R E P O R T T O S H A R E H O L D E R S 2 0 1 0
Building Strengths
Defi ning Distinction
Powering Excellence
Harnessing Synergy
Maximising Value
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 profitably,
with Safety and Innovation, guided by our three key
business thrusts of Sustaining Growth, Empowering
Lives and Nurturing Communities.
Contents
1 Key Figures 2010
2 Group Financial Highlights 2010
3 Our Growth Record from 2001 to 2010
4 Chairman’s Statement
Interview with the CEO
10
16 Key Messages
22 Group Strategic Directions
24 Keppel Around the World
26 Board of Directors
32 Keppel Group Boards of Directors
34 Keppel Technology Advisory Panel
36 Senior Management
38
Investor Relations
40 Awards and Accolades
42 Special Feature
– Creating Value Through Innovation
50 Operating & Financial Review
51 – Group Structure
52 – Management Discussion and Analysis
54 – Offshore & Marine
66 –
74 – Property
82 –
84 – Financial Review and Outlook
94 Sustainability Report Highlights
Infrastructure
Investments
Sustaining Growth
96 – Corporate Governance
116 – Risk Management
120 – Environmental Protection
124 – Product Excellence
Empowering Lives
128 – People Matters
132 – Safety and Health
Nurturing Communities
136 – Community and Society
Directors’ Report & Financial Statements
Independent Auditors’ Report
142 – Directors’ Report
148 – Statement by Directors
149 –
150 – Balance Sheets
151 – Consolidated Profi t and Loss Account
152 – Consolidated Statement of
Comprehensive Income
153 – Statement of Changes in Equity
156 – Consolidated Statement of Cash Flows
158 – Notes to the Financial Statements
208 – Signifi cant Subsidiaries and
Associated Companies
Interested Person Transactions
219
220 Directors and Key Executives
233 Major Properties
237 Group Five-Year Performance
241 Group Value-Added Statements
242 Share Performance
243 Shareholding Statistics
244 Notice of Annual General Meeting and
Closure of Books
251 Corporate Information
252 Financial Calendar
Key Figures 2010
Revenue
$9.8b
Decreased 20% from
FY 2009’s $12.2 billion.
Net Profi t
$1,419m
Increased 12% from
FY 2009’s $1,265 million.
Return On Equity
22.3%
Decreased by 1.6% from
FY 2009’s 23.9%.
Economic Value Added
Earnings Per Share
Cash Dividend Per Share
$1,035m
Increased $9 million from
FY 2009’s $1,026 million.
88.7¢
Increased 12% from
FY 2009’s 79.4 cents
per share.
42.0¢
Increased 11% from
FY 2009’s 38.0 cents
per share.
Free Cash Flow
-$193m
Decreased from
FY 2009’s free cash flow
of $1,097 million.
Net Cash Ratio
0.02x
Decreased from
FY 2009’s net cash
of 0.14x.
Net Profi t
g Focusing on sustaining growth
amidst an uncertain economic
environment, we achieved a record
net profit of $1.4 billion, 12% higher
than in 2009.
EVA
g Committed to enhancing
shareholder value, EVA rose to
$1,035 million, the highest ever
attained by the Group.
Distribution
g Total cash dividend of 42 cents
per share and the proposed bonus
issue of one bonus share for every 10
shares serve to reward shareholders.
Key Figures 2010
1
Group Financial Highlights 2010
Earnings Per Share
(cents)
2010
2009
88.7
79.4
Return On Equity
(%)
2010
2009
22.3
23.9
Cash Dividend Per Share
(cents)
2010
2009
42.0
38.0
Economic Value Added
($ million)
2010
2009
1,035
1,026
Group quarterly results ($ million)
Revenue
EBITDA
Operating profi t
Profi t before tax & exceptional items
Net profi t before exceptional items
Earnings per share (cents)
For the year ($ million)
Revenue
Profi t
EBITDA
Operating
Before tax & exceptional items
Net profi t 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
After tax & before exceptional items
After tax & exceptional items
Net assets ($)
Net tangible assets ($)
At year-end ($ million)
Shareholders’ funds
Non-controlling interests
Capital employed
Net cash
Net cash ratio (times)
2010
2009
%
Change
9,783
12,247
-20%
1,945
1,756
2,026
1,419
1,623
450
(193)
1,035
768
110.8
88.7
101.5
4.20
4.13
6,740
2,984
9,724
178
0.02
1,679 +16%
1,505 +17%
1,856
+9%
1,265 +12%
1,625 -0.1%
-33%
n.m.
670
1,097
1,026
1,379
+1%
-44%
98.9 +12%
79.4 +12%
102.0 -0.5%
3.75 +12%
3.70 +12%
5,985 +13%
2,728
+9%
8,713 +12%
-85%
1,177
-86%
0.14
Return on shareholders’ funds (%)
Profi t before tax & exceptional items
Net profi t before exceptional items
27.9
22.3
29.8
23.9
-6%
-7%
Shareholders’ value
Distribution (cents per share)
Interim dividend
Final dividend
Special dividend in specie
Total distribution
Share price ($)
Total Shareholder Return (%)
n.m. not meaningful
16.0
26.0
–
42.0
11.32
47.0
15.0
+7%
23.0 +13%
n.m.
23.0
61.0
-31%
8.23 +38%
-53%
100.8
2010
2009
1Q
2Q
3Q
4Q
Total
1Q
2Q
3Q
4Q
Total
2,473 2,416 2,450 2,444 9,783 2,978 3,202 3,038 3,029 12,247
468 1,679
413 1,505
503 1,856
343 1,265
79.4
21.5
535 1,945
477 1,756
582 2,026
403 1,419
88.7
25.2
472
427
482
347
21.6
356
315
400
285
17.9
400
357
466
318
19.9
455
420
487
319
20.1
487
445
497
347
21.7
451
407
465
322
20.2
2
Keppel Corporation Limited
Report to Shareholders 2010
Our Growth Record from 2001 to 2010
Decade of Growth
Keppel’s unwavering drive
for excellence has delivered
a decade of healthy growth
in net profit, with the Group’s
10-year compound annual
growth rate (CAGR) at over
20%. As we move into the
next decade, we remain
committed to building on our
strengths and defining our
distinction to create more
value for our stakeholders.
Revenue
($ million)
2010
2001
9,783
ó66%
5,882
Net Profit Before Exceptional Items
($ million)
2010
2001
267
1,419
ó431%
Earnings Per Share
(cents)
2010
2001
17.4
Cash Distribution Per Share
(cents)
88.7
ó410%
2010
20011
42.0
33.0
ó27%
Return On Equity
(%)
2010
2001
10.1
Net Cash/(Gearing) Ratio
(times)
22.3
ó121%
2010
2001
0.02
(1.12)
ó102%
Shareholders’ Funds
($ million)
2010
2001
2,587
Our Growth Record from 2001 to 2010
6,740
ó161%
Growing Returns
g Return on equity rose by 121%
over the last decade, from 10.1%
to 22.3%, while net profit and earnings
per share increased by over 400%.
Robust Financial Strength
g From a net gearing of 1.12x
in 2001 to a net cash of 0.02x in
2010, reflecting our prudent and
disciplined financial management over
the years.
1
Include 1.5 cents equivalent of special dividend
and 25 cents equivalent of capital distribution.
3
Chairman’s Statement
Net Profi t
$1,419m
Increased 12%
from FY 2009’s
$1,265 million.
Earnings Per Share
(cents)
69.0
79.4
88.7
2008
2009
2010
100
75
50
25
0
4
“Our robust business strategy,
diversified businesses and core
competencies put us in a strong
position to seize opportunities
and capture value wherever there
is economic growth and pickup
in demand. We will continue to
strengthen our capabilities and build
up our resources to further improve
execution excellence.”
DEAR SHAREHOLDERS,
We emerged from the uncertainties
and volatility of 2009 with expectation
of recovery albeit subdued growth for
2010. As it turned out, Asia rebounded
rapidly with property and commodity
markets in particular showing strong
growth. On the other hand, the
developed economies in Europe
and the US were weighed down by
entrenched problems such as high
unemployment and public debt. On
balance, the year closed on a mixed
but more optimistic note.
Amidst the uneven global recovery,
I am particularly delighted to report
that Keppel has turned in yet another
stellar set of results in 2010, surpassing
our previous record results achieved
in 2009. This year’s results came as a
pleasant surprise, given the tentative
recovery at the start of 2010 as well as
the unexpected events in our industries
and markets in the course of the year
such as the massive oil spill in the Gulf
of Mexico and the property market
cooling measures introduced by the
governments in Singapore and China.
Excluding exceptional gains, net profi t
exceeded the $1 billion threshold for a
fourth successive year, rising 12% to a
new high of $1,419 million. Earnings in
the last quarter of 2010 alone reached
$400 million, setting yet another record
for the Group. Earnings per share rose
in tandem to 88.7 cents from 79.4 cents
in FY 2009. Return on equity remained
above 20% for the fourth successive
year. The Company’s Economic Value
Added (EVA) increased by $9 million to
a record $1,035 million, exceeding
$1 billion for the second year running.
As shareholders, you will benefi t from
the good performance. The Board has
recommended a full year total cash
distribution of 42 cents per share, and
a bonus issue of one share for every
10 existing shares. We look forward to
your continued support and confi dence
in Keppel.
The external environment for 2011
will be more complex. Although
recovery in the advanced economies
seems to be gaining momentum,
the outlook remains challenging and
somewhat clouded over the next few
years. The US economy is recovering
in fi ts and starts on the back of
returning business investments and
strengthening manufacturing activity.
Keppel Corporation Limited
Report to Shareholders 2010
Chairman’s Statement
5
Chairman’s Statement
However, the planned withdrawal of
fi scal stimulus will dampen growth
and high unemployment continues
to be a bugbear. In Europe, many
countries are struggling with high
unemployment and painful budget cuts.
The Eurozone remains dogged by a
serious sovereign debt crisis after the
bailouts of Greece, Ireland and Portugal
failed to restore confi dence. Oil prices
have gone above US$100 a barrel
last year and are expected to remain
so in 2011, especially with the current
political uncertainties in the Middle
East and North Africa region. High oil
prices could further dampen global
economic recovery. An added worry is
the appearance of food price infl ation in
many countries around the world.
Developing countries are expected to
remain resilient this year and contribute
up to two-thirds of global economic
growth. China achieved 10.3% growth
in 2010, with growth in 2011 forecasted
to be around 9.8% while India’s
economy is expected to grow nearly
9% for FY2010. After a contraction in
2009, Singapore’s dramatic growth
of 14.5% last year was outstanding
but we must expect growth to be
moderated to a more sustainable range
of 4% to 6% in 2011. Infl ation and
asset bubbles are key concerns and
the Singapore Government like others
are already taking steps to manage
and minimise the impacts from these
uptrends. Keppel will fortify and build
on its diverse capabilities and manifold
strengths to navigate through this
complex environment.
KEPPEL’S STRENGTHS
The exceptional performance of 2010
is a testament to the Group’s sound
strategies and commitment to execution
excellence. Our robust business
strategy, diversifi ed businesses
and core competencies put us in a
strong position to seize opportunities
and capture value wherever there
is economic growth and pickup in
demand. We will continue to strengthen
our capabilities and build up our
resources to further improve
execution excellence. We remain
deeply committed to fi nancial
prudence as well as maximising
synergy across the Group’s capabilities
and businesses. I am confi dent
that Keppel will continue to provide
shareholders with a sound investment
prospect and healthy returns.
Today, our three key businesses
leverage the Group’s collective
strengths in project management,
technology innovation, market focus
and global network. We will continue
to work ceaselessly to sharpen
our focus and further build on our
strengths and capabilities to hone
our competitive edge and exploit
opportunities to extract maximum
value for shareholders.
Offshore & Marine
Keppel Offshore & Marine (Keppel O&M)
has built up a solid reputation for its
relentless focus on execution, project
management excellence and maximising
operational and cost effi ciencies.
Keppel O&M successfully delivered
35 projects including 12 rigs safely, on
time and within budget. For the offshore
and marine industry as a whole, 2010
was a year of weak recovery which
closed with a strong rebound. The last
quarter saw a resurgence of interest
in high-specifi cation jackup rigs resulting
in Keppel O&M securing a good
number of contracts for its proprietary
KFELS B Class design.
Backed by an extensive network of
20 yards and offi ces worldwide,
Keppel O&M continues to innovate and
grow its offerings to meet the needs
of the market. In 2010, Keppel FELS
partnered Seafox, a leading fl eet owner
and operator, to commercialise a new
wind turbine installation vessel
design for deeper waters. Our joint
venture with J Ray McDermott also
secured a US$1 billion contract from
Brazil for its tension leg wellhead platform.
Keppel O&M also continued to
strengthen its effective ‘Near Market,
Near Customer’ strategy through
calibrated expansion in strategic
markets. We acquired a new yard in
Santa Catarina to meet the strong local
demand in Brazil for offshore support
vessels. This yard will also complement
our BrasFELS yard, which is one of
the most established offshore yards
in South America, to support Brazil’s
plans to grow its offshore oil and gas
industry. Building on our partnership
with Azerbaijan’s national oil company,
SOCAR, we took a stake in the Baku
Shipyard which will help to meet the
growing needs of the oil industry in the
Caspian Sea. Keppel’s shareholding in
Subic Shipyard in the Philippines was
raised to better capture opportunities
from the increase in general shiprepair
and upgrading work. Our joint venture
yard, the Nakilat–Keppel Offshore &
Marine shipyard in Qatar, was
inaugurated in November, and aims to
be the preferred partner for solutions in
the Middle East.
Infrastructure
The growing pace of urbanisation
worldwide means that sustainable
energy sources, clean water and waste
management will become growth
areas. The rising concern over climate
change will lead to more legislation
and regulations around the world for
greater environmental protection and
sustainable urbanisation. We anticipate
growing demand for sustainable
urban solutions to be a driver for our
environmental engineering business.
Keppel Integrated Engineering (KIE)
will leverage its core competencies in
treating waste and water as well as the
Group’s extensive network to deliver
quality environmental solutions. KIE
has already established a creditable
track record. The Keppel Seghers Tuas
Waste-to-Energy (WTE) plant, which is
one of the most compact WTE plants in
the world, was offi cially opened in late
June. With its two incineration plants,
6
Keppel Corporation Limited
Report to Shareholders 2010
KIE is the only private operator of WTE
plants in Singapore and handles almost
half the incinerable solid waste here. It
is playing a key role in the privatisation
of the EU’s largest waste and renewable
energy project, in a Greater Manchester
energy-from-waste plant. KIE also
enjoys a strong market position for
imported WTE solutions in China, and
is providing technology for the country’s
largest WTE plant located in Shenzhen
as well as the cleanest WTE plant
located in Tianjin. While there have
been some project delays and cost
overruns in our integrated solid waste
management facility and a wastewater
treatment and reuse plant in Qatar,
we have also gleaned valuable lessons
from this experience of executing
large-scale projects in a challenging
environment such as the Middle
East. KIE will work hard to improve its
project management and execution
even as it moves to the operations and
maintenance phase of these contracts.
The successful listing of the K-Green
Trust in late June, with the Senoko and
Tuas WTE plants and the Ulu Pandan
NEWater facility as underlying assets,
offers a new earnings platform for the
Group. The Trust has since announced
better than forecasted results and is
actively seeking to acquire assets with
recurring value to grow its portfolio.
To meet the growing demand for
logistics in the region, Keppel
Telecommunications & Transportation
(Keppel T&T) has continued to expand
its logistics capacity in Singapore,
China and Vietnam. Working with its
Middle East partner, Keppel T&T also
achieved initial closing of the world’s
fi rst Shariah-compliant data centre
fund to tap into the growing demand
for data centres worldwide. For Keppel
Energy, its $900 million expansion of
its 500 MW co-generation power plant
on Jurong Island by another 800 MW
is targeted for completion in 2013. This
will help us to grow our revenue from
Singapore’s electricity market.
Chairman’s Statement
On safety excellence:
“Safety has long been enshrined as one of Keppel’s
core values. A safe workplace yields superior
operating performance. This is why the Company’s
Board Safety Committee, which was established in
2006, plays an active role in aligning, reviewing and
developing safety policies and initiatives across the
Group’s different business units.”
On the progress of the Tianjin Eco-City:
“The Tianjin Eco-City project has made good
progress since its groundbreaking in 2008, having
secured around RMB55 billion of investment
commitments to-date. This includes leading regional
developers who will build a variety of eco-homes,
commercial and cultural-leisure developments,
as well as eco-technology companies offering
urban solutions.”
7
Chairman’s Statement
Property
With Asia’s strong growth, urbanisation
trends and its rising middle class,
regional property markets have stayed
reasonably healthy. Keppel Land’s
strategic positioning in the market
segments of large-scale townships
and integrated lifestyle developments
holds great potential for sustained
earnings. In 2010, it achieved good
sales in both waterfront luxury homes
as well as township developments in
Singapore and overseas markets. In
particular, record sales of over 4,600
units overseas was achieved, mainly
from township projects in China. China
is now a key focus of Keppel Land’s
regional strategy. Hence, Keppel Land
China was established to consolidate
and sharpen our focus on execution
and delivery in this complex and
fast-growing market to maximise value
creation. Since then, land parcels
have been acquired in the second-tier
cities of Chengdu and Nantong and
we will continue to scan the market for
attractive land acquisitions in cities with
good growth potential.
Asia’s sustained growth has also
boosted demand for quality offi ce
buildings, and both Keppel Land and
K-REIT Asia have managed to capture
value from this rising demand. Strong
pre-commitment totalling about
1 million sf of Grade A offi ce space was
secured at Marina Bay Financial Centre
(MBFC) and Ocean Financial Centre
this year. The asset swap between
Keppel Land and K-REIT Asia involving
MBFC Phase 1, and Keppel Towers
and GE Tower is a strategic move to
unlock value for both companies, to
ensure that assets are optimally utilised.
In its fi rst foray out of Singapore,
K-REIT Asia acquired two quality offi ce
assets in Australia, laying the foundation
to grow into a leading pan-Asian
commercial REIT.
The Group synergises its competencies
in environmental engineering and
property development to develop
large-scale integrated eco-friendly
townships, and we have established
a Sustainable Development unit in
June 2010 to coordinate and drive
the Group’s efforts in offering holistic
sustainable urban living solutions.
Keppel also leads the Singapore
Consortium to develop the landmark
30-sq km Sino-Singapore Tianjin
Eco-City in a joint venture with a
Chinese Consortium. The Tianjin
Eco-City project has made good
progress since its groundbreaking
in 2008, having secured around
RMB55 billion of investment
commitments to-date. This includes
leading regional developers who
will build a variety of eco-homes,
commercial and cultural-leisure
developments, as well as eco-
technology companies offering urban
solutions. Keppel’s eco-homes in the
Eco-City have been well received by the
local market, registering strong sales
for the launched units. KIE’s district
heating and cooling systems subsidiary
is also in a joint venture to offer its
services to the Eco-City, while KIE and
Keppel T&T are planning to leverage the
Eco-City’s position as an eco-research
and logistics hub to grow their presence
in northern China.
DISTINCTIVE VALUES
The Board and Management believe
that strong corporate governance is
the keystone to the sustainability of
our businesses and performance.
Maintaining high standards in corporate
governance is part and parcel of our
accountability to our stakeholders.
Today, we face a complex global
business environment. The Board
will continue to work closely with
Management to manage risks and
ensure the Group remains fl exible
and robust to overcome the diverse
challenges across the different regions
where we operate. The Gulf of Mexico
oil spill has highlighted even more
strongly the need for companies to
strengthen their risk management and
8
Keppel Corporation Limited
Report to Shareholders 2010
crisis management capabilities and
processes. Within the Group, we have
initiated a fresh round of reviews in all
our business operations with the aim of
ensuring stringent and sound measures
in these areas.
Safety has long been enshrined as
one of Keppel’s core values. A safe
workplace yields superior operating
performance. This is why the
Company’s Board Safety Committee,
which was established in 2006, plays
an active role in aligning, reviewing
and developing safety policies and
initiatives across the Group’s different
business units. In 2010, Keppel O&M
also launched the fi rst integrated safety
training complex in Singapore. We will
continue our efforts to implement best
safety practices so that our employees
and workers will be able to return home
safely to their families and loved ones
after a day’s work.
Our people are our core asset.
Keppel continues to provide
opportunities for employees to
maximise their potential, develop
their talents and capabilities to
contribute to the Group’s success.
Capabilities and skills of our workers
and employees are regularly upgraded
to enhance productivity. We continue
to maximise the Group’s innate
synergy by better deploying our talents
across the different business units.
In managing and developing talent,
younger leaders are entrusted with
additional responsibilities, giving
them the exposure and opportunity
to drive the Group’s next phase
of growth, and ensure smooth
and effective succession for key
management positions.
To reinforce sustainable practices and
processes in our businesses, we have
established a more systematic and
rigorous corporate social responsibility
framework Group-wide to monitor,
plan and coordinate activities
undertaken by our various business
units. This framework will galvanise
our ongoing efforts to continuously
improve our environmental, social
and governance standards and allow
us to benchmark against global best
practices to build a strong foundation
for sustainable growth. As part of the
Group’s commitment to giving back to
the communities where we operate,
we are also looking to strengthen the
holistic management of the Group’s
contributions to worthwhile causes.
ACKNOWLEDGEMENTS
I take this opportunity to acknowledge
the following changes as part of the
Board’s proactive process to deepen
its range of expertise. We are pleased
to welcome to the Board two new
members, Mr Tan Ek Kia and Mr Danny
Teoh, who were appointed Independent
Directors with effect from 1 October
2010. Mr Tan is an industry veteran in
the oil, gas and petrochemicals sector
while Mr Teoh has more than 30 years
of experience in the areas of auditing
and fi nancial advisory. Together, they
will support the drive for sustained,
broad-based growth and to enhance
shareholder value across the Group.
Finally, I wish to thank Directors,
Management, employees, partners,
customers, and all stakeholders for their
continued support over the past year.
The Group shall spare no effort to chart
new growth paths so as to ensure that
we continue to grow and prosper in the
years ahead. Thank you.
Yours sincerely,
Lee Boon Yang
Chairman
4 March 2011
Chairman’s Statement
9
Interview with the CEO
Q1. What are your
priorities for the next
couple of years?
A: I want to position Keppel for the volatile world ahead, to ride the upturns and be
robust in any turbulence. At the same time, I am preparing the next team to take
over the helm when the current leadership team phases out. I would like to see a
stronger Team Keppel, working towards our common vision and mission, guided
by our core values.
The Keppel Group delivered a commendable net profi t CAGR of 20% over the
last ten years. With yet another set of record earnings in 2010, we are facing
the challenge to surpass this performance. Having said this, I see good growth
prospects in Keppel’s businesses. I fi rmly believe that the key to continued success
is our strong commitment and focus to stay the course in executing our strategy.
What sets us apart is our execution excellence, innovation and customer focus,
fi nancial prudence and collective strength. To stay ahead of the game, we will
continue to leverage these qualities in the Group, as we capture opportunities to
expand and strengthen our position in our businesses.
“We will refine the
strategies in our business
units, building on their
strengths and extending
their value propositions.
At the same time, we
will further grow cross
business unit synergies
and capabilities.”
Mr Choo Chiau Beng
Chief Executive Offi cer
Keppel Corporation
10
Keppel Corporation Limited
Report to Shareholders 2010
Q2. How are you planning
to further grow Keppel?
Q3. Do you think the
current upturn in the
Offshore & Marine sector
can be sustained?
A: For a start, we will continue to grow our three businesses of Offshore & Marine,
Infrastructure and Property, near our markets and close to customers. The global
megatrends of rising standards of living and urbanisation, increased environmental
concerns and growing demand for energy undoubtedly present opportunities
for Keppel.
We will refi ne the strategies in our business units, building on their strengths and
extending their value propositions. At the same time, we will further grow cross
business unit synergies and capabilities.
We have identifi ed the sustainable development and urbanisation business, which
combines and showcases our expertise in Infrastructure and Property, as our next
growth area. In this respect, we have formed a team to focus and coordinate efforts
across the Group to seize commercially attractive opportunities in the region.
To grow our businesses, we need good and dedicated people motivated to work
as a team. We need continuity in leadership and management. As such, we spend
a lot of resources on talent management and succession planning.
Last year, we launched the Keppel Young Leaders, a programme to nurture talents
across the Group. This also serves as a platform to cultivate a global mindset and
encourage a spirit of innovation and enterprise. Through this initiative, we hope to
develop and identify a continuous pipeline of future leaders for the Group.
A: In the fi rst two months of 2011, we clinched $3.7 billion worth of new orders with
deliveries extending to 2014, more than what we secured for the whole of last year.
The positive view of our customers on the outlook for rigs in the next few years
is well supported by prospects in global spending in exploration and production
(E&P). While the ongoing unrest in the Middle East and North Africa region may
potentially slow the pace of recovery, we are still optimistic of the sound long-term
fundamentals of the industry.
Overall, E&P budgets are expected to increase by 15-20% on average in 2011,
with oil planning prices in the region of US$70 per barrel. Chevron has announced
that it is raising its E&P budget for 2011 by 20% to US$23 billion, while Total is
increasing its 2011 upstream budget by 8% to US$16 billion. In Asia, CNOOC’s
2011 E&P budget will increase to US$8.8 billion, 13% above that for 2010.
The International Energy Agency, or IEA, in its 2010 World Energy Outlook released
in November, revised upwards the estimated growth in global energy demand for
the period from 2008 to 2035, to 36%. This is equivalent to 1.2% increase per year
on average. Fossil fuels accounts for over 50% of the increase, with oil remaining
the dominant fuel source. By 2035, demand for oil will reach 99 million barrels per
day, which is 15 million barrels per day more compared with 2009, driven mainly by
population and economic growth in the developing countries such as China and India.
Besides oil, global natural gas demand is also set to resume its long-term upward trend,
with demand increasing 44% between 2008 to 2030, equivalent to an increase of 1.4%
per year. The steep climb in demand for gas is due to its more favourable environmental
and practical attributes. On the supply side, over a third of the global increase in gas
output is coming from unconventional sources – shale gas, coalbed methane and tight
gas – in the US, and increasingly, from other regions such as Europe and Asia.
Interview with the CEO
11
Interview with the CEO
Q4. What are the
prospects in the jackup
and semisubmersible
space over the near and
longer term?
A: Based on the number of orders placed in the fi rst quarter of this year, the
jackup market is experiencing a healthy recovery, particularly in the demand
for high-end jackups (>350–400 ft water depth). All the 14 newbuild jackup
orders which we have secured since the last quarter of 2010 are for high-
specifi cation jackups.
Such a demand trend was outlined by industry analyst ODS-Petrodata,
which expected worldwide demand for jackups to increase by 48 rigs or
15% in 2011. The largest increase is seen in Central America/Mexico,
North Sea, the Middle East and North America.
On the other hand, supply in 2011 is expected to increase by 19 units, of which
six have already secured contracts. Industry estimates also point to the fact that
69% of the global jackup fl eet is older than 25 years old.
In the area of high-end jackups, our customer Rowan estimated that there is
near-term demand for about 18 to 20 high-end rigs for multiple-well projects in
the UK and Norwegian sectors of the North Sea.
In all, Rowan expects close to 200% increase in demand for high-end jackups,
with utilisation reaching 85%, signifi cantly higher than the industry-wide utilisation
of 68%. Dayrates are also signifi cantly higher.
While the jackup market is active, the outlook for the deepwater segment is also
looking up. According to Pareto Research, dayrates and activity level have started
to pick up, while the latest Douglas-Westwood estimates show that deepwater
expenditure is expanding at a CAGR of 8%, reaching US$35 billion in 2014.
Total global capital expenditure for the 2010–2014 period is expected to reach
US$167 billion. We are therefore optimistic that orders for semisubmersibles
will return in the near term.
A: We are keenly aware of the rising competition, which in a way keeps us on our
toes and motivates us to continue to improve. Rest assured that we are putting in
our maximum efforts to increase our productivity, strengthen our competitive edge
and enhance our leadership position in the industry.
Being near our markets and customers has been a signifi cant value-add to our
customers. After expanding further into Brazil, Caspian region and the Philippines
last year, we continue to actively explore opportunities to grow our global yard
network. Africa and Mexico are regions with abundant offshore oil resources and
hence we are looking closely to tap opportunities there.
Meanwhile, we spare no efforts in leveraging our strengths in research and
development and our deep understanding of the market needs, to provide
customers with the products they require. We are able to continuously enhance
our proven designs to suit the needs of specifi c customers for their target markets.
For example, our KFELS Super A Class jackup is based on an enhanced design
of our successful and proven KFELS MOD V-A Class design. This design is
well-suited for operating conditions in the UK, Danish and Dutch sectors of the
North Sea. The KFELS Super B Class Bigfoot design, which was customised to
suit Transocean’s needs, is based on the proven KFELS B Class jackup design
which has also been well-received by the industry.
Q5. What is Keppel
doing to stay ahead
of the competition in
its Offshore & Marine
business?
12
Keppel Corporation Limited
Report to Shareholders 2010
Q6. How do you plan to
raise productivity further at
Keppel Offshore & Marine?
A: To formalise efforts and implement strategies to achieve continual productivity
improvements, we have established a Productivity Improvement Taskforce
within Keppel O&M. The focus is to increase labour productivity and encourage
proactive sharing of knowledge and best practices in a range of key areas,
including production processes, automation, mechanisation, R&D, skills upgrading
and training, procurement, warehousing, information technology, supply chain
management and pipe shop automation, among others. The ultimate objective is
to cut down on the time and costs to build rigs and vessels, while delivering on our
promise of quality and safety.
We know that we are often compared to the Korean yards. They enjoy good
productivity as their yards are highly automated and their workforce is very
homogenous. Our workforce in Singapore, on the other hand, is not as
homogenous but we are fl exible and adaptable. Such qualities are suited to rig
construction which is project-centric by nature.
A key strength of the project-centric approach is the ability to provide high levels of
customisation for specifi c products. We have so far done well in integrating the best
of both project and manufacturing approaches of effi cient production with good
quality control into our processes, and are continuing to improve on them.
Q7. What are other growth
areas which Keppel Offshore
& Marine is pursuing?
A: We see positive prospects in the production and fl oating accommodation
semisubmersible markets, and are actively seeking opportunities to grow our
presence in these two areas.
According to Douglas-Westwood, the world will need more than 100 Floating
Production Systems (FPS) to be installed between 2010 and 2014. This is equivalent
to a value of US$45 billion. FPSOs account for close to 80% of this total FPS capex
forecast, followed by tension leg platforms, semisubmersibles and Spars. Brazil is
dominating the FPS market with Petrobras looking to double its fl eet to 84 by 2020.
To strengthen our capabilities in the FPS market, we have taken a 28% stake in
Singapore-listed Dyna-Mac, a topside module fabricator. This investment allows
us to have better control over the process of designing and fabricating oil and
gas production modules. We are also stepping up efforts, through FloaTEC, LLC,
our joint venture with J Ray McDermott, to secure orders to provide deepwater
production rigs to the market.
Separately, we have also taken a 31.7% stake in Floatel International, to refl ect
our confi dence in the growth potential of high-quality fl oating accommodation
semisubmersibles for both Brazil and the North Sea.
The construction of our fi rst KFELS Multi-Purpose Self-Elevating Platform (KFELS
MPSEP), in collaboration with the Seafox Group, is progressing well. We are glad
that there is a lot of interest to charter this unit for multiple-year contracts. We see
the need for more capable offshore wind turbine installation vessels, apart from
those currently available, which are a bit undersized. We are confi dent that there is
a market for such vessels and ours will offer a premier solution for the industry.
We continue to work on gaining entry into the turnkey drillship market with our
compact drillship design, the DrillDeep DS12000. This compact drillship is designed
to be more energy-effi cient and easier to maintain than the larger rivals in the market.
Interview with the CEO
13
Interview with the CEO
Q8. What growth
opportunities do you see
for the Infrastructure
Division?
Q9. Keppel’s Property
business had a good year in
2010. What is your outlook
of the property market in
2011 and beyond?
A: According to industry estimates, the global market for thermal and biological
waste-to-energy technologies will grow to $13.6 billion in 2016. The Asia-Pacifi c is
predicted to contribute the largest portion of the growth. Riding on this uptrend,
Keppel Integrated Engineering (KIE) is actively pursuing contracts in its focus
markets of Europe, China and the Middle East. We are drawing useful lessons
from the ongoing challenges we are facing in Qatar, and are working to strengthen
our execution capabilities in that market.
K-Green Trust, which was listed last year, is focused on delivering sustainable
returns while actively pursuing opportunities to acquire green infrastructure assets.
The 800MW capacity expansion of Keppel Merlimau Cogen Plant, which is
powered by natural gas, is expected to meet Singapore’s electricity demand
growth. According to industry forecast, electricity demand in Singapore is
expected to increase at an annual rate of between 2.5% and 3% from now till
2018. In addition, with the need for more clean energy in the world, particularly
in Asia, Keppel Energy is leveraging its experience and expertise to seek
commercially attractive growth opportunities in the region.
In the area of logistics and data centres, Asia’s continued growth is expected to
drive demand for such services. Keppel T&T is actively expanding its logistics
footprint in Asia, with focus on providing integrated logistics services in China
and Southeast Asia. At the same time, it is also looking to grow its data centre
business in Asia and Europe through capacity expansion at existing facilities and
building a portfolio of high-quality data centre assets through its Securus Fund.
A: With Asia’s overall growth momentum stabilising, we believe 2011 and beyond
will continue to hold healthy prospects for both the residential and offi ce markets in
the region.
In Singapore, GDP growth in 2011 is expected to moderate to 4–6%, which is
not expected to impact on the recovering confi dence in Singapore as the region’s
fi nancial hub. Leasing activities in the offi ce market is therefore expected to
continue to strengthen, driven by new expansion in the fi nancial services and other
supporting sectors. Property consultants are predicting an increase of about 15%
in Grade A offi ce rentals in Singapore in 2011, following a rise of 20% in 2010.
In the residential sector, demand and prices are normalising in Singapore and
China following the cooling measures introduced by the governments last year.
With prices heading towards more affordable levels, coupled with aspirations for
homes in line with rising affl uence and urbanisation, genuine home buyers are likely
to be more prepared to make purchases.
14
Keppel Corporation Limited
Report to Shareholders 2010
Q10. What are Keppel’s
plans to further grow the
Property business?
A: With the healthy outlook, we are poised to capture opportunities to further grow
our Property business.
Over the next year or so, Keppel Land will continue to monitor the markets and
time launches of residential units in Singapore and in key markets in Asia. In
China and Vietnam, development of land acquired last year will add to an already
healthy pipeline of quality residential and waterfront homes in cities like Chengdu,
Zhongshan, Nantong and Ho Chi Minh City. The formation of Keppel Land China
is expected to provide a sharper focus and more concerted effort in offering our
value proposition and broadening our property presence in China.
In recent years, prudent fi nancial management has helped Keppel Land build up
a good cash position. Riding on this, Keppel Land will continue to actively seek
acquisition opportunities in Singapore and the region. Apart from land acquisitions
for residential and township developments, Keppel Land will also seek to further
strengthen its commercial and mixed-use development portfolio in Singapore and
the region.
The asset swap between Keppel Land and K-REIT Asia last year involving
Marina Bay Financial Centre, Keppel Towers and GE Tower was a win-win deal
for the two companies, and demonstrate the value which can be extracted from
Group synergy. Looking ahead, we can expect further value to be captured
from similar opportunities within the Group.
Interview with the CEO
15
Powering
Excellence
35 Rigs and
Vessels
In 2010, Offshore & Marine Division continued its delivery excellence
with the completion of 12 rigs, 5 FPSO/FSRU conversions,
18 specialised vessels and several rig upgrades and repairs.
35,000 ft
Capable of operating at 400 ft water depth and drilling at
35,000 ft, the new KFELS Super A Class jackup, our latest offering
to Ensco, will meet the industry’s need for newer and higher
performance assets with improved safety and better effi ciency.
5,250 Homes
In 2010, Keppel Land sold a record 4,600 homes overseas,
bringing 2010 total sales to 5,250 homes, which contributed to
Keppel Land’s record net profi t of over $1 billion.
Harnessing
Synergy
Unlocking Value
with Asset Swap
Asset swap between Keppel Land and K-REIT Asia involving the
one-third stake in Phase 1 of Marina Bay Financial Centre, and
Keppel Towers and GE Tower in Singapore, unlocked signifi cant
value for the two companies and demonstrated the power of
synergy within the Group.
RMB 55b
Having secured over RMB 55b in investments, the Sino-Singapore
Tianjin Eco-City is progressing well as a showcase for integrated
sustainable urban solutions.
150,000 sf
Consolidated data centre assets of Keppel T&T and Keppel Land
to enhance position and meet demand in fast growing sector.
Maximising
Value
CAGR
20.4%
Over the last decade, riding on a strong commitment to
develop our core competencies, our net profi t grew from
$267 million to $1,419 million, which is a compound annual
growth rate of 20.4%.
800MW Expansion
When completed in 2013, the Keppel Merlimau Cogen Plant
expansion will more than double its capacity to 1,300MW,
and is expected to generate good returns for the Group.
Technology Innovation
Our focus on R&D, coupled with our deep understanding of industry
needs and commitment towards value creation, enable us to provide
cost-effective and high quality solutions to our customers.
Group Strategic Directions
Keppel Corporation
To be the Provider of Choice for Solutions to the
Offshore & Marine Industries, Sustainable Environment
and Urban Living
Offshore & Marine
To be the choice
provider and solutions
partner in its selected
segments of the
offshore and marine
industry
Infrastructure
To seek expansion
opportunities in
the 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 sustain value to
shareholders while
seeking growth
opportunities
Strategic Directions
Fortifying Core Competencies
g Ensure continued focus on execution excellence to produce
top quality products and solutions for customers.
g Sharpen competitive edge by investing in Research and
Development (R&D) for long-term growth.
g Maximise talent development and knowledge sharing to
enhance productivity.
Expanding Global Footprint
g Build on the Group’s strong global network for new
business opportunities.
g Leverage the Keppel brand equity to enhance its presence
in existing markets and enter new markets.
Leveraging Growth Platforms
g Maximise synergy and collective strength among businesses.
g Seize value enhancing opportunities when they arise.
Net Profi t
$1,419m
Increased 12% from
FY 2009’s $1,265 million.
Revenue
($ million)
2010
2009
22
Focus for 2011/2012
g Deliver value through
excellent project management
and execution.
g Enhance R&D initiatives to
strengthen position as market
leader in selected segments.
g Explore opportunities in
new markets and adjacent
businesses.
g Maximise and realise
operational efficiencies.
g Sustain prudent cost
management.
g Focus on Health, Safety
and the Environment.
Net Profi t
$987m
Increased 22% from
FY 2009’s $810 million.
Revenue
($ million)
Focus for 2011/2012
g Actively seek acquisitions
in Singapore and overseas
with continued focus on
developing quality residential,
township, commercial and
mixed-use projects.
g Monitor markets and time
launches for new projects
and phases.
g Recycle capital to take
on new large-scale projects.
Focus for 2011/2012
g k1 Ventures to identify
investment opportunities
while continuing to focus on
the management of existing
investments with the aim of
enhancing shareholder value.
g M1 to continue to
strengthen its position in the
mobile market and capitalise
on growth opportunities in
Singapore, riding on the new
national fibre network.
Focus for 2011/2012
g Keppel Integrated
Engineering (KIE) to further
strengthen its presence in
key geographical markets
and business segments.
g KIE to focus on timely
completion of ongoing EPC
projects in Qatar and UK.
g Keppel Energy to grow its
power generation business by
planting additional capacity
in Singapore and seizing
opportunities in the region.
g Keppel Telecommunications
& Transportation to expand
logistics footprint in Asia, and to
increase data centre business.
Net Profi t
$57m
Decreased 55% from
FY 2009’s $126 million.
Net Profi t
Net Profi t
$326m
Increased 55% from
FY 2009’s $210 million.
$49m
Decreased 59% from
FY 2009’s $119 million.
Revenue
($ million)
2010
2009
2,510
2,427
Revenue
($ million)
2010
2009
Revenue
($ million)
1,685
2010
11
1,508
2009
39
Keppel Corporation Limited
Report to Shareholders 2010
Group Strategic Directions
23
9,783
2010
5,577
12,247
2009
8,273
Keppel Around the World
Offshore & Marine
Australia
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
Germany
Indonesia
Ireland
Malaysia
Mexico
Qatar
Singapore
Spain
Sweden
Thailand
The Philippines
United Kingdom
United States
Vietnam
Property
Australia
China
India
Indonesia
Japan
South Korea
Malaysia
Saudi Arabia
Singapore
Thailand
The Philippines
Vietnam
Investments
China
Singapore
United States
We leverage our global reach to
diversify earnings streams and
reap benefits in our near market
near customer strategy.
$1,998m
Europe
$510m
China and
Hong Kong
$52m
Japan and
South Korea
United States
Mexico
Ecuador
Argentina
Brazil
Sweden
Norway
Ireland
The Netherlands
United Kingdom
Belgium
Germany
Bulgaria
Kazakhstan
Spain
Azerbaijan
Algeria
Saudi Arabia
Qatar
United Arab Emirates
South Korea
Japan
China
India
Hong Kong
Vietnam
Thailand
Malaysia
SINGAPORE
Indonesia
The Philippines
Australia
Total FY 2010
Revenue
$9,783m
North
America
$1,892m
South
America
$1,045m
Middle
East
$302m
India
ASEAN
Australia
$43m
$3,841m
$100m
24
Keppel Corporation Limited
Report to Shareholders 2010
Keppel Around the World
25
Board of Directors
Lee Boon Yang, 63
Chairman and
Independent Director
Member, Nominating Committee
Member, Remuneration Committee
Member, Board Safety Committee
Lim Hock San, 64
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
26
Keppel Corporation Limited
Report to Shareholders 2010
Choo Chiau Beng, 63
Chief Executive Officer
Member, Board Safety Committee
Sven Bang Ullring, 75
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, 64
Independent Director
Executive Chairman,
Asia Resource Corporation
Chairman, Nominating Committee
Member, Audit Committee
Oon Kum Loon, 60
Independent Director
Chairperson, Board Risk Committee
Member, Audit Committee
Member, Remuneration Committee
28
Keppel Corporation Limited
Report to Shareholders 2010
Tow Heng Tan, 55
Non-Independent and
Non-Executive Director
Chief Investment Offi cer,
Temasek Holdings
Member, Nominating Committee
Member, Remuneration Committee
Member, Board Risk Committee
Alvin Yeo Khirn Hai, 49
Independent Director
Senior Partner, WongPartnership LLC
Member, Audit Committee
Member, Board Risk Committee
Board of Directors
29
Board of Directors
Tan Ek Kia, 63
Independent Director
Member, Nominating Committee
Member, Board Safety Committee
Danny Teoh, 56
Independent Director
Member, Audit Committee
Member, Remuneration Commitee
30
Keppel Corporation Limited
Report to Shareholders 2010
Teo Soon Hoe, 61
Senior Executive Director and
Group Finance Director
Tong Chong Heong, 64
Executive Director
Board of Directors
31
Keppel Group Boards of Directors
KEPPEL OFFSHORE & MARINE
KEPPEL INTEGRATED
ENGINEERING
Tong Chong Heong
Chairman
Executive Director, Keppel Corporation;
Chief Executive Offi cer, Keppel Offshore
& Marine
Michael Chia Hock Chye
Deputy Chairman
Director (Group Strategy &
Development) of Keppel Corporation;
Managing Director (Offshore), Keppel
Offshore & Marine
BG (NS) Tay Lim Heng
Chief Executive Offi cer
Loh Ah Tuan
Director
Quek Boon Sing
Director
Teo Soon Hoe
Senior Executive Director and
Group Finance Director,
Keppel Corporation
Michael Chia Hock Chye
Director (Group Strategy &
Development) of Keppel Corporation;
Deputy Chairman, Keppel Integrated
Engineering; Managing Director
(Offshore), Keppel Offshore & Marine
KEPPEL TELECOMMUNICATIONS &
TRANSPORTATION
Teo Soon Hoe
Chairman
Senior Executive Director and
Group Finance Director,
Keppel Corporation
Dr Ong Tiong Guan
Managing Director, Keppel Energy
Dr Tan Tin Wee
Associate Professor of Biochemistry,
National University of Singapore
KEPPEL INFRASTRUCTURE FUND
MANAGEMENT (AS TRUSTEE-
MANAGER OF K-GREEN TRUST)
Prof Bernard Tan Tiong Gie
Professor of Physics,
National University of Singapore
Reggie Thein
Independent Director
Khor Poh Hwa
Chairman
Advisor in Township and Infrastructure
Development to Keppel Corporation
Wee Sin Tho
Vice President, Endowment and
Institutional Development,
National University of Singapore
Tan Boon Huat
Independent Director
Karmjit Singh
Independent Director
Alan Ow Soon Sian
Tax Consultant (Non-Legal Practitioner),
KhattarWong
Paul Ma Kah Woh
Independent Director
Quek Soo Hoon
Operating Partner, iGlobe Partners (II)
Pte. Ltd.
Thio Shen Yi
Joint Managing Director, TSMP Law
Corporation
Choo Chiau Beng
Chairman
Chief Executive Offi cer,
Keppel Corporation
Tong Chong Heong
Chief Executive Offi cer
Sit Peng Sang
Executive Director
Bjarne Hansen
Senior Partner,
Wing Partners I/S, Denmark
Prof Neo Boon Siong
Professor and former Dean of
Nanyang Business School, Nanyang
Technological University, Singapore
Stephen Pan Yue Kuo
Chairman, World-Wide Shipping
Agency Limited
Prof Minoo Homi Patel
Professor of Mechanical Engineering
and Director of Development, School of
Engineering, Cranfi eld University, UK
Dr Malcolm Sharples
President, Offshore Risk & Technology
Consulting Inc, US
Teo Soon Hoe
Senior Executive Director and
Group Finance Director,
Keppel Corporation
Tan Ek Kia
Chairman of City Gas Pte Ltd
Po’ad Bin Shaik Abu Bakar Mattar
Independent Director of Hong Leong
Finance Limited and Tiger Airways
Holdings Limited
Lim Chin Leong
Former Chairman of Asia,
Schlumberger
Loh Chin Hua
Managing Director, Alpha Investment
Partners Limited
32
Keppel Corporation Limited
Report to Shareholders 2010
K-REIT ASIA MANAGEMENT
(AS MANAGER OF K-REIT ASIA)
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
Dr Chin Wei-Li Audrey Marie
Chairman, Vietnam Investing Associates
– Financials (S) Pte Ltd
Lee Ai Ming (Mrs)
Senior Partner,
Rodyk & Davidson
Tan Chin Hwee
Portfolio Manager, Apollo Asia
Opportunity Master Fund
Tan Swee Yiow
Alternate Director to
Kevin Wong Kingcheung;
President (Singapore Commercial),
Keppel Land International
KEPPEL ENERGY
KEPPEL LAND
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
Chief Executive Offi cer,
OpenNet Pte Ltd
Koh Ban Heng
CEO & Executive Director of Singapore
Petroleum Company Limited (member
of PetroChina)
Foo Jang See
Senior Vice President, Refi ning,
Crude Supply Trading and Operations,
Singapore Petroleum Company Limited
(member of PetroChina)
Nelson Yeo Chien Sheng
Managing Director (Marine),
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 in 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
Heng Chiang Meng
Former Managing Director,
First Capital Corporation;
Executive Director,
Far East Organisation Group
Michael Chia Hock Chye
Director (Group Strategy &
Development) of Keppel Corporation;
Deputy Chairman, Keppel Integrated
Engineering; Managing Director
(Offshore), Keppel Offshore & Marine
Edward Lee
Former Ambassador to Indonesia
Koh-Lim Wen Gin
Former URA Chief Planner and
Deputy Chief Executive Offi cer
Tina Chin Tin Chie
General Manager, Group Risk
Management, Keppel Corporation
Oon Kum Loon
Non-executive, Non-independent
Director
Teo Soon Hoe
Senior Executive Director and
Group Finance Director,
Keppel Corporation
Keppel Group Boards of Directors
33
Keppel Technology Advisory Panel
The Group promotes a culture
of innovation with guidance from
a panel of eminent business
leaders, professionals and
industry experts.
(From left)
First row: Dr Brian Clark,
CEO Choo Chiau Beng,
Professor Cham Tao Soon
(Chairman, Keppel
Technology Advisory Panel),
Professor Sir Eric Ash,
Dr Yeo Ning Hong
Second row: Tan Gee Paw,
Dr Malcolm Sharples,
Professor Minoo Homi Patel,
Professor James Leckie
and Professor Tom Curtis
Absent from photo:
Professor Jim Swithenbank
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 academic 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.
doctorates, including one from Nanyang
Technological University (Singapore).
Dr Brian Clark
Schlumberger Fellow; B.S. Ohio
State University; PhD, Harvard
University (1977).
He holds 67 patents related to the
exploration and development of oil
and gas, primarily in wire line 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 the National Academy of Engineering
and The Academy of Medicine,
Engineering and Science of Texas.
He is presently an Advisor to Tata
Consulting Engineers Ltd in Mumbai.
A past president of the Institution
of Electrical Engineers, 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
Dr Yeo Ning Hong (KTAP Term
expired on 31 December 2010)
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
34
Keppel Corporation Limited
Report to Shareholders 2010
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, and a recipient
of the Royal Academy of Engineering
Global Research Fellowship, 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.
Professor Jim Swithenbank (KTAP
Term starts from 1 January 2011)
BSc, PhD, FREng, FInstE, FIChemE,
Energy and Environmental
Engineering Group
He is the current Chairman of The
Sheffi eld University Waste Incineration
Centre (SUWIC), a fellow of the
Royal Academy of Engineering and
a member of numerous International
Combustion Committees. He was
the past president of the Institute of
Energy (1986–87) and has served
on many UK government/DTI/EPSRC
Committees. He is a prolifi c researcher
with over 300 refereed papers to his
credit and also an internationally
pre-eminent scholar for research on
combustion, energy from waste and
pollution control and holder of more
than 30 patents. He was also the
technical architect of the Sheffi eld
waste-to-energy CHP scheme
and the co-inventor of the Malvern
instrument and of the original
FLUENT CFD package.
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 Director of Development for 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
(Keppel O&M), Cranfi eld Aerospace Ltd
and BMT Group Ltd.
Dr Malcolm Sharples
President, Offshore Risk & Technology
Consulting Engineering Inc.; BE.
(Engineering Science),University of
Western Ontario; PhD University of
Cambridge; Athlone Fellow; Fellow
of the Society of Naval Architects
and Marine Engineers; Registered
Professional Engineer.
He provides consulting service on
offshore-related projects including
project technical risk, project safety
cases and health & safety quality
systems, fi nancial due diligence
on acquisitions, regulatory advice,
business development assistance. 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 O&M.
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.
Mr Tan is the Chairman of Public
Utilities Board, the national water
agency of Singapore. He is a member
of the Presidential Council for Religious
Harmony, Chairman of 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.
Mr Tan co-chairs the Environmental
& Water Technologies International
Advisory Panel, Ministry of the
Environment & Water Resources.
He is also the Chairman of the
International Advisory Panel of the
Institute of Water Policy, Lee Kuan Yew
School of Public Policy, and National
University of Singapore. Mr Tan chairs
the Nominating Committee of the
Lee Kuan Yew Water Prize, Singapore
International Water Week. He is a
Member of the Centre for Liveable
Cities Advisory Board, Ministry of
National Development; Chairman of
the Governing Board for the Earth
Observatory of Singapore, Nanyang
Technological University; Member
of the Steering Group on Water &
Climate Change for the Asia-Pacifi c
Water Forum; and Member of the
Climate Change Network, Prime
Minister’s Offi ce.
Keppel Technology Advisory Panel
35
Senior Management
KEPPEL CORPORATION
CORPORATE SERVICES
OFFSHORE & MARINE
Choo Chiau Beng
Chief Executive Officer
Teo Soon Hoe
Senior Executive Director
and Group Finance Director
Tong Chong Heong
Executive Director
Chee Jin Kiong
Director
(Group Human Resources)
Tong Chong Heong
Chief Executive Officer
Keppel Offshore & Marine
Michael Chia Hock Chye
Director
(Group Strategy & Development)
Sit Peng Sang
Executive Director
Keppel Offshore & Marine
Paul Tan
Group Controller
Wang Look Fung
General Manager
(Group Corporate Communications)
Michael Chia Hock Chye
Managing Director (Offshore)
Keppel Offshore & Marine
Nelson Yeo Chien Sheng
Managing Director (Marine)
Keppel Offshore & Marine
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)
Goh Toh Sim
Chief Representative (China)
Chee Jin Kiong
Executive Director
(Human Resources)
Keppel Offshore & Marine
Chow Yew Yuen
President, The Americas
Keppel Offshore & Marine
Wong Kok Seng
Managing Director
Keppel FELS
Hoe Eng Hock
Executive Director
Keppel Singmarine
Wong Ngiam Jih
Chief Financial Officer
Keppel Offshore & Marine
Charles Foo Chee Lee
Director / Advisor
Keppel Offshore & Marine Technology
Centre (KOMtech)
Dr Foo Kok Seng
Executive Director
Offshore Technology Development
(OTD)
Centre Director
Keppel Offshore & Marine Technology
Centre (KOMtech)
Aziz Amirali Merchant
Executive Director
Keppel FELS
Chor How Jat
Executive Director
Keppel Shipyard
36
Keppel Corporation Limited
Report to Shareholders 2010
INFRASTRUCTURE
PROPERTY
UNIONS
BG (NS) Tay Lim Heng
Chief Executive Officer
Keppel Integrated Engineering
Head of Sustainable Development
Keppel Group
BG (Ret) Pang Hee Hon
Chief Executive Officer
Keppel Telecommunications &
Transportation
Dr Ong Tiong Guan
Managing Director
Keppel Energy
Thomas Pang Thieng Hwi
Chief Executive Officer
Keppel Infrastructure Fund
Management (Trustee-Manager
of K-Green Trust)
Kevin Wong
Group Chief Executive Officer
Keppel Land
Keppel FELS Employees Union
Ho Mun Choong, Vincent
President
Ang Wee Gee
Executive Director
Keppel Land International
Executive Vice Chairman
Keppel Land China
Choo Chin Teck
Director (Corporate Services) and
Group Company Secretary
Keppel Land International
Lim Kei Hin
Chief Financial Officer
Keppel Land International
Tan Swee Yiow
President (Singapore Commercial)
and Head, Regional Investments
(Indonesia, Malaysia, Myanmar)
Keppel Land International
Augustine Tan
President (Singapore Residential)
and Head, Regional Investments
(India, Middle East)
Keppel Land International
Ng Hsueh Ling
Chief Executive Officer/Director
K-REIT Asia Management
Loh Chin Hua
Managing Director
Alpha Investment Partners
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 Heng
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
37
Investor Relations
1
2
1_Analysts engaged in robust
discussion with Keppel Senior
Management.
2_Visits to our yards provide
analysts and investors a ground
feel of our operational excellence.
With the global fi nancial crisis gradually
easing, 2010 started out on a promising
note. However, this positive mood
was soon dampened by the eruption
of the Eurozone debt crisis. The oil
spill incident in the Gulf of Mexico also
impacted the sentiments in the global
Offshore & Marine sector, and in our
key markets in Singapore and China,
cooling measures were introduced
to curb speculation and stabilise the
property markets. Overall, 2010 was a
year of challenges for the Group.
Throughout the year, Keppel’s dedicated
Investor Relations team worked
steadily to address the concerns of the
investing community, while stepping up
communications with investors, analysts,
fund managers and the media. The
team provided balanced insights into the
Group’s performance, key developments
and growth strategies.
PROACTIVE OUTREACH
In 2010, we held over 160 one-on-one
investor meetings and conference
calls with Singapore and overseas
institutional investors. Our top
management also went on non-deal
roadshows to the US and Hong Kong,
and met over 20 institutional
fund managers.
Such meetings provide a useful
platform for investors and analysts to
engage our management and better
understand our business dynamics and
direction. This also contributes towards
the strengthening of relationships with
our long-term shareholders.
During the year, we also arranged
meetings with the management of
key subsidiaries. Tours of the facilities
aided in the better understanding of our
businesses and operations.
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.
As a global leader in the Offshore &
Marine industry, Keppel’s key attraction
to investors is our rigbuilding operations
and facilities. In 2010, we conducted
over 10 yard tours cum management
dialogues for institutional investors,
including three groups of international
investors who were in Singapore to
38
Keppel Corporation Limited
Report to Shareholders 2010
participate in key investor conferences,
and one group who visited our yard
in Brazil.
With a good number of rigs being
delivered in 2010, investors and
analysts were invited to 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 management, customers
and suppliers.
We also organised visits to facilities in
our Infrastructure Division, to enable
investors and analysts to have a better
understanding of the operations there.
For example, analysts were given a
tour of the newly completed Keppel
Seghers Tuas Waste-to-Energy Plant
in Singapore in conjunction with its
opening ceremony in June 2010.
In addition, we complemented our
outreach efforts with participation in
selected investor conferences. For a
fourth consecutive year, top executives
from Keppel Offshore & Marine
presented at the Annual Oil & Offshore
Conference organised by Pareto
Securities in Norway, which was also a
strategic platform for management to
strengthen and renew ties with industry
players and customers.
REGULAR COMMUNICATION
To reach stakeholders in a timely and
effective manner, we continued ‘live’
webcasts of our quarterly results and
presentations. These webcasts allow
viewers from around the world to listen
to our top 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.
Recognising the importance
of providing easy-to-access and
up-to-date information round the
clock to our stakeholders, we
revamped our corporate website
with better organised business
information and an enhanced investor
centre, containing key fi nancial
highlights, orderbook information
and an outline of the Group’s most
current landmark projects.
RECOGNITION
Our proactive investor relations
approach and commitment to corporate
transparency was again recognised by
the business and investing community
in 2010.
Signifi cant accolades were garnered
at the 5th Singapore Corporate Awards
in May 2010. Keppel Corporation
emerged the Gold winners in the
Best Managed Board and Best Annual
Report Awards in the category of
companies with market capitalisation
of $1 billion and above.
At the 11th Investors’ Choice
Awards organised by the Securities
Investors Association of Singapore,
Keppel Corporation placed
Second in the Singapore Corporate
Governance Award.
Focus on Shareholder Value
We are committed to deliver
value to our shareholders. In 2010,
we continued to sustain our returns
to shareholders.
At 22.3%, our Return on Equity
(ROE) exceeded 20% for the
fourth consecutive year. Our Total
Shareholder Return (TSR) in 2010
was a creditable 47%, which was
well above the benchmark Straits
Times Index’s (STI) TSR of 13%.
Over the past decade, Keppel’s
net profit grew from $267 million
in 2001 to our record earnings of
$1,419 million for 2010. This is a
Compound Annual Growth Rate
(CAGR) of about 20%. In terms of
TSR, Keppel’s CAGR of 32% was
also significantly higher than STI’s
CAGR TSR of 9%.
In terms of share price performance,
Keppel Corporation’s share price
gained 41.3% over the year to close
at $11.32 at the end of 2010 (based
on adjusted beginning share price of
$8.01), outperforming STI’s gain of
about 10.1% during the same period.
To reward shareholders for the
record performance achieved in
2010, we are proposing a total cash
dividend of 42 cents per share for
the year, which is 11% higher than
the 2009 total cash dividend of
38 cents per share. In addition,
we are proposing a bonus issue
to shareholders on the basis of one
bonus share for every 10 existing
ordinary shares in the capital of
the Company. The proposed
payout for 2010 will be around
$670 million, which is about 50%
of Group net profit.
Investor Relations
39
Awards and Accolades
CORPORATE GOVERNANCE AND
TRANSPARENCY
BUSINESS EXCELLENCE
Singapore Corporate Awards
Keppel Corporation
g Gold, Best Managed Board
(Market cap of $1 billion and above)
g Best CEO, Mr Choo Chiau Beng
(Market cap of $1 billion and above)
g Gold, Best Annual Report
(Market cap of $1 billion and above)
K-REIT Asia
g Gold, Best Annual Report
(REITs and Business Trusts)
Keppel Telecommunications
& Transportation
g Gold, Best Annual Report
(Market Cap of $300 million to
less than $1 billion)
Governance and
Transparency Index
Keppel Corporation, Keppel
Telecommunications & Transportation
and Keppel Land were ranked 4th,
9th and 13th respectively among 700
companies that were assessed.
Securities Investors Association
of Singapore 11th Investors’ Choice
Awards
Keppel Corporation
g Second, Singapore Corporate
Governance Award
Keppel Land
g Runner-up, Most Transparent
Company (Property)
g Keppel Corporation was one of
the top five brands in Singapore at the
Brand Finance Asia Pacific Forum.
g Keppel Corporation was
ranked 20th position out of top 42
conglomerates in the Forbes Global
2000 Ranking for 2010, up from 21st
position in 2009.
g Keppel FELS edged four other
finalists to win the Offshore Yard Award
at the Seatrade Asia Awards.
g At the Lloyd’s List Awards, Keppel
Shipyard was lauded the Best Shipyard
of the Year.
g Semisubmersible drilling tender,
West Palaut, built to the KFELS SSDT TM
design won the Shell Platform Rig of
the Year Award for the third time. The
rig was conferred this award in 2004
and 2006.
g At the 24th Annual Singapore 1000
& Singapore SME 1000 and Singapore
International 100 Awards, Keppel
Corporation was named the winner
of the Singapore International 100:
Overseas Sales/Turnover Excellence in
Markets (The Americas) while Keppel
FELS took home a similar award for the
European market.
g Keppel FELS received the
May Day 2010 CBF (Cheaper,
Better, Faster) Model Partnership
Award from the National Trades
Union Congress.
g Keppel Nantong Shipyard was
ranked sixth among Nantong’s Top
10 Export Enterprises by the Nantong
Municipal People’s Government.
g Keppel Logistics clinched for
the second consecutive year, the
Domestic Logistic Service Provider of
the Year (Singapore) at the 2010 Frost
and Sullivan ASEAN Transportation &
Logistics Awards.
g Keppel Corporation was named
as one of the Top Ten Most Desired
Companies to work for in a survey
conducted by Boardroom Research,
commissioned by PeopleSearch.
g At the Singapore Human
Resources (HR) Awards, Keppel Land
received awards in the Corporate Social
Responsibility (Leading), Performance
Management (Special Mention) and
E-HR Management (Special Mention)
categories.
g Two top welders from Regency
Steel Japan won the second and third
position at the 51th Fukuoka Prefecture
Welding Skill Contest in Japan.
g At the Euromoney Real Estate
Awards 2010, Keppel Land garnered
awards comprising:
– Best Developer in Vietnam
– Best Office Developer in Singapore
g Keppel Land was one of the two
Singapore companies to be included
in the Dow Jones Sustainability Asia
Pacific Index.
g Keppel Land also garnered
recognition for its projects as follows:
Marina at Keppel Bay
– Marina at Keppel Bay won the
coveted award of Best Asian Marina at
the 6th Asian Boating Awards.
– Awarded the 5 Gold Anchors rating
from the Marina Industries Association
of Australia (MIAA) for top excellence in
services and facilities.
Jakarta Garden City
– Runner-up in the Residential (Low
Rise) category at the International
Real Estate Federation (FIABCI) Prix
d’Excellence Awards.
– Best Middle Class Residential
Development at the FIABCI Indonesia
– BNI Prix d’Excellence 2010 Awards.
Sedona Suites
– Sedona Suites in Hanoi and
Ho Chi Minh City was lauded for
“Excellent Performance” in the
Guide Awards 2009-2010.
Sedona Hotel Yangon
– At the World Travel Awards,
Sedona Hotel Yangon has reaffirmed its
position as Myanmar’s Leading Hotel.
40
Keppel Corporation Limited
Report to Shareholders 2010
GREEN AWARDS
CORPORATE CITIZENRY
SAFETY
g The Keppel Group garnered
12 awards at the Workplace Safety
and Health Awards 2010.
g For all-round safety performance,
Keppel Singmarine received the WSH
Performance Silver Award for the fourth
year in a row while Keppel Seghers
NEWater Development bagged its first.
g Keppel FELS won the Achievement
in Safety Award at the Lloyd’s List
Awards.
g Keppel Nantong Shipyard received
a Safety Excellence Award from the
Nantong Administration of Work Safety.
g Keppel’s properties at Keppel Bay
as part of the HarbourFront Cluster
have been conferred one of 10 Safe and
Secure Watch Group Awards.
g Keppel Corporation received
the Distinguished Patron of the Arts
Award from the Singapore National
Arts Council.
g Keppel Land was recognised as
the Most Admired ASEAN Enterprise
under the corporate social responsibility
category at the ASEAN Business
Awards 2010.
g Keppel Shipyard was conferred
the Minister for Defence Award
while Keppel Logistics received the
Meritorious Defence Partner Award
at the annual Total Defence Partner
Award.
g Keppel Singmarine won the
Pinnacle Award and SHARE Platinum
Award for its unwavering support
and commitment to Community
Chest. Keppel FELS also won the
SHARE Platinum Award while Keppel
Logistics and Keppel Shipyard
received the SHARE Gold Awards.
Keppel Corporation was bestowed
the Corporate Gold Award for its long
involvement in charitable causes.
g Keppel Towers, GE Tower, Equity
Plaza, Prudential Tower and Keppel Bay
Tower in Singapore, The Arcadia and
La Quinta in China were conferred the
Green Mark Gold by the Singapore’s
Building and Construction Authority.
g Keppel Land’s golf courses in
China and Indonesia, Spring City Golf
& Lake Resort and Ria Bintan Golf Club
were designated Classic Sanctuaries by
Audubon International for their efforts
in enhancing wildlife habitats and
protecting natural resources.
g KREIT Asia’s 275 George Street
building in Australia attained the
prestigious 5 Star Green Star – Office
As Built v2 rating by the Green Building
Council of Australia.
g
In the Singapore Environmental
Achievement Awards, Keppel Land
won the Merit Award in the Services
category for its excellence in corporate
environmental leadership.
g Hotel Sedona clinched the runner-
up place in the ASEAN Best Practice
Competition for Energy Management
in Building and Industry (Small and
Medium category).
g Hotel Sedona was lauded for Best
in Green and Environmental Practices
by the Government of North Sulawesi.
g Ocean Financial Centre was
conferred the Solar Pioneer Award, an
award co-organised by the Singapore
Business Federation, Sustainable
Energy Association of Singapore, the
Economic Development Board and the
Energy Market Authority.
Keppel Group emerged a big winner at the 2010 Singapore Corporate Awards, which recognised
Keppel’s excellence in corporate governance and transparency.
Awards and Accolades
41
Special Feature
Creating Value
Through
Innovation
To sustain our growth, Keppel is committed to develop
our businesses with the twin focus of technology innovation
and value creation.
g Systematic technology development framework
spearheaded by Keppel Technology Advisory Panel,
supported by Keppel Offshore & Marine Technology Centre
and Keppel Environmental Technology Centre
g A range of innovative products designed and
developed to meet the needs of our customers
g Harnessing our technology advantage to provide
sustainable urbanisation solutions
g Boosting productivity and efficiency through effective
cost management and project management skills
Keppel Offshore
& Marine
Technology
Centre
collaborates
with research
institutes and
industry partners
to anticipate
and develop new
technologies and
solutions that will
meet the future
needs of the
global offshore
and marine
industry.
42
Keppel Corporation Limited
Report to Shareholders 2010
Keppel has a range
of proprietary rig
solutions.
Special Feature
Creating Value Through Innovation
43
Special Feature
Keppel Group’s Sustainable Growth Drivers
Technology
Innovation Focus
Product
R&D
Green
Solutions
+
SUSTAINABLE
GROWTH
=
Value and
Customer Focus
High Productivity
and Efficiency
NURTURING A CULTURE
OF INNOVATION
At Keppel, a key engine of our
sustainable growth and value creation
is our focus on and commitment
towards technology innovation. For
years, we have sought to align our
research and development (R&D)
activities to complement our business
activities, with the aim of developing
solutions that are commercially viable
and adaptable to the needs of the
industries which we are in.
Our culture of innovation, developed
and nurtured through our over four
decades of existence, has also improved
the overall productivity and effi ciencies
of our workforce. Together with our
value-based mindset inculcated across
the Group following a restructuring
exercise in 2001, we have achieved
good growth for the last ten years,
culminating in a record net profi t of
$1,419 million in 2010.
Our twin focus on innovation and value
has empowered and fortifi ed the Group
well to weather the recent years of
economic uncertainty, and readied us
to ride on the upturn to capture more
growth opportunities.
Underlying our R&D efforts across
our businesses is the deep-seated
desire to value-add to our
customers, by developing quality
and cost-effective solutions to meet
their needs.
SYSTEMATIC TECHNOLOGY
DEVELOPMENT
Within Keppel, we have put in place
a number of key drivers to sustain
and enhance our technology innovation
capabilities. At the apex of this is the
Keppel Technology Advisory Panel
(KTAP), supported by two centres
of excellence launched in 2007
to implement the strategic vision
of the Panel and to coordinate R&D
efforts within the businesses. They
are the Keppel Offshore & Marine
Technology Centre (KOMtech) and
Keppel Environmental Technology
Centre (KETC).
Keppel Technology Advisory Panel
Established in 2004, the KTAP is
envisioned to be a key platform for
sustaining the Group’s technology
leadership. In addition to providing
strategic leadership for our 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 participation from the Board
and senior management, KTAP
convenes one or two times a year.
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 (please see
details of KTAP members on
page 34 of this Report).
KTAP has proven over the years to be
an effective catalyst in identifying areas
to sustain our competitive edge and in
fostering a vibrant R&D culture within
the Group.
Developing Offshore & Marine
Technology
Launched in 2007, KOMtech
underscores Keppel Offshore &
Marine’s (Keppel O&M) commitment
to long-term R&D. The mission of
KOMtech is to develop competencies,
promote innovation, stimulate and
carry out application research and
product/process development, and
engage in technology foresight to
create strategic advantages for
Keppel O&M.
KOMtech complements and
augments the work of the three
technology units within Keppel O&M
– Offshore Technology Development
which specialises in jackup and
their critical systems; Deepwater
Technology Group which specialises
in semisubmersibles and other
deepwater structures; and Marine
Technology Development which has
expertise in specialised ship design.
At the moment, KOMtech employs
about 45 research engineers, of
which 18 are PhD holders and another
15 are Master degree holders.
44
Keppel Corporation Limited
Report to Shareholders 2010
Our commericial developments
such as Ocean Financial Centre
incorporates environmentally-
friendly initiatives such as
green havens.
Leveraging existing and proprietary
technologies, KOMtech is also
in collaboration with universities,
research institutes and industry
partners worldwide in its work
to anticipate and develop new
technologies and solutions that will
meet the future needs of the global
offshore & marine industry.
Driving Environmental
Technology Solutions
Established in 2007, KETC
underscores Keppel Integrated
Engineering’s (KIE) commitment to
long-term innovation in environmental
solutions. KETC initiates, manages,
and conducts R&D within KIE, and
also collaborates with leading
academic and research institutions
worldwide. Research partners include
research institutes of Singapore’s
A*STAR, universities and polytechnics,
UK’s Cranfi eld University and
Netherlands Organisation for Applied
Scientifi c Research.
KETC works closely with Keppel
Seghers Belgium on cutting-edge
technologies in wastewater treatment
and waste-to-energy systems that
translate into innovative yet value-
enhancing solutions. A case in point
is the Spacer and Turbo-Charger
projects that have resulted in
signifi cant cost savings for the
Keppel Seghers Ulu Pandan NEWater
Plant in Singapore.
In 2010, KETC was successful in a
National Research Foundation call
for Competitive Research Funding
for a Co-Digestion project with
one of our research partners. The
same year, KETC achieved two US
provisional patents (PCTs) on anaerobic
wastewater treatment technology.
The patented improved digestor
is envisaged to be highly effi cient
in producing green biogas, while
achieving cost savings. It might also
address the need for higher strength
wastewater derived from both municipal
and industrial sectors.
DEVELOPING PRODUCTS
FOR CUSTOMERS
At Keppel, we ensure that whatever
we create must help our customers
achieve their commercial and business
goals. When we launch a new product
or pursue a new market segment,
we balance the risks with the
rewards carefully.
Special Feature
Creating Value Through Innovation
45
Special Feature
This is well demonstrated in the
development of our own proprietary
jacking and fi xation systems for the
offshore industry in the 1990s, which
today are key components used in all
Keppel-designed jackup rigs. The key
motivation then in developing our own
systems was to have better control over
the supply and costs, so that we can
deliver good quality products on time
and within budget to our customers.
Following this, we continued to seek
ways to improve on our rigs with strong
inputs from our customers to create
value for them. We combine the best of
our rig building experience with design
and engineering expertise to develop
and offer robust solutions.
We also work hand-in-hand with
trendsetting industry partners and
various universities such as the National
University of Singapore, Nanyang
Technological University, University of
Western Australia, Oxford University,
among others, to sharpen our edge in
technology. This enables us to further
enhance and refi ne our products, as
well as grow our knowledge base.
Proprietary Jackup Rig Designs
1997 was a signifi cant year for Keppel
FELS as it entered the world of rig
design, acquiring rights to the Freide &
Goldman MOD V and MOD VI jackup
rigs. The two jackup models were
further improved upon by our Offshore
Technology Development unit and
evolved to become Keppel’s proprietary
KFELS B Class and KFELS G Class rig
designs. These designs were further
improved upon which gave rise to a
comprehensive range of winning jackup
models in our technology portfolio.
When the offshore industry revived in
2002, after a long dry spell, we were
ready with our own set of viable and
cost-effective rig and ship solutions to
meet the burgeoning demand, spurred
by decades of under investment
worldwide in this sector.
Our new solutions, such as the KFELS
B Class jackup rig design launched
in 2000, were quickly soaked up by
the market. To-date, Keppel FELS has
delivered a total of 33 KFELS B Class
jackup rigs to customers operating
in different parts of the world. For
its environmentally-friendly features,
the KFELS B Class design was also
bestowed the Prestigious Engineering
Achievement Award from Institution
of Engineers Singapore in 2009. We
further enhanced the KFELS B Class for
high pressure, high temperature drilling
of up to 35,000 feet, and came up with
the KFELS Super B Class jackup rigs.
through solid ice over 1.7 m thick and
operate in temperatures as low as -45˚C.
Their main functions are to perform ice
channeling for tankers within the terminal
area, and assist in tanker manoeuvring,
mooring and loading. Importantly, the
two icebreakers were built to “clean
design” and “zero discharge” standards
to better protect the fragile Arctic
environment.
In 2009, Keppel Singmarine also
constructed the fi rst ice-class Floating
Storage Offl oading (FSO) vessel to be
completed and deployed in the Caspian
region for LUKOIL.
Other high-specifi cation, high
performance jackup rigs in the KFELS
design stable are:
– KFELS Super A Class: A viable
and cost-effective solution for
harsh environments and cold
climate areas. It features advanced
automated drilling systems with
2.5 million pounds of static
hook load, a spacious deck and
comprehensive amenities for the
comfort of a 150-person crew.
– KFELS N Class: This high-
specifi cation jackup is designed
and equipped for demanding
drilling requirements in harsh
weather environments, such as
the North Sea.
Robust Vessels for
Ice Environments
We have also been able to apply our
technology and engineering expertise
to create solutions for ice environments
offshore. In 2008, Keppel Singmarine
successfully engineered and
constructed a pair of Arctic icebreakers
for our Russian customer LUKOIL in the
tropics of Singapore. These are the fi rst
icebreakers to be built in Asia.
Built in compliance with the Russian
Maritime Register of Shipping’s
standards, these vessels can cut
At present, we are trying to push
the boundaries even further by
looking into ice-worthy jackup rigs
that can facilitate oil and gas
exploration and production in
expanded weather window.
MEETING THE “GREEN” DEMAND
With the global megatrends of
rapid urbanisation and awareness
of climate change, there is growing
demand for sustainable environmental
solutions. With the fast expanding
population in the world, the need
to effi ciently treat large amounts of
waste and wastewater becomes
more urgent by the day. In addition,
to mitigate the impact of global
warming, the use of renewable energy
is expected to triple between 2008
to 2035, with the bulk of the increase
primarily from wind and hydropower.
Keppel is well-positioned to meet such
a demand trend with our range of
technologically advanced and proven
solutions, from waste-to-energy plants,
green buildings to offshore wind turbine
installation vessels, and foundations
and cable laying vessels.
Advanced Waste and Water
Treatment Technologies
KETC, the R&D arm of KIE, focuses on
innovating water, wastewater treatment
and solid waste treatment technologies
46
Keppel Corporation Limited
Report to Shareholders 2010
Innovative Drillship Design
1
2
To meet the growing demand for
robust solutions in the ultra-deep
waters of Brazil, Gulf of Mexico
and West Africa, Keppel O&M’s
Deepwater Technology Group,
together with leading designer
SBMGustoMSC, jointly developed
one of the fi rst compact drillship
designs in the world.
Called DrillDeep DS12000, it is a
cost-effective rival to its larger peers.
It is more energy-effi cient and easier
to maintain. Spanning 198 m in
length, its construction requires just
16,000 tonnes of steel compared to
the standard 28,000 tonnes.
of DrillDeep DS12000 are fully
integrated within the ship’s hull. This
frees up a generous deck space. It is
capable of drilling down to 40,000 ft
below the rotary table and operating
at a water depth of 12,000 ft. It is
also able to attain transit speeds as
high as 14 knots.
Another innovative drillship design
which is jointly developed by
KOMtech, Keppel FELS and Stena
Drilling is the slim drillship. This
design is engineered to economically
and effectively perform subsea well
maintenance, intervention and light
drilling operations.
pressure riser, the slim drillship
is capable of drilling and well
intervention work in a maximum
well depth of 22,500 ft below rotary
table in water depths no deeper than
7,500 ft.
The slim high pressure riser allows
intervention tools access into wells
containing hydrocarbons, thereby
eliminating the need to fi ll the well
with drilling mud. This riser also
enables the drillship to bore through
sections of old wells which have
been depleted, something traditional
drillships cannot achieve for fear of
damaging the well.
Unlike typical drillship, whose risers
and key equipment are located
on the main deck, the topsides
At 145 m long, the slim drillship
is smaller in size compared to a
standard drillship. Utilising a high
1_DrillDeep DS12000
2_Slim drillship design
Special Feature
Creating Value Through Innovation
47
Special Feature
Keppel
Environmental
Technology
Centre is currently
researching into
the treatment of
biosolids waste
with energy
recovery and
treatment of high
strength industrial
wastewater,
among others.
for commercial applications. Currently,
KETC is working on a number of
projects, including the treatment of
biosolids waste with energy recovery
and seawater desalination.
KETC is exploring a new and more
effective way to treat and recycle
sludge, a by-product of municipal
wastewater treatment processes.
Known as the REDOXAN® process, it
is essentially a two-stage fermentation
process whereby the residual biomass,
after the second stage of aerobic
digestion, is separated and submitted
to either a mechanical treatment,
chemical treatment or both, before
being recycled to the fi rst stage of
anaerobic digestion.
Through the REDOXAN® process,
almost complete digestion of the
sludge and maximum biogas
production can be achieved, therefore
treating sludge more effectively and
producing green energy at the same
time. Preliminary results have been
encouraging and a cost-benefi t analysis
is currently being conducted.
On wastewater treatment, KIE has
identifi ed an emerging clean and
sustainable wastewater technology.
KETC is developing this jointly with
KIE’s Industrial Solutions team and
has won a research grant. This system
can treat varying grades (strengths)
of wastewater and therefore has wide
applications especially for upgrading or
retrofi tting of existing plants. It is also
applicable to new industrial wastewater
treatment plants, is easy and
economical to retrofi t, construct and
operate due to its compact nature and
concise process design. Besides lower
energy consumption, this technology
contributes to signifi cant nitrogen
removal, negligible sludge discharge,
and the ability to generate biofuel.
For water treatment, KETC secured
a TechPioneer funding for seawater
desalination. The team is presently
working on a demonstration plant
targeted to be ready by end of this year.
Tapping the Offshore
Wind Potential
With our established track record
in the offshore drilling industry, we see
growth potential and value in applying
our technological know-how in the area
of renewable energy. In July 2010, we
entered into a partnership with Seafox
48
Keppel Corporation Limited
Report to Shareholders 2010
Group, a leading offshore fl eet owner
and operator, to commercialise a
new vessel concept based on our
jackup technology for the offshore
wind energy sector.
The KFELS Multi-Purpose Self
Elevating Platform, or KFELS MPSEP,
is a cutting-edge wind turbine installation
vessel that can withstand harsh offshore
conditions all year round in the
North Sea. Its maximum operating water
depth of 65 m, is by far one of deepest
in the industry, and some 45% deeper
than the capability of existing vessels.
Made to withstand extreme storm
conditions, the vessel provides a
potentially longer operational window
for its operators.
One Raffl es Quay, an offi ce
development in the Marina Bay area
in Singapore under the portfolio
of K-REIT Asia, hosts a district cooling
plant which provides chilled water for
effi cient air-conditioning for itself
as well as adjoining developments.
Away from Singapore, Keppel Group
is the leader of the Singapore
consortium of a landmark bilateral
project between China and Singapore,
known as the Sino-Singapore
Tianjin Eco-City. This 30-sq km
Eco-City is envisioned to create
a socially harmonious, environmentally-
friendly and resource effi cient
community that meets the needs
of an urbanising China.
Apart from the offshore wind energy
sector, the KFELS MPSEP also meets
all the stringent operating regulations
of the offshore oil and gas industry and
can support a wide range of related
activities such as accommodation, well
intervention, maintenance, construction
and decommissioning.
We are one of the fi rst foreign property
developers to commence construction
and sales of eco-homes within the
Eco-City. Our eco-homes are in
compliance with the Eco-City’s Green
Building Evaluation Standards (GBES).
The standards requirements include:
– Achieving at least 70% reduction
Green Developments
To create live-work-play environments
of enduring value for the communities
in our key markets, we are committed
to incorporate environmentally-friendly
and innovative energy saving features
in our property developments to ensure
minimal impact on the environment.
Our commercial developments
in Singapore such as the Ocean
Financial Centre (OFC) and Marina Bay
Financial Centre (MBFC) are equipped
with environmentally-friendly features.
OFC will feature a roof photovoltaic
system, an energy-effi cient hybrid-
chilled water system and an integrated
paper recycling facility. Power-saving
LEDs will also be used to light up the
building facade. MBFC will incorporate
curtain-wall glass cladding system
which reduces the solar heat load
and as a result, less energy is required
for cooling.
in building energy consumption
compared to buildings designed to
local Design Standard 1980–81;
– Meeting 5% of total building
energy demand from renewable
energy sources;
– All apartment units and 40% of
public spaces to receive at least
two hours of sunlight during winter;
– Green ratio of more than 30%;
– Reduction of construction materials
wastage through optimal design; and
– Sourcing materials from within a
500-km radius.
BOOSTING PRODUCTIVITY
WITH INNOVATION
As part of our continuous process
to create value for the Group as well
as our stakeholders, we are constantly
seeking ways to manage our costs
through improving the productivity
of our workforce and enhancing our
operational effi ciencies. This has been
a key formula in sustaining Keppel’s
growth through the years, and will
continue to be a hallmark of Keppel’s
business strategy.
A highly effi cient operational framework
has helped Keppel O&M to sustain its
position as the world’s leading offshore
rig designer and builder. By constantly
enhancing our processes through
innovation, we have been able to deliver
more rigs by maximising resources and
reducing wastage.
The drive for enhanced productivity
in Keppel is both a top-down and a
bottom-up approach. For instance,
a productivity improvement taskforce
was established within Keppel O&M
last year to formalise efforts and
implement strategies to achieve
continuous productivity improvements
over the longer term. Keppel O&M
employees also participate actively
in the productivity enhancement
movement by submitting resource-
optimising ideas at the annual
Innovation Quality Circle (iQC)
Conventions. Every year, cost savings
of up to several million dollars are
generated from employees’ innovations.
At the logistics division of Keppel
Telecommunications & Transportation,
the aim is to provide transportation
solutions to enable timely and effi cient
deliveries of customers’ goods. The
company recently invested in a new
Transport Management System that
enables it to better process information
across its customers’ supply chains.
This ensures that information on
delivery status is seamlessly translated
into timely operational execution.
The improved planning capability
of the new system also enhances the
overall effi ciency and performance
of the operations.
Special Feature
Creating Value Through Innovation
49
Operating & Financial Review
The Keppel Group is in the Offshore & Marine, Infrastructure
and Property businesses to deliver sustainable earnings
growth. With total assets of $20.98 billion as at end-2010,
the Group serves a global customer base through its
business units strategically located in over 30 countries.
Some of the key factors influencing our businesses
are global and regional economic conditions, oil and
gas exploration and production activities, real estate
markets, threats, currency fluctuations, capital flows,
interest rates, taxation and regulatory legislation. As the
Group’s operations involve 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 financial condition or
the profitability of our operations.
In this section on the operating and financial review,
we seek to provide a strategic, market and business
review of the Keppel Group’s operations and financial
performance. We have described 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 financial statements
as at 31 December 2010.
Contents
51
Group Structure
52
Management Discussion
and Analysis
54
Offshore & Marine
66
Infrastructure
74
Property
82
Investments
84
Financial Review
and Outlook
50
Keppel Corporation Limited
Report to Shareholders 2010
Group Structure
Keppel Corporation Limited
Offshore & Marine
Infrastructure
Property
– Offshore rig design, construction,
repair and upgrading
– Ship conversions and repair
– Specialised shipbuilding
– Environmental engineering
– Power generation
– Logistics and data centres
– 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 Land Limited
52%
MobileOne Ltd2
20%
Keppel FELS Limited
100%
Keppel Integrated
Engineering Ltd
100%
Keppel Shipyard Limited 100%
Keppel Seghers
Engineering Singapore
Pte Ltd
Keppel Singmarine
Pte Ltd
100%
Keppel FMO Pte Ltd
100%
Keppel DHCS Pte Ltd
100%
100%
K-REIT Asia
76%
46%
30%
Keppel Land
International Limited
Southeast Asia, India and Middle East
100%
Keppel Land China
China
100%
Keppel Nantong Shipyard 100%
Company Limited
China
Offshore Technology
Development Pte Ltd
100%
Keppel Seghers
Belgium NV
Belgium
100%
K-REIT Asia
Management Limited
100%
1 Owned by Singapore
Consortium, which is
90%-owned by the
Keppel Group –
Keppel Corporation (45%),
Keppel Land (35%)
and Keppel Integrated
Engineering (20%)
2 Owned by Keppel
Telecommunications
& Transportation Ltd,
an 80%-owned subsidiary
of the Company
Deepwater Technology
Group Pte Ltd
100%
K-Green Trust
49%
Alpha Investment
Partners Ltd
100%
Marine Technology
Development Pte Ltd
100%
Power Generation
Keppel AmFELS LLC
United States
100%
Keppel Energy
Pte Ltd
Keppel Verolme BV
The Netherlands
100%
Keppel Merlimau
Cogen Pte Ltd
100%
100%
Keppel FELS Brasil SA
Brazil
100%
Keppel Electric Pte Ltd
100%
Keppel Singmarine
Brasil Ltda
Brazil
Keppel Norway AS
Norway
Keppel Philippines
Marine Inc
The Philippines
Subic Shipyard &
Engineering Inc
The Philippines
Keppel Kazakhstan
LLP
Kazakhstan
Caspian Shipyard
Company Limited
Azerbaijan
Arab Heavy Industries
PJSC
UAE
Nakilat-Keppel Offshore
& Marine Ltd
Qatar
Group Corporate
Services
100%
Keppel Gas Pte Ltd
100%
100%
Logistics and Data Centres
96%
Keppel
Telecommunications
& Transportation Ltd
80%
87%
Keppel Logistics Pte Ltd
100%
Keppel Data Centres
Holding Pte Ltd
100%
Keppel Logistics
(Foshan) Pte Ltd
China
70%
50%
45%
33%
20%
Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd1
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 pages 208 to 218 of this Report.
Group Structure
51
Operating & Financial Review
Management Discussion and Analysis
Key Performance Indicators
Revenue
Net profi t before exceptional items (Net Profi t)
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
2010
$ million
9,783
1,419
204
1,623
450
(193)
1,035
88.7 cts
22.3%
42.0 cts
10v09
% +/(-)
-20
+12
-43
-0.1
-33
n.m.
+1
+12
-7
-31
2009
$ million
12,247
1,265
360
1,625
670
1,097
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
1,899
855
69.0 cts
22.4%
35.0 cts
GROUP OVERVIEW
For the year, net profi t of the Group
increased by 12% to reach a record
of $1,419 million. The compound
annual growth rate (CAGR) for net
profi t from 2005 to 2010 was 20%.
Attributable profi t after exceptional
items was $1,623 million.
Earnings per share (EPS) of 88.7 cents
were 9.3 cents above 2009 and
19.7 cents above 2008. EPS growth
kept pace with net profi t growth. Return
on equity (ROE) was 22.3%. Economic
Value Added (EVA) before exceptional
items rose $9 million to $1,035 million,
the highest ever attained by the Group.
Net cash from operating activities was
$450 million compared to $670 million
in the previous year due to increased
working capital and higher income
taxes paid, partly offset by higher
operating profi t. The Group spent
$1,266 million on acquisitions and
operational capital expenditure. This
comprised principally acquisition of two
commercial buildings in Australia, equity
injection into the Sino-Singapore Tianjin
Eco-City project, further investment
in Marina Bay Financial Centre and
redevelopment cost of Ocean Financial
Centre. After taking into account
dividend income and divestment
proceeds, net cash used in investing
activities was about $643 million.
The resultant free cash outfl ow was
$193 million.
by lower revenue from Keppel Land
as several residential projects were
completed last year.
Group net profi t of $1,419 million
was $154 million or 12% higher than
that of the previous year. Profi t from
Offshore & Marine Division of
$987 million was 22% higher because
of improved operating margins. The
division remains the largest contributor
to Group net profi t with 70% share.
Profi t from Infrastructure Division of
$57 million was 55% lower due to
losses from EPC contracts in Qatar,
partially offset by better performance
by Keppel Energy. Profi t from Property
Division of $326 million was $116 million
or 55% higher than that of previous
year due to contribution from several
residential projects in Singapore,
China and Vietnam, and share of profi t
of associated company developing
Marina Bay Suites in Singapore. Profi t
from Investments was lower due to
the disposal of Singapore Petroleum
Company in June 2009.
With the strong performance,
shareholders will be rewarded with a
total distribution of 42 cents per share
for 2010. This comprised a proposed
fi nal dividend of 26 cents per share and
the interim dividend of 16 cents per
share paid in August 2010. The total
payout for 2010 exceeds $673 million.
SEGMENT OPERATIONS
Group revenue of $9,783 million
was $2,464 million or 20% lower than
that of the previous year. Revenue
from Offshore & Marine Division of
$5,577 million was $2,696 million or
33% lower and accounted for 57%
of Group revenue. The decrease in
revenue was due to lower volume of
work. Revenue from Infrastructure
Division of $2,510 million was
$83 million or 3% higher and accounted
for 26% of Group revenue. The higher
revenue earned from the electricity
and gas businesses of Keppel Energy,
was partly offset by the lower revenue
from EPC contracts in Qatar. Revenue
from Property Division of $1,685 million
was $177 million or 12% higher due to
sale of apartments at Keppel Bay and
progressive revenue recognition from
Refl ections at Keppel Bay, partly offset
52
Keppel Corporation Limited
Report to Shareholders 2010
Revenue
($ million)
2010 $9,783 million
2009 $12,247 million
2008 $11,805 million
5,577
8,273
8,569
2,510
2,427
2,232
1,685
1,508
950
11
39
54
10,000
8,000
6,000
4,000
2,000
0
Net Profit
($ million)
Offshore & Marine
Infrastructure
Property
Investments
2010 $1,419 million
2009 $1,265 million
2008 $1,097 million
987
810
705
57
126
63
326
210
157
49
119
172
1,000
800
600
400
200
0
Offshore & Marine
Infrastructure
Property
Investments
Operating & Financial Review
Management Discussion and Analysis
53
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.
Alpha Star, the second
DSSTM 38 rig delivered early
and within budget to Brazilian
operator, Queiroz Galvão Óleo
e Gás, is in the league of the
world’s most advanced drilling
semisubmersibles.
EARNINGS REVIEW
In 2010, the Offshore & Marine Division
secured new orders worth a total
of $3.2 billion, and a net orderbook
of $4.6 billion as at year-end, with
deliveries extending to 2013. Revenue
of $5,577 million was $2,696 million
or 33% lower than 2009 due to lower
volume of work. On the other hand,
pre-tax earnings increased by 15%
to $1,242 million, owing to improved
margins driven by cost effi ciencies
and higher productivity. Operating
profi t margin for 2010 reached a high
of 20.1%. Net profi t of $987 million
was $177 million or 22% higher than
in 2009. The Division remains the
largest profi t contributor to the Group,
accounting for 70% of net profi t.
MARKET REVIEW
Global economic recovery in 2010
brought some degree of stabilisation
to the offshore and marine industry,
relative to the volatility of previous
years. The pace of recovery of the
industry was backed by the strong oil
trade and bullish oil prices. Continuing
the uptrend seen in late 2009, oil prices
remained in the trading range of
US$70 to US$90 per barrel for the
most part of 2010.
Against the backdrop of recovery
in the fi rst half of 2010, the industry
faced a setback with the blowout
of the Macondo well in the US Gulf
of Mexico (GoM), which led to a
subsequent ban on deepwater drilling
in the GoM. In the aftermath of the
worst offshore oil spill in US history,
the industry faced uncertainty as
the incident and its implications
looked set to leave an indelible
mark on the regulatory face of the
offshore industry.
By the year’s closing however,
the industry proved remarkably
resilient. The early lifting of the drilling
moratorium had a positive effect on
utilisation and dayrates for deepwater
rigs. Drilling activities in the GoM
look set to pick up gradually as the
permitting process continues. The
tougher safety regulations imposed on
offshore rigs brought about a demand
for newer, high specifi cation rigs which
Keppel Offshore & Marine (Keppel
O&M) is well poised to provide.
Earnings Highlights
Net Profit
($ million)
Revenue
EBITDA
Operating Profi t
Profi t before tax
Net Profi t
Manpower (number)
Manpower cost
ROE
2010
$ million
5,577
1,252
1,119
1,242
987
23,832
975
63%
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%
2010
2009
2008
987
810
705
Profi t before Tax
Major Developments in 2010
Focus for 2011/2012
$1,242m
Increased 15%
from FY 2009’s
$1,081 million.
Net Profi t
$987m
Increased 22%
from FY 2009’s
$810 million.
54
g Continued delivery excellence with
12 rigs, five FPSO/FSRU conversions,
18 specialised vessels, and several rig
upgrades and repairs.
g Acquired new shipbuilding yard
in Santa Catarina, Brazil.
g Took a stake in the new Baku
Shipyard in Azerbaijan.
g
Inaugurated Nakilat–Keppel
Offshore & Marine shipyard in Qatar.
g Partnering Seafox to build first
KFELS MPSEP for offshore wind market.
g
Increased stake in Subic Shipyard
and Engineering Inc in the Philippines.
g Deliver value through excellent
project management and execution.
g Enhance R&D initiatives to
strengthen position as market leader
in selected segments.
g Explore opportunities in new
markets and adjacent businesses.
g Maximise and realise operational
efficiencies.
g Sustain prudent cost management.
g Focus on Health, Safety and
the Environment.
Keppel Corporation Limited
Report to Shareholders 2010
Operating & Financial Review
Offshore & Marine
55
Operating & Financial Review
Offshore & Marine
Keppel FELS delivered Floatel
Superior and Floatel Reliance,
accommodation rigs offering the
highest standards of health and
safety features for the well-being
of the crew.
OPERATING REVIEW
2010 was another landmark year
of deliveries for Keppel O&M, with
a total delivery of 12 rigs, 5 FPSO/FSRU
conversions, 18 specialised vessels
and several upgrades and repairs.
Keppel O&M also secured signifi cant
new contracts worth a total of $3.2 billion
with deliveries into 2013, closing its net
orderbook at $4.6 billion for 2010.
Keppel FELS also executed several
major upgrading/repair jobs in 2010,
with the early completion of work on
four rigs. Scarabeo 9, a Frigstad
D90 semi owned by Saipem S.p.A.
(Saipem), was towed to the yard to
complete installation and commissioning
works. Keppel FELS also secured the
contract for the upgrade, repair and
refurbishment of the ENSCO 7500 semi.
Offshore
2010 was a prolifi c year for Keppel FELS,
which saw a total of eight deliveries,
consisting of three jackups and fi ve
semisubmersible (semi) rigs. Included in
the three jackups delivered, was the fi rst
North Sea-compliant, dual-capability,
high-specifi cation and harsh environment
KFELS N Class rigs built for Rowan
Companies, Inc. (Rowan). This rig is the
fi rst of its kind to go into service. The
other two jackups were of the proprietary
KFELS B Class design. Two fl oating
accommodation semis were delivered
early to a new Keppel FELS client,
Floatel International. Keppel FELS also
delivered early the third and fourth of
seven newbuild units in the ENSCO 8500
series. A DSSTM 21 drilling semi was
also delivered ahead of schedule to
Maersk Drilling (Maersk).
Interest in wind turbine installation
vessels spiked with the development of
several wind farms in Western Europe.
Keppel FELS marked its entry into
this market with its proprietary design
for a multi-purpose self-elevating
platform (MPSEP) that was chosen by
Seafox Group as the basis for a new-
generation wind turbine and foundation
installation vessel.
Several key newbuild contracts were
secured by Keppel FELS in 2010,
including four KFELS B Class newbuild
rig orders as well as a contract early in
the year to build Saudi Aramco’s fi rst
purpose-built jackup, constructed to
KFELS Super B Class design.
The overseas yards also had a productive
year in 2010. Keppel AmFELS delivered
56
Keppel Corporation Limited
Report to Shareholders 2010
four newbuild projects. One jackup
was delivered to repeat customer
Perforadora Central S.A. de C.V. The
yard also completed three out of the four
EXL rigs for Rowan of which the early
delivery of one rig earned the company
a bonus. The construction of the fourth
rig for Rowan is progressing well, within
schedule and budget.
Keppel FELS Brasil achieved several
deliveries in 2010. The P-57 Floating
Production Storage and Offl oading
(FPSO) vessel was delivered to SBM
Offshore N.V. (SBM Offshore) in October
2010, early, within budget and safely.
The company also completed repair,
upgrading and maintenance work on
several other vessels for repeat customers
Pride International, Inc., Diamond Offshore
Drilling, Inc., Transocean Ltd., and
Queiróz Galvão Óleo e Gás (QGOG).
Ongoing projects in the yard include
the upgrading of a drillship for Noble
Corporation, the upgrade and repair of a
BGL-1 pipelay barge and the engineering,
procurement and construction (EPC)
work on P-56 semi Floating Production
Unit, both for Petrobras Netherlands BV
(Petrobras). The company also started
work on a US$1 billion contract to build
and operate the P-61 tension leg wellhead
platform for the Papa-Terra Field. The
contract was signed between FloaTEC
Singapore and Petrobras Netherlands.
FloaTEC Singapore is a joint venture
company between J Ray McDermott and
Keppel FELS.
Keppel FELS Brasil implemented
several major projects in 2010 to
improve the yard’s productivity and cost
effectiveness. For its efforts, the company
earned several safety and early delivery
awards. The yard achieved 1 million
man-hours worked without LTI (lost-time
incidents) on P-57, earning a US$20,000
bonus from SBM Offshore, and received
a US$1.5 million bonus from QGOG. The
BGL-1 and P-56 vessels also enjoyed
stellar safety records, with the yard
respectively achieving 2 million and
1 million man-hours worked without LTI.
Significant Events
January
g Keppel FELS secured a contract to build Aramco Overseas
Company B.V.’s first purpose-built jackup, a customised KFELS
Super B Class jackup.
February
g FloaTEC Singapore signed a contract worth about
US$1 billion to build and operate the P-61 tension leg wellhead
platform for the Papa-Terra Joint Venture in the Campos
Basin, Brazil.
March
g Keppel FELS delivered Floatel Superior, a semisubmersible
accommodation rig to Floatel International (Floatel).
g Keppel O&M broke ground on a new 52-ha shipbuilding
and shiprepair yard in Baku, Azerbaijan, jointly developed with
the State Oil Company of Azerbaijan Republic (SOCAR) and
Azerbaijan Investment Company.
g Keppel Verolme and consortium partner AREVA
Energietechnik GmbH secured a €62 million contract from
Wetfeet Offshore Windenergy GmbH to build a Mobile Offshore
Application Barge.
April
g Keppel O&M fortified its market leadership in Brazil with the
acquisition of a 7.6-ha shipbuilding yard at Navegantes, Santa
Catarina. The new yard would focus on the construction of
offshore support vessels.
President of SOCAR, Mr Rovnag Abdullayev (second from left) introduced the
capabilities of the new Baku Shipyard to Azerbaijani President, HE Ilham Aliyev
(extreme left); Chairman of Keppel Corporation, Dr Lee Boon Yang (third from left)
and Singapore’s Minister for Foreign Affairs, Mr George Yeo.
Operating & Financial Review
Offshore & Marine
57
Operating & Financial Review
Offshore & Marine
Keppel Verolme performed repair and
maintenance work on several vessels in
2010. The company also signed a letter
of intent with Maersk for the fabrication
and installation of a set of spud cans
for a jackup. It also secured a contract
to build a transformer platform for an
offshore wind farm.
In the Caspian region, Keppel Kazakhstan
had another busy year with the
continuation of the Agip KCO contract
to fabricate pipe racks, pontoons
and ancillary steelwork for the
experimental phase of the Kashagan
fi eld development. It delivered
52 pipe-rack modules, various offshore
steel structures and three pontoons
in 2010. The company also secured
a contract from Agip KCO to build
two additional units of pontoons, with
delivery scheduled for September 2011.
For Caspian Shipyard, the year was
relatively quiet, with the completion
of the pipe-rack project for Agip KCO
and the integration of a derrick lay
barge for Bumi Armada Berhad (Bumi
Armada). A repair job was secured
from Saipem, and this was completed
in May 2010. During the year, the
shipyard effectively managed its costs
by trimming its workforce and reducing
overhead costs.
Marine
Keppel Shipyard continued to perform
well in yet another challenging year for
the shiprepair industry. The company
repaired a total of 302 vessels in 2010.
Repeat customers and companies
with fl eet agreements with Keppel
Shipyard accounted for more than 60%
of repair revenue. In conversions and
newbuilds, the yard completed fi ve
FPSO/FSRU conversion/upgrading
Opposite_Towering at 568 ft
or about 56 storeys high,
the North Sea-compliant, dual
capability high specifi cation
KFELS N Class rig was delivered
to Rowan safely, on time and
within budget.
58
Significant Events
June
g Keppel opened the Keppel Safety Training Centre, a first-
of-its-kind immersive safety training hub, offering a complete
range of safety training and certification courses.
July
g Keppel Shipyard and Keppel FELS Brasil secured two
Brazilian projects totaling $170 million from repeat customers
SBM and QGOG, for the conversion of a FPSO vessel and the
repair of a semi.
g Keppel FELS’s multi-purpose self-elevating platform design
was chosen by Seafox Group as the basis for a new-generation
wind turbine installation vessel.
August
g Keppel increased its stake in Subic Shipyard and
Engineering Inc, a repair, conversion and newbuilding yard in
the Philippines.
g Keppel Shipyard secured a contract for the modification
of the FPSO vessel OSX-1, worth approximately $50 million.
Dr Lee Boon Yang (fourth from left), Chairman of Keppel Corporation, showing
Minister Gan Kim Yong the safety innovation, ‘Universal Mobile Stool’, which won
an industry award for signifi cantly improving the ergonomics of the workplace.
Keppel Corporation Limited
Report to Shareholders 2010
Operating & Financial Review
Offshore & Marine
59
Operating & Financial Review
Offshore & Marine
GLOBAL 1200 comes with a
state-of-the-art pipelay system
and has the capability of operating
in waters as deep as 3,000 m.
projects, one turret fabrication, one
livestock carrier conversion and one
derrick lay barge newbuilding project.
At the year’s closing, work-in-progress
included seven FPSO projects and
fi ve other major projects involving
drillship outfi tting, turret fabrication and
livestock carrier conversion.
Keppel Shipyard was awarded several
contracts in 2010. These included an
FPSO conversion for Bumi Armada; the
conversion of two Very Large Crude
Carriers (VLCC) into FPSO facilities
and the modifi cation and upgrading of
an FPSO for Single Buoy Moorings Inc
(SBM); the modifi cation of FPSO OSX-1
for OSX Brasil S/A and the conversion
of a livestock carrier for Reestborg
Compania Naviera S.A.
Marine, Inc (KPMI), with its shipyards
facing the prospect of a sluggish
shiprepair and offshore fabrication
market. Its two operating shipyards,
Keppel Batangas Shipyard and
Subic Shipyard, however, managed
to ride the downturn by capturing
opportunities in marine conversion
and modifi cation projects while
stepping up efforts to seek more work
in the shiprepair market.
Fortunately, the domestic shiprepair
market in the Philippines improved
gradually as the year progressed, with
KPMI repairing a total of 169 domestic
and foreign vessels. The high demand
for coal from Indonesia also led to a
number of conversion projects being
secured by Subic Shipyard.
Keppel Shipyard continues in the
forefront of business and operational
excellence, winning the Shipyard of
the Year Award at the 12th Lloyd’s
List Maritime Asia Awards for the sixth
consecutive year, as well as safety and
early completion bonuses from owners
for various repair and conversion projects.
In the Philippines, 2010 was a
challenging year for Keppel Philippines
Keppel Batangas Shipyard repaired
a total of 110 vessels in 2010,
comprising 80 domestic and 30 foreign
vessels. In light of a slowdown in the
volume of work for rig fabrication,
the shipyard shifted its efforts to
other types of fabrication such as the
construction of coal barge Ratu Giok,
expected to be completed in early 2011.
For the coming year, Keppel Batangas
will continue to step up its marketing
60
Keppel Corporation Limited
Report to Shareholders 2010
efforts to foreign clientele, not just for
repair but also for other types of high
value fabrication works in order to
diversify its source of revenue.
Subic Shipyard saw the servicing of
57 foreign and two domestic vessels
in 2010. The yard will continue to
differentiate itself by focusing on the
marine conversion and modifi cation
work niche market for 2011.
2011 presents positive prospects for the
Philippine shipyards, which have been
upgrading their facilities and equipment
so as to increase their market share.
KPMI’s acquisition of a majority stake
in Subic Shipyard will enable it to better
integrate the operations and marketing
of its two yards.
Arab Heavy Industries PJSC, our joint
venture yard in Ajman, UAE, repaired
212 ships during the year, 20% fewer
than in 2009. It also carried out two
major conversion jobs.
Our joint venture yard at the Port of
Ras Laffan in Qatar, Nakilat–Keppel
Offshore & Marine Ltd (N-KOM), was
inaugurated by the Emir of Qatar on
23 November 2010. On the same day,
N-KOM also signed service agreements
with eight major fl eet owners. Work on
the construction of a load-out barge,
involving 7,000 tonnes of steel, for the
new yard is currently in progress.
Specialised Shipbuilding
Keppel Singmarine delivered 11 vessels
in 2010, including three multi-purpose
platform supply and support vessels
(MPSVs), a derrick pipelay vessel, an
anchor handling tug supply vessel, fi ve
harbour tugs and an anchor handling tug.
The MPSVs were delivered at planned
intervals within the year, safely and
on budget, winning the yard safety
bonuses, while the fi rst of the two
pipelay vessels built for Global
Industries was delivered on time and
with an unblemished safety record.
Significant Events
September
g Keppel Singmarine delivered the fourth MPSV to Greatship.
g Naming ceremony was held by Keppel Singmarine for
a derrick pipelay vessel, GLOBAL 1200, the first of two new
generation derrick pipelay vessels to Global Industries.
g Keppel O&M appointed Mr Lim Chin Leong to its Board.
October
g Keppel O&M delivered FPSO P-57 to SBM Offshore
for Petrobras. The naming of P-57, Brazil’s largest converted
FPSO in terms of production capacity, was witnessed by
President H.E. Luiz Inácio Lula da Silva.
g Keppel FELS delivered the first of three North Sea-
compliant, dual-capability high-specification jack-up, Rowan
Viking, to Rowan as well as the second semisubmersible
accommodation rig, Floatel Reliance, to Floatel 63 days early
and without any lost-time incidents, meriting a bonus of
US$1.1 million.
(From right) Mr Choo Chiau Beng, CEO of Keppel Corporation, Brazilian President
H.E. Luiz Inácio Lula da Silva, Mr Tong Chong Heong, CEO of Keppel Offshore &
Marine, and Mr Sérgio Cabral, Governor of Rio de Janeiro, celebrating the
successful completion of FPSO P-57 at the BrasFELS yard.
Operating & Financial Review
Offshore & Marine
61
Operating & Financial Review
Offshore & Marine
Significant Events
November
g Nakilat–Keppel O&M (N-KOM), Qatar’s premier offshore
and marine facility jointly developed by Keppel O&M and Qatar
Gas Transport Company Ltd, was inaugurated by the Emir of
Qatar, His Highness Sheikh Hamad bin Khalifa Al Thani, and
Singapore’s Minister for Trade and Industry, Mr Lim Hng Kiang.
g Keppel FELS secured an order for a KFELS B Class jackup
rig worth US$180 million from Standard Drilling with options to
build another two similar jackups, which if exercised, will bring
the total contract value to US$550 million.
December
g Keppel FELS signed a contract to build two KFELS B Class
jackup rigs worth US$360 million with Asia Offshore Drilling
Limited (AOD). AOD has been given options to build another
two similar jackups which if exercised will bring the total
contract value to above US$720 million.
g Jasper Investments Limited awarded Keppel FELS
a contract for a KFELS B Class jackup rig worth about
US$180 million, with an option for another similar unit.
g Keppel Shipyard and Keppel Singmarine clinched contracts
totalling $240 million to upgrade an FPSO, convert a livestock
carrier and build a diving support vessel.
g Keppel O&M announced a slew of new management
appointments with effect from 1 January 2011.
Singapore’s Minister for Trade and Industry, Mr Lim Hng Kiang and The Emir of
Qatar, His Highness Sheikh Hamad bin Khalifa Al Thani inaugurating the shipyard
together with Dr Lee Boon Yang, Chairman of Keppel Corporation and Mr Choo
Chiau Beng, CEO of Keppel Corporation.
At the end of 2010, Keppel Singmarine’s
orderbook consisted of a derrick
pipelay vessel, a rock dumping vessel,
two tug boats, a coal trans-shipment
barge and a diving support vessel.
In China, Keppel Nantong Shipyard
delivered six vessels in 2010. At
year-end, its orderbook consisted of
six tugs, a fl oating crane barge, two
mooring boats and a fl oating dock.
Keppel Singmarine Brasil, the newly
acquired yard in Santa Catarina,
Brazil, will focus on the construction
of offshore support vessels (OSV).
At full capacity, it is able to complete
an average of eight vessels a year.
The yard is currently undergoing a
modernisation programme.
A joint venture between Keppel O&M,
State Oil Company of Azerbaijan
Republic (SOCAR) and Azerbaijan
Investment Company, the new Baku
Shipyard LLC in Azerbaijan will be
developed over two to three years into
a shipbuilding and shiprepair facility.
Physical yard development work is
planned to commence in mid-2011.
INDUSTRY OUTLOOK
With the positive market sentiment
and a strong revival in upstream
capital spending at the close of 2010,
confi dence has returned to many regions
and sectors of the upstream industry.
Wood Mackenzie estimates that global
upstream capital spending in 2010
touched US$380 billion, US$19 billion
higher than in 2009. The Barclays Capital
Survey forecasts that global exploration
and production (E&P) spending will rise
11% in 2011. This revival is set to continue
over the next three years and improved
credit and fi nancing conditions could fuel
the upside further.
Underlying the near-term increase in
expenditure is the increasingly bullish
short-term outlook for the world
economy. Many countries are returning
to the economic growth paths that
62
Keppel Corporation Limited
Report to Shareholders 2010
were anticipated before the global
recession. Over the past 12 months,
the International Monetary Fund (IMF)
has revised upwards its forecast several
times for 2010 and is now projecting
that the global economy will grow by
4.4% in 2011.
The fundamentals of the industry remain
sound over the long term. Energy
demand and oil prices are expected
to remain robust, with demand driven
by population and economic growth,
particularly from non-OECD countries.
The International Energy Agency (IEA)
anticipates global energy demand to
increase by 36% between 2008 and
2035, with oil remaining the leading fuel in
the energy mix, and natural gas demand
experiencing the fastest growth among
the three fossil fuels. The projected
increase in demand, with only a modest
increase in oil production, augurs well for
the oil service and drilling industry.
Offshore Deepwater Prospects
The drilling moratorium imposed in
the GoM had brought exploration and
development work in one of the world’s
largest deepwater markets to a standstill.
The ban on deepwater drilling was lifted
in the months leading to the close of
2010 and drilling companies had greater
clarity of the stricter regulations arising
from the incident. With better placed
expectations of compliance requirements
and resumption of activity and cash
fl ow, drilling companies have begun to
push their projects forward and plan for
future increases in their deepwater drilling
programmes and rig fl eets.
Oil service companies are increasingly
shifting their E&P spending and
activities towards deepwater projects
which offer greater potential returns.
Deepwater expenditure is projected
by Douglas-Westwood to expand
at a compound annual growth rate
(CAGR) of 8%, reaching around
US$35 billion in 2014, with total global
capital expenditure of US$167 billion
estimated for the 2010–2014 period.
Deepwater CAPEX
Expenditure (US$ billion)
40
35
30
25
20
15
10
5
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Africa
Asia
Australasia
Latin America
North America
Western Europe
Others
Source: Douglas-Westwood
Long-term prospects for the deepwater
segment remain sound. Petrobras’
massive newbuilding programme for
Brazil’s pre-salt reserves will be a
key driver for the offshore deepwater
market in the medium term. Long-term
prospects will also be backed by the
emergence of more ultra-deepwater
drilling programmes in the latest
offshore oil and gas frontiers such
as GoM’s Lower Tertiary trend and
the offshore natural gas reserves and
LNG-centric developments off the
coast of northwest Western Australia,
discoveries in regions like West Africa,
the Mediterranean and Southeast
Asia as well as the potential from
unconventional shale gas plays.
Drilling Rigs, Production Units
and Specialised Ships
The jackup segment is seeing the
initial recovery stage of a rig-building
cycle driven by replacement demand.
The Macondo incident has spurred
oil companies to demand newer and
higher-specifi cation rigs, as seen in the
increasing bifurcation in the utilisation
rates and dayrates of premium and
commodity jackups.
Operating & Financial Review
Offshore & Marine
63
Operating & Financial Review
Offshore & Marine
environments and regulatory
frameworks are driving demand for
OSV innovations to improve operational
effi ciency and safety.
New Growth Area
A key area of development in the
renewable energy sector, the offshore
wind industry offers a promising new
market for solutions and designs for
offshore wind farms. The European Wind
Energy Association is forecasting that
400 GW of wind power will be operating
in the European Union in 2030, including
150 GW (37.5%) of offshore wind
power. Keppel O&M is building up its
capabilities and track record to meet this
growing demand.
1
ODS-Petrodata estimates that high-
specifi cation jackups, which form only
6% of the global fl eet, enjoy close to
100% utilisation, with dayrates typically
more than US$120,000. In contrast,
lower-specifi cation rigs enjoy 70%
utilisation and dayrates ranging from
US$30,000 to US$90,000, while rigs
built in the mid-1980s to the late 1990s
are being cold-stacked as they fail to
secure charters. Drilling contractors
are therefore ordering more high-
specifi cation jackups. Oil companies
are also increasing their jackup count
in regions of higher demand such
as the Middle East, West Africa,
the Mediterranean and Southeast
Asia. With most of the existing fl eet
considered as low-specifi cation, jackup
replacement demand is forecast to be
sustained throughout the decade.
The deepwater market should also see
increasing demand for upgrades and
replacements. With the enhanced US
safety requirements, drilling contractors
will be looking to yards with established
quality and safety standards.
Production vessels are poised to
form the next phase of orders after
rig replacement. Pareto Securities
predicts that demand for Floating
Production Systems (FPS) will continue
to accelerate over the next fi ve years
as exploration yields more deepwater
fi elds. Douglas-Westwood forecasts
that more than 100 FPSs will be
installed worldwide over the 2010–2014
period, representing a total value of
approximately US$45 billion.
The FPSO market is expected to remain
strong as FPSOs continue to be the
preferred solution for production in
deepwater fi elds. FPSOs account for
close to 80% of the total forecast FPS
capital expenditure, followed by TLPs,
semis and spars. Strength in the sector
will be driven by Latin America, which
will form almost a third of global FPS
forecasted capital expenditure due to
developments in offshore Brazil and its
pre-salt regions. Brazil will dominate
the market for FPS installations with
Petrobras looking to double its fl eet to
84 by 2020.
The OSV market will also see growing
order activity, especially in higher-end
vessels, on the back of higher oil prices,
attractive charter rates and cabotage
rules in regions of high demand.
Changing requirements, operational
64
Keppel Corporation Limited
Report to Shareholders 2010
2
3
1_Tailoring the FPSO to meet the
requirements of the Peregrino fi eld,
Keppel Shipyard completed the
conversion of Maersk Peregrino for
long time customer Maersk FPSOs.
2_Keppel-built rigs, Development
Driller III (foreground) and Q4000
(red hull) successfully intercepted
the Macondo well in the Gulf of
Mexico oil spill.
3_Drillships like Bully I are able
to operate in water depths of
up to 12,000 ft with a drilling depth
of 40,000 ft.
Operating & Financial Review
Offshore & Marine
65
Operating & Financial Review
Infrastructure
We are seeking
expansion
opportunities in
our environmental
engineering,
power generation,
logistics and
data centres
businesses.
The Senoko Waste-to-Energy Plant
was one of the three assets
injected into K-Green Trust,
which aims to invest globally in
“green” infrastructure assets.
EARNINGS REVIEW
Infrastructure Division’s revenue
increased by $83 million to $2,510 million,
due largely to higher revenue from
Keppel Energy as a result of higher
electricity retail prices and higher gas
sales. Profi t before tax decreased by
$57 million in 2010 owing to losses from
the Engineering, Procurement and
Construction (EPC) contracts in Qatar.
With a net profi t of $57 million, the Division
accounts for 4% of the Group’s earnings.
ENVIRONMENTAL ENGINEERING
Market Review
The demand for effi cient solutions
to treat solid waste and wastewater
continue to grow across key markets.
A Pike Research report suggests that
the potential for Waste-to-Energy
(WTE) capacity build-up is increasing
hand-in-hand with waste growth and
landfi ll diversion. In 2010, the world is
estimated to have generated around
1.7 billion tonnes of municipal solid
waste, of which 1 billion tonnes were
directed to landfi lls and just 0.2 billion
tonnes sent to thermal WTE plants.
This trend is bound to change with
increased attention from nations
concerned with climatic changes and
its dire consequences.
According to estimates, the global
market for thermal and biological WTE
technologies will reach $3.7 billion
in 2010 and grow to $13.6 billion in
2016. The Asia-Pacifi c is forecasted
to contribute the largest portion of the
growth, which is set to take off in 2012.
Developments in the UK Government’s
waste management policy, driven by
the EU Landfi ll Directive with ambitious
targets for landfi ll diversion by 2020,
create further opportunities for Keppel
Seghers in the UK. The EU Landfi ll
Directive targets to reduce the amount
of biodegradable waste sent to landfi lls
in 2020 to about a third of that in 1995.
Steeply increasing landfi ll tax has been
implemented to incentivise the diversion
of waste from landfi ll to more advanced
and sustainable waste management
solutions, such as Energy-from-Waste
(EfW) technology. With these pressing
environmental and legislative targets,
EfW technology is emerging as the UK’s
preferred solution for waste treatment
and energy generation.
Earnings Highlights
Net Profit
($ million)
Revenue
EBITDA
Operating Profi t
Profi t before tax
Net Profi t
Manpower (number)
Manpower cost
2010
$ million
2,510
120
75
93
57
4,366
236
2009
$ million
2,427
161
127
150
126
4,574
213
2008
$ million
2,232
82
50
70
63
5,064
219
2010
57
2009
126
2008
63
Profi t before Tax
Major Developments in 2010
Focus for 2011/2012
$93m
Decreased 38%
from FY 2009’s
$150 million.
Net Profi t
$57m
Decreased 55%
from FY 2009’s
$126 million.
66
g KIE officially opened Keppel
Seghers Tuas WTE Plant.
g KIE to further strengthen presence
in key markets and business segments.
g K-Green Trust was listed on
Singapore Exchange.
g KIE broke ground for Greater
Manchester Project, and secured
contract for Project’s second phase.
g The Domestic Solid Waste
Management Centre in Qatar to be
fully operational.
g KIE to ensure timely completion of
on-going EPC projects in Qatar and UK.
g Keppel DHCS in JV to offer district
heating and cooling in Tianjin Eco-City.
g Keppel T&T to continue to expand
its logistics footprint in Asia.
g Keppel T&T established world’s first
Shariah-compliant data centre fund.
g Keppel Energy commenced
capacity expansion on Keppel Merlimau
Cogen plant.
g Keppel T&T to grow data centre
business via capacity expansion and
acquisition of high-quality assets.
g Keppel Energy to pursue selective
opportunities in Singapore and beyond.
Keppel Corporation Limited
Report to Shareholders 2010
Operating & Financial Review
Infrastructure
67
Operating & Financial Review
Infrastructure
Environmental Engineering
Keppel Integrated
Engineering aims to
be a global leader
in environmental solutions
for water/wastewater and
solid waste treatment.
The R1 energy recovery formula is
another key development in the WTE
industry across Europe, which may gain
popularity in Asia. Using this formula,
incineration facilities processing
municipal solid waste are given
‘energy recovery-R1 status’ if their
energy effi ciency meets certain
technical requirements.
In an assessment of the energy
effi ciency of 231 WTE plants in
16 European countries, the
Confederation of European WTE
Plants has classifi ed 169 plants
as ‘energy recovery-R1 status’.
Under the Waste Framework Directive,
effi cient WTE plants can be categorised
as energy recovery operations rather
than for waste disposal. This may
result in greater acceptance of
WTE plants in Europe.
Elsewhere in Asia, WTE solutions
is gaining acceptance despite the
absence of landfi ll bans and levies
in many Asian countries currently.
While focusing on our key areas,
Keppel Seghers will continue to
monitor these markets for suitable
business opportunities.
In China, where rapid urbanisation
has brought increased pollution, the
Opposite_Construction at Keppel
Seghers’ energy-from-waste facility
in Runcorn, Greater Manchester in
the UK, has been progressing well
with the construction of the
chimney’s windshield completed
in 17 days.
demand for WTE facilities continues
to increase. There are currently about
80 WTE facilities in operation, and a
further 10 to 15 are under construction.
Industry experts predict that in the
next fi ve years, hundreds more new
plants are likely to be built. Additionally,
more stringent emission limits are
expected to be enforced in China,
making it an attractive market for
effi cient WTE facilities.
In the Middle East, drivers for the
demand for WTE solutions include
population growth, urbanisation and
economic expansion. Saudi Arabia,
UAE, and Kuwait rank among the
world’s top 10 in terms of per capita
waste generation.
On water treatment, Global Water
Intelligence suggests that scarcity and
urbanisation are two global megatrends
changing the status of water in society
today. Scarcity is the main driver of
growth in solutions for drinking water
while urbanisation is the key driver
of growth for wastewater solutions.
Industry experts predict that the fastest
growth regions will be in Asia and the
Middle East.
China has been listed by the UN as
one of 13 countries experiencing serious
water scarcity, and the water market
Project
Ulu Pandan NEWater Plant
Senoko Waste-to-Energy Plant
Keppel Seghers Tuas
Waste-to-Energy Plant
Qatar Domestic Solid Waste
Management Centre
Doha North Sewage Treatment Works
Greater Manchester Energy-from-
Waste Combined Heat and Power Plant
(Runcorn I and II)
Amotfors Energi Combined Heat and
Power Waste-to-Energy Plant
Technology packages to Waste-to-Energy
plants in Shenzhen and Tianjin
Capacity
148,000 m3/day
2,100 tonnes of solid waste a day
800 tonnes of solid waste a day to generate more than
20 MW of green energy
2,300 tonnes of mixed solid waste and a
1,500 tonnes a day waste-to-energy incineration plant
439,000 m3/day
750,000 tonnes of waste per year, generating
70MW of electricity and 51MW of heat per year
70,000 tonnes of solid waste per year
3,000 tonnes and 1,000 tonnes of solid waste per day
respectively
Tenure
2007–2027
2009–2024
2009–2034
2009–2029
2010–2020
Under
Construction
–
–
68
Keppel Corporation Limited
Report to Shareholders 2010
Operating & Financial Review
Infrastructure
69
Operating & Financial Review
Infrastructure
Significant Events
January
g Keppel Seghers secured two contracts to supply waste-to-
energy (WTE) solutions in China totalling US$53 million.
February
g Keppel Seghers secured a €6.5 million contract to provide
technology and services to a WTE plant in Tianjin, China.
May
g Keppel T&T tripled its logistics footprint in Vietnam through
three new distribution centres and a JV with Tanimex Group to
provide exclusive logistics park management.
g Keppel DHCS signed a JV agreement with Tianjin Eco-City
Energy Investment and Construction Co Ltd to provide district
heating and cooling systems in the Eco-City.
June
g
Pte Ltd, a Shariah-compliant data centre fund.
Initial closing of Keppel T&T’s Securus Data Property Fund
g KIE officially opened Singapore’s first WTE plant to be
built under the National Environment Agency’s Public-Private
Partnership initiative.
g K-Green Trust was listed on the Main Board of the
Singapore Exchange.
October
g Keppel Seghers secured an EPC contract worth about
$341 million for the second phase of an Energy-from-Waste
project in the UK.
g Keppel Energy commenced the 800MW expansion of its
natural gas-fired Keppel Merlimau Cogen (KMC) plant.
December
g BG (NS) Tay Lim Heng was appointed as KIE’s CEO with
effect from 1 January 2011.
In January 2011, construction of the Qatar Domestic Solid Waste Centre project
was completed and the incineration plant started burning solid waste.
there is set to be one of the fastest
growing in the Asia-Pacifi c. According
to China’s Ministry of Housing and
Urban-Rural Development, US$146
billion is needed to fulfi ll the central
government’s goal of equipping at
least 90% of counties or above with
wastewater treatment facilities and
essential pipe works by 2012.
To relieve the future demands on
China’s water resources, massive
investments will be needed to develop
new water resources whether through
reclamation, desalination or other
advanced technologies.
It is estimated that the Middle East
and North Africa region will have
more than US$20 billion worth of
wastewater projects in the pipeline,
and the trend is for governments to
seek Public-Private Partnership (PPP)
models for such projects. Currently,
the most active markets are
Saudi Arabia and North Africa.
UAE and Kuwait are also
potential markets.
Operating Review
In Singapore, KIE offi cially opened the
Keppel Seghers Tuas (KST) WTE Plant,
Singapore’s newest WTE plant and
the fi rst to be built under the National
Environment Agency (NEA)’s PPP
initiative. The KST WTE Plant is the
fi rst incineration plant in Singapore
to showcase WTE technology from
a local company, and also one of the
most compact WTE plants in the world.
KIE will operate and maintain the
plant for 25 years.
KIE is the sponsor of K-Green Trust
(KGT), which was listed in Singapore
in June 2010. KGT aims to invest
in “green” infrastructure assets in
Singapore and globally, with a focus
on Asia, Europe and the Middle East,
to provide long-term, regular and
predictable distributions to unitholders.
KGT has achieved better than
forecasted performance for its
fi rst year since listing.
70
Keppel Corporation Limited
Report to Shareholders 2010
KIE is providing waste-to-energy
technology and services to
repeat customer Tianjin TEDA
Environment Protection Co. Ltd
in Guanzhuang, Tianjin.
In Europe, KIE’s wholly-owned
subsidiary, Keppel Seghers, secured an
EPC contract worth $341 million for the
second phase of an EfW project in the
Greater Manchester region in the UK.
The second phase of this EfW project
will be integrated with the project’s
fi rst phase which is also executed
by Keppel Seghers. Scheduled to
be completed by 2015, the project’s
second phase will use Keppel Seghers’
proprietary technology. The design
and construction for both phases
are progressing well and on target to
achieve their milestones.
In November 2010, Keppel Seghers
do Brasil and Keppel Seghers
Latinoamérica signed an agreement to
provide design, engineering, as well as
assistance for the construction and start
up of the Wastewater Treatment Plant for
the City of Porto Alegre, located in South
Brazil. The plant will have a capacity of
233,280 m3/day and Keppel Seghers will
use its proprietary technology UNITANK
with nutrient reduction, based on
activated sludge. The plant is scheduled
to start operations in September 2012.
In China, Keppel Seghers secured
a $12.5 million contract to provide
technology and services to a WTE plant
in Guanzhuang, Tianjin, as well as a
contract for the expansion of an existing
WTE plant in Shenzhen, Guangdong.
When completed in 2011, the Shenzhen
Baoan WTE site will be the largest in
China with an eventual capacity to treat
4,200 tonnes of municipal waste per day.
In May 2010, Keppel DHCS, another
KIE subsidiary, established a joint
venture with Tianjin Eco-City Energy
Investment and Construction Co., Ltd
(TECEIC) to provide district heating
and cooling systems (DHCS) in the
Sino-Singapore Tianjin Eco-City (Tianjin
Eco-City). 80% held by Keppel DHCS,
the Tianjin Eco-City Keppel New Energy
Development Co., Ltd. (TEC-Keppel)
joint venture has a total investment
amount of RMB300 million, and will
focus on the investment, development,
design, construction, operation,
maintenance and consultancy for
DHCS, Tri-generation and other utility
services in the Tianjin Eco-City.
As the Keppel Group possesses
a strong track record and core
competencies in areas such as
environmental engineering solutions,
property and township development,
Operating & Financial Review
Infrastructure
71
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 aims
to provide good quality
integrated logistics solutions
and data centre services.
72
and logistics and data centres,
a Sustainable Development (SD)
unit was formed in June 2010 to
coordinate the Group’s efforts to
provide sustainable urban living
solutions in countries like China,
Vietnam and Indonesia.
Business Outlook
With global megatrends such as rapid
urbanisation and climate change, there
is a growing need for governments to
look into sustainable environmental
solutions. KIE, through its various
subsidiaries, will continue building its
environmental engineering capability
in providing environmental solutions to
both municipal and industrial clients.
Keppel Seghers will continue to
strengthen its technology leadership
through research and development
and leverage its extensive engineering
expertise and global network to
deliver value to stakeholders. It
will also continue to focus on the
development of turnkey contracts, sell
technology packages and provide total
environmental solutions based on the
Design, Build, Own, Operate (DBOO)
model, Build, Own, Operate, and
Transfer model, or Build, Operate and
Transfer (BOT) model and PPP.
POWER GENERATION
Market Review
Singapore’s electricity demand
recovered strongly in 2010 in tandem
with the global economy recovery.
For the full year of 2010, the average
electricity demand recorded a
growth of 8.8% as compared to
the previous year.
Operating Review
2010 has been a fulfi lling and rewarding
year for Keppel Energy. Keppel Energy
continues to deliver promising results
from its integrated power and gas
businesses in Singapore.
The Keppel Merlimau Cogen power
plant carried out its fi rst major
maintenance in 2010 and has further
improved on its reliability
and availability.
Keppel Gas secured additional
industrial gas customers in 2010 and
started its gas supply to them. The
company also entered into a Gas Sale
Agreement with BG Singapore Gas
Marketing to purchase Liquefi ed Natural
Gas (LNG) for delivery starting 2013.
A major milestone was achieved in 2010
with the commencement of the capacity
expansion of the Keppel Merlimau Cogen
power plant. The additional 800MW of
natural gas-fi red plants on Jurong Island,
expected to be completed by 2013, will
boost the existing generation capacity to
1,300MW from the current capacity
of 500MW.
Keppel Energy continued to sustain
its good safety record in 2010, with
no reportable safety incidents or
lost-time incidents at its Singapore
operations. Initiatives are being taken
to further strengthen the company’s
safety management system with the
commencement of the design and
construction activities for the capacity
expansion of Keppel Merlimau Cogen
power plant.
Business Outlook
Our power and gas businesses in
Singapore are expected to continue to
deliver sustainable earnings in 2011.
With the Singapore economy expected
to record modest but good growth in
2011, Keppel Energy is well-positioned
to benefi t from the corresponding
growth in electricity demand.
Additionally, the strategic planting
of the additional 800MW at Keppel
Merlimau Cogen power plant using
the most advanced and effi cient
commercially available technology
will enable Keppel Energy to remain
highly competitive in the market. We
expect our market share to grow in the
Keppel Corporation Limited
Report to Shareholders 2010
100% occupancy within its fi rst year
of operations. An expansion to add
capacity had commenced, and this
phase had already seen signifi cant
customer commitment. Keppel Datahub
had also secured provisional TIA 942
and SS 507 certifi cations, and
expects to be formally awarded these
certifi cations in 2011.
Citadel 100 Datacenters Limited
(Citadel 100), the 50%-owned
associate based in Dublin, Ireland,
continues to enjoy 100% occupancy.
Securus Data Property Fund, the
world’s fi rst Shariah-compliant data
centre fund, was established in June
2010. The initial closing of the Fund
achieved US$100 million, and the
Fund targets to acquire a portfolio
of high quality data centre assets in
the Asia-Pacifi c, Europe and Middle
East. Keppel T&T (through its wholly
owned subsidiary Keppel Data Centre
Investment Management Pte Ltd)
and AEP Capital Pte Ltd are joint
investment managers of the Fund.
Business Outlook
The data centre market will continue
to stay buoyant in 2011 as demand for
data centre space continues to grow at
a faster rate than its supply. Against this
favourable landscape, and coupled with
its expertise as a premium data centre
co-location service provider in Asia and
Europe, Keppel T&T aims to expand the
capacity at its existing facilities whilst
continuing to explore opportunities to
grow its data centre footprint.
Singapore power market, and we will
continue to enhance our integrated
platform in the gas and utilities
businesses beyond 2011.
With a solid power and gas platform,
Keppel Energy is ready to pursue
selective opportunities in Singapore
and beyond.
LOGISTICS
Market Review
In Singapore, the infl ux of new
warehousing space in early 2010
resulted in lower warehouse occupancy
across the market. This situation
gradually abated during the year as
continued economic growth brought
about higher warehousing demand.
In China, the sustained economic
growth with higher exports translated
into increased cargo volumes.
Operating Review
The warehouses of Keppel Logistics
and its subsidiary, Transware
Distribution Services, in Singapore
continued to operate at near full
occupancy. Several long-term contracts
were renewed with existing customers
such as Brother, M1, Nestle and Trane.
In addition, Keppel Logistics won
contracts in new market segments, to
extend its service offerings into spare
parts logistics and biomedical logistics.
Redevelopment of the warehouse
facility at 44 Benoi Road in Singapore
has commenced, and will double the
facility’s capacity to 20,000 sqm when
completed in end 2011.
Operations in Malaysia grew with the
establishment of a new distribution and
trucking department. Keppel Logistics
also expanded its footprint in Vietnam
with the opening and development of
four new distribution centres, which
tripled warehousing capacity.
In China, despite stiffer competition,
Keppel Logistics Foshan (KLF)
continued to do well. Supported by
China’s strong economic growth,
Lanshi port in Foshan set another new
record high in container throughput,
with an 18% increase from 2009. The
new Nanhai Distribution Centre will
be operational in early 2011, adding
35,000 sqm of warehousing space
in the Pearl River Delta. KLF was
recognised as one the Top 1000 key
enterprises in Guangdong Province,
which granted the company priority by
the local government in processing of
all business applications up to 2012.
Business Outlook
The growing intra-Asia trade, which
is aided by strengthening domestic
consumption in Asia, coupled with
an increasing trend of logistics
outsourcing, will drive strong demand
for third party logistics in Asia. Keppel
Telecommunications & Transportation
(Keppel T&T), the parent company
of Keppel Logistics, will explore
opportunities to leverage these trends
to scale up and expand its logistics
footprint in existing markets, and
grow its customer base in new
logistics verticals.
DATA CENTRES
Market Review
The data centre market has
experienced strong demand and
increasing utilisation globally. The
growth in data centre supply still
lagged behind the growth in demand.
The introduction of the New Generation
National Broadband Network (NGNBN)
will enhance the availability of faster and
cheaper data in Singapore. This in turn
will result in increased demand for data
service providers and a greater need for
data centre spaces.
Operating Review
Keppel Datahub, which was
reconfi gured by Keppel T&T from
an existing industrial building into a
Tier III+ data centre, began operations
in January 2010. The facility achieved
Operating & Financial Review
Infrastructure
73
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.
The unique architecture of
Refl ections at Keppel Bay
is set to be a waterfront
landmark in Singapore.
EARNINGS REVIEW
Revenue of $1,685 million was
$177 million or 12% above the previous
year, due mainly to the sale of homes
at Keppel Bay and progressive revenue
recognition from Refl ections at Keppel
Bay. Rental income from investment
properties improved because of the
acquisitions of investment buildings
in Australia in 2010 and the additional
fl oors of Prudential Tower in Singapore
in November 2009. Pre-tax profi t of
$625 million was an increase of 31%
over 2009. This was due to higher
contribution from several residential
projects in Singapore, China and
Vietnam, and share of profi t of the
associated company developing Marina
Bay Suites in Singapore. With net profi t
at $326 million, the Division contributed
23% to Group’s overall earnings.
MARKET REVIEW
Concerted measures by various
governments averted a global
fi nancial disaster and restored overall
confi dence. Asian countries were
generally less affected and managed to
post positive economic growth for the
year. Improved economic conditions
have revived the property markets in
key Asian cities.
The Singapore economy expanded at
a record growth rate of 14.5% in 2010.
The strong economy shored up market
confi dence. New home sales totalled a
record of about 16,300 units in 2010,
compared to 2009’s take-up of 14,688
units. Residential home prices rose
17.6% in 2010, compared with 1.8%
in 2009. For 2011, prospective home
buyers are expected to hold back
their purchasing decision in the near
term after the government introduced
the fourth round of anti-speculation
measures in January to cool the
buoyant property market. While the
sales volume may be moderated, home
prices are likely to remain largely stable.
Positive economic growth outlook in
Singapore and the rest of Asia, the
relatively low-interest rate environment
and ample liquidity are expected to
support the housing market.
As business confi dence improved
on the back of the strong economic
rebound, the pent-up demand for prime
offi ce space saw heightened leasing
Earnings Highlights
Net Profit
($ million)
Revenue
EBITDA
Operating Profi t
Profi t before tax
Net Profi t
Manpower (number)
Manpower cost
2010
$ million
1,685
563
553
625
326
3,015
91
2009
$ million
1,508
385
371
476
210
2,791
100
2008
$ million
950
337
326
365
157
2,955
89
326
2010
2009
210
2008
157
Profi t before Tax
Major Developments in 2010
Focus for 2011/2012
g Actively seek acquisitions in
Singapore and overseas. with a
continued focus on developing quality
residential, township, commercial and
mixed-use projects.
g Monitor markets and time launches
for new projects and phases.
g Recycle capital to take on new
large-scale projects.
g Sold over 5,250 homes across
Asia, mainly in China.
g Set up Keppel Land China to
sharpen focus for expansion and growth.
g Added more than 9,700 homes
to a pipeline of 75,000 homes with
acquisitions in China and Vietnam.
g Keppel Land’s asset swap with
K-REIT Asia unlocked value.
g One million sf pre-commitment at
MBFC and OFC.
g K-REIT Asia makes first foray
overseas into Australia.
$625m
Increased 31%
from FY 2009’s
$476 million.
Net Profi t
$326m
Increased 55%
from FY 2009’s
$210 million.
74
Keppel Corporation Limited
Report to Shareholders 2010
Operating & Financial Review
Property
75
Operating & Financial Review
Property
Significant Events
January
g Keppel Land acquired its third township site, a
waterfront site in the popular District 2 of Ho Chi Minh City
(HCMC), Vietnam.
g Keppel Land signed a joint venture agreement to develop
an 11-ha waterfront residential site for 175 villas fronting the
Saigon River in HCMC.
g Mrs Koh-Lim Wen Gin, formerly Urban Redevelopment
Authority of Singapore’s Chief Planner and Deputy CEO, was
appointed to Keppel Land’s Board of Directors.
g K-REIT Asia made its maiden commercial investment
outside Singapore with the acquisition of a 50% stake in
275 George Street, a prime commercial building in
Brisbane, Australia.
March
g The iconic Reflections at Keppel Bay topped-out its
first tower.
April
g Topping-out of Marina Bay Financial Centre (MBFC)’s
second commercial tower.
The township at South Rach Chiec, Vietnam offers high-rise apartments
along a riverfront.
activity. Prime offi ce rents increased
12.2% quarter-on-quarter averaging
$8.30 psf per month as at end-2010.
Grade A offi ce rental averaged $9.90 psf
per month, refl ecting an increase of
10% quarter-on-quarter or 22.2% year-
on-year. Grade A offi ce occupancy rate
was 97.3% in 4Q10, up from 93.8% in
4Q09, as corporate occupiers engaged
increasingly in fl ight-to-quality.
The offi ce market is closely co-related
to GDP growth. With Singapore’s
economy projected to expand at a
healthy rate of 4–6% in 2011, leasing
activity is expected to remain buoyant
this year. Given the positive business
sentiment, demand for offi ce space
is poised to rise along with corporate
expansion with the accompanying
headcount growth.
Asia’s other economies are also
expected to continue growing in 2011,
fuelled by domestic demand with
rising affl uence and supportive
government policies.
China’s property market continued
on its upward momentum in 2010.
Despite the government’s progressive
measures to cool demand, real estate
prices rose for a 19th straight month
in December 2010 while home prices
across 70 major Chinese cities rose
6.4% year-on-year. Moving into 2011,
two fundamental factors – the growing
middle class and urbanisation – will
continue to underpin housing demand
in China.
Vietnam showed signs of recovery in
2010, registering a healthy expansion
rate of 6.8% in 2010. GDP growth is
projected at 6.9% in 2011. Demand for
villas has been strong over the past few
years, and is expected to continue.
Indonesia’s economy grew at 6.1% in
2010. Low interest rates, coupled with
a growing and increasingly affl uent
middle-class segment, helped to lift the
property market during the year.
76
Keppel Corporation Limited
Report to Shareholders 2010
Keppel Land’s prime Grade A offi ce
buildings like the Marina Bay
Financial Centre and the Ocean
Financial Centre are in two of the
most desired business addresses
in Singapore.
India is projected to have grown at 9.1%
in FY 2010 [Note: India’s fi scal year
ends on 31 March 2011]. Residential
prices are recovering in various cities.
Home ownership aspirations are well
supported by low mortgage and high
savings rates. Coupled with a shortage
of housing especially in the urban areas,
this is expected to continue to drive
demand in India. The Indian economy
is expected to continue expanding at a
rate of 9% in 2011.
OPERATING REVIEW
Singapore
With buying sentiment buoyed by the
strong economic recovery, Keppel Land
sold about 650 homes in Singapore in
2010, mainly from Refl ections at Keppel
Bay and The Lakefront Residences.
The commercial segment has
strengthened with the improved
business outlook. Strong pre-
commitment totalling about 1 million sf
of Grade A offi ce space was secured
at Marina Bay Financial Centre (MBFC)
and Ocean Financial Centre (OFC) in
2010, lifting the pre-commitment rate
for MBFC Phase 2 and OFC to 66%
and about 80% respectively. In addition
to anchor tenant, DBS Bank, which
had pre-committed approximately 55%
in MBFC Phase 2’s Tower 3, other
tenants such as WongPartnership LLP,
Ashurst LLP and McGraw-Hill have
recently signed up as tenants. Australia
and New Zealand Banking Group and
BNP Paribas joined Drew & Napier LLC
and DMG & Partners Securities Pte
Ltd., long-time tenants from the former
Ocean Building and Ocean Towers, to
commit as tenants of OFC. During the
year, Keppel Land also raised its stake
in OFC to 87.51% after acquiring an
additional 11.85% stake.
In the fourth quarter of 2010,
Keppel Land sold its one-third interest
in MBFC Phase 1 to K-REIT Asia
for $1,426.8 million and acquired
Keppel Towers and GE Tower
from K-REIT Asia for $573 million.
The transaction allowed for the
potential redevelopment of the
site into premium high-rise city
homes and increased Keppel Land’s
Singapore residential pipeline by
about 50%. The divestment yielded
net cash proceeds of $826 million,
strengthening Keppel Land’s
fi nancial position for acquisition
opportunities in Singapore
and overseas.
Operating & Financial Review
Property
77
Operating & Financial Review
Property
Keppel Land is strengthening
its presence in China with
developments such as the
Zhongshan waterfront residential
cum marina development in
Guangdong, China.
Overseas
Keppel Land achieved record sales of
over 4,600 units overseas, mainly from
its township projects in China, namely
The Botanica in Chengdu and Central
Park City in Wuxi. The Springdale
in Shanghai and Seasons Park in
the Sino-Singapore Tianjin Eco-City
registered encouraging sales following
their launches in the second half of
2010. Villa developments, The Arcadia
in Tianjin and Villa Riveria in Shanghai,
are now 100% sold.
With China as a signifi cant growth
market, a separate entity Keppel Land
China was established to sharpen
focus on expanding Keppel Land’s
presence in this fast-growing market.
Keppel Land China further expanded
its footprint in China with strategic
land acquisitions in Chengdu and the
purchase of its maiden residential site
in Nantong in 2010.
Tapping on rising home ownership
aspirations in Vietnam, Keppel Land
acquired four sites during the year,
which increased its residential pipeline
to about 22,000 units. In Indonesia
and India, sale of the Group’s
residential projects continued to
make good progress as these
economies continued on their path
of growth.
Fund Management
Keppel Land’s fund management
vehicles extended their reach in
the region through selective asset
acquisitions. K-REIT Asia made its
fi rst overseas foray by acquiring two
prime offi ce developments in Sydney
and Brisbane, Australia, in 2010. With
the completion of the asset swap deal
with Keppel Land, 90% of K-REIT
Asia’s portfolio in Singapore is now
strategically located within the prime
Raffl es Place and Marina Bay fi nancial
and business districts. With an enlarged
portfolio size of $3.5 billion as at
end-2010, up from $2.1 billion in 2009,
K-REIT Asia has gained increased
visibility as one of the top fi ve S-REITS
in asset size.
Alpha Asia Macro Trends Fund,
a closed-end fund managed by
Keppel Land’s private equity fund
management arm Alpha Investment
Partners (Alpha), has also capitalised
on opportunities to invest in several
commercial and residential property
assets in Singapore, including a stake
78
Keppel Corporation Limited
Report to Shareholders 2010
in Katong Mall and units in high-end
residences at City Vista in the
Newton area, The Cascadia in
Bukit Timah and Draycott 8 near
Scotts Road, as well as a Grade A
offi ce building in South Korea during
the year.
As at end-December 2010,
Keppel Land’s total assets under
management (when fully-invested
and fully-leveraged) from K-REIT Asia
and Alpha have grown to about
$11.2 billion, a 14% rise from 2009.
BUSINESS OUTLOOK
Singapore
Singapore’s economic growth is
expected to slow down to 4–6% in
2011. Calibrated cooling measures
introduced by the government to weed
out speculative buying may moderate
overall sales volume, but home prices
should remain stable.
Keppel Land will be releasing a new
phase of The Lakefront Residences,
as well as the remaining units of
Marina Bay Suites and Refl ections at
Keppel Bay, which will benefi t from their
proximity to the integrated resorts at
Marina Bay and Sentosa.
In view of the positive sentiments in
Singapore and the region, the offi ce
market is primed to remain fi rm with
leasing activities driven mainly by
new expansion among the fi nancial
and professional services sectors.
Keppel Land aims to build on its
position as the leading developer
of Grade A offi ce space in Singapore’s
Raffl es Place and Marina Bay business
and fi nancial districts.
Overseas
Growth prospects in Asia are set
to remain bright in 2011, backed by
healthy economic and demographic
fundamentals. Home ownership
aspirations in markets where
Keppel Land operates are expected
to remain strong.
Operating & Financial Review
Property
Significant Events
May
g Keppel Land was awarded a prime 1.6-ha site next to the
Lakeside MRT station for the development of The Lakefront
Residences. Launched in November, the development attracted
strong interest.
July
g Topping-out of Ocean Financial Centre.
g New lifestyle mall at Katong partly owned by Alpha
attracted positive tenancy ahead of completion in 2011.
g K-REIT Asia acquired 100% of the office tower at
77 King Street in Sydney, Australia.
August
g Mrs Oon Kum Loon, an Independent Director of
Keppel Corporation, was appointed as a Non-Independent
and Non-Executive Director of Keppel Land.
September
g Keppel Land to redevelop Barclays House complex in
Jakarta’s Central Business District.
g K-REIT Asia appointed Mr Tan Chin Hwee, a Portfolio
Manager of the Apollo Asia Opportunity Master Fund, as an
Independent Non-Executive Director.
g Keppel Land completed acquisition of an 86-ha site in
Zhongshan, Guangdong Province.
g Keppel Land strengthened its focus on China with the
establishment of Keppel Land China.
The Lakefront Residences drew strong interest from homebuyers.
79
Operating & Financial Review
Property
Significant Events
October
g Alpha’s Macro Trends Fund invested in Seoul Square,
a prime Grade A office in Seoul, South Korea.
g Keppel Land secured two prime sites in Chengdu, Sichuan
Province, for residential development.
g Keppel Land secured two prime sites in HCMC for villa
developments.
November
g More than 90% of the 220 eco-homes released were
sold in the soft launch of Keppel’s Seasons Park residential
development in the Sino-Singapore Tianjin Eco-City.
December
g Keppel Land and K-REIT Asia successfully completed
the asset swap deal of Keppel Land’s one-third interest in
Phase 1 of MBFC and K-REIT Asia’s Keppel Towers and
GE Tower (KTGE). KTGE will be redeveloped into premium
residences for city living.
g Keppel Land China expanded its portfolio with maiden site
acquisition in Nantong, Jiangsu province.
Keppel Land plans to launch more
homes overseas in 2011. In China,
Keppel Land will be releasing the
remaining units at 8 Park Avenue in
Shanghai and township homes at
The Seasons in Shenyang. In Vietnam,
Riviera Point and a waterfront township
development at South Rach Chiec,
both located in Ho Chi Minh City,
will be launched.
Fund Management
With the improved market conditions,
Keppel Land’s fund management
vehicles are well-positioned to expand
their respective portfolios. K-REIT Asia
will pursue acquisition opportunities
to grow into a leading pan-Asian
commercial REIT. Alpha will continue
to establish and grow its existing
businesses in Asia while actively
scanning for opportunities to buy into
fund management platforms in Europe
and the US.
Keppel Land will keep a lookout for
capital recycling opportunities in
large-scale mixed development sites.
With a strong cash position of
$1.59 billion and low debt-equity
ratio of 0.2x as at end-2010,
Keppel Land will actively seek
value-creating acquisition opportunities
in Singapore and overseas, with
a continued focus on developing
quality residential, commercial and
mixed-use projects.
Mr Wong Kan Seng, Singapore’s Deputy Prime Minister and then Minister for
Home Affairs (second from left) and Tianjin Deputy Party Secretary He Lifeng
(extreme right), accompanied by Dr Lee Boon Yang (extreme left), Chairman
of Keppel Corporation were briefed by Mr Goh Toh Sim, Keppel Corporation’s
Chief Representative in China, on the masterplan of Keppel’s development
in the Tianjin Eco-City.
80
Keppel Corporation Limited
Report to Shareholders 2010
Providing Solutions For Sustainable Future
2010 saw the Sino-Singapore Tianjin Eco-City progress on several fronts,
with the launch of the first eco-homes and inking of agreements with several
technology companies.
Sino-Singapore Tianjin Eco-City
Investment and Development,
Co., Ltd. (SSTEC) sustained
its efforts to attract partners
to the Sino-Singapore Tianjin
Eco-City (Tianjin Eco-City) project,
securing about RMB2.5 billion
($484 million) worth of industrial
investment commitments in the
Eco-Business Park (EBP) and
Eco-Industrial Park (EIP). About
half of the industrial investments
come from Singaporean companies,
including ST Environmental
Services and Technologies,
Pan Asian Water and PV World.
Keppel Telecommunications &
Transportation is planning to
develop and operate a green
integrated logistics distribution
centre in the EIP. Keppel DHCS has
also established a joint venture to
provide district heating and cooling
systems in the Eco-City.
Multi-national companies such as
Hitachi, Philips and ST Engineering
have taken up anchor tenancies
in the EBP. Keppel Integrated
Engineering will be the fi rst anchor
tenant in the EBP’s Tianjin Eco-City
Sustainable Development Innovation
Centre, which aims to bring
international education institutions,
government agencies and leading
companies under one roof.
SSTEC also formed a number of
key strategic partnerships in 2010.
A Memorandum of Understanding
(MOU) was signed with Vancouver
City and leading Canadian cleantech
corporations to develop the fi rst
net zero-energy Canadian research
and development centre in Asia.
SSTEC also established an alliance
with 11 Chinese and international
corporations to drive the adoption
of green transport solutions.
With all the land plots in the 4-sq km
Start-Up Area (SUA) taken up for
development, the SUA is expected
to be completed by 2013, housing
approximately 85,000 residents.
In 2010, more than 5,000 homes
in Tianjin Eco-City were launched
by different developers, drawing
strong interest and brisk sales.
These included developments from
Keppel Land (pictured above),
Japan’s Mitsui Fudosan Residential
and China’s Shimao Group. In
addition, SSTEC attracted two new
developers, Korea’s Samsung C&T
Corporation and the Philippines’
Ayala Land. SSTEC also signed
an MOU with China Healthcare
Limited to collaborate on an elderly
apartment project.
To ensure that the quality of buildings
is maintained in line with the
Eco-City’s Green Building
Evaluation Standards, SSTEC
established a subsidiary to provide
eco-maintenance and property
management services.
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 a Chinese
Consortium led by Tianjin TEDA
Investment Holding Co., Ltd.
Operating & Financial Review
Property
81
Operating & Financial Review
Investments
to a decrease in rail equipment leasing
revenue and a fi xed asset impairment
charge of $36.7 million, offset in part by
lower operating expenses.
de-leverage the business. We are
hopeful that the US economic
expansion will continue to provide
positive trends, which will benefi t Helm.
EARNINGS REVIEW
Pre-tax earnings from Investments
Division of $66 million was $83 million
lower compared with 2009, as the
previous year included contribution from
Singapore Petroleum Company which
was disposed in June 2009. Net profi t of
$49 million was $70 million below that of
the previous year. Investments currently
contribute 3% to the Group’s earnings.
For 2010, k1 distributed 0.5 cent
per share to shareholders and has
distributed a cumulative 22.31 cents
per share or a total of $460 million to
shareholders since 2005.
K1 VENTURES
k1 Ventures (k1) is a diversifi ed
investment company that has
holdings in various targeted sectors of
transportation leasing, education, oil
and gas exploration, and automotive
retail. Its major investments are in
Helm Holding Corporation (Helm), the
largest independent rail equipment
leasing company in North America, and
Knowledge Universe Holdings (KUH), a
leading global education service provider.
For the fi nancial year ended 30 June 2010,
k1 recorded revenue of $70.9 million
and an operating loss of $48.2 million
compared to $99.1 million and an
operating profi t of $4.5 million in the prior
year. The declines were principally due
KUH, through its operating subsidiaries,
acquired a majority stake in the Canadian
International School in Singapore
and completed the acquisition of The
Children’s House in Malaysia in 2010.
China Grand Auto, k1’s investment in
automotive retail, continues to perform
well and expand its platform with
strategic acquisitions.
The slow economic recovery in the
US has led to weakness in rail traffi c
volumes, which has impacted the
demand for rail assets. Helm’s focus
on expense management as well as
opportunistically executing equipment
sales has positively impacted cash fl ow
which has been used to further
M1
M1 is a leading integrated
communications provider in Singapore.
The company contributes signifi cantly
to Keppel Telecommunications &
Transportation’s (Keppel T&T)
earnings and cashfl ow. For FY 2010,
M1 contributed $37.9 million pre-tax
profi ts, which made up 51% of
Keppel T&T’s pretax profi ts. The
company also contributed total
dividends of $24.1 million to
Keppel T&T.
In 2010, M1 introduced a number of
initiatives which boosted its non-voice
services revenue. It was the fi rst in
Singapore to provide ultra high-speed
broadband services on the new national
fi bre network. Its residential broadband
customers were also offered a free fi xed
voice service. In addition, M1 launched
its own application store to provide a
wide selection of the latest applications
for its customers.
Earnings Highlights
Revenue
EBITDA
Operating Profi t
Profi t before Tax
Net Profi t
Manpower (Number)
Manpower (Cost)
2010
$ million
11
10
9
66
49
147
65
2009
$ million
39
4
3
149
119
135
76
2008
$ million
54
26
25
219
172
165
65
Net Profit
($ million)
2010
49
2009
2008
119
172
Profi t before Tax
Major Developments in 2010
Focus for 2011/2012
g Knowledge Universe Education,
a k1 Ventures’ investee company,
invested in the Canadian International
School in Singapore and The Children’s
House in Malaysia.
g k1 Ventures to identify investment
opportunities while continuing to
focus on the management of existing
investments with the aim of enhancing
shareholder value.
g M1 became the first company in
Singapore to provide ultra high-speed
broadband services on the new national
fibre network, and launched its own
application store.
g M1 to continue to strengthen its
position in the mobile market and
capitalise on growth opportunities in
Singapore riding on the new national
fibre network.
$66m
Decreased 56%
from FY 2009’s
$149 million.
Net Profi t
$49m
Decreased 59%
from FY 2009’s
$119 million.
82
Keppel Corporation Limited
Report to Shareholders 2010
Operating & Financial Review
Investments
83
Operating & Financial Review
Financial Review and Outlook
Revenue by Market 2010
(%)
Singapore
ASEAN
Rest of Asia-Pacific
Middle East / India
Europe
North America
South America
Total
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
33
7
7
3
20
19
11
100
23
6
4
10
31
13
11
2
100
26
5
4
8
30
15
11
1
100
$9,783m
Singapore 33%
Overseas 67%
$12,247m
Singapore 23%
Overseas 77%
$11,805m
Singapore 26%
Overseas 74%
84
Keppel Corporation Limited
Report to Shareholders 2010
PROSPECTS
The Offshore & Marine Division secured
$3.2 billion worth of new orders for
the year. The net orderbook at the end
of the year stood at $4.6 billion with
deliveries into 2013. The incident in the
Gulf of Mexico has raised safety and
environmental concerns in offshore
drilling. With increasing focus on safety
afforded by newer rigs and a global rig
fl eet that is relatively old, rigbuilders are
expected to benefi t from the renewal
of existing rigs. The sharp divergence
in utilisation and dayrates between
new and old jackups has already led to
the ordering of new jackups in the last
quarter of the year. The Division’s focus
on innovation, quality, on-time delivery
and safety will place it in a good position
to win more orders and to widen and
deepen its market leadership.
In the Infrastructure Division, the Group
has commenced the expansion of the
Keppel Merlimau Cogen power plant
which will increase generation capacity
from the current 500MW to 1,300MW by
2013. Notwithstanding the cost overruns
and delays in our Qatar projects, the
Group believes that the global drive
towards sustainable development will
provide opportunities for our environmental
engineering business. The Group has just
announced the consolidation of our data
centre assets, which we expect to derive
greater economies of scale and offer more
cost-effective solutions to our customers.
Riding on the robust economic
performance and favourable
demographics, the Property Division sold
more than 650 homes in Singapore for
the year. With the latest round of cooling
measures, buying sentiment is expected
to turn cautious. We will time our launch
of remaining units in our projects at
Keppel Bay and Lakeside Drive when
market stabilises. The recent asset
swap between Keppel Land and K-REIT
Asia has increased the Group’s quality
residential pipeline with the potential
redevelopment of the Keppel Towers and
GE Tower site to meet the demand for
Shareholder Returns
ROE
16.4
Full-year dividend 11.5
19.1
14.0
21.8
19.0
22.4
35.0
Capital
distribution
11.5 cts/
share
Capital
distribution
14.0 cts/
share
Special
dividend
45.0 cts/
share
Plus
Plus
Plus
22.3
42.0
23.9
38.0
Dividend
in specie
~23.0 cts/
share
Plus
cents
48
36
24
12
0
%
24
18
12
6
0
2005
2006
2007
2008
2009
2010
city living. The Division also posted record
sales of about 4,600 homes overseas in
2010. Capitalising on aspirations for
homes due to rising affl uence and
urbanisation in the region, the Group
boosted its China portfolio and expanded
its presence in Vietnam with several land
acquisitions during the year. With healthy
leasing activities on the back of buoyant
economic growth, prime offi ce rents in
Singapore registered good increase in
2010. The Group achieved creditable
offi ce space take-up for our Marina Bay
Financial Centre and Ocean Financial
Centre projects.
With another year of record earnings
in 2010, the Group is mindful of the
challenges in 2011. The Group will
continue to sharpen our competitive edge
by leveraging on collective strengths and
synergies among the Divisions so as to
create value for our stakeholders.
SHAREHOLDER RETURNS
Return on equity (ROE) exceeded
20% for the fourth consecutive year,
refl ecting our efforts to pursue higher
returns for our shareholders.
The Company will be paying a total
dividend of 42 cents per share. This
comprises a fi nal dividend of 26 cents
per share and the interim dividend of
16 cents per share paid in August 2010.
Total payout for 2010 represents 47%
of Group net profi t. This is equivalent
to a gross yield of 3.7% on the
Company’s last transacted share price
as at 31 December 2010.
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.
To reward our shareholders for their
continuing support, as well as to increase
the accessibility of an investment in the
Company to more investors, thereby
encouraging trading liquidity and greater
participation by investors and broadening
our shareholder base, the Company will
be issuing one bonus share for
every 10 existing ordinary shares
held by shareholders.
Operating & Financial Review
Financial Review and Outlook
85
Operating & Financial Review
Financial Review and Outlook
Continued EVA Growth
($ million)
197
416
779
855
1,026
1,035
1,200
1,000
800
600
400
200
0
2005
2006
2007
2008
2009
2010
Economic Value Added (EVA)
ECONOMIC VALUE ADDED (EVA)
In 2010, EVA excluding exceptional items
rose by $9 million to $1,035 million. This
was attributable to higher operating profi t
(excluding exceptional items), partially
offset by higher capital charge.
Capital charge rose by $130 million as
a result of higher Average EVA Capital
and higher Weighted Average Cost of
Capital (WACC). Average EVA Capital
increased by $1.34 billion from
$9.86 billion to $11.20 billion. WACC
increased from 6.26% to 6.67% mainly
due to increase in risk-free rate and beta.
EVA excluding exceptional items of
$1,035 million in 2010 is the highest
ever attained by the Group. The
Group’s effective deployment and
management of resources to enhance
shareholders’ value is refl ected in the
Profi t after tax & exceptional items
Adjustment for:
Interest expense
Interest expense on non-capitalised leases
Tax effect on interest expense adjustments (Note 1)
Provisions, deferred tax, amortisation & other adjustments
Net Operating Profi t After Tax (NOPAT)
Average EVA Capital Employed (Note 2)
Weighted Average Cost of Capital (Note 3)
Capital Charge
2010
$ million
1,343
107
21
(22)
66
1,515
10v09
+/(-)
-494
+18
-
-7
+2
-481
11,201
6.67%
(747)
+1,340
+0.41%
-130
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)
Economic Value Added
768
-611
1,379
+687
692
Comprising:
EVA excluding exceptional items
EVA of exceptional items
1,035
(267)
768
+9
-620
-611
1,026
353
1,379
+171
+516
+687
855
(163)
692
Notes:
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% (2009: 6%);
(b) Risk-free rate of 2.5526% (2009: 2.1949%) based on yield-to-maturity of Singapore Government 10-year Bonds;
(c) Unlevered beta at 0.74 (2009: 0.72); and
(d) Pre-tax Cost of Debt at 3.03% (2009: 3.13%) using 5-year Singapore Dollar Swap Offer Rate plus 70 basis points (2009: 100 basis points).
86
Keppel Corporation Limited
Report to Shareholders 2010
1,947
3,030
3,633
3,318
2,574
2,245
2,157
3,051
3,332
3,178
2,653
2,936
2,243
3,208
4,443
4,441
2,400
4,246
16,747
17,307
20,981
2008
2009
2010
4,596
2,153
7,647
1,970
381
5,985
2,728
6,423
1,759
412
6,740
2,984
6,730
4,068
459
16,747
17,307
20,981
Total Assets Owned
($ million)
Fixed assets
Properties
Investments
Stocks & work-in-progress
Debtors & others
Bank balances, deposits & cash
Total
25,000
20,000
15,000
10,000
5,000
0
Total Liabilities Owed and Capital Invested
($ million)
Shareholders' funds
Non-controlling interests
Creditors
Term loans & bank overdrafts
Other liabilities
Total
25,000
20,000
15,000
10,000
5,000
0
positive and growing EVA that we have
been achieving since 2004.
FINANCIAL POSITION
Group total assets of $20.98 billion at
31 December 2010 were $3.67 billion
or 21.2% higher than the previous
year-end. Associated companies
increased because K-Green Trust
became an associated company
following the distribution in specie
of 51% of K-Green Trust units to
Keppel Corporation’s shareholders
in June 2010. Increase in investment
properties was due to the acquisition
of two commercial buildings in Australia
and the redevelopment cost of
Ocean Financial Centre. Decrease
in long term receivables was due
to the sale of Senoko WTE Plant,
Keppel Seghers Tuas WTE Plant and
Keppel Seghers Ulu Pandan NEWater
Plant to K-Green Trust. Higher stocks
and work-in-progress were due to
expenditure on trading properties and
acquisitions of land for development.
Group shareholders’ funds increased
from $5.99 billion at 31 December 2009
to $6.74 billion at 31 December 2010.
The increase was mainly attributable
to retained profi ts for the year and fair
value gain on available-for-sale assets,
partially offset by payment of fi nal
dividend of 23 cents per share and
special dividend in specie of K-Green
Trust units of approximately 23 cents
per share in respect of fi nancial year
2009, and the interim dividend of
16 cents per share for fi nancial year 2010.
Group total liabilities of $11.26 billion at
31 December 2010 were $2.66 billion
or 31.0% higher than the previous
year-end. Higher level of term loans
was due to increased bank borrowings
and funds raised in the capital markets
during the year for working capital
requirements, operational capital
expenditure and acquisitions.
2008
2009
2010
Group net cash of $178 million at
31 December 2010 was a decrease
Operating & Financial Review
Financial Review and Outlook
87
Operating & Financial Review
Financial Review and Outlook
of $999 million from $1,177 million at
31 December 2009. This was mainly
due to operational cash outfl ow, capital
expenditure and dividend payment.
TOTAL SHAREHOLDER
RETURN
Keppel is 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.
Our Total Shareholder Return (TSR) for
2010 was 47%. This was 34% above
the benchmark Straits Times Index’s
(STI) TSR of 13%. Over the past nine
Total Shareholder Return (TSR)
(%)
Keppel
2.0 37.6 75.2 48.7 32.5 65.3 51.7
(64.4) 100.8 47.0
STI
(13.4) (14.5) 38.3 21.6 19.3 32.4 21.0
(47.1) 70.8 13.4
150
100
50
0
-50
-100
Cash Flow
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
years, our Compound Annual Growth
Rate (CAGR) TSR of 32% was also
signifi cantly higher than STI’s CAGR
TSR of 9%.
CASH FLOW
Net cash from operating activities was
$450 million compared to $670 million
in the previous year. This was mainly
due to increased working capital and
higher income taxes paid, partly offset
by higher operating profi t.
Net cash used in investing activities
was $643 million. The Group spent
$1,266 million on acquisitions and
operational capital expenditure. This
comprised principally the acquisition
of two commercial buildings in
Australia, equity injection into the Tianjin
Eco-City and Dong Nai projects, further
investment in Marina Bay Financial
Centre, redevelopment cost of Ocean
Financial Centre and other operational
capital expenditure. Divestment and
dividend income totalled $623 million.
Free cash fl ow was a negative
$193 million as compared to a positive
$1,097 million in the previous year.
Total distribution to shareholders of the
Company and minority shareholders of
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 used in investing activities
Free cash fl ow
2010
$ million
1,756
233
1,989
(1,301)
(238)
450
(1,266)
623
(643)
(193)
10v09
+/(-)
+251
+29
+280
-390
-110
-220
-48
-1,022
-1,070
-1,290
2009
$ million
1,505
204
1,709
(911)
(128)
670
(1,218)
1,645
427
1,097
09v08
+/(-)
+267
+46
+313
-1,763
+73
-1,377
-678
+1,253
+575
-802
2008
$ million
1,238
158
1,396
852
(201)
2,047
(540)
392
(148)
1,899
Dividend paid to shareholders of the Company & subsidiaries
(757)
-96
(661)
+540
(1,201)
88
Keppel Corporation Limited
Report to Shareholders 2010
An integrated development
centrally located on prime
waterfront space, the Marina Bay
Financial Centre has been
committed to international banking
and fi nancial institutions and
various multi-national companies.
subsidiaries for the year amounted to
$757 million.
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
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 the
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;
– 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 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
Operating & Financial Review
Financial Review and Outlook
89
Operating & Financial Review
Financial Review and Outlook
hedge interest rate risks. This may
include interest rate swaps and
interest rate caps;
Details of these derivative instruments
are disclosed in the notes to the fi nancial
statements in this Report.
overseas investments and receivables,
which were denominated in foreign
currencies.
– 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 2010, 10%
(2009: 48% and 2008: 10%) of Group
borrowings were repayable within one
year with the balance largely repayable
between two and fi ve years.
Unsecured borrowings constituted
69% (2009: 64% and 2008: 69%)
of total borrowings with the balance
secured by properties and assets.
Secured borrowings are mainly for
fi nance of 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 $2.55 billion (2009:
$2.41 billion and 2008: $2.81 billion).
Fixed rate borrowings constituted
52% (2009: 39% and 2008: 29%) of
total borrowings with the balance at
fl oating rates. The Group has interest
rate swap agreements with notional
amount totalling $929 million, whereby
it receives variable rates equal to SOR
and pays fi xed rates of between 1.43%
and 3.62% 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
2010, the Group has outstanding interest
rate cap agreements of $46 million.
Singapore dollar borrowings
represented 93% (2009: 96% and
2008: 94%) of total borrowings. The
balances were in US dollars, Brazilian
Reals and other Asian currencies.
Foreign currency borrowings were
drawn to hedge against the Group’s
CAPITAL STRUCTURE &
FINANCIAL RESOURCES
The Group maintains a strong balance
sheet and an effi cient capital structure
to maximise returns for shareholders.
The strong operational cash fl ow of
the Group and divestment proceeds
Debt Maturity
($ million)
< 1 year
1-2 years
2-3 years
3-4 years
4-5 years
> 5 years
Net Cash/(Gearing)
Net Cash/(Gearing) Ratio =
Borrowings – Cash
Capital Employed
Net Cash
Capital Employed
Net Cash Ratio
275
6,749
0.04
1,177
8,713
0.14
178
9,724
0.02
$ million
10,000
8,000
6,000
4,000
2,000
0
2008
2009
2010
392
527
638
456
1,455
600
No. of times
2.0
1.6
1.2
0.8
0.4
0
90
Keppel Corporation Limited
Report to Shareholders 2010
Interest Coverage
Interest Coverage =
EBIT
Interest Cost
EBIT
Total Interest Cost
Interest Cover
1,676
96
17.46
1,905
67
28.44
2,091
81
25.81
$ million
2,500
2,000
1,500
1,000
500
0
2008
2009
2010
Cash Flow Coverage
Cash Flow Coverage =
Operating Cash Flow + Interest Cost
Interest Cost
Operating Cash Flow + Interest 2,143
Total Interest Cost
Cash Flow Coverage
96
22.32
737
67
11.00
531
81
6.56
$ million
2,500
2,000
1,500
1,000
500
0
2008
2009
2010
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 with an appropriate mix of
equity and debt after careful evaluation
and management of risks.
No. of times
40
32
24
16
8
0
Capital Structure
Capital employed at the end of 2010
was $9.72 billion, an increase of
$1.01 billion over 2009 and $2.97 billion
over 2008. The Group was in a net cash
position of $178 million at the end
of 2010 compared to net cash of
$1.18 billion in 2009 and net cash
of $275 million in 2008. The Group’s
net cash ratio was 0.02 times at the
end of 2010.
Interest coverage increased from
17.46 times in 2008 to 28.44 times in
2009 and decreased to 25.81 times in
2010. Despite higher EBIT in 2010, interest
coverage has reduced because of higher
borrowings and interest expense.
Cash fl ow coverage decreased from
22.32 times in 2008 to 11.00 times in
2009 and to 6.56 times in 2010. This was
mainly due to lower operating cash fl ow.
At the Annual General Meeting
in 2010, shareholders gave their
approval for the mandate to buy back
shares. The Company did not
exercise this mandate.
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.
No. of times
40
32
24
16
8
0
Operating & Financial Review
Financial Review and Outlook
91
Operating & Financial Review
Financial Review and Outlook
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 are actively reviewed on an
ongoing basis.
The Group has further strengthened
its fi nancial capacity during the year.
As at end of 2010, total funds available
and unutilised facilities amounted to
$7.62 billion.
CRITICAL ACCOUNTING POLICIES
The Group’s signifi cant accounting
policies are discussed in more detail in
the notes to the fi nancial statements in
this Report. 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 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
Financial Capacity
Cash at Corporate Treasury
Credit facilities extended
to the Group
Total
$ million
2,731
4,892
7,623
Remarks
64% of total cash of $4.25 billion
Credit facilities of $6.87 billion, of
which $1.98 billion was utilised
to which the fair value of an investment
is less than its cost, the fi nancial health
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.
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
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 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 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 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
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.
92
Keppel Corporation Limited
Report to Shareholders 2010
1
2
1_As the most comprehensive
offshore and marine facility in
Latin America, BrasFELS is in a
strong position to help meet
Brazil’s requirements for greater
local content, and to give value
to Petrobras and drillers operating
in Brazil and the region.
2_Keppel Logistics is well-
positioned to benefi t from the
increase in demand for logistics
and warehousing services.
Operating & Financial Review
Financial Review and Outlook
93
Sustainability
Report
Highlights
We aim to achieve sustainable
business growth by contributing to
the well-being of the environment,
society and community.
Sustaining
Growth
(pages 96-127)
Empowering
Lives
(pages 128-135)
Nurturing
Communities
(pages 136-140)
Our commitment to business
excellence is driven by our
unwavering focus on strong
corporate governance and
prudent risk management.
Resource efficiency is not only
our responsibility, it also makes
good business sense.
Innovation and delivering
quality products and services
are key in sharpening our
competitive edge.
People are the cornerstone
of our businesses.
As an employer of choice,
we are committed to grow
and nurture our talent pool
through continuous training and
development to help our people
reach their full potential.
We want to instill a culture of
safety so that everyone who
comes to work goes home safe.
As a global corporate citizen,
we believe that as communities
thrive, we thrive. We give back
to communities wherever we
operate through our multi-
faceted approach towards
Corporate Social Responsibility.
We also believe that cultivating
a green mindset among our
employees will spur them to
adopt a sustainable lifestyle.
As leaders in our businesses,
we support industry
programmes and initiatives,
and encourage open dialogue
for further growth.
For more details, please refer to Keppel Corporation’s Sustainability Report 2010, which will be available in June 2011 and also via our website at
www.kepcorp.com.
94
Keppel Corporation Limited
Report to Shareholders 2010
Sustainability Report Highlights
95
Sustaining Growth
Corporate
Governance
Our Board of
Directors bring
their deep
insights and
diverse expertise
to the strategic
governance
of the Group,
acting in the
best interest of
our shareholders
at all times.
We are committed to strong
corporate governance which is
essential in enhancing shareholder
value and achieving sustainable
growth for the Group.
96
Keppel Corporation Limited
Report to Shareholders 2010
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
Sustaining Growth
Corporate Governance
Page reference
in this report
Pages 98 and 99
Page 98
Page 99
Pages 99
and 100
Not Applicable
Page 101
Pages 101
and 102
Pages 220 to 224
and 231
Pages 102, 103,
114 and 115
Pages 104 to 107
Page 104
Pages 106
and 107
Page 107
Pages 145, 146,
and 169 to 172
Pages 107 to 112
Pages 110 to 112
97
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
Role: 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.
–
Independent Judgment: 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 for FY 2010, 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.
Board Committees: To assist the
board in the discharge of its oversight
function, various board committees,
namely the Audit, Board Risk,
Nominating, Remuneration, and
Board Safety Committees, 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. The terms of
reference of the respective board
committees are disclosed in the
Appendix to this report.
Meetings: 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. Further, the
non-executive directors meet without
the presence of management on a
need basis. The number of board,
board committee, and non-executive
director, meetings held in FY 2010,
as well as the attendance of each
board member at these meetings,
are disclosed below:
Lee Boon Yang
Lim Hock San
Choo Chiau Beng
Sven Bang Ullring
Tony Chew Leong-Chee
Oon Kum Loon1
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia2
Danny Teoh3
Teo Soon Hoe
Tong Chong Heong
No. of Meetings Held
Board Meetings
8
8
8
8
8
8
7
7
3 of 3
3 of 3
8
8
8
Board Committee Meetings
Audit
–
5
–
–
5
5
–
4
–
–
–
–
5
Nominating Remuneration
11
11
–
10
–
10
11
–
–
–
–
–
11
4
–
–
4
4
4
4
–
–
–
–
–
4
Safety
3
–
3
3
–
–
–
–
–
–
–
–
3
Non-executive
directors’ Meeting
(without presence of
management)
1
1
–
1
1
1
1
1
–
–
–
–
1
Risk
–
4
–
–
–
4
4
4
–
–
–
–
4
1 Mrs Oon Kum Loon relinquished her membership on the Nominating Committee with effect from 1 December 2010.
2 Mr Tan Ek Kia was appointed as non-executive director with effect from 1 October 2010 and member of the Board Safety Committee and Nominating
Committee with effect from 1 December 2010.
3 Mr Danny Teoh was appointed as non-executive director with effect from 1 October 2010 and member of the Audit Committee and Remuneration
Committee with effect from 1 December 2010.
98
Keppel Corporation Limited
Report to Shareholders 2010
Internal Limits of Authority: 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 $30 million
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. 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.
Director Orientation: 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.
Training: 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 that affect or may enhance
their performance as board or board
committee members. In FY 2010, some
KCL directors attended the two-day
“Inaugural International Symposium
on Catastrophe Risk Management”
organised by Nanyang Technological
University, a four-day conference
on “Making Corporate Boards More
Effective” organised by the Harvard
Business School, and a seminar on
“Director’s Responsibilities in respect
of Prospectus, Annual Report &
Circulars” organised by the Singapore
Sustaining Growth
Corporate Governance
Institute of Directors & Wong
Partnership, among others.
BOARD COMPOSITION
AND GUIDANCE
Principle 2:
Strong and independent element
on the Board
Board Composition: To discharge its
oversight responsibilities, 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.
Board Independence: 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. In this connection, the
Nominating Committee takes into
account, among other things, whether a
director has business relationships with
the Company or any of its subsidiaries,
and if so, whether such relationships
could interfere, or be reasonably
perceived to interfere, with the
exercise of the director’s independent
business judgment with a view to the
best interests of the Company. In this
connection, the Nominating Committee
noted that Mr Alvin Yeo would be
deemed non-independent by virtue of
his position as Senior Partner of
WongPartnership LLP which is one
of the law fi rms providing legal services
to Keppel Group companies. However,
the Nominating Committee considers
that the integrity and independence
of Mr Alvin Yeo are beyond doubt in
99
Corporate Governance
view of his credentials and conduct
on the board. Further, 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.
Board Size: 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
approximately 12 members. The board
currently has majority independent
directors with a total of 12 directors,
of whom eight are independent. No
individual or small group of individuals
dominate the board’s decision making.
The nature of the directors’ appointments
on the board and details of their
membership on board committees are
set out on page 114 herein.
Board Competency: 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. In FY 2010,
the board’s core competencies
were further strengthened with the
appointment of Mr Tan Ek Kia and
Mr Danny Teoh. Mr Tan brings to
the board his deep and extensive
knowledge and experience in the
Energy and Utilities business and
China, and best practices in such areas
as human resources, health, safety
and environment (HSE), and corporate
social responsibility (CSR) from his long
working career in Shell. Mr Tan has
been appointed as a member of the
Nominating Committee and Board
Safety Committee. Mr Danny Teoh,
former Managing Partner of KPMG
Singapore, has deep knowledge and
experience in audit, fi nance and risk.
He has been appointed as a member
of the Audit Committee and
Remuneration Committee.
Board Information: 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 business 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 organized
every two years for in-depth discussion
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.
The next board strategy meeting is
scheduled to be held in March 2011.
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.
Non-executive Directors’ Meetings: The
board’s non-executive directors meet
on a need basis without the presence
of management to discuss matters
such as board processes, corporate
governance initiatives, matters which
they wish to discuss during the board
off-site strategy meeting, succession
planning and leadership development,
and performance management and
remuneration matters.
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
Principle 3:
Chairman and Chief Executive Offi cer
should in principle be separate
persons to ensure appropriate
balance of power, increased
accountability and greater capacity
of the board for independent
decision making
Dr Lee Boon Yang is the non-executive
and independent Chairman, and
Mr Choo Chiau Beng is the Chief
Executive Offi cer, of the Company.
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
in a timely manner to the board for the
board to make good decisions. He
also encourages constructive relations
100
Keppel Corporation Limited
Report to Shareholders 2010
between the board and management,
and between the executive directors
and non-executive directors.
non-executive directors, four out
of fi ve of whom (including the Chairman)
are independent; namely:
The Board interacts with the
Group’s Senior Management
regularly, sharing their views
and perspectives.
The Chairman also ensures effective
communication with shareholders.
– Mr Tony Chew
Independent Chairman
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 (NC)
to, among other things, make
recommendations to the board
on all board appointments and
oversee the Company’s succession
and leadership development plans.
The NC comprises entirely
– Dr Lee Boon Yang
Independent Member
– Mr Sven Ullring
Independent Member
– Mrs Oon Kum Loon1
Independent Member
– Mr Tow Heng Tan
Non-Executive and
Non-Independent Member
– Mr Tan Ek Kia
Independent Member
The terms of reference of the NC are
set out on pages 112 and 113 herein.
Process for appointment
of new directors
The NC 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 NC leads the process and
1 Mrs Oon Kum Loon stepped down as a member of the Nominating Committee, and Mr Tan Ek Kia
was appointed in her place, on 1 December 2010.
Sustaining Growth
Corporate Governance
101
Corporate Governance
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:
Integrity
(1)
(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.
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
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 pages 99 and 100 herein 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 was satisfi ed that in FY 2010, all
the directors were able to and had
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.
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 220 to 224 and 231: 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
102
Keppel Corporation Limited
Report to Shareholders 2010
considered by the Nominating
Committee to be independent; and
Pages 143 to 144: 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.
Independent Co-ordinator: 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.
Mrs Fang Ai Lian, former Chairman,
Ernst & Young and currently Chairman,
Great Eastern Holdings Ltd, was
appointed for this role.
Formal Process and Performance
Criteria: The evaluation processes and
performance criteria are disclosed in
the Appendix to this report.
Objectives and Benefi ts: The board
assessment exercise provides an
opportunity to obtain constructive
feedback from each director on
whether the board’s procedures and
processes allows 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
helps the directors to focus on their
key responsibilities. The individual
director assessment exercise allows
for peer review with a view to raising
the quality of board members. It also
Sustaining Growth
Corporate Governance
assists 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 the 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
Company’s senior management and the
Company Secretary to facilitate direct
access to senior management and the
Company Secretary.
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 &
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.
103
Corporate Governance
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, fi ve out of six1 of whom
(including the Chairman) are
independent, namely:
– Mr Lim Hock San
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
– Mr Danny Teoh
Independent Member
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, grant of shares and
share 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, the KCL Restricted Share
Plan (the “KCL RSP”) and the
KCL Performance Share Plan
(the “KCL PSP”).
The RC has access to expert
advice in the fi eld of executive
compensation outside the
Company where required.
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:
(i) Cash Component: Each
non-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.
1 Mr Danny Teoh was appointed as member of the Remuneration Committee on 1 December 2010.
104
Keppel Corporation Limited
Report to Shareholders 2010
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
Chairman
Member
Chairman
Member
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.
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.
In designing the compensation
structure, the RC seeks to ensure
that the level and mix of remuneration
is competitive and relevant. The
total remuneration mix comprises
three key components, that is,
Chairman
Deputy Chairman
Director
Audit Committee
Board Risk, Remuneration, Nominating
and Board Safety Committees
Basic Fee: The directors’ fee
structure (subject to shareholders’
approval at each annual general
meeting) is shown as above.
Attendance Fee: Further,
subject to shareholders’ approval
at each annual general meeting,
in the event that in a fi nancial year,
a non-executive director
attends more than six board
meetings and/or (as the
case may be) more than four
meetings of a board committee
of which he is a member, he
will 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:
Board Meeting
Committee Meeting
In-Country Out-Country
$5,000
$3,000
$3,000
$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
Sustaining Growth
Corporate Governance
annual fi xed cash, annual
performance incentive and
the KCL share plans. The annual
fi xed cash component comprises
the annual basic salary plus
any other fi xed allowances which
the Company benchmarks with
the relevant industry market
median. 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
performance. The KCL share plans
are in the form of two new share
plans approved by shareholders,
the KCL RSP and the KCL PSP
(collectively, the “KCL Share Plans”).
The EVA performance incentive plan
and the KCL Share Plans are both
long-term incentive plans.
Long-Term Incentive Plans
EVA Incentive Plan
Each year, the current year’s
EVA bonus earned 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
for payment in future years, subject
to the continued EVA performance
of the Company. 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
105
Corporate Governance
on a personal basis and represents
the executive’s contribution to the
EVA 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.
KCL Share Plans
At the extraordinary general meeting
of the Company held on 23 April 2010,
the Company’s shareholders approved
the adoption of the KCL Share Plans,
with effect from the date of termination
of the KCL Share Option Scheme.
The KCL Share Option Scheme was
terminated on 30 June 2010. Options
granted and outstanding prior to the
termination will continue to be valid and
subject to the terms and conditions of
the KCL Share Option Scheme.
The KCL Share Plans are put in place
to increase the Group’s fl exibility and
effectiveness in its continuing efforts to
reward, retain and motivate employees
to achieve superior performance
and to motivate them to continue
to strive for the Group’s long-term
shareholder value. The KCL Share
Plans also aim to strengthen the
Group’s competitiveness in attracting
and retaining talented key senior
management and employees. The KCL
RSP is intended to apply to a broader
base of employees while the KCL PSP
is intended to apply to a select group
of key senior management. Generally,
it is envisaged that the range of
performance targets to be set under
the KCL RSP and the KCL PSP will be
different, with the latter emphasising
stretched or strategic targets aimed at
sustaining longer-term growth.
Details of the KCL Share Plans are set
out on pages 146, 171 and 172.
The Executive Directors participate in
both the KCL RSP and the KCL PSP.
Level and mix of remuneration of
Directors and Key Executives (who
are not also Directors) for the year
ended 31 December 2010
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 $8,000,000 to $8,250,000
Choo Chiau Beng
Abv $5,500,000 to $8,000,000
Nil
Abv $5,250,000 to $5,500,000
Teo Soon Hoe
Base/
Fixed
Salary
Performance-Related
Bonuses Earned
(including EVA and
non-EVA Bonuses)
Paid Deferred
& at risk
14% 44% 42%
–
–
–
16% 43% 41%
Tong Chong Heong
15% 44% 41%
$250,000 to $5,250,000
Nil
Below $250,000
Lee Boon Yang
Lim Hock San
Sven Bang Ullring
Tony Chew Leong-Chee
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Directors’
Fees
Directors’
Allowance
Benefi ts-
in-Kind
Contingent awards
of shares1
Remuneration
Shares2
–
–
–
–
–
60%
83%
73%
75%
81%
76%
72%
64%
64%
–
–
–
–
–
3%
–
6%
–
–
–
–
–
–
n.m.3 0 to 300,000 PSP
0 or 150,000 RSP
–
–
n.m. 0 to 200,000 PSP
0 or 100,000 RSP
n.m. 0 to 180,000 PSP
0 or 90,000 RSP
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
37%
17%
21%
25%
19%
24%
28%
36%
36%
Notes:
1. Shares awarded under the KCL PSP and KCL RSP are subject to pre-determined performance targets set over a three-year and a one-year performance
period respectively. For the KCL PSP, the additional award can be up to 50% of the maximum range depending on the achievement of the pre-determined
targets at the end of the three-year performance period.
2. Estimated value based on KCL shares’ closing price of $11.32 on the last trading day of FY2010.
3. n.m. – not material
106
Keppel Corporation Limited
Report to Shareholders 2010
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 $3,000,000 to $3,250,000
Wong Kingcheung, Kevin
Abv $2,000,000 to $3,000,000
Nil
Abv $1,750,000 to $2,000,000
Loh Chin Hua
Abv $1,500,000 to $1,750,000
Ang Wee Gee
Yeo Chien Sheng, Nelson
Abv $1,250,000 to $1,500,000
Chia Hock Chye, Michael
Abv $1,000,000 to $1,250,000
Chow Yew Yuen
Ong Tiong Guan
Wong Kok Seng
Abv $750,000 to $1,000,000
Hoe Eng Hock
Abv $500,000 to $750,000
Nil
Abv $250,000 to $500,000
Pang Hee Hon
Tay Lim Heng6
Base/
Fixed
Salary
Performance-Related
Bonuses Earned
(including EVA and
non-EVA Bonuses)
Paid Deferred &
at risk
Benefi ts-
in-Kind
Contingent awards
of shares1
26% 37% 37%
n.m. 0 to 200,000 PSP4
0 or 70,000 RSP4
–
–
33% 67%
–
–
–
–
n.m. 0 to 120,000 PSP4
30% 38% 32%
24% 37% 39%
n.m. 0 to 120,000 PSP4
0 or 40,000 RSP4
0 or 75,000 RSP
n.m.
25% 37% 38%
n.m.
0 or 75,000 RSP
33% 36% 31%
31% 37% 32%
28% 37% 35%
n.m.
n.m.
n.m.
0 or 50,000 RSP
0 or 50,000 RSP
0 or 50,000 RSP
40% 36% 24%
n.m.
0 or 50,000 RSP
–
–
–
–
–
67% 19% 14%
35% 35% 30%
n.m. 0 to 100,000 PSP5
0 or 70,000 RSP5
0 or 30,000 RSP
n.m.
4. On Keppel Land Limited share based compensation scheme.
5. On Keppel Telecommunications & Transportation Ltd share based compensation scheme.
6. Joined the Company on 15 June 2010.
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
2010. “Immediate family member” means
the spouse, child, adopted child, step-
child, brother, sister and parent.
Details of the KCL Share Option
Scheme and KCL Share Plans
The KCL Share Option Scheme and
the KCL Share Plans, which have
been approved by shareholders of the
Company, are administered by the RC.
Please refer to pages 145, 146 and 169
to 172 of this Annual Report for details
on the KCL Share Option Scheme and
the KCL Share Plans.
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
assessment of the Company’s and
Group’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
Sustaining Growth
Corporate Governance
107
Corporate Governance
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 members
of the board with management
accounts which present a balanced
and understandable assessment of the
Company’s and Group’s performance,
position and prospects on a monthly
basis. Such reports keep the board
members informed of the Company’s
and 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.
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
– Mr Alvin Yeo
Independent Member
– Mr Danny Teoh1
Independent Member
Mr Lim Hock San, Mrs Oon Kum Loon
and Mr Danny Teoh 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 page 112 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.
The Audit Committee met with the
external auditors four times and with the
internal auditors six 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 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
1 Mr Danny Teoh was appointed as member of the Audit Committee on 1 December 2010.
signifi cant changes made that
would have a material 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 also
reviewed the training costs and
programmes attended by the internal
audit to ensure that the staff continued
to update their technical knowledge
and auditing skills.
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 for the independent investigation
108
Keppel Corporation Limited
Report to Shareholders 2010
1
2
1_Dr Lee Boon Yang,
Chairman of Keppel Corporation,
visits the Group’s various
operations and facilities regularly
to obtain updates.
2_Mr Sven Ullring, Chairman of
the Board Safety Committee,
undertook safety walkabouts to
better understand the operations
as well as share safety practices.
Sustaining Growth
Corporate Governance
109
Corporate Governance
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” section on pages 84 to 93
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
system and was satisfi ed that the
Company’s internal control processes
are adequate.
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
are disclosed on page 112 herein.
The Board Risk Committee is
made up of three 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 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 WongPartnership 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
110
Keppel Corporation Limited
Report to Shareholders 2010
Internal Auditors Incorporated, USA
(“IIA”), Group Internal Audit is guided
by the International Standards for
the Professional Practice of Internal
Auditing set by the IIA. These
standards consist of attribute and
performance 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. To
ensure timely and adequate closure
of audit fi ndings, the status of
implementation of the actions agreed
by management is tracked and
discussed with the Committee.
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.
Sustaining Growth
Corporate Governance
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 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.
111
Corporate Governance
APPENDIX
BOARD COMMITTEES
– TERMS OF REFERENCE
A. 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
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
function is adequately resourced
and has appropriate standing within
the Company, at least annually.
(10) Review arrangements by which
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.
B. 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 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.
C. Nominating Committee
(1) Recommend to the board the
appointment/re-appointment
of directors.
(2) Annual review of skills required
by the board, and the size of
the board.
112
Keppel Corporation Limited
Report to Shareholders 2010
(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.
D. 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
(5) Decide how the board’s
compensation (if any) of directors.
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
(3) Consider whether directors
should be eligible for benefi ts
under long-term incentive
schemes (including 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.
development plans.
(5) Administer the Company’s employee
(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 or any other
stock exchange;
(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; and
(iii) parent companies of the
Company’s core businesses
which are unlisted (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) 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.
share option scheme (the
“KCL Share Option Scheme”), and
the Company’s Restricted Share
Plan and Performance Share Plan
(collectively, the “KCL Share Plans”),
in accordance with the rules of the
KCL Share Option Scheme and the
KCL Share Plans.
(6) Grant awards under the
KCL Share Plans 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.
E. Board Safety Committee
(1) Review and examine the
effectiveness of the Group
companies’ safety management
system, including training and
monitoring systems, to ensure
that a robust safety management
system is maintained.
Sustaining Growth
Corporate Governance
113
Corporate Governance
Nature of Current Directors’ Appointments and Membership on Board Committees
Committee Membership
Board Membership
Director
Chairman
Lee Boon Yang
Deputy Chairman
Lim Hock San
Chief Executive Offi cer
Choo Chiau Beng
Sven Bang Ullring
Independent
Tony Chew Leong-Chee Independent
Independent
Oon Kum Loon
Non-Independent &
Tow Heng Tan
Non-Executive
Independent
Independent
Independent
Executive Director &
Group Finance Director
Executive Director
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Teo Soon Hoe
Tong Chong Heong
Nominating
Member
Audit
–
Chairman
–
–
Remuneration
Member
– Chairman
–
–
Member
Member
Member Chairman
–
-
Member
Member
–
Risk
Safety
–
Member
Member
–
Member
–
– Chairman
–
–
–
Member Chairman
–
Member
Member
Member
–
Member
–
–
Member
–
–
–
–
Member
–
Member
–
–
–
–
Member
–
–
–
–
–
–
–
(2) Review and examine the 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 Group.
(5) Ensure that the safety functions
in 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
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 IC
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
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.
114
Keppel Corporation Limited
Report to Shareholders 2010
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.
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
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 fi ve
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
Sustaining Growth
Corporate Governance
115
Sustaining Growth
Risk
Management
Keppel’s Business
Continuity
Management
focuses on
building the
Group’s resilience
against events
such as
pandemic flu.
Bolstering risk management practices
to support value creation and
continuing excellence in an uncertain
business environment.
116
Keppel Corporation Limited
Report to Shareholders 2010
The recovery from the global fi nancial
crisis in 2010 has been disproportionate,
with numerous European countries
facing severe problems simultaneously
while the recovery of emerging countries
is facing a slowdown with governments
introducing measures to control infl ation.
The uncertainty over a sustained
recovery in the US, lingering Eurozone
debt concerns, rising commodity
prices and interest rates in Asia, have
continued to reinforce the importance of
risk management.
Keppel’s Enterprise Risk Management
(ERM) framework provides a holistic
and systematic approach in risk
management to better prepare the
Group to respond to uncertainties and
leverage new business opportunities
to maintain a competitive edge in
doing our businesses. A robust risk
management framework underpins the
Group’s overall business performance
and operations. The ERM framework
designed by our management provides
a systematic approach in managing
risks and to minimise surprises and
losses that may occur arising from
unexpected events. However, under
an evolving landscape of uncertainties
and vulnerabilities, risks can never be
entirely eliminated.
ROBUST ENTERPRISE RISK
MANAGEMENT
The Keppel Board of Directors (Board)
has overall responsibility for risk
oversight. The Board, assisted by the
Board Risk Committee (BRC), is fully
committed to a robust risk management
system that safeguards and enhances
stakeholders’ interest. The terms of
reference of the BRC are disclosed on
page 112 of this Report.
Management’s strong commitment in
driving Group-wide risk management
system and processes over the years
has equipped the Group well to face the
dynamic business environment and to
capitalise on opportunities. Sound risk
management policies, practices and
guidelines provide a robust platform
to prudently and effectively steer
our business operations in today’s
challenging and uncertain macro-
economic environment.
CULTURE OF RISK MANAGEMENT
Risk management is an integral part
of strategic, operational and fi nancial
decision-making processes at all
levels of the Group. Management
identifi es, evaluates, mitigates risks
and discusses key risk issues with
the Board periodically. A systematic
and structured approach is adopted
across all business units in the Group.
The Group’s key risks and appropriate
mitigating measures taken are grouped
under the following categories:-
Strategic
Strategic risk relates to the Company’s
business plans and strategies,
including the risks associated with
the countries and industries in which
we operate, changing laws and
regulations, acquisition and capital
project investment, changing customer
demand pattern, competitive threats,
technology and product innovation.
To support the Group in executing
its business strategies in sustaining
growth, BRC guides the Group in
the formulation and review of its risk
policies, risk limits and effective risk
management system. The Group’s
risk-related policies and limits are
subject to periodic reviews to ensure
that they continue to support business
objectives, address business risks
adequately and effectively, and take into
consideration the prevailing business
climate and risk appetite of the Group.
Risk management is an integral part
of the Group’s strategic and budget
review exercise, policy formulation
and revision, project and investment
evaluation, and management
performance evaluation process.
Impact assessment and review of
the Group’s exposure to changing
Sustaining Growth
Risk Management
117
ENHANCING OPERATIONAL
READINESS
Business Continuity Management
(BCM) increases the Group’s resilience
to potential business disruptions and
minimise 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.
The unusually severe storms, fl oods and
harsh winter conditions in many parts
of the world experienced in 2010 have
awakened many to the impact of climate
change. With operations around the
world, the Group continues to scan for
possible threats and establish plans to
enhance operational preparedness.
During the year, the BCM focus was
on building the Group’s resilience
against events such as pandemic fl u,
IT downtime and power outage. Various
simulation exercises were conducted at
business units and locations to enhance
operational preparedness. These plans
are tested and refi ned regularly to ensure
that planned responses are effective.
Risk Management
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,
regulatory issues and changing
customers’ demand patterns have
enabled Management to have better
insight on impeding developments
in the span of countries where the
Group operates.
The Group’s investment decision
process is guided by investment
parameters instituted on a Group-
wide basis. All investments are subject
to due diligence processes and
are independently evaluated by the
Board and management to ensure
that they are in line with the Group’s
strategic business focus, meet relevant
hurdle rates of return, and take into
consideration risk factors.
Operational
Operational risk relates to the
effectiveness and effi ciency of
our people, integrity of internal
control systems and processes and
externalities that affect the day-to-day
operations. It includes project tender
and execution risks, unfavourable
regulatory changes, tight labour
situation, wide cost fl uctuations,
suppliers dependency, IT downtime,
information security, catastrophic
events, among others.
Operational risk management
is integrated into the day-to-day
business operations and projects
across all business units to facilitate
early risk detection for proactive
management and control. Guidelines
and tools are used to provide guidance
in the identifi cation, assessment,
mitigation and monitoring of risks.
Specifi c focus groups, comprising
members from a spectrum of
expertise, are established to
manage and monitor specifi c risks.
Where appropriate, this is supported
by risk transfer mechanisms such as
insurance and outsourcing, as well as
joint ventures.
Financial
Financial risk relates to our ability
to meet fi nancial obligations and
mitigate credit risks, liquidity risks,
currency risks, interest rate risks
and price risks. To manage these
risks, the Group’s policies and
fi nancial authority limits are reviewed
periodically to incorporate changes
in the operating and control
environment. These policies set
out the parameters for management
of Group’s foreign exchange
exposures, loans and deposits,
use of fi nancial instruments and
listed investments.
The Group has continued to place
emphasis on improving fi nancial
discipline in cash and liquidity
management. Formalised processes,
which include counterparty evaluation
and review against pre-established
guidelines, have been established.
For more details on the fi nancial risk
management, please see pages 89–90
of this Report.
SHARPENING COMPETITIVE EDGE
The Group has intensifi ed its efforts
to strengthen its risk-centric culture.
Continuous education and regular
communication through various
forums and in-house publications on
risk management related topics are
integral in inculcating risk awareness
and reinforce risk discipline among
employees. In-house workshops are
developed and conducted to train key
personnel and management staff to
increase awareness of the Group’s risk
management methodology and tools
available in mitigating risks.
Embedding risk management
in the performance evaluation
process aims to raise risk
accountability and reinforce a
risk-centric culture in the Group.
118
Keppel Corporation Limited
Report to Shareholders 2010
1
2
1_Evacuation drills are conducted
regularly at the various yards
around the world.
2_As part of the effort to raise
risk awareness, quarterly talks
are organised.
Sustaining Growth
Risk Management
119
Sustaining Growth
Environmental
Protection
We aim to
contribute
towards a clean
and sustainable
urban living
environment
in all the
communities
where we
operate.
Keppel Corporation is committed
to operate its businesses in a
manner that is environmentally
responsible. Beyond supporting
and championing green causes,
we believe that incorporating
environmentally responsible practices
makes good business sense.
120
Keppel Corporation Limited
Report to Shareholders 2010
Key Eco Principles
Ecollaboration
Working with stakeholders, policy-makers
and decision-makers to build a better future
Economy
Balancing commercial viability
and environmental sustainability
Ecommitment
Promoting environmental awareness
and supporting green initiatives
Ecommunity
Creating sustainable developments
for future generations
Keppel’s Environmental Key Performance Indicators
Energy
Waste
ENVIRONMENTAL
INDICATORS
Water
Emissions
and
Effluents
Mitigating environmental issues
is a key concern for many of
our businesses.
Our environmental engineering
business is a leading player in the
provision of waste-to-energy (WTE)
and water treatment technologies.
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. 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.
The Keppel Group will track, measure
and manage its environmental
performance in the areas of energy,
water, waste and emissions.
For our initial efforts, we have
focused on our operations in Singapore
with the view to include our overseas
operations in the future.
The reporting will include Keppel
Offshore & Marine (Keppel O&M)
(and its signifi cant subsidiaries,
Keppel FELS, Keppel Shipyard and
Keppel Singmarine), Keppel Land,
Keppel Integrated Engineering (KIE),
Keppel Telecommunications &
Transportation (Keppel T&T) and
Keppel Energy.
2010 Quick fact
Waste
g We recycled
91,598 tonnes
of waste.
Sustaining Growth
Environmental Protection
121
Environmental Protection
Keppel Group’s Direct and
Indirect Energy Consumption
(GJ)
Keppel Group's Potable Water
and NEWater Used
(m3)
Keppel Group's Recycled
and Incinerated Waste
(tonnes)
2010
2009
753,985
1,905,497
1,002,906
1,717,831
2010
2009
1,566,587
2,905,055
2010
2,083,658
1,972,627
2009
(estimated)
91,598
87,000
116,712
126,600
2,100,000
1,800,000
1,500,000
1,200,000
900,000
600,000
300,000
0
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Direct
Energy
Indirect
Energy
Potable
Water
NEWater
Recycled
Waste
Incinerated
Waste
ENERGY1,2,3
Energy is a vital element in our
businesses. As a Group with
businesses in Offshore & Marine,
Environmental Engineering, Power
Generation, Logistics, Data Centres
and Property, we depend heavily on
both direct and indirect sources of
energy to drive our businesses.
Liquid fuels, natural gases, liquefi ed
petroleum gas and compressed
natural gas are the major types
of direct energy consumed by the
Group. In 2010, the total amount
of direct energy consumed by the
Group, excluding Keppel Energy,
were 753,985 GJ, compared to
1,002,906 GJ in 2009. The direct
energy consumption was 25% lower
due to a lower volume of work
at our Offshore & Marine Division,
and initiatives to improve energy
effi ciency. Keppel O&M was the
most signifi cant contributor to
direct energy consumption after
Keppel Energy.
The total amount of indirect energy
or electricity consumed increased
11% from 1,717,831 GJ in 2009 to
1,905,497GJ in 2010.
Despite the increasing demand
for energy as a result of expanding
operations, the Group will be
focusing on increasing energy
effi ciency through technical
improvements, which includes the
replacement of less effi cient
machines or equipment, and
energy conservation initiatives.
The total amount of energy saved
by the different business units in
the Group through such initiatives
in 2010 were 161,160 GJ or
44,766,666 kWH.
WATER1
Like energy, water is a vital resource for
the Group. Not only does the Group’s
Offshore & Marine Division consume
large volumes of potable and non-potable
water, other subsidiaries, such as KIE
and Keppel Energy, also use water for
energy generation.
The Group’s water consumption can
be segmented into potable water,
NEWater, both purchased from PUB, and
recycled water. NEWater is reclaimed
water produced by Singapore’s Public
Utilities Board. Specifi cally, it is treated
wastewater that has been purifi ed
through advanced technologies such
that it is potable and fi t for industry use.
The Group does not draw any water from
ground or surface water sources directly.
For 2010, the Group used 1,566,587m3
of potable water, 25% less compared to
2,083,658m3 used in 2009.
122
Keppel Corporation Limited
Report to Shareholders 2010
The Group used 2,905,055m3 of NEWater
compared to 1,972,627m3 used in 2009,
registering an increase of 47%.
KIE’s Senoko WTE plant is equipped
with a wastewater treatment plant that
treats the wastewater from the refuse.
The treated water is subsequently used
for general washing. In 2010, 56,133m3
of water were recycled.
WASTE2
For 2010, a total of 91,598 tonnes
of waste were recycled. This was
an increase of approximately 5%
compared to an estimated 87,000
tonnes of waste recycled in 2009.
The waste recycled included metal,
plastics, grits and papers which
were materials used for the Group’s
operations. As a responsible company,
Keppel Corporation is committed to
promote more recycling and reusing
efforts to reduce the amount of waste
being disposed of.
In Singapore, all solid municipal
waste that cannot be recycled is
sent for incineration. The incinerated
ash and other non-incinerable waste
are then sent to Semakau Landfi ll.
For 2010, across the Group,
116,712 tonnes of waste were sent
for incineration, which was 8% lower
than an estimated 126,600 tonnes
of waste that were sent for incineration
in 2009.
Chemical, oil, fuel spills are threats to
our environment and severely affect
the soil, water, air and biodiversity. For
2010, there were no reports of major
spillage for the Group.
EMISSIONS AND EFFLUENTS1,2,3
Carbon Emissions
The emission of greenhouse gases
(GHG) has a detrimental impact on
the atmosphere. Governments,
businesses, communities and
individuals need to take responsibility
for their own carbon footprint and
minimise their GHG emissions.
2010 Quick facts
Energy
g We saved enough
energy to power
115,676 four-room
apartments for
a month.
Water
g 56,133m3 of water
were recycled by
Keppel Group,
which is equivalent
to Singapore’s
monthly average
water consumption
for 2,900 four-room
apartments.
Direct emissions occur from the assets
that are owned or controlled by the
Group. In 2010, the total direct carbon
emission of the Group, excluding
Keppel Energy, was 123,443 t-CO2 ,
which registered an approximate 29%
increase from 2009’s carbon emission
level of 95,619 t-CO2.
Indirect emissions are from purchased
electricity consumed by the Group. Other
indirect emissions are a consequence
of the activities of Keppel Group, which
occur from sources not owned or
controlled by Keppel.
In 2010, indirect emissions from
the Group stood at 240,013 t-CO2,
registering 17% increase from
251,477 t-CO2.
Other Emissions
Keppel Energy and KIE have kept their
monthly average emissions of oxides of
nitrogen and sulphur dioxides well below
the limits of 700mg/Nm3 and 500mg/Nm3
as stipulated in the National Environment
Agency’s (NEA) Code on Pollution
Control respectively.
Dust or particulate matter is also emitted
from the stacks of KIE’s WTE plants
when refuse is being burnt. For 2010, the
monthly average emission levels were
43mg/Nm3 for KIE’s Senoko WTE plant
and 29 mg/Nm3 for Keppel Seghers
Tuas WTE plant, which were within
NEA’s emissions limits of 100mg/Nm3.
There were no signifi cant emissions
of oxides of nitrogen, sulphur dioxide
and other air emissions from our
Offshore & Marine and Property divisions.
1 The increase to indirect energy, NEWater used, direct and indirect carbon emissions were due mainly
to the inclusion of new 2010 data from Senoko WTE and Keppel Seghers Tuas WTE plants, which
were acquired and commenced operations respectively in late 2009.
2 For some business units, 2009 data for some aspects was unavailable. For the purposes of
comparison, the 2009 data was assumed to be the same as 2010. Those assumptions represented
5% or lower of the consolidated fi gures at Group level, and are therefore unlikely to cause signifi cant
variance and are negligible.
3 Due to commercial sensitivity, Keppel Energy’s direct energy consumption and direct carbon
emission are not included in this Sustainability Report Highlights nor Keppel Corporation’s
Sustainability Report 2010 to be published in June 2011.
Sustaining Growth
Environmental Protection
123
Sustaining Growth
Product
Excellence
Product and
technology
excellence
as well as
innovation
are key to
strengthening
our core
competencies
and developing
new growth
drivers.
The Keppel Group is recognised for
high quality products and services,
and over the years, we have won
numerous awards, testament to our
commitment towards excellence.
124
Keppel Corporation Limited
Report to Shareholders 2010
Key business units in the Keppel Group
are certifi ed to ISO 9001, ISO 14001
and OHSAS 18001 standards,
achieving the objectives of product
quality, environmental protection and
occupational health and safety (see
table on page 127 on recent awards
and certifi cations).
In the Offshore & Marine Division,
Keppel FELS has developed
propriety designs for jackups and
semisubmersible rigs. The KFELS B
class jackup rig and KFELS
semisubmersible drilling tender (SSDT)
have set benchmarks in the industry for
their contributions towards sustainable
operations, as well as to the safety and
well-being of the rig crew.
In the Infrastructure business, the
Group’s high quality standards have led
to contract awards to provide essential
services in Singapore. In partnership
with public sector agencies, Keppel
Seghers operates a NEWater plant
supplying recycled potable water and
a waste-to-energy plant treating solid
waste and generating energy.
In Property, Keppel Land has achieved
22 Green Mark Awards to-date
for its environmentally conscious
developments both in Singapore and
abroad, as well as four FIABCI Prix
d’Excellence Awards since 2006 for
excellence in property development
and management.
To stay in the forefront of technologies,
the Keppel Group invests heavily in
research and development. Keppel
Offshore & Marine Technology Centre
(KOMtech) and Keppel Environmental
Technology Centre (KETC), the
research arms of Keppel Offshore
& Marine and Keppel Integrated
Engineering (KIE) respectively,
engage in product development,
process improvement and knowledge
management, to sustain market
leadership and strengthen the business
units for long-term growth. Ongoing
The KFELS B Class
design is the
industry standard
for efficient and
high grade
performance;
to-date, more than
30 such units
have been delivered
for operations
in various parts
of the world.
research efforts in KOMtech include
ice-resistant rigs for the Arctic, drilling
systems and mini-LNG supply chain for
associated gas.
CUSTOMER HEALTH AND SAFETY
The Group places great importance on
the health and safety of customers who
use Keppel’s products and services.
Much care and diligence are applied in
the design, construction, and operation
of our products and services to ensure
that they are fi t for their intended use
and do not pose hazards to customers’
health and safety.
Customers’ health and safety impacts
are constantly assessed over the
products’ life cycle stages, to help us
seek further improvement. Policies,
procedures and guidelines on the
environment, health and safety are
implemented and adhered to at all times.
For example, our KFELS SSDT is
designed and constructed to facilitate
emergency response operations,
such as fi re fi ghting and emergency
evacuations. The SSDT has a large
deck space, fi xed equipment pathways,
and dedicated life saving equipment.
In an emergency situation, the rig can
Sustaining Growth
Product Excellence
125
Product Excellence
quickly move away from the drilling
platform to a safe standby position.
Another case in point is Keppel Land’s
adoption of the “Design for Safety in
Buildings and Structure Guidelines”
for all its new projects. This is a safety
management tool that requires design
consultants to review the safety and
health risks associated with their design
at various stages of the project.
For infrastructure projects undertaken
by KIE, the company adheres to a
set of health and safety policies and
procedures that provides guidance in
the design, construction and operation
of plants and facilities.
Procurement of materials and
equipment are made with responsible
and reputable vendors, taking into
consideration the health and safety
impacts during their useful life. Only
authorised disposal companies are
engaged to ensure proper disposal of
hazardous waste.
meeting the needs of our homebuyers.
Their feedback is obtained for the
review and improvement of future
projects. Regular events and activities
are also organised to build rapport with
homeowners and tenants.
CUSTOMER ENGAGEMENT
‘Customer Focus’ is one of the Group’s
eight core values. As such, our
customers’ feedback is valuable to us
in our drive to continuously improve
our products and services, vital for
sustainable growth and long-term
success. Mechanisms for customers to
provide feedback are in place to assess
and maintain customer satisfaction with
our products and services.
COMPLIANCE
Keppel’s products and services are
designed, developed and delivered
in compliance with relevant laws and
regulations concerning health and
safety. In 2010, the Group has not
identifi ed any non-compliance with
laws, regulations and voluntary codes
concerning the provision and use,
including the health and safety impacts,
of our products and services.
Moving into the future, the
Keppel Group will remain focused
on customer needs and exercise due
care to ensure customers’ health and
safety while providing products and
services stamped with our hallmark
quality and excellence.
Surveys are also conducted regularly
to gather feedback and suggestions.
For example, Keppel FELS conducts
surveys once every four months,
involving face-to-face interviews with
customers. Other business units such
as Keppel Energy, Keppel Shipyard
and Keppel Telecommunications &
Transportation also gather feedback
on a regular basis for continuous
service improvements. Keppel Land
has established a Customer Focus Unit
(CFU) since 1997, which is dedicated to
Marina at
Keppel Bay is
the first marina
in Asia to be
awarded the
5 Gold Anchors
rating from the
Marina Industries
Association
Australia and
was named
“Best Asian
Marina 2010”
at the Asia
Boating Awards.
126
Keppel Corporation Limited
Report to Shareholders 2010
Awards and Certifications
OFFSHORE AND MARINE
Keppel FELS
Shell Platform Rig of the Year Award
Offshore Yard Award
Singapore Quality Class Certifi cation (SQC)
Singapore Innovation Class Certifi cation (I-Class)
IES Prestigious Engineering Achievement Awards
Asean Outstanding Engineering Achievement Award
MAXA 2008 Award
ISO 9001 Certifi cation
Keppel Shipyard
The Shipyard of the Year Award by Lloyds List
The Ship Repair Yard Award by Lloyds List
ISO 14001 Certifi cation
ISO 9001 Certifi cation
2010
2010
Since 2002
Since 2004
2009
2009
2008
Since 1994
2010
2009
Since 2004
Since 1996
INFRASTRUCTURE
Keppel Seghers Engineering Singapore
ISO 9001, ISO 14001 and OHSAS 18001 Certifi cation
Since 2009
Keppel Telecommunications
& Transportation
Singapore Domestic Logistics Service Provider
of the Year
2010
PROPERTY
Keppel Land
Best Retail & Fast Moving Consumable Goods (Singapore)
2009
Best Domestic Logistics Service Provider (Singapore)
2009
ISO 13485 and GDPMDS
ISO 14001, OHSAS 18001 Certifi cation
ISO 9001 Certifi cation
Since 2009
Since 2002
Since 1993
4 BCA Green Mark Awards (Total 22 awards to-date)
2010
Euromoney Real Estate Awards
– Best Offi ce Developer in Singapore
2010 & 2009
FIABCI Indonesia BNI Prix d’Excellence – Best Middle
Class Residential Development (Jakarta Garden City)
2009
4 FIABCI Prix d’Excellence Awards
Since 2006
Best Asian Marina Award
Clean Marina Award
ISO 14001 Certifi cation
List of awards and certifi cations are in relation to product excellence and are not exhaustive.
Sustaining Growth
Product Excellence
2010
2008
Since 2008
127
Empowering Lives
People
Matters
Apart from a
Can Do! spirit,
Keppel employees
display a strong
sense of esprit
de corps, and are
bonded by our
Group Vision,
Mission and
Core Values.
Keppel is committed to be an
employer of choice. We value our
employees and recognise their
contributions towards achieving
sustainable growth for the Group and
creating value for our stakeholders.
128
Keppel Corporation Limited
Report to Shareholders 2010
With people as a core asset, Keppel
continues to actively grow and enhance
the capabilities of our global workforce
and talent pools through the Keppel
College leadership development
programmes and training opportunities,
while spurring them to achieve greater
results through rewards and incentives.
We are also committed to a culture
in which all employees strike a
balance between work and play,
and we constantly engage our
employees through social and
recreational interaction and family
bonding activities. We continue to
build trusting and harmonious working
relations with our unions whom we see
as a strategic partner in reaching
out to our employees.
ENGAGING OUR EMPLOYEES
As part of the Group’s efforts to identify
areas for continuous improvement, the
annual group-wide Organisational Climate
Survey (OCS) was conducted in October
2010. The OCS collects feedback and
views from our employees so that we
can continue to review and refi ne our
HR policies and programmes. This is the
second year that the survey was rolled
out across the Group.
LEARNING & DEVELOPMENT
In 2010, we invested a total of
$18.3 million in the training and
development of our employees globally.
Since 2004, Keppel has sponsored
269 employees from all levels as part
of our Employee Development Scheme
(EDS). 38 outstanding employees were
sponsored under the EDS in 2010 to
pursue further education.
We continued to adopt government
initiatives such as the Skills Programme
for Upgrading and Resilience (SPUR).
In 2010, four in-house Keppel-SPUR
courses were organised for a total
of 68 participants. Besides skills
development, bringing together staff
from various business units under the
SPUR courses helps in building bonds.
Manpower by Segment
(number)
Corporate Office
Offshore & Marine
Infrastructure
Property
Total
161
27,567
4,418
4,572
36,718
Manpower by Region
(number)
Americas
Asia
Europe
Middle East
Singapore
Total
8,951
9,145
705
1,652
16,265
36,718
Executives / Non-Executives
(number)
Executives
Non-executives
Total
7,236
29,482
36,718
Note:
The headcount fi gures in this table include associated companies where Keppel has
management control.
Empowering Lives
People Matters
129
People Matters
ATTRACTING TALENT
In 2010, we continued our efforts to
attract the best and brightest into
the Group through scholarships and
internships amongst other initiatives
and recruitment exercises. Nine new
scholars were inducted into the Keppel
family at the Keppel Group Scholarship
Awards Ceremony on 16 July 2010.
They will be groomed for roles in the
business units according to their
aspirations and qualifi cations. To-date,
we have awarded 176 Keppel Group
Scholarships, and have 96 working
scholars in various business units
within the Group.
GRADUATES TRAINING
PROGRAMME
Our new graduate hires undergo
comprehensive development and
training programmes which provide on-
the-job training and exposure to various
functional roles.
In Keppel Offshore & Marine
(Keppel O&M), new graduate engineers
undergo a two-year Management
Traineeship Scheme (MTS) which has
been accredited by internationally
recognised professional membership
body, the Institute of Marine Engineering,
Science and Technology (IMarEST),
since 2009. Upon completing the MTS,
participants with the relevant academic
qualifi cations and working experience
can register as an Incorporated Engineer
or Chartered Engineer with IMarEST.
In 2010, Keppel O&M recruited
81 graduates, bringing its total
MTS participants to 659 since its
inception in 1986. Keppel Energy and
Keppel Integrated Engineering also
have similar MTS for new hires.
Keppel Land re-launched its
Management Associate Programme
(MAP) in 2010 to attract bright
graduates. Three Management
Associates were recruited and placed
in a 12-month rotation programme
to gain exposure through different
functional roles.
TALENT MANAGEMENT
To manage talent in a systematic
and structured way, a framework has
been put in place that focuses on the
topmost tier of the high potential and
high performing talents, so that they
can be fully developed and put in
leadership positions. Various training
platforms are planned for our talents
which include overseas assignments,
special projects and job rotations.
We recognise succession planning as a
vital business imperative and have put in
place an internal process of succession
planning. Our succession plan today
is closely linked to talent management
to provide a dynamic closed-loop
process. The synergy between the two
programmes helps in recognising and
building our pipeline of talents over the
mid to long term.
Keppel College
Keppel College centralises the Group’s
programmes for leadership and
executive development. Targeting three
levels of talent – young leaders, middle
management and senior management
– Keppel College aims to Educate,
Empower and Energise our talents
so that they can Learn, Lead and
Leap-frog to the next level of success.
Courses such as the Global Young
Leaders Programme and the Global
Advanced Management Programme
are customised in collaboration with
the Nanyang Business School, with
Keppel’s talents from as far as Brazil,
the Netherlands, Bulgaria, Azerbaijan
and Norway participating in them.
To-date, Keppel College has some
1,000 alumni.
Training and development programmes
are also specially planned for new hires.
Three Keppel Group Orientations were
held in 2010 for 217 new members. The
Group Orientations held during the year
were enhanced by having the new hires
go on site visits at the various business
units to gain a better understanding of
the Group’s diverse businesses.
Mentors are assigned to help new hires
and talents assimilate quickly into the
Company’s culture as well as facilitate
knowledge transfer. To-date, the
Mentoring Scheme has trained a total of
540 mentors.
Senior management is actively involved
in talent development. They frequently
meet and exchange views with our
talents at various dialogue sessions and
regular interactions such as TalenTime
and Executive Chat! Series.
Keppel Young Leaders
As a seedbed to nurture high-potential
employees, Keppel Young Leaders
(Keppel YL) was inaugurated on
16 July 2010 to serve as a central
platform to cultivate global mindsets,
innovativeness and entrepreneurship.
As an offshoot of Keppel’s talent and
succession management framework,
Keppel YL aims to ensure a continuous
stream of future leaders for Keppel.
Members are given opportunities
to champion and participate in
high-impact projects and cross-border
assignments beyond their regular
job scope.
REWARDS & RECOGNITION
The annual performance review serves
as a platform to assess employees’
performance, formalise employees’
development needs and career planning
opportunities, as well as to ascertain
employees’ current estimated potential.
We advocate a pay-for-performance
remuneration philosophy where
rewards and incentives are guided
by market competitiveness and
performance orientation principles.
Annual Performance Incentive (API)
includes a bank mechanism where a
portion of the earned API is deferred
in the individual’s bank for future
payouts so as to encourage better
performance in employees.
Apart from monetary rewards, we
provide comprehensive benefi ts to
130
Keppel Corporation Limited
Report to Shareholders 2010
1
2
1_Senior Management and key
process owners are involved in the
development of Keppel College
programmes to drive talent
development.
2_More than 2,000 Keppelites
kicked into high gear with an
energetic workout during the
Keppel FELS ACTIVE Day
which aims to remind people that
work-life balance and a robust
body and mind are very important.
relations with our unions. In our
business units, bargainable employees
in Singapore are governed by their
respective Collective Agreements (CAs).
In 2010, Keppel Shipyard, jointly with
Keppel Singmarine, Keppel Land and
Keppel Logistics renewed their CAs
with their respective unions.
BURSARIES
Every year, we make contributions to
our co-operative and unions that go
towards helping deserving members
and their children in the pursuit of
education. Under the Keppel FELS
Co-operative Bursary & Education
Grant, Keppel O&M awarded
43 Bursary Awards and 16 Education
Grants in 2010, totalling $12,800.
employees such as leave entitlement,
medical benefi ts and group insurance
plans, taking into consideration industry
practices and market norms. A total
of 394 Keppelites from across the
Group in Singapore received their Long
Service Awards in 2010.
EMPLOYEE WELLNESS
With a holistic approach in
promoting employee well-being,
Keppel Corporation puts in place
a framework that promotes healthy
lifestyle and employee well-being
through activities that strengthen
bonding and work-life balance, such as
wellness workshops and basic health
check-ups.
The eighth run of the Keppel Games
was organised over two months to
provide a platform that will bring
interaction amongst staff to another
level and underscore the element of
sportsmanship.
MANAGEMENT-UNION RELATIONS
Keppel’s management sees the unions
as a strategic partner in caring for our
employees. Over the years, through
constant dialogues and sharing,
we have built harmonious working
Empowering Lives
People Matters
131
Empowering Lives
Safety
and Health
Keppel is focused on ensuring
a safe and healthy environment
for everyone from employees
to subcontractors and customers
at our work sites.
Keppel’s Safety
Training Centre
provides core
competency,
safety leadership
development
programmes, and
Workforce Skills
Qualifications
courses certified
by the Singapore
Workforce
Development
Agency.
132
Keppel Corporation Limited
Report to Shareholders 2010
Through investments in infrastructure,
improvements in processes, training
of our workforce and promotion of a
safety culture, we aim to achieve zero
incidents in all our business activities.
One of Keppel’s core values, the safety
of our employees and workplaces
forms part of each business unit’s key
performance indicators and is an integral
element of our business operations. As
a Group, we invested over $23 million in
2010 on improving our safety systems
and training our workforce.
We took another major step in our safety
journey last year with the introduction of
the Keppel Workplace Safety & Health
(WSH) 2018 strategy. Keppel is the fi rst
company to launch a corporate initiative
in line with the Singapore Government’s
WSH 2018 initiative.
MANAGEMENT AND SYSTEMS
Keppel Corporation established the
Board Safety Committee (BSC) in 2006,
the fi rst by a listed company in Singapore,
to review and develop safety policies
across its multiple business units.
One of its fi rst measures was to start
all operational meetings with safety as
the fi rst agenda. To better understand
the different operating environments,
the BSC and senior management
conduct numerous site visits in
Singapore and overseas.
Keppel companies comply strictly with
all applicable laws and regulations in the
countries we operate in. In Singapore,
we work closely with the Ministry of
Manpower (MOM) and the Workplace
Safety and Health Council (WSHC) to
implement initiatives that help to raise
safety standards within our industries.
With more than 600 subcontractors
in our Singapore operations, we help
to instil their workers with a strong
commitment to safety and equip them
with the necessary competencies to
carry out their tasks safely.
Four Thrusts of the
Keppel WSH 2018 strategy:
1. Establish an Integrated WSH Framework
across Businesses Worldwide
g Keppel has introduced a centralised electronic
Global Incident Reporting System across the Group,
to ensure timely updates of incidents and immediate
corrective measures.
2.
g
Implement an Effective Safety Management System
Individual business units will undergo a self assessment
programme to develop a roadmap and identify the
measures needed to improve their safety performance.
Assessors from across the Group will be trained.
3. Enhance Safety Ownership
g Keppel has rolled out an exchange programme where
project leaders are attached to safety departments
to better understand workplace safety management,
so that they can apply the knowledge acquired in their
regular duties.
4. Strengthen Safety Partnerships
g Keppel will continue to support numerous industry, client
and national campaigns and conferences.
Keppel management and union workers ‘hand printing’ their commitment to safety
as part of the National Workplace Safety and Health campaign 2010.
Empowering Lives
Safety and Health
133
Safety and Health
5
KEY
PRINCIPLES
FOR SAFETY
If safety is
expensive,
disasters cost
more
Passion
for Health,
Safety and
Environment
Excellence
Value
Everyone’s
Safety
Zero Tolerance
for Incidents
Recognise Safe
Behaviours
SAFETY IN NUMBERS
The cumulative effect of Keppel’s
safety journey has seen its Accident
Frequency Rate (AFR) improve from
0.43 reportable accidents for every
million man-hours worked in 2009
to 0.33 in 2010. Our Accident Severity
Rate (ASR) however, increased to 133
man-days lost per million man-hours
worked in 2010 from 93 man-days
lost in 2009, due to four fatalities in 2010.
We deeply regret the loss of these lives
and have thoroughly investigated the
causes, all of which involved falls from
height. Efforts were stepped up
to prevent future incidents and the
lessons learnt were shared across the
Group. We have introduced further
stringent measures and increased
awareness on height safety.
ALL HANDS ON DECK
Comprising employees, contractors and
subcontractors who are represented in
unions and councils across the Group,
our workforce plays an important role
in our efforts to achieve zero incidents.
There are regular dialogues between
management and unions as well as
Collective Agreements that address
health and safety issues, amongst others,
for union members in various countries.
WORKPLACE RESPONSIBILITY
Safety practices are integrated
in our work processes. In all our
operations, there are daily safety
briefi ngs while regular walkthroughs
of project sites are conducted to
ensure full compliance with safety
regulations as well as to identify and
rectify any safety hazard.
High Impact Risk Activities (HIRA)
require a special focus. Through efforts
led by Keppel Shipyard, six HIRA
were identifi ed: height safety, confi ned
space safety, lifting safety, fi re safety,
permit-to-work and electrical safety.
A campaign was launched in 2010 to
create awareness and increase scrutiny
on HIRA at the workplace.
A buddy system was also introduced in
2009 where workers had to look out for
each other at the workplace.
COMPETENCE
As a conglomerate with a workforce
hailing from different cultures and
countries, everyone has to undergo
safety training to ensure alignment with
the Company’s safety policies.
In June 2010, we launched the
Keppel Safety Training Centre
which offers courses run by
qualifi ed instructors. Employing the
latest technology, simulations and
methodologies, the centre not only
equips employees and subcontractors
with relevant safety training and skill
competencies but engages them in the
Group’s safety culture. In 2010, some
8,300 workers and subcontractors
were trained at the centre.
Across the Group, each worker
undergoes an average of some
20 hours of training in health and safety.
Key courses include safety leadership,
confi ned space training, height safety,
electrical safety as well as fi re safety.
CULTURE AND COMMUNICATION
Each stakeholder plays a part in building
a strong safety culture by sharing their
knowledge and experience as well as
looking out for one another’s well being.
The promotion of this safety culture is
thus a key focus of senior management.
Safety conventions and campaigns as
well as a Group HSE newsletter help in
encouraging and communicating safety
as a way of life.
LEADERSHIP
One of the most effective ways to foster
a safety culture is to lead by example. At
Keppel, personnel in leadership positions
attend training to learn how to be a safety
leader regardless of their vocation.
We also aim to extend this leadership
role beyond our companies, into
134
Keppel Corporation Limited
Report to Shareholders 2010
our chosen industries. As a leader in
safety, we participate in national and
industry events, such as Singapore’s
fi rst WSH conference and the
International Association of Drilling
Contractors Safety conference to
share our experiences.
OCCUPATIONAL HEALTH
In addition to a safe environment, we
also aim to protect and promote the
health of our workforce. Workers have
to undergo regular health checks and
be certifi ed fi t before they can take on
strenuous work.
Other occupational health programmes
include hearing conservation and
respiratory protection system. Talks on
AIDS awareness, malaria and dengue
protection, cancer symptoms and
nutritional diets were also conducted
across the business units.
AWARDS AND ACCOLADES
While safety is its own reward,
recognition of safety efforts encourages
vigilance and act as incentives. Awards
and bonuses are given out to projects
and individuals with exemplary records
and performances by the business units
as well as customers.
A testament to Keppel’s safety
commitment, these accolades spur
us to maintain our vigilance in our
safety journey. To attain our 2018
vision of ensuring that everyone at our
workplace goes home safely, we will
look to complete our safety assessment
and extend our safety road map to all
our operations and partners.
Cumulative Accident Frequency Rate – Keppel Group
(per million man-hours)
0.49
0.43
0.33
0.5
0.4
0.3
0.2
0.1
0.0
2008
2009
2010
Cumulative Accident Severity Rate – Keppel Group
(man-days lost per million man-hours)
143
93
133
200
160
120
80
40
0
2008
2009
2010
Empowering Lives
Safety and Health
135
Nurturing Communities
Community
and Society
Keppel Nights,
a ticket
subsidy scheme,
contributes
towards the
promotion of the
arts to all levels
of the community
in Singapore.
Wherever we operate, Keppel
is committed to seeking ways
to contribute meaningfully to
the development of our industries
and the well-being of society
and communities.
136
Keppel Corporation Limited
Report to Shareholders 2010
COMMUNITY ENGAGEMENT
AND VOLUNTEERISM
As a global corporate citizen,
Keppel believes that as communities
thrive, we thrive. This is why we
engage and nurture communities
where our businesses are and
support them in moving towards
a sustainable future.
Keppel encourages its employees to
become responsible citizens with a
greater awareness and concern for the
well-being of others. Since its inception
in 2000, Keppel Volunteers has been
spearheading regular activities that
make meaningful contributions to local
communities, social institutions and
non-profi t organisations. On a monthly
basis, Keppel Volunteers runs activities
in collaboration with Keppel’s adopted
charity, the Association for Persons with
Special Needs (APSN).
In 2010, the activities included
life-skills programmes for APSN
students and visits to the Singapore
Science Centre, the Singapore Airshow
and the National Day Parade Preview.
Keppel Volunteers also organised
the annual Keppel Group Blood
Donation Drive which was held for
four days at three venues across
the Group’s operations in Singapore.
A record 485 packets of blood were
collected over the Christmas season
in 2010 when the Singapore blood
bank experienced a shortage.
To help a larger group of benefi ciaries
and to attract more volunteers, Keppel
Volunteers conducted a survey to
understand volunteerism patterns
within the Group. Since then, it has
expanded its activities to include other
programmes such as a monthly home
maintenance programme with the
Moral Senior Activity Centre. Keppel
Volunteers also reached out to animal
care by participating in the Society for
the Prevention of Cruelty to Animals’
fl ag day and Fun Run.
In Brazil, Keppel FELS Brasil mobilised
a workboat and barge to help in the
search and rescue operations in the
1 January landslide on Ilha Grande
Island. Keppelites also donated basic
necessities as well as helped in the
distribution of the relief supplies.
Volunteers from Batangas Shipyard
in the Philippines also participated
in the Alay Lakad project, an annual
nationwide walk-for-a-cause event
to raise scholarship funds for out-of-
school youths.
INDUSTRY ENGAGEMENT
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 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.
In 2010, the Keppel Group supported
several major events and initiatives
that promote the development of our
industries and showcase our Group
strengths and Singapore to the world.
A key highlight was the Singapore
The third annual
Keppel Group
Blood Donation
Drive garnered
a record 485
packets of blood.
Nurturing Communities
Community and Society
137
Community and Society
1
International Water Week (SIWW),
which serves as a platform to discuss
the challenges of rapid urbanisation
such as increasing demand for housing,
water, food and basic services. At
the SIWW in June 2010, Keppel
Integrated Engineering (KIE) presented
a showcase of their waste and water
treatment technologies as well as
district heating and cooling systems
capabilities.
The inaugural Lee Kuan Yew World City
Prize was presented during the World
Cities Summit (WCS) which was held
alongside SIWW in 2010. Keppel Group
sponsored the prize of $300,000 and
the gold medallion for this prestigious
biennial award which recognises
individuals and organisations that
have made outstanding contributions
to the creation of vibrant, liveable and
sustainable urban communities around
the world. Keppel Land highlighted its
eco-township developments throughout
the region at the WCS exhibition.
Keppel Offshore & Marine (Keppel O&M)
supported various academic events
to inspire study and research of its
industry and create platforms
to share insights and ideas.
The Chua Chor Teck Memorial
Lecture, which commemorates the
former Managing Director of Keppel
Shipyard and a pioneer of Singapore’s
maritime industry, was a key highlight
in 2010 which saw two runs of the
Lecture. In January, Mr Sven Ullring,
Board Director of Keppel Corporation
and Chairman of the third Maritime
Research & Development Advisory
Panel for the Maritime & Port Authority
of Singapore, shared his views on the
Singapore maritime sector’s unique
competitive edge. In December,
Professor Sir Eric Ash, former Rector
of Imperial College (UK) and a member
of the Keppel Technology Advisor
Panel, spoke on the issues surrounding
the use of nuclear energy in the
maritime industry.
Asia Business Forum 2010. Helmed
by a set of distinguished panellists,
the forum addressed issues such
as investment and partnership
opportunities as well as best business
practices and strategies.
Keppel Group was a special sponsor
for the inaugural China (Binhai Tianjin)
International Eco-City Forum, which
highlights the achievements in eco-city
construction and the development
of a low carbon economy in China.
Dr Lee Boon Yang, Chairman of
Keppel Corporation, spoke on the
challenges of eco-urbanisation at the
Forum while KIE and Keppel Land
showcased their offerings
for sustainable urban living at the
Forum’s Eco Expo.
Keppel Corporation played host to the
ASEAN Council on Petroleum Games
in 2010, which saw the participation
of teams from national oil companies
across the ASEAN region. The Games
aims to foster friendship and strengthen
ties among industry players.
To support growing ties between Asia
and Latin America, Keppel O&M was
the strategic sponsor for the Latin
Together with the National University
of Singapore, Keppel Corporation
jointly launched the book “Why Am
I Here?”, authored by Singapore’s
President, HE S R Nathan. The story
of his experience (as Seamen’s
Welfare Offi cer in the mid 1950s)
provides a glimpse into the struggles
of Asian merchant seamen and
their contributions to Singapore’s
development as a maritime nation.
138
Keppel Corporation Limited
Report to Shareholders 2010
2
1_Mr Teo Chee Hean, Singapore’s
Deputy Prime Minister and
Minister for Defence (third from left)
was briefed on the Group’s broad
portfolio of projects in
environmental engineering and
sustainable development by
Dr Lee Boon Yang, Chairman
of Keppel Corporation (second
from left), as Dr Yaacob Ibrahim,
Minister for the Environment and
Water Resources (fi rst from left),
looked on.
2_Supporting the Earth Hour were
Keppel employees and their
families holding candles from
ChaCha Cottage, an organisation
which supports women in need.
GREEN ENDEAVOURS
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.
Keppel is committed to promote and
pursue green endeavours to encourage
our employees and the public to
embrace a green lifestyle.
Sustaining their efforts since 2007,
Keppel Volunteers divers continued
to support the coral nursery project
located in Pulau Semakau, Singapore.
The divers shifted coral fragments
from the nursery to a breakwater
area and cleaned the corals to help
them “breathe”.
The Keppel Group rallied efforts both
in Singapore and overseas to support
Earth Hour on 27 March 2010. For one
hour from 8.30pm to 9.30pm, it was
lights out across our seven shipyards
in Singapore, the Marina at Keppel Bay
and the Ulu Pandan NEWater Plant.
32 of Keppel Land’s developments
across Asia also turned off non-essential
lights and appliances, achieving
estimated energy savings equivalent
to what is needed to power a fi ve-room
fl at for 7.7 months.
In the Netherlands, 100 Keppel Verolme
employees became scooter commuters
in an initiative to reduce car traffi c on
the highway to the Port of Rotterdam
by at least 20%.
SHOWCASING SINGAPORE
An 80-strong contingent
marched in Singapore’s National Day
Parade on 9 August 2010, in a
proud display of Keppel’s roots
and its place as a leading
home-grown conglomerate in the
country. The contingent went through
rigorous training over four months
before the event.
Keppel supported the Clipper
Round the World Yacht Race
2009-2010 and was the primary
sponsor for the Singapore yacht,
Uniquely Singapore, and host
port sponsor for the Singapore
stopover, together with the
Singapore Tourism Board.
SUPPORTING WORTHWHILE
CAUSES
As part of our wider Keppel Group
programmes, we also contribute back
to communities by raising funds for
worthwhile initiatives.
Nurturing Communities
Community and Society
139
Community and Society
With Keppel Corporation’s $20,000
sponsorship of the Dover Park
Hospice SUNday walk, APSN
students showed their caring spirit
for others by joining the walk with
Keppel Volunteers.
Introduced in 2008, Keppel Nights is
Singapore’s fi rst ticket subsidy scheme
to benefi t and cultivate audiences
for the arts. Since then, the scheme
has supported about 150 events,
offering 12,500 subsidised tickets and
benefi tting more than 11,000 people.
Keppel O&M continued its support as
the title sponsor for the third SAFRA
Keppel Quadthlon. The Quadthlon aims
to provide participants with the exciting
and distinct opportunity to experience a
race where they will push their physical
and mental abilities to the maximum.
For the second year running,
Spring City Golf & Lake Resort in
Kunming, China partnered a group of
Singaporean doctors and nurses in a
voluntary medical mission to perform
cataract surgery on villagers who
cannot afford medical treatment or
are too weak to travel to the nearest
town or city. To-date, the Resort has
sponsored more than RMB200,000
with about 150 patients benefi tting from
this initiative.
In Shanghai, Keppel Land donated
RMB500,000 to a relief fund rendering
support to families affected by a local
fi re that set a 28-storey tower ablaze.
The tower had been home to some 440
people in 156 households.
PROMOTING HEALTHY LIVING AND
NURTURING THE ARTS
A regular winner of the Patron of the
Arts award in Singapore, Keppel
Corporation unveiled the enhanced
Keppel Nights scheme in 2010, together
with the Ministry of Information,
Communications and the Arts. The new
scheme opens up more opportunities
for fi rst-time attendees and those who
cannot afford full-price tickets to enjoy
performances, exhibitions and shows.
140
Keppel Corporation Limited
Report to Shareholders 2010
Directors’ Report & Financial Statements
Independent Auditors’ Report
Contents
142 Directors’ Report
148 Statement by Directors
149
150 Balance Sheets
151 Consolidated Profit and Loss Account
152 Consolidated Statement of
Comprehensive Income
153 Statements of Changes in Equity
156 Consolidated Statement of Cash Flows
158 Notes to the Financial Statements
208 Significant Subsidiaries and
Associated Companies
Interested Person Transactions
219
220 Directors and Key Executives
233 Major Properties
237 Group Five-Year Performance
241 Group Value-Added Statements
242 Share Performance
243 Shareholding Statistics
244 Notice of Annual General Meeting and
Closure of Books
251 Corporate Information
252 Financial Calendar
141
Directors’ Report
For the financial year ended 31 December 2010
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 2010.
1. Directors
The Directors of the Company in office at the date of this report are:
Lee Boon Yang (Chairman)
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
Tan Ek Kia (appointed on 1 October 2010)
Danny Teoh (appointed on 1 October 2010)
Teo Soon Hoe
Tong Chong Heong
2. Audit Committee
The Audit Committee of the Board of Directors comprises five independent Directors. Members of the Committee are:
Lim Hock San (Chairman)
Tony Chew Leong-Chee
Oon Kum Loon (Mrs)
Alvin Yeo Khirn Hai
Danny Teoh (appointed on 1 December 2010)
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, KCL Restricted Share Plan and
KCL Performance Share Plan.
142
Keppel Corporation Limited
Report to Shareholders 2010
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)
Lee Boon Yang
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
Alvin Yeo Khirn Hai (deemed interest)
Teo Soon Hoe
Tong Chong Heong
(Share options)
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
1.1.2010
or date of
appointment,
if later
-
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
Holdings At
31.12.2010
21.1.2011
20,000
9,000
2,321,666
200,000
99,000
9,000
49,000
40,000
9,626
26,172
1,750
20,000
4,088,332
1,659,582
20,000
9,000
2,321,666
200,000
99,000
9,000
49,000
40,000
9,626
26,172
1,750
20,000
4,088,332
1,659,582
2,150,000
2,760,000
1,540,000
1,770,000
2,530,000
1,580,000
1,770,000
2,530,000
1,580,000
(Contingent award of restricted shares to be delivered after 2010) 1
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
(Contingent award of performance shares issued in 2010 to be delivered after 2012) 2
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
-
-
-
-
-
-
150,000
100,000
90,000
150,000
100,000
90,000
300,000
200,000
180,000
300,000
200,000
180,000
Keppel Land Limited
(Ordinary shares)
Choo Chiau Beng
Tony Chew Leong-Chee (deemed interest)
Tow Heng Tan (deemed interest)
Tan Ek Kia
Keppel telecommunications & transportation Ltd
(Ordinary shares)
Teo Soon Hoe
100,000
1,286,100
95
-
102,204
800,000
95
114,000
102,204
800,000
95
114,000
28,000
28,000
28,000
Directors’ Report
143
Directors’ Report
4. Directors’ interest in shares and debentures (continued)
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
1.1.2010
or date of
appointment,
if later
Holdings At
31.12.2010
21.1.2011
894,000
-
2,635,000
10
250,000
494,000
2,635,000
-
10
250,000
494,000
2,635,000
-
10
250,000
$100,000
$100,000
$100,000
2,000
2,000
2,000
2,000
2,000
2,000
1
2
Depending on the achievement of pre-determined performance targets, the actual number of shares to be released could be zero or the number stated.
Depending on the achievement of pre-determined performance targets, the actual number of shares to be released could range from zero to 150% of
the number stated.
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.
144
Keppel Corporation Limited
Report to Shareholders 2010
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 8,079,000 Ordinary Shares (“Shares”) were granted during the financial year. There were 11,017,200
Shares issued by virtue of exercise of options and options to take up 3,264,800 Shares were cancelled during the
financial year. At the end of the financial year, there were 53,391,000 Shares under option as follows:
Date of
grant
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
09.02.10
Balance at
1.1.2010 or
later date
of grant
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
8,079,000
67,673,000
number of share options
Exercised
(570,000)
(690,000)
(762,000)
(1,401,000)
(1,685,000)
(2,573,200)
(1,244,000)
-
(688,000)
(597,000)
(692,000)
(95,000)
(20,000)
(11,017,200)
Cancelled
-
-
-
-
(1,000)
(29,300)
(338,000)
(849,000)
(453,000)
(524,000)
(502,000)
(384,500)
(184,000)
(3,264,800)
Balance at
31.12.2010
-
70,000
345,000
807,000
1,440,000
2,805,000
4,822,000
6,431,000
6,210,000
7,252,000
7,502,000
7,832,000
7,875,000
53,391,000
Exercise price*
Date of expiry
$2.78
$3.01
$4.19
$6.01
$6.16
$7.43
$8.90
$12.72
$9.73
$10.03
$3.81
$7.98
$8.01
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
08.02.20
* Adjusted for dividend in specie of K-Green Trust units
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
5,430,000
5,730,000
3,774,200
Options
granted
during the
financial year
310,000
230,000
200,000
Aggregate
options
exercised since
commencement
of the Scheme
to the end of
financial year
3,086,250
2,626,250
1,784,200
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
1,770,000
2,530,000
1,580,000
Name of Director
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
There are no options granted to any of the Company’s controlling shareholders or their associates under the Scheme.
Directors’ Report
145
Directors’ Report
7. Share plans of the Company
The KCL Restricted Share Plan (“KCL RSP”) and KCL Performance Share Plan (“KCL PSP”) were approved by the
Company’s shareholders at the Extraordinary General Meeting of the Company on 23 April 2010.
Details of share plans awarded under the KCL RSP and KCL PSP are disclosed in Note 3 to the financial statements.
The number of contingent Shares granted was 3,796,500 under KCL RSP and 680,000 under KCL PSP during the
financial year. No Share was released under the KCL RSP and KCL PSP during the financial year. 38,534 Shares under
the KCL RSP were cancelled during the financial year. At the end of the financial year, there were 3,757,966 Shares under
the KCL RSP and 680,000 Shares under the KCL PSP as follows:
Date of grant
KCL RsP
30.06.10
KCL PsP
30.06.10
Balance at
date of grant
3,796,500
680,000
number of shares
Adjustment
Vested
Cancelled
Balance at
31.12.2010
-
-
-
-
(38,534)
3,757,966
-
680,000
The information on Directors of the Company participating in the KCL RSP and the KCL PSP is as follows:
Contingent
awards
granted
during the
financial year
150,000
100,000
90,000
300,000
200,000
180,000
Aggregate
adjusted awards
granted since
commencement
of plans
to the end of
financial year
Aggregate
awards
released since
commencement
of plans
to the end of
financial year
Awards released
during the
financial year
150,000
100,000
90,000
300,000
200,000
180,000
-
-
-
-
-
-
-
-
-
-
-
-
Aggregate
awards not
released as
at the end of
financial year
150,000
100,000
90,000
300,000
200,000
180,000
Name of Director
KCL RsP
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
KCL PsP
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
There are no contingent award of Shares granted to any of the Company’s controlling shareholders or their associates
under the KCL RSP and the KCL PSP.
Other than Choo Chiau Beng who received 760,000 or 6 percent of the aggregate of the total share options under the
Scheme and contingent award of Shares under the KCL RSP and KCL PSP, no employee received 5 percent or more of
the total number of share options and contingent award of Shares granted during the financial year.
146
Keppel Corporation Limited
Report to Shareholders 2010
8. Share options and share plans of subsidiaries
The particulars of share options and share plans of subsidiaries of the Company are as follows:
(a) Keppel Land Limited (“Keppel Land”)
At the end of the financial year, there were 133,720,072 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, $500 million principal amount of 1.875% Convertible Bonds due 2015 at a conversion price of $6.72
per share and 5,551,871 options under the Keppel Land Share Option Scheme. In addition, there were 874,000
contingent shares granted under Keppel Land Restricted Share Plan and 656,000 contingent shares granted under
Keppel Land Performance Share Plan at the end of the financial year. Details and terms of the options and share
plans 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 1,822,000 unissued shares of Keppel Telecommunications &
Transportation Ltd under option relating to Keppel T&T Share Option Scheme. In addition, there were 553,500
contingent shares granted under Keppel T&T Restricted Share Plan and 180,000 contingent shares granted under
Keppel T&T Performance Share Plan at the end of the financial year. Details and terms of the options and share
plans have been disclosed in the Directors’ Report of Keppel Telecommunications & Transportation Ltd.
(c) K-REIT Asia Management Limited (“KRAM”)
At the end of the financial year, there were 70,500 contingent K-REIT Asia units granted under KRAM Restricted
Unit Plan and 108,000 contingent K-REIT Asia units granted under KRAM Performance Unit Plan. The grants will
be settled in K-REIT Asia units owned by KRAM. Details and terms of the unit plans have been disclosed in the
Directors’ Report of Keppel Land Limited.
9. 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, 22 February 2011
Teo Soon Hoe
Group Finance Director
Directors’ Report
147
Statement by Directors
For the financial year ended 31 December 2010
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 150 to 218 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 2010, 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, 22 February 2011
Teo Soon Hoe
Group Finance Director
148
Keppel Corporation Limited
Report to Shareholders 2010
Independent Auditors’ Report
to the Members of Keppel Corporation Limited
For the financial year ended 31 December 2010
Report on the Financial Statements
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 2010, 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 150 to 218.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the
provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards and for 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 sheets and to maintain accountability of
assets.
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 of financial statements that give a true and fair view 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, 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 2010 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.
Report on Other Legal and Regulatory Requirements
In our opinion, 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
22 February 2011
Independent Auditors’ Report
149
Balance Sheets
As at 31 December 2010
share capital
Reserves
share capital & reserves
non-controlling 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
Group
Company
Note
3
4
2010
$’000
906,409
5,833,377
6,739,786
2,984,097
2009
$’000
832,908
5,152,439
5,985,347
2,727,226
2010
$’000
906,409
3,783,517
4,689,926
- -
2009
$’000
832,908
3,924,918
4,757,826
9,723,883
8,712,573
4,689,926
4,757,826
5
6
7
8
9
10
11
2,243,150
3,207,539
-
3,606,723
299,896
28,646
107,676
9,493,630
2,157,172
3,051,247
-
2,723,169
152,046
547,665
90,118
8,721,417
5,120
- -
3,580,409
55
- -
360
- -
3,585,944
5,430
3,393,466
3,074
584
3,402,554
12
4,440,827
3,178,182
- -
13
13
14
15
16
17
12
18
13
13
19
27
20
-
305,162
1,958,993
536,872
4,245,990
11,487,844
-
287,922
1,727,099
456,515
2,935,787
8,585,505
1,732,273
2,575
82,416
- -
207,073
2,024,337
1,642,528
6,056
103,575
33,507
1,785,666
4,342,963
1,638,193
83,586
4,051,972
1,683,392
68,856
-
180,609
391,764
484,699
736
7,122,550
-
168,186
839,117
450,951
1,668
7,264,142
138,435
- -
- -
241,792
- -
9,047 -
26,147
- -
415,421
132,302
265,546
27,169
425,017
4,365,294
1,321,363
1,608,916
1,360,649
19
21
3,675,968
459,073
4,135,041
918,410
411,797
1,330,207
500,000 -
4,934
504,934
5,377
5,377
net assets
9,723,883
8,712,573
4,689,926
4,757,826
See accompanying notes to the financial statements.
150
Keppel Corporation Limited
Report to Shareholders 2010
Consolidated Profit and Loss Account
For the financial year ended 31 December 2010
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
non-controlling 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
Total distribution
Note
2010
$’000
2009
$’000
22
23
24
25
25
25
8
26
27
26
28
29
9,782,922
(6,210,898)
(1,367,077)
(188,633)
(259,820)
1,756,494
7,946
111,350
(64,701)
215,249
2,026,338
661,101
2,687,439
(580,632)
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)
2,106,807
1,829,831
1,419,052
203,932
1,622,984
483,823
2,106,807
1,264,611
360,506
1,625,117
204,714
1,829,831
88.7 cts
88.1 cts
79.4 cts
79.2 cts
101.5 cts
100.7 cts
102.0 cts
101.8 cts
16.0 cts
26.0 cts
-
42.0 cts
15.0 cts
23.0 cts
23.0 cts
61.0 cts
See accompanying notes to the financial statements.
Consolidated Profit and Loss Account
151
Consolidated Statement of Comprehensive Income
For the financial year ended 31 December 2010
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
Non-controlling interests
2010
$’000
2009
$’000
2,106,807
1,829,831
130,996
1,663
139,760
66,405
(1,247)
(47,508)
207,336
247
(100,559)
10,013
(144,436)
23,505
3,133
(3,509)
(20,832)
271,985
2,103,298
2,101,816
1,659,042
444,256
2,103,298
1,943,492
158,324
2,101,816
See accompanying notes to the financial statements.
152
Keppel Corporation Limited
Report to Shareholders 2010
Statements of Changes in Equity
For the financial year ended 31 December 2010
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
Non-
controlling
Interests
$’000
Capital
Employed
$’000
832,908
540,289
4,695,478
(83,328) 5,985,347
2,727,226
8,712,573
-
-
-
-
-
-
-
-
-
-
-
-
91,717
1,622,984
-
-
(55,659)
1,622,984
36,058
483,823
(39,567)
2,106,807
(3,509)
91,717
1,622,984
(55,659) 1,659,042
444,256
2,103,298
-
36,633
(991,006)
-
-
-
(991,006)
36,633
-
1,608
(991,006)
38,241
(345)
441
(96)
-
-
-
-
-
-
-
-
(20,987)
(9,060)
-
-
-
-
-
-
-
(129,580)
(129,580)
5,091
5,091
282
16,973
282
16,973
(30,047)
(96,987)
(127,034)
6,317
(1)
73,501
5,733
9,495
-
12,050
9,494
73,501
-
-
-
-
-
-
-
-
-
-
73,501
6,317
-
-
-
(1)
-
73,501
21,618
(999,626)
(96)
(904,603)
(187,385) (1,091,988)
Group
2010
As at 1 January
total comprehensive income
for the year
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
transactions with equity
holders, recorded
directly in equity
Dividend paid
Share-based payment
Transfer of statutory, capital
and other reserves
to revenue reserves
Dividend paid to
non-controlling shareholders
Cash subscribed by
non-controlling shareholders
Disposal to non-controlling
shareholders
Acquisition of subsidiary
Acquisition of additional interest
in subsidiaries
Equity component of
convertible bond issued
by a subsidiary
Other adjustments
Shares issued
Total transactions with
equity holders
As at 31 December
906,409
653,624
5,318,836
(139,083) 6,739,786
2,984,097
9,723,883
See accompanying notes to the financial statements.
statements of Changes in equity
153
Statements of Changes in Equity
Attributable to equity holders of the Company
Foreign
Exchange
Translation
Account
$’000
Capital
Reserves
$’000
Revenue
Reserves
$’000
Share
Capital
$’000
Share
Capital &
Reserves
$’000
Non-
controlling
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
1,625,117
-
-
(84,444)
1,625,117
318,375
204,714
(46,390)
1,829,831
271,985
402,819
1,625,117
(84,444) 1,943,492
158,324
2,101,816
-
22,672
(573,562)
-
-
-
(573,562)
22,672
-
1,142
(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
8,337
10,125
(572,780)
(3)
(554,321)
416,571
(137,750)
Group
2009
As at 1 January
total comprehensive income
for the year
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
transactions with equity
holders, recorded
directly in equity
Dividend paid
Share-based payment
Transfer of statutory, capital
and other reserves
to revenue reserves
Dividend paid
to non-controlling shareholders
Cash subscribed by
non-controlling shareholders
Acquisition of additional
interest in subsidiaries
Other adjustments
Shares issued
Total transactions with
equity holders
As at 31 December
832,908
540,289
4,695,478
(83,328) 5,985,347
2,727,226
8,712,573
See accompanying notes to the financial statements.
154
Keppel Corporation Limited
Report to Shareholders 2010
Company
2010
As at 1 January
Share
Capital
$’000
Capital
Reserves
$’000
Revenue
Reserves
$’000
Capital
Employed
$’000
832,908
91,555
3,833,363
4,757,826
Profit/total comprehensive income for the year
-
-
815,140
815,140
transactions with equity holders, recorded directly in equity
Dividend paid
Share-based payment
Shares issued
Total transactions with equity holders
As at 31 December
2009
As at 1 January
-
-
73,501
73,501
-
34,465
-
34,465
(991,006)
-
-
(991,006)
(991,006)
34,465
73,501
(883,040)
906,409
126,020
3,657,497
4,689,926
824,571
70,042
2,250,226
3,144,839
Profit/total comprehensive income for the year
-
-
2,156,699
2,156,699
transactions with equity holders, recorded directly in equity
Dividend paid
Share-based payment
Shares issued
Total transactions with equity holders
-
-
8,337
8,337
-
21,513
-
21,513
(573,562)
-
-
(573,562)
(573,562)
21,513
8,337
(543,712)
As at 31 December
832,908
91,555
3,833,363
4,757,826
See accompanying notes to the financial statements.
statements of Changes in equity
155
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2010
operating activities
Operating profit
Adjustments:
Depreciation and amortisation
Share-based payment expenses
(Profit)/loss on sale of fixed assets and investment properties
Impairment of assets
Operational cash flow before changes in working capital
Working capital changes:
Stocks & work-in-progress
Debtors
Creditors
Investments in bonds and shares
Intangibles
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 and further investment in associated companies
Acquisition of fixed assets and investment properties
Disposal of subsidiaries
Proceeds from disposal of interest in a subsidiary
Return of capital from associated company
Proceeds from disposal of associated companies
Proceeds from disposal of fixed assets and investment properties
Dividend received from investments and associated companies
net cash (used in)/from investing activities
Financing activities
Proceeds from share issues
Proceeds from non-controlling shareholders of subsidiaries
Proceeds from term loans
Repayment of term loans
Acquisition of additional shares in subsidiaries
Dividend paid to shareholders of the Company
Dividend paid to non-controlling shareholders of subsidiaries
net cash from/(used in) financing activities
net increase in cash and cash equivalents
Cash and cash equivalents as at 1 January
Note
2010
$’000
2009
$’000
1,756,494
1,504,791
188,633
38,437
(4,949)
10,715 -
1,989,330
(794,558)
(292,304)
(65,033)
(71,646)
(5,256) -
928
(73,660)
687,801
112,888
(57,223)
(293,226)
450,240
(49,184)
(343,788)
(873,073)
- -
16,281 -
300,000 -
3,165
58,430
245,119
(643,050)
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)
(212,395)
(475,797)
1,465,767
48,936
130,282
427,359
73,501
5,091
3,221,224
(921,644)
(117,464)
(627,183)
(129,580)
1,503,945
8,337
510,224
196,658
(431,184)
(3,814)
(573,562)
(87,136)
(380,477)
1,311,135
2,934,119
717,030
2,217,089
A
B
Cash and cash equivalents as at 31 December
C
4,245,254
2,934,119
See accompanying notes to the financial statements.
156
Keppel Corporation Limited
Report to Shareholders 2010
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:
2010
$’000
2009
$’000
Fixed assets
Investments
Long term receivables
Stocks & work-in-progress
Debtors
Bank balances and cash
Creditors
Amounts due to associated companies
Taxation
Term loans
Deferred taxation
Non-controlling interests
Goodwill on consolidation (Note 11)
Amount previously accounted for as associated company
Purchase consideration
Less: Purchase consideration payable
Less: Bank balances and cash acquired
123,536
185 -
120 -
8,425
20,764
16,643
(25,679)
(494) -
(415) -
(10,625)
-
(16,973) -
115,487
10,560
(42,689) -
83,358
(17,531)
(16,643)
143,507
161
463,546
12,842
(13,752)
(70,935)
(9,765)
525,604
24,615
550,219
(7,943)
(12,842)
Cash flow on acquisition net of cash acquired
49,184
529,434
B. Disposal of subsidiaries
During the financial year, the fair values of net assets of subsidiaries disposed were as follows:
Fixed assets
Long term receivables
Stocks & work-in-progress
Debtors
Bank balances and cash
Creditors
Taxation
Deferred taxation
Amount accounted for as associated company
Amount accounted for as advance from associated company
Distribution of dividend in specie (less expenses)
Add: Bank balances and cash disposed
Cash flow on disposal net of cash disposed
C. Cash and Cash equivalents
(1,007) -
(589,440) -
(14,538) -
(86,376) -
(57,949) -
21,492 -
1,782 -
12,659 -
(713,377) -
349,552 -
(57,947) -
363,823 -
57,949 -
- -
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)
See accompanying notes to the financial statements.
Consolidated statement of Cash Flows
4,245,990
(736)
2,935,787
(1,668)
4,245,254
2,934,119
157
Notes to the Financial Statements
For the financial year ended 31 December 2010
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, logistics and data centres;
– 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 2010 and the balance sheet and
statement of changes in equity of the Company at 31 December 2010 were authorised for issue in accordance with a
resolution of the Board of Directors on 22 February 2011.
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 2010. 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:
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 from Customers
Consolidated and Separate Financial Statements
Business Combinations
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.
158
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Report to Shareholders 2010
(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. Acquisition-related costs are recognised in profit or loss as incurred. 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 non-controlling interest.
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.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted and the fair
value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.
When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the revised Standard requires
that the Group derecognise all assets, liabilities and non-controlling interests at their carrying amount. Any retained
interest in the former subsidiary is recognised at its fair value at the date control is lost, with the gain or loss arising
recognised in profit or loss.
On a transaction-by-transaction basis, the measurement of non-controlling interests (previously referred to as ‘minority’
interests) is either at fair value or at the non-controlling interests’ share of the fair value of the identifiable net assets of the
acquiree.
Contingent consideration is measured at fair value at the acquisition date; subsequent adjustments to the consideration
are recognised against goodwill only to the extent that they arise from better information about the fair value at the
acquisition date, and they occur within the ‘measurement period’ (a maximum of 12 months from the acquisition date). All
other subsequent adjustments are recognised in profit or loss.
notes to the Financial statements
159
Notes to the Financial Statements
2. Significant acounting policies (continued)
(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.
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.
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Keppel Corporation Limited
Report to Shareholders 2010
(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. If the Group’s interest
in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount
of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the
acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Other Intangible Assets
Intangible assets include development expenditure and customer contracts. 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 17 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.
(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.
notes to the Financial statements
161
Notes to the Financial Statements
2. Significant acounting policies (continued)
(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.
(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.
162
Keppel Corporation Limited
Report to Shareholders 2010
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.
(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.
notes to the Financial statements
163
Notes to the Financial Statements
2. Significant acounting policies (continued)
(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.
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.
164
Keppel Corporation Limited
Report to Shareholders 2010
(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.
(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.
notes to the Financial statements
165
Notes to the Financial Statements
2. Significant acounting policies (continued)
(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 and Share Plans
The Group operates share-based compensation plans. The fair value of the employee services received in exchange for
the grant of options, restricted shares and performance shares is recognised as an expense in the profit and loss account
with a corresponding increase in the share option and share plan reserve over the vesting period. The total amount to
be recognised over the vesting period is determined by reference to the fair values of the options, restricted shares and
performance shares granted on the respective dates of grant.
At each balance sheet date, the Group revises its estimates of the number of options that are expected to become
exercisable and share plan awards that are expected to vest on the vesting dates, and recognises the impact of the
revision of the estimates in the profit and loss account, with a corresponding adjustment to the share option and share
plan reserve over the remaining vesting period.
No expense is recognised for options or share plan awards that do not ultimately vest, except for options or share plan
awards where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not
the market condition is satisfied, provided that all other performance and/or service conditions are satisfied.
The proceeds received from the exercise of options are credited to share capital when the options are exercised. When
share plan awards are released, the share plan reserve is transferred to share capital if new shares are issued.
(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.
166
Keppel Corporation Limited
Report to Shareholders 2010
(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.
notes to the Financial statements
167
Notes to the Financial Statements
2. Significant acounting policies (continued)
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.
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 assumptions are 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.
168
Keppel Corporation Limited
Report to Shareholders 2010
3. Share capital
ordinary shares (“shares”)
Issued and paid up:
Balance 1 January
1,594,496,680 Shares (2009: 1,593,134,180 Shares)
Issued during the financial year
11,017,200 Shares (2009: 1,362,500 Shares)
Balance 31 December
1,605,513,880 Shares (2009: 1,594,496,680 Shares)
Group and Company
2010
$’000
2009
$’000
832,908
824,571
73,501
8,337
906,409
832,908
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 11,017,200 Shares for cash upon exercise of options under the KCL Share
Option Scheme. This comprised 570,000 Shares at $3.01 per Share, 690,000 Shares at $3.24 per Share, 448,000
Shares at $4.42 per Share, 314,000 Shares at $4.19 per Share, 972,000 Shares at $6.24 per Share, 429,000 Shares at
$6.01 per Share, 1,200,000 Shares at $6.39 per Share, 485,000 Shares at $6.16 per Share, 1,632,200 Shares at $7.66
per Share, 941,000 Shares at $7.43 per Share, 333,000 Shares at $9.13 per Share, 911,000 Shares at $8.90 per Share,
688,000 Shares at $9.73 per Share, 597,000 Shares at $10.03 per Share, 96,000 Shares at $4.04 per Share, 596,000
Shares at $3.81 per Share, 53,000 Shares at $8.21 per Share, 42,000 Shares at $7.98 per Share, 4,000 Shares at $8.24
per Share and 16,000 Shares at $8.01 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
Danny Teoh (appointed on 1 December 2010)
At the Extraordinary General Meeting of the Company held on 23 April 2010, the Company’s shareholders approved the
adoption of two new share plans, with effect from the date of termination of the Scheme. The Scheme was terminated on
30 June 2010. Options granted and outstanding prior to the termination will continue to be valid and subject to the terms
and conditions of the Scheme.
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
169
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
2010
2009
number of
options
59,594,000
8,079,000
(11,017,200)
(3,264,800)
53,391,000
Weighted
average
exercise
price
^$8.15
$8.01
$6.55
$9.24
$8.40
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
Exercisable at 31 December
30,561,000
$9.70
28,056,500
$8.79
^ Weighted average exercise price adjusted for dividend in specie in K-Green Trust’s units
The weighted average share price at the date of exercise for options exercised during the financial year was $9.84 (2009:
$8.04). The options outstanding at the end of the financial year had a weighted average exercise price of $8.40 (2009:
$8.38) and a weighted average remaining contractual life of 7.6 years (2009: 7.9 years).
On 9 February 2010, the Company granted 8,079,000 options under the KCL Share Option Scheme. The estimated fair
value of the options granted is $1.97 per share. Options granted on 5 February 2009 and 6 August 2009 had estimated
fair values of $0.64 per share and $1.98 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
2010
09.02.2010
$8.24
$8.24
42.98%
4.0 years
1.15%
4.61%
2009
05.02.2009
$4.04
$4.04
41.43%
4.0 years
0.96%
8.66%
06.08.2009
$8.21
$8.21
42.82%
4.0 years
0.97%
4.38%
The expected volatility is determined by calculating the historical volatility of the Company’s share price over the previous
4.0 years (2009: 4.0 years). The expected lives used in the model have 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.
170
Keppel Corporation Limited
Report to Shareholders 2010
KCL share Plans
The KCL Restricted Share Plan (“KCL RSP”) and KCL Performance Share Plan (“KCL PSP”) were approved by the
Company’s shareholders at the Extraordinary General Meeting of the Company on 23 April 2010. The two share plans are
administered by the Remuneration Committee.
Details of the KCL RSP and the KCL PSP are as follows:
Plan Description
KCL RsP
Award of fully-paid ordinary shares of the
Company, conditional on achievement of
pre-determined targets at the end of a
one-year performance period
KCL PsP
Award of fully-paid ordinary shares of the
Company, conditional on achievement of
pre-determined targets over a three-year
performance period
Performance Conditions
Return on Equity
a) Economic Value Added
b) Absolute Total Shareholder’s Return
c) Relative Total Shareholder’s Return
to MSCI Asia Pacific Ex-Japan
Industrials Index (MXAPJIN)
Final Award
0% or 100% of the contingent award
granted, depending on achievement of
pre-determined targets
0% to 150% of the contingent award
granted, depending on achievement of
pre-determined targets
Vesting Condition
and Schedule
If pre-determined targets are achieved,
awards will vest equally over three years
subject to fulfillment of service requirements
If pre-determined targets are achieved,
awards will vest at the end of the
three-year performance period subject
to fulfillment of service requirements
Movements in the number of shares under the KCL RSP and the KCL PSP are as follows:
Balance at 1 January
Granted
Adjustment
Vested
Cancelled
Balance at 31 December
2010
KCL RsP
-
3,796,500
-
-
(38,534)
3,757,966
KCL PsP
-
680,000
-
-
-
680,000
Executive Directors who are eligible for the KCL Share Plans are required to hold a minimum number of shares under
the share ownership guideline which requires them to maintain a beneficial ownership stake in the Company, thus further
aligning their interests with shareholders.
At the end of the financial year, the number of contingent Shares granted but not released was 3,757,966 under the KCL
RSP and 680,000 under the KCL PSP. Depending on the achievement of pre-determined performance targets, the actual
number of Shares to be released could be zero or 3,757,966 under the KCL RSP and range from zero to a maximum of
1,020,000 under the KCL PSP.
notes to the Financial statements
171
Notes to the Financial Statements
3. Share capital (continued)
The fair values of the contingent award of shares under the KCL RSP and the KCL PSP are determined at the grant date
using Monte Carlo simulation method which involves projection of future outcomes using statistical distributions of key
random variables including share price and volatility.
On 30 June 2010, the Company granted contingent awards of 3,796,500 shares under the KCL RSP and 680,000 shares
under the KCL PSP. The estimated fair value of the shares granted ranges from $7.72 to $8.30 under the KCL RSP and
amounts to $7.08 under the KCL PSP. The significant inputs into the model are as follows:
Date of grant
Prevailing share price at date of grant
Expected volatility:
Company
MXAPJIN
Correlation with MXAPJIN
Expected term
Risk free rate
Expected dividend yield
2010
KCL RsP
KCL PsP
30.06.2010
$8.51
30.06.2010
$8.51
47.54%
#
#
0.5 - 2.5 years
0.42% - 0.53%
*
47.54%
40.13%
82.60%
2.5 years
0.53%
*
#
*
This input is not required for the valuation of shares granted under the KCL RSP.
Expected dividend yield is based on management’s forecast.
The expected volatilities are based on the historical volatilities of the Company’s share price and the MXAPJIN price over
the previous 36 months immediately preceding the grant date. The expected term used in the model is based on the
grant date and the end of the performance period.
Details of share plans 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 and share plan reserve
Fair value reserve
Hedging reserve
Bonus issue by subsidiaries
Others
Revenue Reserves
Foreign Exchange
Translation Account
Group
Company
2010
$’000
2009
$’000
2010
$’000
137,410
370,162
95,474
40,000
10,578
653,624
100,777
231,920
141,999
40,000
25,593
540,289
126,020
- -
- -
- -
- -
126,020
2009
$’000
91,555
91,555
5,318,836
4,695,478
3,657,497
3,833,363
(139,083)
(83,328)
- -
5,833,377
5,152,439
3,783,517
3,924,918
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.
172
Keppel Corporation Limited
Report to Shareholders 2010
5.
Fixed assets
Group
2010
Cost
At 1 January
Additions
Disposals
Write-off
Subsidiary acquired
Subsidiaries disposed
Reclassification
- Stocks
- Investment properties
- Other assets
- Other fixed assets
categories
Exchange differences
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Buildings
$’000
Vessels &
Floating Docks
$’000
Plant,
Machinery
& Equipment
$’000
Capital
Work-in-
Progress
$’000
Total
$’000
54,337
147
-
(22)
68,377
-
-
(676)
(92)
1,333,783
30,454
(2,573)
(68)
3,762
-
-
-
(7,615)
233,049
48,017
(22,797)
-
44,033
-
1,855,079
52,817
(20,062)
(4,751)
60,517
(1,239)
278,232
99,405
-
(7,442)
-
-
3,754,480
230,840
(45,432)
(12,283)
176,689
(1,239)
-
-
-
(946)
162
(30)
-
-
(945)
(946)
(514)
(8,682)
606
(1,119)
16,100
(20,137)
21,247
(2,907)
71,480
(21,652)
(109,433)
(3,419)
-
(49,234)
At 31 December
121,558
1,353,706
320,642
1,991,375
256,398
4,043,679
Accumulated Depreciation &
Impairment Losses
At 1 January
Depreciation charge
Impairment loss (Note 26)
Disposals
Write-off
Subsidiary acquired
Subsidiaries disposed
Reclassification
- Stocks
- Other assets
- Other fixed assets
categories
Exchange differences
18,852
2,319
-
-
(22)
13,254
-
-
(26)
-
(620)
522,729
48,382
10,319
(1,742)
(470)
2,539
-
-
(1,158)
450
(8,942)
125,689
22,760
-
(11,532)
(3,913)
10,522
-
930,038
113,254
17,453
(16,839)
(3,634)
26,838
(232)
-
-
178
(89)
-
(1,794)
(450)
(13,584)
At 31 December
33,757
572,107
141,732
1,052,933
-
-
-
-
-
-
-
-
-
-
-
-
1,597,308
186,715
27,772
(30,113)
(8,039)
53,153
(232)
178
(1,273)
-
(24,940)
1,800,529
net Book Value
87,801
781,599
178,910
938,442
256,398
2,243,150
notes to the Financial statements
173
Notes to the Financial Statements
5.
Fixed assets (continued)
Group
2009
Cost
At 1 January
Additions
Disposals
Subsidiary acquired
Subsidiary disposed
Reclassification
- Stocks
- Other assets
- Other fixed assets
categories
Exchange differences
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Buildings
$’000
Vessels &
Floating Docks
$’000
Plant,
Machinery
& Equipment
$’000
Capital
Work-in-
Progress
$’000
Total
$’000
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
During the financial year, the Group recognised impairment losses of $27,772,000 (2009: $655,000) which relates to
write-down of non-performing assets in the Offshore & Marine and Property divisions. These non-performing assets were
fully written down.
Certain plant, machinery and equipment with carrying amount of $83,665,000 (2009: $14,322,000) are mortgaged to
banks for loan facilities (Note 19).
174
Keppel Corporation Limited
Report to Shareholders 2010
Company
2010
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
At 31 December
net Book Value
2009
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
6,569
-
-
6,569
1,752
41
-
1,793
4,776
6,542
27
-
6,569
1,711
41
-
1,752
4,817
-
-
-
-
-
-
-
-
-
7,046
133
(312)
13,615
133
(312)
6,867
13,436
6,433
298
(208)
8,185
339
(208)
6,523
8,316
344
5,120
484
-
(484)
6,952
417
(323)
13,978
444
(807)
-
7,046
13,615
82
5
(87)
-
-
6,295
385
(247)
8,088
431
(334)
6,433
8,185
613
5,430
notes to the Financial statements
175
Notes to the Financial Statements
6.
Investment properties
At 1 January
Acquisition of properties
Development expenditure
Fair value gain/(loss) (Note 26)
Disposals
Write-off
Reclassification
- Fixed assets
- Stocks
Exchange differences
At 31 December
Group
2010
$’000
3,051,247
379,891
262,342
64,719
(32,258)
-
514 -
(509,564)
(9,352)
2009
$’000
3,029,675
107,690
75,536
(131,920)
(19,458)
(255)
(21)
(10,000)
3,207,539
3,051,247
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 2010:
– Colliers International Consultancy & Valuation (Singapore) Pte Ltd for properties in Singapore;
– Savills (Qld) Pty Limited and m3 Property Strategists for properties in Australia;
– CB Richard Ellis (Vietnam) Co. Ltd and Allied Appraisal Consultants Pte Ltd for properties in Vietnam; and
– KJPP Wilson & Rekan (an affiliate of Knight Frank) and KJPP Benny, Desmar & Rekan for properties in Indonesia.
Interest capitalised during the financial year amounted to $1,968,000 (2009: $1,992,000).
Certain investment properties with carrying amount of $2,024,600,000 (2009: $2,125,600,000) are mortgaged to banks
for loan facilities (Note 19).
7. Subsidiaries
Quoted shares, at cost
Market value: $4,276,939,000 (2009: $3,243,780,000)
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
2010
$’000
2009
$’000
1,788,191
2,169,218
3,957,409
(377,000)
3,580,409
-
1,728,360
1,933,706
3,662,066
(265,000)
3,397,066
(3,600)
3,580,409
3,393,466
265,000
112,000 -
265,000
377,000
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.
176
Keppel Corporation Limited
Report to Shareholders 2010
8. Associated companies
Quoted shares, at cost
Market value: $885,408,000
(2009: $474,190,000)
Unquoted shares, at cost
Provision for impairment
Share of reserves
Advances to associated companies
Group
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
561,226
966,034
1,527,260
(147,800)
1,379,460
1,176,775
2,556,235
1,050,488
208,176
795,997
1,004,173
(94,207)
909,966
527,549
1,437,515
1,285,654
3,606,723
2,723,169
3,074
3,074
3,074
3,074
3,074
- -
55
55
- -
55
- -
55
- -
55
- -
- -
- -
- -
- -
- -
Movements in the provision for impairment of associated companies are as follows:
At 1 January
Write back to profit and loss account
Impairment loss (Note 26)
Reclassification (Note 10)
Exchange differences
At 31 December
94,207
-
1,544
52,522
(473)
33,993
(56)
61,000
-
(730)
147,800
94,207
Advances to associated companies are unsecured and are not repayable within the next 12 months. Interest is charged
at rates ranging from 1.18% to 3.63% (2009: 1.47% to 4.47%) per annum.
During the financial year, the Group recognised an impairment loss of $1,544,000 (2009: $61,000,000) on investment
in associated companies. The carrying amount of the associated companies were reduced to its recoverable amount,
which was based on the estimated future cash flow from operations discounted to present value ranging from 5.53% to
6.05% (2009: 11%).
The share of net 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 net profit#
Group
2010
$’000
2009
$’000
215,249
775,821
991,070
(184,730)
321,683
100,684
422,367
(57,226)
806,340
365,141
#
This comprises share of net profit before exceptional items of $178,295,000 (2009: $276,013,000) and share of exceptional items (net of tax) of
$628,045,000 (2009: $89,128,000).
The summarised financial information of associated companies, not adjusted for the Group’s proportionate share, is as follows:
Total assets
Total liabilities
Revenue
Net profit before exceptional items
Net profit after exceptional items
16,274,056
8,426,896
3,964,732
574,042
2,657,740
12,657,767
7,478,745
3,777,218
673,342
912,386
Information relating to significant associated companies whose results are included in the financial statements is given in
Note 37.
notes to the Financial statements
177
Notes to the Financial Statements
9.
Investments
Available-for-sale investments:
Quoted equity shares
Unquoted equity shares
Unquoted property funds
Unquoted bonds
10. Long term receivables
Group
2010
$’000
2009
$’000
126,343
51,738
104,130
17,685 -
49,992
40,351
61,703
299,896
152,046
Receivables from service concession arrangements
Staff loans
Long term trade receivables and others
Less: Amounts due within one year and included
in debtors (Note 14)
Provision for doubtful debts
Movements in the provision for doubtful debts are as follows:
At 1 January
Amount written off
Amount utilised
Exchange differences
At 31 December
Group
Company
2010
$’000
-
2,543
27,534
30,077
(1,431)
28,646
-
2009
$’000
564,387
2,941
40,028
607,356
(55,957)
551,399
(3,734)
28,646
547,665
3,734
-
(3,810)
76
3,930
52
-
(248)
-
3,734
2009
$’000
793
793
(209)
584
584
-
2010
$’000
- -
560
- -
560
(200)
360
- -
360
- -
- -
-
- -
- -
Included in staff loans are interest free advances to certain Directors amounting to $259,000 (2009: $210,000) and to
directors of related corporations amounting to $221,000 (2009: $436,000) under an approved car loan scheme.
Long term receivables are unsecured, largely repayable after five years and bears effective interest ranging from 2.00% to
13.00% (2009: 2.00% to 5.00%) per annum.
As at 31 December 2009, receivables arising from service concession arrangements arose from the following:
(a)
(b)
(c)
a 20-year contract to build and operate a water treatment plant. The plant started commercial operations in 2007;
a 25-year contract to build and operate a waste-to-energy plant. The plant started commercial operations in
November 2009; and
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 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
respectively in the year ended 31 December 2009. During the financial year, the subsidiaries holding these arrangements
were disposed pursuant to the distribution of dividend in specie of K-Green Trust units.
178
Keppel Corporation Limited
Report to Shareholders 2010
In the previous financial year, certain assets of the waste-to-energy plant with carrying amount of $163,337,000 are
mortgaged to banks for loan facilities (Note 19).
During the previous financial year, the Group recognised an impairment loss of $107,522,000 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%. During the financial year, impairment
loss of $55,000,000 (Note 26) was reversed and the remaining impairment loss of $52,522,000 (Note 8) was reclassified
to provision for impairment of associated companies upon the distribution of dividend in specie of 51% equity interest in
K-Green Trust units.
The fair value of long term receivables for the Group is $28,329,000 (2009: $547,272,000). 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
2010
At 1 January
Additions
Amortisation
Impairment loss (Note 26)
Reclassification
Exchange differences
Goodwill
$’000
Development
Expenditure
$’000
Customer
Contracts
$’000
87,004
10,560
-
-
(24,615)
-
3,114
5,256
(450)
(314)
3,883
(257)
-
-
(1,468)
-
24,963
-
Total
$’000
90,118
15,816
(1,918)
(314)
4,231
(257)
At 31 December
72,949
11,232
23,495
107,676
Cost
Accumulated amortisation
2009
At 1 January
Additions
Amortisation
Impairment loss (Note 26)
Reclassification
Exchange differences
At 31 December
Cost
Accumulated amortisation
notes to the Financial statements
72,949
-
21,050
(9,818)
24,963
(1,468)
118,962
(11,286)
72,949
11,232
23,495
107,676
73,253
24,615
-
(11,568)
704
-
5,234
151
(467)
-
(1,655)
(149)
87,004
3,114
87,004
-
12,981
(9,867)
87,004
3,114
-
-
-
-
-
-
-
-
-
-
78,487
24,766
(467)
(11,568)
(951)
(149)
90,118
99,985
(9,867)
90,118
179
Notes to the Financial Statements
11. Intangibles (continued)
For the purpose of impairment testing, goodwill is allocated to cash-generating units.
Goodwill allocated to Offshore & Marine division amounted to $15,771,000 (2009: $5,211,000). 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 7.32% to 15.25% (2009:
7.30% to 16.10%). 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.
Goodwill allocated to Infrastructure division amounted to $57,178,000 (2009: $81,793,000). In the previous financial year,
this includes provisional goodwill of $24,615,000 arising from the acquisition of Keppel DHCS Pte Ltd (previously First
DCS Pte Ltd). Upon the completion of purchase price allocation during the current financial year, provisional goodwill was
allocated to the attributable assets and liabilities. The recoverable amount of goodwill at balance sheet date is based on
current bid prices of the cash-generating unit.
During the previous 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
(a)
(c)
(d)
Group
2010
$’000
605,210
164,400
3,671,217
2009
$’000
648,925
248,109
2,281,148
4,440,827
3,178,182
Billings on work-in-progress in excess of related costs
(b)
(1,638,193)
(1,683,392)
(a) Work-in-Progress in excess of Related Billings
Costs incurred and attributable profits
Provision for loss on work-in-progress
Less: Progress billings
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
180
2,279,293
(3,651)
2,275,642
(1,670,432)
7,027,504
(2,809)
7,024,695
(6,375,770)
605,210
648,925
2,809
1,597
(768)
13
3,651
1,534
1,963
(611)
(77)
2,809
14,541,819
(16,180,012)
11,753,627
(13,437,019)
(1,638,193)
(1,683,392)
Keppel Corporation Limited
Report to Shareholders 2010
(c) Stocks
Consumable materials and supplies
Finished products for sale
(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
Charge/(Write-back) to profit and loss account
Amount utilised
Exchange differences
At 31 December
Group
2010
$’000
2009
$’000
161,620
2,780
235,984
12,125
164,400
248,109
2,583,577
1,500,932
645,352
(1,059,510)
3,670,351
44,813
3,715,164
(43,947)
1,537,652
1,066,114
576,876
(1,047,505)
2,133,137
196,212
2,329,349
(48,201)
3,671,217
2,281,148
48,201
3,128
(7,378)
(4)
72,187
(13,237)
(10,739)
(10)
43,947
48,201
Interest capitalised during the financial year amounted to $16,368,000 (2009: $17,319,000) at rates ranging from
1.00% to 2.50% (2009: 0.91% to 4.14%) per annum for Singapore properties and 2.88% to 15.50% (2009: 3.10%
to 21.00%) per annum for overseas properties.
Certain properties held for sale with carrying amount of $444,705,000 (2009: $101,879,000) are mortgaged to
banks for loan facilities (Note 19).
notes to the Financial statements
181
Notes to the Financial Statements
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/31 December
Group
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,876
1,731,997
1,738,873
(6,600)
6,155
1,642,973
1,649,128
(6,600)
1,732,273
1,642,528
161,893
79,899
163,307
102,239
241,792
265,546
6,600
6,600
Advances to and from subsidiaries are unsecured and are repayable on demand. Interest is charged at rates ranging from
0.07% to 5.25% (2009: 0.10% to 6.00%) per annum on interest-bearing advances.
Associated Companies
Amounts due from
- trade
- advances
Provision for doubtful debts
Amounts due to
- trade
- advances
76,959
228,872
305,831
(669)
86,330
207,728
294,058
(6,136)
2,575
- -
2,575
- -
6,056
6,056
305,162
287,922
2,575
6,056
5,867
174,742
13,388
154,798
180,609
168,186
- -
- -
- -
- -
- -
- -
Movements in the provision for doubtful debts are as follows:
At 1 January
(Write-back)/Charge to profit and loss account
At 31 December
6,136
(5,467)
1,113
5,023
669
6,136
Advances to and from associated companies are unsecured and are repayable on demand. Interest is charged at rates
ranging from 0.18% to 12.50% (2009: 0.13% to 5.31%) per annum on interest-bearing advances.
182
Keppel Corporation Limited
Report to Shareholders 2010
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
Land tender deposits
Advance land payments
Recoverable accounts
Accrued receivables
Advances to subcontractors
Advances to corporations in which the Group
has investment interests
Advances to non-controlling shareholders of subsidiaries
Provision for doubtful debts
Group
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
1,053,217
(39,156)
1,014,061
1,105,613
(36,552)
1,069,061
1,431
62,598
57,275
106,488
23,189
88,466
19,751
18,246
140,021
241,796
41,765
9,459
116,386
250
44,759
971,880
(26,948)
944,932
55,957
87,293
31,118
117,906
19,258
91,184
21,289
23,092
-
20,664
43,509
9,412
107,129
48,551
9,496
685,858
(27,820)
658,038
- -
- -
- -
200
371
197
81,228
- -
- -
42
378
- -
- -
- -
- -
- -
- -
- -
82,416
- -
82,416
209
269
166
102,502
48
381
103,575
103,575
Total
1,958,993
1,727,099
82,416
103,575
Movements in the provision for debtors are as follows:
At 1 January
Charge to profit and loss account
Amount written off
Reclassification
Exchange differences
At 31 December
64,372
5,609
(2,598)
-
(1,279)
58,431
11,996
(5,546)
67
(576)
66,104
64,372
- -
- -
- -
- -
- -
- -
notes to the Financial statements
183
Notes to the Financial Statements
15. Short term investments
Available-for-sale investments:
Quoted equity shares
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
2010
$’000
2009
$’000
412,438
1,223
52,323
465,984
322,108
27,680
46,393
396,181
70,888
-
70,888
59,415
919
60,334
536,872
456,515
Bank balances and cash
Fixed deposits with banks
Amounts held under escrow accounts for
overseas acquisition of land,
payment of construction cost and liabilities
Amounts held under project accounts,
withdrawals from which are restricted to
payments for expenditures incurred on projects
Group
Company
2010
$’000
2009
$’000
1,225,434
2,910,461
447,051
2,379,201
2010
$’000
2,845
204,228
2009
$’000
3,051
30,456
24,141
54,898
85,954
54,637
- -
- -
4,245,990
2,935,787
207,073
33,507
Fixed deposits with banks of the Group mature on varying periods, substantially between 1 day to 3 months (2009: 1 day
to 3 months). This comprised Singapore dollar fixed deposits of $1,474,593,000 (2009: $956,427,000) at interest rates
ranging from 0.00% to 1.13% (2009: 0.10% to 1.10%) per annum, and foreign currency fixed deposits of $1,435,868,000
(2009: $1,422,774,000) at interest rates ranging from 0.00% to 14.00% (2009: 0.10% to 18.00%) per annum.
Fixed deposits with banks of the Company mature on varying periods, substantially in 5 days (2009: 4 days to 3 months).
This comprised foreign currency fixed deposits of $204,228,000 (2009: $30,456,000) at interest rates ranging from 0.28%
to 1.20% (2009: 0.04% to 3.45%) per annum.
184
Keppel Corporation Limited
Report to Shareholders 2010
17. Creditors
Trade creditors
Customers’ advances and deposits
Derivative financial instruments (Note 34)
Sundry creditors
Accrued operating expenses
Advances from non-controlling shareholders
Interest payables
Other payables
Group
Company
2010
$’000
682,357
74,999
51,720
754,078
2,305,512
337,410
17,131
119,756
2009
$’000
875,892
60,515
57,864
623,888
2,112,151
221,384
9,653
90,625
2010
$’000
38
57
26,950
16,905
90,980
- -
3,505 -
- -
2009
$’000
53
57
37,171
11,829
83,192
4,342,963
4,051,972
138,435
132,302
Advances from non-controlling shareholders of certain subsidiaries are unsecured and are repayable on demand. Interest
is charged at rates ranging from 1.04% to 6.00% (2009: 1.25% to 4.64%) per annum on interest-bearing loans.
18. Provisions
Group
2010
At 1 January
Charge to profit and loss account
Amount utilised
Reclassification
Exchange differences
Warranties
$’000
Claims
$’000
Total
$’000
60,953
11,213
(963)
-
(3,005)
7,903
14,989
(2,000)
(5,500)
(4)
68,856
26,202
(2,963)
(5,500)
(3,009)
At 31 December
68,198
15,388
83,586
2009
At 1 January
Charge to profit and loss account
Amount utilised
Exchange differences
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
notes to the Financial statements
185
Notes to the Financial Statements
19. Term loans
Group
Keppel Corporation Medium Term Notes
Keppel Land Medium Term Notes
Keppel Land 2.5% Convertible Bonds 2013
Keppel Land 1.875% Convertible Bonds 2015
Keppel Structured Notes Commodity-linked Notes
K-REIT Asia term loans
Bank and other loans
- secured
- unsecured
Company
Keppel Corporation Medium Term Notes
Unsecured bank loans
2010
2009
Due within
one year
$’000
-
20,000
282,536
-
41,920
-
Due after
one year
$’000
500,000
380,000
-
478,436
-
-
29,808
17,500
1,221,141
1,096,391
Due within
one year
$’000
-
248,000
-
-
-
-
174,761
416,356
Due after
one year
$’000
-
70,000
275,925
-
41,920
190,085
268,045
72,435
391,764
3,675,968
839,117
918,410
-
9,047
500,000
-
9,047
500,000
-
-
-
-
-
-
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(a)
(a)
The $500,000,000 Fixed Rate Notes due 2020 were issued during the financial year under the US$600,000,000
Multi-Currency Medium Term Note Programme by the Company. The notes were unsecured and carried fixed
interest rate at 3.10% per annum.
(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 $400,000,000. The notes are
unsecured and are issued in series or tranches, and comprised fixed rate notes due 2011 to 2017 of $400,000,000.
Interest payable is based on money markets rates ranging from 2.67% to 4.25% (2009: 1.14% to 4.25%) 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
2010
$’000
275,925
14,111
(7,500)
2009
$’000
269,579
13,846
(7,500)
282,536
275,925
Interest expense on the convertible bonds is calculated based on the effective interest method by applying the
interest rate of 4.78% (2009: 4.78%) per annum for an equivalent non-convertible bond to the liability component of
the convertible bonds.
186
Keppel Corporation Limited
Report to Shareholders 2010
(d)
The $500,000,000 1.875%, 5 year convertible bonds were issued during the financial year by Keppel Land Limited.
Interest is payable semi-annually. The bonds, maturing on 29 November 2015, are convertible at the option of
bondholders to Keppel Land ordinary shares at a conversion price of $6.72 per share. Any bondholder may request
to redeem all of its bonds 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:
Face value of convertible bonds issued
Equity conversion component, net of deferred tax liability
Deferred tax liability
Bond issue expenses
Liability component on initial recognition
Interest expense
Interest paid
Liability component at 31 December
2010
$’000
500,000
(12,050)
(2,468)
(7,400)
478,082
1,135
(781)
478,436
Interest expense on the convertible bonds is calculated based on the effective interest method by applying the
interest rate of 2.5% per annum for an equivalent non-convertible bond to the liability component of the convertible
bonds.
(e)
(f)
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 0.77% to 1.21% (2009: 1.21% to 1.50%) per annum.
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% (2009: 3.91% to 4.06%) per annum. The term loans were fully repaid in the year.
(g)
The secured bank loans consist of:
– A $323,385,000 bank loan 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 0.62% to
2.34% (2009: 0.85% to 2.49%) per annum.
– A term loan of $158,600,000 drawn down by a subsidiary. The term loan is repayable in 2013 and is secured
on the investment property of the subsidiary. Interest is based on money market rates ranging from 1.37% to
1.60% (2009: 1.60% to 2.17%) per annum.
notes to the Financial statements
187
Notes to the Financial Statements
19. Term loans (continued)
– A term loan of $240,000,000 drawn down by a subsidiary during the financial year. The term loan is repayable
in 2014 and is secured on other assets of the subsidiary. Interest is based on money market rates ranging from
1.00% to 1.10% per annum.
– Bank loans of $425,000,000 drawn down by a subsidiary during the financial year. The term loans are
repayable in 2015 and are secured on the investment properties of the subsidiary. Interest is based on money
market rates ranging from 1.24% to 1.35% per annum.
– A term loan of $60,863,000 drawn down by subsidiaries during the financial year. The term loan is repayable
between one and five years and is secured on certain fixed assets of the subsidiaries. Interest is based on
money market rates ranging from 0.85% to 0.86% per annum.
– Other secured bank loans comprised $43,101,000 of foreign currency loans. They are repayable between one
and three 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 11.75% (2009: 6.25% to 14.50%) per annum.
(h)
The unsecured bank and other loans of the Group totalling $1,113,891,000 comprised $880,000,000 of loans
denominated in Singapore dollar and $233,891,000 of foreign currency loans. They are repayable between one and
five years. Interest on loans denominated in Singapore dollar is based on money market rates ranging from 0.85%
to 2.54% (2009: 0.93% to 3.46%) per annum. Interest on foreign currency loans is based on money market rates
ranging from 0.90% to 15.50% (2009: 9.88% to 21.00%) per annum.
The net book value of property and assets mortgaged to the banks amounted to $2,552,970,000 (2009:
$2,405,138,000). These are securities given to the banks for loans and overdraft facilities.
The fair values of term loans for the Group and Company are $4,100,179,000 (2009: $1,777,695,000) and $481,832,000
(2009: $nil) respectively. These fair values are computed on the discounted cash flow method using a discount rate
based upon the borrowing rate which the Group expect would be available as at the balance sheet date.
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
Group
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
527,257
2,548,711
600,000
289,111
556,253
73,046
- -
- -
500,000 -
3,675,968
918,410
500,000 -
188
Keppel Corporation Limited
Report to Shareholders 2010
20. Bank overdrafts
Secured
Unsecured
Group
2010
$’000
718
18 -
2009
$’000
1,668
736
1,668
Interest on the bank overdrafts is payable at the banks’ prevailing prime rates ranging from 5.50% to 6.66% (2009:
5.19%) 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
2010
$’000
2009
$’000
161,896
192,534
122,671
477,101
167,141
175,860
88,117
431,118
(13,821)
(4,207)
(18,028)
(13,498)
(5,823)
(19,321)
2010
$’000
- -
- -
4,934
4,934
- -
- -
- -
2009
$’000
5,377
5,377
Net deferred tax liabilities
459,073
411,797
4,934
5,377
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 $547,551,000 (2009: $722,190,000) 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
189
Notes to the Financial Statements
21. Deferred taxation (continued)
Movements in deferred tax liabilities and assets are as follows:
Charged/
Charged/
(credited)
to other
(credited) to comprehensive
income
profit or loss
$’000
$’000
At
1 January
$’000
Subsidiary Subsidiaries Reclassifi-
cation
disposed
$’000
$’000
acquired
$’000
At
Exchange
differences 31 December
$’000
$’000
167,141
3,885
175,860
16,917
88,117
431,118
36,955
57,757
(13,498)
(5,823)
(19,321)
(310)
1,244
934
-
-
688
688
-
-
-
-
(12,659)
3,600
(71)
161,896
-
-
-
-
-
-
-
382
(625)
192,534
-
(12,659)
(3,825)
157
736
40
122,671
477,101
-
-
-
-
-
-
(13)
372
359
(13,821)
(4,207)
(18,028)
411,797
58,691
688
-
(12,659)
157
399
459,073
159,029
(1,843)
212,017
(35,616)
-
-
9,765
-
78,951
449,997
14,497
(22,962)
14,309
14,309
-
9,765
(40,323)
(28,462)
(68,785)
(1,884)
22,889
21,005
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
190
167,141
(541)
175,860
(20,679)
(20,679)
1,039
688
88,117
431,118
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
5,377
(443)
5,608
(231)
-
-
-
-
-
-
-
-
-
-
4,934
5,377
Group
2010
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
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
Company
2010
Deferred tax Liabilities
Offshore income
2009
Deferred tax Liabilities
Offshore income
190
Keppel Corporation Limited
Report to Shareholders 2010
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 and share plans 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 and share plans granted
Depreciation of fixed assets
Write-off of fixed assets and investment properties
Amortisation of intangibles
(Profit)/loss on sale of fixed assets and investment properties
Profit on sale of investments
Fair value (gain)/loss on
- investments
- forward foreign exchange contracts
- forward HSFO contracts
notes to the Financial statements
Group
2010
$’000
5,931,575
1,480,738
192,705
2,165,992
6,182
5,730
2009
$’000
8,990,796
1,337,742
181,871
1,715,563
6,555
14,594
9,782,922
12,247,121
Group
2010
$’000
1,078,364
114,952
38,437
135,324
2009
$’000
1,093,522
96,026
23,682
159,175
1,367,077
1,372,405
Group
2010
$’000
1,409
3,764
964
410
2009
$’000
1,270
3,824
1,426
309
801
642
33,807
100
7,993
186,715
4,244
1,918
(4,949)
(11,795)
(8,028)
(14,813)
-
31,326
420
3,119
173,846
255
467
5,781
(24,967)
64,320
8,112
(3,053)
191
Notes to the Financial Statements
24. Operating profit (continued)
Provision for
- warranties
- claims
Provision/(write-back) for
- work-in-progress
- properties held for sale
- stocks
Provision 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 (recovered)/written down
Rental expense
- operating leases
Direct operating expenses
- investment properties that generated rental income
Loss/(gain) on differences in foreign exchange
Non-audit fees paid to
- auditors of the Company
- other auditors of subsidiaries
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 (loss)/gain on interest rate caps and swaps
Group
2010
$’000
11,213
14,989
1,597
3,128
379 -
4,055
-
1,554
(79)
80
993,343
(169)
2009
$’000
5,397
7,601
1,963
(13,237)
11,382
60
614
(159)
13
858,217
72,975
64,632
60,647
56,766
53,161
59,843
(5,166)
135
2,121
118
608
Group
2010
$’000
2,055
5,891
2009
$’000
1,694
3,407
7,946
5,101
111,350
73,676
(62,959)
(1,742)
(51,838)
2,163
(64,701)
(49,675)
192
Keppel Corporation Limited
Report to Shareholders 2010
26. Exceptional items
Gain on disposal of subsidiaries,
associated companies and investments *
Gain on acquisition of additional interest in subsidiaries
Impairment (loss)/write-back of:
- Fixed assets (Note 5)
- Associated companies (Note 8)
- Long term receivables (Note 10)
- Intangibles (Note 11)
- Other assets
Other assets written off:
- Costs associated with long term receivables
- Foreign exchange translation deficit
- Other assets
Loss provision for cost overruns and completion delays
Fair value gain/(loss) on investment properties (Note 6)
Share of associated companies ** (Note 8)
Cost associated with restructuring of operations and others
Taxation (Note 27)
Non-controlling interests
Group
2010
$’000
8,645
-
(27,772)
(1,544)
55,000
(314)
(12,556)
-
-
(9,984)
(186,775) -
64,719
775,821
(4,139)
661,101
(164,150)
496,951
(293,019)
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
Attributable exceptional items
203,932
360,506
*
**
In 2009, this represents substantially the gain on disposal of an associated company.
In 2010 and 2009, this represents substantially the Group’s share of fair value gain on investment properties of associated companies.
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
2010
$’000
2009
$’000
337,273
2,471
184,730
(2,533)
289,420
(2,621)
57,226
5,807
58,691
(1,957)
580,632
347,875
notes to the Financial statements
193
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% (2009: 17%)
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/(credit) of exceptional items (Note 26)
(b) Movement in current income tax liabilities
Group
2010
$’000
2009
$’000
2,026,338
1,855,576
344,477
(45,495)
95,189
(22,376)
-
42,216
2,471
164,150
315,448
(41,316)
109,862
(6,816)
(10,272)
7,650
(2,621)
(24,060)
580,632
347,875
At 1 January
Exchange differences
Tax expense
Adjustment for prior year’s tax
Income taxes paid
Subsidiary acquired
Subsidiaries disposed
Reclassification
Others
Group
Company
2010
$’000
450,951
(6,067)
337,273
2,471
(301,546)
415
(1,782)
2,924
60
2009
$’000
344,020
5,268
289,420
(2,621)
(172,200)
-
-
4,371
(17,307)
2010
$’000
27,169
- -
8,000
-
(9,022)
- -
- -
- -
-
2009
$’000
19,669
13,000
(935)
(5,334)
769
At 31 December
484,699
450,951
26,147
27,169
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
Group
2010
$’000
2009
$’000
Basic
Diluted
Basic
Diluted
1,419,052
1,419,052
1,264,611
1,264,611
-
1,419,052
203,932
(760)
1,418,292
203,932
-
1,264,611
360,506
-
1,264,611
360,506
Adjusted net profit after exceptional items
1,622,984
1,622,224
1,625,117
1,625,117
194
Keppel Corporation Limited
Report to Shareholders 2010
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
2010
number of shares
’000
2009
Number of Shares
’000
Basic
1,599,251
-
Diluted
1,599,251
11,017
Basic
Diluted
1,593,398
-
1,593,398
3,474
1,599,251
1,610,268
1,593,398
1,596,872
88.7 cts
101.5 cts
88.1 cts
100.7 cts
79.4 cts
102.0 cts
79.2 cts
101.8 cts
The Directors are pleased to recommend a final dividend of 26 cents per share tax exempt one-tier (2009: final dividend
of 23 cents per share tax exempt one-tier) in respect of the financial year ended 31 December 2010 for approval by
shareholders at the next Annual General Meeting to be convened.
Together with the interim dividend of 16 cents per share tax exempt one-tier (2009: 15 cents per share tax exempt one-
tier), total cash dividend paid and proposed in respect of the financial year ended 31 December 2010 will be 42 cents per
share tax exempt one-tier (2009: 61 cents per share tax exempt one-tier which included the special dividend in specie of
K-Green Trust units of 23 cents per share tax-exempt one-tier).
The Directors are also proposing a bonus issue to shareholders on the basis of one bonus share for every ten existing
ordinary shares in the capital of the Company. The proposed bonus issue is conditional upon certain approvals being
obtained as described in the announcement dated 25 January 2011.
During the financial year, the following dividends were paid:
A final dividend of 23 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the previous financial year
A special dividend in specie of K-Green Trust units of 23 cents per share
tax exempt one-tier in respect of the previous financial year
An interim dividend of 16 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the current financial year
$’000
368,021
366,882
256,103
991,006
30. Acquisition of subsidiary
The following was acquired during the financial year:
Subsidiary
Subic Shipyard and
Engineering, Inc
Date of
acquisition
Gross interest
before
acquisition
Interest
acquired
Gross interest
after
acquisition
Net assets
acquired
$’000
Consideration
$’000
29.9.2010
45.59%
41.60%
87.19%
72,798
83,358
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
195
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: Non-controlling shareholders’ shares
Group
2010
$’000
2009
$’000
102,718
413,760
571,943
322,986
91,214
857,985
152,072
181,316
99,304
1,521,113
(415,033)
3,625
140,305
92,276
1,508,391
(548,047)
1,106,080
960,344
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
2010
$’000
2009
$’000
55,484
194,599
629,552
55,100
198,259
707,541
879,635
960,900
2010
$’000
322
119
- -
441
2009
$’000
252
192
444
(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
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
173,405
271,723
150,676
152,049
148,775
65,825
595,804
366,649
- -
- -
- -
- -
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.
196
Keppel Corporation Limited
Report to Shareholders 2010
32. Contingent liabilities (unsecured)
Guarantees in respect of banks and other loans
granted to subsidiaries and associated companies
154,618
24,656
477,213
686,376
Group
Company
2010
$’000
2009
$’000
2010
$’000
2009
$’000
Bank guarantees
Others
61,198
57,521
53,885
54,055
- -
- -
269,701
136,232
477,213
686,376
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.
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
2010
$’000
1,119
2009
$’000
6,540
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.
As at the end of the financial year, the Group has outstanding forward foreign exchange contracts with notional
amounts totalling $3,666,123,000 (2009: $4,080,268,000). The net positive fair value of forward foreign exchange
contracts is $68,794,000 (2009: $66,455,000) comprising assets of $97,480,000 (2009: $106,000,000) and
liabilities of $28,686,000 (2009: $39,545,000). These amounts are recognised as derivative financial instruments in
debtors (Note 14) and creditors (Note 17).
notes to the Financial statements
197
Notes to the Financial Statements
34. Financial risk management (continued)
As at the end of the financial year, the Company has outstanding forward foreign exchange contracts with notional
amounts totalling $3,476,028,000 (2009: $4,009,822,000). The net positive fair value of forward foreign exchange
contracts is $54,278,000 (2009: $65,331,000) comprising assets of $81,228,000 (2009: $102,502,000) and
liabilities of $26,950,000 (2009: $37,171,000). 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
107,696
138,338
68,980
54,269
58,029
1,365
-
-
2010
euro
$’000
1,063
-
2,429
1,208
-
others
$’000
USD
$’000
2009
Euro
$’000
Others
$’000
49,587
255,355
79,061
106,702
31,434
80,877
837
-
30,269
46,451
154,103
118,161
59,209
27,052
46,695
-
7,031
-
85,817
14,464
-
-
-
228
1,815
95
-
501
-
-
7,622
181
25,097
-
118
Sensitivity analysis for currency risk
If the relevant foreign currency change against SGD by 5% (2009: 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
2010
$’000
2009
$’000
2010
$’000
2009
$’000
3,243
(3,243)
114
(114)
69
(69)
-
-
7,045
(7,045)
1,205
(1,205)
25
(25)
382
(382)
6,970
(6,970)
1,571
(1,571)
- -
- -
- -
- -
- -
- -
198
Keppel Corporation Limited
Report to Shareholders 2010
(ii)
Interest rate risk
The Group is exposed to interest rate risk for changes in interest rates primarily for debt obligations, placements in
the money market and investments in bonds. The Group policy is to maintain a mix of fixed and variable rate debt
instruments with varying maturities. Where necessary, the Group uses derivative financial instruments to hedge
interest rate risks.
The Group purchases interest rate caps to hedge the interest rate risk exposure arising from its US$ 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
2010
2009
Notional amount
$45,758,000
$48,579,000
Maturity
2011
2011
Interest rate caps
3%
3%
The positive fair values of interest rate caps for the Group are $nil (2009: $78,000). This amount is recognised as
derivative financial instruments in debtors (Note 14).
The Group enters into interest rate swap agreements to hedge the interest rate risk exposure arising from its S$
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 $929,075,000 (2009: $366,765,000) whereby it receives variable rates equal to
SIBOR (2009: SIBOR) and pays fixed rates of between 1.43% and 3.62% (2009: 2.55% and 4.42%) on the notional
amount.
The net negative fair value of interest rate swaps for the Group is $19,807,000 (2009: $15,564,000) comprising
assets of $3,217,000 (2009: $2,340,000) and liabilities of $23,024,000 (2009: $17,904,000). 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% (2009: 0.5%) with all other variables held constant, the Group’s profit
before tax would have been lower/higher by $5,040,000 (2009: $3,545,000) 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 $93,331,000 (2009: $73,529,000). The net
positive fair value of HSFO forward contracts for the Group is $5,781,000 (2009: $9,073,000) comprising assets
of $5,791,000 (2009: $9,488,000) and liabilities of $10,000 (2009: $415,000). 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.
notes to the Financial statements
199
Notes to the Financial Statements
34. Financial risk management (continued)
Sensitivity analysis for price risk
If prices for HSFO increase/decrease by 5% (2009: 5%) with all other variables held constant, the Group’s hedging
reserve in equity would have been higher/lower by $4,956,000 (2009: $4,130,000) as a result of fair value changes
on cash flow hedges.
If prices for quoted investments increase/decrease by 5% (2009: 5%) with all other variables held constant, the
Group’s profit before tax would have been higher/lower by $3,544,000 (2009: $3,017,000) as a result of higher/
lower fair value gains on investments held for trading, and the Group’s fair value reserve in other comprehensive
income would have been higher/lower by $29,555,000 (2009: $20,925,000) as a result of higher/lower fair value
gains on available-for-sale investments.
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
2010
$’000
96,298
30,152
82,611
2009
$’000
254,892
149,638
122,779
209,061
527,309
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.
200
Keppel Corporation Limited
Report to Shareholders 2010
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.
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
2010
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
2009
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
Company
2010
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
2009
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Within
one year
$’000
Within
one to
two years
$’000
Within
two to
five years
$’000
2,791,408
(2,704,945)
830,045
(804,220)
171,831
(172,359)
5,335
(10)
448
-
8
-
3,789,510
(3,730,427)
367,391
(359,079)
3,439
(3,206)
9,292
(415)
160
-
37
-
2,593,056
(2,546,137)
781,779
(773,457)
171,831
(172,359)
3,737,912
(3,679,578)
353,197
(344,527)
1,448
(1,469)
notes to the Financial statements
201
Notes to the Financial Statements
34. Financial risk management (continued)
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 2009.
The Group and the Company are in compliance with externally imposed capital requirements for the financial year ended
31 December 2010.
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
Group
2010
$’000
2009
$’000
177,522
1,176,592
9,723,883
8,712,573
0.02x
0.14x
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.
Group
2010
Assets
Derivative financial instruments
Investments
- Available-for-sale investments
Short term investments
- Available-for-sale investments
- Investments held for trading
Liabilities
Derivative financial instruments
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
106,488
-
106,488
126,343
-
173,553
299,896
412,438
70,888
52,323
-
1,223
-
465,984
70,888
609,669
158,811
174,776
943,256
-
51,720
-
51,720
202
Keppel Corporation Limited
Report to Shareholders 2010
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
2010
Assets
Derivative financial instruments
Liabilities
Derivative financial instruments
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
-
-
-
-
81,228
26,950
102,502
37,171
-
-
-
-
81,228
26,950
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 profit and loss account
Fair value loss recognised in equity
Subsidiary acquired
Transfer from Level 2
Reclassification
Exchange differences
At 31 December
2010
$’000
124,338
77,123
(57,124)
417 -
(3,795)
185 -
6,683 -
28,347
(1,398)
2009
$’000
105,588
23,730
(596)
(2,938)
1,343
(2,789)
174,776
124,338
During the financial year ended 31 December 2010, the Group transferred investments from Level 2 to Level 3 of the fair
value hierarchy as the inputs to the valuation models for investments ceased to be observable.
notes to the Financial statements
203
Notes to the Financial Statements
35. Segment analysis
Offshore & Marine
$’000
Infrastructure
$’000
Property
$’000
Investments
$’000
Elimination
$’000
Total
$’000
2010
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
Non-controlling interests
other information
Segment assets
Segment liabilities
Net assets
Investment in associated
companies
Additions to non-current assets
Depreciation and amortisation
Geographical information
5,577,010
-
5,577,010
2,510,113
111,958
2,622,071
1,684,786
2,537
1,687,323
11,013
63,541
74,554
-
(178,036)
(178,036)
9,782,922
-
9,782,922
1,119,047
2,441
74,888
(4,787)
75,027
-
4,037
(23,306)
553,157
5,425
36,765
(71,860)
12,316
80
86,339
(58,480)
(3,053)
-
(90,679)
93,732
1,756,494
7,946
111,350
(64,701)
50,061
37,197
101,995
25,996
1,241,650
(31,743)
1,209,907
(242,119)
967,788
92,955
(136,932)
(43,977)
(26,978)
(70,955)
625,482
844,176
1,469,658
(301,035)
1,168,623
66,251
(14,400)
51,851
(10,500)
41,351
987,202
(24,762)
962,440
5,348
967,788
56,627
(135,998)
(79,371)
8,416
(70,955)
325,957
379,092
705,049
463,574
1,168,623
49,266
(14,400)
34,866
6,485
41,351
-
-
-
-
-
-
-
-
-
-
-
215,249
2,026,338
661,101
2,687,439
(580,632)
2,106,807
1,419,052
203,932
1,622,984
483,823
2,106,807
6,211,833
4,350,655
1,861,178
2,886,615 12,532,848
7,133,845
1,974,392
5,399,003
912,223
5,998,926
4,447,447
1,551,479
(6,648,748) 20,981,474
(6,648,748) 11,257,591
9,723,883
-
171,501
244,138
133,189
499,445
421,006
44,824
2,704,497
887,326
10,194
231,280
13,299
426
-
-
-
3,606,723
1,565,769
188,633
External sales
Non-current assets
Singapore
$’000
7,088,728
7,155,063
Far East &
other ASEAN
countries
$’000
1,045,200
1,300,191
America
$’000
1,117,208
161,592
Other
countries
$’000
531,786
548,242
Elimination
$’000
Total
$’000
-
-
9,782,922
9,165,088
Information about a major customer
Revenue of $1,308,330,000 is derived from a single external customer and is attributable to Offshore & Marine division for
the financial year ended 31 December 2010.
204
Keppel Corporation Limited
Report to Shareholders 2010
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
Non-controlling interests
other information
Segment assets
Segment liabilities
Net assets
Investment in associated
companies
Additions to non-current assets
Depreciation and amortisation
Geographical information
Offshore & Marine
$’000
Infrastructure
$’000
Property
$’000
Investments
$’000
Elimination
$’000
Total
$’000
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
Singapore
$’000
8,489,626
6,708,057
Far East &
other ASEAN
countries
$’000
1,494,261
1,068,854
America
$’000
1,713,466
170,310
Other
countries
$’000
549,768
74,485
Elimination
$’000
Total
$’000
- 12,247,121
8,021,706
-
Information about a major customer
No single external customer accounted for 10% or more of the Group’s revenue for the financial year ended
31 December 2009.
notes to the Financial statements
205
Notes to the Financial Statements
35. Segment analysis (continued)
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 M1 Limited.
(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:
FRS 24 (Revised)
Amendments to FRS 32
Amendments to INT FRS 114
INT FRS 115
INT FRS 119
Related Party Disclosures
Financial Instruments: Presentation
– Amendments relating to Classification of Rights Issues
Prepayments of a Minimum Funding Requirement
Agreements for Construction of Real Estate
Extinguishing Financial Liabilities with Equity Instruments
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 except for the following:
INT FRS 115 Agreements for Construction of Real Estate
INT FRS 115 is effective for annual periods beginning on or after 1 January 2011. The Interpretation addresses
how entities should determine whether an agreement for the construction of real estate is within the scope of FRS
11 Construction Contracts or FRS 18 Revenue and when revenue from the construction of real estate should be
recognised. In the period of initial adoption of the Interpretation, the method of recognising revenue among real
estate developers for sales of units before construction is complete, may change.
The Interpretation is issued with an Accompanying Note that explains the application of the Interpretation to
property development sales in Singapore by considering the Singapore legal framework.
When the Group applies INT FRS 115 in 2011 retrospectively, the 2010 comparatives for revenue and net profit are
expected to decrease by approximately $38,805,000 and $7,933,000 respectively. The properties held for sale as
at 31 December 2010 is also expected to decrease by approximately $192,237,000.
(b) RAP 11 Pre-Completion Contracts for the Sale of Development Property
RAP 11 is still applicable in Singapore as INT FRS 115 shall be effective from 1 January 2011 only. 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.
206
Keppel Corporation Limited
Report to Shareholders 2010
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 in revenue recognised for the year
Decrease in profit for the year
Increase in carrying value of property held for sale
Balance as at 1 January
Balance as at 31 December
Increase/(decrease) in non-controlling interests
Balance as at 1 January
Share of profit for the year
2010
$’000
2009
$’000
(265,157)
(186,558)
(786,666)
(82,514)
(99,194)
(78,599)
390,350
894,351
28,686
390,350
(171,214)
18,957
(195,582)
24,368
37. Significant subsidiaries and associated companies
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.
notes to the Financial statements
207
Significant Subsidiaries and Associated Companies
Gross
Interest
2010
%
Effective Equity
Interest
2010
%
2009
%
Cost of Investment
2010
$’000
2009
$’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)
Deepwater Technology Group
Pte Ltd
75
45
45
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
Hygrove Investments Ltd(4)
100
100
100
Keppel AmFELS, LLC(3)
(formerly known as
Keppel AmFELS Inc)
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
#
Brazil
Holding of long-term investments
and provision of procurement
services
Procurement of equipment and
materials for the construction of
offshore production facilities
#
Singapore
Project management, engineering
and procurement
BVI/HK
Investment holding
#
#
USA
Construction and repair of offshore
drilling rigs and offshore production
facilities
Marine and offshore engineering
services
Engineering, construction and
fabrication of platforms for the oil
and gas industry
Marine and offshore engineering
services
#
Bulgaria
#
Brazil
#
India
208
Keppel Corporation Limited
Report to Shareholders 2010
Gross
Interest
2010
%
Effective Equity
Interest
2010
%
2009
%
Cost of Investment
2010
$’000
2009
$’000
Country of
Incorporation
/Operation
Principal Activities
Keppel Norway A/S(1a)
100
100
100
Keppel Offshore & Marine USA
Inc(3)
Keppel Offshore & Marine
Technology Centre Pte Ltd
100
100
100
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
Seafox 5 Ltd(n)
75
75
Topaz Atlantic Unlimited(n)(4)
100
100
-
-
Wideluck Enterprises Ltd (4)
100
100
100
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
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# Norway
Construction and repair of offshore
drilling rigs and offshore production
facilities
#
USA
Offshore and marine-related services
#
Singapore
Research & development on marine
and offshore engineering
# Netherlands Construction and repair of offshore
drilling rigs and shiprepairs
# Netherlands Holding of long-term investments
# 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
#
Isle of Man
Owning and leasing of offshore rigs
and equipment
-
#
#
BVI
BVI
Holding of long-term investments
Holding of long-term investments
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
Engineering and construction of
specialised vessels
significant subsidiaries and Associated Companies
209
Significant Subsidiaries and Associated Companies
Gross
Interest
2010
%
Effective Equity
Interest
2010
%
2009
%
Cost of Investment
2010
$’000
2009
$’000
Country of
Incorporation
/Operation
Principal Activities
Keppel Singmarine Pte Ltd
100
100
100
Keppel Singmarine Brasil
Ltda(n)(1a)
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
100
100
100
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Shipbuilding and repairing
Brazil
Shipbuilding
Singapore
Provision of towage services
Singapore
Holding of long-term investments
BVI/Norway Holding of long-term investments
Singapore
Provision of towage services
Singapore
Provision of technical consultancy
for ship design and engineering works
Marine Technology Development
Pte Ltd
Subic Shipyard & Engineering
Inc(1a)
Associated Companies
Arab Heavy Industries Public
Joint Stock Company(3)
87+
84+
44+
3,020
3,020
Philippines
Shipbuilding and repairing
33
33
33
#
#
UAE
Shipbuilding and repairing
Consort Land Inc(1a)
49+
39+
32+
55
54
Philippines
Land holding company and power
distributor
Chartering tugs and other marine
services
# Malaysia
# Qatar
Shiprepairing
Kejora Resources Sdn Bhd(3)
49
25
25
Nakilat-Keppel Offshore &
Marine Ltd(3)
20
20
20
#
#
INFRASTRUCTURE
Power Generation
subsidiaries
Keppel Energy Pte Ltd
100
100
100 330,914 330,914
Singapore
Investment holding
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
#
#
#
#
#
#
#
#
#
#
#
#
#
#
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
210
Keppel Corporation Limited
Report to Shareholders 2010
Gross
Interest
2010
%
Effective Equity
Interest
2010
%
2009
%
Cost of Investment
2010
$’000
2009
$’000
Country of
Incorporation
/Operation
Principal Activities
environmental engineering
subsidiaries
Keppel Integrated Engineering Ltd
100
100
100 540,290 272,554
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
Brixworth Group Ltd(4)
100
100
100
FELS Cranes Pte Ltd
100
100
100
Keppel DHCS Pte Ltd
100
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
#
#
#
#
#
#
#
#
BVI/Qatar
Trading in industrial goods
Singapore
Fabrication of heavy cranes and
provision of marine-related equipment
#
Singapore
#
Singapore
Development of district cooling
system for the purpose of air cooling
and other utility services
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 UK Ltd(1a)
100
100
100
Keppel Seghers Holdings Pte Ltd
100
100
100
Keppel Seghers Hong Kong
Ltd(1a)
100
100
100
Associated Companies
GE Keppel Energy Services
Pte Ltd(2)
K-Green Trust
Tianjin Eco-City Energy
Investment & Construction
Co Ltd(3)
50
50
50
49
20
49
20
100
20
Tianjin Eco-City Environmental
Protection Co Ltd(3)
20
20
20
#
#
#
#
#
#
#
#
United
Kingdom
Design, supply and installation of
Flue Gas treatment equipment
#
Singapore
Investment holding
# HK
Engineering contracting and
investment holding
#
Singapore
Precision engineering, repair,
services and agencies
#
Singapore
Infrastructure business trust
# China
# China
Investment and implementation
of energy and utilities related
infrastructure
Investment, construction and
operation of infrastructure for
environmental protection
significant subsidiaries and Associated Companies
211
Significant Subsidiaries and Associated Companies
Gross
Interest
2010
%
Effective Equity
Interest
2010
%
2009
%
Cost of Investment
2010
$’000
2009
$’000
Country of
Incorporation
/Operation
Principal Activities
80
80
80 397,647 397,647
Singapore
Investment, management and
holding company
network & Logistics
subsidiaries
Keppel Telecommunications &
Transportation Ltd(2)
Keppel Data Centres Pte Ltd(2)
(formerly known as DataOne
Asia Pte Ltd)
ECHO Broadband Gmbh(2a)
Keppel Communications
Pte Ltd(2)
100
80
80
100
100
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)
Asia Airfreight Terminal
Company Ltd(3)
45
36
36
10
8
8
Citadel 100 Datacenters Ltd(3)
50
40
40
Computer Generated Solutions
Inc(3)
Radiance Communications
Pte Ltd(2)
21
17
17
50
40
40
SVOA Public Company Ltd(2a)
32
26
26
Trisilco Folec Sdn Bhd(2a)
30
24
24
Trisilco Radiance Communications
Sdn Bhd(2a)
40
32
32
Wuhu Annto Logistics Company
Ltd(3)
35
28
28
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
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
#
Ireland
#
USA
#
Singapore
#
Thailand
# Malaysia
# Malaysia
# China
Operation of air cargo handling
terminal
Provision of data centre facilities and
co-location services
IT consulting and outsourcing
provider
Distribution and maintenance of
communications equipment and
systems
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
Transportation, warehousing and
distribution
212
Keppel Corporation Limited
Report to Shareholders 2010
Gross
Interest
2010
%
Effective Equity
Interest
2010
%
2009
%
Cost of Investment
2010
$’000
2009
$’000
Country of
Incorporation
/Operation
Principal Activities
PROPERTY
subsidiaries
Keppel Land Ltd(2)
52
52
52 1,390,051 1,330,220
Singapore
Holding, management and investment
company
K-REIT Asia(2)
76
54
54
Keppel Bay Pte Ltd
100+
86+
86+
79+
55+
55+
Keppel Philippines Properties
Inc(2a)
Acresvale Investment Pte Ltd(2)
Aintree Assets Ltd(4)
100
100
Alpha Investment Partners Ltd(2)
100
Avenue Park Development(2)
Bayfront Development Pte Ltd(2)
Beijing Kingsley Property
Development Co Ltd(3)
52
100
100
Bintan Bay Resort Pte Ltd(2)
90
Boulevard Development Pte Ltd(2)
100
Changzhou Fushi Housing
Development Pte Ltd(3)
100
52
52
52
27
52
52
47
52
52
52
52
52
27
52
52
47
52
52
Chengdu Hillwest Development
Co Ltd(3)
100
52
52
Da Di Investment Pte Ltd(2)
Devonshire Development
Pte Ltd(2)
DL Properties Ltd(2)
Double Peak Holdings Ltd(4)
Dovesdale Development
Pte Ltd(2)
Estella JV Co Ltd(2a)
Evergro Properties Ltd(2)
Hillwest Pte Ltd(2)
International Centre(1a)
Jiangyin Evergro Properties
Co Ltd(3)
KeplandeHub Ltd(2)
Keppel Al Numu Development
Ltd(2a)
100
60
65
100
52
31
34
52
52
31
34
52
100
52
52
55
100
100
79
99
100
51
29
52
52
58
52
52
27
29
52
52
53
43
52
27
#
626
493
#
Singapore
Real estate investment trust
626
Singapore
Property development
493
Philippines
Investment holding
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Property development and investment
BVI/Asia
Investment holding
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
Singapore
Investment holding
Vietnam
Property investment
# China
Property development
#
#
Singapore
Investment holding
Singapore/
Saudi Arabia
Property development
significant subsidiaries and Associated Companies
213
Significant Subsidiaries and Associated Companies
Gross
Interest
2010
%
Effective Equity
Interest
2010
%
2009
%
80
42
-
100
52
52
Keppel Bay Property
Development (Shenyang)
Co Ltd(n)(2a)
Keppel China Township
Development Pte Ltd(2)
Keppel Hong Da (Tianjin Eco-City)
Property Development Co Ltd(3)
100
74
74
Keppel Land China Pte Limited
Keppel Land (Mayfair) Pte Ltd(2)
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 Tianjin Eco-City
Investment Pte Ltd(2)
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)
Mansfield Developments Pte Ltd(2)
100
Merryfield Investment Pte Ltd(2)
Ocean & Capital Properties
Pte Ltd(2)
Ocean Properties Pte Ltd(2)
OIL (Asia) Pte Ltd(2)
100
100
88
100
100
100
100
100
100
100
100
100
68
51
52
52
52
52
52
52
52
52
35
27
52
52
52
52
52
52
52
52
35
27
45
23
23
100
52
52
100
52
52
100
100
100
52
52
52
52
52
52
46
52
52
52
52
52
52
52
40
52
Country of
Incorporation
/Operation
Principal Activities
Cost of Investment
2010
$’000
2009
$’000
#
#
#
#
#
#
#
#
#
#
#
#
#
#
- China
Property development
#
Singapore
Investment holding
# China
Property development
#
#
Singapore
Investment holding
Singapore
Property development and investment
# 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
Investment holding
Singapore
Investment holding
Singapore
Property and investment holding
Singapore
Property investment
Singapore
Investment holding
100
74
74
41,010
-
Singapore
Investment holding
214
Keppel Corporation Limited
Report to Shareholders 2010
Gross
Interest
2010
%
100
Effective Equity
Interest
2010
%
52
2009
%
52
Cost of Investment
2010
$’000
#
2009
$’000
#
Country of
Incorporation
/Operation
BVI/
Singapore
Principal Activities
Investment holding
100
51
51
100
80
80
100
70
60
75
100
90
100
99
52
27
27
24
42
42
20
36
31
39
52
47
47
51
52
27
27
24
42
42
20
34
31
39
52
47
47
51
100
52
52
99
51
51
99
51
51
99
51
51
100
52
52
100
100
100
100
55
100
52
52
52
52
29
52
52
52
52
52
29
52
100
52
52
100
52
52
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Indonesia
Property investment and development
Indonesia
Property development and investment
Indonesia
Property development and investment
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
Vietnam
Property development
Vietnam
Property development
# China
Property development
# China
Property development
# China
Property development
# China
Property development
# China
Property development
#
Singapore
Property development
#
Singapore
Investment holding
# Myanmar
Hotel ownership and operations
#
#
Singapore
Property development and investment
Singapore
Investment holding
#
BVI/China
Investment holding
# China
Development of marina lifestyle cum
residential properties
#
Singapore
Property development
#
Singapore
Investment holding and marketing
agent
Pembury Properties Ltd(4)
PT Kepland Investama(1a)
PT Mitra Sindo Makmur(1a)
PT Mitra Sindo Sukses(1a)
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 Cove JV LLC(2a)
Riviera Point LLC(2)
Saigon Centre Holdings
Pte Ltd(2)
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)
Success View Enterprises Ltd(4)
Sunsea Yacht Club (Zhongshan)
Co Ltd(3)
Tat Chuan Development
(Pte) Ltd(2)
Third Dragon Development
Pte Ltd(2)
significant subsidiaries and Associated Companies
215
Significant Subsidiaries and Associated Companies
Gross
Interest
2010
%
Effective Equity
Interest
2010
%
2009
%
100
52
52
100
52
52
Tianjin Fushi Property Devt
Co Ltd(3)
Tianjin Merryfield Property
Development Co Ltd(3)
Wiseland Investment Myanmar
Ltd(3)
100
52
52
Country of
Incorporation
/Operation
Principal Activities
Cost of Investment
2010
$’000
2009
$’000
#
#
#
# China
Property development
# China
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
98+
90+
90+
Petro Tower Ltd(3)
Alpha Real Estate Securities Fund
76
98
68
98
68
98
#
48
#
#
#
7
#
#
Singapore
Under liquidation
Singapore
Investment holding
Vietnam
Property investment
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+
83+ 40,948
14,510
Singapore
Investment holding
Keppel (USA) Inc(4)
100
100
100
7,117
7,117
USA
Investment holding
Keppel Houston Group LLC(4)
100
86
86
Keppel Kunming Resort Ltd(3)
100
100
100
#
4
#
USA
4 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
90
75
83
Substantial Enterprises Ltd(4)
100+
83+
83+
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)
10
50
33
-
33
5
26
18
-
17
5
26
17
16
17
50
26
26
50
26
26
50
25
26
13
26
13
#
#
#
#
#
-
#
#
#
#
#
#
Singapore
Investment holding
#
BVI/China
Investment holding
# Guernsey
Property investment
#
Singapore
Fund management
#
#
#
Singapore
Property development
Singapore
Liquidated
Singapore
Property development
# China
Property development
#
Singapore
Investment holding
#
#
Vietnam
Property development
Singapore
Property management
216
Keppel Corporation Limited
Report to Shareholders 2010
Gross
Interest
2010
%
Effective Equity
Interest
2010
%
2009
%
Cost of Investment
2010
$’000
2009
$’000
39
39
38
50
33
50
50
25
25
20
40
25
50
33
33
20
26
18
26
26
13
13
10
21
13
37
33
33
20
26
17
26
26
13
13
10
21
13
42
Harbourfront Three Pte Ltd(3)
Harbourfront Two Pte Ltd(3)
Keppel Magus Development
Pvt Ltd(3)
Kingsdale Development Pte Ltd(2)
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(1a)
INVESTMENTS
subsidiaries
Keppel Philippines Holdings
Inc(2a)
54+
54+
54+
China Canton Investments Ltd
75
75
75
#
#
#
#
#
#
#
#
#
#
#
#
#
-
#
Country of
Incorporation
/Operation
Principal Activities
Singapore
Property development
Singapore
Property development
India
Property development
Singapore
Investment holding
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
Kepmount Shipping (Pte) Ltd
-
-
100
Keppel Investment Ltd
100
100
100
#
-
#
# HK
Investment company
4,000
Singapore
Strike-off
#
Singapore
Investment company
Keppel Oil & Gas Services
Pte Ltd
-
-
100
- 116,609
Singapore
Strike-off
Kepventure Pte Ltd
100
100
100
48,526
30,650
Singapore
Investment holding
KI Investments (HK) Ltd(3)
100
100
100
KV Management Pte Ltd
100
100
100
Travelmore Pte Ltd
The Vietnam Investment Fund
(Singapore) Ltd
100
100
100
100
100
56
#
250
265
#
# HK
Investment company
250
Singapore
Fund management
265
Singapore
Travel agency
#
Singapore
Venture capital fund
significant subsidiaries and Associated Companies
217
Significant Subsidiaries and Associated Companies
Gross
Interest
2010
%
Effective Equity
Interest
2010
%
2009
%
Cost of Investment
2010
$’000
2009
$’000
Country of
Incorporation
/Operation
Principal Activities
36
20
36
16
36
16
#
#
#
#
Singapore
Investment holding
Singapore
Telecommunications services
3,957,409 3,662,066
55
3,074
Associated Companies
k1 Ventures Ltd
M1 Limited(2)
(formerly known as
MobileOne Ltd)
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 220 significant subsidiaries and associated companies as at 31 December 2010. 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.
218
Keppel Corporation Limited
Report to Shareholders 2010
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
Certis CISCO Security Pte Ltd
Gas Supply Pte Ltd
Mount Faber Leisure Group
SembCorp Industries Group
SembCorp Marine Group
Singapore Airlines Group
Singapore Airport Terminal Services Group
transaction for the Purchase of Goods and services
Gas Supply Pte Ltd
Mapletree Investments Pte Ltd
SembCorp Industries Group
Divestment transaction
Singbridge International Singapore Pte Ltd
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)
2010
$’000
2009
$’000
2010
$’000
2009
$’000
-
-
-
-
-
-
-
-
-
-
10,582
10,582
-
-
-
-
-
-
-
-
-
-
-
-
25,420
142
482
2,179
10,500
28,500
570
2,500
2,400 -
19,300
-
-
1,988
14,500
21,000 -
40,000
668
-
- -
99,856
70,293
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.
Interested Person transactions
219
Directors and Key Executives
Lee Boon Yang, 63
Chairman and Independent Director
B.V.Sc Hon (2A), University of Queensland, 1971.
Chairman of Keppel Corporation Limited with effect from 1 July 2009 (Director since 2009; date of last re-election: 23 April 2010).
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, 64
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: 23 April 2010), he is an independent
and non-executive Director. Mr Lim is also 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 Chairman of Gallant Ventures
Ltd, the National Council Against Problem Gambling and Ascendas Pte Ltd. Mr Lim also sits on the board of Indofood Agri
Resources 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.
220
Keppel Corporation Limited
Report to Shareholders 2010
Choo Chiau Beng, 63
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 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 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 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, 75
Independent Director
Master of Science, Swiss Federal Institute of Technology (ETH), Zurich.
Appointed to the Board in 2000 (date of last re-election: 23 April 2010). An independent and non-executive Director, he is
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 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).
Directors and Key executives
221
Directors and Key Executives
Tony Chew Leong-Chee, 64
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 is
Chairman of the Nominating Committee and a member of the Audit Committee.
Mr Chew is Executive Chairman of Asia Resource Corporation and Chairman of KFC Vietnam. He also serves on the boards of
Macondray Corporation, Air Alliance 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, Advisor to the Singapore Institute of
International Affairs, and served on the Economic Strategies Committee. He is a Public Service Award recipient.
Oon Kum Loon, 60
Independent Director
Bachelor of Business Administration (Honours) from the University of Singapore.
Appointed to the Board in 2004 (date of last re-election: 23 April 2010). An independent and non-executive Director, she is
Chairperson of the Board Risk Committee and a member of the Audit 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 China Resources Microelectronics Limited, Keppel Land Limited, Singapore Power Ltd and
Aviva Ltd.
Tow Heng Tan, 55
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.
222
Keppel Corporation Limited
Report to Shareholders 2010
Alvin Yeo Khirn Hai, 49
Independent Director
LLB Honours, King’s College London, University of London.
Appointed to the Board in 2009 (date of last re-election: 23 April 2010), Mr Alvin Yeo is an independent and non-executive
Director. He is a member of the Audit and Board Risk Committees.
Mr 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 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, Tuas Power Generation Pte Ltd and Thomas Medical Centre 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.
Tan Ek Kia, 63
Independent Director
BSc Mechanical Engineering (First Class Hons), Nottingham University, United Kingdom; Management Development
Programme, International Institute for Management Development, Lusanne, Switzerland; Fellow of the Institute of Engineers,
Malaysia; Professional Engineer, Board of Engineers, Malaysia; Chartered Engineer of Engineering Council, United Kingdom and
Member of Institute of Mechanical Engineer, United Kingdom.
Appointed to the Board on 1 October 2010, Mr Tan is an independent and non-executive Director. He is also a member of the
Nominating and Board Safety Committees.
Mr Tan is a seasoned executive in the oil and gas and petrochemicals business, with more than 30 years of experience in
design, engineering and construction, project management, health, safety and environment, production, logistics, procurement
and drilling operations management, business management and development, joint venture management and governance, and
organisation change/transformation. He has worked in different countries and cultures.
Prior to his retirement as the Vice President (Ventures and Developments) of Shell Chemicals, Asia Pacific and Middle East
region (based in Singapore) in September 2006, he held senior positions in Shell including Managing Director (Exploration and
Production) of Shell Malaysia, Chairman of Shell North East Asia and Managing Director of Shell Nanhai Ltd (both based in
Beijing, China).
His other directorships include PT Chandra Asli Petrochemical Tbk, SMRT Corporation Ltd, CitiSpring Infrastructure
Management Pte Ltd,, Keppel Offshore & Marine Ltd and Dialog Systems (Asia) Pte Ltd. Mr Tan is also Chairman of City Gas
Pte Ltd, a wholly owned subsidiary of CitySpring.
Directors and Key executives
223
Directors and Key Executives
Danny Teoh, 56
Independent Director
Member of the Institute of Chartered Accountants in England & Wales.
Appointed to the Board on 1 October 2010, Mr Teoh is an independent and non-executive Director. He is also a member of the
Audit and Remuneration Committees.
Mr Teoh spent 27 years in KPMG LLP, Singapore and over the years, held various senior positions including member of
KPMG’s International Board and Council, Head of Audit and Risk Advisory Services and Head of Financial Services. He was the
Managing Partner of KPMG LLP, Singapore from 2005 until his retirement in September 2010.
His other directorships include DBS Group Holdings Ltd, DBS Bank Ltd, Changi Airport Group (Singapore) Pte Ltd and JTC.
He chairs the Audit Committee and is a member of the Board Risk Management Committee of DBS Group Holdings Ltd.
Teo Soon Hoe, 61
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 Chairman of Keppel Telecommunications & Transportation Ltd, M1 Limited 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, Keppel Infrastructure Fund Management Pte Ltd (the Trustee-Manager of K-Green Trust), Keppel Energy Pte Ltd,
Singapore Tianjin Eco-City Investment Holdings Pte. 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, 64
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 in 2009 (date of last re-election: 23 April 2010). He is an Executive Director.
Mr Tong is the Chief Executive Officer of Keppel Offshore & Marine, Keppel FELS and Keppel Shipyard. He is also Chairman of
Keppel Integrated Engineering Limited.
He served for 28 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 was awarded the Medal of Commendation
(Gold) Award at NTUC May Day 2010. He is appointed a member of Board of Institute of Technical Education (ITE) Governors
with effect from 1 April 2010. He is a member of the NTUC-U Care Fund Board of Trustees and DNV Southeast Asia Offshore
Committee. Mr Tong is also appointed a member of the Singapore Maritime Institute Governing Council on 1 January 2011.
He had served as Vice President/President of Association of Singapore Marine Industries (1993-1996). He is a member of
Society of Naval Architects and Marine Engineers (USA), American Bureau of Shipping and Nippon Kaiji Kyokai (Class NK).
He is a Fellow of The Royal Institute of Naval Architects (RINA) UK as well as Fellow of Institute of Marine Engineering, Science
& Technology, member of Singapore Institute of Directors and Fellow of the Society of Project Managers.
224
Keppel Corporation Limited
Report to Shareholders 2010
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, 55
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, 52
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., Keppel Integrated Engineering Ltd and Keppel DHCS Pte Ltd.
Michael Chia Hock Chye, 58
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 Director (Group Strategy & Development) of Keppel Corporation and 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 Deputy Chairman 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
225
Directors and Key Executives
Michael Chia Hock Chye, 58 (continued)
His directorships include FELS Cranes Pte Ltd, Keppel FELS Brasil SA (Brazil), Keppel Amfels Inc (USA), Keppel FELS Ltd,
Deepwater Technology Group Pte Ltd, Willalpha Ltd, Bintan Offshore Fabricators Pte Ltd, Keppel FELS Engineering
Shenzhen Co Ltd, 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 Ventus
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., 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., Keppel Seghers Gmbh, Keppel Seghers Tuas
Waste-to-Energy Plant Pte Ltd and Tianjin Eco-City Keppel New Energy Development Company Ltd.
Yeo Chien Sheng Nelson, 54
Bachelor of Science in Mechanical Engineering (First Class Honours), 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 Chairman of Keppel Philippines Marine Inc., Subic Shipyard and Engineering, Inc., Keppel Batangas Shipyard,
Inc., Keppel Smit Towage Pte Ltd, Maju Maritime Pte Ltd and Keppel Singmarine 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 and DYNA-MAC Holdings 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 29 years of
working experience in the shipyard industry.
Wong Kok Seng, 60
BSc (Hons) Naval Architecture, University of Newcastle Upon Tyne; Graduate of Management Development Program, Harvard
Business School.
Mr Wong is the Managing Director of Keppel FELS Limited (KFELS). Prior to this appointment, he was the Executive Director
of KFELS. 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, Assistant General Manager (Commercial) and
Executive Director (Operations).
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.
In addition to his current appointment, he is also the Chairman of the Centre of Innovation, Marine and Offshore Technology
(COI-MOT) Advisory Committee and a member of the Workplace Safety & Health (WSH) Council Marine Industries Committee.
Mr Wong is a Chartered Engineer and member of the Royal Institution of Naval Architects.
226
Keppel Corporation Limited
Report to Shareholders 2010
Hoe Eng Hock, 60
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, 55
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 Keppel Amfels
Inc, Deputy Chairman of Keppel Fels 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 Board 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, 49
Bachelor of Science summa cum laude, University of Denver, USA; Master of Business Administration, Imperial College,
University of London, UK.
Mr Ang joined Keppel Land Group in 1991. He is currently Executive Vice Chairman of Keppel Land China Limited and
Executive Director of Keppel Land International Limited. Keppel Land China, a wholly-owned subsidiary of Keppel Land
Limited, owns and independently operates Keppel Land’s businesses in China. Mr Ang was previously Executive Director &
Chief Executive Officer, International of Keppel Land International Limited, responsible for 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; was the Group’s country head for Vietnam; and had also concurrently headed
Sedona Hotels International.
Mr Ang is 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
227
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 is a director of Keppel Offshore Marine Ltd, Keppel Land China Limited and various fund companies and subsidiaries.
Pang Hee Hon, 50
Bachelor of Science and Bachelor of Commerce, University of Birmingham; Masters in Public Administration, Harvard University.
Mr Pang is the Chief Executive Officer of Keppel T&T, appointed with effect from 4 January 2010. Previously the Deputy
President (Operations) of ST Electronics (Info-Software Systems), Mr Pang oversaw business operations and international
marketing. He was Chairman of the eGov Chapter in the Singapore IT Federation, which provides feedback on eGov policies
and promotes internationalisation of local ICT companies.
Mr 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.
Tay Lim Heng, 47
Bachelor (Honours) in Engineering Science and Economics, University of Oxford; Masters in Public Administration, Harvard
University; attended Advanced Management Programme, Harvard Business School.
BG(NS) Tay is the Chief Executive Officer of Keppel Integrated Engineering Ltd, appointed with effect from 1 January 2011.
He is also Head, Sustainable Development, of Keppel Group.
Prior to joining Keppel Group, BG(NS) Tay was the Deputy Secretary (Development) in the Ministry of National Development
(MND). Before that, he was the Chief Executive of the Maritime and Port Authority of Singapore. BG (NS) Tay has also held
senior key appointments in the Singapore Armed Forces (SAF). He was absorbed into the Singapore Administrative Service in
1996 and served until May 2010 when he left public service. He was awarded the Public Administration Medal (Gold) (Military) in
2005. In 2010, he was elected to the Council of Singapore Water Association.
His directorships include Keppel Integrated Engineering Limited, Keppel Seghers Engineering Singapore Pte Ltd, Keppel
Seghers Holdings Pte Ltd, GE Keppel Energy Services Pte Ltd, Keppel Seghers Belgium NV, Keppel Prince Engineering Pty
Ltd, Keppel DHCS Pte Ltd, Keppel FMO Pte Ltd, Keppel Sea Scan Pte Ltd and Keppel Land China Limited.
228
Keppel Corporation Limited
Report to Shareholders 2010
Thomas Pang Thieng Hwi, 46
Bachelor of Arts (Honours) and Master of Arts, University of Cambridge; Investment Management Certificate from The CFA
Society of the UK.
Mr Pang has been the Chief Executive Officer of Keppel Infrastructure Fund Management Pte Ltd (the Trustee-Manager of
K-Green Trust (“KGT”)) since 29 June 2010. He was seconded to the Trustee-Manager on a full-time basis but remains under
the employment of Keppel Offshore & Marine Ltd. As the CEO of the Trustee-Manager, he is responsible for working with the
board to determine the strategy for KGT. He works with the other members of the Trustee-Manager’s management team to
execute the stated strategy of the Trustee-Manager.
Mr Pang joined Keppel Offshore & Marine Ltd in 2002 as a Senior Manager (merger integration office) to assist in the merger
integration of Keppel FELS Limited and Keppel Shipyard Limited. He was promoted to be the assistant General Manager
(corporate development) in 2003 and subsequently the General Manager (corporate development) in 2007 to focus on the
investment, mergers and acquisitions and strategic planning of Keppel Offshore & Marine Ltd. Before joining Keppel Offshore &
Marine Ltd, Mr Pang was the vice president (finance and business development) of Arrakiis Pte Ltd, where he was involved in fund
raising and business development. Prior to that, he was an investment manager with Vertex Management (UK) from 1998 to 2001.
Mr Pang was also the Vice-President (Central USA) of the Singapore Tourism Board from 1995 to 1998, as well as assistant head
at the Economic Development Board of Singapore, responsible for local enterprise development from 1988 to 1995.
Ng Hsueh Ling, 44
Bachelor of Science Degree in Real Estate from the National University of Singapore.
Ms Ng has been the Chief Executive Officer and Executive Director of K-REIT Asia Management Limited (the manager of K-REIT
Asia) since 17 August 2009. She has 21 years of experience in the real estate industry.
Her experience encompasses the strategic sourcing, investment, asset and portfolio management and development of assets
in key Asian cities, as well as extensive fund management experience in the areas of real estate fund product creation, deal
origination, distribution and structuring of real-estate-based financial products.
Prior to this appointment, Ms Ng has held key positions with two other real estate companies, CapitaLand and Ascendas.
Before her appointment as Chief Executive Officer and Executive Director in K-REIT Asia Management Limited, she was CEO
(Korea & Japan) at Ascendas Pte Ltd.
Ms Ng is a Licensed Appraiser for land and buildings and is a Fellow of the Singapore Institute of Surveyors and Valuers.
Aziz Amirali Merchant, 46
Bachelor of Engineering (First Class Honours) in Naval Architecture & Ocean Engineering from University of Glasgow; Master of
Science in Naval Architecture from University College London (UCL), University of London.
Mr Merchant is the Executive Director of Keppel FELS Ltd and Head of Deepwater Technology Group Ltd. Prior to this, he was
the General Manager (Group Design & Engineering) for Keppel Offshore & Marine and the General Manager (Engineering) for
Keppel FELS Ltd since 2002.
Mr Merchant is a director of Keppel Singmarine Ltd, Deepwater Technology Group Ltd, Keppel Offshore & Marine Technology
Centre Pte Ltd, Floatec LLC, Keppel FELS Baltech Ltd, Keppel FELS Shenzhen and Keppel FELS Offshore and Engineering
Services Mumbai Pvt Ltd.
Mr Merchant is the Member of the Ngee Ann Polytechnic Marine & Offshore Technology Advisory Committee and the American
Bureau of Shipping South East Asia Technical Committee. He is a Fellow of the Society of Naval Architects and Marine
Engineers Singapore.
Directors and Key executives
229
Directors and Key Executives
Chor How Jat, 49
Bachelor of Science (Honours) in Naval architecture, University of Newcastle Upon Tyne. Master of Science in Marine
Technology, University of Newcastle Upon Tyne.
Mr Chor is the Executive Director of Keppel Shipyard Limited, appointed with effect from 1 Jan 2011. Mr Chor began his
professional career with Keppel Offshore and Marine in 1988 and held appointments as Shiprepair Manager, Deputy Shipyard
Manager, Shipyard Manager and prior to his appointment as Executive Director of Keppel Shipyard Limited, he was General
Manager (Operations) of Keppel FELS Limited.
Mr Chor serves as director on the Board of Keppel Shipyard Limited, Regency Steel Japan Limited, Asian Lift Pte Ltd,
Keppel FELS Offshore and Engineering Services Mumbai Pvt. Ltd. and Atwin Offshore and Marine Pte. Ltd. Mr Chor is also a
council member of Association of Singapore Marine Industries (ASMI).
230
Keppel Corporation Limited
Report to Shareholders 2010
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; Singapore Refining Company; SMRT Corporation Ltd; SMRT Buses Ltd; SMRT Light
Rail Pte Ltd; SMRT Road Holdings Ltd; SMRT Trains Ltd; Nanyang Business School Advisory Board.
Sven Bang Ullring
Chairman of the Supervisory Board 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
Schmidt Electronics Group Ltd; Gas Supply Pte Ltd; PSA International Pte Ltd; SP PowerGrid Ltd.
Tow Heng Tan
IE Singapore; Shangri-la Asia Limited.
Alvin Yeo Khirn Hai
Civil Service College; Asian Civilisations Museum; SMOE Pte Ltd.
Tan Ek Kia
Orchard Energy Pte Ltd; Power Seraya Ltd.
Danny Teoh
KPMG Advisory Services Pte. Ltd.; KPMG Corporate Finance Pte Ltd; KPMG Services Pte. Ltd.; SIFE Singapore; Viva
Foundation For Children With Cancer; Singapore Dance Theatre.
Teo Soon Hoe
Keppel Shipyard Limited; Singapore Petroleum Company Limited; Travelmore Pte Ltd.
Tong Chong Heong
Nil.
Directors and Key executives
231
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.
Dr Ong Tiong Guan
Corporacion Electrica Nicaraguense S.A..
Michael Chia Hock Chye
Nil.
Yeo Chien Sheng Nelson
Alpine Engineering Services Pte Ltd.; Blastech Abrasives Pte Ltd.; Keppel Tuas Pte Ltd.
Wong Kok Seng
Keppel Shipyard Limited; Keppel Nantong Shipyard Company Limited; FloaTEC L.L.C.; Offshore Technology Development Pte
Ltd; Bintan Offshore Fabricators Pte Ltd; Seafox 5 Limited.
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; Creek
& Cove Properties Pte Ltd.
Chow Yew Yuen
Nil.
Ang Wee Gee
Various subsidiaries and associated companies of Keppel Land Limited; Evergro Properties Limited.
Loh Chin Hua
Pteris Global Limited (previously known as InterRoller Engineering Limited).
Pang Hee Hon
PM-B Pte Ltd; INFA Systems Limited; ST Electronics (e-Services) Pte Ltd.
Tay Lim Heng
Nil.
Thomas Pang Thieng Hwi
Nil.
Ng Hsueh Ling
Ascendas Korea Inc.; Ascendas Japan Pte Ltd; Ascendas Japan Inc.; Ascendas China Fund Management Pte. Ltd.; Ascendas
China Commercial Fund Management Pte. Ltd.; Raffles Quay Asset Management Pte Ltd; Central Boulevard Development Pte Ltd.
Aziz Amirali Merchant
Nil.
Chor How Jat
Nil.
232
Keppel Corporation Limited
Report to Shareholders 2010
Major Properties
Held By
Completed properties
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
Ocean Properties Pte Ltd
46%
DL Properties Ltd
34%
K-REIT Asia
54%
Mansfield Development
Pte Ltd
52%
Ocean Towers
Collyer Quay,
Singapore
Equity Plaza
Cecil Street,
Singapore
Prudential Tower
Cecil Street &
Church Street,
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 23,422 sqm
30-storey office building
99 years leasehold
Commercial office building with
rentable area of 16,320 sqm
(73.4% of the strata area)
15-storey office building
99 years leasehold
Commercial office building with
rentable area of 22,876 sqm
275 George Street Land area: 7,074 sqm
Brisbane, Australia 30-storey Grade A
commercial building
77 King Street
Sydney, Australia
Land area: 1,284 sqm
23-storey office
and retail Grade A
commercial building
Freehold
Freehold
Commercial office building with
rentable area of 20,874 sqm
(50% interest)
Commercial office building with
rentable area of 13,752 sqm
Keppel Towers
Hoe Chiang Rd,
Singapore
GE Tower
Hoe Chiang Rd,
Singapore
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
One Raffles Quay Pte Ltd
18%
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%
Keppel Bay Tower
HarbourFront
Avenue,
Singapore
Land area: 17,267 sqm
18-storey office building
99 years leasehold
Commercial office building with
rentable area of 36,072 sqm
HarbourFront Two Pte Ltd
33%
HarbourFront
Land area: 10,923 sqm
Tower One and Two 18-storey and 16-storey
HarbourFront Place, office buildings
Singapore
99 years leasehold
Commercial office building with
rentable area of 48,668 sqm
Major Properties
233
Major Properties
Held By
Keppel Bay Pte Ltd
Effective
Group
Interest
86%
Location
Caribbean
at Keppel Bay
Singapore
Description and
Approximate
Land Area
163 out of 168 units of
corporate residences
have been sold
Tenure
Usage
99 years leasehold
A 969-unit luxurious waterfront
condominium development
PT Straits-CM Village
20%
Club Med Ria Bintan Land area: 200,000 sqm 30 years lease with
Bintan,
Indonesia
option for another
50 years
A 302-room beachfront hotel
PT Kepland Investama
52%
Keppel Land Watco I Co Ltd 35%
BFC Development Pte Ltd
18%
International
Financial Centre
(formerly, Barclays
House)
Jakarta,
Indonesia
Saigon Centre
(Phase 1 Tower)
Ho Chi Minh City,
Vietnam
Land area: 10,444 sqm
20 years lease with
option for another
20 years
A prime office development with
rentable area of 27,875 sqm
(Tower 1)
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
Marina Bay Financial Land area: 20,505 sqm
Centre (Phase 1)/
Marina Bay
Residences
Marina Boulevard/
Central Boulevard,
Singapore
99 years leasehold
An integrated development
comprising office, retail and
428 condominium units
Properties under development
Ocean Properties Pte Ltd
46%
Ocean Financial
Centre
Collyer Quay,
Singapore
Land area: 2,557 sqm
999 years leasehold Commercial building with
Central Boulevard
Development Pte Ltd
17%
99 years leasehold
Marina Bay Financial Land area: 15,010 sqm
Centre (Phase 2)/
Marina Bay Suites
Marina Boulevard/
Central Boulevard,
Singapore
Land area: 83,591 sqm
99 years leasehold
Keppel Bay Pte Ltd
86%
Reflections
at Keppel Bay
Singapore
Keppel Bay
Plot 3 and 6,
Singapore
Land area: 82,619 sqm
99 years leasehold Waterfront condominium
development
rentable area of 78,587 sqm
*(2011)
An integrated development
comprising office, retail and
221 condominium units
*(2012)
A 1,129-unit waterfront
condominium development
*(2013)
234
Keppel Corporation Limited
Report to Shareholders 2010
Description and
Approximate
Land Area
Tenure
Usage
Held By
Keppel Land (Mayfair)
Pte Ltd
Effective
Group
Interest
52%
Shanghai Pasir Panjang
Land Co Ltd
51%
Shanghai Hongda Property 51%
Development Co Ltd
21%
Spring City Golf & Lake
Resort Co (owned by
Kingsdale Development
Pte Ltd)
CityOne Development
(Wuxi) Co
26%
Location
The Lakefront
Residences
Lakeside Drive,
Singapore
Eight Park Avenue
Shanghai,
China
The Springdale
Shanghai,
China
Spring City Golf
& Lake Resort
Kunming,
China
Central Park City
Wuxi,
China
Keppel Township
Development (Shenyang)
Co Ltd
52%
The Seasons
Shenyang,
China
Land area: 16,117 sqm
99 years leasehold
Land area: 33,432 sqm
70 years lease
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)
Keppel Hongda (Tianjin
Eco-City) Property
Development Co
74%
Development in
Sino-Singapore
Tianjin Eco-City
Tianjin,
China
Land area: 365,722 sqm 70 years lease
(residential)
40 years lease
(commercial)
A 629-unit condominium
development
*(2015)
A 930-unit residential apartment
development (Plot B)
*(2014)
A 2,667-unit residential
development with integrated
facilities
*(2015)
Integrated resort comprising
golf courses, resort homes
and resort facilities
*(2011 Phase 2)
A 5,000-unit residential
township development with
integrated facilities
*(2012 Phase 2)
A 4,748-unit residential
township with integrated
facilities in Shenbei New District
in Shenyang
*(2013 Phase 1)
A mixed development, primarily
residential (5,000 units) together
with some commercial space
*(2012 – 2014)
PT Mitra Sindo Sukses/
PT Mitra Sindo Makmur
27%
Jakarta Garden City Land area: 2,700,000 sqm 30 years lease
with option for
Jakarta,
another 20 years
Indonesia
A 7,000-unit residential township
*(2011 Phase 1 &
2013 Phase 2)
Estella JV Co Ltd
29%
The Estella
Ho Chi Minh City,
Vietnam
Land area: 47,906 sqm
50 years lease
A 1,393-unit high-rise residential
development with supporting
commercial space in An Phu
Ward in prime District 2
*(2012 Phase 1)
Major Properties
235
Major Properties
Held By
Dong Nai Waterfront
City LLC (owned by
Portsville Pte Ltd)
Effective
Group
Interest
26%
Location
Dong Nai
Waterfront City
Dong Nai Province,
Vietnam
Description and
Approximate
Land Area
Tenure
Usage
Land area: 3,667,127 sqm 50 years lease
A 7,850-unit residential township
*(2015 Phase 1)
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: 776,827 sqm 30 years
leasehold
buildings, workshops,
drydocks and wharves
Shiprepairing, shipbuilding and
marine construction
* Expected year of completion
236
Keppel Corporation Limited
Report to Shareholders 2010
Group Five-Year Performance
selected Profit & Loss Account Data
($ million)
Revenue
Operating profit
Profit before tax & exceptional items
Net profit before exceptional items
Attributable profit 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
Non-controlling interests
Capital employed
Per share
Earnings (cents) (Note 1):
Before tax & exceptional items
After tax & before exceptional items
After tax & exceptional items
Total distribution (cents)
Net assets ($)
Net tangible assets ($)
Financial Ratios
Return on shareholders’ funds (%) (Note 2):
Profit before tax and exceptional items
Net profit before exceptional items
Dividend cover (times)
Net cash / (gearing) (times)
employees
Number
Wages & salaries ($ million)
2006
2007
2008
2009
2010
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
9,783
1,756
2,026
1,419
1,623
5,451
4,443
10,979
108
20,981
6,730
4,068
459
9,724
6,740
2,984
9,724
110.8
88.7
101.5
42.0
4.20
4.13
27.9
22.3
2.1
0.02
29,185
931
31,914
1,132
35,621
1,329
31,775
1,372
31,360
1,367
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.
Group Five-Year Performance
237
Group Five-Year Performance
2010
Group revenue of $9,783 million was 20% lower than last year. Revenue from Offshore & Marine Division of $5,577 million
decreased by $2,696 million or 33% because of a lower volume of work. During the year, the Division completed and delivered
twelve rigs, eighteen specialised vessels, five FPSO conversions/upgrades and several rig upgrade/repair contracts. Revenue
from Infrastructure Division increased by $83 million or 3% to $2,510 million. Higher revenue generated from the cogen power
plant in Singapore was partly offset by lower revenue from Engineering, Procurement and Construction (EPC) contracts in
Qatar. Revenue from Property Division of $1,685 million was $177 million or 12% above the previous year. The increase was
mainly attributable to the sale of apartments at Keppel Bay and progressive revenue recognition from Reflections at Keppel Bay.
Rental income from investment properties improved because of the acquisitions of investment buildings in Australia in 2010 and
additional six strata floors of Prudential Tower in November 2009.
At the pre-tax level, Group profit of $2,026 million was 9% higher than FY 2009. Pre-tax earnings from Offshore & Marine
Division increased by 15% to $1,242 million. This was due to improved margins driven by cost efficiencies and higher
productivity on delivered contracts. Profit from Infrastructure Division decreased by 38% to $93 million as a result of losses
from EPC contracts in Qatar, partly offset by better performance from the cogen power plant in Singapore. Property Division
recorded profit of $625 million, an increase of 31% over the preceding year. This was mainly attributable to higher contribution
from several residential projects in Singapore, China and Vietnam, and share of profit of the associated company developing
Marina Bay Suites in Singapore. Profit from Investments Division was lower as the previous year included contribution from
Singapore Petroleum Company which was disposed in June 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 fourteen rigs, fourteen 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
$476 million, 30% higher. Earnings have increased because of higher revenue recognition from the sale of residential properties
and share of profit of associated companies developing Marina Bay Residences in Singapore and The Botanica in Chengdu,
China. Profit from Investments was lower following the disposal of Singapore Petroleum Company in June 2009.
Revenue
($ billion)
Pre-Tax Profit
($ million)
Net Profit
($ million)
7.6
10.4
11.8
12.2
9.8
1,139 1,556 1,597 1,856
2,026
751 1,026 1,097 1,265
1,419
15.0
7.5
0
238
2,500
1,250
0
1,500
750
0
2006 2007 2008 2009 2010
2006 2007 2008 2009 2010
2006 2007 2008 2009 2010
Keppel Corporation Limited
Report to Shareholders 2010
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 three semisubmersibles and thirteen 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 Singapore Petroleum Company.
The income tax expense of the Group included a write-back of $15 million for tax provision in respect of prior years. After
minority share of profit, the net profit before exceptional items was $1,097 million.
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 $51 million or 3% of Group pre-tax profit. This was mainly derived from new projects and the initial
Shareholders’ Funds
($ billion)
Capital Employed
($ billion)
Market Capitalisation
($ billion)
4.2
5.2
4.6
6.0
6.7
5.6
7.0
6.7
8.7
9.7
13.9
20.6
6.9
13.1
18.2
8.0
4.0
0
10.0
5.0
0
25.0
12.5
0
2006 2007 2008 2009 2010
2006 2007 2008 2009 2010
2006 2007 2008 2009 2010
Group Five-Year Performance
239
Group Five-Year Performance
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 Singapore Petroleum
Company, 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 net 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.
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 Singapore Petroleum Company, 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
accounts the higher taxation charge and minority share of profit, the attributable profit to shareholders was $751 million.
240
Keppel Corporation Limited
Report to Shareholders 2010
Group Value-Added Statements
($ 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
2006
2007
2008
2009
2010
7,601
(5,738)
1,863
10,431
(8,123)
2,308
11,805
(9,099)
2,706
12,247
(9,196)
3,051
9,783
(6,470)
3,313
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
120
215
661
4,309
1,367
581
65
130
991
1,186
total Distribution
1,481
1,952
2,897
2,431
3,134
Balance retained in the business:
Depreciation & amortisation
Minority share of profits in subsidiaries
Retained profit for the year
127
60
593
780
126
474
889
1,489
139
120
-
259
174
118
1,051
1,343
189
354
632
1,175
2,261
3,441
3,156
3,774
4,309
Number of employees
29,185
31,914
35,621
31,775
31,360
Productivity data:
Gross value added per employee ($’000)
Gross value added per dollar employment cost ($)
Gross value added per dollar sales ($)
64
2.00
0.25
72
2.04
0.22
76
2.04
0.23
96
2.22
0.25
106
2.42
0.34
($ million)
4000
2000
0
Depreciation & Retained Profit
Interest Expenses & Dividends
Taxation
Wages, Salaries & Benefits
3,441
1,489
351
469
1,132
3,156
259
1,280
288
1,329
2,261
780
292
258
931
3,774
1,343
711
348
1,372
4,309
1,175
1,186
581
1,367
2006
2007
2008
2009
2010
Group Value-Added statements
241
Share Performance
Turnover (million)
Share Prices ($)
400
300
200
180
160
140
120
100
80
60
40
20
0
40
30
20
18
16
14
12
10
8
6
4
2
0
2006
Turnover
2007
2008
2009
2010
High and Low Prices
Share Price ($)*
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 ($)
Distribution yield (%) (Note 3)
Net price earnings ratio (Note 3)
Net price to book ratio (Note 3)
Net assets backing ($)
2006
2007
2008
2009
2010
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
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
11.32
11.46
7.87
9.10
88.7
42.0
4.6
10.3
11.32
3.7
12.8
2.7
4.13
Notes:
1. Earnings per share are calculated based on the Group net profit 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.
* Historical share prices are not adjusted for special dividends, capital distribution and dividend in specie.
242
Keppel Corporation Limited
Report to Shareholders 2010
Shareholding Statistics
As at 24 February 2011
Total number of issued shares : 1,611,918,880
Issued and fully paid-up capital : $947,154,405.19
Class of 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
Temasek Holdings (Pte) Ltd
Citibank Nominees Singapore Pte Ltd
DBS Nominees Pte Ltd
DBSN Services Pte Ltd
HSBC (Singapore) Nominees Pte Ltd
Raffles Nominees (Pte) Ltd
United Overseas Bank Nominees Pte Ltd
BNP Paribas Securities Services S’pore Pte Ltd
DB Nominees (S) Pte Ltd
Merrill Lynch (Singapore) Pte Ltd
Shanwood Development Pte Ltd
Lim Chee Onn
Morgan Stanley Asia (Singapore) Pte Ltd
Teo Soon Hoe
OCBC Nominees Singapore Pte Ltd
Royal Bank of Canada (Asia) Ltd
BNP Paribas Nominees Singapore Pte Ltd
OCBC Securities Private Ltd
Phillip Securities Pte Ltd
UOB Kay Hian Pte Ltd
Total
number of
shareholders
485
27,793
3,296
33
%
1.54
87.93
10.43
0.10
number of
shares
216,865
84,526,454
117,537,583
1,409,637,978
%
0.01
5.25
7.29
87.45
31,607
100.00
1,611,918,880
100.00
number of
shares
337,643,902
330,013,775
229,838,382
170,744,338
146,639,575
56,701,115
46,515,334
14,358,803
10,718,732
6,406,732
6,400,000
5,121,166
5,019,202
4,088,332(i)
3,974,251
3,688,276
3,374,570
3,256,202
3,157,853
2,783,984
1,390,444,524
%
20.95
20.47
14.26
10.59
9.10
3.52
2.89
0.89
0.66
0.40
0.40
0.32
0.31
0.25
0.25
0.23
0.21
0.20
0.19
0.17
86.26
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
20.95
9,011,931(i)
0.56
346,655,833
21.51
Note(i):
By operation of Section 7 of the Companies Act, Temasek Holdings (Pte) Ltd is deemed to be interested in an aggregate of 9,011,931 shares in which its subsidiaries
and associated companies have an aggregate interest.
Public shareholders
Based on the information available to the Company as at 24 February 2011, 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 24 February 2011, there are no treasury shares held.
shareholding statistics
243
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 43rd Annual General Meeting of the Company will be held at Raffles City Convention
Centre, Collyer Room (Level 4), 2 Stamford Road, Singapore 178882 on Thursday, 21 April 2011 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 2010.
Resolution 1
To declare a final tax-exempt (one-tier) dividend of 26 cents per share for the year ended
31 December 2010 (2009: final dividend of 23 cents per share tax-exempt (one-tier)).
Resolution 2
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 Tony Chew Leong-Chee
(ii) Mr Tow Heng Tan
(iii) Mr Teo Soon Hoe
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) Mr Tan Ek Kia
(ii) Mr Danny Teoh
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) (the “Companies Act”) to hold office until
the conclusion of the next annual general meeting of the Company (see Note 2).
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Resolution 7
Resolution 8
244
Keppel Corporation Limited
Report to Shareholders 2010
6.
To approve the ordinary remuneration of the non-executive directors of the Company for the financial Resolution 9
year ended 31 December 2010, comprising the following:
(1)
the payment of directors’ fees of an aggregate amount of $944,170 in cash (2009: $1,144,095);
and
(2)
(a)
the award of an aggregate number of 29,500 existing ordinary shares in the capital of the
Company (the “Remuneration Shares”) to Dr Lee Boon Yang, 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, Mr Tan Ek Kia and Mr Danny Teoh as payment in part of their
respective remuneration for the financial year ended 31 December 2010 as follows:
(i)
10,000 Remuneration Shares to Dr Lee Boon Yang;
(ii)
3,000 Remuneration Shares to Mr Lim Hock San;
(iii)
3,000 Remuneration Shares to Mr Sven Bang Ullring;
(iv) 3,000 Remuneration Shares to Mr Tony Chew Leong-Chee;
(v)
3,000 Remuneration Shares to Mrs Oon Kum Loon;
(vi) 3,000 Remuneration Shares to Mr Tow Heng Tan;
(vii) 3,000 Remuneration Shares to Mr Alvin Yeo Khirn Hai;
(viii) 750 Remuneration Shares to Mr Tan Ek Kia 1; and
(ix) 750 Remuneration Shares to Mr Danny Teoh 2;
(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 29,500 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).
7.
To re-appoint the Auditors and authorise the directors of the Company to fix their remuneration.
Resolution 10
Special Business
To consider and, if thought fit, approve the following Ordinary Resolutions, with or without any modifications:
8.
That pursuant to Section 161 of the Companies Act, and Article 48A of the Company’s Articles
of Association, authority be and is hereby given to the directors of the Company to:
Resolution 11
(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
1 Mr Tan Ek Kia was appointed as non-executive director with effect from 1 October 2010.
2 Mr Danny Teoh was appointed as non-executive director with effect from 1 October 2010.
notice of Annual General Meeting and Closure of Books
245
Notice of Annual General Meeting and Closure of Books
(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;
provided that:
(i)
(ii)
(iii)
(iv)
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) shall not exceed fifty (50) per cent. of the total
number of issued Shares (excluding treasury Shares) (as calculated in accordance with
sub-paragraph (ii) below), of which the aggregate number of Shares to be issued other than on
a pro rata basis to shareholders of the Company (including Shares to be issued in pursuance
of Instruments made or granted pursuant to this Resolution and any adjustment effected under
any relevant Instrument) shall not exceed five (5) per cent. of the total number of issued Shares
(excluding treasury Shares) (as calculated in accordance with sub-paragraph (ii) below);
(subject to such manner of calculation as may be prescribed by the Singapore Exchange
Securities Trading Limited (“SGX-ST”)) for the purpose of determining the aggregate number
of Shares that may be issued under sub-paragraph (i) 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 4).
246
Keppel Corporation Limited
Report to Shareholders 2010
Resolution 12
9.
That:
(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
(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 five (5) 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 (as hereafter defined), 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)
(b)
in the case of a Market Purchase, 105 per cent. of the Average Closing Price (as hereafter
defined); and
in the case of an Off-Market Purchase pursuant to an equal access scheme, 120 per cent.
of the Average Closing Price,
notice of Annual General Meeting and Closure of Books
247
Notice of Annual General Meeting and Closure of Books
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
(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 5).
10. That:
(1)
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”);
(2)
(3)
(4)
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 6).
To transact such other business which can be transacted at the annual general meeting of the Company.
Resolution 13
248
Keppel Corporation Limited
Report to Shareholders 2010
notICe Is ALso HeReBY GIVen tHAt:
(a)
(b)
the Share Transfer Books and the Register of Members of the Company will be closed on 29 April 2011, for the
preparation of dividend warrants. Duly completed transfers received by the Company’s Share Registrar, B.A.C.S. Private
Limited, 63 Cantonment Road, Singapore 089758 up to 5.00 p.m. on 28 April 2011 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 10 May 2011;
the Share Transfer Books and the Register of Members will be closed at 5.00 p.m. on 28 April 2011 to determine
Shareholders’ entitlements to Bonus Shares under the Bonus Issue. Duly completed transfers received by the Company’s
Share Registrar, B.A.C.S. Private Limited, 63 Cantonment Road, Singapore 089758 up to 5.00 p.m. on 28 April 2011
will be registered to determine Shareholders’ entitlements to Bonus Shares under the Bonus Issue. Shareholders whose
securities accounts with The Central Depository (Pte) Limited are credited with Shares as at 5.00 p.m. on 28 April 2011
will be entitled to Bonus Shares under the Bonus Issue.
Bonus shares, when issued, will not be entitled to the final cash dividend in respect of the financial year
ended 31 December 2010 (which shall be subject to the approval of shareholders at this annual general
meeting).
Please refer to the Company’s announcements dated 25 January 2011, 26 January 2011 and 28 January 2011 for
details; and
(c)
the electronic copy of the Company’s Annual Report 2010 will be published on the Company’s website on 6 April 2011.
The Company’s website address is http://www.kepcorp.com, and the electronic copy of the Annual Report 2010 can be
viewed or downloaded from the “Financial Reports” section, which can be accessed from the main menu item “Investor
Centre”. To view the electronic copy of the Annual Report 2010, 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, 23 March 2011
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 Tony Chew Leong-Chee will upon re-election continue to serve as Chairman of the Nominating Committee
and member of the Audit Committee. Mr Tow Heng Tan will upon re-election continue to serve as member of the Remuneration,
Nominating and Board Risk Committees. Mr Tan Ek Kia will upon re-election continue to serve as member of the Nominating and Board
Safety Committees. Mr Danny Teoh will upon re-election continue to serve as member of the Audit and Remuneration Committees. Mr
Sven Bang Ullring will upon re-election continue to serve as Chairman of the Board Safety Committee and member of Remuneration and
Nominating Committees. Except for Mr Tow Heng Tan who is considered a non-independent non-executive director, these directors are
considered by the Nominating Committee to be independent directors.
3
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 2010, 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 10,000 Shares as part of his
ordinary remuneration as non-executive Chairman for the financial year ended 31 December 2010. 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 Tan Ek Kia and Mr Danny Teoh will
each, subject to Shareholders’ approval, be awarded 750 Shares as part of their respective remuneration for serving as non-executive
director from 1 October 2010 to 31 December 2010. The Chairman and the non-executive directors will abstain from voting, and will
procure their respective associates to abstain from voting, in respect of this Resolution 9.
4. Resolution 11 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 50 per cent. of the total number of Shares (excluding
treasury Shares) (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). 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. Of the 5 per cent. sub-limit, in relation to
the Company’s Restricted Share Plan and Performance Share Plan (collectively, the “Share Plans”), the Company shall not award shares
(“Awards”) under the Share Plans exceeding in aggregate 2 per cent. of the total number of issued shares in the capital of the Company
(“Yearly Limit”). However, if the Yearly Limit is not fully utilised in any given year, the balance of the unutilised Yearly Limit may be used
by the Company to make grants of Awards in subsequent years. 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 11 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 11 is
passed, and any subsequent bonus issue, consolidation or sub-division of Shares.
5. Resolution 12 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 23 April 2010. However, at this annual general meeting, the
Company is seeking a lower “Maximum Limit” of 5 per cent. of the total number of issued Shares, which is lower than the 10 per cent.
Maximum Limit allowed under the Companies Act. Please refer to Appendix 1 to this Notice of Annual General Meeting for further details.
6. Resolution 13 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 to this Notice of Annual General Meeting for details.
250
Keppel Corporation Limited
Report to Shareholders 2010
Corporate Information
Board of Directors
Nominating Committee
Registered Office
Lee Boon Yang (Chairman)
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
Tan Ek Kia
Danny Teoh
Teo Soon Hoe
Tong Chong Heong
Audit Committee
Lim Hock San (Chairman)
Tony Chew Leong-Chee
Oon Kum Loon (Mrs)
Alvin Yeo Khirn Hai
Danny Teoh
Remuneration Committee
Lim Hock San (Chairman)
Lee Boon Yang
Sven Bang Ullring
Oon Kum Loon (Mrs)
Tow Heng Tan
Danny Teoh
Tony Chew Leong-Chee (Chairman)
Lee Boon Yang
Sven Bang Ullring
Tow Heng Tan
Tan Ek Kia
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
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
Tan Ek Kia
Company Secretary
Caroline Chang
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
Corporate Information
251
Financial Calendar
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
Despatch of Summary Financial Report to Shareholders
Despatch of Annual Report to Shareholders
Annual General Meeting
2010 Proposed final dividend
Books closure date
Payment date
Proposed Bonus Issue
Books closure date
FY 2011
Financial year-end
Announcement of 2011 1Q results
Announcement of 2011 2Q results
Announcement of 2011 3Q results
Announcement of 2011 full year results
31 December 2010
22 April 2010
22 July 2010
21 October 2010
25 January 2011
23 March 2011
6 April 2011
21 April 2011
5.00 p.m., 28 April 2011
10 May 2011
5.00 p.m., 28 April 2011
31 December 2011
April 2011
July 2011
October 2011
January 2012
252
Keppel Corporation Limited
Report to Shareholders 2010
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