MIRA INFORM REPORT

Report Date :

07.04.2008

IDENTIFICATION DETAILS

Name :	JOHNSON CONTROLS (S) PTE. LTD.
Registered Office :	^10 Upper Aljunied Link ^#08-00 ^York International Industrial Bldg
Country :	Singapore
Financials (as on) :	30.09.2006
Date of Incorporation :	^14.12.1982
Com. Reg. No.:	^198205221M
Legal Form :	^Pte Ltd
Line of Business :	Supply, Installation and Servicing of Building Automation Systems for Ventilation, Air-Conditioning, Energy Management, Security, Fire Safety, Provision of Building Maintenance, Management and other related services

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

JOHNSON CONTROLS (S) PTE. LTD.

Line Of Business 

SUPPLY, INSTALLATION AND SERVICING OF BUILDING AUTOMATION SYSTEMS FOR VENTILATION, AIR-CONDITIONING, ENERGY MANAGEMENT, SECURITY, FIRE SAFETY, PROVISION OF BUILDING MAINTENANCE, MANAGEMENT AND OTHER RELATED SERVICES

Parent Company

JOHNSON CONTROLS HOLDING (S) PTE. LTD.

(PERCENTAGE OF SHAREHOLDINGS: 100.00%)

Financial Elements

FY 2006

COMPANY

Sales : S$65,190,294

Networth : S$17,803,718

Paid-Up Capital : S$ 2,400,000

Net result : S$-1,287,764

Net Margin(%) : -1.98

Return on Equity(%) : -7.23

Leverage Ratio : 3.17

COMPANY IDENTIFICATION

^{Subject Company : JOHNSON CONTROLS (S) PTE. LTD.}

^{Former Name : -}

^{Business Address : 10 UPPER ALJUNIED LINK #08-00}

^{YORK INTERNATIONAL INDUSTRIAL BLDG.}

^{Town : SINGAPORE}

^{Postcode : 367904}

^{County : -}

^{Country : Singapore}

^{Telephone : 6748 0202}

^{Fax : 6743 4420}

^{ROC Number : 198205221M}

^{Reg. Town : -}

SUMMARY

^{Legal Form : Pte Ltd}

^{Date Inc. : 14/12/1982}

^{Previous Legal Form : -}

^{Summary year : 30/09/2006}

^{Sales : 65,190,294}

^{Networth : 17,803,718}

^{Capital : -}

^{Paid-Up Capital : 2,400,000}

^{Employees : 500}

^{Net result : -1,287,764}

^{Share value : -}

^{Auditor : PRICEWATERHOUSECOOPERS}

REFERENCES

^{Litigation : YES}

^{Company status : TRADING}

^{Started : 14/12/1982}

PRINCIPAL(S)

^{TOH YUE KANG F0343677L Managing Director}

DIRECTOR(S)

^{STEPHEN ALAN ROELL 022021476 Director}

^{Appointed on : 01/08/1991}

^{Street : 19140 EDMONTON DRIVE}

^{Town : BROOKFIELD}

^{Postcode : 53045}

^{Country : United States}

^{JEROME DENNIS OKARMA 023422375 Director}

^{Appointed on : 03/04/1991}

^{Street : 1109 EAST LEXINGTON BOULEVARD}

^{WHITEFISH BAY, WISCONSIN 53217}

^{Town :}

^{Postcode :}

^{Country : United States}

^{WOO MAY POH S7128630D Company Secretary}

^{Appointed on : 01/03/2005}

^{Street : 476 ANG MO KIO AVENUE 1O}

^#11-796

^{Town : SINGAPORE}

^{Postcode : 560476}

^{Country : Singapore}

^{SOREN BJERG S2734292B Director}

^{Appointed on : 28/02/2006}

^{Street : 16 LEEDON HEIGHTS}

^#09-03

^{LEEDON HEIGHTS}

^{Town : SINGAPORE}

^{Postcode : 267937}

^{Country : Singapore}

^{LIM AIK KUN S7161644D Company Secretary}

^{Appointed on : 17/07/2006}

^{Street : 49 HUME AVENUE}

^#07-01

^{PARC PALAIS}

^{Town : SINGAPORE}

^{Postcode : 598749}

^{Country : Singapore}

^{SUN WING MING WILSON BC247421 Director}

^{Appointed on : 28/02/2007}

^{Street : 42B KADOORIE AVENUE}

^MONGKOK

^{Town : KOWLOON}

^{Postcode :}

^{Country : Hong Kong}

^{TOH YUE KANG F0343677L Director}

^{Appointed on : 01/10/2007}

^{Street : 4 CAIRNHILL RISE}

^#05-01

^{THE CAIRNHILL}

^{Town: SINGAPORE}

^{Postcode: 229740}

^{Country: Singapore}

^{TOH YUE KANG F0343677L Managing Director}

^{Appointed on : 01/10/2007}

^{Street : 4 CAIRNHILL RISE}

^#05-01

^{THE CAIRNHILL}

^{Town : SINGAPORE}

^{Postcode : 229740}

^{Country : Singapore}

FORMER DIRECTOR(S)

^{PHUAR BOON CHIN SALLY S0115452D}

^{JOHN LINDSAY PATRICK KENNEDY 150498507}

^{TEO KOON HONG S0184004E}

^{SCHULTZ E KING S02032663}

^{WADE JAMES M S02060499}

^{KAN MUN LEONG EDDIE S0341298I}

^{TAN SIEW PENG S0558609G}

^{LEE CHIN TAO ANDREW S0908613G}

^{FOO SOON SOO S1310912E}

^{WILLIAMS RONALD M S24566800}

^{MICHAEL DEVOY SU F10637589T}

^{BRENGEL FRED L A077165}

^{DALY RICHARD THOMAS HAYWARD SC282005A}

^{KEYES JAMES H K779702}

^{CHOONG MEE FONG S2564466B}

^{HENG EE LEAN S2551493I}

^{KENNETH KIN HSU 700593844}

^{JOHN MCDONOUGH 740024238}

^{NGUYEN VAN VANG S1103956A}

^{PRAMOD RAMANATH KARKAL S2635841H}

^{JOHN DAVID MAJOR 025935920}

^{CHUAH CHENG HUAT S2721527J}

ACTIVITY(IES)

^{THERMOSTATS - WHSLE And MFRS Code: 21555}

^{CONTROLS, CONTROL SYSTEMS And REGULATORS Code: 5570}

^{AUTOMATION SYSTEMS And EQUIPMENT Code: 1260}

^{REAL ESTATE MANAGEMENT Code: 18100}

^{BUILDING MAINTENANCE - REPAIRING Code: 2910}

^{BASED ON ACRA'S RECORD}

^{1) INSTALLATION OF BUILDING AUTOMATED SYSTEMS FOR REMOTE MONITORING}

^{2) COMMERCIAL AND INDUSTRIAL REAL ESTATE MANAGEMENT}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

BANKERS

^{CITIBANK N.A.}

SHAREHOLDERS(S)

^{JOHNSON CONTROLS HOLDING (S) PTE. 11,924,658 Company}

^{Street : 47 SCOTTS ROAD}

^#17-03/04

^{GOLDBELL TOWERS}

^{Town: SINGAPORE}

^{Postcode: 228233}

^{Country: Singapore}

FORMER SHAREHOLDER(S)

^{JOHNSON CONTROLS HOLDING (S) PTE LT 1,400,000}

^{TAN SIEW PENG 1}

^{CHAN MENG SENG 1}

HOLDING COMPANY

^{JOHNSON CONTROLS HOLDING (S) PTE. LTD. 199602432R %: 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: High Court - W/S}

^{Case Number: HWS00543/2007}

Defendant JOHNSON CONTROLS (S) PTE. LTD. ROC #: 198205221M

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

^{Case Number: MCS22561/2004}

Defendant JOHNSON CONTROLS (S) PTE. LTD. ROC #: 198205221M

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

^{Case Number: MCS13614/2004}

Defendant JOHNSON CONTROLS (S) PTE. LTD. ROC #: 198205221M

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

^{Case Number: DCS05718/2003}

Defendant JOHNSON CONTROLS (S) PTE. LTD. ROC #: 198205221M

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

^{Case Number: DCS01936/2003}

Defendant JOHNSON CONTROLS (S) PTE. LTD. ROC #: 198205221M

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

^{Case Number: DCS01153/2003}

Defendant JOHNSON CONTROLS (S) PTE. LTD. ROC #: 198205221M

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

^{Case Number: HWS00414/2002}

Defendant JOHNSON CONTROLS (S) PTE. LTD. ROC #: 198205221M

FINANCIAL ELEMENTS

^{All amounts in this report are in: SGD}

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

^{Date Account Lodged: 31/01/2008}

^{Balance Sheet Date: 30/09/2006 30/09/2005}

^{Number of weeks: 52 52}

^{Consolidation Code: COMPANY COMPANY}

^{--- ASSETS ---}

^{Preliminary Exp 392,887 176,552}

^{Tangible Fixed Assets: 430,455 305,418}

^{Total Fixed Assets: 823,342 481,970}

^{Inventories: 701,228 614,281}

^{Receivables: 15,250,315 11,526,203}

^{Cash,Banks, Securitis: 2,589,806 2,491,128}

^{Other current assets: 54,871,470 53,185,947}

^{Total Current Assets: 73,412,819 67,817,559}

^{TOTAL ASSETS: 74,236,161 68,299,529}

^{--- LIABILITIES ---}

^{Equity capital: 2,400,000 1,500,010}

^{Profit & lost Account: 15,403,718 16,691,482}

^{Surplus equity: 899,990}

^{Total Equity: 17,803,718 19,091,482}

^{Trade Creditors: 9,670,491 9,513,160}

^{Prepay. & Def. charges: 2,715,461 1,774,948}

^{Advanced payments: 270,731 48,881}

^{Due to Bank: 23,328,489 32,688,967}

^{Provisions: 1,016,865 1,830,751}

^{Other Short term Liab.: 19,430,406 3,351,340}

^{Total short term Liab.: 56,432,443 49,208,047}

^{TOTAL LIABILITIES: 56,432,443 49,208,047}

^{--- PROFIT & LOSS ACCOUNT ---}

^{Net Sales 65,190,294 63,714,246}

^{Purchases,Sces & Other Goods: 56,775,934 52,621,327}

^{Gross Profit: 8,414,360 11,092,919}

^{NET RESULT BEFORE TAX: -1,630,249 2,319,074}

^{Tax : 342,485 690,994}

^{Net income/loss year: -1,287,764 1,628,080}

^{Interest Paid: 1,035,083 469,987}

^{Depreciation: 178,039 198,627}

^{Directors Emoluments: 347,347}

^{Wages and Salaries: 14,760,142 16,064,669}

^{Financial Income: 70,854 19,967}

RATIOS

^{30/09/2006 30/09/2005}

^{Turnover per employee: 130380.59 127428.49}

^{Net result / Turnover(%): -0.02 0.03}

^{Fin. Charges / Turnover(%): 0.02 0.01}

^{Stock / Turnover(%): 0.01 0.01}

^{Net Margin(%): -1.98 2.56}

^{Return on Equity(%): -7.23 8.53}

^{Return on Assets(%): -1.73 2.38}

^{Net Working capital: 16980376.00 18609512.00}

^{Cash Ratio: 0.05 0.05}

^{Quick Ratio: 0.32 0.28}

^{Current ratio: 1.30 1.38}

^{Receivables Turnover: 84.22 65.13}

^{Leverage Ratio: 3.17 2.58}

^{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}

^{Net Working capital : (Total current assets/Total short term liabilities)/1000}

^{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 WAS CONSIDERED PASSABLE DESPITE THE DROP IN NET WORTH OF 6.75% FROM S$19,091,482 IN 2005 TO S$17,803,718 IN 2006. THIS WAS DUE TO LOWER RETAINED EARNINGS OF S$15,403,718 (2005: S$16,691,482); A DROP OF 7.72% FROM THE PRIOR YEAR.}

^LEVERAGE:

^{IN THE SHORT TERM, SUBJECT WAS LARGELY FINANCED BY DUE TO BANKS WHICH MADE UP 41.34% (2005: 66.43%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO S$23,328,489 (2005: S$32,688,967). THIS CONSISTED OF BANK OVERDRAFTS WHICH CARRIES AN INTEREST OF 3% (2005: 1.6%) PER ANNUM AND IS SECURED BY A CORPORATE GUARANTEE GIVEN BY THE ULTIMATE HOLDING COMPANY.}

^{IN ALL, LEVERAGE RATIO ROSE FROM 2.58 TIMES TO 3.17 TIMES AS A RESULT OF A RISE IN TOTAL LIABILITIES AND A DROP IN TOTAL EQUITY.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE DESPITE THE DROP IN NET WORKING CAPITAL AND CHANGES IN LIQUIDITY RATIOS. CURRENT RATIO FELL TO 1.30 TIMES, DOWN FROM 1.38 TIMES AND QUICK RATIO IMPROVED TO 0.32 TIMES FROM 0.28 TIMES IN 2005. NET WORKING CAPITAL}

^{FELL BY 8.75% FROM S$18,609,512 IN 2005 TO S$16,980,376 IN 2006.}

^{CASH AND CASH EQUIVALENTS COMPRISES OF: CASH AT BANK AND ON HAND - 2006: S$2,589,806 (2005: S$2,491,128)}

^{PROFITABILITY:}

^{REVENUE POSTED AN INCREASE OF 2.32% FROM S$63,714,246 IN 2005 TO S$65,190,294 BUT NET PROFIT FELL BY 1.79 TIMES TO S$-1,287,764 (2005: S$1,628,080). HENCE, NET MARGIN FELL TO -1.98% (2005: 2.56%).}

^REVENUE:

^{* INSTALLATION SALES - 2006: S$15,361,573 (2005: S$14,206,864)}

^{* PRODUCT SALES - 2006: S$ 3,919,108 (2005: S$ 5,425,700)}

^{* SERVICES RENDERED - 2006: S$45,909,613 (2005: S$44,081,682)}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS MIGHT NOT BE EXPECTED IF REVENUE CAN BE MAINTAINED, PAYMENT BY TRADE DEBTORS ARE FORTHCOMING AND EARNINGS IMPROVED. IN ADDITION, ITS INTEREST COVERAGE WAS UNHEALTHY CONSIDERING THAT ITS INTEREST EXPENSES WERE HIGH AT S$1,035,083 (2005: S$469,987).}

^{NON-CURRENT ASSETS:}

^{THE FOLLOWING ITEMS ARE CLASSIFIED UNDER PRELIMINARY:}

^{* DEFERRED INCOME TAX ASSEST - 2006: S$392,887 (2005: S$176,552)}

^{NOTES TO THE FINANCIAL STATEMENTS:}

^{EVENTS OCCURING AFTER BALANCE SHEET DATE (A) ON 29 MARCH 2007, THE DIRECTORS RECOMMENDED THE PAYMENT OF AN INTERIM DIVIDEND OF $0.144 PER SHARE AMOUNTING TO $10,423,658 NET OF TAX AT 18%.}

^{(B) ON 31 MARCH 2007, THE COMPANY ISSUED 10,423,658 ORDINARY SHARES BY}

^{WAY OF CAPITALISING $10,423,658 FROM RETAINED EARNINGS. THESE}

^{NEWLY ISSUED SHARES RANK PARI PASSU IN ALL RESPECTS WITH THE}

^{PREVIOUS ISSUED SHARES.}

^{ALL ISSUED SHARES ARE FULLY PAID.}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 14/12/1982 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS PRESENT NAMESTYLE AS "JOHNSON CONTROLS (S) PTE. LTD.".}

^{THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 11,923,658 ORDINARY SHARES, OF A VALUE OF S$11,923,658.}

^{THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 900,000 PREFERRED SHARES, OF A VALUE OF S$900,000.}

^{PRINCIPAL ACTIVITIES:}

^{SUBJECT IS REGISTERED WITH THE ACCOUNTING & CORPORATE REGULATORY}

^{AUTHORITY (ACRA) TO BE PRINCIPALLY ENGAGED IN THE BUSINESS OF:}

^{1) INSTALLATION OF BUILDING AUTOMATED SYSTEMS FOR REMOTE MONITORING}

^{2) COMMERCIAL AND INDUSTRIAL REAL ESTATE MANAGEMENT}

^{DURING THE FINANCIAL YEAR(S), UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY COMPRISE THE SUPPLY, INSTALLATION AND SERVICING OF BUILDING AUTOMATION SYSTEMS FOR VENTILATION, AIR-CONDITIONING, ENERGY MANAGEMENT, SECURITY, FIRE SAFETY, PROVISION OF BUILDING MAINTENANCE, MANAGEMENT AND OTHER RELATED SERVICES.}

^{THE IMMEDIATE HOLDING COMPANY IS JOHNSON CONTROLS HOLDING (S) PTE LTD, INCORPORATED IN SINGAPORE. THE ULTIMATE HOLDING COMPANY IS JOHNSON CONTROLS INC., INCORPORATED IN THE UNITED STATES OF AMERICA. FROM THE RESEARCH DONE, THE FOLLOWING INFORMATION WAS GATHERED:}

^{SUBJECT ENGAGES IN THE FOLLOWING ACTIVITIES:}

^{* SUPPLY, INSTALLATION & SERVICING OF BUILDING AUTOMATION SYSTEMS FOR}

^{VENTILATION, AIR-CONDITIONING, ENERGY MANAGEMENT, SECURITY AND}

^{FIRE SAFETY}

^{* CONSULTANCY - ENGINEERING}

^{PRODUCTS AND SERVICES:}

^{* AIR CONDITIONING CONTROLS}

^{* BUILDING AUTOMATION SYSTEMS}

^{* CONTROLLERS}

^{* REFRIGERATION CONTROLS}

^{* REMOTE SURVEILLANCE}

^{* SECURITY CONTROL EQUIPMENT & SYSTEMS}

^{BRAND NAMES:}

^{* JOHNSON CONTROLS, BUILDING AUTOMATION SYSTEMS}

^{* PENN-BASO, CONTROLS}

^{* CARDKEY}

^{* SPRITE}

^{NO OTHER TRADE INFORMATION IS AVAILABLE AS TELE-INTERVIEW WAS NOT GRANTED BY SUBJECT'S PERSONNEL. HOWEVER FROM THE PRIOR TELE-INTERVIEW CONDUCTED, SUBJECT PERSONNEL REVEALED THAT THERE ARE ABOUT 500 EMPLOYEES. NO OTHER TRADE INFORMATION WAS AVAILABLE}

^{NUMBER OF EMPLOYEES (30 SEPTEMBER):}

^{* COMPANY - 2006: NOT AVAILABLE (2005: 329; 2004: 427; 2003: 226;}

^{2002: 154)}

^{REGISTERED AND BUSINESS ADDRESS:}

^{10 UPPER ALJUNIED LINK}

^#08-00

^{YORK INTERNATIONAL INDUSTRIAL BLDG.}

^{SINGAPORE 367904}

^{DATE OF CHANGE OF ADDRESS: 06/11/2006}

^{- OFFICE}

^{- PROPERTY RECORD WAS NOT AVAILABLE}

^{WEBSITE : http://www.jci.com}

^{http://www.johnsoncontrol.com (WEBSITE CURRENTLY UNAVAILABLE)}

^{EMAIL : miko.lf.leong@jci.com}

^{hr.jcs@jci.com}

MANAGEMENT

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

^{1) STEPHEN ALAN ROELL, AN AMERICAN}

^{- BASED IN THE UNITED STATES OF AMERICA.}

^{2) JEROME DENNIS OKARMA, AN AMERICAN}

^{- BASED IN THE UNITED STATES OF AMERICA.}

^{3) SUN WILSON WING MING, A CANADIAN}

^{- BASED IN HONG KONG.}

^{4) TOH YUE KANG, A MALAYSIAN}

^{- BASED IN SINGAPORE.}

^{5) SOREN BJERG, A SINGAPORE PERMANENT RESIDENT}

^{- HOLDS OTHER DIRECTORSHIP(S) AS RECORDED IN OUR DATABASE:}

^{YORK INTERNATIONAL PTE LTD}

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 8.9% IN 3Q 2007, FOLLOWING 8.7% GROWTH IN 2Q 2007. GROW MOMENTUM (ON AN ANNUALISED QUARTER-ON-QUARTER BASIS) WAS 4.3%, COMPARED WITH 14.5% IN THE SECOND QUARTER.

THE FINANCIAL SERVICES SECTOR ROSE SIGNIFICANTLY BY 20% IN 3Q 2007, FOLLOWING A 17% GROWTH IN THE PREVIOUS QUARTER. HOWEVER, ON A SEASONALLY-ADJUSTED QUARTER-ON-QUARTER BASIS, THE SECTOR FELL BY 8.6%, IN CONTRAST TO THE 39% GROWTH IN THE SECOND QUARTER. THE DECLINE STEMS FROM THE IMPACT FROM THE TURMOIL IN GLOBAL FINANCIAL MARKETS.

THE CONSTRUCTION SECTOR REGISTERED A STRONG GROWTH. THE SECTOR GREW BY 18%, FOLLOWING 19% GAIN IN 2Q 2007. GROWTH MOMENTUM MODERATED FROM 15% IN 2Q 2007 TO 6% IN 3Q 2007.

MANUFACTURING SECTOR ROSE BY 10% IN 3Q 2007, UP FROM 8.3% IN 2Q 2007. THE HIGHEST GROWTH WAS REGISTERED IN THE BIOMEDICAL MANUFACTURING CLUSTER, FOLLOWED BY TRANSPORT ENGINEERING, ELECTRONICS AND CHEMICALS

CLUSTERS. PRECISION ENGINEERING SECTOR CONTINUED TO SEE LOWER PRODUCTION.

THE WHOLESALE AND RETAIL TRADE SECTOR GREW BY 6.6% IN 3Q 2007, SLOWER THAN THE 8.4% GROWTH IN 2Q 2007. ALTHOUGH NON-OIL RE-EXPORTS STRENGTHENED IN THE QUARTER, RETAIL SALES SAW WEAKER GROWTH.

THE TRANSPORT AND STORAGE SECTOR MOEDERATED TO 4.8% IN 3Q 2007, FROM 5.3% IN 2Q 2007. HIGHER GROWTH IN THE AIR TRANSPORT SEGMENT WAS OFFSET BY SLOWER GROWTH IN THE WATER TRANSPORT SEGEMENT AFTER LAST QUARTER’S STRONG GROWTH.

THE HOTELS AND RESTAURANTS SECTOR GREW BY 4.5% FROM 5.3% IN 2Q 2007.

THE AVERAGE OCCUPANCY RATE OF HOTELS CLIMBED TO 89%, A 2.1% RISE OVER 3Q 2006. THE AVERAGE ROOM RATE ALSO GREW BY 22% TO S$204. CONSEQUENTLY, TOTAL HOTEL ROOM REVENUE OF GAZETTED HOTELS ROSE BY 20% IN 3Q 2007 TO AN ESTIMATED S$478 MILLION.

THE INFORMATION AND COMMUNICATIONS SECTOR ROSE 6.9% IN 3Q 2007, HIGHER THAN THE 6.5% IN 2Q 2007. THE TELECOMMUNICATIONS SEGMENT CONTINUED TO ACCOUNT FOR MUCH OF THE GROWTH IN THE SECTOR. IT SERVICES MAINTAINED ITS MODERATE GROWTH LEVEL FROM 2Q 2007.

IN THE TELECOMMUNICATIONS SEGMENT, THE GROWTH OF MOBILE SUBSCRIBERS CONTINUED TO RISE, RISING BY 20%, UP FROM 18% IN 2Q 2007. INTERNATIONAL TELEPHONE CALL DURATION GREW TO 27%, UP FROM 24% IN 2Q 2007.

THE BUSINESS SERVICES SECTOR EXPANDED BY 7.1%, SIMILAR TO THE 7.2% GAIN IN 2Q 2007. GROWTH WAS HEALTHY ACROSS ALL SEGMENTS, WITH GOOD PERFORMANCES IN THE BUSINESS REPRESENTATIVE OFFICES, REAL ESTATE AND PROFESSIONAL SERVICES SEGMENTS.

NEWS

SINGAPORE GROWTH SLOWS TO 6% IN 4Q 2007

THE SINGAPORE ECONOMY GREW AT A SLOWER-THAN-EXPECTED 6% GROWTH IN 4Q 2007, WEIGHED DOWN BY DECLINING MANUFACTURING OUTPUT.

ECONOMISTS HAD ANTICIPATED GROWTH OF 7.0-8.5% FOR 4Q 2007.

THE ESTIMATE FOR REAL GROSS DOMESTIC PRODUCT (GDP) GROWTH, COMPARED WITH 4Q 2006, MEANT THE GROWTH HAD MODERATED FROM THE REVISED GROWTH FIGURE OF 9% SEEN IN 3Q 2006, THE MINISTRY OF TRADE AND INDUSTRY SAID.

ON A QUARTER-ON-QUARTER SEASONALLY ADJUSTED ANNUALISED BASIS, REAL GDP FELL BY 3.2% IN 4Q 2007 COMPARED WITH A 4.4% GAIN IN 3Q 2007, CAUSED BY A SLOWDOWN IN MANFACTURING OUTPUT.

THE FIGURE MARKS THE FIRST QUARTER-ON-QUARTER DECLINE SINCE 1Q 2005, ACCORDING TO DATA.

GROWTH IN THE MANUFACTURING SECTOR IS FORECASTED TO HAVE SLOWED FROM 10.3% IN 3Q 2007 TO 0.5% IN 4Q 2007. IT WAS LARGELY ATTRIBUTED TO A DECLINE IN THE BIOMEDICAL MANUFACTURING CLUSTER AS SOME ACTIVE PHARMACEUTICAL INGREDIENTS WERE NOT PRODUCED.

TRANSPORT ENGINEERING, WHICH INCLUDES OIL RIG MANUFACTURING AND SHIP REPAIR, CONTINUED TO SHOW DOUBLE-DIGIT GROWTH, WHILE THE CONSTRUCTION SECTOR IS PREDICTED TO HAVE GROW STRONGLY BY 24.4% IN 4Q 2007, UP FROM 19.2% IN 3Q 2007.

GROWTH IN THE SERVICE SECTOR WAS STEADY AT 8.3%.

SINGAPORE’S ECONOMY GREW BY 7.5% IN 2007, MARKING THE FOURTH STRAIGHT YEARS OF STRONG GROWTH, PRIME MINISTER LEE HSIEN LOONG SAID IN HIS NEW YEAR MESSAGE.

THE FIGURE FOR 2007 ECONOMIC EXPANSION WAS AT THE LOWER END OF THE GOVERNMENT’S UPGRADED FULL-YEAR GROWTH TARGET OF 7.5-8.0%, AND WAS BELOW THE 7.9% GROWTH REGISTERED FOR 2006.

MR LEE FORECAST GROWTH OF 4.5-6.5% FOR SINGAPORE IN 2008.

OUTLOOK

FOR 2008, EXTERNAL ECONOMIC CONDITIONS ARE EXPECTED TO WEAKEN SLIGHTLY COMPARED TO 2007. THE LINGERING EFFECTS OF THE SUB-PRIME PROBLEMS AND AN OVERALL WEAKENING OF THE HOUSING MARKET WILL DAMPEN US CONSUMPTION. EU GROWTH IS ALSO EXPECTED TO BE LOWER AS A STRONG CURRENCY ERODES EXPORT COMPETITIVENESS. HOWEVER, THE FORECAST FOR ASIAN ECONOMIES REMAIN POSITIVE, WITH CHINA EXPECTED TO SUBSTAIN DOUBLE-DIGIT GROWTH.

WITH THESE FACTORS IN MIND, THE MINISTRY OF TRADE AND INDUSTRY PREDICTS THS SINGAPORE ECONOMY TO GROW BY 4.5-6.5% IN 2008. THIS REPRESENTS A MODERATION IN GROWTH TOWARDS THE ECONOMY’S POTENTIAL RATE OF GROWTH, AFTER FOUR YEARS OF ABOVE-TREND GROWTH.

THERE ARE SOME DOWNSIDE RISKS. IF THE SUB-PRIME PROBLEMS WORSEN THAN EXPECTED, OR OIL PRICES RISE FURTHER IN 2008, THIS COULD BRING A GREATER-THAN-EXPECTED SLOWDOWN IN US, WHICH WOULD AFFECT THE SINGAPORE ECONOMY.

IN THE FINANCIAL SERVICES INDUSTRY, A NET WEIGHTED BALANCE OF 17% OF FIRMS, ESPECIALLY INSURANCE COMPANIES, REMAINS POSITIVE ABOUT THE BUSINESS OUTLOOK IN THE MONTHS AHEAD.

FIRMS IN THE REAL ESTATE INDUSTRY EXPECT BUSINESS TO BE BRISK FOR THE

COMING MONTHS, IN PARTICULAR THE REAL ESTATE DEVELOPERS.

MANUFACTURING FIRMS REMAIN OPTIMISTIC FOR THE PERIOD ENDING MARCH 2008. A NET WEIGHTED BALANCE OF 25% OF MANUFACTURERS FORECAST BETTER BUSINESS, SLIGHTLY HIGHER THAN THE 22% REGISTERED BOTH IN THE PREVIOUS QUARTER AND THE SAME PERIOD IN THE PREVIOUS YEAR.

WHOLESALERS GENERALLY REMAIN POSITIVE ABOUT THEIR BUSINESS CONDITIONS, WITH A NET WEIGHTED BALANCE OF 24% OF FIRMS BEING OPTIMISTIC FOR THE COMING MONTHS. SEGMENTS THAT ARE EXPECTED TO PERFORM BETTER INCLUDE WHOLESALING OF FOOD AND BEVERAGES, WEARING APPAREL AND FOOTWEAR, COSMETICS AND TOILETRIES, AND HOUSEHOLD ELECTRICAL APPLIANCES.

RETAILERS ANTICIPATES BETTER BUSINESS IN THE COMING MONTHS DUE TO YEAR-END FESTIVE SHOPPING, WITH A NET WEIGHTED BALANCE OF 31% BEING POSITIVE. THE SEGMENTS THAT ARE FORECASTING BRISK BUSINESS IN THE COMING MONTHS INCLUDE DEPARTMENT STORE AND SUPERMARKET OWNERS, WEARING APPAREL AND FOOTWEAR, FURNITURE AND FURNISHINGS, AND JEWELLERY AND WATCHES.

IN THE TRANSPORT AND STORAGE INDUSTRY, A NET WEIGHTED BALANCE OF 18% OF FIRMS FORECASTS FAVOURABLE BUSINESS CONDITIONS FOR THE COMING MONTHS.

HOTELIERS FORESEES A FAVOURABLE BUSINESS OUTLOOK, WITH A NET WEIGHTED BALANCE OF 79% OF FIRMS EXPECTING THEIR BUSINESSES TO RISE IN ANTICIPATION OF HIGHER BANQUET SALES AND INCREASE IN ROOM REVENUE IN VIEW OF THE POSITIVE DEVELOPMENT IN THE TOURISM INDUSTRY. FIRMS IN THE CATERING TRADE INDUSTRY ALSO FORESEES BETTER BUSINESS CONDITIONS.

FIRMS IN THE INFORMATION AND COMMUNICATIONS INDUSTRY PREDICTS A HIGHER DEMAND FOR THEIR SERVICES, WITH A NET WEIGHTED BALANCE OF 5%.

IN THE BUSINESS SERVICES INDUSTRY, AN OVERALL NET WEIGHTED BALANCE OF 33% OF FIRMS EXPECTS POSITIVE SENTIMENTS. THESE INCLUDE ACCOUNTING, BOOK-KEEPING AND AUDITING, ENGINEERING AND SPECIALISED DESIGN SERVICES AS WELL AS TRAVEL AGENCIES.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

CHANNEL NEWS 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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