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Land Systems - Singapore Technologies Engineering

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ST Kinetics’ performance, in light of THE<br />

difficult market conditions, is testimony to its<br />

strong capabilities and demand for its products<br />

and services.<br />

The Commercial Articulated Vehicle and<br />

the Bronco All Terrain Tracked Carrier.<br />

68


operating financial review<br />

LAND SYSTEMS SOLUTIONS THAT EXCEED<br />

THE COMPETITION<br />

As ST <strong>Engineering</strong>’s land systems arm, ST Kinetics<br />

provides an integrated suite of state-of-the-art<br />

solutions for the defence, homeland security and<br />

commercial markets. Serving customers in over<br />

30 countries worldwide, ST Kinetics’ capabilities<br />

cover the entire value chain, including the design,<br />

development, production, operation and through-life<br />

support of specialised land systems equipment and<br />

specialty vehicles.<br />

Despite market uncertainties, 2008 saw<br />

improvements in ST Kinetics’ performance, largely<br />

due to defence export sales. Its defence business<br />

continued to perform well during the year, securing<br />

several significant orders, most noteworthy of which<br />

was the £150m order for Bronco All Terrain Tracked<br />

Carriers by the UK Ministry of Defence (MoD).<br />

Other key contracts announced were the supply of<br />

40mm ammunition to the UK MoD and the export of<br />

the 120mm Super Rapid Advanced Mortar System<br />

(SRAMS) to a Gulf States customer.<br />

LeeBoy 9000 Wheeled Paver was launched at CONEXPO 2008.<br />

Faced with challenging market conditions in the<br />

US, the company’s US specialty vehicles business<br />

weathered the impact and grew in market share<br />

in some product segments. In China, its specialty<br />

vehicles companies managed to strengthen<br />

operations and profitability.<br />

ST Kinetics’ performance, in light of the difficult<br />

market conditions, is testimony to its strong<br />

capabilities and demand for its products and services.<br />

Each of its specialty vehicles companies grew more<br />

efficient, flexible and robust. Together with the solid<br />

showing of its defence businesses, ST Kinetics has<br />

reinforced its position as the premier land systems<br />

company in Southeast Asia.<br />

<strong>Land</strong> <strong>Systems</strong> & Solutions<br />

The company participated in various exhibitions<br />

during the year, showcasing both its capabilities<br />

and products. In February, it participated in India’s<br />

DefExpo 2008, where it showcased its automatic<br />

assault rifle SAR21 and Ultimax100 light machine<br />

gun. In the same month, the company participated<br />

in the <strong>Singapore</strong> Airshow 2008, displaying its<br />

range of capabilities for integrated defence<br />

solutions, such as the wheeled 8x8 armoured<br />

vehicle Terrex and Total 40mm Solutions, and<br />

launching its 40mm Low Velocity Air Bursting<br />

Munitions System (LV ABMS). The Commercial<br />

<strong>Singapore</strong> <strong>Technologies</strong> <strong>Engineering</strong> Ltd ENGAGING IDEAS DELIVERING PROMISES Annual Report 2008<br />

69


Articulated Vehicle (CAV) for disaster relief<br />

and the Hybrid Electric Tow Tractor HETT20<br />

were also exhibited. The HETT20 incorporates<br />

the latest hybrid electric technologies and is<br />

part of ST Kinetics’ offering of green products<br />

designed to reduce the emission of greenhouse<br />

gases and increase fuel efficiency.<br />

Later in June, the company showcased its<br />

Bronco Heavy Maintenance Vehicle, SRAMS<br />

on Spider Light Strike Vehicle, Total 40mm<br />

Solutions, including the 40mm LV ABMS, and<br />

Compact Personal Weapon (CPW) at Eurosatory<br />

2008 in Paris, France.<br />

ST Kinetics’ specialty<br />

vehicles companies<br />

have placed greater<br />

emphasis on the<br />

development of<br />

higher margin<br />

products, and<br />

export sales.<br />

In September, ST Kinetics’ joint venture company,<br />

Advanced Technology Research Centre, and<br />

Nanyang Technological University (NTU), officially<br />

opened Southeast Asia’s first research and<br />

development centre in cold spray technology.<br />

Through the combined strengths of ST Kinetics<br />

and NTU, this collaboration aims to use the Cold<br />

Spray Research Centre to spin off niche industrial<br />

applications; specifically, advanced coatings for<br />

enhanced wear resistance, as well as bioactive<br />

and anti-bacterial coatings for biomedical<br />

applications.<br />

Toward the end of the year, ST Kinetics<br />

showcased its solutions at two shows in the<br />

US. It displayed its full range of 40mm<br />

ammunition and the Bronco at Modern<br />

Day Marines in Virginia, and at the<br />

Association of United States Army<br />

Annual Meeting & Exposition in<br />

Washington DC, in September and<br />

October respectively.<br />

The Bronco Heavy Maintenance<br />

Vehicle generated much interest at<br />

Eurosatory 2008.<br />

ST Kinetics launched its 40mm Low Velocity Air Bursting Munitions System at<br />

<strong>Singapore</strong> Airshow 2008.<br />

70


operating financial review<br />

In October, ST Kinetics and <strong>Singapore</strong> Polytechnic<br />

signed an MOU for collaboration on a new Solar<br />

Energy Test-bedding Application Centre (SETAC)<br />

to facilitate research and development in solar<br />

applications, and the production of Dye Sensitised<br />

Solar Cell (DSSC). DSSCs are new generation<br />

solar cells that are more efficient and up to 60%<br />

cheaper than those currently available.<br />

ST Kinetics expects greater demand for its<br />

Total 40mm Solutions. It will also continue to<br />

pursue opportunities in local and foreign defence<br />

markets for its range of products, as well as new<br />

development and upgrade programmes. Increasing<br />

global environmental awareness and pressures<br />

to reduce fuel consumption are also expected<br />

The ST Kinetics-NTU Cold Spray Research Centre opened in September is<br />

Southeast Asia’s first R&D centre for such technology.<br />

to give rise to a higher demand for electric and<br />

hybrid electric vehicles and more efficient hydromechanical<br />

transmissions, all of which ST Kinetics<br />

offers as subsystems or integrated end products<br />

to its customers.<br />

<strong>Singapore</strong> <strong>Technologies</strong> <strong>Engineering</strong> Ltd ENGAGING IDEAS DELIVERING PROMISES Annual Report 2008<br />

71


Total Support & Services<br />

<strong>Singapore</strong> Airport Terminal Services Limited<br />

(SATS), the leading provider of integrated ground<br />

handling and airline catering services at <strong>Singapore</strong><br />

Changi Airport, became the first customer to use the<br />

Hybrid Electric Tow Tractor HETT20 in January.<br />

In June, ST Kinetics launched “STAR BLACK”<br />

– an independent premium service centre that<br />

delivers personalised, comprehensive automotive<br />

services for high-end German cars from<br />

marques like BMW and Mercedes Benz. This<br />

complements the current one-stop automotive<br />

services of STAR Automotive Centre.<br />

These EXPORT<br />

contracts attest<br />

to the growing<br />

confidence and<br />

global recognition<br />

of ST Kinetics’<br />

defence products.<br />

ST Kinetics expects more opportunities to provide<br />

services such as integrated training, logistics and<br />

life cycle cost management. The global economic<br />

downturn would also reduce new acquisitions and<br />

lead to increased demand for MRO services and<br />

life extension programmes for existing components<br />

and equipment.<br />

Specialty Vehicles & Services<br />

In March, ST Kinetics generated strong interest<br />

for three new LeeBoy products and GJK’s mini<br />

excavator at CONEXPO 2008 held in Las Vegas.<br />

VT LeeBoy launched its new 9000 wheeled<br />

Asphalt Paver, 705 Motor Grader and the upgraded<br />

Maximizer III Distributor.<br />

Later in May, the company set up VT Specialized<br />

Vehicles, S.A. de C.V. (VT SVM) – a wholly-owned<br />

subsidiary in Mexico – to sell VT SVC’s specialty<br />

vehicles in Mexico and Latin America. Sales of<br />

VT SVC kits in Latin America have enjoyed steady<br />

growth over the last few years, and the company’s<br />

presence in Mexico will enhance customer service<br />

and facilitate expansion in the Latin American market.<br />

At Bauma China 2008, held in Shanghai in<br />

November, both GJK and BZK showcased their<br />

range of products for the construction and mining<br />

industries. Also exhibited at the show were a new<br />

high mobility telehandler called Chang Jing 6, a<br />

hydraulic excavator, articulated dump truck<br />

ADT-30, CAV, and hybrid electric vehicle<br />

components and solutions.<br />

Besides growing organic sales, ST Kinetics’<br />

specialty vehicles companies have placed<br />

greater emphasis on the development of higher<br />

margin products, and export sales. It has<br />

expanded its market reach through establishing<br />

new dealers in Australia, Indonesia, India,<br />

Malaysia, the Philippines, South Africa, the UAE<br />

and Vietnam. These initiatives will not only help<br />

the specialty vehicles companies to weather the<br />

challenging periods of downturn, but also to<br />

emerge stronger on the upswing.<br />

PERFORMANCE OF THE LAND SYSTEMS<br />

SECTOR<br />

Half Yearly Performance<br />

Turnover of the <strong>Land</strong> <strong>Systems</strong> sector in 2H2008 of<br />

$618m was 6% or $38m lower than that achieved<br />

in 1H2008. The lower turnover was mainly due to<br />

lower turnover from the US operations and lower<br />

project deliveries.<br />

Compared to 1H2008, PBT in 2H2008 decreased<br />

by 54% or from $31.3m to $26.7m. The lower<br />

PBT was mainly attributable to lower turnover and<br />

lower margins from product mix, as well as the<br />

impairment in value of a quoted investment.<br />

72


operating financial review<br />

Full Year Performance<br />

<strong>Land</strong> <strong>Systems</strong> sector’s FY2008 turnover of $1,274m<br />

was higher than that achieved in FY2007 by 8% or<br />

$96m. The higher turnover was mainly contributed<br />

by the Munitions & Weapon (M&W) business group’s<br />

higher export sales, but this was partially offset by<br />

lower turnover from the Automotive (Auto) business<br />

group. The lower turnover in the Auto business<br />

group was mainly due to lower sales from the US<br />

operations, but this was partially offset by higher<br />

project deliveries.<br />

Compared to FY2007, <strong>Land</strong> <strong>Systems</strong> sector’s PBT<br />

of $84.7m for FY2008 was higher by 6% or $4.7m.<br />

The higher PBT was mainly contributed by the M&W<br />

business group, but this was largely offset by lower<br />

PBT in the Auto business group. The higher PBT<br />

of the M&W business group was in line with the<br />

higher turnover recorded, while the poorer results<br />

of the Auto business group was mainly due to the<br />

impairment in value of a quoted investment, lower<br />

interest income, weakness in US operations and<br />

lower margins from product mix.<br />

Acquisitions<br />

On 10 September, ST Kinetics acquired the remaining<br />

13.76% stake in STAR Automotive Centre (Zhejiang) Co<br />

Ltd (STAR (ZJ)), making it a wholly-owned subsidiary.<br />

The acquisition was in line with ST Kinetics’ growth<br />

plan in China’s expanding automotive repair market.<br />

STAR (ZJ) has seen growing demand for quality aftersales<br />

services in the provinces of Jiangsu and Zhejiang,<br />

where it is the only workshop that provides quality<br />

one-stop services for owners of premium cars such as<br />

Mercedes Benz, BMW and Porsche. Using state-of-theart<br />

equipment, STAR (ZJ) has one of the largest facilities<br />

in the city, and is recognised by insurance companies in<br />

the Jiangsu and Zhejiang provinces.<br />

Major Projects<br />

In August, ST Kinetics announced the $110m<br />

redevelopment of its facilities at Jalan Boon Lay and<br />

Chin Bee Road, where it will consolidate its facilities<br />

and operations located at its Portsdown Road and Ayer<br />

Rajah Crescent premises.<br />

Visitors watching a demonstration of the 120mm SRAMS at Eurosatory 2008.<br />

An export contract for the mortar system was announced in February.<br />

During the year, ST Kinetics delivered the Bionix II,<br />

Bronco, Pegasus, and other weapons and munitions.<br />

It also saw the sales of specialised truck bodies,<br />

trailers, off-road dump trucks, excavators, and road<br />

construction and maintenance equipment to various<br />

commercial customers.<br />

In February, ST Kinetics was awarded a US$31.6m<br />

contract for 120mm SRAMS by a Gulf States<br />

customer. Under the export contract, ST Kinetics<br />

will supply its unsurpassed low-recoil SRAMS, with<br />

delivery to be completed by 2011. In the same month,<br />

the company was awarded a contract worth about<br />

$42.5m by the UK MoD for the supply of 40mm<br />

ammunition.<br />

2008 ended on a high note for ST Kinetics with the<br />

announcements of two contracts from UK MoD -<br />

a £150m order for over 100 Bronco All Terrain<br />

Tracked Carriers and a £35m order for 40mm<br />

ammunition. The Bronco order was a significant<br />

export milestone as it is the first sale of a locally<br />

designed and produced armoured vehicle and to<br />

one of the world’s leading defence forces. UK MoD’s<br />

repeat order for more 40mm ammunition was also<br />

notable as it demonstrated the customer’s trust in<br />

the product’s quality and performance. These export<br />

contracts attest to the growing confidence and global<br />

recognition of ST Kinetics’ defence products.<br />

<strong>Singapore</strong> <strong>Technologies</strong> <strong>Engineering</strong> Ltd ENGAGING IDEAS DELIVERING PROMISES Annual Report 2008<br />

73

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