APAC: Sembcorp eyes UK acquisitions

03 August 2018 - 12:00 am UTC

Sembcorp Industries is looking to follow up its acquisition of UK Power Reserve (UKPR) with more deals in the United Kingdom.

The Singapore-listed company is considering “opportunistic roll ups” to smooth UKPR’s seasonal revenue contribution over the year, Sembcorp Industries chief executive officer Neil McGregor said during the company’s 1H18 results presentation on Friday (3 August).

UKPR is the largest flexible distributed power generator in the country with 533MW of small-scale gas turbine operational assets, and a further 480MW of reserve power in development by 2019. 

The seasonal business captures value during the October to March period when volatility in power demand is higher, McGregor noted. 

Sembcorp will use a “high grading” strategy to target other peaking generators in the UK because the market needs a flexible conventional power fleet, he added.

The move is part of a transformation strategy outlined in February, which includes rebalancing Sembcorp’s portfolio towards developed markets. 

The company invested in Australian renewable generation and energy efficiency project developer Vellocet Clean Energy in July to “establish a beachhead” to grow in the Australian power market.

1H 2018 results
The Singapore-headquartered group has seen progress in its strategy to reposition its utilities business and build integrated energy platforms.

For the half-year to June 30, the utilities business delivered 58% YoY profit growth to SGD 155.3m (USD 113.65m). Singapore assets contributed 40% of profit. The utilities business includes energy, water, solid waste management and logistics. 

Overall, however, the group’s net profit fell 8% YoY to SGD 158.6m from SGD 172.1m in 1H17, mainly due to losses from the group’s marine and construction businesses. The group also has an urban development vertical, alongside its utilities and marine businesses.

Sembcorp’s India power unit returned to profitability and contributed SGD 23.8m. However, increasing coal costs and delays in collecting payment from debt-ridden Indian power distributors are still concerns, McGregor noted.

The initial public offering of Sembcorp Energy India on local stock exchanges is still moving through the process of regulatory approvals, he added.