Management
Discussion &
Analysis
We are configured for growth with prudent financial discipline and a strong balance sheet.
GROUP OVERVIEW

Group net profit attributable to shareholders increased by 2% to $1,885 million. The compounded annual growth for net profit from 2009 to 2014 was 4.1% and for the period from 2004 to 2014 was 15.1%.

EPS went up by 2% to $1.04. ROE was 18.8%. EVA, at a record high of $1,778 million, was $636 million above that of the previous year.

Net cash from operating activities dropped by 99% to $5 million as compared to $637 million for 2013 due mainly to higher working capital requirements from the Offshore & Marine and Property Divisions, despite higher operating profit in the current year.

To better reflect its operational free cash flow, the Group had excluded expansionary acquisitions (e.g. investment properties) and capital expenditure (e.g. building of new logistics or data centre facilities), meant for long-term growth for the Group, and major divestments. After excluding expansionary acquisitions & capital expenditure and major divestments, net cash from investment activities was $724 million. The Group spent $662 million on investments and operational capital expenditure, mainly from the Offshore & Marine Division. After taking into account proceeds from divestments and dividend income of $1,386 million, the resulting free cash inflow was $729 million.

Total cash dividend for 2014 will be 48 cents per share, 20% higher than the prior year's total cash dividend of 40 cents per share. This comprised a final proposed cash dividend of 36 cents per share and the interim cash dividend of 12 cents per share distributed in 3Q 2014. The total distribution for 2014 is approximately $870 million. The total distribution for the prior year of 49.5 cents per share included a total cash dividend of 40 cents per share and a special distribution in specie of Keppel REIT units equivalent to 9.5 cents per share.

SEGMENT OPERATIONS

Group revenue of $13,283 million was $903 million or 7% above that of the previous year. Revenue from the Offshore & Marine Division of $8,556 million was $1,430 million higher due to higher revenue recognition from ongoing projects. Revenue from the Infrastructure Division of $2,934 million was $525 million lower due mainly to lower revenue recorded by the power generation plant in Singapore, partly offset by higher revenue from the logistics and data centre businesses. Revenue from the Property Division of $1,729 million fell by $39 million due largely to lower contribution from residential property sales in Singapore and the deconsolidation of Keppel REIT from 31 August 2013, partly offset by the sale of a residential development in Jeddah, Saudi Arabia.

Group net profit of $1,885 million was $39 million or 2% higher than that of the previous year. Profit from the Offshore & Marine Division of $1,040 million was $95 million or 10% higher than in 2013. Better operating results and higher interest income were partly offset by a lower share of associated companies' profits and higher tax expense. Profit from the Infrastructure Division of $320 million was $305 million higher due largely to better operating results as well as gains from divestments of data centre assets and Keppel FMO Pte Ltd. Profit from the Property Division of $482 million declined by $350 million or 42% due largely to lower operating results, lower fair value gains on investment properties and the absence of gains from the deconsolidation of Keppel REIT.

This was partially offset by gains from the disposals of Equity Plaza, Prudential Tower and its one-third interest in Marina Bay Financial Centre (MBFC) Tower 3 in 2014. Profit from the Investments Division decreased by $11 million or 20% to $43 million due mainly to higher overheads partly offset by profit from the disposal of investments and a write-back of impairment of investments.

The Offshore & Marine Division was the largest contributor to Group net profit with a 55% share followed by the Property Division at 26%, the Infrastructure Division at 17% and the Investments Division at 2%.


Free Cashflow
$729m

Earnings Per Share
$1.04
There was no significant dilution as no major capital call was made since 1997.


Key Performance Indicators
  2014
$ million
14 vs 13
% +/(-)
2013
$ million
13 vs 12
% +/(-)
2012
$ million
           
Revenue 13,283 +7 12,380 -11 13,965
Net profit 1,885 +2 1,846 -17 2,237
Operating cash flow 5 -99 637 -37 1,011
Free cash flow* 729 +11 654 +4 630
Economic Value Added (EVA) 1,778 +56 1,142 -20 1,430
Earnings per Share (EPS) $1.04 +2 $1.02 -18 $1.25
Return on Equity (ROE) 18.8% -4 19.5% -26 26.4%
Total cash dividend per share** 48 cts +20 40 cts -11 45 cts
* Free cash flow excludes expansionary acquisitions & capex, and major divestments.
** Total distributions for FY 2013 and FY 2012 included non-cash special distributions in specie of Keppel REIT units equivalent to 9.5 cts per share and 28.6 cts per share respectively.