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Singapore Food Industries Limited
First Half 2007
Performance Review
Joint Media/Analysts Briefing
19 July 2007
1
Overview (2Q2007 vs 2Q2006)
TURNOVER
S$'M 2Q 2007 2Q 2006 %
Singapore 56.2 59.7 (3.5) (5.9)
Overseas 102.7 87.5 15.2 17.4
158.9 147.2 11.7 7.9
PBT
S$'M 2Q 2007 2Q 2006 %
Singapore 5.5 7.0 (1.5) (20.8)
Overseas 3.1 2.7 0.5 17.4
8.7 9.7 (1.0) (10.3)
2
Overview (1H 2007 vs 1H 2006)
TURNOVER
S$'M 1H 2007 1H 2006 %
Singapore 113.7 118.7 (5.0) (4.2)
Overseas 217.7 178.5 39.2 22.0
331.4 297.2 34.2 11.5
PBT
S$'M 1H 2007 1H 2006 %
Singapore 12.0 11.7 0.3 2.9
Overseas 11.2 8.7 2.5 28.6
23.3 20.5 2.8 13.9
3
Overview (2Q2007 vs 2Q2006)
The PBT for 2Q 2007 and 1H 2007 included the following “one
offs”/adjustments which were not in corresponding periods last year:-
($'M) 2Q 2007 1H 2007
Cresset-Restructuring costs (0.9) (0.9)
Shanghai STFI-Provision for stock (0.5) (0.7)
Australia-Grant Income 4.4 4.4
Australia- Impairment loss on fishing licence (1.1) (1.1)
Net impact 1.9 1.7
4
Overview underlying operations PBT
PBT
S$'M 2Q 2007 2Q 2006 %
Singapore 5.5 7.0 (1.5) (20.8)
Overseas-As Reported 3.1 2.7 0.4 17.4
One-Offs 1.9 0.0 1.9 N.A
Overseas-Underlying PBT 1.2 2.7 (1.5) (54.3)
Group-Underlying PBT 6.7 9.7 (3.0) (30.0)
PBT
S$'M 1H 2007 1H 2006 %
Singapore 12.0 11.7 0.3 2.9
Overseas-As Reported 11.2 8.7 2.5 28.6
One-Offs 1.7 (0.6) 2.3 N.A
Overseas-Underlying PBT 9.5 9.3 0.2 1.5
Group-Underlying PBT 21.5 21.0 0.5 2.3
5
Singapore Food Industries Limited
Financial Highlights
6
Financial Highlights (1H2007 vs 1H2006)
$’m 1H2007 1H2006 %
Turnover 331.4 297.2 11.5
Gross Margins (%) 26.6 26.5 0.1
PBT 23.3 20.5 13.9
PATMI 14.1 14.1 0.1
Net after-tax margins (%) 4.8 4.9 (0.1)
Earnings per share (cents) 2.7 2.8 (0.6)
Economic Value Added 10.5 9.0 16.9
EVA Spread (%)* 8.7 8.1 0.6
*Annualised
7
Financial Highlights (1H2007 vs 1H2006)
1H2007 1H2006 %
ROE (%)* 19.0 20.3 (1.3)
ROTA (%)* 10.0 9.9 0.1
Interest Cover (times) 11.7 12.9 (9.3)
Debt/Equity Ratio 0.5 0.4
Net Assets per Share (cents) 28.9 27.1 6.6
EBITDA ($’m) 35.6 30.2 17.8
Capex ($’m) 4.4 4.0 9.0
*Annualised
8
Singapore Food Industries Limited
Segmental Results
9
Turnover by Geographical Region
(1H2007 vs 1H2006]
($’m) +23.2%
200
180
160
140 -4.2%
120
100
80
60
40
-20.2% +21.9%
20
0
Singapore UK/Europe China Australia
1H 2006 118.7 162.2 4.6 11.7
1H 2007 113.7 199.8 3.6 14.3
10
Turnover by Quarters
($’m)
800
$636.9m
$597.1m
$590.1m
600 $534.4m
196.8
175.9 179.9 4Q
159.1
$331.4 m 3Q
400 142.9
139.8 133.3 2Q
123.7
147.2
158.9 1Q
135.6 139.1
200 124.9
138.8 144.8 150.0 172.5
126.7
0
2003 2004 2005 2006 2007
11
PBT by Geographical Region
(1H2007 vs 1H2006)
($’m) 14 +2.9%
12
8.3%
10
8
6 272.3%
4
2
0
-2
China &
Singapore UK/Europe Australia
Others
1H 2006 11.7 8.5 -0.7 1.0
1H 2007 12.1 9.1 -1.5 3.7
12
PBT by Quarters
($’m)
60 $50.4m
$47.7m
$43.4m
50 $41.9m
17.3 20.0
40 4Q
15.5 16.7
3Q
30 $23.3m
9.7 7.6 2Q
8.9 6.2
20 9.6 8.7 1Q
8.4 9.7
6.6
10 12.3 13.2 14.6
10.9 10.8
0
2003 2004 2005 2006 2007
13
Singapore Food Industries Limited
EVA, Cash Flows and
Balance Sheet Highlights
14
EVA Statement
(1H2007 vs 1H2006)
S$'000 1H 2007 1H 2006
Profit Before Taxation 23,288 20,448
Adjustments for:
(Decrease)/Increase in allowance for doubtful debts 159 (128)
(Decrease)/increase in allowance for stock obsolescence 1 (1)
Amortisation of intangibles 1,000 0
Unusual item 0 648
Interest expense 2,169 1,718
Interest expense on non-capitalised leases 50 55
Adjusted Earnings Before Income Tax 26,667 22,740
Less Cash Operating Taxes 7,834 6,004
Net Operating Profit After Tax (NOPAT) 18,833 16,736
Average EVA Capital Employed 241,013 221,052
Weighted Average Cost of Capital 6.9% 7.0%
Capital Charge 8,315 7,736
Economic Value Added (EVA) 10,518 9,000
15
Group Cash Flow Statement
(1H2007 vs 1H2006)
Profit before taxation 23,291 20,448
EBITDA Adjustments:
Share of profit of a jointly controlled entity 3 3
Interest expense 2,169 1,718
Interest income (213) (287)
Depreciation and amortisation 10,359 8,349
EBITDA 35,609 30,231
Gain on disposal of property, plant and equipment and intangible assets (184) (407)
Provision for diminution in value of other financial assets 24 18
Provision for fair value of share-based compensation expenses 384 369
Allowance for stock obsolescence (net) 814 464
Allowance for doubtful receivables and trade discounts (net) 1,481 (453)
Impairment of intangibles 1,112 0
Loss on liquidation of a subsidiary 0 648
Changes in Working Capital (8,244) (5,146)
Income taxes paid (8,256) (8,331)
Net Cash Flow from Operating Activities 22,740 17,393
Net Cash Flow from Investing Activities (3,451) (2,623)
Net Cash Flow from Financing Activities (16,740) (13,820)
Net Cash Flow 2,549 950
Cash and Bank Balances at end of period 24,298 19,637
16
Consolidated Balance Sheet
June March December
S$'000 2007 2007 2006
Property, Plant & Equipment 122,851 123,427 126,868
Intangible assets 66,429 67,942 68,404
JV & other long term assets 2,537 2,438 2,446
Inventories 48,013 39,069 38,474
Trade & other receivables 100,463 102,077 100,457
Cash and bank balances 24,298 25,896 21,438
Bank overdrafts (4,497) (4,393) (5,805)
Trade & other payables (113,282) (107,038) (119,370)
Current portion of bank loans (41,162) (31,273) (22,419)
Provision for taxation (14,026) (14,909) (14,798)
Long Term Liabilities (32,069) (36,186) (38,726)
159,555 167,050 156,969
Share Capital & Reserves 148,909 158,207 148,423
Minority Interests 10,646 8,843 8,546
159,555 167,050 156,969
17
Singapore Food Industries Limited
Operations Review
18
Food Distribution
for the six months ended 30 June 2007
2Q2007 2Q2006 %Δ 1H2007 1H2006 %Δ
Turnover ($’m) 29.8 33.4 (10.8) 61.8 68.9 (10.2)
PBT ($’m) 0.5 2.8 (81.8) 2.4 5.0 (51.3)
Food Distribution sales were 10.2% lower at $61.8m in
1H2007 due to stock issues and general suspension on
import of chicken products from China.
PBT fell 51.3% to $2.4m due to lower sales and reduced
gross margins.
19
Food Distribution - Market Share
Estimated market share of imported meats
Percentage % Imported Meats
14 12.4%
11.4%
12 10.6% 9.7%
10 8.1%
7.7%
8
6
4
2
0
2005 1Q 2Q 3Q 4Q 1Q
2006 2006 2006 2006 2007
20
Food Preparation, Mfg & Processing
for the six months ended 30 June 2007
2Q2007 2Q2006 %Δ 1H2007 1H2006 %Δ
Turnover ($’m) 123.8 109.8 12.7 259.2 220.1 17.8
PBT ($’m) 6.4 6.4 (0.9) 17.4 14.3 21.4
Singapore
Food Catering revenues in 1H2007 comparable to 1H2006
Sales to key customer higher in 1H2007
Export of MREs (meals ready to eat) in 2Q2007 was
substantially down compared to 2Q2006
PBT in 1H2007 slightly higher than 1H2006
21
Singapore Food Industries Limited
Hottest April on Record…
22
UK Mean Temperature between
1985 – April 2007 (YTD)
Mean
Temperature °C
10.5 10.2°C
9.5
8.5
7.5
6.5
5.5
4.5
April mean temperatures were the warmest on record
3.5 across England, with well above average sunshine.
2.5
1.5
0.5
-0.5
-1.5
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
April Mean Temperature 7.7 6.8 7.7 5.6 7.3 7.2 4.8 8.8 7.1 5.6 7.1 6.9 7.4 8.2 6.8 7.6 7.5 7.9 6.6 8.3 6.8 6.7 8.2 8.9 8.5 7.9 7.4 10.2
Data source: Met Office (UK),
URL: http://www.metoffice.gov.uk
23
Food Preparation, Mfg & Processing
for the six months ended 30 June 2007
Overseas
In 1H2007, Daniels’ turnover grew 18.9% to $120.2m.
All of Daniels core categories grew in 1H 2007
Sales of prepared fruits grew 15.8% while sales of juice/
drinks grew 43.6% in 1H2007
New Covent Garden soup sales grew strongly in 1Q2007
but 2Q growth affected by unusually warm April. As a result,
soup grew 3.5% over 1H2006.
New Covent Garden chilled ready meals were launched in
May, and initial response has been quite encouraging
Daniels’ PBT increased 13.4% to $8.5m
24
Food Preparation, Mfg & Processing
for the six months ended 30 June 2007
Overseas
ICL’s sales increased 20.9% to $60.2m in 1H2007 on the back of
successful new product launches for 2 key customers
PBT grew 43.8% to $4.0m on increased sales
Farmhouse Fare contributed revenue of $11.3m and PBT of
$0.9m in the 1st half (after a $1.0m provisional amortisation
charge for intangibles)
Cresset sales increased 9.8% to $12.6m. While CRM sales
increased by 86.0%, ambient sales continued to decline.
Cresset registered loss of $4.3m, including restructuring costs of
$0.9m in 2Q2007
25
Food Preparation, Mfg & Processing
for the six months ended 30 June 2007
Overseas
Australian subsidiaries reported a 21.9% sales increase to
$14.3m in 1H2007
Higher scallop sales in both export and domestic markets
Commercial fishing reported lower revenues in 2Q2007due to
gradual scaling down of fishing operations
PBT of $3.6m included a $4.4m grant received from GBRMPA
(Great Barrier Reef Marine Park Authority) and a $1.1m
impairment loss for fishing licences.
Shanghai STFI sales decreased 20.2% to $3.6m due to a
general ban by AVA on chicken products from China imposed in
February this year.
Loss of $1.5m in 1H2007 included $0.7m of stock provisions.
26
Abattoir & Hog Auction
for the six months ended 30 June 2007
2Q2007 2Q2006 %Δ 1H2007 1H2006 %Δ
Turnover ($’m) 5.3 4.0 33.4 10.4 8.3 25.2
PBT ($’m) 1.8 0.4 306.1 3.5 1.1 208.1
Abattoir and Hog Auction revenues in 1H2007 were 25.2%
higher at $10.4m due to higher pig supply numbers and a
$3 per pig slaughter fee increase from 1st April 2007
Average slaughter and auction numbers higher at 954 and
962 pigs per day respectively in the 1st half
PBT improved by 208.1% to $3.5m
27
Abattoir & Hog Auction
Average no. of pigs per day Average weight per pig (kg)
1200 90
1100
80
1000
70
900
Average no. of pigs per day
800 60
Average weight per pig (kg)
700
50
600
40
500
400 30
Year 2001 2002 2003 2004 2005 2006 Q1 Q2
2007 2007
Note: Management views pig weight as a lead indicator of future farm productivity 28
Singapore Food Industries Limited
FY2007 Outlook
Overall, we expect better
earnings for FY 2007.
Note: This is management’s outlook based on current expectations, projections and
assumptions about the future. This is not a forecast.
29
Thank You
This presentation contains certain statements that are not statements of historical
fact, i.e. forward-looking statements. Readers can identify some of these statements
by forward-looking terms such as ‘expect’, ‘believe’, ‘plan’, ‘intend’, ‘estimate’,
‘anticipate’, ‘may’, ‘will’, ‘would’, ‘could’ or similar words. However you should
note that these words are not the exclusive means of identifying forward-looking
statements. Forward-looking statements are made based on current expectations,
projections and assumptions about future events. Although SFI believes that these
expectations, projections and assumptions are reasonable at the time of making
them, these forward-looking statements are subject to risks (known and unknown),
uncertainties and certain assumptions about SFI, its business operations and the
environment it operates in. Actual future performance, outcomes and results may
therefore differ materially from those expressed in forward-looking statements.
Representative examples of these risk factors include (without limitation) general
industry and economic conditions, outbreak of animal disease, food scares, interest
rate movements, cost of capital and capital availability, competition from other
companies and venues for sales /manufacture/distribution of goods and services,
shift in customer demands, customers and partners, changes in operating expenses,
including employee wages, benefits and training, and governmental and public
policy changes. Readers are cautioned not to place undue reliance on these
forward-looking statements, which are based on current view of management on
future events.
30
