3Q & 9M 2021 Business Update Media & Analysts Conference Call

Analyst and media friends, good evening. Thank you for joining us at the conference call following Keppel Corporation’s voluntary business update for 3Q & 9M 2021. We have posted our media release and an accompanying deck of slides on SGXNET. I will take them as read and will not go over them. Instead, let me draw your attention to a few key highlights, which I believe the market and investment community would be interested in. First, on Keppel’s performance: COVID-19 continues to cause significant disruptions to the global economy and supply chains. But against a challenging backdrop, Keppel has delivered a strong performance. Our net profit for the first nine months of 2021 was a sharp reversal from the net loss registered a year ago, with all segments performing better year on year1. As a Group, we recorded sharp improvements in earnings for 9M 2021, not only when compared to the same period in 2020, but even to pre-COVID 2019, after excluding revaluations, impairments and divestments across the three years. Keppel’s profit for 3Q 2021 also grew strongly compared to a year ago, with all segments registering improved performance. Revenue at S$5.51 billion for 9M 2021 was 14% higher year on year, underpinned by higher revenue contributions across all four key segments. Net gearing has also improved and was 0.76x as at 30 September 2021, compared to 0.85x as at 30 June 2021. 1 All segments performed better in 9M 2021, excluding a gain from the reclassification of Keppel Infrastructure Trust in 2020. Second, we have continued to execute and deliver on the Vision 2030 strategy that we had announced in May 2020. Given the progress to date, we are confident of achieving most of our targets by 2025. Since the launch of our asset monetisation a year ago, we have announced about S$2.4 billion in asset monetisation, and so far received about S$1.6 billion of this in cash. We had earlier said that we would aim to achieve S$3 to S$5 billion of asset monetisation over three years. Today, I can share with you that we are on track to exceed our S$5 billion target by the end of 2023. The substantial capital unlocked from our asset monetisation programme would allow us to fuel Keppel’s organic and inorganic growth plans, especially in Vision 2030’s focus areas such as renewables and decarbonisation solutions. We will also reward shareholders for their continued confidence in the Company despite the challenging environment, as we have done through the interim dividend paid out in August this year. On the two proposed transactions that we announced earlier this year: Discussions on the proposed combination of Keppel O&M and Sembcorp Marine, and the resolution of Keppel O&M’s legacy rig assets are progressing steadily. With the recent rise in oil price, we are seeing signs of improvement in the jackup rig market. Utilisation rates are improving and Keppel O&M has been receiving more enquiries on bareboat charters for its rig assets, though the sale of rig assets may take longer to materialise. In the meantime, Keppel O&M’s orderbook remains strong at S$5.5 billion, and it continues to focus on execution, delivering five major projects in this quarter. Significantly, Keppel O&M was profitable for 9M 2021, reversing the net loss it had sustained in the same period a year ago. Keppel O&M has been proactively rightsizing its operations and reducing overheads since 2015. In the year to date, Keppel O&M has achieved a reduction in overheads of over S$90 million; and the running total is about S$525m in overheads savings since 2015. We will continue to streamline the operations for Keppel O&M. As for the proposed acquisition of SPH ex-media, we have obtained the requisite approval from the Monetary Authority of Singapore and Australia’s Foreign Investment Review Board, or FIRB, and are pending the approval of Keppel’s and SPH’s shareholders for the transaction, court approval for the scheme and the completion of SPH’s media divestment exercise. Both Keppel’s and SPH’s shareholder meetings for the proposed transaction are expected in November 2021. I am confident that the transaction, when completed, will be a win-win proposition for the shareholders of both Keppel and SPH. I will not go over the performance of each business unit, but let me highlight a few key strategies that Keppel is pursuing as part of Vision 2030: We are sharpening our focus on sustainable urbanisation solutions, such as renewables, low carbon and decarbonisation solutions. You would have seen a series of recent announcements such as the proposed import of renewable energy to Singapore from Laos, the development of new technology to boost our district cooling systems, and provision of Energy-as-a-Service at Perennial Business City. We are moving away from being an asset-heavy business. Beyond our asset monetisation programme, we will continue to leverage third-party funds through Keppel Capital for growth. Two weeks ago, M1 and Keppel DC REIT signed definitive agreements for the monetisation of M1’s network assets with book value of S$580 million, which will free up capital that can be invested in new capabilities and growth initiatives. We are also focused on growing recurring income. We have seen strong growth in Keppel Capital’s asset management fees in the year to date, most of which is recurring income. I have mentioned that Keppel Infrastructure is offering Energy-as-a-Service, while Keppel Land is pivoting away from a traditional property developer model. It is evolving to become an asset-light real estate solutions provider and growing its recurring fee-based income in areas such as smart and sustainable townships and urban renewal. With the macrotrend of digitalisation driving demand for digital connectivity, we are also meeting this demand through our energy efficient data centre solutions, M1, as well as the adjacent business of subsea transmission cables, where we have seen strong demand for Keppel’s fibre pairs in the Bifrost Cable System. With M1’s 5G standalone network rollout gaining momentum, M1 will continue to explore opportunities to monetise its 5G use cases. As we continue to streamline and focus our business, we believe the market will see us increasingly as one integrated business, working together to harness synergies and both create and capture value. Ahead of the upcoming UN Climate Change Conference in Glasgow, we have also reaffirmed our commitment to sustainability by unveiling our absolute carbon emissions reduction targets. We have committed to halve the Group’s Scope 1 and 2 carbon emissions by 2030, compared to 2020 levels, and achieve net zero by 2050. We will run our business sustainably and make sustainability our business through the solutions we provide. We are honoured that Keppel Corporation was conferred Winner of the Singapore Corporate Governance Award 2021 for Big Caps at the SIAS Investors’ Choice Awards earlier this month. The Award has been revamped this year to include sustainability disclosures. Keppel Land was also ranked first globally in the Diversified - Office/Residential - Core category in GRESB 2021, and achieved the highest GRESB 5 Star rating. We will continue to do our part to contribute to a greener world, as we transform and grow our business and deliver greater value to our stakeholders. To conclude, if I may leave you with three key take-aways from this briefing, they would be: (i) Keppel’s performance in 9M 2021 was a sharp reversal from the loss in 9M 2020. We have also seen a significant improvement in 3Q 2021’s net profit year on year. (ii) We have made good progress in asset monetisation and are on track to exceed the S$5 billion target by end 2023. (iii) The two proposed transactions are progressing steadily, and we are also investing in new growth engines. We see ourselves emerging stronger after the pandemic, and are confident of achieving most of our Vision 2030 targets by 2025. Question & Answer session