Full Annual Report 2006 - Singapore Technologies Engineering

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THE WINNING SPIRIT ST Engineering AR 2006 88 Operating Financial Review CASH FLOW ($m) 460 303 06 05 06 05 East remain and the high oil prices are likely to persist and continue to be volatile. The risk of economic slowdown in the US and the re-emerged threat of a bird-flu pandemic continue to cause uncertainties in the global economy. As the Group continues its expansion into the global market, the impact of external risks on overall performance remains. Barring unforeseen circumstances, the Group expects to achieve a higher turnover and PBT in 2007. 06 05 Operating Activities Cash and Cash Equivalents As at 31 December 2006, the Group’s cash and cash equivalents stood at $1.2b, comparable to that of FY2005. The cash and cash equivalents are centrally managed by the Treasury Unit and the majority of the funds were invested in liquid assets such as fixed deposits and placements with a related corporation. The cash and cash equivalents as at yearend is adequate to fund the committed and planned capital expenditure, as well as to service the Group’s borrowings. Notwithstanding the Group’s current positive cash and cash equivalents position, it has established short term financing facilities with various financial institutions for bridging finance. Such liquidity facilities can be tapped when requirements arise, in particular, for financing significant merger and acquisition deals. ACCOUNTING POLICIES The Group’s significant accounting policies are presented in Notes to the Financial Statements, Note 2 (pg 112 to 126). The Group has applied the same accounting policies and methods of computation in the preparation of the financial statements for the current reporting period compared with the audited financial statements as at 31 December 2005. PROSPECT FOR 2007 (369) (435) (143) (184) Investing Activities Financing Activities The global economy in 2006 was shrouded with uncertainties caused by the high and volatile oil prices and the risk of a US economic slowdown. Fortunately, the economy ended the year relatively unscathed. Financial markets around the world started positively in 2007, with many stock market indices reaching record highs. The geo-political tensions in the Middle In the Aerospace sector, high fuel prices and intense competition, especially from LCCs, will continue to exert pressure on the cost structure of the aviation industry. This could facilitate MRO outsourcing trend, as legacy airlines are compelled to improve operating cost efficiency. The sector will focus on airframe heavy maintenance and modification work, Total Aviation Support and implementing the recently secured seven-year FedEx Express Passenger-to-Freighter conversion contract. It will set up the required capabilities to support the operation of Skybus Airlines in the US. Through SAS Component in Europe and the expanding component support operations, the sector will continue its efforts to increase its presence in the global components and material services market. With the enhanced simulation and digital media capabilities following the acquisition of MÄK Technologies, the Electronics sector will strengthen its market position and further broaden its customer base in 2007. iDirect will continue to extend the sector’s presence in the US and enable the sector to offer a full suite of satellite communications services globally. The Land Systems sector will continue its strategy of growing its international businesses by expanding its sales and distribution network, developing niche products and fostering local partnerships in the global market. The sector will continue to apply its engineering capabilities to its commercial automotive businesses, and create synergies and operating efficiencies from its specialty vehicles companies in the US and China. The Marine sector succeeded in securing a few large contracts last year. Coupled with ongoing projects, these will keep the yards in Singapore and the US well utilised in 2007. The US yards had resumed full operations in 2006 after the disruption caused by Hurricane Katrina in August 2005. Apart from seeking new contracts and developing new products, the sector will concentrate on delivering its commitments to the customers and continue to pursue business opportunities in the naval and government industries, and niche segments of the commercial market.
THE WINNING SPIRIT ST Engineering AR 2006 90 Directors’ Report AS AT 31 DECEMBER 2006 (Currency – Singapore dollars unless otherwise stated) We, the undersigned directors, on behalf of all the directors of the Company, submit this annual report to the members together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2006. DIRECTORS The directors of the Company in office at the date of this report are as follows: Peter Seah Lim Huat Tan Pheng Hock Koh Beng Seng LG Ng Yat Chung Dr Tan Kim Siew Professor Lui Pao Chuen Winston Tan Tien Hin Lucien Wong Yuen Kuai Dr Philip Nalliah Pillai Quek Poh Huat Venkatachalam Krishnakumar BG Bernard Tan Kok Kiang (Chairman) (President and Chief Executive Officer) (Alternate Director to LG Ng Yat Chung) ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURES Except for the Singapore Technologies Engineering Executives’ Share Option Scheme, Singapore Technologies Engineering Share Option Plan and Singapore Technologies Engineering Performance Share Plan (collectively the “ST Engineering Share Plans”), neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares or debentures of the Company or of related corporations either at the beginning (or date of appointment, if later) or at the end of the financial year. There were no changes in any of the directors’ interests in the Company between the end of the financial year and on 21 January 2007.
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197 SGX Listing Manual Requirements
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201 SECTORAL FINANCIAL REVIEW - AER
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Full Annual Report 2006 - Singapore Technologies Engineering

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