AL RE T 2011 - StarHubir.starhub.com/FormBuilder/_Resource/_module/gZSLLgdlcU... · 2012-06-05 · LTE services will give us the ﬂ exibility to replace our ﬁ xed price packages

ANNUAL REPORT 2011

For the fi rst time, a detailed sustainability report has been prepared in accordance with the Global Reporting Initiative (GRI) G3.1 guidelines, including GRI’s Telecommunications Sector Supplement. Social and environmental data presented in this report establishes our baseline. StarHub is committed to working toward setting targets and goals for future reporting. Below are some key statistics for 2011:

Content

> 1Our Key Figures for the Year

> 2Our Financial Highlights

> 4Chairman’s Message

> 8Message from the CEO

> 12Even More Enhanced

> 16Even More Engaging

> 18Even More Enthralling

> 20Even More Endearing

> 22Board of Directors

> 28In Discussion with StarHub’s Management

> 34Senior Management

> 36Hubbing at a Glance

> 38The Nucleus Connect Conversation

> 40 Enhanced Hubbing in Review

> 54Group Financial Review

> 59Corporate Governance

> 71Directors’ Particulars

> 75Awards and Industry Honours

> 76Investor Relations

> 80Sustainability Report

> 119Financial Statements

17%EMPLOYEE TURNOVER

LOWER THAN NATIONAL AVERAGE OF 24%

ENERGY CONSUMPTION

104.5MILLION kWh

CARBON EMISSIONS

52,618METRIC TONNES

WATERCONSUMPTION

24,212CUBIC

METRES

WASTE GENERATED AND RECYCLED

126METRIC TONNES

DONATED TO CHARITIES/SOCIAL PROJECTS

$1.8MILLION

StarHub LtdAnnual Report 2011

1

Our Key Figures for the Year

KEY FIGURES 2011

EBITDA $ million

676

602

+12.3%

11

10

EARNINGS PER SHARE cents

18.3

15.3

+19.8%

11

10

PROFIT ATTRIBUTABLETO SHAREHOLDERS $ million

316

263

+19.9%

11

10

DIVIDEND PER SHARE cents

20

20

+0.0%

11

10

STARHUB SHARE PRICE PERFORMANCE AGAINST STI 2010–2011 %

+11%StarHub

-17%STI

100

1Q2010 2Q2010 3Q2010 4Q2010 1Q2011 2Q2011 3Q2011 4Q2011


2

Our Financial Highlights

5-YEAR FINANCIAL HIGHLIGHTS

REVENUE $ million

2,312

2,238

11

10

2,150

2,128

09

08

2,01407

FREE CASH FLOW $ million

450

398

11

10

461

378

09

08

48307

EBITDA MARGIN ON SERVICE REVENUE %

31

28

11

10

32

32

09

08

3407

HUBBING INDEX (HOUSEHOLDS)

205

244

200

240

11

10

350

186

241

357

342

168

243

364

09

08

150

239

366

07

Triple householdsDouble householdsSingle households

’000


3

Our Financial Highlights

GROWTH DRIVEN BY POST-PAID

MOBILE SERVICES

MONTHLY SUBSCRIPTION PRICE

INCREASE PARTLY HELPED TO STABILISE

PAY TV REVENUE

GROWTH ATTRIBUTED TO BOTH DATA &

INTERNET AND VOICE SERVICES

INCREASE DRIVEN BY HIGHER

BROADBAND CUSTOMER BASE

FIXED NETWORK REVENUE (DATA & INTERNET)$ million

07 08 09 10 11

281278269247

206

MOBILE CUSTOMER BASE ’000

07 08 09 10 11

2,1922,145

1,9181,7651,757

PAY TV CUSTOMER BASE ’000

07 08 09 10 11

545538539524504

BROADBANDCUSTOMER BASE ’000

07 08 09 10 11

440422

400373

346

MOBILE REVENUE $ million

07 08 09 10 11

1,2181,1811,0941,079

1,037

PAY TV REVENUE$ million

07 08 09 10 11

376395405398

342

BROADBANDREVENUE$ million

07 08 09 10 11

242236241253247

FIXED NETWORK REVENUE(VOICE)$ million

07 08 09 10 11

5653

4953

74

$1,218MILLION

$376MILLION

$242MILLION

$337MILLION


4

“STARHUB HAS CONTINUED TO GROW FOR A SEVENTH STRAIGHT YEAR. WE SAW GROWTH IN THREE OF OUR FOUR LINES OF BUSINESS: MOBILE, BROADBAND AND FIXED NETWORK SERVICES.”

Chairman’s Message

WE INCREASED OUR OPERATING REVENUE BY 3% TO $2.3 BILLION

$2.3BILLION


5

Building on smartphones’ popularitySmartphones have become more and more ubiquitous. We saw strong demand for the iPhone 4S. Tablets have also fi gured strongly in the market with players such as Apple, Samsung, Dell and even BlackBerry looking to play in the tablet arena. Our cost of equipment sold went up by 23%, contributed mainly by the high demand for smartphones, especially the iPhone.

We have continued to invest signifi cantly in our handset subsidies for smartphones, and this has translated to an increase in smartphone adoption and data usage by our customers. The rewards from consumers’ reliance on data will become more evident when the LTE network rolls out in 2012. LTE services will give us the fl exibility to replace our fi xed price packages with tiered pricing plans for data.

Building on strategic partnerships We formed many strategic alliances in 2011. In partnership with some of Asia’s top carriers, namely Japan’s NTT Communications, Philippines’ PLDT and Malaysia’s Telekom Malaysia, StarHub will build and operate the 7,200km-long Asia Submarine-Cable Express (ASE). This will complement our current strong connections into the US via the Asia-America Gateway (AAG) to allow our customers to directly connect to Hong Kong, Japan and the Philippines. The system will potentially have future connectivity to Mainland China as well as other Southeast Asian countries.

At an estimated cost of US$430 million, the ASE will be welcomed by both consumers and corporate customers alike. From video streaming and advanced multimedia applications on devices such as smartphones and tablets, to time-sensitive transactions for business, these will all benefi t greatly from a network that minimises latency.

A proud moment for us in 2011 was the signing of telecommunications giant Vodafone as our exclusive partner in Singapore. StarHub’s partner network includes the Conexus Mobile Alliance, one of Asia’s largest mobile alliances with presence in 10 countries/regions, and now, we have extended the reach with Vodafone, which has over 40 partner networks worldwide. These networks will allow us to offer fi rst-class, innovative mobile services to enterprises in Singapore, especially with the unique Vodafone Global Enterprise services, and a further enhanced roaming experience abroad with StarHub.

Locally, StarHub is part of a consortium that won the InfoComm Development Authority’s (IDA) Call for Collaboration award to develop the Near Field Communications (NFC) infrastructure. Alongside partners such as DBS and EZ-Link, StarHub will play a pivotal role in the creation of contactless payment via mobile devices, potentially boosting the consumers’ take-up rate for NFC-enabled smartphones in the future. The NFC service is set for a launch in mid-2012.

Dear shareholdersIn 2011, Singapore’s economic growth slowed, in line with a weaker global economy. According to the latest statistics from the Ministry of Trade and Industry, Singapore’s GDP growth fell from 14.8% in 2010 to 4.9% in 2011. The growth is expected to moderate further in 2012.

The overall mobile telephone penetration rate in Singapore is now hovering around the 150% mark, with limited growth potential in this area. However, the era of smartphones is quite evidently here to stay, with consumers utilising their mobile phones increasingly for data, rather than just calls and SMSes. Singapore’s 3G market is booming with over 5.5 million 3G subscribers as of end-2011. This bodes well for the coming Long Term Evolution (LTE) and the introduction of the 4G network in 2012.

The Next Generation Nationwide Broadband Network (Next Gen NBN), an open system with all operators having access, is slated for a 95% nationwide rollout by mid-2012. This should allow us to build on the resilience of our pay TV and fi xed-line services and tap on opportunities in the commercial sector. In anticipation of this, we have formed a new Enterprise Business Group, which is dedicated to serving the needs of corporate clients.

StarHub has continued to grow for a seventh straight year, increasing our operating revenue by 3% to $2.3 billion. We saw growth in three of our four lines of business: Mobile, Broadband and Fixed Network services. Our EBITDA grew by 12% to $676 million as we realised the profi t from key investments we made in 2010. We have made additional investments in 2011 which we believe will enhance our overall performance as well as the performance of our individual lines of business in 2012 and the years to come. I would now like to highlight some of the key investments we made in 2011.


“WE FORMED MANY STRATEGIC ALLIANCES WITH SOME OF ASIA’S TOP CARRIERS, SUCH AS TELE-COMMUNICATIONS GIANT VODAFONE.”


6

Building on richer content and channels We signifi cantly bulked up our content delivery to consumers in 2011 on both the mobile and pay TV fronts. StarHub was the fi rst to launch a “Facebook® for Feature Phones” service. This gave consumers a better experience when accessing the popular networking site. This service is free for all StarHub’s Mobile pre-paid Happy Stars users, who will incur no data access charges when they use the application locally.

For Pay TV, we grew our customer base. We increased the number of sports programming for our customers by securing the broadcast rights to the UEFA Euro 2012™, as well as a host of other sporting events such as the French Open Finals, the Italian Serie A and major rugby events which can be viewed on our Setanta Sports channel. We are also excited to be the Offi cial Broadcaster and Principal Sponsor of LionsXII.

Entertainment-wise, we have added new channels, like KMTV Channel, ONE and tvN, that we believe will prove to be a hit with the local audiences and satisfy their need for Korean culture. We have also beefed up our news and entertainment content from other countries in the region.


“We believe that maintaining a good

balance between social, environmental and economic performance is fundamental to creating long-term value

for shareholders as well as for stakeholders.”

Tan Guong ChingChairman


7

Building on corporate sustainability and responsibilitySocial and environmental responsibility has always been an integral part of how we do business at StarHub. We believe that maintaining a good balance between social, environmental and economic performance is fundamental to creating long-term value for shareholders as well as for stakeholders.

Our workplace practices continue to focus on attracting and retaining the best talent, investing in people development, promoting diversity, ensuring workplace health and safety, and the fair treatment of all employees. On the environmental front, our priorities include reducing energy consumption, our carbon and water footprints, and waste disposal.

In the marketplace, we are committed to ensuring excellent customer experience, as well as adopting and promoting ethical business practices. Community investment remains an important activity to StarHub as a responsible corporate citizen.

Internationally, data security and privacy are becoming issues of increasing concerns. As a responsible info-

communications company, we are committed to taking measures that protect data security and privacy.

In terms of overall approach, we are now taking sustainability to a whole new level. For example, we have adopted the internationally recognised Global Reporting Initiative (GRI) Framework’s latest G3.1 Guidelines to report our sustainability performance. We have for the fi rst time embarked on a comprehensive carbon footprint calculation using the Greenhouse Gas (GHG) Protocol, a globally recognised framework, to measure and report on our carbon footprint. We have also adopted the internationally recognised Water Footprint Network standards to track our water consumption.

Our carbon reduction strategies will save costs in the medium to long term, and better prepare us for supporting Singapore’s pledge to reduce national greenhouse gas (GHG) emissions by 16% below the “Business-as-Usual” scenario in 2020 when a global agreement is achieved.

Having established baseline fi gures this year for a range of sustainability performance indicators, the next step for us is to develop realistic targets for improvement and working toward achieving those targets.

Looking forward to 2012I would like to take this opportunity to thank all of you, our shareholders, for your continued confi dence in and support of StarHub. I would also like to extend the Board’s heartfelt appreciation to all staff, customers, business partners and associates for their valuable dedication and commitment in 2011.

I believe that 2012 will be a challenging year, but am assured that with our fi rm foundation and strategies in place, we will succeed in the coming year and the years to come. Please allow me to renew the StarHub Board and Management’s pledge to continue to build value in the Company for you, while achieving our vision of being Singapore’s premier choice for information, communications and entertainment services.

Once again, thank you all and I look forward to meeting you at our upcoming Annual General Meeting.



“HAVING ESTABLISHED BASELINE FIGURES FOR A RANGE OF SUSTAINABILITY PERFORMANCE INDICATORS, THE NEXT STEP FOR US IS TO DEVELOP REALISTIC TARGETS FOR IMPROVEMENT AND WORKING TOWARD ACHIEVING THOSE TARGETS.”


8

“THROUGHOUT THE CHALLENGES AND OPPORTUNITIES PRESENTED IN 2011, WE HAVE REMAINED FLEXIBLE, CONSTANTLY ADJUSTING OUR BUSINESS PLANS IN ORDER TO MEET OUR VARIOUS CUSTOMERS’ DIVERSE SPECTRUM OF NEEDS.”

Message from the CEO

791,000HOUSEHOLDS

OUR HUBBING STRATEGY CONTINUES TO DELIVER. MORE THAN 70% OF HOUSEHOLDS USE AT LEAST ONE OF OUR SERVICES


9

higher for our EBITDA margin at 31.1% and increased NPAT by 20% to $316 million for the full year.

Performance for our lines of businessMobile services saw a revenue growth of 3% to $1.22 billion on top of an expanded post-paid customer base. Post-paid mobile services revenue increased 6% to hit the $968.2 million mark and accounted for 80% of our mobile revenue mix. Pre-paid service revenue, however, dipped 6% to $249.4 million. These fi gures were on the back of a growth in the post-paid customer base of 3% to 1.07 million and an increase of 2% in the pre-paid customer base to 1.13 million.

Compared to a year ago, post-paid mobile ARPU increased $2 to $74, mainly due to the higher commercial availability of smartphones and a corresponding take-up of our newly launched SmartSurf plans. Pre-paid mobile ARPU decreased by $2 YoY to $19, a drop which was caused primarily by lower voice usage.

The revenue for Pay TV revenue dipped 5% to $376.0 million, due mainly to the more-than-50% rate discount given on the Sports Group pack. However, a higher subscriber base and the $2 monthly subscription price increase nudged our Pay TV ARPU up to $50. The customer base was up 1% to 545,000, and churn was only 1.1%.

Our Broadband revenue increased 2% to $241.7 million. ARPU held steady at $45 for the year, attributed to a higher number of customers on lower speed price plans, Hubbing promotions and discounts offers, but offset by a 4% growth in the residential broadband customer base. We ended the year with 440,000 customers for this line of business.

2011 was truly a year of exciting innovation and network challenges for the telecommunications industry.

The smartphone revolution continues as demand ramped up. The launch of iPhone 4S further cemented Apple’s foothold in the market, resulting in pressure on operational margins in the latter half of the year. Resistance from building owners and problems in scheduling residential connections translated to delays in the take-up of the Next Gen NBN services, although the network company should still be on track for a 95% nationwide “home-passed” roll-out by mid-2012.

On the positive side, we strengthened our presence in the global telecommunications landscape with strategic partnerships for projects such as the building and operation of the ASE undersea cable with other large Asian carriers, the development of the local NFC infrastructure with players such as DBS and EZ-Link, and joining the Vodafone Global Partnership.

On the Pay TV front, we reinforced our delivery of premium sports content with broadcast rights to major events such as the French Open Finals and Italian Serie A, capped with our securing of the rights to broadcast UEFA Euro 2012™. This will be the fi rst major broadcast to come under the Cross Carriage regime and we are hoping to build on our market share through this avenue.

We are proud to be the Offi cial Broadcaster and Principal Sponsor of LionsXII. StarHub’s comprehensive coverage includes live broadcasts of LionsXII matches in the Malaysia Super League, the Malaysia FA Cup, and the Malaysia Cup. It is truly exciting to be able to see Singapore play in Malaysia again after so many years.

Throughout these challenges and opportunities, we have remained fl exible, constantly adjusting our business plans in order to meet our various customers’ diverse spectrum of needs. Part of this meant some reorganisation, which resulted in the creation of the Enterprise Business Group, to better realise the growth potential of the enterprise market.

StarHub has nine retail outlets as of this year, and this was a large cause of the increased staff costs for 2011, which rose 7% from 2010. However, these outlets, four of which opened in 4Q2010, have allowed us to tap into high retail customers’ traffi c areas such as the relatively new shopping centre, nex, in Serangoon while the more upmarket Marina Bay Link mall allowed us to tap into the high business customers’ traffi c areas. Our retail shops, spread across the island, will increase and provide higher visibility for the StarHub brand. Overall, we are pleased with our performance for 2011. We have demonstrated our resilience on many fronts and proven again that the Hubbing strategy is a winning one. Our full year revenue increased 3% to $2.3 billion, while EBITDA was 12% higher at $676 million. We also averaged


“WE ARE PROUD TO BE THE OFFICIAL BROADCASTER AND PRINCIPAL SPONSOR OF LIONSXII.”


10

Fixed Network revenue increased 2% to $336.7 million for the year. Data & Internet services revenue, which makes up 83% of the Fixed Network revenue increased 1% from a year ago. The increase was despite pricing pressure in the local and international leased circuit services. Voice services revenue increased 4% to $55.6 million, mainly attributed to a higher subscription of local voice services and increased interconnect revenue.

Our Hubbing strategy has proven to be a sound one, with the number of Hubbing households, or households subscribing to all three services, increasing by 3% or 5,000 to 205,000 households. Importantly, the total number of Hubbing households with at least two StarHub services also increased by 9,000 to 449,000 for 2011. We are pleased that our multi-service bundling, especially our Hubbing Packs of cable broadband and basic Pay TV channels, appealing to the lower end of the market, have been warmly received by our customers, and we hope to develop more value-added offers in 2012.

Embracing mobile opportunities The LTE generation, or 4G network is poised to come online sometime in 2H2012. This opens up the possibility of monetising mobile data usage. Consumers have been utilising less of their voice and SMS entitlements but consuming more data, which carries lower margins.

At present, StarHub offers a cap of 12Gb of data at a fi xed price. Because few consumers use more than this allotted amount, the revenue there has been largely stagnant with little chance of growth due to the already large mobile penetration rate of about 150%. With the advent of the LTE, we will be able to offer tiered and/or customised pricing plans to cater to the consumers’ usage patterns and needs. We will be able to streamline our service delivery while offering customers more value for their mobile surfi ng preferences.

Embracing pay TV opportunitiesThe UEFA Euro 2012™ will be the fi rst programme to come under the Media Development Authority’s (MDA) Cross Carriage regime. While StarHub won the exclusive rights to broadcast this prestigious tournament, we will be obligated to make this available to the other specifi c Pay TV licensee here in Singapore.

However, this presents a prime opportunity for us to increase our market share as well as increase revenue for this line of business.

Embracing Next Gen NBN opportunitiesThe rolling out of the Next Gen NBN has encountered many stumbling blocks in both residential units and commercial buildings. Schedules for the connection of households, connectivity lapses and resistance to installation from building owners has slowed the progress of the setting up of the Next Gen NBN, although the network company should be on track to roll this out to 95% nationwide by mid-2012.


“MOVING FORWARD, WE WILL BUILD ON OUR EXCLUSIVE PARTNERSHIPS LOCALLY, REGIONALLY AND GLOBALLY. WE AIM TO PROVIDE AN EVEN MORE COMPREHENSIVE RANGE OF PRODUCTS AND SERVICES.”

“LTE is poised to come online in 2H2012. This

opens up the possibility of monetising mobile data usage. Consumers have

been utilising less voice but consuming more data.”

Neil Montefi oreCEO


11

Building on the global mobile alliances of Conexus and Vodafone, StarHub is now well positioned to take advantage of the proliferation of smartphone ownership and mobile broadband data roaming by offering higher quality and more cost-effective roaming services for all our customers.

Given the above developments, we expect our revenue growth for 2012 to be in the low single-digit range. Our EBITDA margin on service revenue should hold steady at about 30% and our cash CAPEX is not expected to exceed 11% of operating revenue. We intend to pay a cash dividend of 20.0 cents per ordinary share for FY2012.

We are planning to make great inroads in the corporate fi xed-line market when we gain access to about 20,000 corporate locations connected to the Next Gen NBN.

Outlook for 2012Moving forward, we are looking to build on our exclusive partnerships locally, regionally and globally.

In Singapore, we are excited to take consumer payment and business transactions to the next level with the NFC infrastructure. This opens up the market for a new generation of smartphones with NFC capability.

The ASE undersea cable will enable us to offer our consumers direct, seamless and higher-quality connectivity to Hong Kong, Japan and the Philippines. The system will potentially have future connectivity to Mainland China, as well as other Southeast Asian countries. Both our individual and corporate consumers will benefi t from the enhanced speed, capacity and reduced latency.

We are also looking forward to providing an even more comprehensive range of products and services for our enterprise customers, locally and globally, through our exclusive partnership with Vodafone in Singapore.

Neil Montefi oreCEO



13

ENHANCED ROAMING SERVICES FOR HUBBERS THROUGH EXCLUSIVE PARTNERSHIP WITH VODAFONE

> Strategic partnership brings world-class mobile services to enterprise customers in Singapore, with unique Vodafone Global Enterprise services and an extensive global mobile footprint.

> Partnership links not only Vodafone, one of the world’s largest mobile communications companies with equity interests in over 30 countries and more than 40 partner networks worldwide, but also Conexus Mobile Alliance. Conexus is one of Asia’s largest mobile alliances with presence in 10 countries/regions.

> This allows StarHub to cater to the growing demand for data roaming on smartphones and mobile broadband.

ENHANCED HUBBERS’ EXPERIENCE WITH MORE NEW AND RENEWED PAY TV CONTENT

> Launched 24 new channels—10 of them in HD. We currently carry 179 channels including nine free-to-air.

> More content—secured broadcast rights to UEFA Euro 2012™, Italian Serie A, major rugby events and the French Open Finals, and more news and entertainment, such as dramas, variety shows and concerts from Hong Kong, Korea and Taiwan.THEN

179CHANNELS

NOW

170CHANNELS

ENHANCED MOBILE SERVICES AND GLOBAL FOOTPRINT THROUGH EXCLUSIVE PARTNERSHIP WITH VODAFONE

THEN

STARHUB+

VODAFONE

NOW

STARHUB


15

ENHANCED PENETRATION INTO THE CORPORATE FIXED MARKET

> Next Gen NBN will pass through 20,000 locations, extending StarHub’s reach beyond the 1,000 buildings currently covered by our own fi bre-optic network.

> With the newly-formed Enterprise Business Group, an agile, dedicated and solutions-focused division, StarHub is all ready to focus on and harness the growth potential of the corporate space and remains committed to be the trusted service provider for info-communications services in Singapore.

ENHANCED REGIONAL CONNECTIVITY THROUGH THE ASIA SUBMARINE-CABLE EXPRESS (ASE) TO BETTER SERVE THE ENTERPRISE MARKET

> Joined top Asian carriers to build and operate the ASE, a 7,200-kilometre undersea cable system linking Singapore directly to Hong Kong, Japan and the Philippines.

> System boasts a total bandwidth capacity in excess of 15 terabits per second and is specifi cally designed to avoid earthquake and typhoon-prone regions, resulting in better connectivity and allow StarHub to serve our enterprise customers more competitively.

THEN

20,000LOCATIONS

SOON

1,000BUILDINGS

THEN

12CABLES

SOON

11CABLES

ENHANCED SERVICES AND PENETRATION INTO THE ENTERPRISE MOBILE MARKET THROUGH EXCLUSIVE PARTNERSHIP WITH VODAFONE AND CONEXUS

> Collaboration allows us to serve the local enterprise mobile market with Vodafone’s enhanced roaming experience.

> It gives us the opportunity to strengthen our enterprise mobile service offerings and positioning by leveraging Vodafone’s expertise and corporate relationship.

> Along with Conexus, we aim to provide more streamlined services to multi-national corporations and offer simplifi ed roaming rates across multiple countries.


17

EXPANDED OUR CUSTOMER BASE ACROSS ALL SEGMENTS OVER THE YEAR

2.2MILLION

STARHUB’S TOTAL MOBILE SUBSCRIBER BASE GREW BY 47,000 OR 2% TO 2.2 MILLION AT THE END OF 2011

DESPITE THE BPL LOSS, WE GREW OUR PAY TV BASE BY 7,000 YoY TO 545,000

545,000HOUSEHOLDS

THE RESIDENTIAL BROADBAND BASE GREW 4% YoY, ENDING THE YEAR WITH 440,000 HOUSEHOLDS

440,000HOUSEHOLDS

INCREASED OUR HUBBING HOUSEHOLDS TAKE-UP OF AT LEAST TWO SERVICES

> With continued promotion of Hubbing packs and subscription discounts offered to drive multi-services take-up in the quarter, the number of households taking more than one StarHub service was up 1 percentage point to 57%.

> The number of households subscribing to all three services increased by 5,000 households YoY.

43.2% SINGLE

(2010: 44.3%)

30.9% DOUBLE

(2010: 30.4%)

25.9% TRIPLE (2010: 25.3%)


19

1.2%BROADBANDCHURN RATE

(2010: 1.3%)

1.1%PAY TV

CHURN RATE(2010: 1.1%)

LOW CHURN RATES ACROSS ALL SERVICES IS A TESTAMENT TO HUBBING’S SUCCESS

> StarHub’s Hubbing strategy ensured customer loyalty, which led to low churn rates across all lines of business.

> Mobile services have consistently seen a low 1.1% across the four quarters.

> Pay TV defi ed the odds to record low churn despite losing the BPL broadcast rights.

> Broadband churn remained low as we continue to focus on bundling to keep churn rates low.

1.1%MOBILE

CHURN RATE(2010: 1.1%)


20

> StarHub shares rose 11% in 2011 as investors fl ocked towards dividend-paying stocks with defensive earnings.

> Management’s commitment to $0.05 DPS per quarter in 2011 was well supported by a strong balance sheet and was one of the stock’s attractions.

SHARE PRICE GROWTH OF 11% IS ONE OF THE HIGHEST IN SINGAPORE, SURPASSING COMPETITORS

SOLID AND ATTRACTIVE DIVIDEND YIELD OF 7%

even

20¢TOTAL DPS

DIVIDEND PER SHARE (DPS) HAS INCREASED STEADILY FROM 9 CENTS IN 2005

ATTRACTIVE HIGH YIELD

7%DIVIDEND

YIELD

18%TOTAL

SHAREHOLDER’S RETURN

STOCK APPRECIATED 11% + 20 CENTS TOTAL DPS


22

THE

Board of Directors

Mr Tan Guong Ching is the non-executive Chairman of StarHub. He was appointed to the Board on 8 August 1998 and was last re-elected as a Director on 16 April 2010. He is also the Chairman of Singapore Technologies Telemedia Pte Ltd (ST Telemedia), STT Communications Ltd, Asia Mobile Holdings Pte. Ltd., Singapore Technologies Aerospace Ltd., Temasek Life Sciences Laboratory Limited and IP Academy. He was formerly the CEO of the Housing & Development Board, the Principal Private Secretary to the Prime Minister and the Permanent Secretary of the Ministry of Home Affairs, the Ministry of the Environment and the then Ministry of Communications & Information. Mr Tan initiated several major projects during his career, such as neighbourhood policing, civil defence, commissioning of the mass rapid transit system, the corporatisation of Singapore Telecommunications Ltd and the re-organisation of the then Telecommunication Authority of Singapore. Mr Tan holds a Bachelor and a Master of Engineering (Chemical) from the McMaster University, Canada.


BOARD


23

Board of Directors

Mr Neil Montefi ore joined StarHub on 1 January 2010 as its CEO and Executive Director. He was last re-elected as an Executive Director on 16 April 2010. Mr Montefi ore has over 35 years of global experience in the telecommunications industry. Prior to joining StarHub, he was the CEO of M1 Limited (M1) in Singapore since 1 April 1996. He was appointed as a Director of M1 in 2002. From 1991 to 1996, Mr Montefi ore was the Managing Director of Chevalier (Telepoint) Ltd and Director, Mobile Services of Hong Kong Telecom CSL Limited. Prior to that, he held the senior position of Managing Director of PakNet Ltd in the United Kingdom. Mr Montefi ore joined The Cable and Wireless group in 1976 and held various marketing and engineering management positions in Hong Kong, Bahrain, Saudi Arabia and the United Kingdom before being appointed as CEO of Cable and Wireless Systems Ltd in Hong Kong. In September 2010, Mr Montefi ore was named as one of the 100 most powerful people in the telecoms industry worldwide. He was also named the Commsday Asia “Best Telecom Industry Executive” for 2010. Mr Montefi ore is a Fellow of the Institution of Engineering and Technology and a Fellow of the Chartered Institute of Marketing.

Mr Kua Hong Pak was appointed to the Board on 19 November 2001 and was last re-elected as a Director on 16 April 2009. He is the Managing Director and Group CEO of ComfortDelGro Corporation Limited and has extensive experience in the transport industry. An accountant by training, Mr Kua is also the Deputy Chairman of SBS Transit Ltd and VICOM Ltd. Prior to joining ComfortDelGro Corporation Limited, Mr Kua served as the President and CEO of Times Publishing Limited and Executive Director of SBS Transit Ltd. He holds a Bachelor of Accountancy from the former University of Singapore. Mr Kua also participated in the Advanced Management Program conducted by the Harvard Business School, USA.

Neil Montefi oreExecutive DirectorChief Executive Offi cer

Kua Hong Pak Independent Director Chairman of Audit Committee


24

Board of Directors

Mr Nihal Vijaya Devadas Kaviratne CBE was appointed to the Board on 16 August 2004 and was last re-elected as a Director on 15 April 2011. He serves on the Board of Directors of DBS Bank Ltd and DBS Group Holdings Ltd in Singapore and GlaxoSmithKline Pharmaceuticals Limited in India. Prior to joining StarHub, he held various senior level management positions in the Unilever group across Asia, Europe and Latin America and has extensive experience in marketing and sales. His career with the Unilever group spanned 40 years before he retired from the Unilever group in March 2005. He was chosen by Business Week in 2002 for the Stars of Asia Award as one of the “25 leaders at the forefront of change”. Mr Kaviratne holds a Bachelor of Arts (Honours) with a major in Economics from Bombay University, India and attended the Advanced Management Program at the Harvard Business School, USA.

Mr Peter Seah Lim Huat was appointed to the Board on 22 July 2002 and was last re-elected as a Director on 15 April 2011. He is a member of the Temasek Advisory Panel and has extensive experience in the fi nancial industry. He is also the Chairman of DBS Bank Ltd, DBS Group Holdings Ltd and Singapore Technologies Engineering Ltd. Mr Seah served as the President and CEO and a Director of Singapore Technologies Pte Ltd from December 2001 to December 2004. Prior to that, he held several senior level positions in Overseas Union Bank Limited before retiring as Vice Chairman and CEO in September 2001. Mr Seah holds a Bachelor of Business Administration (Honours) from the former University of Singapore.

Peter Seah Lim HuatNon-Executive Director Chairman of Executive Resource & Compensation Committee and Nominating Committee

Nihal Vijaya Devadas Kaviratne CBEIndependent Director Chairman of Strategy Committee


25

Board of Directors

Mr Steven Terrell Clontz was appointed to the Board on 8 December 1999 and was last re-elected as a Director on 16 April 2010. He is the Chairman of InterDigital, Inc. Prior to this, he served as the CEO of StarHub for 11 years before retiring on 1 January 2010. Mr Clontz is a veteran in the telecommunications and media industry with more than 30 years of extensive experience. He began his career in the United States. From 1995 to 1998, he served as the President and CEO of IPC Information Systems Inc., based in New York. Prior to that, Mr Clontz has held senior executive positions at BellSouth International, Inc. He was the President of BellSouth International (Asia Pacifi c), Inc between 1991 and 1994. Mr Clontz holds a Bachelor of Science (Physics Major) from the University of North Carolina, USA.

Mr Lim Ming Seong was appointed to the Board on 14 December 2000 and was last re-elected as a Director on 15 April 2011. He is the Chairman of CSE Global Limited and First Resources Ltd. Mr Lim was with the ST group from 1986 to 2002, where he left as Group Director. Prior to joining the ST group, Mr Lim was with the Ministry of Defence of Singapore. He holds a Bachelor of Applied Science (Honours) with a major in Mechanical Engineering from the University of Toronto and a Diploma in Business Administration from the former University of Singapore. Mr Lim also participated in the Advanced Management Programs conducted by INSEAD and the Harvard Business School, USA.

Mr Lee Theng Kiat was appointed to the Board on 7 May 1998 and was last re-elected as a Director on 15 April 2011. Mr Lee has been President and CEO of ST Telemedia since 1994 and a Director of STT Communications Ltd since 1998. He joined Singapore Technologies Pte Ltd (ST) in 1985 and has held various senior level positions in ST. In 1993, following ST’s decision to enter the telecommunications sector, Mr Lee spearheaded the creation of ST Telemedia as a new business area for ST. Under his leadership, ST Telemedia has evolved into a signifi cant info-communication company with operations and investments in Asia Pacifi c, America and Europe. Mr Lee, a lawyer by training, began his career as an offi cer of the Singapore Legal Service, for more than eight years. He holds a Bachelor of Laws (Honours) from the former University of Singapore.

Lee Theng KiatNon-Executive Director

Steven Terrell ClontzNon-Executive Director

Lim Ming Seong Non-Executive Director


26

Board of Directors

Mr Teo Ek Tor was appointed to the Board on 16 August 2004 and was last re-elected as a Director on 16 April 2010. He is the Chairman of PrimePartners Group Pte Ltd and the Managing Partner of PrimePartners Asset Management Pte Ltd, which manages private equity funds. He has vast experience in investment banking and fi nancial services in Asia. Mr Teo had contributed to and been instrumental in the development of two major regional investment banking groups—Morgan Grenfell Asia (1980–1993) and BNP Prime Peregrine (1997–1999). Mr Teo held senior executive positions within the Morgan Grenfell Asia group and was the Regional Managing Director of BNP Prime Peregrine (Singapore) Ltd. He holds a Bachelor of Arts (Honours), with a major in Business Administration from the University of Western Ontario, Canada.

Mr Sadao Maki was appointed to the Board on 6 August 2008 and was last re-elected as a Director on 16 April 2009. He is a Director and the Senior Executive Vice President of NTT Communications Corporation (NTTCom). He started his career with Nippon Telegraph and Telephone Corporation (formerly known as Nippon Telegraph and Telephone Public Corporation) (NTT) in 1975 and was the General Manager, Overseas Business Development from 1992 to 1999. He has since held various senior level positions in NTTCom, a subsidiary of NTT, including Vice President of Global Strategy, Accounts and Finance, and Corporate Planning, and Senior Vice President of Enterprise Sales, Enterprise Business and Global Business Divisions. Mr Maki was a non-executive Director of Philippine Long Distance Telephone Company, a leading telecommunications provider in the Philippines, in 2004 and 2005. He holds a Bachelor of Economics from the University of Tokyo, Japan and a Master of Business Administration from the University of Chicago, USA.

Sadao Maki Non-Executive Director

Teo Ek Tor Independent Director


27

Board of Directors

Dr Nasser Marafi h was appointed to the Board on 9 July 2007 and was last re-elected as a Director on 15 April 2011. He is the CEO of Qatar Telecom (Qtel) Q.S.C. (Qtel), a public listed company on the Doha Securities Market and has extensive experience in the telecommunications industry. Dr Nasser began his professional career at Qtel in 1992 as an expert advisor from the University of Qatar, and later joined Qtel as the Director of Strategic Planning and Development. He was instrumental in many strategic initiatives and landmarks in Qtel’s history, including the introduction of the fi rst GSM service in the Middle East in 1994 and thereafter, the Internet service in Qatar in 1996, and the privatisation of Qtel in 1998. Under Dr Nasser’s leadership, Qtel has evolved from being a local telecom provider to an international player, with strategic investments in the Asia Pacifi c region. Dr Nasser holds a Bachelor of Science in Electrical Engineering, a Master of Science and a PhD in Communication Engineering from George Washington University, USA.

Mr Liu Chee Ming was appointed to the Board on 16 August 2004 and was last re-elected as a Director on 16 April 2010. He has been the Managing Director of Platinum Holdings Company Limited since 1996. Mr Liu has over 30 years of experience within the fi nancial services sector and media industry. He worked for various Jardine Fleming entities for over 17 years in senior level positions. Between 1988 to 1995, he served as a Member of the Executive Committee and the Head of Investment Banking for Jardine Fleming Holdings Limited. Mr Liu was a Director of Media Asia Entertainment Group Limited of Hong Kong from 2005 to 2007. He has been a member of the Takeovers Appeal Committee and Takeovers and Mergers Panel of the Securities and Futures Commission in Hong Kong since May 1995. Mr Liu holds a Bachelor of Business Administration from the former University of Singapore.

Mr Robert J. Sachs was appointed to the Board on 29 April 2005 and was last re-elected as a Director on 16 April 2009. He is a Principal of Continental Consulting Group, LLC. Mr Sachs has almost 30 years extensive experience in the cable television and media industry. He was the President and CEO of the National Cable & Telecommunications Association from August 1999 to March 2005. From 1979 to 1998, he held various senior level positions in Continental Cablevision, Inc. and its successor, MediaOne Group, Inc., overseeing the company’s legal and regulatory affairs and corporate development. He began his professional career as the legislative staff of US Senator Charles Goodell and thereafter as a consultant to the White House Offi ce of Telecommunications Policy. He was legislative counsel to the National Telecommunications and Information Administration in the United States. Mr Sachs holds a Bachelor of Political Science from the University of Rochester, a Master of Journalism from the Columbia University Graduate School of Journalism and a Doctorate of Law from Georgetown University, USA.

Liu Chee MingIndependent Director

Robert J. Sachs Independent Director

Nasser Marafi hNon-Executive Director


28

In Discussion with StarHub’s Management

Why did StarHub invest in the Asia Submarine-Cable Express (ASE)? Does it help when LTE is launched?

> Given the many natural disasters that have hit the East-Asian and Pacifi c regions over the last few years, it is necessary to invest in networks that would withstand earthquakes and typhoons. In addition, we see a growing need for international bandwidth, not only from individual consumers but also corporate users. Currently, we are using our Asia-America Gateway (AAG) to connect to countries such as Hong Kong, Japan and the Philippines. The ASE, a complementary network, will also be able to do this and more importantly, is future-proof. This means that we can expand the capacity from the initial 40Gbps optical technologies 100Gbps should and when the need arises.

The more advanced technology and more direct connection to these countries also means that we will be able to deliver our mobile and broadband services with greater speed, enhanced reliability and minimum latency. This is timely news as we expect to launch our LTE services in 2H2012, the same period that we are expecting the ASE to be operational.

Given the increasing number of smartphone users and a large

Tan Tong HaiCOO

IN DISCUSSION

WITHSTARHUB’SMANAGEMENT


29


number of foreigners here from countries in the region, coupled with the propensity for Singaporeans to travel overseas, the ASE will enable individual and corporate consumers to access their multimedia applications and conduct business transactions with greater assurance.

The local info-comms landscape has seen many changes in recent times. What has StarHub done internally to stay ahead?

> In order for StarHub to be more resilient and agile, we created a new division called Enterprise Risk Management (ERM) and Business Excellence (BE). The division, headed by Alex Siow, plays an increasingly important role in the area of Company strategic and business risk management, disaster preparedness and organisational effectiveness.

The function of ERM provides a proper framework for effectively coordinated risk management across all departments to address strategic business risks as well as fi nancial and operational risks. It also ensures that StarHub adheres closely to the industry standards regarding risk assessment, business continuity and internal controls. The BE function helps the company to look into new ways to deliver our services in a more consistent and effective manner. It also looks into ways to reduce costs by cutting wastages and shortening business processes cycle-time.

In order to serve our Enterprise and Small & Medium Business (SMB) customers better, we formed a new division called Enterprise Business Group (EBG). This new division is headed by Kevin Lim, who was formerly the Managing Director of Pacifi c Internet Singapore. EBG will focus on delivering info-comms solutions to enterprise customers and capitalising on the Next Gen NBN to deliver cloud services to SMBs.

Finally, we have also integrated both our IT division and Network Engineering division under the leadership of Mock Pak Lum. Mock brings with him a wealth of

StarHub has a lot of investment in the Next Gen NBN, ASE and NFC. Given those and the expected competition on the pay TV front with the Next Gen NBN’s rollout, how will this affect your dividend payout?

> StarHub’s Board adopts a three-year projected view of the Company’s earnings performance, the Company’s reserves and free cash fl ows when setting our dividend policy. This ensures that we have suffi cient funds to cover our dividend payment requirements. As dividends are paid out at the Company level, our shareholders’ reserves stood at $946.4 million at the end of 2011. This reserve is able to satisfy the payment of any dividend amount exceeding the earnings for the current year. The Company’s net debt to equity position is also at a strong 0.42 times.

Would there be a possibility of a capital management exercise in 2012?

> Our net debt to EBITDA ratio is currently at 0.71 times, within our long-term target of 1.5 to 2 times. Given the lacklustre outlook for 2012, it is prudent to defer additional capital management initiatives. However, we should continue to pay out quarterly dividends totalling 20.0 cents per share for 2012. In 2011, the StarHub stock saw a dividend yield of about 7% and the total shareholders’ return of about 18%. The stock appreciated about 11% from $2.63 at beginning of the year to close at $2.91 and it outperformed the STI’s loss of 17% for the same period.

Your guidance for CAPEX is at not more than 11% of sales in 2012. What investments will we be seeing in 2012?

> Our CAPEX spending in 2011 was $246.5 million, or 9% lower than 2010’s $272.1 million. Included therein are the strategic CAPEX for the undersea cable and other infrastructure investment which are for future data capacity growth needs. We expect our CAPEX spending to not exceed 11% for 2012.

experience having spent 13 years with MediaCorp Technologies and 1-Net. With an integrated IT and Network Engineering division, it will allow the company to exploit infrastructure synergies and cost savings for both internal and external customers’ needs.

Kwek Buck ChyeCFO

“Our Company shareholders’ reserves of $946.4 million can

be applied to cover any dividends declared in excess of the current

year’s earnings.”

Kwek Buck ChyeCFO

$946.4 millionTOTAL SHAREHOLDERS’ RESERVES


30

29 words

Chan Kin Hung Head, Products and Solutions

Signing Vodafone as an exclusive partner was a real feat. What can we expect from the partnership?

> Vodafone is the world’s largest mobile telecommunications company measured by revenues and the world’s second-largest measured by subscribers. With network operations in over 30 countries and partner networks in over 40 additional countries, the extended reach afforded by such a partnership is tremendous.

StarHub is also a member of Conexus Mobile Alliance, one of Asia’s largest mobile alliances with a presence in 10 countries and regions. The partnership with these two prominent groups will allow StarHub to offer fi rst-class, innovative and cost-effective mobile services to enterprises and consumers here in Singapore. Given the growth in travelling and the popularity of smartphone and tablet devices, the partnership will also cater to the roaming needs of customers, especially the growing demand for data roaming for smartphones and tablets. Together with StarHub’s Roam Manager—which enables customers to know and better manage their roaming costs—StarHub’s roaming customers will truly enjoy peace of mind when they travel overseas.

To better serve the corporate sector, StarHub and Vodafone will jointly provide Vodafone Global Enterprise to multinational corporations in Singapore with mobile services and access to Vodafone’s unique products and services, as well as innovative mobile pricing plans.

In essence, both corporate and retail customers can look forward to more innovative services and cost-effective packages, which will further enhance their roaming experience abroad with the StarHub-Vodafone-Conexus partnership.

What effects would the launch of the NFC infrastructure have on the mobile business and customers?

> With the NFC ecosystem, customers will be able to make payments and access lifestyle services using NFC-enabled phones—from purchasing tickets, catching the latest news and receiving discounts and promotions from retailers, to digitally socialising on the move when they share information with their network by tapping on each other’s NFC mobile devices.

To ease the adoption of the NFC technology, StarHub will offer NFC mobile accessories and handsets to customers. StarHub will also look for more payment and service partners to collaborate on unique services that simplify and enhance StarHub Mobile customers’ lives at work, at home, and for leisure.

We are pleased to be offering this innovative service to our customers. We have always been a strong advocate of offering the best solutions to our customers through unique experiences. The launch of the NFC will give our mobile customers a more engaging experience as they use their NFC-enabled mobile handsets for contactless services such as transit, shopping, ticketing, social sharing, and much more. With such attractive features, we expect more customers to embrace the NFC services that simplify and enhance their lifestyle.

StarHub has been the market leader in the pay TV space for more than a decade now. How do you plan to maintain your leadership?

> We will continue to expand our wide range of branded quality content. In 2011, we launched 24 new channels, including 10 HD channels. This brings a total of 179 channels (includes free-to-air) for our customers to choose.

We are particularly excited that with a total of 18 HD channels in our corner and as the reigning home for HDs, our customers are spoilt for HD choice. Some HD channels we brought in this year included Syfy HD, Universal Channel HD, MTVN HD and Nick Jr. We also introduced FOX Family Movies HD and tvN HD, and look forward to getting more HD content for our customers in 2012.

Over the years, we have seen more households buying HD TVs and this has corresponded to a steady take-up of our HubStation HD set-top boxes. Complementing our HD content offerings, we also provide more than 30 pay TV channels on our mobile platform—the most comprehensive mobile TV on the go in Singapore—StarHub TV on Mobile. All this is part of our “TV Anywhere” strategy, which allows our customers

“StarHub and Vodafone will jointly

provide Vodafone Global Enterprise to MNCs in Singapore with mobile services and access to

Vodafone’s unique products and services, as well as

innovative mobile pricing plans.”

Chan Kin HungHead, Products and Solutions



31

Ng Long Shyang Head, Sales and Marketing

Global trends point to the fact that smartphones and tablets will become even more popular than before. Does StarHub see it too?

> More and more consumers are using more data than voice or SMS on their mobile devices. The always-connected smartphones and tablets have certainly made the mobile multimedia experience dream come true, enabling many work and play PC-like activities to move from desktop to on-the-go, anytime and anywhere. This spells a shift in consumers’ choice towards greater smartphone and tablet adoption. As the technology improves and new compelling mobile applications fi nd their way to smartphones, the take-up rate of these smart devices will undoubtedly go up.

Besides the impending launch of our LTE network, which will offer quality, faster and more seamless data connectivity, the rollout of the NFC ecosystem will offer consumers yet more reasons to take up NFC-enabled phones to experience mobile commerce. In the end, it will be both infrastructural and behavioural advancements that drive the continued demand for smartphones and tablets.

What is the rationale behind giving higher subsidies for smartphones since they are already popular in their own right? How will the Company mitigate these higher subsidies?

> While smartphones are increasingly becoming the preferred choice in the mobile landscape, it is necessary to remain competitive as well as ensure that these handsets still remain affordable to the consumers, especially when faced with an uncertain economic outlook.

Handset subsidy costs for smartphones typically take four to fi ve months to recoup—iPhones take a bit longer at around six to seven months—but we look forward to offsetting these with revised data plans once the LTE network is up. This is targeted to take place in 2H2012.

The LTE services will allow us to monetise data usage by moving away from the current fi xed price data plans, which have limited growth potential, to a tiered pricing structure that allows users to choose their plans based on data usage type and quantity.

Love Tail was an award-winning marketing campaign. Can we have more details?

> We felt that it was time to revitalise the concept of Hubbing, which was introduced by StarHub in 2002, with the convergence of our mobile, pay TV and online platforms. Love Tail was meant to be a key part of StarHub’s new Life. HUB IT! brand campaign. Life. HUB IT! basically sets out to capture the feeling of consumers, and how StarHub aims to be the social catalyst to an exciting and seamless connected life.

We were proud to unveil Love Tail as a fi rst in the local advertising scene, thanks to the fact that it leveraged on multiple digital and social platforms to provide consumers with a truly interactive advertising experience. Moving forward, we hope to continue to fi nd new ways and means of reminding consumers of the exciting Hubbing nature offered by StarHub’s suite of services.

“Love Tail is a key part of StarHub’s

new Life. HUB IT! brand campaign. It leveraged on multiple digital and

social platforms to provide consumers with a truly interactive advertising

experience.”

Ng Long ShyangHead, Sales and Marketing

to catch their favourite TV content anytime, anywhere on smart tablets, phones and TVs—extending our reach beyond the home.

With over a decade of operating a pay TV service, StarHub has accumulated extensive experience in delivering not only a comprehensive range of pay TV content in the market, but also in ensuring that the overall customer experience continues to be excellent.



32

Kevin LimHead, Enterprise Business Group

The new Enterprise Business division groups old and new resources that will be focused exclusively on the enterprise segment. The nature of a Profi t & Loss unit will allow us to make the right decisions on resource allocation, solutions and business models and permit StarHub to penetrate deeper into a segment that is monopolised by a single provider.

Infrastructural investment for commercial premises, mainly via the Next Gen NBN, opens up new opportunities to service business customers, particularly in the SMB segment. And investments in new solutions and skills will complement the existing connectivity services to provide more integrated and complete solutions that customers are demanding.

What objectives does EBG have for 2012, and what strategies has it developed in order to achieve those objectives?

> We have quite an uphill climb ahead of us as we venture into new grounds against a well entrenched incumbent. We have grown our enterprise business in the past years and, with a focused and consolidated team,

Alex SiowHead, Enterprise Risk Management and Business Excellence

StarHub formed a new division in 2011—the EBG. What is the purpose of this new team?

> EBG was born out of a recognition that teams working on the enterprise market and seated in separate functional divisions would not allow StarHub to properly and effi ciently service the needs of our existing or new enterprise customers, be they corporations or SMBs. The enterprise market presents great growth opportunities for StarHub as companies invest to better equip themselves to be more competitive and effi cient in an increasingly connected world.

StarHub is the fi rst info-communication company in Singapore to be certifi ed for SS540: 2008 for Business Continuity Management (BCM). What made StarHub strive for this certifi cation?

> StarHub believes in providing the best and most reliable services to our customers. As such, we strive to be prepared for any crisis or disaster that may happen. Besides helping to increase our resilience to business disruption, the BCM certifi cation also helps to differentiate ourselves from our competitors and build our shareholders and customers’ confi dence in our services.

The project, which took slightly over a year to complete, has helped us identify gaps between our IT capabilities and the various Business Units’ system requirements. This enabled us to develop a 3–5 year plan to build up our IT systems’ capabilities to support the Business Units. We will also be beefi ng up our network infrastructure resiliency.

The products and services that StarHub provide are all essential to the daily lives of Singaporeans. Hence, it is important for us to be operational at all times. This is why we need a BCM plan to ensure continuity in our services and product offerings. Although companies cannot predict what may occur, every company can take active steps to rampart what could occur. StarHub is fortunate to have support in this area, as championed by our senior management.

new solutions and extended network coverage, we believe we can make even more progress in this segment. The company’s growth expectations for the division are high, and we are targeting to deliver stronger growth than we have this year.

The strategy to achieving these objectives is simple: FAST. In other words, we will be Focused and Agile, we will strive for Simplicity and earn the reputation of being a Trusted business solutions provider.

Infrastructure is core to our business but companies need more than just connectivity, and our goal is to provide a more comprehensive solution in a multitude of areas such as security, mobility and content management and delivery. We have been working on solutions to enhance the trusted connectivity that we provide today, be it in a fi xed or mobile environment. With the right focus and investment, we are confi dent that there will be an acceleration of our growth. There are several new areas that we have embarked on and, while there is no history to predict how well these areas may perform, it will not stop us from innovating and providing better solutions for our customers.



33

In the longer term, cross-carriage could discourage operators in Singapore from bidding aggressively for exclusive content, and encourage them to focus on areas such as customer experience, value-added services and technology.

On the telecoms front, Malaysia and Singapore successfully concluded discussions to reduce bilateral roaming rates. The reduced rates have been implemented since May 2011. Will we see more roaming rates reduction across other countries?

> Under this measure, Malaysia and Singapore mobile phone customers will see reductions in their retail roaming charges by up to 30% for voice calls and 50% for SMSes. We worked closely with IDA on the implementation of this measure.

In the near term, we see minimal impact in net roaming revenues from Malaysia, as the wholesale inter-operator charges are being reduced in parallel. In the longer term, this change in rates may encourage more of our customers to roam in Malaysia. We will work closely with IDA on this and any other roaming initiatives they may have.

The local regulatory environment has changed over the last few years and recently, there was the implementation of the cross-carriage regime of exclusive carriage agreements. How has this affected StarHub?

> Under the new cross-carriage regime, new content agreements signed by StarHub exclusively must be made available to customers on other operator’s networks, and vice versa. The regime applies on a forward-looking basis to new exclusive content agreements, and should not have a signifi cant impact on StarHub in the near term.

Tim Goodchild Head, Government & Strategic Affairs

Jeannie OngHead, Corporate Communications and Investor Relations

Diana LeeHead, Customer Service

Veronica LaiHead, Legal & SecretariatCompany Secretary

Chan Hoi SanHead, Human Resource

Mock Pak LumHead, Network Engineering and Information Services



34

Senior Management

Neil Montefi ore CEO(Neil’s profi le can be found on page 23 of this report.)

Tan Tong HaiCOOTong Hai oversees the day-to-day operations and has direct responsibility of StarHub’s Sales & Marketing, Products & Solutions, Enterprise Business, Customer Service, Network Engineering & Information Services, Wholesale & International Services and Government & Strategic Affairs divisions.

Tong Hai has over 20 years of experience in the regional IT, Internet and e-commerce industries. He was previously the President & CEO of Singapore Computer Systems Ltd, and the President & CEO of Pacifi c Internet Ltd. He was instrumental in turning both companies around when he was at their helms.

Tong Hai holds a Bachelor of Electrical Engineering (Honours) from the National University of Singapore.

Kwek Buck ChyeCFOBuck Chye has been the Chief Financial Offi cer since September 2002. In addition to his fi nancial portfolio, he also oversees the Risk Management, Corporate Administration, Business Performance and Purchasing & Logistics divisions. He received the prestigious Singapore Corporate Award for Best CFO in 2008.

Prior to joining StarHub, Buck Chye was CFO of ST Telemedia. He joined the ST Group in 1992 and held the CFO position in various subsidiaries, including Chartered Semiconductor

Manufacturing Ltd and ST Assembly Test Services Pte Ltd (now known as STATS ChipPAC Ltd.). He was also COO of Vickers Ballas & Co. Before joining the ST group, Buck Chye spent 10 years at United Technologies group—Carrier (Asia Pacifi c Operations) where he had regional responsibilities.

Buck Chye holds a Bachelor of Accountancy from the former University of Singapore. He also attended the Advanced Management Program at Harvard Business School in 1997.

Chan Kin HungHead, Products & Solutions Kin Hung is responsible for the strategic planning, development and management of all consumer products, services and content that are provided on StarHub’s multiple platforms. These offerings include mobile, pay TV and broadband services. He is also in charge of customer lifecycle management and business planning and analysis.

Kin Hung joined StarHub as Head of Mobile Services in 2001, bringing with him more than 15 years of product development, marketing, sales and general management experience. Kin Hung started his career in Digital Equipment Corporation and Apple Computer International Limited. He also spent several years in Singapore holding various senior positions in the telecommunications industry. Prior to joining StarHub, Kin Hung was the Managing Director of UUNET Singapore Pte Ltd.

Kin Hung holds a Master in Electrical Engineering from the University of Michigan, Ann Arbor, as well as a Master in Business Administration from the Chinese University of Hong Kong.

Ng Long ShyangHead, Sales & Marketing Long Shyang heads the Sales & Marketing division. In addition to taking care of consumer sales and marketing for StarHub, he is responsible for managing StarHub’s distribution channels as well as mobile device merchandising. Within Marketing, Long Shyang also oversees brand management and marketing communications.

Long Shyang brings with him over 20 years of diverse working experience in the wireless communications and consumer electronics industry, having held key positions at Samsung Asia Pte Ltd and Motorola Electronics Pte Ltd. He was with Texas Instruments Singapore Pte Ltd from 1987 to 1999.

Long Shyang graduated with a Bachelor of Science from the National University of Singapore.

Mock Pak Lum Head, Network Engineering and Information Services Pak Lum oversees the Network Engineering and Information Services division. He is responsible for establishing StarHub’s technical vision and leading all aspects of technology development. He also looks into the strategy for technology platforms and external partnerships.

Prior to joining StarHub, Pak Lum spent eight years in Pico Art International Pte Ltd and GT Communications Pte Ltd. He then moved to head 1-Net Singapore Pte Ltd. He was also appointed the CEO of the technology arm of MediaCorp Pte Ltd where he oversaw the IT, engineering and transmission support functions.

Pak Lum holds a Bachelor of Electrical/Electronic Engineering from the National University of Singapore and a Master in Business Administration from the University of California, USA.

Alex SiowHead, Enterprise Risk Management and Business Excellence Alex leads the Enterprise Risk Management and Business Excellence division, where he is responsible for

SENIORMANAGEMENT


35

Senior Management

StarHub’s strategic and business risk management and disaster preparedness. Alex also steers the business excellence function which looks into business process improvements, process quality and corporate security management.

Alex was nominated as one of the top 10 most powerful IT personalities in Singapore by Computerworld Singapore in 1995, and IT Person of the Year 2002 by the Singapore Computer Society. He was conferred the Public Administration Medal Silver award in 2000 and the Bronze award in 1993.

Alex holds a Bachelor of Engineering (Civil) from Stuttgart Institute of Technology, Germany and a Master of Science (Distinction), with a major in Engineering from University of Birmingham, UK, and attended the Senior Management Programme of INSEAD, Fontainebleau, France in 1991.

Diana LeeHead, Customer ServiceDiana heads the Customer Service team and is responsible for all customer support activities including the 24-hour call centre, customer service centres and online self-help service. Under her leadership, StarHub’s Customer Service practices and standards have won wide recognition at the Annual Call Centre Awards by the Call Centre Council of Singapore.

Prior to her role in heading the Customer Service team, Diana was the Senior Manager of Human Resource in SCV.

Diana has a Graduate Diploma in Financial Management from the Singapore Institute of Management and is a Customer Operations Performance Centre (COPC) Certifi ed Six Sigma High Performance Management Techniques Specialist.

Jeannie OngHead, Corporate Communications and Investor Relations Jeannie is responsible for building StarHub’s profi le and its corporate reputation. She is instrumental in providing strategic counsel in the areas

of corporate communications, corporate positioning, investor relations (IR) and community relations. Jeannie received the Best IR Offi cer in Singapore award twice by Asiamoney magazine in its annual Asiamoney Corporate Governance Poll in 2007 and 2010. She and her team clinched the Best IR award (Gold) at the Singapore Corporate Awards 2010, as well as Best IR award (Bronze) and Best IR award (Silver) at the same awards in 2009 and 2008 respectively. They also won the Gold award for IR in Telecom in Singapore at the Triple A Asset Asian Awards 2009.

Jeannie joined StarHub in April 2001 and was involved in bringing the company public in October 2004. She has more than 19 years of experience in corporate, fi nancial, marketing and community communications across different industries. She fi rst commenced her career with the Civil Aviation Authority of Singapore.

Jeannie holds an honours degree from the University of London, UK with majors in Economics and Financial Management.

Chan Hoi SanHead, Human Resource Hoi San is responsible for the overall direction of all human resource (HR) services in StarHub. She is also responsible for formulating, developing and ensuring consistent implementation of StarHub’s strategic HR policies and procedures. Hoi San has been credited for building a strong groundwork in StarHub’s HR division. She also played an integral part in the merger of StarHub and SCV by aligning and integrating the various business functions and resources, HR policies and procedures.

Hoi San holds a Master in Human Resource Management from Rutgers University, USA and a Bachelor of Arts from Scripps College, The Claremont Group for Colleges, USA. She also holds a graduate diploma in Personnel Management and is an Accredited Myers-Briggs Type Indicator Assessor, as well as a Certifi ed Evaluator of the Thomas (DISC) Personal Profi le System.

Veronica LaiHead, Legal & SecretariatCompany Secretary Veronica embarked on her career with StarHub in 1999, as part of the team establishing the legal structure to support StarHub in its offi cial launch in April 2000 and thereafter in the merger of StarHub and SCV in 2002, and StarHub’s IPO in 2004. Her responsibilities include the management of the Legal department of the StarHub Group. In addition, she serves as Company Secretary for the StarHub Group.

Under her leadership, the StarHub Legal team was recognised with various awards, including the Best Domestic Equity Deal in Singapore and Best Deal for Singapore in 2005 for their role in the StarHub IPO by Asia Legal Business, and the IT/Telco In-house Team of the Year Award in 2007 at the ALB Southeast Asia Law Awards. Veronica received the 2007 AsiaLaw Singapore In-house Counsel Award by Asia Law and Practice, and was named by Asia Legal Business as one of the Top 25 in-house counsels in Asia in 2010.

Prior to joining StarHub, she spent six years in practice with Rajah and Tann LLP.

Veronica holds a Bachelor of Laws (Honours) from the National University of Singapore.

Tim GoodchildHead, Government and Strategic Affairs Tim is responsible for managing StarHub’s relationships with its regulators, and for providing regulatory support to StarHub’s lines of business.

Tim joined StarHub in 2004, and has over 20 years experience in telecommunications regulatory issues. His working career has included time with Telecom New Zealand, the Telecommunications Authority of Singapore (now the IDA), Millicom International Cellular S.A. and Equant (Singapore) Pte Ltd. His career has given him exposure to regulatory regimes throughout the Asia-Pacifi c region.

Tim holds a Bachelor of Economics (Honours) from Victoria University of Wellington, New Zealand.


36


37

Fixed Network

Mobile53%

15%

Broadband 10%

Sale of Equipment

6%

Pay TV

16%

StarHub47%

Others 53%

Voice

Data & Internet

83%

17%

Hubbing at a Glance

$2.3b+3%

$242m

2%

$337m

2%

RESIDENTIAL BROADBAND REVENUE MIX

TOTAL REVENUE REVENUE MIX

BROADBAND FIXED NETWORK

BROADBAND SERVICE REVENUE

YoY REVENUE GROWTH

FIXED NETWORKSERVICES REVENUE

YoY REVENUE GROWTH

Digital100%

Pre-paid

Post-paid

80%

20%

Hubbing at a Glance

The Group’s operating revenue was 3% higher year-on-year at $2.3 billion. EBITDA came in at $676 million due to improved revenue performance and costs management. In 2011, EBITDA margin averaged higher at 31.1% compared to a year ago. NPAT increased 20% to $316 million against the same period last year.

Service revenue for the full year increased 1% with Mobile, Broadband and Fixed Network services contributing to the increase. Mobile revenue grew 3%, while Broadband and Fixed Network services grew 2%.

$1.2b

3%

$376m

-5%

REVENUE MIX CUSTOMER MIX

TOTAL MOBILE SERVICE REVENUE

YoY REVENUE GROWTH

MOBILE PAY TV

PAY TVSERVICE REVENUE

YoY REVENUE GROWTH

THEGROUPTODAY


38

The Nucleus Connect Conversation

Nucleus Connect (NC) is a wholly-owned subsidiary of StarHub. NC was appointed by IDA in 2009 to design, build and operate the active infrastructure of the Next Gen NBN, which it launched commercially in August 2010. In that year, NC launched its two central offi ces which housed highly advanced optical network equipment that will empower the new network based on Gigabit Passive Optical Network (GPON) and Optical Ethernet (OE) access technologies. These offi ces also house a state-of-the-art OSS/BSS system that will function as the heartbeat of the Next Gen NBN.

David Storrie was appointed by StarHub in 2009 to be the Chief Executive Offi cer of NC. He was named as one of 2010’s 100 most powerful people in the telecoms industry worldwide by Global Telecoms Business.

The progress of the Next Gen NBN implementation has been beset by many delays. What have been the chief causes of these delays?

> As with any new network infrastructure rollout, it is no exception that the Next Gen NBN project has experienced trials and tribulations in the initial days of the rollout. The multi-layer industry structure has increased the amount of operational interaction between several different entities, thus introducing signifi cant complexity in the overall service delivery process.

THENUCLEUSCONNECTCONVERSATION


39

The Nucleus Connect Conversation

In addition, network rollout challenges and service delivery delays at the NetCo level have added to the confusion and unhappiness of end users. Initial challenges faced in getting access to homes and commercial buildings have impacted the extent of Next Gen NBN coverage. Even as coverage improved, service delivery delays, ineffi cient operational processes and insuffi cient capacity in the NetCo layer still contributed to signifi cant customer unhappiness, particularly in the non-residential market.

However, there has been signifi cant interest and end-user demand for the ultra high-speed services offered by the Next Gen NBN, and we remain committed to improving the overall service delivery experience, and to provide a vibrant playing fi eld for our Retail Service Providers (RSPs).

What has been done to overcome these delays, both for residential and commercial sites? For instance, how have you convinced more RSPs to sign up?

> We have been working very closely with the NetCo to identify solutions to each of the impediments that are being experienced. Continuous engagement on capacity planning led to the NetCo introducing additional volume handling capacity, to deal with spikes that are normally experienced during trade shows. Closer engagement with building managers has helped to clear bottlenecks that are being faced by the NetCo in rolling the network out to commercial buildings.

The RSPs are generally supportive of the Next Gen NBN and understand the benefi ts it brings. They also understand the challenges that the new network is facing. When the service is eventually up and running for an end user, the service experience is generally positive and customers are happy with the speeds they are receiving. That has helped to maintain RSP interest and encourage more RSPs to sign up.

Based on reports, the Next Gen NBN is reaching 95% nationwide coverage by mid-2012. As of December 2011, the Next Gen NBN has reached 80% nationwide deployment. More than 900,000 homes have been passed, and end-users can now subscribe to a variety of fi bre-based broadband plans or cloud-based value-added services from all the key service providers in Singapore.

Are there any expansion plans for NC in 2012? If so, what are they?

> 2012 will be a busy and, hopefully, fruitful year for us. With the new network reaching 95% by mid-2012, RSPs will have almost full coverage of Singapore and be able to aggressively engage the market with Next Gen NBN-enabled services. We plan to work closely with our RSPs on both driving end-user adoption and implementing service and feature enhancements, in terms of devices as well as feature sets to help them add to their service offerings.

What would NC’s focus be prior to and after the rollout of the new network?

> Prior to the complete rollout of the new network, the priority will be to build the elements of the active infrastructure, while understanding and provisioning the RSPs’ bandwidth and network requirements. Now that we have successfully launched our central offi ces and the active infrastructure is in operation, our focus has been on customising our offerings to meet our RSPs service requirements, managing the bandwidth and driving end-user adoption of the Next Gen NBN.

What do you hope to achieve for NC in 2012?

> NC was honoured, as part of the Singapore Next Gen NBN, to receive the “Most Innovative Telecom Project” award at Telecom Asia Awards 2011. The same year also marked the signing of our 17th RSP.

It is our aim to build on these endorsements from the telecommunications industry to further establish NC’s leadership and commitment to the industry players in 2012.

While we are expecting a swift resolution of NetCo’s service delay, capacity and operational issues—so that we can subsequently provision for RSPs and create a higher standard of a vibrant playing fi eld—we will be implementing service and feature enhancements to the active infrastructure to support RSPs as they scale their offerings to meet growing demand.

“Nucleus Connect received the ‘Most

Innovative Telecom Project’ award at Telecom Asia Awards 2011. The same year also marked the

signing of our 17th RSP.”

David StorrieChief Executive Offi cer,

Nucleus Connect


40

EVEN

Hubbing is all about communication and communication is all about sharing via our spread of new mobile plans.

Enhanced Hubbing in ReviewPersonal Solutions

MORE

=PHONE + TV + INTERNET


41


More models, more plans, more partnershipsSingapore’s mobile penetration rate, one of the highest in the world, was about 150% as of end 2011. Complementing that statistic was the fact that StarHub launched 60 new handsets, many of which were unsurprisingly smartphones, and 16 new tablets from leading manufacturers.

While smartphones from major manufacturers like HTC, Samsung and Sony Ericsson were warmly received, the hottest item launched was the iPhone 4S.

In addition to the plethora of handset and tablet models, StarHub also launched a spread of new mobile plans, catering to locals travelling overseas, tourists on holiday here and the families of StarHub customers, amongst others.

Mobile entertainment reached sizzling new heights with the FooD.I.Y. application for iOS devices and the Facebook® Mobile Application, giving StarHub customers more to do, see and play with on the move. Then, with the SmartSurf SharePlus plans, family members had the fl exibility to save even more by sharing their bundled airtime, data and SMSes with each other.

One major coup of the year was unquestionably StarHub forming a strategic and exclusive partnership with mobile communications giant Vodafone, to bring even more world-class mobile services to enterprise customers in Singapore, as well as a more enhanced roaming experience abroad with StarHub.

Bright applesIn the middle of 2011, StarHub and Foresight Technologies launched the innovative “SOLO”, an entry-level, affordable feature mobile phone that was tailor-made for military personnel here. The SOLO’s most unique feature is its solar charging battery that backs up its lithium battery to further extend the usefulness of the phone in outdoor locations.

“ONE MAJOR COUP WAS STARHUB FORMING A STRATEGIC AND EXCLUSIVE PARTNERSHIP WITH MOBILE COMMUNICATIONS GIANT VODAFONE.”

MOBILE CUSTOMER BASE ’000

2,192

2,145

11

10

MOBILE REVENUE $ million

1,218

1,181

11

10


42

While StarHub saw many more tablets enter the market, such as Samsung’s Galaxy Tab and Acer’s Iconia Tab A101, the tablet to beat was the iPad 2. iPad 2 came in a thinner, lighter and faster package than the original iPad, and maintained the same battery life span as the original model, thus eclipsing the other tablets.

Despite not seeing the much-anticipated iPhone 5’s launch, consumers the world over still snapped up the iPhone 4S, the popularity of which the industry attributed to the passing of Apple CEO Steve Jobs. It was therefore no surprise that stocks fl ew off the shelves and new orders had to be placed.

New plans and packagesIn March, StarHub launched Roam Manager, Singapore’s fi rst set of tools that provided mobile roaming customers with pertinent roaming related information and a data usage cost notifi cation feature. These allowed customers to manage their data cost and gave them greater peace-of-mind data roaming in more than 230 destinations around the world. We also introduced four new packages for affordable mobile data access abroad.

Roam Manager provides roaming related information and data usage cost notifi cations at customers’ fi ngertips. Coupled with our comprehensive roaming solutions, StarHub customers will be able to keep in touch with their friends and families while overseas, and at the same time be aware of their roaming usage and avoid incurring unexpected mobile roaming charges.

StarHub Mobile pre-paid customers travelling to Malaysia enjoyed even greater perks, as we introduced mobile rates for them that are almost like those for a local mobile pre-paid user in Malaysia. This resulted from a special six-month agreement between StarHub and Malaysian mobile service provider U Mobile, to encourage roaming between the two countries.

Meanwhile, visitors to Singapore were given yet another aspect of Singapore to make their trip more memorable: our StarHub Preferred Tourist Prepaid Card, which was jointly launched with the Singapore Tourism Board.

For just $15, tourists get to enjoy goodies such as free data access to the Singapore Tourism Board’s YourSingapore Guide mobile application, an additional 30MB of local data access free for their Internet surfi ng needs, free IDD 018 Calls to 18 destinations to call back home, 20 free local SMSes, and Per-Second Billing, amongst others.

Hubbing is all about communication and communication is all about sharing. StarHub gave families even more to share in September with SmartSurf SharePlus plans, Singapore’s fi rst mobile post-paid plan that offers customers the option of sharing bundled data, airtime, and SMSes with their loved ones, giving their families greater savings and fl exibility.

The SmartSurf SharePlus mobile plan, available to StarHub Mobile customers who have SmartSurf 300 and SmartSurf 700 as the main plan, offers up to two SmartSurf SharePlus line users attractive features available on the SmartSurf main plan, including Per-Second Billing, All Day Free Incoming Call, Free Local Missed Call Alerts, Free Voicemail, and more. They also receive an additional 1,000 free SMSes on a monthly basis, and have the option to convert bundled SMS to MMS.

Finally, given the proliferation of tablets and smartphones, more StarHub customers are using two or more mobile devices to make calls, surf the Internet and use mobile applications simultaneously.

That is why StarHub specially designed the i2Surf mobile plan, to meet their unique lifestyle needs. i2Surf comes bundled with a free multi-SIM, and offers customers who own two of such devices instant voice and data accessibility. We launched three i2Surf mobile plans—i2Surf 100, i2Surf 300 and i2Surf 700—to suit the various lifestyles of our IT-savvy consumers.

More apps to whet consumers’ appetitesStarHub was the fi rst mobile operator in Singapore to offer our customers another way to stay connected: with a new Facebook® mobile application for Java-powered feature phones.

The new “Facebook® for Feature Phones” service, which provides a better experience for feature phones than other similar applications and mobile sites, is free for all StarHub’s Mobile pre-paid Happy Stars users and they will incur no data access charges when they use the application locally.

With 30 days of free incoming calls, 500 free SMSes, 120 minutes of local outgoing calls and 50MB of local mobile data access at just $17 per top-up, Happy Stars customers get the best value for staying connected anywhere, anytime.


SmartSurf SharePlus plan is Singapore’s fi rst post-paid plan that offers sharing of bundled data, airtime and SMSes with loved ones.


43

In July, StarHub unveiled FooD.I.Y, a free application available on iPad, iPhone and iPod Touch devices. This unique application serves up a library of recipes from well-known international chefs on StarHub TV’s food channels and a well-known local culinary school in both text and demonstrative video formats. Because FooD.I.Y is an application, this is more than a recipe book; it is also a how-to-be-a-chef guide enhanced with customised user-friendly functions adapted for Singapore.

This initiative, presented under StarHub’s experiential food and lifestyle platform Hubalicious, is the fi rst locally-produced application to integrate an extensive database of recipes from popular chefs and TV hosts. The content is derived from StarHub’s popular food channels such as BBC Lifestyle, Food Network Asia and TLC, as well as Palate Sensations culinary studio. The unique selling point is with the added functionality for local users on a single interface.

Besides a wide selection of recipes from celebrity chefs such as Bobby Chinn, Bobby Flay, Jamie Oliver, Paula Deen, Rachel Allen, Rachael Ray and more, FooD.I.Y also offers these helpful features:• Selected video tutorials• Detailed ingredients and tools glossary• Easy-to-navigate search tool• Handy shopping list• Conversion chart• Promotions• My favourites, where users can add recipes to a list

of favourites for easy reference• Share, which enables users to share their favourite

recipes via email and Facebook®

Proud partnerships for greater reachPerhaps one of our proudest moments on the mobile landscape was our signing of an exclusive partnership with global mobile communications giant Vodafone.

StarHub was already a member of Conexus Mobile Alliance (Conexus), one of Asia’s largest mobile alliances with presence in 10 countries/regions, but the partnership with Vodafone, which has equity interests in over 30 countries and more than 40 partner networks worldwide, allows StarHub to offer fi rst-class, innovative mobile services to enterprises in Singapore with unique Vodafone Global Enterprise services.

Catering to the growing demand for data roaming on smartphone and mobile broadband, this strategic partnership meant that corporate and retail customers can look forward to more innovative services and packages as well as further enhanced roaming experience abroad with StarHub.

Beyond the benefi ts to enterprise customers, StarHub mobile customers will benefi t from the extensive global mobile networks of Vodafone and Conexus, for seamless and world-class roaming services wherever they go in the world.


SIGNIFICANT ACHIEVEMENTS

JAN

First mobile operator in Singapore to offer customers another way to stay connected with a new Facebook® mobile application

Y

MAR

Launched Roam Manager—Singapore’s fi rst set of tools that

provides mobile roaming customers with pertinent roaming related

information and data usage cost notifi cation feature

AUG

Agreement between StarHub and Malaysian mobile service provider U Mobile offers low rates to encourage roaming between the two countries

SEP

Partnered Vodafone to bring world-class mobile services to enterprises in Singapore

Introduced Singapore’s fi rst mobile post-paid plan that offers

the sharing of bundled data, airtime, and SMSes for customers

OCT

DBS, EZ-Link and StarHub announced that they will roll out

Near Field Communication mobile services in 2012


44

The resiliency of our Pay TV business can be credited to our beefi ng up of our content—from sports to entertainment to news.

TV + INTERNET + PHONE

MORE

=

EVEN

Enhanced Hubbing in ReviewHome Solutions


45

Still on a winning streakStarHub’s Pay TV customer base defi ed the odds by growing 1%, despite the loss of the right to screen the BPL and the marginal rate revision of our residential Pay TV monthly subscription.

In 2011, the resiliency of our Pay TV can be credited to our beefi ng up of our content, not just in the sports arena but in terms of Asian entertainment and lifestyle content as well. We also focused on delivering an enhanced experience for our customers by adding more High Defi nition (HD) channels and Subscription On Demand (SVOD) channels to give our customers fl exibility and control. To further beef up our anytime TV proposition, we acquired on-demand movies from an additional four studios to complete our Hollywood on-demand library.

In all, we launched 24 new channels on our Pay TV platform, 10 of them in HD. We currently carry 179 channels over our cable TV platform: nine free-to-air, 10 Video On Demand, 23 HD and 137 Standard Defi nition.

Acknowledging the need for security in an increasingly connected world, StarHub was proud to announce Singapore’s fi rst network-based mobile Internet content fi ltering service. We have been offering it free to all customers till June 2012 and also proffered the use of our new Internet security service to all Singaporean families for free for a period of one year.

StarHub’s Hubbing strategy is set to continue to serve us well. We aim to continue strengthening our Pay TV and residential broadband business and have begun doing so with an emphatic clinching of UEFA Euro 2012™. Our emphasis on quality content and smart home solutions will ensure that StarHub customers stay with us for the long term.

Scoring new sports contentEarly in 2011, StarHub secured the broadcast rights to the Italian Serie A, the premier Italian league, for the

“WE CONTINUE TO STRENGTHEN OUR PAY TV BUSINESS AND HAVE BEGUN DOING SO WITH AN EMPHATIC CLINCHING OF UEFA EURO 2012™.”


PAY TV CUSTOMER BASE ’000

545

538

11

10

PAY TV REVENUE $ million

376

395

11

10

BROADBAND CUSTOMER BASE ’000

440

422

11

10

BROADBAND REVENUE $ million

242

236

11

10


46

We launched 24 new channels on our pay TV platform, 10 of them in HD.

2010/11 and 2011/12 seasons. With the addition of Italian Serie A, StarHub TV now offers football fans three out of the top four European leagues ranked according to the UEFA Coeffi cient: Spanish La Liga, Italian Serie A and German Bundesliga.

While the BPL may enjoy widespread popularity, the high quality of football on the pitch in both the La Liga and Italian Serie A has been acknowledged by 50,000 professional players, managers and journalists the world over. Of the 55 players on FIFA FIFPro’s 2011 World XI Award, 22 players feature from Spain’s Primera Division, while only 18 hail from the BPL.

StarHub TV Sports Group customers will be able to watch a total of 118 “live” Italian Serie A matches for the current season with up to six matches weekly “live” and in three HD channels. StarHub TV Sports Group customers who are StarHub Mobile post-paid and home broadband customers can also catch AC Milan’s Zlatan Ibrahimovic, Juventus’ Andrea Pirlo and famous goalkeeper Gianluigi Buffon via StarHub TV on Mobile.

Remembering the need to appreciate, acknowledge and support homegrown talent, StarHub was Great Eastern-YEO’s S-League’s broadcast partner for 2011. Even non-StarHub TV customers were able to catch the “live” broadcasted matches without a StarHub TV set-top box. In addition, a weekly magazine show—with highlights of S-League action from the previous week’s matches—was featured on StarHub TV’s SuperSports Arena, a complimentary channel for all StarHub TV Sports Group customers.

To further revitalise and rally support for local talent, StarHub was appointed the Offi cial Broadcaster and Principal Sponsor of LionsXII, giving Singaporeans a chance to follow all the LionsXII matches on our Pay TV, Online and Mobile platforms. These matches will also be shown for free on SuperSports Arena and non-StarHub TV customers will still be able to follow the action by tuning their television sets to frequency 76.25MHz.

In the fi eld of football, however, StarHub’s feather in the cap had to be the acquisition of exclusive broadcast rights to the much-anticipated UEFA Euro 2012™. UEFA Euro 2012™, jointly hosted by Poland and Ukraine, will run from 8 June till 2 July 2012.

Two other key sporting events that StarHub was excited to announce were the French Open Finals, or more commonly known as the Roland Garros French Open, and the 2011 Copa America. Telecasting the French Open Finals in 3D was a milestone for StarHub. StarHub TV Sports Group customers with a 3D TV set were able to catch the French Open Men’s and Women’s Singles Finals “live” in 3D. Meanwhile, the Copa America tournament, which is likened to be the UEFA Euro of South America, made its return to StarHub TV in July 2011.

StarHub also won the broadcast rights to various rugby events, including Six Nations Championships, Tri Nations and Super Rugby, otherwise known as Super 15. The rights were acquired from international sports broadcaster, Setanta Sports, and broadcasted over a dedicated Rugby Channel.

The Six Nations Championship, held yearly in the northern hemisphere for over a decade, involves European nations England, France, Ireland, Italy, Scotland and Wales. Meanwhile, the Tri Nations is contested annually by the Australian Wallabies, New Zealand All Blacks and South African Springboks. Super Rugby is the largest rugby union competition to be held in the southern hemisphere annually, and it comprises 15 teams from Australia, New Zealand and South Africa.

In addition to a dedicated channel for rugby fans, we also have other dedicated sports channels like basketball and racquet games. NBA TV brings live NBA and WNBA regular



47

MAY

For the fi rst time ever, Singapore viewers were able to catch the French

Open Finals in 3D on StarHub TV

JUN

Announced the revision of our residential Pay TV monthly

subscription by an additional $2 with effect from 1 August 2011

AUG

Launched Singapore’s fi rst interactive commercial —

Love Tail

NOV

Acquired the exclusive broadcast rights to the much-anticipated

UEFA Euro 2012™

SIGNIFICANT ACHIEVEMENTS


season and playoff games, real-time statistics, scores, breaking news, game highlights and Classic games to basketball fans. While the Racquet Channel comprises racquet sports programming including tennis, badminton, table tennis and squash events. The dedicated sports channels are in line with StarHub’s intent to offer customers more simplicity and greater ease in accessing their favourite content.

Eyes to the EastStarHub TV’s Asian lineup blossomed in 2011 with a whole host of Chinese and Korean content. We revamped our homegrown Chinese entertainment channel, E City, with top-rated prime-time soap dramas, Korean variety and a shorter telecast window for its staple of leading Taiwanese variety shows.

Our TVB fans were treated to more exciting programmes on VV Drama and TVBJ, which boosted their primetime programming. For instance, VV Drama extended its Taiwanese soap drama time belt on weekdays, while TVBJ introduced a simul-telecast of a fi rst-run TVB drama with VV Drama on weekday prime-time slots. Meanwhile, fans of the increasingly popular K-Pop culture and soap dramas saw a huge growth of content for them with the launch of fi ve new Korean channels: KMTV Channel, ONE, ONE HD, tvN and tvN HD.

ONE is a 24-hour channel that showcases fi rst-run and exclusive SBS (Seoul Broadcasting System) dramas as recent as three to fi ve weeks from the premiere in Korea, variety shows with top Korean celebrities, and popular Korean concerts and music shows. ONE HD is a simulcast of ONE in HD. ONE (Malay), a mirror service of ONE, was launched to cater to the growing interest in Korean content amongst the young Malay community, ONE (Malay) will

“Consumers had the chance to interact on

multiple platforms to help Sparky, our Jack Russell terrier, in Singapore’s fi rst

interactive commercial – Love Tail.”


48

offer viewers subtitles in Bahasa Melayu for all programmes, with dual sound in Korean and Bahasa Melayu available for selected shows.

KMTV Channel is a 24-hour Korean channel offering an array of high-quality programming with a focus on music and live performances, variety shows and idol dramas. The channel also features music series, awards shows and idol reality shows.

Korean enthusiasts were also able to catch tvN, the number one Korean entertainment channel in Asia, and especially enjoyed the channel’s broadcast of the 2011 Mnet Asian Music Awards (MAMA) LIVE, Asia’s biggest music awards show. Singapore was the second overseas country outside of South Korea to present the major music awards show, and StarHub subscribers were treated to 2011 MAMA’s fantastic showcase of talented and popular artistes from South Korea and its spectacular pyrotechnics in full HD glory on the tvN HD channel.

StarHub, in partnership with FOX International Channels (FIC), also announced a new STAR Chinese Movies (SCM) Pack, which featured three additional channels: STAR Chinese Movies HD, STAR Chinese Movies On Demand, and STAR Chinese Movies 2 On Demand. SCM viewers get to enjoy widely acclaimed blockbuster hits and some of the best Chinese movies from the 1970s to 1990s.

More news, more entertainmentFor the PMEBs wanting to keep abreast of the latest news and developments in the region, particularly China, Hong Kong and Indonesia, StarHub launched three news channels: Shen Zhou News Channel, TVB News Channel On Demand and MNC Business.

The Shen Zhou News Channel presents primetime news from 10 leading provincial channels in China, namely Anhui, Beijing, Chongqing, Hubei, Jiangsu, Liaoning, Shanghai, Shanxi, Tianjin and Zhejiang. StarHub TV Chinese Add-on Group viewers can keep up with the latest happenings in China and tune in to up-to-date reports and special news reporting from the various provinces.

TVB News Channel On Demand offers daily updates from Hong Kong in the original Cantonese language. Our consumers can tune in to the latest news from Hong Kong and around the world. They will also be able to catch in-depth expert analyses on social, economic and political issues in Hong Kong.

The new MNC Business is a 24-hour channel that offers the latest business and fi nancial news and in-depth reports on various economic issues in Bahasa Indonesia. The channel caters specially to the Indonesian and Singapore business communities. Viewers can learn more about the business climate and investment opportunities in Indonesia through up-to-date reports and news features.

Other new channels that StarHub TV introduced in 2011 include Syfy HD, Universal Channel HD, MTVN HD, FOX Family Movies HD, Nick Jr and three channels under the new iConcerts Pack.

Universal Channel, the fl agship channel of Universal Networks International UNI, delivers the world’s favourite and most talked-about shows with great characters, while science fi ction and fantasy channel, Syfy HD is the destination for HD-quality imagination-based entertainment.

A winning number in StarHub Pay TV’s stable would be MTVN HD, the world’s fi rst global music channel to be shown in full HD glory. Viewers can expect to watch recorded live performances and concerts, music documentaries and original production in quality HD.

Preschool viewers in Singapore were the fi rst in Asia to catch Nick Jr on StarHub TV. This channel aims to engage this demographic with thoughtfully produced and developed programmes that help promote their social and thinking skills.

Launched in December, the iConcerts Pack gives concert buffs a convenient and extremely affordable way to catch their favourite acts over three new channels: iConcerts, iConcerts HD and iConcerts On Demand. With over 200 concerts and music programmes lined up every month, iConcerts will feature one of the world’s largest libraries of music concerts and programmes.

Two notable highlights were the rebranding of StarHub’s Demand TV as On Demand, and a multi-year renewal deal between StarHub and FIC.

News of Demand TV’s rebranding came with the addition of three new studios, giving customers access to the widest range of blockbusters and Hollywood’s newest titles. The three new studios that were introduced were Universal Studios, 20th Century Fox and Walt Disney Studios, which joined Paramount Pictures and SONY Pictures in StarHub’s offerings.

“NOTABLE HIGHLIGHTS THIS YEAR INCLUDED THE MULTI-YEAR RENEWAL DEAL BETWEEN STARHUB AND FIC.”



49

With the renewal deal, FIC also launched two more channels in HD format: FOX Family Movies HD and tvN HD.

Finally, in a tie-up by StarHub and Rediffusion to enhance their reach to the increasing senior population in Singapore, StarHub launched RediGold—Rediffusion’s top radio station. This was a landmark event in Singapore, as RediGold was the fi rst subscription radio station to have been made available on a subscription TV platform.

More security for the InternetThe Internet is becoming even more prevalent in society and the need to safeguard against malicious software and unsuitable websites for the young has increased dramatically. This also included Internet access via their mobile devices.

Recognising this need, StarHub launched SafeSurf on Mobile, Singapore’s fi rst network-based mobile Internet content fi ltering service. This enables parents to block undesirable categories of content as well as specifi c websites on the mobile phone used by the child.

With SafeSurf Online, a network-based Internet content fi ltering for all computers connected to a home network, parents can get peace of mind knowing that their children at home will have a tamper-proof, “clean” surfi ng experience.

Rounding off the suite is SafeShield, StarHub’s new Internet security service. This provides the whole family with a whole host of features to protect personal computers against viruses, spyware, spam, phishing attacks as well as unsafe websites.

More hubbing, more contact, more loveConsumers had a chance to be a part of Singapore’s fi rst interactive commercial when StarHub released Love Tail, a marketing campaign that allowed consumers to interact with it on multiple platforms.

Cementing our position as Singapore’s most innovative info-communications company, StarHub’s Love Tail had viewers to watch and help Sparky—Singapore’s most famous and much-loved Jack Russell terrier—fi nd and win his dream girl.

Using Facebook® or a free Hub It! app from StarHub for iPhones and Android phones, viewers obtained clues and hints on how to use the Hub It! app to interact with characters and scenes in the TV commercial. Through these interactions, they played games, unlocked maps and help fi nd Sparky’s canine love and won prizes.

SafeSurf Online gives parents peace of mind knowing their kids have a tamper-proof, “clean” surfi ng experience.


“For the PMEBs wanting to keep

abreast of the latest news and developments in the region, StarHub

launched three new channels—Shen Zhou News Channel, TVB News Channel On Demand and

MNC Business.”


50

EVENMOREM RE

Enhanced Hubbing in ReviewBusiness Solutions

Together with the AAG, the ASE will enable us to tackle the increasingly demanding global telecommunications landscape.

DATA + INTERNET + VOICE

=


51


More reach, more solutionsStarHub has expanded its network and reach with strategic and powerful partnerships in 2011. In January, we joined a group of top Asian carriers to build and operate the Asia Submarine-Cable Express (ASE), a 7,200-kilometre undersea cable system linking Singapore directly to Hong Kong, Japan and the Philippines.

The launch of ASE in East Asia will greatly support our existing connections to the US via the Asia-America Gateway (AAG). Together with the AAG, the ASE will well equip us to handle the next level of challenges and competition against other network operators.

And in October, we formed a consortium with DBS, EZ-Link and other companies, having won IDA’s NFC Call for Collaboration (CFC) award to develop a vibrant and interoperable mobile NFC infrastructure and mobile payment ecosystem in Singapore.

With such a system in place, consumers will be able to tap their mobile devices to pay for shopping purchases, transport trips, and other contactless services, while merchants and business owners will be able to glean more in-depth insights into their consumers’ buying patterns.

The Next Gen NBN, which is set to be 95% nationwide covered by the middle of 2012, has seen some delays and resistance from building owners and a lack of content. But the new network will open up the potential for high-speed data usage, particularly in the mobile and broadband lines of business.

Finally, StarHub formed the Enterprise Business Group (EBG) to focus on and harness the growth potential of our non-residential business base.

In order to stay competitive, StarHub constantly adapts our strategies to meet our objectives of serving our customers well and creating more value for our shareholders. We

“TO STAY COMPETITIVE, WE CONSTANTLY EVALUATE AND ADAPT OUR STRATEGIES TO SERVE OUR CUSTOMERS WELL.”

FIXED NETWORK REVENUE (DATA & INTERNET) $ million

281

278

11

10

FIXED NETWORK REVENUE (VOICE) $ million

56

53

11

10


52

realised that it was necessary to cater to the needs of the enterprise customer more holistically, with more than just a separate sales force or product team.

Hence, in October, StarHub formed the EBG, an agile, dedicated and solutions-focused division to concentrate on exploring the growth potential of our non-residential business base and undertaking the opportunities in this sector.

The new division pulls together old and new resources from the current Sales & Marketing and Products & Solutions divisions, to focus exclusively on the enterprise segment. However, it will continue to tap on shared resources in Network, IT, Customer Service and corporate functions, such as Legal, Corporate Communications, Corporate Finance and HR. The group is running as a P&L entity and, being a P&L unit, will have to make the right decisions on resources, solutions and business models that allows StarHub to penetrate deeper into a segment that is currently dominated by a single provider.

With new partnerships and a dedicated business team to undertake opportunities in the enterprise business space, we are confi dent that our business products and solutions will continue to provide companies and organisations with fast, high-quality and seamless connectivity. StarHub remains committed to be the trusted service provider for info-communications services in Singapore.

More overseas connectionsStarHub joined top Asian carriers Japan-based NTT Communications, Malaysia-based Telekom Malaysia and the Philippines-based PLDT to build and operate the ASE. The ASE system, which is estimated to cost about US$430 million, will also have connectivity to Malaysia and potentially future connectivity to Mainland China, as well as other Southeast Asian countries.

Slated to commence operations by mid-2012, the ASE will boast a total bandwidth carrying capacity in excess


“ASE IS SPECIFICALLY DESIGNED TO AVOID EARTHQUAKES AND TYPHOON-PRONE REGIONS.”

“EBG, an agile, dedicated and

solutions-focused division, was formed to explore the growth

potential of our enterprise business.”


53

A dedicated business team to undertake opportunities in the enterprise business space.


SIGNIFICANT ACHIEVEMENT

of 15 terabits per second thanks to its incorporation of the latest 40Gbps optical technologies. And, because the ASE is also future-proof, it will have the capability to incorporate 100Gbps optical technology in the future.

Notably, the new submarine cable system is specifi cally designed to avoid earthquake and typhoon-prone regions, such as the Bashi Channel south of Taiwan. It also covers the shortest possible distance between Hong Kong, Japan and Singapore, in order to ensure maximum reliability and minimum latency.

Complementing our strong connections to the US via the AAG, the ASE will enable us to tackle the increasingly demanding global telecommunications landscape where network operators compete on speed and reliability.

While the ASE is great news for the average consumer—given the rapidly increasing popularity of video streaming, advanced multimedia applications and gadgets like smartphones and tablets—businesses, especially those that deal with time-critical transactions, will benefi t greatly from a network that minimises latency.

JAN

Joined top Asian carriers to build and operate the Asia Submarine-Cable Express, an undersea cable system linking Singapore directly to Hong Kong, Japan and the Philippines


54

Group Financial Review

1.1 Operating RevenueYear ended 31 December

2011 2011 2010 2010 Incr/(Decr) $m % $m % $m %

Mobile revenue 1,217.6 52.7 1,181.3 52.8 36.3 3.1 Pay TV revenue 376.0 16.3 395.4 17.7 (19.4) (4.9)Broadband revenue 241.7 10.5 236.0 10.5 5.7 2.4 Fixed Network services revenue 336.7 14.6 331.7 14.8 5.0 1.5 Total service revenue 2,172.0 93.9 2,144.4 95.8 27.6 1.3 Sale of equipment 140.0 6.1 93.3 4.2 46.7 50.0 Total 2,312.0 100.0 2,237.7 100.0 74.3 3.3

Total operating revenue in 2011 was 3.3% higher year-on-year at $2,312.0 million.

Service revenue for the year increased $27.6 million or 1.3% to $2,172.0 million. Mobile services revenue grew 3.1% to $1,217.6 million from higher post-paid mobile services revenue, which offset the lower revenue from pre-paid mobile services. 2011 Pay TV services revenue at $376.0 million was $19.4 million or 4.9% lower due to the lowering of the Sports Group’s subscription price from $25/month to $12/month since June 2010, and the

non-recurrence of the 2010 FIFA World Cup event in 2011. Compared to last year, Broadband services revenue in 2011 was up 2.4% to $241.7 million. Fixed Network services revenue grew $5.0 million or 1.5% to $336.7 million for the year, with the increase contributed by both Data & Internet and Voice services.

Revenue from equipment sales rose $46.7 million or 50.0% to $140.0 million in 2011 due to higher quantities of smartphones and tablets sold in the current period, and at higher average selling prices.

GROUPFINANCIAL REVIEW


55


1.2 Operating ExpensesYear ended 31 December

2011 2010 Incr/(Decr) $m $m $m %

Cost of sales 928.5 912.8 15.7 1.7 Other operating expenses 1,006.7 988.6 18.1 1.8 Total 1,935.2 1,901.4 33.8 1.8

In 2011, total operating expenses were 1.8% higher year-on-year at $1,935.2 million, with both the cost of sales and other operating expenses increasing at 1.7% and 1.8% respectively. As a percentage of operating revenue, total operating expenses were 83.7% in 2011, compared to 85.0% in 2010.

The breakdown of the total operating expenses is as follows:

(A) Cost of salesYear ended 31 December

2011 2010 Incr/(Decr) $m $m $m %

Cost of equipment sold 383.4 312.3 71.1 22.8 Cost of services 298.3 338.8 (40.5) (12.0)Traffi c expenses 246.8 261.7 (14.9) (5.7)Total 928.5 912.8 15.7 1.7

For the year, cost of sales amounted to $928.5 million, 1.7% higher than last year. The increase was due to higher cost of equipment sold, mitigated by a lower cost of services and traffi c expenses. As a percentage of operating revenue, cost of sales ratio reduced to 40.2% in 2011 when compared to 40.8% last year.

Cost of equipment sold was up $71.1 million or 22.8% to $383.4 million in 2011 due to a higher quantity of smart devices sold in the current period and with higher unit costs. As a percentage of operating revenue, cost of equipment sold ratio was higher at 16.6% in 2011, up from 14.0% last year.

Cost of services was $40.5 million or 12.0% lower year-on-year at $298.3 million in 2011. The higher Pay TV content costs from new and renewed programming contracts in the current period were mitigated by the non-recurrence of costs for 2010 FIFA World Cup event and the avoidance of Barclay Premier League content cost. As a percentage of operating revenue, cost of services declined from 15.1% last year to 12.9% this year.

Traffi c expenses for the year decreased $14.9 million or 5.7% to $246.8 million when compared to last year. The lower traffi c expenses were mainly due to lower interconnection rates negotiated with our carrier partners. As a percentage of operating revenue, traffi c expenses ratio was 10.7% in 2011, down from 11.7% last year.


56


(B) Other operating expensesYear ended 31 December

2011 2010 Incr/(Decr) $m $m $m %

Staff costs 266.9 249.9 17.0 6.8 Operating lease 135.5 146.2 (10.7) (7.3)Marketing and promotion 169.6 156.3 13.3 8.5 Allowance for doubtful receivables 14.7 18.4 (3.7) (20.3)Repair and maintenance 68.0 73.3 (5.3) (7.2)Other expenses 74.2 85.0 (10.8) (12.7)Subtotal 728.9 729.1 (0.2) (0.0)Depreciation and amortisation 277.8 259.5 18.3 7.1 Total 1,006.7 988.6 18.1 1.8

Total operating expenses were $18.1 million or 1.8% higher year-on-year at $1,006.7 million in 2011. The increase was attributed to higher depreciation and amortisation, staff costs and marketing and promotion expenses, mitigated by lower other expenses, operating lease, repair and maintenance and allowance for doubtful receivables. As a ratio of operating revenue, total operating expenses were 43.5% this year as against 44.2% last year.

Staff costsStaff costs at $266.9 million in 2011 were $17.0 million or 6.8% higher than last year. Excluding the one-time $12 million charge for the bonus payment in 2010, this year’s staff costs would have increased 12% year-on-year. This was attributable to higher salaries, temporary staff expenses and increased headcount to support the increased business activities and the expanded distribution network, as fi ve more retail outlets and customer service centres became fully operational for the full year of 2011. As a percentage of operating revenue, staff costs were 11.5% in 2011 as compared to 11.2% in 2010.

Operating leaseThe increased rental costs for the new retail and customer service centres in the current period were offset by write-backs of costs over-provided for prior years’ projects. As a result, operating lease for the year amounted to $135.5 million, a decrease of 7.3% year-on-year. As a percentage of operating revenue, operating lease was lower at 5.9% for the year as against 6.5% in 2010.

Marketing and promotionMarketing and promotion expenses for the year were 8.5% higher year-on-year at $169.6 million, due to increased marketing and promotional activities this year to drive acquisition and retention. As a percentage of operating revenue, marketing and promotion expenses were 7.3%, up from 7.0% last year.

Allowance for doubtful receivablesCompared to last year, allowance for doubtful receivables decreased $3.7 million or 20.3% to $14.7 million in 2011. The higher expenses in last year were due to higher receivables then when we had to delay billing and dunning activities to accommodate migration to a new business support system. As a percentage of service revenue, allowance for doubtful receivables for 2011 was 0.7%, compared to 0.9% last year.

Repair and maintenanceFor the year, repair and maintenance decreased $5.3 million or 7.2% to $68.0 million when compared to last year. The decrease was mainly due to the write-back of over accruals for network and support system maintenance. Excluding this, repair and maintenance expenses in 2011 were comparable to last year. As a percentage of operating revenue, repair and maintenance was lower at 2.9% for the year as compared to 3.3% in 2010.

Other expensesYear-on-year, other expenses were $10.8 million or 12.7% lower at $74.2 million in 2011. The reduction was attributed to exchange gain, lower license fees and offi ce expenses, and higher recoveries from network construction expenses. These were partially offset by higher loss from disposal of fi xed assets, higher occupancy costs and professional fees. As a percentage of operating revenue, other expenses ratio reduced from 3.8% in 2010 to 3.2% in 2011.

Depreciation and amortisationDepreciation and amortisation for the year rose 7.1% year-on-year to $277.8 million. The higher expenses were attributed to a 3% year-on-year increase in the Group’s depreciable fi xed asset base. As a ratio of operating revenue, depreciation and amortisation expenses were 12.0% in 2011, compared to 11.6% last year.


57


1.3 Profi tability

Year ended 31 December

2011 2010 Incr/(Decr) $m $m $m %

Operating revenue 2,312.0 2,237.7 74.3 3.3 Operating expenses (1,935.2) (1,901.4) 33.8 1.8 Other income 21.4 6.0 15.4 nm Profi t from operations 398.2 342.3 55.9 16.3 Finance income 2.1 1.8 0.3 16.2 Finance expenses (20.5) (26.6) (6.1) (23.0)Profi t before taxation 379.8 317.5 62.3 19.6 Taxation (64.3) (54.3) 10.0 18.6 Profi t for the year 315.5 263.2 52.3 19.9

EBITDA 676.0 601.8 74.2 12.3 Service revenue 2,172.0 2,144.4 27.6 1.3 EBITDA as a % of service revenue 31.1% 28.1% 3.0% pts

nm – More than +/- 200%

Profi t from operations grew $55.9 million or 16.3% year-on-year to $398.2 million in 2011.

The higher operating revenue and income grant for the year were offset by higher cost of sales and other operating expenses. On the back of a 3.3% year-on-year increase in operating revenue, 2011 cost of sales was up 1.7% to $928.5 million, driven mainly by the higher cost of equipment sold, which rose 22.8% as a higher quantity of smart devices were sold. This increase was mitigated by the lower cost of services and traffi c expenses, which decreased 12.0% and 5.7% respectively.

Other operating expenses, at $1,006.7 million in 2011 were $18.1 million or 1.8% higher year-on-year. The increase was due to higher depreciation and amortisation, staff costs, and marketing and promotion expenses, mitigated by lower other expenses, operating lease, repair and maintenance and allowance for doubtful receivables. Other income increased $15.4 million to $21.4 million in 2011 as a result of increased adoption grants received this year, and the increase in grants recognised upon completion of the Next Gen NBN rollout milestones.

The improved revenue performance and costs management resulted in the Group’s EBITDA increasing 12.3% to $676.0 million for the year. As a percentage of service revenue, 2011 EBITDA margin was averaging higher at 31.1% when compared to 28.1% in 2010.

Finance income grew $0.3 million year-on-year to $2.1 million in 2011 due to higher yielding deposits with the banks.

Against last year, fi nance expenses decreased $6.1 million or 23.0% to $20.5 million in 2011. The lower fi nance expenses were from lower facility fees and interest expenses as loan balances decreased during the year.

Profi t before taxation for the year was up $62.3 million or 19.6% to $379.8 million when compared to last year.

For the year, the Group’s taxation amounted to $64.3 million or 17% of the profi t before tax.

The Group’s profi t after taxation increased 19.9% year-on-year to $315.5 million in 2011.


58


1.4 Liquidity and ResourcesYear ended 31 December

2011 2010 $m $m

Profi t before taxation 379.8 317.5 Non-cash items & net fi nance expenses adjustments 278.1 288.6 Net change in working capital 38.3 63.5 Net cash from operating activities 696.2 669.6 Net cash used in investing activities (244.0) (268.2)Net cash used in fi nancing activities (510.5) (398.1)Net change in cash and cash equivalents (58.3) 3.3 Cash and cash equivalents at beginning of the year 237.5 234.2 Cash and cash equivalents at end of the year 179.2 237.5

Free Cash Flow(1) 449.7 397.5

(1) Free Cash Flow refers to net cash fl ow from operating activities less purchase of fi xed assets in the cash fl ow statement.

Compared to last year, net cash from operating activities increased to $696.2 million in 2011 due mainly to the higher operating profi ts, offset by lower positive change in working capital.

Total net cash outfl ow from investing activities in 2011 was lower at $244.0 million as a result of lower CAPEX payment this year. As a percentage of operating revenue, total CAPEX payment for the year was 10.7%.

As at 31 December 2011, the Group’s total outstanding capital expenditure commitments was $195.1 million compared to $137.4 million a year ago. The current outstanding capital expenditure commitments mainly comprised commitments for the expansion and enhancement of our existing network infrastructure, and set-tops for the Pay TV business.

Free cash fl ow for the year was up 13.1% year-on-year to $449.7 million due to higher net cash infl ow from operating activities and lower CAPEX payment.

Total cash outfl ow from fi nancing activities amounted to $510.5 million in 2011 compared to $398.1 million in 2010. The increased outfl ow was for higher net repayment of bank loans ($52.5 million) and purchase of treasury shares ($9.1 million), as well as lower government grant receipts ($55.1 million).

Consequently, the Group’s cash and cash equivalents as at 31 December 2011 was lower at $179.2 million, compared to $237.5 million a year ago.

1.5 GearingAs at 31 December 2011, the Group’s overall gross debts was lower at $662.5 million due to repayments made

during the year from surplus operational cash fl ows. Net debt as at 31 December 2011 amounted to $483.3 million, 14.9% lower than $567.9 million a year ago. As a ratio of 2010 EBITDA, the Group’s net debt was lower at 0.80 times this year, compared to 0.94 times in 2010.

1.6 Financial positionAs at 31 December 2011, the Group’s total non-current assets amounted to $1,188.3 million, a decrease of $43.8 million from a year ago, due to lower net book values for property, plant and equipment, and intangible assets.

Total current assets as at 31 December 2011 amounted to $534.8 million. Compared to a year ago, this was $26.6 million lower, on account of lower cash and bank balances, lower trade receivables, and offset by higher other receivables, deposits and prepayments and inventories.

Total current liabilities reduced from $1,073.1 million as at 31 December 2010 to $903.3 million this year. The lower current liabilities were mainly due to a lower current portion of outstanding bank loans, offset by higher provision for taxation, trade payables and accruals, and other payables.

Against last year, total non-current liabilities were $130.8 million higher at $797.2 million as at 31 December 2011. The increase was attributable to a higher non-current portion of outstanding bank loans as some current loan repayments were refi nanced with longer-term bank facilities and increase in deferred income.

As at 31 December 2011, the Group’s shareholders’ equity amounted to $22.6 million. This was $31.4 million lower compared to 31 December 2010, due to lower retained profi ts after distribution of dividends.


59

Corporate Governance

Corporate transparency, integrity and fairness “Good corporate governance ensures corporate transparency, accountability and fairness to shareholders, employees, business partners and other stakeholders. We also believe that professionalism and integrity are critical in building a company that our shareholders and stakeholders can be proud of.”

Corporate Governance StatementThe Company is strongly committed to achieving and upholding high standards of corporate governance and business conduct and promoting transparency and accountability. We believe that good corporate governance brings about sustained growth in the value of the Company. It also strengthens the trust placed in the Company by shareholders and stakeholders such as our employees, business partners, customers and the general public.

Our corporate governance rests on a foundation of timely disclosures, transparency, accountability, trust, a balanced Board of Directors with an appropriate mix of skills, experience and independence, a responsible Management team with strong values and a comprehensive risk management and compliance culture.

Corporate Governance Report 2011This Report sets out the Company’s corporate governance framework with reference to the principles of the Code of Corporate Governance (Code) issued by the Ministry of Finance on 14 July 2005. In developing our corporate governance policies and practices, the Company adopts a balanced approach by observing the spirit, and not just the letter of the Code. The Company recognises the importance of corporate governance and has substantially complied with the principles and guidelines of the Code. Where the Company has deviated from the Code, each area of deviation is disclosed herein.

1. BOARD MATTERSThe Board’s Conduct of Affairs

The Board’s ResponsibilitiesThe Board is responsible for reviewing and guiding the overall corporate strategy and direction of the Group. The key roles of the Board include:– overseeing the management of the Company’s business and affairs;– monitoring and reviewing the fi nancial and operating performance of the Group; – assessing and approving key operational and business initiatives, major funding and investments proposals; – formulating major corporate policies, internal controls and corporate governance best practices; – ensuring effective management leadership by putting in place effective human resource management policies and

leadership of the highest quality and integrity; and– ensuring the Group’s compliance with all relevant laws and regulations.

CORPORATEGOVERNANCE


60


Each Director is required to act in good faith and in the best interests of the Company and all its shareholders at all times. He must ensure his compliance with all applicable laws, and should act objectively, in good faith and with due diligence and care. Further, each Director is required to promptly disclose to the Board any new information relating to his fi nancial or other interests and relationships which may affect his independence, including any related-party transactions with the Group. Although this is not a requirement under the Code, the Company also requires each Director to formally declare his independence from all other stakeholders of the Company on an annual basis, in order to sieve out potential confl icts of interest.

All newly appointed Directors are briefed by Management on the Group’s strategies, business performance and governance policies. New Directors are also given manuals containing, among other relevant information, information about their statutory and other responsibilities as Directors and the Company’s insider trading policy. This gives the Directors a better understanding of the Group’s business and operations and allows them to settle into their new roles smoothly. The Board is updated regularly on key legal, regulatory and accounting changes, which have an important bearing on the obligations of the Group and/or Directors. Apart from internal updates, Directors are also notifi ed of and encouraged to attend seminars and training relating to the Group’s business and their responsibilities and duties as directors, especially those conducted by the Singapore Institute of Directors and SGX-ST.

Board and Board CommitteesThe Board complies with internal controls that set out the authority and approval limits for capital and operating expenditure, investments, divestments, bank facilities and cheque signatories at the Board level. Authority and approval sub-limits are also provided at various Management levels to optimise operational effi ciency.

To ensure an equitable distribution of responsibilities among Board members and to optimise the effectiveness of the Board, the Board is supported in its tasks by the following four Board committees which are delegated specifi c responsibilities. These are the Audit Committee (AC), Nominating Committee (NC), Executive Resource and Compensation Committee (ERCC) and Strategy Committee (SC). Each Board Committee makes decisions on matters within its terms of reference and applicable limits of authority, and recommends the course of action for the Board’s consideration and decision. Further details of the Board Committees’ specifi c responsibilities are described in subsequent sections of this report. Additional committees may be formed when necessary to look into specifi c areas of oversight.

The composition of the Board Committees is set out in Table 1 below:

Table 1AC NC ERCC SC

Kua Hong Pak(Chairman)Nihal Vijaya Devadas Kaviratne CBETeo Ek TorLim Ming Seong

Peter Seah Lim Huat(Chairman)Lee Theng KiatTeo Ek Tor

Peter Seah Lim Huat(Chairman)Lee Theng KiatLim Ming Seong

Nihal Vijaya Devadas Kaviratne CBE (Chairman)Tan Guong ChingSteven Terrell ClontzLim Ming SeongLiu Chee MingRobert J. SachsStephen Geoffrey Miller (co-opted)Yong Lum Sung (co-opted)

The Chairman and all members of the AC, NC, ERCC and SC are non-executive Directors independent of Management. While the Chairman of the ERCC and NC may not be considered independent within the meaning of the Code, he is not involved in the business and daily operations of the Group. He is able to exercise independent judgment and act objectively in the best interests of the Company in carrying out his duties.


61


Board MeetingsThe Board meets regularly, with a minimum of fi ve meetings each fi nancial year, and may convene additional Board meetings on an ad hoc basis as appropriate. Every year, the Board holds a full-day meeting for the specifi c purpose of reviewing the budget and business strategies of the Group. The Company’s Articles of Association allow Board meetings to be held via telephone and video conference.

A total of fi ve Board meetings were held in the fi nancial year ended 31 December 2011. A matrix showing the Board members’ participation and attendance at the Board and Board Committee meetings held in the fi nancial year ended 31 December 2011 is set out in Table 2 below.

Table 2Board AC(1) ERCC(2) NC(3) SC(4)

Name of Director

Meeting Attendance (in %)





Tan Guong Ching 100 – – – 100Neil Montefi ore 100 – – – –Kua Hong Pak 100 100 – – –Peter Seah Lim Huat 100 – 100 100 –Nihal Vijaya Devadas Kaviratne CBE 100 100 – – 100Lee Theng Kiat 100 – 75 50 –Steven Terrell Clontz 80 – – – 100Lim Ming Seong 100 100 100 – 100Sadao Maki(5) 100 – – – –Teo Ek Tor 100 100 – 100 –Liu Chee Ming 100 – – – 100Robert J. Sachs 100 – – – 75Nasser Marafi h(5) 100 – – – –(1) The AC held four (4) meetings during the fi nancial year ended 31 December 2011.(2) The ERCC held four (4) meetings during the fi nancial year ended 31 December 2011.(3) The NC held two (2) meetings during the fi nancial year ended 31 December 2011.(4) The SC held four (4) meetings during the fi nancial year ended 31 December 2011.(5) Includes meetings attended by Alternate Director on Director’s behalf.

Board Composition and GuidanceThe Board comprises 13 Directors, 12 of whom are non-executive and independent of Management. The sole executive Director is Mr Neil Montefi ore, who is the CEO.

There is a strong independent element in the Board. Five Directors, or one-third of the Board, are non-executive independent Directors within the meaning of the Code. These non-executive Directors are Mr Kua Hong Pak, Mr Nihal Vijaya Devadas Kaviratne CBE, Mr Teo Ek Tor, Mr Liu Chee Ming and Mr Robert J. Sachs.

The Directors are business leaders with broad and diverse experience (both domestically and internationally) and professionals with fi nancial, banking, accounting, regulatory, industry, legal and management expertise and experience. They bring valuable insights and objective perspectives to the Board, facilitating the making of balanced and well-considered decisions, and a robust exchange of ideas and views to help shape strategic directions. This, together with a clear division of roles between the Chairman and the CEO, provide a healthy professional relationship between the Board and Management, with clarity of roles and robust oversight.


62

Details on the experience and expertise of the Board can be found in the write-up on the Board of Directors at the start of this Annual Report. All principal directorships and chairmanships in any listed companies held by any of the Directors currently, and in the preceding three years, are also detailed in the Directors’ Particulars in this Annual Report.

The NC reviews the size and composition of the Board, to ensure that the Board is of an appropriate size conducive for effective decision-making, has an appropriate balance of independent Directors, and comprises suitable Directors with the right skills and expertise to meet the industry and business needs of the Company.

The main responsibilities of the NC are:– to conduct regular reviews to ensure that the Board is adequately comprised of independent Directors, as well as

Directors with the requisite fi nancial, regulatory, legal and industry knowledge, management, strategic planning and customer-based experience and expertise;

– to review and assess the nominations for the appointment, re-appointment or re-election of Directors before making recommendations to the Board; and

– to conduct internal and external searches for candidates for appointment to the Board.

The SC supports and advises the Board and Management in the formulation and implementation of the Group’s strategies with a view to grow and enhance shareholder value. The main responsibilities of the SC are:– to identify and assess signifi cant intermediate and long-term opportunities and risks in the Group’s business areas,

operations and the industry; and – to provide constructive challenges and ensure objectivity and independence in the strategy formulation and

review process.

Chairman and CEOThere is a clear separation of roles and responsibilities between the Chairman, Mr Tan Guong Ching, and the CEO, Mr Neil Montefi ore. This enables the Company to maintain an effective balance of power, authority and responsibility. It also ensures Management accountability and Board independence.

The Chairman is non-executive and unrelated to the CEO. While this is not a requirement under the Code, the Company ensures that the Board’s agenda at each meeting is not determined solely by the CEO. Instead, the Board’s agenda is proposed by the CEO, for review, revision and approval by the Chairman. This enhances the separation of powers between the Board and Management.

The Chairman leads the Board and facilitates constructive and robust Board discussions and decision-making on strategic and operational issues of the Group. The Chairman also oversees the translation of the Board’s decision into executive action. With the assistance of the Company Secretary, he ensures that information fl ow between the Board and Management is timely and accurate, effective shareholder communications are in place, and the high standards of corporate transparency and corporate governance are maintained.

The CEO has full executive responsibility for the day-to-day running of the Group’s business operations and the implementation of the Group’s strategies and policies.

Board Membership and Board PerformanceBoard renewal is an ongoing process and the NC is tasked to review nominations and recommend candidates for appointment to the Board according to a formal procedure involving both external and internal searches for potential candidates. Candidates are assessed for appointment to the Board based on their skills, expertise and experience in the Group’s areas of business, as well as their ability to devote suffi cient time and attention to the Company, potential confl icts of interest, the composition and independence of the existing Board and the evolving needs of the Company. All new appointments to the Board are subject to the approval of the Company’s regulators, the Info-communications Development Authority of Singapore and the Media Development Authority of Singapore.



63

The NC also assesses each Director’s independence annually. No Director can stay in offi ce beyond three years without being re-elected. At each Annual General Meeting (AGM), one-third of the Directors (who have been longest in offi ce since their appointment or last re-election, including the CEO who is an Executive Director) are required to retire from offi ce by rotation (one-third rotation rule). A retiring Director is eligible for re-election by shareholders at the AGM. Accordingly, no Director can stay in offi ce beyond three years without being subject to re-election by the Company’s shareholders. In addition, under the Companies Act, Directors who are more than 70 years of age have to be re-elected at each AGM. Newly-appointed Directors are also required to submit themselves for retirement and re-election at the AGM immediately following their appointment, after which he is subject to the one-third rotation rule.

The Company believes that Board performance is ultimately refl ected in the performance of the Group. The NC is responsible for reviewing the composition of the Board to ensure that there is good governance and the Board remains relevant to the changing needs of the Company and its business. The NC assesses the performance of the Board annually based on its ability to support, lead and communicate with Management, its conduct of its principal functions, each Director’s participation and attendance at Board and Board Committee meetings, the level and quality of the Director’s contributions and standard of conduct.

Each Director is required to individually complete a Board Performance Evaluation Form (Evaluation Form) annually, to facilitate the NC in its assessment of the Directors. Through the Evaluation Form, feedback is collated from the Board on various aspects of the Board’s performance, including the Board’s composition, the contributions of the Board and the Board Committees and the Directors’ standards of conduct. The Evaluation Form specifi cally seeks feedback from the Directors on whether there is an adequate degree of diversity and independence in the Board, whether the Board understands the Company’s business suffi ciently, whether the Board provides useful advice and guidance to Management, whether the Board Committees’ scope of responsibilities help the Board to discharge its duties effectively and whether there are adequate opportunities for informal discussions between the Board and Management.

The NC reviews the feedback collated from the Evaluation Forms and recommends the steps which need to be taken to strengthen the Board’s leadership so as to improve the Board’s oversight of the Company. Where appropriate, Management may also be involved in the review process, and assist in implementing the measures needed.

Throughout the year, the Board has maintained open lines of communication directly with Management on matters within their purview, over and above their attendance at the Board meetings. Non-executive Directors have also constructively challenged and assisted in developing strategic proposals and reviewed Management’s performance in meeting set goals and objectives.

Access to InformationPrior to every Board Meeting, and as and when the need arises, Management provides timely, pertinent and complete information about the Group, its fi nancials and businesses to the Board and the relevant Board Committees. The Board also receives monthly management accounts, updates on key performance indicators of the Group and regular analysts’ reports on the Company and the industry. This facilitates their making of informed and sound decisions, and enables them to keep abreast of key challenges and opportunities for the Group.

The Board has independent, direct and unrestricted access to Management at all times. Frequent dialogue and interaction takes place between Senior Management and the Board members, as encouraged by the CEO. Further, the Board has separate and independent access to the Company Secretary, who attends all Board meetings and advises the Board on procedures, the requirements of the Company’s Memorandum and Articles of Association, the Companies Act and the SGX-ST Listing Manual. The Company Secretary also ensures that there is good information fl ow within the Board and between the Board, the Board Committees and Senior Management.

In addition to the above, the Board can also seek independent professional advice at the Company’s cost where necessary.



64

2. REMUNERATION MATTERSProcedures for Developing Remuneration PoliciesLevel and Mix of RemunerationDisclosures on Remuneration

The Company believes that in a highly competitive and challenging business environment, it is important to have committed and talented human resources to manage and grow the Company’s business for sustained long-term enhancement of shareholders’ value and remain competitive. Thus, the Company places strong emphasis on motivating its employees through engagement, recognition and proper alignment of reward to performance.

The ERCC is tasked with the responsibility of overseeing the Company’s remuneration policies, and its key duties include:– succession planning for the CEO and key offi cers such as the Chief Operating Offi cer (COO) and the Chief Financial

Offi cer (CFO). Potential candidates for immediate, medium and long-term needs are identifi ed each year; – assessing and approving performance share awards and restricted stock awards under the Company’s approved

share plans; – establishing, reviewing and approving competitive remuneration policies for the CEO, key executives and Directors

with a focus on long–term sustainability and shareholders’ return;– assessing and approving candidates for key appointments; and– overseeing the development of management and reviewing succession plans for key positions in the Group.

In 2011, the ERCC held four meetings. The ERCC has access to expert professional advice from appropriate external advisors.

All decisions by the ERCC are made by a majority of votes of the ERCC members present and voting. The votes, approval or recommendation of any members with a confl ict of interest in the subject matter under consideration are excluded. The CEO is not present at any ERCC discussions, which relate to his own terms of service and the review of his performance. However, he is present at other ERCC discussions on the compensation and incentive policies, such as share awards, bonus framework, salary and other incentive schemes, of the Company’s key staff.

The ERCC adopts a framework of remuneration for the Board and key executives of the Company that is linked to (a) the performance of the Company, the Group and the individuals; (b) industry practices and compensation norms; and (c) the need to attract key executives to ensure continuing development of talent and renewal of strong leadership for the Company.

As the executive Director, the CEO is remunerated as a member of the Senior Management of the Company, and does not receive Director’s fees for his Board directorship with the Company. His compensation consists of a base salary, allowances, performance-related bonuses/payments, benefi ts-in-kind and share awards. The vesting of the conditional share awards granted to the CEO under the StarHub Performance Share Plan is subject to the CEO achieving prescribed performance targets over the relevant performance period. These performance targets benchmark (a) the performance of the Company’s Total Shareholders’ Return (TSR) measured against the MSCI Asia Pacifi c Telecommunications Index (including Japan) over the performance period, and (b) the Wealth Added, which measures investment performance in terms of the Company’s TSR against shareholders expected returns using the cost of equity. If the threshold performance targets are not achieved, no shares will be granted to the CEO. On the other hand, if the prescribed performance targets are met or exceeded, up to twice the number of shares that are the subject of the award will be granted. Similarly, the bonuses awarded to the CEO depend on the CEO’s achievement of his prescribed performance targets.

Arising from a review of the non-executive Directors’ compensation by ERCC in consultation with our external advisor, a new remuneration structure applicable for the fi nancial year ended 31 December 2011 was proposed and is as set out in Table 3. The Directors’ fee policy comprised in the new remuneration structure divides fees into basic retainer fees, attendance fees, travel allowance (for overseas Directors) and additional fees for serving on Board Committees. The non-executive Directors’ remuneration for the fi nancial year ended 31 December 2011 will be subject to shareholders’ approval at the forthcoming AGM.



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Under the new remuneration structure, the non-executive Directors (with the exception of Mr Kua Hong Pak and Mr Sadao Maki) will receive 70% of their Directors’ remuneration in cash and 30% of their Directors’ remuneration in the form of restricted share awards pursuant to the StarHub Restricted Stock Plan. As the restricted share awards are awarded in lieu of Directors’ compensation in cash, the restricted share awards will consist of the grant of fully paid shares, without any performance or vesting conditions attached. The number of shares to be awarded to a participating non-executive Director will be determined by reference to the volume weighted average price of a share on the SGX-ST over the 14 trading days immediately following approval from shareholders for the non-executive Directors’ compensation at the forthcoming AGM.

Details on the share awards and options granted by the Company to the non-executive Directors can be found in the Directors’ Report.

Table 3

Annual Fees for the Board

Board Chairman: $132,000Non-Executive Director: $63,000

Additional Annual Fees for Membership in Board Committees

Type of Committee Chairman Member

Audit Committee $40,000 $24,000Executive Resources and Compensation Committee $24,000 $15,000Nominating Committee $24,000 $15,000Strategy Committee $24,000 $15,000

Breakdown of Directors’ RemunerationThe following shows the composition of Directors’ remuneration for the fi nancial year ended 31 December 2011:

Name of Non-Executive DirectorsTotal Directors’ Remuneration(1)

Cash-based Share-based (2) Total

Tan Guong Ching $124,250 $53,250 $177,500Kua Hong Pak $93,450 $0 (3) $93,450Peter Seah Lim Huat $100,100 $42,900 $143,000Nihal Vijaya Devadas Kaviratne CBE $119,000 $51,000 $170,000Lee Theng Kiat(4) $84,700 $36,300 $121,000Steven Terrell Clontz(4) $107,800 $46,200 $154,000Lim Ming Seong $114,450 $49,050 $163,500Sadao Maki(4) $77,350 $0 (5) $77,350Teo Ek Tor $95,550 $40,950 $136,500Liu Chee Ming $93,450 $40,050 $133,500Robert J. Sachs $81,900 $35,100 $117,000Nasser Marafi h $73,850 $31,650 $105,500(1) Remuneration payable to non-executive Directors in the form of cash and share awards for the fi nancial year ended 31 December 2011 is subject to

shareholders’ approval at the forthcoming AGM.(2) If approved by shareholders at the forthcoming AGM, restricted share awards will be granted pursuant to the StarHub Restricted Stock Plan to all non-

executive Directors (except for Mr Kua Hong Pak and Mr Sadao Maki) after the AGM. The number of shares to be awarded will be based on the volume weighted average price of a share listed on the SGX-ST over the 14 trading days immediately after the AGM. The number of shares to be awarded will be rounded down to the nearest hundred, with cash to be paid in lieu of the remaining shares arising. The restricted share awards will consist of the grant of fully paid shares, without any performance or vesting conditions attached. However, in order to encourage alignment of the interests of the Directors with the interests of shareholders, non-executive Directors are required to hold shares in the Company worth at least the annual basic retainer fee at all times during the tenure of their directorships with the Company; non-executive Directors can only dispose of all their shares one year after ceasing to be a Director.

(3) Mr Kua Hong Pak has declined the share award and will only receive the cash component of his remuneration. Mr Kua holds no shares in the Company.(4) Fees are payable to Director’s employer company.(5) Mr Sadao Maki has declined the share award and will only receive the cash component of his remuneration. Mr Maki holds no shares in the Company.



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During the year, none of the Directors’ immediate family members were employees of the Group whose remuneration exceeded $150,000 per annum.

The aggregate annual compensation paid and accruing in bands of $250,000 (including any benefi ts-in-kind) to the CEO and each of the top fi ve key senior executives (who are also not Directors of the Company) for the services rendered by them in any capacity to the Group for the fi nancial year ended 31 December 2011, is set out in Table 4 below.

The Company adopts the StarHub Performance Share Plan and the StarHub Restricted Stock Plan (Share Plans) as long-term incentives to motivate senior executives and Directors to strive for superior performance and to align their interest with those of shareholders. Share awards under the StarHub Performance Share Plan correlate with corporate performance, while the length of the vesting period for each award under the StarHub Restricted Stock Plan is determined at the date of each grant. Details of the Share Plans are contained in the Directors’ Report. Details of the share awards granted to the senior executives for the fi nancial year ended 31 December 2011 is set out in Table 4 below.

Table 4

Fixed (1)

(%) Variable (2)

(%) Benefi ts- in-kind (3)

(%)

Remu- neration bands (4) (%)

Share Awards granted in 2011 under StarHub Performance Share Plan (5)

Share Awards granted in 2011 under StarHub Restricted Stock Plan (6)

CEO and Executive DirectorNeil Montefi ore 45% 35% 20% D Refer to details in

Directors’ Report Refer to details in Directors’ Report

Senior ExecutivesTan Tong Hai 56% 39% 5% C Up to 243,800 shares Up to 106,500 sharesKwek Buck Chye 52% 43% 5% B Up to 243,800 shares Up to 106,500 sharesChan Kin Hung 68% 26% 6% A Up to 103,500 shares Up to 48,000 sharesNg Long Shyang 75% 19% 6% A Up to 103,500 shares Up to 48,000 sharesDiana Lee 67% 26% 7% A Up to 103,500 shares Up to 48,000 shares(1) Fixed refers to base salary, Annual Wage Supplement and fi xed allowances earned for the year ended 31 December 2011.(2) Variable refers to incentives paid and accrued for the year pursuant to the Company’s performance bonus scheme and Economic Value Added (EVA)

scheme for the year ended 31 December 2011. The Company’s performance bonus scheme is the “balanced scorecard” scheme used to determine the annual performance bonuses payable to the Company’s employees. Under this scheme, each of the Company’s employees is given clear objectives on his personal scorecard, which are aligned to the Company’s overall strategic objectives of growth and profi tability, creating customer value, operational effi ciency, excellence and optimal customer management, and developing a motivated and well trained workforce. Under the EVA scheme, a notional EVA bank account is set up for each senior executive, into which the annual EVA performance bonus earned by him each year is credited. One third of the total amount in his EVA bank account is payable annually at a later date in the following fi nancial year, and the remaining balance in his EVA bank account is payable to him upon his resignation or termination of employment (other than for cause), subject to certain conditions being met. The balance in the EVA bank account will increase or decrease depending on the Company’s EVA performance in subsequent years.

(3) Benefi ts-in-kind are stated on the basis of direct costs to the Company, and include tax equalisation, housing and other non-cash benefi ts such as leave, medical scheme and club membership.

(4) Remuneration bands: “A” refers to remuneration between $550,001 and $800,000 p.a. “B” refers to remuneration between $800,001 and $1,050,000 p.a. “C” refers to remuneration between $1,050,001 and $1,300,000 p.a. “D” refers to remuneration between $2,000,001 and $2,250,000 p.a.(5) A share award was granted under the StarHub Performance Share Plan on 31 March 2011. The share valuation adopted a Monte-Carlo simulation

methodology applied at the point of grant. The share award is conditional upon the participant achieving prescribed performance targets over the performance period from 1 January 2011 to 31 December 2013. The performance targets benchmark (a) the performance of the Company’s Total Shareholders’ Return (TSR) measured against the MSCI Asia-Pacifi c Telecommunications Index (including Japan) over the performance period, and (b) the Wealth Added which measures investment performance in terms of the Company’s TSR against shareholders’ expected returns using cost of equity. The actual number of shares delivered will depend on the level of attainment of the performance targets.

(6) A share award was granted under the StarHub Restricted Stock Plan on 31 March 2011. The share valuation adopted a Monte-Carlo simulation methodology applied at the point of grant. The share award is conditional upon the participant achieving prescribed performance targets over the performance period from 1 January 2011 to 31 December 2012. The actual number of shares delivered will depend on the level of attainment of the performance targets. Shares will be delivered in phases according to the stipulated vesting periods.



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3. ACCOUNTABILITY AND AUDITAccountabilityThe Board has overall accountability to the shareholders for the Group’s performance and ensuring that the Group is well managed and guided by strategic objectives. The Company continues to report the Group’s operating performance and fi nancial results on a quarterly basis via SGXNET, with an accompanying negative assurance by the Board to confi rm that nothing has come to its attention that may render the results false or misleading. This provides shareholders with a balanced and accurate assessment of the Group’s performance and prospects and refl ects the Board’s overall accountability to the shareholders. The Company believes that prompt and full compliance with statutory reporting requirements is a must in maintaining shareholder confi dence and trust.

The Board is able to make decisions based on up-to-date information provided by Management. Monthly business and fi nancial reports which clearly explain the Company’s performance (in comparison with its forecasted performance and budget) and fi nancial position are provided to the Board members. Other business reports are also provided to the Board regularly.

With respect to dealings in the securities of the Company by the Directors and employees of the Group, the Company has adopted the following insider trading policy that exceeds the requirements of the SGX-ST Listing Manual:

(1) All Directors and employees of the Group are prohibited from dealing in the Company’s securities:– two weeks prior to the announcement of the Group’s results for each of the fi rst three quarters of its fi nancial year;

and – a month prior to the announcement of the Group’s full-year results; and

(2) All Directors, Management and employees directly involved in the preparation of the Group’s quarterly and full year results are prohibited from dealing in the Company’s securities one month prior to the announcement of each of the Group’s quarterly and full year results.

All Directors, Management and employees are notifi ed by email prior to the start of each trading blackout period and the restrictions are only lifted after the announcement of the respective results. The Company, all Directors and employees of the Group are also strictly required to observe insider trading laws at all times.

The Company has also adopted a policy against acquiring any of its shares pursuant to its Share Purchase Mandate where a price-sensitive development has occurred or been the subject of a decision, until the development has been publicly announced. Further, the Board has voluntarily undertaken to reduce the amount of shares it may issue and allot pursuant to the general authority granted by the Company’s shareholders to the Board, from 20% to 15% of the Company’s total issued share capital.

The Board and Management believe that the Company has complied with and exceeded the Code and SGX-ST Listing Manual, as well as industry best practices.

Audit CommitteeThe AC comprises non-executive Directors, all of whom have invaluable accounting and fi nancial management expertise. The majority of the AC members, including the Chairman, are independent Directors.



68

The AC’s key roles as defi ned in its Terms of Reference include:– review of the annual audit plan, internal audit process and assessing the adequacy of the Group’s internal controls;– review and approval of quarterly, half-yearly and annual fi nancial statements, and the appointment and re-appointment

of auditors, before recommending the same to the Board for approval; – review of Interested Person Transactions to ensure compliance with the SGX-ST Listing Manual and the Shareholders’

Mandate that is renewable annually; – the commission and review of fi ndings of internal investigations into suspected fraud, irregularity, failure of internal

controls or violation of any law likely to have a material impact on the Group’s results; and– review the nature, extent and cost of non-audit services provided by the external auditors during the year to assess the

external auditors’ independence.

The AC has full access to Management. The AC has the discretion to invite any Director or offi cer to attend its meetings, and to require Management to provide it with such resources as are necessary for it to discharge its functions properly.

In 2011, the AC held four meetings, and met the Company’s external and internal auditors without Management at least once to discuss matters it believes should be raised privately. Having satisfi ed itself that the external auditors’ independence is not impaired by their provision of non-audit services to the Group, and that Rules 712 and 715 of the SGX-ST Listing Manual have been complied with, the AC has recommended to the Board that KPMG LLP be nominated for re-appointment as the Group’s external auditors at the next AGM. To further safeguard KMPG LLP’s independence, the Company ensures that the KPMG LLP partner in charge of auditing the Group is changed every fi ve years.

Internal Controls and AuditThe AC reviews the Group’s key internal controls and key management systems, which are supported by its policies on employee discipline and conduct, annually. The AC assesses the external auditors’ recommendations for resolving any lapses or weaknesses in the controls, taking into account any views Management has. The AC also takes steps to correct such defi ciencies with the assistance of the internal auditors.

The AC reviews the following key internal controls:– policies and procedures for risk identifi cation and amelioration; – approval limits for key fi nancial and operational matters, and guidelines for delegation of authority;– policies and procedures for safeguarding assets; – measures for ensuring compliance with applicable laws and regulations; and– procedures and processes for maintaining the integrity, confi dentiality and availability of critical information and

systems, including accounting records.

The Group’s internal auditor, RSM Ethos Pte Ltd, is an independent outsourced internal audit function which is guided by the Standards for the Professional Practice of Internal Auditing prescribed by the Institute of Internal Auditors. The internal auditors report to the AC, and administratively to the CEO and CFO of the Company.

The annual internal audit plan is developed in consultation with, but independent of Management, and is submitted to the AC for its approval at the start of each fi nancial year. As regards quarterly internal audit reports, these are submitted to the AC detailing the internal auditors’ progress in executing the audit plan and any major fi ndings and corrective actions taken by Management. The AC meets with the internal auditors at least once a year without the presence of Management to ensure independence of these functions.

Based on the external and internal auditors’ fi ndings, the Board with the concurrence of the AC is of the view that the Group’s internal controls addressing fi nancial, operational and compliance risks are adequate in meeting the needs of the Group and provide reasonable (though not absolute) assurance against material fi nancial misstatements and loss, and safeguard the Group’s assets. The internal controls ensure the Group’s maintenance of proper accounting records, compliance with applicable regulations and best practices, and timely identifi cation and containment of fi nancial, operational and compliance risks. The AC is also satisfi ed that material internal control defi ciencies were identifi ed and remedied on a timely basis.



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4. COMMUNICATION WITH SHAREHOLDERSRegular, Effective and Fair Communication with ShareholdersTogether with the CEO and other members of Senior Management, the Company’s Investor Relations team keeps the Company’s shareholders informed of major industry and corporate developments, the Group’s performance and other relevant information on a timely basis. The Company conducts analyst and media briefi ngs periodically throughout the year. In addition, the Company’s Management and Investor Relations team meet with institutional investors regularly, through international road shows and conferences organised by major brokerage fi rms.

All media releases, fi nancial results, annual reports, SGXNET announcements, presentation materials, archived webcasts and conference calls, and other corporate information relating to the Group are accessible on the Company’s website at www.starhub.com/ir, which is regularly updated. Upon request, investors can also be notifi ed via an e-mail alert service. Material price-sensitive information such as fi nancial results are however, released through SGXNET before any media or analyst conferences are conducted. This ensures fair and non-selective disclosure of information to all investors.

The contact details of the Investor Relations team are available on the Company’s website and the team is always ready to address shareholders’ queries and concerns. The team is also prompt in keeping Management fully apprised of shareholder views and sentiments.

Enhanced Shareholder ParticipationThe Company is of the view that AGM and other general meetings are important opportunities for meeting investors and addressing their concerns. The Board, Senior Management and external auditors attend all such meetings. Registered shareholders are invited to attend and participate actively in such meetings, including by clarifying and questioning the Group’s strategic direction, business, operations, performance and proposed resolutions.

Each shareholder can vote in person or by appointing up to two proxies to attend and vote on his behalf. The Company’s Articles of Association do not allow shareholders to vote in absentia. Separate issues are tabled in separate resolutions at general meetings, voting is carried out systematically and resolutions passed are properly recorded.

5. ADDITIONAL MEASURES TO ENHANCE CORPORATE GOVERNANCEBeyond complying with the requirements of the Code, the SGX-ST Listing Manual and the Companies Act, the Company has also undertaken various additional measures to enhance corporate governance, as follows:

(1) In line with the Company’s zero tolerance for fraud and other ethical violations, the Group has enhanced its whistle-blowing policy and procedures, providing employees with accessible channels, including a direct channel to their immediate supervisors, the relevant Heads of Department or the Head of Human Resource (as may be appropriate), as well as the AC, for reporting suspected fraud, corruption, fi nancial impropriety, unethical conduct and other criminal or dishonest practices. An Investigation Committee (constituting representatives from the Senior Management, Risk, Human Resource and Legal) will be formed to investigate the suspected wrongdoing and implement rectifi cation and prevention measures. Any personnel with a confl ict of interest (actual or potential) will be barred from appointment to the Investigation Committee. All cases of suspected wrongdoing will also be reported to and reviewed by the AC. In cases of suspected wrongdoing involving the CEO, COO and/or CFO, the Investigation Committee will be chaired by the AC Chairman (or his nominee). Upon completing the investigations for each case of suspected wrongdoing, the Investigation Committee may at its discretion decide whether to circulate the investigation results to employees, taking into account the interests of the Group. The Group’s whistle-blowing policy aims to encourage the reporting of such matters in good faith with confi dence that whistle-blowers will be treated fairly and accorded with protection against reprisals. The Company will take disciplinary action against any party who victimises whistle-blowers. Further, the Company does not disregard anonymous complaints but will give such complaints appropriate weight. The Group’s whistle-blowing policy is available on the Company’s intranet for easy access by all employees.



70

(2) The Company has augmented the Employee Code of Conduct, the Ethics Policy and the Corporate Gift and Hospitality Policy to incorporate stringent obligations on employees to comply with anti-corruption and anti-bribery laws in Singapore. In parallel, the Company has tightened existing processes and internal controls on tenders, vendor selection and purchasing to ensure transparency, objectivity and compliance. The Supplier and Vendor Policy and the updated Employee Code of Conduct are available on the Company’s intranet for easy access.

(3) As a further risk mitigation measure and to enhance governance, the Company has voluntarily put in place a Compliance Leave Policy which applies to all employees with sensitive job functions such as handling monies, inventories, payroll processing and approvals, risk management and purchasing of goods and services. Under the Compliance Leave Policy, such employees are required to go on mandatory block leave of at least fi ve consecutive working days each calendar year. This arrangement allows covering offi cers to fully step into the duties of the employee on leave, as an additional check and balance against any breaches.

(4) In addition, the Company has undertaken a strategic business continuity management (BCM) programme which has been certifi ed as meeting the Singapore Standards SS540:2008. The BCM programme ensures that the Company has in place business continuity and disaster recovery policies, plans and procedures. This provides assurance to the Group’s stakeholders that the Company will be able to provide, maintain and recover its critical business functions and continue to provide info-communication products and services in the event of an emergency, disaster or crisis.

(5) The Company has implemented a clear document classifi cation policy to ensure that all documents relating to the Group’s business, activities and operations are classifi ed according to whether the information contained within the document is confi dential, for internal use or for public distribution. This classifi cation helps to safeguard the information and ensures that only appropriate persons access information and on a need-to-know basis only.

(6) To further enhance security of confi dential and commercially sensitive documents stored in laptops belonging to senior staff, the Company has implemented a Laptop Encryption Solution which ensures that sensitive and confi dential information relating to the Company continue to be protected, in the event of any loss of the laptop. The Company would have the ability to remotely wipe out the sensitive information, in such event of loss.

Finally, as regards processes and procedures, the Company has taken steps to ensure that its notice of AGM is issued to shareholders at least 28 days before the scheduled date of the AGM. Electronic annual reports (in the form of a CD-ROM) are sent to all shareholders (including foreign shareholders) at least 28 days before the AGM to ensure that all shareholders have adequate opportunity and suffi cient time to review the annual reports before the AGM. The move to electronic documentation demonstrates StarHub’s commitment towards green and sustainable efforts. Hard copies will be provided upon request of shareholders. The Company has also committed not to introduce new resolutions within one week of each general meeting, to enhance governance and transparency. Further, the Company has adopted electronic poll voting for general meetings since 2010 to ensure greater transparency and effi ciency in the voting process and results. We believe that this initiative would encourage greater shareholder participation at the Company’s general meetings.



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DIRECTORS’PARTICULARS

Principal Directorships/Chairmanships in other listed companies & other major appointments, both present and held over the preceding 3 years

Director

Age in Year 2012

Present Principal Directorships/ Chairmanships & Appointments (as at 31 Dec 2011)

Past Principal Directorships/Chairmanships & Appointments (from 1 Jan 2009 to 30 Dec 2011)

Tan Guong Ching 66 Singapore Technologies Telemedia Pte Ltd

Singapore Technologies Aerospace Limited

STT Communications Ltd

Asia Mobile Holding Company Pte. Ltd.

Asia Mobile Holdings Pte. Ltd.

Singapore Pools (Private) Limited

Temasek Life Sciences Laboratory Limited

IP Academy

Pteris Global Limited

Singapore Shipping Corporation Limited

Inter-Roller Engineering Limited

eircom Limited

Neil Montefi ore 60 StarHub Cable Vision Ltd.

StarHub Internet Pte Ltd

StarHub Mobile Pte Ltd

StarHub Online Pte Ltd

SHINE Systems Assets Pte. Ltd.

NEILM (S) Pte Ltd

Ruswarp Consultants (as Manager)

Singapore Repertory Theatre Ltd

Singapore National Employers Federation (as Council Member)

M1 Limited

M1 Net Ltd.

M1 Shop Pte Ltd

KLIQ Pte. Ltd.

Wireless Intellect Labs Pte Ltd

Directors’ Particulars


72



Director

Age in Year 2012



Kua Hong Pak 68 ComfortDelGro Corporation Limited

SBS Transit Ltd

VICOM Ltd

PSA Corporation Limited

PSA International Pte Ltd

Temasek Holdings (Private) Limited

ComfortDelGro Cabcharge Pty Ltd

Metroline plc (UK)

CabCharge Australia Limited

Peter Seah Lim Huat 66 DBS Bank Ltd

DBS Group Holdings Ltd

Singapore Technologies Engineering Ltd

CapitaLand Limited

Government of Singapore Investment Corporation Private Limited

STATS ChipPAC Ltd

DBS (Hong Kong) Limited

Level 3 Communications, Inc.

The Siam Commercial Bank Public Company Limited, Singapore Branch

Chartered Semiconductor Manufacturing Ltd

SembCorp Industries Limited

Alliance Bank Malaysia Berhad

Singapore Technologies Telemedia Pte Ltd

Bank of China Limited

Global Crossing Limited

Nihal Vijaya Devadas Kaviratne CBE

68 DBS Bank Ltd

DBS Group Holdings Ltd

GlaxoSmithKline Pharmaceuticals Limited

TVS Motor Company (Europe) BV

PT TVS Motor Company

Wildlife Reserves Singapore Pte Ltd

Akzo Nobel India Limited

SATS Ltd.

Agro Tech Foods Limited

Fullerton India Credit Company Limited

Fullerton Securities and Wealth Advisors Limited

Titan Industries Ltd


73



Director

Age in Year 2012



Lee Theng Kiat 59 Singapore Technologies Telemedia Pte Ltd

STT Communications Ltd

Asia Mobile Holding Company Pte. Ltd.

Asia Mobile Holdings Pte. Ltd.

i-STT Investments Pte. Ltd.

ST Telecommunications (Beijing) Co., Ltd

ST Teleport Pte Ltd

STT Crossing Ltd

TeleChoice International Limited

Level 3 Communications, Inc.

Shenington Investments Pte Ltd


eircom Limited

Steven Terrell Clontz 62 InterDigital, Inc.

Nucleus Connect Pte. Ltd.

Equinix, Inc.

eircom Limited

Global Crossing Limited (as Executive Committee Member)

Lim Ming Seong 65 CSE Global Limited

First Resources Ltd

Singapore Technologies Kinetics Pte Ltd

Singapore Technologies Telemedia Pte Ltd

WhiteRock Partners Ltd

Amplus Communications Pte Ltd

Tuas Power Ltd

Singapore Aerospace Manufacturing Pte Ltd

Accuron Technologies Ltd

United BMEC Pte Ltd

WhiteRock Healthcare Pte Ltd

Sadao Maki 60 NTT Communications Corporation

Teo Ek Tor 59 PrimePartners Group Pte Ltd

PrimePartners Asset Management Pte Ltd

Prime Partners Corporate Finance Pte Ltd

PrimePartners Renewable Energy Inc

ServTouch Holdings Pte Ltd

WhiteRock Medical Company Pte Ltd

Delta Asia Capital Singapore Fund Pte Ltd

United Pacifi c Industries Limited


74


Director

Age in Year 2012



Liu Chee Ming 61 Platinum Broking Company Limited

Platinum Holdings Company Limited

Platinum Securities Company Limited

Platinum Securities Company Limited (Singapore)

Access Investment Management (H.K.) Limited

Kader Holdings Company Limited

The Singapore International School Foundation Ltd

Haitong Securities Company Ltd

Brianne Investments Limited

Keltyhill Incorporated

Odlins Holdings Limited

CIMC Raffl es Offshore (Singapore) Limited

Robert J. Sachs 64 Continental Consulting Group, LLC. (as Principal)

Dana-Farber Cancer Institute, Inc.

UpdateLogic, Inc.

WGBH Educational Foundation


Big Band Networks, Inc.

National Coalition for Cancer Survivorship (as Chairman of Board of Trustees)

Nasser Marafi h 51 Asia Mobile Holdings Pte. Ltd.

Asiacell Communications LLC

National Mobile Telecommunications Company K.S.C.

Omani Qatari Telecommunications Company S.A.O.C.

Orascom Telecom Tunisie SA

PT Indosat, Tbk

Shenington Investments Pte Ltd

Wataniya Telecom Algerie S.P.A.

Wataniya Palestine Mobile Telecommunication Public Shareholding Company (formerly known as Wataniya Palestine Mobile Telecommunication Company Limited)

wi-tribe Limited



75

Awards and Industry Honours

Community Work Awards> Community Chest Awards 2011Special Events – Gold Award

> Community Chest Awards 2011 Corporate Platinum Award

Corporate Awards> GTB (Global Telecoms Business) 40 Under 40, 2011 Chong Siew Loong, Vice President of Network and Systems, Nucleus Connect; one of the top 40 executives under 40 years old in the telecoms industry worldwide

> SS540: 2008 for Business Continuity Management (BCM) StarHub is the fi rst info-communication company in Singapore to be successfully certifi ed

> Telecom Asia Awards 2011 Nucleus Connect honoured as part of the Singapore Next Gen NBN, which received the “Most Innovative Telecom Project” award

Customer Service Awards> HWM (Hardware Magazine) and HMZ (Hardwarezone.com) Tech Awards 2011StarHub awarded Best Pay TV Service in Reader’s Choice 2011 Category

Investor Relations Awards > 1st Asian Excellence Recognition Awards 2011 Best IR by a Singapore company

> 7th Corporate Governance Asia Recognition Awards 2011 Recipient

> Governance and Transparency Index 2011Ranked 28th out of 660 companies

> Institutional Investor’s The 2011 All-Asia Executive Team Awards Jeannie Ong, Runner-Up (nominated by the Sell side) for Best Investor Relations Professional

> Institutional Investor’s The 2011 All-Asia Executive Team Awards Jeannie Ong, Runner-Up (nominated by the Buy side) for Best Investor Relations Professional

> Institutional Investor’s The 2011 All-Asia Executive Team Awards Best Investor Relations, 2nd Runner-Up (nominated by the Buy side)

> SIAS Investors’ Choice Awards 2011Runner-up in the category of Transport/Storage/Communication for Most Transparent Company

> Singapore 1000, SME 1000 and Singapore International 100 AwardsReturn on Equity Excellence Award (Information and Communications)

Marketing/Advertising/Branding > Brand Finance Singapore Top 100 Brands 2011StarHub ranked 17th

> Campaign Asia-Pacifi c Agency of the Year Awards 2011 Oliver Chong, Client Marketer of the Year 2011

> Campaign of the Year at IAS (Institute of Advertising Singapore) Hall of FameStarHub’s Life. Hub It!: Campaign of the Year

> Cannes Lions International Festival Of Creativity 2011 StarHub’s “Musical Fitting Room” campaign: Gold and Silver for Promotion & Activation, Silver for Media Lions and Bronze for Direct Lions

> Digital Media Awards 2011StarHub’s “Musical Fitting Room”: Gold for Media and EntertainmentStarHub’s “Music MoodBox”: Bronze for Media and Entertainment

> Effi e Singapore Awards 2011StarHub’s “Music MoodBox”: Gold for Entertainment

> Singapore’s Top Digital Brands StarHub ranked 2nd

> Spikes Asia Awards 2011 StarHub’s “Musical Fitting Room”: Four Silver awards and one Bronze award across the Direct, Digital, Promotion & Activation and Media categories

> Superbrands 2011: Top 10 Consumer BrandsStarHub ranked 6th

AWARDS& INDUSTRY HONOURS


76

“ROUND-THE-CLOCKACCESS TO THE IR TEAM ON INVESTOR QUERIES HAS BECOME A HALLMARK TRADITION FOR STARHUB. THEY ALSO HAVE ACCESS TO FREQUENT ONE-ON-ONE SESSIONS WITH THE SENIOR MANAGEMENT TEAM.”

Investor Relations

The StarHub Investor Relations (IR) team, led by the CEO, has a fi rm and longstanding belief in effectively and constantly communicating with its shareholders and the investment community. The Company’s strong spirit of corporate governance and corporate transparency was demonstrated even before it was listed on the Main Board of SGX-ST in October 2004, and we have now taken the next step with a sustainability report based on indicators under the Global Reporting Initiative (GRI) framework. The report covers new ground not previously seen in our previous Corporate Social Responsibility section, such as our carbon and water footprints, waste management and human resource welfare.

THE STARHUB STOCK, THE SECOND BEST PERFORMING STOCK IN THE STI, HAS APPRECIATED 11% IN 2011 TO CLOSE AT $2.91 FOR THE YEAR

11%IN 2011

INVESTORRELATIONS


77

Investor Relations

Round-the-clock access to the IR team on investor queries has become a hallmark tradition for StarHub. Quarterly meetings and briefi ng sessions have been arranged through conference call-ins and webcasts for numerous local/regional analysts and fund managers. They also have access to frequent one-on-one sessions with the senior management team on subjects as wide-ranging as fi nancial performance, technological developments, industry trends, content acquisition strategies and beyond.

StarHub has frequently been an active participant in regional equity conferences organised by the banks. The Company also goes on international road shows to cities in Asia, Europe and the US to meet with existing institutional shareholders and potential investors. In 2011, the StarHub IR team met over 300 investors in some 220 meetings held in various cities.

Online IR is part of the Company’s holistic approach to our IR endeavours, and StarHub maintains a dedicated IR section within our corporate website. This electronic avenue has become the easiest and most cost-effective way to reach a wide audience, providing investors and other interested parties with up-to-date information at their fi ngertips. Shareholders have an easy-to-use and accessible way to obtain information about StarHub’s operations and fi nancial performance. For a growing number of stakeholders, it is the fi rst and primary area of contact with the Company.

Understanding investors and shareholdersTo get a better understanding of how effective our meetings with the analysts and fund managers are, as well as to improve our overall IR efforts, we engaged a third-party research fi rm to conduct extensive qualitative and quantitative interviews with targeted and critical fund managers and analysts. The research fi rm’s approach is to elicit open and honest sharing with regard to respondents’ views, comments, insights and criticism of the Company and its performance. Such results are then shared with the Board of Directors and Senior Management team.

Besides that, to get a clearer picture of our shareholders’ profi le, we commissioned a share registry analysis after every quarter’s results. Besides Singapore, the other top geographical regions where our investors are based are Asia (specifi cally Hong Kong and Japan), UK and the US.

StarHub is a constituent of the Straits Times Index (STI). In terms of share price performance, the stock has appreciated 11% in 2011 to close at $2.91 for the year, outperforming the STI’s loss of 17% in the same period. Looking at the dividend yield, we have seen an increase since we fi rst started paying dividend in 2005. We saw a 4.4% dividend yield then, and this has increased to the current 6.9% in 2011. In setting our dividend policy, the Board takes a projected three-year view of the Company’s earnings performance, the Company’s reserves, and free cash fl ows to ensure there is more

than adequate to cover the funding requirement for our dividend payments.

As we have always advocated, the twin engines of communications and relationship building drive StarHub’s IR strategy. Communications involve the regular two-way fl ow of information that gives investors, analysts and media a basis for evaluating StarHub. Relationship building requires the delivery of quality information in a timely fashion with complete honesty—this is the only way, in our opinion, to build mutually benefi cial relationships with investors, analysts and the fi nancial/business media.

AwardsOur steadfast commitment to regular communication led StarHub to clinch three awards at the Institutional Investor’s 2011 All-Asia Executive Team Awards. The Company was the 2nd Runner-Up, as nominated by the Buy-side, for Best Investor Relations, while our IR Head Jeannie Ong won the Runner-Up Awards for Best Investor Relations Professional in Asia, as nominated by both the Buy and Sell-side analyst.

We also won in the Singapore 1000, SME 1000 and Singapore International 100 Awards for the Return on Equity Excellence Award (Information and Communications category) and garnered the Runner-Up position in the Transport/Storage/Communication for Most Transparent Company category at the SIAS Investors’ Choice Awards 2011.

Finally, in the Governance and Transparency Index 2011, StarHub was ranked 28th out of 660 companies in Singapore.

“Our steadfast commitment to

regular communication led to three awards at the

Institutional Investor’s All-Asia Executive Team

Awards. In the Governance and Transparency Index, StarHub was ranked 28th

out of 660 Singapore companies.”


78

Investor Relations

StarHub, through its four lines of business, has a record of driving shareholder value since it was listed in 2004. Together with its proven management team and powerful brands, it augments well to deliver more value in the future.

WHY INVEST IN

Widely Recognised Brand

Well-known in the info- communication industry to be innovative—providing

value-for-money products and services and excellent

customer service.

Focus on Customer Service

Extensive retail distribution channels, dedicated

account management team, Hub Trooper service and recognised for customer

service excellence.

Strategic Partnerships

Developing and fostering strategic relationships to run an effi cient business model, provide complete end-to-end service offerings and

continue to lead innovation in all areas.

Proven Management Team

Experienced, performance-oriented management

team with solid industry expertise, technical depth

and company tenures.

Financially Sound Stable cash fl ow

generation, strong fi nancial fl exibility and consistently

providing a high dividend yield.

Regional ConnectivityStrategic investment in submarine cable

systems like AAG and ASE ensures low network

latency, resilience and diversity, and supports future growth needs.

Proven Strategy The Hubbing strategy has been successfully

executed since July 2002 across multiple service

platforms. It has consistently delivered increased revenues and total dividend payouts.

Singapore’s First Fully-Integrated Info-communications

Company Fully-integrated info-communication and

entertainment service provider based in Singapore, providing at least one service

to approximately 70% of all households.

STARHUB


79

Investor Relations

IR CALENDAR OF EVENTSDate Activities

1Q2011 – FY2010 results announcement – Singapore Investor Roadshows – Daiwa Investment Conference – Tokyo– Credit Suisse Asian Investment Conference – Hong Kong

2Q2011 – 1Q2011 results announcement – Singapore Investor Roadshows – CLSA Corporate Access Forum – Singapore– UBS Pan-Asian Telco Conference – Singapore– Daiwa Investment Conference – New York– USA Investor Roadshow– Nomura Asia Equity Forum – Singapore– Macquarie ASEAN Corporate Day – London– HSBC ASEAN Conference – Singapore

3Q2011 – 2Q2011 results announcement – Singapore Investor Roadshows– SGX-UBS Conference – Hong Kong– Macquarie ASEAN Corporate Day – Singapore– UBS ASEAN Conference – Singapore– CLSA Investors’ Forum – Hong Kong– USA Investor Roadshows

4Q2011 – 3Q2011 results announcement– Singapore Investor Roadshows– Morgan Stanley Annual APAC Summit – Singapore– JP Morgan APAC TMT Conference – Hong Kong– SGX-UBS Conference – London

FINANCIAL CALENDAR FOR 2012/2013*Date Activities

2 February FY2011 results announcement

12 April 14th Annual General Meeting

May 1Q2012 results announcement

August 1H2012 results announcement

November 3Q2012 results announcement

February 2013 FY2012 results announcement

*Subject to change. Please check www.starhub.com/ir for the latest updates


80


81

ABOUT THIS REPORTStarHub has included corporate social responsibility information in its Annual Reports since FY2004 when the company published its fi rst Annual Report after listing on the Singapore Stock Exchange. For the fi rst time, this year’s Annual Report contains a detailed sustainability report that has been prepared in accordance with the Global Reporting Initiative (GRI) G3.1 guidelines including GRI’s Telecommunications Sector Supplement.

Data presented in this report covers StarHub’s sustainability performance during the fi nancial year 1 January 2011 to 31 December 2011, with comparison to 2010’s performance. We are committed to working toward setting targets and goals for future reporting.

The report includes social, environmental and economical performance data from all business divisions and subsidiaries that are under the fi nancial and operational control of StarHub with the exception of Nucleus Connect, a wholly-owned subsidiary incorporated in April 2009. In the case of Nucleus Connect, which is an operating company responsible for building and managing Singapore’s Next Gen NBN, only fi nancial fi gures have been reported. All data in the report has been extracted from primary offi cial documents and records to ensure accuracy. Estimations have been used

Content

> 82Stakeholder Engagement

> 86Materiality Analysis

> 88Our Approach to Sustainability

> 90Our Marketplace

> 94Our People

> 100Workplace Safety and Health

> 102Our Environment

> 108Our Community

> 112Economic Performance

> 113GRI Statement

> 114GRI Index

REPORT

in a very few instances where complete data was not available, and this has been indicated in the report wherever applicable. We are in the process of implementing more robust data tracking and gathering mechanisms that will enable us to improve reporting next year.

We have used internationally accepted measurement units for all data. Financial fi gures are in Singaporean dollars unless specifi ed otherwise.

GRI has verifi ed that this report fulfi ls the requirements of Application Level B. A summarised GRI Content Index has been included at the end of this report identifying the location of the Standard Disclosures in the report.

Reporting processA Sustainability Reporting Committee was set up to facilitate the preparation of the report. The Committee consists of senior management executives from various functions. A materiality analysis was carried out to identify sustainability issues that are most signifi cant to the StarHub business as well as to its key stakeholders. Stakeholders are defi ned as individuals and groups who may be potentially impacted by, have the ability to impact, or have an interest in StarHub’s business operations. The Committee assessed and determined the sustainability context, materiality, scope, boundary, and prioritisation of topics to be covered in the report. A taskforce with representatives from the key departments was created to gather and verify the performance data.

AudienceThe aim of this report is to provide information on our sustainability efforts to a wide range of stakeholders that include investors, employees, unions, customers, suppliers, contractors, business partners, NGOs, regulatory authorities, industry associations, academics, media, analysts and the local community.

AssuranceWe did not seek external assurance for the sustainability report content this year, although information was internally verifi ed. However, a sustainability expert from an advisory fi rm that we worked with, assisted in the preparation of this report and verifi ed a sample of data gathered.

AvailabilityIn line with our environmental policy, we have printed only a limited number of copies of this report. However, a PDF version of the report is available for download on our website at www.starhub.com

ContactWe value your feedback. You are welcome to send questions, comments, suggestions or feedback relating to this report to [email protected]

42NUMBER OF GRI INDICATORS COVERED IN THIS SUSTAINABILITY REPORT

SUSTAINABILITY


82

Sustainability Report

STAKEHOLDERENGAGEMENT

We have identifi ed a wide range of stakeholders who are important to us and who have an interest in how we run our business. We believe an open, transparent and ongoing dialogue with stakeholders is crucial in addressing their concerns and expectations, as well as to grow our business in a manner that is sustainable.

Providing regular information about our economical, social and environmental performance, as well as products and services, is an important aspect of our stakeholder engagement process. We make use of a variety of channels and platforms to share information about our business and to understand stakeholders’ views about our operations.

Stakeholder engagement is an ongoing activity for StarHub rather than a one-off event. While informal ways of engaging stakeholders will continue, we plan to develop a more structured approach to engage with our stakeholders as our sustainability programme evolves.

“Stakeholder engagement is anongoing activity

rather than a one-off event.”


83


Here is a summary of how we presently engage with key stakeholders:

Stakeholders How we engageStakeholders’expectations How we respond

Customers Customer surveys, Twitter, Facebook® pages, advertisements, retail stores, Customer Service outlets

Seamless, high-quality coverage, rich content, affordability, data security, prompt level of service

By committing ourselves to respect consumers’ rights, provide clear product information, offer value for money, ensure product performance and quality, reliable service, prompt handling of complaints, and protection of data and privacy

Employees Intranet, emails, internal newsletter publications, workshops, frequent games organised for staff, annual Staff Communication Session, encouragement of staff to interact more personally in and out of the offi ce

Caring, conducive environment where productivity and self-development can take place, ease of employees’ applications for leave, training, etc.

By adopting sound HR policies and practices that promote fair treatment, safe working conditions, reward and recognition for performance, team work, work-life balance and career growth, e.g. through provision of nursing rooms and encouraging staff to take part in runs

Suppliers Quotations, Requests for Proposal, tenders, regular meetings, email correspondence, teleconference

Compliance with terms and conditions of prevailing purchasing policies and procedures, while maintaining ethical standards at all times, the best cost, marketing support from suppliers

By establishing policies and practices that ensure a fair selection and procurement process, ethical business practices and respect for contractual obligations

Distributors/Retailers

Regular meetings, shop visits, email correspondence

On-time delivery, quality assurance of the hardware, strong dealer collaboration, driving good customer experience, after-sales support

By proactive sales planning, sales support, regular visits by account managers and providing a single point of contact for distributors/partners for speedier response

Business partners Frequent discussions with telecom and content partners

Partnerships for business opportunities and growth

By engaging them to seek mutually benefi cial business opportunities

Investors Regular meetings, discussions, emails with over 300 institutional investors, across Asia, Europe and the US

Transparency, timely information on company progress and status, profi tability

By endeavouring to generate optimum return on investment, good governance, transparency and disclosure, as well as sustainable and long-term growth of business


84


STAKEHOLDER ENGAGEMENT

Stakeholders How we engageStakeholders’expectations How we respond

Local Communities Community outreach programmes, corporate sponsorships

Support from a caring corporate citizen

By regularly reviewing community needs, partnering with Voluntary Welfare Organisations, and investing in community projects to help the needy and the underprivileged youth

Media Invitations to media events, regular media releases

Exposure and access to company developments and news, as well as breaking stories on entertainment and related content

By providing dedicated media contacts, and offering timely and accurate information on company issues of public interest

Government and Regulators

Regular discussions with relevant agencies and departments

Adherence to regulations, prompt resolution of issues

By committing ourselves to complywith applicable laws, putting in place policies and procedures to ensure compliance

Trade associations Joining relevant trade associations

Support in addressing issues facing the industry

By contributing through active membership and participating in industry forums and dialogues, sharing knowledge and information

Trade unions Dialogue with the unions Access to employees for promoting membership and engagement with management

By maintaining an open communication with the union. We have signed a Memorandum of Understanding (MOU) with Singapore Industrial and Services Employees’ Union (SISEU), which allows rank-and-fi le employees to participate in recreational and social activities organised by the Union

NGOs and Advocacy Groups (e.g. Singapore Compact, human rights groups, WWF, etc.)

Attending conferences, meeting with interest groups, and sustainability reporting

Responsible business practices, reducing environmental impacts, and disclosing information about sustainability performance

By committing to wider sustainability programmes that seek to harmonise our economical, social and environmental goals


85


Membership StarHub, through our employees, engages with a number of industry associations and forums through membership, participation and contributions. Some of these are listed below:

Singapore Compact for CSRAmerican Chamber of Commerce, SingaporeAsia Digital Marketing Association (ADMA)Asia Pacifi c Network Information Centre (APNIC)Association of Media Owners (AMOS)Association of Small & Medium Enterprises (ASME), SingaporeBritish Chamber of Commerce, SingaporeCable Television Laboratories (CableLabs)Current AnalysisGSMA Development FundGSMA Wireless Intelligence SubscriptionInstitute of Advertising, SingaporeInstitute of Public Relations, SingaporeInvestor Relations Professional Association, SingaporeLaw Society of Singapore Lawnet for Legal Research Open Data Center AllianceOvum Enterprise IT knowledge CentrePacifi c Telecommunications CouncilPromax AsiaRouting Asset Database (RADB)Singapore Academy of LawSingapore Advanced Research & Education Network (SingAREN)Singapore Association of the Institute of Chartered Secretaries & AdministratorsSingapore Business Federation (SBF)Singapore Chinese Chamber of Commerce & Industry (SCCCI)Singapore Computer SocietySingapore Corporate Counsel AssociationSingapore Hotel AssociationSingapore Human Resource Institute (SHRI)Singapore Indian Chamber of Commerce & Industry (SICCI)Singapore InfoComm Technology FederationSingapore Institute of Management (SIM)Singapore International Chamber of Commerce (SICC)Singapore IT Management Association (ITMA) and AccentureSingapore National Employers’ Federation (SNEF)Singapore Press ClubSingapore Training and Development Association (STADA)Singapore-German Chamber of CommerceSMa (Singapore Manufacturers Federation)TM Forum


86


MATERIALITYANALYSIS

Regular discussion with stakeholders has facilitated our understanding of economical, social and environmental issues that are material to our stakeholders as well as to our business. This has also helped us to prioritise issues that our sustainability strategy should address.

StarHub operates in four main business areas: mobile, pay TV, broadband and fi xed network for data, voice and internet services. We have a combined customer base of more than three million for these services. Uninterrupted connectivity and service delivery for all our customers is of paramount importance. Transparency in product offerings, product quality, data security, privacy protection, protecting children, product safety and prompt resolution of complaints and problems are other key issues considered important by customers. We understand that meeting customers’ expectations in these areas will help us build the trust and reputation necessary to retain existing customers and win new customers to support business growth.

“Connecting with communities

through various social and environmental

projects strengthens StarHub’s reputation as

a trusted brand.”


87

We cannot delight our customers without building a committed and motivated workforce. Our people therefore are at the centre of our business strategy. Implementing human resource policies and practices that promote safe and healthy working conditions, fair employment, teamwork, learning and development, career growth and rewards for performance are important to attract, retain and grow talent.

As a leading telecommunications operator in Singapore, we run data centres and base stations and occupy offi ce spaces where we consume energy. Energy consumption produces greenhouse gas emissions, a key source of global warming. Initiatives to reduce energy consumption not only help mitigate climate change but also save costs for the company. Therefore, fi nding ways to reduce energy use is an ongoing effort at StarHub. Reducing water use and waste are other key initiatives that we see as material. Introducing eco-friendly products and services is yet another area in which we seek to play a role to benefi t the environment.

Finally, as a responsible corporate citizen, contributing to the development of the local community is important for us. Connecting with communities, through various social and environmental projects, also strengthens StarHub’s reputation as a trusted brand.

All StarHubbers go through ExCITe, one of two induction workshops, to learn about StarHub’s core values.



88

ADVISOR & ADVISORY

PANELCEO & Senior Management

CHAIRPERSONHead, Corporate Communications

& IR

CSR Manager


STARHUB SUSTAINABILITY COMMITTEE

Responsibility for sustainability at StarHub begins at the top management level. StarHub’s Sustainability Committee, headed by the CEO and represented by senior management executives, oversees company-wide sustainability strategies and initiatives coordinated by a CSR Manager.

Our approach to sustainability is based on making continuous efforts to strike a healthy balance between economic, social and environmental objectives. We do this by identifying the impact our business makes on the economy, society and environment. Constructively engaging stakeholders, our own assessment of impacts that our business operations may have and research of wider social and environmental issues facing the telecommunications sector help us develop and adjust our sustainability strategy.

A key aspect of our approach involves adopting the most relevant economic, social and environmental performance indicators to manage, measure, and report our progress in sustainability.

OUR APPROACH TOSUSTAINABILITY

BusinessContinuity

Management

CorporateAdministration

CustomerService

Finance Government& Strategic

Affairs

HumanResource

Legal Network


89


Below is a summary of our approach to various sustainability aspects:

Sustainability aspects Our approach

Sustainable business performance − Drive business excellence and operational effi ciencies across the company by reviewing and improving processes.

− Promote and develop technology and service innovation within StarHub and with our external partners.

− Work closely with vendors, agencies, industry specialists and research partners to develop innovative solutions, from conceptualisation to implementation.

Environment− Energy − Water− Emissions, effl uent and waste− Products and services− Compliance

− Develop capabilities to measure, track and reduce environmental footprint, including energy, water and waste.

− Introduce products and services that reduce environmental impact.− Minimise regulatory risks by complying with applicable environmental laws.

Labour practices− Employment− Labour/management relations− Occupational health and safety− Training and education− Diversity and equal opportunity− Equal remuneration for men

and women

− Become an employer of choice by offering a vibrant workplace and fair employment practices.

− Promote mutual trust between employees and the management through open communication and seeking feedback.

− Assess workplace health and safety risks and take preventive measures.− Invest in human capital, develop employee competencies and upgrade skills

by providing regular training opportunities.− Respect and promote gender and ethnic diversity and equality in

employment and promotions.− Promote a culture of merit with a performance-based reward system.− Comply with applicable labour laws.

Human Rights− Non-discrimination− Freedom of association

and collective bargaining− Child labour− Forced labour and

compulsory labour

− Implement non-discriminatory human rights policies, practices and procedures and ban child labour, and forced and compulsory labour.

− Identify potential human rights risks across business operations and take necessary measures to prevent violations.

− Respect employees’ rights to freedom of association and collective bargaining as protected by Singaporean labour laws.

Society− Local communities− Corruption− Anti-competitive behaviour− Compliance

− Work with Voluntary Welfare Organisations and government agencies to identify opportunities for investing in community welfare by funding, volunteering, sharing knowledge and expertise, and sponsorships.

− Implement corporate code of ethics to promote integrity.− Comply with anti-competition laws of Singapore.

Products and services− Marketing communications− Customer privacy− Compliance

− Ensure fair disclosure in advertising and marketing campaigns and materials for product offerings and pricing packages.

− Implement policies and systems to protect customer privacy and to maintain data security.

− Support and follow industrial guidelines for ethical practices in marketing communications.


90


MARKETPLACE

As a leading info-communication and entertainment operator in Singapore, we are fully committed to responsible market practices, and to uphold high ethical and service standards.

We have adopted policies and practices to ensure availability and reliability of telecommunications products and services to our customers.

A team of well-trained technical staff is responsible for our equipment’s daily maintenance to ensure the system availability, serviceability and performance. We have adopted a high standard MTTR (Mean Time to Repair) target and system rectifi cation and troubleshooting procedures have been put in place. In addition, a hierarchical escalation process has been implemented for fault management control for system restoration or service normalisation.

Mobile accessibilityStarHub operates a 24/7 mobile network monitoring system which oversees our network services to maintain reliability and quick response to ensure quality and reliability of service consistently above 99.9%.

StarHub offers mobile handsets and plans targeted at the lower-income brackets, from retail rates of $20.33 for post-paid mobile plans to up to 25% extra credits with every top-up for GREEN pre-paid SIM cards. Some of our handsets are available for free with a new sign-up contract.

In addition, given the increasing ease of access to the Internet via smartphones, and the corresponding rising popularity of smartphones, there is greater urgency to protect minors from being exposed to undesirable mobile content. To this end, StarHub jointly developed the Voluntary Code for Self-regulation of Mobile Content (Mobile Content Code) with the other telcos in Singapore.

“StarHub operates a 24/7 mobile network

monitoring system which oversees all network services

to maintain reliability and quick response to ensure quality and reliability of

service consistently above 99.9%.”

OUR


91


StarHub launched SafeSurf on Mobile, Singapore’s fi rst network-based mobile Internet content fi ltering service, SafeSurf Online, a network-based Internet content fi ltering for all computers connected to a home network, and SafeShield, an Internet security service that provides the whole family with a whole host of features to protect personal computers against viruses, spyware, spam, phishing attacks as well as unsafe websites.

StarHub adheres to the policies and practices issued by the regulators, the IDA and Media Development Authority, to manage human rights issues relating to the access and use of telecommunication products and services.

Emergency preparednessStarHub maintains a strategic business continuity management (BCM) programme, certifi ed under Singapore Standards SS540: 2008 since May 2011, to enhance its capability to provide, maintain and recover its telecommunication products and services in the event of an emergency, disaster or crisis situation. Consistency and continuous improvement is maintained with surveillance audits and recertifi cation.

Critical business functions identifi ed within StarHub have assessed business continuity risks and potential impacts; prepared business continuity and disaster recovery policies; developed plans and procedures; and executed tests and exercises as part of the programme. Areas addressed include pandemic fl u, crisis communication, coordination and management, and loss of access to key StarHub infrastructure and operating facilities. In its second year of certifi cation, StarHub is continuing to refi ne, update and validate these plans and exercises through its BCM programme.

The certifi cation and its ongoing maintenance gives reasonable assurance to our stakeholders and customers that a methodical BCM framework has been adopted by StarHub, and its required components have been put in place to achieve this business continuity objective.

The BCM programme is overseen by the Risk Management Committee, and is supported operationally by representatives from StarHub’s critical business functions.

Protecting intellectual property rightsWe recognise intellectual property rights (IPR) as signifi cant corporate assets. In relation to the protection of StarHub’s IPRs, our policy is to only grant licences for our IPRs to third parties on a limited basis and only when necessary. We also take action to prevent the use of our StarHub IPRs by unauthorised persons. For example, should a third party use the StarHub trademark to promote their own services without our permission, we will take necessary legal action to prevent such unauthorised use.


92

Anti-corruption measuresSingapore has a strict anti-corruption legislation in place and instances of corruption are dealt with fi rmly. StarHub adopts a zero-tolerance policy against corrupt conduct.

Cases of alleged corruption are promptly acted upon when they are escalated to the team’s attention through the whistle-blowing channels.

Details of our Whistle-Blowing Policy can be found in the Corporate Governance section of this Annual Report.

Fair competition policyStarHub is committed to supporting fair competition policies and non-discriminatory practices. Singapore has comprehensive anti-competition laws; StarHub is governed under sector regulation under the Telecom Competition Code and Media Market Conduct Code. We run our business in compliance with the law.

There has been no claim against StarHub in the reporting period for anti-competitive behaviour, antitrust, and monopolistic practice.

Compliance with regulationsStarHub adheres to applicable laws, standards and code relevant to our business, some of which are listed below:

Singapore Laws and Codes1. Broadcasting Act2. Media Market Conduct Code3. TV Advertising Code4. Sponsorship Code5. Subscription TV Programme Code6. Video on Demand (VOD) Programme Code7. Film Classification Guidelines 8. Telecommunications Act (Cap. 323)9. Telecom Competition Code10. Code of Practice for Info-communication Facilities in Buildings11. Code of Practice for Telecommunications Service Resiliency12. Code of Practice for Telecommunication Outage Reporting13. Premium Rate Services Code

Voluntary Codes1. Advertising Standards Authority of Singapore (ASAS) Code2. Mobile Operators’ Content Code

OUR MARKETPLACE


91.1%

CUSTOMERS WHO RATED US AS HAVING MET OR EXCEEDED EXPECTATIONS VIA CALL CENTRE INTERACTION

95.7%

CUSTOMERS WHO RATED US AS HAVING MET OR EXCEEDED EXPECTATIONS FOR TECHNICAL SERVICES


93


All radio frequency (RF)-emitting phones in Singapore, including base stations and mobile phones, must comply with the World Health Organisation (WHO) standards. These standards follow the International Commission on Non-Ionising Radiation Protection (ICNIRP) guidelines, which protect against identifi ed hazards of RF exposure with large safety margins. StarHub works closely with the local health authorities to monitor and check that RF signals from base stations are within prescribed limits.

Clarity of charges and tariffsStarHub’s mobile price plans are available on our website and are clearly displayed at our retail outlets.

StarHub’s service staff go through contract terms with customers before any agreements are signed, highlighting the penalties of early termination by the customers where applicable. It is also the practice for customers to acknowledge the products and services provided in the customer service agreement before their transaction is processed.

StarHub launched Singapore’s fi rst-ever set of tools that provides mobile roaming customers with pertinent roaming-related information and data usage, with an added cost notifi cation feature. Roam Manager allows StarHub’s roaming customers to check their daily data roaming usage charges in over 230 international destinations, and be aware of their mobile spend each day.

Customer feedbackExcellent customer service is crucial for retaining and growing our customer base. Regular feedback from customers helps us to better understand their expectations. We actively monitor customer satisfaction through the Enterprise Customer Experience Scorecard that we have implemented.

In a survey in 2011, 91.1% of customers rated us as having met or exceeded their expectations through their call centre interactions. For technical services, the score was 95.7%. Both these surveys were conducted by a third party, a consulting fi rm that we engaged. At Customer Service Centres, 93.1% of customers, surveyed through the Queue Management System, felt that we met or exceeded their expectations.

Customer privacy and data securityWe have implemented robust policies and systems to protect customer privacy, maintain data security and comply with our obligations under relevant laws.

93.1%

CUSTOMERS WHO RATED US AS HAVING MET OR EXCEEDED EXPECTATIONS AT CUSTOMER SERVICE CENTRES


94

PEOPLEEmployees are at the heart of StarHub’s sustainability strategy. As a service organisation, our growth comes from ensuring excellent customer experience. To a large extent, the customer experience depends on how our people interact with, serve and solve problems for our customers. Our people play a key role in winning and retaining customers.

As a leading telecommunications services provider, it is critical for us to maintain an extensive and sophisticated telecom infrastructure to ensure seamless and uninterrupted connectivity for our customers. We would only be able to do this with a pool of people who are qualifi ed, talented, experienced and dedicated; but also passionate about what they do.

We operate in a technologically dynamic market where innovation and speed to market are critical factors for success. We therefore need people who are creative, innovative and strategic thinkers, who are quick to read technological trends and customer needs, to tailor products and services to fuel growth.

In essence, our people are key drivers of our business. We are interested in what motivates our people to be more competent, productive, creative, innovative and passionate. We invest in people.


“We are interested in what motivates our

people to be more competent, productive, creative, innovative and passionate. We invest

in people. ”

OUR


95

We have put in place human resource policies that support attracting, retaining and growing the best talent and providing a work environment that is safe, fair, motivating and vibrant.

We regard our people as one of our key competencies to enable us to excel on the business front. We ensure that the organisation has the right resources and relevant competency and skills to support its business growth and sustainability, and that our team is equipped with the tools to excel in the marketplace.

We treat all employees with respect and expect them to do the same to each other. We also hope that all employees have a fulfi lling tenure at StarHub where they feel that they are developing themselves.

We have reinforced our commitment to responsible workplace policies by signing the Employers’ Pledge of Fair Employment Practices with the Tripartite Alliance for Fair Employment Practices.

StarHub has been recognised for its leadership in people management practices. In 2011, StarHub was one of the select recipients of Asia’s Best Employer Brand Awards by Employer Branding Awards.

Employee profi leWe employed 3,724 people in 2011 across our businesses in Singapore, including part-time employees.

Workplace diversityDiversity is a key strength in Singapore’s multiracial and multicultural landscape. As a responsible employer, we value and support gender, ethnic and age diversity in the workplace. We follow a merit-based hiring policy which provides equal opportunity to candidates irrespective of their gender, ethnic background and age. This is refl ected in our workforce profi le. We employ persons with physical disability in line with our commitment to support integration and diversity.


EMPLOYEE PROFILE

Temporary employees

Full-timeequivalent91%

8%

Part-timeemployees

1%

GENDER DIVERSITY AT STARHUB

Female

Male56%

44%


96

AGE PROFILE

41-50yrs

Above 50 yrs

30-40 yrs

<30 yrs6% 29%

48%

17%

HIRING BY AGE GROUP: 2011

30-50 yrs

Above 50 yrs1%

<30 yrs57%

42%

OUR PEOPLE

GenderWe have a healthy mix of women and men in our workforce. In 2011, women accounted for 44% of our headcount. Coincidentally, women also represented 44% of the total new hiring during the year.

Women held 45% of positions in the “senior managers & above” category. Their share in the “executives” category was also 45%.

AgeEstablished in April 2000, StarHub is a relatively young company, a fact which is also refl ected in our employees’ age profi le. The median age in StarHub is 34 years old. In 2011, 48% of our employees were in the age group of 30–40 years, followed by 29% being less than 30 years of age. Of all the employees hired during the year, the share of those below 30 years of age was 57%, followed by those in the age group 30–50 years at 42%.

Female employees were well represented in the “30–40 years” group, which is remarkable as females of this age group tend to stay at home due to familial commitments. We want to sustain this healthy balance by continuing to encourage females in this age group to stay with us, by constantly reviewing and improving our strategies on a better work-life balance.

StarHub has enhanced its Retirement and Re-employment Policy to be aligned with the Retirement and Re-employment Act, which came into effect from 1 January 2012. The Act requires employers to re-employ those who have reached retirement age of 62 up to age 65 as a fi rst step, and later, to 67 subject to good health and performance. We have in our workforce nine employees who are above the age of 62 years old.

Ethnic diversityOur policy is to provide equal and merit-based employment opportunities. StarHub’s workforce is represented by all key ethnic and racial groups in Singapore. We remain committed to maintaining a fair representation of the minority groups in particular.

NationalitiesStarHub’s operations are in Singapore. Job opportunities that we create mostly benefi t Singaporeans and Permanent Residents (PR). In 2011, Singaporeans represented 80% of our workforce followed by PRs at 12%.

Though foreigners account for just 7% of our employees, they add richness to our employee diversity and bring global perspectives necessary for growth. In 2011, our workforce included people from the following nations: Australia, China, India, Indonesia, Myanmar, Vietnam, Malaysia, New Zealand, United Kingdom and the Philippines, among others.


GENDER PROFILE BY EMPLOYEE CATEGORY %

4555

3961

4555

8713

FemaleMale

Seniormanagers& above

Middlemanagers

Non-Executives

Executives


97

RemunerationOur compensation, rewards and recognition strategy is aimed at attracting, retaining, motivating and rewarding employees. StarHub uses market benchmarks to offer competitive compensation.

StarHub has established two Rewards and Recognition Committees, which are responsible for reviewing and approving promotions and recommending rewards. The Corporate Rewards and Recognition Committee consists of the CEO, Head of HR and selected Heads of Division. The Divisional Rewards and Recognition Committee includes Division Heads, Heads of Sections and HR Business Partners.

Compensation is determined on the basis of contributions towards the profi tability and growth of the company, skills and relevant experience. In 2011, the overall base salary ratio of women to men was 1.0 : 1.3.

Apart from wages, StarHub employees receive a number of benefi ts. Some of these benefi ts are not available to temporary workers hired for less than three months. Benefi ts for permanent employees include comprehensive health screening, additional insurance coverage other than coverage under the Workplace Injury Compensation Act, discount on StarHub products and services, leave except for National Service, medical coverage, transport allowance, development training (except job-related training), professional fee claims for any professional associations, free entry passes for places of interest, and tokens for occasions such as marriage.

Performance managementWe have a comprehensive Performance Management and Appraisal system in place to fairly assess and reward employee performance. Employees and their managers discuss and agree on a set of goals at the beginning of the year. At the end of the year, appraisal is conducted via an open joint discussion between the employee and his/her supervisor. The process is documented and signed off by both the employee as well as the supervisor. Additionally, supervisors are strongly encouraged to conduct regular interim reviews on a biannual or quarterly basis.

Apart from determining rewards, the performance appraisal plays a crucial role in identifying employees’ development and career growth needs and aspirations, and in developing necessary plans to meet these goals.

StarHub’s performance appraisal policy currently covers only permanent employees.

Health EducationStarHub is committed to promoting the health and well being of employees. We have signed a Health Pledge with the Health Promotion Board to implement health promotion programmes in the workplace. In 2011, we organised a number of lunchtime talks to create awareness among employees on a range of health issues. Topics covered include cervical cancer, stress management, anger management and fi re safety.

AGE & GENDER PROFILE %

4852

4654

3565

3367

FemaleMale

<30 yrs

30-40 yrs

Above50 yrs

41-50 yrs


ETHNIC PROFILE %

74.1

75.2

National ethnic composition*StarHub workforce

Chinese

13.4

9.1

Malay

9.2

5.4

Indian

3.3

10.2

Others

WORKFORCE PROFILE

Singapore PR

Foreigner

Singapore citizen

7%

80%12%

Numbers do not add up to 100% due to rounding off.

* Population Trends 2011, Department of Statistics, Singapore.


98

OVERALL AVERAGE TRAINING HOURS BY GENDER

Female

Male51%

49%

AVERAGE TRAINING HOURS BY CATEGORY AND GENDER hours

66

00

63

2421

2225

FemaleMale

Seniormanagers& above

Middlemanagers

Executives

Training and developmentWe fi rmly believe that investing in continuous development of our people is critical to maintaining a competitive edge in the marketplace, and in keeping our employees motivated. Offering opportunities for learning and upgrading skills is therefore an integral part of our people management.

StarHub has put in place an extensive Learning & Development Framework to support the development of employees. The Organisational Learning Department has the responsibility to implement the framework with the following objectives:

1. Build and maintain an engaged and motivated workforce, one that is aligned to StarHub’s core values and branding;

2. Build leadership quality for the future; equip talents with leadership competencies, and prepare them for leadership roles; and

3. Identify and equip employees with critical technical skills which are required to meet current and future business challenges.

StarHub has adopted a joint accountability approach to learning and development. At the corporate level, the organisation is responsible for ensuring the availability of critical skills to support the current and future business needs. Line managers are responsible for identifying the training and developmental needs of their staff members. At the individual level, employees are encouraged to take responsibility for their learning while the company provides opportunities and support for development.

StarHub has implemented three levels of in-house training programmes. All employees are expected to attend the essential StarHub training modules. A set of key programmes has been developed for various job categories. Attendance in these courses is one of the criteria for promotion. A list of recommended programmes has also been developed for various job levels to support learning and development.

In addition, sponsorship opportunities are offered for attending functional skills training, overseas training and conferences, diploma courses and executive management and master’s degree programmes.

In 2011, StarHub invested in 70,508 hours of training for employees, or 24.6 hours of training per employee. Rapid developments in technology which deeply impact consumers’ lifestyles and spending habits, have necessitated the constant upgrade of skills of industry players. It is not surprising, therefore, for companies to invest more in upgrading the skills of their employees. StarHub is no exception, in grooming its people and its leaders. For instance, more than 25 senior managers attended a customised leadership programme conducted by the INSEAD faculty last November, with each participant clocking more than 40 hours of training. Overall, women received about the same number of training hours as men.

OUR PEOPLE



99

We spent $2.09 million on employee training in 2011. Per employee training spend was $732, signifi cantly higher than the national average expenditure of $511 per employee in 2010, based on the national statistics from the Ministry of Manpower available at the time of this report. Our training expenditure per trainee at $954 in 2011 was higher than the national per trainee expenditure of $872 in 2010, the latest available benchmark at the time of this report.

Employee turnoverWe have a number of retention strategies in place to minimise employee turnover. We regularly review our turnover rate against key national and general industry benchmarks.

Employee turnover in 2011 was 17%, down from 18% in 2010. Our turnover rate in 2011 continued to be signifi cantly lower than the national attrition rate of over 25% and fared well against the telecom industry‘s attrition rate of over 18% (see Employee turnover chart).

Our analysis indicates that those who resign generally do not leave us for another telecommunications company. Most of the time, they leave us to work in other sectors.

Employee turnover by both female and male employees was lower in 2011 at 18% and 14.6% respectively, compared with 18.5% and 17.0% in 2010. Turnover in the “above 50 years of age” category recorded the most signifi cant drop in 2011 compared with 2010.

Respecting Human RightsStarHub conducts its business in conformance with international Human Rights Conventions and national laws.

Discrimination: StarHub discourages any kind of discrimination in employment. There were no incidents of discrimination during the reporting period.

Child labour: StarHub does not employ child labour. We do not support employment of children.

Freedom of association: StarHub has signed a Memorandum of Understanding (MOU) with Singapore Industrial and Services Employees’ Union (SISEU), which allows rank-and-fi le employees to participate in recreational and social activities organised by the Union. Additionally, StarHub pays for the annual subscription fee for rank-and-fi le employees to join SISEU.

Forced labour: StarHub does not engage in forced and compulsory labour. Our employees are free to leave employment after serving a notice in accordance with their contracts.


18

24

17

17

25

18

EMPLOYEE TURNOVER %

11

10

StarHubNational average*Telecom Industry*

22.7

16.0

8.6

22.9

14.3

2.5

EMPLOYEE TURNOVER BY AGE GROUPS %

11

10

<30 yrs30-50 yrsAbove 50 yrs

EMPLOYEE TURNOVER BY GENDER %

18.0

14.6

18.5

17.0

11

10

FemaleMale

* Source: Labour Market Survey, MOM. 2011 rates based on fi rst three quarters’ fi gures.


100

Our approach to workplace safety and health (WSH) is to adopt reasonably practicable means to eliminate or reduce the risk of hazards that are associated with our workplace activities to an acceptable level. Implementation of a WSH risk management system and various WSH practices and procedures across business and operational units are important aspects of our WSH programme.

Since we moved into our current premises at StarHub Green, we have taken part in the building’s fi re drills, with the latest taking place on 29 December 2011, in order to maintain a high-level of preparedness in the event of a fi re. The fi re safety certifi cate was awarded to the building management.

Safety of fi eld personnelWe have put in place operating procedures to ensure the safety of our fi eld staff and contractors involved in the installation, operation and maintenance of masts, base stations, laying cables and other outside work. These include adoption of a Code of Practice on WSH Risk Management, safety procedures for installation of radio equipment, and a disaster recovery plan.

WORKPLACESAFETY AND HEALTH


“StarHub is committed to establishing and maintaining a safe

and healthy workplace for all employees and

other persons who may be affected by our workplace activities.”


101

All our vendors or contractors are required to comply with the provisions of the Workplace Safety & Health Act (WSH Act) while undertaking work at our sites. They are required to assess the workplace for potential risks prior to carrying out work on site. After the assessment, the safety offi cer is required to submit a Risk Assessment (RA) form, based on MOM guidelines, to the building management for approval.

Siting of mastsStarHub actively supports responsible policies and practices on the siting of masts and transmission sites. StarHub undertakes stakeholder consultation, and actively pursues site sharing and other initiatives to reduce visual impacts. Mobile telecommunications operators in Singapore are required to share all future masts. These are part of the new terms and conditions imposed by the Urban Redevelopment Authority and IDA for new proposed designation of monopoles or masts as infrastructure to be shared with all mobile telecommunications operators.

They are also required to have the mast painted to blend with the surroundings in order to reduce their visual impact. For example, we erected a fake coconut tree, together with the other two operators, to house the antenna at Sentosa Cove.

At the end of 2011, the percentage of standalone sites, shared sites and sites on existing structures is as follows:

Type of site Percentage

Stand-alone Mobile Sites 0.8%Shared Sites (Mobile-Combined Antenna System) 7.2%Sites on Existing Structures 92.0%Total Mobile Sites 100.0%



102

ENVIRONMENT

OUR CORPORATE GREEN POLICY AND SIX-POINT COMMITMENT

StarHub will adopt responsible and sustainable practices in our corporate activities to minimise the environmental impact of our operations. We will continually review our goals and commitment to protect the global environment as much as possible.

We will adhere as much as possible to environmental recommendations by the relevant authorities and also implement in-house targets to improve our environmental performance.

We will reduce our environmental loads by effi ciently using resources, saving energy, reducing waste, encouraging material recycling, and minimising emissions of greenhouse gases and ozone-depleting substances.

We will minimise environmental loads and adopt environmentally friendly technologies as far as possible, when ordering and purchasing necessary resources.

We will implement educational programmes to raise environmental awareness among our employees and to ensure that they recognise the essence of this Green Policy by actively addressing environmental concerns.

We will make social contributions in close partnership with local communities by disclosing environmental information and supporting environmental conservation initiatives.

Regularly assessing and fi nding ways to minimise our operations’ impact on the environment is a key piece of our sustainability strategy.

Our direct impact on the environment comes mainly from the use of electricity, fuel, water and generation of waste across our business activities. Our environmental approach is two pronged. Firstly, reducing the relative consumption of energy, fuel and water, and minimising waste. Secondly, increasing the use of renewable energy, implementing initiatives for water and resource conservation, and recycling of waste.


“StarHub will adopt responsible

and sustainable practices in our corporate activities

to minimise the environmental impact

of our operations.”

OUR


103

Working closely with regulatory authorities and complying with applicable regulations is an important aspect of our approach to managing environmental issues. StarHub has not been fi ned nor sanctioned for breach of environmental laws and/or regulations in the reporting period.

We established a formal Corporate Green Policy in 2009 and made a six-point commitment to drive environmental excellence across our businesses (see page 102). Our Corporate Green Policy continues to guide our actions.

At StarHub, environmental performance is now part of the corporate Key Performance Indicators (KPIs) and is linked with the company bonus. Environmental KPIs for 2011 comprised reduced paper usage, minimising electricity consumption, replacing manual forms with online versions and paper recycling.

Our environmental programme evolved further in 2011 as we adopted several performance indicators from the Global Reporting Initiative (GRI) Framework for disclosing our impact. In addition, for the fi rst time we began measuring our carbon footprint in conformance with the Greenhouse Gas (GHG) Protocol, the internationally recognised framework for measuring and reporting corporate carbon footprint. We have also started tracking and measuring water consumption by using the globally recognised Water Footprint Network standards. Another initiative involved measuring the amount of waste. These endeavours have enabled us to establish a baseline against which we would measure our future performance.

Energy

CASE STUDY: Solar-powered mobile phone

In July 2011, StarHub and Foresight Technologies launched the innovative iNO SOLO, a rugged entry-level mobile phone designed for military personnel and outdoor adventurers. StarHub is the exclusive distributor for SOLO in Singapore.

SOLO’s most unique feature is its solar charging battery that backs up its lithium battery to further extend the usefulness of the phone in outdoor locations where users have no easy access to power points. Simply place the rugged phone in a sunny spot and it will recharge automatically. It takes an accumulated 24 hours of sunlight to fully charge the solar battery. This provides a standby time of up to 200 hours and a talk-time of up to 200 minutes.

The SOLO comes in an Army-Green rubberised casing, which protects the phone from accidental drops and shocks. Its Ingress Protection 65 (IP65) rating also means that the phone is splash-proof and dust-proof. Other features of the SOLO include a mini-torchlight and an FM radio.

SOLO was designed with the local military personnel in mind. Its solar-charging feature which allows the phone to operate far longer than current traditional phones while away from an electrical power source, coupled with its design for rugged use in any outdoor environment, means that National Servicemen can stay in touch longer with their friends and family while in the fi eld.

StarHub believes in sustaining both the social and physical environments in which we operate.



104


OUR ENVIRONMENT

Our energy consumption was 104.5 million kWh in 2011 or 0.47% lower than in the preceding year. Base Transceiver Stations (BTS) and Central Offi ces account for 77% of our total electricity consumption. Energy data for nearly 17% of our base stations is based on estimates where landlords absorbed electricity expenses in the rental and do not provide usage fi gures.

We have been taking steps to reduce energy consumption at BTS sites. We now have two solar-powered BTS and have upgraded more than 50% of our BTS to a more energy-effi cient model. The two solar-powered BTS situated at StarHub Green and on the roof of IKEA at Alexandra Road, established in September 2010, helped us save more than 8,000 kWh of energy or about 3,900 kg of CO2e in 2011.

We are in the midst of upgrading all our BTS sites. The upgraded BTS would consume 50% less energy and after completion, the upgrade will result in an estimated saving of 2,940 kWh of energy per BTS annually.

We are also using a solar-powered BTS-enabled Greenergy vehicle, which is deployed to boost signal strength where needed.

Other initiatives to save energy include motion-sensor activated lighting in our offi ces after normal working hours.

FuelWe use diesel for our commercial fl eet and back-up power generator sets. Petrol is used for company-owned vehicles. In 2011, the diesel consumption amounted to 181,138 litres; a tad lower than 181,450 litres in the previous year. Petrol consumption was also lower at 101,801 litres than 115,091 litres in 2010.

ENERGY USE kWh

104,528,944

105,024,691

11

10

FUEL CONSUMPTION litres

11

10

Petrol (mobile combustion)Diesel (stationary combustion) Diesel (mobile combustion)

101,80185,80795,333

115,091105,99575,457


105


Carbon footprintThis is our fi rst carbon footprint reporting. We used the Greenhouse Gas Protocol (GHG Protocol), a global reporting framework jointly developed by the World Resource Institute and the World Business Council for Sustainable Development, to measure our carbon footprint.

DETAILED EMISSIONS SUMMARY (in metric tonnes)

Emissions sources 2011 2010

Scope 1Stationary combustion 229 283Mobile combustion 491 469Fugitive emissions (refrigerant gases) 2,131 1,885Total Scope 1 emissions 2,852 2,637

Scope 2Purchased electricity 49,766 50,002Total Scope 2 emissions 49,766 50,002Total CO2 emissions 52,618 52,640

Numbers are to the nearest whole number.

StarHub’s absolute carbon footprint (Scope 1 and Scope 2) in 2011 was at 52,618 Mt CO2e, roughly the same as in 2010. Emissions from purchased electricity accounted for more than 94% of the overall emissions. Our focus moving forward, therefore, is going to be on reducing power consumption and exploring ways to harness renewable energy such as solar power.

WaterWe followed the Water Footprint Network standards, a global framework, to measure our water footprint. Due to diffi culty in data gathering, this year’s water footprint covers only four locations: Headquarters at StarHub Green, Nobel Call Centre, Haw Par Techno Centre and Da Vinci. We plan to expand coverage in the next year’s report as we implement more reliable and robust data gathering mechanisms.

Our water use at these sites in 2011 was 24,212 cubic metres or 8.1% higher than in the preceding year. Water for drinking accounted for 69% of the total water use followed by 31% for domestic purposes such as washing and cleaning.

WATER CONSUMPTION cubic metres

24,212

22,396

11

10

SOURCES OF GHG EMISSIONS 2011

Fugitiveemissions(refrigerant

gases)4.05%

Mobilecombustion

0.93%

Stationary combustion0.44%

Purchased electricity94.58%

WATER USE IN 2011

Drinking

DomesticUse31%

69%


106


OUR ENVIRONMENT

Waste Total waste in 2011 amounted to 126 tonnes, which is slightly higher than the 122 tonnes fi gure for 2010. Some of the attributing factors include increased sales as well as a more effi cient collection of waste, particularly paper. The reported fi gures include waste from only these locations: StarHub Green HQ, all retail and CSC outlets, Nobel call centre and Haw Par Techno Centre.

Paper and polystyrene foam, from utensils and packaging, formed the bulk of the waste generated at our offi ces. All waste was sent for recycling through licensed contractors.

Our measures to reduce paper waste include creating awareness to lower use of printing paper, buying only FSC-certifi ed paper (paper made from wood sourced from certifi ed sustainable forests) for internal use, and implementing paper recycling systems in key offi ces.

We have placed a number of internal manual forms on the intranet where online processing can take place, thus removing the need to use printed forms.

A new initiative in 2011 is helping us to reduce the amount of paper used to send Business Reply Envelopes (BREs) with bills to customers.

Case Study: Replacing Business Reply Envelopes to save paper

It is an industry practice to send Business Reply Envelopes (BREs) together with the bill to customers. We discovered that only a small section of customers were actually using BREs to make payment. We have now introduced an alternative payment system via Recurring Credit Card (RCC) to replace BREs.

As of October 2011, StarHub had 244,206 customers paying by RCC. From 1 October 2011, the BREs were removed from insertion into the envelopes which contained the bills of RCC customers. However, customers still have a choice of an electronic BRE which they can print off the StarHub Corporate website and fold themselves.

The benefi ts of this project are three-fold: a reduction in paper usage; providing customers the convenience of downloading the self-help BRE whenever they wish to make changes to their existing recurring credit card payment arrangement; and savings for StarHub in terms of printing and inserting the BREs.

The initiative helped in eliminating almost 250,000 printed BREs a month last year. This amounts to an estimated reduction of more than 1,200 kg of paper each month, and monthly cost savings of over $5,000 for StarHub.

WASTE GENERATED tonnes

126

122

11

10


107

Environmental education and awarenessOur environmental awareness programmes in 2011 included a My Green StarHub road show and exhibition for employees to learn more about environmentally-friendly practices. In another event, more than 1,000 employees attended a talk on the importance of eco-friendly efforts. Environmental awareness has also been included as a topic in the induction programme for new employees.

We continue to engage local communities to create environmental awareness. In December 2011, we organised a beach cleaning campaign at Changi Beach Park with the Society for the Physically Disabled, at the end of which we collected 74 bags of trash.

1. StarHub staff getting a chance to purchase environmentally-friendly items at the Eco Bazaar.

2. Together with the Society for the Physically Disabled, StarHub volunteers cleared 74 bags of fl otsam and garbage from Changi Beach Park.


21


108


As a responsible corporate citizen, StarHub acknowledges its role in contributing to the development of communities in which it operates. Building trusted relationships with its communities has been one of the core values practised at StarHub. Investing in social projects has been an integral part of StarHub corporate culture and business philosophy.

We work closely with a number of Voluntary Welfare Organisations and relevant government agencies to assess and understand community needs, and how we can use our expertise, infl uence and resources to address some of these needs. In addition to investing our own resources, StarHub has successfully mobilised customers and employees to actively support community work.

In 2011, StarHub continued to support and invest in a number of social projects. Donations and other community investments in 2011 amounted to about $1.8 million, 93% more than the $1.0 million spent in 2010.

COMMUNITYOUR

“Building trusted relationships with

our communities has been one of the core values

practised here.”


109


StarHub Sparks FundSince July 2000, StarHub has been channelling 1% of all revenues from its IDD 008 and 018 services into the StarHub Sparks Fund (formerly StarHub IDD Charity Fund), which aims to give back to society, especially the disabled and disadvantaged in the community.

In 2011, the 1% of the IDD 008 and 018 calls translated to just over $1.1 million. Contribution to the Fund in 2010 was over $1.09 million. About $8 million has been donated to the Fund since the launch in July 2000, and over 250 social organisations and charities have benefi ted from the Fund so far.

StarHub Rewards Redemption for Charity ProgrammeUnder a programme launched in February 2009, StarHub customers can redeem their StarHub Rewards Monthly Points to make a donation to an appointed charity, namely the MINDS’ Towner Garden School. In 2011, StarHub customers redeemed their Rewards Points to raise $94,175 for the school. The school has received a total sum of $240,145 since the rewards option was created in 2009.

1. Fengshan-Jade RC Chairman Mr Lim Tee Peng receives the $150,000 donation from StarHub CEO Mr Neil Montefi ore, for tuition for the district’s underprivileged children.

2. StarHubbers rallying for the Community Chest Heartstrings Walk in May 2011.

1 2


110


Supporting rehabilitation effortsSince July 2010, StarHub has engaged Connect Centre, a private company that has a call centre set up at Changi Prison. Currently, about 20 of the inmates there operate as call centre agents on rotating shifts to sell StarHub products and services. Customer service and product training is provided by StarHub. The programme aims to equip the inmates with useful skills to enable them to rehabilitate and integrate back into society upon their release.

Connecting the ‘Sparklers’ NetworkStarHub’s culture of caring for society is also refl ected in employees’ active participation in community outreach programmes. The StarHub Corporate Volunteerism Scheme, introduced at the end of 2006, provides each employee with two working days of paid leave every year to spend on community development projects.

The StarHub Corporate Volunteerism programme was strengthened in 2009 when an internal volunteer network called Sparklers, made up of StarHub employees with a shared passion to help the underprivileged, was created. This was a result of an employee survey in which a large number of staff members had indicated keen interest in participating in longer-term volunteering initiatives.

The Sparklers Network serves as a platform for like-minded employees to network, collaborate and lead long-term volunteer commitments.

In 2011, employees volunteered a total of 57 days to support a number of social initiatives such as the Central CDC’s Nurture Programme, painting a wall mural at the Spastic Children’s Association School and taking clients from the Society for the Physically Disabled to clean up parts of Changi Beach Park.

StarHub’s approach to community development was founded on the following principles:

– To encourage equality and the social integration of the less fortunate by fulfi lling basic needs and supporting opportunities to maximise human potential through training and skills enhancement;

– Spark the next generation of young talents by empowering youths with the resources and platforms they require to uncover their talents and make a positive difference in their world; and

– Contribute towards Singapore’s quest for sporting excellence and promote a vibrant sporting culture.

Moving forward, StarHub will be focusing on directly empowering disadvantaged youth to give them equal opportunities to grow, and to enable them to realise and actualise their potential in life.

OUR COMMUNITY

1. CEO Neil Montefi ore and wife Rosie (both in green) helping to clean Changi Beach Park with SPD President Chia Yong Yong (seated) and ED Abhimanyau Pal.

2. StarHubbers painting a mural at the Spastic Children’s Association School ahead of World Environment Day.

1

2


111

Benefi ciaries of StarHub’s community outreach programme

> January 2010Visited Moral Home for the Disabled and donated $88,888.

> October 2010Visited AWWA Community Home for Senior Citizens and donated $100,000.

> November 2010Donated $100,000 to Central Singapore Community Development Council in support of their Nurture Programme.

> May 2011Took part in the Community Chest Heartstrings Walk 2011 @ Marina Bay Sands and donated $300,000.

> June 2011Visited Spastics Children’s Association School and donated $200,000.

> November 2011Took 30 underprivileged children to watch Jack and the Beanstalk, and donated $150,000 for the tuition of 165 children in Fengshan-Jade district for 2012’s school year.

> December 2011Took disabled clients from Society for the Physically Disabled to clean Changi Beach and Park, and donated $300,000.

> 2010 & 2011StarHub donated $800,000 to Singapore National Olympics Council in cash and kind to support local sports and athletes.

> 2010, 2011, 2012StarHub invests $1.5m over the three years to *SCAPE to drive programmes for youth and new media development.


$1.8MILLION

DONATIONS MADE IN 2011


112

ECONOMICPERFORMANCE

A summary of StarHub’s economic performance for the FY2010 and FY2011 is provided below in accordance with the GRI guidelines.

These fi gures have been taken from the audited Financial Statements approved by the Board of Directors for the respective fi nancial years. For more detailed information on StarHub’s fi nancial performance, please refer to Group Financial Review and Financial Statements sections of this report.

SUMMARY OF STARHUB’S ECONOMIC PERFORMANCEEconomic performance indicators 2011 2010

Operating revenue $2,312m $2,238mNet profi t $316m $263mOperating costs (including staff costs) $1,935m $1,901mStaff costs $267m $250mDividends paid to shareholders $343m $343m



113



114


GLOBAL REPORTING INITIATIVE G3.1 INDEXGRI Application Level BProfi le Disclosure Description Page No.

STANDARD DISCLOSURES PART I: PROFILE DISCLOSURES1. Strategy and Analysis

1.1 Statement from the most senior decision-maker of the organisation. 6–71.2 Description of key impacts, risks, and opportunities. 7, 10–112. Organisational Profile2.1 Name of the organisation. 12.2 Primary brands, products, and/or services. 3, 12–172.3 Operational structure of the organisation, including main divisions, operating companies, subsidiaries,

and joint ventures.34–35,

38, 40–412.4 Location of organisation’s headquarters. Singapore2.5 Number of countries where the organisation operates, and names of countries with either major operations

or that are specifi cally relevant to the sustainability issues covered in the report.StarHub operates

primarily in Singapore

2.6 Nature of ownership and legal form. 76–772.7 Markets served (including geographic breakdown, sectors served, and types of customers/benefi ciaries). 12–172.8 Scale of the reporting organisation. 1–3, 12–17, 952.9 Signifi cant changes during the reporting period regarding size, structure, or ownership. None2.10 Awards received in the reporting period. 753. Report Parameters3.1 Reporting period (e.g. fi scal/calendar year) for information provided. 54–58, 803.2 Date of most recent previous report (if any). 803.3 Reporting cycle (annual, biennial, etc.) 813.4 Contact point for questions regarding the report or its contents. 813.5 Process for defi ning report content. 813.6 Boundary of the report (e.g. countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). 803.7 State any specifi c limitations on the scope or boundary of the report. 803.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other

entities that can signifi cantly affect comparability from period to period and/or between organisations.80

3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report. Explain any decisions not to apply, or to substantially diverge from, the GRI Indicator Protocols.

81

3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g. mergers/acquisitions, change of base years/periods, nature of business, measurement methods).

Does not apply as this is our

fi rst annual sustainability

report3.11 Signifi cant changes from previous reporting periods in the scope, boundary, or measurement methods

applied in the report.Does not apply

as this is our fi rst annual

sustainability report

3.12 Table identifying the location of the Standard Disclosures in the report. 113–1163.13 Policy and current practice with regard to seeking external assurance for the report. 81

GRI INDEX


115


Profi le Disclosure Description Page No.

4. Governance, Commitments and Engagement4.1 Governance structure of the organisation, including committees under the highest governance body

responsible for specifi c tasks, such as setting strategy or organisational oversight. 59–60

4.2 Indicate whether the Chair of the highest governance body is also an executive offi cer. 61–624.3 For organisations that have a unitary board structure, state the number and gender of members of the

highest governance body that are independent and/or non-executive members.61–62

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

63, 69

4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organisation’s performance (including social and environmental performance).

64

4.6 Processes in place for the highest governance body to ensure confl icts of interest are avoided. 62–63, 69–70

4. Governance, Commitments and Engagement4.7 Process for determining the composition, qualifi cations, and expertise of the members of the highest

governance body and its committees, including any consideration of gender and other indicators of diversity.

62–63

4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

69–70

4.9 Procedures of the highest governance body for overseeing the organisation’s identifi cation and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.

59–60, 69–70, 88

4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance.

88

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation. 69–70, 86–874.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which

the organisation subscribes or endorses. 7, 85

4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organisations in which the organisation: *Has positions in governance bodies; *Participates in projects or committees; *Provides substantive funding beyond routine membership dues; or *Views membership as strategic.

85

4.14 List of stakeholder groups engaged by the organisation. 82–844.15 Basis for identifi cation and selection of stakeholders with whom to engage. 82–844.16 Approaches to stakeholder engagement, including frequency of engagement by type and

by stakeholder group. 82–84

4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key topics and concerns, including through its reporting.

82–84

STANDARD DISCLOSURES PART II: DISCLOSURE ON MANAGEMENT APPROACH (DMAs)DMA EC Disclosure on Management Approach EC

Economic performance 88–89DMA EN Disclosure on Management Approach EN

Energy 88–89, 106Water 88–89, 106Emissions, effl uents and waste 88–89, 106Products and services 88–89, 106Compliance 88–89, 106Overall 88–89, 106


116

GRI INDEX


Profi le Disclosure Description Page No.

DMA LA Disclosure on Management Approach LAAspects Employment 88–89, 94–95

Training and education 88–89, 98–99Diversity and equal opportunity 88–89, 95–96Equal remuneration for women and men 88–89, 97

DMA HR Disclosure on Management Approach HRNon-discrimination 88–89, 99Freedom of association and collective bargaining 88–89, 99Child labour 88–89, 99Prevention of forced and compulsory labour 88–89, 99

DMA SO Disclosure on Management Approach SOAspects Local communities 88–89

Corruption 88–89, 92Anti-competitive behaviour 88–89, 92

DMA PR Disclosure on Management Approach PRMarketing communications 88–89Customer privacy 88–89, 93Compliance 88–89

Performance Indicator Description Page No.

STANDARD DISCLOSURES PART III: PERFORMANCE INDICATORSEconomicEconomic performanceEC1 Direct economic value generated and distributed, including revenues, operating costs, employee

compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

112

EnvironmentalEnergyEN3 Direct energy consumption by primary energy source. 10,308 GJ,

also see page 104

EN4 Indirect energy consumption by primary source. 376,304 GJ, also see

page 104EN5 Energy saved due to conservation and effi ciency improvements. 104EN6 Initiatives to provide energy-effi cient or renewable energy based products and services, and reductions

in energy requirements as a result of these initiatives.103

WaterEN8 Total water withdrawal by source. 105Emissions, effl uents and wasteEN16 Total direct and indirect greenhouse gas emissions by weight. 105EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. 104EN22 Total weight of waste by type and disposal method. 106ComplianceEN28 Monetary value of signifi cant fi nes and total number of non-monetary sanctions for non-compliance with

environmental laws and regulations.103


117



Social: Labour Practices and Decent WorkEmploymentLA1 Total workforce by employment type, employment contract, and region, broken down by gender. 95LA2 Total number and rate of new employee hires and employee turnover by age group, gender, and region. 96, 99LA3 Benefi ts provided to full-time employees that are not provided to temporary or part-time employees,

by major operations.97

LA8 Education, training, counselling, prevention, and risk-control programmes in place to assist workforce members, their families, or community members regarding serious diseases.

97

Training and educationLA10 Average hours of training per year per employee by gender, and by employee category. 98–99LA12 Percentage of employees receiving regular performance and career development reviews, by gender. 97Diversity and equal opportunityLA13 Composition of governance bodies and breakdown of employees per employee category according to

gender, age group, minority group membership, and other indicators of diversity.96–97

Equal remuneration for women and menLA14 Ratio of basic salary and remuneration of women to men by employee category, by signifi cant locations

of operation.97

Social: Human RightsNon-discriminationHR4 Total number of incidents of discrimination and actions taken. 99Freedom of association and collective bargainingHR5 Operations and signifi cant suppliers identifi ed in which the right to exercise freedom of association and

collective bargaining may be violated or at signifi cant risk, and actions taken to support these rights.99

Child labourHR6 Operations and signifi cant suppliers identifi ed as having signifi cant risk for incidents of child labour, and

measures taken to contribute to the effective abolition of child labour.99

Forced and compulsory labourHR7 Operations and signifi cant suppliers identifi ed as having signifi cant risk for incidents of forced or compulsory

labour, and measures to contribute to the elimination of all forms of forced or compulsory labour.99

Social: SocietyLocal communitiesSO1 Percentage of operations with implemented local community engagement, impact assessments, and

development programmes.108

CorruptionSO2 Percentage and total number of business units analysed for risks related to corruption. 92SO4 Actions taken in response to incidents of corruption. 92Anti-competitive behaviourSO7 Total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices

and their outcomes.92

Social: Product Responsibility Marketing communicationsPR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction. 93PR6 Programmes for adherence to laws, standards, and voluntary codes related to marketing communications,

including advertising, promotion, and sponsorship.92


118


GRI TELECOMMUNICATION SECTOR SPECIFIC INDICATORSHealth and SafetyIO3 Practices to ensure health and safety of fi eld personnel involved in the installation, operation and

maintenance of masts, base stations, laying cables and other outside plant.104–105

IO5 Compliance with ICNIRP (International Commission on Non-Ionising Radiation Protection) guidelines on exposure to radio frequency (RF) emissions from base stations.

93

IO7 Policies and practices on the siting of masts and transmission sites including stakeholder consultation, site sharing and initiatives to reduce visual impacts.

101

IO8 Number and percentage of stand-alone sites, shared sites and sites on existing structures. 101Providing AccessPA1 Policies and practices to enable the deployment of telecommunications infrastructure and access to

telecommunications products and services in remote and low population density areas. 90

PA2 Policies and practices to overcome barriers for access and use of telecommunications products and services including: language, culture, illiteracy and lack of education, income, disabilities and age.

90

PA3 Policies and practices to ensure availability and reliability of telecommunications products and services and quantify, where possible, time periods and locations of down time.

90–91

PA4 Quantify the level of availability of telecommunications products and services in areas where the organisation operates.

90–91

PA5 Number and types of telecommunications products and services provided to and used by low and no income sectors of the population.

90

PA6 Programmes to provide and maintain telecommunication products and services in emergency situations and for disaster relief.

90–91

PA7 Policies and practices to manage human rights issues relating to access and use of telecommunications products and services.

91

PA10 Initiatives to ensure clarity of charges and tariffs. 93Technology ApplicationsTA2 Provide examples of telecommunication products, services and applications that have the potential to

replace physical objects.106

TA5 Description of practices relating to intellectual property rights and open-source technologies. 91

GRI INDEX


FINANCIAL STATEMENTS

Content

> 120Directors’ Report

> 132Statement by Directors

> 133Independent Auditors’ Report

> 134Statements of Financial Position

> 135Income Statements

> 135Statements of Comprehensive Income

> 136Statements of Changes in Equity

> 138Consolidated Cash Flow Statement

> 139Notes to the Financial Statements

> 179Interested Person Transactions and Material Contracts

> 180Shareholding Information

> 182Notice of Fourteenth Annual General Meeting

> 185Proxy Form

> IBCCorporate Information


119


120

DIRECTORS’ REPORTYear ended 31 December 2011

We are pleased to submit this report to the members of the Company together with the audited fi nancial statements for the fi nancial year ended 31 December 2011.

DirectorsThe directors in offi ce at the date of this report are as follows:

Tan Guong Ching (Chairman)Neil Montefi ore (CEO)Kua Hong PakPeter Seah Lim HuatNihal Vijaya Devadas Kaviratne CBELee Theng KiatSteven Terrell ClontzLim Ming SeongSadao MakiTeo Ek TorLiu Chee MingRobert J. SachsNasser Marafi h Sio Tat Hiang (Alternate to Peter Seah Lim Huat)Stephen Geoffrey Miller (Alternate to Lee Theng Kiat)Takeshi Kazami (Appointed as Alternate to Sadao Maki on 30 May 2011)Guy William Norman (Alternate to Nasser Marafi h)

Directors’ Interests According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter 50, particulars of interests of directors who held offi ce at the end of the fi nancial year (including those held by their spouses and infant children) in shares, debentures, warrants, share options and share awards in the Company and in related corporations (other than wholly-owned subsidiaries) are as follows:

Shares in the Company and in related corporations

1 January 2011

31 December 2011

The CompanyOrdinary shares Tan Guong Ching 24,200 70,952Neil Montefi ore 750,000 750,000Peter Seah Lim Huat 482,110 519,022Nihal Vijiya Devadas Kaviratne CBE 9,900 134,812Lee Theng Kiat 173,230 205,354Steven Terrell Clontz 4,462,000+ 1,015,000+

Lim Ming Seong 217,300 257,302Teo Ek Tor 61,550 95,796Liu Chee Ming 102,850+ 129,862+

Robert J. Sachs 39,400 66,412Nasser Marafi h 1,700 18,600

+ Held (partly or wholly) by a nominee.


121

Shares in the Company and in related corporations (continued)

1 January 2011

31 December 2011

Related Corporations

i-STT Investments Pte LtdOrdinary shares (held in trust for STT Communications Ltd)Lee Theng Kiat 1 1

Singapore Airlines LimitedOrdinary sharesTan Guong Ching 2,000 2,000

Singapore Technologies Engineering LtdOrdinary sharesTan Guong Ching 13,857 47,399Peter Seah Lim Huat 391,483 494,108Lim Ming Seong 62,434 82,280

Singapore Telecommunications LimitedOrdinary shares Tan Guong Ching 2,840 2,840Kua Hong Pak 3,027 3,027Peter Seah Lim Huat 3,040 3,040Lee Theng Kiat 1,610 1,610Sio Tat Hiang 1,490 –


122


Shares in the Company and in related corporations (continued)

1 January 2011

31 December 2011

Related Corporations (continued)

SMRT Corporation LtdOrdinary shares Tan Guong Ching 11,000 11,000

SP Australia Networks (Transmission) Ltd (“SPANTL”)SP Australia Networks (Distribution) Ltd (“SPANDL”)SP Australia Networks (Finance) Trust (“SPANFT”)Stapled securities comprising shares in SPANTL and SPANDL and units in SPANFT Tan Guong Ching 160,935 174,642

STATS ChipPAC LtdOrdinary sharesPeter Seah Lim Huat 6,900 6,900Steven Terrell Clontz 800 800Lim Ming Seong 6,900 6,900

TeleChoice International LimitedOrdinary sharesPeter Seah Lim Huat 50,000 50,000Lim Ming Seong 60,000 60,000Sio Tat Hiang 150,000 150,000

Options and other interests in the Company and in related corporations

1 January2011

31 December 2011

The Company Conditional awards of shares under StarHub Performance Share PlanNeil Montefi ore 303,600 (1) 303,600 (1)

– 303,600 (2)

(1) A conditional award was granted in May 2010. The performance period is from 2010 to 2012. No shares will be delivered if the threshold performance targets are not achieved while up to twice the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded.

(2) A conditional award was granted in March 2011. The performance period is from 2011 to 2013. No shares will be delivered if the threshold performance targets are not achieved while up to twice the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded.


123

Options and other interests in the Company and in related corporations (continued)

1 January2011

31 December 2011

The Company Conditional awards of shares under StarHub Restricted Stock PlanTan Guong Ching 10,352 (3) –

7,118 (4) 3,518 (4)

23,300 (5) 13,471 (5)

26,000 (6) –

Neil Montefi ore 264,000 (7) 264,000 (7)

– 264,000 (8)

Peter Seah Lim Huat 8,312 (3) –5,740 (4) 2,740 (4)

19,000 (5) 10,930 (5)

20,000 (6) –

Nihal Vijaya Devadas Kaviratne CBE 8,312 (3) –5,740 (4) 2,740 (4)

19,000 (5) 10,930 (5)

20,000 (6) –

Lee Theng Kiat 7,024 (3) –4,768 (4) 2,268 (4)

15,800 (5) 9,146 (5)

18,000 (6) –

Steven Terrell Clontz 15,000 (6) –

Lim Ming Seong 9,102 (3) – 6,008 (4) 2,908 (4)

19,800 (5) 11,426 (5)

22,000 (6) –

Teo Ek Tor 7,446 (3) – 5,304 (4) 2,604 (4)

17,400 (5) 10,038 (5)

19,000 (6) –


124


1 January2011

31 December 2011

The Company (continued)Conditional awards of shares under StarHub Restricted Stock PlanLiu Chee Ming 6,012 (3) –

4,064 (4) 1,964 (4)

13,400 (5) 7,758 (5)

15,000 (6) –

Robert J. Sachs 6,012 (3) – 4,064 (4) 1,964 (4)

13,400 (5) 7,758 (5)

15,000 (6) –

Nasser Marafi h 3,360 (4) 1,660 (4)

11,000 (5) 6,370 (5)

12,000 (6) –

(3) A conditional award was granted in May 2007. The performance period was from 2007 to 2008. The final award was granted in 2009 based on the actual level of achievement of the pre-determined performance targets. The shares under the final award were delivered in phases according to the stipulated vesting periods from 2009 to 2011.

(4) A conditional award was granted in May 2008. The performance period was from 2008 to 2009. The final award was granted in 2010 based on the actual level of achievement of the pre-determined performance targets. The shares under the final award were partially delivered in 2010 and 2011, and the balance will be delivered in 2012.

(5) A conditional award was granted in May 2009. The performance period was from 2009 to 2010. The final award was granted in 2011 based on the actual level of achievement of the pre-determined performance targets. The shares under the final award were partially delivered in 2011, and the balance will be delivered in 2012 and 2013.

(6) An award of time-based restricted shares was granted in May 2010. Upon the satisfactory completion of the pre-determined time-based service conditions, the shares under the award were delivered in May 2011.

(7) A conditional award was granted in May 2010. The performance period was from 2010 to 2011. No shares will be delivered if the threshold performance targets are not achieved while up to 1.5 times the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded. Shares will be delivered in phases according to the stipulated vesting periods.

(8) A conditional award was granted in March 2011. The performance period is from 2011 to 2012. No shares will be delivered if the threshold performance targets are not achieved while up to 1.5 times the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded. Shares will be delivered in phases according to the stipulated vesting periods.



125


1 January2011

31 December2011

Exercise Price

$ Exercise Period

Related Corporations

Singapore Technologies Engineering LtdOptions to subscribe for ordinary sharesTan Guong Ching 13,500 – 3.01 10.02.2007 to 09.02.2011

13,500 – 2.84 11.08.2007 to 10.08.201113,500 13,500 3.23 16.03.2008 to 15.03.201213,500 13,500 3.61 11.08.2008 to 10.08.2012

Peter Seah Lim Huat 33,375 – 3.01 10.02.2007 to 09.02.201133,375 – 2.84 11.08.2007 to 10.08.201144,500 44,500 3.23 16.03.2008 to 15.03.201244,500 44,500 3.61 11.08.2008 to 10.08.2012

Lim Ming Seong 7,500 – 3.01 10.02.2007 to 09.02.20117,500 – 2.84 11.08.2007 to 10.08.20117,500 7,500 3.23 16.03.2008 to 15.03.20127,500 7,500 3.61 11.08.2008 to 10.08.2012

1 January2011

31 December 2011

Singapore Technologies Engineering LtdConditional awards of shares Tan Guong Ching 967 (9) –

2,351 (10) 1,176 (10)

4,400 (11) –

Peter Seah Lim Huat 5,358 (9) –13,034 (10) 6,517 (10)

24,000 (11) –

Lim Ming Seong 792 (9) –1,710 (10) 856 (10)

3,200 (11) –

(9) The minimum threshold performance over the period from 1 January 2008 to 31 December 2008 was required for any restricted shares to be released. The final award was granted in 2009 based on the actual level of achievement of the pre-determined performance targets. The shares under the final award were delivered in phases according to the stipulated vesting periods from 2009 to 2011.

(10) The minimum threshold performance over the period from 1 January 2009 to 31 December 2009 was required for any restricted shares to be released. The final award was granted in 2010 based on the actual level of achievement of the pre-determined performance targets. The shares under the final award were partially delivered in 2010 and 2011, and the balance will be delivered in 2012.

(11) An award of time-based restricted shares was granted in 2010. The shares under the time-based restricted award were vested in 2011.


126


1 January2011

31 December2011

Exercise Price

$ Exercise Period

STATS ChipPAC LtdOptions to subscribe for ordinary sharesPeter Seah Lim Huat 70,000 70,000 1.99 06.08.2004 to 05.08.2013

35,000 35,000 1.91 17.02.2005 to 16.02.2014

Except as disclosed in this report, no director who held offi ce at the end of the fi nancial year had interests in shares, debentures, warrants, share options or share awards of the Company, or of its related corporations, either at the beginning of the fi nancial year, or at date of appointment, if later, or at the end of the fi nancial year.

There were no changes in the above-mentioned directors’ interests in the Company between the end of the fi nancial year and 21 January 2012.

Except as disclosed under the “Options and other interests” section of this report, neither at the end of nor at any time during the fi nancial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefi ts by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Except as disclosed in this report and in notes 19.2.1 and 19.2.2 to the fi nancial statements, since the end of the last fi nancial year, no director has received or become entitled to receive a benefi t by reason of a contract made by the Company or a related corporation with the director, or with a fi rm of which he is a member or with a company in which he has a substantial fi nancial interest.

Share-based Payments

The StarHub Share Option Plan 2004, the StarHub Performance Share Plan and the StarHub Restricted Stock Plan (collectively referred to as the “Plans”) were approved and adopted by the members at an Extraordinary General Meeting of the Company held on 16 August 2004.

The Plans and the StarHub Pte Ltd Share Option Plan (“StarHub Share Option Plan 2000”) are administered by the Company’s Executive Resource and Compensation Committee (“ERCC”) comprising three directors, namely Peter Seah Lim Huat (Chairman), Lee Theng Kiat and Lim Ming Seong.

The Company designates Singapore Technologies Telemedia Pte Ltd as its parent company (“Parent Company”) for purposes of the Plans.

(a) Options granted under the StarHub Share Option Plan 2000 and the StarHub Share Option Plan 2004 (collectively, the “StarHub Share Option Plans”)

(i) The StarHub Share Option Plan 2000 was terminated in 2004, while the StarHub Share Option Plan 2004 has been suspended since 2006. Hence, no option has been granted since 2006. The existing options granted were vested according to the terms of the StarHub Share Option Plan 2000, or as applicable, the StarHub Share Option Plan 2004 and the respective grants.

(ii) Since 31 December 2010, there has been no option outstanding held by the directors of the Company.



127

Share-based Payments (continued)

(iii) Details of options granted to directors of the Company under the StarHub Share Option Plans are as follows:

Name of director

Aggregate options granted and accepted since commencement

of the StarHub Share OptionPlans to 31 December 2011

Aggregate options exercised since commencement

of the StarHub Share OptionPlans to 31 December 2011

StarHub Share Option Plan 2000

Peter Seah Lim Huat 93,750 93,750Lee Theng Kiat 143,750 143,750Steven Terrell Clontz 6,875,010 6,875,010Lim Ming Seong 118,750 118,750

StarHub Share Option Plan 2004

Peter Seah Lim Huat 44,250 44,250Nihal Vijaya Devadas Kaviratne CBE 44,250 44,250Lee Theng Kiat 44,250 44,250Lim Ming Seong 44,250 44,250Teo Ek Tor 44,250 44,250Liu Chee Ming 44,250 44,250Robert J. Sachs 25,500 25,500

(iv) As at the end of the fi nancial year, no options have been granted to controlling shareholders of the Company or its associates or to directors or employees of the Parent Company and its subsidiaries (“Parent Group”).

(v) No options have been offered at a discount during the fi nancial year.

(vi) The options granted by the Company do not entitle the option holders, by virtue of such holding, to any rights to participate in any share issue of any other company.

(vii) During the fi nancial year, a total of 576,343 ordinary shares fully paid in the Company were issued and a total of 614,064 treasury shares were transferred pursuant to the exercise of options under the StarHub Share Option Plans at exercise prices of between $0.88 and $1.52 per share.


128


(viii) As at the end of the fi nancial year, unissued shares of the Company under the StarHub Share Option Plans are as follows:

Number of option holders

Exercise period

Number of unissued shares

Exercise price per share

9 29.11.2002 to 29.11.2012 32,686 0.68013 27.04.2003 to 26.04.2012 14,000 0.88040 30.11.2003 to 29.11.2012 172,750 0.88058 31.05.2004 to 30.05.2013 128,314 0.88093 29.11.2004 to 28.11.2013 193,864 0.880

157 03.04.2005 to 02.04.2014 283,536 0.960205 27.11.2005 to 26.11.2014 464,519 0.985381 31.05.2006 to 30.05.2015 1,441,611 1.520

Total 2,731,280

Except as disclosed in this report, there were no other unissued shares of the Company or its subsidiaries under option as at the end of the fi nancial year.

(b) StarHub Performance Share Plan and StarHub Restricted Stock Plan

(i) The StarHub Performance Share Plan and the StarHub Restricted Stock Plan were implemented with the objectives of motivating key executives to strive for superior performance and sustaining long-term growth for the Group.

(ii) The following persons shall be eligible to participate in the aforesaid plans at the absolute discretion of the ERCC:

(1) employees (including executive directors) and non-executive directors of the Group;

(2) employees (including executive directors) and non-executive directors of the Parent Group who meet the relevant age and rank criteria and whose services have been seconded to a company within the Group and who shall be regarded as an employee of the Group for the purposes of the StarHub Performance Share Plan and the StarHub Restricted Stock Plan; and

(3) employees and non-executive directors of the Company’s associated companies, who in the opinion of the ERCC, have contributed or will contribute to the success of the Group.

(iii) Under the StarHub Performance Share Plan, awards of shares are granted on an annual basis, conditional on targets set for a performance period, currently prescribed to be a three-year period. Awards represent the right of a participant to receive fully paid shares, their equivalent cash value or combinations thereof, free of charge, upon the participant achieving prescribed performance targets set based on medium-term corporate objectives.

Awards are released once the ERCC is satisfi ed that the prescribed performance targets have been achieved. The actual number of shares given will depend on the level of achievement of the prescribed performance targets over the performance period. The fi rst performance target benchmarks the performance of the Company’s Total Shareholder Return (“TSR”) measured against the MSCI Asia-Pacifi c Telecommunications Index including Japan, over the performance period. The second performance target used is Wealth Added which measures the investment performance in terms of the Company’s TSR against shareholders’ expected returns by using cost of equity as a benchmark.



129


Since the commencement of the StarHub Performance Share Plan to the fi nancial year ended 31 December 2011, conditional awards aggregating 6,962,150 shares have been granted under the aforesaid plan. No shares will be delivered if the threshold performance targets are not achieved, while up to twice the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded.

Details of share awards granted under the StarHub Performance Share Plan (or “PSP”), are as follows:

Participants

Share awards granted during

the fi nancial year

Aggregateshare awardsgranted since

commencementof the PSP to

31 December 2011

Share awardsvested during the

fi nancial year

Aggregateshare awards

outstanding as at31 December 2011

Executive director:Neil Montefi ore 303,600 607,200 − 607,200

Key executives 657,800 4,411,950 143,889 1,347,950

(iv) Under the StarHub Restricted Stock Plan, awards granted vest only after the satisfactory completion of time-based service conditions (time-based restricted awards) or where the award is performance-related, after a further period of service beyond the performance targets completion date (performance-based restricted awards).

No minimum vesting periods are prescribed under the StarHub Restricted Stock Plan and the length of the vesting period in respect of each award will be determined on a case-by-case basis. Performance-based restricted awards differ from awards granted under the StarHub Performance Share Plan in that an extended vesting period is imposed beyond the performance target completion date. The total number of shares to be released depends on the level of attainment of the performance targets.

Since the commencement of the StarHub Restricted Stock Plan to the fi nancial year ended 31 December 2011:

(1) performance-based restricted awards aggregating 11,432,100 shares have been granted under the aforesaid Plan. No shares will be delivered if the threshold performance targets are not achieved, while up to 1.3 times or as the case may be 1.5 times, the number of shares that are the subject of the award, will be delivered if stretched performance targets are met or exceeded;

(2) a time-based restricted award of 100,000 shares has been granted on 15 January 2009. The shares under this award were vested in three equal tranches over a 3-year period from 1 January 2009 to 31 December 2011 according to a specifi ed vesting schedule; and

(3) a time-based restricted award of 213,000 shares has been granted on 17 May 2010. The shares under this award were vested in May 2011 upon the participants’ continued tenure as non-executive directors of the Company for a full one-year period from the date of grant.


130



Details of share awards granted under the StarHub Restricted Stock Plan (or “RSP”), are as follows:

Participants

Share awardsgranted during

the fi nancial year

Aggregateshare awardsgranted since

commencementof the RSP to

31 December 2011

Share awardsvested during the

fi nancial year

Aggregateshare awards

outstanding as at 31 December 2011

Non-executive directors:

Tan Guong Ching − 93,800 46,572 16,989Peter Seah Lim Huat − 75,200 36,912 13,670Nihal Vijaya Devadas Kaviratne CBE − 75,200 36,912 13,670Lee Theng Kiat − 64,000 32,124 11,414Steven Terrell Clontz − 15,000 15,000 −Lim Ming Seong − 80,300 40,002 14,334Teo Ek Tor − 68,900 34,246 12,642Liu Chee Ming − 54,000 27,012 9,722Robert J. Sachs − 54,000 27,012 9,722Nasser Marafi h − 34,000 16,900 8,030

Executive director:Neil Montefi ore 264,000 528,000 – 528,000

Key employees 1,776,000 9,783,400 1,064,688 4,516,352

As at 31 December 2011, no participant has been granted options under the StarHub Share Option Plans and/or received shares pursuant to the release of awards granted under the StarHub Performance Share Plan and/or the StarHub Restricted Stock Plan, which, in aggregate, represents 5% or more of the aggregate of:

(a) the total number of new shares available under the StarHub Share Option Plans, StarHub Performance Share Plan and StarHub Restricted Stock Plan collectively; and

(b) the total number of existing shares delivered pursuant to options exercised under the StarHub Share Option Plans and awards released under the StarHub Performance Share Plan and the StarHub Restricted Stock Plan collectively.


131

Audit Committee

The members of the Audit Committee as at the date of this report are as follows:

Kua Hong Pak, independent non-executive director (Chairman);Nihal Vijaya Devadas Kaviratne CBE, independent non-executive director; Lim Ming Seong, non-executive director; and Teo Ek Tor, independent non-executive director.

The Audit Committee has held four meetings since the last directors’ report. In performing its functions, the Audit Committee met with the Company’s external and internal auditors to discuss the scope of their work, the results of their examination and evaluation of the Company’s internal accounting control system.

The Audit Committee has also reviewed the following:

(1) assistance provided by the Company’s offi cers to the internal and external auditors;

(2) fi nancial statements of the Company and its subsidiaries prior to their submission to the directors of the Company for adoption; and

(3) interested person transactions (as defi ned in Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited) of the Company and its subsidiaries and the Company’s compliance with the review procedures of such transactions.

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 the discretion to invite any director or executive offi cer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees.

The Audit Committee has undertaken a review of all non-audit services provided by the external auditors, and is satisfi ed with the independence and objectivity of the external auditors and has recommended to the Board of Directors that KPMG LLP be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.

Auditors

The auditors, KPMG LLP, have expressed their willingness to accept re-appointment.

On behalf of the Board of Directors

Tan Guong ChingDirector

Neil Montefi oreDirector

Singapore2 February 2012


132

STATEMENT BY DIRECTORSYear ended 31 December 2011

In our opinion:

(a) the fi nancial statements set out on pages 132 to 176 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and the results and changes in equity of the Group and of the Company and the cash fl ows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and

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

The Board of Directors has, on the date of this statement, authorised these fi nancial statements for issue.

On behalf of the Board of Directors

Tan Guong ChingDirector

Neil Montefi oreDirector



133

INDEPENDENT AUDITORS’ REPORT

Members of the Company

StarHub Ltd

Report on the fi nancial statements

We have audited the accompanying fi nancial statements of StarHub Ltd (the Company) and its subsidiaries (the Group), which comprise the statements of fi nancial position of the Group and the Company as at 31 December 2011, the income statement and statement of comprehensive income, statement of changes in equity and statement of cash fl ows of the Group, and the income statement and statement of comprehensive income and statement of changes in equity of Company for the year then ended, and a summary of signifi cant accounting policies and other explanatory information, as set out on pages 132 to 176.

Management’s responsibility for the fi nancial statements

Management is responsible for the preparation of fi nancial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls suffi cient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profi t and loss accounts and balance sheets and to maintain accountability of assets.

Auditors’ responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated fi nancial statements of the Group and the statement of fi nancial position, the income statement and statement of comprehensive income and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and the results, changes in equity and cash fl ows of the Group and the results and changes in equity of the Company for the year ended on that date.

Report on other legal and regulatory requirements

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

KPMG LLPPublic Accountants and Certifi ed Public Accountants



134

STATEMENTS OF FINANCIAL POSITIONAs At 31 December 2011

GROUP COMPANY

Notes2011$’mil

2010$’mil

2011$’mil

2010$’mil

Non-current assetsProperty, plant and equipment 3 761.9 776.0 344.9 328.8Intangible assets 4 423.6 451.6 126.9 154.7Subsidiaries 5 – – 1,202.1 1,202.1Deferred tax assets 6 2.8 4.5 – –

1,188.3 1,232.1 1,673.9 1,685.6

Current assetsInventories 7 37.2 31.8 29.0 25.2Trade receivables 8 152.0 173.9 139.9 164.4Other receivables, deposits and prepayments 9 149.2 101.7 22.0 18.1Balances with related parties 10 17.2 16.5 661.6 614.7Cash and bank balances 11 179.2 237.5 154.3 180.2

534.8 561.4 1,006.8 1,002.6

Current liabilitiesTrade payables and accruals (448.1) (437.7) (288.9) (274.3)Other payables 12 (254.8) (237.4) (64.5) (78.6)Balances with related parties 10 (41.9) (41.8) (296.0) (187.3)Bank loans 13 (75.0) (330.4) (75.0) (330.4)Provision for taxation (83.5) (25.8) (55.7) (25.2)

(903.3) (1,073.1) (780.1) (895.8)Net current (liabilities)/assets (368.5) (511.7) 226.7 106.8

Non-current liabilitiesBank loans 13 (587.5) (475.0) (587.5) (475.0)Other payables 12 (34.1) (38.2) (34.1) (38.2)Deferred income 14 (62.8) (45.1) – –Deferred tax liabilities 6 (112.8) (108.1) (69.8) (71.4)

(797.2) (666.4) (691.4) (584.6)

Net assets 22.6 54.0 1,209.2 1,207.8

Shareholders’ equityShare capital 15 262.8 260.3 262.8 260.3Reserves 17 (240.2) (206.3) 946.4 947.5Total equity 22.6 54.0 1,209.2 1,207.8

The accompanying notes form an integral part of these financial statements.


135

INCOME STATEMENTSYear ended 31 December 2011

GROUP COMPANY

Notes2011$’mil

2010$’mil

2011$’mil

2010$’mil

Operating revenue 18 2,312.0 2,237.7 1,108.4 1,044.8Operating expenses 19 (1,935.2) (1,901.4) (1,018.8) (934.6)Other income 20 21.4 6.0 290.9 231.0

398.2 342.3 380.5 341.2

Finance income 21 2.1 1.8 17.6 16.2Finance expense 21 (20.5) (26.6) (20.6) (26.6)Net fi nance costs (18.4) (24.8) (3.0) (10.4)

Profi t before taxation 379.8 317.5 377.5 330.8Taxation 22 (64.3) (54.3) (29.2) (29.7)Profi t for the year 315.5 263.2 348.3 301.1

Attributable to:Equity holders of the Company 315.5 263.2 348.3 301.1Profi t for the year 315.5 263.2 348.3 301.1

Earnings per shareBasic (cents) 23 18.4 15.3Diluted (cents) 23 18.3 15.3

EBITDA 24 676.0 601.8


STATEMENTS OF COMPREHENSIVE INCOMEYear ended 31 December 2011

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Profi t for the year 315.5 263.2 348.3 301.1

Other comprehensive incomeEffective portion of changes in fair value of cash fl ow hedge, (net of tax) 1.1 (0.3) 1.1 (0.4)Total comprehensive income for the year 316.6 262.9 349.4 300.7

Total comprehensive income for the year attributable to:Equity holders of the Company 316.6 262.9 349.4 300.7


136

STATEMENTS OF CHANGES IN EQUITYYear ended 31 December 2011

GROUP

Share Capital

$’mil

Treasury Shares

$’mil

Goodwill Written Off

$’mil

Share-Based Payments

Reserve$’mil

Hedging Reserve

$’mil

Retained Profi ts

$’mil

Total Reserves

$’mil

Total Equity

$’mil

At 1.1.2010 257.5 (3.0) (276.3) 13.0 (7.4) 142.0 (131.7) 125.8

Total comprehensive income for the year

Profi t for the year – – – – – 263.2 263.2 263.2

Other comprehensive income

Effective portion of changes in fair value of cash fl ow hedge, (net of tax) – – – – (0.3) – (0.3) (0.3)

Total comprehensive income for the year – – – – (0.3) 263.2 262.9 262.9

Transactions with equity holders of the Company, recognised directly in equity

Contributions by and distributions to equity holders of the Company

Issue of shares pursuant to share plans 2.8 – – (0.6) – – (0.6) 2.2

Share-based payments expenses – – – 6.0 – – 6.0 6.0

Transfer from treasury shares to share-based payments reserve – 2.9 – (2.7) – – 0.2 0.2

Dividends paid (note 16) – – – – – (343.1) (343.1) (343.1)

Total transactions with equity holders of the Company 2.8 2.9 – 2.7 – (343.1) (337.5) (334.7)

At 31.12.2010 260.3 (0.1) (276.3) 15.7 (7.7) 62.1 (206.3) 54.0

At 1.1.2011 260.3 (0.1) (276.3) 15.7 (7.7) 62.1 (206.3) 54.0




Effective portion of changes in fair value of cash fl ow hedge, (net of tax) – – – – 1.1 – 1.1 1.1

Total comprehensive income for the year – – – – 1.1 315.5 316.6 316.6





Purchase of treasury shares – (9.1) – – – – (9.1) (9.1)



Total transactions with equity holders of the Company 2.5 (5.4) – (1.8) – (343.3) (350.5) (348.0)

At 31.12.2011 262.8 (5.5) (276.3) 13.9 (6.6) 34.3 (240.2) 22.6



137

COMPANY

Share Capital

$’mil

Treasury Shares

$’mil

Merger/ Capital

Reserve$’mil

Share-Based Payments

Reserve$’mil

Hedging Reserve

$’mil

Retained Profi ts

$’mil

Total Reserves

$’mil

Total Equity

$’mil

At 1.1.2010 257.5 (3.0) 276.5 13.0 (7.3) 705.1 984.3 1,241.8




Effective portion of changes in fair value of cash fl ow hedge, (net of tax) – – – – (0.4) – (0.4) (0.4)

Total comprehensive income for the year – – – – (0.4) 301.1 300.7 300.7







Total transactions with equity holders of the Company 2.8 2.9 – 2.7 – (343.1) (337.5) (334.7)

At 31.12.2010 260.3 (0.1) 276.5 15.7 (7.7) 663.1 947.5 1,207.8

At 1.1.2011 260.3 (0.1) 276.5 15.7 (7.7) 663.1 947.5 1,207.8




Effective portion of changes in fair value of cash fl ow hedge, (net of tax) – – – – 1.1 – 1.1 1.1

Total comprehensive income for the year – – – – 1.1 348.3 349.4 349.4





Purchase of treasury shares – (9.1) – – – – (9.1) (9.1)



Total transactions with equity holders of the Company 2.5 (5.4) – (1.8) – (343.3) (350.5) (348.0)

At 31.12.2011 262.8 (5.5) 276.5 13.9 (6.6) 668.1 946.4 1,209.2



138

CONSOLIDATED CASH FLOW STATEMENTYear ended 31 December 2011

2011$’mil

2010$’mil

Operating activitiesProfi t before taxation 379.8 317.5Adjustments for: Depreciation and amortisation (net of asset grants) 277.8 259.5 Loss on disposal of property, plant and equipment and intangible assets 3.8 1.3 Income related grants (21.4) (6.0) Share-based payments 2.4 6.0 Changes in fair value of fi nancial instruments (2.0) 2.1 Net fi nance costs 18.4 24.8 Other non-cash items (0.9) 0.9Operating cash fl ow before working capital changes 657.9 606.1Changes in working capital: Inventories (5.4) (3.6) Trade receivables 21.9 (48.6) Other receivables, deposits and prepayments (3.7) 14.2 Trade payables, accruals and other payables 26.1 95.7 Balances due from related parties (0.8) 6.1 Balances due to related parties 0.2 (0.3)Net cash from operating activities 696.2 669.6

Investing activitiesProceeds from disposal of property, plant and equipment and intangible assets 0.5 2.1Purchase of property, plant and equipment and intangible assets (246.5) (272.1)Interest received 2.0 1.8Net cash used in investing activities (244.0) (268.2)

Financing activitiesProceeds from exercise of share options 1.7 2.2Interest paid (21.8) (26.8)Proceeds from loans 187.5 200.0Repayment of loans (330.4) (290.4)Dividends paid (343.3) (343.1)Grants received 4.9 60.0Purchase of treasury shares (9.1) –Net cash used in fi nancing activities (510.5) (398.1)

Net change in cash and cash equivalents (58.3) 3.3Cash and cash equivalents at beginning of year 237.5 234.2Cash and cash equivalents at end of year (note 11) 179.2 237.5



139

These notes form an integral part of the fi nancial statements.

The fi nancial statements were authorised for issue by the Board of Directors on 2 February 2012.

1 Domicile and Activities

StarHub Ltd (“StarHub” or the “Company”) is incorporated in the Republic of Singapore and has its registered offi ce at 67 Ubi Avenue 1, #05-01 StarHub Green, Singapore 408942.

The principal activities of the Company are those relating to the operation and provision of telecommunications services and other businesses relating to the info-communications industry. The principal activities of the subsidiaries are set out in note 5 to the fi nancial statements.

The consolidated fi nancial statements relate to the Company and its subsidiaries (the “Group”).

2 Summary of Signifi cant Accounting Policies

2.1 Basis of preparation

The fi nancial statements are prepared in accordance with Singapore Financial Reporting Standards (FRS) pursuant to the requirements of the Companies Act, Chapter 50.

The fi nancial statements are prepared on a historical cost basis except for certain fi nancial assets and liabilities which are measured at fair value as disclosed in the accounting policies below.

The fi nancial statements are presented in Singapore dollars which is the Company’s functional currency. All fi nancial information presented in Singapore dollars has been rounded to the nearest million, unless otherwise stated.

The accounting policies set out below have been applied consistently by the Group to all periods presented in these fi nancial statements, except as disclosed below.

Adoption of new and revised standards

In the current fi nancial year, the Group has adopted all the new and revised FRSs and Interpretations of FRSs (“INT FRSs”) that are relevant to its operations and effective for annual periods beginning on 1 January 2011. The adoption of these new/revised FRSs and INT FRSs does not result in substantial changes to the Group’s accounting policies and has no material effect on the amounts reported for the current or prior years.

FRS 24 (revised 2010) Related Party Disclosures

From 1 January 2011, the Group has applied the revised FRS 24 Related Party Disclosures (2010) to identify parties that are related to the Group and to determine the disclosures to be made on transactions and outstanding balances, including commitments, between the Group and its related parties. FRS 24 (2010) improved the defi nition of a related party in order to eliminate inconsistencies and ensure symmetrical identifi cation of relationships between two parties.

The adoption of FRS 24 (2010) affects only the disclosures made in the fi nancial statements. There is no fi nancial effect on the results and fi nancial position of the Group for the current and previous fi nancial years. Accordingly, the adoption of FRS 24 (2010) has no impact on earnings per share.

New accounting standards and interpretations not yet adopted

The Group has not applied the following accounting standards (including their consequential amendments) and interpretations that have been issued as of the reporting date and are relevant to its operations but are not yet effective:

The Conceptual Framework for Financial Reporting 2010

FRS 12 Income Taxes : Amendments relating to deferred tax on recovery of underlying assetsFRS 107 Financial Instruments Disclosures : Amendments relating to disclosures on transfers of fi nancial assets

The initial application of the standards and interpretations relevant to the Group’s operations is not expected to have any material impact on the Group’s fi nancial statements. The Group has not considered the impact of the accounting standards issued after 31 December 2011.

NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2011


140

2.2 Consolidation

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.

Investments in subsidiaries are stated in the Company’s statement of fi nancial position at cost less impairment losses. Subsidiaries are consolidated with the Company in the Group’s fi nancial statements.

Acquisitions of subsidiaries from related corporations controlled by the ultimate holding company, Temasek Holdings (Private) Limited (“Temasek”) are accounted for as reconstructions of businesses under common control using the historical cost method similar to the “pooling of interest” method.

Under the historical cost method, the acquired assets and liabilities were recorded at their existing carrying amounts. The consolidated fi nancial statements included the results of operations, and the assets and liabilities, of the pooled enterprises as part of the Group for the whole of the current and preceding periods.

To the extent that the par value of the shares issued in consideration for these transactions exceeded the par value of the shares held by the related corporations, the difference was recognised as a merger reserve in the Group’s fi nancial statements.

Where a subsidiary was acquired from a related corporation in a share swap, the excess of the fair value of the Company’s shares issued over their par value for the portion acquired from an unrelated party was recognised as a capital reserve by the Group and the Company.

All other acquisitions with unrelated parties are accounted for under the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profi t or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classifi ed as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profi t or loss.

When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market based value of the replacement awards compared with the market-based value of the acquiree’s awards and the extent to which the replacement awards relate to past and/or future service.

Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interest and the other components of equity related to the subsidiary. Any surplus or defi cit arising on the loss of control is recognised in profi t or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale fi nancial asset depending on the level of infl uence retained.

The consolidated fi nancial statements include the fi nancial statements of the Company and its subsidiaries made up to the end of the fi nancial year.



141

2.2 Consolidation (continued)

Assets and liabilities of foreign subsidiaries are translated into Singapore dollars at rates of exchange closely approximate to those ruling at the reporting date. Income, expenses and cash fl ows are translated at average rates prevailing during the period. Translation differences are recognised in other comprehensive income, and are presented within equity in the foreign currency translation reserve. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign subsidiary is disposed of such that control is lost, the cumulative amount in the foreign currency translation reserve related to that foreign subsidiary is transferred to the income statement as an adjustment to the profi t or loss arising on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests.

Goodwill and fair value adjustments arising on the acquisition of foreign subsidiaries on or after 1 January 2005 are treated as assets and liabilities of the foreign subsidiary and translated at the closing rate. For acquisitions prior to 1 January 2005, the exchange rates at the date of acquisition were used.

All signifi cant intra-group transactions, balances and unrealised gains/losses are eliminated on consolidation. Unrealised gains are eliminated in full. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment. Otherwise they are recognised immediately in the income statement.

2.3 Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The costs of self-constructed assets include the cost of materials and direct labour, an appropriate proportion of overheads, the costs of dismantling and removing the assets and restoring the site on which they are located and capitalised borrowing costs.

Subsequent expenditure relating to existing property, plant and equipment is added to the carrying amount of the asset when it is probable that future economic benefi ts, in excess of the originally assessed standard of performance of the existing asset, will fl ow to the Group. All other subsequent expenditure is recognised as an expense in the year in which it is incurred.

Gains or losses arising from the retirement or disposal of property, plant and equipment are determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset and are recognised in the income statement on the date of retirement or disposal.

Depreciation is provided on the straight-line basis over their estimated useful lives as follows:

Leasehold building – 30 yearsLeasehold improvements – Shorter of lease term or 5 yearsNetwork equipment – 2 years to 15 yearsOffi ce equipment, computers and furniture and fi ttings – 2 years to 5 yearsMotor vehicles – 5 years

Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date.

No depreciation is provided on freehold property.

No depreciation is provided in respect of property, plant and equipment under construction.


142

2.4 Intangible assets

Goodwill

Acquisitions prior to 1 January 2010

Goodwill arising on acquisition prior to 1 January 2010 represents the excess of the cost of acquisition over the fair value of the Group’s share of the identifi able assets, liabilities and contingent liabilities of the acquiree.

Acquisitions on or after 1 January 2010

For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as:• the fair value of the consideration transferred; plus• the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved

in stages, the fair value of the existing equity interest in the acquiree; less• the net recognised amount (generally fair value) of the identifi able assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profi t or loss.

Goodwill is stated at cost less accumulated impairment losses. Goodwill is tested for impairment on an annual basis as described in note 2.5.

Goodwill arising on acquisitions of subsidiaries that occurred prior to 1 January 2001 was written off against reserves in the year of acquisition and has not been retrospectively capitalised and amortised.

Goodwill that has previously been taken to reserves is not taken to the income statement when the business is disposed or the goodwill is impaired. Similarly negative goodwill that has previously been taken to reserves is not taken to income statement when the business is disposed of.

Telecommunications licences

Telecommunications licences costs incurred is measured at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to income statement using the straight-line method over the period of the licence, being 10 to 21 years, commencing from the effective date of the licence.

Computer software

Computer software comprises software purchased from third parties, and also the cost of internally developed software. Computer software is stated at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to income statement using the straight-line method over their estimated useful lives of 2 years to 5 years.

Subsequent expenditure on capitalised intangible assets is added to the carrying value only when it increases the future economic benefi ts embodied in the specifi c asset to which it relates. All other expenditure is recognised in income statement as incurred.

Computer software integral to a related item of equipment is accounted for as property, plant and equipment.

Amortisation methods, useful lives and residual values are reviewed at each fi nancial year end and adjusted if appropriate.



143

2.5 Impairment

The carrying amounts of the Group’s assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement unless it reverses a previous revaluation, in which case it is charged to other comprehensive income.

For goodwill, intangible assets with indefi nite useful lives and intangible assets not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amounts.

` Impairment losses recognised in respect of cash-generating units are allocated fi rst to reduce the carrying amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying amount of other assets in the unit (group of units) on a pro rata basis.

Calculation of recoverable amount

The recoverable amount of an asset or its cash-generating unit (CGU) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset or CGU. For an asset that does not generate cash infl ows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. For the purpose of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed refl ects the lowest level within the Group at which goodwill is monitored for internal reporting purposes.

Reversals of impairment

An impairment loss recognised in prior periods for an asset other than goodwill is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. All reversals of impairment are recognised in the income statement.

2.6 Inventories

Inventories comprise goods held for resale and reserved telephone numbers. Inventories are valued at the lower of cost and net realisable value. The cost of goods held for resale is determined on the weighted average basis. Reserved telephone numbers are stated at cost and accounted for using the specifi c identifi cation basis.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale. Allowance for obsolescence is made for all deteriorated, damaged, obsolete and slow-moving inventories.

2.7 Trade and other receivables

Trade and other receivables (including balances with related parties) are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for doubtful receivables. Allowance for doubtful receivables is made based on historical write-off patterns and ageing of accounts receivables. Bad debts are written off when incurred.

2.8 Cash and cash equivalents

For the purpose of presentation in the consolidated cash fl ow statement, cash and cash equivalents comprise cash balances and deposits with fi nancial institutions and bank overdrafts which are repayable on demand and which form an integral part of the Group’s cash management.

2.9 Trade and other payables

Trade and other payables (including balances with related parties) are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method.


144

2.10 Bank loans

Bank loans are initially recognised at fair value of the proceeds received less directly attributable transaction costs. After initial recognition, bank loans are subsequently measured at amortised cost using the effective interest method. Any difference between the proceeds (net of transactions costs) and the settlement or redemption of the bank loans is recognised in income statement over the period of the bank loans.

2.11 Employee benefi ts

Share-based payment

Share Option Plans

The Share Option Plans allow the Group employees and directors to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees and directors become unconditionally entitled to the options. At each reporting date, the Company revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates in employee expense and in a corresponding adjustment to equity over the remaining vesting period. The proceeds received net of any directly attributable transactions costs are credited to share capital when the options are exercised.

Performance Share Plan and Restricted Stock Plan

The Performance Share Plan and the Restricted Stock Plan are accounted as equity-settled share-based payments. Equity-settled share-based payments are measured at fair value at the date of grant. The share-based expense is amortised and recognised in the income statement on a straight line basis over the vesting period. At each reporting date, the Company revises its estimates of the number of shares that the participating employees and directors are expected to receive based on non-market vesting conditions. The difference is charged or credited to the income statement, with a corresponding adjustment to equity.

Defi ned contribution plans

Contributions to defi ned contribution plans are recognised as an expense in the income statement when incurred.

Other short-term benefi ts

Short-term employee benefi t obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A provision is recognised for the amount expected to be paid under short-term cash bonus or Performance Cash Plan if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

2.12 Customer loyalty programmes

For customer loyalty programmes, the fair value of the consideration received or receivable from a sales transaction which attracts customer loyalty credits or points is allocated between the customer loyalty points and the other component of the sale. The amount allocated to the customer loyalty points is estimated by reference to the fair value of the customer loyalty points for which they could be redeemed. The fair value of the customer loyalty points is estimated by taking into account the expected redemption rate and the timing of such expected redemptions. Such amount is deferred and recorded as unearned revenue until the customer loyalty points are redeemed. At this juncture, the cost of fulfi lling the customer loyalty credits is also recognised.

2.13 Provisions

Provisions are recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outfl ow of economic benefi ts will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. If the effect is material, provisions are determined by discounting the expected future cash fl ows at a pre-tax rate that refl ects current market assessments of the time value of money and, where appropriate, the risks specifi c to the liability.



145

2.14 Share capital

Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issuance of new equity shares are recognised as a deduction from equity, net of any tax effects.

Where share capital recognised as equity is repurchased and held as treasury shares, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is presented as a deduction from equity. Where such shares are subsequently reissued, sold or cancelled, the consideration received is recognised as a change in equity. No gain or loss is recognised in the income statement.

2.15 Revenue recognition

Revenue comprises fees earned from telecommunications services, broadband access, Pay TV, related advertising space and sale of equipment. Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and the revenue can be reliably measured. Revenue is recognised in the income statement as follows:

• Revenue from telecommunications, broadband and cable television services and advertising space is recognised at the time such services are rendered. Revenue billed in advance of the rendering of services is deferred and presented in the statement of fi nancial position as unearned revenue.

• Revenue from sale of pre-paid and phone cards for which services have not been rendered is deferred and presented in the statement of fi nancial position as unearned revenue. Upon the expiry of pre-paid and phone cards, any unutilised value of the cards is taken to the income statement.

• Revenue from sale of equipment is recognised upon delivery and acceptance of the equipment sold.

• Revenue from bundled products and services is recognised based on values allocated to the individual elements of the bundled products and services in accordance to the earning process of each element.

• Interest income is recognised on a time-apportioned basis taking into account the principal outstanding at the applicable rate.

2.16 Finance costs

Interest expense and similar charges are recognised in the income statement using the effective interest method, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to prepare for its intended use or sale.

2.17 Government grants

Government grants received, which are designated for the purchase of property, plant and equipment, are accreted to the income statement on a straight-line basis over the estimated useful lives of the related assets, so as to match the related depreciation expense.

Government grants received, which are designated for operating expenditure, are recognised on a systematic basis in the income statement over the periods necessary to match the related cost which they are intended to compensate.

2.18 Marketing and promotions

Advertising costs are expensed when incurred. The direct costs of acquiring customers, including commission and promotion expenses, are recognised in the income statement when incurred.

2.19 Operating leases

Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the income statement on a straight-line basis over the terms of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease payments made. Contingent rentals are charged to the income statement in the accounting period in which they are incurred.


146

2.20 Income taxes

Income taxes comprise current tax and deferred tax. Income taxes are recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case such tax is recognised in equity, or in other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences at the balance sheet date arising between the tax bases of assets and liabilities and their carrying amounts in the fi nancial statements.

Deferred tax is provided based on the expected realisation or settlement of the temporary differences, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction other than a business combination that affects neither accounting nor taxable profi t, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profi t will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefi t will be realised.

2.21 Dividends

Interim dividends to the Company’s shareholders are recognised in the fi nancial year in which they are declared payable. Final dividends to the Company’s shareholders are recognised in the fi nancial year in which the dividends are approved by the shareholders.

2.22 Foreign currencies

Monetary assets and liabilities in foreign currencies are translated into Singapore dollars at exchange rates approximate to those ruling at the reporting date. Transactions in foreign currencies are translated at rates ruling on transaction dates. The translation differences arising from such transactions are included in the income statement.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into Singapore dollars at the exchange rate at the date on which fair value was determined.

2.23 Derivative fi nancial instruments

The Group uses interest rate swaps and forward foreign exchange contracts to hedge its exposure to interest rate risks and foreign exchange risks arising from operational, fi nancing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative fi nancial instruments for trading purposes.

Derivative fi nancial instruments are recognised initially at fair value. Subsequent to initial recognition, derivative fi nancial instruments are remeasured at fair value prevailing at reporting date. The gain or loss on remeasurement to fair value is recognised immediately in the income statement. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged as described in note 2.24.

The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the reporting date, taking into account current interest rates and the current creditworthiness of the swap counterparties. The fair value of forward exchange contracts is their quoted market price at the reporting date, being the present value of the quoted forward price.



147

2.24 Hedging

Cash fl ow hedges

Where a derivative fi nancial instrument is designated as a hedge of the variability in cash fl ows of a recognised asset or liability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative fi nancial instrument is recognised directly in other comprehensive income and presented in the Hedging Reserve in equity.

When the forecast transaction subsequently results in the recognition of a non-fi nancial asset or non-fi nancial liability, or the forecast transaction for a non-fi nancial asset or non-fi nancial liability becomes a fi rm commitment for which fair value hedge accounting is applied, the associated cumulative gain or loss is removed from other comprehensive income and included in the initial cost or other carrying amount of the non-fi nancial asset or liability. If a hedge of a forecast transaction subsequently results in the recognition of a fi nancial asset or fi nancial liability, the associated gains and losses that were recognised in other comprehensive income are reclassifi ed into the income statement in the same period or periods during which the asset acquired or liability assumed affects the income statement (i.e. when interest income or expense is recognised).

For other cash fl ow hedges, the associated cumulative gain or loss that was recognised in other comprehensive income is removed and recognised in the income statement in the same period or periods during which the hedged forecast transaction affects the income statement. The ineffective part of any gain or loss is recognised immediately in the income statement.

When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in other comprehensive income and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in other comprehensive income is recognised immediately in the income statement.

Hedge of monetary assets and liabilities

Where a derivative fi nancial instrument is used to hedge economically the foreign exchange exposure of a recognised monetary asset or liability, no hedge accounting is applied and any gain or loss on the hedging instrument is recognised in the income statement.

2.25 Segment reporting

With the adoption of FRS 108, segment information is presented based on the information reviewed by chief operating decision maker (“CODM”) for performance assessment and resource allocation.

The Group operates primarily in Singapore and delivers its Mobile, Pay TV, Broadband, Fixed network services and equipment sales on an operationally integrated network, customer service, sales, marketing and administration support. Based on the fi nancial information regularly reviewed by the CODM, the Group has one operating and reporting segment.


148

2.26 Signifi cant accounting estimates and judgements

The preparation of fi nancial statements requires management to make judgements in the application of accounting policies. It also requires the use of accounting estimates and assumptions that affect the reported amounts of assets, liabilities and the disclosure of contingent assets and liabilities at the date of the fi nancial statements; and the reported income and expenses during the fi nancial year. These estimates are based on management’s best knowledge and judgement of current events and environment. Actual results may ultimately differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In the application of the Group’s accounting policies, which are described in note 2, management is of the opinion that there is no instance of application of judgement which is expected to have a signifi cant effect on the amounts recognised in the fi nancial statements, apart from those involving estimations described below.

The key assumptions concerning the future, and other key sources at reporting date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities in the next fi nancial year are described in the following notes:

• Note 4 – measurement of recoverable amounts relating to goodwill impairment• Note 6 – recognition of deferred tax assets• Note 8 – measurement of recoverable amounts of trade receivables • Note 19.2.2 – measurement of share-based payments • Note 27 – valuation of fi nancial instruments



149

3 Property, Plant and Equipment

GROUP

Leasehold building

$’mil

Leasehold improve-

ments$’mil

Freehold property

$’mil

Network equipment

$’mil

Offi ce equipment, computers

and furniture and fi ttings

$’mil

Motorvehicles

$’mil

Constructionin progress

$’milTotal$’mil

CostAt 1.1.2010 5.7 63.8 1.7 2,624.6 137.9 6.2 71.0 2,910.9Additions – 0.9 – 31.2 0.4 1.3 190.5 224.3Transfers – 3.5 – 170.8 19.2 – (193.5) –Disposals – (8.0) – (37.4) (4.9) (1.3) – (51.6)At 31.12.2010 5.7 60.2 1.7 2,789.2 152.6 6.2 68.0 3,083.6

At 1.1.2011 5.7 60.2 1.7 2,789.2 152.6 6.2 68.0 3,083.6Additions – 0.2 – 12.5 6.2 0.4 201.2 220.5Transfers 2.6 3.1 – 154.6 17.4 – (177.7) –Disposals – (3.0) – (116.8) (10.1) (0.5) – (130.4)At 31.12.2011 8.3 60.5 1.7 2,839.5 166.1 6.1 91.5 3,173.7

Accumulated depreciation At 1.1.2010 0.4 39.8 – 1,972.0 109.7 3.9 – 2,125.8Charge for the year 0.2 6.8 – 206.3 16.9 0.8 – 231.0Disposals – (7.7) – (35.4) (4.8) (1.3) – (49.2)At 31.12.2010 0.6 38.9 – 2,142.9 121.8 3.4 – 2,307.6

At 1.1.2011 0.6 38.9 – 2,142.9 121.8 3.4 – 2,307.6Charge for the year 0.3 7.4 – 205.3 16.4 0.9 – 230.3Transfers – (0.4) – 0.4 – – – –Disposals – (2.9) – (112.6) (10.1) (0.5) – (126.1)At 31.12.2011 0.9 43.0 – 2,236.0 128.1 3.8 – 2,411.8

Carrying amountAt 1.1.2010 5.3 24.0 1.7 652.6 28.2 2.3 71.0 785.1

At 31.12.2010 5.1 21.3 1.7 646.3 30.8 2.8 68.0 776.0

At 1.1.2011 5.1 21.3 1.7 646.3 30.8 2.8 68.0 776.0

At 31.12.2011 7.4 17.5 1.7 603.5 38.0 2.3 91.5 761.9

2011 $’ mil

2010$’ mil

Staff costs capitalised in construction in progress during the year 4.1 4.6


150

3 Property, Plant and Equipment (continued)

COMPANY

Leasehold building

$’mil

Leasehold improve-

ments$’mil

Network equipment

$’mil

Offi ce equipment, computers

and furniture and fi ttings

$’mil

Motorvehicles

$’mil

Constructionin progress

$’milTotal$’mil

CostAt 1.1.2010 5.7 50.4 919.8 106.6 2.0 35.5 1,120.0Additions – – – 0.1 0.8 58.4 59.3Transfers – 2.4 40.3 18.6 – (61.3) –Disposals – (3.5) (24.9) (0.9) (1.0) – (30.3)At 31.12.2010 5.7 49.3 935.2 124.4 1.8 32.6 1,149.0

At 1.1.2011 5.7 49.3 935.2 124.4 1.8 32.6 1,149.0Additions – – – 0.2 0.1 92.3 92.6Transfers 2.6 1.4 50.3 8.7 – (63.0) –Disposals – (2.4) (19.7) (5.0) (0.3) – (27.4)At 31.12.2011 8.3 48.3 965.8 128.3 1.6 61.9 1,214.2

Accumulated depreciation At 1.1.2010 0.4 26.7 663.4 80.2 1.5 – 772.2Charge for the year 0.2 6.5 53.4 15.8 0.3 – 76.2Disposals – (3.2) (23.1) (0.9) (1.0) – (28.2)At 31.12.2010 0.6 30.0 693.7 95.1 0.8 – 820.2

At 1.1.2011 0.6 30.0 693.7 95.1 0.8 – 820.2Charge for the year 0.3 6.5 54.7 14.4 0.3 – 76.2Transfers – (0.4) 0.4 – – – –Disposals – (2.2) (19.6) (5.0) (0.3) – (27.1)At 31.12.2011 0.9 33.9 729.2 104.5 0.8 – 869.3

Carrying amountAt 1.1.2010 5.3 23.7 256.4 26.4 0.5 35.5 347.8

At 31.12.2010 5.1 19.3 241.5 29.3 1.0 32.6 328.8

At 1.1.2011 5.1 19.3 241.5 29.3 1.0 32.6 328.8

At 31.12.2011 7.4 14.4 236.6 23.8 0.8 61.9 344.9



151

4 Intangible Assets

GROUP

Telecom-munications

licences$’mil

Software$’mil

Software in development

$’milGoodwill

$’milTotal$’mil

CostAt 1.1.2010 98.1 242.8 105.4 220.3 666.6Additions 18.7 0.9 49.9 – 69.5Transfers – 148.1 (148.1) – –Disposals – (3.1) – – (3.1)At 31.12.2010 116.8 388.7 7.2 220.3 733.0

At 1.1.2011 116.8 388.7 7.2 220.3 733.0Additions – 5.0 18.0 – 23.0Transfers – 16.4 (16.4) – –Disposals – (3.3) – – (3.3) At 31.12.2011 116.8 406.8 8.8 220.3 752.7

Accumulated amortisationAt 1.1.2010 41.1 209.7 – – 250.8Charge for the year 5.0 27.6 – – 32.6Disposals – (2.0) – – (2.0)At 31.12.2010 46.1 235.3 – – 281.4

At 1.1.2011 46.1 235.3 – – 281.4Charge for the year 6.5 44.5 – – 51.0Disposals – (3.3) – – (3.3) At 31.12.2011 52.6 276.5 – – 329.1

Carrying amountAt 1.1.2010 57.0 33.1 105.4 220.3 415.8

At 31.12.2010 70.7 153.4 7.2 220.3 451.6

At 1.1.2011 70.7 153.4 7.2 220.3 451.6

At 31.12.2011 64.2 130.3 8.8 220.3 423.6

Impairment tests for goodwill The carrying value of the Group’s goodwill is assessed for impairment annually or more frequently if there are indications

that the goodwill might be impaired. For the purposes of impairment testing, goodwill is allocated to the cash generating unit comprising the Group’s integrated fi xed, mobile, cable and broadband operations. This represents the lowest level within the Group at which goodwill is monitored for impairment for internal management purposes.

The recoverable amount of the cash-generating unit (“CGU”) is determined based on value-in-use calculations. The key assumptions for the value-in-use calculations are the discount rates, growth rates and expected changes to profi t margins.

The value-in-use calculations apply a discounted cash fl ow model using cash fl ow projections from the most recent fi nancial budget and forecasts approved by management covering 4 years. The forecast cash fl ows were extrapolated using an estimated growth rate of 5.0% (2010: 5.5%). The pre-tax discount rate applied is assumed at 6.4% (2010: 6.4%) for the value-in-use calculation.

No impairment charge was required for the carrying amount of goodwill assessed as at 31 December 2011 and 31 December 2010 as the recoverable value was in excess of the carrying value. Any reasonably possible change to the key assumptions applied was not likely to cause the recoverable values to be below the carrying values.


152

4 Intangible Assets (continued)

COMPANY

Telecom-munications

licences$’mil

Software$’mil

Software in development

$’milTotal$’mil

CostAt 1.1.2010 1.0 200.0 104.4 305.4Additions – – 47.1 47.1Transfers – 146.0 (146.0) –Disposals – (1.1) – (1.1)At 31.12.2010 1.0 344.9 5.5 351.4

At 1.1.2011 1.0 344.9 5.5 351.4Additions – 0.1 14.0 14.1Transfers – 12.6 (12.6) –At 31.12.2011 1.0 357.6 6.9 365.5

Accumulated amortisationAt 1.1.2010 0.4 171.1 – 171.5Charge for the year 0.1 25.1 – 25.2At 1.1.2010 0.5 196.2 – 196.7

At 1.1.2011 0.5 196.2 – 196.7Charge for the year 0.1 41.8 – 41.9At 31.12.2011 0.6 238.0 – 238.6

Carrying amountAt 1.1.2010 0.6 28.9 104.4 133.9

At 31.12.2010 0.5 148.7 5.5 154.7

At 1.1.2011 0.5 148.7 5.5 154.7

At 31.12.2011 0.4 119.6 6.9 126.9

GROUP AND COMPANY

2011$’mil

2010$’mil

Staff costs capitalised in software in development during the year 1.9 5.4



153

5 Subsidiaries

COMPANY2011$’mil

2010$’mil

Investments in subsidiaries, at cost 1,209.1 1,209.1Discount implicit in the interest-free loan to a subsidiary 21.9 21.9

1,231.0 1,231.0Allowance for impairment losses (28.9) (28.9)

1,202.1 1,202.1

The subsidiaries directly held by the Company are as follows:

Name of company Principal activities

Country of incorporation/

business

Effective equity interest held by the Group

2011%

2010%

StarHub Cable Vision Ltd. (1) Provision of subscription television and television broadcasting services

Singapore 100 100

StarHub Mobile Pte Ltd (1) Provision of mobile telecommunications services

Singapore 100 100

StarHub Internet Pte Ltd (1) Provision and operation of internet services

Singapore 100 100

StarHub Online Pte Ltd (1) Provision of broadband access services

Singapore 100 100

Nucleus Connect Pte. Ltd. (1) Provision of high speed wholesale broadband services

Singapore 100 100

SHINE Systems Assets Pte. Ltd. (1) Investment in, ownership or lease of infrastructure assets for use by StarHub Group or its partners

Singapore 100 –

StarHub (Mauritius) Ltd (2) Investment holding company and for acquisition of info-communication and infotainment services

Mauritius 100 100

StarHub (Hong Kong) Limited (3) Provision of telecommunication services

Hong Kong 100 100

StarHub Shop Pte Ltd (4) Dormant Singapore 100 100

StarHub, Inc. (4) Dormant United States 100 100

Other subsidiary indirectly held by the Company is as follows:

Name of company Principal activities

Country of incorporation/

business

Effective equity interest held by the Group

2011%

2010%

Foosti Pte. Ltd. (4) (5) Dormant Singapore 100 100

(1) Audited by KPMG LLP Singapore(2) Audited by KPMG Mauritius, a member firm of KPMG International (3) Audited by another firm(4) Not required to be audited by laws of the country of incorporation(5) The company is currently in liquidation pursuant to a winding-up order by the High Court of Singapore issued on 14 January 2011.


154

6 Deferred Taxes

Movements in deferred tax assets and liabilities during the year are as follows:

GROUP2011

At 1.1.2011

$’mil

Recognisedin incomestatement

$’mil

Recognisedin other

comprehensiveincome

$’mil

Recognisedin equity

statement$’mil

At31.12.2011

$’mil

Deferred tax assetsProperty, plant and equipment and intangible assets (4.8) 0.3 – – (4.5)Deferred income 9.2 (2.2) – – 7.0Other payables and accruals 0.1 – – – 0.1Tax losses carried forward – 0.2 – – 0.2Total 4.5 (1.7) – – 2.8

Deferred tax liabilitiesProperty, plant and equipment and intangible assets (111.0) (5.0) – – (116.0)Other payables and accruals 2.9 – (0.2) 0.5 3.2Total (108.1) (5.0) (0.2) 0.5 (112.8)

GROUP2010

At 1.1.2010

$’mil


$’mil

Recognisedin other

comprehensiveincome

$’mil

Recognisedin equity

statement$’mil

At31.12.2010

$’mil

Deferred tax assetsProperty, plant and equipment and intangible assets 5.2 (10.0) – – (4.8)Deferred income – 9.2 – – 9.2Other payables and accruals – 0.1 – – 0.1Tax losses carried forward 0.1 (0.1) – – –Total 5.3 (0.8) – – 4.5

Deferred tax liabilitiesProperty, plant and equipment and intangible assets (65.0) (46.0) – – (111.0)Other payables and accruals 3.5 (0.8) 0.1 0.1 2.9Inventories 0.3 (0.3) – – –Total (61.2) (47.1) 0.1 0.1 (108.1)



155

6 Deferred Taxes (continued)

COMPANY2011

At 1.1.2011

$’mil


$’mil

Recognisedin other

comprehensiveincome

$’mil

Recognisedin equity

statement$’mil

At31.12.2011

$’mil

Deferred tax liabilitiesProperty, plant and equipment and intangible assets (74.3) 1.3 – – (73.0)Other payables and accruals 2.9 – (0.2) 0.5 3.2Total (71.4) 1.3 (0.2) 0.5 (69.8)

COMPANY2010

At 1.1.2010

$’mil


$’mil

Recognisedin other

comprehensiveincome

$’mil

Recognisedin equity

statement$’mil

At31.12.2010

$’mil

Deferred tax liabilitiesProperty, plant and equipment and intangible assets (51.3) (23.0) – – (74.3)Other payables and accruals 3.5 (0.8) 0.1 0.1 2.9Inventories 0.1 (0.1) – – –Total (47.7) (23.9) 0.1 0.1 (71.4)

Deferred tax assets are recognised to the extent that realisation of the related tax benefi ts through future taxable profi ts is probable.

Deferred tax assets have not been recognised in respect of the following items:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Tax losses 63.6 55.5 – –

Deferred tax assets 10.8 9.4 – –

The Group has not recognised deferred tax assets in respect of the above tax losses as the Group does not expect to recover these potential deferred tax assets in the foreseeable future. The Group reassesses the recovery of these potential deferred tax assets annually.

7 Inventories

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Inventories, at lower of cost and net realisable value 37.2 31.8 29.0 25.2

Allowance made/ (written back) during the year 2.1 (0.3) 2.1 0.2


156

8 Trade Receivables

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Trade receivables 184.2 212.4 171.8 202.6Allowance for doubtful receivables (32.2) (38.5) (31.9) (38.2)

152.0 173.9 139.9 164.4 The trade receivables of the Company include amounts billed under a combined billing arrangement to customers for

services provided by certain subsidiaries.

The Group’s and the Company’s primary credit risk exposure arises through its trade receivables, which include corporate and retail customers. There is no concentration of credit risk with respect to trade receivables as the Group and the Company have a large number of customers. The recorded allowances for doubtful receivables have been made based on the Group and the Company’s historical collections experience. Due to these factors, management believes that no additional credit risk beyond the amounts provided for collection losses is inherent in the Group and the Company’s trade receivables.

The age analysis of trade receivables past due but not impaired at the reporting date is as follows:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Past due 0 – 30 days 46.7 57.2 41.9 53.8Past due 31 – 60 days 14.0 17.0 12.8 15.3Above 60 days 4.3 11.5 1.9 8.7

65.0 85.7 56.6 77.8

The movements in allowance for doubtful receivables in respect of trade receivables during the year are as follows:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

At beginning of year 38.5 30.2 38.2 25.6Allowance for doubtful receivables 14.7 18.4 3.1 3.7Recharged to subsidiaries – – 8.3 17.3Allowance utilised (21.0) (10.1) (17.7) (8.4)At end of year 32.2 38.5 31.9 38.2

9 Other Receivables, Deposits and Prepayments

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Grant receivables 43.8 – – –Accrued revenue 27.2 36.7 3.0 2.3Deposits 5.4 5.0 1.5 1.5Prepayments 72.2 59.3 17.1 14.1Other receivables 0.6 0.7 0.4 0.2

149.2 101.7 22.0 18.1



157

10 Balances with Related Parties

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Loans to subsidiaries – – 600.0 500.0

Amounts due from (trade): – Ultimate holding company 0.1 0.1 0.1 0.1– Subsidiaries – – 49.6 104.0– Related corporations 17.1 16.4 11.9 10.6

17.2 16.5 661.6 614.7

Amounts due to (trade): – Subsidiaries – – 263.3 156.0– Related corporations 41.9 41.8 32.7 31.3

41.9 41.8 296.0 187.3

At 31 December 2011, the loans to the subsidiaries are unsecured, repayable on demand and bore interest at 2.69% (2010: 2.69%) per annum.

The amounts due to subsidiaries include interest bearing amounts of $159.8 million (2010: Nil) at interest rates ranging from 0.57% to 0.88% (2010: Nil) per annum.

The immediate and ultimate holding companies are Asia Mobile Holdings Pte. Ltd. and Temasek Holdings (Private) Limited respectively. These companies are incorporated in the Republic of Singapore.

11 Cash and Cash Equivalents

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Fixed deposits 141.7 191.1 136.7 161.1Cash at bank and in hand 37.5 46.4 17.6 19.1

179.2 237.5 154.3 180.2


158

12 Other Payables

GROUP COMPANY

Note2011$’mil

2010$’mil

2011$’mil

2010$’mil

CurrentDeferred income 14 21.6 15.5 – –Property, plant and equipment vendors 54.0 59.1 26.0 34.8Unearned revenue 168.8 150.0 28.2 31.4Deposits from customers 9.3 8.7 9.2 8.6Mark-to-market fi nancial instruments– Interest rate swaps 1.1 2.1 1.1 2.1– Forward exchange contracts – 2.0 – 1.7

254.8 237.4 64.5 78.6

Non-currentUnearned revenue 27.2 31.0 27.2 31.0Mark-to-market fi nancial instruments– Interest rate swaps 6.9 7.2 6.9 7.2

34.1 38.2 34.1 38.2

13 Bank Loans

GROUP AND COMPANY

2011$’mil

2010$’mil

Term loans:– Current 75.0 330.4– Non-current 587.5 475.0

662.5 805.4

Repayable:– Within 1 year 75.0 330.4– 1 to 5 years 537.5 475.0– 5 to 10 years 50.0 –

662.5 805.4

At 31 December 2011, the unsecured term loans bore interest at rates ranging from 0.30% to 2.56% (2010: 0.44% to 1.48%) per annum.



159

14 Deferred Income

GROUP COMPANY

Note2011$’mil

2010$’mil

2011$’mil

2010$’mil

Deferred grantsAt beginning of year 60.6 10.7 – – Grants receivable/ received 40.0 60.0 – – Amount accreted to the income statement (16.2) (10.1) – – At end of year 84.4 60.6 – –

Deferred grants to be accreted:Current (within 1 year) 12 21.6 15.5 – – Non-current (between 1 to 5 years) 62.8 45.1 – – Total 84.4 60.6 – –

The deferred grants are government grants received. The assets related grants are recognised over the estimated useful lives of the related assets. The income related grants are recognised on a systematic basis over the periods to match the related cost.

15 Share Capital

2011 2010

COMPANY

Numberof shares

’mil $’mil

Numberof shares

’mil $’mil

Issued and fully paid ordinary shares:At beginning of year 1,716.0 260.3 1,713.9 257.5Issue of ordinary shares 0.7 1.7 0.3 0.6Issue of ordinary shares for cash pursuant to the exercise of options under the – StarHub Share Option Plan 2000 0.1 0.1 0.4 0.3 – StarHub Share Option Plan 2004 0.5 0.7 1.4 1.9At end of year 1,717.3 262.8 1,716.0 260.3

The holders of ordinary shares (excluding treasury shares) are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares (excluding treasury shares) rank equally with regard to the Company’s residual assets.

As at 31 December 2011, included in the total number of ordinary shares was 1,975,987 shares (2010: 12,740 shares) purchased by the Company by way of market acquisition at an average price of approximately $2.77 per share (2010: $2.72 per share). The shares, held as treasury shares, were included as a deduction from equity (note 17).


160

16 Dividends

COMPANY

2011$’mil

2010$’mil

Final dividend of $0.05 (2010: $0.05) per share (1-tier tax exempt) paid in respect of the previous fi nancial year 85.8 85.8Interim dividends of $0.15 (2010: $0.15) per share (1-tier tax exempt) paid in respect of the current fi nancial year 257.5 257.3

343.3 343.1

17 Reserves

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Treasury shares (5.5) (0.1) (5.5) (0.1)Merger/Capital reserve – – 276.5 276.5Goodwill written off (276.3) (276.3) – –Share-based payments reserve 13.9 15.7 13.9 15.7Hedging reserve (6.6) (7.7) (6.6) (7.7)Retained profi ts 34.3 62.1 668.1 663.1

(240.2) (206.3) 946.4 947.5

Treasury shares comprise the cost of the Company’s shares held by the Group.

The merger/capital reserve comprises reserve arising from the acquisition of a subsidiary, StarHub Cable Vision Ltd. (“SCV”), on 2 July 2002 and the excess of the fair value of the Company’s shares issued as consideration for the acquisition of SCV over its par value.

The goodwill written off represents the excess of consideration paid on the acquisition of subsidiaries prior to 1 January 2001 over the Group’s share of the fair value of net assets acquired.

The share-based payments reserve comprises the cumulative value of services received from employees and directors recorded in respect of the grant of share options and share awards.

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash fl ow hedging instruments related to hedged transactions.

18 Operating Revenue

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Mobile revenue 1,217.6 1,181.3 – –Pay TV revenue 376.0 395.4 – –Broadband revenue 241.7 236.0 – –Fixed network services revenue 336.7 331.7 697.8 710.9Sale of equipment 140.0 93.3 410.6 333.9

2,312.0 2,237.7 1,108.4 1,044.8



161

19 Operating Expenses

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Cost of equipment sold 383.4 312.3 382.2 311.2Cost of services 298.3 338.8 35.8 28.5Traffi c expenses 246.8 261.7 95.7 102.1Depreciation and amortisation (net of asset grants) 277.8 259.5 118.1 101.4Marketing and promotion 169.6 156.3 13.7 16.2Staff costs 266.9 249.9 194.5 180.6Allowance for doubtful receivables 14.7 18.4 3.1 3.7Repairs and maintenance 68.0 73.3 34.5 37.9Operating leases 135.5 146.2 68.7 77.4Other expenses 74.2 85.0 72.5 75.6

1,935.2 1,901.4 1,018.8 934.6

19.1 Depreciation and amortisation

Depreciation and amortisation expenses comprise the following:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Depreciation of property, plant and equipment 230.3 231.0 76.2 76.2Accretion of asset grants to the income statement (3.5) (4.1) – –

226.8 226.9 76.2 76.2Amortisation of intangible assets 51.0 32.6 41.9 25.2Total 277.8 259.5 118.1 101.4

19.2 Staff costs

The following are included in staff costs:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Defi ned contribution plans 21.9 22.0 14.7 15.0Share-based payments 2.4 6.0 2.4 6.0Government grants – Jobs Credit Scheme – (1.7) – (1.7)


162

19 Operating Expenses (continued)

19.2.1 Key management personnel compensation

The key management personnel compensation is as follows:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Short-term employee benefi ts 11.3 9.4 10.2 8.3Share-based payments 2.8 2.1 2.7 2.0

14.1 11.5 12.9 10.3

Included in the above is the total compensation to directors of the Company which amounted to $4.9 million (2010: $4.1 million).

Key management personnel also participate in the StarHub Share Option Plans, the StarHub Performance Share Plan and the StarHub Restricted Stock Plan as detailed in Note 19.2.2. The short term benefi ts include the Company balanced scorecard incentive programme to reward employees for achieving or exceeding performance target.

Conditional awards of 961,400 shares (2010: 672,750 shares) under the StarHub Performance Share Plan and conditional awards of 662,000 shares (2010: 703,000 shares) under the StarHub Restricted Stock Plan were granted to the key management personnel of the Company during the year.

Based on the actual level of achievement of the pre-determined performance targets over the 2008 to 2010 performance period, there were 143,889 shares delivered to the key management personnel of the Company during the year under the 2008 conditional awards granted to key management personnel of the Company in May 2008 pursuant to the StarHub Performance Share Plan.

Based on the actual level of achievement of the pre-determined performance targets over the 2009 to 2010 performance period, fi nal awards comprising 340,605 shares were awarded to the key management personnel of the Company during the year under the 2009 conditional awards granted to the key management personnel of the Company in May 2009 pursuant to the StarHub Restricted Stock Plan. 114,100 shares under the fi nal awards were delivered during the year, with the balance of 226,505 shares to be delivered in phases according to the stipulated vesting periods.

All share options and conditional share awards (except for the time-based restricted share awards) granted to the key management personnel of the Company were on the same terms and conditions as those offered to other employees of the Company.

At the 31 December 2011, 118,000 (2010: 268,000) of those share options, 1,955,150 (2010: 1,243,750) of those conditional awards of shares under the StarHub Performance Share Plan and 1,433,494 (2010: 1,327,555) of those conditional awards of shares and 33,200 (2010: 66,600) time-based restricted shares under the StarHub Restricted Stock Plan are outstanding.



163


19.2.2 Share-based Payments

The StarHub Share Option Plan 2004, the StarHub Performance Share Plan and the StarHub Restricted Stock Plan (collectively referred to as the “Plans”) were approved and adopted by its members at an Extraordinary General Meeting of the Company held on 16 August 2004.

The Plans and the StarHub Pte Ltd Share Option Plan 2000 (“StarHub Share Option Plan 2000”) are administered by the Company’s ERCC.

The Company designates Singapore Technologies Telemedia Pte Ltd as its parent company for purposes of the Plans.

The StarHub Share Option Plan 2000 was terminated in 2004, while the StarHub Share Option Plan 2004 has been suspended since 2006. Hence, no option has been granted since 2006. The existing options granted were vested according to the terms of the StarHub Share Option Plan 2000, or as applicable, the StarHub Share Option Plan 2004 and the respective grants.

Other information regarding the Plans and the StarHub Share Option Plan 2000 is set out below:

(a) Options granted under the StarHub Share Option Plan 2004 and the StarHub Share Option Plan 2000 (collectively, the “StarHub Share Option Plans”)

(i) Under the StarHub Share Option Plan 2004, the exercise price for each ordinary share in respect of which an option is exercisable shall be determined by the ERCC in its absolute discretion on the date of grant to be either:

(1) a price which is equal to the volume-weighted average price for the Company’s shares on the Singapore Exchange Securities Trading Limited over the three consecutive trading days immediately preceding the date of grant of that option (“Market Price”), or such higher price as may be determined by the ERCC in its absolute discretion; or

(2) a price which is set, at the absolute discretion of the ERCC, at a discount to the Market Price so long as the maximum discount for any option shall not exceed 20% of the Market Price in respect of that option.

(ii) Under the StarHub Share Option Plan 2000, the exercise price for each ordinary share in respect of which an option is exercisable was determined by the ERCC in its absolute discretion on the date of grant.

(b) StarHub Performance Share Plan and StarHub Restricted Stock Plan

(i) The StarHub Performance Share Plan and the StarHub Restricted Stock Plan were implemented with the objectives of motivating key executives to strive for superior performance and sustaining long-term growth for the Group.

(ii) Under the StarHub Performance Share Plan, conditional awards of shares are granted. Awards represent the right of a participant to receive fully paid shares, their equivalent cash value or combinations thereof, free of charge, upon the participant achieving prescribed performance targets set based on medium-term corporate objectives. Awards are released once the ERCC is satisfi ed that the prescribed performance targets have been achieved. There are no vesting periods beyond the performance achievement periods.

(iii) Under the StarHub Restricted Stock Plan, awards granted vest only after the satisfactory completion of time-based service conditions (time-based restricted awards) or where the award is performance-related after a further period of service beyond the performance targets completion date (performance-based restricted awards).

(iv) During the fi nancial year ended 31 December 2011, the conditional grants of 961,400 (2010: 672,750) shares under the StarHub Performance Share Plan and the conditional grants of 2,040,000 (2010: 2,465,000) shares under the StarHub Restricted Stock Plan were made to the directors of the Company and key employees of the Group. These represent the number of shares to be delivered when performance targets at “on-target” level are achieved, or as the case may be, when the time-based service conditions are completed.


164


19.2.2 Share-based Payments (continued)

StarHub Share Option Plan

Share options outstanding under the StarHub Share Option Plans are as follows:

Number ofshare options

Weighted averageexercise price

per share

COMPANY2011’000

2010’000

2011$

2010$

Outstanding at beginning of year 4,011 5,996 1.25 1.24Exercised (1,190) (1,809) 1.28 1.20Forfeited (90) (176) 1.31 1.22Outstanding at end of year 2,731 4,011 1.24 1.25

Exercisable at end of year 2,731 4,011 1.24 1.25

Options were exercised throughout the year. The weighted average share price during the year was $2.76 per share (2010: $2.35 per share).

The outstanding share options have the following exercise prices:

COMPANY2011’000

2010’000

Exercise price range:$1.50 to $1.52 1,441 2,214$0.48 to $0.99 1,290 1,797

2,731 4,011

Weighted average remaining contractual life 2.80 years 3.83 years

The share options have a maximum validity period of 10 years from the date of grant and vesting periods according to the terms and conditions of the StarHub Share Option Plans and respective grants. The share options granted have a vesting period up to 3 years.

The fair values of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured based on a Binomial model. The expected life used in the model has been adjusted, based on management’s best estimate, for details of non-transferability, exercise restrictions and behavioural considerations.

Date of grant of options

COMPANY29 Nov

200230 May

200328 Nov

20032 Apr 2004

26 Nov 2004

30 May 2005

Fair value at measurement date $0.22 $0.22 $0.24 $0.25 $0.31 $0.33

Share price $0.88 $0.88 $0.88 $0.96 $1.06 $1.58Exercise price $0.88 $0.88 $0.88 $0.96 $0.985 $1.52Expected volatility 29.00% 29.00% 29.00% 29.00% 29.00% 31.93%Expected option life 4 years 4 years 4 years 4 years 4 years 4 yearsExpected dividend yield – – – – – 5%Risk-free interest rate 1.65% 1.11% 2.48% 1.74% 1.91% 2.22%

The expected volatility is based on the historical volatility.

There are no market conditions associated with the share option grants.



165



StarHub Performance Share Plan

The movements of the number of shares under the StarHub Performance Share Plan, the fair values of the grant at measurement date and the assumptions of the fair value model for the grants are as follows:

Date of grant

COMPANY21 Mar

20079 May

200829 May

200917 May

201031 Mar

2011 Total

Number of shares (’000)Outstanding at 1.1.2010 464 514 585 – – 1,563Granted – – – 673 – 673Vested (121) – – – – (121)Forfeited (343) (264) (264) – – (871)Outstanding and unvested at 31.12.2010 – 250 321 673 – 1,244

Outstanding at 1.1.2011 – 250 321 673 – 1,244Granted – – – – 961 961Vested – (144) – – – (144)Forfeited – (106) – – – (106)Outstanding and unvested at 31.12.2011 – – 321 673 961 1,955

Fair value at measurement date $2.48 $2.37 $2.35 $1.92 $2.17

Assumptions under Monte-Carlo Model

Share price $2.84 $2.97 $2.20 $2.24 $2.70

Expected volatility StarHub 29.51% 20.28% 26.27% 22.89% 22.09% MSCI Asia-Pacifi c Telecommunications Component Stock 14.43% 13.50% 18.14% 21.77% 19.02%

Expected dividend yield 5.00% 5.95% 8.18% 8.44% 6.39%

Risk-free interest rates Zero-coupon Singapore Sovereign 2.61% 1.22% 0.70% 0.51% 0.50%

The fair value of the shares is estimated using a Monte-Carlo simulation methodology at the measurement dates, which are grant dates of the share awards. The accrual for the share expense under the StarHub Performance Share Plan has been estimated on the basis that the Group will be on target in respect of the performance conditions.


166



StarHub Restricted Stock Plan

The movements of the number of shares under the StarHub Restricted Stock Plan, the fair values of the grant at measurement date and the assumptions of the fair value model for the grants are as follows:

Date of grant

COMPANY5 Jul 2006

18 Apr 2007

21 May 2007

9 May 2008

15 Jan 2009

29 May 2009

17 May 2010

17 May 2010

31 Mar 2011 Total

Number of shares (’000)

Outstanding at 1.1.2010 437 734 93 1,434 100 1,846 – – – 4,644

Granted – – – – – – 2,252 213 – 2,465

Vested (398) (314) (47) (244) (33) – – – – (1,036)

Forfeited (39) (122) – (733) – (230) (36) (31) – (1,191)

Outstanding and unvested at 31.12.2010 – 298 46 457 67 1,616 2,216 182 – 4,882

Outstanding at 1.1.2011 – 298 46 457 67 1,616 2,216 182 – 4,882

Granted – – – – – – – – 2,040 2,040

Vested – (287) (46) (228) (34) (461) – (182) – (1,238)

Forfeited – (11) – (25) – (293) (135) – (58) (522)

Outstanding and unvested at 31.12.2011 – – – 204 33 862 2,081 – 1,982 5,162

Fair value at measurement date $1.58 $2.29 $2.18 $2.54 $1.57 $1.97 $2.20 $2.06 $2.56

Assumptions under Monte-Carlo Model

Share price $2.29 $2.97 $2.96 $2.97 $1.92 $2.20 $2.24 $2.24 $2.70

Expected volatility

StarHub 30.98% 29.36% 29.12% 20.28% – 26.27% 22.89% 22.89% 22.09%

STI Index 11.38% 12.85% 13.08% – – – – – –

Expected dividend yield 5.00% 5.00% 5.00% 5.95% 10.94% 8.18% 8.44% 8.44% 6.39%

Risk-free interest rates

Zero-coupon Singapore Sovereign

1 year Government Bond Yield – – – – – – – 0.37% –

2 year Government Bond Yield 3.11% 2.27% 2.10% 0.99% – 0.49% 0.49% – 0.43%

3 year Government Bond Yield 3.20% 2.34% 2.16% 1.18% – 0.66% 0.51% – 0.49%

4 year Government Bond Yield 3.28% 2.41% 2.22% 1.48% – 0.88% 0.67% – –

Except as disclosed below, the fair value of the share awards is estimated using a Monte-Carlo simulation methodology at the measurement dates, which are grant dates of the share awards. The accrual for the share expense under the StarHub Restricted Stock Plan has been estimated on the basis that the Group will be on target in respect of the performance conditions.

The fair value of the share awards on 15 January 2009 of 100,000 shares is estimated at grant date after discounting for expected dividend yield. It is solely time-based with no performance conditions tied to this grant.

The fair value of the time-based share awards granted on 17 May 2010 of 213,000 shares is estimated using a Monte-

Carlo simulation methodology at the measurement date, which is grant date of the share award. It is solely time-based with no performance conditions tied to this grant.



167


19.3 Other expenses

Included in other expenses are the following:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Fees paid to auditors of the Company:– Audit 0.3 0.3 0.1 0.1– Non-audit 0.3 0.2 0.1 0.1Exchange (gain)/ loss (8.1) 1.2 (7.5) 5.0Changes in fair value of fi nancial instruments (2.0) 2.1 (1.7) 1.9Loss on disposal of property, plant and equipment and intangible assets 3.8 1.3 0.3 1.3

20 Other Income

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Corporate recharges to subsidiaries – – 190.9 161.0Dividend income from subsidiaries – – 100.0 70.0Income related grants 21.4 6.0 – –

21.4 6.0 290.9 231.0

21 Finance Income and Expense

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Interest income:– Bank deposits 2.1 1.8 2.1 1.8– Subsidiaries – – 15.5 14.4Finance income 2.1 1.8 17.6 16.2

Interest expense:– Bank borrowings 20.5 26.6 20.5 26.6– Subsidiaries – – 0.1 –Finance expense 20.5 26.6 20.6 26.6

Net fi nance costs (18.4) (24.8) (3.0) (10.4)


168

22 Taxation

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Current tax Current income tax 66.9 18.5 55.7 25.2 Utilisation of previously unrecognised deferred tax assets (8.6) (9.4) (18.0) (16.7) Over provision in prior year (0.7) (2.7) (7.2) (2.7)

57.6 6.4 30.5 5.8

Deferred tax Origination and reversal of temporary differences 7.8 46.5 (8.5) 21.2 (Under)/ over provision of tax assets in prior year (1.1) 1.4 7.2 2.7

6.7 47.9 (1.3) 23.9

Total income tax in income statement 64.3 54.3 29.2 29.7

A reconciliation between tax expense and the product of accounting profi t multiplied by the applicable corporate tax rate for the years ended 31 December is as follows:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Profi t before taxation 379.8 317.5 377.5 330.8

Income tax using Singapore tax rate of 17% 64.6 54.0 64.2 56.2Income not subject to tax (0.7) (0.4) (17.0) (12.2)Non-deductible expenses 2.6 2.6 1.3 2.4Deferred tax assets not recognised 10.2 8.8 – –Utilisation of previously unrecognised deferred tax assets (8.6) (9.4) (18.0) (16.7)Over provision in prior year, net (1.8) (1.3) – –Others (2.0) – (1.3) –Total income tax in income statement 64.3 54.3 29.2 29.7

The Company’s utilisation of previously unrecognised deferred tax assets relate to unutilised and unabsorbed capital allowances transferred from its subsidiaries under the group tax relief system in Singapore.

Income tax recognised in other comprehensive income for the years ended 31 December are as follows:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Cash fl ow hedge, before tax 1.3 (0.4) 1.3 (0.5)Taxation (0.2) 0.1 (0.2) 0.1Other comprehensive income for the year, net of tax 1.1 (0.3) 1.1 (0.4)



169

23 Earnings Per Share

GROUP

2011$’mil

2010$’mil

Profi t attributable to equity holders 315.5 263.2

2011 2010

Number of shares (million)

Weighted average number of ordinary shares (basic) 1,716.2 1,715.3Adjustment for dilutive effect of share plans 8.9 8.3Weighted average number of ordinary shares (diluted) 1,725.1 1,723.6

Basic earnings per share is calculated by dividing the Group’s profi t attributable to equity holders by the weighted average number of ordinary shares in issue during the fi nancial year.

For the purpose of calculating the diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to take into account the dilutive effect arising from the StarHub share plans.

24 Earnings Before Interest, Tax, Depreciation and Amortisation

Earnings before interest, tax, depreciation and amortisation (“EBITDA”) is a supplementary indicator of performance used by the Group. The measurement of EBITDA is not covered by FRS. The Group defi nes EBITDA as follows:

GROUP

2011$’mil

2010$’mil

Profi t before taxation 379.8 317.5

Adjustments for: Depreciation and amortisation (net of asset grants) 277.8 259.5 Interest income (2.1) (1.8) Interest on borrowings 20.5 26.6EBITDA 676.0 601.8


170

25 Related Party Transactions

The Company has entered into contractual agreements on behalf of its subsidiaries, and recharges its subsidiaries based on terms agreed between the parties involved.

In the normal course of business, the Group purchases and sells info-communications services to related companies. The related party transactions are carried out on terms negotiated between the parties which are intended to refl ect competitive terms.

Other than disclosed above and elsewhere in the fi nancial statements, signifi cant transactions of the Group and the Company with related parties during the fi nancial year were as follows:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Ultimate holding companySales 0.6 0.7 0.5 0.6

Subsidiaries Sales – – 648.9 625.0Purchase of services – – 32.5 26.4

Related corporationsSales 105.7 102.5 30.2 28.1Purchase of property, plant and equipment 15.3 14.9 13.7 13.0Rental expenses 81.6 85.7 39.4 42.5Purchase of services 124.2 131.7 25.5 35.7Purchase of inventories 76.4 75.9 75.7 75.1



171

26 Segment Reporting

Segment information is presented based on the information reviewed by chief operating decision maker (“CODM”) for performance assessment and resource allocation.

The CODM assess the Group’s fi nancial performance using performance indictors which include revenue, EBITDA, capital expenditure and cash fl ow of the Group.

The Group operates primarily in Singapore in one segment. The Group delivers its Mobile, Pay TV, Broadband, Fixed networks services and equipment sales on a fully integrated network, customer service, sales, marketing and administration support.

The Group has a large and diversifi ed customer base which consists of individuals and corporations. There was no single customer that contributed to 10% or more of the Group’s revenue.

The Group’s reportable segment information is as follows:

GROUP

2011$’mil

2010$’mil

Mobile 1,217.6 1,181.3Pay TV 376.0 395.4Broadband 241.7 236.0Fixed network services 336.7 331.7Sale of equipment 140.0 93.3Operating revenue 2,312.0 2,237.7

EBITDA 676.0 601.8Depreciation and amortisation (net of asset grants) (277.8) (259.5)Finance income 2.1 1.8Finance expense (20.5) (26.6)Profi t before taxation 379.8 317.5Taxation (64.3) (54.3)Profi t for the year 315.5 263.2

Assets and liabilities

Non-current assets 1,188.3 1,232.1Current assets 534.8 561.4Total assets 1,723.1 1,793.5

Bank loans 662.5 805.4Other non-current liabilities 209.7 191.4Current liabilities 828.3 742.7Total liabilities 1,700.5 1,739.5

Other information

Capital expenditure 243.5 293.8Free cash fl ow * 449.7 397.5

* Free cash flow refers to net cash flow from operating activities less purchase of fixed assets in the cash flow statement.


172

27 Financial Risk Management

Financial risk management objectives and policies

Exposure to credit, liquidity, interest rate and currency risk arises in the normal course of the Group’s business. The Group has written risk management policies and guidelines which set out its overall business strategies, its tolerance of risk and its general risk management philosophy, and has established processes to monitor and control the hedging of transactions in a timely and accurate manner.

Derivative fi nancial instruments are used to reduce exposure to fl uctuations in foreign exchange rates and interest rates. While these are subject to the risk of market rates changing subsequent to acquisition, such changes are generally offset by opposite effects on the items being hedged.

The Group’s accounting policy in relation to derivative fi nancial instruments is set out in note 2.23.

Credit risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Periodic frequent credit review and counterparty credit limits are practised.

The Group has no signifi cant concentration of credit risk from trade receivables due to its large diversifi ed customer base. Credit evaluations are performed on corporate customers requiring credit. Identifi cation documents are obtained from retail customers. Deposits are obtained for certain categories of higher-risk customers.

The Group places its cash and cash equivalents and enters into treasury transactions only with creditworthy banks and fi nancial institutions.

The maximum credit risk exposure is represented by the carrying value of each fi nancial asset in the statement of fi nancial position.

Liquidity risk

The Group monitors its liquidity risk and actively manages its operating cash fl ows, debt maturity profi le and availability of funding. The Group maintains suffi cient level of cash and cash equivalents, and has available funding through diverse sources of committed and uncommitted credit facilities from various banks to meet its working capital requirements. The Group regularly reviews its credit lines from banks to ensure its ability to access funding at any time with best possible rates.



173

27 Financial Risk Management (continued)

Liquidity risk (continued)

The following are the expected contractual undiscounted cash outfl ows (including interest payments) of fi nancial liabilities:

Contractual cash fl ows

GROUP2011

Carrying amount

$’milTotal$’mil

Within 1 year

$’mil

After 1 year but

within 5 years

$’mil

After 5 years

$’mil

Non-derivative fi nancial liabilitiesBank loans 662.5 700.5 79.7 568.2 52.6Trade payables and accruals ^ 443.9 443.9 443.9 – –Other payables * 63.3 63.3 63.3 – –Balances with related parties 41.9 41.9 41.9 – –

Derivative fi nancial liabilitiesInterest rate swaps used for hedging 12.2 12.2 8.8 3.4 –Forward exchange contracts – – – – –

1,223.8 1,261.8 637.6 571.6 52.6


GROUP2010

Carrying amount

$’milTotal$’mil

Within 1 year

$’mil

After 1 year but

within 5 years

$’mil

Non-derivative fi nancial liabilitiesBank loans 805.4 838.8 335.0 503.8Trade payables and accruals ^ 433.5 433.5 433.5 –Other payables * 67.8 67.8 67.8 –Balances with related parties 41.8 41.8 41.8 –

Derivative fi nancial liabilitiesInterest rate swaps used for hedging 13.5 13.5 11.2 2.3Forward exchange contracts 2.0 2.0 2.0 –

1,364.0 1,397.4 891.3 506.1


174




COMPANY2011

Carrying amount

$’milTotal$’mil

Within 1 year

$’mil

After 1 year but

within 5 years

$’mil

After 5 years

$’mil

Non-derivative fi nancial liabilitiesBank loans 662.5 700.5 79.7 568.2 52.6Trade payables and accruals ^ 284.8 284.8 284.8 – –Other payables * 35.2 35.2 35.2 – –Balances with related parties 296.0 296.2 296.2 – –

Derivative fi nancial liabilitiesInterest rate swaps used for hedging 12.2 12.2 8.8 3.4 –Forward exchange contracts – – – – –

1,290.7 1,328.9 704.7 571.6 52.6


COMPANY2010

Carrying amount

$’milTotal$’mil

Within 1 year

$’mil

After 1 year but

within 5 years

$’mil

Non-derivative fi nancial liabilitiesBank loans 805.4 838.8 335.0 503.8Trade payables and accruals ^ 270.0 270.0 270.0 –Other payables * 43.4 43.4 43.4 –Balances with related parties 187.3 187.3 187.3 –

Derivative fi nancial liabilitiesInterest rate swaps used for hedging 13.5 13.5 11.2 2.3Forward exchange contracts 1.7 1.7 1.7 –

1,321.3 1,354.7 848.6 506.1

^ The carrying amount of trade payables and accruals disclosed in the table exclude interest accruals for derivative financial liabilities as these are included in the derivative financial liabilities.

* Excludes deferred income, unearned revenue and derivative financial liabilities (shown separately).



175



The following table indicates the periods in which the cash fl ow hedges are expected to affect profi t or loss:

2011 2010

Within 1 year

$’mil

After 1 year but within

5 years$’mil

Total$’mil

Within 1 year

$’mil

After 1 year but within

5 years$’mil

Total$’mil

GROUP AND COMPANYInterest rate swaps – Liabilities 4.6 3.4 8.0 6.9 2.4 9.3

Interest rate risk

The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s debt obligations.

The Group adopts a policy of ensuring that at least 50 percent of its exposure to changes in interest rates on bank loans is on a fi xed rate basis. Interest rate swaps, denominated in Singapore dollars, have been entered into to achieve this purpose.

At 31 December 2011, the Group had outstanding interest rate swap agreements with notional principal amounts totalling $602.5 million (2010: $687.5 million) in cash fl ow hedges against borrowings. These interest rate swaps will mature over the remaining term ranging from 4 months to 4.6 years (2010: 1 month to 4.6 years) to match the underlying hedged cash fl ows arising on the borrowings consisting of semi-annual interest payments. The fi xed interest payable are at interest rates ranging from 0.92% to 3.015% per annum (2010: 1.45% to 3.015% per annum).

Sensitivity analysis

The Group’s and Company’s borrowings are denominated in Singapore dollars. An increase/decrease in the interest rates by 100 basis points with all other variables remaining constant, will result in the Group’s and Company’s profi t before taxation to be lower/higher by $0.1 million (2010: $1.2 million).

Foreign currency risk

The Group incurs foreign exchange risk on sales and purchases that are denominated in currencies other than Singapore dollar. The currency giving rise to this risk is primarily the US dollar.

For operations with signifi cant expenditure denominated in foreign currencies, forward exchange contracts are entered into to hedge the foreign currency risk on forecasted payment obligations. At 31 December 2011, the Group and the Company do not have outstanding forward exchange contracts. The notional principal amounts for Group and the Company at 31 December 2010 was $86.9 million and $80.3 million respectively.

The Group’s and Company’s exposures to US dollar are as follows:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Trade and other receivables 6.4 15.5 6.9 6.5Cash and cash equivalents 17.3 30.6 14.4 30.1Trade payables, accruals and other payables (164.5) (146.6) (111.6) (83.5)

(140.8) (100.5) (90.3) (46.9)

In respect of other monetary liabilities held in foreign currencies, the Group ensures that the net exposure is kept to an acceptable level by buying foreign currencies at spot rates where necessary to address any shortfalls.


176


Foreign currency risk (continued)

Sensitivity analysis

At 31 December 2011, a 1% (2010: 1%) strengthening of Singapore dollar against the US dollar would increase profi t before taxation by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Profi t before taxation 1.4 1.0 0.9 0.5

A 1% (2010: 1%) weakening of Singapore dollar against the US dollar would have had the equal but opposite effect to the amounts shown above, on the basis that all other variables, in particular interest rates, remain constant.

Estimation of fair values

The following summarises the signifi cant methods and assumptions used in estimating the fair values of fi nancial instruments of the Group and Company.

Derivatives

Marked to market valuations of the forward exchange contracts are provided by the banks. For interest rate swaps, valuations are also provided by the banks. Those quotes are back tested using pricing models or discounted cash fl ow techniques.

Where discounted cash fl ow techniques are used, estimated future cash fl ows are based on management’s best estimates and the discount rate is a market related rate for a similar instrument at the reporting date. Where other pricing models are used, inputs are based on market related data at the reporting date.

Loans

The fair value of loans that reprice within one year of reporting date were assumed to equate the carrying value. All other loans are calculated using discounted cash fl ow models based on the present value of future principal and interest cash fl ows, discounted at the market rate at the reporting date.

Other fi nancial assets and liabilities

The carrying amounts of fi nancial assets and liabilities with maturity of less than one year (including trade and other receivables, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values.

Interest rates used in determining fair values

The Group and the Company use the interbank swap yield as of 31 December 2011 plus an adequate constant credit spread to discount fi nancial instruments. The interest rates used are as follows:

2011% per annum

2010% per annum

Derivatives 0.92 – 3.015 1.45 – 3.015



177


Fair value hierarchy

The table below analyses fi nancial instruments carried at fair value, by valuation method. The different levels have been defi ned as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly (i.e. as prices) or indirectly (i.e. derived from prices);Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following table represents the assets and liabilities measured at fair value, using Level 2 valuation method, at reporting date:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Mark-to-market fi nancial instruments– Liabilities 8.0 11.3 8.0 11.0

28 Capital Management

The Group regularly reviews its fi nancial position, capital structure and use of capital, with the objective of achieving long-term capital effi ciency, optimum shareholders’ total returns, including the level of dividends, and proper strategic positioning.

From time to time, the Group may purchase its own shares on the market; the timing of these purchases depends on market prices. Such share purchases are intended to be used for issuing shares under the StarHub Share Option Plan, StarHub Performance Share Plan and StarHub Restricted Stock Plan programmes. Other than for such specifi c purposes, the Group does not have a defi ned share buy-back plan.

The Group manages the use of capital centrally and all borrowings to fund the operations of the subsidiaries are managed by the Company. The capital employed by the Company consists of equity attributable to shareholders and bank borrowings from fi nancial institutions.

The Group is not subject to any externally imposed capital requirement.

There were no changes in the Group’s approach to capital management during the year.


178

29 Commitments

(a) Capital and other fi nancial commitments

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Contracted and not provided for in the fi nancial statements:– Capital expenditures 195.1 137.4 167.6 96.4– Other operating expenditures 454.9 569.7 – –

650.0 707.1 167.6 96.4

Included in the capital expenditures contracted by the Company is an amount of approximately $56.2 million (2010: $37.7 million) which has been entered into on behalf of a subsidiary.

As at 31 December 2011, the Group has outstanding capital and other fi nancial commitments with related companies amounting to $28.1 million (2010: $9.4 million).

(b) Operating leases

Future minimum lease payments under non-cancellable operating leases are as follows:

GROUP COMPANY

2011$’mil

2010$’mil

2011$’mil

2010$’mil

Payable:– Within 1 year 98.0 93.1 51.6 49.0– Within 2 to 5 years 270.4 281.3 135.5 150.3– After 5 years 20.6 78.8 11.5 40.1

389.0 453.2 198.6 239.4 Included in the operating lease commitment of the Company is $6.6 million (2010: $4.9 million) which is contracted on

behalf of a subsidiary. The operating leases include lease of premises and network infrastructure. The leases have varying terms and renewal rights. As at 31 December 2011, the Group has outstanding operating lease commitments with related companies amounting

to $310.3 million (2010: $366.4 million).

30 Subsequent Event

The directors have proposed a fi nal dividend of $0.05 (2010: $0.05) per share, tax exempt (one tier), totalling $85.8 million (2010: $85.8 million) in respect of the fi nancial year ended 31 December 2011. This proposed fi nal tax exempt dividend has not been recognised as at year end and will be submitted for shareholders’ approval at the forthcoming Annual General Meeting of the Company in 2012.



179

INTERESTED PERSON TRANSACTIONS AND MATERIAL CONTRACTS(pursuant to SGX-ST Listing Manual Rule 907 and Rule 1207(8))

Aggregate value of all transactions conducted under a Shareholders’

Mandate pursuant to Rule 920 of the SGX-ST Listing Manual (excluding

transactions less than $100,000)

1 January 2011 to 31 December 2011$’mil

Transactions for the Sale of Goods & ServicesCapitaLand Limited & its associates 0.8Singapore Power Limited & its associates 0.8Singapore Telecommunications Limited & its associates 70.3TeleChoice International Ltd & its associates 4.4Temasek Holdings (Private) Limited & its associates (other than those disclosed above) 1.5

77.7

Transactions for the Purchase of Goods & ServicesCapitaLand Limited & its associates 0.3Singapore Power Limited & its associates 25.6Singapore Technologies Engineering Ltd & its associates 3.4Singapore Telecommunications Limited & its associates 124.4STT Communications Ltd and its associates 1.9TeleChoice International Ltd & its associates 93.6Temasek Holdings (Private) Limited & its associates (other than those disclosed above) 6.1

255.4

There were no interested person transactions (excluding transactions less than $100,000 and transactions conducted under a Shareholders’ Mandate pursuant to Rule 920 of the SGX-ST Listing Manual) entered into by StarHub Ltd and its subsidiaries for the period 1 January 2011 to 31 December 2011.

During the fi nancial year ended 31 December 2011, no material contracts were entered into by StarHub Ltd or any of its subsidiaries involving the interests of the CEO, any Director or controlling shareholder pursuant to Rule 1207(8) of the SGX-ST Listing Manual.


180

SHAREHOLDING INFORMATIONAs at 15 February 2012

Class of shares : Ordinary shareVoting rights : One vote per shareTotal number of issued shares excluding treasury shares : 1,716,020,579Total number of treasury shares held : 1,284,023Percentage of treasury shares held against the total number of issued shares excluding treasury shares

: 0.07%

Distribution of shareholdings

Size of shareholdings No. of shareholders % of shareholders No. of shares % of issued share capital

1 – 999 1,142 7.81 652,277 0.041,000 – 10,000 11,111 76.03 44,207,838 2.5710,001 – 1,000,000 2,334 15.97 95,862,404 5.581,000,001 and above 27 0.19 1,576,582,083 91.81Total 14,614 100.00 1,717,304,602 100.00

Substantial shareholders

Number of shares

Name Direct interest Deemed interest % of issued share capital (5)

Temasek Holdings (Private) Limited – 972,463,140 (1) 56.67Singapore Technologies Telemedia Pte Ltd – 970,807,990 (2) 56.57STT Communications Ltd – 970,807,990 (2) 56.57Asia Mobile Holding Company Pte. Ltd. – 970,807,990 (2) 56.57Asia Mobile Holdings Pte. Ltd. 970,807,990 – 56.57Qatar Telecom (Qtel) Q.S.C. – 970,807,990 (3) 56.57Qtel Investment Holdings S.P.C. – 970,807,990 (3) 56.57Nippon Telegraph and Telephone Corporation – 171,490,520 (4) 9.99NTT Communications Corporation 171,490,520 – 9.99

Notes:(1) Temasek Holdings (Private) Limited is deemed to have an interest in 972,463,140 shares of StarHub in which Fullerton Fund Management

Company Ltd, DBS Group Holdings Ltd and Singapore Technologies Telemedia Pte Ltd (ST Telemedia) group of companies have or are deemed to have an interest.

(2) ST Telemedia is deemed to have an interest in 970,807,990 shares of StarHub held by Asia Mobile Holdings Pte. Ltd. (AMH), a subsidiary of Asia Mobile Holding Company Pte. Ltd. (AMHC), which is in turn a wholly-owned subsidiary of STT Communications Ltd, a wholly-owned subsidiary of ST Telemedia. AMHC holds approximately 75% of the total issued share capital of AMH.

(3) Qtel Investment Holdings S.P.C. (QIH) and Qatar Telecom (Qtel) Q.S.C. (Qtel) are deemed to have an interest in 970,807,990 shares of StarHub held by AMH. QIH holds approximately 25% of the total issued share capital of AMH. QIH is a wholly-owned subsidiary of Qtel.

(4) Nippon Telegraph and Telephone Corporation (NTT) is deemed to have an interest in 171,490,520 shares of StarHub held by NTT Communications Corporation, a wholly-owned subsidiary of NTT.

(5) The shareholding percentage is based on the number of issued shares of the Company excluding treasury shares.


181

Twenty largest shareholders

No. Name of shareholder Number of shares held % of issued share capital (1)

1 Asia Mobile Holdings Pte. Ltd. 970,807,990 56.572 NTT Communications Corporation 171,490,520 9.993 Citibank Nominees Singapore Pte Ltd 122,225,428 7.124 DBS Nominees Pte Ltd 86,376,878 5.035 HSBC (Singapore) Nominees Pte Ltd 83,597,923 4.876 DBSN Services Pte Ltd 44,199,849 2.587 Raffl es Nominees (Pte) Ltd 22,911,983 1.348 United Overseas Bank Nominees Pte Ltd 19,986,011 1.179 Singapore Press Holdings Limited 12,911,230 0.7510 DB Nominees (Singapore) Pte Ltd 8,699,602 0.5111 BNP Paribas Securities Services 6,175,048 0.3612 Bank of Singapore Nominees Pte Ltd 3,956,520 0.2313 Merrill Lynch (Singapore) Pte Ltd 3,156,152 0.1914 Morgan Stanley Asia (Singapore) Pte Ltd 2,749,117 0.1615 OCBC Nominees Singapore Pte Ltd 1,840,882 0.1116 Yeo Kok Pin 1,575,000 0.0917 Koh Kai Jiang 1,530,000 0.0918 CIMB Securities (Singapore) Pte Ltd 1,422,160 0.0819 Philip Securities Pte Ltd 1,415,900 0.0820 BNP Paribas Nominees Singapore Pte Ltd 1,347,647 0.08Total 1,568,375,840 91.40

(1) The shareholding percentage is based on the number of issued shares of the Company excluding treasury shares.

Shareholding held in hands of the publicBased on the information available to StarHub as at 15 February 2012, approximately 33% of the total number of issued shares (excluding treasury shares) of StarHub was held by the public. Accordingly, StarHub has complied with Rule 723 of the SGX-ST Listing Manual.


182

STARHUB LTD(Incorporated in the Republic of Singapore) Co. Reg. No. 199802208C

NOTICE OF FOURTEENTH ANNUAL GENERAL MEETING

Notice is hereby given that the Fourteenth Annual General Meeting of the Company will be held at StarHub Auditorium, 67 Ubi Avenue 1, #03-01 (South Wing) StarHub Green, Singapore 408942 on 12 April 2012 at 10.00 a.m. for the following purposes:

Ordinary Business

1 To receive and adopt the Directors’ Report and the Audited Accounts for the fi nancial year ended 31 December 2011 and the Auditors’ Report therein.

Resolution 1

2 To re-elect the following Directors, each of whom will retire by rotation pursuant to Article 93 of the Company’s Articles of Association and who, being eligible, will offer themselves for re-election:

(a) Mr Tan Guong Ching; Resolution 2

(b) Mr Kua Hong Pak (Independent Chairman of Audit Committee); Resolution 3

(c) Mr Steven Terrell Clontz; and Resolution 4

(d) Mr Robert J. Sachs.

Mr Sadao Maki is also retiring under Article 93 of the Company’s Articles of Association, but will not be offering himself for re-election.

Resolution 5

3 To approve the sum of S$1,592,300 as Directors’ Remuneration for the fi nancial year ended 31 December 2011 comprising:

(a) S$1,165,850 to be paid in cash (2010: S$1,165,375); and

(b) S$426,450 to be paid in the form of restricted share awards pursuant to the StarHub Restricted Stock Plan (the “Restricted Stock Plan”) (2010: S$374,738).

Resolution 6

4 To declare a fi nal dividend of fi ve cents per ordinary share for the fi nancial year ended 31 December 2011. Resolution 7

5 To re-appoint KPMG LLP as Auditors of the Company and authorise the Directors to fi x their remuneration. Resolution 8

Special Business

To consider and if thought fi t, to pass the following resolutions which will be proposed as Ordinary Resolutions:

6 That authority be and is hereby given to the Directors to: Resolution 9

(a) (i) issue shares in the capital of the Company (“shares”) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fi t; and

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

provided that :

(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with subparagraph 2 below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 15% of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with subparagraph 2 below);


183

(2) (subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading Limited (“SGX-ST”)) for the purpose of determining the aggregate number of shares that may be issued under subparagraph 1 above, the total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company, at the time this Resolution is passed, after adjusting for:

(i) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and

(ii) any subsequent bonus issue, consolidation or subdivision of shares;

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

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

7 That authority be and is hereby given to the Directors to allot and issue from time to time such number of ordinary shares in the capital of the Company as may be required to be issued pursuant to the exercise of options granted under the StarHub Pte Ltd Share Option Plan.

Resolution 10

8 That approval be and is hereby given to the Directors to:

(a) offer and grant options in accordance with the provisions of the StarHub Share Option Plan 2004 (the “Share Option Plan”) and/or to grant awards in accordance with the provisions of the StarHub Performance Share Plan (the “Performance Share Plan”) and/or the Restricted Stock Plan (the Share Option Plan, the Performance Share Plan and the Restricted Stock Plan, together the “Share Plans”); and

(b) allot and issue from time to time such number of ordinary shares in the capital of the Company as may be required to be issued pursuant to the exercise of options under the Share Option Plan and/or such number of fully paid ordinary shares as may be required to be issued pursuant to the vesting of awards under the Performance Share Plan and/or the Restricted Stock Plan,

provided that the aggregate number of ordinary shares to be issued pursuant to the StarHub Pte Ltd Share Option Plan and the Share Plans shall not exceed 15% of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.

Resolution 11

9 To transact such other business as may be transacted at an Annual General Meeting of the Company.

By Order of the Board

Veronica Lai Company Secretary

Singapore, 14 March 2012


184

Notes:1. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two proxies to attend and vote in his

stead. A proxy need not be a member of the Company.2. The instrument appointing a proxy must be lodged at the registered office of the Company at 67 Ubi Avenue 1, #05-01 StarHub Green, Singapore 408942

(Attn: Company Secretary) not less than 48 hours before the time appointed for the Annual General Meeting.

Explanatory Notes :Resolution 6

Resolution 6 is to approve the payment of an aggregate sum of S$1,592,300 as Directors’ remuneration for the non-executive Directors of the Company for the financial year ended 31 December 2011. If approved, each of the non-executive Directors (with the exception of Mr Kua Hong Pak and Mr Sadao Maki) will receive 70% of his Directors’ remuneration in cash and 30% of his Directors’ remuneration in the form of a restricted share award pursuant to the StarHub Restricted Stock Plan. See the section on “2. Remuneration Matters” in the Corporate Governance section on pages 64 to 66 of the Annual Report 2011 for the rationale in relation to the shares component of the non-executive Directors’ remuneration. The number of shares to be awarded will be based on the volume weighted average price of a share listed on the SGX-ST over the 14 trading days immediately after the Annual General Meeting. The number of shares to be awarded will be rounded down to the nearest hundred, with cash to be paid in lieu of the remaining shares arising. The restricted share awards will consist of the grant of fully paid shares, without any performance or vesting conditions attached. However, in order to encourage alignment of the interests of the Directors with the interests of shareholders, non-executive Directors are required to hold shares in the Company worth at least the annual basic retainer fee at all times during the tenure of their directorships with the Company; non-executive Directors can only dispose of all their shares one year after ceasing to be a Director. Each of Mr Kua Hong Pak and Mr Sadao Maki has declined the restricted share award grant, and will only receive the cash component of their remuneration. Both Mr Kua Hong Pak and Mr Sadao Maki hold no shares in the Company. The comparative figure of S$374,738 for the restricted share awards granted in financial year ended 31 December 2010 reflects the fair value of restricted share awards granted to the non-executive Directors in recognition of their previous services and did not form part of Directors’ fees for the financial year ended 31 December 2010. The figure is shown for comparison purposes only.

Resolution 9

Resolution 9 is to empower the Directors to issue shares in the capital of the Company and to make or grant instruments (such as warrants or debentures) convertible into shares, and to issue shares in pursuance of such instruments, up to a number not exceeding in total 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company, with a sub-limit of 15% for issues other than on a pro rata basis to shareholders. For the purpose of determining the aggregate number of shares that may be issued, the total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time that Resolution 9 is passed, after adjusting for (a) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time that Resolution 9 is passed, and (b) any subsequent bonus issue, consolidation or subdivision of shares.

Resolution 10

Resolution 10 is to empower the Directors to issue shares in the capital of the Company pursuant to the exercise of options granted under the StarHub Pte Ltd Share Option Plan.

Resolution 11

Resolution 11 is to empower the Directors to offer and grant options and/or grant awards and to issue shares in the capital of the Company pursuant to the StarHub Share Option Plan 2004, the StarHub Performance Share Plan and the StarHub Restricted Stock Plan (collectively, the “Share Plans”) provided that the aggregate number of shares issued pursuant to the StarHub Pte Ltd Share Option Plan and the Share Plans shall not exceed 15% of the total number of issued shares (excluding treasury shares) in the capital of the Company for the time being. Approval for the adoption of the Share Plans was given by shareholders at an Extraordinary General Meeting of the Company held on 16 August 2004. The grant of options and awards under the respective Share Plans will be made in accordance with their respective provisions.

Notice of Books Closure and Final Dividend Payment Date

Notice is hereby given that, subject to the approval of the shareholders to the fi nal dividend at the Fourteenth Annual General Meeting, the Register of Members and the Transfer Books of the Company will be closed on 19 April 2012 (“Books Closure Date”).

Duly completed registrable transfers received by the Company’s share registrar, M & C Services Private Limited, 138 Robinson Road, #17-00, The Corporate Offi ce, Singapore 068906 up to the close of business at 5.00 p.m. on 18 April 2012 (“Entitlement Date”) will be registered to determine members’ entitlements to the fi nal dividend. Subject as aforesaid, persons whose securities accounts with The Central Depository (Pte) Limited are credited with ordinary shares in the capital of the Company as at 5.00 p.m. on the Entitlement Date will be entitled to the fi nal dividend.

The fi nal dividend, if so approved by shareholders, will be paid on 30 April 2012.

STARHUB LTD(Incorporated in the Republic of Singapore) Co. Reg. No. 199802208C

NOTICE OF FOURTEENTH ANNUAL GENERAL MEETING

STARHUB LTD(Incorporated in the Republic of Singapore)Co. Reg. No. 199802208C

PROXY FORMFourteenth Annual General Meeting

IMPORTANT:1. For investors who have used their CPF monies to buy StarHub Ltd’s shares, this

report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors for all intents and purposes if used or purported to be used by them.

I/We, NRIC/ Passport/Co. Reg. No.

of (Address)

being a member/members of STARHUB LTD (the “Company”) hereby appoint :

Name Address NRIC/Passport Number

Proportion of Shareholding (%)

and/or (delete as appropriate)

as my/our proxy/proxies to attend and to vote for me/us and on my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting (“AGM”) of the Company to be held on 12 April 2012 at 10.00 a.m. at StarHub Auditorium, 67 Ubi Avenue 1, #03-01 (South Wing) StarHub Green, Singapore 408942 and at any adjournment thereof.

I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the AGM as indicated hereunder. In the absence of specifi c directions, the proxy/proxies will vote or abstain as he/they may think fi t, as he/they will on any other matter arising at the AGM and at any adjournment thereof.

No. Resolutions For * Against *

Ordinary Business1 To receive and adopt the Reports of Directors and Auditors and Audited Accounts2 To re-elect Mr Tan Guong Ching as Director3 To re-elect Mr Kua Hong Pak as Director 4 To re-elect Mr Steven Terrell Clontz as Director5 To re-elect Mr Robert J. Sachs as Director6 To approve the Directors’ Remuneration7 To declare the Final Dividend8 To re-appoint KPMG LLP as Auditors and to authorise the Directors to fi x their remuneration

Special Business9 To authorise Directors to allot and issue shares10 To authorise Directors to allot and issue shares pursuant to exercise of options granted

under the StarHub Pte Ltd Share Option Plan11 To authorise Directors to offer/grant options and/or grant awards and allot and issue shares

pursuant to the StarHub Share Option Plan 2004, the StarHub Performance Share Plan and the StarHub Restricted Stock Plan

* If you wish to exercise all your votes “For” or “Against” the relevant Resolution, please tick (√) within the relevant box provided. Alternatively, if you wish to exercise your votes both “For” and “Against” the relevant Resolution, please insert the relevant number of Shares in the boxes provided.

Dated this day of 2012 .

Signature(s) or Common Seal of members

Total Number ofShares 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 defined in Section 130A of the Companies Act, Cap. 50 of Singapore), you should insert that number of shares. If you only have shares registered in your name in the Register of Members, you should insert that number of shares. However, if you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his stead. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his holding (expressed as a percentage of the whole) to be represented by each proxy. A proxy need not be a member of the Company.

3. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 67 Ubi Avenue 1, #05-01 StarHub Green, Singapore 408942 (Attn: Company Secretary), not less than 48 hours before the time appointed for the Annual General Meeting.

4. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his 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 the hand of an officer or attorney duly authorised. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

5. A corporation which is a member may authorise by resolution of its Directors or other governing body such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Cap. 50 of Singapore.

6. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of members whose shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares entered against their names in the Depository Register 48 hours before the time appointed for holding the Annual General Meeting as certified by The Central Depository (Pte) Limited to the Company.

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STARHUB LTD

67 Ubi Avenue 1

#05-01 StarHub Green

Singapore 408942

Attn: Company Secretary

AffixPostageStamp

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CORPORATE INFORMATION

Board of DirectorsTAN Guong Ching (Chairman)Neil MONTEFIORE (CEO)KUA Hong PakPeter SEAH Lim HuatNihal Vijaya Devadas KAVIRATNE CBELEE Theng KiatSteven Terrell CLONTZLIM Ming SeongSadao MAKITEO Ek TorLIU Chee MingRobert J. SACHSNasser MARAFIHSIO Tat Hiang (Alternate to Peter SEAH Lim Huat)Stephen Geoffrey MILLER (Alternate to LEE Theng Kiat)Takeshi KAZAMI (Alternate to Sadao MAKI)Guy William NORMAN (Alternate to Nasser MARAFIH)

Audit CommitteeKUA Hong Pak (Chairman)Nihal Vijaya Devadas KAVIRATNE CBELIM Ming SeongTEO Ek Tor

Executive Resource and Compensation CommitteePeter SEAH Lim Huat (Chairman)LEE Theng KiatLIM Ming Seong

Nominating CommitteePeter SEAH Lim Huat (Chairman)LEE Theng KiatTEO Ek Tor

Strategy CommitteeNihal Vijaya Devadas KAVIRATNE CBE (Chairman)TAN Guong ChingSteven Terrell CLONTZLIM Ming SeongLIU Chee MingRobert J. SACHSStephen Geoffrey MILLERYONG Lum Sung

Company SecretariesVeronica LAI Kwai-YiKONG Pooi Foong

Registration Number199802208C

Registered Address67 Ubi Avenue 1#05-01 StarHub GreenSingapore 408942Tel: (65) 6825 5000Fax: (65) 6721 5000

Share RegistrarM & C Services Private Limited138 Robinson Road #17-00 The Corporate Offi ceSingapore 068906

AuditorsKPMG LLPCertifi ed Public Accountants16 Raffl es Quay #22-00Hong Leong BuildingSingapore 048581Partner-in-charge: ANG Fung Fung(appointed w.e.f. 1 January 2011)

SubsidiariesStarHub Mobile Pte Ltd StarHub Cable Vision Ltd.StarHub Internet Pte LtdStarHub Online Pte LtdSHINE Systems Assets Pte. Ltd.StarHub Shop Pte LtdStarHub, Inc.StarHub (Hong Kong) LimitedStarHub (Mauritius) LtdNucleus Connect Pte. Ltd.

Investor RelationsFor enquiries on the Group’s business performance, contact the Investor Relations team at email: [email protected]

All rights reserved. Some of the information in this report constitute “forward looking statements” which reflect StarHub’s current intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which may be outside StarHub’s control. You are urged to view all forward looking statements with caution. No information herein should be reproduced without the express written permission of StarHub. All information herein are correct at the time of publication. For updated information, please contact our Corporate Office.

strategic communicator and visual creatorgreymatter williams and phoa (asia)

This annual report is printed on paper certified according to the FSC standard. These papers are environmentally-friendly and are produced with a minimum content of 51% recycled paper. For more information, please visit www.fsc.org

StarHub LtdReg. No: 199802208C

67 Ubi Avenue 1#05-01 StarHub Green

Singapore 408942Tel: (65) 6825 5000Fax: (65) 6721 5000

www.starhub.com

Documents

AL RE T 2011 - StarHubir.starhub.com/FormBuilder/_Resource/_module/gZSLLgdlcU... · 2012-06-05 · LTE services will give us the ﬂ exibility to replace our ﬁ xed price packages