Report to Shareholders 2009
Fortifying
Fundamentals
Sustaining
Growth
To be the Provider of
Choice for Solutions
to the Offshore & Marine
Industries, Sustainable
Environment and
Urban Living.
We will develop and execute our business profi tably,
with Safety and Innovation, guided by our three key
business thrusts of Sustaining Growth, Empowering
Lives and Nurturing Communities.
CONTENTS
1 Key Figures 2009
2 Group Financial Highlights 2009
3 Our Track Record from 2000 to 2009
4 Chairman’s Statement
10
Interview with the CEO
16 Key Messages
22 Group Strategic Directions
24 Keppel Around the World
26 Board of Directors
30 Keppel Group Boards of Directors
32 Keppel Technology Advisory Panel
34 Senior Management
36
Investor Relations
38 Awards and Accolades
40 Special Feature
– Opportunities in the
Environmental Business
48 Operating & Financial Review
49 – Group Structure
50 – Management Discussion and Analysis
52 – Offshore & Marine
64 –
72 – Property
80 –
82 – Financial Review and Outlook
92 Sustainability Report
Sustaining Growth
Infrastructure
Investments
94 – Corporate Governance
114 – Risk Management
116 – Environmental Protection
120 – Product Excellence
Empowering Lives
124 – People Development
132 – Safety and Health
Nurturing Communities
Industry Engagement
142 –
146 – Green Endeavours
148 – Community Relations
Directors’ Report & Financial Statements
154 – Directors’ Report
158 – Balance Sheets
159 – Consolidated Profi t and Loss Account
160 – Consolidated Statement of
Comprehensive Income
Independent Auditors’ Report
161 – Statement of Changes in Equity
163 – Consolidated Statement of Cash Flows
165 – Notes to the Financial Statements
211 – Signifi cant Subsidiaries and
Associated Companies
222 – Statement by Directors
223 –
224
225 Directors and Key Executives
235 Major Properties
238 Group Five-Year Performance
242 Group Value-Added Statements
243 Share Performance
244 Shareholding Statistics
245 Notice of Annual General Meeting and
Interested Person Transactions
Closure of Books
251 Corporate Information
252 Financial Calendar
Key Figures 2009
$12.2b
Revenue increased
4% from FY 2008’s
$11.8 billion.
$1,265m
PATMI increased
15% from FY 2008’s
$1,097 million.
23.9%
ROE increased 7%
from FY 2008’s 22.4%.
$1,026m
EVA increased
20% from FY 2008’s
$855 million.
79.4¢
EPS increased
15% from FY 2008’s
69.0 cents per share.
61.0¢
Distribution per share
increased 74% from
FY 2008’s 35.0 cents
per share.
$1,094m
Free cash fl ow
continued to be
above $1 billion.
0.14x
Net cash ratio
improved from
FY 2008’s 0.04x.
PATMI
Notwithstanding
the unstable and
diffi cult global
economic conditions,
our three key
divisions delivered
strong performances,
bringing PATMI
to a new high of
$1,265 million.
ROE
Improving year
on year, ROE has
remained above
20% for the past
three years, reaching
a new record of
23.9% in 2009.
Distribution
Total distribution
per share for 2009
comprises fi nal
dividend of 23 cents,
special dividend in
specie equivalent
to approximately
23 cents and interim
dividend of 15 cents
already paid. This is
about 77% of PATMI.
Key Figures 2009
1
Group Financial Highlights 2009
Earnings Per Share
(cents)
2009
2008
Return On Equity
(%)
2009
2008
Distribution Per Share
(cents)
2009
2008
79.4
69.0
23.9
22.4
61.0
35.0
For the year ($ million)
Revenue
Profi t
EBITDA
Operating
Before tax & exceptional items
Attributable before exceptional items
Attributable after exceptional items
Operating cash fl ow
Free cash fl ow
Economic Value Added (EVA)
Before exceptional items
After exceptional items
Per share
Earnings (cents)
Before tax & exceptional items
Attributable before exceptional items
Attributable after exceptional items
Net assets ($)
Net tangible assets ($)
Economic Value Added
($ million)
2009
2008
1,026
855
At year-end ($ million)
Shareholders’ funds
Minority interests
Capital employed
Net cash
Net cash ratio (times)
2009
2008
%
Change
12,247 11,805
+4
1,679
1,505
1,856
1,265
1,625
670
1,094
1,026
1,379
98.9
79.4
102.0
3.75
3.70
5,985
2,728
8,713
1,177
0.14
1,377
1,238
1,597
1,097
1,098
2,047
1,876
855
692
84.2
69.0
69.0
2.89
2.84
+22
+22
+16
+15
+48
-67
-42
+20
+99
+17
+15
+48
+30
+30
4,596
2,153
6,749
275
0.04
+30
+27
+29
+328
+250
Return on shareholders’ funds (%)
Profi t before tax & exceptional items
Attributable profi t before exceptional items
29.8
23.9
27.3
22.4
+9
+7
Shareholders’ value
Distribution (cents per share)
Interim dividend
Final dividend
Special dividend in specie*
Total distribution
Share price ($)
Total Shareholder Return (%)
15.0
23.0
23.0
61.0
8.23
100.8
14.0
21.0
–
35.0
4.33
(64.4)
+7
+10
n.m.
+74
+90
n.m.
n.m. not meaningful
*
This special dividend in specie is conditional upon certain approvals being obtained
as set out in paragraph 7 of the announcement dated 26 January 2010.
2009
2008
1Q
2Q
3Q
4Q
Total
1Q
2Q
3Q
4Q
Total
Group quarterly results ($ million)
Revenue
EBITDA
Operating profi t
Profi t before tax & exceptional items
Attributable profi t before exceptional items
Earnings per share (cents)
2,978
356
315
400
285
17.9
3,202
400
357
466
318
19.9
3,038
455
420
487
319
20.1
3,029 12,247
1,679
1,505
1,856
1,265
79.4
468
413
503
343
21.5
2,211
295
262
366
262
16.5
2,643
294
261
434
299
18.8
3,217
360
325
400
273
17.1
3,734 11,805
1,377
1,238
1,597
1,097
69.0
428
390
397
263
16.6
2
Keppel Corporation Limited
Report to Shareholders 2009
Our Track Record from 2000 to 2009
From Strength to Strength
Over the last decade, the Keppel Group has grown steadily, delivering and enhancing
shareholder value through the strengthening of its core competencies and the
expansion of its global footprint. Moving into the future, we continue to fortify our
fundamentals to achieve sustainable growth.
Revenue ($ million)
2009
2000
Attributable Profit Before Exceptional Items ($ million)
2009
2000
Earnings Per Share (cents)
2009
2000
Distribution Per Share (cents)
2009
2000
Return On Equity (%)
2009
2000
Shareholders’ Funds ($ million)
2009
2000
Net Cash/(Gearing) Ratio (times)
2009
2000
Our Track Record from 2000 to 2009
97%
12,247
6,218
1,265
237
434%
416%
79.4
15.4
61.0
6.5
838%
23.9
8.6
5,985
2,679
178%
123%
0.14
(1.00)
114%
Growing
Shareholder
Returns
Distribution per share
grew 838% over the
last decade, from
6.5 cents per share
in 2000 to 61.0 cents
per share in 2009,
in tandem with the
over 400% increase
in attributable profi ts.
Net Cash Position
The improvement of
our gearing position
from 1x to a net cash
position of 0.14x is
attributable to strong
fi nancial discipline
over the years.
3
Chairman’s Statement
Earnings
per share rose
to 79.4 cents
from FY 2008’s
69.0 cents.
EPS
(cents)
80
60
40
20
0
64.9
69.0
79.4
2007
2008 2009
Dear Shareholders,
Early last year we faced a rather gloomy and pessimistic future caused by the
global fi nancial crisis. The September 2008 collapse of major US fi nancial
institutions was still reverberating around the world. The world economy came
under severe pressures and there were many predictions of deep recession,
massive business failures and mass unemployment. Indeed there was widespread
recession and markets fell worldwide. Governments around the world, including
the Singapore Government, launched prompt and wide-ranging measures to
arrest the loss of confi dence and stimulate economies. These counter-recessionary
measures including unprecedented massive fi scal and monetary stimulus
succeeded to pull the global economy back from the brink, averting a Great
Depression-style meltdown.
The global economy began to stabilise in the second half. The US, Japan and
the Eurozone countries emerged from the doldrums in the third quarter of the
year, although problems such as unemployment and high fi scal debt continue
to hinder a steady recovery. Oil demand picked up and prices recovered from
the below US$40 a barrel level seen during the depths of the fi nancial crisis and
reached the US$70 a barrel level by mid-2009. Developing countries, especially
those in Asia, led the global recovery. China and India, in particular, were able
to sustain their growth throughout the crisis, proving to be important locomotives
for growth and recovery.
The general mood for 2010 is certainly much more upbeat and optimistic.
While business conditions remain fragile amidst an uncertain transition from
public sector-led support to private sector-driven demand, there is general
expectation that the global recovery can be sustained. However, it will take time
for markets to work out the excesses of recent years, so growth is likely to remain
subdued for the next few years. Nevertheless, we can be cautiously confi dent
that the worst is over.
Amidst these tough and uncertain operating conditions, I am particularly pleased
to report that Keppel has turned in yet another outstanding set of results. Keppel’s
2009 performance had even surpassed the previous record results achieved in
2008. Excluding exceptional gains, profi ts after tax and minority interests (PATMI)
exceeded the $1 billion threshold for a third successive year, rising 15% to a
new high of $1.27 billion. Earnings per Share rose in tandem to 79.4 cents from
69.0 cents in FY 2008. Return on Equity remained well above 20%. For the fi rst
time, our three Divisions – Offshore & Marine, Infrastructure and Property - all
reported positive Economic Value Added (EVA), increasing the Company’s EVA
by $171 million to a record $1.03 billion.
To reward shareholders for your continued support and confi dence in Keppel,
the Board has recommended a full year total distribution of 61 cents per share,
comprising an ordinary dividend of 38 cents (including 15 cents interim dividend)
and a special dividend in specie of 23 cents. This is almost double the
35 cents per share payout for 2008. The dividend in specie of units in the
proposed K-Green Trust will, subject to shareholder and regulatory approvals,
allow Keppel shareholders to directly participate in our growth portfolio of
environmentally friendly urban infrastructure assets for long-term, regular
and predictable distributions.
4
Keppel Corporation Limited
Report to Shareholders 2009
$1.27b
PATMI rose 15%
to a new high from
FY 2008’s $1.1 billion.
“Leveraging the Group’s resources,
synergies and brand equity, Keppel
will actively pursue opportunities
to drive sustained, broad-based
growth and enhance shareholder
value across its businesses.”
Dr Lee Boon Yang, Chairman
Chairman’s Statement
5
Chairman’s Statement
“Our ‘Near Market,
Near Customer’ strategy
has served us well.
We will continue to build
on this strategy.”
Dr Lee Boon Yang with the Keppel management
engaging the local community during the
Brazil stopover of the Clipper Round the World
Yacht Race.
Fortifying Fundamentals
Keppel’s sterling performance through the fi nancial maelstrom is a testament
to our robust business strategy, diversifi ed businesses and operating fundamentals.
Our fi rm commitment to execution excellence backed by disciplined fi nancial
management, Group capabilities and cohesiveness have long been Keppel’s
defi ning traits. These deeply entrenched corporate values enabled the Group
to rise to the occasion and to vigorously deal with the adverse business climate
as we had done in previous global crises through the years. As a well-managed
company with strong fi nancials and execution capabilities, Keppel was very
well-placed to ride out the economic storm. The excellent results of 2009 bear
testimonial to our resilience. We are also poised to seize new opportunities
which will spring up with the upturn. I believe Keppel will continue to provide
shareholders with a sound investment prospect and healthy returns.
Today, our broad portfolio of sustainable businesses harnesses the Group’s
strengths in project management, technology innovation, market focus and
collective networks. We will continue to sharpen our focus in the next phase of
growth, further building on our strengths and capabilities to hone our competitive
edge and exploit opportunities to create and realise value for shareholders.
Keppel’s strategic vision is to build a leading position in businesses which will
fulfi ll fundamental needs of communities worldwide seeking a better quality of life.
We recognise that there will be increasing demand for sustainable energy, living
and environmental solutions in a rapidly urbanising world. The Group’s three core
Divisions will have key roles in crystallising our vision of becoming a provider of
choice for solutions to make the world a better place.
6
Keppel Corporation Limited
Report to Shareholders 2009
Offshore & Marine
Despite the slowdown in order momentum in 2009, Keppel Offshore & Marine’s
(Keppel O&M) relentless focus on execution and project management excellence
has reaped rewards and strengthened its track record. Last year Keppel O&M
delivered 34 projects, including a record 14 rigs, safely, on time and within budget.
Keppel O&M’s suite of leading-edge proprietary designs backed by an extensive
network of 20 yards and offi ces worldwide has yielded operating and cost
effi ciencies. At the same time, prudently managed project fi nancials, stringently
tracked progress payments and diversifi ed customer base comprising established
drilling contractors, as well as national oil companies with long-term exploration
and production programmes, mitigated project risks and enabled Keppel to
maintain its market leader position.
Our ‘Near Market, Near Customer’ strategy has served us well. We will continue
to build on this strategy. Keppel O&M will explore calibrated expansion in strategic
markets. This will include strengthening our existing leading position in Brazil’s
offshore and marine segment to further support the country’s aggressive plans to
grow its oil and gas industry. We will also seek additional capacity in the Caspian
region to maximise opportunities from potential exploitation of the Kashagan Field.
Infrastructure
The acceleration of urbanisation worldwide brings immense environmental
challenges. Sustainable energy sources, clean water and waste management
are high priorities for urban development. We anticipate the growing demand
for environmentally friendly urban solutions will become a growth driver for our
environmental engineering business.
Keppel Integrated Engineering (KIE) will leverage its core competencies in water
and waste-to-energy (WTE) technologies and the Group’s extensive network to
become a world leader in environmental solutions, whether through organic
growth or acquisitions. It is already a signifi cant global player, with a creditable
track record that includes two landmark projects – an integrated solid waste
management facility and a wastewater treatment and reuse plant – in Doha,
Qatar, a market leader position for imported WTE solutions in China and a key
role in the EU’s largest waste and renewable energy privatisation project, in the
Greater Manchester energy-from-waste plant. At home, KIE, with its two
incineration plants, is already handling almost half the solid waste in Singapore.
The recent acquisition of Singapore’s largest district cooling systems provider will
expand KIE’s slate of eco-friendly and energy-effi cient solutions. Together with
Keppel O&M, KIE is also looking at possibilities in the offshore wind energy sector
to tap into the global demand for clean wind power.
The planned listing of the K-Green Trust, with the Senoko and Tuas WTE plants
and the Ulu Pandan NEWater facility as underlying assets, will offer a new value-
creating earnings platform for the Group.
Property
Against the background of rebounding sentiments in key Asian markets, Keppel
Land’s strategic positioning in the niche market segments of large-scale townships
and integrated lifestyle developments holds great potential. Demand from an
expanding middle class in the region’s economies is rising while quality supply in
choice locations across key and second-tier cities in regional markets is
Chairman’s Statement
7
Chairman’s Statement
Warm ties for a
successful Tianjin
Eco-City
(from left)
Mr Choo Chiau Beng,
Chief Executive Offi cer
of Keppel Corporation,
Dr Lee Boon Yang,
Chairman of Keppel
Corporation, and
Mr Zhang Gaoli,
Party Secretary of the
Communist Party of
China Tianjin Municipal
Committee.
increasingly scarce. Keppel Land brought Evergro Properties into its fold, to
capitalise on growth opportunities in China and amalgamate competencies and
networks across key and second-tier Chinese cities. With a pipeline of more than
70,000 prime homes in the region, Keppel Land is poised to meet the
homeownership aspirations of a rapidly urbanising Asia.
We are able to synergise our competencies in environmental engineering and
property development to develop large-scale integrated eco-friendly townships
in the region, such as the landmark 30-sq km Sino-Singapore Tianjin Eco-City.
Keppel is leading the Singapore Consortium for this joint venture project with a
Chinese Consortium. The project is making good progress. A sustainable urban
showcase for China, the Tianjin Eco-City has secured investments of around
$6.7 billion in just 15 months, attracting leading developers from China, Taiwan,
Japan and Malaysia to collaborate in a variety of integrated eco-driven residential,
commercial, industrial, and cultural-leisure developments. Featuring a green
central business district, eco-transport networks, intelligent urban lighting and
other eco-friendly features, the Tianjin Eco-City will stand out as a harmonious
and eco-friendly live-work-play environment. Keppel has broken ground on a
35.4-ha site within the Eco-City’s Start-Up Area to develop both quality homes
and commercial space.
Sustaining Growth
Keppel continues to believe that strong corporate governance is essential to the
sustainability of our businesses and performance. We remain fi rmly committed
to maintaining high standards in corporate governance as part of our
accountability to all our stakeholders.
Prudent capital and fi nancial management coupled with proactive risk
management have kept the Group on even keel even in the midst of turbulent
times. Stringent project selection, close progress payment monitoring and
carefully phased project launches are all part of our robust capital, human
resource and risk management systems.
Keppel places the highest value on a safe workplace for all our employees and
workers. A safe work environment translates into superior operating performance.
This is why safety has long been enshrined as one of Keppel’s core values.
Keppel Corporation was also the fi rst company in Singapore to establish a Safety
Committee at Board level in 2006. The Group’s Accident Frequency Rate has
continued to improve reaching a low of 0.43 reportable incidents per million
man-hours worked, down from 0.49 for 2008. Keppel O&M is also pioneering
the fi rst integrated safety training complex in Singapore. We will continue to step
up these efforts to implement best safety practices to ensure that our employees
and workers will be able to return home safely to their families and loved ones
at the end of each day of hard and productive work.
Our people are our primary resource. Keppel will continue to nurture our employees.
We will provide opportunities for employees to maximise their potential, develop
their talents and capabilities to contribute to the Group’s competitiveness and
business success. We will continue to upgrade the capabilities of our employees
to become more productive. We continue to place great emphasis on grooming
our people to ensure smooth and effective succession for key management
positions. In 2009, we established the Keppel College to identify, develop and
8
Keppel Corporation Limited
Report to Shareholders 2009
nurture young and high potential talents and to grow them into future generations
of Keppel leaders and valuable additions to our human capital.
Striving for Success
Today we continue to face an external business environment that remains volatile.
The Board will work closely with Management to manage risks and ensure the
Group remains fl exible and robust to overcome the multiple challenges in the
different countries and regions where we operate. Leveraging the Group’s
resources, synergies and brand equity, Keppel will actively pursue opportunities
to drive sustained, broad-based growth and enhance shareholder value across
its businesses.
Acknowledgements
I take this opportunity to acknowledge the following changes as part of the Board’s
proactive self-renewal and governance process. Most signifi cantly, it is my honour
and privilege to assume the role of non-executive Chairman from Mr Lim Chee Onn,
who facilitated the transition up to last June after handing over the Chief Executive
baton to Mr Choo Chiau Beng in January 2009. We are indeed much indebted to
Mr Lim for his 25 years of sterling service to the Group at both the Board and
executive levels, helming Keppel’s transformation into a dynamic global enterprise
with a solid reputation for excellence. We are grateful that Mr Lim had agreed to
continue as our Senior Advisor so as to share with us his extensive and diverse
business experience as well as business networks.
We also record our appreciation to Dr Lee Tsao Yuan, who stepped down and
did not seek re-election at the last Annual General Meeting, for her many years
of sound advice and loyal service to the Board and its Nominating, Remuneration
and Safety Committees. We also thank Mr Yeo Wee Kiong, who stepped down
from the Board last August, for his wise counsel and dedicated service, particularly
as Board Safety Committee Chairman guiding our safety initiatives. We wish
Mr Lim Chee Onn, Dr Lee Tsao Yuan and Mr Yeo Wee Kiong all the best in their
future endeavours.
We are pleased to welcome to the Board two new members, Mr Tong Chong
Heong, Chief Executive Offi cer of Keppel O&M, and Mr Alvin Yeo, Senior Counsel
and distinguished legal practitioner. Mr Tong will, as Executive Director, support
the Board with his 40 years of experience in steering Keppel O&M into a world
leading offshore and marine group, while Mr Yeo’s experience in the corporate
legal sector will contribute to the Board’s corporate governance.
Last but not least, I wish to thank Directors, Management, employees, partners,
customers, and all stakeholders for their unstinting support through this tumultuous
period. The Group shall spare no effort and shall endeavour to chart new growth
paths so as to achieve even greater success in the years ahead. Thank you.
Yours sincerely,
Lee Boon Yang
Chairman
1 March 2010
Chairman’s Statement
9
Interview with the CEO
Q: Describe
2009 for the
Keppel Group.
A: 2009 was a challenging yet fruitful year for Keppel. It was a record year for the
Company despite the gloom across the globe, especially in the fi rst half.
At Keppel, we were not immune to the impact of the downturn caused by the tight
credit situation. Fortunately, we could count on our experiences in past crises to
guide us in what we needed to do.
At the start of 2009 when I took over as Chief Executive Offi cer, my priority for
the Group was to make the Group leaner and stronger with profi table businesses.
Over the past year, we worked towards this goal by systematically reviewing,
consolidating and rationalising our businesses, processes and resources.
The Group enhanced its effi ciency, raised productivity and stepped up its training
and development of its workforce. The sale of our stake in Singapore Petroleum
Company and the rights issues at our property subsidiaries further strengthened
our balance sheet, positioning the Group well for the necessary operational capital
expenditure and possible acquisitions.
We continued to leverage our core competencies to execute our projects well,
delivering with excellence a record 14 rigs, as well as six major conversions/
upgrades/completions and 14 specialised vessels. We secured a major
environmental engineering contract in the UK, and in Singapore, acquired the
Senoko Waste-to-Energy (WTE) Plant and successfully completed the
construction of the Tuas WTE Plant. On the property front, we sold a total of
about 3,500 homes in Singapore and other parts of Asia.
I’m happy that our efforts in the past year have paid off, and we ended 2009
on a high note with record profi ts before exceptional gains for the Group at
$1.265 billion. For the fi rst time in Keppel’s history, all businesses achieved positive
Economic Value Added, while Return on Equity was at 23.9%. To mark this
achievement, we are rewarding shareholders with a proposed total distribution
of 61 cents per share.
Q: What will
be Keppel’s focus
for the next
few years?
A: Keppel has emerged stronger from this last crisis and with our fi rm
fundamentals, we are in a good position to ride the economic upturn and to
capture more value for the Group’s sustainable growth.
Keeping Keppel fi ghting fi t remains my top priority. We have outlined a collective
vision for the Group – to be the Provider of Choice for Solutions to the Offshore &
Marine Industries, Sustainable Environment and Urban Living. We aim to achieve
this through developing and executing our businesses profi tably, with safety and
innovation, and will be guided by our three key business thrusts of Sustaining
Growth, Empowering Lives and Nurturing Communities.
In the near term, we will be focused on growing the Group further and we remain
committed to build up our three key pillars. In the past year, we have started to
strengthen the synergy among our businesses, and we will continue to do so.
This enables the Group to better meet the growing demand arising from the need for
a more sustainable environment and the increasing trend of urbanisation in Asia. I see
opportunity particularly in marrying our competencies in environmental engineering
and property to develop integrated townships in China, Vietnam, Indonesia and India.
10
Keppel Corporation Limited
Report to Shareholders 2009
Mr Choo Chiau Beng,
Chief Executive Offi cer
Meanwhile, we will also continue to focus on what we do best. Our competitive
advantages, like our execution excellence and technology edge, will be further
strengthened. In 2009, we benefi ted from the enhanced productivity and
operational effi ciencies, and this is an area we will continue to hone.
In addition, I am intent on raising the next generation of Keppelites to lead and
grow the Company further. During the year, Keppel College was set up to identify,
develop and nurture young and high potential talents. Efforts are being stepped up
to groom the next set of leaders to ensure that the Group continues to have
smooth leadership transitions, another hallmark of Keppel.
A: I would like to do both, sticking, of course, to our core competencies. We will
continue to have a fi rm foundation in our core talents, skill sets and technology for
organic growth. Apart from this, we will also acquire assets, technology or skill
sets which we currently may not have but are necessary to help us broaden and
deepen our core competencies to capture future demand in our businesses.
Acquisitions must fi t into our strategy, providing us our desired returns of around
12% and more importantly, contributing to the sustained growth of Keppel. We are
ready to seize opportunities to buy businesses that offer the right fi t. The acquisition
of Singapore’s largest district cooling systems provider, now named as Keppel
DHCS Pte Ltd, helped to broaden the suite of solutions offered by our environmental
engineering business, while the purchase of the Senoko WTE Plant from the
Singapore Government served as seed asset to our “green” infrastructure trust.
This trust will provide us and its investors with a steady recurring income stream.
A: The slowdown in new orders in 2009 has allowed us to focus on delivering on
our order backlog to our customers on time, within budget and with a good safety
record. I am pleased that Keppel FELS was awarded $2 million for the early
deliveries of 13 rigs in 2009.
In a diffi cult market, I must say we did relatively well to secure $1.7 billion worth of
new orders with $1.2 billion secured in the last quarter, extending our $5.6 billion
net orderbook into 2013.
11
Q: Will you grow
Keppel’s key
businesses
organically, or are
you more focused
on seeking M&A
opportunities?
Q: What is your
outlook of the
offshore and
marine industry in
the near term?
Interview with the CEO
Interview with the CEO
Q: How about
the longer term
outlook?
Q: 2009 was a
record year for
Keppel Offshore
& Marine (Keppel
O&M). How are you
going to sustain
Keppel O&M’s
growth momentum?
We expect 2010 to be better than 2009, due to the recovery in global Exploration
and Production (E&P) spending brought on by the turnaround in global economic
outlook. However, we are unlikely to see the level of orders of 2007 and 2008. So
far, we have secured about $1.3 billion worth of new orders in the fi rst two months
of 2010. Enquiries are at a healthy level, and we are working to convert them into
fi rm orders.
Looking ahead, the key thrust will be in deepwater production in Brazil, the Gulf of
Mexico, West Africa and possibly Australia. These regions saw major oil and gas
discoveries in 2009, adding to the deepwater reserves. Industry expert Douglas
Westwood has forecasted that deepwater expenditure will reach US$137 billion
over the next fi ve years and deepwater subsea wells are set to account for over
60% of all subsea wells by 2015, compared to less than half in 2009. Deepwater
oil production is therefore expected to rise steadily, from slightly over seven million
barrels of oil per day (bopd) in 2009 to more than 10 million bopd in 2015.
With our proven technology and capabilities, we are ready to clinch orders in this
segment. The P-61 Tension Leg Wellhead Platform contract awarded by
Petrobras and Chevron to FloaTEC, LLC, our joint venture with J. Ray McDermott,
will contribute towards building up our track record in this area.
A: Over the longer term, the industry fundamentals remain sound. According to
the International Energy Agency, global energy demand is set to resume its long-
term upward trend once the economic recovery gathers pace. Oil demand is
expected to rise 24% from 85 million bopd in 2008 to 105 million bopd in 2030.
While demand for renewable energy is expected to increase, fossil fuel remains the
dominant source of energy worldwide in the foreseeable future, accounting for
77% of the overall demand increase in energy. This translates into the need for
continued signifi cant investment in E&P activities in the longer run.
In addition, expected increases in capital spending in oil and gas infrastructure and
technology will help boost production rates to meet the rising consumption from
the industrial and transportation sectors. Douglas Westwood has predicted
offshore production expenditure per year to reach US$360 billion by 2013,
compared to an estimated US$260 billion spent in 2009.
The deepwater market remains the highest growth prospect in the medium to long
term. E&P activities are slowly but surely shifting towards deepwater to replace the
fast depleting shallow water reserves.
A: Moving forward, we will continue to leverage our established competencies in
execution, project and cost management, our technology advantage, as well as
our network of global yards to help sustain the growth momentum of our offshore
and marine business.
As a premier offshore and marine group, we offer our customers a complete range
of products and solutions, ranging from jackups and semisubmersibles to Floating
Production Storage and Offl oading vessel conversions, shiprepair and specialised
shipbuilding. Our yard in Singapore is currently outfi tting two drillships, while our
yard in Brazil has just won contracts to upgrade and repair three drillships.
12
Keppel Corporation Limited
Report to Shareholders 2009
We believe what stands us apart is our keen sense of what works in the offshore
and marine business. We know the business better than others, and we
understand the cycles and the risks associated with the business. We have very
close relationships with our customers, and we anticipate their needs even before
they are made known to the public. Another important element of good project
and cost management is the ability to forge close ties with the suppliers. At
Keppel, we have a reliable pool of suppliers whom we can count on.
To ensure we continue to meet the needs of our customers, we are seeking
opportunities to advance our ‘Near Market Near Customer’ strategy, mainly in
Brazil, the Caspian region and the Gulf of Mexico, so that we can selectively
net the orders as and when they occur in the next few years.
Apart from Brazil, the activity in the Caspian region continues to be high and we
expect more investments in E&P activities. To help us meet future demand in this
region and to complement our Caspian Shipyard, we have signed an agreement
with the State Oil Company of Azerbaijan and the Azerbaijan Investment
Committee to invest in a new shipbuilding and repair yard in Baku.
In the Gulf of Mexico, there are capacity expansion opportunities in Mexico but it
will take time to realise. We are in a good position there with our yard in
Brownsville, Texas, near the border of Mexico.
A: Petrobras has announced a massive fi ve-year E&P spending plan of around
US$174 billion, which includes ordering an additional 28 drilling rigs to be built in
Brazil between 2013 and 2018.
With our established yard, long-term relationships and sound track record of
deliveries in Brazil, we are confi dent of our ability to build some of these rigs for
Petrobras. A number of our customers, the drilling contractors, are discussing with
us on how to partner them in meeting the orders.
We will seek orders which are meaningful to us. We know that apart from cost,
customers like Petrobras value execution capability, experience and track record.
This is where we have an edge.
Currently, Brazil is facing a shortage of yard capacity. We are working hard to raise
our productivity in Brazil and manage our costs there to stay competitive. We are
expanding the capacity of our yard in Angra, and at the same time considering a
possible acquisition of another yard in Brazil.
A: On the whole, we are happy with the progress made by our Infrastructure
Division. For 2009, the Division has once again doubled its profi t after tax and
minority interests from $63 million in 2008 to $126 million. This Division is now
contributing a healthy 10% to the Group’s bottom line, and I am hoping that this
will grow.
All businesses in our Infrastructure Division are making concerted efforts to boost
their earnings base by strengthening their existing businesses, seeking and
moving into earnings-accretive adjacent businesses.
13
Q: How much
of the upcoming
orders from
Petrobras can
Keppel get?
Q: How do
you intend to
continue to grow
the earnings
contribution from
Infrastructure
Division?
Interview with the CEO
Interview with the CEO
Q: With the
improved balance
sheets at companies
in your Property
Division, where do
you see opportunities
to grow this Division
further?
In environmental engineering, we are leveraging renewed global efforts to
combat climate change to secure more projects with our proven WTE and
water treatment technologies. Over the years, we have built up a sizeable
portfolio of assets and projects and these serve as a valuable track record
for us to secure new jobs. With the recent acquisition of a new capability
to provide district heating and cooling systems, Keppel Integrated Engineering (KIE)
is working to expand its slate of products and solutions with the aim of becoming
a world leader in environmental solutions.
The offshore wind business is another area which poses potential for KIE, where
our offshore and marine expertise and technology can be transferred selectively
and innovatively to offshore wind farm installation and maintenance.
We are delivering on our promise to expand our infrastructure growth platforms
and to extract value from our assets. We have announced the proposed listing
of the K-Green Trust by 2Q 2010, with our three Singapore assets – Senoko WTE
Plant, Ulu Pandan NEWater Plant and the Keppel Seghers Tuas WTE Plant, as
seed assets. When listed, the Trust will offer Keppel, its shareholders and other
like-minded investors with long-term, regular and predictable distributions. The
Trust is expected to provide growth in distributions through future investments in
green infrastructure assets.
Keppel Energy’s 500 MW clean gas-fi red co-generation plant, which began
operations in 2007, has produced good performance. To meet the growing
demand for clean energy, we are planning to expand the capacity of this plant by
an additional 900 MW.
Through Keppel Telecommunications & Transportation, we are also capitalising on
rising demand in logistics outsourcing and data centres.
A: For 2009, our Property Division recorded a better-than-expected
performance, thanks to the easing of liquidity and credit conditions in the
second half of the year. Both the Singapore and regional residential markets
rebounded, resulting in the sale of 3,500 homes, with the bulk being from our
townships in China.
Our downtown prime offi ce portfolio was also off to a good start this year.
Nomura signed a 12-year lease for 102,000 square feet of space at our
one-third-owned Marina Bay Financial Centre (MBFC) Tower Two. This brought
the overall pre-commitment level at MBFC to 68%, with Phase One’s
pre-commitment level reaching 79%.
With a healthy gearing level and a good brand name, our Property Division
is well-positioned to build on the existing portfolio while meeting growing demand
for homes across an urbanising Asia.
The immediate near-term goal will be to seek development and acquisition
opportunities in Singapore, China, India, Vietnam and Indonesia, with continued
focus on developing quality residential, offi ce and township projects.
14
Keppel Corporation Limited
Report to Shareholders 2009
Q: How is the
progress of the
Tianjin Eco-city
project? When
will it start
contributing
to Keppel’s
earnings?
Q: How do you
intend to maximise
synergy in all your
businesses?
Q: What does it
take for Keppel to
realise the Group
Vision which you
have articulated
in 2009?
A: The 30-sq km Sino-Singapore Tianjin Eco-City project, where we are
spearheading the Singapore Consortium, is progressing well. We expect
contributions to fl ow in by fi rst half of 2011.
In just two years, the Eco-City has raised more than 30 billion yuan (approximately
$6.7 billion) worth of investment commitments from leading developers in China,
Taiwan, Japan and Malaysia. Apart from eco-friendly residential developments, the
Eco-City is featuring a fi rst-of-its-kind eco-central business district, eco-transport
networks, intelligent urban lighting and waste management systems, and an
international school.
We have also started construction of Keppel’s 35.4-ha site in the Eco-City.
Phase 1, comprising 1,700 homes, will be launched in the second half of 2010.
The Eco-City is well on its way to become a sustainable urban showcase for
China, with its integrated eco-friendly residential, commercial, industrial and
cultural-leisure developments.
A: As the urbanisation trend and the growing demand for energy continue
unabated, the world’s oceans and seas will be more extensively and intensively
used. Together with a heightened sense of the threat of climate change, all of us
are challenged to hand over to the next generation a more developed, yet greener
and cleaner world with a lower carbon footprint.
At Keppel, we see good potential in combining the strengths of all our businesses
to meet this urgent need for a cleaner environment. To kickstart this effort, we
enhanced resources at KIE with the expertise and experience from Keppel O&M
last year. The two companies are also collaborating to seek commercially viable
opportunities in offshore wind energy.
Eco-friendly township development is another area of strength which we are
tapping into. With proven competencies of Keppel Land in developing townships
and green buildings, KIE in environmental solutions and Keppel Energy in providing
clean energy, we believe we are well-placed to offer one-stop-eco-solutions in a
world facing the increasing twin challenges of urbanisation and environmental
protection.
A: We will need lots of courage, commitment and a sustained Can Do! spirit from
the current and next generation of Keppelites, bound together by our common
core values of passion, integrity, customer focus, people-centredness, safety,
agility and innovativeness, collective strength and accountability. We should also
continue to know our business better than others and to take calculated risks to
ensure that all our engines of growth are fi ring away.
With the strong support from our Chairman, Board and all Keppelites, I believe we
are well on track to realise the Keppel Group Vision of being the Provider of Choice
in all our selected businesses.
Interview with the CEO
15
With a robust
fi nancial position
and entrenched
core competencies,
we are on track
to strengthen the
breadth and depth
of our businesses.
n
e
h
t
g
n
e
r
t
S
$1.18b
Our strong net cash
position enables us
to judiciously seize
opportunities for
value creation.
68%
Return on Equity of
our Offshore & Marine
Division rose to a
record level of 68%
on the back of strong
operating performance.
70,000
homes
With a total of
70,000 homes in the
pipeline, our Property
Division stands to benefi t
from the rising demand
for quality residential
developments in
Asia’s growth cities.
$6.7b
A showcase of
Keppel’s synergistic
strengths in township
development and
environmental solutions,
the Sino-Singapore
Tianjin Eco-City
project attracted
$6.7 billion worth
of investments.
$750m
The K-Green Trust,
with initial assets
of $750 million, offers
eco-conscious investors
the opportunity to invest
in a pipeline of ‘green’
infrastructure assets,
including renewable
energy and other energy
effi ciency initiatives.
e
s
i
g
r
e
n
y
for incineration.S
We are maximising
the synergy among
our businesses to
meet the growing
global demand for
a cleaner urban
living environment.
47.6%
As the only
private operator
of waste-to-energy
plants in Singapore,
we treat almost half
of Singapore’s waste
+20%
$24m
Our Economic Value
Added (EVA) grew
20% to cross the
$1 billion mark for
the fi rst time, with all
businesses generating
positive EVA.
The prudent and
effective use of
Group resources,
together with the
harnessing of
collective strength,
place us in a good
position to optimise
value creation for
sustainable growth.
e
s
i
m
i
t
p
over the same period.O
Strong human capital
is essential for our
sustainable growth
into the future. In 2009,
we invested $24 million
in the training and
development of our
global workforce.
Over the past nine
years, our Total
Shareholder Return
grew at a Compounded
Annual Growth Rate
of 27%, signifi cantly
outperforming the
Straits Times Index
27%
Group Strategic Directions
Keppel Corporation
To be the Provider of Choice for Solutions
to the Offshore & Marine Industries,
Sustainable Environment and Urban Living
$1,265m
PATMI increased 15% from
FY 2008’s $1,097 million.
Offshore & Marine
To be the choice provider
and solutions partner in
its selected segments of
the offshore and marine
industry
$810m
PATMI increased
15% from FY 2008’s
$705 million.
Revenue
($ million)
2009
2008
Revenue
($ million)
2009
2008
12,247
11,805
8,273
8,569
Strategic Directions
Fortifying Core Competencies
– Ensure continued focus on execution excellence to produce top
quality products and solutions for customers.
– Sharpen competitive edge by investing in R&D for long-term
growth.
– Maximise talent development and knowledge sharing to enhance
productivity.
Expanding Global Footprint
– Build on the Group’s strong global network for new business
opportunities.
– Leverage the Keppel brand equity to enhance its presence in
existing markets and enter new markets.
Leveraging Growth Platforms
– Maximise synergy and collective strength among businesses.
– Seize value enhancing opportunities when they arise.
Focus for 2010/2011
– Deliver value through excellent
project management and
execution.
– Enhance R&D initiatives to
strengthen position as market
leader in selected segments.
– Explore opportunities in new
markets and adjacent businesses.
– Maximise and realise operational
effi ciencies.
– Sustain prudent cost management.
– Focus on Health, Safety and the
Environment.
22
Keppel Corporation Limited
Report to Shareholders 2009
Infrastructure
To grow further with
its robust portfolio of
environmental engineering,
power generation,
logistics and data centres
businesses
Property
To provide urban living
solutions through the
twin core businesses of
property development
and property fund
management
Investments
To deliver good value to
shareholders while seeking
growth opportunities
presented by the global
economic recovery
$126m
PATMI increased
100% from FY 2008’s
$63 million.
$210m
PATMI increased
34% from FY 2008’s
$157 million.
$119m
PATMI decreased
31% from FY 2008’s
$172 million.
Revenue
($ million)
2009
2008
Revenue
($ million)
2,427
2009
2,232
2008
Revenue
($ million)
1,508
2009
950
2008
39
54
Focus for 2010/2011
– Keppel Integrated Engineering
(KIE) to continue building its
environmental engineering
business, with the aim of
becoming a world leader in
environmental solutions.
– KIE to expand its slate of products
and solutions, as well as moving
into adjacent businesses such as
renewable energy.
– Keppel Energy to grow its power
generation business by planting
additional capacity in Singapore.
– Keppel Telecommunications &
Transportation to continue
growing its logistics and data
centre footprint.
Focus for 2010/2011
– Selectively seek acquisitions with
continued focus on developing
quality residential, offi ce and
township projects.
– Capitalise on market recovery to
launch more township projects in
key and secondary cities in China.
– Time launches of remaining units
of Marina Bay Suites and Refl ections
at Keppel Bay with the opening
of the integrated resorts.
– K-REIT Asia and Alpha Investment
Partners to explore potential
acquisitions of quality assets in
Singapore and overseas.
– Unlock value from non-core
assets at appropriate time.
Focus for 2010/2011
– k1 Ventures will identify
investment opportunities while
continuing to focus on the
management of existing
investments with the aim of
enhancing shareholder value.
– MobileOne will continue to
strengthen its position in the
market and capitalise on new
growth opportunities from
the commercial launch of the
Next Generation Nationwide
Broadband Network.
Group Strategic Directions
23
Keppel Around the World
Offshore & Marine
Azerbaijan
Brazil
Bulgaria
China
India
Indonesia
Japan
Kazakhstan
Norway
Qatar
Singapore
The Netherlands
The Philippines
United Arab Emirates
United States
Vietnam
Infrastructure
Algeria
Argentina
Australia
Belgium
Brazil
China and Hong Kong
Ecuador
France
Germany
Honduras
Indonesia
Ireland
Malaysia
Mexico
Qatar
Singapore
Spain
Sweden
Thailand
The Philippines
United Kingdom
United States
Vietnam
Property
China
India
Indonesia
Japan
Korea
Malaysia
Saudi Arabia
Singapore
Thailand
The Philippines
Vietnam
Investments
China and Hong Kong
Singapore
United States
We have a global presence spanning
more than 30 countries with overseas
customers as our earnings mainstay.
EUROPE
$3,837m
CHINA AND
HONG KONG
$344m
JAPAN AND
KOREA
$91m
United States
Mexico
Honduras
Ecuador
Argentina
Brazil
Sweden
Norway
Ireland
The Netherlands
United Kingdom
Belgium
Germany
France
Bulgaria
Kazakhstan
Spain
Azerbaijan
Algeria
Saudi Arabia
Qatar
United Arab Emirates
Japan
Korea
The Philippines
India
China
Hong Kong
Vietnam
Thailand
Malaysia
SINGAPORE
Indonesia
Australia
TOTAL FY 2009
REVENUE
$12,247m
NORTH
AMERICA
$1,532m
CENTRAL
AMERICA
$262m
SOUTH
AMERICA
$1,377m
MIDDLE EAST
$893m
INDIA
$293m
ASEAN
$3,545m
AUSTRALIA
$73m
24
Keppel Corporation Limited
Report to Shareholders 2009
Keppel Around the World
25
Board of Directors
“The Group shall spare
no effort and shall endeavour
to chart new growth paths...”
Lee Boon Yang, 62
Chairman and Independent Director
Member, Nominating Committee
Member, Remuneration Committee
Member, Board Safety Committee
26
Lim Hock San, 63
Choo Chiau Beng, 62
Sven Bang Ullring, 74
Deputy Chairman and
Independent Director
Chief Executive Offi cer,
United Industrial Corporation
Chief Executive Offi cer,
Singapore Land
Chairman, Audit Committee
Chairman, Remuneration Committee
Member, Board Risk Committee
Chief Executive Offi cer
Member, Board Safety Committee
Independent Director
Chairman, Board of The Fridtjof
Nansen Institute, Oslo, Norway
Chairman, Board Safety Committee
Member, Nominating Committee
Member, Remuneration Committee
Board of Directors
27
Board of Directors
Tony Chew Leong-Chee, 63
Oon Kum Loon, 59
Tow Heng Tan, 54
Independent Director
Executive Chairman,
Asia Resource Corporation
Chairman, Nominating Committee
Member, Audit Committee
Independent Director
Chairman, Board Risk Committee
Member, Audit Committee
Member, Nominating Committee
Member, Remuneration Committee
Non-Independent and
Non-Executive Director
Chief Investment Offi cer,
Temasek Holdings
Member, Nominating Committee
Member, Remuneration Committee
Member, Board Risk Committee
28
Keppel Corporation Limited
Report to Shareholders 2009
Alvin Yeo Khirn Hai, 48
Teo Soon Hoe, 60
Tong Chong Heong, 63
Independent Director
Senior Partner, Wong Partnership LLC
Member, Audit Committee
Member, Board Risk Committee
Senior Executive Director and
Group Finance Director
Executive Director
Board of Directors
29
Keppel Telecommunications &
Transportation
Teo Soon Hoe
Chairman
Senior Executive Director
and Group Finance Director,
Keppel Corporation
Dr Tan Tin Wee
Associate Professor of Biochemistry,
National University of Singapore
Prof Bernard Tan Tiong Gie
Professor of Physics,
National University of Singapore
Reggie Thein
Independent Director
Wee Sin Tho
Vice President, Endowment
and Institutional Development,
National University of Singapore
Tan Boon Huat
Chief Executive Director,
People’s Association
Keppel Group Boards of Directors
Keppel Offshore & Marine
Keppel Integrated Engineering
Tong Chong Heong
Chairman
Chief Executive Offi cer,
Keppel Offshore & Marine
Michael Chia Hock Chye
Deputy Chairman and
Chief Executive Offi cer
Managing Director (Offshore),
Keppel Offshore & Marine
Wong Boon Kong
Director
Loh Ah Tuan
Director
Quek Boon Sing
Director
Dr Ong Tiong Guan
Managing Director,
Keppel Energy
Choo Chiau Beng
Chairman
Chief Executive Offi cer,
Keppel Corporation
Tong Chong Heong
Chief Executive Offi cer
Charles Foo Chee Lee
Managing Director (Special Projects)
Centre Director, Keppel Offshore &
Marine Technology Centre
Sit Peng Sang
Chief Financial Offi cer
Bjarne Hansen
Senior Partner, Wing Partners I/S,
Denmark
Prof Neo Boon Siong
Director, Asia Competitiveness
Institute, Lee Kuan Yew School
of Public Policy, National University
of Singapore
Stephen Pan Yue Kuo
Chairman, World-Wide Shipping
Agency Limited
Prof Minoo Homi Patel
Head of School & Professor of
Engineering, School of Engineering,
Cranfi eld University, UK
Dr Malcolm Sharples
President, Offshore Risk &
Technology Consulting, US
Teo Soon Hoe
Senior Executive Director
and Group Finance Director,
Keppel Corporation
Tan Ek Kia
Chairman of City Gas Pte Ltd
Board member of SMRT
Corporation Ltd
Po’ad Bin Shaik Abu Bakar Mattar
Independent Director of
Hong Leong Finance Limited
30
Keppel Corporation Limited
Report to Shareholders 2009
Keppel Energy
Keppel Land
K-REIT Asia Management
Prof Tsui Kai Chong
Chairman
Provost and Professor of Finance,
SIM University
Kevin Wong Kingcheung
Deputy Chairman
Group Chief Executive Offi cer,
Keppel Land
Ng Hsueh Ling
Chief Executive Offi cer
Tan Swee Yiow
Chief Executive Offi cer
(Singapore Commercial),
Keppel Land International
Lee Ai Ming (Mrs)
Senior Partner,
Rodyk & Davidson
Dr Chin Wei-Li, Audrey Marie
Chairman, Vietnam Investing
Associates – Financials (S) Pte Ltd
Choo Chiau Beng
Chairman
Chief Executive Offi cer,
Keppel Corporation
Dr Ong Tiong Guan
Managing Director
Teo Soon Hoe
Senior Executive Director
and Group Finance Director,
Keppel Corporation
Khoo Chin Hean
Executive Director,
Energy Studies Institute
Koh Ban Heng
Chief Executive Offi cer
and Executive Director,
Singapore Petroleum Company
Limited (a member of PetroChina)
Foo Jang See
Senior Vice President,
Singapore Petroleum Company
Limited (a member of PetroChina)
Nelson Yeo Chien Sheng
Managing Director (Marine),
Keppel Offshore & Marine
Michael Chia Hock Chye
Deputy Chairman and
Chief Executive Offi cer,
Keppel Integrated Engineering
Managing Director (Offshore),
Keppel Offshore & Marine
Choo Chiau Beng
Chairman
Chief Executive Offi cer,
Keppel Corporation
Kevin Wong Kingcheung
Group Chief Executive Offi cer
Khor Poh Hwa
Advisor in Township and Infrastructure
Development to Keppel Corporation
Lim Ho Kee
Chairman, Singapore Post
Prof Tsui Kai Chong
Provost and Professor of Finance,
SIM University
Lee Ai Ming (Mrs)
Senior Partner,
Rodyk & Davidson
Tan Yam Pin
Former Managing Director,
Fraser and Neave Group
Niam Chiang Meng
Permanent Secretary,
Ministry of Community Development,
Youth and Sports
Heng Chiang Meng
Former Managing Director,
First Capital Corporation
Executive Director,
Far East Organisation Group
Edward Lee
Former Ambassador to Indonesia
Koh-Lim Wen Gin
Former URA Chief Planner and
Deputy Chief Executive Offi cer
Teo Soon Hoe
Senior Executive Director
and Group Finance Director,
Keppel Corporation
Keppel Group Boards of Directors
31
Keppel Technology Advisory Panel
The Group promotes a
culture of innovation
with guidance from
eminent business
leaders, professionals
and industry experts.
(From left)
First row: Dr Yeo Ning Hong,
Professor Cham Tao Soon
(Chairman, Keppel
Technology Advisory Panel)
and Professor Sir Eric Ash
Second row: Professor
Minoo Homi Patel,
Professor James Leckie,
Professor Tom Curtis and
Dr Malcolm Sharples
Absent from photo:
Dr Brian Clark and
Tan Gee Paw
Professor Cham Tao Soon
Chairman
BEng (Civil), 1st Class Honours,
University of Malaya; BSc (Maths),
University of London; PhD (Fluid
Mechanics), University of Cambridge.
He was the founding President of
Nanyang Technological University
(Singapore) in 1981 and had
relinquished the post in 2002 and is
now its President (Emeritus). Presently,
he is the Chancellor and Chairman of
SIM University. He has received several
honorary doctorates and foreign
academy awards including the
International Medal of the British
Royal Academy of Engineering.
Professor Sir Eric Ash
BSc and PhD, Imperial College
London; CBE FREng FRS.
He is presently an Advisor to Tata
Consulting Engineers Ltd in Mumbai.
A past president of the Institution of
Electrical Engineers (now Institution of
Engineering and Technology), he is a
Foreign Member of the US National
Academy of Engineering. He was
Rector of Imperial College 1985–93,
Vice President of the Royal Society
1997–2002. He has several honorary
doctorates including one from Nanyang
Technological University (Singapore).
Dr Brian Clark
Schlumberger Fellow; B.S. Ohio
State University; PhD, Harvard
University (1977).
He holds 58 patents related to the
exploration and development of oil
and gas, primarily in wireline logging
and logging while drilling. He was
recognised as the Outstanding Inventor
of the Year for 2002, by the Houston
Intellectual Property Law Association
and as the Texas Inventor of the Year
for 2002, by the Texas State Bar
Association. Dr Clark is also a member
of US National Academy of Engineering
and The Academy of Medicine,
Engineering and Science of Texas.
32
Keppel Corporation Limited
Report to Shareholders 2009
Dr Yeo Ning Hong
BSc (Chemistry), First Class Honours,
MSc, University of Singapore; Master
of Arts and PhD, University of
Cambridge (1970).
Dr Yeo is Advisor to Far East
Organisation and formerly Advisor to
Temasek Holdings (Pte) Ltd and Hyfl ux
Ltd. He is also Chairman of SQL View
Pte Ltd and Universal Gateway
International (Pte) Ltd, and serves as
a Director of Singapore Press Holdings
Ltd. Dr Yeo was a Cabinet Minister in
the Singapore Government from
1981 to 1994 holding appointments
as Minister for Communications,
Information, National Development
and Defence.
Professor Minoo Homi Patel
Fellow of the Royal Academy of
Engineering, the Institution of
Mechanical Engineers and the
Royal Institution of Naval Architects;
Chartered Engineer; BSc (Eng) and
PhD, University of London and an
Honorary Member of the Royal
Corps of Naval Constructors.
He is Head of the School of
Engineering at Cranfi eld University and
a Founder Director of the science park
company BPP Technical Services Ltd.
He also sits on the Boards of
Keppel Offshore & Marine,
Cranfi eld Aerospace, Cranfi eld
Engineering Innovations and
Pipestream Engineering Inc.
Dr Malcolm Sharples
President, Offshore Risk & Technology
Consulting Engineering Inc.; B. E. Sc
Engineering Science, University of
Western Ontario; PhD; University of
Cambridge; Athlone Fellow; Fellow
of the Society of Naval Architects;
Registered Professional Engineer.
His company provides consulting
on offshore-related projects including
project technical risk, project safety
Keppel Technology Advisory Panel
cases and health & safety quality
systems, fi nancial due diligence on
acquisitions, regulatory advice,
business development assistance,
and he has been involved as an
expert witness in a number of legal
proceedings. He is an active member
of the Canadian Standards Association
on offshore wind farms. He is a Director
of Keppel Offshore & Marine.
Professor James Leckie
BS (Honours), San Jose State
University; SM, PhD, Harvard University
(1970); The C. L. Peck, Class of 1906
Professor of Environmental Engineering
and Applied Earth Sciences, Stanford
University; Director of the Stanford
Centre for Sustainable Development
& Global Competitiveness; Director,
Stanford-China Executive Leadership
Programme; Director, Singapore
Stanford Partnership.
He has appointments in both Civil
and Environmental Engineering, and
Geological and Environmental Sciences
at Stanford. He is a member of the
National Academy of Engineering.
He holds fi ve patents related to water
treatment technology and over
300 publications. His areas of
teaching and research are in
environmental chemistry and
human exposure analysis.
Tan Gee Paw
BEng (Civil), First Class Honours,
University of Malaya; MSc (Systems
Engineering), University of Singapore;
Doctor of Science (Honorary),
University of Westminster; Doctorate
in Engineering (Honorary), University
of Sheffi eld.
He is the Chairman of Public Utilities
Board, the national water agency of
Singapore, since 1 April 2001. He is a
member of the Presidential Council for
Religious Harmony, as well as the
Chairman of the Boards of First DCS
Pte Ltd, OpenNet Pte Ltd and Exploit
Technologies Pte Ltd. Mr Tan
is also a Director of the Singapore
Millennium Foundation Ltd, and
Ascendas Pte Ltd. He is the Advisor
for the Centre for Water Research,
and Adjunct Research Professor of
the Division of Environmental Science
& Engineering, Faculty of Engineering,
National University of Singapore (NUS).
Mr Tan co-chairs the Environmental
& Water Technologies International
Advisory Panel, Ministry of the
Environment & Water Resources.
He is Chairman of the International
Advisory Panel of the Institute of Water
Policy, Lee Kuan Yew School of Public
Policy, NUS, and chairs the Nominating
Committee of the Lee Kuan Yew Water
Prize, Singapore International Water
Week. He is also a Member of the
Advisory Board of the Centre for
Liveable Cities, Chairman of the
Governing Board for the Earth
Observatory of Singapore, Nanyang
Technological University, and Member
of the Steering Group on Water &
Climate Change for the Asia-Pacifi c
Water Forum.
Professor Thomas (Tom) Curtis
BSc (Hons) Microbiology, University
of Leeds; M.Eng and PhD Civil
Engineering, University of Leeds.
He is a professor of Environmental
Engineering of the University of
Newcastle upon Tyne, as well as
a recipient of the Royal Academy
of Engineering Global Research
Fellowship and the Biotechnology
and Biological Sciences Research
Council (BBSRC) Research
Development Fellowship. Before
entering academia, he worked in
construction and public health policy
and has worked in the US, Brazil,
Bangladesh and Jordan. His major
areas of research include microbial
ecology, engineered biological systems
in general and wastewater treatment
in particular. His research is supported
by an Engineering Physical Science
Research Council Platform Grant.
33
Senior Management
Keppel Corporation
Corporate Services
Offshore & Marine
Choo Chiau Beng
Chief Executive Offi cer
Teo Soon Hoe
Senior Executive Director
and Group Finance Director
Tong Chong Heong
Executive Director
Chee Jin Kiong
Director
(Group Human Resources)
Paul Tan
Group Controller
Wang Look Fung
General Manager
(Group Corporate
Communications)
Lynn Koh
General Manager
(Group Treasury)
Lai Ching Chuan
General Manager
(Corporate Development /
Planning)
Magdeline Wong
General Manager
(Group Tax)
Tina Chin
General Manager
(Group Risk Management)
Caroline Chang
General Manager
(Group Legal)
Tan Eng Hwa
General Manager
(Group Internal Audit)
Cindy Lim
General Manager
(Group Human Resources)
Tong Chong Heong
Chief Executive Offi cer
Keppel Offshore & Marine
Sit Peng Sang
Chief Financial Offi cer
Keppel Offshore & Marine
Charles Foo Chee Lee
Managing Director
(Special Projects)
Keppel Offshore & Marine
Centre Director
Keppel Offshore & Marine
Technology Centre
Michael Chia Hock Chye
Managing Director
(Offshore)
Keppel Offshore & Marine
Nelson Yeo Chien Sheng
Managing Director
(Marine)
Keppel Offshore & Marine
Chee Jin Kiong
Executive Director
(Human Resources)
Keppel Offshore & Marine
Chow Yew Yuen
President
(The Americas)
Keppel Offshore & Marine
Wong Kok Seng
Executive Director
Keppel FELS
Hoe Eng Hock
Executive Director
Keppel Singmarine
34
Keppel Corporation Limited
Report to Shareholders 2009
Infrastructure
Michael Chia Hock Chye
Deputy Chairman and
Chief Executive Offi cer
Keppel Integrated Engineering
BG (NS) Pang Hee Hon
Chief Executive Offi cer
Keppel Telecommunications
& Transportation
Ong Tiong Guan
Managing Director
Keppel Energy
Ng Hsueh Ling
Chief Executive Offi cer/Director
K-REIT Asia Management
(from 17 August 2009)
Loh Chin Hua
Managing Director
Alpha Investment Partners
Goh Toh Sim
Chief Executive Offi cer
Evergro Properties
(till 31 December 2009)
Chief Representative (China)
Keppel Corporation
(from 1 November 2009)
Property
Investments
Steven Jay Green
Chairman and
Chief Executive Offi cer
k1 Ventures
Karen Kooi
Chief Executive Offi cer
MobileOne
Kevin Wong
Group Chief Executive Offi cer
Keppel Land
Ang Wee Gee
Executive Director and
Chief Executive Offi cer
(International)
Keppel Land International
Choo Chin Teck
Director (Corporate Services)
Keppel Land International
Group Company Secretary
Keppel Land
Lim Kei Hin
Chief Financial Offi cer
Keppel Land International
Tan Swee Yiow
Chief Executive Offi cer
(Singapore Commercial)
Keppel Land International;
Chief Executive Offi cer/Director
K-REIT Asia Management
(January 2009 to 16 August 2009)
Augustine Tan
Chief Executive Offi cer
(Singapore Residential)
Keppel Land International
Unions
Keppel FELS Employees Union
Muhamad Shah Bin Md Sahid
President
Atyyah Hassan
General Secretary
Keppel Employees Union
Mohd Yusop Bin Mansor
President
Mohd Yusof Bin Mohd
General Secretary
Shipbuilding & Marine
Engineering Employees’ Union
Wong Weng Onn
President
Lim Chin Siew
Executive Secretary
Singapore Industrial
& Services Employees’ Union
Tan Peng Huat
President
Lim Kuang Beng
General Secretary
Josephine Teo
Executive Secretary
Union of Power
& Gas Employees
Tay Seng Chye
President
S. Thiagarajan
Executive Secretary
Nachiappan RKS
General Secretary
Senior Management
35
Investor Relations
The economic uncertainties in 2008
and 2009 presented challenges for
businesses worldwide. In 2009, our
dedicated Investor Relations team
stepped up its communications with
investors, analysts, fund managers
and the media, to address the
concerns of the investing community
on the impact of the downturn on the
Keppel Group. The team provided
assurance with balanced insights into
the Group’s strategic directions,
performance, key developments and
plans for sustainable growth amidst
the economic slowdown.
In both good times and bad, our
Investor Relations efforts are guided by
the principle of achieving best practices
in corporate governance and
disclosure. Clear, consistent and
regular communication is a hallmark
of Keppel’s relationships with analysts
and investors worldwide.
Proactive Outreach
In 2009, despite the volatile economic
environment, we continued to see
a strong level of interest among
institutional investors and analysts
on the prospects of the Group. In all,
we held 152 face-to-face investor
meetings and conference calls in
Singapore and overseas. Such
meetings provided a useful platform for
investors and analysts to engage our
management and better understand
our business dynamics and direction.
This also contributed towards the
strengthening of our relationships with
our long-term shareholders.
During the year, we also arranged
meetings with management of key
subsidiaries. Tours of the facilities
aided in the better understanding
of our businesses and operations.
With our Offshore & Marine Division
as the key contributor to Group
earnings, institutional investors
continued to show keen interest in
our rigbuilding operations and facilities.
Apart from our yards in Singapore, there
is growing interest in our established
and wholly-owned yard in Brazil, due to
the aggressive Exploration & Production
programme of Petrobras, Brazil’s
national oil company. In December 2009,
a group of nine fund managers and
analysts had a meaningful and fruitful
visit to Keppel FELS Brasil. Senior
management there gave them insights
into the yard’s capabilities in meeting
Petrobras’ local content requirements
for its rigbuilding programme.
With a record 14 rig deliveries in 2009,
investors and analysts were invited to
all the key naming and delivery
ceremonies in Singapore to understand
what it takes to complete a rig or vessel
on time, within budget and with no
incidents, through mingling with our key
management, customers and suppliers.
Some of Keppel’s retail shareholders
are equally interested in our business
operations as the institutional investors.
In response to a request made by
a group of retail shareholders, we
organised a tour of our rigbuilding yard in
Singapore for them in September 2009.
Apart from the Offshore & Marine
business, we also organised visits to
facilities in our Infrastructure Division.
In October 2009, a group of research
analysts was invited to visit one of the
Group’s growth engines in the
Infrastructure Division, Keppel Energy’s
500 MW clean gas-fi red co-generation
plant on Jurong Island in Singapore.
The visit provided them with a fi rst-
hand understanding of the operational
and business aspects of the plant.
During the year, we complemented our
outreach efforts with participation in
selected investor conferences. For a
third consecutive year, top executives
from Keppel Offshore & Marine made a
presentation and shared our strengths
at the Annual Oil & Offshore Conference
organised by Pareto Securities in
Norway. At the inaugural DnB NOR
36
Bank investor conference in Singapore,
Mr Teo Soon Hoe, our Senior Executive
Director and Group Finance Director,
spoke on Keppel’s strategy in achieving
sustainable growth for the Group.
Regular Communication
To reach stakeholders in a timely and
effective manner, we continued ‘live’
webcasts of our quarterly results
presentations. These webcasts allow
viewers from around the world
to listen to senior management
and post questions online for them
to respond to in real time.
We are also committed to keep our
communication channels accessible
and information timely so as to serve
the interests of the investing community.
Market sensitive news is promptly
posted on our website, www.kepcorp.
com, at the end or beginning of each
market day, in addition to the
Singapore Exchange website.
Focus on Shareholder Value
We are committed to deliver sustained
value to our shareholders. In 2009,
we continued to improve on our returns
to shareholders.
Our Return on Equity increased from
2008’s 22.4% to a new high of 23.9%.
Our Total Shareholder Return (TSR)
improved from a negative 64% in 2008
to 101% in 2009. This was 30% above
the benchmark Straits Times Index’s
(STI) TSR of 71%. Over the past nine
years, Keppel’s Compounded Annual
Growth Rate (CAGR) TSR of 27% was
also signifi cantly higher than STI’s
CAGR TSR of 5%.
In terms of share price performance,
Keppel Corporation’s share price
gained 95% over the year to close at
$8.23 at the end of 2009, outperforming
STI’s gain of about 64% during the
same period.
To reward shareholders for the record
profi ts achieved in 2009, we will be
Keppel Corporation Limited
Report to Shareholders 2009
1
Keppel’s senior
management engages
the investing community
through diverse channels,
including the Company’s
results presentations
and webcasts.
2, 3
Visits to our yards and
the Keppel Merlimau
Co-generation Plant
provide fund managers,
analysts and retail
shareholders a better
understanding of our
operational capabilities.
proposing a total distribution of
61 cents per share for the year, which
is 75% higher than the 2008 total
dividend of 35 cents per share. The
proposed payout for 2009 will exceed
$970 million which is about 77% of
Group PATMI.
Recognition
Our proactive investor relations
approach and commitment to corporate
transparency was again recognised by
the investing community in 2009.
At the 10th Investors’ Choice Awards
organised by the Securities Investors
Association of Singapore, Keppel
Corporation entered the Hall of Fame
for the category of the Most Transparent
Company. This was in recognition of
the Company winning the coveted
Golden Circle Award for being the best
in transparency across all categories
for three consecutive years.
In January 2009, Keppel Corporation
was ranked among the best in
corporate governance in Asia by
The Asset, a fi nancial publication
headquartered in Hong Kong. The
Company was ranked Second in
the Singapore country category in
The Asset Corporate Governance
Awards 2008.
In Issue 2 of the Governance and
Transparency Index, published in
November 2009 by Singapore’s
The Business Times and the Corporate
Governance & Financial Reporting
Centre of the National University of
Singapore, Keppel Corporation was
ranked third out of more than 700
Singapore-listed companies.
1
2, 3
Investor Relations
37
Awards and Accolades
Award recipients at the
Securitites Investors
Association of Singapore
10th Investors’ Choice
Awards:
(from left)
Mr Teo Soon Hoe,
Senior Executive Director
and Group Finance
Director of Keppel
Corporation,
Mr Choo Chiau Beng,
Chief Executive Offi cer
of Keppel Corporation, and
Mr Lim Kei Hin,
Chief Financial Offi cer
of Keppel Land.
Corporate Governance and
Transparency
Securities Investors Association
of Singapore 10th Investors’
Choice Awards
The Asset Corporate Governance
Awards
Keppel Corporation
– Excellence Award, Hall of Fame
in the Most Transparent Company
Award
– Merit, Singapore Corporate
Governance Award
Keppel Land
– Runner-Up, Most Transparent
Company Award (Property)
Governance and Transparency
Index (Issue 2 November 2009)
Keppel Corporation, Keppel
Telecommunications & Transportation,
Keppel Land and MobileOne were
ranked third, sixth, 10th and 40th
respectively out of more than
700 companies assessed.
Other accolades that Keppel Corporation
achieved include being named one of
the top 10 winners of the Wall Street
Journal Asia 200 Awards for the most
admired companies in Singapore and
Keppel Corporation
– Second, Singapore Category
Singapore Corporate Awards
Keppel Land
– Gold, Best Annual Report
(Market capitalisation more
than $1 billion)
K-REIT Asia
– Silver, Best Annual Report (REITs
and Business Trusts)
– Silver, Best Investor Relations
(Market capitalisation between
$300 million and $1 billion)
38
listed as one of UBS’s regional top 10
corporate governance picks.
Business Excellence
– Keppel Offshore & Marine
(Keppel O&M) was bestowed the
Offshore & Marine Engineering
Award at the Singapore International
Maritime Awards.
– Keppel Gas received the Sales/
Turnover Growth Excellence Award
at the 22nd Annual Singapore 1000
& SME 500 Awards.
– Keppel FELS garnered the
Intergraph 3D Design Award at the
Intergraph Golden Valve Awards
Competition for showcasing its
proprietary semisubmersible drilling
tender created with SmartMarine
3D design software.
– For the third consecutive year,
Keppel Logistics clinched the Retail
& Fast Moving Consumer Goods
Logistics Service Provider of the
Year (Singapore) Award in Frost &
Sullivan’s 2009 Asia Pacifi c
Transportation & Logistics Awards –
Voice of the Customer. It also
secured the Domestic Logistics
Keppel Corporation Limited
Report to Shareholders 2009
Service Provider of the Year
(Singapore) title.
– Sixth Avenue Residences,
Singapore – Gold
– Keppel Shipyard added the fi fth
consecutive win of the Best
Shiprepair Yard Award to its track
record at the 11th Lloyd’s List Asia
Awards 2009.
– The KFELS B Class rig and KFELS
SSDT TM 3600E won the Prestigious
Engineering Achievement Award
2009 from Institution of Engineers
Singapore for their environmentally
friendly features.
– Keppel’s KFELS SSDT TM 3600E
design was conferred the ASEAN
Outstanding Engineering Achievement
Award for its eco-friendly features
and sustainable operations.
– Keppel Land was named the Best
Offi ce Developer in Singapore at the
Euromoney-Liquid Real Estate
Awards 2009.
– Keppel Land’s Sustainability Report
2008 was bestowed the Merit Award
by the Association of Chartered
Certifi ed Accountants in the
Singapore Awards for Sustainability
Reporting 2008.
At the CNBC Asia Pacifi c Property
Awards, six of Keppel Land’s projects
garnered awards comprising:
– Refl ections at Keppel Bay,
Singapore – Best High-Rise
Development, Residential
– 8 Park Avenue, China – Best
Development, Residential
– The Arcadia, China – Best Property,
Residential
– Villa Riviera, Vietnam – Best
Development, Residential
– Saigon Centre, Vietnam – Best
Mixed-Use Development,
Commercial
– Elita Promenade, India – Best
Development, Residential
The following Keppel Land projects
were awarded Green Mark Awards
by Singapore’s Building and
Construction Authority:
– Marina Bay Financial Centre
Phase 2 (Commercial), Singapore
– Gold PLUS
– Marina Bay Suites, Singapore – Gold
– One Raffl es Quay, Singapore – Gold
Awards and Accolades
– The Promont, Singapore – Gold
– Spring City (La Quinta),
China – Gold
– Residential development
in Pudong, Shanghai (Plots 1 and 3),
China – Gold
– The Arcadia, China – Gold
Sedona Hotel Yangon, Myanmar
– Named Myanmar’s Leading Hotel for
the second consecutive year at the
World Travel Awards
Sedona Suites HCMC, Vietnam
– Voted the Best Business Serviced
Apartment by The Guide Magazine
for the sixth consecutive year
– Riviera Cove, Vietnam – Gold
Corporate Citizenry
KOM Tower, a new offi ce block in
Keppel O&M’s Singapore headquarters,
also achieved a Green Mark Award.
Keppel Land bagged Golden Dragon
Awards for the following developments:
– The Estella, Vietnam
– Riviera Cove, Vietnam
– Sedona Suites Ho Chi Minh City
(HCMC), Vietnam
– Sedona Suites Hanoi, Vietnam
Keppel Land also garnered recognition
for its projects as follows:
Ocean Financial Centre,
Singapore
– Named Best Green Development
(Future) at the Cityscape Asia Real
Estate Awards
– Achieved the Platinum level
LEED-CS Precertifi cation
Jakarta Garden City, Indonesia
– Won the Best Middle-Class
Residential Development title
at the International Real Estate
Federation (FIABCI) Indonesia –
BNI Prix d’Excellence Award
Ceremony
– Accorded the Well-Planned,
Environmentally Friendly and
Technologically Modern Township
Award at the Indonesia Property and
Bank Awards
Marina at Keppel Bay, Singapore
– Accorded the SIA-Hunter Douglas
Award 2008 in the Completed
Projects category
– Inaugural winner for the PUSH
– Keppel Corporation was conferred
the Distinguished Patron of the Arts
Award for its contributions towards
the promotion and organisation of
arts activities in Singapore.
– In recognition of its support and
contribution to national defence,
Keppel Shipyard was conferred the
Meritorious Defence Partner Award.
– Keppel Shipyard received the
May Day Model Partnership Award
from the National Trades Union
Congress for its active promotion
of labour relations at the individual
and national level.
– For outstanding contributions to the
Community Chest, Keppel FELS
and Keppel Singmarine received the
Social Help and Assistance Raised
by Employees Platinum Awards
while Keppel Shipyard received the
Gold Award.
– Keppel O&M was conferred the
Community Chest Silver Award for
donating $50,000 to the
Heartstrings Walk in 2008.
Safety
– The Keppel Group garnered
18 safety accolades, the largest
number for a single entity, at this
year’s Annual Workplace Safety
and Health (WSH) Awards held by
the WSH Council and the Ministry
of Manpower.
– Keppel Singmarine clinched the
Silver and Bronze Awards for two
of its safety innovations at the
12th Workplace Safety and Health
Innovations in the Marine Industry
Convention.
Award which honours institutes and
associations for their contributions
to Singapore as a brand of design
excellence
– Marina at Keppel Bay is the fi rst
marina to be an award recipient at
the inaugural National Safety and
Security Watch Group Award 2009.
39
Special Feature
OPPORTUNITIES
IN THE
ENVIRONMENTAL
BUSINESS
Environmental Challenges
The world is paying more attention
to climate change largely due to the
2007 assessment report by the
Intergovernmental Panel on Climate
Change (IPCC), which warned of
global warming effects threatening
communities worldwide.
Changes in sea levels and global
average temperature, as well as an
increasing frequency and intensity
of extreme weather such as storms,
fl oods and droughts directly
endanger humankind.
Many have suggested that greenhouse
gases (GHG) produced by human
activities, such as the combustion of
fossil fuels, have led to the observed
increase in global average temperatures
since the mid-20th century. Indeed, this
opinion fi nds support from the fact that
carbon dioxide has increased by 35%
and methane concentrations in the
atmosphere have more than doubled.1
Many countries see the need and are
accelerating their actions to mitigate
the most damaging impacts of climate
change. Coupled with the gravity of the
problems caused by pollution, demand
for green infrastructure is expected to
grow in tandem with the world’s
population growth and urbanisation.
Today, more than half the world’s
population live in urbanised areas.
In Asia, we expect even more rapid
urbanisation. By 2030, Asia is projected
to have 54% of the world’s urban
population. Over the next 20 years,
China’s cities will be home to another
350 million. This is more than the entire
population of the US today. Similarly,
in India, a projected 40.76% of its
population will live in urban centres
by 20302.
Large cities are at risk to climate hazards
and face multi-fold environmental
challenges. Without sustainable and
practical solutions to these challenges,
our quality of life and even survival will
be seriously threatened.
Meeting Challenges through
Investment and Innovation
Communities worldwide will have to
invest signifi cantly to meet the
demands of the growing population
and also manage the environmental
1 Waste and Climate Change: ISWA White Paper, International Solid Waste Association (ISWA), 2009.
2
“State of the World Population 2007”, United Nations Population Fund (UNFPA), 2007.
DO YOU KNOW...
Despite the global
fi nancial crisis,
34% of China’s
stimulus package
is directed towards
green measures.
40
Keppel Corporation Limited
Report to Shareholders 2009
Special Feature
Opportunities in the Environmental Business
41
Special Feature
Modern Waste-to-Energy
Facilities and Air Pollution
Control
Typically, a Waste-to-Energy (WTE) plant uses the
following methods to remove pollutants from its
emissions:
– A “Selective Non-Catalytic Reduction” or “SNCR”
converts nitrogen oxides and water to harmless
nitrogen by spraying ammonia or urea into the
hot furnace.
– A “scrubber” sprays a mixture of lime and water
mixture into the hot exhaust gases. The lime
neutralises acid gases.
– A “carbon injection” system blows powdered
carbon into the exhaust gas to absorb mercury.
Carbon injection also reduces emissions of trace
organics such as dioxins.
– A “bag house” works like a giant vacuum cleaner
with hundreds of fabric fi lter bags that clean the air
of soot, smoke and metals.
Hence, modern WTE facilities that are well-managed
and regulated do not pose a signifi cant threat
to public health. These facilities are required to
monitor emissions to ensure that they comply, as a
minimum, with the limits in the EU Waste Incineration
Directive (2000/76/EC), which sets strict emission
limits for pollutants.
According to research published by the British
government-backed Health Protection Agency,
incineration of municipal solid waste accounts for less
than 1% of UK emissions of dioxins. Therefore, the
contribution of WTE emissions to direct respiratory
exposure of dioxins is a negligible component of the
average human intake.3
42
problems posed by economic
development. Clean drinking water,
sanitary sewerage, effi cient waste
disposal and access to electricity have
a direct impact on standards of living.
The UN Framework Convention on
Climate Change (UNFCCC) views
“[e]nvironmentally sound technologies
(ESTs) for mitigation and adaptation as
central to mitigate climate change and
increase resilience to climate change
impacts. ESTs are able to provide win-
win solutions, allowing global economic
growth and climate change mitigation
to proceed hand in hand.”4
Despite the global fi nancial crisis,
countries could meet the twin goals
of economic growth and environmental
protection. Many economic stimulus
packages employed incorporate large
green elements. For instance, 34% of
China’s stimulus package is directed
towards green measures (about
US$218 billion), for the US, 12% (about
US$117 billion) and for Germany, 13%.5
Governments are searching for newer
and better approaches to water-saving,
wastewater treatment, water reuse, as
well as solid waste reuse and recycling,
to tackle the challenges that come with
urbanisation, population growth and
economic development. While this
trend poses many challenges, they
also offer opportunities to improve
the lives of citizens and promote
sustainable development.
3 The Impact on Health of Emissions to Air from
Municipal Waste Incinerators, Health Protection
Agency, 2009.
4 United Nations Framework Convention on
Climate Change (UNFCCC), Fact sheet: Why
technology is so important, 2009.
5 Keynote speech by Yvo de Boer,
Executive Secretary, “Sustainable development
in times of crises: Opposition or Opportunity,”
Bonn Symposium, UNFCCC, 23 November 2009.
6 OECD Environmental Outlook to 2030, 2008.
7 Waste and Climate Change: ISWA White Paper,
ISWA, 2009.
ibid.
8
Keppel Corporation Limited
Report to Shareholders 2009
Figure 1: GHG Emissions from Municipal Waste in the EU (2002–2007)
150
100
50
0
-50
-100
Direct – Recycling
Direct – Incineration
Direct – Landfilling
Direct – Transport
Indirect – Recycling
Indirect – Incineration
Indirect – Landfilling
Net GHG emissions
2002
2003
2004
2005
2006
2007
Source: Waste and Climate Change: ISWA White Paper, International Solid Waste Association, 2009.
Keppel’s Solutions for a Cleaner
Future
Keppel Integrated Engineering (KIE)
is the environmental technology and
engineering division of Keppel
Corporation.
The Keppel Seghers Group of
companies (Keppel Seghers Group),
which are owned by KIE, are leading
providers of comprehensive
environmental solutions ranging from
consultancy, design and engineering,
technology and construction to operation
and maintenance of facilities.
Its advanced technology solutions
address a wide spectrum of
environmental issues such as
solid waste, wastewater, drinking
and process water, and biosolids
and sludge.
Keppel Seghers Group has an
established track record of participation
in waste-to-energy (WTE) projects in
Europe, the Americas and the Asia
Pacifi c for more than 40 years. To date,
Keppel Seghers has executed more
than 350 water and wastewater
projects and more than 100 WTE
projects in more than 25 countries.
Waste: Problems and Solutions
Global population growth and
urbanisation are producing increasing
volumes of waste. The conventional
method of dealing with solid waste is
through landfi lls. However, the
shrinking number of potential disposal
sites in many countries is resulting in
the replacement of landfi ll disposal with
more advanced technology in waste
management solutions.
According to an OECD (Organisation
for Economic Co-operation and
Development) report, by 2030, with
some 60% of Chinese population living
in urban areas, waste generation is
expected to be at least 485 tonnes,
representing a 214% increase from 2004.
Furthermore, by 2030, the non-OECD
countries are expected to produce
about 70% of the world’s municipal
solid waste. OECD also projects that
in 2020, about 45% of municipal waste
within the OECD would be disposed of
in landfi lls, with only 25% incinerated
and 30% recycled or composted.6
Due to growing landfi ll costs, increasing
demand for energy and concerns
about climate changes, WTE is gaining
acceptance in many countries as a
proven, practical and cost-effective
technology, which can also mitigate
GHG emissions. Rising electricity rates
and tax, and renewable energy
incentives in many countries have also
increased the value of power generated
at WTE plants.
Waste can be a signifi cant source
of renewable energy as they can help
secure signifi cant global GHG
emission savings.
Studies show there is an inverse
correlation between net GHG
emissions and volume of waste that is
incinerated and recycled. Therefore, by
diverting waste from landfi ll to recycling
or incineration, we are able to achieve
signifi cant savings in GHG emissions
(see Figure 1).7
WTE offers several advantages. Firstly,
it is able to effectively reduce the volume
of waste going to the landfi lls by more
than 90%. Secondly, energy is produced
during waste treatment, thereby
reducing dependency on fossil fuels.
Now, with the advancement in
technology, emissions from WTE facilities
are able to pass the most stringent
standards (see page 42). Therefore,
we are seeing an increasing acceptance
of WTE in many countries. Globally,
more than 130 million tonnes of waste
are incinerated each year at over
600 WTE plants, producing over
7,600 MW of power.8
Special Feature
Opportunities in the Environmental Business
43
Special Feature
Special Feature
Public-Private
Partnerships
A Public-Private
Partnership (PPP)
involves a contract
between a public sector
authority and a private
party, in which the private
party provides a public
service or project.
PPPs have been used
to develop and deliver all
manner of infrastructure,
from schools, waste and
water treatment to
defence facilities.
There are advantages
to PPPs. It allows the
costs of the investment
to be spread over the
lifetime of the asset
and thus can allow
infrastructure projects
to be brought forward
by years to address the
urgent needs of the
communities. Driven
by commercial viability,
PPPs also often have
a solid track record of
on-time, within budget
delivery and can lower
cost by reducing both
construction costs and
overall lifecycle costs.
DO YOU KNOW...
Globally, more than 130 million tonnes of waste
are incinerated every year at over 600 WTE plants,
meeting the electrical energy demand of the equivalent
of 10 million European consumers.
Keppel’s Leadership in Waste
Technology
Keppel Seghers is the only private
operator of WTE plants in Singapore.
Owning and operating two of four WTE
plants in Singapore, Keppel Seghers
can treat up to 47.6% of the total
volume of waste9 in Singapore. It also
commands 60% of market share for
imported WTE technology in China.
KIE acquired the Senoko WTE Plant
from the Singapore Government in
August 2009. This plant has the
capacity to treat 2,400 tonnes per day
of waste and will provide incineration
services to the National Environment
Agency for 15 years.
KIE’s other WTE plant, Keppel Seghers
Tuas WTE Plant, has the capacity to
treat 800 tonnes a day of solid waste
to generate more than 20 MW of green
energy, contributing to Singapore’s
electricity supply. Keppel Seghers
Tuas is the fi rst plant in Singapore
that is built under the Public-Private
Partnership (PPP).
It is also the fi rst to showcase WTE
technology from a local company,
incorporating in-house technology
such as the air-cooled tumbling grates,
boiler, rotary atomiser and fl ue gas
treatment system. Occupying only
1.6 ha, it is also one of the most
space-effi cient WTE plants in the world.
Keppel is also executing Qatar’s
fi rst integrated waste management
facility, the Domestic Solid Waste
Management Centre (DSWMC).
The DSWMC will handle and treat
domestic solid waste for the whole
of Qatar. As a Design-Build-Operate
project, Keppel Seghers will
subsequently operate DSWMC
for 20 years.
44
Keppel Corporation Limited
Report to Shareholders 2009
necessity for survival, it is intricately
tied to all aspects of human activity.
Agriculture accounts for 70% of
freshwater withdrawals from rivers,
lakes and aquifers – up to more than
90% in some developing countries.11
Water also has a direct impact on
energy as it is needed for production of
energy of all types. Industry and energy
together account for 20% of water
demand.12 In the EU, energy production
accounts for 44% of water demand.13
A shortage of water will, therefore, have
a direct impact on the supply of energy.
Similarly, an increase in energy demand
will also increase the strain on water
resources. Taking into account the
projection by the International Energy
Agency that the world will need almost
60% more energy in 2030 than in
2020,14 the water shortage is expected
to worsen.
It is also clear that increasing
population growth, rapid urbanisation
and economic development with
discharge of chemicals, have led to
the worldwide decline of water quality,
as well as water shortage. Coupled
with climate change, which brings
about longer periods of droughts for
some areas, water is becoming a
serious issue for many countries.
9 According to Singapore’s Ministry of Environment
and Water Resources, 2.45 million tonnes of
waste were sent for incineration in 2008.
10 OECD Environmental Outlook to 2030,
OECD, 2008.
11 “Facts and Figures”, Water in a Changing
World, World Water Assessment Programme,
United Nations World Water Development
Report 3, 2009.
ibid.
12
13 Water resources across Europe — confronting
water scarcity and drought, European
Environment Agency, 2009.
14 “Facts and Figures”, Water in a Changing
World, World Water Assessment Programme,
United Nations World Water Development
Report 3, 2009.
ibid.
15
DO YOU KNOW...
The 10 largest water users (in volume) are India, China,
the US, Pakistan, Japan, Thailand, Indonesia, Bangladesh,
Mexico and Russia.15
It is designed to treat up to 2,300 tonnes
of mixed domestic solid waste and up
to 5,000 tonnes of construction and
demolition waste per day. The facility
will also include waste sorting and
recycling facilities, landfi ll, a composting
plant and a 1,500 tonnes per day
WTE plant.
Keppel Seghers’ WTE technology
will be used for several key projects,
for instance, the $518 million
Engineering, Procurement and
Construction (EPC) project for an
Energy-from-Waste Combined Heat
and Power Plant. The project was
awarded by Greater Manchester
Waste Disposal Authority in April 2009.
Keppel’s WTE technology will also be
used for what would be China’s largest
WTE plant in Shenzhen, Guangdong
for Shenzhen Energy Environmental
Engineering Company Ltd. When
completed in 2011, the WTE plant
will have an eventual capacity to
treat 4,200 tonnes per day of
municipal waste.
Keppel Seghers also has an in-principle
approval for the development of Vietnam’s
fi rst WTE plant in Ho Chi Minh City.
Water: Problems and Solutions
Only 2.5% of the total water on Earth
is freshwater. A study showed that 85%
of the world’s population resides in the
drier half of the Earth. This would imply
that more than 1 billion people are
living in arid and semi-arid parts of the
world and have access to little or no
renewable water resources. By 2030,
47% of the world population will be
living in areas of high water stress.10
The issue of access to water, therefore,
is expected to be increasingly critical in
the future. Not only is water a basic
Special Feature
Opportunities in the Environmental Business
45
Special Feature
Special Feature
Faced with the prospect of water
scarcity, governments worldwide
are starting to look at ways of
managing their water resources more
carefully and effi ciently. Other than
precipitation, desalination is one of
the ways communities can get water.
However, conventional desalination
is energy-intensive.
Fortunately, technology advancement
has made water reuse a feasible
option. Through microfi ltration and
reverse osmosis, wastewater can be
treated such that it is clean enough
for non-potable use and even direct
potable use. Therefore, water reuse is
often regarded as a more sustainable
and viable alternative to desalination.
Although the demand for water is
clear and technology has made it
economically feasible for water to
be reused, there is still a gap in
investments. For governments around
the world, funding is an issue.
PPPs are emerging as one of the most
important models governments use
to close the gap for the fi nancing of
such infrastructure projects.
PPPs offer immense opportunities for
companies with good track record to
participate in key infrastructure
projects. According to the World Bank,
there has been an increasing number
of water projects offering PPP
participation globally. But notably,
we also see an ongoing shift towards
water treatment plants16 (see Figure 2).
This suggests that the demand for
water treatment is accelerated by an
increasing need for wastewater
treatment, as well as increasing
acceptance of water reuse.
has undergone a stringent purifi cation
and treatment process which ensures
its quality and purity. It is ultra-clean
because it goes through a multi-barrier
water reclamation process that comprises
three stages: microfi ltration, reverse
osmosis and ultraviolet disinfection.
Occupying just 2.6 ha, the plant was
built on a fast-track schedule of
20 months and is entirely developed,
designed, constructed and operated
by Keppel Seghers.
In Qatar, Keppel Seghers is developing
the largest wastewater treatment and
reuse and sludge treatment facility,
the Doha North Sewage Treatment
Works. The facility will treat up to
439,000 m3/day and the water will
be used for irrigation.
Keppel Seghers will design, build and
subsequently operate the facility for
10 years. The facility will be the fi rst
wastewater treatment facility to use
advanced membrane and ultraviolet
treatment technologies to reclaim
high-quality water for non-potable
purposes, feature comprehensive
odour control system to minimise
impact on surrounding environment,
and treat sludge from all sewage
treatment works in Qatar.
Opportunities for Change
According to OECD, by combining
specifi c policy actions, some of the
key environmental challenges can be
addressed at a cost of just over 1%
of world GDP in 2030 or about 0.03
percentage point lower than average
annual GDP growth to 2030.17 It is also
clear that we now have the technology
to mitigate the impact of climate change.
Keppel’s Track Record
Keppel Seghers designed, built and is
operating one of Singapore’s largest
NEWater plants, the Keppel Seghers
Ulu Pandan NEWater Plant, which
produces 148,000 m3/day of NEWater.
NEWater is treated used water that
While communities worldwide are still
grappling with the various viewpoints
and perspectives on how best to
answer the environmental challenges,
they all see eye-to-eye on the urgency.
Fortunately, as technology continually
innovates, we will have newer and more
46
effi cient technical solutions to combat
these challenges. Beyond technology,
governments and communities
worldwide are also fi nding other ways
to tackle the problem of climate change.
According to a 2007 UNFCCC report,
“the fact that total investment in new
physical assets is projected to triple
between 2000 and 2030 provides a
window of opportunity to direct the
fi nancial and investment fl ows into
new facilities that are more climate
friendly and resilient.”18
Businesses, governments, authorities
and communities are recognising
one another’s relevance and roles in
addressing these issues, whether it
is policies, funding gaps, technology,
or R&D. What is clear is that more
international co-operation and
transparency are needed, and for any
solution to work, it has to be sustainable.
16 World Bank and Public-Private Infrastructure
Advisory Facility (PPIAF), PPI Project Database.
17 OECD Environmental Outlook to 2030, 2008.
Investment and Financial Flows to address
18
Climate Change, UNFCCC, 2007.
Keppel Corporation Limited
Report to Shareholders 2009
The Future is Green
KIE will be sponsoring the listing of Units of a
business trust, known as K-Green Trust (KGT), on
the Main Board of the Singapore Exchange Securities
Trading Limited (SGX-ST) by way of an introduction.
The investment objective of KGT is to invest globally
in “green” infrastructure assets in Singapore, Asia,
Europe and the Middle East. The Senoko WTE Plant
has been transferred into KGT as seed asset. KIE will
further transfer two assets – the Keppel Seghers Tuas
WTE Plant and the Ulu Pandan NEWater Plant – into
KGT prior to the listing.
Aiming to provide Unitholders with long-term,
regular and predictable distributions, KGT will offer
eco-conscious investors the opportunity to invest in
and benefi t from “green” infrastructure assets, such
as waste management plants, water and wastewater
treatment plants, and renewable energy or energy-
effi cient infrastructure assets.
Trading of the Units is expected to commence in the
second quarter of 2010, subject to regulatory and
shareholder approvals.
Figure 2: Water projects with private participation in developing countries by type of business, 1990–2008
90
80
70
60
50
40
30
20
10
0
Sewage collection
and treatment
Water utility with
sewerage
Potable water
treatment plant
Water utility without
sewerage
Sewage treatment plant
Potable water and
sewage treatment plant
0
9
9
1
1
9
9
1
2
9
9
1
3
9
9
1
4
9
9
1
5
9
9
1
6
9
9
1
7
9
9
1
8
9
9
1
9
9
9
1
0
0
0
2
1
0
0
2
2
0
0
2
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
Source: World Bank and PPIAF, PPI Project Database.
Special Feature
Opportunities in the Environmental Business
47
CONTENTS
49
Group Structure
50
Management
Discussion and Analysis
52
Offshore & Marine
64
Infrastructure
72
Property
80
Investments
82
Financial Review
and Outlook
Operating & Financial Review
The Keppel Group is in the Offshore & Marine,
Infrastructure and Property businesses to deliver
sustainable earnings growth. With total assets of
$17.3 billion as at end-2009, the Group serves a
global customer base through its business units
strategically located in more than 30 countries.
Some of the key factors infl uencing our businesses
are global and regional economic conditions,
oil and gas exploration and production activities,
real estate markets, threats, currency fl uctuations,
capital fl ows, interest rates, taxation and regulatory
legislation. As the Group’s operations include
providing a range of products and services to a
broad spectrum of customers in many geographic
locations, no one factor, in management’s opinion,
determines the Group’s fi nancial condition or the
profi tability of our operations.
In this section on the operating and fi nancial
review, we seek to provide a strategic, market
and business review of the Keppel Group’s
operations and fi nancial performance. In describing
the key activities of our businesses and their
impact on Keppel Group’s performance, we have
also discussed the challenges in our operating
environment, and how we balance the short-term
pressures and longer-term strategies.
This discussion and analysis is based on the
Keppel Group’s consolidated fi nancial statements
as at 31 December 2009.
48
Keppel Corporation Limited
Report to Shareholders 2009
Group Structure
Keppel Corporation Limited
Offshore & Marine
– Offshore rig design,
construction, repair and
upgrading
– Ship conversions and repair
– Specialised shipbuilding
Infrastructure
– Environmental engineering
– Power generation
– Logistics and data centres
Property
– Property development
– Property fund management
– Property trusts
Investments
– Investments
– Telco
Keppel Offshore &
Marine Limited
100%
Environmental Engineering
Keppel Bay Pte Ltd
100%
k1 Ventures Limited
36%
70%
30%
Keppel FELS Limited
100%
Keppel Shipyard Limited 100%
Keppel Integrated
Engineering Ltd
Keppel Seghers
Engineering Singapore
Pte Ltd
100%
Keppel Land Limited
52%
MobileOne Ltd3
20%
31%
45%
100%
K-REIT Asia
76%
1 To be listed in 2Q 2010
2 Owned by Singapore
Consortium, which is
90%-owned by the
Keppel Group –
Keppel Corporation (45%),
Keppel Land (35%)
and Keppel Integrated
Engineering (20%)
3 Owned by Keppel
Telecommunications
& Transportation Ltd,
an 80%-owned subsidiary
of the Company
Keppel Land
International Limited
China/ Southeast Asia/
India and Middle East
100%
K-REIT Asia
Management Limited
100%
Alpha Investment
Partners Ltd
100%
Keppel Singmarine
Pte Ltd
100%
Keppel FMO Pte Ltd
100%
Keppel Nantong Shipyard 100%
Company Limited
China
Keppel DHCS Pte Ltd
100%
Offshore Technology
Development Pte Ltd
100%
K-Green Trust1
100%
Deepwater Technology
Group Pte Ltd
100%
Keppel Seghers
Belgium NV
Belgium
100%
Marine Technology
Development Pte Ltd
Keppel AmFELS Inc
United States
100%
Power Generation
100%
Keppel Energy Pte Ltd 100%
Keppel Verolme BV
The Netherlands
100%
Keppel Merlimau
Cogen Pte Ltd
100%
Keppel FELS Brasil SA
Brazil
Keppel Norway AS
Norway
Keppel Philippines
Marine Inc
The Philippines
Caspian Shipyard
Company Limited
Azerbaijan
Arab Heavy Industries
PJSC
UAE
Keppel Kazakhstan
LLP
Kazakhstan
100%
Keppel Electric Pte Ltd
100%
100%
Keppel Gas Pte Ltd
100%
96%
Logistics and Data Centres
45%
Keppel
Telecommunications &
Transportation Ltd
80%
33%
Keppel Logistics Pte Ltd 100%
50%
Keppel Logistics
(Foshan) Pte Ltd
China
70%
Group Corporate Services
Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd2
China
50%
Control &
Accounts
Corporate
Communications
Corporate
Development/
Planning
Human
Resources
Legal
Risk
Management
Audit
Tax
Treasury
The complete list of subsidiaries and signifi cant associated companies is available on Keppel Corporation’s website www.kepcorp.com
Operating & Financial Review
Group Structure
49
Operating & Financial Review
Management Discussion and Analysis
Key Performance Indicators
Revenue
Profi t after Tax & Minority Interests (PATMI)
Exceptional items
Attributable profi t after exceptional items
Operating cash fl ow
Free cash fl ow
Economic Value Added (EVA)
Earnings per Share (EPS)
Return on Equity (ROE)
Total distribution per share
2009
$ million
12,247
1,265
360
1,625
670
1,094
1,026
79.4 cts
23.9 %
61.0 cts
09v08
% +/(-)
+4
+15
n.m.
+48
-67
-42
+20
+15
+7
+74
2008
$ million
11,805
1,097
1
1,098
2,047
1,876
855
69.0 cts
22.4%
35.0 cts
08v07
% +/(-)
+13
+7
n.m.
-3
+21
+63
+10
+6
+3
-45
2007
$ million
10,431
1,026
105
1,131
1,697
1,151
779
64.9 cts
21.8%
64.0 cts
Group Overview
The Group performed well in 2009
despite the contraction and volatility
in the global and domestic economy.
PATMI increased by 15% to reach a
new high of $1,265 million. The
compounded annual growth rate for
PATMI from 2004 to 2009 was 22%.
Attributable profi t after exceptional
items was $1,625 million.
EPS of 79.4 cents were 10.4 cents
above 2008 and 14.5 cents above
2007. EPS growth kept pace with
PATMI growth. ROE increased from
22.4% to 23.9%. EVA before
exceptional items rose $171 million
to $1,026 million, the highest ever
attained by the Group.
Net cash from operating activities was
a healthy $670 million, despite negative
working capital changes resulting from
the rundown of our offshore and
marine orderbook. During the year, the
Group spent $1.2 billion on acquisitions
and operational capital expenditure.
This comprised mainly the acquisition
of Senoko Waste-to-Energy Plant and
further development of our investment
buildings. After taking into account
dividend income and divestment
proceeds of approximately $1.6 billion,
net cash from investing activities was
about $400 million. The resultant free
cash fl ow was a robust $1,094 million.
With the strong performance, the
Board recommended that shareholders
be rewarded with a total distribution
of 61 cents per share for 2009. This
comprised a proposed fi nal dividend
of 23 cents per share, a proposed
special dividend in specie of K-Green
Trust units equivalent to approximately
23 cents per share and the interim
dividend of 15 cents per share paid in
August 2009. The total payout for 2009
exceeds $970 million which is about
77% of Group PATMI.
Segment Operations
Group revenue of $12,247 million
was $442 million or 4% higher than
that of the previous year. Revenue
from Offshore & Marine Division of
$8,273 million was $296 million or
3% lower, and this accounted for
68% of Group revenue. The decline
in revenue was due to lower value
of the new contracts secured. Revenue
from Infrastructure Division increased
$195 million or 9% to reach
$2,427 million, which accounted for
20% of Group revenue. Higher revenue
from Engineering, Procurement and
Construction (EPC) contracts
undertaken by Keppel Integrated
Engineering was partly offset by lower
revenue earned from the electricity and
gas businesses of Keppel Energy.
Revenue from Property Division of
$1,508 million was $558 million or
59% higher and accounted for 12%
of Group revenue. This was mainly
attributable to higher sales recognition
from the residential properties of
Keppel Land and Keppel Bay.
Group PATMI of $1,265 million was
$168 million or 15% higher than that
of the previous year. Profi t from
Offshore & Marine Division of
$810 million was 15% higher because
of improved operating margins. The
Division remains the largest contributor
to Group PATMI with 64% share.
Profi t from Infrastructure Division
was $126 million, which was double
the earnings of last year, due to
contribution from EPC contracts in
Qatar and better performance by
Keppel Energy. Profi t from Property
Division was $210 million or 34%
higher due to increased revenue
recognition from the sale of residential
properties and share of profi t of
associated companies developing
Marina Bay Residences in Singapore
and The Botanica in Chengdu, China.
PATMI from Investments was
$119 million, a decrease of $53 million
from the previous year. This was
mainly due to lower contribution from
our stake in Singapore Petroleum
Company, which was disposed of in
June 2009.
50
Keppel Corporation Limited
Report to Shareholders 2009
Keppel achieved record
results in 2009 despite
the contraction and
volatility in the global
and domestic economy.
Revenue
($ million)
8,600
6,450
4,300
2,150
0
2009 $12,247 million
8,273
2008 $11,805 million
2007 $10,431 million
8,569
7,258
2,427
2,232
1,277
1,508
950
1,835
39
54
61
Offshore & Marine
Infrastructure
Property
Investments
PATMI
($ million)
810
540
270
0
2009 $1,265 million
2008 $1,097 million
2007 $1,026 million
810
705
522
126
63
27
210
157
209
119
172
268
Offshore & Marine
Infrastructure
Property
Investments
Operating & Financial Review
Management Discussion and Analysis
51
Operating & Financial Review
Offshore & Marine
Keppel Offshore
& Marine aims
to be the choice
provider and
solutions partner
in its selected
segments of the
offshore and
marine industry.
PATMI
($ million)
2009
2008
2007
Earnings Highlights
Revenue
EBITDA
Operating profi t
Profi t before tax
PATMI
Manpower (number)
Manpower cost
ROE
810
705
522
2007
$ million
7,258
648
570
700
522
24,448
802
46%
2009
$ million
8,273
1,129
1,004
1,081
810
24,275
983
68%
2008
$ million
8,569
932
837
943
705
27,437
956
61%
$1,081m
Profi t before tax
increased 15% from
FY 2008’s $943 million.
$810m
PATMI increased
15% from FY 2008’s
$705 million.
Major Developments in 2009
Focus for 2010/2011
– Record delivery of 14 newbuild rigs.
– Deliver value through excellent
project management and execution.
– Secured $1.7 billion of contracts
with deliveries into 2013.
– Building Vietnam’s fi rst
semisubmersible drilling tender.
– Enhance R&D initiatives to
strengthen position as market
leader in selected segments.
– Explore opportunities in new
– Awarded Letter of Intent for FloaTEC,
markets and adjacent businesses.
LLC to build P-61 Tension Leg
Wellhead Platform for Petrobras
and Chevron.
– Maximise and realise operational
effi ciencies.
– Constructing Singapore’s fi rst
– Sustain prudent cost management.
dedicated safety training complex.
– Achieved good operating profi t
margins due to productivity
improvements.
– Focus on Health, Safety and the
Environment.
52
Keppel Corporation Limited
Report to Shareholders 2009
The Offshore & Marine
Division achieved higher
operating margins in 2009
due to higher productivity.
Earnings Review
Offshore & Marine Division secured
$1.7 billion of new orders in 2009. The
net orderbook at the end of the year
was $5.6 billion, with deliveries extending
through to 2013. Profi t before tax
increased from $700 million in 2007
to $943 million in 2008, and further
increased by 15% to reach $1,081 million
in 2009. Operating margins for the
year improved to 12.1% due to better
productivity. PATMI of $810 million was
$105 million or 15% higher than that
of 2008, and $288 million more than
in 2007. The Division remains the
largest contributor, at 64%, to the
Group’s overall earnings.
Market Review
2009 continued to be a volatile year for
the offshore and marine industry, with
some signs of recovery towards the
end of the year. In the fi rst quarter,
crude oil prices dropped to US$35 per
barrel, continuing its steep decline from
over US$100 per barrel since late 2008.
However, as global markets staged a
rebound in the second quarter, the
demand for oil bottomed out and
began to grow again. Over the remaining
months of 2009, oil prices more than
doubled to end the year at nearly
US$80 per barrel.
Market sentiment was particularly
negative in the fi rst half of 2009 when
oil prices hit a low, affecting the industry
on all fronts, especially for shiprepairs
and newbuild support vessels. The
jackup market took a hit early in the year
with worldwide rig count and utilisation
rates taking a tumble. Contractors began
cold-stacking their rigs as newbuild
jackups entered the market in 2009.
Operating & Financial Review
Offshore & Marine
53
Operating & Financial Review
Offshore & Marine
Signifi cant Events
January
Mr Tong Chong Heong, formerly Managing Director
and Chief Operating Offi cer of Keppel O&M,
succeeded Mr Choo Chiau Beng as Chief Executive
Offi cer of Keppel O&M.
Keppel FELS delivered the fi rst jackup rig of 2009,
Maersk Resolve, to Maersk Drilling (Maersk), while
Keppel AmFELS completed a series of fi ve jackups
with its delivery of Offshore Intrepid to Scorpion
Offshore.
Igniting bright beginnings for Greatdrill Chetna are Lady Sponsor
Mrs Archana Mitta and Keppel Corporation Chief Executive Offi cer
and Keppel O&M’s Chairman, Mr Choo Chiau Beng, at the rig’s
naming ceremony.
February
Delivery of jackup Deep Driller 8 to Aban Singapore
Pte Ltd (Aban) marked the completion of a series of
fi ve rigs. Built to its proprietary DSSTM 51 semi design,
Keppel FELS also completed Development Driller III
for Transocean.
March
The 20-day early delivery of jackup Greatdrill Chetna
earned Keppel FELS $1 million bonus from Mercator
Offshore Limited.
Keppel O&M was awarded projects worth $300 million
to build a derrick lay barge, modify a FPSO vessel
and complete a deep drilling semi.
54
Towards the latter part of the year,
expansionary fi scal and monetary
policies began to revive the global
economy and investor confi dence
returned to the fi nancial markets,
providing much needed capital to
the industry. In line with higher and
more stable oil prices, utilisation and
day rates stabilised. These developments
helped to kick-start many previously
stalled projects for fi eld developers
and drilling contractors, resulting in
increased exploration and production
(E&P) spending and a number of
contract awards in the second half
of the year.
Operating Review
Keppel Offshore & Marine (Keppel O&M)
saw another record year in 2009 with
the delivery of a total of 14 rigs, six
major conversions/upgrades, one
semisubmerible (semi) completion and
14 specialised vessels safely, on time
and within budget. The company
secured a number of major contracts
with deliveries through to 2013,
including three drillship upgrades for
Noble Corporation, a newbuild
semisubmersible drilling tender (SSDT)
for PetroVietnam Drilling (PV Drilling),
and a Letter of Intent for a newbuild
Tension Leg Wellhead Platform (TLWP)
for Petrobras and Chevron.
Offshore
Despite the uncertain market
conditions, Keppel FELS improved on
its 2008 performance and achieved a
new record of 13 deliveries in 2009.
The company was awarded a total of
$2 million for early deliveries of most of
these newbuilds, which included eight
jackup rigs, four semi drilling rigs and
one SSDT.
Six of the jackup rigs were built
according to Keppel FELS’s fl agship
design specifi cations, the KFELS
Super B Class and the KFELS B Class.
The company also delivered three
proprietary DSS Series semis and
completed the second of seven
Keppel Corporation Limited
Report to Shareholders 2009
Keppel FELS Brasil
will leverage its strong
local presence, experience
and track record to
strengthen its leadership
position in the Brazilian
offshore market.
ENSCO 8500 series ultra deepwater
semis, built exclusively for Ensco
International (Ensco). When the
ENSCO 8500 series is completed,
Keppel-built rigs will make up 30%
of Ensco’s drilling fl eet. The last rig
delivered for the year was the sixth
of seven KFELS SSDTs to be
constructed for Seadrill Limited
(Seadrill), built to the award-winning
KFELS SSDT TM 3600E design.
During the year, Keppel FELS continued
its yard expansion to entrench its
leadership position and to gear up for
a possible market rebound. A new
300-metre (m) pier extension at Pioneer
Yard was completed in October 2009,
enabling Keppel FELS to take on a
larger number of projects, such as
larger rigs and drillships.
Several contracts were secured by
Keppel FELS in 2009, including a
KFELS SSDT TM 3600E for PV Drilling,
the fi rst SSDT for Vietnam. Other
upgrading and repair projects secured
during the year include semis from
Transocean and Korea National Oil
Corporation.
Overseas, the yards were also busy.
Keppel AmFELS successfully delivered
a newbuild jackup rig. Repair and
modifi cation works on one jackup and
one semi were also completed. 2010
will be a busy period for the yard with
major ongoing work on fi ve newbuild
jackups scheduled to be delivered from
2010 to 2012.
Keppel FELS Brasil completed seven
repair, conversion and upgrading
projects in 2009. Its orderbook was
boosted in 2009 with the successful
bids for several high-value contracts
stretching into 2013, including the
upgrade and repair of three drillships
from Noble Corporation. The yard was
also awarded a Letter of Intent for the
construction of the P-61 TLWP for
Petrobras and Chevron. These are in
Operating & Financial Review
Offshore & Marine
55
Operating & Financial Review
Offshore & Marine
Signifi cant Events
May
Keppel FELS achieved an early delivery of jackup
COSLSTRIKE to China Oilfi eld Services Limited.
Singapore’s Senior Minister of State for National Development, Ms Grace Fu,
at the naming of ENSCO 8501, accompanied by Mr Choo Chiau Beng, Chief
Executive Offi cer of Keppel Corporation and Chairman of Keppel O&M, and
Mr Tong Chong Heong (extreme left), Chief Executive Offi cer of Keppel O&M.
June
Keppel Shipyard unveiled plans to build a training
complex dedicated to equip its workforce with
safety knowledge and competencies, the fi rst of its
kind in Singapore.
Keppel FELS delivered the second 8500 Series® semi,
ENSCO 8501, to Ensco, incident free.
Keppel O&M secured contracts worth $30 million
for the upgrade and repair of three semis in Keppel
Verolme and Keppel FELS Brasil. All three vessels
were delivered to their owners by end-2009.
(opposite)
The successful delivery
of Deep Driller 8 completed
the series of fi ve KFELS
Super B Class jackup rigs
built by Keppel FELS
for Aban.
56
addition to the ongoing work on
Petrobras’ BGL-1 pipelay barge, the
P-56 semi fl oating production unit and
Single Buoy Moorings’ (SBM) P-57
Floating Production Storage and
Offl oading (FPSO) vessel. To cope with
the increased workload, Keppel FELS
Brasil is in the midst of expanding and
upgrading its BrasFELS yard.
In the Netherlands, Keppel Verolme
enjoyed higher effi ciency and productivity
after a series of process improvements
and streamlining exercises. The yard
carried out eight major projects including
newbuilds, upgrades and repair works.
Keppel Verolme also secured a contract
from Saipem S.p.A involving the repair
and modifi cation of a semi pipelay vessel.
Over in the Caspian region, Keppel
Kazakhstan achieved record revenue
in 2009, with deliveries of 14 pipe rack
modules and an Ice Breaking Emergency
Evacuation Vessel pontoon. It will
continue to work on its ancillary steelwork
procurement and fabrication contract
with Agip KCO in 2010, as part of the
experimental phase of the Kashagan
fi eld development programme.
Marine
Despite the slowdown in demand for
shiprepair and conversion projects in
2009, Keppel Shipyard matched its
record turnover in 2008. Conversions
of FPSOs, Floating Storage and
Offl oading (FSO) vessels and Floating
Storage and Re-Gasifi cation Units
(FSRU) again contributed to the good
performance, accounting for almost
70% of total revenue while shiprepair
contributed about 24%.
During the year, Keppel Shipyard
completed 361 vessel repairs and
seven conversion/upgrade projects,
bringing its track record for conversions
to 86. Three FPSO/FSO conversion
projects were delivered in 2009. In
addition, Keppel Shipyard completed
the world’s fi rst Floating Drilling
Production Storage and Offl oading
Keppel Corporation Limited
Report to Shareholders 2009
Operating & Financial Review
Offshore & Marine
57
Operating & Financial Review
Offshore & Marine
Signifi cant Events
July
Keppel Singmarine delivered Kogalym, an Ice-Class
rescue vessel, and LANGEPAS, an OSV to LUKOIL-
Kaliningradmorneft (LUKOIL). It also handed over an
OSV, Sea Commanche, to GulfMark Offshore, Inc.
Conversion of FPSO Armada Perdana was completed
for repeat customer Bumi Armada Berhad at
Keppel Shipyard.
Keppel FELS completed an outstanding collection
of four jackup rigs for Maersk with the delivery of
Maersk Reacher.
LANGEPAS is the sixth vessel Keppel Singmarine has delivered to LUKOIL
since 2003.
August
Keppel Shipyard was on course to complete the
conversion of FSO vessel, Ratu Songkhla, for M3nergy
JDA Sdn Bhd.
Keppel O&M yards secured contracts worth
$ 85 million from repeat customers GOLAR LNG,
Four Vanguard Serviços E Navegaçao Lda, Keppel
Smit Towage, Seadrill and Diamond Offshore.
Keppel FELS delivered the second of three DSSTM 21
deepwater semis, Maersk Discoverer, to Maersk.
Keppel Singmarine completed Ice-Class FSO YURI
KORCHAGIN on time and with no incidents, for
LUKOIL in the Caspian region.
58
vessel. Major upgrade works
completed include modifi cation and
upgrading as well as refurbishment and
life extension for two FPSOs, and the
jumboisation of a trailing suction
hopper dredger. At the end of 2009,
the yard had eight ongoing conversion
projects and a further fi ve major
projects involving a derrick lay barge
newbuilding, a lay barge completion,
turret fabrication and integration of
new drillships.
Seven new major contracts were
secured in 2009 by Keppel Shipyard
from both repeat and new customers
in 2009, further enhancing its position
as a global leader in shiprepair and
conversions. For the fi fth consecutive
year, the company was conferred the
Shiprepair Yard of the Year Award by
Lloyd’s List Maritime Asia Awards.
In the Philippines, Keppel Batangas
Shipyard saw a 20% increase in
shiprepair activities in 2009. It delivered
a newbuild fuel oil tanker-barge and also
completed block fabrication works for
two semi units. Keppel Cebu Shipyard
went through a rationalisation exercise,
where all shiprepair work was
transferred to Keppel Batangas.
Subic Shipyard completed its yard
expansion during the year, allowing
the yard to accommodate the new
generation of super large container
vessels, VLCCs, containerships, bulk
carriers, and increase operational
effi ciency in servicing double-banked
Panamax and Capesize vessels. In all,
Subic Shipyard repaired 47 vessels
in 2009.
Arab Heavy Industries PJSC, our joint
venture yard in Ajman, UAE, repaired
a total of 266 ships in 2009, achieving
strong results through high productivity
and cost-cutting measures.
Specialised Shipbuilding
Keppel Singmarine continued to
perform well in 2009. It delivered a total
Keppel Corporation Limited
Report to Shareholders 2009
Global Offshore Expenditure by Region 2004–2013
Capex & Opex ($ billion)
400
350
300
250
200
150
100
50
0
Africa
Asia
Australasia
Eastern Europe & FSU
Latin America
Middle East
North America
Western Europe
Source: Energyfi les/Douglas-Westwood
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
of four vessels, including the fi rst ever
newbuild FSO project undertaken by
Keppel O&M. The Ice-Class FSO was
deployed in the Russian Federation
sector of the Caspian Sea. A new
design by Keppel Singmarine’s
technology arm, Marine Technology
Development, the FSO was fi rst built in
two halves in Singapore, before being
towed to Caspian Shipyard Company
in Azerbaijan for completion. At the end
of 2009, Keppel Singmarine’s
orderbook includes four platform
supply vessels, two heavylift pipelay
vessels, three anchor handlers and fi ve
tugboats for a global clientele.
Keppel Nantong Shipyard in China
delivered 10 vessels in 2009 and is
expected to deliver another fi ve in 2010.
It is also increasing its newbuilding
capacity to include offshore fabrication
capabilities in the near future.
Industry Outlook
The International Energy Agency has
projected oil and gas demand to
continue its upward trend over the next
few years as industries begin their
recovery from the economic crisis.
Oil consumption is projected to rise
from 84.9 million barrels per day (bpd)
in 2009 to 105 million bpd in 2030,
and expected increases in capital
spending in oil and gas infrastructure
and technology will help boost
production rates. Douglas Westwood
has predicted offshore production
expenditure per year to reach
US$360 billion by 2013, compared to
an estimated US$260 billion in 2009.
The US Energy Information
Administration (EIA) expects Brazil
to lead the growth in supply in the
short to medium term. In April 2009,
Petrobras announced a US$174.4 billion
capital expenditure plan for 2009
through 2013. This was followed by
a tender issue for 28 rigs in September
2009. Keppel O&M, with the largest
and best equipped yard in the region,
as well as a strong relationship and
track record with Petrobras, is
well-positioned to meet Brazil’s
high local content requirement and to
support Petrobras’ aggressive growth.
Offshore Deepwater Prospects
The deepwater market continues
to have the best growth prospect in
the medium to long term. E&P activities
are gradually shifting towards deepwater
to replace the fast depleting shallow
water reserves.
Major oil and gas discoveries in the
Gulf of Mexico, Australia, West Africa
and Brazil were added to the
deepwater reserves in 2009. Douglas
Westwood has forecasted deepwater
expenditure to reach US$137 billion
over the next fi ve years and deepwater
oil production is also expected to rise
from just over seven million bpd in 2009
to more than 10 million bpd in 2015.
The deepwater market is an important
area of development for Keppel O&M.
Our proprietary deepwater solutions
are designed to address the changing
Operating & Financial Review
Offshore & Marine
59
Operating & Financial Review
Offshore & Marine
The naming of twin
jackups, PV Drilling II
and PV Drilling III,
was a fi rst in rig history
and marked another
milestone in the
deepening relationship
between Singapore
and Vietnam.
needs of the industry and have been
gaining worldwide market acceptance.
Our DSSTM semis, jointly designed
and owned with Marine Structure
Consultants, which we have delivered
to our customers, are operating well.
To meet future demands for deeper
water E&P activities, we have
introduced the Extendable Draft
Semisubmersible, an ultra deepwater
dry tree drilling and production design
for harsh environmental conditions.
Keppel’s Deepwater Technology Group
has also developed one of the world’s
fi rst compact drillships in collaboration
with SBMGustoMSC. With topsides
fully-integrated within its hull, the
DrillDeep DS12000’s slender design
makes it more cost-effective and
energy-effi cient than its larger rivals
in the market.
FloaTEC, LLC, Keppel O&M’s joint
venture with J. Ray McDermott, has
also entered the deepwater market.
It secured a Letter of Intent from
Petrobras and Chevron to design, build
and operate the P-61 TLWP for Brazil’s
Papa Terra fi eld. FloaTEC, LLC also
clinched a contract from Chevron for
the front-end engineering and design
of the hull, mooring and risers for the
proposed Big Foot development in the
Gulf of Mexico.
Drilling Rigs, Production Units,
Specialised Ships
Although the jackup environment will
be challenging in the medium term,
with utilisation and day rates facing
pressure from newbuilds scheduled to
be delivered in 2010, overall demand
for jackups is estimated to remain at
current levels with the Middle East,
Southeast Asia and the North Sea
markets expected to hold fi rm.
Keppel FELS will continue to set the
industry benchmark with its powerful
KFELS B Class rigs. According to
ODS-Petrodata, over 40% of the rigs
delivered in the past 10 years were built
to Keppel FELS designs. Prospects for
the drilling fl oater market looks positive
over the next few years. Despite the
economic downturn, deepwater
fl oaters are forecasted to command
increasing rates through to 2011 on
long-term fi xed contracts. We remain
optimistic on the drilling fl oater market
and will be looking to expand our
technology offerings to meet the
increasing demands of the industry.
The Floating Production Systems (FPS)
market is set to continue its recovery
into 2010. After a quiet fi rst half in
2009, the FPS market was boosted by
news of a number of FPSO contract
awards in the second half and this
trend is expected to continue with oil
prices stabilising.
According to Douglas Westwood
estimates, FPSOs are expected to
dominate the sector, accounting for
about 80% of the US$50 billion FPS
market from 2009 to 2013. Keppel O&M
will continue to develop its key
competencies in FPSO conversions and
topside modules to capture this market.
60
Keppel Corporation Limited
Report to Shareholders 2009
With increasing emphasis towards
operations in harsh environments,
specialised vessels such as
icebreakers, pipelay vessels and
construction vessels are better
positioned to withstand fl uctuating
market conditions and provide greater
resilience to the declining day rates.
According to EIA projections, global
natural gas consumption is set to grow
1.6% per year to 153 trillion cubic feet
in 2030. E&P activities for natural gas
are slated to grow signifi cantly in the
Middle East, Latin America, Africa
and the Asia Pacifi c. With many large
re-gasifi cation plants and import
terminals scheduled to come online in
2010, offshore LNG supply looks set to
increase considerably and fl oating
LNG vessels are expected to play a
greater role in providing a cleaner
energy source. According to Douglas
Westwood, US$74 billion will be
invested in fl oating LNG solutions
from 2009 to 2014. With its strong
track record of FSRU conversions,
Keppel O&M will continue to develop
and provide a wide range of solutions
for the natural gas industry.
New Growth Area
The European Wind Energy Association
predicts that 40 gigawatts of offshore
wind energy in the European Union
will be installed by 2020 with an annual
growth rate of 28%.
Keppel O&M, together with Keppel
Integrated Engineering, has introduced
a new generation wind turbine
installation vessel to meet this growing
demand. This purpose-built vessel will
be able to handle the largest wind
turbines of up to 6 megawatts and
operate at water depths of up to 65 m.
It will also provide a far larger installation
weather window than conventional
vessels due to its unique handling
mechanism. We will continue to look at
possibilities for our offshore technology
and expertise to be applied innovatively
to the offshore wind energy industry.
Operating & Financial Review
Offshore & Marine
Signifi cant Events
September
On track for early deliveries, Keppel FELS and
PV Drilling named identical twin rigs PV Drilling II
and PV Drilling III together, a fi rst in rig history.
October
A Letter of Intent for the P-61 TLWP was awarded
to FloaTEC, LLC, a joint venture between Keppel O&M
and J. Ray McDermott, Inc.
Keppel Shipyard was on track to deliver the fi rst FPSO
for the Gulf of Mexico, BW Pioneer, to BW Pioneer Ltd.
Keppel FELS delivered Greatdrill Chitra and Gold Star,
ahead of schedule, within budget and with no
incidents, to Greatship Global Energy Services Pte Ltd
and Queiroz Galvão Óleo e Gás respectively.
BW Pioneer will be the fi rst FPSO to be deployed in the Gulf of Mexico and
turret moored at the deepest waters ever for an FPSO.
61
Operating & Financial Review
Offshore & Marine
Signifi cant Events
November
Keppel O&M secured contracts to upgrade and repair
two Noble Corporation drillships for US$304 million
in Brazil.
In addition, two contracts worth about $165 million –
pre-conversion of FPSO P-58, and repair and
modifi cation of a semi pipelay vessel – were awarded
by Petrobras and Saipem S.p.A to Keppel Shipyard
and Keppel Verolme respectively.
The upgrading of Noble Corporation’s drillships will create a baseload of work
stretching into 2013 for the BrasFELS yard.
December
Keppel FELS won a contract to build Vietnam’s fi rst
SSDT for about US$200 million.
Contracts worth $160 million were awarded to
Keppel O&M for a FPSO conversion, a derrick lay
barge completion and life extension of a semi.
Marking the last delivery of the year, Keppel FELS
handed over West Vencedor, the sixth of seven KFELS
semi drilling tenders, to Seadrill.
Adding on to the earlier Noble drillship jobs,
Keppel FELS Brasil won the third contract to upgrade
and repair a drillship for US$152 million.
Meeting the Challenges
The economic downturn has resulted in
delays and cancellations of projects in
the industry. Speculative orders
prevalent just a few years ago have all
but disappeared. As a result, there has
been a consolidation of drilling and
FPSO contractors, leading to a more
concentrated market with leaner and
stronger players.
While the market may not see a
return to the high volume of newbuild
rig orders seen in the fi ve years
before 2009, there continues to be
a healthy level of enquiries for our
products and solutions.
Keppel O&M has continued to invest
to improve and expand its production
facilities to meet customer needs.
Furthermore, to meet the local content
requirements of a growing group
of customers who are national oil
companies, Keppel O&M is actively
pursuing meaningful acquisitions that
will undergird our ‘Near Market, Near
Customer’ strategy.
To support the shiprepair and
upgrading market, our new yard facility
jointly developed with Qatar Gas
Transport Company, is scheduled to be
ready in the third quarter of 2010 and
will be the largest shiprepair yard in
Qatar, home to one of the world’s
largest natural gas reserves.
Despite the economic uncertainty,
Keppel O&M continues to focus heavily
on Research and Development to
provide innovative solutions that can
be brought to market quickly. Our
proprietary designs are refi ned
constantly with inputs from fi eld
operators, allowing us to develop
products that are commercially viable
and relevant to the market’s needs.
62
Keppel Corporation Limited
Report to Shareholders 2009
1
Keppel FELS is
constructing a highly
effi cient fl eet of seven
ultra deepwater semis
for Ensco.
2
Keppel Shipyard’s
expertise in Liquefi ed
Natural Gas (LNG)
carriers repair has
enabled it to capture
a major market share
of LNG carriers in
Singapore.
1
2
Operating & Financial Review
Offshore & Marine
63
Operating & Financial Review
Infrastructure
The Infrastructure
Division is poised
to grow further
with its robust
portfolio of
environmental
engineering,
power generation,
logistics and
data centres
businesses.
PATMI
($ million)
2009
2008
2007
Earnings Highlights
Revenue
EBITDA
Operating profi t
Profi t before tax
PATMI
Manpower (number)
Manpower cost
126
63
27
2007
$ million
1,277
45
11
51
27
4,392
180
2009
$ million
2,427
161
127
150
126
4,574
213
2008
$ million
2,232
82
50
70
63
5,064
219
$150m
Profi t before tax
increased 114% from
FY 2008’s $70 million.
$126m
PATMI was doubled
that of FY 2008’s
$63 million.
Major Developments in 2009
Focus for 2010/2011
– KIE completed the acquisition
– KIE to continue building its
environmental engineering business,
with the aim of becoming a world
leader in environmental solutions.
– KIE to expand its slate of products
and solutions, as well as moving
into adjacent businesses such as
renewable energy.
– Keppel Energy to grow its power
generation business by planting
additional capacity in Singapore.
– Keppel T&T to continue growing its
logistics and data centre footprint.
of the Senoko WTE Plant from the
Singapore Government.
– Keppel Seghers Tuas WTE Plant
began commercial operations.
– KIE secured four new contracts to
maintain its market leader position
in imported WTE solutions in China.
– Keppel Seghers clinched an EPC
contract worth around $518 million
for an Energy-from-Waste Plant
serving Greater Manchester in UK.
– KIE acquired First DCS Pte Ltd,
the largest district cooling systems
provider in Singapore.
– Keppel T&T expanded warehousing
and data centre capacity.
64
Keppel Corporation Limited
Report to Shareholders 2009
Earnings Review
Infrastructure Division’s revenue in
2009 increased by $195 million, due
largely to the Doha North Sewage
Treatment Works project in Qatar.
This was partly offset by lower
revenue from the Keppel Merlimau
Co-generation Plant.
In all, 2009 saw good progress made
by the Division, which continued
its steady growth and more than
doubled its pre-tax profi t from
$70 million to $150 million. This was
due to higher contribution from
environmental engineering projects
and better performance by
Keppel Energy. PATMI of $126 million
was double the level achieved in 2008.
The Division accounted for 10% of
the Group’s PATMI.
Environmental Engineering
Market Review
Demand for effective solutions to treat
solid waste and wastewater continues
to grow in the Middle East and North
Africa. The Gulf Co-operation Council
countries rank among the highest in
the world in waste generated. Rapid
increases in population and economic
activities in this region have also led to
a surge in the volume of sewage water
produced. Despite the prevalence of
wastewater reuse in agriculture,
wastewater treatment plants in most
countries in this region are not
operated and maintained adequately.
According to World Bank estimates,
tens of billions of dollars will be
invested in the waste management
and environmental sectors in the
Middle East over the next 10 years.
1
KIE is building the
Middle East’s fi rst
integrated solid waste
management centre
in Qatar.
2
Keppel Energy has
improved on the reliability
and availability of the
Keppel Merlimau
Co-generation Plant since
operations in 1H 2007.
3
The Keppel Seghers Ulu
Pandan NEWater Plant
continues to contribute
to the Infrastructure
Division’s earnings stream
since commencing
operations in 2007.
1
2, 3
Operating & Financial Review
Infrastructure
65
Operating & Financial Review
Infrastructure
Keppel Integrated Engineering’s (KIE)
environmental technology arm,
Keppel Seghers, will continue to expand
its foothold in this emerging market.
The market for waste-to-energy (WTE)
solutions remains strong in Europe. The
European Union (EU) Landfi ll Directive,
which requires a reduction in municipal
solid waste being disposed of to
landfi lls and the treatment of municipal
solid waste to reduce biological content
prior to landfi lling, will drive demand for
WTE and municipal solid waste pre-
treatment solutions. KIE is actively
pursuing waste management Private
Finance Initiatives (PFI) in the UK.
Europe, in particular the UK, represents
the most mature of the renewable
energy market, with strong national and
EU policies driving the growth of
renewable energy. The EU’s Renewables
Directive stipulates a binding target of
20% of fi nal energy consumption to be
from renewable sources by 2020. In
particular, the UK government wants
renewable energy to supply 10% of the
country’s electricity requirement by
2010, and has put in place polices to
further promote the use and development
of renewable energy.
In Latin America, Peru and Mexico
have become notably more open to
foreign investment in the sanitation
sector, with a healthy list of
concessions to foreign participants
to support the incumbent state-run
service providers. In recent years, the
Brazilian government has also started
to take steps to improve on the weak
regulatory legislation hindering private
sector participation in the country’s
sanitation sector.
In China, the latest fi gures from
megacities such as Beijing and
Shanghai show the urgency of the
country’s waste problem. Beijing’s
municipal administration commission
warned that at the current rate of
waste production, the city’s 13 landfi lls
will be full in “four to fi ve years”. The
Chinese government is expected to
allocate even more funding towards
environmental protection in its next
fi ve-year development plan from
2011 to 2015.
More low carbon eco-cities are
emerging in China, giving KIE the
opportunity to replicate the experience
it is gaining from its involvement in the
Sino-Singapore Tianjin Eco-City project.
Environmental
Engineering
Keppel Integrated
Engineering aims
to be a world leader in
environmental solutions
for water/wastewater
and solid waste
treatment, and make
a signifi cant contribution
to a cleaner future.
(opposite)
Featuring Keppel Seghers’
design and technology,
the Greater Manchester
EFW CHP Plant will
be one of the largest
waste management
facilities in the UK when
completed in 2012.
Project
Ulu Pandan NEWater Plant
Senoko Waste-to-Energy Plant
Capacity
148,000 m3/day
2,400 tonnes of solid waste a day
Keppel Seghers Tuas Waste-to-Energy Plant
Domestic Solid Waste Management Centre
Doha North Sewage Treatment Works
Greater Manchester Energy-from-Waste
Combined Heat and Power Plant
Amotfors Energi Combined Heat and Power
Waste-to-Energy Plant
Technology packages to Waste-to-Energy
plants in Shandong, Chengdu,
Yangzhou and Tianjin
800 tonnes of solid waste a day to generate
more than 20 MW of green energy
2,300 tonnes of mixed solid waste and 5,000
tonnes of construction and demolition waste
a day, and a 1,500 tonnes a day waste-to-
energy incineration plant
439,000 m3/day
420,000 tonnes of solid waste per year,
generating about 270,000 MW of electricity
and 500,000 tonnes of steam per year
70,000 tonnes of solid waste per year
2,000 tonnes, 1,800 tonnes, 1,000 tonnes
and 1,500 tonnes of solid waste per day
respectively
Operational Date
2007
Acquired
in 2009
2009
Tenure
2007–2027
2009–2024
2009–2034
1H 2010
2009–2029
1H 2011
2012
2010–2020
–
1H 2010
2010–2011
–
–
66
Keppel Corporation Limited
Report to Shareholders 2009
Operating & Financial Review
Infrastructure
67
Operating & Financial Review
Infrastructure
There is also a trend in Southeast Asian
cities such as Bangkok, Ho Chi Minh
City, Hanoi, Jakarta, Bandung and
Surabaya, towards incineration
solutions to solve their waste issues.
Australia’s increasingly dry climate
and population pressure has threatened
the existing water supplies. As its
water and wastewater treatment
market is at the maturity phase,
opportunities generally exist through
upgrades, improvements and retrofi ts
of existing plants, with more advanced
technologies and competitively priced
products. Keppel Seghers is monitoring
this market closely.
Singapore Government in August 2009,
Keppel Seghers Tuas WTE Plant also
commenced its 25-year operations
and maintenance contract with
Singapore’s National Environment
Agency in November. With these two
plants, KIE is now the sole private
operator of WTE plants treating general
waste in Singapore.
In the Middle East, KIE is making
steady progress in its construction
of the Middle East’s fi rst integrated
solid waste management centre in
Qatar. When completed, the facility
will be able to treat 2,300 tonnes of
waste per day.
Operating Review
KIE is strengthening its home ground
presence in Singapore, as well as
growing its sources of recurring income
streams. In addition to the acquisition
of the Senoko WTE Plant from the
Also making satisfactory progress
is the construction of the Doha
North Sewage Treatment Works, a
greenfi eld wastewater treatment and
water reuse facility. With peak design
capacity to treat wastewater of up to
439,000 m3/day, this will be the largest
wastewater treatment and reuse facility
in Qatar, more than triple the capacity
of the next largest wastewater
treatment plant.
In China, KIE secured fi ve WTE projects
in 2009 and 2010, reinforcing its
position in that country as the market
leader for imported WTE solutions with
60% of the market share.
In Europe, Keppel Seghers secured
an Engineering, Procurement and
Construction (EPC) contract worth
around $518 million, to build an
Energy-from-Waste Combined Heat
and Power (EFW CHP) Plant to serve
the Greater Manchester region. This
will be one of the largest waste and
renewable energy projects in the UK.
Keppel Seghers also established its
UK representative offi ce in London to
pursue UK PFI projects.
Mr He Lifeng (left),
Deputy Party Secretary
of the Communist Party
of China Tianjin Municipal
Committee, touring
Keppel DHCS’s facilities
with the Chief Executive
Offi cer Mr Joseph Ng.
68
Keppel Corporation Limited
Report to Shareholders 2009
In November 2009, KIE acquired First
DCS Pte Ltd from SLI Holdings Pte Ltd,
a wholly-owned subsidiary of JTC
Corporation. The renamed Keppel
DHCS is the largest district cooling
systems provider in Singapore. Apart
from providing an additional recurring
income stream, Keppel DHCS will allow
KIE to explore more opportunities
arising from the drive for more
environmentally friendly and energy-
effi cient solutions in Singapore and the
region. Keppel DHCS has also signed a
Memorandum of Understanding with
Sino-Singapore Tianjin Eco-City
Investment and Development Co., Ltd
to jointly study the feasibility of
introducing district heating and cooling
systems to support the energy
requirements of the Eco-Business Park
in the Sino-Singapore Tianjin Eco-City.
The MEMSTILL® project, a novel
desalination process utilising low-grade
heat, completed its third pilot testing in
the Netherlands and a demonstration
plant will be constructed in Singapore
in 2010. At the same time, a new
design to signifi cantly improve the price
performance of the process was tested
in a pilot plant in Belgium, as well as
in Spain.
Business Outlook
With the world confronting complex
climate change issues, countries need
to look into creating sustainable
environments and developing a “Green
Concept”. This would translate into
more stringent discharge requirements
and greater emphasis on recycling and
reusing. The general trend of the
environmental industry is also moving
towards providing total environmental
solutions based on the Design, Build,
Own, Operate or Build, Own, Operate,
Transfer model.
In addition, there is increasing global
awareness of environmental issues and
a growing movement towards a “zero
waste” approach. The future of landfi lls
is now in question, with their long-term
Operating & Financial Review
Infrastructure
Signifi cant Events
March
Keppel Seghers was awarded a $30 million technology
contract for a WTE plant in Shandong, China.
April
An EPC contract worth about $518 million to build
an Energy-from-Waste plant in Greater Manchester,
UK, was clinched by Keppel Seghers.
July
Keppel Seghers won a techology contract of
$22.3 million to a WTE plant in Tianjin, China.
August
Mr Tong Chong Heong, CEO of Keppel O&M,
assumed the role of Chairman of KIE, while
Mr Michael Chia, MD (Offshore) of Keppel O&M,
was appointed Deputy Chairman.
KIE acquired the Senoko WTE Plant, establishing
itself as the only private operator of incineration
plants in Singapore.
The Senoko WTE Plant can treat 2,400 tonnes of waste per day.
November
The Keppel Seghers Tuas WTE Plant commenced
commercial operations.
Keppel T&T and Al Rajhi Holding Group formed
the world’s fi rst Shariah-compliant data centre fund.
December
KIE acquired Singapore’s largest district cooling
systems service provider First DCS for $ 88 million.
KIE appointed Mr Michael Chia as CEO with effect
from 13 January 2010.
Keppel T&T appointed BG (NS) Pang Hee Hon as
CEO with effect from 4 January 2010.
69
Operating & Financial Review
Infrastructure
Power Generation
Keppel Energy aims
to be a power company
with innovative fuel
solutions in Singapore
and beyond.
Logistics and
Data Centres
Keppel
Telecommunications
& Transportation
(Keppel T&T) aims to
leverage core
competencies to
enhance existing
businesses.
70
potential threat to the environment.
Governments are now looking to
reduce or avoid landfi lling, as well as
transforming open dumps into
sustainable landfi lls, and more cities
are turning to harnessing energy from
waste as a single solution for the dual
objectives of rubbish disposal and
electricity generation.
A report published by the World Bank’s
International Financial Corporation
showed that the demand for water
withdrawals from nature is expected
to grow from 4,500 km3 in 2009 to
6,900 km3 in 2030. However, many
water basins are already in defi cit, and
some are drying up. By 2030, this
water defi cit would have grown to
2,700 km3 and this gap will have to
be bridged by improvements in water
productivity, increased supply,
conservation and development of
non-traditional water supplies such
as water reuse.
Water reuse is considered more
environmentally friendly than
desalination due to lower energy
consumption and global water reuse
capacity is expected to triple from
2008 to 2016. This trend will allow
KIE to pursue more opportunities to
provide its water treatment solutions
based on water reuse technology,
to countries and regions around
the world.
The wastewater treatment and water
reuse market is also moving towards
membrane-based solutions. Keppel
Environmental Technology Centre has
two ongoing research initiatives in
membrane distillation (MEMSTILL®)
and membrane bioreactor technologies.
The gradual thawing of the credit
markets will help to revive projects that
were put on hold due to lack of
liquidity. KIE aims to pursue the
opportunities to continue building a
robust global track record in WTE and
water treatment solutions.
Power Generation
Market Review
Singapore’s electricity demand in 2009
had been volatile. Average electricity
demand shrunk by 2.4% in the fi rst half
of 2009 due to the global economic
slowdown. Electricity demand picked
up substantially in the second half of
2009 with a growth of 3.1%. For the full
year 2009, average electricity demand
grew approximately 0.3%.
Operating Review
2009 has been a challenging yet
rewarding year for Keppel Energy.
The company continues to harness and
deliver value from its integrated power
and gas businesses in Singapore whilst
ensuring risks are well-managed during
the economic downturn. The Keppel
Merlimau Co-generation Plant has
improved on its reliability and availability.
Keppel Gas achieved an important
milestone as it started its supply of gas
to ExxonMobil Asia Pacifi c Pte Ltd in
the last quarter of the year.
As part of its Safety Excellence
commitment, Keppel Energy achieved
more than one million man-hours
without any lost-time incident as of
31 December 2009. There were also
no lost-time incidents in the year.
Keppel Energy successfully divested
its power plant in Nicaragua in 2009,
while the power barges operations in
Ecuador contributed positively in 2009.
The company will continue to enhance
the performance of its assets and look
for options to unlock value.
Business Outlook
Keppel Energy’s power and gas
businesses in Singapore are expected
to continue to deliver sustainable
earnings in 2010.
With a secured generation licence
of 1,400 MW, Keppel Energy has
started to develop the expansion of
its existing 500 MW Keppel Merlimau
Co-generation Plant. This strategic
Keppel Corporation Limited
Report to Shareholders 2009
planting will allow Keppel Energy to
grow its market share in the Singapore
power market and further enhance its
integrated platform in the power and
gas businesses.
Logistics
Market Review
In Singapore, the logistics market was
slow in tandem with the economy.
Consequently, general occupancy and
warehousing rates softened. Activities
picked up in the second half of the year
as economic sentiments turned positive.
In China, overall cargo throughput was
hit by reduced exports to developed
countries. The situation improved in the
last quarter of 2009 when the economy
returned to double-digit growth.
Operating Review
Despite the tough economic
environment in 2009, occupancy rates
at the Singapore warehouses of both
Keppel Logistics and its subsidiary,
Transware Distribution Services,
remained high at above 90%.
During the year, Keppel Logistics
renewed several key contracts in
Singapore including those with Kraft,
Carrefour and MobileOne.
For the third consecutive year, Keppel
Logistics was awarded the Best Retail
& Fast Moving Consumer Goods
Logistics Service Provider (Singapore)
by Frost & Sullivan, the Domestic
Logistics Service Provider of the Year
(Singapore) title.
It also successfully obtained the
certifi cation for Good Distribution
Practices for Medical Devices as well
as the ISO 13485 Quality Standard,
which will allow the company to
handle and store higher value
biomedical products.
In Malaysia, the logistics division
continued to perform well, ending
the year with high occupancy rates
Operating & Financial Review
Infrastructure
at both its warehouses in Shah Alam
and Klang.
In China, Keppel Logistics Foshan
(KLF) continued to operate at maximum
capacity, with its Lanshi Port
maintaining high throughputs against
a challenging environment. KLF also
expanded its warehouse capacity
during the year, through the
construction of a new distribution centre
in Nanhai. The distribution centre will
be fully operational in late 2010.
Keppel Logistics’ associate companies
– Wuhu Annto Logistics Company
(Annto) and Indo-Trans Keppel
Logistics Vietnam (ITKL Vietnam) –
continued their growth momentum
in 2009. Annto extended its logistics
network in the second- and third-tier
cities of China and expanded into the
cold-chain logistics business. In the
meantime, ITKL Vietnam, 40% owned
by Keppel T&T, expanded its
warehousing presence in Hanoi and
Ho Chi Minh City with the construction
of two new warehouses.
Business Outlook
Logistics activities are expected to pick
up in 2010. Keppel T&T is optimistic
about the industry’s growth potential in
Asia, especially in developing countries
such as Vietnam. The company will
continue to extend its footprint in these
locations while looking out for
opportunities to expand its capacity.
Data Centres
Market Review
The data centre market remained
relatively buoyant despite the global
fi nancial crisis. Demand for data centre
space continued to grow, underpinned
by strong fundamentals such as rapid
global digitalisation and tightening
regulations on data storage. There is an
increasing move by companies to
outsource their data centre operations.
Demand is also growing due to tighter
fi nancial data regulations. On the
supply side, the crisis has led to a
slowdown in the construction of new
data centres. As such, the global
demand for data centres has continued
to surge ahead of supply.
Operating Review
Based in Dublin, Ireland, the
50%-owned associate, Citadel 100
Datacenters Limited (Citadel100),
serves blue-chip customers. Its
occupancy remained fi rm at 100%.
During the year, Citadel100 signed a
new power contract with Airtricity to
supply “green” electricity to the data
centre. With this, Citadel100 will reduce
its annual carbon emissions by almost
30,000 tonnes – the equivalent of taking
5,500 cars off the road.
To further tap the growing data centre
market, Keppel T&T reconfi gured one
of its existing buildings in Singapore
into a Tier III++ data centre. Keppel
Datahub began operations since
January 2010 and has secured several
blue-chip clients.
During the year, Keppel T&T signed
a joint venture agreement with
AEP Investment Management,
a member of Saudi Arabia-based
Al Rajhi Holding Group, to form
Securus Partners Pte Ltd, which
will provide fund and asset
management services for the world’s
fi rst Shariah-compliant data centre
fund to be established.
Business Outlook
The data centre market continues
to be backed by strong demand
fundamentals. As demand for quality
data centre continues to outstrip supply,
co-location and utilisation are expected
to increase. Against this backdrop,
Keppel T&T continues to evaluate
possibilities to expand its data centre
footprint globally.
71
Operating & Financial Review
Property
Keppel Land
is committed
to provide urban
living solutions
through the twin
core businesses
of property
development and
property fund
management.
PATMI
($ million)
2009
2008
2007
Earnings Highlights
Revenue
EBITDA
Operating profi t
Profi t before tax
PATMI
Manpower (number)
Manpower cost
210
157
209
2007
$ million
1,835
453
440
471
209
2,918
90
2009
$ million
1,508
385
371
476
210
2,791
100
2008
$ million
950
337
326
365
157
2,955
89
$476m
Profi t before tax
increased 30% from
FY 2008’s $365 million.
$210m
PATMI increased
34% from FY 2008’s
$157 million.
Major Developments in 2009
Focus for 2010/2011
– Sold more than 3,500 homes
across Asia.
– Keppel Land raised about
$708 million from a rights issue.
– Phases 1 and 2 of Marina Bay
Financial Centre achieved
pre-completion commitments
of 79% and 55% respectively.
– Acquired waterfront township site
in Shenyang.
– Selectively seek acquisitions with
continued focus on developing
quality residential, offi ce and
township projects.
– Capitalise on market recovery to
launch more township projects in
key and secondary cities in China.
– Time launches of remaining units of
Marina Bay Suites and Refl ections at
Keppel Bay with the opening of the
integrated resorts.
– Commenced work on Phase 1
of the Keppel development in the
Sino-Singapore Tianjin Eco-City.
– K-REIT Asia and Alpha to explore
potential acquisitions of quality
assets in Singapore and overseas.
– Successfully delisted Evergro
– Unlock value from non-core assets
Properties.
at appropriate time.
– K-REIT Asia’s rights issue raised
about $620 million.
72
Keppel Corporation Limited
Report to Shareholders 2009
With its fi rst phase targeted
for completion by 2010,
landmark development
Marina Bay Financial
Centre will benefi t from its
proximity to the upcoming
integrated resort.
Earnings Review
Revenue of $1,508 million was
$558 million above that of the previous
year due to higher sales of homes in
Singapore, China, Vietnam, Indonesia
and India. Progressive revenue
recognition from Refl ections
at Keppel Bay and other projects in
Singapore and overseas were also
higher. Pre-tax profi t increased by
30% to $476 million due to higher
revenue recognition from the sale
of residential properties and share
of profi t of associated companies
developing Marina Bay Residences
in Singapore and The Botanica in
Chengdu, China. With PATMI of
$210 million, the Division contributed
17% to the Group’s overall earnings.
Market Review
The worst of the recession which
threatened a global fi nancial meltdown
in 2008 appears to have passed,
largely due to the concerted efforts
of governments around the world.
Asia’s resilient economies have turned
the corner and property markets
have rebounded.
Singapore emerged from recession
in the third quarter of 2009, following
two consecutive quarters of strong
growth. Overall, the economy
contracted by 2.1% in 2009,
signifi cantly lower than earlier
forecasted. Residential prices surged
in the second half of 2009, ending the
year with an overall increase of 1.8%.
Total take-up for the year was
14,688 units, second to the record
of 14,811 units in 2007. The monthly
sales volume slowed down after the
government scrapped the interest
absorption scheme and interest-only
housing loans in September. Looking
Operating & Financial Review
Property
73
Operating & Financial Review
Property
ahead, the near-term demand for
quality homes remains positive as
Singapore rolls out its plans to
restructure the economy to one which
creates more jobs and quality growth
from higher productivity.
and ensuring a steady supply of
affordable housing. Despite this, strong
growth fundamentals continue to
underpin demand in China and the
economy is expected to achieve
double-digit growth in 2010.
at Wee Nam were fully sold during
the year, while strong sales were
achieved at Madison Residences,
The Promont, and at both waterfront
developments, Refl ections and
Caribbean at Keppel Bay.
Similarly, the offi ce market was
dampened by sliding rents and
decreased demand at the start of the
year. The rate of rental decline started
to ease in the third quarter of 2009 on
the back of improved economic
sentiments. According to CB Richard
Ellis (CBRE), Grade A and prime offi ce
rents averaged $8.10 psf and $6.75 psf
respectively in the fourth quarter of
2009, refl ecting an 8% and 10%
quarter-on-quarter decline. The drop
was lower than the previous quarter’s
contraction of 13.3% for Grade A rents
and 12.8% decline for prime offi ce
rents. Take-up of offi ce space turned
positive in the last two quarters of
2009. Although the full-year take-up
for 2009 remained negative, CBRE
expects the take-up to be positive at
about 1 million sf and 2 million sf in
2010 and 2011 respectively.
The recovery in Asia has been more
pronounced compared to the Western
economies. The roll-out of huge
stimulus packages totalling about
US$1 trillion contributed greatly to
restoring confi dence in key Asian
economies. With improved market
sentiments, consumer spending has
increased and residential demand has
picked up across the region.
China has benefi ted from a record
stimulus package. With a robust GDP
growth of 8.7% in 2009, China
experienced a property boom, with
residential prices surging in pace with
sustained economic growth. Prices
across 70 major cities rose at their
fastest pace in 16 months in November
2009, leading the government to
impose cautionary measures such as
restricting sales tax exemptions, raising
the reserve requirements on its banks,
Vietnam’s economy grew by 5.3% in
2009 and is expected to grow further
by 6.5% in 2010. Government spending
has propped up business activities and
consumer spending. In addition, the
liberalisation of conditions for Viet
Kieus to own residences in Vietnam
may further increase demand for quality
homes. Together with a growing middle-
class and increasing affl uence, this
bodes well for sustained residential
demand in the longer term.
Indonesia’s economy grew at
4.6% in 2009 and the country has
enjoyed broad-based growth as low
interest rates boosted consumer
spending. Lower mortgage rates
have played a key role in the increased
sales of residential estates in 2009
and the central bank is likely to keep
key interest rates low to boost
economic recovery.
In India, property prices have bottomed
out and the residential market is
recovering well. The second half of
2009 saw price increases in many
cities, particularly for the premium and
lower-end segments. The Indian
economy is expected to expand by
about 7.2% in FY 2009.
Operating Review
Singapore
Supported by the strong rebound
in the residential market and improved
sentiments, Keppel Land sold a total
of 384 homes in Singapore in 2009.
Capitalising on the strong market
demand, Keppel Land held a private
preview of Marina Bay Suites in
November 2009 and achieved a
positive take-up of 89 of the 90 units
launched. The Tresor and Park Infi nia
The commercial segment continued
to show signs of bottoming out. Marina
Bay Financial Centre (MBFC), a new
Grade A commercial development
jointly developed with Cheung Kong
(Holdings) and Hongkong Land, has
secured strong pre-commitments of
about 79% and 55% for Phases 1 and
2 respectively, ahead of their scheduled
completions in 2010 and 2012.
The redevelopment of the former
Ocean Building into the ecologically-
conscious Ocean Financial Centre
(OFC) is expected to be completed
in mid-2011. The 43-storey offi ce
building has secured commitments
of about 140,000 sf or about 16%
of the development.
During the year, Keppel Land carried
out a nine-for-10 rights issue and raised
gross proceeds of about $708 million
to position itself for opportunities to
acquire attractive assets in Singapore
and overseas.
Overseas
Keppel Land’s overseas residential
launches continued to do well, with
over 3,100 homes sold in 2009, of
which about 2,600 homes were sold
in China, mostly from its residential
townships in Chengdu and Wuxi.
Capitalising on the demand for
township and waterfront homes in
China, Keppel Land acquired a second
township site along the Hun River in
Refl ections at Keppel Bay
will offer its residents a
world-class waterfront
lifestyle coupled with
environmentally friendly
features when completed
in 2013.
74
Keppel Corporation Limited
Report to Shareholders 2009
Operating & Financial Review
Property
75
Operating & Financial Review
Property
1
Dr Lee Boon Yang
(second from left) and
Mr Choo Chiau Beng
(extreme left), Chairman
and CEO of Keppel
Corporation respectively,
reaffi rm the Group’s
commitment to grow
with Vietnam during
a visit to Singapore by
H.E. Nguyen Minh Triet
(second from right), the
President of Vietnam.
2
K-REIT Asia owns
73% of Prudential Tower,
one of the few offi ce
developments in Singapore
to win a FIABCI Award.
Shenyang. This development is
expected to yield a total of 6,000
waterfront apartments.
Residential sales in Indonesia and India
continued to make favourable progress,
with higher sales achieved in 2009.
Keppel is the leading partner in the
Singapore consortium for the Sino-
Singapore Tianjin Eco-City (Tianjin
Eco-City), a landmark co-operation
project between Singapore and China
to create a model for sustainable urban
living. The Tianjin Eco-City project is
making good progress (see page 79).
Keppel Land also strengthened its
growth platform in China with the
delisting of Evergro Properties from
the Singapore Exchange in 2009.
Combining the operational expertise,
industry knowledge and extensive
networks allows Keppel Land to
maximise the potential of its existing
portfolio to be the choice developer
of homes in China.
Fund Management
Keppel Land’s fund management
business has performed well in 2009
and is well-positioned to pursue further
growth opportunities.
In November 2009, K-REIT Asia
completed a one-for-one rights issue
and raised about $620 million in gross
proceeds. The rights issue provided
K-REIT Asia with additional debt
headroom to fund acquisitions and
asset enhancement initiatives. Part
of the proceeds was utilised to acquire
six additional strata fl oors of Prudential
Tower. This has increased K-REIT Asia’s
interest in Prudential Tower to a
controlling 73.4% stake, thereby enabling
more effi cient management of the
1
2
76
Keppel Corporation Limited
Report to Shareholders 2009
asset’s income. This yield-accretive
acquisition has enlarged K-REIT Asia’s
portfolio by 5.5% in terms of net
lettable area.
Keppel Land’s private equity fund
management vehicle, Alpha Investment
Partners (Alpha) has also capitalised on
the competitive environment with
strategic investments. In 2009, Alpha
invested in four deals across Tokyo,
Seoul and Hong Kong.
As at end-December 2009, the assets
under management under K-REIT Asia
and Alpha will be about $9.8 billion,
when all the funds under Alpha are fully
leveraged and invested.
Business Outlook
Singapore
Singapore’s economy is expected to
pick up in 2010 with the government
forecasting a positive economic growth
of 3% to 5% for 2010. Residential sales
and the offi ce market in Singapore
have gradually recovered, encouraged
by signs of economic recovery.
Capitalising on the positive sentiments
and sustainable demand for quality
homes, Keppel Land will be releasing
the remaining units of Marina Bay
Suites and Refl ections at Keppel Bay
in 2010, as they are well-positioned to
benefi t from the opening of the two
integrated resorts.
The commercial segment continues
to show signs of bottoming out as the
rate of rental decline for Grade A and
prime offi ces continued to ease further.
As business outlook turns positive,
fi nancial institutions which have
previously halted their expansion plans
are beginning to look for offi ce space
to grow. Leasing activity is expected to
pick up further in 2010, in line with
market recovery. The government’s
focus on creating a legal arbitration hub
is likely to benefi t the offi ce sector in the
mid- to long-term when legal advisory
services gains momentum in Singapore.
Operating & Financial Review
Property
Signifi cant Events
May
A Director of Keppel Land since 1985, Mr Choo Chiau
Beng became Chairman of the company.
June
Keppel Land raised gross proceeds of $708 million
through a nine-for-10 renounceable rights issue.
July
Keppel Corporation and Keppel Land took up
interests of 45% and 55% respectively in a 35.4-ha
site located in the 4-sq km Start-Up Area (SUA)
of the Tianjin Eco-City.
Keppel Land strengthened its presence in China with the acquisition
of a second waterfront township in Shenyang.
August
Ms Ng Hsueh Ling joined K-REIT Asia as CEO
and Director.
November
K-REIT Asia completed the acquisition of six strata
fl oors at Prudential Tower, increasing its stake from
44% to 73%. It also issued about 666 million new units
in a one-for-one rights issue to raise $620 million.
December
Delisting of Evergro Properties was completed.
Keppel Land acquired a 30.3-ha site for RMB884 million
($180 million) in Shenyang for a township comprising
about 6,000 waterfront apartments.
Keppel commenced work on its 35.4-ha site in the
SUA of the Tianjin Eco-City.
77
Operating & Financial Review
Property
The ecologically-conscious
Ocean Financial Centre
will be a Singapore
landmark when completed
in mid-2011.
Keppel Land will continue to step
up its leasing activity at MBFC and
OFC to improve overall commitments
ahead of their completion. The
company will remain a dominant
landlord in Singapore’s business and
fi nancial districts.
Backed by a healthy balance sheet
after its rights issue, Keppel Land
is well-positioned to capitalise on
opportunities for acquisitions in
Singapore and overseas. Similarly,
its fund management vehicles
have substantial room for acquisition.
Following its rights issue, K-REIT Asia
has an additional debt headroom of
$440 million to $650 million should it
gear up to between 30% and 40%.
Alpha’s two funds focusing on Japan
and Asia’s macro trends are in a strong
fi nancial position for further acquisitions
in Asia, with just 46% and 22%
invested as at end-December 2009.
Overseas
With most Asian economies posting
positive growth, demand for quality
housing across Asia continued to
remain favourable on the back of
strong economic growth and rising
homeownership aspirations. The
demographic fundamentals of the
countries where Keppel Land operates
remain strong.
Leveraging the recovery in Asia,
Keppel Land plans to launch more than
5,000 homes overseas in 2010, mostly
in China. In line with its strategy to tap
on rising demand for quality housing in
Asia’s growth cities, Keppel Land will
continue to pursue selective
acquisitions in Asia with continued
focus on developing quality residential
and township developments.
78
Keppel Corporation Limited
Report to Shareholders 2009
Creating a Model for Sustainable Urban Living
The Sino-Singapore Tianjin Eco-City made signifi cant
progress in 2009, attracting leading regional developers
and top global technology companies into the landmark
co-operation project between Singapore and China.
Keppel is committed to
create a harmonious and
eco-driven live-work-play
environment, integrating
homes and commercial
developments.
Sino-Singapore Tianjin Eco-City
Investment and Development, Co., Ltd.
(SSTEC) has attracted many partners
to participate in the Sino-Singapore
Tianjin Eco-City (Tianjin Eco-City)
this year, securing investments of
more than $6.7 billion as at
end-December 2009.
The master developer for the Tianjin
Eco-City, SSTEC is a 50/50 joint
venture between the Singapore
Consortium led by the Keppel Group
and Chinese partners.
Overall development in the Tianjin
Eco-City is progressing well.
SSTEC has secured partnerships
with leading regional developers –
Taiwan’s Farglory Group, Japan’s
Mitsui Fudosan Co., Ltd., China’s
Shimao Group and Malaysia’s Sunway
City Berhad – to develop integrated
residential, commercial and cultural-
leisure developments.
Construction of the fi rst development in
the Keppel Group’s 35.4-ha site in the
Start-Up Area of Tianjin Eco-City has
started and is expected to yield a total
of more than 5,000 homes.
In commercial developments, SSTEC
co-founded a greenfi eld international
school with the world’s largest K-12
(kindergarten to grade 12) education
company, GEMS Education. In addition,
it also signed a Memorandum of
Understanding (MOU) with Samsung
C&T Corporation to explore creating
the fi rst-of-its-kind eco central
business district.
SSTEC also signed an MOU with
STSE Engineering Services Pte Ltd
to explore collaboration to provide
pneumatic waste collection private
connection systems.
Through partnership with leading
Singapore transport organisations,
SSTEC is laying the foundation for
an effective green transport system
in the Eco-City.
In addition, the 30-ha Eco-Business
Park (EBP) and 130-ha Eco-Industrial
Park (EIP) also broke ground in June
and December respectively.
Collectively, the EBP and EIP are
expected to create more than 25,000
jobs opportunities and create a 24/7
vibrant and self-sustaining business
community.
Located in the Tianjin Binhai New Area,
the 30-sq km Tianjin Eco-City is
envisioned to create a harmonious and
sustainable community that meets the
needs of an urbanising China and will
be a modern township where 350,000
residents can live, work and play.
Operating & Financial Review
Property
79
Operating & Financial Review
Investments
Our investments
are committed
to deliver
good value to
shareholders while
seeking growth
opportunities
presented by the
global economic
recovery.
PATMI
($ million)
2009
2008
2007
Earnings Highlights
Revenue
EBITDA
Operating profi t
Profi t before tax
PATMI
Manpower (Number)
Manpower (Cost)
119
172
268
2007
$ million
61
30
30
334
268
156
60
2009
$ million
39
4
3
149
119
135
76
2008
$ million
54
26
25
219
172
165
65
Major Developments in 2009
Focus for 2010/2011
– Sale of 45.5% stake in SPC to
PetroChina for $1.47 billion.
– Knowledge Universe Education,
a k1 Ventures investee company,
acquired Busy Bees in the UK.
– M1 enhanced its service offerings to
the corporate and residential
segments, as well as upgraded its
3G and HSPA networks for better
connectivity nationwide.
– k1 Ventures will identify investment
opportunities while continuing to
focus on the management of
existing investments with the aim
of enhancing shareholder value.
– M1 will continue to strengthen its
position in the mobile market and
capitalise on new growth
opportunities arising from the
commercial launch of the NGNBN.
$149m
Profi t before tax
decreased 32% from
FY 2008’s $219m.
$119m
PATMI decreased
31% from
FY 2008’s $172m.
80
Keppel Corporation Limited
Report to Shareholders 2009
1
M1 partners operators
globally to provide its
customers coverage
and roaming services
in over 230 countries
and territories.
2
In June 2009, KUH
acquired Busy Bees,
the largest provider of
early childhood education
in the UK.
Earnings Review
Pre-tax profi ts from Investments of
$149 million was $70 million below
that of 2008 due to the divestment of
our stake in Singapore Petroleum
Company (SPC) in June 2009. PATMI
of $119 million was $53 million or 31%
lower compared to the previous year.
Investments currently contribute 9% to
the Group’s PATMI, a decrease from
16% in 2008.
k1 Ventures
k1 Ventures is invested in companies
across key diverse sectors of
transportation leasing, education,
oil and gas exploration, and automotive
retail to maximise shareholder returns.
Its major investments are in Helm
Holding Corporation (Helm), the largest
independent locomotive and railcar
leasing company in North America,
and Knowledge Universe Holdings
(KUH), a leading global education
service provider.
For the fi nancial year ended 30 June
2009, the company recorded total
revenue of $99.1 million and operating
profi t of $4.5 million from continuing
operations compared to $350.2 million
and $166.7 million respectively in the
prior year. This decrease in revenue
and operating profi t was mainly
attributable to the prior year’s sales of
approximately 2.38 million shares of
McMoRan Exploration Company and
Helm’s sale of its investment in Dakota,
Minnesota & Eastern Railroad Corp, in
Operating & Financial Review
Investments
1, 2
addition to a decrease in operating
results at Helm. For 2009, the company
distributed 0.75 cent per share to
shareholders and has distributed a
cumulative 21.81 cents per share
to shareholders since 2005.
KUH, through its operating subsidiaries,
acquired Busy Bees, the largest
provider of early childhood education
in the UK in June 2009. This followed
the expansion of the company’s
international platform into the
Singapore market in 2008, making it
the largest preschool education
services provider in Singapore.
China Grand Auto, the company’s
investment in automotive retail, has
performed well.
The US decline in economic output and
growth has resulted in a reduction of
freight shipped by rail, which has
negatively impacted k1 Ventures’
investment in Helm. The company
continues to proactively manage its
investments with the goal to maximise
shareholder value, and will continue its
patient and discipline approach to the
investment of capital.
MobileOne (M1)
M1 is a leading integrated
communications provider in Singapore,
providing a full range of voice and data
communications services. M1 is 20%-
owned by Keppel Telecommunications
& Transportation (Keppel T&T).
M1 remains a signifi cant contributor to
Keppel T&T’s earnings and cash fl ow.
For FY2009, M1 contributed pre-tax
profi ts of $35.5 million to Keppel T&T,
making up 54% of Keppel T&T’s pre-
tax profi ts. M1 also contributed total
dividends of $24 million to Keppel T&T.
The Next Generation Nationwide
Broadband Network (NGNBN), which
is scheduled to be launched in the
second quarter of 2010, will enable M1
to offer a more comprehensive suite of
communications services to customers.
As part of the strategy to transform the
company into a dynamic multi-play
operator, M1 embarked on several key
initiatives to capture new opportunities
during the year.
In 2009, M1 acquired a corporate
Internet Service Provider to offer
integrated solutions to enterprises and
expanded its fi xed broadband offerings
through the introduction of ADSL
service plans. Looking ahead, M1 will
continue to enhance its mobile and
fi xed service offerings for both the retail
and corporate segments in Singapore.
81
Operating & Financial Review
Financial Review and Outlook
$12,247m
+4%
Singapore 23%
Overseas 77%
$11,805m
+13%
Singapore 26%
Overseas 74%
$10,431m
+37%
Singapore 25%
Overseas 75%
Revenue by Market 2009
(%)
Singapore
ASEAN
Rest of Asia-Pacific
Middle East / India
Europe
North America
South America
Central America
Total
Revenue by Market 2008
(%)
Singapore
ASEAN
Rest of Asia-Pacific
Middle East / India
Europe
North America
South America
Central America
Total
Revenue by Market 2007
(%)
Singapore
ASEAN
Rest of Asia-Pacific
Middle East / India
Europe
North America
South America
Central America
Total
23
6
4
10
31
13
11
2
100
26
5
4
8
30
15
11
1
100
25
2
7
6
29
25
5
1
100
82
Keppel Corporation Limited
Report to Shareholders 2009
1
Keppel’s 35.4-hectare
development in the
Sino-Singapore Tianjin
Eco-City is located
strategically along the
Eco-Valley, the Eco-City’s
ecological spine linking
major transport nodes,
residential areas and
commercial centres.
Phase 1 of the development
is expected to yield
about 1,760 homes
and commercial space
of about 40,000 sm.
2
Keppel Shipyard’s
competencies in FPSO
conversions and topside
modules will help it
capture a growing share
of the improving fl oating
production systems
market in 2010.
2
1
Operating & Financial Review
Financial Review and Outlook
83
Operating & Financial Review
Financial Review and Outlook
Prospects
The global recession appears to be
over, but some still believe that the
recovery is volatile and tepid. The
Group has weathered the storm well
and reported record earnings for
FY2009. With a net cash balance of
$1.2 billion and a healthy balance
sheet, we are well-positioned to seize
opportunities as the economy recovers
and capture value in our key businesses
so as to deliver sustainable returns
to shareholders.
Our Offshore & Marine Division secured
$1.7 billion of new orders for the year
sustaining the net orderbook at about
$5.6 billion at the end of the year. With
the pick-up of orders in the last quarter
of 2009, the outlook for new orders in
2010 is better. There have been
increased enquiries from both drilling
contractors and oil companies.
The fundamentals of the industry
remain sound, with projected higher
energy consumption in the longer term.
Exploration and production spending
by oil companies is also expected to
increase in 2010 after falling in 2009.
The Division will continue to broaden its
technology base to develop products
to meet the needs of its customers.
In the Infrastructure Division, the Group
has built up a sizeable pool of
environmental infrastructure projects.
It intends to list the K-Green Trust
(KGT), with the initial assets comprising
Senoko Waste-to-Energy (WTE) Plant,
Keppel Seghers Tuas WTE Plant and
Keppel Seghers Ulu Pandan NEWater
Plant. The Group expects to distribute
approximately 51% of KGT units to
shareholders of the Company.
The two Qatar projects and Greater
Manchester Energy-from-Waste project
are making progress. The acquisition of
a company providing district heating
and cooling systems will provide an
additional recurring income stream and
new opportunities for the Division. The
Keppel Merlimau Co-generation Plant
is expected to continue generating
good returns for the Group.
Shareholder Returns
Capital
distribution
10.0 cents
per share
Capital
distribution
11.5 cents
per share
Capital
distribution
14.0 cents
per share
Special
dividend
45.0 cents
per share
Plus
Plus
Plus
Plus
Dividend
in specie
~23.0 cents
per share
Plus
%
25
20
15
10
5
0
cents
40
32
24
16
8
0
ROE
Full-year dividend
15.5
10.0
16.4
11.5
19.1
14.0
21.8
19.0
22.4
35.0
2004
2005
2006
2007
2008
23.9
38.0
2009
84
During the year, the Property Division
sold 384 homes in Singapore, 2,600
homes in China and 500 homes in
Vietnam, Indonesia and India. The
Division will ride the economic recovery
and time its launches of existing and
new projects. In Singapore, the Group
expects to launch more units of Marina
Bay Suites and Keppel Bay projects,
which are both strategically located
close to the upcoming integrated
resorts. In China, we expect to launch
our project in the Start-Up Area of the
Sino-Singapore Tianjin Eco-City and
projects in Shanghai. We also intend
to launch Riviera Point and the
remaining units of Riviera Cove in
Ho Chi Minh City.
The pace of offi ce rental decline in
Singapore has continued to ease as
business confi dence returns. The
Group’s signifi cant portfolio of new
offi ce buildings in the new downtown
is expected to benefi t from the recovery.
Shareholder Returns
Return on Equity increased from
22.4% in 2008 to 23.9% in 2009,
refl ecting our effort to pursue higher
returns for our shareholders.
The Company will be paying a total
distribution of 61 cents per share. This
comprises a proposed fi nal dividend of
23 cents per share, a proposed special
dividend in specie of K-Green Trust
units equivalent to approximately
23 cents per share and the interim
dividend of 15 cents per share paid in
August 2009. Total payout for 2009
represents 77% of Group PATMI. This
is equivalent to a gross yield of 7.4% on
the Company’s last transacted share
price as at 31 December 2009.
The distribution to shareholders is paid
on account of increased profi tability
and strong operational cash fl ow. We
are committed to reward shareholders
with generous payouts as we achieve
healthy year-on-year improvement in
earnings growth.
Keppel Corporation Limited
Report to Shareholders 2009
EVA*
($ million)
1,200
800
400
0
-400
* Excluding exceptional items
(274)
(111)
36
197
416
779
2002
2003
2004
2005
2006
2007
855 1,026
2008 2009
Economic Value Added (EVA)
In 2009, EVA excluding exceptional
items rose by $171 million to
$1,026 million. This was attributable
to higher operating profi t, partially
offset by higher capital charge.
Capital charge rose by $20 million as
a result of higher Average EVA Capital,
partly offset by lower Weighted Average
Cost of Capital (WACC). Average EVA
Capital increased by $1.01 billion from
$8.85 billion to $9.86 billion. WACC
decreased from 6.75% to 6.26% mainly
due to decrease in risk-free rate and
lower pre-tax cost of debt.
EVA excluding exceptional items of
$1,026 million in 2009 is the highest
ever attained by the Group. The
Group’s effective deployment and
Economic Value Added (EVA)
Profi t after tax & exceptional items
Adjustment for:
Interest expense
Interest expense on non-capitalised leases
Tax effect on interest expense adjustments1
Provisions, deferred tax, amortisation & other adjustments
Net Operating Profi t after Tax (NOPAT)
Average EVA Capital Employed2
Weighted Average Cost of Capital3
Capital Charge
2009
$ million
1,837
89
21
(15)
64
1,996
9,861
6.26%
(617)
09v08
+/(-)
+688
-16
+1
+3
+31
+707
+1,013
-0.49%
-20
2008
$ million
1,149
105
20
(18)
33
1,289
8,848
6.75%
(597)
08v07
+/(-)
+87
-29
-
+1
+1
+60
-102
-0.24%
+28
2007
$ million
1,062
134
20
(19)
32
1,229
8,950
6.99%
(625)
Economic Value Added
1,379
+687
692
+88
604
Comprising:
EVA excluding exceptional items
EVA of exceptional items
1,026
353
1,379
+171
+516
+687
855
(163)
692
+76
+12
+88
779
(175)
604
1 The reported current tax is adjusted for statutory tax impact on interest expenses.
2 Average EVA Capital Employed is derived from the quarterly averages of net assets plus interest-bearing liabilities, provision and present value of operating leases.
3 Weighted Average Cost of Capital is calculated in accordance with the Keppel Group EVA Policy as follows:
a Cost of Equity using Capital Asset Pricing Model with market risk premium set at 6% (2008: 6%);
b Risk-free rate of 2.1949% (2008: 2.7797%) based on yield-to-maturity of Singapore Government 10-year Bonds;
c Unlevered beta at 0.72 (2008: 0.72); and
d Pre-tax Cost of Debt at 3.13% (2008: 3.43%) using fi ve-year Singapore Dollar Swap Offer Rate plus 100 basis points (2008: 40 basis points).
Operating & Financial Review
Financial Review and Outlook
85
Operating & Financial Review
Financial Review and Outlook
Total Assets Owned
($ million)
Total Liabilities Owed and Capital Invested
($ million)
17,500
14,000
10,500
7,000
3,500
0
17,500
14,000
10,500
7,000
3,500
0
Fixed assets
Properties
Investments
Stocks & work-in-progress
Debtors & others
1,772
2,960
4,024
2,890
2,550
Bank balances, deposits & cash
1,601
1,947
3,030
3,633
3,318
2,574
2,245
2,157
3,051
3,332
3,178
2,653
2,936
Shareholders’ funds
Minority interests
Creditors
Term loans & bank overdrafts
Other liabilities
Total
Total
15,797
16,747
2007
2008
17,307
2009
5,205
1,830
6,139
2,234
389
4,596
2,153
7,647
1,970
381
15,797
16,747
2007
2008
5,985
2,728
6,423
1,759
412
17,307
2009
management of resources to enhance
shareholder value is refl ected in the
positive and growing EVA that we have
been achieving since 2004.
Financial Position
Group total assets of $17.31 billion at
31 December 2009 were $560 million
or 3.3% higher than the previous year-
end. Fixed assets increased as a result
of capital expenditure and acquisition
of Keppel DHCS Pte Ltd.
Higher long-term receivables was
due to the acquisition of Senoko
Waste-to-Energy Plant and expenditure
on the Tuas Waste-to-Energy plant.
These were partly offset by the
decrease in associated companies
as a result of the divestment of our
stake in Singapore Petroleum Company
(SPC) and lower receivables in the
Offshore & Marine Division.
Group shareholders’ funds increased
from $4.60 billion at 31 December
2008 to $5.99 billion at 31 December
2009. The increase was mainly
attributable to retained profi ts for the
year and higher fair value and hedging
reserves, partially offset by payment of
fi nal dividend of 21 cents per share for
the fi nancial year 2008 and interim
dividend of 15 cents per share for
current fi nancial year 2009. Minority
interests were higher because of share
of profi ts and subscription to the rights
issue of Keppel Land and K-REIT Asia.
Group total liabilities of $8.59 billion at
31 December 2009 were $1.40 billion
or 14% lower than the previous year-
end. Reduction in billings on work-in-
progress in excess of related costs was
mainly due to project cost incurred and
project completion for Offshore &
Marine jobs. Amount due to associated
companies was lower because of
repayment of advances.
Group net cash of $1,177 million at
31 December 2009 was an increase
of $902 million from $275 million at
31 December 2008. This was mainly
attributable to the proceeds from the
disposal of our stake in SPC, the rights
issues of Keppel Land and K-REIT
Asia, and operational cash infl ow.
Total Shareholder Return (TSR)
In 2009, our Total Shareholder Return
(TSR) was at 101%, a signifi cant
improvement from the negative 64%
in 2008. Our 2009 TSR was 30%
above the benchmark Straits Times
Index’s (STI) TSR of 71%. Over the
past nine years, our Compounded
Annual Growth Rate (CAGR) TSR of
27% was also signifi cantly higher than
STI’s CAGR TSR of 5%.
86
Keppel Corporation Limited
Report to Shareholders 2009
Total Shareholder Return (TSR)
(%)
110
50
-10
-70
Tower, equity injection into the
Sino-Singapore Tianjin Eco-City
project, further investments in Marina
Bay Financial Centre and Ocean
Financial Centre, and other operational
capital expenditure. Proceeds from
disposal, mainly from the sale of SPC,
amounted to $1,645 million.
Free cash fl ow was $1,094 million
as compared to $1,876 million in the
previous year.
Keppel
(18.2)
2.0
37.6
75.2
48.7
32.5
65.3
51.7
STI
(20.0)
(13.4)
(14.5)
38.3
21.6
19.3
32.4
21.0
2000
2001
2002
2003
2004
2005
2006
2007
(64.4) 100.8
(47.1) 70.8
2008 2009
Total distribution to shareholders of the
Company and minority shareholders of
subsidiaries for the year amounted to
$661 million.
We are committed to deliver value to
shareholders through earnings growth.
We will continue to identify, develop
and build growth platforms for our
businesses, sharpen our strategic
focus, streamline our businesses,
launch new products, strengthen
customer relationships and penetrate
new markets.
Cash Flow
Net cash from operating activities
was $670 million compared to
$2,047 million in the previous year.
This was mainly due to increased
working capital and reduced advances
from associated companies, partly
offset by higher operating profi t.
Net cash from investing activities was
$424 million. The Group spent
$1,221 million on acquisitions and
operational capex. This comprised
principally acquisition of Senoko
WTE Plant, Keppel DHCS Pte Ltd
and additional fl oors of Prudential
Financial Risk Management
The Group operates internationally and
is exposed to a variety of fi nancial risks,
including market risk (foreign currency
exchange rates, interest rates and
commodity/equity prices), credit risk
and liquidity risk. Financial risk
management is carried out by the
Keppel Group Treasury Department in
accordance with established policies
and guidelines.
These policies and guidelines are
established by the Group Central
Finance Committee and are updated
Cash Flow
Operating profi t
Depreciation, amortisation & other non-cash items
Cash fl ow provided by operations before changes in
working capital
Working capital changes
Interest receipt and payment & tax paid
Net cash from operating activities
Investments & capital expenditure
Divestments & dividend income
Net cash from investing activities
Free cash fl ow
2009
$ million
1,505
204
1,709
(911)
(128)
670
(1,221)
1,645
424
1,094
09v08
+/(-)
+267
+46
+313
-1,763
+73
-1,377
-658
+1,253
+595
-782
2008
$ million
1,238
158
1,396
852
(201)
2,047
(563)
392
(171)
1,876
08v07
+/(-)
+187
+19
+206
+214
-70
+350
+278
+97
+375
+725
2007
$ million
1,051
139
1,190
638
(131)
1,697
(841)
295
(546)
1,151
Dividend paid to shareholders of the Company & subsidiaries
(661)
+540
(1,201)
-690
(511)
Operating & Financial Review
Financial Review and Outlook
87
Operating & Financial Review
Financial Review and Outlook
to take into account changes in the
operating environment. This committee
is chaired by the Group Finance
Director and comprises Chief Financial
Offi cers of the Group’s key operating
companies and Head Offi ce specialists.
The Group’s fi nancial risk management
is discussed in more detail in the notes
to the fi nancial statements. In summary:
– The Group has receivables and
payables denominated in foreign
currencies viz US dollars, European
and other Asian currencies. Foreign
currency exposures arise mainly from
the exchange rate movement of
these foreign currencies against
Singapore dollar, which is the
Group’s measurement currency.
The Group utilises forward foreign
currency contracts to hedge its
exposure to specifi c currency risks
relating to receivables and payables.
The bulk of these forward foreign
currency contracts are entered into to
hedge any excess US dollars arising
from Offshore & Marine contracts
based on the expected timing of
receipts. The Group does not engage
in foreign currency trading;
a benchmark fuel price index, High
Sulphur Fuel Oil 180-CST;
– The Group maintains a mix of fi xed
and variable rate debt/loan
instruments with varying maturities.
Where necessary, the Group uses
derivative fi nancial instruments to
hedge interest rate risks. This may
include interest rate swaps and
interest rate caps;
– The Group maintains fl exibility in
funding by ensuring that ample
working capital lines are available at
any one time; and
– The Group adopts stringent
procedures on extending credit
terms to customers and the
monitoring of credit risk.
Borrowings
The Group borrows from local and
foreign banks in the form of short-term
and long-term loans, project loans and
bonds. At the end of 2009, 48%
(2008: 10% and 2007: 22%) of Group
borrowings were repayable within
one year with the balance largely
repayable between two and fi ve years.
– The Group hedges against price
fl uctuations arising on purchase of
natural gas. Exposure is managed via
fuel oil forward contracts, whereby
the price of natural gas is indexed to
Unsecured borrowings constituted 64%
(2008: 69% and 2007: 70%) of total
borrowings with the balance secured by
properties and assets. Secured
borrowings are mainly for fi nance of
Debt Maturity
($ million)
< 1 year
1-2 years
2-3 years
3-4 years
4-5 years
> 5 years
88
839
289
226
315
15
73
investment properties and project
fi nance loans for property development
projects. The net book value of
properties and assets pledged/
mortgaged to fi nancial institutions
amounted to $2.41 billion (2008:
$2.81 billion and 2007: $1.83 billion).
Fixed rate borrowings constituted 39%
(2008: 29% and 2007: 21%) of total
borrowings with the balance at fl oating
rates. The Group has interest rate swap
agreements with notional amount
totalling $367 million whereby it
receives variable rates equal to SOR
and pays fi xed rates of between 2.55%
and 4.42% on the notional amount.
The Group also has interest rate cap
agreements to hedge the interest rate
risk exposure arising from its US dollar
and Singapore dollar variable rate term
loans. As at the end of the fi nancial
year, the Group has outstanding interest
rate cap agreements of $49 million.
Details of these derivative instruments
are disclosed in the notes to the
fi nancial statements.
Singapore dollar borrowings represented
96% (2008: 94% and 2007: 76%) of
total borrowings. The balances were in
other Asian currencies. Foreign
currency borrowings were drawn to
hedge against the Group’s overseas
investments and receivables, which
were denominated in foreign currencies.
Capital Structure
& Financial Resources
The Group maintains a strong balance
sheet and an effi cient capital structure
to maximise return for shareholders.
The strong operational cash fl ow of the
Group and divestment proceeds from
low yielding and non-core assets
will provide resources to grow the
Group’s businesses.
Every new investment will have to
satisfy strict criteria for return on
investment, cash fl ow generation,
EVA creation and risk management.
New investments will be structured
Keppel Corporation Limited
Report to Shareholders 2009
with an appropriate mix of equity and
debt after careful evaluation and
management of risks.
Capital Structure
Capital employed at the end of 2009
was $8.71 billion, an increase of
$1.96 billion over 2008 and $1.68 billion
over 2007. The Group is in a net cash
position of $1.18 billion at the end of
2009 compared to net cash of
$275 million in 2008 and net
borrowings of $634 million in 2007.
With strong cash fl ow, the Group’s net
gearing was negative 0.14 times at the
end of 2009.
Interest coverage improved from
13.96 times in 2007 to 28.44 times in
2009. This was achieved on increasing
EBIT and lower cost of funds.
Cash fl ow coverage increased from
15.63 times in 2007 to 22.32 times
in 2008 and decreased to 11.00 times
Net Cash / (Gearing)
Net Gearing =
Borrowings – Cash
Capital Employed
$ million
10,000
8,000
6,000
4,000
2,000
0
No. of times
2.5
2.0
1.5
1.0
0.5
0
Net Cash / (Debt)
(634)
Capital Employed
7,035
Net Cash / (Gearing)
(0.09)
2007
275
6,749
0.04
2008
1,177
8,713
0.14
2009
Interest Coverage
Cash Flow Coverage
Interest Coverage =
EBIT
Interest Cost
Cash Flow Coverage =
Operating Cash Flow
+ Interest Cost
Interest Cost
$ million
2,000
1,600
1,200
800
400
0
No. of times
40
$ million
2,500
No. of times
25
32
2,000
24
1,500
16
1,000
8
0
500
0
20
15
10
5
0
EBIT
Total Interest Cost
Interest Cover
1,619
116
13.96
2007
1,676
96
17.46
2008
1,905
67
28.44
2009
Operating Cash Flow + Interest
1,813
2,143
Total Interest Cost
116
96
Cash Flow Coverage
15.63
22.32
2007
2008
737
67
11.00
2009
Operating & Financial Review
Financial Review and Outlook
89
Operating & Financial Review
Financial Review and Outlook
in 2009. Despite lower interest expense,
cash fl ow coverage has reduced
because of decrease in operating
cash fl ow.
At the Annual General Meeting in 2009,
shareholders gave their approval for
mandates to issue and buy back
shares. The Company did not exercise
these mandates.
Financial Resources
As part of its liquidity management,
the Group has built up adequate cash
reserves and short-term marketable
securities as well as suffi cient undrawn
banking facilities and capital market
programme. Funding of working capital
requirements, capital expenditure and
investment needs is made through a mix
of short-term money market borrowings
and medium/long-term loans.
Due to the dynamic nature of its
businesses, the Group maintains
fl exibility in funding by ensuring that
ample working capital lines are
available at any one time. Cash fl ow,
debt maturity profi le and overall liquidity
position is actively reviewed on an
ongoing basis.
The Group has further strengthened
its fi nancial capacity during the year.
As at end of 2009, total funds available
and unutilised facilities amounted to
$5.58 billion.
Critical Accounting Policies
The Group’s signifi cant accounting
policies are discussed in more detail in
the notes to the fi nancial statements.
Financial Capacity
$ million
Remarks
Cash at Corporate Treasury
Credit facilities extended
to the Group
Total
1,526
4,056
5,582
52% of total cash of $2.94 billion
Credit facilities of $5.42 billion, of
which $1.36 billion was utilised
Impairment of Loans and
Receivables
The Group assesses at each balance
sheet date whether there is any
objective evidence that a loan and
receivable is impaired. The Group
considers factors such as the probability
of insolvency or signifi cant fi nancial
diffi culties of the debtor and default or
signifi cant delay in payments. When
there is objective evidence of impairment,
the amount and timing of future cash
fl ows are estimated based on historical
loss experience for assets with similar
credit risk characteristics.
Impairment of Available-for-Sale
Investments
The Group follows the guidance of
FRS 39 in determining whether
available-for-sale investments are
considered impaired. The Group
evaluates, among other factors, the
duration and extent to which the fair
value of an investment is less than its
cost, the fi nancial health of and the
near-term business outlook of the
investee, including factors such as
industry and sector performance,
changes in technology and operational
and fi nancing cash fl ow.
calculate the present value of the future
cash fl ows.
Revenue Recognition
The Group recognises contract revenue
based on the stage of completion
method which is measured by reference
to the proportion of contract work
completed. Signifi cant assumption is
required in determining the stage of
completion, the extent of the contract
cost incurred, the estimated total
contract revenue and contract cost and
the recoverability of the contracts. In
making the assumption, the Group
evaluates by relying on past experience
and the work of engineers.
Revenue arising from additional claims
and variation orders, whether billed or
unbilled, is recognised when negotiations
have reached an advanced stage such
that it is probable that the customer will
accept the claims or approve the
variation orders, and the amount that it
is probable will be accepted by the
customer can be measured reliably.
Income Taxes
The Group has exposure to income
taxes in numerous jurisdictions.
Signifi cant assumption is required in
determining the provision for income
taxes. There are certain transactions
and computations for which the
ultimate tax determination is uncertain
during the ordinary course of business.
The Group recognises liabilities for
expected tax issues based on
estimates of whether additional taxes
will be due. Where the fi nal tax
outcome of these matters is different
Keppel Corporation Limited
Report to Shareholders 2009
The preparation of fi nancial statements
requires management to exercise its
judgement in the process of applying
the accounting policies. It also requires
the use of accounting estimates and
assumptions which affect the reported
amounts of assets, liabilities, income
and expenses. Critical accounting
estimates and judgement are
described below.
Impairment of Non-Financial
Assets
Determining whether the carrying value
of a non-fi nancial asset is impaired
requires an estimation of the value in
use of the cash-generating units.
This requires the Group to estimate the
future cash fl ows expected from the
cash-generating units and an
appropriate discount rate in order to
90
Keppel intends to list the
K-Green Trust with three
initial assets from the
Infrastructure Division.
from the amounts that were initially
recognised, such differences will
impact the income tax and deferred tax
provisions in the period in which such
determination is made.
Claims, Litigations and Reviews
The Group entered into various
contracts with third parties in its
ordinary course of business and is
exposed to the risk of claims, litigations
or reviews from the contractual parties
and/or government agencies. These
can arise for various reasons, including
changes in the scope of work, delay
and disputes, defective specifi cations
or routine checks etc. The scope,
enforceability and validity of any claim,
litigation or review may be highly
uncertain. In making its judgement
as to whether it is probable that any
such claims, litigations or reviews will
result in liabilities and whether any
such liabilities can be measured
reliably, management relies on past
experience and the opinion of legal
and technical expertise.
Operating & Financial Review
Financial Review and Outlook
91
SUSTAINABILITY
REPORT
We aim to achieve sustainable
business growth by contributing to the
well-being of the environment, society and community.
NurturingCommunities
SustainingGrowth
EmpoweringLives
CONTENTS
94
Corporate Governance
114
Risk Management
116
Environmental
Protection
120
Product Excellence
124
People Development
132
Safety and Health
142
Industry Engagement
146
Green Endeavours
148
Community Relations
Despite a volatile year in 2009, Keppel stayed
focused on its fundamental mission. We renewed
our pledge to be the choice solutions provider
in our businesses guided by our three strategic
thrusts of Sustaining Growth, Empowering Lives,
and Nurturing Communities.
As the Group expands its reach to all corners of
the world, we aim to ensure that we have a positive
impact on the communities where we operate.
For years, we have put in place initiatives and
programmes which dovetail with our drive to be
a global corporate citizen. This report describes
our activities in 2009 directed at this effort.
Looking ahead, we hope to do more, and so
we have started building a Group-wide corporate
social responsibility framework. This will help us
improve co-ordination of our existing efforts,
better strategise and implement even more
effective programmes across the Group to benefi t
our stakeholders and reinforce the long-term
sustainability of our businesses.
92
Keppel Corporation Limited
Report to Shareholders 2009
Sustainable Development Principles
Contributing to sustainable development is an integral
part of our business strategy. It helps us to be a more
competitive and profi table company with growing
shareholder value.
1
Keppelites from across
the Group share the
passion and positive
Can Do! attitude to
overcome challenges
with an open and
fl exible mindset.
2
Product and technology
development and
innovation are important
for Keppel to sustain its
competitive edge and
meet customer needs.
3
Students from the
Centre for Adults,
a learning institute
under APSN, benefi t
from increased profi tability
as gardeners trained
at hydroponics farms
sponsored by Keppel.
1
2, 3
Sustainability Report
93
SustainingGrowth
Corporate Governance
PROMOTING
GOOD
CORPORATE
GOVERNANCE
Strong corporate governance enables us to
achieve our goal of growing sustainable
businesses with greater confi dence and effi cacy.
94
Keppel Corporation Limited
Report to Shareholders 2009
Code of Corporate Governance 2005
Specifi c Principles and Guidelines for Disclosure
Relevant guideline or principle
Guideline 1.3
Delegation of authority, by the board to any board committee, to make decisions on certain board matters
Guideline 1.4
The number of board and board committee meetings held in the year, as well as the attendance of every
board member at these meetings
Guideline 1.5
The type of material transactions that require board approval under internal guidelines
Guideline 2.2
Where the company considers a director to be independent in spite of the existence of a relationship
as stated in the Code that would otherwise deem him as non-independent, the nature of the director’s
relationship and the reason for considering him as independent should be disclosed
Guideline 3.1
Relationship between the Chairman and CEO where they are related to each other
Guideline 4.1
Composition of nominating committee
Guideline 4.5
Process for selection and appointment of new directors to the board
Guideline 4.6
Key information regarding directors, which directors are executive, non-executive or considered by the
nominating committee to be independent
Guideline 5.1
Process for assessing the effectiveness of the board as a whole and the contribution of each individual
director to the effectiveness of the board
Principle 9
Clear disclosure of its remuneration policy, level and mix of remuneration, procedure for setting
remuneration and link between remuneration paid to directors and key executives, and performance
Guideline 9.1
Composition of remuneration committee
Guideline 9.2
Names and remuneration of each director. The disclosure of remuneration should be in bands of
$250,000. There will be a breakdown (in percentage terms) of each director’s remuneration earned through
base/fi xed salary, variable or performance-related income/bonuses, benefi ts in kind, and stock options
granted and other long-term incentives
Names and remuneration of at least the top fi ve key executives (who are not also directors).
The disclosure should be in bands of $250,000 and include a breakdown of remuneration
Guideline 9.3
Remuneration of employees who are immediate family members of a director or the CEO, and whose
remuneration exceed $150,000 during the year. The disclosure should be made in bands of $250,000 and
include a breakdown of remuneration
Guideline 9.4
Details of employee share schemes
Guideline 11.8
Composition of audit committee and details of the committee’s activities
Guideline 12.2
Adequacy of internal controls, including fi nancial, operational and compliance controls, and risk
management systems
Page reference
in this report
Pages 96 and 97
Page 96
Page 97
Page 98
Not Applicable
Page 100
Page 100
Pages 225 to 228
and 233
Pages 100, 101,
112 and 113
Pages 102 to 105
Page 102
Pages 104 and
105
Page 105
Pages 156, 175
to 177
Pages 105 to 109
Pages 108 to 109
Sustainability Report
Sustaining Growth – Corporate Governance
95
SustainingGrowth
Corporate Governance
The board and management of Keppel
Corporation Limited (“KCL” or the
“Company”) fi rmly believe that a genuine
commitment to good corporate governance
is essential to the sustainability of the
Company’s businesses and performance,
and are pleased to confi rm that the
Company has adhered to the principles and
guidelines of the Code of Corporate
Governance 20051 (the “2005 Code”).
The following describes the Company’s
corporate governance practices with
specifi c reference to the 2005 Code.
Board’s Conduct of Affairs
Principle 1: Effective Board
to lead and control the Company
The principal functions of the board are to:
• decide on matters in relation to
the Group’s activities which are
of a signifi cant nature, including
decisions on strategic directions
and guidelines and the approval
of periodic plans and major
investments and divestments;
• oversee the business and affairs
of the Company, establish, with
management, the strategies and
fi nancial objectives to be implemented
by management, and monitor the
performance of management;
• oversee processes for evaluating the
adequacy of internal controls, risk
management, fi nancial reporting and
compliance, and satisfy itself as to
the adequacy of such processes; and
• assume responsibility for corporate
governance.
All directors are expected to exercise
independent judgment in the best interests
of the Company. This is one of the
performance criteria for the peer and self
assessment on the effectiveness of the
individual directors. Based on the results
of the peer and self assessment carried
out by the directors, all directors have
discharged this duty consistently well.
1
The Code of Corporate Governance 2005 issued by the Ministry of Finance on 14 July 2005.
To assist the board in the discharge
of its oversight function, various board
committees, namely the Audit Committee,
Board Risk Committee, Nominating
Committee, Remuneration Committee,
and Executive Committee, have been
constituted with clear written terms of
reference. All the board committees are
actively engaged and play an important
role in ensuring good corporate
governance in the Company and within
the Group. In addition, a Board Safety
Committee was formed in January 2006.
The terms of reference of the respective
board committees are disclosed in the
Appendix to this report.
The board meets six times a year and as
warranted by particular circumstances.
Telephonic attendance and conference
via audio-visual communication at
board meetings are allowed under the
Company’s Articles of Association. The
number of board and board committee
meetings held in FY 2009, as well as
the attendance of each board member
at these meetings, are disclosed below:
Lee Boon Yang2
Lim Chee Onn3
Lim Hock San
Choo Chiau Beng
Sven Bang Ullring
Tony Chew Leong-Chee
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai4
Tsao Yuan Mrs Lee Soo Ann5
Yeo Wee Kiong6
Teo Soon Hoe
Tong Chong Heong7
No. of Meetings Held
Board Meetings
5 of 5
6 of 8
14
14
15
15
14
11
5 of 5
9 of 10
11 of 13
15
2 of 2
15
Audit
–
–
6
–
–
6
6
–
1 of 1
–
–
–
–
6
Executive1
1
–
1
1
–
1
1
1
–
–
–
1
–
1
Board Committee Meetings
Nominating Remuneration
5 of 5
–
5 of 5
–
11
–
10
9
–
4 of 5
–
–
–
11
4 of 4
–
–
–
8
4 of 4
8
3 of 3
–
3 of 4
–
–
–
8
Safety
2 of 2
–
–
2
3
–
–
–
1 of 1
1 of 1
1 of 2
–
–
3
Non-executive
Directors’ meeting
(without presence
of management)
1 of 1
2 of 3
4
–
4
4
4
3
1 of 1
3 of 3
3 of 3
–
–
4
Risk
–
–
6
–
–
–
6
5
1 of 1
–
4 of 5
–
–
6
1 With effect from 1 January 2010, the Executive Committee was dissolved.
2 Dr Lee Boon Yang was appointed as non-executive director with effect from 1 May 2009 to 30 June 2009, assumed the role of non-executive Chairman with
effect from 1 July 2009, Chairman of the Executive Committee with effect from 1 July 2009, member of the Remuneration Committee, Nominating Committee
and Board Safety Committee with effect from 1 July 2009.
3 Lim Chee Onn resigned as non-executive Chairman and Chairman of the Executive Committee with effect from 30 June 2009.
4 Alvin Yeo was appointed as non-executive director with effect from 1 June 2009, member of the Audit Committee with effect from 1 October 2009, member of
the Board Risk Committee with effect from 23 July 2009 and member of the Board Safety Committee with effect from 1 July 2009. He resigned as member of
the Board Safety Committee with effect from 30 September 2009.
5 Tsao Yuan Mrs Lee Soo Ann resigned as non-executive director, member of the Remuneration Committee, Nominating Committee and Board Safety Committee
with effect from 24 April 2009.
6 Yeo Wee Kiong resigned as non-executive director, member of the Board Risk Committee and Board Safety Committee with effect from 1 August 2009.
7 Tong Chong Heong was appointed as executive director with effect from 1 August 2009.
96
Keppel Corporation Limited
Report to Shareholders 2009
The Board consists of
executive and independent
directors who share their
wealth of experience and
expertise with the Group.
The Company has adopted internal
guidelines setting forth matters that
require board approval. Under these
guidelines, new investments or
increase in investments and
divestments exceeding $100 million1
by any Group company, and all
commitments to term loans and lines
of credit from banks and fi nancial
institutions by the Company, require
the approval of the board. Further, any
investment of $100 million2 and below
but which does not have strategic fi t
with any of the Company’s core
businesses, is not EVA positive, or
does not generate Return on Equity
of at least 12% on a standalone basis,
would require specifi c board approval.
Each board member has equal
responsibility to oversee the business
and affairs of the Company.
Management on the other hand
is responsible for the day-to-day
operation and administration of the
Company in accordance with the
policies and strategy set by the board.
A formal letter is sent to newly-
appointed directors upon their
appointment explaining their duties
and obligations as director. All
newly-appointed Directors undergo
a comprehensive orientation
programme which includes
management presentations on the
Group’s businesses and strategic
plans and objectives, and site visits.
The directors are provided with
continuing education in areas such
as directors’ duties and responsibilities,
corporate governance, changes in
fi nancial reporting standards, insider
trading, changes in the Companies Act
and industry-related matters, so as to
update and refresh them on matters
1 With effect from 1 January 2010, this fi nancial threshold has been lowered to $30 million with the
dissolution of the Executive Committee.
2 See footnote 1 above.
Sustainability Report
Sustaining Growth – Corporate Governance
97
SustainingGrowth
Corporate Governance
that affect or may enhance their
performance as board or board
committee members. By way of an
example, some directors attended the
courses organised by the Singapore
Institute of Directors to reinforce
Audit, Remuneration and Nominating
Committee members’ understanding
of their respective roles and
responsibilities and how they
can better discharge them.
Board Composition and Guidance
Principle 2: Strong and independent
element on the Board
To carry out its oversight function well,
the board must be an effective board
which can lead and control the
business of the Group. The directors
believe that, in view of the many
complex businesses that the Company
is involved in, the board should
comprise executive directors, who have
intimate knowledge of the business,
and independent directors, who can
take a broader view of the Group’s
activities and bring independent
judgment to bear on issues for the
board’s consideration.
The Nominating Committee determines
on an annual basis whether or not
a director is independent, bearing
in mind the Code’s defi nition of an
“independent director” and guidance
as to relationships the existence of
which would deem a director not to be
independent. The Nominating Committee
also deems a director who is directly
associated with a substantial shareholder
as non-independent, although such a
relationship has not been expressly
identifi ed in the Code as one that would
deem a director not to be independent.
Mr Tow Heng Tan, who is Chief
Investment Offi cer, Temasek Holdings,
is therefore deemed non-independent
by the Nominating Committee.
The Nominating Committee is of the
view that, taking into account the
nature and scope of the Company’s
businesses, the board should consist
of 9 to 11 members. The board
currently has majority independent
directors with a total of 10 directors,
of whom 6 are independent.
The nature of the directors’ appointments
on the board and details of their
membership on board committees
are set out in the Appendix hereto.
The Nominating Committee is satisfi ed
that the board comprises directors who
as a group provide core competencies
such as accounting or fi nance,
business or management experience,
industry knowledge, strategic planning
experience and customer-based
experience or knowledge, required
for the board to be effective. There
is nonetheless an ongoing exercise
by the Nominating Committee and
the board to source for suitable
potential board members who are
able to further strengthen the board
and board committees.
The board and management fully
appreciate that fundamental to good
corporate governance is an effective
and robust board whose members
engage in open and constructive
debate and challenge management
on its assumptions and proposals,
and that for this to happen, the board,
in particular, the non-executive
directors, must be kept well-informed
of the Company’s businesses and
affairs and be knowledgeable about
the industry in which the businesses
operate. The Company has therefore
adopted initiatives to put in place
processes to ensure that the non-
executive directors are well-supported
by accurate, complete and timely
information, have unrestricted access
to management, and have suffi cient
time and resources to discharge their
oversight function effectively. These
initiatives include regular informal
meetings for management to brief
the directors on prospective deals
and potential developments at an early
stage before formal board approval
is sought, and the circulation of
relevant information on business
initiatives, industry developments and
analyst and press commentaries on
matters in relation to the Company
or the industries in which it operates.
A two-day off-site board strategy
meeting is organised every two years
for in-depth discussions on strategic
issues and direction of the Group,
to give the non-executive directors
a better understanding of the Group
and its businesses and to provide
an opportunity for the non-executive
directors to familiarise themselves
with the management team so as
to facilitate the board’s review of the
Group’s succession planning and
leadership development programme.
In this connection, a board strategy
meeting was held in Bintan over two
days on 17 and 18 July 2009. The
Company has also made available on
the Company’s premises an offi ce for
the use by the non-executive directors
at any time to facilitate direct access
to management.
The board’s non-executive directors
meet regularly without the presence
of management to discuss matters
such as board processes, corporate
governance initiatives, matters which
they wish to cover during the board
off-site strategy meeting, succession
planning and leadership development,
and remuneration matters.
Chairman and
Chief Executive Offi cer
Principle 3: Chairman and Chief
Executive Offi cer to be separate
persons to ensure appropriate
balance of power, increased
accountability and greater capacity
of the Board for independent
decision-making
Mr Lim Chee Onn relinquished his role
as Chief Executive Offi cer and served
as Chairman of the Company for the
period 1 January 2009 to 30 June
98
Keppel Corporation Limited
Report to Shareholders 2009
Keppel’s board members
visit the Group’s various
facilities to gain insights
and updates on the
operational performance
and capabilities.
2009. Mr Choo Chiau Beng assumed
the role of Chief Executive Offi cer of the
Company with effect from 1 January
2009. During this period, Mr Lim had
continued with his efforts to expand
and strengthen Keppel’s geographical
footprint in China, Vietnam, India and
the Middle East. The board had
considered it important that, besides
ensuring the effective operation of the
board, Mr Lim should be available to
continue to perform these services so
that the Company could continue to
benefi t from his business network and
relationships for a period of time and
so as to ensure a smooth transition in
executive leadership. Dr Lee Boon
Yang was appointed non-executive
director from 1 May 2009 to 30 June
2009 and thereafter served as non-
executive and independent Chairman
with effect from 1 July 2009.
The Chairman, with the assistance of
the Company Secretary, schedules
meetings and prepares meeting
agenda to enable the board to perform
its duties responsibly having regard to
the fl ow of the Company’s operations.
The Chairman sets guidelines on and
monitors the fl ow of information from
management to the board to ensure
that all material information are
provided timeously to the board for the
board to make good decisions. He also
encourages constructive relations
between the board and management,
and between the executive directors
and non-executive directors.
The Chairman also ensures effective
communication with shareholders.
The Chairman takes a leading role in
the Company’s drive to achieve and
maintain a high standard of corporate
governance with the full support of
the directors, Company Secretary
and management.
Board Membership
Principle 4: Formal and transparent
process for the appointment of new
directors to the Board
Nominating Committee
The Company has established a
Nominating Committee to, among other
Sustainability Report
Sustaining Growth – Corporate Governance
99
SustainingGrowth
Corporate Governance
things, make recommendations to the
board on all board appointments and
oversee the Company’s succession
and leadership development plans.
The Nominating Committee comprises
entirely non-executive directors, 4 out
of 5 of whom (including the Chairman)
are independent; namely:
• Mr Tony Chew Leong-Chee
Independent Chairman
• Dr Lee Boon Yang
Independent Member
• Mr Sven Ullring
Independent Member
• Mrs Oon Kum Loon
Independent Member
• Mr Tow Heng Tan
Non-Executive and
Non-Independent Member
The terms of reference of the Nominating
Committee are disclosed in the
Appendix hereto.
Process for appointment
of new directors
The Nominating Committee has
put in place a formal process for the
selection of new directors to increase
transparency of the nominating process
in identifying and evaluating nominees
for directors. The Nominating
Committee (“NC”) leads the process
and makes recommendations to the
board as follows:
a. NC evaluates the balance of skills,
knowledge and experience on the
board and, in the light of such
evaluation and in consultation with
management, determines the role
and the desirable competencies
for a particular appointment.
b. External help (for example,
Singapore Institute of Directors,
search consultants, open
advertisement) may be used to
source for potential candidates if
need be. Directors and management
may also make recommendations.
c. NC meets with the short-listed
candidates to assess suitability and
to ensure that the candidate(s) are
aware of the expectations and the
level of commitment required.
d. NC makes recommendations to the
board for approval.
Criteria for appointment
of new directors
All new appointments are subject to
the recommendation of the NC based
on the following objective criteria:
1. Integrity
2. Independent mindedness
3. Diversity – Possess core
competencies that meet the needs
of the Company and complement
the skills and competencies of the
existing directors on the board
4. Able to commit time and effort to
carry out duties and responsibilities
effectively – proposed director is on
not more than six principal boards
5. Track record of making good
decisions
6. Experience in high-performing
companies
7. Financially literate
The NC is also charged with the
responsibility of re-nomination having
regard to the director’s contribution
and performance (such as attendance,
preparedness, participation and
candour), with reference to the results
of the assessment of the performance
of the individual director by his peers
for the previous fi nancial year.
The directors submit themselves for
re-nomination and re-election at regular
intervals of at least once every three
years. Pursuant to the Company’s
Articles of Association, one-third of the
directors retire from offi ce at the
Company’s annual general meeting,
and a newly appointed director must
submit himself for re-election at the
annual general meeting immediately
following his appointment.
As a matter of policy, a non-executive
director would serve a maximum
of two three-year terms of appointment.
However, the board recognises the
contribution of directors who over time
100
have developed deep insight into the
Group’s businesses and operations
and who are therefore able to provide
invaluable contribution to the board as
a whole. In such cases, the board
would exercise its discretion to extend
the term and retain the services of the
director rather than lose the benefi t of
his contribution.
The NC is also charged with determining
the “independence” status of the directors
annually. Please refer to page 98 on the
basis of the NC’s determination as to
whether a director should or should
not be deemed independent.
The NC also determines annually
whether a director with multiple board
representations is able to and has been
adequately carrying out his duties as a
director of the Company. The NC
took into account the results of the
assessment of the effectiveness of the
individual director, and the respective
directors’ actual conduct on the board,
in making this determination, and is
satisfi ed that all the directors have been
able to and have adequately carried out
their duties as director notwithstanding
their multiple board representations.
The NC has adopted internal guidelines
addressing competing time commitments
that are faced when directors serve on
multiple boards. As a guide, directors
should not serve on more than six
principal boards.
Nominee Director Policy
At the recommendation of the NC,
the board approved the adoption of
the KCL Nominee Director Policy in
January 2009. For the purposes of
the policy, a “Nominee Director” is a
person who, at the request of KCL,
acts as director (whether executive
or non-executive) on the board of
another company or entity (“Investee
Company”) to oversee and monitor
the activities of the relevant Investee
Company so as to safeguard KCL’s
investment in the company.
Keppel Corporation Limited
Report to Shareholders 2009
The purpose of the policy is to highlight
certain obligations of a person while
acting in his capacity as a Nominee
Director. The policy also sets out the
internal process for the appointment
and resignation of a Nominee Director.
The policy would be reviewed and
amended as required to take into
account current best practices and
changes in the law and stock
exchange requirements.
Key information regarding directors
The following key information regarding
directors are set out in the following
pages of this Annual Report:
Pages 225 to 228 and 233: Academic
and professional qualifi cations, board
committees served on (as a member
or Chairman), date of fi rst appointment
as director, date of last re-election as
director, directorships or chairmanships
both present and past held over the
preceding fi ve years in other listed
companies and other major appointments,
whether appointment is executive or
non-executive, whether considered
by the NC to be independent; and
Pages 155: Shareholding in the
Company and its subsidiaries.
Board Performance
Principle 5: Formal assessment of the
effectiveness of the Board as a whole
and the contribution by each director
to the effectiveness of the Board
The board has implemented formal
processes for assessing the
effectiveness of the board as a whole,
the contribution by each individual
director to the effectiveness of the
board, as well as the effectiveness
of the Chairman of the board.
To ensure that the assessments are
done promptly and fairly, the board has
appointed an independent third party
(the “Independent Co-ordinator”) to
assist in collating and analysing the
returns of the board members.
Sustainability Report
Sustaining Growth – Corporate Governance
Mrs Fang Ai Lian, former Chairman,
Ernst & Young and currently Chairman,
Great Eastern Holdings Ltd, was
appointed for this role.
Company’s senior management and
the Company Secretary to facilitate
direct access to senior management
and the Company Secretary.
The evaluation processes and
performance criteria are disclosed
in the Appendix to this report.
The board assessment exercise
provided an opportunity to obtain
constructive feedback from each
director on whether the board’s
procedures and processes allowed him
to discharge his duties effectively and
the changes which should be made to
enhance the effectiveness of the board
as a whole. The assessment exercise
also helped the directors to focus on
their key responsibilities. The individual
director assessment exercise allowed
for peer review with a view to raising
the quality of board members. It also
assisted the NC in determining whether
to re-nominate directors who are due
for retirement at the next annual
general meeting, and in determining
whether directors with multiple board
representations are nevertheless able
to and have adequately discharged
their duties as directors of the Company.
Access to Information
Principle 6: Board members
to have complete, adequate
and timely information
As a general rule, board papers are
required to be sent to directors at least
seven days before the board meeting
so that the members may better
understand the matters prior to the
board meeting and discussion may be
focused on questions that the directors
may have. However, sensitive matters
may be tabled at the meeting itself or
discussed without any papers being
distributed. Managers who can provide
additional insight into the matters at
hand would be present at the relevant
time during the board meeting. The
directors are also provided with the
names and contact details of the
The Company fully recognises that
the fl ow of relevant information on an
accurate and timely basis is critical
for the board to be effective in the
discharge of its duties. Management
is therefore expected to provide the
board with accurate information in
a timely manner concerning the
Company’s progress or shortcomings
in meeting its strategic business
objectives or fi nancial targets and
other information relevant to the
strategic issues facing the Company.
Management also provides the board
members with management accounts
on a monthly basis. Such reports keep
the board informed, on a balanced and
understandable basis, of the Group’s
performance, fi nancial position and
prospects and consist of the
consolidated profi t and loss accounts,
analysis of sales, operating profi t,
pre-tax and attributable profi t by
major divisions compared against
the budgets, together with explanation
given for signifi cant variances for the
month and year-to-date.
The Company Secretary administers,
attends and prepares minutes of board
proceedings. She assists the Chairman
to ensure that board procedures
(including but not limited to assisting
the Chairman to ensure timely and
good information fl ow to the board and
board committees, and between senior
management and the non-executive
directors, and facilitating orientation
and assisting in the professional
development of the directors) are
followed and regularly reviewed to
ensure effective functioning of the
board, and that the Company’s
memorandum and articles of
association and relevant rules and
regulations, including requirements
of the Companies Act, Securities &
101
SustainingGrowth
Corporate Governance
Futures Act and Listing Manual of the
Singapore Exchange Securities Trading
Limited (“SGX”), are complied with.
She also assists the Chairman and the
board to implement and strengthen
corporate governance practices and
processes with a view to enhancing
long-term shareholder value. She is
also the primary channel of communication
between the Company and the SGX.
The appointment and removal of the
Company Secretary are subject to the
approval of the board.
Subject to the approval of the Chairman,
the directors, whether as a group
or individually, may seek and obtain
independent professional advice to
assist them in their duties, at the
expense of the Company.
Remuneration Matters
Principle 7: The procedure for
developing policy on executive
remuneration and for fi xing
remuneration packages of
individual directors should be
formal and transparent
Principle 8: Remuneration of
directors should be adequate
but not excessive
Principle 9: There should be clear
disclosure of remuneration policy,
level and mix of remuneration, and
procedure for setting remuneration
Remuneration Committee
The Remuneration Committee (RC)
comprises entirely non-executive
directors, 4 out of 5 of whom (including
the Chairman) are independent; namely:
• Mr Lim Hock San
The RC has access to expert advice in
the fi eld of executive compensation
outside the Company where required.
Independent Chairman
• Dr Lee Boon Yang
Independent Member
• Mr Sven Ullring
Independent Member
• Mrs Oon Kum Loon
Independent Member
• Mr Tow Heng Tan
Non-Executive and
Annual Remuneration Report
Policy in respect of non-executive
directors’ remuneration
The directors’ fees payable to
non-executive directors is paid in cash
and/or a fi xed number of KCL shares
as follows:
Non-Independent Member
i. Cash Component: Each non-
The RC is responsible for ensuring
a formal and transparent procedure
for developing policy on executive
remuneration and for determining the
remuneration packages of individual
directors and senior management.
The RC assists the board to ensure
that remuneration policies and
practices are sound in that they are
able to attract, retain and motivate
without being excessive, and thereby
maximise shareholder value. The RC
recommends to the board for
endorsement a framework of
remuneration (which covers all aspects
of remuneration including directors’
fees, salaries, allowances, bonuses,
options and benefi ts in kind) and the
specifi c remuneration packages for
each director and the Chief Executive
Offi cer. The RC also reviews the
remuneration of senior management
and administers the KCL Share
Option Scheme.
executive director is paid a basic
fee and if applicable (as explained
below), attendance fee. In addition,
non-executive directors who
perform additional services in board
committees are paid an additional
fee for such services. The Chairman
of each board committee is also
paid a higher fee compared with
the members of the respective
committees in view of the greater
responsibility carried by that offi ce.
Executive Directors are not paid
directors’ fees.
Basic Fee: The RC conducted a
review of the directors’ fee structure
in 2009, and the board, after due
deliberation, approved (subject to
shareholders’ approval at each
annual general meeting) the RC’s
proposed revised directors’ fee
structure as follows:
Chairman
Deputy Chairman
Director
Audit and Executive Committees
Board Risk, Remuneration, Nominating
and Board Safety Committees
Chairman
Member
Chairman
Member
Basic Fee
$125,000 per annum
$70,000 per annum
$50,000 per annum
$40,000 per annum
$20,000 per annum
$25,000 per annum
$15,000 per annum
Keppel Corporation Limited
Report to Shareholders 2009
102
Making safety an
integral part of business
operations, the Board
Safety Committee assists
in enhancing safety
awareness and culture
within the Keppel Group.
Attendance Fee: Further, the board
approved (subject to shareholders’
approval at each annual general
meeting) the recommendation of the
RC that in the event that in a
fi nancial year, a non-executive
director attends more than 6 board
meetings and/or (as the case may
be) more than 4 meetings of a board
committee of which he is a member,
he shall be paid an attendance fee
as set out below from the 7th board
meeting onwards and/or (as the
case may be) the 5th meeting of the
board committee onwards which he
attended in that fi nancial year:
In-Country Out-Country
$5,000
Board Meeting
$3,000
$3,000
Committee Meeting $1,500
ii. Share Component: At an
extraordinary general meeting
of the Company held in 2007, the
shareholders approved the board’s
recommendation to amend Article
82 of the Company’s Articles of
Association relating to the
remuneration of directors to permit
the Company to award a fi xed
number of KCL shares, as shall
from time to time be determined
by an Ordinary Resolution of the
Company, to the non-executive
directors as part of their
remuneration. The Company is
therefore able to remunerate its
non-executive directors in the form
of KCL shares by the purchase
of KCL shares from the market
for delivery to the non-executive
directors. The incorporation of an
equity component in the total
remuneration of the non-executive
directors is intended to achieve the
objective of aligning the interests
of the non-executive directors with
those of the shareholders and the
long term interests of the Company.
The directors’ fees payable to
non-executive directors is subject
to shareholders’ approval at the
Company’s annual general meetings.
Sustainability Report
Sustaining Growth – Corporate Governance
103
SustainingGrowth
Corporate Governance
Remuneration policy in respect
of Executive Directors and other
Key Executives
The Company advocates a
performance-based remuneration
system that is highly fl exible and
responsive to the market. Company’s,
business unit’s and individual
employee’s performance.
The total remuneration mix comprises
3 key components; that is, annual fi xed
cash, annual performance incentive
and long-term incentive. The annual
fi xed cash component comprises the
annual basic salary plus any other fi xed
allowances. The annual performance
incentive is tied to the Company’s,
business unit’s and individual
employee’s performance, inclusive
of a portion which is tied to EVA
performance1. The long-term incentive
is in the form of share options which
are granted based on the individual’s
performance and contribution.
The compensation structure is
designed to enable the Company
to stay competitive and relevant.
The Company benchmarks its annual
fi xed salary at the market median
with the variable compensation being
performance-driven. More emphasis
is placed on the ‘pay-at-risk’ compensation
as an employee moves up the
corporate ladder. This allows the
Company to better align executive
compensation towards shareholders’
value creation.
The Executive Directors participate in a
long-term incentive scheme in the form
of the KCL Share Option Scheme, details
of which are set out in pages 156, 175
to 177.
Level and mix of remuneration of
Directors and Key Executives (who
are not also Directors) for the year
ended 31 December 2009
The level and mix of each of the
directors’ remuneration in bands
of $250,000 are set out below:
Remuneration Band & Name of Director
Abv $11,500,000 to $11,750,000
Choo Chiau Beng*
Abv $7,750,000 to $11,500,000
Nil
Abv $7,500,000 to $7,750,000
Teo Soon Hoe
Abv $7,000,000 to $7,500,000
Nil
Abv $6,750,000 to $7,000,000
Tong Chong Heong*
$500,000 to $6,750,000
Nil
$250,000 to $500,000
Lim Chee Onn
Below $250,000
Lee Boon Yang
Lim Hock San
Sven Ullring
Tony Chew Leong-Chee
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai
Tsao Yuan Mrs Lee Soo Ann
Yeo Wee Kiong
Base/
Fixed
Salary
Performance-Related
Bonuses Earned (including
EVA and non-EVA Bonuses)
Deferred
& at risk1
Paid
9%4
43%
37%
–
–
–
10%
42%
36%
–
–
–
12%5
41%
36%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Directors’
Fees
Directors’
Allowance
Benefi ts-
in-Kind
Options
Granted2
Remuneration
Shares3
–
–
–
–
–
–
89%6
55%
87%
82%
84%
87%
83%
73%
83%
82%
–
–
–
–
–
–
–
5%
1%
5%
1%
2%
1%
3%
–
–
n.m.7
11%8
–
–
n.m.
12%9
–
–
n.m.
11%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11%
40%10
12%
13%
15%
11%
16%
24%
17%
18%
Notes:
1. A portion of the executive’s annual performance incentive is tied to EVA performance. With effect from FY2009, instead of one-half payout from the current year’s
EVA bonus, the current year’s EVA bonus is added to the accrued EVA bank balance of the preceding year and thereafter one-third (1/3) is paid out provided the
total EVA balance is positive. The other two-third (2/3) of the total EVA balance is credited to the executive’s EVA Bank(a) for payment in future years, subject to
the continued EVA performance of the Company.
(a) EVA Bank: The EVA bank concept is used to defer incentive compensation over a time horizon to ensure that the executive continues to generate sustainable
shareholder value over the longer term. The EVA bank account is designated on a personal basis and represents the executive’s contribution to the EVA
104
Keppel Corporation Limited
Report to Shareholders 2009
performance of the Company. Monies credited into the EVA bank are at risk in that the amount in the bank can decrease should EVA performance be
adversely affected in the future years.
(*) In accordance with the Company’s EVA bank policy, an Executive Director is allowed to draw down his EVA bank balance over 3 tranches when he reaches
the statutory retirement age. Each of the 3 tranches is payable consecutively on the respective annual bonus payment dates following the date he reached
the statutory retirement age, subject to the continued EVA performance of the Company.
If the Executive Director continues in service after the statutory retirement age, a separate EVA bank account is set up for him and the policy as outlined
in paragraph (1) above will apply. If he subsequently ceased service with the Company, he would be allowed to draw down his EVA bank balance over
3 tranches. Each of the 3 tranches is payable consecutively on the respective annual bonus payment dates following the date of his cessation of service,
subject to the continued EVA performance of the Company.
In line with this policy, Mr Choo Chiau Beng who reached the statutory retirement age in December 2009 was paid the fi rst tranche from his EVA bank
balance as at 31 December 2009 on the annual bonus payment date in February 2010. The balance 2 tranches will be payable on the respective annual
bonus payment dates thereafter, subject to the continued EVA performance of the Company.
Further, with effect from 22 April 2009, this policy (which was previously applicable to Executive Directors) was extended to all senior management offi cers.
As Mr Tong Chong Heong reached the statutory retirement age of 62 in January 2009 prior to this change, his total EVA bank balance as at 31 January 2009
has been fully paid out to him.
2. Based on the fair value of Options granted in August 2009 and February 2010 using Black Scholes valuation model.
3. Estimated value based on KCL shares’ closing price of $8.23 on the last trading day of FY2009.
4. Includes the sum of $194,100, being payments made pursuant to Mr Choo Chiau Beng’s contract of employment. The Company entered into a new contract
of service with Mr Choo Chiau Beng for a term of 3 years with effect from 1 January 2010.
5. Includes the sum of $153,000, being payments made pursuant to Mr Tong Chong Heong’s contract of employment. The Company entered into a new contract
of service with Mr Tong Chong Heong for a term of 3 years with effect from 1 February 2009.
6. Includes the special remuneration of $250,000 (see Resolution 10 of the Company’s Notice of Annual General Meeting).
7. n.m. – not material
8. In addition to the abovementioned Options granted, Mr Choo Chiau Beng also received 14,500 Singapore Petroleum Company Restricted Shares.
9. In addition to the abovementioned Options granted, Mr Teo Soon Hoe also received 5,000 Singapore Petroleum Company Restricted Shares.
10. Includes the award of additional 4,500 Remuneration Shares (See Resolution 11 of the Company’s Notice of Annual General Meeting).
The level and mix of each of the key executives (who are not also directors) in bands of $250,000 are set out below:
Remuneration Band & Name of Key Executive
Abv $2,250,000 to $2,500,000
Wong Kingcheung, Kevin
Abv $2,000,000 to $2,250,000
Yeo Chien Sheng, Nelson
Chia Hock Chye, Michael
Abv $1,750,000 to $2,000,000
Nil
Abv $1,500,000 to $1,750,000
Loh Chin Hua
Abv $1,250,000 to $1,500,000
Ong Tiong Guan
11. Received Keppel Land Limited Share Options.
Base/
Fixed
Salary
Performance-Related
Bonuses Earned (including
EVA and non-EVA Bonuses)
Benefi ts-
in-Kind
Options
Granted2
Paid
Deferred
& at risk1
33%
42%
16%
n.m.
9%11
17%
18%
30%
29%
26%
26%
–
–
40%
60%
–
–
n.m.
n.m.
–
n.m.
27%
27%
–
–
21%
20%
21%
n.m.
38%
Remuneration of employees who
are immediate family members
of a director or the Chief
Executive Offi cer
No employee of the Company and its
subsidiaries was an immediate family
member of a director or the Chief
Executive Offi cer and whose
remuneration exceeded $150,000
during the fi nancial year ended
31 December 2009. “Immediate family
member” means the spouse, child,
adopted child, step-child, brother,
sister and parent.
Details of the KCL Share
Option Scheme
The KCL Share Option Scheme
(“Scheme”), which has been
approved by shareholders of the
Company, is administered by the
Remuneration Committee. Please
refer to pages 156, 175 to 177 for
details on the Scheme.
Accountability and Audit
Principle 10: The Board
should present a balanced and
understandable assessment of the
Company’s performance, position
and prospects
Principle 11: Establishment
of Audit Committee with written
terms of reference
The board is responsible for providing
a balanced and understandable
Sustainability Report
Sustaining Growth – Corporate Governance
105
SustainingGrowth
Corporate Governance
assessment of the Company’s
performance, position and prospects,
including interim and other price-
sensitive public reports, and reports
to regulators (if required). Management
provides all members of the board
with management accounts which
present a balanced and
understandable assessment of the
company’s performance, position
and prospects on a monthly basis.
The board has embraced openness
and transparency in the conduct of the
Company’s affairs, whilst preserving
the commercial interests of the
Company. Financial reports and other
price-sensitive information are
disseminated to shareholders through
announcements via SGXnet to the
SGX, press releases, the Company’s
website, and public webcast and
media and analyst briefi ngs. The
Company’s Summary Financial Report
is sent to all shareholders and its Annual
Report is available on request and
accessible on the Company’s website.
Management provides all board
members with management accounts
on a monthly basis. Such reports
keep the board members informed
of the Group’s performance, position
and prospects and consist of the
consolidated profi t and loss accounts,
analysis of sales, operating profi t,
pre-tax and attributable profi t by
major divisions compared against
the respective budgets, together
with explanations for signifi cant
variances for the month and
year-to-date.
• Mr Alvin Yeo
Independent Member
Mr Lim Hock San and Mrs Oon Kum
Loon have accounting and related
fi nancial management expertise and
experience. The board considers
Mr Tony Chew as having suffi cient
fi nancial management knowledge
and experience to discharge his
responsibilities as a member of the
Committee. Mr Alvin Yeo has in-depth
knowledge of the responsibilities
of the Audit Committee and practical
experience and knowledge of the
issues and considerations affecting
the Committee from serving on
the audit committee of other listed
companies.
The Audit Committee’s primary role is
to assist the board to ensure integrity
of fi nancial reporting and that there is
in place sound internal control systems.
The Committee’s terms of reference are
set out on pages 110 and 111 herein.
The Audit Committee has explicit
authority to investigate any matter
within its terms of reference, full
access to and co-operation by
management and full discretion to
invite any director or executive offi cer
to attend its meetings, and reasonable
resources (including access to external
consultants) to enable it to discharge
its functions properly. The Company
has an internal audit team and together
with the external auditors, report
independently their fi ndings and
recommendations to the Audit
Committee.
Audit Committee
The Audit Committee comprises
the following non-executive directors,
all of whom are independent:
• Mr Lim Hock San
Independent Chairman
• Mr Tony Chew Leong-Chee
Independent Member
• Mrs Oon Kum Loon
Independent Member
The Audit Committee met with the
external auditors 3 times and with
the internal auditors 6 times during
the year, and at least one of these
meetings was conducted without the
presence of management.
During the year, the Audit Committee
performed independent review of the
fi nancial statements of the Company
106
before the announcement of the
Company’s quarterly and full-year
results. In the process, the Committee
reviewed the key areas of management
judgment applied for adequate
provisioning and disclosure, critical
accounting policies and any signifi cant
changes made that would have a great
impact on the fi nancials.
The Audit Committee also reviewed
and approved both the Group internal
auditor’s and external auditor’s plans
to ensure that the plans covered
suffi ciently in terms of audit scope
in reviewing the signifi cant internal
controls of the Company. Such
signifi cant controls comprise fi nancial,
and operational and compliance
controls. All audit fi ndings and
recommendations put up by the
internal and the external auditors
were forwarded to the Audit
Committee. Signifi cant issues were
discussed at these meetings.
In addition, the Audit Committee
undertook a review of the
independence and objectivity of the
external auditors through discussions
with the external auditors as well as
reviewing the non-audit fees awarded
to them, and has confi rmed that the
non-audit services performed by the
external auditors would not affect
their independence.
The Committee also reviewed
the adequacy of the internal audit
function and is satisfi ed that the
team is adequately resourced and
has appropriate standing within
the Company.
The Committee has reviewed
the “Keppel: Whistle-Blower
Protection Policy” (the “Policy”)
which provides for the mechanisms
by which employees and other persons
may, in confi dence, raise concerns
about possible improprieties in fi nancial
reporting or other matters, and was
satisfi ed that arrangements are in place
Keppel Corporation Limited
Report to Shareholders 2009
1
Board members sharing
their views during the
Company’s strategic
review sessions.
2
The annual general
meeting provides
shareholders with an
update of the Company’s
fi nancial performance
and milestones, as well
as a platform for them
to interact with board
members and senior
management.
1
2
Sustainability Report
Sustaining Growth – Corporate Governance
107
SustainingGrowth
Corporate Governance
for the independent investigation of
such matters and for appropriate
follow-up action. Following the launch
of the Policy, a set of guidelines which
was reviewed by the Audit Committee
and approved by the board, was issued
to assist the Audit Committee in
managing allegations of fraud or
other misconduct which may be
made pursuant to the Policy, so that:
• investigations are carried out in an
appropriate and timely manner;
• administrative, disciplinary, civil and/
or criminal actions that are initiated
following completion of investigations,
are appropriate, balanced, and fair; and
• action is taken to correct the
weaknesses in the existing system
of internal processes and policies
which allowed the perpetration of
the fraud and/or misconduct, and
to prevent a recurrence.
On a quarterly basis, management
reported to the Audit Committee the
interested person transactions (“IPTs”)
in accordance with the Company’s
Shareholders’ Mandate for IPT. The
IPTs were reviewed by the internal
auditors. All fi ndings were reported
during Audit Committee meetings.
Internal Controls
and Risk Management
Principle 12: Sound system
of internal controls
The Company’s approach to risk
management and internal control is
set out in the “Operating and Financial
Review” and the “Risk Management”
sections on pages 87 to 91 and 114
to 115 of this Annual Report.
The Company’s internal and external
auditors conduct an annual review of
the effectiveness of the Company’s
material internal controls, including
fi nancial, operational and compliance
controls, and risk management. Any
material non-compliance or failures in
internal controls and recommendations
for improvements are reported to the
Audit Committee. The Audit Committee
also reviews the effectiveness of the
actions taken by management on the
recommendations made by the internal
and external auditors in this respect.
During the year, the Audit Committee
reviewed the effectiveness of the
Company’s internal control and risk
management procedures and was
satisfi ed that the Company’s risk
management and internal control
processes are adequate to meet the
needs of the Company in its current
business environment.
Board Risk Committee
The Board Risk Committee assists the
board in examining the effectiveness
of the Group’s risk management
system to ensure that a robust risk
management system is maintained.
The Committee reviews and guides
management in the formulation of risk
policies and processes to effectively
identify, evaluate and manage
signifi cant risks, and discusses
risk management strategies with
management. The Committee reports
to the board on material fi ndings and
recommendations in respect of
signifi cant risk matters. The detailed
terms of reference of this Committee
is disclosed on page 111 herein.
The Board Risk Committee is made up
of 3 independent directors (including
the Chairman) and a non-executive
director who is independent of
management. Mrs Oon Kum Loon was
appointed Chairman of the Committee
because of her wealth of experience in
the area of risk management. Prior to
serving as Chief Financial Offi cer in the
Development Bank of Singapore (DBS),
she was the Managing Director &
Head of Group Risk Management,
responsible for the development and
implementation of a Group-wide
integrated risk management framework
for the DBS Group. Mrs Oon is a
member of the Company’s Audit
Committee. Mr Lim Hock San, who is
108
the Chairman of the Audit Committee,
has in-depth knowledge and
experience in fi nance accountancy,
business and management and is the
second member of the Board Risk
Committee. The third member is
Mr Tow Heng Tan, who has deep
management experience from his
extensive business career spanning the
management consultancy, investment
banking and stock-broking industries.
Mr Tow is currently the Chief
Investment Offi cer of Temasek
Holdings. The fourth member is
Mr Alvin Yeo who is a Senior Partner
in Wong Partnership LLP, a leading law
corporation in Singapore. Mr Yeo sits
on the boards of several companies
(listed and non-listed) and has in-depth
knowledge and experience in the area
of risk management.
Internal Audit
Principle 13: Independent
internal audit function
The role of the internal auditors is to
assist the Audit Committee to ensure
that the Company maintains a sound
system of internal controls by regular
monitoring of key controls and
procedures and ensuring their
effectiveness, undertaking investigations
as directed by the Audit Committee,
and conducting regular in-depth audits
of high risk areas. The Company’s
internal audit functions are serviced
in-house (“Group Internal Audit”).
Staffed by suitably qualifi ed executives,
Group Internal Audit has unrestricted
direct access to the Audit Committee.
The Head of Group Internal Audit’s
primary line of reporting is to the
Chairman of the Audit Committee,
although she reports administratively
to the Chief Executive Offi cer of
the Company.
As a corporate member of the Singapore
branch of the Institute of Internal
Auditors Incorporated, USA (“IIA”),
Group Internal Audit is guided by the
Keppel Corporation Limited
Report to Shareholders 2009
Standards for the Professional Practice
of Internal Auditing set by the IIA.
These standards consist of attribute
standards, performance standards
and implementation standards.
During the year, Group Internal
Audit adopted a risk-based auditing
approach that focuses on material
internal controls, including fi nancial,
operational and compliance controls.
Audits were carried out on all
signifi cant business units in the
Company, inclusive of limited review
performed on dormant and inactive
companies. All Group Internal Audit’s
reports are submitted to the Audit
Committee for deliberation with
copies of these reports extended
to the Chairman, Chief Executive
Offi cer and the relevant senior
management offi cers. In addition,
Group Internal Audit’s summary of
fi ndings and recommendations are
discussed at the Audit Committee
meetings.
Communication with Shareholders
Principle 14: Regular, effective and
fair communication with shareholders
Principle 15: Greater shareholder
participation at Annual General
Meetings
In addition to the matters mentioned
above in relation to “Access to
Information/Accountability”,
the Company’s Group Corporate
Communications Department (with
assistance from the Group Finance
and Group Legal Departments, when
required) regularly communicates with
shareholders and receives and attends
to their queries and concerns.
Material information are disclosed in
a comprehensive, accurate and timely
manner via SGXnet and the press.
To ensure a level playing fi eld and
provide confi dence to shareholders,
unpublished price sensitive information
are not selectively disclosed, and on
the rare occasion when such
Sustainability Report
Sustaining Growth – Corporate Governance
information are inadvertently disclosed,
they are immediately released to the
public via SGXnet and the press.
Shareholders are informed of
shareholders’ meetings through
notices published in the newspapers
and reports or circulars sent to all
shareholders. Shareholders are invited
at such meetings to put forth any
questions they may have on the motions
to be debated and decided upon. If any
shareholder is unable to attend, he is
allowed to appoint up to two proxies
to vote on his behalf at the meeting
through proxy forms sent in advance.
At shareholders’ meetings, each
distinct issue is proposed as a
separate resolution.
The Chairmen of each board
committee are required to be present
to address questions at the Annual
General Meeting. External auditors are
also present at such meetings to assist
the directors to address shareholders’
queries, if necessary.
The Company is not implementing
absentia voting methods such as voting
via mail, e-mail or fax until security,
integrity and other pertinent issues
are satisfactorily resolved.
The Company Secretary prepares
minutes of shareholders’ meetings,
which incorporates substantial
comments or queries from
shareholders and responses from
the board and management. These
minutes are available to shareholders
upon their requests.
Securities Transactions
Insider Trading Policy
The Company has a formal Insider
Trading Policy and Disclosure of
Dealings in Securities Policy on
dealings in the securities of the
Company and its listed subsidiaries,
which sets out the implications of
insider trading and guidance on
such dealings. The policy has been
distributed to the Group’s directors and
offi cers. In compliance with Rule 1207(18)
of the Listing Manual on best practices
on dealing in securities, the Company
issues circulars to its Directors and
offi cers informing that the Company
and its offi cers must not deal in listed
securities of the Company one month
before the release of the full-year
results and two weeks before the
release of quarterly results, and if
they are in possession of unpublished
price-sensitive information.
109
SustainingGrowth
Corporate Governance
Appendix
Nature of Current Directors’ Appointments and Membership on Board Committees
Committee Membership
Director
Lee Boon Yang
Lim Hock San
Choo Chiau Beng
Sven Bang Ullring
Tony Chew Leong-Chee
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai
Teo Soon Hoe
Tong Chong Heong
Board Membership
Chairman
Deputy Chairman
Chief Executive Offi cer
Independent
Independent
Independent
Non-Independent & Non-Executive
Independent
Executive Director
& Group Finance Director
Executive Director
Nominating
Member
Audit
–
Chairman
–
–
Remuneration
Member
– Chairman
–
–
Member
Member
Member Chairman
–
Member
Member
Member
–
–
Member
–
–
Safety
Risk
Member
–
–
Member
–
Member
– Chairman
–
–
–
Member Chairman
–
Member
Member
–
Member
–
–
–
–
–
–
–
–
–
Board Committees
– Terms Of Reference
A. Executive Committee
1. Consider and, if deemed fi t,
approve investments, acquisitions
and disposal of assets of the
Company and its subsidiaries which
are above $30 million but less than
$100 million.
2. Consider and recommend to
the board proposed investments,
acquisitions and disposal of assets
of the Company and its subsidiaries
which are $100 million or above.
3. Consider and recommend to the
board proposed investments and
acquisitions of the Company and its
subsidiaries which do not fall within
the Company’s core businesses
but which are considered strategic
investments for the long-term
prospects of the Company.
4. Consider and, if deemed fi t,
approve capital equipment
purchases and leases of the
Company and its subsidiaries
which are above $30 million but
less than $100 million.
5. Consider and recommend to
the board on proposed capital
equipment purchases and leases
of the Company and its subsidiaries
which are above $100 million.
6. Consider and, if deemed fi t,
approve performance bonds and
guarantees to be furnished by the
Company or its subsidiaries which
are above $30million but less than
$100 million.
7. Consider and recommend to the
board on proposed performance
bonds and guarantees to be
furnished by the Company or
its subsidiaries which are above
$100 million.
8. Consider and, if deemed fi t,
approve loans to companies within
the Keppel Group of an amount
exceeding $30 million but up
to $100 million.
9. Consider and, if deemed fi t, approve
foreign exchange transactions for
companies within the Keppel Group
of an amount exceeding $100 million
but up to $200 million.
10. In relation to matters which require
the approval of this Committee
pursuant to other provisions of
these terms of reference, approve
the affi xation of the Common Seal
onto any legal document in
accordance with the Company’s
Articles of Association.
11. Approve the banks in Singapore
and overseas with which the
Company may transact.
12. Approve the establishment and
registration of local and foreign
offi ces of the Company.
13. Carry out such other functions as
may be delegated to it by the board.
14. Sub-delegate any of its powers
within its terms of reference as
listed above, from time to time,
as this Committee may deem fi t.
Matters arising at meetings of the
Executive Committee shall be decided
by a simple majority of votes including
the affi rmative vote of at least one
member who is an independent director.
B. Audit Committee
1. Examine the effectiveness of the
group’s internal control system,
including fi nancial, operational and
compliance controls, to ensure that
a sound system of internal controls
is maintained.
2. Review audit plans and reports of
the external auditors and internal
auditors, and consider the
effectiveness of actions or policies
taken by management on the
recommendations and
observations.
3. Review fi nancial statements and
formal announcements relating to
fi nancial performance, and review
signifi cant fi nancial reporting issues
and judgments contained in them,
to ensure integrity of such
110
Keppel Corporation Limited
Report to Shareholders 2009
statements and announcements.
4. Review the independence and
objectivity of the external auditors
annually.
5. Review the nature and extent of
non-audit services performed by
the auditors.
6. Meet with external auditors
and internal auditors, without the
presence of management, at
least annually.
7. Make recommendations to the
board on the appointment,
re-appointment and removal of
the external auditor, and approve
the remuneration and terms of
engagement of the external auditor.
8. Review the effectiveness of the
Company’s internal audit function.
9. Ensure that the internal audit
Group’s risk management system
to ensure that a robust risk
management system is maintained.
4. Review and guide in establishing a
process to effectively identify, evaluate
and manage signifi cant risks.
5. Review risk limits where applicable.
6. Review the Group’s risk profi le
periodically.
7. Provide a forum for discussion
on risk issues.
8. Report to the board on material
matters, fi ndings and recommendations.
9. Perform such other functions
as the board may determine.
10. Sub-delegate any of its powers
within its terms of reference as
listed above from time to time as
this Committee may deem fi t.
function is adequately resourced
and has appropriate standing within
the company, at least annually.
10. Review arrangements by which
D. Nominating Committee
1. Recommend to the board the
appointment/re-appointment
of directors.
employees of the Company may,
in confi dence, raise concerns about
possible improprieties in matters of
fi nancial reporting or other matters,
to ensure that arrangements are in
place for the independent
investigation of such matters and
for appropriate follow-up action.
11. Review interested person
transactions.
12. Investigate any matters within the
Audit Committee’s purview,
whenever it deems necessary.
13. Report to the board on material
matters, fi ndings and
recommendations.
14. Perform such other functions
as the board may determine.
15. Sub-delegate any of its powers
within its terms of reference as
listed above from time to time as
this Committee may deem fi t.
C. Board Risk Committee
1. Review and guide the Group
in formulating its risk policies.
2. Discuss risk mitigation strategies
with management.
3. Examine the effectiveness of the
2. Annual review of skills required by
the board, and the size of the board.
3. Annual review of independence of
each director, and to ensure that
the board comprises at least one-
third independent directors.
4. Decide where a director has multiple
board representation, whether the
director is able to and has been
adequately carrying out his duties
as director of the Company.
5. Decide how the board’s performance
may be evaluated, and propose
objective performance criteria to
assess effectiveness of the board
as a whole and the contribution of
each director.
6. Annual assessment of the
effectiveness of the board as a
whole and individual directors.
7. Review succession and leadership
development plans.
8. To review and, if deemed fi t, approve
recommendations for nomination of
candidates as nominee director
(whether as chairman or member)
to the board of directors of investee
companies which are:
i. listed on the Singapore Exchange
Sustainability Report
Sustaining Growth – Corporate Governance
111
SustainingGrowth
Corporate Governance
or any other stock exchange
(that is, as at the date hereof,
Keppel Land Limited, Keppel
Telecommunications &
Transportation Ltd, K-REIT Asia
Management Limited, Keppel
Philippines Holdings Inc, Keppel
Philippines Marine Inc, Keppel
Philippines Properties Inc, Keppel
Thai Properties Public Co Ltd,
Singapore Petroleum Company
Limited, k1 Ventures Limited,
Evergro Properties Ltd and
MobileOne Limited);
ii. managers or trustee-managers
of any collective investment
schemes, business trusts, or any
other trusts which are listed on
the Singapore Exchange or any
other stock exchange (that is, as
the date hereof, K-REIT Asia
Management Limited and Keppel
Infrastructure Fund Management
Pte. Ltd.); and
iii. parent companies of the
Company’s core businesses (that
is, as at the date hereof, Keppel
Offshore & Marine Ltd, Keppel
Integrated Engineering Ltd, and
Keppel Energy Pte Ltd),
(hereinafter referred to as
“Nominee Director Nominations”).
9. To review all Nominee Director
weighing the use of share schemes
against the other types of long-term
incentive scheme)
4. Review the terms, conditions and
remuneration of the senior
management.
5. Administer the Company’s
employee share option scheme
(the “KCL Share Option Scheme”)
in accordance with the rules of
the scheme.
6. Grant share options under the KCL
Share Option Scheme as this
Committee may deem fi t.
7. Sub-delegate any of its powers
within its terms of reference as
listed above, from time to time, as
this Committee may deem fi t.
Save that a member of this Committee
shall not be involved in the deliberations
in respect of any remuneration,
compensation, options or any form
of benefi ts to be granted to him.
F. Board Safety Committee
1. Review and examine the
effectiveness of the Keppel Group
companies’ safety management
system, including training and
monitoring systems, to ensure that
a robust safety management
system is maintained.
Nominations annually.
2. Review and examine the Keppel
10. Sub-delegate any of its powers
within its terms of reference as
listed above, from time to time,
as this Committee may deem fi t.
E. Remuneration Committee
1. Recommend to the board a
framework of remuneration for
board members and key
executives, and the specifi c
remuneration packages for each
director and the chief executive
offi cer (if the chief executive offi cer
is not an executive director).
2. Decide the early termination
compensation (if any) of directors.
3. Consider whether directors should
be eligible for benefi ts under long-
term incentive schemes (including
Group companies’ safety
procedures against industry best
practices, and monitor its
implementation.
3. Provide a discussion forum on
developments and best practices in
safety standards and practices, and
the feasibility of implementing such
developments and best practices.
4. Assist in enhancing safety
awareness and culture within the
Keppel Group.
5. Ensure that the safety functions in
Keppel Group companies are
adequately resourced (in terms of
number, qualifi cation, and budget)
and has appropriate standing within
the organisation.
6. Consider management’s proposals
112
on safety-related matters.
7. Carry out such investigations into
safety-related matters as the
Committee deems fi t.
8. Report to the board on material
matters, fi ndings and
recommendations.
9. Perform such other functions as
the board may determine.
10. Sub-delegate any of its powers
within its terms of reference as
listed above from time to time
as the Committee may deem fi t.
Board Assessment
Evaluation Processes
Board
Each board member is required to
complete a Board Evaluation Questionnaire
and send the Questionnaire direct to
the Independent Co-ordinator (“IC”)
within fi ve working days. An “Explanatory
Note’” is attached to the Questionnaire
to clarify the background, rationale and
objectives of the various performance
criteria used in the Board Evaluation
Questionnaire with the aim of achieving
consistency in the understanding and
interpretation of the questions. Based
on the returns from each of the directors,
the Independent Co-ordinator prepares
a consolidated report and briefs the
Chairman of the Nominating Committee
(“NC”) and the Board Chairman on the
report. Thereafter, the IC presents the
report for discussion at a meeting of
the non-executive directors (“NEDs”),
chaired by the Board Chairman. The IC
will thereafter present the report to the
board together with the recommendations
of the NEDs for discussion on the changes
which should be made to help the board
discharge its duties more effectively.
Individual Directors
The board differentiates the assessment
of an executive director from that of a
non-executive director (“NED”).
In the case of the assessment of the
individual executive director, each NED
is required to complete the executive
director’s assessment form and send
Keppel Corporation Limited
Report to Shareholders 2009
the form directly to the IC within fi ve
working days. It is emphasised that the
purpose of the assessment is to assess
each of the executive directors on their
respective performance on the board
(as opposed to their respective
executive performance). The executive
directors are not required to perform a
self, nor a peer, assessment. Based on
the returns from each of the NEDs, the
IC prepares a consolidated report and
briefs the NC Chairman and Board
Chairman on the report. Thereafter, the
IC presents the report for discussion at
a NED meeting, chaired by the Board
Chairman. The Chairman of the NC
will thereafter meet with the executive
directors individually to provide the
necessary feedback on their respective
board performance with a view to
improving their board performance
and shareholder value.
As for the assessment of the
performance of the NEDs, each
director (both NEDs and executive
directors) is required to complete the
NED’s assessment form and send
the form directly to the IC within fi ve
working days. Each NED is also
required to perform a self-assessment
in addition to a peer assessment.
Based on the returns, the IC prepares
a consolidated report and briefs the
NC Chairman and Board Chairman on
the report. Thereafter, the IC presents
the report for discussion at a meeting
of the NEDs, chaired by the Board
Chairman. The IC will thereafter present
the report to the board together with
the recommendations of the NEDs.
The Chairman of the NC will thereafter
meet with the NEDs individually to
provide the necessary feedback on
their respective board performance
with a view to improving their board
performance and shareholder value.
Chairman
The Chairman Evaluation Form is
completed by each director (both
non-executive and executive) and sent
directly to the IC within fi ve working
Sustainability Report
Sustaining Growth – Corporate Governance
days. Based on the returns, the IC
prepares a consolidated report and
briefs the NC Chairman and Board
Chairman on the report. Thereafter,
the IC presents the report for
discussion at a meeting of the NEDs,
chaired by the Board Chairman. The
IC will thereafter present the report
to the board together with the
recommendations of the NEDs.
Performance Criteria
The performance criteria for the
board evaluation are in respect of the
board size and composition, board
independence, board processes,
board information and accountability,
board performance in relation to
discharging its principal functions,
board committee performance in
relation to discharging their
responsibilities set out in their
respective terms of reference, and
fi nancial targets which include return
on capital employed, return on equity,
debt/equity ratio, dividend pay-out
ratio, economic value added, earnings
per share, and total shareholder return
(i.e; dividend plus share price increase
over the year).
The individual director’s performance
criteria are categorised into 5 segments;
namely, (1) interactive skills (under
which factors as to whether the director
works well with other directors, and
participates actively are taken into
account); (2) knowledge (under which
factors as to the director’s industry
and business knowledge, functional
expertise, whether he provides valuable
inputs, his ability to analyse,
communicate and contribute to the
productivity of meetings, and his
understanding of fi nance and
accounts, are taken into consideration);
(3) director’s duties (under which
factors as to the director’s board
committee work contribution, whether
the director takes his role of director
seriously and works to further improve
his own performance, whether he
listens and discusses objectively and
exercises independent judgment,
and meeting preparation are taken
into consideration); (4) availability
(under which the director’s attendance
at board and board committee
meetings, whether he is available
when needed, and his informal
contribution via e-mail, telephone,
written notes, etc. are considered);
and (5) overall contribution, bearing
in mind that each director was
appointed for his/her strength in
certain areas which taken together
provides the board with the required
mix of skills and competencies.
The assessment of the Chairman
of the board is based on his ability
to lead, whether he established proper
procedures to ensure the effective
functioning of the board, whether
he ensured that the time devoted
to board meetings were appropriate
(in terms of number of meetings held
a year and duration of each board
meeting) for effective discussion
and decision-making by the board,
whether he ensured that information
provided to the board was adequate
(in terms of adequacy and timeliness)
for the board to make informed and
considered decisions, whether he
guided discussions effectively so that
there was timely resolution of issues,
whether he ensured that meetings
were conducted in a manner that
facilitated open communication and
meaningful participation, and whether
he ensured that board committees
were formed where appropriate,
with clear terms of reference, to
assist the board in the discharge
of its duties and responsibilities.
113
SustainingGrowth
Risk Management
MANAGING
RISKS FOR
OPERATIONAL
RESILIENCE
Concerted risk management efforts ensure
the Group remains well-placed to protect
the interests of and add value to shareholders.
114
Keppel Corporation Limited
Report to Shareholders 2009
A robust risk management framework
underpins the Group’s overall business
performance and day-to-day
operations. Sound risk management
policies, practices and guidelines
provide a robust platform to prudently
and effectively steer our business
operations in today’s challenging
macro-economic environment.
Managing Risks Proactively
The Board, assisted by the Board Risk
Committee (BRC), is fully committed
to a robust risk management system
to safeguard and enhance stakeholders’
interests. To support the Group in
executing its business strategies to
sustain growth, BRC reviews and
guides the Group in the formulation
of its risk policies, risk limits and
effective risk management system.
Its terms of reference are disclosed
on page 111 of this Report.
Strong commitment by top management
in driving Group-wide risk management
systems and processes over the years
has equipped the Group well to face the
challenging business environment and
to capitalise on opportunities that arise.
The global fi nancial crisis has reinforced
the importance of risk management, in
particular, the management of liquidity
risks and counterparty credit risks.
Strong emphasis has been placed on
formalising various risk mitigation
strategies to improve fi nancial discipline
in cash management and in preparing
the Group to seize investment
opportunities. Impact assessment
and review of the Group’s exposure
to changing market situations, as well
as stress testing analysis were carried
out to enable informed decision-
making and timely mitigation actions.
In addition, the continuous scanning
and close monitoring of political,
economic and regulatory issues also
enable management to have a better
insight on impending developments
in the span of countries where the
Group operates.
Sustainability Report
Sustaining Growth – Risk Management
Fortifying Fundamental Practices
While there are signs of a global
economic recovery, managing risks
in the respective businesses and
countries of operations remains
challenging. The Enterprise Risk
Management framework provides
a holistic and systematic approach
in risk management to better prepare
the Group to respond to the dynamic
business environment and leverage
business opportunities.
The Group’s risk-related policies and
limits are subjected to periodic reviews
to ensure that they continue to support
business objectives, address business
risks adequately and effectively, and
take into consideration the prevailing
economic climate and risk appetite of
the Group.
Standardised risk management
methodology is adopted across all
business units to streamline processes.
Guidelines and templates are tools
used to provide guidance in the
identifi cation, assessment, mitigation
and monitoring of risks. Operational
risk management is embedded in the
day-to-day business operations across
all functions, allowing early risk
detection for effective management
and control. Risk management also
forms an integral part of the Group’s
strategic and budget review exercise,
policy formulation and revision, project
and investment evaluation, and
performance evaluation process.
With its strong fi nancial position,
the Group has greater room to explore
investment opportunities. Management
is vigilant in evaluating any investment
opportunities, and decisions are made
after taking into consideration the risks
and returns. All investments and
divestments are subject to due diligence
processes and are approved by
an investment and major projects
committee comprising key senior
management, and subsequently by the
Board based on established thresholds.
Prudent risk management practices,
including effective management of
market risks (currency risks, interest
rate risks and price risks), credit and
liquidity risks, lay the Group’s fi nancial
management foundation. Further
details can be found on pages 90
and 91 in this Report.
Strengthening Risk Management
Culture
The Group has intensifi ed its efforts
to strengthen its risk-centric culture.
Continuous education and regular
communications through various
forums and in-house publications on
risk management-related topics are
essential in inculcating risk awareness
among employees. In-house workshops
are programmed to train key project
personnel and management staff to
strengthen risk assessment discipline.
Embedding risk management processes
in the daily operations across functions
also helps to reinforce a risk-centric
culture in the Group.
Enhancing Operational Readiness
Business Continuity Management
(BCM) increases the resilience of the
Group to potential business disruptions
and minimises the impact of a crisis
on business operations, people and
assets. Emphasis is placed on
establishing robust business continuity
plans to ensure that the Group can
respond seamlessly to external events
while minimising operational disruptions.
During the year, the BCM focus was on
building the Group’s resilience against
pandemic fl u adversities. Various
simulation exercises were conducted
at selected business units and locations
to enhance operational preparedness.
The Group continues to scan for
possible threats and establish plans
to enhance operational preparedness.
These plans are tested and refi ned
regularly to ensure that premeditated
responses are workable and effective.
115
SustainingGrowth
Environmental Protection
DEVELOPING A
SUSTAINABLE
ENVIRONMENT
Running our operations responsibly and with
focus on the environment makes good business
sense for the Group.
116
Keppel Corporation Limited
Report to Shareholders 2009
With the need for concerted global
efforts to tackle the environmental
challenges brought on by rapid
economic growth and urbanisation,
we are doing our part to contribute
to the preservation and protection
of the environment as part of our
business operations.
Mitigating environmental issues forms
the fundamental backbone of many
of our businesses. Our environmental
engineering business is a leading
player in the provision of waste-to-
energy and water treatment plants.
Our property business has expertise
in developing integrated townships
incorporating green elements. A key
contributor to our energy business
is a natural gas-fi red co-generation
plant, providing an effi cient and clean
energy source which helps to reduce
emissions. We are also looking for
opportunities in renewable energy
such as offshore wind.
At the operational level, our businesses
are continually seeking ways to use
less energy, reduce wastage and
emissions, and to recycle more.
Harmonising with the
Living Environment
Guided by the philosophy that
properties should be developed
to harmonise and improve the
environment, as well as enhance the
quality of life of the people who use
them, Keppel Land takes a proactive
environmental management approach
and has an Environment Management
Committee to develop and implement
strategies and programmes relating
to the environment. The company
aims to minimise its environmental
impact through energy-effi cient
measures, water conservation,
recycling programmes and
preserving biodiversity.
As part of its commitment to establish
and maintain high standards of
environmental protection and
Sustainability Report
Sustaining Growth – Environmental Protection
continually innovate to improve
its environmental performance,
Keppel Land invests up to 4% of the
construction cost of a development
on green design and features. The
company believes that the long-term
benefi ts far outweigh the higher cost
in the development of green buildings.
Commercial developments such as
Ocean Financial Centre (OFC) and
Marina Bay Financial Centre (MBFC)
are distinguished by effi cient intelligent
features geared towards housing the
world’s leading corporations, while
incorporating environmentally friendly
initiatives such as green havens. OFC
will feature a roof photovoltaic system,
an energy-effi cient hybrid-chilled water
system and an integrated paper
recycling facility. MBFC will have an
energy-effi cient curtain-wall glass
cladding system for an overall
building envelope design that delivers
low-energy thermal transfer value
and a high-energy effi ciency index.
Keppel Land has set as a benchmark
for all its projects in Singapore and
overseas the goal of achieving at least
the Green Mark Gold standard by the
Building and Construction Authority
of Singapore (BCA) or its equivalent
overseas, such as the Leadership in
Energy and Environmental Design
of the US and the Building Research
Establishment Environmental
Assessment Method of the UK.
To date, the company has garnered
a total of 18 BCA Green Mark awards.
KEY ECO PRINCIPLES
Ecollaboration
Work with stakeholders, policy-makers
and decision-makers to build a ‘greener’ future
Economy
Balance commercial viability
and environmental sustainability
Ecommitment
Promote environmental awareness
and support green initiatives
Ecommunity
Create sustainable developments
for future generations
117
SustainingGrowth
Environmental Protection
In addition, Keppel Land applies a set
of stringent criteria on the selection
of contractors and suppliers it works
with, to ensure that they share the
company’s commitment to high quality,
environmental, health and safety
standards. It is also building up a core
of in-house green building specialists.
To date, Keppel Land has successfully
trained close to 35 Project Managers
as Green Mark Managers. Of these,
three are also Green Mark Professionals
and another, a Singapore Certifi ed
Energy Manager.
From China to Indonesia, Keppel Land’s
golf courses achieved certifi cation by
Audubon International, an environmental
organisation shaping wildlife protection,
and providing education and conservation
assistance in responsible management
of land, water and wildlife. Tianjin Pearl
Beach International Country Club was
the fi rst in the world to be certifi ed a
Classic Sanctuary by Audubon
International.
In terms of environmental performance,
in 2009, the total energy consumption
at Keppel Land’s corporate offi ce and
six investment buildings reduced by
almost 4% to 23.5 million kWh from
24.4 million kWh in 2008. This was
due mainly to the implementation of
key initiatives such as energy audits
and the eco-offi ce programme to
conserve energy and improve energy
effi ciency. As a result of the reduced
energy usage, the company’s total
carbon emissions, which are indirect
emissions, fell by 10.8% in 2009
compared to 2008.
Eco-Friendly Rigs
Keppel Offshore & Marine (Keppel
O&M) is known for its market-proven
rig designs which are technologically
advanced and environmentally friendly.
The KFELS Semisubmersible Drilling
Tender (SSDT) and the KFELS B Class
jackup were acknowledged by the
Institution of Engineers Singapore
Prestigious Engineering Achievement
Awards 2009 for their contributions to
sustainable operations.
Apart from its outstanding
performance, the KFELS SSDTTM
is a zero discharge vessel. As part of
a stringent drilling waste management
Keppel Land’s Total Energy Consumption
(million kWh)
25
20
15
10
5
0
Corporate Office
Investment Buildings
Total
118
0.5
24.2
24.7
0.5
24.4
24.9
0.5
23.9
24.4
2006
2007
2008
0.5
23.0
23.5
2009
system, drilling cuttings which contain
hydrocarbon contents are separated by
the solid control equipment and stored
in containers on the KFELS SSDT TM’s
large deck. This system eliminates the
dumping of solid waste into the ocean
and reduces the need for frequent
supply boat trips to offl oad the waste.
The KFELS B Class jackup is designed
for maximum uptime with reduced
emissions. The main generators at the
heart of the rig meet the stringent
Engine International Air Pollution
Prevention requirements, while the
air-conditioning units also employ
non-ozone depleting refrigerants.
Quiet and energy-effi cient AC drives
are used for all drilling motors and
mooring winches. In addition, the three
legs of the jackup rig are designed
in a way which is less bulky and
obstructive underwater. This causes
minimal disruption to the eco-system
and allows marine life to co-exist with
exploration and drilling activities.
Energy-Reducing Initiatives
Keppel Logistics continually seeks to
streamline its warehousing operations
spanning about 1.5 million square feet
in Singapore to improve resource-
effi ciency. In 2008, it audited the
energy consumption of its operations
centres and then embarked on energy-
saving initiatives aimed at reducing the
usage of electricity, water, paper,
packing materials and fuel. In less than
six months, energy consumption at its
top fi ve centres reduced by 12%.
Harnessing the year-round sunlight
available in Singapore, Keppel O&M
Technology Centre (KOMtech) has
installed two photovoltaic power plants
on the rooftop of its building in
Singapore to convert solar energy into
electricity. Each plant has an average
lifespan of about 25 years and can
generate energy savings of 30,000 kWh
annually. With the two plants, the
Centre can potentially save as much
as 1.5 million kWh, thereby avoiding
Keppel Corporation Limited
Report to Shareholders 2009
With the installation
of PV power plants on
its rooftop, KOMtech
is able to generate energy
savings and minimise
carbon dioxide emissions
for over two decades.
carbon dioxide emissions of 1,300
tonnes. This green feature also helps
the Centre reduce its energy costs in
the longer run.
Keppel Shipyard has embarked on
several energy-saving initiatives in daily
operations since December 2007.
In workshops around the yards,
fi breglass sheets were installed on
rooftops to let the natural sunlight in
to help reduce the use of lighting.
Conventional lightbulbs in offi ces and
tower gangways were also replaced
with energy-saving lightbulbs. During
daily operations, travelling motors in
level luffi ng cranes were replaced with
inverter drivers.
As the world observed Earth Hour
on 28 March 2009, companies in
the Keppel Group also participated
in this World Wildlife Fund initiative
by turning off non-essential lights
for an hour from 8.30pm to 9.30pm.
Lights were turned off at Keppel O&M’s
yards and workers’ dormitories, the
Keppel Seghers Ulu Pandan NEWater
Plant, Keppel Land’s seven offi ce
buildings and Marina at Keppel Bay
in Singapore. Keppel Land’s overseas
developments such as Saigon Centre
in Vietnam, The Seasons in Beijing
as well as properties under Sedona
Hotels International also participated
in this initiative.
Water Saving and
Recycling Efforts
For Keppel Integrated Engineering
(KIE), its environmental engineering
solutions are meant not just for
customers, but are also applied
in its civil work processes in the
construction of waste-to-energy
or water treatment plants.
In Qatar, Keppel Seghers is developing
the largest wastewater treatment and
reuse and sludge treatment facility, the
Doha North Sewage Treatment Works.
The facility will treat up to 439,000 m3/
day and the water will be used for
irrigation. This will be the fi rst wastewater
treatment facility in Qatar to use
advanced membrane and ultraviolet
treatment technologies to reclaim high-
quality water for non-potable purposes,
feature a comprehensive odour control
system and treat sludge from all sewage
treatment works in Qatar.
In the construction of this facility,
Keppel Seghers deployed its Potabloc
system to treat recycled water.
Potabloc is a mobile water production
unit that produces high-quality water
from unconventional sources including
seawater or brackish water, through
separation techniques such as
ultra-fi ltration and reverse osmosis.
Ashgal, the Public Works Authority
of Qatar, hailed this as an example of
green construction practice and is
looking into implementing the system
in other infrastructure and construction
projects in Doha.
At Keppel Shipyard, NEWater is
used for hull washing and toilet
fl ushings. NEWater is treated used
water that has undergone stringent
purifi cation and treatment process.
This initiative has effectively reduced
the consumption of potable water at
the yards, thereby reducing the strain
on the already scarce water resources
in Singapore.
Recycling of paper is another green
initiative actively pursued by companies
in the Keppel Group. Keppel Land
has put in place a paper-recycling
programme for tenants of its offi ce
buildings in Singapore, while
Keppel Shipyard inculcated a culture
of recycling among its employees,
resulting in a signifi cant increase
in the amount of paper recycled
since the effort started in 2006.
Sustainability Report
Sustaining Growth – Environmental Protection
119
SustainingGrowth
Product Excellence
DRIVING
PRODUCT AND
TECHNOLOGY
EXCELLENCE
Product and technology excellence and innovation
are key in strengthening our core competencies and
developing new growth drivers.
120
Keppel Corporation Limited
Report to Shareholders 2009
Offshore and Marine
Technology Development
Launched at end-2007, Keppel
Offshore & Marine Technology
Centre (KOMtech) underscores
Keppel Offshore & Marine’s
(Keppel O&M) commitment to long-
term R&D. Housed under one roof
since November 2008, KOMtech
consists of six groups, namely, the
Offshore Structures Group, Marine
Group, Technology Foresight Group,
Shipyard Process Improvement
Group, FPSO/Process Group and
the Drilling Equipment Group.
With its emphasis on technologies
with strategic and commercial impact,
KOMtech augments the work of
Keppel O&M’s three existing
technology units – Offshore
Technology Development, Deepwater
Technology Group and Marine
Technology Development – which
focus on design and engineering.
With an initial $150 million funding for
its fi rst fi ve years providing reasonable
fi nancial visibility, KOMtech researchers
can focus on longer-term innovation
and projects. To date, KOMtech has
fi led 14 patents.
Keppel O&M also actively participates
in industry forums and events, keeping
abreast of latest technology trends
and innovations while playing an active
role in the development of solutions
for the offshore and marine industry.
Driving Environmental
Technology Solutions
Increasing urbanisation and climate
change presents environmental
challenges. Demand for sustainable
water and energy will be the primary
driver for our environmental business,
as we leverage our competencies
in water treatment and thermal
waste technology to carve a niche
for innovative yet cost-effi cient
environmental solutions.
Product and technology development
and innovation are vital in sustaining
Keppel’s competitive edge across its
markets, constantly enabling us to offer
advanced as well as cost-effi cient
solutions that address present and
future customer needs.
Keppel Technology
Advisory Panel
Established in 2004, the Keppel
Technology Advisory Panel (KTAP)
is envisioned to be a key platform
for sustaining the Group’s technology
leadership. In addition to providing
strategic leadership for our Research
and Development (R&D) efforts,
KTAP also mentors and challenges
the robustness of initiatives in
research, development, testing
and commercialisation of new
products and services in our
various businesses.
With Board and senior management
participation, KTAP convenes twice
a year and has met 11 times since its
inception. Chaired by Professor Cham
Tao Soon, President Emeritus of
Nanyang Technological University
(NTU) and Chancellor of UniSIM,
KTAP comprises eight other academic
and industry experts from both the
local and international arena.
At its meeting in Singapore in
December 2009, KTAP deliberated
a broad spectrum of topics ranging
from offshore wind energy, mini-LNG
solution for offshore associated gas,
future trends of waste management,
forward osmosis for desalination,
to the setting up of an R&D centre for
environmental, water and sustainable
development in the Sino-Singapore
Tianjin Eco-City.
Looking ahead, KTAP will continue
to play a catalytic role in fostering a
vibrant R&D culture within the Group,
as a strategic, forward-looking platform
to identify areas to sustain our
competitive edge.
Sustainability Report
Sustaining Growth – Product Excellence
Spurring Innovation in
Environmental Technology
Our environmental engineering
business focuses its innovation
strategy on competency building and
technology commercialisation in our
efforts to align leadership in water and
wastewater treatment and solid waste
management technologies with the
needs of the global market.
Keppel Environmental Technology
Centre (KETC) is the Group’s centre of
excellence spearheading innovation in
the environmental sphere. Established
in 2007, KETC augments existing R&D
initiatives and strategic alliances with
leading academic and industry
partners, harnessing both internal and
external resources and collaborations
to complement its technology
development activities.
KETC continued to undertake active
R&D to propel technological innovation
for Keppel Seghers in 2009 despite the
slowdown in the global economy. In
line with the new economic reality, our
focus was directed on a number of high
impact studies while maintaining
vigilance on evolving technologies
around the world.
Throughout the year, signifi cant
progress was achieved in various pilot
and testbedding initiatives in our key
areas of focus:
– The MEMSTILL® project, a novel
desalination process utilising low-
grade heat, completed its third pilot
testing in the Netherlands. Tech
Pioneering Funding was secured for
a demonstration plant to be
constructed in Singapore in 2010.
A new design to signifi cantly improve
the cost effectiveness of the process
was also tested in Belgium and Spain.
– The REDOXAN® pilot study, to seek
a more effective way to treat and
recycle sludge, was largely
completed and promising results of
121
SustainingGrowth
Product Excellence
sludge destruction and biogas
production were obtained.
– Collaborated with Toray Industries
to design, construct and operate
a Membrane Bioreactor (MBR)
pilot plant in the Ulu Pandan Water
Reclamation Plant.
– Continued to modify and upgrade
the interstage turbochargers for the
Reverse Osmosis (RO) system in the
Ulu Pandan NEWater Plant to
reduce power consumption.
– Tested and approved new
anti-scalants for wastewater
RO treatment in the Ulu Pandan
NEWater Plant.
– Co-ordinated research efforts
with KOMtech and collaborated
on a number of new project
proposals, including offshore RO,
shipyard waste treatment and
shipboard MBR.
– Collaborated with NTU to submit
research proposals to the National
Research Foundation (NRF) and the
National Environmental Agency for
both solid waste and water treatment
research projects. KIE’s project with
NTU, entitled Sustainable Urban
Waste Management for 2020, was
one of fi ve projects selected by NRF
for funding. The proposal aims to
achieve an increase in biogas yield
and fl exibility of municipal sludge
digester by co-digesting with other
waste, improved sludge quality, and
a reduction in solid mass and sludge
disposal costs.
1
2
1
Dutch Economic Minister
H.E. Mrs Maria Vander
Hoeven leading a
delegation to meet
Keppel management at
the Keppel Seghers Ulu
Pandan NEWater Plant
and discuss water
technologies and solutions.
2
With the reverse osmosis
process, treated water can
easily be further purifi ed
for industrial processes
and potable use.
122
Keppel Corporation Limited
Report to Shareholders 2009
RIG DESIGN
ANOTHER MOTION
WINNER
Gaining recognition after several
years of research and continual
enhancements, Keppel FELS won
two prestigious awards in 2009 –
the ASEAN Outstanding Engineering
Achievement Award 2009 and the
Institution of Engineers Singapore’s
Engineering Achievement Award –
for its semisubmersible drilling tender
(SSDT) design, KFELS SSDT TM.
The KFELS SSDT TM design
revolutionised drilling tender
operations, because it became the
world’s fi rst drilling tender to operate
against a fl oating platform in deep
waters up to 2,000 metres. In the past,
conventional drilling tenders could only
be deployed next to fi xed platforms in
shallow waters.
deep sea. The turbulence caused by
strong waves and the fl oating units
would surely lead to collisions. The
KFELS SSDT’sTM ability to synchronise
random motion between the ocean
waves and the fl oating platform to
which it is attached, makes this design
truly award-winning.
The Deepwater Technology Group
(DTG) used model testing, as well as
various simulation methods such as
computer fl uid dynamics and diffraction
analysis to come up with the best
methods of preventing collisions.
Throughout the entire R&D process,
customer input was actively sought,
resulting in an extraordinary solution,
which literally allows two fl oating
bodies to move as one.
Prior to the introduction of this design,
it was virtually impossible for two
fl oating units to operate side by side in
This SSDT was successfully deployed
in 2003, in more than 1,000 metres of
water in the West Seno fi eld, offshore
Indonesia. It was later installed
alongside a deepwater Spar platform in
the Kikeh fi eld, offshore Malaysia.
The use of Keppel FELS’s trendsetting
drilling tender has gained momentum
across international markets in recent
years. It has proven its suitability to
operate in challenging offshore
environments, including the deepwater
‘Golden Triangle’ of Brazil, West Africa
and the Gulf of Mexico.
The development process on this
winning rig design has not ceased.
DTG continues to explore ways to
improve the KFELS SSDT’sTM ability
to handle hurricane seasons in the
Gulf of Mexico, as well as increasing
the rig’s deck load to 5,000 tonnes
from the current 3,600.
The KFELS SSDT TM design
has established a proven
track record for strong
operational performance
over the past 15 years.
Sustainability Report
Sustaining Growth – Product Excellence
123
EmpoweringLives
People Development
BUILDING A
FORMIDABLE
& COMPETENT
TEAM
Growing a pool of innovative individuals, diverse
talents, passionate team players and responsible
citizens is core in our mission to build enduring and
value-creating businesses.
124
Keppel Corporation Limited
Report to Shareholders 2009
With people as
a core asset,
Keppel continues
to actively grow
the capabilities
and capacities
of its worldwide
manpower and
talent pool.
Manpower by Segment
(number)
Offshore & Marine
Infrastructure
Property
Investments
Total
Manpower by Country
(number)
Singapore
China / HK
Asia
USA
Brazil
Others
Total
Executives / Non-Executives
(number)
Executives
Non-executives
Total
24,275
4,574
2,791
135
31,775
16,932
1,507
4,631
881
6,173
1,651
31,775
6,789
24,986
31,775
To lead the Group into future phases
of growth, Keppel adopts a holistic
approach towards hiring, developing
and motivating our employees, and
aligning our workforce with a common
set of core values to infl uence behavior
and shape the corporate culture
of our operations across the globe.
At the same time, Keppel seeks
to identify areas for continuous
improvement. To garner employee
feedback, a Group-wide organisational
climate survey was conducted,
building on an annual exercise
by Keppel Offshore & Marine
(Keppel O&M) since 2005. A near
90% response was achieved out
of 3,000 representative sample of
employees, in which Keppel scored
well in the categories of Safety
& Environment, Attitude, Motivation
and Morale, and Employee
Engagement. The Company
will continue to review and refi ne
current policies and programmes
to reinforce its position as an
employer of choice.
Sustainability Report
Empowering Lives – People Development
125
EmpoweringLives
People Development
Attracting Talent
Keppel attracts talent through
scholarships, internships, exchange
programmes and recruitment
exercises. In 2009, we continued
our efforts to attract the best and
brightest to the Group. The Keppel
Group Scholarship is an important
constituent of our human capital
development strategy. Our scholars
inject new ideas, drive and an
entrepreneurial spirit. Each scholar
inherits not only Keppel’s history and
values but also the exciting opportunity
to shape its future. In 2009, four
dynamic youths were offered the
Keppel Group Scholarship and
the chance to pursue the dream
of a quality education and a
challenging career.
Keppel offers internships for tertiary
students keen to glean valuable work
experience before considering and
starting a career with the Group.
In 2009, a total of 188 internships
were offered to students from various
local and foreign institutions.
To share best practices and showcase
the Group as an employer of choice,
Keppel hosted more than 25 visits
with over 620 visitors in 2009 from
top class universities including INSEAD,
University of California Berkeley,
Wharton Business School, Shanghai
Jiao Tong University and Fudan
University, and major organisations
and companies such as the World
Bank, S-Oil Corporation, the
International Labour Organisation
and the Korean Standards Association.
Talent Management
– Keppel College
An organisation needs to constantly
grow and cultivate its pool of talent
to build sustainable businesses.
In Keppel, we ensure that strong
performers with high potential to excel
are given the opportunities to prove
themselves and be developed in
leadership positions.
126
Keppel O&M had established the
Keppel O&M College in 2007 to drive
talent development initiatives and
groom talent.
Mentoring Scheme has 600 appointed
mentors. Workshops were organised
as part of the continual effort to hone
the mentoring skills of these role models.
In August 2009, with a critical mass
of alumni, Keppel O&M College was
elevated to a Group-wide initiative and
renamed Keppel College to augment
the Group’s commitment to leadership
development and support the Group’s
business strategy by cultivating a pool
of talented key executives. It aims to
facilitate succession planning and
groom future leaders to steer the
Keppel Group in years to come. Keppel
College also seeks to imbue our future
leaders with the Group’s core values,
mission and vision, and equip them
with networking skills necessary in
forming business partnerships.
Keppel College centralises the Group’s
programmes for leadership and
executive development. Programmes
targeting three levels of talent – Young
Leaders, Middle Management and
Senior Management – are customised
in collaboration with top tertiary
institutions and training providers.
The motto of the Keppel College is to
Educate, Empower and Energise our
talents so that they can Learn, Lead and
Leap-frog to the next level of success.
Senior management and key process
owners are involved in the development
of Keppel College programmes and
prospectus, as well as to provide
inputs on existing and future
competency gaps and steward
Keppel College excellence.
Mentoring has always been part of
Keppel’s culture and is instrumental
in the retention and perpetuation of
knowledge and values throughout the
Group. Selected employees are
assigned to help our new hires and
talents assimilate into the Company’s
environment and culture, as well as
share their knowledge. To date, our
Organised under the auspices of
Keppel College, the second run of
Keppel Group’s fl agship Global General
Management Programme (GGMP)
was held in Singapore in June 2009
for 25 talents from across the Group.
The fi rst fun was conducted in September
2007, the GGMP is one of three
executive development programmes
that Keppel has developed with
Nanyang Business School, to hone
strategic thinking and management
skills. The other two programmes are
the Global Young Leaders Programme
(GYLP) and the Global Advanced
Management Programme (GAMP).
Keppel College also organised the
GAMP in February 2008 and the GYLP
in October 2008. The next run of
GAMP and GYLP will be organised in
March and October 2010 respectively.
Twenty-seven local and overseas
staff from Keppel O&M and
Keppel Integrated Engineering (KIE)
attended the third run of the Project
Management Programme in August
2009. Introduced in 2007, it aims
to strengthen skills in negotiations,
drafting of commercial contracts,
claim management, dispute avoidance,
technical writing and presentation.
Having successfully organised the
‘Improving People Quotient for
Leaders’ workshop in September
2008, Keppel College organised a
second run in October 2009. Conducted
in-house, the workshop was attended
by 26 middle management staff and
supervisors with line responsibility
in the selection, appraisal, motivation
and grooming of employees.
Since 2007, Keppel College has
partnered Outward Bound Singapore
to customise and organise eight runs
of the three-day residential experiential
Keppel Corporation Limited
Report to Shareholders 2009
1
2
To achieve talent
management in a
systematic and structured
way, a framework has
been put in place that
focuses on the topmost
tier of high potential and
high performing talents
to ensure that they are
developed and have
opportunities to be tested
in leadership positions.
1
Activities during
the Outward Bound
Singapore programme
required participants
to exercise teamwork
and leadership qualities
to accomplish tasks.
2
Showcasing the Group as
an employer of choice,
Keppel hosts visits from
top class universities and
major organisations from
around the globe.
leadership programme on Pulau Ubin.
Two runs were organised in 2009 and
attended by 44 talents across the Group.
A total of 154 talents have completed
the programme since its inception.
talks from the Grow Beyond Series by
Mr Charles Wong from Charles & Keith
and the Singapore Women’s Everest
Team, who shared their boundless
enthusiasm for life and achievements.
Equipping and strengthening the
competencies of our human resources
community formed the theme of the
Keppel Group Human Resource (HR)
Symposium. Keppel College organised
the second run of the Symposium in
November 2009 with the aim of sharing
good practices across the various
business units and providing a
networking opportunity among Keppel
HR practitioners.
Keppel’s senior management drives
the development of talents across the
Group and has a keen interest
in the well-being and growth of
employees. Communication platforms
such as TalenTime, pre-Board dinners
and the Executive Chat! Series, allow
Board members and senior
management to engage employees
and share their experiences.
Keppel also supports the Clipper
Round the World Yacht Race, one of
the world’s most celebrated amateur
sailing races. To encourage Keppelites
to grow beyond their ordinary
boundaries and test their personal
limits, the Company sponsored four
employees as Keppel Ambassadors to
each take on one leg of the Race.
Building Bench Strengths for
Key Positions
Succession planning is an integral part
of Keppel’s HR process. A formal
system has been put in place to identify,
assess and empower high potential
employees to ensure that they are
ready to assume key positions. In
2009, Group HR introduced common
Group-wide Key Performance Indicators
for tracking the progress of Succession
Planning and Talent Management.
Keppel College regularly organises
sharing and motivational talks to
engage our talents and promote
knowledge sharing. Five such sessions
were organised in 2009 including two
Both the Board and senior management
periodically review their list of potential
successors, and assess them against
a list of leadership competencies and
Keppel Group Core Values. We also
Sustainability Report
Empowering Lives – People Development
127
EmpoweringLives
People Development
Systematic Approach to Talent Management
Talent
Management
Framework
Succession
Management
Framework
System Review and Improvement
Talent
Development
Talent
Deployment
Succession
Needs Analysis
Succession
Planning
System Review and Improvement
Talent
Performance
Management
Successor
Performance
Management
actively plan career and development
to build management bench strengths
through regular face-to-face interaction,
executive coaching, international
assignments, executive development
programmes and leading roles in
major projects.
Learning & Development
In 2009, we invested a total of
$23.7 million in the training and
development of our 31,000 employees
globally. Of this, $17.5 million went
towards upgrading the skills of
Singapore-based employees, who
comprise 53% of our total workforce.
Locally, there was a total of 35,900
training places for technical skills
upgrading and programmes on
innovation, safety, customer-focused
and sustainability.
Since 2004, Keppel has sponsored
231 employees from all levels, as part
of our Employee Development Scheme
(EDS). In 2009, 27 outstanding
employees were sponsored under
the EDS to pursue further education.
Across the Group, customised learning
and development plans are set out for
employees to develop and refi ne skills
and competencies essential to good
performance. Employees are guided by
offerings of training programmes for
core and functional skills development
at different stages of their careers.
was given to defray the costs of
hiring and training workers, including
on-the-job training.
Keppel O&M Management Trainee
Scheme achieved accreditation
by the IMarEST by meeting the Initial
Professional Development (IPD)
requirements for registration as an
Incorporated Engineer (IEng – for
Diploma and Bachelor degree holders)
and Chartered Engineer (CEng – for
Master degree holders).
Adopting Government Initiatives
The Skills Programme for Upgrading
and Resilence (SPUR) is an enhanced
funding scheme by the Singapore
Government to help companies
and workers during the recent
economic downturn and to build
strong capabilities for the recovery.
To introduce the scheme to the
business units across the Group,
Group HR launched several in-house
Keppel-SPUR courses. A total of seven
courses were organised with a total
of 131 participants.
The Workforce Development Agency
launched SPUR-JOBS in May 2009
to encourage companies to recruit
and retrain local workers. Funding
Promoting Work-Life Balance
Riding on its commitment to a culture
in which all employees strike a balance
between work and play, a string of
activities were lined up to promote
work-life harmony amongst employees.
Since its inception in 1975, Keppel
Recreation Club (KRC) has been
integral to Keppel’s emphasis on a
healthy lifestyle for its employees. Its
yearly events foster camaraderie among
fellow Keppelites, promote family get-
togetherness and are also extended to
reach out to the community.
Keppel Group supported the nationwide
annual Eat With Your Family Day
organised by the Centre for Fathering.
Early release was granted to employees
on 29 May 2009 to encourage employees
to spend quality family time and have
a meal with their loved ones.
In an effort to strengthen family ties,
Keppel Telecommunications &
Transportation and Keppel O&M
organised the Little Keppelites at
Work (Kids Safety First) programme,
for young children to learn about
128
Keppel Corporation Limited
Report to Shareholders 2009
HOUSING FOR WORKERS
HOME AWAY
FROM HOME
1, 2
1, 2
By housing more than
8,000 workers in its three
lodges, Keppel Offshore &
Marine continues to place
emphasis on the welfare
of its foreign employees.
With over 8,000 foreign workers under
its employ in Singapore, Keppel O&M
places emphasis on the welfare of
these workers and ensures that they
are well assimilated into the multi-
national workforce. Being away from
home, it’s important for the workers to
have a proper place to rest after a long
day at work. For this reason, Keppel
O&M has developed well-equipped
dormitories for these workers. Today,
the workers are housed in three lodges
– Acacia Lodge in Bukit Batok, Juniper
Lodge in Mandai and Lantana Lodge in
Tuas. The Juniper Lodge and Lantana
Lodge were completed in 2009.
Residents at the Lodges are provided
many amenities within the compounds,
such as convenience stores, banking
and IT facilities, while the bigger
Lodges also include a gymnasium and
a canteen. Various recreational activities
are organised regularly for the residents
to promote team bonding. This is
important in helping the workers to
be acclimatised to community living
which can contribute to positive
mindsets at work.
Mr Steven Lee, General Manager
of Keppel Housing, which developed
the Lodges, said, “We are one of the
fi rst companies in Singapore to provide
dormitories for foreign workers. It is
our vision to be a caring host-employer
to our foreign employees. We believe
workers who live well, work well.”
Sustainability Report
Empowering Lives – People Development
129
EmpoweringLives
People Development
Led by senior management,
Keppelites fl exed and
stretched at Keppel FELS
ACTIVE Day 2009.
workplace safety and gain a better
understanding of their parents’ work
and work environment.
Creating a Healthy
Workforce
In line with the emphasis on a healthy
workforce and employee well-being,
Keppel stepped up its efforts in
promoting health awareness and
an active lifestyle.
Numerous sports and outdoor team-
bonding activities are organised to offer
Keppelites the chance to de-stress
after working hours. Promoting friendly
competition and sporting activities,
employees are encouraged to
participate in various events
including the annual Keppel Games.
19 December 2009 marked
Keppel FELS’s annual A.C.T.I.V.E.
(All Companies Together in Various
Exercises) Day, which aims to promote
better physical and mental wellness,
higher morale and greater team spirit.
All employees participated in the
40 minutes of kickboxing and boot
camp exercises.
Talks are organised by the business
units to increase greater awareness
and understanding of a wide range
of health issues that are close to
employees’ hearts. Fresh fruits are
distributed to employees regularly
and bazaars are held at offi ce premises
to provide employees with better
access to healthy food products.
Keppel FELS embarked on the Good
Food Programme from May to July
2009 and a nutritionist was engaged to
educate canteen operators on healthier
cooking methods and to serve food
following guidelines from the Health
Promotion Board.
Long Service Awards
A total of 521 Keppelites from
across the Group received their
Long Service Awards in 2009,
of which 193 have served more
than 35 year with the Group.
Industrial Relations
The Keppel FELS Employees’
Agreement was renewed for three
years with improvements to employees’
hospitalisation benefi ts, starting from
1 July 2009.
Keppel Logistics renewed its Collective
Agreement (CA) for three years effective
1 January 2010 with Singapore Industrial
& Services Employees Union. To instil
joint ownership on health management,
medical co-payment will be introduced.
Keppel Merlimau Cogen also concluded
its fi rst CA negotiation with the Union
of Power & Gas Employees (UPAGE).
Keppel Employees’ Union (KEU) held
its 41st Annual Delegates Conference
on 18 August 2009. The event was
attended by employees from Keppel
Shipyard, Keppel Singmarine and KIE.
Keppel O&M played host to union
delegates from Brazil and NTUC,
followed by yard tours. Two of
Keppel O&M’s Brazilian union
delegates, President Mr Paulo Ignacio
Furtuozo and Vice President Mr Aguilar
Ribeiro Da Silva, were on a fi ve-day
visit to Singapore from 3 December
2009. Led by Madam Halimah Yacob,
Secretary General of NTUC,
10 Industrial Relations Offi cials visited
Keppel FELS yard on 9 December 2009.
Under the Keppel FELS Co-operative
Bursary & Education Grant, Keppel
O&M awarded 77 Bursary Awards and
27 Education Grants in 2009. It also
contributed towards Keppel FELS
Union Bursary Awards for 123 children
and 26 employees on part-time studies,
and another 10 Bursary Awards under
the KEU Bursary Awards. Along the
same vein, Keppel Credit Union
presented 33 Book Awards to
173 children of members.
130
Keppel Corporation Limited
Report to Shareholders 2009
CORE VALUES
STRENGTHENING
OUR CORE
With 36,000 employees in more than
30 countries around the world, the
Keppel Group leverages its international
network, resources and talents to grow
its key businesses.
A major challenge is aligning our global
operations to produce the same high
quality and standards of timely, within
budget and incident-free deliveries,
associated with the Keppel brand. To
achieve consistent excellence, we have
to communicate and motivate our people
to embrace a common set of core values
to form the foundation on which we
perform work and conduct ourselves.
Aligning and Communicating
Our Core Values
A signifi cant milestone in 2009 was the
articulation of the Group Core Values.
As we move into a new decade, this
was timely, providing a common goal
and language for all as we strive to
achieve strong results.
To home in on the message, the
Keppel Group Core Values, graphically
represented by a series of icons,
were unveiled at the launch event on
6 October 2009. Centred on the theme
of “hands”, a video presentation was
screened to convey that Keppelites
are putting all hands to the plough,
working in unity and teamwork.
Hands are internationally recognised
as symbols of harmony, productivity,
Passion
“Can Do” Attitude
and Excellence
Integrity
Ethics, Honesty and
Responsibility
Customer Focus
Value-added Solutions,
On-time and Within Budget
People-Centredness
Value and Nurture People
Safety
Uphold High Safety
Standards
Agility &
Innovativeness
Adapt to Change and
Innovate for Growth
Collective
Strength
Global Mindset and
Achieve Shared Goals
Accountability
Optimise Resources
and Being Responsible
to Stakeholders
unity and strength. As icons,
they can be accurately interpreted,
understood and internalised by
Keppelites worldwide.
Core values communications are
incorporated into orientations,
workshops and team-building
exercises. To further internalise these
core values, company HR policies and
processes were reviewed, including
the incorporation of alignment
measurement into the Performance
Management System.
These initiatives have led to a greater
understanding and alignment of the
core values in our global workforce,
heightening their sense of ownership
and belonging in the Group and
building esprit de corps. More
importantly, the alignment of our core
values amongst employees is a key
component in the Group’s succession
planning, forming the basis of our
evaluation and selection of candidates
for performance management, reward
and recognition as well as further
leadership development.
Sustainability Report
Empowering Lives – People Development
131
EmpoweringLives
Safety and Health
MAKING
SAFETY OUR
BUSINESS
Our goal is to ensure that everyone
goes home safely each day. 2009 was
another fruitful year in our safety journey.
132
Keppel Corporation Limited
Report to Shareholders 2009
“I adopt “Stop.
Look. Think. Act.”
safety initiatives
in every aspect
of my daily work
in the plant as I
want to be at my
son’s university
graduation
ceremony when
he grows up.”
U Win Aung,
Technical Offi cer,
Keppel Seghers Tuas
Waste-to-Energy Plant
At Keppel, we aim to create a zero-
incident workplace for everyone
and to ensure the well-being of our
employees. This is achieved through
a strong and cohesive safety and
health culture, where employees,
customers and subcontractors work
together to share their knowledge and
look out for one another’s safety.
At the heart of our safety effort is
the adoption of safety as a way of life.
The proliferation of this safety culture
is a key focus of senior management
across the Keppel Group. Leading by
example, the Board Safety Committee
made a number of site visits to the
different business units to better
understand the operating environment
and recommend safety measures.
Safety as Our Core Value
In 2009, we fortifi ed our safety infrastructure
and enhanced our safety initiatives to
empower our workforce in promoting
safety. ‘Safety’ was offi cially adopted
as one of eight core values of the
Keppel Group articulated by our top
management and forms part of each
business unit’s Key Performance Indicator.
Keppel’s Board Safety Committee
was the fi rst by a listed company
in Singapore to be established at
the board level in 2006. Across
the Group, fi ve key safety principles
were introduced in 2007 to align our
safety initiatives across the different
business units.
1, 2
1
Beyond equipping
individuals with knowledge,
Keppel wants to drive home
the importance of
accountability to one
another and empower
employees with the skills
to create a secure work
environment for everyone.
2
Reaching towards
new safety heights
are participants at the
inaugural Elita Garden
Vista safety event in
Bangalore, India.
Sustainability Report
Empowering Lives – Safety and Health
133
EmpoweringLives
Safety and Health
Cumulative Accident Frequency Rate – Keppel Group (Singapore)
(per million man-hours)
3.0
2.0
1.0
0.0
2006
2007
2008
2009
0.38
0.51
0.29
0.29
2.78
0.31
0.40
2.60
0.38
0.38
2.27
0.35
0.42
2.09
0.32
0.54
2.00
0.35
0.53
1.83
0.35
0.53
1.80
0.39
0.48
1.65
0.40
0.45
1.57
0.40
0.43
1.47
0.41
0.41
0.36
0.38
0.33
0.40
0.36
0.36
0.31
0.30
0.30
0.30
0.29
0.28
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Cumulative Accident Frequency Rate – Keppel Group (Overseas)
(per million man-hours)
4.0
3.0
2.0
1.0
0.0
2006
2007
2008
2009
0.79
0.14
3.60
0.49
3.14
0.94
0.59
2.79
0.83
0.72
2.39
0.84
0.74
2.23
0.82
0.78
2.23
0.76
0.68
2.05
0.74
0.68
1.88
0.72
0.68
1.71
0.70
0.67
1.60
0.67
0.60
1.51
0.64
0.63
0.43
0.40
0.46
0.40
0.57
0.54
0.65
0.61
0.68
0.70
0.67
0.72
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
134
Keppel Corporation Limited
Report to Shareholders 2009
“We often
forget our
responsibilities
to our families
and loved ones,
especially when
we are too
engrossed in
our daily work.
So, we have
integrated a
photo of our
loved ones with
our identifi cation/
security badge
and added the
slogan “This is
Why I Work Safe”
on it to constantly
remind ourselves
at work that they
will be waiting for
us to go home
safely.”
Ranjit Singh,
Technical Manager,
Keppel Merlimau
Cogen
Keppel’s Board Safety
Committee holds its
meetings at the various
business units to better
understand the facilities,
operations, as well as
share safety practices.
Sustainability Report
Empowering Lives – Safety and Health
An Inter-Business Unit Safety Committee
helmed by management representatives
convenes regularly to plan, implement
and review safety initiatives, share
experiences and lessons learnt,
as well as address critical safety issues.
The Group invested a total of
$40.5 million in 2009 to improve
safety infrastructure and promote
safety culture through training and
development. This is an increase
over the Group’s expenditure of
$38.9 million in 2008.
The results of our efforts have been
encouraging. We improved our safety
statistics, achieving an Accident
Frequency Rate (AFR) of 0.43
reportable cases for every million
man-hours worked in 2009, compared
to 0.49 in the year before. Our Accident
Severity Rate (ASR) was reduced
to 92 man-days lost per million
man-hours worked from 143 man-days
lost in 2008. Both AFR and ASR are
well below the national average of 2008.
Collective and
Co-ordinated Efforts
Integrating the directions and initiatives
systematically at Group level ensures
that all safety efforts are maximised in
achieving our goal. Importantly, the
Group’s safety initiatives are developed
to complement the nature of work at
our business units.
Apart from a co-ordinated Group-wide
effort, we ensure that we adopt and
are aligned with international and
industry best practices. Towards this
end, we work closely with the Ministry
of Manpower (MOM), its Workplace
Safety and Health (WSH) Council and
other industry bodies in Singapore.
One of WSH Council’s initiatives is the
bizSAFE programme, which was
developed to assist smaller companies
build up their WSH capabilities. In
2009, our group of companies pledged
their commitment as bizSAFE partners
to help our contractors achieve
bizSAFE Level 3 standards by 2012.
Even as we improve our safety record,
the Group suffered three fatalities in
2009. We deeply regret the loss of these
lives. In 2008, we had nine fatalities.
The lessons from these fatalities were
shared across the business units.
The bizSAFE partners in the Group
comprising Keppel FELS, Keppel
Shipyard, Keppel Singmarine, Keppel
Land, Keppel Seghers Engineering,
Keppel Sea Scan, Keppel FMO and
Keppel Merlimau Cogen, encourage
135
EmpoweringLives
Safety and Health
Cumulative Accident Severity Rate – Keppel Group (Singapore)
(per million man-hours)
600
400
200
0
2006
2007
2008
2009
554.74
420.69
326.74
270.07 235.17
204.22
258.43
238.40
211.60
192.80
6.48
4.78
4.87
6.08
117.46
98.67
84.87
78.47
189.07
170.53
155.38
142.59
11.64
7.25
168.79
126.96
103.16
89.49
79.13
129.59
114.55
103.81
95.19
125.21
450.00 238.27 159.78 123.32 106.46
84.04 73.49
65.98 112.66 101.01
92.14
84.99
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Cumulative Accident Severity Rate – Keppel Group (Overseas)
(per million man-hours)
600
400
200
0.0
2006
2007
2008
2009
587.24
448.14
349.53
512.97 435.12
543.97
470.92
417.49
370.65
337.49
42.87
161.85
35.69
248.96
206.08
178.27 157.01
259.83
321.39
294.63
271.07
255.33
31.54
29.74
31.90
36.00
200.40
178.28 144.44
144.13
220.43
202.86
184.14
175.21
11.97 23.25
21.57
30.05 30.63
31.06 158.69 144.37 132.66 121.05 110.36 106.16
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
136
Keppel Corporation Limited
Report to Shareholders 2009
“To promote
safety as part
of our daily lives,
we had the
Little Keppelites
at Work day.
Our children were
invited to come
to the warehouse
to witness how
their parents
perform their
tasks safely at
work. It not only
helped to engage
the family, it also
brought home the
safety message.”
Mohamad Hanafi Khan,
Senior Warehouse
Supervisor,
Keppel Logistics
To test the preparedness
for emergency situations
at Keppel’s yards, mock
exercises are carried out
in collaboration with the
Singapore Civil Defence
Force and the Singapore
Police Force.
Sustainability Report
Empowering Lives – Safety and Health
contractors’ participation in safety
initiatives as well as provide
stewardship and support to them
in meeting the safety standards set
by the WSH Council.
To facilitate the contractors in their
bizSAFE achievement, Keppel FELS,
supported by a bizSAFE-accredited
safety consultant, conducted
workshops for their subcontractors.
At Keppel Singmarine, a course was
organised for their resident contractors
to strive for bizSAFE Level 4.
Beyond its own company employees,
Keppel Offshore & Marine (Keppel
O&M) is also dedicated to the national
and industry efforts in promoting
workplace safety. The company
contributed $100,000 towards the
National Workplace Safety & Health
campaign in 2009, where 11 workers
and supervisors from Keppel O&M
received certifi cates for successfully
completing the Professionals
Conversion Programme for WSH
Offi cers. The company also signed
the ‘Pledge for Zero’ charter on
25 November 2009 at the Marine
Industries CEO Summit, which called
for appropriate governance structures,
resource allocation, communication
and safety strategies to be put in place.
In the marine industry, Keppel Shipyard
was the fi rst company to host members
from the Association of Singapore
Marine Industries (ASMI) in a self-
regulatory programme, known as the
Marine Industry Safety Engagement
Team (MIndSET). MIndSET aims to
improve the safety performance of the
industry by sharing safety practices
and recommend areas for improvement
through inter-shipyard visits.
Working closely with its customers,
Keppel Shipyard’s Safety Steering
Committee includes ExxonMobil,
Single Buoy Moorings, Shell, Prosafe
Production, BW Offshore, Woodside,
Statoil, Maersk, BP and Frontier
Drilling. The committee regularly
reviews and deliberates on safety
initiatives in the yard. A Safety
Champion team made up of
representatives from customers with
projects at Keppel Shipyard was also
set up to implement the directives from
the Safety Steering Committee.
Fortifying a Safety Culture
Beyond the rigorous safety processes
and systems, Keppel is focused on
fostering positive behavioural changes
and a sense of ownership for safety
among our multi-national and multi-
cultural workforce.
137
EmpoweringLives
Safety and Health
“Through the
‘Together We
Care’ initiative,
we drive home
the importance
of looking out
for one another.
I cannot
emphasise
enough that by
looking out for
each other and
sharing safety
knowledge,
we will help to
enhance overall
safety welfare.”
Mr Choo Chiau Beng,
CEO of Keppel
Corporation
In an effort to drive home the message
of safety as a collective responsibility,
a Group-wide campaign with the key
message “Safety Starts with Me,
Together We Care” was launched
on 2 June 2009. This campaign,
a continuation of the “Safety Starts
with Me” campaign introduced
in 2008, emphasises the importance
of accountability in safety to one
another and empowers our workforce
to remove at-risk behaviour and
conditions through active observation
and intervention.
As part of the campaign, the Group
held its third annual safety convention
on 5 November 2009, which brought
together employees, clients, contractors
as well as MOM offi cials to share on
safety. Organised by the Inter-Business
Units Safety Committee, the convention
also recognised innovations by teams
across the Group that signifi cantly
helped to improve safety. Nineteen
teams from various business units
emerged winners for their safety
innovations. Keppel Integrated
Engineering (KIE) was awarded the
Chairman Challenge Trophy for its
safety performance, innovation and
initiatives in the past year.
Reaching Out to All
With a workforce of more than
30,000 worldwide, the Keppel Group
understands the importance of
communicating and reaching out
effectively to all stakeholders to
achieve sustainable results.
During the year, various safety
campaigns were organised to educate
and inculcate safety best practices
among employees across the Group.
of their fi ngers and hands to better
understand the risks.
Under the Safety Leadership
Programme, Keppel FELS trained
an additional 250 supervisors in 2009.
It also launched a new incentive
scheme to reward the best leader in
each project for their proactive and
outstanding contributions to safety.
Keppel Shipyard continued to focus
on its Safety Excellence 2010 initiative,
fi rst started in 2008. Through this
initiative, some 5,000 direct and
contract supervisors have undergone
its Safety Leadership Training, while
another 19,000 direct employees and
contractors have attended the Safety
Promoter Training.
As part of Keppel Shipyard’s action
plan to enhance safety leadership,
programmes such as weekly ‘Safety
Moments’ and ‘Safety Timeouts’
were introduced. During ‘Safety
Moments’, project and section
managers discuss issues and ways
to mitigate high impact risk activities
on their projects. ‘Safety Timeouts’
are weekly briefi ngs to workers on
specifi c topics such as working at
heights and in confi ned spaces.
Since 2006, Keppel Shipyard’s
Workforce Safety Council, comprising
workers and contractors, have proven
very effective in reducing incidents,
through encouraging active
involvement from workers. As a result,
workers are more willing to submit
workplace hazard reports to help
identify and eliminate potential risks,
as well as recognise exemplary workers
in safety.
At Keppel FELS, its annual Health,
Safety and Environment (HSE)
Excellence promotion campaign in
April 2009 was targeted at reducing
fi nger and hand injury. During the
campaign, workers participated in
interactive exhibits involving the use
To provide a more conducive learning
environment, Keppel Shipyard
developed an integrated safety training
centre for its 14,000 strong workforce
and subcontractors. The centre, which
has been completed, employs the
latest equipment, simulations and
138
Keppel Corporation Limited
Report to Shareholders 2009
“I’m very happy
to be included
in Keppel’s
safety training
programme
even though I’m
a subcontractor.
As I have to work
in the same
environment,
it’s good that
I also know
how to keep my
co-workers and
myself safe.”
Subramanian Sivakumar,
Job Leader,
Alpine Services
Engineering Services
methodologies in training its workforce
and raising their safety competencies.
Over at Keppel Singmarine, the
company is focusing their training
efforts on high risk areas. It conducted
a “Safety while working at heights”
engagement campaign for its entire
workforce in January 2010, and
introduced a system to monitor workers
who carry out jobs in confi ned spaces.
At Keppel Land, signifi cant efforts
were put into strengthening the safety
culture among its contractors. Apart
from a number of safety campaigns
held across its project sites in
Singapore and overseas, surprise visits
were made by its safety teams to work
sites to ensure safety compliance from
its contractors.
To remind its workers and contractors
to plan their tasks to minimise risks,
Keppel Land introduced the ‘Take 3’
safety campaign with the slogan
“Stop, Think and Plan”. Taking just
a few minutes to think through the
risks of a task, work order or job
assignment can make a big difference
between a safe and successful
outcome and an accident.
Keppel Land also held a number
of Hazard Identifi cation and Risk
Assessment training sessions to
139
Inculcating the safety
mindset at the ground level
involves personal
responsibility, teamwork
and camaraderie.
Sustainability Report
Empowering Lives – Safety and Health
EmpoweringLives
Safety and Health
Marina at Keppel Bay
staff and tenants
underwent a one-day
training Community
Emergency Preparedness
Programme conducted
by the Singapore Civil
Defence Force.
educate employees on managing
safety and health risks at the
workplace.
In a similar vein, KIE launched its
“Stop. Look. Think. Act.” safety
campaign designed to imbue in
workers the habit of considering
safety before every task.
At Keppel Energy, safety activities at
their Keppel Merlimau Co-generation
Plant (KMC) included training of the
Emergency Response Team and having
joint exercises with the Singapore Civil
Defence Force. Fire drills and chemical
leak response drills were conducted to
test the company’s emergency plans
and preparedness.
KIE’s safety efforts were reinforced
at their fi rst Environment, Health and
Safety (EHS) seminar conducted on
26 February 2009 where they shared
their safety performance and lessons
learnt from 2008. This was followed by
a second EHS seminar on 31 July 2009
and an EHS convention on 22 January
2010 which reiterated their “Stop.
Look. Think. Act.” initiative. An internet
portal to facilitate safety sharing was
also introduced.
On 27 January 2010, Keppel Energy
held their second Annual HSE Day at
KMC to celebrate the achievement of
more than one million man-hours
worked without lost-time incidents (LTI)
since October 2008, and also to launch
their safety campaign – “This Is Why
I Work Safe”. Family photos were
attached on the reverse side of their
identifi cation/security cards, to remind
employees that their loved ones are
waiting for them to return home safely.
140
Keppel Corporation Limited
Report to Shareholders 2009
“We continue to
be proactive in
strengthening
and raising
safety standards
wherever we
operate. To
effectively
instil safety
consciousness,
we believe in
inculcating a
safety mindset
in all employees
and stakeholders,
including our
consultants,
suppliers and
contractors.”
Adris Isnin,
Senior Project Manager,
Keppel Land
To celebrate the one millionth and
four millionth man-hours achieved
without LTI on a conversion project,
BW Pioneer, Keppel Shipyard, and
the contractors donated some
$9,000 to charity.
In Bangalore, India, Keppel Land’s
Elita Promenade residential
development celebrated National
Safety Day and the achievement of
eight million man-hours without LTI
on 4 March 2009. Exemplary workers
were recognised with safety awards.
Striving for Safety Excellence
Leveraging the Group’s resources and
diverse operational expertise, Keppel
has what it takes to achieve safety
excellence.
Since aligning safety at the Group level,
there has been a signifi cant increase
in the level of awareness, acceptance
and concrete results. To sustain this
momentum across the Group,
communication efforts are being
stepped up so that Keppelites are
kept abreast of initiatives, best
practices and lessons learnt.
Looking ahead, Mr Abu Bakar,
Secretary to Keppel Corporation’s
Board Safety Committee and Chairman
of Inter-Business Units Safety
Committee, said, “Much effort has
been put to integrate and align safety
across the business units. We need
to continue on this path and fi nd
ways to maintain and further reinforce
our efforts. Through continuous
engagement with the multi-national
and multi-cultural workforce and
partnership with various stakeholders,
safety can become a way of life at
our workplaces.”
To instil greater safety awareness
of their environment, Keppel Logistics
in Singapore incorporated behavioural-
based safety training in their Quality
and Service Excellence training. It also
introduced a quarterly safety focus
which encouraged employees to
turn off unused electrical appliances.
In Malaysia, the company’s safety
handbook was translated into Tamil
and training was conducted in Tamil
for their contract workers from India.
Our Efforts Recognised
Our collective efforts were recognised
at the 2009 MOM WSH Awards,
where we garnered a record of
18 safety awards. In a special category
for exemplary safety behaviour,
supervisors Paul Raj from Keppel
Shipyard and Aminul Islam from
Keppel Singmarine were highlighted
as role models.
Keppel O&M was bestowed 14 safety
awards, while Keppel Singmarine won
the Silver Award for Workplace Safety
& Health Performance for the third year
in a row.
Keppel FMO, a subsidiary of KIE,
won the Outstanding Achievement
& Innovation Award for a creative
employee-driven project to improve the
safety and effi ciency of replacing the
tyres of passenger loading bridges at
Changi Airport.
At the 12th Convention for WSH
Innovations in the marine industry
organised by ASMI, Keppel Singmarine
received the Silver and Bronze
awards for their innovations, the Safe
Ship Launcher and Safe Structure
Fabricator respectively.
In China, after conducting numerous
site visits and HSE audits, the Nantong
Administration of Work Safety (NAWS)
awarded Keppel Nantong the Safety
Excellence Award for achieving the
highest HSE standards set by NAWS.
Sustainability Report
Empowering Lives – Safety and Health
141
NurturingCommunities
Industry Engagement
BUILDING
BRAND EQUITY
THROUGH
LEADERSHIP
Keppel builds its strong brand equity through
supporting initiatives that promote development
of our industries and showcase our strengths
and Singapore to the world.
142
Keppel Corporation Limited
Report to Shareholders 2009
Encouraging
Sustainable
Water Solutions
Through the support
of the Singapore
International Water Week
(SIWW), Keppel
demonstrates its
commitment to seek
sustainable solutions
to mitigate the shortage
of water faced by the
growing global
population. The SIWW
is a joint initiative by
Singapore’s Ministry
of the Environment
and Water Resources,
and PUB, Singapore’s
national water agency.
As a leading conglomerate with deep
roots in Singapore, Keppel plays an
active role in promoting the country
and contributing to various national
strategies and initiatives. Through our
involvement in various knowledge
building platforms and international
conventions, we also help to engage
our chosen industries and catalyse the
exchange of ideas as well as potential
collaborations.
Supporting Public Policy
Research and Discourse
Keppel Corporation continued its
longstanding sponsorship of the
Singapore Perspectives series in 2009.
Held in January, this fl agship conference
of Singapore’s Institute of Policy
Studies aims to engage Singaporeans
in a lively debate on public policy
challenges facing the country.
Keppel Corporation is a founding
sponsor of the Singapore International
Water Week (SIWW), a Singapore
government initiative to create a
premier global platform for water
solutions that brings policymakers,
industry leaders, experts and
practitioners to address challenges,
showcase technologies, discover
opportunities and celebrate
achievements. At the SIWW 2009 held
from 22 to 26 June, Keppel Integrated
Engineering (KIE) showcased its
track record for water capabilities
in Singapore and Qatar.
Reinforcing the importance of building
strong links and partnerships across
borders, Keppel Corporation was a
lead sponsor of Global Entrepolis @
Singapore (GES). Running for the
sixth year, the event took place from
11 to 12 November 2009. GES brings
together businesses from different
sectors and regions on a single
platform, sparking off a vibrant
exchange of ideas.
Keppel Offshore & Marine (Keppel O&M)
made a strong presence at the
Singapore Maritime Week as an anchor
conference exhibitor in Sea Asia 2009,
which seeks to project Asian
perspectives in world shipping. As a
founding supporter of this exhibition
since 2007, Keppel O&M hosted the
networking reception and presided
over a roundtable session.
To support the growing ties between
Asia and Latin America, Keppel O&M
was a Platinum Sponsor of the sixth
Latin Asia Business Forum held in
Singapore.
Promoting Industry Development
Through the Keppel Professorship at
the National University of Singapore
(NUS), Keppel O&M has been aiding
the initiation of research projects,
as well as product and technology
development in its industry for the past
eight years. A public lecture is also
conducted annually by an eminent
academic appointed to the Chair of the
Keppel Professorship.
As a founding member of the Centre
for Offshore, Research and Engineering
(CORE) in NUS, Keppel O&M continues
to facilitate joint participation in R&D
by the industry, institutions and
government agencies.
To provide a constructive platform for
industry networking and the sharing of
insights, Keppel O&M supported the
annual Chua Chor Teck Memorial
Lecture organised by the Society of
Naval Architects & Marine Engineers
Singapore. In 2009, Professor Choo
Yoo Sang, Director (Research) of
CORE, NUS, spoke on ‘Offshore
Engineering Research and Education’
at the 23rd Lecture.
To encourage more youths to join
the offshore and marine industry,
Keppel O&M partnered Singapore’s
Institute of Technical Education (ITE) to
set up the ITE-Keppel O&M Technology
Centre, which was offi cially opened in
2009. Keppel O&M will offer 10
Sustainability Report
Nurturing Communities – Industry Engagement
143
NurturingCommunities
Industry Engagement
HRH Willem-Alexander,
The Prince of Orange
from the Netherlands (left),
getting an insight into
Keppel Seghers’ capabilities
from Roland Carrette,
Head of Proposal from
Keppel Seghers (Belgium)
at SIWW 2009.
scholarships annually over the next fi ve
years, as well as provide the equipment
and technical support to create an
authentic hands-on learning
environment at this Centre.
KIE was one of the founding sponsors
of the inaugural World Bank-Singapore
Infrastructure Finance Summit held
from 11 to 12 November 2009. The
event brought together policy-makers,
thought leaders, experts from the
public and private sectors in an
exchange of views on infrastructure
fi nancing and challenges.
Keppel Land continues to support
initiatives that promote a sustainable
built environment and eco-best
practices. It is a founding member
and sponsor of the new Singapore
Green Building Council, established
to increase the collaboration between
private and public sectors to direct
the building and construction industries
towards environmental sustainability.
Keppel Land also sponsored the
inaugural International Green Building
Conference (IGBC), the anchor event
of the Singapore Green Building Week
organised by the Building and
Construction Authority of Singapore
from 28 to 30 October 2009. IGBC
2009 focused on green building
technologies and designs.
Showcasing Singapore
Keppel Corporation helmed the
Singapore representation at the
ASEAN Council of Petroleum
(ASCOPE) meetings in Thailand in
November 2009 and shared
Singapore’s perspectives on
sustainable development issues in
energy and solutions to environmental
challenges. Established in 1977,
ASCOPE is held once every four years
to facilitate robust exchanges on major
issues facing the petroleum industry
in ASEAN.
Keppel O&M sponsored the third
International Conference on
Technology & Operation of Offshore
Support Vessels, a platform for ship
designers, builders and operators
to discuss clean energy and marine
environmental solutions.
Showcasing Singapore’s capabilities
on the international arena, we returned
to the Offshore Technology Conference
(OTC) in Houston for the 23rd year.
In spite of the H1N1 outbreak, the
premier oil and gas show drew some
68,000 visitors with 2,500 exhibitors
from 38 countries.
144
Keppel Corporation Limited
Report to Shareholders 2009
SUSTAINABLE CITY
KEPPEL SPONSORS
LEE KUAN YEW
WORLD CITY PRIZE
$1.75m
Keppel Corporation
is sponsoring the
gold medallion and
cash prize of $300,000
for fi ve cycles of
the prestigious
biennial award.
vibrant, liveable and sustainable urban
communities worldwide.
Most recently, Keppel’s leadership in
the Sino-Singapore Tianjin Eco-City,
which aims to be a model of sustainable
development in China, continues
to demonstrate its commitment
to excellence globally moving
into the future. It is in this spirit
that Keppel supports the goals
and aspirations of the Prize.
The Lee Kuan Yew World City Prize
Laureate will be presented with an
award certifi cate, a gold medallion,
and a cash prize of $300,000
sponsored by Keppel Corporation.
Members of the Prize Council and
Nominating Committee are prominent
local and international thought
leaders, practitioners, academics
and relevant experts from the private
and public sectors.
The inaugural Lee Kuan Yew World City
Prize will be awarded in June 2010 at
the Lee Kuan Yew Awards Ceremony
and Banquet, to be held during the
World Cities Summit 2010 in Singapore.
Launched during SIWW in 2009,
the Lee Kuan Yew World City
Prize focuses on four pillars
instrumental to the success
of every city – liveability, vibrancy,
sustainability and quality of life.
Co-organised by Singapore’s Urban
Redevelopment Authority and the
Centre for Liveable Cities, the biennial
international award seeks to recognise
the achievements of outstanding
individuals and organisations who
have contributed urban initiatives,
policies or projects which epitomise
foresight, good governance or
innovation in overcoming the
challenges faced by cities.
With many cities facing the challenges
of rapid urban growth, lack of housing
and infrastructure, and increasing
traffi c congestion, the Lee Kuan Yew
World City Prize is envisaged to serve
as a catalyst to facilitate the sharing of
best practices in urban solutions
worldwide and spur further innovation
in sustainable urban development in
pursuit of city excellence.
Through its operations in Singapore
and abroad, and particularly, with its
businesses in environmental engineering
and developing quality homes, Keppel
has participated in the creation of
Sustainability Report
Nurturing Communities – Industry Engagement
145
NurturingCommunities
Green Endeavours
EMBRACING AN
ECO-CULTURE
The greening of our behaviour at home, work and
play is crucial to the sustainability of our environment
and the optimal use of limited resources.
146
Keppel Corporation Limited
Report to Shareholders 2009
Volunteers from
Keppel Batangas
Shipyard and their
sub-contractors joined
hands with the local
community to clear up
litter and debris along
Batangas Bay.
Keppel is committed to pursue
green endeavours to encourage our
employees and the public to embrace
a green lifestyle.
Green Dates
Keppel Land initiated a paper-recycling
programme in its offi ce buildings in
Singapore in conjunction with Earth
Day in April 2009. Offi ces were given
cardboard cartons for weekly
collection. The eco-roadshows also
provided insights on the 3Rs of reusing,
reducing and recycling.
On World Environment Day on 5 June
2009, Keppel Land sponsored the
global premiere of the documentary
fi lm HOME, directed by renowned
French photographer and environmentalist
Yann Arthus-Bertrand. The company
also organised events to drive eco-
awareness, including the Earthopoly
Challenge – a green twist to the classic
board game Monopoly, using carbon
credits, clean air and recycling to
increase property values.
Environmental
Education and Outreach
Keppel Group is the Gold Sponsor for
Asia Dive Expo 2009, an annual event
educating the public on the marine
environment. Included as part of the
Expo was a showcase of Keppel’s
efforts with the National University
of Singapore, National Parks Board
and National Environment Agency in
restoring corals along the coast line
of Pulau Semakau. Keppel’s volunteer
divers involved in the initial phase of the
coral nursery project were on hand
to help increase awareness of the
importance of coral reefs to marine
creatures. Keppel Volunteers also
brought students from Tanglin School
and the Centre for Adults to the Expo.
Keppel Group sponsored Amazônia
in Singapore, a special exhibition
organised by the Embassy of Brazil
on 21 November 2009, that showcased
the uniqueness and diversity of species
in the Amazon. The interactive
exhibition showed how sustainable
alternatives existed in the region
to harmonise development and
conservation. Keppel Volunteers
also led a group of APSN students
to visit the exhibition, which proved
to be a good learning session on
nature’s miracles.
Keppel Land organised a nature walk
along Singapore’s Southern Ridges
for its staff and their families to give
employees an opportunity to learn about
Singapore’s rich ecological system.
Keppel FELS Brasil’s BrasFELS yard
started a Zero Waste campaign to
encourage employees to conserve
water, power, materials and gases used
in welding. BrasFELS is also carrying
out an extensive environmental dredging
project with local authorities to help
clear up pollution at Angra’s main beach.
Efforts are in place to sustain and
calibrate the growth of the marine life
at Marina at Keppel Bay. Scores of sea
creatures from the popular clown fi sh
to clams have made Keppel Bay their
home (see opposite page). The coral
community is thriving due to the clean
waters at Marina at Keppel Bay, the
fi rst and only marina in Asia to be
awarded the ‘Clean Marina’ status
by the Marina Industries Association
of Australia in 2008. This certifi cation
means that the marina has proper
procedures in place that ensure its
readiness in tackling marine hazards
which could potentially impact
the environment.
Sustainability Report
Nurturing Communities – Green Endeavours
147
NurturingCommunities
Community Relations
MAKING A
DIFFERENCE
WHEREVER
WE ARE
Wherever we operate, we are committed to seeking
ways to contribute meaningfully to the well-being
and welfare of the communities.
148
Keppel Corporation Limited
Report to Shareholders 2009
$600,000
Raised by the
Keppel Group
towards disaster
recovery aid efforts
for Indonesia,
Vietnam and the
Philippines in 2009.
As a global citizen, Keppel believes that
as communities thrive, we thrive. This is
why we nurture the communities where
our businesses are and support them
to move towards a sustainable future.
Corporate Volunteerism
Keppel encourages its employees
to become responsible citizens with
a genuine concern for the well-being
of others. As such, staff volunteerism
is a key feature of our community
relations programme. Since 2000,
Keppel Volunteers has been
spearheading regular activities that
make meaningful contribution to local
communities, social institutions and
non-profi t organisations. On a monthly
basis, Keppel Volunteers runs activities
in collaboration with our adopted
charity, the Association for Persons
with Special Needs (APSN).
The activities in 2009 include a trek
across Singapore’s Southern Ridges,
visits to the Singapore Science Centre,
the Marina Barrage, the Asia Dive
Expo, the Amazônia in Singapore
Keppel Volunteers and
APSN students together
in heartfelt celebration
at the 2009 National Day
Parade preview.
Sustainability Report
Nurturing Communities – Community Relations
149
NurturingCommunities
Community Relations
exhibition and other venues of
educational benefi t.
Our employees have also been actively
supporting the blood donation drive
organised by the Keppel Scholars
Alumni Association. The response
exceeded expectations with a total
of 415 packets of blood collected,
a 53% increase from the 272 packets
of blood collected in 2008.
Raising Funds for Good Causes
In September 2009, three countries
where Keppel Group has an active
presence – Indonesia, Vietnam and
the Philippines – were struck by natural
disasters. To help alleviate suffering
and rebuild lives, Keppel Group
raised about $600,000 towards
disaster recovery aid efforts for the
three countries, channelled through
the Singapore Red Cross Society. The
sum was collected through fund-raising
initiatives among Keppelites, customers
and business associates, as well as
through two charity golf tournaments
held in Ho Chi Minh City, Vietnam
and Bintan Island, Indonesia.
In the Philippines, Keppel Philippines
Marine also pitched in to help typhoon
victims, donating PhP200,000 worth
of relief goods. Its volunteers organised
the despatch of rice, noodles and
biscuits to support centres. The Keppel
Filipino Community in Singapore also
raised PhP90,500 for sustainable
development projects to improve the
lives of disaster-affl icted communities.
Across Indonesia, staff and tenants
at Ria Bintan, Barclays House, BG
Junction and homeowners at Jakarta
Garden City donated generously both
in cash and kind.
Since 2007, Keppel Group has been
the Platinum Sponsor for the National
Environmental Agency (NEA)-
Mediacorp Semakau Run. Held on
8 August 2009, the charity run raised
$359,000 for six environmental and
social charities.
Keppel Shipyard celebrated the
achievement of one million man-hours
without lost-time incident on one of its
projects by making a donation to the
Children’s Cancer Foundation. More
than 2,000 staff members participated
in the donation drive which collected
more than $4,000.
Keppel FELS Brasil raised
US$10,000 for the Montreal Rio
Project and the Lamb Project in Rio
de Janeiro, Brazil through a charity
party attended by staff and their
families, as well as customers. The
Montreal Rio Project focuses on
engaging less-privileged youths
through sports and equipping them
with lifeskills while the Lamb Project
is targeted at youths, with the aim of
helping them develop skills, discipline
and self respect.
Keppel O&M raised funds for charities
such as the Singapore Children’s
Society and the Society for the
Physically Disabled, and donated
more than 1,000 Can Do! tee-shirts
to the Metta Welfare Association.
Supporting Education
Reaching out to youths by enhancing
education standards, Keppel FELS
Brasil donated R$40,000 to a literacy
programme that trains teachers in
Angra dos Reis. The in-house technical
school at the BrasFELS yard has been
providing free specialised skills
training and certifi cation to the Angra
community. Through its apprenticeship
scheme, the yard has trained and
provided employment opportunities
in trades such as piping and welding
to hundreds of youths in Angra.
Since 2006, Keppel Philippines
Marine and Subic Shipyard and
Engineering have sponsored the
college education of outstanding
youths who lack the fi nancial means
to continue their marine related
courses. Two such scholarships
were awarded in 2009.
150
Keppel Credit Union (KCU) presented
33 book awards ranging from $200 to
$1,000 to the children of its members
in 2009. The annual presentation of
book awards is an initiative to provide
assistance to members and encourage
academic excellence. KCU is a credit
union for all employees in the Keppel
Group, encouraging thrift and fi nancial
prudence, sharing fi nancial resources
and mutual assistance in times of need,
and instilling the sense of being part of
the Keppel family.
Promoting Sports
and Healthy Living
The Clipper Round the World Yacht
Race is one of the world’s most
celebrated amateur sailing races. For
the 2009–2010 race, Keppel was the
primary sponsor for the Singapore
yacht, Uniquely Singapore, and host
port sponsor for the Singapore
stopover in the race, together with
Singapore Tourism Board.
A charity walkathon organised by the
Keppel Scholars Alumni Association
and Keppel Volunteers raised $40,500
for APSN. The walkathon was the fi nale
event for the annual Keppel Games,
which was held from July to October
2009. This year’s theme of ‘Can Do
the Distance’ is a call to Keppelites
to continue to embody Keppel’s
Can Do! spirit.
Keppel O&M is the title sponsor of the
SAFRA Keppel O&M Quadthlon. The
2009 event was held on 11 October,
and combined a 500-m open sea
swim, a 20-km bicycle, a 6-km run
and a 12-km inline skate.
Special Olympics Singapore grants
full funding to intellectually disabled
athletes for their sporting pursuits
offered through various special
schools. Keppel’s adopted charity,
APSN, participates in the Games,
which is held once every four years.
Keppel O&M supported the 2009
Games with a sponsorship of $20,000.
Keppel Corporation Limited
Report to Shareholders 2009
10
Keppel has been
in close partnership
with its adopted
charity, APSN,
for over 10 years.
1, 2
3
1
APSN students learn the
importance of environmental
conservation at the Singapore
Science Centre with Keppel
Volunteers.
2
Keppel Verolme’s staff ride
electric bicycles to work every
day to reduce their carbon
footprint and traffi c jams in
Rotterdam.
3
Keppel celebrates the
adventure-seeking mindset
epitomised by the Clipper
Round the World Race, and
provides opportunities for it
to fl ourish through our
sponsorship of the Race
since 2005.
Sustainability Report
Nurturing Communities – Community Relations
151
NurturingCommunities
Community Relations
In line with its belief
that the universal language
of music promotes
international goodwill
and friendship, Keppel
showcased the Singapore
Symphony Orchestra
to a Beijing audience
in May 2009.
Nurturing the Arts
Amidst the gloom of the economic
downturn in 2009, the Keppel Nights
scheme was a welcome relief,
giving senior citizens, students and
heartlanders the opportunity to enjoy
cultural performances at discounted
rates. Singapore’s fi rst sustained
subsidised ticket purchasing scheme,
Keppel Nights was launched in August
2008 to mark the 40th anniversary of
Keppel Corporation. 6,045 tickets have
been sold under this popular scheme
as at end-July 2009.
Keppel Corporation continued to
support Singapore cultural showcases
overseas through its sponsorship of the
participation of Singapore Symphony
Orchestra in the inaugural May Festival
organised by the National Centre for
the Performing Arts in Beijing, China.
Adding to the festive cheer in
Singapore, Keppel Group sponsored
Jeremy Monteiro’s A Swinging Jazzy
Christmas concert for the third year
running during the Christmas holidays.
To support the growth of the arts in
its local community, Keppel AmFELS
pledged US$50,000 to the construction
of the Arts Centre at the University
of Texas at Brownsville and the Texas
Southmost College. The company’s
annual golf charity tournament raised
US$30,000 of the sum. Keppel AmFELS
also supported Charro Day, which
celebrates the cultures of the border
towns of Brownsville, Texas, and
Matamoros, Mexico, by sponsoring
the poster designed by a local artist
in Brownsville.
152
Keppel Corporation Limited
Report to Shareholders 2009
Directors’ Report & Financial Statements
Contents
154 Directors’ Report
158 Balance sheets
159 Consolidated Profit and Loss Account
160 Consolidated statement of
Comprehensive Income
161 statements of Changes in equity
163 Consolidated statement of Cash Flows
165 notes to the Financial statements
211 significant subsidiaries and
Independent Auditors’ Report
Interested Person transactions
Associated Companies
222 statement by Directors
223
224
225 Directors and Key executives
235 Major Properties
238 Group Five-Year Performance
242 Group Value-Added statements
243 share Performance
244 shareholding statistics
245 notice of Annual General Meeting and
Closure of Books
251 Corporate Information
252 Financial Calendar
153
Directors’ Report
For the financial year ended 31 December 2009
The Directors present their report together with the audited consolidated financial statements of the Group and balance sheet
and statement of changes in equity of the Company for the financial year ended 31 December 2009.
1. Directors
The Directors of the Company in office at the date of this report are:
Lee Boon Yang (Chairman) (appointed as Director on 1 May 2009 and as Chairman on 1 July 2009)
Lim Hock San (Deputy Chairman)
Choo Chiau Beng (Chief Executive Officer)
Sven Bang Ullring
Tony Chew Leong-Chee
Oon Kum Loon (Mrs)
Tow Heng Tan
Alvin Yeo Khirn Hai (appointed on 1 June 2009)
Teo Soon Hoe
Tong Chong Heong (appointed on 1 August 2009)
2. Audit Committee
The Audit Committee of the Board of Directors comprises four independent Directors. Members of the Committee are:
Lim Hock San (Chairman)
Tony Chew Leong-Chee
Oon Kum Loon (Mrs)
Alvin Yeo Khirn Hai
The Audit Committee carried out its function in accordance with the Companies Act, including the following:
- Review audit plans and reports of the Company’s external auditors and internal auditors and consider effectiveness of
actions/policies taken by management on the recommendations and observations;
Independent review of quarterly financial reports and year-end financial statements;
- Review the assistance given by the Company’s officers to the auditors;
-
- Examine effectiveness of financial, operating and compliance controls;
- Review the independence and objectivity of the external auditors annually;
- Review the nature and extent of non-audit services performed by auditors;
- Meet with external auditors and internal auditors, without the presence of management, at least annually;
- Ensure that the internal audit function is adequately resourced and has appropriate standing within the Company, at
least annually;
- Review interested person transactions; and
-
Investigate any matters within the Audit Committee’s term of reference, whenever it deems necessary.
The Audit Committee recommended to the Board of Directors the re-appointment of Deloitte & Touche LLP as auditors of
the Company at the forthcoming Annual General Meeting.
3. Arrangements to enable directors to acquire shares and debentures
Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose
object is to enable the Directors of the Company to acquire benefits by means of the acquisition of shares or debentures
in the Company or any other body corporate other than the KCL Share Option Scheme.
154
Keppel Corporation Limited
Report to Shareholders 2009
4. Directors’ interest in shares and debentures
According to the Register of Directors’ shareholdings kept by the Company for the purpose of Section 164 of the
Companies Act, none of the Directors holding office at the end of the financial year had any interest in the shares and
debentures of the Company and related corporations, except as follows:
Keppel Corporation Limited
(Ordinary shares)
Lim Hock San
Choo Chiau Beng
Choo Chiau Beng (deemed interest)
Sven Bang Ullring
Tony Chew Leong-Chee
Oon Kum Loon (Mrs)
Oon Kum Loon (Mrs) (deemed interest)
Tow Heng Tan
Tow Heng Tan (deemed interest)
Alvin Yeo Khirn Hai (deemed interest)
Teo Soon Hoe
Tong Chong Heong
(Share options)
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
Keppel Land Limited
(Ordinary shares)
Choo Chiau Beng
Tony Chew Leong-Chee (deemed interest)
Tow Heng Tan (deemed interest)
Keppel telecommunications & transportation Ltd
(Ordinary shares)
Teo Soon Hoe
K-ReIt Asia
(Units)
Lim Hock San
Choo Chiau Beng
Choo Chiau Beng (deemed interest)
Tow Heng Tan (deemed interest)
Alvin Yeo Khirn Hai (deemed interest)
Keppel structured notes Pte Limited
(S$ Commodity Linked Guaranteed Note Series 1 due 2011)
Teo Soon Hoe
Keppel Philippines Holdings, Inc
(“B” shares of one Peso each)
Choo Chiau Beng
Teo Soon Hoe
Directors’ Report
1.1.2009
or date of
appointment,
if later
4,000
1,631,666
200,000
80,000
4,000
44,000
40,000
4,626
26,172
20,000
3,628,332
1,499,582
Holdings At
31.12.2009
21.1.2010
6,000
1,631,666
200,000
82,000
6,000
46,000
40,000
6,626
26,172
20,000
3,628,332
1,499,582
6,000
2,091,666
200,000
82,000
6,000
46,000
40,000
6,626
26,172
20,000
4,088,332
1,499,582
1,610,000
2,300,000
1,340,000
2,150,000
2,760,000
1,540,000
1,690,000
2,300,000
1,540,000
-
-
50
100,000
1,286,100
95
100,000
1,286,100
95
28,000
28,000
28,000
-
780,000
-
10
-
894,000
-
2,635,000
10
250,000
894,000
-
2,635,000
10
250,000
$100,000
$100,000
$100,000
2,000
2,000
2,000
2,000
2,000
2,000
155
Directors’ Report
5. Directors’ receipt and entitlement to contractual benefits
Since the beginning of the financial year, no Director of the Company has received or become entitled to receive a benefit
which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by
the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which
he has a substantial financial interest except as disclosed in the notes to the financial statements and salaries, bonuses
and other benefits in their capacity as directors of the Company which are disclosed in the Corporate Governance Report.
6. Share options of the Company
Details of share options granted under the KCL Share Option Scheme (“Scheme”) are disclosed in Note 3 to the financial
statements.
Options to take up 17,414,500 Ordinary Shares (“Shares”) were granted during the financial year. There were 1,362,500
Shares issued by virtue of exercise of options and options to take up 1,949,000 Shares were cancelled during the
financial year. At the end of the financial year, there were 59,594,000 Shares under option as follows:
Date of
grant
20.12.02
11.02.03
14.08.03
13.02.04
12.08.04
11.02.05
11.08.05
09.02.06
10.08.06
13.02.07
10.08.07
14.02.08
14.08.08
05.02.09
06.08.09
Balance at
1.1.2009 or
later date
of grant
20,000
10,000
10,000
590,000
780,000
1,291,000
2,563,000
3,589,000
5,968,000
6,629,000
7,616,000
7,701,000
8,724,000
9,079,000
8,335,500
62,905,500
number of share options
Exercised
(20,000)
(10,000)
(10,000)
(20,000)
(20,000)
(184,000)
(335,000)
(394,000)
(341,500)
-
-
-
-
(28,000)
-
(1,362,500)
Cancelled
-
-
-
-
-
-
(20,000)
(69,000)
(219,000)
(225,000)
(336,000)
(350,000)
(351,000)
(355,000)
(24,000)
(1,949,000)
Balance at
31.12.2009
-
-
-
570,000
760,000
1,107,000
2,208,000
3,126,000
5,407,500
6,404,000
7,280,000
7,351,000
8,373,000
8,696,000
8,311,500
59,594,000
Exercise price
Date of expiry
$1.30
$1.32
$2.24
$3.01
$3.24
$4.42
$6.24
$6.39
$7.66
$9.13
$12.95
$9.96
$10.26
$4.04
$8.21
19.12.12
10.02.13
13.08.13
12.02.14
11.08.14
10.02.15
10.08.15
08.02.16
09.08.16
12.02.17
09.08.17
13.02.18
13.08.18
04.02.19
05.08.19
The information on Directors of the Company participating in the Scheme is as follows:
Aggregate
options
granted and
adjusted since
commencement
of the Scheme
to the end of
financial year
5,120,000
5,500,000
3,574,200
Options
granted
during the
financial year
540,000
460,000
380,000
Aggregate
options
exercised since
commencement
of the Scheme
to the end of
financial year
2,396,250
2,166,250
1,624,200
Aggregate
options
lapsed since
commencement
of the Scheme
to the end of
financial year
573,750
573,750
410,000
Aggregate
options
outstanding as
at the end of
financial year
2,150,000
2,760,000
1,540,000
Name of Director
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
No employee received 5 percent or more of the total number of options available under the Scheme.
There are no options granted to any of the Company’s controlling shareholders or their associates under the Scheme.
156
Keppel Corporation Limited
Report to Shareholders 2009
7. Share options of subsidiaries
The particulars of share options of subsidiaries of the Company are as follows:
(a) Keppel Land Limited (“Keppel Land”)
At the end of the financial year, there were 59,729,288 unissued shares of Keppel Land Limited under option. This
comprised $300 million principal amount of 2.5% Convertible Bonds due 2013 at a conversion price of $5.58 per
share and 5,965,848 options under the Keppel Land Share Option Scheme. Details and terms of the options have
been disclosed in the Directors’ Report of Keppel Land Limited.
(b) Keppel Telecommunications & Transportation Ltd (“Keppel T&T”)
At the end of the financial year, there were 2,806,000 unissued shares of Keppel Telecommunications & Transportation
Ltd under option relating to the Keppel T&T Share Option Scheme. Details and terms of the options have been
disclosed in the Directors’ Report of Keppel Telecommunications & Transportation Ltd.
8. Auditors
The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.
On behalf of the Board
Choo Chiau Beng
Chief Executive Officer
Singapore, 1 March 2010
Teo Soon Hoe
Group Finance Director
Directors’ Report
157
Balance Sheets
As at 31 December 2009
share capital
Reserves
share capital & reserves
Minority interests
Capital employed
Represented by:
Fixed assets
Investment properties
subsidiaries
Associated companies
Investments
Long term receivables
Intangibles
Current assets
Stocks & work-in-progress in excess of related billings
Amounts due from:
- subsidiaries
- associated companies
Debtors
Short term investments
Bank balances, deposits & cash
Current liabilities
Creditors
Billings on work-in-progress in excess of related costs
Provisions
Amounts due to:
- subsidiaries
- associated companies
Term loans
Taxation
Bank overdrafts
net current assets
non-current liabilities
Term loans
Deferred taxation
Note
3
4
5
6
7
8
9
10
11
Group
2009
$’000
2008
$’000
Company
2009
$’000
2008
$’000
832,908
5,152,439
5,985,347
2,727,226
824,571
3,771,605
4,596,176
2,152,331
832,908
3,924,918
4,757,826
- -
824,571
2,320,268
3,144,839
8,712,573
6,748,507
4,757,826
3,144,839
2,157,172
3,051,247
-
2,723,169
152,046
547,665
90,118
8,721,417
1,946,662
3,029,675
-
3,201,031
101,024
197,662
78,487
8,554,541
5,430
- -
3,393,466
3,074
- -
584
- -
3,402,554
5,890
2,867,303
3,074
301,018
3,177,285
12
3,178,182
3,318,820
- -
13
13
14
15
16
17
12
18
13
13
19
27
20
-
287,922
1,727,099
456,515
2,935,787
8,585,505
-
326,583
1,970,831
330,817
2,244,851
8,191,902
1,642,528
6,056
103,575
- -
33,507
1,785,666
4,051,972
1,683,392
68,856
3,939,583
2,882,124
58,609
-
168,186
839,117
450,951
1,668
7,264,142
-
422,205
197,868
344,020
27,762
7,872,171
132,302
- -
- -
265,546
- -
- -
27,169
- -
425,017
260,718
300
59,908
664,441
985,367
219,688
472,848
19,669
712,205
1,321,363
319,731
1,360,649
273,162
19
21
918,410
411,797
1,330,207
1,744,553
381,212
2,125,765
-
5,377
5,377
300,000
5,608
305,608
net assets
8,712,573
6,748,507
4,757,826
3,144,839
See accompanying notes to the financial statements.
158
Keppel Corporation Limited
Report to Shareholders 2009
Consolidated Profit and Loss Account
For the financial year ended 31 December 2009
Revenue
Materials and subcontract costs
Staff costs
Depreciation and amortisation
Other operating expenses
operating profit
Investment income
Interest income
Interest expenses
Share of results of associated companies
Profit before tax and exceptional items
Exceptional items
Profit before taxation
Taxation
Profit for the year
Attributable to:
shareholders of the Company
Profit before exceptional items
Exceptional items
Minority interests
Earnings per ordinary share
Before exceptional items
- basic
- diluted
After exceptional items
- basic
- diluted
Gross dividend per ordinary share
Interim dividend paid
Final dividend proposed
Special dividend in specie proposed
Total distribution
Note
2009
$’000
2008
$’000
22
23
24
25
25
25
8
26
27
26
28
29
12,247,121
(8,808,751)
(1,372,405)
(174,313)
(386,861)
1,504,791
5,101
73,676
(49,675)
321,683
1,855,576
322,130
2,177,706
(347,875)
11,805,426
(8,828,492)
(1,329,042)
(139,078)
(270,340)
1,238,474
12,087
71,002
(78,671)
353,957
1,596,849
12,592
1,609,441
(288,030)
1,829,831
1,321,411
1,264,611
360,506
1,625,117
204,714
1,829,831
1,096,653
1,318
1,097,971
223,440
1,321,411
79.4 cts
79.2 cts
102.0 cts
101.8 cts
15.0 cts
23.0 cts
23.0 cts -
61.0 cts
69.0 cts
68.7 cts
69.0 cts
68.8 cts
14.0 cts
21.0 cts
35.0 cts
See accompanying notes to the financial statements.
Consolidated Profit and Loss Account
159
Consolidated Statement of Comprehensive Income
For the financial year ended 31 December 2009
Profit for the year
Available-for-sale assets
- Fair value changes arising during the year
- Realised & transferred to profit and loss account
Cash flow hedges
- Fair value changes arising during the year, net of tax
- Realised & transferred to profit and loss account
Foreign exchange translation
- Exchange difference arising during the year
- Realised & transferred to profit and loss account
Share of other comprehensive income of associated companies
other comprehensive income for the year, net of tax
total comprehensive income for the year
Attributable to:
Shareholders of the Company
Minority interests
Note
2009
$’000
2008
$’000
1,829,831
1,321,411
139,760
66,405
(334,693)
(60,843)
21
207,336
247
(322,528)
1,827
(144,436)
23,505
64,767
(4,687)
(20,832)
271,985
21,061
(635,096)
2,101,816
686,315
1,943,492
158,324
2,101,816
433,518
252,797
686,315
See accompanying notes to the financial statements.
160
Keppel Corporation Limited
Report to Shareholders 2009
Statements of Changes in Equity
For the financial year ended 31 December 2009
Attributable to equity holders of the Company
Share
Capital
$’000
Capital
Reserves
$’000
Revenue
Reserves
$’000
Foreign
Exchange
Translation
Account
$’000
Share
Capital &
Reserves
$’000
Minority
Interests
$’000
Capital
Employed
$’000
824,571
127,345
3,643,141
1,119
4,596,176
2,152,331
6,748,507
402,819
-
22,672
1,625,117
(573,562)
-
(84,444) 1,943,492
(573,562)
22,672
-
-
158,324
-
1,142
2,101,816
(573,562)
23,814
(1,572)
1,575
(3)
-
-
-
-
-
(793)
-
-
-
-
-
-
-
-
8,337
(11,116)
141
-
-
-
-
-
-
(87,136)
(87,136)
510,224
510,224
(11,116)
(652)
8,337
(3,065)
(4,594)
-
(14,181)
(5,246)
8,337
-
-
-
-
-
-
Group
2009
As at 1 January
Total comprehensive income
for the year
Dividend paid
Share-based payment
Transfer of statutory, capital
and other reserves
to revenue reserves
Dividend paid to minority
shareholders
Cash subscribed by minority
shareholders
Acquisition of additional
interest in subsidiaries
Other adjustments
Shares issued
As at 31 December
832,908
540,289
4,695,478
(83,328) 5,985,347
2,727,226
8,712,573
2008
As at 1 January
Total comprehensive income
for the year
Dividend paid
Share-based payment
Transfer of statutory, capital
and other reserves
to revenue reserves
Dividend paid to minority
shareholders
Cash subscribed by minority
shareholders
Acquisition of subsidiaries
Acquisition of additional
interest in subsidiaries
Other adjustments
Shares issued
790,407
827,571
3,644,164
(57,409) 5,204,733
1,830,459
7,035,192
-
-
-
-
-
-
-
-
-
34,164
(722,219) 1,097,971
(1,097,743)
-
-
20,361
57,766
-
-
433,518
(1,097,743)
20,361
252,797
-
1,590
686,315
(1,097,743)
21,951
1,632
(2,394)
762
-
-
-
-
-
-
-
-
-
-
1,143
-
-
-
-
-
-
-
-
-
-
-
-
-
(103,416)
(103,416)
199,559
350
199,559
350
-
1,143
34,164
(29,008)
-
-
(29,008)
1,143
34,164
As at 31 December
824,571
127,345
3,643,141
1,119
4,596,176
2,152,331
6,748,507
See accompanying notes to the financial statements.
statements of Changes in equity
161
Statements of Changes in Equity
Company
2009
As at 1 January
Profit / Total comprehensive income for the year
Dividend paid
Share-based payment
Shares issued
Share
Capital
$’000
Capital
Reserves
$’000
Revenue
Reserves
$’000
Total
$’000
824,571
-
-
-
8,337
70,042
-
-
21,513
-
2,250,226
2,156,699
(573,562)
-
-
3,144,839
2,156,699
(573,562)
21,513
8,337
As at 31 December
832,908
91,555
3,833,363
4,757,826
2008
As at 1 January
Profit / Total comprehensive income for the year
Dividend paid
Share-based payment
Shares issued
790,407
-
-
-
34,164
47,456
-
-
22,586
-
2,510,512
837,457
(1,097,743)
-
-
3,348,375
837,457
(1,097,743)
22,586
34,164
As at 31 December
824,571
70,042
2,250,226
3,144,839
See accompanying notes to the financial statements.
162
Keppel Corporation Limited
Report to Shareholders 2009
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2009
operating activities
Operating profit
Adjustments:
Depreciation and amortisation
Share-based payment expenses
Loss/(profit) on sale of fixed assets and investment properties
Others
Operational cash flow before changes in working capital
Working capital changes:
Stocks & work-in-progress
Debtors
Creditors
Investments in bonds and shares
Advances to associated companies
Translation of foreign subsidiaries
Interest received
Interest paid
Income taxes paid, net of refunds received
net cash from operating activities
Investing activities
Acquisition of subsidiary and business
Acquisition of additional shares in subsidiaries
Acquisition and further investment in associated companies
Acquisition of fixed assets and investment properties
Proceeds from disposal of associated companies
Proceeds from disposal of fixed assets and investment properties
Dividend received from investments and associated companies
net cash from/(used in) investing activities
Financing activities
Proceeds from share issues
Proceeds from minority shareholders of subsidiaries
Proceeds from term loans
Repayment of term loans
Dividend paid to shareholders of the Company
Dividend paid to minority shareholders of subsidiaries
net cash used in financing activities
net increase in cash and cash equivalents
Cash and cash equivalents as at 1 January
Note
2009
$’000
2008
$’000
1,504,791
1,238,474
A
174,313
23,682
5,781
-
1,708,567
(1,066,070)
183,639
235,389
41,610
(225,378)
(79,593)
798,164
70,315
(52,183)
(146,148)
670,148
(529,434)
(3,814)
(212,395)
(475,797)
1,465,767 -
48,936
130,282
423,545
139,078
26,527
(8,268)
(93)
1,395,718
(73,960)
(376,344)
635,517
39,395
557,385
70,121
2,247,832
69,219
(85,687)
(184,550)
2,046,814
(1,400)
(23,604)
(127,463)
(410,609)
18,667
373,246
(171,163)
8,337
510,224
196,658
(431,184)
(573,562)
(87,136)
(376,663)
34,164
199,559
170,228
(458,437)
(1,097,743)
(103,416)
(1,255,645)
717,030
2,217,089
620,006
1,597,083
Cash and cash equivalents as at 31 December
B
2,934,119
2,217,089
See accompanying notes to the financial statements.
Consolidated statement of Cash Flows
163
Consolidated Statement of Cash Flows
Notes to Consolidated Statement of Cash Flows
A. Acquisition of subsidiary and Business
During the financial year, the fair values of net assets of subsidiary and business acquired were as follows:
2009
$’000
2008
$’000
Fixed assets
Stocks & work-in-progress
Debtors
Bank balances and cash
Creditors
Loans
Deferred tax
Minority interests
Goodwill on consolidation (Note 11)
Purchase consideration
Less: Purchase consideration payable
Less: Bank balances and cash acquired
143,507 -
161
463,546
12,842
(13,752)
(70,935)
(9,765)
-
525,604
24,615
550,219
(7,943)
(12,842)
1,750
-
-
-
-
-
(350)
1,400
-
1,400
-
-
Cash flow on acquisition net of cash acquired
529,434
1,400
B. Cash and Cash equivalents
Cash and cash equivalents consist of cash on hand and balances with banks. Cash and cash equivalents in the
consolidated statement of cash flows comprise the following balance sheet amounts:
Bank balances, deposits and cash (Note 16)
Bank overdrafts (Note 20)
2,935,787
(1,668)
2,244,851
(27,762)
2,934,119
2,217,089
See accompanying notes to the financial statements.
164
Keppel Corporation Limited
Report to Shareholders 2009
Notes to the Financial Statements
For the financial year ended 31 December 2009
These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1. General
The Company is incorporated and domiciled in Singapore and is listed on the Singapore Exchange Securities Trading
Limited. The address of its principal place of business and registered office is 1 HarbourFront Avenue #18-01, Keppel Bay
Tower, Singapore 098632.
The Company’s principal activity is that of an investment holding and management company.
The principal activities of the companies in the Group consist of:
- offshore oil-rig construction, shipbuilding & shiprepair and conversion;
- environmental engineering, power generation and network & logistics;
- property development & investment and property fund management; and
-
investments.
There has been no significant change in the nature of these principal activities during the financial year.
The financial statements of the Group for the financial year ended 31 December 2009 and the balance sheet and statement
of changes in equity of the Company at 31 December 2009 were authorised for issue in accordance with a resolution of the
Board of Directors on 1 March 2010.
2. Significant acounting policies
(a) Basis of Preparation
The financial statements have been prepared in accordance with the provisions of the Singapore Companies Act and
Singapore Financial Reporting Standards (“FRS”). The financial statements have been prepared under the historical cost
convention, except as disclosed in the accounting policies below.
Adoption of New and Revised Standards
In the current year, the Group adopted the new/revised FRS and Interpretations of FRS (“INT FRS”) that are effective for
annual periods beginning on or after 1 January 2009. Changes to the Group’s accounting policies have been made as
required, in accordance with the transitional provisions in the respective FRS and INT FRS.
The following are the new or amended FRS and INT FRS that are relevant to the Group:
FRS 1 (Revised)
Amendments to FRS 23
Amendments to FRS 107
FRS 108
Improvements to FRSs
Presentation of Financial Statements
Borrowing Costs
Improving Disclosures about Financial Instruments
Operating Segments
Amendments to FRS 40
The adoption of the above FRS did not result in any substantial change to the Group’s accounting policies nor any
significant impact on these financial statements except as disclosed below:
FRS 1 (Revised) – Presentation of Financial Statements
FRS 1 (Revised) introduced terminology changes (including revised titles for the financial statements) and changes in the
format and content of the financial statements.
Amendments to FRS 107 – Financial Instruments: Disclosures – Improving Disclosures about Financial Instruments
The amendments to FRS 107 expand the disclosures required in respect of fair value measurements and liquidity risk. The
Group has elected not to provide comparative information for these expanded disclosures in the current year in accordance
with the transitional reliefs for these amendments.
notes to the Financial statements
165
Notes to the Financial Statements
2. Significant acounting policies (continued)
(b) Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries as at the
balance sheet date.
The results of subsidiaries acquired or disposed of during the financial year are included or excluded from the consolidated
financial statements from their respective dates of acquisition or disposal. All intercompany transactions, balances and
unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the asset transferred. Where necessary, adjustments are made to
the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.
Acquisition of subsidiaries is accounted for using the purchase method. The cost of an acquisition is measured at the
aggregate of the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date
of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective
of the extent of any minority interest. Costs directly attributable to an acquisition are included as part of the cost of
acquisition.
Any excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised in the profit and
loss account on the date of acquisition.
(c) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and any impairment in value. When the carrying amount of
an asset is greater than its estimated recoverable amount, it is written down to its recoverable amount. Profits or losses on
disposal of fixed assets are included in the profit and loss account.
Depreciation of fixed assets is calculated on a straight-line basis to write off the cost of the fixed assets over their estimated
useful lives. No depreciation is provided on freehold land and capital work-in-progress. The estimated useful lives of other
fixed assets are as follows:
Freehold buildings
Leasehold land & buildings
Vessels & floating docks
Plant, machinery & equipment
30 to 50 years
Over period of lease (ranging from 2 to 80 years)
10 to 20 years
1 to 30 years
The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any
changes in estimate accounted for on a prospective basis.
(d)
Investment Properties
Investment properties are initially recognised at cost and subsequently measured at fair value, determined annually by
independent professional valuers. Changes in fair value are recognised in the profit and loss account.
On disposal of an investment property, the difference between the disposal proceeds and the carrying amount is
recognised in the profit and loss account.
(e) Subsidiaries
A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain
benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity.
166
Keppel Corporation Limited
Report to Shareholders 2009
Investments in subsidiaries are stated in the Company’s financial statements at cost less any impairment losses. On
disposal of a subsidiary, the difference between net disposal proceeds and the carrying amount of the investment is taken
to the profit and loss account.
(f) Associated Companies
An associated company is an entity, not being a subsidiary, over which the Group has significant influence, but not control,
in the operating and financial policy decisions.
Investments in associated companies are stated in the Company’s financial statements at cost less any impairment losses.
On disposal of an associated company, the difference between net disposal proceeds and the carrying amount of the
investment is taken to the profit and loss account.
Investments in associated companies are accounted for in the consolidated financial statements using the equity method of
accounting whereby the Group’s share of profit or loss of the associated company is included in the profit and loss account
and the Group’s share of net assets of the associated company is included in the balance sheet.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and
contingent liabilities of the associated company recognised at the date of acquisition is recognised as goodwill. The
goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment.
Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the
cost of acquisition, after reassessment, is recognised immediately in profit or loss.
(g)
Intangibles
Goodwill
Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of the business combination over
the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Goodwill is initially
recognised as an asset at cost and is subsequently measured at cost less any impairment losses.
Other Intangible Assets
Intangible assets include development expenditure. Costs incurred which are expected to generate future economic
benefits are recognised as intangibles and amortised on a straight line basis over their useful lives, ranging from 5 to 15
years.
(h)
Investments
Investments are classified as held for trading or available-for-sale. Investments acquired for the purpose of selling in the
short term are classified as held for trading. Other investments held by the Group are classified as available-for-sale.
Investments are recognised and derecognised on the trade date where the purchase or sale of an investment is under a
contract whose terms required delivery of investment within the timeframe established by the market concerned.
Investments are initially measured at fair value plus transaction costs except for investments held for trading, which are
recognised at fair value.
For investments held for trading, gains and losses arising from changes in fair value are included in the profit and loss account.
For available-for-sale investments, gains and losses arising from changes in fair value are recognised directly in other
comprehensive income, until the investment is disposed of or is determined to be impaired, at which time the cumulative
gain or loss previously recognised in other comprehensive income is reclassified to the profit and loss account.
The fair value of investments that are traded in active markets is based on quoted market prices at the balance sheet date.
The quoted market price is the current bid prices. The fair value of investments that are not traded in an active market is
determined using valuation techniques. Such techniques include using recent arm’s length transactions, reference to the
underlying net asset value of the investee companies and discounted cash flow analysis.
notes to the Financial statements
167
Notes to the Financial Statements
2. Significant acounting policies (continued)
(i) Derivative Financial Instruments and Hedge Accounting
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently re-measured at fair value. Derivative financial instruments are carried as assets when the fair value is positive
and as liabilities when the fair value is negative.
Gains or losses arising from changes in fair value of derivative financial instruments that do not qualify for hedge accounting
are taken to the profit and loss account.
For cash flow hedges, the effective portion of the gains or losses on the hedging instrument is recognised directly in other
comprehensive income, while the ineffective portion is recognised in the profit and loss account. Amounts taken to other
comprehensive income are reclassified to the profit and loss account when the hedged transaction affects profit or loss.
The fair value of forward foreign currency contracts is determined using forward exchange market rates at the balance
sheet date. The fair value of High Sulphur Fuel Oil (“HSFO”) forward contracts is determined using forward HSFO prices
provided by the Group’s key counterparty. The fair value of interest rate caps and interest rate swaps are based on
valuations provided by the Group’s bankers.
(j)
Financial Assets
Financial assets include cash and bank balances, trade, intercompany and other receivables and investments. Trade,
intercompany and other receivables are stated at their fair values as reduced by appropriate allowances for estimated
irrecoverable amounts.
(k) Stocks & Work-in-Progress
Stocks, consumable materials and supplies are stated at the lower of cost and net realisable value, cost being principally
determined on the weighted average method.
Work-in-progress is stated at the lower of cost (comprising direct labour, material costs, direct expenses and an
appropriate allocation of production overheads) and net realisable value, which is arrived at after providing for anticipated
losses, if any, when the possibility of loss is ascertained.
Completed properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land and
construction, related overhead expenditure and interest incurred during the period of construction.
Properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land and
construction, related overheads expenditure, and financing charges incurred during the period of development. Net
realisable value represents the estimated selling price less costs to be incurred in selling the property. Upon receipt of
temporary occupation permits, they are transferred to completed properties held for sale.
Each property under development is accounted for as a separate project. Where a project comprises more than one
component or phase with a separate temporary occupation permit, each component or phase is treated as a separate
project, and interest and other net costs are apportioned accordingly.
Progress claims made against work-in-progress are offset against the cost of work-in-progress and the profits recognised
on partly completed long-term contracts less any provision required to reduce cost to estimated realisable value.
168
Keppel Corporation Limited
Report to Shareholders 2009
(l)
Impairment of Assets
Financial Assets
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of
financial assets is impaired and recognised an allowance for impairment when such evidence exists.
Loans and receivables
Significant financial difficulties of the debtor and default or significant delay in payments are objective evidence that the
financial assets are impaired. The carrying amount of these assets is reduced through the use of an allowance account
and the loss is recognised in the profit and loss account. When the asset becomes uncollectible, the carrying amount is
written off against the allowance account. If, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be objectively measured, the previously recognised impairment loss is reversed to the extent that the carrying
amount does not exceed the amortised cost had no impairment been recognised in the prior periods. The amount of
reversal is recognised in the profit and loss account.
Investments
Significant or prolonged decline in the fair value of the investment below its cost is considered in determining whether the
investment is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured
as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset
previously recognised in profit or loss - is removed from equity and recognised in the profit and loss account. Impairment
losses recognised in the profit and loss account are not reversed through the profit and loss account until the investment is
disposed of.
Goodwill
Goodwill is tested for impairment annually and whenever there is an indication that the goodwill may be impaired. Goodwill
included in the carrying amount of an associated company is tested for impairment as part of the investment.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to
benefit from the synergies of the combination.
An impairment loss is recognised in the profit and loss account when the carrying amount of the cash-generating unit,
including goodwill, exceeds the recoverable amount of the cash-generating unit. The impairment loss is allocated first to
reduce the carrying amount of goodwill allocated to the cash-generating units and then, to reduce the carrying amount of
the other assets in the unit on a pro-rata basis. An impairment loss recognised for goodwill is not reversed in a subsequent
period.
Other Non-Financial Assets
Tangible and intangible assets are tested for impairment whenever there is any objective evidence or indication that these
assets may be impaired.
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the
value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely
independent of those from other assets. If this is the case, recoverable amount is determined for cash-generating unit to
which the asset belongs.
If the recoverable amount of the asset is estimated to be less than its carrying amount, the carrying amount of an asset is
reduced to its recoverable amount. The difference between the carrying amount and recoverable amount is recognised as
impairment loss in the profit and loss account. An impairment loss for an asset is reversed if, and only if, there has been a
change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised.
The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in
prior years. A reversal of impairment loss for an asset is recognised in the profit and loss account.
notes to the Financial statements
169
Notes to the Financial Statements
2. Significant acounting policies (continued)
(m) Financial Liabilities and Equity Instruments
Financial liabilities include trade, intercompany and other payables, bank loans and overdrafts. Trade, intercompany and
other payables are stated at their fair values. Interest-bearing bank loans and overdrafts are initially measured at fair value
and are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and
the redemption value is taken to the profit and loss account over the period of the borrowings using the effective interest
method.
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its
liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
(n) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be
made.
Provision for warranties is set up upon completion of a contract to cover the estimated liability which may arise during the
warranty period. This provision is based on service history. Any surplus of provision will be written back at the end of the
warranty period while additional provisions where necessary are made when known. These liabilities are expected to be
incurred over the applicable warranty periods.
Provision for claims is made for the estimated cost of all claims notified but not settled at the balance sheet date, less
recoveries, using the information available at the time. Provision is also made for claims incurred but not reported at the
balance sheet date based on historical claims experience, modified for variations in expected future settlement. The
utilisation of provisions is dependent on the timing of claims.
(o) Leases
When a group company is the lessee
Finance leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. Assets held under finance leases are recognised as assets of the Group at their fair values at the
inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the
lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the profit and loss
account. Contingent rentals are recognised as expenses in the periods in which they are incurred.
Operating leases
Leases of assets in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases (net of any incentive received from lessor) are taken to
the profit and loss account on a straight-line basis over the period of the lease. When an operating lease is terminated
before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an
expense in the period in which termination takes place.
170
Keppel Corporation Limited
Report to Shareholders 2009
When a group company is the lessor
Finance leases
Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment
in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on
the Group’s net investment outstanding in respect of the leases.
Operating leases
Assets leased out under operating leases are included in investment properties and are stated at fair values. Rental income
(net of any incentive given to lessee) is recognised on a straight-line basis over the lease term.
(p) Revenue
Revenue consists of:
- Revenue recognised on contracts, under the percentage of completion method when the outcome of the contract can
be estimated reliably;
Invoiced value of goods and services;
-
- Rental income from investment properties; and
Investment income, interest and fee income.
-
(q) Revenue Recognition
Revenue from rigbuildings, shipbuildings and repairs, and long term engineering contracts is recognised based on the
percentage of completion method in proportion to the stage of completion, provided that the work is at least 20% complete
and the outcome of such work can be reliably estimated. The percentage of completion is measured by reference to the
percentage of the physical proportion of the contract work completed as determined by engineers’ estimates. Provision is
made where applicable for anticipated losses on contracts in progress.
Revenue recognition on partly completed properties held for sale is based on the percentage of completion method as
follows:
- For Singapore trading properties under development, the profit recognition upon the signing of sales contracts is 20%
of the total estimated profit attributable to the actual contracts signed. Subsequent recognition of profit is based on the
stage of physical completion;
- For overseas trading properties under development, the profit recognition upon the signing of sales contracts is the
direct proportion of total expected project profit attributable to the actual sales contract signed, but only to the extent
that it relates to the stage of physical completion; and
-
In respect of large residential property projects, income recognition is applied by phases.
When losses are expected, full provision is made in the accounts after adequate allowance has been made for estimated
costs to completion. Any expenditure incurred on abortive projects is written off in the profit and loss account.
Revenue from the sale of products is recognised upon shipment to customers and collectibility of the related receivables is
reasonably assured. Sales are stated net of goods and services tax and sales returns.
Revenue from the rendering of services including electricity supply and logistic services is recognised over the period in
which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual
services provided as a proportion of the total services to be performed.
Rental income from operating leases on investment properties are recognised on a straight-line basis over the lease term.
Dividend income from investments is recognised when the right to receive payment is established, and in the case of fixed
interest bearing investments, on a time proportion basis using the effective interest method.
Interest income is recognised on a time proportion basis using the effective interest method.
notes to the Financial statements
171
Notes to the Financial Statements
2. Significant acounting policies (continued)
(r) Borrowing Costs
Borrowing costs incurred to finance the development of properties are capitalised during the period of time that is required
to complete and prepare the asset for its intended use. Other borrowing costs are taken to the profit and loss account
over the period of borrowing using the effective interest rate method.
(s) Employee Benefits
Defined Contribution Plan
The Group makes contributions to pension schemes as defined by the laws of the countries in which it has operations. In
particular, the Singapore companies make contributions to the Central Provident Fund in Singapore, a defined contribution
pension scheme. Contributions to pension schemes are recognised as an expense in the period in which the related
service is performed.
Employee Leave Entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the
estimated liability for leave as a result of services rendered by employees up to the balance sheet date.
Share Option Scheme
The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received
in exchange for the grant of the options is recognised as an expense in the profit and loss account with a corresponding
increase in the share option reserve over the vesting period. The total amount to be recognised over the vesting period is
determined by reference to the fair value of the options granted on the date of grant.
(t)
Income Taxes
Current income tax liabilities (and assets) for current and prior periods are recognised at the amounts expected to be paid
to (or recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted
by the balance sheet date.
Deferred income tax assets/liabilities are recognised for deductible/taxable temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts. The principal temporary differences arise from depreciation,
valuation of investment properties, unremitted offshore income and future tax benefits from certain provisions not allowed
for tax purposes until a later period. Deferred tax assets are recognised to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred
tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Current and deferred tax are recognised as an expense or income in the profit and loss account, except when they relate
to items credited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise
from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into
account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities over cost.
172
Keppel Corporation Limited
Report to Shareholders 2009
(u) Foreign Currencies
Functional Currency
Items included in the financial statements of each entity in the Group are measured using the currency that best reflects the
economic substance of the underlying events and circumstances relevant to that entity (“functional currency”).
The financial statements of the Group and the balance sheet and statement of changes in equity of the Company are
presented in Singapore Dollars, which is the functional currency of the Company.
Foreign Currency Transactions
Transactions in foreign currencies are translated at exchange rates approximating those ruling at the transaction dates.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at exchange rates
approximating those ruling at that date. Exchange differences arising from translation of monetary assets and liabilities are
taken to the profit and loss account. Exchange differences on non-monetary items such as investments held for trading
are reported as part of the fair value gain or loss. Exchange differences on non-monetary items such as available-for-sale
investments are also recognised in other comprehensive income.
Foreign Currency Translation
For inclusion in the Group’s financial statements, the assets and liabilities of foreign subsidiaries and associated companies
that are in functional currencies other than Singapore Dollars are translated into Singapore Dollars at the exchange rates
ruling at the balance sheet date. The trading results of foreign subsidiaries and associated companies are translated into
Singapore Dollars using the average exchange rates for the financial year. Exchange differences due to such currency
translation are recognised in other comprehensive income and accumulated in a separate component of equity. Goodwill
and fair value adjustments arising on acquisition of a foreign entity are treated as non-monetary foreign currency assets and
liabilities of the acquirer and recorded at the closing exchange rate.
(v) Critical Accounting Estimates and Judgements
(i) Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, the management is of the opinion that there is no instance
of application of judgements which is expected to have a significant effect on the amounts recognised in the financial
statements, apart from those involving estimations described below.
(ii) Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year, are as follows:
Impairment of loans and receivables
The Group assesses at each balance sheet date whether there is any objective evidence that a loan and receivable
is impaired. The Group considers factors such as the probability of insolvency or significant financial difficulties of
the debtor and default or significant delay in payments. When there is objective evidence of impairment, the amount
and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk
characteristics. The carrying amounts of trade, intercompany and other receivables are disclosed in the balance sheet.
Impairment of available-for-sale investments
The Group follows the guidance of FRS 39 in determining whether available-for-sale investments are considered
impaired. The Group evaluates, among other factors, the duration and extent to which the fair value of an investment
is less than its cost, the financial health of and the near-term business outlook of the investee, including factors such
as industry and sector performance, changes in technology and operational and financing cash flow. The fair values of
available-for-sale investments are disclosed in the balance sheet.
notes to the Financial statements
173
Notes to the Financial Statements
2. Significant acounting policies (continued)
Impairment of non-financial assets
Determining whether the carrying value of a non-financial asset is impaired requires an estimation of the value in use
of the cash-generating units. This requires the Group to estimate the future cash flows expected from the cash-
generating units and an appropriate discount rate in order to calculate the present value of the future cash flows. The
carrying amounts of fixed assets, investment properties and intangibles are disclosed in the balance sheet.
Revenue recognition
The Group recognises contract revenue based on the stage of completion method. The stage of completion is
measured in accordance with the accounting policy stated in Note 2(q). Significant assumption is required in
determining the stage of completion, the extent of the contract cost incurred, the estimated total contract revenue and
contract cost and the recoverability of the contracts. In making the assumption, the Group evaluates by relying on past
experience and the work of engineers. Revenue from construction contracts is disclosed in Note 22.
Revenue arising from additional claims and variation orders, whether billed or unbilled, is recognised when negotiations
have reached an advanced stage such that it is probable that the customer will accept the claims or approve the
variation orders, and the amount that it is probable will be accepted by the customer can be measured reliably.
Income taxes
The Group has exposure to income taxes in numerous jurisdictions. Significant assumption is required in determining
the provision for income taxes. There are certain transactions and computations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax
issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made. The carrying amounts of taxation and deferred taxation
are disclosed in the balance sheet.
Claims, litigations and reviews
The Group entered into various contracts with third parties in its ordinary course of business and is exposed to the risk
of claims, litigations or review from the contractual parties and/or government agencies. These can arise for various
reasons, including change in scope of work, delay and disputes, defective specifications or routine checks etc. The
scope, enforceability and validity of any claim, litigation or review may be highly uncertain. In making its judgement as
to whether it is probable that any such claim, litigation or review will result in a liability and whether any such liability can
be measured reliably, management relies on past experience and the opinion of legal and technical expertise.
174
Keppel Corporation Limited
Report to Shareholders 2009
3. Share capital
ordinary shares (“shares”)
Issued and paid up:
Balance 1 January
1,593,134,180 Shares (2008: 1,585,086,180 Shares)
Issued during the financial year
1,362,500 Shares (2008: 8,048,000 Shares)
Balance 31 December
1,594,496,680 Shares (2008: 1,593,134,180 Shares)
Group and Company
2009
$’000
2008
$’000
824,571
790,407
8,337
34,164
832,908
824,571
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends declared by the
Company.
During the financial year, the Company issued 1,362,500 Shares for cash upon exercise of options under the KCL Share
Option Scheme. This comprised 20,000 Shares at $1.30 per Share, 10,000 Shares at $1.32 per Share, 10,000 Shares
at $2.24 per Share, 20,000 Shares at $3.01 per Share, 20,000 Shares at $3.24 per Share, 184,000 Shares at $4.42 per
Share, 335,000 Shares at $6.24 per Share, 394,000 Shares at $6.39 per Share, 341,500 Shares at $7.66 per Share and
28,000 Shares at $4.04 per Share.
KCL share option scheme
The KCL Share Option Scheme (“Scheme”), which has been approved by the shareholders of the Company, is
administered by the Remuneration Committee whose members are:
Lim Hock San (Chairman)
Lee Boon Yang
Sven Bang Ullring
Oon Kum Loon (Mrs)
Tow Heng Tan
Under the Scheme, an option may, except in certain special circumstances, be exercised at any time after two years but no
later than the expiry date. The two-year vesting period is intended to encourage employees to take a longer-term view of
the Company.
The Shares under option may be exercised in full or in respect of 100 Shares or a multiple thereof, on the payment of the
subscription price. The subscription price is based on the average last done prices for the Shares of the Company on the
Singapore Exchange Securities Trading Limited for the three market days preceding the date of offer. The Remuneration
Committee may at its discretion fix the subscription price at a discount not exceeding 20 percent to the above price. None
of the options offered in the financial year was granted at a discount.
notes to the Financial statements
175
Notes to the Financial Statements
3. Share capital (continued)
To promote transparency, the Board of Directors had in 2002 resolved that the date of offer of share options under the
Scheme shall be a pre-determined date; that is, the date falling 14 days immediately after the date of announcement of the
Company’s half-year or full-year results, as the case may be. The number of Shares available under the Scheme shall not
exceed 15% of the issued share capital of the Company.
The employees to whom the options have been granted do not have the right to participate by virtue of the options in a
share issue of any other company.
Movements in the number of share options and their weighted average exercise prices are as follows:
Balance at 1 January
Granted
Exercised
Cancelled
Balance at 31 December
2009
2008
number of
options
45,491,000
17,414,500
(1,362,500)
(1,949,000)
59,594,000
Weighted
average
exercise
price
$9.23
$6.04
$6.12
$8.91
$8.38
Number of
options
37,768,000
16,715,000
(8,048,000)
(944,000)
45,491,000
Weighted
average
exercise
price
$7.80
$10.12
$4.24
$9.93
$9.23
Exercisable at 31 December
28,056,500
$8.79
14,829,000
$6.39
The weighted average share price at the date of exercise for options exercised during the financial year was $8.04 (2008:
$10.78). The options outstanding at the end of the financial year had a weighted average exercise price of $8.38 (2008:
$9.23) and a weighted average remaining contractual life of 7.9 years (2008: 8.3 years).
On 5 February 2009 and 6 August 2009, the Company granted 9,079,000 options and 8,335,500 options respectively
under the KCL Share Option Scheme. The estimated fair values of the options granted on those dates are $0.64 per share
(14 February 2008: $1.38 per share) and $1.98 per share (14 August 2008: $1.54 per share) respectively. These fair values
are determined using The Black-Scholes pricing model. The significant inputs into the model are as follows:
Date of grant
Prevailing share price at grant
Exercise price
Expected volatility
Expected life
Risk free rate
Expected dividend yield
2009
2008
5.2.2009
$4.04
$4.04
41.43%
4.0 years
0.96%
8.66%
6.8.2009
$8.21
$8.21
42.82%
4.0 years
0.97%
4.38%
14.2.2008
$9.96
$9.96
27.59%
3.5 years
1.23%
4.39%
14.8.2008
$10.26
$10.26
29.33%
3.5 years
1.81%
4.78%
176
Keppel Corporation Limited
Report to Shareholders 2009
The expected volatility is determined by calculating the historical volatility of the Company’s share price over the previous
4.0 years (2008: 3.5 years). The expected lives used in the model has been adjusted, based on management’s best
estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Details of share options granted by Keppel Land Limited and Keppel Telecommunications & Transportation Ltd, subsidiaries
of the Company are disclosed in the annual reports of the respective publicly-listed subsidiaries.
4. Reserves
Capital Reserves
Share option reserve
Fair value reserve
Hedging reserve
Bonus issue by subsidiaries
Others
Revenue Reserves
Foreign Exchange
Translation Account
Group
Company
2009
$’000
2008
$’000
100,777
231,920
141,999
40,000
25,593
540,289
80,240
36,673
(65,580)
40,000
36,012
127,345
2009
$’000
91,555
-
-
-
-
91,555
2008
$’000
70,042
-
-
-
-
70,042
4,695,478
3,643,141
3,833,363
2,250,226
(83,328)
1,119
-
-
5,152,439
3,771,605
3,924,918
2,320,268
Movements in the Group’s and the Company’s reserves are set out in the Consolidated Statement of Comprehensive
Income and Statement of Changes in Equity respectively.
notes to the Financial statements
177
Notes to the Financial Statements
5.
Fixed assets
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Vessels &
Buildings Floating Docks
$’000
$’000
Plant,
Machinery
& Equipment
$’000
Capital
Work-in-
Progress
$’000
Total
$’000
Group
2009
Cost
At 1 January
Additions
Disposals
Subsidiary acquired
Subsidiary disposed
Reclassification
- Stocks
- Other assets
- Other fixed assets
categories
Exchange differences
52,628
248
(255)
-
(213)
1,262,154
10,999
(644)
15,213
-
223,638
14,381
(10,684)
-
-
1,731,321
48,486
(21,978)
132,300
(87,902)
207,813
218,457
(19,025)
30,683
-
3,477,554
292,571
(52,586)
178,196
(88,115)
-
-
-
1,019
-
-
(827)
286
-
-
(827)
1,305
2,118
(189)
72,695
(27,653)
4,105
1,609
75,443
(22,050)
(154,361)
(5,335)
-
(53,618)
At 31 December
54,337
1,333,783
233,049
1,855,079
278,232
3,754,480
Accumulated Depreciation &
Impairment Losses
At 1 January
Depreciation charge
Impairment loss (Note 26)
Disposals
Subsidiary acquired
Subsidiary disposed
Reclassification
- Stocks
- Other assets
- Other fixed assets
categories
Exchange differences
19,418
2,539
-
(165)
-
(213)
490,420
41,675
655
(155)
4,853
-
101,514
28,931
-
(2,443)
-
-
919,540
100,701
-
(17,932)
29,836
(87,902)
-
-
-
287
-
-
130
157
(2,460)
(267)
(197)
(14,809)
(2,411)
98
5,068
(19,560)
At 31 December
18,852
522,729
125,689
930,038
-
-
-
-
-
-
-
-
-
-
-
1,530,892
173,846
655
(20,695)
34,689
(88,115)
130
444
-
(34,538)
1,597,308
net Book Value
35,485
811,054
107,360
925,041
278,232
2,157,172
178
Keppel Corporation Limited
Report to Shareholders 2009
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Vessels &
Buildings Floating Docks
$’000
$’000
Plant,
Machinery
& Equipment
$’000
Capital
Work-in-
Progress
$’000
Total
$’000
Group
2008
Cost
At 1 January
Additions
Disposals
Reclassification
- Stocks
- Investment properties
- Other fixed assets
categories
Exchange differences
54,228
4,190
(2,425)
1,158,464
5,460
(2,595)
209,730
8,952
(19,242)
1,598,671
71,025
(19,291)
103,230
229,463
-
3,124,323
319,090
(43,553)
729
-
(2,291)
(1,803)
33,621
(867)
64,605
3,466
-
-
98
(5,955)
54,992
-
27,766
(3,568)
88,801
(2,028)
(178,881)
(991)
89,440
(6,822)
-
(4,924)
At 31 December
52,628
1,262,154
223,638
1,731,321
207,813
3,477,554
Accumulated Depreciation &
Impairment Losses
At 1 January
Depreciation charge
Impairment loss (Note 26)
Disposals
Reclassification
- Other fixed assets
categories
Exchange differences
21,781
2,507
-
(1,433)
453,732
36,135
-
(1,038)
100,564
14,918
-
(11,654)
850,015
85,139
1,036
(19,054)
(3,014)
(423)
(51)
1,642
(1,028)
(1,286)
4,093
(1,689)
At 31 December
19,418
490,420
101,514
919,540
-
-
-
-
-
-
-
1,426,092
138,699
1,036
(33,179)
-
(1,756)
1,530,892
net Book Value
33,210
771,734
122,124
811,781
207,813
1,946,662
During the financial year, the Group recognised impairment losses of $655,000 (2008: $1,036,000) which relates to write-
down of non-performing assets in the Infrastructure division. These non-performing assets were fully written down.
Certain plant, machinery and equipment with carrying amount of $14,322,000 (2008: $19,542,000) are mortgaged to
banks for loan facilities (Note 19).
notes to the Financial statements
179
Notes to the Financial Statements
5.
Fixed assets (continued)
Company
2009
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
At 31 December
net Book Value
2008
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
At 31 December
net Book Value
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Buildings
$’000
Plant,
Machinery
& Equipment
$’000
Total
$’000
6,542
27
-
6,569
1,711
41
-
1,752
4,817
6,542
-
-
6,542
1,671
40
-
1,711
4,831
484
-
(484)
6,952
417
(323)
13,978
444
(807)
-
7,046
13,615
82
5
(87)
-
-
484
-
-
484
72
10
-
82
6,295
385
(247)
8,088
431
(334)
6,433
8,185
613
5,430
6,346
682
(76)
13,372
682
(76)
6,952
13,978
5,961
407
(73)
7,704
457
(73)
6,295
8,088
402
657
5,890
180
Keppel Corporation Limited
Report to Shareholders 2009
6.
Investment properties
At 1 January
Acquisition of property
Development expenditure
Fair value (loss)/gain (Note 26)
Disposals
Write-off
Reclassification
- Fixed assets
- Stocks
Exchange differences
At 31 December
Group
2009
$’000
3,029,675
107,690 -
75,536
(131,920)
(19,458) -
(255)
-
(21)
(10,000)
2008
$’000
2,960,347
80,508
4,471
(380)
6,822
(11,435)
(10,658)
3,051,247
3,029,675
The Group’s investment properties (including integral plant and machinery) are stated at Directors’ valuations based on the
following valuations (open market value basis) by independent firms of professional valuers as at 31 December 2009:
- Colliers International Consultancy & Valuation (Singapore) Pte Ltd for properties in Singapore;
- CB Richard Ellis (Vietnam) Co. Ltd and Allied Appraisal Consultants Pte Ltd for properties in Vietnam; and
- PT. Willson Properti Advisindo and PT. Piesta Penilai for properties in Indonesia.
Interest capitalised during the financial year amounted to $1,992,000 (2008: $1,219,000).
Certain investment properties with carrying amount of $2,125,600,000 (2008: $2,230,226,000) are mortgaged to banks for
loan facilities (Note 19).
7. Subsidiaries
Quoted shares, at cost
Market value: $3,243,780,000 (2008: $997,210,000)
Unquoted shares, at cost
Provision for impairment
Advances from subsidiaries
Movements in the provision for impairment of subsidiaries are as follows:
At 1 January
Charge to profit and loss account
At 31 December
Company
2009
$’000
2008
$’000
1,728,360
1,933,706
3,662,066
(265,000)
3,397,066
(3,600)
1,329,571
1,806,332
3,135,903
(265,000)
2,870,903
(3,600)
3,393,466
2,867,303
265,000
-
199,135
65,865
265,000
265,000
Advances from subsidiaries are unsecured, interest free and are not repayable within the next 12 months.
Information relating to significant subsidiaries consolidated in the financial statements is given in Note 37.
notes to the Financial statements
181
Notes to the Financial Statements
8. Associated companies
Quoted shares, at cost
Market value: $474,190,000
(2008: $916,407,000)
Unquoted shares, at cost
Provision for impairment
Share of reserves
Advances to associated companies
Group
2009
$’000
2008
$’000
Company
2009
$’000
2008
$’000
208,176
795,997
1,004,173
(94,207)
909,966
527,549
1,437,515
1,285,654
590,708
722,218
1,312,926
(33,993)
1,278,933
759,328
2,038,261
1,162,770
- -
3,074
3,074
- -
3,074
- -
3,074
- -
3,074
3,074
3,074
3,074
2,723,169
3,201,031
3,074
3,074
Movements in the provision for impairment of associated companies are as follows:
At 1 January
(Write back)/charge to profit and loss account
Impairment loss (Note 26)
Amount written off/disposed
Exchange differences
At 31 December
33,993
(56)
61,000
-
(730)
28,131
115
6,209
(713)
251
94,207
33,993
- -
- -
- -
- -
- -
- -
Advances to associated companies are unsecured and are not repayable within the next 12 months. Interest is charged at
rates ranging from 1.47% to 4.47% (2008: 1.93% to 3.41%) per annum.
During the financial year, the Group recognised an impairment loss of $61,000,000 (2008: $Nil) on investment in an
associated company. The carrying amount of the associated company was reduced to its recoverable amount, which was
based on the estimated future cash flow from operations discounted to present value at 11%.
The share of attributable profit of associated companies is as follows:
Share of profit before tax and exceptional items
Share of exceptional items (Note 26)
Share of profit before taxation
Share of taxation (Note 27)
Share of attributable profit
Group
2009
$’000
2008
$’000
321,683
100,684
422,367
(57,226)
353,957
7,684
361,641
(71,066)
365,141
290,575
The summarised financial information of associated companies, not adjusted for the Group’s proportionate share, is as follows:
Total assets
Total liabilities
Revenue
Attributable profit before exceptional items
Attributable profit after exceptional items
12,657,767
7,478,745
3,777,218
673,342
912,386
15,516,823
9,172,077
14,518,960
835,792
850,997
Information relating to significant associated companies whose results are included in the financial statements is given in Note 37.
182
Keppel Corporation Limited
Report to Shareholders 2009
9.
Investments
Available-for-sale investments:
Quoted equity shares
Unquoted equity shares
Unquoted property funds
10. Long term receivables
Receivables from service concession arrangements
Staff loans
Long term trade receivables
Loan to a subsidiary
Others
Less: Amounts due within one year and included
in debtors (Note 14)
Provision for doubtful debts
Group
2009
$’000
2008
$’000
49,992
40,351
61,703
16,040
28,524
56,460
152,046
101,024
Group
Company
2009
$’000
564,387
2,941
21,049
-
18,979
607,356
2008
$’000
194,088
3,829
382
-
16,397
214,696
(55,957)
551,399
(3,734)
(13,104)
201,592
(3,930)
2009
$’000
- -
793
- -
-
- -
793
(209)
584
- -
2008
$’000
1,331
300,000
301,331
(313)
301,018
547,665
197,662
584
301,018
Movements in the provision for doubtful debts are as follows:
At 1 January
Amount written off
Exchange differences
At 31 December
3,930
52
(248)
4,358
(18)
(410)
3,734
3,930
- -
- -
- -
- -
Receivables arising from service concession arrangements arose from the following:
(a) a 20-year contract to build and operate a water treatment plant. The plant started commercial operations in 2007;
(b) a 25-year contract to build and operate a waste-to-energy plant. The plant started commercial operations in November
2009; and
(c) a 15-year contract to design, upgrade, own and operate an incineration plant. The plant was acquired from the
Singapore Government in August 2009.
The above arrangements are classified as service concession arrangements under INT FRS 112. Under the terms of the
arrangements, the Group will receive an aggregate minimum amount of $54,959,000 (2008: $16,300,000) yearly from
the contracted parties (grantors) in exchange for services performed by the Group when the plants are in commercial
operations. Revenue and profit arising from these arrangements for the provision of construction services amounted to
$39,876,000 and $4,969,000 (2008: $63,223,000 and $2,394,000) respectively.
Certain assets of the waste-to-energy plant with carrying amount of $163,337,000 (2008: $113,000,000) are mortgaged to
banks for loan facilities (Note 19).
Included in staff loans are interest free advances to certain Directors amounting to $210,000 (2008: $409,000) and to
directors of related corporations amounting to $436,000 (2008: $536,000) under an approved car loan scheme.
notes to the Financial statements
183
Notes to the Financial Statements
10. Long term receivables (continued)
Long term receivables are unsecured, largely repayable after five years and bears effective interest ranging from 3.22% to
5.00% (2008: 1.09% to 4.58%) per annum.
During the financial year, the Group recognised an impairment loss of $107,522,000 (2008: $Nil) on certain long term
receivable. The carrying amount of the long term receivable was reduced to its recoverable amount, which was based on
the estimated future cash flow from operations discounted to present value at 5%.
The fair value of long term receivables for the Group is $547,272,000 (2008: $197,600,000). The carrying amount of long
term receivables for the Company approximates its fair value. These fair values are computed on the discounted cash flow
method using a discount rate based upon the market-related rate for a similar instrument as at the balance sheet date.
11. Intangibles
Group
2009
At 1 January
Additions
Amortisation
Impairment loss (Note 26)
Reclassification
Exchange differences
At 31 December
Cost
Accumulated amortisation
2008
At 1 January
Additions
Amortisation
Exchange differences
At 31 December
Cost
Accumulated amortisation
Goodwill
$’000
Development
Expenditure
$’000
73,253
24,615
-
(11,568)
704
-
5,234
151
(467)
-
(1,655)
(149)
Total
$’000
78,487
24,766
(467)
(11,568)
(951)
(149)
87,004
3,114
90,118
87,004
-
12,981
(9,867)
99,985
(9,867)
87,004
3,114
90,118
62,389
10,864
-
-
5,434
165
(379)
14
67,823
11,029
(379)
14
73,253
5,234
78,487
73,253
-
8,750
(3,516)
82,003
(3,516)
73,253
5,234
78,487
For the purpose of impairment testing, goodwill is allocated to cash-generating units.
Goodwill allocated to Offshore & Marine division amounted to $5,211,000 (2008: $16,075,000). The recoverable amount
is determined based on value-in-use calculation using cash flow projections derived from the most recent financial budgets
approved by management for the next five years using discount rates ranging from 7.30% to 16.10% (2008: 7.32% to
20.00%). The key assumptions are those regarding the discount rate and expected changes to selling prices and direct
costs. Management estimates discount rate using pre-tax rate that reflects current market assessment of the time value
of money and risks specific to the unit. Changes in selling prices and direct costs are based on past practices and
expectations of future changes in the market.
184
Keppel Corporation Limited
Report to Shareholders 2009
Goodwill allocated to Infrastructure division amounted to $81,793,000 (2008: $57,178,000). This includes provisional
goodwill of $24,615,000 arising from the acquisition of Keppel DHCS Pte Ltd (previously First DCS Pte Ltd) during the
financial year. Goodwill has been determined on a provisional basis as the purchase price allocation exercise is not finalised
as at the date the financial statements was authorised for issue. For the balance of goodwill amounting to $57,178,000,
the recoverable amount is based on current bid prices of the cash-generating unit.
During the financial year, goodwill allocated to Offshore & Marine division of $11,568,000 was impaired as the recoverable
amount based on value-in-use calculation was lower than the carrying amount.
12. Stocks and work-in-progress
Work-in-progress in excess of related billings
Stocks
Properties held for sale
Billings on work-in-progress in excess of related costs
(a) Work-in-Progress in excess of Related Billings
Costs incurred and attributable profits
Provision for loss on work-in-progress
Less: Progress billings
(a)
(c)
(d)
(b)
Movements in the provision for loss on work-in-progress are as follows:
At 1 January
Charge to profit and loss account
Amount utilised
Exchange differences
At 31 December
(b) Billings on Work-in-Progress in excess of Related Costs
Costs incurred and attributable profits
Less: Progress billings
(c) Stocks
Consumable materials and supplies
Finished products for sale
notes to the Financial statements
Group
2009
$’000
648,925
248,109
2,281,148
2008
$’000
400,760
414,032
2,504,028
3,178,182
3,318,820
(1,683,392)
(2,882,124)
7,027,504
(2,809)
7,024,695
(6,375,770)
5,696,608
(1,534)
5,695,074
(5,294,314)
648,925
400,760
1,534
1,963 -
(611)
(77)
37,284
(35,880)
130
2,809
1,534
11,753,627
(13,437,019)
12,474,358
(15,356,482)
(1,683,392)
(2,882,124)
235,984
12,125
385,295
28,737
248,109
414,032
185
Notes to the Financial Statements
12. Stocks and work-in-progress (continued)
(d) Properties Held For Sale
Properties under development
Land cost
Development cost incurred to date
Related overhead expenditure
Progress billing and recognised profit
Completed properties held for sale
Provision for properties held for sale
Movements in the provision for properties held for sale are as follows:
At 1 January
Write-back to profit and loss account
Amount utilised
Exchange differences
At 31 December
Group
2009
$’000
2008
$’000
1,537,652
1,066,114
576,876
(1,047,505)
2,133,137
196,212
2,329,349
(48,201)
1,816,011
1,053,750
562,097
(1,141,802)
2,290,056
286,159
2,576,215
(72,187)
2,281,148
2,504,028
72,187
(13,237)
(10,739)
(10)
115,915
(24,616)
(19,127)
15
48,201
72,187
Interest capitalised during the financial year amounted to $17,319,000 (2008: $17,113,000) at rates ranging from
0.91% to 4.14% (2008: 1.64% to 3.50%) per annum for Singapore properties and 3.10% to 21.00% (2008: 1.23% to
21.00%) per annum for overseas properties.
Certain properties held for sale with carrying amount of $101,879,000 (2008: $447,368,000) are mortgaged to banks
for loan facilities (Note 19).
186
Keppel Corporation Limited
Report to Shareholders 2009
13. Amounts due from/to
subsidiaries
Amounts due from
- trade
- advances
Provision for doubtful debts
Amounts due to
- trade
- advances
Movements in the provision for doubtful debts are as follows:
At 1 January
Charge to profit and loss account
At 31 December
Group
2009
$’000
2008
$’000
Company
2009
$’000
2008
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,155
1,642,973
1,649,128
(6,600)
5,366
261,952
267,318
(6,600)
1,642,528
260,718
163,307
102,239
404,461
68,387
265,546
472,848
6,600
-
5,700
900
6,600
6,600
Advances to and from subsidiaries are unsecured and are repayable on demand. Interest is charged at rates ranging from
0.10% to 6.00% (2008: 0.10% to 3.90%) per annum on interest-bearing advances.
Associated Companies
Amounts due from
- trade
- advances
Provision for doubtful debts
Amounts due to
- trade
- advances
Movements in the provision for doubtful debts are as follows:
At 1 January
Charge to profit and loss account
At 31 December
86,330
207,728
294,058
(6,136)
85,363
242,333
327,696
(1,113)
6,056
- -
6,056
- -
300
300
287,922
326,583
6,056
300
13,388
154,798
17,186
405,019
168,186
422,205
1,113
5,023
946
167
6,136
1,113
- -
- -
- -
- -
- -
- -
Advances to and from associated companies are unsecured and are repayable on demand. Interest is charged at rates
ranging from 0.13% to 5.31% (2008: 0.40% to 9.56%) per annum on interest-bearing advances.
notes to the Financial statements
187
Notes to the Financial Statements
14. Debtors
Trade debtors
Provision for doubtful debts
Long term receivables due within one year (Note 10)
Sundry debtors
Prepaid project cost & prepayments
Derivative financial instruments (Note 34)
Tax recoverable
Goods & Services Tax receivable
Interest receivable
Deposits paid
Recoverable accounts
Accrued receivables
Advances to subcontractors
Advances to corporations in which the Group
has investment interests
Advances to minority shareholders of subsidiaries
Provision for doubtful debts
Group
2009
$’000
2008
$’000
1,105,613
(36,552)
1,069,061
1,326,761
(30,074)
1,296,687
55,957
87,293
31,118
117,906
19,258
91,184
21,289
43,756
43,509
9,412
107,129
48,551
9,496
685,858
(27,820)
658,038
13,104
114,503
54,368
71,616
9,494
88,727
17,928
16,975
50,498
6,477
173,346
52,334
33,131
702,501
(28,357)
674,144
Company
2009
$’000
2008
$’000
- -
- -
- -
209
269
166
102,502
- -
- -
48
381
- -
- -
- -
- -
- -
103,575
- -
103,575
313
249
210
58,675
66
395
59,908
59,908
Total
1,727,099
1,970,831
103,575
59,908
Movements in the provision for debtors are as follows:
At 1 January
Charge to profit and loss account
Impairment loss written back (Note 26)
Amount written off
Reclassification
Exchange differences
58,431
11,996
-
(5,546)
67
(576)
52,136
12,590
(1,921)
(4,197)
(6)
(171)
At 31 December
64,372
58,431
- -
- -
- -
- -
- -
- -
- -
188
Keppel Corporation Limited
Report to Shareholders 2009
15. Short term investments
Available-for-sale investments:
Quoted equity shares
Quoted unit trust
Quoted bonds
Unquoted equity shares
Unquoted unit trust
Total available-for-sale investments
Investments held for trading:
Quoted equity shares
Quoted unit trust
Total investments held for trading
Total short term investments
16. Bank balances, deposits and cash
Group
2009
$’000
322,108
-
-
27,680
46,393
396,181
59,415
919
60,334
2008
$’000
229,484
1,641
6,480
25,772
27,676
291,053
32,781
6,983
39,764
456,515
330,817
Bank balances and cash
Fixed deposits with banks
Amounts held under escrow accounts for
overseas acquisition of land,
payment of construction cost and liabilities
Bank balances of property subsidiaries held under
Project Account Rules 1985
Group
Company
2009
$’000
2008
$’000
447,051
2,379,201
417,603
1,746,261
2009
$’000
3,051
30,456
2008
$’000
3,155
661,286
54,898
34,364
54,637
46,623
- -
- -
2,935,787
2,244,851
33,507
664,441
Fixed deposits with banks of the Group mature on varying periods, substantially between 1 day to 3 months (2008: 1 day
to 3 months). This comprised Singapore dollar fixed deposits of $956,427,000 (2008: $672,885,000) at interest rates
ranging from 0.10% to 1.10% (2008: 0.11% to 2.14%) per annum, and foreign currency fixed deposits of $1,422,774,000
(2008: $1,073,376,000) at interest rates ranging from 0.10% to 18.00% (2008: 0.10% to 18.00%) per annum.
Fixed deposits with banks of the Company mature on varying periods, substantially between 4 days to 3 months
(2008: 2 days to 3 months). This comprised foreign currency fixed deposits of $30,456,000 at interest rates ranging from
0.04% to 3.45% (2008: 0.10% to 5.88%) per annum. As at 31 December 2008, fixed deposits with banks of the Company
comprised Singapore dollar fixed deposits of $509,603,000 at interest rates ranging from 0.37% to 0.50% per annum, and
foreign currency fixed deposits of $151,683,000 at interest rates ranging from 0.10% to 5.88% per annum.
notes to the Financial statements
189
Notes to the Financial Statements
17. Creditors
Trade creditors
Customers’ advances and deposits
Derivative financial instruments (Note 34)
Sundry creditors
Accrued operating expenses
Advances from minority shareholders
Interest payables
Other payables
Group
Company
2009
$’000
875,892
60,515
57,864
623,888
2,112,151
221,384
9,653
90,625
2008
$’000
952,313
61,497
266,516
517,803
1,778,607
271,330
12,161
79,356
2009
$’000
53
57
37,171
11,829
83,192
- -
-
- -
2008
$’000
52
56
158,020
5,960
55,294
306
4,051,972
3,939,583
132,302
219,688
Advances from minority shareholders of certain subsidiaries are unsecured and are repayable on demand. Interest is
charged at rates ranging from 1.25% to 4.64% (2008: 2.00% to 18.59%) per annum on interest-bearing loans.
18. Provisions
Group
2009
At 1 January
Charge to profit and loss account
Amount utilised
Exchange differences
Warranties
$’000
Claims
$’000
Total
$’000
58,301
5,397
(3,215)
470
308
7,601
-
(6)
58,609
12,998
(3,215)
464
At 31 December
60,953
7,903
68,856
2008
At 1 January
Charge/(write-back) to profit and loss account
Amount utilised
Exchange differences
35,267
25,830
(351)
(2,445)
2,633
(2,190)
(113)
(22)
37,900
23,640
(464)
(2,467)
At 31 December
58,301
308
58,609
190
Keppel Corporation Limited
Report to Shareholders 2009
19. Term loans
2009
2008
Due within
one year
$’000
Due after
one year
$’000
Due within
one year
$’000
Group
Keppel Corporation Medium Term Notes
Keppel Land Medium Term Notes
Keppel Land 2.5% Convertible Bonds 2013
Keppel Structured Notes Commodity-linked Notes
K-REIT Asia term loans
Bank and other loans
- secured
- unsecured
(a)
(b)
(c)
(d)
(e)
(f)
(g)
-
248,000
-
-
-
174,761
416,356
-
70,000
275,925
41,920
190,085
268,045
72,435
-
108,500
-
-
-
37,525
51,843
Due after
one year
$’000
300,000
150,000
269,579
41,920
190,085
385,130
407,839
839,117
918,410
197,868
1,744,553
Company
Keppel Corporation Medium Term Notes
(a)
-
-
-
300,000
(a) The $300,000,000 Floating Rate Notes 2010 were issued in 2005 under the US$600,000,000 Multi-Currency Medium
Term Note Programme by the Company. The notes were unsecured and were issued in tranches which will mature five
years from the date of issue. Interest is based on money market rates ranging from 0.89% to 1.34% (2008: 1.09% to
3.04%) per annum. The notes were fully redeemed in the year.
(b) At the end of the financial year, notes issued under the US$800,000,000 Multi-Currency Medium Term Note Programme
by Keppel Land Limited, a subsidiary of the Company, amounted to $318,000,000. The notes are unsecured and are
issued in series or tranches, and comprised (i) fixed rate notes due 2010 to 2012 of $168,000,000 and (ii) variable rate
notes due 2010 of $150,000,000. Interest payable is based on money markets rates ranging from 1.14% to 4.25%
(2008: 1.10% to 3.40%) per annum.
(c) The $300,000,000 2.5%, 7 year convertible bonds were issued in 2006 by Keppel Land Limited. Interest is payable
semi-annually. The bonds, maturing on 23 June 2013, are convertible at the option of bondholders to Keppel Land
ordinary shares at a conversion price of $5.58 per share. Any bondholder may request to redeem all or some of its
bonds on 23 June 2011 or in the event that its shares cease to be listed or admitted to trading on the Singapore Stock
Exchange.
The convertible bonds are recognised on the balance sheet as follows:
Balance at 1 January
Interest expense
Interest paid
Liability component at 31 December
Group
2009
$’000
269,579
13,846
(7,500)
2008
$’000
263,488
13,591
(7,500)
275,925
269,579
Interest expense on the convertible bonds is calculated based on the effective interest method by applying the interest
rate of 4.78% (2008: 4.78%) per annum for an equivalent non-convertible bond to the liability component of the
convertible bonds.
notes to the Financial statements
191
Notes to the Financial Statements
19. Term loans (continued)
(d) The S$23,960,000 (“Tranche A”) and US$11,565,000 (“Tranche B”) commodity-linked notes were issued in 2006 by
Keppel Structured Notes Pte Ltd (“KSN”), a subsidiary of the Company. The commodity-linked notes, maturing on 28
November 2011, may be redeemed at par at the option of KSN, in whole, on notice, in the event of certain changes
in the tax laws of Singapore, subject to certain other conditions. The notes are unsecured and bear interest payable
annually at a rate ranging from 6% to 13% per annum for the period from 27 November 2006 to 28 November 2011.
The notes are unconditionally and irrevocably guaranteed by the Company. KSN has entered into a 5-year commodity-
linked interest rate swap transaction relating to Tranche A notes and a 5-year commodity-linked cross currency and
interest rate swap transaction relating to the Tranche B notes to hedge the foreign exchange and interest rate risks of
the notes. The effect of the swap transactions is that KSN pays an interest rate based on money market rates ranging
from 1.21% to 1.50% (2008: 1.50% to 2.77%) per annum.
(e) K-REIT Asia, a subsidiary of the Company, secured two fixed rate mortgage loans in 2006 totalling $190,085,000
from a special purpose company, Blossom Assets Ltd. The loans consist of a Tranche A Mortgage Loan amounting
to $160,197,000 and a Tranche B Mortgage Loan amounting to $29,888,000, which are funded by the proceeds of
commercial mortgaged-backed securities notes issued by Blossom Assets Ltd. The loans are due on 17 May 2011
and are secured on the investment properties and certain assets of K-REIT Asia. Interest is payable ranging from
3.91% to 4.06% (2008: 3.91% to 4.06%) per annum.
(f) The secured bank loans consist of:
- A $100,300,000 bank loan drawn down by a subsidiary. The term loan is repayable in 2029 and is secured on
certain fixed assets of the subsidiary. Interest is swapped to fixed rates ranging from 3.52% to 3.62% (2008: 3.42%
to 3.62%) per annum.
- A term loan of $158,600,000 drawn down by a subsidiary. The term loan is repayable in 2010 and is secured on
the investment property of the subsidiary. Interest is based on money market rates ranging from 1.60% to 2.17%
(2008: 2.03% to 3.71%) per annum.
- A term loan of $141,912,000 drawn down by a subsidiary. The term loan is repayable in 2012 and is secured on
the investment property of the subsidiary. Interest is based on money market rates ranging from 0.85% to 2.49%
(2008: 1.97% to 2.48%) per annum.
- Other secured bank loans comprised $41,994,000 of foreign currency loans. They are repayable between one and
five years and are secured on certain fixed and other assets of subsidiaries. Interest on foreign currency loans is
based on money market rates ranging from 6.25% to 14.50% (2008: 5.40% to 9.95%) per annum.
(g) The unsecured bank and other loans of the Group totalling $488,791,000 comprised $453,685,000 of loans
denominated in Singapore dollar and $35,106,000 of foreign currency loans. They are repayable between one and
twenty years. Interest on loans denominated in Singapore dollar is based on money market rates ranging from 0.93%
to 3.46% (2008: 1.46% to 3.40%) per annum. Interest on foreign currency loans is based on money market rates
ranging from 9.88% to 21.00% (2008: 2.03% to 21.00%) per annum.
The net book value of property and assets mortgaged to the banks amounted to $2,405,138,000 (2008: $2,810,136,000).
These are securities given to the banks for loans and overdraft facilities.
The fair values of term loans for the Group and Company are $1,777,695,000 (2008: $1,968,578,000) and $nil (2008:
$300,000,000) respectively. These fair values are computed on the discounted cash flow method using a discount rate
based upon the borrowing rate which the Directors expect would be available as at the balance sheet date.
192
Keppel Corporation Limited
Report to Shareholders 2009
Loans due after one year are estimated to be repayable as follows:
Years after year-end:
After one but within two years
After two but within five years
After five years
20. Bank overdrafts
Secured
Unsecured
Group
2009
$’000
2008
$’000
Company
2009
$’000
2008
$’000
289,111
556,253
73,046
1,020,959
666,562
57,032
918,410
1,744,553
-
- -
- -
-
300,000
300,000
Group
2009
$’000
1,668
-
2008
$’000
180
27,582
1,668
27,762
Interest on the bank overdrafts is payable at the banks’ prevailing prime rates of 5.19% (2008: 1.76% to 19.29%) per
annum. The secured bank overdrafts are secured by certain land and building of a subsidiary.
21. Deferred taxation
Deferred tax liabilities:
Accelerated tax depreciation
Investment properties valuation
Offshore income & others
Deferred tax assets:
Other provisions
Unutilised tax benefits
Group
Company
2009
$’000
2008
$’000
167,141
175,860
88,117
431,118
159,029
212,017
78,951
449,997
(13,498)
(5,823)
(19,321)
(40,323)
(28,462)
(68,785)
2009
$’000
- -
- -
5,377
5,377
- -
- -
- -
2008
$’000
5,608
5,608
Net deferred tax liabilities
411,797
381,212
5,377
5,608
Deferred tax assets are recognised for unutilised tax benefits carried forward to the extent that realisation of the related tax
benefits through future taxable profits is probable.
The Group has unutilised tax losses and capital allowances of $722,190,000 (2008: $546,613,000) for which no deferred
tax benefit is recognised in the balance sheet. These tax losses and capital allowances can be carried forward and
used to offset against future taxable income subject to meeting certain statutory requirements by those companies with
unrecognised tax losses and capital allowances in their respective countries of incorporation. The unutilised tax losses and
capital allowances do not have expiry dates.
notes to the Financial statements
193
Notes to the Financial Statements
21. Deferred taxation (continued)
Movements in deferred tax liabilities and assets are as follows:
Charged/
Charged/ (credited) to other
comprehensive
income
$’000
(credited) to
profit or loss
$’000
At
1 January
$’000
Subsidiary
acquired Reclassification
$’000
$’000
Exchange
At
differences 31 December
$’000
$’000
159,029
(1,843)
212,017
(35,616)
-
-
9,765
-
-
-
190
167,141
(541)
175,860
78,951
449,997
14,497
(22,962)
14,309
14,309
-
9,765
(20,679)
(20,679)
1,039
688
88,117
431,118
(40,323)
(28,462)
(68,785)
(1,884)
22,889
21,005
-
-
-
-
-
-
31,515
-
31,515
(2,806)
(250)
(3,056)
(13,498)
(5,823)
(19,321)
381,212
(1,957)
14,309
9,765
10,836
(2,368)
411,797
116,215
42,001
210,607
1,426
-
-
113,124
439,946
(18,042)
25,385
(14,216)
(14,216)
(31,232)
(19,745)
(50,977)
(10,742)
(8,831)
(19,573)
-
-
-
388,969
5,812
(14,216)
5,608
(231)
13,486
(7,878)
-
-
-
-
-
-
-
-
-
-
-
-
1,407
(594)
159,029
(31)
15
212,017
(1,436)
(60)
(479)
(1,058)
78,951
449,997
(1,040)
14
(1,026)
2,691
100
2,791
(40,323)
(28,462)
(68,785)
(1,086)
1,733
381,212
-
-
-
-
5,377
5,608
Keppel Corporation Limited
Report to Shareholders 2009
Group
2009
Deferred tax Liabilities
Accelerated tax
depreciation
Investment properties
valuation
Offshore income
& others
Total
Deferred tax Assets
Other provisions
Unutilised tax benefits
Total
net Deferred
tax Liabilities
2008
Deferred tax Liabilities
Accelerated tax
depreciation
Investment properties
valuation
Offshore income
& others
Total
Deferred tax Assets
Other provisions
Unutilised tax benefits
Total
net Deferred
tax Liabilities
Company
2009
Deferred tax Liabilities
Offshore income
2008
Deferred tax Liabilities
Offshore income
194
22. Revenue
Revenue from construction contracts
Sale of property and goods
Rental income from investment properties
Revenue from services rendered
Dividend income from quoted shares
Others
23. Staff costs
Wages and salaries
Employer’s contribution to Central Provident Fund
Share options granted to Directors and employees
Other staff benefits
24. Operating profit
Operating profit is arrived at after charging/(crediting) the following:
Auditors’ remuneration
- auditors of the Company
- other auditors of subsidiaries
Fees and other remuneration to Directors of the Company
Shares granted to Directors of the Company
Contracts for services rendered by Directors or
with a company in which a Director
has a substantial financial interest
Key management’s emoluments
(including executive directors’ remuneration)
- short-term employee benefits
- post-employment benefits
- share options granted
Depreciation of fixed assets
Write-off of investment properties
Amortisation of intangibles
Loss/(profit) on sale of fixed assets and investment properties
Profit on sale of investments
Fair value loss/(gain) on
- investments
- forward foreign exchange contracts
- forward HSFO contracts
notes to the Financial statements
Group
2009
$’000
8,990,796
1,337,742
181,871
1,715,563
6,555
14,594
2008
$’000
8,946,107
731,160
165,078
1,932,229
6,569
24,283
12,247,121
11,805,426
Group
2009
$’000
1,093,522
96,026
23,682
159,175
2008
$’000
1,060,421
104,068
26,527
138,026
1,372,405
1,329,042
Group
2009
$’000
1,270
3,824
1,426
309
2008
$’000
1,171
3,984
580
139
642
80
31,326
420
3,119
173,846
255
467
5,781
(24,967)
64,320
8,112
(3,053)
34,959
69
4,993
138,699
380
379
(8,268)
(45,263)
45,995
71,321
3,012
195
Notes to the Financial Statements
24. Operating profit (continued)
Provision/(write-back) for
- warranties
- claims
Provision/(write-back) for
- work-in-progress
- properties held for sale
Provision/(write-back) for doubtful debts
- trade debts
- receivables
- other debts
Bad debts written off/(recovered)
- trade debts
- other debts
Cost of stocks & properties held for sale recognised as expense
Stocks written down/(recovered)
Rental expense
- operating leases
Direct operating expenses
- investment properties that generated rental income
(Gain)/loss on differences in foreign exchange
Non-audit fees paid to
- auditors of the Company
- other auditors of subsidiaries
Group
2009
$’000
5,397
7,601
1,963 -
(13,237)
11,382
60
614
(159)
13
858,217
72,975
2008
$’000
25,830
(2,190)
(24,616)
14,668
3,650
(5,728)
163
155
514,132
(2,554)
60,647
52,088
59,843
(5,166)
51,757
101,554
118
608
74
314
The Audit Committee has undertaken a review of all non-audit services provided by the auditors and in the opinion of the
Audit Committee, these services would not affect the independence of the auditors.
25. Investment income, interest income and interest expenses
Investment income from:
Shares - quoted outside Singapore
Shares - unquoted
Interest income from:
Bonds, debentures, deposits and associated companies
Interest expenses on:
Bonds, debentures, fixed term loans and overdrafts
Fair value gain/(loss) on interest rate caps and swaps
196
Group
2009
$’000
1,694
3,407
2008
$’000
2,074
10,013
5,101
12,087
73,676
71,002
(51,838)
2,163
(64,931)
(13,740)
(49,675)
(78,671)
Keppel Corporation Limited
Report to Shareholders 2009
26. Exceptional items
Gain on disposal of subsidiaries,
associated companies and investments *
Gain on acquisition of additional interest in subsidiaries
Impairment (loss)/write-back:
- Fixed assets (Note 5)
- Associated companies (Note 8)
- Long term receivables (Note 10)
- Intangibles (Note 11)
- Debtors (Note 14)
- Other assets
Other assets written off:
- Costs associated with long term receivables
- Foreign exchange translation deficit
- Other receivables
Fair value (loss)/gain on investment properties (Note 6)
Share of associated companies (Note 8)
Cost associated with restructuring of operations and others
Taxation (Note 27)
Minority interests
Group
2009
$’000
639,464
6,895
(655)
(61,000)
(107,522) -
(11,568) -
-
(21,870)
(29,626) -
(15,475) -
(10,310) -
(131,920)
100,684
(34,967)
322,130
24,060
346,190
14,316
2008
$’000
2,568
15,417
(1,036)
(6,209)
1,921
2,448
4,471
7,684
(14,672)
12,592
(2,810)
9,782
(8,464)
Attributable exceptional items
360,506
1,318
*
In 2009, this represents substantially the gain on disposal of an associated company.
27. Taxation
(a) Income tax expense
Tax expense comprised:
Current tax
Adjustment for prior year’s tax
Share of taxation of associated companies (Note 8)
Others
Deferred tax movement:
Movements in temporary differences (Note 21)
Group
2009
$’000
2008
$’000
289,420
(2,621)
57,226
5,807
218,191
(15,268)
71,066
8,229
(1,957)
5,812
347,875
288,030
notes to the Financial statements
197
Notes to the Financial Statements
27. Taxation (continued)
The income tax expense on the results of the Group differ from the amount of income tax expense determined by
applying the Singapore standard rate of income tax to profit before tax and exceptional items due to the following:
Profit before tax and exceptional items
Tax calculated at tax rate of 17% (2008: 18%)
Income not subject to tax
Expenses not deductible for tax purposes
Utilisation of previously unrecognised tax benefits
Effect of reduction in tax rate
Effect of different tax rates in other countries
Adjustment for prior year’s tax
Tax expense of exceptional items (Note 26)
(b) Movement in current income tax liabilities
At 1 January
Exchange differences
Tax expense
Adjustment for prior year’s tax
Income taxes paid
Reclassification
Others
At 31 December
28. Earnings per ordinary share
Net profit attributable to shareholders
before exceptional items
Adjustment for dilutive potential ordinary shares
of subsidiaries and associated companies,
before exceptional items
Adjusted net profit before exceptional items
Exceptional items
Adjustment for dilutive potential ordinary shares
of subsidiaries and associated companies,
after exceptional items
Group
2009
$’000
2008
$’000
1,855,576
1,596,849
315,448
(41,316)
109,862
(6,816)
(10,272) -
7,650
(2,621)
(24,060)
287,433
(65,267)
68,545
(2,139)
11,916
(15,268)
2,810
347,875
288,030
Group
Company
2009
$’000
344,020
5,268
289,420
(2,621)
(172,200)
4,371
(17,307)
2008
$’000
351,864
5,528
218,191
(15,268)
(229,306)
(410)
13,421
2009
$’000
19,669
- -
13,000
(935)
(5,334)
- -
769 -
2008
$’000
15,305
8,573
(1,482)
(2,727)
450,951
344,020
27,169
19,669
Group
2009
$’000
2008
$’000
Basic
Diluted
Basic
Diluted
1,264,611
1,264,611
1,096,653
1,096,653
-
1,264,611
360,506
-
1,264,611
360,506
-
1,096,653
1,318
(109)
1,096,544
1,318
-
-
-
9
Adjusted net profit after exceptional items
1,625,117
1,625,117
1,097,971
1,097,871
198
Keppel Corporation Limited
Report to Shareholders 2009
Weighted average number of ordinary shares
Adjustment for dilutive potential ordinary shares
Weighted average number of ordinary shares
used to compute earnings per share
Earnings per ordinary share
Before exceptional items
After exceptional items
29. Dividends
Group
2009
number of shares
’000
2008
Number of Shares
’000
Basic
Diluted
Basic
Diluted
1,593,398
-
1,593,398
3,474
1,590,353
-
1,590,353
5,614
1,593,398
1,596,872
1,590,353
1,595,967
79.4 cts
102.0 cts
79.2 cts
101.8 cts
69.0 cts
69.0 cts
68.7 cts
68.8 cts
The Directors are pleased to recommend a final dividend of 23 cents per share tax exempt one-tier (2008: final dividend
of 21 cents per share tax exempt one-tier) in respect of the financial year ended 31 December 2009 for approval by
shareholders at the next Annual General Meeting to be convened.
Together with the interim dividend of 15 cents per share tax exempt one-tier (2008: 14 cents per share tax exempt one-
tier), total cash dividend paid and proposed in respect of the financial year ended 31 December 2009 will be 38 cents per
share tax exempt one-tier (2008: 35 cents per share tax exempt one-tier).
The Directors are also proposing a special dividend in specie of K-Green Trust units of approximately 23 cents per share
tax exempt one-tier. The proposed distribution is conditional upon certain approvals being obtained as described in the
announcement dated 26 January 2010.
Together with the cash dividend, total distribution paid and proposed in respect of the financial year ended 31 December
2009 will be 61 cents per share (2008: 35 cents per share).
During the financial year, the following dividends were paid:
A final dividend of 21 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the previous financial year
An interim dividend of 15 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the current financial year
30. Acquisition of subsidiary and business
The following were acquired during the financial year:
Subsidiary/business
Date of
acquisition
Gross interest
before
acquisition
Interest
acquired
Gross interest
after
acquisition
$’000
334,558
239,004
573,562
Net assets
acquired
$’000
454,000
Consideration
$’000
454,000
Senoko Incineration Plant
31.8.2009
Keppel DHCS Pte Ltd
(previously First DCS Pte Ltd)
3.12.2009
-
-
100%
100%
100%
100%
71,604
96,219
Details of net assets acquired are disclosed in the Consolidated Statement of Cash Flows.
Had the above been acquired at the beginning of the year, the effect would not have been material to the consolidated
financial statements and therefore is not disclosed.
notes to the Financial statements
199
Notes to the Financial Statements
31. Commitments
(a) Capital commitments
Capital expenditure not provided for in the financial statements:
In respect of contracts placed:
- for purchase and construction of investment properties
- for purchase of other fixed assets
- for purchase/subscription of shares in other companies
Amounts approved by Directors in addition to contracts placed:
- for purchase and construction of investment properties
- for purchase of other fixed assets
- for purchase/subscription of shares in other companies
Less: Minority shareholders’ shares
Group
2009
$’000
2008
$’000
322,986
91,214
857,985
331,079
62,948
673,238
3,625 -
140,305
92,276
1,508,391
(548,047)
98,431
10,579
1,176,275
(524,472)
960,344
651,803
There was no significant future capital expenditure/commitment of the Company.
(b) Lessee’s lease commitments
The Group leases land and office buildings from non-related parties under non-cancellable operating lease agreements.
The leases have varying terms, escalation clauses and renewal rights. The future minimum lease payable in respect of
significant non-cancellable operating leases as at the end of the financial year are as follows:
Years after year-end:
Within one year
From two to five years
After five years
Group
Company
2009
$’000
2008
$’000
55,100
198,259
707,541
50,651
149,898
633,376
960,900
833,925
2009
$’000
252
192
- -
444
2008
$’000
188
88
276
(c) Lessor’s lease commitments
The Group leases out commercial space to non-related parties under non-cancellable operating leases. The future
minimum lease receivable in respect of significant non-cancellable operating leases as at the end of the financial year
are as follows:
Years after year-end:
Within one year
From two to five years
After five years
Group
2009
$’000
2008
$’000
Company
2009
$’000
2008
$’000
152,049
148,775
65,825
149,043
166,220
48,729
366,649
363,992
- -
- -
- -
- -
Some of the operating leases are subject to revision of lease rentals at periodic intervals. For the purposes of the
above, the prevailing lease rentals are used.
200
Keppel Corporation Limited
Report to Shareholders 2009
32. Contingent liabilities (unsecured)
Guarantees in respect of banks and other loans
granted to subsidiaries and associated companies
Performance guarantees issued for contracts
awarded to subsidiaries and associated companies
Bank guarantees
Others
Group
2009
$’000
2008
$’000
Company
2009
$’000
2008
$’000
24,656
27,001
686,376
741,413
-
300
57,521
60,533
54,055
47,912
- -
- -
- -
136,232
135,746
686,376
741,413
The financial effects of FRS 39 relating to financial guarantee contracts issued by the Company are not material to the
financial statements of the Company and therefore are not recognised.
The Directors do not expect material losses under these guarantees.
33. Significant related party transactions
In addition to the related party information disclosed elsewhere in the financial statements, there were the following
significant related party transactions which were carried out in the normal course of business on terms agreed between the
parties during the financial year:
Sale of residential properties to directors and their associates
34. Financial risk management
Group
2009
$’000
6,540 -
2008
$’000
The Group operates internationally and is exposed to a variety of financial risks, comprising market risk (including currency
risk, interest rate risk and price risk), credit risk and liquidity risk. Financial risk management is carried out by the Keppel
Group Treasury Department in accordance with established policies and guidelines. These policies and guidelines are
established by the Group Central Finance Committee and are updated to take into account changes in the operating
environment. This committee is chaired by the Group Finance Director and comprises Chief Financial Officers of the
Group’s key operating companies and Head Office specialists.
Market Risk
(i) Currency risk
The Group has receivables and payables denominated in foreign currencies viz US dollars, European and other Asian
currencies. The Group’s foreign currency exposures arise mainly from the exchange rate movement of these foreign
currencies against the Singapore dollar, which is the Group’s presentation currency. To hedge against the volatility of
future cash flows caused by changes in foreign currency rates, the Group utilises forward foreign currency contracts
and other foreign currency hedging instruments to hedge the Group’s exposure to specific currency risks relating to
investments, receivables, payables and other commitments. Group Treasury Department monitors the current and
projected foreign currency cash flow of the Group and aims to reduce the exposure of the net position in each currency
by borrowing in foreign currency and other currency contracts where appropriate.
notes to the Financial statements
201
Notes to the Financial Statements
34. Financial risk management (continued)
As at the end of the financial year, the Group has outstanding forward foreign exchange contracts with notional
amounts totalling $4,080,268,000 (2008: $4,261,980,000). The net positive fair value of forward foreign exchange
contracts is $66,455,000 (2008: net negative fair value of $95,027,000) comprising assets of $106,000,000 (2008:
$64,728,000) and liabilities of $39,545,000 (2008: $159,755,000). These amounts are recognised as derivative
financial instruments in debtors (Note 14) and creditors (Note 17).
As at the end of the financial year, the Company has outstanding forward foreign exchange contracts with notional
amounts totalling $4,009,822,000 (2008: $4,146,968,000). The net positive fair value of forward foreign exchange
contracts is $65,331,000 (2008: net negative fair value of $99,345,000) comprising assets of $102,502,000
(2008: $58,675,000) and liabilities of $37,171,000 (2008: $158,020,000). These amounts are recognised as derivative
financial instruments in debtors (Note 14) and creditors (Note 17).
Other than the above hedged foreign currency contracts, the unhedged currency exposure of financial assets and
financial liabilities denominated in currencies other than the respective entities’ functional currencies are as follows:
Group
Financial Assets
Debtors
Investments
Bank balances, deposits & cash
Financial Liabilities
Creditors
Term loans
Company
Financial Assets
Debtors
Bank balances, deposits & cash
Financial Liabilities
Creditors
UsD
$’000
106,702
31,434
80,877
46,695
-
-
501
-
2009
euro
$’000
837
-
30,269
7,031
-
others
$’000
USD
$’000
2008
Euro
$’000
Others
$’000
46,451
154,103
118,161
140,815
20,472
141,310
3,945
-
190,327
65,169
124,330
197,045
85,817
14,464
44,848
21,303
18,601
-
108,433
13,685
-
7,622
181
25,097
-
95,896
17
25,320
611
33,403
-
118
621
-
267
Sensitivity analysis for currency risk
If the relevant foreign currency change against SGD by 5% (2008: 5%) with all other variables held constant, the effects
will be as follows:
Group
USD against SGD
- Strengthened
- Weakened
Euro against SGD
- Strengthened
- Weakened
Company
USD against SGD
- Strengthened
- Weakened
Euro against SGD
- Strengthened
- Weakened
Profit before tax
equity
2009
$’000
2008
$’000
2009
$’000
2008
$’000
7,045
(7,045)
1,205
(1,205)
25
(25)
382
(382)
10,739
(10,739)
8,753
(8,753)
4,739
(4,739)
1,264
(1,264)
1,571
(1,571)
1,018
(1,018)
- -
- -
- -
- -
- -
- -
202
Keppel Corporation Limited
Report to Shareholders 2009
(ii) Interest rate risk
The Group is exposed to interest rate risk for changes in interest rates primarily for debt obligations, placements in
the money market and investments in bonds. The Group policy is to maintain a mix of fixed and variable rate debt
instruments with varying maturities. Where necessary, the Group uses derivative financial instruments to hedge interest
rate risks.
The Group purchases interest rate caps to hedge the interest rate risk exposure arising from its US$ and S$ variable
rate term loans (Note 19). As at the end of the financial year, the Group has the following outstanding interest rate cap
agreements.
Year
2009
2008
Notional amount
$48,579,000
Maturity
2011
Interest rate caps
3%
$52,708,000
2009 - 2011
1.8% - 3%
The positive fair values of interest rate caps for the Group are $78,000 (2008: $265,000). This amount is recognised as
derivative financial instruments in debtors (Note 14).
The Group enters into interest rate swap agreements to hedge the interest rate risk exposure arising from its S$ variable
rate term loans (Note 19). As at the end of the financial year, the Group has interest rate swap agreements with notional
amount totalling $366,765,000 (2008: $348,011,000) whereby it receives variable rates equal to SIBOR (2008: SIBOR)
and pays fixed rates of between 2.55% and 4.42% (2008: 3.19% and 3.50%) on the notional amount.
The net negative fair value of interest rate swaps for the Group is $15,564,000 (2008: $26,161,000) comprising assets
of $2,340,000 (2008: $3,495,000) and liabilities of $17,904,000 (2008: $29,656,000). These amounts are recognised
as derivative financial instruments in debtors (Note 14) and creditors (Note 17).
Sensitivity analysis for interest rate risk
If interest rates increase/decrease by 0.5% (2008: 0.5%) with all other variables held constant, the Group’s and
Company’s profit before tax would have been lower/higher by $3,545,000 (2008: $5,084,000) and $nil (2008:
$1,500,000) respectively as a result of higher/lower interest expense on floating rate loans.
(iii) Price risk
The Group hedges against fluctuations arising on the purchase of natural gas that affect cost. Exposure to price
fluctuations is managed via fuel oil forward contracts, whereby the price of natural gas is indexed to a benchmark fuel
price index, High Sulphur Fuel Oil (HSFO) 180-CST. As at the end of the financial year, the Group has outstanding
HSFO forward contracts with notional amounts totalling $73,529,000 (2008: $181,080,000). The net positive fair value
of HSFO forward contracts for the Group is $9,073,000 (2008: net negative fair value of $73,977,000) comprising
assets of $9,488,000 (2008: $3,128,000) and liabilities of $415,000 (2008: $77,105,000). These amounts are
recognised as derivative financial instruments in debtors (Note 14) and creditors (Note 17).
The Group is exposed to equity securities price risk arising from equity investments classified as investments held for
trading and available-for-sale investments. To manage its price risk arising from investments in equity securities, the
Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
Sensitivity analysis for price risk
If prices for HSFO increase/decrease by 5% (2008: 5%) with all other variables held constant, the Group’s hedging
reserve in equity would have been higher/lower by $4,130,000 (2008: $3,677,000) as a result of fair value changes on
cash flow hedges.
If prices for quoted investments increase/decrease by 5% (2008: 5%) with all other variables held constant, the Group’s
profit before tax would have been higher/lower by $3,017,000 (2008: $1,988,000) as a result of higher/lower fair value
gains on investments held for trading, and the Group’s fair value reserve in equity would have been higher/lower by
$20,925,000 (2008: $14,066,000) as a result of higher/lower fair value gains on available-for-sale investments.
notes to the Financial statements
203
Notes to the Financial Statements
34. Financial risk management (continued)
Credit Risk
Credit risk refers to the risk that debtors will default on their obligation to repay the amount owing to the Group. A
substantial portion of the Group’s revenue is on credit terms or stage of completion. These credit terms are normally
contractual. The Group adopts stringent procedures on extending credit terms to customers and on the monitoring of
credit risk. The credit policy spells out clearly the guidelines on extending credit terms to customers, including monitoring
the process and using related industry’s practices as reference. This includes assessment and valuation of customers’
credit reliability and periodic review of their financial status to determine the credit limits to be granted. Customers are
also assessed based on their historical payment records. Where necessary, customers may also be requested to provide
security or advance payment before services are rendered. The Group’s policy does not permit non-secured credit risk to
be significantly centralised in one customer or a group of customers.
The maximum exposure to credit risk is the carrying amount of financial assets which are mainly trade debtors and bank
balances, deposits and cash.
(i) Financial assets that are neither past due nor impaired
Trade debtors that are neither past due nor impaired are substantially companies with good collection track record with
the Group. Bank deposits, forward foreign exchange contracts, interest rate caps and interest rate swaps are mainly
transacted with banks of high credit ratings assigned by international credit-rating agencies.
(ii) Financial assets that are past due but not impaired/partially impaired
The age analysis of trade debtors past due but not impaired/partially impaired is as follows:
Past due 0 to 3 months but not impaired
Past due 3 to 6 months but not impaired
Past due over 6 months and partially impaired
Group
2009
$’000
254,892
149,638
122,779
2008
$’000
365,317
108,138
76,367
527,309
549,822
Trade debtors that are individually determined to be impaired at the balance sheet date relate to debtors that are in
significant financial difficulties and have defaulted on payments.
Information relating to the provision for doubtful debts is given in Note 14.
Liquidity Risk
Prudent liquidity risk management requires the Group to maintain sufficient cash and marketable securities, internally
generated cash flows, and the availability of funding resources through an adequate amount of committed credit facilities.
Group Treasury also maintains a mix of short-term money market borrowings and medium/long term loans to fund working
capital requirements and capital expenditures/investments. Due to the dynamic nature of business, the Group maintains
flexibility in funding by ensuring that ample working capital lines are available at any one time.
Information relating to the maturity profile of loans is given in Note 19.
204
Keppel Corporation Limited
Report to Shareholders 2009
The following table details the liquidity analysis for derivative financial instruments of the Group and the Company based on
contractual undiscounted cash inflows/(outflows).
Group
2009
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
2008
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
Company
2009
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
2008
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Within
one year
$’000
Within
one to
two years
$’000
Within
two to
five years
$’000
3,789,510
(3,730,427)
367,391
(359,079)
3,439
(3,206)
9,292
(415)
160
-
37
-
2,848,157
(2,899,778)
1,180,269
(1,224,123)
109,091
(116,213)
3,128
(73,463)
-
(3,642)
-
-
3,737,912
(3,679,578)
353,197
(344,527)
1,448
(1,469)
2,782,373
(2,836,179)
1,146,506
(1,192,551)
94,169
(101,915)
Capital Risk
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and
to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal
capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares,
obtain new borrowings or sell assets to reduce borrowings. The Group’s current strategy remains unchanged from 2008.
Management monitors capital based on the Group net cash/(gearing). The Group net cash/(gearing) is calculated as net
cash/(borrowings) divided by total capital. Net cash/(borrowings) are calculated as bank balances, deposits & cash (Note
16) less total term loans (Note 19) plus bank overdrafts (Note 20). Total capital refers to capital employed under equity.
Net cash
Total capital
Net cash ratio
notes to the Financial statements
Group
2009
$’000
2008
$’000
1,176,592
274,668
8,712,573
6,748,507
0.14x
0.04x
205
Notes to the Financial Statements
34. Financial risk management (continued)
Fair Value of Financial Instruments
The Group classify fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in
making the measurement. The fair value hierarchy has the following levels:
• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (is as prices) or indirectly (i.e. derived from prices)
• Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
The following table presents the assets and liabilities measured at fair value at 31 December 2009.
Group
2009
Assets
Derivative financial instruments
Investments
- Available-for-sale investments
Short term investments
- Available-for-sale investments
- Investments held for trading
Liabilities
Derivative financial instruments
Company
2009
Assets
Derivative financial instruments
Liabilities
Derivative financial instruments
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
117,906
-
117,906
49,992
5,396
96,658
152,046
322,108
60,334
46,393
-
27,680
-
396,181
60,334
432,434
169,695
124,338
726,467
-
57,864
-
57,864
-
-
102,502
37,171
-
-
102,502
37,171
The following table presents the reconciliation of financial instruments measured at fair value based on significant
unobservable inputs (Level 3).
At 1 January
Purchases
Sales
Fair value gain recognised in equity
Reclassification
Exchange differences
At 31 December
2009
$’000
105,588
23,730
(596)
(2,938)
1,343
(2,789)
124,338
206
Keppel Corporation Limited
Report to Shareholders 2009
35. Segment analysis
Offshore & Marine
$’000
Infrastructure
$’000
Property
$’000
Investments
$’000
Elimination
$’000
Total
$’000
2009
Revenue
External sales
Inter-segment sales
Total
segment results
Operating profit
Investment income
Interest income
Interest expenses
Share of results of
associated companies
Profit before tax &
exceptional items
Exceptional items
Profit before taxation
Taxation
Profit for the year
Attributable to:
Shareholders of Company
Profit before exceptional items
Exceptional items
Minority interests
other information
Segment assets
Segment liabilities
Net assets
Investment in associated
companies
Additions to non-current assets
Depreciation and amortisation
Geographical information
8,273,390
-
8,273,390
2,426,513
170,229
2,596,742
1,508,247
2,591
1,510,838
38,971
57,921
96,892
- 12,247,121
(230,741)
-
(230,741) 12,247,121
1,003,907
1,866
33,195
(3,691)
126,474
-
7,833
(12,688)
371,181
3,133
44,581
(84,947)
(1,088)
102
126,416
(82,381)
4,317
-
(138,349)
134,032
1,504,791
5,101
73,676
(49,675)
45,546
28,526
142,028
105,583
1,080,823
(22,565)
1,058,258
(234,065)
824,193
150,145
(169,330)
(19,185)
(16,439)
(35,624)
475,976
(30,546)
445,430
(74,655)
370,775
148,632
544,571
693,203
(22,716)
670,487
810,033
(22,550)
787,483
36,710
824,193
125,692
(167,396)
(41,704)
6,080
(35,624)
209,445
4,270
213,715
157,060
370,775
119,441
546,182
665,623
4,864
670,487
-
-
-
-
-
-
-
-
-
-
-
321,683
1,855,576
322,130
2,177,706
(347,875)
1,829,831
1,264,611
360,506
1,625,117
204,714
1,829,831
5,807,974
4,250,761
1,557,213
2,887,191
2,017,490
869,701
9,983,553
5,503,550
4,480,003
4,907,752
3,102,096
1,805,656
(6,279,548) 17,306,922
8,594,349
(6,279,548)
8,712,573
-
108,940
239,822
125,274
182,213
69,108
34,800
2,199,896
404,500
13,718
232,120
467
521
-
-
-
2,723,169
713,897
174,313
External sales
Non-current assets
Far East &
other ASEAN
countries
$’000
Singapore
$’000
America
$’000
8,489,626
6,708,057
1,494,261
1,068,854
1,713,466
170,310
Other
countries
$’000
549,768
74,485
Elimination
$’000
Total
$’000
- 12,247,121
8,021,706
-
notes to the Financial statements
207
Notes to the Financial Statements
35. Segment analysis (continued)
Offshore & Marine
$’000
Infrastructure
$’000
Property
$’000
Investments
$’000
Elimination
$’000
Total
$’000
2008
Revenue
External sales
Inter-segment sales
Total
segment results
Operating profit
Investment income
Interest income
Interest expenses
Share of results of
associated companies
Profit before tax &
exceptional items
Exceptional items
Profit before taxation
Taxation
Profit for the year
Attributable to:
Shareholders of Company
Profit before exceptional items
Exceptional items
Minority interests
other information
Segment assets
Segment liabilities
Net assets
Investment in associated
companies
Additions to non-current assets
Depreciation and amortisation
Geographical information
8,569,185
-
8,569,185
2,232,549
202,219
2,434,768
949,589
2,543
952,132
54,103
61,683
115,786
11,805,426
-
(266,445)
-
(266,445) 11,805,426
837,155
2,074
78,574
(18,780)
49,895
267
10,007
(24,469)
325,655
9,353
50,915
(91,420)
(6,396)
393
111,063
(91,394)
32,165
-
(179,557)
147,392
1,238,474
12,087
71,002
(78,671)
43,613
34,032
70,852
205,460
942,636
(6,209)
936,427
(197,206)
739,221
704,687
(6,209)
698,478
40,743
739,221
69,732
1,404
71,136
1,250
72,386
63,078
2,109
65,187
7,199
72,386
365,355
27,372
392,727
(52,089)
340,638
219,126
(9,975)
209,151
(39,985)
169,166
156,528
15,393
171,921
168,717
340,638
172,360
(9,975)
162,385
6,781
169,166
-
-
-
-
-
-
-
-
-
-
-
353,957
1,596,849
12,592
1,609,441
(288,030)
1,321,411
1,096,653
1,318
1,097,971
223,440
1,321,411
6,574,288
5,443,711
1,130,577
2,141,940
1,712,820
429,120
8,988,885
5,548,850
3,440,035
5,856,584
4,107,809
1,748,775
(6,815,254) 16,746,443
9,997,936
(6,815,254)
6,748,507
-
96,097
299,414
95,102
180,203
51,368
32,369
1,833,132
192,537
11,061
1,091,599
5,782
546
-
-
-
3,201,031
549,101
139,078
External sales
Non-current assets
Far East &
other ASEAN
countries
$’000
Singapore
$’000
America
$’000
8,180,820
7,023,614
1,087,630
978,414
1,688,961
168,962
Other
countries
$’000
848,015
84,865
Elimination
$’000
Total
$’000
-
-
11,805,426
8,255,855
208
Keppel Corporation Limited
Report to Shareholders 2009
Note:
(a) The Group is organised into business units based on their products and services, and has four reportable operating
segments: Offshore & Marine, Infrastructure, Property and Investments. The Investments division consists mainly of the
Group’s investments in k1 Ventures Ltd and MobileOne Ltd. In June 2009, the Group sold its entire stake in SPC which
was previously included in the Investments division.
(b) Pricing of inter-segment goods and services is at fair market value.
36. New accounting standards and recommended accounting practice
(a) At the date of authorisation of the financial statements, the following FRS, INT FRS and amendments to FRS that are
relevant to the Group and the Company were issued but not yet effective:
Amendments to FRS 39
INT FRS 117
INT FRS 118
FRS 27 (Revised)
FRS 103 (Revised)
Financial Instruments: Recognition and Measurement
– Eligible Hedged Items
Distributions of Non-Cash Assets to Owners
Transfer of Assets to Customers
Consolidated and Separate Financial Statements
Business Combination
The Directors anticipate that the adoption of the above FRS, INT FRS and amendments to FRS in future periods is not
expected to have a material impact on the financial statements of the Group and of the Company in the period of their
initial adoption.
(b) RAP 11 Pre-Completion Contracts for the Sale of Development Property
The International Accounting Standards Board issued International Financial Reporting Interpretations Committee
(“IFRIC”) Interpretation 15 in July 2008 which becomes effective for financial years beginning on or after 1 January
2009. When adopted, the interpretation is to be applied retrospectively. It clarifies when and how revenue and related
expenses from the sale of a real estate unit should be recognised if an agreement between a developer and a buyer is
reached before construction of the real estate is completed. Furthermore, the interpretation provides guidance on how
to determine whether an agreement is within the scope of IAS 11 (Construction Contracts) or IAS 18 (Revenue).
RAP 11 is still applicable in Singapore as IFRIC Interpretation 15 has not been adopted by the Accounting Standards
Council. RAP 11 was issued by the Institute of Certified Public Accountants of Singapore in October 2005. In the RAP,
it is mentioned that a property developer’s sale and purchase agreement is not a construction contract as defined in
FRS 11 (Construction Contracts) and the percentage of completion (“POC”) method of recognising revenue, which is
allowed under FRS 11 for construction contracts, may not be applicable for property developers. The relevant standard
for revenue recognition by property developers is FRS 18 (Revenue), which addresses revenue recognition generally
for all types of entities. However, there is no clear conclusion in FRS 18 whether the POC method or the completion of
construction (“COC”) method is more appropriate for property developers.
notes to the Financial statements
209
Notes to the Financial Statements
36. New accounting standards and recommended accounting practice (continued)
The Group uses the POC method for recognising revenue from partly completed residential projects which are held for
sale. Had the COC method been adopted, the impact on the financial statements of the Group will be as follows:
Decrease in opening revenue reserve
(Decrease)/increase in revenue recognised for the year
(Decrease)/increase in profit for the year
Increase/(decrease) in carrying value of property held for sale
Balance as at 1 January
Balance as at 31 December
Increase/(decrease) in minority interests
Balance as at 1 January
Share of profit for the year
37. Significant subsidiaries and associated companies
2009
$’000
2008
$’000
(186,558)
(239,573)
(82,514)
569,010
(78,599)
53,015
28,686
390,350
(98,341)
28,686
(195,582)
24,368
(205,194)
9,612
Information relating to significant subsidiaries consolidated in these financial statements and significant associated
companies whose results are equity accounted for is given in the following pages.
210
Keppel Corporation Limited
Report to Shareholders 2009
Significant Subsidiaries and Associated Companies
Gross Effective Equity
Interest
2009
%
Interest
2009
%
2008
%
Cost of Investment
2009
$’000
2008
$’000
Country of
Incorporation
/Operation
Principal Activities
OFFSHORE & MARINE
offshore
subsidiaries
Keppel Offshore and Marine Ltd
100
100
100 801,720 801,720
Singapore
Investment holding
Keppel FELS Ltd
100
100
100
#
#
Singapore
Construction, fabrication and repair of
offshore production facilities and drilling
rigs, power barges, specialised vessels
and other offshore production facilities
AmFELS Offshore Ltd(4)
100
100
100
AzerFELS Pte Ltd
Benniway Pte Ltd
BrasFELS SA(1a)
60
88
60
88
60
88
100
100
100
Caspian Shipyard Company Ltd(1a)
75
45
45
Deepwater Technology Group Pte Ltd 100
100
100
FELS Offshore Pte Ltd
100
100
100
Fornost Ltd(1a)
100
100
100
FSTP Brasil Ltda(1a)
75
75
75
FSTP Pte Ltd
75
75
75
Keppel AmFELS Inc(3)
100
100
100
Keppel FELS Baltech Ltd(3)
100
100
100
Keppel FELS Brasil SA(1a)
100
100
100
Keppel FELS Offshore &
Engineering Services Mumbai
Pte Ltd(3)
100
100
100
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
BVI/Mexico
Holding of long-term investments
Singapore
Holding of long-term investments
Singapore
Holding of long-term investments
Brazil
Engineering, construction and
fabrication of platforms for the oil and
gas sector, shipyard works and other
general business activities
#
Azerbaijan
Construction and repair of offshore
drilling rigs
#
Singapore
Research and experimental
development on deepwater engineering
#
#
Singapore
Holding of long-term investments
HK
Holding of long-term investments and
provision of procurement services
#
Brazil
Procurement of equipment and materials
for the construction of offshore
production facilities
#
Singapore
Project management, engineering and
procurement
#
USA
Construction and repair of offshore
drilling rigs and offshore production
facilities
#
#
Bulgaria
Marine and offshore engineering services
Brazil
Engineering, construction and
fabrication of platforms for the oil and
gas industry
#
India
Marine and offshore engineering services
significant subsidiaries and Associated Companies
211
Significant Subsidiaries and Associated Companies
Gross Effective Equity
Interest
2009
%
Interest
2009
%
2008
%
Cost of Investment
2009
$’000
2008
$’000
Country of
Incorporation
/Operation
Principal Activities
Keppel Norway A/S(1a)
100
100
100
Keppel Offshore & Marine
Technology Centre Pte Ltd
100
100
100
Keppel Verolme BV(1a)
100
100
100
KV Enterprises BV(1a)
100
100
100
Marine & Offshore Protection &
Preservation BV(1a)
100
100
100
Offshore Technology Development
Pte Ltd
100
100
100
Prismatic Services Ltd(4)
100
100
100
Regency Steel Japan Ltd(1a)
51
51
51
Willalpha Ltd(4)
100
100
100
Associated Companies
Asian Lift Pte Ltd
50
50
50
Keppel Kazakhstan LLP(3)
50
50
50
Marine
subsidiaries
Keppel Shipyard Ltd
100
100
100
Keppel Philippines Marine Inc(1a)
96
96
96
Alpine Engineering Services Pte Ltd
100
100
100
Blastech Abrasives Pte Ltd
100
100
100
Keppel Nantong Shipyard
Company Limited(3)
100
100
100
Keppel Singmarine Pte Ltd
100
100
100
Keppel Smit Towage Pte Ltd
51
51
51
KS Investments Pte Ltd
100
100
100
KSI Production Pte Ltd(4)
100
100
100
Maju Maritime Pte Ltd
51
51
51
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Norway
Construction and repair of offshore
drilling rigs and offshore production
facilities
#
Singapore
Research & development
#
Netherlands
Construction and repair of offshore
drilling rigs and shiprepairs
#
#
Netherlands
Hiring and leasing of barges
Netherlands
Chamber blasting services and painting
and coating works
#
Singapore
Production of jacking systems
#
#
BVI/Brazil
Project procurement
Japan
Sourcing, fabricating and supply of
specialised steel components
#
BVI/Vietnam Holding of long-term investments
#
Singapore
Provision of heavy-lift equipment and
related services
#
Kazakhstan
Construction and repair of offshore
drilling units and structures and
specialised vessels
#
Singapore
Shiprepairing, shipbuilding and
conversions
#
#
#
#
#
#
#
#
#
Philippines
Shipbuilding and repairing
Singapore
Marine contracting
Singapore
Marine contracting
China
Shipbuilding
Singapore
Shipbuilding
Singapore
Provision of towage services
Singapore
Holding of long-term investments
BVI/Norway
Holding of long-term investments
Singapore
Provision of towage services
212
Keppel Corporation Limited
Report to Shareholders 2009
Gross Effective Equity
Interest
2009
%
Interest
2009
%
2008
%
Cost of Investment
2009
$’000
2008
$’000
Country of
Incorporation
/Operation
Principal Activities
Marine Technology Development
Pte Ltd
100
100
100
#
#
Singapore
Provision of technical consultancy for
ship design and engineering works
Associated Companies
Arab Heavy Industries Public
Joint Stock Company(3)
33
33
33
#
#
UAE
Shipbuilding and repairing
Consort Land Inc(1a)
33+
32+
32+
54
54
Philippines
Land holding company and power
distributor
Kejora Resources Sdn Bhd(3)
49
25
25
Nakilat-Keppel Offshore &
Marine Ltd(1a)
20
20
20
#
#
# Malaysia
Chartering tugs and other marine
services
# Qatar
Shiprepairing
Subic Shipyard & Engineering Inc(1a)
46+
44+
44+
3,020
3,020
Philippines
Shipbuilding and repairing
INFRASTRUCTURE
Power Generation
subsidiaries
Keppel Energy Pte Ltd
100
100
100 330,914 330,914
Singapore
Investment holding
Corporacion Electrica
Nicaraguense SA(1a)
-
-
100
Dawley Developments Ltd(4)
100
100
100
Keppel Electric Pte Ltd
100
100
100
Keppel Gas Pte Ltd
100
100
100
Keppel Merlimau Cogen Pte Ltd
100
100
100
New Energy Industrial Ltd(4)
100
100
100
Okachi Investments Ltd(4)
100
100
100
Termoguayas Generation SA(1a)
100
100
100
-
#
#
#
#
#
#
#
#
Nicaragua
Disposed
#
#
#
#
#
#
#
BVI/HK
Holding of long-term investments
Singapore
Electricity, energy and power supply,
investment holding and general
wholesale trade
Singapore
Purchase and sale of gaseous fuels
Singapore
Holding of long-term investments,
generation and supply of electricity
BVI/Ecuador Holding of long-term investments
BVI/HK
Holding of long-term investments
Ecuador
Commercial power generation
significant subsidiaries and Associated Companies
213
Significant Subsidiaries and Associated Companies
Gross Effective Equity
Interest
2009
%
Interest
2009
%
2008
%
Cost of Investment
2009
$’000
2008
$’000
Country of
Incorporation
/Operation
Principal Activities
environmental engineering
subsidiaries
Keppel Integrated Engineering Ltd
100
100
100 272,554 171,574
Singapore
Investment holding
Keppel Seghers Engineering
Singapore Pte Ltd
100
100
100
#
#
Singapore
Fabrication of steel structures,
mechanical and electrical works and
engineering services specialising in
treatment plants
K-Green Trust(n)
100
100
-
Brixworth Group Ltd(4)
100
100
100
FELS Cranes Pte Ltd
100
100
100
Keppel DHCS Pte Ltd
100
100
-
Keppel FMO Pte Ltd
100
100
100
Keppel Prince Engineering
Pty Ltd(2a)
100
100
100
Keppel Sea Scan Pte Ltd
100
100
100
#
#
#
#
#
#
#
-
#
#
-
#
Singapore
Investment holding
BVI/Qatar
Trading in industrial goods
Singapore
Fabrication of heavy cranes and
provision of marine-related equipment
Singapore
Development of district cooling system
Singapore
Construction, project and facilities
management and operational
maintenance of industrial and
commercial complexes
#
Australia
Metal fabrication
#
Singapore
Keppel Seghers Belgium NV(1a)
100
100
100
#
#
Belgium
Trading and installation of hardware,
industrial, marine and building-related
products, leasing and provision of
services
Provider of services and solutions to the
environmental industry related to solid
waste, waste-water and sludge
management
Keppel Seghers Holdings Pte Ltd
100
100
100
Keppel Seghers Hong Kong Ltd(1a)
100
100
100
Keppel Seghers NeWater
Development Co Pte Ltd
Keppel Seghers Tuas
Waste-to-Energy Plant Pte Ltd
100
100
100
100
100
100
Senoko Waste-to-Energy Pte Ltd(n)
100
100
-
#
#
#
#
#
#
#
Singapore
Investment holding
HK
Engineering contracting and
investment holding
#
Singapore
Collection, purification and distribution
of water
#
Singapore
Collection and treatment of solid waste
to generate green energy
-
Singapore
Investment holding
214
Keppel Corporation Limited
Report to Shareholders 2009
Gross Effective Equity
Interest
2009
%
Interest
2009
%
2008
%
Cost of Investment
2009
$’000
2008
$’000
Country of
Incorporation
/Operation
Principal Activities
Associated Companies
GE Keppel Energy Services
Pte Ltd(2)
50
50
50
Tianjin Eco-City Energy Investment
& Construction Co Ltd(3)
20
20
20
Tianjin Eco-City Environmental
Protection Co Ltd(3)
20
20
20
#
#
#
#
Singapore
Precision engineering, repair, services
and agencies
#
China
#
China
Investment and implementation of
energy and utilities related infrastructure
Investment, construction and operation
of infrastructure for environmental
protection
80
80
80 397,647 397,647
Singapore
Investment, management and
holding company
network & Logistics
subsidiaries
Keppel Telecommunications &
Transportation Ltd(2)
DataOne Asia Pte Ltd(2)
ECHO Broadband Gmbh(2a)
Keppel Communications Pte Ltd(2)
100
100
100
80
80
80
80
80
80
Keppel Logistics (Foshan) Ltd(3)
70
56
56
Keppel Logistics Pte Ltd(2)
Keppel Telecoms Pte Ltd(2)
100
100
80
80
80
80
Transware Distribution Services
Pte Ltd(2)
50
40
40
Associated Companies
Advanced Research Group
Co Ltd(2a)
45
36
36
Asia Airfreight Terminal Company
Ltd(3)
10
8
8
Citadel 100 Datacenters Ltd(3)
50
40
40
Computer Generated Solutions Inc(3)
Radiance Communications Pte Ltd(2)
21
50
17
40
17
40
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Investment holding
# Germany
Broadband network services
#
Singapore
Trading and provision of
communications systems and
accessories
#
China
Shipping operations, warehousing and
distribution
#
#
Singapore
Warehousing and distribution
Singapore
Telecommunications services and
investment holding
#
Singapore
Warehousing and distribution
#
Thailand
IT publication and business information
#
HK
Operation of air cargo handling terminal
#
Ireland
Provision of data centre facilities and
co-location services
#
#
USA
IT consulting and outsourcing provider
Singapore
Distribution and maintenance of
communications equipment and
systems
significant subsidiaries and Associated Companies
215
Significant Subsidiaries and Associated Companies
Gross Effective Equity
Interest
2009
%
Interest
2009
%
2008
%
Cost of Investment
2009
$’000
2008
$’000
Country of
Incorporation
/Operation
Principal Activities
SVOA Public Company Ltd(2a)
32
26
26
Trisilco Folec Sdn Bhd(2a)
30
24
44
Trisilco Radiance Communications
Sdn Bhd(2a)
40
32
32
Wuhu Annto Logistics Company
Ltd(3)
35
28
28
#
#
#
#
#
Thailand
# Malaysia
# Malaysia
Distribution of IT products and
telecommunications services
Trading and provision of
communications systems and
accessories
Sales, installation and maintenance of
telecommunications systems,
equipment and accessories
#
China
Transportation, warehousing and
distribution
PRoPeRtY
subsidiaries
Keppel Land Ltd(2)
52
52
53 1,330,220 931,432
Singapore
Holding, management and investment
company
K-REIT Asia(2)
76
54
55
Keppel Bay Pte Ltd
100+
86+
86+
Keppel Philippines Properties Inc(2a)
79+
55+
55+
#
626
493
#
Singapore
Real estate investment trust
626
Singapore
Property development
493
Philippines
Investment holding
Alpha Investment Partners Ltd(2)
100
Avenue Park Development(2)
Bayfront Development Pte Ltd(2)
Beijing Kingsley Property
Development Co Ltd(3)
Bintan Bay Resort Pte Ltd(2)
Boulevard Development Pte Ltd(2)
Changzhou Fushi Housing
Development Pte Ltd(3)
Chengdu Hillwest Development
Co Ltd(3)
Da Di Investment Pte Ltd(2)
Devonshire Development Pte Ltd(2)
DL Properties Ltd(2)
Double Peak Holdings Ltd(4)
Doversdale Development Pte Ltd(2)
Estella JV Co Ltd(1a)
Evergro Properties Ltd(2)
52
27
52
52
47
52
52
53
28
53
53
48
53
45
52
100
100
90
100
100
100
52
53
100
60
65
100
100
55
100
52
31
34
52
52
29
52
53
32
34
53
53
29
45
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Fund management
Singapore
Property development
Singapore
Investment holding
China
Property development
Singapore
Investment holding
Singapore
Investment holding
China
Property development
#
China
Property development
#
#
#
#
#
#
#
Singapore
Investment holding
Singapore
Property development
Singapore
Property investment
BVI/Singapore Investment holding
Singapore
Investment holding
Vietnam
Property development
Singapore
Property investment and development
216
Keppel Corporation Limited
Report to Shareholders 2009
Gross Effective Equity
Interest
2009
%
Interest
2009
%
2008
%
Cost of Investment
2009
$’000
2008
$’000
Country of
Incorporation
/Operation
Principal Activities
International Centre(1a)
Jiangyin Evergro Properties
Co Ltd(3)
KeplandeHub Ltd(2)
Keppel Al Numu Development
Ltd(2a)
Keppel China Township
Development Pte Ltd(2)
Keppel Hong Da (Tianjin Eco-City)
Property Development Co Ltd(n)(3)
Keppel Land (Saigon Centre) Ltd(3)
Keppel Land (Tower D) Pte Ltd(2)
Keppel Land Financial Services
Pte Ltd(2)
Keppel Land International Ltd(2)
Keppel Land Properties Pte Ltd(2)
Keppel Land Realty Pte Ltd(2)
Keppel Land Watco I Co Ltd(3)
Keppel Puravankara Development
Pvt Ltd(3)
Keppel Thai Properties Public
Co Ltd(2a)
Keppel Township Development
(Shenyang) Co Ltd(3)
K-REIT Asia Investment Pte Ltd(2)
K-REIT Asia Management Ltd(2)
K-REIT Asia Property Management
Ltd(2)
Le Vision Pte Ltd(2)
Ocean & Capital Properties Pte
Ltd(2)
Ocean Properties Pte Ltd(2)
OIL (Asia) Pte Ltd(2)
Pembury Properties Ltd(4)
PT Kepland Investama(1a)
PT Mitra Sindo Makmur(1a)
PT Mitra Sindo Sukses(1a)
79
83
100
51
52
43
52
27
53
40
53
27
100
52
53
100
74
-
100
100
100
100
100
100
68
51
52
52
52
52
52
52
35
27
53
53
53
53
53
53
36
27
45
23
24
100
52
53
100
100
100
100
100
76
100
100
100
51
51
52
52
52
52
52
40
52
52
52
27
27
53
53
53
53
53
40
53
53
53
27
27
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Vietnam
Property investment
China
Property development
Singapore
Investment holding
Singapore/
Saudi Arabia
Property development
#
Singapore
Investment holding
-
China
Property development
#
#
#
#
#
#
#
#
HK
Investment holding
Singapore
Property development and investment
Singapore
Financial services
Singapore
Property services
Singapore
Investment holding
Singapore
Property development and investment
Vietnam
Property investment and development
India
Property development
#
Thailand
Property development and investment
#
China
Property development
#
#
#
#
#
#
#
#
#
#
#
Singapore
Investment holding
Singapore
Property fund management
Singapore
Property management services
Singapore
Investment holding
Singapore
Property and investment holding
Singapore
Property investment
Singapore
Investment holding
BVI/Singapore Investment holding
Indonesia
Property investment and development
Indonesia
Property development and investment
Indonesia
Property development and investment
significant subsidiaries and Associated Companies
217
Significant Subsidiaries and Associated Companies
Gross Effective Equity
Interest
2009
%
Interest
2009
%
2008
%
Cost of Investment
2009
$’000
2008
$’000
Country of
Incorporation
/Operation
Principal Activities
PT Ria Bintan(1a)
PT Sentral Supel Perkasa(2a)
PT Sentral Tanjungan Perkasa(2a)
PT Straits-CM Village(1a)
Quang Ba Royal Park JV Co(3)
Riviera Core JV LLC(2a)
Riviera Point LLC(2)
Saigon Centre Holdings Pte Ltd(2)
Saigon Centre Investment Ltd(4)
Saigon Riviera JV Co Ltd(2a)
Saigon Sports City(2a)
Shanghai Floraville Land Co Ltd(3)
Shanghai Hongda Property
Development Co Ltd(3)
Shanghai Merryfield Land Co Ltd(3)
Shanghai Minghong Property
Co Ltd(3)
Shanghai Pasir Panjang Land
Co Ltd(3)
Sherwood Development Pte Ltd(2)
Spring City Resort Pte Ltd(2)
Straits Greenfield Ltd(3)
Straits Properties Ltd(2)
Straits Property Investments
Pte Ltd(2)
100
80
80
100
70
60
75
100
100
90
100
99
100
99
99
24
42
42
20
34
31
39
52
52
47
47
51
52
51
51
24
42
42
21
34
32
40
53
53
48
48
52
53
52
52
99
51
52
100
100
100
100
100
52
52
52
52
52
52
52
52
52
53
53
53
53
53
53
45
45
53
Tat Chuan Development (Pte) Ltd(2)
100
Third Dragon Development Pte Ltd(2)
100
Tianjin Fushi Property Devt Co Ltd(3)
100
Tianjin Merryfield Property
Development Co Ltd(3)
100
Wiseland Investment Myanmar Ltd(3)
100
52
53
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Indonesia
Golf course ownership and operation
Indonesia
Property investment and development
Indonesia
Property development
Indonesia
Hotel ownership and operations
Vietnam
Property investment
Vietnam
Property development
Vietnam
Property investment
Singapore
Investment holding
BVI/HK
Investment holding
Vietnam
Property development
Vietnam
Property development
China
China
China
China
Property development
Property development
Property development
Property development
#
China
Property development
#
#
Singapore
Property development
Singapore
Investment holding
# Myanmar
Hotel ownership and operations
#
#
#
#
#
#
Singapore
Property development and investment
Singapore
Investment holding
Singapore
Property development
Singapore
Investment holding and marketing agent
China
China
Property development
Property development
# Myanmar
Hotel ownership and operations
FELS Property Holdings Pte Ltd
100
100
100
70,214
70,214
Singapore
Investment holding
Brightway Property Pte Ltd
100
100
100
FELS SES International Pte Ltd
100+
85+
85+
Petro Tower Ltd(3)
76
64
64
#
7
#
#
7
#
Singapore
Property investment
Singapore
Investment holding
Vietnam
Property investment
218
Keppel Corporation Limited
Report to Shareholders 2009
Gross Effective Equity
Interest
2009
%
Interest
2009
%
2008
%
Cost of Investment
2009
$’000
2008
$’000
Country of
Incorporation
/Operation
Principal Activities
Alpha Real Estate Securities Fund
98
98
98
#
#
Singapore
Investment holding
Esqin Pte Ltd
100
100
100
11,001
11,001
Singapore
Investment holding
Harbourfront One Pte Ltd
70
65
65
#
#
Singapore
Property development
Keppel Group Eco-City Investments
Pte Ltd
100+
83+ 100
14,510
20
Singapore
Investment holding
Keppel (USA) Inc(4)
100
100
100
7,117
9,702
USA
Investment holding
Keppel Houston Group LLC(4)
100
86
86
Keppel Kunming Resort Ltd(3)
100
100
100
#
4
#
4
USA
HK
Property investment
Property investment
Keppel Point Pte Ltd
100+
86+
86+ 122,785 122,785
Singapore
Property development and investment
100
100
100
50,000
50,000
Singapore
Investment holding
Keppel Real Estate Investment
Pte Ltd
Singapore Tianjin Eco-City
Investment Holdings Pte Ltd
100
83
100
Substantial Enterprises Ltd(4)
100
83
100
Associated Companies
Asia No. 1 Property Fund Ltd(1a)
Asia Real Estate Fund Management
Ltd(2)
BFC Development Pte Ltd(2)
Bugis City Holdings Pte Ltd(2)
Central Boulevard Development
Pte Ltd(2)
CityOne Development (Wuxi) Co
Ltd(3)
CityOne Township Development
Pte Ltd(2)
Dong Nai Waterfront City LLC(2a)
EM Services Pte Ltd(3)
Harbourfront Three Pte Ltd(3)
Harbourfront Two Pte Ltd(3)
Keppel Magus Development
Pvt Ltd(3)
10
50
33
31
33
5
26
17
16
17
5
27
17
16
17
50
26
27
50
26
27
50
25
39
39
38
26
13
33
33
20
27
13
33
33
20
Kingsdale Development Pte Ltd(2)
50
26
27
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Investment holding
#
BVI/China
Investment holding
# Guernsey
Property investment
#
Singapore
Fund management
#
#
#
Singapore
Property development
Singapore
Under liquidation
Singapore
Property development
#
China
Property development
#
Singapore
Investment holding
#
#
#
#
#
Vietnam
Property development
Singapore
Property management
Singapore
Property development
Singapore
Property development
India
Property development
#
Singapore
Investment holding
significant subsidiaries and Associated Companies
219
Significant Subsidiaries and Associated Companies
Gross Effective Equity
Interest
2009
%
Interest
2009
%
2008
%
Cost of Investment
2009
$’000
2008
$’000
Country of
Incorporation
/Operation
Principal Activities
33
50
50
25
25
20
40
25
50
17
26
26
13
13
10
21
13
42
17
27
27
13
13
11
21
13
-
One Raffles Quay Pte Ltd(2)
Parksville Development Pte Ltd(2)
PT Pantai Indah Tateli(2a)
PT Pulomas Gemala Misori(3)
PT Purimas Straits Resort(3)
PT Purosani Sri Persada(3)
Renown Property Holdings (M)
Sdn Bhd(2a)
SAFE Enterprises Pte Ltd(3)
Sino-Singapore Tianjin Eco-City
Investment and Development Co.,
Ltd(n)(1a)
INVESTMENTS
subsidiaries
Keppel Philippines Holdings Inc(2a)
54+
54+
54+
China Canton Investments Ltd
75
75
75
#
#
#
#
#
#
#
#
#
-
#
#
#
#
#
#
#
Singapore
Property development
Singapore
Property investment
Indonesia
Property development
Indonesia
Property development
Indonesia
Development of holiday resort
Indonesia
Property investment
# Malaysia
Property investment
#
-
-
#
Singapore
Investment holding
China
Property development
Philippines
Investment holding
Singapore
Investment holding
Kep Holdings Ltd(4)
100+ 100+ 100+ 10,480
10,480
BVI/HK
Investment company
Kephinance Investment (Mauritius)
Pte Ltd(3)
100
100
100
#
# Mauritius
Investment holding
Kephinance Investment Pte Ltd
100
100
100
90,000
90,000
Singapore
Investment holding
Kepital Management Ltd(3)
100
100
100
#
#
HK
Investment company
Kepmount Shipping (Pte) Ltd
100
100
100
4,000
4,000
Singapore
Investment holding
Keppel Investment Ltd
100
100
100
#
#
Singapore
Investment company
Keppel Oil & Gas Services Pte Ltd
100
100
100 116,609 116,609
Singapore
Investment holding
Kepventure Pte Ltd
100
100
100
30,650
16,160
Singapore
Investment holding
KI Investments (HK) Ltd(3)
100
100
100
KV Management Pte Ltd
100
100
100
Travelmore Pte Ltd
100
100
100
The Vietnam Investment Fund
(Singapore) Ltd
56
56
56
#
250
265
#
#
HK
Investment company
250
Singapore
Fund management
265
Singapore
Travel agency
#
Singapore
Venture capital fund
220
Keppel Corporation Limited
Report to Shareholders 2009
Gross Effective Equity
Interest
2009
%
Interest
2009
%
2008
%
Cost of Investment
2009
$’000
2008
$’000
Country of
Incorporation
/Operation
Principal Activities
-
36
20
-
36
16
45
36
16
-
#
#
#
#
#
Singapore
Disposed
Singapore
Investment holding
Singapore
Telecommunications services
3,662,066 3,135,903
3,074
3,074
Associated Companies
Singapore Petroleum Company Ltd
k1 Ventures Ltd
MobileOne Ltd(2)
Total
subsidiaries
Associated Companies
Notes:
(i) All the companies are audited by Deloitte & Touche LLP, Singapore except for the following:
(1a) Audited by overseas practice of Deloitte & Touche LLP;
(2) Audited by Ernst & Young LLP, Singapore;
(2a) Audited by overseas practice of Ernst & Young LLP;
(3) Audited by other firms of auditors (not significant associated companies and foreign subsidiaries); and
(4) Not required to be audited by law in the country of incorporation and companies disposed, liquidated and struck off.
In accordance to Rule 716 of The Singapore Exchange Securities Trading Limited – Listing Rules, the Audit Committee and Board of Directors of the Company
confirmed that they are satisfied that the appointment of different auditors for its subsidiaries and significant associated companies would not compromise the
standard and effectiveness of the audit of the Company.
(ii) + The shareholdings of these companies are held jointly with other subsidiaries.
(iii) # The shareholdings of these companies are held by subsidiaries of Keppel Corporation Limited.
(iv)
(v) The subsidiaries’ place of business is the same as its country of incorporation, unless otherwise specified.
(vi) Abbreviations:
(n) These companies were incorporated during the financial year.
British Virgin Islands (BVI)
Hong Kong (HK)
United Arab Emirates (UAE)
United States of America (USA)
(vii) The Company has 211 significant subsidiaries and associated companies as at 31 December 2009. Subsidiaries and associated companies are considered
as significant (a) in accordance to Rule 718 of The Singapore Exchange Securities Trading Limited – Listing Rules, or (b) by reference to the significance of their
economic activities.
significant subsidiaries and Associated Companies
221
Statement by Directors
For the financial year ended 31 December 2009
We, CHOO CHIAU BENG and TEO SOON HOE being two Directors of Keppel Corporation Limited, do hereby state that in the
opinion of the Directors, the financial statements of the Group and the balance sheet and statement of changes in equity of the
Company as set out on pages 158 to 221 are drawn up so as to give a true and fair view of the state of affairs of the Group
and of the Company as at 31 December 2009, and of the results, changes in equity and cash flows of the Group and changes
in equity of the Company for the financial year then ended and at the date of this statement, there are reasonable grounds to
believe that the Company will be able to pay its debts as and when they fall due.
On behalf of the Board
Choo Chiau Beng
Chief Executive Officer
Singapore, 1 March 2010
Teo Soon Hoe
Group Finance Director
222
Keppel Corporation Limited
Report to Shareholders 2009
Independent Auditors’ Report
to the Members of Keppel Corporation Limited
For the financial year ended 31 December 2009
We have audited the accompanying financial statements of Keppel Corporation Limited (“Company”) and its subsidiaries
(“Group”) which comprise the balance sheets of the Group and the Company as at 31 December 2009, the profit and loss
account, statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group and
the statement of changes in equity of the Company for the year then ended, and a summary of significant accounting policies
and other explanatory notes, as set out on pages 158 to 221.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This
responsibility includes: devising and maintaining a system of internal accounting controls sufficient to provide a reasonable
assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly
authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and
balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion,
(a)
the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the
Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting
Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December
2009 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the
year ended on that date; and
(b)
the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated
in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
DELOITTE & TOUCHE LLP
Public Accountants and Certified Public Accountants
Singapore
Chaly Mah Chee Kheong
Partner
Appointed on 28 April 2006
1 March 2010
Independent Auditors’ Report
223
Interested Person Transactions
During the financial year, the following interested person transactions were entered into by the Group:
Name of interested person
transaction for the sale of Goods and services
Gas Supply Pte Ltd
PSA Corporation Group
Mount Faber Leisure Group
SembCorp Industries Group
SembCorp Marine Group
Singapore Airlines Group
Singapore Power/PowerSeraya Group
transaction for the Purchase of Goods and services
CapitaLand Group
Gas Supply Pte Ltd
Mapletree Investments Pte Ltd
SembCorp Industries Group
total Interested Person transactions
Aggregate value of all
interested person
transactions during
the financial year
under review (excluding
transactions less than
$100,000 and transactions
conducted under
shareholders’ mandate
pursuant to Rule 920)
Aggregate value of all
interested person
transactions conducted
under a shareholders’
mandate pursuant
to Rule 920 of
the SGX Listing Manual
(excluding transactions
less than $100,000)
2009
$’000
2008
$’000
2009
$’000
2008
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,420
-
142
482
2,179
-
-
-
28,500
570
2,500 -
61,550
4,379
145
110
1,073
15,900
25,462
4,532
90,000
2,478
59,793
205,629
Save for the interested person transactions disclosed above, there were no other material contracts entered into by the Company
and its subsidiaries involving the interests of its chief executive officer, directors or controlling shareholders, which are either still
subsisting at the end of the financial year or, if not then subsisting, entered into since the end of the previous financial year.
224
Keppel Corporation Limited
Report to Shareholders 2009
Directors and Key Executives
Lee Boon Yang, 62
Chairman and Independent Director
B.V.Sc Hon (2A), University of Queensland, 1971.
Chairman of Keppel Corporation Limited with effect from 1 July 2009 (Appointed Chairman Designate and independent
non-executive Director on 1 May 2009). An independent and non-executive Director, he is a member of the Remuneration,
Nominating and Board Safety Committees.
After graduation, he worked as a veterinarian and R&D Officer in the government’s Primary Production Department from 1972
to 1981. In 1981, he joined the regional office of the US Feed Grains Council as Assistant Regional Director. A year later, he
joined the Primary Industries Enterprise Pte Ltd as Senior Manager (Projects).
In 1984, he stood as a candidate in the Singapore General Elections. Since then he held the Jalan Besar parliamentary seat for
six consecutive terms. In 1985, he was appointed Parliamentary Secretary to the Minister for the Environment and the Minister
for Communications and Information. Subsequently he served as Parliamentary Secretary to the Minister for Finance and the
Minister for Home Affairs.
In 1986, he was appointed Minister of State for Trade and Industry and Home Affairs. A year later he relinquished his portfolio
as Minister of State for Trade and Industry and took on the appointment of Minister of State for National Development. In 1988,
he was appointed Senior Minister of State for National Development and Home Affairs. He was also appointed the Government
Whip.
In November 1990, he was appointed Senior Minister of State for Defence. He was appointed Minister in the Prime Minister’s
Office in July 1991, concurrently holding the post of Second Minister for Defence.
In January 1992, he relinquished his post as Minister in the Prime Minister’s Office and took on the appointments of Minister for
Labour and Second Minister for Defence. In 1994, he was appointed Minister for Defence and Minister for Labour (The Labour
Ministry was later reorganised into the Ministry of Manpower in 1998). He relinquished his Defence portfolio in August 1995.
In May 2003, he relinquished the Manpower portfolio to serve as Minister for Information, Communications and the Arts. He
retired from political office on 31 Mar 2009. He continues to serve as MP for Jalan Besar GRC.
Lim Hock San, 63
Deputy Chairman and Independent Director
Bachelor of Accountancy, University of Singapore; Master of Science, MIT Sloan School of Management; Advanced
Management Program, Harvard Business School; Fellow, Chartered Institute of Management Accountants (UK).
Deputy Chairman with effect from 1 July 2009 (Director since 1989; date of last re-election: 27 April 2007), he is an independent
and non-executive Director. Mr Lim is also the Chairman of the Audit Committee, Chairman of the Remuneration Committee
and a member of the Board Risk Committee.
Mr Lim is the CEO of United Industrial Corporation Ltd and Singapore Land Ltd. He is also the Chairman of Gallant Ventures
Ltd, the National Council Against Problem Gambling and Ascendas Pte Ltd. Mr Lim previously served as the Director-General of
Civil Aviation (1980-1992) and was past President of the Institute of Certified Public Accountants of Singapore.
Directors and Key executives
225
Directors and Key Executives
Choo Chiau Beng, 62
Chief Executive Officer
Bachelor of Science (First Class Honours), University of Newcastle upon Tyne (awarded the Colombo Plan Scholarship to study
Naval Architecture); Master of Science in Naval Architecture, University of Newcastle upon Tyne; attended the Programme for
Management Development in Harvard Business School in 1982 and is a Member of the Wharton Society of Fellows, University
of Pennsylvania.
Appointed as Chief Executive Officer on 1 January 2009 (Director since 1983; date of last re-election: 24 April 2009). Member
of the Board Safety Committee.
Mr Choo is the Chairman of Keppel Offshore & Marine Ltd, Keppel Land Limited and Keppel Energy Pte Ltd. He is also a
director of k1 Ventures Limited.
Mr Choo started his career with Keppel Shipyard as a Ship Repair Management Trainee in 1971 and was appointed Executive
Director of Singapore Slipway in 1973. In 1975, when Keppel set up its shipyard in the Philippines, he was posted there to
assume the position of Executive Vice President and CEO of the company for a period of four years. He joined Keppel FELS
(formerly known as Far East Levingston Shipbuilding Ltd) in 1980 as Assistant General Manager and was appointed as director
to the board of the company. He was promoted to Deputy Managing Director in November 1981 and to Managing Director in
March 1983. In 1994, he was appointed Deputy Chairman and in 1997, Chairman of the company.
He is a Board Member of Energy Studies Institute, a Board and Council Member of American Bureau of Shipping and the
Chairman of Det Norske Veritas South East Asia Committee. He is a member of the American Bureau of Shipping’s Southeast
Asia Regional Committee, Special Committee on Mobile Offshore Drilling Units, Nanyang Business School Advisory Board and
Singapore University of Technology and Design’s Board of Trustee.
Mr Choo was conferred the Public Service Star Award (BBM) in August 2004, The Meritorious Service Award in 2008 and The
NTUC Medal of Commendation (Gold) Award in May 2007.
He is Singapore’s Non-Resident Ambassador to Brazil.
Sven Bang Ullring, 74
Independent Director
Master of Science, Swiss Federal Institute of Technology (ETH), Zurich.
Appointed to the Board in 2000 (date of last re-election: 24 April 2009). An independent and non-executive Director, he is the
Chairman of the Board Safety Committee and a member of the Nominating and Remuneration Committees.
Mr Ullring was President and Chairman of the Executive Board of Det Norske Veritas, Oslo from 1985-2000 and President and
CEO of NORCONSULT, Oslo from 1981-1985. He worked for SKANSKA, Malmo, Sweden from 1962-1981 in Africa, Asia,
Europe and the Americas; from 1972-1981 he was Director of the International Department.
Mr Ullring is the Chairman of the Board of The Fridtjof Nansen Institute, Oslo, Norway, Chairman of the Maritime and Port
Authority of Singapore’s Third Maritime and Research and Development Advisory Panel and Chairman of the Board of
Transparency International (Norway).
226
Keppel Corporation Limited
Report to Shareholders 2009
Tony Chew Leong-Chee, 63
Independent Director
Trained as an agronomist at Ko Plantations Berhad and Serdang Agricultural College in Malaysia from 1966 to 1970.
Appointed to the Board in 2002 (date of last re-election: 25 April 2008). An independent and non-executive Director, he was
the Company’s Lead Independent Director until the appointment of Dr Lee Boon Yang as the Company’s independent and
non-executive Chairman on 1 July 2009. Mr Chew is the Chairman of the Nominating Committee and a member of the Audit
Committee.
He is Executive Chairman of Asia Resource Corporation and Chairman of KFC Vietnam. He also serves on the boards of
Macondray Corporation, Orangestar Investment Holdings Pte Ltd, SBF Holdings Pte Ltd and SBF-PICO Events Pte Ltd,
amongst others.
From 1966, he worked at Sri Gading Estates in Malaysia, Guthrie Trading in Singapore, and the Sampoerna Group of Indonesia.
In 1975 he ventured out, becoming an entrepreneur, and built a group of companies in the region which became Asia Resource
Corporation.
He plays an active role in promoting regional business, having served on the Trade Development Board, Economic Review
Sub-Committee for Entrepreneurship and Internationalisation, Regional Business Forum, and the GPC Resource Panel for
Finance, Trade and Industry. He is presently Chairman of Singapore Business Federation as well as Governing Board of Duke-
NUS Graduate Medical School Singapore. He is also Governing Board member of the Economic Research Institute for ASEAN
and East Asia, the Chinese Development Assistance Council Board of Trustees, and Advisor to the Singapore Institute of
International Affairs. He is a Public Service Award recipient.
Oon Kum Loon, 59
Independent Director
Bachelor of Business Administration (Honours) from the University of Singapore.
Appointed to the Board in 2004 (date of last re-election: 27 April 2007). An independent and non-executive Director, she is the
Chairperson of the Board Risk Committee and a member of the Audit, Nominating and Remuneration Committees.
Mrs Oon is a veteran banker with about 30 years of extensive experience, having held a number of management and executive
positions with the DBS Group. She was the Chief Financial Officer (CFO) of the bank until September 2003.
Prior to serving as CFO, she was the Managing Director & Head of Group Risk Management, responsible for the development
and implementation of a group-wide integrated risk management framework.
During her career with the bank, Mrs Oon was also involved with treasury and markets, corporate finance and credit
management activities.
Her other directorships include SP PowerGrid Ltd and China Resources Microelectronics Limited. She is also a member of the
Board Risk Management Committee of Singapore Power Ltd.
Tow Heng Tan, 54
Non-Independent and Non-Executive Director
Fellow of the Association of Chartered Certified Accountants as well as the Chartered Institute of Management Accountants.
Appointed to the Board in 2004 (date of last re-election: 27 April 2007). A non-executive Director and a member of the
Nominating, Remuneration and Board Risk Committees.
Mr Tow has an extensive business career spanning the management consultancy, investment banking and stockbroking
industries. He is currently the Chief Investment Officer of Temasek Holdings (Private) Ltd (Temasek Holdings).
Prior to joining Temasek Holdings in September 2002, he was Senior Director of Business Development at DBS Vickers
Securities (Singapore) Pte Ltd. From 1993 to 2001, Mr Tow was Managing Director of Lum Chang Securities Pte Ltd.
Mr Tow also sits on the board of ComfortDelGro Corporation Limited, among others.
Directors and Key executives
227
Directors and Key Executives
Alvin Yeo, 48
Independent Director
LLB Honours, King’s College London, University of London.
Appointed to the Board on 1 June 2009, Mr Alvin Yeo is an independent and non-executive Director. He is a member of the
Audit and Board Risk Committees.
Mr Alvin Yeo is the Senior Partner of WongPartnership LLP. He was admitted to the English Bar in 1987 and to the Singapore
Bar in 1988. In January 2000, Mr Yeo became the youngest lawyer to be appointed Senior Counsel.
Mr Yeo is a member of the Monetary Authority of Singapore advisory panel to advise the Minister on appeals under various
financial services legislation, the Singapore International Arbitration Centre’s Council of Advisors, and a Fellow of the Singapore
Institute of Arbitrators. He is a Member of Parliament and the Chairman of the Government Parliamentary Committee for Home
Affairs and Law.
Mr Yeo is a director and Chairman of the Remuneration Committees of United Industrial Corporation Limited and Singapore
Land Limited. He is also a director of Tuas Power Ltd and Tuas Power Generation Pte Ltd. He was a former member of the
Senate of the Academy of Law, the Council of the Law Society, and the board of the Civil Service College.
Teo Soon Hoe, 60
Senior Executive Director and Group Finance Director
Bachelor of Business Administration, University of Singapore; Member of the Wharton Society of Fellows, University of
Pennsylvania.
Appointed to the Board in 1985 (date of last re-election: 25 April 2008). A Senior Executive Director and the Group Finance
Director.
Mr Teo is the Chairman of Keppel Telecommunications & Transportation Ltd, MobileOne Ltd and Keppel Philippines Holding
Inc. In addition, he is a director of several other companies within the Keppel Group, including Keppel Land Limited, Keppel
Offshore & Marine Ltd and k1 Ventures Limited.
Mr Teo began his career with the Keppel Group in 1975 when he joined Keppel Shipyard. He rose through the ranks and was
seconded to various subsidiaries of the Keppel Group before assuming the position of Group Finance Director in 1985.
Tong Chong Heong, 63
Executive Director
Graduate of Management Development Programme, Harvard Business School; Stanford - NUS Executive Programme, Diploma
in Management Studies, The University of Chicago Graduate School of Business.
Appointed to the Board on 1 August 2009. He is an Executive Director.
Mr Tong has been appointed Chief Executive Officer of Keppel Offshore & Marine (KOM) on 1 January 2009. Prior to that, he
was the Managing Director/Chief Operating Officer of KOM since May 2002. He is also the Managing Director of Keppel FELS
and Keppel Shipyard. He is also Chairman of Keppel Integrated Engineering Limited with effect from 3 August 2009. Mr Tong
was the Executive Director of Keppel Corporation from 1989-1996. He served for 27 years and was appointed Commander
of the Volunteer Special Constabulary (VSC) from 1995-2001 and was honoured with Singapore Public Service Medal at the
1999 National Day Award. He had served as Vice President/President of Association of Singapore Marine Industries (1993-1996),
Member/Deputy Chairman of the Shipbuilding & Offshore Engineering Advisory Committee, Ngee Ann Polytechnic (1986-1995).
He is a member of Society of Naval Architects and Marine Engineers (USA), member of Singapore Institute of Directors,
member of American Bureau of Shipping and member of Nippon Kaiji Kyokai (Class NK) Singapore Committee and Fellow of
the Society of Project Managers, Fellow of The Royal Institute of Naval Architects (RINA) UK as well as Fellow of Institute of
Marine Engineering, Science & Technology.
His directorships include Keppel Offshore & Marine Ltd, Keppel FELS Limited, Keppel Shipyard Ltd and Keppel Integrated
Engineering Ltd.
228
Keppel Corporation Limited
Report to Shareholders 2009
Key Executives
In addition to the Chief Executive Officer (Mr Choo Chiau Beng), the Senior Executive Director (Mr Teo Soon Hoe) and the
Executive Director (Mr Tong Chong Heong), the following are the key executive officers (“Key Executives”) of the Company and
its principal subsidiaries:
Kevin Wong Kingcheung, 54
Bachelor degree in Civil Engineering with First Class Honours, Imperial College, London; Masters degree, Massachusetts
Institute of Technology, USA.
Mr Wong has been Group Chief Executive Officer/Managing Director, Keppel Land Limited since January 2000. Prior to
this appointment, he was Executive Director since November 1993. He is Deputy Chairman and Director of K-REIT Asia
Management Limited. He is a Board Member of the Building and Construction Authority (BCA), and Deputy Chairman of BCA
Academy Advisory Panel. He is also a director of Prudential Assurance Company Singapore (Pte) Limited.
Prior to joining Keppel Land Limited, Mr Wong had diverse experience in the real estate industry in the UK, USA and Singapore.
Ong Tiong Guan, 51
Bachelor of Engineering (First Class Honours), Monash University; and Doctor of Philosophy (Ph.D.) under Monash Graduate
Scholarship, Monash University, Australia.
Dr Ong was appointed Keppel Energy Pte Ltd’s Executive Director from November 1999. He became Managing Director of
Keppel Energy Pte Ltd with effect from 1 May 2003. He is responsible for Keppel Corporation’s power generation business,
which develops, owns and operates power generation projects in Asia and in the Americas.
Dr Ong’s career spans across the energy industry from engineering and contracting to investment and ownership of energy
assets. He started with Jurong Engineering as a Design Engineer in 1987 and went on to hold senior management positions in
Foster Wheeler Eastern, the Sembawang Group, and CMS Energy Asia. Dr Ong was Chairman of SEPEC (Singapore Electricity
Pool Executive Committee) for the FY 2002/2003.
His directorships include Keppel Energy Pte Ltd, Keppel Electric Pte Ltd, Keppel Merlimau Cogen Pte Ltd, Keppel Gas Pte Ltd,
Termoguayas Generation S.A. and Corporacion Electrica Nicaraguense, S.A..
Michael Chia Hock Chye, 57
Colombo Plan scholar. Bachelor in Science Naval Architecture and Shipbuilding (First Class Honours), University of Newcastle-
Upon-Tyne; Masters in Business Administration, National University of Singapore; Graduate Certificate in International
Arbitration, National University of Singapore.
Mr Chia is the Managing Director (Offshore) of Keppel Offshore and Marine. Prior to this, he was the Executive Director of
Keppel FELS Ltd since 2002 with overall responsibility of the business management of the company. Mr Chia is also the
Deputy Chairman and Chief Executive Officer of Keppel Integrated Engineering Limited. He has more than 25 years of
management experience in corporate development, engineering, operations and commercial. He was elected as the President
of the Association of Singapore Marines Industries from 2005 - 2009, a non profit association formed in 1968 to promote the
interests of the marine industry in Singapore.
Mr Chia is the Chairman of the Singapore Maritime Foundation, member of the Ngee Ann Polytechnic Council, Society of Naval
Architects and Marine Engineers Singapore, and American Bureau of Shipping – USA and Society of Petroleum Engineers. He
is a Fellow with the Singapore Institute of Arbitrators.
Directors and Key executives
229
Directors and Key Executives
His directorships include FELS Cranes Pte Ltd, Asian Lift Pte Ltd, Keppel FELS Brasil SA (Brazil), Keppel Amfels Inc (USA),
Keppel FELS Ltd, TradeoneAsia Pte Ltd, Deepwater Technology Group Pte Ltd, Willalpha Ltd, Prismatic Services Ltd,
Regency Steel Japan Ltd (Japan), Bintan Offshore Fabricators Pte Ltd, Durward International (BVI), Keppel FELS Engineering
Shenzhen Co Ltd, Offshore Technology Development Pte Ltd, Floatec LLC Offshore Innovative Solutions LLC, Keppel Shipyard
Ltd, Keppel Offshore & Marine USA (Holdings) LLC., Keppel Offshore & Marine USA Inc, Keppel Integrated Engineering Ltd,
GE Keppel Energy Services Pte Ltd, Keppel Prince Engineering Pty Ltd, Keppel Ventus Pte Ltd, Floatec Singapore Pte Ltd,
Keppel DHCS Pte Ltd, Keppel Seghers Belgium N.V., Keppel Seghers Holding B.V., Fels Tekform (Singapore) Pte Ltd, Kepfels
Engineering Pte Ltd, Keppel Environment China Investments Pte Ltd, Keppel Environment Technology Centre Pte Ltd, Keppel
FMO Pte Ltd, Keppel Infrastructure Fund Management Pte Ltd, Keppel Sea Scan Pte Ltd, Keppel Seghers Engineering
Singapore Pte Ltd, Keppel Seghers Holdings Pte Ltd, Keppel Seghers Newater Development Co Pte Ltd, Senoko Waste-
To-Energy Pte Ltd, Asia Environmental Development Ltd, Keppel Seghers UK Ltd, Keppel Seghers Iberica S.A. Unipersonal,
Auto Blast Steel Structures Co Ltd, Claridge House Ltd, Keppel Infrastructure (China) Ltd, Keppel Infrastructure Environment
Development Inc, Keppel Seghers Engineering Ltd, Keppel Seghers Hong Kong Ltd, Keppel Seghers Investment Ltd, Wealth
Come (Asia) Ltd, Keppel Seghers Netherlands B.V., Seghers Keppel Technology for Services & Machinery, Ruisbroek N.V.,
Seghers Keppel Technology for Services & Machinery, Zele N.V. and Keppel Energy Pte Ltd.
Yeo Chien Sheng Nelson, 53
Bachelor of Science in Mechanical Engineering (First class honors), University of Birmingham; Master of Engineering in Energy
Technology, Asian Institute of Technology, Thailand; Program for Management Development, Graduate School of Business
Administration, Harvard University.
Mr Yeo is the Managing Director (Marine) of Keppel Offshore & Marine Ltd and the Managing Director of Keppel Shipyard
Limited. He is the Chairman of Keppel Philippines Marine Inc., Subic Shipyard and Engineering, Inc., Keppel Batangas
Shipyard, Inc., Keppel Smit Towage Pte Ltd and Maju Maritime Pte Ltd. He is also a director of Keppel FELS Ltd, Arab Heavy
Industries P.J.S.C., KS Investments Pte Ltd, KSI Production Pte Ltd, Keppel Marine Agencies International, L.L.C., DPS Bristol
(Holdings) Ltd., Keppel Energy Pte Ltd and PV Keez Pte Ltd.
Mr Yeo serves as a member of the Workplace Safety and Health (Marine Industries) Committee, Ministry of Manpower; AIDS
Business Alliance, Ministry of Health; and is also a member of the American Bureau of Shipping; South East Asia Advisory/
Technical Committee in Lloyd’s Register and the Singapore Technical Committee in Nippon Kaiji Kyokai. He has 28 years of
working experience in the shipyard industry.
Wong Kok Seng, 59
BSc (Hons) Naval Architecture, University of Newcastle Upon Tyne; Graduate of Management Development Program, Harvard
Business School
Mr Wong is the Executive Director of Keppel FELS Limited (KFels). Prior to this appointment, he was the Executive Director
(Operations). His career in Keppel Fels began in 1977 and has held appointments as Structural Engineer, Project Engineer,
Project Manager, Quality Assurance Manager, Planning and Estimating Manager, and Assistant General Manager (Commercial).
Mr Wong also held appointments in Keppel Group as Project Director, Keppel Land, Executive Director, Keppel Singmarine and
Senior General Manager (Group Procurement), Keppel Offshore and Marine.
230
Keppel Corporation Limited
Report to Shareholders 2009
Hoe Eng Hock, 59
Bachelor of Science in Marine Engineering (First Class Honors, University of Newcastle-on-Tyne (Colombo Plan Scholarship);
Program for Management Development, Graduate School of Business Management, Harvard University; Finance for Senior
Executives, Asian Institute of Management, Manila, Philippines.
Mr Hoe Eng Hock started his professional career with Keppel Group upon his graduation. After serving various business units
under Keppel Group both at Singapore and the Philippines, Mr Hoe has taken up the position of Executive Director of Keppel
Singmarine Pte Ltd in the year 2005.
Mr Hoe is a fellow member of IMarest and the Institute of Chartered Engineers, UK. He is also a member of The American
Bureau of Shipping, South East Asia Advisory/Technical Committee of Lloyd’s Register and Bureau Veritas. In addition, he is a
Member of Singapore Accreditation Council as well as council member and Vice President of ASMI (Association of Singapore
Marine Industries)
Chow Yew Yuen, 54
Bachelor of Science degree in Mechanical Engineering with First Class Honours, University of Newcastle Upon Tyne.
Mr Chow was appointed President of The Americas for Keppel Offshore and Marine in 2008. He has the responsibility of
business management, covering the United States, Mexico and Brazil. Mr Chow is also the Chairman of KeppelAmfels Inc,
Deputy Chairman of KeppelFels Brazil SA and President of Keppel Offshore and Marine USA Inc. He has been with the
company for 29 years and was based in the United States for the last 17 years. His experience is quite diverse, covering areas
of technical, production, operations, commercial and management across different geographical and cultural boundaries.
Mr Chow also serves as director on the boards of Floatel International Ltd., BrasFels SA (Brazil), Deepwater Marine Technology
LLC, Floatec LLC, Keppel FELS Ltd., FSTP Pte. Ltd., AmFels Offshore Ltd., Joy Pride Investments (BVI), Kep Holdings Ltd.,
Kepital Management Ltd., Keppel FELS Invest (HK) Ltd., Keppel Marine Agencies, International LLC, KI Investments (HK) Ltd.
Mr Chow is also a member of The American Bureau of Shipping.
Ang Wee Gee, 48
Bachelor of Science (summa cum laude), University of Denver, USA; Master of Business Administration, Imperial College,
University of London
Mr Ang joined Keppel Land Group in 1991 and was appointed the Executive Director of Keppel Land International Limited
and Chief Executive Officer, International on 1 January 2008. Prior to these appointments, he was the Director of Regional
Investments, in charge of the group’s overseas businesses. He has previously held positions in business & project development
for Singapore and overseas markets, corporate planning & development in the group’s hospitality arm, and was the group’s
Country Head for Vietnam and had also concurrently headed Sedona Hotels International.
Mr Ang is currently the Chairman of Keppel Philippines Properties Inc and Keppel Thai Properties Public Co Ltd, property
companies listed on the Philippine Stock Exchange and The Stock Exchange of Thailand respectively. He is a director of
Sedona Hotels International Pte Ltd, the hotel management arm of Keppel Land Limited, and a number of other subsidiaries
and associated companies in the Keppel Land Group.
Directors and Key executives
231
Directors and Key Executives
Loh Chin Hua, 49
Bachelor Degree in Property Administration (Colombo Plan Scholarship), Auckland University; Presidential Key Executive MBA
Program, Pepperdine University; Chartered Financial Analyst (CFA); Registered Valuer, New Zealand Institute of Valuers.
Mr Loh is the Managing Director of Alpha Investment Partners Limited (“Alpha”), the real estate fund management arm of the
Keppel Land Group. He joined Alpha in September 2002, and has 24 years of experience in real estate investing and fund
management.
He has served as an Executive Chairman in Asia Real Estate Fund Management Ltd. He has over 20 years of experience in real
estate investing and funds management, spanning the U.S., Europe and Asia.
Prior to joining Alpha, Mr Loh was Managing Director at Prudential Investment Management Inc. (“Prudential”), and led its
Asian real estate fund management business. During his eight years at Prudential, Mr Loh was responsible for overseeing all
investment and asset management activities for the real estate funds managed out of Asia.
Mr Loh started his career in real estate investment with the Government of Singapore Investment Corporation (GIC). During the
10 years with GIC, he has held appointments in the San Francisco office and was head of the European real estate group in
London before returning to head the Asian real estate group.
Mr Loh serves as an independent director on the board of Pteris Global Limited (previously known as InterRoller Engineering
Limited).
Pang Hee Hon, 49
Bachelor of Science and Bachelor of Commerce, University of Birmingham; Masters in Public Administration, Harvard University.
BG (NS) Pang Hee Hon is the Chief Executive Officer of Keppel Telecommunications & Transportation Ltd, appointed with
effect from 4 January 2010. Previously the Deputy President (Operations) of ST Electronics (Info-Software Systems), BG (NS)
Pang oversaw business operations and international marketing. He was the Chairman of the eGov Chapter in the Singapore IT
Federation, which provides feedback on eGov policies and promotes internationalisation of local ICT companies.
BG (NS) Pang was also Head of Joint Logistics Department, MINDEF, where he directed the implementation of enterprise wide
IT solutions for supply chain management, electronic procurement and finance. He also held other principal command and staff
appointments within the Singapore Armed Forces, including Assistant Chief of the General Staff (Logistics) G-4 Army, Assistant
Chief of the General Staff (Plans) G-5 Army, Commander, Division Artillery Headquarters and Deputy Assistant Chief of the
General Staff (Ops Planning) G-3 Army.
232
Keppel Corporation Limited
Report to Shareholders 2009
Past Principal Directorships In The Last Five Years
Directors
Lee Boon Yang
Nil.
Lim Hock San
Civil Aviation Authority of Singapore; Singapore Changi Airport Enterprise Pte Ltd; Changi Airports International Pte. Ltd;
Air Transport Training College Pte Ltd; Advanced Material Technologies Pte Ltd; United Test and Assembly Center Ltd;
Interra Resources Limited; Ascendas Property Fund Trustee Private Limited.
Choo Chiau Beng
EDB Investments Pte Ltd; Keppel Norway AS; Maritime and Port Authority of Singapore; Singapore Maritime Foundation
Limited; Singapore Petroleum Company Limited; Singapore Refining Company; SMRT Corporation Limited; SMRT Buses Ltd;
SMRT Light Rail Pte Ltd; SMRT Road Holdings Ltd; SMRT Trains Ltd.
Sven Bang Ullring
Chairman of the Supervisory Boards of NORSK HYDRO ASA, Oslo and STOREBRAND ASA, Oslo.
Tony Chew Leong-Chee
Del Monte Pacific Ltd; Pontirep Investments Pte Ltd; Operational Development Pte Ltd; Juno Pacific Pte Ltd; ARC Corporate
Services Pte Ltd; Eurolife Limited; Del Monte Pacific Resources Ltd; Dewey Ltd.
Oon Kum Loon (Mrs)
Schmidt Electronics Group Ltd; Gas Supply Pte Ltd; PSA International Pte Ltd.
Tow Heng Tan
IE Singapore; Shangri-la Asia Limited.
Alvin Yeo
Civil Service College; Asian Civilsations Museum; SMOE Pte Ltd.
Teo Soon Hoe
Keppel Bank Philippines Inc; Centurion Bank Limited; Southern Bank Bhd; Keppel Shipyard Limited; Singapore Petroleum
Company Limited; Travelmore Pte Ltd.
Tong Chong Heong
Nil.
Directors and Key executives
233
Directors and Key Executives
Key Executives
Kevin Wong Kingcheung
Various subsidiaries and associated companies of Keppel Land Limited; Evergro Properties Limited; HDB Corporation Private
Limited; Singapore Hotel Association; Singapore International Chamber of Commerce
Ong Tiong Guan
Nil
Michael Chia Hock Chye
Nil
Yeo Chien Sheng Nelson
Keppel Singmarine Pte Ltd.; Alpine Engineering Services Pte Ltd.; Blastech Abrasives Pte Ltd., Keppel Tuas Pte Ltd.; Keppel
Marine Agencies Inc.
Wong Kok Seng
Keppel Shipyard Ltd, Keppel Nantong Shipyard Company Limited, Keppel Philippines Marine Inc.
Hoe Eng Hock
Keppel Singmarine Pte Ltd; Keppel Nantong Shipyard Co., Ltd; Keppel Smit Towage Pte Ltd; Maju Maritime Pte Ltd; Marine
Technology Development Pte Ltd; Prime Steelkit Pte Ltd; Keppel Cebu Shipyard Inc; Keppel Singmarine Philippines, Inc
Chow Yew Yuen
Nil
Ang Wee Gee
Various subsidiaries and associated companies of Keppel Land Limited
Loh Chin Hua
Nil
Pang Hee Hon
PM-B Pte Ltd; INFA Systems Limited; ST Electronics (e-Services) Pte Ltd
234
Keppel Corporation Limited
Report to Shareholders 2009
Major Properties
Held By
Completed properties
Effective
Group
Interest Location
Description and
Approximate
Land Area
Tenure
Usage
Ocean Properties Pte Ltd
40%
DL Properties Ltd
34%
K-REIT Asia
54%
Ocean Towers
Collyer Quay,
Singapore
Equity Plaza
Cecil Street,
Singapore
Prudential Tower
Cecil Street &
Church Street,
Singapore
Keppel Towers
Hoe Chiang Rd,
Singapore
GE Tower
Hoe Chiang Rd,
Singapore
Bugis Junction
Tower
Victoria Street,
Singapore
Land area: 3,552 sqm
27-storey office building
999 years leasehold Commercial office building with
rentable area of 21,129 sqm
Land area: 2,345 sqm
28-storey office building
99 years leasehold Commercial office building with
rentable area of 23,255 sqm
30-storey office building 99 years leasehold Commercial office building with
rentable area of 16,320 sqm
(73.4% of the strata area)
Land area: 7,760 sqm
27-storey office building
Freehold
Commercial office building with
rentable area of 32,585 sqm
Land area: 1,367 sqm
13-storey office building
Freehold
Commercial office building with
rentable area of 7,378 sqm
15-storey office building 99 years leasehold Commercial office building with
rentable area of 22,991 sqm
One Raffles Quay Pte Ltd
17%
One Raffles Quay
Singapore
Land area: 11,367 sqm
Two office towers
99 years leasehold Commercial office building with
rentable area of 124,058 sqm
HarbourFront One Pte Ltd
65%
HarbourFront Two Pte Ltd
33%
Keppel Bay Pte Ltd
86%
Keppel Bay Tower Land area: 17,267 sqm
HarbourFront
18-storey office building
Avenue,
Singapore
HarbourFront
Land area: 10,923 sqm
Tower One and Two 18-storey and 13-storey
HarbourFront Place, office buildings
Singapore
Caribbean
at Keppel Bay
Singapore
141 out of 168 units of
corporate residences
have been sold
99 years leasehold Commercial office building with
rentable area of 36,035 sqm
99 years leasehold Commercial office building with
rentable area of 48,795 sqm
99 years leasehold
A 969-unit luxurious waterfront
condominium development
Tianjin Merryfield Property
Development Co Ltd
52%
The Arcadia
Tianjin,
China
168 villas
70 years leasehold
A 168-unit villa development
complete with private clubhouse
facilities
Major Properties
235
Major Properties
Held By
Effective
Group
Interest Location
Description and
Approximate
Land Area
Tenure
Usage
PT Straits-CM Village
20%
Club Med Ria Bintan Land area: 200,000 sqm 30 years lease with A 302-room beachfront hotel
Bintan,
Indonesia
option for another
50 years
PT Kepland Investama
52%
Keppel Land Watco I Co Ltd 35%
Properties under development
Ocean Properties Pte Ltd
40%
BFC Development Pte Ltd
17%
Central Boulevard
Development Pte Ltd
17%
Keppel Bay Pte Ltd
86%
Barclays House
Jakarta,
Indonesia
Saigon Centre
(Phase 1 Tower)
Ho Chi Minh City,
Vietnam
Ocean Financial
Centre
Collyer Quay,
Singapore
Marina Bay
Financial Centre
(Phase 1)/Marina
Bay Residences
Marina Boulevard/
Central Boulevard,
Singapore
Marina Bay
Financial Centre
(Phase 2)/Marina
Bay Suites
Marina Boulevard/
Central Boulevard,
Singapore
Reflections
at Keppel Bay
Singapore
Keppel Bay
Plot 3 and 6,
Singapore
Land area: 10,444 sqm
20 years lease with A prime office development
option for another
20 years
with rentable area of 38,093 sqm
Land area: 2,730 sqm
25-storey office, retail
cum serviced apartments
50 years lease
Commercial building with
rentable area of 10,443 sqm
office, 3,663 sqm retail,
305 sqm post office and
89 units of serviced apartments
Land area: 2,557 sqm
999 years leasehold Commercial office building with
Land area: 20,505 sqm
99 years leasehold
Land area: 15,010 sqm
99 years leasehold
rentable area of 78,587 sqm
*(2011)
An integrated development
comprising office, retail and
428 condominium units
*(2010)
An integrated development
comprising office, retail and
221 condominium units
*(2012)
Land area: 83,591 sqm
99 years leasehold
A 1,129-unit waterfront
condominium development
*(2013)
Land area: 82,619 sqm
99 years leasehold Waterfront condominium
development
Shanghai Pasir Panjang
Land Co Ltd
51%
Eight Park Avenue Land area: 33,432 sqm
Shanghai,
China
70 years lease
A 946-unit residential
apartment development (Plot B)
*(2012/2013)
236
Keppel Corporation Limited
Report to Shareholders 2009
Held By
Effective
Group
Interest Location
Description and
Approximate
Land Area
Tenure
Usage
Shanghai Hongda Property 52%
Development Co Ltd
21%
Spring City Golf & Lake
Resort Co (owned by
Kingsdale Development
Pte Ltd)
CityOne Development
(Wuxi) Co
26%
Residential
development
Shanghai,
China
Spring City Golf
& Lake Resort
Kunming,
China
Central Park City
Wuxi,
China
Keppel Township
Development (Shenyang)
Co Ltd
52%
Residential
development
Shenyang,
China
PT Mitra Sindo Sukses/
PT Mitra Sindo Makmur
27%
Estella JV Co Ltd
29%
Jakarta Garden
City
Jakarta,
Indonesia
The Estella
Ho Chi Minh City,
Vietnam
Land area: 264,090 sqm 70 years lease
(residential)
40 years lease
(commercial)
Land area: 2,157,361 sqm 70 years lease
Land area: 352,534 sqm 70 years lease
(residential)
40 years lease
(commercial)
Land area: 348,312 sqm 50 years lease
(residential)
40 years lease
(commercial)
A 2,667-unit residential
development with integrated
facilities
*(2015)
Integrated resort comprising
golf courses, resort homes and
resort facilities
*(2010/2017)
A 5,000-unit residential
township development with
integrated facilities
*(2012 Phase 2)
A 4,700-unit residential
township with integrated
facilities in Shenbei New District
in Shenyang
*(2013 Phase 1)
Land area: 2,700,000 sqm 30 years lease with A 7,000-unit residential
option for another
20 years
township
*(2011 Phase 1 &2013 Phase 2)
Land area: 47,906 sqm
50 years lease
Land area: 3,667,127 sqm 50 years lease
Dong Nai
Waterfront City
Dong Nai Province,
Vietnam
Dong Nai Waterfront
City LLC (owned by
Portsville Pte Ltd)
26%
Industrial properties
Keppel FELS Limited
100%
Jurong, Pioneer
Cresent and
Tuas South Yard,
Singapore
Land area: 737,525 sqm 24 - 30 years
buildings, workshops,
building berths and
wharves
leasehold
Oil rigs, offshore and marine
construction, repair, fabrication,
assembly and storage
Keppel Shipyard Limited
100% Benoi and
Pioneer Yard,
Singapore
Land area: 775,527 sqm 30 years leasehold
buildings, workshops,
drydocks and wharves
Shiprepairing, shipbuilding
and marine construction
* Expected year of completion
Major Properties
237
A 1,393-unit high-rise
residential development with
supporting commercial space
in An Phu Ward in prime
District 2
*(2012 Phase 1)
A 10,434-unit residential
township
*(2013 Phase 1)
Group Five-Year Performance
selected Profit & Loss Account Data
($ million)
Revenue
Operating profit
Profit before tax & exceptional items
Attributable profit
Before exceptional items
After exceptional items
selected Balance sheet Data
($ million)
Fixed assets & properties
Investments
Stocks, debtors & cash
Intangibles
Total assets
Less:
Creditors
Borrowings
Other liabilities
Net assets
Share capital & reserves
Minority interests
Capital employed
Per share
Earnings (cents) (Note 1):
Before tax & exceptional items
Attributable before exceptional items
Attributable after exceptional items
Total distribution (cents)
Net assets ($)
Net tangible assets ($)
Financial Ratios
Return on shareholders’ funds (%) (Note 2):
Profit before tax and exceptional items
Attributable profit before exceptional items
Dividend cover (times)
Net cash / (gearing) (times)
employees
Number
Wages & salaries ($ million)
2005
2006
2007
2008
2009
5,688
467
826
564
564
3,907
2,664
5,874
145
12,590
3,750
3,731
174
4,935
3,646
1,289
4,935
43.9
36.1
36.1
23.0
2.33
2.23
20.0
16.4
3.9
(0.47)
7,601
804
1,139
751
751
4,187
3,113
6,466
135
13,901
5,188
2,957
158
5,598
4,205
1,393
5,598
61.5
47.7
47.7
28.0
2.67
2.58
24.7
19.1
4.2
(0.24)
10,431
1,051
1,556
1,026
1,131
4,732
4,024
6,973
68
15,797
6,139
2,234
389
7,035
5,205
1,830
7,035
81.4
64.9
71.5
64.0
3.28
3.24
27.4
21.8
1.0
(0.09)
11,805
1,238
1,597
1,097
1,098
4,977
3,633
8,059
78
16,747
7,647
1,970
381
6,749
4,596
2,153
6,749
84.2
69.0
69.0
35.0
2.89
2.84
27.3
22.4
2.0
0.04
12,247
1,505
1,856
1,265
1,625
5,208
3,332
8,677
90
17,307
6,423
1,759
412
8,713
5,985
2,728
8,713
98.9
79.4
102.0
61.0
3.75
3.70
29.8
23.9
1.3
0.14
23,625
803
29,185
931
31,914
1,132
35,621
1,329
31,775
1,372
Notes:
1. Earnings per share are calculated based on the Group profit by reference to the weighted average number of shares in issue during the year.
2.
3. Comparative figures have been adjusted for sub-division of shares in 2007.
In calculating return on shareholders’ funds, average shareholders’ funds has been used.
238
Keppel Corporation Limited
Report to Shareholders 2009
2009
Group revenue rose by $442 million or 4% to $12,247 million, the highest achieved by the Group in a year. Higher revenue
from Infrastructure and Property Divisions were more than sufficient to offset the fall in revenue from Offshore & Marine
Division. Revenue from Offshore & Marine Division of $8,273 million decreased by $296 million or 3% because of lower value
of new contracts secured. During the year, the Division completed and delivered 14 rigs, 14 specialised vessels and six major
conversions/upgrades. Revenue from Infrastructure Division increased by 9% or $195 million. Higher revenue from Engineering,
Procurement and Construction (EPC) contracts undertaken by Keppel Integrated Engineering was partially offset by lower revenue
from Keppel Energy because of lower energy prices. Revenue from Property Division of $1,508 million was 59% above that of
the previous year. This was mainly due to higher sale of residential homes in Singapore, China, Vietnam, Indonesia and India.
Progressive revenue recognition from Reflections at Keppel Bay and other projects in Singapore and overseas were also higher.
Rental income from investment properties also increased due to higher rental rates.
At the pre-tax profit level, Group earnings of $1,856 million were 16% higher than FY 2008. Earnings from Offshore & Marine
Division of $1,081 million were 15% above the previous year. Higher operating margins achieved in the year contributed to the
increased profit. Infrastructure Division continued its steady build-up and more than doubled its earnings from $70 million to $150
million. Profit from both Keppel Energy and Keppel Integrated Engineering were higher. Property Division posted profit of $476
million, 30% higher. Earnings have increased because of higher revenue recognition from the sale of residential properties and
share of profit of associated companies developing Marina Bay Residences in Singapore and The Botanica in Chengdu, China.
Profit from Investments was lower following the disposal of SPC in June 2009.
2008
Group revenue of $11,805 million was $1,374 million or 13% higher than that of the previous year. Revenue from Offshore &
Marine Division of $8,569 million was $1,311 million or 18% higher and accounted for 72% of Group revenue. The Division
completed and delivered 3 semisubmersibles and 13 jackups on schedule for its customers. Revenue from shiprepairs,
conversions and shipbuilding were also higher. Revenue from Infrastructure Division increased by 75% to $2,232 million.
Revenue generated from the cogen power plant in Singapore and environmental engineering contracts contributed to the
significant increase in revenue. Revenue from Property Division of $950 million was $885 million or 48% lower. The decrease was
due to lower sales of residential properties in the current year. Rental income from investment properties increased due to higher
rental rates and occupancy.
Group pre-tax profit of $1,597 million was 3% more than the previous year. Higher contribution from Offshore & Marine and
Infrastructure were partially offset by lower profits from Property and Investments. Earnings from Offshore & Marine Division of
$943 million were 35% above the previous year. Infrastructure Division continued to make encouraging progress, contributing
$70 million to Group pre-tax profit. Property Division posted profit of $365 million, $106 million or 23% lower than the previous
year. The decrease was due to the lower sales and share of profit from associated companies. Profit from Investments was lower
because of lower profit from SPC.
The income tax expenses of the Group included a write-back of $15 million for tax provision in respect of prior years. After
minority share of profit, the attributable profit before exceptional items was $1,097 million.
Revenue ($ billion)
Pre-Tax Profit ($ million)
PATMI ($ million)
15.0
7.5
0
2,000
1,000
0
1,500
750
0
5.7
7.6
10.4
11.8
12.2
826
1,139
1,556
1,597 1,856
564
751
1,026
1,097 1,265
2005
2006
2007
2008 2009
2005
2006
2007
2008 2009
2005
2006
2007
2008 2009
Group Five-Year Performance
239
Group Five-Year Performance
2007
Group revenue of $10,431 million was $2,830 million or 37% higher than that of the previous year. Revenue from Offshore &
Marine Division at $7,258 million was $1,503 million or 26% higher and accounted for 70% of Group revenue. Revenue from
shipconversion and shiprepair was strong. Revenue from Infrastructure Division more than doubled to $1,277 million as a result of
new income stream from the cogen power plant, NEWater plant, power barges and the contract for the solid waste management
complex in Qatar. Property Division achieved revenue of $1,835 million, $680 million or 59% higher. The higher revenue was due
to sales of Reflections at Keppel Bay, Sixth Avenue Residences and Park Infinia @ Wee Nam in Singapore, Villa Riviera in Shanghai
and Elita Promenade in Bangalore. Rental income from investment properties was higher as a result of the tight supply of prime
office buildings in the Singapore Central Business District.
Group profit before tax was $1,556 million or 37% more than the previous year’s. Earnings from Offshore & Marine Division at
$700 million were 12% above the previous year. Production activities continued to increase at the shipyards, however operating
margins were lower because of lower margins from its Brazilian operations. Infrastructure Division returned firmly to profitability
contributing $51 million or 3% of Group pre-tax profit. This was mainly derived from new projects and the initial contribution from
the contract in Qatar. The turnaround was achieved despite higher costs incurred in completing some old contracts and the
higher gas cost to operate the cogen plant. Earnings from Property Division more than doubled to $471 million due to the higher
revenue and operating margins from trading projects, and share of profit of Marina Bay Residences. In addition, cost provisions
no longer required for Singapore trading projects were released in the year. The share of results of associated companies from
Investments was significantly higher due mainly to increased contribution from SPC, which also reported record profits.
Group taxation expenses were higher in the year as a result of write-back of deferred tax amounting to $18 million from the
reduction in the Singapore corporate tax rate from 20% to 18%. After taking into account the higher taxation charge and minority
share of profit, the attributable profit before exceptional items was $1,026 million.
2006
Group revenue of $7,601 million was $1,913 million or 34% higher than that of the previous year. Revenue from Offshore &
Marine of $5,755 million was $1,643 million or 40% higher and accounted for 76% of Group revenue. Twenty six newbuilds and
conversions were completed and delivered in the year, on time or ahead of time and within budget. Revenue from ship and rig
repair was also strong. Keppel T&T reported lower revenue as no major new network engineering contract was secured. Revenue
from electricity trading also declined as non-profitable fixed price contracts were not renewed. Property achieved revenue of
$1,155 million, $308 million or 36% higher. The increased revenue was underpinned by higher sales and prices of the Group’s
new and existing trading projects both in Singapore and regionally. Rental income from investment properties was higher as a
result of the tight supply of prime office buildings in the Singapore Central Business District.
Shareholders’ Funds ($ billion)
Capital Employed ($ billion)
Market Capitalisation ($ billion)
6.0
3.0
0
10.0
5.0
0
25.0
12.5
0
3.6
4.2
5.2
4.6
6.0
4.9
5.6
7.0
6.7
8.7
8.6
13.9
20.6
6.9
13.1
2005
2006
2007
2008 2009
2005
2006
2007
2008 2009
2005
2006
2007
2008 2009
240
Keppel Corporation Limited
Report to Shareholders 2009
Group profit before tax exceeded $1 billion for the first time to $1,139 million, 38% higher than the previous year. Offshore &
Marine, which had an exceptionally busy year contributed significantly to the Group earnings growth. The division’s profit before
tax of $624 million was $273 million or 78% higher. Revenue and operating margins improved with higher prices and efficient
project execution. Infrastructure returned to profitability in the fourth quarter with the commercial operation of the power barges in
Ecuador. However, the quarter’s profit was not sufficient to reverse the losses in the first nine months. Property posted earnings
of $233 million, 5% above the previous year due to the higher revenue from trading projects and profit from sale of a piece of
land in Tianjin and an equity interest in a property project. Earnings from Investments were higher with gains from the sale of
investments and much better contributions from k1 Ventures which benefited from the divestment of The Gas Company, LLC.
These were more than sufficient to offset the lower contributions from SPC, which was affected by lower margins in the second
half year.
Group taxation expenses were higher in the year as a result of higher profits from overseas operations. After taking into account
the higher taxation charge and minority share of profit, the attributable profit to shareholders was $751 million.
2005
Group revenue of $5,688 million for the year was $1,725 million or 44% higher than that of the previous year. Revenue from
Offshore & Marine of $4,112 million was 69% higher and contributed 72% of Group revenue. The net orderbook carried over
from the previous year and the record new orders secured in the year contributed to the increased revenue of Offshore & Marine.
Revenue from Property of $848 million was $137 million or 19% higher than the previous year. The increased revenue was due to
the strong performance of the Group’s trading projects both in Singapore and overseas. The increased revenue from Offshore &
Marine and Property was partially offset by lower revenue from Infrastructure following the cessation of the power barges contract
in Brazil at the end of the previous year.
Group pre-tax profit of $826 million was 28% higher than the previous year with increased contributions from Offshore & Marine,
Property and SPC. Offshore & Marine benefited from profit recognition of completed jobs arising from its large orderbook. Losses
were incurred by the Infrastructure because of the redeployment cost of the power barges and losses in electricity trading. KIE
returned to profitability after the restructuring efforts from the previous year. Keppel Land’s earnings rose by 31% from the healthy
sales of its residential developments. However, this was partially offset by lower earnings from Caribbean at Keppel Bay. The
continuing tight refining capacity and strong growth in demand for refined products led to significantly higher earnings at SPC.
Taking into consideration taxation and minority share of profits, the resultant profit attributable to shareholders of $564 million was
21% higher than the previous year. Offshore & Marine remains the largest contributor to attributable earnings with 42%, followed
by SPC with 33%, Property with 21% and the rest from Keppel T&T and Investments net of the losses of Infrastructure.
Group Five-Year Performance
241
Group Value-Added Statements
($ million)
Value added from:
Revenue earned
Less: purchases of materials and services
Gross value added from operation
In addition:
Interest and investment income
Share of associated companies’ profits
Exceptional items
Distribution of Group’s value added:
To employees in wages, salaries and benefits
To government in taxation
To providers of capital on:
Interest on borrowings
Dividends to our partners in subsidiaries
Dividends to our shareholders
2005
2006
2007
2008
2009
5,688
(4,287)
1,401
7,601
(5,738)
1,863
10,431
(8,123)
2,308
11,805
(9,099)
2,706
12,247
(9,196)
3,051
60
321
-
1,782
803
153
22
36
131
189
83
315
-
2,261
931
258
62
73
157
292
91
477
565
3,441
1,132
469
63
46
242
351
83
354
13
3,156
1,329
288
79
103
1,098
1,280
79
322
322
3,774
1,372
348
50
87
574
711
total Distribution
1,145
1,481
1,952
2,897
2,431
Balance retained in the business:
Depreciation & amortisation
Minority share of profits in subsidiaries
Retained profit for the year
132
73
432
637
127
60
593
780
126
474
889
1,489
139
120
-
259
174
118
1,051
1,343
1,782
2,261
3,441
3,156
3,774
Number of employees
23,625
29,185
31,914
35,621
31,775
Productivity data:
Gross value added per employee ($’000)
Gross value added per dollar employment cost ($)
Gross value added per dollar sales ($)
59
1.74
0.25
64
2.00
0.25
72
2.04
0.22
76
2.04
0.23
($ million)
3000
2000
1000
Depreciation & Retained Profit
Interest Expenses & Dividends
Taxation
Wages, Salaries & Benefits
0
3,441
1,489
351
469
1,132
2,261
780
292
258
931
1,782
637
189
153
803
96
2.22
0.25
3,774
1,343
711
348
3,156
259
1,280
288
1,329
1,372
242
Keppel Corporation Limited
Report to Shareholders 2009
2005
2006
2007
2008
2009
Share Performance
Turnover (million)
Share Prices ($)
400
300
200
180
160
140
120
100
80
60
40
20
0
40
30
20
18
16
14
12
10
8
6
4
2
0
2005
Turnover
2006
2007
2008
2009
High and Low Prices
2005
2006
2007
2008
2009
Share Price ($)
Last transacted (Note 3)
High
Low
Volume weighted average (Note 2)
Per Share
Earnings (cents) (Note 1)
Total distribution (cents)
Distribution yield (%) (Note 2)
Net price earnings ratio (Note 2)
At Year End
Share price ($)
Distribution yield (%) (Note 3)
Net price earnings ratio (Note 3)
Net price to book ratio (Note 3)
Net assets backing ($)
5.50
6.60
4.25
5.69
36.1
23.0
4.1
15.8
5.50
4.2
15.3
2.5
2.23
8.80
9.25
5.55
7.22
47.7
28.0
3.9
15.1
8.80
3.2
18.4
3.4
2.58
13.00
15.30
8.30
11.56
64.9
64.0
5.5
17.8
13.00
4.9
20.0
4.0
3.24
4.33
12.84
3.35
8.59
69.0
35.0
4.1
12.5
4.33
8.1
6.3
1.5
2.84
Notes:
1. Earnings per share are calculated based on the Group PATMI by reference to the weighted average number of shares in issue during the year.
2. Volume weighted average share price is used in calculating distribution yield and net price earnings ratio.
3. Last transacted share price is used in calculating distribution yield, net price earnings ratio and net price to book ratio.
4. Comparative figures have been adjusted for sub-division of shares in 2007.
share Performance
8.23
8.70
3.97
6.40
79.4
61.0
9.5
8.1
8.23
7.4
10.4
2.2
3.70
243
Shareholding Statistics
As at 26 February 2010
Total number of issued Shares
Issued and Fully Paid-up Capital : $840,644,543.19
Class of Shares
: 1,596,019,680 Shares
: Ordinary Shares with equal voting rights
size of shareholdings
1 - 999
1,000 - 10,000
10,001 - 1,000,000
1,000,001 & Above
Total
twenty Largest shareholders
Citibank Nominees Singapore Pte Ltd
Temasek Holdings (Pte) Ltd
DBS Nominees Pte Ltd
DBSN Services Pte Ltd
HSBC (Singapore) Nominees Pte Ltd
United Overseas Bank Nominees Pte Ltd
Raffles Nominees Pte Ltd
DB Nominees (S) Pte Ltd
BNP Paribas Securities Services S’pore Pte Ltd
Shanwood Development Pte Ltd
Merrill Lynch (Singapore) Pte Ltd
Morgan Stanley Asia (Singapore) Pte Ltd
OCBC Nominees Singapore Pte Ltd
Teo Soon Hoe
Lim Chee Onn
Royal Bank of Canada (Asia) Ltd
Phillip Securities Pte Ltd
UOB Kay Hian Pte Ltd
TM Asia Life Singapore Ltd - PAR Fund
OCBC Securities Private Ltd
Total
number of
shareholders
479
28,987
3,270
32
%
1.46
88.46
9.98
0.10
number of
shares
214,305
86,880,783
111,996,529
1,396,928,063
%
0.01
5.44
7.02
87.53
32,768
100.00
1,596,019,680
100.00
number of
shares
388,657,336
337,643,902
215,295,454
140,031,186
139,659,763
51,094,385
44,923,421
8,195,671
7,391,954
6,400,000
5,362,804
4,656,368
4,630,451
4,088,332(i)
3,660,916
3,459,184
3,210,602
3,038,500
3,000,000
2,853,658
1,377,253,887
%
24.35
21.16
13.49
8.77
8.75
3.20
2.81
0.51
0.46
0.40
0.34
0.29
0.29
0.26
0.23
0.22
0.20
0.19
0.19
0.18
86.29
Note:
i)
Includes 40,000 shares held by OCBC Nominees Singapore Pte Ltd on his behalf.
substantial shareholder
Direct Interest
Deemed Interest
total Interest
no. of shares
%
no. of shares
%
no. of shares
%
Temasek Holdings (Pte) Ltd
337,643,902
21.16
7,443,021(i)
0.47
345,086,923
21.62
Note(i):
By operation of Section 7 of the Companies Act, Temasek Holdings (Pte) Ltd is deemed to be interested in an aggregate of 7,443,021 shares in which its subsidiaries
and associated companies have an aggregate interest.
Public shareholders
Based on the information available to the Company as at 26 February 2010, approximately 77% of the issued shares of the
Company is held by the public and therefore, pursuant to Rules 1207 and 723 of the Listing Manual of the Singapore Exchange
Securities Trading Limited, it is confirmed that at least 10% of the ordinary shares of the Company is at all times held by the
public.
treasury shares
As at 26 February 2010, there are no treasury shares held.
244
Keppel Corporation Limited
Report to Shareholders 2009
Notice of Annual General Meeting and Closure of Books
eppel
Corporation
Keppel Corporation Limited
Co Reg No. 196800351N
(Incorporated in the Republic of Singapore)
notICe Is HeReBY GIVen that the 42nd Annual General Meeting of the Company will be held at Four Seasons Hotel,
Four Seasons Ballroom (Level 2), 190 Orchard Boulevard, Singapore 248646 on Friday, 23 April 2010 at 4.00 p.m. to transact
the following business:
Ordinary Business
1.
2.
3.
To receive and adopt the Directors’ Report and Audited Financial Statements for the year
ended 31 December 2009.
To declare a final tax-exempt (one-tier) dividend of 23 cents per share for the year ended
31 December 2009 (2008: final dividend of 21 cents per share tax exempt one-tier).
To re-elect the following directors, each of whom will retire pursuant to Article 81B of the
Company’s Articles of Association and who, being eligible, offer themselves for re-election
pursuant to Article 81C (see Note 2):
(i) Mr Lim Hock San
(ii) Mrs Oon Kum Loon
4.
To re-elect the following directors, each of whom, being appointed by the board of directors after
the last annual general meeting, will retire in accordance with Article 81A(1) of the Company’s
Articles of Association and who, being eligible, offer themselves for re-election (see Note 2):
(i)
Dr Lee Boon Yang
(ii) Mr Alvin Yeo Khirn Hai
(iii) Mr Tong Chong Heong
5.
To re-elect Mr Sven Bang Ullring who, being over the age of 70 years, will cease to be a director
at the conclusion of this annual general meeting, and who, being eligible, offers himself for
re-election pursuant to Section 153(6) of the Companies Act (Cap. 50) to hold office until the
conclusion of the next annual general meeting of the Company (see Note 2).
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Resolution 7
Resolution 8
6.
To approve the ordinary remuneration of the non-executive directors of the Company for the
financial year ended 31 December 2009, comprising the following:
Resolution 9
(1)
the payment of directors’ fees of an aggregate amount of $1,144,095 in cash (2008: $570,000)
(see Note 3.1); and
(2)
(a)
the award of an aggregate number of 30,000 existing ordinary shares in the capital
of the Company (the “Remuneration Shares”) to Dr Lee Boon Yang, Mr Lim Chee Onn,
Mr Lim Hock San, Mr Sven Bang Ullring, Mr Tony Chew Leong-Chee, Mrs Oon Kum Loon,
Mr Tow Heng Tan, Mr Alvin Yeo Khirn Hai, Tsao Yuan Mrs Lee Soo Ann and
Mr Yeo Wee Kiong, as payment in part of their respective remuneration for the
financial year ended 31 December 2009 as follows:
(i)
(ii)
5,500 Remuneration Shares to Dr Lee Boon Yang1;
5,000 Remuneration Shares to Mr Lim Chee Onn2;
1
Dr Lee Boon Yang was appointed non-executive director from 1 May 2009 to 30 June 2009, and assumed the role of non-executive Chairman
with effect from 1 July 2009.
2 Mr Lim Chee Onn served as non-executive Chairman from 1 January 2009 to 30 June 2009.
notice of Annual General Meeting and Closure of Books
245
Notice of Annual General Meeting and Closure of Books
(iii)
3,000 Remuneration Shares to Mr Lim Hock San;
(iv) 3,000 Remuneration Shares to Mr Sven Bang Ullring;
(v)
3,000 Remuneration Shares to Mr Tony Chew Leong-Chee;
(vi) 3,000 Remuneration Shares to Mrs Oon Kum Loon;
(vii) 3,000 Remuneration Shares to Mr Tow Heng Tan;
(viii) 1,750 Remuneration Shares to Mr Alvin Yeo Khirn Hai3;
(ix) 1,000 Remuneration Shares to Tsao Yuan Mrs Lee Soo Ann4; and
(x)
1,750 Remuneration Shares to Mr Yeo Wee Kiong5;
(b)
the directors of the Company and/or any of them be and are hereby authorised to instruct
a third party agency to purchase from the market 30,000 existing shares at such price
as the directors of the Company may deem fit and deliver the Remuneration Shares
to each non-executive director in the manner as set out in (2)(a) above; and
(c)
any director of the Company or the Company Secretary be authorised to do all things
necessary or desirable to give effect to the above (see Note 3.2).
7.
8.
To approve payment of the sum of $250,000 as special remuneration to Mr Lim Chee Onn, for the
period 1 January 2009 to 30 June 2009 (see Note 4).
Resolution 10
To approve the award of an additional 4,500 Remuneration Shares to Dr Lee Boon Yang as
payment in part of his director’s remuneration for the financial year ended 31 December 2009
(see Note 5).
Resolution 11
9.
To re-appoint the Auditors and authorise the directors of the Company to fix their remuneration.
Resolution 12
Special Business
To consider and, if thought fit, approve the following Ordinary Resolutions, with or without any modifications:
10. That pursuant to Section 161 of the Companies Act, Cap. 50 of Singapore (the “Companies Act”)
Resolution 13
and Article 48A of the Company’s Articles of Association, authority be and is hereby given to the
directors of the Company to:
(1)
(a)
issue shares in the capital of the Company (“Shares”), whether by way of rights, bonus
or otherwise, and including any capitalisation pursuant to Article 124 of the Company’s
Articles of Association of any sum for the time being standing to the credit of any of the
Company’s reserve accounts or any sum standing to the credit of the profit and loss
account or otherwise available for distribution; and/or
(b) make or grant offers, agreements or options that might or would require Shares to be
issued (including but not limited to the creation and issue of (as well as adjustments to)
warrants, debentures or other instruments convertible into Shares) (collectively
“Instruments”),
at any time and upon such terms and conditions and for such purposes and to such persons
as the directors may in their absolute discretion deem fit; and
(2)
(notwithstanding that the authority so conferred by this Resolution may have ceased to be in
force) issue Shares in pursuance of any Instrument made or granted by the directors of the
Company while the authority was in force;
3 Mr Alvin Yeo Khirn Hai was appointed as non-executive director with effect from 1 June 2009.
4
5 Mr Yeo Wee Kiong resigned from the Board with effect from 1 August 2009.
Tsao Yuan Mrs Lee Soo Ann resigned from the Board with effect from 24 April 2009.
246
Keppel Corporation Limited
Report to Shareholders 2009
provided that:
(i)
the aggregate number of Shares to be issued pursuant to this Resolution (including Shares
to be issued in pursuance of Instruments made or granted pursuant to this Resolution and
any adjustment effected under any relevant Instrument):
(a)
(b)
(until 31 December 2010 or such later date as may be determined by Singapore
Exchange Securities Trading Limited (“SGX-ST”)) by way of renounceable rights issues
on a pro rata basis to shareholders of the Company (“Renounceable Rights Issues”)
shall not exceed 100 per cent. of the total number of issued Shares (excluding treasury
Shares) (as calculated in accordance with sub-paragraph (iii) below); and
otherwise than by way of Renounceable Rights Issues (“Other Share Issues”) shall not
exceed 50 per cent. of the total number of issued Shares (excluding treasury Shares)
(as calculated in accordance with sub-paragraph (iii) below), of which the aggregate
number of Shares to be issued other than on a pro rata basis to shareholders of the
Company shall not exceed 5 per cent. of the total number of issued Shares (excluding
treasury Shares) (as calculated in accordance with sub-paragraph (iii) below);
the Shares to be issued under the Renounceable Rights Issues and Other Share Issues shall
not, in aggregate, exceed 100 per cent. of the total number of issued Shares (excluding
treasury Shares) (as calculated in accordance with sub-paragraph (iii) below);
(subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose
of determining the aggregate number of Shares that may be issued under sub-paragraphs (i)(a)
and (i)(b) above, the percentage of issued Shares shall be calculated based on the total
number of issued Shares (excluding treasury Shares) at the time this Resolution is passed, after
adjusting for:
(a)
new Shares arising from the conversion or exercise of convertible securities or share
options or vesting of share awards which are outstanding or subsisting as at the time
this Resolution is passed; and
(b)
any subsequent bonus issue, consolidation or sub-division of Shares;
in exercising the authority conferred by this Resolution, the Company shall comply with the
provisions of the Companies Act, the Listing Manual of the SGX-ST for the time being in force
(unless such compliance has been waived by the SGX-ST) and the Articles of Association for
the time being of the Company; and
(unless revoked or varied by the Company in general meeting) the authority conferred by this
Resolution shall continue in force until the conclusion of the next annual general meeting
of the Company or the date by which the next annual general meeting is required by law to be
held, whichever is the earlier (see Note 6).
(ii)
(iii)
(iv)
(v)
11. That:
Resolution 14
(1)
for the purposes of the Companies Act, the exercise by the directors of the Company of all
the powers of the Company to purchase or otherwise acquire Shares not exceeding in
aggregate the Maximum Limit (as hereafter defined), at such price(s) as may be determined
by the directors of the Company from time to time up to the Maximum Price (as hereafter
defined), whether by way of:
(a) market purchase(s) (each a “Market Purchase”) on the SGX-ST; and/or
notice of Annual General Meeting and Closure of Books
247
Notice of Annual General Meeting and Closure of Books
(b)
off-market purchase(s) (each an “Off-Market Purchase”) in accordance with any equal
access scheme(s) as may be determined or formulated by the directors of the Company
as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the
Companies Act;
and otherwise in accordance with all other laws and regulations, including but not
limited to, the provisions of the Companies Act and listing rules of the SGX-ST as may
for the time being be applicable, be and is hereby authorised and approved generally
and unconditionally (the “Share Purchase Mandate”);
(2)
unless varied or revoked by the members of the Company in a general meeting, the authority
conferred on the directors of the Company pursuant to the Share Purchase Mandate may be
exercised by the directors at any time and from time to time during the period commencing
from the date of the passing of this Resolution and expiring on the earlier of:
(a)
the date on which the next annual general meeting of the Company is held or is
required by law to be held; or
(b)
the date on which the purchases or acquisitions of Shares by the Company pursuant
to the Share Purchase Mandate are carried out to the full extent mandated;
(3)
in this Resolution:
“Maximum Limit” means that number of issued Shares representing ten 10 per cent. of the
total number of issued Shares as at the date of the last annual general meeting or at the date
of the passing of this Resolution whichever is higher unless the Company has effected a
reduction of the share capital of the Company in accordance with the applicable provisions
of the Companies Act, at any time during the Relevant Period, in which event the total
number of issued Shares shall be taken to be the total number of issued Shares as altered
(excluding any treasury Shares that may be held by the Company from time to time);
“Relevant Period” means the period commencing from the date on which the last annual
general meeting was held and expiring on the date the next annual general meeting is held
or is required by law to be held, whichever is the earlier, after the date of this Resolution; and
“Maximum Price”, in relation to a Share to be purchased or acquired, means the purchase
price (excluding brokerage, stamp duties, commission, applicable goods and services tax
and other related expenses) which is:
(a)
in the case of a Market Purchase, 105 per cent. of the Average Closing Price; and
(b)
in the case of an Off-Market Purchase pursuant to an equal access scheme,
120 per cent. of the Average Closing Price,
where:
“Average Closing Price” means the average of the closing market prices of a Share over the
last five (5) Market Days (a “Market Day” being a day on which the SGX-ST is open for trading
in securities), on which transactions in the Shares were recorded, in the case of Market
Purchases, before the day on which the purchase or acquisition of Shares was made and
deemed to be adjusted for any corporate action that occurs after the relevant five (5) Market
Days, or in the case of Off-Market Purchases, before the date on which the Company makes
an announcement of the offer; and
248
Keppel Corporation Limited
Report to Shareholders 2009
(4)
the directors of the Company and/or any of them be and are hereby authorised to complete
and do all such acts and things (including without limitation, executing such documents as
may be required) as they and/or he may consider necessary, expedient, incidental or in the
interests of the Company to give effect to the transactions contemplated and/or authorised
by this Resolution (see Note 7).
12. That:
Resolution 15
(1)
(2)
(3)
(4)
approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual of the
SGX-ST, for the Company, its subsidiaries and target associated companies (as defined in
Appendix 2 to this Notice of Annual General Meeting (“Appendix 2”)), or any of them, to enter
into any of the transactions falling within the types of Interested Person Transactions
described in Appendix 2, with any person who falls within the classes of Interested Persons
described in Appendix 2, provided that such transactions are made on normal commercial
terms and in accordance with the review procedures for Interested Person Transactions as
set out in Appendix 2 (the “IPT Mandate”);
the IPT Mandate shall, unless revoked or varied by the Company in general meeting,
continue in force until the date that the next annual general meeting is held or is required by
law to be held, whichever is the earlier;
the Audit Committee of the Company be and is hereby authorised to take such action as it
deems proper in respect of such procedures and/or to modify or implement such procedures
as may be necessary to take into consideration any amendment to Chapter 9 of the Listing
Manual of the SGX-ST which may be prescribed by the SGX-ST from time to time; and
the directors of the Company and/or any of them be and are hereby authorised to complete
and do all such acts and things (including, without limitation, executing such documents as
may be required) as they and/or he may consider necessary, expedient, incidental or in the
interests of the Company to give effect to the IPT Mandate and/or this Resolution (see Note 8).
To transact such other business which can be transacted at the annual general meeting of the Company.
notICe Is ALso HeReBY GIVen tHAt:
(a)
(b)
the Transfer Books and the Register of Members of the Company will be closed on 30 April 2010, for the preparation
of dividend warrants. Duly completed transfers received by the Company’s registrar, B.A.C.S. Private Limited,
63 Cantonment Road, Singapore 089758 up to the close of business at 5.00 p.m. on 29 April 2010 will be registered
to determine shareholders’ entitlement to the proposed final dividend. The proposed final dividend if approved at this
annual general meeting will be paid on 11 May 2010; and
the electronic copy of the Company’s Annual Report 2009 will be published on the Company’s website on 8 April 2010.
The Company’s website address is http://www.kepcorp.com, and the electronic copy of the Annual Report 2009 can be
viewed or downloaded from the “Annual Reports” section, which can be accessed from the main menu item “Investor
Relations”. To view the electronic copy of the Annual Report 2009, you will need the Adobe Reader installed on your
computer, which can be downloaded free of charge at http://get.adobe.com/reader.
BY ORDER OF THE BOARD
Caroline Chang
Company Secretary
Singapore, 25 March 2010
notice of Annual General Meeting and Closure of Books
249
Notice of Annual General Meeting and Closure of Books
Notes:
1.
A member is entitled to appoint one proxy or two proxies to attend and vote in his place. A proxy need not be a member of the Company. The instrument
appointing a proxy must be deposited at the registered office of the Company at 1 HarbourFront Avenue, #18-01 Keppel Bay Tower, Singapore 098632, not
less than 48 hours before the time appointed for holding the annual general meeting.
2. Detailed information about these directors can be found in the “Board of Directors” and “Directors and Key Executives” sections of the Company’s Annual
Report. Mr Lim Hock San will upon re-election continue to serve as Deputy Chairman, Chairman of the Audit Committee, Chairman of the Remuneration
Committee and member of the Board Risk Committee. Mrs Oon Kum Loon will upon re-election continue to serve as Chairman of the Board Risk Committee
and member of the Audit, Remuneration and Nominating Committees. Dr Lee Boon Yang will upon re-election continue to serve as Chairman, and member of
the Remuneration, Nominating and Board Safety Committees. Mr Alvin Yeo Khirn Hai will upon re-election continue to serve as member of the Audit and Board
Risk Committees. These directors are considered by the Nominating Committee to be independent directors.
3.1 The increase in the aggregate amount of directors’ fees payable for the financial year 2009 is due mainly to the revised directors’ fee structure following a
review by the Remuneration Committee taking into account industry practice and the number of meetings held in the financial year ended 2009, and the Board
having a non-executive Chairman with effect from 1 January 2009. The revised directors’ fee structure is set out in the Company’s Corporate Governance
Report, on page 94 of the Company’s Annual Report 2009.
3. 2 The proposed award of Remuneration Shares to the non-executive directors forms part of the ordinary remuneration of the non-executive directors for the
financial year ended 31 December 2009, and is in addition to the proposed directors’ fees in cash mentioned in this Resolution 9. The Remuneration Shares
to be awarded to the non-executive directors will rank pari passu with the then existing issued Shares at the time of the award. Subject to Shareholders’
approval, Dr Lee Boon Yang will be awarded 5,500 Shares (on a pro rata basis) as part of his ordinary remuneration for serving as a non-executive director
from 1 May 2009 to 30 June 2009 and as non-executive Chairman from 1 July 2009 to 31 December 2009. Mr Lim Chee Onn will, subject to Shareholders’
approval, be awarded 5,000 Shares (on a pro rata basis) as part of his ordinary remuneration for serving as non-executive Chairman from 1 January 2009 to
30 June 2009. The non-executive directors who have served for the full financial year will each be awarded 3,000 Shares as part of their remuneration. Mr
Alvin Yeo Khirn Hai will, subject to Shareholders’ approval, be awarded 1,750 Shares as part of his remuneration for serving as non-executive director from 1
June 2009 to 31 December 2009. Tsao Yuan Mrs Lee Soo Ann will, subject to Shareholders’ approval, be awarded 1,000 Shares as part of her remuneration
for serving as non-executive director from 1 January 2009 to 24 April 2009. Mr Yeo Wee Kiong will, subject to Shareholders’ approval, be awarded 1,750
Shares as part of his remuneration for serving as non-executive director from 1 January 2009 to 1 August 2009. The Chairman, non-executive directors, Mr
Lim Chee Onn, Tsao Yuan Mrs Lee Soo Ann and Mr Yeo Wee Kiong will abstain from voting, and will procure their respective associates to abstain from voting,
in respect of this Resolution 9.
4.
5.
The Company had on 22 December 2008 announced that Mr Lim Chee Onn would relinquish his role as Chief Executive Officer, but would continue to
serve as non-executive Chairman of the Company with effect from 1 January 2009 and that, in this role, he would oversee the Group’s thrust in sustainable
development initiatives and continue to contribute his efforts to expand and strengthen Keppel’s geographical footprint in China, Vietnam, India and the
Middle East (the “Services”). The Board had considered it important that, besides ensuring the effective operation of the Board, Mr Lim should be available to
continue to perform the Services and the Company should continue to benefit from his business network and relationships for a period of time, so as to ensure
a smooth transition in executive leadership and minimise the risk of business disruption which may arise from his ceasing to be Executive Chairman of the
Company. The Services go beyond the typical duties of a non-executive chairman. The Board is therefore seeking the approval of Shareholders to pay Mr Lim
a sum of $250,000 as special remuneration for his aforementioned efforts and contribution during the period 1 January 2009 to 30 June 2009. The payment
of this special remuneration will be in addition to the payment, subject to Shareholders’ approval, of the ordinary remuneration payable to Mr Lim as a non-
executive director of the Company for the financial year ended 31 December 2009 pursuant to the above Resolution 9.
The Board is seeking shareholders’ approval to award to Dr Lee Boon Yang the full-year’s grant of Remuneration Shares for non-executive Chairman based on
the Company’s directors’ fees structure (that is, another 4,500 Remuneration Shares in addition to the 5,500 Remuneration Shares pursuant to Resolution 9
above ), notwithstanding that he held office as non-executive director from 1 May 2009 to 30 June 2009 and non-executive Chairman from 1 July 2009 to 31
December 2009, in the financial year ended 31 December 2009 (which, subject to Shareholders’ approval, on a pro rata basis would entitle him only to 500
Remuneration Shares and 5,000 Remuneration Shares respectively). The additional grant is in recognition of the substantial amount of time and effort put in by
Dr Lee since assuming the role of non-executive Chairman.
6. Resolution 13 is to empower the directors from the date of the annual general meeting until the date of the next annual general meeting to issue further Shares
and Instruments in the Company, up to a number not exceeding (i) 100 per cent. of the total number of Shares for Renounceable Rights Issues and (ii) 50 per
cent. of the total number of Shares for Other Share Issues (with a sub-limit of 5 per cent. of the total number of Shares (excluding treasury Shares) in respect
of Shares to be issued other than on a pro rata basis to shareholders), provided that the total number of Shares which may be issued pursuant to (i) and (ii)
shall not exceed 100 per cent. of the issued Shares (excluding treasury Shares). The 5 per cent. sub-limit for non pro rata issues is lower than the 20 per cent.
sub-limit allowed under the Listing Manual of the SGX-ST and the Articles of Association of the Company. For the purpose of determining the total number
of Shares (excluding treasury Shares) that may be issued, the percentage of issued Shares shall be based on the total number of issued Shares (excluding
treasury Shares) at the time that Resolution 13 is passed, after adjusting for new Shares arising from the conversion or exercise of any convertible securities
or share options or vesting of share awards which are outstanding or subsisting at the time that Resolution 13 is passed, and any subsequent bonus issue,
consolidation or sub-division of Shares.
7. Resolution 14 relates to the renewal of the Share Purchase Mandate which was originally approved by Shareholders on 18 February 2000 and was last
renewed at the annual general meeting of the Company on 24 April 2009. Please refer to Appendix 1 of this Notice of Annual General Meeting for details.
8. Resolution 15 relates to the renewal of a mandate given by Shareholders on 22 May 2003 allowing the Company, its subsidiaries and target associated
companies to enter into transactions with interested persons as defined in Chapter 9 of the Listing Manual of the SGX-ST. Please refer to Appendix 2 of this
Notice of Annual General Meeting for details.
250
Keppel Corporation Limited
Report to Shareholders 2009
Corporate Information
Board of Directors
Nominating Committee
Registered Office
Lee Boon Yang (Chairman)
Tony Chew Leong-Chee (Chairman)
Lim Hock San (Deputy Chairman)
Lee Boon Yang
Choo Chiau Beng (Chief Executive Officer)
Sven Bang Ullring
Sven Bang Ullring
Oon Kum Loon (Mrs)
Tony Chew Leong-Chee
Tow Heng Tan
1 HarbourFront Avenue
#18-01 Keppel Bay Tower
Singapore 098632
Telephone: (65) 6270 6666
Telefax: (65) 6413 6391
Email: keppelgroup@kepcorp.com
Website: www.kepcorp.com
Share Registrar
B.A.C.S. Private Limited
63 Cantonment Road
Singapore 089758
Auditors
Deloitte & Touche LLP
Public Accountants and
Certified Public Accountants
Singapore
Audit Partner: Chaly Mah Chee Kheong
Year appointed: 2006
Oon Kum Loon (Mrs)
Tow Heng Tan
Alvin Yeo Khirn Hai
Teo Soon Hoe
Tong Chong Heong
Audit Committee
Lim Hock San (Chairman)
Tony Chew Leong-Chee
Oon Kum Loon (Mrs)
Alvin Yeo Khirn Hai
Remuneration Committee
Lim Hock San (Chairman)
Lee Boon Yang
Sven Bang Ullring
Oon Kum Loon (Mrs)
Tow Heng Tan
Board Risk Committee
Oon Kum Loon (Mrs) (Chairman)
Lim Hock San
Tow Heng Tan
Alvin Yeo Khirn Hai
Board Safety Committee
Sven Bang Ullring (Chairman)
Lee Boon Yang
Choo Chiau Beng
Company Secretary
Caroline Chang
Corporate Information
251
Financial Calendar
FY 2009
Financial year-end
Announcement of 2009 1Q results
Announcement of 2009 2Q results
Announcement of 2009 3Q results
Announcement of 2009 full year results
Despatch of Summary Financial Report to Shareholders
Despatch of Annual Report to Shareholders
Annual General Meeting and Extraordinary General Meeting
Proposed final dividend
Books closure date
Payment date
Proposed special dividend in specie
Books closure date and payment date
FY 2010
Financial year-end
Announcement of 2010 1Q results
Announcement of 2010 2Q results
Announcement of 2010 3Q results
Announcement of 2010 full year results
31 December 2009
23 April 2009
23 July 2009
22 October 2009
26 January 2010
25 March 2010
8 April 2010
23 April 2010
5.00 p.m., 29 April 2010
11 May 2010
To be determined
31 December 2010
April 2010
July 2010
October 2010
January 2011
252
Keppel Corporation Limited
Report to Shareholders 2009
This annual report is printed on Meridien Brilliance, Eco-Frontier and Excel Satin. These papers
are environmentally-friendly and are produced with a minimum content of 51% recycled paper.
Edited and Compiled by
Group Corporate Communications, Keppel Corporation
Designed by
greymatter williams and phoa (asia)
Keppel Corporation Limited
(Incorporated in the Republic of Singapore)
1 HarbourFront Avenue
#18-01 Keppel Bay Tower
Singapore 098632
Tel: (65) 6270 6666
Fax: (65) 6413 6391
Email: keppelgroup@kepcorp.com
www.kepcorp.com
Co Reg No: 196800351N