2003 Interim Results Announcement 23 July 2003 2 Scope of - PDF document

1 2003 Interim Results Announcement 23 July 2003 2 Scope of Presentation � Introduction � Group Financial Highlights � Business Segment Review & Outlook 1

3 Group Financial Highlights 4 Financial Highlights: P&L S$m 1H 2003 1H 2002 % change Revenue 127.6 146.3 -13% Operating Profit (Loss) (4.1) 5.3 -177% Profit (Loss) before Tax & EI 9.3 27.5 -66% 8.9 15.8 -44% PATMI before EI 8.8 17.0 -48% PATMI Earnings per share (cts) 1.6 2.9 -45% 2

5 Financial Highlights: P&L (Segments) Network Invest- Logistics Shipping Total Engrg ments * S$m 1H (03) 1H (03) 1H (03) 1H (03) 1H (03) 73.4 33.9 15.6 4.7 127.6 Revenue Operating Profit (Loss) (5.2) 3.4 1.8 (4.1) (4.1) Profit (Loss) before Tax & EI (4.4) 3.2 1.4 9.1 9.3 PATMI before EI (4.5) 5.9 1.3 6.1 8.9 PATMI (4.5) 5.6 1.3 6.4 8.8 * “Investments division” was previously known as “Telecoms division” 6 Financial Highlights: Balance Sheet S$m Jun-03 Dec-02 Jun-02 217.8 229.0 164.2 Shareholders' Funds Net Debt 200.0 170.4 496.4 D/E Ratio (times) 0.9 0.7 3.0 8.0 12.9 20.7 ROE - annualised (%) 3

7 Financial Highlights: Cash Flow Cashflow from Operating Activities Operating Loss (4.1) Adjustments for non-cash items 8.6 Working capital changes (10.9) Net Interest expense and tax, etc (4.7) Restructuring expenses (2.1) Net cash used in Operating activities (13.2) Dividends received from investments 12.5 Acquisition of assets (5.3) Net cash from Investing activities 7.2 Dividends paid to shareholders & minorities (23.7) Free Cashflow (29.7) 8 Business Segment Review & Outlook 4

9 Network Engineering – Review of 1 st Half S$m 1H (03) 1H (02) Revenue 73.4 83.7 Operating Profit (Loss) (5.2) 9.2 Profit (Loss) before Tax & EI (4.4) 10.9 PATMI before EI (4.5) 4.2 PATMI (4.5) 5.0 10 Network Engineering – Review of 1 st Half � The telecommunications & IT industry continued to be challenging: • Continued over-capacity and severe cut-backs in capital expenditure. • Continued 3G rollout delays due to technical and commercial issues. � Performance affected by: • Delays in projects already awarded. • Severe contraction of orders from a key customer. • Increased competition leading to margin erosion. 5

11 Network Engineering – Review of 1 st Half � Restructured the business: • Streamlined operations to reap greater efficiency: Consolidation of wireless network deployment operations under Trisilco Folec to reduce operating cost base. • Right-sized operations to match the market environment. • Exited non-profitable markets and low margin activities. • Broadened our customer base in Europe through acquiring new customers. 12 Network Engineering – Outlook � Consolidation in telecommunications industry will continue. � Significant network infrastructure rollout only expected to commence from mid-2004. • 3G trials will continue but full-scale rollout not expected before 2004. � Telcos will seek incremental revenue through existing networks by offering value-added services. � Telcos will continue to focus on Broadband access and IP services. � Telcos will drive efficiencies through outsourcing. 6

13 Logistics – Review of 1 st Half S$m 1H (03) 1H (02) Revenue 33.9 36.1 Operating Profit (Loss) 3.4 4.0 Profit (Loss) before Tax & EI 3.2 3.7 5.9 3.1 PATMI before EI PATMI 5.6 3.1 14 Logistics – Review of 1 st Half � External environment was challenging: • Singapore business affected by economic slowdown. • Warehousing rates under severe pressure. • Operations in Foshan (China) and Hong Kong affected by SARS. 7

15 Logistics – Outlook � Singapore business expected to continue to experience margin pressure. � China / Hong Kong business is expected to increase in the 2 nd half. � Focus will be to: • Divest warehouses to improve asset efficiency. • Expand business activities into the region. 16 Shipping – Review of 1 st Half S$m 1H (03) 1H (02) Revenue 15.6 18.2 Operating Profit (Loss) 1.8 2.7 Profit (Loss) before Tax & EI 1.4 1.8 PATMI before EI 1.3 1.8 PATMI 1.3 1.8 8

17 Shipping – Review of 1 st Half � Ship-owning: • Charter rates improved with renewals at higher rates. � Vietnam Feeder: • Freight rates under pressure. • Operations facing greater competition with new entrants. 18 Shipping – Outlook � Improving economic activity augurs well for charter rates. � Vietnam Feeder volumes showing some improvement. � Remain focused on divesting the ships. 9

19 Investments – Review of 1 st Half S$m 1H (03) 1H (02) Revenue 4.7 8.3 Operating Profit (Loss) (4.1) (10.6) Profit (Loss) before Tax & EI 9.1 11.2 PATMI before EI 6.1 6.7 PATMI 6.4 7.2 20 Investments – Review � M1: profits improved by 20%. KT&T’s stake was reduced from 35% to 14%, resulted in lower contribution of S$9.7m. � DataOne: reduced 1 st Half losses to S$1.2m compared to S$6.0m losses for 1 st half 2002. � Netrust: reduced 1 st Half losses to S$0.1m compared to S$0.6m for 1 st half 2002. � Remain focused on divesting these businesses. 10

21 Conclusion � External environment for Network Engineering is expected to remain challenging. � Improvements in economic conditions will benefit logistics operations, particularly in Foshan, China. � Charter rates for ships are firming. � Investments division performance should improve as un- profitable businesses are divested. END 11