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GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
FLIGHTtaking
annual report.03
HYFLUX LTD
annual report.03
HYFLUX LTD
CONTENTS
GROUP CEO & PRESIDENT’S MESSAGE .02
BOARD OF DIRECTORS .08
SENIOR MANAGEMENT .10
CORPORATE MILESTONES .16
FINANCIAL HIGHLIGHTS .18
OPERATIONS REVIEW .21
TAKING OFF ON ADVANCED TECHNOLOGY .26
RAISING SHAREHOLDER VALUE .32
CONQUERING NEW HEIGHTS .38
CONFIDENCE TO SOAR .44
CORPORATE STRUCTURE .48
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS“I always like to think ahead of others.
I don’t like to play catch up.”
OLIVIA LUM FOUNDER, GROUP CEO & PRESIDENT
annual report.03
HYFLUX LTD
OLIVIA LUMGroup CEO & President
page
02.03
“The challenge for us is to grow our company into the leading watertreatment company in the world.”
OLIVIA LUMTHE STRAITS TIMES, SINGAPORE PRESS HOLDINGS, 26 MARCH 2004OLIVIA RECEIVED THE ENTERPRISE AWARD FOR HYFLUX AT THE SINGAPORE BUSINESS AWARDS 2003.
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
This time last year, we promised to create value for your
investment in us and to achieve another year of profitable
growth. We are pleased to have done that and more.
The strength of our broadened portfolio, combined with
excellent execution, made for a sterling finish with a
S$19.5 million post-tax profit for the fiscal year ended
31 December 2003 (2002: S$12.3 million).
Hyflux today commands a market capitalisation of around
S$460 million. Having grown our market capitalisation
six fold, we were ranked as one of the best performing
companies on the Singapore Exchange Sesdaq board and
was upgraded to the Mainboard listing in April 2003.
Our success last year was largely due to the fact that
we remained focused on the course we had charted for
ourselves to stay ahead. These achievements represent
the collective efforts of our staff to excel at every
level and the support received from our shareholders
who today exceeds 5,000, our customers, suppliers and
business partners.
2003 – A YEAR OF MANY MILESTONES
2003 was truly a year of many milestones for Hyflux.
Two municipal projects were completed in Singapore: The
S$27.0 million Chestnut Avenue raw water treatment plant
which is the largest potable water plant in Asia using
membranes and the S$27.8 million third NEWater plant at
Seletar using our own in-house developed ultrafiltration
membrane system. Undoubtedly, the highlight of the year
was the award of Singapore’s first seawater desalination
plant to us, with a project value of some S$200 million,
followed by the conclusion of a financing deal with top
international banks for this landmark project. These
projects have provided Hyflux with the credentials
and confidence to venture forth more aggressively
internationally, targeting potential projects of similar stature.
In addition to growing our industrial applications, 2003
also saw our entry into the consumer product market.
Hence, the theme of this year’s report...Taking Flight.
GROUP CEO& PRESIDENT’S
MESSAGE
taking FLIGHT
annual report.03
HYFLUX LTD
“Our know-how and technology has noboundaries. We are not just confined towater even though we are just a watertreatment company.”
OLIVIA LUMSMART INVESTOR, VOLUME XII, 2004
WATER FOR 20 YEARS
In early 2002, PUB invited tenders for Singapore’s
first-ever seawater desalination project. Through a rigorous
and demanding bidding process, Singspring Pte Ltd,
a wholly-owned subsidiary of the Hyflux Group, was
eventually selected to build, own and operate the
desalination plant in Tuas that will supply water to PUB
for 20 years under a Water Purchase Agreement signed
in April 2003. A cornerstone in Singapore’s future water
self sustainability, this project-financed deal will enhance
our track record and image in the Asia Pacific region and
provide the springboard for us to clinch further projects.
REACHING INTO THE REGION AND BEYOND
Underpinning the support and confidence garnered
for this project, Singspring concluded the financing
agreement with four leading regional and international
banks, led by DBS bank, in December 2003. The deal
also clinched the Euromoney Asia Pacific Water Deal of
the Year 2003.
Such strong support and recognition will stand us in good
stead as we take flight and extend our reach into the region
and beyond. Construction of the desalination plant
commenced in January 2004. When completed in the 4th
quarter of 2005, the desalination plant will have
a designed capacity of over 136,000 cubic metres of
potable water a day, one of the largest such facilities
in the world.
CHINA – A KEY MARKET
Our growth in China was robust. We won an extra
S$20 million worth of orders from Sinolac (Singapore) Pte
Ltd, raising the value of a contract previously awarded to
Hyflux to S$46.9 million. The increased contract value
involves the supply of an organic acid plant, including the
membrane filtration system, with design capacity double
that of the original design. This represents our biggest
industrial project to date and will position us strongly to
make further inroads in China.
page
04.05
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
DRAGON-FLY
2003 also saw the commercial launch of our new
consumer product, the Dragon-fly, simply called the
“Air-2-Water” machine. This is yet another example of our
ability to leverage on Hyflux’s proprietary ultrafiltration
membrane and purification technology to develop
innovative products to benefit consumers. Following the
launch, we have received some 20,000 units of firm orders
in Singapore, Indonesia, Malaysia, the Middle East and
the United States, with firm enquiries pouring in from India,
Sri Lanka, the Caribbean, Korea, Taiwan and Thailand.
CLEAR STRATEGY FOR R&D
Over the past ten years or so, the context in which we are
operating and the resources and expertise that we
possess have changed dramatically. However, one thing
which remains clear to us and continues to be the bulwark
of our growth strategy is our investment in R&D and the
need to stay technologically ahead.
UNDOUBTEDLY, THE HIGHLIGHT OF THE YEAR WAS THE AWARD OF SINGAPORE’S FIRST SEAWATER DESALINATION PLANT TO US, WITH A PROJECT VALUE OF SOME
S$200 MILLION, FOLLOWED BY THE CONCLUSION OF A FINANCING DEAL WITH TOP INTERNATIONAL BANKS FOR THIS LANDMARK PROJECT.
For years, Hyflux has dedicated itself to investing in
research and development. Our core business lies
in the development and application of membrane
technology. We firmly believe that the only way to maintain
a competitive edge in business is through improving
membrane technology and its innovative use in new
markets. We will always leverage on our core capabilities
and membrane technology to make pure water readily
available and affordable to every individual – whether it is
NEWater, or from seawater, or even from the air.
Clearly, with the flexibility that comes from the continuous
development of our proprietary membranes, the market
potential is enormous. To further facilitate advancements
in the applications of membrane technology, Hyflux signed
a Memorandum of Understanding with the Nanyang
Technological University’s Environmental Engineering
Research Centre (EERC) in October 2003 for collaboration
in water treatment research. We welcome similar
collaborations with other research bodies and
tertiary institutes.
GROUP CEO& PRESIDENT’S
MESSAGE
annual report.03
HYFLUX LTD
OUTLOOK
Just like the previous year, we are also entering the
new year with a healthy order book, valued at some
S$62 million. This time, growth drivers will come from the
China market and the consumer business segment.
THE CHINA MARKET
With rapid industrialisation and increasing focus on the
availability of water resources to sustain economic
development, China continues to present high growth
opportunities, especially in the pharmaceutical and
biotechnology segments.
We therefore intend to continue with our on-going
efforts to build on our reputation and standing in China,
and to extend our business portfolio there. We are
penetrating new segments such as the chemical and
petrochemical industries. Hyflux Filtech was incorporated
in November 2003, as a joint venture with a team of
Chinese entrepreneurs to develop and market membrane-
based niche applications for the process industries in
China. Our Chinese partners also bring with them in-depth
knowledge of the distribution channels in a market,
estimated to have a value of over US$500 million.
The synergistic alliance will thus give us immediate access
to this vast market as reflected by the deals already
secured and will complement our existing strong presence
in the electronics, the pharmaceutical and the
biotechnology sectors. Elsewhere, we are exploring
business opportunities in countries like the Philippines,
Indonesia, Vietnam and Thailand.
CONSUMER PRODUCTS POISED TO TAKE OFF
The Group also expects sales of consumer products to
take off in 2004. We have made some inroads in this area
and will now strengthen our business development
fundamentals to expand this line of business in the region.
The Dragon-fly, sold mainly through a network of
distributors, represents an additional and recurring revenue
stream for us. We will continue to develop new membrane-
based home products to fuel our foray into the consumer
and lifestyle markets.
page
06.07
“The sky is the limit. With the directions we have set and with newblood in our management team, we are confident that Hyflux willcontinue to be a nimble, highly focused and leading enterprise.We move into 2004 on a charted course, with excitement andconfidence that we have in place the right strategy, the rightpeople and the right leadership to take us to greater heights.”
OLIVIA LUM
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
FLYING FORWARD
We intend to fly high and fast. Our key strength lies in the
development and commercialisation of membrane
technology. This will continue to be our forte. The
technology has a wide range of applications – from
treatment of water and wastewater to the reclamation of
water (NEWater) and desalination, process liquid
purification, as well as the production of potable water
from ambient air. We will continue to leverage on this core
capability and the tremendous energy and passion within
Hyflux to provide customised solutions to our customers
and those who wish to be our clients.
ON WINGS OF FLIGHT
Taking flight – the sky is the limit. With the directions we
have set and with new blood in our management team,
we are confident that Hyflux will continue to be a nimble,
highly focused and leading enterprise. We move into 2004
on a charted course, with excitement and confidence that
we have in place the right strategy, the right people and
the right leadership to take us to greater heights.
JUST LIKE THE PREVIOUS YEAR, WE ARE ALSO ENTERING THE NEW YEAR WITH A HEALTHY ORDER BOOK, VALUED AT SOME S$62 MILLION.
PERSONAL THANKS
I would like to welcome our new Director, Mr S. Iswaran
to the Board. With his vast experience in the private and
public sectors, I am confident he will be an invaluable
member of the Board.
I would also like to thank Dr Deirdre Murugasu and
Mr Foo Hee Kiang for their contributions to the Board for
the past three years. For corporate governance reasons,
Dr Murugasu and Mr Foo will be stepping down from the
Board in February 2004. They will both join the executive
committee of the board.
Finally, and with great pride and gratitude, I would like
to thank all our shareholders, customers, business
partners, suppliers and employees for believing in us and
for their continuing support. Hyflux will strive towards even
better performance in 2004, exploring fresh ideas, breaking
new grounds and flying high to create wealth for those
who believe in us.
OLIVIA LUMGroup CEO & President
GROUP CEO& PRESIDENT’S
MESSAGE
annual report.03
HYFLUX LTD
1. OLIVIA LUM OOI LIN
Olivia Lum is Group CEO and
President of the Hyflux Group.
She started corporate life as a
chemist with Glaxo Pharmaceuticals
Pte Ltd and left in 1989 to start up
Hydrochem (S) Pte Ltd, the precursor
to Hyflux Ltd.
Managing the Group for more than
ten years now, Olivia Lum is the
driving force behind the Group’s
growth and business expansion,
responsible for policy and strategies
formulation and corporate direction.
A Nominated Member of Parliament
since July 2002, Olivia Lum holds
several positions in the public service.
She is a board member of SPRING
Singapore and the National University
of Singapore Council. She is also an
advisor to the Singapore Institute
of International Affairs. In 2003,
1. 2.
she was awarded the International
Management Action Award (IMAA)
and the Business Times “Most
Creative Entrepreneur Award”.
Ms Lum holds an Honours degree in
Science from the National University
of Singapore.
2. GAY CHEE CHEONG
Mr Gay was appointed Non-
executive Director of the Group
on 3 August 2001.
Currently Deputy Chairman/CEO
of 2G Capital Pte Ltd, he was JIT
Group’s Group Executive Director
and MD to the various JIT companies
in Singapore and overseas during the
four years he was there.
Mr Gay holds directorships in a
number of l isted companies in
Singapore.
page
08.09
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
He holds an Honours degree in
Electronic Engineering from Royal
Military College of Shrivenham, UK
and in Economics from University of
London. He also has a MBA from the
National University of Singapore.
3. LEE JOO HAI
Mr Lee was appointed Independent
Director on 19 December 2000.
A CPA with memberships to
ICPAS and Institute of Chartered
Accountants in England and
Wales, he is a partner in a public
accounting firm in Singapore. He has
more than 20 years of experience in
accounting, auditing, taxation and
company secretarial work.
Mr Lee holds directorships in a
number of other listed companies
in Singapore.
4. TEO KIANG KOK
Mr Teo was appointed Independent
Director on 19 December 2000.
A lawyer with more than 20 years
experience in legal practice, he is a
senior partner of Shook Lin & Bok, a
firm of advocates and solicitors. He
is currently the finance partner and
Head of Corporate Finance and
China practice groups in Shook Lin
& Bok. His main areas of practice are
corporate finance, international
finance and securities. He has
advised listed companies extensively
on corporate law and compliance
requirements.
He holds a Bachelor of Law (Honours)
degree from the University of Hull
and is a Barrister-at-Law from
Lincoln’s Inn.
5. S. ISWARAN
Mr S. Iswaran was appointed
Non-executive Director of the Group
on 2 June 2003.
Managing Director at Temasek
Holdings Pte Ltd and MP for West
Coast GRC, Mr Iswaran holds
directorships in a number of
companies such as SembCorp
Industries, Sunningdale Precision
Industries and SciGen. He has also
held various appointments at the
Ministry of Trade and Industry,
National Trades Union Congress and
Singapore Technologies.
3. 4. 5.
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
annual report.03
HYFLUX LTD
1. DEIRDRE MURUGASU (DEE DEE NG)
Dr Dee Dee Ng is Chief Operating
Officer (COO) and Executive Vice
President for the Hyflux Group.
She worked for nine years with the
Ministry of Health before joining
Hyflux in 1996. Her last appointment
the re was as a spec ia l i s t i n
Family Medicine.
Her previous appointment in
Hydrochem (S) Pte Ltd (wholly-
owned subsidiary of Hyflux Ltd) was
Head of Business Development,
responsible for the development,
application and marketing of new
products and services.
Her current appointment as the
Group COO entails overseeing the
Group’s day-to-day operations, sales
and marketing.
Dr Dee Dee Ng holds a Masters of
Medicine (Family Medicine) from the
National University of Singapore.
SINGAPORE
OFFICE
1. 2.
2. FOO HEE KIANG
Mr Foo is Executive Vice President
for Special Projects.
He worked as a Sales Manager for
Multico System Engineers Pte Ltd, a
construction equipment and building
materials company, for eight years
before joining Hyflux in 1998.
Mr Foo is in charge of the Group’s
special projects, which require
intensive management expertise and
structured planning. With more than
15 years of marketing and sales
experience behind him, he also
supports the marketing and sales of
the Group’s products and services.
Mr Foo holds a Bachelor of
Engineering degree from the National
University of Singapore.
page
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GROUP CEO& PRESIDENT’S
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SENIORMANAGEMENT
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OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
3. LIM KIM SENG
Mr Lim is Executive Vice President
of Finance and Company Secretary
for the Hyflux Group.
He heads the Group’s financial
management, legal and corporate
secretarial and investor relations
functions.
Mr Lim has over 25 years of
experience in industry and banking.
Prior to joining the Group in 2000,
he held senior positions in finance,
corporate secretarial functions
and human resources with major
American MNCs and a leading
local bank.
Mr Lim graduated with a degree in
accountancy from the University of
Singapore and holds a MBA from the
National University of Singapore.
He is a non-practising member of
the Institute of Certified Public
Accountants.
4. GRACE GOH
Ms Goh is Senior Vice President of
Finance and Chief Financial Officer
for the Hyflux Group.
She is responsible for the financial
management of the Group covering
accounting, treasury, tax and
financial control and reporting.
She also handles investor relations
and assists in corporate secretarial
functions.
Ms Goh has more than 15 years of
experience in external and internal
audit, financial management and
control, and human resource
administration with both MNCs
and SMEs.
She holds a Degree in Accountancy
from the University of Singapore and
a MBA from the University of Wales
and Manchester Business School
(UK). Ms Goh is also a Certified
Internal Auditor and non-practising
member of the Institute of Certified
Public Accountants of Singapore.
3. 4. 5.
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
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BOARDOF DIRECTORS
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5. CHRISTOPHER MURUGASU
Mr Murugasu is Senior Vice President
for Corporate Services. He is
responsible for the Group’s human
resource, procurement and general
administration functions.
Prior to joining Hyflux in August 2001,
Mr Murugasu accumulated over 15
years of experience in the public
sector as well as with a foreign bank.
He holds an Honours degree in
Computing Science from the Imperial
College and a Masters degree from
the London School of Economics.
annual report.03
HYFLUX LTD
6. FREDDY SOON
Mr Soon is Senior Vice President for
Business & Corporate Development.
H e i s r e s p o n s i b l e f o r n e w
business development, corporate
communications, branding and
customer relations. Mr Soon has over
30 years of experience in productivity
and competitiveness policy and
strategy formulation, industrial
design, quality assurance and
standardisation, business excellence
management, and international
relations.
Prior to joining Hyflux, he was Deputy
Chief Executive of the Standards,
Productivity and Innovation Board
(SPRING Singapore), responsible for
corporate planning and development
and major national initiatives including
Benchmarking, Best Practices and
the Singapore Quality Award.
6. 7.
He holds an Honours Degree in
Science from the University of
Western Australia and a Certificate
of the Advanced Management
Programme from INSEAD.
7. HURN DAVID CHARLES
Mr Hurn is Senior Vice President for
Structured Projects.
Prior to joining Hyflux, he worked for
more than ten years in the power
industry, initially in the construction
of power stations and later in the
development and financing of
independent power projects.
Mr Hurn leads development for
the Group’s subsidiary, Hyflux
Engineering, which invests in the
growing market of privately financed
water projects and other process
industries that uti l ise Hyflux’s
membrane technologies.
He holds a Masters degree from
Cambridge University, UK.
page
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8. EDMUND WONG
Mr Wong is Senior Vice President,
responsible for the Group’s water and
wastewater treatment business
for both industrial and municipal
markets.
Having joined Hyflux in August 2003,
he brings with him over 25 years of
experience in various sales/marketing
and management capacities for
companies in the pulp & paper,
petrochemical, minerals, power, steel
and municipal markets in North
America and Asia.
He graduated with a Masters of
Sc ience degree i n Chemica l
Engineering from Stanford University
in California, USA.
9. TERENCE MATTHEWS
Mr Matthews is Senior Vice President
of Sales and Marketing, providing
global sales and technical support to
clients and representatives for water,
water reclamation and wastewater
treatment applications.
He has more than 20 years of
experience in the industry and
is a long time member of the
Water Environment Association of
Ontario, Canadian Pulp and Paper
Association, American Water Works
A s s o c i a t i o n a n d t h e Wa t e r
Environment Association.
He is a graduate in Chemical
E n g i n e e r i n g f ro m M c M a s t e r
University in Ontario, Canada.
10. ROSE TONG LAY KUEN
Ms Tong is Senior Vice President
and Head of Hyflux’s Consumer
Products Division.
She is responsible for spearheading
the Group’s global growth in the
Consumer Products arena and
securing new revenue streams from
this segment.
Ms Tong has over 20 years of
experience in Consumer Banking.
Prior to joining the Group in February
2004, she held senior management
positions in Branding, Product
Management, Marketing and Sales
& Service in major foreign and
local banks.
Ms Tong graduated with a degree in
Science, majoring in Computer
Science and Economics from the
National University of Singapore and
is a member of the Chartered Institute
of Marketing.
8. 9. 10.
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
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annual report.03
HYFLUX LTD
1. GE WEN YUE
Mr Ge is Vice President for Business
Development and the General
Manager of Hydrochem Engineering
(Shanghai) Co. Ltd. He joined
Hydrochem in 1994.
Being a pioneer in the China
operations, he is also responsible
for overseeing the research,
development and sales of membrane
technology in China.
Mr Ge holds a Bachelor of Chemistry
degree from Shanghai Science and
Technology University.
CHINA
OFFICE
2. GU JIA LONG
Mr Gu is Vice President for Finance
and Administration and the Vice
General Manager of Hydrochem
Engineering (Shanghai) Co. Ltd.
He joined the Group in 1990 and is
responsible for the daily operations,
financial jurisdiction and general
administration of Hydrochem.
Mr Gu has more than 36 years of
experience in a wide range of
industries. Having headed chemical
factories and institutions and
development companies, he has also
covered portfolios in finance and
human resource.
1. 2.
page
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GROUP CEO& PRESIDENT’S
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3. 4.
3. DAVID WEI CHEN
Mr Chen is Executive Director for
Hyflux Filtech (Singapore) Pte Ltd. He
is responsible for the overall business
direction, corporate strategy, human
resource and financial functions of
Hyflux Filtech.
Mr Chen has more than 15 years of
regional experience in strategic
planning, business development and
management. Prior to joining the
Group in November 2003, Mr Chen
was an executive in the liquid filtration
industry, and later served as CEO
and Managing Director of two
Chinese companies.
He holds a B.S degree in Mechanical
Engineering from Shanghai’s Jiao
Tong University.
4. GARY GUOXING LI
Mr Li is General Manager of Hyflux
Filtech (Singapore) Pte Ltd. He is
responsible for the overall sales and
marketing and the daily operations
of Hyflux Filtech.
Before joining Hyflux in November
2003, Mr Li accumulated more
than ten years of sales and marketing
experience in China’s liquid filtration
industry. He is also experienced in
developing related applications for
the chemical and petrochemical
sectors.
Mr Li holds a degree in Mechanical
Engineering from Shanghai Chemical
College and a MBA degree from Inter
American University.
GROUP CEO& PRESIDENT’S
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SENIORMANAGEMENT
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annual report.03
HYFLUX LTD
JANUARY 2003
Awarded contract by PUB for
Singapore’s first 30MGD 20-yr
BOO Seawater Desalination
Plant in Tuas
Invested in revolutionary
Air-2-Water technology –
Aquosus water generator
FEBRUARY 2003
Awarded “Singapore’s Best
Small Company 2003” by
Asiamoney
APRIL 2003
Upgraded to SGX Mainboard
Listing
MAY 2003
Recorded 155 percent surge
in net profit for the year’s first
quarter, despite weak market
sentiments
JUNE 2003
Hyflux Engineering secured an
additional order of S$20 million
from Sinolac’s manufacturing
facility in China
Hyflux Group increased
its stake in the seawater
desalination project with
acquisition of outstanding
shares in Singspring Pte Ltd
from Ondeo Degremont
page
16.17
january.december
2003
GROUP CEO& PRESIDENT’S
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SENIORMANAGEMENT
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Recieved ISO 9001:2000
Certif ication for “Design,
Fabrication, Installation &
Commissioning of Fluid
Treatment Systems”
AUGUST 2003
Recorded 133 percent surge in
net profit and 99 percent
increase in sales for the first half
of the year
OCTOBER 2003
Signed a Memorandum of
Unde rs tand ing w i th the
Nanyang Techno log i ca l
University (NTU) for research
co l l abora t ion i n wa te r
treatment using membrane
technology
NOVEMBER 2003
Recorded 133 percent surge in
net profit for the year’s third
quarter
Incorporated Hyflux Filtech
as a joint venture to extend its
arm into niche applications for
the process industries in China
DECEMBER 2003
Singspring Pte Ltd secured the
financing deal for the seawater
desalination project with four
regional and international banks
Official launch of “Dragon-fly”,
the first commercial model
of Aquosus
GROUP CEO& PRESIDENT’S
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annual report.03
HYFLUX LTD
(S$’000) 1999 2000 2001 2002 2003
Revenue 6,929 20,759 27,235 45,267 81,172
Profit Before Tax and Minority Interests 430 8,631 9,447 11,803 19,941
Minority Interests – – 5 402 246
Profit Attributable to Shareholders 79 6,370 7,355 12,261 19,510
Shareholders’ Equity 310 9,131 31,366 53,915 85,479
Total Assets 5,271 17,921 43,247 72,414 116,158
Net Tangible Assets 301 9.775 27,610 50,409 76,362
Net Tangible Assets per share (cents) 0.21 6.76 15.50 21.34 24.44
Earnings per share (cents) 0.05 4.40 3.38 5.33 7.68
Dividend per share (cents) – 0.60 0.50 1.50 0.70
Return on Revenue (%) 1.1% 30.7% 27.0% 27.1% 24.0%
Return on Equity (%) 25.5% 69.8% 23.4% 22.7% 22.8%
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○
“Having grown our market capitalisation six fold, we were ranked as one ofthe best performing companies on the Singapore Exchange Sesdaq boardand was upgraded to the Mainboard listing in April 2003.”
OLIVIA LUM
page
18.19
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
GROUP REVENUE BY COUNTRY REVENUE GROWTH BY COUNTRY
0
50
100
150
200
250
0
5
10
15
20
25
30
35
40
45
50
S$’000 %
FY1999
201% 31%
66%
79%
FY2000 FY2001 FY2002 FY2003
0
5
10
15
20
25
30
35
40
45
50
0
20
40
60
80
100
120
S$’000 %
FY2001 FY2002 FY2003
60%
113%
103%
62%
SINGAPORE PRC OTHERS REVENUE GROWTH %
GROUP REVENUE BY SECTOR (FY2002) GROUP REVENUE BY SECTOR (FY2003)
3%CONSUMER
48%MUNICIPAL
52%INDUSTRIAL
FINANCIALHIGHLIGHTS
54%MUNICIPAL
42%INDUSTRIAL
SINGAPORE PRC OTHERS PRC GROWTHSINGAPORE GROWTH
annual report.03
HYFLUX LTD
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
430
8,6319,447
11,803
19,941
FY1999 FY2000 FY2001 FY2002 FY2003
S$’000
PROFIT BEFORE TAX (PBT)
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
79
6,3707,355
12,261
19,510
FY1999 FY2000 FY2001 FY2002 FY2003
S$’000
PROFIT AFTER TAX (PAT)
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
FY1999 FY2000 FY2001 FY2002 FY2003
310
9,131
31,366
53,915
85,479
S$’000
SHAREHOLDERS’ EQUITY NTA/SHARE
0
5
10
15
20
25
30
FY1999 FY2000 FY2001 FY2002 FY2003
0.21
6.76
15.50
21.34
24.44
S$ CENTS
page
20.21
FINANCIAL HIGHLIGHTS (CONT’D)
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
MANPOWER
OVERVIEW
Employee headcount grew by about 30 percent from 352 at year-end 2002 to 495 at end of this year. About one-half
of this increase was for Singspring’s seawater desalination plant project. The rest of the increase was mainly in R&D,
engineering and sales personnel. A breakdown in the employee workforce is as follows:-
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○○ ○ ○ ○ ○ ○ ○
2003 2002
Singapore 280 169
Shanghai 132 105
Hangzhou and Ningbo 83 78
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
annual report.03
HYFLUX LTD
PERFORMANCE
OVERVIEW
(a) Key Financial Data
page
22.23
S$ MILLION 2003 2002 INCREASE
Revenue 81.2 45.3 79%
Earnings before interest, tax, depreciation & amortisation (EBITDA) 22.3 14.4 55%
Earnings before interest & tax (EBIT) 20.2 12.1 67%
Profit after tax after MI 19.5 12.3 59%
Earnings per share (EPS) (cents) 7.7 5.3 45%
Net asset value (NAV) per share (cents) 27.4 22.8 20%
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○○ ○ ○ ○ ○ ○ ○
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
(b) Revenue
In FY2003, revenue for the Group increased by 79 percent
to S$81.2 million on the back of strong demand from its
two main markets in China and Singapore.
Revenue in Singapore doubled to S$48.4 million, from a
year ago, largely due to completion of the two municipal
projects for Singapore’s Public Utilities Board – the
Chestnut Avenue raw water treatment project and the
Seletar NEWater project.
Sales in China surged by 62 percent or S$12.3 million
to S$32.1 million, mostly from the pharmaceutical and
biotechnology sectors.
During the year, the Group also announced its entry into
the consumer market. Its new consumer product,
“Dragon-fly”, which uses patented technology, was
launched in the fourth quarter of the year and contributed
3 percent of total sales.
(c) Profit after Tax
Group profit after tax of S$19.5 million was higher by
59 percent or S$7.2 million compared to that in FY2002.
Growth in profits was driven by contributions from China,
which contributed to 62 percent of the Group’s profit from
operations. This was due to higher margins achieved from
the pharmaceutical and biotechnology sectors.
In tandem with the higher sales, raw and consumable
materials increased by 98 percent to S$36.7 million in
FY2003, yielding a gross margin of 55 percent compared
to 59 percent in FY2002. The lower gross margin was
largely due to higher municipal sales in Singapore.
Operating costs and expenses were also higher, largely
due to civil work and subcontractor costs of S$8.7 million
for the two municipal projects in Singapore and the start-
up and operating costs of the new consumer business.
Overall, net profit margin was marginally lower by
3 percent to 24 percent this year largely due to lower
margins from municipal projects.
REVENUE BY COUNTRY (FY2003) PROFIT FROM OPERATIONS BY COUNTRY (FY2003)
OPERATIONSREVIEW
60%SINGAPORE
40%CHINA
38%SINGAPORE
62%CHINA
annual report.03
HYFLUX LTD
(d) Earnings Per Share (EPS)
Earnings per share rose 44 percent to 7.68 cents
compared to 5.33 cents in FY2002. This was despite the
enlargement of share capital with a new share issue and
a bonus issue in 2003. The higher EPS was the result of
higher profit after tax for FY2003.
(e) Balance Sheet Review
The Group’s equity base strengthened by 59 percent
or S$31.6 million to S$85.5 million as of 31 December
2003. The strengthening was mainly due to the net profit
for the year of S$19.5 million, the private placement of
11.8 million shares and due to 2 million of option shares
exercised pursuant to the Hyflux Employee Share Option
Scheme less dividend payment.
Current assets increased by 45 percent or S$24.2 million
to S$78.1 million largely due to the stronger cash position
of S$31.9 million and higher trade receivables as a result
of increased sales. Higher trade payables and accruals
accounted for the bulk of the increase in current liabilities
of S$15.5 million. This led to the lower current ratio of 2.9
compared to 4.8 in FY2002.
In the area of capital expenditure, construction-in-progress
for the seawater desalination plant amounted to S$10.1
million. The other significant area of investment in 2003
was in research and development expenditure which rose
by S$5.6 million.
Compared to FY2002, net asset value per share increased
by 20 percent to 27.4 cents per share whilst debt equity
ratio improved from 0.14 to 0.08.
page
24.25
EPS/DPS (CENTS)
0
1
2
3
4
5
6
7
8
FY1999 FY2000 FY2001 FY2002 FY2003
0.60
0.50
1.50
0.70
00.05
4.40
3.38
5.33
7.68
EPS DPS
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
(f) Cash Flows and Liquidity
In FY2003, net cash generated from operating activities
amounted to S$26.5 million compared to S$3.4 million in
FY2002. The substantial improvement of S$23.1 million
in cash from operating activities was largely the result of
higher operating profit and improvement in working capital.
For invest ing act iv i t ies, higher cash outf low of
S$16.7 million was due to the Group’s investment in
the seawater desalination project, acquisition of new
technologies and research and development projects.
Cash flow generated from financing activities such as
shares issuance amounted to S$11.0 million, which
was partially offset by repayment of the term loans.
As at 31 December 2003, the Group’s cash position stood
at S$31.9 million, which is S$14.8 million higher than that
of FY2002.
In addition to the current positive cash and cash
equivalents position, the Group has established short-term
and medium-term financing facilities with various financial
institutions to fund the Group’s working capital
requirements and capital expenditure programme.
(g) Shareholders’ Returns
Return on Equity, Dividends and Earnings Per Share
Despite the larger share capital as a result of a new share
issue and a bonus issue, return on equity was maintained
at 23 percent in FY2003.
The Group will continue its policy of ploughing most of its
cash resources back into fuelling business growth.
It has therefore proposed a final cash dividend of 0.7 cents
per ordinary share compared to a total dividend payout of
1.5 cents in 2002.
OPERATIONSREVIEW
annual report.03
HYFLUX LTD
taking off on advanced
TECHNOLOGY“This is literally a Ground Breaking Ceremony (and) for us at Hyflux,it is also figuratively a ground breaking – breaking new grounds aswe progress to be one of the world’s leaders in water technologyand business.”
OLIVIA LUMAT THE GROUND BREAKING CEREMONY OF SINGAPORE’S FIRST SEAWATER DESALINATION PLANT AT TUAS
page
26.27
GROUP CEO& PRESIDENT’S
MESSAGE
SENIORMANAGEMENT
CORPORATEMILESTONES
OPERATIONSREVIEW
BOARDOF DIRECTORS
FINANCIALHIGHLIGHTS
Our message is clear:
Membranes are the future...
Membranes for every product
annual report.03
HYFLUX LTD
SELETAR NEWATER PLANT
page
28.29
“2003 was truly a year of many milestones for Hyflux. Two municipalprojects were completed in Singapore: The S$27.0 million ChestnutAvenue raw water treatment system which is the largest potable waterplant in Asia using membranes and the S$27.8 million third NEWaterplant at Seletar using our own in-house developed ultra-filtrationmembrane system.”
OLIVIA LUM
TAKING OFF ON ADVANCEDTECHNOLOGY
RAISING SHAREHOLDERVALUE
CONQUERING NEWHEIGHTS
CONFIDENCETO SOAR
TAKING OFF ON ADVANCEDTECHNOLOGY
With a clear vision to become a leader in water
treatment and membrane technology, Hyflux goes beyond
the conventional description of a water-treatment
company. It develops and manufactures its own
proprietary membranes.
Membranes are inspired by, none other than nature. Similar
to a human body, the internal organs and skin work like
high tech membranes to provide the necessary purification
and processing.
Hyflux believes that the only way forward to maintain its
competitive edge in water treatment is through the use of
advanced membrane technology. Hence, the growth
strategy is to harness the development and application of
membrane technology as its core strength, making it a
true integrated solutions provider for a spectrum of liquid
treatment systems.
Hyflux advanced membranes have wide-ranging
applications across different separation fields – not only
applicable to water and wastewater treatment and
desalination, but are also used in fluid treatment
for industrial processes or in new products for the
consumer market.
With its proprietary technology, Hylfux is able to incorporate
and customise its in-house membranes for the more
demanding filtration processes, to fulfil unique and
stringent criteria for different projects, unlike off-the-shelf
membranes. The Seletar NEWater plant, for example, uses
Hyflux’s Kristal300™ ultra-filtration membranes with
capacity to produce 24,000 cubic metres of NEWater daily.
Minister for the Environment, Mr Lim Swee Say, in a speech
at an International Symposium on Water Resource
Management in December 2003, mentioned the five
annual report.03
HYFLUX LTD
applications. In October 2003, Hyflux signed a Memorandum
of Understanding with Nanyang Technological University’s
Environmental Engineering Research Centre to collaborate
in water treatment research. The agreement allows Hyflux
to tap the Centre’s expertise and advanced equipment
and facilities.
SPREADING WINGS
Another reason for Hyflux’s competitive edge is its ability
to respond faster than bigger competitors. It does not
merely produce standardised membranes. Hyflux is able
to improvise and customise the membrane structures for
its clients. Another strength is its dedicated laboratories
and fully equipped test plant facilities which allow
specialists to conduct evaluation trials before embarking
on the actual manufacturing process.
In 2003, sales of membrane systems to China’s
pharmaceutical and biotechnology sectors surged.
Hyflux’s membranes are now enjoying greater acceptance
in the processing of fluids such as those found in the
agri-food, pharmaceutical, biotech, chemical and
petrochemical industries.
page
30.31
DRAGON-FLY
PUREFLO
challenges in management of water resources. One of
them is the use of advanced technology for water
treatment. With conventional water treatment technology,
it is not economical to treat rainwater for drinking. With
new membrane technology, not just rainwater, but even
sea and wastewater can be cost-effectively treated.
Advanced technology in water treatment and purification
can only enhance Singapore’s available water resources.
INNOVATION CREATES LIFT
Membrane technology is not new, but Hyflux’s innovative
applications and research have pushed back the
boundaries of what was previously possible. Research,
development and production of membranes are carried
out by Hyflux in Singapore, as well as in China through
its 55-percent-owned subsidiary, Hangzhou Zheda
Hualu Membrane Engineering. The subsidiary, not only
strengthens the group’s presence in China but also
provides access to a larger pool of R&D talent.
To tap external expertise, Hyflux also partners universities
and research institutes for R&D work in membrane
“Our core business is in thedevelopment and applicationof membrane technology andwe are trying to mimic whatnature has provided for us.”
OLIVIA LUMSMART INVESTOR, VOLUME XII, 2004
TAKING OFF ON ADVANCEDTECHNOLOGY
RAISING SHAREHOLDERVALUE
CONQUERING NEWHEIGHTS
CONFIDENCETO SOAR
TAKING OFF ON ADVANCEDTECHNOLOGY
In June 2003, Hyflux Engineering (a wholly-owned
subsidiary of Hyflux) was also awarded an additional
order of S$20 million from China’s Sinolac Manufacturing
Facility, raising the value of a previous contract to
S$46.9 million through a doubling of the design capacity
of its membrane system.
DEVELOPING THE CONSUMER MARKET – DRAGON-FLY
Named Dragon-fly, the first commercial model of
Aquosus was rolled out in December 2003. Aquosus
was an investment made by the Group in January 2003
in a US-incorporated entity, which holds the 20-year
patent for the Air-2-Water technology, which we call
Aquovate Technology.
Hyflux has adroitly transformed part of itself to enter the
consumer market and secure a new income stream,
through successful miniaturisation of its large-scale
membrane-based systems.
OUR GROWTH IN CHINA WAS ROBUST. WE WON AN EXTRA S$20 MILLION WORTH OF ORDERS FROM SINOLAC (SINGAPORE) PTE LTD,RAISING THE
VALUE OF A CONTRACT PREVIOUSLY AWARDED TO HYFLUX TO
S$46.9 MILLION.
PureFlo is another example of Hyflux tapping on this niche:
A new water filter that brings ultra-filtration membrane
technology into the home. Affixed to taps, PureFlo allows
consumers to enjoy purified water of unrivalled standards.
This state-of-the-art water filter, which leverages on Hyflux
proprietary ultra-fine membrane systems, uses double-
skinned purification membranes that even filter out
viruses, unlike commonly available filtration systems.
With new lifestyle habits and greater awareness of the
health benefits of using pure water, demand for this
high-quality water filter is expected to flow in 2004.
annual report.03
HYFLUX LTD
raising shareholder
VALUE
Mainboard-listed Hyflux Ltd is forecasting an annual growth rateof 30 percent over the next five years, as China, one of its mainmarkets, continues its rapid economic ascent.
TODAY, MEDIACORP PRESS, 27 FEBRUARY 2004
page
32.33
TAKING OFF ON ADVANCEDTECHNOLOGY
RAISING SHAREHOLDERVALUE
CONQUERING NEWHEIGHTS
CONFIDENCETO SOAR
Exploring fresh ideas, breaking new grounds and
flying high to create wealth for those who believe in us
annual report.03
HYFLUX LTDpage
34.35
1. GUEST OF HONOUR, MR LIM SWEE SAY, MINISTER FOR THE ENVIRONMENT
OFFICIATING THE GROUND BREAKING CEREMONY OF THE SINGSPRING SEAWATER
DESALINATION PLANT
2. OLIVIA PRESENTING A TOKEN OF APPRECIATION TO CHAIRMAN OF PUB,MR TAN GEE PAW AT THE GROUND BREAKING CEREMONY OF THE SEAWATER
DESALINATION PLANT
3. SIGNING CEREMONY OF THE SEAWATER DESALINATION PROJECT FINANCING DEAL
1.
2. 3.
TAKING OFF ON ADVANCEDTECHNOLOGY
RAISING SHAREHOLDERVALUE
CONQUERING NEWHEIGHTS
CONFIDENCETO SOAR
In 2003, the Hyflux Group achieved record growth and
laid down significant markers for the future.
On 12 December 2003 Singspring Pte Ltd (a wholly-owned
subsidiary of Hyflux) inked the financing agreement for
the project to develop, design, procure, construct, test and
commission Singapore’s first seawater desalination plant.
The transaction was lead arranged by DBS Bank Ltd, also
the facility agent, the security trustee and the account
bank. This landmark project financing deal attracted
interest from three global banks. ING Bank N.V., KBC Bank
N.V. and Standard Chartered Bank.
The S$165 million issue comprises a senior debt facility
of up to S$158.5 million to fund 80 percent of the project
costs, and a contingency facility of up to S$6.5 million to
pay for 70 percent of any cost overrun. The balance of
the total project costs or cost overrun will come from
Hyflux’s equity in Singspring.
Repayment of the loan facility will be over a period of up
to 18 years from the date of commercial operation of the
plant. For the first ten years, the interest rate has been
fixed under an interest rate swap facility with DBS Bank.
For the remainder of the period, the interest rate will be
floating at the swap offer rate plus a fixed margin.
Such strong support from four leading regional and
international banks clearly testifies to the standing of Hyflux
the off-taker and the sponsor of the project and the project
itself. The fact that the loan was oversubscribed by more
than 30 percent is testimony to the lending community’s
faith in the Hyflux Group.
A historic ground breaking ceremony was held on
16 January 2004 to mark the start of construction for
Singapore’s first-ever seawater desalination plant.
Scheduled for completion by end 2005, Asia’s largest
tropical seawater desalination plant at Tuas is capable
of supplying over 136,000 cubic metres of desalinated
water a day to meet some ten percent of Singapore’s
water needs.
RAISING SHAREHOLDERVALUE
annual report.03
HYFLUX LTD
Currently, water in Singapore is supplied through three
taps: water catchment areas, importation of water and
alternative sources like NEWater. Completion of the
desalination plant in 2005 will truly turn on the nation’s
fourth tap – a momentous occasion for both Singapore
and Hyflux.
The desalination project also confirms Hyflux’s arrival as
a key player in the water industry. With Hyflux acquiring
in July 2003 the 30 percent stake in Singspring previously
held by Ondeo Degremont, Singspring is now wholly
owned by Hyflux.
Reverse osmosis membranes will form the core technology
for the desalination plant. Hyflux’s membranes also ensure
a higher recovery rate of seawater, in addition to higher
energy savings and also being environmentally friendly.
Hyflux provided the necessary engineering, procurement
and construction (EPC) management, as well as
operational experience and financial expertise for the
project. This signals Hyflux’s ability to undertake similar
large-scale municipal projects, whether at home or abroad,
and heralds its entry into the big league.
Projects which were successfully completed in 2003
included – the commissioning of the Seletar NEWater plant
in January 2004, Hyflux’s second venture into the municipal
market. The plant, operating on proprietary Kristal300™
Ultrafiltration membranes, reverse-osmosis membranes
and ultra-violet technologies, now meets around 15
percent of the country’s total water needs. The raw water
treatment works at Chestnut Avenue marked Hyflux’s third
municipal project in Singapore. Commissioned in January
2004, the project to outfit PUB’s plant with an advanced
membrane filtration system with a capacity of 273 million
cubic metres per day. The Chestnut Avenue facility is
currently the second largest raw water membrane
treatment plant in the world.
page
36.37
“Many successful companies have gone into all kinds of differentfields but we have chosen to focus on membrane technology andwater-related businesses. So the challenge is how we can capturethe market because it is definitely growing.”
OLIVIA LUMTHE BUSINESS TIMES SUPPLEMENT, SINGAPORE PRESS HOLDINGS, 26 MARCH 2004.
TAKING OFF ON ADVANCEDTECHNOLOGY
RAISING SHAREHOLDERVALUE
CONQUERING NEWHEIGHTS
CONFIDENCETO SOAR
RAISING SHAREHOLDERVALUE
ENGAGING MARKETS IN CHINA
With biotechnology an up-and-rising industry in China,
Hyflux’s membrane systems, capable of separating
alternative liquid streams such as organic acids, will
be in demand. Hyflux has thus devoted significant
resources to its regional office in Shanghai, as well as its
operations in Hebei and Hangzhou.
The competitiveness of Hyflux’s systems in China was
confirmed by an increased contract from Sinolac, raising
the value of a project previously awarded from S$20 million
to some S$46 million. Currently, the Group’s largest
industrial project, the Sinolac deal points towards China
as a growing market.
In November 2003, a fresh initiative to target new market
segments in China was also announced. Hyflux Filtech
was incorporated as a joint venture between Hyflux and a
team of Chinese entrepreneurs to develop and market
membrane-based niche applications in China. By
December, the 71-percent-owned subsidiary had already
secured orders to the tune of S$8.4 million, a bright start
for a youthful enterprise.
Hyflux today commands a market capitalisation of around $450 million.
annual report.03
HYFLUX LTD
conquering new
HEIGHTS
“Nobody knows the chemistry of water better than Hyflux and we havethe membrane technology that can be miniaturised for home use. I seegreat potential in the home consumer market.”
OLIVIA LUMTHE STRAITS TIMES, SINGAPORE PRESS HOLDINGS, 27 FEBRUARY 2004
page
38.39
TAKING OFF ON ADVANCEDTECHNOLOGY
RAISING SHAREHOLDERVALUE
CONQUERING NEWHEIGHTS
CONFIDENCETO SOAR
Innovations for better living
annual report.03
HYFLUX LTD
“We want to help people improve their lives through creating abetter environment for them. One of the worst things is to livein a dirty environment and to have to drink dirty water.”
OLIVIA LUMTHE BUSINESS TIMES SUPPLEMENT, SINGAPORE PRESS HOLDINGS, 26 MARCH 2004
page
40.41
TAKING OFF ON ADVANCEDTECHNOLOGY
RAISING SHAREHOLDERVALUE
CONQUERING NEWHEIGHTS
CONFIDENCETO SOAR
Industrial isation and economic development are
increasingly dependent on usable water.
Hyflux offers a number of competitive advantages as the
preferred water treatment company. These include:
• Singapore-manufactured membranes that
have the highest quality standards
• Turnkey experience and in-house system
integration capabilities
• Experience in a wide range of industrial applications
• Ability to transform pilot plant experience
into commercial projects
CONQUERING NEWHEIGHTS
Aquosus marks Hyflux’s first foray into the consumer
market. By July 2003, Hyflux had received orders for some
20,000 units, slated for delivery in 2004.
The first commercial model of Aquosus, called
“Dragon-fly”, allows consumers to enjoy fresh and
pure water at an affordable price, since the water is
generated on its own, converted from ambient
atmospheric water vapour. The high-performance water
generator will help meet the growing demand for high
quality drinking water, especially in countries where piping
quality is poor.
“Aquovated water” is kept fresh while in storage through
a constant recirculation process, making it even safer than
bottled water which may run the risk of bacterial build up.
The patented aquovate technology is another example
how Hyflux revolutionises the drinking water industry.
annual report.03
HYFLUX LTD
Hyflux Aquosus, another wholly-owned subsidiary will
manufacture and market “Dragon-fly” in Asia, targeting
an audience who consumes over 25.6 billion litres of water
per year, or 23 percent of total global bottled water
consumption. Three of the largest Asian markets, China,
Indonesia and Thailand, have also joined the top ten
markets for bottled water.
Just as a dragonfly springs from a larval stage, Hyflux’s
“Dragon-fly” transforms air into a different form – water.
“Dragon-fly” will bear the proud “Made-in-Singapore”
brand name and enjoy the image of a lifestyle product.
CLEAR VIEW FROM HERE
Following the rapid expansion into new markets, Hyflux
has concurrently developed its production and
manufacturing facilities. Peripheral components are
manufactured in China, but the heart of the system, the
proprietary “Hyflux Filtration Cartridge”, is developed and
installed in Singapore.
The consumer market segment contributed S$3 million
to Group sales in 2003. In 2004, Hyflux’s latest home
product anticipates to create greater impact. PureFlo, the
latest consumer offering to come from the Group, allows
homes to enjoy tap water purified through ultra-filtration
(UF) membrane technology – the purest form of filtering
water using tap pressure.
Each UF membrane filter, found in PureFlo has micro-pores
so fine at 0.015 micron that it screens out particles such
as sand (100 micron), hair and pollen (10 micron), bacteria
(1 micron) and even viruses (0.1 micron)
PureFlo’s compact design allows for easy installation as it
comes with two adaptors that are compatible with four
major tap sizes. The filter is also equipped with toggle
switches offering a choice of “Tap Water” or “Purified
Water” which extends the shelf life of the membrane.
Users can also easily view the condition of the filters and
replace the cartridge on time.
page
42.43
Just as a dragonfly springs from a larval stage, Hyflux’s “Dragon-fly”transforms air into a different form – water. “Dragon-fly” will bear theproud “Made-in-Singapore” brand name and enjoy the image of alifestyle product.
TAKING OFF ON ADVANCEDTECHNOLOGY
RAISING SHAREHOLDERVALUE
CONQUERING NEWHEIGHTS
CONFIDENCETO SOAR
THE CONSUMER MARKET SEGMENT CONTRIBUTED S$3 MILLION TO GROUP SALES IN 2003.
CONQUERING NEWHEIGHTS
The advanced home filter also helps to remove chlorine
for up to 1,500 litres of water, based on an average chlorine
concentration of 0.2 parts per million (ppm) or less for
standard water. This ensures four to five months of pure
water for a household of four.
PureFlo will be introduced in Malaysia by March, Thailand
by April and China by September 2004. For some homes
in Singapore, water is already “Hyflux-pure”.
TOMORROW’S REALITY, TODAY
Hyflux’s new products are reminiscent of its growing
international stature. Proprietary membrane technology
will position the Group at the forefront of global fluid
treatment, whether for homes, industries or municipalities.
Our know-how and innovations are for better living.
They know no boundaries.
annual report.03
HYFLUX LTDpage
44.45
“At Hyflux, we always stress R&D, human capital and innovativeideas. With all these, we want to focus on our already-successfultechnologies and we want to be ahead of everybody else.This will be the main thrust to put us on the world map.”
OLIVIA LUMTHE BUSINESS TIMES SUPPLEMENT, SINGAPORE PRESS HOLDINGS, 26 MARCH 2004
TAKING OFF ON ADVANCEDTECHNOLOGY
RAISING SHAREHOLDERVALUE
CONQUERING NEWHEIGHTS
CONFIDENCETO SOARconfidence to
SOAR
The Hyflux dream is a future made
boundless by pure water
annual report.03
HYFLUX LTD
As one of Asia’s largest water and fluid treatment
companies, Hyflux has successfully partnered more than
200 clients from Asia Pacific and Africa. Despite the
presence of bigger players, the Group is often singled out
as the preferred partner. This, according to clients, is
because of Hyflux’s professionalism, technology, passion
and a no-nonsense approach to get the job done, speedily
and efficiently.
ENTERPRISE OF THE YEAR
The Singapore Business Awards, jointly organised by
The Business Times and DHL Worldwide Express, a global
logistics company, honoured Hyflux with the Enterprise
of the Year Award for 2003 in recognition of its outstanding
record of innovation, entrepreneurial culture, financial
performance and growth. The award, one of Singapore’s
most prestigious, is conferred by a panel drawn from the
business, government, academic and media fields.
EUROMONEY WATER DEAL OF THE YEAR, ASIA PACIFIC
Singapore’s first seawater desalination project clinched
Euromoney’s Water Deal of the Year Award 2003, Asia
Pacific. It will be Singapore’s largest ever financed water
project, with the longest ever tenure of 18 years. This award
has set a new benchmark for the Group in regional water
projects; in terms of scope, as well as complexity of
execution, and extends our reach into the region and beyond.
EUROMONEY BEST SMALL COMPANY LIST
The only local company to make Euromoney’s Best Small
Company list, Hyflux was recognised by the magazine for
its glowing financial and management performance in
2003. The criteria used to select top performers from 699
firms were market strength, profitability, growth potential
and quality of management and earnings.
ISO 9001:2000
In June 2003, Hyflux was awarded the ISO 9001:2000
certification for the “Design, Fabrication, and Installation
& Commissioning of Fluid Treatment Systems.”
THE ASCENT SO FAR
Hyflux is firmly on the way to becoming a world-leading
water treatment company. By focusing on its proprietary
membrane know-how and core business capabilities,
Hyflux is poised to take off internationally. Hyflux has a
page
46.47
While Hyflux’s initial ascent has been about passion, drive, and focus,a new height will only be reached through experimentation, creativityand unrelenting speed.
TAKING OFF ON ADVANCEDTECHNOLOGY
RAISING SHAREHOLDERVALUE
CONQUERING NEWHEIGHTS
CONFIDENCETO SOAR
CONFIDENCETO SOAR
solid platform and reputation to undertake more projects
in the region. There is dazzling promise given Hyflux’s
membrane technology, leadership and ability to compete.
Charting its flight path, the Hyflux Group has identified
the following to go forward:
THE STRENGTH OF OUR BROADENED PORTFOLIO, COMBINED WITH EXCELLENT EXECUTION, MADE FOR A STERLING FINISH WITH A
S$19.5 MILLION POST-TAX PROFIT FOR THE FISCAL YEAR ENDED 31 DECEMBER 2003.
• Harness proprietary technology by acquiring
technology in the fluid and water treatment
business, either through direct investment or
joint development
• Build recurring income streams and focus on
core business groups, secure large value
projects and develop new applications
• Invest in synergistic businesses and potential
tie-ups in large growing markets such as
China and other parts of Asia
• Further strengthen the existing strong
management team
NOW FOR FREE FLIGHT
The work done in strengthening the Group’s fundamentals
has resulted its sterling performance and recognition. While
Hyflux’s initial ascent has been about passion, drive, and
focus, a new height will only be reached through
experimentation, creativity and unrelenting speed.
China will be a high growth market, not only in the
pharmaceutical and biotechnology segments, but also in
the chemical and petrochemical segments. The country’s
evolution into the largest manufacturing hub in the
world, coupled with a population exceeding one billion,
translates into exciting demand for a range of membrane
treatment systems.
Surging demand for clean water in China is merely
symptomatic of a world-wide thirst. According to the
United Nations, around five billion people will find it difficult
or impossible to meet their needs for fresh water in 2025.
Hyflux has a mission to provide part of the answer.
annual report.03
HYFLUX LTD
CORPORATE
STRUCTURE
HYFLUX LTD
SINGSPRING
PTE LTD
(100%)
HYFLUX
INTERNATIONAL
LTD
(100%)
HYFLUX
AQUOSUS
(SINGAPORE)
PTE LTD
(75%)
HYDROCHEM
ENGINEERING
(S) PTE LTD
(100%)
HANGZHOUZHEDA HUALU
MEMBRANETECH. CO. LTD.
(55%)
HYFLUX
FILTECH
(SINGAPORE)
PTE LTD
(71%)
HYFLUX
AQUOSUS
(SHANGHAI)
CO. LTD.
(100%)
HYDROCHEM
ENGINEERING
(SHANGHAI)
CO. LTD.
(100%)
NINGBO HUALUMEMBRANE
TECHNOLOGYCO. LTD.
(75%)
HYFLUX
FILTECH
(SHANGHAI)
CO. LTD.
(100%)
HYFLUX
ENGINEERING
PTE LTD
(100%)
page
48
HYDROCHEM
(S) PTE LTD
(100%)
TAKING OFF ON ADVANCEDTECHNOLOGY
RAISING SHAREHOLDERVALUE
CONQUERING NEWHEIGHTS
CONFIDENCETO SOARdesigned & produced by
RAINDANCE
CORPORATE
INFORMATION
COMPANY SECRETARY
Mr Lim Kim Seng
AUDIT COMMITEE
Mr Lee Joo Hai (Chairman)
Mr Teo Kiang Kok
Mr Gay Chee Cheong
Ms Olivia Lum Ooi Lin
NOMINATING COMMITTEE
Mr Teo Kiang Kok (Chairman)
Mr Lee Joo Hai
Mr Gay Chee Cheong
Ms Olivia Lum Ooi Lin
REMUNERATION COMMITTEE
Mr Teo Kiang Kok (Chairman)
Mr Lee Joo Hai
Mr Gay Chee Cheong
Ms Olivia Lum Ooi Lin
EXECUTIVE COMMITTEE
Ms Olivia Lum (Chairman)
Dr Deirdre Murugasu
Mr Foo Hee Kiang
Mr Lim Kim Seng
Mr David Hurn
Ms Grace Goh
Ms Rose Tong
REGISTERED OFFICE
40 Changi South Street 1
Singapore 486764
Tel: (65) 6214 0777
Fax: (65) 6214 1211
SHARE REGISTRAR ANDSHARE TRANSFER OFFICE
Lim Associates (Pte) Ltd
10 Collyer Quay
#19-08 Ocean Building
Singapore 049315
AUDITORS
Ernst & Young
Certified Public Accountants
10 Collyer Quay
#21-01 Ocean Building
Singapore 049315
Partner-In-Charge
Max Loh Khum Whai
(since 2002)
BANKERS
DBS Bank Ltd
6 Shenton Way
DBS Building Tower One
Singapore 068809
Oversea-Chinese Banking
Corporation Limited
65 Chulia Street
OCBC Centre
Singapore 049513
annual report.03
HYFLUX LTD
HYFLUX LTD40 Changi South Street 1 Singapore 486764 t. [65] 6214 0777 f. [65] 6214 1211 www.hyflux.com
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