Driving Sustainable Growth
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Driving Sustainable Growth Report to Stakeholders 2016 Contents OVERVIEW OPERATIONS AND MARKET REVIEW 02 32 02 Key Figures for 2016 32 Singapore 03 Group Financial Highlights 36 Investments 04 International Network 38 Retail Management 06 Chairman’s Statement 40 Hospitality Management 10 Interview with the CEO 42 China 14 Board of Directors 48 Vietnam 18 Senior Management 52 Indonesia 20 Key Personnel 54 The Philippines/Myanmar 22 Corporate Profile 55 United States/United Kingdom 23 Corporate Milestones in 2016 56 India/Malaysia 24 Awards and Accolades 57 Property Portfolio 25 Corporate Governance 29 Risk Management Driving Sustainable Growth Keppel is a multi-business company committed to providing robust solutions for sustainable urbanisation. At Keppel Land, we are driving sustainable growth by meeting needs for quality urban living and seizing opportunities to seek higher returns. Vision A leading real estate company, shaping the best for future generations. Mission Guided by our operating principles and core values, we will create value for all stakeholders through innovative real estate solutions. Keppel Group’s Operating Principles 1 Best value propositions to customers. 2 Tapping and developing best talents from our global workforce. 3 Cultivating a spirit of innovation and enterprise. 4 Executing our projects well. 5 Being financially disciplined to earn best risk-adjusted returns. 6 Clarity of focus and operating within our core competence. 7 Being prepared for the future. View our report online: www.keppelland.com 01 Overview Key Figures for 2016 Revenue $1.9b Revenue rose by 16% year-on-year to $1.9 billion. Return on Equity 1 Return on equity is one of the highest among Asia’s leading property developers at 19% per annum over 19% 10 years, from 2007 to 2016. Total Assets Total assets grew from $14.9 billion to $16.2 billion $16.2b year-on-year. Total Homes Sold Total homes sold in Singapore and overseas in 2016 5,720 is 25% higher than the 4,570 homes sold in 2015. Commercial Gross Floor Area Gross floor area of commercial projects under Under Development 1.089m sm development. Volunteerism A total of 5,600 hours were clocked by staff for corporate social responsibility activities in 5,600hrs Singapore and overseas. Safety Training A total of 46,000 workers trained to-date at Keppel Land’s Safety Awareness Centres in Vietnam, 46,000 Indonesia and Malaysia. Note: 1. Return for 2016 includes $563 million gain from the divestment of the Keppel Land’s fund management business to Keppel Capital. 02 Keppel Land Limited Report to Stakeholders 2016 Group Financial Highlights 2016 2015 2014 2013 2012 For the year ($’000) Revenue 1,859,951 1,598,260 1,497,177 1,461,048 938,856 Pre-tax profit 1,300,568 728,855 953,325 1,000,773 987,308 Net profit 1,149,313 564,076 752,486 885,892 838,368 Funds from/(used in) operations 868,363 495,565 200,443 (1,308,680) (612,268) At year-end ($’000) Fixed assets and investment properties 3,587,374 2,811,783 1,577,281 1,894,051 1,590,744 Investments 3,242,782 3,494,114 3,028,776 3,040,799 2,709,394 Deferred tax assets 34,346 17,425 45,248 30,047 10,002 Other non-current assets 384,341 294,062 211,603 761,409 775,886 Net current assets (Note 1) 6,423,786 6,062,058 7,767,480 6,183,482 4,784,231 Deferred tax liabilities (234,246) (229,623) (216,261) (212,065) (160,546) Other non-current liabilities (18,592) (22,236) – – – Assets employed 13,419,791 12,427,583 12,414,127 11,697,723 9,709,711 Shareholders’ equity 8,905,770 8,143,153 7,655,537 6,989,419 6,169,141 Non-controlling interests 409,854 489,443 489,401 496,168 477,314 Long-term borrowings 2,886,134 3,646,982 3,147,338 3,869,749 2,348,613 Short-term borrowings 1,149,769 83,775 1,055,670 283,275 714,643 Loans from non-controlling shareholders 68,264 64,230 66,181 59,112 – Total funds invested 13,419,791 12,427,583 12,414,127 11,697,723 9,709,711 Financial ratios Return on equity (%) 13.5 7.1 10.7 14.1 14.8 Interest cover (times) (Note 2) 14.4 5.2 8.4 8.9 12.3 Net debt-equity ratio (times) (Note 3) 0.26 0.24 0.20 0.38 0.22 Employees (Note 4) Number (average) 3,760 4,150 4,071 4,207 4,107 Wages and salaries ($’000) 197,251 212,453 195,940 176,189 144,212 Pre-tax profit per employee ($’000) 240 63 111 105 58 Notes: 1. In arriving at net current assets, short-term borrowings have been excluded. 2. In the calculation of interest cover, fair value gain on investment properties has been excluded. Net interest cost, comprising net interest expense taken to the profit and loss account and interest capitalised under investment properties, properties held for sale and fixed assets, has been used. 3. In the calculation of the net debt-equity ratio, net debt includes borrowings net of cash and equity includes non-controlling interests in subsidiaries. 4. Wages and salaries include amounts capitalised under investment properties and properties held for sale. In the calculation of pre-tax profit per employee, the share of results of associates and joint ventures, and fair value gain on investment properties have been excluded. 03 Overview International Network Geographically diversified with Singapore and China as core markets, and Vietnam and Indonesia as growth markets. China Shanghai United Kingdom Beijing London Tianjin The Netherlands Chengdu Almere Germany Wuxi Frankfurt Shenyang United States Nantong New York Zhongshan Houston Jiangyin Kunming Vietnam Ho Chi Minh City Myanmar Hanoi Yangon Dong Nai India Vung Tau Bangalore The Philippines Manila Indonesia Malaysia Jakarta Johor Bahru Singapore Bintan Batam Bali Australia Brisbane Number of Countries We Operate In Sydney Perth 13 Melbourne Pipeline of Homes 66,000 Commercial Gross Floor Area Under Development Legend: Residences Offices/ Mixed-use/ Data Centres 1.089 million sm Hotels/ Serviced Apartments/ Resorts 04 Keppel Land Limited Report to Stakeholders 2016 05 Overview Chairman’s Statement Dear Stakeholders, In May 2016, Keppel Land’s selective a strong cash position of $1.6 billion, and Real Estate Business Law, increase in Keppel Land is a multi-faceted property capital reduction exercise to cancel all Keppel Land is well-positioned to pursue foreign direct investments, improvements player, providing solutions to meet the needs On behalf of the Board of Directors, the shares held by the participating acquisitions and new investments. in public infrastructure, growing I am pleased to present Keppel Land’s shareholders of Keppel Land, apart from middle-class as well as high urbanisation of sustainable urbanisation, while focusing on annual report for the year ended those held by Keppel Corporation, was Capitalising on Positive Market rate continue to drive the demand for quality remaining a developer with one of the highest 31 December 2016. effected. As a result, Keppel Corporation Conditions homes and investment-grade offices. now has full ownership of Keppel Land. Keppel Land is focused on its core markets return on equity in Asia. Strong Financial Performance The privatisation of Keppel Land has of Singapore and China as well as its We sold 1,520 units in Vietnam in 2016, 2016 was an eventful and challenging fully aligned the interests of the Company growth markets of Vietnam and Indonesia. which is more than a 60% increase year. Global growth remained slow, with the Keppel Group, providing the year-on-year. Capitalising on positive with weak demand in major advanced Group with a strong pillar for earnings Bolstered by rapid urbanisation and a sentiments in the country, we launched economies and China’s continuing and long-term value creation. growing middle-class across Asia, we sold four residential projects in Ho Chi Minh transition towards more sustainable a total of 5,720 residential units in 2016, City (HCMC) in 2016. These projects are growth. Geopolitical developments Maximising Returns with total sales value of about $2.3 billion. Palm Residence, Palm Heights, The View including Brexit, the United States’ Keppel Land will continue to be a This is about 25% higher than the 4,570 at Riviera Point and Linden Residences, presidential election as well as growing multi-faceted property player, building units sold in 2015. Phase 1 of Empire City. All four launches insularism and anti-globalisation quality homes, offices and commercial were met with strong demand. Palm sentiments have further heightened developments that are well sought-after In Singapore, there continues to be healthy Residence, for example, saw all 135 the volatility and uncertainty in the by buyers and tenants. Our goal is for demand for our high quality developments units sold out over one weekend. With international economy. Keppel Land to be a property company among discerning homebuyers. In 2016, the projects to be completed over the with one of the highest return on equity we sold 380 homes, double the 190 units next few years, profit contribution from Notwithstanding these headwinds, (ROE) in Asia. We do not necessarily have sold in 2015. The recent slight easing of Vietnam is expected to grow steadily in Keppel Land managed to achieve a to be the biggest industry player. Over the residential property curbs in Singapore, the coming years. creditable performance in 2016. last 10 years, Keppel Land has turned in a with calibrated adjustments to the seller’s The Company achieved a revenue laudable average ROE of 19% annually1.