Full Annual Report 2006 - Singapore Technologies Engineering

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77 Land Systems Major Acquisitions Through VT Land Systems, ST Kinetics acquired B. R. Lee Industries at an enterprise value of US$135m ($212m). The acquired entity, renamed VT LeeBoy, is a leader in the road construction and maintenance equipment market and the number one OEM in the US by unit volume for commercial class asphalt pavers and brooms. The joint venture with Kalyani Group to collaborate in research, development and manufacture of military land-based products and solutions, specifically in the area of large calibre guns and small arms, marked ST Kinetics’ entry into the Indian defence market. ST Kinetics holds a 26% stake while Kalyani’s unit, BF Utilities, holds the remaining 74% stake. ST Kinetics also established Advanced Technology Research Centre, a 50-50 joint venture company with DSO, for further research and technology development in advanced materials for defence and commercial applications. In addition, ST Kinetics enlarged its stake in its STAR automotive centre in Zhejiang to 86.24%, increasing the total capital injection to RMB13m (about $2.6m), in line with the business growth in China. Another defence milestone was ST Kinetics’ successful demonstration of a range of low velocity 40mm electrically ignited munitions jointly developed with Metal Storm. It also unveiled an array of products and competencies during Asian Aerospace that included a light armoured multi role vehicle, all terrain vehicle, multi role unmanned ground vehicle, new 40mm ammunition products and the People Portal, among others. On the commercial front, specialised truck bodies and trailers, off-road dump trucks and excavators, road construction and maintenance equipment were successfully delivered to international customers. ST Kinetics showcased its range of specialty vehicles at BAUMA, one of the world’s largest exhibitions for the construction industry, held in Shanghai. It launched new dump trucks and excavators from BZK and GJK respectively, and introduced VT LeeBoy to the Chinese market. ST Kinetics also developed a new commercial articulated vehicle catered to search and rescue, mining, forestry as well as oil and gas industries around the world. Major Projects 2006 saw the contractual delivery of major projects such as Bronco, BXII, SAR 21, Primus, Pegasus and munition products to the SAF. ST Kinetics also secured and delivered various munition and weapon contracts from overseas customers, penetrating new markets in the African continent and Latin America. (from left to right) ST Kinetics’ commercial articulated vehicle made its debut to potential customers in the mining, oil, gas, forestry, and search and rescue industries around the world. International partnerships with major OEMs like the Kalyani Group of India enable ST Kinetics to establish a foothold in key overseas markets and expand its product range. The acquisition of VT LeeBoy, with its leadership position in commercial class asphalt pavers and brooms, enhanced ST Kinetics’ range of specialty vehicle products for the construction industry.
79 Marine RAISING THE BAR ON SHIPBUILDING AND SHIPREPAIR ST Marine has been providing turnkey shipbuilding, ship conversion and shiprepair services to a worldwide customer base in the naval and commercial markets for over three decades. It has operations in Singapore and the US, under VT Halter Marine. The year for the Marine sector was highlighted by new products, expanding business from existing customers, and shiprepair projects requiring more engineering expertise. Collectively, these included customers like the Republic of Singapore Navy, US Army, National Oceanic and Atmospheric Administration, Crowley Maritime, Baggermaatschappij Boskalis BV, and China National Petroleum Corporation. The wide ranging nature of the Marine sector’s shipbuilding and shiprepair competencies allows it to attract quality projects, leveraging on its design and engineering expertise to customise ship design to meet the specific needs of customers. Some key new customers that have placed shipbuilding orders are the US Navy, Shreyas World Navigation, Louis Dreyfus Armateurs SAS and Hoegh Autoliners. Shipbuilding The sector continued its efforts to secure high value added contracts, capitalising on its knowledge and skills in designing and building sophisticated vessels, as well as project management skills acquired through highly complex and tightly scheduled projects such as the frigates programme. In September 2006 alone, there were repeat orders for its US operations from existing customers amounting to about US$450m ($735m), attesting to the level of confidence and trust that customers have in VT Halter Marine. Shiprepair During the year, ST Marine’s shiprepair business was highlighted by projects which required higher engineering expertise in both repairs and conversions, reflecting its reputation for customisation and design capabilities. It also saw expanding business from blue chip maritime customers all over the world, particularly established European shipowners from the Netherlands, Belgium and Germany and customers from the US and Asia. The sector maintained its presence as a key player in the Singapore shiprepair market, especially for tankers, containers and dredgers. PERFORMANCE OF THE MARINE SECTOR Half Yearly Performance The Marine sector’s turnover for 2H2006 at $365m increased by 8% or $28m over 1H2006 turnover of $337m due mainly to higher Shipbuilding turnover. PBT for 2H2006 at $41.9m increased by 11% or $4.3m over 1H2006 due mainly to the higher turnover and other income. Full Year Performance FY2006 turnover of $702m for the Marine sector increased by 6% or $42m compared to FY2005, largely contributed by Shipbuilding and Shiprepair. The higher Shipbuilding turnover was mainly contributed by the US operations, VT Halter Marine, while the higher Shiprepair turnover was the result of a more active shiprepair market. The Marine sector’s PBT of $79.5m in FY2006 was lower than that of FY2005 by 10% or $8.4m. The lower PBT was due mainly to lower gross margins as a result of a different sales mix. The fi rst of the four feeder container vessels for the Transworld Group, OEL Singapore, was launched in June 2006.
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Full Annual Report 2006 - Singapore Technologies Engineering

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