Financial analysis and corporate governance:

Singapore Post Ltd

Name

University

Date
Executive Summary

Singapore Post is the nation postal services provider in Singapore. Singapore post Ltd is

responsible for providing local and international courier and postal services which include end to

end integrate mail solution, letter-shopping, data printing coverage, mailroom and delivery

management and others. The company offers end-to-end e-commerce logistic services. Together

with its subsidiaries Singapore Postal Limited provide postal , retail , and ecommerce logistic

services in Singapore, Australia, United State and globally. The company operation is divided

into four segments which include: Property, E-commerce, Logistic and Postal services.

Singapore post limited segment offers services for gathering, screening, transportation, and

distribution of domestic and international mails. The company also sells philatelic products. The

global mail services include processing of the international incoming and outgoing mails. The

company segment also gives e-post hybrid mail services for integrating the electronic

information communication with analogue mail; financial services and agency services.

The services offered by logistic segment include warehousing, freight, and delivery service,

domestic and international distribution. The Ecommerce segment offer front-end e-commerce

services. Commercial property and rental services are offered by the property segment.

Singapore post offers sale of luxury product online, provision of consultancy and management

services including global sales and market services as well as business mail distribution. The

company was establish in 1819 and is headquarter is in Singapore. The current value for

Singapore Post Ltd is $ 2.79 the company operate in a competitive market and hence it currently

developing strategies to promote competitiveness.

Vertical Analysis Balance Sheet

In Millions of SGD ,000

Year 2017 2016 2015 2014 2013
Assets
Total Current Assets 608 368 798 556 791 -23%
Long Term Investments 1142.692 947.631 767 384.7 342 234%
Property/Plant/Equipment,
566 517 330 234 236
Total - Net 140%
Intangibles, Net 401 583 317 184 186 116%
Total Assets 2,717 2,416 2,211 1,358 1,554 75%

Liabilities
Total Current Liabilities 587 501 415 352 620 -5%
Total Long Term Debt 372 354 328 274 267 39%
Total Liabilities 959 854 743 626 887 8%

Stockholders' Equity:
Others, Net 468.955 363.081 355.118 316 305 54%
Common Stock, Total 639 449 430 129 121 428%
Retained Earnings
650 750 683 251 241
(Accumulated Deficit) 170%
Total Equity 1,758 1,562 1,468 732 668 163%
Total Liabilities &
2,717 2,416 2,211 1,358 1,554
Shareholders' Equity 75%

Vertical Analysis Income Statement

Income statement

In Millions of SGD ,000

Year 2017 2016 2015 2014 2013
Total Revenue 1,348 1,152 920 821 659 105%
Cost of Revenue, Total 1,084 868 664 572 417 160%

Gross Profit 264 284 255 249 241

10%

Selling/General/Admin.
161 142 121 108 108
Expenses, Total 49%
Total Operating Expense 1,244 1,010 779 779 525 137%

Operating Income 30 253 160 143 136 -78%

Net Income Before Taxes 55 287 193 179 167 -67%

Income Tax 25 34 33 34 30 -17%

Net Income 30 253 160 143 136 -78%

In Millions of SGD ,000

Year
Assets
Total Current Assets 608 22% 368 15% 798 36% 556 41%
Long Term Investments 1142.692 42% 947.631 39% 767 35% 384.7 28%
Property/Plant/Equipment,
21% 21% 15% 17%
Total - Net 566 517 330 234
Intangibles, Net 401 15% 583 24% 317 14% 184 14%
Total Assets 2,717 100% 2,416 100% 2,211 100% 1,358 100

Liabilities
Total Current Liabilities 587 22% 501 21% 415 19% 352 26%
Total Long Term Debt 372 14% 354 15% 328 15% 274 20%
Total Liabilities 959 35% 854 35% 743 34% 626 46%

Stockholders' Equity:
Others, Net 468.955 17% 363.081 15% 355.118 16% 316 23%
Common Stock, Total 639 24% 449 19% 430 19% 129 10%
Retained Earnings
24% 31% 31% 18%
(Accumulated Deficit) 650 750 683 251
Total Equity 1,758 65% 1,562 65% 1,468 66% 732 51%
Total Liabilities &
2,717 100% 2,416 100% 2,211 100% 1,358 97%
Shareholders' Equity
 Total Revenue
1,600
1,400 2017, 1,348
1,200 2016, 1,152
1,000
SGD 000

2015, 920
800 2014, 821
600 2013, 659
Total Revenue
400
200
0
2012 2013 2014 2015 2016 2017 2018
Year

Despite stiff competition company face from Siingapore holding Ltd, Singapore Post has

maintained an upward trend in terms of sale revenue. This is as a result of innovative way of

transmitting information from one place to another. The adoption of e-commerce has helped

much in increasing the sale revenue.

Chart Title
500

400

300

200

100

0
2017 2016 2015 2014 2013

Singapore Press Holdings Ltd Singapore Post Ltd

The Singapore post profit was in 2017, when the competition from Singapore post was

intensified. In 2016 the two companies had the same profit. People have started adoption of

digital media and hence decrease in profits.

Asset Trend

7,000

6,000

5,000

4,000 Singapore Press

Holdings Ltd
3,000 Singapore Post Ltd

2,000

1,000

0
2017 2016 2015 2014 2013

The company asset continues to grow over the years. There is an increase of 43% increase in the

total asset over the 5 years period. To remain competitive the company has company have

continued its increase in Total assets.

Liabilities Trend
 Liability Trend
1,200

1,000

800

600 Singapore Press

Holdings Ltd
400

200

0
2017 2016 2015 2014 2013

As result of the increase in technology investment the debt and borrowing have increased in

order to accommodate the operation of the company. The increase in infrastructure investment is

to help the company compete in a competitive market and hence much borrowing to raise capital

for investment.

Year 2017 2016 2015 2014 2013

gross profit Ratio 20% 25% 28% 30% 37%

 gross profit Ratio
40%
35%
30%
25%
20%
gross profit Ratio
15%
10%
5%
0%
2017 2016 2015 2014 2013

The gross net profit of the company has continued to decrease over the last financial years. This

indicate that Singapore post has been facing stiff competition from other communication and

logistic in the country. The management needs to find a competitive advantage that will help

company increase it gross profit in long run. A health gross profit margin is supposed to be

above 40%. A gross profit margin of above 40% will help the company cover it operating

activity without much struggle.

Return on Asset

Year 2017 2016 2015 2014 2013

Return on Asset 2% 12% 9% 13% 11%

 Return on Asset
14%

12%

10%

8%

6% Return on Asset

4%

2%

0%
2017 2016 2015 2014 2013

Return on Equity Ratio

Return On Equity Ratio

25%

20%

15%

Return On Equity Ratio

10%

5%

0%
2017 2016 2015 2014 2013

According to Warren Buffet, (2012) the Return on Asset (ROA) and Return on Equity (ROE) is

supposed to be above 15% and 7% respectively. The return on asset measure how efficient the

firm is able to utilize and manage its asset to generate profits in a given financial period (Ic &

Yildirim, 2015). The most recent return on investment was not the perfect compared to the
industry performance of 13.7% over the past financial period. The ROE of the company have

effect on the overall business sustainability.

On the other side Return on Equity ROE measures the ability of the company to generate profit

applying the shareholder investment in the business. From the Singapore Post the Return on

Asset and Return on Equity have demonstrated a declining trend which shows that the company

is not performing well despite high investment. The stiff competition in 2017 shows a sharp

decrease in ROA and ROE.

DIVIDEND

Dividend Payout ratio

Year 2017 2016 2015 2014 2013

EPS 7% 11% 1% 5% 5%

Earning per Share Ratio

12%

10%

8%

6%
Earning per Share Ratio
4%

2%

0%
2017 2016 2015 2014 2013

Despite the decrease in ROE and ROA the company increased its earning per share. This was

strategy to attract more investors to invest in the company since majority of the investor have
perception that an increasing in dividend ratio is determined by the company performance. The

earning per share is also dictated by the average market share which its price has fallen and

become more affordable compare to the previous years.

Liquidity Ratio

Liquidity demonstrates the business ability to convert its asset in to cash so as to meet its short

term obligations. Low credit ratios and quick ratios indicate that the firm has difficulties in

meeting its short term obligations (Saleem & Rehman, 2011).

Current ratio = Current assets/current liability 1.03 0.73 1.92 1.58 1.28

Cash flow ratio = Cash flow from Op. activity/ Current

Liabilities 0.34 0.40 0.52 0.61 0.34

Long term debt ratio= long-term liabilities/ asset 0.14 0.15 0.15 0.26 0.17

Current Ratio
 current ratio
2.50

2.00

1.50

current ratio
1.00

0.50

0.00
2017 2016 2015 2014 2013

Current ratio refers to the ability of the company to meet the short term liabilities. The desired

liquidity level is 1.5. Liquidity above this level is considered to be too high since the firm has

excess liquid assess needed hence loosing chances for converting them into profitable investment

assets. Currently Singapore post ltd has the less that the desired liquidity level. This indicate

most of the money is invested in the long-assets which play part in the profitability of the

company. The business should be cautious to go below this level as it may be unable to pay it

short term liabilities when they fall due.

 Cash flow ratio
0.70

0.60

0.50

0.40

0.30 Cash flow ratio

0.20

0.10

0.00
2017 2016 2015 2014 2013

The cash flow ratio of the company indicates a declining trend since year 2014. The cash flow of

the company is favorable. The company is able to meet its current liability as its cash operating

cash flow os higher compared to the current liabilities.

Long Term Debt Ratio

Long Term Debt ratio

0.30

0.25

0.20

0.15
Long Term Debt ratio
0.10

0.05

-
2017 2016 2015 2014 2013
The desired level of the long term asset should be five time the income of the company. The

Long Term Debt to Total Asset Ratio measures the percentage of the business asset to business

debts. The long term debt ratio of Singapore is low and hence the government does not face any

risk in terms of debt. In case of any investment opportunity to invest the management of the

company should not fear taking more debt.

EFFICIENCY RATIO

Efficiency measures the business ability to generate income applying the available asset. These

ratios indicate how long a business will take to convert stock into cash. The business inventories

should be converted into cash applying the shortest time possible should the company need to do

so.

Asset Turnover ratio

Year 2017 2016 2015 2014 2013

Asset Turnover ratio

0.50 0.48 0.42 0.60 0.42

Asset Turnover ratio

0.70

0.60

0.50

0.40

0.30 Asset Turnover ratio

0.20

0.10

-
2017 2016 2015 2014 2013
The asset turnover ratio measure the amount of revenue generated per dollar invested in purchase

of asset. Per every dollar invested Singapore made revenue of SGD. 500,000. There has been

gradual increase revenue since 2015. The communication has been competitive and hence with

much innovation ecommerce services has continued to increase.

Current Asset turnover ratio

Year 2017 2016 2015 2014 2013

Current Asset turnover

ratio 2.22 3.13 1.15 1.48 0.83

Current Asset turnover ratio

3.50
3.00
2.50
2.00 Current Asset turnover
1.50 ratio

1.00
0.50
-
2017 2016 2015 2014 2013

The current asset turnover ratio of the company increased by 166% since 2013. The shows that

the company is able pay its short term obligations on time. The company has low leverage ratio

compared to other companies in the market.

Capital Structure Ratio

Capital structure ratio is applied to measure the performance of the company in the years to

come. The prediction is based on the performance of the previous years.

Year 2017 2016 2015 2014 2013

Debt Equity Ratio = Total Liabilities/Total Equity 0.55 0.55 0.51 0.86 1.33

Debt Ratio = Total liabilities/Total assets 0.35 0.35 0.34 0.46 0.57

Equity ratio= Total equity/Total assets

0.65 0.65 0.66 0.54 0.43

Debt coverage ratio=Noncurrent liabilities/Cash

flows from Op.Act. 1.89 1.75 1.52 1.27 1.28

The company management is required to be concerned with the future of the business. The

efficiency ratio measures the concern of the business. The business operation in the future can be

analyzed through application of capital structure ratio methods (Higgins, 2012). The debt ratio

for Singapore post ltd reduced from 1.33 in 2013 to 0.55 in 2017. The sum of the debt and equity

ratio should be equal to one. Capital structure ratios are also applied in comparison between

liabilities and equity. From this analysis it is indicate that Singapore get more it funding from

shareholders equities. The company equity to asset ratio is 0.65 meaning that shareholder equity

have financed 65% of the company assets other long-term investments. These ratios indicate

that the level of equity is more compared to that of liabilities.

The most recent return on investment was not the perfect compared to the industry performance

of 13.7% over the past financial period. The ROE of the company have effect on the overall

business sustainability.

Non-financial (ratios) parameters

Apart from financial measure there are non-financial parameters that determine the performance

of the business. Singapore post is one of the competitive brands in the market. It enjoys the good

name which make majority of customers to remain royal. Singapore post has launched Centre of

innovation to enhance technologies to develop new postal and logistics services. The company

has invested S$182 million to enhance their service delivery. Digital transformation in the

Singapore post ltd customers are able to transact with greater pace and ease. The company also

engages with a lot of corporate social responsibilities which have help in building of the

corporate image and in return translate to high revenue.

Corporate governance

Singpost has emphasized on its commitment to high standard of corporate governance so as to

enhance the sustainability of business performance. The main responsibility of the company to

its shareholder is to promote transparency, integrity, transparency and protect the interest of the

shareholders. It is the role of the Board of Director to promote corporate governance. The BOD

provide guidance and direction on issues relate to strategic business directions, risk policy,

corporate governance and realization of the corporate objective. A good corporate governance

that the shareholders’ investment is safeguarded and hence enhancing good financial

performance of the business,

To promote the company corporate governance they management should ensure that the

customer are satisfied of the services offered to them. There have been complains from the

customers of delay in receiving their parcels. This may make the customers to look for other

better option that are effective and efficient. The have also issue of the lost parcel which make

the customer feel that the company is not the best for the purpose of sending their parcels and

hence this may be the Couse for the decrease in revenue

(https://www.complaintsboard.com/singapore-post-b120181).

The board of director is comprises 12 director whom 6 are independent. The board member

includes the Chairman, the CEO, Lead Independent Director, Nominations Committee and

Alternate Directors. The chairman gives direction on the transformation agenda of the group.

The chairman also ensures that the interest of the shareholder is protected. The chairman ensures

effective communication and good relationship between the management and the shareholders.

The CEO of the company ensures that the company policies are implemented. It is also the role

of the CEO to ensure that the day to day; managements of the company are well executed.

Half of the directors of the company are non-executive who are independent. Mr Keith Tay Ah

Kee is the Lead director of non-executive directors. The chairman of the board is not an

independent auditor since he holds 10% of the total shares. The main role of the non-executive

director is to promote company corporate governance through accessing the performance of the

management. There are responsible for oversight role in the management of the company.

Conclusion

As the director of Singapore post Ltd my vision would be to maximize wealth of shareholder

through promotion of prudent corporate governance. Most of the company losses are

experienced through lack of proper governance. As a leader I would ensure that the transparency,
accountability and trustworthy is maintained. This would ensure that the management is

accountable of every decision they make. To ensure the company increases its market share the

marking department should ensure that their customers are assured of good services. The

company is also requiring having financial goals so as to ensure that they are able to have

finance to innovation hubs. To achieve this business require having good relation with financier

of the company project. Investors will only invest in company where they are assured they will

get return. The as director therefor is you role to ensure that the investors finance are proper

utilized and transparency is promoted.

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