1
1Q 2002 Results Announcement18 April, 2002
2
Scope of Briefing
1. Group Financial Highlights
2. 1Q Business Review and 2Q Outlook
3. Strategic & Corporate Review
1. Group Financial Highlights
4
Financial Highlights in 1Q
1Q PATMI was S$82m, 47% higher than last year
• Offshore and Marine contributed 48%
• Investments contributed 29%
Annualised ROE surpassed 12%, an increase from 10.1% in year 2001
Current order book is about S$3.5 billion
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Financial Highlights – P/L
1Q 2002 1Q 2001* % Change
Turnover
EBITDA
Operating Profit
Profit Before Tax
PATMI before EI
EPS before EI (cents)
1,163.6 1,540.0 (24)
155.9 236.1 (34)
113.6 184.3 (38)
131.1 187.0 (30)
82.1 55.9 47
10.7 47
($m)
7.3
* Include Keppel Capital Holdings (KCH) contributions
Higher PATMI and EPS are due to the net effect of divesting KCH and privatising KFEI and KHZ.
6
Financial Highlights – B/S
As at 31 Mar 2002
As at 31 Dec 2001 % Change
Shareholders’ Fund
Capital Employed
Net Gearing
Net Debt
2,743 2,658 3
4,057 4,114 (1)
1.17x 1.10x 6
4,737 4,525 5
($m)
ROE (Before EI) 12.2%* 10.1% 21
* Annualised
Balance sheet remains strong.Annualised ROE improved by 21% to reach 12.2%
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Turnover by Segments
1Q 2002 1Q 2001 % Change
Offshore & Marine
Infrastructure
Property
Investments
%%
385.1
135.2
93.3
549.9
261.7
113.5
68.0
653.6
47
19
37
(16)
33
12
47
8
60
6
10
24
($m)
Keppel Capital 0 443.2 na
Total 100 1001,163.6 1,096.8 6
Turnover of core businesses* increased by 38%
* Core businesses are Offshore & Marine, Infrastructure and Property
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EBITDA by Segments
1Q 2002 1Q 2001 % Change
Offshore & Marine
Infrastructure
Property
Investments
%%
61.4
15.1
36.4
43.1
22.4
35.9
38.8
11.9
174
(58)
(6)
262
39
10
28
23
11
36
33
20
($m)
Keppel Capital 0 127.2 na
Total 100 100155.9 108.9 43
Strong cash generation from core businesses*
* Core businesses are Offshore & Marine, Infrastructure and Property
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PATMI by Segments1Q 2002 1Q 2001 % Change%%
38.9
5.7
13.2
24.2
5.6
16.3
12.4
(11.1)
595
(65)
6
na
48
7
29
16
(48)
54
70
24
($m)
Total 100 10082.1 23.2 254
Offshore & Marine
Infrastructure
Property
Investments
0 32.7 naKeppel Capital
PATMI of core businesses* grew by 69% to S$58m from S$34m
* Core businesses are Offshore & Marine, Infrastructure and Property
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Result By Segments
PATMI (before EI )
24.2
(11.1)
13.2
12.4
5.7
16.3
38.9
5.6
32.7
(12.0)
(2.0)
8.0
18.0
28.0
38.0
48.0
58.0
68.0
78.0
1Q 2001 1Q 2002
S$m
KCHoffshore & MarineInfrastructurePropertyInvestment
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Growth of Core Businesses
(11)
9
29
49
69
S$m
Offshore & Marine 5.6 38.9 I nfrastructure 16.3 5.7 Property 12.4 13.2 Total 34.3 57.8
1Q 2001 1Q 2002
PATMI (before EI)
(S$m)
69% growth
34.3
57.8
2. 1Q Business Review and 2Q Outlook
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1Q Group Business Highlights O&M had 2 project completions
Privatisation of KHZ completed
Clinched US$400m electricity supply contract in Brazil
Network Engineering Division completed S$37.1m* worth of projects
Strong take-up rates for recently launched properties
* Exclude Network Engineering projects from associates
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Financial Highlights – Offshore & Marine
1Q 2002 1Q 2001 % Change
Turnover
EBITDA
Operating Profit
Profit Before Tax
PATMI
385.1 261.7 47
61.4 22.4 174
48.5 8.7 457
54.2 11.9 355
38.9 5.6 595
($m)
Annualised ROE 14.1% 4.3% 228
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Offshore & Marine Review
Strong order book resulted in higher turnover in 1Q 2002
Increase in operating profit because of:
• lower unit overheads from higher capacity utilisation rates
• higher value-added jobs
100% profit recognition at Group level
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Offshore & Marine Review
Early completion of the US$60m upgrading of semi-submersible ‘Ocean Baroness’ for Diamond Offshore
• Awarded cash bonus for early completion
• Clinched repeat contract for upgrading of “Ocean Rover”
Completion of US$110m Chiles Discovery jack up rig
• Awarded cash bonus for early completion
Integration of KHZ and KFELS on track
• synergies of at least S$10m will be achieved in 2H2002
Major jobs in progress are on schedule and within budget
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Offshore & Marine Review
Accolades received:
• Keppel FELS
– first major shipyard in Singapore to receive re-certification under ISO 9001:2000
• Keppel Shipyard
– distinction given by Singapore’s Productivity and Standards Boards in implementing National Skills Recognition System
Recognition for Outstanding Management:
• Choo Chiau Beng, Chairman and Managing Director of KFEI awarded “Outstanding CEO of the Year 2001”
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Offshore & Marine Outlook
Strong Orderbook of S$2.2b for delivery between 2002 – 2004
Continue to receive enquiries on new rigs, upgrades, conversions, repairs and new-builds of specialised vessels
Overall market outlook is positive
• demand for conversions and upgrades expected to be buoyant due to:
– high oil and gas prices
– increased activity in deep water production and exploration
• shiprepair market likely to remain competitive
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Financial Highlights – Infrastructure
1Q 2002 1Q 2001 % Change
Turnover
EBITDA
Operating Profit
Profit Before Tax
PATMI before EI
37.1 27.3 36
4.5 2.6 73
3.8 2.1 81
5.3 6.5 (18)
1.3 2.7 (52)
($m)
ROE na na na
Network Engineering
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Infrastructure Review
Network Engineering
Lower Q1 PATMI due to
• increased marketing activity in existing and new markets
• infrastructure set-up costs for global operations
Current jobs progressing on time and budget
Making headway in new markets
• S$400k initial contract secured from Nokia for Zhejiang province, with potential for S$10m follow-on contract
• market development work in Japan, Spain, Luxembourg, France, Italy and the Netherlands
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Infrastructure Outlook
Network Engineering
Order book of $530m for delivery between 2002 and 2004• Wireless S$170m• Wireline S$360m
Pursuing orders in excess of S$300m Better PATMI in 2Q 2002 expected Current contracts in Malaysia and Germany will be key
earnings contributor Outsourcing of Network Engineering projects by Telcos,
Cable Operators and Equipment vendors will continue to fuel growth
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Financial Highlights – Infrastructure
1Q 2002 1Q 2001 % Change
Turnover
EBITDA
Operating Profit
Profit Before Tax
PATMI
98.1 86.1 14
10.6 33.3 (68)
4.5 29.9 (85)
4.9 30.7 (84)
4.4 13.7 (68)
($m)
ROE na na na
Utilities Engineering
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Utilities Engineering
Electricity marketing business contributed to increase in turnover
Lower Q1 PATMI due to realisation of toll-road investment in 1H 2001
Secured US$400m contract to supply electricity in Brazil between June 2002 - Dec 2004
Power generation projects are in start-up phase
Infrastructure Review
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Utilities Engineering
Earnings from Brazil power barges project expected to kick in from 2H 2002 onwards
Performance of power generation assets expected to be maintained in 2Q 2002
Participating in the PUB desalination bid in May 2002
Any delay of genco privatisation in Singapore will not impact projected earnings for 2002
Infrastructure Outlook
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Financial Highlights - Property
1Q 2002 1Q 2001 % Change
Turnover
EBITDA
Operating Profit
Profit Before Tax
PATMI
93.3 68.0 37
36.4 38.8 (6)
30.8 32.3 (5)
31.1 25.3 23
13.2 12.4 6
($m)
ROE 5.0% 3.6% 39
*Property Segment includes all property related businesses of KCL
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Property Review
Strong take-up rates for recently launched properties resulted in higher turnover:
• The Edgewater – 100% sold
• Amaranda Gardens – 98% sold
• Butterworth 8 - 100% sold
Appointed HypoVereinsbank for securitisation of more than S$300m worth of receivables from above 3 projects
Completed US$800m multi-currency medium-term note (MTN) programme
Pursuing various options to divest investment buildings
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Property Outlook
Two residential launches expected in 2Q 2002
• 22-26 Mar Thoma Road
• 6 Mar Thoma Road
One Park Avenue in Shanghai to be launched in 2H 2002
Possible residential launches / re-launches in 2H 2002
• Duchess Park, Parc Devon, The Linc, Norfolk Gardens, Cluny Hill, Freesia Woods and Caribbean
Maintain business development efforts for residential development projects overseas including China, Thailand and Vietnam
127 units
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Financial Highlights - Investments
1Q 2002 1Q 2001 % Change
Turnover
EBITDA
Operating Profit
Profit Before Tax*
PATMI*
549.9 653.6 (16)
43.1 11.9 262
26.1 (9.1) na
35.6 (9.2) na
24.2 (11.1) na
($m)
* Before EI
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Investments Review
Higher profitability due to
• Higher PATMI of S$13m from SPC due partly to higher product prices in SPC
• gains of about S$11m from sale of quoted investments
M1 contributed $6m to Q1 PATMI
• customer base crossed the 1 million-mark
Accolades received:
• Keppel Logistics awarded ISO 9001, ISO 14001 and OHSAS 18001 simultaneously
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Investments Outlook
Singapore refining margins remain challenging
Actively drive divestment of non-core assets:
• currently investigating a number of initiatives
• expect to announce one major divestment in 2002
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Group Outlook for 2Q 2002
Performance for 2Q expected to be maintained
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PATMI in S$(Millions)
1088684106
134
12913474
40
82
1997 1998 1999 2000 2001 2002Year
Q12H1H
PATMI (1997 – Present)
83
56
180
124
220237
273
33
ROE (% )
12.2*
10.1
7.9
3.95.3
8.5
1997 1998 1999 2000 2001 1Q 2002
Year
ROE (1997 – Present)
* Annualised ROE
3. Strategic & Corporate Review
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Strategic Review
Financial Targets - On Track
15% - 20% CAGR earnings growth through 2003
ROE of 12% - 15% by end 2003
Net gearing of 0.6x - 0.8x by end 2003
EVA focused
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Strategic Review
Our Roadmap
Focus resources on core businesses• Divest non-core businesses
Strong corporate governance process• Disciplined investment and divestment management
Implement ROE and EVA based performance measures• Revamp reward system to be more individual
performance linked Effective and timely communication for greater market
transparency Widen global reach: markets, facilities, partners and
alliances.
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Corporate Review
Code of Corporate Governance(Ministry of Finance)
Code issued 21 Mar ‘01
KCL Corporate Governance Committee formed May ‘01
Corporate Governance Implementation Plan approved by KCL Board Aug ‘01
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Corporate Review
Strengthening Corporate Governance
Increasing accountability of:
• Management to Board
• Board to Shareholders
Having only independent Directors on Audit, Nominating and Remuneration Committees
Put in place processes for:
• Board appraisal of senior management
• Board peer appraisal:
– of each Director
– of Board as a Team
• Board appraisal of Chairman
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Corporate Review
Strengthening Corporate Governance
2 new independent Directors appointed on 16 April
Board comprises 11 Directors of whom 7 are independent
Appointed 6-member EXCO, comprising 3 independent directors and 3 executive directors
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MDC:Strategic HR
Issues
Group Risk Management & Internal Audit
Corporate Governance Structure
KCL BOARD
KCL MANAGEMENT
REMUNERATION COMMITTEE
AUDIT COMMITTEENOMINATING
COMMITTEE
PropertyOffshore & Marine Infrastructure Investments
Shareholders
KCL EXCO
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Corporate Review
Recognition for corporate transparency
Keppel Land – eighth Grand Award at the 28th Annual Report Awards Competition;
Keppel Corp, Keppel Hitachi Zosen and Keppel Telecommunications & Transportation – Special Commendation
• Awards organised by SGX, ICPAS, SIM, SID and BT
• Grand Award: Company eligible to be considered for Grand Award only after receiving Best Annual Report for 3 consecutive years
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Corporate Review
Human Resource Development
Implemented vigorous performance appraisal process:
• Completed 1st annual performance ranking
• Identified high potential performers
• Management of under performers
Implemented performance differentiated variable bonus payment for Y2001’s performance
Initiated succession planning for key positions
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Corporate Review
Human Resource Development (…contd)
Reviewing Total Remuneration Compensation
Structure across the Group
Integrating processes & systems to ensure smooth
and efficient 2 - way information flow globally.
Instituted a structured training program with
emphasis on key competencies and leverage on the
group size.
44
Corporate Review
Improving Investor Relations
Investor road shows:
• Hong Kong in Jan 2002
• Europe and USA in Feb 2002
Initiated quarterly reporting; 1 year ahead of SGX requirements
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Growth Strategy
Leverage relationships with strategic partners
Gain greater access to key overseas markets
Focus on growing intellectual capital
Continue to streamline and restructure organisation to improve efficiency and to support growth
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Keppel Corporation Q1 2002 Results
Thank You