MIRA INFORM REPORT

Report Date :

16.08.2007

IDENTIFICATION DETAILS

Name :	DRUG HOUSES OF AUSTRALIA (ASIA) PRIVATE LIMITED
Registered Office :	^2 Chia Ping Road, #09-01/02^, Haw Par Tiger Balm Building, Singapore^– 619968
Country :	Singapore
Financials (as on) :	31.12.2005
Date of Incorporation :	^08/10/1969
Com. Reg. No.:	^196900625G
Legal Form :	^Pte Ltd
Line of Business :	Manufacturing, Marketing and Distributing of Pharmaceutical Products

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Status :	Good
Payment Behaviour :	Regular
Litigation :	Exists

Subject Company

DRUG HOUSES OF AUSTRALIA (ASIA) PRIVATE LIMITED

Line Of Business 

MANUFACTURING, MARKETING AND DISTRIBUTING OF PHARMACEUTICAL PRODUCTS

Parent Company

STRIDES SINGAPORE PTE. LTD.

(PERCENTAGE OF SHAREHOLDING: 100.00%)

Financial Elements

FY 2005

COMPANY

Sales : S$16,360,978

Networth : S$6,010,208

Paid-Up Capital : S$1,500,000

Net result : S$2,721,092

Net Margin(%) : 16.63

Return on Equity(%) : 45.27

Leverage Ratio : 0.54

COMPANY IDENTIFICATION

^{Subject Company: DRUG HOUSES OF AUSTRALIA (ASIA) PRIVATE LIMITED}

^{Former Name: -}

^{Business Address: 2 CHIA PING ROAD}

^#09-01/02

^{HAW PAR TIGER BALM BUILDING}

^{Town: SINGAPORE}

^{Postcode: 619968}

^{County: -}

^{Country: Singapore}

^{Telephone: 6265 2777}

^{Fax: 6261 5887/ 6265 4703}

^{ROC Number: 196900625G}

^{Reg. Town: -}

SUMMARY

^{All amounts in this report are in: SGD unless otherwise stated}

^{Legal Form: Pte Ltd}

^{Date Inc.: 08/10/1969}

^{Previous Legal Form: -}

^{Summary year: 31/12/2005}

^{Sales: 16,360,978}

^{Net worth: 6,010,208}

^{Capital: 3,000,000}

^{Paid-Up Capital: 1,500,000}

^{Employees: 231}

^{Net result: 2,721,092}

^{Share value: 1}

^{Auditor: DELOITTE & TOUCHE}

REFERENCES

^{Litigation: Yes}

^{Company status: TRADING}

^{Started: 08/10/1969}

PRINCIPAL(S)

^{LEK PENG YONG S0552208J Director}

DIRECTOR(S)

^{LEK PENG YONG S0552208J Director}

^{Appointed on: 26/09/2006}

^{Street: 302 SHUNFU ROAD}

^#03-39

^{Town: SINGAPORE}

^{Postcode: 570302}

^{Country: Singapore}

^{MARK ALEXANDER BISSET E1034091 Director}

^{Appointed on: 26/09/2006}

^{Street: 10 LATHAM COURT, GLEN WAVERLEY}

^{Town: VICTORIA}

^{Postcode: -}

^{Country: Australia}

^{CHUA SUI CHOO ANNE S1239655D Company Secretary}

^{Appointed on: 26/09/2006}

^{Street: 10 STEVENS CLOSE}

^{TANGLIN HOUSE}

^{Town: SINGAPORE}

^{Postcode: 257950}

^{Country: Singapore}

^{TAN CHONG HUAT S1599656J Company Secretary}

^{Appointed on: 26/09/2006}

^{Street: 5B ADAM ROAD}

^#05-01

^{Town: SINGAPORE}

^{Postcode: 289882}

^{Country: Singapore}

^{KEERTHAPATI RAMARAJU RAVISHANKAR Z1559564 Director}

^{Appointed on: 26/09/2006}

^{Street: STRIDES HOUSE}

^{BILEKAHALLI, BANNERGHATTA ROAD}

^{Town: BANGALORE}

^{Postcode: 560076}

^{Country: India}

FORMER DIRECTOR(S)

^{LEOW SWEE KHENG S0006082H}

^{GOH BEE LEONG S0221864Z}

^{THIA SIOW KHEE S0340183I}

^{NGO GIM KANG PETER S0571717E}

^{TAN HEE CHAI S0843277E}

^{PHUA KOK PENG CHARLIE S1018925Z}

^{ONG SIAN HIN S1104989C}

^{LOO SIEW POH S1109454F}

^{WEE EE LIM S1505679G}

^{GAN WAI SENG S1706231Z}

^{HONG HAI @ HUANG HAI S1852301I}

^{ONG HEAN TAT 4027139}

^{LING MING CHUAN S0138848G}

^{FOO SWEE KHENG S0138848G}

^{HAN AH KUAN S0202381D}

ACTIVITY(IES)

^{PHARMACEUTICAL PRODUCTS - WHSLE And MFRS Code:16400}

^{BASED ON ACRA'S RECORD AS AT 01/08/2007}

^{1) MANUFACTURE OF PHARMACEUTICAL, BIOLOGICAL INTERMEDIATES AND FINE CHEMICALS FOR HUMAN USE;}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

BANKERS

^{UNITED OVERSEAS BANK LIMITED}

^{THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED}

SHAREHOLDERS(S)

^{STRIDES SINGAPORE PTE. LTD. 1,500,000 Company}

^{Street: 2 CHIA PING ROAD}

^{HAW PAR TIGER BALM BUILDING}

^{Town: SINGAPORE}

^{Postcode: 619968}

^{Country: Singapore}

FORMER SHAREHOLDER(S)

^{HAW PAR HEALTHCARE LIMITED 1,500,000}

HOLDING COMPANY

^{STRIDES SINGAPORE PTE. LTD. 200610988W %: 100}

SUBSIDIARY(IES)

No Participation In Our Database

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality: AVERAGE}

^{Liquidity: SUFFICIENT}

^{Payments: REGULAR}

^{Trend: LEVEL}

^{Financial Situation: AVERAGE}

LITIGATION(S)

^{Type Of Case: Magistrate Court - W/S}

^{Case Number: MCS25569/2004}

Defendant DRUG HOUSES OF AUSTRALIA (ASIA) ROC #: 196900625G

FINANCIAL ELEMENTS

^{All amounts in this report are in: SGD unless otherwise stated}

^{Audit Qualification: UNQUALIFIED (CLEAN) UNQUALIFIED (CLEAN) UNQUALIFIED (CLEAN)}

^{Date Account Lodged: 30/05/2006}

^{Balance Sheet Date: 31/12/2005 31/12/2004 31/12/2003}

^{Number of weeks: 52 52 52}

^{Consolidation Code: COMPANY COMPANY COMPANY}

^{--- ASSETS}

^{Tangible Fixed Assets: 1,490,395 1,570,460 2,183,704}

^{Investments 878 878 878}

^{Total Fixed Assets: 1,491,273 1,571,338 2,184,582}

^{Inventories: 4,065,924 3,294,205 5,141,246}

^{Receivables: 2,193,881 3,037,916 10,265,046}

^{Cash,Banks,Securities: 1,519,815 1,068,724 1,259,796}

^{Other current assets: - 69,290 51,521}

^{Total Current Assets: 7,779,620 7,470,135 16,717,609}

^{TOTAL ASSETS: 9,270,893 9,041,473 18,902,191}

^{--- LIABILITIES}

^{Equity capital: 1,500,000 1,500,000 1,500,000}

^{Profit & loss Account: 4,510,208 4,289,116 12,959,599}

^{Total Equity: 6,010,208 5,789,116 14,459,599}

^{L/T deferred taxes: 207,347 206,422 307,225}

^{Total L/T Liabilities: 207,347 206,422 307,225}

^{Trade Creditors: 992,429 1,174,880 1,705,429}

^{Prepay. & Def. charges: 1,021,649 975,963 1,415,515}

^{Provisions: 712,950 820,314 506,912}

^{Other Short term Liab.: 326,310 74,778 507,511}

^{Total short term Liab.: 3,053,338 3,045,935 4,135,367}

^{TOTAL LIABILITIES: 3,260,685 3,252,357 4,442,592}

^{PROFIT & LOSS ACCOUNT}

^{Net Sales 16,360,978 23,681,856 24,359,290}

^{Purchases,Sces & Other Goods:10,387,327 16,861,592 18,641,842}

^{Gross Profit: 5,973,651 6,820,264 5,717,448}

^{NET RESULT BEFORE TAX: 3,410,809 4,028,887 2,305,103}

^{Tax: 689,717 699,370 536,163}

^{Net income/loss year: 2,721,092 3,329,517 1,768,940}

^{Depreciation: 344,056 430,079 516,522}

^{Dividends: 2,500,000 1,200,000 780,000}

^{Directors Emoluments: 244,857 201,504 196,519}

^{Wages and Salaries: 5,293,216 5,524,841 5,732,729}

RATIOS

^{31/12/2005 31/12/2004 31/12/2003}

^{Turnover per employee: 70826.74 102518.86 105451.47}

^{Net result / Turnover(%): 0.17 0.14 0.07}

^{Stock / Turnover(%): 0.25 0.14 0.21}

^{Net Margin(%): 16.63 14.06 7.26}

^{Return on Equity(%): 45.27 57.51 12.23}

^{Return on Assets(%): 29.35 36.82 9.36}

^{Dividends Coverage: 1.09 2.77 2.27}

^{Net Working capital: 4726282.00 4424200.00 12582242.00}

^{Cash Ratio: 0.50 0.35 0.30}

^{Quick Ratio: 1.22 1.35 2.79}

^{Current ratio: 2.55 2.45 4.04}

^{Receivables Turnover: 48.27 46.18 151.70}

^{Leverage Ratio: 0.54 0.56 0.31}

^{Net Margin: (100*Net income loss year)/Net sales}

^{Return on Equity: (100*Net income loss year)/Total equity}

^{Return on Assets: (100*Net income loss year)/Total fixed assets}

^{Dividends Coverage: Net income loss year/Dividends}

^{Net Working capital: (Total current assets-Total short term liabilities)}

^{Cash Ratio: Cash Bank securities/Total short term liabilities}

^{Quick Ratio: (Cash Bank securities+Receivables)/Total Short term liabilities}

^{Current ratio: Total current assets/Total short term liabilities}

^{Inventory Turnover: (360*Inventories)/Net sales}

^{Receivables Turnover: (Receivable*360)/Net sales}

^{Leverage Ratio: Total liabilities/(Total equity-Intangible assets)}

FINANCIAL COMMENTS

^{THE FINANCIAL CONDITION OF THE COMPANY WAS SEEN TO BE FAIR IN VIEW OF THE FOLLOWING:}

^{NET WORTH:}

^{THE BALANCE SHEET WAS CONSIDERED PASSABLE WITH NET WORTH IMPROVED BY 3.82% FROM S$5,789,116 IN 2004 TO S$6,010,208 IN 2005.}

^{THIS WAS DUE TO HIGHER ACCUMULATED PROFIT OF S$4,510,208 (2004: S$4,289,116); A RISE OF 5.15% FROM THE PRIOR FINANCIAL YEAR.}

^LEVERAGE:

^{IN THE SHORT-TERM IN 2005, SUBJECT WAS LARGELY FINANCED BY OTHER ACCRUED EXPENSES WHICH MADE UP 33.46% (2004: 32.04%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO S$1,021,649 (2004: S$975,963).}

^{HOWEVER IN THE SHORT-TERM IN 2004, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 38.57% (2005: 32.50%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO S$1,174,880 (2005: S$992,429).}

^{SUBJECT'S LONG TERM LIABILITY, WHICH CONSIST OF DEFERRED INCOME TAXATION, ROSE BY 0.45% TO S$207,347 (2004: S$206,422).}

^{IN ALL, LEVERAGE RATIO FELL FROM 0.56 TIMES TO 0.54 TIMES AS A RESULT OF A RISE IN TOTAL EQUITY.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE AS SEEN FROM THE RISE IN NET WORKING CAPITAL BY 6.83% TO S$4,726,282 (2004: S$4,424,200).}

^{CURRENT RATIO ROSE TO 2.55 TIMES, UP FROM 2.45 TIMES BUT QUICK RATIO DECREASED TO 1.22 TIMES FROM 1.35 TIMES IN 2004.}

^{CASH AND CASH EQUIVALENTS ROSE SHARPLY BY 42.21% TO S$1,519,815}

^{(2004: S$ 1,068,724).}

^{PROFITABILITY:}

^{REVENUE POSTED A DECREASE OF 30.91% FROM S$23,681,856 IN 2004 TO S$16,360,978 AND NET PROFIT DROPPED BY 18.27% TO S$2,721,092 (2004: S$3,329,517).}

^{HOWEVER, NET MARGIN ROSE TO %16.63 (2004: 14.06%).}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS MIGHT NOT BE EXPECTED IF REVENUE AND EARNINGS CAN BE MAINTAINED AND PAYMENT BY TRADE DEBTORS ARE FORTHCOMING. IN ADDITION, SUBJECT DID NOT INCUR ANY INTEREST EXPENSES DURING THE FINANCIAL YEAR UNDER REVIEW.}

^{NOTES TO THE FINANCIAL STATEMENTS:}

^COMMITMENTS

^{CAPITAL COMMITMENTS}

^{CAPITAL EXPENDITURES CONTRACTED FOR AT THE BALANCE SHEET DATE BUT NOT RECOGNISED IN THE FINANCIAL STATEMENTS ARE AS FOLLOWS:}

^{PROPERTY, PLANT AND EQUIPMENT - 2005: S$250,850 (2004: S$70,632)}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 08/10/1969 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS PRESENT NAMESTYLE AS "DRUG HOUSES OF AUSTRALIA (ASIA) PRIVATE LIMITED".}

^{AS AT 01/08/2007, THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 1,500,000 SHARES OF A VALUE OF S$1,500,000.}

^{PRINCIPAL ACTIVITIES:}

^{SUBJECT IS REGISTERED WITH THE ACCOUNTING & CORPORATE REGULATORY AUTHORITY (ACRA) TO BE PRINCIPALLY ENGAGED IN THE BUSINESS OF:}

^{1) MANUFACTURE OF PHARMACEUTICAL, BIOLOGICAL INTERMEDIATES AND FINE CHEMICALS FOR}

^{HUMAN USE;}

^{MANUFACTURE OF MEDICINAL & PHARMACEUTICAL PRODUCTS}

^{DURING THE FINANCIAL YEAR(S), UNDER REVIEW, SUBJECT'S PRINCIPAL ACTIVITIES ARE THE MANUFACTURING, MARKETING AND DISTRIBUTING OF PHARMACEUTICAL PRODUCTS.}

^{FROM THE RESEARCH DONE, SUBJECT IS IN THE MANUFACTURING AND TRADING OF PHARMACEUTICALS. SUBJECT ALSO ENGAGES IN CONTRACT MANUFACTURING OF CLIENTS SPECIFICATION, OTC PRODUCTS AND CHINESE PROPRIETARY MEDICINES. SUBJECT OCCUPIES MORE THAN 100,000 SQUARE FEET OF FACTORY SPACE.}

^{IN ADDITION TO MAKING GENERIC ETHICAL PHARMACEUTICALS, SUBJECT IS THE CONTRACT MANUFACTURER OF INTERNATIONALLY RENOWNED PRODUCTS LIKE KWANG LOONG OIL. SUBJECT HAS THE CAPABILITY TO MANUFACTURE IN THE FOLLOWING DOSAGE FORMS: TABLETS (PLAIN, COATED), CAPSULES, CREAMS/ OINTMENTS, GRANULES/ POWDERS, LIQUID PREPARATIONS- SYRUPS, SUSPENSIONS, EMULSIONS AND SOLUTIONS.}

^{SUBJECT'S ACTIVITIES IN THE DOMESTIC MARKET (SINGAPORE) ARE:}

^{*MANUFACTURING}

^{*QUALITY CONTROL}

^{*SALES & MARKETING}

^{*DISTRIBUTION}

^{SOME OF SUBJECT'S PRODUCTS:}

^{*ANALGESICS & ANTIPYRETICS, ANTI-RHEUMATICS & ANTI-INFLAMMATORY}

^*ANALGESICS

^{*ANTACIDS & ANTI-ULCERANTS}

^{*ANTI-ASTHMATICS}

^{*ANTI-DIABETICS}

^{*ANTI-FUNGALS}

^{*ANTI-HYPERTENSIVES}

^*ANTI-VIRALS

^{*CORTICOSTEROID CREAMS/ORAL PREPARATIONS}

^{*COUGH PREPARATIONS}

^{*DERMATOLOGICALS}

^{*GOUT PREPARATION}

^{*HERBAL REMEDY}

^*LAXATIVES

^{*REHYDRATION SALTS}

^{SUBJECT MARKETS AND DISTRIBUTES ITS PRODUCTS TO:}

^{*PRIVATE CLINICS & GROUP PRACTICES}

^{*HOSPITALS (PRIVATE AND RESTRUCTURED)}

^*POLYCLINICS

^*PHARMACIES

^{*DENTAL SURGERIES}

^{*VETERINARY PRACTICES}

^{*MEDICAL HALLS}

^*WHOLESALERS

^{*OTHER INSTITUTIONS E.G. OLD FOLK'S HOMES, ETC.}

^{SUBJECT'S MARKET:}

^{*DOMESTSIC - 2003: 65% (2001: 57%)}

^{*EXPORT - 2003: 23% (2001: 29%)}

^{*TENDERS - 2003: 12% (2001: 14%)}

^{EXPORT MARKETS:}

^{*MALAYSIA, HONG KONG, BRUNEI, THE PHILIPPINES, THAILAND, SRI LANKA, BANGLADESH, VIETNAM, MYANMAR, PAPUA NEW GUINEA, AFGHANISTAN, MALDIVES AND SOUTH PACIFIC ISLANDS.}

^{TERMS OF PAYMENT:}

^{*TRADE AND OTHER DEBTORS : 30-90 DAY TERMS}

^{*TRADE AND OTHER CREDITORS: 30-90 DAY TERMS}

^{SUBJECT HAS THE SINGAPORE MINISTRY OF HEALTH'S CERTIFICATION AS A MANUFACTURER MEETING THE PHARMACEUTICAL INSPECTION CO-OPERATION SCHEME (PICS) GUIDE TO GOOD MANUFACTURING PRACTICE (GMP) FOR MEDICINAL PRODUCTS, WHICH ENCOMPASSES ALL RECOMMENDATIONS OF THE WORLD HEALTH ORGANISATION (WHO) IN RELATION TO GMP.}

^{NO OTHER TRADE INFORMATION IS AVAILABLE AS TELE-INTERVIEW WAS NOT GRANTED BY SUBJECT'S PERSONNEL ON 15/08/2007.}

^{DURING THE FINANCIAL YEAR, THE COMPANY'S IMMEDIATE HOLDING COMPANY IS HAW PAR HEALTHCARE LIMITED, INCORPORATED IN SINGAPORE. THE ULTIMATE HOLDING COMPANY IS HAW PAR CORPORATION LIMITED, INCORPORATED IN SINGAPORE.}

^{HOWEVER, BASED ON ACRA'S RECORD DATED 01/08/2007, SUBJECT'S HOLDING COMPANY IS STRIDES SINGAPORE PTE. LTD., A COMPANY INCORPORATED IN SINGAPORE.}

^{NUMBER OF EMPLOYEES (31 DECEMBER):}

^{*2005: 231 (FULL TIME: 176; CONTRACT: 55)}

^{*2004: 227 (FULL TIME: 174; CONTRACT: 53)}

^{*2003: 182 (FULL TIME: 134; CONTRACT: 48)}

^{*2002: 186}

^{*2001: 191}

^{REGISTERED AND BUSINESS ADDRESS:}

^{2 CHIA PING ROAD}

^#09-00

^{HAW PAR TIGER BALM BUILDING}

^{SINGAPORE 619968}

^{DATE OF CHANGE OF ADDRESS: 26/09/2006}

^WEBSITE:

^{www.dha.com.sg}

^EMAIL:

^{mktg.dha@hph.hawpar.com}

MANAGEMENT

^{THE DIRECTORS AT THE TIME OF THE REPORT ARE:}

^{1) MARK ALEXANDER BISSET, AN AUSTRALIAN}

^{- BASED IN AUSTRALIA}

^{2) LEK PENG YONG, A SINGAPOREAN}

^{- HOLDS NO OTHER DIRECTORSHIPS AS RECORDED IN OUR DATABASE.}

^{3) KEERTHAPATI RAMARAJU RAVISHANKAR, AN INDIAN}

^{- BASED IN INDIA}

SINGAPORE’S COUNTRY RATING 2007

^{INVESTMENT GRADE}

^{IN SINGAPORE, THE POLITICAL SITUATION REMAINS STABLE.}

^{SINGAPORE BOASTS THE BEST GOVERNANCE IN ASIA, WITH AN EFFECTIVE LEGAL SYSTEM FACILITATING DEBT COLLECTION AND TO A HIGH DEGREE OF FINANCIAL TRANSPARENCY.}

^{EXTERNAL ACCOUNTS HAVE REMAINED SUBSTANTIALLY IN SURPLUS, CONTRIBUTED TO THE DYNAMISM OF THE ELECTRONICS AND PHARMACEUTICALS SECTORS AND TO REPATRIATION OF PROFITS FROM SINGAPORE INVESTMENTS. THE FINANCIAL AND TOURISM SECTORS HAVE ALSO CONTRIBUTED TO THE LARGE CURRENT ACCOUNT SURPLUS.}

^{SINGAPORE CONTINUES TO KEENLY WELCOME FOREIGN INVESTMENT AND OFFERS A VERY OPEN AND WELL-PLANNED ECONOMIC AND POLITICAL ENVIRONMENT. IT HAS BEEN IMPLEMENTING AMBITIOUS DIVERSIFICATION STRATEGY, FOCUSED PARTICULARLY ON THE CHEMICALS AND PHARMACEUTICAL SECTORS.}

^{THE GOVERNMENT USES FOREIGN DIRECT INVESTMENT TO DEVELOP PRIORITY SECTORS (ELECTRONICS, CHEMICALS, BIOTECHNOLOGY). THE AIM IS TO ENCOURAGE THE GROWTH OF HIGH ADDED-VALUE ACTIVITIES AND TURN SINGAPORE INTO A REGIONAL HUB FOR FOREIGN INVESTORS INTERESTED IN ASIA.}

^{CERTAIN SECTORS (MEDIA, LEGAL AND FINANCIAL SERVICES) ARE HOWEVER ONLY PARTIALLY OPEN TO FOREIGN INVESTMENT. THESE SECTORS ARE SLOWLY OPENING UP, BUT THE PROGRESS IS SLOW. AFTER HIGH GROWTH IN 2006, BUOYED BY THE DYNAMISM OF BOTH EXPORTS AND HOUSEHOLD CONSUMPTION, A SLOWDOWN IS EXPECTED IN 2007.}

^ASSETS

^{" MAJOR EXPORTER OF CAPITAL IN ASIA, NOTABLY VIA THE STATE-OWNED TEMASEK HOLDING}

^COMPANY.

^{" HIGH QUALITY COMPETITIVENESS IN ASIA}

^{" EXCELLENT BUSINESS CLIMATE}

^{" POLITICAL STABILITY.}

^WEAKNESSES

^{" SKILLED MANPOWER HAS BEEN LACKING IN THE SECTORS TARGETED FOR DEVELOPMENT.}

^{" AN AGEING POPULATION COULD, ULTIMATELY, AFFECT ECONOMIC PERFORMANCE.}

^{" GROWING INEQUALITY AND THE EMERGENCE OF LONG-TERM UNEMPLOYMENT AMONG THE LEAST}

^{SKILLED COULD GENERATE SOCIAL TENSIONS.}

^{" BEING THE WORLD'S MOST OPEN ECONOMY, IT HAS BEEN VULNERABLE TO WORLD ECONOMIC}

^DOWNTURNS.

OVERVIEW OF SINGAPORE

PAST PERFORMANCE

SINGAPORE’S ECONOMY GREW BY 6.1% IN QUARTER 1 OF 2007 AFTER A 6.6% GROWTH IN QUARTER 4 OF 2006. THE GROWTH MOMENTUM EASED SLIGHTLY TO 7.6% IN 1Q 2007, COMPARED WITH 7.9% A QUARTER EARLIER. GROWTH IN QUARTER 1 WAS LED BY THE FINANCIAL SERVICES AND CONSTRUCTION SECTORS. THE MANUFACTURING SECTOR CONTINUED TO EXPERIENCE A MODERATION IN GROWTH.

THE FINANCIAL SERVICES SECTOR SIGNIFICANTLY INCREASED BY 13% IN 1Q 2007 ON THE HEELS OF THE 11% GROWTH A QUARTER AGO. THE STRONG PERFORMANCE WAS ACROSS ALL MAJOR FINANCIAL SEGMENTS, PARTICULARLY IN THE CAPITAL AND MONEY MARKETS. FUND MANAGEMENT ACTIVITIES REMAINED BOUYANT, IN LINE WITH THE CONTINUED STRENGTH IN ECONOMIC CLIMATE. SIMILARLY, BANKS SAW STRONG GROWTH, BOUYED BY SUSTAINED RESILIENCE IN THE ASIA DOLLAR MARKET AS WELL AS A STEADY INCREASE IN DOMESTIC LENDING ACTIVITY.

THE CONSTRUCTION SECTOR GREW BY 9.7% IN 1Q 2007, ITS STRONGEST GROWTH IN 9 YEARS. CERTIFIED PAYMENTS INCREASE BY 9.5% IN 1Q 2007, SUPPORTED BY STRONG GROWTH IN THE PRIVATE RESIDENTIAL, COMMERCIAL AND INDUSTRIAL SEGMENTS AS WELL AS PUBLIC RESIDENTIAL SEGMENT. HOWEVER, CONTRACTS AWARDED FELL BY 11% IN 1Q 2007, DUE MAINLY TO THE DROP IN THE PRIVATE COMMERCIAL AND PUBLIC INSTITUTIONAL SEGMENTS.

MANUFACTURING SECTOR INCREASED BY 4.3% IN 1Q 2007, DOWN FROM 7.7% IN THE PREVIOUS QUARTER. BOTH BIOMEDICAL MANUFACTURING (-5.0%) AND PRECISION ENGINEERING (-0.7%) CLUSTERS SAW LOWER PRODUCTION DURING THE QUARTER. THE ELECTRONICS CLUSTER, HOWEVER, RECOVERED FROM A 4.1% CONTRACTION IN 4Q 2006 TO REGISTER AN INCREASE OF 2.6% IN 1Q 2007. THE TRANSPORT ENGINEERING CLUSTER CONTINUED TO EXPAND STRONGLY AT 23%, FOLLOWING A 25% INCREASE IN 4Q 2006.

THE WHOLESALE AND RETAIL TRADE SECTOR EXPANDED 6.7% IN 1Q 2007 AFTER A 6.9 GROWTH IN 4Q 2006. RETAIL SALES GROWTH EASED FROM 7.9% IN THE PREVIOUS QUARTER TO 6.1% IN 1Q 2007, MAINLY DUE TO A DECELERATION IN MOTOR VEHICLES SALES. EXCLUDING MOTOR VEHICLES, RETAIL SALES ROSE BY 5.9%, UP FROM 4.2% IN 4Q 2006. IN THE WHOLESALE SEGMENT, GROWTH OF NON-OIL RE-EXPORTS REMAINED FIRM AT 5.9%, SLOWER THAN 6.3% IN 4Q 2006.

THE TRANSPORT AND STORAGE SECTOR GREW 4.4% IN 1Q 2007, UP FROM 4.0% A QUARTER EARLIER. THE AIR SEGMENT SAW A SLOWDOWN DUE TO A MODERATION IN AIR PASSENGER TRAFFIC GROWTH AND A DECLINE IN AIR CARGO. STRONGER ACTIVITY WAS RECORDED IN THE SEA SEGMENT ON THE BACK OF BETTER PERFORMANCE IN SEA CARGO HANDLED AND CONTAINER THROUGHPUT.

THE HOTELS AND RESTAURANTS SECTOR REGISTERED A SLOWER GROWTH OF 4.7% IN 1Q 2007, DOWN FROM 6.1% 4Q 2006. VISITOR ARRIVALS GREW AT A MORE MODEST PACE OF 4.1% COMPARED TO 8.4% IN THE PREVIOUS QUARTER. THE INCREASE IN HOTEL ROOM REVENUE MODERATED FROM THE 21% GAIN IN 4Q 2006 TO 14% IN 1Q 2007. HOWEVER, THE AVERAGE OCCUPANCY RATE OF HOTELS REMAINED HIGH AT 87%, A 4.3% POINTS INCREASE OVER THE CORRESPONDING PERIOD LAST YEAR.

THE INFORMATION AND COMMUNICATIONS SECTOR GREW 6.6% IN 1Q 2007, UP FROM 6.0% IN THE PREVIOUS QUARTER. WHILE THE IT SEGMENT SAW SOME MODERATION IN ACTIVITIES, THE TELECOMMUNICATIONS SEGMENT PERFORMED BETTER. INTERNATIONAL TELEPHONE CALL DURATION WENT UP SHARPLY BY 19%, UP FROM 11% IN 4Q 2006. GROWTH IN THE NUMBER OF MOBILE SUBSCRIBERS AND BROADBAND SUBSCRIBERS ALSO REMAINED STRONG DURING THE QUARTER.

BUSINESS SERVICES SECTOR EXPANDED BY 6.6% IN 1Q 2007, BETTER THAN THE 5.4% POSTED IN 4Q 2006. ROBUST PERFORMANCE WAS SEEN IN THE REAL ESTATE SEGMENT ON THE BACK OF CONTINUED STRENGTH IN THE LUXURY PROPERTY MARKET. THE SECTOR WAS ALSO WELL SUPPORTED BY THE OTHER SEGMENTS, PARTICULARLY BUSINESS REPRESENTATIVE OFFICES, AND BUSINESS & MANAGEMENT CONSULTANCY ACTIVITIES.

OUTLOOK

THE ECONOMIC OUTLOOK IS GENERALLY POSITIVE BUT SOME DOWNSIDE RISKS REMAIN. THESE INCLUDE A SLOWDOWN IN THE US ECONOMY, VULNERABILITY OF OIL PRICES TO SUPPLY SHOCKS AND A DISORDERLY UNWINDING OF GLOBAL UNBALANCES. BARRING THESE UNCERTAINTIES, ECONOMIC GROWTH IS EXPECTED TO REMAIN HEALTHY IN 2007.

BUSINESS SENTIMENTS ARE GENERALLY POSITIVE IN THE FINANCIAL SERVICES INDUSTRY. BANKS AND FINANCE COMPANIES, FUND MANAGEMENT FIRMS AND INSURANCE COMPANIES EXPECT AN IMPROVEMENT IN THE BUSINESS CLIMATE IN THE COMING MONTHS.

AN OVERALL NET WEIGHTED BALANCE OF 61% OF FIRMS IN THE REAL ESTATE INDUSTRY EXPECTS BETTER BUSINESS CONDITIONS FOR THE NEXT 6 MONTHS. WITHIN THE INDUSTRY, REAL ESTATE DEVELOPERS AND AGENTS FORESEE BRISK BUSINESS ACTIVITY AHEAD.

MANUFACTURING SECTORS ARE MORE OPTIMISTIC IN THE NEXT 6 MONTHS COMPARED TO THE FIRST QUARTER OF THE YEAR. OVERALL, A WEIGHTED 30% OF MANUFACTURERS FORESEE AN IMPROVED OUTLOOK, WHILE 4% PREDICT DETERIORATION. THIS RESULTS IN A NET WEIGHTED BALANCE OF 26% OF MANUFACTURERS EXPECTING BUSINESS CONDITIONS TO IMPROVE, WHICH IS HIGHER THAN 7% RECORDED A QUARTER AGO.

WHOLESALERS EXPECT TO DO WELL FOR THE NEXT 6 MONTHS, WITH A POSITIVE NET WEIGHTED BALANCE OF 17%. DEALERS OF FOOD AND BEVERAGES, TROPICAL PRODUCE, TEXTILES & LEATHER GOODS AND HOUSEHOLD ELECTRICAL APPLIANCE & EQUIPMENT ARE AMONG THOSE WHO ARE OPTIMISTIC ABOUT THE BUSINESS OUTLOOK AHEAD.

FIRMS IN THE RETAIL TRADE FORESEE BUSINESS TO BE LESS BRISK. IN PARTICULAR, DEPARTMENT STORES, SUPERMARKETS AND RETAILERS OF MOTOR VEHICLES EXPECT SLOWER BUSINESS IN THE COMING MONTHS.

WITHIN THE TRANSPORT AND STORAGE INDUSTRY, A NET WEIGHTED BALANCE OF 18% OF FIRMS FORECASTS IMPROVED BUSINESS PROSPECTS FOR THE NEXT 6 MONTHS. IN PARTICULAR, FIRMS IN THE WATER TRANSPORT AND SUPPORTING SERVICES EXPECT HIGHER LEVEL OF BUSINESS ACTIVITY.

HOTELIERS PROJECT A FAVOURABLE BUSINESS OUTLOOK, WHICH IS IN TANDEM WITH THE POSITIVE SENTIMENTS IN THE TOURISM MARKET. FOR THE CATERING TRADE INDUSTRY, BUSINESS OUTLOOK IN THE COMING MONTHS REMAINS THE SAME.

FIRMS IN THE INFORMATION AND COMMUNICATION INDUSTRY ANTICIPATES A HIGHER LEVEL OF BUSINESS ACTIVITY, WITH A POSITIVE NET WEIGHTED BALANCE OF 12%.

IN THE BUSINESS SERVICES INDUSTRY, AN OVERALL NET WEIGHTED BALANCE OF 24% OF FIRMS EXPRESSES POSITIVE SENTIMENTS. THESE INCLUDE FIRM ENGAGED IN RENTING OF CONSTRUCTION & INDUSTRIAL MACHINERY, ARCHITECTURAL & ENGINEERING, SPECIALISED DESIGN AND LABOUR RECRUITMENT SERVICES.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

CHANNELNEWS ASIA

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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