View - Singapore Technologies Engineering

ELECTRONICS SECTOR FINANCIAL HIGHLIGHTSREVIEW OF FINANCIAL PERFORMANCE – LAND SYSTEMS SECTOR1996 1997 1998 1999 2000$’000 $’000 $’000 $’000 $’000Turnover 152,117 311,504 337,670 361,991 423,533Profit before tax 10,415 19,643 16,159 28,201 46,591Profit after tax (before extraordinary items) 7,283 11,328 9,188 15,300 30,580Shareholders’ funds 54,343 71,965 71,013 67,322 78,746Total assets 131,897 350,192 407,154 497,124 592,884Net tangible assets 53,765 71,644 71,013 67,322 78,746Return on turnover (%) 4.8 3.6 2.7 4.2 7.2Earnings per share (¢) 12.14 10.78 8.75 14.57 29.11Return on equity (%) 13.4 15.7 12.9 22.7 38.8Return on total assets (%) 5.5 3.2 2.3 3.1 5.2Net tangible assets per share (¢) 89.61 68.20 67.60 64.09 74.96PRODUCTIVITY DATAAverage staff strength 888 1,527 1,638 1,796 2,030Employment costs ($’000) 42,600 80,468 91,929 107,121 134,135Sales per employee ($) 171,303 203,997 206,148 201,554 208,637Profit after tax per employee ($) 8,202 7,418 5,609 8,519 15,064Economic value added ($’000) 412 3,722 6,073 12,599 22,957Economic value added spread (%) 0.6 3.7 5.7 11.2 18.8Economic value added per employee ($) 464 2,437 3,708 7,015 11,309Value added ($’000) 60,447 121,239 129,088 137,214 186,677Value added per employee ($) 68,071 79,397 78,808 76,400 91,959Value added per $ of employment costs 1.42 1.51 1.40 1.28 1.391. FINANCIAL PERFORMANCE1.1 TURNOVERTurnover increased by 78% or $231 million comparedto the corresponding period in 1999, of which FoundersIndustries Pte Ltd (FIPL) accounted for $200 million.The inclusion of the munitions and weapon sales of FIPL,increased revenue from STAR accident repairs andOrdnance after-sales services contributed to the higherturnover for the Manufacturing, Upgrading & Repairsbusiness group. Higher sales from Opel and electricvehicle businesses, as well as the inclusion of sales fromtrading activities of FIPL, accounted for the increase inturnover of the Engineering Services & Trading businessgroup. Sales of FIPL from its test services businessaccounted for the increase in turnover of the Inspection,Test Services & Others business group.1.2 PROFITProfit after tax (before extraordinary items) increasedby 132% or $36.9 million to $64.9 million over thesame period last year, of which FIPL accounted for$24.4 million.The bulk of the increase came from theManufacturing, Upgrading & Repairs business group.This was the result of higher sales with the inclusion ofFIPL, better margins and productivity gains, as well ashigher interest and other income. Higher sales from Opeland electric vehicle businesses and the inclusion of thetrading profit from FIPL, contributed positively to theEngineering Services & Trading business group.Theincrease in profit for the Inspection,Test Services &Others business group was mainly contributed by the testservices business from FIPL. Increases in Distributionand Selling expenses, Administration expenses and OtherOperating expenses were due mainly to the inclusion ofFIPL.1.5 ECONOMIC VALUE ADDED (EVA)EVA for the full year 2000 was $41.8 million, an increaseof $13.2 million over 1999.The weighted average cost ofcapital was 9.9% for 2000 and 1999.2. REVIEW OF BUSINESS ACTIVITIES2.1 BUSINESS ENVIRONMENTThe acquisition of FIPL added to the strong growth ofthe existing automotive business. As a fully integratedland systems group, the sector now has a much widerportfolio of products and services to meet the changingneeds of our customers.While we continue to be strongin our traditional markets, we have stepped up ourinternational marketing activities especially in Africa,the Middle East and Europe.We also started to marketaggressively into America with our bid for the US Army’sInterim Armoured Vehicle (IAV) program.To furtherenhance our capabilities in the military business, wecontinued to invest in collaborative partnerships as wellas companies with dual-purpose technologies. Beyondthe acquisition of FIPL and organic growth, we have tograsp the implications of the rapid consolidation in recentyears of the western land systems industry.The last fewyears have seen many European companies eithermerging among themselves or acquired by theirAmerican counterparts.This trend will continue and it isinevitable that we shall have to find ways to participate inthis global change that is sweeping the industry. STARaccident repairs achieved higher revenue as a result of thesuccessful launch of new satellite centres and newinitiatives for services that provide us a competitiveadvantage. Estimated market share for the accidentrepairs business increased from 7% to 10%. Opel sawa surge in volume sales and market presence for Opelincreased from 1% in 1999 to 2% in year 2000.1.3 CASHNet cash from operating activities for the year amountedto $177.8 million.1.4 CAPITAL EXPENDITURETotal capital expenditure amounted to $8.4 millionmainly for the purchase of plant and machinery andcomputer equipment for project use.2.2 MAJOR PROJECTSMajor deliveries in 2000 were Bionix IFVs, FLYER lightstrike vehicles, SAR 21 assault rifles and the 40mmfamily of launchers and munitions.We also launchedvarious new products such as the ATTC, SAR21 variants,FLYER and new Bionix variants (AVLB and RCV).Although another Bionix variant, the ICV, was notselected for the US Army’s IAV program, we gained192 • visionreview of financial performance • 193