HDB financial statement - any accountants?

[ManBearPig62]

http://www88.hdb.gov.sg/eBook/AnnualReport/Financial2010.html

Was having a look at this the other day. Yes, I am a nerd who likes numbers.

One interesting thing I noticed is that they mentioned in the summary they had about 3.34 billion of capital expenditure that year. But I can't seem to find it in the cash flow statements.

Any accounting guys want to help me out?

And the important bits have no notes. Like "cost of sales" on page 14. Or all the juicy investing and financing activities in the cash flow statement.

So we know Singaporeans paid 7.36 billion in loan repayments last year. But we have no idea how much of that was paid out in turn to whom.

 

[batman1]

Better don't ask so much.Better don't be too clever.Just keep quiet and pretend that everything in super-efficient Red Dot is in order.OTC ask about the monetary value of govt assets and see what happend to him .

 

[silverfox@]

http://www88.hdb.gov.sg/eBook/AnnualReport/Financial2010.html

Was having a look at this the other day. Yes, I am a nerd who likes numbers.

One interesting thing I noticed is that they mentioned in the summary they had about 3.34 billion of capital expenditure that year. But I can't seem to find it in the cash flow statements.

Any accounting guys want to help me out?

And the important bits have no notes. Like "cost of sales" on page 14. Or all the juicy investing and financing activities in the cash flow statement.

So we know Singaporeans paid 7.36 billion in loan repayments last year. But we have no idea how much of that was paid out in turn to whom.

Not an accounting guy but do read financial statements once in a while.

One interesting thing is HDB has retained earnings of 80million at the end of 09/10 which is an increase of 5 million from the previous year. Wow

Anyway to really break the whole financial statement down will take a couple of days for my standard. I think others can do it faster. I also tired to go through. :o

 

[LeMans2011]

One interesting thing I noticed is that they mentioned in the summary they had about 3.34 billion of capital expenditure that year. But I can't seem to find it in the cash flow statements....And the important bits have no notes. Like "cost of sales" on page 14. Or all the juicy investing and financing activities in the cash flow statement..

Part of the 3.34b is in the purchase of pty, plant & eqt, the rests in the increase in working capital for properties under development.
There is no requirement to disclose details of cost of sales in published accounts.

 

[LeMans2011]

Pertinent Points:

1) They sold 4,990 flats in 2010 at total gross profit of about 100m ==> they made 20k per flat which on the average cost 300k. So the gross margin is only 7%. Industry standard would be 5-10% NET profit ie. after operaing expenses.

2) After operating expenses, they lose almost a billion every year for the last few years. Whatever they lose is reimbursed by govt in the form of grant.

3) For a 1.6b business, losing 1b a year is rather scary. They lose more money in upgrading than selling flats. To be fair to them, the bulk of their loss in sale of flats are due to the housing grant which cost them 0.5b

4) Salaries cost 0.4b... so for every 300k flat you purchased from HDB, 70k-80k goes towards paying HDB staff salaries and this excludes construction workers salaries.

Do you now understand why they die die must boost property market so that they can sell their flats at higher price?
The main question that comes to my mind is - why so inefficient? A similar 99 years condo in similar location costs about 2x but developers are making tons of profits!
Does the auditor-general's office ever scrutinise the process of how they award contracts? Did they sample check a few contracts and compare with the private sector benchmark?
If HDB is owned by CDL, how would they fair? That is why you can never benchmark civil servants pay to private sector.

 

[Papsmearer]

Pertinent Points:

1) They sold 4,990 flats in 2010 at total gross profit of about 100m ==> they made 20k per flat which on the average cost 300k. So the gross margin is only 7%. Industry standard would be 5-10% NET profit ie. after operaing expenses.

2) After operating expenses, they lose almost a billion every year for the last few years. Whatever they lose is reimbursed by govt in the form of grant.

3) For a 1.6b business, losing 1b a year is rather scary. They lose more money in upgrading than selling flats. To be fair to them, the bulk of their loss in sale of flats are due to the housing grant which cost them 0.5b

4) Salaries cost 0.4b... so for every 300k flat you purchased from HDB, 70k-80k goes towards paying HDB staff salaries and this excludes construction workers salaries.

Do you now understand why they die die must boost property market so that they can sell their flats at higher price?
The main question that comes to my mind is - why so inefficient? A similar 99 years condo in similar location costs about 2x but developers are making tons of profits!
Does the auditor-general's office ever scrutinise the process of how they award contracts? Did they sample check a few contracts and compare with the private sector benchmark?
If HDB is owned by CDL, how would they fair? That is why you can never benchmark civil servants pay to private sector.

Your premise that HDB is inefficient is very wrong. Everything u see on the financial statements is smoke and mirrors. u have to look at the overall picture. If you recall in the 70s and 80s, HDB actually used to own the land that was expropriated. Expropriated land was directly transferred to them. This resulted in them making obscene profits and coupled with the higher prices of flats made it politically unacceptable. What was done than was that most of the HDB land bank was transferred to SLA or URA and future expropriations were given directly to these 2 agencies instead of HDB. Therefore, HDB was made to "buy" the land from these agencies. SO, lets say a piece of land (just using as an example) was purchased for $100,000, and $400,000 worth of infrastruture improvements were done to the land. It was than sold to the HDB for $5 million. Hence, after the factoring in this land price and the cost of the tender for construction, the HDB reported large losses every year. In reality, the HDB "loses", but the govt. wins. Its a classic case of the PAP showing u one hand, but playing another much better one. Its much better for the PAP to tell the people that these flats are heavily subsidised by pointing to the deficits every year and for the need for the govt to give them grants. That way the can con people.

In the above example, If the govt. was to really use the real cost of the land, HDB would make very large profits. In decades past, Temasek was funded by large HDB donations, via MOF. As for the other segmental losses, I would take those with a grain of salt too. The only segment that is believable is the mortgage portion. I have known for a long time the HDB does not make money on its mortgages, and hence opened the market to private banks years ago. In the Upgrading segment, they charge flat owners a fee for that too. If they had build lifts to stop at every floor in the first place, it would have saved them a lot of money later on thru crap like this lift upgrading programs. As the landlord of the flats, they should not even have charged the tenants for improvements to their property. No doubt the HDB bureaucracy is bloated. U can cut a lot of deadwood there. AUditor general scrutinise what? We don't even know the cost for each flat.

 

[kulgai]

http://www88.hdb.gov.sg/eBook/AnnualReport/Financial2010.html

Was having a look at this the other day. Yes, I am a nerd who likes numbers.

One interesting thing I noticed is that they mentioned in the summary they had about 3.34 billion of capital expenditure that year. But I can't seem to find it in the cash flow statements.
.

expenditure need not tally with cashflow because capital expenditure may be either financed or some of it still unpaid

 

[Orion]

Your premise that HDB is inefficient is very wrong. Everything u see on the financial statements is smoke and mirrors. u have to look at the overall picture. If you recall in the 70s and 80s, HDB actually used to own the land that was expropriated. Expropriated land was directly transferred to them. This resulted in them making obscene profits and coupled with the higher prices of flats made it politically unacceptable. What was done than was that most of the HDB land bank was transferred to SLA or URA and future expropriations were given directly to these 2 agencies instead of HDB. Therefore, HDB was made to "buy" the land from these agencies. SO, lets say a piece of land (just using as an example) was purchased for $100,000, and $400,000 worth of infrastruture improvements were done to the land. It was than sold to the HDB for $5 million. Hence, after the factoring in this land price and the cost of the tender for construction, the HDB reported large losses every year. In reality, the HDB "loses", but the govt. wins. Its a classic case of the PAP showing u one hand, but playing another much better one. Its much better for the PAP to tell the people that these flats are heavily subsidised by pointing to the deficits every year and for the need for the govt to give them grants. That way the can con people.

In the above example, If the govt. was to really use the real cost of the land, HDB would make very large profits. In decades past, Temasek was funded by large HDB donations, via MOF. As for the other segmental losses, I would take those with a grain of salt too. The only segment that is believable is the mortgage portion. I have known for a long time the HDB does not make money on its mortgages, and hence opened the market to private banks years ago. In the Upgrading segment, they charge flat owners a fee for that too. If they had build lifts to stop at every floor in the first place, it would have saved them a lot of money later on thru crap like this lift upgrading programs. As the landlord of the flats, they should not even have charged the tenants for improvements to their property. No doubt the HDB bureaucracy is bloated. U can cut a lot of deadwood there. AUditor general scrutinise what? We don't even know the cost for each flat.

And they make Mak in charge of URA and HDB at the same time and he go around telling ppl he has to pay land prices to himself.....he is a joker.

 

[Orion]

Not an accounting guy but do read financial statements once in a while.

One interesting thing is HDB has retained earnings of 80million at the end of 09/10 which is an increase of 5 million from the previous year. Wow

Anyway to really break the whole financial statement down will take a couple of days for my standard. I think others can do it faster. I also tired to go through. :o

And they will tell u, they make a loss of 2Billlion dollar. The way they calculate is really simple maths. 80% live in HDB, so 5mil out of 5.5mil = 2B losses.

 

[Char_Azn]

Your premise that HDB is inefficient is very wrong. Everything u see on the financial statements is smoke and mirrors. u have to look at the overall picture. If you recall in the 70s and 80s, HDB actually used to own the land that was expropriated. Expropriated land was directly transferred to them. This resulted in them making obscene profits and coupled with the higher prices of flats made it politically unacceptable. What was done than was that most of the HDB land bank was transferred to SLA or URA and future expropriations were given directly to these 2 agencies instead of HDB. Therefore, HDB was made to "buy" the land from these agencies. SO, lets say a piece of land (just using as an example) was purchased for $100,000, and $400,000 worth of infrastruture improvements were done to the land. It was than sold to the HDB for $5 million. Hence, after the factoring in this land price and the cost of the tender for construction, the HDB reported large losses every year. In reality, the HDB "loses", but the govt. wins. Its a classic case of the PAP showing u one hand, but playing another much better one. Its much better for the PAP to tell the people that these flats are heavily subsidised by pointing to the deficits every year and for the need for the govt to give them grants. That way the can con people.

In the above example, If the govt. was to really use the real cost of the land, HDB would make very large profits. In decades past, Temasek was funded by large HDB donations, via MOF. As for the other segmental losses, I would take those with a grain of salt too. The only segment that is believable is the mortgage portion. I have known for a long time the HDB does not make money on its mortgages, and hence opened the market to private banks years ago. In the Upgrading segment, they charge flat owners a fee for that too. If they had build lifts to stop at every floor in the first place, it would have saved them a lot of money later on thru crap like this lift upgrading programs. As the landlord of the flats, they should not even have charged the tenants for improvements to their property. No doubt the HDB bureaucracy is bloated. U can cut a lot of deadwood there. AUditor general scrutinise what? We don't even know the cost for each flat.

Interesting comment but that's only assuming the houses are built on new land, New towns like Sengkang. Not a lot of those places left to develope. What about those that were from older estate, they en-bloc, rebuilt higher larger apartment buildings(which is happening a lot these days). Wouldn't the cost then be very lop-sided if new estates do not use the same formula to calculate the price.

Any economist in here can comment on what would happen if that was the case?

 

[halsey02]

Better don't ask so much.Better don't be too clever.Just keep quiet and pretend that everything in super-efficient Red Dot is in order.OTC ask about the monetary value of govt assets and see what happend to him .

He contracted cancer & died...is that , what you mean?. As far memory goes, one opposition some years back, long, long time ago, ask about HDB balance sheet or something...was rebuffed!..anyone still have this nugget??

 

[rofthelper]

Not an accounting guy but do read financial statements once in a while.

One interesting thing is HDB has retained earnings of 80million at the end of 09/10 which is an increase of 5 million from the previous year. Wow

Anyway to really break the whole financial statement down will take a couple of days for my standard. I think others can do it faster. I also tired to go through. :o

I tot someone up there had said it would take abt years to breakdown such figures?

 

[halsey02]

In decades past, Temasek was funded by large HDB donations, via MOF. As for the other segmental losses, I would take those with a grain of salt too. The only segment that is believable is the mortgage portion. I have known for a long time the HDB does not make money on its mortgages, and hence opened the market to private banks years ago. In the Upgrading segment, they charge flat owners a fee for that too. If they had build lifts to stop at every floor in the first place, it would have saved them a lot of money later on thru crap like this lift upgrading programs. As the landlord of the flats, they should not even have charged the tenants for improvements to their property. No doubt the HDB bureaucracy is bloated. U can cut a lot of deadwood there. AUditor general scrutinise what? We don't even know the cost for each flat.

I have been asking that question for a long time too, and expounding the part of why are we paying money to the landlord for repairs or improvement or upgrading or whatever you want to call it, for we do not even own the building, least of all even the flat that we pay up.

Why dor we have to pay for lift upgrading that stop at every floor, when we do not even own the lifts??. It was HDB 'clever' design, if we have been reading or following HDB since they started building "homes for the people", to install lift that serve 5, 9, 12 or?? and some flats designed in the 70's, 80's..have stairs that lead to certain floors or certain common stairwell. It was an intricate maze, even the lad mice will be confused, if you are not familar with that block of flat or...

Now, they residents have to pay or some have already paid for the lift upgrading that stop on every flooe, their, blood, sweat, & tears money to their Landlord HDB...and never ask, why, should I pay?, do I own that lift??

 

[halsey02]

In decades past, Temasek was funded by large HDB donations, via MOF. As for the other segmental losses, I would take those with a grain of salt too. The only segment that is believable is the mortgage portion. I have known for a long time the HDB does not make money on its mortgages, and hence opened the market to private banks years ago. In the Upgrading segment, they charge flat owners a fee for that too. If they had build lifts to stop at every floor in the first place, it would have saved them a lot of money later on thru crap like this lift upgrading programs. As the landlord of the flats, they should not even have charged the tenants for improvements to their property. No doubt the HDB bureaucracy is bloated. U can cut a lot of deadwood there. AUditor general scrutinise what? We don't even know the cost for each flat.

I have been asking that question for a long time too, and expounding the part of why are we paying money to the landlord for repairs or improvement or upgrading or whatever you want to call it, for we do not even own the building, least of all even the flat that we pay up.

Why dor we have to pay for lift upgrading that stop at every floor, when we do not even own the lifts??. It was HDB 'clever' design, if we have been reading or following HDB since they started building "homes for the people", to install lift that serve 5, 9, 12 or?? and some flats designed in the 70's, 80's..have stairs that lead to certain floors or certain common stairwell. It was an intricate maze, even the lab mice will be confused, if you are not familar with that block of flat you are visiting, you are that lab mouse, very confused.

Now, they residents have to pay or some have already paid for the lift upgrading that stop on every floor, their, blood, sweat, & tears money to their Landlord HDB...and never ask, why, should I pay?, do I own that lift??

 

[LeMans2011]

Your premise that HDB is inefficient is very wrong. Everything u see on the financial statements is smoke and mirrors. u have to look at the overall picture. If you recall in the 70s and 80s, HDB actually used to own the land that was expropriated. Expropriated land was directly transferred to them. This resulted in them making obscene profits and coupled with the higher prices of flats made it politically unacceptable. What was done than was that most of the HDB land bank was transferred to SLA or URA and future expropriations were given directly to these 2 agencies instead of HDB. Therefore, HDB was made to "buy" the land from these agencies. SO, lets say a piece of land (just using as an example) was purchased for $100,000, and $400,000 worth of infrastruture improvements were done to the land. It was than sold to the HDB for $5 million. Hence, after the factoring in this land price and the cost of the tender for construction, the HDB reported large losses every year. In reality, the HDB "loses", but the govt. wins. Its a classic case of the PAP showing u one hand, but playing another much better one. Its much better for the PAP to tell the people that these flats are heavily subsidised by pointing to the deficits every year and for the need for the govt to give them grants. That way the can con people.

In the above example, If the govt. was to really use the real cost of the land, HDB would make very large profits. In decades past, Temasek was funded by large HDB donations, via MOF. As for the other segmental losses, I would take those with a grain of salt too. The only segment that is believable is the mortgage portion. I have known for a long time the HDB does not make money on its mortgages, and hence opened the market to private banks years ago. In the Upgrading segment, they charge flat owners a fee for that too. If they had build lifts to stop at every floor in the first place, it would have saved them a lot of money later on thru crap like this lift upgrading programs. As the landlord of the flats, they should not even have charged the tenants for improvements to their property. No doubt the HDB bureaucracy is bloated. U can cut a lot of deadwood there. AUditor general scrutinise what? We don't even know the cost for each flat.

That is quite true... political accounting. At the same time i know for a fact some of the main contractors who contracted to build HDB neighbourhood lost money like hell, hence i would expect contract values awarded to be on the low side. But how about upgrading? They lost 700m after netting off collections from upgrading. That to me is still puzzling, because i thought they collected more than 10k per household for upgrading lift that previously did not stop on their floor.

 

[ManBearPig62]

Part of the 3.34b is in the purchase of pty, plant & eqt, the rests in the increase in working capital for properties under development.
There is no requirement to disclose details of cost of sales in published accounts.

Thanks for explaining that.

But that's the problem. Without the details, its very hard to get any useful information from a financial statement like this.

 

[Papsmearer]

Interesting comment but that's only assuming the houses are built on new land, New towns like Sengkang. Not a lot of those places left to develope. What about those that were from older estate, they en-bloc, rebuilt higher larger apartment buildings(which is happening a lot these days). Wouldn't the cost then be very lop-sided if new estates do not use the same formula to calculate the price.

Any economist in here can comment on what would happen if that was the case?

My analysis applies to all HDB land, old or new. If you look at the really old estates, some of the original ones, like Queenstown, you will see the same pattern. The original estate I believe was developed in the 50s and 60s, before even Toa Payoh or AMK. The land for this estate was expropriated back than at cents on the dollar. The land was owned by HDB after the expropriation. This first batch of blocks was demolished in the mid-90s and HDB did a SERS en bloc if I am not mistaken. By doing the SERS, HDB is now able to build much higher density on the same plot of land and charge much higher prices per flat. However, their cost of land is still what they paid for it when they expropriated the land in the 50s and 60s. So, the formula does not change, except for the present value of money if u want to factor it in. i.e. if they paid $10,000 for a large piece of land in Queenstown in the 60s, their cost in 1996 is still $10,000, regardless of what the market is.

They earn big money several ways:
1) From the initial expropriation, they made money by paying cents on the dollar.
2) By demolishing the old flats and doing SERS, they make money selling more new units, at a higher price to new flat buyers.
3) They made money by offering old occupants of the demolished blocks new flats, but of course, they must top up the payment as the new flats (even at the preferred pricing for these displaced people) was substantially more than the $16,000 or less they paid for their original flats.

 

[silverfox@]

I tot someone up there had said it would take abt years to breakdown such figures?

Actually interpreting the financial statement is an art. You have to learn how to deduce each interpretation from the figures given. So some have different views from each interpretation. And papsmearer's deduction on selling of land from 1 agency to another could hold some truth.

Anyone knows how many staff are on HDB payroll? Because if I don't recall wrongly, >$400million were spent on salary bonuses, etc. So can roughly know whether civil servants really well paid or not.

 

[LeMans2011]

Thanks for explaining that.

But that's the problem. Without the details, its very hard to get any useful information from a financial statement like this.

Well this one bo bian... GAAP does not require that much details... on the whole it still gives a fairly good idea of the overall operations. On the subject of land price, i recall some time ago there was a discussion about the PTP port in Johor and one bro provided the link to the accounts which actually gave details of the purcase cost of land and the size of land.

HDB is a stat board hence level of disclosure is very much voluntary.

 

[Papsmearer]

Actually interpreting the financial statement is an art. You have to learn how to deduce each interpretation from the figures given. So some have different views from each interpretation. And papsmearer's deduction on selling of land from 1 agency to another could hold some truth.

Anyone knows how many staff are on HDB payroll? Because if I don't recall wrongly, >$400million were spent on salary bonuses, etc. So can roughly know whether civil servants really well paid or not.

It is the truth, you can see it in their financial statements under transfers. Regarding your questions on staffing, that is also in the annual report. The HDB group has a staff of 4679. Their total salary/bonuses/CPF contribution is $424 million a year. That works out to a whopping average of $90K per year salary for each HDB staff. As I have said, there is a lot of deadwood. The top 4 guys alone make almost $6 million in salary and bonuses. The breakdown is even scarier. Of the 4679 staff, almost 2000 are "management support" staff. These are your office girls, secretaries, personal assistants, etc. Their pay is not high, usually $2-3K a month, so their combined salary is maybe around $60 million out of this $424 million. No where near the average of $90k per year. On top of this, IT and Tech support staff is 1,260, and they also don't earn that much either, especially if they are apunehs from India. If you say $3000 is the average monthly pay for this group, than than collectively, they earn $45 million per year. The management staff is 1503, and yes you guess it, their average pay is 6 figures for this group. $424 million -$60 million-$45 million divide by 1503 = approx. $200K per person annually. That's a lot.