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Second Quarter and First Half 2012 Financial Results 19 July 2012
Second Quarter and First Half 2012 Financial Results
19 July 2012
Scope of Briefing
Address by Chief Executive Officer
Group Financial Highlights
Business Review & Outlook
2
Address By
Chief Executive Officer
3
Continued Volatility
Anaemic recovery for the US
A shaky Eurozone
Moderating growth in China
Slower Singapore GDP growth
Brent crude above US$90/b
4
Creditable Performance
1H12 net profit increased 83% over 1H11
Annualised ROE remains healthy at 22.4%
EVA increased from S$472m to S$1,052m
Interim dividend of 18.0 cts per share
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Robust Developments
• New orders secured including 3 jackups, semi upgrades and FPSO contracts
Offshore & Marine
• Secured additional natural gas supply • Expanding logistics and data centres footprint
Infrastructure
• Handed over more than 700 homes at Reflections at Keppel Bay • Developing GFA of over 400,000 sm in commercial portfolio • Healthy interest for township homes in China and Indonesia• Steady and recurring income from fee‐based business
Property
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Enhancing Value Propositions
7
• Continue execution excellence for orders secured • Enhance yard capabilities to meet strong demand in Brazil• Increase focus on technology and productivity improvement
Offshore & Marine
• Grow share of Singapore’s power market • Improve operational efficiencies in our plants• Develop China logistics projects expeditiously
Infrastructure
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Sustaining Growth
• Acquire sites in Singapore and overseas selectively• Seize opportunities to expand commercial portfolio • Target higher income from fee‐based business
Property
• Long‐term growth potential in KrisEnergy• Joint bid to privatise and delist k1 Ventures
Investments
8
Group Financial Highlights
9
1H12 Financial Performance
Net profit 83% to S$1,272m
EPS 81% to 71.0cts
Annualised ROE from 20.8% to 22.4%
EVA from S$472m to S$1,052m
Cash outflow from S$697m to S$103m
Net gearing from 0.16x to 0.21x
Interim dividend to 18.0 cts per shareComparatives for ROE and net gearing are restated due to retrospective application of Amendments to FRS 12.
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11
Financial Highlights
S$m 1H 2012 1H 2011 % Change
Revenue 7,747 4,575 69
EBITDA 1,656 963 72
Operating Profit 1,556 868 79
Profit Before Tax 1,674 961 74
Net Profit 1,272 696 83
EPS (cents) 71.0 39.2 81
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Revenue by Segments
S$m 1H 2012 % 1H 2011 % % Change
Offshore & Marine 4,028 52 2,523 55 60
Infrastructure 1,438 19 1,382 30 4
Property 2,153 28 632 14 241
Investments 128 1 38 1 237
Total 7,747 100 4,575 100 69
13
Pre‐tax Profit by Segments
S$m 1H 2012 % 1H 2011 % % Change
Offshore & Marine 623 37 609 63 2
Infrastructure 76 5 81 9 (6)
Property 824 49 225 23 266
Investments 151 9 46 5 228
Total 1,674 100 961 100 74
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Net Profit by Segments
S$m 1H 2012 % 1H 2011 % % Change
Offshore & Marine 484 38 475 68 2
Infrastructure 57 4 74 11 (23)
Property 569 45 108 15 427
Investments 162 13 39 6 315
Total 1,272 100 696 100 83
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27.7 31.1 32.9 37.0
27.330.6 35.0
37.3
17.6
41.921.6
29.122.8
21.8
07 08 09 10 11 12
Consistent Earnings Growth
1H 2H
Net Profit (S$m) EPS (Cents)
55.061.7
2Q:
67.9
74.3
1Q:482 544 576 650
475535 614
657
312751
384
521406
389
07 08 09 10 11 12
9571,079
1,1901,307
1,491
1Q:
2Q:
83.8
3Q:3Q:
4Q:4Q:
2Q:
1Q:1Q:
2Q:
1,27271.0
16
20.1%21.8% 22.5%
20.8% 20.8%22.4%
2007 2008 2009 2010 2011 1H'12
ROE Full‐year dividend Interim dividend
ROE & Dividend
Plus
31.8 cts
12.7 cts 13.6 cts
18.0 cts
8.2 cts
34.6 cts38.2 cts
43.0 cts
17.3 cts
Note: Comparatives for ROE are restated due to retrospective application of Amendments to FRS 12. In addition, dividend per share for FY2007 to FY2010 have been adjusted for the bonus issue in 2011.
14.5 cts
Special dividend
40.9cts/share
Dividendin specie
~20.9cts/share
Plus
17.0 cts
17
Free Cash Flow
1H 2012S$m
1H 2011S$m
Operating profit 1,556 868
Depreciation & other non‐cash items 116 84
1,672 952
Working capital changes (1,123) (746)
Interest & tax paid (160) (183)
Net cash from operating activities 389 23
Investments & capex (584) (850)
Divestments & dividend income 92 130
Net cash used in investing activities (492) (720)
Cash Outflow (103) (697)
Dividend Paid (631) (553)
Business Review & Outlook
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Offshore & Marine
19
Rising Rig Utilisation
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Source: ODS Petrodata
75
80
85
90
95
100
Jul 10
Aug 10
Sep 10
Oct 10
Nov 10
Dec 10
Jan 11
Feb 11
Mar 11
Apr 11
May 11
Jun 11
Jul 11
Aug 11
Sep 11
Oct 11
Nov 11
Dec 11
Jan 12
Feb 12
Mar 12
Apr 12
May 12
Jun 12
Rig Utilisation
Global Jackup Global Semi KFELS JUs KFELS Semi
Rig market continues to be tightProprietary design rigs enjoy good utilisation rates
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22 cold stacked rigs scrapped over the past 20 months
Newly delivered jackups absorbed by the market
Continued Jackup Replacement Cycle
Source: Pareto and ODS Petrodata, as at June 2012
New Orders Secured
New orders to date of S$2 bn
From April to date:
US$560m jackup for Maersk
US$242m KFELS B Class jackup
US$200m FPSO topside integration
US$70m contracts for semi repair/upgrade and floating dock construction
KFELS B Class jackup
22
23
Deliveries in 2Q12:
3 FPSO/FSU conversions/upgrades
6 Major rig repairs
2 Specialised vessels
Quality Deliveries
Rock Dumping Vessel
Net orderbook of S$7.6 bn as at 30 June 2012 with deliveries extending to 2015
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Infrastructure
Focused On Execution
25
Keppel EnergyContinue to deliver good earnings
Keppel Integrated EngineeringUK and Qatar projects moving towards completion and commissioning
Keppel T&TDevelopment of port in Wuhu and logistics park in Jilin on track
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• 800MW expansion on track for completion in 2013
Keppel Energy
• Pursuing opportunities in India, Brazil and Europe
Keppel Integrated Engineering
• Securus Fund acquired first Malaysia data centre Keppel T&T
Positioning For Growth
27
Property
Resilient Home Sales
Singapore
• 194 Keppel homes sold in 1H12• Quality developments with strong attributes continue to draw demand
Overseas
• 838 Keppel homes sold in 1H12• Indonesian market remains encouraging
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Expanding Commercial Portfolio
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Positive leasing continues : ‐MBFC Phase 1 (100%)‐MBFC Phase 2 (70%)‐ OFC (92.3%)
Beijing – 100,000 sm for 3 office blocks and retail premises
Tianjin Eco‐City – 162,000 smof office towers, retail and serviced apartments
Vietnam – 90,000 sm for retail, office and serviced apartments
Indonesia – 64,000 sm in 48‐storey office tower
Saigon Centre – Phase 2, Vietnam
Growing Fee‐Based Business
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K‐REIT Asia
Income‐accretive acquisition of additional 12.39% interest in Ocean Financial Centre
Portfolio committed occupancy increased to 97.0%
Alpha Investment Partners
Opportune acquisitions and divestments
AUM of S$15.1b
Outlook
Driving sustainable value creation amidst volatility through excellent
execution, focus on core competencies and prudent financial management
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32
Thank youQ&A
2Q & 1H 2012 Results
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Additional Info
Financial Highlights
34
S$m 2Q 2012 2Q 2011 % Change
Revenue 3,481 2,287 52
EBITDA 660 508 30
Operating Profit 610 460 33
Profit Before Tax 680 511 33
Net Profit 521 384 36
Revenue by Geography
35
1H 2012
TotalS$m
OverseasCustomers
%
SingaporeCustomers
%
Offshore & Marine 4,028 90 10
Infrastructure 1,438 12 88
Property 2,153 8 92
Investments 128 78 22
Total 7,747 53 47
EBITDA by Segments
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S$m 1H 2012 % 1H 2011 % % Change
Offshore & Marine 636 38 634 66 ‐
Infrastructure 99 6 97 10 2
Property 804 49 206 21 290
Investments 117 7 26 3 350
Total 1,656 100 963 100 72
Capital/Gearing/ROE
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S$m 30 Jun 2012Restated
31 Dec 2011
Shareholders’ Funds 8,385 7,699
Capital Employed 12,465 11,761
Net Debt (2,649) (1,857)
Net Gearing Ratio 0.21x 0.16x
ROE 22.4% 20.8%
Comparatives are restated due to retrospective application of Amendments to FRS 12.
Offshore & Marine
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Financial Highlights – Offshore & Marine
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S$m 1H 2012 1H 2011 % Change
Revenue 4,028 2,523 60
EBITDA 636 634 ‐
Operating Profit 570 568 ‐
Profit Before Tax 623 609 2
Net Profit 484 475 2
Financial Highlights – Offshore & Marine
40
S$m 2Q 2012 2Q 2011 % Change
Revenue 2,034 1,324 54
EBITDA 302 353 (14)
Operating Profit 269 320 (16)
Profit Before Tax 308 343 (10)
Net Profit 249 259 (4)
Offshore & Marine Review
S$790m contracts secured in 2Q 2012:
1 Jackup, 1 Semi Upgrade and 1 Floating Dock
Major contract completions in 2Q 2012:
3 FPSO/FSU Conversions/Upgrades, 6 Rig Repairs, 1 Semi Crane Repair, 2 Specialised Vessels, 1 Coal Transhipment Barge and Steel Fabrication
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Offshore & Marine Orderbook
42
Orderbalance Clients
S$m
For delivery in 2012
1 Semi / 6 Jackups / 1 Semi Upgrade / 1 Jackup Repair / Ensco / Saudi Aramco / Standard Drilling / AOD /
1 FPSO Conversion / 1 FPSO Upgrade / 2 FPSO Modules Fab. & Jasper / Safin Gulf / Transocean / Saipem / COSL /
Integrations / 1 FSO Modification & Upgrade / 1 EPV Modification / Bumi Armada / Petrofac / SBM / Modec /
1 Transformer Platform / 1 Pipelayer Completion / Dixstone / BC Petroleum / Wetfeet / Saipem /
5 Tugs / 2 Coal Barges 392 Smit Rebras / PT Pelayaran Straits / PT Mitra
For delivery in 201318 Jackups / 1 TLWP / 1 Semi / 2 Semi Upgrades / 1 Drillship Upgrade / Transocean / AOD / Perforadora Central / Dynamic
1 Accommodation Semi / 1 FPSO Conversion / 2 FPSO Upgrade / Drilling / Standard Drilling / JDC / Jasper / Ensco / GDI /
1 Diving Support Vessel / 1 Floating Dock / 1 AHT / 1 Containership / Discovery Offshore / Petrobras / Chevron / Seadrill /
3 Bulk Carriers / 4 Tugs Noble / Diamond Offshore/Floatel/SBM/Bumi Armada/
3,295 Baku Shipyard / Seaways / OK Tedi / Smit Rebras
For delivery in 2014/20157 Jackups / 1 Semi / 1 Floating Crane
3,933Maersk / Ensco / Standard Drilling / GDI / PerforadoraCentral / Sete Brasil / Asian Lift
TOTAL as at 30 June 2012 7,620
Infrastructure
43
Financial Highlights – Infrastructure
44
S$m 1H 2012 1H 2011 % Change
Revenue 1,438 1,382 4
EBITDA 99 97 2
Operating Profit 72 74 (3)
Profit Before Tax 76 81 (6)
Net Profit 57 74 (23)
Financial Highlights – Infrastructure
45
S$m 2Q 2012 2Q 2011 % Change
Revenue 755 732 3
EBITDA 48 39 23
Operating Profit 35 27 30
Profit Before Tax 37 30 23
Net Profit 30 34 (12)
Property
46
Financial Highlights – Property
47
S$m 1H 2012 1H 2011 % Change
Revenue 2,153 632 241
EBITDA 804 206 290
Operating Profit 797 200 299
Profit Before Tax 824 225 266
Net Profit 569 108 427
Financial Highlights – Property
48
S$m 2Q 2012 2Q 2011 % Change
Revenue 632 195 224
EBITDA 257 90 186
Operating Profit 253 87 191
Profit Before Tax 267 102 162
Net Profit 176 59 198
Investments
49
Financial Highlights – Investments
50
S$m 1H 2012 1H 2011 % Change
Revenue 128 38 237
EBITDA 117 26 350
Operating Profit 117 26 350
Profit Before Tax 151 46 228
Net Profit 162 39 315
Financial Highlights – Investments
51
S$m 2Q 2012 2Q 2011 % Change
Revenue 60 36 67
EBITDA 53 26 104
Operating Profit 53 26 104
Profit Before Tax 68 36 89
Net Profit 66 32 106
This release may contain forward-looking statements which are subject to risks and uncertainties that could cause actual results to differ
materially from such statements. Such risks and uncertainties include industry and economic conditions, competition, and legal, governmental
and regulatory changes. The forward-looking statements reflect the current views of Management on future trends and developments.
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ADDRESS BY KEPPEL CORPORATION LIMITED’S
CHIEF FINANCIAL OFFICER, LOH CHIN HUA
AT THE 1H 2012 RESULTS PRESENTATION
THURSDAY, 19 JULY 2012 Group Financial Highlights (Slide 9) 1. 1H12 Financial Performance (Slide 10)
Thank you, Chiau Beng. A very good evening to all of you. Net profit for the first half hit a record S$1,272 million, driven largely by the lumpy profits arising from the delivery of Reflection units sold under the Deferred Payment Scheme (DPS). As residential units sold under the DPS has mostly being delivered, profits for the second half of the year is likely to revert to normal. Earnings per share grew at 81 per cent to 71.0 cents. Annualised ROE increased to 22.4% while our EVA expanded to S$1,052 million.
Cash outflow was lower than the year before at S$103 million, and resulted mainly from working capital changes. Net gearing moved up to 0.21 from 0.16 at end of 2011. In view of the Group’s strong performance, we are declaring an interim dividend of 18 cents per share, up from 17 cents in the prior period.
2. Financial Highlights (Slide 11)
All key line items registered significant improvement over the previous year. The growth in EBITDA and profits were at a higher rate than revenue because of higher margins from the Property Division and higher investment profits.
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3. Revenue by Segments (Slide 12) Revenue was higher in all divisions. Offshore & Marine Division posted an increase of 60% in revenue as a result of higher volume of work. Infrastructure Division recorded a slight increase in revenue attributed to higher retail prices and contract load, partly offset by lower revenues recognised from KIE’s Engineering, Procurement and Construction (“EPC”) contracts. Property revenue rose more than 2-fold as we continue to witness the lumpy revenue recognition from the sale of Reflections units under the Deferred Payment Scheme.
4. Pre-tax Profit by Segments (Slide 13)
Offshore & Marine Division showed a modest increase from the previous year, as a result of lower prices of new builds. For the Infrastructure Division, there was a dip in pre-tax profit. Better performance at Keppel Merlimau co-gen plant was offset by lower contribution from KIE. In Property, we recorded more than 200% growth in profitability due to robust margins from our sales of Singapore residential projects.
5. Net Profit by Segments (Slide 14)
The largest contributor to net profit came from the Property Division which increased its profit by 4-times to S$569 million. Offshore & Marine Division recorded a smaller 2% improvement, contributing 38% of the Group’s net profit. Earnings from Investments were higher due to sale of investments.
2
6. Consistent Earnings Growth (Slide 15)
Both the Group’s net profit and earnings per share for the first half have surpassed that of the full year 2009 and are almost equal to financial year 2010. With the delivery of a significant bulk of Reflections units sold under DPS, this level of profits will not be repeated in the second half.
7. ROE & Dividend (Slide 16)
For the past 5 years, we achieved return on equity of above 20%. For the first half of 2012, our annualised ROE is 22.4%. In line with our increased earnings, we are rewarding our shareholders with a higher interim dividend of 18 cents, as compared to 17 cents last year.
8. Free Cash Flow (Slide 17)
Cash flow from operations was a robust $1.7 billion for the first half of the year. This was $0.7 billion above the previous year. With higher working capital requirement in Offshore & Marine and Property, the resultant net cash from operating activities amounted to S$389 million. The Group spent about S$600 million on acquisitions and capital expenditure. This included the capital expenditure for the expansion of Keppel Merlimau Co-generation plant, investment in associated companies and other operational capex. The resultant cash outflow was S$103 million for the first half of the year.
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Business Review & Outlook (Slide 18)
1. Offshore & Marine (Slide 19)
1.1 Rising Rig Utilisation (Slide 20)
The high rig utilisation bodes well for our Offshore & Marine Division. The utilisation of our proprietary design rigs continues to outperform the industry average. This further reinforces our conviction to focus on research & technology and, to be the provider of choice and partner for solution for the offshore and marine industry.
1.2 Continued Jackup Replacement Cycle (Slide 21)
The rate for scrapping of jackups in the last 20 months has outpaced all of that in the previous 15 years. With the average age of the jackup fleet exceeding 25 years and a requirement for safer and higher specification rigs, we expect this pace of scrapping to continue. We expect the newly delivered jackups and those under construction to be readily absorbed into the market.
1.3 New Orders Secured (Slide 22)
Our ‘Near Market, Near Customer’ strategy has paid off well as our yards in various locations have successfully secured orders from customers globally including Brazil, USA, Mexico, North Sea and Kazakhstan. We have secured new orders to date of S$2 billion and this does not include the US$4.12 billion LOI from Sete Brasil.
1.4 Quality Deliveries (Slide 23) The successful deliveries made by Offshore & Marine in the first half of this year are testament to the Division’s commitment and focus on product quality and strong project execution. Our robust net orderbook of S$7.6 billion, with deliveries extending to 2015, demonstrates our strong standing in the market.
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2. Infrastructure (Slide 24)
2.1 Focused On Execution (Slide 25) Keppel Energy continues to deliver positive results from its Cogen plant. KIE’s EPC projects are making progress towards completion. The development of Keppel T&T’s first port project along Yangtze River in Wuhu and the international logistics park in Jilin is on track. When completed, both projects are expected to enhance our earnings.
2.2 Positioning For Growth (Slide 26) The expansion of the Keppel Merlimau cogen power plant is progressing well and on schedule for completion by 2013 while Keppel Integrated Engineering continues to pursue opportunities in its target markets. Securus Data Property Fund’s recent acquisition of an 80% stake in a data centre at Cyberjaya further expands its footprint in the region.
3. Property (Slide 27)
3.1 Resilient Home Sales (Slide 28) Despite the cooling measures, we continue to see fairly robust demand for well located sub-urban homes in Singapore. Over 190 residential units, primarily from our suburban development, The Luxurie, were sold in the first half of the year. In the overseas market, despite similar policy headwinds, home ownership aspiration remains strong. We sold over 800 homes in the first half primarily from our township developments in China and Indonesia.
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3.2 Expanding Commercial Portfolio (Slide 29)
Phase 2 of our Marina Bay Financial Centre is completed. Occupancy has reached a creditable 70%. Together with MBFC Phase 1 and the Ocean Financial Centre, we command approximately 260,000 sm of new office space in the Central Business District of Singapore. We now have more than 400,000 sm of office, retail and serviced apartments under development in prime city centre locations in the region.
.
3.3 Growing Fee-based Business (Slide 30)
Our fee-based fund management business continues to produce good results with total assets under management of S$15.1 billion. KReit continues to make DPU accretive acquisitions and has improved the average committed occupancy of its prime office portfolio to 97%. Alpha continues to make selective and attractive investments, whilst harvesting some of its existing holdings to produce good returns for its investors.
4. Outlook (Slide 31)
As our CEO has pointed out, the world economy and financial markets remain in a state of flux. How do we position ourselves in such an environment? We need to continue to execute well, and focus our attention on markets and businesses where we have proven core competence. With the credit markets still open and still relatively benign, the Group has issued a total of S$900 million of long dated bonds under our various MTN programs since the beginning of this year. We have diversified our source of funding and lengthened our weighted average maturity of our loan book from 35 months to 52 months. Committed lines have also been secured from some of our lenders. We are well placed to fund our working capital requirements, continue to make the necessary investments in our existing businesses such as R&D and productivity improvements. We will also maintain sufficient liquidity and balance sheet capacity to take advantage of good opportunities that may emerge in our core businesses and their close adjacencies. We remain steadfast in our goal to produce good sustainable profits for our shareholders.
