Keppel Corporation Limited

Loh Chin Hua - Chief Executive Officer Chan Hon Chew - Chief Financial Officer Paul Tan - Group Controller Chow Yew Yuen - Chief Executive Officer of Keppel Offshore & Marine Ong Tiong Guan - Chief Executive Officer of Keppel Infrastructure Ang Wee Gee - Chief Executive Officer of Keppel Land Thomas Pang - Chief Executive Officer of Keppel Telecommunications & Transportation

Cheryl Lee - UBS Ajay Mirchandani - JP Morgan Lee Yue Jer - RHB Abhijit Attavar - Jefferies Ling Xin Jin - Morgan Stanley Lim Siew Khee - CIMB Pamela - IHS Ling Xin Jin - Morgan Stanley James Yoon - BNP Paribas Low Horng Han - CLSA Tarun Bhatnagar - HSBC Hu Xiangyu - Morgan Stanley

Good evening to all of you. On behalf of my colleagues, a warm welcome to the webcast on Keppel Corporation's Results and Performance for the Third Quarter and First Nine Months of 2015.

The global economic environment remains challenging, with volatility in international financial markets and concerns over the economic growth in China and other emerging economies. China's GDP grew 6.9% in the third quarter, the slowest quarterly economic growth since the first quarter of 2009.

Uncertainty over the timing of the U.S. expected interest rate hike is also affecting business sentiments.

Against these headwinds, economic growth in Singapore is also slowing. According to preliminary estimates released by the Ministry of Trade and Industry last week, Singapore narrowly avoided a technical recession in the third quarter, with the economy growing only 0.1% quarter-on-quarter.

The Monetary Authority of Singapore expects the economy to grow at a modest pace in 2015 and 2016, with GDP growth of 2% to 2.5% in 2015. Meanwhile, oil price remains depressed, hovering at around US$50 per barrel.

Slower demand growth coupled with global oversupply continue to weigh on oil prices, posing significant challenges to the global oil and gas industry. Amidst the challenging operating environment, in the first nine months of 2015, our business divisions contributed to a net profit of $1.12 billion.

This was down 3% year-on-year mainly due to lower profit contribution from Offshore & Marine. For third quarter 2015, we achieved a net profit of S$363 million.

Annualised ROE was 13.6% and EVA was $$456 million for the current period. Given the current headwinds, these results are creditable.

They demonstrate our resilience as a multi-business conglomerate, not just a single business company. During a downturn, if one of our businesses slows down, our other businesses would be able to contribute.

As it stands today, this fact that our multi-business approach provides us some resilience in our earnings, as borne out by our results this year, may not be fully appreciated by the market. Let me now take you through the businesses in our Group.

First, Offshore & Marine: Even during this slowdown in orders for drilling rigs, we are responding with agility to capture opportunistic, high value work for modifications and upgrading of offshore solutions as well as repair. On this slide is a recent photograph of our yard in Keppel FELS, Singapore, in which you can see a good mix of such projects in addition to newbuilds in various stages of progress.

We remain confident of the sound long-term fundamentals in the Offshore & Marine business. While E&P investments have declined, they will have to increase eventually to keep up with global oil demand, which is set to rise by 1.4 million barrels per day in 2016.

With rebalancing forces intensifying on both oil demand and supply sides, we believe oil prices will eventually recover and stabilise at a new equilibrium. The Offshore & Marine Division has secured about S$1.7 billion worth of contracts year-to-date.

For the first nine months of 2015, we achieved a net profit S$542 million, albeit down 28% year-on-year. While there was a fall in demand for drilling rigs, our projects such as conversions and specialised shipbuilding are bolstering Keppel Offshore & Marine's performance.

We are also winning customers for more diversified and specialised solutions such as FLNG conversions, liftboats as well as ice-class vessels which will position us to capture more value. Work is advancing well for the Hilli with Golar, which is the world's first-of-its-type conversion of an existing Moss LNG carrier, into a Floating Liquefaction Vessel.

We will commence work on GIMI, the second conversion project from Golar once we receive the expected notice to proceed by the end of this year. The third conversion project, Gandria, remains on track with feed study being carried out for potential deployment in Equatorial Guinea with Ophir.

Golar has also initiated talks with Keppel Shipyard for project with a delivery in early 2019. Keppel Offshore & Marine has a net orderbook year-to-date which stands at $10 billion, giving us visibility to 2020.

We will be delivering six jackups in the fourth quarter for Grupo R, Falcon Energy, Energy Arabian Drilling Company and Perforadora Central. In the current challenging environment, we have acceded prudently to requests for slightly later delivery of three jackups, two for Grupo R and the other for Parden Holdings, from 2015 to early next year.

To be prepared for a possibly longer winter, we are also hunkering down in our O&M business, rightsizing our operations and resources. We have considerable flexibility in our workforce deployment with our contract workers as well as overseas production yards.

Our yards are still busy these next two years, but we are already trimming our overheads and making ourselves more efficient. We will continue to invest prudently in training, R&D, productivity improvements through this down cycle and get ourselves ready to seize opportunities when the upturn comes.

During the quarter, we entered into an agreement with Cameron International Corporation, to acquire Cameron's offshore rigs business, which comprises the LETOURNEAUTM jackup rig designs, rig kit business, and aftermarket services. We expect to conclude this by end of the year.

This opportune and strategic acquisition will not only broaden our suite of jackup rig design offerings but also offer us with enhanced capabilities to service customers through the provision of expanded aftermarket sales and services. With about 100 LETOURNEAUTM rigs currently operating around the world, many operators require servicing and repair of their rigs.

Keppel will leverage its global network of yards to better meet these customers' needs. I will now move on to our Property Division.

Across emerging Asia, the fundamentals for sustainable urbanisation remains sound despite the soft property market conditions in certain cities. The privatisation of Keppel Land, we have seen the contribution from the Property Division improve notably, bolstering the Group's performance.

In the first nine months of 2015, our Property Division achieved a net profit of S$333 million, up 51% year-on-year. The additional interest acquired of Keppel Land has added S$127 million in net profit contribution to the Group's bottom line so far this year.

Interest cost related to the privatisation should be less than S$15 million for the full year. This is highly accretive for the Group.

Keppel Land sold 3,130 homes for the first nine months of this year. This is 66% higher compared to the same period last year and is more than the 2,400 homes we sold for the whole of 2014.

In Singapore, the property market remains subdued due to the government's continuing property market cooling measures. Meanwhile, reflecting stronger buying sentiments in China, more than 70% of our homes sold were in China, in the cities of Shanghai, Chengdu and Tianjin.

Residential sales in the country have been improving steadily since first quarter 2015 with the government relaxing various property tightening measures. We are also seeing improved property sentiments in Vietnam, where we sold about 600 homes year-to-date, more than triple the 134 homes we sold over the same period in 2014.

This last weekend, we launched the final phase of Estella Heights in Ho Chi Minh City and sold 110 of a total of 376 units in a special preview. The Saigon Centre Phase 2 retail podium, also in Ho Chi Minh City, is already about 85% pre-committed and we look forward to its opening in the second half of 2016.

Over in Jakarta, Indonesia, we topped off another commercial development, International Financial Centre Jakarta Tower Two in August. Ahead of its completion in the first quarter of 2016, IFC 2 has secured tenants such as Servcorp, Tokio Marine, Grant Thornton and Rintis.

The 48-storey state-of-the-art Tower Two, offering 50,200 square meters of prime Grade A office space, will meet the growing needs of multinational and local corporations in Jakarta's CBD. IFC 2 is the first project in Indonesia to be conferred the highest Green Mark Platinum Award by the Building and Construction Authority of Singapore.

Participating in the continuing growth of Myanmar, we have launched the new wing of Sedona Hotel Yangon, adding 431 rooms to its current total of 366 rooms. Keppel Land will be nimble to capture opportunities which present themselves in a softening market.

From proceeds obtained from the sale of its one-third shareholding interest in Marina Bay Financial Centre Tower 3, some S$616 million has been reinvested in new residential and commercial projects. Our expanding portfolio comprises more than 16,000 launch-ready homes and total commercial GFA of some 843,737 square meters under development.

We are also steadily growing our property fund management business through Keppel REIT and Alpha, which have a combined AUM of S$18.7 billion. Keppel REIT strengthened its portfolio in Australia, topping off the 100% pre-committed Old Treasury Building Office Tower in Perth and acquiring three prime retail units at 8 Exhibition Street in Melbourne.

Alpha Asia Macro Trends Fund II has acquired a portfolio of retail properties in Singapore located in established suburban locations comprising a total net lettable area of 246,000 square feet. In this quarter, Alpha also divested two commercial buildings in Singapore and Tokyo, and one logistics centre in Korea.

Separately, BVK, Germany's largest pension fund, has just awarded a €500 million separate account mandate to Alpha Investment Partners to be their manager for their core strategy in Asia. We remain committed to grow our Infrastructure Division into a stable contributor to the Group's bottom line.

The Division's net profit of S$160 million for the first nine months was higher, compared to S$105 million a year ago, mainly due to gains from the injection of our 51% stake in Keppel Merlimau Cogen into Keppel Infrastructure Trust. We have successfully handed over both phases of the Greater Manchester Energy from Waste Plant.

The Doha North project will achieve significant completion this year. Following this, we look forward to commencing the operating and maintenance of the Doha North facility for a period of 10 years, which will add stability to income contributions from Keppel Infrastructure while it looks for new opportunities to design, build, own and operate its own assets.

Meanwhile, Keppel T&T inaugurated its distribution centre in Vietnam, as well as announced plans to develop its fourth data centre in Singapore. The company's purpose-built data centre facility in the Netherlands, Almere 2, has also commenced operations on schedule in September.

As these new data centres ramp up, they will augment our portfolio of high quality assets adding stability to income from the Infrastructure Division. Looking ahead, Keppel T&T will continue seeking opportunities to develop such assets as well as explore the possibility of collaborating with like-minded investors.

The development of our infrastructure fund management arms is also picking up steadily. Keppel DC REIT made its first acquisition in less than nine months from its successful IPO in December 2014, adding Intellicentre 2 in Sydney to its portfolio of quality data centres.

KIT has also just completed a full quarter of operations following the combination with CitySpring and acquisition of a 51% interest in Keppel Merlimau Cogen. Together, the value of assets managed by Keppel DC REIT and KIT has more than tripled, reaching S$5.4 billion at end September 2015, from S$1.6 billion at the end of 2014.

Next, I will provide some updates on our investments. Following the subscription to the Rights Issue of KrisEnergy, our shareholding in the company has increased to 40.2%.

Over the last quarter, k1 Ventures sold the U.S. childcare operating business owned by Knowledge Universe Education for good returns to shareholders.

k1 Ventures will continue to actively manage its existing investments with the goal to monetise them when appropriate and distribute surplus cash to drive shareholder value. A downturn can either be the worst of times or the best time to strengthen one's capabilities.

For Keppel, it presents the opportunity to build a long-term sustainable, competitive position for the Group as we position ourselves for future growth. As a Group, we are melding together our fortes to create better opportunities and a more conducive environment for collaboration across business units.

We are a leader in technology and innovation with the ability to create quality products and assets tailored to our customers' needs. We are able to execute on our business plans and developments with precision, through strong engineering and project management capabilities.

We have also honed solid expertise in the operating and maintenance of the products and assets that we create. Keppel has a long history of successful capital management of its portfolio of businesses as well as growing successful fund management businesses.

Conglomerates tend to perform well through crises due to their access to capital and the ability to invest when times are tough. With the privatisation of Keppel Land, our corporate structure has been simplified.

We now have greater flexibility to deploy resources across our key business verticals, manage our capital and invest sensibly in the best interests of the Group's long-term growth. I am confident that we are well placed not only to seize opportunities for the best possible returns but also apply our unique blend of strengths to draw synergy and capture value from all parts of Keppel.

The world is undergoing the largest wave of urban growth in history. More than half of the world's population now lives in towns and cities, and by 2030 this number will swell to about 5 billion.

Our Offshore & Marine, Property, Infrastructure and Investments divisions are already meeting people's needs for energy, a clean urban environment, urban living and connectivity. Anchored on our multi-business strategy, and Keppel's distinct combination of strengths, we are configured to provide competitive solutions and services for sustainable urbanisation.

In addition to providing turnkey solutions, we are also capable of creating quality assets across our business lines that can generate stable cash flows for the Group over a longer period. These range from office buildings to data centres and power and waste-to-energy plants, as well as midstream assets such as FLNG vessels which may be chartered for 10 years to 20 years at time.

Such assets can be created either from green or brown fields. We can then own, manage and operate the assets, stabilise and de-risk them, before monetising them.

Our goal is to capture value at every step of the way, from the time we create an asset till even after we inject it into a trust or fund that we own. As demonstrated, we have created an efficient eco-system for capital recycling with established vehicles in place to support asset creation by our key verticals.

There will also be fees that we can continue to earn along the way, such as for asset management, operations and maintenance, and facilities and property management. All of these add to our bottom line in a sustainable way.

For the first nine months of 2015, recurring income contributed $293 million or about 26% of the Group's total net profit. Recurring income contributed a similar percentage of the Group's profit for the first nine months of 2014.

Through the business model that I have just discussed, we aim to continue growing contributions from recurring income to improve the overall quality and stability of our earnings. I shall now let our CFO, Hon Chew, take you through a review of the Group's financial performance.

Thank you.

Thank you. And A very good evening to everyone.

I shall now take you through the Group's financial performance for the third quarter of 2015. The Group recorded a net profit of S$363 million this quarter which was 12% below the third quarter last year.

Earnings per share correspondingly decreased by 13% to S$0.20, our EVA was lower at S$194 million. The free cash flow of S$568 million for this quarter is decrease from S$648 million inflow in the third quarter of 2014.

The higher free cash inflow in 2014 was due mainly to the proceeds from the share of equity plaza in the same quarter last year. The Group's revenue for the third quarter was 23% or S$745 million lower than the same quarter last year.

All divisions except property recorded lower revenues during the quarter. Operating profit at S$371 million decline 34% or S$194 million from the same quarter last year.

Lower profits from Offshore & Marine infrastructure and investments divisions were partially offset by higher profits from property. Profit before tax decreased by a small extent of 27% or S$172 million due to higher contributions from associated companies.

After tax and non-controlling interests, the drop in net profit was at a lower rate 12% or S$51 million as a result of lower non-controlling interests due to acquisition of additional shareholding in Keppel Land. Correspondingly earnings per share decreased by 13%, at Group level revenue was 23% lower than the same quarter last year, driven largely by the decline in the Offshore & Marine Division as a result of lower volume of work and deferment of some projects.

This was partially offset by a 122% growth in Property revenue, primarily due to higher revenues from residential projects in China such as Park Avenue Heights in Chengdu, Stamford City in Jiangyin, Seasons Park and Seasons Garden in Tianjin Eco-City, and also The Glades in Singapore. Infrastructure's 30% drop in revenue was mainly due to lower revenue from save of electricity as a result of lower prices and volume, as well as the absence of revenue from Keppel FMO Private Limited which was divested in the fourth quarter of 2014.

Offshore & Marine division's pre-tax profit was 43% or $153 million lower due to lower revenues at lower operating margins and lower net interest income. The division's operating margin for the quarter was 12.3% compared to 15% in the same quarter last year.

Despite the higher revenue, Property Division's pre-tax profit was at a same level as last year due mainly to higher net interest expenses and lower contribution from associated companies mainly Marina Bay Financial Centre Tower 3, which was sold in the fourth quarter of 2014. Infrastructure division reported a 20% or a S$11 million decrease in pre-tax earnings for the same period last year.

Last year driven by reduced contribution from the power and gas business. As a result, the Group recorded a S$417 million of pre-tax profit for the quarter 27% or S$172 million lower than last year.

After tax and non-controlling interests, the Group’s net profit decrease at a lower rate of 12% or S$51 million. There was a 57% of S$ 2 million increase in net profit of the Property Division, other divisions pre-tax profit was flat as compared to the same period last year.

This is due to lower non-controlling interest following the Group’s acquisition of additional shareholding in Keppel Land. The increase is offset by the drop in net profit of Offshore & Marine and Infrastructure Divisions.

Next, I shall take you through the performance of the Group for the nine months of 2015. Net profit for the first nine months of 2015 was S$1.12 billion, down 3% from the same period last year.

Earnings per share also decreased by the same extent to S$61.7, annualized ROE declined to 13.6% from 14.5% last year. While EVA was lower at S$456 million.

Free cash outflow increased from S$133 million in the first nine months of 2014 to S$784 million. In the prior year cash inflow include at proceeds from the sale of equity plaza.

Our net gearing increased from 19% in the first nine months of 2014 to 52% this year, mainly due to funds used for the acquisition of additional shareholding in Keppel Land, partially offset by proceeds from the disposal of 51% of Keppel Merlimau Cogen plant this year. The Group recorded a 16% or S$1.5 billion decrease in revenue to S$7.8 billion, largely due to lower revenue from the Offshore & Marine and Infrastructure Divisions.

Similarly operating profit decreased to S$1.4 billion, an 18% or S$264 million decrease from the first nine months of 2014. The decrease is led by lower revenues from Offshore & Marine and Infrastructure Divisions, and losses following finalization of the cost to complete the Doha North Sewage Treatment Plant, partially offset by gains from divestment of Keppel Merlimau Cogen and the combination of Keppel Infrastructure Trust and CitySpring Infrastructure Trust.

Pre-tax profit dropped 18% as well inline with the decrease in operating profit. After tax and non-controlling interests, net profit was lower by a small extent of 3% or S$39 million as a result of lower tax expenses and reduced non-controlling interests in Keppel Land.

The Group earned total revenues of S$7.8 billion in the first nine months of the year, a drop of 17% as compared to the same period last year. The decrease was mainly driven by lower revenues from Offshore & Marine and Infrastructure, partially offset by higher revenues from Property and Investments.

In the Offshore & Marine division, major jobs completed to date this year include five jack-up rigs and accommodation semi, one depletion compression platform, one floating crane and FPSO conversion and FPSO integration. For the first nine months of 2015 property revenue increased by 39% as compared to 2014, led by higher revenue from residential projects in China.

Lower revenues for infrastructure was attributed mainly to decreases in revenue from the power generation business as well as the absence of revenues from the Keppel FMO Private Limited which was disposed off in the fourth quarter of 2014. With lower revenues and operating margin resulted in Offshore & Marine the division reported a 33% decrease in pre-tax profit for the first nine months of 2015.

The division also recorded lower net interest income offset by higher contribution from associated companies. Offshore & Marine operating margin for the first nine months was 12.4%, compared to 14.6% in the same period last year.

Despite higher revenues, the Property Divisions pre-tax profits was lower by 7% in the first nine months of the year mainly as a result of higher net interest expense and lower contribution from associated companies which was partially offset by gain from divestment of BG Junction. The Infrastructure division registered an increase of 30% in pre-tax profit, largely due to gains from divestment of Keppel Merlimau Cogen and the combination of Keppel Infrastructure Trust and CitySpring Infrastructure Trust.

This increase was partially offset by losses recognised for the Doha North Sewage Treatment project and reduced contribution from the power and gas business. The decrease in pre-tax profits of Offshore & Marine and Property Divisions were partially offset by the increase in pre-tax profit from Infrastructure and Investment divisions, resulting in an overall 18% or $304 million decrease in Group pre-tax profit to $1.4 billion.

Despite the 18% decrease in the Group’s pre-tax profit, the overall net profit after tax and non-controlling interests was only 3% or $39 million lower than the same period last year. As mentioned earlier, this was due to decreases in tax expenses and non-controlling interests in Keppel Land.

Against the backdrop of a challenging macro environment, the Group’s net profit for the first nine months of 2015 stands at a respectable $1.1 billion. This translates to an earnings per share of 61.7 cents, which is 2.2 cents lower than the previous year.

In the first nine months of 2015, the Group generated $1.1 billion of cash flow from operations. After accounting for working capital requirements mainly from the Offshore & Marine and Property Divisions, partially offset by proceeds from sale of investments, operating cash outflow for the nine months was $738 million, compared to an outflow of $477 million in the same period last year.

Net cash used in investing activities amounted to $46 million comprising investments and operational CapEx amounting to $291 million, mainly from the Offshore & Marine division, partially offset by divestment and dividend income from associated companies of $245 million. The resultant cash outflow was $784 million for the first nine months of 2015, which is $651 million higher than 2014.

As a reminder, we exclude expansionary acquisitions and CapEx, and major divestments in our free cash flow statement. For instance, the cash inflow of $952 million from the divestment of the 51% interest in Keppel Merlimau Cogen during the second quarter in 2015, as well as the cash outflow of $205 million for the acquisition of UK property this year, are excluded.

The Group continues to focus on its core strengths and competencies to meet the challenges of an uncertain macro environment. Our robust balance sheet and ability to remain competitive through our resilience and agility, will allow Keppel to weather the business cycles, and continue to deliver sustainable growth and create value for our shareholders and customers.

Thank you.

Thank you, Hon Chew. We can now wait for questions.

Questions can be submitted through the net.

First question is from Cheryl Lee from UBS.

Hi good evening. It appears there is an increase in group net gearing from 40% to 50%.

Is this due to a weaker working capital cycle at the offshore and marine division? Or is it due to other factors?

Thank you.

I believe the question is comparing the 3Q gearing of 52% with the second quarter gearing, so the movement in the quarter is largely coming from the working capital requirements from the Offshore & Marine division.

Okay, this question is from Ajay from JPMorgan.

Can you run us through any one-offs or exceptional gains or losses seen in the third quarter of 2015?

Think Ajay is referring to the RIDs in 2015.

Yes, I think for the third quarter of 2015, there was no major one-off item. If you look at the nine months, of course, I think we have mentioned before, in first half, we had an injection of 51% share of Keppel Merlimau Cogen into KIT and also we had investment gains upon the combination of KIT with CitySpring.

So that we had recognized over $200 million of one-off in the first half, partially offset by the provisions that we had made for Doha North, so that was in first half. In the third quarter there were no major one-offs.

This is from Lee Yue Jer from RHB Research.

Hi, regarding the delays of the three jackups this quarter, can we check whether Keppel has negotiated additional fees for the delay and for how long the rigs delayed please?

There is provision in the contract for additional fees if it is delayed and the delay actually is for roughly about three to four months.

So that is a short delay, and yes, we did collect some additional fees for the prolongation from the customer.

Okay, this question is from Mr. Attavar from Jefferies.

Can you please elaborate the key items and the amounts included in other operating income of minus $88 million in third quarter 2015 versus the plus $100 million last year?

I’ll take the question. If you can refer to the SGX announcement on Page 2, it is actually detailed under Note 3.

But I will highlight the major items. For the third quarter, under other operating expenses this year is $88 million compared to $100 million gain last year.

So the main difference firstly, one of them is the sales of Equity Plaza last year that generated a gain of $90 million, so that’s in last year’s other operating income. And this year we do not have major sale of investment properties.

The other item is foreign exchange loss this year of $13 million compared to a foreign exchange gain of $2 million last year. So these are the major items contributing to the difference between the $88 million loss this year and $100 million gain last year.

Okay, this question is from Ling Xin Jin from Morgan Stanley.

Hi, could you give an update on the Sete contracts, what is the completion status for each semi?

As you know, Sete is still going through its refinancing at this point in time. Until they are able to get the restructuring organize I think we have – the exact status of how long is going to be – the contract and delivery extension that were already depend on how long when they actually have the contract refinancing finalized.

Just to give you an indication, since November last year, our first vessel for example was supposed to be delivered end of this year. And they told us initially that they maybe able to get it done by October, so we have given them a 10-month extension and time.

Now if the contract is not going to – refinancing is not able to be done until February for example, then it will add another four months. So I think you look at it from that perspective that will give you the status of the delivery.

So there is not much change in terms of the completion status, so the Unit 1 is substantially completed; and I think the Unit 2 is about two-thirds completed and then 30% for the third unit. I think the keys as we have said before, we are working with our customer to get a win-win situation for all of us.

But until they can resolve their issues, we have been going slow in terms of our construction and we have in the third quarter, we had not spent a lot in terms of the construction.

Okay, this is question from Ms. Lim Siew Khee from CIMB.

Hi there, what is the key reason for the strong third quarter 2015 EBITDA in property versus the second quarter 2015?

I think you are comparing quarter-on-quarter. Third quarter we had higher revenue coming from residential properties in China, in particular, for example the Park Avenue Heights in Chengdu, the Seasons Park and Seasons Garden in Tianjin Eco-City.

But of course, if you look at net profit level year-on-year, after tax and after non-controlling interests, the high contribution is also because of as a result of the privatisation of Keppel Land. So these are the key points.

Thank you, Hon Chew. As I have said in my remarks, despite the softer market conditions in a number of the markets, we are selling more homes this year compared to last year, about 66% more.

So we are still doing quite well, particularly in markets like Vietnam and some of the cities in China.

This is a question from Pamela from IHS.

May I check if you have agreed to delay the delivery of CANTARELL 4 and PARAISO I for Grupo R rigs and PARAISO II for Parden Holdings. This means that you are still planning to deliver three rigs for Grupo R namely CANTARELL I, CANTARELL II and CANTARELL III, is this correct?

Yes. That is correct.

So three deliveries this year and the rest has been pushed back by about three to four months till next year.

So the answer to your question, Pamela, is yes, that is correct.

Okay, this question is a follow-up question from Ling Xin Jin from Morgan Stanley.

Hi Chin Hua, another question please. Could you elaborate on the rightsizing of operations and resources in O&M?

What costs can be managed? How does this impact your margins and potential cost savings?

I think as I shared in my opening remarks, we are still very busy for the next two years in our yards. But looking ahead, we are prudently starting to look at all our overhead costs and starting to trim overhead costs, making ourselves more efficient, leaner, trimmer, so that we will be prepared in case the downturn turns out to be longer than everyone expects.

I think in terms of costs, we also have to be quite careful. This is not just cutting cost across.

It’s really about selectively choosing where to spend our money. For instance, as I have shared, R&D, productivity gains, training, these are all very important aspects that we would continue to prudently spend on.

So in terms of the impact on margins, it will all depend on how quickly the rig orders comes back, but clearly, the more efficient we are in terms of our overheads, the better net margins will be when all is said and done. Yew Yuen, do you want to add anything.

I think when you talk about rightsizing, it is actually value engineering. So, what we are doing is that we are, what Chin Hua says we are looking at our overhead of course.

So we have to make sure that we are well in control of our overheads, and actually be ready. If the market was in – I think then we are much more ready because we have trigger points.

About rightsizing is also about resources, the workforce. So what we have done, for example since there is a reduction in the top line.

We have actually by natural attrition, meeting that workers, for example, the workers, foreign workers then on work permits. So what we have done is that when the time comes we basically have to let them go.

So we have achieved roughly around 12% in reduction in direct labour, and also with our subcontractors. We operate with a network of subcontractors, those makes our job a little bit easier in a sense.

And we were able to cut around 19% of our subcontract workforce. So I think rightsizing means that we have the right overhead and we have the right kind of resources.

But Chin Hua also mentioned that while we are doing this, we have also got to make sure that when the upturn comes back, that we are ready to take advantage of that. So we are developing our human resources, so we have people that we are cross-deploying to all our yards so that they can gain the experience and exposure, including overseas exposure.

And at the same time, we are still investing in R&D, making sure that we continue to be the leader in offering solutions, new ideas and so on. So that to us is value engineering, which means that rightsizing.

This is a question from another question from Nigam. Mr.

Nigam from Nomura.

For the three jackup rig deliveries that were delayed into next year, are there any provisions made or suspension of revenue?

No provisions were made, because you heard earlier, the three rigs are only delayed by three months and there are actually additional fees that we collected for the prolongation.

This is a question from James Yoon BNP Paribas.

Do you not feel there is a need to make provisions or write-downs related to the Sete Brasil contracts?

Hon Chew, do you want to take that.

So I think you may have read in the press that there have been quite a lot of developments in Brazil. But I think at this point, we are still working with our counterparts in Sete Brasil, and helping them with their refinancing.

So we are still in negotiations and discussions. So I think at this point, it really would be premature for us to even talk about making provisions at this point in time.

Thank you.

This question is submitted by Low Horng Han. Hello, Low Horng good to hear from you with CLSA.

Good evening everyone. I have a few questions please.

Out of the S$10 billion backlog, what is the total receivables associated? And your assessment of any risk this must be Sete I presume.

Is it? Anyway that’s Horng Han, there is some words missing to your questions.

What has contributed to the associate income in Investments segment negative S$89 million as this has gone up significantly quarter on quarter?

I think the second question has already been addressed earlier. I think on Sete, if assuming that is not total receivable, it is a backlog, so is not a really a receivable, it is a net order book.

And the net order book what is the portion that’s associated with Sete assuming that is about S$4 billion out of the S$10 billion. So Horng Han if I didn’t get your question, interpret your question correctly, please resubmit.

I think this is really addressed by Hon Chew.

Okay this question is from Mr. Attavar, Jefferies.

Was there a write-back in provisions for the Infrastructure Division in third 2015?

No.

Even with that, there was a drop in operating profit. Was it largely because of Keppel Merlimau and low power prices?

Yes, that’s a contributor.

Can you quantify a bit more on the write-back of provisions?

For the current quarter, there was a write-back of impairment of investments of S$23 million. This actually relates to the Senoko Incineration Plant.

There were some impairment provisions which we actually write-back during the quarter, arising from our change in shareholding in Keppel Infrastructure Trust from 49% to 18%.

Thank you. Okay this question is from Mr.

Tarun from HSBC.

What is the outlook for the Property Division in 2016 and 2017? Mr.

Ang, please.

Well, we are fairly positive about the outlook for the Property Division for the next two years. Our major market, China, we see the market recovering.

I think year-to-date, sales have gone up quite well. I think the government is loosening the cooling measures, homebuyers are allowed to put down lower deposits for their purchases.

The Chinese government is also liberalising the financial borrowings that buyers can secure. Interest rates have gone down I think the banks also the reserve requirement has also been lowered, so there is more liquidity for home buyers.

For the purchase restriction has also been lifted for second homes in many cities. Recently we also the government also allowed foreigners to buy homes in certain cities in China.

So you can see that the government is putting effort to lift the cooling measures. So we are quite positive about the market in the next few years and we have a sizeable land bank in China.

We have about 10,000 units that we are able to launch over the course of the next two years, so we think that we will have significant contributions from our China properties. And the other market that we are quite positive about is Vietnam.

As we have indicated earlier, we have sold about 600 units of homes in Vietnam. We just launched our Estella Heights Phase Two over the weekend in Ho Chih Minh City.

Last weekend, we sold 110 units out of about 300 units launched. And so we see the prospect, the economic growth in Vietnam next few years to be good.

We see the housing market in Vietnam to be recovering, so we are positive about that. So these are two of our key markets.

We see good contribution from these two key markets that will bolster our prospects for the next two years for the Property Division.

We also have quite a lot of commercial developments that are currently under construction. Over the next two years, Phase Two at Saigon City Centre and IFC 2 in Jakarta they will progressively start to contribute to our bottom line as well.

This is question from RHB Research, Lee Yue.

Hi, so far, we have been fortunate that we have only seen delivery delays and no cancellations. Are there any contracts at risk of cancellation now?

Well, I don’t really – I don’t think I mean you could say it is fortunate, but at the KOM side, we would like to think that we have been very careful particularly in the leader the last couple of years when the market was very good, we have been very selective in the orders that we took. So the terms of orders that we took as well as the customers we have are of the highest quality.

We do have to work with them because it is a difficult time in the market. But we also think that this has worked out quite well, because of the work that my colleagues have done and lead up to this cycle.

Okay, hi for Keppel’s property business in China, will Keppel Land focus more on the few Tier 1 cities, or Tier 2/3 cities, going forward? This is from Mr.

Hu Xiangyu from Morgan Stanley. Hu?

Okay our strategy in China for Keppel Land has been to focus on five key cities. These are Shanghai, Beijing, Tianjin, Chengdu and Wuxi.

And the markets in these cities are huge. They are a mix of first Tier and high-growth second Tier cities.

We have significant land back in these cities and over the course of the next few years, we will be looking at developing our land bank. Of course, we will not dismiss opportunities if they arise in other cities as well.

End of Q&A

Any further questions. Okay, thank you everyone.