Sembcorp Industries Ltd. · SGX:U96
Sembcorp Industries — FY1999 Earnings Presentation
46 slides from Sembcorp Industries's earnings presentation, Mar 1, 2000
Slide 1: Performance Review 1999
PERFORMANCE REVIEW 1999 March 1, 2000
Slide 2: Highlights
HIGHLIGHTS • SembCorp Industries’ profit has rebounded • Against previous year’s loss of $57.1m, our FY99 PATMI reached $128.2m - no writebacks • Discounting exceptional items, our operating PATMI grew 57% against the previous year • We achieved $38m from merger cost savings and rationalisations • O
Slide 3: Scope
SCOPE • Financial performance • Sectoral review • What’s coming in FY 2000 • Priorities and management target 3 3
Slide 4: Financial Performance
FINANCIAL PERFORMANCE 4 4
Slide 5: Profit & Loss
PROFIT & LOSS $M 1999 1998 % Turnover 3,653.1 3,900.1 (6) PBT (before Assocs & JVs) 229.0 35.0 554 Contribution from Assocs/JVs 31.9 28.2 13 PBT (after Assocs & JVs) 260.9 63.2 313 - exclude Exceptional Items 260.9 193.1 35 PATMI 128.2 (57.1) NM - exclude Exceptional Items 128.2 81.4 57 EI 237.3 (45
Slide 6: Balance Sheet Items
BALANCE SHEET ITEMS $M 1999 1998 % Share Capital 400.4 394.5 1 Capital Reserves 528.2 564.7 (6) Revenue Reserves 238.9 (304.4) NM Currency Translation Reserves 0.9 2.3 (61) Share Capital & Reserves 1,168.4 657.1 78 Minority Interests 656.6 790.4 (17) Interest of Preference Shareholders 397.6 350.0 1
Slide 7: Contribution to Turnover (%) by business sectors
CONTRIBUTION TO TURNOVER (%) (by business sectors) Properties, F’ F’l Svcs & Corporate Properties, F’ F’l & Others Svcs & Corporate Hotels/Resorts & Others Hotels/Resorts 2 Lifestyle 2 Lifestyle 14 15 46 14 44 12 IT IT 24 25 Infrastructure Marine Infrastructure Marine Engrg Engrg 1999 1998
Slide 8: Contribution to Turnover (by business sectors)
CONTRIBUTION TO TURNOVER (by business sectors) $M 1999 1998 % Infrastructure 1,691.7 1,723.0 (2) Construction 687.7 652.0 5 Engineering 432.6 479.9 (10) Integrated Logistics 432.3 420.7 3 Building Materials 135.5 154.9 (13) Industrial Parks 3.1 15.5 (80) Others (incl. Heavy 0.5 - NM Infrastructure,
Slide 9: Contribution to Turnover (by business sectors)
CONTRIBUTION TO TURNOVER (by business sectors) $M 1999 1998 % Lifestyle 507.2 569.1 (11) Food Processing & Distribution 315.4 280.5 12 Food Retailing 112.8 137.3 (18) Travel & Retail 46.7 100.2 (53) Minting 32.3 51.1 (37) Corporate & Others 4.8 8.3 (42) Properties, Financial Services & Hotels / Reso
Slide 10: Contribution to Turnover (by geographical area)
CONTRIBUTION TO TURNOVER (by geographical area) 1999 % 1998 % % $M $M Local 2,229.7 61 2,406.3 62 (7) Overseas 1,423.4 39 1,493.8 38 (5) TOTAL 3,653.1 100 3,900.1 100 (6) 10 10
Slide 11: Contribution to PATMI, excl Exceptional Items
CONTRIBUTION TO PATMI, EXCL EXCEPTIONAL ITEMS (by business sectors) $M 1999 1998 % Infrastructure 75.5 52.6 44 Construction 24.2 21.6 12 Engineering 15.2 7.7 97 Integrated Logistics 25.5 16.9 51 Building Materials 2.3 2.9 (21) Industrial Parks 3.5 7.1 (51) Others (incl. Heavy Infrastructure, Energy)
Slide 12: Contribution to PATMI, excl Exceptional Items
CONTRIBUTION TO PATMI, EXCL EXCEPTIONAL ITEMS (by business sectors) $M 1999 1998 % Lifestyle 29.7 27.6 8 Food Processing & Distribution 18.4 16.1 14 Food Retailing 4.6 5.3 (13) Travel & Retail 3.2 1.9 68 Minting 3.5 4.3 (19) Corporate & Others (36.0) (51.5) 30 Properties, Financial Services & Hotels
Slide 13: Extraordinary Items
EXTRAORDINARY ITEMS $M Gain/(Loss) on Disposals: PacNet 145.4 SFI 73.7 Ventura 65.8 ST Logistics 19.7 SAFE Superstore 12.2 Delifrance (91.6) AutoBatam Ferries (5.0) North Bridge Road Shophouses, Resource Building & Moulmein Rise (4.4) Others (5.8) Sub-total 210.0 13 13
Slide 14: Extraordinary Items
EXTRAORDINARY ITEMS $M Write-backs: FCC 84.1 Wah Kwong Shipping 7.9 Provisions for properties sold 0.3 Sub-total 92.3 Write-offs/Provisions: Beijing Toronto International Hospital (15.8) Bintan Resort, Garden City Mall & others (22.6) Construction’s development properties (19.3) Provision for Sun Cr
Slide 15: Financial Indicators
FINANCIAL INDICATORS 1999 1998 % ROE (%) 14.04 (5.86) NM ROTA (%) 4.65 1.28 263 EPS - before EI (cents) 7.91 (3.78) NM EPS - after EI (cents) 22.85 (32.81) NM Interest Cover 3.87 1.36 185 Net Gearing (times) 0.49 1.03 (52) EVA ($m) (55.57) (166.00) 67 EVA ($m) 110.50 - - NTA per share ($) 0.71 0.40
Slide 16: Capex - 1999
CAPEX - 1999 $M Top three investment items • SembCogen 45 • New Assocs/JVs 18 • SUT 13 Top three fixed asset items • Plant & Machinery 30 • Vessels & Tugboats 13 • Computers 12 16 16
Slide 17: External Borrowings (excluding SembCap)
EXTERNAL BORROWINGS (excluding SembCap) Currencies Amount ($M) Total S$M As a % ST LT Equivalent of total S$ 193 1,150 1,343 87 US$ 98 58 156 11 Others (RM, NZ$, A$, £) 27 9 36 2 Total 318 1,217 1,535 100 (Average interest rates for S$ and US$ were 5.61% and 6.27% p.a. respectively). 17 17
Slide 18: Net Borrowings (excluding SembCap)
NET BORROWINGS (excluding SembCap) $M As at As at Dec 31, 1999 Jun 30, 1999 % Short-term 318 703 (55) Long-term 1,217 1,145 6 Gross 1,535 1,848 (17) Less Cash (644) (568) 13 Net 891 1,280 (30) 18 18
Slide 19: Cost Savings
COST SAVINGS $M Merger cost savings and rationalisations at 25 HQ & SBUs CPF savings 13 Total 38 Current headcount for Group: 13,500 (16% decline against pre- merger) 19 19
Slide 20: Solitaire Update
SOLITAIRE UPDATE • Norton Rose notified us on January 17, 2000 that Allseas filed additional claims totaling about $218m against Sembawang Corporation • We have been advised by Norton Rose that at present no evidence or particulars have been advanced to substantiate this increase in the claim • Base
Slide 21: Sectoral Review
SECTORAL REVIEW 21 21
Slide 22: Construction
CONSTRUCTION • PATMI grew 12% to $24.2m • Gross margin stood at 6% for the year • Order book (18 months) is $1.06bn at end-Jan 00 • Largest projects booked in 1999: - JTC stack-up factories: $134m (completion: 90%) - SATS Inflight Catering Centre 3: $81m (completion: 94%) - Ulu Pandan Sewage Treatme
Slide 23: Engineering
ENGINEERING • PATMI grew 97% to $15.2m • Gross margin is 10% for the year (includes BOO) EPC • PATMI contribution was $9.2m • Order book (18 months) is $416m at end-Jan 00 • Largest projects booked in 1999: - Peciko field development: $53m (completion: 98%) - Yetagun development: $115m (completion:
Slide 24: Engineering
ENGINEERING BOO • SUT became a 60% owned subsidiary in Dec 99 (only one month consolidation). Total PATMI contribution for FY99 was $6.5m • Number of SUT customers rose from 13 to 17 last year. Many existing customers have also expanded facilities and hence demand for utilities has risen • PATMI con
Slide 25: Industrial Parks
INDUSTRIAL PARKS • Performance affected by regional crisis, political uncertainty in Indonesia and Japan’s economic recession • PATMI contribution to SembCorp Industries: 1999 1998 % BIP 11.2 12.4 (10) BIE (0.7) (0.7) - WSIP (4.3) (3.8) (13) VSIP (1.2) (0.2) NM KMIC (2.1) (0.6) NM SPM 0.5 - - TOTAL
Slide 26: Integrated Logistics
INTEGRATED LOGISTICS • PATMI grew 21% to $34.9m • Supply chain management was the key earnings contributor • Most of non-core businesses such as shiprepair, shipping, ferry and cruise were divested during the year • Further provision of $20.9m was made for the diminution in value of the remaining sh
Slide 27: Marine Engineering
MARINE ENGINEERING • PATMI grew 10% to $78.7m despite slight dip in turnover • Shortfalls in shiprepair and shipbuilding were offset by increased contributions from ship conversion and offshore upgrading jobs • Cost control measures also contributed to higher profitability 27 27
Slide 28: Information Technology
INFORMATION TECHNOLOGY • SCS’ PATMI grew 58% to $16.0m despite a fall in turnover arising from lower hardware sales • Higher profitability due mainly to shift of focus towards higher value added service-based businesses and greater operating efficiency 28 28
Slide 29: Internet
INTERNET • PacNet’s PATMI declined 49% to $7.7m • Fall in earnings was due largely to provision of toll rebates and increased expenditure in entering new markets such as Australia and India • Dial-up subscribers rose 41% to over 287,000 while leased line subscribers grew 142% to 1,434 (about 100,000
Slide 30: What's Coming in FY 2000
WHAT’S COMING IN FY 2000 30 30
Slide 31: Strategic Framework
STRATEGIC FRAMEWORK • In E&C, logistics, marine and ISP, we are already Asia dominant (outside Japan) with solid earnings • Growth through major acquisitions / strategic alliances is the way to make us a global player • Valuation of companies in traditional businesses are now looking attractive (PEs
Slide 32: Strategic Framework: e-Business Development
STRATEGIC FRAMEWORK e-Business Development - Inject the e-dimension into all our businesses to create value - In-house methodology created for e-business: • Training of management to migrate brick & mortar businesses to click & mortar ones • All business units must complete at least one e-business p
Slide 33: Strategic Framework: e-Business Development
STRATEGIC FRAMEWORK e-Business Development - Examples of e-initiatives within SembCorp Industries - SembCorp Logistics : document transfer and web-based tracking - SembCorp Construction: submission of bids/quotes by sub-contractors/suppliers, e-procurement - SFI : e-mart shopping - Mint : sale of co
Slide 34: What's Coming: Engineering and Construction
WHAT’S COMING ENGINEERING AND CONSTRUCTION • Have defined our M&A targets and the roadmap to get there • In negotiation to appoint an investment banker and advisor to seek a major acquisition / alliance • Target companies being shortlisted in USA and UK 34 34
Slide 35: What's Coming: Utilities
WHAT’S COMING UTILITIES • Jurong Island‘s earnings potential by 2002* $M - SUT 1/2 19.0 - Gas 9.0 - Cogen 20.0 - PPU 3.0 - Air Products should breakeven • Natuna gas and Cogen on schedule • Intend to participate in bidding for the privatised gencos (local and overseas) • Study on desalination is und
Slide 36: What's Coming: Waste Management - Galax Services
WHAT’S COMING WASTE MANAGEMENT - GALAX SERVICES • SembCorp SITA to acquire all the equity of Galax. The total investment estimated $2.5m • Galax is a specialist in industrial and medical waste collection and disposal - holds 11% of the Singapore market • Has 800 customers covering factories, airport
Slide 37: What's Coming: Waste Management
WHAT’S COMING WASTE MANAGEMENT • Acquisitions planned / under negotiation in: - Australia - Indonesia - Malaysia - China • Estimated expenditure - $250m (over this year) • 60 : 40 debt / equity ratio • Greenfield projects in China, Philippines and Thailand are in collection, landfill and incineratio
Slide 38: What's Coming: Integrated Logistics, Marine Engineering
WHAT’S COMING INTEGRATED LOGISTICS • Should complete global bilateral / tripartite alliance by end-2000. In process of appointing an investment banker and advisor • Growth in this area will rise very strongly after completion MARINE ENGINEERING • Proposed acquisitions of a conversion yard in Brazil
Slide 39: What's Coming: Information Technology
WHAT’S COMING INFORMATION TECHNOLOGY • To sell 40.5% in SCS to Singapore Technologies, subject to minority shareholders’ approval. • SembCorp Industries to retain 20% stake in SCS. EI gain from this transaction will be about $182m • SCS’ remains our e-commerce enabler and systems provider 39 39
Slide 40: What's Coming: Internet
WHAT’S COMING INTERNET • SembCorp Industries cannot drive the company alone, we still need a global partner (either in content or telco services) to maximize PacNet’s potential • We will continue to remain PacNet’s largest shareholder • SembCorp Industries will not enter the traditional telco busine
Slide 41: What's Coming: Internet
WHAT’S COMING INTERNET • Capabilities to be rolled out include fixed wireless (eg. LMDS) and voice • PacNet will continue to establish itself as the leading Asian ISP, content and e-business company • PacNet to attain a subscriber base of 400,000 by end-2000 • PacNet discussing JV with our travel op
Slide 42: What's Coming: Food Processing & Distribution
WHAT’S COMING FOOD PROCESSING & DISTRIBUTION • Develop e-commerce models to connect with suppliers and business customers • Expand distribution network in China • Seek M&As and strategic alliances in SE Asia, China, UK and Europe • No plans to sell further shares but use shares as currency to do maj
Slide 43: What's Coming: Warchest and Capex 2000
WHAT’S COMING Following the divestment programme (including SCS), we will have a warchest of about $800m $M CAPEX 2000 $672m Equity investments (including SembCogen, SUT, regional Power projects, Waste Management) 384 Fixed Assets (including Plant & Machinery, marine vessels) 288 43 43
Slide 44: Priorities and Management Targets
PRIORITIES AND MANAGEMENT TARGETS 44 44
Slide 45: Our Priorities
OUR PRIORITIES • The divestment phase is over - the first chapter has been written • Chapter II - growing SembCorp Industries by acquisitions and strategic alliances. • M&As to be the key approach taken at Group and SBU levels • Attain our management target of about 20% PATMI growth for FY 2000 • Ne
Slide 46: SembCorp Industries
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