Singapore Corporate News - 26 Jul 2007

SPC shareholders to get first-time interim dividend

SINGAPORE Petroleum Company (SPC) is rewarding shareholders with a first-time interim dividend of 20 cents per share next month, after chalking up higher second-quarter and first-half net profits.

Following its earlier strong first-quater showing, the company yesterday reported a respectable 32.1 per cent year-on-year rise in Q2 net profit to $179.2 million as robust refining margins due to strong regional demand for oil products helped offset lower throughput and sales caused by maintenance shutdown of a refinery plant.

This boosted earnings per share for Q2 by almost a third to 34.79 cents.

The Q2 earnings brought net profit for the first six months up 43.1 per cent to $291.34 million. 'With this performance, the company will be paying an interim dividend in August,' it said.

For the April-June quarter, SPC said revenue dipped 15 per cent to $1.97 billion compared with Q2 last year because of maintenance shutdown of a 90,000 barrels per day (bpd) crude distillation unit for 26 days at its joint venture 285,000 bpd Singapore Refining Company refinery.

This resulted in a 9.2 per cent reduction in throughput for Q2, while sales volume dipped 9.4 per cent to 18.3 million barrels.

'The US dollar continued to weaken in 2007 and this, coupled with the lower sales volume, resulted in lower sales revenue for the second quarter,' SPC said.

But stronger Q2 refining margins of about US$9 a barrel, up from the US$7 seen in the first quarter this year, helped.

Downstream activities (including refining) contributed the lion's share of $1.96 billion in turnover and operating profit of $186.6 million in Q2, while upstream exploration and production contributed $12.8 million in turnover and an operating profit of $8.3 million.

For the first half, SPC recorded total revenue of almost $3.9 billion (down 13.8 per cent from H1 2006) and net profit of $291.34 million (up 43 per cent) due to 'continuing firm demand for crude and refined products', the company said.

It said it was able to capitalise on the healthy refining margins in the first half to record a 15.7 per cent increase in gross profit to $390 million.

On upcoming prospects, SPC said that demand for oil products will remain strong because of regional economic growth.

And as new regional refining capacity has yet to come onstream, 'margins are expected to remain healthy for the rest of the year'.

One blot, however, is that 'due to (equipment) procurement delays, first oil production from Oyong is now targeted to be in H2', it said of what will be its second producing Indonesian oil/gas field after Kakap.

SRG extends takeover offer for Courts to Aug 16

SINGAPORE Retail Group (SRG) Limited yesterday extended the closing date of its takeover offer for Courts (Singapore), as its stake in the company inched up to 61.92 per cent.

The offer, which was due to close today, will now close on Aug 16 at 5.30pm. SRG also said that it does not intend to revise the offer price or extend the offer beyond the new closing date.

SRG is offering to buy the remaining shares of Courts that it does not already own at 64.5 cents per share. For shareholders who accept the offer after Courts' July 25 book closure date, SRG will pay 60.8 cents a share, which is its offer price of 64.5 cents per share, less Courts' proposed final dividend of 1.32 cents and a special dividend of 2.38 cents per share.

In June, SRG bought a 54.16 per cent stake in Courts from Courts Group International Ltd for $56.2 million, or 64.5 cents per share. This triggered its current mandatory unconditional cash offer for the rest of the shares of Courts, and SRG has said it intends to take the company private if it obtains an at least 90 per cent stake.

As of yesterday, valid acceptances of its offer totalled 3.11 per cent. The offeror has separately acquired a stake of about 4.65 per cent, raising its total stake to about 61.92 per cent.

Earlier this month, the independent directors of Courts, acting on the advice of independent financial adviser Deloitte & Touche, urged shareholders to reject SRG's offer as it was deemed not compelling.

Deloitte had noted that the premium implied by the offer price over the one- month and three-month volume weighted average price of the shares prior to the offer was substantially lower than comparative premiums paid by other offerors where the intention was to take their targets private. It also noted that the offer price of 64.5 cents was at a 25 per cent discount to Courts' net asset value (NAV) per share of 86 cents as of March 31.

SRG is a company owned by a consortium of private equity firms, namely Baring Private Equity Asia, Topaz Investment Worldwide Inc and DB International (Asia).

Shares of Courts closed yesterday down a cent to 61 cents.

Xpress Hldgs incorporates in Vietnam

XPRESS Holdings, the mainboard-listed company founded by flamboyant businessman KK Fong, says it has become the first foreign company licensed to offer specialist financial print services in Vietnam.

It announced yesterday that it has incorporated a wholly owned subsidiary, Xpress Print (Vietnam) Co, in Ho Chi Minh City with a charter capital of US$100,000 as part of its strategy 'to capture a greater slice of the Asia-Pacific financial print market'.

The Vietnam subsidiary will offer creative design and layout, Web design and maintenance, and print management and consultancy.

It will target local and multinational clients in banking, securities; real estate; and meetings, incentives, conventions and exhibitions (Mice).

It will focus on quick turnaround and high-volume publications such as financial reports, corporate collaterals, educational and instruction manuals, as well as materials for property launches and Mice.

'Through Xpress Print Vietnam, the group has secured first-mover advantage in Vietnam and can deploy its international experience and technology in financial and time-sensitive print services there,' the company said.

'It will also allow Xpress to reap the benefits of increased profitability as operational costs are relatively lower in Vietnam. In addition, Xpress Print Vietnam expects to enjoy preferential corporate tax rates of between zero and 10 per cent for its Web design and maintenance projects over the next 15 years compared to the normal rate of 28 per cent.'

Xpress said that increasing international interest in financial information about Vietnam and initiatives by foreign stock exchanges, including that of Singapore, to attract Vietnamese enterprises to list locally should raise demand for financial printing and communication services significantly.

More Vietnamese companies will also need to communicate directly with their investors and potential clients worldwide, the company said.

Xpress chief executive Sam Chong Keen said: 'Xpress Print Vietnam's incorporation marks another significant milestone for our 'China...and Beyond' business expansion strategy. As major Vietnamese enterprises become prime candidates for listing on overseas bourses, demand for quality financial reports will rise. Our entry into one of South-east Asia's fastest-growing economies will be timely as it offers attractive earnings potential and abundant growth opportunities. We are confident that it will add new revenue streams for Xpress and enhance our shareholders' value.'

Poh Eng Seng, director for strategic planning and business development, said: 'Mirroring our operating model in the PRC, we will network with domestic printers and establish a first-mover foothold in Vietnam. As the region attracts more foreign direct investment, many of our clients have planned or are planning to set up businesses in Vietnam.

'Our presence in this region will now offer them our pre-press, press efficiency and logistics management expertise at lower costs and shorter turnaround time with no compromise in print quality.'