2Q/1H2011 RESULTS BRIEFING2Q/1H2011 RESULTS BRIEFING

4 August 20114 August 2011

This presentation may contain forward-looking statements that involve risksand uncertainties. Actual future performance, outcomes and results maydiffer materially from those expressed in forward-looking statements as aresult of a number of risks, uncertainties and assumptions.

Representative examples of these factors include (without limitation)general industry and economic conditions, interest rate trends, cost ofcapital availability, competition from other companies and venues for thesale/distribution of goods and services, shifts in customer demands,

CAUTIONARY NOTE

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sale/distribution of goods and services, shifts in customer demands,customers and partners, changes in operating expenses, includingemployee wages, benefits and training, governmental and public policychanges and the continued availability of financing in the amounts and theterms necessary to support future business.

You are cautioned not to place undue reliance on these forward lookingstatements, which are based on current view of management on futureevents.

This presentation should be read in conjunction with

Rotary Engineering Limited’s 2Q/1H2011 Financial Results

ended 30 June 2011 statement

lodged on SGXNET on 4 August 2011

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lodged on SGXNET on 4 August 2011

1. Financial Highlights

2. Project Summary

3. SATORP Update

PRESENTATION OUTLINE

4

4. Business Development

5. Question-&-Answer Session

FINANCIAL HIGHLIGHTSFINANCIAL HIGHLIGHTS

P&L SUMMARY

S$’000 2Q2011 2Q2010 �▼▼▼▼ 1H2011 1H2010 �▼▼▼▼

Revenue 153,290 209,414 ▼27% 283,758 389,155 ▼27%

Gross Profit 31,549 38,268 ▼18% 54,618 70,376 ▼22%

Gross Profit Margins (%) 21% 18% �3ppt 19% 18% �1ppt

Other revenue 326 69 NM 580 517 �12%

Admin costs (13,742) (13,642) �1% (25,744) (26,570) ▼3%

Other operating costs (3,510) (3,542) ▼1% (6,882) (6,901) -

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Finance costs (280) (80) NM (535) (87) NM

Share of associates results 54 (1,903) NM (56) (2,246) NM

Profit Before Tax (PBT) 14,397 19,170 ▼25% 21,981 35,089 ▼37%

Profit After Tax (PAT) 12,336 15,109 ▼18% 20,164 27,511 ▼27%

Non-controlling Interests 2,162 1,369 �58% 4,679 (32) NM

Profit attributable to parent (PATMI)

10,174 13,740 ▼26% 15,485 27,543 ▼44%

EPS (Cents) 1.8 2.4 ▼25% 2.7 4.9 ▼45%

25%

30%

200

250

25%

30%

35%

Revenue Gross Profit Margins

REVENUE & GROSS PROFIT MARGINS

S$’m

7

209

156 160131

153

18%21%

18%

0

50

100

150

2Q2010 3Q2010 4Q2010 1Q2011 2Q2011

0%

5%

10%

15%

20%

REVENUE BY GEOGRAPHICAL SEGMENTS

ASEAN &

OTHERS

8%

Singapore

23%

Saudi

69%

2Q2010: S$209.4m

ASEAN &

OTHERS

Singapore

28%Saudi

65%

2Q2011: S$153.3m

Saudi

66%

Singapore

26%

ASEAN &

OTHERS

8%8

8%

1H2011: S$283.8m

Saudi

65%

Singapore

30%

ASEAN &

OTHERS

5%

1H2010: S$389.2m

OTHERS

7%

ORDER BOOK BY GEOGRAPHICAL SEGMENTS

ASEAN

4%

Singapore

12%

Saudi

Arabia

41%

At 30 Jun 2011: S$756.9m

ASEAN

1%

Singapore

10%

Saudi

Arabia

@ 31 Mar 2011: S$823.9m

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UAE

43%

UAE

39%

Arabia

50%

� 2Q2011- better margins due to closure of projects

� Expect continued pressure on margin

GROSS PROFIT MARGIN

S$’000 2Q2011 2Q2010 �▼▼▼▼ 1H2011 1H2010 �▼▼▼▼

Gross Profit 31,549 38,268 ▼18% 54,618 70,376 ▼22%

Gross Profit Margins (%) 21% 18% �3ppt 19% 18% �1ppt

10

� Maintain GP guidance: 15% ~ 20% for FY2011

44

44

13%

11% 12%

11%

12%

15%

15

20

Other Operating Costs Admin Costs(less FX) Total Costs as % of revenue

ADMIN (EXCL FX) & OTHER OPERATING COSTS

S$’m

Stable & inline with revenue growth

11

14 1413

12 13

34

8%

0%

3%

6%

9%

0

5

10

15

2Q2010 3Q2010 4Q2010 1Q2011 2Q2011

� FX losses due to weak USD

� Costs in line with business activities and performance

ADMINISTRATIVE COSTS

S$’000 2Q2011 2Q2010 �▼▼▼▼ 1H2011 1H2010 �▼▼▼▼

Admin costs (Incl FX) (13,742) (13,642) �1% (25,744) (26,570) ▼3%

FX (Loss) / Gain (986) 329 NM (1,205) (27) NM

Admin costs (excl FX) (12,756) (13,971) ▼9% (24,539) (26,543) ▼8%

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� Costs in line with business activities and performance

� Maintenance

� IT support

� Business development and tender

OTHER OPERATING COSTS

S$’000 2Q2011 2Q2010 �▼▼▼▼ 1H2011 1H2010 �▼▼▼▼

Other operating costs (3,510) (3,542) ▼1% (6,882) (6,901) -

• (Allowance) for doubtful debts

(1) (271) NM (94) (10) NM

• Write-back/(Allowance) for obsolete inventories

8 (8) NM (6) (16) ▼▼▼▼63%

• Amortisation of intangible assets

(153) (184) ▼17% (292) (339) ▼14%

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• Other operating costs (excl allowances) ~ mainly depreciation in Singapore & Saudi Arabia

assets

•Impairment loss on advances to associates

- - NM - (603) NM

Other operating costs

(excl allowances)

(3,364) (3,079) ����9% (6,490) (5,933) ����9%

S$’000 30.06.2011 31.12.2010 �▼▼▼▼

Property, Plant & Equipment 74,023 77,066 ▼4%

Other Non Current Assets 24,315 24,036 �1%

Current Assets 624,186 638,427 ▼2%

TOTAL ASSETS 722,524 739,529 ▼2%

Current Liabilities (413,498) (427,812) ▼3%

BALANCE SHEET SUMMARY

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Current Liabilities (413,498) (427,812) ▼3%

NET CURRENT ASSETS 210,688 210,615 -

Non-Current Liabilities (14,105) (11,884) �19%

NET ASSETS 294,921 299,833 ▼2%

Share Capital & Reserves 274,421 283,123 ▼3%

Net Asset Value (Per share) 48.3cts 49.9cts ▼3%

� Property Plant & Equipment

� Purchase of assets ~ mainly Saudi

� Depreciation: S$6.5m (1H2011)

� Non Current Liabilities

� Further approved financing from Saudi Industrial Development

BALANCE SHEET ANALYSIS

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� Further approved financing from Saudi Industrial Development Fund (SIDF)

CASH FLOW SUMMARY

S$’000 2Q2011 2Q2010 1H2011 1H2010

Net cashflows (used in)/from Operations (5,015) 35,646 (34,484) 45,300

Net cashflows (used in) Investment (1,363) (4,663) (3,275) (8,334)

Net cashflows (used in)/from Financing (10,405) (13,049) 2,636 (18,507)

Net (decrease)/increase in cash and (16,783) 17,934 (35,123) 18,459

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Net (decrease)/increase in cash and cash equivalents

(16,783) 17,934 (35,123) 18,459

Cash & Cash Equivalents

Effect on exchange rate changes (776) 188 (1,374) 352

At beginning of period 115,600 132,914 134,538 132,225

At end of period 98,041 151,036 98,041 151,036

� Net cash used in operations

� Project claims per contract T&Cs

� Invoicing procedures

� Income tax payment

CASH FLOW ANALYSIS

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� Net cash used in investment

� Replacement of assets (PPE)

� Net cash used in financing

� Proceeds from loans & facilities

� Dividends paid to shareholders

� Working capital in Saudi Arabia

1. Project progress recognition by client

2. Obtain all documents, incl vendors’/subcontractors’

3. Reconcile documents to client’s project progress

4. Submit claims for approval by client

5. Submit invoice for acceptance by client, …

SATORP RECEIVABLES’ CYCLE

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5. Submit invoice for acceptance by client, …

(All the above stages is subjected to SATORP’s review and sign off)

6. Await payment by client

• 45 days > invoice accepted

151

137

116

98

123

150

Cash & equivalent Project Working CapitalS$’m

STRONG CASH POSITION

19

98

1424

38

5163

0

50

100

2Q2010 3Q2010 4Q2010 1Q2011 2Q2011

� Interim dividend of 1.0 cent proposed

� Dividend payout ratio of 37% based on 1H2011 EPS

� Company does not have a fixed dividend policy; dividend

INTERIM DIVIDEND

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� Company does not have a fixed dividend policy; dividend payout ratio of between 25% ~ 48% over last 5 years

1H11 FY10 FY09 FY08 FY07 FY06

EPS 2.7 11.2 9.6 9.0 9.3 8.7

Share Price at P/E (cts) 83.0 102.0 105.0 24.5 85.0 71.0

Dividend (cts/share) 1.0 1.0 + 3.8 3.8 2.3 4.6* 13.1**

Dividend Yield (%) NM 4.7 3.6 9.4 5.4* 18.5**

DIVIDEND

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Dividend Payout Ratio (%)

37 43 40 26 49* 151**

* Includes dividend of 2.3cents/share to utilize S.44 credits

** Includes dividend of 10.0cents/share to utilize S.44 credits

Dividend (cts/share) Excl

S.44

1.0 4.8 3.8 2.3 3.1 3.1

Dividend Yield (%) Excl S.44 NM 4.7 3.6 9.4 3.6 4.4

Dividend Payout Ratio (%)

37 43 40 26 33 36

PROJECT SUMMARYPROJECT SUMMARY

Client/Project Location Contract

Value

Start

Date

Expected

Completion Date

Shell - Maintenance Various - 4Q2009 Ongoing

Hyundai - Jurong Rock Cavern (Engineering)

JurongIsland

S$2m 3Q2009 4Q2011

Petrochemical process ASEAN S$130m 2H2009 4Q2011

PROJECT SUMMARY

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Petrochemical process plant

ASEAN S$130m 2H2009 4Q2011

Saudi Aramco Total Refining & Petrochemical Company (SATORP) refinery tank farm

Saudi Arabia-

Jubail City

US$745m 3Q2009 4Q2012

PTT Tank Terminal Co -ammonia storage tank

Thailand-Rayong

S$48m 3Q2009 3Q2011

Client/Project Location Contract

Value

Start

Date

Expected

Completion Date

Concord Energy -Fujairah Oil Terminal

UAE-Fujairah

US$250m 1Q2011 1H2013

Stepan Asia -Chemical plant

JurongIsland

S$15m 1Q2011 1Q2012

Lanxess – Butyl Rubber Jurong S$3m 1Q2011 3Q2011

PROJECT SUMMARY

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Lanxess – Butyl Rubber plant

JurongIsland

S$3m 1Q2011 3Q2011

Thailand small projects Rayong/Chonburi

@ 2Q-3Q

2011

4Q2011-3Q2012

Chang Chun - Specialty Chemical Plant

JurongIsland

@ 3Q2011 4Q2011

Client/Project Location Contract

Value

Start

Date

Expected

Completion Date

Alstom Power - Oil and water tanks

Tuas @ 3Q2011 2Q2012

Int’l Oil Major - Shutdown maintenance

JurongIsland

@ 2Q2011 3Q2011

Evonik Rohmax - Jurong @ 2Q2011 1Q2012

PROJECT SUMMARY

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Evonik Rohmax -Maintenance

JurongIsland

@ 2Q2011 1Q2012

Invista - Maintenance Tuas @ 2Q2011 3Q2011

@ Total cumulative value S$40m: per 25 Jul 2011 SGX announcement

SUMMARY

� 2Q2011

� Revenue: S$153m

� PAT S$12.3m

� PATMI S$10.2m

� Cash: S$98m

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� Cash: S$98m

� Order book: S$757m (@30 June 2011)

� Interim dividend : 1.0 cent

SATORP UPDATESATORP UPDATE

SATORP UPDATE

� SATORP Update @30 June 2011� Engineering phase: 98%

� Procurement : 81%

� Construction: 54%

� Manpower on ground: > 5200

� Progress on track

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SATORP UPDATE

29North Tank Farm

SATORP UPDATE

30South Tank Farm

SATORP UPDATE

311st Aluminum Dome Roof Completed

SATORP UPDATE

32Piping works

SATORP UPDATE

33Bullet tanks delivery ▲

SATORP UPDATE

34Bullet tank lifting operation ▲

SATORP UPDATE

35▲ 8 x Bullet tanks (far view)

SATORP UPDATE

36

SATORP UPDATE

37

BUSINESS BUSINESS DEVELOPMENT

BUSINESS DEVELOPMENT

� Singapore

� Focus on Jurong Island’s downstream projects

� In discussions with fine chemical plant producers setting up facilities here

� Slight delay in Singapore projects arising from global uncertainties, particularly in US and Europe

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uncertainties, particularly in US and Europe

� ASEAN

� Direct negotiations continuing. Key markets of Malaysia, Indonesia and Thailand.

� Pursuing both greenfield and expansion projects

� Exploring BOO / BOT opportunities

� Middle East

� Business development ~ Saudi Arabia

� Prequalified for projects such as RTIP, Jazan

� Bidding for projects ~ Saudi Arabia

� Continuing direct negotiations

BUSINESS DEVELOPMENT (Cont.)

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� Exploring BOO / BOT opportunities

QUESTION-&-ANSWERQUESTION-&-ANSWER

THANK YOUTHANK YOU