Scope of Presentation CEOs Report Financial Review - - PDF document

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FY2005 Results

February 28, 2006

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Scope of Presentation

• CEO’s Report
• Financial Review
• Operations Review
• Group Priorities & Outlook

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CEO’S REPORT

By Tang Kin Fei Group President & CEO SembCorp Industries

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• Delivered strong operating earnings growth
• Turnover at record-high of $7.4bn, up 25%
• PATMI before EI of $278.5m, up 22%
• PATMI before EI of $278.5m, up 45% (excl KNI)
• PATMI at $303.3m
• Healthy balance sheet and cash flow
• Net cash position
• Interest cover at 12 times
• Operating cash flow at $828m
• Sustainable growth for the future
• Strong orderbook at $8.4bn (excl. long-term contracts)

Strong Performance & Growth

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161 278 184 228 100 200 300 2002 2003 2004 2005

Sustainable Earnings & Growth

2005 PATMI 2005 PATMI before EI before EI PATMI before EI ($M)

22% 22% 20% 20%

3 3-

• Year CAGR

Year CAGR

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13 11 14 13 5 10 15 2002 2003 2004 2005

Strong Returns & Financial Discipline

ROE* (%)

*Before EI

ROE ROE

14% 14%

Interest Cover Interest Cover

12x 12x Net Cash Net Cash

Position

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Delivering Shareholder Returns

• Paid shareholders dividends
• f 11.25 cents per share and

$1.95 for every share cancelled via capital reduction in 2005

• For FY2005, Directors

recommend a 30% increase in gross ordinary dividend to 6.5 cents per share

• Represents gross dividend

yield of 2.4% (based on December 30, 2005 closing share price)

1.00 1.50 2.00 2.50 3.00 3.50

Jan-05 Apr-05 Jun-05 Sep-05 Dec-05

1,800 2,300 2,800 3,300 3,800

Total Shareholder Returns (TSR) of 66%* versus STI TSR of 18%*

SembCorp Industries ► Straits Times Index *Source: Bloomberg

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FINANCIAL REVIEW

By Lim Joke Mui Group CFO SembCorp Industries

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Group Profit & Loss

Turnover grew 25% and PATMI before EI grew 22%

($M) FY2005 FY2004 ∆% Turnover 7,409 5,944 25 EBITDA 668 1,112 (40) PBT 508 982 (48) PATMI before EI 278 228 22 PATMI before EI (excl KNI) 278 192 45 PATMI 303 391 (23) EPS before EI (cts) 15.7 12.5 26 EPS after EI (cts) 17.1 21.5 (20)

(RESTATED) 10

Contribution to Turnover

($M) FY2005 FY2004 ∆% Utilities* 3,262 2,909 12 Marine 2,102 1,351 56 Logistics 542 500 9 Enviro 217 200 8 E&C 1,096 823 33 Others 185 153 21 Corporate 5 8 (42) Total 7,409 5,944 25

*Note: Utilities (excluding Offshore Engineering) 2,945 2,495 18 Offshore Engineering 317 414 (23)

(RESTATED)

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Turnover (%) by Businesses

FY2005

Total Turnover $7.4bn

Utilities & Marine account for 72% of Group Turnover

Total Turnover $5.9bn

FY2004

Others 3% Enviro 3% E&C 15% Logistics 7% Marine 28% Others 3% Enviro 3% E&C 14% Logistics 8% Marine 23% Utilities 49% Utilities 44%

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Turnover (%) by Geographical Areas*

Overseas businesses contribute 53% of Group turnover

*Based on geographical location of customers

FY2005

Total Turnover $7.4bn Total Turnover $5.9bn

FY2004

Rest of Asia 28% Others 5% Singapore 47% Europe 20% Rest of Asia 16% Others 9% Singapore 52% Europe 23%

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($M) FY2005 FY2004 ∆%

(RESTATED)

Utilities* 147.1 108.4 36 Marine 73.4 60.3 22 Logistics (excl KNI) 32.7 28.1 16 Enviro 4.7 14.4 (67) E&C 0.8 0.4 100 Others 21.7 19.1 14 Corporate (1.9) (38.3) 95 PATMI before EI (excl KNI) 278.5 192.4 45 KNI

• 35.3

NM PATMI (before EI) 278.5 227.7 22 Exceptional Items (EI) 24.8 163.8 (85) PATMI 303.3 391.5 (23)

*Note: Utilities (excluding Offshore Engineering) 170.3 152.0 12 Offshore Engineering (23.2) (43.7) 47

Contribution to PATMI

Solid PATMI growth for Utilities and Marine

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($M) FY2005 Gain on disposal of associates and other investments 56.1 Write-back of provisions for loans and other recoverables 24.2 Unrealised foreign exchange loss relating to an amount accumulated in connection with the Solitaire arbitration (30.8) Allowance for impairment loss for interests in associates (6.2) 43.4 Less: Tax and Minority Interests (18.5) Net Exceptional Items 24.8

Exceptional Items

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($M) FY2005

MAJOR EQUITY INVESTMENT ITEMS

• Cosco Shipyard Group

47.5

• Conversion of Footwork convertible bonds

7.8

• Sabine Industries

8.6

• Others

19.3 Sub-total 83.2

MAJOR FIXED ASSET ITEMS

• Utilities

156.7

• Marine

42.0

• Logistics

18.3

• Others

51.2 Sub-total 268.2

TOTAL

351.4

Group Capex

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Group Cash Flow

($M) FY2005 FY2004

CASH FLOW FROM OPERATING ACTIVITIES

• Before changes in working capital

597 472

• Changes in working capital

276 56

• Tax paid

(45) (34) 828 494

CASH FLOW FROM INVESTING ACTIVITIES

• Divestment proceeds and sale of fixed assets

223 1,452

• Acquisitions (including investments)

(81) (192)

• Acquisitions of fixed assets

(366) (227)

• Others (including dividends and interest received)

124 178 (100) 1,211

CASH FLOW FROM FINANCING ACTIVITIES

• Issue of shares by SCI / subsidiaries

84 53

• Repayment of loans and interest paid / net borrowings

(850) (207)

• Capital reduction by SCI / subsidiaries

(314)

• Others (including dividend paid)

(512) (80) (1,592) (234)

NET (OUTFLOW) / INFLOW DURING THE PERIOD

(864) 1,471

CASH AND CASH EQUIVALENTS AT END OF PERIOD

1,231 2,100

FREE CASH FLOW

968 1,974

(RESTATED)

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Operating Cash Flow

Steadily growing operating cash flow

($M) 530 337 494 828 250 500 750 1000 2002 2003 2004 2005

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($M) Dec 31, 2005 Dec 31, 2004 PF Loans 399 513 Long-term 546 471 Short-term 161 922 Gross 1,106 1,906 Less: Cash and FD (1,231) (2,100) Net Cash (125) (194) Net Cash (excl. PF*) (394) (575) Net Gearing Ratio Net Cash Net Cash

Group Borrowings

a b * PF: Non-recourse project financing.

a Includes the $1.3bn received by SembLog for the disposal of its 20% stake in KNI. b In FY05, $702m was paid to SCI shareholders & SembLog's minority shareholders in the form of special interim

dividend and capital reduction.

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Healthy financial ratios

FY2005 FY2004

BEFORE EI

EPS (cts) 15.7 12.5 ROE (%) 14.2 12.8 ROTA (%) 5.5 5.9

AFTER EI

EPS (cts) 17.1 21.5 ROE (%) 15.3 21.1 ROTA (%) 6.1 13.5 EVA ($M) 251.0 305.7

Financial Indicators

(RESTATED) 20

Maintaining a strong balance sheet

Dec 31, 2005 Dec 31, 2004 NAV per share (cts) 114 107 NTA per share (cts) 106 99 Net Gearing Net Cash Net Cash Interest Cover (times) 12 15

Financial Indicators

(RESTATED)

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OPERATIONS REVIEW

By Tang Kin Fei Group President & Chief Executive Officer SembCorp Industries

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Utilities

• Sustainable and stable

earnings from Singapore

• perations
• Robust growth from UK and

Vietnam

156.1 (25%) PATMI ($M) 22.1 3,280.5 (12%) ROE (%) Turnover ($M)

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($M) FY2005 FY2004 ∆%

REVENUE

Energy 1,967.7 1,655.5 19 Integrated Utilities 995.3 860.5 16 Offshore Engineering 317.5 414.1 (24) Total Revenue 3,280.5 2,930.1 12

PATMI

Energy 80.8 73.6 10 Integrated Utilities 111.6 84.3 32 Offshore Engineering (23.2) (27.4) 16 Corporate & Others (13.1) (5.7) (130) Total PATMI 156.1 124.8 25

Utilities Revenue and PATMI

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1,000 2,000 3,000 FY2004 FY2005

Energy 1,655.5 1,967.7 Integrated Utilities 860.5 995.3 TOTAL 2,516.0 2,963.0

Energy and Integrated Utilities

($M) 50 100 150 200 FY2004 FY2005

Energy 73.6 80.8 Integrated Utilities 84.3 111.6 TOTAL 157.9 192.4

($M) Local

77%

Overseas

23%

Local

77%

Overseas

23%

Local

72%

Overseas

28%

Local

60%

Overseas

40%

192.4 157.9 2,963.0 2,516.0

• 18%

18%

REVENUE REVENUE

• 22%

22%

PATMI PATMI

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Key Developments

• Singapore

– Secured long-term utilities and services contracts (average 15

years) worth $68m per annum

– Secured $10m per annum worth of natural gas contracts with 13

new industrial customers

• UK

– Secured new and renewed contracts (1-5 years) worth $611m – Commenced construction of Wilton 10, one of UK’s largest

biomass renewable energy projects

• Other markets
• Strengthened beachhead in Nanjing Chemical Industrial Park

Utilities

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Nanjing

Nanjing Chemical Industrial Park

Opportunity to replicate our unique integrated utilities Opportunity to replicate our unique integrated utilities model in China model in China

Dec 2005: NCIP SembCorp Utilities

• Exclusive provider of third-party

integrated utilities and services such as steam, service corridors and terminalling within NCIP Feb 2003: Nanjing SembCorp SUIWU

• Integrated wastewater treatment plant
• 12,500 tonnes per day
• COD achieved July 2005

Nov 2005: NCIP SembCorp Water

• Exclusive rights to supply industrial

water to the Park

• 100,000 tonnes per day water

treatment facility by 1Q2007

– Planned area: 45 sq km – One of the two State-level petrochemical parks in China – Park tenants include Celanese, DSM, BASF-YPC, etc. Nanjing Chemical Industrial Park Nanjing Chemical Industrial Park

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Key Developments

• Other markets (cont’d)

– Shanghai Caojing completed reliability test runs and was

declared commercially operational in December 2005

– Established new beachhead in ZhangJiaGang Free Trade Zone

with a 20,000 tonnes per day integrated industrial wastewater treatment plant by 1H2006

• Offshore Engineering

– Focused on executing new projects secured during the year – Commenced expansion of Batam yard from 15 ha to 30 ha

Utilities

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Priorities

• Singapore

–

Continue to support the growth of existing customers and secure new customers

–

Continue to engage in optimisation projects to increase assets yield

• UK

–

Continue to support the growth of existing customers and secure new customers

–

Construction of renewable energy power plant, Wilton 10. Target COD: mid-2007

• Other markets

–

Develop and strengthen start-up operations in China

–

Pursue selective greenfield and brownfield M&A opportunities in growing markets (China, GCC and ASEAN)

• Offshore Engineering

–

Focus on securing procurement and construction projects

Utilities

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Outlook

• Singapore

–

Stable earnings from long-term contracts with organic growth

• pportunities on Jurong Island

–

Potential M&A opportunities e.g. local genco

–

Expected launch of New Gas Market

–

Potential gas assets pipeline transfer

• UK

–

Strong performance expected to be maintained in 2006, underpinned by favourable energy prices in the UK

• Other markets

–

China projects are still in the early phase and are not expected to contribute significantly to the 2006 performance

–

Vietnam power plant will continue to perform well

–

Ranked as first of two short-listed bidders for Fujairah IWPP in UAE

• Offshore Engineering

–

Performance expected to improve in 2006

Utilities

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Marine

• Another record year - strong

performance by all sectors particularly rig building and

• ffshore conversion
• $5.9bn orderbook on hand

(as of Feb 14, 2006)

74.4 ( 24%) PATMI ($M) 11.9 2,119 ( 56%) ROE (%) Turnover ($M)

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Key Developments

• Secured $4.2bn worth of contracts in 2005. Orderbook at

$5.9bn (as of Feb 14, 2006)

• Delivered 2 semi-submersibles for Global Santa Fe
• Delivered 1 unit 2,600 TEU container ship for Wan Hai

Lines

• Positioned to serve customers in the Gulf of Mexico with

the acquisition of Sabine Shipyard, Texas in October 2005

Marine

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Priorities

• Strengthening Global Hubs
• Strategically located facilities in Singapore, China, Brazil and the

US

• Maximising shipyard capacity in Singapore
• Research & development in proprietary designs for rigs
• Strategic alliances with customers

Marine

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Outlook

• Strong demand for high specification rigs and deepwater

drilling units

• Strong fundamentals in offshore conversion
• Ship repair demand expected to be strong amid

competitive environment

• Good demand for niche shipbuilding

Marine

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Logistics

• Growth driven by Supply

Chain Management

• Recurring earnings for 2006

expected to be better than 2005

37.4 (95% ) PATMI ($M)* 9.9 542.1 (9% ) ROE (%) Turnover ($M)

* PATMI before EI (excluding KNI) for FY2005: $32.7m, up 16%

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Key Developments

• Expanded supply chain network to Indonesia and the

Philippines

• Formed 2 task forces (China-Japan, China-Korea) to grow

North Asia SCM

• Secured a total of 245 SCM contracts of which 173 were from

new customers

• Started second chemical logistics terminal at Jurong Island
• Made good headway in cross-selling efforts, now serving 22

customers regionally

• Expanded operations and warehouse capacities in seven

countries to meet increase in demand

Logistics

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Priorities

• Serve more regional SCM accounts
• Grow inter-region cross-border SCM business
• Expand Chemical Logistics business to China
• Scale up Collateral Management and Metals Logistics

business to more countries in SembLog’s network

• Explore M&A opportunities and expansion to new

geographical areas

Outlook

• Recurring earnings for FY2006 are expected to be better than

FY2005

Logistics

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Enviro

Outlook

• Orderbook of $548.4m
• Business streamlined post-strategic

review

• Strategically focusing on pre-

disposal treatment and waste-to- resource to extract value from waste

• Waste management opportunities

from current JVs in China and India

4.7 ( 67%) PATMI ($M) 3.1 219 ( 8%) ROE (%) Turnover ($M)

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Engineering & Construction

Outlook

• Orderbook at $2.3bn
• Focused on Process Engineering

projects

0.8 ( 100%) PATMI ($M) 1.3 1,097 ( 33%) ROE (%) Turnover ($M)

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By Tang Kin Fei Group President & CEO SembCorp Industries

GROUP OUTLOOK

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Our Growth Drivers Marine

• Unique integrated utilities

business model

• Sustainable earnings from long-

term contracts

• Overseas investments (UK &

Vietnam) bearing fruit

• Beachheads in growing

markets, M&A opportunities

• Global leader, worldwide

network of 12 shipyards with total capacity of 2.9m dwt

• Technological capability and

proprietary designed rigs

• Record-high $5.9bn orderbook

(2006-2009)

• Strong fundamentals in offshore

& marine sector

Utilities

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Barring unforeseen circumstances, the Group's overall performance for 2006 is expected to be better than that of 2005.

Group Outlook

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This presentation contain forward-looking statements that involve risks and

• uncertainties. Actual future performance, outcomes and results may differ

materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples

• f these factors include (without limitation) general industry and economic

conditions, interest rate trends, availability and cost of fuel and materials, cost of capital and capital availability, competition from other companies and ventures for the sale and distribution of goods and services, shifts in customer demands, customers and partners, changes in operating expenses, including employee wages, benefits and training, governmental and public policy, directives and changes. You are cautioned not to place undue reliance on these forward-looking statements, which are based on current view of management on future events and impact on the Group.

Disclaimer

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Questions & Answers Questions & Answers

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APPENDIX

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2005 Developments

• The hearing on the Owner’s claims were completed in
• 2005. The Tribunal is expected to make an award on

the Principal sums in 2006.

• We look forward to closing the matter once and for all

and moving on.

Update for Solitaire

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Group Orderbook

5,341 Marine 2,300 Engineering & Construction 548 Enviro 8,420 TOTAL 231 Utilities (SMOE)

As at Dec 31, 2005

($M)

Note: Excludes long-term contracts

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Contribution to Turnover

($M) 4Q2005 4Q2004 ∆% Utilities* 909 706 29 Marine 746 396 88 Logistics 144 150 (5) Enviro 59 52 14 E&C 210 195 8 Others 23 42 (52) Corporate 1 2 35 Total 2,092 1,543 35

*Note: Utilities (excluding Offshore Engineering) 839 642 31 Offshore Engineering 70 64 9

(RESTATED) 48

($M) 4Q2005 4Q2004 ∆%

(RESTATED)

Utilities* 42.4 31.8 33 Marine 17.2 17.1 1 Logistics (excl KNI) 6.5 5.5 18 Enviro (1.7) 3.6 NM Engineering & Construction (0.2) 0.7 NM Others 8.7 7.9 5 Corporate 7.4 (6.1) NM PATMI before EI (excl KNI) 80.3 60.4 33 KNI

• 10.4

NM PATMI (before EI) 80.3 70.8 14 Exceptional Items (EI) 10.2 163.8 NM PATMI 90.5 234.6 (61)

*Note: Utilities (excluding Offshore Engineering) 36.6 37.9 (4) Offshore Engineering 5.8 (6.2) 194

Contribution to PATMI