Investments
We are focused on delivering sustainable value to shareholders by investing strategically and growing our asset management businesses.
Major Developments in 2015
  • Keppel Corporation announced plans to consolidate its interests in business trust, REIT and fund management under Keppel Capital Holdings (Keppel Capital).
  • k1 Ventures completed the sale of its childcare operating business and received a cash distribution of US$61.5 million from Knowledge Universe Holdings.
  • M1 launched Voice over LTE which provides customers with higher quality voice calls, and introduced XGPON connectivity which offers speeds of up to 10 Gbps.
  • KrisEnergy achieved first oil in two new oil fields located in the Gulf of Thailand.
Focus for 2016/2017
  • Keppel Capital will focus on integrating and growing the Group’s asset management platform.
  • k1 Ventures will focus on managing existing investments to drive shareholder value and distribute excess cash when investments are monetised.
  • M1 will focus on enhancing customer experience to maintain its market position.
  • KrisEnergy will focus on maintaining production and maximising efficiencies.
Profit Before Tax
$146m
as compared to FY 2014’s $55 million.

Net Profit
$136m
as compared to FY 2014’s $43 million.

The Investments Division is Keppel’s fourth business vertical, which presently comprises mainly the Group’s investments in k1 Ventures, M1 Limited and KrisEnergy.

In January 2016, Keppel Corporation announced a significant restructuring exercise to consolidate its interests in Alpha Investment Partners and the managers of Keppel Infrastructure Trust, Keppel DC REIT and Keppel REIT under Keppel Capital, and report them under a new segment as part of the Investments Division.

Through Keppel Capital, we aim to grow our assets under management, strengthen the Group’s capital-recycling platform, as well as expand its capital base with co-investors. This will also improve the performance of the asset managers and the funds, REITs and business trusts that they manage by centralising certain non-regulated support functions and creating a larger vehicle that will enhance the recruitment and retention of talent, and sharing of best practices.

This restructuring will bring greater focus and scale to our asset management business, as we grow the Investments Division into a steady pillar of recurring income for the Group.

Earnings Review

Pre-tax earnings from the Investments Division increased by $91 million or 166% to $146 million for FY 2015, due mainly to higher contributions from k1 Ventures and KrisEnergy. Net profit for the year was $136 million, an increase of $93 million or 216%, from $43 million in FY 2014.

k1 Ventures

k1 Ventures (k1) is an investment company with interests in education and financial services.

For the financial year ended 30 June 2015, k1 reported revenue from continuing operations of $60.6 million, an increase of 92% from the prior year. This was driven mainly by the sale of k1’s investment in China Grand Automotive (China Auto), partially offset by a decrease in investment income. In the previous year, k1 received K12 Inc shares distributed by Knowledge Universe.

Operating profit for the year ended 30 June 2015 was $26.3 million compared to $25.8 million in the previous period. EBITDA from continuing operations of $45.0 million was $19.5 million higher than the prior year, driven mainly by profit from the sale of China Auto. Net profit attributable to shareholders was $24.9 million, compared to $20.1 million in the previous year.

For FY 2015, k1 paid total dividend of 4.0 cents per share*, increasing cumulative distributions to 35.3 cents per share* or more than $742 million since 2005.

*   Up to 30 June 2015 and based on the number of shares before share consolidation.

In August 2015, Knowledge Universe Education (KUE) sold its US early-childhood education operating business, thereby completing the divesture of both its US and international education platforms. k1 received a cash distribution of approximately US$61.5 million, representing a majority of its share of net proceeds from the sale.

During the year, the financial services firm, Guggenheim Capital, grew its assets under management to over US$240 billion. In addition to the 7% annual dividend from Preferred Units held in Guggenheim Capital, k1 also received cumulative supplemental special cash distributions of about US$2.6 million.

k1 will focus on actively managing its existing investments with the goal to monetise them when appropriate, and distribute surplus cash to drive shareholder value.

Net Profit ($ million)
Created with Highcharts 4.0.44354
FY 2014
FY 2013
FY 2012
194
Earnings Highlights ($ million)
  2015 2014 2013
Revenue 71 64 27
EBITDA 61 17 25
Operating Profit 60 16 25
Profit before Tax 146 55 80
Net Profit 136 43 54
Manpower (Number) 177 183 198
Manpower Cost 94 135 93


The financial services firm, Guggenheim Capital which k1 has invested in, grew its assets under management to over US$240 billion during the year.
M1

As at end-2015, M1’s total customer base was 2.06 million. During the year, mobile customer base increased 76,000 to 1.93 million, while fibre customer base grew 25,000 to 128,000. Overall mobile market share increased to 23.4% as at end-November 2015, compared to 22.9% as at end-2014.

In 2015, M1 continued to focus on delivering superior customer experience, which has led M1’s mobile network to be recognised in Infocomm Development Authority’s network survey as delivering the best 4G experience. M1 was also conferred the Award of Excellence in IT sector at the Singapore Productivity Awards 2015, and further extended its lead at consulting firm Frost & Sullivan’s 2015 Customer Experience study.

Key products and services launched during the year included the well-received mySIM postpaid plans, which offer the best value plans for customers who prefer to buy their own smartphones and the flexibility to decide how often they wish to upgrade them. M1’s Data Passport service, which enables customers to use their existing mobile data bundle for overseas roaming across 29 countries, has also helped drive a 45% increase in data roaming users year-on-year.

In the corporate segment, M1 introduced an innovative mobile Point of Sale solution that transforms smartphones and tablets into terminals that accept card payments, and further expanded its suite of XGPON connectivity services to offer speeds of up to 10Gbps. M1 also worked with Keppel Land Limited to launch the M1-Keppel Smart Lives programme to provide smart living solutions for Keppel Land’s residential and commercial properties.

Based on the current economic outlook and barring unforeseen circumstances, M1 anticipates stable performance for FY 2016.

In 2015, M1 continued to focus on delivering superior customer experience and was recognised in IDA’s network survey as delivering the best 4G experience.
KrisEnergy

2015 was a seminal year for Singapore-listed independent exploration and production (E&P) operator, KrisEnergy as it completed two new oil developments in the Gulf of Thailand. A successful exploration drilling programme resulted in an approved production licence for a future oil development. These milestones, together with strong growth in production to over 19,000 barrels of oil equivalent per day (boepd) in early 2016 and a 49% uplift in proved plus probable (2P) reserves to 106 million barrels of oil equivalent (mmboe), underpin KrisEnergy’s vision to become a sustainable and best-in-class E&P operator in Asia.

In August 2015, KrisEnergy produced first oil at the Wassana oil field in the Gulf of Thailand just 15 months after the company took control of operations for the G10/48 contract area. Upon completion of the drilling programme in January 2016, production at the Wassana field hit a peak of approximately 12,800 barrels of oil per day (bopd), above the original forecast for the plateau rate of 10,000 bopd. Also in the Gulf of Thailand, production was further boosted by the start-up of the Nong Yao oil field in June 2015.

KrisEnergy’s total average working interest production in January 2016 was around 19,000 boepd from five fields, namely B8/32, B9A, Wassana and Nong Yao in the Gulf of Thailand, and the Bangora gas field in Block 9 onshore Bangladesh. This is against an average rate of about 9,700 boepd for 2015.

With five out of six wells encountering commercial volumes of hydrocarbons, successful exploration, coupled with progress in advancing gas development in Indonesia, led to an uplift in 2P reserves for the fifth consecutive year.

As at 31 December 2015, KrisEnergy’s total working interest in 2P reserves was 106 mmboe, an increase of 49% from 2014. The increase was attributed to four discoveries in the Rossukon area in G6/48 and the subsequent approval of the production licence for the Rossukon field development; the conversion of contingent resources to 2P reserves for the gas developments in Block A Aceh onshore North Sumatra; and an upward revision in reserve estimates for the Bangora gas field in Block 9 onshore Bangladesh and the G10/48 licence in Thailand.

Business Outlook

KrisEnergy’s management has consistently applied prudent financial discipline. In 2016, the Company will substantially cut capital expenditure to US$50.8 million from US$224.7 million in 2015, when it reduces general and administrative expenses by a third.

In 2016, KrisEnergy will focus on maintaining production and maximising efficiencies. With minimal operational commitments, KrisEnergy is able to exercise flexibility in its asset portfolio. The opening weeks of 2016 saw Brent crude oil prices deteriorating further to below US$30 per barrel. In view of this, KrisEnergy will be deferring all exploration expenditure until oil and gas prices improve. Future development projects will be funded through a combination of project financing and free cash flow from operations.

As at 31 December 2015, KrisEnergy’s total working interest in 2P reserves was 106 mmboe, an increase of 49% from 2014.