Annual Report 2008
Total Page：16
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ANNUAL REPORT 2008 01 Engaging Ideas Delivering Promises | 02 Letter to Shareholders | 08 Financial Highlights 14 Board of Directors | 18 Senior Management | 20 Organisation Chart | 22 Corporate Governance 34 Human Resource | 37 Our Green Initiatives | 38 Community | 39 Health and Safety | 40 Investor Relations 42 Awards and Commendations | 45 Operating Financial Review | 52 ST Engineering at a Glance 89 Financial Report W81250 Size: W190 x H255mm Mac 9 S.Fong 2nd Editorial IDEAS Annual Report 2008 PROMISES ENGAGING IDEAS DELIVERING PROMISES ENGAGING Forward, innovative thinking. Strategic partnerships and close customer engagement. Consistent, superior service. These are the values upon which ST Engineering has built its reputation for excellence and dependability. Our dynamic relationships with customers, partners and stakeholders are based on trust, confidence and active cooperation – we have a proven history of listening attentively to their requirements, pre-empting their needs and providing practical, proprietary solutions that set us apart from the competition. From drawing board to delivery, we put our exceptional creativity, responsiveness and expertise to work. Engineering Ltd Technologies Singapore 1 W81250 Size: W190 x H255mm Mac 9 S.Fong 2nd Editorial 2 W81250 Size: W190 x H255mm Mac 9 S.Fong 2nd Editorial Dear Shareholders 2008 saw a world in unprecedented turmoil. What started Amidst THese as the US sub-prime problem snowballed into a global CHallenges, THE crisis, which hit financial institutions and financial markets worldwide and is now pushing many economies into ST ENGINEERING GroUP recession. Oil prices hit an all-time high of US$147 per WAS ABLE to DELIVER A barrel during the third quarter of the year, driving cost of businesses up. With the recession, oil prices nosedived steadY set OF resUlts IN to a record low of close to US$40 per barrel at year’s end. Although the lower oil prices have since offered 2008. WE set A RECord IN some reprieve to many industries, the uncertainties in Closing THE YEAR WITH A macroeconomics and the financial environment continue to pose huge challenges to businesses. respeCtaBLE $10.6B Amidst these challenges, the ST Engineering Group order BooK. was able to deliver a steady set of results in 2008. We achieved 6% higher turnover of $5,345m, though net Strong financial position profit was lower by 6% at $473.6m. This performance Notwithstanding the economic challenges, the Group was achieved on the back of impairment charge for continues to be in a sound financial position. Our balance long term investments of $25.9m in 2008. The Group’s sheet is strong, with a net cash position and cash and cash operating performance remained resilient with EBITDA at equivalents of $1.05b as at 31 December 2008. In addition, a healthy $667.9m, a marginal 2% decrease compared to we remain one of few companies in the world with Moody’s 2007. Our strong operational performance was weighed Aaa credit rating. down by allowance for doubtful debts of $32.4m, a weak US dollar particularly in the first three quarters which Order book at all time high resulted in translational loss, higher prototyping cost as we We set a record in closing the year with a respectable $10.6b executed the Fedex 757-200 PTF programme and higher order book. This is the first time we have recorded an order Annual Report 2008 depreciation from our continuing investment in capital book exceeding $10b, and it is despite the removal of the expenditure to strengthen our capabilities and presence. Skybus, Sterling and EAMS contracts from the order book when the companies filed for bankruptcy during the year. Rewarding our shareholders The robust order book will keep us busy for the next few In recognition of shareholders’ loyalty, the Board of years. Our untiring pursuit of new contracts as well as efforts Directors is proposing to pay all of its 2008 net profit to to strengthen customer partnerships and developing longer our shareholders as dividends. Subject to shareholders’ term relationships with OEMs have re-shaped our working approval, ST Engineering proposes to declare a final relations with customers. In so doing, we are able to minimise dividend of 12.8 cents per share comprising an ordinary some of the cyclicity of contracts and sustain our order book. ENGAGING IDEAS DELIVERING PROMISES ENGAGING dividend of 4.0 cents per share and a special dividend of Geographic, business and customer diversification, with a 8.8 cents per share at our AGM in April 2009. Together primary focus on our core capabilities, also added to order with our interim ordinary dividend of 3.0 cents per share book resilience. which was paid in September 2008, the Company will have declared a total of 15.8 cents per share in dividends Key defence and commercial contract wins from all four for FY2008, giving a dividend yield of 5.16%, computed sectors during the year contributed to the strong order book using the average of the closing share prices of 2007 growth. In particular, the Group had significant success with and 2008. defence export sales. Singapore Technologies Engineering Ltd Technologies Singapore 3 W81250 Size: W190 x H255mm Mac 9 S.Fong 2nd Editorial For the first time, the Group sealed deals to export the Bronco, diversified customer base spanning Asia, US, Europe, the Gulf an all-terrain tracked carrier, and the Landing Platform Dock, and Africa. Today, 52% of the Group’s revenue is derived from a multi-role vessel derived from the design of the Landing markets beyond the Asian region. Ship Tank. The Bronco export deal of over 100 vehicles is the Group’s first military vehicle sale to the UK Ministry of At the sector level, diversification created new niches and Defence. These milestone wins are significant in positioning capabilities that are developed from established strengths. ST Engineering in the defence marketplace and are a For example, we have expanded our aerospace commercial recognition of the outstanding quality of our designs and business from primarily an airframe maintenance, repair and products. They further augment our reputation and credibility overhaul (MRO) provider ten years ago to include components as a key defence industry player and will increase our and engines MRO, passenger-to-freighter conversions and opportunities in defence exports. training services. We have secured long-term partnerships with both customers as well as OEMs. In the defence arena, Amongst other new businesses, the Aerospace sector landed the sector is working on a developmental programme for the training contracts of $125m to support RSAF’s training Unmanned Aerial Vehicle besides various other projects for requirements, while its European arm, STA Solutions, secured local and foreign defence forces. an extended US$160m maintenance contract with Flybe, Europe’s largest regional airline. OUR Well-diversiFied The Electronics sector won a $112m contract to design and supply half-height platform doors to Singapore’s Land gloBal portFolio Has Transport Authority for MRT stations, $160m worth of AFForded US some contracts to supply communication systems for the Marina Coastal Expressway and the MRT Downtown Line and resilienCE, providing US $86m worth of contracts to provide a security system, an IT infrastructure system and a carpark Guidance & Payment WitH MUltiple groWTH system to the new integrated resort on Sentosa. opportUnities, and The Land Systems sector made major inroads into defence Hedging US against exports. It made headlines with the £150m and about $120m anY maJor negative contracts from the UK Ministry of Defence for its Bronco and munitions sales respectively. It also secured a $44.8m impaCT From THis gloBal contract from a Gulf States customer for its mortar system, the 120mm SRAMS. doWntUrn. The Marine sector clinched a $200m contract from an Asia Such diversification not only expands our income streams but Pacific Navy to build a Landing Platform Dock and a $127.7m also allows us to provide our customers with comprehensive contract to build a Diving Support Vessel for a commercial solutions. During the year, our aerospace arm inked a series foreign customer in Singapore. Its US unit, VT Halter Marine, of agreements valued at US$1.5b with CFM international, an after completing Phase I of designing the Fast Missile Craft, OEM, in support of our CFM engines’ MRO operations. won the US$393m Phase II contract to build three Fast Missile Craft for the Egyptian Navy. While we have conscientiously grown our commercial sales, defence and government projects remain a strategic focus Resilience through diversity for the Group and we remain one of Asia’s largest defence Indeed, our well-diversified global portfolio has afforded firms. Our Electronics sector for example, has a healthy and us some resilience, providing us with multiple growth balanced portfolio of defence, government and infrastructure opportunities, and hedging us against any major negative related, and commercial projects. Defence business and impact from this global downturn. government projects are however expected to continue providing the Group with revenue stability. Our track record Our four core business sectors cover the spectrum of has made us a trusted partner in defence and government industries from aerospace, marine and land, with an projects both locally and overseas and we expect to gain overarching electronics sector. We have built a strong and increasing traction in these segments overseas. 4 W81250 Size: W190 x H255mm Mac 9 S.Fong 2nd Editorial A prudent approach The Group remains committed to the guiding principle of The Group’s desire to increase our foothold is balanced balancing People, Planet and Profit in the way we conduct our with a cautious approach. We have in place a risk review business. Among the many initiatives in 2008, we launched and management framework, which seeks to minimise any our Green Month, marking our commitment to doing our part negative surprises, be it investment or operational risks.