To be the leading retail and consumer finance company in South Asia.

Transcription

1

2

3 Our Vision To be the leading retail and consumer finance company in South Asia. Our Mission To improve the quality of life of our customers by offering high quality products and services at affordable prices. Our Values Honesty and Integrity Ability to communicate and behave openly without fear, focused on one truth as the only norm, based on mutual trust and respect and where the intent of any communication and/or behaviour is unquestionable. Valuing Diversity Individually and/or collectively understanding, accepting and valuing the different backgrounds, cultures, personal preferences and competencies of people. Shared Purpose and Teamwork Positively and unconditionally identifying and associating with the Company s vision, whilst possessing a clear understanding that this vision can only be achieved through teamwork. Professionalism Consistently executing our roles and responsibilities in ways that clearly display the highest levels of professionalism and competence. Respecting People s Dignity Always placing human dignity above all else in our interactions with people, irrespective of the communication being positive or negative in nature. Achievement Driven Continually and consistently driven by a need for achievement in everything that we embark upon and in every interaction we engage in. Always striving to do better than yesterday, being the best today and setting higher goals for tomorrow. Our Objectives To maximize shareholder wealth and to safeguard the assets of the Company. Achieve world class customer service through the establishment of a culture within which each customer is treated as our only customer. Establish, maintain and grow technology capacities that will enable a differentiated customer experience and secure maximized business efficiencies. Creating and establishing a culture of continuous learning, leadership development and business performance. Continuous focus to offer our customers the best possible range of differentiated products and financial services offerings. To react to market signals and continually re-evaluate the strategic positioning of the Group to secure a relevant and healthy future.

4 Contents Financial Highlights 03 Information about Singer Asia 05 Review of Strategy and Operations 10 Financial Review 25 Board of Directors 28 Management Team 30 Corporate Social Responsibility 32 Independent Auditors Report 38 Consolidated Statement of Financial Position 39 Consolidated Statement of Income 40 Consolidated Statement of Comprehensive Income 41 Consolidated Statement of Changes in Equity 42 Consolidated Statement of Cash Flows 43 Notes to the Consolidated Financial Statements 44 It s the Singer not the Song Report concept, design and production by Smart Media - The Annual Report Company Information about Singer Asia Singer Asia has been operating in South Asia since the late 1800s. It is recognized by consumers as a trusted source of reliable, quality, consumer products, as well as being identified with the availability of consumer credit. Review of Strategy and Operations 2011 was another year of impressive growth for Singer Asia. All of the Singer Asia operations performed well with some significantly above expectation. 25 Financial Review For the year ended December 31, 2011, the Company reported consolidated revenue of US$ million, compared to consolidated revenue of US$ million for the same period in 2010, an increase of US$ 67.2 million or 25.4%. 32 Corporate Social Responsibility 37 Financial Reports Singer strongly believe that businesses have a responsibility to uplift the overall well-beings of the society and are therefore committed to contribute and work towards that goal. Singer Asia Limited 7/F, Baskerville House, 13, Duddell Street, Central, Hong Kong This Annual Report is Carbon Neutral This Annual Report has been produced by Smart Media - The Annual Report Company whose greenhouse gas emissions resulting from the writing, designing, photography, production, project management, usage of paper and other raw materials, printing and transportation are offset using verified carbon offsets.

5 Financial Highlights Revenue US$ million Profit attributable to Owners of the Company excluding one-time gains US$ million Revenue Excluding Thailand Thailand Total Assets US$ million Cash Distribution US$ million

6

7 Information about Singer Asia Singer Asia has been operating in South Asia since the late 1800s. It is recognized by consumers as a trusted source of reliable, quality, consumer products, as well as being identified with the availability of consumer credit. Singer Asia is a holding company with operating subsidiaries in the South Asian countries of Bangladesh, India, Pakistan and Sri Lanka. The subsidiaries in Bangladesh, Pakistan and Sri Lanka are retail businesses engaged in the distribution of a wide variety of consumer durable products, with consumer credit and other financial services available to qualified customers. In each of these markets, Singer Asia is the leading retailer of durable products for the home. The subsidiary in India is primarily a wholesale distributor of sewing products, although that company also has a right to retail nationwide. Singer Asia also has an affiliate company in Thailand and a licensee in Malaysia that are the largest direct (door-to-door) sellers of consumer durable products in those markets. Singer Asia has significant potential for long-term growth along with the emerging economies of Asia and the expansion of their middle- and lower-income class consumers. The number of distribution points in South Asia at December 31, 2011 was as follows: Retail Distributors outlets and dealers Bangladesh 314 1,017 India Pakistan Sri Lanka Total 850 2,738 The Thailand company has 187 direct selling locations that serve as a base for 2,432 canvassers/collectors. Retail Holdings N.V. currently owns approximately 56.2% of the equity of Singer Asia indirectly through its wholly owned subsidiary, ReHo Limited. UCL Asia Partners, L.P owns approximately 42.8% indirectly through its subsidiary UCL Asia Holdings VII Limited and Mr. Gavin Walker, Singer Asia s President and CEO, owns 1.0% of the equity, reflecting the exercise of a portion of his options. Should Mr. Walker exercise all of his options, his equity stake in Singer Asia would increase to approximately 4.8%, the Retail Holdings N.V. shareholding would decline to approximately 54.1% and the Fund s stake would decline to approximately 41.1%. Singer Asia Limited (Shareholders - fully-diluted) Retail Holdings N.V. 54.1% UCL Asia Partners, L.P. 41.1% Mr. Gavin Walker 4.8% Annual Report 2011 Singer Asia Limited 5

8 Unique Attributes The unique attributes of Singer Asia include: Number One Retailer of Durables for the Home - In each of the markets where Singer Asia operates retail stores - Bangladesh, Pakistan and Sri Lanka - Singer Asia is the number one retailer of durables for the home, with broad, often multi-channel distribution and significant market shares across several product categories. Offer of Consumer Credit and Financial Services - Singer Asia is the leading provider of non-automotive, non-residential, consumer credit to middle- and lower-income consumers in Bangladesh, Pakistan, Sri Lanka and Thailand. Singer Asia, including the affiliate operating company in Thailand, has a total of 626,098 active installment accounts and an installment accounts receivable of US$ million. Powerful Brand - Singer Asia has an exclusive, perpetual, royalty-bearing license allowing the Company to use the Singer name and trademark. The brand s strengths include exceptionally high brand awareness, positive emotional consumer tie-in and consumer association with trust, with reliable products for the home and with reasonable prices and available credit. Opportunity in India - Continuing a business started in 1870, Singer Asia is only one of two multi-nationals with a right to retail, including through company stores, nationwide in India. Superior Management - Singer Asia has the benefit of a very strong management team with exceptional local market knowledge, and with experience with international financial standards. Strong Products Offering - Singer Asia successfully sources a broad range of competitively featured and competitively priced products from third-party manufacturers which it markets under the Singer brand. An increasing array of products is also being sold using a variety of other well-known brands, often under exclusive brand distribution arrangement. Public Market Presence - Eight of the Singer Asia companies - one each in Bangladesh, India, Pakistan and Thailand and four companies in Sri Lanka - are public companies. Public ownership enhances the image and prestige of each of the operating subsidiaries and affiliates in customer, lender and investor perceptions, and, in a few cases, results in lower tax rates. Additional Assets - Singer Asia has substantial additional assets including unutilized cash and unutilized, confirmed bank facilities. The operating companies also have a large portfolio of owned properties and long-term leaseholds. Products Singer Asia distributes a variety of consumer durables, especially products for the home, including: Home Appliances, such as: air conditioners; dishwashers; kitchen ranges; microwaves; refrigerators, freezers and bottle coolers; washing machines and dryers; water heaters; as well as small kitchen appliances and sewing machines. Refrigerators are the largest contributor in this category and overall. Consumer Electronics, such as: colour televisions, including LCD and LED products, home theatre; DVD and Blu Ray players; personal computers; portable audio products; and telephone and satellite television equipment. Televisions are the largest contributor in this category. Other Consumer Durables, such as: bottle coolers, generators, home furnishings, mobile phone reload machines, motorcycles and water heaters. The range of products varies by location but all of the retail businesses offer a core range of home appliances and consumer electronics. Singer Asia broadens and updates the product offering on a regular basis. The Singer Asia sales mix remained fairly constant in 2011 with refrigerators (at 32%) continuing to be the largest contributor to revenue. Product Sales % E D F G C H % A - Refrigerators 32 B - Televisions 16 C - Other Consumer Electronics 16 D - Other Home Appliances 6 E - Sewing Machines 19 F - Motor Cycles 1 G - Furniture 6 H - Others 4 Most products continue to be sold using the Singer brand although a meaningful share, especially in Sri Lanka, and, to a lesser extent, in Bangladesh and Pakistan, are now being sold using a variety of other well-known names. Singer Asia is an exclusive distributor or co-distributor in certain markets for such well-known brands as Haier, Hitachi, Philips, Samsung, Skyworth, TCL and Whirlpool. Reflecting the multi-brand offering, Singer shops in the retail markets are branded Singer Plus. B A 6 Singer Asia Limited Annual Report 2011 Information about Singer Asia

9 House brand appliances, electronics and sewing machines comprise 91% of sales, whilst non-house brands comprise the balance of 9% of sales. The Singer Asia house brands include; Singer, Sisil, Merritt, Unic and MEG.XL. Brand Sales % C B D % A - Singer Brand Appliances and Electronics 57 B - Singer Merritt Brand Sewing Machines 19 C - Other House Brands 15 D - 3rd Party Multi-Brands 9 Most of the consumer durable products sold by Singer Asia are sourced from third party manufacturers, either in fully assembled or kit form. Singer Asia has maintained strong historical relationships with several leading global and local Asian manufacturers. In some cases, where there are local efficiencies or tax or duty incentives, manufacture or assembly of certain products is carried out by the local Singer Asia operating company as follows: Sri Lanka - domestic and agricultural water pumps, furniture, paddy threshers, refrigerators and washing machines are manufactured, and motorcycles and sewing machines are assembled; A Bangladesh - motorcycles and televisions are assembled and consumer and industrial electric wire and cable is manufactured; and Pakistan - freezers, gas appliances, refrigerators and sewing machines are manufactured and air conditioners, microwaves, televisions and washing machines are assembled. Consumer Credit Operations and Financial Services Extension of consumer credit has been an integral part of Singer s operations since shortly after the business was founded almost 160 years ago. Consumer credit is a key element of the sales offering in the emerging markets in which Singer Asia operates as other forms of credit are less readily available for middle- and lowerincome consumers in these markets than is the case in more developed countries. Approximately 45% of Singer Asia s sales during 2011 were on credit. In addition to providing a strong impetus to sales, consumer credit continues to be an important component of revenue and profit; finance charges on consumer installments represented approximately 8% of Singer Asia s total revenue in Singer Asia s credit activities generate installment accounts receivable which are outstanding from three to 36 months and bear interest at rates based upon prevailing consumer interest rates in the various local markets. These accounts receivable are financed by the local Singer Asia companies. It is Singer Asia s consistent practice to finance such accounts receivable by borrowing funds in the country and in the currency where such accounts receivable originate. Singer Asia had a total of 482,999 active installment accounts at December 31, 2011, with a total installment accounts receivable, net of unearned finance charges and allowances, of US$ 92.2 million, as detailed below: As at December 2011 Number of installment receivable accounts Net Amount of installment accounts receivable (US$ millions) Bangladesh 80, Pakistan 83, Sri Lanka 318, Total 482, At the end of 2011, Singer Thailand, an affiliate, had an additional 143,099 active receivable accounts with a total installment accounts receivable, net of unearned finance charges and allowances, of US$ 38.3 million. Singer Asia continually reviews and updates the credit granting and collection process. This includes: monitoring and refreshing point scoring systems, use of call centers for customer verification and collection calls, use of credit bureaus and consumer blacklists, use of third-party collection agencies, and enforcing strict repossession policies. Singer Asia s collection experience has generally been very good. The percentage of installment receivables in arrears for Singer Asia at December 31, 2011 was 1.5%, ranging from a low of 1.1% in Sri Lanka to a high of 4.0% in Bangladesh. Information about Singer Asia Annual Report 2011 Singer Asia Limited 7

10 Number of Accounts and Paying Percentage No. of Accounts - in '000 Paying % Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Total Number of Accounts Paying % Amount of Gross and Net Receivable and Arrears Percentage US$ million Arrears % Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Gross Receivable Net Receivable Arrears % In addition to credit, Singer Asia also offers a variety of consumer protection plans including extended warranties, protection against product loss or damage due to fire, theft or natural calamities, and debt forgiveness in the event of the death or other extraordinary interruption in a customer s repayment ability. Starting in Sri Lanka, but now including Bangladesh and Pakistan, Singer Asia has significantly broadened the scope of the financial products and services offered to customers. These include bill collection on behalf of utility companies and financial institutions, disbursement of remittances from overseas, and the sale of mobile phone air-time. Singer Asia successfully completed 10.3 million financial services transactions during Singer Asia Limited Annual Report 2011 Information about Singer Asia

11 Organizational Structure and Valuation Singer Asia s investment portfolio of principal operating companies as at December 31, 2011 is as follows: Company Country of incorporation Singer Asia s economic interest (%) Singer Bangladesh Limited Bangladesh 75.0 Singer India Limited India 78.9 Singer Pakistan Limited Pakistan 70.3 Singer (Sri Lanka) PLC Sri Lanka 86.1 Singer Thailand Public Company Limited Thailand 45.5 For additional information regarding the Company, see Singer Asia's website: Market Valuation of Singer Asia Listed Companies The shares of all of Singer Asia s principal operating companies and of three subsidiaries in Sri Lanka are publicly traded. The public companies and the market value of Singer Asia s holding in the public companies are as follows: Company Listing December 31, 2011 US$ millions December 31, 2010 US$ millions December 31, 2009 US$ millions Singer Bangladesh Limited Dhaka and Chittagong Singer India Limited Delhi and Mumbai Singer Pakistan Limited Karachi and Lahore Singer (Sri Lanka) PLC Colombo Other Sri Lankan Public Subsidiaries Colombo Singer Thailand Public Company Limited Bangkok In addition, Singer Asia at December 31, 2011 had a net equity investment of US$ 0.8 million in a 100% owned subsidiary in India and held US$ 2.6 million in cash. Singer Asia has no debt outstanding. Information about Singer Asia Annual Report 2011 Singer Asia Limited 9

12 Review of Strategy and Operations Singer Asia continued with a more expansive strategy in A total of 38 stores were added, 98 stores were renovated and modernized and 369 more dealers were appointed. New products were introduced and more emphasis was placed on higher-end models. This resulted in consolidated revenue increasing by 25.4% to $ million. The following table indicates the revenue growth of the Singer operations in Sri Lanka, India, Thailand, Bangladesh and Pakistan in the local currency of each country and in US Dollars during the year. Revenue Growth 2011 vs 2010 Local Currency US$ Sri Lanka 37.1% 40.0% India 28.7% 25.9% Thailand 16.2% 21.3% Bangladesh 12.4% 5.4% Pakistan 5.9% 4.5% Particular emphasis was given to Sri Lanka, where the end of the long civil war and liberalization of government economic policies resulted in a substantial increase in consumer durables spending. In addition, the rural areas, where Singer Asia is particularly strong, benefitted from higher agriculture prices and resultant buoyant consumer durables demand. Revenue US$ million 500 Gavin Walker Revenue Excluding Thailand Thailand 10 Singer Asia Limited Annual Report 2011

13 Profit attributable to Owners of the Company excluding one-time gains US$ million The measures taken during 2009 and 2010 to increase gross margins, strengthen cost controls and credit procedures, and improve receivables and inventory management continued into This has further improved the profitability of the Company. The completion of the roll-out of the new Singer Information System during the year also improved the efficiency of the stores. Excluding a one-times gain from disposals of an investments, Singer Asia s profit attributable to the owners of the Company increased 60.6% in 2011 from $ 9.4 million to $ 15.1 million. To increase Singer Asia s focus on its core retail operations and to take advantage of favourable equity markets, Singer Asia made several changes in its equity ownership structure during 2010 and The one-time gains resulting from these changes have been excluded from the profit attributable to owners in the Company graph above. During 2010, Singer Bangladesh Limited ( Singer Bangladesh ) sold its entire remaining 35.6% interest in its affiliate leasing company, International Leasing and Financial Services Limited ( ILFS ). During 2010, Singer (Sri Lanka) PLC ( Singer Sri Lanka ), sold a 25.0% equity interest in its wholly-owned subsidiary finance company, Singer Finance (Lanka) PLC via an initial public offering. To eliminate small cross holdings and simplify the equity structure within Sri Lanka, Singer Sri Lanka sold the 0.9% stake that it held in Regnis (Lanka) PLC. During 2011, Singer Industries (Ceylon) PLC, similarly, sold the 1.7% equity stake that it held in Singer Sri Lanka. During 2010, Singer Asia sold shares in Singer India Limited ( Singer India ), reducing its stake from 85.9% at December 31, 2009 to 80.1% at December 31, During 2011, additional Singer India shares were sold, reducing the Singer Asia s stake in Singer India to 78.9% at December 31, To maintain the Singer India listing, Singer Asia is required to sell down to a no more than a 75.0% ownership stake. During 2011, continuing into 2012, Singer Asia sold certain indirectly held shares in its affiliate, Singer Thailand Public Company Limited ( Singer Thailand ), reducing the Singer Asia s stake from 48.5% at December 31, 2010 to 45.5% at December 31, 2011, and then to 43.1% at March 31, Singer Asia will continue its more expansive strategy into The strategy for 2012 is to: Continue to increase the number of retail stores, opening about 60 stores this year, focusing on the rural areas, especially in Bangladesh and Sri Lanka. Renovate and modernize the existing retail network (about 120 stores to be renovated in 2012), including introducing new store layouts and designs. Invest in plant and machinery to enhance local manufacturing and assembly operations, realizing additional duty and tax advantages. Extend the range and penetration of the financial services offering, particularly bill collection, funds remittance and mobile phone reloads. Improve the operating profit margins from the levels achieved in 2011, while further driving down the total cost to revenue ratio. Maintain the high quality of the consumer credit receivables. Improve the investor relations function at each of the public companies. A more detailed financial analysis of the Singer Asia 2011 performance is included in the Financial Review section. A review of the underlying results and strategies of each subsidiary company and the affiliate company follows: Review of Strategy and Operations Annual Report 2011 Singer Asia Limited 11

14 We re Vocal about our Range In fact we ll sing it from the rooftops every chance we get our product diversity and range spans the scale, serving a wide cross section of customers across the length and breadth of the demographics. 12 Singer Air Conditioners Asia Limited Audios Annual (Portable/Hi-Fi) Report 2011 Bicycles CDMA Phone Connections Chest Freezers Computers Cooker Hoods/Hobs Dialog TV (Satellite TV Broadcasting) Home Theatre Systems Industrial Sewing Machines Irons Kitchen Appliances Microwave Ovens Motor Bicycles PEO TV (SLT PEO TV - IPTV Broadcasting)

15 Digital Cameras & Camcorders DVDs/VCDs/VCRs Electric Ovens Fans Fitness Equipment Furniture Gas Burners Annual & Ovens Report Generators 2011 Singer Asia Limited 13 Refrigerators Security Systems Sewing Machines Televisions, LCD and LED Two-wheel Tractors Washing Machines Water Pumps

16 Sri Lanka Non-Executive Chairman Hemaka Amarasuriya Managing Director Asoka Pieris Directors Gavin Walker Peter James O Donnell John J. Hyun G.C.B. Wijeyesinghe A.M. De S. Jayaratne S. Kelegama A.C.M. Irzan Nasser Majeed Priyath Salgado Kumar Samarasinghe V.G.K. Vidyaratne Mahesh Wijewardene The Singer Sri Lanka group of companies (the Sri Lanka Group ) includes four public companies; Singer (Sri Lanka), Regnis (Lanka) PLC ( Regnis ), Singer Industries (Ceylon) PLC ( Industries ) and Singer Finance (Lanka) PLC ( Singer Finance ). Singer Asia currently owns 86.1% of the shares of Singer Sri Lanka; the principal company in the Sri Lanka Group and the marketing arm. Singer Asia also owns controlling stakes (53% and 84%, respectively) in Regnis, a manufacturer of refrigerators, washing machines and related products, and in Industries, a manufacturer of sewing cabinets and stands and an assembler of sewing machines. A division of Singer Sri Lanka manufactures domestic and agricultural water pumps, furniture and paddy threshers, and assembles motorcycles. Singer Sri Lanka, in turn, owns 75% of the equity of Singer Finance, a finance company subsidiary with a deposit taking license. The four companies in Sri Lanka have a total of 1,717 employees. Singer Asia has operated in Sri Lanka since The 2011 performance of the Singer Sri Lanka Group was exceptional. Revenue increased by 40.0% from prior year and results from operating activities increased by 51.2%. Net income increased from $ 6.3 million in 2010 to $ 14.5 million in Revenue in 2011 was boosted by more buoyant economic conditions following the end of the civil war and the liberalization of government economic policies. The improved working capital and overhead management, strong installment receivables collection and lower interest rates all contributed to the net income growth. Revenue US$ million Results from Operating Activities US$ million The Sri Lanka Group s strategy is to substantially boost revenue in 2012 and later years, building on the economic recovery that started in the second half of 2010, while maintaining profit margins and the Sri Lanka Group s strong balance sheet. Singer Sri Lanka intends to increase the number of sales locations, especially in rural areas and in the recently integrated northern and eastern regions of the country, to broaden and extend the product range, and to increase the financial services product offering and coverage. Additional manufacturing capability will be added at Regnis. The Sri Lanka Group has approximately $ 49.1 million of unutilized, confirmed credit facilities available to help fund expansion. 14 Singer Asia Limited Annual Report 2011 Review of Strategy and Operations

17 Singer Sri Lanka operates: 168 Singer Plus retail stores; 114 smaller Singer satellite shops; 14 Singer Mega stores, a larger format store offering a wider range of consumer durable brands and products including furniture. One of the Singer Mega stores is the largest consumer durables department store in the country; 43 Sisil World retail stores, offering a somewhat different product and brand mix, under the Sri Lanka heritage brand Sisil; and 12 Singer Homes furniture showrooms, offering a variety of modern and traditional bedroom, dining room and occasional furniture and accessories. In addition, Singer Sri Lanka has more than 704 independent dealers. Singer Sri Lanka is the largest retailer in Sri Lanka of durables for the home with an approximate 30% overall market share and very significant market shares across several product categories including a 55% market share in refrigerators, a 37% market share in washing machines, a 35% market share in televisions, as well as an 80% market share in consumer sewing machines. Sales of nonsewing products represent about 88% of Singer Sri Lanka s total sales. The product sales mix is as follows: Product Sales % D E Products traditionally have been sold by Singer in Sri Lanka using the Singer brand, recognized again in 2011 as one of Sri Lanka s Superbrands, and by an A.C. Nielsen countrywide poll, as the Most Popular Brand in Sri Lanka for the seventh consecutive year. Singer Sri Lanka over the past several years has introduced additional brands, often under exclusive brand distribution arrangements. Singer Sri Lanka is currently the exclusive distributor or codistributor in Sri Lanka for Hitachi, Philips, Samsung, Skyworth, TCL and Whirlpool, among others. At the end of 2011, Singer Sri Lanka and Singer Finance had 318,589 active consumer accounts with a total installment accounts receivable, net of unearned finance charges and allowances, of $ 76.1 million. Only about 1.1% of these installment accounts receivable are in arrears. Singer Sri Lanka operates an active call centre and has an extensive customer loyalty programme. Singer Sri Lanka has over the last several years substantially broadened its financial services offering. Customers can now pay utility and credit card bills, purchase extended warranty and consumer protection plans, purchase mobile phone uploads, receive remittances from overseas, purchase insurance or make deposits at selected Singer Sri Lanka and Singer Finance locations. During 2011, approximately 2.2 million transactions were executed involving these new financial services products, in addition to 4.0 million traditional credit transactions. For additional information regarding Singer Asia in Sri Lanka, see the Singer Sri Lanka website: and the public company annual reports of Singer Sri Lanka, Regnis, Singer Industries and Singer Finance. C A B % A - Home Appliances 46 B - Consumer Electronics 27 C - Sewing Machines 12 D - Furniture 8 E - Others 7 Review of Strategy and Operations Annual Report 2011 Singer Asia Limited 15

18 Bangladesh Non-Executive Chairman Mahbub Jamil Managing Director A.M. Hamim Rahmatullah Directors Gavin Walker Akhtar Imam C.K. Hyder Akram Uddin Ahmed Gelmart Gellecanao Sajidur Rahman Khan Mohammad Sanaullah Singer Asia currently owns 75.0% of the shares of Singer Bangladesh. The Bangladesh company has 926 employees. Singer has operated in the geographic area of Bangladesh since Singer Bangladesh s revenue increased by 5.4% from prior year, to $ 72.9 million in Changes to local tax legislation during 2010 resulted in certain tax items no longer being included as part of revenue. Revenue would have increased by over 14.0% when calculated on a like-for-like basis. Revenue US$ million Results from Operating Activities US$ million 35 Singer Bangladesh s strategy is to seek to further boost revenue and profit by: increasing the number of sales locations, particularly in rural areas; modernizing and improving existing outlets; improving and broadening the product offering; and expanding the range of financial services offered. The Bangladesh company has approximately $ 5.7 million in cash on deposit plus an additional $ 29.5 million of unutilized, confirmed credit facilities available to help fund its expansion. Singer Bangladesh operates 300 Singer Plus retail stores and 14 smaller Singer satellite shops. The Bangladesh company also has approximately 1,017 independent dealers, most of whom sell the Company s electric wire and cable products. Singer Bangladesh is the largest retailer in Bangladesh of durables for the home with an approximate 20% overall market share and significant market shares across several product categories including an 18% market share in refrigerators, a 15% market share in televisions and a 6% market share in washing machines, as well as a 38% market share in consumer sewing machines. Sales of nonsewing products represent approximately 96% of Singer Bangladesh s total sales. The product sales mix is as follows: Product Sales % C D B A Results from Operating Activities Excluding ILFS Gain ILFS Gain % A - Home Appliances 64 B - Consumer Electronics 22 C - Sewing Machines 4 D - Others Singer Asia Limited Annual Report 2011 Review of Strategy and Operations

19 Products traditionally have been sold in Bangladesh using the Singer brand. During 2005, the Bangladesh company began to offer non-singer brand home appliances, consumer electronics and motorcycles, some of which brands, such as Haier, Whirlpool and Samsung, are being sold under exclusive or co-exclusive brand distribution arrangements. At the end of 2011, Singer Bangladesh had 80,657 active installment accounts with a total installment accounts receivable, net of unearned finance charges and allowances, of $ 9.4 million. About 4.0% of Singer Bangladesh s installment accounts receivable is in arrears. Singer Bangladesh operates a call centre and has introduced a customer loyalty programme. Singer Bangladesh has its own manufacturing facility that presently manufactures consumer and industrial electric wire and cable, and assembles motorcycles and televisions. In July 2010, Singer Bangladesh sold its entire remaining 35.6% interest in its affiliate leasing company, ILFS, for a cash consideration of $ 31.9 million; the Bangladesh company realized a profit of $ 24.5 million on the sale. For additional information regarding Singer Bangladesh, see the Singer Bangladesh website: and the Singer Bangladesh public company annual report. Review of Strategy and Operations Annual Report 2011 Singer Asia Limited 17

20 Pakistan Non-Executive Chairman Kamal Shah Chief Executive Officer S. Aleem Hussain Directors Gavin Walker Rasheed Y. Chinoy Yussuff Rasheed Chinoy Abdul Hamid Dagia Fareed Khan Badaruddin F. Vellani Mehmood Ahmed Nasir Hussain Singer Asia currently owns 70.3% of the shares of the public company, Singer Pakistan Limited ( Singer Pakistan ). The Pakistan company has 1,295 employees. Singer has operated in the geographic area of Pakistan since Singer Pakistan s revenue increased by 4.5% from prior year, to $ 28.5 million in Revenue growth in US dollars was achieved despite unsettled political and security conditions, currency devaluation and ongoing economic difficulties. During the 2008 to 2011 period, the Pakistan Rupee depreciated by almost 20% versus the US Dollar. Revenue growth in local currency over the period was 5.9%. Revenue US$ million Within the context of the Pakistan environment, Singer Pakistan s strategy is to modestly grow revenue and profit, primarily by improving the product offering, expanding the range of financial services offered, and modernizing and improving existing outlets. Singer Pakistan operates 160 Singer Plus retail stores, supplemented by 252 independent dealers. Singer Pakistan is the largest retailer in Pakistan of durables for the home with an approximate 8% overall market share. The Pakistan company s stores sell a broad range of consumer durable products with the emphasis on air conditioners, freezers, gas appliances, refrigerators, televisions, washing machines and sewing machines. Sales of non-sewing consumer durables represent about 91% of Singer Pakistan s total sales. The product sales mix is as follows: Product Sales % B C D A Results from Operating Activities US$ million % A - Home Appliances 77 B - Consumer Electronics 11 C - Sewing Machines 9 D - Others Singer Asia Limited Annual Report 2011 Review of Strategy and Operations

21 Products traditionally have been sold in Pakistan using the Singer brand. More recently, the Pakistan company has begun to offer non-singer brand air conditioners, refrigerators, televisions and a few other products. Singer Pakistan s dealers primarily sell Singer brand gas appliances and, to a lesser extent, other Singer brand products assembled at the Singer Pakistan factory. At the end of 2011, Singer Pakistan has 83,753 active installment accounts with a total installment accounts receivable, net of unearned finance charges and allowances, of $ 6.7 million. About 3.6% of Singer Pakistan s installment accounts receivable is in arrears. Singer Pakistan operates an active call centre and has introduced a customer loyalty programme. Singer Pakistan has its own manufacturing facility that presently manufactures freezers, gas appliances, refrigerators and sewing machines, and assembles air conditioners, microwaves, televisions and washing machines. For additional information regarding Singer Pakistan, see the Singer Pakistan website: and the Singer Pakistan public company annual report. Review of Strategy and Operations Annual Report 2011 Singer Asia Limited 19

22 India Singer Asia currently owns 78.9% of the public company, Singer India, and also owns 100% of a second Indian company, Brand Trading (India) Pvt. Limited ( BTI ). From March 2009, Singer Asia has sold shares in Singer India, reducing its ownership from 90.1% to the present 78.9%. It is Singer Asia s intention to sell additional Singer India shares to reduce its ownership stake to the 75.0% level required to maintain the Singer India stock exchange listing. Singer India and BTI have a total of 126 employees. and received a one-time settlement of all amounts due. Singer India could exit from BIFR during Singer India s revenue grew by 25.9% from prior year, to $ 29.1 million in Revenue US$ million 30 Singer India is undergoing a financial 25 restructuring. In May 2005, Singer India was registered as a Sick Company by the Board 20 Chairman K.K. Gupta Managing Director Rajeev Bajaj for Industrial & Financial Reconstruction ( BIFR ) pursuant to the Sick Industrial Company s (Special Provisions) Act of This registration provides certain legal protection against creditors. In April 2008, Directors Gavin Walker K.K. Goel Deepak Sabharwal P.N. Sharma Ajit Kumar BIFR approved a reorganization plan for Singer India. Singer India s secured creditors have approved the plan and have accepted Singer Asia Limited Annual Report 2011 Review of Strategy and Operations

23 Results from Operating Activities US$ million Singer India s strategy is to continue to grow revenue and profit by increasing market share in the domestic sewing market and by growing the small appliance business, a market segment which Singer India reentered in late In the somewhat longer term, following exit from BIFR, Singer India may seek to pursue a new retail initiative with multi-brand retail stores, offering durables for the home as well as credit and other financial services to Indian consumers. Singer India historically was a retailer of consumer durables, with consumer credit, and an emphasis on sewing machines. Continuing a business started in 1870, Singer India is only one of the two multi-nationals with a right to retail, including through company stores, nationwide in India. Presently, Singer India sells Singer and Merritt brand consumer sewing machines and other sewing related products to distributors and dealers throughout India, through its own small retail network of 25 Singer shops in highly attractive locations in India, and through BTI to certain government agencies and to military canteens. Singer in India has about a 30% share of the organized sewing market in India. The new small appliance line is being sold by Singer India through a separate network of distributors and dealers, as well as through the Singer shops. Sales of sewing products represent almost all of Singer India s sales. Singer India manufactures, through contract arrangements, some of the sewing machines that it sells; sewing machines are also purchased from outside suppliers in India and from SVP. Singer India plans to re-open its own direct manufacturing operation with the goal to satisfy a portion of its own requirements and to export sewing machines to other Singer Asia locations and to SVP. For additional information regarding Singer India, see the Singer India website: www. singerindia.net and the Singer India public company annual report. Review of Strategy and Operations Annual Report 2011 Singer Asia Limited 21

24 Thailand Non-Executive Chairman Admiral M.L. Usni Pramoj Managing Director Boonyong Tansakul Directors Gavin Walker Tobias Brown Bibit Bijaisoradat Udom Chatiyanonda Christopher King Paitoon Sukhanaphorn Singer Asia, as of March 30, 2012, owns 43.1% of the shares of the public company, Singer Thailand. The Thailand company has a total of 3,693 personnel including canvassers/collectors. Singer Asia has operated in Thailand since Singer Thailand was honoured during 2004 to receive the coveted Garuda Award from the King of Thailand for the Thailand company s contribution to the social welfare of the people of Thailand. In December 2009, Singer Asia sold shares in the Thailand company, reducing its ownership to 48.5%, converting Singer Thailand from a subsidiary to an affiliate. The share sale was intended to enhance Singer Asia s focus on the core retail operations and to increase the perceived national identity of the Thailand company. In December 2011, Singer Asia sold a further 3.0% of the shares, reducing its ownership stake in Singer Thailand to 45.5%; early in 2012 a further 2.4% of the shares were sold. Singer Thailand s revenue increased by 21.3% from the prior year, to $ 75.4 million in 2011, helped by a substantial increase in sales to village grocers, a new customer focus. Revenue US$ million Results from Operating Activities US$ million Singer Thailand s strategy is to boost revenue and profit while further improving the credit granting and collection processes and managing down sales and administrative costs. The product range offered to village grocers, first introduced in 2010 with air time vending machines has been extended in 2011 to include other appliances and durable products used by these mini marts ; further extensions are planned. The discharge of unproductive canvassers/collectors, and better credit practices, continue to reduce Singer Thailand s S&A expense. Singer Thailand operates 187 Singer direct selling centres, which are located primarily outside Bangkok. The direct selling locations serve primarily as a base for canvassers (direct selling agents)/collectors who sell and collect door to door, and as local warehouses. Singer Thailand has 2,432 canvassers/collectors, most of who are on a commission-only basis Singer Asia Limited Annual Report 2011 Review of Strategy and Operations

25 Singer Thailand is the largest direct seller in Thailand of durables for the home. Singer Thailand has a small, but still significant - approximately 5% - market share across several consumer durables product categories. Sales of non-sewing products represent about 96% of Singer Thailand s total sales. Almost all products are sold by Singer Thailand under the Singer brand. The product sales mix is as follows: Product Sales % D E C B A % A - Home Appliances 61 B - Commercial Products 22 C - Consumer Electronics 11 D - Sewing Machines 4 E - Others 2 At the end of 2011, Singer Thailand had 143,099 active installment accounts with a total accounts receivable, net of unearned financing charges and allowances, of $ 38.3 million. About 3.8% of Singer Thailand s installment accounts receivable is in arrears. The Thailand company operates a very active call centre. For additional information regarding Singer Thailand, see the Singer Thailand website: and the Singer Thailand public company annual report. Review of Strategy and Operations Annual Report 2011 Singer Asia Limited 23

26 License Singer Asia has a royalty-bearing license from a subsidiary of SVP, the owner of the Singer trademark, allowing Singer Asia: to use the Singer name in its company and its subsidiary company names; to use the Singer trademark on its and its affiliate stores and on the non-sewing products it manufactures or sources, subject to appropriate quality and other standards; and to license the Singer name and trademark to third party licensees in most countries of Asia including China and Australia and New Zealand, but excluding Japan and Korea. The royalty paid to SVP is set at 1.0% of Singer Asia s consolidated revenue; royalty paid to SVP totaled $3.3 million and $ 2.6 million for each of the years ending December 31, 2011 and December 31, 2010, respectively. Singer Asia, in turn, has entered into royaltybearing license arrangements with thirdparty licensees. In Malaysia, Singer Asia has licensed a local company, Singer (Malaysia) Sdn. Bhd. ( Singer Malaysia ), to use the Singer name in its company name and to use the Singer trademark on its stores and on the products it manufactures or sources. Singer Malaysia, in addition to operating a retail network, is the largest direct seller in Malaysia of durables for the home. Singer Malaysia pays Singer Asia a royalty calculated as a percentage of revenue. Royalties from Singer Malaysia were $ 1.2 million and $ 1.0 million in the years ending December 31, 2011 and December 31, 2010, respectively. For additional information regarding Singer Malaysia, see the Singer Malaysia website: In Australia, Singer Asia has licensed the local Singer sewing machine distributor, Blessington Pty. Limited, to apply the Singer trademark to specific consumer durable products that it sources. The Australian licensee pays Singer Asia a royalty calculated as a percentage of sales of these products, with a minimum annual royalty. Singer Asia is seeking to identify licensees in additional markets throughout Asia where it does not have and does not contemplate having its own retail, direct selling or wholesale operations. Licenses may take the form of a pan-asian license of the Singer trademark for a specific non-sewing product category or categories or of a license of the Singer trademark for distribution locations and for non-sewing products in a particular market. Conclusion and Appreciation During 2011, Singer Asia was able to continue with its expansive strategy whilst also maintaining a close vigil on working capital management, the gross margins and cost control. This resulted in the Group comfortably achieving the aggressive revenue and profit targets set for the year. During 2011, Singer Asia paid a cash distribution of $ 15.7 million. This is the highest distribution in the history of the Company and follows the $ 5.5 million distribution paid in A further distribution is anticipated in The task set for 2012 is challenging but certainly achievable; 60 new stores, 120 store renovations and many other new strategies and investments are expected to increase the attributable profit by 30% in However, our single most important task each month will always be to maintain the quality of our installment receivable asset. On behalf of the Board of Directors of Singer Asia and our shareholders, I would like to express our sincerest gratitude to the Singer Asia management and staff for their remarkable effort and very impressive results during We look forward to 2012 being even more successful and rewarding. In particular, I would like to thank Mr. K.K. Gupta who retired as Senior Regional Vice President of the Company at the end of 2011 having served a total of 35 years with Singer. His contribution to the Singer businesses in Asia has been invaluable; particularly his leadership in growing the Singer India business since rejoining the company in We look forward to and are grateful for KK s continued contribution as Non-Executive Chairman of Singer India. Gavin Walker President and Chief Executive Officer Singer Asia Limited 24 Singer Asia Limited Annual Report 2011 Review of Strategy and Operations

27 Financial Review The following discussion and analysis should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, The Company realized record revenue and record results from operating activities and profit, excluding one-time items, for the year ended December 31, Profit for the year was US$ 20.1 million, of which US$ 16.2 million is attributable to the Singer Asia s shareholders. This performance reflects the continuing economic recovery in the countries where Singer Asia operates, especially Sri Lanka, which benefitted both from the end of the long civil war and more liberal Government economic policies, continuing improvements in operating margins and better working capital management. Comparisons to prior years are impacted by the sale in 2010 of the Company s equity stake in ILFS in Bangladesh, with a resulting gain on disposal of US$ 24.5 million and, to a much lesser extent, by the US$ 1.0 million gain from the disposal of a 3.0% interest in Singer Thailand in 2011 (see Notes 9 and 23 to the financial statements). Joe Kan For the year ended December 31, 2011, the Company reported consolidated revenue of US$ million, compared to consolidated revenue of US$ million for the same period in 2010, an increase of US$ 67.2 million or 25.4%. Revenue at the retail operating units in Sri Lanka, Bangladesh and Pakistan increased by 40.0%, 5.4% and 4.5%, respectively, compared to the same period prior year. Excluding the effects of fluctuations in foreign currency exchange rates, revenue growth at these operating units were 37.1%, 12.4% and 5.9%, Annual Report 2011 Singer Asia Limited 25

28 respectively. Revenue also grew by 25.9% and 28.7% measured in US Dollars and local currency, respectively, at Singer India. Revenue at Singer Thailand, which is not included in consolidated revenue, increased 21.3% to US$ 75.4 million in the year ended December 31, 2011 as compared to US$ 62.2 million in the year ended December 31, The Company s revenue for the year ended December 31, 2011 includes US$ 26.7 million of finance earnings on consumer credit sales, compared to US$ 21.3 million in finance earnings for the same period in The growth in finance earnings is proportionate to the growth in revenue as the Company continued to promote credit sales while maintaining strong credit management policies. Gross profit from continuing operations for the year ended December 31, 2011 was US$ million, representing a gross profit as a percentage of revenue of 33.7%, compared to US$ 85.3 million and a gross profit percentage of 32.3% for the year ended December 31, The improvement in gross margin percentage reflects both better sourcing and less need for promotional pricing to boost revenue. Other income for the year ended December 31, 2011 was US$ 2.9 million compared to US$ 26.0 million for the year ended December 31, Other income in 2011 mainly consists of a US$ 1.0 million gain from the disposal of a 3.0% interest in Singer Thailand. Other income in 2010 includes a US$ 24.5 million gain from the disposal of the Company s equity interest in ILFS. Selling and administrative expense for the year ended December 31, 2011 was US$ 74.6 million, representing 22.5% of revenue, compared to US$ 57.9 million and 21.9% of revenue for the year ended December 31, The slight increase in selling and administrative expense as a percentage of revenue is due to a planned increase in advertising and promotion and an increase in rental and occupancy costs for new shops and renewed shop leases. Other expenses, representing royalty payments to SVP, amounted to US$ 3.3 million and US$ 2.6 million for the years ended December 31, 2011 and December 31, 2010, respectively. The royalty is for the use of the Singer Asia trademark by Singer Asia and its operating companies and is calculated, based on Singer Asia s consolidated revenue. Results from operating activities for the year ended December 31, 2011 showed a profit of US$ 36.7 million, compared to US$ 50.8 million for the same period in Excluding the gain from the disposal of 3.0% of the shares in Singer Thailand from the 2011 results, and the profit from the sale of the ILFS equity stake from the 2010 comparative, results from operating activities for the years ended December 31, 2011 and December 31, 2010 would have amounted to US$ 35.7 million and US$ 26.3 million, respectively. The improvement in results from operating activities on a like-forlike basis would have been US$ 9.4 million, a 35.7% gain reflecting an increase in revenue and improvement in gross margin, partially offset by an increase in selling and administrative expenses. Finance income, primarily interest on bank deposits and short-term investments, was US$ 1.5 million and US$ 0.8 million for the years ended December 31, 2011 and December 31, 2010, respectively. Finance cost, which represents interest expense on borrowings at the Singer Asia operating companies to finance working capital, was US$ 10.8 million and US$ 10.5 million for the years ended December 31, 2011 and December 31, 2010, respectively. Finance cost increased modestly compared to the same period in 2010, despite a growth in working capital and bank borrowings, reflecting a decline in interest rates, especially in Sri Lanka, and the full year effect of the pay down of debt in Singer Bangladesh from the proceeds from the sale of the ILFS equity stake shares. Funded debt increased from US$ 70.2 million at December 31, 2010 to US$ 91.3 million at December 31, The increase is a direct result of the increase in working capital, especially in Sri Lanka, reflecting the growth in revenue and in accounts receivable. Net Finance Costs US$ million Share of profit of equity accounted investees was US$ 2.3 million and US$ 2.5 million for the years ended December 31, 2011 and December 31, 2010, respectively. If the share of profit from ILFS, an equity accounted investee in 2010 is excluded from the 2010 comparative, the share of profit of equity accounted investees would have been US$ 1.3 million that year. Net profit at Singer Thailand, an equity accounted investee, increased 65.7% to US$ 5.8 million in the year ended December 31, 2011, as compared to a net profit of US$ 3.5 million in the year ended December 31, The Company s profit before income tax was US$ 29.7 million for the year ended December 31, 2011, compared to a profit of US$ 43.7 million for the same period in If the one-time gains are excluded from the 2011 result and from the 2010 comparative, profit before income tax for the years 26 Singer Asia Limited Annual Report 2011 Financial Review

29 ended December 31, 2011 and December 31, 2010 would have amounted to US$ 28.7 million and US$ 19.2 million, respectively. The increase in profit on a like-for-like basis of US$ 9.5 million, or by 49.5%, reflects the flow through of the improved results from operating activities. Income tax expense amounted to US$ 9.5 million for the year ended December 31, 2011 and for the same period prior year. The effective tax rate, which is calculated, based on total income tax expense as a percentage of profit before tax, excluding share of profit of equity accounted investees, was 34.9% for the year ended December 31, 2011, compared to an effective tax rate of 23.0% for the year ended December 31, The increase in the effective rate is due primarily to smaller one-time gains, which are generally taxed at lower rates, offset, in part, by a reduction in the statutory tax rate in Sri Lanka. The Company s profit for the year ended December 31, 2011 was US$ 20.1 million, compared to a US$ 34.2 million profit for the same period in If the one-time gains are excluded from the 2011 result and from the 2010 comparative, the Company s profit for the years ended December 31, 2011 and December 31, 2010 would have amounted to US$ 19.1 million and US$ 11.9 million, respectively. The increase in profit on a likefor-like basis of US$ 7.2 million, or by 60.5%, reflects the flow through of the improved results from operating activities, offset, in part, by a higher effective tax rate. The profit attributable to Singer Asia s shareholders was US$ 16.2 million for the year ended December 31, 2011, compared to US$ 26.1 million for the same period prior year. A profit of US$ 4.0 million was attributable to non-controlling interests for the year ended December 31, 2011, compared to a US$ 8.1 million profit for the year ended December 31, Singer Asia shareholders share of the profit has increased to 80.6% of the total for the year ended December 31, 2011 from 76.3% for the year ended December 31, This is mainly due to a shift in profit mix from Singer Bangladesh, reflecting the ILFS sale in 2010 where non-controlling interests have a 25.0% stake, to Singer Sri Lanka where non-controlling interests have a 14.0% stake. The profit attributable to equity holders of the Company is equivalent to basic and diluted earnings per share of US$ for the year ended December 31, 2011, compared to US$ for the year ended December 31, Basic Earnings per Share US$ million Basic earnings per share excluding one time gains One time gains Financial Position Property, plant and equipment as at December 31, 2011 was US$ 42.1 million, representing a decrease of US$ 1.3 million from US$ 43.4 million as at December 31, The decrease is mainly due to the effect of movements in exchange rates and depreciation charges, partly offset by new additions during the year. Intangible assets, which represent the value of trademarks owned by the Group, remain the same at US$ 4.0 million as at December 31, 2011 and December 31, Investment in equity accounted investee was US$ 13.6 million as at December 31, 2011, compared to US$ 13.1 million as at December 31, The increase is due to the profit made by Singer Thailand during the year, partly offset by the disposal of 3.0% shareholding therein in December Inventory as at December 31, 2011 amounted to US$ 63.5 million, as compared to US$ 47.0 million as at December 31, The increase is mainly due to increased inventory holding in anticipation of further revenue growth. Total trade and other receivables were US$ million as at December 31, This represent an increase of US$ 25.5 million comparing to the amount of US$ 87.2 million as at December 31, The increase is due to the growth of the credit sales in Cash and cash equivalents decreased from US$ 36.8 million as at December 31, 2010 to US$ 17.8 million as at December 31, The decrease is mainly due to the increase in working capital primarily in Financial Review Annual Report 2011 Singer Asia Limited 27

30 accounts receivable and inventory due to the growth of the operating companies, and distribution to owners amounting to US$ 15.7 million in Total Assets US$ million Equity attributable to the shareholders of the Company decreased from US$ million as at December 31, 2010 to US$ million as at December 31, The decrease of US$ 5.7 million is mainly due to profits earned during the year, partly offset by effects of movements in exchange rates and distributions made to the owners of the Company in Net Assets per Share US$ Total borrowings increased from US$ 70.2 million as at December 31, 2010 to US$ 91.3 million as at December 31, 2011 mainly to support the increase in working capital requirements. Debt to Equity Ratio US$ million Liquidity and Capital Resources For the year ended December 31, 2011, the Company had a net cash outflow from operations of US$ 21.4 million. This was mainly due to a US$ 41.1 million increase in net working capital, primarily in accounts receivable and inventory due to the growth of the Singer Asia operating companies. Net cash from investing activities for the year ended December 31, 2011 was an inflow of US$ 1.0 million, primarily reflecting the US$ 1.5 million of interest received and US$ 4.0 million of proceeds received from the sale of interest in subsidiaries and associate, partly offset by US$ 4.7 million of capital expenditure. Distributions to the Company s shareholders and to non-controlling interests during the year ended December 31, 2011 utilized US$ 15.7 million and US$ 5.2 million of cash, respectively. Net borrowings excluding bank overdraft increased by US$ 20.5 million during the year. The net effect of the cash flow movements and exchange rate fluctuations was to decrease the Company s net cash and cash equivalents by US$ 21.8 million for the year ended December 31, As a result, cash and cash equivalents, net of overdrafts, were US$ 2.3 million as at December 31, 2011 as compared to US$ 24.1 million as at December 31, Current assets, less current liabilities at December 31, 2011 were US$ 51.8 million, a decrease of US$ 19.8 million from the corresponding US$ 71.6 million amount at December 31, Conclusion 2011 was another impressive year of growth. This was built on the solid foundation of costs control, credit granting and monitoring, and tight balance sheet management that was laid down during the financial crisis in 2008 and Outlook for 2012 appears to be less favourable than the past two years, with currency depreciation, inflation and economic slowdown particularly in Europe being the major issues experienced in the countries in which Singer Asia operates. Senior management will continue to strive to manage these issues, build on the past success and continue to enhance shareholders value Joe Kan Chief Financial Officer 28 Singer Asia Limited Annual Report 2011 Financial Review

31 Board of Directors 1. Stephen H. Goodman 2. Gavin Walker 3. Peter James O Donnell 4. Tobias Brown 5. Malcolm J. Matthews 6. Alex Johnston 01. Stephen H. Goodman Chairman Mr. Goodman was appointed Director and Chairman of the Company in July Since September 2000, he has been the Chairman, President and Chief Executive Officer of Retail Holdings N.V. From the beginning of 1998 through that date, he was a Director, President and Chief Executive Officer of Singer Company N.V. (Old Singer). Prior to joining Old Singer, Mr. Goodman was a Managing Director of Bankers Trust Company. 02. Gavin Walker President and Chief Executive Officer, Executive Director Mr. Walker was appointed to these positions in August Prior to joining the Company, Mr. Walker served as Managing Director and Chief Executive Officer of a number of public quoted and private companies in the United Kingdom and in South Africa. Earlier, he had served as Chief Executive Officer of a South African public company that was a multi-brand retailer of electrical appliances and furniture, with operations in 16 African countries and Australia. Mr. Walker is on the Boards of all of the principal Singer Asia subsidiaries. 03. Peter James O Donnell Non-Executive Director Mr. O Donnell was appointed as a Director of the Company in July He is a Managing Director and co-founder of UCL Asia. He also serves as a Director of Singer (Sri Lanka) PLC. Mr. O Donnell is an alumnus of both Harvard College and Harvard Business School. 04. Tobias Brown Non-Executive Director Mr. Brown was appointed as a Director in July He is a Managing Director and co-founder of UCL Asia. He also serves as a Director of Singer Thailand PCL. Mr. Brown is a graduate of South Eugene High School and attended Brandeis University, Massachusetts, USA. 05. Malcolm J. Matthews Mr. Matthews is a consultant to TAL Apparel Ltd., a multi-national garment manufacturer. Mr. Matthews served as a consultant to Old Singer during 1999 and He is the former Managing Director/Chief Executive Officer of the Hong Kong & China Gas Company, a Hong Kong public utility. Mr. Matthews has been deputy Chairman of the Federation of Hong Kong Industries and President of the Hong Kong Institution of Engineers. Mr. Matthews was elected a Director of the Company in May Mr. Matthews also serves as a Director of Retail Holdings N.V. 06. Alex Johnston Mr. Johnston is an Executive Vice President at Omnicom, a leading international holding company for advertising and marketing service agencies. At Omnicom, he advises on digital and earned media strategies for clients and manages Omnicom s digital incubation initiatives. Prior to joining Omnicom in 2010, Mr. Johnston was a senior communications advisor to PepsiCo, Inc. From 2005 to 2008, he was the Managing Partner of Fleming Media, a rights and media acquisition fund, backed by the Fleming family. Mr. Johnston was a co-founder of Freud Communications, the largest consumer public relations agency in the United Kingdom, where he was Creative Director for many years. Mr. Johnston was elected a Director of the Company in May Mr. Johnston also serves as a Director of Retail Holdings N.V. Financial Review Annual Report 2011 Singer Asia Limited 29

32 Management Team 1. Gavin Walker 2. Joe Kan 3. Asoka Pieris 4. Gelmart Gellecanao 5. A.M. Hamim Rahmatullah 6. Boonyong Tansakul 7. S. Aleem Hussain 8. Rajeev Bajaj 30 Singer Asia Limited Annual Report 2011

33 01. Gavin Walker President and Chief Executive Officer, Executive Director For details on Mr. Walker s background and experience, please refer to the 'Board of Directors' section. 02. Joe Kan Chief Financial Officer Mr. Kan was appointed as the Chief Financial Officer of the Company in September 2010 and as Controller of Retail Holdings N.V. in November Prior to joining the Company he was the Head of Finance of Octopus Cards Limited, the developer and operator of the largest smartcard payment system in the world. He has a Bachelor of Engineering degree in Electrical and Electronics Engineering from the University of Birmingham, UK, and an MBA from The Chinese University of Hong Kong. Mr. Kan is also a member of the Institute of Chartered Accountants in England and Wales and of the Hong Kong Institute of Certified Public Accountants. He is currently a Director of Singer Asia Sourcing Limited and Singer Corporation Limited. 03. Asoka Pieris Managing Director and Chief Executive Officer of the Singer Sri Lanka Group of Companies and Vice-President Mr. Pieris was appointed as the Managing Director and Group Chief Executive Officer in July Prior to this appointment he was the Company s Chief Financial Officer and Controller of Retail Holdings N.V. Mr. Pieris also serves as Vice-President of the Company and Retail Holdings N.V. He is a Director of Singer (Sri Lanka) PLC, Singer Finance (Lanka) PLC, Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, Reality Lanka Limited, Btindia Limited and Brand Trading (India) Private Limited. He is an Associate Member of The Institute of Chartered Accountants of Sri Lanka and a Fellow Member of the Chartered Institute of Management Accountants, UK. Mr. Pieris has been with the Company and old Singer for over 21 years. 04. Gelmart Gellecanao Head of Credit and Vice-President Mr. Gellecanao was appointed as a Vice- President of the Company in July 2009 and Head of Credit of the Company in January He is also responsible for the overall planning and risk management for the Internal Audit Department. He joined the old Singer in May 1994 as an International Auditor and was responsible for the audits of various Singer companies and affiliates. He has also worked as Controller in a number of Singer locations. Prior to this, Mr. Gellecanao spent 10 years at a member firm of Ernst & Young in the Philippines. He is a Certified Public Accountant (Philippines) and a Certified Internal Auditor. He has been with the Company and old Singer for over 17 years. 05. A.M. Hamim Rahmatullah Managing Director of Singer Bangladesh Limited and Regional Vice-President Mr. Hamim was appointed as a Vice- President of the Company in July He is also the Managing Director of Singer Bangladesh Limited. Prior to this, he served as Director and Chief Operating Officer of Singer Bangladesh Limited. Mr. Hamim was the out-going President of Foreign Investors Chambers of Commerce & Industry (FICCI) and has also been nominated as a Commercially Important Person (CIP) by the Government of Bangladesh. He has an MBA specialized in Marketing from the Institute of Business Administration (IBA), University of Dhaka. He started his professional career in 1985 with Philips Bangladesh Limited in its Consumer Electronic Division and joined Singer Bangladesh Limited in Mr. Hamim has been with the Company and old Singer for over 21 years. 06. Boonyong Tansakul Managing Director of Singer Thailand PCL Mr. Boonyong was appointed as the Managing Director of Singer Thailand Public Company Limited in December Prior to that, he was Deputy Managing Director and Sales and Marketing Director of the same company. He holds a Bachelor of Science degree in Electrical Engineering from the King Mongkut's Institute of Technology. Mr. Boonyong has been with Singer Thailand Public Company Limited for over 15 years. 07. S. Aleem Hussain Chief Executive Officer of Singer Pakistan Limited Mr. S. Aleem Hussain held the position of Deputy Managing Director of Singer Pakistan Limited before he was appointed as its Chief Executive Officer in January He has an MBA from the University of the East Philippines and has worked with Singer Pakistan in various executive positions since Rajeev Bajaj Chief Executive Officer of Singer India Limited Mr. Bajaj held the positions of Managing Director and Chief Financial Officer of Singer India Limited before he was appointed as its Chief Executive Officer in January Prior to that he was the General Manager - Commercial and Company Secretary of Brand Trading (India) Private Limited. Mr. Bajaj is a Fellow Member of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India. He has completed over 25 years with old Singer and Singer India Limited. Management Team Annual Report 2011 Singer Asia Limited 31

34 Corporate Social Responsibility Singer Asia and its subsidiaries (Singer) strongly believe that businesses have a responsibility to uplift the overall wellbeings of the society and are therefore committed to contribute and work towards that goal. The Company receives many requests from religious, educational, and other institutions as well as appeals from local people and communities. Local citizens know that Singer is a compassionate and socially responsible Company and, as such, often turn to it in their moment of need. Because of its voluntary nature, the Singer has set up dedicated CSR Committees in selected countries, consisting of personnel drawn from a diverse range of backgrounds and experiences, to evaluate proposals forwarded by its employees as well as the requests from community. along this line. In time, this will help to bridge the gaps between people of different cultures, ethnic groups and religions. Singer Bangladesh partnered with a local television channel and gave out the KINGBODOTHI award in recognition of exceptional bravery and courage in five different categories: selfless act of bravery at great personal risk to save life or property of others by common people; extraordinary bravery in preventing crimes while performing official duty by police officers; valiant effort for the benefit of the society by an individual; to the handicapped who despite their limitations have performed far beyond the ordinary; and to outstanding citizens for their lifetime contribution in the field of social services. Looking After the Sick and Improving Hygiene Singer Sri Lanka has supported the maintenance programme at the Lunawa Hospital for the past three years. The programme is currently focused on the Male Ward, which includes a complete overhaul of the ceiling and roof and renovation of bathrooms and doors. It has also donated much-needed health care equipments such as state-of-the-art Pulse-Oximeter to the Maternity Ward of the Nuwara Eliya General Hospital. Singer Thailand, together with Sabina PCL and Muang Thai Life Assurance Co. Limited., helped to organize the Sabina Sewing Cup Sewing Heart Start Forward project When making this decision, Singer looks, first and foremost, at the sustainability of a given project. It believes that taking the long-term view is essential, not only because it maximizes the effectiveness but also because Singer believes that will be an integral part of the local communities for generations to come. Listed below are some of the projects and contributions that Singer made in In the Public Interest Singer has supported a number of initiatives in order to improve the quality of living of its fellow citizens. It has made over 100 contributions in the form of souvenir advertisements, banners, sponsorships and gifts, to schools, community service associations, religious institutions and youth associations. Although each of these contributions is relatively small, collectively they help in empowering the community and providing new opportunities. Singer Sri Lanka has been one of the main backers of the Uthuru Mithuru Railway Development Project initiated by the Ministry of Transport, which seeks to develop the railway track from Vavuniya to Jaffna while rebuilding the railway stations 32 Singer Asia Limited Annual Report 2011

35 to give care and moral support to those suffering from breast cancer. The project aimed to increase the awareness about breast cancer among Thai women. Singer Bangladesh has co-operated with Fareea Lara Foundation since 2006 to make a significant improvement in the lives of many rural people. This programme s objective is to raise the general awareness of hygiene and proper health care such as the hazards of drinking and using surface water; education about appropriate food nutritional needs for mother and children; training on diabetics and eye care. On each Saturday, approximately 300, and on each of the remaining days of the week, 50 people frequents this medical centre for medical assistance. Caring for the Elderly and Disadvantaged In Thailand, under the project Build up the career for more earning and safety to people in the South of Thailand, Singer donated 15 Singer Sewing Machines to the Co-opertive Women Group of I-Jujoh Village at Srisakorn, Narathiwat, in the South of Thailand for them to learn about sewing and cloth-making. Singer India has been associated with many social welfare organizations through its shops and dealers network whereby sewing machines are distributed for the benefit of underprivileged who get an opportunity to earn their livelihood. Helping the Suffered In 2011, there have been severe floods in some of the countries that Singer operates and Singer did not hesitate to extend help to those who were affected. In Sri Lanka, Singer s employees travelled with the Army to the flooded areas to help those affected. They, together with Singer, have made donations to help the suffered. In Thailand, Singer was the very first company to help the flood victims especially on damaged electrical appliances. Its staff provided free repair services on products of all brands. Nurturing Young Minds To celebrate its 160th anniversary, Singer Sri Lanka has carried 160 CSR projects, mainly focusing on the education section. Inspired by the vision of his Excellency the President of Sri Lanka for the development of library resources for rural schools, which aims to improve literacy amongst Sri Lankan school children, Singer has made substantial donations to one of the projects. In addition, it has also contributed financially towards the M.J.C. Fernando Memorial Scholarship which funds O-Level and A-Level Examinations for students in Moratuwa. Other projects undertook by Singer Sri Lanka includes sponsoring the Youth Development Project of YMCA; donations to equip the Home Science laboratory of a school in Anamaduwa and to build an auditorium at D.S. Senanayake College, Ampara; and financial contributions to the University of Moratuwa for the Inter- University Hockey Tournament. Corporate Social Responsibility Annual Report 2011 Singer Asia Limited 33

36 Energizing Sports Singer believes that a sound mind comes from a sound body. As such, it strongly encourages participation of sports and contributes towards developing and improving the sporting infrastructure. In Sri Lanka, Singer was the proud sponsor of the 2011 Under 20 School Rugby Tournament and has been in partnership for the past 9 years with Kandy Sports Club Rugby Team. Nourishing Entrepreneurship Singer has invested considerable sums in entrepreneurship development. Its goal is to provide sustainable employment to diverse groups of people and to create a betterskilled and better-equipped workforce. The Singer sewing school allows its students an opportunity to gain training in scientific dressmaking, machine and ribbon embroidery, tailoring methods, needle painting, smocking, curtain design, and other related skills. The school uses its contacts in the garment industry to find employment opportunities for its graduates. It charges a nominal fee from those it trains and bears the bulk of the cost of training and education. After graduation, these young women continue their relationship with Singer and receive concessionary rates on sewing machines as well as easy payment schemes for its products. In some countries, Singer operates culinary schools to provide training to those who are interested. The certificate offered by the culinary schools is well-recognized by the restaurant and hotel industry. In Sri Lanka, a mobile kitchen provides outstation areas with access to the Singer culinary school s knowledge base, travelling the island and visiting schools and associations and providing cookery demonstrations free of charge to social groups from diverse backgrounds. The Sri Lankan school also conducts special programmes for abused women at shelters, since in many cases, these women face a traumatic time in adjusting to life once they leave those shelters. Sustaining the Environment As a responsible corporate citizen, Singer takes great care to not only protect the environment in which it operates but also to minimize the impact of its products on the environment. The following sections highlight some of the measures that it has implemented. Training and Awareness Singer has invested time and money in ensuring that the employees understand the concept of environmental sustainability. The training programme equips Singer employees with the knowledge, skills, and training needed to minimize the impact on the environment. 34 Singer Asia Limited Annual Report 2011 Corporate Social Responsibility

37 Recycling and Reusing Singer recycles and reuses wherever possible. Wood cut-offs, particle boards, and plastic are reused or given to third parties that make use of it in a sustainable manner. Waste paper is collected periodically and sent for recycling. Singer Sri Lanka has also partnered with the Central Environmental Authority to limit the growth of electronic wastes. The initiative allows the public to dispose of their televisions, refrigerators and other electronic products in an environmental-friendly manner. Optimizing Energy Use Energy use in all our facilities is constantly monitored to ensure that they make optimum use of the energy resources. Singer is constantly in search for alternative and renewable sources of energy in all its areas of operation. Examples of energy saving initiates are: specific task lights have been installed instead of general lighting; incandescent street lights were replaced with low energy fluorescent lights; stricter control over thermostat settings on air-conditioners to reduce energy use; and old high-consumption compressors were replaced with new energy-efficient compressors that do not need to be switched on at all times. dust and incinerates it while expelling only clean air into the atmosphere. It uses only woods sourced from sustainable agroforestry plantations. Singer Sri Lanka also uses water-based paints which are nonvolatile and do not lead to toxic emissions during the curing or application processes as distinct from the nitrocellulose paints which are more harmful. Restoring Habitats For many years, Singer has been nourishing natural habitats. Trees were planted at its facilities to provide not only shade but also act as carbon sinks, removing carbon from the atmosphere while releasing oxygen into the air. Reducing Pollutions Reducing pollutions is part of Singer s sustainability strategy. The furniture manufacturing plant in Piliyandala in Sri Lanka, which is licensed under the Environmental Protection License, has implemented some of the most-advanced energy-saving and pollution-minimizing technologies. These include a state-of-theart dust extraction system, which isolates Corporate Social Responsibility Annual Report 2011 Singer Asia Limited 35

38