Daily news - 21 Jan

SPC reports 55.4% fall in earnings to $229.7m
Singapore Petroleum Company – Despite its profit warning last month, integrated Singapore Petroleum Company yesterday said that thanks to prudent inventory hedging, it managed to chalk up net profit of $229.7 million for FY 2008 - albeit 55.4 per cent lower than 2007's all-time record of $514.7 million. This was achieved on the back of a 26.9 per cent increase in revenue to $11.1 billion from 2007's $8.8 billion. Earnings per share, however, fell by 55.3 per cent to 44.61 cents from 99.9 cents a year ago. SPC - which is in upstream oil exploration and production (E&P) and downstream refining/marketing - is paying a final ordinary dividend of eight cents per share, bringing its total dividend payout for the year to 28 cents, or a payout ratio of about 63 per cent of net profit. Its chairman Choo Chiau Beng said that '2008 had been a most challenging year. Oil prices and refining margins climbed to record highs in mid-2008 and (then) fell sharply in the second half'. 'SPC had adopted a prudent risk management policy towards hedging the group's inventory. Thus, despite writing down inventory at year-end to account for the severe drop in oil prices, the group turned in a profitable performance for 2008.' SPC's results came even as crude oil prices yesterday slipped further to US$33 a barrel amidst a global economic slowdown, or more than US$100 down from the peak of US$147-plus a barrel last July.

KTT's profit up marginally
Keppel Telecommunications & Transportation (KTT) managed to achieve a marginal rise in net profit for 2008 despite lower contributions from associates, a poor showing from its network engineering unit and impairment and foreign exchange losses. The 12 months ended Dec 31, 2008, saw a net profit of $52 million, against 2007's $51.4 million. This translated to a 1.1 per cent increase in earnings per share for the year to 9.4 cents. Turnover rose 25 per cent to $128.87 million, helped largely by a revenue boom from its logistics arm, Keppel Logistics. KTT has recommended a first and final dividend of three cents per share, half of the amount in 2007.
Full-year net profit from the company's three divisions - logistics, network engineering and investments - stood at $16.76 million, $9.09 million and $26.18 million respectively. The logistics segment saw a 41 per cent jump in sales in 2008 to $101 million due to an increase in warehousing distribution and container handling services in Singapore and Foshan, China. Contribution from TradeOneAsia, a company which KTT acquired in June 2007, also helped lift the division's full-year sales, the firm said in a regulatory filing. However, turnover for KTT's network engineering unit fell 11 per cent to $27.4 million due to poorer performances in Malaysia and Thailand. Net profit from investments fell 15 per cent to $26.1 million year-on-year due to higher taxes, as well as lower contributions from associated companies such as MobileOne. M1, which is 20 per cent owned by KTT, last week reported a 12.6 per cent drop in 2008 net income to $150.1 million due to heightened competition with the dawn of mobile number portability last year.

Mandarin Oriental sells Macau hotel stake for HK$1.6 billion
Mandarin Oriental International, a member of the Jardine Matheson Group, said yesterday that it has agreed to sell its 50 per cent interest in the 416-room Mandarin Oriental in Macau for HK$1.6 billion (S$307 million). The company will sell its stake to Sociedade de Turismo e Diversoes de Macau (STDM). Mandarin Oriental's partner in the hotel, Shun Tak Holdings, will also sell its 50 per cent stake to STDM. The carrying value of the group's 50 per cent stake in the hotel as at Dec 31, 2007 was US$15.7 million and its contribution to the group's Ebitda (earnings before interest, tax, depreciation and amortisation) in 2007 was US$10.2 million, the company said. On the sale's completion, Mandarin Oriental will receive proceeds of about US$90 million with a post-tax gain of about US$75 million, which will be recognised in 2009. The proceeds will be used for the group's general corporate purposes, it said. Completion of the sale is expected by the end of May 2009. The sale is conditional upon approval of the arrangements by Shun Tak's and STDM's respective shareholders as well as other regulatory formalities. As part of the agreement to sell, Mandarin Oriental and Shun Tak also have the right to participate equally in any increase in the hotel site's value - over and above the agreed value of HK$1.6 billion - which might arise if the property were to be redeveloped or sold to a third party in the future. The property will be rebranded by STDM. However, under a short-term management arrangement, Mandarin Oriental will continue to manage the hotel for up to two years to ensure a smooth transition.

SATS shareholders okay SFI takover
Singapore Airport Terminal Services (SATS) & Singapore Food Industries (SFI) – Minority shareholders of SATS have given their company the nod to buy a controlling stake in SFI from Temasek Holdings. Almost 70 per cent of minority votes cast at a meeting yesterday were in favour of SATS buying 359.7 million SFI ordinary shares equivalent to a 69.6 per cent stake. The offer price is 93 cents a share - a total of $334.5 million. The move will trigger a general offer for all 157.1 million SFI shares, which could lift the total bill to $509 million. SATS chief executive Clement Woon said SFI shareholders will get the offer document within two weeks. 'We only needed 50 per cent plus one vote to get this through, but what we got is overwhelming support,' he said. 'There is still a lot of work to do. We will move ahead with the general offer first, then start work on our integration plan.' SATS' controlling shareholder Singapore Airlines, with a stake of just over 80 per cent, abstained from yesterday's vote, leaving minorities to decide. SATS needs to secure at least 90 per cent of SFI's shares to de-list the food company and 100 per cent for total control.

Source: Kim Eng