Student ID 1067413 of 07 16050 Financial & Management Accounting Assignment

7/30/2019 Student ID 1067413 of 07 16050 Financial & Management Accounting Assignment

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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: Mrs. Anne Ullathorne

Submitted by: Student ID No. 1067413

Word Count: 3120 words

Submission date: 25th October 2009

E XECUTIVE 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 thatmatches 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 PAGE

Introduction

1.0 Profile of Pertama Holdings Limited 1~ 2

2.0 Analysis of Pertama Financial Statements for Year 2009 2~ 6

2.1 Profitability Ratios

2.2 Liquidity Ratios

2.3 Asset Management Ratios

2.4 Financial Structure Ratios

2.5 Investor Ratios

3.0 Comparative Appraisal of Pertama and Challenger Performance 6~ 10

3.1 Comparison of Profitability Ratios

3.2 Comparison of Liquidity Ratios

3.3 Comparison of Asset Management Ratios

3.4 Comparison of Financial Structure Ratios

3.5 Comparison of Investor Ratios

4.0 Evaluation of Pertama Chairmans Statement for Year 2009 10~ 11

5.0 Recommendations 12

6.0 Appraisal of Pertama Accounting Policy for Inventories 13~ 14

7.0 Conclusion 14

Bibliography

Appendices

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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

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

($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.

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.

http://www.asiaone.com/print/Business/My%2BMoney/Opinion/Story/A1Story20090123-116738.htmlihttp://www.asiaone.com/print/Business/My%2BMoney/Opinion/Story/A1Story20090123-116738.htmlihttp://www.asiaone.com/print/Business/My%2BMoney/Opinion/Story/A1Story20090123-116738.htmlihttp://www.asiaone.com/print/Business/My%2BMoney/Opinion/Story/A1Story20090123-116738.htmli


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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 of30days 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 PerformanceGibson (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 hastranslated 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 shareholdersinvestment 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 RatiosBoth 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 gooddividends 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 financialstructure 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 acautious 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 where cash is king for maximising returns for

shareholders and lowering of company vulnerabilities in a low growth competitive retail

industry.

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 liesin 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 ofinventories 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

1. Aidan Berry, Robin Jarvis. (2006)Accounting in a business context. 4th edn.

China: Cengage Learning. pp.109 154.. pp.247-265.

2. Charles H. Gibson. (1998) Financial Statement Analysis. 7th edn. Ohio: South-

Western Publishing. pp. 202-207.3. David Alexander, Anne Britton, Ann Jorissen. (2003) International Financial

Reporting and Analysis. 1st edn. Great Britain: Thomson Learning. pp. 121-145.

4. Pam Powell.Accounting, Analysis and Planning. Kent: Financial World Publishing.

ISBN 0-85297-614-3 pp. 227-251.

5. Peter Atrill, Eddie Mclaney. (2008)Accounting and Finance for Non Specialist.

6th edn. London: Prentice Hall. p. 54 pp. 181 - 224.

6. Ralph Tiffin. (2004) The Complete Guide to International Financial Reporting

Standards Including IAS and Interpretation. London: Thorogood pp.57-61.7. Robert Perks. (2007) financial accounting understanding and practice. 2nd edn.

Berkshire: McGraw-Hill. pp. 77-100.

8. Dr. Themin Suwardy, (2002) Financial Reporting in Singapore, Cases and

Readings. 2nd edn. Singapore: Pearson

9. Tony Davies, Tony Boczko. (2006) Principles of Accounting and Finance. 1st edn.

Berkshire: McGraw Hill. p.136 pp.

10. Pertama Holdings Limited. Annual Report 2009 pp. 1-73.

11. Challenger Technologies Limited . Annual Report pp. 1-112.

12. http://app.mti.gov.sg/default.asp?id=745#6

13. http://www.asiaone.com/print/Business/My%2BMoney/Opinion/Story/A1Story20090123-

116738.html

14. http://www.business.gov.sg/EN/News/Sep2009/20090916singapore.htm

15. http://www.challenger.com.sg/

16. http://www.harveynorman.com.sg/

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

18. http://www.inc.com/resources/retail/articles/200707/hurlbut.html

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

20. http://www.reuters.com/finance/stocks/incomeStatement?stmtType=BAL&perType=

ANN&symbol=PRTH.SI

21. http://www.reuters.com/finance/stocks/incomeStatement?stmtType=BAL&perType=

ANN&symbol=CHALbi.SI

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

S t u d e n t I D N o . 1 0 6 7 4 1 3
http://app.mti.gov.sg/default.asp?id=745#6http://www.asiaone.com/print/Business/My%2BMoney/Opinion/Story/A1Story20090123-http://www.business.gov.sg/EN/News/Sep2009/20090916singapore.htmhttp://www.challenger.com.sg/http://www.harveynorman.com.sg/http://www.iasplus.com/dttpubs/pocket2009.pdfhttp://www.inc.com/resources/retail/articles/200707/hurlbut.htmlhttp://www.retailasiaonline.com/magazine/archive/2009/mag2009-01_story03.htmlhttp://www.reuters.com/finance/stocks/incomeStatement?stmtType=BAL&perTypehttp://www.theedgesingapore.com/component/content/8600.html?task=viewhttp://app.mti.gov.sg/default.asp?id=745#6http://www.asiaone.com/print/Business/My%2BMoney/Opinion/Story/A1Story20090123-http://www.business.gov.sg/EN/News/Sep2009/20090916singapore.htmhttp://www.challenger.com.sg/http://www.harveynorman.com.sg/http://www.iasplus.com/dttpubs/pocket2009.pdfhttp://www.inc.com/resources/retail/articles/200707/hurlbut.htmlhttp://www.retailasiaonline.com/magazine/archive/2009/mag2009-01_story03.htmlhttp://www.reuters.com/finance/stocks/incomeStatement?stmtType=BAL&perTypehttp://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

A 1.1 Schedule of comparative profitability ratio calculations for Pertama and Challenger (Year

2006 2009)

A 1.2 Schedule of comparative Liquidity ratios calculations for Pertama and Challenger (Year2006 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 Pertama Holdings Limited. Annual Report 2009 pp. 1-73C Appendices C Commentary of retail business by Challenger Technologies Chairman

(THE EDGE SINGAPORE FEBRUARY 25, 2008)

D How are retailers in Singapore bearing up?

E Singapore Economic Indicators

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

H IAS 2 (Inventories)

S t u d e n t I D N o . 1 0 6 7 4 1 3


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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 FORMULA USED FINANCIAL YEAR 2009 $000DETAIL OF CALCULATION

FINANCIAL YEAR 2008 $000DETAIL OF CALCULATION

PROFITABILITY RATIOS

Gross Profit Revenue minus Cost of sales 376,413 350,853 = 25,560 420,953 388,784 = 32,169

Gross Profit Margin Gross profit X 100%Revenue

25,560 X 100% = 6.8%376,413

32,169 X 100% = 7.6%420,953

PBIT Margin Operating profit X 100%Revenue

8,345 X 100% = 2.2%376,413

9,987 X 100% = 2.4%420,953

Asset Turnover Sales (or turnover) = number of timesCapital employed

376,413 = 3.6 times151,146 47,227

420,953 = 4.1 times150,836 47,539

ROCE Profit before interest and tax X 100%Capital employed

8,345 X 100% = 8%151,146 47,227

9.987 X 100% = 9.7%150,836 47,539

ROE Profit after tax X 100%Net assets

6,699 X 100% = 6.4%103,919

6,636 X 100% = 6.4%103,297

LIQUIDITY RATIOS

Current Ratio Current assets : Current liabilities 136,826 : 47,227 = 2.9 to 1 133,834 : 47,539 = 2.8 to 1

Quick Ratio Current assets less stock : Current liabilities 87,838 : 47,227 = 1.9 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 stocksCost of sales

48,988 X 365 days = 51 days350,853

55,689 X 365 days = 52 days388,784

Debtor (Receivables) Turnover Debtors X 365 days = x days outstandingSales

4,368 X 365 days = 4.2 days376,413

8,754 X 365 days = 7.6 days420,953

Creditors (Payables) Turnover Trade payables X 365 days = days of creditors unpaidCost of sales

26,073 X 365 days = 27 days350,853

24,807 X 365 days = 23 days388,784

FINANCIAL STRUCTURE

GearingPrior charge capital .Total capital employed 0 0

Debt to equityDebt X 100%Equity

0 0

Cash flow Cash from operationsOperating profit

22,921 = 2.758,345

13,772 = 1.389,987

Free cash flow Operating cash from operation Capital expenditure 22,921 2,230 = 20,691 13,772 6,530 = 7,242

INVESTOR RATIOS

Market price of share 25.0 cents (at 22ndh June 2009) 25.5 cents (at 20th June 2008)

EPS Profit available for shareholdersNumber of shares issued

6,699 = 2.80cents239,117

7,373 = 3.08 cents239,117

PE ratio Market price of shareEPS

25.0 cents = 8.92.80 cents

25.5 cents = 8.33.08 cents

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Dividend yield Annual dividend per shareMarket price of share

5811 / 239117 = 9.7%25.0 cents

5109 / 239117 = 8.4%25.5 cents

Earnings yield

EPSMarket price of share

2.80 cents = 11.2%25.0 cents

3.08 cents = 12.1%25.5 cents

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 Formula used Year 2008 ($000) Year 2007 ($000) Year 2006 ($000)

Pertama Gross prof it Revenue minus Cost of sales 421 388.8 = 32.2 409.1 373 = 36.1 396.2361.2 = 34.9

Challenger Grossprofit

Revenue minus Cost of sales 168 133 = 35 136.1107.6 = 28.5 92.3 73.7 = 18.6

Pertama Gross profitmargin

Gross profit X 100%Revenue

32.2 / 421 X 100% = 7.6% 36.1 / 409.1 X 100% = 8.8% 34.9 / 396.2 X 100% = 8.8%

Challenger Grossprofit margin

Gross profit X 100%Revenue

35 / 168 X 100% = 20.8% 28.5 / 136.1 X 100% = 20.9% 18.6 / 92.3 X 100% = 20.2%

Pertama PBIT marginOperating profit X 100%Revenue 10 / 421 X 100% = 2.4% 13.6 / 409.1 X 100% = 3.3% 11.9 / 396.2 X 100% = 3.0%

Challenger PBITmargin

Operating profit X 100%Revenue 7.2 / 168 X 100% = 4.3% 8.8 / 136.1 X 100% = 6.5% 6.1 / 92.3 X 100% = 6.6%

Pertama Assetturnover

Sales or turnoverCapital employed 421 / (150.8 -47.5) = 4.1 times 409.1 / (161.1 -57.6) = 4.1 times 396.2 / (132.8 -38.5) = 4.2 times

Challenger Assetturnover

Sales or turnoverCapital employed 168 / (46.7 -23.9) = 7.4 times 136.1 / (38.7 -16.4) = 6.1 times 92.3 / (26.5 -12.0) = 7.7 times

Pertama ROCE

PBIT X 100%

Capital employed 10 / (150.8 -47.5) X 100% = 9.7% 13.6 / (161.1 -57.6) X 100% = 13.1 % 11.9 / (132.8 -38.5) X 100%= 12.6%

Challenger ROCE PBIT X 100%Capital employed 7.2 / (46.7- 23.9) = 31.6% 8.8 / (38.7 -16.4) = 39.4% 6.1 / (26.5 -12.0) = 42.1%

Pertama ROE Profit after tax X 100%Net assets 6.6 / (150.8 -47.5) X 100% = 6.4% 10.4 / (161.1 -58.3) X 100% = 10.1 % 9.3 / (132.8 -38.5) X 100%= 9.9%

Challenger ROE Prof it af ter tax X 100%Net assets 5.3 / (46.7- 24.7) = 24.1% 7.1 / (38.7 -16.8) = 32.4% 4.5 / (26.5 -12.5) = 32.1%

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)


Pertama Current ratio Current assets : Current l iabi li ties 133.8 : 47.5 = 2.8 : 1 145.3 : 57.6 = 2.5 : 1 121.9 : 38.5 = 3.2 : 1

Challenger Current Ratio Current assets : Current liabilities 39.6 : 23.9 = 1.6 : 1 32.9 : 16.4 = 2.0 : 1 22.2 : 12.0 = 1.8 : 1

Pertama Quick ratio Current assets less stock : Currentliabilities

78.1 : 47.5 = 1.6 : 1 100 : 57.6 = 1.7 : 1 82.3 : 38.5 = 2.1 : 1

Challenger Quick ratio Current assets less stock : Currentliabilities

30.4 : 23.9 = 1.3 : 1 24.7 : 16.4 = 1.5 : 1 15.0 : 12.0 = 1.3 : 1


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


Pertama Inventory turnover Average inventory divide cost ofsales times 365 days

55.7 / 388.8 X 365 = 52 days 45.3 / 373.6 X 365 = 44 days 39.6 / 361.3 X 365 = 40 days

Challenger Inventory turnover Average inventory divide cost ofsales times 365 days

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 Trade debtors divide by revenuetimes 365 days

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 Trade debtors divide by revenuetimes 365 days


Pertama creditors turnover Trade payables divide by revenuetimes 365 days


Challenger creditors turnover Trade payables divide by revenuetimes 365 days



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


Pertama Gearing Prior charge capital .Total capital employed

0 0 0

Challenger Gearing Prior charge capital .Total capital employed

0 0 0

Pertama Debt to equity Debt X 100%Equity

0 0 0

Challenger Debt to equity Debt X 100%Equity

0 0 0

Pertama Cash Flow cash from operation divideoperating profit

13.8 / 10 = 1.38 27.7 / 13.6 = 2.04 10.9 / 11.9 = 0.92

Challenger Cash Flow cash from operation divideoperating profit

14.6 / 7.2 = 2.02 10.7 / 8.8 = 1.22 8.4 / 6.1 = 1.38

Pertama Free cash flow cash from operation minuscapital expense

$13.8m -$6.5m =$7.3m $27.7m -$8.5m =$19.2m $10.9m -$2.8m =$8.1m

Challenger Free cash f low cash from operation minuscapital expense

$14.6m -$2.4m =$12.2m $10.7m -$3.1m =$7.6m $8.4m -$2.9m =$5.5m


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

Company Formula used Year 2008 ($000) Year 2007($000) Year 2006 ($000)

Pertama EPS Profit available for shareholders

Number of shares issued

3.10 cents 4.40 cents 3.90 cents

Challenger EPS Profit available for shareholders

Number of shares issued


Pertama profit for shareholder $7.4m $10.6m $9.3m

Challenger profit for shareholder $5.3m $7.1m $4.5m

Pertama basic average shares 239.12 239.12m239.12m

Challenger basic average shares 221.83 195.43 177.78

Pertama Share pricing at end oftrading month (June )


Pertama PE ratio Market price of shareEPS

8.22 11.14 10.0

Challenger Share pricing at end oftrading month (June)


Challenger PE ratio Market price of shareEPS

11.04 6.11 7.2

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Pertama gross dividend commonstocks

5.1

4.8

3.1

Pertama dividend yield Annual dividend per shareMarket price of share

2.4 = 9.4%25.5

2.0 = 4.08%49.0

1.3 = 3.33%39.0

Challenger gross dividends commonstocks

5.5

7.3

4.0

Challenger dividend yield Annual dividend per shareMarket price of share

2.4 = 9.1%26.50

3.3 = 15%22.0

2.2 = 12.22%18.0

Pertama earnings yield


3.10 = 12.16%25.5

4.40 = 8.98%49.0

3.90 = 10.0%39.0

Challenger earnings yield


2.40 = 9.06%26.5

3.60 = 16.36%22.0

2.50 = 13.89%18.0


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 forSingapores 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 thedownturn.

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 countrysinaugural Formula One Grand Prix night races being big draws.

The economy, then enjoying the decades lowest unemployment rate, was abuzz withactivity as new mall projects were announced amid much anticipation over the citystatestwo 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 donot 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 alsostumbled 10 points to 92in a second double-digit drop for the year.

Predictably, the mood on the streets turned noticeably sombre last festive year-end. Eventhe colourful lights and Christmas trees did little to spread cheer, as consumers began tosquirrel away whatever spare cash they have, says Lau Chuen Wei, executive director ofSingapore 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 awhole 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 NewYear. This is one of two major peaks in Singapores retailcycle, 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 thespillover effects of a 2007 that had ended on a very high note, before news of the slowdown started creeping in around the middle oflast year, she says. The industry didnot 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 sixthin the Asia- Pacific. The countrys rate of rental increases is the 22nd fastest in the world, with rents along Orchard Road going forUS$455psf annually.

Another real-estate consultancy, Cushman & Wakefield, has also credited events like the launch of the ingapore Flyer and the three-day Formula One races for the spike in tourist arrivals, sustaining international retailers business and driving rentals. The number oftourists 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 thatlandlords may be compelled to lower their rents. But SRAs Lau remains sceptical, maintaining that high retail rentals have been anissue among tenants for the longest time.

She encourages retailers to continue building their brands while standing their ground concerning rentals. Maybe, in the currenteconomic situation, the time has come for retailers having takenmore than they can stomach because their margins just would not let them push on any further to have the upper hand [in rentalnegotiation], she says.

Mall projects still on Despite the anticipation of a protracted slowdown, a number of new malls areslated to come on stream this year. Along Orchard Road alone, four developments are set to open, led by Far East OrganizationsOrchard 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 beingrevamped, 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 theheartlands, refurbishments and asset- nhancementprojects are breathing new life into suburban properties. Wendy Low, generalmanager of Frasers Centrepoint Ltd, reveals: Aside from the newlycompletedNorthpoint extension [in Yishun], we will be completing assetenhancementworks at the current Northpoint by early [next] quarter. The Frasers entrepoint

Malls group will also be unveiling YewTee Point [this quarter] and a mall inBedok in 2010.

Unfazed by the number of new players, Low believes these new malls willkeep the industry on its toes to the benefit of consumers. Landlords andretailers will be challenged to work very closely to roll out more unique mall andretail concepts.

Shoppers will have more variety and hence choices. Furthermore, we havewitnessed the growing popularity of suburban shopping destinations. Retailershave stretched themselves [to offer] differing concepts at the malls, she adds.

This makes for some good news, bringing more excitement to the scene, Lausays, averring that differentiation remains the key to success in what isbecoming an even more challengingretail 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 therent to fill up that space. This could result in copycat malls, whichwill reduce their appeal to shoppers.

Expansion continues, along with investment in training and technology Dubbing tourist dollars the icing on the retail cake, retailershave 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 stayafloat, homegrown retail group NTUC FairPrice has announced that it plans to train and retrain its employees as well as proceed withthe 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$2.3billion in loans for over 120,000 localcompanies 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 tointroduce labels by Mango and Croquis, while sportswear brand Nike opened its first 8,000sqf South-east Asian flagship duplex storeat 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 morecompetitive, 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, retailersshould 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 toimplement technology, retain customers and increase customer loyalty, Sah maintains, stressing the importance of using technologyin 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 areby 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 tomeet up with friends and be with the family. Just to trawl theshops, 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 formfrom 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)

20092009-06-30 20082008-06-30 20072007-06-30 20062006-06-30

2005

2005-06-30Restated2006-06-30

Cash 36.4 37.7 36.4 9.6 7.7Cash & Equivalents -- -- -- -- --Short Term Investments 44.7 28.6 27.9 35.3 31.9Cash and Short Term Investments 81.2 66.3 64.4 44.8 39.6Accounts Receivable - Trade, Net 4.4 8.8 32.8 32.9 26.9Notes Receivable - Short Term -- -- -- -- --Receivables - Other 2.0 2.8 2.0 4.6 5.1Total Receivables, Net 6.4 11.5 34.8 37.5 31.9Total Inventory 49.0 55.7 45.3 39.6 51.1Prepaid Expenses 0.2 0.3 0.9 -- --Other Current Assets, Total -- -- -- -- --Total Current Assets 136.8 133.8 145.3 121.9 122.7Property/Plant/Equipment, Total - Gross 34.7 35.6 30.8 22.3 22.6

Accumulated Depreciation, Total (21.3) (19.2) (15.6) (12.5) (12.0)Property/Plant/Equipment, Total - Net 13.4 16.4 15.2 9.8 10.6Goodwill, Net -- -- -- -- --Intangibles, Net -- -- -- -- --Long Term Investments -- -- -- -- --Note Receivable - Long Term -- -- -- -- --Other Long Term Assets, Total 0.9 0.6 0.6 1.1 0.6Other Assets, Total -- -- -- -- --Total Assets 151.1 150.8 161.1 132.8 133.9Accounts Payable 26.1 24.8 32.0 21.8 31.3Payable/Accrued -- -- -- 13.3 10.9Accrued Expenses 7.9 7.5 8.5 -- --Notes Payable/Short Term Debt 0.0 0.0 0.0 0.0 0.0Current Port. of LT Debt/Capital Leases -- -- -- -- --Other Current liabilities, Total 13.3 15.3 17.1 3.4 2.9Total Current Liabilities 47.2 47.5 57.6 38.5 45.2

Long Term Debt -- -- -- -- --Capital Lease Obligations -- -- -- -- --Total Long Term Debt 0.0 0.0 0.0 0.0 0.0Total Debt 0.0 0.0 0.0 0.0 0.0Deferred Income Tax -- -- -- -- --Minority Interest 0.0 0.0 0.7 0.0 --Other Liabilities, Total -- -- -- -- --Total Liabilities 47.2 47.5 58.3 38.5 45.2Redeemable Preferred Stock, Total -- -- -- -- --Preferred Stock - Non Redeemable, Net -- -- -- -- --Common Stock, Total 66.7 66.7 66.7 66.7 59.8Additional Paid-In Capital 0.4 0.4 0.3 0.2 7.1Retained Earnings (Accumulated Deficit) -- -- -- -- --Treasury Stock - Common -- -- -- -- --ESOP Debt Guarantee -- -- -- -- --Unrealized Gain (Loss) 43.4 42.5 40.3 32.5 26.3Other Equity, Total (6.6) (6.3) (4.5) (5.1) (4.4)Total Equity 103.9 103.3 102.8 94.3 88.7Total Liabilities & Shareholders' Equity 151.1 150.8 161.1 132.8 133.9Shares Outs - Common Stock Primary Issue 239.12 239.12 239.12 239.12 239.12Shares Outstanding - Common Issue 2 -- -- -- -- --Shares Outstanding - Common Issue 3 -- -- -- -- --Shares Outstanding - Common Issue 4 -- -- -- -- --Total Common Shares Outstanding 239.12 239.12 239.12 239.12 239.12Total Preferred Shares Outstanding -- -- -- -- --

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)


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20092009-06-30

Period Length12 Months

20082008-06-30


20072007-06-30


20062006-06-30


20052005-06-30Restated

2006-06-30Period Length

12 Months

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Revenue 376.4 421.0 409.1 396.2 393.3Other Revenue, Total -- -- -- -- --Total Revenue 376.4 421.0 409.1 396.2 393.3Cost of Revenue, Total 350.9 388.8 373.0 361.3 355.2Gross Profit 25.6 32.2 36.2 34.8 38.1Selling/General/Admin. Expenses, Total 19.9 21.2 24.3 24.7 26.8Research & Development -- -- -- -- --Depreciation/Amortization -- -- -- -- --Interest Expense, Net - Operating -- -- -- -- --Interest/Investment Income - Operating (0.8) (1.4) (1.6) -- --

Interest Expense(Income) - Net Operating -- -- -- -- --Unusual Expense (Income) -- -- -- -- --Other Operating Expenses, Total (1.8) 2.5 (0.1) (1.8) (0.8)Total Operating Expense 368.1 411.0 395.5 384.3 381.2Operating Income 8.3 10.0 13.6 11.9 12.1Interest 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 8.3 10.0 13.6 11.9 12.1Provision for Income Taxes 1.6 3.4 3.2 2.6 2.2Net Income After Taxes 6.7 6.6 10.4 9.3 9.9Minority Interest 0.0 0.7 0.2 0.0 --Equity In Affiliates -- -- -- -- --U.S. GAAP Adjustment -- -- -- -- --Net Income Before Extra. Items 6.7 7.4 10.6 9.3 9.9Accounting Change -- -- -- -- --Discontinued Operations -- -- -- -- --Extraordinary Item -- -- -- -- --Tax on Extraordinary Items -- -- -- -- --Net Income 6.7 7.4 10.6 9.3 9.9Preferred Dividends -- -- -- -- --General Partners' Distributions -- -- -- -- --Miscellaneous Earnings Adjustment -- -- -- -- --Pro Forma Adjustment -- -- -- -- --Interest Adjustment - Primary EPS -- -- -- -- --Income Available to Com Excl ExtraOrd 6.7 7.4 10.6 9.3 9.9Income Available to Com Incl ExtraOrd 6.7 7.4 10.6 9.3 9.9Basic Weighted Average Shares 239.12 239.12 239.12 239.12 239.12Basic EPS Excluding Extraordinary Items 0.028 0.031 0.044 0.039 0.041Basic EPS Including Extraordinary Items 0.028 0.031 0.044 0.039 0.041Dilution Adjustment 0.0 0.0 0.0 -- --Diluted Weighted Average Shares 239.12 239.88 239.47 239.12 239.12Diluted EPS Excluding ExtraOrd Items 0.028 0.031 0.044 0.039 0.041Diluted EPS Including ExtraOrd Items 0.028 0.031 0.044 0.039 0.041DPS - Common Stock Primary Issue 0.021 0.024 0.020 0.013 0.014Gross Dividends - Common Stock 5.8 5.1 4.8 3.1 2.2Total Special Items 0.0 (0.1) 0.8 -- --Normalized Income Before Taxes 8.4 9.9 14.4 11.9 12.1Effect of Special Items on Income Taxes 0.0 (0.0) 0.2 -- --Inc Tax Ex Impact of Sp Items 1.7 3.3 3.3 2.6 2.2Normalized Income After Taxes 6.7 6.6 11.0 9.3 9.9Normalized Inc. Avail to Com. 6.7 7.3 11.2 9.3 9.9Basic Normalized EPS 0.028 0.031 0.047 0.039 0.041Diluted Normalized EPS 0.028 0.031 0.047 0.039 0.041


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

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



20092009-06-30


20082008-06-30


20072007-06-30


20062006-06-30


20052005-06-30

Reclassified2006-06-30


Net Income/Starting Line 8.3 10.0 13.6 11.9 12.1Depreciation/Depletion 5.1 5.1 3.6 3.3 2.8Amortization -- -- -- -- --Deferred Taxes -- -- -- -- --Non-Cash Items 0.8 0.6 2.1 0.7 1.8

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Changes in Working Capital 8.7 (1.8) 8.3 (4.9) 7.6Cash from Operating Activities 22.9 13.8 27.7 10.9 24.2Capital Expenditures (2.2) (6.5) (8.5) (2.8) (1.9)Other Investing Cash Flow Items, Total 0.0 0.1 0.0 0.2 0.2Cash from Investing Activities (2.2) (6.4) (8.5) (2.6) (1.7)Financing Cash Flow Items -- -- -- -- --Total Cash Dividends Paid (5.8) (5.1) (3.7) (3.1) (2.2)Issuance (Retirement) of Stock, Net -- -- -- -- --Issuance (Retirement) of Debt, Net -- -- -- -- --Cash from Financing Activities (5.8) (5.1) (3.7) (3.1) (2.2)

Foreign Exchange Effects -- -- -- -- --Net Change in Cash 14.9 2.2 15.5 5.2 20.3


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)


20082008-12-31

20072007-12-31

20062006-12-31

20052005-12-31

20042004-12-31

Cash -- -- -- -- --Cash & Equivalents 24.9 20.3 11.4 10.7 12.7Short Term Investments -- -- -- -- --Cash and Short Term Investments 24.9 20.3 11.4 10.7 12.7Accounts Receivable - Trade, Net 1.7 2.7 2.5 1.7 2.0Notes Receivable - Short Term -- -- -- -- --Receivables - Other 3.6 1.7 1.1 0.5 0.4

Total Receivables, Net 5.3 4.4 3.5 2.2 2.4Total Inventory 9.2 8.2 7.2 6.5 6.0Prepaid Expenses 0.1 0.1 0.1 0.1 0.0Other Current Assets, Total -- -- -- -- --

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Total Current Assets 39.6 32.9 22.2 19.5 21.2Property/Plant/Equipment, Total - Gross 10.7 8.1 5.7 4.3 4.3Accumulated Depreciation, Total (6.0) (3.7) (2.5) (3.2) (3.1)Property/Plant/Equipment, Total - Net 4.7 4.5 3.1 1.1 1.2Goodwill, Net -- -- -- -- 0.0Intangibles, Net -- -- -- -- --Long Term Investments 2.5 1.3 1.2 0.0 0.3Note Receivable - Long Term -- -- -- -- --Other Long Term Assets, Total -- -- 0.0 0.0 0.0Other Assets, Total -- -- -- -- --

Total Assets 46.7 38.7 26.5 20.6 22.7Accounts Payable -- -- -- -- --Payable/Accrued 18.6 12.2 9.0 5.6 6.0Accrued Expenses -- -- -- -- --Notes Payable/Short Term Debt 0.0 0.0 0.0 0.0 0.9Current Port. of LT Debt/Capital Leases -- -- 0.0 0.0 0.0Other Current liabilities, Total 5.2 4.2 3.0 1.3 1.0Total Current Liabilities 23.9 16.4 12.0 6.9 7.9Long Term Debt -- -- -- -- --Capital Lease Obligations -- -- 0.0 0.0 0.1Total Long Term Debt 0.0 0.0 0.0 0.0 0.1Total Debt 0.0 0.0 0.0 0.1 1.0Deferred Income Tax 0.2 0.2 0.2 0.1 0.1Minority Interest 0.2 0.0 0.0 0.0 0.0Other Liabilities, Total 0.4 0.3 0.3 0.0 --Total Liabilities 24.7 16.8 12.5 7.1 8.1Redeemable Preferred Stock, Total -- -- -- -- --Preferred Stock - Non Redeemable, Net -- -- -- -- --Common Stock, Total 18.6 16.1 11.3 6.1 6.1Additional Paid-In Capital 0.0 0.0 0.0 5.2 5.2Retained Earnings (Accumulated Deficit) 3.0 5.7 2.7 2.2 3.3Treasury Stock - Common -- -- -- -- --ESOP Debt Guarantee -- -- -- -- --Unrealized Gain (Loss) 0.4 -- -- -- --Other Equity, Total (0.0) (0.0) (0.0) (0.0) (0.0)Total Equity 22.1 21.8 14.0 13.5 14.6Total Liabilities & Shareholders' Equity 46.7 38.7 26.5 20.6 22.7Shares Outs - Common Stock Primary Issue 228.57 203.20 177.78 177.78 177.78Shares Outstanding - Common Issue 2 -- -- -- -- --Shares Outstanding - Common Issue 3 -- -- -- -- --Shares Outstanding - Common Issue 4 -- -- -- -- --Total Common Shares Outstanding 228.57 203.20 177.78 177.78 177.78Total Preferred Shares Outstanding -- -- -- -- --


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

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




12 Months


12 Months

2006

2006-12-31Reclassified2007-12-31



12 Months


12 Months

Revenue 168.0 136.1 92.3 77.5 75.5Other Revenue, Total -- -- -- -- --Total Revenue 168.0 136.1 92.3 77.5 75.5Cost of Revenue, Total 133.0 107.6 73.7 62.2 61.0Gross Profit 35.0 28.5 18.6 15.3 14.5Selling/General/Admin. Expenses, Total 20.5 17.0 10.8 9.4 4.9Research & Development -- -- -- -- --Depreciation/Amortization 2.3 1.8 0.6 0.4 0.5Interest Expense, Net - Operating -- -- -- -- --Interest/Investment Income - Operating 2.3 (0.4) (0.0) -- --Interest Expense(Income) - Net Operating -- -- -- -- --

Unusual Expense (Income) 1.4 0.0 0.2 -- --Other Operating Expenses, Total 1.9 1.8 1.6 0.9 5.7Total Operating Expense 161.4 127.9 86.7 73.0 72.1Operating Income 6.6 8.2 5.6 4.5 3.4Interest Expense, Net Non-Operating (0.0) (0.0) (0.0) (0.3) (0.1)

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Interest/Invest Income - Non-Operating -- -- -- (0.1) 0.0Interest Income(Exp), Net Non-Operating 0.6 0.6 0.4 0.4 0.4Gain (Loss) on Sale of Assets -- -- -- -- --Other, Net -- -- -- -- --Net Income Before Taxes 7.2 8.8 6.1 4.6 3.7Provision for Income Taxes 1.9 1.7 1.5 0.9 0.9Net Income After Taxes 5.3 7.1 4.5 3.7 2.8Minority Interest (0.1) 0.0 0.0 0.1 0.1Equity In Affiliates -- -- -- -- --U.S. GAAP Adjustment -- -- -- -- --

Net Income Before Extra. Items 5.3 7.1 4.5 3.8 2.9Accounting Change -- -- -- -- --Discontinued Operations -- -- -- -- --Extraordinary Item -- -- -- -- --Tax on Extraordinary Items -- -- -- -- --Net Income 5.3 7.1 4.5 3.8 2.9Preferred Dividends -- -- -- -- --General Partners' Distributions -- -- -- -- --Miscellaneous Earnings Adjustment -- -- -- -- --Pro Forma Adjustment -- -- -- -- --Interest Adjustment - Primary EPS -- -- -- -- --Income Available to Com Excl ExtraOrd 5.3 7.1 4.5 3.8 2.9Income Available to Com Incl ExtraOrd 5.3 7.1 4.5 3.8 2.9Basic Weighted Average Shares 221.83 195.43 177.78 177.78 176.56Basic EPS Excluding Extraordinary Items 0.024 0.036 0.025 0.021 0.016Basic EPS Including Extraordinary Items 0.024 0.036 0.025 0.021 0.016Dilution Adjustment -- 0.0 0.0 0.0 0.0Diluted Weighted Average Shares 230.25 198.13 177.78 177.78 176.56Diluted EPS Excluding ExtraOrd Items 0.023 0.036 0.025 0.021 0.016Diluted EPS Including ExtraOrd Items 0.023 0.036 0.025 0.021 0.016DPS - Common Stock Primary Issue 0.024 0.033 0.022 0.028 0.026Gross Dividends - Common Stock 5.5 7.3 4.0 4.9 4.5Total Special Items 2.8 0.1 0.2 0.0 0.0Normalized Income Before Taxes 10.0 8.8 6.3 4.6 3.7Effect of Special Items on Income Taxes 0.7 0.0 0.1 0.0 0.0Inc Tax Ex Impact of Sp Items 2.6 1.7 1.6 0.9 0.9Normalized Income After Taxes 7.4 7.1 4.7 3.7 2.8Normalized Inc. Avail to Com. 7.4 7.1 4.7 3.8 2.9Basic Normalized EPS 0.033 0.036 0.026 0.021 0.016Diluted Normalized EPS 0.032 0.036 0.026 0.021 0.016


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

Appendix F 1.5 Challenger Cash Flow Statement (Year 2006 to 2009)



20082008-12-31


20072007-12-31


20062006-12-31



20052005-12-31



20042004-12-31Restated


12 Months

Net Income/Starting Line 7.2 8.8 6.1 3.7 2.8

Depreciation/Depletion 2.3 1.8 0.6 0.4 0.5

Amortization -- 0.0 0.0 0.0 0.0

Deferred Taxes -- -- -- -- --

Non-Cash Items 1.1 (0.6) (0.3) 0.7 1.1

Changes in Working Capital 4.0 0.8 1.9 (0.9) (1.3)

Cash from Operating Activities 14.6 10.7 8.4 3.9 3.2

Capital Expenditures (2.4) (3.1) (2.9) (0.4) (0.4)

Other Investing Cash Flow Items, Total (2.0) 0.6 (0.7) 0.2 (0.2)

Cash from Investing Activities (4.5) (2.6) (3.6) (0.2) (0.6)

Financing Cash Flow Items (0.0) (0.0) (0.0) 0.0 (0.8)

Total Cash Dividends Paid (8.0) (4.0) (4.0) (4.9) (0.9)Issuance (Retirement) of Stock, Net 2.5 4.8 0.0 -- 7.4

Issuance (Retirement) of Debt, Net -- 0.0 (0.0) (0.3) 0.4

Cash from Financing Activities (5.5) 0.8 (4.0) (5.2) 6.1

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Foreign Exchange Effects (0.0) 0.0 -- 0.0 (0.0)

Net Change in Cash 4.6 9.0 0.7 (1.5) 8.6


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

Appendices G: Pertama Holdings: Undervalued retailer offers high dividend; recoverycould 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 HarveyNorman, 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 ofprivate 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. Thecompanys parent in Australia, , owns 60.7%. A further 17.3% is held by

London-listed , 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

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)

S t u d e n t I D N o . 1 0 6 7 4 1 3
http://www.theedgesingapore.com/investing/investing-ideas/8600-pertama-holdings-undervalued-retailer-offers-high-dividend-recovery-could-spur-growth.htmlhttp://www.theedgesingapore.com/http://www.theedgesingapore.com/investing/investing-ideas/8600-pertama-holdings-undervalued-retailer-offers-high-dividend-recovery-could-spur-growth.htmlhttp://www.theedgesingapore.com/


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

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