ST Engineering Annual Report 2020

project cancellations of about $1b, we ended the year with an order book of $15.4b. This was slightly higher than 2019 year-end order book despite the challenges we faced in 2020. The expected delivery of $5.3b from the order book in 2021 continues to provide a healthy revenue pipeline. Capex in 2020 was $196m, about 30% lower than the year before, as we reduced some discretionary capex. Nevertheless, we continue to invest in new growth areas like cybersecurity, data analytics and cloud computing so that we can be ready for the upturn and emerge stronger. Our balance sheet remains very strong. We have access to diverse funding sources including a U.S. Commercial Paper programme and a Medium-Term Notes programme to support the Group’s activities and growth. It is noteworthy to mention that the Group managed to secure the lowest bond coupon/yield achieved for a 5-year U.S. dollar bond issuance by a Singapore corporate amidst the COVID-19 credit crunch in 2020, and received reaffirmation on our AAA credit rating from Standard & Poor's and Moody’s after our debt issuance. We ended the year with $729m in cash and cash equivalents, compared to $452m at the end of 2019. In view of these results, the Board of Directors has recommended a final dividend of 10 cents per share for this financial year. Together with the interim dividend of 5 cents per share paid out in September 2020, the total dividend for 2020 will be 15 cents per share. This represents a dividend yield of 3.9% 1 . Our ability to weather a difficult 2020 and pivot to the demands of the new normal driven by COVID-19 demonstrates the Group’s strong fundamentals and various mitigating factors, including our cost reduction initiatives and government support. Our results underscore the resilience of our diversified business across industries and geographies, the dedication of our people, our strengths in technology and innovation, and the breadth and depth of our engineering capabilities. The detailed business developments and updates of our business sectors in 2020 are covered in the Operating Review and Outlook section on pages 38 to 61. Looking ahead, we feel that there are grounds for optimism. Thanks to the biggest and fastest vaccination campaign in history, we see a future where the impact of COVID-19 can be significantly blunted. This holds out the possibility of the economy bouncing back. That said, there will be lower level of government support in 2021. However, with partial revenue recovery and savings generated by our cost reduction initiatives, we are confident of offsetting the impact of lower government support. Reorganising for growth While we might have spent much of 2020 wrestling with the immediate challenges posed by COVID-19, we did not lose sight of the bigger, long term picture. In November, we announced a major reorganisation of the Group. Since 1 January 2021, we have reorganised into two major clusters: Commercial as well as Defence & Public Security. This setup replaced the sector-centric structure of Aerospace, Electronics, Land Systems and Marine. Despite the pandemic, we decided to proceed with the redesign of the Group’s organisation structure so that we can be better positioned for growth when the economy recovers. We are fortunate to have a team of highly committed employees and resources to overcome both the immediate challenges posed by COVID-19, and in tandem, reorganise the Group to seize future opportunities. Three key principles guided the redesign. The first is our aim to be a key participant on the global stage. The new organisation structure will help us achieve global scale and success. Secondly, we wanted to sharpen our customer focus, to enable us to build deeper and more strategic engagements with our customers. Finally, we wanted to deepen our engineering and technology core, and improve the ways in which we develop, empower and deploy our engineers. To deliver on our strategic priorities, we also created a new leadership structure. The Group Executive Committee, comprising the Group President & Chief LETTER TO SHAREHOLDERS / ST ENG I NEER I NG 06 1 Dividend yield is based on $3.88, the average closing share price of the last trading days of 2019 and 2020.