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Dear Shareholders,
Sembcorp delivered a strong performance in
2011. Our net profit attributable to shareholders (net
profit) for the year grew 2% from S$792.9 million in
2010 to S$809.3 million, while turnover was up 3%
from S$8.8 billion in the previous year to S$9.0 billion.
Our main profit contributors continued to be our
Utilities and Marine businesses, which accounted for
37% and 55% of Group net profit respectively. Our
Utilities business delivered robust profit growth in
2011, with net profit growing 32% to S$304.4 million,
while Marine’s net profit was S$456.2 million
compared to S$492.8 million in 2010.
The Group’s return on equity was 20.4% and
earnings per share amounted to 45.3 cents. Economic
value added was a positive S$728.2 million, while
cash and cash equivalents stood at S$3.0 billion.
For 2011, we are pleased to inform you that the
Board of Directors is proposing a final tax exempt
one-tier dividend of 17 cents per ordinary share,
comprising an ordinary dividend of 15 cents and a
bonus dividend of 2 cents.
In a year marked by economic uncertainty,
our Group delivered a robust operating performance.
We
also continued to position our businesses for
sustainable growth with the achievement of significant
milestones in the execution and development of more
than S$5 billion worth of new projects.
Providing a growing recurring earnings base, our
Utilities business delivered a strong performance.
Record profits for the business were driven by good
operating performance in Singapore, China and the
Middle East & Africa. Our Singapore operations,
underpinned by a solid performance from our
existing combined cycle gas turbine cogeneration
plant, remained the business’ key contributor. During
the year we also saw the commencement of the
delivery of an additional 90 billion British thermal
units per day of natural gas from West Natuna Sea
in the fourth quarter of the year. This second gas
sales agreement increases our existing supply by
26%. We also successfully integrated businesses we
had acquired into the Group and made significant
progress in executing our new projects in Singapore,
Oman and India.
During the year, we integrated the operations
of Cascal into the Sembcorp Group following our
acquisition in 2010. Demonstrating our ability to
execute and extract value from acquisitions, its
municipal water and wastewater businesses in 18
operating locations across eight countries delivered
a good performance. In Australia, our solid waste
management associate, SembSITA Australia, is now
the second largest waste management operator in
the country with the successful acquisition and
integration of WSN Environmental Solutions, a solid
waste management service provider formerly owned
by the New South Wales government.
We strengthened our market position as a
global leader in the provision of energy, water and
on-site logistics to industrial sites with our successful
expansion into a new growth area on Jurong
Island, Singapore. During the year, we commenced
construction of facilities to provide the integrated
supply of steam, water and industrial wastewater
treatment as well as a new combined cycle gas
turbine cogeneration plant in the Banyan and
Angsana districts of the island. Our industrial wastewater treatment capacity will more than
double when the new 9,600 cubic metres per
day industrial wastewater treatment plant, capable
of treating multiple streams of complex industrial
wastewater, is operational in the second half of
2012. Meanwhile, our new cogeneration plant, our
second on Jurong Island, will increase our generation
capacity in the Singapore energy market by 50%.
Complementing our existing facility with a capacity
of 400 megawatts of power and 200 tonnes per
hour of process steam, this initial phase is due for
completion in the fourth quarter of 2013.
Key milestones were also achieved in Oman
and India where we are actively building platforms
for future growth. In Oman, we successfully met
a tight timeline to complete the first phase of the
US$1 billion Salalah Independent Water and Power
Plant on schedule. With the completion of the first
phase, the facility began dispatching 61 megawatts
of net power to the Dhofar power grid in southern
Oman in July 2011. Targeted to begin full commercial
operations in the second quarter of 2012, the project
is set to be the most energy-efficient power and
water plant in Dhofar, with a total gross power
capacity of 490 megawatts and water production
capacity of 15 million imperial gallons (69,000 cubic
metres) per day. Meanwhile, in India, we completed
our acquisition of a 49% stake in Thermal Powertech
Corporation India and commenced construction of
the 1,320-megawatt coal-fired power plant applying
high efficiency supercritical technology in
Krishnapatnam, Nellore District in Andhra Pradesh.
The S$1.9 billion plant, our first in the fast-growing
Indian energy market, is expected to begin full
commercial operations in 2014.
The year also saw international recognition for
Sembcorp’s capabilities as a leading global water
player. Sembcorp was named the Water Company
of the Year at the Global Water Intelligence’s 2011
Global Water Awards. In addition to winning the top
honour at the prestigious Global Water Awards, we
also clinched the Desalination Deal of the Year award
for our Salalah Independent Water and Power Plant.
In 2011, our Marine business continued to
deliver satisfactory results underpinned by its rig
building, ship conversion and offshore and ship repair
sectors. During the year, we completed and delivered
a record number of four semi-submersible rigs, three
jack-up rigs and five ship conversion and offshore
projects on schedule or ahead of schedule. This
included the Gajah Baru platforms for Premier Oil
Natuna Sea as well as the West Elara, a Gusto MSC
CJ70 150A harsh-environment jack-up rig for
Seadrill. Classed among the biggest and most
advanced jack-up rigs in the world, the West Elara is our Marine business’ first harsh-environment,
high-specification jack-up newbuild and the largest
of its kind constructed in Singapore. Sembcorp
Marine has a net orderbook of S$6.3 billion as at
February 2012, with completions and deliveries till
2015. This includes S$1.3 billion in contract orders
secured since the start of 2012, excluding ship repair
contracts. For ship repair, several long-term contracts
were secured during the year which will provide a
stable baseload for the business.
Over the course of the year, we also strengthened
our Marine business’ global network of shipyards. In
Brazil, an important milestone was achieved with the
groundbreaking of Sembcorp Marine’s wholly-owned
Estaleiro Jurong Aracruz, our first overseas Integrated
New Yard Facility in the state of Espirito Santo,
Brazil’s second largest oil producer. Strategically
placed close to the rich oil and gas basin of Espirito
Santo, one of Brazil’s giant pre-salt reservoirs,
Estaleiro Jurong Aracruz is well-positioned to support
developments in one of the fastest growing offshore
oil and gas exploration markets in the world. In
February 2012, Estaleiro Jurong Aracruz secured
its first project, a US$792.5 million contract
from a subsidiary of Sete Brasil Participacões for
the design and construction of a drillship based on
our proprietary Jurong Espadon drillship design. This
represents the first drillship that our Marine business
is building for Brazil. In India, we increased our
stake in Sembmarine Kakinada from 19.9% to 40%,
making us the largest single shareholder of the joint
venture facility. Located in the east coast of India,
the integrated marine and offshore facility is
well-placed to capitalise on the development and
long-term growth potential of the offshore industry
in India and South Asia. Meanwhile in Singapore,
construction of the Integrated New Yard Facility in
Tuas View Extension is progressing on schedule. The
state-of-the-art yard, with its innovative work-efficient
design, represents a major milestone in
our growth and expansion strategy as it will further
bolster our home-based capabilities to deliver
value-added cost-efficient solutions to our customers.
Upon the yard becoming operational in 2013, our
ship repair and ship conversion and offshore capacity
will nearly double from the current 1.9 million
deadweight tonnes.
2011 was also a fruitful year for our Integrated
Urban Development business (formerly known
as Industrial Parks) as we continued to step up
our presence, undertaking integrated developments
comprising industrial parks as well as business,
commercial and residential space in Vietnam
and China.
In 2011, our Vietnam Singapore Industrial Park
(VSIP) joint venture turned in a solid year led by
industrial land sales. Following the success of our first
four VSIP projects, a memorandum of understanding
was signed with the People’s Committee of Quang
Ngai province during the year to explore the
feasibility of a fifth VSIP, a 1,020-hectare integrated
urban development in Quang Ngai province, central
Vietnam. The signing was witnessed by the President
of Vietnam His Excellency Truong Tan Sang and
Singapore Prime Minister Lee Hsien Loong. In China,
we sold the first plot of land in the Sino-Singapore
Nanjing Eco Hi-tech Island, kick-starting a mixed-use
development, New One North. The development will
comprise a research and development park, an
exhibition centre and a waterfront commercial-leisure-residential precinct overlooking Nanjing city
on the mainland.
In 2011, the business sold a total of 226 hectares
of land, a 24% increase from the previous year and
had 227 hectares of land commitments at year-end.
During the year, we also studied the feasibility of
a new integrated development in Chengdu, China.
The Singapore-Sichuan Hi-tech Innovation Park,
to be located in Chengdu’s Tianfu New City central
business district, adds 500 hectares to our saleable
land bank. With a total gross project size of 7,687
hectares and 2,711 hectares of land available for
sale, our projects in Vietnam and China provide a
robust development pipeline. Together with our
track record in the development of raw land,
including land preparation and infrastructure
development, and our ability to extract further
value by undertaking the selective development
of commercial and residential estate at choice sites,
we believe that the business is poised for growth
in the coming years.
In today’s volatile global economic environment,
the key to Sembcorp’s long-term sustainability lies
in the strength of our businesses. We aim to enhance
shareholder value by excelling in businesses that
deliver recurring earnings and have the ability
to sustain growth over the long term. This means
an unrelenting focus on operational excellence
and performance, but also the same unremitting
commitment to growing businesses that can
deliver lasting value.
Our energy business supports industrialisation
and powers households. Our water and wastewater
solutions enhance quality of life and limit environmental
impact. Our Marine business supports progress in the
oil and gas and marine sectors with a full spectrum
of integrated solutions, while our Integrated Urban
Development business supports urban development
in emerging markets. With globalisation and
urbanisation, the world’s demand for these solutions
will continue to grow. As a provider of these essential
solutions, we believe that we are in the right
businesses – businesses that meet the needs of the
global market and provide innovative solutions to
the challenges our world is facing. With a global
footprint across six continents including growing
emerging economies such as China, India, South
Africa, Brazil and Chile, we are well-positioned with
the reach and scale to meet the growing needs in
these markets. At the same time, it is our belief that
a climate of business uncertainty is inevitably
accompanied by opportunity. All our businesses are
well-placed to take advantage of value-enhancing and
strategically attractive opportunities that may arise.
While we generate returns for shareholders
by providing essential solutions to our customers,
we aim to do so responsibly, and in a sustainable
manner. We believe that truly sustainable businesses
will not only create economic value, but will do so in
a way that creates benefit for customers, suppliers,
partners and communities wherever they operate.
For Sembcorp, this translates to doing our part to
limit the environmental impact of our activities and
helping our customers and communities do the
same, as well as being a responsible employer and
maintaining a commitment to invest in communities
where we operate. It also means seeking out
opportunities to increase our competitiveness
through addressing sustainability impacts and by
better meeting society’s needs and expectations.
For instance, in response to the challenges posed
by climate change and scarce natural resources,
our businesses apply technology to produce energy
efficiently in greener ways, create innovative
solutions for clean sustainable water and recover
resources from waste. Our new woodchip-fuelled
biomass steam production plant in Singapore that
was completed in 2011 is a case in point. The plant
produces process steam for our customers on Jurong
Island from waste wood collected and processed by
our solid waste collection business and enhances our
competitiveness on the petrochemical hub.
Meanwhile, in the communities where we
operate, we continue to support causes relating to
the environment, children and education, sports and
the elderly. In 2011, we were also heartened by the
recognition we received for efforts in carrying out our
business responsibly. During the year, Sembcorp was
selected as an index component of the Dow Jones
Sustainability Asia Pacific Index. This index represents
the top 20% of the largest 600 companies in the
Asia Pacific developed region based on long-term
economic, environmental and social criteria.
Sembcorp is honoured to be one of only four
Singapore companies selected for this index.
We would like to take this opportunity to
record our deep appreciation to Richard Hale and
Lee Suet Fern, who retired from the board at the
last annual general meeting. Mr Hale served as an
independent director of the company for over
10 years, chairing the board’s Audit and Risk
Committees, while Mrs Lee served as an independent
director and a member of the board’s Audit and Risk
Committees for over five years. We thank Mr Hale
and Mrs Lee for their invaluable contributions during
their time with us.
We would also like to extend a warm welcome
to Tham Kui Seng, who joined our board as an
independent director during the year. Formerly the
Chief Corporate Officer of CapitaLand, Mr Tham
brings to the board a strong background in
management in various industries, including a
decade’s experience in the real estate business.
Our thanks must also go to our shareholders, for
your continued confidence in Sembcorp. While there
may be further global economic challenges ahead,
we remain confident of Sembcorp’s future. We have
robust and resilient businesses. We have strong
operational and technological capabilities and
enviable market positions established in key markets
around the world. We have a healthy pipeline of
projects and will continue to make every effort to
build platforms for our future growth.
Last but not least, we turn to Sembcorp’s talented
team of employees around the world. Sembcorp’s
ability to deliver outstanding performance and
sustainable value depends on their commitment,
expertise and creativity in providing essential solutions
to our customers. On behalf of the board, we would
like to thank them for their steadfast contribution
and dedication in 2011. As Sembcorp meets
tomorrow’s needs and grows sustainable businesses,
this committed team will remain the foundation of
your company’s success. |
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Chairman
February 27, 2012 |
Group President & CEO
February 27, 2012 |
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