We are Southeast Asia’s
largest Asian environmental management services company, providing a complete
suite of solutions for the municipal, industrial, commercial, construction
and biomedical sectors.
Review of Operations |
Our Environmental Engineering business performed well in 2004. Turnover
of SembCorp Environmental Management (SembEnviro) increased 5% from S$192.2
million in 2003 to S$202.5 million. In 2004, SembEnviro continued to consistently
deliver double-digit growth, with Profit After Tax and Minority Interest
(PATMI) improving 16% from S$12.5 million to S$14.5 million. This increase
was driven by ongoing improvement in cost savings and margins, as well
as better operating performance by our Australian operations.
Review of Operations
In Singapore, we maintained our position as the largest waste management
solutions provider, retaining a 55% market share in the municipal sector
and a major share in the biomedical waste sector. While the municipal
sector provides a stable base for SembEnviro, its industrial and commercial
sector is steadily growing, forming a second stable income stream for
The acquisition of new contracts in 2004 further strengthened our operations,
by broadening our integrated services portfolio. These saw our orderbook
rising to an all-time high of S$403.0 million as at December 31, 2004.
SembWaste Cleantech clinched a seven-year S$63.0 million public cleansing
contract from the National Environment Agency in April 2004, to serve
Singapore’s Eastern and Western sectors while SembEnviro Tay Paper
secured S$1.6 million worth of contracts in June 2004 to provide waste
paper collection services and destruction of confidential documents.
During the course of the year, we made significant progress in our push
to aggressively market technologically advanced solutions to the market.
Together with our partner ShinMaywa (Asia), we were awarded eight major
projects in 2004 to apply the Singmatic system – a proprietary pneumatic
waste conveyance system – for use in upcoming developments. These
included the sizeable educational premises of the Republic Polytechnic
and Singapore Management University, as well as upscale residential developments
such as Sentosa Cove, The Pier@Robertson and The Esparis.
In June 2004, our wholly-owned subsidiary Sembiologics, in partnership
with world-leader Novozymes Inc, developed and launched three new bio-products
in Singapore. These products, Grease Solve, Freshen Asia and Marvel Clean,
utilise natural microbes to treat common grease, odour and dirty surfaces,
forming environmentally friendly alternatives for chemical based solutions.
Throughout the year, we continued to back up the expansion of our operations
by strengthening our capabilities through the holistic enhancement of
our facilities and equipment, better systems management and staff development.
In terms of facilities and equipment, April 2004 saw the official opening
of SembWaste’s automated incineration facility for medical waste
in Tuas. The new plant, which has a capacity of eight tonnes per day,
enables us to operate 24 hours a day, 7 days a week. This added incineration
capacity allows us to take in more bio-liquid waste and better cater for
In addition, SembWaste Cleantech increased its existing fleet of vehicles
to support its street cleansing activities. The subsidiary also set up
a state-of-the-art 24-hour Command and Control Centre to remotely operate
and manage the carparks under its charge in August 2004.
In 2004, SembEnviro received company-wide certification for ISO 9001,
ISO 14001 & OHSMS 18001, reflecting our efforts to strengthen our
operations through strict systems management.
Capitalising on staff development as a value management strategy, we launched
our Learning Portal in Toa Payoh in March 2004, which offers comprehensive
in-house training for our staff. The S$100,000 training centre is certified
as an approved training and assessment centre for Industrial and Commercial
Cleaning training, under the Workforce Development Agency’s National
Skills Recognition System (NSRS). The NSRS is a national initiative for
structured employee training, which aims to enhance performance standards
and job competencies while bettering competitiveness.
In December 2004, SembEnviro was conferred International Headquarters
status by the Economic Development Board, endorsing its overseas growth
strategy while maintaining its head office in Singapore.
In 2004, our Australian associate company, SITA Environmental Solutions,
remained the country’s second largest environmental management company.
In spite of keen competition, its operating performance improved, due
mainly to stronger sales boosted by good management of costs.
In addition, 2004 marked several milestones towards our goal to gain footholds
in the Chinese and Indian waste management markets, key countries targeted
in 2003 for expansion of our revenue base. These developments furthered
our aim of providing total integrated environmental services in the region,
and laid the foundations for future growth in these new markets.
In August 2004, we formed a joint venture with India’s Ramky Group
and Shriram Group, with the acquisition of 51% of Ramky’s medical
waste management business. The new joint venture currently has a fleet
of 57 vehicles and eight treatment plants throughout India with a total
installed capacity of 40 tonnes/day. With this purchase, we became the
first foreign environmental company to penetrate the Indian continent’s
medical waste management industry, estimated to be worth over S$50 million.
Respectable growth is expected in this market over the next few years,
underpinned by economic growth, privatisation and regulatory improvements.
In November 2004, SembEnviro followed this with an exclusive Letter of
Intent with its partner, Ramky Group, to explore the hazardous waste landfill
business in India.
SembEnviro signed a Heads of Agreement with Shanghai’s state-owned
enterprise, Shanghai Environment Investment in September 2004, to develop
the entire waste management chain in Shanghai’s newly corporatised
municipal waste market. This agreement paved the way for further joint
ventures to tap onto China’s privatisation wave, while maintaining
a strategic focus on the fast-liberalising Shanghai market.
September 2004 also saw the opening of our new Representative Office in
Shanghai. This will help oversee both our new joint ventures as well as
our existing Shanghai joint venture serving the commercial sector,
Shanghai SembEnviro Reliance.
Looking ahead, as Singapore continues to evolve into a mature and highly
competitive market, it will continue to provide considerable market space
for the introduction of new waste management practices and new technologies.
Accordingly, the outlook for our Singapore operations for 2005 is expected
to be stable with a relatively more conducive regulatory environment that
promotes recycling and innovation. In the coming year, we will continue
to broaden our host of integrated environmental solutions and alternative
Overseas, we expect to see a continuing trend for the liberalisation of
waste management markets to foreign participation in China, India and
the Middle East. We will continue to prioritise the exploration of opportunities
in these markets in 2005. In addition, we aim to further consolidate our
market position in Australia, and expand into the post-collection business
We expect our Environmental Engineering business to achieve further PATMI
growth in 2005, with continued improvement of operating efficiencies,
and contributions from new overseas acquisitions.