NOMINEE FOR OUTSTANDING CHIEF EXECUTIVE OFFICER AWARD
Tan Pheng Hock, 56 President & CEO Singapore Technologies Engineering Ltd
Personal background Mr Tan Pheng Hock, 56, was appointed President and CEO of Singapore Technologies Engineering Ltd (ST Engineering) in February 2002. He has spent more than 30 years at ST Engineering, his first and only job. He began his career with the group as an engineer in Singapore Technologies Marine Ltd in 1981. His time there has given him extensive knowledge on the structure of the group.
In 1997, Mr Tan was named President, Corporate Affairs, ST Engineering to assist in the integration of the various sectors of ST Engineering during its formation that year.
Mr Tan has also held the positions of ST Engineering’s Chief Operating Officer from February 2000 to July 2000, President and COO from July 2000 to June 2001, and Group President from June 2001 to February 2002. Before these various positions in the corporate office, he was President of Singapore Technologies Kinetics Ltd (formerly known as Singapore Technologies Automotive Ltd) since September 1998.
As President and CEO, Mr Tan integrates and capitalises on the Group’s capabilities, steering the Group towards its vision of becoming a global defence and engineering company.
Outside of ST Engineering group, Mr Tan is: Chairman, Singapore Workforce Development Agency Chairman, Lifelong Learning Endowment Fund Advisory Council of Nanyang Polytechnic Director, International Institute for Strategic Studies (Asia) Ltd Director, Singapore Economic Development Board Member, Consultative Committee for the Department of Mechanical Engineering, National University of Singapore Member, Industry Advisory Panel for the School of Mechanical & Aerospace Engineering, Nanyang Technological University. A Colombo Plan scholar, Mr Tan graduated from the University of Surrey with first class Honours
1 in Marine Engineering. He also holds a Master of Science (Management) from Stanford University, USA.
He was awarded the Best CEO Award (large caps over $1 billion) by Singapore Corporate Awards 2012.
Mr Tan was named the Asia Business Leader of the Year by CNBC at its 12th Asia Business Leaders Awards (ABLA). In all, 62 Asian leaders of Asian corporations were nominated for the ABLA awards. Mr Tan is the first Singaporean to have won the Asia Business Leader of the Year award since ABLA's launch in 2001.
Mr Tan was also one of the four Singaporeans to receive the esteemed Honorary Fellowship award from the ASEAN Federation of Engineering Organisations (AFEO). AFEO Honorary Fellowship is awarded to distinguished persons of acknowledged eminence and who have rendered outstanding services to the engineering profession, the institution or the nation.
Company background Singapore Technologies Engineering (ST Engineering) is an integrated engineering group specialising in innovative solutions and services in the aerospace, electronics, land systems and marine sectors. It is one of the largest companies listed on the Singapore Exchange by market capitalisation and is also one of Asia’s largest defence and engineering groups.
It is a component stock of the FTSE Straits Times Index, FTSE ASEAN 40 Index, MSCI Singapore and other indices. The company was conferred the Singapore Quality Award, the highest honour given to organisations in Singapore for business excellence. Mr Tan believes that passion, persistence and perseverance helped the company achieve its business excellence.
In the past 40 years, ST Engineering has evolved from a local company to today’s integrated and globalised company with a global workforce of more than 23,000. It serves both commercial and defence customers in over 100 countries, through a global network of over 100 subsidiaries, joint ventures and associated companies in 24 countries and 46 cities spanning the United States, South America, Europe, Asia and Australasia.
Building on its defence heritage, it is the principal supplier to the Singapore Armed Forces. The group is now one of Singapore’s most successful multinational companies and is a shareholder of Experia Events, the company behind the organising and running of the Singapore Airshow – Asia’s biggest aerospace and defence exhibition.
Business Sectors See Corporate Profile attached..
TAN PHENG HOCK'S VISION: Mr Tan's vision is to nurture ST Engineering into a global defence and engineering company. To realise his vision, he mapped clear, strategic directions for achieving long-term sustainability and growth of ST Engineering, through restructuring, transformation, and globalisation.
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He restructured ST Engineering to ride on new technology, innovation and new capabilities for growth, transforming it into a capability-driven enterprise that enabled ST Engineering to become a market leader. Setting his sights on globalisation as a key strategy for sustainable growth, Mr. Tan led the company to penetrate new markets and forge alliances and partnerships that helped the company leverage on competitive strengths and capabilities.
Additionally, Mr Tan Pheng Hock believes that whether he is dealing with a customer, colleague or competitor, the idea is that the person you are dealing with “is your partner”.
Due to his work and philosophy, Mr. Tan takes pride in informing critics and peers alike that teachers in Kazakhstan are helping students catch up with their First World peers by using ST Engineering multimedia labs; or that the 2008 Sichuan earthquake victims were able to use the group’s satellite phones to call for help.
He is also big on listening – to customers, colleagues and competitors – because he believes he can learn from anyone.
However, he draws the line at moaners because to him, life is brimming with opportunities to sell if one would only think harder about how to meet customers’ needs more creatively so they will still enlist the group’s services in bad times.
In that spirit, he drums into his colleagues the need to make the most of every chance and chore that comes their way.
His pursuit for outstanding practices was recognised by the Asia Pacific Quality Organisation as a World Class Winner of the Global Performance Excellence Award under the Large Manufacturing Organisation category. This international quality award was given out to only two Singapore companies.
Looking ahead, Mr Tan feels that ST Engineering’s future lies in buying up companies that add value to the group and in staying agile so it can deliver small as well as large orders.
Business Highlights 2013
Aerospace
ST Aerospace is the largest maintenance, repair and overhaul (MRO) service provider in the world. In 2013, the Aerospace sector announced contract value of over $2.3b, covering the aerospace sector’s broad range of capabilities, from airframe, component and brings the total announced
AERIA, our VIP interior completion business based in the US made good progress in 2013, when it added a green aircraft completion contract for a European-based VIP Boeing Business Jet to its increasingly impressive track record. Significant developments include - becoming an approved a Boeing Business Jet, and Airbus Corporate Jet service centre at the end of 2013.
3 It signed two long-term component licensing agreements with UTC Aerospace Systems. This will allow ST Aerospace to leverage UTC Aerospace Systems’ expertise to support the Boeing 787 operators.
New hangar at Seletar dedicated to General Aviation (GA) MRO work. Expanded Seletar facility can handle up to 24 GA aircraft and 11 narrow-body aircraft at any one time. New narrow-body hangar at Changi also operational became operational in 3Q2013, receiving line and base maintenance work.
We made a major extension of our leading position in the Aerospace sector through an important strategic alliance with Airbus, EADS Deutschland GmbH and Elbe Flugzeugwerke GmbH (EFW) on the A330 Passenger-to-Freighter conversion programme. This partnership is important to us in three ways – it forges a new relationship with Airbus and EADS, gives us a new freighter conversion capability, and fills a geographical gap in our global airframe MRO footprint. We have since launched the A330-300P2F variant, to complement Airbus’ existing freighter product line. Entry into service for the first A330-300P2F is targeted for late 2017/early 2018. We plan to obtain both EASA and FAA Supplementary Type Certificates for the P2F solution.
ST Aerospace received the following international awards in the second quarter:
Top Airframe MRO company with a total of 11.5m manhours in 2012 (The Top Airframe MRO biennial survey results published in Aviation Week & Space Technology’s 24 June 2013 edition)
ATE&M Best AsiaAirframe MRO Provider of the Year
LIMA 2013 ASEAN Airframe MRO Service Provider of the Year. The award is part of the inaugural ASEAN Commercial Aviation (ACA) Awards, organised in conjunction with the Langkawi International Maritime and Aerospace Exhibition (LIMA) held in March 2013.
Electronics
In 2013, the Electronics sector continued to win various contracts in rail electronics, satellite communications, cyber security and advanced electronics, announcing close to $1.4b of new orders,. The sector set up subsidiaries in Thailand, as well as in Wuxi and Tianjin in China, to tap growing demand for advanced electronics and infocomm technology solutions in the region.
ST Electronics remains the only company to offer a comprehensive suite of rail electronics solutions, and this competitive edge has enabled it to gain new market entry and increase market presence in existing cities where its solutions are already in use. In 2013, it gained entries into new markets: In Toronto, Canada, ST Electronics’ platform screen doors are being used by Merolinx Air Rail Link Spur Line. Its Smartrip Ticket Dispensers was implemented in the US by the Washington Metro. San Francisco’s Bay Area Rapid Transit is in the midst of implementing the digital trainborne passenger
4 information system, for activation in 2020. In Asia, we continue to deepen market presence with new contracts in cities of China, Malaysia, Taiwan and Thailand.
ST Electronics set up and launched its DigiSAFE Cyber Security Centre. The centre, set up by ST Electronics (Info-Security) Pte Ltd, houses a training facility offering advanced cyber defender training courses with a state-of-the art training system that will emulate real- world attacks on enterprise networks in a controlled environment. It is located in the Devan Nair Institute for Employment and Employability in Jurong East, Singapore.
ST Electronics, A*STAR’s Institute for Infocomm Research (I²R) and Changi Airport Group (CAG) were conferred the Prestigious Engineering Achievement Award 2013, presented by the Institution of Engineers Singapore (IES) for the AgilFence Perimeter Intrusion Detection System (PIDS). The award recognises the high degree of engineering breakthrough and operational innovation introduced in the AgilFence PIDS. The AgilFence PIDS was successfully commissioned at the Changi Airport in 28 February 2013.
ST Electronics (Satellite Systems) Pte Ltd, a wholly owned indirect subsidiary of ST Electronics, has started the design and development of Singapore's first commercial remote sensing satellite. Named TeLEOS-1, this made-in-Singapore earth observation satellite is targeted to be launched into commercial service in 2015.
In 2012, ST Electronics together with Accenture was selected by Singapore’s Energy Market Authority (EMA) to design and implement Phase 1 of its Intelligent Energy System (IES) pilot project. The project is an advanced metering infrastructure and smart grid pilot funded by the Government of Singapore and Singapore Power, a leading energy utility company in Asia Pacific.
Our US subsidiary, VT iDirect holds more than 60% of the global satellite internet protocol hub market share.
Land Systems
ST Kinetics is one of the leaders in the global 40mm ammunition market. In 2013, the 40mm ammunition, known for its effectiveness and reliability, was selected for use in the Canadian Armed Forces’ Tactical Armoured Patrol Vehicle programme and by the US Army. Australian Munitions partnered us to cooperate in Australia and New Zealand to develop, manufacture and market the 40mm low velocity, extended range and air bursting ammunition.
In 2013, ST Kinetics delivered Singapore made and designed Terrex, a personnel carrier vehicle, to the US Marine Corps (USMC) Marine Personnel Carrier (MPC) Programme which called for a brand new fleet of up to 579 8x8 class armoured vehicles in three variants – Personnel Carrier, Recovery Vehicle and Command Vehicle. It made headline in 2012 when it was awarded the contract to supply the TERREX for the demonstration and studies phase, competing with established global industry players. The TERREX was put through a 12-month period of performance trials and testing in 2013 and received good ratings. However the USMC has since put this programme on hold due to the US Sequestration.
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ST Kinetics acquired Brazilian automotive MRO provider, Technicae Projetos e Serviços Automotivos Ltda., to establish a presence in Brazil to further its defence business there and in the rest of South America.
The Land Systems sector set up subsidiaries in Myanmar and Brazil to pursue commercial opportunities in these new markets. A fully owned subsidiary, Kinetics Automotive & Specialty Equipment Co., Ltd, was established in Yangon to introduce and support ST Kinetics’ automotive and specialty vehicles products and services in Myanmar.
ST Kinetics also set up a manufacturing base in Brazil to increase the presence of ST Kinetics and the LeeBoy brand of road construction equipment in Brazil, through a new subsidiary, LeeBoy Brazil Equipamentos De Contrução Ltda. (LeeBoy Brazil).
Marine Our proven expertise in shipbuilding, as well as shiprepair and conversion, especially of sophisticated vessels requiring high levels of engineering content, has enabled us to receive a steady flow of contracts from both naval and commercial customers. The marine sector has 3 shipyards in the US, and 2 shipyards in Singapore. All yards have shipbuilding and shiprepair capabilities.
In 2013, the Marine sector announced close to $1b of orders, of which $446m worth of contracts was secured in 4Q2013. These included defence and commercial newbuild, ship maintenance and conversion contracts, as well as an environmental engineering project in China. In the US, its yards added shiprepair capabilities.
In January 2013, ST Marine was awarded a contract (contract value not disclosed) to design and build eight new vessels to replace the Republic of Singapore Navy’s existing Fearless-class Patrol Vessels, indigenously designed and built by ST Marine in the 1990s. This new development attests to the Group’s core strength of providing integrated capabilities and solutions to support its customers.
ST Marine’s US Shipyard, VT Halter Marine, added shiprepair capabilities for semi- submersible drilling rigs and Panamax-size ships. The arrival of the 12,000MT Floating Dry Dock is part of the overall expansion plan for our south yard in Pascagoula, Mississippi. Our US shipyard in Mississippi now offers customers a wider range of services, with the launch of its shiprepair capability following the expansion of its Pascagoula yard and the addition of a floating dry dock
In April 2012, ST Marine secured a contract worth €534.8m (about S$880m) to design and build four patrol vessels (PVs) and the provision of associated logistic support for the Royal Navy of Oman (RNO).
6 Customer Satisfaction Customer satisfaction was not been compromised with ST Engineering's rapid growth. Senior management spent half of their working time on customer engagement and was involved in frequent reviews of customer relations. The Group's customer satisfaction improved from an average of 92% in 2002 to 97% in 2006, compared to an industry benchmark of 85-90%. ST Engineering raised its superb customer acceptance rate of 99.5% in 2002 to a score of 100% in 2006, and its Top 10% Customer Retention Rate of 89% in 2002 grew to 99% in 2007 under Mr Tan's leadership.
Financial Performance FY2010 Good growth was registered for turnover and profit in FY2010 over FY2009. Turnover increased by 8% to almost $6 billion while profit before tax (PBT) and Net Profit improved by 15% and 11% to $627.5 million and $491.0 million respectively. This good performance translated to a return on equity of 30.3%. Also in 2010, the Group invested more than $300 million of capital expenditure in new capabilities and capacity to tap the growth opportunities across the four sectors. The year ended with a strong order book of S$11.5 billion which provided good visibility of the group's future revenue stream and further added to the Group's resilience.
FY2011 FY2011 ended with revenue of $5.99b, comparable to the year before. Profit before tax increased 4% to $655.2 million while net profit grew 7% to $527 million. Cash and cash equivalents and short-term investments stood at $1.77b.
Despite the challenging economic environment in 2011, the Group’s order book grew to a record high of $12.3b. The record high record book was a 7% or $800m increase year-on-year.
FY2012 The Group closed the financial year ended 31 December 2012 with revenue of $6.3 billion, a 6% year-on-year growth. It also recorded a 10% boost in profit before tax (PBT) of $723.1 million from $67.9 million the previous financial year. It registered a 9% increase in net profit amounting to $576.2 million.
Despite a weak global economy with fears of a Eurozone meltdown, slowing growth in Asia, sluggish US economy and leadership transitions in China, the sectors reported strong results. The Aerospace, Electronic, Marine sectors reported year-on-year growth of between 5% and 15%, with revenues of $2 billion, $1.6 billion and $1 billion respectively. All sectors saw improvements in PBT with growth of 9% for the Aerospace sector, 11% for the Electronics sector, 6% for the Land Systems sector and 5% for the Marine sector. These results against the backdrop of a weak macro-environment prove the soundness of the Group’s diversified business model.
FY2013 ST Engineering posted a strong set of results for the financial year ended 31 December 2013
7 (FY2013).
Group revenue was $6.63b, 4% higher than that achieved in FY2012. Profit before tax (PBT) was $729.7m, a 2% growth from the same period last year, and Net Profit was $580.8m, up 1% from FY2012. The Group ended the year with a record high order book of $13.2b, of which $4.3b is expected to be delivered in 2014.
Commercial sales accounted for 62% or $4.1b of Group revenue, and Defence business remained core to the Group. Revenue mix of the Group comprised Aerospace sector 31%, Electronics sector 25%, Land Systems sector 22% and Marine sector 19%.
Share performance As of 31th December 2013, ST Engineering shares stood at S$3.96, with a market capitalisation of $12.3 billion. The 52-week high was S$4.56 on 24 April 2013, while the 52 week low was on 13 June 2013 was at S$3.56.
Financial summary
S$ Million 2012 2013 2010 2011
Turnover 6,633 5,985 5,991 6,380
Profit before Tax 729.7 627.5 655.2 723.1
576.2 Net profit 527.5 580.8 491
EPS (cents) 18.76 18.73 16.21 17.28
68.14
NAV (cents) 53.38 57.79 61.51
Corporate Social Responsibility ST Engineering is committed to being an exemplary citizen of each community where the firm operates to actively participate in achieving community goals.
The company's corporate social responsibility practices include health and safety, care for the
8 environment, corporate governance and transparency, education, and support for the arts and sports.
The Group is a member of the Singapore Compact for CSR, a national society aimed at broadening the base for collaboration among stakeholders to develop effective strategies to promote CSR in Singapore.
ST Engineering's priority is the safety of its customers, employees and the community. Together with the Ministry of Manpower, ST Engineering launched the annual Safety@Work Creative Awards in 2005 to spread the message of workplace safety in the community.
In 2011 a key highlight of its CSR efforts was the planting of 950 trees at the Punggol Promenade during the Green Month where over 1,600 employees and their families participated in the events.
Awards
2013 Mr Tan was named the Asia Business Leader of the Year by CNBC
2012 Mr. Tan Pheng Hock, President & CEO, received the Best CEO Award (large caps over $1 billion) by Singapore Corporate Awards 2012.
2011 • Bronze Award at the 2011 International ARC Awards Competition (Overall Annual Report: Engineered Industrial Products) for its 2010 Annual Report "Innovate"
• Bronze Award for Best Annual Report for 2010 Annual Report at the Singapore Corporate Awards 2011
• World Class Winner of the Global Performance Excellence Awards 2011
2010 • Mr Tan Pheng Hock, President & CEO, was honoured as the 2010 Asia Leader at the Asia Leadership Dialogues 2010 presented by Platinum Circle. • Associate of the Arts Award by National Arts Council
2009 • Asia Talent Management of the Year Award awarded to Mr Tan Pheng Hock, President & CEO, at CNBC's 8th Asia Business Leaders Awards for his personal involvement in supporting and nurturing leadership within the company.
9 • 2009 ASEAN Business Awards Finalist (Large Size Companies) - Innovation Category by the ASEAN Business Advisory Council • Gold Award at the 2009 International ARC Awards Competition (Multi-industry-Products & Services category) for its 2008 Annual Report "Engaging ideas, Delivering promises" • Platinum Award at the Hermes Creative Awards for its 2008 Annual Report "Engaging ideas, Delivering promises" • Associate of the Arts Award by National Arts Council
2008 • Gold of the Best Annual Report Award 2007 (For companies with $500m or more in market capitalisation) at the Singapore Corporate Awards • Bronze Award for Overall Annual Report for 2007 Annual Report at the 2008 International ARC Awards • Arts Supporter Award 2008 by National Arts Council • 2008 LifeLong Learner Awards (Corporate) by MediaCorp and the Singapore Workforce Development Agency
2007 • Walter L. Hurd Foundation World Executive Medal 2007 awarded to Mr Tan Pheng Hock, President and CEO, by Asia Pacific Quality Organisation • 2007 Singapore Quality Award with Special Commendation by SQA Governing Council • Bronze of the Best Annual Report Award 2006 (For companies with $500m or more in market capitalisation) at the Singapore Corporate Awards 2006
2006 • Silver of the Best Annual Report Award 2005 (For companies with $500m or more in market capitalisation) at the Singapore Corporate Awards 2005 • International Asia Pacific Quality Award 2005 - Best of its Class Distinction (Big Manufacturing Organisation) by Asia Pacific Quality Organisation • Associate of the Arts Awards 2005 from the National Arts Council • International Management Action Award conferred on Mr Tan Pheng Hock, President and CEO, by Chartered Management Institute and SPRING Singapore
December 2013
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