The impairment has hit Keppel Corp’s shareholders equity, causing NAV to fall 5.6% as at June 30, 2020, from Sept 30, 2019. As a result gearing has risen to 1x, from 0.85x as at end-2019.
Keppel Corp reported a net loss of $537 million for 1H2020, reversing a net profit in 1H2019 of $356 million. The loss was caused by $930 million of impairments mainly related to Keppel Offshore & Marine’s (Keppel O&M) stranded assets, receivables, stocks and share of impairment provisions from Floatel. Excluding impairments, Keppel Corp would have registered net profit of $393 million for 1H2020, 5% higher y-o-y.
The reversal of a net profit to a net loss y-o-y in 1H2020 implies that Keppel Corp has not been able to fulfil one of the preconditions for Temasek Holdings’ partial offer made in October last year. According to the offer document, the no material adverse change clause states that profit after tax (PAT) must not fall by more than 20% from $696 million, being the PAT for the 12 months to Sept 20, 2019, and net asset value (NAV) must not fall by more than 10% from the NAV as at Sept 30, 2019. When approached for confirmation, Temasek Holdings declined comment.
