Chairman's Message 2019

Strengthening our Core

It has been a challenging year. With digitalisation and increasing reliance on advanced technology in our globalised economy, the demand for reliable, efficient energy supply has risen in tandem. We are committed to delivering greater value to customers through innovative, sustainable solutions and energy and cost savings.

Maintaining Financial Stability

For the year ended 31 March 2019, our consolidated group net profit decreased by S$53.4 million to S$980.2 million. This includes S$495.5 million from our largest subsidiary, SP PowerAssets and S$169.6 million from our Australian associates.

Despite rising costs and interest rates, we maintained a healthy financial position through prudent financial management, maintaining our credit ratings at Aa2 by Moody’s and AA by S&P. The high investment-grade ratings allowed us to have broad and cost-effective access to banks and capital markets to finance our continuous capex investments in renewing and upgrading our network infrastructure. 

Leveraging the strong credit rating, our new treasury vehicle, SP Group Treasury issued its inaugural 10-year bond in February 2019, raising US$600 million. The issue received strong demand from international investors, recording a final order book of US$1.6 billion. The bond issuance established a new pricing benchmark for SP Group and was testament to investors’ confidence in us.

Financial Highlights

Focus on reliability

In the latest international benchmarking report by DNV GL in 2018, Singapore’s electricity and gas networks performance ranked top among major cities. On average, consumers experienced 0.87 minute of electricity interruption and 0.093 minute of gas interruption.

Singapore’s electricity network performance is ranked top among major cities, according to the latest international benchmarking report by DNV.GL in 2018.

Network reliability remains our number one focus. We continue to invest in infrastructure and engineering capabilities so that customers can enjoy efficient, high quality service.

We have a long-term renewal strategy to replace our aging assets, ensuring that our electricity network remains resilient. We have completed the construction of the cross-island cable tunnels after intensive preparation and development over seven years. In addition, we completed several major transmission projects, including 28 renewal projects, and replaced 116km of cables, 479 transformers, 479 switchgear panels and 314 ring main units in our distribution network. To enhance speed and accuracy in predicting equipment abnormalities, we are digitising our grid and have implemented online condition monitoring for all 400kV and 230kV switchgears and are in the process of doing so for the 66kV and 22kV switchgears. By 2020, we would have remote control capabilities for all our 6.6kV distribution network substations, thereby minimising supply restoration time.

We accelerated our gas pipeline renewal programme, replacing ductile iron pipes with the more durable polyethylene pipes, which significantly reduces the risk of gas leaks. About 70km of gas pipelines were renewed last year. We are on track to set up our real-time smart gas distribution monitoring system by 2021. In April last year, we launched a mobile app to digitise, track and monitor our emergency response management to public calls on gas-related matters. These measures will improve our ability to take preventive and restoration action.

We thank our community partners, grassroots leaders and residents for their patience, understanding and support during the construction of the above projects.

Helping Customers Change and Save

With the full rollout of the Open Electricity Market (OEM) in May 2019, customers can choose to switch to a retailer or remain with SP at the regulated tariff. We assisted customers to switch seamlessly to a retailer of their choice and enjoy significant cost savings of 25 per cent or more.

Regardless of the retailer from whom consumers buy electricity, we continue to operate and maintain the electricity grid and provide market support services such as billing and meter reading. Despite rising demand and costs, we have kept these fees low for the past 10 years, while improving the reliability of such services through increased productivity and by leveraging technology to drive cost efficiencies.

To make it easier for consumers to select price plans that best suit their needs, we rolled out the price comparison feature on the SP Utilities app, whereby they can see all the price plans at a glance. We are also installing smart meters nationwide, so that customers can receive accurate and timely readings of their utilities consumption. As of August 2019, we have installed close to 400,000 smart meters nationwide.

Our commitment to deliver quality service to meet our customers’ ever-changing needs was acknowledged internationally. At the 2018 Global Performance Excellence Awards, we were presented the International World Class Award for service excellence. Our SP Utilities app won the “Omni-experience Innovator of the Year” award at the 2018 IDC Digital Transformation Awards.

Bringing energy-saving solutions to our customers

We aim to deliver greater value to customers by bringing sustainable, energy-saving solutions to residents and businesses. This is in line with our 30-30-30 commitment to add at least 30 per cent value for our customers or reduce their carbon footprint by 30 per cent, by the year 2030.

We have expanded our partnership with Sembcorp Marine at its Tuas Boulevard Yard by deploying our digital energy-saving system across the 4.5 MegaWattpeak (MWp) solar photovoltaic (PV) system, the largest single solar rooftop in a Southeast Asian shipyard. The system was fully commissioned in February 2019 and will deliver up to 6 GWh of energy annually – enough to power almost 16,000 four-room flats and reduce 2,515 tonnes of carbon emissions per year. We have also developed an in-house digital energy suite with AI-enabled technology to monitor and optimise the shipyard’s energy consumption and help make operations and maintenance of the solar PV system more efficient.

We are partnering JTC to develop Singapore’s first smart grid in a business park, at Punggol Digital District. This will drive the integration of smart energy solutions such as renewable energy and electric mobility. Businesses and consumers can adopt clean sources of energy, such as solar energy generated from building roof tops, electric vehicle charging and smart metering. This enables them to optimise energy consumption, reduce carbon footprint and save cost.

Minister for Environment and Water Resources Masagos Zulkifli (centre) witnessed the signing of the Memorandum of Understanding by JTC CEO Ng Lang (left) and Group CEO Wong Kim Yin to develop Singapore’s first Smart Grid in a business park, at Punggol Digital District. 

Together with HDB, we will be developing Singapore’s first smart energy town at Tengah estate. Leveraging on artificial intelligence, our integrated digital energy solutions combine technologies for residential cooling, solar energy, EV charging points and batteries as a smart energy enabler. Residents and town councils will be able to utilise the insights to manage their energy consumption and achieve greater savings.

Cooling outdoor spaces efficiently

At the National Day Parade 2018, sections of spectators were able to enjoy the show in comfort with individual air outlets providing cool relief. This was done through technology that taps on SP’s underground district cooling network, thanks to an improved outdoor cooling solution SP developed in collaboration with ST Engineering. SP’s outdoor cooling solution was also utilised at the Food Fiesta 2019 in April.

Building our engineering bench

To boost our engineering capabilities, we have supported our engineers in their professional development. We have 105 engineers with Professional Engineer certification, the highest among companies in Singapore. Last year, we sponsored 224 employees for their higher education courses and offered 11 scholarships to budding engineers for their tertiary education. In total, we invested about S$8.4 million in training our people through a combination of relevant adaptive, technology and technical skills to meet our growing business needs.

Since 2016, we have offered polytechnic and university sponsorships to 23 students who have worked on Singapore Polytechnic’s SunSPEC solar car. They are offered jobs with us and are provided a structured training programme upon graduation. This is in addition to our five-year sponsorship of S$1 million to build solar cars to compete at the biennial World Solar Challenge.

Singapore Polytechnic and SP Group at the launch of SunSPEC 6 solar car on 30 July 2019. 

Future-proofing our workforce

In April 2018, we launched Project Fusion – Future Skills In Everyone – to equip staff with new digital skillsets and relevant core knowledge to better serve our customers in the increasingly digitalised landscape. We invested S$2 million last year and have set aside another $5 million for this purpose. Last year, about 2,000 employees underwent more than 52,000 hours of training in 14 courses as part of this initiative.

This initiative was made possible by the strong labour-management relations that we enjoy with the Union of Power and Gas (UPAGE). In the past year, we signed three collective agreements with UPAGE. This has paved the way for enhanced benefits such as adjustment of salary ranges to align with market movements, increase in medical subsidy and paid volunteer leave for community service.

Building on strong labour-management relations, we signed three collective agreements with UPAGE in the past year, with new benefits for our employees. 

Supporting innovative, ground-up solutions

To support the younger generation in actualising their innovative ideas, we partnered Singapore Polytechnic to develop an idea translation lab – ideaBox. Through ideaBox, Singapore Polytechnic students will draw on concepts generated from ideation competitions to turn innovative ideas into real-world solutions.

World’s first smart grid index

We proactively seek out best practices and tools internationally to measure the performance of our electricity grid. We turned our learnings into a framework that has become the world's first smart grid index. It measures 45 utilities across 30 countries and covers key dimensions of grid development. Launched last year, the index was presented and well received at international industry events such as the ASEAN Energy Business Forum and Bloomberg New Energy Finance.

Singapore’s largest public EV charging network

Riding on rising public awareness and demand for low-carbon transportation, we are setting up Singapore’s largest and fastest public EV charging network. We will have 1,000 EV charging points island-wide by 2020. Of these, 250 are high-powered direct current chargers which can fully charge a vehicle in 30 minutes. We have worked with location owners like Ascendas-Singbridge Group to install chargers at their properties and partnered vehicle fleet owners like Grab and HDT Singapore Taxi (HDT) to meet the charging needs of their expanding EV fleets.

Besides electrifying our vehicle fleet, we will install 1,000 EV charging points island-wide for the public by 2020.

World’s first blockchain-powered marketplace for renewable energy certificates

We launched the world’s first blockchain-powered renewable energy certificate (REC) marketplace in October last year. The platform connects buyers and sellers around the world to trade green energy easily on this digital platform. Blockchain technology enables the security, integrity and traceability of each REC transaction. City Developments Limited and DBS have come on board as REC buyers. Katoen Natie Singapore, a global chemical logistics company that owns Singapore’s largest single unit rooftop solar facility at a warehouse, has signed on as an REC seller.

Doing More for the Community

We are committed to improving the quality of life for individuals and families from less privileged backgrounds.

We worked closely with the Toa Payoh West-Balestier Constituency Office at its seniors activity centre, Meeting Point @128. Our staff volunteers, or Heart Workers, served lunch to seniors there twice a week, shared safety tips and conducted digital literacy workshops for the elderly. We also held regular outreach programmes for seniors at TOUCH’s seniors activity centre at Geylang Bahru and for the children at student care centres under AMKFSC Community Services.

Together with our business partners and the public, we raised more than S$1.4 million to support elder care services under the SP Heartware Fund administered by Community Chest, benefitting community homes, befriending programmes, counselling, rehabilitation and caregiver support.

We are proud to support Project Silver Screen, a nation-wide programme to screen seniors for age-related conditions, launched by Temasek Foundation Cares and the Ministry of Health. This programme provided checks for vision, hearing and oral health conditions for seniors.

We are supporting Project Silver Screen, a nation-wide programme to screen seniors age 60 and above for age-related conditions.

In appreciation

On behalf of the Board, I would like to thank the management and staff for their dedication and leadership in driving transformation to shape Singapore’s energy future and ensuring network sustainability. I am grateful to our shareholder, business partners, union and regulator for their continuous support. Thank you to my board members for their guidance and counsel.

Mohd Hassan Marican

August 2019

Financial Statements