FY 2024 Full-Year Financial Results Webcast Briefing

Good morning, welcome to SD Engineering's full year 2024 results briefing. We will begin with a presentation by our group CFO Cedric Fu. Our group president and CEO Vincent Chong will then give his remarks. After that, we will end today's session with a Q&A for the analysts. Without further ado, may I invite Cedric to give his presentation, please? Yeah, thank you. Welcome to SD Engineering's full year 2024 results briefing. Very good morning to everyone here in person, as well as those joining us via webcast. Slide two, please. Before I begin, I would like to bring your attention to slide number two, which states amongst others that the group's actual performance, outcomes and results in the future may differ materially from those expressed in forward-looking statements. Slide three, please. This is our agenda for today. I'll be covering group highlights, business discussions, productivity, debt profile, contract wins and order book,

investing for the future, dividends and outlook.

Slide four, please. First, let's take a look at group highlights.

Slide five. I'm pleased to report a very strong set of second half 2024 and full year 2024 results. First, on the left, for second half 2024, the group achieved a solid year growth, 10% growth in revenue, 11% growth in EBITDA, 18% growth in EBIT, 26% growth in PBT and 20% growth in net profit. For the full year 2024, the group also performed very well. On a year-on-year basis, 12% growth in revenue, which crossed the $11 billion mark. 11% growth in EBITDA. And as you know, EBITDA is a good proxy for operating cash flow, growing to $1.6 billion. 18% growth in EBIT to $1.1 billion, which exceeded the $1 billion mark.

23% growth in PBT to $863 million and 20% growth in net profit to $702 million. The above good performance was due to our concerted efforts all across the group in successfully executing on our audiobook. Audibook as at end 2024 came in at $28.5 billion, with about $8.8 billion to be delivered in 2025. Slide six, please. This slide shows revenue by segment, revenue by type, and revenue by location of customers. First, from the left, the pie chart shows revenue breakdown by segment. 39% was contributed by commercial aerospace, or CA, in short. 44% contributed by defence and public security, DPS, in short. And 17% contributed by Urban Solutions and SecCom, USS.

DPS as a segment includes both local and international customers. It also covers commercial domains, not just defence domains, including public security and safety, critical information infrastructure, and others. Hence, the DPS segment revenue in the pie chart, which was $4.9 billion in 2024, is different from the revenue derived from pure defence products and solutions, as shown in the middle, which is $3.5 billion. So I just want to clarify that the $3.5 billion is a subset of the $4.9 billion, or pure defence is a subset of DPS, which has more than defence.

Revenue by type, in the centre of the slide, the bar chart shows revenue by type of products and solutions over the past three years. They have all been growing. Commercial type increased from $7.1 billion in 2023 to $7.8 billion in 2024. Defence revenue grew a very robust 15% from $3 billion in 2023. To $3.5 billion in 2024, reflecting the opportunities arising from ongoing conflicts and geopolitical tensions around the world. Revenue by customer location, on the right of the slide, Asia contributed 51%, US 23%, Europe 19%, and others 7%. Slide seven, please. This slide shows the year-on-year increase in group revenue by segment.

As you can see, all segments contributed to the growth, and our revenue grew from $10.1 billion to $11.3 billion as a group, 12% increase contributed by all segments. Slide eight, this waterfall chart shows a strong EBIT growth of 18%, from $915 million in 2023 to $1.1 billion in 2024, driven by business growth and cost savings. Slide nine shows a significant net profit growth of 20% year-on-year, which crossed the $700 million mark for the first time. Next, I will move on to cover business discussions by segment. Slide 11, for commercial aerospace, revenue grew 12% to $4.4 billion. Excluding aircraft sales in both 23 and 24, revenue growth would have been 15%.

This growth is contributed by stronger sales from engine MRO, Nacelles, PTF, and composite panel.

Although the base revenue for commercial aerospace is now much higher, at $4.4 billion, the second half-24 growth rate, I must well point out to you, year-on-year was not as high as the first half-24 growth rate year-on-year. And this isn't a surprise, as Jeff has anticipated and spoken to you before. Nevertheless, we remain confident in the growth trajectory for the CA business. We will share more at investor day, 18th of March, and we do expect our growth rate in the midterm going forward to be stronger than industry growth rates, given our very strong competitive position. EBIT for commercial aerospace improved 19% to $400 million due to stronger revenue and good product mix. Aircraft OEM have been unable to produce new aircraft fast enough to meet demand from airlines. Hence, existing aircraft fleet remain in service for longer.

This resulted in a lack of PTF packs aircraft feedstock, impacting our PTF business volume. Nevertheless, we can and we are optimizing our hangar capacity since the capacity is fungible by increasing airframe MRO revenue to offset the lower PTF revenue. We are also looking at optimizing our CA facility network around the world for greater efficiency. In terms of contract wins, CA secured $4.7 billion of new contracts in 2024, of which 1.8 billion of new contracts were signed in the fourth quarter.