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 decreased by 19% to $1,525 million. The compounded annual growth for net profit from 2010 to 2015 was negative 0.8%, and for the period from 2005 to 2015 was positive 10.5%.

Earnings Per Share went down by 19% to 84.0 cents. ROE was 14.2%. Economic Value Added of $648 million was $1,130 million below that of the previous year.

Net cash used in operating activities was $705 million as compared to net cash from operating activities of $5 million for 2014, due mainly to lower operational cash inflow.

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 and capital expenditure and major divestments, net cash from investment activities was $11 million. The Group spent $357 million on investments and operational capital expenditure, mainly from the Offshore & Marine Division. After taking into account proceeds from divestments and dividend income of $368 million, the resulting free cash outflow was $694 million.

Total cash dividend for 2015 will be 34.0 cents per share, 29% lower than the prior year’s total cash dividend of 48.0 cents per share. This comprises a final proposed cash dividend of 22.0 cents per share and the interim cash dividend of 12.0 cents per share distributed in the third quarter of 2015. The total distribution for the year is approximately $617 million.

Segment Operations

Group revenue of $10,296 million was $2,987 million or 22% below that of the previous year. Revenue from the Offshore & Marine Division of $6,241 million was $2,315 million lower due to lower volume of work, deferment of some projects and cessation of work on Sete Brasil’s projects. Revenue from the Property Division rose by $197 million to $1,926 million. This was due mainly to higher revenue from China, partly offset by lower revenue from Singapore. Revenue from the Infrastructure Division of $2,058 million was $876 million lower, due mainly to lower revenue recorded by the power and gas business from lower prices and volume, as well as the absence of revenue from Keppel FMO Pte Ltd which was disposed in December 2014.

Group net profit of $1,525 million was $360 million or 19% lower than that of the previous year. Profit from the Offshore & Marine Division of $481 million was $559 million lower than that of the previous year, due mainly to lower operating results, provisions for the Sete Brasil projects and lower net interest income, partly offset by higher contributions from associated companies. Net profit from the Property Division of $701 million rose by $219 million because of lower non-controlling interest following the privatisation of Keppel Land Limited, higher fair value gains on investment properties and cost write-back upon finalisation of project cost for Reflections at Keppel Bay, partially offset by a lower contribution from associated companies and higher net interest expenses. Profit from the Infrastructure Division of $207 million was $113 million lower due mainly to the losses following finalisation of the cost to complete the Doha North Sewage Treatment Works, partly offset by the gain from divestment of 51% interest in Keppel Merlimau Cogen to Keppel Infrastructure Trust (KIT) and the dilution re-measurement gain from the combination of Crystal Trust and CitySpring Infrastructure Trust to form the enlarged KIT. Profit from the Investments Division increased by $93 million, due mainly to higher profit from sale of investments and higher share of profits from k1 Ventures and KrisEnergy.

The Property Division was the largest contributor to Group net profit with a 46% share, followed by the Offshore & Marine Division with 32% share, the Infrastructure Division with 14% share and the Investments Division with 8% share.

Free Cash Outflow
$694m

Earnings Per Share
$0.84
There was no significant dilution as no major capital call was made since 1997.
Key Performance Indicators
  2015
$ million
15 vs 14
% +/(-)
2014
$ million
14 vs 13
% +/(-)
2013
$ million
           
Revenue 10,296 -22 13,283 +7 12,380
Net profit 1,525 -19 1,885 +2 1,846
Operating cash flow (705) n.m. 5 -99 637
Free cash flow* (694) n.m. 729 +11 654
Economic Value Added (EVA) 648 -64 1,778 +56 1,142
Earnings Per Share (EPS) 84.0 cts -19 103.8 cts +2 102.3 cts
Return On Equity (ROE) 14.2% -24 18.8% -4 19.5%
Total cash dividend per share** 34.0 cts -29 48.0 cts +20 40.0 cts
* Free cash flow excludes expansionary acquisitions & capex, and major divestments.
** Total distributions for FY 2013 included non-cash special distributions in specie of Keppel REIT units equivalent to 9.5 cents per share.