Sembcorp Industries Ltd. · SGX:U96
Sembcorp Industries — FY2004 Earnings Presentation
60 slides from Sembcorp Industries's earnings presentation, Feb 18, 2005
Slide 1: Delivering Sustainable Performance - FY2004 Results
Delivering Sustainable Performance SembCorp Industries FY2004 Results February 18, 2005 1
Slide 2: Scope Of Presentation
Scope Of Presentation Chairman’s Report Financial Review Operations Review - Utilities - Marine Engineering - Logistics - Environmental Engineering - Engineering & Construction Group Priorities & Outlook for 2005 2
Slide 3: Chairman's Report
CHAIRMAN’S RE P O RT By Peter Seah Lim Huat Chairman SembCorp Industries 3
Slide 4: Solid Performance & Growth
Sol id Perform ance & G row th Delivered credible earnings growth - Turnover of $5.9bn, up 28% - PATMI of $395.5m, up 39% - PATMI before EI up 26%, exceeded target set for FY2004 Improved performance from all key businesses - Double-digit growth across most businesses Shareholder value enhanced - To
Slide 5: Solid Performance & Growth
Sol id Perform ance & G row th Healthy Balance Sheet - Net cash position - Interest cover doubled to 15 times Strong operating cash flow - Operating cash flow increased to $528m Sustainable growth for the future - Strong group orderbook of $5.6bn (excl. long term contracts in Utilities and Logistics
Slide 6: Stable Growth
Stab l e G row th PATMI ($’m) 500 2004 PATMI 395 400 39% 285 300 200 172 172 3 year CAGR 100 0 32% 2001 2002 2003 2004 Record PATMI – 3 year CAGR at 32% 6
Slide 7: Returns exceeded target
R etu rns ex ceed ed targ et 25 2004 ROE 21 20 18 18 17% 15 14 ROE (%) 11 ROE 12% target 10 5 0 2000 2001 2002 2003 2004 7
Slide 8: Rewarding shareholders
R ew ard ing sh areh ol d ers 15 11.25 12 Dividend per share Dividend per share 9 7.00 6.25 61% 6 4.50 2 3.00 1.5 3 5 5 3 3 0 2001 2002 2003 2004 Directors recommend 20% (5 cents per share) ordinary and 25% (6.25 cents per share) special dividend for FY2004 This 45% (11.25 cents) gross dividend is a
Slide 9: Financial Review
F INANCIAL RE V IE W By Lim Joke Mui Group Chief Financial Officer SembCorp Industries 9
Slide 10: Group Profit & Loss
G rou p Profit & L oss $M FY04 FY03 % Turnover 5,944 4,642 28 EBITDA 1,117 583 92 PBT 1,016 471 116 PATMI before EI 232 184 26 PATMI 395 285 39 EPS before EI (cts) 12.7 10.1 26 EPS(cts) 21.7 15.7 39 Delivered record set of results for FY04 Turnover grew 28% and PATMI grew 39% 10
Slide 11: Contribution to Turnover
C ontrib u tion to T u rnov er $M FY04 FY03 % Utilities 2,909 1,933 51 Marine Engineering 1,351 1,062 27 Logistics 501 465 8 Environmental Engineering 200 190 5 Engineering & Construction 823 803 3 Others 152 180 (16) Corporate 8 9 (11) Total 5,944 4,642 28 Turnover growth spurred by Utilities which
Slide 12: Contribution to Turnover (%) by businesses
Contribution to Turnover (%) by bus ines s es Others & Corporate Others & Marine 3% Corporate Eng. 4% 23% Marine Eng. 23% Utilities Utilities 42% 49% Logistics Logistics 8% 10% E&C E&C 17% 14% Env.Eng. Env.Eng. 3% 4% FY04 FY03 Total Turnover - $5.9bn Total Turnover - $4.6bn Utilities’ contribution i
Slide 13: Contribution to Turnover (%) by geographical areas
Contribution to Turnover (%) by g eog ra p h ic a l a rea s * Rest of Asia 16% Rest of Asia 15% Others 9% Others Singapore 10% 52% Singapore Europe 54% Europe 23% 21% FY04 FY03 Total Turnover - $5.9bn Total Turnover - $4.6bn Overseas turnover grew from 46% to 48% 13 *Based on source of business
Slide 14: Contribution to PATMI
C ontrib u tion to PA T M I $M FY04 FY03 % Utilities 108.9 98.3 11 Marine Engineering 60.8 49.0 24 Logistics 64.8 55.9 16 Environmental Engineering 14.5 12.5 16 Engineering & Construction 1.1 0.6 83 Others 19.3 7.4 161 Corporate (37.7) (40.1) 6 PATMI before EI 231.7 183.6 26 EI 163.8 101.5 61 PATMI
Slide 15: Exceptional Items
E x ceptional I tem s $M FY04 Gain on disposal of KNI shares 648.8 Gain on disposal of SSE 16.3 Solitaire: - Provision for exposure - ($200m Nov 04) - ($215m Dec 04) (415.0) - WIP written off (86.3) 163.8 *The additional $215m provision made for Solitaire in Dec 04 took into account latest evaluatio
Slide 16: Group Capex
G rou p C apex $M FY04 Capex 281 - Equity Investments 121 - Fixed assets 160 Major Equity Investment items:- Shanghai Caojing Cogen 49 Phu My3 10 COSCO Corp 14 Footwork Express 34 Major Fixed Assets items:- Capital WIP 102 Plant & Machinery 58 16
Slide 17: Group Cash Flow
G rou p C ash F l ow $M FY04 FY03 Cash flow from Operating activities - before changes in working capital 468 449 - changes in working capital 94 (48) - tax paid (34) (64) 528 337 Cash flow from Investing activities - divestments proceeds & sale of FA 1,451 203 - acquisitions (incl. investments) (41
Slide 18: Group Borrowings
G rou p B orrow ing s $M Dec 31, 2004 Dec 31, 2003 PF loans 513 814 Long-term 471 580 Short-term 922 660 Gross 1,906 2,054 Less Cash & FD (2,100) (679) Net (Cash) / Debt (194) 1,375 Net (Cash) / Debt (excl. PF*) (575) 762 Net Gearing Ratio - include PF* Net cash 0.6 - exclude PF* Net cash 0.3 * PF -
Slide 19: Financial Indicators
F inancial I nd icators FY04 FY03 Before EI EPS (cts) 12.7 10.1 ROE (%) 13.1 11.4 ROTA (%) 5.7 5.6 After EI EPS (cts) 21.7 15.7 ROE (%) 21.3 17.7 ROTA (%) 13.6 7.3 EVA ($m) 311.0 91.0 Financial ratios improved 19
Slide 20: Financial Indicators
F inancial I nd icators Dec 31, 2004 Dec 31, 2003 NAV per share (cts) 107 94 NTA per share (cts) 99 88 Net Gearing - excl. PF* (times) Net Cash 0.3 Net Gearing - incl. PF* (times) Net Cash 0.6 Interest Cover (times) 15 7 *PF - Non-recourse project financing The Group is in a net cash position of $19
Slide 21: Proposed Capital Reduction
P rop os ed Ca p ita l R ed uc tion Proposal Proposed amount to be distributed to shareholders About $215m Percentage / number of shares to be cancelled 6% or about 110m shares Price to be paid for each share cancelled $1.95 Price paid is $1.95 per share; @ 2.6% premium over the 5-day VWAP (11 Febru
Slide 22: Proposed Capital Reduction
P rop os ed Ca p ita l R ed uc tion Impact to Shareholders For every 1,000 shares held, 60 shares will be cancelled. Shareholders will then hold 940 shares Value distributed to shareholders for every 1,000 share held = $117.00 As shares will be cancelled proportionately, all shareholders will mainta
Slide 23: Proposed Capital Reduction
P rop os ed Ca p ita l R ed uc tion Timing (maybe subject to change) 18 February 2005 - Announcement of capital reduction 26 April 2005 – EGM to approve capital reduction June 2005 – Payment to shareholders 23
Slide 24: Utilities Operations Review
U T IL IT IE S O P E RAT IO NS RE V IE W By Tang Kin Fei President & Chief Executive Officer SembCorp Utilities 24
Slide 25: Utilities
U til ities Turnover ($M) PATMI ($M) ROE (%) 2,930 ( 50%) 125.2 ( 27%) 21.8 Delivered strong top and bottom-line growth Energy and Integrated Utilities generated robust performance 25
Slide 26: Utilities Revenue and PATMI
U til ities R ev enu e and PA T M I ($M) 2004 2003 % REVENUE: - Energy 1,656 845 96 - Integrated Utilities 860 616 40 - Offshore Engineering 414 489 (15) Total Revenue 2,930 1,950 50 PATMI: - Energy 74 46 61 - Integrated Utilities 84 44 91 - Offshore Engineering (27) 18 (247) - Corporate & Others (6
Slide 27: Energy and Integrated Utilities
E nerg y a nd I nteg ra ted U til ities ($M) 3,000 ($M) 180 REVENUE PATMI 160 158 2,516 72% 76% 2,500 140 Overseas Overseas 23% 120 28% 2,000 100 90 1,461 1,500 80 Overseas Overseas 23% 24% Local 1,000 Local 60 72% 77% 40 Local Local 500 77% 76% 20 0 0 2003 2004 2003 2004 Energy 845 1,656 Energy 46
Slide 28: Utilities Key Developments
U til ities Key Developments Singapore - Operations integrated to increase synergy and profitability - Finances restructured to release trapped cash UK - Full year contribution - Tallow Project, our first foray into renewable energy was a resounding success - New 42-megawatt GT commenced operations
Slide 29: Utilities Key Developments (cont'd)
U til ities Key Developments (cont’d) Vietnam - Phu My 3 COD on March 1, 2004 - Profits achieved from first year of operations Offshore Engineering - Enterprise-wide risk management processes tightened - Sime SembCorp Engineering divested - Two contracts secured to-date worth more than US$312m ▪ Off
Slide 30: Utilities 2005 Priorities
Utilities 2005 Priorities Expand facilities and services to support new and existing customers on Jurong Island Continue to focus on renewable energy in UK Provide expand services to new and existing customers on Teesside Strengthen China beach-head to support growth strategy in China Continue to ex
Slide 31: Utilities Outlook
Utilities Outlook Singapore operations - Chemicals industry did well in 2004 and projected to be strong in 2005 - Increase customer base by tapping on new investors on Jurong Island - Existing customers to provide organic growth UK operations - Strong government push for green energy - Potential inv
Slide 32: Marine Engineering Operations Review
MARINE E NG INE E RING O P E RAT IO NS RE V IE W By Tan Kwi Kin President & Chief Executive Officer SembCorp Marine 32
Slide 33: Marine Engineering
M arine E ng ineering Turnover ($M) PATMI ($M) ROE (%) 1,363 ( 28%) 95.0 ( 21%) 10.0 Ship conversion and ship repair delivered sturdy growth Record performance and dividends payout 33
Slide 34: Marine Engineering Key Developments
M arine E ng ineering Key Developments Acquisition of 30% stake in COSCO Shipyard Group bolstered presence across China Strong growth in ship conversions and shiprepair Proprietary designs spurred building orders - 5 orders of Baker Marine Pacific Class deep drilling offshore jack up rigs have been
Slide 35: Marine Engineering 2005 Priorities and Outlook
M arine E ng ineering 2005 Priorities Strengthening global hubs Leverage on complementary overseas facilities Leverage on proprietary design to increase market share Continue to develop strategic alliances with customers Outlook Strong fundamentals in offshore conversion and rig building Ship repair
Slide 36: Logistics Operations Review
L O G IS T ICS O P E RAT IO NS RE V IE W By Koh Soo Keong President & Chief Executive Officer SembCorp Logistics 36
Slide 37: Logistics
L og istics Turnover ($M) PATMI ($M)* ROE (%)* 769 ( 65.3%) 106.6 ( 18%) 19.1 Strengthened Pan- Asia network spanning across 15 countries Delivered double-digit growth *PATMI and ROE shown are ex-EI PATMI after EI:$1,171m ROE after EI:209.3% 37
Slide 38: Logistics Key Developments
L og istics Key Developments Strengthened Pan-Asia supply chain network - Vietnam - Philippines - Indonesia North Asia performed well Expanded specialty logistics offerings: Metals, CMA and commodities Strategic sale of stake in KNI making $1bn gain 38
Slide 39: Logistics 3-Year Plan (2005-2007)
L og istics 3-Year Plan (2005 – 2007) Make ourselves the “household name” in logistics across Asia Accelerate earnings growth Achieve global reach 39
Slide 40: Logistics Outlook
L og istics Outlook North Asia will lead EBIT growth South East Asia will continue to show growth and provide baseload earnings South Asia operations expected to be profitable Management target of 20-25% growth in net earnings (based on operating earnings of $49m) 40
Slide 41: Environmental Engineering Operations Review
E NV IRO NME NT AL E NG INE E RING O P E RAT IO NS RE V IE W By Loh Wai Kiew President & Chief Executive Officer SembCorp Environmental Management 41
Slide 42: Environmental Engineering
E nv ironm ental E ng ineering Turnover ($M) PATMI ($M) ROE (%) 203 ( 5.7%) 14.5 ( 16%) 9.1 Leading Asian environmental management services company Delivering consistent double-digit growth 42
Slide 43: Environmental Engineering Key Developments
E nv ironm ental E ng ineering Key Developments Orderbook at $403m as at 31 December 2004 Strengthened home base operations in Singapore - SembWaste Cleantech was awarded $63m public cleansing contract by the NEA - Awarded 8 major projects on pneumatic waste technology including Republic Polytechnic
Slide 44: Environmental Engineering 2005 Priorities and Outlook
E nv ironm ental E ng ineering 2005 Priorities Continue to capitalise on the liberalisation of waste management markets in China, India, and Middle East to foreign participation Expand into host of integrated environmental solutions and alternative waste technologies Further consolidate market posit
Slide 45: Engineering & Construction Operations Review
E NG INE E RING & CO NS T RU CT IO N O P E RAT IO NS RE V IE W By Wong Heang Fine President & Chief Executive Officer SembCorp Engineers and Constructors 45
Slide 46: Engineering & Construction
E ng ineering & C onstru ction Turnover ($M) PATMI ($M) ROE (%) 824 ( 0.8%) 1.1 ( 83%) 0.7 Improved performance over 2003 Predominant focus on process engineering: 67% of orderbook Predominant focus on overseas market: 59% of orderbook 46
Slide 47: Engineering & Construction Key Developments
E ng ineering & C onstru ction Key Developments Orderbook doubled to $2.6 bn (vs $1.42bn) Book-to-bill ratio at 3.10 (vs 1.74) Enhanced profile and capabilities in the international process engineering sector - Middle East: Secured petrochemical based contracts worth $325m - India: Refinery project
Slide 48: Engineering & Construction 2005 Priorities and Outlook
E ng ineering & C onstru ction 2005 Priorities Continue to expand overseas markets Continue to focus on proactive execution through good risk management and cost control Extend focus on process sectors Outlook Better prospects for 2005 48
Slide 49: Outlook & Priorities
Outlook & Priorities By Peter Seah Lim Huat Chairman, SembCorp Industries 49
Slide 50: 2005 Group Priorities
2 0 0 5 G rou p Priorities Continue to strengthen key business units and growth drivers Building on stable earnings of the Group’s businesses Continual focus on operational execution and sound financial discipline 50
Slide 51: Group Outlook for 2005
G rou p Ou tl ook for 2 0 0 5 The Group’s overall operating performance in 2005 is expected to be better than that of 2004 on a comparable basis, which excludes profit contribution from KNI in 2004 51
Slide 52: Thank You
a9 SembCorp —- Industries Thank You = == SembCorp — Industries
Slide 53: Appendix
a9 SembCorp —- Industries APPENDIX
Slide 54: Update for Solitaire
Update for Solitaire 2004 Developments May - Tribunal ruled in favour of the Owners (Allseas) in the interim award on the “choice of yard” June - Sembawang submitted an application for leave to appeal to the English High Court against the interim award which was granted in October November - High Co
Slide 55: Update for Solitaire
Update for Solitaire 2005 Developments Hearing on residual issues to be heard in late February The Tribunal is scheduled to hear Sembawang’s counterclaims in late April. Arbitration is expected to complete by end 2005, at which time the Tribunal will determine the final award for both parties. 55
Slide 56: Group Orderbook
G rou p O rderb ook $M As at Dec 31, 2004 Utilities (SMOE) 304 Engineering & 2,600 Construction Environmental 403 Engineering Marine Engineering 2,288 TOTAL 5,595 Note: Excludes long-term contracts 56
Slide 57: Utilities Orderbook
Uti l i ti es Orderbook (31 December 2004): $304m Major Projects $m Client Date of Completion Bongkot Field PTT Exploration 1Q2005 Development Phase 175 and Production 3C Public Company Dan FG Development Maersk Olie OG 2Q2005 Project * Gas Idd El Shargi North Occidental 2Q2005 Dome Offshore* Petrol
Slide 58: Engineering & Construction Orderbook
Engineering & Construction Orderbook (31 December 2004): $2.6bn Major Projects $m Client Date of Completion LTA- Contract 856 335 LTA Feb 2009 PARS Polystyrene 163 Pars Petro Co Dec 2007 Tambora Gas 113 Total E&P Jun 2006 Project Indonesia Indonesie Mediterranean 220 NAKHEEL Jun 2006 Garden UAE Essa
Slide 59: Engineering & Construction Orderbook Mix
Engineering & Construction • $1,708m (67%) of Process Orderbook Mix (31 December 2004) Engineering projects − petrochemical − utilities − pharmaceutical 10% 22% − environmental 41% − oil and gas 87% 37% • $847m (33%) of Building and Civil Engineering projects – transportation – defence Singapore Res
Slide 60: Thank You
Thank You = == SembCorp — Industries