1H 2006 Results Announcement
August 1, 2006
Scope of Briefing
Part I Financial Review
Part II Operations Review & Outlook Sustaining Growth
Part III Q & A
1 1H 2006 Performance Highlights
Continuous Strong Growth
Revenue increased by 68% to a record high at $1,540.3 million Operating profits increased 79% to $100.3 million PBT increased 70% to $127.5 million PATMI increased 69% at $98.4 million PATMI (exclude non-operating items of $1.8 m) increased 65% to $96.6 million EPS at 6.77 cents (1H 2005 : 4.08 cents) : up 66% Interim dividend for 1H 2006 : 3.5 cents per share : up 40% - 1H 2005 interim dividend : 2.5 cents
Earnings & EPS
PATMI grew by 69% for 1H 2006 as compared with 1H 2005
Year 2Q 2Q % 1H 1H % Description 2006 2005 ∆ 2006 2005 ∆ Revenue ($’m) 1,041.2 470.4 121.4 1,540.3 918.1 67.8
EBITDA ($’m) 60.0 41.1 46.0 120.8 72.9 65.7 Operating Profit ($’m) 49.5 32.6 52.1 100.3 56.1 78.6 Pre-tax Profit ($’m) 71.4 44.6 60.0 127.5 75.1 69.7 PATMI ($’m) 57.5 34.6 66.4 98.4 58.4 68.5 PATMI ($’m) 49.6 34.6 43.4 96.6 58.4 65.4 (exclude non-operating items) EPS (cents) – Basic 3.96 2.40 65.0 6.77 4.08 65.9 - Diluted 3.91 2.37 65.0 6.69 4.02 66.4
2 Quarterly Revenue
• Record quarterly revenue achieved at $1,041 million in 2Q 2006 • 1H 2006 revenue grew by 68% to $1,540 million
S$m 2200 2,119
2000
1800 750 1,540 1600 1,363 1400
1200 397 1,012 1,068 451 1,041 1000 239 854 264 800 390 242 339 470 600 256 239 400 331 290 294 210 15 448 499 200 245 163 202 196 0 2001 2002 2003 2004 2005 1H 2006
1Q 2Q 3Q 4Q
Quarterly PATMI
• Highest quarterly earnings in 2Q 2006 at $57 million, up 66% from 2Q 2005 • Record PATMI achieved at $98 million for half year
S$m 130 121 120
110 30 98 100 95 92 90 82 20 79 25 80 33 57 70 19 31 19 60 22 50 19 12 40 24 34 27 30 22 25 20 41 29 15 24 10 19 21 14 0 2001 2002 2003 2004 2005 1H 2006
1Q 2Q 3Q 4Q
3 Operating Margin & Operating Profit
• Quarterly Operating Margin & Operating Profit show slight fluctuations due to changes in product mix & nature of Percentage conversion projects $’000
14 70,000 13.2 65,668 12.4 Operating Margin 62,446 Gross Profit Margin 12 Operating Profit 60,000 Gross Profit 51,387 10 10.1 10.2 49,537 10 50,000 50,741 8.9 45,467 8.1 8.1 42,002 8 7.4 7.7 38,870 7.8 40,000 6.9 6.8 6.9 30,318 31,425 6.1 6.0 30,640 32,577 35,285 6 26,786 33,119 30,000 24,390 5.3 4.8 25,421 4.5 4.4 4 23,570 20,000 18,162 17,929
2 10,000
0 0 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06
Operating Margin & Operating Profit
• However, Half-yearly Operating Margin & Operating Profit show increasing trends
Percentage $’000 12 140,000 128,114 Operating Margin Gross Profit Margin 9.9 Operating Profit 120,000 10 Gross Profit 100,278 96,854 8.3 100,000 8.0 7.9 8.1 8 7.6
80,000 6.3 6.1 6.5 6 63,260 72,642 5.7 57,104 68,404 60,000 56,147 4 49,354 43,583 40,000
2 20,000
0 0 1H 2004 2H 2004 1H 2005 2H 2005 1H 2006
4 Operating Margin & Operating Profit
• On a yearly basis, Operating Margin & Operating Profit also show increasing trends. We expect margin improvement based on a yearly basis Percentage $’000 14 169,496 180,000 12.6 Operating Margin Gross Profit Margin Operating Profit 160,000 12 Gross Profit
127,556 128,114 140,000 124,549 10 9.5 120,364 8.9 8.8 120,000 101,918 8.0 8.3 8 89,883 92,933 100,278 100,000 7.0 6.8 74,308 6.5 5.9 6 80,000
60,000 4 40,000
2 20,000
0 0 2002 2003 2004 2005 1H 2006
Capital and ROE
Annualised ROE is 18%
Year % Description 1H 2006 1H 2005 change Shareholders’ Funds (million) 1,092 1,032 6 Capital Employed (million) 1,120 1,074 4 Net Cash (million) 513 607 (15) ROE (%) (annualised) 18.2 11.7 56 Net Asset Value (cents) 75.0 71.6 5
5 Free Cashflow
Dividends paid increased 17% to $81 million
Year 1H 2006 1H 2005 % Description S$m S$m change Cashflow from operation 123 73 68 before reinvestment in working capital Net cash provided (used in)/ (43) 290 n.m. by operating activities Net cash provided by/(used 95 ( 101) n.m. in) investing activities Dividends paid to (81) ( 69) 17 shareholders Cash & cash equivalent 513 607 (15)
Capex
Capex for strategic tie & capacity expansion at $187 million, subject to shareholders’ approval Year(S$m) 2006 2005 FY2005 Description Forecast Budget Actual
Rig 35.5 97.3 97.6 Buildings 2.0 0.7 0.2 Plants, Machinery & Cranes 27.6 17.9 33.2 Office & Workshop Equipment 5.4 4.6 8.6 70.5 120.5 139.6 CoscoShipyard Group (China) 24.6 49.0 47.5 Others 25.4 - - 50.0 49.0 47.5
CoscoCorporation (Singapore) 120.3 - - SMOE & SemBeth 66.5 * -- 186.8 --
Total 307.3 169.5 187.1
* Remaining amount of $116.9 million from bank borrowings
6 Commitment to Shareholder Value
Interim 2006 Dividend Payout at 3.5 cents per share vs 2.5 cents in 1H 2005 40% higher than 2005 interim Dividend Policy : Not lower than 75% in payout ratio
91% Cents 9.5 9.50 9.00 8.50 91% 8.00 7.5 7.50 84% 86% 78% 7.00 79% 6.45 6.5 6.5 6.50 6.0 7.00 6.00 72% 72% 5.50 5.0 5.0 5.00 3.20 4.50 2.75 4.00 4.00 6.00 4.00 57% 2.25 2.50 3.50
3.00 2.5 1.00 1.00 2.50 1.00 2.00 0.75 1.00 1.00 1.00 1.50 1.50 3.5 1.50 1.00 0.75 1.00 1.38 0.75 0.75 1.5 2.5 0.75 0.50 0.75 0.75 0.75 0.75 0.75 0.00 0.375 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Interim Dividend Interim Special Final Final Special 0.75
7 Turnover by Segments
Rig Building registered strongest growth Others Ship Repair at 419% as compared with Rig Building 4% 25% 16% 1H 2005
1H 2005
Shipbuilding 11% Others Ship Repair Ship Conversion 4% 17% 44% 1H 2006 Ship Conversion 22%
Sector 1H 2006 1H 2005 +/(-) +/(-) $’m $’m $’m % Rig Building Ship Repair 257.7 231.2 26.5 11.5 Shipbuilding Shipbuilding 117.0 99.0 18.0 18.2 49% 8% Ship conversion 342.4 402.5 ( 60.1) (14.9) Rig Building 753.3 145.1 608.2 419.2 Others 69.9 40.3 29.6 73.4 Total 1,540.3 918.1 622.2 67.8
Turnover by Segments (2Q 2006 vs 2Q 2005 & 1H 2006 vs 1H 2005)
All Sectors registered strong increases
$m 2Q 2Q % 1H 1H % Sector 2006 2005 Change 2006 2005 Change
Ship Repair 127.5 135.1 ( 5.6) 257.7 231.2 11.5
Shipbuilding 70.1 47.6 47.3 117.0 99.0 18.2
Ship Conversion 266.7 179.4 48.7 342.4 402.5 ( 14.9)
Rig Building 558.8 97.2 474.9 753.3 145.1 419.2
Others 18.1 11.1 63.1 69.9 40.3 73.4
Total 1,041.2 470.4 121.4 1,540.3 918.1 67.8
8 Ship Repair : Review
Average value per vessel increased by 18% to $1.62 million for 1H 2006
Year 2Q 2Q % 1H 1H % Description 2006 2005 change 2006 2005 change
Revenue contributions 127.5 135.1 (5.6) 257.7 231.2 11.5
No. of vessels 78 89 (12.4) 159 169 5.9
Average value per vessel ($m) 1.63 1.52 7.2 1.62 1.37 18.2
Ship Repair : Review
Tanker, FPSO, Offshore upgrading, Container, Bulk Carrier & LNG/LPG carriers accounted for 80% of ship FPSO Repair in 1H 2006 upgrading Tanke r 20% Dredger 27% 1% 1H 2005 8% Others
4% Navy Offshore 12% 18% FPSO upgrading 10% upgrading LNG/LPG Container 13% Tanke r Bulk Carrier 3% Passenger 25% 4% Cargo 1% 1H 2006 7% Others
Navy 7% 13% 1% Container 13% Dredger/barge 13% LNG/LPG Bulk Carrier
9 Ship Building: Review
2 container vessels delivered in 1H 2006
Year 2Q 2Q % 1H 1H % Description 2006 2005 change 2006 2005 change
No. of vessels delivered 1 - 100 2 2 -
No. of vessels (WIP) 7 8 (13) 7 8 (13)
In planning & engineering stage 1 2 (50) 1 2 (50)
Percentage completion ($m) 70.1 47.6 47.3 117.0 99.0 18.2
Shipbuilding : Review
Shipbuilding activities will remain strong in 2006
Project Completed & Delivered in 1H 2006 : 2 Project Name/Type Customer Delivery schedule
• 2nd unit 2,600 TEU container Wan Hai Lines 1Q 2006 • 3rd unit 2,600 TEU container Wan Hai Lines 2Q 2006 Projects in WIP Stages : 6
• 4th 2,600 TEU container Wan Hai Lines 4Q 2006 • 1st unit 2,600 TEU container Reederei F Laeisz 3Q 2006 • 2 units 4,950 dwt tanker Kuwait Oil Tanker 4Q 2006 • 5th unit 2,600 TEU container Wan Hai Lines 2Q 2007 • 6th unit 2,600 TEU container Wan Hai Lines 4Q 2007
Project in Early Stages : 1 • 2nd unit 2,600 TEU container ReedereiF Laeisz 3Q 2007
10 Ship Conversion & Offshore : Review
Lower conversion revenue due to reduced level of activity on completion of marine hull conversion of FPSO P-54 project in April 2006
Year 2Q 2Q % 1H 1H % Description 2006 2005 change 2006 2005 change
No. of vessels delivered 1 - n.m. 2 1 100
No. of vessels (WIP) 8 5 60 8 5 60
In planning & engineering stage - 4 n.m. - 4 n.m.
Percentage completion ($m) 266.7 179.4 48.7 342.4 402.5 (14.9)
Ship Conversion & Offshore: Review
Ship Conversion activities expected to remain strong in 2006
Projects completed & delivered in 1H 2006 : 2 Project Name/Type Customer Delivery schedule • P-50 Topsides installation Petrobras 1Q 2006 • P-54 marine conversion Petrobras 2Q 2006
Projects in WIP stages : 8 • P-54 Topsides fabrication Petrobras 3Q 2006 • P-54 Compressor modules Petrobras 3Q 2006 • Heavy Lift Derrick Pipelay Sapura Crest 1Q 2007 • P-54 integration & commissioning Petrobras 3Q 2007 • ConocoPhillips topsides ConocoPhillips 3Q 2008 • PRA-1 FPSO conversion Modec 1Q 2007 • RJS FSO conversion Modec 4Q 2006 • BW Enterprise FPSO conversion Bergessen 4Q 2006
11 Rig Building Jack-up : Review
Jack-Up Rig Building recorded strongest growth at 510% in 1H 2006 as compared with 1H 2005
Year 2Q 2Q % 1H 1H % Description 2006 2005 change 2006 2005 change
No. of Rigs delivered 1 - 100 1 - 100
No. of Rigs (WIP) 6 2 200 6 2 200
No. in planning & 8 8 - 8 8 - engineering stage
Percentage completion ($m) 424.5 72.9 477 592.7 97.2 510
Rig Building Jack-up : Review Jack-Up Rig building activities expected to increase substantially in 2006
Project completed & delivered in 1H 2006 : 1 Project Name/Type Customer Delivery schedule • 1st unit Jack-Up Kristiansand Drilling 2Q 2006 Projects in WIP Stages : 6 • 2nd unit Jack-Up Wilpower 3Q 2006 • 3rd unit Jack-Up Apexindo 4Q 2006 • 4th unit Jack-Up Deep Drilling Invest 3Q 2007 • 5th unit Jack-Up WilSuperior 3Q 2007 • 6th unit Jack-Up Petrojack I 2Q 2007 • 7th unit Jack-Up Petrojack II 1Q 2008 Projects in Engineering & Early Stages : 8 • 8th unit Jack-Up Japan Drilling 1Q 2008 • 9th unit Jack-up SeaDrill 4Q 2007 • 10 th unit Jack-Up Petrojack III 3Q 2008 • 11 th unit Jack-Up Awilco 4Q 2007 • 12 th unit Jack-Up Aban Lloyd 4Q 2008 • 13 th unit Jack-Up Sinvest 4Q 2008 • 14 th unit Jack-up JackInvest 1 4Q 2008 • 15 th unit Jack-up Awilco 3Q 2008
12 Rig Building Semi-submersibles: Review
Semi-submersible Rig Building revenue is expected to grow with more projects coming into the WIP stages by 2H 2006
Year 2Q 2Q % 1H 1H % Description 2006 2005 change 2006 2005 change
No. of Rigs delivered 1* - 100 1* 2 (100)
No. of Rigs (WIP) 1 1* - 1 1* -
No. in planning & 3 2 n.m 3 2 n.m engineering stage
Percentage completion ($m) 134.3 24.3 469 160.6 47.9 235
* Atlantia Lower Hull
Rig Building Semi-submersible : Review
Semi-submersible rig building activities also expected to increase in 2006
Projects completed & delivered in 1H 2006 : 1 Project Name/Type Customer Delivery schedule
• Lower Hull Atlantia Offshore 1Q 2006
Project in WIP Stages : 1 • 1st unit Semi-submersible SeaDrill 3Q 2008
Projects in Engineering & Early Stages : 3 • 2nd unit Semi-submersible SeaDrill 4Q 2008 • 3rd unit Semi-submersible PetroMena 4Q 2009 • 4th unit Semi-submersible PetroMena 4Q 2009
Exclusion : 2 units Baredeck Hull to be built up as semi-submersibles
13 Exclusion : 2 units Baredeck Hull to be built up as semi-submersibles
Scope & price still pending
In Jurong SML Shipyard
In Karimun Shipyard in Indonesia
Contracts Secured in 1H 2006 Contracts secured 2006 to-date stand at S$1,878 million. We expect more
Month Value (2006) Details Value (2005) Details US$m S$m US$m S$ January $ 175 $ 288 1 unit Baker Marine Pacific Class 375 $133 $ 217 1 unit Baker Marine Pacific Class 375 Jack-up rig for Aban Lloyd Chiles, India Jack-up rig for PT Apexindo $ 53 $ 88 1 FPSO conversion – BW Enterprise
February $ 141 $ 228 1 unit of Baker Marine Pacific Class 375 $101 $ 161 Fabrication & integration of topsides production Jack-up rig for Sinvest ASA modules for newbuild FPSO for ConocoPhilips China $ 80 $ 123 Design & construction of a self-propelled DP Heavy Lift PipeLay vessel for SapuraCrest Petroleum Berhad $ 50 $ 82 Fabrication of a deep draft semi-submersible hull got Atlantia Offshore $120 $ 194 1 unit Baker Marine Pacific Class 375 Jack-up rig for Deep Drilling Invest March $ 480 $ 778 1 unit Friede & Goldman ExD design Semi- $121 $ 196 1 unit Baker Marine Pacific Class 375 Jack-up submersible rig for PetroMena ASA rig for WilSuperior, a subsidiary of Awilco Offshore Sub-total $ 849 $1,382 $ 605 $ 973
April $ 165.5 $ 266 1 unit Baker Marine Pacific Class 375 $ 129 $ 212 1 unit Baker Marine Pacific Class 375 Jack-up Jack-up rig for JackInvest I rig for Seatankers $ 142 $ 230 1 unit Baker Marine Pacific Class 375 $ 127 $ 209 1 unit Baker Marine Pacific Class 375 Jack-up Jack-up rig for Awilco Offshore rig for PetroJack II $ 130 $ 215 1 unit Baker Marine Pacific Class 375 Pacific Class 375 Jack-up rig for Japan Drilling June nil nil $ 794 $1,310 2 units Friede & Goldman Ex-D design semi-submersibles for SeaDrill $ 131 $ 216 1 unit Baker Marine Pacific Class 375 Jack-up rig for PetroJack III Total $ 307.5 $ 496 $ 1,311 $2,162
Overall $1,157 $1,878 $ 1,916 $3,135
* excludes semi-submersibles (2 units bare-deck hull) from Noble Drilling
14 Contracts Secured (exclude ship repair)
S$’000 Contracts secured to-date 2006 stand 4500 at $1.9 billion. We expect to secure more 4,197 4000
Ship Building 3500 1,697 Rig Building: jack-up (40%) 3000 Rig Building: semi-submersible Conversion/offshore 2500 2,055 1,878 2000 335 (16%) 2,089 (50%)
1500 601 (30%) 1,012 (53%) 1000 757 700 657 1,119 (54%) (16%) (35%) (43%) 778 500 (42%) 244 (84%) (65%) 411 (57%) (50%) (10%) 0 (50%) 88 (6%) 2000 2001 2002 2003 2004 2005 1H 2006 Contracts Secured
Schedule of Delivery & Completion (exclude ship repair)
Shipbuilding and ship conversion & offshore expected to be strong in 2006 Year Projects 2005 2006 2007 2008 2009 2010 Shipbuilding 1st unit 2,600 TEU container (Wan Hai Lines) 2nd unit 2,600 TEU container (Wan Hai Lines) 3rd unit 2,600 TEU container (Wan Hai Lines) 4th unit 2,600 TEU container (Wan Hai Lines) 5th unit 2,646 TEU container (Wan Hai Lines) 6th unit 2,646 TEU container (Wan Hai Lines) 1st unit 2,600 TEU container (R F Laeisz) 2nd unit 2,600 TEU container (R F Laeisz) 1st unit 4,950 dwt tanker (Kuwait Tanker) 2nd unit 4,950 dwt tanker (Kuwait Tanker)
Completion 1 6 3
Ship Conversion & Offshore P-50 integration & commissioning P-54 marine conversion P-54 Topside Fabrication P-54 Compressor Modules P-54 Integration and Commissioning ConocoPhillips Topsides Heavy Lift Derrick Pipelay Vessel PRA-1 FPSO conversion RJS FSO conversion BW Enterprise FPSO conversion Completion 1 4 3 1
15 Schedule of Delivery & Completion (exclude ship repair)
Earnings visibility strong for Jack-up & semi-submersible rigs 2005 2006 2007 2008 2009 2010
Jack-up 1st Jack-up (Kristiansand Drilling) 2nd Jack-up (Wilpower ) 3rd Jack-up (Petrojack I) 4th Jack-up (Apexindo) 5th Jack-up (Deep Drilling Invest) 6th Jack-up (Wilsuperior) 7th Jack-up (Seatanker) 8th Jack-up (Petrojack II) 9th Jack-up (Japan Drilling) 10 th Jack-up (Petrojack III) 11 th Jack-up (Awilco) 12 th Jack-up (Aban) 13 th Jack-up (Sinvest) 14 th Jack-up (JackInvest 1) 15 th Jack-Up (Awilco) Completion (15 jack-ups on order) (0) (3) (5) (7) Semi-submersible Lower semi-submersible hull (Atlantia) 1st Semi-submersible (SeaDrill) 2nd Semi-submersible (SeaDrill) 3rd Semi-submersible (PetroMena) 4th Semi-submersible (PetroMena) Completion (4 units) (0) ( 1) (0) (2) (2)
Total (17) 0 4 5 9 2
Net Order Book (exclude ship repair)
• Order Book remains strong at $6.0 billion
S$m Contract Value carried Taken Balance Percentage forward from 1Q 2006 2Q 2006 of Total plus new contracts Order Book Sector secured as at to-date
Shipbuilding 252 70 182 3%
Ship Conversion & 1,117 267 850 14% Offshore
Rig Building -Jack-up 2,773 425 2,348 39% -Semi-submersible 2,782 134 2,648 44%
Total 6,924 896 6,028 100%
16 Net Order Book
• Net Order Book remains strong at $6.0 billion • Order Book expected to increase S$’000 6400 Rig Building 6,028 6000 Ship Conversion 5600 Ship Building 5,341 5200 4800 4400 4000 3600 4996 4051 (83%) 3200 (75%) 2800 2,288 2400 589 2000 (21%) 1600 1200 1,081 269 1212 800 (53%) 992 584 (19%) 850 400 487 (14%) 0 228 298 182 2003 2004 2005 1H2006
Outlook : Ship Repair
Overall demand for ship repair remains very strong - big docks are nearly fully booked till October 2006 - market still competitive - specialised niche market : LNG gas tankers, containerships, rig repairs - ability to deliver on schedule important - high HSSE standards
17 Outlook : Shipbuilding
Shipbuilding supported by strong demand
Continual demand for niche market in feeder container vessels & offshore supply vessels
Outlook : Ship Conversion & Offshore
Global oil demand continues to grow - IEA expects global oil demand in 2006 at a rate of 1.5% - OPEC sees world oil demand growing at 1.6% in 2006 - U.S. EIA sees global oil demand growing 2.1% in 2006 with China oil demand growing an astronomical 7.2% - Longer term, worldwide oil demand expected to grow at a robust pace
Energy supply remains tight - oil & natural gas futures prices still climbing
Offshore E & P Spending outlook is very positive - worldwide exploration & production spending will continue to rise – an increase of 21.3% over 2005 at US$261 billion - drilling plans also positive
18 Outlook : Ship Conversion & Offshore
109 Production Floaters are Planned or Under Study as of July 2006 No. of units * Production Floater Orders Have Been Very Strong 26 23 24 23 <1000m water depth 22 Deepwater 1000 - 1500m 20 Ultra-Deepwater >1500m 20 7 3 18 16 18 14 14 7 2
12 9 11 10 5 8 8 7 6 10 10 8 4 7 3 7 7 3 2 2 2 0 1 1 Gulf of W. Africa SE Asia Brazil Australia/NZ N.Europe China Other Mexico Source : International Maritime Associates, Inc
Offshore Rig Market
19 Outlook : Rig Building
High utilisation levels - offshore drilling market continues to strengthen around the world with high utilisation levels - operators increasingly commit to long-term charters to ensure rig access
Growing demand for high-specification rigs - operators prepared to commit ahead of time in anticipation of their drilling programs
Demand for floaters continues to grow - both standard and deepwater sectors are tightening worldwide - dayrates increasing across the board
Jack-up : Fundamentals for rig building remain strong
70 • Aging rig fleet worldwide 60 • World oil supply remains tight
50 • Supply of rigs well regulated due to certain constraints No. of units
9040 83
8030 NominalDollars per Barrel 7020 66
6010
50 0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
40 Rigs on Order
33 29 Ordering momentum 30 24 picks up from 2004 25 19 20 onwards & is expected 19 20 17 13 12 to continue 12 10 10 9 9 6 4 5 4 5 4 4 4 3 3 2 2 3 3 4 3 1 1 1 1 1 0
1 3 5 9 1 3 7 9 7 9 1 5 7 3 7 7 8 8 9 0 0 97 97 98 99 00 1 19 19 1977 1 19 19 1985 198 1 1991 1993 1995 1 19 20 2003 2 20 2009 2011 201 <1970 Source : ODS - Petrodata As at 12 June 2006
20 Outlook : Demand for oil is increasing
• Demand for oil is increasing rapidly • Excess oil production capacity is decreasing
Source : BP/Pareto
Semi-submersibles : Fundamentals for rig building remain strong
No. of units
25
20 19 Semi market is expected 18 to be strong & ordering 16 momentum to continue 15 14 13 Rigs on Order 11 11 10 10 10
7 6 6 5 5 5 5 4 4 4 3 3 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 0
8 2 0 2 4 6 8 0 2 70 72 74 76 7 80 81 84 86 88 90 9 94 96 98
Source : ODS - Petrodata
21 Rigs : Age Profile & Rigs on Order
No. of units
110
3 100 Drillship Overall, the rig market is Semi-submersible 18 90 expected to be strong Jack-up
80
70 2 Rigs on Order 4
60
50 1
83 40 3 19 3 3 2 66 30 10 16 1 14 3 3
1 1 20 1 11 4 11 13 33 2 29 1 20 1 7 24 5 1 25 10 19 1 19 10 17 6 1 5 4 1 1 13 12 2 4 12 10 1 2 2 9 5 1 2 6 1 2 9 6 3 1 4 5 3 4 5 1 3 3 4 4 4 3 4 3 0 1 1 1 1 2 2 1 01 1 0 <1970 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Source : ODS - Petrodata
Rig Market Outlook : High Utilisation Levels
World Activity Summary North Atlantic Rig Activity
South American Rig Activity US Gulf Rig Activity
Source : RS Platou
22 Rig Market Outlook : High Utilisation Levels
Norwegian Rig Activity West & South Africa Rig Activity
Rest of the World Rig Activity Pacific Rim Rig Activity
Source : RS Platou
Rig Market Outlook : Unprecedented High Charter Rates
Source : RS Platou
23 Rig Market Outlook : Unprecedented High Charter Rates
Source : RS Platou
Positive long term outlook for deepwater drilling activity
Deepwater 1524 m/ft 5000
Source : RS Platou
24 Strategy for Sustaining Growth
Increasing shipyard capacity - Change in work flow and processes - Maximising Singapore-based shipyard capacity
Leveraging on complementary facilities - Singapore and China - Singapore and Brazil
Expansion and growth in rig building and offshore engineering business through: - Acquisition of SMOE - Acquisition of SemBeth land
Maximising Singapore-based Yard Capacity
• Ship repair • Passenger & navy vessels • Ship conversion SSPL • Rig Building • Repair of mid-sized vessels • Construction of small to mid-sized vessels
JSPL, SML, Atlantis
• Complements Singapore yards • Fabrication works
• Rig repairs & construction • Rig Building
• Ship repair • EPC FPSO conversion • Rig Building • Shipbuilding
25 Maximising Capacity : change in work processes
• Change of work flow & processes • Outsourcing of blocks to shipyards within Singapore & overseas
(1) Lower hull, consisting of 2 parts of (2) The Upper Hull, measuring 8.5m (3) Part of Lower Hull towed to Drydock pontoons & columns, constructed x 75m was built over a skid truss separately in another Drydock on land in front of the Drydock
(4) The Lower Hull shifted in position (5) The keel blocks & supporting (6) Mating operations complete with in Drydock prior to skidding and truss in position. Skidding beam upper fully connected with lower mating operations of 188 metres hull
Maximising Capacity : change in work processes
• Change of work flow & processes • Outsourcing of blocks to shipyards within Singapore & overseas
Baker Marine Pacific Class 375 Jack-up rig • 15 units ordered so far based on the design • 10 units to be built in PPL Shipyard (1 delivered & 9 others in different stages of production)
BMC 375 Pacific Class
High specification: enhanced design Depth: 375 ft Drill depth: 30,000 ft Cantilever 70 ft skid off Accommodation: 120
26 Additional Land Acquired by PPL Shipyard
Area : 58,255 sq metres
Location : 27 Tuas Crescent
Rental : $130,000 per year
Potential: 1.5 rigs per year
Strategic tie-up : Cosco Corporation & Cosco Shipyard Group
• SembCorp Marine to acquire 110,400,000 shares in Cosco Corporation from Seletar Investments Pte Ltd for $120,336,000 at $1.09 per share
• Enhance & increase capacity to take on offshore projects
• Leveraging on facilities & strengths of partners
• A “win-win” situation for all parties
• Examples of projects undertaken - Lower pontoons of semi-submersibles - Accommodation portion of jack-up rig - etc
27 Cosco Shipyard Group : Ship Repair & Offshore
Breakdown of Revenue
Year 2004 2005 1H 2006
Ship Repair 92.2% 79.6% 91.9%
Others 7.8% 20.4% 9.1%
32.3% Total 100% 100% 100% FSU/FPSO Upgrading & others
S$’m S$’m
800 180 737 Revenue 1H 2006 700 160 PATMI
Profit before tax 140 600 535 120 500 106 427 100 51.6% 400 89 339 80 285 Bulk Carriers 300 9.0% 53 50 58 60 Tankers 200 40 24 7.1% 100 12 20 Containers 0 0 2002 2003 2004 2005 1H 2006
Cosco Shipyard Group effective January 2005
Màua Jurong (Brazil) : Leveraging between Singapore & Brazil
P-50 on completion in Maua Jurong in Brazil
P-54 departing Jurong Shipyard for Maua Jurong in Brazil PMXL-1 Fixed Gas Production Platform by Maua Jurong in Brazil
• Marine conversion in Singapore • Topside fabrication in Brazil • Topside integration & commissioning in Brazil * P-43, P-50 & P-54
28 Expanding Capacity to build more rigs
Ex-SemBeth
Land Area : 86 hectares SSPL : 40 hectares In partnership with PPL SMOE : 20 hectares Shipyard, Sembawang Others : 26 hectares Shipyard started rig building in April 2006
SMOE’s turnkey capabilities and strong offshore track record
SMOE core capabilities Batam Fabrication Yard
FPSOs •Topside modules PAUs • Modularization • Partially Assembled • Integration units for onshore plants • Turrets
Modules •Water Injection • Power generation • Compression • Living Quarters
Platforms • Integrated • Process • Drilling • Wellhead • Accommodation
29 Summary : Strong Outlook
Ship repair demand remains strong especially in the specialised market of LNG/LPG gas tankers, container vessels and rig
Good demand for niche shipbuilding
Strong fundamentals in the floating production market
Strong demand for high specification rigs and deepwater drilling units
Summary : Yield plus Growth Strong, Resilient Core Businesses - Strong market fundamentals - Proven track record
Sustaining & Growing our Business - Increasing shipyard capacity - Leveraging on complementary facilities locally & overseas - Acquisition of SMOE & SemBeth land
Superior Returns with Yield and Growth - Strong cash flow & financials - Modest capital expenditure - High & sustainable dividend
30 31