SHAPING
THE FUTURE
Report to Shareholders 2012
To be the provider of choice
for solutions to the offshore
& marine industries,
sustainable environment
and urban living.
1
We will develop and execute our
businesses profitably, with safety
and innovation, guided by our three
key business thrusts of Sustaining
Growth, Empowering Lives and
Nurturing Communities.
CONTENTS
GROUP OVERVIEW
GOVERNANCE & SUSTAINABILITY
141 Consolidated Statement
1 Key Figures for 2012
2 Group Financial Highlights
4 Chairman’s Statement
10
Interview with the CEO
16 Group at a Glance
18 Keppel Around the World
20 Board of Directors
90 Sustainability Report Highlights
Sustaining Growth
92 Corporate Governance
116 Risk Management
120 Environmental Performance
121 Product Excellence
Empowering Lives
of Cash Flows
143 Notes to the Financial Statements
191 Significant Subsidiaries &
Associated Companies
OTHER INFORMATION
203 Interested Person Transactions
26 Keppel Group Boards of Directors
122 Labour Practices & Human Rights
204 Key Executives
28 Keppel Technology Advisory Panel
123 Safety & Health
214 Major Properties
30 Senior Management
32
Investor Relations
34 Awards & Accolades
36 Shaping the Future
OPERATING & FINANCIAL REVIEW
47 Group Structure
Nurturing Communities
124 Our Community
FINANCIAL STATEMENTS
219 Group Five-Year Performance
223 Group Value-Added Statements
224 Share Performance
225 Shareholding Statistics
Directors’ Report & Financial Statements
226 Notice of Annual General Meeting
126 Directors’ Report
133 Statement by Directors
& Closure of Books
232 Corporate Information
233 Financial Calendar
235 Proxy Form
48 Management Discussion & Analysis
134 Independent Auditors’ Report
50 Offshore & Marine
135 Balance Sheets
62
Infrastructure
70 Property
78
Investments
136 Consolidated Profit & Loss Account
137 Consolidated Statement of
Comprehensive Income
80 Financial Review & Outlook
138 Statement of Changes in Equity
KEY FIGURES FOR 2012
Net Profit**
Return On Equity**
Distribution Per Share
$1,914m
Increased 28% from
FY 2011’s $1,491 million
22.6%
Increased by 9% from
FY 2011’s 20.8%*
Our Offshore & Marine and
Property divisions delivered strong
performance, bringing net profit
before revaluation, major
impairment and divestments
to a new high of $1,914 million.
Return On Equity exceeded 20%
for the sixth consecutive year.
72.4¢
Increased 68% from
FY 2011’s 43.0 cents per share
Total distribution for 2012 comprised
a special dividend in specie of one
Keppel REIT unit for every five shares
in the Company (approximately
27.4 cents per share), a final
dividend of 27.0 cents and an interim
dividend of 18.0 cents that had
already been paid.
Revenue
Earnings Per Share**
Economic Value Added**
$13,965m
106.8¢
$1,375m
Increased 39% from
FY 2011’s $10,082 million
Increased 27% from
FY 2011’s 83.8 cents per share
Increased $351 million from
FY 2011’s $1,024 million
Net Gearing Ratio
Net Asset Value Per Share
0.23x
$5.14
Increased from
FY 2011’s net gearing of 0.16x*
Increased 19% from
FY 2011’s $4.32 per share*
* Comparative figures have been restated
due to retrospective application of
Amendments to FRS 12 Deferred Tax:
Recovery of Underlying Assets.
** Figures exclude revaluation,
major impairment and divestments.
2
1 Reflections at Keppel Bay
in Singapore underpinned
strong earnings in the
Property Division.
2 The Offshore & Marine
Division’s orderbook was
replenished with $10 billion
worth of new orders won
in 2012.
Key Figures for 2012
1
GROUP FINANCIAL HIGHLIGHTS
Earnings Per Share** (cents)
+27%
from FY 2011
2012
2011
Return On Equity** (%)
+9%
from FY 2011
2012
2011
106.8
83.8
22.6
20.8*
Distribution Per Share (cents)
+68%
from FY 2011
2012
2011
72.4
43.0
Economic Value Added** ($ million)
+34%
from FY 2011
2012
2011
1,375
1,024
* Comparative figures have been restated due to retrospective application of Amendments to FRS 12
Deferred Tax: Recovery of Underlying Assets.
** Figures exclude revaluation, major impairment and divestments.
Group Quarterly Results ($ million)
Revenue
EBITDA
Operating profit*
Profit before tax*
Net profit*
Earnings Per Share (cents)*
1Q
4,266
996
946
994
751
41.9
2Q
3,481
660
610
680
521
29.1
2012
3Q
3,219
469
415
482
337
18.8
4Q
Total
2,999
482
425
539
305
17.0
13,965
2,607
2,396
2,695
1,914
106.8
1Q
2,288
455
408
450
312
17.6
2Q
2,287
508
460
511
384
21.6
2011
3Q
2,703
574
524
580
406
22.8
4Q
Total
2,804
569
505
636
389
21.8
10,082
2,106
1,897
2,177
1,491
83.8
* Figures exclude revaluation, major impairment and divestments.
2
Keppel Corporation Limited
Report to Shareholders 2012
For the year ($ million)
Revenue
Profit (before revaluation, major impairment and divestments)
EBITDA
Operating
Before tax
Net profit
Net profit after revaluation, major impairment and divestments
Operating cash flow
Free cash flow
Economic Value Added (EVA)
Before revaluation, major impairment and divestments
After revaluation, major impairment and divestments
Per share
Earnings (cents)
Before tax & revaluation, major impairment and divestments
After tax & before revaluation, major impairment and divestments
After tax & revaluation, major impairment and divestments
Net assets ($)
Net tangible assets ($)
At year-end ($ million)
Shareholders’ funds
Non-controlling interests
Capital employed
Net debt
Net gearing ratio (times)
Return on shareholders’ funds (%)
2012
2011
Restated*
% Change
13,965
10,082
+39%
2,607
2,396
2,695
1,914
2,237
1,006
(63)
1,375
1,430
130.4
106.8
124.8
5.14
5.08
9,246
4,332
13,578
3,153
0.23
2,106
1,897
2,177
1,491
1,946
(224)
(1,482)
1,024
838
105.4
83.8
109.4
4.32
4.26
7,699
4,062
11,761
1,857
0.16
+24%
+26%
+24%
+28%
+15%
n.m.
n.m.
+34%
+71%
+24%
+27%
+14%
+19%
+19%
+20%
+7%
+15%
+70%
+44%
Profit before tax & revaluation, major impairment and divestments
Net profit before revaluation, major impairment and divestments
27.6
22.6
26.2
20.8
+5%
+9%
Shareholders’ value
Distribution (cents per share)
Interim dividend
Final dividend
Special dividend in specie
Total distribution
Share price ($)
Total Shareholder Return (%)
18.0
27.0
27.4
72.4
11.00
22.9
17.0
26.0
–
43.0
9.30
(6.4)
+6%
+4%
n.m.
+68%
+18%
n.m.
n.m. not meaningful
* Comparative figures have been restated due to retrospective application of Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets.
Group Financial Highlights
3
CHAIRMAN’S STATEMENT
“In shaping Keppel’s future, we have to
stay the course of our multi-business
strategy, focusing our collective
strengths on achieving sustainable
growth in our businesses and delivering
value to our stakeholders.”
Net Profit*
$1,914m
Increased 28% from
FY 2011’s $1,491 million
DEAR SHAREHOLDERS,
The global economy in 2012 was
marked by the spillover effects
of an anaemic US economy and a
Eurozone hobbled by a continuing
debt crisis. Asia, while resilient, was
not impervious to external shocks.
China’s growth slowed to 7.8%
while Singapore narrowly avoided
a recession in the fourth quarter,
managing a modest 1.2% GDP growth
for the whole of 2012.
2013 is expected to be another
challenging year as the issues facing
the US and the Eurozone have yet
to be fully resolved. We must be
prepared for an extension of the
recent tumultuous years. There will
be uncertainties and potential risks
which must be factored into our
business strategy.
CREDITABLE PERFORMANCE
Despite the uncertainties and volatile
environment, Keppel was able to
deliver another set of creditable results.
For 2012, excluding revaluations,
major impairment and divestments,
our net profit grew by 28% to
$1.9 billion. Our Return On Equity
continued to be healthy at 22.6%
while Economic Value Added increased
to about $1.4 billion for the year.
With the record performance, the
Board of Directors has recommended
a final dividend of 27.0 cents per share.
To commemorate Keppel Corporation’s
45th anniversary and reward our
shareholders for their continued
support, we have proposed a
distribution in specie of one Keppel REIT
unit for every five shares held by
entitled shareholders equivalent to
approximately 27.4 cents. Together
with the interim dividend of 18.0 cents,
total distribution for 2012 will be
72.4 cents per share.
OFFSHORE & MARINE
In 2012, Keppel Offshore & Marine
(Keppel O&M) was able to secure about
$10 billion in new contracts from
customers across Brazil, the Caspian
Sea and Mexico. This almost matched
the record new orders achieved in 2011.
Our net orderbook was $12.8 billion
as at end December 2012, with
projects stretching into 2019.
Notably, in August 2012, Keppel FELS
Brasil secured another five repeat
semisubmersible orders amounting to
about US$4.1 billion from Sete Brasil,
following the award of the first unit
at end-2011. The semisubmersibles,
which are based on Keppel’s proprietary
DSSTM 38E design, are well-suited
to meet the stringent requirements
of the deepwater “Golden Triangle”
region of Brazil, West Africa and the
Gulf of Mexico.
With 40 units operating worldwide and counting,
the KFELS B class jackup rig has become an
industry benchmark.
Earnings Per Share* (cents)
120
90
60
30
0
2010
2011
2012
74.3
83.8
106.8
* Figures exclude revaluation, major
impairment and divestments.
4
Keppel Corporation Limited
Report to Shareholders 2012
Chairman’s Statement
5
CHAIRMAN’S STATEMENT
1
With record deliveries of 20 rigs by
Keppel FELS expected in 2013, we
will further improve our execution,
engineering and design capabilities
to sustain our market leadership in
the light of growing competition.
The Near Market, Near Customer
strategy continues to work well for us.
Our Asian network of yards across the
Philippines, Indonesia and China has
been assisting the Singapore yards
with offshore work.
In this regard, our yards in the
Philippines are good examples.
Keppel Batangas and Keppel Subic
Shipyard are supporting the
construction of pontoons for Sete
Brasil’s DSSTM 38E semisubmersibles
and Floatel’s floating accommodation
unit. Keppel Batangas is also teaming
with Keppel Singmarine to construct
three units of 4,000 dwt bulk ore/fuel
carriers for OK Tedi.
We are heartened that our Philippines
yards have also been winning the
confidence of international operators
and drillers. In November 2012,
Keppel Subic Shipyard secured
the Malampaya Phase 3 Depletion
Compression Platform (DCP)
newbuilding contract from Shell
Philippines Exploration.
Ongoing productivity enhancements
and mechanisation have equipped our
satellite yards to take on more complex
projects. The sustained efforts to
improve the skills and efficiency of
our satellite yards will help mitigate
the foreign labour constraint that we
are facing in Singapore.
Despite lingering uncertainties in the
global economy, fundamentals in the
offshore and marine industry remain
sound over the longer term. Keppel
O&M will continue to invest in R&D
to come up with innovative solutions
for new offshore frontiers as it builds
on strong relationships with trend-
setting customers and sharpens its
technology edge.
INFRASTRUCTURE
At our Infrastructure Division, we have
chosen to offer sustainable solutions
for power generation, environmental
engineering and business connectivity.
Our Infrastructure Division is still in its
early growth phase and its immediate
focus will be on honing expertise,
efficient delivery and smooth execution
in scalable businesses. We will be
more focused on selecting projects
that are value-enhancing.
Keppel Energy, with a strong integrated
power and gas platform, remains
highly competitive and will continue to
grow its market share in Singapore.
The 800MW expansion of its Keppel
Merlimau Cogen plant is on track for
completion by mid-2013, and will soon
add to the Group’s recurring income
stream. The first unit of 400MW started
commissioning in the third quarter of
2012, ahead of schedule.
Wholly-owned subsidiary, Keppel Gas
has secured a long-term agreement
with Petronas to import additional
piped natural gas into Singapore. With
the additional gas import, Keppel Gas
is well-positioned to serve the gas
needs of industrial and commercial
users. In light of the challenges
faced in its EPC contracts, Keppel
Integrated Engineering (KIE) is more
deliberate and selective in the pursuit
of new projects and remains focused
on the execution and delivery of
existing ones.
In Qatar, KIE’s wholly-owned subsidiary,
Keppel Seghers, completed its first
year of operations and maintenance
for the Domestic Solid Waste
Management Centre and achieved
ISO certification in November 2012.
The Doha North Sewage Treatment
Works in Qatar has also begun
commissioning works and its first
phase is expected to be completed
in 2013.
In August 2012, a Keppel Seghers’
consortium was awarded a Waste-
to-Energy (WTE) combined heat and
power project in Bialystok, Poland for
about $124 million. The consortium,
led by Budimex SA, one of Poland’s
largest construction companies, will
provide engineering, construction
and procurement expertise. To be
6
Keppel Corporation Limited
Report to Shareholders 2012
1 Keppel Merlimau
Cogen plant’s 800MW
expansion is on track
for completion in 2013.
2 Keppel Land will
extend its expertise and
experience in developing
quality commercial
properties overseas.
2
completed by end-2015, the plant
will have the capacity to treat 120,000
tonnes of waste per year.
Keppel Telecommunications &
Transportation (Keppel T&T) continued
its growth track in tandem with strong
domestic demand experienced in most
Southeast Asian economies which
have ramped up plans to build up
key logistics infrastructure.
During the year, Keppel T&T made
its first foray into Indonesia to provide
services for the consumer and
retail goods sector through a joint
venture (JV) with PT Puninar Jaya,
a leading local third party logistics
service provider.
Over in China, Keppel T&T has entered
into the niche of food logistics. In March
2012, it sealed a JV Agreement with
the Jilin City Government to develop
and operate a food logistics park in
Jilin City, Jilin Province. The first phase
of the logistics park spread out over
40-ha will begin operations in 2014.
Its second food logistics project, a JV
with private investors and the Lu’an
City Jin’an District Government, is in
Lu’an City, Anhui Province.
Keppel T&T also continued its growth
thrust in the data centre business
through the Securus Data Property
Fund (Securus Fund), acquiring two
more facilities in London, UK and
Selangor, Malaysia respectively.
In addition, it is investing another
US$50 million as part of the Securus
Fund’s second round capital raising.
This will make Keppel T&T the single
largest shareholder of the Fund,
which now holds a diversified
portfolio of four high quality assets
spread across the UK, Malaysia
and Australia.
In line with the increasing global
emphasis on sustainable businesses,
Keppel T&T will develop greener data
centres with a modular expansion
strategy, which will allow it to adopt
the latest features and designs to
optimise energy and resource efficiency.
PROPERTY
In Property, Singapore and China
continue to be our core markets where
we are confident that fundamentals
remain positive in the medium to long
term. The stringent property market
cooling measures introduced by the
governments in these two countries
will support sustainable and healthy
development of these markets.
Both Singapore and China were key
contributors to last year’s total sales
of about 2,350 homes, with about 430
and 1,650 homes sold in Singapore
and China respectively. Last year, we
invested about $1 billion, mostly on
acquisitions of new sites in Singapore
and China.
In Singapore, new home prices were
driven by demand for suburban
developments in well-located,
popular estates. Notably, homes sold
at Reflections at Keppel Bay strongly
boosted our property profits for
the year. The Luxurie, our 622-unit
suburban residential development
Chairman’s Statement
7
CHAIRMAN’S STATEMENT
1
“As we embrace
change and
develop ourselves
to stay relevant
and resilient,
Keppel will
continue to
nurture a strong
and united team
of leaders and
employees who
embrace the
same vision and
excitement about
our future.”
in Sengkang, is almost sold out.
In October 2012, Keppel Land secured
a prime residential site along
New Upper Changi Road, on which
it plans to develop about 700 homes.
On Plot 3 in the Keppel Bay waterfront
precinct, design work is at an advanced
stage. We will monitor the market
closely for a suitable time to launch
these two projects.
property markets in key cities in the
region. For a balanced portfolio, we
have strategically expanded our
commercial presence overseas in
the last two years. We are developing
some 420,000 sm of prime commercial
space in Beijing, Tianjin, Jakarta and
Ho Chi Minh City, leveraging our
experience and expertise in this
sector in Singapore.
In China, Keppel Land’s current portfolio
comprises more than 42,000 homes
spanning 10 cities. We will step up our
presence in key gateway cities like
Shanghai and Beijing, as well as
promising secondary cities like Tianjin,
Chengdu and Wuxi. In 2012, we acquired
a prime commercial site in Beijing’s
CBD, a landed housing site in an
upmarket low-density housing district
in Chengdu, as well as a city-centre
mixed-use development site in Wuxi.
With continued economic growth, we
are optimistic about the commercial
Our property fund management
business, through Keppel REIT and
Alpha Investment Partner, has grown
steadily to achieve total assets under
management of $15.3 billion as at
end-2012. Keppel REIT, which changed
its name from K-REIT Asia in October
2012, continued to expand its Grade A
office portfolio with income-accretive
acquisitions of a 50% stake in a new
office development in Perth, Western
Australia and an additional interest in
Ocean Financial Centre (OFC), raising
its stake in OFC from 87.5% to 99.9%.
Alpha’s latest fund, Alpha Asia Macro
Trends Fund II is targeting to close at
US$1 billion in the first half of 2013.
SHAPING THE FUTURE
The Keppel story is 45 years in the
making in 2013. We have successfully
weathered many ups and downs to
emerge resilient and stronger with
each challenge and opportunity.
In shaping Keppel’s future, we
have to stay the course of our
multi-business strategy, focusing our
collective strengths on achieving
sustainable growth in our businesses
and delivering value to our stakeholders.
At the same time, we have to maintain
our competitive edge by building
new capabilities and investing to
further improve our productivity and
technological edge.
At the heart of every good company
are its people. As we embrace change
and develop ourselves to stay relevant
and resilient, Keppel will continue to
8
Keppel Corporation Limited
Report to Shareholders 2012
2
1 The Outstanding
Keppelite Awards
recognise employees
who exemplify Keppel’s
core values and passion
for excellence.
2 Keppel Care Foundation
was launched in 2012
to aid the needy and
under-privileged,
promote education and
encourage eco-friendly
mindsets and initiatives.
nurture a strong and united team of
leaders and employees who embrace
the same vision and excitement
about our future.
which we will aid the needy and
under-privileged, promote education
and encourage eco-friendly mindsets
and initiatives.
Leadership succession remains a key
priority of the Board. Over the past
year, our succession plans have
ensured key positions are anchored
by capable and experienced people
who exemplify the Keppel core
values and continue to contribute to
our Group’s growth. We will groom
a new generation of Keppelites who
share a deep corporate pride and
commitment to build successful and
sustainable businesses and create
value for shareholders.
Even as we continue to celebrate our
achievements, we never forget our
responsibilities to the communities
we are a part of, whose well-being
contribute to the sustainability of
our businesses. We launched Keppel
Care Foundation in 2012 through
ACKNOWLEDGEMENTS
Faced with global volatility and
uncertainties, we are most appreciative
of our shareholders’ support, trust
and confidence in Keppel.
We commend all Keppelites
worldwide for your bold and
resounding demonstration of the
Can-Do! spirit and passion to sustain
Keppel’s success amidst a challenging
environment. In doing so, you continue
to strengthen the 45-year old fabric
of the Keppel tapestry and lay the
groundwork for future successes.
We are privileged to have Mr Tan
Puay Chiang, a veteran in the oil, gas and
petrochemicals sector, come onboard
in 2012 to bring his extensive experience
to bear for the benefit of the Group.
Last but not least, I wish to express
my appreciation to Directors,
Management, partners, customers
and all stakeholders for their staunch
support. Thank you.
Yours sincerely,
LEE BOON YANG
CHAIRMAN
27 February 2013
Chairman’s Statement
9
INTERVIEW WITH THE CEO
“The Group has laid firm foundations that have allowed us
to deliver creditable results year on year, as well as emerge
more agile, resilient and stronger through every challenge.
In shaping our future, we will be further growing our human
capital and deepening our bench-strengths in core disciplines.”
Q
Keppel Corporation achieved
another bumper year in 2012. In the
absence of one-time gains from units
sold at Reflections at Keppel Bay,
what will the outlook be like for 2013?
2013 will still be affected by
A
the spillover effects of the recent
turbulent years. While we do not
expect to repeat 2012’s results,
our investments and efforts to
improve our core businesses and
competencies put us in a good
position to capture good opportunities
amidst challenging times.
In 2013, our yards will be busy delivering
a record of 22 newbuild rigs, working
down from a hefty $12.8 billion backlog
as at end December 2012 which extends
into 2019. Growing global energy
demand and stable Brent crude prices
of above US$100 per barrel continue
to support global exploration and
production (E&P) spending. On the back
of our Near Market, Near Customer
strategy and proven track record, we
continue to garner healthy interest for
jackups and semisubmersibles from
customers across major and emerging
oil and gas markets worldwide. While
we are mindful of keen competition,
we are confident of capturing a fair
share of new orders in 2013.
In the Infrastructure Division,
Keppel Energy’s 800MW power plant
expansion is progressing well, and
is expected to start contributing
towards the Group’s earnings in 2013.
At the same time, Keppel Integrated
Engineering (KIE) is working hard to
deliver the first phases of the Doha
North Sewage Treatment Works
and Greater Manchester projects
this year. We have made additional
provisions for these two projects in
2012 based on our best estimates.
10
Keppel Corporation Limited
Report to Shareholders 2012
Keppel Telecommunications &
Transportation (Keppel T&T) is
expected to begin trial operations for
the Wuhu Sanshan port in Wuhu City,
Anhui Province, in early 2013, and will
focus on operating its other logistics
parks in China well. Keppel T&T’s
Securus Fund will also continue
to seek out prime data centres for
acquisition in building up its portfolio
of quality assets.
In Property, Keppel Land will launch
new properties in tandem with market
conditions in the region and selectively
buy sites with good attributes for
both residential and commercial
development. Keppel Land will further
leverage its synergy with its property
fund management arms to improve
the quality and performance of assets,
as well as explore opportunistic
acquisitions. A good example is the joint
venture between Keppel Land China
and Alpha Investment Partners,
which acquired a prime mixed-use
development in Shanghai in February
2013. The Group has laid firm
foundations that have allowed us to
deliver creditable results year on
year, as well as emerge more agile,
resilient and stronger through
every challenge.
What are the global trends
Q
affecting your businesses, and how do
you plan to address or leverage them?
The world’s urban population
A
is expected to increase 72% by
2050, from the current 3.6 billion to
6.3 billion. The effects of urbanisation
are pervasive. Around the world,
cities contend with pressing issues
on energy security, clean water,
waste management and environmental
impact. Through our key businesses
in offshore and marine, infrastructure
and property, we are providing
solutions to help address some of
the world’s most crucial needs in a
sustainable way.
The world will still remain highly
dependent on fossil fuels to support
its growth. Growing demand for
energy continues to drive E&P into
new frontiers, which are deeper
and harsher. Political agenda
and pressures have also nudged
governments of emerging countries
to quickly exploit their own oil and
gas resources. We see a lot of
interest in the ultra-deepwater
segment. The shallow water
segment remains robust with the
bifurcation of the jackup market.
We are in a good position to
provide solutions to meet these
different needs.
Shale gas is a game-changer.
With technology spurring the recent
growth of shale gas production and
the possible export of LNG from the
US, there is expectation that gas
prices in the US, Asia and Europe
could converge over time. With our
competencies to convert vessels
into Floating Storage Re-gasification
Units, as well as service and repair
LNG carriers, we are positioning
ourselves to tap opportunities in this
area. We are also looking at projects
in the area of Floating LNG facilities.
The Group’s Infrastructure Division will focus on honing expertise, efficiency and execution in scalable businesses.
Interview with the CEO
11
INTERVIEW WITH THE CEO
Other areas that we can explore
include providing solutions for the
exploration of stranded gas reserves
in smaller fields with under 1 trillion
cubic feet of gas. As an integrated
power and gas player, Keppel Energy
could also leverage this trend.
A third trend is the rising focus on
the environment and sustainable
development. The Group is committed
to develop environmentally-friendly
solutions for office and residential
buildings, rigs as well as renewable
energy. Seafox 5, Keppel FELS’s
Multi-Purpose Self-Elevating
Platform, is an innovative solution,
which we have developed to meet
the needs of the offshore wind
energy sector.
We also have proprietary
Waste-to-Energy (WTE) technology.
In Singapore, we are operating two
of the country’s four WTE plants.
We have built and are now operating
one of the Middle East’s most
advanced WTE plants in Qatar.
We also sell technology packages
to China. In addition, through
vehicles such as K-Green Trust
and the Securus Fund, the Group
is investing in green infrastructure
assets and data centres.
Q
What is the outlook for the
Offshore & Marine industry? With
intensifying competition from the
Korean and Chinese shipyards,
how will Keppel stay ahead?
Global energy consumption
A
is growing because of developing
countries. We can expect energy
prices to remain relatively high in the
near future, which will in turn spur
exploration in deeper waters and
harsher environments.
Presently, stable oil prices of above
US$100 per barrel continue to support
E&P in the Gulf of Mexico, North Sea,
Brazil and Africa. Scaling new frontiers
requires highly advanced solutions.
We can therefore expect global E&P
spending to rise further.
The outlook for Singapore’s commercial property sector remains encouraging with the country’s
continuing appeal to financial institutions and regional head offices.
On the supply side, recent years of
demand growth coupled with the
retirement of older rigs have tightened
the market, lifting utilisation and
dayrates for newer and more advanced
jackups and ultradeepwater units.
We will continue to see good industry
prospects and healthy interest in both
our jackup and floating solutions.
However, with shipbuilding in the
doldrums, yards in China and Korea
are chasing after offshore work.
The competition continues to exert
pressure on newbuild prices and
margins in some product segments.
As such, we must choose our battles
wisely, competing on value creation
rather than price and in areas where
we have good prospects for success.
We have also established ourselves
in key and emerging oil and gas
markets across the world, in places
where the Chinese and Korean yards
are not yet present. We are confident
that our Near Market, Near Customer
strategy will continue to differentiate
Keppel from the competition, and
enable us to capture a fair share of
global new orders. We hope to sustain
healthy margins in the range of 10 to
12% for the mid to long term. We will
continue to enhance the productivity
and capabilities of our global yards,
and deepen our technology expertise
and customer partnerships to stay
ahead of the curve.
How does the Infrastructure
Q
Division fit in with Keppel’s business
strategy and what are the plans to
improve its performance?
Infrastructure development
A
driven by urbanisation and
sustainability will continue to be a
major growth driver for most emerging
economies. We are looking at how
the Group’s businesses in power
and gas, environmental engineering,
logistics and data centres can best
leverage their respective expertise to
address the growing emphasis on
sustainable development.
We have several units in the
Infrastructure Division that are doing
well, and which have helped to offset
cost overruns from projects in the
environmental engineering business
in 2012. In particular, our power and
gas business managed by Keppel
12
Keppel Corporation Limited
Report to Shareholders 2012
Energy has been contributing stable
recurring income to the Group.
The logistics and data centre
businesses under Keppel T&T have
also been maintaining high occupancy
levels, and are selectively expanding
their overseas footprint.
economy, and a fairly large supply
of newly completed units, is likely to
depress the local market. In China, the
new leaders are expected to maintain
a tight rein over property speculation
and prices to balance cooling
measures with economic growth.
Still in early growth stages, our
infrastructure units are deepening
their roots, and will focus on honing
expertise, efficiency and execution
in scalable businesses. We will be
very selective in undertaking projects
that we are confident will bring us
a fair return. Meanwhile, we are
examining how the Division can be
restructured and streamlined for
value creation.
Q
Cooling measures continue to
depress residential markets across
the region; what is Keppel doing to
weather the situation? What is the
outlook for the Property Division as
a whole?
A
Singapore’s government
announced its seventh wave of cooling
measures in January 2013. This,
coupled with the lacklustre global
Nonetheless, we remain confident of
the long-term potential of the Singapore
and China markets. The cooling
measures are targeted at speculators,
to prevent asset bubbles and help
sustain a healthy property market,
which will be good for us. In the
meantime, some consolidation can be
expected and weaker developers will be
pressured to cut prices or sell their
assets cheaply. This will provide
opportunity for us to grow our portfolio.
We will review the launch of our
residential properties and concurrently
seek good sites with strong marketing
attributes for development.
Despite global uncertainties,
urbanisation trends and low interest
rates continue to drive strong demand
for quality homes and office spaces
in Asia. The outlook for Singapore’s
commercial sector remains encouraging
with the country’s continuing appeal
to financial institutions and regional
head offices. Marina Bay Financial
Centre Tower 3 for instance, which
is about 85% occupied, has been
attracting multinational tenants from
various industries such as technology,
energy and resources and commodities.
With sizeable young populations and
growing middle-income groups,
countries such as Vietnam and
Indonesia also possess favourable
demographics for the property sector.
Additionally, the improved liquidity
and availability of low-cost financing
options will support growing office
values in the region, as well as provide
sound fundamentals for our property
fund management businesses.
Having built up a strong balance
sheet with low gearing, Keppel Land
stands to benefit from these trends
and is in a position to seize the right
opportunities as they surface.
Keppel has invested into
Q
companies such as KrisEnergy and
Floatel International. What are your
plans for these strategic investments?
We are always looking for
A
opportunities to grow our core
businesses and competitive strengths.
Interview with the CEO
13
INTERVIEW WITH THE CEO
Through selectively investing in niche
areas, we expect to tap into synergistic
market segments that can produce
sustainable returns and greater value
for our shareholders in the long run.
KrisEnergy’s portfolio contains a
good balance of exploration and
developmental stage assets, and
proven reserves with the potential
to grow. Floatel International is
expanding its fleet to meet rising
demand for floating accommodation
semisubmersibles in places such as
offshore Brazil and the North Sea.
Our stakes in these companies will
enable us to widen the acceptance
of our own solutions, as well as
participate in and extract value from
more segments of the oil and gas
industry. There will also be many
opportunities to pursue areas of
common interests and mutual benefit.
What are your priorities
Q
and strategies for allocating capital
across the Group?
A
We take capital allocation very
seriously. The underlying principle is to
see how we can make the best use of
our funds to generate good returns.
We look for opportunities to recycle
capital. By being very disciplined and
selective in our investments and capital
expenditure, we have consistently
achieved a Return On Equity of above
20%, and a compounded annual net profit
growth of 15% over the last five years.
We will continue to devote resources
to our offshore and marine business
but remain cautious about over-investing
in an up-cycle to the extent that capital
would be difficult to recover when the
downturn hits. Where possible, we
prefer to enhance existing assets or
acquire and resurrect brown field
shipyards, as opposed to building
new yards where a massive capital
outlay is needed. Annually, we have
been investing about $200 million to
improve our shipyards worldwide.
Uncertain economic conditions can
also generate good opportunities. An
example is Keppel Land’s acquisition
of a 51% stake in a prime commercial
development in Beijing’s city centre in
early 2012. There are potential assets
in the current market that we can
acquire to strengthen our property and
infrastructure portfolios. What is
important is maintaining a strong
balance sheet and sources of funding
that will give us the flexibility to capitalise
on opportunities when they arise.
The Keppel Group issued
Q
about $1.8 billion in bonds in 2012.
What was the rationale for entering
the bond market? What are your
plans for the funds?
As a Group, we operate in
A
highly competitive industries where
an edge in funding is an important
tool for success. We are constantly
scanning the horizon and reviewing
our funding needs and sources to
prepare ourselves to capture the
right opportunities.
The global economic turmoil and
European debt crisis have dampened
market confidence and caused
interest rates in many countries to
fall to historically low levels. These
events have diverted investors’
attention to corporate credits and
created a very conducive and liquid
environment for bond issuers. We saw
this as a good opportunity for the
Group to tap the credit markets to
extend our average tenure of loans
and diversify funding sources.
We have raised about $1.8 billion
in 2012, and stretched our average
debt maturity from three years to
over five. The funds raised will be
used for general corporate and
1
1 Keppel seeks to tap
into synergistic market
segments, such as
floating accommodation
solutions, to create
sustainable returns.
2 Infused with common
core values and the
Can-Do! spirit, Keppelites
are ready to chart the
Group’s future.
14
Keppel Corporation Limited
Report to Shareholders 2012
working capital requirements as well
as investments. This puts us in a
comfortable position to meet current
and future needs.
The Company has grown
Q
significantly over the past decade.
What systems have you set in place
to sustain long-term growth and
value creation?
An organisation cannot expect
A
to succeed in every area, so we
have to choose and compete in the
businesses where we have an edge.
We are focused on building up our key
businesses and competencies, while
being selective in growing adjacencies
and new markets. We believe that we
must be very pragmatic and disciplined
in pursuing our business activities, and
will not hesitate to walk away from
potential projects and opportunities
that are not value-enhancing.
The Group’s established risk
management framework helps to
align all business units and enable
them to assess and mitigate risks in
their activities. We are focused on the
bottom line as much as the top line.
This focus on value creation helps
us generate good profits and
optimise returns.
We continually invest in technology
innovation and R&D to create
commercially viable and cost-effective
solutions. This is vital to distance
ourselves from competitors and
enhance our value-proposition to
our customers. We are continuously
cascading the best practices and
effective processes from our centres
of excellence to other operations
worldwide. Any lessons learnt,
such as in safety which is imperative
in all our operations, are also
exchanged globally.
Finally, growth and value creation
can only be achieved by a capable and
committed workforce, infused with
the right values and motivated to give
of its best to achieve the company’s
objectives. Keppel has been driven
by good people, who have diligently
contributed to the growth and success
of the Company since its inception.
Many of these individuals who carved
their careers in the Group are still
with us today, training and mentoring
the next generation of Keppel leaders.
We are also actively developing our
talents from different parts of the
world, offering them training and
development opportunities and
overseas exposure. While many key
overseas positions are currently filled
by Singaporeans, we aim to localise
these as and when the right talents
are available.
Today, we have managed to galvanise
over 40,000 employees in more than
30 countries with a common vision
and mission, embracing a set of core
values. Looking ahead, we will be
further growing our human capital
and deepening our bench-strengths
in core disciplines. We will be
relentless in our efforts to sustain
a safe work environment for our
people. I am confident that we
have the right people, core values
and systems in place to drive the
Group’s growth and create value
for shareholders in the years
to come.
2
Interview with the CEO
15
GROUP AT A GLANCE
Keppel Corporation
Offshore & Marine
Infrastructure
Property
Investments
STRATEGIC DIRECTIONS
FOCUS FOR 2013/2014
FOCUS FOR 2013/2014
FOCUS FOR 2013/2014
FOCUS FOR 2013/2014
Fortifying Core Competencies
• Ensure continued focus on execution excellence to produce top quality
products and solutions for customers.
• Sharpen competitive edge by investing in Research and Development (R&D)
and technology innovation for long-term growth.
• Maximise talent development and knowledge sharing to enhance productivity.
• Deliver on excellent execution,
enhance productivity and
manage costs.
• Continue R&D efforts to
fortify market leadership in
selected segments.
Expanding Global Footprint
• Build on the Group’s strong global network for new business opportunities.
• Leverage the Keppel brand to enhance presence in existing markets and enter
• Explore opportunities in new
markets and adjacent businesses.
new ones.
Leveraging Growth Platforms
• Maximise synergy and collective strength among businesses.
• Seize value-enhancing opportunities when they arise.
• Continue emphasis on Health,
Safety and the Environment.
• Keppel Energy to grow its share
of Singapore’s power market
and further enhance its
integrated platform in gas
and utilities businesses.
• KIE to complete construction of
remaining projects in Qatar and the
UK, as well as enhance operations
and maintenance capabilities.
• Keppel T&T to leverage new
technologies to enhance services
and further expand customer base
and geographical presence.
• Focus on core markets of Singapore
and China, as well as growth
markets of Vietnam and Indonesia.
• Scale up in high-growth cities to
develop competitive advantage.
• Expand commercial portfolio
overseas.
• Increase fee income from
fund management for
sustainable growth.
• k1 Ventures to manage its current
investment portfolio to maximise
shareholder value and distribute
excess cash as investments
are monetised.
• M1 to continue strengthening
its position in the mobile market
and capitalise on Singapore’s
national fibre network for
growth opportunities.
Revenue ($ million)
Revenue ($ million)
Revenue ($ million)
Revenue ($ million)
Revenue ($ million)
2012
2011
2010
2009
2008
13,965
10,082
9,140
11,990
11,784
2012
2011
2010
2009
2008
7,963
5,706
5,577
8,273
8,569
2012
2011
2010
2009
2008
2,832
2,863
2,510
2,427
2,232
2012
2011
2010
2009
2008
3,018
1,467
1,042
1,251
929
2012
2011
2010
2009
2008
11
46
39
54
Net Profit* ($ million)
Net Profit* ($ million)
Net (Loss)/Profit* ($ million)
Net Profit* ($ million)
Net Profit* ($ million)
2012
2011
2010
2009
2008
1,491
1,307
1,190
1,079
1,914
2012
2011
2010
2009
2008
937
1,064
987
810
705
(1)
2012
2011
2010
2009
2008
82
57
63
126
2012
2011
2010
2009
2008
300
214
135
139
784
2012
2011
2010
2009
2008
* Figures exclude revaluation, major impairment and divestments.
45
49
119
172
16
Keppel Corporation Limited
Report to Shareholders 2012
Group at a Glance
17
152
194
KEPPEL AROUND THE WORLD
SWEDEN
RUSSIA
UNITED
KINGDOM
POLAND
THE NETHERLANDS
BELGIUM
GERMANY
IRELAND
KAZAKHSTAN
UNITED STATES
MEXICO
SPAIN
BULGARIA
ALGERIA
AZERBAIJAN
QATAR
SAUDI
ARABIA
BRAZIL
ARGENTINA
CHINA
SOUTH
KOREA
JAPAN
UAE
INDIA
MYANMAR
THAILAND
HONG KONG
VIETNAM
MALAYSIA
THE PHILIPPINES
INDONESIA
SRI LANKA
SINGAPORE
AUSTRALIA
NORTH AMERICA
$2,270m
EUROPE
$3,191m
INDIA
$184m
SINGAPORE
$5,462m
JAPAN & SOUTH KOREA
$324m
SOUTH AMERICA
$720m
MIDDLE EAST
$647m
REST OF ASEAN
$545m
CHINA & HONG KONG
$434m
AUSTRALIA
$188m
TOTAL FY 2012 REVENUE
$13,965m
Group revenue was 39% higher
than in FY 2011 due to stronger
performance by the business units.
LEGEND
Offshore & Marine
Infrastructure
Property
Investments
18
Keppel Corporation Limited
Report to Shareholders 2012
Keppel Around the World
19
BOARD OF DIRECTORS
Major Appointments
(other than directorships):
Nil
Past Directorships held over the
preceding 5 years (from 1 January 2008
to 31 December 2012):
Nil
Others:
Former Minister for Information,
Communications and the Arts
(May 2003 to Mar 2009); Former Member
of Parliament (Dec 1984 to April 2011)
Date of first appointment as a director:
1 May 2009
Date of last re-election as a director:
20 April 2012
Length of service as a director
(as at 31 December 2012):
3 years 8 months
Board Committee(s) served on:
Remuneration Committee (Member)
Nominating Committee (Member)
Board Safety Committee (Member)
Present Directorships
(as at 31 December 2012):
Listed companies
Singapore Press Holdings Limited
(Chairman)
Other principal directorships
Keppel Care Foundation Limited; Singapore
Press Holdings Foundation Limited
LEE BOON YANG, 65
CHAIRMAN
NON-EXECUTIVE
AND INDEPENDENT DIRECTOR
B.V.Sc Hon (2A),
University of Queensland, 1971
Date of first appointment as a director:
18 March 1983
Date of last re-election as a director:
20 April 2012
Length of service as a director
(as at 31 December 2012):
29 years 10 months
Board Committee(s) served on:
Board Safety Committee (Member)
Present Directorships
(as at 31 December 2012):
Listed companies
Keppel Land Limited (Chairman);
k1 Ventures Limited
Other principal directorships
Keppel Offshore & Marine Ltd (Chairman);
Keppel Energy Pte Ltd (Chairman);
Keppel Land China Limited (Chairman);
KrisEnergy Ltd
Major Appointments
(other than directorships):
Singapore’s Non-Resident Ambassador
to Brazil; Det Norske Veritas South East
Asia Committee (Chairman); Energy Studies
Institute (Board Member); American Bureau
of Shipping (Board & Council Member);
American Bureau of Shipping’s Southeast
Asia Regional Committee (Member); Special
Committee on Mobile Offshore Drilling
Units (Member); Singapore University
of Technology and Design (Member of
the Board of Trustee); Asean Council on
Petroleum (Council Member); Institute for
Engineering Leadership of the National
University of Singapore (Management
Board Member)
Past Directorships held over the
preceding 5 years (from 1 January 2008
to 31 December 2012):
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
Others:
Conferred the Meritorious Service Award
in 2008; Conferred the NTUC Medal of
Commendation (Gold) Award in May 2007;
Conferred the Public Service Star Award
(BBM) in August 2004
CHOO CHIAU BENG, 65
CHIEF EXECUTIVE OFFICER
SENIOR EXECUTIVE DIRECTOR
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
Member of the Wharton Society of Fellows,
University of Pennsylvania
20
Keppel Corporation Limited Report to Shareholders 2012 TONY CHEW LEONG-CHEE, 66
NON-EXECUTIVE
AND INDEPENDENT DIRECTOR
Trained as an agronomist at Ko Plantations
Berhad and Serdang Agricultural College,
Malaysia
OON KUM LOON (MRS), 62
NON-EXECUTIVE
AND INDEPENDENT DIRECTOR
Bachelor of Business Administration
(Honours), University of Singapore
Date of first appointment as a director:
16 April 2002
Date of last re-election as a director:
21 April 2011
Length of service as a director
(as at 31 December 2012):
10 years 9 months
Board Committee(s) served on:
Nominating Committee (Chairman)
Audit Committee (Member)
Present Directorships
(as at 31 December 2012):
Listed companies
Nil
Other principal directorships
Asia Resource Corporation Pte Ltd
(Chairman); ARC Investment Pte Ltd;
International Property Development J.S.
Corporation (Vietnam); KFC Vietnam
(Chairman); SBF Holdings Pte Ltd
(Chairman); SBF-PICO Events Pte Ltd;
Macondray Company Limited (Chairman);
Macondray & Co. Inc (Chairman);
Macondray Corporation Pte Ltd (Chairman);
Pontirep Investments Limited (Chairman);
Representations International Pte Ltd
(Chairman); Representations International
(H.K.) Pte. Ltd (Chairman); Resource
Pacific Holdings Pte Ltd (Chairman); Tianjin
Summer Palace Winery and Distillery Co. Ltd
Major Appointments
(other than directorships):
Singapore Business Federation (Chairman);
Duke-NUS Graduate Medical School
Singapore (Chairman); Economic Research
Institute for ASEAN and East Asia (Board
Member); Chinese Development Assistance
Council (Member of the Board of Trustee);
Advisor to the Singapore Institute of
International Affairs and served on the
Economic Strategies Committee
Past Directorships held over the
preceding 5 years (from 1 January 2008
to 31 December 2012):
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
Others:
Public Service Award recipient
Major Appointments
(other than directorships):
Nil
Past Directorships held over the
preceding 5 years (from 1 January 2008
to 31 December 2012):
Schmidt Electronics Group Ltd;
PSA International Pte Ltd; SP PowerGrid Ltd;
China Resources Microelectronics Limited;
Aviva Life Insurance Company Limited;
Aviva Ltd; Navigator Investment
Services Ltd
Others:
Former Chief Financial Officer
of DBS Group
Date of first appointment as a director:
15 May 2004
Date of last re-election as a director:
20 April 2012
Length of service as a director
(as at 31 December 2012):
8 years 8 months
Board Committee(s) served on:
Board Risk Committee (Chairman)
Audit Committee (Member)
Remuneration Committee (Member)
Present Directorships
(as at 31 December 2012):
Listed companies
Keppel Land Limited
Other principal directorships
Singapore Power Limited; SP PowerAssets
Limited; PowerGas Limited; Keppel Land
China Limited
Board of Directors
21
BOARD OF DIRECTORS
TOW HENG TAN, 57
NON-EXECUTIVE
AND NON-INDEPENDENT DIRECTOR
Fellow of the Association of Chartered
Certified Accountants
Fellow of the Chartered Institute
of Management Accountants
ALVIN YEO KHIRN HAI, 51
NON-EXECUTIVE
AND INDEPENDENT DIRECTOR
LLB Honours, King’s College London,
University of London
Gray’s Inn (Barrister-at-Law)
Senior Counsel
22
Major Appointments
(other than directorships):
Centre for Asset Management Research
& Investment, NUS (Member); National
Council of Social Services (Member of
Investment Committee); SAFRA Board
of Governors (Member)
Past Directorships held over the
preceding 5 years (from 1 January 2008
to 31 December 2012):
IE Singapore; Shangri-la Asia Limited
Others:
Former Chief Investment Officer
of Temasek International (Private) Ltd;
Former Senior Director of Business
Development at DBS Vickers Securities
(Singapore) Pte Ltd; Former Managing
Director of Lum Chang Securities Pte Ltd
Date of first appointment as a director:
15 September 2004
Date of last re-election as a director:
21 April 2011
Length of service as a director
(as at 31 December 2012):
8 years 4 months
Board Committee(s) served on:
Nominating Committee (Member)
Remuneration Committee (Member)
Board Risk Committee (Member)
Present Directorships
(as at 31 December 2012):
Listed companies
ComfortDelGro Corporation Limited
Other principal directorships
Pavilion Capital Holdings Pte Ltd;
Pavilion Capital International Pte Ltd;
Fullerton Financial Holdings Pte Ltd;
Avondale Properties Limited; Union
Charm Development Limited; Germiston
Developments Limited; Crown Pacific
Development Limited, Surbana Corporation
Pte Ltd; ST Asset Management Ltd
Date of first appointment as a director:
1 June 2009
Date of last re-election as a director:
23 April 2010
Length of service as a director
(as at 31 December 2012):
3 years 7 months
Board Committee(s) served on:
Audit Committee (Member)
Board Risk Committee (Member)
Present Directorships
(as at 31 December 2012)
Listed companies
United Industrial Corporation Limited;
Singapore Land Limited
Other principal directorships
Tuas Power Ltd; Thomson Medical
Centre Pte Ltd
Major Appointments
(other than directorships):
Monetary Authority of Singapore
advisory panel to advise the Minister on
appeals under various financial services
legislation (Member); Singapore
International Arbitration Centre’s
Council of Advisors (Member);
Member of Parliament
Past Directorships held over the
preceding 5 years (from 1 January 2008
to 31 December 2012):
Asian Civilisations Museum;
Clifford Chance Pte Ltd
Others:
Past member of the Senate of the Academy
of Law; Past member of the Council of the Law
Society; Past member of the Board of the
Civil Service College
Keppel Corporation Limited Report to Shareholders 2012 TAN EK KIA, 65
NON-EXECUTIVE
AND INDEPENDENT DIRECTOR
BSc Mechanical Engineering
(First Class Honours), Nottingham
University, United Kingdom
Management Development Programme,
International Institute for Management
Development, Lausanne, Switzerland
Fellow of the Institute of Engineers, Malaysia
Professional Engineer, Board of Engineers,
Malaysia
Chartered Engineer of Engineering Council,
United Kingdom
Member of Institute of Mechanical Engineer,
United Kingdom
Major Appointments
(other than directorships):
Nil
Past Directorships held over the
preceding 5 years (from 1 January 2008
to 31 December 2012):
Orchard Energy Pte Ltd; Power Seraya Ltd
Others:
Former Vice President (Ventures and
Developments) of Shell Chemicals, Asia
Pacific and Middle East region (based
in Singapore); Former Chairman, Shell
companies in North East Asia; Former
Managing Director, Shell Malaysia
Exploration and Production
Date of first appointment as a director:
1 October 2010
Date of last re-election as a director:
21 April 2011
Length of service as a director
(as at 31 December 2012):
2 year 3 months
Board Committee(s) served on:
Board Safety Committee (Chairman)
Nominating Committee (Member)
Present Directorships
(as at 31 December 2012):
Listed companies
SMRT Corporation Ltd; PT Chandra
Asli Petrochemical Tbk; CitySpring
Infrastructure Management Pte Ltd
(as Trustee-Manager of CitySpring
Infrastructure Trust); Transocean Ltd
Other principal directorships
Keppel Offshore & Marine Ltd; City Gas
Pte Ltd (Chairman); Star Energy Group
Holdings Pte Ltd (Chairman)
Date of first appointment as a director:
1 October 2010
Date of last re-election as a director:
21 April 2011
Length of service as a director
(as at 31 December 2012):
2 year 3 months
Board Committee(s) served on:
Audit Committee (Chairman)
Remuneration Committee (Chairman)
Board Risk Committee (Member)
Major Appointments
(other than directorships):
Singapore Olympic Foundation
Pro-Tem Singapore Accountancy Council
Past Directorships held over the
preceding 5 years (from 1 January 2008
to 31 December 2012):
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 Limited
DANNY TEOH, 58
NON-EXECUTIVE
AND INDEPENDENT DIRECTOR
Member of the Institute of Chartered
Accountants in England & Wales
Present Directorships
(as at 31 December 2012):
Listed companies
DBS Group Holdings Ltd; DBS Bank Ltd;
CapitaMall Trust Management Limited
(as manager of CapitaMall Trust)
Others:
Former Managing Partner, KPMG LLP,
Singapore; Past member of KPMG’s
International Board and Council; Former
Head of Audit and Risk Advisory Services
and Head of Financial Services
Other principal directorships
Changi Airport Group (Singapore) Pte Ltd;
JTC Corporation
Board of Directors
23
BOARD OF DIRECTORS
Date of first appointment as a director:
20 June 2012
Date of last re-election as a director:
n.a.
Length of service as a director
(as at 31 December 2012):
7 months
Board Committee(s) served on:
Board Safety Committee (Member)
Board Risk Committee (Member)
Present Directorships
(as at 31 December 2012):
Listed companies
Neptune Orient Lines Limited
Major Appointments
(other than directorships):
Energy Studies Institute,
National University of Singapore
Past Directorships held over the
preceding 5 years (from 1 January 2008
to 31 December 2012):
Nil
Others:
Nil
TAN PUAY CHIANG, 65
NON-EXECUTIVE
AND INDEPENDENT DIRECTOR
Bachelor of Science (First Class Honours),
University of Singapore
MBA (Distinction), New York University
Other principal directorships
Singapore Power Limited;
SP Services Limited
Major Appointments
(other than directorships):
Nil
Past Directorships held over the
preceding 5 years (from 1 January 2008
to 31 December 2012):
Singapore Petroleum Company Limited;
Travelmore Pte Ltd; Keppel Land Limited
Others:
Former Group Finance Director
of Keppel Corporation Limited
Date of first appointment as a director:
1 June 1985
Date of last re-election as a director:
21 April 2011
Length of service as a director
(as at 31 December 2012):
27 years 7 months
Board Committee(s) served on:
Nil
Present Directorships
(as at 31 December 2012):
Listed companies
Keppel Telecommunications &
Transportation Ltd (Chairman); M1 Limited
(Chairman); Keppel Philippines Holding Inc
(Chairman); Keppel Infrastructure Fund
Management Pte Ltd (the Trustee-Manager
of K-Green Trust); k1 Ventures Limited
Other principal directorships
Keppel Offshore & Marine Ltd; Keppel
Energy Pte Ltd; Singapore Tianjin Eco-City
Investment Holdings Pte Ltd
TEO SOON HOE, 63
SENIOR EXECUTIVE DIRECTOR
Bachelor of Business Administration,
University of Singapore
Member of the Wharton Society of Fellows,
University of Pennsylvania
24
Keppel Corporation Limited Report to Shareholders 2012 Date of first appointment as a director:
1 August 2009
Date of last re-election as a director:
23 April 2010
Length of service as a director
(as at 31 December 2012):
3 years 5 months
Board Committee(s) served on:
Nil
Present Directorships
(as at 31 December 2012):
Listed companies
Nil
Other principal directorships
Keppel Offshore & Marine Ltd; Keppel FELS
Limited; Keppel Shipyard Limited; Keppel
Integrated Engineering Limited (Chairman)
Major Appointments
(other than directorships):
Institute of Technical Education (ITE)
Governors (Board Member); NTUC-U
Care Fund Board of Trustees (Member);
Singapore Maritime Institute Governing
Council (Member)
Past Directorships held over the
preceding 5 years (from 1 January 2008
to 31 December 2012):
Nil
Others:
Former Commander of the Volunteer
Special Constabulary (VSC); Conferred the
Public Service Medal; Conferred the Medal
of Commendation (Gold) Award at NTUC
May Day 2010
TONG CHONG HEONG, 66
SENIOR 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
Member of Society of Naval Architects and
Marine Engineers (USA), American Bureau
of Shipping, DNV Southeast Asia Offshore
Committee, Germanishcer Lloyd’s Asean
Committee and Nippon Kaiji Kyokai
(Class NK)
Fellow of The Royal Institute of Naval
Architects (RINA) UK
Fellow of Institute of Marine Engineering,
Science & Technology
Fellow of Singapore Institute of Directors
Fellow of the Society of Project Managers
Board of Directors
25
KEPPEL GROUP BOARDS OF DIRECTORS
KEPPEL OFFSHORE & MARINE
KEPPEL ENERGY
CHOO CHIAU BENG
CHAIRMAN
Chief Executive Officer,
Keppel Corporation
TONG CHONG HEONG
Chief Executive Officer;
Senior Executive Director,
Keppel Corporation
CHOW YEW YUEN
Chief Operating Officer
SIT PENG SANG
Director
STEPHEN PAN YUE KUO
Chairman, World-Wide
Shipping Agency Limited
CHOO CHIAU BENG
CHAIRMAN
Chief Executive Officer,
Keppel Corporation
DR ONG TIONG GUAN
Managing Director
TEO SOON HOE
Senior Executive Director,
Keppel Corporation
KHOO CHIN HEAN
Director
KOH BAN HENG
Senior Advisor, Singapore
Petroleum Company Limited
(member of PetroChina)
PROF MINOO HOMI PATEL
Professor of Mechanical Engineering
and Director of Development,
School of Engineering,
Cranfield University, UK
DR MALCOLM SHARPLES
President, Offshore Risk &
Technology Consulting Inc, USA
TAN EK KIA
Chairman of City Gas Pte Ltd
MICHAEL CHIA HOCK CHYE
Managing Director (Marine)
and Managing Director (Technology),
Keppel Offshore & Marine;
Managing Director,
Keppel Offshore & Marine
Technology Centre (KOMTech)
TINA CHIN TIN CHIE
General Manager,
Group Risk Management,
Keppel Corporation
PO’AD BIN SHAIK ABU BAKAR MATTAR
Independent Director,
Hong Leong Finance Limited and
Tiger Airways Holdings Limited
LOH CHIN HUA
Chief Financial Officer,
Keppel Corporation
TEO SOON HOE
Senior Executive Director,
Keppel Corporation
LIM CHIN LEONG
Former Chairman of Asia,
Schlumberger
LOH CHIN HUA
Chief Financial Officer,
Keppel Corporation
CHOW YEW YUEN
Chief Operating Officer,
Keppel Offshore & Marine
KEPPEL INTEGRATED
ENGINEERING
TONG CHONG HEONG
CHAIRMAN
Senior Executive Director,
Keppel Corporation;
Chief Executive Officer,
Keppel Offshore & Marine
DR ONG TIONG GUAN
Managing Director,
Keppel Energy
MICHAEL CHIA HOCK CHYE
Managing Director (Marine) and
Managing Director (Technology),
Keppel Offshore & Marine;
Managing Director,
Keppel Offshore & Marine
Technology Centre (KOMTech)
BG (NS) TAY LIM HENG
Chief Executive Officer;
Head of Sustainable Development,
Keppel Group
LOH AH TUAN
Director
ONG HO SIM
Director
KEPPEL INFRASTRUCTURE
FUND MANAGEMENT
(AS TRUSTEE-MANAGER
OF K-GREEN TRUST)
KHOR POH HWA
CHAIRMAN
Advisor, (Township and
Infrastructure Development),
Keppel Corporation
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
TEO SOON HOE
Senior Executive Director,
Keppel Corporation
BG (NS) TAY LIM HENG
Chief Executive Officer,
Keppel Integrated Engineering;
Head of Sustainable Development,
Keppel Group
26
Keppel Corporation Limited
Report to Shareholders 2012
KEPPEL
TELECOMMUNICATIONS
& TRANSPORTATION
TEO SOON HOE
CHAIRMAN
Senior Executive Director,
Keppel Corporation
DR TAN TIN WEE
Associate Professor of Biochemistry,
National University of Singapore
PROF BERNARD TAN TIONG GIE
Professor of Physics,
National University of Singapore
WEE SIN THO
Vice President, Endowment
and Institutional Development,
National University of Singapore
TAN BOON HUAT
Independent Director
PROF NEO BOON SIONG
Professor (Division of Strategy,
Management and Organisation),
Nanyang Business School,
Nanyang Technological University
KARMJIT SINGH
Independent Director
MICHAEL CHIA HOCK CHYE
Managing Director (Marine) and
Managing Director (Technology),
Keppel Offshore & Marine;
Managing Director,
Keppel Offshore & Marine
Technology Centre (KOMTech)
KEPPEL LAND
CHOO CHIAU BENG
CHAIRMAN
Chief Executive Officer,
Keppel Corporation
ANG WEE GEE
Chief Executive Officer; Executive
Vice Chairman, Keppel Land China
LIM HO KEE
Chairman,
Singapore Post
PROF TSUI KAI CHONG
Provost and Professor of Finance,
SIM University
DANIEL CHAN CHOONG SENG
Managing Director,
DCG Capital Pte Ltd
LEE AI MING (MRS)
Senior Partner,
Rodyk & Davidson LLP
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
EDWARD LEE
Former Ambassador to Indonesia
KOH-LIM WEN GIN (MRS)
Former Chief Planner and
Deputy Chief Executive Officer, URA
OON KUM LOON (MRS)
Non-Executive,
Non-Independent Director
LOH CHIN HUA
Chief Financial Officer,
Keppel Corporation
KEPPEL REIT MANAGEMENT
(AS MANAGER OF
KEPPEL REIT)
DR CHIN WEI-LI, AUDREY MARIE
CHAIRMAN
Executive Chairman, Vietnam
Investing Associates – Financials
Singapore Private Limited
NG HSUEH LING
Chief Executive Officer
TAN CHIN HWEE
Co-Head of Asia Pacific,
Apollo Global Management
LEE CHIANG HUAT
Executive Director,
Icurrencies Pte Ltd;
Non-Executive Director,
Chanoil Asia Pte Ltd
LOR BAK LIANG
Director, Werone Connect Pte Ltd
LOH CHIN HUA
Chief Financial Officer,
Keppel Corporation
ANG WEE GEE
Chief Executive Officer,
Keppel Land; Executive Vice
Chairman, Keppel Land China
PROF TAN CHENG HAN
Professor of Law,
National University of Singapore
k1 VENTURES
STEVEN JAY GREEN
CHAIRMAN/
CHIEF EXECUTIVE OFFICER
Former US Ambassador to Singapore
CHOO CHIAU BENG
Chief Executive Officer,
Keppel Corporation
DR LEE SUAN YEW
Medical Practitioner and
Past President of the
Singapore Medical Council
TEO SOON HOE
Senior Executive Director,
Keppel Corporation
JEFFREY ALAN SAFCHIK
Chief Financial Officer and
Chief Operating Officer
ALEXANDAR VAHABZADEH
President, Safanad SA
PROF NEO BOON SIONG
Professor (Division of Strategy,
Management and Organisation),
Nanyang Business School,
Nanyang Technological University
PROF ANNIE KOH
Vice President, Business Development
and External Relations, Singapore
Management University
Keppel Group Boards of Directors
27
KEPPEL TECHNOLOGY ADVISORY PANEL
(From left) First row: Dr Brian Clark, Choo Chiau Beng (CEO of Keppel Corporation), Sven Bang Ullring, Dr Lee Boon Yang (Chairman of Keppel Corporation),
Professor Sir Eric Ash. Second row: Dr Malcolm Sharples, Professor Jim Swithenbank, Professor Ng Wun Jern, Professor Kazuo Nishimoto, Professor Tom
Curtis, Professor Minoo Homi Patel. Not in photo: Professor Stefan Thomke
The Keppel Technology Advisory
Panel (KTAP) was established in 2004
to advance the Group’s technology
leadership. It comprises eminent
business leaders, professionals and
industry experts. KTAP members have
been contributing to new ideas and
developments, ranging from drilling and
production technology, offshore wind,
coal gasification and Waste-to-Energy,
to potential disruptive technologies in
subsea and 3D additive manufacturing.
KTAP is advising Keppel on carbon
capture and storage issues relating
to the introduction of carbon tax in
Singapore, as well as technologies
for coal gasification, district heating
and cooling, Waste-to-Energy and
wastewater treatment. New areas
being explored include managing
and treating water used in shale
gas extraction, raising the efficiency
of power generation and improving
drilling and production automation.
With active participation from Keppel’s
board and senior management, KTAP
convenes up to twice a year and has
met 15 times since its inception.
Significant current events, lessons
learnt and implications are discussed
at these meetings. Distinguished
guest speakers are also invited to
add to the knowledge pool and
robust discourses.
TECHNOLOGY INITIATIVES
KTAP provides support and
suggestions to improve the Group’s
Research and Development (R&D)
processes. It encouraged the
setting up of Keppel Offshore &
Marine Technology Centre in 2007
to focus on long-term projects,
and recommended the Stage Gate®
Process to screen R&D proposals.
SVEN BANG ULLRING
CHAIRMAN (APPOINTED IN APRIL 2012)
Master of Science, Swiss Federal
Institute of Technology (ETH), Zurich.
He was 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
and was Director of the International
Department from 1972. He was an
Independent Director on Keppel
Corporation’s Board from 2000 to
April 2012.
He is the Chairman of the Board
of The Fridtjof Nansen Institute,
Oslo, Norway. He was the Chairman
of the Maritime and Port Authority
of Singapore’s First, Second and
Third Maritime and Research and
Development Advisory Panel.
He is a fellow and Honorary fellow
of the Norwegian Academy of
Technological Sciences and a fellow
of the Royal Swedish Academy of
Engineering Sciences.
PROFESSOR SIR ERIC ASH
BSc and PhD, Imperial College
London; CBE FREng FRS.
He is presently an Advisor to Tata
Consulting Engineers Ltd in Mumbai.
A past president of the Institution
of Electrical Engineers, he is a
Foreign Member of the US National
Academy of Engineering. He was
Rector of Imperial College 1985 –
1993 and Vice President of the
Royal Society 1997 – 2002. He has
several honorary doctorates including
one from Nanyang Technological
University (Singapore).
DR BRIAN CLARK
Schlumberger Fellow; B.S. Ohio State
University; PhD, Harvard University
(1977).
He holds 67 patents related to the
exploration and development of oil
and gas, primarily in wire line logging
28
Keppel Corporation Limited
Report to Shareholders 2012
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.
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 Cranfield
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), Cranfield
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 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 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.
PROFESSOR JIM SWITHENBANK
BSc, PhD, FREng, FInstE, FIChemE,
Energy and Environmental
Engineering Group.
He is the Chairman of The Sheffield
University Waste Incineration
Centre (SUWIC), a fellow of the
Royal Academy of Engineering and
a member of numerous International
Combustion Committees. He was
the President of the Institute of
Energy (1986 – 1987) and has served
on many UK government/DTI/
EPSRC Committees. He is a prolific
researcher with over 300 refereed
papers to his credit and holder of
more than 30 patents.
PROFESSOR NG WUN JERN
(APPOINTED IN JANUARY 2012)
BSc (CE) QMC London University,
MSc (Water Resources) and PhD
University of Birmingham, PE(S),
FIES, FSEng.
He is the Executive Director at
the Nanyang Environment &
Water Research Institute (NEWRI)
and Professor, Environmental
Engineering in the School of Civil
& Environmental Engineering at
Nanyang Technological University.
He has some 400 publications
including technical papers, books
and patents. He was Chairman on
the Board of directors of a major
consulting firm in Singapore. He
is technical advisor to a number of
environmental companies operating
in ASEAN, China and India.
PROFESSOR STEFAN THOMKE
(APPOINTED IN JANUARY 2012)
BS (Electrical Engineering), University
of Oklahoma; MS (Electrical &
Computer Engineering), Arizona
State University; SM (Operations
Research), SM (Mgmt.), PhD (Electrical
Engineering & Mgmt.), Massachusetts
Institute of Technology; AM
(Honorary), Harvard University.
He is an authority on the
management of innovation and the
William Barclay Harding Professor
of Business Administration at
Harvard Business School (HBS).
He is Chair of the Executive Education
Program Leading Product Innovation
and is faculty Chair of HBS executive
education in India. He is currently
on the core faculty of the General
Management Program (GMP) and has
previously taught in the Advanced
Management Program (AMP).
He was faculty Chair of the MBA
Required Curriculum and faculty
Co-Chair of the doctoral programme
in Science, Technology and
Management (S, T&M).
Professor Thomke is a widely
published author. Prior to joining the
Harvard faculty, he was with McKinsey
& Company in Germany.
PROFESSOR KAZUO NISHIMOTO
(APPOINTED IN JANUARY 2012)
B.S.E. Naval Architect and Marine
Engineer, University of São Paulo;
M.S. Eng, Yokohama National
University, Japan and PhD Naval
Architecture & Ocean Engineering,
University of Tokyo, Japan.
He served as a Visiting Professor of
the University of Tokyo in 1991 and
in the University of Michigan Ann
Arbor from 1996 – 1997. He is a
Full Professor of the University of
São Paulo, Head of Department
of Naval Architecture & Ocean
Engineering of Polytechnic School
of USP and Director of Numerical
Offshore Tank Center of USP.
He also coordinated several
development projects in the field
of naval and ocean engineering,
mainly related to offshore systems
and military vessels. He has been
developing the Numerical Offshore
Tank (TPN) and DYNASIM simulators
coupling several numerical codes to
analyse moored floating systems.
Keppel Technology Advisory Panel
29
SENIOR MANAGEMENT
KEPPEL CORPORATION
CORPORATE SERVICES
OFFSHORE & MARINE
CHOO CHIAU BENG
CHIEF EXECUTIVE OFFICER
TEO SOON HOE
SENIOR EXECUTIVE DIRECTOR
TONG CHONG HEONG
SENIOR EXECUTIVE DIRECTOR
LOH CHIN HUA
CHIEF FINANCIAL OFFICER
CHEE JIN KIONG
DIRECTOR
(GROUP HUMAN RESOURCES)
TONG CHONG HEONG
CHIEF EXECUTIVE OFFICER
Keppel Offshore & Marine
WANG LOOK FUNG
DIRECTOR
(GROUP CORPORATE AFFAIRS)
CHOW YEW YUEN
CHIEF OPERATING OFFICER
Keppel Offshore & Marine
PAUL TAN
(GROUP CONTROLLER)
ONG YE KUNG
DIRECTOR
(GROUP STRATEGY &
DEVELOPMENT)
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)
JACOB TONG
GENERAL MANAGER
(GROUP INFORMATION SYSTEMS)
GOH TOH SIM
CHIEF REPRESENTATIVE (CHINA)
WONG NGIAM JIH
CHIEF FINANCIAL OFFICER
Keppel Offshore & Marine
CHEE JIN KIONG
EXECUTIVE DIRECTOR
(HUMAN RESOURCES)
Keppel Offshore & Marine
MICHAEL CHIA HOCK CHYE
MANAGING DIRECTOR (MARINE)
MANAGING DIRECTOR
(TECHNOLOGY)
Keppel Offshore & Marine
MANAGING DIRECTOR
Keppel Offshore & Marine
Technology Centre (KOMtech)
WONG KOK SENG
MANAGING DIRECTOR (OFFSHORE)
Keppel Offshore & Marine
MANAGING DIRECTOR
Keppel FELS
CHOR HOW JAT
MANAGING DIRECTOR
Keppel Shipyard
HOE ENG HOCK
MANAGING DIRECTOR
Keppel Singmarine
TOH KO LIN
EXECUTIVE DIRECTOR
Keppel Singmarine
WONG FOOK SENG
EXECUTIVE DIRECTOR (OPERATIONS)
Keppel FELS
30
Keppel Corporation Limited
Report to Shareholders 2012
DR FOO KOK SENG
EXECUTIVE DIRECTOR
(SHALLOW WATER TECHNOLOGY)
KOMtech
EXECUTIVE DIRECTOR
Offshore Technology Development
AZIZ AMIRALI MERCHANT
EXECUTIVE DIRECTOR
(ENGINEERING)
Keppel FELS
EXECUTIVE DIRECTOR
(DEEPWATER TECHNOLOGY)
KOMtech
EXECUTIVE DIRECTOR
Deepwater Technology Group
CHARLES FOO CHEE LEE
DIRECTOR/ADVISOR
KOMtech
INFRASTRUCTURE
DR ONG TIONG GUAN
MANAGING DIRECTOR
Keppel Energy
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
THOMAS PANG THIENG HWI
CHIEF EXECUTIVE OFFICER
Keppel Infrastructure Fund
Management (Trustee-Manager
of K-Green Trust)
PROPERTY
UNIONS
ANG WEE GEE
CHIEF EXECUTIVE OFFICER
Keppel Land
EXECUTIVE VICE CHAIRMAN
Keppel Land China
CHOO CHIN TECK
COMPANY SECRETARY
Keppel Land
DIRECTOR (CORPORATE SERVICES)
Keppel Land International
LIM KEI HIN
CHIEF FINANCIAL OFFICER
Keppel Land International
TAN SWEE YIOW
PRESIDENT (SINGAPORE)
Keppel Land International
HO CHEOK KONG
PRESIDENT
Keppel Land China
LINSON LIM
PRESIDENT
(VIETNAM & PHILIPPINES)
Keppel Land International
SAM MOON THONG
PRESIDENT (INDONESIA)
Keppel Land International
NG OOI HOOI
PRESIDENT
(REGIONAL INVESTMENTS)
Keppel Land International
NG HSUEH LING
CHIEF EXECUTIVE OFFICER/
DIRECTOR
Keppel REIT Management
CHRISTINA TAN
MANAGING DIRECTOR
Alpha Investment Partners
KEPPEL FELS EMPLOYEES’ UNION
VINCENT HO MUN CHOONG
PRESIDENT
ATYYAH HASSAN
GENERAL SECRETARY
KEPPEL EMPLOYEES UNION
RAZALI BIN MAULOD
PRESIDENT
MOHD YUSOF BIN MOHD
GENERAL SECRETARY
SHIPBUILDING & MARINE
ENGINEERING EMPLOYEES’ UNION
WONG WENG ONG
PRESIDENT
EILEEN YEO CHOR GEK
ASSISTANT GENERAL SECRETARY
MAH CHEONG FATT
EXECUTIVE SECRETARY
GOH SOR IMM
DEPUTY EXECUTIVE SECRETARY
SINGAPORE INDUSTRIAL &
SERVICES EMPLOYEES’ UNION
TAN PENG HENG
PRESIDENT
LIM KUANG BENG
GENERAL SECRETARY
SYLVIA CHOO
EXECUTIVE SECRETARY
UNION OF POWER
& GAS EMPLOYEES
TAY SENG CHYE
PRESIDENT
S. THIAGARAJAN
EXECUTIVE SECRETARY
NACHIAPPAN RKS
GENERAL SECRETARY
Senior Management
31
INVESTOR RELATIONS
1
1 The investing community
enjoys access to Keppel
Corporation’s top
management.
2 Institutional investors
visited Keppel’s
yards for a better
understanding of the
rigbuilding operations
and facilities.
A slow global economic recovery
laden with uncertainties has made
company valuation and investment
decision making even more
challenging. Against this backdrop,
Keppel Corporation employs a robust
investor relations programme to
engage its shareholders.
Strong corporate governance,
transparent disclosures and effective
communication with shareholders
guide the Company’s investor relations
efforts. With a dedicated investor
relations team, the management
proactively builds relationships with
analysts and investors worldwide,
understanding their concerns and
addressing these promptly through
various platforms.
These continuous efforts help the
Company in achieving a fair valuation
that reflects its astute management,
sound strategy and strong competencies,
empowering it to shape its future.
PROACTIVE OUTREACH
In 2012, Keppel Corporation held
about 170 one-on-one investor
meetings and conference calls with
local and overseas institutional
investors. Members of the senior
management went on non-deal
roadshows to Japan, Hong Kong,
the US and UK and had 60 meetings.
The Company provides access to
its management at these meetings,
and briefs investors on its business
thrusts and developments. Such
proactive outreach enables Keppel
to foster deeper relationships with
long-term shareholders as well as
cultivate new ones.
During the year, the Company created
opportunities for investors to visit major
operational centres and projects in
Singapore and overseas. Responding
to keen interests in its offshore
newbuilding and conversion business,
Keppel held over 10 yard tours and
dialogue sessions for institutional
investors attending major
conferences in Singapore.
Several visits to the BrasFELS
shipyard in Brazil and the Sino-
Singapore Tianjin Eco-City in China were
also held to help investors understand
the Company’s Near Market, Near
Customer strategy and sustainable
development business.
Keppel also took part in selected
investor conferences such as the
Annual Oil & Offshore Conference
organised by Pareto Securities
in Norway. Such conferences
are strategic platforms for the
management to renew and
strengthen ties with investors
and industry stakeholders.
EFFECTIVE COMMUNICATION
To reach out to our stakeholders
worldwide in a timely and effective
manner, the Company continued
‘live’ webcasts of its quarterly results
and presentations. These webcasts
allow viewers worldwide to watch
presentations by the management
and post questions online in
real time.
Market sensitive news is promptly
posted on Keppel Corporation’s
website, www.kepcorp.com, as well as
the Singapore Exchange website, at
the end or beginning of each market
day. This ensures that pertinent
company information is promptly
disseminated and easily accessible
to shareholders.
In 2012, the corporate website was
further enhanced for information
access and user-experience. Website
visitors can now sign up for and
32
Keppel Corporation Limited
Report to Shareholders 2012
2
Total Shareholder Return (TSR)
22.9%
Increased from negative 6.4%
in FY 2011
10-Year TSR Growth
26.0%
(compounded)
This is significantly higher than
STI’s compounded annual TSR
growth rate of 11%
The distribution for 2012 is 68%
higher than 2011’s total distribution
of 43.0 cents per share. The payout
for 2012 represents 68% of the Group’s
net profit before revaluation, major
impairment and divestments. This is
equivalent to a gross yield of 6.6% on
the Company’s last transacted price
as at 31 December 2012.
During the year, the Company
received several accolades from the
business and investing communities
for its robust investor relations
efforts. Details of these investor
relations awards can be found on
page 34 of this annual report.
customise notifications on updates
to media releases, the annual
report, newsletters and results
announcements under a new email
alert system. This system also allows
the Company to broadcast important
information to a large group of
stakeholders.
Keppel Corporation produced its
second sustainability report in 2012,
disclosing the Group’s environmental,
social and governance performance
in line with the internationally-
accepted Global Reporting Initiative
(GRI) framework’s Application
Level B (GRI-checked). The report
will be produced annually to give
stakeholders insights into the
Company’s sustainability efforts.
The Company actively seeks
investors’ feedback and monitors
analyst and media reports which help
it to continuously improve its investor
relations efforts. Contact details of
the Company’s investor relations
personnel are put on the corporate
website for shareholders to make
enquiries or provide feedback; any
significant concerns or constructive
suggestions will be promptly
communicated to the management.
SUSTAINED VALUE CREATION
Keppel Corporation continued to
sustain its returns to shareholders
in 2012.
Return On Equity exceeded 20%
for the sixth consecutive year at
22.6%, excluding revaluation, major
impairment and divestments.
Total Shareholder Return (TSR) in
2012 grew to 22.9% from negative
6.4% in 2011, which is close to the
benchmark Straits Times Index’s
(STI) TSR of 23.3%. The Company’s
Compounded Annual Growth Rate
(CAGR) TSR of 26% over the past
decade, is also significantly higher
than STI’s CAGR TSR of 11%.
Keppel Corporation’s share price
gained 18% over the year closing at
$11.00 at the end of 2012, close to
STI’s gain of 19.7% in the same period.
To reward its shareholders, the
Company announced a total dividend
distribution of 72.4 cents per share
for 2012. This includes the interim
dividend of 18.0 cents per share, a
final dividend of 27.0 cents per share,
and a dividend in specie of Keppel
REIT units equivalent to 27.4 cents.
Investor Relations
33
AWARDS & ACCOLADES
CORPORATE GOVERNANCE
& TRANSPARENCY
SECURITIES INVESTORS
ASSOCIATION OF SINGAPORE
13TH INVESTORS’ CHOICE AWARDS
• KEPPEL CORPORATION
– Winner, Singapore Corporate
Governance Award (Big Cap)
– Most Improved Company,
Singapore Corporate
Governance Award
– Brendan Wood TopGun CEO
Designation, Mr Choo Chiau Beng
• KEPPEL LAND
– Merit, Singapore Corporate
Governance Award (Big Cap)
– Runner-up, Most Transparent
Company Award (Property)
• KEPPEL REIT
– Runner-up, Most Transparent
Company Award (REITs)
SINGAPORE CORPORATE AWARDS
• KEPPEL LAND
– Gold, Best Annual Report
– Silver, Best Managed Board
(Market cap of $1 billion
and above)
• KEPPEL TELECOMMUNICATIONS
& TRANSPORTATION
(KEPPEL T&T)
– Bronze, Best Investor Relations
(Market cap of $300 million to
less than $1 billion)
IR MAGAZINE SOUTHEAST ASIA
CONFERENCE & AWARDS
• KEPPEL CORPORATION
– Best Investor Relations Award
by Section (Industrials)
• KEPPEL LAND
– Grand Prix for Best Overall
Investor Relations Award
(Mid or Small Cap)
SOUTHEAST ASIA INSTITUTIONAL
INVESTOR CORPORATE AWARDS
• KEPPEL CORPORATION
– The Best Annual Report
in Southeast Asia
– Top eight most preferred
companies by institutional
investors
GOVERNANCE AND
TRANSPARENCY INDEX
• Keppel Corporation was ranked
fourth, Keppel Land was sixth while
Keppel T&T was 13th out of 674
companies assessed.
• Keppel Corporation was named the
Overall Best Managed Company
in Singapore (Large Cap), at the
Asiamoney Annual Best Managed
Companies Awards.
BUSINESS EXCELLENCE
• Keppel Shipyard won the
Repair Yard and Shipyard of
the Year awards from Seatrade
and Lloyd’s List respectively.
• Nakilat-Keppel Offshore & Marine
won the Ship Repair/Shipyard and
Shipyard of the Year awards for the
Middle East & Indian Subcontinent
from Seatrade and Lloyd’s
List respectively.
• The BrasFELS yard garnered the
Quality and Sustainability Naval Award
for large companies from Brazil’s
National Union of Construction,
Ship Repair and Offshore Industry
and the ARO Foundation.
• Keppel Logistics was named, for
the third time, the Best Domestic
Logistics Service Provider of the
Year (Singapore) at the annual
Frost & Sullivan Asia Pacific Best
Practices Awards 2012.
• Keppel Land clinched four
Euromoney Real Estate Awards:
– Best Office Developer,
Singapore (fifth consecutive year)
– Best Developer, Vietnam
– Best Residential Developer,
Vietnam
• Keppel Land received the Highly
Commended Best Developer
Singapore award at the South East
Asia Property Awards.
• Keppel Land won the Best Property
Development Organisation for
Mature Markets (Merit) at the
Asia Pacific Real Estate Association
Best Practices Awards.
• Reflections at Keppel Bay
(Reflections) topped the FIABCI
Singapore Property Awards’
high-rise residential category.
• Reflections was lauded at
the International Architecture
Awards, conferred by The
Chicago Athenaeum: Museum
of Architecture and Design;
the European Centre for
Architecture Art Design and
Urban Studies, and the
Metropolitan Arts Press.
• Reflections clinched the
Design and Engineering
Safety Excellence Award (Merit)
and the Universal Design Award
(Silver) at the Building and
Construction Authority of
Singapore (BCA) Awards.
It also achieved a high score
of 95.9 for BCA’s Construction
Quality Assessment System.
• Reflections received a Special
Award as the Residential Building
of the Year (Multiple Occupancy)
by Emirates Glass LEAF (Leading
European Architects Forum).
• Marina Bay Financial Centre Phase 1
topped the FIABCI Prix d’Excellence
Awards office category, while
Marina Bay Residences (MBR)
was runner-up in the high-rise
residential category.
• MBR clinched BCA’s Construction
Excellence Award.
– Best Mixed-Use Developer,
• Ocean Financial Centre (OFC)
Vietnam
received Five Star ratings for Best
Commercial High-Rise Development,
Best Office Development and
Best Office Architecture at the
International Property Awards.
– Top three companies with the
strongest adherence to corporate
governance in Singapore
• Keppel Land was among the top
10 developers in Singapore and
Vietnam at the BCI Asia Awards.
34
Keppel Corporation Limited
Report to Shareholders 2012
It also won Merit for Commercial
Interior at the Pinnacle Awards.
• Riviera Point was awarded the
Highly Commended Mixed-Use
Development in Vietnam.
• Jakarta Garden City (Phase 1) was
named the Best Villa Development
in Indonesia at the South East Asia
Property Awards.
• Sedona Hotel Yangon was
named Myanmar’s Leading Hotel
for the fifth consecutive year,
while Hotel Sedona Manado
was Indonesia’s Leading Business
Hotel for the second year at the
World Travel Awards.
SUSTAINABILITY
• The Keppel Group won 34
Workplace Safety and Health (WSH)
Awards from the WSH Council and
Singapore’s Ministry of Manpower,
the highest number ever attained
by a single organisation.
• Mr Choo Chiau Beng, CEO of
Keppel Corporation, was awarded
the Corporate Social Responsibility
Award by CNBC.
• Keppel Land was ranked among
the top sustainable companies
on the Dow Jones Sustainability
Asia Pacific and World Indices
2012/2013.
• Keppel Land was named
Regional Sector Leader (Office)
in the Global Real Estate
Sustainability Benchmark.
• Keppel Land received special
mention in the Singapore
Compact CSR Award’s Green
Champion category.
BCA GREEN MARK AWARDS
• SINGAPORE
– Keppel DHCS’s District Cooling
System plant, Platinum
– The Lakefront Residences, Gold
– Marina at Keppel Bay, Gold
– Bugis Junction Towers, Gold
– Capital Square, Gold
– 158 Cecil Street, Gold
– Cassia @ Penjuru, Gold
– Keppel Offshore & Marine
Technology Centre, Certification
• OVERSEAS
– International Financial Centre
Jakarta Tower 2, Platinum
– Saigon Centre Phase 2 in
Ho Chi Minh City (HCMC), Gold
– Riviera Point in HCMC, Gold
– Elita Garden Vista in Kolkata,
Certification (Provisional)
• Bugis Junction Towers was
re-certified with the Eco-Office
Label (2011 – 2013) by the
Singapore Environmental Council.
• OFC was certified under the
United States’ Leadership in
Energy and Environmental Design
Green Building Rating System
(Platinum Level LEED-CS), and
received Merit for Buildings Under
Construction in Asia Pacific at the
Green Building Award.
• Alpha Investment Partners’ 158
Cecil Street won two Gold Awards
at the World Green Roof Congress
for the design and construction
quality of its vertical garden.
• Keppel REIT’s 8 Chifley Square in
Sydney was awarded the 6-Star
Green Star Office Design v2 rating
by the Green Building Council of
Australia. Its Grade A commercial
building, 275 George Street, in
Brisbane achieved an energy rating
of 5-stars under the National
Australian Built Environment
Rating System.
• Jakarta Garden City (Phase 1)
topped the Green Development
category at the South East Asia
Property Awards.
Patron of the Arts Award from
Singapore’s National Arts Council,
and received the SSO Benefactor
Award from the Singapore
Symphony Orchestra.
• Keppel Corporation was conferred
the ‘Friend of Heritage’ award by
the National Heritage Board.
• Keppel Corporation was
conferred the title of Distinguished
Fellow by the Singapore Scout
Foundation Fund.
• Keppel Offshore & Marine
(Keppel O&M) was conferred the
Distinguished Partner in Progress
Award by Singapore’s Economic
Development Board.
• Keppel Land’s joint venture, Royal
Park Sedona Suites Hanoi, received
the prestigious 2nd Order Labour of
Med Award.
HUMAN RESOURCE
• Keppel Corporation was named
Singapore’s 11th most attractive
employer at the inaugural
Randstad Award.
• The Keppel Group won five
accolades at the ‘Helping
Employees Achieve Life-time
Health’ Awards by Singapore’s
Health Promotion Board.
• Mr Tong Chong Heong, CEO of
Keppel O&M, was named Champion
of HR at the HRM Awards.
• The late MD (Marine) of Keppel O&M
and MD of Keppel Shipyard,
Mr Nelson Yeo, was conferred the
Lifetime Achievement Award by
Lloyd’s List.
• Spring City Golf & Lake Resort
• Keppel Land garnered seven
received the Best Eco-Friendliness
Award by Golf Magazine China.
awards from the Singapore HR
Institute, including the HR Advocate
Award in CSR.
CORPORATE CITIZENRY
• The Keppel Group garnered its
fifth consecutive Distinguished
Awards & Accolades
35
SHAPING
THE FUTURE
We will strengthen our
core and invest for growth
to build successful and
sustainable businesses.
Photo courtesy of Woh Hup
PROPRIETARY DESIGNS
POWER GENERATION
RESIDENTIAL PIPELINE
27
800MW
Jackup, semisubmersible
and drillship solutions
Additional capacity
ready in 2013
75,000
Homes across Asia
Firm foundations have enabled us to deliver solid results year on year and emerge
stronger through every challenge. We will continue to fortify our strengths and
competencies, harnessing human, knowledge and financial capital to shape
Keppel’s future.
SHAPING THE FUTURE
Keppel has chosen to be in the businesses where our core
competencies lie and where we can create the most value
– offshore & marine, infrastructure and property – providing
sustainable solutions to help address the world’s needs for
energy, homes, connectivity and a clean environment.
Majulah (in Malay) Keppel or Onward
Keppel – this continues to be our rallying
call. It was the banner under which our
Keppel veterans boldly made their stride
more than four decades ago when
they decided to forge the future with a
distinct management and culture.
In 2013, Keppel is 45 and still on the
march. What drives 40,000 of our
people worldwide is that same vision
and mission of building quality and
enduring businesses with the stamp
of the Keppel brand. Today, the brand
has grown to be synonymous with
world-class quality, innovation and
execution excellence.
Keppel was listed as a shipyard on
the Stock Exchange of Singapore in
1980 and our market capitalisation
was $396 million. As at end December
2012, our market capitalisation grew
to $19.7 billion. Our full year revenue
and net profit have risen from about
$723.2 million and $87.2 million in
1981 to $13.9 billion and $1.9 billion
(before revaluation, major
impairment and divestments)
respectively in 2012.
We stay on track with our multi-
business growth strategy. We will
enhance the performance of the Group’s
businesses, prudently manage
resources, harness synergies, build
our human capital and sharpen
our competitive edge to seize new
opportunities and deliver greater
value. Technology and innovation are
our key value propositions, enabling
us to offer cost-effective, leading-
edge solutions to customers.
For Keppel, it has always been about
shaping the future.
38
Keppel Corporation Limited
Report to Shareholders 2012
Keppel Corporation’s 10-Year Revenue and Net Profit ($ million)
15,000
12,500
10,000
7,500
5,000
2,500
0
2,100
1,750
1,400
1,050
700
350
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Revenue
Net Profit*
5,947
394
3,963
465
5,688
564
7,601
751
10,144
957
11,784
1,079
11,990
1,190
9,140
1,307
10,082
1,491
13,965
1,914
* Figures exclude revaluation, major impairment and divestments.
THROUGH STRATEGY
Keppel has chosen to be in the
businesses where our core
competencies lie and where we can
create the most value – offshore &
marine, infrastructure and property
– providing sustainable solutions to
help address the world’s needs for
energy, homes, connectivity and a
clean environment.
The world’s urban population is
projected to grow to over six billion
by 2050. Rapid urbanisation of the
world’s fast-growing population
creates both challenges and
opportunities. Challenges will
include resource pressures on
housing, energy and water supply,
as well as the diminishing ability of
the natural environment to absorb
human-induced pollution and waste.
We firmly believe that we shall
realise much value both immediately
and for the future if we build upon our
existing world leadership in offshore
rig construction. The collective and
synergistic strengths of the business
units in Keppel O&M continues to
deliver strong results.
Revenue for Keppel O&M has
grown three-fold from $1.9 billion
in 2002 to about $7.9 billion in
2012. Economic Value Added also
reached $708 million in 2012, from
$20.2 million in 2002. By eliminating
duplication and internal competition,
streamlining the operations of
our yards as well as harnessing
synergies and combined strengths,
we continue to maximise value for
not only ourselves, but also our
customers and business partners.
At the same time, rising global demand
for energy is driving exploration and
production into new frontiers, which
are deeper and harsher. Stable oil
prices of above US$100 per barrel
continue to support exploration in
the Gulf of Mexico, North Sea,
Brazil and West Africa.
Keppel Land is now a focused
developer of outstanding properties
for sale and a successful manager
of property funds. Our diversified-
business portfolio enables us to
enjoy the counter-cyclical advantages
of the offshore and marine,
infrastructure and property sectors.
Even as we build up our core
competencies, we are also constantly
on the look-out for investments,
which provide long-term growth
potential and sustainable returns
and to which we can add value.
One of the most recent examples
is our purchase of a 20% stake
in KrisEnergy, an independent
upstream oil and gas company with
a diverse portfolio in Southeast Asia.
At the same time, we continue to invest
in areas, closely related to our core
businesses. Our interest in topside
module fabricator Dyna-Mac
Holdings allows us to have better control
over the process of designing and
fabricating oil and gas production
modules while our stake in Floatel
International reflects our growing
confidence in the long-term prospects
for high quality floating accommodation
semisubmersibles in Brazil and the
North Sea.
These efforts are supplemented by
opportune divestment of our assets.
For Keppel, there are no sacred cows.
Our sale of Keppel Capital Holdings
in 2001 and Singapore Petroleum
Company in 2009 provided the cash
Shaping the Future
39
SHAPING THE FUTURE
By harnessing collective strengths and synergies across yards, Keppel O&M continues to maximise value for the Company and its stakeholders.
flow and a stronger balance sheet for
the Group to focus on the growth of
key businesses.
Keppel’s drive to constantly rationalise
and grow its businesses has buttressed
the Group’s overall prospects. Our
diversified-business model is well-
suited for extracting synergies
and drawing on complementary
strengths to develop new business
platforms and exploit opportunities.
THROUGH SOLUTIONS
Our vision is to be the provider of
choice for solutions to the offshore
and marine industries, sustainable
environment and urban living.
In our respective businesses, we
have been privileged to deepen
relationships with our customers
which has enabled us to better
understand and anticipate their
requirements. Bringing together the
best of our technology and operational
experience, we seek to develop
market-relevant and commercially
viable products, improving upon
existing solutions and addressing
future needs.
We continue to pursue our Near
Market, Near Customer strategy,
which allows us to be responsive to
our customers and keep abreast of
market conditions. Notably, Keppel
secured contracts from Sete Brasil
for six semisubmersible drilling rigs
of its proprietary DSSTM 38E design,
on the count of our proven shipyard
and track record in Brazil.
Today, emerging economies
dominate energy production growth,
with the Asia Pacific accounting
for nearly half of global growth.
According to the BP World Energy
Outlook 2030, the Asia Pacific
region is the largest regional energy
producer, showing the most rapid
growth rate (2.2% per annum) and
accounting for 48% of global energy
production growth. This augurs well
for our Asian network of yards across
the Philippines, Indonesia and China.
Ongoing productivity enhancements
and mechanisation have equipped
our satellite yards to support our
operations in Singapore as well
as to take on more complex projects.
This will increasingly help to alleviate
the labour constraints in Singapore.
We are unrelenting in our emphasis
on improving productivity through
process technology. Steering our
efforts in this area is the Productivity
Improvement Taskforce responsible
for overseeing the development of
related strategic plans, and ensuring
that the initiatives are executed
across all the yards in our global
network. Annually, we invest about
$200 million in yard maintenance
and enhancements.
Continuous efforts and investments
to raise efficiency over the years have
reaped substantial benefits for the
Keppel O&M Group. With improved
40
Keppel Corporation Limited
Report to Shareholders 2012
processes and systems, Keppel FELS
doubled its output in 2009 and
delivered 13 rigs, compared to
six rigs in 2007. In 2013, Keppel
FELS will achieve a new record of
delivering 20 rigs.
Our feats are achieved with minimal
capital expenditure by leveraging
breakthrough innovations in
construction methodology, adopting
new manufacturing concepts as
well as integrating operations
management and control of critical
processes. The activities of our
engineering offices in Singapore,
Bulgaria, Mumbai and Shenzhen are
seamlessly integrated through an
advanced web-based environment
offering 3D design tools and data
management functions. The system
enhances design accuracy, speeds
up communications and prevents
unnecessary revisions as well as
enables our engineering centres
operating in different time zones to
work on projects with high efficiency,
round-the-clock.
As the world’s demand for energy
continues to spur exploration and
production, our comprehensive suite
of offshore and marine solutions
address the operating challenges
of virtually all frontiers. In the area
of Arctic drilling, Keppel O&M and
ConocoPhillips are jointly designing
a jackup that can operate efficiently
and safely in ice environments.
Our focus on research and
development (R&D), and commitment
to technological innovation are key
engines to sustaining growth. Driving
our R&D efforts and technology
foresight further is the Keppel
Technology Advisory Panel, supported
by our centres of excellence.
The recent restructuring of Keppel
Offshore & Marine’s Technology
Division highlights our continued
efforts to advance our technology edge
and productivity in our yards globally.
Across businesses in the Group, we apply
the same commitment to innovation.
Whether it is implementing proprietary
“Our focus on
research and
development,
and commitment
to technological
innovation are
key engines to
sustaining growth.”
Keppel O&M is partnering ConocoPhillips to jointly design the first ice-worthy jackup for the Arctic.
Shaping the Future
41
SHAPING THE FUTURE
technology in Waste-to-Energy
management or wastewater treatment
in the desert of Qatar or building
integrated eco-townships in Asia,
we are in the business to better the
quality of lives and the environment.
THROUGH PRUDENCE
Prudent capital allocation and
disciplined financial management
together with sound operating
policies are Keppel’s hallmarks,
whether in good times or bad.
Our solid balance sheet provides
financial strength to invest in growth
and enables us to seize opportunities
as they present themselves.
In our property business, for
example, the establishment and
listing of K-REIT Asia, now renamed
Keppel REIT, represented an
important milestone to unlock value.
For Keppel Land, the strategic move
facilitates the re-deployment of
capital in investment properties to
property development projects to
generate higher returns; this creates
an enlarged platform to generate
fee-based income and better Return
On Equity to shareholders.
Demonstrating continuing acumen,
Keppel Land entered into a conditional
share purchase agreement with then
K-REIT Asia for the divestment of its
one-third interest in Phase One of
Marina Bay Financial Centre (MBFC)
at an agreed value of $1,426.8 million
(inclusive of rental support).
As part of the asset swap, Keppel Land
had signed a conditional sale and
purchase agreement with K-REIT Asia
for the purchase of two properties,
Keppel Towers and GE Tower, at
an agreed value of $573.0 million,
for redevelopment into premium
residences for city living.
For Keppel Land, the acquisition
presented the opportunity to
increase its residential pipeline
with the potential redevelopment
of Keppel Towers and GE Tower.
The rapid transformation of the
business district into an area for
live-work-play and future
development plans for the Tanjong
Pagar precinct present good
investment opportunities.
At the same time, the world-class
MBFC development will continue
to augment Keppel Land’s sterling
portfolio of prime commercial
properties through its interest in
Keppel REIT. Importantly, the net
cash proceeds of about $812.0 million
provided Keppel Land additional
capital to invest in more projects that
could generate higher returns for
the company.
As a Group, we are always looking
out for good assets and adjacencies
that will further enhance our suite
of core businesses. Often times,
when good assets come by, it may
not be the best time to borrow.
The global economic turmoil followed
by the European debt crisis have
diverted investors’ attention to
corporate credits and created a very
conducive and liquid environment
for bond issuers.
1
1 Continuous productivity
improvements enable
the Group to sharpen
execution and tackle
labour constraints.
2 Shareholder value is
maximised through
the Group’s prudent
investments and
recycling of capital.
42
Keppel Corporation Limited
Report to Shareholders 2012
We saw this as a good opportunity
for the Group to tap the credit
markets for long-term funds,
extend the average tenure of
loans and diversify funding sources.
In 2012, we raised about $1.8 billion
and stretched our average debt
maturity from three years to over
five. The funds raised put us in a
comfortable position to meet current
and future needs.
For us, prudent financial management
is important in growing our businesses
in good times and sustaining them in
bad times. We will continue to manage
our finances wisely, guided by stringent
risk management and strong
corporate governance frameworks.
THROUGH PEOPLE
Our people, or Keppelites as we call
ourselves, have learnt through the
years to make adversity a friend,
developing a discipline and a culture
which are definitively Keppel.
Through ups and downs, the core
values of passion, integrity, customer
focus, people-centredness, safety,
agility and innovativeness, collective
strength and accountability bond us
and drive us.
Keppel’s performance in and beyond
this new constant of volatility will
depend on our core of dedicated
leaders, talented managers, as well
as our competent and committed
workforce. As we embrace change
and stay relevant, we continue to
place strong emphasis on nurturing
a sustainable and cohesive cast
of future leaders and employees
to steer the Group through
evolving landscapes.
We attract the best and brightest into
the Group through scholarships and
recruitment campaigns. Our talent
management programmes include
overseas assignments, special
projects and job rotations. Keppel’s
senior management frequently meet
and exchange views with our talents
at dialogue sessions. We recognise
succession planning has a vital
business imperative and have in
place a rigorous internal process
for that purpose. This succession
2
planning process is closely linked
with talent management to provide
a dynamic closed-loop process and
build our pipeline of high-calibre
successors over the mid to long term.
Training and development of our
people is being stepped up, so that
our workforce will be equipped and
ready to bring Keppel to the next level
of growth.
Through our in-house Keppel College
and training centres, we are growing
the capabilities of our people with a
structured learning and development
framework and programmes that are
tailored to our Group’s business needs.
Keppel College centralises the Group’s
programmes for leadership and
executive development. A suite of
courses such as the Keppel Group
Young Leaders Programme, General
Management Programme and
Keppel Global Advanced Management
Programme are customised in
collaboration with reputable business
schools and professional training
institutions. These initiatives also
Shaping the Future
43
SHAPING THE FUTURE
“Keppel’s performance in and beyond this new constant
of volatility will depend on our core of dedicated leaders,
talented managers, as well as our competent and committed
workforce. As we embrace change and stay relevant, we
continue to place strong emphasis on nurturing a sustainable
and cohesive cast of future leaders and employees to steer
the Group through evolving landscapes.”
CHOO CHIAU BENG,
CEO, KEPPEL CORPORATION
contribute to our upskilling and
inclusiveness of staff in our operations
worldwide. To date, Keppel College
has an alumnus of 2,577.
We also value retirees and older
employees as active mentors and
support re-employment beyond the
statutory retirement age. This allows
our experienced staff to pass on their
expertise and wealth of experience,
and coach the younger generation
of employees.
Keppel believes that a pay-for-
performance philosophy encourages
ownership of collective goals,
whereby a high-performance culture
creates long-term shareholder value.
We have in place a robust performance
management system to ensure
that all employees receive
regular performance and career
development reviews.
We engage and nurture communities
with the aim of achieving a sustainable
future together. Employee volunteerism
is a key thrust of the Group’s
community engagement programme.
Across the Group, employees are given
up to two days of paid volunteerism
leave each year to participate in
activities organised by Keppel
Volunteers which was started in
2000 as a Group-wide volunteer
movement. In 2011, Keppel Volunteers
launched fresh initiatives that
leveraged employees’ skills and
interests, and expanded its range of
supported causes to include elderly
care, environmental protection,
education, and animal welfare.
Wherever we operate, we are
committed to Sustaining Growth,
Empowering Lives and Nurturing
Communities.
ONWARD KEPPEL
While we do not know what the future
will bring, we offer insight into how
we think and address challenges,
what they mean for the Group, and
how we will manage, and indeed
thrive, through them.
Can-Do! That is the ultimate result of
our strong culture. We aim to reward
the unwavering trust of our investors
by delivering sustainable growth.
We are ever mindful about competition
and are compelled to continually
innovate and improve – to do things
safer, faster and better.
This is Keppel shaping the future.
The mentorship scheme in Keppel allows
experienced staff to pass on their wealth of
experience to younger Keppelites.
44
Keppel Corporation Limited
Report to Shareholders 2012
Keppel will forge forward, shaping the future with its trademark Can-Do! spirit.
Shaping the Future
45
OPERATING & FINANCIAL REVIEW
Keppel Corporation creates
sustainable value through its key
businesses in Offshore & Marine,
Infrastructure and Property. The
Group serves a global customer
base through its presence in over
30 countries, and as at end-2012
had total assets of $29.17 billion.
Some of the key factors influencing
the Group’s businesses include
global and regional economic
conditions, oil and gas exploration
and production activities,
real estate markets, currency
fluctuations, capital flows,
interest rates, taxation and
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
single factor, in the management’s
opinion, determines the Group’s
financial condition nor the
profitability of its operations.
This section provides the strategic
market and business overview of
the Keppel Group’s operations
and financial performance, based
on its consolidated financial
statements as at 31 December
2012. Also discussed are the
impacts of key business activities
on the Group’s performance,
challenges in the operating
environment, as well as the
long-term strategies which
Keppel uses to shape its future.
CONTENTS
47 – Group Structure
48 – Management Discussion & Analysis
50 – Offshore & Marine
62 – Infrastructure
70 – Property
78 – Investments
80 – Financial Review & Outlook
46
Keppel Corporation Limited
Report to Shareholders 2012
GROUP STRUCTURE
KEPPEL CORPORATION LIMITED
OFFSHORE & MARINE
INFRASTRUCTURE
PROPERTY
INVESTMENTS
• Offshore rig design, construction,
• Power and gas
• Property development
• Investments
repair and upgrading
• Ship conversion and repair
• Specialised shipbuilding
• Environmental engineering
• Property fund management
• Telco
• Logistics and data centres
• Property trusts
Keppel Offshore
& Marine Ltd
Power and Gas
100%
Keppel Bay Pte Ltd
70%
100%
k1 Ventures Limited
M1 Limited2
55%
72%
Keppel FELS Limited
100%
Keppel Shipyard Limited
100%
Keppel Energy
Pte Ltd
Keppel Merlimau
Cogen Pte Ltd
100%
30%
100%
Keppel Land Limited
Keppel Singmarine Pte Ltd
100%
Keppel Electric Pte Ltd
100%
46%
Keppel Nantong Shipyard
Company Limited,
China
Offshore Technology
Development Pte Ltd
Deepwater Technology
Group Pte Ltd
Marine Technology
Development Pte Ltd
Keppel AmFELS LLC
United States
Keppel Verolme BV
The Netherlands
100%
Keppel Gas Pte Ltd
100%
Keppel REIT
26%
100%
Environmental Engineering
100%
100%
Keppel Integrated
Engineering Ltd
100%
Keppel Land
International Limited
Southeast Asia, India and Middle East
100%
Keppel Seghers Engineering
Singapore Pte Ltd
100%
Keppel Land China
China
100%
Keppel FMO Pte Ltd
100%
Alpha Investment
Partners Ltd
100%
Keppel DHCS Pte Ltd
100%
36%
20%
Keppel FELS Brasil SA
Brazil
100%
Keppel Seghers Belgium NV
Belgium
100%
Keppel Singmarine
Brasil Ltda
Brazil
100%
K-Green Trust
49%
Keppel Philippines Marine Inc 98%
The Philippines
Logistics and Data Centres
Keppel Subic Shipyard Inc
The Philippines
87%
Keppel
Telecommunications
& Transportation Ltd
80%
Keppel Kazakhstan LLP
Kazakhstan
50%
Keppel Logistics Pte Ltd
100%
Caspian Shipyard
Company Limited
Azerbaijan
45%
Keppel Data Centres
Holding Pte Ltd
Arab Heavy Industries PJSC
UAE
33%
Keppel Logistics
(Foshan) Pte Ltd
China
100%
70%
Nakilat-Keppel Offshore
& Marine Ltd
Qatar
20%
Dyna-Mac Holdings Limited
24%
100%
100%
1 Owned by a Singapore Consortium,
which is in turn 90%-owned
by the Keppel Group.
2 Owned by Keppel
Telecommunications
& Transportation Ltd,
an 80%-owned subsidiary
of the Company.
GROUP CORPORATE
SERVICES
Sino-Singapore Tianjin Eco-City Investment
and Development Co., Ltd1, China
Control &
Accounts
Corporate
Communications
Strategy &
Development
Corporate
Development/
Planning
Human
Resources
Legal
Risk
Management
Audit
Tax
Treasury
Updated as at 4 March 2013.
The complete list of subsidiaries and significant associated companies is available at Keppel Corporation’s website www.kepcorp.com.
50%
Information
Systems
Operating & Financial Review
Group Structure
47
OPERATING & FINANCIAL REVIEW
MANAGEMENT DISCUSSION & ANALYSIS
Key Performance Indicators
$ million
Revenue
Net profit**
Revaluation, major impairment and divestments
Net profit after revaluation,
major impairment and divestments
Operating cash flow
Free cash flow
Economic Value Added (EVA)**
Earnings Per Share (EPS)**
Return On Equity (ROE)**
Total Distribution Per Share
2012
13,965
1,914
323
2,237
1,006
(63)
1,375
106.8 cts
22.6%
~72.4 cts
12 vs 11
% +/(-)
2011
Restated*
11 vs 10
% +/(-)
2010
Restated*
+39
+28
-29
+15
n.m.
n.m.
+34
+27
+9
+68
10,082
1,491
455
1,946
(224)
(1,482)
1,024
83.8 cts
20.8 %
43.0 cts
+10
+14
+60
+22
n.m.
n.m.
+6
+13
–
+13
9,140
1,307
284
1,591
450
(193)
964
74.3 cts
20.8 %
38.2 cts
* Comparatives have been restated due to retrospective application of Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets.
** Figures exclude revaluation, major impairment and divestments.
GROUP OVERVIEW
The Group performed well in 2012
despite the challenging global
environment. Excluding revaluation,
major impairment and divestments,
Group net profit increased 28%
to reach $1,914 million, while the
compounded annual growth for net
profit from 2007 to 2012 was 15%.
Net profit after revaluation, major
impairment and divestments was
$2,237 million.
EPS rose by 27% to 106.8 cents. ROE
was 22.6%. EVA was $1,375 million,
$351 million above the previous year’s.
Net cash from operating activities
was $1,006 million compared to net
cash used in operating activities of
$224 million in 2011. This was due
mainly to higher operational cash flow
and lower cash outflow from working
capital requirements.
Net cash used in investment activities
was $1,069 million. The Group spent
$1,323 million on acquisitions and
operational capital expenditure
(capex). This mainly comprised
acquisitions of an associated company
KrisEnergy and other subsidiaries
(Kingsdale and Chengdu Shengshi
Jingwei Real Estate Investment Co Ltd);
further investments in associated
companies; the expansion of Keppel
Merlimau Cogen power plant, and
other operational capex. Divestment
and dividend income totalled
$254 million, including proceeds
from the partial divestment of
interests in Saigon Centre Phases 1
and 2. The resultant free cash outflow
was $63 million.
With the strong performance,
shareholders will be rewarded with
a total distribution of approximately
72.4 cents per share for 2012.
This comprises a final dividend of
27.0 cents per share, special dividend
in specie of one Keppel REIT unit for
every five shares in the Company
(approximately 27.4 cents per share)
and the interim dividend of 18.0 cents
per share paid in August 2012.
The total distribution for 2012 will
be approximately $1,301 million.
SEGMENT OPERATIONS
Group revenue of $13,965 million
was $3,883 million or 39% higher
than that of the previous year.
The Offshore & Marine Division’s
revenue of $7,963 million was
$2,257 million or 40% higher, and
accounted for 57% of Group revenue.
The Infrastructure Division’s revenue
of $2,832 million was $31 million
or 1% lower. Lower revenue from
Keppel Integrated Engineering was
partly offset by higher revenue from
the co-generation power plant in
Singapore. The Property Division’s
revenue of $3,018 million was
$1,551 million or 106% higher due
largely to revenue recognition from
Reflections at Keppel Bay.
Group net profit of $1,914 million
was $423 million or 28% higher than
that of 2011. The Offshore & Marine
Division’s profit of $937 million
was $127 million or 12% lower.
The Infrastructure Division made
a loss of $1 million compared to a
profit of $82 million in 2011 as Keppel
Energy’s improved performance
had offset Keppel Integrated
Engineering’s losses. The Property
Division’s profit of $784 million was
$484 million or 161% higher due
mainly to greater contribution from
Reflections at Keppel Bay. Profit from
Investments Division was higher due
to the disposal of investments.
48
Keppel Corporation Limited
Report to Shareholders 2012
Revenue ($ million)
10,000
8,000
6,000
4,000
2,000
0
Total
Offshore &
Marine
Infrastructure
Property
Investments
2010
2011
2012
9,140
10,082
13,965
5,577
5,706
7,963
2,510
2,863
2,832
1,042
1,467
3,018
11
46
152
Net Profit ($ million)
1,200
1,000
800
600
400
200
0
(200)
Total
Offshore &
Marine
Infrastructure
Property
Investments
2010 1,307
2011 1,491
2012 1,914
987
1,064
937
57
82
(1)
214
300
784
49
45
194
Note: Figures exclude revaluation, major impairment and divestments.
Operating & Financial Review Management Discussion & Analysis
49
1
2
OPERATING & FINANCIAL REVIEW
OFFSHORE & MARINE:
Keppel Offshore & Marine
(Keppel O&M) aims to be the choice
provider and solutions partner in its
selected segments of the offshore
and marine industry.
Profit Before Tax*
Net Profit*
$1,181m
Dipped 17% from
FY 2011’s $1,417 million
$937m
Dipped 12% from
FY 2011’s $1,064 million
EARNINGS REVIEW
The Offshore & Marine Division
secured about $10 billion of new
orders for 2012. The net orderbook
stood at $12.8 billion as at December
2012, with deliveries extending into
2019. Revenue of $7,963 million
was $2,257 million or 40% higher.
Operating profit margin for 2012 was
13.5%. Pre-tax earnings decreased
17% to $1,181 million due to lower
margins. Net profit of $937 million
was $127 million or 12% lower than
in 2011. The Division remains the
largest contributor to Group net
profit with a 49% share.
MARKET REVIEW
Global economic recovery was tepid in
2012, amidst continuing uncertainties
in the US and EU, as well as lower-
than-expected growth in emerging
economies. The Eurozone debt crisis
and US fiscal policies continued to
pose downside risks to the global
economy. Oil prices remained range-
bound, influenced by ongoing tensions
in the Middle East and concerns over
dampened economic prospects.
Notwithstanding the overall
headwinds, capital spending in the
oil and gas industry was sustained
in 2012, driven mainly by sufficiently
high oil prices averaging about
US$110 per barrel, and the industry’s
move to higher quality assets
post-Macondo.
OPERATING REVIEW
Keppel O&M and its global network
of yards achieved steady growth and
performance in 2012. Together, they
delivered seven rigs, eight Floating
Production Storage Offloading (FPSO)/
Floating Storage Offloading (FSO)/
Floating Storage Unit (FSU)
conversion and upgrade projects,
and six specialised vessels, among
other jobs. During the year,
Keppel O&M almost repeated its
record order wins in 2011. These
new contracts from customers in
Brazil, the Caspian Sea and Mexico,
replenished the company’s
orderbook to $12.8 billion as
at end-2012.
OFFSHORE
Keppel FELS delivered a total of
seven rigs comprising six newbuilds
and one rebuild project. These
included the last two of seven
ENSCO 8500 semisubmersibles to
Ensco; four KFELS B Class jackups,
one each to Chernomornaftogaz,
Saudi Aramco, Oro Negro and
Safin Gulf FZCO; and Seafox 5,
a Multi-Purpose Self-Elevating
Platform to Seafox Group. All the
projects were completed either
ahead of schedule or on time, and
within budget, benefitting from
MAJOR DEVELOPMENTS
IN 2012
• Maintained record of $10 billion
in new contracts won.
• Secured five deepwater drilling
rig contracts in Brazil.
• Won first jackup contract in
Kazakhstan, based on KFELS
B Class design.
• Partnered ConocoPhillips to
design a unique ice-worthy
jackup for the Arctic.
• Made inroads into FLNG
vessel conversion.
• Established Keppel O&M
Technology Division to boost
expertise and processes.
FOCUS FOR 2013/14
• Deliver on excellent execution,
enhance productivity and
manage costs.
• Continue R&D efforts to fortify
market leadership in selected
segments.
• Explore opportunities in new
markets and adjacent businesses.
• Continue emphasis on Health,
Safety and the Environment.
Net Profit* ($ million)
(12)%
from FY 2011
2012
2011
2010
Earnings Highlights
$ million
Revenue
EBITDA*
Operating Profit*
Profit before Tax*
Net Profit*
Manpower (Number)
Manpower Cost
937
1,064
987
1 The KFELS B class
jackup is gaining
traction amongst a
growing number of
new customers such
as Safin Gulf.
2 The final two units of
the seven-strong fleet
of ENSCO 8500 Series®
semisubmersibles were
delivered safely, on time
and within budget.
2012
7,963
1,211
1,077
1,181
937
29,765
1,080
2011
5,706
1,459
1,318
1,417
1,064
25,830
949
2010
5,577
1,252
1,119
1,242
987
23,832
975
* Figures exclude revaluation, major impairment and divestments.
50
Keppel Corporation Limited
Report to Shareholders 2012
Operating & Financial Review Offshore & Marine
51
OPERATING & FINANCIAL REVIEW
OFFSHORE & MARINE
ongoing productivity improvements
at the yard.
1
Keppel FELS with its proven proprietary
designs and engineering expertise,
continued to entrench its position
as the market leader in offshore
rig design and construction. Repeat
customers such as Maersk Drilling
and Floatel International (Floatel)
awarded the yard a third Gusto MSC
CJ70 ultra harsh environment jackup
and a fourth DSSTM 20NS Dynamic
Positioning III floating accommodation
unit respectively. Keppel FELS also
secured orders from Petroleos
Mexicanos (PEMEX), Mexico’s state-
owned petroleum company, to build
two jackups based on the KFELS B
Class design, which has become an
industry standard.
Despite the heavy workload and
pressure to deliver on time, Keppel FELS
redoubled its commitment to Health,
Safety and Environment (HSE). For its
excellent safety record on projects,
the yard was bestowed 12 Workplace
Safety and Health (WSH) Safety and
Health Awards Recognition for Projects
(SHARP). Seadrill’s West Pelaut,
a semisubmersible drilling tender
(SSDT) designed and built by Keppel
FELS in 1994, was awarded the Best
Performing Rig of the Year 2012 by
Shell World Wide for the fourth time.
Keppel AmFELS completed a number
of rig repair and refurbishment jobs
as well as docked vessels for long-
time customers including Rowan
Companies (Rowan), Noble Drilling
(Noble) and Cal Dive International.
It also won a contract from Diamond
Offshore (Diamond) to upgrade a
deepwater semisubmersible, and
another from Perforadora Central to
build a LeTourneau Super 116E jackup
for delivery in 1Q 2014. The latest jackup
for Perforadora Central is a repeat
of the first unit, which is targeted for
delivery in 2Q 2013. Other work in
progress at Keppel AmFELS includes
the refurbishment and upgrading of
Sedco 707 for Transocean Offshore
Deepwater Drilling.
Keppel FELS Brasil fortified its
leadership position and reputation
for reliability amongst a growing base
of customers operating in Brazil.
Its BrasFELS yard completed the first
of two FPSO projects for MODEC and
Toyo Offshore Production Systems
Pte Ltd (MTOPS) 19 days early and
incident-free. This stellar delivery
earned the yard a US$2 million
early delivery bonus and another
R$350,000 for safety performance.
Additionally, BrasFELS completed
several repair jobs for Noble, Floatel,
Diamond and Ensco.
record for diverse and complex
offshore projects.
The yard is on track with ongoing
projects including Single Buoy
Mooring’s FPSO Cidade de Paraty,
Sete Brasil’s first DSSTM 38E
semisubmersible and MTOP’s
FPSO Cidade de Mangaratiba.
It has also commenced engineering
and procurement for the first
Replicante FPSO, P-66, with
strike steel in 1Q 2013.
In August 2012, Keppel FELS Brasil
secured another five repeat DSSTM 38E
semisubmersible orders from Sete
Brasil, after it had won the first unit at
end-2011. It also clinched two contracts
from Petrobras-led consortiums,
Guara BV and Tupi BV, to fabricate
and integrate topside modules for the
Replicante FPSO units P-66 and P-69.
Finally, it received a repeat order
from MTOPS to construct and
integrate modules for FPSO Cidade
de Mangaratiba, adding to its track
Delivering on collective strength,
Caspian Shipyard Company (CSC)
successfully reinstated the legs of
Chernomornaftogaz’s two KFELS B
Class jackups jointly with Keppel FELS
at the Giresun Yard in Turkey.
Both units were delivered ahead
of schedule; the first unit was
completed a month early, earning
CSC a US$500,000 bonus from the
customer. CSC also completed
several jobs on TOPAZ Marine’s
specialised vessels during the year,
52
Keppel Corporation Limited
Report to Shareholders 2012
2
1 Seafox 5, one of the
world’s most advanced
multi-purpose offshore
wind turbine installers,
was delivered ahead
of schedule.
2 Keppel Shipyard
provides a full range
of conversion services,
including the fabrication
and integration of
topsides for floating
production systems.
SIGNIFICANT EVENTS
January
• KV Ventus acquired a 49.9% stake
March
• Mr Chow Yew Yuen was
in OWEC Tower, an industry-leading
designer of offshore wind turbine
jacket foundations.
appointed Chief Operating
Officer of Keppel O&M.
• Keppel AmFELS secured a
US$150 million contract from
Diamond Offshore to construct
and upgrade a deepwater
semisubmersible.
• Keppel Singmarine delivered
ROCKPIPER, a new-generation
rock dumping fall pipe vessel safely,
on time and on budget to Royal
Boskalis Westminster.
February
• KOMtech partnered ConocoPhillips
in designing a unique ice-worthy
jackup for the Arctic Seas.
• ENSCO 8505, the sixth of
seven ENSCO 8500 Series®
semisubmersibles, was delivered
on time, within budget and
incident-free.
April
• Keppel O&M’s Technology
Division was established
to integrate the company’s
research and process
improvement units, and advance
its technology leadership.
• Keppel AmFELS won a
US$205 million contract from
repeat customer Perforadora
Central to build a LeTourneau
Super 116E jackup.
• Keppel Shipyard secured
$170 million worth of FPSO
upgrading contracts from SBM
Offshore and Bumi Armada.
May
• Keppel FELS delivered Piter
Godovanets, Ukraine’s first
KFELS B Class jackup.
and received the ISO 14001:2004 and
OHSAS 18001:2007 certifications from
the American Bureau of Shipping.
Meanwhile, Keppel Kazakhstan and
Ersai Caspian Contractor jointly won
a KFELS B class jackup newbuild
contract from Teniz Burgylau. This
jackup will be deployed in the Caspian
Sea when it is delivered in 1Q 2015.
Over in the Netherlands, Keppel
Verolme completed major upgrading
works on Saipem’s Scarabeo 6
semisubmersible and redelivered the
rig swiftly in six months. It was also
awarded a bonus for the early and
incident-free completion of a special
periodic survey of COSL Drilling
Europe’s accommodation jackup,
COSL Rigmar. Other projects in
progress at the yard include a survey
of Heerema Marine Contractors’
deepwater construction vessel, and
the drydocking and maintenance of
Saipem’s semisubmersible crane
and pipelaying DP vessel.
MARINE
Keppel Shipyard performed well
amidst the sluggish shiprepair market
in 2012. The company completed 298
repair jobs, mainly from repeat clients
Operating & Financial Review Offshore & Marine
53
OPERATING & FINANCIAL REVIEW
OFFSHORE & MARINE
who accounted for more than 80% of
total repair revenue. Product-wise,
tankers, gas carriers, drilling vessels
and dredgers made up over half of
repair turnover for the year.
In 2012, Keppel Shipyard converted
and upgraded six FPSOs, an FSO and
an FSU, as well as completed a pipe-
laying vessel. During the year, it won
new contracts from SBM, Bumi
Armada, PTSC Asia Pacific, Perenco
and BC Petroleum, adding to its
proven track record for converting,
upgrading and repairing FPSOs/
FSOs/FSUs/Floating Storage and
Regasification Units (FSRU). The yard
also secured the job of fabricating an
internal turret for INPEX’s Ichthys
FPSO. At end-2012, it had six FPSOs
and an FSO in various stages of work.
Keppel Shipyard was bestowed the
Repair Yard Award by Seatrade, and
its eighth consecutive Shipyard of the
Year Award by Lloyd’s List Asia. It also
garnered 11 WSH SHARP medals for its
major contracts, as well as a Gold and
a Silver for two of its Innovation and
Quality Circles projects at the Team
Excellence Symposium.
To enhance capacity and productivity,
the yard expanded a graving dock and
added more fabrication space to its
Tuas facility. It also extended the quay
at its Benoi facility and deepened
the draft.
SIGNIFICANT EVENTS
June
• Keppel FELS secured a third contract
from Maersk Drilling Holdings
Singapore to build a Gusto MSC CJ70
ultra harsh environment jackup
worth about US$560 million.
• Keppel FELS Brasil secured
an FPSO topside contract
worth US$200 million from
MODEC and Toyo Offshore
Production Systems.
• Keppel FELS delivered
NEZALEZHNIST, Ukraine’s second
KFELS B Class jackup safely,
early and within budget.
• Keppel Shipyard delivered its 100th
FPSO / FSO / FSRU conversion and
upgrading project, FPSO Cidade de
Paraty, to SBM Offshore.
July
• Keppel FELS delivered ENSCO
8506, the final unit in the fleet
of seven ENSCO 8500 Series®
semisubmersibles it had
constructed for Ensco.
• Keppel Kazakhstan and Ersai
Caspian Contractor jointly won a
KFELS B Class jackup newbuild
contract from Teniz Burgylau worth
US$242 million.
• Keppel Shipyard secured three
conversion and upgrading
contracts worth $103 million
from PTSC Asia Pacific, Perenco
Group and BC Petroleum.
August
• Keppel O&M firmed up contracts
worth US$4.1 billion to design
and build five DSS™ 38E
semisubmersibles for Sete Brasil.
• Keppel FELS Brasil clinched two
contracts worth US$950 million
to fabricate and integrate topside
modules for Petrobras’ P-66 and
P-69 FPSOs.
• Keppel FELS sealed a
US$315 million contract to
build another DSSTM 20NS
accommodation semisubmersible
for Floatel International.
Keppel Philippines Marine Inc’s (KPMI)
consolidated revenue in 2012 was lifted
by a good mix of shiprepair and offshore
work. Its yards in Batangas and Subic
repaired a total of 121 vessels, which
contributed to slightly over half of
KPMI’s revenue for the year.
Ongoing productivity enhancements
and mechanisation have allowed the
Philippine yards to take on more
complex offshore work. Keppel
Batangas and Keppel Subic Shipyard
completed five coal transhipment
barges and a dredger barge. The two
yards are supporting the construction
of pontoons for Sete Brasil’s DSSTM
38E semisubmersible and Floatel’s
floating accommodation unit. Keppel
Batangas is also supporting
Keppel Singmarine in constructing
three units of 4,000 dwt bulk ore/fuel
carriers for OK Tedi.
In November 2012, Keppel Subic
Shipyard secured the Malampaya
Phase 3 Depletion Compression
Platform offshore newbuilding
contract from Shell Philippines
Exploration. Ramping up for more
offshore work, the Subic yard is
expanding its facilities to include an
assembly area with a 1,000-tonne
gantry crane, a new fabrication area
with two 100-tonne gantry cranes,
as well as movable sheds with a
20-tonne overhead crane.
Arab Heavy Industries repaired a total
of 170 vessels in 2012. Noteworthy
projects included upgrading a
dredger and renewing the steel of
three barges for its customers, Middle
East Dredging Co, Athena C.R.Y.
and Otto Industrial Marine. The yard
also secured installation and repair
work from new customers such as
Hercules Offshore Middle East Ltd
and World Wide Auctioneries.
Meanwhile, Nakilat-Keppel Offshore
& Marine (N-KOM) in Qatar is making
swift progress in establishing itself as
the Middle East’s leading shipyard.
In 2012, the yard repaired an impressive
63 vessels, the majority of which were
LNG carriers, tankers and containers.
It also dry-docked its first VLCC,
LPG, Q-flex and Q-max LNG vessels.
54
Keppel Corporation Limited
Report to Shareholders 2012
1
2
1 Keppel FELS Brasil
delivered FPSO Cidade
de Sao Paolo 19 days
ahead of schedule and
with an excellent
safety record.
2 Keppel Subic Shipyard
was awarded a contract
to build a Depletion
Compression Platform
by Shell Philippines
Exploration BV.
Operating & Financial Review Offshore & Marine
55
OPERATING & FINANCIAL REVIEW
OFFSHORE & MARINE
Leveraging its reputation for quality,
N-KOM won 27 LNG carrier repair
projects for delivery in 2013.
Growing its track record for offshore
work, N-KOM repaired, modified and
refurbished four jackups for Gulf
Drilling International, Rowan and Ensco.
The yard also repaired its first land-rig
for Weatherford Drilling.
During the year, N-KOM began
operating the fifth phase of the 43-ha
world class facility. This latest phase
is equipped with mobile boat hoists
and repair jetties to serve smaller
vessels supporting the region’s oil
and gas industry.
For its business and operational
excellence, N-KOM won two Middle
East & Indian Subcontinent awards
from Seatrade and Lloyd’s List.
Certified to international quality and
HSE standards, N-KOM received
further accreditations in 2012 from
the American Society of Mechanical
Engineers, National Board R Stamp and
the American Petroleum Institute.
SPECIALISED SHIPBUILDING
Keppel Singmarine delivered four
vessels in 2012, including a fall pipe
rock dumping vessel for Royal Boskalis
and a diving support vessel designed
in-house by Marine Technology
Development (MTD) for Target
Resources. It also collaborated with
Keppel Shipyard on the completion of
Saipem’s Castorone, one of the world’s
largest and most technologically
advanced DP III pipelay vessels.
Keppel Singmarine secured two
major contracts in 2012, namely
a catamaran air dive support
vessel from Bhagwan Marine and
a high-specification deepwater
pipelay vessel designed by MTD for
McDermott. The pipelay vessel’s
construction will take two and
a half years to complete, beginning
1Q 2013.
Keppel Singmarine garnered
the Group’s Chairman Safety Challenge
award in 2012 for maintaining an
incident-free workplace for four
consecutive years. To further improve
its productivity and reduce man-hours,
Keppel Singmarine invested in a
robotic welding machine, and is in
the process of automating steel
cutting and some fabrication work.
Keppel Nantong Shipyard (Keppel
Nantong) continued to support
Keppel O&M’s Singapore yards in
2012. It delivered a floating dock
with a 12,000-tonne lifting capacity
to Keppel Shipyard and a set of
pontoons to Keppel FELS for Floatel’s
accommodation rig. Projects under
construction at year-end included a
5,000-tonne sheerleg crane and two
45-tonne bollard pull Azimuth Stern
Drive (ASD) tugs.
The yard secured new jobs to extend
the jib for Asian Hercules II sheerleg
crane and fabricate upper hull blocks
for Floatel’s accommodation rig.
Both projects will be delivered in 3Q
2013. For its good HSE performance,
Keppel Nantong was recognised by
customer Floatel, and also received
a safety award from the Nantong
Municipal Government.
1
1 N-KOM is strengthening
its credentials as a
leading shipyard in
the Middle East.
2 Keppel Singmarine
delivered ROCKPIPER,
a new-generation
rock dumping fall
pipe vessel, with
zero incidents.
3 Keppel Singmarine
celebrates 125 years’
journey of shipbuilding
excellence.
56
Keppel Corporation Limited
Report to Shareholders 2012
2
Meanwhile, the development of
Keppel Nantong Heavy Industries
(KNHI) in China is progressing well.
Located next to Keppel Nantong,
KNHI is designed to build jackups
and undertake other heavy offshore
work. The new yard will be completed
in phases over 2013.
Over in Brazil, Keppel Singmarine
Brasil’s first phase, comprising core
amenities such as a slipway, a wharf,
a 120-tonne gantry crane, a pipe shop
and mobile sheltered workshops, was
completed in 2012. During the year,
work in progress at the yard comprised
six SMIT Rebras 45-tonne bollard pull
ASD harbour tugs and a Guanabara
Navegacao’s (GNL) 4,500-DWT platform
supply vessel (PSV). In April 2012,
it was awarded another contract by
GNL for a second PSV, which is also
presently under construction.
Keppel Singmarine Brasil is
advancing into its second phase of
yard development, with licensing
approval expected in 1Q 2013.
The second phase comprises a
3
• Keppel FELS made an
early and safe delivery of
Paradise 400, Safin Gulf’s
first KFELS B Class jackup.
• Keppel Shipyard delivered
FPSO Armada Sterling to
Bumi Armada.
• Keppel Singmarine marked
its 125th Anniversary.
SIGNIFICANT EVENTS
September
• Keppel FELS delivered Seafox 5,
an offshore wind turbine installer
built to its proprietary Multi-
Purpose Self-Elevating Platform
design, to the Seafox Group.
• Keppel Shipyard delivered
FPSO Cidade de Anchieta
to SBM Offshore.
October
• Mr Michael Chia and Mr Wong Kok
Seng were respectively appointed
as Keppel O&M’s Managing Director
(Marine) and Managing Director
(Offshore), while Mr Chor How Jat
was appointed as Keppel Shipyard’s
Managing Director.
Operating & Financial Review Offshore & Marine
57
OPERATING & FINANCIAL REVIEW
OFFSHORE & MARINE
graving dock, a blasting chamber
as well as additional workshops
and equipment.
In the Caspian region, Keppel O&M’s
second yard developed jointly with
Azeri national oil company SOCAR,
is expected to be ready for partial
operations in 4Q 2013. The key
amenities under construction at
Baku Shipyard include a floating dock
with 9,000-tonne lifting capacity, as
well as shiprepair and shipbuilding
berths. Ahead of its completion, the
yard has been receiving enquiries for
various specialised newbuild vessels.
INDUSTRY OUTLOOK
The International Energy Agency
(IEA) expects global oil consumption
to rise in tandem with improving
economic conditions in China and
the US to about 90.8 mb/d in 2013,
up 0.86 mb/d from 2012. In the base-
case scenario, IEA forecasts that
global oil demand would increase to
99.7 mb/d by 2035 from 87.4 mb/d in
2011, with China accounting for 50%
of the net increase.
Fossil fuels will remain the principal
source of energy worldwide, although
the market for renewables is expected
to grow rapidly. In particular, demand
for oil, gas and coal will grow in
absolute terms through 2035.
However, IEA expects their combined
share of the global energy mix to fall
from 81% to 75% in the same period.
On the exploration and production (E&P)
front, Barclays Capital forecasts
that global capital spending will grow
for the fourth consecutive year to
reach US$644 billion in 2013. Findings
from its latest E&P survey suggest
that the industry is still in the early
stages of an international spending
up cycle.
International oil companies are
expected to continue high levels
of spending due to a confluence
of factors; these include years of
underinvestment in the early to
mid-2000s, the nationalisation of
resources which has led to more
deepwater drilling activity, as well
as the need to find and replace
reserves and increase production.
Despite uncertainties in the global
economy, offshore and marine
industry fundamentals remain sound
over the longer term.
SHALLOW WATER POTENTIAL
The jackup market continues to
put a premium on high-specification
jackups over commodity rigs.
This bifurcation is mainly due to
operators requiring higher HSE
standards post-Macondo and better
rig capabilities to drill challenging
wells. Utilisation rates for high-
specification jackups continue to be
healthy and are close to 100%.
About 35% of the world’s jackup fleet
is at least 30 years old. As such,
the sizeable number of new jackups
entering the market in 2013 is
expected to be readily absorbed
as the older rigs phase out.
Douglas Westwood expects the
number of jackup wells to be
drilled to steadily increase over
the next few years, supporting a
sustainable replacement cycle
over the mid-term. With the
consistently high crude oil prices,
drilling contractors are finding it
increasingly attractive to revisit
marginal fields or explore in harsh
environments in the North Sea
and the Arctic.
SIGNIFICANT EVENTS
November
• Keppel Shipyard and Keppel
Singmarine delivered Castorone,
one of the world’s largest and most
capable pipelay vessels to Saipem.
• Keppel Subic Shipyard won a
contract from Shell Philippines
Exploration to build a depletion
compression platform for the
Malampaya gas field.
• Keppel Verolme was engaged by
Heerema Marine Contractors to
perform a deepwater construction
survey of one of its vessels.
• MODEC and Toyo Offshore
• Keppel FELS won a contract to
Production Systems awarded
US$2 million in bonuses to
Keppel FELS Brasil for the early
and safe delivery of FPSO Cidade
de Sao Paulo.
• Keppel O&M celebrated its 10th
Anniversary graced by Deputy Prime
Minister and Minister for Finance,
Mr Tharman Shanmugaratnam.
December
• Keppel FELS delivered a KFELS B
Class jackup to Mexican oil field
services company, Oro Negro,
early and without incidents.
build two KFELS B Class jackups
worth US$420 million from
PEMEX’s subsidiary.
• Keppel Singmarine and Keppel
Shipyard secured contracts worth
$420 million to construct Hydro
Marine Services’ high-specification
deepwater pipelay vessel and
Bhagwan Marine’s catamaran air
dive support vessel, as well as to
upgrade EMAS Offshore’s FPSO
Lewek Arunothai.
58
Keppel Corporation Limited
Report to Shareholders 2012
E&P Spending Forecast
Capital Spending
(US$ millon)
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Source: Barclays
Actual Estimates
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
United States
Canada
Outside North America
DEEPWATER PROSPECTS
The global deepwater market
continued to enjoy healthy growth
with about 40 deepwater units
ordered in 2012, including some
15 semisubmersibles. In fact,
the number of orders for highly
capable sixth-generation
semisubmersibles more than
doubled over the 2011 – 2012 period.
Notwithstanding this, the supply of
semisubmersibles is likely to remain
tight over the next few years, due to
the absence of orders between 2009
and 2011.
Underpinned by a huge development
backlog and successful recent
explorations, ultra-deepwater
dayrates have stabilised at above
US$600,000 per day in 2012,
compared to over US$500,000 per
day in 2011. The Golden Triangle
region, comprising the Gulf of
Mexico, Brazil and West Africa,
is expected to dominate deepwater
expenditure over the next five years.
Outside of this region, growth will be
led by Australia, the Mediterranean,
and East Africa.
Notably, Asia and Australasia will
become increasingly important areas
for deepwater activity. Douglas
Westwood forecasts Asian capital
expenditure to reach US$19 billion
over the next five years, with important
deepwater projects being developed
off India, Malaysia and Indonesia.
Meanwhile, Australasia deepwater
activity will be focused in basins off
the western coast, with substantial
projects in LNG.
PRODUCTION UNITS &
SPECIALISED SHIPS
There are currently about 250
floating production systems in service
globally with FPSOs comprising 60%
of the total fleet. Brazil, Northern
Europe and the Gulf of Mexico are the
top three regions in the production
floaters space, based on the current
order backlog.
Operating & Financial Review Offshore & Marine
59
OPERATING & FINANCIAL REVIEW
OFFSHORE & MARINE
1
1 Having delivered FSRU
conversions to Golar
LNG, Keppel O&M is
growing its capability
in FLNG conversion.
2 President of Petrobras,
Ms Maria das Gracas
Silva Foster (centre),
expressed her confidence
in BrasFELS’ capability
to deliver projects safely
and promptly.
3 With its proven track
record, BrasFELS can
offer a diverse range of
services including the
repair and upgrade
of drillships.
4 Keppel O&M celebrated
10 years of excellence in
November 2012.
International Maritime Associates
has identified another 250 projects
in the bidding, design or planning
stages, which potentially require
a floating production or storage
system. This number is up 65%
from five years ago.
The long-term outlook for floating
production systems remains robust
as the development of marginal
and deepwater reserves speeds up,
corresponding to a decline in shallow-
water opportunities. This augurs well
for service providers who can help
operators improve on performance.
Rising E&P spending has also
encouraged growth in the Offshore
Support Vessel (OSV) sector. While
the expected supply of Anchor
Handling Tug Supply (AHTS) vessels
and PSVs will outpace demand,
there is still potential upside from
increasing offshore drilling activities
and production infrastructure.
There has also been a gradual
bifurcation in the OSV fleet; dayrates
and utilisation levels of newbuild and
older vessels have diverged over the
past few years, with rising demand
for construction and subsea support
vessels in the deepwater markets of
Brazil, Southeast Asia, the North Sea
and the Gulf of Mexico.
Demand for construction and subsea
support vessels is projected to remain
healthy. However, as the value of such
vessels is generally higher than the
common AHTSs and PSVs, competition
is likely to come from various
quarters, apart from shipyards
specialising in OSVs.
NEW GROWTH AREAS
As the world’s demand for energy
continues to drive E&P into new
frontiers, Keppel O&M will step up
its R&D efforts to meet the changing
needs of its global customers with
cost-effective solutions. In the area
of Arctic drilling, Keppel O&M and
ConocoPhillips are jointly designing
a unique jackup that can operate
efficiently and safely in ice
environments. The rig’s ice-worthy
features include the ability to operate
self-sustained for 14 days and a hull
designed for towing in ice. This joint
design project is expected to be
completed by end-2013.
In the area of Floating LNG (FLNG),
Keppel O&M is working with Golar
FLNG on the Front-End Engineering
and Design (FEED) study to convert
LNG vessels into FLNG vessels.
Keppel O&M continues to partner
trend-setting customers to develop
innovative solutions for new offshore
frontiers and sharpen its technology
edge. It will also fortify its leadership
positions in both key and emerging oil
and gas markets, as well as further
improve the skills and productivity of
its global yards.
60
Keppel Corporation Limited
Report to Shareholders 2012
2
3
4
Operating & Financial Review Offshore & Marine
61
1
2
OPERATING & FINANCIAL REVIEW
INFRASTRUCTURE:
Keppel’s Infrastructure Division
continues to seek value-enhancing
projects in power and gas,
environmental engineering,
logistics and data centres.
Profit Before Tax*
Net (Loss)/Profit*
$42m
Dipped 65% from
FY 2011’s $120 million
($1m)
Dipped 101% from
FY 2011’s $82 million
EARNINGS REVIEW
The Infrastructure Division’s
revenue decreased by $31 million to
$2,832 million, with higher revenue
generated from the co-generation
power plant in Singapore offset by
lower revenue from Keppel Integrated
Engineering (KIE). Profit before tax
decreased by 65% to $42 million as
a result of losses from KIE partly
offset by better performance from
Keppel Energy.
POWER AND GAS
MARKET REVIEW
Singapore’s average electricity demand
continued to grow at a modest pace,
registering an increase of about
2.7% in 2012.
OPERATING REVIEW
Keppel Energy continued to deliver
strong earnings through its integrated
power and gas businesses in Singapore
in 2012. Its wholly-owned subsidiary,
Keppel Gas entered into a long-term
gas agreement with Petronas to import
additional piped natural gas into
Singapore. With the additional gas
import, Keppel Gas is well-positioned
to serve the gas needs of industrial
and commercial users.
The 800MW expansion of the Keppel
Merlimau Cogen (KMC) plant is on
track to be completed in 2013.
The first unit of 400MW started
commissioning in the third quarter
of 2012, ahead of schedule.
During the year in review, Keppel
Energy successfully divested its last
remaining non-core assets in relation
to the power barge operations in
Ecuador. Meanwhile, Keppel Energy’s
operations in Singapore achieved zero
reportable safety incidents or lost
time injury in 2012.
Keppel Energy is committed to
continually improve safety while
maintaining a high level of efficiency
in its operations.
BUSINESS OUTLOOK
Keppel Energy expects its power and
gas businesses in Singapore to deliver
sustainable earnings in 2013.
With the uncertainties in the
European and US economies,
electricity demand in Singapore
is not expected to show strong
growth in 2013. Competition in
the power market is expected to
intensify with the increased supply
from competitors and new market
entrants. With a strong integrated
power and gas platform and the
strategic 800MW plant expansion,
Keppel Energy remains highly
competitive and will continue to grow
its market share in Singapore.
MAJOR DEVELOPMENTS
IN 2012
• Keppel Energy’s capacity
expansion of KMC is on track.
• Keppel Gas imported additional
piped natural gas from Petronas.
• KIE was in a consortium
that won a $124 million WTE
contract in Poland.
• Keppel T&T widened its logistics
network with three JVs in China
and Indonesia.
• Securus Fund acquired two data
centres in Australia and Malaysia.
FOCUS FOR 2013/14
• Keppel Energy to grow its
share of Singapore’s power
market and further enhance
its integrated platform in its
gas and utilities businesses.
• KIE to complete construction
of remaining projects in Qatar
and the UK, as well as enhance
operations and maintenance
capabilities.
• Keppel T&T to leverage
new technologies to enhance
services and further expand
customer base and
geographical presence.
Net (Loss)/Profit* ($ million)
(101)%
from FY 2011
2012
(1)
2011
2010
Earnings Highlights
$ million
Revenue
EBITDA*
Operating Profit*
Profit before Tax*
Net (Loss)/Profit*
Manpower (Number)
Manpower Cost
1 K-Green Trust ensures
that its assets’ operational
standards are closely
benchmarked to the
best in the industry.
2 Keppel Energy continued
to deliver strong
earnings through its
integrated power and
gas businesses.
57
2011
2,863
155
102
120
82
4,552
255
2012
2,832
84
29
42
(1)
4,175
278
82
2010
2,510
120
75
93
57
4,366
236
* Figures exclude revaluation, major impairment and divestments.
62
Keppel Corporation Limited
Report to Shareholders 2012
Operating & Financial Review
Infrastructure
63
OPERATING & FINANCIAL REVIEW
INFRASTRUCTURE
1
POWER & GAS
Keppel Energy aims to
deliver competitive energy
in a carbon and resource
constrained world essential
for a better, safer and
healthier life.
Moreover, the expected completion
of Singapore’s Liquefied Natural Gas
(LNG) Terminal in mid-2013 will
facilitate local LNG imports and KMC’s
strategy to diversify its fuel sources.
ENVIRONMENTAL ENGINEERING
MARKET REVIEW
According to the World Bank, the amount
of municipal waste generated annually
is expected to increase from the
current 1.3 billion tonnes to 2.2 billion
tonnes by 2025. With many countries
facing dramatic population growth,
urbanisation and resource scarcity,
Waste-to-Energy (WTE) is considered
an attractive, proven and sustainable
option to address the issue of
increasing waste.
China is one of the largest producers
of municipal solid waste in the world,
due to rising urbanisation. The Middle
East produces over 150 million tonnes
of waste each year. Managing the
waste sustainably is a key concern
for the policy-makers, and countries
like UAE, Qatar and Saudi Arabia.
According to McKinsey research, the
global annual water requirement is set to
grow from the current 4,500 billion m3
to 6,900 billion m3 by 2030. Increasing
demand from homes and businesses,
coupled with the dwindling supply of
fresh water has triggered more water
infrastructure investment projects,
especially in Asia. With limitations
in public funding, the private sector
is expected to play a bigger role in
water and wastewater treatment.
Climate change and reliance on
non-renewable fuel sources have
prompted policy makers around the
world to consider alternative energy
options that are more environmentally
friendly. District heating and cooling
is a proven technology which provides
low carbon heating and cooling for
towns and cities. The European
Technology Platform on Renewable
Heating and Cooling estimates that
renewable heating and cooling will
be 20% of the EU’s renewable energy
sources by 2020. Underpinned by
rapid urbanisation, Asia’s demand
for district heating and cooling sector
is expected to be sustained.
OPERATING REVIEW
In Singapore, Keppel Seghers,
a wholly-owned subsidiary of KIE,
continued to operate three facilities
optimally: Keppel Seghers Tuas
WTE plant, Senoko WTE plant and
Ulu Pandan NEWater plant. Keppel
Seghers also completed the flue gas
treatment upgrade for the Senoko WTE
plant to improve emission standards.
In Qatar, Keppel Seghers completed
its first year of operations for the
Domestic Solid Waste Management
Centre (DSWMC) and achieved ISO
certification in November 2012.
The DSWMC treats up to 2,300 tonnes
of mixed domestic solid waste daily,
serving the needs of the whole of
Qatar. Concurrently, the Doha North
Sewage Treatment Works in Qatar
has commenced commissioning
and its first phase is expected to
be completed in 2013.
Keppel Seghers’ consortium
was awarded a PLN 333 million
(approximately $124 million) contract
for a WTE combined heat and power
project in Bialystok, Poland in
August 2012. The consortium, led by
Budimex SA, one of Poland’s largest
construction companies, will provide
engineering, construction and
procurement expertise for this
project. The plant, with a capacity
to treat 120,000 tonnes of waste per
year, is expected to be completed
by end-2015.
In China, Keppel Seghers started
trial operations of the WTE plants in
64
Keppel Corporation Limited
Report to Shareholders 2012
2
1 The first phase of KMC’s
800MW expansion was
commissioned in the
third quarter of 2012.
2 DSWMC in Qatar
completed its first year
of operations.
SIGNIFICANT EVENTS
February
• Securus Data Property Fund
(Securus Fund) acquired a data
centre in London, UK.
June
• Securus Fund acquired an
80% stake in a data centre
in Cyberjaya, Malaysia.
• Keppel DHCS secured new
contracts to provide district cooling
systems services at Biopolis and
Fusionopolis at one-north.
March
• Keppel T&T formed a joint venture
(JV) with the Jilin City Government
to develop a food logistics park in
Jilin City, China.
April
• Keppel Energy entered into an
agreement with Petronas to import
an additional 43 million cubic feet
per day of natural gas.
May
• Keppel T&T appointed Professor
Neo Boon Siong and Mr Michael
Chia to its Board of Directors.
• Keppel T&T established a
$500 million multicurrency
medium term note programme.
July
• Keppel FMO won a five-year
facilities management contract to
serve Changi Airport Terminal 2.
August
• Keppel T&T issued $120 million
fixed rate notes due in 2019 under
its $500 million multicurrency
medium term note programme.
• Keppel Energy started
commissioning the first 400MW
unit of KMC’s 800MW expansion.
September
• Keppel Seghers was part of a
consortium that won a $124 million
contract for a WTE combined heat and
power project in Bialystok, Poland.
October
• K-Green Trust was awarded a Solar
Pioneer Award for Singapore’s
largest photovoltaic installation
at Keppel Seghers Ulu Pandan
NEWater Plant.
• Keppel T&T and the Jilin City
Government commenced work on
the Sino-Singapore Jilin Food Zone
International Logistics Park.
November
• Keppel T&T joined hands with
Chinese partners to develop and
operate the Keppel Wanjiang
International Coldchain Logistics
Park in Lu’an City, Anhui, China.
December
• Keppel Logistics made its first
foray into Indonesia, partnering PT
Puninar Jaya to provide integrated
logistics services for the fast
moving consumer goods, retail
and healthcare sectors.
Operating & Financial Review
Infrastructure
65
OPERATING & FINANCIAL REVIEW
INFRASTRUCTURE
1
ENVIRONMENTAL
ENGINEERING
Keppel Integrated
Engineering seeks
to provide quality
environmental engineering
solutions that support
the world’s sustainable
development.
Shenzhen and Chengdu using its
proprietary technology. The first waste
firing was also completed successfully
on each of the 750 tonnes per day line
in the Shenzhen Baoan II WTE project,
which has entered into the trial
production phase. When completed, the
Baoan project will be the largest WTE
plant in China with a capacity to treat
4,200 tonnes of municipal waste daily.
Keppel DHCS, a wholly-owned
subsidiary of KIE, secured contracts
to provide its environmentally-
friendly district cooling systems
services to leading companies at the
one-north research hub and Changi
Business Park in Singapore. In July
2012, Keppel DHCS was awarded the
Sustainable Business Award by the
Singapore Business Federation.
Keppel FMO, another wholly-owned
subsidiary of KIE, was awarded a five-
year maintenance contract by Changi
Airport Group, which commenced in
August 2012. The contract was for the
mechanical and electrical systems in
Singapore Changi Airport Terminal 2.
Keppel FMO also renewed its
maintenance contract with Republic
Polytechnic for another three years.
KIE is the sponsor of K-Green
Trust (KGT), a business trust with
an investment focus on green
infrastructure assets. KGT’s current
portfolio comprises Senoko WTE
plant, Keppel Seghers Tuas WTE
plant and Keppel Seghers Ulu Pandan
NEWater plant. KGT was awarded a
Solar Pioneer Award for its one
mega-watt-peak solar photovoltaic
(PV) installation on the rooftops of
Ulu Pandan NEWater Plant as part of
its asset enhancement programme to
reduce the intake of grid electricity.
This is the single largest solar PV
installation in Singapore to date.
KGT proposed a Distribution Per Unit
of 7.82 cents to its unitholders for
2012, similar to the previous year.
leveraging its environmental
engineering expertise to seek out
value-enhancing projects.
Keppel Seghers will enhance its
technology and execution capabilities
to deliver competitive and innovative
solutions to customers. Keppel
Seghers will also continue to expand
its revenue streams in the operations
and maintenance of WTE and water
treatment plants.
Riding on growing demand for
district heating and cooling systems
in Asia, Keppel DHCS will explore
business opportunities to expand its
revenue stream in Singapore and
the region. Backed by strong growth
prospects in Asia and the Middle East,
Keppel FMO aims to secure more
contracts both locally and overseas.
BUSINESS OUTLOOK
Rapid population growth, urbanisation
and economic development drive the
need for sustainable environmental
solutions. KIE is positioned to capture
opportunities in Singapore, Europe,
Greater China and the Middle East,
KGT will continue to evaluate
enhancement opportunities for
its assets, and will seek out good
acquisitions in waste management,
water treatment, renewable energy
and energy efficiency in Asia Pacific
and Europe.
66
Keppel Corporation Limited
Report to Shareholders 2012
LOGISTICS
MARKET REVIEW
2012 was a year of robust growth
for most Southeast Asian economies,
which continued to attract foreign
investors. Plans to build up key
logistics infrastructure in the form
of highways, ports and temperature
controlled warehouses are still on
track in developing countries.
The company also expanded its
operations at 44 Benoi Road facility
to include trucking services, which
will better cater to the growing offshore
and marine sector. Automated
equipment and temperature control
enhancements have also been
installed at other warehouses
to provide better services for
biomedical customers.
The Chinese economy has maintained
strong growth despite a dip in the second
half of 2012. The Chinese Central
Government remains committed to
further develop the logistics industry.
Inland water transport will continue to
play an important role in transportation
due to its cost competitiveness.
OPERATING REVIEW
Keppel Logistics maintained high
occupancy rates in Singapore, Malaysia
and Vietnam. In September 2012,
Keppel Logistics won the Best Domestic
Logistics Service Provider of the Year
(Singapore) for the third time at the
annual Frost & Sullivan Asia Pacific
Best Practices Awards.
During the year, Keppel Logistics
entered into Indonesia to provide
services for the retail goods sector
through a JV with PT Puninar Jaya,
a leading local third-party logistics
service provider. The JV company,
PT Keppel Puninar Logistics, is 49%
owned by Keppel Logistics and 51%
owned by Puninar Logistics.
Meanwhile, Keppel Logistics Foshan’s
Lanshi Port, located in the Pearl River
Delta in Guangzhou Province,
continued to operate at near full
capacity despite stiff competition and
the Chinese economy’s slowdown.
Trial operations for Wuhu Sanshan
port, a JV with Sinotrans Ltd along
2
2
1 Keppel has the
capacity to treat about
half of Singapore’s
incinerable waste.
2 The Jilin food logistics
park is on track to begin
operations in 2014.
Operating & Financial Review
Infrastructure
67
OPERATING & FINANCIAL REVIEW
INFRASTRUCTURE
1
LOGISTICS &
DATA CENTRES
Keppel Telecommunications
& Transportation aims
to provide good quality
integrated logistics solutions
and data centre services.
the Yangtze River in Wuhu City,
Anhui Province, had commenced
in February 2013. Construction for
the integrated logistics distribution
centre within the Eco-Industrial Park
of the Sino-Singapore Tianjin
Eco-City will also start in 2013.
Keppel T&T has also made headway
in food logistics. It formed a JV with
the Jilin City Government in March
2012 to develop and operate a food
logistics park in Jilin City, Jilin
Province. The JV company is 70% held
by Keppel T&T and 30% by the Jilin
City Government. The logistics park’s
first phase of about 40-ha is expected
to begin operations in 2014.
The company embarked on its
second food logistics project in
Anhui Province, taking the majority
stake in a 60/40 JV with private
investors and the Lu’an City Jin’an
District Government. The 33-ha site
is close to Hefei, the capital of Anhui
Province, the upcoming Hefei Xin
Qiao International Airport, and the
Lu’an City Centre.
The logistics parks in Jilin and
Anhui provinces will play a crucial
role in enhancing manufactured
food distribution and trading
efficiencies, as well as in improving
food safety in China. Both projects
are strongly supported by the
Chinese government and will also
incorporate green features.
BUSINESS OUTLOOK
Southeast Asian economies are
expected to experience high growth
as the region’s infrastructure and
financial systems become more
developed. However, growth stability
in the region will hinge on the outcome
of upcoming political elections. China’s
fast-growing domestic consumer
market and deep foreign reserves
are expected to sustain its economy
in spite of lingering uncertainties in
the EU and US.
markets and grow its presence in
China and Southeast Asia.
DATA CENTRES
MARKET REVIEW
Global trends fuelling in corporate
data, cloud computing, as well as
social and new media further
strengthened demand for data centres.
Investments in new data centres
continued to grow on the back of a
supply shortage and high utilisation
rates of existing data centres in Asia,
Europe and the Middle East.
In response to the increasing
global emphasis on greener data
centres, the Singapore government
introduced the BCA-iDA Green Mark
for Data Centres – a dedicated green
building rating system designed to
encourage local operators to adopt
environmentally-friendly technologies.
Notwithstanding the challenges, rising
urbanisation and the need for specialist
logistics providers present windows of
opportunities, which Keppel T&T will
leverage to further expand in current
OPERATING REVIEW
Keppel T&T’s data centres in Singapore,
Sydney and Ireland continued to enjoy
near full occupancy. In Singapore, the
consolidation of Keppel Digihub and
68
Keppel Corporation Limited
Report to Shareholders 2012
2
3
1 Securus Fund holds
a portfolio of quality
assets including the
Gore Hill data centre
in Sydney, Australia.
2 Keppel Wanjiang
International Coldchain
Logistics Park in Lu’an
City will be Keppel T&T’s
second logistics project
in Anhui, China.
3 Keppel Logistics will
continue to grow its
expertise to provide
quality integrated
logistics solutions.
BUSINESS OUTLOOK
Escalating growth in data and the
adoption of cloud computing by
enterprises, financial institutions,
government agencies and social
media companies are expected to
drive global demand for data centres.
Having served blue-chip clients for
over a decade, Keppel T&T’s data
centre business is well-positioned to
leverage these fundamentals to grow
in Asia, Europe and the Middle East.
Moreover, in line with increasing
global emphasis on more sustainable
businesses, Keppel T&T’s
commitment to develop greener
data centres together with its
modular expansion strategy,
will allow it to adopt the latest
features and designs to optimise
energy and resource efficiency
of its data centres.
Keppel Datahub since January 2011
had been successful in improving
efficiencies. Several phases of
expansion have been activated to
serve requirements from both
existing and new customers.
Keppel Digihub became one of the
pioneering companies to undergo
the Threats, Vulnerability, and Risk
Assessment set by the Monetary
Authority of Singapore for data
centres serving financial institutions.
Leveraging a decade of data centre
expertise and operational know-how,
Keppel T&T set up Keppel Data Centre
Facility Management to provide both
project and operation support for its
overseas assets.
Through the Securus Fund, Keppel T&T
acquired a 100% stake in GV7 data
centre in London, UK and an 80%
stake in a data centre in Selangor,
Malaysia. With the latest acquisitions,
Securus Fund now holds a diversified
portfolio of four high quality assets
spread across the UK, Malaysia
and Australia.
Operating & Financial Review
Infrastructure
69
OPERATING & FINANCIAL REVIEW
PROPERTY:
Keppel is committed to
provide urban living solutions
through its core businesses
of property development and
property fund management.
Profit Before Tax*
Net Profit*
$1,276m
Grew 119% from
FY 2011’s $582 million
$784m
Grew 161% from
FY 2011’s $300 million
1
2
MAJOR DEVELOPMENTS
IN 2012
• Sold about 2,350 homes, mainly
in Singapore and China.
• Acquired four prime residential
sites, which will add over 2,600
homes in Singapore, China and
Sri Lanka.
• Acquired a 2.6-ha prime
commercial site in Beijing CBD,
marking Keppel Land’s foray
into the Beijing office market.
• Grew total Assets Under
Management of Keppel REIT
and Alpha Investment Partners
(Alpha) to $15.3 billion as
at end-2012.
FOCUS FOR 2013/14
• Focus on core markets of
Singapore and China and
growth markets of Vietnam
and Indonesia.
• Scale up in high-growth cities to
develop competitive advantage.
• Expand commercial portfolio
•
overseas.
Increase fee income from
fund management for
sustainable growth.
EARNINGS REVIEW
Revenue from the Property Division
of $3,018 million in 2012 was
$1,551 million above the previous
year’s. This was contributed largely
by revenue recognition from
Reflections at Keppel Bay following
the handover of units sold under the
deferred payment scheme. Pre-tax
profit of $1,276 million was an increase
of $694 million over 2011. This was
mainly due to higher contributions
from Reflections at Keppel Bay.
With a net profit of $784 million,
the Division contributed 41% to the
Group’s overall earnings in 2012.
MARKET REVIEW
In Singapore and China, governments
continued to impose extensive
measures on the property markets
to avoid asset bubbles. Although
buyers’ sentiments were affected,
strong liquidity and the low interest
rate environment have supported
these markets.
Singapore’s economy registered a
modest 1.3% growth in 2012 compared
with a 5.2% growth in 2011. Despite
the slower economy, new private
residential sales hit a record high of
22,197 units, exceeding the take-up
of 16,292 units in 2010 and the strong
sales of just under 16,000 units in 2011.
Private residential prices rose 2.8%
in 2012, compared with 5.9% in 2011.
To ensure a sustainable property
market, the Singapore government
introduced the seventh round of
cooling measures in January 2013.
The new measures implemented
include higher additional buyer’s
stamp duties, lower loan-to-value
limits and higher cash down payments
for purchasers with second and
subsequent home loans.
Based on statistics from the Urban
Redevelopment Authority, the office
market saw healthy net take-up of
1.87 million sf in 2012. According
to CB Richard Ellis, Grade A office
rents moderated 2.2% quarter-on-
quarter to reach $9.58 psf in 4Q 2012.
However, core Central Business
District (CBD) occupancy remained
stable at 92.2% in 2012, reflecting a
resilient office market with demand
supported by higher take-up from
diverse non-financial sectors such as
commodities, legal and professional
services. New Grade A office supply
continues to be limited with about
780,000 sf from Asia Square Tower 2,
which will be ready in 2013.
China achieved a 7.8% GDP growth in
2012, the slowest expansion since 1999
and a clear drop from the average 10%
growth seen over the last two decades.
The government maintained property
Net Profit* ($ million)
+161%
from FY 2011
2012
2011
2010
300
214
784
Earnings Highlights
$ million
Revenue
EBITDA*
Operating Profit*
Profit before Tax*
Net Profit*
Manpower (Number)
Manpower Cost
2012
3,018
1,178
1,157
1,276
784
4,280
126
2011
1,467
472
457
582
300
3,210
136
2010
1,042
363
353
488
214
3,015
91
* Figures exclude revaluation, major impairment and divestments.
Photo courtesy of Woh Hup
1 Keppel Land acquired a
prime commercial site
in the heart of Beijing’s
CBD in 2012.
2 Reflections at Keppel Bay
redefines urban
waterfront living
in Singapore and
internationally.
70
Keppel Corporation Limited
Report to Shareholders 2012
Operating & Financial Review
Property
71
OPERATING & FINANCIAL REVIEW
PROPERTY
1
curbs throughout 2012, demonstrating
its resolve to stabilise the market.
However, the government has fine-
tuned several mortgage and home
purchase restriction policies aimed
at supporting first-time homebuyers.
As a result, property prices and
transaction volumes improved over
the second half of 2012, with price
growth recorded in 41 out of
70 cities across China year-on-year
in December 2012.
In Vietnam, the government has made
progressive fiscal corrections to rein
in the double-digit inflation of 18.7%
in 2011 to 9.1% in 2012. The State
Bank of Vietnam has also conducted
six rounds of interest rate cuts in 2012
to spur economic growth. With lower
inflation and interest rates, the
residential market is seeing increasing
demand from owner occupiers,
especially for mid-market and
landed homes.
Indonesia’s residential market
continues to strengthen with domestic
consumption as its main growth
driver as well as an expanding and
increasingly affluent middle-class
population. Office space has also been
tight due to limited supply, with Jakarta
CBD office rents soaring 34.5% year-
on-year in 2012.
OPERATING REVIEW
SINGAPORE
In 2012, Keppel Land sold about
430 homes, mainly from The Luxurie.
The 622-unit development located
in Sengkang was almost fully sold
as at end-February 2013. Capitalising
on demand for well-located suburban
developments near MRT stations,
retail amenities and reputable
schools, Keppel Land acquired a
new site near the Tanah Merah MRT
station in October 2012. The project
is currently being designed. A prime
waterfront project at Keppel Bay
Plot 3 is at an advanced stage of
design development.
Completed in 2012, Marina Bay
Financial Centre (MBFC) Tower 3
continued to attract tenants, with
leasing commitment improving to
about 84% as at end-February 2013.
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Keppel Corporation Limited
Report to Shareholders 2012
In addition to anchor tenant DBS,
MBFC Tower 3 has established a
strong and diverse tenant base,
including global financial information
company McGraw-Hill, Denmark-
based Lego and New York-based
legal firm, Milbank.
OVERSEAS
Keppel Land sold about 1,920 units
overseas, mainly in China, in 2012.
Despite stringent home purchase
restrictions and credit control, projects
in China registered encouraging sales
with more than 1,650 units sold,
primarily from The Botanica in
Chengdu, Central Park City in Wuxi
and The Springdale in Shanghai,
reflecting demand from owner-
occupiers and first-time homebuyers
for well-planned developments and
integrated townships.
Tapping on the immense growth
potential and rapid urbanisation of
second-tier cities, Keppel Land China
further secured two prime residential
sites in Chengdu and Wuxi in 2012.
The Group’s residential projects in
Indonesia and India continued to
make encouraging sales progress.
Elita Promenade in Bangalore, India,
was fully sold. In Indonesia, Jakarta
Garden City sold 95% of 1,104
launched homes, as well as 68% of
48 launched shophouses as at end-
February 2013. This gated township
development was named the Best
Villa Development and Highly
Commended Green Development
at the South East Asia Property
Awards 2012.
During the year, the Group entered
the Sri Lankan residential market to
ride on the country’s rapid growth
as well as improved economic and
political conditions. Keppel Land will
jointly develop a 260-unit condominium
development in Colombo with a
leading local developer.
To establish a balanced portfolio,
Keppel Land has scaled up its
commercial presence overseas in
the last two years, capitalising on
2
SIGNIFICANT EVENTS
January
• Keppel Land China acquired a 51%
stake in a prime 2.6-ha commerical
site in Beijing’s CBD.
February
• Takashimaya became an anchor
tenant of Saigon Centre Phase 2
in Ho Chi Minh City, Vietnam,
pre-committing to 15,000 sm
of retail space.
March
• Master architect
Mr Daniel Libeskind was
appointed to design the
Plot 3 residential development
at Keppel Bay.
• MBFC Tower 3 attained temporary
occupation permit.
June
• Keppel Land announced that
Mr Ang Wee Gee would succeed
Mr Kevin Wong as CEO of
Keppel Land in 2013.
• Keppel REIT acquired another
12.4% stake in Ocean Properties,
increasing its total interest in
Ocean Financial Centre to 99.9%.
• Keppel Land broke ground for
International Financial Centre (IFC)
Jakarta Tower 2 in Indonesia.
1 Keppel’s Grade A
offices continue to
attract quality tenants
across industries.
2 IFC Jakarta Tower 2,
Indonesia’s first BCA
Green Mark Platinum
office tower, will meet
rising demand for quality
office spaces there.
Operating & Financial Review
Property
73
OPERATING & FINANCIAL REVIEW
PROPERTY
its reputation as a premier office
developer in Singapore. In 2012,
Keppel Land China acquired a 2.6-ha
prime commercial site in the heart
of Beijing’s CBD and is planning to
develop three office towers with
supporting retail premises on the site.
Including the Beijing commercial
development and projects in Tianjin
Eco-City, Ho Chi Minh City and Jakarta,
more than 420,000 sm of commercial
gross floor area are currently
under development.
FUND MANAGEMENT
Keppel Land’s property fund
management business, through
Keppel REIT and Alpha Investment
Partners (Alpha) grew to $15.3 billion
as at end-2012 from $14.8 billion as at
end-2011. Keppel REIT, which has
changed its name from K-REIT Asia,
continued to expand its Grade A
office portfolio with income-accretive
acquisitions. These included a 50%
stake in a new office development
in Perth, Western Australia, and
additional interest in Ocean Financial
Centre (OFC), which raised its stake
in the latter from 87.5% to 99.9%.
Alpha’s latest fund, Alpha Asia Macro
Trends Fund (AAMTF) II acquired a
50% stake in 78 Shenton Way and
some high-end residential units
at 8 Napier in 2012. Alpha’s
fully-invested funds also divested
several properties in Hong Kong,
China, South Korea, Japan and
Singapore during the year.
BUSINESS OUTLOOK
SINGAPORE
2013 is expected to be another
challenging year. Economic growth
is expected to remain modest at
1-3%. With the latest set of property
measures announced in January 2013,
residential prices and sales volume
may be affected.
SIGNIFICANT EVENTS
July
• Keppel Land formed a JV with
CT Properties to develop luxury
condominiums in Colombo,
Sri Lanka.
• Keppel Land secured a
3.2-ha prime residential
site along New Upper Changi
Road for the development
of about 700 homes.
September
• Keppel REIT topped off its
landmark Sydney office
building at 8 Chifley Square.
• Keppel REIT acquired a 50%
interest in a new office tower
in Perth, Western Australia.
October
• K-REIT Asia was renamed
Keppel REIT.
• Keppel Land China
acquired a 28.7-ha prime
residential site in Xinjin
County of Chengdu.
November
• MBFC Tower 3 secured
new leases, bringing the
total commitment level to
about 960,000 sf or 76%
of the building.
While any further property cooling
measures will exert downward
pressure on the residential market,
liquidity and the low interest rate
environment continue to support
demand. Well-located suburban
projects with strong attributes such
as being close to key transportation
nodes, reputable schools and tertiary
institutions as well as shopping and
recreational amenities will continue
to attract strong interest from buyers.
Meanwhile, world-class waterfront
homes remain a preferred lifestyle
choice for discerning homeowners.
Keppel Land will monitor the market
closely to launch its new residential
projects at New Upper Changi Road,
as well as Plot 3 at Keppel Bay in 2013.
As office demand is closely co-related
to the state of economy, the uncertain
global economic conditions may affect
the take-up of space from the financial
sector. However, the limited supply of
Grade A office space as well as take-up
from non-financial sectors will mitigate
the impact. Multinational corporations
continue to establish and grow their
operations in Singapore given its
appeal as a pro-business hub in Asia.
OVERSEAS
Asia’s growth will persist on the back
of major economic reforms in India,
Myanmar and China to stimulate
investments and growth. Its pace
however, may be affected by poor
economic conditions in the US and
Europe. Economic growth, favourable
demographics and rapid urbanisation
will continue to drive demand for
quality homes in markets where
Keppel Land operates.
Keppel Land will monitor the regional
market, where homeownership
aspirations remain strong with rising
middle-class populations, for
appropriate opportunities to launch
new developments and phases.
The company will also continue to look
out for attractive residential and
commercial development sites with
good marketing attributes. Riding
on its reputable brand name and
experience as a premier office
developer in Singapore, Keppel Land
74
Keppel Corporation Limited
Report to Shareholders 2012
2
1
3
1 The Luxurie in Sengkang
is almost fully sold.
2 Keppel REIT announced
the acquisition of a 50%
interest in a Grade A
office development to be
built on the Old Treasury
Building site in Perth.
3 Jakarta Garden City
is an eco-conscious
integrated township.
Operating & Financial Review
Property
75
1 Tapping the growth
potential of second-tier
Chinese cities, Keppel
Land China acquired its
fifth site in Wuxi.
2 Singapore’s Prime
Minister Lee
Hsien Loong (extreme
right) and former
Deputy Secretary of the
Communist Party of
China Tianjin Municipal
Committee, He Lifeng
(extreme left) planting
a spruce tree at the
Yongding Zhou Cultural
Theme Park in the
Sino-Singapore Tianjin
Eco-City.
OPERATING & FINANCIAL REVIEW
PROPERTY
will continue to expand its commercial
portfolio overseas.
FUND MANAGEMENT
Keppel REIT’s strong average
portfolio occupancy of above 98%
by a diversified tenant base and
extended lease expiry profile will
continue to provide sustainable
returns. The Pan-Asian commercial
REIT will remain focused on retaining
good tenants and pursuing selective
income-accretive acquisitions to
grow its earnings.
Alpha will continue to expand its
existing portfolio across Asia,
while actively monitoring opportunities
to buy into global fund management
platforms. AAMTF II will actively seek
out potential acquisitions while the
other fully-invested funds continue
to review divestment opportunities
focusing on asset management and
the timing of asset disposal. Having
raised more than US$700 million to-
date, AAMTF II is targeting to close at
US$1 billion in the first half of 2013.
Looking ahead, Keppel Land stays
on track with its asset-light strategy,
keeping a lookout for capital
recycling opportunities.
The company will continue to focus
on its core markets of Singapore
and China, as well as strengthen
its growth markets of Vietnam and
Indonesia. It will also scale up in high-
growth cities to develop a competitive
advantage in those regions.
With a strong cash position of
$1.6 billion and low debt-to-equity ratio
of 0.22x as at end-2012, Keppel Land
stands in good stead to capture
acquisition opportunities, focusing
on quality residential developments,
townships, as well as commercial
and mixed-use developments.
1
SIGNIFICANT EVENTS
December
• Keppel Land China
secured its fifth site in Wuxi.
The 6.6-ha prime city centre
site will yield 1,135 high-rise
residential apartments and
commercial components.
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Keppel Corporation Limited
Report to Shareholders 2012
SUSTAINABLE DEVELOPMENT TAKES ROOT
2
In 2012, the Sino-Singapore
Tianjin Eco-City (Tianjin Eco-City)
attracted an additional RMB300 million
in investments, bringing its total
registered capital to over
RMB60 billion. The number of
companies that have signed on
with Tianjin Eco-City also grew
from 500 in 2011 to 850 in 2012.
To attract even more Singapore-
based businesses, some $9.5 million
in financial incentives were rolled out
by Sino-Singapore Tianjin Eco-City
Investment and Development Co.,
Ltd. (SSTEC) and IE Singapore.
The high-profile project continues
to garner attention at international
platforms, including the United
Nation Conference on Sustainable
Development (Rio+20 Conference)
in Brazil, where it won the Global
Human Settlements Award. It was
also visited on several occasions by
dignitaries including Singapore’s
Prime Minister Lee Hsien Loong,
Deputy Prime Minister Teo Chee Hean
and Minister for National Development
Khaw Boon Wan.
Tianjin Eco-City welcomed its first wave
of residents and companies in 2012.
With a resident population of 2,000
and growing, a green community is
quickly taking root in the core of
Tianjin Eco-City. As at end-January
2013, close to 7,000 homes, as well as
key components of the Eco-Business
Park including The Landmark and
Ready-Built Offices were completed.
Keppel’s eco-developments in
the Start-Up Area also made good
progress. About 80% of 787 launched
homes in Keppel Land’s 1,672-unit
Seasons Park, were sold by end-
February 2013. Meanwhile, the first
phase of the company’s commercial
development Seasons City is expected
to be completed in 2015.
In 2013, Keppel Land plans to launch
its other residential projects such
as the 1,190-unit Seasons Garden,
as well as the third phase of Serenity
Cove which comprises 340 low-density
eco-friendly homes. Serenity Cove is
being developed over three phases and
will yield a total of 573 landed homes.
Phase 1, featuring 83 bungalows,
as well as Phase 2, consisting of 110
semi-detached and 40 terrace units,
have been completed and sold out.
In the Eco-Industrial Park,
the Group’s green integrated
logistics distribution centre will
begin construction soon. Over at the
Eco-Business Park, Keppel’s district
heating and cooling system plant will
commence operations in 2013.
Tianjin Eco-City is developed by SSTEC,
a 50/50 JV between the Keppel-led
Singapore Consortium and a Chinese
Consortium helmed by Tianjin TEDA
Investment Holding Co., Ltd.
Operating & Financial Review
Property
77
OPERATING & FINANCIAL REVIEW
OPERATING & FINANCIAL REVIEW
1
INVESTMENTS:
Keppel is committed to deliver good
value to shareholders while seeking
growth opportunities.
Profit Before Tax*
Net Profit*
$196m
Grew 238% from
FY 2011’s $58 million
$194m
Grew 331% from
FY 2011’s $45 million
EARNINGS REVIEW
Pre-tax earnings from the
Investments Division of $196 million
was $138 million higher compared
to 2011 due to the disposals
of investments.
Net profit of $194 million
was $149 million above that of
the previous year. Investments
contributed 10% to the Group’s
earnings in 2012.
k1 VENTURES
k1 Ventures (k1) is an investment
company with interests in diverse
sectors including transportation
leasing, education, oil and gas
exploration, financial services
and automotive retail.
in the prior year, due to an increase
in revenue from investments, offset
in part by a decrease in revenue
from transportation leasing-
related activities.
Operating loss was $58.7 million
compared to $4.7 million in the
prior year. The decline in operating
results was driven by the impairment
of goodwill and other intangibles
of $55.4 million, a fixed assets
impairment loss of $18.3 million
associated with Helm Holding
Corporation, and a decrease in
revenue from transportation-
related activities offset in part
by an increase in revenue
from investments.
For the financial year ended 30 June
2012, k1 reported a revenue of
$78.7 million compared to $71.2 million
During the year, there was a
write-back of prior years’ tax
provisions of $44.4 million and a
tax benefit of $11.4 million related
to the fixed assets and other
intangible impairment losses.
For 2012, k1 paid a dividend of
0.5 cent per share to shareholders,
increasing cumulative distributions to
shareholders to 23.3 cents per share
or more than $480 million since 2005.
k1’s US$100 million investment
in Guggenheim Capital LLC,
comprising mainly Preferred
Units and detachable Warrants
to acquire common units,
has performed as expected.
The Preferred Units delivered
a 7% annual dividend.
Knowledge Universe Holdings’
global education business is doing
well. Its new, state-of-the art
$140 million Canadian International
School Lakeside campus in
Singapore opened in early 2012.
Net Profit* ($ million)
+331%
from FY 2011
2012
2011
2010
45
49
194
Earnings Highlights
$ million
Revenue
EBITDA*
Operating Profit*
Profit before Tax*
Net Profit*
Manpower (Number)
Manpower Cost
2012
152
134
133
196
194
170
95
2011
46
20
20
58
45
155
93
2010
11
10
9
66
49
147
65
* Figures exclude revaluation, major impairment and divestments.
MAJOR DEVELOPMENTS
IN 2012
• GKB Holdings Pte Ltd made
a voluntary conditional cash
offer for k1 Ventures, which
did not garner the necessary
votes from k1 shareholders
to proceed.
• M1 was the first
telecommunications operator
in Southeast Asia to offer
nationwide 4G service in the
last quarter of 2012.
FOCUS FOR 2013/14
• k1 Ventures to manage its
current investment portfolio to
maximise shareholder value,
and distribute excess cash as
investments are monetised.
• M1 to continue strengthening
its position in the mobile market
and capitalise on Singapore’s
national fibre network for
growth opportunities.
1 M1 continued to
perform well in 2012,
with a resilient growth
in revenue of 2.8%.
China Grand Auto, k1’s investment
in automotive retail, continues to
perform well and has filed for an
initial public offering to list on the
Shanghai Stock Exchange.
In December 2012, it was
announced that McMoRan
Exploration Company (MMR), in
which k1 owns 2,309,000 common
shares, signed an agreement with
Freeport-McMoRan Copper & Gold
Inc (FCX) whereby FCX will acquire
MMR for a per share consideration
of US$14.75 in cash and 1.15 units
of a royalty trust. The sale of MMR
is conditional upon the approval
of MMR shareholders and other
customary conditions, and is
expected to close in the second
quarter of 2013.
During the year, GKB Holdings
Pte Ltd, a company formed by the
three largest shareholders of k1 for
the purpose of making a voluntary
conditional cash offer for k1, did
not garner the necessary votes as
shareholders elected to remain
shareholders of k1.
M1
A leading integrated
telecommunications provider in
Singapore, and 20% owned by
Keppel Telecommunications &
Transportation (Keppel T&T),
M1 provides a full range of voice
and data communications services.
M1 continued to perform well in
2012, with a resilient growth in
service revenue of 2.8%. It also
strengthened its market position
with the total mobile customer
base growing 94,000 to reach
2.11 million customers as at end-
2012. Additionally, the total fibre
service customer base grew over
two folds to 52,000 persons.
M1 achieved another milestone
in September 2012 as the first
telecommunications operator in
Southeast Asia to offer nationwide
4G service in the last quarter of
the year. Take-up rate for the
service was brisk and is expected
to grow steadily in 2013.
78
Keppel Corporation Limited
Report to Shareholders 2012
Operating & Financial Review
Investments
79
OPERATING & FINANCIAL REVIEW
FINANCIAL REVIEW & OUTLOOK
Revenue by Division 2012 (%)
Offshore & Marine
Infrastructure
Property
Investments
Total
%
57
20
22
1
100
Net Profit by Division 2012 (%)
Offshore & Marine
Infrastructure
Property
Investments
Total
%
49
–
41
10
100
Note: Figures exclude revaluation, major impairment and divestments.
80
Keppel Corporation Limited
Report to Shareholders 2012
PROSPECTS
The Offshore & Marine Division
secured $10 billion of new orders for
the year. The net orderbook stood
at $12.8 billion as at 31 December
2012 with deliveries extending into
2019. The long-term fundamentals
for the Offshore & Marine industry
remain sound, underpinned by
growing energy demand from
developing economies. Demand for
rigs is expected to remain strong in
view of an ageing fleet, a preference
for newer rigs and increasing
requirements in many parts of the
world, particularly Brazil, Africa,
the North Sea and the Gulf of Mexico.
The Division will continue to focus on
excellence in executing the projects
on-hand, improving the competencies
and productivity of its yards, and
exploring value-adding acquisitions.
evolving energy market in Singapore.
Keppel Integrated Engineering
continues to selectively pursue
opportunities in its target markets.
Keppel T&T will seek opportunities
to expand its logistics business as
well as acquire more data centres
and develop new ones organically.
The Property Division sold about
430 residential units in Singapore for
the year, mostly from The Luxurie
in Sengkang. The Division acquired
a prime residential site near Tanah
Merah MRT station in October 2012,
which will yield about 700 residential
units. In January 2013, the Singapore
government introduced the seventh
round of measures to further cool the
residential market. These measures
have dampened sentiments and are
likely to weigh down the market.
In the Infrastructure Division,
the 800MW expansion of the Keppel
Merlimau Cogen power plant is on
track for commercial operations in
2013, which will enable Keppel Energy
to capture opportunities from the
Overseas, the Division sold about
1,900 residential units for the year,
with China accounting for about
1,650 units. In December 2012, the
Division secured its fifth site in Wuxi
for a mixed-use development.
Shareholder Returns
%
25
20
15
10
5
0
Special dividend
40.9 cts/share
Plus
Dividend in specie
~ 20.9 cts/share
Plus
Dividend in specie
~ 27.4 cts/share
Plus
cents
50
40
30
20
10
0
2007
2008
2009
2010
2011
2012
ROE (%)*
20.1
21.8
22.5
20.8
20.8
22.6
Full-year
dividend (cents)
Interim
dividend (cents)
17.3
31.8
34.6
38.2
43.0
45.0
8.2
12.7
13.6
14.5
17.0
18.0
Note: Figures exclude revaluation, major impairment and divestments.
* Comparatives have been restated due to retrospective application of Amendments to FRS 12
Deferred Tax: Recovery of Underlying Assets.
The 6.6-ha prime city-centre site will
comprise about 1,135 residential units
and some commercial components.
The Division’s fund management
business continued to grow through
selective acquisitions and divestments
in 2012. Expanding its quality office
portfolio, Keppel REIT acquired a
50% stake in a new Grade A office
development in Perth, Australia and
raised its interests in Ocean Financial
Centre to 99.9%. Alpha Asia Macro
Trends Fund II, which is managed by
Alpha Investment Partners (Alpha),
acquired a 50% stake in 78 Shenton
Way and 17 high-end residential units
at 8 Napier. The Group’s total assets
under management by Keppel REIT
and Alpha have grown to $15.3 billion
as at end-2012.
Moving forward, the Property Division
will focus on the core markets
of Singapore and China while
strengthening its position in Vietnam
and Indonesia. It will also continue
to grow assets under management
through its fund management
businesses for sustainable income.
The global economy remains
challenging with unresolved fiscal
cliff issues faced by the US economy,
and uncertainty over the Eurozone
debt crisis. As such, the Group will
continue to sharpen its competencies
and fortify its capabilities to navigate
the challenges.
SHAREHOLDER RETURNS
Return On Equity (ROE) exceeded 20%
for the sixth consecutive year, reflecting
Keppel Corporation’s effort to achieve
higher returns for its shareholders.
The Company will be paying a total
distribution of approximately 72.4 cents
per share for 2012. This comprises a
final dividend of 27.0 cents per share,
special dividend in specie of one
Keppel REIT unit for every five shares
in the Company (approximately
27.4 cents per share) and the interim
dividend of 18.0 cents per share paid
in August 2012. Total distribution
for 2012 represents 68% of Group
net profit before revaluation, major
impairment and divestments of
Operating & Financial Review
Financial Review & Outlook
81
OPERATING & FINANCIAL REVIEW
FINANCIAL REVIEW & OUTLOOK
EVA Growth ($ million)
1,400
1,200
1,000
800
600
400
200
0
2007
2008
2009
2010
2011
2012
699
837
953
964
1,024
1,375
Note: Figures exclude revaluation, major impairment and divestments.
$2,237 million. This is equivalent to a
gross yield of 6.6% on the Company’s
last transacted share price as at
31 December 2012.
The distribution to shareholders is
on account of Keppel Corporation’s
45th anniversary and increased
profitability. The Company is committed
to reward shareholders with generous
payouts as it achieves healthy
year-on-year earnings growth.
ECONOMIC VALUE ADDED (EVA)
In 2012, EVA excluding major
impairment and divestments rose
by $351 million to $1,375 million.
This was attributable to higher
operating profit (excluding major
impairment and divestments), partially
offset by higher capital charge.
Capital charge rose by $167 million as a
result of higher Average EVA Capital,
EVA
$ million
Profit after tax and major impairment and divestment (Note 1)
Adjustment for :
Interest expense
Interest expense on non-capitalised leases
Tax effect on interest expense adjustments (Note 2)
Provisions, deferred tax, amortisation & other adjustments
Net Operating Profit After Tax (NOPAT)
2012
2,253
180
16
(29)
23
2,443
12 vs 11
+/(-)
+706
+60
-3
-7
+3
+759
2011
1,547
120
19
(22)
20
1,684
11 vs 10
+/(-)
+321
+44
-2
–
-46
+317
Average EVA Capital Employed (Note 3)
Weighted Average Cost of Capital (Note 4)
Capital Charge
16,711
6.06%
(1,013)
+4,251
-0.73%
-167
12,460
6.79%
(846)
+2,416
+0.12%
-176
2010
1,226
76
21
(22)
66
1,367
10,044
6.67%
(670)
Economic Value Added
1,430
+592
838
+141
697
Comprising:
EVA excluding major impairment and divestment
EVA of major impairment and divestment
1,375
55
1,430
+351
+241
+592
1,024
(186)
838
+60
+81
+141
964
(267)
697
Notes:
1. Profit after tax and major impairment and divestments excludes net revaluation gain on investment properties.
2. The reported current tax is adjusted for statutory tax impact on interest expenses.
3. Average EVA Capital Employed is derived from the quarterly averages of net assets plus interest-bearing liabilities, provision and present value
of operating leases.
4. 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% (2011: 6%);
(b) Risk-free rate of 1.6780% (2011: 2.5379%) based on yield-to-maturity of Singapore Government 10-year Bonds;
(c) Unlevered beta at 0.79 (2011: 0.79); and
(d) Pre-tax Cost of Debt at 1.90% (2011: 2.33%) using five-year Singapore Dollar Swap Offer Rate plus 55 basis points (2011: 40 basis points).
82
Keppel Corporation Limited
Report to Shareholders 2012
partially offset by lower Weighted
Average Cost of Capital (WACC).
Average EVA Capital increased by
$4.25 billion from $12.46 billion to
$16.71 billion. WACC decreased from
6.79% to 6.06% mainly due to a
reduction in risk free rate.
EVA excluding major impairment and
divestments of $1,375 million in 2012 is
the highest ever attained by the Group.
The continuing trend of positive and
increasing EVA is evident of the Group’s
commitment to maximise shareholders’
value through the effective and
efficient management of resources.
FINANCIAL POSITION
Group shareholders’ funds increased
from $7.70 billion as at 31 December
2011 to $9.25 billion as at 31 December
2012. The increase was mainly
attributable to retained profits for
the year and fair value gains on cash
flow hedges, partially offset by foreign
exchange translation losses, and the
payment of a final dividend of 26.0 cents
per share for 2011 and the interim
dividend of 18.0 cents per share for 2012.
Group total assets of $29.17 billion at
31 December 2012 was $4.1 billion or
16.2% higher than the previous year
end. Increase in fixed assets was
largely due to capital expenditure
(capex) for the expansion of Keppel
Merlimau Cogen power plant, the
inclusion of fixed assets from the
consolidation of Kingsdale Group
(Kingsdale), which became a subsidiary,
and other operational capex. The
increase in investment properties was
mainly due to the acquisition of Aether
Pte Ltd Group (Aether), which has an
interest in a commercial development
in Beijing, China, and the fair value gain
on investment properties in 2012, offset
by derecognition from disposal of partial
interest in Saigon Centre Phase 1.
Associated companies increased mainly
due to further investments in existing
property development projects and
the acquisition of a 20% interest in
KrisEnergy Ltd (KrisEnergy). Higher
stocks and work-in-progress were
due to land acquisition costs and
development expenditure incurred for
projects in the Property Division, the
Total Assets Owned ($ million)
30,000
25,000
20,000
15,000
10,000
5,000
0
Fixed assets
Properties
Investments
Stocks & work-in-progress
Debtors & others
Bank balances, deposits & cash
Total
2010*
2011*
2012
2,243
3,208
4,618
4,929
2,400
4,246
21,644
2,716
4,610
5,350
6,605
2,797
3,021
25,099
3,337
5,423
5,909
7,443
3,004
4,055
29,171
* Comparatives have been restated due to retrospective application of Amendments to FRS 12 Deferred
Tax: Recovery of Underlying Assets.
Total Liabilities Owed & Capital Invested ($ million)
30,000
25,000
20,000
15,000
10,000
5,000
0
Shareholders’ funds
Non-controlling interests
Creditors
Term loans & bank overdrafts
Other liabilities
Total
2010*
2011*
2012
6,619
3,036
7,689
4,068
232
21,644
7,699
4,062
8,194
4,877
267
25,099
9,246
4,332
8,059
7,208
326
29,171
* Comparatives have been restated due to retrospective application of Amendments to FRS 12 Deferred
Tax: Recovery of Underlying Assets.
Operating & Financial Review
Financial Review & Outlook
83
OPERATING & FINANCIAL REVIEW
FINANCIAL REVIEW & OUTLOOK
consolidation of Kingsdale and higher
work-in-progress for the Offshore &
Marine Division.
Higher level of receivables was largely
due to higher progress billings from
the Offshore & Marine Division and
advances to associated companies.
These were partly offset by a decrease
in long term assets, particularly
advance payment, following the
completion of the acquisition of Aether.
Group total liabilities of $15.59 billion
at 31 December 2012 were $2.3 billion
or 16.9% higher than at the previous
year end. Increase in current taxation
was due to higher taxable profit for
the Offshore & Marine and Property
divisions. Higher level of term loans
was due to increased bank borrowings
and funds raised in the capital markets
for working capital requirements,
operational capex and acquisitions.
Increase in deferred taxation was due
mainly to the acquisition of Aether.
These were partly offset by reduction
in billings on work-in-progress in
excess of related costs due mainly
to project cost incurred and project
completion for Offshore & Marine jobs.
Group net debt as at 31 December
2012 was $3.15 billion as compared
to Group net debt of $1.86 billion as
at 31 December 2011. This was
mainly due to capex, investment
in subsidiaries and investment in
associated companies.
TOTAL SHAREHOLDER RETURN (TSR)
Keppel Corporation is committed
to deliver value to its shareholders
through earnings growth. The Company
will continue to identify, develop
and build growth platforms for its
businesses, sharpen its strategic
focus, streamline its operations,
launch new products, strengthen
customer relationships and penetrate
new markets.
Total Shareholder Return (%)
125
100
75
50
25
0
(25)
(50)
(75)
2003
2004
2005
2006
2007
2008
2009
2010
2011 2012
Keppel
STI
75.2
38.3
48.7
21.6
32.5
19.3
65.3
32.4
51.7 (64.4) 100.8
70.8
(47.1)
21.0
47.0
13.4
(6.4)
(14.0)
22.9
23.3
Source: Bloomberg
Cash Flow
$ million
Operating profit
Depreciation, amortisation & other non-cash items
Cash flow provided by operations before changes
in working capital
Working capital changes
Interest receipt and payment & tax paid
Net cash from/(used in) operating activities
Investments & capital expenditure
Divestments & dividend income
Net cash used in investing activities
Free cash flow
Dividend paid to shareholders of the Company & subsidiaries
2012
2,621
19
2,640
(1,448)
(186)
1,006
(1,323)
254
(1,069)
(63)
(1,001)
12 vs 11
+/(-)
2011
Restated*
-203
+855
+652
+441
+137
+1,230
+238
-49
+189
+1,419
2,824
(836)
1,988
(1,889)
(323)
(224)
(1,561)
303
(1,258)
(1,482)
11 vs 10
+/(-)
+1,383
-997
2010
Restated*
1,441
161
+386
-975
-85
-674
-295
-320
-615
-1,289
1,602
(914)
(238)
450
(1,266)
623
(643)
(193)
-119
(882)
-125
(757)
* Comparatives have been restated due to retrospective application of Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets and other reclassifications.
84
Keppel Corporation Limited
Report to Shareholders 2012
The Company’s 2012 TSR was 22.9%.
This was at about the level of the
benchmark Straits Times Index’s
(STI) TSR of 23.3%. Over the past
10 years, its Compounded Annual
Growth Rate (CAGR) TSR of 26% was
also significantly higher than STI’s
CAGR TSR of 11%.
Finance Committee and are updated
to take into account changes in the
operating environment. This committee
is chaired by the Chief Financial
Officer of the Company and includes
Chief Financial Officers of the Group’s
key operating companies and Head
Office specialists.
• The Group maintains a mix of
fixed and variable rate debt/loan
instruments with varying maturities.
Where necessary, the Group uses
derivative financial instruments to
hedge interest rate risks. This may
include interest rate swaps and
interest rate caps.
CASH FLOW
Net cash from operating activities
was $1,006 million compared to net
cash used in operating activities of
$224 million in the previous year.
This was mainly due to higher
operational cash flow and lower
cash outflow from working
capital requirements.
Net cash used in investment activities
was $1,069 million. The Group spent
$1,323 million on acquisitions and
operational capex. This mainly
comprised acquisitions of associated
company KrisEnergy and other
subsidiaries (Kingsdale and
Chengdu Shengshi Jingwei Real
Estate Investment Co Ltd); further
investments in associated companies;
the expansion of Keppel Merlimau
Cogen power plant; and other
operational capex. Divestments and
dividend income totalled $254 million,
including proceeds from the partial
divestment of interests in Saigon
Centre Phases 1 and 2.
Free cash flow was negative
$63 million as compared to negative
$1,482 million in the previous year.
Total distribution to shareholders
of the Company and non-controlling
shareholders of subsidiaries for the
year amounted to $1,001 million.
FINANCIAL RISK MANAGEMENT
The Group operates internationally
and is exposed to a variety of financial
risks, comprising market (including
currency, interest rate and price risks),
credit and liquidity risks. 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
The Group’s financial risk
management is discussed in more
detail in the notes to the financial
statements. In summary:
• The Group maintains flexibility
in funding by ensuring that
ample working capital lines
are readily available.
• The Group has receivables and
• The Group adopts stringent
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 specific 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
fluctuations in the 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 (HSFO) 180-CST.
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. Total Group borrowings as
at the end of 2012 were $7.2 billion
(2011: $4.9 billion and 2010: $4.1 billion).
At the end of 2012, 14% (2011: 17%
and 2010: 10%) of Group borrowings
were repayable within one year
with the balance largely repayable
between two and five years.
Unsecured borrowings constituted
81% (2011: 72% and 2010: 69%) of
total borrowings with the balance
secured by properties and assets.
Secured borrowings were mainly
for financing investment properties
and development project loans.
The Group has mortgaged certain
properties and assets of up to an
aggregate amount of $3.10 billion
Debt Maturity ($ million)
< 1 year
1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
> 5 years
1,006 (14%)
625 (9%)
491 (7%)
869 (12%)
1,962 (27%)
2,255 (31%)
Operating & Financial Review
Financial Review & Outlook
85
OPERATING & FINANCIAL REVIEW
FINANCIAL REVIEW & OUTLOOK
to financial institutions. (2011:
$4.20 billion and 2010: $2.55 billion).
Fixed rate borrowings constituted 57%
(2011: 51% and 2010: 52%) of total
borrowings with the balance at floating
rates. The Group has interest rate swap
agreements with notional amount
totalling $1,421 million whereby it
receives variable rates equal to the
Singapore Swap Offer Rate and pays
fixed rates between 0.88% and 3.52%
on the notional amount. Details of these
derivative instruments are disclosed
in the notes to the financial statements.
Singapore dollar borrowings
represented 82% (2011: 90% and
2010: 93%) of total borrowings.
The balances were mainly in US
dollars, Brazilian Reals and other
Asian currencies. Foreign currency
borrowings were drawn to hedge
against the Group’s overseas
investments and receivables,
which were denominated in
foreign currencies.
Weighted average tenor of the loan
book was termed out from around
three years at the beginning of 2012
to over five years at the end of 2012
with only a marginal increase of less
than 20 basis points in average cost
of funds.
CAPITAL STRUCTURE &
FINANCIAL RESOURCES
The Group maintains a strong
balance sheet and an efficient capital
structure to maximise returns for
shareholders. The strong operational
cash flow and divestment proceeds
from low yielding and non-core assets
will provide resources to grow the
Group’s businesses.
Every new investment will have to
satisfy strict criteria for return on
investment, cash flow 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.
CAPITAL STRUCTURE
Capital employed at the end of 2012
was $13.58 billion, an increase of
Net Cash/(Gearing)
Net Cash/(Gearing) Ratio =
Borrowings – Cash
Capital Employed
$ millon
15,000
12,000
9,000
6,000
3,000
0
(3,000)
(6,000)
No. of times
1.25
1.0
0.75
0.5
0.25
0
(0.25)
(0.5)
Net Cash/(Debt)
Capital Employed*
Net Cash/(Gearing) Ratio*
2010
178
9,655
0.02
2011
2012
(1,857)
11,761
(0.16)
(3,153)
13,578
(0.23)
* Comparatives have been restated due to retrospective application of Amendments to FRS 12
Deferred Tax: Recovery of Underlying Assets.
Interest Coverage
Interest Coverage =
EBIT
Interest Cost
$ millon
3,200
2,800
2,400
2,000
1,600
1,200
800
400
0
No. of times
40
35
30
25
20
15
10
5
0
EBIT
Total Interest Cost
Interest Cover
2010
1,954
81
24.12
2011
2,276
146
15.59
2012
2,829
183
15.46
86
Keppel Corporation Limited
Report to Shareholders 2012
Cash Flow Coverage
Cash Flow Coverage =
Operating Cash Flow + Interest Cost
Interest Cost
$ million
1,250
1,000
750
500
250
0
(250)
No. of times
10
8
6
4
2
0
(2)
Operating Cash Flow +
Interest*
Total Interest Expense +
Interest Capitalised
Cash Flow Coverage*
2010
2011
2012
531
81
6.56
(78)
1,190
146
(0.53)
183
6.50
* Comparatives have been restated due to certain reclassifications during 2012.
Financial Capacity
$ million
Remarks
Cash at Corporate Treasury
Credit facilities extended
to the Group
Total
2,063
5,970
8,033
51% of total cash of $4.06 billion
Credit facilities of $9.02 billion,
of which $3.05 billion was utilised
$1.82 billion over 2011 and $3.92 billion
over 2010. The Group was in a net debt
position of $3,153 million at the end
of 2012 compared to net debt position
of $1,857 million in 2011. The Group’s
net gearing ratio was 0.23 times at
the end of 2012.
Interest coverage decreased from
24.12 times in 2010 to 15.59 times
in 2011 and further decreased to
15.46 times in 2012. Despite higher EBIT
from 2010 to 2012, interest coverage
has reduced because of higher
borrowings and interest expense.
Cash flow coverage decreased from
6.56 times in 2010 to negative 0.53 times
in 2011 and increased to 6.50 times in
2012. This was mainly due to higher
operating cash flows in 2012.
At the Annual General Meeting
in 2012, shareholders gave their
approval for the mandate to buy back
shares. The Company did not exercise
this mandate.
FINANCIAL RESOURCES
The credit market in 2012 was relatively
benign, and the low interest rate
environment allowed the Group to tap
the debt capital market at competitive
terms and for longer tenures. The Group
raised about $1.8 billion in medium
to long dated bonds to position itself
for value-enhancing opportunities in
core businesses.
As part of its liquidity management,
the Group has built up adequate cash
reserves and short-term marketable
securities as well as sufficient
undrawn banking facilities and
capital market programmes. Funding
of working capital requirements,
capex and investment needs is made
through a mix of short-term money
market borrowings and medium/
long-term loans.
Due to the dynamic nature of its
businesses, the Group maintains
flexibility in funding by ensuring
that ample working capital lines are
readily available. Cash flow, debt
maturity profile and overall liquidity
position are actively reviewed on an
ongoing basis.
As at end-2012, total funds available
and unutilised facilities amounted to
$8.03 billion.
CRITICAL ACCOUNTING POLICIES
The Group’s significant accounting
policies are discussed in more detail
in the notes to the financial statements.
The preparation of financial statements
requires the management to exercise
its judgment 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
judgment are described below.
IMPAIRMENT OF LOANS
& RECEIVABLES
The Group assesses at each balance
sheet date whether there is any
objective evidence that a loan or
receivable is impaired. The Group
considers factors such as the
probability of insolvency or significant
financial difficulties of the debtor, as
well as a default or significant delay
in payments. Where there is objective
Operating & Financial Review
Financial Review & Outlook
87
OPERATING & FINANCIAL REVIEW
FINANCIAL REVIEW & OUTLOOK
1
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, inter-company and
other receivables are disclosed in the
balance sheet.
IMPAIRMENT OF AVAILABLE-FOR-
SALE INVESTMENTS
The Group follows the guidance
of FRS 39 in determining whether
available-for-sale investments are
considered impaired. The Group
evaluates, among other factors, the
duration and extent to which the fair
value of an investment is less than its
cost, the financial health of and the
near-term business outlook of the
investee, including factors such as
industry and sector performance,
changes in technology as well as
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 percentage
of completion method. The stage
of completion is measured in
accordance with the accounting
policy stated in Note 2(q) of the
financial statements. Significant
assumptions are 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 assumptions, the
Group relies on past experience and
the work of engineers. Revenue from
construction contracts is disclosed in
Note 22 of the financial statements.
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 that the amount
which is likely to 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 & 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, latent defects or review
from the contractual parties and/or
government agencies. These can
arise for various reasons, including
change in scope of work, defective
specifications, routine checks,
delays and disputes. The scope,
enforceability and validity of any claim,
litigation or review may be highly
uncertain. In making its judgment
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 opinions of legal
and technical experts.
88
Keppel Corporation Limited
Report to Shareholders 2012
2
“We will continue to
recycle capital and
ensure our assets
earn risk-adjusted
returns sufficient to
cover our cost of
capital. Our strong
balance sheet also
puts us in good
stead to capitalise on
the right investment
opportunities that
will drive sustainable
growth and increase
shareholder value
in the long term.”
LOH CHIN HUA,
CFO, KEPPEL CORPORATION
1 Operational risks
are monitored and
managed prudently.
2 Prudent finanical
management and the
strategic recycling of
capital enable the Group
to maximise its assets
for value creation.
Operating & Financial Review
Financial Review & Outlook
89
SUSTAINABILITY REPORT
HIGHLIGHTS
Keppel is committed to delivering value to all
our stakeholders through Sustaining Growth in
our businesses, Empowering Lives of people and
Nurturing Communities wherever we operate.
SUSTAINING
GROWTH
EMPOWERING
LIVES
NURTURING
COMMUNITIES
PAGE 92–121
PAGE 122–123
PAGE 124
Our commitment to business
excellence is driven by our
unwavering focus on strong
corporate governance and
prudent risk management.
Resource efficiency is our
responsibility and makes
good business sense.
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.
Innovation and delivering quality
products and services sharpen
our competitive edge.
We want to instill a culture of
safety so that everyone who
comes to work goes home safe.
As a global citizen, Keppel
believes that as communities
thrive, we thrive. We give back
to communities wherever we
operate through our multi-faceted
approach towards sustainability.
We 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 to promote growth.
90
Keppel Corporation Limited
Report to Shareholders 2012
MANAGING
SUSTAINABILITY
We believe that our success
is intertwined with that of our
communities, and recognise the
importance of addressing sustainability
challenges in order to fulfil our
responsibility to future generations.
We aim to achieve sustainable
business growth by generating both
economic and social capital for the
communities where we operate.
We will publish the Sustainability
Report 2012 in July 2013, continuing
our practice of reporting on our
performance. The report will articulate
our performance in six key focus
areas: Corporate Governance and
Risk Management, Environmental
Performance, Product Excellence,
Labour Practices & Human Rights,
Safety & Health and Community
Development. We have included a
concise review of these areas in
the following pages.
MANAGEMENT STRUCTURE
Sustainability issues are managed
at and communicated through
all levels of the Group. The Group
Sustainability Steering Committee,
which comprises senior management
from across the Keppel Group, sets
the sustainability strategy.
The Steering Committee is supported
by the Working Committee, which is
made up of six functional teams that
execute the strategy and report the
Group’s performance.
MATERIALITY ANALYSIS
Our materiality analysis process
identifies and prioritises economic,
environmental and social concerns
to our stakeholders. Issues were
systematically placed on a numerical
scale where higher priority issues were
assigned higher scores (1 - Low, 5 -
Critical). Following, the issues were
plotted graphically on internal and
external stakeholder axes to show
where they lay in relation. Thresholds
on the axes were marked to divide
the matrix into bands of materiality.
Our report addresses issues in the
most significant bands. This process
is in line with AA1000 and Global
Reporting Initiative guidelines.
STAKEHOLDER ENGAGEMENT
We recognise that business and
sustainability goals are best aligned
through an active engagement
process with our stakeholders.
Our sustainability reports are part of
our commitment to engage those who
take an interest in our company.
In 2012, we embarked on a stakeholder
consultation exercise with the aim of
communicating sustainability issues
more effectively. The ongoing exercise
is facilitated by an independent
sustainability consultancy and will
be completed in May 2013.
In addition, through our participation
in and support of corporate social
responsibility initiatives in areas such
as manpower, workplace safety and
health, and environmental protection,
we aim to contribute to addressing
sustainability issues.
ASSURANCE
We believe external assurance
provides an objective evaluation of
how well we report our sustainability
performance. We have engaged
DNV Business Assurance to conduct
a third-party assurance of the
Keppel Corporation Sustainability
Report 2012.
Alpha Investment Partners (Alpha), Keppel Land’s fund management arm, hosted Mr Khaw Boon Wan (centre), Singapore’s Minister of National Development
to a tour of 158 Cecil Street, a commercial building managed by Alpha which won the top prize at the 2011 Skyrise Greenery Awards by the Singapore Institute
of Architects and National Parks Board.
Sustainability Report Highlights Managing Sustainability
91
Sustaining Growth
CORPORATE
GOVERNANCE
The Board and management of
Keppel Corporation Limited (“KCL”
or the “Company”) firmly 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 confirm 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 specific 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 significant 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 financial objectives to be
implemented by management,
and monitor the performance
of management;
• oversee processes for evaluating
the adequacy of internal controls,
risk management, financial
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
Mr Tony Chew (centre), Independent Director of Keppel Corporation, represented the Company to receive
the Singapore Corporate Governance Award (Big Cap) – Winner at the SIAS Investors’ Choice Awards.
carried out by the directors for
FY 2012, all directors have discharged
this duty consistently well.
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 were recently amended
following the issuance of the Code of
Corporate Governance 20122 (the “2012
Code”). The new responsibilities of the
respective board committees with effect
from 1 January 2013, 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 2012, as well as the attendance
of each board member at these
meetings, are disclosed in Table 1.
If a director is unable to attend a board
or board committee meeting, he or she
still receives all the papers and
materials for discussion at that
meeting. He or she will review them
and will advise the Chairman or board
committee chairman of his or her views
and comments on the matters to be
discussed so that they can be conveyed
to other members at the meeting.
Internal Limits of Authority:
The Company has adopted internal
guidelines setting forth matters that
require board approval. Under these
guidelines, (a) new investments
or increase in investments, (b)
acquisition and disposal of assets and
(c) capital equipment purchase and/or
lease, exceeding $30 million by
any Group company (not separately
listed), and all commitments to term
loans and lines of credit from banks and
financial 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.
Notes:
1 The Code of Corporate Governance 2005 issued by the Ministry of Finance on 14 July 2005.
2 The Code of Corporate Governance 2012 issued by the Monetary Authority of Singapore on 2 May 2012.
92
Keppel Corporation Limited
Report to Shareholders 2012
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 directors.
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 financial
reporting standards, insider trading,
changes in the Companies Act and
industry-related matters, so as to
update and refresh them on matters
that may affect or enhance their
performance as board or board
committee members. A training
programme is also in place for directors
in areas such as accounting, finance,
risk governance and management,
the roles and responsibilities of a
director of a listed company and
industry-specific matters. In FY 2012,
some KCL directors attended a two-
day course on “Enhancing Board
Stewardship” and talks on topics
relating to the revised 2012 Code, the
Airocean appeal judgment in relation
to directors’ disclosure obligations
under the Securities and Futures Act
and the Listing Manual of the
Singapore Exchange Securities
Trading Limited (SGX), prohibition
against insider trading, risk governance
and management, and the new regime
on Disclosure of Interests of Directors,
Chief Executive Officer and Substantial
Shareholders, among others.
BOARD COMPOSITION AND
SUCCESSION PLANNING
Principle 2:
Strong and independent element
on the Board
Board Composition and Succession
Planning: 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. There is also
a process of refreshing the Board
progressively over time so that the
experience of longer serving directors
can be drawn upon while tapping into the
new external perspectives and insights
which more recent appointees bring to
the Board’s deliberation. In this regard,
two long-serving directors, Mr Lim Hock
San and Mr Sven Bang Ullring, retired
from the Board in FY 2012. Mr Tan Puay
Chiang was appointed as director and will
be seeking re-election at the Company’s
forthcoming annual general meeting.
Table 1
Lee Boon Yang
Lim Hock San1
Choo Chiau Beng
Sven Bang Ullring2
Tony Chew Leong-Chee
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia3
Danny Teoh4
Tan Puay Chiang5
Teo Soon Hoe
Tong Chong Heong
No. of Meetings Held
Board
Meetings
10
4 out of 5
10
5 out of 5
8
10
7
8
9
9
5 out of 5
10
9
10
Audit
–
3 out of 3
–
–
5
5
–
3
–
5
–
–
–
5
Board Committee Meetings
Nominating
3
–
–
2 out of 2
3
–
3
–
3
–
–
–
–
3
Remuneration
7
4 out of 4
–
4 out of 4
–
6
7
–
–
7
–
–
–
7
Safety
4
–
4
2 out of 2
–
–
–
–
4
–
2 out of 2
–
–
4
Non-Executive
Directors’ Meeting
(without presence
of management)
1
1
–
1
0
1
1
1
1
1
–
–
–
1
Risk
–
2 out of 2
–
–
–
5
4
2
–
3 out of 3
3 out of 3
–
–
5
Notes:
1 Mr Lim Hock San retired as director and ceased as Chairman of the Audit Committee and Remuneration Committee, and member of the Board Risk
Committee at the conclusion of the last annual general meeting held on 20 April 2012.
2 Mr Sven Bang Ullring retired as director and ceased as Chairman of the Board Safety Committee and member of the Nominating Committee and
Remuneration Committee at the conclusion of the last annual general meeting held on 20 April 2012.
3 Mr Tan Ek Kia was appointed as Chairman of the Board Safety Committee with effect from 20 April 2012.
4 Mr Danny Teoh was appointed as Chairman of the Audit Committee and Remuneration Committee, and member of the Board Risk Committee with effect from
20 April 2012.
5 Mr Tan Puay Chiang was appointed as non-executive director and member of the Board Safety Committee and Board Risk Committee with effect from 20 June 2012.
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
93
Sustaining Growth
CORPORATE
GOVERNANCE
Board Independence: The Nominating
Committee determines on an annual
basis whether or not a director is
independent bearing in mind the 2012
Code’s definition 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
Committee takes into account, among
other things, whether a director has
business relationships with the Company
or any of its related companies, and if
so, whether such relationships could
interfere, or be reasonably perceived
to interfere, with the exercise of the
director’s independent judgment
with a view to the best interests of
the Company. In this connection, the
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 firms providing legal services
to Keppel group companies. However,
as Mr Yeo had declared to the
Committee that he has at all times
acted in the best interests of the
Company in the discharge of his duties
as director, and as the Committee
was of the firm view that Mr Yeo
has been exercising independent
judgment in the best interests of
the Company in the discharge of his
director’s duties, the Committee
considered that Mr Yeo should be
deemed independent. The Committee
also noted that Mr Tan Ek Kia is a
non-executive director on the Board
of Transocean Ltd which has business
contracts with the Keppel Offshore
& Marine Group from time to time.
However, Mr Tan had declared to
the Committee that as a director of
Transocean Ltd, he did not influence
or participate in any discussions at
Transocean or the Company that had led
to awards of contract. The Committee
was of the firm view that Mr Tan
has been exercising independent
judgment in the best interests of
the Company in the discharge of
his director’s duties and should be
deemed independent. The Committee
also noted Mr Tow Heng Tan’s
recent past appointment as senior
executive of Temasek Holdings and
considered him as non-independent.
Lastly, the 2012 Code states that the
independence of any director who
has served on the Board beyond
nine years from the date of his first
appointment should be subject to
particularly rigorous review. In this
regard, the Committee (save for
Mr Tony Chew who abstained from
the deliberation on this matter)
noted that Mr Tony Chew would be
deemed non-independent as he
was first appointed to the Board
on 16 April 2002. However, the
Committee considered that Mr Chew
has demonstrated independent
mindedness and conduct at board
meetings and was of the firm view
that Mr Chew has been exercising
independent judgment in the best
interests of the Company in the
discharge of his director’s duties.
The Committee therefore considered
Mr Chew should be deemed
independent. Taking into account the
views of the Nominating Committee,
the Board concurred that
Dr Lee Boon Yang, Mr Tony Chew,
Mrs Oon Kum Loon, Mr Alvin Yeo,
Mr Tan Ek Kia, Mr Danny Teoh and
Mr Tan Puay Chiang should be
deemed independent.
Board Size: The Board, in concurrence
with the Nominating Committee, is of
the view that, taking into account the
nature and scope of the operations of
the Company, the requirements of the
Company’s businesses and the need to
avoid undue disruptions from changes
to the composition of the Board and
board committees, the Board should
consist of approximately 12 members,
which would facilitate effective
decision making. The Board currently
comprises majority independent
directors with a total of 11 directors
of whom seven 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 111 herein.
Board Competency: The Nominating
Committee is satisfied that the Board
and the Board committees comprise
directors who as a group provide core
competencies such as accounting or
finance, business or management
experience, industry knowledge,
strategic planning experience and
customer-based experience or
knowledge, required for the Board and
the board committees to be effective.
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 sufficient
time and resources to discharge
their oversight function effectively.
These initiatives include regular
informal meetings for management
to brief the directors on prospective
deals and potential developments at
an early stage before formal board
approval is sought, and the circulation
of relevant information on business
initiatives, industry developments and
analyst and press commentaries on
matters in relation to the Company
or the industries in which it operates.
A two-day off-site board strategy
meeting is organised annually 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 Company has also made available
on the Company’s premises an office
for the use by the non-executive
directors at any time to facilitate
direct access to management.
94
Keppel Corporation Limited
Report to Shareholders 2012
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 Officer
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 Officer, of the Company.
The Chairman, with the assistance of
the Company Secretaries, schedules
meetings and prepares meeting agenda
to enable the Board to perform its
duties responsibly having regard to
the flow of the Company’s operations.
The Chairman sets guidelines on and
monitors the flow 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 between the Board and
management, and between the executive
directors and non-executive directors.
At annual general meetings and other
shareholders’ meeting, the Chairman
ensures constructive dialogue
between shareholders, the Board
and management.
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 Secretaries
and management.
The Chief Executive Officer, assisted
by the Senior Executive Directors and
management team, makes strategic
proposals to the Board and after robust
and constructive board discussion,
executes the agreed strategy, and
manages and develops the Group’s
businesses and implements the
Board’s decisions.
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 Board and senior
management’s succession and
leadership development plans.
The NC comprises entirely non-
executive directors, three out of four
of whom (including the Chairman)
are independent; namely:
• Mr Tony Chew
Independent Chairman
• Dr Lee Boon Yang
Independent Member
• Mr Tow Heng Tan
Non-Executive and
Non-Independent Member
• Mr Tan Ek Kia
Independent Member
The responsibilities of the NC are set
out on pages 109 and 110 herein.
PROCESS FOR APPOINTMENT
OF NEW DIRECTORS AND BOARD
SUCCESSION PLANNING
The NC is responsible for reviewing
the succession plans for the Board.
In this regard, it has put in place a
formal process for the renewal of
the Board and the selection of new
directors. The NC leads the process
and makes recommendations to the
Board as follows:
The Board brings diverse expertise to the strategic governance of the Group.
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
95
Sustaining Growth
CORPORATE
GOVERNANCE
(a) NC reviews annually the balance
and diversity of skills, experience,
gender and knowledge required
by the Board and the size of the
Board which would facilitate
decision-making.
(b) In light of such review and in
consultation with management,
the NC assesses if there are any
inadequate representation in
respect of those attributes and
if so, determines the role and
the desirable competencies
for a particular appointment.
(c) 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.
(d) 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.
(e) NC makes recommendations to
the Board for approval.
The Board believes that orderly
succession and renewal is achieved as
a result of careful planning, where the
appropriate composition of the Board
is continually under review.
CRITERIA FOR APPOINTMENT
OF NEW DIRECTORS
All new appointments are subject to
the recommendation of the NC based
on the following objective criteria:
(1) Integrity
(2) Independent mindedness
(3) Diversity – Possess core
competencies that meet the needs
of the Company and complement
the skills and competencies of the
existing directors on the Board
(4) Able to commit time and effort to
carry out duties and responsibilities
effectively – proposed director
does not have more than six listed
company board representations
and other principal commitments
(5) Track record of making good decisions
(6) Experience in high-performing
companies
(7) Financially literate
Adopting the above appointment
process and criteria, the Board will
be recommending at the forthcoming
annual general meeting the re-election
of a new director. Mr Tan Puay Chiang
was formerly Chairman, ExxonMobil
(China) Investment Co. During his
37-year career with Mobil and later
ExxonMobil, he held executive
management roles in Australia,
Singapore and the United States.
These included the executive
positions of Vice-President,
Mobil Research & Technology Corp,
United States; and Chairman
of Mobil Oil Australia. His other
directorships include Neptune
Orient Lines Limited, Singapore
Power Limited and Energy Studies
Institute (NUS).
RE-NOMINATION OF DIRECTORS
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 office 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 benefit of his contribution.
ANNUAL REVIEW OF DIRECTORS’
INDEPENDENCE
The NC is also charged with
determining the “independence” status
of the directors annually. Please refer
to page 94 herein on the basis of the
NC’s determination as to whether
a director should or should not be
deemed independent.
ANNUAL REVIEW OF DIRECTORS’
TIME COMMITMENTS
The NC has adopted internal
guidelines addressing competing
time commitments that are faced
when directors serve on multiple
boards and have other principal
commitments. As a guide, directors
should not have more than six listed
company board representations and
other principal commitments.
The NC determines annually whether
a director with other listed company
board representations and/or other
principal commitments is able to
and has been adequately carrying
out his duties as a director of the
Company. The NC takes 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. In respect
of FY 2012, the NC was of the view
that each director’s directorships
was in line with the Company’s
guideline of a maximum of six listed
company board representations
and other principal commitments
and that each director has been
able to discharge their duties as
director. The NC also discussed
with Mr Tan Ek Kia and Mr Alvin Yeo
on their respective directorships
and commitments (including, with
respect to Mr Tan, his directorship
on the board of Transocean Ltd and
SMRT Ltd and with respect to Mr Yeo,
his appointment as a Member of
Parliament) and was of the view that
both Mr Tan and Mr Yeo would be able
to continue to adequately carry out
their respective duties as a director
of KCL. The NC noted that based on
the attendance of board and board
committee meetings during the
year, all the directors were able to
participate in at least a substantial
96
Keppel Corporation Limited
Report to Shareholders 2012
number of such meetings to carry
out their duties. The NC also noted
that, based on the Independent
Co-ordinator’s Report on individual
director assessment for FY 2012,
all the directors performed well.
The NC was therefore satisfied that in
FY 2012, where a director had other
listed company board representations
and/or other principal commitments,
the director was able and had been
adequately carrying out his duties as
director of the Company.
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 is set out in the
following pages of this Annual Report:
Pages 20 to 24: Academic and
professional qualifications, board
committees served on (as a member
or Chairman), date of first appointment
as director, date of last re-election
as director, directorships or
chairmanships both present and
past held over the preceding five
years in other listed companies and
other major appointments, whether
appointment is executive or non-
executive, whether considered by
the NC to be independent; and
Pages 127 to 128: Shareholding in the
Company and its subsidiaries.
BOARD PERFORMANCE
Principle 5:
Formal assessment of the
effectiveness of the Board and board
committees and the contribution by
each director to the effectiveness of
the Board
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
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. Mrs Fang Ai Lian
does not have business relationship
or any other connection with the
Company which may affect her
independent judgment.
Formal Process and Performance
Criteria: The evaluation processes
and performance criteria are disclosed
in the Appendix to this report.
Objectives and Benefits: The board
assessment exercise provides an
opportunity to obtain constructive
feedback from each director on
whether the Board’s procedures and
processes allow him to discharge his
duties effectively and the changes
which should be made to enhance
the effectiveness of the Board and/or
board committees. 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 assists the NC in
determining whether to re-nominate
directors who are due for retirement
at the next annual general meeting,
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
Secretaries to facilitate direct access
to senior management and the
Company Secretaries.
The Company fully recognises that
the flow 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 financial 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, financial position
and prospects and consist of the
consolidated profit and loss accounts,
analysis of sales, operating profit,
pre-tax and attributable profit by
major divisions compared against the
budgets, together with explanation
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97
Sustaining Growth
CORPORATE
GOVERNANCE
given for significant variances for the
month and year-to-date.
The Company Secretaries administer,
attend and prepare minutes of board
proceedings. They assist the Chairman
to ensure that board procedures
(including but not limited to assisting
the Chairman to ensure timely and
good information flow 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 SGX,
are complied with. They also assist
the Chairman and the Board to
implement and strengthen corporate
governance practices and processes
with a view to enhancing long-term
shareholder value. They are also the
primary channel of communication
between the Company and the SGX.
The appointment and removal of the
Company Secretaries are subject to
the approval of the Board.
Subject to the approval of the
Chairman, the directors, whether
as a group or individually, may seek
and obtain independent professional
advice to assist them in their duties,
at the expense of the Company.
REMUNERATION MATTERS
Principle 7:
The procedure for developing policy
on executive remuneration and for
fixing 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, three out of four of
whom (including the Chairman)
are independent; namely:
• Mr Danny Teoh
Independent Chairman
• Dr Lee Boon Yang
Independent Member
• Mrs Oon Kum Loon
Independent Member
• Mr Tow Heng Tan
Non-Executive and
Non-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 benefits in
kind) and the specific remuneration
packages for each director and the key
management personnel. 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”). In addition, the RC reviews the
Company’s obligations arising in the
event of termination of the executive
directors’ and key management
personnel’s contract of service, to
ensure that such contracts of service
contain fair and reasonable termination
clauses which are not overly generous.
and objectivity of the external
remuneration consultants through
discussions with the external
remuneration consultants, and
has confirmed that the external
remuneration consultants had no
relationships with the Company which
would affect their independence.
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 fixed number of KCL shares as follows
(subject to shareholders’ approval at
each annual general meeting):
(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 office. Executive
directors are not paid directors’ fees.
Basic Fee: The directors’ basic fee
structure is set out in Table 2.
Attendance Fee: In addition, in
the event that in a financial 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 in Table 3 from the seventh
board meeting onwards and/or (as
the case may be) the fifth meeting of
the board committee onwards which
he attended in that financial year.
The RC has access to expert advice
from external remuneration consultants
where required. In FY 2012, the RC
sought views on market practice and
trends from external remuneration
consultants, Aon Hewitt. The RC
undertook a review of the independence
(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
98
Keppel Corporation Limited
Report to Shareholders 2012
Table 2
Chairman
Deputy Chairman
Director
Audit and Board Risk
Committees
Remuneration and Board Safety
Committees
Nominating Committee
Basic Fee
$160,000 per annum
$101,000 per annum
$64,000 per annum
$47,000 per annum
$25,000 per annum
$32,000 per annum
$18,000 per annum
$28,000 per annum
$17,000 per annum
Chairman
Member
Chairman
Member
Chairman
Member
Table 3
Board
Meeting
Committee
Meeting
For all
Members
In-Country
For all
Members
Out-Country
$3,000
$5,000
$1,500
$3,000
remuneration of directors to permit
the Company to award a fixed
number of KCL shares, as shall
from time to time be determined
by an Ordinary Resolution of the
Company, to the non-executive
directors as part of their
remuneration. The Company is
therefore able to remunerate its
non-executive directors in the form
of KCL shares by the purchase
of KCL shares from the market
for delivery to the non-executive
directors. The incorporation of
an equity component in the total
remuneration of the non-executive
directors is intended to achieve
the objective of aligning the interests
of the non-executive directors with
those of the shareholders and the
long-term interests of the Company.
The directors’ fees payable to
non-executive directors is subject
to shareholders’ approval at the
Company’s annual general meetings.
REMUNERATION POLICY IN
RESPECT OF EXECUTIVE
DIRECTORS AND OTHER KEY
MANAGEMENT PERSONNEL
The Company advocates a
performance-based remuneration
system that is highly flexible 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,
relevant and appropriate in finding a
balance between current versus long-
term compensation and between cash
versus equity incentive compensation.
The total remuneration mix comprises
three key components; that is, annual
fixed cash, annual performance
incentive, and the KCL Share Plans.
The annual fixed cash component
comprises the annual basic salary
plus any other fixed 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 share
plans approved by shareholders, the
KCL Restricted Share Plan and the
KCL Performance Share Plan. The
EVA performance incentive plan and
the KCL Share Plans are both long-
term incentive plans. Executives who
have a greater ability to influence
Group outcomes have a greater
proportion of overall reward at risk.
The RC exercises broad discretion
and independent judgment in
ensuring that the amount and mix
of compensation is aligned with the
interests of shareholders and promote
the long-term success of the Company.
The mix of fix and variable reward is
considered appropriate for the Group
and for each individual role. RC is
of the view that the overall level of
remuneration is not considered to be
at a level which is likely to promote
behaviours contrary to the Group’s
risk profile.
The compensation structure is
directly linked to corporate and
individual performance, both in
terms of financial, non-financial
performance and the creation of
shareholder wealth. This link is
achieved in the following way:
(a) by placing a significant portion of
executives’ remuneration at risk
(“At Risk component”) and in some
cases, subject to a vesting schedule;
(b) by incorporating appropriate key
performance indicators (“KPIs”) for
awarding of annual cash incentives:
i. There are four scorecard areas
that the Company has identified
as key to measuring the
performance of the Group
– (a) Commercial/Financial; (b)
Customers; (c) Process; and
(d) People;
ii. The four scorecards areas have
been chosen because they
support how the Group achieves
achieves its strategic objectives.
The framework provides a link
for staff in understanding how
they contribute to each area of
the scorecard, and therefore to
the Company’s overall strategic
strategic goals. This is designed
to achieve a consistent approach
and understanding across
the Group;
(c) by selecting performance
conditions such as ROE, Total
Shareholder Return and EVA for
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99
Sustaining Growth
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GOVERNANCE
equity awards that are aligned
with shareholder interests;
(d) by requiring those KPIs or
conditions to be met in order
for the At Risk components of
remuneration to be awarded
or to vest; and
(e) by forfeiting the At Risk
components of remuneration
when those KPIs or conditions
are not met at a satisfactory level
In order to align the interests of
senior executive directors with that
of shareholders, the senior executive
directors are remunerated partially in
the form of shares in the Company and
are encouraged to hold such shares
while they remain in the employment
of the Company.
The Directors, the CEO and the key
management personnel (who are not
directors or the CEO) are remunerated
on an earned basis and there are no
termination, retirement and post-
employment benefits that are granted
over and above what has been disclosed.
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
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
The KCL Share Plans are put in place
to increase the Group’s flexibility 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 applies to a broader
base of employees while the KCL
PSP applies to a select group of key
management personnel. 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.
The RC has the discretion not to
award variable incentives in any year
if an executive is directly involved in
a material restatement of financial
statements or of misconduct
resulting in restatement of financial
statements or of misconduct
resulting in financial loss to the
Company. Outstanding EVA bank,
KCL RSP and KCL PSP are also
subject to RC’s discretion before
further payment or vesting can occur.
Details of the KCL Share Plans are set
out in pages 130 to 131 and 155 to 157.
LEVEL AND MIX OF REMUNERATION
OF DIRECTORS AND KEY
MANAGEMENT PERSONNEL
(WHO ARE NOT ALSO DIRECTORS
OR THE CEO) FOR THE YEAR ENDED
31 DECEMBER 2012
The level and mix of each of the
directors’ remuneration are set out
in Table 4.
PSP and RSP shares granted and
vested for the senior executive
directors are shown in Table 5.
The total remuneration paid to the
key management personnel (who are
not directors or the CEO) in FY2012
was $22,165,806. The level and mix
of each of the key management
personnel (who are not also directors
or the CEO) in bands of $250,000 are
set out in Table 6.
100
Keppel Corporation Limited
Report to Shareholders 2012
Table 4
Base/
Fixed
Salary
($)
Performance-Related
Bonuses Earned
(including EVA and
non-EVA Bonuses) ($)
Directors’
Fees
($)
Directors’
Allowance
($)
Benefits
-in-Kind
($)
Paid
Deferred
& at Risk
Contingent
Awards of
Shares1
($)
PSP RSP2
Remuneration
Shares3
($)
Total
Remuneration
($)
Remuneration &
Name of Director
Choo Chiau Beng
1,287,600 2,050,425 3,085,600
Tong Chong Heong
988,700 1,365,982 2,082,443
988,800 1,244,683 1,711,467
–
–
–
–
–
–
n.m.4 1,564,200
n.m. 1,279,800
n.m.
639,900
Teo Soon Hoe
Lee Boon Yang
Tony Chew Leong-Chee
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia5
Danny Teoh6
Tan Puay Chiang7
Lim Hock San8
Sven Bang Ullring9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
229,500
10,000
124,500
–
172,000
3,000
131,500
– 120,000
–
–
– 117,795
3,000
– 164,670
–
–
–
57,010
62,175
39,730
–
–
–
8,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,987,825
5,716,925
4,584,850
110,000
349,500
33,000
33,000
33,000
33,000
33,000
33,000
17,600
9,900
9,900
157,500
208,000
164,500
153,000
153,795
197,670
74,610
72,075
57,630
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. As at 29 June 2012 (being the grant date), the estimated fair value of each share granted in respect of the contingent awards under the
KCL PSP and KCL RSP were $7.11 and $9.71 respectively. For the KCL PSP, the figures are based on the fair value of the PSP shares at 100% of the award
and the figures may not be indicative of the actual value at vesting which can range from 0% to 150% of the award.
2 With effect from 2012 onwards, officers who are retired and re-employed on contract basis would no longer be eligible to participate in the KCL RSP awards.
3 Estimated value based on the KCL shares’ closing price of $11.00 on the last trading day of FY 2012.
4 n.m. – not material
5 Mr Tan Ek Kia was appointed as Chairman of BSC with effect from 20 April 2012. Fees are pro-rated.
6 Mr Danny Teoh was appointed as Chairman of AC and RC, and member of the BRC with effect from 20 April 2012. Fees are pro-rated.
7 Mr Tan Puay Chiang was appointed as director, member of BSC and BRC with effect from 20 June 2012. Fees are pro-rated.
8 Mr Lim Hock San retired as director and ceased as Chairman of AC and RC, and member of the BRC at the conclusion of the AGM on 20 April 2012. Fees are pro-rated.
9 Mr Sven Bang Ullring retired as director and ceased as Chairman of BSC, and member of the NC and RC at the conclusion of the AGM on 20 April 2012. Fees are pro-rated.
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GOVERNANCE
Table 5
PSP
Awards
Vesting
Date
Contingent
Awards
of PSP
Shares
Number
of PSP
Shares
Vested
Value
of PSP
Shares
Vested
RSP
Awards
Vesting
Date
Contingent
Awards
of RSP
Shares
Number
of RSP
Shares
Vested
Value
of RSP
Shares
Vested ($)10
Name of Senior
Executive Directors
Choo Chiau Beng
2010
Awards
28 Feb 2013
0 to
495,00010
2011
Awards
28 Feb 2014
0 to
420,000
Tong Chong Heong
2012
Awards
2010
Awards
27 Feb 2015
28 Feb 2013
0 to
330,000
0 to
297,00010
2011
Awards
28 Feb 2014
0 to
270,000
Teo Soon Hoe
2012
Awards
2010
Awards
27 Feb 2015
28 Feb 2013
0 to
270,000
0 to
330,00010
2011
Awards
28 Feb 2014
0 to
270,000
2012
Awards
27 Feb 2015
0 to
135,000
–
–
–
–
–
–
–
–
–
–
2010
Awards
–
2011
Awards
–
–
2012
Awards
2010
Awards
–
2011
Awards
–
–
2012
Awards
2010
Awards
–
2011
Awards
28 Feb 2011
160,00011
50,000
585,000
28 Feb 2012
28 Feb 2013
55,000
607,750
–
–
28 Feb 2012
140,000
46,700
516,035
28 Feb 2013
28 Feb 2014
–
0
–
–
–
–
–
–
28 Feb 2011
96,00011
30,000
351,000
28 Feb 2012
28 Feb 2013
33,000
364,650
–
28 Feb 2012
90,000
30,000
331,500
28 Feb 2013
28 Feb 2014
–
0
–
–
–
–
–
–
28 Feb 2011
106,67011
33,300
389,610
28 Feb 2012
28 Feb 2013
36,685
405,369
–
–
28 Feb 2012
90,000
30,000
331,500
28 Feb 2013
28 Feb 2014
–
2012
Awards
–
0
–
–
–
–
–
–
Notes:
10 The value of RSP shares vested is computed based on the market price of the shares when the shares are credited to the employee’s CDP account.
11 Arising from the bonus issue of one bonus share for every 10 existing ordinary shares in 2011, the RC approved an adjustment to unvested shares under the award.
102
Keppel Corporation Limited
Report to Shareholders 2012
Table 6
Remuneration Band & Name of Key Management Personnel
Above $4,000,000 to $4,250,000
Loh Chin Hua12
Above $3,250,000 to $4,000,000
Nil
Above $3,000,000 to $3,250,000
Chow Yew Yuen
Above $2,500,000 to $3,000,000
Nil
Above $2,250,000 to $2,500,000
Ong Tiong Guan
Above $2,000,000 to $2,250,000
Wong Kingcheung, Kevin13
Wong Kok Seng
Above $1,750,000 to $2,000,000
Chia Hock Chye, Michael
Above $1,500,000 to $1,750,000
Ang Wee Gee
Above $1,250,000 to $1,500,000
Hoe Eng Hock
Tay Lim Heng
Above $1,000,000 to $1,250,000
Chor How Jat
Above $750,000 to $1,000,000
Nil
Above $500,000 to $750,000
Pang Hee Hon
Base/
Fixed
Salary
Performance-Related
Bonuses Earned
(including EVA and
non-EVA Bonuses)
Benefits-
in-Kind
Contingent Awards
of Shares
Paid
Deferred
& at Risk
PSP
RSP2
18%
22%
30%
n.m.
12%
18%
–
–
–
–
–
–
15%
20%
25%
n.m.
17%
23%
–
–
–
–
–
–
17%
21%
30%
n.m.
12%
20%
41%14
59%15
-13
21%
26%
36%
n.m.
n.m.
–
17%
–
–
20%
24%
31%
n.m.
–
25%
36%
22%
19%
n.m.
16%16
7%16
30%
28%
20%
18%
15%
18%
n.m.
n.m.
28%
22%
18%
n.m.
–
–
–
–
–
–
–
–
35%
36%
32%
–
52%
14%
10%
n.m.
11%17
13%17
Notes:
12 Total Remuneration shown above for Mr Loh Chin Hua does not include vested share of carried interests for funds created during the time he was Managing
Director at Alpha Investment Partners. These carried interests are only earned at the end of the fund life and depend entirely on the actual performance of
the funds after they have been liquidated.
13 Mr Wong Kingcheung, Kevin has relinquished his role as Group Chief Executive Officer of Keppel Land Limited (“KLL”) with effect from 1 January 2013.
The EVA Earned Bonus to be deferred and at risk was forfeited in accordance with the Company’s Annual Performance Incentive (API) policy on staff
resignations. No share awards were granted to Mr Wong during the year.
14 Includes leave encashment of $30,000.
15 Includes an estimated ex-gratia sum of up to $750,000 as approved by KLL Remuneration Committee in December 2012.
16 On KLL share based compensation scheme. As at 29 June 2012 (being the grant date), the estimated fair value of each share granted in respect of the
contingent awards under the KLL PSP and KLL RSP were $2.228 and $2.96 respectively.
17 On Keppel Telecommunications & Transportation Ltd (“KTT”) share based compensation scheme. As at 2 July 2012 (being the grant date), the estimated fair
value of each share granted in respect of the contingent awards under the KTT PSP and KTT RSP were $0.722 and $1.07 respectively.
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
103
Sustaining Growth
CORPORATE
GOVERNANCE
REMUNERATION OF EMPLOYEES
WHO ARE IMMEDIATE FAMILY
MEMBERS OF A DIRECTOR OR
THE CHIEF EXECUTIVE OFFICER
No employee of the Company and
its subsidiaries was an immediate
family member of a director or the
Chief Executive Officer and whose
remuneration exceeded $50,000
during the financial year ended
31 December 2012. “Immediate family
member” means the spouse, child,
adopted child, step-child, brother,
sister and parent.
DETAILS OF THE KCL SHARE PLANS
The KCL Share Plans, which have
been approved by shareholders of
the Company, are administered by
the RC. Please refer to pages 130 to
131 and 155 to 157 of this Annual Report
for details on 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 SGX-ST, press releases,
the Company’s website, and
public webcast and media and
analyst briefings.
The Company’s Annual Report is
accessible on the Company’s
website. The Company also sends its
Annual Report to all its shareholders
in CD-ROM format. In line with the
Company’s drive towards sustainable
development, the Company encourages
shareholders to read the Annual Report
from the CD-ROM or on the Company’s
website. Shareholders may however
request for a physical copy at no cost.
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 profit and loss
accounts, analysis of sales, operating
profit, pre-tax and attributable profit
by major divisions compared against
the respective budgets, together with
explanations for significant variances
for the month and year-to-date.
AUDIT COMMITTEE
The Audit Committee (AC) comprises
the following non-executive directors,
all of whom are independent:
• Mr Danny Teoh
Independent Chairman
• Mr Tony Chew Leong-Chee
Independent Member
• Mrs Oon Kum Loon
Independent Member
• Mr Alvin Yeo
Independent Member
Mr Danny Teoh and Mrs Oon Kum Loon
have accounting and related financial
management expertise and experience.
The Board considers Mr Tony Chew
as having sufficient financial
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 AC and practical experience
and knowledge of the issues
and considerations affecting the
Committee from serving on the audit
committee of other listed companies.
The AC’s primary role is to assist the
Board to ensure integrity of financial
reporting and that there is in place
sound internal control systems. The
Committee’s responsibilities are set
out on pages 108 and 109 herein.
The AC has explicit authority to
investigate any matter within its
responsibilities, full access to and
co-operation by management and full
discretion to invite any director or
executive officer 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 their
findings and recommendations
to the AC independently.
The AC met with the external auditors
and with the internal auditors five
times during the year, and at least
one of these meetings was conducted
without the presence of management.
During the year, the AC performed
independent review of the financial
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 significant changes
made that would have a material
impact on the financials.
The AC also reviewed and approved
both the Group internal auditor’s and
external auditor’s plans to ensure
that the plans covered sufficiently in
terms of audit scope in reviewing the
significant internal controls of the
Company. Such significant controls
comprise financial, and operational
and compliance controls. All audit
findings and recommendations put
up by the internal and the external
auditors were forwarded to the AC.
Significant issues were discussed at
these meetings.
The AC undertook a review of the
independence and objectivity of the
external auditors through discussions
104
Keppel Corporation Limited
Report to Shareholders 2012
with the external auditors as well as
reviewing the non-audit fees awarded
to them, and has confirmed that the
non-audit services performed by the
external auditors would not affect
their independence. For details of fees
payable to the auditors in respect of
audit and non-audit services, please
refer to Note 24 of the Notes to the
Financial Statements on page 176.
The Company has complied with
Rules 712, and Rule 715 read with 716
of the SGX Listing Manual in relation
to its auditing firms.
The Committee also reviewed the
adequacy of the internal audit
function and is satisfied 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 team to ensure that the staff
continue 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 confidence, raise concerns about
possible improprieties in financial
reporting or other matters, and
was satisfied that arrangements
are in place for the independent
investigation of such matters and
for appropriate follow-up action.
To facilitate the management of
incidences of alleged fraud or other
misconduct, the AC is guided by a
set of guidelines to ensure proper
conduct of investigations and
appropriate closure actions following
completion of the investigations,
including administrative, disciplinary,
civil and/or criminal actions, and
remediation of control weaknesses
that perpetrated the fraud or
misconduct so as to prevent
a recurrence.
In addition, the Committee reviews
the Policy yearly to ensure that
it remains current. The details
of the Policy are set out on
page 113 hereto.
On a quarterly basis, management
reported to the AC the interested
person transactions (“IPTs”) in
accordance with the Company’s
Shareholders’ Mandate for IPT.
The IPTs were reviewed by the
internal auditors. All findings were
reported during AC meetings.
INTERNAL CONTROLS AND
RISK MANAGEMENT
Principle 12:
Sound system of internal controls
The Board Risk Committee (BRC)
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 significant
risks, to safeguard shareholders’
interests and the Company’s
assets. The Committee reports to
the Board on material findings and
recommendations in respect of
significant risk matters. The detailed
responsibilities of this Committee
is disclosed on page 109 herein.
The BRC is made up of four
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 Officer 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 Danny Teoh,
who is the Chairman of the Audit
Committee, is the second member of
the Board Risk Committee. Mr Danny
Teoh was the Managing Partner of
KPMG Singapore from October 2005
to October 2010. He was also the Head
of Audit and Risk Advisory Services
practices in Singapore as well as in
Asia, and served on its global team.
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. 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. The fifth
member is Mr Tan Puay Chiang, who
held various executive management
roles in his 37-year career with
Mobil and later ExxonMobil, and has
in-depth knowledge and experience
in the oil and gas industry and wide
international exposure.
The Company’s approach to risk
management is set out in the “Risk
Management” section on pages 116
and 119 of this Annual Report.
KCL’s Group Internal Audit and the
external auditors also conduct an
annual review of the effectiveness
of the Company’s material internal
controls, including financial,
operational, compliance controls,
and risk management. Any material
non-compliance or failures in internal
controls and recommendations for
improvements are reported to the AC.
The AC also reviews the effectiveness
of the actions taken by management
on the recommendations made by
Group Internal Audit and the external
auditors in this respect.
The Group also has in place the
Keppel’s System of Management
Controls Framework (the
“Framework”) outlining the Group’s
internal control and risk management
processes and procedures.
The Framework comprises three
Lines of Defence (“LoD”) towards
ensuring the adequacy of the Group’s
system of internal controls and
risk management.
Under the first LoD, management is
required to ensure good corporate
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
105
Sustaining Growth
CORPORATE
GOVERNANCE
KEPPEL’S SYSTEM OF MANAGEMENT CONTROLS
POLICIES
4. Board Oversight
Board of Directors
3. Assurance
Business Unit
Representation
Compliance
Internal
Audit
External
Audit
SYSTEMS
2. Management &
Assurance
Frameworks
Self-Assessment
Process
Enterprise Risk
Management
Fraud Risk
Management
PROCESSES
1. Business Governance/
Rules of Governance
Core Values, Corporate & Employee Conduct
Policy
Management
Operational
Governance
Financial
Governance
PEOPLE
governance through the implementation
and management of policies and
procedures relevant to the Group’s
business scope and environment.
Such policies and procedures govern
financial, operational, information
technology and compliance matters and
are reviewed and updated periodically.
Under the second LoD, significant
business units are required to conduct
self-assessment exercise on an
annual basis. This exercise requires
such business units to assess the
status of their respective internal
controls and risk management via
self-assessment questionnaires.
Action plans would then be drawn
up to remedy identified weaknesses.
Through the Group’s Enterprise Risk
Management, significant risks areas
of the Group are also identified and
assessed, with systems, policies and
processes put in place to manage
and mitigate the identified risks.
Fraud risk management processes
include mandatory conflict of interest
declaration by employees in high-risk
positions and the implementation
of policies such as the Keppel
Whistle-Blower Protection Policy
and Employee Code of Conduct to
establish a clear tone at the top with
regard to employees’ business and
ethical conduct.
Under the third LoD, to assist the
Company to ascertain the adequacy
of the Group’s internal controls,
business units are required to provide
the Company with written assurances
as to the adequacy and effectiveness
of their system of internal controls.
Such assurances are also sought
from the Company’s internal and
external auditors based on their
independent assessments.
The Board of Directors, supported by
the AC and BRC, oversees the Group’s
system of internal controls and
risk management.
The Board has received assurance
from the CEO and CFO:
(a) that the financial records have
been properly maintained and
the financial statements give a
true and fair view of the Group’s
operations and finances; and
(b) regarding the effectiveness of the
Group’s risk management and
internal control systems.
For FY 2012, based on the Group’s
framework of management control,
the internal control policies and
procedures established and
maintained by the Group, and the
regular audits, monitoring and
reviews performed by the internal
and external auditors, the Board,
with the concurrence of the AC, is of
the opinion that the Group’s internal
controls, are adequate to address the
financial, operational and compliance
risks which the Group considers
relevant and material to its current
business scope and environment.
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Keppel Corporation Limited
Report to Shareholders 2012
The system of internal controls and risk
management established by the Group
provides reasonable, but not absolute,
assurance that the Group will not be
adversely affected by any event that can
be reasonably foreseen as it strives
to achieve its business objectives.
However, the Board also notes that no
system of internal controls and risk
management can provide absolute
assurance in this regard, or absolute
assurance against the occurrence
of material errors, poor judgment
in decision-making, human error,
losses, fraud or other irregularities.
INTERNAL AUDIT
Principle 13:
Independent internal audit function
The role of the internal auditors is
to assist the AC 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 AC, and conducting
regular in-depth audits of high risk
areas. The Company’s internal audit
functions are serviced in-house
(“Group Internal Audit”).
and the results re-affirmed that the
internal audit activity conforms to the
International Standards.
Staffed by suitably qualified
executives, Group Internal Audit
has unrestricted direct access to
the AC and unfettered access to all
the Group’s documents, records,
properties and personnel. The Head
of Group Internal Audit’s primary
line of reporting is to the Chairman
of the AC, although she reports
administratively to the Chief Executive
Officer of the Company.
As a corporate member of the
Singapore branch of the Institute
of Internal Auditors Incorporated,
USA (“IIA”), Group Internal Audit is
guided by the International Standards
for the Professional Practice of
Internal Auditing set by the IIA. These
standards consist of attribute and
performance standards. External
quality assessment reviews are carried
out at least once every five years
by qualified professionals, with the
last assessment conducted in 2011,
During the year, Group Internal Audit
adopted a risk-based auditing
approach that focuses on material
internal controls, including financial,
operational, compliance and
information technology controls.
Audits were carried out on all
significant 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 AC for
deliberation with copies of these
reports extended to the Chairman,
Chief Executive Officer and the
relevant senior management
officers. In addition, Group Internal
Audit’s summary of findings and
recommendations are discussed
at the AC meetings. To ensure
timely and adequate closure
of audit findings, the status of
implementation of the actions agreed
by management is tracked and
discussed with the Committee.
Chairman Dr Lee Boon Yang engaging shareholders at the Annual General Meeting.
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
107
Sustaining Growth
CORPORATE
GOVERNANCE
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.
Engagement with shareholders takes
many forms, including “live” webcasts
of quarterly results and presentations,
e-mail communications, publications
and content on the Company’s website.
In FY 2012, the Company held about 170
one-on-one investor meetings and
conference calls with Singapore and
overseas institutional investors.
Senior management went on non-deal
roadshows to Japan, Hong Kong,
the US and UK, and held over 60
meetings. Such meetings provide
useful platforms for management to
engage with investors and analysts.
Material information is disclosed
in a comprehensive, accurate and
timely manner via SGXnet and the
press. To ensure a level playing
field and provide confidence 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 Chairman 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 Secretaries prepare
minutes of shareholders’ meetings,
which incorporate 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, including
the prohibition on dealings with
the Company’s securities on short-
term considerations. The policy
has been distributed to the Group’s
directors and officers. In compliance
with Rule 1207(19) of the Listing
Manual on best practices on dealing
in securities, the Company issues
circulars to its directors and
officers informing that the Company
and its officers 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.
APPENDIX
BOARD COMMITTEES –
RESPONSIBILITIES
A. AUDIT COMMITTEE
1.1 Review financial statements and
formal announcements relating
to financial performance, and
review significant financial
reporting issues and judgments
contained in them, for better
assurance of the integrity of such
statements and announcements.
1.2 Review and report to the Board
at least annually the adequacy
and effectiveness of the Group’s
internal controls, including
financial, operational, compliance
and information technology
controls (such review can be
carried out internally or with
the assistance of any competent
third parties).
1.3 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.
1.4 Review the independence and
objectivity of the external auditors.
1.5 Review the nature and extent of
non-audit services performed by
the auditors.
1.6 Meet with external auditors and
internal auditors, without the
presence of management,
at least annually.
1.7 Make recommendations
to the Board on the proposals
to the shareholders on the
appointment, re-appointment
and removal of the external
auditors, and approve the
remuneration and terms
of engagement of the
external auditors.
1.8 Review the adequacy and
effectiveness of the Company’s
internal audit function,
at least annually.
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Keppel Corporation Limited
Report to Shareholders 2012
1.9 Ensure that the internal
audit function is adequately
resourced and has appropriate
standing within the Company,
at least annually.
extent of significant risks which
the Group overall may take in
achieving its strategic objectives
and the Group’s overall levels of
risk tolerance and risk policies;
1.10 Approve the hiring, removal
evaluation and compensation
of the head of the internal audit
function, or the accounting
auditing firm or corporation to
which the internal audit function
is outsourced.
1.11 Review the policy and
arrangements by which employees
of the Company and any other
persons may, in confidence, raise
concerns about possible
improprieties in matters of financial
reporting or other matters,
to ensure that arrangements
are in place for such concerns
to be raised and independently
investigated, and for appropriate
follow up action to be taken.
1.12 Review interested person
transactions.
1.2 Review and discuss, as and when
appropriate, with management
on the Group’s risk governance
structure and its risk policies and
risk mitigation and monitoring
processes and procedures;
1.3 Receive and review at least
quarterly reports from
management on major risk
exposures and the steps taken
to monitor, control and mitigate
such risks.
1.4 Review the Group’s capability
to identify and manage new
risk types.
1.5 Review and monitor management’s
responsiveness to the findings
and recommendations of the
internal risk division.
1.6 Provide timely input to the Board
1.13 Investigate any matters within
on critical risk issues.
that the Board comprises at
least one-third independent
directors. In this connection, the
Nominating Committee should
conduct particularly rigorous
review of the independence of any
director who has served on the
Board beyond nine years from the
date of his first appointment.
1.4 Decide, where a director has
other listed company board
representation and/or other
principal commitments, whether
the director is able to and has been
adequately carrying out his duties
as director of the Company.
1.5 Recommend to the Board the
process for the evaluation of the
performance of the Board, the
Board committees and individual
directors, and propose objective
performance criteria to assess
the effectiveness of the Board
as a whole and the contribution
of each director.
1.6 Annual assessment of the
effectiveness of the Board as a
whole and individual directors.
the Audit Committee’s purview,
whenever it deems necessary.
1.14 Report to the Board on
material matters, findings
and recommendations.
1.15 Review the Audit Committee’s
terms of reference annually
and recommend any proposed
changes to the Board.
1.16 Perform such other functions
as the Board may determine.
1.17 Sub-delegate any of its powers
within its terms of reference
as listed above from time to
time as the Audit Committee
may deem fit.
B. BOARD RISK COMMITTEE
1.1 Receive, as and when appropriate,
reports and recommendations
from management on risk
tolerance and strategy, and
recommend to the Board for its
determination the nature and
1.7 Review the Committee’s terms
of reference annually and
recommend any proposed
changes to the Board.
1.7 Review the succession plans for the
Board (in particular, the Chairman)
and senior management (in
particular, the CEO).
1.8 Perform such other functions as
1.8 Review talent development plans.
the Board may determine.
1.9 Sub-delegate any of its powers
within its terms of reference as
listed above from time to time as
the Committee may deem fit.
C. NOMINATING COMMITTEE
1.1 Recommend to the Board the
appointment/re-appointment
of directors.
1.2 Annual review of balance and
diversity of skills, experience,
gender and knowledge required
by the Board, and the size of the
Board which would facilitate
decision-making.
1.3 Annual review of independence
of each director, and to ensure
1.9 Review the training and
professional development
programmes for board members;
1.10 Review and, if deemed fit, 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
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CORPORATE
GOVERNANCE
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).
1.11 Report to the Board on material
matters and recommendations.
Performance Share Plan
(collectively, the “KCL Share
Plans”), in accordance with the
rules of the KCL Share Option
Scheme and KCL Share Plans.
1.5 Report to the Board on material
matters and recommendations.
1.6 Review the Remuneration
budget) and has appropriate
standing within the organisation.
1.6 Consider management’s proposals
on safety-related matters.
1.7 Carry out such investigations
into safety-related matters as
the Committee deems fit.
Committee’s terms of reference
annually and recommend any
proposed changes to the Board.
1.8 Report to the Board on
material matters, findings
and recommendations.
1.12 Review the Nominating
the Board may determine.
as the Board may determine.
1.7 Perform such other functions as
1.9 Perform such other functions
1.10 Sub-delegate any of its powers
within its terms of reference as
listed above from time to time
as the Committee may deem fit.
Committee’s terms of reference
annually and recommend any
proposed changes to the Board.
1.13 Perform such other functions as
the Board may determine.
1.14 Sub-delegate any of its powers
within its terms of reference as
listed above, from time to time as
this Committee may deem fit.
D. REMUNERATION COMMITTEE
1.1 Review and recommend to
the Board a framework of
remuneration for board members
and key management personnel,
and the specific remuneration
packages for each director
as well as for the key
management personnel.
1.2 Review the Company’s
obligations arising in the event
of termination of the executive
directors’ and key management
personnel’s contracts of service,
to ensure that such clauses
are fair and reasonable and not
overly generous.
1.3 Consider whether directors should
be eligible for benefits under long-
term incentive schemes (including
weighing the use of share
schemes against the other types
of long-term incentive scheme).
1.4 Administer the Company’s
1.8 Sub-delegate any of its powers
within its terms of reference as
listed above, from time to time
as the Remuneration Committee
may deem fit.
Save that a member of this Committee
shall not be involved in the
deliberations in respect of any
remuneration, compensation, award
of shares or any form of benefits to be
granted to him.
E. BOARD SAFETY COMMITTEE
1.1 Review and examine the
effectiveness of Group
companies’ safety management
system, including training and
monitoring systems, to ensure
that a robust safety management
system is maintained.
1.2 Review and examine Group
companies’ safety procedures
against industry best practices,
and monitor its implementation.
1.3 Provide a discussion forum
on developments and best
practices in safety standards and
practices, and the feasibility of
implementing such developments
and best practices.
1.4 Assist in enhancing safety
awareness and culture within
the Group.
employee share option scheme
(the “KCL Share Option
Scheme”), and the Company’s
Restricted Share Plan and
1.5 Ensure that the safety functions
in Group companies are
adequately resourced (in terms
of number, qualification, and
110
Keppel Corporation Limited
Report to Shareholders 2012
Nature of Current Directors’ Appointments & Membership on Board Committees
Director
Board Membership
Audit
Nominating
Remuneration
Risk
Safety
Committee Membership
Lee Boon Yang
Chairman
Choo Chiau Beng
Chief Executive Officer
–
–
–
Member
Member
Tony Chew Leong-Chee
Independent
Member
Chairman
–
–
–
–
–
Independent
Member
–
Member
Chairman
–
Member
Member
Member
Member
Member
–
–
–
–
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Tan Puay Chiang
Teo Soon Hoe
Non-Independent &
Non-Executive
Independent
Independent
Independent
Independent
Senior Executive Director
Tong Chong Heong
Senior Executive Director
Member
–
–
Member
–
–
Member
–
Chairman
Chairman
–
–
–
–
–
–
–
Chairman
Member
–
–
–
–
Member
Member
–
–
–
–
Site visits to the Group’s major operating centres and projects are held frequently for investors and analysts.
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
111
Sustaining Growth
CORPORATE
GOVERNANCE
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
five 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 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 five
working days. It is emphasised that
the purpose of the assessment is to
assess each of the executive directors
on their respective performance on the
Board (as opposed to their respective
executive performance). The executive
directors are not required to perform
a self, nor a peer, assessment. Based
on the returns from each of the NEDs,
the IC prepares a consolidated report
and briefs the NC Chairman and Board
Chairman on the report. Thereafter,
the IC presents the report for discussion
at a NED meeting, chaired by the Board
Chairman. The Chairman of the NC will
thereafter meet with the executive
directors individually to provide
the necessary feedback on their
respective board performance with
a view to improving their board
performance and shareholder value.
As for the assessment of the
performance of the NEDs, each
director (both NEDs and executive
directors) is required to complete the
NED’s assessment form and send the
form directly to the IC within five
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 five
Mr Tan Ek Kia (second from left), Independent Director and Chairman of the Board Safety Committee at the
Keppel Group Safety Convention.
112
Keppel Corporation Limited
Report to Shareholders 2012
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
financial 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 five
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 finance and accounts, are taken
into consideration); (3) director’s
duties (under which factors as to the
director’s board committee work
contribution, whether the director
takes his role of director seriously
and works to further improve his
own performance, whether he
listens and discusses objectively
and exercises independent judgment,
and meeting preparation are taken
into consideration); (4) availability
(under which the director’s
attendance at board and board
committee meetings, whether he
is available when needed, and his
informal contribution via e-mail,
telephone, written notes etc are
considered); and (5) overall
contribution, bearing in mind that
each director was appointed for his/
her strength in certain areas which
taken together provides the Board
with the required mix of skills
and competencies.
The assessment of the Chairman of
the Board is based on his ability to
lead, whether he established proper
procedures to ensure the effective
functioning of the Board, whether he
ensured that the time devoted to
board meetings were appropriate
(in terms of number of meetings held
a year and duration of each board
meeting) for effective discussion
and decision-making by the Board,
whether he ensured that information
provided to the Board was adequate
(in terms of adequacy and timeliness)
for the Board to make informed and
considered decisions, whether he
guided discussions effectively so that
there was timely resolution of issues,
whether he ensured that meetings
were conducted in a manner that
facilitated open communication
and meaningful participation, and
whether he ensured that board
committees were formed where
appropriate, with clear terms
of reference, to assist the Board
in the discharge of its duties
and responsibilities.
KEPPEL WHISTLE-BLOWER
PROTECTION POLICY
Keppel Whistle-Blower Protection
Policy (the “Policy”) took effect on
1 September 2004 to encourage
reporting in good faith of suspected
Reportable Conduct (as defined
below) by establishing clearly
defined processes through which
such reports may be made with
confidence that employees and other
persons making such reports will
be treated fairly and, to the extent
possible, protected from reprisal.
Group or contract worker appointed
by a company within the Group, which
occurred in the course of his or her
work (whether or not the act is within
the scope of his or her employment)
which in the view of a Whistle Blower
acting in good faith, is:
(a) dishonest, including but not
limited to theft or misuse of
resources within the Group;
(b) fraudulent;
(c) corrupt;
(d) illegal;
(e) other serious improper conduct;
(f) an unsafe work practice; or
(g) any other conduct which may
cause financial or non-financial
loss to the Group or damage to
the Group’s reputation.
A person who files a report or provides
evidence which he knows to be false,
or without a reasonable belief in the
truth and accuracy of such information,
will not be protected by the Policy and
may be subject to administrative and/
or disciplinary action.
Similarly, a person may be subject to
administrative and/or disciplinary
action if he subjects (i) a person who
has made or intends to make a report
in accordance with the Policy, or (ii) a
person who was called or may be called
as a witness, to any form of reprisal
which would not have occurred if he
did not intend to, or had not made the
report or be a witness.
The General Manager (Internal Audit)
is the Receiving Officer for the purposes
of the Policy and is responsible for the
administration, implementation and
overseeing ongoing compliance with
the Policy. She reports directly to the
Audit Committee (AC) Chairman on all
matters arising under the Policy.
REPORTING MECHANISM
The Policy emphasises that the role of
the Whistle Blower is as a reporting
party, and that Whistle Blowers are
not to investigate, or determine the
appropriate corrective or remedial
actions that may be warranted.
Reportable Conduct refers to any act
or omission by an employee of the
Employee are encouraged to report
suspected Reportable Conduct to
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Sustaining Growth – Corporate Governance
113
Sustaining Growth
CORPORATE
GOVERNANCE
their respective supervisors who are
responsible for promptly informing
the Receiving Officer, who in turn is
required to promptly report to the
AC Chairman, of any such report.
The supervisor must not start any
investigation in any event. If any of
the persons in the reporting line
prefers not to disclose the matter
to the supervisor and/or Receiving
Officer (as the case may be), he may
make the report directly to the
Receiving Officer or the AC Chairman.
Other Whistle Blowers may report
a suspected Reportable Conduct to
either the Receiving Officer or the
AC Chairman.
All reports and related communications
made will be documented by the person
first receiving the report. The information
disclosed should be as precise as
possible so as to allow for proper
assessment of the nature, extent and
urgency of preliminary investigative
procedures to be undertaken.
INVESTIGATION
The AC Chairman will review the
information disclosed, interview the
Whistle Blower(s) when required and,
either exercising his own discretion
or in consultation with the other AC
members, determine whether the
circumstances warrant an investigation
and if so, the appropriate investigative
process to be employed and corrective
actions (if any) to be taken. The AC
Chairman will use his best endeavours
to ensure that there is no conflict of
interests on the part of any person
involved in the investigations.
NO REPRISAL
No person will be subject to any
reprisal for having made a report in
accordance with the Policy or having
participated in the investigation.
A reprisal means personal
disadvantage by:
All employees have a duty to cooperate
with investigations initiated under the
Policy. An employee may be placed
on administrative leave or investigatory
leave when it is determined by the
AC Chairman that it would be in the
best interests of the employee, the
Company or both. Such leave is not
to be interpreted as an accusation
or a conclusion of guilt or innocence
of any employee, including the
employee on leave. All participants
in the investigation must also refrain
from discussing or disclosing the
investigation or their testimony
with anyone not connected to the
investigation. In no circumstance
should such persons discuss
matters relating to the investigation
with the person(s) who is/are
subject(s) of the investigation
(“Investigation Subject(s)”).
Identities of Whistle Blower,
participants of the investigations
and the Investigation Subject(s)
will be kept confidential to the
extent possible.
(a) dismissal;
(b) demotion;
(c) suspension;
(d) termination of employment /
contract;
(e) any form of harassment or
threatened harassment;
(f) discrimination; or
(g) current or future bias.
Any reprisal suffered may be reported
to the Receiving Officer (who shall
refer the matter to the AC Chairman)
or directly to the AC Chairman. The AC
Chairman shall review the matter and
determine the appropriate actions to be
taken. Any protection does not extend
to situations where the Whistle Blower
or witness has committed or abetted
the Reportable Conduct that is the
subject of allegation. However, the AC
Chairman will take into account the
fact that he or she has cooperated
as a Whistle Blower or a witness in
determining the suitable disciplinary
measure to be taken against him
or her.
Mr Danny Teoh (left), Chairman of the Audit and Remuneration Committees, shares perspectives with senior management.
114
Keppel Corporation Limited
Report to Shareholders 2012
Code of Corporate Governance 2005
Specific 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/fixed salary, variable or performance-related income/bonuses, benefits in kind, and
stock options granted and other long-term incentives
Names and remuneration of at least the top five key executives (who are not also directors).
The disclosure should be in bands of $250,000 and include a breakdown of remuneration
Page Reference
in this Report
Page 92
Page 93
Page 92
Page 94
Not Applicable
Page 95
Pages 95 and 96
Pages 22 to 25,
and 97
Pages 96 and 97,
112 and 113
Pages 98 to 103
Page 98
Pages 101
to 103
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
Page 104
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 financial, operational and compliance controls,
and risk management systems
Pages 129 to 131
and 154 to 157
Pages 104 to 109
Pages 105 to 107
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
115
Sustaining Growth
RISK
MANAGEMENT
1
2012 was a difficult period for the global
economy, fraught with uncertainties.
The unresolved Eurozone crisis
continues to pose a large downside risk
to outlook. In the US, recovery was
anaemic and remains susceptible to
high unemployment and the threat of
excessive near-term fiscal consolidation.
Meanwhile, Singapore, China and
most of Asia experienced slowdowns
due to weak export demand from the
European Union and US.
The Keppel Group’s long-term
commitment towards a robust risk
management system and astute
processes, will equip it to respond
swiftly to challenges and opportunities
in the difficult business terrain ahead.
ROBUST ENTERPRISE RISK
MANAGEMENT FRAMEWORK
The Board is responsible for governing
risks and ensuring that the management
maintains a sound system of risk
management and internal controls to
safeguard shareholders’ interests and
the Company’s assets. Assisted by a
Board Risk Committee (BRC), the Board
provides valuable advice to the
management in formulating various
risk policies and guidelines. Terms of
reference of the BRC are disclosed
on page 109 of this Report.
The management surfaces key risk
issues for discussion and confers with
the BRC and the Board regularly.
The Company’s risk governance
framework is set out under pages
105 – 107 under Principle 12 (Internal
Control and Risk Management). As
part of an overall assurance process,
all Keppel companies perform a self-
assessment of their compliance to the
Group’s policies and control guidelines,
including risk management systems.
Keppel’s Enterprise Risk Management
(ERM) framework provides the Group
with a holistic structure to identify,
assess and adequately address its
significant risks. It outlines the reporting
structure, monitoring mechanisms,
as well as specific risk management
processes and tools, including Group
policies and limits. These ensure
the close monitoring of potential
operational, financial and reputational
impact from the Group’s key risks.
The ERM framework is reviewed
regularly, taking into account changes
in the business and operating
environments, as well as evolving
corporate governance requirements.
It adapts risk management practices
set out in the ISO31000 standards,
Singapore Standards SS540 for
Business Continuity Management
(BCM), as well as the Singapore
Code of Corporate Governance.
The Group also keeps abreast of
latest developments and good
practices in risk management
by participating in seminars and
interacting with professionals in the
field. An ERM Committee, comprising
management-nominated champions
from across business units, drives
and coordinates risk management
initiatives Group-wide.
Risk management is an integral part
of strategic, operational and financial
decision-making processes at all levels
of the Group. Despite best efforts,
the Group recognises that risks can
never be entirely eliminated, especially
in an evolving landscape of uncertainties
and vulnerabilities. Moreover, the
cost of minimising these risks may
also outweigh potential benefits.
With its span and scale, the Group is
exposed to diverse risks relating to
116
Keppel Corporation Limited
Report to Shareholders 2012
competition; political and regulatory
changes; contractual liabilities; human
resources; market and financial
developments; project management;
Health, Safety and Environment; cost-
escalation; dependency on suppliers
and subcontractors; disruptions to
supply chain; catastrophic events;
IT security and partnerships among
others. The Group’s operations and
businesses could be affected should
any of these risks occur.
STRATEGIC RISK
Strategic risk relates to the Group’s
business plans and strategies, and
broadly encompasses risks associated
with the countries and industries in
which Keppel operates. These include
changing laws and regulations; evolving
competitive landscape; changing
customer demands, as well as
technology and product innovation.
Risk considerations form an integral
part of the Group’s strategic and budget
review exercise, policy formulation
and revision, project, investment as
well as management performance
evaluation. Strategic risks are
reviewed periodically with the Board
to ensure that the Group is resilient in
dealing with adversity and is agile in
pursuing opportunities.
At the macro level, the BRC guides
the Group in formulating and
reviewing its risk policies and limits,
and assessing management
effectiveness. The Group’s risk-related
policies and limits are subject to
periodic reviews to ensure that
these continue to support business
objectives, effectively and proactively
address risks faced in business
operations and consider the prevailing
business climate and the Group’s
risk appetite.
Keppel’s investment decisions are
guided by investment parameters set
on a Group-wide basis. All major
investments are subject to due diligence
processes and are evaluated by the
Investment and Major Project Action
Committee and/or the Board.
This ensures that the potential
investments are in line with the Group’s
strategic business focus, consider the
underlying risk factors, and meet the
required risk-adjusted rate of return.
The systematic evaluation process
requires the investment team to
identify and incorporate the risks
and corresponding mitigating actions
into the investment proposals.
Investment risk assessment
encompasses rigorous due diligence,
feasibility studies and sensitivity
analyses of key investment assumptions
and variables. Some of the key risks
considered pertain to whether the
proposed investment is aligned to the
Group’s strategy, the financial viability
of the business model, political and
regulatory developments in the country
of investment and if contractual terms
are unfavorable to the Group.
Impact assessment and stress-
testing analysis are performed to
gauge the Group’s exposure to
changing market situations, as well
as to enable informed decision-
making and prompt mitigating actions.
On a regular basis, the Group also
monitors changes in concentration
exposures associated with its
investments in the countries where
it operates. Close monitoring of the
changes in the business, economic,
political, regulatory and competitive
landscape in the countries where
the Group has operations gives the
management better insights into
impending developments.
OPERATIONAL RISK
Operational risk relates to the
effectiveness and efficiency of
employees, the integrity of internal
control systems as well as processes
2
1 A joint security exercise
was organised by
Keppel O&M’s Security
Department and
Singapore’s Home
Team to simulate a
high-level terrorist
attack at Keppel
Shipyard Gul.
2 Dr Thierry Apoteker,
Chief Economist and
CEO of Thierry Apoteker
Consultant updated the
directors and senior
management on the
developments in
emerging countries.
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Sustaining Growth – Risk Management
117
Sustaining Growth
RISK
MANAGEMENT
1
1 Senior management
across the Group
received hands-on
training on crisis
communications.
2, 3 Drills and simulations
are regularly conducted
as part of the Group’s
Business Continuity Plans.
and externalities that affect day-to-
day operations. Operational risk
management is integrated into
day-to-day business operations and
projects across all business units
to facilitate early risk detection and
proactive management. Formalised
guidelines, procedures, internal
training and tools are used to provide
guidance in assessing, mitigating
and monitoring risks. Knowledge-
sharing platforms are also organised
to facilitate the propagation of good
practices and lessons learnt in
projects and operations.
The Group’s operations are largely
project-based and executed over
extended periods. The Group adopts
a standardised risk assessment and
monitoring process to help manage
the spectrum of key risks throughout
the lifespan of each project. The tender
team, comprising experts from different
disciplines, evaluates the significant
risks of potential projects. Particular
attention is given to technically
challenging and high-value projects,
including greenfield developments
and those that involve novel technology
or operations in a new country.
As a pre-emptive measure, project
reviews and quality assurance
programmes are instituted to monitor
and address key risks involving cost,
schedule and quality at the execution
stage. Health, safety and environmental
risks are key areas that are subject
to close monitoring and oversight by
dedicated committees. Project teams
and management also use Key Risk
Indicators (KRIs) as early warning
signals to monitor related execution
risks. These systems have been
established to ensure that projects
are completed on time, within budget
and safely, while achieving the quality
standards and specifications defined
in the contracts with customers.
As part of the overall risk-mitigating
actions, the Group regularly reviews
the scope, type and adequacy of its
insurance coverage taking into account
the availability of such cover and its
cost, as well as the likelihood and
magnitude of potential risks involved.
This exercise is carried out with
the advice and support of selected
insurance brokers.
FINANCIAL RISK
Financial risk management relates to
the Group’s ability to meet financial
obligations and mitigate credit, liquidity,
currency, interest rate and price risks.
The Group’s policies and financial
authority limits are reviewed periodically
to incorporate changes in the operating
and control environment.
The Group continues to place
emphasis on improving financial
discipline in cash and liquidity
management. For more details on
financial risk management, please
see page 85 of this Report.
STRENGTHENING OPERATIONAL
PREPAREDNESS
BCM increases the Group’s resilience
to potential business disruptions and
minimises the impact of a crisis on
people, business operations and assets.
Emphasis is placed on establishing
robust business continuity plans (BCP)
to ensure that the Group can respond
seamlessly to external events while
minimising operational disruptions.
With operations spanning the world,
the Group is on a constant lookout
for emerging threats that may impact
its operations, and has stepped up
efforts through BCM committees
to refine its BCP and fortify
operational preparedness.
The BCM methodology embodies
enterprise-wide planning, arranging
key resources, coordinating with
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Keppel Corporation Limited
Report to Shareholders 2012
interdependencies and identifying
alternate business processes.
It enables the Group to respond
effectively and continue to run critical
business functions across a broad
spectrum of disruptions from internal
or external events. Business units
in different locations conducted
various simulations to enhance
their operational preparedness.
These plans are being tested and
refined frequently to ensure that
the Group can respond effectively
in emergencies.
The Group’s crisis management
and communication plans are also
continually reviewed and refined to
equip it to respond to crises in an orderly
and coordinated way, as well as to
expedite recovery. The focus is on
building resilience and capabilities to
counter crises effectively and safeguard
the interest of key stakeholders and
the Group’s reputation.
Crisis communication procedures
have also been embedded as part
of the Group’s BCP. Key company
spokespersons have undergone
intensive media training for
communications with media and
stakeholders so that they are more
equipped when faced with possible
crisis scenarios.
ENHANCING RISK-CENTRIC CULTURE
Effective risk management hinges
equally on mindsets and attitudes,
as well as systems and processes.
The management is committed to
foster a strong risk-centric culture
in the Group. Risk culture surveys
are conducted to assess and
monitor the Group’s risk culture
climate. Education and regular
communications through various
forums and in-house publications
are important for increasing risk
awareness and competency among
employees. ERM workshops are
conducted on a regular basis to
enhance the risk management
capabilities of the management staff.
By embedding risk management in
the performance evaluation process,
the management aims to raise
accountability and reinforce a risk-
centric culture.
PROACTIVE RISK MANAGEMENT
The Group will continue to review
and refine its risk management
methodology, systems and processes,
to have sufficient resilience in the face
of potential risks and threats. A robust
and effective risk management system
will help the Group better navigate
this climate of heightened
uncertainties, economic volatility,
unprecedented environmental
destruction, geopolitical instability,
social unrests and key information
technology systems vulnerability.
2
3
Sustainability Report Highlights
Sustaining Growth – Risk Management
119
Sustaining Growth
ENVIRONMENTAL
PERFORMANCE
1
Environmental protection not only
makes business sense but is also the
Company’s responsibility as a corporate
citizen. Keppel continues to sharpen
its focus on resource efficiency and
conservation through optimisation of
equipment and processes, as well as
investments in technology.
IMPROVING ENERGY EFFICIENCY
In 2012, the Group increased its efforts
to conserve energy by using more
energy-efficient technologies and
optimising processes in its operations.
Keppel Offshore & Marine
(Keppel O&M) implemented various
process improvements, such as the
centralisation of shore generators
usage in its yard facilities. Keppel
Integrated Engineering (KIE) and
Keppel Telecommunications &
Transportation (Keppel T&T) have
also increased their energy efficiencies
in 2012. For example, both companies
replaced more lights at their plants
and facilities with energy-efficient ones.
KIE also installed Variable Speed Drives
for pumps to optimise energy usage,
and upgraded chillers in its plants
to improve energy efficiency. Two
facilities, the Keppel Seghers Ulu
Pandan NEWater Plant and the District
Cooling Plant (DCS) at Changi Business
Park (CBP), are now using solar
photovoltaic panels to reduce
reliance on electricity drawn from
the grid. The Group’s property arm,
Keppel Land, continues to improve
energy efficiency through the
development of high performance
commercial buildings, upgrade of
chiller plant systems in existing
buildings and replacement of existing
carpark lightings with LED tubes.
MANAGING WATER USE
The Group reduced its water
consumption by using more water
conservation devices such as water
thimbles and flow-reducing valves.
Keppel DHCS incorporated rainwater
harvesting for its new DCS plant
at CBP to reduce its potable water
consumed for landscaping. For its
existing DCS plants, Keppel DHCS
installed side stream filtration units
on the cooling towers to maintain a
good quality of water in the basin,
thereby minimising the amount of
NEWater required.
electricity generation and Waste-
to-Energy plants. Their emissions
are well below the strict limits
stipulated in Singapore’s Code on
Pollution Control and the European
Union Waste Incineration Directive
(2000/76/EC) which set strict
emission limits on pollutants.
WASTE MANAGEMENT
The Group drives efforts to reuse and
recycle where possible to reduce waste.
The Group’s Waste-to-Energy plants
and shipyard operations continued
to recover materials, such as scrap
metal and paper, for recycling.
There were no reports of spillages
and sanctions by the Singapore
authorities in 2012. Regrettably,
Keppel Singmarine Brasil, the new
shipyard in Brazil, received a fine in
2012 for breaching environmental
regulation by carrying out open-air
blasting. Blasting chambers have
since been constructed.
AIR EMISSIONS FROM OPERATIONS
Indirect emissions from electricity used
and the incineration of waste were
the major contributors to the Group’s
total carbon emissions in 2012.
Keppel Energy and KIE continue to
monitor and take an active role in
managing air emissions from
ENHANCING CAPABILITIES
Educational materials are disseminated
within various business units regularly
to raise employees’ environmental
consciousness. Employees involved
in energy management or operations
also received formal training, such
as the Singapore Certified Energy
Manager course.
120
Keppel Corporation Limited
Report to Shareholders 2012
PRODUCT
EXCELLENCE
Keppel is committed to deliver products
and services that exceed its customers’
expectations. The Keppel brand has
grown to be synonymous with world-
class quality, execution excellence
and innovation.
Central to the Group’s pursuit of
excellence are the core values of
‘customer focus’ and ‘agility and
innovativeness’. The Group values
customer feedback and believe that
it is vital for sustainable growth and
long-term success.
BEST PRACTICES
The Group’s global presence in over
30 countries is in line with Keppel’s
Near Market, Near Customer strategy.
This strategy has allowed the Group
to keep abreast of market conditions
and be responsive to customers’
changing needs.
Keppel’s key business units are
certified to ISO9001, ISO14001
and OHSAS18001 standards,
demonstrating our dedication
towards product quality,
environmental protection and
occupational health and safety.
RESEARCH & DEVELOPMENT
The Group needs to respond swiftly
to changes and innovate to remain
2
competitive. Its focus on Research and
Development (R&D) and commitment
to technological innovation are
key engines to sustaining growth.
Keppel O&M and KIE each have their
own dedicated R&D arms, the Keppel
Offshore & Marine Technology Centre
and Keppel Environmental Technology
Centre in Singapore, respectively.
As the world’s demand for energy
continues to drive exploration and
production into new frontiers,
Keppel O&M will constantly innovate
to meet the changing needs of its
global customers with cost-effective
solutions. For instance, in the area
of Arctic drilling, Keppel O&M and
ConocoPhillips are jointly designing
a unique jackup that can operate
efficiently and safely in
ice environments.
CUSTOMER HEALTH & SAFETY
Due care and diligence are strictly
exercised in the design, construction,
and operation of the Group’s products
to ensure that they are fit for their
intended use and do not pose hazards
to customers’ health and safety.
The health and safety impact of the
Group’s products are assessed over
their entire life cycle and mitigated
through improvements in building
processes and the usage, storage
and disposal of materials. Policies,
procedures, and guidelines on
environment, health and safety
are implemented and adhered to,
to ensure that customers’ health
and safety are not compromised.
CUSTOMER ENGAGEMENT
Mechanisms for customers to
provide feedback and suggestions
are in place to assess and improve
satisfaction with Keppel’s products
and services.
In 2012, the Group embarked on a
consultation exercise with the aim
of communicating sustainability
issues more effectively with its
customers. The exercise is targeted
for completion in May 2013.
COMPLIANCE
Keppel is committed to best
practices and comply with applicable
legislation. In 2012, the Group
did not detect any non-compliance
with laws, regulations and voluntary
codes concerning the provision and
use, as well as health and safety,
of its products and services.
1 Keppel Land continues
to improve energy
efficiency through
the development of
high performance
commercial buildings.
2 PV Drilling V is the
eighth SSDT designed
and built by Keppel
FELS. The first rig in
the series built in 1994,
West Pelaut, received
the prestigious Best
Performing Rig of the
Year 2012 by Shell
World Wide for the
fourth time.
Sustainability Report Highlights
Sustaining Growth – Product Excellence
121
Empowering Lives
LABOUR PRACTICES
& HUMAN RIGHTS
The Group’s human resource practices
seek to enhance the performance
of the organisation, while striving to
build a workforce that is inclusive
and diverse.
FAIR EMPLOYMENT PRACTICES
Keppel adopts merit-based human
resource policies, firmly upholds fair
employment practices and ensure
that its recruitment process is unbiased.
In Singapore, Keppel subscribes to the
principles spelt out by The Tripartite
Alliance for Fair Employment
Practices (TAFEP) and endorses the
Tripartite Alliance’s Employers’ Pledge
of Fair Employment Practices.
HUMAN RIGHTS
Keppel respects human rights and has
implemented a number of policies
throughout the Group in support of
human rights principles, including fair
employment practices and a reporting
of grievance and harassment policy.
The Group views unions and
subcontractors as strategic partners
and places emphasis on maintaining
a harmonious relationship with them.
Close to 42% of its global workforce
are bargainable employees covered
by Collective Agreements. There were
no reported incidences of discrimination
in 2012. Worldwide, there were three
cases of reported grievances in 2012,
of which two have been resolved while
the third is undergoing resolution.
DEVELOPING A SKILLED
WORKFORCE
The Group builds organisational
capabilities through recruiting,
retaining and developing its human
capital at all levels. In 2012, Keppel
invested some $20.5 million in the
training and development of its
employees globally.
Keppel grows the skills and
capabilities of its workforce with a
structured learning and development
framework and programmes
conducted by the in-house Keppel
College and Training Centres, as well
as qualified training providers.
Keppel College programmes are
developed with reputable business
schools and subject matter experts
to provide effective and holistic
programmes for young leaders,
middle management and senior
management. The Training Centres
cater for technical and core skills
qualification and provide upgrading
and certifications.
EMPLOYEE ENGAGEMENT
Keppel values its people and promotes
employee engagement and wellness
through various initiatives. In 2012,
Keppel worked with an independent
research firm to launch a Group-wide
Employee Engagement Survey. This
survey involved over 5,000 employees
and recorded a 75.3% response rate.
The Group continues to engage its
people through regular dialogue
sessions, and review employee
feedback and benchmark market
practices when adapting policies.
TALENT MANAGEMENT &
SUCCESSION PLANNING
Keppel has in place a talent and
succession management framework
that focuses on high-potential
and high-performing employees.
Employees are given opportunities
to fulfil their career aspirations
through job rotations, projects
and overseas postings. Its talent
management process is tightly
knitted with succession planning to
create a robust leadership pipeline.
The Keppel Young Leaders programme
nurtures high-potential employees in
the Group by exposing young leaders
from business units worldwide to
the counsel of an advisory panel of
senior management.
1
122
Keppel Corporation Limited
Report to Shareholders 2012
SAFETY
& HEALTH
2
1 Senior management
play an important role
in grooming the Group’s
young leaders.
2 All stakeholders – from
employees to customers
and subcontractors –
are encouraged to take
ownership of safety and
share best practices.
Keppel believes that a safe workplace
is a collective responsibility. All
stakeholders – from employees to
customers and subcontractors – are
encouraged to take ownership of safety
and share best practices, so as to
foster positive mindsets and behaviour.
LEADERSHIP FRAMEWORK
Since its formation in 2006, the
Keppel Corporation Board Safety
Committee (BSC) continues to drive
strong commitment and display
visible leadership.
Mr Sven Bang Ullring, who was the BSC’s
Chairman since 2009, handed over to
Mr Tan Ek Kia in 2012. The leadership
team was also bolstered by Mr Tan
Puay Chiang who joined the BSC,
and Mr John Birchall, Keppel Land’s
Safety and Health Director, who was
appointed as the Keppel Group
Safety Coordinator.
EFFECTIVE MANAGEMENT SYSTEM
The Group entered the second year
of a three-year review exercise in
collaboration with Du Pont Company
(Singapore), an industry leader in
safety, to establish a sustainable
self-assessment tool, tracking the
progress of the Group’s safety culture
and systems and addressing gaps.
Group-wide site assessments were
carried out, identifying strengths
and areas for improvement.
Self-perception surveys and
subsequently, safety road maps,
were formulated and implemented
across the business units.
The companies’ safety performances
are taken into account during the
performance appraisal of key senior
management and heads of business
units, underscoring the Group’s
focus. Safety targets, endorsed by
the BSC, help business units track
their performance.
Keppel also streamlined its global
incident and accident reporting
system for swift and structured
communication.
encouraged all employees to look out
for one another. Awards were given out
to project teams and contractors at
Keppel Land’s Annual Consultants and
Contractors Safety and Health Meeting.
OCCUPATIONAL HEALTH
Activities promoting workforce health
were rolled out regularly to employees.
Workers have to undergo regular health
checks and be certified fit before they
can take on strenuous work. Other
occupational health programmes
include hearing conservation and
respiratory protection.
SAFETY PERFORMANCE
In 2012, Keppel Group clinched
a record 34 safety awards at the
Workplace Safety and Health (WSH)
Awards in Singapore. It is the highest
number by a single organisation
since the awards were introduced
in 2006 by the WSH Council and
Ministry of Manpower.
ENHANCING OWNERSHIP
Efforts to address safety concerns were
extensive and directed. Keppel FELS
focused on hand and finger safety
awareness, while Keppel Shipyard
The Keppel Group remains focused
on improving its safety records and
strives for a zero-incident work
environment. More details can be
found in the Sustainability Report.
Sustainability Report Highlights
Empowering Lives – Safety & Health
123
Nurturing Communities
OUR
COMMUNITY
Keppel Care Foundation
and Keppel Volunteers
teamed up to support the
launch of Nature Cares
which was officiated by
Dr Tony Tan Keng Yam
(seated), the President of
the Republic of Singapore.
Keppel supports the disadvantaged and
empowers local communities through
education and skills development; spurs
industrial advancements through
research, innovation and the robust
exchange of ideas; and cares for the
community through volunteerism and
social investments.
The Group’s total social investment
spend in 2012 was $9.66 million.
KEPPEL CARE FOUNDATION
In 2012, Keppel launched Keppel Care
Foundation (KCF), a registered charity
under Singapore’s Charities Act.
KCF aims to provide assistance for
the needy and under-privileged,
promote education and encourage
eco-friendly mindsets and initiatives.
The Keppel Group will commit up to
1% of the Group’s annual profits to KCF.
CAPACITY BUILDING
KCF contributed $2 million in 2012 to the
Singapore University of Technology &
Design (SUTD). The donation, in the form
of scholarships and bursaries, will
support needy students. In addition,
Keppel will also offer internships to equip
students with practical knowledge
accessible through industry exposure
and on-the-job training.
INDUSTRY ADVANCEMENT
Keppel committed $2.4 million
to initiatives including the Keppel
Professorship to attract world-class
researchers and practitioners in the
field of Ocean, Marine and Offshore
Technology to work in Singapore;
the Kwa Geok Choo Professorship
in Property Law to raise the bar of
property law in Singapore; and the
Chua Chor Teck Memorial Fund to
promote knowledge transfer in the
marine and marine-related industries.
CARING FOR THE COMMUNITY
BREAKING THE CYCLE OF POVERTY
The Keppel-Gawad Kalinga Eco
Village in Bauan, a municipality
in Batangas, the Philippines, was
completed in 2012. The 60-unit
housing project provides needy
families with a safe haven to raise
children and a permanent address
to help breadwinners secure gainful
employment. The Group also funded
technical training for out-of-school
youths and college scholarships for
disadvantaged students in Batangas.
IMPROVING HEALTHCARE
KCF pledged $2.5 million to the
Keppel-NUS Vietnam Programme in
Medicine. The programme supports
the National University of Singapore
Yong Loo Lin Medical School’s work
with Hanoi Medical University and
Vietnam Military Medical University
to achieve mutual learning,
benchmarking and improvement of
healthcare in the region, as well as
global learning for medical leaders
and students.
HOLISTIC CARE FOR THE ELDERLY
KCF and Keppel Volunteers teamed up
to support Nature Cares, a sustainable
and nature-based programme for
volunteers to bring the healing
properties of nature to elderly homes.
The launch of Nature Cares, which
was officiated by the President of the
Republic of Singapore, Dr Tony Tan
Keng Yam, saw Keppel Volunteers
working hand-in-hand with students
to create an easy-to-maintain garden
in a voluntary welfare nursing home.
124
Keppel Corporation Limited
Report to Shareholders 2012
Directors’ Report &
Financial Statements
CONTENTS
126 Directors’ Report
133 Statement by Directors
134 Independent Auditors’ Report
135 Balance Sheets
136 Consolidated Profit & Loss Account
137 Consolidated Statement of
Comprehensive Income
138 Statements of Changes in Equity
141 Consolidated Statement of Cash Flows
143 Notes to the Financial Statements
191 Significant Subsidiaries &
Associated Companies
203 Interested Person Transactions
204 Key Executives
214 Major Properties
219 Group Five-Year Performance
223 Group Value-Added Statements
224 Share Performance
225 Shareholding Statistics
226 Notice of Annual General Meeting &
Closure of Books
232 Corporate Information
233 Financial Calendar
235 Proxy Form
125
Directors’ Report
For the financial year ended 31 December 2012
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 2012.
1.
Directors
The Directors of the Company in office at the date of this report are:
Lee Boon Yang (Chairman)
Choo Chiau Beng (Chief Executive Officer)
Tony Chew Leong-Chee
Oon Kum Loon (Mrs)
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Tan Puay Chiang (appointed on 20 June 2012)
Teo Soon Hoe
Tong Chong Heong
2.
Audit Committee
The Audit Committee of the Board of Directors comprises four independent non-executive Directors. Members of the
Committee are:
Danny Teoh (Chairman)
Tony Chew Leong-Chee
Oon Kum Loon (Mrs)
Alvin Yeo Khirn Hai
The Audit Committee carried out its function in accordance with the Singapore Companies Act, including the
following:
−
−
−
−
−
−
−
−
−
−
Reviewed audit scopes, plans and reports of the Company’s external auditors and internal auditors and
considered effectiveness of actions/policies taken by management on the recommendations and observations;
Reviewed the assistance given by the Company’s officers to the auditors;
Carried out independent review of quarterly financial reports and year-end financial statements;
Examined effectiveness of financial, operational and compliance controls;
Reviewed the independence and objectivity of the external auditors annually;
Reviewed the nature and extent of non-audit services performed by external auditors;
Met with external auditors and internal auditors, without the presence of management, at least annually;
Ensured that the internal audit function is adequately resourced and has appropriate standing within the
Company, at least annually;
Reviewed interested person transactions; and
Investigated any matters within the Audit Committee’s term of reference, whenever it deemed necessary.
The Audit Committee has recommended to the Board of Directors the nomination of Deloitte & Touche LLP for re-
appointment as external auditors at the forthcoming Annual General Meeting of the Company.
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, KCL Performance Share Plan and Remuneration Shares to Directors of the Company.
126
Keppel Corporation Limited
Report to Shareholders 2012
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
Singapore 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
Choo Chiau Beng
Choo Chiau Beng (deemed interest)
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)
Tan Ek Kia
Danny Teoh
Tan Puay Chiang
Tan Puay Chiang (deemed interest)
Teo Soon Hoe
Tong Chong Heong
(Share options)
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
(Unvested restricted shares to be delivered after 2010)
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
(Unvested restricted shares to be delivered after 2011)
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
(Contingent award of performance shares issued in 2010 to be
delivered after 2012)1
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
1.1.2012
or date of
appointment,
if later
33,000
3,114,832
220,000
14,000
57,200
44,000
13,888
28,789
9,225
32,000
825
25,825
22,000
7,103
4,786,795
1,903,540
Holdings At
31.12.2012
21.1.2013
43,000
3,810,532
220,000
17,000
60,200
44,000
16,888
28,789
12,225
32,000
3,825
28,825
22,000
7,103
4,853,480
1,966,540
43,000
3,810,532
220,000
17,000
60,200
44,000
16,888
28,789
12,225
32,000
3,825
28,825
22,000
7,103
4,853,480
1,966,540
1,441,000
2,530,000
1,528,000
847,000
2,530,000
1,528,000
847,000
2,530,000
1,528,000
110,000
73,370
66,000
140,000
90,000
90,000
55,000
36,685
33,000
93,300
60,000
60,000
55,000
36,685
33,000
93,300
60,000
60,000
330,000
220,000
198,000
330,000
220,000
198,000
330,000
220,000
198,000
Directors’ Report
127
Directors’ Report
4.
Directors’ interest in shares and debentures (continued)
(Contingent award of performance shares issued in 2011 to be
delivered after 2013)1
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
(Contingent award of performance shares issued in 2012 to be
delivered after 2014)1
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
(3.145% Fixed Rate Notes due 2022)
Tan Puay Chiang
Keppel Land Limited
(Ordinary shares)
Choo Chiau Beng
Tony Chew Leong-Chee (deemed interest)
Tow Heng Tan (deemed interest)
Alvin Yeo Khirn Hai (deemed interest)
Tan Ek Kia
Danny Teoh
(3.51% Fixed Rate Notes due 2015)
Tan Puay Chiang
(3.90% Fixed Rate Notes due 2024)
Tan Puay Chiang
Keppel Telecommunications & Transportation Ltd
(Ordinary shares)
Teo Soon Hoe
Keppel REIT
(Units)
Choo Chiau Beng
Tow Heng Tan (deemed interest)
Alvin Yeo Khirn Hai (deemed interest)
Teo Soon Hoe
Keppel Philippines Holdings, Inc
(“B” shares of one Peso each)
Choo Chiau Beng
Teo Soon Hoe
1.1.2012
or date of
appointment,
if later
Holdings At
31.12.2012
21.1.2013
280,000
180,000
180,000
280,000
180,000
180,000
280,000
180,000
180,000
-
-
-
220,000
90,000
180,000
220,000
90,000
180,000
$250,000
$250,000
$250,000
500,000
800,000
95
10,000
11,400
100,000
850,315
-
95
10,000
11,400
100,000
850,315
-
95
10,000
11,400
100,000
$250,000
$250,000
$250,000
-
$250,000
$250,000
28,000
28,000
28,000
5,899,250
10
100,000
-
6,260,000
10
100,000
600,000
6,260,000
10
100,000
600,000
2,000
2,000
2,000
2,000
2,000
2,000
1
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.
128
Keppel Corporation Limited
Report to Shareholders 2012
5.
Directors’ receipt and entitlement to contractual benefits
Since the beginning of the financial year, no Director of the Company has received or become entitled to receive a
benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract
made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a
company in which he has a substantial financial interest except as disclosed in the notes to the financial statements
and salaries, bonuses and other benefits in their capacity as directors of the Company which are disclosed in the
Corporate Governance Report.
6.
Share options of the Company
Details of share options granted under the KCL Share Option Scheme (“Scheme”) are disclosed in Note 3 to the
financial statements.
No options to take up Ordinary Shares (“Shares”) were granted during the financial year. There were 11,156,255
Shares issued by virtue of exercise of options and options to take up 145,200 Shares were cancelled during the
financial year. At the end of the financial year, there were 30,314,565 Shares under option as follows:
Number of Share Options
Date of grant
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
1.1.2012
16,500
505,700
743,500
1,741,300
3,103,800
6,815,600
4,733,470
5,922,030
2,099,320
7,660,600
8,274,200
41,616,020
Exercised
-
(147,100)
(360,200)
(411,400)
(611,900)
(22,000)
(1,035,470)
(1,021,015)
(439,520)
(3,897,450)
(3,210,200)
(11,156,255)
Cancelled
-
-
-
-
-
(140,800)
-
(4,400)
-
-
-
(145,200)
Balance at
31.12.2012
16,500
358,600
383,300
1,329,900
2,491,900
6,652,800
3,698,000
4,896,615
1,659,800
3,763,150
5,064,000
30,314,565
The information on Directors of the Company participating in the Scheme is as follows:
Exercise
price
$3.81
$5.46
$5.60
$6.75
$8.09
$11.56
$8.85
$9.12
$3.46
$7.25
$7.28
Date of
expiry
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
Aggregate
options
granted and
adjusted since
commencement
of the Scheme
to the end of
financial year
5,584,000
5,983,000
3,922,200
Aggregate
Aggregate
options
options
exercised since
lapsed since
commencement commencement
of the Scheme
to the end of
financial year
of the Scheme
to the end of
financial year
4,163,250
2,879,250
1,984,200
573,750
573,750
410,000
Aggregate
options
outstandingas
at the end of
financial year
847,000
2,530,000
1,528,000
Options
granted
during the
financial year
-
-
-
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
129
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 4,159,000 under KCL RSP and 780,000 under KCL PSP during the
financial year. The number of Shares released was 4,158,177 under KCL RSP and Nil under KCL PSP during the
financial year. 2,733,998 Shares under the KCL RSP were vested during the financial year. 121,603 Shares under the
KCL RSP were cancelled during the financial year. At the end of the financial year, there were 4,103,656 contingent
Shares and 3,955,446 unvested Shares under the KCL RSP, and 2,129,314 contingent Shares under the KCL PSP as
follows:
Contingent awards:
Date of grant
KCL RSP
30.06.2011
29.06.2012
KCL PSP
30.06.2010
30.06.2011
29.06.2012
Awards released but not vested:
Date of grant
KCL RSP
30.06.2010
30.06.2011
Balance at
1.1.2012
4,158,177
-
4,158,177
748,000
640,000
-
1,388,000
Balance at
1.1.2012
2,652,870
-
2,652,870
Contingent
awards
granted
-
4,159,000
4,159,000
-
-
780,000
780,000
Number of Shares
Released
Cancelled
(4,158,177)
-
(4,158,177)
-
-
-
-
-
(55,344)
(55,344)
-
-
(38,686)
(38,686)
Number of Shares
Released
Vested
Cancelled
-
4,158,177
4,158,177
(1,327,425)
(1,406,573)
(2,733,998)
(47,410)
(74,193)
(121,603)
Balance at
31.12.2012
-
4,103,656
4,103,656
748,000
640,000
741,314
2,129,314
Balance at
31.12.2012
1,278,035
2,677,411
3,955,446
130
Keppel Corporation Limited
Report to Shareholders 2012
The information on Directors of the Company participating in the KCL RSP and the KCL PSP is as follows:
Contingent awards:
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
Awards released but not vested:
Name of Director
KCL RSP
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
Aggregate
awards
granted since
commencement
of plans
to the end of
financial year
Contingent
awards granted
during the
financial year
Aggregate
awards
released since
commencement
Aggregate
awards
of plans not released as
at the end of
financial year
to the end of
financial year
-
-
-
300,000
196,670
186,000
(300,000)
(196,670)
(186,000)
-
-
-
220,000
90,000
180,000
830,000
490,000
558,000
-
-
-
830,000
490,000
558,000
Aggregate
awards
released since
commencement
of plans
to the end of
financial year
Aggregate
awards
vested since
commencement
of plans
to the end of
financial year
Aggregate
awards
released but
not vested as
at the end of
financial year
300,000
196,670
186,000
(151,700)
(99,985)
(93,000)
148,300
96,685
93,000
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.
No director or employee has received 5 percent or more of the total number of contingent award of Shares granted
during the financial year.
Other than Choo Chiau Beng who received 1,130,000 or 7.8% and Tong Chong Heong who received 744,000 or 5.1%
of the aggregate of the contingent award of Shares under the KCL RSP and KCL PSP, no other director or employee
received more than 5 percent or more of the total number of contingent award of Shares granted to date.
Directors’ Report
131
Directors’ Report
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 131,202,035 unissued shares of Keppel Land Limited under option.
This comprised $300,000,000 principal amount of 2.5% Convertible Bonds due 2013 at a conversion price of
$5.58 per share, $499,800,000 principal amount of 1.875% Convertible Bonds due 2015 at a conversion price of
$6.72 per share and 3,063,596 options under the Keppel Land Share Option Scheme. In addition, there were
849,500 unvested shares and 1,902,500 contingent shares granted under Keppel Land Restricted Share Plan,
and 1,053,000 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 1,425,000 unissued shares of Keppel Telecommunications &
Transportation Ltd under option relating to Keppel T&T Share Option Scheme. In addition, there were
486,200 unvested shares and 870,000 contingent shares granted under Keppel T&T Restricted Share Plan,
and 585,000 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) Keppel REIT Management Limited (“KRAM”)
At the end of the financial year, there were 107,601 unvested and 229,974 contingent Keppel REIT units granted
under KRAM Restricted Unit Plan, and 532,048 contingent Keppel REIT units granted under KRAM Performance
Unit Plan. The grants will be settled in Keppel REIT 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, 27 February 2013
Teo Soon Hoe
Senior Executive Director
132
Keppel Corporation Limited
Report to Shareholders 2012
Statement by Directors
For the financial year ended 31 December 2012
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 consolidated financial statements of the Group and the balance sheet and statement of
changes in equity of the Company as set out on pages 135 to 202 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 2012, 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, 27 February 2013
Teo Soon Hoe
Senior Executive Director
Statement by Directors
133
Independent Auditors’ Report
to the Members of Keppel Corporation Limited
For the financial year ended 31 December 2012
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 2012, 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 135 to 202.
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 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 accounts and balance sheets and to
maintain accountability of assets.
Auditor’s 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 about 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 2012
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
Cheung Pui Yuen
Partner
Appointed on 21 April 2011
27 February 2013
134
Keppel Corporation Limited
Report to Shareholders 2012
Balance Sheets
As at 31 December 2012
Note
31 December
2012
$’000
Share capital
Reserves
Share capital & reserves
Non-controlling interests
Capital employed
Represented by:
Fixed assets
Investment properties
Subsidiaries
Associated companies
Investments
Long term assets
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
3
4
5
6
7
8
9
10
11
12
13
13
14
15
16
17
12
18
13
13
19
26
20
19
21
Group
31 December
2011
$’000
Restated
1,016,112
6,683,263
7,699,375
4,061,920
1 January
2011
$’000
Restated
906,409
5,712,715
6,619,124
3,035,951
Company
31 December
2012
$’000
31 December
2011
$’000
1,123,590
4,581,934
5,705,524
-
1,016,112
4,193,452
5,209,564
-
1,123,590
8,122,362
9,245,952
4,332,174
13,578,126
11,761,295
9,655,075
5,705,524
5,209,564
3,337,433
5,423,060
-
5,266,602
225,380
139,446
109,608
14,501,529
2,715,517
4,610,107
-
4,462,179
310,759
267,060
98,573
12,464,195
2,243,150
3,207,539
-
3,781,700
299,896
28,646
107,676
9,668,607
559
-
4,933,380
-
-
168
-
4,934,107
4,080
-
3,928,160
-
-
339
-
3,932,579
7,442,713
6,605,580
4,928,835
-
-
-
696,737
2,057,270
417,107
4,055,176
14,669,003
-
403,775
2,027,933
577,400
3,020,454
12,635,142
-
305,162
1,958,993
536,872
4,245,990
11,975,852
2,655,295
1,719
157,737
-
3,773
2,818,524
2,204,813
1,483
78,164
-
1,621
2,286,081
5,535,961
5,709,902
5,331,672
191,872
234,396
1,619,475
74,874
-
63,495
1,005,554
764,862
-
9,064,221
5,604,782
1,863,881
77,674
1,638,193
83,586
-
63,918
808,475
478,911
-
9,002,761
-
180,609
391,764
455,079
736
8,081,639
-
-
329,206
-
-
21,097
-
542,175
-
-
229,852
-
17,668
22,244
-
504,160
3,632,381
3,894,213
2,276,349
1,781,921
6,202,345
325,840
6,528,185
4,068,696
266,585
4,335,281
3,675,968
231,777
3,907,745
1,500,000
4,932
1,504,932
500,000
4,936
504,936
Net assets
13,578,126
11,761,295
9,655,075
5,705,524
5,209,564
See accompanying notes to the financial statements.
Balance Sheets
135
Consolidated Profit and Loss Account
For the financial year ended 31 December 2012
Note
2012
$’000
Revenue
Materials and subcontract costs
Staff costs
Depreciation and amortisation
Other operating income
Operating profit
Investment income
Interest income
Interest expenses
Share of results of associated companies
Profit before tax
Taxation
Profit for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
Earnings per ordinary share
- basic
- diluted
Gross dividend per ordinary share
Interim dividend paid
Final dividend proposed
Special dividend in specie proposed
Total distribution
22
23
24
25
25
25
8
26
27
28
2011
$’000
Restated
10,082,467
(6,273,001)
(1,432,889)
(208,571)
656,338
2,824,344
24,589
113,982
(98,230)
448,017
3,312,702
(443,574)
13,964,841
(9,566,016)
(1,578,749)
(210,512)
11,611
2,621,175
6,701
160,776
(134,933)
602,548
3,256,267
(500,619)
2,755,648
2,869,128
2,237,299
518,349
2,755,648
1,945,765
923,363
2,869,128
124.8 cts
123.6 cts
109.4 cts
108.2 cts
18.0 cts
27.0 cts
27.4 cts
72.4 cts
17.0 cts
26.0 cts
-
43.0 cts
See accompanying notes to the financial statements.
136
Keppel Corporation Limited
Report to Shareholders 2012
Consolidated Statement of
Comprehensive Income
For the financial year ended 31 December 2012
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 expense of associated companies
Other comprehensive expense for the year, net of tax
Total comprehensive income for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
2012
$’000
2011
$’000
Restated
2,755,648
2,869,128
30,690
(49,948)
(146,669)
(18,906)
217,394
(2,377)
(116,932)
10,725
(312,556)
(1,378)
(6,488)
(124,663)
15,617
(4,077)
(13,880)
(274,122)
2,630,985
2,595,006
2,200,049
430,936
2,630,985
1,675,464
919,542
2,595,006
See accompanying notes to the financial statements.
Consolidated Statement of Comprehensive Income
137
Statements of Changes in Equity
For the financial year ended 31 December 2012
Attributable to shareholders 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
1,016,112
460,357
6,049,411
(135,498) 7,390,382
3,800,674 11,191,056
-
1,016,112
-
460,357
308,993
6,358,404
-
308,993
(135,498) 7,699,375
261,246
570,239
4,061,920 11,761,295
-
202,369
2,237,299
-
-
(239,619)
2,237,299
(37,250)
518,349
(87,413)
2,755,648
(124,663)
202,369 2,237,299
(239,619) 2,200,049
430,936
2,630,985
-
47,237
(789,456)
-
122
(122)
-
-
-
142
-
-
-
107,478
-
-
(25,050)
107,478
22,309
(789,436)
-
-
-
-
-
-
(2,772)
8,949
-
-
(2,772)
8,949
-
-
-
-
-
-
-
-
-
-
-
-
(789,456)
47,237
-
2,221
(789,456)
49,458
-
-
-
-
(211,912)
(211,912)
-
142
82,428
85,325
373
-
85,325
515
82,428
(659,649)
(123,993)
(783,642)
-
225,401
225,401
6,177
(230,572)
(224,395)
-
(31,518)
(31,518)
6,177
(36,689)
(30,512)
-
-
-
-
-
-
-
Group
2012
As at 1 January
As previously reported
Effect of adopting
Amendments to FRS 12
As restated
Total comprehensive income
for the year
Profit for the year
Other comprehensive income *
Total comprehensive income
for the year
Transactions with owners,
recognised directly in equity
Contributions by and
distributions to owners
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
Other adjustments
Shares issued
Total contributions by and
distributions to owners
Changes in ownership
interests in subsidiaries
Acquisition of subsidiaries
Acquisition of additional
interest in subsidiaries
Disposal of interest in
subsidiaries with loss
of control
Total changes in ownership
interests in subsidiaries
Total transactions with
owners
107,478
19,537
(780,487)
-
(653,472)
(160,682)
(814,154)
As at 31 December
1,123,590
682,263 7,815,216
(375,117) 9,245,952 4,332,174 13,578,126
* Details of other comprehensive income have been included in the consolidated statement of comprehensive income.
See accompanying notes to the financial statements.
138
Keppel Corporation Limited
Report to Shareholders 2012
Attributable to shareholders 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
906,409
653,624
4,994,434
(139,083) 6,415,384
2,866,384
9,281,768
-
906,409
-
653,624
203,740
5,198,174
-
203,740
(139,083) 6,619,124
169,567
3,035,951
373,307
9,655,075
-
(273,886)
1,945,765
-
-
3,585
1,945,765
(270,301)
923,363
(3,821)
2,869,128
(274,122)
(273,886) 1,945,765
3,585
1,675,464
919,542
2,595,006
Group
2011
As at 1 January
As previously reported
Effect of adopting
Amendments to FRS 12
As restated
Total comprehensive income
for the year
Profit for the year
Other comprehensive income *
Total comprehensive income
for the year
Transactions with owners,
recognised directly in equity
Contributions by and
distributions to owners
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
Other adjustments
Shares issued
Total contributions by and
distributions to owners
Changes in ownership
interests in subsidiaries
Acquisition of additional
interest in subsidiaries
Disposal of interest in
a subsidiary company
without loss of control
Disposal of interest in
a subsidiary company
with loss of control
Total changes in ownership
interests in subsidiaries
Total transactions with
owners
As at 31 December
-
-
-
-
-
-
-
-
48,981
(723,857)
-
34,788
(34,788)
-
-
-
-
-
-
-
109,703
-
382
(10,422)
109,703
73,729
(758,645)
-
-
-
-
-
(26,890)
6,890
-
-
-
6,890
(26,890)
109,703
80,619
(785,535)
-
-
-
-
-
-
-
-
-
-
-
-
-
(723,857)
48,981
-
2,213
(723,857)
51,194
-
-
-
-
(157,867)
(157,867)
-
382
99,281
245,275
750
-
245,275
1,132
99,281
(575,213)
90,371
(484,842)
(26,890)
(1,625)
(28,515)
6,890
18,101
24,991
-
(420)
(420)
(20,000)
16,056
(3,944)
(595,213)
106,427
(488,786)
1,016,112
460,357
6,358,404
(135,498) 7,699,375
4,061,920
11,761,295
* Details of other comprehensive income have been included in the consolidated statement of comprehensive income.
See accompanying notes to the financial statements.
Statements of Changes in Equity
139
Statements of Changes in Equity
Company
2012
As at 1 January
Share
Capital
$’000
Capital
Reserves
$’000
Revenue
Reserves
$’000
Capital
Employed
$’000
1,016,112
161,496
4,031,956
5,209,564
Profit/total comprehensive income for the year
-
-
1,158,896
1,158,896
Transactions with owners, recognised directly in equity
Dividend paid
Share-based payment
Other adjustments
Shares issued
Total transactions with owners
-
-
-
107,478
107,478
-
43,950
-
(25,050)
18,900
(789,456)
-
142
-
(789,314)
(789,456)
43,950
142
82,428
(662,936)
As at 31 December
1,123,590
180,396
4,401,538
5,705,524
Company
2011
As at 1 January
906,409
126,020
3,657,497
4,689,926
Profit/total comprehensive income for the year
-
-
1,098,316
1,098,316
Transactions with owners, recognised directly in equity
Dividend paid
Share-based payment
Shares issued
Total transactions with owners
As at 31 December
-
-
109,703
109,703
-
45,898
(10,422)
35,476
(723,857)
-
-
(723,857)
(723,857)
45,898
99,281
(578,678)
1,016,112
161,496
4,031,956
5,209,564
See accompanying notes to the financial statements.
140
Keppel Corporation Limited
Report to Shareholders 2012
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2012
Operating activities
Operating profit
Adjustments:
Depreciation and amortisation
Share-based payment expenses
Profit on sale of fixed assets
Gain on disposal of subsidiaries
Gain on disposal of associated companies
(Write-back)/impairment of assets
(Write-back)/provision for restructuring of operations and others
Fair value gain on investment properties
Operational cash flow before changes in working capital
Working capital changes:
Stocks & work-in-progress
Debtors
Creditors
Investments
Intangibles
Advances to associated companies
Translation of foreign subsidiaries
Interest received
Interest paid
Income taxes paid, net of refunds received
Net cash from/(used in) operating activities
Investing activities
Acquisition of subsidiaries
Advance payment for acquisition of a subsidiary
Acquisition and further investment in associated companies
Acquisition of fixed assets and investment properties
Disposal of subsidiaries
Return of capital and disposal of associated companies
Proceeds from disposal of fixed assets
Dividend received from investments and associated companies
Net cash used in investing activities
Financing activities
Proceeds from share issues
Proceeds from non-controlling shareholders of subsidiaries
Proceeds from disposal of interest in a subsidiary
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 financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents as at 1 January
Effects of foreign exchange translation on cash and cash equivalents
Note
2012
$’000
2011
$’000
Restated
2,621,175
2,824,344
210,512
49,882
(16,689)
(30,004)
(3,120)
(7,673)
(12,000)
(172,101)
2,639,982
(855,588)
(80,579)
(398,236)
226,530
(1,369)
(298,399)
(40,209)
1,192,132
160,189
(120,847)
(224,907)
1,006,567
(116,265)
-
(371,002)
(835,974)
56,621
4,645
35,248
157,344
(1,069,383)
82,428
15,125
-
2,859,518
(528,790)
(149,427)
(789,456)
(211,912)
1,277,486
208,571
51,274
(26,959)
(4,288)
(21,021)
50,198
23,446
(1,117,155)
1,988,410
(1,254,385)
(314,907)
103,390
(217,518)
(10,199)
(223,772)
27,676
98,695
119,032
(98,118)
(343,424)
(223,815)
-
(207,930)
(477,340)
(875,773)
(153)
53,970
73,936
175,516
(1,257,774)
99,281
245,275
24,991
1,231,567
(422,128)
(22,211)
(723,857)
(157,867)
275,051
1,214,670
3,020,454
(1,206,538)
4,245,254
(179,948)
(18,262)
A
B
Cash and cash equivalents as at 31 December
C
4,055,176
3,020,454
See accompanying notes to the financial statements.
Consolidated Statement of Cash Flows
141
Consolidated Statement of Cash Flows
Notes to Consolidated Statement of Cash Flows
A.
Acquisition of Subsidiaries
During the financial year, the fair values of net assets of subsidiaries acquired were
as follows:
2012
$’000
2011
$’000
Fixed assets
Investment properties
Stocks & work-in-progress
Debtors
Bank balances and cash
Shareholders’ loans
Creditors
Current and deferred taxation
Total identifiable net assets at fair value
Non-controlling interests measured at non-controlling interests’
proportionate share of the net assets
Amount previously accounted for as associated company
Assumption of shareholders’ loans
Advance payment made in prior year
Purchase consideration
Less: Purchase consideration deferred
Less: Bank balances and cash acquired
Cash flow on acquisition net of cash acquired
B.
Disposal of Subsidiaries
During the financial year, the book values of net assets of subsidiaries disposed were
as follows:
Fixed assets
Investment properties
Stocks & work-in-progress
Debtors
Bank balances and cash
Creditors
Current and deferred taxation
Non-controlling interests deconsolidated
Amount accounted for as associated company
Net assets disposed of
Net profit on disposal
Realisation of foreign currency translation reserve
Sale proceeds
Less: Bank balances and cash disposed
Cash flow on disposal net of cash disposed
C.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and balances with banks.
See accompanying notes to the financial statements.
142
Keppel Corporation Limited
Report to Shareholders 2012
109,998
732,409
235,551
2,017
33,059
(142,489)
(314,268)
(141,198)
515,079
(225,401)
(10,546)
142,489
(207,930)
213,691
(64,367)
(33,059)
116,265
(21,646)
(81,710)
(24,121)
(25,386)
(5,838)
40,404
14,176
31,518
(72,603)
44,606
(27,997)
(30,004)
(4,458)
(62,459)
5,838
(56,621)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(258)
-
(932)
(297)
(1,583)
5,388
120
420
2,858
-
2,858
(4,288)
-
(1,430)
1,583
153
Notes to the Financial Statements
For the financial year ended 31 December 2012
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 2012 and the balance sheet and
statement of changes in equity of the Company at 31 December 2012 were authorised for issue in accordance with a
resolution of the Board of Directors on 27 February 2013.
2.
Significant accounting 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 2012. 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 that are relevant to the Group:
Amendments to FRS 107
Amendments to FRS 12
Disclosures - Transfer of Financial Assets
Deferred Tax: Recovery of Underlying Assets
The adoption of the above FRS and INT FRS did not have any significant impact on the financial statements of the
Group, except as disclosed below:
Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets
The Amendments to FRS 12 apply to the measurement of deferred tax liabilities and assets arising from investment
properties measured using the fair value model under FRS 40 Investment Property, including investment property
acquired in a business combination and subsequently measured using the fair value model. For the purposes
of measuring deferred tax, the Amendments introduce a rebuttable presumption that the carrying amount of
an investment property measured at fair value will be recovered entirely through sale. The presumption can be
rebutted if the investment property is depreciable and is held within a business model whose objective is to consume
substantially all of the economic benefits over time, rather than through sale.
The Group has previously provided for deferred tax liabilities for its investment properties on the basis that the
carrying amount of the investment properties will be recovered through use. Upon adoption of the Amendments
to FRS 12, there is a presumption that the carrying amount of an investment property measured at fair value will
be recovered entirely through sale. Accordingly, there will be no deferred tax liability on investment properties in
Singapore as there is no capital gains tax in Singapore.
Notes to the Financial Statements
143
Notes to the Financial Statements
2.
Significant accounting policies (continued)
The change in accounting policy has been applied retrospectively. The effects of adopting Amendments to FRS 12 are
as follows:
Group Profit and Loss Account
Decrease in taxation
Increase in profit for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
Increase in basic EPS
Increase in diluted EPS
Group Balance Sheet
Increase in revenue reserves
Increase in non-controlling interests
Increase in associated companies
Decrease in deferred taxation
(b) Basis of Consolidation
2012
$’000
2011
$’000
(82,912)
82,912
(196,932)
196,932
46,289
36,623
82,912
2.6 cts
2.6 cts
2012
$’000
355,282
297,869
284,815
(368,336)
105,253
91,679
196,932
5.9 cts
5.8 cts
2011
$’000
308,993
261,246
230,132
(340,107)
2010
$’000
203,740
169,567
194,796
(178,511)
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 acquisition method. The cost of an acquisition is measured at
the aggregate of the fair value of the assets given, equity instruments issued, liabilities incurred or assumed at the
date of exchange and the fair values of any contingent consideration arrangement and any pre-existing equity interest
in the subsidiary. 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 interests, except for deferred tax assets/
liabilities, share-based related accounts and assets held for sale.
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
difference between the change in the carrying amounts of the non-controlling interests and the fair value of the
consideration paid or received is recognised directly in equity and attributed to owners of the Company.
144
Keppel Corporation Limited
Report to Shareholders 2012
When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the Group derecognises
all assets (including any goodwill), liabilities and non-controlling interests at their carrying amounts. Amounts
previously recognized in other comprehensive income in respect of that former subsidiary are reclassified to profit or
loss or transferred directly to revenue reserves if required by a specific Standard. 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.
Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable
to the interests which are not owned directly or indirectly by the owners of the Company. They are shown separately
in the consolidated statement of comprehensive income, statement of changes in equity and balance sheet. Total
comprehensive income is attributed to the non-controlling interests in a subsidiary on their respective interests in a
subsidiary, even if this result in the non-controlling interests having a deficit balance.
(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:
Buildings on freehold land
Leasehold land & buildings
Vessels & floating docks
Plant, machinery & equipment
20 to 50 years
Over period of lease (ranging from 5 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 comprise completed properties and properties under construction or re-development held to
earn rental and/or for capital appreciation. Investment properties are initially recognised at cost and subsequently
measured at fair value, determined annually based on valuations 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.
Where there is a change in use, transfers to or from investment properties to another asset category are at the
carrying values of the properties at the date of transfer.
(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.
Notes to the Financial Statements
145
Notes to the Financial Statements
2.
Significant accounting policies (continued)
(f) Associated Companies
An associated company is an entity, not being a subsidiary, over which the Group has significant influence, but not
control, in the operating and financial policy decisions.
Investments in associated companies are stated in the Company’s financial statements at cost less any impairment
losses. On disposal of an associated company, the difference between net disposal proceeds and the carrying amount
of the investment is taken to the profit and loss account.
Investments in associated companies are accounted for in the consolidated financial statements using the equity
method of accounting whereby the Group’s share of profit or loss of the associated company is included in the profit
and loss account and the Group’s share of net assets of the associated company is included in the balance sheet.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities
and contingent liabilities of the associated company recognised at the date of acquisition is recognised as goodwill.
The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the
investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent
liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.
(g)
Intangibles
Goodwill
Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of the business combination
over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Goodwill
is initially recognised as an asset at cost and is subsequently measured at cost less any impairment losses. 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 3 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.
146
Keppel Corporation Limited
Report to Shareholders 2012
(i)
Derivative Financial Instruments and Hedge Accounting
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into
and are subsequently re-measured at fair value. Derivative financial instruments are carried as assets when the fair
value is positive and as liabilities when the fair value is negative.
Gains or losses arising from changes in fair value of derivative financial instruments that do not qualify for hedge
accounting are taken to the profit and loss account.
For cash flow hedges, the effective portion of the gains or losses on the hedging instrument is recognised directly
in other comprehensive income, while the ineffective portion is recognised in the profit and loss account. Amounts
taken to other comprehensive income are reclassified to the profit and loss account when the hedged transaction
affects profit or loss.
The fair value of forward foreign currency contracts is determined using forward exchange market rates at the
balance sheet date. The fair value of High Sulphur Fuel Oil (“HSFO”) forward contracts is determined using forward
HSFO prices provided by the Group’s key counterparty. The fair value of interest rate caps and interest rate swaps are
based on valuations provided by the Group’s bankers.
(j)
Financial Assets
Financial assets include cash and bank balances, trade, intercompany and other receivables and investments. Trade,
intercompany and other receivables are stated at their fair values as reduced by appropriate allowances for estimated
irrecoverable amounts.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and
bank deposits and are subject to an insignificant risk of changes in value.
(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, financing charges and other net costs 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
completion of construction, 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.
Notes to the Financial Statements
147
Notes to the Financial Statements
2.
Significant accounting policies (continued)
(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 recognises 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. For available-for-sale investments, impairment losses previously recognised in the profit and loss account
are not reversed through the profit and loss account until the investment is disposed of.
Goodwill
Goodwill is tested for impairment annually and whenever there is an indication that the goodwill may be impaired.
Goodwill included in the carrying amount of an associated company is tested for impairment as part of the investment.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to
benefit from the synergies of the combination.
An impairment loss is recognised in the profit and loss account when the carrying amount of the cash-generating unit,
including goodwill, exceeds the recoverable amount of the cash-generating unit. The impairment loss is allocated
first to reduce the carrying amount of goodwill allocated to the cash-generating unit 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.
148
Keppel Corporation Limited
Report to Shareholders 2012
(m) Financial Liabilities and Equity Instruments
Financial liabilities include trade, intercompany and other payables, bank loans and overdrafts. Trade, intercompany
and other payables are stated at their fair values. Interest-bearing bank loans and overdrafts are initially measured
at fair value and are subsequently measured at amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption value is taken to the profit and loss account over the period of the borrowings
using the effective interest method.
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of
its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
(n) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it
is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount
can be made.
Provision for warranties is set up upon completion of a contract to cover the estimated liability which may arise during
the warranty period. This provision is based on service history. Any surplus of provision will be written back at the
end of the warranty period while additional provisions where necessary are made when known. These liabilities are
expected to be incurred over the applicable warranty periods.
Provision for claims is made for the estimated cost of all claims notified but not settled at the balance sheet date, less
recoveries, using the information available at the time. Provision is also made for claims incurred but not reported at
the balance sheet date based on historical claims experience, modified for variations in expected future settlement.
The utilisation of provisions is dependent on the timing of claims.
(o) Leases
When a group company is the lessee
Finance leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. Assets held under finance leases are recognised as assets of the Group at
their fair values at the inception of the lease or, if lower, at the present value of the minimum lease payments. The
corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the profit
and loss account. Contingent rentals are recognised as expenses in the periods in which they are incurred.
Operating leases
Leases of assets in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentive received from lessor) are
taken to the profit and loss account on a straight-line basis over the period of the lease. When an operating lease is
terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is
recognised as an expense in the period in which termination takes place.
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.
Notes to the Financial Statements
149
Notes to the Financial Statements
2.
Significant accounting policies (continued)
(p) Revenue
Revenue consists of:
-
-
Revenue recognised on contracts, under the completion of construction method;
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, which are held for sale is based on the following methods:
-
-
-
For Singapore trading properties under progressive payment scheme, 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 Singapore trading projects under deferred payment scheme and overseas trading properties, profit
recognition is recognised upon the transfer of significant risks and rewards of ownership to the purchasers
under the completion of construction method; and
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.
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 and acquisition of fixed assets 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.
150
Keppel Corporation Limited
Report to Shareholders 2012
(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 is 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.
Notes to the Financial Statements
151
Notes to the Financial Statements
2.
Significant accounting policies (continued)
(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 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 acquiree and recorded at the closing exchange rate.
(v) Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary
shares are deducted against the share capital account.
(w) Segment Reporting
The Group has four reportable segments, namely Offshore & Marine, Infrastructure, Property and Investments.
Management monitors the results of each of these operating segments for the purpose of making decisions on
resource allocation and performance assessment.
(x) 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.
152
Keppel Corporation Limited
Report to Shareholders 2012
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 flows. 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 percentage of completion method. The stage of completion
is measured in accordance with the accounting policy stated in Note 2(q). Significant assumptions are 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, latent defects 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.
Notes to the Financial Statements
153
Notes to the Financial Statements
3.
Share capital
Ordinary Shares (“Shares”)
Issued and paid up:
Balance at 1 January
Bonus issue
Issue of shares under the
share option scheme
Issue of shares under
restricted share plan
Group and Company
Number of Shares
2012
2011
Amount
2012
$’000
1,783,716,751
-
1,605,513,880
161,883,330
1,016,112
-
11,156,255
15,064,000
82,425
2011
$’000
906,409
-
99,282
2,733,998
1,255,541
25,053
10,421
Balance at 31 December
1,797,607,004
1,783,716,751
1,123,590
1,016,112
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends declared
by the Company.
In 2011, the Company issued one bonus share for every ten existing ordinary shares with effect from 6 May 2011.
During the financial year, the Company issued 11,156,255 Shares for cash upon exercise of options under the KCL
Share Option Scheme. This comprised 147,100 Shares at $5.46 per Share, 360,200 Shares at $5.60 per Share, 411,400
Shares at $6.75 per Share, 611,900 Shares at $8.09 per Share, 22,000 Shares at $11.56 per Share, 1,035,470 Shares at
$8.85 per Share, 1,021,015 Shares at $9.12 per Share, 439,520 Shares at $3.46 per Share, 3,897,450 Shares at $7.25
per Share and 3,210,200 Shares at $7.28 per Share.
During the financial year, 2,733,998 Shares vested under the KCL Restricted Share Plan.
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:
Danny Teoh
Lee Boon Yang
Oon Kum Loon (Mrs)
Tow Heng Tan
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 2010 was granted at a discount.
154
Keppel Corporation Limited
Report to Shareholders 2012
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
Exercised
Cancelled
Share adjustment for bonus issue
Balance at 31 December
2012
2011
Number of
options
41,616,020
(11,156,255)
(145,200)
-
30,314,565
Weighted
average
exercise
price
$8.21
$7.39
$11.49
-
$8.49
Number of
options
53,391,000
(15,064,000)
(808,200)
4,097,220
41,616,020
Exercisable at 31 December
30,314,565
$8.49
33,403,420
Weighted
average
exercise
price
$8.40
$6.59
$9.02
$8.07
$8.21
$8.44
The weighted average share price at the date of exercise for options exercised during the financial year was $10.98
(2011: $11.39). The options outstanding at the end of the financial year had a weighted average exercise price of $8.49
(2011: $8.21) and a weighted average remaining contractual life of 5.5 years (2011: 6.6 years).
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.
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
KCL PSP
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
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
Notes to the Financial Statements
155
Notes to the Financial Statements
3.
Share capital (continued)
Movements in the number of shares under the KCL RSP and the KCL PSP are as follows:
Contingent awards:
Balance at 1 January
Granted
Released
Cancelled
Adjustment for bonus issue
Balance at 31 December
Awards released but not vested:
Balance at 1 January
Released
Vested
Cancelled
Adjustment for bonus issue
Balance at 31 December
2012
2011
KCL RSP
KCL PSP
KCL RSP
KCL PSP
4,158,177
4,159,000
(4,158,177)
(55,344)
-
4,103,656
1,388,000
780,000
-
(38,686)
-
2,129,314
3,757,966
4,175,900
(3,757,966)
(17,723)
-
4,158,177
680,000
640,000
-
-
68,000
1,388,000
2,652,870
4,158,177
(2,733,998)
(121,603)
-
3,955,446
-
-
-
-
-
-
-
3,757,966
(1,255,541)
(90,500)
240,945
2,652,870
-
-
-
-
-
-
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.
As at 31 December 2012, there were 3,955,446 (2011: 2,652,870) restricted shares that were released but not vested.
At the end of the financial year, the number of contingent Shares granted but not released was 4,103,656 (2011:
4,158,177) under the KCL RSP and 2,129,314 (2011: 1,388,000) 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 3,955,446 under
the KCL RSP and range from zero to a maximum of 3,193,971 under the KCL PSP.
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.
156
Keppel Corporation Limited
Report to Shareholders 2012
On 29 June 2012 (2011: 30 June 2011), the Company granted contingent awards of 4,159,000 (2011: 4,175,900) shares
under the KCL RSP and 780,000 (2011: 640,000) shares under the KCL PSP. The estimated fair value of the shares
granted ranges from $9.33 to $10.08 (2011: $10.12 to $10.92) under the KCL RSP and amounts to $8.28 (2011: $10.29)
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
2012
KCL RSP
29.06.2012
$10.28
KCL PSP
29.06.2012
$10.28
2011
KCL RSP
KCL PSP
30.06.2011
$11.08
30.06.2011
$11.08
28.06%
#
#
0.5 - 2.5 years
0.18% - 0.25%
*
28.06%
25.76%
84.90%
2.5 years
0.25%
*
45.99%
#
#
0.5 - 2.5 years
0.43% - 0.54%
*
45.99%
37.11%
84.50%
2.5 years
0.54%
*
# 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
2012
$’000
198,156
181,662
204,546
40,000
57,899
682,263
Group
2011
$’000
Restated
175,969
199,046
(7,296)
40,000
52,638
460,357
2010
$’000
Restated
137,410
370,162
95,474
40,000
10,578
653,624
Company
2012
$’000
2011
$’000
180,396
-
-
-
-
180,396
161,496
-
-
-
-
161,496
Revenue Reserves
7,815,216
6,358,404
5,198,174
4,401,538
4,031,956
Foreign Exchange
Translation Account
(375,117)
(135,498)
(139,083)
-
-
8,122,362
6,683,263
5,712,715
4,581,934
4,193,452
Movements in the Group’s and the Company’s reserves are set out in the Statements of Changes in Equity.
Notes to the Financial Statements
157
Notes to the Financial Statements
5.
Fixed assets
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Vessels &
Buildings Floating Docks
$’000
$’000
Plant,
Machinery
& Equipment
$’000
Capital
Work-in-
Progress
$’000
Total
$’000
Group
2012
Cost
At 1 January
Additions
Disposals
Write-off
Subsidiaries acquired
Subsidiaries disposed
Reclassification
- Stocks
- Other assets
- Other fixed assets
categories
Exchange differences
At 31 December
Accumulated Depreciation &
Impairment Losses
At 1 January
Depreciation charge
Disposals
Write-off
Subsidiaries disposed
Reclassification
- Stocks
Exchange differences
At 31 December
102,542
6,320
(5,325)
-
-
(111)
1,446,784
6,448
(6,760)
(72)
103,794
(21,527)
412,244
18,094
(18,703)
-
-
-
2,118,150
83,209
(20,360)
(1,383)
5,501
(182,585)
594,740
701,967
-
(927)
703
-
4,674,460
816,038
(51,148)
(2,382)
109,998
(204,223)
-
-
-
-
(16,147)
315
-
(11)
-
(4,818)
10,078
(1,992)
46,122
(25,769)
58,122
(5,480)
127,235
(37,205)
(241,557)
(12,116)
(16,147)
(4,514)
-
(82,562)
111,512
1,549,020
448,445
2,092,551
1,037,992
5,239,520
37,536
3,892
(1,617)
-
(111)
634,357
43,330
(2,928)
-
-
151,024
24,913
(9,811)
-
-
1,136,026
128,949
(19,091)
(1,205)
(182,466)
-
2,074
98
(9,940)
(2,090)
(2,409)
366
(28,810)
41,774
664,917
161,627
1,033,769
-
-
-
-
-
-
-
-
1,958,943
201,084
(33,447)
(1,205)
(182,577)
(1,626)
(39,085)
1,902,087
Net Book Value
69,738
884,103
286,818
1,058,782
1,037,992
3,337,433
158
Keppel Corporation Limited
Report to Shareholders 2012
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Vessels &
Buildings Floating Docks
$’000
$’000
Plant,
Machinery
& Equipment
$’000
Capital
Work-in-
Progress
$’000
Total
$’000
Group
2011
Cost
At 1 January
Additions
Disposals
Write-off
Subsidiary disposed
Reclassification
- Stocks
- Investment properties
- Other assets
- Other fixed assets
categories
Exchange differences
121,558
8,507
(1,225)
-
-
1,353,706
22,854
(10,124)
-
(67)
-
-
9
13,559
24,500
76
320,642
5,163
(30,127)
(1,202)
-
-
-
(12,276)
(26,645)
338
47,559
(5,279)
132,019
(1,975)
1,991,375
45,193
(34,908)
(1,005)
(1,463)
256,398
553,566
-
(5)
-
4,043,679
635,283
(76,384)
(2,212)
(1,530)
-
64,500
(2,460)
60,882
(3,964)
-
-
(698)
(213,815)
(706)
13,559
89,000
(15,349)
-
(11,586)
At 31 December
102,542
1,446,784
412,244
2,118,150
594,740
4,674,460
Accumulated Depreciation &
Impairment Losses
At 1 January
Depreciation charge
Impairment loss (Note 24)
Disposals
Write-off
Subsidiary disposed
Reclassification
- Stocks
- Other assets
- Other fixed assets
categories
Exchange differences
33,757
3,616
891
(636)
-
-
-
25
-
(117)
572,107
52,052
16,900
(4,147)
-
(66)
-
67
260
(2,816)
141,732
24,472
-
(9,229)
(1,023)
-
-
(4,166)
-
(762)
1,052,933
121,855
-
(32,313)
(782)
(1,206)
248
(2,031)
(260)
(2,418)
At 31 December
37,536
634,357
151,024
1,136,026
-
-
-
-
-
-
-
-
-
-
-
1,800,529
201,995
17,791
(46,325)
(1,805)
(1,272)
248
(6,105)
-
(6,113)
1,958,943
Net Book Value
65,006
812,427
261,220
982,124
594,740
2,715,517
In 2011, the Group recognised impairment losses of $17,791,000 relating to write-down of non-performing assets in
the Property and Investment divisions.
Certain plant, machinery and equipment with carrying amount of $65,204,000 (2011: $74,754,000) are mortgaged to
banks for loan facilities (Note 19).
Interest capitalised during the financial year amounted to $9,968,000 (2011: $1,444,000).
Notes to the Financial Statements
159
Notes to the Financial Statements
5.
Fixed assets (continued)
Company
2012
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
At 31 December
Net Book Value
2011
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Impairment loss
Disposals
At 31 December
Net Book Value
Freehold
Land &
Buildings
$’000
Plant,
Machinery
& Equipment
$’000
Total
$’000
6,569
175
(5,325)
6,888
318
(312)
13,457
493
(5,637)
1,419
6,894
8,313
2,725
36
(1,617)
6,652
270
(312)
9,377
306
(1,929)
1,144
6,610
7,754
275
284
559
6,569
-
-
6,569
1,793
41
891
-
2,725
3,844
6,867
101
(80)
13,436
101
(80)
6,888
13,457
6,523
209
-
(80)
6,652
236
8,316
250
891
(80)
9,377
4,080
160
Keppel Corporation Limited
Report to Shareholders 2012
6.
Investment properties
At 1 January
Acquisition of properties
Development expenditure
Fair value gain (Note 24)
Disposals
Subsidiary acquired
Subsidiary disposed
Reclassification
- Fixed assets
Exchange differences
At 31 December
Group
2012
$’000
4,610,107
-
24,551
172,101
-
732,409
(81,710)
2011
$’000
3,207,539
119,237
225,336
1,117,155
(12,210)
-
-
-
(34,398)
(53,117)
6,167
5,423,060
4,610,107
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 2012:
-
-
-
-
-
-
Colliers International Consultancy & Valuation (Singapore) Pte Ltd, Savills Valuation and Professional Services
(S) Pte Ltd, and Cushman & Wakefield for properties in Singapore;
Savills Valuations Pty Ltd and CBRE Valuations Pty Ltd for properties in Australia;
DTZ Debenham Tie Leung (Vietnam) Co. Ltd for properties in Vietnam;
KJPP Wilson & Rekan (an affiliate of Knight Frank) for properties in Indonesia;
Cushman & Wakefield Valuation Advisory Services (HK) Ltd for a property in China; and
Jones Lang Lasalle (Thailand) Limited for a property in Thailand.
Interest capitalised during the financial year amounted to $694,000 (2011: $551,000).
The Group has mortgaged certain investment properties of up to an aggregate amount of $2,123,730,000 (2011:
$3,343,322,000) to banks for loan facilities (Note 19).
7.
Subsidiaries
Quoted shares, at cost
Market value: $4,008,470,000 (2011: $2,257,423,000)
Unquoted shares, at cost
Provision for impairment
Movements in the provision for impairment of subsidiaries are as follows:
At 1 January
Charge to profit and loss account
At 31 December
Company
2012
$’000
2011
$’000
2,083,822
3,470,628
5,554,450
(621,070)
4,933,380
1,925,049
2,478,111
4,403,160
(475,000)
3,928,160
475,000
146,070
621,070
377,000
98,000
475,000
During the financial year, provision for impairment amounting to $146,070,000 (2011: $98,000,000) had been made
for certain subsidiaries of the Company as a result of their recoverable amounts being estimated to be less than their
carrying amounts.
Information relating to significant subsidiaries consolidated in the financial statements is given in Note 36.
Notes to the Financial Statements
161
Notes to the Financial Statements
8.
Associated companies
Quoted shares, at cost
Market value: $1,062,078,000
(2011: $906,665,000)
Unquoted shares, at cost
Provision for impairment
Share of reserves
Advances to associated companies
2012
$’000
Group
2011
$’000
Restated
651,580
1,470,846
2,122,426
(157,901)
1,964,525
2,121,333
4,085,858
1,180,744
563,986
1,341,158
1,905,144
(166,687)
1,738,457
1,574,914
3,313,371
1,148,808
2010
$’000
Restated
561,226
966,034
1,527,260
(147,800)
1,379,460
1,351,752
2,731,212
1,050,488
5,266,602
4,462,179
3,781,700
Movements in the provision for impairment of associated companies are as follows:
At 1 January
(Write-back)/provision of impairment loss (Note 24)
Exchange differences
At 31 December
Group
2012
$’000
166,687
(7,673)
(1,113)
157,901
2011
$’000
147,800
18,869
18
166,687
Long term advances to associated companies are unsecured and considered to be part of investment in associated
companies. They are not repayable within the next 12 months. Interest is charged at rates ranging from 1.23% to
3.85% (2011: 0.78% to 3.58%) per annum. During the financial year, the Group wrote back an impairment loss of
$7,673,000 (2011: provision of impairment loss of $18,869,000) on investment in associated companies. The carrying
amount of the associated companies in the previous financial year were reduced to its recoverable amount, which was
based on the estimated future cash flow from operations discounted to present value ranging from 6.37% to 15.00%.
The share of net profit of associated companies is as follows:
Share of profit before tax
Share of taxation (Note 26)
Share of net profit
Group
2012
$’000
602,548
(27,096)
575,452
2011
$’000
Restated
448,017
(45,236)
402,781
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
22,196,158
9,952,448
4,688,181
1,788,221
19,160,688
9,222,344
4,913,441
1,203,969
Information relating to significant associated companies whose results are included in the financial statements is
given in Note 36.
162
Keppel Corporation Limited
Report to Shareholders 2012
9.
Investments
Available-for-sale investments:
Quoted equity shares
Unquoted equity shares
Unquoted property funds
Unquoted bonds
10. Long term assets
Advance payment and financing for
acquisition of subsidiary
Staff loans
Long term receivables and others
Less: Amounts due within one year and
included in debtors (Note 14)
Group
2012
$’000
1,442
79,923
133,044
10,971
225,380
2011
$’000
107,772
68,339
117,314
17,334
310,759
Company
2012
$’000
-
341
-
341
(173)
168
2011
$’000
-
534
-
534
(195)
339
Group
2012
$’000
-
1,916
148,970
150,886
2011
$’000
207,930
2,586
67,859
278,375
(11,440)
(11,315)
139,446
267,060
As at 31 December 2011, the advance payment for acquisition of subsidiary includes the acquisition of a 100% interest
in Aether Pte Ltd, and other advances required under the terms of the acquisition.
Included in staff loans are interest-free advances to certain Directors amounting to $90,000 (2011: $130,000) and to
directors of related corporations amounting to $238,000 (2011: $359,000) 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% (2011: 2.00% to 13.00%) per annum.
The fair value of long term receivables for the Group is $150,443,000 (2011: $69,944,000). 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.
Notes to the Financial Statements
163
Notes to the Financial Statements
11.
Intangibles
Group
2012
At 1 January
Additions
Amortisation
Exchange differences
At 31 December
Cost
Accumulated amortisation
2011
At 1 January
Additions
Amortisation
Impairment loss (Note 24)
Exchange differences
Goodwill
$’000
Development
Expenditure
$’000
Customer
Contracts
$’000
59,270
-
-
-
17,276
20,839
(7,960)
(376)
22,027
-
(1,468)
-
Total
$’000
98,573
20,839
(9,428)
(376)
59,270
29,779
20,559
109,608
59,270
-
52,304
(22,525)
24,963
(4,404)
136,537
(26,929)
59,270
29,779
20,559
109,608
72,949
-
-
(13,538)
(141)
11,232
11,040
(5,108)
-
112
23,495
-
(1,468)
-
-
107,676
11,040
(6,576)
(13,538)
(29)
At 31 December
59,270
17,276
22,027
98,573
Cost
Accumulated amortisation
59,270
-
32,474
(15,198)
24,963
(2,936)
116,707
(18,134)
59,270
17,276
22,027
98,573
For the purpose of impairment testing, goodwill is allocated to cash-generating units.
Goodwill allocated to Offshore & Marine division amounted to $2,092,000 (2011: $2,092,000). 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 of 7.22% (2011: ranging from 7.32%
to 15.25%). 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 (2011: $57,178,000). The recoverable amount of
goodwill at balance sheet date is based on current bid prices of the cash-generating unit.
In 2011, goodwill allocated to Offshore & Marine division of $13,538,000 was impaired as the recoverable amount
based on value-in-use calculation using the most recent financial budgets approved by management for the next five
years was lower than the carrying amount.
164
Keppel Corporation Limited
Report to Shareholders 2012
12. Stocks and work-in-progress
Work-in-progress in excess of related billings
Stocks
Properties held for sale
(a)
(c)
(d)
2012
$’000
2,258,599
234,296
4,949,818
7,442,713
Group
2011
$’000
Restated
1,118,214
326,646
5,160,720
2010
$’000
Restated
605,210
164,400
4,159,225
6,605,580
4,928,835
Billings on work-in-progress in excess of related costs
(b)
(1,619,475)
(1,863,881)
(1,638,193)
(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
(c)
Stocks
Consumable materials and supplies
Finished products for sale
9,649,476
(4,443)
9,645,033
(7,386,434)
8,203,393
(4,137)
8,199,256
(7,081,042)
2,279,293
(3,651)
2,275,642
(1,670,432)
2,258,599
1,118,214
605,210
4,137
306
-
-
4,443
3,651
486
-
-
4,137
2,809
1,597
(768)
13
3,651
9,754,918
(11,374,393)
9,166,938
(11,030,819)
14,541,819
(16,180,012)
(1,619,475)
(1,863,881)
(1,638,193)
170,007
64,289
234,296
293,471
33,175
161,620
2,780
326,646
164,400
Notes to the Financial Statements
165
Notes to the Financial Statements
12. Stocks and work-in-progress (continued)
(d) Properties held for sale
Properties under development
Land cost
Development cost incurred to date
Related overhead expenditure
Progress billing and recognised profit
Completed properties held for sale
Provision for properties held for sale
2012
$’000
Group
2011
$’000
Restated
2010
$’000
Restated
3,216,525
684,975
292,601
(315,487)
3,878,614
1,099,770
4,978,384
(28,566)
2,768,549
703,193
300,351
(273,643)
3,498,450
1,703,286
5,201,736
(41,016)
2,493,896
1,334,228
555,463
(232,269)
4,151,318
51,854
4,203,172
(43,947)
4,949,818
5,160,720
4,159,225
Movements in the provision for properties held for sale are
as follows:
At 1 January
(Write-back)/charge to profit and loss account
Amount utilised
Exchange differences
At 31 December
41,016
(6,656)
(4,780)
(1,014)
28,566
43,947
11,116
(14,271)
224
48,201
3,128
(7,378)
(4)
41,016
43,947
The following table provides information about agreements
that are in progress at the reporting date whose revenue are
recognised on a percentage of completion basis:
Aggregate amount of costs incurred and recognised profit
(less recognised losses) to date
Less: Progress billings
At 31 December
1,724,447
(340,918)
1,418,742
(264,297)
2,086,761
(332,537)
1,383,529
1,154,445
1,754,224
Interest capitalised during the financial year amounted to $48,184,000 (2011: $47,975,000) at rates ranging from
0.67% to 2.50% (2011: 0.67% to 2.50%) per annum for Singapore properties and 2.01% to 17.80% (2011: 2.04% to
23.30%) per annum for overseas properties.
Certain properties held for sale with carrying amount of $915,740,000 (2011: $778,508,000) are mortgaged to
banks for loan facilities (Note 19).
166
Keppel Corporation Limited
Report to Shareholders 2012
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
2012
$’000
Company
2011
$’000
2012
$’000
2011
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,153
2,656,742
2,661,895
(6,600)
6,998
2,204,415
2,211,413
(6,600)
2,655,295
2,204,813
175,533
153,673
329,206
157,426
72,426
229,852
6,600
6,600
Advances to and from subsidiaries are unsecured and are repayable on demand. Interest is charged at rates ranging
from 0% to 4.02% (2011: 0.05% to 5.35%) per annum on interest-bearing advances.
Associated Companies
Amounts due from
- trade
- advances
Provision for doubtful debts
Amounts due to
- trade
- advances
Movements in the provision for doubtful debts are
as follows:
At 1 January
Write-back to profit and loss account
At 31 December
121,974
574,970
696,944
(207)
696,737
12,053
51,442
63,495
106,094
297,919
404,013
(238)
403,775
9,371
54,547
63,918
238
(31)
207
669
(431)
238
1,719
-
1,719
-
1,719
-
-
-
-
-
-
1,483
-
1,483
-
1,483
-
-
-
-
-
-
Advances to and from associated companies are unsecured and are repayable on demand. Interest is charged at
rates ranging from 0.13% to 12.50% (2011: 0.14% to 12.50%) per annum on interest-bearing advances.
Notes to the Financial Statements
167
Notes to the Financial Statements
14. Debtors
Trade debtors
Provision for doubtful debts
Long term receivables due within one year (Note 10)
Sundry debtors
Prepaid project cost & prepayments
Derivative financial instruments (Note 32)
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
Total
Group
Company
2012
$’000
1,171,118
(11,392)
1,159,726
2011
$’000
1,249,437
(39,367)
1,210,070
11,440
111,515
47,698
174,227
14,614
66,160
15,288
31,127
52,590
182,052
31,572
18,421
57,367
11,315
83,154
85,628
96,736
21,652
92,094
14,701
19,479
38,020
115,493
42,057
17,981
103,294
2012
$’000
-
-
-
173
350
365
156,513
-
-
40
296
-
-
-
-
-
248
249
-
108,800
923,119
(25,575)
897,544
104,474
846,327
(28,464)
817,863
2,057,270
2,027,933
-
157,737
-
157,737
157,737
Movements in the provision for debtors are as follows:
At 1 January
(Write-back)/charged to profit and loss account
Amount written off
Subsidiary disposed
Exchange differences
At 31 December
67,831
(28,151)
(2,367)
43
(389)
36,967
66,104
4,619
(2,370)
(228)
(294)
67,831
-
-
-
-
-
-
2011
$’000
-
-
-
195
853
210
76,541
-
-
31
334
-
-
-
-
-
-
-
78,164
-
78,164
78,164
-
-
-
-
-
-
168
Keppel Corporation Limited
Report to Shareholders 2012
15. Short term investments
Available-for-sale investments:
Quoted equity shares
Unquoted equity shares
Unquoted unit trust
Unquoted debt securities
Total available-for-sale investments
Investments held for trading:
Quoted equity shares
Total short term investments
16. Bank balances, deposits and cash
Group
2012
$’000
301,189
1,137
48,265
1,802
352,393
64,714
417,107
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
2012
$’000
2,542,851
1,322,014
2011
$’000
1,023,667
1,731,377
18,653
23,635
171,658
241,775
2012
$’000
3,773
-
-
-
2011
$’000
349,153
129,842
42,704
-
521,699
55,701
577,400
2011
$’000
1,563
58
-
-
4,055,176
3,020,454
3,773
1,621
Fixed deposits with banks of the Group mature on varying periods, substantially between 1 day to 3 months (2011:
1 day to 6 months). This comprises Singapore dollar fixed deposits of $140,590,000 (2011: $338,506,000) at interest
rates ranging from 0.01% to 4.44% (2011: 0.02% to 4.47%) per annum, and foreign currency fixed deposits of
$1,181,424,000 (2011: $1,392,871,000) at interest rates ranging from 0.01% to 14.50% (2011: 0.00% to 18.65%) per
annum.
As at 31 December 2011, fixed deposits with banks of the Company matured on varying periods, substantially in 2
months. This comprised foreign currency fixed deposits of $58,000 at interest rate of 0.90% per annum.
Notes to the Financial Statements
169
Notes to the Financial Statements
17. Creditors
Trade creditors
Customers’ advances and deposits
Progress billings received
Derivative financial instruments (Note 32)
Sundry creditors
Accrued operating expenses
Advances from non-controlling shareholders
Retention monies
Interest payables
Group
Company
2012
$’000
878,560
120,720
114,052
110,092
1,245,140
2,556,014
344,921
135,133
31,329
2011
$’000
850,953
98,334
386,635
141,422
1,000,570
2,720,461
361,795
132,489
17,243
5,535,961
5,709,902
2012
$’000
-
-
-
37,134
3,302
137,171
-
-
14,265
191,872
2011
$’000
-
57
-
90,665
3,404
136,798
-
-
3,472
234,396
Advances from non-controlling shareholders of certain subsidiaries are unsecured and are repayable on demand.
Interest is charged at rates ranging from 0.81% to 4.20% (2011: 0.93% to 12.00%) per annum on interest-bearing
loans.
18. Provisions
Group
2012
At 1 January
Write-back to profit and loss account
Amount utilised
Exchange differences
At 31 December
2011
At 1 January
Write-back to profit and loss account
Amount utilised
Reclassification
Exchange differences
At 31 December
Warranties
$’000
Claims
$’000
Total
$’000
62,670
(780)
(288)
(1,728)
15,004
(3)
-
(1)
77,674
(783)
(288)
(1,729)
59,874
15,000
74,874
68,198
(5,887)
(172)
-
531
15,388
(296)
-
(86)
(2)
83,586
(6,183)
(172)
(86)
529
62,670
15,004
77,674
170
Keppel Corporation Limited
Report to Shareholders 2012
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 Telecommunications & Transportation
Medium Term Notes
Bank and other loans
- secured
- unsecured
Company
Keppel Corporation Medium Term Notes
Unsecured bank loans
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(a)
2012
2011
Due within
one year
$’000
Due after
one year
$’000
Due within
one year
$’000
-
75,000
296,609
-
1,500,000
889,750
-
486,800
-
50,000
-
-
Due after
one year
$’000
500,000
330,000
289,426
482,683
-
120,000
-
-
171,831
462,114
1,219,852
1,985,943
444,098
314,377
912,950
1,553,637
1,005,554
6,202,345
808,475
4,068,696
-
-
-
1,500,000
-
1,500,000
-
17,668
500,000
-
17,668
500,000
(a) During the financial year, the Company increased the limit of the Multi-Currency Medium Term Note
Programme to US$3,000,000,000 (2011: US$600,000,000). The notes comprise fixed rate notes of $500,000,000,
$400,000,000, $300,000,000 and $300,000,000 (2011: $500,000,000) due in 2020, 2022, 2027 and 2042 (2011: 2020)
respectively and are unsecured and carried interest rates ranging from 3.10% to 4.00% (2011: 3.10%) per annum.
(b) During the financial year, in addition to the existing US$800,000,000 Multi-Currency Medium Term Note
Programme, Keppel Land Limited and its wholly-owned subsidiary, Keppel Land Financial Services Pte. Ltd.
established a US$3,000,000,000 Multi-Currency Medium Term Note Programme. Fixed rate notes issued under
this Programme amounting to $304,750,000 due in 2019 are unsecured and carried an interest rate of 3.26% per
annum.
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 amounted to $660,000,000. The notes are unsecured and comprised fixed
rate notes due from 2013 to 2024 (2011: 2012 to 2017) with interest rates ranging from 2.67% to 3.90% (2011:
2.67% to 4.25%) per annum.
(c)
The $300,000,000 2.50%, 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. The bonds had been reclassified to short
term loan during the financial year.
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
2012
$’000
289,426
14,683
(7,500)
296,609
2011
$’000
282,536
14,390
(7,500)
289,426
Interest expense on the convertible bonds is calculated based on the effective interest method by applying the
interest rate of 4.78% (2011: 4.78%) per annum for an equivalent non-convertible bond to the liability component
of the convertible bonds.
Notes to the Financial Statements
171
Notes to the Financial Statements
19. Term loans (continued)
(d)
The $500,000,000 1.875%, 5 year convertible bonds were issued in 2010 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. On 25 April 2012, $200,000 convertible bonds were converted and cancelled pursuant to the
exercise of conversion rights by a bondholder.
The convertible bonds are recognised on the balance sheet as follows:
At 1 January
Conversion to ordinary shares of Keppel Land Limited
Interest expense
Interest paid
Liability component at 31 December
Group
2012
$’000
482,683
(200)
13,692
(9,375)
486,800
2011
$’000
478,436
-
13,622
(9,375)
482,683
Interest expense on the convertible bonds is calculated based on the effective interest method by applying the
interest rate of 2.50% (2011: 2.50%) per annum for an equivalent non-convertible bond to the liability component
of the convertible bonds.
(e) During the financial year, Keppel Telecommunications & Transportation Ltd, a subsidiary of the Company,
established a S$500,000,000 Multi-Currency Medium Term Note Programme. Fixed rate notes issued under this
Programme amounting to $120,000,000 due in 2019 are unsecured and carried an interest rate of 2.63% per
annum from August 2012 to August 2017, and at 3.83% from August 2017 to August 2019 per annum.
(f)
The secured bank loans consist of:
-
-
-
-
-
-
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 1.08% to 1.23% (2011: 1.11% to 1.37%) per annum.
A term loan of $240,000,000 drawn down by a subsidiary. 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 0.67% to
1.25% (2011: 0.67% to 1.10%) per annum.
Bank loans of $425,000,000 drawn down by a subsidiary. 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 1.25% to 1.41% (2011: 1.09% to 1.41%) per annum.
A $428,780,000 bank loan drawn down by a subsidiary. The term loan is repayable in 2017 and is secured
on the investment property of the subsidiary. Interest is based on money market rates ranging from 1.17%
to 1.19% per annum.
Term loans of $35,200,000 drawn down by subsidiaries. The term loans are repayable between one to
three years and are secured on certain fixed assets of the subsidiaries. Interest is based on money market
rates ranging from 0.93% to 0.99% (2011: 0.68% to 0.90%) per annum.
Other secured bank loans comprised $104,103,000 of foreign currency loans. They are repayable between
one to four 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 6.77% to 9.93% (2011: 6.50% to 9.93%) per
annum.
172
Keppel Corporation Limited
Report to Shareholders 2012
(g)
The unsecured bank and other loans of the Group totalling $2,448,057,000 comprised $1,528,224,000 of loans
denominated in Singapore dollar and $919,833,000 of foreign currency loans. They are repayable between one
to five years. Interest on loans denominated in Singapore dollar is based on money market rates ranging from
0.83% to 2.98% (2011: 0.82% to 2.98%) per annum. Interest on foreign currency loans is based on money market
rates ranging from 0.71% to 17.80% (2011: 0.90% to 23.30%) per annum.
The Group has mortgaged certain properties and assets of up to an aggregate amount of $3,104,674,000 (2011:
$4,196,584,000) to banks for loan facilities.
The fair values of term loans for the Group and Company are $7,281,995,000 (2011: $4,918,390,000) and
$1,533,629,000 (2011: $520,933,000) 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
2012
$’000
Company
2011
$’000
2012
$’000
632,410
3,314,279
2,255,656
937,206
2,531,490
600,000
-
-
1,500,000
6,202,345
4,068,696
1,500,000
2011
$’000
-
-
500,000
500,000
20. Bank overdrafts
As at 1 January 2011, interest on the bank overdrafts was payable at the banks’ prevailing prime rates ranging from
5.50% to 6.66% per annum. The secured bank overdrafts were 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
Net deferred tax liabilities
2012
$’000
232,339
120,937
36,969
390,245
(28,899)
(35,506)
(64,405)
325,840
Group
2011
$’000
Restated
181,768
12,820
93,235
287,823
2010
$’000
Restated
161,896
14,023
73,886
249,805
(12,648)
(8,590)
(21,238)
(13,821)
(4,207)
(18,028)
Company
2012
$’000
-
-
4,932
4,932
-
-
-
2011
$’000
-
-
4,936
4,936
-
-
-
266,585
231,777
4,932
4,936
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 $576,547,000 (2011: $739,427,000) 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
173
Notes to the Financial Statements
21. Deferred taxation (continued)
Movements in deferred tax liabilities and assets are as follows:
Charged/
Charged/
(credited)
to other
At
1 January
$’000
(credited) to comprehensive Subsidiaries Subsidiaries Reclassifi-
cation
profit or loss
$’000
$’000
disposed
$’000
acquired
$’000
income
$’000
Exchange
At
differences 31 December
$’000
$’000
Group
2012
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
2011 (Restated)
Deferred Tax Liabilities
Accelerated tax
depreciation
Investment properties
valuation
Offshore income
& others
Total
Deferred Tax Assets
181,768
49,739
12,820
1,939
-
-
-
-
(8,388)
115,228
-
-
832
232,339
(662)
120,937
93,235
287,823
(33,817)
17,861
(364)
(364)
-
(8,388)
19,275
134,503
(41,172)
(41,172)
(188)
(18)
36,969
390,245
(12,648)
(8,590)
(21,238)
(17,734)
(27,516)
(45,250)
-
-
-
44
-
44
-
-
-
-
-
-
1,439
600
2,039
(28,899)
(35,506)
(64,405)
266,585
(27,389)
(364)
(8,344)
134,503
(41,172)
2,021
325,840
161,896
20,152
14,023
(963)
73,886
249,805
19,467
38,656
-
-
(27)
(27)
-
-
-
Other provisions
Unutilised tax benefits
Total
(13,821)
(4,207)
(18,028)
1,221
(4,592)
(3,371)
231,777
35,285
(27)
Net Deferred
Tax Liabilities
Company
2012
Deferred Tax Liabilities
Offshore income
4,936
(4)
2011
Deferred Tax Liabilities
Offshore income
4,934
2
-
-
(8)
-
45
37
15
-
15
52
-
-
-
-
-
-
-
-
-
-
-
-
(132)
(140)
181,768
-
(240)
12,820
(36)
(168)
(100)
(480)
93,235
287,823
64
212
276
(127)
(3)
(130)
(12,648)
(8,590)
(21,238)
108
(610)
266,585
-
-
-
4,932
-
4,936
174
Keppel Corporation Limited
Report to Shareholders 2012
22. Revenue
Revenue from construction contracts
Sale of property
- Recognised on completion of construction method
- Recognised on percentage of completion method
Sale of 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
Amortisation of intangibles
Profit on sale of fixed assets
Profit on sale of investments
Notes to the Financial Statements
Group
2012
$’000
7,969,213
2,070,632
574,224
41,202
246,536
3,056,114
6,175
745
2011
$’000
5,974,949
431,489
712,942
100,023
192,516
2,627,241
40,967
2,340
13,964,841
10,082,467
Group
2012
$’000
1,255,631
120,140
49,882
153,096
2011
$’000
1,146,706
102,113
51,274
132,796
1,578,749
1,432,889
Group
2012
$’000
1,480
4,450
1,308
364
2011
$’000
1,415
4,597
1,533
368
1,621
725
30,821
131
12,108
201,084
1,177
9,428
(16,689)
(150,441)
34,227
304
12,399
201,995
407
6,576
(26,959)
(35,434)
175
Notes to the Financial Statements
24. Operating profit (continued)
Fair value (gain)/loss on
- investments
- forward foreign exchange contracts
- interest rate caps and swaps
Write-back for
- warranties
- claims
(Write-back)/provision for
- work-in-progress
- properties held for sale
- stocks
(Write-back)/provision for doubtful debts
- trade debts
- other debts
Bad debts written off
- trade debts
- other debts
Cost of stocks & properties held for sale recognised as expense
Stocks written off/(recovered)
Rental expense
- operating leases
Direct operating expenses
- investment properties that generated rental income
Loss on differences in foreign exchange
Gain on disposal of subsidiaries
Gain on disposal of associated companies
Impairment (write-back)/loss of:
- Fixed assets (Note 5)
- Associated companies (Note 8)
- Intangibles (Note 11)
Fair value gain on investment properties (Note 6)
(Write-back)/provision for restructuring of operations and others
Non-audit fees paid to
- auditors of the Company
- other auditors of subsidiaries
Group
2012
$’000
(9,682)
48,327
1,549
(780)
(3)
306
(6,656)
1,771
(26,685)
(1,466)
59
-
1,765,235
99
2011
$’000
27,980
(14,111)
7,589
(5,887)
(296)
486
11,116
268
3,337
1,282
33
98
854,572
(60)
77,643
76,162
67,377
34,341
(30,004)
(3,120)
-
(7,673)
-
(172,101)
(12,000)
61,927
14,318
(4,288)
(21,021)
17,791
18,869
13,538
(1,117,155)
23,446
268
1,490
11
1,313
176
Keppel Corporation Limited
Report to Shareholders 2012
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 on interest rate caps and swaps
26. 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
2012
$’000
2,230
4,471
6,701
2011
$’000
2,899
21,690
24,589
160,776
113,982
(133,384)
(1,549)
(134,933)
(90,641)
(7,589)
(98,230)
Group
2012
$’000
512,937
(20,843)
27,096
8,818
2011
$’000
Restated
379,110
(24,725)
45,236
8,668
(27,389)
35,285
500,619
443,574
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 due to the following:
Profit before tax
Tax calculated at tax rate of 17% (2011: 17%)
Income not subject to tax
Expenses not deductible for tax purposes
Utilisation of previously unrecognised tax benefits
Effect of different tax rates in other countries
Adjustment for prior year’s tax
Group
2012
$’000
2011
$’000
Restated
3,256,267
3,312,702
553,565
(283,810)
258,328
(16,574)
9,953
(20,843)
563,159
(274,768)
138,449
(21,566)
63,025
(24,725)
500,619
443,574
Notes to the Financial Statements
177
Notes to the Financial Statements
26. Taxation (continued)
(b) Movement in current income tax liabilities
At 1 January
Exchange differences
Tax expense
Adjustment for prior year’s tax
Income taxes paid
Subsidiary acquired
Subsidiaries disposed
Reclassification
- deferred tax liabilities
- tax recoverable and others
Others
Group
2012
$’000
478,911
(14,302)
512,937
(20,843)
(213,619)
6,695
(5,832)
41,172
(20,598)
341
2011
$’000
Restated
455,079
(1,151)
379,110
(24,725)
(335,608)
-
(172)
-
6,323
55
Company
2012
$’000
22,244
-
11,000
(5,638)
(6,626)
-
-
-
-
117
2011
$’000
26,147
-
8,000
(5,107)
(6,796)
-
-
-
-
-
At 31 December
764,862
478,911
21,097
22,244
27. Earnings per ordinary share
Net profit attributable to shareholders
Adjustment for dilutive potential ordinary shares
of subsidiaries and associated companies
Group
2012
$’000
Basic
2,237,299
Diluted
2,237,299
2011
$’000
Restated
Basic
Diluted
1,945,765
1,945,765
-
(844)
-
(794)
Adjusted net profit
2,237,299
2,236,455
1,945,765
1,944,971
Weighted average number of ordinary shares
Adjustment for dilutive potential ordinary shares
Weighted average number of ordinary shares
used to compute earnings per share
Number of Shares
’000
Number of Shares
’000
1,792,992
-
1,792,992
17,055
1,778,594
-
1,778,594
17,659
1,792,992
1,810,047
1,778,594
1,796,253
Earnings per ordinary share
124.8 cts
123.6 cts
109.4 cts
108.2 cts
28. Dividends
A final dividend of 27.0 cents per share tax exempt one-tier (2011: final dividend of 26.0 cents per share tax exempt
one-tier) in respect of the financial year ended 31 December 2012 has been proposed for approval by shareholders at
the next Annual General Meeting to be convened.
In addition, a special dividend in specie of one Keppel REIT unit for every five shares in the Company (“Proposed
Distribution”) has been proposed. The Proposed Distribution value is equivalent to approximately 27.4 cents per share
tax exempt one-tier as at 23 January 2013. The Proposed Distribution is conditional upon approval by shareholders
during an Extraordinary General Meeting to be convened and satisfaction of any regulatory approvals which may be
required in connection with the Proposed Distribution. Final Proposed Distribution value will be determined based on
the closing price of Keppel REIT on the trading day immediately preceding the ex-date for the dividend in specie.
178
Keppel Corporation Limited
Report to Shareholders 2012
Together with the interim dividend of 18.0 cents per share tax exempt one-tier (2011: 17.0 cents per share tax exempt
one-tier), total distribution paid and proposed in respect of the financial year ended 31 December 2012 will be 72.4
cents per share tax exempt one-tier (2011: 43.0 cents per share tax exempt one-tier).
During the financial year, the following dividends were paid:
A final dividend of 26.0 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the previous financial year
An interim dividend of 18.0 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the current financial year
29. 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
$’000
466,423
323,033
789,456
Group
2012
$’000
2011
$’000
87,308
291,362
455,240
2,143
547,908
526,732
182,049
307,536
189,093
1,512,588
(424,464)
124,561
434,533
37,734
1,673,611
(326,415)
1,088,124
1,347,196
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 is as
follows:
Years after year-end:
Within one year
From two to five years
After five years
Group
2012
$’000
78,208
218,042
683,079
979,329
2011
$’000
67,214
225,604
705,809
998,627
Company
2012
$’000
122
167
-
289
Notes to the Financial Statements
2011
$’000
122
-
-
122
179
Notes to the Financial Statements
29. Commitments (continued)
(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 is as follows:
Years after year-end:
Within one year
From two to five years
After five years
Group
2012
$’000
Company
2011
$’000
2012
$’000
2011
$’000
272,020
591,996
135,848
999,864
270,780
623,716
189,165
1,083,661
-
-
-
-
-
-
-
-
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.
30. Contingent liabilities (unsecured)
Guarantees in respect of banks and other loans
granted to subsidiaries and associated companies
Bank guarantees
Others
Group
2012
$’000
Company
2011
$’000
2012
$’000
2011
$’000
183,035
206,709
1,745,784
904,867
59,686
29,444
62,370
48,006
-
-
-
-
272,165
317,085
1,745,784
904,867
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.
31. Significant related party transactions
Other than the related party information disclosed elsewhere in the financial statements, there were no other
significant related party transactions during the financial year.
32. Financial risk management
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 Chief Financial Officer of the Company and includes
Chief Financial Officers of the Group’s key operating companies and Head Office specialists.
180
Keppel Corporation Limited
Report to Shareholders 2012
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 $9,141,571,000 (2011: $8,516,890,000). The net positive fair value of forward foreign exchange
contracts is $127,198,000 (2011: net negative fair value $2,003,000) comprising assets of $164,566,000 (2011:
$90,812,000) and liabilities of $37,368,000 (2011: $92,815,000). These amounts are recognised as derivative
financial instruments in debtors (Note 14) and creditors (Note 17).
As at the end of the financial year, the Company has outstanding forward foreign exchange contracts with
notional amounts totalling $8,954,546,000 (2011: $8,139,093,000). The net positive fair value of forward foreign
exchange contracts is $119,379,000 (2011: net negative fair value $14,124,000) comprising assets of 156,513,000
(2011: $76,541,000) and liabilities of $37,134,000 (2011: $90,665,000). 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:
USD
$’000
2012
Euro
$’000
Others
$’000
USD
$’000
2011
Euro
$’000
Others
$’000
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
36,056
172,186
1,687
5,095
2,156,741
29,016
69,735
1,075,223
9,218
-
30
40
-
-
-
50
14,486
100,031
155,233
36,365
-
117
1,332
-
35,576
149,916
1,037
16,587
27,172
224,413
629,222
71,521
199,852
49,342
235,371
17,551
-
50,688
-
302
214
-
-
-
-
164
1,705
57
Notes to the Financial Statements
181
Notes to the Financial Statements
32. Financial risk management (continued)
Sensitivity analysis for currency risk
If the relevant foreign currency change against SGD by 5% (2011: 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
Profit before tax
Equity
2012
$’000
2011
$’000
2012
$’000
2011
$’000
52,435
(52,435)
1,078
(1,078)
18,945
(18,945)
2,737
(2,737)
8,617
(8,617)
256
(256)
7,472
(7,472)
827
(827)
4
(4)
26
(26)
-
-
-
-
(ii)
Interest rate risk
The Group is exposed to interest rate risk for changes in interest rates primarily for debt obligations,
placements in the money market and investments in bonds. The Group policy is to maintain a mix of fixed and
variable rate debt instruments with varying maturities. Where necessary, the Group uses derivative financial
instruments to hedge interest rate risks.
The Group enters into interest rate swap agreements to hedge the interest rate risk exposure arising from
its S$ 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 $1,421,237,000 (2011: $905,807,000) whereby it receives variable
rates equal to SIBOR (2011: SIBOR) and pays fixed rates of between 0.875% and 3.62% (2011: 1.43% and 3.62%)
on the notional amount.
The net negative fair value of interest rate swaps for the Group is $54,957,000 (2011: $45,763,000) comprising
assets of $Nil (2011: $Nil) and liabilities of $54,957,000 (2011: $45,763,000). These amounts are recognised as
derivative financial instruments in creditors (Note 17).
Sensitivity analysis for interest rate risk
If interest rates increase/decrease by 0.5% (2011: 0.5%) with all other variables held constant, the Group’s profit
before tax would have been lower/higher by $8,298,000 (2011: $8,278,000) 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 $437,241,000 (2011:
$182,927,000). The net negative fair value of HSFO forward contracts for the Group is $8,106,000 (2011: net
positive fair value $3,080,000) comprising assets of $9,661,000 (2011: $5,924,000) and liabilities of $17,767,000
(2011: $2,844,000). 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.
182
Keppel Corporation Limited
Report to Shareholders 2012
Sensitivity analysis for price risk
If prices for HSFO increase/decrease by 5% (2011: 5%) with all other variables held constant, the Group’s
hedging reserve in equity would have been higher/lower by $21,457,000 (2011: $7,719,000) as a result of fair
value changes on cash flow hedges.
If prices for quoted investments increase/decrease by 5% (2011: 5%) with all other variables held constant,
the Group’s profit before tax would have been higher/lower by $3,236,000 (2011: $2,785,000) 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 $17,545,000 (2011: $24,982,000) 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 debtors, amounts
due from associated companies and bank balances, deposits and cash.
(i)
Financial assets that are neither past due nor impaired
Debtors and amounts due from associated companies 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
2012
$’000
96,601
40,348
51,777
188,726
2011
$’000
222,060
23,544
97,878
343,482
Trade debtors that are individually determined to be impaired at the balance sheet date relate to debtors that
are in significant financial difficulties and have defaulted on payments.
Information relating to the provision for doubtful debts is given in Note 14.
Liquidity Risk
Prudent liquidity risk management requires the Group to maintain sufficient cash and marketable securities,
internally generated cash flows, and the availability of funding resources through an adequate amount of committed
credit facilities. Group Treasury also maintains a mix of short-term money market borrowings and medium/long
term loans to fund working capital requirements and capital expenditures/investments. Due to the dynamic nature of
business, the Group maintains flexibility in funding by ensuring that ample working capital lines are available at any
one time.
Information relating to the maturity profile of loans is given in Note 19.
Notes to the Financial Statements
183
Notes to the Financial Statements
32. Financial risk management (continued)
The following table details the liquidity analysis for derivative financial instruments and borrowings of the Group and
the Company based on contractual undiscounted cash inflows/(outflows).
Group
2012
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
Borrowings
2011
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
Borrowings
Company
2012
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Borrowings
2011
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Borrowings
Within
one year
$’000
Within
one to
two years
$’000
Within
two to
five years
$’000
After
five years
$’000
7,337,433
(7,245,594)
1,284,681
(1,271,747)
655,137
(643,828)
18
(18)
8,351
(16,120)
(1,171,775)
1,310
(1,601)
(781,862)
-
(46)
(3,633,627)
-
-
(2,849,793)
4,177,071
(4,143,081)
3,368,019
(3,408,451)
915,506
(949,178)
-
-
5,870
(869)
(909,331)
54
(1,856)
(1,019,193)
-
(119)
(2,679,328)
-
-
(661,522)
7,154,891
(7,066,514)
(51,480)
1,279,670
(1,266,747)
(51,480)
655,137
(643,828)
(154,440)
18
(18)
(1,999,733)
3,910,519
(3,886,020)
(33,473)
3,257,639
(3,307,987)
(15,500)
910,341
(944,178)
(46,500)
-
-
(559,417)
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 2011. The Group and the Company are in compliance with externally imposed capital requirements
for the financial year ended 31 December 2012.
184
Keppel Corporation Limited
Report to Shareholders 2012
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 debt
Total capital
Net gearing ratio
Group
2012
$’000
2011
$’000
Restated
(3,152,723)
(1,856,717)
13,578,126
11,761,295
(0.23x)
(0.16x)
Fair Value of Financial Instruments
The Group classifies 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:
(cid:153)(cid:21)
(cid:153)(cid:21)
(cid:153)(cid:21)
(cid:65)(cid:90)(cid:107)(cid:90)(cid:97)(cid:21)(cid:38)(cid:21)(cid:34)(cid:21)(cid:70)(cid:106)(cid:100)(cid:105)(cid:90)(cid:89)(cid:21)(cid:101)(cid:103)(cid:94)(cid:88)(cid:90)(cid:104)(cid:21)(cid:29)(cid:106)(cid:99)(cid:86)(cid:89)(cid:95)(cid:106)(cid:104)(cid:105)(cid:90)(cid:89)(cid:30)(cid:21)(cid:94)(cid:99)(cid:21)(cid:86)(cid:88)(cid:105)(cid:94)(cid:107)(cid:90)(cid:21)(cid:98)(cid:86)(cid:103)(cid:96)(cid:90)(cid:105)(cid:104)(cid:21)(cid:91)(cid:100)(cid:103)(cid:21)(cid:94)(cid:89)(cid:90)(cid:99)(cid:105)(cid:94)(cid:88)(cid:86)(cid:97)(cid:21)(cid:86)(cid:104)(cid:104)(cid:90)(cid:105)(cid:104)(cid:21)(cid:100)(cid:103)(cid:21)(cid:97)(cid:94)(cid:86)(cid:87)(cid:94)(cid:97)(cid:94)(cid:105)(cid:94)(cid:90)(cid:104)
(cid:65)(cid:90)(cid:107)(cid:90)(cid:97)(cid:21)(cid:39)(cid:21)(cid:34)(cid:21)(cid:62)(cid:99)(cid:101)(cid:106)(cid:105)(cid:104)(cid:21)(cid:100)(cid:105)(cid:93)(cid:90)(cid:103)(cid:21)(cid:105)(cid:93)(cid:86)(cid:99)(cid:21)(cid:102)(cid:106)(cid:100)(cid:105)(cid:90)(cid:89)(cid:21)(cid:101)(cid:103)(cid:94)(cid:88)(cid:90)(cid:104)(cid:21)(cid:94)(cid:99)(cid:88)(cid:97)(cid:106)(cid:89)(cid:90)(cid:89)(cid:21)(cid:108)(cid:94)(cid:105)(cid:93)(cid:94)(cid:99)(cid:21)(cid:65)(cid:90)(cid:107)(cid:90)(cid:97)(cid:21)(cid:38)(cid:21)(cid:105)(cid:93)(cid:86)(cid:105)(cid:21)(cid:86)(cid:103)(cid:90)(cid:21)(cid:100)(cid:87)(cid:104)(cid:90)(cid:103)(cid:107)(cid:86)(cid:87)(cid:97)(cid:90)(cid:21)(cid:91)(cid:100)(cid:103)(cid:21)(cid:105)(cid:93)(cid:90)(cid:21)(cid:86)(cid:104)(cid:104)(cid:90)(cid:105)(cid:21)(cid:100)(cid:103)(cid:21)(cid:97)(cid:94)(cid:86)(cid:87)(cid:94)(cid:97)(cid:94)(cid:105)(cid:110)(cid:33)(cid:21)
either directly (i.e. as prices) or indirectly (i.e. derived from prices)
(cid:65)(cid:90)(cid:107)(cid:90)(cid:97)(cid:21)(cid:40)(cid:21)(cid:34)(cid:21)(cid:62)(cid:99)(cid:101)(cid:106)(cid:105)(cid:104)(cid:21)(cid:91)(cid:100)(cid:103)(cid:21)(cid:105)(cid:93)(cid:90)(cid:21)(cid:86)(cid:104)(cid:104)(cid:90)(cid:105)(cid:21)(cid:100)(cid:103)(cid:21)(cid:97)(cid:94)(cid:86)(cid:87)(cid:94)(cid:97)(cid:94)(cid:105)(cid:110)(cid:21)(cid:105)(cid:93)(cid:86)(cid:105)(cid:21)(cid:86)(cid:103)(cid:90)(cid:21)(cid:99)(cid:100)(cid:105)(cid:21)(cid:87)(cid:86)(cid:104)(cid:90)(cid:89)(cid:21)(cid:100)(cid:99)(cid:21)(cid:100)(cid:87)(cid:104)(cid:90)(cid:103)(cid:107)(cid:86)(cid:87)(cid:97)(cid:90)(cid:21)(cid:98)(cid:86)(cid:103)(cid:96)(cid:90)(cid:105)(cid:21)(cid:89)(cid:86)(cid:105)(cid:86)(cid:21)(cid:29)(cid:106)(cid:99)(cid:100)(cid:87)(cid:104)(cid:90)(cid:103)(cid:107)(cid:86)(cid:87)(cid:97)(cid:90)(cid:21)(cid:94)(cid:99)(cid:101)(cid:106)(cid:105)(cid:104)(cid:30)(cid:35)(cid:21)
Fair value is determined by reference to the net tangible assets of the investments.
The following table presents the assets and liabilities measured at fair value.
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Group
2012
Assets
Derivative financial instruments
Investments
- Available-for-sale investments
Short term investments
- Available-for-sale investments
- Investments held for trading
Liabilities
Derivative financial instruments
2011
Assets
Derivative financial instruments
Investments
- Available-for-sale investments
Short term investments
- Available-for-sale investments
- Investments held for trading
Liabilities
-
174,227
-
174,227
1,442
-
223,938
225,380
301,189
64,714
50,067
-
1,137
-
352,393
64,714
367,345
224,294
225,075
816,714
-
-
110,092
96,736
-
-
110,092
96,736
107,772
349,153
55,701
-
202,987
310,759
42,704
-
129,842
-
521,699
55,701
512,626
139,440
332,829
984,895
Derivative financial instruments
-
141,422
-
141,422
Notes to the Financial Statements
185
Notes to the Financial Statements
32. Financial risk management (continued)
Company
2012
Assets
Derivative financial instruments
Liabilities
Derivative financial instruments
2011
Assets
Derivative financial instruments
Liabilities
Derivative financial instruments
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
156,513
37,134
76,541
90,665
-
-
-
-
156,513
37,134
76,541
90,665
The following table presents the reconciliation of financial instruments measured at fair value based on significant
unobservable inputs (Level 3).
Group
At 1 January
Purchases
Sales
Fair value gain/(loss) recognised in equity
Subsidiary acquired
Impairment loss
Reclassification
Exchange differences
At 31 December
33. Segment analysis
2012
$’000
2011
$’000
332,829
68,439
(221,461)
55,900
392
(5,062)
-
(5,962)
174,776
228,490
(2,658)
(58,697)
-
-
(8,194)
(888)
225,075
332,829
The Group is organised into business units based on their products and services, and has four reportable operating
segments as follows:
(i)
(ii)
Offshore & Marine
Principal activities include offshore rig design, construction, repair and upgrading, ship conversions and repair,
and specialised shipbuilding. The Division has operations in Brazil, China, Singapore, United States and other
countries.
Infrastructure
Principal activities include environmental engineering, power generation, logistics and data centres. The
Division has operations in China, Qatar, Singapore, United Kingdom and other countries.
(iii) Property
Principal activities include property development and investment, and property fund management. The Division
has operations in Australia, China, India, Indonesia, Singapore, Vietnam and other countries.
(iv)
Investments
The Investments division consists mainly of the Group’s investments in k1 Ventures Ltd, M1 Limited and
equities.
186
Keppel Corporation Limited
Report to Shareholders 2012
Management monitors the results of each of the above operating segments for the purpose of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on net profit or loss.
Information regarding the Group’s reportable segments is presented in the following table:
Offshore & Marine
$’000
Infrastructure
$’000
Property
$’000
Investments
$’000
Elimination
$’000
Total
$’000
2012
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
Taxation
Profit for the year
Attributable to:
Shareholders of Company
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
7,962,865
442
7,963,307
2,832,290
149,000
2,981,290
3,018,026
2,305
3,020,331
151,660
72,678
224,338
13,964,841
-
(224,425)
-
(224,425) 13,964,841
123,769
102
135,993
(112,058)
9,710
-
(132,278)
122,568
2,621,175
6,701
160,776
(134,933)
1,088,647
2,340
81,687
(9,973)
29,989
1,192,690
(228,166)
964,524
46,203
-
2,007
(16,502)
26,889
58,597
(29,907)
28,690
1,352,846
4,259
73,367
(118,968)
497,606
1,809,110
(246,521)
1,562,589
48,064
195,870
3,975
199,845
948,689
15,835
964,524
16,127
12,563
28,690
1,078,673
483,916
1,562,589
193,810
6,035
199,845
7,625,282
5,189,042
2,436,240
3,474,294
2,625,484
848,810
18,027,856
9,144,811
8,883,045
5,240,189
3,830,158
1,410,031
(5,197,089) 29,170,532
(5,197,089) 15,592,406
13,578,126
-
410,671
365,575
134,351
547,605
500,784
54,706
3,918,658
201,009
21,061
389,668
140,977
394
-
-
-
5,266,602
1,208,345
210,512
-
-
-
-
-
-
-
602,548
3,256,267
(500,619)
2,755,648
2,237,299
518,349
2,755,648
External sales
Non-current assets
Singapore
$’000
11,101,775
10,785,313
Far East &
other ASEAN
countries
$’000
1,111,666
2,361,299
Americas
$’000
1,115,485
383,344
Other
countries
$’000
635,915
606,747
Elimination
$’000
-
-
Total
$’000
13,964,841
14,136,703
Other than Singapore, no single country accounted for 10% or more of the Group’s revenue for the financial year
ended 31 December 2012.
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 2012.
Note: Pricing of inter-segment goods and services is at fair market value.
Notes to the Financial Statements
187
Notes to the Financial Statements
33. Segment analysis (continued)
Offshore & Marine
$’000
Infrastructure
$’000
Property
$’000
Investments
$’000
Elimination
$’000
Total
$’000
2011 (restated)
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 taxation
Taxation
Profit for the year
Attributable to:
Shareholders of Company
Non-controlling interests
Other information
Segment assets
Segment liabilities
Net assets
5,705,966
-
5,705,966
2,862,389
107,829
2,970,218
1,467,043
2,342
1,469,385
47,069
66,589
113,658
-
(176,760)
(176,760)
10,082,467
-
10,082,467
1,272,536
3,046
59,022
(7,504)
44,266
1,371,366
(309,521)
1,061,845
17,902
-
3,184
(18,343)
32,661
35,404
(24,092)
11,312
1,541,942
19,300
53,585
(79,452)
339,636
1,875,011
(103,606)
1,771,405
(11,222)
2,243
87,769
(79,323)
31,454
30,921
(6,355)
24,566
1,019,249
42,596
1,061,845
(8,083)
19,395
11,312
917,352
854,053
1,771,405
17,247
7,319
24,566
3,186
-
(89,578)
86,392
-
-
-
-
-
-
-
2,824,344
24,589
113,982
(98,230)
448,017
3,312,702
(443,574)
2,869,128
1,945,765
923,363
2,869,128
6,734,279
4,916,110
1,818,169
3,354,860
2,512,787
842,073
16,892,143
9,608,902
7,283,241
5,266,419
3,448,607
1,817,812
(7,148,364)
(7,148,364)
-
25,099,337
13,338,042
11,761,295
Associated companies
Additions to non-current assets
Depreciation and amortisation
386,014
349,612
141,360
514,592
519,864
52,652
3,338,343
703,706
14,220
223,230
19,980
339
-
-
-
4,462,179
1,593,162
208,571
Geographical information
External sales
Non-current assets
Singapore
$’000
7,555,667
9,558,829
Far East &
other ASEAN
countries
$’000
926,092
1,615,746
Americas
$’000
944,067
183,488
Other
countries
$’000
656,641
736,243
Elimination
$’000
Total
$’000
-
-
10,082,467
12,094,306
Other than Singapore, no single country accounted for 10% or more of the Group’s revenue for the financial year
ended 31 December 2011.
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 2011.
Note: Pricing of inter-segment goods and services is at fair market value.
188
Keppel Corporation Limited
Report to Shareholders 2012
34. Comparatives
Certain adjustments have been made to the previous years’ financial statements to conform to the current year’s
presentation in connection with:
(a)
(b)
The adoption of Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets.
The reclassification of progress billings, which relate to properties under development where revenue is
recognised under the completion of construction method, as progress billings within creditors (Note 17).
As a result, certain line items have been restated in the balance sheets of the Group as at 31 December 2011 and
2010, the consolidated statements of changes in equity of the Group, the consolidated profit and loss account,
consolidated statement of comprehensive income and consolidated statement of cash flows of the Group for the year
ended 31 December 2011, and the related notes to the financial statements.
35. New accounting standards and interpretations
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 have been issued but are not yet effective:
Amendments to FRS 1
Revised FRS 19
FRS 113
Amendments to FRS 107
Revised FRS 27
Revised FRS 28
FRS 110
FRS 111
FRS 112
Amendments to FRS 32
Presentation of Items of Other Comprehensive Income
Employee Benefits
Fair Value Measurements
Disclosures - Offsetting of Financial Assets and Financial Liabilities
Separate Financial Statements
Investments in Associates and Joint Ventures
Consolidated Financial Statements
Joint Arrangements
Disclosure of Interests in Other Entities
Offsetting of Financial Assets and Financial Liabilities
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:
(a) Amendments to FRS 1 Presentation of Items of Other Comprehensive Income
The Amendments to FRS 1 on presentation of items of other comprehensive income (“OCI”) will require the
Group to present in separate groupings, OCI items that might be recycled i.e., reclassified to profit or loss and
those items that would not be recycled.
Changes arising from these amendments to FRS 1 will take effect from financial years beginning on or after 1
July 2012, with full retrospective application.
As the Amendments only affect the presentation of items that are already recognised in OCI, the Group does not
expect any impact on its financial position or performance upon adoption of this standard.
(b) FRS 113 Fair Value Measurement
FRS 113 is a single new Standard that applies to both financial and non-financial items. It replaces the guidance
on fair value measurement and related disclosures in other Standards, with the exception of measurement dealt
with under FRS 102 Share-based Payment, FRS 17 Leases, net realisable value in FRS 2 Inventories and value-
in-use in FRS 36 Impairment of Assets.
FRS 113 provides a common fair value definition and hierarchy applicable to the fair value measurement of
assets, liabilities, and an entity’s own equity instruments within its scope, but does not change the requirements
in other Standards regarding which items should be measured or disclosed at fair value. FRS 113 will be
effective prospectively from annual periods beginning on or after 1 January 2013. Comparative information is not
required for periods before initial application.
The Group is currently determining the effects of FRS 113 in the period of initial adoption.
Notes to the Financial Statements
189
Notes to the Financial Statements
35. New accounting standards and interpretations (continued)
(c)
FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements
FRS 110 defines the principle of control and establishes control as the basis for determining which entities are
consolidated in the consolidated financial statements. It also provides more extensive application guidance on
assessing control based on voting rights or other contractual rights. Under FRS 110, control assessment will be
based on whether an investor has (i) power over the investee; (ii) exposure, or rights, to variable returns from its
involvement with the investee; and (iii) the ability to use its power over the investee to affect the amount of the
returns. FRS 27 remains as a standard applicable only to separate financial statements.
FRS 110 will take effect from financial years beginning on or after 1 January 2014, with full retrospective
application, subject to transitional provisions.
When the Group adopts FRS 110, entities it currently consolidates may not qualify for consolidation, and entities
it currently does not consolidate may qualify for consolidation. The Group is currently estimating the effects of
FRS 110 on its investments in the period of initial adoption.
(d) FRS 111 Joint Arrangements and FRS 28 Investments in Associates and Joint Ventures
FRS 111 classifies joint arrangements either as joint operations or joint ventures based on the parties’ rights
and obligations under the arrangement. The existence of a separate legal vehicle is no longer the key factor. A
joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets and
obligations for the liabilities. A joint venture is a joint arrangement whereby the parties that have joint control
have rights to the net assets.
The joint venturer should use the equity method under the revised FRS 28 Investments in Associates and
Joint Ventures to account for a joint venture. The option to use proportionate consolidation method has been
removed. For joint operations, the Group directly recognises its rights to the assets, liabilities, revenues and
expenses of the investee in accordance with applicable FRSs.
FRS 111 will take effect from financial years beginning on or after 1 January 2014, with full retrospective
application, subject to transitional provisions.
The Group is currently determining the impact of the changes in the period of initial adoption.
(e) FRS 112 Disclosure of Interests in Other Entities
FRS 112 requires an entity to provide more extensive disclosures regarding the nature of and risks associated
with its interest in subsidiaries, associates, joint arrangements and unconsolidated structured entities.
FRS 112 will take effect from financial years beginning on or after 1 January 2014 and the Group is currently
determining the impact of the extent of additional disclosure required. As this is a disclosure standard, it will
have no impact on the financial position or financial performance of the Group when implemented.
36. 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.
190
Keppel Corporation Limited
Report to Shareholders 2012
Significant Subsidiaries and
Associated Companies
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
Gross
Interest
2012
%
2012
%
2011
%
2012
$’000
2011
$’000
OFFSHORE & MARINE
Offshore
Subsidiaries
Keppel Offshore and Marine Ltd
Keppel FELS Ltd
100
100
100
100
100 801,720 801,720
Singapore
Investment holding
100
#
#
Singapore
Angra Propriedades &
Administracao Ltda(n)(1a)
AzerFELS Pte Ltd
Benniway Pte Ltd
Berich Enterprises Ltd(4)
Caspian Shipyard Company
Ltd(1a)
Deepwater Technology Group
Pte Ltd
100
100
-
68
88
100
75
60
88
100
45
60
88
100
45
100
100
100
Estaleiro BrasFELS Ltda(1a)
100
100
100
FELS Offshore Pte Ltd
Fernvale Pte Ltd
Fornost Ltd(1a)
100
100
100
100
100
100
100
100
100
FSTP Brasil Ltda(1a)
75
75
75
FSTP Pte Ltd
75
75
75
Guanabara Navegacao Ltda(1a)
Hygrove Investments Ltd(4)
Keppel AmFELS, LLC(3)
100
100
100
100
100
100
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
Keppel Norway A/S(4)
-
-
100
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
-
Construction, fabrication and repair
of offshore production facilities and
drilling rigs, power barges,
specialised vessels and other
offshore production facilities
Holding of long-term investments
and property management
-
Brazil
#
#
#
#
Singapore
Holding of long-term investments
Singapore
Holding of long-term investments
BVI
Holding of long-term investments
Azerbaijan
Construction and repair of offshore
drilling rigs
#
Singapore
#
Brazil
Research and experimental
development on deepwater
engineering
Engineering, construction and
fabrication of platforms for the oil
and gas sector, shipyard works and
other general business activities
Singapore
Holding of long-term investments
Singapore
Holding of long-term investments
#
#
#
HK
#
Brazil
#
Singapore
#
#
#
Brazil
BVI/HK
USA
#
Bulgaria
#
Brazil
#
India
Holding of long-term investments
and provision of procurement
services
Procurement of equipment and
materials for the construction of
offshore production facilities
Project management, engineering
and procurement
Ship owning
Holding of long-term investments
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
# Norway
Disposed
Significant Subsidiaries and Associated Companies
191
Significant Subsidiaries and Associated Companies
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
Gross
Interest
2012
%
2012
%
2011
%
2012
$’000
2011
$’000
Keppel Offshore & Marine
Technology Centre Pte Ltd
Keppel Offshore & Marine
USA Inc(3)
100
100
100
100
100
100
Keppel Verolme BV(1a)
100
100
100
KV Enterprises BV(1a)
KVE Adminstradora de Bens
Imoveis Ltda(n)(1a)
Marine & Offshore Protection
& Preservation BV(1a)
Navegantes Administracoes
de Bens Moveis e Imoveis
Ltda(1a)
(formerly known as
Navegantes Construcao
e Servicos Maritimos Ltd(a)
Offshore Technology
Development Pte Ltd
Prismatic Services Ltd(4)
Regency Steel Japan Ltd(1a)
Topaz Atlantic Unlimited(4)
Wideluck Enterprises Ltd(4)
Willalpha Ltd(4)
Associated Companies
Asian Lift Pte Ltd
FloaTEC Singapore Pte Ltd
Floatel International Pte Ltd(3)
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
51
100
100
100
50
50
47
100
51
100
100
100
100
51
100
100
100
50
50
50
47
50
47
Keppel Kazakhstan LLP(3)
50
50
50
Marine Housing Services
Pte Ltd
OWEC Tower AS(n)(3)
Seafox 5 Ltd(1a)
50
50
49
50
50
50
-
49
75
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Research & development on marine
and offshore engineering
#
USA
Offshore and marine-related
services
# Netherlands Construction and repair of offshore
drilling rigs and shiprepairs
# Netherlands Holding of long-term investments
-
Brazil
Holding of long-term investments
and property management
# Netherlands Chamber blasting services and
painting and coating works
#
Brazil
Shipbuilding
#
Singapore
Production of jacking
systems
#
#
#
#
#
BVI/Brazil
Project procurement
Japan
BVI
BVI
Sourcing, fabricating and supply of
specialised steel components
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
#
#
Singapore
Manufacturing and repair of oil rigs
Bermuda
Operating accommodation and
construction support vessels
(floatels) for the offshore oil and gas
industry
#
Kazakhstan Construction and repair of offshore
#
Singapore
- Norway
#
Isle of Man
drilling units and structures and
specialised vessels
Provision of housing services for
marine workers
Offshore wind turbine jacket
foundation design and engineering
Owning and leasing of multi-
purpose self-elevating platforms
192
Keppel Corporation Limited
Report to Shareholders 2012
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
Gross
Interest
2012
%
2012
%
2011
%
2012
$’000
2011
$’000
Marine
Subsidiaries
Keppel Shipyard Ltd
100
100
100
Keppel Philippines Marine
Inc(1a)
Alpine Engineering Services
Pte Ltd
98
98
98
100
100
100
Blastech Abrasives Pte Ltd
100
100
100
Keppel Nantong Heavy
Industry Co Ltd(3)
Keppel Nantong Shipyard
Company Ltd(3)
Keppel Singmarine Brasil
Ltda(1a)
100
100
100
100
100
100
100
100
100
Keppel Singmarine Pte Ltd
Keppel Smit Towage Pte Ltd
100
51
100
51
100
51
#
#
#
#
#
#
#
#
#
#
Singapore
Shiprepairing, shipbuilding and
conversions
#
Philippines
Shipbuilding and repairing
#
Singapore
Marine contracting
#
Singapore
#
China
#
China
Painting, blasting, shot blasting,
process and sale of slag
Engineering and construction of
specialised vessels
Engineering and construction of
specialised vessels
#
Brazil
Shipbuilding
#
#
Singapore
Shipbuilding and repairing
Singapore
Provision of towage services
Keppel Subic Shipyard Inc(1a)
87+
86+
86+
3,020
3,020
Philippines
Shipbuilding and repairing
KS Investments Pte Ltd
KSI Production Pte Ltd(4)
Maju Maritime Pte Ltd
Marine Technology
Development Pte Ltd
100
100
51
100
100
100
51
100
100
100
51
100
#
#
#
#
#
#
#
#
#
#
#
#
#
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
#
UAE
Shipbuilding and repairing
#
Singapore
Investment holding
# Malaysia
Provision of towage services
#
Qatar
Shiprepairing
#
Singapore
Chartering of ships, barges and
boats with crew
33
33
24
25
20
27
25
20
20
20
Associated Companies
Arab Heavy Industries Public
Joint Stock Company(3)
Dyna-Mac Holdings Ltd(3)
Kejora Resources Sdn Bhd(3)
Nakilat-Keppel Offshore &
Marine Ltd(3)
PV Keez Pte Ltd
INFRASTRUCTURE
Power and Gas
Subsidiaries
Keppel Energy Pte Ltd
Keppel Electric Pte Ltd
Keppel Gas Pte Ltd
Keppel Merlimau Cogen
Pte Ltd
New Energy Industrial Ltd(4)
Termoguayas Generation SA(4)
33
24
49
20
20
100
100
100
100
-
-
100
100
100
100
-
-
100 330,914 330,914
Singapore
Investment holding
100
100
100
100
100
#
#
#
-
-
#
Singapore
Electricity, energy and power supply
and general wholesale trade
#
#
#
#
Singapore
Purchase and sale of gaseous fuels
Singapore
Commercial power generation
BVI/Ecuador Disposed
Ecuador
Disposed
Significant Subsidiaries and Associated Companies
193
Significant Subsidiaries and Associated Companies
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
Gross
Interest
2012
%
2012
%
2011
%
2012
$’000
2011
$’000
Environmental Engineering
Subsidiaries
Keppel Integrated Engineering
Ltd
Keppel Seghers Engineering
Singapore Pte Ltd
100
100
100 779,721 761,848
Singapore
Investment holding
100
100
100
#
#
Singapore
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
#
#
#
#
#
#
Singapore
#
Singapore
#
Singapore
#
Australia
Metal fabrication
#
Singapore
Keppel Seghers Belgium NV(1a)
100
100
100
#
#
Belgium
Provision of environmental
engineering services specialising on
WTE plants and biosolidsand sludge
treatment
Fabrication of heavy cranes and
provision of marine-related
equipment
Development of district heating and
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
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 Hong Kong
Ltd(1a)
100
100
100
Keppel Seghers UK Ltd(1a)
100
100
100
Associated Companies
K-Green Trust
GE Keppel Energy Services
Pte Ltd(2)
Tianjin Eco-City Energy
Investment & Construction
Co Ltd(3)
49
50
20
49
50
49
50
20
20
Tianjin Eco-City Environmental
Protection Co Ltd(3)
20
20
20
#
#
#
#
#
#
#
HK
Engineering contracting and
investment holding
United
Kingdom
Design, supply and installation of
flue gas treatment equipment
Singapore
Infrastructure business trust
#
#
#
Singapore
#
China
#
China
Precision engineering, repairing,
services and agencies
Investment and implementation of
energy and utilities related
infrastructure
Investment, construction and
operation of infrastructure for
environmental protection
194
Keppel Corporation Limited
Report to Shareholders 2012
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
2012
%
2011
%
2012
$’000
2011
$’000
80
80 397,647 397,647
Singapore
Investment, management and
holding company
56
-
Gross
Interest
2012
%
Logistics & Data Centres
Subsidiaries
Keppel Telecommunications &
Transportation Ltd(2)
Jilin Sino-Singapore Food Zone
International Logistics
Co Ltd(n)(3)
80
70
Keppel Communications
Pte Ltd(2)
100
80
80
Keppel Data Centres Holding
Pte Ltd(2)
100+
73+
72+
Keppel Data Centres Pte Ltd(2)
100
Keppel Datahub Pte Ltd(2)
100+
80
73+
80
72+
Keppel Digihub Ltd(2)
100+
73+
72+
Keppel Logistics (Foshan)
Ltd(3)
70
56
56
Keppel Logistics Pte Ltd(2)
100
80
80
Keppel Telecoms Pte Ltd(2)
100
80
80
Transware Distribution Services 100
Pte Ltd(2)
80
80
Associated Companies
Advanced Research Group
Co Ltd(2a)
Asia Airfreight Terminal
Company Ltd(3)
45
10
36
36
8
8
Citadel 100 Datacenters Ltd(3)
50
40
40
Computer Generated Solutions
Inc(3)
Radiance Communications
Pte Ltd(2)
Securus Data Property Fund
Pte Ltd(3)
Securus Guernsey 2 Ltd(3)
SVOA Public Company Ltd(2a)
21
50
30
51
32
17
17
40
40
24
24
41
41
26
26
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
-
China
Integrated logistics services, storage
and distribution
#
Singapore
Trading and provision of
communications systems and
accessories
#
Singapore
Data centre facilities and co-location
services
Singapore
Investment holding
#
#
Singapore
#
Singapore
#
China
#
Singapore
#
Singapore
Data centre facilities and co-location
services
Data centre facilities and co-location
services
Shipping operations, warehousing
and distribution
Integrated logistics services and
supply chain solutions
Telecommunications services and
investment holding
#
Singapore
Warehousing and distribution
#
Thailand
#
HK
#
Ireland
#
USA
#
Singapore
IT publication and business
information
Operation of air cargo handling
terminal
Data centre facilities and co-location
services
IT consulting and outsourcing
provider
Distribution and maintenance of
communications equipment and
systems
#
Singapore
Investment holding
#
Guernsey/
Australia
Data centre facilities and co-location
services
#
Thailand
Distribution of IT products and
telecommunications services
Significant Subsidiaries and Associated Companies
195
Significant Subsidiaries and Associated Companies
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
Gross
Interest
2012
%
2012
%
2011
%
2012
$’000
2011
$’000
PROPERTY
Subsidiaries
Keppel Land Ltd(2)
55
55
53 1,685,682 1,526,909
Singapore
Holding, management and
investment company
Keppel Land China Ltd(2)
Keppel REIT(2)
(formerly known as
K-REIT Asia)
Keppel Bay Pte Ltd
Keppel Philippines Properties
Inc(2a)
Aether Ltd(n)(3)
Aintree Assets Ltd(4)
Alpha Investment Partners
Ltd(2)
Bayfront Development Pte
Ltd(2)
Beijing Aether Property
Development Ltd(n)(3)
Beijing Kingsley Property
Development Co Ltd(3)
Belwynn-Hung Phu
Joint Venture LLC(2a)
Bintan Bay Resort Pte Ltd(2)
Broad Elite Investments Ltd(4)
Changzhou Fushi Housing
Development Pte Ltd(3)
Chengdu Hillstreet
Development Co Ltd(3)
Chengdu Hilltop Development
Co Ltd(3)
Chengdu Hillwest Development
Co Ltd(3)
Chengdu Shengshi Jingwei
Real Estate Investment
Co Ltd(n)(3)
DL Properties Ltd(2)
Double Peak Holdings Ltd(4)
Estella JV Co Ltd(2a)
Evergro Properties Ltd(2)
Hillwest Pte Ltd(2)
International Centre(1a)
Jiangyin Evergro Properties
Co Ltd(3)
100
76
55
54
53
55
#
#
100+
80+
86+
57+
86+
56+
626
493
51
100
100
28
55
55
-
53
53
100
55
53
100
28
-
100
55
53
60
33
32
90
100
100
49
55
55
48
53
53
100
55
53
100
55
53
100
55
53
100
55
-
65
100
55
100
100
79
99
36
55
30
55
55
59
54
34
53
29
53
53
59
52
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
626
493
-
#
#
Singapore
Investment holding
Singapore
Real estate investment trust
Singapore
Property development
Philippines
Investment holding
HK
Investment holding
BVI/Asia
Investment holding
Singapore
Fund management
#
Singapore
Investment holding
-
China
Property investment
#
China
Property development
#
Vietnam
Property development
#
#
#
Singapore
Investment holding
BVI/China
Investment holding
China
Property development
#
China
Property development
#
China
Property development
#
China
Property development
-
China
Property development
#
#
#
#
#
#
#
Singapore
Property investment
BVI/
Singapore
Investment holding
Vietnam
Property development
Singapore
Property investment and
development
Singapore
Investment holding
Vietnam
Property investment
China
Property development
196
Keppel Corporation Limited
Report to Shareholders 2012
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
Gross
Interest
2012
2012
%
2012
%
2011
%
2012
$’000
2011
$’000
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Investment holding
Singapore/
Saudi Arabia
Property development
#
China
Property development
#
Singapore
Investment holding
#
Singapore
Investment holding
#
China
Property development
#
China
Property development
#
China
Property development
#
#
Singapore
Property development
HK
Investment holding
#
Singapore
Property development and
investment
#
Singapore
Financial services
#
Singapore
Property services
#
Singapore
Investment holding
#
Singapore
#
Vietnam
#
Vietnam
Property development and
investment
Property investment and
development
Property investment and
development
#
India
Property development
#
Singapore
Investment holding
KeplandeHub Ltd(2)
Keppel Al Numu Development
Ltd(2a)
Keppel Bay Property
Development (Shenyang)
Co Ltd(3)
100
51
55
28
53
27
100
55
53
Keppel China Marina Holdings
Pte Ltd(2)
100
55
53
Keppel China Township
Development Pte Ltd(2)
Keppel Hong Da
(Tianjin Eco-City) Property
Development Co Ltd(3)
Keppel Lakefront (Nantong)
Property Development Co Ltd(3)
Keppel Lakefront (Wuxi)
Property Development Co Ltd(3)
Keppel Land (Mayfair) Pte Ltd(2)
Keppel Land (Saigon Centre)
Ltd(3)
Keppel Land (Tower D)
Pte Ltd(2)
100
55
53
100
75
74
100
55
53
100
55
53
100
100
55
55
53
53
100
55
53
Keppel Land Financial Services
Pte Ltd(2)
100
55
53
Keppel Land International
Ltd(2)
Keppel Land Properties
Pte Ltd(2)
100
55
53
100
55
53
Keppel Land Realty Pte Ltd(2)
100
55
53
Keppel Land Watco IV
Co Ltd(2a)
68
37
36
Keppel Land Watco V Co Ltd(2a)
68
37
36
51
28
27
100
54
55
Keppel Puravankara
Development Pvt Ltd(2a)
Keppel REIT (Australia)
Pte Ltd(2)
(formerly known as K-REIT
Asia (Australia) Pte Ltd)
Keppel REIT (Australia)
Subtrust1(2a)
(formerly known as K-REIT
(Australia) Subtrust1)
Keppel REIT (Australia)
Subtrust2(2a)
(formerly known as K-REIT
(Australia) Subtrust2)
100
54
55
#
#
Australia
Investment in real estate properties
100
54
55
#
#
Australia
Investment in real estate properties
Significant Subsidiaries and Associated Companies
197
Significant Subsidiaries and Associated Companies
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
Gross
Interest
2012
%
2012
%
2011
%
2012
$’000
2011
$’000
Keppel REIT (Australia)
Subtrust3(n)(2a)
Keppel REIT (Australia)
Trust(2a)
(formerly known as K-REIT
Asia (Australia) Trust)
Keppel REIT (Bermuda) Ltd(4)
(formerly known as K-REIT
Asia (Bermuda) Ltd)
Keppel REIT Fin. Co Pte Ltd(2)
(formerly known as K-REIT
Fin. Co Pte Ltd)
Keppel REIT Investment
Pte Ltd(2)
(formerly known as K-REIT
Asia Investment Pte Ltd)
Keppel REIT Management Ltd(2)
(formerly known as K-REIT
Asia Management Ltd)
Keppel REIT Property
Management Pte Ltd(2)
(formerly known as K-REIT
Asia Property Management
Pte Ltd)
Keppel Thai Properties Public
Co Ltd(2a)
Keppel Tianjin Eco-City
Investments Pte Ltd(2)
Keppel Township Development
(Shenyang) Co Ltd(3)
Kingsdale Development
Pte Ltd(2)
Kingsley Investment Pte Ltd(2)
Le Vision Pte Ltd(2)
Mansfield Developments
Pte Ltd(2)
Merryfield Investment
Pte Ltd(2)
Ocean & Capital Properties
Pte Ltd(2)
Ocean Properties LLP(2)
Oceansky Pte Ltd(2)
OIL (Asia) Pte Ltd(2)
Pembury Properties Ltd(4)
100
54
-
100
54
55
100
54
55
100
54
55
100
55
53
100
55
53
100
55
53
#
#
#
#
#
#
#
-
Australia
Investment in real estate properties
#
Australia
Investment in real estate properties
#
Bermuda
Investment holding
#
Singapore
Provision of treasury services
#
Singapore
Investment holding
#
Singapore
Property fund management
#
Singapore
Property management services
45
25
24
#
#
Thailand
Property development and
investment
100+
75+
74+ 64,725
64,725
Singapore
Investment holding
100
55
53
86
47
27
100
100
100
55
55
55
53
53
53
100
55
53
100
55
53
100
100
100
100
54
55
55
55
48
53
53
53
#
#
#
#
#
#
#
#
#
#
#
#
#
#
China
Property development
#
Singapore
Investment holding
#
#
#
Singapore
Investment holding
Singapore
Investment holding
Singapore
Property development
#
Singapore
Investment holding
#
Singapore
Property and investment holding
#
#
#
#
Singapore
Property investment
Singapore
Investment holding
Singapore
Investment holding
BVI/
Singapore
Investment holding
#
Indonesia
#
Indonesia
Property investment and
development
Property development and
investment
PT Kepland Investama(2a)
100
55
53
PT Mitra Sindo Makmur(1a)
51
28
27
198
Keppel Corporation Limited
Report to Shareholders 2012
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
Gross
Interest
2012
%
2012
%
2011
%
2012
$’000
2011
$’000
PT Mitra Sindo Sukses(1a)
51
28
27
PT Ria Bintan(1a)
PT Sentral Supel Perkasa(2a)
100
80
25
44
24
42
PT Sentral Tanjungan
Perkasa(2a)
PT StraitsCM Village(1a)
Quang Ba Royal Park JV Co(2a)
Riviera Cove JV LLC(2a)
Riviera Point LLC(2a)
Saigon Centre Holdings
Pte Ltd(2)
Saigon Sports City Ltd(2a)
Shanghai Floraville Land
Co Ltd(3)
Shanghai Hongda Property
Development Co Ltd(3)
Shanghai Ji Xiang Land
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 Golf & Lake Resort
Co Ltd(n)(3)
80
44
42
100
70
60
75
100
100
99
21
38
33
41
55
49
54
21
37
32
40
53
48
52
100
54
52
100
55
53
99
99
99
54
52
54
52
54
52
100
55
53
80
38
-
Spring City Resort Pte Ltd(2)
Straits Greenfield Ltd(3)
Straits Properties Ltd(2)
100
100
100
55
55
55
53
53
53
Straits Property Investments
Pte Ltd(2)
Success View Enterprises Ltd(4)
Sunsea Yacht Club (Zhongshan)
Co Ltd(3)
Sunseacan Investment (HK)
Co Ltd(3)
Third Dragon Development
Pte Ltd(2)
Tianjin Fushi Property
Development Co Ltd(3)
100
55
53
100
100
75
44
74
42
80
44
42
100
55
53
100
55
53
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
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
Vietnam
Vietnam
Property investment
Property development
Property development
Singapore
Investment holding
Vietnam
Property development
China
Property development
#
China
Property development
#
China
Property development
#
China
Property development
#
China
Property development
#
China
Property development
#
Singapore
Property development
-
China
Golf club operations and
development and 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
#
HK
Investment holding
#
Singapore
Investment holding and marketing
agent
#
China
Property development
Significant Subsidiaries and Associated Companies
199
Significant Subsidiaries and Associated Companies
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
Gross
Interest
2012
%
2012
%
2011
%
2012
$’000
2011
$’000
100
55
53
100
100
55
55
-
53
#
#
#
#
China
Property development
-
BVI/China
Investment holding
# Myanmar
Hotel ownership and operations
100+
91+
91+
1,460
-
Singapore
Investment holding
100
100
98+
70
100
100+
100
100
100
100
90+
65
90+
65
11,001
11,001
Singapore
Investment holding
70,214
70,214
Singapore
Investment holding
48
#
48
#
Singapore
Investment holding
Singapore
Property development
100
100
7,117
7,117
USA
Investment holding
84+
84+ 126,744
67,624
Singapore
Investment holding
100+
84+
84+
450
450
Singapore
Investment holding
100
100+
100+
86
91+
86+
86
91+
#
4
#
4
USA
HK
Property investment
Property investment
86+ 122,785 122,785
Singapore
Property development and
investment
100
100
100 764,400
50,000
Singapore
Investment holding
Tianjin Merryfield Property
Development Co Ltd(3)
Triumph Jubilee Ltd(n)(4)
Wiseland Investment Myanmar
Ltd(3)
Atlantic Marina Services
(Asia-Pacific) Pte Ltd
Esqin Pte Ltd
FELS Property Holdings Pte Ltd
FELS SES International Pte Ltd
Harbourfront One Pte Ltd
Keppel (USA) Inc(4)
Keppel Group Eco-City
Investments Pte Ltd
Keppel Hi-Tech InnovationPark
Holdings Pte Ltd
Keppel Houston Group LLC(4)
Keppel Kunming Resort Ltd(3)
Keppel Point Pte Ltd
Keppel Real Estate Investment
Pte Ltd
Petro Tower Ltd(3)
Singapore Tianjin Eco-City
Investment Holdings Pte Ltd
76
90
69
76
68
75
Substantial Enterprises Ltd(4)
100
84
84
Associated Companies
Asia Real Estate Fund
Management Ltd(2)
BFC Development 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(1a)
Harbourfront Three Pte Ltd(3)
Harbourfront Two Pte Ltd(3)
Keppel Land Watco I Co Ltd(2a)
50
33
27
27
18
18
33
18
17
50
50
50
25
39
39
68
27
27
27
27
27
27
14
34
34
37
13
34
34
36
Keppel Land Watco II Co Ltd(2a)
68
37
36
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Vietnam
Property investment
Singapore
Investment holding
#
BVI/China
Investment holding
#
Singapore
Fund management
#
Singapore
Property development and
investment
#
Singapore
Property development
#
China
Property development
#
Singapore
Investment holding
#
Vietnam
Property development
#
#
#
#
Singapore
Property management
Singapore
Property development
Singapore
Property development
Vietnam
#
Vietnam
Property investment and
development
Property investment and
development
200
Keppel Corporation Limited
Report to Shareholders 2012
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
Gross
Interest
2012
%
2012
%
2011
%
2012
$’000
2011
$’000
Keppel Land Watco III Co
Ltd(2a)
Keppel Magus Development
Pvt Ltd(3)
One Raffles Quay Pte Ltd(2)
Parksville Development
Pte Ltd(2)
PT Pantai Indah Tateli(2a)
PT Pulomas Gemala Misori(3)
PT Purimas Straits Resorts(3)
PT Purosani Sri Persada(4)
Raffles Quay Asset
Management Pte Ltd(2)
Renown Property Holdings (M)
Sdn Bhd(2a)
SAFE Enterprises Pte Ltd(3)
Sino-Singapore Tianjin
Eco-City Investment and
Development Co., Ltd(1a)
Suzhou Property Development
Pte Ltd(3)
Vietcombank Tower 198 Ltd(3)
INVESTMENTS
Subsidiaries
68
38
33
50
50
25
25
-
33
40
25
50
25
30
37
36
21
20
18
18
27
27
27
14
14
-
18
27
13
13
11
17
22
21
14
38
13
38
14
13
27
27
Keppel Philippines Holdings
Inc(2a)
Alpha Real Estate Securities
Fund
55+
55+
55+
99
99
99
Devan International Ltd(4)
100
100
100
#
#
#
#
#
#
#
#
#
#
#
#
#
#
-
#
#
#
Vietnam
Property investment and
development
#
India
Property development
#
Singapore
Property development and
investment
#
Singapore
Property investment
#
#
#
#
#
Indonesia
Property development
Indonesia
Property development
Indonesia
Development of holiday resort
Indonesia
Disposed
Singapore
Property management
# Malaysia
Property investment
#
#
Singapore
Investment holding
China
Property development
#
Singapore
Property development
#
Vietnam
Property investment
-
Philippines
Investment holding
#
Singapore
Investment holding
#
BVI
Investment holding
Kep Holdings Ltd(4)
100+
100+ 100+ 10,480
10,480
BVI/HK
Investment company
Kephinance Investment
(Mauritius) Pte Ltd(3)
Kephinance Investment Pte Ltd
Kepital Management Ltd(3)
Keppel GMTN Pte Ltd
Keppel Investment Ltd
Keppel Oil & Gas Pte Ltd
Kepventure Pte Ltd
KI Investments (HK) Ltd(3)
Primero Investments Pte Ltd
Travelmore Pte Ltd
100
100
100
#
# Mauritius
Investment holding
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90,000
90,000
Singapore
Investment holding
#
10
#
#
#
-
#
#
HK
Investment company
Singapore
Investment holding
Singapore
Investment company
Singapore
Investment holding
100 284,924
85,270
Singapore
Investment holding
100
100
100
#
#
#
#
HK
Investment company
Singapore
Investment company
265
265
Singapore
Travel agency
Significant Subsidiaries and Associated Companies
201
Significant Subsidiaries and Associated Companies
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
Gross
Interest
2012
%
2012
%
2011
%
2012
$’000
2011
$’000
Associated Companies
k1 Ventures Ltd
M1 Ltd(2)
Total
Subsidiaries
36
20
36
16
36
16
#
#
#
#
Singapore
Investment holding
Singapore
Telecommunications services
5,554,450 4,403,160
Notes:
(i) All the companies are audited by Deloitte & Touche LLP, Singapore except for the following:
(1a) Audited by overseas practice of Deloitte Touche Tohmatsu Limited;
(2) Audited by Ernst & Young LLP, Singapore;
(2a) Audited by overseas practice of Ernst & Young LLP;
(3) Audited by other firms of auditors; 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.
The shareholdings of these companies are held jointly with other subsidiaries.
The shareholdings of these companies are held by subsidiaries of Keppel Corporation Limited.
(ii) +
(iii) #
(iv) (n) These companies were incorporated during the financial year.
(v) The subsidiaries’ place of business is the same as its country of incorporation, unless otherwise specified.
(vi) Abbreviations:
British Virgin Islands (BVI) United Arab Emirates (UAE)
Hong Kong (HK)
United States of America (USA)
(vii) The Company has 250 significant subsidiaries and associated companies as at 31 December 2012. 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.
202
Keppel Corporation Limited
Report to Shareholders 2012
Interested Person Transactions
The Group has obtained a general mandate from shareholders of the Company for interested person transactions in the
Annual General Meeting held on 20 April 2012. 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
CapitaLand Group
CapitaMalls Asia Group
Gas Supply Pte Ltd
Integradora de Servicios Petroleros Oro Negro
Mapletree Investments Group
MediaCorp Group
Neptune Orient Lines Group
PSA International Group
SATS Group
SembCorp Marine Group
Singapore Airlines Group
Singapore Power Group
Singapore Technologies Engineering Group
Singapore Telecommunications Group
Temasek Holdings Group
Transaction for the Purchase of Goods and Services
CapitaMalls Asia Group
Certis CISCO Security Group
Gas Supply Pte Ltd
Hazeltree Holdings Group
Mapletree Investments Group
MediaCorp Group
PSA International Group
SembCorp Marine Group
Singapore Power Group
Singapore Technologies Engineering Group
Joint Venture
Temasek Holdings (Private) Limited and its associate
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)
2012
$’000
2011
$’000
2012
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,700
337,000
-
460,454
-
71,500
29,676
384
30,180
6,967
7,763
20,938
959
4,590
4,218
344
561
100,000
108
694
221
1,146
412
240
106
2011
$’000
-
-
9,000
-
3,312
-
-
-
-
-
4,200
-
-
-
-
-
-
39,900
-
719
-
-
-
-
-
26,740
-
-
26,740
1,083,161
57,131
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
203
Key Executives
In addition to the Chief Executive Officer (Mr Choo Chiau Beng), the Senior Executive Directors (Messrs Teo Soon Hoe
and Tong Chong Heong), the following are the key executive officers (“Key Executives”) of the Company and its principal
subsidiaries:
Loh Chin Hua, 51
Bachelor in Property Administration (Colombo Plan Scholarship), Auckland University; Presidential Key Executive MBA
Program, Pepperdine University; Chartered Financial Analyst (CFA).
Mr Loh is the Chief Financial Officer of Keppel Corporation Limited, appointed with effect from 1 January 2012. He is also
the Chairman of Alpha Investment Partners Limited (Alpha), the real estate fund management arm of the Keppel Land
Group. He joined Alpha in September 2002. He has served as an Executive Chairman in Asia Real Estate Fund Management
Ltd. He has over 25 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 Land Limited, Keppel Land China Limited, Keppel REIT Management Limited (the manager of
Keppel REIT), Keppel Offshore Marine Ltd, Keppel Shipyard Limited, Keppel FELS Limited, KrisEnergy Ltd, Keppel Energy
Pte. Ltd. and various fund companies and subsidiaries.
Past principal directorships in the last five years
Various fund companies under the management of Alpha Investment Partners Limited.
Chow Yew Yuen, 58
Bachelor of Science in Mechanical Engineering with First Class Honours, University of Newcastle-Upon-Tyne; Attended
Advanced Management Programme at Harvard Business School.
Mr Chow was appointed the Chief Operating Officer of Keppel Offshore & Marine Ltd on 1 March 2012. Prior to this, he was
the Managing Director of Keppel Offshore & Marine Ltd from 1 June 2011. Mr Chow is also responsible for the Americas
(the United States, Mexico and Brazil) through his various appointments as Chairman of Keppel AmFELS, LLC, Deputy
Chairman of Keppel FELS Brasil SA and Chairman of Keppel Offshore & Marine USA, Inc. He has been with the company
for well over 30 years and was based in the United States for 17 years. His experience is quite diverse, covering areas of
technical, production, operations, commercial and management across different geographical and cultural borders.
Mr Chow also serves as the Chairman of Keppel Singmarine Pte. Ltd. and Director on the boards of Keppel Offshore &
Marine Technology Centre Pte. Ltd., Deepwater Marine Technology LLC, FloaTEC LLC, FloaTEC de Mexico SA de CV, Keppel
FELS Ltd., Keppel Shipyard Ltd., Keppel Marine Agencies LLC, Bennett & Associates LLC, Keppel Energy Pte. Ltd., Keppel
SLP LLC, and Offshore Innovative Solution LLC.
Mr Chow is also a member of The American Bureau of Shipping, Vice President of Association of Singapore Marine
Industries, a Council Member of Singapore Accreditation Council and a member of ABS Southeast Asia Regional
Committee.
Past principal directorships in the last five years
Nil
204
Keppel Corporation Limited
Report to Shareholders 2012
Michael Chia Hock Chye, 60
Colombo Plan Scholar, Bachelor of Science (First Class Honours) in Naval Architecture and Marine Engineering, University
of Newcastle-Upon-Tyne; Masters in Business Administration, National University of Singapore; Graduate Certificate in
International Arbitration, National University of Singapore.
Mr Chia is the Managing Director (Marine and Technology) of Keppel Offshore and Marine and Managing Director of
Keppel Offshore & Marine Technology Centre. He was Director (Group Strategy & Development) of Keppel Corporation Ltd
from January 2011 to January 2013. He was the Executive Director of Keppel FELS Ltd from 2002 to 2009, with overall
responsibility of the business management of the company. Mr Chia was also Deputy Chairman of Keppel Integrated
Engineering Limited from 2009 to 2011 and CEO from 2009 to 2010. He has more than 27 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 to 2009, a non-profit
association formed in 1968 to promote the interests of the marine industry in Singapore and was a member of the Ngee Ann
Polytechnic Council from 2006 to 2012. Mr Chia is the Chairman of the Singapore Maritime Foundation since 2010. Prior to
the Chairmanship, he was a Board Member from 2005 to 2010. He is a member of the American Bureau of Shipping, USA;
Society of Petroleum Engineers; Fellow member with the Society of Naval Architects and Marine Engineers Singapore; and
Fellow member with the Singapore Institute of Arbitrators.
His directorships include Keppel Telecommunications & Transportation Ltd, Keppel Amfels Inc (USA), Keppel FELS Ltd ,
Keppel FELS Brasil SA (Brazil), Keppel Shipyard Ltd, Keppel Integrated Engineering Ltd, Keppel Energy Pte Ltd, FloaTEC
LLC, Floatel International Ltd, Keppel Oil & Gas Pte Ltd, Keppel Offshore & Marine Technology Centre Pte Ltd, DPS Bristol
(Holdings) Ltd, Keppel Singmarine Pte Ltd, Keppel Smit Towage Pte Ltd, Maju Maritime Pte Ltd, Marine Technology
Development Pte Ltd, PV Keez Pte Ltd, Arab Heavy Industries P.J.S.C., Nakilat Keppel Offshore & Marine Ltd, Dyna-Mac
Holdings Ltd, FELS Crane Pte Ltd, Deepwater Techno logy Group Pte Ltd, Willaphla Ltd, Keppel Offshore & Marine USA
Inc., Offshore Innovative Solutions LLC, Keppel FELS Engineering ShenZhen Co Ltd, Keppel Ventus Pte Ltd, Keppel Seghers
Belgium N.V., Keppel Seghers Holding B.V., FELS Tekform (Singapore) Pte Ltd, Keppel Seghers Holding Pte Ltd, Keppel
Seghers Iberica S.A., Keppel Seghers UK Ltd, Keppel Infrastructure Environmental Development Inc. Keppel Seghers
Netherlands B.V., Seghers Keppel Technology for Services & Machinery, Ruisbroek N.V., Seghers Keppel Technology for
Services & Machinery, Zele N.V., Keppel Seghers Gmbh, DPS (Bristol) Ltd UK, Greenwood Pte Ltd, KS Investments Pte Ltd,
KSI Production Pte Ltd and Offshore Technology Development Pte Ltd.
Past principal directorships in the last five years (1 Jan 2008 to 31 Dec 2012):
Asian Lift Pte Ltd, Regency Steel Japan Ltd, GE Keppel Energy Services Pte Ltd, Keppel Prince Engineering Pty Ltd
(Australia), Floatec Singapore Pte Ltd, Keppel DHCS Pte Ltd, Keppel Environmental 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 Newater Development Co Pte Ltd, Senoko Waste-To-Energy Pte Ltd, Keppel Seghers Tuas Waste-
To-Energy Plant Pte Ltd, Tianjin Eco-City Keppel New Energy Development Company Ltd and Keppel Offshore & Marine
USA (Holdings) LLC.
Key Executives
205
Key Executives
Yeo Chien Sheng Nelson, 55 (Deceased)
Bachelor of Science in Mechanical Engineering (First Class Honours), University of Birmingham; Master of Engineering in
Energy Technology, Asian Institute of Technology; Program for Management Development, Graduate School of Business
Administration, Harvard University.
Mr Yeo was the Managing Director (Marine) of Keppel Offshore & Marine Ltd and the Managing Director of Keppel Shipyard
Limited. He was Chairman of Keppel Philippines Marine Inc., Keppel Subic Shipyard Inc, Keppel Batangas Shipyard,
Inc., Keppel Smit Towage Pte Ltd, Maju Maritime Pte Ltd, Keppel Singmarine Pte Ltd, DPS Bristol (Holdings) Ltd and
Marine Technology Development Pte Ltd. He was 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) Limited, Keppel
Energy Pte Ltd, PV Keez Pte Ltd and Dyna-Mac Holdings Ltd, Keppel Offshore & Marine Technology Centre, Offshore
Technology Development and Nakilat-Keppel Offshore & Marine.
Mr Yeo served as a member of the Workplace Safety and Health (Marine Industries) Committee, Ministry of Manpower;
AIDS Business Alliance, Ministry of Health; and was 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 had
30 years of working experience in the shipyard industry.
Past principal directorships in the last five years
Blastech Abrasives Pte Ltd.
Wong Kok Seng, 62
Bachelor of Science (Honours) in Naval Architecture, University of Newcastle Upon Tyne; Attended the Program for
Management Development in Harvard Business School in 1984.
Mr Wong is the Managing Director (Offshore) of Keppel Offshore & Marine and also Managing Director of Keppel FELS
Limited. Prior to this appointment, he was the Executive Director of Keppel FELS. His career in Keppel FELS began in 1977
and he 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 serves as the Chairman of the Centre of Innovation, Marine and Offshore
Technology (COI-MOT) Advisory Committee and as a member of the Workplace Safety & Health (WSH) Council Marine
Industries Committee.
Mr Wong is a Chartered Engineer, a Fellow of the Institute of Marine Engineering, Science and Technology and is a Member
of the American Bureau of Shipping and the Royal Institution of Naval Architects.
Mr Wong is a director of Keppel FELS Limited; Keppel Shipyard Limited; Keppel Nantong Shipyard Company Limited;
Keppel Nantong Heavy Industries Co. Ltd.; FloaTEC LLC; Floatec Singapore Pte Ltd; Offshore Technology Development Pte
Ltd (Chairman); Bintan Offshore Fabricators Pte Ltd (Chairman); Seafox 5 Limited; Keppel Offshore & Marine Technology
Centre and Bennett & Associates, LLC (Chairman).
Past principal directorships in the last five years
Nil
206
Keppel Corporation Limited
Report to Shareholders 2012
Chor How Jat, 51
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 Managing Director of Keppel Shipyard Limited, appointed with effect from October 2012. Prior to this, he
was the Executive Director since 1 January 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 of Keppel Shipyard
Limited, and he was a General Manager (Operations) of Keppel FELS Limited in 2004.
Mr Chor serves as director on the Board of Keppel Shipyard Limited, Asian Lift Pte Ltd, Keppel FELS Offshore and
Engineering Services Mumbai Pvt. Ltd., Keppel Philippines Marine, Inc, Keppel Batangas Shipyard, Keppel Subic Shipyard
Inc., KOMtech and Atwin Offshore and Marine Pte. Ltd. Mr Chor is also Director and Chairman of Blastech Abrasives Pte
Ltd, Nusa Maritime Pte Ltd and Alpine Engineering Services Pte Ltd.
In addition, Mr Chor is a council member of Association of Singapore Marine Industries (ASMI), member of Workplace
Safety and Health Council (Marine Industries), American Bureau of Shipping, Singapore Technical Committee of Nippon
Kaiji Kyokai and AIDS Business Alliance, the Health Promotion Board.
Mr Chor recently graduated from Harvard Business School in 2012 from the General Management Program.
Past principal directorships in the last five years
Japan Regency Steel Limited
Hoe Eng Hock, 61
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 started his professional career with Keppel Group upon his graduation. Having served various business units under
Keppel Group both at Singapore and the Philippines, Mr. Hoe is currently the Managing Director of Keppel Singmarine
Pte Ltd, appointed with effect from 1 January 2013. Prior to this appointment, he was the Executive Director of Keppel
Singmarine Pte Ltd since 2005. Mr. Hoe is also the Executive Director of Keppel Singmarine Brasil Ltda, Chairman of
Keppel Nantong Shipyard Co., Ltd and Prime Steelkit Pte Ltd. He is also on the Board of Keppel Smit Towage Pte Ltd; Maju
Maritime Pte Ltd; Marine Technology Development Pte Ltd; Keppel Offshore & Marine Technology Centre; Keppel Cebu
Shipyard Inc; Keppel Singmarine Philippines, Inc and Baku Shipyard LLC.
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. Mr Hoe is the
current President of Keppel Recreation Club.
Past principal directorships in the last five years
Nil
Toh Ko Lin, 61
Bachelor of Science (Hons) in Naval Architecture, University of Newcastle-upon-Tyne (Colombo Plan Scholarship); Master
of Business Administration, Richard Ivey School of Business, University of Western Ontario.
Mr. Toh is the Executive Director of Keppel Singmarine Pte Ltd, appointed with effect from 1 January 2013. Prior to this
appointment, he was the Senior General Manger, Commercial, since 2006. He is the Chairman and President of Keppel
Philippines Marine, Inc. and the Chairman of Keppel Subic Shipyard, Inc. since October 2012. He is a board member of
Keppel Singmarine Pte Ltd, Keppel Nantong Shipyard Co. Ltd. and an alternate director of Baku Shipyard LLC.
He began his career in ship repair and specialized shipbuilding in 1975, and undertook business development work and
various assignments abroad within the Keppel Group. He is also a member of The American Bureau of Shipping.
Past principal directorships in the last five years
Nil
Key Executives
207
Key Executives
Wong Fook Seng, 60
MSC (Financial Management) from the University of London, UK.; MBA (Nanyang Fellows/MIT) from Nanyang Technological
University, Singapore.
Mr Wong Fook Seng started his career in the marine industry 44 years ago as an apprentice and has been with Keppel FELS
for the last 34 years. He is currently Executive Director (Operations) of Keppel FELS. Prior to this appointment, Mr Wong
was a General Manager, heading various functions such as Production, Marketing, Projects, Planning & Control, Quality
System and Process Excellence. In the course of his work, Mr Wong also led various initiatives that helped transform the
processes and systems of Keppel FELS to meet the challenges of a sudden upsurge in market demand.
Mr Wong was also involved in setting up and heading various subsidiaries of Keppel FELS, both locally and overseas. He
also served as a director on the boards of some of these subsidiaries and currently sits on the board of Lindel Pte. Ltd. His
overseas assignments included countries such as Vietnam, Brazil and Kazakhstan.
Mr Wong was also an Adjunct Associate Professor with National University of Singapore, School of Design and Environment.
Among his various public contributions, he was the sole Singapore representative on the panel of 3 judges for the Maxa
Award, the pinnacle award for manufacturing excellence in Singapore, in 2010.
Mr Wong had served as a Council Member for the Singapore Welding Society and had been a member of the Institute of
Industrial Managers, Institute of Marine Engineers, Society of Naval Architecture and Marine Engineers and is a Certified
System Engineer with the Institute of Engineers Singapore.
Past principal directorships in the last five years
Nil
Foo Kok Seng, 50
Bachelor of Engineering (First Class Honours) in Mechanical Engineering from University of Strathclyde; Doctor of
Philosophy in Mechanical Engineering from University of Strathclyde.
Dr Foo is the Executive Director (Shallow Water) for Keppel Offshore & Marine Technology Centre and Executive Director of
Offshore Technology Development Pte Ltd. Prior to this, he was the General Manager for Offshore Technology Development
Pte Ltd since 2002.
Dr Foo serves as a director on the Board of DPS Bristol (Holdings), Keppel AmFELS LLC, Keppel FELS Offshore and
Engineering Services Mumbai Pvt Ltd, Keppel Offshore & Marine Technology Centre, Offshore Technology Development
Pte Ltd, Regency Steel Japan Ltd, Keppel Ventus Pte Ltd and Blue Ocean Solutions Pte Ltd. He is also a Member of Energy
Ventures Advisory Board.
Past principal directorships in the last five years
Arab Heavy Industries
Aziz Amirali Merchant, 48
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, Keppel Offshore & Marine Technology Centre (Deepwater), Executive Director,
Deepwater Technology Group (DTG), Executive Director (Engineering), Keppel FELS Ltd.
Mr Merchant is a director of Keppel Singmarine Pte Ltd, Deepwater Technology Group Ltd, Keppel Offshore & Marine
Technology Centre Pte Ltd, Floatec LLC, Keppel FELS Baltech Ltd, Keppel FELS Shenzhen, Keppel FELS Offshore and
Engineering Services Mumbai Pvt Ltd and Fernvale Pte 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.
Mr Merchant recently graduated from Harvard Business School in 2011 from the General Management Program.
Past principal directorships in the last five years
Nil
208
Keppel Corporation Limited
Report to Shareholders 2012
Ong Tiong Guan, 54
Bachelor of Engineering (First Class Honours), Monash University; 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 energy business, which
develops, owns and operates power generation projects.
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, Keppel Integrated Engineering Ltd and Keppel DHCS Pte Ltd.
Past principal directorships in the last five years
Corporacion Electrica Nicaraguense S.A..
Termoguayas Generation S.A.
Tay Lim Heng, 49
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 served in the Singapore Administrative Service as 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 (MPA), where he was also a Board Member of the Singapore Maritime Foundation, Centre of Maritime Studies
(NUS), Tropical Marine Science Institute (NUS), a Member of Class NK Singapore Committee and a Vice President of the
International Association of Ports and Harbours (IAPH).
BG(NS) Tay held various key appointments in the Singapore Armed Forces (SAF), including Director of Joint Intelligence
Directorate, 6th Division Commander and Assistant Chief of General Staff (Operations). He was awarded the Public
Administration Medal (Gold) (Military).
His directorships include Keppel Seghers Engineering Singapore Pte Ltd, Keppel Seghers Belgium NV, Keppel
Infrastructure Fund Management Pte Ltd, Keppel DHCS Pte Ltd, Keppel FMO Pte Ltd, Keppel Sea Scan Pte Ltd, Keppel
Prince Engineering Pty Ltd, GE Keppel Energy Services Pte Ltd, EM Services Pte Ltd, Singapore Tianjin Eco-City Investment
Holdings Pte Ltd, Keppel Land China Limited, Keppel Shipyard Limited and Keppel Singmarine Pte Ltd. He is President of
the Singapore Water Association.
Past principal directorships in the last five years
Director of DSO National Laboratory, Singapore.
Key Executives
209
Key Executives
Pang Hee Hon, 52
Bachelor of Science and Bachelor of Commerce, University of Birmingham; Masters in Public Administration, Harvard
University.
Mr Pang Hee Hon is the Chief Executive Officer of Keppel Telecommunications & Transportation, appointed with effect from
4 January 2010, and is also the Chief Executive Officer of Keppel Logistics Pte Ltd with effect from 7 August 2012. Previously
the Deputy President (Operations) of ST Electronics (Info-Software Systems), Mr Pang oversaw business operations and
international marketing. He was the Chairman of the eGov Chapter in the Singapore IT Federation, which provides feedback
on eGov policies and promotes internationalisation of local ICT companies.
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.
Past principal directorships in the last five years
PM-B Pte Ltd; INFA Systems Limited; ST Electronics (e-Services) Pte Ltd
Thomas Pang Thieng Hwi, 48
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. 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.
Past principal directorships in the last five years
Nil
Kevin Wong Kingcheung, 57
Bachelor in Civil Engineering with First Class Honours, Imperial College, London; Masters degree, Massachusetts Institute
of Technology, USA.
Mr Wong was Group Chief Executive Officer/Managing Director, Keppel Land Limited from January 2000 to 31 December
2012. Prior to this appointment, he was Executive Director since November 1993. He was Deputy Chairman and Director of
K-REIT Asia Management Limited (now known as Keppel REIT 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.
Past principal directorships in the last five years
Various subsidiaries and associated companies of Keppel Land Limited; Evergro Properties Limited; Singapore Hotel
Association; Singapore International Chamber of Commerce.
210
Keppel Corporation Limited
Report to Shareholders 2012
Ang Wee Gee, 51
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 and was appointed Chief Executive Officer of Keppel Land Limited on 1 January
2013. He continues as Executive Vice Chairman of Keppel Land China Limited, a wholly-owned subsidiary of Keppel Land
which was formed in 2010 to own and operate Keppel Land’s businesses in China.
Prior to his appointment as Executive Vice Chairman of Keppel Land China, Mr Ang was Executive Director and Chief
Executive Officer, International of Keppel Land International Limited, responsible for the Group’s overseas businesses. He
was also Chairman of Keppel Philippines Properties, Inc. and Keppel Thai Properties Public Company Limited, which were
listed on the Philippine Stock Exchange and The Stock Exchange of Thailand respectively. He has previously held positions
in business and project development for Singapore and overseas markets, corporate planning and development in the
Group’s hospitality arm. He was the Group’s country head for Vietnam as well as the head of Sedona Hotels International,
the Group’s hotel and serviced apartment management company.
He is a director of Sedona Hotels International Pte Ltd and a number of other subsidiaries and associated companies in the
Keppel Land Group.
Prior to joining Keppel Land, Mr Ang had diverse experience in the hotel, real estate and management consulting industry
in the USA, Hong Kong and Singapore.
Past principal directorships in the last five years
Various subsidiaries and associated companies of Keppel Land Limited; Evergro Properties Limited.
Tan Swee Yiow, 52
Bachelor of Science (First Class Honours) in Estate Management, National University of Singapore; Master of Business
Administration Degree in Accountancy, Nanyang Technological University.
Mr Tan joined Keppel Land Group in 1990 and is currently its President (Singapore) overseeing the Group’s investment and
development operation in Singapore.
Mr Tan is the Chairman of Keppel Thai Properties Public Company Limited which is listed on The Stock Exchange of
Thailand. He is also a Director of a number of subsidiary and associated companies of the Group including Keppel Land
Hospitality Management Pte Ltd and Raffles Quay Asset Management Pte Ltd.
In addition, he is on the Board of the Singapore Green Building Council since 2010 and more recently in 2012, a member of
the World Green Building Council’s Corporate Advisory Board. He also serves on the Management Council of Real Estate
Developers’ Association of Singapore, the Workplace Safety Health Council (Construction and Landscape Committee), and
the Malaysia-Singapore Business Council.
Past principal directorships in the last five years
Asia No. 1 Property Fund, Keppel REIT Management Ltd, EM Services Pte Ltd and other subsidiaries and associated
companies within the Keppel Land Group.
Key Executives
211
Key Executives
Augustine Tan Wee Kiong, 54
Bachelor of Science in Estate Management, National University of Singapore; Master of Business Administration Degree,
University of Birmingham, UK.
Mr Tan joined Keppel Land Group in 1991 and was President, Singapore Residential overseeing the Group’s residential
developments and investments in Singapore and the Group’s marina developments, namely Marina at Keppel Bay in
Singapore and Nongsa Point Marina in Indonesia. He was also Head, Regional Investments, responsible for the Group’s
property developments and investments in India and Middle East.
Mr Tan’s previous appointments include Chief Executive Officer of Singapore Residential and General Manager for
Marketing, overseeing the marketing of the Keppel Land Group’s developments and investments in Singapore and
overseas.
Prior to joining Keppel Land Group, Mr Tan had extensive experience in the design development and marketing of
commercial, retail, industrial and residential developments with other listed real estate developers.
Mr Tan is a Member of the Singapore Institute of Surveyors and Valuers, and was a Director of Keppel Land International
Limited and a number of other Keppel Land Group’s subsidiary and associated companies.
Mr Tan stepped down from his various positions on 28 February 2013.
Past principal directorships in the last five years
Nil
Ho Cheok Kong, 56
Bachelor of Engineering (Honours, 2nd Upper) from the University of Western Australia under the Colombo Plan
Scholarship.
Mr Ho first joined Keppel Land Group in 1990. He is currently the President of Keppel Land China Limited, a wholly-owned
subsidiary company of Keppel Land Limited which owns and independently operates Keppel Land Group’s businesses in
China.
Prior to re-joining the Keppel Land Group in 2007, Mr Ho had extensive experience in the investment and development of
various commercial, industrial and residential developments in Singapore and other countries in Asia. He had extensive
experience in China, starting with the investment and development of the Spring City Golf & Lake Resort in 1993. Based
in Shanghai since 2007, Mr Ho currently oversees the business operations of all the projects in various cities in China
(including Shanghai, Beijing, Tianjin, Chengdu, Wuxi, Nantong, Shenyang, Kunming and Zhongshan).
Past principal directorships in the last five years
Nil
212
Keppel Corporation Limited
Report to Shareholders 2012
Ng Hsueh Ling, 46
Bachelor of Science in Real Estate, National University of Singapore.
Ms Ng has been the Chief Executive Officer and Executive Director of Keppel REIT Management Limited (the manager of
Keppel REIT) since 17 August 2009. She has 23 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 Limited and
Ascendas Pte Ltd.
Before her appointment as Chief Executive Officer and Executive Director in Keppel REIT 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.
Ms Ng is a director of various subsidiaries and associated companies of Keppel REIT, and is currently a director on The
National Art Gallery, Singapore.
Past principal directorships in the last five years
Raffles Quay Asset Management Pte Ltd, Central Boulevard Development Pte Ltd and various subsidiaries and associated
companies of Ascendas Pte Ltd and CapitaLand Limited.
Christina Tan Hua Mui, 47
Bachelor of Accountancy (Honors), National University of Singapore; Chartered Financial Analyst
Christina Tan is the Managing Director of Alpha Investment Partners (AIP). Ms Tan joined AIP in November 2002 and was
the Chief Financial Officer of AIP for 9 years. She has over 15 years of experience in financial management and controls.
Prior to joining AIP, Ms. Tan was the Chief Financial Officer of GRA (Singapore) Private Limited, the Asian real estate fund
management arm of the Prudential Insurance Company of America, managing more than US$1 billion in real estate funds.
During her 8 years with GRA, she had responsibility for client financial reporting, operational management and controls,
raising project financing and treasury management. Before joining GRA, Ms. Tan was the Treasury Manager with Chartered
Industries of Singapore, managing the group’s cash positions and investments. Ms. Tan started her career with Ernst &
Young prior to joining the Government of Singapore Investment Corporation (GIC). In GIC, she has responsibilities in the
Finance department overseeing External Fund Managers, Special Investments and Real Estate departments.
Past principal directorships in the last five years
Nil
Key Executives
213
Commercial office building
with rentable area of
20,677 sqm
(92.8% of the strata area)
Commercial office building
with rentable area of
22,759 sqm
Commercial office building
with rentable area of
20,874 sqm
(50% interest)
Commercial office building
with rentable area of
13,748 sqm
An integrated development
comprising office, retail and
428 condominium units
Major Properties
Held By
Completed properties
Effective
Group
Interest Location
Description and
Approximate
Land Area
Tenure
Usage
Ocean Properties LLP
54%
Keppel REIT
55%
Ocean Financial
Centre
Collyer Quay,
Singapore
Prudential Tower
Cecil Street &
Church Street,
Singapore
Bugis Junction
Towers
Victoria Street,
Singapore
Land area: 6,109 sqm
43-storey office building
999 years leasehold Commercial office building
with rentable area of
82,279 sqm
30-storey office building 99 years leasehold
15-storey office building 99 years leasehold
275 George Street Land area: 7,074 sqm
Brisbane,
Australia
30-storey Grade A
commercial building
Freehold
77 King Street
Sydney,
Australia
Freehold
Land area: 1,284 sqm
Grade A commercial
building with office and
retail space
Land area: 20,505 sqm
99 years leasehold
BFC Development Pte Ltd 18%
Central Boulevard
Development Pte Ltd
18%
Marina Bay
Financial Centre
(Phase 1)/
Marina Bay
Residences
Marina Boulevard/
Central Boulevard,
Singapore
Marina Bay
Financial Centre
(Phase 2)/
Marina Boulevard/
Central Boulevard,
Singapore
Land area: 9,710 sqm
46-storey office towers
with retail podium
99 years leasehold
Commercial office building
with rentable area of
125,392 sqm
One Raffles Quay Pte Ltd 18%
One Raffles Quay
Singapore
Land area: 11,367 sqm
Two office towers
99 years leasehold
Mansfield Development
Pte Ltd
55%
Keppel Towers
Hoe Chiang Rd,
Singapore
GE Tower
Hoe Chiang Rd,
Singapore
Land area: 7,760 sqm
27-storey office building
Freehold
Land area: 1,367 sqm
13-storey office building
Freehold
Commercial office building
with rentable area of
41,353 sqm
(1/3 interest)
Commercial office building
with rentable area of
32,580 sqm
Commercial office building
with rentable area of
7,378 sqm
214
Keppel Corporation Limited
Report to Shareholders 2012
Held By
Effective
Group
Interest Location
Description and
Approximate
Land Area
Tenure
Usage
DL Properties Ltd
36%
Equity Plaza
Cecil Street,
Singapore
Land area: 2,177 sqm
28-storey office building
99 years leasehold
HarbourFront One Pte Ltd 65%
HarbourFront Two Pte Ltd 34%
Keppel Bay Pte Ltd
86%
Spring City Golf &
Lake Resort Co
(owned by Kingsdale
Development Pte Ltd)
38%
PT Straits-CM Village
21%
PT Kepland Investama
55%
99 years leasehold
Commercial office building
with rentable area of
23,481 sqm
Commercial office building
with rentable area of
36,042 sqm
99 years leasehold
Commercial office building
with rentable area of
48,668 sqm
Keppel Bay Tower Land area: 17,267 sqm
HarbourFront
Avenue,
Singapore
18-storey office building
Land area: 10,923 sqm
18-storey and 16-storey
HarbourFront
Tower One and
Two, HarbourFront office buildings
Place,
Singapore
Reflections
at Keppel Bay
Singapore
Spring City Golf
& Lake Resort
Kunming,
China
Club Med
Ria Bintan
Bintan,
Indonesia
International
Financial Centre
(Tower 1)
Jakarta,
Indonesia
Land area: 83,538 sqm
99 years leasehold
A 1,129-unit waterfront
condominium development
Land area: 2,884,749 sqm 70 years lease
Two 18-hole golf courses,
a club house
Integrated resort comprising
golf courses, resort homes
and resort facilities
Land area: 200,000 sqm 30 years lease
with option for
another 50 years
A 302-room beachfront hotel
Land area: 10,428 sqm
20 years lease
with option for
another 20 years
A prime office development
with rentable area of
27,933 sqm
Keppel Land Watco
Co Ltd
37%
Saigon Centre
(Phase 1)
Ho Chi Minh City,
Vietnam
Land area: 2,730 sqm
25-storey office, retail
cum serviced apartments
development
50 years lease
Properties under development
Keppel REIT
55%
8 Chifley Square
Sydney,
Australia
Land area: 1,581 sqm
99 years leasehold
Central Boulevard
Development
Pte Ltd
18%
Marina Bay Suites/ Land area: 5,300 sqm
Marina Boulevard/
Central Boulevard,
Singapore
99 years leasehold
Commercial building with
rentable area of 10,443 sqm
office, 3,663 sqm retail,
305 sqm post office and
89 units of serviced
apartments
Commercial office buildings
with rentable area of
9,559 sqm
(50% interest)
*(2013)
A 221-unit luxury
condominium development
*(2014)
Major Properties
215
Major Properties
Held By
Effective
Group
Interest Location
Description and
Approximate
Land Area
Tenure
Usage
Sherwood Development
Pte Ltd
55%
Keppel Bay Pte Ltd
86%
Keppel Land (Mayfair)
Pte Ltd
55%
Residential
Development,
Singapore
Keppel Bay
Plot 3 and 6,
Singapore
The Lakefront
Residences
Lakeside Drive,
Singapore
Land area: 31,882 sqm
99 years leasehold
A 720-unit condominium
development
Land area: 82,523 sqm
99 years leasehold Waterfront condominium
development
Land area: 16,117 sqm
99 years leasehold
A 629-unit condominium
development
*(2015)
A 622-unit condominium
development
*(2015)
An office and retail
development in Chaoyang
District
*(2015)
A 1,102-unit residential
development in Nanxiang
Town, Jiading District
*(2015)
A 930-unit residential
apartment development
(Plot B)
*(2015)
A 2,667-unit residential
development with integrated
facilities
*(2014)
Integrated resort comprising
golf courses, resort homes
and resort facilities
(Hillcrest Residence Phase 2)
*(2014)
A 2,500-unit prime residential
development with commercial
facilities in Binhu District
*(2018)
A 4,984-unit residential
township development with
integrated facilities
*(2015 Phase 3)
Keppel Land Realty
Pte Ltd
55%
The Luxurie
Compassvale Road,
Singapore
Land area: 17,700 sqm
99 years leasehold
Beijing Aether Property
Development Ltd
28%
Commercial
Development
Beijing,
China
Land area: 26,081 sqm
40/50 years lease
Shanghai Ji Xiang Land
Co Ltd
55%
Seasons Residence Land area: 71,621 sqm
Shanghai,
China
70 years lease
Shanghai Pasir Panjang
Land Co Ltd
54%
Eight Park Avenue Land area: 33,432 sqm
Shanghai,
China
70 years lease
Shanghai Hongda
Property Development
Co Ltd
Spring City Golf &
Lake Resort
54%
38%
Keppel Lakefront (Wuxi)
Property Development
Co Ltd
55%
CityOne Development
(Wuxi) Co Ltd
27%
The Springdale
Shanghai,
China
Spring City Golf
& Lake Resort
Kunming,
China
Waterfront
Residence
Wuxi,
China
Central Park City
Wuxi,
China
Land area: 264,090 sqm 70 years lease
(residential)
40 years lease
(commercial)
Land area: 2,157,361 sqm 70 years lease
Land area: 215,230 sqm 70 years lease
(residential)
40 years lease
(commercial)
Land area: 352,534 sqm 70 years lease
(residential)
40 years lease
(commercial)
216
Keppel Corporation Limited
Report to Shareholders 2012
Held By
Effective
Group
Interest Location
Description and
Approximate
Land Area
Tenure
Usage
Keppel Township
Development (Shenyang)
Co Ltd
55%
The Seasons
Shenyang,
China
Land area: 348,312 sqm 50 years lease
(residential)
40 years lease
(commercial)
Keppel Hongda
(Tianjin Eco-City)
Property Development
Co Ltd
75%
Development in
Sino-Singapore
Tianjin Eco-City
Tianjin,
China
Land area: 365,722 sqm 70 years lease
(residential)
40 years lease
(commercial)
Land area: 128,685 sqm 70 years lease
Tianjin Fushi Property
Development Co Ltd
55%
Chengdu Hillstreet
Development Co Ltd
55%
Chengdu Hilltop
Development Co Ltd
Chengdu Century
Development Co Ltd
55%
24%
Serenity Cove
Tianjin,
China
Park Avenue
Heights
Chengdu,
China
Hill Crest Villa
Chengdu,
China
The Botanica
Chengdu,
China
Land area: 50,782 sqm
70 years lease
(residential)
40 years lease
(commercial)
A 1,555-unit prime residential
development in Jinjiang
District
*(2015)
Land area: 249,330 sqm 70 years lease
Land area: 419,775
70 years lease
(residential)
40 years lease
(commercial)
A 3,836-unit residential
township with integrated
facilities in Shenbei New
District in Shenyang
*(2017 Phase 2)
A mixed development,
primarily residential
(4,354-units) together with
some commercial space
*(2013 Phase 1 & 2015
Phase 2)
A 340-unit residential
development in Tianjin
Eco-City
*(2013 Phase 3)
A 274-unit villa development
in Xinjin County
*(2015)
A 9,664-unit residential
township development with
integrated facilities
*(2013 Phase 6 & 2014
Phase 7)
A 1,647-unit residential
development with a mix of
villas and apartments, and
integrated marina lifestyle
facilities
*(2014 Phase 1)
Sunsea Yacht Club
(Zhongshan) Co Ltd
44%
Zhongshan Marina Land area: 857,753 sqm 70 years lease
Zhongshan,
China
(residential)
40 years lease
(commercial)
Jiangyin Evergro
Properties Co Ltd
54%
Stamford City
Jiangyin,
China
Land area: 82,987 sqm
70 years lease
(residential)
40 years lease
(commercial)
A 1,477-unit mixed
development with residential,
office and retail space
*(2014 Phase 3 & 2015
Phase 2)
Keppel Lakefront
(Nantong) Property
Development Co Ltd
55%
PT Mitra Sindo Sukses/
PT Mitra Sindo Makmur
28%
Waterfront
Residence
Nantong,
China
Jakarta Garden
City
Jakarta,
Indonesia
Land area: 172,215 sqm 70 years lease
Land area: 2,700,000 sqm 30 years lease
with option for
another 20 years
A 1,199-unit residential
development
*(2015)
A 7,000-unit residential
township
*(2013 Phase 2 and 2014
Phase 3)
Major Properties
217
Major Properties
Held By
Effective
Group
Interest Location
Description and
Approximate
Land Area
Tenure
Usage
Estella JV Co Ltd
30%
The Estella
Ho Chi Minh City,
Vietnam
Land area: 47,906 sqm
50 years lease
Dong Nai Waterfront
City LLC (owned by
Portsville Pte Ltd)
27%
Dong Nai
Waterfront City
Dong Nai Province,
Vietnam
Land area: 3,667,127 sqm 50 years lease
A 1,393-unit high-rise
residential development with
supporting commercial space
in An Phu Ward in prime
District 2
*(2018 Phase 2)
A 7,850-unit residential
township
*(2018 Phase 1)
Industrial properties
Keppel FELS Limited
100%
Jurong, Pioneer,
Crescent and
Tuas South Yard,
Singapore
Land area: 741,773 sqm 3 - 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: 799,111 sqm 30 years leasehold
buildings, workshops,
drydocks and wharves
Shiprepairing, shipbuilding
and marine construction
* Expected year of completion
218
Keppel Corporation Limited
Report to Shareholders 2012
Group Five-Year Performance
Selected Profit & Loss Account Data
($ million)
Revenue
Profit (before revaluation, major impairment
and divestments)
Operating
Before tax
Net profit
Attributable profit after revaluation,
major impairment and divestments
Selected Balance Sheet Data
($ million)
Fixed assets & properties
Investments
Stocks, debtors, cash & long term assets
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 & revaluation, major impairment
and divestments
After tax & before revaluation, major impairment
and divestments
After tax & revaluation, major impairment
and divestments
Total distribution (cents)
Net assets ($)
Net tangible assets ($)
Financial Ratios
Return on shareholders’ funds (%) (Note 2):
Profit before tax and revaluation, major impairment
and divestments
Net profit before revaluation, major impairment
and divestments
Dividend cover (times)
Net cash / (gearing) (times)
Employees
Number
Wages & salaries ($ million)
2008
2009
2010
2011
2012
11,784
11,990
9,140
10,082
13,965
1,222
1,573
1,079
1,424
1,748
1,190
1,556
1,889
1,307
1,897
2,177
1,491
1,082
1,540
1,591
1,946
5,077
3,659
8,173
78
16,987
7,960
1,970
167
6,890
4,640
2,250
6,890
75.5
61.7
61.9
31.8
2.65
2.60
26.7
21.8
1.9
0.04
5,208
3,347
9,326
90
17,971
7,251
1,759
224
8,737
5,944
2,793
8,737
85.1
67.9
87.9
55.5
3.39
3.34
28.2
22.5
1.2
0.13
5,451
4,618
11,467
108
21,644
7,689
4,068
232
9,655
6,619
3,036
9,655
93.4
74.3
90.4
38.2
3.75
3.69
26.2
20.8
1.9
0.02
7,326
5,350
12,325
99
25,100
8,195
4,877
267
11,761
7,699
4,062
11,761
105.4
83.8
109.4
43.0
4.32
4.26
26.2
20.8
1.9
(0.16)
35,621
1,329
31,775
1,372
31,360
1,367
33,747
1,433
2,396
2,695
1,914
2,237
8,760
5,909
14,391
110
29,170
8,058
7,208
326
13,578
9,246
4,332
13,578
130.4
106.8
124.8
72.4
5.14
5.08
27.6
22.6
1.5
(0.23)
38,390
1,579
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 restated due to retrospective application of Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets.
In calculating return on shareholders’ funds, average shareholders’ funds has been used.
Group Five-Year Performance
219
Group Five-Year Performance
2012
Group revenue of $13,965 million was 39% higher than 2011. Revenue from Offshore & Marine Division of $7,963 million
was 40% above that of the previous year due to higher volume of work. The Division completed and delivered two
semisubmersible rigs, one semisubmersible rig upgrade, four jack-up rigs, one multi-purpose self-elevating platform,
one drillship outfitting, four FPSO conversions/upgrades, one FPSO module fabrication and integration, one FSU upgrade,
one pipelay vessel completion, two specialised vessels and several upgrade/repair projects. Revenue from Infrastructure
Division decreased slightly by $31 million or 1% to $2,832 million. Lower revenue from Engineering, Procurement and
Construction contracts was partly offset by higher revenue generated from the co-generation power plant in Singapore.
Revenue from Property Division of $3,018 million was 106% above 2011. The lumpy revenue was due mainly to higher
contributions from Reflections at Keppel Bay following the delivery of residential units sold under the deferred payment
scheme to the purchasers. This high level of revenue is not expected in 2013 as revenue recognition from sale of
Reflections at Keppel Bay is expected to be lower.
At the pre-tax level (before revaluation, major impairment and divestments), Group profit of $2,695 million was 24% higher
than 2011. Pre-tax earnings from Offshore & Marine Division decreased by 17% to $1,181 million, principally because of
lower margins for rig building contracts. Profit from Infrastructure Division decreased by 65% to $42 million as a result of
losses from Keppel Integrated Engineering, partly offset by better performance from Keppel Energy. Profit from Property
Division increased from $582 million to $1,276 million due to higher contribution from associated companies and higher
contribution from Reflections at Keppel Bay.
2011
Group revenue exceeded $10 billion, which was 10% higher than 2010. Revenue from Offshore & Marine Division of $5,706
million was slightly above that of the previous year. During the year, the Division completed and delivered eight rigs, seven
major FPSO/FSO conversion projects and eleven specialised vessels, among other repair, upgrade and completion projects.
Revenue from Infrastructure Division increased by $353 million or 14% to $2,863 million. Higher revenue generated from
the cogen power plant in Singapore was partly offset by lower revenue from Keppel Integrated Engineering. Revenue from
Property Division of $1,467 million was $425 million or 41% above the previous year. Overseas operations reported higher
revenue, due largely to the completion of several projects/phases in India, China and Vietnam in 2011. Higher revenue was
also reported by Singapore trading projects, such as Reflections at Keppel Bay, The Lakefront Residences, The Luxurie and
Madison Residences due to higher sales and percentage of physical completion achieved.
At the pre-tax level (before revaluation, major impairment and divestments), Group profit of $2,177 million was 15%
higher than FY 2010. Pre-tax earnings from Offshore & Marine Division increased by 14% to $1,417 million. This was due
to cost savings and higher margins on jobs. Profit from Infrastructure Division increased by 29% to $120 million as a
result of better performance from Keppel Energy, partly offset by losses from Keppel Integrated Engineering. Property
Division recorded profit of $582 million, an increase of 19% over the preceding year. This was mainly attributable to higher
contribution from several residential projects in Singapore, China and Vietnam. Profit from Investments Division was lower
due to higher costs in 2011.
Revenue ($ billion)
Pre-Tax Profit ($ million) **
Net Profit ($ million) **
15
10
5
0
3,000
2,000
1,000
0
2008 2009 2010 2011 2012
3,000
2,000
1,000
0
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
11.8
12.0
9.1
10.1 14.0
1,573 1,748 1,889 2,177 2,695
1,079 1,190 1,307 1,491 1,914
** Figures exclude revaluation, major impairment and divestments.
220
Keppel Corporation Limited
Report to Shareholders 2012
2010
Group revenue of $9,140 million was 24% 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, seventeen 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 $1,042 million was $209 million or 17% lower
than the previous year. The decrease was mainly attributable to lower sales of residential homes partially offset by higher
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 (before revaluation, major impairment and divestments), Group profit of $1,889 million was 8% 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 $488 million, an increase of 33%
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 $206 million or 2% to $11,990 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 $1,251 million was 35% 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 (before revaluation, major impairment and divestments), Group earnings of $1,748 million were
11% 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 $368 million, 8% higher. Earnings have
increased because of higher revenue recognition from residential properties and share of profit of associated companies
developing Marina Bay Residences in Singapore. Profit from Investments was lower following the disposal of Singapore
Petroleum Company in June 2009.
Shareholders’ Funds ($ billion)
Capital Employed ($ billion)
Market Capitalisation ($ billion)
12
8
4
0
15
10
5
0
30
20
10
0
2008* 2009* 2010* 2011* 2012
2008* 2009* 2010* 2011* 2012
2008 2009 2010 2011 2012
4.6
5.9
6.6
7.7
9.2
6.9
8.7
9.7
11.8 13.6
6.9
13.1 18.2
16.6 19.8
* Comparative figures have been restated due to retrospective application of Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets.
Group Five-Year Performance
221
Group Five-Year Performance
2008
Group revenue of $11,784 million was $1,640 million or 16% 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 73% 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 $929 million was $619 million or 40%
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 (before revaluation, major impairment and divestments) of $1,573 million was 8% 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 $341 million, $29 million or 8% 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 revaluation, major impairment and divestments was $1,079 million.
222
Keppel Corporation Limited
Report to Shareholders 2012
Group Value-Added Statements
2008
2009
2010
2011
2012
($ million)
Value added from:
Revenue earned
Less: purchases of materials and services
Gross value added from operation
11,784
(9,094)
2,690
11,990
(9,020)
2,970
9,140
(6,028)
3,112
10,082
(6,544)
3,538
13,965
(9,779)
4,186
In addition:
Interest and investment income
Share of associated companies’ profits **
Revaluation, major impairment and divestments
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
83
347
13
3,133
1,329
283
79
103
1,098
1,280
79
295
322
3,666
1,372
357
50
87
574
711
120
278
661
4,171
1,367
409
65
130
991
1,186
139
240
1,135
5,052
1,433
444
98
158
724
980
Total Distribution
2,892
2,440
2,962
2,857
Balance retained in the business:
Depreciation & amortisation
Non-controlling interests share of profits
in subsidiaries
Retained profit for the year
139
118
(16)
241
174
189
208
85
967
1,226
420
600
1,209
765
1,222
2,195
3,133
3,666
4,171
5,052
167
266
562
5,181
1,579
501
135
212
789
1,136
3,216
211
306
1,448
1,965
5,181
Number of employees
Productivity data:
35,621
31,775
31,360
33,747
38,390
Gross value added per employee ($’000)
Gross value added per dollar employment cost ($)
Gross value added per dollar sales ($)
76
2.02
0.23
93
2.16
0.25
99
2.28
0.34
105
2.47
0.35
($ million)
6,000
5,000
4,000
3,000
2,000
1,000
0
*
3,133
241
1,280
283
1,329
3,666
1,226
711
357
1,372
4,171
1,209
1,186
409
1,367
5,052
2,195
980
444
1,433
2008*
2009*
2010*
2011*
109
2.65
0.30
5,181
1,965
1,136
501
1,579
2012
Comparative figures have been restated due to retrospective application of
Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets.
** Figures exclude revaluation, major impairment and divestments.
Group Value-Added Statements
223
Depreciation & Retained Profit
Interest Expenses & Dividends
Taxation
Wages, Salaries & Benefits
Share Performance
Turnover (million)
400
Share Prices ($)
40
300
200
180
160
140
120
100
80
60
40
20
0
30
20
18
16
14
12
10
8
6
4
2
0
2008
2009
2010
2011
2012
Turnover
High and Low Prices
Share Price ($)*
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 ($)
Distribution yield (%) (Note 3)
Net price earnings ratio (Note 3)**
Net price to book ratio (Note 3)
Net assets backing ($)
2008
2009
2010
2011
3.94
11.67
3.05
7.81
61.7
31.8
4.1
12.7
3.94
8.1
6.4
1.5
2.60
7.48
7.91
3.61
5.82
67.9
55.5
9.5
8.6
7.48
7.4
11.0
2.2
3.34
10.29
10.42
7.15
8.27
74.3
38.2
4.6
11.1
10.29
3.7
13.8
2.8
3.69
9.30
12.18
7.02
9.88
83.8
43.0
4.4
11.8
9.30
4.6
11.1
2.2
4.26
2012
11.00
11.67
9.32
10.75
106.8
72.4
6.7
10.1
11.00
6.6
10.3
2.2
5.08
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 restated due to retrospective application of Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets.
* Historical share prices are not adjusted for special dividends, capital distribution and dividend in specie.
** Figures exclude revaluation, major impairment and divestments.
224
Keppel Corporation Limited
Report to Shareholders 2012
Shareholding Statistics
As at 5 March 2013
Total number of issued shares
Issued and fully paid-up capital : $1,173,998,047.06
Class of Shares
: 1,803,665,669
: 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 as at 5 March 2013
Temasek Holdings (Private) Limited
Citibank Nominees Singapore Pte Ltd
DBS Nominees Pte Ltd
DBSN Services Pte Ltd
HSBC (Singapore) Nominees Pte Ltd
United Overseas Bank Nominees Pte Ltd
BNP Paribas Securities Services
Raffles Nominees (Pte) Ltd
Bank of Singapore Nominees Pte Ltd
Merrill Lynch (Singapore) Pte Ltd
DB Nominees (S) Pte Ltd
Shanwood Development Pte Ltd
Teo Soon Hoe
Choo Chiau Beng
OCBC Nominees Singapore Pte Ltd
Lim Chee Onn
BNP Paribas Nominees Singapore Pte Ltd
OCBC Securities Private Ltd
UOB Kay Hian Pte Ltd
Tong Chong Heong
Total
Number of
Shareholders
2,758
28,689
4,579
35
%
7.65
79.55
12.70
0.10
Number of
Shares
798,096
87,019,528
146,399,606
1,569,448,439
%
0.04
4.83
8.12
87.01
36,061
100.00
1,803,665,669
100.00
Number of
Shares
371,408,292
334,506,011
255,593,526
208,202,436
157,560,779
57,076,895
56,388,965
46,366,051
9,795,330
7,586,022
7,079,722
7,040,000
5,241,365(i)
4,394,032(ii)
4,135,742
3,544,282
2,481,669
2,406,500
2,400,032
2,318,640(iii)
1,545,526,291
%
20.59
18.55
14.17
11.54
8.74
3.16
3.13
2.57
0.54
0.42
0.39
0.39
0.29
0.24
0.23
0.20
0.14
0.13
0.13
0.13
85.68
Notes:
(i)
(ii)
(iii) Includes 660,000 shares held by Coutts Co Ltd, SG, 220,000 shares held by OCBC Nominees Singapore Pte Ltd, 55,000 held by Maybank Kim Eng Securities
Includes 44,000 shares held by OCBC Nominees Singapore Pte Ltd on his behalf.
Includes 1,540,000 shares and 554,000 shares held by HSBC (Singapore) Nominees Pte Ltd and DBS Nominees Pte Ltd respectively on his behalf.
Pte Ltd, 500,000 shares held by UBS AG, 100,000 held by DMG & Partners Securities Pte Ltd and 300,000 shares held by Bank of Singapore Nominees Pte
Ltd respectively on his behalf.
Substantial Shareholders
Direct Interest
Deemed Interest
Total Interest
No. of Shares
%
No. of Shares
%
No. of Shares
%
Temasek Holdings (Private) Limited
Aberdeen Asset Management PLC
Aberdeen Asset Management Asia Limited
BlackRock, Inc
The PNC Financial Services Group, Inc
371,408,292
-
-
-
-
20.59%
-
-
-
-
5,936,133
96,961,900
93,301,900
95,200,874
95,202,520
0.33%
5.38%
5.17%
5.28%
5.28%
377,344,425
96,961,900
93,301,900
95,200,874
95,202,520
20.92%
5.38%
5.17%
5.28%
5.28%
Notes:
(1) Temasek Holdings (Private) Limited is deemed to be interested in an aggregate of 5,936,133 shares in which its subsidiaries and associated companies
have an interest.
(2) Aberdeen Asset Management PLC (AAMPL) is deemed to be interested in an aggregate of 96,961,900 shares held by various accounts managed or advised
by AAMPL over which AAMPL has disposal and voting rights.
(3) Aberdeen Asset Management Asia Limited (AAMAL) is deemed to be interested in an aggregate of 93,301,900 shares held by various accounts managed or
advised by its subsidiaries over which its subsidiaries have disposal and voting rights.
(4) BlackRock, Inc is deemed to be interested in an aggregate of 95,200,874 shares held through its various subsidiaries.
(5) The PNC Financial Services Group, Inc is deemed to be interested in the shares held through BlackRock, Inc through its over 10% ownership of BlackRock,
Inc. and 1,646 ordinary shares represented by 823 American Depositary Receipts held by various accounts managed, held in custody or advised by a
subsidiary of The PNC Financial Services Group, Inc. and over which the subsidiary has disposal rights.
Public Shareholders
Based on the information available to the Company as at 5 March 2013, approximately 67% 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 5 March 2013, there are no treasury shares held.
Shareholding Statistics
225
Notice of Annual General Meeting
& Closure of Books
eppel
Corporation
Keppel Corporation Limited
Co Reg No. 196800351N
(Incorporated in the Republic of Singapore)
NOTICE IS HEREBY GIVEN that the 45th Annual General Meeting of the Company will be held at Raffles City Convention
Centre, Stamford Ballroom (Level 4), 80 Bras Basah Road, Singapore 189560 on Friday, 19 April 2013 at 3.00 p.m. to transact
the following business:
Ordinary Business
1.
2.
3.
4.
5.
To receive and adopt the Directors’ Report and Audited Financial Statements for the year ended
31 December 2012.
To declare a final tax-exempt (one-tier) dividend of 27 cents per share for the year ended
31 December 2012 (2011: final tax-exempt (one-tier) dividend of 26 cents per share).
To re-elect the following directors, each of whom will be retiring by rotation pursuant to Article
81B of the Company’s Articles of Association and who, being eligible, offers himself for re-election
pursuant to Article 81C (see Note 3):
(i) Mr Alvin Yeo Khirn Hai
(ii) Mr Tong Chong Heong
(iii) Mr Tan Ek Kia
To re-elect Mr Tan Puay Chiang, 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, offers himself for re-election (see Note 3).
To approve the ordinary remuneration of the non-executive directors of the Company for the financial
year ended 31 December 2012, comprising the following:
(1)
the payment of directors’ fees of an aggregate amount of $1,218,880 in cash (2011: $1,382,500);
and
(2)
(a)
the award of an aggregate number of 31,400 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, Mr Danny Teoh and Mr Tan Puay Chiang
as payment in part of their respective remuneration for the financial year ended
31 December 2012 as follows:
Resolution 1
Resolution 2
Resolution 3
Resolution 4
Resolution 5
Resolution 6
Resolution 7
(i)
10,000 Remuneration Shares to Dr Lee Boon Yang;
(ii)
900 Remuneration Shares to Mr Lim Hock San;
(iii) 900 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;
226
Keppel Corporation Limited
Report to Shareholders 2012
(vii) 3,000 Remuneration Shares to Mr Alvin Yeo Khirn Hai;
(viii) 3,000 Remuneration Shares to Mr Tan Ek Kia;
(ix) 3,000 Remuneration Shares to Mr Danny Teoh; and
(x)
1,600 Remuneration Shares to Mr Tan Puay Chiang,
(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 31,400 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 4).
6.
To re-appoint the Auditors and authorise the directors of the Company to fix their remuneration.
Resolution 8
Special Business
To consider and, if thought fit, to pass with or without any modifications, the following Ordinary Resolutions:
7.
That pursuant to Section 161 of the Companies Act, Chapter 50 of Singapore (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 9
(1)
(a)
issue shares in the capital of the Company (“Shares”), whether by way of rights, bonus
or otherwise, and including any capitalisation pursuant to Article 124 of the Company’s
Articles of Association of any sum for the time being standing to the credit of any of the
Company’s reserve accounts or any sum standing to the credit of the profit and loss
account or otherwise available for distribution; and/or
(b) make or grant offers, agreements or options that might or would require Shares to be
issued (including but not limited to the creation and issue of (as well as adjustments
to) warrants, debentures or other instruments convertible into Shares) (collectively
“Instruments”),
at any time and upon such terms and conditions and for such purposes and to such persons as
the directors may in their absolute discretion deem fit; and
(2)
(notwithstanding that the authority so conferred by this Resolution may have ceased to be in
force) issue Shares in pursuance of any Instrument made or granted by the directors of the
Company while the authority was in force;
provided that:
(i)
the aggregate number of Shares to be issued pursuant to this Resolution (including Shares
to be issued in pursuance of Instruments made or granted pursuant to this Resolution and
any adjustment effected under any relevant Instrument) 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);
Notice of Annual General Meeting and Closure of Books
227
Notice of Annual General Meeting and Closure of Books
(ii)
(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:
(iii)
(iv)
8.
That:
(1)
(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 5).
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;
228
Keppel Corporation Limited
Report to Shareholders 2012
Resolution 10
(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,
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 offer for the purchase or acquisition of Shares from holders of Shares, stating therein the
relevant terms of the equal access scheme for effecting the Off-Market Purchase; 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 6).
9.
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”);
Resolution 11
Notice of Annual General Meeting and Closure of Books
229
Notice of Annual General Meeting and Closure of Books
(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 7).
To transact such other business which can be transacted at the annual general meeting of the Company.
NOTICE IS ALSO HEREBY GIVEN THAT:
(a)
(b)
the Share Transfer Books and the Register of Members of the Company will be closed on 26 April 2013 at 5.00 p.m. 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 26 April 2013 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 8 May 2013; and
the electronic copy of the Company’s Annual Report 2012 will be published on the Company’s website on 28 March
2013. The Company’s website address is http://www.kepcorp.com, and the electronic copy of the Annual Report 2012
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 2012, 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/Kenny Lee
Company Secretaries
Singapore, 28 March 2013
Notes:
1.
The Chairman of this annual general meeting will be exercising his right under Article 67 of the Company’s Articles of Association to demand a poll in
respect of each of the resolutions to be put to the vote of members at the annual general meeting and at any adjournment thereof. Accordingly, each
resolution at the annual general meeting will be voted on by way of a poll.
2.
3.
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.
Detailed information on these directors can be found in the “Board of Directors” and “Directors and Key Executives” sections of the Company’s Annual
Report.
Mr Alvin Yeo will upon re-election continue to serve as member of the Audit and Board Risk Committees. Mr Alvin Yeo is a Senior Partner of WongPartnership
LLP and a member of the Monetary Authority of Singapore advisory panel to advise the Minister on appeals under various financial services legislation and
the Singapore International Arbitration Centre’s Council of Advisors. He is also a Member of Parliament for Chua Chu Kang GRC and currently serves as a
director and a member of the Audit Committee and Chairman of the Remuneration Committee of United Industrial Corporation Limited and Singapore Land
Limited.
230
Keppel Corporation Limited
Report to Shareholders 2012
Mr Tan Ek Kia will upon his re-election continue to serve as the Chairman of the Board Safety Committee and member of the Nominating Committee.
Mr Tan is a seasoned executive in the oil and gas and petrochemicals business. 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, Mr Tan 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 SMRT Corporation Ltd, CitySpring Infrastructure Management Pte Ltd (as Trustee-Manager of CitySpring
Infrastructure Trust), Transocean Ltd and PT Chandra Asli Petrochemical Tbk.
Mr Tan Puay Chiang will upon his re-election continue to serve as a member of the Board Risk and Board Safety Committees. Mr Tan Puay Chiang was
formerly Chairman, ExxonMobil (China) Investment Co. During his 37-year career with Mobil and later ExxonMobil, he held executive management roles
in Australia, Singapore and the United States. These included the executive positions of Vice-President, Mobil Research & Technology Corp, United States;
and Chairman of Mobil Oil Australia. His other directorships include Neptune Orient Lines Limited, Singapore Power Limited and Energy Studies Institute
(NUS).
The above three directors are considered by the Board, taking into account the views of the Nominating Committee, to be independent directors.
4.
5.
6.
7.
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 2012, and is in addition to the proposed directors’ fees in cash mentioned in this Resolution 7. 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 2012. 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 Lim Hock San and Mr Sven Bang Ullring will, subject to shareholders’ approval, each be awarded 900 Shares (on a pro rata basis) as part of their
ordinary remuneration for service as non-executive directors from 1 January 2012 to 20 April 2012. Mr Tan Puay Chiang will, subject to shareholders’
approval, be awarded 1,600 Shares (on a pro rata basis) as part of his ordinary remuneration for service as non-executive director from 20 June 2012 to
31 December 2012. 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.
Resolution 9 is to empower the directors from the date of the annual general meeting until the date of the next annual general meeting to issue 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 this Resolution 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 9 is passed, and any subsequent bonus issue, consolidation or
sub-division of Shares.
Resolution 10 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 20 April 2012. At this annual general meeting, the Company is seeking a “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, Chapter 50 of
Singapore. Please refer to Appendix 1 of this Notice of Annual General Meeting for further details.
Resolution 11 relates to the renewal of a mandate given by Shareholders on 22 May 2003 allowing the Company, its subsidiaries and target associated
companies to enter into transactions with interested persons as defined in Chapter 9 of the Listing Manual of the SGX-ST. Please refer to Appendix 2 of this
Notice of Annual General Meeting for details.
Notice of Annual General Meeting and Closure of Books
231
Corporate Information
BOARD OF DIRECTORS
NOMINATING COMMITTEE
REGISTERED OFFICE
Lee Boon Yang (Chairman)
Choo Chiau Beng (Chief Executive
Officer)
Tony Chew Leong-Chee
Oon Kum Loon (Mrs)
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Tan Puay Chiang
Teo Soon Hoe
Tong Chong Heong
AUDIT COMMITTEE
Danny Teoh (Chairman)
Tony Chew Leong-Chee
Oon Kum Loon (Mrs)
Alvin Yeo Khirn Hai
REMUNERATION COMMITTEE
Danny Teoh (Chairman)
Lee Boon Yang
Oon Kum Loon (Mrs)
Tow Heng Tan
Tony Chew Leong-Chee (Chairman)
Lee Boon Yang
Tow Heng Tan
Tan Ek Kia
BOARD RISK COMMITTEE
Oon Kum Loon (Mrs) (Chairman)
Tow Heng Tan
Alvin Yeo Khirn Hai
Danny Teoh
Tan Puay Chiang
BOARD SAFETY COMMITTEE
Tan Ek Kia (Chairman)
Lee Boon Yang
Choo Chiau Beng
Tan Puay Chiang
COMPANY SECRETARIES
Caroline Chang
Kenny Lee
1 HarbourFront Avenue
#18-01 Keppel Bay Tower
Singapore 098632
Telephone: (65) 6270 6666
Facsimile No.: (65) 6413 6391
Email: keppelgroup@kepcorp.com
Website: www.kepcorp.com
SHARE REGISTRAR
B.A.C.S. Private Limited
63 Cantonment Road
Singapore 089758
AUDITORS
Deloitte & Touche LLP
Certified Public Accountants
6 Shenton Way Tower Two
#32-00
Singapore 068809
Audit Partner: Cheung Pui Yuen
Year appointed: 2011
232
Keppel Corporation Limited
Report to Shareholders 2012
Financial Calendar
FY 2012
Financial year-end
Announcement of 2012 1Q results
Announcement of 2012 2Q results
Announcement of 2012 3Q results
Announcement of 2012 full year results
Despatch of Annual Report to Shareholders
Annual General Meeting
2012 Proposed final dividend and dividend in specie
Books closure date
Payment date
FY 2013
Financial year-end
Announcement of 2013 1Q results
Announcement of 2013 2Q results
Announcement of 2013 3Q results
Announcement of 2013 full year results
31 December 2012
19 April 2012
19 July 2012
18 October 2012
24 January 2013
28 March 2013
19 April 2013
5.00 p.m., 26 April 2013
8 May 2013
31 December 2013
April 2013
July 2013
October 2013
January 2014
Financial Calendar
233
This page is intentionally left blank
eppel
Corporation
Keppel Corporation Limited
Co Reg No. 196800351N
(Incorporated in the Republic of Singapore)
ANNUAL GENERAL MEETING
Proxy Form
IMPORTANT
1. For investors who have used their CPF monies to buy Keppel Corporation Limited’s
shares, this Annual Report is forwarded to them at the request of their CPF Approved
Nominees and is sent solely FOR INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all
intents and purposes if used or purported to be used by them.
3. CPF investors who wish to attend the Annual General Meeting as observers have
to submit their requests through their CPF Approved Nominees so that their CPF
Approved Nominee may register, within the specified timeframe, with the Company’s
Share Registrar. (CPF Approved Nominee: Please refer to Note No. 7 on the reverse
side of this form on the required details.)
4. CPF investors who wish to vote must submit their voting instructions to their CPF
Approved Nominees to enable them to vote on their behalf.
I/We (Name) (NRIC/Passport Number)
of (Address)
being a Shareholder(s) of KEPPEL CORPORATION LIMITED (the “Company”) hereby appoint:
Name
Address
NRIC/
Passport Number
Proportion of Shareholdings
No. of Shares
%
and/or (delete as appropriate)
Name
Address
NRIC/
Passport Number
Proportion of Shareholdings
No. of Shares
%
F
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as my/our proxy/proxies to attend and vote for me/us on my/our behalf at the Annual General Meeting of the Shareholders of the
Company (“AGM”) to be held on 19 April 2013 at Raffles City Convention Centre, Stamford Ballroom (Level 4), 80 Bras Basah Road,
Singapore 189560 at 3.00 p.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the resolutions
to be proposed at the meeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or
abstain from voting at his/their discretion, as he/they will on any other matter arising at the meeting and at any adjournment thereof .
NOTE: The Chairman of the AGM will be exercising his right under Article 67 of the Articles of Association of the Company to
demand a poll in respect of the resolutions to be put to the vote of the Shareholders at the AGM and at any adjournment
thereof. Accordingly, each resolution at the AGM will be voted on by way of poll.
Resolutions
Number of Votes
For *
Number of Votes
Against *
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Ordinary Business
1. Adoption of Directors’ Report and Audited Financial Statements
2. Declaration of dividend
3. Re-election of Mr Alvin Yeo Khirn Hai as director
4. Re-election of Mr Tong Chong Heong as director
5. Re-election of Mr Tan Ek Kia as director
6. Re-election of Mr Tan Puay Chiang as director
7. Approval of remuneration to non-executive directors comprising payment
of directors’ fees and award of Remuneration Shares
8. Re-appointment of Auditors
Special Business
9. Authority to issue shares and convertible instruments
10. Renewal of Share Purchase Mandate
11. Renewal of Shareholders’ Mandate for Interested Person Transactions
*
If you wish to exercise all your votes “For” or “Against” the relevant resolution, please tick ((cid:23)) within the relevant box provided. Alternatively, if you wish to
exercise your votes for both “For” and “Against” the relevant resolution, please indicate the number of Shares in the boxes provided.
Dated this day of 2013
Total Number of
Shares held
Signature(s) or Common Seal of Member(s)
IMPORTANT: Please read the notes overleaf before completing this Proxy Form.
Fold and glue firmly along dotted line
Notes:
1.
2.
Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as
defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you only have
Shares registered in your name in the Register of Members, you should insert that number of Shares. However, if you have Shares
entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should
insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the
Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the
Shares held by you.
A Shareholder of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to
attend and vote instead of him. A proxy need not be a Shareholder of the Company. Where a Shareholder appoints two proxies, the
proportion of the shareholding concerned to be represented by each proxy shall be specified in the proxy form. If no percentage is
specified, the first named proxy shall be deemed to represent 100 per cent of the shareholding and the second named proxy shall
be deemed to be an alternate to the first named proxy.
3.
The instrument appointing a proxy or proxies 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 the Annual General Meeting.
Affix
Postage
Stamp
Fold along this line (1)
The Company Secretary
Keppel Corporation Limited
1 HarbourFront Avenue
#18-01 Keppel Bay Tower
Singapore 098632
Fold along this line (2)
4.
5.
6.
7.
The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing.
Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under
the hand of an officer or attorney duly authorised. Where an instrument appointing a proxy is signed on behalf of the appointor by
an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be
lodged with the instrument of proxy, failing which the instrument may be treated as invalid.
A corporation which is a Shareholder may authorise, by resolution of its directors or other governing body, such person as it thinks
fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of
Singapore.
The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or
illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the
instrument appointing a proxy or proxies. In addition, in the case of Shareholders whose Shares are entered against their names in
the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such Shareholders are not
shown to have Shares entered against their names in the Depository Register 48 hours before the time appointed for holding the
Annual General Meeting as certified by The Central Depository (Pte) Limited to the Company.
CPF Approved Nominees acting on the request of the CPF investors who wish to attend the Annual General Meeting as observers
are requested to submit in writing, a list with details of the CPF investors’ names, NRIC/Passport numbers, addresses and number
of Shares held. The list, signed by an authorised signatory of the CPF Approved Nominee, should reach the Company’s Share
Registrar, B.A.C.S. Private Limited at 63 Cantonment Road, Singapore 089758 at least 48 hours before the time fixed for the Annual
General Meeting.
Edited and Compiled by
Group Corporate Communications, Keppel Corporation
Designed by
Sedgwick Richardson
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