Financial Results Briefing Financial Year 2015 Results 26 February 2016 Engineering Our Future
Comparable PBT for FY2015 ST Engineering Page 2
Financial Highlights for the year ended 31 December 2015 $m FY2015 FY2014 Change ▼ Revenue 6,335 6,539 3% Earnings before interest & tax ▼ 510.3 555.0 8% (EBIT) ▲ Other income, net 55.5 40.2 38% ▲ 479% Finance income/(costs), net 6.2 (1.7) ▼ Profit before tax (PBT) 630.3 650.7 3% Profit attributable to shareholders ▼ 529.0 532.0 1% (Net Profit) ST Engineering Page 3
Financial Highlights for the year ended 31 December 2015 ► Commercial sales at 64% (FY2014: 61%) or $4.0b of FY2015 revenue ► $11.7b order book; about $3.8b to be delivered in FY2016 (end 2014: $12.5b) ► CCE including funds under management of $1.4b (FY2014: $1.7b) ► EBITDA of $697.6m (FY2014:$725.5m) and EBIT of $510.3m (FY2014:$555.0m) lower by 4% and 8% respectively ► EVA for FY2015 at $366.2m (FY2014: $344.5m) ST Engineering Page 4
Agenda ► Financial Highlights ► 4Q2015 vs 4Q2014 ► FY2015 vs FY2014 ► FY2015 In Review ► Outlook ► Dividends ST Engineering Page 5
Financial Highlights for the fourth quarter ended 31 December 2015 $m 4Q2015 4Q2014 Change ▼ Revenue 1,779 1,848 4% ▼ Earnings before interest & tax (EBIT) 129.3 130.4 1% ▲ Other income, net 22.5 12.5 81% ▼ 131% Finance income/(costs), net (2.8) 9.1 Profit before tax (PBT) 166.6 167.4 - - Profit attributable to shareholders 140.8 140.3 - - (Net Profit) ST Engineering Page 6
Profit Before Tax by sector Comparable PBT Higher PBT from Aerospace, Electronics and Land Systems sectors, partially offset by lower PBT from Marine sector and Others. ▼ $0.8m 4Q2014 4Q2015 ▼ 366% $4.1m ▼ 43% 2% ($10.9m) (-7%) $19.3m $33.9m 12% ▲ >500 % 20% $12.7m 8% $1.1m $85.3m ▲ 19 % $71.9m 1% 51% $167.4m $166.6m 43% $56.4m $60.2m 34% 36% ▲ 7 % Aerospace Electronics Land Systems Marine Others ST Engineering Page 7
Agenda ► Financial Highlights ► 4Q2015 vs 4Q2014 ► FY2015 vs FY2014 ► FY2015 In Review ► Outlook ► Dividends ST Engineering Page 8
Group Revenue by sector Comparable Revenue Change $m FY2015 FY2014 % % ▲ Aerospace 2,090 2,061 1% 32 33 ▲ 8% Electronics 1,709 1,583 27 24 - Land Systems 1,396 1,397 - 22 21 ▼ Marine 958 1,341 29% 15 21 ▲ 16% Others 182 157 2 3 ▼ Group 6,335 100 6,539 100 3% ST Engineering Page 9
Group Revenue Breakdown by location of customers (by geography ) 9% 5% 14% Locality FY2014 FY2015 5% $m % $m % Asia 3,781 58 3,940 62 24% USA 1,525 23 1,503 24 58% 23% Europe 290 5 312 5 62% Others 943 14 580 9 Total 6,539 100 6,335 100 ST Engineering Page 10
EBIT by sector EBIT lower by $44.7 or 8% Change $m FY2015 FY2014 Aerospace 222.0 261.5 ▼ 15% ▲ Electronics 178.7 174.4 2% ▲ Land Systems 47.2 38.7 22% ▼ Marine 71.8 100.8 29% ▲ Others (9.4) (20.4) 54% ▼ Group 510.3 555.0 8% ST Engineering Page 11
Profit Before Tax by sector Comparable PBT Lower PBT from Marine sector and Others, partially offset by higher PBT from Land Systems sector, while Aerospace and Electronics sectors had comparable PBT ▼ 3% ; $20.4m FY2014 FY2015 ▼ 196% ($4.6m) $4.7m ▼ 28% (1%) 1% $88.3m $122.8m 14% 19% ▲ 3% $65.0m ▲ 16% $283.0m 11% $56.2m $290.6m 43% $630.3m $650.7m 46% 9% $191.0m $184.0m 30% 28% ▲ 4% Aerospace Electronics Land Systems Marine Others ST Engineering Page 12
Aerospace Comparable Profits FY2015 vs FY2014 Favourable exchange impact from the • stronger US dollar More Maintenance by the Hour • Revenue $2,090m ▲ $29m or 1% (MBH TM ) programmes in the Engineering & Materials Services business group Lower gross profit due to slowdown in • airframe maintenance work and provision of liquidated damages for $222.0m ▼ $39.5m or 15% EBIT B757 15 Pallet programme Partially offset by Lower operating expenses • Negative goodwill from acquiring the • remaining 50% interest in SPRO $290.6m ▲ $7.6m or 3% PBT Higher wage credit • Absence of impairment of an • associate ST Engineering Page 13
Electronics Higher Revenue and Net Profit FY2015 vs FY2014 Higher revenue contributed by • Revenue $1,709m ▲ $126m or 8% all business groups Higher revenue • $178.7m ▲ $4.3m or 2% EBIT Partially offset by Higher R&D expenses • Higher wage credit and • $191.0m ▲ $7.0m or 4% PBT government grant ST Engineering Page 14
Land Systems Higher Profits FY2015 vs FY2014 $1,396m ▼ $1m Revenue Comparable revenue • Lower allowance for inventory • ▲ $8.5m or 22% EBIT $47.2m obsolescence Lower goodwill impairment • Absence of gain from disposal of a • ▲ $8.8m or 16% PBT $65.0m joint venture ST Engineering Page 15
Marine Lower Profits FY2015 vs FY2014 Lower revenue from Shipbuilding • ▼ $383m or 29% Revenue $958m from both local and US operations ▼ $29.0m or 29% • EBIT $71.8m In line with lower revenue ▼ $34.5m or 28% • PBT $88.3m In line with lower EBIT ST Engineering Page 16
PBT Margin by sector FY2015 FY2014 Aerospace 14% 14% Electronics 11% 12% Land Systems 5% 4% Marine 9% 9% Group 10% 10% ST Engineering Page 17
Statement of Cash Flows $m FY2015 FY2014 Net cash from/(used in): Investments in 465 624 Operating activities bonds ($259m) & PPE ($273m) (477) (157) Investing activities Payment of (519) (925) Financing activities dividends ($498m), purchase of treasury Repayment of bank shares ($90m) Net decrease in CCE * (531) (458) loans ($392m) Payment of CCE at beginning of the year 1,463 1,921 dividends ($499m) Exchange difference 12 - CCE at end of the year 944 1,463 * CCE – Cash & Cash Equivalents ST Engineering Page 18
Balance Sheet $ m 31 Dec 2015 31 Dec 2014 Property, plant and equipment 1,709 1,578 Associates & joint ventures 462 478 Investments 328* 127 Intangible assets 736 671 Intangible assets Long-term receivables, non-current 5 3 Increased by $65m due mainly to Amount due from related parties, non-current 5 5 Strengthening of USD/SGD Finance lease receivables, non-current 1 1 Development expenditure of Aerospace, Electronics and Miltope Derivative financial instruments, non-current 26 24 Deferred tax assets 106 106 3,378 Non-current assets 2,993 Current assets 4,791 5,326 Total assets 8,169 8,319 Current liabilities 3,720 3,716 Net Current Assets Non-current liabilities 2,188 2,339 Decreased by $539m: Decrease in CCE (by $519m) for Total liabilities 5,908 6,055 investments in PPE, Bonds, Intangible Net Assets: Net Assets: assets and purchase of treasury shares 2,132 Share capital and reserves 2,132 $2.3b Decrease in advances and other $2.3b 129 Non-controlling interests 132 receivables (by $196m) Partially offset by Total equity and liabilities 8,169 8,319 Increase in inventories and WIP (by $141m) Net current assets 1,071 1,610 * Total investments increased from $246m to $512m, with $184m under short term. ST Engineering Page 19
Agenda ► Financial Highlights ► 4Q2015 vs 4Q2014 ► FY2015 vs FY2014 ► FY2015 In Review ► Outlook ► Dividends ST Engineering Page 20
FY2015 In Review ► Aerospace ► Launched A320/A321 P2F conversion programme with Airbus and EFW ► Redelivered 1,217 aircraft for maintenance and modifications, including the first green Boeing Business Jet for VIP completions ► Started line maintenance support for Boeing 787 operations in Singapore and commenced A380 heavy maintenance work in Dresden ► Commenced aircraft leasing business with acquisition of two aircraft ► Supplemental type certificate from US FAA for the 15-Pallet B757-200SF conversion ST Engineering Page 21
FY2015 In Review ► Electronics ► Launched TeLEOS-1, Singapore’s First Commercial Earth Observation Satellite, into a 550km Near Equatorial Orbit ► Set up VT-iDirect Solutions Limited Ireland to build competencies in satellite cell backhaul technology ► Secured various contracts including rail electronics projects in Singapore, US, China, India, Thailand and Vietnam ST Engineering Page 22
FY2015 In Review ► Land Systems ► Down-selected for next phase of the United States Marine Corps’ Amphibious Combat Vehicle (ACV) 1.1 programme ► Secured contract to supply 120mm SRAMS to an overseas customer ► Signed MOU with A*STAR to collaborate on Autonomous Vehicle technologies ST Engineering Page 23
FY2015 In Review ► Marine ► Shipbuilding deliveries: 7 th to 10 th of ten Offshore Supply Vessel to Hornbeck Offshore Services, Pasha Car Truck Carrier, 4 th of four Fast Missile Craft, 1 st of two Articulated Tug Barges (ATB) for Bouchard Transportation ► Interim acceptance of 1 st & 2 nd of four Patrol Vessel (PV) for the Royal Navy of Oman (RNO) ► Launched 1 st of eight Littoral Mission Vessels (LMV) for the Republic of Singapore Navy ► Keel laid 1 st & 2 nd of two Container Roll-on/Roll-off (ConRo) Vessels for Crowley Maritime and 2 nd & 3 rd of eight LMVs ST Engineering Page 24
Agenda ► Financial Highlights ► 4Q2015 vs 4Q2014 ► FY2015 vs FY2014 ► FY2015 In Review ► Outlook ► Dividends ST Engineering Page 25
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