Group Overview 2 Key Figures
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GROUP OVERVIEW 2 KEY FIGURES REVENUE NET (LOSS)/PROFIT MSCI ESG RATING $6.6b ($506)m AAA Decreased 13% from FY 2019’s $7.6 billion. Compared to FY 2019’s net profit Received the highest AAA rating in the Lower contributions from the Energy & of $707 million. Morgan Stanley Capital International Environment, Urban Development and Apart from Keppel Offshore & Marine, (MSCI) ESG ratings in February 2021. Asset Management segments were partly all key business units remained profitable Ranked among the top 8% of global offset by higher revenue from Connectivity. in FY 2020. Excluding impairments of industrial conglomerates, based on $952 million mainly due to the offshore environmental, social and governance & marine business, the Group’s net profit (ESG) criteria, in the MSCI All Country was $446 million for FY 2020. World Index. Keppel has held the rating since February 2020. RETURN ON EQUITY (LOSS)/EARNINGS PER SHARE EMPLOYEE ENGAGEMENT SCORE (4.6)% ($0.28) 87% Compared to positive 6.3% for FY 2019. Compared to earnings per share This was higher than Mercer’s global Return on Equity for FY 2020 was negative of $0.39 for FY 2019. average of 80%. due to the net loss registered. Net loss of $506 million for FY 2020 translated to a loss per share of $0.28. CASH DIVIDEND PER SHARE NET ASSET VALUE PER SHARE COVID-19 RELIEF EFFORTS 10.0cts $5.90 >$5m Compared to FY 2019’s cash dividend Decreased 4% from FY 2019’s Committed to support communities of 20.0 cents per share. $6.17 per share. affected by the pandemic in Singapore Total distribution for FY 2020 comprises and overseas. a proposed final cash dividend of 7.0 cents per share and an interim cash dividend of 3.0 cents per share. NET GEARING RATIO FREE CASH INFLOW^ WORKPLACE SAFETY AND 0.91x $497m HEALTH AWARDS Increased from FY 2019’s net gearing Compared to FY 2019’s outflow 21 Awards of 0.85x. of $653 million. The highest number of awards won Net gearing increased mainly due to This was mainly due to lower working by a single organisation in 2020. impact from lower equity due to the capital requirements and higher proceeds significant impairments recorded in from divestments. FY 2020, as well as increase in net debt arising from investments made, working capital requirements and dividend payments. ^ Free cash flow excludes expansionary acquisitions & capital expenditure, and major divestments. Annual Report 2020 GROUP OVERVIEW GROUP FINANCIAL HIGHLIGHTS 3 GROUP QUARTERLY/HALF-YEARLY RESULTS ($ million) 2020 2019 1H 2H Total 1Q 2Q 3Q 4Q Total Revenue 3,182 3,392 6,574 1,531 1,784 2,067 2,198 7,580 EBITDA 52 370 422 389 262 289 312 1,252 Operating (loss)/profit (149) 157 8 322 160 183 212 877 (Loss)/Profit before tax (357) 102 (255) 283 206 227 238 954 Attributable (loss)/profit (537) 31 (506) 203 153 159 192 707 (Loss)/Earnings per share (cents) (29.5) 1.7 (27.8) 11.2 8.4 8.8 10.5 38.9 2020 2019 % Change For the year ($ million) Revenue 6,574 7,580 -13 Profit EBITDA 422 1,252 -66 Operating 8 877 -99 Before tax (255) 954 n.m.f. Net (Loss)/Profit (506) 707 n.m.f. Operating cash flow 202 (825) n.m.f. Free cash flow* 497 (653) n.m.f. Economic Value Added (EVA) (1,368) 188 n.m.f. Per share (Loss)/Earnings ($) (0.28) 0.39 n.m.f. Net assets ($) 5.90 6.17 -4 Net tangible assets ($) 5.02 5.25 -4 At year-end ($ million) Shareholders’ funds 10,728 11,211 -4 Non-controlling interests 428 435 -2 Total equity 11,156 11,646 -4 Net debt 10,123 9,874 3 Net gearing ratio (times) 0.91 0.85 7 Return on shareholders’ funds (%) (Loss)/Profit before tax (2.4) 7.9 n.m.f. Net (Loss)/Profit (4.6) 6.3 n.m.f. Shareholders’ value Distribution (cents per share) Interim dividend 3.0 8.0 -63 Final dividend 7.0 12.0 -42 Total distribution 10.0 20.0 -50 Share price ($) 5.38 6.77 -21 Total shareholder return (%) (18.6) 18.5 n.m.f. * Free cash flow excludes expansionary acquisitions & capital expenditure, and major divestments. n.m.f. = No meaningful figure Keppel Corporation Limited GROUP OVERVIEW 4 GLOBAL PRESENCE 5 TOTAL FY 2020 REVENUE ASIA $6.6b $5,246m Markets outside of Singapore • China contributed about 41% of the EUROPE • India Group’s revenue for FY 2020. • Indonesia $374m • Japan • Belgium • Malaysia • Germany • Myanmar • Italy • The Philippines • Ireland • Singapore • The Netherlands • South Korea • The United Kingdom • Vietnam NORTH AMERICA $644m • The United States MIDDLE EAST $105m • Qatar • The United Arab Emirates SOUTH AMERICA AUSTRALIA $72m $133m • Brazil Annual Report 2020 Keppel Corporation Limited GROUP OVERVIEW 6 CHAIRMAN’S STATEMENT 7 BUILDING A SUSTAINABLE FUTURE As part of Vision 2030, we are working towards becoming one integrated business, providing solutions for sustainable urbanisation. LEE BOON YANG Chairman DEAR SHAREHOLDERS, However, despite the many challenges brought about by COVID-19, Keppel WE ARE DEEPENING COLLABORATION 2020 will long be remembered as the year continues to strive for growth and success. of the COVID-19 pandemic. The pandemic In May 2020, we unveiled Vision 2030, AND ADOPTING A ONEKEPPEL APPROACH infected more than 100 million people our long-term strategy to guide the worldwide and caused the death of Group’s growth and transformation. more than two million victims by TO HARNESS THE SYNERGIES OF THE GROUP end-February 2021. It inflicted immense VISION 2030 human suffering, ravaged the global From a conglomerate of largely unrelated AND CAPTURE NEW PROFIT POOLS. economy and disrupted life everywhere. parts, we are working towards becoming one integrated business, providing Recent progress in the development and solutions for sustainable urbanisation. and capture new profit pools that might not exit low value-adding repairs and other rollout of COVID-19 vaccines has given We will focus on four key segments be available to individual business entities. activities with low bottom-line contribution. hope of bringing the pandemic under that are part of a connected value chain, Keppel O&M will instead transit to control. However, the virus continues namely Energy & Environment, In the last few months, we have progressively being a developer and integrator of to spread in many countries, with new Urban Development, Connectivity announced different steps that Keppel is offshore energy and infrastructure assets, mutations emerging and threatening and Asset Management. We are also taking to execute Vision 2030. These include focusing on work with higher value capture. new waves of infection. We are thus not deepening intra-company collaboration the announcement last September of our As we execute the transformation of out of the woods yet, but must continue and adopting a OneKeppel approach plans to monetise $3–5 billion of identified Keppel O&M, we will also continue to to rigorously implement safe management to harness the synergies of the Group assets over three years, which will be explore inorganic options, though there measures as we continue the global fight redeployed to seize new opportunities. is no assurance that any transaction against the coronavirus. We have since made good progress towards will materialise. the target, with announced divestments As a multi-business company operating in of more than $1.2 billion from October In line with Keppel’s sharpened business more than 20 countries, Keppel has also to December. We will continue our asset focus, we have decided to divest our been severely impacted by the pandemic, monetisation programme in the year ahead logistics business, and are currently especially our offshore & marine (O&M) and recycle capital to fund new initiatives. engaging potential buyers. We have business, which was badly hurt by the also announced new initiatives in plunge in global demand for oil. Earlier this year, we also announced bold the development of onshore and plans to transform Keppel Offshore & Marine offshore renewable energy assets, (Keppel O&M) to be more relevant and urban development and asset management, competitive amidst the global energy transition. among others. These are just some of Keppel O&M will exit the offshore rigbuilding the changes and new initiatives that the business, after completing its existing Company will be implementing as we uncompleted rigs, and will progressively pursue Vision 2030. Annual Report 2020 Keppel Corporation Limited GROUP OVERVIEW 8 CHAIRMAN’S STATEMENT 9 FINANCIAL PERFORMANCE cash dividend of 3.0 cents per share, For FY 2020, Keppel sustained a net loss we will be paying out a total cash dividend CASH DIVIDEND PER SHARE of $506 million, due to impairments of 10.0 cents per share to shareholders of $952 million, which were mainly for the whole of 2020. 10.0cts in the O&M business. Most of these impairments were recorded in 2Q 2020, ENERGY & ENVIRONMENT Total cash distribution following the sharp drop in oil demand Over the past few years, Keppel O&M has proposed for FY 2020. and oil prices, which were triggered been increasingly pivoting to renewables by the pandemic. and cleaner fossil fuels such as Liquefied Natural Gas (LNG). This strategy has borne Apart from Keppel O&M, all key business fruit. Despite the very tough environment, it units remained profitable, with Keppel secured new order wins of about $1.0 billion Infrastructure, Keppel Capital and in 2020, with offshore renewables and Keppel Telecommunications & Transportation LNG solutions making up 65% of new achieving higher net profits year-on-year (yoy). orders. Keppel O&M’s net orderbook Excluding impairments, FY 2020’s net stood at $3.3 billion as at end-2020, profit would have been $446 million, of which close to 82% comprises underpinned by the resilient performance renewables and gas solutions.