INVESTOR DAY 22 MARCH 2018

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1 INVESTOR DAY 22 MARCH 2018

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7 Build Upon Our Position of Strength Strong returns since formation in 1997 provides solid foundations for next stage of growth / 7

8 Focus Areas for Growth

9 Strengthen Core Businesses Aerospace Strengthen and grow engineering and MRO Invest in new growth areas Seed the future with unmanned technologies By 2022, we expect steady state revenue of more than S$400m per annum from our Passenger-to-Freighter business / 9

10 Strengthen Core Businesses Marine Enhance our product offerings for the future Strengthen US business to position for upturn Grow our environmental engineering business By 2022, we expect Marine sector revenue to recover to 2013 to 2014 levels, subject to the business cycle / 10

11 Pursue Growth Opportunities Defence Export Leverage proven successes in defence capabilities and export wins Focus on developing targeted products and solutions Focus on specific markets / 11

12 Pursue Growth Opportunities Smart City Significant and growing market opportunity Build upon core competencies and end-to-end capabilities Leverage Singapore track record; positioned for overseas success Icon to be amended to have >2x in circle Expect Smart City revenue of S$1b in 2017 to more than double by 2022 / 12

13 Our Smart City Offerings and Track Records Match Needs of Smart Cities / 013 / 13

14 Develop Businesses through New Enterprises and Ventures Judicious evaluation of growth opportunities Strategic Analysis New growth opportunities 1 Health Tech Market Attractiveness Ability to Win 2 Digital Strategic Fit 3 Internal Rate of Return Threshold Net Present Value 4 Go/ No-go Investment / 14

15 Recognise Challenges and New Realities as We Pursue Growth Singapore as important reference market Future growth largely from global markets Leverage strength of integrated approach New go-tomarket models and M&A focus / 15

16 Aspiration: Global Technology, Defence & Engineering Powerhouse / 16

17 People & Culture People are our strengths Build strong sense of purpose and belonging Strengthen capacity and capability for growth Strengthen leadership bench Drive key focus areas - Shared Services - Digitalisation - New lines of businesses / 17

18 Customers & Marketing ST Engineering Masterbrand Build marketing presence and capabilities Develop new capabilities / 18

19 Technology & Innovation Build, partner and acquire to develop technology capabilities / 19

20 Capacity For Growth Financial Strength Efficiency & Scalability Portfolio Management Disciplined Growth Strong balance sheet provides capacity to grow and sustain dividends * versus business-as-usual Cost optimisation through Shared Services Cumulative net savings of ~S$150m over next 5 years* Diversified portfolio Unlock value and recycle capital Disciplined approach to go-to-market models and M&A / 20

21 Strong Order Book NEAR TERM Strong order book of S$13.2b provides stability and visibility on near-term revenue and cash flows / 21

22 Poised for Success / 22

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24 Aviation Market Outlook is Positive 44K passenger aircraft by K dedicated freighters by 2036 Sources: Boeing, Oliver Wyman, IBA, Counterpoint / 24

25 MRO Landscape Key challenges: / 25

26 Strengthen Core Businesses Aerospace Invest in new growth areas Strengthen and grow engineering and MRO Seed the future with unmanned technologies / 26

27 Strengthen and Grow Engineering and MRO Maintain lead through disciplined management, safety culture and customer focus / 27

28 Strengthen Engineering and MRO PTF Conversions Established leader through design and engineering capability Strengthen portfolio of freighter solutions and extract incremental MRO synergies / 28

29 Strengthen Engineering and MRO Leverage on Technology Our aim: E-enable our workforce Improve customer stickiness Offer new solutions / 29

30 Grow MRO Increase capacity and global footprint Strengthen regional presence in growth regions and key markets Source: Oliver Wyman / 30

31 Invest in New Growth Areas Adjacencies that add value to MRO and offer competitive advantage via IP / 31

32 Seed the Future Develop technologies that shape autonomous networks and freighters / 32

33 Strengthen Core Businesses Aerospace Invest in new growth areas Strengthen and grow engineering and MRO Seed the future with unmanned technologies / 33

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35 Strengthen Core Businesses Marine Enhance product offerings for the future Strengthen US business to position for upturn Grow environmental engineering business Icon to be amended By 2022, we expect Marine sector revenue to recover to 2013 to 2014 levels, subject to the business cycle / 35

36 Competency in Naval Segment Provides Resilience Against Downturn Our business is cyclical in nature Global Shipbuilding Orders by mdwt (Last 10 Years) however heightened geopolitical tensions increase defence spending Global naval shipbuilding revenue forecast (US$b) Year Year Sources: Barry Rogliano Salles, Clarksons Platou Source: Frost & Sullivan / 36

37 Strengthen US Business to Position for Upturn Why acquire rig repair assets? Invest at bottom of business cycle; acquire rig repair capabilities Superior location; closest to rigs deployed in Gulf of Mexico Reap operational synergy among the US yards / 37

38 GoM Rig Utilisation (%) Strengthen US Business to Position for Upturn Positive outlook in the US Gradual recovery in Gulf of Mexico (GoM) rig demand Increased defence spending with Trump s administration augurs well with our US capabilities Source: Seabrokers Feb 18 Year Year Source: Annual Plan for Construction of Navy Vessels for FY 2019 Source: Morgan Stanley Jan 18 / 38

39 Execute Projects Well and Target Addressable Markets / 39

40 Leverage Technology to Improve Operational Efficiency Yard of the future Smart Engineering Smart Manufacturing Smart Workplace Smart Warehouse Smart Asset Mgmt Integrate Product Lifecycle Management with Design and Engineering Automate manufacturing process via robots and video analytics Expand usage of sensors and wearables to create a safer workplace Use technology to track and monitor movement of goods Incorporate technology to track utilisation, condition monitoring and preventive maintenance / 40

41 Enhance Product Offerings for the Future In-house Advanced SMS 2 * (NERVA) equipped with: Intelligent Power Management System Sense Making System Decision Support System / 41 * Ship Management System & Sense Making System (SMS 2 )

42 Develop a Suite of Unmanned Solutions Unmanned Solutions Defence Para-military Commercial Other niche markets Unmanned ship-toshore connectors Unmanned maritime platforms / 42

43 Improve Margins through Cost Optimisation Improve productivity Promote Shared Services Increase collaboration Continue to invest in technology and automation Captured ~10% efficiency improvement year-on-year Reduce overhead costs Drive alignment to group s policies Provide fast turnaround engineering solutions Share design expertise and leverage proven ship designs / 43

44 Smart City: Grow Environmental Engineering Business Smart Environment Solid waste management Water treatment Waste water treatment / 44

45 Marine Business is Strategic to the Group / 45

46 Strengthen Core Businesses Marine Enhance product offerings for the future Strengthen US business to position for upturn Grow environmental engineering business Icon to be amended By 2022, we expect Marine sector revenue to recover to 2013 to 2014 levels, subject to the business cycle / 46

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48 Pursue Growth Opportunities Smart City Significant and growing market opportunity Build upon core competencies and end-to-end capabilities Leverage Singapore track record; positioned for overseas success Expect Smart City revenue of S$1b in 2017 to more than double by 2022 / 48

49 Why Smart City? Demographic Change Urbanisation Resource Scarcity Climate Change By 2050, population aged over 60 is set to double to over 2 billion Significant increase in dependency ratio while birth rate continues to fall By 2050, 86% of the developed world and 64% of developing world will be urbanised Strain on essential public services Sources: United Nations Dept of Economic & Social Affairs, World Wildlife Fund, various By 2040, developing countries will consume 65% of energy By 2025, two-thirds of the world s population would face water shortages Rising global average temperature Extreme weather conditions / 49

50 Market Opportunity (US$) Smart City Global Market Global Market Global Market, by Major Regions, 2025 Sources: IHS insights (2016) Expert interviews; Frost & Sullivan (2017) Sources: Frost & Sullivan (2017); Persistence Market Research Pvt. Ltd / 50

51 Our Smart City Global Presence / 51

52 Leverage Singapore Track Record / 52

53 Our Smart City Solutions / 53 / 26

54 End-to-end Solutions Our Unique Differentiator Enabled by integrated architecture / 54

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56 Public Safety & Security / 56

57 Public Safety & Security Physical Security Solutions Aviation Security Airport Operations Collaboration System Air Traffic Smart Tower Communication and Aircraft Identification Counter-Drone System Maritime Security Seaport Security Coastal Surveillance Vessel Tracking Asset Tracking Key Installation Security Wide Area Security Perimeter Security Checkpoint Security Integrated Security Management / 57

58 Cyber Security / 58

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60 Grow Environmental Engineering Business Build on our first success in JIDP* Cultivate an inventory of smart technologies Grow recurring income streams US$185b addressable market in APAC & MEA Leverage track record to penetrate key target markets * Jurong Island Desalination Plant (JIDP) Smart water and waste management technologies Use analytics to optimise plant operations, improve yield; reduce operational and maintenance costs Grow recurring income through Public Private Partnership and operation and maintenance of infrastructure assets / 60

61 Smart Sensor Networks Deployment / 61

62 Internet of Things (IoT) Solutions for Smart Cities Integrated platform to enable smart city management solutions Waste Sensors Automatic Meter Reading Smart Lighting Control Traffic Counters Sewage Level Monitoring Software Application Noise & Pollution Sensors Parking & Place Detection Gateway IoT Platform and Data Analytics Smart Street Lighting / 62

63 Integrated Estate Management Applying data analytics and artificial intelligence to Smart Cities Environment Lift Monitoring Utilities Lighting Legend Gateway Noise & Temperature/ Humidity Sensor Water Meter Sensor / 63

64 Digital Connectivity through Satellite Source: Ericsson Mobility Report, Nov 2016 / 64

65 World Leader in Satellite Communications Close partnership with major satellite operators 75% of the world s top 20 operators use our enterprise satellite communication (satcom) system Strong presence in key mobility and defence markets Significant market share in global satcom TDMA* sites in service MARITIME 60% AVIATION 46% MILITARY 41% *Time-Division Multiple Access (TDMA) Source: COMSYS VSAT Report, 14th Edition / 65

66 Digital Connectivity through Satellite Developing differentiating products to address the growing aviation and connected car markets / 66

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68 Our Vision of Smart Mobility: Connected, Seamless & Integrated / 68

69 Engineering the Future of Mobility Operationalise new mobility concepts through leveraging our end-to-end capabilities Leverage track record in Singapore / 69

70 Smart Rail Suite Solutions: Strong Track Record in Rail Transportation / 70

71 Smart Rail Suite Solutions: Leading Solutions Complete and comprehensive range of rail electronic products and solutions / 71

72 Intelligent Road Transport Solutions: Strong Track Record / 72

73 Intelligent Road Transport Solutions: Suite of multimodal transport solutions / 73

74 Smart Mobility Platforms: Building on Deep Mobility Expertise 50 years of engineering track record Strong foundation in technologies and capabilities / 74

75 End-to-end Transportation Solution: Competitive Edge Leverage Singapore s Smart Nation ecosystem to accelerate speed of operationalisation Autonomous Buses for First- & Last-Mile, as part of the future Smart Mobility Systems Participate in full value chain / 75

76 Autonomous Public Transport Solutions Operationalising Bus Fleets *Mobility on Demand Vehicles (MODV) / 76

77 Autonomous Public Transport Solutions: Leverage Singapore Ecosystem / 77

78 Smart Robotics for Every Smart City Healthcare Hospitality Security Airport Logistics Industrial / 78

79 Build Robotics Business / 79

80 Build Robotics Business in Other Industry Verticals Leverage capabilities for logistics automation in airports, seaports and warehouses Airport Automation Logistics Automation Industrial Automation Partner local players and system integrators to: Enhance regional market penetration Collaborate on industrial automation / 80

81 Pursue Growth Opportunities Smart City Significant and growing market opportunity Build upon core competencies and end-to-end capabilities Leverage Singapore track record; positioned for overseas success Expect Smart City revenue of S$1b in 2017 to more than double by 2022 / 81

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90 Figures shown are estimated addressable market size / 90

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93 Customers & Marketing ST Engineering Masterbrand Build marketing presence and capabilities Develop new capabilities / 93

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108 * * versus business-as-usual / 108

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119 Poised for Success / 119

120 THANK YOU THANK YOU