keppel t&t financial highlights - keppel corporation slides.pdf · roe of 13.4%! divested 20.8%...

Copyright ©Keppel T&T 2003

Financial Highlights

21 Jan 0321 Jan 03

Keppel T&TKeppel T&T


2002 financial highlights! Full year PATMI before E.I. of $24.6m

! ROE of 13.4%

! Divested 20.8% of M1 raising proceeds of $287m

! Net gearing ratio improved from 4.3 times at endof 2001 to 0.7 times at end 2002

! Dividend rate of 21.5% - $21.9m� Final dividend of 6.5% - 1.3 cents (taxable)

� Special dividend of 15% - 3.0 cents (tax-exempt one-tier)

� Total 4.3 cents


Financial highlight � P&L2002 2001 %$'m $'m

TURNOVER 683.4 672.0 2%

Operating Profit/(Loss) 33.7 17.6 91%

Profit/(Loss) before exceptional items 29.3 10.6 176%

Exceptional Items 61.5 (180.5) n.m.

Profit/(Loss) before taxation 90.8 (169.8) n.m.

PATMI before E.I 24.6 (10.4) n.m.

PATMI before E.I (excl deferred tax adj) 11.3 (10.4) n.m.


Financial highlight � Balance Sheet

S$ Million 31-12-01 30-06-02 31-12-02

Shareholders' funds 138.0 164.0 229.0

Net Debt 588.4 606.7 163.9

D/E Ratio (times) 4.3 3.7 0.7

Operating Cashflow 150.0

ROE before E.I 13.4


Financial highlight � Cash Flow

(11.4)Net decrease in cash

5.5Others

(377.9)Repayment of term loan

(372.4)Cash flow from Financing Activities

(3.5)Others

(51.2)Acquisition of fixed assets

286.5Sale of M1

231.8Cash flow from Investing Activities

129.2Net cash from Operating Activities

(21.5)Interest income / expenses, taxes paid, etc

150.7Cash from Operations

57.6Working Capital changes

93.1Operating profit before working capital change

S$ Mil


Exceptional Items

S$ MilGain from sale of M1 187 Write-down (118) Restructuring Cost, etc (8)

61


Network Engineering P&L! Increase due to full year revenue

contribution from SVOA

! Reduced capex spending by telcosand competitive pressures reducedturnover and margins

! Downsizing brings cost structuredown to competitive level

! Focus on higher value-addedservices

! Acquisition of the remaining 40% ofEcho in April 2002

Outlook for 2003

! Cost structure competitive afterdownsizing

! Continue to focus on higher value-added services

! Will be profitable

12.1(1.4)PATMI before EI

21.2(4.0)Operating Profit /(Loss)

276.9309.8Revenue

20012002S$ Mil


Network Engineering Order Book

! As at Dec 2002, order book was S$204 mil

� Wireline S$10 mil

� Wireless S$194 mil


Telecoms P&L! Revenue dropped due to sale

of data centres in Thailand,Philippines and Malaysia

! Losses avoided with the closureand sale of loss-makingbusinesses

! Higher earnings recorded byM1

Outlook for 2003

! Divest remaining data centresand online data securitybusiness

! M1 will continue to perform well

(36.0)12.4PATMI before EI

(16.4)24.0Operating Profit /(Loss)

274.8263.8Revenue

20012002S$ Mil


Logistics P&L! Revenue dropped due to lower

occupancy of a warehouse

! Profit from China operationsincreased due to buoyanteconomy

! Restructuring in 2001 loweredcost of operations

Outlook for 2003

! Occupancies will improve

! China operations will continueto do well with post-WTOimpetus and activities

! Continue to divest

5.310.7PATMI before EI

7.28.7Operating Profit /(Loss)

73.071.3Revenue

20012002S$ Mil


Shipping P&L! Revenue dropped due to

smaller fleet and lowercharter rates

Outlook for 2003

! Charter rates expected tostabilise

! Continue to divest8.22.8PATMI before EI

9.95.0Operating Profit /(Loss)

47.342.0Revenue

20012002S$ Mil


Medium term financial targets

! ROE of 15%

! Operating gross margin to increase beyond 25%

! Further return of capital to shareholders withproceeds from divestments


Keppel T&TKeppel T&T

Network Engineering &Technology Solutions

The Market & StrategyThe Market & Strategy

21 Jan 200321 Jan 2003


Vision

To be a leader in

network engineering services and technology

solutions in the info-communications industry

by delivering best-in-class services and solutions to

our customers

through focused project management and

continuous innovation


Industry development in 2002! Weak global economy

! High debt levels and basic cost cutting measureshave reduced planned capex expendituresGlobally, capex fell from US$240bn to US$130bn

(TotalTelecom, Dec 2002)

! 3G did not take off as some countries andoperators had planned

! Basic network capacity is in place and consumerdemand continues to take up capacity


Industry Trend

! Global telecoms market projected to grow by CAGR of 6% from USD1Trn in 2002 to USD 1.3Trn in 2007 (Pyramid, Nov 2002)

! Operators feeling margin erosion due to competition in maturingmarkets forcing a shift in focus to more value added and data orientedservices

! Operators looking to improve financial performance:

� Areas for cost reduction & efficiency

� Areas for new revenue sources

! Increasing adoption of wireless/mobility solutions

! Operators are outsourcing more of their engineering needs

! Operators are returning to �Utility� model from �Internet hype� model

! �Broadband Access� increasingly become a �Life Line Utility Service�


Market Segments

! Strategic partners for rolloutdeployment and operation

! Financing

! Low penetration butexponential subscribergrowth

! Poor network infrastructure

! Latin America! Africa! Middle East! Russia! Cent Europe

Emerging

! Network performanceenhancement

! Deployment services

! Moderate penetration! Robust subscriber growth! Pre-paid mode dominant

! Malaysia! Thailand! China! India! Portugal! Hungary! India

Developing

! Migration from voice to datanetworks (2G > 2.5G > 3G)

! Value-added revenue-generatingservices

! Fixed network upgrades tobroadband

! Network optimization! Addition of IP Services

! Very high penetration! Saturated market! Growth driven by data

services and mobilesubstitution of fixed lines

! Taiwan! Singapore! Germany! UK! France! Spain! US

Mature

Key requirements Market Characteristics Countries Market


Our Goals! Knowledge-based business in the info-comms industry

! Specialized Network Engineering Competencies:

� Systems Integration for IP Services

� Project Management

� Network Operations

� System Engineering

� Technology Solutions

� Network Design

! Implementation leadership in Network and EnterpriseApplications

! Seamless integrated global business model


Val

ue

Pro

po

siti

on

MarketExpansion

North Asia & Europe

4. Penetrate markets withhigh growth andearly adoption of

innovations

North Americas

5. Leverage on in-countrycustomers, partners and

infrastructure to capitalize onopportunities.

Products and services addressefficiency and

cost effectiveness ofnetwork design & implementation

ASEAN & Germany

1. Consolidate existingbusinesses andfocus on existingkey competencies

and target atwireless and fixed linebroadband customers

2. Focus on home markets forinitial success and

critical mass

3. Expand comprehensivesuite of products & services

NetworkEngineering

Nwk Ops &Maintenance

TechnologySolutions

Complete suite of pdts & svcesenhance our value proposition

and increase �stickiness�

Intellectual property, Innovative solutions & middleware

give us clear competitive advantage

6. Use Innovative solutions &middleware as

key differentiator andextend up the value chain.Kep

CommsKep

CommsEchoBB

EchoBB

TrisilcoFolec

TrisilcoFolec

Innovativesolutions

Innovativesolutions TelcosTelcos

NewCapabilities& markets

NewCapabilities& markets

+ +

KTT�s Strategy


Moving Up the Value Pyramid

Production Technical Services

Production

� GIS data collection/conversion

� Rollout designs (fixed & wireless)

� Facility design

� Field data collection

� Cell site design

� Cell site rollout

� Construction documents

� Construction

� Equipment supply



Planning & Engineering & CM

Planning & Engineering & CM

� Standards

� Implementation of network concepts

� Planning & coordination with other carriers

� Construction implementation



Network Architecture &Project Mgt

Network Architecture & Project Mgt

� Business plan & network concept integration

� Network concepts

� Technology evaluation

� Technology migration planning

� Project mgt. systems, tools, methods

� Vendor management



Network Systems & Tools

Implementation of



� Performance analysis

� Optimization

� Troubleshooting

� Security

� Usage Management

� �Billing by the bite�

� Operations Support Systems

� Business Support Systems

� IP Services Integration

Implementation

� Use of Project Mgt. skills, tools and methodscombined with �production� skills to implementNetwork Systems & Tools



EnterpriseApplications

EnterpriseApplication

Implementation

Integration

� Pilot projects

� Interoperability

� Scaling

� Network interface

Implementation

� Project rollout

� Operations implementation

� Operator / User Support


Status Update


Expand Service Offerings! Expand service offering to existing telecom

customers in areas of

�Performance

�Management

�Value added services

! Partnership with technology providers

�Small World in GIS

�Gamma Project in infrastructure mgmt

�Metatron in 2G/2.5G network monitoring and3G network optimization


Technology Solutions! Mobility solutions offering using InfoClarus

! Agreement with InfoClarus in place

! Preparations for trials in 3 telecom & 3 enterprisecustomers in first half 2003

! Annuity based revenue


Joint Ventures� A Shift from the Acquisition Approach

! Creation of joint ventures for market entry

! Developing business plans with select partieswith privileged telecom relationships to pursueoutsourced O&M opportunities (e.g. managedservices for carriers)

! Targeted 2 in USA and 1 in Europe

! Exploring with ADC, CedarPoint and others toteam in area of system integration


Progress to date

2

! Expanded into key target countries

� Asia (China, Indonesia)

� Europe (France, Switzerland)

! Build sales & marketing teams

� Sales teams now in place in China, France,Germany, Iberia, UK

� Sales & Engineering services officeestablished in USA

! Build a Global Operations group to deployprojects & manage resources globally


Process & Tools! Put in place a business process and tools to support a global

business, organisation and workforce to :

� Focus on the execution of the business plan

� Gain efficiencies across the organisation,

� Maximize the allocation and utilisation of resources

� Provide accurate and timely management reports

! 4Q2002 � Phase 1 of our End to End (E2E) Business process

� Process definition and tools

� Timesheet & project ledger systems

� Organisation & work structures, workflow, reporting lines

� HR initiatives, policies, procedures,

� Risk management

! 2003 � Phase 2 ; Process improvements


Organisation! Focus in 2H2002

� Right Sizing of the organisation ( ca. 45 %)

� Integration of ECHO Broadband & KeppelCommunications ( processes, systems andorganisation)

! Focus in 2003

� Entity consolidation and streamlining

! Global Organisation structure around 4 Market regions

� North Asia

� South Asia

� Europe

� USA


New Operating Entities

2

NORTH ASIAChina BeijingTaiwan

SOUTH ASIASingaporeM alaysiaThailandThe PhilippinesIndonesiaBruneiVietnam

EURO PEGerm anyLuxem bourgFrance

NORTH AM ERICA USA

Hendon, VA


Conclusion! 2002 was a difficult year, in particular for Telecom and IT industries

! Challenging year too for KTT

! Company took swift and decisive actions to overcome thesechallenges and to position itself for future growth

! Going forward, these are the challenges :

! transform from an investment & holding company to an operating company

! build network engineering to a global business

! orderly divestment of non-core assets

! enhance shareholder values

� ROE of 15%

� Operating gross margin to increase beyond 25%

� Further return of capital to shareholders with proceeds fromdivestments


Thank You

keppel t&t financial highlights - keppel corporation slides.pdf · roe of 13.4%! divested 20.8%...

Documents