ANNUAL REPORT 2022
OUR CORPORATE PURPOSE It is the unifying purpose that aligns everything we do. Harness technology and innovation to enable a more secure and sustainable world OUR GROUP ASPIRATION It is the singular winning long-term goal that all our businesses follow. Become a global technology, defence and engineering powerhouse OUR CORE VALUES Our Core Values guide every aspect of our business and are embedded in our culture – from the people we hire, to the way we work with each other and how we engage our partners and customers. Value Creation Courage Compassion Commitment Integrity
ST Engineering is a global technology, defence and engineering group with a diverse portfolio of businesses across the aerospace, smart city, defence and public security segments. The Group harnesses technology and innovation to solve real-world problems, enabling a more secure and sustainable world. Headquartered in Singapore, we employ about 25,000 people across our network of subsidiaries and associated companies in Asia, Europe, the Middle East and the U.S., serving customers in more than 100 countries. We rank among the largest companies listed on the Singapore Exchange and are a component stock of the FTSE Straits Times Index, Dow Jones Sustainability Asia Pacific Index, iEdge SG ESG Transparency Index and iEdge SG ESG Leaders Index. CONTENTS CORPORATE OVERVIEW Financial Highlights 02 Letter to Shareholders 04 Farewell Note by Kwa Chong Seng, Board Chairman 12 Corporate Information 13 Board of Directors 14 Directors Seeking Re-election 21 Group Executive Committee 24 PERFORMANCE REVIEW Tech & Innovation 26 Operating Review & Outlook Commercial Aerospace 28 Urban Solutions & Satcom 36 Defence & Public Security 44 Financial Review 52 Investor Relations 60 Awards Highlights 62 SUSTAINABILITY Board Statement 65 Environment 68 Social 70 Governance 79 Corporate Governance Report 79 FINANCIAL REPORT Directors' Statement 110 Independent Auditor’s Report 125 Consolidated Income Statement 132 Consolidated Statement of Comprehensive Income 133 Consolidated Statement of Financial Position 134 Consolidated Statement of Changes in Equity 136 Consolidated Statement of Cash Flows 140 Notes to the Consolidated Financial Statements 142 Statement of Financial Position of the Company 264 Notes to the Statement of Financial Position of the Company 265 Shareholding Statistics 269 SGX Listing Rules Requirement 271 CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 01
FINANCIAL HIGHLIGHTS ORDER BOOK $23.0b 2021: $19.3b +19% EARNINGS PER SHARE 17.18¢ 2021: 18.30¢ -6% -6% PROFIT BEFORE TAX $597.5m 2021: $637.6m 2021: $570.5m $535.0m -6% NET PROFIT 2021: $7.7b REVENUE $9.0b +17% +7% 2021: 15.0¢ DIVIDENDS PER SHARE 16.0¢ 2021: $1,071.7m EBITDA $1,252.0m +17% -6% 2021: 23.6% RETURN ON EQUITY 22.3% NM 2021: 2.4% TOTAL SHAREHOLDER RETURNS -4.7% NM: not meaningful Commercial 6.0 2022 4.8 2021 Defence 3.0 2.9 2021 2022 REVENUE BY TYPE* ($b) * Refers to revenue by products and services type. 02 ST ENGINEERING ANNUAL REPORT 2022
18% Europe 50%Asia 7% Others 25%U.S. REVENUE BY CUSTOMER LOCATIONS 2022 55 41 4 $735.1m 2022 ($m) 2021 ($m) Commercial Aerospace 300.9 181.9 Urban Solutions & Satcom 29.2 25.8 Defence & Public Security 405.0 466.0 $673.6m EBIT BY SEGMENT (%) $9,035m 2022 ($m) 2021 ($m) Commercial Aerospace 2,991 2,465 Urban Solutions & Satcom 1,772 1,191 Defence & Public Security 4,272 4,038 2022 47 33 20 $7,693m REVENUE BY SEGMENT (%) 15 53 32 2021 69 27 4 2021 Amounts may not add to totals shown due to rounding. CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 03
KWA CHONG SENG Chairman Non-Executive Independent Director VINCENT CHONG SY FENG Group President & CEO Executive Director LETTER TO SHAREHOLDERS ...our strategy for achieving sustainable growth is on track given our achievements in recent years. Dear Shareholders 2022 was a year marked by considerable challenges but also significant opportunities. Even as much of the world recovered from the COVID pandemic, geopolitical stability was shaken by the conflict in Ukraine. Businesses grappled with energy price volatility, higher inflation, supply chain disruptions, global chip shortages and rising interest rates. In such an environment, while we were cautious because of the short-term market outlook, we continued to take the long view. Ever since we embarked on our journey to transform ST Engineering, the Board 04 ST ENGINEERING ANNUAL REPORT 2022
and management team have demonstrated our commitment to making measured and sound decisions — reinforced by a willingness to take calculated and calibrated risks — to achieve our strategic long-term objectives. At Investor Day 2018, we unveiled our plans to seek growth in selected domains while streamlining our portfolio, and at Investor Day 2021, we refreshed our five-year (2022-2026) mid-term targets to place the Group on a clear path forward in a continuously evolving world, post-COVID. Our aim is that by 2026 (using 2020 as the base year), we will have grown our revenue at a CAGR of two to three times global GDP growth rate, which would translate to a Group revenue of more than $11b by the end of the five-year plan, with net profits expected to grow in tandem. By 2026, we expect annual revenue from our Commercial Aerospace segment to exceed $3.5b, and annual revenue of our Smart City business to more than double to $3.5b. In addition, we expect that the annual revenue from our digital business — comprising the Cloud, AI Analytics and Cyber businesses — to triple to more than $500m. We are confident that our strategy for achieving sustainable growth is on track given our achievements in recent years, especially our resilience against the COVID pandemic. Our results speak for themselves. In 2022, Group revenue was $9.0b while Group EBIT and Group Net Profit were $735m and $535m respectively. Between 2020 (the start of the pandemic) and 2022, Group revenue grew 26%, while our underlying operating performance (excluding government support) at Group EBIT and Group Net Profit levels was three times as strong. This recovery is significant given that more than 40% of our business was directly and negatively impacted by the pandemic. We closed 2022 with total contract value of $13.1b as all business segments maintained good contract win momentum, and a Group order book of $23b, which was 19% higher than the prior year and 50% stronger than when we went into 2020 at the start of COVID-19. Our robust order book, a leading indicator of growth, points to stronger business activities across all our segments. It also reflects a sharper focus on our customers, enabled by a more effective organisation structure put in place two years ago. SIGNIFICANT HIGHLIGHTS IN 2022 Highlights include the completion of the acquisition of TransCore, and major contract wins in all business segments, including international defence business which gained traction in the Middle East. Our Airbus Passenger-to-Freighter (P2F) conversion programme continued to book new orders and improved its gross profit margin as new conversion sites mature. At the same time, we have also divested ourselves of businesses that no longer fit our long-term strategic objectives, such as the U.S. Marine business. These achievements are important milestones towards our 2026 goals. Stronger Smart Mobility business. We completed the acquisition of TransCore in midMarch 2022 and immediately focused on transitioning the business into the Group. We are pleased to report that, as planned, our investment in TransCore turned cash flow positive at the close of 2022, and we expect this acquisition to be earnings accretive to the Group from its second year. TransCore’s steadfast focus on customer excellence ensured continuity in project execution and strong contract wins as demonstrated by the significant contracts it secured in late 2022 to modernise the tolling infrastructure in New Jersey. We plan to grow the TransCore business outside of the U.S., bringing its strengths in design and build as well as operations and maintenance of endto-end tolling solutions, into We closed 2022 with a Group order book of $23b…50% stronger than when we went into 2020 at the start of COVID-19. CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 05
LETTER TO SHAREHOLDERS Southeast Asia, leveraging our strong track record built over the years in providing a strong suite of transportation solutions in these cities. Beyond TransCore, our Smart Mobility business has been winning contracts for landmark projects around the world. Headlining our wins in 2022 was the contract for the new Kaohsiung MRT Yellow Line in Taiwan, where we will provide turnkey rail services and serve as overall project management and systems integration lead as part of a consortium with Siemens Mobility and Stadler Rail. These developments bring us closer to becoming a market leader in Smart Mobility and will help us to build up our position in the Smart City space. Airbus P2F conversion business takes off. According to IATA, 2022 was one of the strongest years for the air cargo industry. Unsurprisingly then, it was a big year for our Airbus P2F conversion business. At the programme level, we also turned gross profit margin positive in the last quarter of 2022, a significant milestone. We completed our family of Airbus converted freighters solution suite when we redelivered our first freighter based on our A320P2F programme in July 2022. Other platforms within the family — the A330-300P2F, A330-200P2F and A321P2F — were redelivered in 2017, 2018 and 2020 respectively. Conversion slots for our A320/321P2F and A330P2F are fully booked through 2026. Freighter conversion is our core competency, and we have invested in the Airbus P2F conversion capability and business well before COVID-19 expecting it to be profitable over the long run. While pent-up demand from the COVID pandemic may eventually subside, fundamental demand is still strong as freighter capacity planning by freighter airlines is long-term in nature, riding over multiple economic cycles. This is also the reason we have increased our conversion capacity across our global network by adding Shanghai and Mobile, Alabama to our conversion sites in San Antonio, Texas; Dresden, and Singapore. To meet strong demand, we are collaborating with Turkish Technic and Ameco as third-party conversion houses to provide conversion services for our A330P2F programme. At the time of writing this letter, we announced our intent to collaborate with Sichuan Haite Hi-Tech for it to carry out conversions for our A321P2F programme. These developments augur well for our Commercial Aerospace business, which is well on its way to achieving our 2026 target of more than $700m of annual revenue from the freighter conversion business. Disciplined portfolio management continues. After a thorough review, we divested our U.S. Marine business, following years of challenges and losses in operating the shipbuilding and ship/rig repair businesses despite significant efforts to turn them around. The divestment enabled us to avoid future losses, while enabling management to focus on growth businesses. In late 2022, we also decided to wind up our Autonomous (AV) Bus unit that was started in late 2015. We still firmly believe that autonomous buses are closer to being commercialised compared to other types of autonomous vehicles. The business needs are evident and the path to reaching the required levels of performance are also better known and more attainable. While we have made considerable technological progress, there are still technical and operational milestones to be reached. As the financial resources needed for this continuing effort are significant, after careful evaluation, we decided to withdraw from further AV bus development. Our robust order book, a leading indicator of growth, points to stronger business activities… 06 ST ENGINEERING ANNUAL REPORT 2022
Hence, future capex needed for this wound-up AV Bus business, and that of the U.S. Marine business will be avoided. In the six years since 2016 when we started our portfolio rationalisation, we have divested or closed 16 businesses including these two. As the operating environment for each line of business evolves, we will continue to prioritise businesses that play to our strengths, are attractive and are scalable. This way, our portfolio will be highgraded and will remain resilient in generating value for shareholders, customers and employees alike. Innovation culture to sustain technology and engineering core. As a technology, defence and engineering Group, we understand the need to sustain our technology and engineering core and we have committed to invest up to 5% of our annual revenue on R&D, of which up to 75% will be spent on digital technologies. In addition, we continue to strengthen our engineering talent pool, attracting and recruiting the best in our journey to build a world-class team. For years, we have been driving innovation, establishing strategic collaborations, and sustaining an innovation culture that helps our engineers to expand their competencies as part of their professional development. We have an integrated framework on how we think about innovation. This framework can take numerous forms and produces an array of outcomes. In providing a failuretolerant space, our employees and engineers can better experiment, harness their creativity, and redefine boundaries. It is also in We will continue to prioritise businesses that play to our strengths, are attractive and are scalable. these spaces that we can unleash and take advantage of our collective genius. In line with this, we have numerous innovation awards to recognise our employees and to encourage them to innovate. The Best-of-Best Continuous Improvement Awards seek to showcase the most outstanding improvements to work processes and drive cost efficiencies and excellence in whatever we do. The InnoChamp Awards recognise teams behind products, services, or business ideas that have been successfully launched within the last 12 months, while the In.Vent Awards focus on new venture innovations where teams are assessed on customer desirability, technical viability and business feasibility. 2022 FINANCIALS: STRONG RECOVERY IN UNDERLYING OPERATING PERFORMANCE ST Engineering posted a 17% year-on-year (y-o-y) increase in Group revenue to $9.0b from $7.7b. Group EBIT improved 9% y-o-y to $735m from $674m despite a reduction of $203m in government support1. On a base operating performance (BOP) basis, excluding government support, energy inflation impact and TransCore transaction and integration (T&I) expenses, as well as the positive impact of a pension restructuring cost savings, Group EBIT increased by 55% y-o-y to $727m. This result was achieved through cost saving initiatives and business growth. Group PBT was $597m, down 6% y-o-y from $638m and Group Net Profit was $535m, down 6% y-o-y from $571m, largely due to the virtual absence of government support in 2022. On a BOP basis, Group PBT and Group Net Profit each grew by close to 40%, on the back of cost saving initiatives and business growth. Commercial Aerospace, Urban Solutions & Satcom and Defence & Public Security accounted for 33%, 20% and 47% of revenue respectively. By geography, customers from Asia, including Singapore accounted for 50% (compared to 58% in 2021), while customers from the U.S. and Europe accounted for 25% and 18% (was 20% and 16% respectively in 2021). The remaining 7% customers were 1 All mentions of government support refer to COVID-19 related government support only CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 07
LETTER TO SHAREHOLDERS from the rest of the world. By products and services type, Commercial revenue was $6.0b and Defence revenue was $3.0b. Our performance at the business segment level also showed strength in key areas. Revenue for Commercial Aerospace segment was $3.0b, up 21% from $2.5b though the aviation industry has yet to recover fully to pre-COVID level. EBIT grew 65% y-o-y to $301m from $182m, despite a $150m reduction in government support y-o-y, due to cost saving initiatives and business recovery. The aviation industry gained momentum in its recovery from COVID-19 as travel restrictions across the world were further lifted, leading to the reopening of more routes. Increased demand for air passenger and air cargo also spurred new aircraft orders and freighter conversions, signalling confidence in the sustainable growth of air passenger and air freight postCOVID. Our Aerostructures and Systems business saw several new developments during the year. The manufacturing business recovered steadily as the production rate improved in line with rising demand from OEMs. In addition, as mentioned earlier, the freighter conversion business also continued growing, with strong customer demand. Returning MRO demand was reflected in the healthy utilisation rate of all our facilities, which maintained, on average, an above 80% rate in 2022. Our airframe hangars were operating mostly at near full capacity. We expect to see further recovery in aviation in 2023, especially in the Asia Pacific region. The reopening of China will also present more opportunities, enabling our local operations to go back to full capacity sooner and help raise the efficiency of our MRO output. Revenue for Urban Solutions & Satcom segment grew 49% y-o-y to $1.8b from $1.2b, with contribution from TransCore. The segment EBIT was $29m, up 13% y-o-y from $26m despite TransCore T&I expenses, and in spite of Satcom’s weakness resulting from the impact of global chip shortages and its higher investment in product development. As part of returning to normalcy post-COVID, we saw a resumption of investments by some governments into infrastructure development. This led to more opportunities for large-scale projects, especially in the areas of Smart Mobility, IoT and Smart Security. Our Mobility Rail business continued to win contracts for landmark projects around the world that underscore our competitive differentiation and demonstrate our ability to move up the value chain. Our AGIL® Smart Street Lighting control solutions continue to gain traction in various parts of the world, reinforcing our credentials in quality solutions that deliver superior lighting performance, reduce energy consumption and ease maintenance regimes. While our Satcom business saw a gradual pickup in most of its markets, the global chip shortages continued to weigh down this business. Specific components used in our satcom products were still experiencing shortages due to imbalances of chip inventories. Even with mitigation measures to reduce business impact, we expect the shortage in chips on our Satcom business to improve only in 2023. Meanwhile, we have increased our investments in product development to better position our Satcom business towards virtualisation and the cloud as the industry moves towards a new hybrid of satellite and terrestrial Cloud and 5G networks. We have committed to invest up to 5% of our annual revenue on R&D, of which up to 75% will be spent on digital technologies. 08 ST ENGINEERING ANNUAL REPORT 2022
Revenue for our Defence & Public Security (DPS) segment grew 6% y-o-y to $4.3b from $4.0b with contribution from all its sub-segments: Digital Systems & Cyber, Defence Aerospace, Land Systems and Marine. The segment EBIT was down 13% y-o-y to $405m from $466m in the absence of $51m government support received in the prior year and a $23m impact from energy inflation. If these factors were excluded, DPS EBIT would be 3% stronger y-o-y. Geopolitical conflicts have increased the importance of national security and defence, leading many countries to expand their defence budgets. This translates into greater export opportunities for our International Defence business. We have identified opportunities that are compatible with our flagship platforms and solutions, including the Bronco All Terrain Tracked Carrier and its commercial variant, ExtremV that is designed for humanitarian assistance and disaster relief missions. The defence business pipeline has a long gestation period though, and it will take several years before these efforts show results. One of our multi-year business development efforts did bear fruit in the Middle East. In 2022, we formed a notable defence partnership with Saudi Arabian Military Industries, consistent with our go-to-market approach of tapping on local defence champions to deliver differentiated defence solutions. Concurrently, we also won a set of new defence contracts worth over $300m from a customer in the Middle East. Meanwhile, the Falaj 3-class Offshore Patrol Vessels project in UAE that we secured in 2021 is tracking well and has progressed to the Critical Design Review phase. In previous annual reports, we mentioned that, together with Oshkosh Defense, we were bidding to produce the ColdWeather All-Terrain Vehicle for the U.S. Army. Unfortunately, we were not successful in this bid despite delivering a competitive platform which met all technical and performance requirements. This experience, though, has been a valuable one, and we will learn from this and strive to make better inroads in this market segment. On our Digital business, we continue to build up our core competencies in operational technology and cybersecurity to help governments and enterprises strengthen their security and protect their critical operating systems and data from evolving and complex threats. Digital business comprising Cloud, AI Analytics and Cyber businesses achieved a revenue of $385m in 2022, or more than doubled the revenue in 2020, on track to well exceed its 2026 target of $500m. Our business updates and outlook are covered in the Operating Review and Outlook section on pages 28 to 51. OPERATING MORE EFFICIENTLY We reduced our unit operating expenses (per unit revenue)1 to 11.7% in 2022 from 12.0% in 2021, and from 12.2% recorded in 2019 before the pandemic. We achieved this because of the Group’s continued structural cost and operational efficiency capture, notwithstanding general inflationary pressure. Capex in 2022 was about $760m, with a large part spent on supporting our Aviation Asset Management business for which we have near-term plans to securitise and recycle capital. Other portions of the capex went into supporting businesses across the Group, including the construction of new hangars. On a base operating performance basis, Group PBT and Group Net Profit each grew by close to 40%, on the back of cost saving initiatives and business growth. 1 Excludes M&As transaction expenses CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 09
LETTER TO SHAREHOLDERS BALANCED DEBT PROFILE Post-TransCore acquisition, our balance sheet remained strong, with Aaa and AA+ ratings by Moody’s and S&P respectively. 2022 operating cash flow decreased compared to 2021 due to higher net working capital to support growth in revenues as business recovery continues. We issued US$700m in 5-year bonds and US$300m in 10-year bonds in May 2022 to partially term out the bridge financing for the TransCore acquisition. Looking at our debt interest rate profile, 53% of our debt is based on fixed rates while 47% is based on floating rates as of end 2022. We believe this is a balanced ratio, and this approach allows us to reduce interest expense volatility in both rising and falling interest rate environments. The Group’s weighted average cost of borrowing for FY2022 was 2.4%, a marginal increase compared to 2.3% in 2021. The weighted average borrowing cost of our existing fixed rate borrowings, comprising mainly bonds, lease obligations and fixed rate loans, is around mid-2%. We continue to work towards reducing capital employed in our Group as appropriate, undertaking measures such as net working capital optimisation, portfolio rationalisation, and asset securitisation of our Aviation Asset Management business. ENHANCING ESG EFFORTS In 2022, we made substantial headway in our sustainability aspirations. In our 2022 Sustainability Report, we published our inaugural Task Force on Climate-related Financial Disclosures (TCFD) report. We also expanded the proportion of sustainability metrics linked to employee performance and developed a mandatory sustainability training module for all employees. We strengthened our Supplier Code of Conduct and increased our engagement with suppliers on ESG considerations. ST Engineering has also been included as a constituent of the Dow Jones Sustainability Index Asia Pacific, representing the top 20% of the 600 largest ESGfocused companies in the region. As well as the value delivered to shareholders, we made significant contributions to the communities where we operate. We serve our communities through a combination of volunteer work, skills-based contributions, as well as in-kind and monetary support to build an inclusive, resilient and vibrant society. We actively promote a purpose-driven giving culture through corporate initiatives and volunteerism among our employees. We are honoured to be recipients of the National Awards (COVID-19) for our Group’s contributions to Singapore’s fight against COVID-19. The awards recognise the great teamwork and solidarity that our people demonstrated as they helped our customers and the community respond quickly to pandemic-related challenges. A special mention goes to our respiratory protection team for their tremendous efforts and ‘can do’ spirit in establishing local medical-grade surgical mask manufacturing capabilities from the ground up, helping to steer Singapore towards greater selfreliance in respiratory masks. BOARD RENEWAL In 2022, we made various changes to the Board. In April, Joseph Leong Weng Keong resigned. He had been a non-independent and non-executive director since June 2019. Teo Ming Kian was appointed as deputy chairman of the Board. Kevin Kwok, who was a member of the Audit Committee (AC), assumed the role of AC chairman in place of Quek See Tiat who relinquished his AC membership. In July, Quek See Tiat was re-designated as a nonindependent and non-executive director following his nine-year tenure on the Board. Read our 2022 Sustainability Report 10 ST ENGINEERING ANNUAL REPORT 2022
We remain steadfast in focusing on achieving sustainable business results based on our well-defined growth strategy. CREATING VALUE NOW AND BEYOND The Board of Directors has proposed a final dividend of 4.0 cents per share. Together with the quarterly interim dividends of 12 cents per share paid in 2022, the total dividend for 2022 will be 16 cents per share, after consistently paying 15 cents per share even in the depths of the COVID pandemic in 2020 and 2021. This translates to a dividend yield of 4.5%, computed using the average closing share price of the last trading day of 2022 and 2021. Notwithstanding our consistent and recently increased dividend payments, we will continue to work towards strengthening longterm shareholder returns across business and economic cycles. We remain steadfast in focusing on achieving sustainable business results, based on our well-defined growth strategy with clear midterm revenue and profit targets. We are executing well against our strategic plan, and our track record of producing results puts us in good stead to deliver shareholder value now and in the years ahead. ST Engineering is a Group with a vision, a clear roadmap and the wherewithal to achieve longterm sustainable growth. With the support of our shareholders, customers and employees, we will continue to shape ST Engineering into becoming a global technology, defence and engineering powerhouse. VINCENT CHONG SY FENG Group President & CEO Executive Director KWA CHONG SENG Chairman Non-Executive Independent Director 28 February 2023 CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 11
FAREWELL NOTE BY KWA CHONG SENG, BOARD CHAIRMAN Dear Shareholders As part of Board renewal, I am stepping down as Chairman of ST Engineering after being a director for 10 years, with nine of those years as Chairman. As such, this is my last letter to you. Teo Ming Kian, who was appointed as an independent director in August 2021 and Deputy Chairman since April 2022, will succeed me as Board Chairman. During my service with the Group, I have witnessed the transformation of ST Engineering as it set its sights on pursuing global success and sustainable long-term growth. Many major initiatives undertaken are foundational to the Group’s future. First of all, the management team made significant changes to strengthen the Group. We simplified the Group’s business structure, reduced the number of legal entities by streamlining its business portfolio, set up corporate shared services functions and harmonised over 30 corporate brands to one ST Engineering masterbrand. In 2021, the Group reorganised its legacy structure into one that is customer-centric and that facilitates growth in its core business, as well as in Smart City and International Defence businesses. The legacy structure had served us well, but in an evolving external environment, it had to be adjusted to better enable the execution of our global growth strategy. The re-tooled Group is now more focused, and thus, better able to adapt to fast-changing business environments. To help investors better understand our growth story, the management team released and articulated the Group’s five-year plan, with clear financial targets, at Investor Day in 2018 and 2021. As part of our plan for long-term sustainable growth, the Group made several strategic acquisitions from 2019 to 2022 to expand our Aerospace and Smart City businesses. At the same time, the management team undertook a continuous portfolio review involving closing or divesting businesses that were non-core or that no longer fit into our strategic goals. The Group also intensified its talent development initiatives, including focusing on developing women in leadership and technical roles. In addition, we strengthened our sustainability practices and enhanced disclosure to be more aligned with international standards. Many of these initiatives involved taking calculated risks and making bold decisions to leverage Group scale and strength, channel resources to strategic growth areas, as well as support continual investments in technology and innovation to make a greater impact on the world stage with the aim of enhancing shareholder value. With your continued support, we have accomplished much, especially in the last several years despite significant external challenges. Through all this, the Board worked with the management team in navigating those challenges, and successfully balanced between short-term needs and long-term success. We have overcome what can be said to be our biggest challenge ever—the COVID pandemic—which tested the stamina and resilience of the whole organisation. As we are recovering from the pandemic at good pace, other macroeconomic challenges started to impact businesses. Yet, we have built a record order book that is significantly higher than the pre-COVID period. It provides strong revenue visibility that will contribute to the further growth of the Group and is a leading indicator of our ability to achieve our fiveyear (2022-2026) financial targets and our growth trajectory. In closing, I would like to say that it has been an honour to chair the ST Engineering Board. My priority as Chairman has always been to help accelerate value creation for our shareholders and our stakeholders based on a strong governance framework. I believe the Board and the management team have collectively succeeded in doing so and that the best is yet to come, given the strengthened foundation of the Group. I thank my fellow directors for their unwavering support during my tenure as Chairman. I am confident that ST Engineering, under the chairmanship of Ming Kian, will continue to build on its track record and excel in the years ahead as the Group continues to move towards its vision of becoming a global technology, defence and engineering powerhouse. 12 ST ENGINEERING ANNUAL REPORT 2022
CORPORATE INFORMATION AS AT 28 FEBRUARY 2023 BOARD OF DIRECTORS Kwa Chong Seng (Chairman) Teo Ming Kian (Deputy Chairman) Vincent Chong Sy Feng (Group President & CEO) Kevin Kwok Khien Lim Ah Doo Lim Chin Hu Lim Sim Seng Ng Bee Bee (May) Lieutenant-General Ong Su Kiat Melvyn Quek See Tiat Song Su-Min Tan Peng Yam Colonel Cai Dexian (Alternate Director to Lieutenant-General Ong Su Kiat Melvyn) AUDIT COMMITTEE Kevin Kwok Khien (Chairman) Lim Ah Doo Song Su-Min EXECUTIVE RESOURCE AND COMPENSATION COMMITTEE Kwa Chong Seng (Chairman) Lim Chin Hu Lim Sim Seng Teo Ming Kian NOMINATING COMMITTEE Lim Chin Hu (Chairman) Kwa Chong Seng Lim Sim Seng Ng Bee Bee (May) Teo Ming Kian RESEARCH, DEVELOPMENT AND TECHNOLOGY COMMITTEE Tan Peng Yam (Chairman) Vincent Chong Sy Feng Lim Chin Hu Teo Ming Kian RISK AND SUSTAINABILITY COMMITTEE Quek See Tiat (Chairman) Vincent Chong Sy Feng Kevin Kwok Khien Lieutenant-General Ong Su Kiat Melvyn Song Su-Min STRATEGY AND FINANCE COMMITTEE Kwa Chong Seng (Chairman) Vincent Chong Sy Feng Lim Ah Doo Lim Chin Hu Lim Sim Seng Teo Ming Kian COMPANY SECRETARY/ JOINT COMPANY SECRETARY Low Meng Wai Tan Wan Hoon REGISTERED OFFICE 1 Ang Mo Kio Electronics Park Road #07-01 ST Engineering Hub Singapore 567710 Tel: (65) 6722 1818 www.stengg.com AUDITORS PricewaterhouseCoopers LLP 7 Straits View #12-00 Marina One East Tower Singapore 018936 Lam Hock Choon (Partner-in-charge) Date of appointment: 15 May 2020 SHARE REGISTRAR M & C Services Private Limited 112 Robinson Road #05-01 Singapore 068902 CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 13
Academic & Professional Qualification • Bachelor of Engineering (First Class Honours) degree in Mechanical Engineering, Monash University, Australia • Master of Science degree in Management Studies, Massachusetts Institute of Technology, USA Other Directorships/Appointments – Present • Global Innovation Index by World Intellectual Property Organization (Advisory Board Member) • Interel Pte. Ltd. • Temasek Foundation Ltd • Temasek Lifesciences Accelerator Pte. Ltd. (Chairman) • Temasek Life Sciences Laboratory Limited (Chairman) • Temasek Life Sciences Ventures Private Limited (Chairman) • Temasek Trust Ltd. • TF IPC Ltd • Vertex Venture Holdings Ltd (Chairman) • Zinfinity Pte. Ltd. (Chairman) Other Directorships/Appointments – Past 5 years • JOil (S) Pte. Ltd. (Chairman and Alternate Director) • Temasek Foundation Ecosperity CLG Limited (Chairman) • Temasek Holdings (Private) Limited • Tessa Therapeutics Pte Ltd (Chairman) • Vertex Venture Management Pte. Ltd. (Chairman) Achievements • Degree of Doctor of Laws honoris causa by Monash University • The Commander First Class – Royal Order of the Polar Star (Sweden) • The Defence Technology Medal (Distinguished Leadership) • The Meritorious Service Medal • The Public Administration Medal (Gold) TEO MING KIAN DEPUTY CHAIRMAN INDEPENDENT & NON-EXECUTIVE DIRECTOR Date of first appointment as Director: 1 August 2021 Date of appointment as Deputy Chairman: 21 April 2022 Date of last re-election as Director: 21 April 2022 Academic & Professional Qualification • Degree in Mechanical Engineering, former University of Singapore • Fellow of the Academy of Engineering Singapore Other Directorships/Appointments – Present • 5-Hour International Corporation Private Limited (Board Member and Strategic Advisor) • Defence Science & Technology Agency • Judicial Service Commission (Member) • Public Service Commission, Singapore (Deputy Chairman) • Renew Group Private Limited (Strategic Advisor) • Smart Energy Systems, Inc Other Directorships/Appointments – Past 5 years • SeaTown Holdings Pte. Ltd. • Singapore Exchange Limited* (Chairman) Achievements • Distinguished Engineering Alumni Award by the National University of Singapore in 1994 • Honorary Ningbo Citizenship in 1999 • Public Service Star at the Singapore National Day Awards 2005 • Public Service Star (Bar) at the Singapore National Day Awards 2016 KWA CHONG SENG CHAIRMAN INDEPENDENT & NON-EXECUTIVE DIRECTOR Date of first appointment as Director: 1 September 2012 Date of appointment as Chairman: 25 April 2013 Date of last re-election as Director: 15 May 2020 BOARD OF DIRECTORS AS AT 28 FEBRUARY 2023 * Listed company 14 ST ENGINEERING ANNUAL REPORT 2022
Academic & Professional Qualification • Bachelor of Arts (Honours) Economics, Accounting & Financial Management, University of Sheffield, UK • Fellow, Institute of Chartered Accountants in England and Wales • Fellow, Institute of Singapore Chartered Accountants Other Directorships/Appointments – Present • Sentosa Development Corporation • Standard Chartered Bank (Singapore) Limited Other Directorships/Appointments – Past 5 years • Accounting Standards Council (Chairman) • Keppel Offshore & Marine Ltd • Mapletree North Asia Commercial Trust Management Ltd • Singapore Exchange Limited* • Wheelock Properties (Singapore) Limited KEVIN KWOK KHIEN INDEPENDENT & NON-EXECUTIVE DIRECTOR Date of first appointment as Director: 1 October 2021 Date of last re-election as Director: 21 April 2022 Academic & Professional Qualification • Bachelor of Engineering (First Class Honours) (Mechanical Engineering), National University of Singapore • Executive leadership programmes, Thunderbird School of Global Management and the Columbia Business School • Fellow of the Academy of Engineering Singapore Other Directorships/Appointments# – Present • JTC Corporation (Board Member, Member of Development Committee and Human Resource Committee) • Jurong Port Pte Ltd (Director and Member of Management, Development & Compensation Committee) • Mechanical Engineering Departmental Consultative Committee, National University of Singapore (Member) • Singapore’s Manufacturing, Trade and Connectivity Domain International Advisory Panel (Member) Other Directorships/Appointments# – Past 5 years • Emerging Stronger Taskforce (Member) • Experia Events Pte. Ltd. • International Advisory Panel for Advanced Manufacturing & Engineering, Ministry of Trade & Industry (Member) • Singapore Airshow & Events Pte. Ltd. • Singapore Quality Award Governing Council (Member) • Temasek Defence Systems Institute (TDSI) Management Board, National University of Singapore (Member) Achievements • Distinguished Engineering Alumni Award by the National University of Singapore in 2021 VINCENT CHONG SY FENG GROUP PRESIDENT & CEO EXECUTIVE DIRECTOR Date of first appointment as Director: 1 October 2016 Date of last re-election as Director: 22 April 2021 Date of next re-election as Director: 20 April 2023 # Directorships excluded ST Engineering’s subsidiary(ies) * Listed company CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 15
Academic & Professional Qualification • Bachelor of Science, La Trobe University, Melbourne, Australia • Diploma in Electrical & Electronics Engineering, Ngee Ann Polytechnic • Fellow of the Singapore Institute of Directors Other Directorships/Appointments# – Present • Certis CISCO Security Pte Ltd • G-Able (Thailand) Ltd • Heliconia Capital Management Pte. Ltd. • Kulicke & Soffa Inc* • Ministry of Health/MOH Holdings Pte Ltd - ALPS Pte. Ltd. - Integrated Health Information Systems Pte. Ltd. - Singapore Health Services Pte Ltd • Sentosa Development Corporation (Audit Committee Member) • Singapore Exchange Limited* Other Directorships/Appointments – Past 5 years • Citibank Singapore Limited Achievements • Public Service Medal at the Singapore National Day Awards 2022 Academic & Professional Qualification • Degree in Engineering (Honours), Queen Mary College, University of London, UK • Master in Business Administration, Cranfield School of Management, UK Other Directorships/Appointments – Present • GDS Holdings Limited* • GP Industries Ltd* • Olam Group Limited*@(Chairman) • Singapore Technologies Telemedia Pte Ltd • STT Communications Ltd • STT Global Data Centres India Private Limited • U Mobile Sdn Bhd Other Directorships/Appointments# – Past 5 years • ARA-CWT Management (Cache) Limited • SembCorp Marine Ltd* • STT GDC Pte. Ltd. • Virtus HoldCo Limited LIM AH DOO INDEPENDENT & NON-EXECUTIVE DIRECTOR Date of first appointment as Director: 10 November 2015 Date of last re-election as Director: 22 April 2021 Date of next re-election as Director: 20 April 2023 BOARD OF DIRECTORS AS AT 28 FEBRUARY 2023 * Listed company @ Olam Group Limited (OGL) succeeded Olam International Limited (OIL) as the public listed company on the Mainboard of the SGX-ST on 16 March 2022 pursuant to the scheme of arrangement undertaken by OIL which became effective on 15 March 2022. Consequently, Mr Lim Ah Doo was appointed as chairman and director of OGL and relinquished his appointments with OIL. # Directorships excluded ST Engineering’s subsidiary(ies) * Listed company # Directorships excluded ST Engineering’s subsidiary(ies) LIM CHIN HU INDEPENDENT & NON-EXECUTIVE DIRECTOR Date of first appointment as Director: 16 July 2018 Date of last re-election as Director: 21 April 2022 16 ST ENGINEERING ANNUAL REPORT 2022
Academic & Professional Qualification • Bachelor of Arts (Honours), University of Western Ontario, Canada Other Directorships/Appointments – Present • NTUC Enterprise Co-operative Ltd. • Pan-United Corporation Ltd.* (CEO and Director) Other Directorships/Appointments – Past 5 years • Mercatus Co-operative Ltd* Achievements • NTUC, Friend of Labour • NTUC, Meritorious Service NG BEE BEE (MAY) INDEPENDENT & NON-EXECUTIVE DIRECTOR Date of first appointment as Director: 1 June 2020 Date of last re-election as Director: 22 April 2021 Academic & Professional Qualification • Bachelor in Business Administration from Yokohama National University, Japan • Japanese Government Monbusho scholar Other Directorships/Appointments – Present • Building and Construction Authority (Chairman and Non-executive Board Member) • DBS Securities (Japan) Company Limited • DBS Vickers Securities Holdings Pte Ltd • Federal Republic of Nigeria (High Commissioner) Other Directorships/Appointments# – Past 5 years • Nikko Asset Management Co., Ltd • Singapore Land Authority Achievements • Institute of Banking & Finance Distinguished Fellow Award in 2015 (IBF Distinguished Fellow) • May Day Award, Medal of Commendation 2015 • Public Service Medal at the Singapore National Day Awards 2018 LIM SIM SENG INDEPENDENT & NON-EXECUTIVE DIRECTOR Date of first appointment as Director: 15 May 2015 Date of last re-election as Director: 22 April 2021 Date of next re-election as Director: 20 April 2023 * Listed company # Directorships excluded ST Engineering’s subsidiary(ies) CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 17
Academic & Professional Qualification • Bachelor of Science (Economics)(Honours), London School of Economics and Political Science, UK • Fellow of the Institute of Chartered Accountants in England and Wales Other Directorships/Appointments – Present • Accounting Standards Council Singapore (Chairman) • Centre for Liveable Cities Advisory Panel (Panel Member) • Council of Estate Agencies (President/Council Member) • Pavilion Energy Pte. Ltd. • Pavilion Energy Spain, S.A.U. • Temasek Foundation Ltd • Temasek Life Science Laboratory Limited • TF IPC Ltd. Other Directorships/Appointments – Past 5 years • Energy Market Authority (Board Member) • Monetary Authority of Singapore (Board Member) • Singapore Press Holdings Limited^ • Temasek Foundation Connects CLG Limited Achievements • Public Service Medal at the Singapore National Day Awards 2009 • Public Service Star at the Singapore National Day Awards 2014 LIEUTENANT-GENERAL ONG SU KIAT MELVYN NON-INDEPENDENT & NON-EXECUTIVE DIRECTOR Date of first appointment as Director: 8 June 2018 Date of last re-election as Director: 22 April 2021 BOARD OF DIRECTORS AS AT 28 FEBRUARY 2023 * Listed company # Directorships excluded ST Engineering’s subsidiary(ies) 1 Formerly known as Ascott Business Trust Management Pte. Ltd. 2 Formerly known as Ascott Residence Trust Management Limited ^ Delisted from SGX-ST in 2022 QUEK SEE TIAT NON-INDEPENDENT & NON-EXECUTIVE DIRECTOR Date of first appointment as Director: 1 July 2013 Date of last re-election as Director: 21 April 2022 Academic & Professional Qualification • Bachelor of Science (Economics) (Honours), London School of Economics and Political Science, UK • Master of Science (Development Studies), London School of Economics and Political Science, UK Other Directorships/Appointments – Present • CapitaLand Ascott Business Trust Management Pte. Ltd.1 (as Trustee-Manager of Capitaland Ascott Business Trust*) • CapitaLand Ascott Trust Management Limited2 (as Manager of CapitaLand Ascott Real Estate Investment Trust*) • Defence Science & Technology Agency • JTC Corporation (Board Member) Other Directorships/Appointments# – Past 5 years Nil Achievements • Chief of Defence Force Commendation (New Zealand) • Public Administration Medal – Silver (Military) • Singapore Armed Forces Command Appointment Award • Singapore Armed Forces Good Service Medal • Singapore Armed Forces Long Service Award • Singapore Armed Forces Long Service and Good Conduct Medal • Singapore Armed Forces Overseas Service Medal, New Zealand 18 ST ENGINEERING ANNUAL REPORT 2022
Academic & Professional Qualification • Bachelor of Engineering (Electrical Engineering), University of Tasmania, Australia Other Directorships/Appointments – Present • Cap Vista Pte Ltd (Chairman) • D’Crypt Pte Ltd • Defence Science & Technology Agency • DSO National Laboratories • Integrated Health Information Systems Pte Ltd • Land Transport Authority (Board Member) • PUB Board Committee for Transformation (Member) • Singapore University of Technology and Design, Board of Trustees (Member) • SMRT Technical Advisory Panel (Chairman) • Temasek Defence Systems Institute (TDSI) Management Board, NUS (Chairman) Other Directorships/Appointments – Past 5 years • Government Technology Agency (GovTech) (Board Member) • National Environment Agency (Board Member) • Tech Vista Pte Ltd (Chairman) • Temasek Laboratories, NTU (Member) • Temasek Polytechnic Board of Governors (Board Member) Achievements • Grand Cross of Naval Merit with White Mark (Spain) • Royal Order of the Polar Star, Knight 1st Class (Sweden) • The Public Administration Medal (Gold) TAN PENG YAM NON-INDEPENDENT & NON-EXECUTIVE DIRECTOR Date of first appointment as Director: 1 August 2021 Date of last re-election as Director: 21 April 2022 Academic & Professional Qualification • Bachelor of Laws (Honours), University of Kent, Canterbury • Singapore Bar • Bar of England and Wales, Middle Temple Other Directorships/Appointments – Present Nil Other Directorships/Appointments – Past 5 years Nil SONG SU-MIN INDEPENDENT & NON-EXECUTIVE DIRECTOR Date of first appointment as Director: 16 September 2018 Date of last re-election as Director: 21 April 2022 CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 19
BOARD OF DIRECTORS AS AT 28 FEBRUARY 2023 Academic & Professional Qualification • Bachelor of Arts in Economics and International Relations, Stanford University, USA • Master in Business Administration (with Distinction), INSEAD, Singapore Other Directorships/Appointments – Present Nil Other Directorships/Appointments – Past 5 years Nil Achievements • NATO International Security Assistance Force (Afghanistan) Medal • Public Administration Medal (Bronze) (Military) • Singapore Armed Forces Good Service Medal • Singapore Armed Forces Long Service and Good Conduct (10 Years) Medal • Singapore Armed Forces Long Service Award & Good Conduct (10 Years) Medal – 15 Years Clasp • Singapore Armed Forces Overseas Service Medal, Afghanistan 2012 • United States Army Bronze Star Medal COLONEL CAI DEXIAN ALTERNATE DIRECTOR TO LIEUTENANT-GENERAL ONG SU KIAT MELVYN Date of first appointment as Alternate Director: 1 October 2021 20 ST ENGINEERING ANNUAL REPORT 2022
VINCENT CHONG SY FENG Age 53 Country of principal residence Singapore The Board’s comments on this appointment (including rationale, selection criteria, board diversity considerations, and the search and nomination process) Mr Vincent Chong is the Group President & CEO and an Executive Director of ST Engineering. His role as Group President & CEO is to integrate and leverage on the Group's strengths and capabilities to steer the Group towards its vision of becoming a global technology, defence and engineering powerhouse. Mr Chong has more than 20 years of global business and management experience and his leadership will continue to benefit ST Engineering and set the direction for growth of the ST Engineering Group. Whether appointment is executive, and if so, the area of responsibility Executive. Mr Chong oversees the business of the ST Engineering Group. Job Title (e.g. Lead ID, AC Chairman, AC Member etc.) Group President & CEO and Executive Director Member of • Research, Development and Technology Committee • Risk and Sustainability Committee • Strategy and Finance Committee Working experience and occupation(s) during the past 10 years President & CEO, ST Engineering (2016 – current) President & CEO (Designate), ST Engineering (2015 – 2016) Deputy CEO (Corporate Development), ST Engineering (2014 – 2015) President, Strategic Plans & Business Development, ST Aerospace (2014) Director, Asia Pacific Lubricants Sales, ExxonMobil Asia Pacific Pte Ltd (2013 – 2014) Downstream Senior Advisor, Corporate Strategic Planning, Exxon Mobil Corporation (2012 – 2013) Shareholding interest in the listed issuer and its subsidiaries 3,069,256 shares Familial relationship with any director and/or substantial shareholder of the listed issuer or of any of its principal subsidiaries No Conflict of interest (including any competing business) No Undertaking (in the format set out in Appendidx 7.7) under Rule 720 (1) has been submitted to the listed issuer Yes Other Directorships Past (for the last 5 years)/Present Refer to page 15 of this Annual Report Mr Chong confirmed that all responses under items (a) to (k) of Appendix 7.4.1 of the SGX-ST Listing Manual to be “No”. INFORMATION REQUIRED UNDER RULE 720(6) OF THE LISTING MANUAL OF SINGAPORE EXCHANGE SECURITIES TRADING LIMITED [Information as at 28 February 2023] DIRECTORS SEEKING RE-ELECTION CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 21
INFORMATION REQUIRED UNDER RULE 720(6) OF THE LISTING MANUAL OF SINGAPORE EXCHANGE SECURITIES TRADING LIMITED [Information as at 28 February 2023] DIRECTORS SEEKING RE-ELECTION LIM AH DOO Age 73 Country of principal residence Singapore The Board’s comments on this appointment (including rationale, selection criteria, board diversity considerations, and the search and nomination process) Mr Lim Ah Doo's leadership and background experience in finance, investment and corporate management will enhance board deliberations with a well-rounded perspective. Whether appointment is executive, and if so, the area of responsibility Non-Executive Job Title (e.g. Lead ID, AC Chairman, AC Member etc.) Independent Director Member of • Audit Committee • Strategy and Finance Committee Working experience and occupation(s) during the past 10 years Independent director of various listed companies Shareholding interest in the listed issuer and its subsidiaries 112,300 shares Familial relationship with any director and/or substantial shareholder of the listed issuer or of any of its principal subsidiaries No Conflict of interest (including any competing business) No Undertaking (in the format set out in Appendidx 7.7) under Rule 720 (1) has been submitted to the listed issuer Yes Other Directorships Past (for the last 5 years)/Present Refer to page 16 of this Annual Report Mr Lim confirmed that all responses under item (a) to (k) of Appendix 7.4.1 of the SGX-ST Listing Manual to be “No” save for item (j) (i) as disclosed below:- PT Indosat: Mr Lim was non-executive independent Commissioner of PT Indosal Tbk (PT Indosat) from December 2002 to August 2008, and Chairman of the Audit Committee from June 2004 to June 2008. In November 2007, PT Indosat along with six other Indonesian telecommunications companies were investigated by Indonesia's anti-competition KKPU, on allegations of price fixing of charges for short text messages and breach of Anti-Monopoly Law of Indonesia. PT Indosat and eight other companies were also investigated by KKPU of concern of breaches of Article 27(a) of the Anti-Monopoly Law of Indonesia. There was no finding of breach of law by PT Indosat at the time Mr Lim left PT Indosat. Asian Agri: Mr Lim was president of RGM International Pte Ltd (RGMI) from October 2003 to June 2007 and non-executive vice chairman of RGMI from June 2007 to November 2008. Mr Lim was also acting president of AAA Oils and Fats Pte Ltd (AAA) from June 2007 to November 2007 and non-executive deputy chairman of AAA from November 2007 to November 2008. RGMI provides strategy services and support to a global group of independent companies (the RGM Group) operating in the resources development sector. Each business group within the RGM Group operates independently with its own holding company and directors responsible for the operation of that business group. Asian Agri is a member of the RGM Group and AAA is a member of Asian Agri. Certain Indonesian companies of Asian Agri operating in Indonesia were investigated by the tax authorities of Indonesia in November 2006 for alleged non-payment of certain tax. The tax authorities of Indonesia had not confirmed any findings of breach of law at the time when Mr Lim left the RGM Group in November 2008. Mr Lim was not a member of the board nor was he concerned with the management of the companies under investigation. 22 ST ENGINEERING ANNUAL REPORT 2022
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