OCTOBER 2010 eppel www.kepcorp.com/ekeppelite Keppel Group Newsletter Keppelite Posting record nine months 4 A Viking ready for action 18 Keppel Games 44 SeamlessSeamless integrationintegration MICA(P) NO. 169/01/2010 30 32 44 Contents SUSTAINING GROWTH Business forums 38 Posting record profits 4 Insights into waste treatment 39 Fortifying collective strengths 7 Excellence in corporate governance Harnessing core competencies 10 Double bill at Lloyd’s List Awards 40 Positioning for growth 12 Leg doctors Expansion of Keppel Merlimau Cogen 13 New benchmark to luxury living 41 Keppel Land and K-REIT swap prime assets 14 Golden formula 42 Strengthening focus on China 15 Securing rig refurbishment contracts 16 Treat among friends 43 Further foray into Chengdu 17 EMPOWERING LIVES Fair Games 44 A Viking ready for action 18 Keppelites Abroad Enhancing bench strength 20 Brazil for all ages 46 Mission Peregrino accomplished 21 Grooming leaders for the next wave 48 Tianjin Eco-City draws more strategic partners 22 Connecting the dots 49 Building a replicable and scalable Eco-City 25 Growing in solidarity 50 SPECIAL FOCUS Walking up the fun 51 Seamless integration 28 NURTURING COMMUNITIES Specialised partner 30 Pounding the road for charity 52 Alpha invests in Korean prime office 31 Sharing charity honours 53 Hosting global dialogues 32 Four times the challenge Double strikes 34 Wheels for causes 54 Launch of Casa Villa homes 35 Keppel Volunteers Strengthening ties with Latin America 36 Colouring the lives of children 55 Safety onboard 37 BACK PAGE Keppel Seghers secures $341 million contract 56 New CFO for K-REIT Asia in the UK Cover image: All smiles – Brazil’s President HE Luiz Inácio Lula da Silva (second from right), Mr Choo Chiau Beng, CEO of Keppel Corporation (right) and Mr Tong Chong Heong, CEO of Keppel Offshore & Marine (second from left) celebrating the successful completion of FPSO P-57 at the BrasFELS yard. eppel Published for people in the Keppel Group by the Group Corporate Communications Division, Keppel Corporation Limited, 1 HarbourFront Ave, #18-01 Keppel Bay Tower, Singapore 098632. Printed by Image Printers Pte Ltd, Blk 1002, Redhill Industrial Estate, Jalan Bukit Merah, #03-12, Singapore 159456. Editorial Advisor Wang Look Fung Editor Wong Chai Yueh Editorial Committee Andrea Lee, Ang Lai Lee, Catherine Tan, Chan Suan Sim, Cheryl Tang, Christie Lai, Chua Ying Ying, Diana Chan, Donald Sng, Elizabeth Widjaja, Eva Ho, Frances Teh, Geraldine Lai, Grace Chia , Hoo Yao Lin, Ivana Chua, Leanne Sim, Lee Wan Jun, Lim Kah Ai, Lynette Chong, Lynette Goh, Mak Chui Ling, Mohamed Yusof Mohamed, Raymond Chao, Roy Tan, Say Huan Yuan, Serena Toh, Teri Liew, Woon Pek Yong, Vett Ramos, Yolanda Guo Ying Keppelite I October 2010 CO REG NO: 196800351N Editorial Game for the challenge Team Singapore athletes have just returned can. At the same time, we do not forget to have from the 19th Commonwealth Games with their fun and make friends from across the Group. haul of medals. Their outstanding achievements are an inspiration to young talents in Singapore. One of the Games’ key goals is to help imbue a common set of values and beliefs in the younger Here in Keppel, the drumbeats for our very own set of Keppelites. As they forge the company into house tradition – the Keppel Games – have just the future, they would perpetuate the Keppel begun. This year marks the seventh year of the culture and Can Do! Spirit. much anticipated annual affair. By the end of the Games, we would celebrate Through the years, the Keppel Games have the successful completion of weeks of rigorous successfully rallied the Group and individuals planning by the organisers, as well as arduous together through competitive sports. In fact, training and friendly competition by the players. the Games’ closing event in the last few years has developed into an iconic fund-raising effort. Although only the best wins, everyone triumphs. Keppelites even rally their families and friends from outside the Group to participate and do something For whether you were an organiser, a leader, a worthwhile for the less fortunate. team player or even a supporter, you would have witnessed the discipline, ability and will to fight of More importantly, the Keppel Games have brought Keppelites – that same fighting spirit that will prove Keppelites, young and old, from across different decisive in competition, at work or at play. units and departments together. Chipping in with our diverse strengths and skills, we have shown Indeed, in the competitive business arena and that the Keppel team spirit prevails. amid global economic uncertainties, we will need such strong men and women with the grit, morale The spirit behind the Games resonates with the and discipline to run the extra mile. values of Keppel. With properties, infrastructure projects, yards and For me, this is the essence of the Games – offices in more than 30 countries around the world, individuals with different abilities stepping forward the complex challenges of our diverse and global to contribute their strengths, and in the process, businesses demand nothing less than committed realise they can overcome challenges with passion, Keppelites who are game for the challenge. team work and shared commitment. What matters most is that we get engaged, make a commitment to do our best, and give wherever we Keppelite I October 2010 4 Sustaining Growth Growth Posting record profits Group net profit surpassed NET PROFIT BY SEGMENTS the billion dollar level for the first nine months of 2010, to S$m 9M 2010 % 9M 2009 % Change reach $1,016 million. This Offshore & Marine 694 68 609 66 14 represented a 10% growth Infrastructure 54 5 81 9 (33) over the corresponding period in the previous year. Property 253 25 133 14 90 EPS grew at the same rate Investments 15 2 99 11 (85) to 63.5 cents. Annualised Total 1,016 100 922 100 10 ROE was 21.7%. EVA of $747 million was $32 million above that of the same period last year. For the third quarter, Group revenue of $2,450 million was 19% below that of the same quarter in 2009. This was mainly due to lower revenue from Offshore & Marine and Infrastructure Divisions. Despite the lower revenue, the Group achieved a net profit of $346 million for the quarter, representing an 8% increase over the corresponding quarter in the prior year. Higher profit from Offshore & Marine and Property Divisions were partly offset by lower contribution from Infrastructure Division. REVENUE AND PROFITS Group revenue of $7,339 million for the nine months to date was 20% lower than that of the same period in the previous year. Revenue from Offshore & Marine Division decreased by $2,120 million or 33% to $4,381 million due to the lower volume of work. The Property Division bolstered the Group’s performance by posting a 51% increase in pre-tax profit as compared to the previous year Keppelite I October 2010 Sustaining Growth 5 The Division completed to $76 million as a result of and delivered eight rigs, lower contribution from the 14 specialised vessels, four EPC contracts in Qatar, partly FPSO conversions/upgrades offset by better performance and several rig upgrade/ from the cogen power plant repair contracts. in Singapore. Revenue from Infrastructure Property Division recorded Division of $1,771 million profit of $465 million, was maintained at the same an increase of 51% over level of the prior year. Higher the preceding year. This revenue generated from was mainly attributable to the co-generation power higher contribution from plant in Singapore was several residential projects offset by lower revenue from in Singapore, China and Engineering, Procurement Vietnam, and share of the and Construction (EPC) associated companies which contracts in Qatar. are developing Marina Bay Suites in Singapore. Revenue from Property Division of $1,179 million Profit from Investments was 30% above the previous was lower as the previous year. The increase was mainly year included contribution attributable to the sale of from Singapore Petroleum units in Caribbean at Keppel Company (SPC), which Bay and progressive revenue was disposed in June recognition from Reflections 2009. Exceptional gains of at Keppel Bay. Rental income $422 million in the preceding from investment properties year comprised principally To meet the increasing demand for clean energy, expansion of the Keppel Merlimau Co-generation Plant will commence with completion expected in 2013 improved because of the profit from the disposal acquisitions of an Australian of SPC, partially offset investment building in by impairment of non- new orders to date. The regulatory regime will be March 2010 and additional performing assets. net orderbook stands at positive for rig builders who six strata floors of Prudential $4.1 billion with deliveries possess technologically Tower in November 2009. After taking into account into 2013. The ban on advanced proprietary designs. income tax expenses and deepwater drilling in the With our focus on innovation At the pre-tax level, Group non-controlling interests, US Gulf of Mexico has been and safety, the Group is in a profit of $1,444 million net profit attributable recently lifted, seven weeks good position to participate was 7% higher than that to shareholders was ahead of schedule. While in the improvement of this of the corresponding $1,016 million. Offshore & the lifting of the drilling ban segment. period in 2009. Earnings Marine remained the largest may not necessarily induce from Offshore & Marine contributor to net profit a full revitalisation of the The Infrastructure Division Division increased by 8% to with 68%, followed by offshore drilling segment, it recently secured an EPC $882 million. This was due to Property Division with 25% signifies a step towards the contract for the second phase improved margins driven by and Infrastructure Division normalisation of deepwater of the Greater Manchester cost efficiencies and higher with 5%.