SPC 1Q2008 Financial Statements (22 April 2008)

8/14/2019 SPC 1Q2008 Financial Statements (22 April 2008)

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SINGAPORE PETROLEUM COMPANY LIMITEDCo. Reg. No. 196900291N(Incorporated in the Republic of Singapore)

FIRST QUARTER FINANCIAL STATEMENTS

UNAUDITED RESULTS FOR THE FIRST QUARTER ENDED 31 MARCH 2008

The Directors of Singapore Petroleum Company Limited (SPC) announce the following unaudited results of theGroup for the first quarter ended 31 March 2008.

1 GROUP INCOME STATEMENT

First Quarter

31.03.08 31.03.07 +/(-)%$000 $000

Revenue 2,713,865 1,924,927 41.0

Cost of sales (2,560,214) (1,780,174) 43.8Gross profit 153,651 144,753 6.1

Other gains (net)- Other income 5,045 6,119 (17.6)- Finance income 2,782 3,819 (27.2)- Divestment - 5,291 N.M.

Expenses- Operations (12,948) (16,019) (19.2)- Selling and marketing (2,043) (1,116) 83.1- General and administrative (23,724) (21,622) 9.7- Finance (4,664) (6,996) (33.3)

Share of results of associates - 547 N.M.Share of results of joint ventures 2,773 3,136 (11.6)

Profit before income tax 120,872 117,912 2.5Income tax expense (22,443) (5,816) 285.9

Net profit 98,429 112,096 (12.2)

Attributable to:Equity holders of the Company 98,482 112,096 (12.1)Minority interests (53) - N.M.

98,429 112,096 (12.2)

Earnings per ordinary share

- Basic 19.08 cts 21.73 cts (12.2)- Diluted 19.07 cts 21.71 cts (12.1)

N.M. = Not Meaningful


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NOTES TO GROUP INCOME STATEMENT

(a) Profit for the period is arrived at after charging/(crediting) the following:

First Quarter

31.03.08 31.03.07 +/(-)%

$000 $000

Gain on disposal of other investments (306) - N.M.Loss on disposal of property, plant and equipment - 46 N.M.Finance income including interest income (2,782) (3,819) (27.2)Gain on divestment of joint venture - (5,291) N.M.Depreciation, depletion and amortisation* 42,109 12,661 232.6Write-back of other investments - (61) N.M.Impairment of investment in a joint venture - 509 N.M.Fair value loss on financial derivatives 12,106 24,244 (50.1)Interest on borrowings 10,468 6,945 50.7Foreign exchange (gain)/loss (5,804) 51 N.M.

* Higher charges for 1Q 2008 due to expanded E&P activities

(b) Earnings per ordinary share

First Quarter

31.03.08 31.03.07 +/(-)%

Earnings per ordinary share of the Group based on net profitattributable to shareholders and on the weighted averagenumber of ordinary shares (excluding treasury shares):

- Basic 19.08 cts 21.73 cts (12.2)- Diluted 19.07 cts 21.71 cts (12.1)

(c) There were no bad debts written off during the period and during the corresponding period of thepreceding year.

(d) There were no exceptional items nor extraordinary items during the period and during the correspondingperiod of the preceding year.

(e) Where necessary, comparative figures have been adjusted to conform with changes in presentation inthe current period.

N.M. = Not Meaningful


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2 BALANCE SHEETS

Group Company31.03.08 31.12.07 31.03.08 31.12.07

$000 $000 $000 $000Current assetsCash and bank balances 476,547 475,090 424,759 412,945Trade and other receivables 1,189,448 1,357,532 1,552,526 1,786,902

Inventories 982,544 901,301 958,599 877,622Other assets 11,179 22,465 7,300 4,343Derivative financial instruments 10,286 7,753 9,324 7,753

2,670,004 2,764,141 2,952,508 3,089,565

Non-current assetsInvestments in associates and joint ventures 129,446 126,674 107,925 107,925Investments in subsidiaries - - 147,903 147,903Financial assets 33,092 30,199 28,063 25,116Restricted cash deposit 4,324 4,324 - -Intangible exploration assets 121,739 119,528 - -Property, plant and equipment 1,182,144 1,214,576 721,527 715,226Loan to an investee company 46,592 48,710 - -

1,517,337 1,544,011 1,005,418 996,170

Total assets 4,187,341 4,308,152 3,957,926 4,085,735

Current liabilitiesTrade and other payables 1,120,363 1,428,679 1,127,600 1,415,935Current income tax liabilities 79,121 79,591 72,721 69,190Derivative financial instruments 26,942 13,600 26,852 13,505Borrowings* 914,928 836,760 886,262 826,329

2,141,354 2,358,630 2,113,435 2,324,959

Non-current liabilitiesProvision for retirement benefits 7,059 6,973 7,059 6,973Provision for asset retirement obligations 1,992 2,046 - -Deferred income tax liabilities 152,052 149,858 78,304 75,851Other non-current liabilities 145 152 - -

161,248 159,029 85,363 82,824

Total liabilities 2,302,602 2,517,659 2,198,798 2,407,783

Net assets 1,884,739 1,790,493 1,759,128 1,677,952

Share capital and reservesShare capital 618,179 618,139 618,179 618,139Treasury shares (1,091) (8,397) (1,091) (8,397)Capital reserve 1,182 1,182 - -Foreign currency translation reserve (38,039) (29,813) - -Other reserves 12,619 20,668 11,575 19,256Retained earnings 1,291,492 1,188,264 1,130,465 1,048,954Equity attributable to equity holders of the Company 1,884,342 1,790,043 1,759,128 1,677,952Minority interests 397 450 - -

Total equity 1,884,739 1,790,493 1,759,128 1,677,952

* Included short-term borrowings is an amount of $478.9 million (31 December 2007: $299.1 million) from arelated party.

Other changes in the balance sheet components were due to normal ongoing operations.


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NOTES TO BALANCE SHEETS

(a) Groups borrowings and debt securities

(i) Amount repayable in one year or less, or on demand

As at 31.03.08 As at 31.12.07

Secured Unsecured Secured Unsecured

$000 $000 $000 $000

- 914,928 - 836,760

(ii) Details of any collaterals

Fixed deposit of a subsidiary was pledged as security for a short-term loan facilities granted toanother subsidiary.

(b) Net asset value

Group Company

31.03.08 31.12.07 +/(-)% 31.03.08 31.12.07 +/(-)%

Net asset value per $3.65 $3.48 4.9 $3.41 $3.26 4.6ordinary share*

* Based on issued share capital of 516,130,257 ordinary shares (excluding treasury shares) on issue asat the end of the period. (31 December 2007: 514,708,357 ordinary shares)


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3 CONSOLIDATED CASH FLOW STATEMENT

Quarter Ended

31.03.08 31.03.07$000 $000

Operating activitiesNet profit 98,429 112,096Adjustments for:- Income tax 22,443 5,816- Depreciation of property, plant and equipment 42,109 12,661- Finance income (2,782) (3,819)- Interest expense 10,468 6,945- Share-based payment expense 4,112 1,406- Write-back of impairment of other investments - (61)- Impairment of investment in joint venture - 509- Changes in fair value of derivative financial instruments 12,106 24,244- Gain on disposals of financial assets, available-for-sale (306) -- Loss on disposal and write-off of property, plant and equipment - 47- Gain on disposal of a joint venture company - (5,291)- Share of results of associates - (547)- Share of results of joint ventures (2,773) (3,136)

Operating cash flow before working capital changes 183,806 150,870

Changes in operating assets and liabilities- Trade and other receivables 183,115 286,841- Inventories (82,088) (33,862)- Other assets 10,875 (469)- Trade and other payables (298,362) (328,980)- Foreign currency translation 4,883 6,956Cash generated from operations 2,229 81,356Income tax paid (17,991) (6,930)

Net cash (used in)/provided by operating activities (15,762) 74,426

Investing activitiesPurchases of property, plant and equipment (30,030) (13,359)

Purchases of exploration assets (7,461) -Proceeds from sale of financial assets, available-for-sale 1,230 -Interest received 2,550 3,184Acquisition of available-for-sale investments (4,254) (9,923)

Net cash used in investing activities (37,965) (20,098)

Financing activitiesProceeds from issuance of ordinary shares 40 658Proceeds from short-term borrowings 77,714 -Repayment of borrowings (short-term unsecured bank loans) - (6,089)Interest paid (22,570) (10,066)

Net cash provided by/(used in) financing activities 55,184 (15,497)

Net increase in cash and cash equivalents 1,457 38,831

Cash and cash equivalents at beginning of period 458,172 421,218Cash and cash equivalents at end of period 459,629 460,049


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4a STATEMENT OF CHANGES IN EQUITY OF THE GROUP

ShareCapital

TreasuryShares

CapitalReserve

ForeignCurrency

TranslationReserve

OtherReserves

RetainedEarnings

Attributabto equity

holders othe

Compan$000 $000 $000 $000 $000 $000 $000

Balance as at 1 January 2007 617,278 (8,140) 1,182 (17,423) 14,477 963,061 1,570,43Fair value gains on financial assets, - - - - 876 - 87available-for-saleTransfer between reserves for share - 7,326 - - (7,873) 547 awards/optionsCurrency translation differences - - - (1,889) - - (1,88Net gains/(losses) recognised directly - 7,326 - (1,889) (6,997) 547 (1,01in equityNet gains recognised in income - - - - - 112,096 112,09statementTotal recognised gains/(losses) - 7,326 - (1,889) (6,997) 112,643 111,08

Employee share awards and share 658 - - - 1,406 - 2,06options scheme value of employee

rvices

se

Balance as at 31 March 2007 617,936 (814) 1,182 (19,312) 8,886 1,075,704 1,683,58

Balance as at 1 January 2008 618,139 (8,397) 1,182 (29,813) 20,668 1,188,264 1,790,04

Fair value losses on financial assets, - - - - (109) - (10available-for-saleTransfer between reserves for share - 7,306 - - (12,052) 4,746 awards/optionsCurrency translation differences - - - (8,226) - - (8,22

Net gains/(losses) recognised directly - 7,306 - (8,226) (12,161) 4,746 (8,33in equityNet gains/(losses) recognised in - - - - - 98,482 98,48income statementTotal recognised gains/(losses) - 7,306 - (8,226) (12,161) 103,228 90,14

Employee share awards and share 40 - - - 4,112 - 4,15options scheme value of employee

rvices

se

Balance as at 31 March 2008 618,179 (1,091) 1,182 (38,039) 12,619 1,291,492 1,884,34


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4b STATEMENT OF CHANGES IN EQUITY OF THE COMPANY

ShareCapital

TreasuryShares

CapitalReserve

ForeignCurrency

TranslationReserve

OtherReserves

RetainedEarnings Total

$000 $000 $000 $000 $000 $000 $000

Balance as at 1 January 2007 617,278 (8,140) - - 14,052 863,441 1,486,631Fair value gains on financial - - - - 680 - 680assets, available-for-saleTransfer between reserves for - 7,326 - - (7,873) 547 -share awards/optionsNet gains/(losses) recognised - 7,326 - - (7,193) 547 680directly in equityNet gains recognised in income - - - - - 99,545 99,545statementTotal recognised gains/(losses) - 7,326 - - (7,193) 100,092 100,225

Employee share awards and 658 - - - 1,406 - 2,064share options scheme value

of employee servicesBalance as at 31 March 2007 617,936 (814) - - 8,265 963,533 1,588,920

Balance as at 1 January 2008 618,139 (8,397) - - 19,256 1,048,954 1,677,952Fair value gains on financial - - - - 259 - 259assets, available-for-saleTransfer between reserves for - 7,306 - - (12,052) 4,746 -share awards/optionsNet gains/(losses) recognised - 7,306 - - (11,793) 4,746 259directly in equityNet gains recognised in income - - - - - 76,765 76,765statementTotal recognised gains/(losses) - 7,306 - - (11,793) 81,511 77,024

Employee share awards and 40 - - - 4,112 - 4,152share options scheme valueof employee servicesBalance as at 31 March 2008 618,179 (1,091) - - 11,575 1,130,465 1,759,128

c SHARE CAPITAL

During the quarter, the Company issued and alloted 27,000 ordinary shares upon the exercise of options grantedunder the SPC Share Option Scheme. As at 31 March 2008, there were unexercised options for 324,000 ordinaryshares under the SPC Share Option Scheme.

During the quarter, the Company utilised 1,394,900 treasury shares for the shares awarded under the SPCRestricted Share Plan and SPC Performance Share Plan. As at 31 March 2008, a balance of 203,100 ordinary

shares remained as treasury shares.

The issued share capital of the Company as at 31 March 2008 was 516,130,257 ordinary shares (excludingtreasury shares).


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5 AUDIT

The figures have not been audited nor reviewed.

6 AUDITORS REPORT

Not applicable.

7 ACCOUNTING POLICIES

The Group has applied the same accounting policies and methods of computation in the financial statementsfor the current financial period compared with those of the audited financial statements as at31 December 2007.

8 CHANGES IN ACCOUNTING POLICIES

None.

9 REVIEW OF GROUP PERFORMANCE

First Quarter Review

The SPC Group recorded a sales turnover of $2.7 billion and a net profit after tax and minority interests (PATMI)of $98.4 million for 1Q 2008.

The rising oil prices appear not to have dampened demand for refined petroleum products in 1Q 2008. TheGroup handled a total crude and product sales volume of 19.3 million barrels for 1Q 2008 compared to20.5 million barrels for 1Q 2007, a year on year decline of 5.8%. This was due mainly to the reduction of fuel oiltrading volume in 1Q 2008 as a result of the shortage of suitable blending components and fewer cargoescoming from the Middle East.Speculative activities, geopolitical tensions and fears of inventory shortfalls caused oil prices to reach recordlevels in the first quarter. Thus, despite the lower sales volume and a lower US$, the Groups turnover of

S$2.7 billion was an increase of 41.0% over 1Q 2007. Realisations during the quarter averaged US$98.47 perbarrel compared to US$61.13 per barrel for 1Q 2007, an increase of 61.1%.

The Group continues to optimise its refining capacity during the quarter. Crudes processed during the quartertotalled 12.4 million barrels against the 13.3 million barrels for the corresponding quarter in 2007. The decline of6.8% in the volume of crudes processed was due to lighter crudes and more feedstocks processed. During thequarter, available crude capacity was also lower as a result of various upgrading units in the refinery being shutdown for minor maintenance.

With firm product demand, the Group was able to achieve an average refining margin of US$7.00 per barrel forthe quarter, comparable to the margin achieved in 1Q 2007.

Share of results of joint ventures was lower during the quarter. In 1Q 2007, there was a write-back of deferredtax for a Singapore-incorporated joint venture due to the reduction of corporate tax rate from 20% to 18%.

At the Group level, while the profit before tax of $120.9 million achieved for 1Q 2008 was an improvement over$117.9 million for the corresponding period, the income tax expense for 1Q 2008 was substantially higher than in1Q 2007. This was mainly due to the deferred tax write-back of $10.5 million in 1Q 2007 as a result of thelowering of the Singapore corporate tax rate. Income tax expense was also higher due to the increasedcontribution to the bottom line from the exploration and production (E&P) segment. Of the $22.4 million taxexpense, $16.5 million was for E&P activities.


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As a result of the higher income tax expense, the Groups PATMI for 1Q 2008 was $98.4 million, a decline of12.2% against 1Q 2007 PATMI.

Downstream activities contributed $2,619.9 million in turnover and an operating profit of $81.8 million, while E&Pactivities contributed $94.0 million in turnover and $38.2 million in operating profits for 1Q 2008.

10 VARIANCE FROM PROSPECT STATEMENT

No variance.

11 PROSPECTS

Continuing high oil and commodity prices are expected to affect global GDP growth negatively. The IMF recentlylowered its GDP growth forecast for 2008 to 3.7%.

Against this expected slowdown of the global economy, demand for refined petroleum products may soften in thenext few quarters. However, global refining capacity remains constrained and refining margins are expected tobe well supported.

SRC will be shutting down the Catalytic Refomer Unit (CRU) and the Hydrocracker 2 Unit (HCU) during April andMay for a scheduled plant maintenance. SRC crude processing capacity would be lowered by around 3% for thesecond quarter as compared to the first quarter. The planned maintenance exercise is not expected tosignificantly affect SPCs operations as the Group will have sufficient inventory during this period to cater tomarket demand.

We continue to pursue E&P opportunities in line with the Groups strategic vision.

12 DIVIDEND

(a) Current Financial Period Reported On

Any dividend recommended for the current financial period reported on? None.

(b) Corresponding Period of the Immediately Preceding FinancialYearAny dividend declared for the corresponding period of the immediately preceding financial year? None.

(c) Date payable

Not applicable.

(d) Books closure date

Not applicable.

(e) If no dividend has been declared/recommended, a statement to that effect

No interim dividend for the period ended 31 March 2008 is recommended nor declared.


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-

13 INTERESTED PERSON TRANSACTIONS

Name of Interested Persons

Aggregate value of allinterested person

transactions during the

financial period (excludingtransactions less than$100,000 and transactions

conducted undershareholders mandatepursuant to Rule 920)

Aggregate value of allinterested person

transactions conducted

under shareholdersmandate pursuant toRule 920 during the

financial year (excludingtransactions less than

$100,000)

1Q 2008 1Q 2007 1Q 2008 1Q 2007$000 $000 $000 $000

A Sales of Goods and Services

1 Keppel Corporation Group - - 4,277 1,9082 Singapore Airlines Group - - 142,461 101,5743 SembCorp Marine Group - - 9,282 5,2364 Temasek Holdings Group

(other than the above)

- - 621 15,756

- - 156,641 124,474

B Purchase of Goods and Services

5 Keppel Corporation Group - - 108 1426 PSA Corporation Group - - 2,565 2,2847 Temasek Holdings Group - - - 7,374

(other than the above)

- - 2,673 9,800

C Treasury Transactions

8 Keppel Corporation Group - - 1,884 2,553

D Management and Support Services

9 Keppel Corporation Group - - 125 125

- - 161,323 136,952

BY ORDER OF THE BOARD

Helen Chong/Lee Seok HianSecretaries22 April 2008


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SPC 1Q2008 Financial Statements (22 April 2008)

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