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Our core competencies supported by our financial strength and firm foundation
built through the years drive our growth. Our sound financial discipline
and corporate agility in a changing environment are reflected in our strategic
planning and business decisions.
In building upon our growth momentum, the application of our technology
innovation, together with the well-orchestrated and safe execution of
our projects, has strengthened our lead. As we further enhance shareholder
value, we will continue to focus on business excellence which has earned
us the recognition of being a valued business partner, solutions provider
and employer of choice.
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| in financial performance
enables Keppel to deliver greater shareholder value |
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| in portfolio of leadership
businesses underpins Keppel's ability to maximise potential |
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| in execution allows Keppel
to achieve business excellence |
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| in reputation distinguishes
Keppel as a partner, provider and employer of choice |
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| We are building businesses in
the Keppel Group to sustain earnings growth. With our multi-business
strategy, Group earnings will become more broad-based with contributions
coming from all divisions. |
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Multi-business strategy supports broad-based earnings
2006 was another record-setting year for Keppel. Profit after Tax
and Minority Interests (PATMI) reached a historical high, with pre-tax
profit crossing the $1 billion mark for the first time in the Group’s
history, on the back of $7.6 billion in revenue. These results show
that our consistent multibusiness strategy has worked well.
Keppel Corporation was named one of the five "superstars"
in the conglomerate category in the Forbes' Global 2000 report dated
29 March 2007. The ranking takes into account the company's long-term
growth and quality of corporate governance. The report is a ranking
of the world's biggest public companies.
Looking ahead, Group earnings are expected to become even more
broad-based in the next few years, with increasing contributions
from the Property and Infrastructure divisions. Consequently, overall
earnings are likely to be less susceptible to fluctuations in the
business cycles of our key divisions.
Robust earnings generate attractive returns for shareholders
Keppel’s spectacular earnings have consistently led to generous
dividend payouts over the years. In addition to improving share
price, such high dividends have resulted in Total Shareholder Return
(TSR) of slightly above 65% last year, significantly outperforming
the 32% yielded by the benchmark Straits Times Index. Our five-year
TSR averaged 51% per annum, strongly surpassing the Index’s
18% during the same period.
Strong balance sheet powers new growth initiatives
We have a strong balance sheet that gives us the financial ability
and dexterity to further strengthen the growth platforms of our
key businesses.
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We also have an efficient capital structure, with healthy free cashflow
and low net gearing. In 2006, our free cashflow amounted to $1.5 billion,
due mainly to strong operating cashflow from the Offshore & Marine
business, while net gearing at 0.24x was down from 0.47x the year before.
Our robust financial strength is our competitive
advantage. In addition to record earnings in 2006, our sound financial
discipline has enabled us to generate greater returns to our shareholders
through dividends. The market also recognised our efforts, according
us with an improvement in share price in 2006. |
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A major factor contributing to our success
is strong leadership. Our management team possesses integrity, bold
vision and a firm grasp of industry fundamentals. Their in-depth knowledge
of the industries in which our businesses operate and the environment
at large, gives them the insight to lead wisely and set clear strategic
directions for the Group. |
Disciplined financial management drives prudent investments
Keppel continues to place great importance on financial discipline. For
example, the Group applies stringent investment criteria, with all project
investments having to meet a hurdle rate of at least 12% and to be EVA-positive.
Such stringent financial management, together with the relentless building
of our financial strength, allows us to make timely and prudent investments.
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| In 2006, we clinched 36% and
28% respectively of the jackup and semisubmersible (semi) orders
worldwide, maintaining our market lead in both sectors. We also
secured the first KFELS N Class jackup contract and clinched
all semi orders placed by US drillers. |
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Leadership in rigbuilding bolsters Group strengths
We leverage our core competencies to intensify our development of
new growth platforms for sustainable earnings growth.
Our offshore business is well-positioned to meet the fast-growing
demand for deepwater exploration and production by developing innovative
solutions. We seek to replicate this success in our Environmental
Engineering business, with Keppel Integrated Engineering leading
Singapore over time to become a global centre of excellence for
water and environmental technology.
Premier property developer strengthens regional footprint
Our Property Division is seeking to participate more vigorously
in the real estate value chain by growing beyond our established
role as property developer of premier office buildings and distinctive
residential homes, to also become a leading regional REIT and fund
manager.
Apart from developing townships and residential properties to cater
to strong demand for quality housing across Asia, we are unlocking
value from commercial properties in Singapore through K-REIT Asia
and overseas. Our real estate fund management, Alpha Investment
Partners, is also capitalising on strong interest in Asian property
from foreign funds to extract maximum value for investors.
Technology innovations unlock embedded growth options
We view technology innovations as engines for our future growth.
Our strategy is to align our R&D activities to complement existing
business activities and develop technologies that will sustain and
further the Group’s long-term growth. We have successfully
commercialised some of our technology innovations in our Offshore
and Infrastructure businesses.
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Strong global network creates new opportunities
Our globalisation has provided us the platforms to create opportunities
and expand into new markets worldwide.
Our financial strength and business leadership
have placed us in a solid position to invest and increase our capability
and resources in R&D. To this end, we are setting up technology
centres in Keppel Offshore & Marine and Keppel Integrated Engineering. |
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Keppel Kazakhstan LLP was set up in a move
to service the emerging offshore oil and gas industry in the Kazakh
Sector of the Caspian Sea as part of Keppel’s “Near Market,
Near Customer” strategy.
The launch of a transportation barge AKKU1,
built for Agip Kazakhstan North Caspian Operating Company N.V.,
was graced by His Excellency Nursultan A Nazarbayev, President of
the Republic of Kazakhstan.
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In addition to providing clients operating in different markets unparalleled
services, our “Near Market, Near Customer” strategy has enabled
us to seize new business opportunities and paved our way into new markets.
Our divisions routinely scan the environment to identify new sources of
growth even in non-traditional markets.
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| Our healthy order book for Offshore
and Marine Division is providing us strong earnings visibility
into 2010. Key to our success is a commitment to engage our
customers, understand their needs and tailor solutions. |
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Smart and safe project execution ensures excellent delivery
Engaging our stakeholders ensures that we are able to provide on-time
and within budget product and service delivery. This includes managing
the supply chain of material and equipment to facilitate timely
execution of our projects.
Our project management capability also extends to inculcating good
safety practices and management as we believe that this is essential
to our project excellence.
Strong designs exceed customers’ expectations
Keppel prides itself on being a very strong engineering organisation.
Coming from a multi-disciplinary engineering background, our staff
are well-qualified and equipped with cutting-edge tools and technology.
Coupled with the fact that we own the designs of many products,
we are able to quickly and cost-effectively propose design solutions
to fit our customers’ specific needs and exceed their expectations.
Apart from engineering, our portfolio of award-winning residential
developments and investment-grade commercial properties from Keppel
Land also bears the quality hallmark of product excellence. In making
environmental preservation and enhancement of community life a design
and construction priority, we meet the needs of the present without
compromising resources for future generations.
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Expertise and experience create a competitive advantage
The collective expertise and experience of Keppel’s skilled and diverse
workforce in 33 countries is a formidable competitive advantage. Our businesses
are able to leverage this knowledge base of our people to improve processes,
productivity and cross-fertilise ideas for greater efficiencies. To sustain
this advantage, we are continuing to draw and build our talent pool to
meet the challenges of an ever-changing marketplace.
Good safety practices are key to our operational
excellence. Our Offshore & Marine division maintained its good
safety performance in 2006, further improving the 10-year low Accident
Frequency Rate from 1.73 in 2005 to 1.20 in 2006 for its Singapore
yards. |
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Saigon Sports City is an integrated township
development developed by Keppel Land to meet the aspirations of the
burgeoning Vietnamese middle class for quality housing. Comprising
3,000 residential units, commercial space and a recreational sporting
club, the township offers a convenient and comfortable lifestyle in
a planned and integrated community. |
Entrenched procedures and processes ensure production quality
The well-documented processes in our yards and plants are executed with
clock-work precision and with an emphasis on ‘doing it right the
first time’. In all our facilities, we have procedures in place to
promote an error-free approach to work, minimising wastage and undertaking
continuous improvement. Our systems are also audited regularly in compliance
with ISO standards, and we work closely with various classification societies.
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| As part of good corporate governance,
management ensures that all directors, including non-executive
directors, are kept well-informed of the Company’s businesses
and affairs. |
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Strong governance protects shareholder interests
Keppel emphasises the adoption of good corporate governance practices
to safeguard the interests of our shareholders. This policy stems
from an internal corporate desire to ensure proper management of
the company and to excel, rather than as a response to external
pressure. We believe that this helps us to maximise long-term
shareholder value.
Solid Keppel brand makes us an employer of choice
Keppel’s strong corporate brand serves to attract talents to
the Group, which is reputed to be strong with fast-growing global
businesses. We are recognised as an employer of choice with tremendous
career opportunities across the Group.
As a people developer, our core values that drive success and compassion
encourage the development and growth of the myriad of talents in
the Group to carry out our businesses in the different environments.
Business excellence promotes us as a trusted partner of choice
Keppel has a strong corporate reputation as a versatile and reliable
group fully committed to our contractual agreements with customers
and partners alike to achieve a win-win partnership. We are known
in the market for our Can Do! spirit and on-time and on-budget
deliveries of projects.
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The Keppel brand carries a premium and opens doors for our business units
around the world. Our core values and business excellence are consciously
replicated in all our operations worldwide.
In order to attract the best and the brightest
to join us, we launched the Grow Beyond campaign over the television,
print media and the web. The campaign was also carried through various
events and activities, including the Grow Beyond series of
motivational talks. Apart from enhancing our profile, the campaign
has created much buzz and excitement in Keppelites. |
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We seek to be active citizens in the communities
we operate in. Keppel Group’s adopted charity is the Association
for Persons with Special Needs (APSN). In this event which was held
at the culmination of the Inter-SBU games, funds raised went towards
providing senior students of APSN training in employment-related skills,
to help the students achieve financial independence. |
Corporate citizenry through community involvement
Keppel is highly regarded for its corporate social responsibility. We
are pro-active in our corporate citizenry, recognising it as part of our
commitment to help build a better future for the various communities where
we operate. We will continue to support charities, volunteer
work, education, the arts, sporting activities and disaster relief efforts,
as well as promote international and regional business investment and
trade, and strengthen inter-country business relationships.
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