View - Singapore Technologies Engineering

ECONOMIC VALUE ADDED STATEMENTS (S$ million)VALUE ADDED STATEMENTS (S$’000)1996 1997 1998 1999 20001998 1999 2000Net operating profit before tax 125.2 181.7 224.9 267.2 369.4Adjust for:Share of associated companies’ profit 22.8 20.7 24.3 32.9 43.1Interest expense 2.2 2.5 12.6 9.7 12.7Others 18.5 14.1 46.8 50.5 34.6Adjusted profit before interest and tax 168.8 219.0 308.7 360.3 459.8Cash operating taxes (Note 1) 61.2 80.9 95.9 97.1 130.3Net operating profit after tax (NOPAT) 107.6 138.1 212.7 263.2 329.5Average capital employed (Note 2) 944.2 1,066.8 1,205.8 1,288.1 1,422.2Weighted average cost of capital (Note 3) (%) 10.4 10.5 11.4 9.9 9.9Capital charge 98.2 112.0 137.5 127.5 140.2Economic value added 9.4 26.1 75.3 135.6 189.3Economic value added (S$ million)9.426.175.3135.6189.31996 1997 1998 1999 2000Value added from:• Revenue earned 1,661,729 1,764,407 2,259,027• Less bought in materials and services (943,341) (952,921) (1,243,541)Gross value added 718,388 811,486 1,015,486Income from investments and interest 99,152 58,048 85,349Extraordinary items (2,798) (8,205) –Exchange gain / (loss) (1,080) 336 222Other non-operating income / (expenses) 6,138 5,548 11,722Share of losses of associated companies and joint ventures 28,145 32,894 43,066Total value added 847,945 900,107 1,155,845Distribution of value added:To employees in wages, salaries and benefits 496,861 533,357 658,830To government income and other taxes 94,148 95,666 125,447To providers of capital on• Interest paid on borrowings 5,339 3,961 3,983• Dividends to shareholders 142,210 195,359 213,037738,558 828,343 1,001,297Balance retained in / (applied from) business:Depreciation 63,026 58,787 76,143Retained profits (54,624) (47,274) (7,112)8,402 11,513 69,031Non-production cost and income:Provision of doubtful debts 5,807 10,072 (54)Income from investments and interest 99,056 58,048 85,349Extraordinary items (2,798) (8,205) –Exchange gain / (loss) (1,080) 336 222100,985 60,251 85,517Total distribution 847,945 900,107 1,155,845Note 1: The reported current tax is adjusted for the statutory tax impact of interest expense.Note 2: Monthly average total assets less non-interest bearing liabilities plus timing provision, goodwill amortised, unusualloss/(gain) items, and present value of operating leases.Note 3: The Weighted Average Cost of Capital is calculated in accordance to Singapore Technologies (ST) Group EVA Policy asfollows:i) Cost of Equity using Capital Asset Pricing Model with market risk premium at 7.0% (1999: 8.1%). This is set with referenceto the returns of the MSCI Index less US 30-year Treasury Bond yield rate from 1987 to 1999;ii) Risk-free rate of 4.57% (1999 @ 4.1%) based on yield-to-maturity of Singapore Government 10 years (1999: 7 years) Bonds;iii) Ungeared beta at 0.85 (1999 @ 0.85) based on ST risk categorisation; andiv) Cost of Debt rate at 5.25% (1999 @ 5.5%) using 5-year Singapore Dollar Swap Offered rate plus 75 basis point (1999:average prime lending rate of the 4 major banks in Singapore).Value added (S$ million)1,1568489007245381996 1997 1998 1999 200026 • visionfinancial highlights • 27