PERFORMANCE REVIEW 1998 SembCorp Industries PATMI for FY98 showed - - PowerPoint PPT Presentation

PERFORMANCE REVIEW 1998

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SembCorp Industries’ PATMI for FY98 showed 1 per cent growth to $92.9m. The Directors recommend a 10 per cent dividend amounting to $29.2m to shareholders.

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SCOPE

• Financial Performance
• Post-merger Initiatives
• Business Review
• Outlook and Prospects

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FINANCIAL PERFORMANCE FINANCIAL PERFORMANCE

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$M 1998 1997 % Turnover 3,900.1 3,309.3 18 PBT (before Assocs & JVs) 185.0 123.0 50 Contribution from Assocs 17.2 75.3 (77) Contribution from JVs 11.0 4.7 134 PBT (after Assocs & JVs) 213.2 203.0 5 PATMI (before EI) 92.9 92.3 1 EI (458.0) (38.0) NM PATMI (after EI) (365.1) 54.3 NM

PROFIT & LOSS PROFIT & LOSS

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$M 1998 1997 % Share Capital 394.5 394.5

• Capital Reserves

564.7 646.5 (13) Revenue Reserves (154.4) 242.9 NM Currency Translation Reserves 2.3 7.8 (71) Share Capital & Reserves 807.1 1,291.7 (37) Minority Interests 790.4 827.4 (4) Interest of Preference Shareholders 350.0 350.0 - in a Subsidiary 1,947.5 2,469.1 (21)

BALANCE SHEET ITEMS BALANCE SHEET ITEMS

CONTRIBUTION TO TURNOVER (%) (by business sectors)

Corporate Corporate

Corporate Corporate

Others Others

Others Others

Leisure & Leisure & Lifestyle Lifestyle

Leisure & Leisure & Lifestyle Lifestyle

IT IT

IT IT

Marine Marine Engrg Engrg

Marine Marine Engrg Engrg

Infrastructure Infrastructure

Infrastructure Infrastructure

44 44 15 15 24 24 14 14 2 2 2 2 15 15 13 13 16 16 53 53

1998 1998 1997 1997

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$M 1998 1997 % Infrastructure Engineering & Construction 29.3 16.8 74 Integrated Logistics 28.3 26.3 8 Building Materials 2.9 2.9

• Industrial Parks

5.6 5.3 6 Others (Cathay, SembCorp Energy) (3.6) 4.4 NM Marine Engineering 41.8 8.3 NM Information Technology IT Services 6.1 8.4 (27) Internet Service Provider 11.3 (2.1) NM

CONTRIBUTION TO PATMI (by business sectors)

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$M 1998 1997 % Lifestyle Food Processing & Distribution 16.2 12.1 34 Food Retailing 5.3 1.4 278 Travel & Retail 1.9 (2.4) NM Others (Minting, Hotels & Resorts) 0.4 6.6 (94) Corporate (50.6) (36.2) (40) Others (2.0) 40.5 NM (Properties, Financial services) TOTAL 92.9 92.3 1

CONTRIBUTION TO PATMI (by business sectors)

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1998 % 1997 % Singapore 225.4 105.7 199.3 98.2 Rest of Asia (13.3) (6.2) 5.4 2.7 Others 1.1 0.5 (1.8) (0.9) TOTAL 213.2 100 203.0 100

CONTRIBUTION TO PBT (by country of incorporation)

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$M 1H98 Property Development (9.0) Financial Services 0.8 Hotels & Resorts (56.9) Other Investments 73.4 Sub-total 8.3

EXTRAORDINARY ITEMS

Write-downs and disposals:

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$M 2H98 Non-core Businesses Property Development (197.8) Financial Services (30.0) Hotels & Resorts (53.1) Ferries & Cruises (15.2) Shipping (32.5) Other Investments (123.4) Sub-total (452.0) Core Businesses (14.3) Sub-total (466.8) Grand Total for FY1998 (458.0)

EXTRAORDINARY ITEMS

Write-downs and disposals:

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1998 1997 % ROE (%) 8.60 6.48 33 EPS (cents) 5.72 5.69 1 NTA per share ($) 0.50 0.81 (38) ROTA (%) 3.7 3.0 23 Net Gearing (times) 0.93 0.86 8 CAPEX ($m) 297 1129 (74)

FINANCIAL INDICATORS

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CAPEX

$M Top three investment items

• Delifrance (general offer)

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• BOO Projects

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• CSN & GEIS

13 Top three fixed asset items

• SML vessels

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• Propylene Purification Unit

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• Marine Engineering (dock in Karimun,

plant & machinery) 18

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EXTERNAL BORROWINGS (excluding SembCap)

Currencies Amount ($M) Total S$M As a % ST LT Equivalent of total S$ 707 1,083 1,790 86 US$ 197 61 258 13 Others (RM, £) 19 4 23 1 Total 923 1,148 2,071 100 (Average interest rates for S$ and US$ were 6.15 per cent and 5.92 per cent p.a. respectively).

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POST POST-

• MERGER INITIATIVES

MERGER INITIATIVES

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• Reorganisation of construction and engineering businesses

into SembCorp Construction and SembCorp Engineering.

• Merger of ST Logistics and SML to form SembCorp Logistics.
• Placement of all five industrial parks under one management.
• Consolidation of hotels and resorts under one management.
• Announcement of exit write-downs of $452m below the line for

non-core businesses - property development, financial services, hotels and resorts, ferries and cruises and shipping.

• Listing of PacNet on Nasdaq.

RATIONALISATION OF BUSINESSES

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BUSINESS REVIEW

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INFRASTRUCTURE

Engineering & Construction

• SembCorp Engineering’s PATMI grew 50 per cent to

$18.3m due to higher profit margins and cost control.

• SembCorp Construction’s PATMI rose 25 per cent to

$14.4m.

• Secured 11 off-take agreements for 15 years for SUT.
• Won $204.5m LTA contract to build Changi Airport MRT

Station.

• Won a US$11m EPC contract for Mobil’s Vietnam project.

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INFRASTRUCTURE

Integrated Logistics

• Merger of logistics units to form one of Asia’s largest

integrated logistics providers.

• ST Logistics reported PATMI growth of 30 per cent

to $12.6m.

• SML’s PATMI fell 16 per cent to $20.5m due to

losses incurred in ferries & cruises business.

• Won contract to provide logistics management

services for GE group in Singapore.

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INFRASTRUCTURE

Utilities & Power

• Signed agreement for 22-year supply of natural gas

from West Natuna.

• Construction of SembCorp Cogen’s 800MW power

plant to begin in 2Q99.

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INFRASTRUCTURE

Industrial Parks

• Performance affected by regional crisis, political uncertainty

in Indonesia and Japan’s economic recession.

• PATMI contribution to SembCorp Industries:

1998 1997 BIP $12.4m $10.6m BIE ($0.7m) ($0.6m) WSIP ($5.3m) ($3.1m) VSIP ($0.2m) $0.6m KMIC ($0.6m) ($2.2m) TOTAL $5.6m $5.3m

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MARINE ENGINEERING

• PATMI contribution grew significantly due to full year

consolidation of JSL’s financial results.

• JSL’s PATMI increased 58 per cent to $71.3m due to:

– strengthening of US dollar. – increased baseload from shipbuilding and offshore activities. – improved profitability of associates and JVs.

• No significant impact from Asian economic crisis as most

customers are from outside Southeast Asia.

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INFORMATION TECHNOLOGY

ST Computer

• PATMI fell 27 per cent to $10.2m due to adoption of a

more conservative provision policy.

• Formed regional JV with GE Information Systems.
• Secured a two-year contract to manage Compaq’s

data centre operations.

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INFORMATION TECHNOLOGY

PacNet

• Turned in PATMI of $15.1m due to 110 per cent

increase in subscriber base to about 204,000.

• Raised US$35.7m from its Nasdaq listing in Feb.

SembCorp Industries received US$13.8m from sale of vendor shares.

• As at Mar 26, PacNet’s market capitalisation was

about US$550m.

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LIFESTYLE

Food Processing & Distribution

• SFI posted PATMI of $16.2m, representing a growth of

33 per cent over the previous year.

• Introduced higher value added products and made

significant market penetration in UK and Europe through ICL, its UK subsidiary.

• Manages 49 SAF cookhouses and has received a

consistent 98 per cent good/satisfactory food rating.

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LIFESTYLE

Food Retailing & Others

• Delifrance’s full-year PATMI (Jan-Dec 98) fell 30 per cent

to $6.9m compared to $10.0m in FY97 due to current economic crunch and intense retail competition.

• Full year reporting for Delifrance changed to follow

calendar year.

• Despite poor retail market, SAFE Enterprises reported

PATMI of $5.5m due to better cost control and savings as well as rationalisation of non-performing associates.

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Y2K COMPLIANCE

• Y2K efforts are in progress to ensure that all computer

systems are Y2K compliant by 2Q99.

• Success of Y2K programme also depends on the

success of Y2K programmes of business partners and associates.

• Business contingency plans are in place to minimise

impact, if any, on operations.

• $14m is allocated for Y2K programme, of which 27 per

cent is capitalised and the remainder expensed in FY98.

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OUTLOOK AND PROSPECTS

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SOLITAIRE

History

In Nov 93, Sembawang was awarded a contract worth $230m by Allseas for conversion works to the vessel “Solitaire”. Allseas terminated the contract in Oct 95 before works were fully completed. Arbitration started in London in early 1996.

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SOLITAIRE

The Claims

Allseas

• Termination on the grounds of:

– failure to complete on time – breaches of contractual obligations

• Damages claimed include:

– costs relating to termination and removal of vessel – costs of completion of the vessel Sembawang

• Counter-claim for wrongful termination
• Damages claimed include:

– value of work done but unpaid – time and cost implications of variation orders

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SOLITAIRE

Status

• Hearing to consider termination issue took place in Sept 98.
• No award has been issued so far but tribunal decision is

believed to be imminent.

• Our chances of winning are 50:50.
• Should the decision be adverse, we will make a provision in

FY98 to cover our possible net exposure arising from the claims and counter-claims submitted. This will be about $150m to be taken as an Exceptional Item.

• The final determination of Solitaire-related gains/liabilities will
• nly be clear in 2001.

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OUTLOOK & PROSPECTS

Infrastructure

• Engineering and construction order book now stands at

$1.8bn.

• SUT’s earnings are targeted to increase 30 per cent over the

next three years due to new projects and increased number of customers.

• SembCorp Logistics’ earnings are targeted to grow by 10 per

cent in 1999 and 20 per cent in 2000 and beyond. Supply chain management will be the main driver of growth.

• Operations of SembCorp Cogen’s 800MW power plant and

SembCorp Gas’ natural gas pipeline project are expected to start from mid 2001.

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OUTLOOK & PROSPECTS

Marine Engineering

• Offshore construction, conversion and repair activities

expected to be strong for 1999 due to baseload of projects. Information Technology

• ST Computer will pursue internationalisation efforts into

greater China, Australia and the US and expand e-commerce and internet-related services. Management’s target is to grow earnings by about 20 per cent in 1999.

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OUTLOOK & PROSPECTS

Information Technology

• PacNet will expand within its existing markets in Hong Kong

and the Philippines. It will also penetrate into selected new markets such as Australia, China and India to achieve regional market leadership.

• PacNet will build up its expertise through strategic alliances

with global partners. Food Processing

• SFI’s FY99 target PATMI growth will be affected by the

temporary closure of Primary Industries’ abattoirs.

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PRIORITIES FOR 1999

• Streamline operations and reduce costs by $35m.
• Orderly exit from non-core businesses.
• Implement EVA throughout SembCorp Industries to rate

business and CEO performance.

• Focus each SBU on its core businesses.
• Explore fund-raising options.
• Attain management target for 1999.