Executive Master of Business Administration (Singapore)

A Financial Analysis of Pertama Holdings Limited Financial Statements

Submitted in part fulfilment of the requirements for: Financial and Management Accounting Module (07 02798) Submitted to: Submitted by: Word Count: Submission date: Mrs. Anne Ullathorne Student ID No. 1067413 3120 words 25th October 2009

EXECUTIVE SUMMARY
The purpose of this report lies in conducting an analysis of the financial activities of Pertama Holdings Limited for determining its suitability for investment or trading partner and appraising the impact of an accounting policy on Pertama reported results. Evaluation was conducted between Pertama appraisal of its performance (Chairmans Report) with findings that was revealed or implied from its financial statements and performance of its peers (Challenger Technologies Limited). Financial ratios were selected for analysis of financial statements as mentioned by Atrill (2008.p.182.) on its usefulness when comparing the financial health of different business as differences may exist between businesses in the scale of operations.
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IAS 2 was selected as the accounting policy due to the importance of inventories in a retail entity. Limiting factors that surface in this report include shortage of listed companies that matches Pertama in the size of its finance and operations, different adoption of accounting policies and reporting timing of annual report and non disclosures of sensitive information which impact the validity of the findings. The major findings indicate weaknesses in Pertama business that was not revealed in the Chairmans statement. Despite the identified shortcomings, the company strengths in key areas justify recommendation for investment or trading partners. Pertama accounting policy for inventories are closely aligned to IAS 2 regulations which lend credence to the reliability and relevancy of its financial reports.

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TABLE OF CONTENTS
Introduction 1.0 2.0 Profile of Pertama Holdings Limited Analysis of Pertama Financial Statements for Year 2009 2.1 2.2 2.3 2.4 2.5 3.0 Profitability Ratios Liquidity Ratios Asset Management Ratios Financial Structure Ratios Investor Ratios

PAGE

1~ 2 2~ 6

Comparative Appraisal of Pertama and Challenger Performance 3.1 3.2 3.3 3.4 3.5 Comparison of Profitability Ratios Comparison of Liquidity Ratios Comparison of Asset Management Ratios Comparison of Financial Structure Ratios Comparison of Investor Ratios

6~ 10

4.0 Evaluation of Pertama Chairmans Statement for Year 2009

5.0 6.0 7.0 Recommendations Appraisal of Pertama Accounting Policy for Inventories Conclusion Bibliography Appendices

10~ 11 12 13~ 14 14

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Introduction
Pertama Holdings Limited was selected for this report as it fulfil the requirements of the assignment of being a public limited company listed in Singapore Exchange, availability and accessibility of published financial reports, avenues for data gathering which assist in the feasibility, reliability and validity of this report.

1.0

Profile of Pertama Holdings Limited

Pertama started as a partnership for undertaking retailing and wholesaling of consumer electronics products. In 1982, Pertama Holdings was formed as an investment holding company and subsequently listed in the Singapore Exchange in 1992. In 1999, Pertama Holdings became a subsidiary of Harvey Norman Ossia (Asia) Pte Ltd.which is a joint venture company between Australia listed Harvey Norman Hldgs Ltd and Singapore listed Ossia Intl Ltd. Over the years, Pertama has embarked on an expansion strategy that culminates in 2009 of a total of 14 stores within Singapore and 6 stores in Malaysia. The principal activities of its subsidiaries lies in the reselling of consumer electronics, furniture and bedding products from vendors of established brands i.e. Sony, Acer, Tempur to walk in customers at its stores. Pertama also operates an advertising and property investment subsidiary (Eastern Audio Pte Ltd) and has ceased its export and wholesaling business in 2008. Pertama operate in a monopolistic market that is fragmented by bigger firms i.e. Best Denki, Courts, Challenger and numerous sole proprietors in a extremely competitive market due to sharing of similar suppliers base, price cutting and difficulties of securing of customers loyalties (Annex C) The state of local economy has direct impact on the growth and revenue generation of firms in the retail industry (http://app.mti.gov.sg/default.asp?id=745#6) as seen in the slump in retail performance since end 2008. Pertama products display high income elasticity due to its luxury and high pricing perception and revenue generation is subjected to the level of consumer disposable income. The management of Pertama possess strong entrepreneur and retail operations experience which is a valuable asset for enhancing competiveness in a dynamic market environment.
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2.0

Analysis of Pertama Financial Statements for Year 2009

According to Tony Davies & Tony Boczko (2006 p.136) ratio analysis may be used to provide cross-sectional analysis and inter-firm comparison..more objective way to aid decision making. The findings derived from the schedule of Pertama 2009 financial ratios (Annex A 1.0) are categorised as follows:

2.1

Profitability Ratios
($25.56m from $32.16m) and gross profit margin (6.8% from 7.6% ) despite lower cost of sales ($$350.85m to $388.78m). This indicate the poor trading conditions from the onset of recession in Singapore (Annex D) which was worsen by the cessation of Pertama export and wholesaling business.

For 2009, Pertama saw a 10.6% ($376.41m from $420.95m) drop in revenue, gross profit

The company show resilience in achieving 2.2% PBIT margin that was contributed from lower administrative expenses ($10.53m from $12.42m), recovery of bad debts ($0.32m) and government grant of $0.5m for Jobs Credit Scheme (source: http://www.asiaone.com/print/Business/My %2BMoney/Opinion/Story/A1Story20090123-116738.html. Net profit shows a slight increase of $6.69m from $6.63m from lower tax expense ($1.64 from $3.35m) and a reduction in corporate tax rate (17% from 18%). Significantly, Pertama has been able to lower cost drivers of personnel expenses ($27.56m from $28.8m) that form a major component of retailers expenses given the labour intensive nature of the industry. However, the doubling of allowance for inventory obsolescence ($0.83m to $1.55m) raise concerns as it indicate possibilities of inventories not meeting customers demands, slow turning of inventories or excessive amounts of obsolete or damaged stocks. Asset turnover has fallen to 3.6 times which indicate poor investment opportunities or lack of management efficiency in employing its capital for revenue and profit generation. This can be seen by the increase of cash and cash equivalents to $77.45m which form over 50% of current assets and the drop in inventories ($55.68m to $48.98m) which served as the main driver of revenue generation. Non engagement of the cash hoard raise concern given the low interest (0.1% to 2.94%) being earned coupled with the absence of long term debt payments.

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ROCE drop from 9.7% to 8% while ROE stagnant at 6.4% due to fall PBIT and insignificant increase of and net profit ($6.69m from $6.63m). The figures indicate that past investments of opening new stores in Singapore and Malaysia have not translated materially into higher revenue or profits.

2.2

Liquidity Ratios

Pertama maintain high liquidity ratios for 2009 (current ratio 2.9, acid ratio 1.9) which was contributed by the increase in cash and cash equivalents and lowering of inventories level. The contributing factors lies in the nature of its business: a) proportion of inventories as current assets due to reselling activities b) strong cash generation from operation activities due to the short lead time between sales of goods and collection of payments. However, there is low rationale for Pertama in maintaining over liquidity given the lack of long term debts and continuing inflow of cash from operations. The excessive liquidity should be engaged on higher yielding initiatives.

2.3

Asset Management Ratios

The 51 days of inventory turnover significantly exceed the stated settlement terms of 30days due to trade payables (note 12.). This implied delay between cash outflow for purchase of goods and cash inflow from selling of goods which arise from slow movement of purchased goods and considerable amount of obsolescence goods ($1.55m in 2009, note 7.). In addition, Pertama is not capitalising on suppliers capital through selling off purchased stocks before settlement date. Slow inventory turn raise concerns as inventories obsolete at a fast pace due to the short life cycle of consumer electronics products which will require expense of write down for selling purpose. There is an improvement for debtor turnover (4.2 days from 7.6 days) with the reduction of trade debtors ($4.36m from $8.75m) and a fall in doubtful debts ($2.87m from $8.75m). This indicates a prudent and stringent approach in credit allowance for trade debtors for minimising surfacing of bad debts, which is a sound strategy given the current economic climate. Creditors turnover at 27 days remains within the companys 30 days terms (note 12.) which indicate prompt payment of creditors while maximising credit facilities of creditors.
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The main proportion of payables lies in stocks purchases from vendors for reselling purpose. Pertama ability to pay within the defined trading terms increase its credit worthiness, good suppliers relationship while adding strength during company endeavours for trading terms or marketing support with suppliers.

2.4

Financial Structure Ratios

Pertama has no gearing and debt to equity ratios as its has been maintaining net cash position in recent years. The lack of gearing cushions the company from downturns of business cycle such as the present recession. The company has no long term debt and investment has been self financed from its equity without a need for external borrowings and financial risks. The company cash flow remain healthy and has increased to 2.75 from 1.38 from lower inventories and trade payables level which reduce the outflow of cash as it operate a cash business with inventories that is being financed by vendors capital (30 days payment period) with low trade debtors due to the COD (cash on delivery) terms for customers purchase. Pertama free cash flow has grown significantly to $20.69 from $7.24m due to higher cash inflow from operations activities and lower cash outflow for investing activities ($2.18m from $6.43m).

2.5

Investor Ratios

Earnings per share (EPS) have dropped due to lower profit available for shareholders ($6.69m from $7.37m). PE ratio has no significant changes at 8.9 due to low changes in EPS coupled with non fluctuations of shares prices. Pertama shares are thinly traded as only 11.16% of ordinary shares are held by public investors (statistics of shareholdings 2009 annual report) with the balance being hold by company and investment institutions which minimise drastic share price movements. Despite a token improvement in net profit, Pertama has increased its dividend to shareholders for a dividend yield of 9.7% against 8.4% in 2008 which arises from the financial strength of the company, low liabilities and nil long term debts.

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There is a slight drop in earnings yield to 1.1% from 12.1% due to lower EPS. However, earnings yield is more attractive when compared alternative investment avenues such as treasury bonds and bank interest.

3.0

Comparative Appraisal of Pertama and Challenger Performance

Gibson (1998 p.202.) point out the analysis of an entitys financial statements is more meaningful if the results are compared with industry averages and with results of competitors. Given the absence of exact entities that mirrors Pertama business profile such as size of operation and products mixture; Challenger Technologies is selected for comparative purpose as it shares sufficient similarities for higher validation. However, the presence of different accounting policies such as valuation of inventories (FIFO and weighted average) and differing reporting period (June and December) raise reliability and distortion issues should 2009 be used for appraisal. Hence, trend analysis is adopted as Aidan and Robin (2006 p.265) acknowledge it made the results easier to understand and interpret of trends of both companies over 2006 to 2008 (2008 as base) on a like to like basis given similar operating timing. The interpretations of findings from the schedules of ratios (Annex A 1.1 to A 1.5) are elaborated as follows:

3.1

Comparison of Profitability Ratios

Both companies saw a trend of growing revenues due to expansion of retail business and positive filter effect on retail trade from Singapore economic growth prior to the onset of recession in end 2008 (Annex E). Pertama out-performed Challenger in gross profit generation, however profit margin yield is lower which may be contributed to the different product mix as Challenger do not sell furniture and beddings and different business strategy such as focusing on high margin products and avoidance of price cutting by Challenger ( Annex C).

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Pertama post lower asset turnover as it conserve its capital in cash and cash equivalents which form 50% of its current assets. The company focus on expansion of its retail business without any investment in other non-related business unlike Challenger which incur higher risk through deploying its working capital in quoted shares, acquisition of non-core business of Incall Systems Pte Ltd, electronic signage services which has translated to revenue of $3.58m in 2008 (source: note 5.&16. Challenger Technologies Limited.2008 Annual Report p. 59. p. 68.). From 2006 to 2008, Challenger has achieved higher ROCE against Pertama which indicates its efficiency in engaging capital on sound investment opportunities for yields in profits and revenues generation. Similarly, its higher ROE ratios demonstrate management aptitude in leveraging on equity for maximising returns on shareholders investment in the company without incurring debts from external borrowings.

3.2

Comparison of Liquidity Ratios

Pertama has relatively high liquidity level as compared to Challenger from its trend of its cash hoarding while maintaining low inventories and liabilities level unlike Challenger trend of increasing inventories that correspond with increase of stores.

3.3

Comparison of Asset Management Ratios

Unlike Challenger, Pertama has seen an unhealthy trend of increasing days of its inventory turnover which has exceeded its payment terms of 30days for purchased goods. Products being sold by both companies have very short life cycle due to constant introductions of newer models that were communicated to consumers through mass media for selling objectives. Goods that remained in the company after payment incur opportunity and economic costs of marked down which will impact negatively on returns on capital, cash flow and profit position of the company. Pertama has improved significantly on its debtors turnover 7.6 days (2008) from 36 days (2006) which translate to effective credit management and minimising of equity leakage from non collection of debts.

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Unlike Challenger, Pertama has been a good paymaster for suppliers, exceeding payment due date for suppliers may erode both reputation and financial confidence of a company as delays in payments will increase suppliers debtors turnover ratios.

3.4

Comparison of Financial Structure Ratios

Both companies cash receipts have consistently exceed cash payments resulting in positive cash flow while meeting all financial obligations. The lack of long term debts lessen cash outflows resulting in good solvency level and permits both companies to self-finance investments such as opening of new stores without occurring financial risks from external borrowing. In addition, both companies positive free cash have sustained their ability for good dividends payout and gradual building of high cash reserves provide capital for investment opportunities.

3.5

Comparison of Investor Ratios

Pertama has out-performed Challenger in EPS as it has not diluted shareholders value by increasing its share base through issue of warrants as performed by Challenger in 2007 and 2008 (note 13.Challenger 2008 annual report p.64.). Both companies shares are thinly traded due to low percentage being hold by public investors (Pertama at 11.16%, Challenger at 21.94%) and generally are inactive shares that do not display wide swings in price resulting in PE ratios range of 6% to 11% over 2006 to 2008. Challenger pays out higher annual dividends per share due to the company distribution of accumulated retained earnings to shareholders. In 2007 and 2008, dividends payout exceeded net profit from operations ($7.3m: $7.1m, $5.5m: $5.3m) while growth in equity arises from issuance of shares (Challenger 2008 annual report p.35.). Over 3 years, Pertama mean earnings yield of 10.4% is relatively close to Challenger mean yield of $13% when discounting the upsurges of its shares prices in 2006 and 2007.

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In addition, Pertama was able to achieve this figure without diluting its shares base and equity. Both companies figures have out-perform yield from other investment institutions such as treasury bills and bank deposits. Pertama performance is on par with Challenger in liquidity, investors and financial structure ratios. However, Pertama conservative approach in employing its capital has lowered its ability for earnings and profit expansion. The company needs to review its asset management strategies such as improving inventory turnover, ROCE for greater efficiency of its substantial capital base.

4.0

Evaluation of Pertama Chairmans Statement for Year 2009

The context of Pertama Chairmans statement centered on the company adoption of a cautious approach in business operations due to the negative implications of current economic woes. The statement provides superficial analysis of Pertama business for 2009 without detailed qualitative reviews of weaknesses that have surfaced in this report. Pertama has been badly affected by economic conditions both in Singapore and Malaysia due to over emphasis on retailing activities. The cessation of export business and lack of alternatives measures for its replacement, nil cushioning of bad trading conditions from alternate business options will subject the growth and profitability of Pertama to unpredictable health of the Singapore economy. Gain in net profit lies from reduced tax expense and losses in Malaysias operations were not disclosed (note 31.). Concrete reasons and plans for accumulation of $77.4m cash hoard currently earning minimal interest was not provided which implied poor capital management by the company. Measures for overcoming continuing weaknesses of profit margin, PBIT, ROE, ROCE, inventory turnover was not forthcoming in the statement. There was no comparison done against competitors and industry results for validation of performance.

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Pertama can afford move away from the cautious stance being adopted by companies due to sound financial strength, nil long term debts, high liquidity level by seeking opportunities in a recession period industry. where cash is king for maximising returns for shareholders and lowering of company vulnerabilities in a low growth competitive retail

5.0

Recommendations

Aidan and Robin (2006 p.247 248) claim lenders may be sub-divided intoshort- term creditors, medium-term lenders and long term lenders. Here, trading partners of Prertama serve as lenders of capital through supplying goods on credit terms. These lenders undertake financial risks in trading with Pertama and their key interest lies in a) risk factor b) financial strength c) profitability and growth of trading d) solvency of the company. From the findings of this report, Pertama is recommended as a trading partner as its business model is that of a cash generating company with sound financial strength, continuing profitability of operations and good paymaster records. The nature of its business being retailing requires constant supply of goods for reselling and its substantial sales and expansion plans portend good growth of trading opportunities. The continuing profitability contributes to high liquidity, substantial cash holdings and absence of long term debts which will mitigate risk of non payments of supplied goods. In addition, being a listed company that complies with Singapore Exchange requirements, published reports of Pertama financial statements are readily available which will facilitate traders measurement of its credit worthiness. Pertama would be recommended for investors seeking attractive price shares that provide stable dividend yields from a debt free, low risk company with strong financial structure and conservative approach towards equity engagement. (Annex G). However, speculative investors will be disappointed in low fluctuations of Pertama shares given its thin trading and low amount of shares hold by public.

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6.0

Appraisal of Pertama Accounting Policy for Inventories

IAS 2 (Annex H) deal with how an organization should value its inventories which give credence for selecting Pertama accounting policy for inventories given its importance in retailing and as noted by Tiffin (2004 p. 57.) over (or under) valuing inventory affects the balance sheet asset value...also affects the related cost of sales, and thus profits by the same amount. As per accruals concepts of recognizing costs as they are incurring, Pertama inventories costs includes all costs in bringing the inventories to their present location, stated at the lower of costs that are net of volume rebates and other inventory based incentives from suppliers (notes 2.19.). Rebates are deducted from cost of inventory on goods that remain unsold at end of financial year which will be reflected in the income statement Atrill (2008 p. 54.) stressed prudence convention requires the expected loss from future sales be recognised immediately. Allowance (note 3.) is made for Pertama deteriorated, damaged, obsolete and slow-moving inventories for bringing the inventories to a saleable condition for realising its net realisable value (NRV). Allowance is treated as an expense in cost of sales of the income statement (note 7.) which will reduce net income and value of inventories in the balance sheet. Pertama determine its inventories though weighted average cost formula which according to Aidan, Robin (2006 p. 129.) made no assumption about the way in which goods flow through the business and is more neutral. Valuation method impact gross profit as cost of sales will be different under different methods of inventory valuation. For example; should Pertama adopt FIFO during period of inflation, its costs of goods will be lower as the value of closing inventory is based on later purchases which will lift up gross profit for the year and the higher costing purchases will be matched against the following year revenues. Pertama do not adopt this approach in elevating its profits due to adherence of the consistency concept of uniformity of accounting treatment of items from one accounting period to the next period. Pertama inventories that are unsold at the end of the year is recognised as an asset and carried forward under current assets in the balance sheet (note.7) in accordance to the accruals and going concepts. The value of closing inventory is deducted from the cost of

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sale in the income statement which will affect the gross profit margin that is reported for the period, liquidity ratios and working capital of the business. In addition, as per IAS 2, Pertama annual report disclose the accounting policies for valuing its inventories, details of reversal of inventory write downs (note 3.) and amount of inventories at NRV are classified in the relevant financial statements.

7.0

Conclusion

The analysis of Pertama financial statements surfaces weaknesses in its business operations which do not dilute its attractiveness for investment or trading partner purpose. The company demonstrates good accounting practices by abiding to accounting treatment for valuing its inventories under IAS2 regulations. Limiting factors identified is minimised through a review of Pertama non-financial performance indicators as argue by Tony Davies and Tony Boczko (2006. pp. 172 173) which may give a more timely indication of the levels of performance achieved than do financial ratios ..less susceptible to distortion

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Bibliography
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2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. Aidan Berry, Robin Jarvis. (2006) Accounting in a business context. 4th edn. China: Cengage Learning. pp.109 154.. pp.247-265. Charles H. Gibson. (1998) Financial Statement Analysis. 7th edn. Ohio: SouthWestern Publishing. pp. 202-207. David Alexander, Anne Britton, Ann Jorissen. (2003) International Financial Reporting and Analysis. 1st edn. Great Britain: Thomson Learning. pp. 121-145. Pam Powell. Accounting, Analysis and Planning. Kent: Financial World Publishing. ISBN 0-85297-614-3 pp. 227-251. Peter Atrill, Eddie Mclaney. (2008) Accounting and Finance for Non Specialist. 6th edn. London: Prentice Hall. p. 54 pp. 181 - 224. Ralph Tiffin. (2004) The Complete Guide to International Financial Reporting Standards Including IAS and Interpretation. London: Thorogood pp.57-61. Robert Perks. (2007) financial accounting understanding and practice. 2nd edn. Berkshire: McGraw-Hill. pp. 77-100. Dr. Themin Suwardy, (2002) Financial Reporting in Singapore, Cases and Readings. 2nd edn. Singapore: Pearson Tony Davies, Tony Boczko. (2006) Principles of Accounting and Finance. 1st edn. Berkshire: McGraw Hill. p.136 pp. Pertama Holdings Limited. Annual Report 2009 pp. 1-73. Challenger Technologies Limited . Annual Report pp. 1-112. http://app.mti.gov.sg/default.asp?id=745#6 http://www.asiaone.com/print/Business/My%2BMoney/Opinion/Story/A1Story20090123116738.html http://www.business.gov.sg/EN/News/Sep2009/20090916singapore.htm http://www.challenger.com.sg/ http://www.harveynorman.com.sg/ http://www.iasplus.com/dttpubs/pocket2009.pdf http://www.inc.com/resources/retail/articles/200707/hurlbut.html http://www.retailasiaonline.com/magazine/archive/2009/mag2009-01_story03.html http://www.reuters.com/finance/stocks/incomeStatement?stmtType=BAL&perType= ANN&symbol=PRTH.SI http://www.reuters.com/finance/stocks/incomeStatement?stmtType=BAL&perType= ANN&symbol=CHALbi.SI

http://www.theedgesingapore.com/component/content/8600.html?task=view

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Appendices
A 1.0 Schedule of ratios calculations for Pertama Holdings Limited Year end 30th June 2009 2006 2009) A 1.2 Schedule of comparative Liquidity ratios calculations for Pertama and Challenger (Year 2006 2009) A1.3 Schedule of comparative Asset Management ratios calculations for Pertama and Challenger (Year 2006 2009) A 1.4 Schedule of comparative Financial Structure ratios calculations for Pertama and Challenger (Year 2006 2009) A 1.5 Schedule of comparative Investor ratios calculations for Pertama and Challenger (Year 2006 2009) B C Pertama Holdings Limited. Annual Report 2009 pp. 1-73 Appendices C Commentary of retail business by Challenger Technologies Chairman (THE EDGE SINGAPORE FEBRUARY 25, 2008) D E How are retailers in Singapore bearing up? Singapore Economic Indicators A 1.1 Schedule of comparative profitability ratio calculations for Pertama and Challenger (Year

F 1.0 Pertama Balance Sheet (Year 2006 to 2009)

F 1.1 Pertama Income Statement (Year 2006 to 2009)

F 1.2 Pertama Cash Flow Statement (Year 2006 to 2009)

F 1.3 Challenger Balance Sheet (Year 2006 to 2009 F 1.4 Challenger Income Statement (Year 2006 to 2009) F 1.5 Challenger Cash Flow Statement (Year 2006 to 2009)
G Pertama Holdings: Undervalued retailer offers high dividend; recovery could spur growth IAS 2 (Inventories)

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Appendix A 1.0. Schedule of ratios calculations for Pertama Holdings Limited Year end 30th June 2009 NB Accounting Equation: Fixed assets + Current Assets Current Liabilities = Ownership Interest + Long Term Loans Year 2009 ($000): 14,320 + 136,826 47,227 = 103,919 Year 2008 ($000): 17,002 + 133,834 47539 = 103,297
RATIOS PROFITABILITY RATIOS Gross Profit Gross Profit Margin Revenue minus Cost of sales Gross profit X 100% Revenue Operating profit X 100% Revenue Sales (or turnover) Capital employed = number of times 376,413 350,853 = 25,560 25,560 X 100% = 6.8% 376,413 8,345 X 100% = 2.2% 376,413 376,413 151,146 47,227 8,345 151,146 47,227 6,699 103,919 X = 3.6 times 420,953 388,784 = 32,169 32,169 X 100% = 7.6% 420,953 9,987 X 100% = 2.4% 420,953 420,953 150,836 47,539 = 4.1 times FORMULA USED FINANCIAL YEAR 2009 $000 DETAIL OF CALCULATION FINANCIAL YEAR 2008 $000 DETAIL OF CALCULATION

PBIT Margin

Asset Turnover

ROCE

Profit before interest and tax Capital employed Profit after tax Net assets X 100%

100%

X 100% = 8%

9.987 X 100% = 9.7% 150,836 47,539 6,636 103,297 X 100% = 6.4%

ROE LIQUIDITY RATIOS Current Ratio Quick Ratio

100% = 6.4%

Current assets : Current liabilities Current assets less stock : Current liabilities

136,826 : 47,227 = 2.9 to 1 87,838 : 47,227 = 1.9 to 1

133,834 : 47,539 = 2.8 to 1 78,145 : 47,539 = 1.6 to 1

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ASSET MANAGEMENT RATIOS Inventory Turnover Average inventory X 365 days = number days of stocks Cost of sales Debtors X 365 days Sales = x days outstanding 48,988 350,853 X 365 days = 51 days 55,689 388,784 8,754 420,953 X 365 days = 52 days

Debtor (Receivables) Turnover

4,368 X 365 days 376,413

= 4.2 days

X 365 days = 7.6 days

Creditors (Payables) Turnover

Trade payables X 365 days = days of creditors unpaid Cost of sales

26,073 X 365 days = 27 days 350,853

24,807 X 365 days = 23 days 388,784

FINANCIAL STRUCTURE Gearing Debt to equity Cash flow Prior charge capital . Total capital employed Debt Equity X 100% 0 0 0 0

Cash from operations Operating profit Operating cash from operation Capital expenditure

22,921 8,345

= 2.75

13,772 9,987

= 1.38

Free cash flow INVESTOR RATIOS Market price of share EPS

22,921 2,230 = 20,691

13,772 6,530 = 7,242

25.0 cents (at 22nd h June 2009) Profit available for shareholders Number of shares issued Market price of share EPS 6,699 239,117 25.0 cents 2.80 cents = 2.80cents

25.5 cents (at 20th June 2008) 7,373 239,117 25.5 cents 3.08 cents = 3.08 cents

PE ratio

= 8.9

= 8.3

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Dividend yield

Annual dividend per share Market price of share EPS Market price of share

5811 / 239117 25.0 cents 2.80 cents 25.0 cents

= 9.7%

5109 / 239117 25.5 cents 3.08 cents 25.5 cents

= 8.4%

Earnings yield

= 11.2%

= 12.1%

Data Source: Pertama Holdings Limited. Annual Report 2009 pp. 1-73 Share Price: http://www.reuters.com/finance/stocks/chart?symbol=PRTH.SI

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Appendix A1.1 Schedule of comparative Profitability ratios calculations for Pertama and Challenger (Year 2006 2009)
Company
Pertama Gross profit Challenger Gross profit Pertama Gross profit margin Challenger Gross profit margin Pertama PBIT margin Challenger PBIT margin Pertama Asset turnover Challenger Asset turnover Pertama ROCE Challenger ROCE Pertama ROE Challenger ROE

Formula used
Revenue minus Cost of sales Revenue minus Cost of sales

Year 2008 ($000)

421 388.8 = 32.2 168 133 = 35

Year 2007 ($000)

409.1 373 = 36.1 136.1107.6 = 28.5

Year 2006 ($000)

396.2361.2 = 34.9 92.3 73.7 = 18.6

Gross profit X 100% Revenue Gross profit X 100% Revenue Operating profit X 100% Revenue Operating profit X 100% Revenue Sales or turnover Capital employed Sales or turnover Capital employed PBIT X 100% Capital employed PBIT X 100% Capital employed Profit after tax X Net assets Profit after tax X Net assets 100%

32.2 / 421 X 100% = 7.6%

36.1 / 409.1 X 100% = 8.8%

34.9 / 396.2 X 100% = 8.8%

35 / 168 X 100% = 20.8%

28.5 / 136.1 X 100% = 20.9%

18.6 / 92.3 X 100% = 20.2%

10 / 421 X 100% = 2.4% 7.2 / 168 X 100% = 4.3% 421 / (150.8 -47.5) = 4.1 times 168 / (46.7 -23.9) = 7.4 times 10 / (150.8 -47.5) X 100% = 9.7% 7.2 / (46.7- 23.9) = 31.6% 6.6 / (150.8 -47.5) X 100% = 6.4%

13.6 / 409.1 X 100% = 3.3% 8.8 / 136.1 X 100% = 6.5% 409.1 / (161.1 -57.6) = 4.1 times 136.1 / (38.7 -16.4) = 6.1 times 13.6 / (161.1 -57.6) X 100% = 13.1 % 8.8 / (38.7 -16.4) = 39.4% 10.4 / (161.1 -58.3) X 100% = 10.1 % 7.1 / (38.7 -16.8) = 32.4%

11.9 / 396.2 X 100% = 3.0% 6.1 / 92.3 X 100% = 6.6% 396.2 / (132.8 -38.5) = 4.2 times 92.3 / (26.5 -12.0) = 7.7 times 11.9 / (132.8 -38.5) X 100%= 12.6% 6.1 / (26.5 -12.0) = 42.1% 9.3 / (132.8 -38.5) X 100%= 9.9% 4.5 / (26.5 -12.5) = 32.1%

100% 5.3 / (46.7- 24.7) = 24.1%

Data Source: Pertama Holdings Limited. Annual Report 2009 pp. 1-73, Challenger Technologies Limited . Annual Report pp. 1-112
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Appendix A1.2 Schedule of comparative Liquidity ratios calculations for Pertama and Challenger (Year 2006 2009)
Company
Pertama Current ratio Challenger Current Ratio Pertama Quick ratio

Formula used
Current assets : Current liabilities Current assets : Current liabilities Current assets less stock : Current liabilities Current assets less stock : Current liabilities

Year 2008 ($000)

133.8 : 47.5 = 2.8 : 1 39.6 : 23.9 = 1.6 : 1 78.1 : 47.5 = 1.6 : 1

Year 2007 ($000)

145.3 : 57.6 = 2.5 : 1 32.9 : 16.4 = 2.0 : 1 100 : 57.6 = 1.7 : 1

Year 2006 ($000)

121.9 : 38.5 = 3.2 : 1 22.2 : 12.0 = 1.8 : 1 82.3 : 38.5 = 2.1 : 1

Challenger Quick ratio

30.4 : 23.9 = 1.3 : 1

24.7 : 16.4 = 1.5 : 1

15.0 : 12.0 = 1.3 : 1

Data Source: Pertama Holdings Limited. Annual Report 2009 pp. 1-73, Challenger Technologies Limited . Annual Report pp. 1-112

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Appendix A1.3 Schedule of comparative Asset Management ratios calculations for Pertama and Challenger (Year 2006 2009)
Company
Pertama Inventory turnover

Formula used
Average inventory divide cost of sales times 365 days Average inventory divide cost of sales times 365 days Trade debtors divide by revenue times 365 days Trade debtors divide by revenue times 365 days Trade payables divide by revenue times 365 days Trade payables divide by revenue times 365 days

Year 2008 ($000)

55.7 / 388.8 X 365 = 52 days

Year 2007 ($000)

45.3 / 373.6 X 365 = 44 days

Year 2006 ($000)

39.6 / 361.3 X 365 = 40 days

Challenger Inventory turnover

9.2 / 133.0 X 365 = 25 days

8.2 / 107.6 X 365 = 28 days

7.2 / 73.7 X 365 = 36 days

Pertama debtors turnover

8.8 / 421 X 365 = 7.6 days

32.8 / 409.1 X 365 = 29.3 days

32.9 / 396.2 X 365 = 30.3 days

Challenger debtors turnover

5.3 / 168 X 365 = 11.5 days

4.4 / 136.1 X 365 = 11.8 days

3.5 / 92.3 X 365 = 13.8 days

Pertama creditors turnover

24.8 / 421 X 365 = 21.5 days

32.0 / 409.1 X 365 = 28.6 days

21.8 / 396.2 X 365 = 20.08 days

Challenger creditors turnover

18.6 / 168 X 365 = 40.4 days

12.2 / 136.1 X 365 = 32.7 days

9.0 / 92.3 X 365 = 35.6 days

Data Source: Pertama Holdings Limited. Annual Report 2009 pp. 1-73, Challenger Technologies Limited . Annual Report pp. 1-112

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Appendix A1.4 Schedule of comparative Financial Structure ratios calculations for Pertama and Challenger (Year 2006 2009)

Company
Pertama Gearing

Formula used
Prior charge capital . Total capital employed Prior charge capital . Total capital employed Debt Equity Debt Equity X 100%

Year 2008 ($000)

0

Year 2007 ($000)

0

Year 2006 ($000)

0

Challenger Gearing

Pertama Debt to equity

Challenger Debt to equity

X 100%

Pertama Cash Flow

cash from operation divide operating profit cash from operation divide operating profit cash from operation minus capital expense cash from operation minus capital expense

13.8 / 10 = 1.38

27.7 / 13.6 = 2.04

10.9 / 11.9 = 0.92

Challenger Cash Flow

14.6 / 7.2 = 2.02

10.7 / 8.8 = 1.22

8.4 / 6.1 = 1.38

Pertama Free cash flow

$13.8m -$6.5m =$7.3m

$27.7m -$8.5m =$19.2m

$10.9m -$2.8m =$8.1m

Challenger Free cash flow

$14.6m -$2.4m =$12.2m

$10.7m -$3.1m =$7.6m

$8.4m -$2.9m =$5.5m

Data Source: Pertama Holdings Limited. Annual Report 2009 pp. 1-73, Challenger Technologies Limited . Annual Report pp. 1-112

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Appendix A1.5 Schedule of comparative Investor ratios calculations for Pertama and Challenger (Year 2006 2009)
Company
Pertama EPS

Formula used
Profit available for shareholders Number of shares issued

Year 2008 ($000)

3.10 cents

Year 2007($000)
4.40 cents

Year 2006 ($000)

3.90 cents

Challenger EPS

Profit available for shareholders Number of shares issued

2.40 cents

3.60 cents

2.50 cents

Pertama profit for shareholder Challenger profit for shareholder Pertama basic average shares Challenger basic average shares Pertama Share pricing at end of trading month (June ) Pertama PE ratio Challenger Share pricing at end of trading month (June) Challenger PE ratio Market price of share EPS Market price of share EPS

$7.4m $5.3m 239.12 221.83 25.5 cents

$10.6m $7.1m 239.12m 195.43 49.0 cents

$9.3m $4.5m 239.12m

177.78 39.0 cents

8.22 26.50 cents

11.14 22.0 cents

10.0 18.0 cents

11.04

6.11

7.2

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Pertama gross dividend common stocks Pertama dividend yield Annual dividend per share Market price of share

5.1

4.8

3.1

2.4 = 9.4% 25.5 5.5

2.0 = 4.08% 49.0 7.3

1.3 = 3.33% 39.0 4.0

Challenger gross dividends common stocks Challenger dividend yield Annual dividend per share Market price of share EPS Market price of share

2.4 = 9.1% 26.50 3.10 = 12.16% 25.5

3.3 = 15% 22.0 4.40 = 8.98% 49.0

2.2 = 12.22% 18.0 3.90 = 10.0% 39.0

Pertama earnings yield

Challenger earnings yield

EPS Market price of share

2.40 = 9.06% 26.5

3.60 = 16.36% 22.0

2.50 = 13.89% 18.0

Data Source: Pertama Holdings Limited. Annual Report 2009 pp. 1-73, Challenger Technologies Limited . Annual Report pp. 1-112 Pertama Share Price: http://www.reuters.com/finance/stocks/chart?symbol=PRTH.SI Challenger Share Price: http://www.reuters.com/finance/stocks/chart?symbol=CHALbi.SI

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Appendix C Commentary of retail business by Challenger Technologies Chairman (THE EDGE SINGAPORE FEBRUARY 25, 2008)

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Appendix D How are retailers in Singapore bearing up?

Magazines Archives - 2009 January How are retailers in Singapore bearing up? Story 3 - Focus Unusually early festive sales and heightening competition signal tough times ahead for Singapores recession-hit retail sector. But retailers are seeing this as an opportunity for differentiation. Jolene Klassen finds out how some players are bracing themselves for the downturn. A year ago, Singapores retail industry was riding high on the back of record tourist arrivals, with new attractions such as the Singapore Flyer observation wheel and the countrys inaugural Formula One Grand Prix night races being big draws. The economy, then enjoying the decades lowest unemployment rate, was abuzz with activity as new mall projects were announced amid much anticipation over the citystates two integrated resorts under construction. But, as the global financial downturn rippled through markets across the globe late last year, Singapores economy took a downward turn, with pensive government forecasts, which do not appear to be lifting anytime soon. Visitor numbers last October fell by 8.1% from the year before while retail sales dipped by 3.6% year on year. According to a Nielsen study, the consumer sentiment in 2008 had also stumbled 10 points to 92 in a second double-digit drop for the year. Predictably, the mood on the streets turned noticeably sombre last festive year-end. Even the colourful lights and Christmas trees did little to spread cheer, as consumers began to squirrel away whatever spare cash they have, says Lau Chuen Wei, executive director of Singapore Retailers Association (SRA). At the moment, with all this gloom and doom, people are just afraid to spend, she observes. Recessionary effects began to be felt in the shops when, for the first time last year, retailers [came] up with offers and discounts a whole month before Christmas, doing their utmost to appeal to their customers and give them value buys, says Lau. Calling this a rarity, she explains that retailers get their highest yields from the period leading to Christmas right through to the New Year. This is one of two major peaks in Singapores retail cycle, the other being the Great Singapore Sale, Lau points out. It seems the dreary outlook for the retail industry set in only in the latter part of 2008. Earlier, the industry was still enjoying the spillover effects of a 2007 that had ended on a very high note, before news of the slowdown started creeping in around the middle of last year, she says. The industry did not feel the effects of the global crisis until end-September to early-October. All in all, weve had a pretty good nine months or so. Despite the slowdown, one perennial concern has remained little changed. Rentals have been escalating, Lau laments. Even now, with the economic crisis, they have still not come down. The rate of increase has perhaps slowed somewhat, but has [yet to see] a downward trend. The landlords will tell you that its a matter of market forces if the supply is there, the natural thing is that rentals will come down. But, historically, we have not seen that happen. Real-estate specialist CB Richard Ellis latest ranking names Singapore the 17th most expensive shopping location globally, and sixth in the Asia- Pacific. The countrys rate of rental increases is the 22nd fastest in the world, with rents along Orchard Road going for US$455psf annually. Another real-estate consultancy, Cushman & Wakefield, has also credited events like the launch of the ingapore Flyer and the threeday Formula One races for the spike in tourist arrivals, sustaining international retailers business and driving rentals. The number of tourists for the period the races were held had increased 30% over the same period last year. With the spate of new malls coming up across the island-state at a time of poor economic outlook, it has been speculated that landlords may be compelled to lower their rents. But SRAs Lau remains sceptical, maintaining that high retail rentals have been an issue among tenants for the longest time. She encourages retailers to continue building their brands while standing their ground concerning rentals. Maybe, in the current economic situation, the time has come for retailers having taken more than they can stomach because their margins just would not let them push on any further to have the upper hand [in rental negotiation], she says. Mall projects still on Despite the anticipation of a protracted slowdown, a number of new malls are slated to come on stream this year. Along Orchard Road alone, four developments are set to open, led by Far East Organizations Orchard Central in the first quarter, followed in mid-2009 by ION Orchard, a joint venture between CapitaLand and Sun Hung Kai

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Properties, and Lend Lease Retails 313@Somerset at year-end, while The Meritus Mandarin Hotels Mandarin Gallery, now being revamped, is scheduled for completion this October. On the city outskirts, City Development Ltd also aims to open City Square Mall, the countrys first ecomall, by the end of the year. Farther away in the heartlands, refurbishments and asset- nhancement projects are breathing new life into suburban properties. Wendy Low, general manager of Frasers Centrepoint Ltd, reveals: Aside from the newlycompleted Northpoint extension [in Yishun], we will be completing assetenhancement works at the current Northpoint by early [next] quarter. The Frasers entrepoint Malls group will also be unveiling YewTee Point [this quarter] and a mall in Bedok in 2010. Unfazed by the number of new players, Low believes these new malls will keep the industry on its toes to the benefit of consumers. Landlords and retailers will be challenged to work very closely to roll out more unique mall and retail concepts. Shoppers will have more variety and hence choices. Furthermore, we have witnessed the growing popularity of suburban shopping destinations. Retailers have stretched themselves [to offer] differing concepts at the malls, she adds. This makes for some good news, bringing more excitement to the scene, Lau says, averring that differentiation remains the key to success in what is becoming an even more challenging retail landscape. Some [mall owners] are also saying that they will be bringing in foreign brands that have never been in Singapore before, she reveals. However, attempts at mall positioning are only the beginning of differentiation, as Lau warns: At the end of the day, if landlords cannot get the tenants that ... match [their] niche, they will end up taking anybody who is ready to pay the rent to fill up that space. This could result in copycat malls, which will reduce their appeal to shoppers. Expansion continues, along with investment in training and technology Dubbing tourist dollars the icing on the retail cake, retailers have not forgotten that the bulk of their sales is generated by the domestic market. In order to keep local consumer confidence from waning further, and at a time when other companies are retrenching staff to stay afloat, homegrown retail group NTUC FairPrice has announced that it plans to train and retrain its employees as well as proceed with the opening of two new stores this in addition to its third hypermarket, opened last December at Jurong Point. The government has always pushed for training and re-training, Lau acknowledges. Recently, the Singapore government has set aside S$600 million (US$406.43 million) for employers staff-training schemes. On top of that, the government has earmarked S$2.3 billion in loans for over 120,000 local companies to tide them over until after the recession. Foreign retail groups, too, are taking the slowdown in stride and forging ahead. Isetan Scotts is sprucing up its mens section to introduce labels by Mango and Croquis, while sportswear brand Nike opened its first 8,000sqf South-east Asian flagship duplex store at Wisma Atria last November. Meanwhile, technology providers are anticipating a busy year ahead for the retail industry, says Peter Robilliard, solution director, Asia-Pacific and Japan, Torex Retail Holdings Limited, a retail-solutions provider.More and more retailers in Singapore are adopting global Tier-1 solutions. As these retailers become more competitive, they look at systems that can help run their business [with] more information to help them make better decisions quicker, Robilliard reveals. Maneesh Sah, marketing director, Asia-Pacific at Torex, adds that during recessionary times, retailers should focus not only on increasing sales by creating impulse buys, but also on sustaining customer$ loyalty to brands. Retailers are not shying away from investing in technology, even in these times. It clearly means that, [far] from stopping their IT investments, retailers are using this downturn to implement technology, retain customers and increase customer loyalty, Sah maintains, stressing the importance of using technology in the retail environment to further convert browsers into customers. Lau affirms that, in terms of technology, Singapore is reputed for being a well-connected country. She adds: To survive, retailers are by and large looking at what will contribute to the Industry players in Thailand now pin their 2009 retail-growth forecast at only 2%-3%, about half of the 4% expected to have een recorded for the year just ended. next dollar in sales and how they can contain costs. On the whole, a lot of Singaporeans still see shopping as ... more than just going out to buy something. It is a whole leisure activity to meet up with friends and be with the family. Just to trawl the shops, whether they buy or not, is something that Singaporeans still cling on to and enjoy doing. To view other stories, get a copy of Retail Asia. To subscribe, please download the subscription form from http://www.retailasiaonline.com/subscription.html

Source http://www.retailasiaonline.com/magazine/archive/2009/mag2009-01_story03.html

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Appendix E Singapore Economic Indicators

Real Economic Growth

Share of GDP by Industry

Source: http://www.singstat.gov.sg/stats/charts/econ.html

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Appendix F 1.0 Pertama Balance Sheet (Year 2006 to 2009)

Pertama Holdings Limited (PRTH.SI) (Stock Exchange of Singapore) In Millions of Singapore Dollars (except for per share items)
Cash Cash & Equivalents Short Term Investments Cash and Short Term Investments Accounts Receivable - Trade, Net Notes Receivable - Short Term Receivables - Other Total Receivables, Net Total Inventory Prepaid Expenses Other Current Assets, Total Total Current Assets Property/Plant/Equipment, Total - Gross Accumulated Depreciation, Total Property/Plant/Equipment, Total - Net Goodwill, Net Intangibles, Net Long Term Investments Note Receivable - Long Term Other Long Term Assets, Total Other Assets, Total Total Assets Accounts Payable Payable/Accrued Accrued Expenses Notes Payable/Short Term Debt Current Port. of LT Debt/Capital Leases Other Current liabilities, Total Total Current Liabilities Long Term Debt Capital Lease Obligations Total Long Term Debt Total Debt Deferred Income Tax Minority Interest Other Liabilities, Total Total Liabilities Redeemable Preferred Stock, Total Preferred Stock - Non Redeemable, Net Common Stock, Total Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Treasury Stock - Common ESOP Debt Guarantee Unrealized Gain (Loss) Other Equity, Total Total Equity Total Liabilities & Shareholders' Equity Shares Outs - Common Stock Primary Issue Shares Outstanding - Common Issue 2 Shares Outstanding - Common Issue 3 Shares Outstanding - Common Issue 4 Total Common Shares Outstanding Total Preferred Shares Outstanding

2009 2009-06-30
36.4 -44.7 81.2 4.4 -2.0 6.4 49.0 0.2 -136.8 34.7 (21.3) 13.4 ----0.9 -151.1 26.1 -7.9 0.0 -13.3 47.2 --0.0 0.0 -0.0 -47.2 --66.7 0.4 ---43.4 (6.6) 103.9 151.1 239.12 ---239.12 --

2008 2008-06-30
37.7 -28.6 66.3 8.8 -2.8 11.5 55.7 0.3 -133.8 35.6 (19.2) 16.4 ----0.6 -150.8 24.8 -7.5 0.0 -15.3 47.5 --0.0 0.0 -0.0 -47.5 --66.7 0.4 ---42.5 (6.3) 103.3 150.8 239.12 ---239.12 --

2007 2007-06-30
36.4 -27.9 64.4 32.8 -2.0 34.8 45.3 0.9 -145.3 30.8 (15.6) 15.2 ----0.6 -161.1 32.0 -8.5 0.0 -17.1 57.6 --0.0 0.0 -0.7 -58.3 --66.7 0.3 ---40.3 (4.5) 102.8 161.1 239.12 ---239.12 --

2006 2006-06-30
9.6 -35.3 44.8 32.9 -4.6 37.5 39.6 --121.9 22.3 (12.5) 9.8 ----1.1 -132.8 21.8 13.3 -0.0 -3.4 38.5 --0.0 0.0 -0.0 -38.5 --66.7 0.2 ---32.5 (5.1) 94.3 132.8 239.12 ---239.12 --

2005 2005-06-30 Restated 2006-06-30

7.7 -31.9 39.6 26.9 -5.1 31.9 51.1 --122.7 22.6 (12.0) 10.6 ----0.6 -133.9 31.3 10.9 -0.0 -2.9 45.2 --0.0 0.0 ---45.2 --59.8 7.1 ---26.3 (4.4) 88.7 133.9 239.12 ---239.12 --

DataSource:

http://www.reuters.com/finance/stocks/incomeStatement?

stmtType=BAL&perType=ANN&symbol=PRTH.SI Appendix F 1.1 Pertama Income Statement (Year 2006 to 2009)

Pertama Holdings Limited (PRTH.SI) (Stock Exchange of Singapore)

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In Millions of Singapore Dollars (except for per share items)

2005 2009 2008 2007 2006 2005-06-30 2009-06-30 2008-06-30 2007-06-30 2006-06-30 Restated Period Length Period Length Period Length Period Length 2006-06-30 12 Months 12 Months 12 Months 12 Months Period Length 12 Months

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Revenue Other Revenue, Total Total Revenue Cost of Revenue, Total Gross Profit Selling/General/Admin. Expenses, Total Research & Development Depreciation/Amortization Interest Expense, Net - Operating Interest/Investment Income - Operating Interest Expense(Income) - Net Operating Unusual Expense (Income) Other Operating Expenses, Total Total Operating Expense Operating Income Interest Expense, Net Non-Operating Interest/Invest Income - Non-Operating Interest Income(Exp), Net Non-Operating Gain (Loss) on Sale of Assets Other, Net Net Income Before Taxes Provision for Income Taxes Net Income After Taxes Minority Interest Equity In Affiliates U.S. GAAP Adjustment Net Income Before Extra. Items Accounting Change Discontinued Operations Extraordinary Item Tax on Extraordinary Items Net Income Preferred Dividends General Partners' Distributions Miscellaneous Earnings Adjustment Pro Forma Adjustment Interest Adjustment - Primary EPS Income Available to Com Excl ExtraOrd Income Available to Com Incl ExtraOrd Basic Weighted Average Shares Basic EPS Excluding Extraordinary Items Basic EPS Including Extraordinary Items Dilution Adjustment Diluted Weighted Average Shares Diluted EPS Excluding ExtraOrd Items Diluted EPS Including ExtraOrd Items DPS - Common Stock Primary Issue Gross Dividends - Common Stock Total Special Items Normalized Income Before Taxes Effect of Special Items on Income Taxes Inc Tax Ex Impact of Sp Items Normalized Income After Taxes Normalized Inc. Avail to Com. Basic Normalized EPS Diluted Normalized EPS

376.4 -376.4 350.9 25.6 19.9 ---(0.8) --(1.8) 368.1 8.3 -----8.3 1.6 6.7 0.0 --6.7 ----6.7 -----6.7 6.7 239.12 0.028 0.028 0.0 239.12 0.028 0.028 0.021 5.8 0.0 8.4 0.0 1.7 6.7 6.7 0.028 0.028

421.0 -421.0 388.8 32.2 21.2 ---(1.4) --2.5 411.0 10.0 -----10.0 3.4 6.6 0.7 --7.4 ----7.4 -----7.4 7.4 239.12 0.031 0.031 0.0 239.88 0.031 0.031 0.024 5.1 (0.1) 9.9 (0.0) 3.3 6.6 7.3 0.031 0.031

409.1 -409.1 373.0 36.2 24.3 ---(1.6) --(0.1) 395.5 13.6 -----13.6 3.2 10.4 0.2 --10.6 ----10.6 -----10.6 10.6 239.12 0.044 0.044 0.0 239.47 0.044 0.044 0.020 4.8 0.8 14.4 0.2 3.3 11.0 11.2 0.047 0.047

396.2 -396.2 361.3 34.8 24.7 ------(1.8) 384.3 11.9 -----11.9 2.6 9.3 0.0 --9.3 ----9.3 -----9.3 9.3 239.12 0.039 0.039 -239.12 0.039 0.039 0.013 3.1 -11.9 -2.6 9.3 9.3 0.039 0.039

393.3 -393.3 355.2 38.1 26.8 ------(0.8) 381.2 12.1 -----12.1 2.2 9.9 ---9.9 ----9.9 -----9.9 9.9 239.12 0.041 0.041 -239.12 0.041 0.041 0.014 2.2 -12.1 -2.2 9.9 9.9 0.041 0.041

DataSource:

http://www.reuters.com/finance/stocks/incomeStatement?

stmtType=CAS&perType=ANN&symbol=PRTH.SI Appendix F 1.2 Pertama Cash Flow Statement (Year 2006 to 2009)
Pertama Holdings Limited (PRTH.SI) (Stock Exchange of Singapore) 2005 2009 2008 2007 2006 2005-06-30 2009-06-30 2008-06-30 2007-06-30 2006-06-30 Reclassified Period Length Period Length Period Length Period Length 2006-06-30 12 Months 12 Months 12 Months 12 Months Period Length 12 Months
8.3 5.1 --0.8 10.0 5.1 --0.6 13.6 3.6 --2.1 11.9 3.3 --0.7 12.1 2.8 --1.8

In Millions of Singapore Dollars (except for per share items)

Net Income/Starting Line Depreciation/Depletion Amortization Deferred Taxes Non-Cash Items

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8.7 22.9 (2.2) 0.0 (2.2) -(5.8) --(5.8) -14.9

(1.8) 13.8 (6.5) 0.1 (6.4) -(5.1) --(5.1) -2.2

8.3 27.7 (8.5) 0.0 (8.5) -(3.7) --(3.7) -15.5

(4.9) 10.9 (2.8) 0.2 (2.6) -(3.1) --(3.1) -5.2

7.6 24.2 (1.9) 0.2 (1.7) -(2.2) --(2.2) -20.3

DataSource:

http://www.reuters.com/finance/stocks/incomeStatement?

stmtType=CAS&perType=ANN&symbol=PRTH.SI

Appendix F 1.3 Challenger Balance Sheet (Year 2006 to 2009)

Challenger Technologies Limited (CHALbi.SI) (Stock Exchange of Singapore) In Millions of Singapore Dollars (except for per share items)
Cash Cash & Equivalents Short Term Investments Cash and Short Term Investments Accounts Receivable - Trade, Net Notes Receivable - Short Term Receivables - Other Total Receivables, Net Total Inventory Prepaid Expenses Other Current Assets, Total

2008 2008-12-31
-24.9 -24.9 1.7 -3.6 5.3 9.2 0.1 --

2007 2007-12-31
-20.3 -20.3 2.7 -1.7 4.4 8.2 0.1 --

2006 2006-12-31
-11.4 -11.4 2.5 -1.1 3.5 7.2 0.1 --

2005 2005-12-31
-10.7 -10.7 1.7 -0.5 2.2 6.5 0.1 --

2004 2004-12-31
-12.7 -12.7 2.0 -0.4 2.4 6.0 0.0 --

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Total Current Assets Property/Plant/Equipment, Total - Gross Accumulated Depreciation, Total Property/Plant/Equipment, Total - Net Goodwill, Net Intangibles, Net Long Term Investments Note Receivable - Long Term Other Long Term Assets, Total Other Assets, Total Total Assets Accounts Payable Payable/Accrued Accrued Expenses Notes Payable/Short Term Debt Current Port. of LT Debt/Capital Leases Other Current liabilities, Total Total Current Liabilities Long Term Debt Capital Lease Obligations Total Long Term Debt Total Debt Deferred Income Tax Minority Interest Other Liabilities, Total Total Liabilities Redeemable Preferred Stock, Total Preferred Stock - Non Redeemable, Net Common Stock, Total Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Treasury Stock - Common ESOP Debt Guarantee Unrealized Gain (Loss) Other Equity, Total Total Equity Total Liabilities & Shareholders' Equity Shares Outs - Common Stock Primary Issue Shares Outstanding - Common Issue 2 Shares Outstanding - Common Issue 3 Shares Outstanding - Common Issue 4 Total Common Shares Outstanding Total Preferred Shares Outstanding

39.6 10.7 (6.0) 4.7 --2.5 ---46.7 -18.6 -0.0 -5.2 23.9 --0.0 0.0 0.2 0.2 0.4 24.7 --18.6 0.0 3.0 --0.4 (0.0) 22.1 46.7 228.57 ---228.57 --

32.9 8.1 (3.7) 4.5 --1.3 ---38.7 -12.2 -0.0 -4.2 16.4 --0.0 0.0 0.2 0.0 0.3 16.8 --16.1 0.0 5.7 ---(0.0) 21.8 38.7 203.20 ---203.20 --

22.2 5.7 (2.5) 3.1 --1.2 -0.0 -26.5 -9.0 -0.0 0.0 3.0 12.0 -0.0 0.0 0.0 0.2 0.0 0.3 12.5 --11.3 0.0 2.7 ---(0.0) 14.0 26.5 177.78 ---177.78 --

19.5 4.3 (3.2) 1.1 --0.0 -0.0 -20.6 -5.6 -0.0 0.0 1.3 6.9 -0.0 0.0 0.1 0.1 0.0 0.0 7.1 --6.1 5.2 2.2 ---(0.0) 13.5 20.6 177.78 ---177.78 --

21.2 4.3 (3.1) 1.2 0.0 -0.3 -0.0 -22.7 -6.0 -0.9 0.0 1.0 7.9 -0.1 0.1 1.0 0.1 0.0 -8.1 --6.1 5.2 3.3 ---(0.0) 14.6 22.7 177.78 ---177.78 --

DataSource:

http://www.reuters.com/finance/stocks/incomeStatement?

stmtType=BAL&perType=ANN&symbol=CHALbi.SI

Appendix F 1.4 Challenger Income Statement (Year 2006 to 2009)

Challenger Technologies Limited (CHALbi.SI) (Stock Exchange of Singapore) 2006 2008 2007 2006-12-31 2005 2004 2008-12-31 2007-12-31 Reclassified 2005-12-31 2004-12-31 In Millions of Singapore Dollars Period Length Period Length 2007-12-31 Period Length Period Length (except for per share items) 12 Months 12 Months Period Length 12 Months 12 Months 12 Months
Revenue Other Revenue, Total Total Revenue Cost of Revenue, Total Gross Profit Selling/General/Admin. Expenses, Total Research & Development Depreciation/Amortization Interest Expense, Net - Operating Interest/Investment Income - Operating Interest Expense(Income) - Net Operating Unusual Expense (Income) Other Operating Expenses, Total Total Operating Expense Operating Income Interest Expense, Net Non-Operating 168.0 -168.0 133.0 35.0 20.5 -2.3 -2.3 -1.4 1.9 161.4 6.6 (0.0) 136.1 -136.1 107.6 28.5 17.0 -1.8 -(0.4) -0.0 1.8 127.9 8.2 (0.0) 92.3 -92.3 73.7 18.6 10.8 -0.6 -(0.0) -0.2 1.6 86.7 5.6 (0.0) 77.5 -77.5 62.2 15.3 9.4 -0.4 ----0.9 73.0 4.5 (0.3) 75.5 -75.5 61.0 14.5 4.9 -0.5 ----5.7 72.1 3.4 (0.1)

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Interest/Invest Income - Non-Operating Interest Income(Exp), Net Non-Operating Gain (Loss) on Sale of Assets Other, Net Net Income Before Taxes Provision for Income Taxes Net Income After Taxes Minority Interest Equity In Affiliates U.S. GAAP Adjustment Net Income Before Extra. Items Accounting Change Discontinued Operations Extraordinary Item Tax on Extraordinary Items Net Income Preferred Dividends General Partners' Distributions Miscellaneous Earnings Adjustment Pro Forma Adjustment Interest Adjustment - Primary EPS Income Available to Com Excl ExtraOrd Income Available to Com Incl ExtraOrd Basic Weighted Average Shares Basic EPS Excluding Extraordinary Items Basic EPS Including Extraordinary Items Dilution Adjustment Diluted Weighted Average Shares Diluted EPS Excluding ExtraOrd Items Diluted EPS Including ExtraOrd Items DPS - Common Stock Primary Issue Gross Dividends - Common Stock Total Special Items Normalized Income Before Taxes Effect of Special Items on Income Taxes Inc Tax Ex Impact of Sp Items Normalized Income After Taxes Normalized Inc. Avail to Com. Basic Normalized EPS Diluted Normalized EPS

-0.6 --7.2 1.9 5.3 (0.1) --5.3 ----5.3 -----5.3 5.3 221.83 0.024 0.024 -230.25 0.023 0.023 0.024 5.5 2.8 10.0 0.7 2.6 7.4 7.4 0.033 0.032

-0.6 --8.8 1.7 7.1 0.0 --7.1 ----7.1 -----7.1 7.1 195.43 0.036 0.036 0.0 198.13 0.036 0.036 0.033 7.3 0.1 8.8 0.0 1.7 7.1 7.1 0.036 0.036

-0.4 --6.1 1.5 4.5 0.0 --4.5 ----4.5 -----4.5 4.5 177.78 0.025 0.025 0.0 177.78 0.025 0.025 0.022 4.0 0.2 6.3 0.1 1.6 4.7 4.7 0.026 0.026

(0.1) 0.4 --4.6 0.9 3.7 0.1 --3.8 ----3.8 -----3.8 3.8 177.78 0.021 0.021 0.0 177.78 0.021 0.021 0.028 4.9 0.0 4.6 0.0 0.9 3.7 3.8 0.021 0.021

0.0 0.4 --3.7 0.9 2.8 0.1 --2.9 ----2.9 -----2.9 2.9 176.56 0.016 0.016 0.0 176.56 0.016 0.016 0.026 4.5 0.0 3.7 0.0 0.9 2.8 2.9 0.016 0.016

DataSource:

http://www.reuters.com/finance/stocks/incomeStatement?

stmtType=INC&perType=ANN&symbol=CHALbi.SI Appendix F 1.5 Challenger Cash Flow Statement (Year 2006 to 2009)
Challenger Technologies Limited (CHALbi.SI) (Stock Exchange of Singapore)

In Millions of Singapore Dollars (except for per share items)

2006 2005 2004 2008 2007 2006-12-31 2005-12-31 2004-12-31 2008-12-31 2007-12-31 Reclassified Reclassified Restated Period Length Period Length 2007-12-31 2006-12-31 2005-12-31 12 Months 12 Months Period Length Period Length Period Length 12 Months 12 Months 12 Months
7.2 2.3 --1.1 4.0 14.6 (2.4) (2.0) (4.5) (0.0) (8.0) 2.5 -(5.5) 8.8 1.8 0.0 -(0.6) 0.8 10.7 (3.1) 0.6 (2.6) (0.0) (4.0) 4.8 0.0 0.8 6.1 0.6 0.0 -(0.3) 1.9 8.4 (2.9) (0.7) (3.6) (0.0) (4.0) 0.0 (0.0) (4.0) 3.7 0.4 0.0 -0.7 (0.9) 3.9 (0.4) 0.2 (0.2) 0.0 (4.9) -(0.3) (5.2) 2.8 0.5 0.0 -1.1 (1.3) 3.2 (0.4) (0.2) (0.6) (0.8) (0.9) 7.4 0.4 6.1

Net Income/Starting Line Depreciation/Depletion Amortization Deferred Taxes Non-Cash Items Changes in Working Capital Cash from Operating Activities Capital Expenditures Other Investing Cash Flow Items, Total Cash from Investing Activities Financing Cash Flow Items Total Cash Dividends Paid Issuance (Retirement) of Stock, Net Issuance (Retirement) of Debt, Net Cash from Financing Activities

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Foreign Exchange Effects Net Change in Cash

(0.0) 4.6

0.0 9.0

-0.7

0.0 (1.5)

(0.0) 8.6

DataSource:

http://www.reuters.com/finance/stocks/incomeStatement?

stmtType=CAS&perType=ANN&symbol=CHALbi.SI

Appendices G: Pertama Holdings: Undervalued retailer offers high dividend; recovery could spur growth

Pertama Holdings: Undervalued retailer offers high dividend; recovery could spur growth
WRITTEN BY JOAN NG MONDAY, 12 OCTOBER 2009 15:23

Shares of Pertama Holdings, operator of the electronics, appliances and furniture retailing chain Harvey Norman, have outperformed the broad market this year, rising 67.3% to close at 38 cents last Thursday, versus the Straits Times Indexs gain of 50.5%. And, the stock appears to have the potential to continue delivering decent returns. For starters, it appears to be attractively priced. At current levels, it is trading at 13.6 times its FY2009 earnings. The company also boasts a healthy balance sheet, with cash and cash equivalents of $77.5 million and zero debt, as at June 30. That cash pile is equivalent to 32.4 cents per share, just 14.7% short of its current share price. Pertamas net asset value is 43.5 cents per share. The company also pays regular dividends. Last year, it paid out 2.45 cents per share, which works out to a yield of 6.4%, based on its current share price. By comparison, the average yield of STI component stocks is about 3.3% now. Pertama has been quietly building up its retailing business in Singapore and opening new stores in
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Malaysia. It sells flat-screen televisions, laptops and netbooks, as well as furniture and bedding. And, the company seems to have weathered the recession quite well. For the financial year to June 2009, its revenue declined 10.6% to $376.4 million, while its earnings slipped 9.1% to $6.7 million. The primary reason for the decline in revenue and earnings was the cessation of the companys wholesale business, according to a statement accompanying its financial results. Its core retailing business still managed to deliver single-digit revenue growth, though, says Pertamas managing director Angelo Augustus.

Image: Flat-screen TVs, which are increasingly more affordable, are selling well at Harvey Norman. Credit: Samuel isaac Chua The company has been expanding especially fast in Malaysia, where Augustus says retail is growing very nicely at a double-digit rate. Pertama has had a Harvey Norman store in Malaysia since 2003, but it began to expand rapidly in 2007, opening five stores in two years. As a result of the initial cost of opening new stores and building up its brand, Pertamas Malaysian operations chalked up a pre-tax loss of $606,000 for FY2009. Augustus says he is hopeful of the company breaking even in the current financial year. And, in the longer-term, he sees its Malaysian operations helping to drive its growth, because of the countrys larger population and plentiful retail space. Source: Bloomberg In Singapore, meanwhile, Pertama has ceased its unprofitable export business, which resulted in profit before tax for this segment rising 5.1% y-o-y, to $9 million from $8.5 million previously. As Singapores economy recovers, Pertamas sales could get a lift. According to property consultancy DTZ, sales of private homes here are likely to breach the record of 14,811 units sold in 2007. That could mean a flurry of shopping activity by people wanting to furnish their new homes with appliances like the latest flat-screen TV. On top of this, consumers who held back on purchases last year because of the recession might soon have the confidence to begin spending again. Things like flat-screen TVs are also becoming more affordable and are now a must for Singaporeans, Augustus says. Buying shares in Pertama is something of a challenge, though, because they are so tightly held. The companys parent in Australia, Harvey Norman Holdings, owns 60.7%. A further 17.3% is held by London-listed Guinness Peat Group, an investment vehicle of New Zealand born businessman Sir Ronald

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Brierley, who is known for tenaciously extracting value from his investments. Fund management group Fidelity International holds 9.1%. Investors in Pertama also face the risk of the companys rental costs rising as an economic recovery takes off. In 2007 and 2008, retail rents in Singapore surged as the economy crested, squeezing margins at many retailers. A number of local Harvey Norman stores are located in malls that are part of the CapitaLand group, which recently announced it would be spinning off its malls into a real-estate investment trust. Also, there is the pressure of competition, which is particularly tough in the electronics retail business, as price is often the major differentiator for consumers. Harvey Normans closest competitors in Singapore are Best Denki and Courts, neither of which are listed. Despite these potential stumbling blocks, however, shares in Pertama look like a bargain right now. Patient investors can look forward to a steady dividend yield and the possibility of a steep re-rating, if it succeeds in expanding in Malaysia and begins attracting analyst coverage.

Pertama Holdings: Undervalued retailer offers high dividend; recovery could spur growth Monday, 12 October 2009

2009 - The Edge Singapore

Source http://www.theedgesingapore.com/component/content/8600.html?task=view

Appendix H IAS 2 (Inventories)

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Source: http://www.iasplus.com/dttpubs/pocket2009.pdf

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