We are the largest engineering and construction
company in Southeast Asia, with core capabilities in process engineering
and design, civil engineering, and building construction. Together
with our United Kingdom-based process engineering arm, SembCorp
Simon-Carves, we are now a leading process contractor for the worlds
chemical, nuclear, plastic, fertiliser, food and pharmaceutical
industries.
STRATEGY
We remain committed to becoming a world-class, integrated engineering
and construction company. To do this, we will:
Turnaround towards profitability in 2003
While focusing on executing our orderbook, we are also in the midst
of tightening and strengthening our risk management systems. This
is to improve our risk position, in order to ensure future project
profitability.
Shift our business focus from civil engineering
to process engineering and design by capitalising on SembCorp Simon-Carves'
front-end capabilities
We will leverage our petrochemical polymer strengths to develop
selected polymer sectors. SembCorp Simon-Carves strong track
record in process engineering enhances our capability mix to secure
more projects in the gas and petrochemical industries.
Continue to target opportunities in Singapore
and Asia
Our goal is to have more than half our annual turnover come from
projects outside Singapore. To achieve this, we will continue to
develop our overseas operations, with an emphasis on emerging markets
such as China and India.
Build and deepen client relationships
We aim to become the preferred partner for overseas engineering
and construction companies expanding into China and Southeast Asia.
Such partnerships will enable us to strengthen our foothold in key
markets and enhance our core capabilities.
OPERATIONS REVIEW
Despite maintaining a relatively strong orderbook of S$1.8 billion,
SembCorp Engineers and Constructors (SembE&C) performance
in 2002 was subdued, in comparison to the year before. This was
primarily due to the depressed global economic climate and losses
reported as a result of unforeseen problems on two of our civil
engineering projects.
In November, we made allowance for a one-time foreseeable S$85 million
loss on our Tuas View B2b land reclamation project. The project
was halted due to a stoppage of sand supply from Indonesia since
the beginning of 2002. All land reclamation projects in Singapore
have come to a stand-still since and no alternative sources of sand
supply are available. We are now in discussions with Jurong Town
Corporation to terminate the contract.
Our Kranji Deep Tunnel Sewerage System project also encountered
unanticipated terrain difficulties and we have provided S$22 million
for expected losses brought on by unforeseen complex ground conditions.
The project involved the design and construction of a 12.6 kilometre
deep tunnel from Kranji Sewage Treatment Plant to the Seletar Expressway
flyover off Lentor Avenue.
However, we are focused on executing other existing projects in
our orderbook well and profitably, and we expect SembE&C to
turn around towards profitability in 2003.
In 2002, the market for engineering and construction work across
Asia was fiercely competitive. Aggressive pricing across the market
resulted in the margins of many engineering and construction projects
being taxed.
Despite the poor climate, demand for construction in Singapore in
2002 actually grew 5 per cent over 2001, and we won S$700 million
in new contracts 70 per cent of these were new orders in
Singapore. The other 30 per cent of new accounts came from overseas,
and SembCorp Simon-Carves brought in S$146 million in sales.
We remained Singapores top engineering and construction company
(ranked by turnover) for the third year running, in the latest survey
of Singapores Top Contractors by Singapores Building
and Construction Authority (BCA). We attribute this success to our
strategic steer-away from high-cost residential and commercial building
projects to focus on non-reclamation civil engineering projects.
In Singapore, we secured two design-and-build contracts totalling
S$301 million from the Public Utilities Board for its Changi Water
Reclamation Plant Project during the year. The first contract was
to build one of the worlds largest sludge drying systems and
the second was for a sludge digester facility in the same plant.
We also completed and handed over the Mass Rapid Transit stations
from Boon Keng to Sennet, and the Light Rapid Transit system at
Punggol New Town.
OUTLOOK
The BCA has forecasted that Singapores demand for construction
in 2003 will shrink 15 per cent from 2002. Despite the gloom in
the domestic construction industry, we anticipate greater opportunities
in China and India, particularly in the gas and infrastructure sectors.
Implementing a new portfolio shift towards process engineering and
design, we intend to focus on developing niche sectors in Singapore
and overseas. In Singapore, we will continue to bid for projects
in rail infrastructure and wastewater treatment, while developing
the polymer and gas sectors overseas.
We have tightened and strengthened our risk management systems and
will only bid for projects that we have a strong track record and
core competence in. By reorganising and restructuring our engineering
and construction operations, we hope to turn SembE&C around
towards profitability in 2003.
ORDERBOOK
As of end-December 2002, our orderbook stood at S$1.8 billion.
Major projects are:
![](images/spacer.gif) |
Project |
Value
(S$m) |
Client |
Scope of Work |
Completion Date |
![](images/spacer.gif) |
|
|
|
|
Singapore |
|
|
|
|
|
|
Phthalic
Analydride Plant
|
97 |
Continental
Petrochemicals
|
Construction of
a Phthalic Anhydride Plant with an output of 80,000 metric tonnes
per year
|
March
2003
|
|
|
|
|
|
|
|
|
|
Kallang/Paya
Lebar
Expressway (C421)
|
235 |
Land
Transport Authority
|
Construction of
a 1.5 km tunnel connecting to one flyover expressway and ancillary
works
|
November
2005
|
|
|
|
|
|
|
|
|
|
Kallang/Paya
Lebar
Expressway (C422)
|
257 |
Land
Transport Authority
|
Construction of
a 1.6 km tunnel connecting to two flyover expressways and ancillary
works
|
November
2005
|
|
|
|
|
|
|
|
|
|
DTSS
Changi WRP C4C
|
160 |
Public
Utilities
Board
|
Construction of
a sludge digester facility for the Changi Water Reclamation
Plant
|
September
2007
|
|
|
|
|
|
|
|
|
|
Changi
WRP EP3
|
141 |
Public
Utilities
Board
|
Construction of
a sludge drying system for the Changi Water Reclamation Plant
|
January
2008
|
|
|
Overseas |
|
|
|
|
|
|
Nanjing-LDPE-E&P
|
175 |
C.T.C.I
|
Construction of
a low density polyethylene plant in Nanjing, China
|
February
2005
|
|
|
|
|
|
|
|
|
|