October 2010 - Keppel Corporation

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10 Sustaining GrowthHarnessing core competenciesAs Keppel delivers another set of robust results, the Group continued to strengthenthe breadth and depth of its businesses to drive sustainable growth. Excerpts ofremarks from Senior ED and Group Finance Director Mr Teo Soon Hoe at the thirdquarter and nine months 2010 results announcement are reproduced here.FREE CASH FLOWNet cash used in operatingactivities before changes inworking capital was $1.4billion for the first ninemonths of 2010. This waspartly offset by the negativeworking capital changes,largely for expenditure onoffshore and marine work,property development andacquisition of landbank.The Group spent morethan $700 million onacquisitions and operationalcapital expenditure. Thisincluded the acquisition ofa commercial building inAustralia by K-REIT Asia,further development cost ofMarina Bay Financial Centreand Ocean Financial Centre,and other operational capitalexpenditure. The resultantfree cash flow was anoutflow of about $1 billionfor the nine months.BUSINESS REVIEW &OUTLOOKOffshore & MarineThe challenging environmentin the aftermath of the Gulfof Mexico oil spill incidentled to new orders of only$2 billion. With the newcontracts, net orderbook asat September 2010 stood at$4.1 billion, with deliveriesextending through to 2013.The successful 12 deliveriesmade by the Division in thethree months are furthertestament to its commitmentto quality and on scheduleproject execution.Keppel Offshore & Marine continually invests in research and development to move into newfrontiers with innovative vessel designs to meet customers’ demandOur proven track record inthe design and constructionof drilling units has enabledus to further develop andoffer proprietary and versatilesolutions. We have receivedactive enquiries on ourdrillship and multi-purposeplatforms.The Keppel FELS multipurposeself-elevatingplatform design has beenchosen by the Seafox Groupas the basis for a newgeneration,wind turbineinstallation vessel that canwithstand harsh offshoreenvironmental conditions inwater depths of 65 metresin the North Sea. Lookingahead, we are well-positionedto capture opportunities,offer and deliver competitivesolutions to our customers.InfrastructureInfrastructure Divisionis expected to completethe Qatar Solid WasteManagement Centre by theend of this year and theDoha North WastewaterTreatment Plant at the endof 2011. There are cost overrunsin the two projects andwe expect to negotiate andresolve these issues soon.K e p p e l I n t e g r a t e dEngineering broke groundfor the first phase of theGreater Manchester Energyfrom-WastePlant in thethird quarter and furthercollaborated with thepartners in the UK to carryout the second phase of theGreater Manchester projectworth $341 million. Whencombined, they will be oneof the largest waste andrenewable energy projectsin the UK upon completion.Keppel Seghers will continueto provide its proprietarytechnology for the plant’sboiler, heat recovery, and fluegas cleaning system.Capitalising on the increasingdemand for customisedlogistics services, KeppelTelecommunications &Transportation is expandingits warehousing space tofurther grow its businesses inthe Asia Pacific region.PropertyNotwithstanding propertycooling measures introducedrecently in the region, wedo not foresee a significantadverse impact on the overallproperty market in the nearterm. The sustained economicgrowth especially in China,Vietnam and Indonesiaare expected to underpindemand for home ownership.On the commercial front, theKeppelite I October 2010
Sustaining Growth 11As part of its plans to further grow its businesses in the Asia Pacific region, Keppel Logistics is completing a new logistics hub in Foshan, Chinaimproved business sentimentsare expected to drive demandfor office space, and ourProperty Division is poised tobenefit from the promisingoutlook.We are strongly encouragedby the active sales volumein our residential sector inthe Singapore and overseasregion, as well as high levelof enquiries for the localoffice space. On 11 October2 0 1 0 , w e a n n o u n c e dthe proposed asset swapagreement between KeppelLand and K-REIT Asia.For Keppel Land, theacquisition of Keppel Towersand GE Tower presents theopportunity to increasequality residential landbank,and ride on the growingpopularity of city living.At the same time, byacquiring Marina BayFinancial Centre Phase One,K-REIT Asia will benefit fromthe portfolio expansionwithout any additionalequity funding. This deal willgenerate greater returns forunit-holders of K-REIT Asia.Overall, we are confidentthat the transaction willstrengthen both companies’financials and unlock thevalues of their assets.T h e P ro p e r t y D i v i s i o ncontinues to capitaliseo n o p p o r t u n i t i e s t ocreate value throughvarious acquisitionsand developments. Theredevelopment of BarclaysHouse is one fine example.We are confident that uponits targeted completionin early-2014, the newoffice tower will meetthe demand of tenantsseeking well designed andsustainable buildings inJakarta’s Central BusinessDistrict. The successfulacquisition of two primesites in Chengdu andthe waterfront site inZhongshan strengthensour focus in China.GROUP OUTLOOKWhile the Group has delivereda good set of results forthe quarter, we are alwayslooking for opportunitiesto do even better. Over theyears, we have built up ourposition to be the providerof choice in our businesssectors across the globe. Ourcore commitment – to createvalue for our stakeholders– remains firm and clear.By leveraging on internalcompetencies across ourdifferent Divisions, we shallcontinue to build on ourstrong strategic platforms topropel growth. keppeliteKeppelite I October 2010
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Page 12 and 13: 12 Sustaining GrowthPositioning for
Page 14 and 15: 14 Sustaining GrowthKeppel Land and
Page 17 and 18: Sustaining Growth 17Further foray i
Page 19 and 20: Sustaining Growth 19global markets
Page 21 and 22: Sustaining Growth 21Mr Loh Chin Hua
Page 23 and 24: Sustaining Growth 23SSTEC has partn
Page 25 and 26: Sustaining Growth 25Building a repl
Page 27 and 28: Sustaining Growth 27Beijing and Sha
Page 29 and 30: 29All smiles: President Lula (secon
Page 31 and 32: Sustaining Growth 31Alpha invests i
Page 33 and 34: Sustaining Growth 33being developed
Page 35 and 36: Sustaining Growth 35Launch of Casa
Page 37 and 38: Sustaining Growth 37Safety onboardT
Page 39 and 40: Sustaining Growth 39Insights intowa
Page 41 and 42: Sustaining Growth 41New benchmark t
Page 43 and 44: Sustaining Growth 43Treat among fri
Page 45 and 46: Empowering Lives 45With focus and d
Page 47 and 48: Empowering Lives 47through phone, S
Page 49 and 50: Empowering Lives 49Connecting the d
Page 51 and 52: Empowering Lives 51Walking up the f
Page 53 and 54: Nurturing Communities 53Four times
Page 55 and 56: Nurturing Communities 55volunteersK

October 2010 - Keppel Corporation

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