Straits Trading Company

[port]

reported ROE versus revised ROE excluding exceptional gains
2010: 2.5% vs 1.5%
2009: 14.3% vs -ve 0.4%
2008: 4.8% vs 0.7%
2007: 26.5% vs 3.5%
2006: 15% vs 3.8%
seemed that the deteriorating revised roe is turning around

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Amortization History(probably in US)
Prior to 2001, companies amortized the goodwill intangible asset by recording an expense on the income statement each year. Goodwill was taken at straight-line amortization over a period of up to 40 years. For example, if Company A purchased Company B for $450,000 (i.e., purchase price) and the book value of Company B was only $400,000, the goodwill intangible asset would be $50,000. The $50,000 asset would be amortized for the same amount each year for up to 40 years. If you assume that Company A decided to amortize the goodwill amount over 40 years, then the amortization expense listed on the income statement is $1,250 annually (i.e., $50,000 divided by 40 years).

Goodbye Amortization
In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 142, titled "Goodwill and Other Intangible Assets." Under this statement, amortizing goodwill ceased entirely. Now, instead of amortizing, goodwill must be tested annually for impairment. Basically, the company must determine whether the value of this intangible asset has decreased based on market factors. If goodwill has decreased, the company must write down the amount of goodwill on the balance sheet. This decrease in the asset value of goodwill is done by entering a goodwill expense on the income statement.

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in line with Singapore financial reporting standards, amortisation of goodwill on acquisition since April 2004 has ceased. both goodwill amortisation and impairment charges are non-cash accounting adjustments and do not affect the company's cash flow generation.

Goodwill of STC:-
before 1997: not available
1997-2004: nil
2005:21.4m
2006:23.2m
2007:24.1m
2008:22.2m
2009:35.1m
2010:22.4m

[port]

assume stc, being a 124 yr listed co, made some acquisitions decades ago. the goodwill, if any, would have been fully amortised in 40yrs.

does it mean the 2010 goodwill(majority due to acquisition of MSC in 2005) is understated on the B/S?

Anyone with a financial/accounting background can advise on this ?

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writeup by the edge on 14 feb 2011

http://straitstrading.listedcompany.com/...142011.pdf

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STI dn 112, 3.6%
STC dn 2.1% with 14 lots done
capitaland dn 4.6%
keppel land dn 4%
manhattan resource dn 7%
straits asia dn 3.9%
I'm dn 14% on STC

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STI dn 110, 3.8%
STC dn 4.5% with 3 lots done
capitaland dn 4.8%
cdL dn 1.2%
keppel land dn 5.6%
manhattan resource dn 11.6%
straits asia dn 3.4%
I'm dn 18% on STC

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STI dn 63, 2.2%
STC no trades done
capitaland dn 1.9%
cdL up 0.8%
keppel land dn 3.9%
manhattan resource dn 1.9%
straits asia up 1.2%

[port]

STI dn 25, 0.9%
STC unchanged at 3.20 with 2 lots done
capitaland up 0.4%
cdL dn 1.5%
keppel land dn 2.1%
manhattan resource dn 1%
straits asia dn 3.5%

---

MSC
2Q2011 NP:RM 37m,
2Q2010 NP: RM5.6m
1H2011 NP:RM 70m
1H2010 loss:RM 23m

interim dividend: 12 sen less 25% tax

[port]

EBIT margin

1Q2011:6.8%, 2Q2011:5%
1Q2010:4.8%, 2Q2010:0.4%
1H2011:5.8%, 1H2010:2.7%

[port]

INTERVIEW-S''pore''s Straits Trading hopes hotels will turn profitable in 2012 (2011/08/16 12:56PM)

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* Sees comparable H2 performance for resources division
* Expects S''pore office building to remain fully occupied in
next 12 mths

By Eveline Danubrata
SINGAPORE, Aug 16 (Reuters) - Singapore property and
resources group StraitsTrading''s loss-making hospitality
business could turn profitable by the second half of 2012 on the
back of strong tourism outlook and refurbishments across its
hotels such as its flagship Rendezvous Hotel, its executive
chairman said.
Chew GekKhim also told Reuters that Straits Trading''s
resources division, which reported a net profit of
S$13.9 million ($11.5 million) for the first six months of the
year, is expected to deliver a comparable performance in the
second half asunderlying global demand for tin remains strong.
The firm''s hospitality business reported a net loss of S$4
million for the second quarter. But as a whole, Straits
Trading''s net profit had tripled to S$49.3 million from a year
earlier, lifted byhigher tin prices, fair value gains in
investment properties and improved operating performance.
Straits Trading owns, leases and manages a total of 14
hotels in Singapore, Australia, China and New Zealand.
"The tourism outlook isbullish," Chew said, adding that if
all goes according to the plan, the hospitality segment could
turn profitable in the later part of next year.
"The plan is for the refurbishments to result in higher
RevPAR and occupancy, together withimproved systems," she said.
RevPAR refers to revenue per available room.
The firm recently invested around S$25 million to refurbish
its Rendezvous Hotel in Singapore, which is slated to be
completed in November. RevPAR for the hotel last yearwas S$158.
"We are fairly optimistic Rendezvous Singapore will benefit
well given its location and the strong pick-up in tourism," she
said.
In the first half ended June, tin mining and smelting
contributed around 85 percent to revenue ofS$769.5 million from
its business segments. Hotels constituted about 10 percent,
while the remaining was from property. At the end of June, the
company had cash and cash equivalents of around S$135 million.
Turning to the company''s StraitsTrading building in
Singapore''s prime office district, Chew said it currently enjoys
an occupancy rate of 100 percent and she is optimistic that it
will remain full in the next 12 months.
The asking rent as of July was in the range of S$11-S$12per
square foot and the tenants at the building were mostly law
firms and banks.
Straits Trading''s subsidiary Malaysia Smelting Corp
, which is dual-listed in Singapore and Kuala
Lumpur, operates two tin mines in theMalaysian state of Perak
and Indonesia''s Bangka Island. It also processes tin at its two
smelting plants in Penang and Bangka.
Tin prices had come off the record high of $33,600 per tonne
hit in April amid a weakening global economy, but Chewsaid the
underlying demand for tin, which is widely used for soldering in
the electronics industry, is still resilient.
($1 = 1.214 Singapore Dollars)

(Reporting by Eveline Danubrata; Editing by Saeed Azhar)
((eveline.danubrata@thomsonreuters.com)(+65 6403 5669)(Reuters
Messaging: eveline.danubrata.reuters.com@reuters.net))

Keywords: STRAITSTRADING/INTERVIEW