Proposed capital reduction

May 8, 2006

The SCI Capital Reduction will involve reducing the share capital of the Company by the sum of up to S$270 million and such reduction will be effected by returning to shareholders of the Company S$0.15 in cash for each Share held.

The SCI Capital Reduction will not result in a cancellation of Shares, or change in the number of Shares, held by Shareholders immediately after the SCI Capital Reduction.

Rationale for the SCI capital reduction:
(a) Returning Surplus Capital to Shareholders
The Company has determined that, taking account of the reserves available to the Company in the form of cash and investible funds and the ongoing cash flow generated by its operating business, the current level of capital held by the Company is surplus to its requirements. In determining the level of capital to be returned to shareholders, the Company has ensured that it retains sufficient reserves to support its existing business and to allow flexibility to pursue appropriate business opportunities, should such opportunities arise in the future. The Company’s financial position is expected to remain strong and the healthy cash flow generation is expected to be able to support debt repayments and fund new business opportunities.

The SCI Capital Reduction allows a substantial cash distribution to be made to shareholders, while enabling each shareholder to maintain the same proportionate shareholding in the Company.

(b) Enhance shareholders’ value
Capital reduction achieves a permanent improvement in capital structure when the issued share capital of a company is reduced. On a proforma basis as at March 31, 2006, the SCI Capital Reduction is expected to increase the annualised Return on Equity (“ROE”) of the Group from 30% to 32%, thereby increasing shareholders’ value.