KEPPEL CORPORATION LIMITED

Transcription

1 KEPPEL CORPORATION LIMITED Co. Reg. No N (Incorporated in the Republic of Singapore) FIRST QUARTER 2012 FINANCIAL STATEMENTS TABLE OF CONTENTS Paragraph Description Page CHIEF EXECUTIVE OFFICER S ADDRESS I III FINANCIAL STATEMENTS GROUP PROFIT AND LOSS ACCOUNT 1 2 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 3 3 BALANCE SHEETS 4 4 STATEMENTS OF CHANGES IN EQUITY 7 5 CONSOLIDATED STATEMENT OF CASH FLOWS 11 6 AUDIT 13 7 AUDITORS REPORT 13 8 ACCOUNTING POLICIES 13 9 CHANGES IN THE ACCOUNTING POLICIES REVIEW OF GROUP PERFORMANCE VARIANCE FROM FORECAST STATEMENT PROSPECTS DIVIDEND SEGMENT ANALYSIS REVIEW OF SEGMENT PERFORMANCE INTERESTED PERSON TRANSACTIONS 20 CONFIRMATION BY THE BOARD 21

2 First Quarter 2012 Financial Statements Address by Mr Choo Chiau Beng, Chief Executive Officer, Keppel Corporation FIRST QUARTER ENDED 31 MARCH 2012 Mixed Outlook The outlook for the global economy remains mixed. There are signs of improvement in the US economy, with some recovery seen in consumer spending, manufacturing and job creation. Notwithstanding the various policy response mechanisms, the Eurozone sovereign debt crisis remains unresolved with renewed concerns over Italy and Spain. Over in Asia, China s first quarter growth of 8.1% is the lowest since 2009 and the government has adjusted its 2012 growth target downwards to 7.5% as it seeks to transition the economy towards greater domestic consumption. The Singapore economy grew at a faster than expected pace of 9.9% in the first quarter, giving some optimism for the rest of The continued tensions in the Middle East over Iran and Syria are expected to hold up oil prices despite some projected weakness in demand from China. On the back of quantitative easing in the US and European Central Bank loans to troubled European banks, the world continues to see inflationary trends, especially in supply chain constrained markets such as Brazil. Strong Performance I am happy to report that for the first quarter of this year, Keppel Corporation has turned in a better performance than the corresponding period last year. Net profit for 1Q2012 was $751 million, a 141% increase over the same quarter last year. The lumpy performance in this first quarter is primarily because we started recognising earnings from homes sold under the deferred payment scheme at Reflections at Keppel Bay. Due to accounting changes, the profits are now recognised only upon project completion. Our annualised ROE remains healthy at 21.6% and we achieved EVA of $654 million. Business Prospects in 2012 Despite the mixed global outlook, the prospects for our key businesses remain good. The Offshore & Marine industry has continued to see good demand for new rigs in the first quarter. Major oil companies have budgeted increases in their E&P spending for 2012 and there have been a number of new oil and gas finds in Brazil, East Africa and the North Sea in the past months. The market for high-specification jackups has remained active while we also see a returning flow of orders for semis. For this year, our Offshore & Marine Division secured $688 million of new orders to date. This does not include the design and construction of five additional semis for which an LOI was signed with Sete Brasil. The formal contracts worth a total of US$4.12 billion will likely be inked in the middle of the year. Our net orderbook currently stands at $8.4 billion as at end March with deliveries extending until We continue to actively engage our customers to see how our solutions are able to meet their evolving needs. We expect to see a sustained electricity demand in Singapore this year, which will support the earnings momentum for Keppel Energy s 500MW power plant on Jurong Island. Global demand for environmental engineering solutions continues to present Chief Executive Officer s Address, I

3 opportunities for Keppel Integrated Engineering (KIE) to offer its proprietary technologies in waste and wastewater treatment. The operational and maintenance phase of the Qatar solid waste management facility is progressing well. The global growth in online transactions and cloud computing is stimulating good demand for quality data centres, which will provide a strong foundation for Keppel Telecommunications & Transportation (Keppel T&T) to grow its data centre business. In logistics, slowing trade volumes between Asia and Europe may impact the growth of Keppel T&T s business in this segment this year. In property, demand for homes in our key markets of Singapore and China has been affected somewhat by the cooling measures. Private home prices in Singapore showed signs of further moderation in the first quarter with slowing sales in the luxury homes segment. Sales for mass market homes such as our development in Sengkang have held up, indicating that there continues to be good demand from genuine homebuyers. In China, home prices and sales volumes in the major cities have also fallen this year. Our developments in China, especially in the township developments, have continued to see some sales. We remain positive on the longterm prospects of markets such as China, Vietnam and Indonesia that have continued to show growth, and will focus on developing quality homes in these countries. Despite signs of moderation, Asia s growth is expected to remain on an even keel. Net office demand in Singapore is likely to remain positive in 2012 with positive leasing at new premium office buildings. Keppel s well-located office buildings at the heart of Singapore s CBD have continued to command good rentals. Our pipeline of commercial developments in China, Vietnam and Indonesia which will be completed over the next two to three years will also meet the demand for quality office space in the region. Focus in 2012 Let me now touch on the focus of our key businesses for the rest of the year. In Offshore & Marine, we will work hard to execute our orderbook well to ensure that we meet our customers requirements safely, on time and on budget. No effort will be spared to further improve productivity and maximise efficiency to extract good value from each project. Technology continues to play an increasingly important role in the industry. Augmenting our proprietary semisubmersible designs, we have also developed two new designs DSS51HE and DSS60HE to meet the needs of drilling in deeper waters and harsher environments. In redoubling efforts to enhance technology development, we have restructured and elevated the Keppel Offshore & Marine Technology Centre (KOMtech) to become the Technology Division of Keppel Offshore & Marine. This Division will be responsible for R&D, product development and commercialisation as well as Process Technology aimed at improving productivity in all our yards. In our Infrastructure Division, Keppel Energy will continue to grow its share of the Singapore power market as it enhances its position as an integrated platform in the power and gas business. KIE will focus on executing its EPC projects in Qatar and the UK while it continues to scan for projects in its key markets. Keppel T&T will work to complete its current logistics expansion projects in China in Wuhu and the Sino- Chief Executive Officer s Address, II

4 Singapore Jilin Food Zone well and on schedule, so that it is well positioned to capture value from growing local demand for integrated port logistics and cold-chain logistics services. In property, Keppel Land will continue to seek out and selectively acquire quality sites in Singapore and overseas for both residential and commercial developments. We have again appointed Daniel Libeskind to design Plot 3 of Keppel Bay and will time the launch according to market conditions. We will also continue to grow our feebased property fund management business, scanning for good opportunities to enhance our portfolio of quality assets. Conclusion In today s climate of economic uncertainty, we are committed to maintain a strong balance sheet that will give us the financial resilience to weather the cyclicality of our underlying businesses as well as the flexibility to seize opportunities as they arise. Our aim is to drive sustainable growth in our businesses and to continue delivering value to our customers and shareholders. Now, let me now hand over to Mr Loh Chin Hua, our Chief Financial Officer, for a review of the Group s first quarter financial performance. Thank you. Chief Executive Officer s Address, III

5 KEPPEL CORPORATION LIMITED First Quarter 2012 Financial Statements UNAUDITED RESULTS FOR THE FIRST QUARTER ENDED 31 MARCH 2012 The Directors of Keppel Corporation Limited advise the following unaudited results of the Group for the first quarter ended 31 March GROUP PROFIT AND LOSS ACCOUNT for the first quarter ended 31 March Note 1Q Q /- % Revenue 4,265,603 2,287, Materials & subcontract costs (i) (2,848,047) (1,461,245) Staff costs (ii) (369,071) (315,347) Depreciation & amortisation (50,264) (47,484) +5.9 Other operating expenses (52,521) (56,063) -6.3 Operating profit 945, , Investment income 276 1, Interest income (iii) 32,081 23, Interest expenses (30,882) (24,527) Share of results of associated companies (iv) 47,271 41, Profit before tax 994, , Taxation (154,780) (78,496) Profit for the period 839, , Attributable to: Shareholders of the Company 750, , Non-controlling interests 88,897 59, , , Earnings per ordinary share - basic 41.9 cts 17.6 cts diluted 41.6 cts 17.4 cts Annualised return on equity 21.6% 17.7% * Economic value added 654, , * Annualised return on equity is restated due to retrospective application of Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets, which is effective on 1 January A detailed explanation is provided in paragraph 9. Keppel Corporation Limited, Page 1 of 21

6 NOTES TO GROUP PROFIT AND LOSS ACCOUNT 1a. Pre-tax profit of the Group is arrived at after charging/(crediting) the following: Note 1Q Q /- % Share-based payment expenses Write-down of fixed assets 7, , NM Loss/(profit) on sale of fixed assets Profit on sale of investments (v) 39 (78,035) (1,932) (35) NM >500.0 (Write-back)/provision - stocks & work-in-progress (920) (1,292) doubtful debts 623 (860) NM Bad debts written off Stocks written off Fair value (gain)/loss - Investments (vi) (9,981) 792 NM - Forward contracts (vii) 21,268 (3,643) NM - Financial derivatives 547 1, Foreign exchange loss (viii) 11,825 15, NM Not Meaningful Note: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) Materials & subcontract costs increased mainly as a result of higher revenue from the Property Division and Offshore & Marine Division. Staff costs increased due mainly to higher manpower cost in the Offshore & Marine Division and Property Division. Interest income increased largely due to higher effective interest rate. Share of profits of associated companies was higher due mainly to higher contribution from associated companies in the Property Division. Profit on sale of investments increased largely due to disposals of listed equities. Fair value gain (mark-to-market) on investment portfolio held for trading was due to rise in stock prices. Hedging differential on forward exchange contracts was due to elapse of time and fluctuations in interest rate. Foreign exchange differences mainly arose from the revaluation of assets denominated in United States dollar to Singapore dollar. 1b. Taxation expenses were higher because of increased profit, largely attributable to Property Division. 1c. Earnings per ordinary share 1Q Q /-% Earnings per ordinary share of the Group based on net profit attributable to shareholders:- (i) Based on weighted average number of shares 41.9 cts 17.6 cts Weighted average number of shares ( 000) 1,790,856 1,774, (ii) On a fully diluted basis 41.6 cts 17.4 cts Adjusted weighted average number of shares ( 000) 1,805,857 1,791, d. There was no extraordinary item during the period. Keppel Corporation Limited, Page 2 of 21

7 2. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the first quarter ended 31 March 1Q Q /- % Profit for the period 839, , Available-for-sale assets - Fair value changes arising during the period (i) 126,586 14,576 > Realised and transferred to profit & loss account (ii) (79,662) (1,174) >500.0 Cash flow hedges - Fair value changes arising during the period, net of tax (iii) 31,180 68, Realised and transferred to profit & loss account 5,320 11, Foreign exchange translation - Exchange differences arising during the period (iv) (48,448) (98,724) Realised and transferred to profit & loss account 276 (5,240) NM Share of other comprehensive income/(losses) of associated companies (v) (5,697) (19,322) Other comprehensive income for the period, net of tax 29,555 (29,927) NM Total comprehensive income for the period 869, , Attributable to: Shareholders of the Company 808, , Non-controlling interests 60, >500.0 NM Not Meaningful 869, , Note: (i) (ii) (iii) (iv) (v) Fair value gains were mainly attributable to higher quoted prices of available-for-sale assets. These represented fair value gains on available-for-sale assets, which were transferred to profit & loss account upon realisation. Fair value gains were due mainly to the hedging differential on forward exchange contracts. These exchange differences arose from the translation of financial statements of foreign operations whose functional currencies are different from that of the Group s presentation currency as well as from the translation of foreign currency loans that form part of the Group s net investment in foreign operations. The translation losses for both periods arose from weakening of foreign currencies, such as United States dollar, Renminbi, Vietnamese dong and Indonesian rupiah against the Singapore dollar. The share of other comprehensive losses of associated companies mainly related to share of translation losses and share of fair value losses from cash flow hedging reserve, offset by share of fair value gains from available-for-sale assets reserve. Share of other comprehensive losses of associated companies for 1Q 2011 mainly related to share of translation losses. Keppel Corporation Limited, Page 3 of 21

8 3. BALANCE SHEETS as at 31 March G r o u p Restated Restated C o m p a n y Share capital 1,083,882 1,016, ,409 1,083,882 1,016,112 Reserves 7,475,011 6,683,263 5,712,715 4,550,947 4,193,452 Share capital & reserves 8,558,893 7,699,375 6,619,124 5,634,829 5,209,564 Non-controlling interests 4,299,042 4,061,920 3,035,951 Capital employed 12,857,935 11,761,295 9,655,075 5,634,829 5,209,564 Represented by: Fixed assets 2,850,082 2,715,517 2,243,150 4,122 4,080 Investment properties 5,196,246 4,610,107 3,207,539 Subsidiaries 3,957,213 3,928,160 Associated companies 4,563,499 4,462,179 3,781,700 Investments 301, , ,896 Long term assets 77, ,060 28, Intangibles 97,079 98, ,676 13,085,572 12,464,195 9,668,607 3,961,633 3,932,579 Current assets Stocks & work-in-progress in excess of related billings 6,217,201 6,218,945 3,940,126 Amounts due from: - subsidiaries 3,022,823 2,204,813 - associated companies 439, , ,162 1,819 1,483 Debtors 2,682,231 2,027,933 1,958,993 82,155 78,164 Short term investments 414, , ,872 Bank balances, deposits & cash 3,299,308 3,020,454 4,245,990 3,971 1,621 13,052,410 12,248,507 10,987,143 3,110,768 2,286,081 Current liabilities Creditors 5,326,095 5,323,267 4,342, , ,396 Billings on work-in-progress in excess of related costs 1,524,748 1,863,881 1,638,193 Provisions 79,530 77,674 83,586 Amounts due to: - subsidiaries 270, ,852 - associated companies 43,706 63, ,609 Term loans 1,185, , ,764 12,855 17,668 Taxation 531, , ,079 22,196 22,244 Bank overdrafts 4, ,696,219 8,616,126 7,092, , ,160 Net current assets 4,356,191 3,632,381 3,894,213 2,578,132 1,781,921 Non-current liabilities Term loans 4,126,441 4,068,696 3,675, , ,000 Deferred taxation 457, , ,777 4,936 4,936 4,583,828 4,335,281 3,907, , ,936 Net assets 12,857,935 11,761,295 9,655,075 5,634,829 5,209,564 Group net (debt)/cash (2,017,611) (1,856,717) 177,522 n.a. n.a. Group net (gearing)/cash ratio (0.16x) (0.16x) 0.02x n.a. n.a. Comparative figures are restated due to retrospective application of Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets, which is effective on 1 January A detailed explanation is provided in paragraph 9. Keppel Corporation Limited, Page 4 of 21

9 NOTES TO BALANCE SHEETS 3a. Group s borrowings and debt securities (i) Amount repayable in one year or less, or on demand As at As at Secured Unsecured Secured Unsecured 603, , , ,377 (ii) Amount repayable after one year As at As at Secured Unsecured Secured Unsecured 750,324 3,376, ,950 3,155,746 (iii) Details of any collateral Certain subsidiaries of the Company pledged their assets in order to obtain loans from financial institutions. The net book value of properties and other assets pledged/mortgaged to financial institutions amounted to $4,229,445,000 (31 December 2011: $4,196,584,000). 3b. Net asset value Group Restated Company +/-% /-% Net asset value per ordinary share * $4.78 $ $3.14 $ Net tangible asset per ordinary share * $4.72 $ $3.14 $ * Based on share capital of 1,792,394,519 ordinary shares as at the end of the period (31 December 2011: 1,783,716,751 ordinary shares). Keppel Corporation Limited, Page 5 of 21

10 NOTES TO BALANCE SHEETS 3c. Balance sheet analysis Group shareholders funds increased from $7.70 billion at 31 December 2011 to $8.56 billion at 31 March The increase was mainly attributable to retained profits for the period, fair value gain on available-for-sale assets and cash flow hedges, partially offset by currency translation loss. Group total assets of $26.14 billion at 31 March 2012 were $1.43 billion or 5.8% higher than the previous year end. Increase in fixed assets was largely due to capital expenditure for the expansion of Keppel Merlimau cogen power plant and other operational capex. Increase in investment properties was due mainly to acquisition of Aether Pte Ltd Group ( Aether ), which has an interest in a commercial project in Beijing, China. Associated companies increased due mainly to further investments in existing companies. Higher level of debtors was largely due to higher progress billings from Reflections at Keppel Bay. These were partly offset by decrease in long term assets due to reclassification of prior year advance payment made for acquisition of a subsidiary (Aether). Group total liabilities of $13.28 billion at 31 March 2012 were $329 million or 2.5% higher than the previous year end. Higher level of term loans was due to increased bank borrowings and funds raised in the capital markets for working capital requirements, operational capital expenditure and acquisitions. Increase in deferred taxation was due mainly to the completion of the acquisition of a subsidiary (Aether). These were partly offset by reduction in billings on work-in-progress in excess of related costs due mainly to project cost incurred and project completion for Offshore & Marine jobs. Group net debt at 31 March 2012 was $2.02 billion as compared to group net debt of $1.86 billion at 31 December This was due mainly to capital expenditure and investment in associated companies. Keppel Corporation Limited, Page 6 of 21

11 4. STATEMENTS OF CHANGES IN EQUITY for the first quarter ended 31 March 4a. Statement of changes in equity of the Group Share Capital Attributable to owners of the Company Capital Reserves Revenue Reserves Foreign Exchange Translation Account $ 000 Share Capital & Reserves Noncontrolling Interests $ 000 Capital Employed $ As at 1 January As previously reported 1,016, ,357 6,049,411 (135,498) 7,390,382 3,800,674 11,191,056 Effect of adopting Amendments to FRS , , , ,239 As restated 1,016, ,357 6,358,404 (135,498) 7,699,375 4,061,920 11,761,295 Total comprehensive income for the quarter Profit for the quarter 750, ,769 88, ,666 Other comprehensive income * 86,136 (27,973) 58,163 (28,608) 29,555 Total comprehensive income for the quarter 86, ,769 (27,973) 808,932 60, ,221 Transactions with owners, recognised directly in equity Contributions by and distributions to owners Share-based payment 7,496 7, ,888 Dividend paid to non-controlling shareholders (19,723) (19,723) Cash subscribed by non-controlling shareholders 8,822 8,822 Shares issued 67,770 (24,680) 43,090 43,090 Total contributions by and distributions to owners 67,770 (17,184) 50,586 (10,509) 40,077 Changes in ownership interests in subsidiaries Acquisition of subsidiaries 187, ,342 Total change in ownership interests in subsidiaries 187, ,342 Total transactions with owners 67,770 (17,184) 50, , ,419 As at 31 March 1,083, ,309 7,109,173 (163,471) 8,558,893 4,299,042 12,857,935 * Details of other comprehensive income have been included in the consolidated statement of comprehensive income. Keppel Corporation Limited, Page 7 of 21

12 4a. Statement of changes in equity of the Group (cont d) Share Capital Attributable to owners of the Company Capital Reserves Revenue Reserves Foreign Exchange Translation Account $ 000 Share Capital & Reserves Noncontrolling Interests $ 000 Capital Employed $ As at 1 January As previously reported 906, ,624 4,994,434 (139,083) 6,415,384 2,866,384 9,281,768 Effect of adopting Amendments to FRS , , , ,307 As restated 906, ,624 5,198,174 (139,083) 6,619,124 3,035,951 9,655,075 Total comprehensive income for the quarter Profit for the quarter 311, ,501 59, ,010 Other comprehensive income * 95,970 (66,604) 29,366 (59,293) (29,927) Total comprehensive income for the quarter 95, ,501 (66,604) 340, ,083 Transactions with owners, recognised directly in equity Contributions by and distributions to owners Share-based payment 7,324 7, ,810 Dividend paid to non-controlling shareholders (16,915) (16,915) Cash subscribed by non-controlling shareholders 4,356 4,356 Other adjustments (13) (13) Shares issued 62,549 (10,377) 52,172 52,172 Total contributions by and distributions to owners 62,549 (3,053) 59,496 (12,086) 47,410 Changes in ownership interests in subsidiaries Disposal of interest in a subsidiary company without loss of control 6,782 6,782 18,209 24,991 Total change in ownership interests in subsidiaries 6,782 6,782 18,209 24,991 Total transactions with owners 62,549 (3,053) 6,782 66,278 6,123 72,401 As at 31 March 968, ,541 5,516,457 (205,687) 7,026,269 3,042,290 10,068,559 * Details of other comprehensive income have been included in the consolidated statement of comprehensive income. Keppel Corporation Limited, Page 8 of 21

13 4b. Statement of changes in equity of the Company Share Capital Capital Reserves Revenue Reserves Total 2012 As at 1 January 1,016, ,496 4,031,956 5,209,564 Profit / Total comprehensive income for the quarter 375, ,234 Transactions with owners, recognised directly in equity Share-based payment 6,941 6,941 Shares issued 67,770 (24,680) 43,090 Total transactions with owners 67,770 (17,739) 50,031 As at 31 March 1,083, ,757 4,407,190 5,634, As at 1 January 906, ,020 3,657,497 4,689,926 Profit / Total comprehensive income for the quarter 5,876 5,876 Transactions with owners, recognised directly in equity Share-based payment 6,695 6,695 Shares issued 62,549 (10,377) 52,172 Total transactions with owners 62,549 (3,682) 58,867 As at 31 March 968, ,338 3,663,373 4,754,669 Keppel Corporation Limited, Page 9 of 21

14 4c. Share capital Number of shares As at 1 January 1,783,716,751 1,605,513,880 Issue of shares under share option scheme 5,981,585 15,064,000 Issue of shares under restricted share plan 2,696,183 1,255,541 Bonus issue 161,883,330 As at end of period/year 1,792,394,519 1,783,716,751 On 6 May 2011, 161,883,330 bonus shares had been allotted and issued pursuant to the bonus issue at one bonus share for every ten existing ordinary shares ( bonus issue ). As at 31 March 2012, the Company is not holding any treasury shares (31 March 2011: Nil). Share options As at 31 March 2012, there were unexercised options for 35,613,535 of unissued ordinary shares (31 March 2011: 49,402,650 ordinary shares, adjusted for the bonus issue) under the KCL Share Options Scheme. KCL Performance Share Plan ( KCL PSP ) As at 31 March 2012, the number of contingent shares granted but not released were 1,388,000 (31 March 2011: 680,000) for KCL PSP. Based on the achievement factor, the actual release of the awards in ordinary shares of the Company could range from zero to a maximum of 2,082,000 under KCL PSP. The contingent shares granted on 30 June 2010 but not released had been adjusted on 6 May 2011 to reflect the bonus issue. KCL Restricted Share Plan ( KCL RSP ) As at 31 March 2012, the number of awards released but not vested was 4,045,538 (31 March 2011: 2,452,925) for KCL RSP. The awards released but not vested have been adjusted on 6 May 2011 to reflect the bonus issue. 4d. Capital reserves $ 000 Group $ $ 000 Company $ 000 Share option and share plan reserve 158, , , ,338 Fair value reserve 249, ,878 Hedging reserve 27, ,728 Bonus issue by subsidiaries 40,000 40,000 Others 52,638 10, , , , ,338 Keppel Corporation Limited, Page 10 of 21

15 5. CONSOLIDATED STATEMENT OF CASH FLOWS for the first quarter ended 31 March 1Q Q 2011 Note OPERATING ACTIVITIES Operating profit 945, ,809 Adjustments: Depreciation and amortisation 50,264 47,484 Share-based payment expenses 7,974 7,953 Loss/(profit) on sale of fixed assets 39 (1,932) Others (217) Operational cash flow before changes in working capital 1,003, ,097 Working capital changes: Stocks & work-in-progress (259,134) (40,906) Debtors (731,576) 128,894 Creditors (52,222) (39,147) Investments 219,774 2,881 Advances to associated companies (49,879) (40,826) Translation of foreign subsidiaries (28,313) (58,700) 102, ,293 Interest received 32,081 23,247 Interest paid (30,882) (24,527) Income taxes paid, net of refunds received (34,166) (24,939) Net cash from operating activities 69, ,074 INVESTING ACTIVITIES Acquisition of subsidiary and business Acquisition and further investment in associated companies 5a (105,510) (150,610) Acquisition of fixed assets and investment properties (199,040) (290,052) Proceeds from disposal of fixed assets 833 9,456 Dividends received from investments and associated companies 40,974 24,326 Net cash used in investing activities (262,743) (406,880) FINANCING ACTIVITIES Proceeds from share issues 43,090 52,172 Proceeds from non-controlling shareholders of subsidiaries Proceeds from disposal of interest in a subsidiary 8,822 4,356 24,991 Proceeds from term loans 460,804 54,962 Repayment of term loans (25,607) (37,241) Dividend paid to non-controlling shareholders of subsidiaries (19,723) (16,915) Net cash from financing activities 467,386 82,325 Net increase in cash and cash equivalents 274,303 62,519 Cash and cash equivalents as at 1 January 3,020,454 4,245,254 Cash and cash equivalents as at 31 March 5b 3,294,757 4,307,773 Free cash flow (193,083) (19,806) Keppel Corporation Limited, Page 11 of 21

16 NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS 5a. Acquisition of subsidiary and business During the financial period, the fair values of net assets of subsidiary and business acquired were as follows: 1Q 2012 Fixed assets 194 Investment properties 582,931 Debtors 179 Bank balances and cash 292 Creditors (72,804) Deferred taxation (115,228) Non-controlling interests (187,342) Purchase consideration 208,222 Less: Advance payment made in prior year (207,930) 292 Less: Bank balances and cash acquired (292) Cash flow on acquisition net of cash acquired 5b. Cash and cash equivalents Cash and cash equivalents consist of cash on hand and balances with banks. Cash and cash equivalents in the consolidated statement of cash flows comprise the following balance sheet amounts: 1Q Q 2011 Bank balances, deposits and cash 3,299,308 4,308,750 Bank overdrafts (4,551) (977) 5c. Cash flow analysis 3,294,757 4,307,773 Net cash from operating activities for the quarter was $70 million compared to $387 million for the corresponding quarter last year. This was due mainly to increased working capital requirements, partly offset by higher operating profit. Net cash used in investing activities for the quarter was $263 million. The Group spent $305 million on acquisitions and operational capex. This comprised principally acquisition of an associated company, OWEC Tower AS, further investment in associated companies, capital expenditure for the expansion of Keppel Merlimau cogen power plant and other operational capex. Divestment and dividend income totalled $42 million. Free cash flow was negative $193 million for the quarter compared to negative $20 million for the corresponding quarter in the previous year. Keppel Corporation Limited, Page 12 of 21

17 6. AUDIT The financial statements have not been audited nor reviewed by our auditors. 7. AUDITORS' REPORT Not applicable. 8. ACCOUNTING POLICIES Except as disclosed in paragraph 9 below, the Group has applied the same accounting policies and methods of computation in the financial statements for the current financial period compared with those of the audited financial statements as at 31 December CHANGES IN THE ACCOUNTING POLICIES The Group adopted the new/revised FRS that are effective for annual periods beginning on or after 1 January Changes to the Group s accounting policies have been made as required, in accordance with the transitional provisions in the respective FRS. The following are the new or amended FRS that are relevant to the Group: Amendments to FRS 107 Amendments to FRS 12 Disclosures - Transfer of Financial Assets Deferred Tax: Recovery of Underlying Assets The adoption of the above amended FRS did not have any significant impact on the financial statements of the Group, except for the following: Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets The Amendments to FRS 12 apply to the measurement of deferred tax liabilities and assets arising from investment properties measured using the fair value model under FRS 40 Investment Property, including investment property acquired in a business combination and subsequently measured using the fair value model. For the purposes of measuring deferred tax, the Amendments introduce a rebuttable presumption that the carrying amount of an investment property measured at fair value will be recovered entirely through sale. The presumption can be rebutted if the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits over time, rather than through sale. The Group has previously provided for deferred tax liabilities for its investment properties on the basis that the carrying amount of the investment properties will be recovered through use. Upon adoption of the Amendments to FRS 12, there is a presumption that the carrying amount of an investment property measured at fair value will be recovered entirely through sale. Accordingly, there will be no deferred tax liability on investment properties in Singapore as there is no capital gains tax in Singapore. This change in accounting policy has been applied retrospectively. Accordingly the comparatives have been restated. There is no impact on the first quarter 2011 results, as deferred taxes provided by the Group for its investment properties in 2011 were recognised only in the fourth quarter. The financial effect on the comparatives for group balance sheet arising from the adoption of the Amendments to FRS 12 is as follows: Group Balance Sheet Increase in revenue reserves 308, ,740 Increase in non-controlling interests 261, ,567 Increase in associated companies 230, ,796 Decrease in deferred taxation (340,107) (178,511) Keppel Corporation Limited, Page 13 of 21

18 10. REVIEW OF GROUP PERFORMANCE The Group delivered a strong set of results with a record net profit for a quarter of $751 million. This was 141% higher than the corresponding period in Earnings per share were 41.9 cents. Economic Value Added of $654 million was $447 million higher than first quarter Annualised return on equity was 21.6%. Group revenue of $4,266 million was 86% above that of the comparative quarter in 2011 of $2,288 million. Revenue from Offshore & Marine Division of $1,994 million was $795 million or 66% higher. The increase in revenue was due to higher volume of work. The Division completed and delivered one semi-submersible rig, one drillship outfitting, and several upgrade/repair contracts. Revenue from Infrastructure Division increased by 5% to $683 million. Higher revenue generated from the cogen power plant in Singapore was partly offset by lower revenue from Engineering, Procurement and Construction (EPC) contracts. Sales of real estate under the deferred payment scheme are recognised under the completion of construction method. The delivery of residential units sold under the deferred payment scheme to purchasers for Reflections at Keppel Bay has led to lumpy earnings for the quarter with Property Division delivering a 248% growth in revenue from $437 million to $1,521 million. At the pre-tax level, Group profit of $994 million was 121% above that of the corresponding quarter in Despite the 66% increase in revenue, Offshore & Marine Division reported a smaller increase in pre-tax profit of $49 million or 18% from the previous year. This was due mainly to contracts with lower margins. Profit from Infrastructure Division was $12 million or 24% lower compared to same quarter last year due to lower contribution from Keppel Integrated Engineering and Keppel Energy. Profit from Property Division rose 353% from $123 million to $557 million. The profit is lumpy due mainly to higher contribution from Reflections at Keppel Bay following the delivery of residential units sold under the deferred payment scheme. This high level of profit from the Property Division is not expected in the next three quarters. Profit from Investments was $73 million higher due to sale of investments. After taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders was $751 million. Property Division was the largest contributor to net profit with 52%, followed by Offshore & Marine Division with 31%, Infrastructure Division with 4% and Investments Division with 13%. In the opinion of the Directors, no factor has arisen between 31 March 2012 and the date of this report which would materially affect the results of the Group and the Company for the period just ended. 11. VARIANCE FROM FORECAST STATEMENT No forecast was previously provided. Keppel Corporation Limited, Page 14 of 21

19 12. PROSPECTS Offshore & Marine Division secured $688 million of new orders in the first quarter of The net order book stood at $8.4 billion with deliveries extending into The Division continues to see good prospects for the Offshore & Marine industry with the projected increase in exploration and production (E&P) expenditure in the next few years and rising dayrates and utilisation rates for rigs. The Division will remain focused on project execution with continued investment in research and development to tap opportunities in existing and adjacent markets. In the Infrastructure Division, the expansion of the Keppel Merlimau cogen power plant from 500MW to 1,300MW is on schedule for completion by Once completed, this will allow the Division to meet the projected increase in electricity demand. Keppel Integrated Engineering continues to make progress with the operations and maintenance phase of the Domestic Solid Waste Management Centre in Qatar. The Division believes that the experience gained from overseas projects will enable us to better offer commercially viable solutions for environmental and urban solutions. With continued growth in Asia expected to sustain demand for logistics and data centres, we will focus on providing integrated logistics services in selected regional markets and building a portfolio of high-quality data centre assets. The Property Division achieved higher sales in Singapore for the first quarter, with over 90 residential units sold primarily from its suburban development The Luxurie in Sengkang. Capitalising on leasing demand for luxury waterfront developments, the Group has set aside about 150 residential units at Reflections at Keppel Bay, which obtained its temporary occupation permit in late 2011, as corporate residences. In China, the Group sold about 190 residential units in the first quarter of Sales in China have continued to slow down due to the combined effects of the property cooling measures and the economic slowdown. The Group will continue to explore acquisition opportunities for residential, commercial and mixed-use development as well as monitor market conditions to selectively launch new projects and phases in Singapore and overseas at the appropriate time. The outlook for the global economy remains mixed with the continued uncertainty over the Eurozone sovereign debt situation and expected slower growth in China. Amidst this environment, the Group will continue to fortify our collective strengths and capabilities among the Divisions, and enhance sustainable growth in our various businesses. Keppel Corporation Limited, Page 15 of 21

20 13. DIVIDEND 13a. Current Financial Period Reported On Any dividend recommended for the current financial period reported on? No 13b. Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? No 13c. Date Payable Not applicable 13d. Books Closure Date Not applicable 13e. If no dividend has been declared/recommended, a statement to that effect. No dividend has been declared for the quarter ended 31 March For the year ended 31 December 2011, the Directors had recommended a tax exempt one-tier final dividend of 26.0 cents per share for approval by shareholders at the Annual General Meeting to be held on 20 April If approved, the final dividend will be paid on 9 May Keppel Corporation Limited, Page 16 of 21

21 14. SEGMENT ANALYSIS First Quarter ended 31 March 2012 Offshore & Marine Infrastructure Property Investments Elimination Total Revenue External sales 1,993, ,070 1,521,400 67,464 4,265,603 Inter-segment sales 43,912 14,585 15,062 (73,559) Total 1,993, ,982 1,535,985 82,526 (73,559) 4,265,603 Segment Results Operating profit 300,683 37, ,742 70,204 (6,120) 945,700 Investment income Interest income 15, ,209 23,722 (23,578) 32,081 Interest expenses (1,829) (3,425) (32,074) (23,252) 29,698 (30,882) Share of results of associated companies 352 4,914 29,551 12,454 47,271 Profit before tax 314,686 39, ,428 83, ,446 Taxation (72,210) (9,339) (86,780) 13,549 (154,780) Profit for the period 242,476 29, ,648 96, ,666 Attributable to: Shareholders of Company 235,335 27, ,453 95, ,769 Non-controlling interests 7,141 2,673 78, , ,476 29, ,648 96, ,666 Other Information Segment assets 6,820,705 3,074,210 16,683,806 5,362,903 (5,803,642) 26,137,982 Segment liabilities 4,683,508 2,187,342 9,082,188 3,130,651 (5,803,642) 13,280,047 Net assets 2,137, ,868 7,601,618 2,232,252 12,857,935 Investment in associated companies 380, ,715 3,424, ,247 4,563,499 Additions to non-current assets 88, ,609 88, ,550 Depreciation and amortisation 33,342 13,364 3, ,264 Geographical Information Singapore Far East & Other ASEAN Countries Americas $ 000 Other Countries Elimination Total External sales 3,532, , , ,147 4,265,603 Non-current assets 9,750,836 2,029, , ,121 12,706,906 Keppel Corporation Limited, Page 17 of 21

22 First Quarter ended 31 March 2011 Offshore & Marine Infrastructure Property Investments Elimination Total Revenue External sales 1,198, , ,067 1,597 2,287,948 Inter-segment sales 22,422 10,620 20,651 (53,693) Total 1,198, , ,687 22,248 (53,693) 2,287,948 Segment Results Operating profit 248,054 46, , (845) 407,809 Investment income 90 1,418 1,508 Interest income 11, ,393 18,588 (19,167) 23,247 Interest expenses (1,914) (4,721) (21,271) (16,633) 20,012 (24,527) Share of results of associated companies 8,323 8,085 17,384 7,677 41,469 Profit before tax 266,096 50, ,019 10, ,506 Taxation (46,103) (7,899) (21,530) (2,964) (78,496) Profit for the period 219,993 42, ,489 7, ,010 Attributable to: Shareholders of Company 215,815 40,254 48,841 6, ,501 Non-controlling interests 4,178 2,631 51,648 1,052 59, ,993 42, ,489 7, ,010 Other Information Segment assets * 6,684,485 2,751,350 12,478,400 6,053,385 (6,648,810) 21,318,810 Segment liabilities * 4,534,132 1,782,908 7,104,209 4,477,812 (6,648,810) 11,250,251 Net assets 2,150, ,442 5,374,191 1,575,573 10,068,559 Investment in associated companies * 285, ,687 2,892, ,799 3,919,879 Additions to non-current assets 143,000 31, ,179 19, ,411 Depreciation and amortisation 32,654 12,078 2, ,484 Geographical Information Singapore Far East & Other ASEAN Countries Americas $ 000 Other Countries Elimination Total External sales 1,686, , , ,778 2,287,948 Non-current assets * 7,709,604 1,233, , ,975 9,675,880 Note: (a) The Group is organised into business units based on their products and services, and has four reportable operating segments: Offshore & Marine, Infrastructure, Property and Investments. The Investments division consists mainly of the Group's investments in k1 Ventures Ltd and M1 Limited. (b) Pricing of inter-segment goods and services is at fair market value. * Comparative figures are restated due to retrospective application of Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets, which is effective on 1 January Keppel Corporation Limited, Page 18 of 21

23 15. REVIEW OF SEGMENT PERFORMANCE 15a. Revenue by Segments Group revenue of $4,266 million was $1,978 million or 86% higher than the corresponding quarter last year. Revenue from Offshore & Marine Division of $1,994 million was $795 million or 66% higher due to higher volume of work. Revenue from Infrastructure Division of $683 million was $33 million or 5% higher. The higher revenue generated by the cogen power plant in Singapore was partly offset by lower revenue from Keppel Integrated Engineering. Revenue from Property Division of $1,521 million was $1,084 million or 248% higher due largely to revenue recognition from Reflections at Keppel Bay for units sold under the deferred payment scheme. 15b. Net profit by Segments Group net profit of $751 million was $439 million or 141% higher than the corresponding quarter last year. Profit from Offshore & Marine was $235 million. Despite the 66% increase in revenue, Offshore & Marine Division reported a smaller increase in profit of $19 million or 9%, due mainly to contracts with lower margins. Profit from Infrastructure Division of $27 million was $13 million or 33% lower due to lower contribution from Keppel Integrated Engineering and Keppel Energy. Profit from Property Division of $393 million was $344 million or 702% higher due largely to higher contribution from Reflections at Keppel Bay. Property Division was the largest contributor to Group net profit with 52% share, followed by Offshore & Marine Division with 31% share. Profit from Investments was higher due to disposal of investments. Keppel Corporation Limited, Page 19 of 21

24 16. INTERESTED PERSON TRANSACTIONS The Group has obtained a general mandate from shareholders of the Company for interested person transactions in the Annual General Meeting held on 21 April During the financial period, the following interested person transactions were entered into by the Group: Name of Interested Person Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than $100,000 and transactions conducted under shareholders' mandate pursuant to Rule 920) 3 months months Aggregate value of all interested person transactions conducted under a shareholders' mandate pursuant to Rule 920 of the SGX Listing Manual (excluding transactions less than $100,000) 3 months months Transaction for the Sale of Goods and Services Sembcorp Marine Group 180 Singapore Airlines Group 5,763 Singapore Telecommunications Group 3,290 (Singtel) Temasek Holdings Group 1,191 Transaction for the Purchase of Goods and Services Gas Supply Pte Ltd 100,000 30,000 Mapletree Investments Pte Ltd Total Interested Person Transactions 110,559 30,103 BY ORDER OF THE BOARD CAROLINE CHANG/KENNY LEE Company Secretaries 19 April 2012 Keppel Corporation Limited, Page 20 of 21

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