SembCorp Industries : Posts FY2017 Results and Unveils a New Strategy for the Future

- Repositions the Utilities business as an integrated energy player and targets to double renewables portfolio
- Unlocks value with targeted utilities divestments of up to S$0.5 billion over the next two years and proposed IPO of India energy business

Sembcorp Industries (Sembcorp) today announced its full-year 2017 (FY2017) results as well as the completion of its strategic review, unveiling a new strategy for the future to strengthen its businesses and pursue sustainable growth.

For FY2017, Sembcorp posted net profit of S$230.8 million, profit from operations (PFO) of S$795.3 million and turnover of S$8.3 billion compared to S$394.9 million, S$909.0 million and S$7.9 billion in 2016 respectively. Net profit from the Utilities business was S$140.0 million compared to S$348.0 million in 2016. The business recorded exceptional losses totalling S$120.8 million comprising mainly refinancing costs, non-cash impairment charges as well as provisions. The Marine business contributed net profit of S$6.8 million in 2017 compared to S$48.3 million the previous year. The Urban Development business delivered record profits in 2017, with net profit growing 150% to S$83.2 million.

A final dividend of 2.0 cents per ordinary share is proposed. Together with an interim dividend of 3.0 cents per ordinary share paid in August 2017, this would bring the Group's total dividend for the year to 5.0 cents per ordinary share.

Neil McGregor, Group President & CEO, said, '2017 was a challenging year for our business sectors. We fully recognise the challenges we face, and are committed to addressing them head-on to lift our performance and returns. These challenges, together with market and industry disruptions, offer the opportunity for us to take decisive steps and reposition Sembcorp for success in a rapidly changing world.'

A new strategy for a stronger and more sustainable Sembcorp
The Group will drive long-term value creation and performance through disciplined capital allocation and systematic capital recycling. It will also focus on sustainability and building a dynamic organisation to support its strategy and growth. As it deepens its capabilities, the Group will look to add on new merchant capabilities as well as improve performance and capture opportunities through the acceleration of technology adoption and the deployment of digital technologies.

A key focus of Sembcorp's strategy is to reposition its Utilities business to become an integrated energy player that will benefit from the global energy transition. With the aim of having a balanced portfolio in developing and developed markets, the Utilities business will focus on growing three business lines (Gas & Power; Renewables & Environment; and Merchant & Retail). It will look to focus and deepen its presence in key markets by offering a differentiated integrated energy business model.

Neil McGregor, Group President & CEO, said, 'Over the years, Sembcorp has built up strong capabilities and deep integration expertise across the energy and utilities value chain. From thermal and renewable power to gas and industrial water solutions, we have established positions in developing markets and developed markets. This strong track record gives our Utilities business an excellent foundation to create a global integrated energy platform, strategically positioned to benefit from the global energy transition.

'We are confident that Sembcorp Marine, a global leader in the offshore and marine industry, is well-positioned to benefit from the industry's recovery with its active investments in new capabilities and technological innovations. We will continue to support the business through the cycle. Our Urban Development business is steadily growing. With the role it plays in driving economic transformation and job creation, it has built up a strong franchise in Asia and is a valued partner to governments in host countries.'

Repositioning the Utilities business as an integrated energy player
Sembcorp's Utilities business will deliver a differentiated business model that taps on opportunities to provide integrated solutions across the energy and utilities value chain. This will comprise multiple energy offerings built around anchor assets. Besides providing enhanced returns and growth while lowering development risk, this strategy allows Sembcorp to leverage the strengths of its centralised utilities business. These include its strong track record as a developer and owner of energy and utilities assets, and its proven integration expertise.

Sembcorp will reposition its portfolio across certain developing and developed markets. Backed by the strong track record and scale it has established in the region, the business will now focus and deepen its presence in four key markets, namely Singapore & Southeast Asia; China; India and the UK.

As an originator, owner and operator of utility assets, Sembcorp aims to scale and optimise its integrated energy platforms as well as develop a pipeline for active capital recycling. The Utilities business will focus on three business lines:

- The Gas & Power business will target opportunities in thermal power, gas importation and retail as well as regas infrastructure
- The Renewables & Environment business will focus on renewables, water and wastewater treatment as well as waste-to-resource growth opportunities in the low-carbon and circular economies
- The Merchant & Retail business, with its newly added merchant capabilities, will enable the business to capture opportunities closer to customers in multiple markets and enhance competitiveness and returns

These business lines will better position the Utilities business to innovate, grow and meet the challenges of a changing global energy landscape that is facing increasing decarbonisation, decentralisation, digitalisation and demand disruption.

Unlocks value with targeted utilities divestments of up to S$0.5 billion and proposed IPO of India energy business
To build a platform for growth and sustainability of its India energy business, the company today announced that it has initiated the process for an initial public offering of Sembcorp Energy India Limited on BSE Limited and the National Stock Exchange of India, with the filing of a draft red herring prospectus.

Following the review of its Utilities business, the Group is planning to divest a number of peripheral utilities assets. Over the next two years, this is expected to deliver estimated cash proceeds of up to S$0.5 billion. This is additional to potential proceeds from the proposed IPO of Sembcorp Energy India Limited. The company also announced that it had entered into a conditional agreement to divest its municipal water operations in South Africa, as part of its geographical repositioning. The Group's focus on active and systematic capital recycling will enable it to strengthen its balance sheet and deliver sustainable growth.

Strengthens commitment to sustainability with targets for doubling of renewables portfolio to ~4,000 megawatts and a 25% reduction in carbon emission intensity
A strong commitment to sustainability and sustainable value creation continues to underpin Sembcorp's new strategies. The company aims to play a part, together with the international community, in furthering the United Nations' Sustainable Development Goals (SDGs), in particular SDG 6 (Clean Water and Sanitation) and SDG 7 (Affordable and Clean Energy).

In recognition that the world is rapidly transitioning to a low-carbon economy with significant disruption and opportunities, the company is targeting to double its renewables portfolio to approximately 4,000 megawatts by 2022 to create one of the region's leading independent renewable energy players. Currently, Sembcorp has renewable assets comprising both wind and solar across Singapore, China and India.

Sembcorp will target a reduction in its carbon emission intensity in line with the 2°C climate scenario. By 2022, the company aims to reduce carbon emission intensity by close to 25% from its current 0.55 tonnes of carbon dioxide per megawatt hour (tCO2/MWh) to 0.42 tCO2/MWh, and to less than 0.40 tCO2/MWh by 2030.

Mr McGregor concluded, 'We are clear about our strategic priorities and are determined to lift our performance and returns. We are taking decisive action to transform our Utilities business into an integrated energy player that will be strategically positioned to benefit from the global energy transition.

'Sembcorp will build on our strengths to ensure our success in a changing world. I believe we have the right strategy, strong business models as well as the track record and capabilities to deliver. I am confident that Sembcorp will continue to serve the evolving needs of Singapore and markets worldwide and deliver sustainable value and growth for our stakeholders for decades to come.'

For analysts' and media queries, please contact:

Analysts
Aleve Co (Ms)
Senior Manager
Group Corporate Relations
DID: +65 6723 3178
Email: aleve.co@sembcorp.com

Media
Fock Siu Ling (Ms)
Assistant Vice President
Group Corporate Relations
DID: +65 6723 3011
Email: fock.siuling@sembcorp.com

ABOUT SEMBCORP INDUSTRIES
Sembcorp Industries is a leading utilities, marine and urban development group, present across five continents.

As an integrated energy player, Sembcorp is poised to benefit from the global energy transition. With a strong track record in developing and developed markets, it provides solutions across the energy and utilities value chain, with a focus on the Gas & Power, Renewables & Environment, and Merchant & Retail sectors. It has a balanced energy portfolio of over 11,000 megawatts, including thermal power plants, renewable wind and solar power assets, as well as biomass and energy-from-waste facilities. In addition, Sembcorp is a world leader in offshore and marine engineering, as well as an established brand name in urban development.

Sembcorp Industries has total assets of over S$23 billion and over 7,000 employees. Listed on the main board of the Singapore Exchange, it is a component stock of the Straits Times Index, several MSCI and FTSE indices, as well as the SGX Sustainability Leaders Index and the Dow Jones Sustainability Asia Pacific Index.