SING INVESTMENTS & FINANCE LIMITED

Transcription

1 SING INVESTMENTS & FINANCE LIMITED

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3 contents chairman s statement 02 corporate data 03 board of directors 04 corporate governance statement 06 performance review 11 5-year financial summary 15 financial reports 16 statistics of shareholdings 84 notice of annual general meeting 87 Sing Investments & Finance Limited annual report

4 chairman s statement Lee Sze Leong Chairman 6 April 2009 The Singapore economy grew by 1.1% in 2008 as compared to 7.8% in The global economic crisis has caused a slowdown in the Singapore economy and it went into a recession in 2008 as the GDP fell by 4.2% in the fourth quarter after posting flat growth in the preceding quarter. Total non-bank loan assets of the financial sector grew 15.7% in 2008 but contracted month-to-month in November and December as recession dampened corporate and consumer spending. Finance companies total loan assets, on the decline since February of 2008, have contracted by 4.3% in the year. Financial Results Operating revenue for the year increased by 4.6% as compared to the previous year, attributable to a 6.8% growth in the Group s loan assets from $1,304.4 million as at 31 December 2007 to $1,392.7 million as at 31 December Deposits grew marginally from $1,438.8 million to $1,459.1 million during the year. The Group s profit from operations before impairment losses for the year rose by 42.1% to $21.6 million driven by an expanded loan base, lower funding costs and higher rental income. These were partly offset by a decline of 87% in other income due to a gain on sale of a property in the previous year as well as higher operational costs. However, the Group s profit after tax for the year ended 31 December 2008 decreased by 56.4% compared to the previous year, attributed to a $12 million collective impairment provision made on its loan assets in view of the economic crisis. The Group will continue to maintain adequate individual and collective impairment allowances in respect of its loan portfolio. The impact of the slowdown in the Singapore economy has led to a slower growth of the Group s loans assets to 6.8%, from 27.6% in Due to the weakening economic conditions, our non-performing loans has increased marginally to 1.5% from 1.4% in 2007 Earnings per share fell to 5.25 cents from cents a year ago, but net asset value per share rose slightly, from $1.80 to $1.87 as the Group s total equity increased 4.1% from $188.9 million as at 31 December 2007 to $196.7 million as at 31 December Prospects The Ministry of Trade and Industry has projected that the Singapore economy will contract by 2% to 5% in 2009 in view of the deepening global economic crisis and the spillover effects on key sectors of the economy which is largely dependent on external trade. With declining consumption and demand, businesses will find it difficult to sustain economic activities, leading to rising unemployment and a fall in property prices. Against the backdrop of a rapidly worsening economic climate, maintaining our revenues and profitability will be a great challenge. We will continue to be prudent and cautious in this climate of uncertainty. However, the Group will strive to maintain its position as the niche lender to SMEs and the retail market and be supportive of our customers financing needs. With the relocation of a branch to Clementi and the completion of the upgrading exercise of all our branches, we will continue to offer a high level of service and comfort to our customers and depositors. The Group will continue to adopt a cautious stance in our lending activities to maintain asset quality and improve our risk management to effectively manage risks. It will continue to maintain financial prudence by strengthening its liquidity and funding position, monitoring its cost structure carefully and making adjustments where necessary to preserve our profit margin. Dividends The Board is recommending a first and final one-tier tax-exempt dividend of 2.5 cents per share. Acknowledgements I regret to inform that our director, Mr Aw Kim Chen, passed away on 16 January Mr Aw had served on our Board for 31 years. His invaluable contributions and support had benefited the Group significantly. The Board and I wish to express our deepest sympathies to the family of Mr Aw. I would like to thank our customers and shareholders for their ongoing support and trust in the Group. I also wish to express my appreciation to the Board members for their invaluable counsel and contribution and the staff for their unwavering commitment and hard work in the past year. 2 Sing Investments & Finance Limited annual report 2008

5 corporate data Board Of Directors Lee Sze Leong Chairman Aw Kim Chen* Lim Sin Hoa Dr Joseph Yeong Wee Yong Tay Teng Guan Arthur Tan Tong Guan April Lee nee Tang Biew Chin (Mrs) Li Loi Gan Lee Sze Siong Audit Committee Tan Tong Guan Chairman Dr Joseph Yeong Wee Yong Tay Teng Guan Arthur Nominating Committee Dr Joseph Yeong Wee Yong Chairman Lim Sin Hoa Lee Sze Leong Remuneration Committee Lim Sin Hoa Chairman Tan Tong Guan Tay Teng Guan Arthur Loan Committee Lee Sze Leong Chairman Aw Kim Chen* April Lee nee Tang Biew Chin (Mrs) Li Loi Gan Registered & Head Office 96 Robinson Road #01-01 SIF Building Singapore Tel Fax Branch Offices Ang Mo Kio Branch Blk 715 Ang Mo Kio Ave 6 # Singapore Tel Fax Bedok Branch Blk 202 Bedok North Street 1 #01-479/481 Singapore Tel Fax Clementi Branch Blk 450 Clementi Ave 3 # Singapore Tel Fax Secretaries Chan Kum Kit Tan Mui Sang Auditors Deloitte & Touche LLP 6 Shenton Way #32-00 DBS Building Tower Two Singapore (Partner in charge - Giam Ei Leen) Registrar Boardroom Corporate & Advisory Services Pte Ltd 3 Church Street #08-01 Samsung Hub Singapore Tel * The late Mr Aw Kim Chen passed away on 16 January 2009 Sing Investments & Finance Limited annual report

6 board of directors Lee Sze Leong Age 50 Mr Lee became a member of the Board in 1989 and was appointed as its Chairman in He is also the Chairman of the Company s subsidiary, Sing Investments & Finance Nominees (Pte.) Ltd. Mr Lee joined the Company in 1983 and was promoted to Managing Director in He chairs the Loan Committee, Investment Committee, Asset & Liability Committee and Credit Risk Management Committee. He is also a member of the Nominating Committee. Mr Lee has been active in various grassroots organisations and associations. He is presently the chairman of the Tiong Bahru Citizens Consultative Committee and a council member of the Tanjong Pagar Town Council. He is also the secretary of the Finance Houses Association of Singapore, the chairman of the Hire Purchase, Finance and Leasing Association of Singapore and a council member of the Singapore Chinese Chamber of Commerce & Industry. Mr Lee was awarded the Public Service Medal (Pingat Bakti Masyarakat) in 1997 and Public Service Star (Bintang Bakti Masyarakat) in Mr Lee holds a degree in Business Administration. Aw Kim Chen Age 80 The late Mr Aw passed away on 16 January Tay Teng Guan Arthur Age 52 Mr Tay joined our Board as an Alternate Director in 1994 and was appointed Director in He is also a member of the Audit Committee and Remuneration Committee. Mr Tay is the Chairman and CEO of SUTL Group of Companies. SUTL Group has a diversified portfolio with interests in lifestyle consumer goods and leisure developments. He is also the Chairman of Singapore s first purpose-built mega-yacht Marina Club, named One 15 Marina Club. Mr Tay devotes considerable time and expertise serving on several community service and grassroots organizations, such as West Coast Citizens Consultative Committee and Bukit Batok Citizens Consultative Committee of which he is a Patron. He was also appointed a Council Member of the Singapore Heart Foundation. 4 Sing Investments & Finance Limited annual report 2008

7 board of directors Tan Tong Guan Age 45 Mr Tan joined the Board in He is also the Chairman of the Audit Committee and a member of the Remuneration Committee. Mr Tan holds a Bachelor in Accountancy degree from the National University of Singapore and is a Fellow (Non-Practising) member of the Institute of Certified Public Accountants of Singapore. He is also an Executive Director of Tan Gee Beng Pte Ltd, Smartflex Technology Pte Ltd and Perusahaan TGB Sdn Bhd. Joseph Yeong Wee Yong Age 57 Dr Yeong has been a member of the Board since He is also the Chairman of the Nominating Committee and a member of the Audit Committee. He is the President of SGP International Management Academy (SIMA) and holds a Ph.D in Management Science from the University of Waterloo, Canada. He had taught in the NUS Business School for 21 years before forming SIMA in Dr Yeong is also Director of the Tan Kah Kee Foundation, Board member of Tan Kah Kee International Society, Council Member of the Singapore Shandong Business Council and Steering Committee Member of Network China, Singapore, Advisory Board Member of the School of Business Administration, Jimei University, the People s Republic of China. Lim Sin Hoa Age 76 Mr Lim has been a member of the Board since He is also Chairman of the Remuneration Committee and a member of the Nominating Committee and Loan Committee. Mr Lim holds a Bachelor of Science degree in Accountancy and Graduate s Commerce Diploma. He is a Director of SV Holdings Ltd, Times Express Pte Ltd, Kong Hoa Pte Ltd, Lim Kok Gin & Nephews Pte Ltd, Sin Chang An Holdings Pte Ltd, Hong Yin Enterprises Pte Ltd and Koln Industries Pte Ltd. He is also a director of Sing Holdings Ltd, Hokien Kiu Leong Tong, Singapore Hotel & Tourism Education Centre Pte Ltd in Singapore and Kong Hoa (H.K.) Ltd in Hong Kong. In addition to the Honorary Life Membership of Asean Tourism Association (ASEANTA) and Asean Hotel & Restaurant Association (AHRA), Mr Lim was awarded Honorary Life Membership of Singapore Hotel Association. He was conferred the Honorary Citizen of Changxing, China since 15 October April Lee nee Tang Biew Chin Age 61 Mrs Lee joined the Board in She was appointed by the Company as Senior General Manager in 1992 and promoted to Executive Director in Prior to joining the Company, she was a Deputy Director in the Monetary Authority of Singapore. Mrs Lee is also director of Sing Investments & Finance Nominees (Pte) Ltd and a member of the Loan Committee, Investment Committee, Asset & Liability Committee and Credit Risk Management Committee. She holds a degree in Economics from the University of Western Australia. Li Loi Gan Age 65 Mr Li has been a member of the Board since He is also a director of the Company s subsidiary, Sing Investments & Finance Nominees (Pte) Ltd and a member of the Loan Committee, Investment Committee, Asset & Liability Committee and Credit Risk Management Committee. Mr Li is the General Manager who oversees the Company s operation in deposit-taking. Lee Sze Siong Age 47 Mr Lee joined the Company in 1986 and was appointed to the Board in He currently oversees the Company s lending activities, branches, IT and Property Management. He is a member of Asset & Liability Committee and Credit Risk Management Committee. Mr Lee holds a Bachelor of Business Administration degree from University of Hawaii, USA and a Master in Accounting from University of Southern Queensland, Australia. He is also the director of F.H. Lee Holdings Pte Ltd and Meyer Development Pte Ltd. Mr Lee is currently appointed as an Auditor of the Balmoral Neighborhood Committee. Sing Investments & Finance Limited annual report

8 corporate governance statement Sing Investments & Finance Limited, through its Board and management recognize the need to establish and maintain the highest standards of corporate governance policies and practices which meet the requirements of the market regulators and the expectations of its shareholders. These policies and practices remain under constant review as the corporate governance environment and good practice evolve. Board of Directors Functions of Board and Management The Board acknowledges its accountability to shareholders for creating shareholder value within a framework that protects the rights and interests of shareholders and ensures that the company is properly managed. The Board aims to achieve these objectives through the following: Overseeing and formulating long-term business strategies and policies and ensuring that the required human resources are in place to meet the objectives; Identifying the principal risks of the Company s business and establishing a framework of prudential controls to assess and manage these risks; Monitoring and reviewing management performance, succession and development plans; Setting the Company s values and standards, and ensuring that they are consistent with shareholders objectives and expectations; and Maintaining a culture of integrity by reviewing and monitoring internal controls and procedures for financial reporting and compliance. Composition and Size of the Board There has been no change in the composition of the Board members which remains at 9 as at 31 December 2008, and of whom the following 4 are independent: Mr Lim Sin Hoa Dr Joseph Yeong Wee Yong Mr Tan Tong Guan Mr Arthur Tay Teng Guan We regret to inform the demise of one of the Board members Mr Aw Kim Chen, on 16 January The Board composition continues to satisfy the independence requirement of the Code that the independent directors must make up at least one-third of the Board. The Board also periodically reviews its size as appropriate. The Board considers its present size and members with core competencies such as accounting, finance, business, management experience, customerbased knowledge and other relevant experience adequate for its effective management and decision-making. 6 Sing Investments & Finance Limited annual report 2008

9 corporate governance statement Board Performance & Succession Planning The performance of the Board and directors (assessed for their effectiveness as a whole Board and also as individual contribution to the Board) is reviewed every year by the Nominating Committee. The Managing Director is a full time employee of the Company. As such, the need for succession planning is not critical compared to a company where the Chairman or Chief Executive Officer (CEO) is employed on a contract basis. Role of Chairman and Chief Executive Officer (CEO) Mr Lee Sze Leong is the Chairman of the Board and also the Managing Director or CEO of the Company. The Board is of the view that there is no unduly concentrated power in the hands of one individual nor compromised accountability and independent decision-making as all major decisions and policy changes are conducted through the respective committees presided mainly by the independent directors of the Board. and efficient implementation of decisions on policy issues, and (2) the benefit of the objective and independent views from the independent directors. The Code recommends that the Company appoints an independent non-executive director as the lead independent director where the Chairman and the CEO is the same person. However, the Board is of the view that currently there is sufficient check and balance of power and authority on the Board, and it is therefore not immediately essential to appoint a lead independent director. Board Committees The Board has established a number of committees to assist in the execution of its duties and to allow detailed consideration of complex issues. Although the Company does not have an EXCO, the following Committees have been set-up to assist the Board in the management of the Company:- (1) Audit Committee (2) Nominating Committee (3) Remuneration Committee (4) Loan Committee (5) Investment Committee (6) Credit Risk Management Committee (CRM) (7) Asset & Liability Committee (ALCO) Board Meetings The Board met 5 times during the year under review. The Chairman would brief the Board on the issues to be discussed during the Board meetings. The documents pertaining to important and complex issues were circulated during the meetings. Some Board papers were also circulated for the directors review prior to their meeting. Also, the Board believes that notwithstanding that the Chairman and Managing Director/CEO is the same person, the Company s interest remains well served by: (1) the benefit of a Chairman who is knowledgeable about the company s businesses, thereby ensuring the smooth Sing Investments & Finance Limited annual report

10 corporate governance statement The directors attendance at the Board and the Sub-Committees meetings in 2008 are set out as follows: Board/Board Committees Board Audit Committee Nominating Committee Remuneration Committee Loan Committee No. of meetings held Name of Directors No. of meetings attended No. of meetings attended No. of meetings attended No. of meetings attended No. of meetings attended Lee Sze Leong 5 By invitation 1 By invitation 7 Aw Kim Chen 3 NA NA NA 7 Lim Sin Hoa 4 NA Dr Joseph Yeong Wee Yong NA NA Tay Teng Guan Arthur 5 4 NA 1 NA Tan Tong Guan 5 4 NA 1 NA April Lee nee Tang Biew Chin 5 NA NA NA 7 Li Loi Gan 5 NA NA NA 7 Lee Sze Siong 5 NA NA NA NA Nominating Committee The Nominating Committee is chaired by Dr Joseph Yeong Wee Yong. The other 2 members are Mr Lim Sin Hoa and Mr Lee Sze Leong. The main role of the Nominating Committee is to recommend candidates to fill the Board and sub-committee positions and to review and recommend Board composition and balance. The Committee also reviews Board performance. The objective of the Nominating Committee is to assist the Board to comply with the principles and guidelines set forth in paragraphs 4 and 5 of the Code, which are specifically to implement: A formal and transparent process for the appointment of new directors to the Board; and A formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board. The Nominating Committee is also charged with the responsibility of determining annually whether or not a Director is independent. Where a Director has multiple Board representations, the Nominating Committee also considers if such Director is able to adequately carry out his responsibilities as a Director of the Company. New directors receive a formal letter of appointment setting out the responsibilities, rights and terms and conditions of their appointment. The new Director would participate in a comprehensive induction which covers the operations, financial position, strategic and risk management issues, as well as the operation of the Board and its subcommittees. During the year, the independent directors had also attended training courses organized by Singapore Exchange ( SGX ) for the benefit of Board members. 8 Sing Investments & Finance Limited annual report 2008

11 corporate governance statement Audit Committee The Audit Committee comprises Mr Tan Tong Guan (Chairman), Dr Joseph Yeong Wee Yong and Mr Arthur Tay Teng Guan. The Audit Committee is responsible for assisting the Board in its oversight of the reliability and integrity of the accounting policies and financial reporting, as well as to scrutinize the adequacy and effectiveness of the internal controls. In discharging its oversight role, the Committee is authorized and empowered to investigate any matter within its terms of reference and it has full access to and cooperation of the Management. The Audit Committee, together with the Management and the external auditors reviews the Company s audited financial statements, the quality of the accounting principles applied, the financial statement presentations and the items that affect the financials. Through the maintaining and application of appropriate accounting and financial reporting principles and policies and internal controls and procedures, the Audit Committee determines whether the financial statements comply with the accounting standards and applicable laws and regulations. The Audit Committee holds at least one private meeting with the external auditor without the presence of Management. It examines the audit findings of the external and internal auditors and considers all major findings. It also reviews with the Internal Audit Manager on the scope, results and effectiveness of the audits and approves the internal audit plan in consultation with the Management. Remuneration Committee The Remuneration Committee comprises Mr Lim Sin Hoa (Chairman), Mr Tan Tong Guan and Mr Arthur Tay Teng Guan. The primary role of the Remuneration Committee is to assist the Board in fulfilling its objectives which are: To minimize the risk of any potential conflict of interest by putting in place a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors; To make recommendations to the Board on the Group s framework of remuneration for directors and senior management executives with the aim to be fair and avoid rewarding poor performance; and To review the adequacy and form of the compensation for each of the directors, the CEO and senior management executives to ensure that the compensation is realistically commensurate with the duties, responsibilities and risk involved in being an effective director, CEO or senior management executive. Directors remuneration in bands of $250,000 are shown on page 83. Loan Committee Members of the Loan Committee are Mr Lee Sze Leong (Chairman), Mr Aw Kim Chen (now deceased), Mr Lim Sin Hoa, Mrs April Lee nee Tang Biew Chin and Mr Li Loi Gan. The primary role of the Loan Committee is to review and approve credit requests that exceed the credit limits authorized for senior management. Members of the Committee would meet several times during the year to consider the loan applications recommended for approval by the Management. As a policy, all directors and directors related loans must be approved by the Board. Investment Committee The Investment Committee is chaired by Mr Lee Sze Leong and comprises Mr Aw Kim Chen (now deceased), Mrs April Lee nee Tang Biew Chin and Mr Li Loi Gan. The main function and purpose of the Investment Committee is to assist the Board in reviewing and managing the Company s long term investment portfolio with the view of diversifying the Company s assets as well as making gains from the investments. It formulates investment policies, strategies and guidelines and periodically reviews the investment portfolio. Approval on proposed acquisition/ sale of any investment is executed by way of a circular resolution and the Board of Directors is updated of the investment portfolio during the board meetings. Sing Investments & Finance Limited annual report

12 corporate governance statement Internal Controls & Compliance With Policies And Regulations A system of effective internal controls plays a crucial role in the Company s operations as it sets a foundation for safeguarding the shareholders investments and the Company s assets. The Board of directors is fully aware of its responsibilities in establishing and maintaining a strong control culture within the organization and also for ensuring that there are adequate policies in relation to risk management, compliance and internal control systems. The internal audit function of the Company is well-established and the Internal Audit Manager continues to report to the Chairman of the Audit Committee. Various audit tests are performed yearly by the Internal Audit Department to ensure the integrity of the Company s financial system and operating procedures as well as the soundness of the Company s internal controls. The Compliance Department conducts tests to ensure that the Management and staff continue to observe all policies and guidelines set by the Board of Directors, and comply with the applicable laws, regulations and professional standards, including those for anti-money laundering and counter terrorists financing. Credit Risk Management & Asset and Liability Committees Risk Management is an integral part of the Company s corporate governance programs. Two key management committees, headed by the Chairman and Managing Director, Mr Lee Sze Leong, namely The Credit Risk Management Committee and the Asset and Liability Committee, review and assess the risks associated with the Company s credit operations and funding requirements. The Credit Risk Management Committee oversees the Company s credit activities and risk management processes, including reviewing periodically the credit policies, guidelines and procedures as well as evaluating the risk profile of the Company s loan portfolio. The Asset and Liability Committee reviews the risk profile of the Company against the prevailing business and economic conditions, focusing on liquidity, market and interest rate risks. Periodic meetings are conducted by both committees which report their findings to the Board. Related Party Transactions During the year, the Company had granted credit facilities to its directors and their related parties. It had also collected deposits from its directors and their related parties. No preferential treatment had been extended to the directors and their related parties in respect of these credit facilities and deposits. Disclosure of related party transactions during the year is shown on pages 66 to 67. Dealing In Company s Shares The Company continues to adopt the best practices advocated by the Stock Exchange Securities Trading Limited for the trading of the Company s shares by its staff and directors. Communication With Shareholders The Company engages in regular and effective communication with its shareholders. All shareholders will receive the annual report of the Company and the notice of the Annual General Meeting. In addition, the Board also updates shareholders on the Company s quarterly financial results via Singapore Exchange s SGXNET. The financial results are also freely available at the Company s webpage at The external auditors, chairpersons and other directors of the respective committees are present at general meetings where shareholders are given the opportunity to ask relevant questions and express their views. Business And Ethical Conduct The Company continuously exercises prudence in its business dealings. It ensures that all staff continue to observe high standards of professionalism and integrity in their dealings with the customers and business associates. The Company has in place a whistle blowing policy for the independent investigation and appropriate follow-up actions on any feedback / complaints received from staff and the customers. 10 Sing Investments & Finance Limited annual report 2008

13 performance review Variance +/(-) $ 000 $ 000 (%) SELECTED INCOME STATEMENT ITEMS Net interest income 34,439 26, Non-interest income 4,178 4,555 (8.3) Total income 38,617 31, Operating expenses (16,999) (16,228) 4.8 Profit from operations before impairment losses 21,618 15, (Allowances for)/write-back of impairment losses on loans and advances (13,360) 157 N.M. Profit before income tax 8,258 15,366 (46.3) Profit after tax attributable to equity holders of the Group 5,520 12,666 (56.4) SELECTED BALANCE SHEET ITEMS Total equity 196, , Total assets 1,781,969 1,725, Loans and advances 1,392,687 1,304, Deposits and savings accounts of customers 1,459,082 1,438, KEY FINANCIAL RATIOS (%) Net interest margin Non-interest income-to-total income Cost-to-income ratio Loans-to-deposits ratio Non-performing loans ratio Return on equity (1) Return on total assets (2) Capital adequacy ratio PER ORDINARY SHARE DATA Basic earnings per share (cents) Net asset value per share ($) (1) Return on equity is computed based on ordinary shareholders equity at balance sheet date. (2) Return on total assets is computed based on total assets as at balance sheet date. Net profit attributable to equity holders decreased by 56.4% to $5.5 million, from $12.7 million in 2007, mainly attributable to a $12 million in collective impairment provision made on its loan assets for the year in view of the current economic crisis and the slowdown in our economy. Sing Investments & Finance Limited annual report

14 performance review Net interest income increased by 28.1% to $34.4 million, driven by a 6.8% growth in loan assets coupled with lower funding costs. Non-interest income decreased by 8.3% to $4.2 million, primarily due to a gain of $1.2 million on the sale of a property registered in However, the decrease was partially offset by a 65.1% increase in rental income. Operating expenses rose 4.8% to $17.0 million mainly due to an increase in staff costs as additional headcount was required to support the business expansion. Other expenses declined by 12.4% primarily due to lower project costs incurred during the year as compared to 2007 and the costs of relocating to SIF building incurred in The cost-to-income ratio improved to 44% from 51.6% a year ago through continued cost management. The Group s loan assets registered a lower growth of 6.8% to $1,392.7 million as compared to 27.6% in 2007 in line with the slowdown in the economy. Due to the weakening economic conditions, our nonperforming loans ratio has increased marginally to 1.5% from 1.4% in However, deposits grew by a marginal 1.4% to $1,459.1 million during the year as partial funding came from the utilisation of the cash and bank reserves. Earnings per share fell to 5.3 cents from 13.2 cents a year ago, but net asset value per share rose slightly, from $1.8 to $1.9 as the Group s total equity increased 4.1% from $188.9 million to $196.7 million. NET INTEREST INCOME INTEREST-EARNING ASSETS & INTEREST-BEARING LIABILITIES Average Balance Interest Average Rate Average Balance Interest Average Rate $ 000 $ 000 % $ 000 $ 000 % INTEREST EARNING ASSETS Loans and advances 1,391,872 59, ,141,182 54, Singapore Government Securities 201,241 6, ,185 5, Other interest-earning assets 59, ,488 3, Total 1,652,954 66, ,442,855 63, INTEREST BEARING LIABILITIES Deposits and savings accounts 1,439,972 28, ,249,811 33, SPRING loans (unsecured) 16, , Medium-Term Notes 50,000 2, ,000 2, Other liabilities 9, Total 1,515,544 31, ,317,760 36, Net interest income/margin as a percentage of interest-earning assets 34, , Sing Investments & Finance Limited annual report 2008

15 performance review VOLUME AND RATE ANALYSIS INCREASE/(DECREASE) FOR 2008 OVER 2007 Volume Rate Total $ 000 $ 000 $ 000 INTEREST INCOME Loans and advances 12,033 (7,408) 4,625 Singapore Government Securities 1, ,363 Other assets (2,097) (946) (3,043) TOTAL 11,258 (8,313) 2,945 INTEREST EXPENSE Deposits and savings accounts 5,134 (9,911) (4,777) SPRING loans (unsecured) (15) 2 (13) Medium-Term Notes Other liabilities 233 (55) 178 TOTAL 5,352 (9,964) (4,612) NET INTEREST INCOME 5,906 1,651 7,557 Net interest income rose by 28.1% to $34.4m in 2008 attributed to a 14.6% increase in average interest earning assets as well as an improvement in net interest margin from 1.9% in 2007 to 2.1% in As at 31 December 2008, loans and advances comprise 84.2% of the interest earning assets and deposits, 95.0% of the interest bearing liabilities. The improved interest spread was due mainly to the low interest rate environment during the year which saw the cost of deposits falling faster than the yield on loans. NON INTEREST INCOME Variance $ 000 $ 000 +/(-)% Fees and commission 808 1,150 (29.7) Dividends (13.2) Rental income 3,068 1, Others 184 1,411 (87.0) Total non-interest income 4,178 4,555 (8.3) Non-interest income declined by 8.3% to $4.2 million, from $4.6 million in Rental income constitutes 73.4% of the non-interest income as at 31 December 2008 and was mainly accounted for from the leasing of part of SIF building. Rental income rose by 65.1% to $3.1 million due to the leased units being fully tenanted during the year as compared to partial tenancy in 2007 as SIF building was only completed in February The decrease in other income was due to a gain of $1.2 million on the sale of a property registered in Sing Investments & Finance Limited annual report

16 performance review OPERATING EXPENSES Variance $ 000 $ 000 +/(-)% Staff costs 10,219 8, Depreciation of property, plant and equipment Depreciation of investment properties Other expenses 5,456 6,231 (12.4) Total operating expenses 16,999 16, Operating expenses increased by 4.8% to $17 million, mainly attributed to a 16.9% increase in staff costs arising from increased headcount required to support the expansion in business and system enhancement project. The decrease in other expenses was due to a reduction in project expenses in 2008 as well as costs incurred on furnishing and relocating to SIF Building in IMPAIRMENT ALLOWANCES FOR LOANS AND ADVANCES Variance $ 000 $ 000 +/(-)% Allowances for(write-back of) individual impairment 1,350 (33) NM Allowances for(write-back of) collective impairment 12,010 (124) NM Total impairment losses on loans and advances 13,360 (157) NM The impairment losses on loans and advances were significantly higher at $13.4 million as compared to a write-back of $0.2 million in the previous year. The increase was due mainly to a higher collective impairment provision of $12 million provided in view of the economic crisis. 14 Sing Investments & Finance Limited annual report 2008

17 5-year financial summary Capital Employed $ Billion Total Assets Net Assets $ 000 $ 000 $ 000 $ 000 $ 000 OPERATING REVENUE 66,454 63,521 50,082 37,052 30,916 PROFIT AND REVENUE RESERVES Profit before tax 8,258 15,366 9,559 8,230 6,869 Profit after tax 5,520 12,666 7,668 6,072 4,858 Revenue Reserve 62,971 63,756 76,070 72,605 53, SHARE CAPITAL Authorised , ,000 Issued 117, ,199 84,430 75,061 50, Volume of Business $ Billion Loans Deposits CAPITAL EMPLOYED Total Assets 1,781,969 1,725,546 1,427,425 1,184, ,891 Net Assets 196, , , , ,874 VOLUME OF BUSINESS Loans 1,392,687 1,304,372 1,021, , ,151 Deposits 1,459,082 1,438,790 1,166, , ,191 DIVIDEND AND EARNINGS PER SHARE Dividend (net) 2,627 6,305 24,980 4,203 4,003 Dividend per share (cents)* Earnings per share (cents)** RETURN AFTER TAX ON TOTAL ASSETS (%) Profit $ Million Profit before tax Profit after tax RETURN AFTER TAX ON NET ASSETS (%) NET TANGIBLE ASSET PER SHARE ($) * One-tier tax exempt dividend for Year 2007 to Year 2008 & gross dividends for Year 2004 to ** Earnings per share is calculated based on the weighted average number of ordinary shares in issue during the year of 105,083,843 (Year 2007: 95,701,683, Year 2006 : 83,317,266, Year 2005 : 65,100,476 & Year 2004 : 55,044,440) shares Sing Investments & Finance Limited annual report

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19 financial reports report of the directors 17 statement by directors 21 independent auditors report 22 balance sheets 24 consolidated profit and loss statement 26 statement of changes in equity 27 consolidated cash flow statement 29 notes to financial statements 30 additional information 83 statistics of shareholdings 84 Sing Investments & Finance Limited annual report

20 Report of the Directors The directors present their report together with the audited consolidated financial statements of the Group and balance sheet and statement of changes in equity of the Company for the financial year ended 31 December Directors The directors in office at the date of this report are as follows: Lee Sze Leong Lim Sin Hoa Dr Joseph Yeong Wee Yong Tay Teng Guan Arthur Tan Tong Guan April Lee nee Tang Biew Chin Li Loi Gan Lee Sze Siong Pursuant to Article 109 of the Company s Articles of Association, Mrs April Lee nee Tang Biew Chin, Dr Joseph Yeong Wee Yong and Mr Tan Tong Guan retire by rotation and being eligible, offer themselves for re-election except for Mrs April Lee Nee Tang Biew Chin who will be retiring from service with the Company and she is not seeking re-election. Pursuant to Section 153(6) of the Singapore Companies Act, Chapter 50 (the Act ), Mr Lim Sin Hoa who is over seventy years of age, retires and is eligible for re-election to hold office until the next Annual General Meeting. 2 Arrangements to Enable Directors to Acquire Benefits by Means of the Acquisition of Shares and Debentures Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures in the Company or any other body corporate. 17 Sing Investments & Finance Limited annual report 2008

21 Report of the Directors 3 Directors Interests in Shares and Debentures The directors of the Company holding office at the end of the financial year had no interests in the share capital and debentures of the Company and related corporations as recorded in the register of directors shareholdings kept by the Company under Section 164 of the Act except as follows: Name of directors Holdings in the name of the director or nominee At beginning At end of the year of the year Other holdings in which the director is deemed to have an interest At beginning of the year At end of the year Sing Investments & Finance Limited (Ordinary shares) Lee Sze Leong 216, ,721 28,100,300 28,100,300 Aw Kim Chen* 11,996,780 12,105,780 Lee Sze Siong 300, ,395 28,100,300 28,100,300 Li Loi Gan 1,170,961 1,170,961 1,818,000 1,818,000 Tay Teng Guan Arthur 4,068,818 4,068,818 Tan Tong Guan 101, ,540 1,190,100 1,190,100 By virtue of Section 7 of the Act, Messrs Lee Sze Leong and Lee Sze Siong are deemed to have an interest in the wholly-owned subsidiary of the Company at the beginning and at the end of the financial year. There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January * Mr Aw Kim Chen passed away on 16 January Directors Receipt and Entitlement to Contractual Benefits Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Act, by reason of a contract made by the company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for salaries, bonuses and other benefits as disclosed in the financial statements. During the financial year, the Company has engaged in transactions in the normal course of business with immediate family members of certain directors and with companies in which the directors have significant financial interests. However, the directors have not received, nor will they become entitled to receive, any benefits arising out of these transactions other than those which they may be entitled to as customers or as shareholders of these companies. Sing Investments & Finance Limited annual report

22 Report of the Directors 5 Share Options (a) (b) (c) Options to take up unissued shares During the financial year, no option to take up unissued shares of the Company or its subsidiary was granted. Options exercised During the financial year, there were no shares of the Company or its subsidiary issued by virtue of the exercise of an option to take up unissued shares. Unissued shares under option At the end of the financial year, there were no unissued shares of the Company or its subsidiary under option. 6 Audit Committee The members of the Audit Committee during the financial year and at the date of this report are: Tan Tong Guan (Chairman), non-executive director Dr Joseph Yeong Wee Yong, non-executive director Tay Teng Guan Arthur, non-executive director The Audit Committee performs the functions specified by Section 201B of the Act, the Listing Manual and the Best Practices Guide of the Singapore Exchange, and the Code of Corporate Governance. The Audit Committee has held 4 meetings since the last directors report. In performing its functions, the Audit Committee met with the Company s external and internal auditors to discuss the scope of their work, the results of their examination and evaluation of the Company s internal accounting control system. The Audit Committee also reviewed the following: (a) (b) (c) (d) the audit plans and results of the internal auditors examination and evaluation of the Group s systems of internal accounting controls; the Group s financial and operating results and accounting policies; the financial statements of the Company and the consolidated financial statements of the Group before their submission to the directors of the Company and external auditors report on those financial statements; the quarterly, half-yearly and annual announcements as well as the related press releases on the results and financial position of the Company and the Group; 19 Sing Investments & Finance Limited annual report 2008

23 Report of the Directors (e) (f) the co-operation and assistance given by the management to the Group s external auditors; and the re-appointment of the external auditors of the Group. The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees. The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, Deloitte & Touche LLP, be nominated for reappointment as auditors of the Group at the forthcoming Annual General Meeting of the Company. 7 Auditors The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment. ON BEHALF OF THE BOARD OF DIRECTORS Lee Sze Leong Chairman Tan Tong Guan Director 20 February 2009 Sing Investments & Finance Limited annual report

24 Statement by Directors In the opinion of the directors: (a) (b) the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company as set out on pages 24 to 82 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and of the results, changes in equity and cash flows of the Group and of the changes in equity of the Company for the financial year then ended; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. ON BEHALF OF THE BOARD OF DIRECTORS Lee Sze Leong Chairman Tan Tong Guan Director 20 February Sing Investments & Finance Limited annual report 2008

25 Independent Auditors Report TO THE MEMBERS OF SING INVESTMENTS & FINANCE LIMITED We have audited the accompanying financial statements of Sing Investments & Finance Limited (the Company ) and its subsidiary (the Group ), which comprise the balance sheets of the Group and the Company as at 31 December 2008, the profit and loss statement, statement of changes in equity and cash flow statement of the Group and the statement of changes in equity of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 24 to 82. The financial statements for the year ended 31 December 2007 were audited by another firm of auditors whose report dated 15 February 2008 expressed an unqualified opinion on those statements. Management s Responsibility Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the Act ) and Singapore Financial Reporting Standards. This responsibility includes: devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Sing Investments & Finance Limited annual report

26 Independent Auditors Report Opinion In our opinion, (a) (b) the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the year then ended; and the accounting and other records required by the Act to be kept by the Company and by the subsidiary incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act. Deloitte & Touche LLP Public Accountants and Certified Public Accountants Singapore Giam Ei Leen Partner Appointed on 1 April February Sing Investments & Finance Limited annual report 2008

27 Balance Sheets As at 31 December 2008 Group Company Note $ 000 $ 000 $ 000 $ 000 ASSETS Current assets Cash on deposit, at banks and in hand 52, ,650 52, ,586 Other assets 6 5,045 4,286 5,045 4,286 Investments 7 240, , , ,872 Loans and advances due within twelve months 8 491, , , ,335 Statutory deposit with the Monetary Authority of Singapore ( MAS ) 44,076 39,079 44,076 39,079 Total current assets 833, , , ,158 Non-current assets Property, plant and equipment 9 20,630 19,742 20,630 19,742 Investment properties 10 26,718 26,216 26,718 26,216 Subsidiary Loans and advances due after twelve months 8 900, , , ,037 Deferred tax assets Total non-current assets 948, , , ,040 Total assets 1,781,969 1,725,546 1,781,705 1,725,198 Sing Investments & Finance Limited annual report

28 Balance Sheets As at 31 December 2008 Group Company Note $ 000 $ 000 $ 000 $ 000 LIABILITIES AND EQUITY Current liabilities Deposits and savings accounts of customers 13 1,459,082 1,438,790 1,459,784 1,439,482 Other liabilities 14 30,358 27,556 29,869 27,090 Interest bearing borrowings 15 21,000 21,000 Medium-term notes 18 50,000 50,000 SPRING loans due within twelve months (unsecured) 16 7,012 7,735 7,012 7,735 Employee benefits Current tax payable 5,270 4,537 5,270 4,539 Total current liabilities 1,572,947 1,478,811 1,573,160 1,479,039 Non-current liabilities Medium-term notes 18 50,000 50,000 SPRING loans due after twelve months (unsecured) 16 8,966 7,868 8,966 7,868 Deferred tax liabilities 12 3,386 3,359 Total non-current liabilities 12,352 57,868 12,325 57,868 Total liabilities 1,585,299 1,536,679 1,585,485 1,536,907 Equity attributable to equity holders of the Company Share capital , , , ,199 Reserves 20 79,471 71,668 79,021 71,092 Total equity 196, , , ,291 Total liabilities and equity 1,781,969 1,725,546 1,781,705 1,725,198 See accompanying notes to financial statements. 25 Sing Investments & Finance Limited annual report 2008