| |
 |
Funding
During the year, SembCorp Financial Services,
a financial and treasury company was formed, putting
into action the Group’s strategy to achieve
greater efficiency through centralised funding.
The Group continues to consolidate and diversify
its sources of funding by expanding existing banking
relationships and exploring new relationships to
achieve greater access to bilateral facilities.
The increase in funding resources will allow the
Group to grasp opportunities as they arise and provide
flexibility in working capital management. |
| |
| We maintained our net borrowings at S$1,374 million
(2002: S$1,333 million) despite significant additional
financing requirements for the acquisition of Teesside
assets in the United Kingdom, purchase of the remaining
minority stakes in SUT Sakra and SembCorp Cogen,
and an additional 20% stake in SembCorp Gas. Net
gearing remains unchanged at 0.6 times. |
| |
| We remain focused on maintaining an efficient
and optimal mix of committed and uncommitted facilities,
fixed and floating rate borrowings, prudent financial
ratios and reduced cost of funding. As such, committed
funding consists of 75% (2002: 84%) of the Group’s
borrowings and 50% (2002: 66%) of the overall debt
portfolio is not exposed to interest rate fluctuations.
The Group seeks to limit its interest rate exposure
by adopting a prudent debt structure whilst balancing
this with cost considerations. |
| |
| The maturity profile of the Group is evenly spread
over different maturities which reduces the impact
of refinancing risks. The weighted average cost
of funding has been reduced by about 0.50% to 3.55%
in 2003. |
| |
| The Group’s foreign currency borrowings
increased from 14% to 20% in 2003, arising from
the funding of the Group’s overseas acquisitions
in the domestic currencies of the new investments. |
| |
Changes in working capital
The Group continues its concerted effort
towards improvement of its cashflow generation and
generated a positive cashflow from operations of
S$337 million compared to S$530 million in the previous
year. The change in cashflow was attributable to
the timing differences and lumpy nature of earnings
from various projects. |
| |
Risk management
As part of the Group’s enterprise
risk management framework, the Group enters into
various derivative financial instruments to manage
exposure to foreign exchange, interest rate and
commodity price risks arising from operational,
financing and investment activities. Such transactions
hedge the Group against fluctuations in the prices
of the underlying instruments. |
| |
Financial discipline and corporate governance
A systematic approach has been introduced
for SembCorp and its Key Businesses to review financial
discipline in the Group. |
| |
| We have set up a certification process for all
our subsidiaries to confirm their commitment to
and compliance with a prudent financial discipline
framework. The framework provides for checklists
to systematically highlight the requirements of
new accounting standards and the treatment of transactions
and ensures that acceptable accounting policies
are followed and appropriate provisions are made
for long overdue debts, foreseeable losses and impairment
of assets. It establishes the propriety of revenue
and cost recognition, assets valuation, liabilities
recording and allows early identification of areas
of potential exposures which can then be addressed
to minimise adverse impact to the Group. |
| |
Financing and Treasury Highlights
|
|
|
|
|
| |
Group |
 |
| |
2003 |
|
2002 |
|
|
| |
S$m |
% |
S$m |
% |
|
| Source of funding |
|
|
|
|
|
| Funded bank facilities,
capital markets and available funds |
|
|
|
|
|
| Funded facilities available
for drawdown |
4,404 |
|
4,520 |
|
|
| Cash and cash equivalents |
679 |
|
482 |
|
|
 |
|
|
|
| Total facilities and available
funds |
5,083 |
|
5,002 |
|
|
| Amount drawn down |
1,930 |
|
1,615 |
|
|
|
|
|
|
| Unutilised funded facilities
and funds available |
3,153 |
|
3,387 |
|
|
|
|
|
|
| |
|
|
|
|
|
| Unfunded bank facilities |
|
|
|
|
|
| Unfunded facilities available
for drawdown |
1,763 |
|
1,285 |
|
|
| Amount drawn down |
1,151 |
|
890 |
|
|
|
|
|
|
| Unutilised unfunded facilities
available |
612 |
|
395 |
|
|
|
|
|
|
| |
|
|
|
|
|
| Total unutilised facilities
and funds available |
3,765 |
|
3,782 |
|
|
|
|
|
|
| |
|
|
|
|
|
| Committed facilities |
|
|
|
|
|
| Committed facilities available |
1,549 |
|
1,517 |
|
|
| Amount drawn |
1,549 |
|
1,517 |
|
|
| |
|
|
|
|
|
| Funding profile |
|
|
|
|
|
| Maturity profile |
|
|
|
|
|
| Due within one year |
731 |
36 |
408 |
22 |
|
| Due between one to five years |
904 |
44 |
827 |
46 |
|
| Due after five years |
418 |
20 |
580 |
32 |
|
|
|
|
|
| |
2,053 |
100 |
1,815 |
100 |
|
|
|
|
|
| |
|
|
|
|
|
| Debt mix |
|
|
|
|
|
| Floating rate debt |
1,031 |
50 |
612 |
34 |
|
| Fixed rate debt |
1,022 |
50 |
1,203 |
66 |
|
|
|
|
|
| |
2,053 |
100 |
1,815 |
100 |
|
|
|
|
|
| |
|
|
|
|
|
| Currency denomination
of debt |
|
|
|
|
|
| SGD |
1,635 |
80 |
1,563 |
86 |
|
| USD |
132 |
6 |
175 |
10 |
|
| Others |
286 |
14 |
77 |
4 |
|
|
|
|
|
| |
2,053 |
100 |
1,815 |
100 |
|
|
|
|
|
| |
|
|
|
|
|
| Debt ratios |
|
|
|
|
|
| Interest cover ratio
|
|
|
|
|
|
| Net profit before interest,
tax, depreciation and amortisation |
583 |
|
497 |
|
|
| Interest on borrowings |
79 |
|
94 |
|
|
| Interest cover (times) |
7.4 |
|
5.3 |
|
|
| |
|
|
|
|
|
| Debt/equity ratio |
|
|
|
|
|
| Non-recourse project financing
|
814 |
40 |
657 |
36 |
|
| Long-term debt |
579 |
28 |
811 |
45 |
|
| Short-term debt |
660 |
32 |
347 |
19 |
|
|
|
|
|
| |
2,053 |
100 |
1,815 |
100 |
|
|
|
|
|
| Less : Cash and cash equivalents
|
(679) |
|
(482) |
|
|
|
|
|
|
| Net debt |
1,374 |
|
1,333 |
|
|
|
|
|
|
| Net debt excluding project financing |
762 |
|
772 |
|
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| Net gearing excluding project
financing (times) |
0.3 |
|
0.4 |
|
|
| Net gearing including project
financing (times) |
0.6 |
|
0.6 |
|
|
| |
|
|
|
|
|
| Cost of funding
|
|
|
|
|
|
| Floating |
|
2.12 |
|
2.77 |
|
| Fixed |
|
4.43 |
|
4.47 |
|
| Weighted average cost of funds |
|
3.55 |
|
4.04 |
|
| |
|
|
|
|
|
| |
|
|
|
|
|
|
