KEPPEL CORPORATION LIMITED

Transcription

1 KEPPEL CORPORATION LIMITED Co. Reg. No N (Incorporated in the Republic of Singapore) THIRD QUARTER AND NINE MONTHS 2011 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 21 CONFIRMATION BY THE BOARD 22

2 KEPPEL CORPORATION LIMITED Address by Mr Choo Chiau Beng, Chief Executive Officer THIRD QUARTER AND NINE MONTHS ENDED 30 SEPTEMBER 2011 Fragile Economic Landscape The outlook for the global economy has become increasingly unclear over the past quarter. Growth in the US has weakened with data that has not at all been encouraging. In Europe, the sovereign debt crisis continues to deepen with the delays over bail-out plans for its troubled banks and mounting uncertainty over the longer term stability and sustainability of the Eurozone. Against the worsening outlook in Europe and the US, Asia is still seen as a bright spot. Emerging Asia continues to see some growth. The Chinese economy is projected to slow to 9.4% growth this year from 10.4% last year, as the Chinese government grapples with inflation. China s property cooling measures have started to bite as prices and transactions have declined. In Singapore, lower growth is expected for the next few years. Oil prices have continued to soften, but have remained above US$85 a barrel for WTI and above US$105 a barrel for Brent. Good Performance In this trying global environment, I am pleased to report that for the first nine months of this year, Keppel Corporation has managed to achieve a better performance than the same period last year. Our net profit has increased 15% from the same period last year to $1.1 billion. Our annualised ROE remains healthy at 20.8% while Economic Value-Added has increased from $737 million last year to reach $770 million this year. Business Outlook Amidst this complex and rapidly changing external environment, Keppel will work very hard to capture value in its key businesses. Our Offshore & Marine business has secured $8.7 billion of new orders to date. This is a new record for Keppel and we are happy that customers continue to entrust us with their projects. Our priority is to execute our orders well, on-time and on-budget, to extract good value from each project. With sharpened concerns over nuclear safety arising from the disaster in Japan, Germany s turning away from nuclear energy, global demand for oil and gas is expected to continue growing. Drilling in the North Sea has been revitalised by new major oil finds, and the Gulf of Mexico is returning gradually to normalcy with the issue of permits. Coupled with little spare production capacity, industry analysts have projected that spending on exploration and production will rise in the coming years. At Keppel, we will leverage our track record of offering premier solutions and delivery excellence to carve out value from these trends. There have been continuing developments in the Petrobras 21-rig tender earlier this month. With our good track record in delivery from a well-established offshore yard in Chief Executive Officer s Address, I

3 Brazil for Petrobras, we hope to secure a fair share of the orders when the tender is awarded through Sete Brazil. In Infrastructure, Keppel Integrated Engineering (KIE) has handed over the domestic waste project in Qatar to our clients and we have started the operational and maintenance phase which will provide a steady recurring income stream. KIE will continue to focus on completing its existing projects in Qatar and the UK. In China, KIE s subsidiary, Keppel District Heating & Cooling Systems (Keppel DHCS), expects its plant in the Sino-Singapore Tianjin Eco-City to commence operations next year. Keppel DHCS will continue to seek opportunities to provide its energy-efficient solutions in China and the broader region as well as to strengthen its presence as the largest cooling systems provider in Singapore. In our energy business, Keppel Energy s good earnings momentum in the last quarter is expected to be sustained for the rest of the year. Keppel Telecommunications & Transportation (Keppel T&T) has also been steadily growing its logistics business in Singapore, China and Vietnam. Its stake in a port project along the Yangtze River in Wuhu city is the first step in growing Keppel T&T s presence in integrated port logistics beyond Southern China. Keppel T&T is also scouting to invest in good data centre assets. The property market cooling measures by the governments in Singapore and China are taking effect and have dampened sentiments. Good projects still sell but at a slower pace. In this past quarter, we launched a new suburban project in Singapore and a new phase of our township in Chengdu, China. Both were well-received. In August, Keppel Land China acquired a prime waterfront site in Wuxi city to develop residential and small office/home office (SOHO) units. Keppel Land will continue to seize opportunity to secure good sites for residential developments and grow its commercial portfolio. We continue to believe in the fundamentals of demand from Asia s growing middle class for homes and will continue to position ourselves to participate in this growth. Just this Monday, we announced the proposed sale of Keppel Land's stake in the Ocean Financial Centre to K-REIT Asia for a period of 99 years. This is a win-win transaction for both Keppel Land and K-REIT Asia. Pending the approval by minority shareholders and unitholders of the two companies, Keppel Land will see a net gain of $492.7 million, while K-REIT Asia's sterling portfolio would be boosted to nearly $6 billion of Grade A prime office buildings, making it one of the largest office REITs in Singapore. This deal will be earnings accretive for K-REIT Asia. Building Bench Strengths Keppel places great importance on talent management and succession planning. Through deploying talents optimally within and across our three businesses, we groom our younger leaders to ensure sustainable growth for the Group. In this regard, I am happy to announce that we will be appointing Mr Loh Chin Hua as the Chief Financial Officer of Keppel Corporation with effect from 1 January Over the past nine years, Chin Hua has done well in growing Alpha Investment Partners, Keppel Land s real estate fund management arm. We are pleased to have him in this new role in Keppel Corporation. Chief Executive Officer s Address, II

4 Mr Teo Soon Hoe will be relinquishing his role as Group Finance Director, and will serve as Senior Executive Director and remain on the Keppel Corporation Board. He will remain as Chairman of Keppel T&T and M1. He will also assist me to grow our competencies in the business of Sustainable Development as well as oversee direct investments and special projects like the Sino-Singapore Tianjin Eco-City and the K- Green Trust. Conclusion 2011 has been an eventful and volatile year thus far. Our good performance for the first nine months of this year is testament to the Group s sound business strategies and prudent management of our resources. Our experience in past crises will stand us in good stead as we navigate an increasingly complex and uncertain global environment and focus on delivering value to our shareholders. Mr Teo Soon Hoe, our Group Finance Director, will now take you through a review of the Group s third quarter financial performance. Thank you Chief Executive Officer s Address, III

5 KEPPEL CORPORATION LIMITED Third Quarter and Nine Months 2011 Financial Statements UNAUDITED RESULTS FOR THE THIRD QUARTER AND NINE MONTHS ENDED 30 SEPTEMBER 2011 The Directors of Keppel Corporation Limited advise the following unaudited results of the Group for the third quarter and nine months ended 30 September GROUP PROFIT AND LOSS ACCOUNT for the third quarter and nine months ended 30 September Note Third Quarter Nine Months Restated Restated +/- % +/- % Revenue 2,702,050 2,287, ,277,522 6,997, Materials & subcontract costs (1,730,740) (1,456,586) (4,569,160) (4,553,205) +0.4 Staff costs (360,277) (382,609) -5.8 (1,020,949) (1,005,653) +1.5 Depreciation & amortisation (49,042) (44,689) +9.7 (144,391) (131,246) Other operating expenses (37,703) (35,249) +7.0 (150,877) (147,619) +2.2 Operating profit 524, , ,392,145 1,159, Investment income 7,709 2, ,963 6, Interest income 29,504 29, ,352 62, Interest expenses (i) (32,898) (19,298) (82,028) (57,013) Share of results of associated companies (ii) 51,390 40, , , Profit before tax 579, , ,541,168 1,401, Taxation (119,643) (82,101) (284,580) (280,156) +1.6 Profit for the period 460, , ,256,588 1,120, Attributable to: Shareholders of the Company 406, , ,102, , Non-controlling interests 54,221 33, , , , , ,256,588 1,120, Earnings per ordinary share - basic 22.8 cts 17.3 cts cts 54.3 cts diluted 22.7 cts 17.2 cts cts 54.0 cts Annualised return on equity n.a. n.a. n.a. 20.8% 21.3% -2.3 Economic value added 298, , , , The results for third quarter and nine months ended 30 September 2010 are restated due to retrospective application of INT FRS 115, which is effective from INT FRS 115 with its Accompanying Note was issued on 26 August 2010 and the Clarification Note was issued on 7 June A detailed explanation is provided in paragraph 9. Comparatives for earnings per ordinary share have been restated and also adjusted for bonus issue of shares. Keppel Corporation Limited, Page 1 of 22

6 NOTES TO GROUP PROFIT AND LOSS ACCOUNT 1a. Pre-tax profit of the Group is arrived at after charging/(crediting) the following: Note Third Quarter Nine Months +/- % +/- % Share-based payment expenses 17,962 13, ,380 25, Profit on sale of fixed assets (iii) (463) (1,614) (24,324) (3,627) >500.0 Profit on sale of investments (iv) (1,316) (10,749) (34,885) (9,315) Write-back - stocks & work-in-progress (2,944) (742) (6,783) (1,497) doubtful debts (572) (689) (2,021) (1,286) Bad debts (recovered)/written off (4) 90 NM 118 (77) NM Stocks (recovered)/written off (1) NM (19) 27 NM Fair value loss/(gain) - Investments (v) 24,999 (8,198) NM 26,543 (8,100) NM - Forward contracts (vi) (3,453) (4,313) ,717 (8,160) NM - Financial derivatives 9,335 4, ,744 10, Foreign exchange (gain)/loss (vii) (9,604) 4,711 NM 39,510 12, NM Not Meaningful Note: (i) (ii) (iii) (iv) (v) (vi) (vii) Higher interest expense was mainly attributable to higher borrowings. Share of profits of associated companies was lower mainly due to lower contribution from associated companies in the Property Division. Profit on sale of fixed assets increased largely due to disposals in the Offshore & Marine Division. Higher profit on sale of investments due to higher investment trading activities. Fair value loss (mark-to-market) on investment portfolio held for trading was due to fall 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. Earnings per ordinary share Earnings per ordinary share of the Group based on net profit attributable to shareholders:- Third Quarter Nine Months Restated Restated +/-% +/-% (i) Based on weighted average number of shares * 22.8 cts 17.3 cts cts 54.3 cts Weighted average number of shares ( 000) 1,778,547 1,758, ,778,547 1,758, (ii) On a fully diluted basis * 22.7 cts 17.2 cts cts 54.0 cts Adjusted weighted average number of shares ( 000) 1,796,762 1,769, ,796,762 1,769, * Comparative figures for EPS have been adjusted for the bonus issue of shares. 1c. There was no extraordinary item during the period. Keppel Corporation Limited, Page 2 of 22

7 2. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the third quarter and nine months ended 30 September Note Third Quarter Nine Months Restated Restated +/- % +/- % Profit for the period 460, , ,256,588 1,120, Available-for-sale assets - Fair value changes arising during the period (i) (75,186) 141,213 NM (78,111) 130,419 NM - Realised and transferred to profit & loss account 12,780 (2,841) NM (17,770) (4,256) Cash flow hedges - Fair value changes arising during the period, net of tax (ii) (149,419) 132,416 NM 50,965 50, Realised and transferred to profit & loss account (iii) 199 (31,081) NM 8,662 (39,105) NM Foreign exchange translation - Exchange differences arising during the period (iv) 47,186 (80,980) NM (114,990) (75,395) Realised and transferred to profit & loss account 2, >500.0 (3,011) 4 NM Share of other comprehensive income/(expense) of associated companies (v) 3,055 (11,014) NM (28,575) 7,226 NM Other comprehensive (expense)/income for the period, net of tax (159,317) 147,742 NM (182,830) 69,732 NM Total comprehensive income for the period 301, , ,073,758 1,190, Attributable to: Shareholders of the Company 232, , ,051 1,046, Non-controlling interests 68,242 (446) NM 75, , NM Not Meaningful 301, , ,073,758 1,190, Note: (i) (ii) (iii) (iv) (v) Fair value losses were mainly attributable to lower quoted prices of available-for-sale assets. Fair value losses in the third quarter were due mainly to the hedging differential on forward exchange contracts. These represented cash flow hedges, which were transferred to profit & loss account upon realisation. The translation gains in the third quarter arose from strengthening of foreign currencies, such as United States dollar and Renminbi against the Singapore dollar. The translation losses for 9M2011 were mainly due to weakening of foreign currencies such as United States dollar, Renminbi and Vietnamese dong. The share of other comprehensive gains of associated companies for the third quarter mainly related to share of translation gains offset by share of fair value losses from cash flow hedging reserve. Share of other comprehensive losses of associated companies for 9M2011 mainly related to share of translation losses and fair value losses from cash flow hedging reserve. Keppel Corporation Limited, Page 3 of 22

8 3. BALANCE SHEETS as at 30 September G r o u p Restated Restated C o m p a n y Share capital 1,013, , ,908 1,013, ,409 Reserves 5,804,037 5,508,975 4,939,957 4,244,201 3,783,517 Share capital & reserves 6,817,380 6,415,384 5,772,865 5,257,544 4,689,926 Non-controlling interests 2,807,860 2,866,384 2,614, Capital employed 9,625,240 9,281,768 8,387,107 5,257,544 4,689,926 Represented by: Fixed assets 2,515,828 2,243,150 2,157,172 5,041 5,120 Investment properties 3,470,204 3,207,539 3,051, Subsidiaries ,774,377 3,580,409 Associated companies 3,839,835 3,586,904 2,651, Investments 299, , , Long term receivables 35,864 28, , Intangibles 112, ,676 90, ,273,375 9,473,811 8,649,316 3,779,803 3,585,944 Current assets Stocks & work-in-progress in excess of related billings 5,664,348 3,940,126 2,877, Amounts due from: - subsidiaries ,399,564 1,732,273 - associated companies 371, , ,922 4,416 2,575 Debtors 2,492,520 1,958,993 1,727, ,380 82,416 Short term investments 451, , , Bank balances, deposits & cash 2,664,554 4,245,990 2,935,787 4, ,073 11,645,103 10,987,143 8,284,987 2,610,481 2,024,337 Current liabilities Creditors 4,817,724 4,342,963 4,051, , ,435 Billings on work-in-progress in excess of related costs 2,101,052 1,638,193 1,683, Provisions 79,922 83,586 68, Amounts due to: - subsidiaries , ,792 - associated companies 69, , , Term loans 345, , ,117-9,047 Taxation 382, , ,515 25,305 26,147 Bank overdrafts , ,795,653 7,092,930 7,241, , ,421 Net current assets 3,849,450 3,894,213 1,043,281 1,982,675 1,608,916 Non-current liabilities Term loans 4,068,183 3,675, , , ,000 Deferred taxation 429, , ,080 4,934 4,934 4,497,585 4,086,256 1,305, , ,934 Net assets 9,625,240 9,281,768 8,387,107 5,257,544 4,689,926 Group net (debt)/cash (1,749,291) 177,522 1,176,592 n.a. n.a. Group net (gearing)/cash ratio (0.18x) 0.02x 0.14x n.a. n.a. Keppel Corporation Limited, Page 4 of 22

9 NOTES TO BALANCE SHEETS 3a. Group s borrowings and debt securities (i) (ii) (iii) Amount repayable in one year or less, or on demand Secured As at As at Unsecured Secured Unsecured 28, ,853 30, ,974 Amount repayable after one year Secured As at As at Unsecured Secured Unsecured 1,316,733 2,751,450 1,221,141 2,454,827 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 $3,023,543,000 (31 December 2010: $2,552,701,000). 3b. Net asset value Group Company Restated /-% /-% Net asset value per ordinary share * $3.82 $ $2.95 $ Net tangible asset per ordinary share * $3.76 $ $2.95 $ * Based on share capital of 1,783,236,051 ordinary shares as at the end of the period (31 December 2010: 1,766,065,268 ordinary shares). The comparative figures have been adjusted for the bonus issue of shares. Keppel Corporation Limited, Page 5 of 22

10 3c. Balance sheet analysis Group shareholders funds increased from $6.42 billion at 31 December 2010 to $6.82 billion at 30 September The increase was mainly attributable to retained profits for the period and fair value gain on cash flow hedges, partially offset by fair value loss on available-for-sale assets, currency translation loss, and payment of final dividend of 23.6 cents per share in respect of financial year 2010 and interim dividend of 17.0 cents per share for financial year Group total assets of $21.92 billion at 30 September 2011 were $1,458 million or 7.1% 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. Investment properties increased due to acquisition of four levels of strata office at Prudential Tower and redevelopment cost of Ocean Financial Centre. Increase in associated companies mainly due to acquisition of interest in Dyna-Mac Holdings Ltd, acquisition of 50 percent interest in Mirvac 8 Chifley Trust and additional investments. Higher stocks & work-in-progress was due to land acquisition cost and development expenditure incurred for Property Division and project cost incurred for Offshore & Marine jobs. Group total liabilities of $12.29 billion at 30 September 2011 were $1,114 million or 10.0% higher than the previous year end. Higher billings on work-in-progress in excess of related costs was attributable to milestone billings for existing contracts and payment received for new contracts secured in Offshore & Marine Division. Increase in creditors was mainly from Offshore & Marine Division, and accrual for development costs in Property Division. Group net debt at 30 September 2011 was $1,749 million as compared to group net cash of $178 million at 31 December This was mainly due to operational cash outflow, capital expenditure and dividend payment. Keppel Corporation Limited, Page 6 of 22

11 4. STATEMENTS OF CHANGES IN EQUITY for the third quarter and nine months ended 30 September 4a. Statement of changes in equity of the Group Share Capital Attributable to equity holders of the Company Foreign Exchange Capital Revenue Translation Reserves Reserves Account Share Capital & Reserves Noncontrolling Interests Capital Employed 2011 As at 1 January As previously reported 906, ,624 5,318,836 (139,083) 6,739,786 2,984,097 9,723,883 Effect of INT FRS 115 (324,402) (324,402) (117,713) (442,115) As restated 906, ,624 4,994,434 (139,083) 6,415,384 2,866,384 9,281,768 Total comprehensive income for first half Profit for first half 696, ,361 99, ,238 Other comprehensive income 186,597 (117,698) 68,899 (92,412) (23,513) Total comprehensive income for first half 186, ,361 (117,698) 765,260 7, ,725 Transactions with equity holders, recorded directly in equity Dividend paid (420,898) (420,898) (420,898) Share-based payment 14,348 14, ,188 Dividend paid to non-controlling shareholders (149,345) (149,345) Cash subscribed by non-controlling shareholders 22,797 22,797 Disposal to non-controlling shareholders 6,782 6,782 18,209 24,991 Disposal of subsidiary (420) (420) Other adjustments (211) (211) (181) (392) Shares issued 97,709 (10,389) 87,320 87,320 Total transactions with equity holders 97,709 3,748 (414,116) (312,659) (108,100) (420,759) As at 30 June 1,004, ,969 5,276,679 (256,781) 6,867,985 2,765,749 9,633,734 Total comprehensive income for third quarter Profit for third quarter 406, ,129 54, ,350 Other comprehensive income (207,793) 34,455 (173,338) 14,021 (159,317) Total comprehensive income for third quarter (207,793) 406,129 34, ,791 68, ,033 Transactions with equity holders, recorded directly in equity Dividend paid (302,959) (302,959) (302,959) Share-based payment 17,290 17, ,005 Transfer of statutory, capital and other reserves to revenue reserves 129 (129) Dividend paid to non-controlling shareholders (14,171) (14,171) Cash subscribed by non-controlling shareholders Effects of acquiring noncontrolling interests in (6,652) (6,652) (15,379) (22,031) subsidiaries Other adjustments (265) (2) (267) 2,586 2,319 Shares issued 9,225 (33) 9,192 9,192 Total transactions with equity holders 9,225 17,121 (309,742) (283,396) (26,131) (309,527) As at 30 September 1,013, ,297 5,373,066 (222,326) 6,817,380 2,807,860 9,625,240 Keppel Corporation Limited, Page 7 of 22

12 4a. Statement of changes in equity of the Group (cont d) Share Capital Attributable to equity holders of the Company Foreign Exchange Capital Revenue Translation Reserves Reserves Account Share Capital & Reserves Noncontrolling Interests Capital Employed 2010 As at 1 January As previously reported 832, ,289 4,695,478 (83,328) 5,985,347 2,727,226 8,712,573 Effect of INT FRS 115 (212,482) (212,482) (112,984) (325,466) As restated 832, ,289 4,482,996 (83,328) 5,772,865 2,614,242 8,387,107 Total comprehensive income for first half Profit for the first half 650, , , ,625 Other comprehensive income (96,142) 5,695 (90,447) 12,437 (78,010) Total comprehensive income for first half (96,142) 650,651 5, , , ,615 Transactions with equity holders, recorded directly in equity Dividend paid (734,903) (734,903) (734,903) Share-based payment 10,795 10, ,181 Transfer of statutory, capital and other reserves to revenue reserves 34 (34) Dividend paid to non-controlling shareholders (99,271) (99,271) Cash subscribed by non-controlling shareholders 1,742 1,742 Disposal to non-controlling shareholders 1,398 1,398 Other adjustments (1) (1) Shares issued 36,064 36,064 36,064 Total transactions with equity holders 36,064 10,829 (734,937) (688,044) (95,746) (783,790) As at 30 June 868, ,976 4,398,710 (77,633) 5,645,025 2,662,907 8,307,932 Total comprehensive income for third quarter Profit for third quarter 304, ,642 33, ,301 Other comprehensive income 235,734 (53,887) 181,847 (34,105) 147,742 Total comprehensive income for third quarter 235, ,642 (53,887) 486,489 (446) 486,043 Transactions with equity holders, recorded directly in equity Dividend paid (256,103) (256,103) (256,103) Share-based payment 12,966 12, ,610 Transfer of statutory, capital and other reserves to revenue reserves (1,119) 1,119 Dividend paid to non-controlling shareholders (10,273) (10,273) Cash subscribed by non-controlling shareholders Disposal to non-controlling shareholders (1,106) (1,106) Acquisition of additional interest in subsidiaries (3,085) (3,085) Other adjustments 1 1 Shares issued 1,344 1,344 1,344 Total transactions with equity holders 1,344 11,847 (254,984) (241,793) (13,605) (255,398) As at 30 September 870, ,557 4,448,368 (131,520) 5,889,721 2,648,856 8,538,577 Keppel Corporation Limited, Page 8 of 22

13 4b. Statement of changes in equity of the Company Share Capital Capital Reserves Revenue Reserves Total 2011 As at 1 January 906, ,020 3,657,497 4,689,926 Profit /Total comprehensive income for first half 829, ,003 Transactions with equity holders, recorded directly in equity Dividend paid (420,898) (420,898) Share-based payment 13,223 13,223 Shares issued 97,709 (10,389) 87,320 Total transactions with equity holders 97,709 2,834 (420,898) (320,355) As at 30 June 1,004, ,854 4,065,602 5,198,574 Profit /Total comprehensive income for third quarter 336, ,408 Transactions with equity holders, recorded directly in equity Dividend paid (302,959) (302,959) Share-based payment 16,329 16,329 Shares issued 9,225 (33) 9,192 Total transactions with equity holders 9,225 16,296 (302,959) (277,438) As at 30 September 1,013, ,150 4,099,051 5,257, As at 1 January 832,908 91,555 3,833,363 4,757,826 Profit /Total comprehensive income for first half 591, ,922 Transactions with equity holders, recorded directly in equity Dividend paid (734,903) (734,903) Share-based payment 10,384 10,384 Shares issued 36,064 36,064 Total transactions with equity holders 36,064 10,384 (734,903) (688,455) As at 30 June 868, ,939 3,690,382 4,661,293 Profit /Total comprehensive income for third quarter 204, ,191 Transactions with equity holders, recorded directly in equity Dividend paid (256,103) (256,103) Share-based payment 12,016 12,016 Shares issued 1,344 1,344 Total transactions with equity holders 1,344 12,016 (256,103) (242,743) As at 30 September 870, ,955 3,638,470 4,622,741 Keppel Corporation Limited, Page 9 of 22

14 4c. Share capital Issued share capital and treasury shares Number of shares As at 1 January 1,605,513,880 1,594,496,680 Issue of shares under share option scheme 14,583,300 11,017,200 Issue of shares under restricted share plan 1,255,541 Bonus issue 161,883,330 As at end of period/year 1,783,236,051 1,605,513,880 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 30 September 2011, the Company is not holding any treasury shares (31 December 2010: Nil). Share options As at 30 September 2011, there were unexercised options for 42,287,020 of unissued ordinary shares (30 September 2010: 64,963,800 ordinary shares) under the KCL Share Options Scheme. The unexercised options have been adjusted during the period to reflect the bonus issue. KCL Performance Share Plan ( KCL PSP ) As at 30 September 2011, the number of contingent shares granted but not released were 1,388,000 (30 September 2010: 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 have been adjusted during the period to reflect the bonus issue. KCL Restricted Share Plan ( KCL RSP ) As at 30 September 2011, the number of contingent shares granted but not released was 4,166,900 (30 September 2010: 3,769,664). 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 4,166,900 under KCL RSP. As at 30 September 2011, the number of awards released but not vested was 2,660,435 (30 September 2010: Nil) for KCL RSP. The awards released but not vested have been adjusted during the period to reflect the bonus issue. 4d. Capital reserves Group Company Share option reserve 158, , , ,955 Fair value reserve 276, ,688 Hedging reserve 167, ,823 Bonus issue by subsidiaries 40,000 40,000 Others 10,231 24, , , , ,955 Keppel Corporation Limited, Page 10 of 22

15 5. CONSOLIDATED STATEMENT OF CASH FLOWS for the third quarter and nine months ended 30 September Note Third Quarter Restated Nine Months Restated OPERATING ACTIVITIES Operating profit 524, ,108 1,392,145 1,159,385 Adjustments: Depreciation and amortisation 49,042 44, , ,246 Share-based payment expenses 17,962 13,562 33,380 25,031 Profit on sale of associated companies (597) Profit on sale of fixed assets (463) (1,614) (24,324) (3,627) Others (2,735) 1,547 Operational cash flow before changes in working capital 590, ,695 1,542,857 1,312,985 Working capital changes: Stocks & work-in-progress (222,772) (507,138) (1,054,214) (1,054,293) Debtors (791,217) (33,526) (632,329) (277,955) Creditors 164, , ,532 70,338 Investments in bonds and shares 1,916 (36,152) (20,412) (109,039) Advances to associated companies (26,588) 16,804 (176,147) (65,237) Translation of foreign subsidiaries 48,022 (60,358) (56,765) (43,966) (235,578) 83,146 (29,478) (167,167) Interest received 29,504 29,071 78,352 62,020 Interest paid (32,898) (19,298) (82,028) (57,013) Income taxes paid (133,236) (113,396) (316,105) (301,863) Net cash used in operating activities (372,208) (20,477) (349,259) (464,023) INVESTING ACTIVITIES Acquisition and further investment in associated companies (61,158) (151,593) (310,907) (266,701) Acquisition of fixed assets and investment properties (143,914) (121,315) (743,986) (492,899) Disposal of subsidiaries 5a 1,430 Proceeds from disposal of interest in a subsidiary 16,281 Proceeds from disposal of associated companies 53,987 1,241 53,987 2,106 Proceeds from disposal of fixed assets 5,542 29,097 57,586 36,032 Dividends received from investments and associated companies 52, , , ,218 Net cash used in investing activities (92,644) (104,217) (812,568) (519,963) FINANCING ACTIVITIES Acquisition of additional shares in subsidiaries (22,031) (3,085) (22,031) (3,085) Proceeds from share issues 9,192 1,344 96,512 37,408 Proceeds from non-controlling shareholders of subsidiaries ,363 1,956 Proceeds from reduction of interest in a subsidiary 24,991 Proceeds from term loans 257, , ,979 1,197,904 Repayment of term loans (14,513) (25,900) (57,866) (430,474) Dividend paid to shareholders of the Company (302,959) (256,103) (723,857) (627,183) Dividend paid to non-controlling shareholders of subsidiaries (14,171) (10,273) (145,964) (109,544) Net cash (used in)/from financing activities (86,434) 231,384 (418,873) 66,982 Net (decrease)/increase in cash and cash equivalents (551,286) 106,690 (1,580,700) (917,004) Cash and cash equivalents as at beginning of period 3,215,840 1,910,425 4,245,254 2,934,119 Cash and cash equivalents as at end of period 5b 2,664,554 2,017,115 2,664,554 2,017,115 Free cash flow (464,852) (124,694) (1,161,827) (983,986) Keppel Corporation Limited, Page 11 of 22

16 NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS Third Quarter Nine Months 5a. Disposal of subsidiaries During the financial period, the fair values of net assets of subsidiaries disposed were as follows: Fixed assets (255) (1,007) Long term receivables (589,440) Stocks & work-in-progress (14,538) Debtors (7,576) (86,376) Bank balances and cash (57,949) Creditors 5,214 21,492 Current and deferred tax ,441 Non-controlling interests 420 (2,077) (713,377) Net profit on disposal (4,311) Sale proceeds (6,388) (713,377) Amount accounted for as associated company 349,554 Amount accounted for as advance from associated company (57,949) Distribution of dividend in specie 363,823 Add: Bank balances and cash disposed 57,949 Less: Contingent sale proceeds (4,958) Cash flow on disposal net of cash disposed (1,430) 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: Bank balances, deposits and cash 2,664,554 2,017,115 2,664,554 2,017,115 Keppel Corporation Limited, Page 12 of 22

17 5c. Cash flow analysis (i) Third Quarter Net cash used in operating activities for the quarter was $372 million compared to $20 million for the corresponding quarter last year. This was mainly due to cash outflow from working capital changes, partly offset by operational cash inflow. Net cash used in investment activities for the quarter was $93 million. The Group spent $205 million on acquisitions and operational capex. This comprised principally further investment in Marina Bay Financial Centre, capital expenditure for the expansion of Keppel Merlimau cogen power plant, acquisition of 50 percent interest in Mirvac 8 Chifley Trust and other operational capex. Divestment and dividend income totalled $112 million. Free cash flow was negative $465 million for the quarter compared to negative $125 million for the corresponding quarter last year. (ii) Nine Months Net cash used in operating activities for the nine months was $349 million compared to $464 million for the corresponding period last year. This was mainly due to increased operational cash inflow, partly offset by higher cash outflow from working capital changes. Net cash used in investment activities was $813 million. The Group spent $1,055 million on acquisitions and operational capex. This comprised principally acquisition of interest in associated company, Dyna-Mac Holdings Ltd, further investment in associated companies, acquisition of four levels of strata office at Prudential Tower, further investment in Marina Bay Financial Centre, redevelopment cost of Ocean Financial Centre, capital expenditure for the expansion of Keppel Merlimau cogen power plant and other operational capex. Divestment and dividend income totalled $242 million. Free cash flow for the nine months was negative $1,162 million compared to negative $984 million for the corresponding nine months last year. 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 and Interpretations of FRS ( INT 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 and INT FRS. The following are the new or amended FRS that are relevant to the Group: FRS 24 (Revised) Related Party Disclosures Amendments to FRS 32 Financial Instruments: Presentation - Amendments relating to Classification of Rights Issues Amendments to INT FRS 114 Prepayments of a Minimum Funding Requirement INT FRS 115 Agreements for the Construction of Real Estate INT FRS 119 Extinguishing Financial Liabilities with Equity Instruments Improvements to FRSs (issued in 2010) The adoption of the above FRS and INT FRS did not have any significant impact on the financial statements of the Group, except for the following: Keppel Corporation Limited, Page 13 of 22

18 INT FRS 115 Agreements for the Construction of Real Estate On 26 August 2010, the Accounting Standards Council ( ASC ) issued INT FRS 115 with an accompanying note that explains the application of the Interpretation to property development sales in Singapore by considering the Singapore legal framework. INT FRS 115 clarifies when revenue and related expenses from a sale of real estate unit should be recognised if an agreement between a developer and a buyer is reached before the construction of real estate is completed. INT FRS 115 determines that such contracts which are not classified as construction contracts in accordance with FRS 11 Construction Contracts can only be accounted for using the percentage of completion ( POC ) method if the entity continuously transfers to the buyer control and the significant risks and rewards of ownership of the work in progress in its current state as construction progresses. Following the implementation of INT FRS 115 and its Accompanying Note with effect from 1 January 2011, the Group has adopted the Completion of Construction ( COC ) method to account for its overseas trading projects after taking into consideration the legal framework and industry practices in those countries in which the Group operates. For Singapore trading projects under progressive payment scheme, the Group has applied the POC method. The ASC has issued a clarification note on 7 June 2011 to highlight that the Accompanying Note does not address the accounting treatment for sales under Deferred Payment Scheme ( DPS ). With this clarification note and after consultation with public accounting firms, sales of real estate under DPS have to be accounted under the COC method. Impact on the comparatives for the Third Quarter 2011 Financial Statements: The Third Quarter 2011 Financial Statements have been prepared to take into account the effects of implementation of INT FRS 115 as described in the preceding paragraphs. This change in accounting policy has been applied retrospectively. Accordingly, the 2010 comparatives have been restated. The financial effect of adopting INT FRS 115 is as follows: Nine months Group Profit and Loss Account Decrease in revenue (341,394) Decrease in materials and subcontract costs 221,592 Increase in share of results of associated companies 76,938 Decrease in taxation 426 Decrease in profit for the period (42,438) Attributable to: Shareholders of the Company (60,332) Non-controlling interests 17,894 (42,438) Decrease in basic EPS before exceptional items Decrease in diluted EPS before exceptional items 9.2 cts 9.1 cts Group Balance Sheet Decrease in revenue reserves (324,402) (212,482) Decrease in non-controlling interests (117,713) (112,984) Decrease in associated companies (19,819) (72,101) Decrease in stocks & work-in-progress in excess of related billings (500,701) (300,518) Decrease in taxation (29,620) (22,436) Decrease in deferred taxation (48,785) (24,717) Keppel Corporation Limited, Page 14 of 22

19 10. REVIEW OF GROUP PERFORMANCE Group net profit surpassed the billion dollar level for the first nine months of 2011 to reach $1.1 billion, 15% above the corresponding period in Earnings per share of 62.0 cents was 14% higher. Annualised return on equity was 20.8%. Economic Value Added of $770 million was $33 million above the corresponding period in For the third quarter, Group revenue of $2,702 million was 18% above the same quarter in This was mainly due to higher revenue from Offshore & Marine, Infrastructure and Property Divisions. The Group achieved a net profit of $406 million for the quarter, representing a 33% increase over the corresponding quarter in Higher profit were reported by Offshore & Marine and Property Divisions. Group revenue of $7,278 million for the nine months to-date was 4% above the corresponding period in Revenue from Offshore & Marine Division of $4,160 million was 5% lower due to lower volume of work. The Division completed and delivered eight rigs, seven specialised vessels, six FPSO/FSO conversions, one drillship outfitting and several rig upgrade/repair contracts. Revenue from Infrastructure Division increased by 25% to $2,208 million. Higher revenue generated from the cogen power plant in Singapore was partly offset by lower revenue from Keppel Integrated Engineering. Revenue from Property Division of $866 million was 3% above the corresponding period in the previous year. Higher revenue was reported by Singapore trading projects, such as Reflections at Keppel Bay, The Lakefront Residences and Madison Residences due to higher sales and percentage of physical completion achieved. At the pre-tax level, Group profit of $1,541 million was 10% higher than that of the corresponding period in The Offshore & Marine Division reported a higher pre-tax profit of $1,059 million, an increase of 20% as compared to the previous year. Profit from Infrastructure Division increased by 42% to $108 million as a result of better performance from Keppel Energy, partly offset by lower contribution from Keppel Integrated Engineering. Profit from Property Division decreased from $423 million to $334 million mainly due to lower share of profit from associated companies. Marina Bay Residences in Singapore and some phases of the Botanica development in Chengdu, China were completed in the first nine months of 2010 resulting in the higher share of profit for associated companies for the previous year. Profit from Investments Division was higher mainly due to disposal of investments. After taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders was $1,102 million. Offshore & Marine remained the largest contributor to net profit with 74%, followed by Property Division with 15%, Infrastructure Division with 8% and Investments Division with 3%. In the opinion of the Directors, no factor has arisen between 30 September 2011 and the date of this report which would materially affect the results of the Group and the Company for the period just ended. Keppel Corporation Limited, Page 15 of 22

20 11. VARIANCE FROM FORECAST STATEMENT No forecast was previously provided. 12. PROSPECTS Offshore & Marine Division secured $8.7 billion of orders year-to-date. The net order book stood at $9 billion as at 30 September 2011 with deliveries extending into The Division sees good prospects for its deepwater solutions with the projected increase in deepwater capital expenditure for the next few years. The Division will continue to focus on innovation, productivity and safety, which will place the Division in a good position to participate in the expected increase in demand. In the Infrastructure Division, the expansion of the Keppel Merlimau cogen power plant from 500MW to 1,300MW is on schedule. Keppel Integrated Engineering progresses with the execution of its Engineering, Procurement and Construction contracts in Qatar and the United Kingdom. With the expected demand for logistics solutions and data centres in Asia, the Group will focus on providing integrated logistics solutions in selected markets and building up a portfolio of high quality data centres. The series of property market cooling measures rolled out in Singapore have moderated demand and growth in residential prices but the Group continues to see interest in its projects in Singapore. Home sales have moderated in most overseas markets from the property cooling measures but demand for the Group s quality homes remains. Keppel Land China has acquired a prime lakefront residential site in Wuxi for the development of about 2,500 apartments, which includes commercial components. Interest in Ocean Financial Centre and Marina Bay Financial Centre Phase 2 remains healthy but office rentals in Singapore are expected to moderate. With the continued uncertainty over the Eurozone sovereign debt situation and weak United States economic data, there remains volatility in the global economy. 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 16 of 22

21 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 30 September Total cash distribution paid to shareholders in 2011 amounted to 40.6 cents per share. A tax exempt one-tier final dividend of 23.6 cents per share (adjusted for the bonus issue) in respect of the year ended 31 December 2010 was paid on 10 May 2011 and a tax exempt one-tier interim dividend of 17.0 cents per share in respect of the first half year ended 30 June 2011 was paid on 10 August Keppel Corporation Limited, Page 17 of 22

22 14. SEGMENT ANALYSIS Nine months ended 30 September 2011 Offshore & Marine Infrastructure Property Investments Elimination Total Revenue External sales 4,160,133 2,207, ,091 43,764 7,277,522 Inter-segment sales 84,011 36,920 54,956 (175,887) Total 4,160,133 2,291, ,011 98,720 (175,887) 7,277,522 Segment Results Operating profit 993,716 98, ,043 22,567 (11,391) 1,392,145 Investment income 805 2,072 10,855 2,231 15,963 Interest income 39,753 2,337 36,822 47,373 (47,933) 78,352 Interest expenses (5,588) (18,671) (61,441) (55,652) 59,324 (82,028) Share of results of associated companies 30,590 23,894 58,484 23, ,736 Profit before tax 1,059, , ,763 40,287 1,541,168 Taxation (221,386) (10,752) (46,518) (5,924) (284,580) Profit for the year 837,890 97, ,245 34,363 1,256,588 Attributable to: Shareholders of Company 815,278 88, ,455 30,378 1,102,490 Non-controlling interests 22,612 8, ,790 3, , ,890 97, ,245 34,363 1,256,588 Other Information Segment assets 6,972,491 2,964,198 12,937,035 4,746,542 (5,701,788) 21,918,478 Segment liabilities 5,147,289 2,015,165 7,856,247 2,976,325 (5,701,788) 12,293,238 Net assets 1,825, ,033 5,080,788 1,770,217 9,625,240 Investment in associated companies 309, ,156 2,834, ,999 3,839,835 Additions to non-current assets 227, , ,059 19,467 1,066,477 Depreciation and amortisation 98,549 35,966 9, ,391 Geographical Information Singapore Far East & Other ASEAN Countries America Other Countries Elimination Total External sales 5,339, , , ,348 7,277,522 Non-current assets 7,863,607 1,275, , ,536 9,937,882 Keppel Corporation Limited, Page 18 of 22

23 Nine months ended 30 September 2010 Offshore & Marine Infrastructure Property Investments Elimination Total Revenue External sales 4,380,680 1,770, ,828 7,841 6,997,108 Inter-segment sales 93,816 32,082 52,184 (178,082) Total 4,380,680 1,864, ,910 60,025 (178,082) 6,997,108 Segment Results Operating profit 799,710 70, ,717 11,401 (22,193) 1,159,385 Investment income , ,379 Interest income 48,930 3,320 27,877 39,213 (57,320) 62,020 Interest expenses (1,844) (23,850) (65,119) (45,713) 79,513 (57,013) Share of results of associated companies 33,828 25, ,944 15, ,311 Profit before tax 881,543 76, ,617 20,717 1,401,082 Taxation (174,179) (16,416) (87,461) (2,100) (280,156) Profit for the year 707,364 59, ,156 18,617 1,120,926 Attributable to: Shareholders of Company 694,395 53, ,443 14, ,293 Non-controlling interests 12,969 5, ,713 3, , ,364 59, ,156 18,617 1,120,926 Other Information Segment assets 5,710,688 2,642,493 10,025,983 3,892,571 (4,731,817) 17,539,918 Segment liabilities 4,086,205 1,783,748 5,594,245 2,268,960 (4,731,817) 9,001,341 Net assets 1,624, ,745 4,431,738 1,623,611 8,538,577 Investment in associated companies 133, ,827 2,284, ,722 3,077,587 Additions to non-current assets 83, , , ,110,625 Depreciation and amortisation 91,219 31,901 7, ,246 Geographical Information Singapore Far East & Other ASEAN Countries America Other Countries Elimination Total External sales 5,076, , , ,810 6,997,108 Non-current assets 6,987,086 1,225, , ,649 8,677,133 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. Keppel Corporation Limited, Page 19 of 22

24 15. REVIEW OF SEGMENT PERFORMANCE 15a. Revenue by Segments Group revenue of $7,278 million was $280 million or 4% higher than the corresponding period last year. Revenue from Offshore & Marine Division of $4,160 million was $221 million or 5% below that of 9M 2010 and accounted for 57% of Group revenue. The decrease in revenue was due to lower volume of work. Most of the new orders have not achieved at least 20% physical completion in order for revenue recognition to commence. Revenue from Infrastructure Division of $2,208 million was $437 million or 25% higher due to higher revenue generated by the cogen power plant in Singapore partly offset by lower revenue from Keppel Integrated Engineering. Revenue from Property Division of $866 million was $28 million or 3% higher. Higher revenue was reported by Singapore trading projects, such as Reflections at Keppel Bay, The Lakefront Residences and Madison Residences from higher sales and percentage of physical completion achieved. 15b. Net profit (before exceptional items) by Segments Group net profit of $1,102 million was $147 million or 15% higher than the corresponding period in the previous year. Profit from Offshore & Marine Division of $815 million was $121 million or 17% higher and the division remains the largest contributor to Group net profit with 74% share. Profit from Infrastructure Division of $88 million was $35 million or 64% higher due to better performance from Keppel Energy, partly offset by lower contribution from Keppel Integrated Engineering. Profit from Property Division of $168 million was $24 million or 12% lower than that of previous year mainly due to lower share of profit from associated companies. Profit from Investments was higher due to disposal of investments. Keppel Corporation Limited, Page 20 of 22

25 16. INTERESTED PERSON TRANSACTIONS 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) 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) Nine months Nine months Nine months Nine months Transaction for the Sale of Goods and Services Singapore Airlines Group 4,200 14,500 SembCorp Marine Group 1,988 Gas Supply Pte Ltd 9,000 19,300 Mapletree Investments Pte Ltd 3,312 Certis CISCO Security Pte Ltd 2,400 Transaction for the Purchase of Goods and Services Gas Supply Pte Ltd 30,000 35,000 Mapletree Investments Pte Ltd Divestment Transaction Singbridge International Singapore Pte Ltd 10,582 Joint Venture Temasek Holdings (Private) Limited and its associate 26,740 Total Interested Person Transactions 26,740 10,582 47,069 73,602 BY ORDER OF THE BOARD CAROLINE CHANG Company Secretary 20 October 2011 Keppel Corporation Limited, Page 21 of 22

26