Presentation Slides - Singapore Technologies Engineering

Financial Results BriefingFull Year 2010 Results15 February 2011

FY2010 ResultsGood Performance

Financial Highlightsfor the year ended 31 December 2010FY2010 FY2009 Change$ m (a) (b) (a) / (b)Turnover 5,985 5,548EBIT 586.7 486.4Other income, net 40.0 67.6Finance costs, net (43.3) (46.3)PBT 627.5 546.6Net Profit 491.0 443.9EVA 369.7 304.88%21%41%6%15%11%21%Lower Lower income income from fromJobs Jobs Credit Credit Scheme Scheme(by (by $31.2m) $31.2m)Engineering Our Future4

Financial Highlightsfor the year ended 31 December 2010• Commercial sales at 59% (FY2009: 62%) or $3.5b of turnover• $11.5b order book; about $3.7b to be delivered in 2011(end 2009: $10.3b)• CCE and short-term investments of $1.79b (FY2009: $1.75b)• Proposed Dividend: 90% of earnings (FY2009: 90%)• Dividend Yield: 4.36% (FY2009: 4.72%)Engineering Our Future5

Financial Highlightsfor the year ended 31 December 2010FY2010 FY2009 ChangeEarnings Per Share 16.21¢ 14.78¢Return on Sales 8.4% 8.2%Return on Equity 30.3% 28.3%Engineering Our Future6

Change in DepreciationPolicy• FRS 16 requires the Group to review the estimated useful lives ofproperty, plant and equipment (PPE) periodically such that it bestreflects the pattern in which the assets’ future economic benefits areexpected to be consumed• The Group engaged independent consultants to perform industry andbenchmarking study of the depreciation rates of its PPE• The industry and benchmarking study considered the industrypractices of the four sectors and studied the economic useful lives ofits PPE• Based on the results obtained, the Group revised the estimated usefullives of the PPE to align them to industry practices with effect from thefinancial year ended 2010Engineering Our Future7

Change in DepreciationPolicyExistingRevisedBuildings 15 to 30 years 15 to 50 yearsPlant and machinery 2 to 20 years 5 to 25 yearsProduction tools and equipment 3 to 10 years 3 to 15 yearsAircraft and aircraft engines 5 to 20 years 15 to 30 yearsWharves and slipways 10 to 16 years 20 yearsSyncrolift and floating docks 5 to 10 years 15 yearsBoats and barges 5 years 10 yearsEngineering Our Future8

PBT Impact$ m FY2010 FY2009PBT 627.5 546.6 15%Adjustments:Change inDepreciation Policy (39.5) -Jobs Credit Scheme (7.9) (39.1)(47.4) (39.1)Revised PBT 580.1 507.5 14%Engineering Our Future9

Group Turnoverby sector$5,548m1899498%$437mMarine 10%$5,985m1751,0441,167LandSystems 29%1,5061,371Elect 1%1,3891,872Aero -%1,871FY2009FY2010Turnover higher by 8%Higher Turnover from Land Systems and Marine sectorsEngineering Our Future10

Group TurnoverBreakdown by location of customers (by geography)6%13%13%5%Locality FY2009 FY2010$m % $m %Asia 3,093 56 3,328 55USA 1,430 26 1,553 2626%26%56%55%Europe 711 13 755 13Others 314 5 349 6Total 5,548 100 5,985 100Engineering Our Future11

Profit Before Taxby sectorFY2009FY2010LandSystems(17%)Marine(19%)$95.4m$102.3mOthers(1%)$5.3m$115.3mAero(42%)$228.3mLandSystems(18%)Marine(19%)$113.9m15%$118.0mOthers(1%)$5.8m$127.6m8%Aero(42%)$262.2m15%Elect(21%)19%Elect(20%)11%$546.6m15%$80.9m$627.5mHigher by 15%Growth from all SectorsEngineering Our Future12

AerospaceHigher Profits$1,872m$1,871mTurnover by business groupTurnover1,0009008007007%881945746(10%)671FY2009FY2010FY2009$228.3m15%$33.9mFY2010$262.2m6005004003002002454%255100PBT$ m0AMM CERO EMSFY2009FY2010Engineering Our Future14

ElectronicsStrong EBIT Performance$1,371m1%$18m$1,389mTurnover by business groupTurnover8007006586%698FY2009FY2010600FY2009$115.3m11%$12.3mFY2010$127.6m500400300200297(7%)275416416100PBT$ 0mLSG CSG SSGFY2009FY2010Engineering Our Future15

Land SystemsHigher Profits$1,167m29%$339m$1,506mTurnover by business groupTurnover1,2001,00057%1,135FY2009FY2010800722FY2009FY2010600(28%)$95.4m19%$18.5m$113.9m40036126228%20084109PBT$ m0Auto M&W S&TFY2009FY2010Engineering Our Future16

MarineHigher Turnover and Profits$949m10%$95m$1,044mTurnover by business groupTurnover7006649%723FY2009FY2010600500FY200915%$15.7mFY2010$118.0m4003002545%267$102.3m20076%1003154PBT$ 0mShipbuilding Shiprepair EngineeringFY2009FY2010Engineering Our Future17

EBITDA / EBIT - Group$ m FY2010 FY2009 %EBITDA 718.7 649.2 11Depreciation & amortisation (132.0) (162.8) 19EBIT 586.7 486.4 21Other income, net 40.0 67.6 (41)Finance costs, net (43.3) (46.3) 6Strong Strong operatingperformanceChange Change in indepreciation policy policyLower Lower income income from fromJobs Jobs Credit Credit Scheme Scheme(by (by $31.2m) $31.2m)Operating profit 583.4 507.7 15Associates and joint ventures 44.1 38.9 13Profit before tax 627.5 546.6 15Contribution from fromAirshow AirshowEngineering Our Future18

PBT Margin by sectorFY2010 FY2009% %Aerospace 14 12Electronics 9 8Land Systems 8 8Marine 11 11Group 10 10Steady PBT marginEngineering Our Future19

Net Profit by sector$ m FY2010 FY2009 ChangeAerospace 209.8 43% 185.7 42% 13%Electronics 100.7 21% 90.8 20% 11%Land Systems 90.2 18% 82.3 19% 10%Marine 89.1 18% 81.8 18% 9%Others 1.2 - 3.3 1% 64%Group 491.0 100% 443.9 100% 11%Higher Net Profit in all SectorsEngineering Our Future20

Agenda• Financial Highlights• FY2010 vs FY2009• 4Q2010 vs 4Q2009• 4Q2010 vs 3Q2010• Year in Review• Sector Operations• Key Contracts Secured in 2010• OutlookEngineering Our Future21

Financial Highlightsfor the year ended 31 December 20104Q2010 4Q2009 Change$ m (a) (b) (a) / (b)Turnover 1,619 1,469EBIT 171.2 134.4Other income, net 11.7 20.1Finance costs, net (2.5) (19.1)PBT 193.6 146.9Net Profit 144.0 129.710%27%42%87%32%11%Lower Lower income income from fromJobs Jobs Credit CreditScheme SchemeEngineering Our Future22

Group Turnoverby sector$1,469m10%$150m$1,619m4949226Marine 27%286369LandSystems 26%466381Elect 1%378444Aero 1%4404Q20094Q2010Turnover higher by 10%Higher Turnover from Land Systems and Marine sectorsEngineering Our Future23

Profit Before Taxby sector4Q20094Q2010LandSystems(16%)Marine(22%)$32.7m$23.9mOthers(2%)$2.5m$30.4mAero(39%)$57.4mLandSystems(15%)Marine(19%)$29.0m15% Others(4%)$37.6m$6.9m$33.2m170%Aero(45%)$86.9m51%Elect(21%)$146.9m32%$46.7m22%Elect(17%)9%$193.6mHigher by 32%Growth from all SectorsEngineering Our Future24

Agenda• Financial Highlights• FY2010 vs FY2009• 4Q2010 vs 4Q2009• 4Q2010 vs 3Q2010• Year in Review• Sector Operations• Key Contracts Secured in 2010• OutlookEngineering Our Future25

Financial Highlightsfor the year ended 31 December 20104Q2010 3Q2010 Change$ m (a) (b) (a) / (b)Turnover 1,619 1,487EBIT 171.2 157.4Other income, net 11.7 6.2Finance costs, net (2.5) (13.3)PBT 193.6 159.8Net Profit 144.0 130.29%9%88%81%21%11%Engineering Our Future26

Group Turnoverby sector$1,487m412549%$132mMarine 13%$1,619m49286368LandSystems 27%466338Elect 12%378486Aero 10%4403Q20104Q2010Turnover higher by 9%Higher Turnover from Electronics, Land Systems and Marine sectorsEngineering Our Future27

Profit Before Taxby sector3Q20104Q2010LandSystems(18%)Marine(18%)$28.1m$29.2mOthers(1%)$2.2m$31.6mAero(43%)$68.7mLandSystems(15%)Marine(19%)$29.0m29% Others(4%)$37.6m$6.9m$33.2m216%Aero(45%)$86.9m26%Elect(20%)3%Elect(17%)5%$159.8m21%$33.8m$193.6mHigher by 21%Growth from all SectorsEngineering Our Future28

Balance Sheet$ m 31 Dec 2010 31 Dec 2009Property, plant and equipment 1,302 1,166Associates & joint ventures 281 273Investments 16 22Intangible assets 580 644Investment properties 2 2Long-term receivables, non-current 36 30Amount due from related parties, non-current 7 7Finance lease receivables, non-current 7 5Derivative financial instruments 1 19Deferred tax assets 119 127Non-current assets 2,351 2,295Current assets 4,917 4,590Total assets 7,268 6,885Current liabilities 3,551 3,082Non-current liabilities 1,990 2,127Total liabilities 5,541 5,209Share capital and reserves Net Assets: 1,622 Net Assets: 1,568Non-controlling interests$1.727b105$1.676b108Total equity and liabilities 7,268 6,885Net current assets 1,366 1,508Non-CurrentNon-CurrentLiabilitiesLiabilitiesDecreasedDecreasedbyby$137m:$137m:‣Reclass‣Reclass$300m$300mfromfromLTLTtotocurrentcurrentliabilitiesliabilitiesPartiallyPartiallyoffsetoffsetby:by:‣Higher‣HigheradvanceadvancepaymentspaymentsfromfromcustomerscustomersNetNetCurrentCurrentAssetsAssetsDecreasedDecreasedbyby$142m:$142m:‣‣IncreaseIncreaseininotherothercreditorscreditorsandandaccrualsaccruals‣‣ReclassReclass$300m$300mfromfromLTLTtotocurrentcurrentliabilitiesliabilitiesPartiallyPartiallyoffsetoffsetby:by:‣‣IncreaseIncreaseinininventoriesinventories&&WIPWIP‣‣IncreaseIncreaseininadvancesadvancesandandotherotherdebtorsdebtorsEngineering Our Future29

Statement ofCash Flows$ m FY2010 FY2009Cash flow from/(used in) :Operating activities 810 900Investing activities (267) (485)Financing activities (415) 52Net increase in CCE 128 467CCE at beginning of the year 1,514 1,049Exchange difference (50) (2)CCE at end of the year 1,592 1,514GoodGoodoperatingoperatingcashcashflowflowPurchasePurchaseofofPPEPPEPurchasePurchaseofofPPEPPEandandshortshorttermterminvestmentsinvestments••IssuanceIssuanceofofUS$500mUS$500mbondsbondsPartiallyPartiallyoffsetoffsetby:by:••RepaymentRepaymentofofbankbankloansloans••PaymentPaymentofofdividendsdividendsPaymentPaymentofofdividendsdividends• CCE - Cash & Cash EquivalentsEngineering Our Future30

DividendsProposed Final Dividend – FY2010FY2009FY2010cents $ m cents $ m• Final 10.28 311.3 11.55 350.9- Ordinary 4.0 121.1 4.0 121.5- Special 6.28 190.2 7.55 229.4• Interim (Ordinary) 3.0 90.1 3.0 91.0Total 13.28 401.4 14.55 441.9Ave Share Price $2.81 $3.34Dividend Yield (average share price) # 4.72% 4.36%#Computed using the average closing price of the last trading day of the current and previous yearEngineering Our Future31

Agenda• Financial Highlights• FY2010 vs FY2009• 4Q2010 vs 4Q2009• 4Q2010 vs 3Q2010• Year in Review• Sector Operations• Key Contracts Secured in 2010• OutlookEngineering Our Future32

Year in Review– Aerospace Operations• AMM– New customers• GECAS, Mitsubishi Corp, Shanghai Airlines, Sichuan Airlines, Southern Air– New contracts secured• Republic of Singapore Air Force (RSAF) contract to procure 12 M346 aircraftand ground based training system for fighter pilot training in France– Additional capacity and capability• Completed and commissioned additional hangar in San Antonio facility• Began operations in hangar at Pudong• Second line of 757 PTF in SingaporePudong hangarEngineering Our Future33

Year in Review– Aerospace Operations• CERO– Components• Launched new product line on thrust reversers in Denmark component facility• Redelivered 38 A320 landing gears and the first set of A330/340 landing gear inMadrid facility– Engines• Secured maintenance contracts for 84 engines from new customers:GMF, Jetstar Pacific, Sriwijaya Airlines, T’Way Air• Secured ten-year US$750m engine Maintenance-By-the-Hour (MBH TM ) contractfor Jet Airways’ 67 Boeing 737Engineering Our Future34

Year in Review– Aerospace Operations• EMS– Obtained launch customer for 757-200 Passenger-to-Passenger / Cargo(Combi) (PTC) conversion– Completed full delivery of Skyblade III systems– Major component MBH TM contracts won• Eight-year contract with Spring Airlines for 78 A320• Seven-year contract with China Airlines for 10 Boeing 737NGEngineering Our Future35

Year in Review– Electronics Operations• LSG– Secured Automatic Fare Collection (AFC) Systems for Bangkok Bus RapidTransit System & Bangkok Mass Transit System Sukhumvit Line E10 to E14– Secured a signalling system contract for Singapore Downtown Line• CSG– Automated Meter Readers and SMART vehicle and asset tracking devicessecured by Telematics Wireless– Launched a new product : MobileCrypt Micro SD Card• SSG– Secured a maintenance contract for Hong Kong Fire Services ThirdGeneration Mobilising SystemEngineering Our Future36

Year in Review– Land Systems Operations• Automotive– Secured two four-year contracts for maintenance of SAF’svehicles and for preservation of SAF’s fleet of equipment– Delivered Terrex ICV, Warthog, specialised truck bodiesand trailers, road construction and maintenanceequipment, off-road dump trucks and excavators– Established a new construction equipment company inIndia: LeeBoy India• Munitions & Weapon– Secured munitions and weapon contracts including40mm munitions contracts from UK Ministry of Defence(UK MoD) and Finnish armyTerrex ICVWarthog Troop Carrier• Won 3 Defence Technology Prizes (DTP) awarded byMinistry of DefenceDTP Individual AwardwinnerEngineering Our Future37

Year in Review– Marine Operations• Shipbuilding– Local• Signed a JV agreement to form Hovertrans Solutions• Launched Diving Support Vessel (DSV), “Skandi Singapore”• Launched Seismic Survey Vessel (SSV), “Pacific Finder”Launched “Pacific Finder”Engineering Our Future38

Year in Review– Marine Operations• Shipbuilding– US• Contracts Secured - to build two 8,000 HP Tugs for Overseas ShipholdingGroup, Inc. (OSG) Ship Management and 4 th Egyptian Fast Missile Craft (FMC)• Keel Laid - 1 st Egyptian FMC and 1 st Crowley 330,000 bbl ArticulatedTug/Barge (ATB)• Delivered two Platform Supply Vessels and 8 th & 9 th 185,000 bbl ATB unitsPlatform Supply VesselEngineering Our Future39

Year in Review– Marine Operations• Shiprepair– Major upgrading and conversion projects secured:• Upgrading work on semi-submersible pipe lay vessel, “Semac 1”• Conversion work on combat logistics vessel, “HMAS Success”– Completion of several major projects:• Engineering• Repair work on dredger, “Antigoon”• Lengthening and upgrading work on fishing vessel,“Pacific Princess”– Contracts secured:• Pneumatic waste collection system in Tianjin Eco-City• Integrated waste management project in Brunei• Waste transfer station in Wuhan“Pacific Princess”Transfer Waste StationEngineering Our Future40

Agenda• Financial Highlights• FY2010 vs FY2009• 4Q2010 vs 4Q2009• 4Q2010 vs 3Q2010• Year in Review• Sector Operations• Key Contracts Secured in 2010• OutlookEngineering Our Future41

Year in Review– Key Contracts secured in 2010Aerospace• Awarded two six-year maintenance contracts (S$363m) by the Republic ofSingapore Air Force (RSAF)• Awarded a ten-year contract (US$750m) CFM56-7B engines MBH TM contractby Jet Airways covering a fleet of 67 Boeing 737NG• Awarded an eight-year contract (US$105m) component MBH TM contract bySpring Airlines covering up to 78 A320• Secured two ten-year maintenance contracts (US$63m) from T’Way Air forthe MBH TM component support of T’Way Air’s Boeing 737-800 and enginemaintenance programme for CFM56-7B enginesEngineering Our Future42

Year in Review– Key Contracts secured in 2010Aerospace (cont’d)• Won contract (S$543m) to procure 12 M346 aircraft and ground based trainingsystem for RSAF’s fighter pilot training in Cazaux, France• Won a seven-year component MBH TM contract (US$16.2m) from China Airlinesfor 10 Boeing 737NG• Secured new airframe heavy maintenance contracts (S$370m) for heavymaintenance checks, passenger-to-freighter (PTF) conversions and interiorrefurbishments in 3Q2010• Secured first Boeing 757-200 PTC conversion contract from GuggenheimAviation Partners• Secured new maintenance contracts (S$320m) in 4Q2010, which will becarried out at its facilities in the Americas, Asia Pacific and EuropeEngineering Our Future43

Year in Review– Key Contracts secured in 2010Electronics• Secured Passenger Information Systems contracts for Singapore DowntownLine (S$10m) and Brazil’s Rio De Janeiro Metro (S$4.6m)• Secured contract (S$28m) from Invensys Rail for the Signalling SystemInstallation on the Singapore Downtown Line• Received orders for SMART vehicle and asset tracking devices (US$8m) forrecovery of stolen vehicles and goods• Awarded contract (US$21.5m) by Arad Technologies Ltd to supplyAutomatic Meter Reading (AMR) radio transceiversEngineering Our Future44

Year in Review– Key Contracts secured in 2010Land Systems• Secured contract (€30.13m) for the demilitarisation of ammunition for a countryin Africa which involves the supply of specialised equipment, training andoperations assistance• Awarded a six-year contract (S$87m) to provide driver training for theSingapore Armed Forces (SAF)• Awarded by Brazilian Navy (US$20.9m) to supply 5 units of 40mm L70 navalgun and an associated Integrated Logistics Support package• Secured two four-year contracts (S$160m) from the SAF for maintenance ofSAF’s vehicles and preservation of SAF’s fleet of equipmentEngineering Our Future45

Year in Review– Key Contracts secured in 2010Marine• Secured an undefinitised contract (US$165m) with the US Navy for a fourthFMC for the Egyptian Navy• Secured contract (US$21m) from subsidiaries of Overseas Shipholding Group,Inc. (OSG) to build two 8,000 ATB tugs• Awarded upgrading and modification contracts (S$55m) from both its Navaland Commercial customers for a class of vessels from Republic of SingaporeNavy (RSN) and research vessel, “Tangaroa” respectively• Secured contract (S$66.5m) to design and construct a waste managementfacility in Sungai Paku, Brunei• Awarded contract (RMB113m) to provide proprietary loop-based PneumaticWaste Collection System in Tianjin’s Eco-City’s Eco-Business ParkEngineering Our Future46

Year in Review– Key Contracts secured in 2010Others• ST Synthesis won a five-year contract (S$18m) from Land Transport Authority(LTA) to provide installation and maintenance of traffic signal systems for theeastern part of Singapore• Electronics, Land Systems and Marine sectors secured $110m worth ofcontracts that include an Automatic Fare Collection System for the BangkokMass Transit System; supply of 40mm ammunition to UK MoD; and shipupgrading and modification contracts from both naval and commercialcustomersEngineering Our Future47

Agenda• Financial Highlights• FY2010 vs FY2009• 4Q2010 vs 4Q2009• 4Q2010 vs 3Q2010• Year in Review• Sector Operations• Key Contracts Secured in 2010• OutlookEngineering Our Future48

Group Outlook forFY2011Barring unforeseen circumstances, the Group expects to achieve higherturnover and PBT for FY2011 compared to that of FY2010.• For the Aerospace sector, FY2011 turnover is expected to becomparable, whilst PBT is expected to be higher than that of FY2010• For the Electronics, Land Systems and Marine sectors, FY2011 turnoverand PBT are expected to be higher than that of FY2010Engineering Our Future49

Group Outlook forFY2011Aerospace• Pursue and secure aircraft interior modification work and new PTF conversionopportunities• To complete and deliver the first overhauled A340-300 nose landing gear andmain landing gear in Madrid facility• To launch sales of CFM56 proprietary repairs under licence from GeneralElectric• To build up new PTF capability and obtain STC for 757-200 Combi aircraftEngineering Our Future50

Group Outlook forFY2011Electronics• Sales recognition from both LTA’s Circle Line and the Half Height PlatformScreen Doors projects• Sales recognition from an Advanced Combat Man System, a communicationsystem project, the supply of telematics systems, satellite communicationproducts and electro-optics equipment• Sales recognition from the milestone completions of simulator projects, a 3 rdGeneration Learning System, software system projects and managedservices salesEngineering Our Future51

Group Outlook forFY2011Land Systems• Deliver Terrex ICV, balance of Warthog fleet, munitions, weapons andspecialty vehicles• Continue to pursue key defence programmes• Raise TRXBUILD’s brand awareness and penetrate new markets with newand existing specialty vehicles productsEngineering Our Future52

Group Outlook forFY2011Marine• Expect to deliver Roll-on/Roll-off Passenger ferry (Ropax), “Norman Leader”and SSV, “Pacific Finder”• Expect to deliver last of ten 185,000 bbl ATB unit and 2 nd 350,000 bbl ATB unit• Expect to launch 1 st of 4 FMCEngineering Our Future53

President & CEO’sMessage“The Group registered good growth in Turnover and Profits in FY2010 overFY2009. Turnover increased by 8% to almost $6b while PBT and NetProfit improved by 15% and 11% to $627.5m and $491.0m respectively.This good performance translates to an ROE of 30.3%.In 2010, the Group invested more than $300m of capital expenditures innew capabilities and capacity to tap the growth opportunities acrossthe four sectors. We ended the year with a strong order book of $11.5b,which provides good visibility of the Group's future revenue streamand will further add to our resilience.Barring unforeseen circumstances, the Group expects to achieve higherturnover and PBT in FY2011 compared to FY2010.”~ Tan Pheng HockEngineering Our Future54

Thank YouEngineering Our Future55