2q/1h2011 results briefing · 2013. 3. 5. · satorp update presentation outline 4 4. business...
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2Q/1H2011 RESULTS BRIEFING2Q/1H2011 RESULTS BRIEFING
4 August 20114 August 2011
This presentation may contain forward-looking statements that involve risksand uncertainties. Actual future performance, outcomes and results maydiffer materially from those expressed in forward-looking statements as aresult of a number of risks, uncertainties and assumptions.
Representative examples of these factors include (without limitation)general industry and economic conditions, interest rate trends, cost ofcapital availability, competition from other companies and venues for thesale/distribution of goods and services, shifts in customer demands,
CAUTIONARY NOTE
2
sale/distribution of goods and services, shifts in customer demands,customers and partners, changes in operating expenses, includingemployee wages, benefits and training, governmental and public policychanges and the continued availability of financing in the amounts and theterms necessary to support future business.
You are cautioned not to place undue reliance on these forward lookingstatements, which are based on current view of management on futureevents.
This presentation should be read in conjunction with
Rotary Engineering Limited’s 2Q/1H2011 Financial Results
ended 30 June 2011 statement
lodged on SGXNET on 4 August 2011
3
lodged on SGXNET on 4 August 2011
1. Financial Highlights
2. Project Summary
3. SATORP Update
PRESENTATION OUTLINE
4
4. Business Development
5. Question-&-Answer Session
FINANCIAL HIGHLIGHTSFINANCIAL HIGHLIGHTS
P&L SUMMARY
S$’000 2Q2011 2Q2010 �▼▼▼▼ 1H2011 1H2010 �▼▼▼▼
Revenue 153,290 209,414 ▼27% 283,758 389,155 ▼27%
Gross Profit 31,549 38,268 ▼18% 54,618 70,376 ▼22%
Gross Profit Margins (%) 21% 18% �3ppt 19% 18% �1ppt
Other revenue 326 69 NM 580 517 �12%
Admin costs (13,742) (13,642) �1% (25,744) (26,570) ▼3%
Other operating costs (3,510) (3,542) ▼1% (6,882) (6,901) -
6
Finance costs (280) (80) NM (535) (87) NM
Share of associates results 54 (1,903) NM (56) (2,246) NM
Profit Before Tax (PBT) 14,397 19,170 ▼25% 21,981 35,089 ▼37%
Profit After Tax (PAT) 12,336 15,109 ▼18% 20,164 27,511 ▼27%
Non-controlling Interests 2,162 1,369 �58% 4,679 (32) NM
Profit attributable to parent (PATMI)
10,174 13,740 ▼26% 15,485 27,543 ▼44%
EPS (Cents) 1.8 2.4 ▼25% 2.7 4.9 ▼45%
25%
30%
200
250
25%
30%
35%
Revenue Gross Profit Margins
REVENUE & GROSS PROFIT MARGINS
S$’m
7
209
156 160131
153
18%21%
18%
0
50
100
150
2Q2010 3Q2010 4Q2010 1Q2011 2Q2011
0%
5%
10%
15%
20%
REVENUE BY GEOGRAPHICAL SEGMENTS
ASEAN &
OTHERS
8%
Singapore
23%
Saudi
69%
2Q2010: S$209.4m
ASEAN &
OTHERS
Singapore
28%Saudi
65%
2Q2011: S$153.3m
Saudi
66%
Singapore
26%
ASEAN &
OTHERS
8%8
8%
1H2011: S$283.8m
Saudi
65%
Singapore
30%
ASEAN &
OTHERS
5%
1H2010: S$389.2m
OTHERS
7%
ORDER BOOK BY GEOGRAPHICAL SEGMENTS
ASEAN
4%
Singapore
12%
Saudi
Arabia
41%
At 30 Jun 2011: S$756.9m
ASEAN
1%
Singapore
10%
Saudi
Arabia
@ 31 Mar 2011: S$823.9m
9
UAE
43%
UAE
39%
Arabia
50%
� 2Q2011- better margins due to closure of projects
� Expect continued pressure on margin
GROSS PROFIT MARGIN
S$’000 2Q2011 2Q2010 �▼▼▼▼ 1H2011 1H2010 �▼▼▼▼
Gross Profit 31,549 38,268 ▼18% 54,618 70,376 ▼22%
Gross Profit Margins (%) 21% 18% �3ppt 19% 18% �1ppt
10
� Maintain GP guidance: 15% ~ 20% for FY2011
44
44
13%
11% 12%
11%
12%
15%
15
20
Other Operating Costs Admin Costs(less FX) Total Costs as % of revenue
ADMIN (EXCL FX) & OTHER OPERATING COSTS
S$’m
Stable & inline with revenue growth
11
14 1413
12 13
34
8%
0%
3%
6%
9%
0
5
10
15
2Q2010 3Q2010 4Q2010 1Q2011 2Q2011
� FX losses due to weak USD
� Costs in line with business activities and performance
ADMINISTRATIVE COSTS
S$’000 2Q2011 2Q2010 �▼▼▼▼ 1H2011 1H2010 �▼▼▼▼
Admin costs (Incl FX) (13,742) (13,642) �1% (25,744) (26,570) ▼3%
FX (Loss) / Gain (986) 329 NM (1,205) (27) NM
Admin costs (excl FX) (12,756) (13,971) ▼9% (24,539) (26,543) ▼8%
12
� Costs in line with business activities and performance
� Maintenance
� IT support
� Business development and tender
OTHER OPERATING COSTS
S$’000 2Q2011 2Q2010 �▼▼▼▼ 1H2011 1H2010 �▼▼▼▼
Other operating costs (3,510) (3,542) ▼1% (6,882) (6,901) -
• (Allowance) for doubtful debts
(1) (271) NM (94) (10) NM
• Write-back/(Allowance) for obsolete inventories
8 (8) NM (6) (16) ▼▼▼▼63%
• Amortisation of intangible assets
(153) (184) ▼17% (292) (339) ▼14%
13
• Other operating costs (excl allowances) ~ mainly depreciation in Singapore & Saudi Arabia
assets
•Impairment loss on advances to associates
- - NM - (603) NM
Other operating costs
(excl allowances)
(3,364) (3,079) ����9% (6,490) (5,933) ����9%
S$’000 30.06.2011 31.12.2010 �▼▼▼▼
Property, Plant & Equipment 74,023 77,066 ▼4%
Other Non Current Assets 24,315 24,036 �1%
Current Assets 624,186 638,427 ▼2%
TOTAL ASSETS 722,524 739,529 ▼2%
Current Liabilities (413,498) (427,812) ▼3%
BALANCE SHEET SUMMARY
14
Current Liabilities (413,498) (427,812) ▼3%
NET CURRENT ASSETS 210,688 210,615 -
Non-Current Liabilities (14,105) (11,884) �19%
NET ASSETS 294,921 299,833 ▼2%
Share Capital & Reserves 274,421 283,123 ▼3%
Net Asset Value (Per share) 48.3cts 49.9cts ▼3%
� Property Plant & Equipment
� Purchase of assets ~ mainly Saudi
� Depreciation: S$6.5m (1H2011)
� Non Current Liabilities
� Further approved financing from Saudi Industrial Development
BALANCE SHEET ANALYSIS
15
� Further approved financing from Saudi Industrial Development Fund (SIDF)
CASH FLOW SUMMARY
S$’000 2Q2011 2Q2010 1H2011 1H2010
Net cashflows (used in)/from Operations (5,015) 35,646 (34,484) 45,300
Net cashflows (used in) Investment (1,363) (4,663) (3,275) (8,334)
Net cashflows (used in)/from Financing (10,405) (13,049) 2,636 (18,507)
Net (decrease)/increase in cash and (16,783) 17,934 (35,123) 18,459
16
Net (decrease)/increase in cash and cash equivalents
(16,783) 17,934 (35,123) 18,459
Cash & Cash Equivalents
Effect on exchange rate changes (776) 188 (1,374) 352
At beginning of period 115,600 132,914 134,538 132,225
At end of period 98,041 151,036 98,041 151,036
� Net cash used in operations
� Project claims per contract T&Cs
� Invoicing procedures
� Income tax payment
CASH FLOW ANALYSIS
17
� Net cash used in investment
� Replacement of assets (PPE)
� Net cash used in financing
� Proceeds from loans & facilities
� Dividends paid to shareholders
� Working capital in Saudi Arabia
1. Project progress recognition by client
2. Obtain all documents, incl vendors’/subcontractors’
3. Reconcile documents to client’s project progress
4. Submit claims for approval by client
5. Submit invoice for acceptance by client, …
SATORP RECEIVABLES’ CYCLE
18
5. Submit invoice for acceptance by client, …
(All the above stages is subjected to SATORP’s review and sign off)
6. Await payment by client
• 45 days > invoice accepted
151
137
116
98
123
150
Cash & equivalent Project Working CapitalS$’m
STRONG CASH POSITION
19
98
1424
38
5163
0
50
100
2Q2010 3Q2010 4Q2010 1Q2011 2Q2011
� Interim dividend of 1.0 cent proposed
� Dividend payout ratio of 37% based on 1H2011 EPS
� Company does not have a fixed dividend policy; dividend
INTERIM DIVIDEND
20
� Company does not have a fixed dividend policy; dividend payout ratio of between 25% ~ 48% over last 5 years
1H11 FY10 FY09 FY08 FY07 FY06
EPS 2.7 11.2 9.6 9.0 9.3 8.7
Share Price at P/E (cts) 83.0 102.0 105.0 24.5 85.0 71.0
Dividend (cts/share) 1.0 1.0 + 3.8 3.8 2.3 4.6* 13.1**
Dividend Yield (%) NM 4.7 3.6 9.4 5.4* 18.5**
DIVIDEND
21
Dividend Payout Ratio (%)
37 43 40 26 49* 151**
* Includes dividend of 2.3cents/share to utilize S.44 credits
** Includes dividend of 10.0cents/share to utilize S.44 credits
Dividend (cts/share) Excl
S.44
1.0 4.8 3.8 2.3 3.1 3.1
Dividend Yield (%) Excl S.44 NM 4.7 3.6 9.4 3.6 4.4
Dividend Payout Ratio (%)
37 43 40 26 33 36
PROJECT SUMMARYPROJECT SUMMARY
Client/Project Location Contract
Value
Start
Date
Expected
Completion Date
Shell - Maintenance Various - 4Q2009 Ongoing
Hyundai - Jurong Rock Cavern (Engineering)
JurongIsland
S$2m 3Q2009 4Q2011
Petrochemical process ASEAN S$130m 2H2009 4Q2011
PROJECT SUMMARY
23
Petrochemical process plant
ASEAN S$130m 2H2009 4Q2011
Saudi Aramco Total Refining & Petrochemical Company (SATORP) refinery tank farm
Saudi Arabia-
Jubail City
US$745m 3Q2009 4Q2012
PTT Tank Terminal Co -ammonia storage tank
Thailand-Rayong
S$48m 3Q2009 3Q2011
Client/Project Location Contract
Value
Start
Date
Expected
Completion Date
Concord Energy -Fujairah Oil Terminal
UAE-Fujairah
US$250m 1Q2011 1H2013
Stepan Asia -Chemical plant
JurongIsland
S$15m 1Q2011 1Q2012
Lanxess – Butyl Rubber Jurong S$3m 1Q2011 3Q2011
PROJECT SUMMARY
24
Lanxess – Butyl Rubber plant
JurongIsland
S$3m 1Q2011 3Q2011
Thailand small projects Rayong/Chonburi
@ 2Q-3Q
2011
4Q2011-3Q2012
Chang Chun - Specialty Chemical Plant
JurongIsland
@ 3Q2011 4Q2011
Client/Project Location Contract
Value
Start
Date
Expected
Completion Date
Alstom Power - Oil and water tanks
Tuas @ 3Q2011 2Q2012
Int’l Oil Major - Shutdown maintenance
JurongIsland
@ 2Q2011 3Q2011
Evonik Rohmax - Jurong @ 2Q2011 1Q2012
PROJECT SUMMARY
25
Evonik Rohmax -Maintenance
JurongIsland
@ 2Q2011 1Q2012
Invista - Maintenance Tuas @ 2Q2011 3Q2011
@ Total cumulative value S$40m: per 25 Jul 2011 SGX announcement
SUMMARY
� 2Q2011
� Revenue: S$153m
� PAT S$12.3m
� PATMI S$10.2m
� Cash: S$98m
26
� Cash: S$98m
� Order book: S$757m (@30 June 2011)
� Interim dividend : 1.0 cent
SATORP UPDATESATORP UPDATE
SATORP UPDATE
� SATORP Update @30 June 2011� Engineering phase: 98%
� Procurement : 81%
� Construction: 54%
� Manpower on ground: > 5200
� Progress on track
28
SATORP UPDATE
29North Tank Farm
SATORP UPDATE
30South Tank Farm
SATORP UPDATE
311st Aluminum Dome Roof Completed
SATORP UPDATE
32Piping works
SATORP UPDATE
33Bullet tanks delivery ▲
SATORP UPDATE
34Bullet tank lifting operation ▲
SATORP UPDATE
35▲ 8 x Bullet tanks (far view)
SATORP UPDATE
36
SATORP UPDATE
37
BUSINESS BUSINESS DEVELOPMENT
BUSINESS DEVELOPMENT
� Singapore
� Focus on Jurong Island’s downstream projects
� In discussions with fine chemical plant producers setting up facilities here
� Slight delay in Singapore projects arising from global uncertainties, particularly in US and Europe
39
uncertainties, particularly in US and Europe
� ASEAN
� Direct negotiations continuing. Key markets of Malaysia, Indonesia and Thailand.
� Pursuing both greenfield and expansion projects
� Exploring BOO / BOT opportunities
� Middle East
� Business development ~ Saudi Arabia
� Prequalified for projects such as RTIP, Jazan
� Bidding for projects ~ Saudi Arabia
� Continuing direct negotiations
BUSINESS DEVELOPMENT (Cont.)
40
� Exploring BOO / BOT opportunities
QUESTION-&-ANSWERQUESTION-&-ANSWER
THANK YOUTHANK YOU
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