Singapore Corporate News - 20 Jul 2007

Another 'Pearl Energy' heading for listing?

THE Singapore stock market can expect another 'Pearl Energy' soon.

Venture capital firm 3i and Intermediate Capital Group (ICG), which have just bought a majority stake in Singapore-based Franklin Offshore - with the exact quantum and price not disclosed - plan to prepare it for a listing on the Singapore Exchange.

As a 'first building block' they have brought on board Pearl Energy's co-founder Richard Lorentz as chairman of Franklin, which is among the leading global suppliers of deepwater moorings used to anchor rigs for the offshore oil and gas sector, and also used by marine industries.

The move marks 3i's third such energy-related investment in this region, following that in previous SGX-listed, exploration & production (E&P) firm Pearl Energy, which was subsequently bought over by UAE-listed Aabar Petroleum.

It is also a stakeholder in Salamander Energy, another South-east Asian oil and gas E&P firm, which was floated on the London Stock Exchange last year with a market capitalisation of US$405 million.

Announcing the investment yesterday, 3i director John Thomson told BT that the combination of 3i, Franklin and Mr Lorentz 'is a powerful one'.

The Franklin investment by 3i and ICG, with the latter providing 'mezzanine' financing, or financing prior to IPO, comes amidst continued high oil prices and exceptional growth for the offshore oil and gas industry, he added.

Franklin - with 2006 turnover of over $130 million, and whose order book is filled until 2010 - is at a stage where it is moving up the value-add chain.

From providing exploration mooring, that is mooring systems which secure the oil rig for 30-60 days of exploration drilling, it aims to upgrade to providing production mooring for rigs which stay for years at oil wells that go into production.

'The company is currently pursuing these higher value production mooring deals (worth US$13-16 million each) in Vietnam and Malaysia,' Franklin's managing director Angie Tang said, adding that these are worth more than the exploration mooring deals, which typically are worth US$5-10 million each.

But it also needs to boost its mooring specialist team by adding another 20-plus engineers and experts to its existing team of about one dozen specialists, she added.

Franklin currently employs 360 staff, 220 of whom are based here.

The bulk of its deepwater mooring deals are in South-east Asia, although the company has also spread its wings including to Africa and the Middle East.

Mr Lorentz, as the new chairman, will bring his invaluable E&P contacts and expertise, including in his new job as vice-president (new ventures) of Aabar 'to the Franklin table'.

He said that he was delighted to work with 3i again, whose extensive oil and gas expertise had added significant value to Pearl earlier.

'Likewise, I see their participation with Franklin as a real positive step toward preparing the company for a SGX listing,' he said.

3i said it will work with Franklin's management team to identify and introduce additional management expertise to the business and to support its growth through its established relationships.

3i's Mr Thomson was, however, reticent about giving a timeline for bringing Franklin to a Singapore IPO. 'It's not for a lack of track record,' he stressed, saying that the company is projecting 25 per cent annual revenue growth in the coming few years.

'Rather, we prefer to continue building the business first into a world-class one,' he said of Franklin which was recently cited as one of Singapore's top 50 most enterprising businesses.

SFI Q2 net profit falls 40% but stays upbeat on FY2007

SINGAPORE Food Industries' (SFI) second quarter net profit fell 40.1 per cent year-on-year despite a 7.9 per cent rise in revenue.

Net profit for the three months ended June30 fell to $4.17 million from $6.96 million in the previous corresponding quarter.

Earnings per share came to 0.8 cent, down from 1.4 cents. Revenues grew from $147.2 million to $158.9 million.

The quarter also saw operating and administrative expenses climb 20.8 per cent, from $28.4 million to $34.3 million.

The company's second quarter results included exceptional items which had a net impact of increasing its profit before tax by $1.9 million. This included a $4.4 million restructure grant received by its Australian subsidiary, a $1.1 million impairment loss on its fishing licence, a $0.9 million restructuring charge for its Irish subsidiary Cresset, and a $0.5 million charge for exceptional stock provisions.

For the first half of the year, SFI's revenue grew 11.5 per cent from $297.2 million to $331.4 million, while net profit was flat at $14.1 million.

The company reported a 22 per cent increase in revenue from its overseas operations for the first half to $217.7 million or 65.7 per cent of overall revenues, and a 28.6 per cent increase in profit before tax to $11.25 million, or 48.3 per cent of overall profit before tax.

Turnover from its Singapore operations for the half fell 4.2 per cent to $113.7 million or 34.3 per cent of revenue, while profit before tax grew 2.9 per cent to $12 million or 51.7 per cent of overall profit before tax.

Roger Yeo, chief executive of SFI, said in a company statement that the firm's first-half performance was affected by a 'difficult' second quarter, adding that 'a number of one-off charges and adjustments were made during the second quarter'.

SFI said that it 'expects better earnings for FY2007'. No dividend was declared.

Shares of SFI closed the day up a cent at 92.5 cents.