PERFORMANCE REVIEW 1998
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. 2 2
SCOPE • Financial Performance • Post-merger Initiatives • Business Review • Outlook and Prospects 3 3
FINANCIAL PERFORMANCE FINANCIAL PERFORMANCE 4 4
PROFIT & LOSS PROFIT & LOSS $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 5 5
BALANCE SHEET ITEMS BALANCE SHEET ITEMS $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) 6 6
CONTRIBUTION TO TURNOVER (%) (by business sectors) Corporate Corporate Others Others Corporate Corporate Leisure & Leisure & Others Others 2 2 Lifestyle Lifestyle 2 2 Leisure & Leisure & Lifestyle Lifestyle 15 15 15 15 44 44 53 53 13 13 IT IT 14 14 IT IT 16 16 24 24 Infrastructure Marine Marine Infrastructure Infrastructure Infrastructure Engrg Engrg Marine Marine Engrg Engrg 1998 1997 1998 1997
CONTRIBUTION TO PATMI (by business sectors) $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 8 8
CONTRIBUTION TO PATMI (by business sectors) $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 9 9
CONTRIBUTION TO PBT (by country of incorporation) 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 10 10
EXTRAORDINARY ITEMS Write-downs and disposals: $M 1H98 Property Development (9.0) Financial Services 0.8 Hotels & Resorts (56.9) Other Investments 73.4 Sub-total 8.3 11 11
EXTRAORDINARY ITEMS Write-downs and disposals: $M 2H98 Non-core Businesses Property Development (197.8) Financial Services (30.0) Hotels & Resorts (53.1) Ferries & Cruises (15.2) Shipping (32.5) Other Investments (123.4) Sub-total (452.0) Core Businesses (14.3) Sub-total (466.8) Grand Total for FY1998 (458.0 ) 12 12
FINANCIAL INDICATORS 1998 1997 % ROE (%) 8.60 6.48 33 EPS (cents) 5.72 5.69 1 NTA per share ($) 0.50 0.81 (38) ROTA (%) 3.7 3.0 23 Net Gearing (times) 0.93 0.86 8 CAPEX ($m) 297 1129 (74) 13 13
CAPEX $M Top three investment items • Delifrance (general offer) 48 • BOO Projects 35 • CSN & GEIS 13 Top three fixed asset items • SML vessels 45 • Propylene Purification Unit 22 • Marine Engineering (dock in Karimun, plant & machinery) 18 14 14
EXTERNAL BORROWINGS (excluding SembCap) Currencies Amount ($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). 15 15
POST- -MERGER INITIATIVES MERGER INITIATIVES POST 16 16
RATIONALISATION OF BUSINESSES • 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. 17 17
BUSINESS REVIEW 18 18
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. 19 19
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. 20 20
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. 21 21
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 22 22
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. 23 23
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. 24 24
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. 25 25
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. 26 26
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. 27 27
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. 28 28
OUTLOOK AND PROSPECTS 29 29
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. 30 30
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 31 31
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