CONFIGURED
FOR GROWTH
Report to Shareholders 2013
Vision
To be the provider of choice
for solutions to the offshore &
marine industries, sustainable
environment and urban living.
Mission
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
Interview with the CEO
GROUP OVERVIEW
Key Figures for 2013
1
2 Group Financial Highlights
4 Group at a Glance
6 Keppel Around the World
8 Chairman’s Statement
14
21 Board of Directors
26 Keppel Group Boards of Directors
28 Keppel Technology Advisory Panel
30 Senior Management
32
35 Awards & Accolades
38 Configured for Growth
– Growing Beyond 45
Investor Relations
OPERATING & FINANCIAL REVIEW
49 Group Structure
50 Management Discussion & Analysis
52 Offshore & Marine
64 Infrastructure
72 Property
80 Investments
82 Financial Review & Outlook
GOVERNANCE & SUSTAINABILITY
90 Sustainability Report Highlights
Sustaining Growth
92 Corporate Governance
116 Risk Management
120 Environmental Performance
121 Product Excellence
Empowering Lives
122 Labour Practices & Human Rights
123 Safety & Health
Nurturing Communities
124 Our Community
FINANCIAL STATEMENTS
Directors’ Report & Financial Statements
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 Statement of Changes in Equity
141 Consolidated Statement
of Cash Flows
144 Notes to the Financial Statements
190 Significant Subsidiaries &
Associated Companies
OTHER INFORMATION
201 Interested Person Transactions
202 Key Executives
212 Major Properties
217 Group Five-Year Performance
221 Group Value-Added Statements
222 Share Performance
223 Shareholding Statistics
224 Notice of Annual General Meeting
& Closure of Books
229 Corporate Information
230 Financial Calendar
231 Proxy Form
CONFIGURED
FOR GROWTH
Constantly shaping itself for the future,
Keppel’s drive for sustainable growth
finds expression in the tangram,
a symbol of flexibility and potential.
Key Figures for 2013
CONFIGURED
FOR GROWTH
Revenue
$12.4b
Decreased 11% from
FY 2012’s $14.0 billion
Revenue decreased mainly due to
lower contribution from Reflections at
Keppel Bay and as new Offshore &
Marine jobs have not reached the stage
of revenue recognition. These were
partially offset by better performance
of the Infrastructure Division.
Return On Equity
14.9%*
Decreased by 7.7 percentage points
from FY 2012’s 22.6%
Return On Equity decreased mainly
due to the decline in net profit
and higher equity.
Earnings Per Share
78.2cts*
Decreased 27% from
FY 2012’s 106.8 cents per share
No significant dilution in Earnings
Per Share as no major capital call
was made since 1997.
Net Asset Value Per Share
$5.37
Increased 4% from
FY 2012’s $5.14 per share
Net Profi t
$1,412m*
Decreased 26% from
FY 2012’s $1,914 million
Net profit before revaluation, major
impairment and divestments decreased
mainly due to the absence of one-off
contribution from sales of Reflections
at Keppel Bay units in FY 2012 arising
from units sold under the deferred
payment scheme, and fewer disposals
of equity investments in FY 2013. These
were partly offset by higher profits from
China and gains from the divestment
of Jakarta Garden City.
Economic Value Added
$939m*
Decreased 32% from
FY 2012’s $1,375 million
Lower Economic Value Added was
mainly due to lower net operating
profit after tax and higher
capital charge.
Distribution Per Share
49.5cts
Decreased 33% from
FY 2012’s 73.6 cents per share
Total distribution for 2013 will comprise
a final proposed dividend of 30.0 cents
per share, an interim cash dividend of
10.0 cents per share, and a special
dividend in specie of eight Keppel REIT
units for every 100 shares held in the
Company (equivalent to 9.5 cents
per share).
Net Gearing Ratio
0.11x
Decreased from
FY 2012’s net gearing of 0.23x
* Figures exclude revaluation,
major impairment and divestments.
Key Figures for 2013
1
Group Financial Highlights
Earnings Per Share (cents)**
Return On Equity (%)**
-27% from
FY 2012
-34% from
FY 2012
78.2
2013
106.8
2012
14.9
2013
22.6
2012
No significant dilution in Earnings Per Share as no major
capital call was made since 1997.
Return On Equity decreased mainly due to the decline in
net profit and higher equity.
Net Asset Value Per Share ($)
Economic Value Added ($ million)**
+4% from
FY 2012
-32% from
FY 2012
5.37
2013
5.14
2012
939
2013
1,375
2012
Increased 4% from FY 2012’s $5.14 per share.
Lower Economic Value Added was mainly due to lower
net operating profit after tax and higher capital charge.
2
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
Group Quarterly Results ($ million)
Revenue
EBITDA
Operating profi t**
Profi t before tax**
Attributable profi t**
Earnings per share (cents)**
1Q
2Q
2,759
425
371
470
331
18.4
3,076
481
422
519
346
19.1
2013
3Q
2,947
572
507
608
403
22.3
4Q
Total
3,598 12,380
2,016
1,774
2,163
1,412
78.2
538
474
566
332
18.4
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
2013
2012
% Change
For the year ($ million)
Revenue
Profi t (before revaluation, major impairment and divestments)
12,380
13,965
EBITDA
Operating
Before tax
Net profi t
Attributable profi t after revaluation, major impairment and divestments
Operating cash fl ow
Free cash fl ow*
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 (%)
Profi t before tax & revaluation, major impairment and divestments
Net profi t before revaluation, major impairment and divestments
Shareholders’ value
Distribution (cents per share)
Interim dividend
Final dividend
Special dividend in specie
Total distribution
Share price ($)
Total Shareholder Return (%)
* Free cash fl ow excludes expansionary acquisitions and capex, and major divestments.
** Figures exclude revaluation, major impairment and divestments.
2,016
1,774
2,163
1,412
1,846
625
642
939
1,142
96.3
78.2
102.3
5.37
5.32
9,701
3,988
13,689
1,535
0.11
18.4
14.9
10.0
30.0
9.5
49.5
11.19
9.0
2,607
2,396
2,695
1,914
2,237
1,006
625
1,375
1,430
130.4
106.8
124.8
5.14
5.08
9,246
4,332
13,578
3,153
0.23
27.6
22.6
18.0
27.0
28.6
73.6
11.00
22.9
-11%
-23%
-26%
-20%
-26%
-17%
-38%
+3%
-32%
-20%
-26%
-27%
-18%
+4%
+5%
+5%
-8%
+1%
-51%
-52%
-33%
-34%
-44%
+11%
-67%
-33%
+2%
-61%
Group Financial Highlights
3
Group at a Glance
KEPPEL CORPORATION
STRATEGIC DIRECTIONS
• Stay focused on multi-business model
and core competencies, while seeking
opportunities in close adjacencies.
• Sharpen execution through constant
improvements to optimise productivity
and efficiencies.
• Invest continuously in Research &
Development and innovation
to provide customers with the best
value proposition.
• Bolster bench strength through talent
management and succession planning.
• Maintain strong financial discipline
and deploy capital astutely to
seize opportunities for the best
risk-adjusted returns.
Revenue ($ million)
Net Profi t* ($ million)
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
12,380
13,965
10,082
9,140
11,990
1,412
1,914
1,491
1,307
1,190
* Net profi t excludes revaluation, major impairment and divestments.
OFFSHORE & MARINE
INFRASTRUCTURE
PROPERTY
INVESTMENTS
CONFIGURED
FOR GROWTH
Revenue ($ million)
Net Profi t* ($ million)
7,126
7,963
5,706
5,577
8,273
930
937
1,064
987
810
Revenue ($ million)
Net (Loss)/Profi t* ($ million)
3,459
2,832
2,863
2,510
2,427
Revenue ($ million)
Net Profi t* ($ million)
1,768
3,018
1,467
1,042
1,251
Revenue ($ million)
Net Profi t* ($ million)
27
152
46
11
39
(14)
(1)
82
57
126
442
784
300
214
135
54
194
45
49
119
FOCUS FOR 2014/2015
• Sharpen execution and grow
technology expertise to amplify
value proposition.
• Boost productivity through innovation.
• Harness synergy of global yards and
leverage Near Market, Near Customer
strategy to seize opportunities in
new markets and adjacent businesses.
• Maintain emphasis on talent
management and Health,
Safety and the Environment.
FOCUS FOR 2014/2015
• Optimise operational efficiency
of existing assets.
• Complete Engineering,
Procurement and Construction
projects in Qatar and the UK.
• Grow expertise in Waste-to-Energy
technology package development.
• Focus on meeting demand for
quality integrated logistics services
and data centre space.
FOCUS FOR 2014/2015
• Focus on Singapore, China,
Indonesia and Vietnam.
• Expand commercial portfolio
overseas.
• Scale up in high-growth cities
and invest opportunistically in
growth markets.
• Recycle capital actively for
higher returns.
• Grow fee income from fund
management.
FOCUS FOR 2014/2015
• k1 Ventures will manage its
investment portfolio to maximise
shareholder value, and distribute
excess cash as investments
are monetised.
• KrisEnergy will seek acquisitions
in countries and basins where
it has extensive knowledge and
experience.
• M1 will strengthen its position by
improving on customer experience
and providing value-added services.
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
4
Keppel Corpora†ion Limited Report to Shareholders 2013
Group at a Glance
5
Keppel Around the World
With a global presence in over 30 countries,
we leverage our Near Market, Near Customer
strategy to create sustainable growth and value.
OFFSHORE & MARINE
INFRASTRUCTURE
PROPERTY
INVESTMENTS
Total FY 2013 Revenue
$12,380m
Group revenue was 11% lower
than in FY 2012.
CONFIGURED
FOR GROWTH
India
$18m
Singapore
$4,588m
Japan & South Korea
$100m
Rest of ASEAN
$616m
China & Hong Kong
$665m
Australia
$158m
UNITED
KINGDOM
IRELAND
SWEDEN
POLAND
THE NETHERLANDS
BELGIUM
GERMANY
RUSSIA
UNITED STATES
BULGARIA
AZERBAIJAN
ALGERIA
QATAR
UAE
INDIA
CHINA
SOUTH
KOREA
JAPAN
TAIWAN
HONG KONG
MYANMAR
THAILAND
VIETNAM
THE PHILIPPINES
North America
Europe
$1,686m
$2,658m
BRAZIL
South America
Middle East
$1,164m
$727m
SRI LANKA
MALAYSIA
INDONESIA
SINGAPORE
AUSTRALIA
6
Keppel Corpora†ion Limited Report to Shareholders 2013
Keppel Around the World
7
Chairman’s Statement
We reaffirmed our multi-business strategy, even as we explored
new opportunities in close adjacencies. We also remain focused on
delivering incident-free, quality and timely execution of our projects,
whilst challenging ourselves to further improve efficiencies and
raise productivity.
8
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
The KFELS B Class jackup has become the
industry’s benchmark, with more than
50 units delivered since its launch in 2000.
Market Capitalisation ($ billion)
30
24
18
12
6
0
2011
2012
2013
16.6
19.8
20.2
DEAR SHAREHOLDERS,
We celebrated Keppel Corporation’s 45th anniversary in 2013.
It was a significant milestone and an opportunity to reflect on our
strengths and achievements. As Keppelites, we celebrated our
culture and core values, which continue to drive us to make
a great company even better.
We reaffirmed our multi-business strategy, even as we explored
new opportunities in close adjacencies. We also remain focused on
delivering incident-free, quality and timely execution of our projects,
whilst challenging ourselves to further improve efficiencies and
raise productivity.
COMMENDABLE PERFORMANCE
Much of 2013 saw the world’s financial markets shaken by anxiety over
the impact of the US Quantitative Easing tapering. In Europe, recovery
was slow and patchy while China achieved a modest 7.7% GDP growth
for the year amid a new leadership and ensuing reforms. Singapore’s
2013 GDP growth at 4.1% was slightly above the target of the government’s
earlier revised growth forecast of between 3.5% and 4.0%.
Against the climate of uncertainty, Keppel Corporation has performed
creditably. Excluding revaluations, our net profit was $1.4 billion and our
Return On Equity (ROE) was 14.9%. Economic Value Added was $939 million
for the year. Including revaluations, impairments and divestments,
our net profit for the year was $1.85 billion and ROE was 19.5%.
The Board of Directors has proposed a final dividend of 30.0 cents per
share. Together with the interim dividend of about 19.5 cents per share,
comprising a cash dividend of 10 cents per share and a dividend in specie
of Keppel REIT units equivalent to 9.5 cents per share, total distribution
for 2013 will be 49.5 cents per share.
OFFSHORE & MARINE
2013 was a record year for Keppel Offshore & Marine (Keppel O&M)
as 22 rigs were delivered on time, within budget and safely to our
customers globally. The remarkable feat was achieved with investment in
new technology and equipment, optimisation of our processes, as well
as through leveraging our strong network of yards. We have not only
reaped efficiencies from the integration of our regional network of yards
but also equipped them to take on higher value offshore work.
Building on its Near Market, Near Customer strategy, Keppel O&M
inked an Memorandum of Understanding with PEMEX in October 2013 to
jointly develop, own and operate a yard in Altamira along the coast of the
Gulf of Mexico. The first phase will support the construction of six KFELS
B Class jackups. Through the partnership with PEMEX, we will be able to
tap each other’s technological expertise and extensive experience to
provide world-class solutions for the Mexican market.
For the year, Keppel O&M secured about $7 billion of new contracts in
total from new and repeat customers. Our net orderbook stood at about
$14.2 billion as at end December 2013, with deliveries extending into 2019.
Keppel FELS won a number of significant contracts in 2013. Mexican
drilling company, Grupo R, signed with Keppel FELS to build five KFELS B
Class jackups worth over US$1 billion for delivery progressively from
2Q 2015 to 4Q 2015. Keppel FELS also won orders for a KFELS B Class
Chairman’s Statement
9
Chairman’s Statement
1
2
jackup each from repeat customers such as Ensco, Jindal Group
and PV Drilling.
In November 2013, Keppel FELS won a major Transocean order to
build five KFELS Super B Class jackups for US$1.1 billion, with deliveries
from 1Q 2016 to 3Q 2017. In addition, Transocean has options to build
another five similar rigs with Keppel FELS.
Keppel O&M, through its subsidiaries, Caspian Rigbuilders BV and
Caspian Shipyard Company, secured a contract from Caspian Drilling
Company, a subsidiary of the State Oil Company of Azerbaijan Republic,
to build a DSSTM 38M semisubmersible drilling rig worth about
US$800 million.
The offshore and marine market is getting more competitive.
To strengthen and fortify our leadership position, we will continue
to invest in technology to enhance our efficiency. We will also partner
trend-setting customers as well as universities to sharpen our technology
know-how in innovative solutions for new offshore frontiers.
Presently, we have a suite of 30 proprietary designs and will continue
to expand on our offerings. In line with this, Keppel O&M has decided
to proceed with the construction of the new Keppel CAN-DO drillship.
The new drillship design, developed in close consultation with our
customers, major oil companies and vendors, advances our efforts
towards meeting the needs in the industry for vessels capable of
performing development and completion drilling in addition to
exploration drilling. We have been receiving encouraging response
from the market since the launch of the Keppel design in the later
part of 2013.
To further strengthen our Research & Development capability, Keppel
and the National University of Singapore announced a collaboration with
the National Research Foundation on 25 November 2013 to set up the
Keppel-NUS Corporate Laboratory to pursue three main research thrusts
- Future Systems, Future Yards and Future Resources - to maintain our
position as a global leader in the offshore and marine industry.
INFRASTRUCTURE
Our infrastructure division marked an important milestone in 2013.
Keppel Energy and Keppel Integrated Engineering were reorganised to
become Keppel Infrastructure. The new entity has been busy building
up its strengths in the power and gas business, tightening operations
of the Waste-to-Energy (WTE) projects and growing its portfolio of
related technology solutions.
In the power sector, we expect more competition with the power
retail market liberalisation and as more generation capacities come on
stream. We will ensure that our power plant operates more efficiently
in a more competitive market. Keppel Merlimau Cogen’s new 800MW
power generation facility was completed ahead of schedule, expanding
the plant’s total capacity from 500MW to 1,300MW. It is now fully
operational and has boosted overall efficiency.
In the WTE business, we continued to face challenges with the EPC
contracts in Doha, Qatar and Greater Manchester, the UK. We had
to take additional provisions at the year end. While we deem
the provisions as necessary and adequate for the time being,
we cannot be certain until the projects are completed.
10
Keppel Corpora†ion Limited Report to Shareholders 2013
Our teams remain focused on completing the projects and minimising
losses to the Group. Having learnt from the experience, we will
continue to build, own and operate infrastructure projects in
areas where we have stronger technical knowledge and deeper
understanding of the markets.
Keppel Telecommunications & Transportation (Keppel T&T)
made further progress to build up its reputation as a choice
provider of high-quality, reliable logistics and distribution services
in China. During the year, its subsidiary, Keppel Logistics (Foshan)
acquired a 60% stake in Foshan Sanshui Port Development Co,
making it its third port project in China. Cargo throughput for its
Wuhu Sanshan Port in Anhui Province, which commenced operations
in 2013, has been encouraging. The construction of its other logistics
and distribution hubs in China is on track, an example being the Tianjin
Eco-City Distribution Centre which is scheduled to be completed in the
second half of 2014.
Demand for data centre space remains robust, sustained by the
rising trends in cloud computing, e-commerce and exceptional growth
in social media. In 2013, Keppel T&T expanded its data centre portfolio,
adding more capacity in Singapore, Ireland and the Netherlands.
To ride on the growing demand, Keppel T&T is exploring the setting
up of a data centre real estate investment trust to be listed on the
Singapore Exchange.
PROPERTY
In property, our key markets are Singapore, China, Indonesia and
Vietnam. Geographical diversification has reduced our risk exposure
in any one market while allowing us to allocate resources to scale
up in growth markets and compete better.
Notwithstanding government tightening measures and the softening
market in Singapore and China, Keppel Land sold over 4,400 homes,
mostly in China, almost twice the number sold in 2012.
During the year, Keppel Land entered into a strategic partnership
with China’s largest residential developer, China Vanke, to jointly
develop properties in Singapore and China. The first joint project
is The Glades, a condominium at Tanah Merah, Singapore, in which
Vanke has acquired a 30% stake.
In 2013, Keppel Land sold 370 units in Singapore, mostly from
The Glades and Corals at Keppel Bay. There are plans to launch the
500 homes at the Tiong Bahru site over phases in the first half of 2014.
Acquired in April 2013, the site is located in a precinct which is popular
for its proximity to the CBD and heritage appeal.
The Group sold 3,870 units in China in 2013, with strong take-up
in major projects including The Botanica in Chengdu as well as
The Springdale and 8 Park Avenue in Shanghai. In 2014, there are
plans to launch new projects such as Hill Crest Villa in Chengdu
and Waterfront Residence in Nantong.
Faced with a cooling market, Keppel Land has been disciplined and
selective in acquisitions. In Singapore, Keppel acquired the Tiong Bahru
site while in China, it purchased two prime landed residential sites, one
in Sheshan, Shanghai and the other in Tianjin Eco-City. The two sites in
China will yield a total of about 550 landed homes.
CONFIGURED
FOR GROWTH
To strengthen and
fortify our leadership
position, we will continue
to invest in technology
to enhance our efficiency.
We will also partner
trend-setting customers
as well as universities to
sharpen our technology
know-how in innovative
solutions for new
offshore frontiers.
1. With its capacity
expanded to
1,300MW, Keppel
Merlimau Cogen
has boosted its
overall efficiency.
2. Keppel’s homes
in China’s high-
growth cities
continued to
receive positive
response.
Chairman’s Statement
11
Chairman’s Statement
1
Keppel Land also undertakes a disciplined and proactive
approach in the divestment of its assets to achieve higher returns.
In Indonesia, it divested its stakes in Jakarta Garden City and
Hotel Sedona Manado during the year. Proceeds from both
divestments, totaling about $246 million, will be reinvested into
new opportunities in Indonesia, with a focus on Jakarta. In January
2014, Keppel Land announced the acquisition of a well-located
site in West Jakarta where it will develop more than 1,200 apartments
and 60 ancillary shophouses. The first phase of these homes
is slated for launch in 2015.
Building on its strength in developing and managing commercial
buildings, Keppel Land China together with Alpha Investment Partners
acquired an 80% stake in Life Hub @ Jinqiao, a mixed-use development
in Shanghai, China. Keppel Land also plans to develop Park Avenue
Central in Shanghai into a retail cum office complex, to be completed
around 2017/2018. In Indonesia, construction of Tower 2 of
International Financial Centre Jakarta is underway. In Singapore,
commitment at Marina Bay Financial Centre Tower 3 reached 95%,
up from 79% in 2012.
2013 was also an active year for our property fund management
units whose combined assets under management now amount
to about $17.7 billion. Alpha Investment Partners raised more than
US$1.65 billion for its Alpha Asia Macro Trends Fund II, exceeding its
target of US$1 billion. Keppel REIT expanded its footprint in Australia
with the acquisition of stakes in two Grade A office developments in
Perth and Melbourne. The REIT’s liquidity has improved with a larger
free float of 55%, up from 24%, following Keppel Corporation’s
divestment of its stakes and distribution in specie, as well as the
placement of new units.
NURTURING COMMUNITIES
Keppel is committed to nurturing communities wherever it
operates by improving the quality of life and the environment
with sustainable solutions.
In 2013, Sino-Singapore Tianjin Eco-City (Tianjin Eco-City),
where Keppel is the leader of the Singapore consortium,
celebrated its fifth anniversary. Since breaking ground in 2008,
Tianjin Eco-City has been transformed into an eco-township
with shops, offices, clinics, schools and other community
amenities. Today, Tianjin Eco-City is home to about 10,000
residents and has attracted more than 1,000 companies with
over RMB700 million in registered capital. About 60 Singapore
companies have participated in the development of the city,
with a total investment of US$850 million.
Even as we celebrate our achievements, we remember our
responsibilities to the communities we are a part of, whose
well-being contribute to the sustainability of our businesses.
To commemorate Keppel Corporation’s 45th anniversary,
we donated $1.5 million to the President’s Challenge through the
Keppel Care Foundation and our volunteers exceeded our pledge
of 5,000 hours with more than 9,000 hours of community service.
August was designated as the Keppel Community Month and
employees across the Group were engaged in diverse activities
in outreach to the underprivileged in Singapore and overseas.
12
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
Even as we celebrate
our achievements,
we remember our
responsibilities to
the communities
we are a part of, whose
well-being contribute
to the sustainability of
our businesses.
To nurture a new generation of creative and critical thinkers through
art education, Keppel Corporation will commit $12 million, which will be
paid over eight years, to the National Art Gallery, Singapore in support
of its Centre for Art Education. To be named the Keppel Centre for
Art Education, it is projected to engage 250,000 children and youths
every year when it opens its doors in 2015.
ACKNOWLEDGEMENTS
The leadership transition in Keppel has been smooth, with continued
confidence in our strong foundations and support of our staff,
management and shareholders.
We welcome Mr Loh Chin Hua as CEO of Keppel Corporation from
1 January 2014 as well as Mr Chow Yew Yuen as CEO of Keppel
Offshore & Marine and Mr Chan Hon Chew as Chief Financial Officer
of Keppel Corporation from 1 February 2014, and extend to them
our support and vote of confidence.
We would also like to extend our deepest appreciation and gratitude
to Mr Choo Chiau Beng, former CEO of Keppel Corporation and
Chairman of Keppel Offshore & Marine as well as Keppel Land, and
Mr Tong Chong Heong, former Senior Executive Director of Keppel
Corporation and CEO of Keppel Offshore & Marine, for their dedicated
service of more than four decades each. They had committed much
of their lives to build legacies to benefit future generations at Keppel.
In the midst of global volatility and uncertainties, we are spurred
to achieve greater heights by our shareholders’ continued support,
trust and confidence in Keppel, for which we are most appreciative.
As we march onward to shape Keppel’s future, I wish to express
my appreciation to shareholders, directors, management, partners,
customers and other stakeholders for your unwavering support.
Thank you.
Yours sincerely,
LEE BOON YANG
CHAIRMAN
26 February 2014
1. Keppel’s volunteers
brought students
from the Movement
for the Intellectually
Disabled of
Singapore for
an eco-tour
during the Keppel
Community Month.
Chairman’s Statement
13
Interview with the CEO
A successful conglomerate is one that sticks to its core competencies.
We will look at our value chains holistically to determine where the
profit pools are, and for niches where we can add value consistently.
LOH CHIN HUA
Q: What are some of
your top priorities since you
came onboard as CEO at
the start of 2014?
A: I have taken over a strong company with sturdy foundations
and a resilient global team. My focus is to ensure that we build on our
achievements continually to make Keppel an even better and more
successful company that will endure for generations.
Strong execution, from the implementation of business strategy to the
delivery of projects, has been one of Keppel’s defining strengths, and it will
continue to play a vital role in the way we operate and compete. We will be
looking more deeply into how we can sharpen our core competencies,
especially with innovation for new and better solutions as well as more
effective processes that will put the Group ahead of the curve. Our focus
must be to continuously improve upon our value proposition to customers.
14
Keppel Corpora†ion Limited Report to Shareholders 2013
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A core pillar of our strategy is to continue attracting and retaining the best
talents possible to steer Keppel into its next lap of growth. In this respect,
we will bolster our bench strength, nurture and develop our talents to take
on fresh challenges and expanded roles. We will also be working hard to
maintain strong financial discipline and ensure that our capital is always
productively deployed to earn the best returns on a risk-adjusted basis.
Q: What is your view of the
Keppel Group’s multi-business
model, and will you be making
any strategic shifts?
A: Keppel has adapted well and performed remarkably through severe
crises and cyclical downturns, bolstered in no small measure by its
multi-business model. In the process, we have also built up deep
knowledge, expertise and strong track records in our chosen sectors.
Q: How will capital be
managed and resources
allocated across businesses
in the Group?
Q: There have been concerns
about an overall slowdown
in spending in the global oil
and gas industry. What is your
outlook, and what are some
of the key trends that could
work in Keppel’s favour?
Our current business mix is the result of a deliberate and considered strategy,
which has been constantly refined with the guidance of an astute Board.
A successful conglomerate is one that sticks to its core competencies.
We will look at our value chains holistically to determine where the profit
pools are, and for niches where we can add value consistently. Even as we look
for new opportunities, we shall not stray too far from our core competencies.
At the same time, we will be disciplined in pruning non-core businesses and
assets, monetising them and recycling the capital to generate better returns.
My leadership team and I will be charting our way in a business environment
that is full of challenges and new opportunities at the same time. With clarity
of focus and good discipline, we will be able to build on the work of our
predecessors and take Keppel to new heights.
A: Keppel has been able to seize growth prospects even when the chips
are down. This was possible because we have the financial strength to
capture arising opportunities and withstand shocks to the system.
As a conglomerate, we must deploy our capital judiciously to earn the best
risk-adjusted returns. We will operate with a capital-constrained mindset,
giving priority to business opportunities that best meet our investment
criteria and hurdle rates after risk adjustments. Maintaining financial
discipline and a strong balance sheet will put us in pole position to seize
the right growth opportunities.
A: Global exploration and production (E&P) spending is still expected to
grow in 2014, albeit at a slightly slower pace of 6%, compared to 7% the
year before. While international oil majors are tightening their belts a little,
they will be quite selective about the areas to pull back on.
Meanwhile, growing populations and a widening middle class will continue
to drive global demand for oil and gas. Supply however, will be tight as
existing oil fields are depleting at a rapid rate. Although shale gas has exerted
some influence over the industry, we still expect E&P spending to be fairly
robust in the years ahead, underpinned by the strong market fundamentals.
In fact, the trends have been encouraging in the markets where we operate.
Over in Latin America, our customers are stepping up efforts to raise
production levels. Petrobras is committed to double its current oil output
to 4.2 million barrels per day by 2020. It has set aside US$153.9 billion for
E&P between 2014 and 2018, up 4.3% from the previous 2013 - 2017 budget,
to cope with concurrent demands in production and exploration. Moreover,
for every oil rig or floating production system that goes to work, there will
Interview with the CEO
15
Interview with the CEO
Q: What are your views on
the competition in the offshore
and marine business? How will
Keppel continue to differentiate
itself and maintain an edge
over bigger rivals such as the
Chinese and Koreans?
be demand for support vessels and ancillary services that Keppel is able to
effectively provide in Brazil.
Up north, Mexican oil production has fallen by nearly a quarter in the past
decade, and PEMEX is determined to reverse this decline by ramping up
shallow water E&P in the near term. Further afield, reforms in Mexico’s
energy sector is expected to draw substantial foreign investments for oil and
gas, particularly in the mid and deepwater segments. Mexico is an exciting
market, which holds long-term potential for Keppel, and we are privileged to
participate in its growth together with our customer and partner, PEMEX.
In the Caspian Sea, the sanctioning of the second phase development of
Azerbaijan’s Shah Deniz field paves the way for further investments of about
US$28 billion. Shah Deniz II is an important step towards the creation of a
southern energy corridor, which will enable the European Union to secure
gas supplies directly from the Caspian region and the Middle East. We are
presently executing a semisubmersible drilling rig in Azerbaijan for the State
Oil Company of Azerbaijan Republic, and are prepared to build more rigs
and support vessels that will cater to this captive market in the long run.
Potential exists in various pockets of the global oil and gas industry, which
through our Near Market, Near Customer strategy, Keppel is well-disposed
to capture for further growth.
A: It is natural to face rivalry in any business where there is a growing
profit pool. For us, the competition has always been intense and global.
Nonetheless, we have built up distinct advantages that our competitors
will find hard to overcome or replicate.
Our Near Market, Near Customer strategy for instance, has given us a solid
head start in far-off markets such as Brazil and the Caspian, where national
oil companies seek local content. Having well-established yards in these
countries gives us a clear edge over a new entrant who might be attempting
to build a new yard and execute its projects all at once. More importantly,
Keppel is known for reliability and quality execution; our products are well
regarded by drillers and operators for their capabilities and because of our
on-time, on-budget and safe deliveries.
To further distance ourselves from the competition, we must continue to
provide our customers with the best value proposition. At the same time,
we will be on the lookout for new profit pools that we can tap consistently
to stay ahead of rivals and shifting markets.
We will also continue to invest wisely in Research & Development and
create a culture where our people dare to take thoughtful risks across the
value chain. We will collaborate with our customers, industry partners and
universities to develop new solutions, seizing every opportunity to innovate
and produce industry-leading products such as our KFELS B Class jackup.
Q: What is the thinking
behind building your first
drillship without a contract from
a driller or operator? How do
you intend to penetrate a market
dominated by Korean yards?
A: The decision to proceed with the construction of the new Keppel
CAN-DO drillship, which was developed in close consultation with our
customers, major oil companies and vendors, is a step towards meeting
the industry’s needs for vessels capable of performing development and
completion drilling in addition to exploration drilling.
In our design, we have incorporated a generous functional deck space,
70% more spacious then conventional drillships, to allow for the
16
Keppel Corpora†ion Limited Report to Shareholders 2013
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FOR GROWTH
installation of third party equipment invariably required for development
and completion drilling. In addition, our drillship has a double blowout
preventer stack that fulfills post-Macondo safety standards.
From an oil and gas exploration project life cycle perspective, Keppel’s
CAN-DO drillship, with its breadth of capabilities, offers a more holistic
and cost-effective deepwater drilling solution, as compared to rival
designs in the market.
Since the launch of the CAN-DO drillship, we have been receiving
encouraging response from the market. However, it is not just about
winning orders for the drillship that matters but also making sure that we
can make a good profit from them. We are confident of our design and
execution, and will await an opportune time when we can secure a better
price to more fairly reflect the many added features of this quality drillship.
A: We are still firming up details of our joint venture with PEMEX.
We plan to develop the new yard in Altamira over several phases,
with an initial focus on jackup rig construction and repairs in anticipation
of a higher level of shallow water activity in the near future.
We believe that we can continue to capture good value in the mid to
long term, as deepwater activities rise on the back of the country’s energy
sector reform. We plan to meet the needs of the deep and ultra-deep water
segments in subsequent phases, by offering our repertoire of expertise in
semisubmersibles and Floating Production Storage and Offloading units,
among others.
Q: Please provide an update
on Keppel’s partnership with
PEMEX. Do you anticipate the
operating conditions in Mexico
to be as difficult as in Brazil?
What are some of the challenges
with regards to setting up and
running a new yard in Mexico?
The CAN-DO drillship, with its breadth of capabilities, offers a comprehensive and cost-effective
deepwater drilling solution.
Interview with the CEO
17
Interview with the CEO
Keppel T&T’s Sino-Singapore Jilin Food
Zone International Logistics Park will
meet rising demand for quality logistics
services in China.
Q: Can you provide some
details on the cost overruns in
the Engineering, Procurement
and Construction (EPC)
infrastructure projects?
When will the projects be
completed and do you expect to
make more provisions in 2014?
Q: What are plans for the
Infrastructure Division?
Going to a new market always carries some risks. However, it is worth noting
that the conditions surrounding our entry into Mexico are very different from
when we started out in Brazil. We went into Brazil in 2000 without promise of
work from any drillers or operators. By contrast in Mexico today, we are working
directly with PEMEX and have their commitment to build six new KFELS B
Class jackups along with the new yard.
Our privileged position with the Mexicans is due in no small measure to our
track record for having consistently delivered quality projects to PEMEX and
its drilling contractors through Keppel AmFELS in Brownsville, Texas.
Our Brownsville yard, which has been in operations for over 20 years,
is located close to the Altamira yard, and employs a workforce comprising
a majority of Mexicans and Hispanic Americans. This has helped us acquire an
even deeper understanding of the Mexicans and their culture. Furthermore,
our direct partnership with PEMEX coupled with decades of experience
operating in the US and Brazil, puts us is a good position to meet the
challenges of operating in Mexico.
A: Conditions on the ground have been very difficult. We continued to face
challenges on the EPC contracts in Qatar and the UK, whose cost overruns
were due mainly to the projects taking longer than expected to complete.
We are deeply disappointed at having to make additional provisions. We felt
that these provisions were necessary and adequate based on our estimated
costs to finish Doha North Sewage Treatment Works and Greater Manchester
Energy-from-Waste Plant. However, we cannot be certain until the projects
conclude. Moreover, the process of claims in Qatar for Doha North and the
Domestic Solid Waste Management Centre are likely to be protracted.
In this final mile, our teams are working hard under challenging conditions
to deliver the EPC projects with minimal losses to the Group. Phase 1 of the
Greater Manchester Energy-from-Waste Plant is largely completed and is
currently under commissioning. We expect Phase 2 to be substantially
completed by end-2014. At Doha North, we are ready to take in sewage and
will need to commission the plant before handing over. When completed, the
Doha North and Greater Manchester plants will be quality infrastructure assets
that our customers can be proud of.
A: The performance of the Doha North and Greater Manchester EPC projects
is not in keeping with the Group’s enviable record for on-time, on-budget
project execution. Lessons have been learnt. We will continue to build, own
and operate infrastructure projects in areas where we have stronger technical
knowledge and deeper understanding of the markets and key value chains.
Notwithstanding the losses sustained on the EPC projects, the Division’s
operating units have performed creditably in 2013. To sharpen focus
and enhance resource efficiencies, we have restructured Keppel Energy
and Keppel Integrated Engineering in May 2013 to become Keppel
Infrastructure with Dr Ong Tiong Guan as its Chief Executive Officer.
Since then, the new entity has been building up its strengths in the
power and gas business, tightening operations of the Waste-to-Energy
projects and growing its portfolio of related technology solutions.
Corporate integration and restructuring is an ongoing process. Keppel
Infrastructure will concentrate on optimising its resources, strengthening its
execution capabilities and re-focusing its key businesses to drive growth.
18
Keppel Corpora†ion Limited Report to Shareholders 2013
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Meanwhile, our data centre and logistics businesses under Keppel
Telecommunications & Transportation (Keppel T&T) are gaining traction.
To tap the strong demand for data centre services, Keppel T&T has been
actively growing its quality portfolio with added capacities in Singapore,
Ireland and the Netherlands. It also intends to set up a data centre real
estate investment trust to be listed on the Singapore Exchange.
Keppel T&T continues to leverage its extensive experience in supply chain
management and industry know-how to offer quality third party logistics
services in Asia-Pacific. Notably, its Chinese logistics and distribution hubs
across Anhui, Jilin and Tianjin would be fully operational by 2015.
A: Our Property Division performed creditably in 2013, in spite of the
policy headwinds. Looking ahead, cooling measures are likely to persist
in China, while Singapore’s residential market continues to slow down.
However, challenges will also bring opportunities to those who are prepared.
At a time when many property developers were scaling back, Keppel Land
continued to build up its portfolios in Singapore and China, investing more
than S$1 billion in 2013. Capitalising on its strong balance sheet, our property
arm was able to selectively acquire attractive residential sites in Singapore,
Shanghai and Tianjin, as well as a stake in a retail mall in Shanghai.
We will further sharpen our focus on building strong platforms in our
key markets of Singapore, China, Indonesia and Vietnam, while investing
opportunistically in other promising markets, such as Myanmar and
Sri Lanka, where the company has an early-mover’s advantage. Apart from
residential developments, we will also look at opportunities to grow our
commercial portfolio overseas.
Our focus on selected countries in the region will help to reduce our risk
exposure in any one market, while enabling us to scale up to compete
effectively. In the process, we will also be very disciplined about reviewing
our portfolio and seeking opportunities to recycle capital for higher returns.
Q: What is the outlook for
the Property business, and
what are the plans to ensure
continued profitability despite
headwinds in the sector?
Interview with the CEO
19
Interview with the CEO
Parallel to property development, our fund management businesses under
Keppel REIT and Alpha Investment Partners form an integral part of our
strategy to provide a source of stable, recurring income for the Group.
We remain committed to grow our fund management units, which currently
manage combined assets close to $18 billion. Further afield, we will also
be looking at ways to better harness the synergies between our property
development and fund management arms, exploring the potential to
co-invest in interesting projects, a good example being Keppel Land China
and Alpha’s joint venture in a retail mall, Life Hub @ Jinqiao in Shanghai.
Q: Will Keppel’s
investment in KrisEnergy
become a bigger part of
the Group’s businesses?
A: We believe that KrisEnergy is an investment with solid fundamentals.
The company is run by a strong management team of industry veterans,
and possesses an attractive portfolio comprising a good mix of both
production and development assets.
Keppel’s minority stake in KrisEnergy does not signal any intention to move
into the upstream space. The stake is purely an investment on our part.
There have, however, been some discussions between Keppel Offshore &
Marine and KrisEnergy on developing potential solutions that could cater
to the latter’s needs but these are still preliminary.
Keppel Land will continue to leverage its early-mover’s advantage in promising markets – Phase 2 of
Saigon Centre (depicted here in an artist’s impression) is presently being developed.
20
Keppel Corpora†ion Limited Report to Shareholders 2013
Board of Directors
LEE BOON YANG
LOH CHIN HUA
LEE BOON YANG, 66
CHAIRMAN
NON-EXECUTIVE AND
INDEPENDENT DIRECTOR
B.V.Sc Hon (2A),
University of Queensland, 1971
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 2013):
4 years 8 months
Board committee(s) served on:
Remuneration Committee (Member)
Nominating Committee (Member)
Board Safety Committee (Member)
Present directorships
(as at 1 January 2014):
Listed companies
Singapore Press Holdings Limited
(Chairman)
Other principal directorships
Keppel Care Foundation Limited
(Chairman); Singapore Press Holdings
Foundation Limited (Chairman);
Jilin Food Zone Pte Ltd (Chairman)
Major appointments
(other than directorships):
Nil
Past directorships held over
the preceding 5 years
(from 1 January 2009 to
31 December 2013):
Nil
Others:
Former Minister for Information,
Communications and the Arts
(May 2003 to Mar 2009);
Former Member of Parliament
(Dec 1984 to April 2011)
CONFIGURED
FOR GROWTH
LOH CHIN HUA, 52
CHIEF EXECUTIVE OFFICER
EXECUTIVE DIRECTOR
Bachelor in Property Administration,
Auckland University; Presidential Key
Executive MBA, Pepperdine University;
Chartered Financial Analyst
Date of first appointment as a director:
1 January 2014
Date of last re-election as a director:
n.a.
Length of service as a director
(as at 31 December 2013):
n.a.
Board committee(s) served on:
Board Safety Committee (Member)#
Present directorships
(as at 1 January 2014):
Listed companies
Keppel Land Limited (Chairman);
Keppel Telecommunication &
Transportation Ltd;
Keppel REIT Management Limited
(Manager of Keppel REIT)*;
KrisEnergy Ltd
Other principal directorships
Keppel Offshore & Marine Ltd
(Chairman); Keppel Infrastructure
Holdings Pte Ltd (Chairman);
Alpha Investment Partners Limited
(Chairman)
Major appointments
(other than directorships):
Nil
Past directorships held over
the preceding 5 years
(from 1 January 2009 to
31 December 2013):
Keppel Energy Pte Ltd; Keppel
Land China Limited; Various fund
companies under management of
Alpha Investment Partners Limited
Others:
Nil
# Mr Loh was appointed a member of
the Board Safety Committee on
28 February 2014.
* Mr Loh ceased to be a director of
Keppel REIT Management Limited
(Manager of Keppel REIT) with eff ect
from 10 January 2014.
Board of Directors
21
Board of Directors
TONY CHEW LEONG-CHEE
OON KUM LOON (MRS)
TONY CHEW LEONG-CHEE, 67
NON-EXECUTIVE AND
INDEPENDENT DIRECTOR
OON KUM LOON (MRS), 63
NON-EXECUTIVE AND
INDEPENDENT DIRECTOR
Trained as agronomist at Ko Plantations
Berhad and Serdang Agricultural
College, Malaysia
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 2013):
11 years 9 months
Board committee(s) served on:
Nominating Committee (Chairman)
Audit Committee (Member)
Bachelor of Business Administration
(Honours), University of Singapore
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 2013):
9 years 8 months
Board committee(s) served on:
Board Risk Committee (Chairman)
Audit Committee (Member)
Remuneration Committee (Member)
Present directorships
(as at 1 January 2014):
Listed companies
Keppel Land Limited
Other principal directorships
Singapore Power Limited;
SP PowerAssets Limited;
PowerGas Limited
Major appointments
(other than directorships):
The Securities Industry Council (Member)
Past directorships held over
the preceding 5 years
(from 1 January 2009 to
31 December 2013):
PSA International Pte Ltd;
SP PowerGrid Ltd; China Resources
Microelectronics Limited; Aviva Life
Insurance Company Limited;
Aviva Ltd; Navigator Investment
Services Ltd; Keppel Land China
Limited; Aircraft Capital Trust
Management Pte Ltd
Others:
Former Chief Financial Officer
of DBS Group
Present directorships
(as at 1 January 2014):
Listed companies
Nil
Other principal directorships
Air Alliance Pte Ltd; Alliance Asia
Holdings Pte Ltd; Alliance Asia
Investment Private Limited; ARC
Investment Pte Ltd; Asia Resource
Corporation Pte Ltd (Chairman);
International Property Development J.S.
Corporation (Vietnam); KFC Vietnam
(Chairman); Macondray Holdings Pte Ltd
(Chairman); Macondray Corporation
Pte Ltd (Chairman); Macondray & Co.
Inc (Chairman); Macondray Company
Limited (Chairman); Myanmar
Distillery Company Limited; Myanmar
Supply Chain and Marketing Services
Company Limited; Pontirep Investments
Limited (Chairman); Representations
International Pte Ltd (Chairman);
Representations International (H.K.) Ltd
(Chairman); Resource Pacific Holdings
Pte Ltd (Chairman); SBF Holdings Pte Ltd
(Chairman); SBF-PICO Events Pte Ltd;
Tianjin Summer Palace Winery
and Distillery Co. Ltd
Major appointments
(other than directorships):
Singapore Business Federation
(Chairman); Economic Research
Institute for ASEAN and East Asia
(Board Member); Chinese Development
Assistance Council (Board of Trustee
Member); Advisor to Singapore Institute
of International Affairs
Past directorships held over
the preceding 5 years
(from 1 January 2009 to
31 December 2013):
Duke-NUS Graduate Medical School
Singapore
Others:
Conferred National Day Meritorious
Service Medal (2013); Public Service Star
(2008); Public Service Medal (2001);
NUS Outstanding Service Award (2011)
22
Keppel Corpora†ion Limited Report to Shareholders 2013
TOW HENG TAN
ALVIN YEO KHIRN HAI
CONFIGURED
FOR GROWTH
TOW HENG TAN, 58
NON-EXECUTIVE AND
NON-INDEPENDENT DIRECTOR
ALVIN YEO KHIRN HAI, 52
NON-EXECUTIVE AND
INDEPENDENT DIRECTOR
Fellow of the Association of
Chartered Certified Accountants;
Fellow of the Chartered Institute
of Management Accountants
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 2013):
9 years 4 months
Board committee(s) served on:
Nominating (Member)
Remuneration (Member)
Board Risk Committee (Member)
Present directorships
(as at 1 January 2014):
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
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 2009 to
31 December 2013):
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
LLB Honours, King’s College London,
University of London; Gray’s Inn
(Barrister-at-Law); Senior Counsel
Date of first appointment as a director:
1 June 2009
Date of last re-election as a director:
19 April 2013
Length of service as a director
(as at 31 December 2013):
4 years 7 months
Board committee(s) served on:
Audit (Member)
Board Risk Committee (Member)#
Nominating Committee (Member)*
Present directorships
(as at 1 January 2014)
Listed companies
United Industrial Corporation Limited;
Singapore Land Limited; Neptune
Orient Lines Limited
Other principal directorships
Tuas Power Ltd; Thomson Medical
Centre Ltd
Major appointments
(other than directorships):
Monetary Authority of Singapore
advisory panel to advise the Minister
on appeals under various financial
services legislation (Member);
The Court of the SIAC (Member);
The ICC commission on Arbitration
(Member); The Court of the LCIA
(Member); Fellow of the Singapore
Institute of Arbitrators; Member
of Parliament
Past directorships held over
the preceding 5 years
(from 1 January 2009 to
31 December 2013):
Asian Civilisations Museum;
Clifford Chance Wong 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
# Mr Yeo ceased to be a member of the Board
Risk Committee on 23 January 2014.
* Mr Yeo was appointed a member of the
Nominating Committee on 23 January 2014.
Board of Directors
23
Board of Directors
TAN EK KIA
DANNY TEOH
TAN EK KIA, 65
NON-EXECUTIVE AND
INDEPENDENT DIRECTOR
DANNY TEOH, 59
NON-EXECUTIVE AND
INDEPENDENT DIRECTOR
Member of the Institute of Chartered
Accountants in England & Wales
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 2013):
3 years 3 months
Board committee(s) served on:
Audit Committee (Chairman)
Remuneration Committee (Chairman)
Board Risk Committee (Member)
Present directorships
(as at 1 January 2014):
Listed companies
DBS Bank Ltd; DBS Group Holdings Ltd;
CapitaMall Trust Management Limited
(Manager of CapitaMall Trust)
Other principal directorships
Changi Airport Group (Singapore)
Pte Ltd; JTC Corporation;
DBS Bank (China) Limited
Major appointments
(other than directorships):
Singapore Olympic Foundation
Past directorships held over
the preceding 5 years
(from 1 January 2009 to
31 December 2013):
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
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
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
Date of first appointment as a director:
1 October 2010
Date of last re-election as a director:
19 April 2013
Length of service as a director
(as at 31 December 2013):
3 years 3 months
Board committee(s) served on:
Board Safety Committee (Chairman)
Nominating Committee (Member)
Board Risk Committee (Member)*
Present directorships
(as at 1 January 2014):
Listed companies
SMRT Corporation Ltd; KrisEnergy Ltd;
PT Chandra Asri Petrochemical Tbk;
Transocean Ltd
Other principal directorships
Keppel Offshore & Marine Ltd;
Star Energy Group Holdings Pte Ltd
(Chairman)
Major appointments
(other than directorships):
Nil
Past directorships held over
the preceding 5 years
(from 1 January 2009 to
31 December 2013):
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
* Mr Tan Ek Kia was appointed a member of the
Board Risk Committee on 23 January 2014.
24
Keppel Corpora†ion Limited Report to Shareholders 2013
TAN PUAY CHIANG
TEO SOON HOE
TAN PUAY CHIANG, 66
NON-EXECUTIVE AND
INDEPENDENT DIRECTOR
MBA (Distinction), New York University;
Bachelor of Science (First Class
Honours), University of Singapore
Date of first appointment as a director:
20 June 2012
Date of last re-election as a director:
19 April 2013
Length of service as a director
(as at 31 December 2013):
1 year 7 months
Board committee(s) served on:
Board Safety Committee (Member)
Board Risk Committee (Member)
Present directorships
(as at 1 January 2014):
Listed companies
Neptune Orient Lines Limited
Other principal directorships
Singapore Power Limited;
SP Services Limited
Major appointments
(other than directorships):
Energy Studies Institute,
National University of Singapore
Past directorships held over
the preceding 5 years
(from 1 January 2009 to
31 December 2013):
Nil
Others:
Former Chairman, ExxonMobil (China)
Investment Co. (2001 to 2007)
CONFIGURED
FOR GROWTH
TEO SOON HOE, 64
SENIOR EXECUTIVE DIRECTOR
Bachelor of Business Administration,
University of Singapore; Member
of the Wharton Society of Fellows,
University of Pennsylvania
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 2013):
28 years 7 months
Board committee(s) served on:
Nil
Present directorships
(as at 1 January 2014):
Listed companies
Keppel Telecommunications
& Transportation Ltd (Chairman);
M1 Limited (Chairman);
Keppel Philippines Holding Inc
(Chairman); Keppel Infrastructure
Fund Management Pte Ltd
(Trustee-Manager of K-Green Trust);
k1 Ventures Limited
Other principal directorships
Keppel Offshore & Marine Ltd;
Keppel Infrastructure Holdings Pte Ltd;
Singapore Tianjin Eco-City Investment
Holdings Pte Ltd
Major appointments
(other than directorships):
Nil
Past directorships held over
the preceding 5 years
(from 1 January 2009 to
31 December 2013):
Singapore Petroleum Company
Limited; Travelmore Pte Ltd;
Keppel Land Limited; Keppel Energy
Pte Ltd; Keppel Land China Limited
Others:
Former Group Finance Director of
Keppel Corporation Limited
Board of Directors
25
Keppel Group Boards of Directors
KEPPEL
OFFSHORE & MARINE
LOH CHIN HUA
CHAIRMAN
Chief Executive Officer,
Keppel Corporation
CHOW YEW YUEN
Chief Executive Officer
STEPHEN PAN YUE KUO
Chairman,
World-Wide Shipping Agency Limited
PROF MINOO HOMI PATEL
Professor of Mechanical Engineering
and Director of Development,
School of Engineering,
Cranfield University, UK
DR MALCOLM SHARPLES
President,
Offshore Risk & Technology
Consulting Inc, USA
PO’AD BIN SHAIK ABU
BAKAR MATTAR
Independent Director,
Hong Leong Finance Limited and
Tiger Airways Holdings Limited
TAN EK KIA
Chairman,
City Gas Pte Ltd
LIM CHIN LEONG
Former Chairman,
Asia, Schlumberger
ROBERT D. SOMERVILLE
Director,
GasLog Ltd
TEO SOON HOE
Senior Executive Director,
Keppel Corporation
SIT PENG SANG
Director
KEPPEL
INFRASTRUCTURE
HOLDINGS
LOH CHIN HUA
CHAIRMAN
Chief Executive Officer,
Keppel Corporation
DR ONG TIONG GUAN,
Chief Executive Officer
TEO SOON HOE
Senior Executive Director,
Keppel Corporation
CHOW YEW YUEN
Chief Executive Officer,
Keppel Offshore & Marine
CHAN HON CHEW
Chief Financial Officer,
Keppel Corporation
CHEE JIN KIONG
Director,
Group Human Resources,
Keppel Corporation
ONG YE KUNG
Director,
Group Strategy & Development,
Keppel Corporation
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
TAN BOON LENG
Executive Director, X-to-Energy,
Keppel Infrastructure Holdings
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
KOH BAN HENG
Senior Advisor,
Singapore Petroleum Company Limited
(a member of PetroChina)
WEE SIN THO
Senior Advisor,
Office of the President,
National University of Singapore
KHOO CHIN HEAN
Director
TAN BOON HUAT
Independent Director
KEPPEL
INFRASTRUCTURE
FUND MANAGEMENT
(TRUSTEE-MANAGER OF
K-GREEN TRUST)
KHOR POH HWA
CHAIRMAN
Advisor (Township and
Infrastructure Development),
Keppel Corporation
ALAN OW SOON SIAN
Independent Director
PAUL MA KAH WOH
Independent Director
PROF NEO BOON SIONG
Professor (Division of Strategy,
Management and Organisation)
Nanyang Business School,
Nanyang Technological University
KARMJIT SINGH
Independent Director
LOH CHIN HUA
Chief Executive Officer,
Keppel Corporation
MICHAEL CHIA HOCK CHYE
Managing Director
(Marine & Technology),
Keppel Offshore & Marine Ltd;
Managing Director,
Keppel Offshore & Marine Technology
Centre (KOMTech)
26
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
K1 VENTURES
STEVEN JAY GREEN
CHAIRMAN/
CHIEF EXECUTIVE OFFICER
Former US Ambassador to Singapore
DR LEE SUAN YEW
Medical Practitioner and
Past President,
Singapore Medical Council
TEO SOON HOE
Senior Executive Director,
Keppel Corporation
ALEXANDAR VAHABZADEH
Founder and Managing Director of
the Beaumont Group of companies
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 REIT
MANAGEMENT
(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
Partner,
Apollo Global Management
LEE CHIANG HUAT
Executive Director,
Icurrencies Pte Ltd
DANIEL CHAN CHOONG SENG
Managing Director,
DCG Capital Pte Ltd
LOR BAK LIANG
Director,
Werone Connect Pte Ltd
ANG WEE GEE
Chief Executive Officer,
Executive Director,
Keppel Land
PROF TAN CHENG HAN
Professor of Law,
National University of Singapore
LIM KEI HIN
Chief Financial Officer,
Keppel Land
KEPPEL LAND
LOH CHIN HUA
CHAIRMAN
Chief Executive Officer
Keppel Corporation
ANG WEE GEE
Chief Executive Officer,
Executive Director
LIM HO KEE
Chairman,
Singapore Post
PROF TSUI KAI CHONG
Provost and Professor of Finance,
SIM University
LEE AI MING (MRS)
Senior Partner,
Rodyk & Davidson 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
Singapore’s former Ambassador
to Indonesia
KOH-LIM WEN GIN
Former Chief Planner and
Deputy Chief Executive Officer,
URA
OON KUM LOON (MRS)
Non-Executive,
Non-Independent Director
YAP CHEE MENG
Former Senior Partner,
KPMG Singapore and
Chief Operating Officer of
Asia Pacific, KPMG International
PROF HUANG JING
Professor and Director,
Centre on Asia and Globalisation,
Lee Kuan Yew School of Public Policy,
National University of Singapore
Keppel Group Boards of Directors
27
Keppel Technology Advisory Panel
The Keppel Technology Advisory Panel
(KTAP) was established in 2004 as a
key platform to advance the Group’s
technology leadership. Its members
include eminent business leaders and
industry experts from across the world.
Over the years, KTAP members have
contributed to a broad range of ideas
and developments in Keppel. The areas
include drilling and production
technology, offshore wind, coal
gasification, Waste-to-Energy, as well as
potentially disruptive technologies.
More recently, KTAP has been exploring
emission control areas, the collection of
deepsea polymetallic nodules, as well as
future platforms to deepen innovation and
Research & Development in the Group.
KTAP convenes up to twice a year with
key members of Keppel Corporation’s
board and senior management.
Distinguished guest speakers are often
invited to these meetings to share the
latest developments in their respective
fields. Apart from meetings, frequent
discussions are co-ordinated by
the Secretariat via email on topical
issues such as nuclear energy and
subsea-related developments.
SVEN BANG ULLRING
CHAIRMAN
Master of Science, Swiss Federal
Institute of Technology (ETH), Zurich
Mr Ullring 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.
DR BRIAN CLARK
Schlumberger Fellow; B.S. Ohio State
University; PhD, Harvard University (1977)
Dr Clark holds 87 patents related to the
exploration and development of oil and
gas, primarily in wire line logging and
logging while drilling. He was recognised
as the Outstanding Inventor of the Year
for 2002, by the Houston Intellectual
Property Law Association and as the
Texas Inventor of the Year for 2002,
by the Texas State Bar Association.
Dr Clark is also a member of the
National Academy of Engineering and
The Academy of Medicine, Engineering
and Science of Texas.
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
Professor Patel is a 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) and BMT Group Ltd.
DR MALCOLM SHARPLES
President, Offshore Risk & Technology
Consulting Engineering Inc.; BESc.
(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
active member of the Canadian
Standards Association on arctic
structures, offshore structures and
offshore wind farms, and 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
Professor Curtis 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
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, DSc, DEng, FREng, FInstE,
FIChemE, Energy and Environmental
Engineering Group
Professor Swithenbank is a fellow of
the Royal Academy of Engineering,
Chairman of The Sheffield University
Waste Incineration Centre (SUWIC),
and member of numerous International
Combustion and Energy Committees.
He was the President of the Institute of
Energy (1986 – 1987) and served on
many UK government/DTI/EPSRC
Committees. He is a prolific researcher
credited with over 400 refereed papers
and over 30 patents.
PROFESSOR NG WUN JERN
BSc (CE) QMC London University, MSc
(Water Resources) and PhD University
of Birmingham, PE(S), FIES, FSEng
Dr Sharples is a Director of the Offshore
Energy Centre, a non-profit educational
institution and museum. Previously,
he was VP of American Bureau of
Shipping, and President of Noble
Denton, an insurance warranty survey
firm. He consults worldwide on
offshore structures/vessels for
regulatory compliance, safety audits,
safety cases, and has been involved
in accident investigations as an expert
witness for legal proceedings. He is an
Professor Ng is the Executive Director
at the Nanyang Environment & Water
Research Institute, Professor of
Environmental Engineering in the School
of Civil & Environmental Engineering,
and Dean of College of Engineering
at Nanyang Technological University.
He has some 400 publications on
water and wastewater management,
and serves as technical advisor to
various environmental companies
across ASEAN, China, and India.
28
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
(From left) First row: Dr Brian Clark, Professor Jim Swithenbank, Choo Chiau Beng (Senior Advisor of Keppel Corporation), Sven Bang Ullring, Dr Lee
Boon Yang (Chairman of Keppel Corporation), Professor Sir Eric Ash (Retired 31 December 2013), Professor Minoo Homi Patel. Second row: Chow Yew
Yuen (CEO of Keppel Offshore & Marine), Professor Kazuo Nishimoto, Loh Chin Hua (CEO of Keppel Corporation), Dr Malcolm Sharples, Professor Tom
Curtis, Professor Ng Wun Jern. Not in photo – Professor Stefan Thomke, Professor Saif Benjaafar and Professor Chan Eng Soon.
PROFESSOR STEFAN THOMKE
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
Professor Thomke has published
widely and is an authority on
innovation management. He is the
William Barclay Harding Professor of
Business Administration at Harvard
Business School and chairs several of the
university’s leading executive education
programmes. Prior to joining Harvard,
he was with McKinsey & Company
in Germany.
PROFESSOR KAZUO NISHIMOTO
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
Professor Nishimoto is currently a Full
Professor of the University of São Paulo,
heading its Polytechnic School’s Naval
Architecture & Ocean Engineering
department and serving as Director of
the Numerical Offshore Tank Centre. He
has coordinated several naval and ocean
engineering development projects, and
is working on advanced methods to
analyse moored floating systems.
leads the Sustainable Built Environment
Thrust for the MIT-SUTD International
Design Centre. He was a Distinguished
Senior Visiting Scientist at Honeywell
Laboratories and a Visiting Professor to
several universities in Europe and Asia.
PROFESSOR SAIF BENJAAFAR
(APPOINTED 1 JANUARY 2014)
M.S. and PhD (Industrial Engineering),
Purdue University and BS (Electrical
Engineering), University of Texas
at Austin
Professor Benjaafar is internationally
acclaimed for his research on the
design and management of complex
global supply chains. He holds the title
of Distinguished McKnight University
Professor at the University of Minnesota
and is a Founding Director of its
Industrial and Systems Engineering
Department, Director of the Centre
for Supply Chain Research, and
Faculty Scholar with the Centre
for Transportation Studies.
He is also a founding faculty member of
the Singapore University of Technology
and Design (SUTD) where he serves
as Head of Pillar and Professor for
Engineering Systems and Design, and
PROFESSOR CHAN ENG SOON
(APPOINTED 1 JANUARY 2014)
B.Eng (First-class Honours) & M.Eng,
National University of Singapore (NUS),
and PhD, MIT
Professor Chan is a Fellow of the
Singapore Academy of Engineering and
Member IES. He is Dean of Engineering,
NUS, and Keppel Chair Professor.
He headed the then Civil Engineering
Department and served as Executive
Director of the Centre for Offshore
Research and Engineering and Director
of Tropical Marine Science Institute.
He serves on management boards of
various institutions and research
centres, and contributes as a member
of the Singapore Workplace Safety and
Health Council, and board governor
of Republic Polytechnic. His research
interests include marine hydrodynamics,
wave-structure interactions, sediment
transport and coastal processes.
Keppel Technology Advisory Panel
29
Senior Management
KEPPEL
CORPORATION
LOH CHIN HUA
CHIEF EXECUTIVE OFFICER
TEO SOON HOE
SENIOR EXECUTIVE DIRECTOR
CHAN HON CHEW
CHIEF FINANCIAL OFFICER
CORPORATE
SERVICES
CHEE JIN KIONG
DIRECTOR
GROUP HUMAN RESOURCES
WANG LOOK FUNG
DIRECTOR
GROUP CORPORATE AFFAIRS
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
JACOB TONG
GENERAL MANAGER
GROUP INFORMATION SYSTEMS
GOH TOH SIM
CHIEF REPRESENTATIVE (CHINA)
OFFSHORE & MARINE
CHOW YEW YUEN
CHIEF EXECUTIVE OFFICER
Keppel Offshore & Marine
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 & 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
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
WONG FOOK SENG
EXECUTIVE DIRECTOR
(PROCESS EXCELLENCE & PLANNING)
Keppel FELS
TOH KO LIN
EXECUTIVE DIRECTOR
Keppel Singmarine
ONG LENG YEOW
ACTING EXECUTIVE DIRECTOR
(OPERATIONS)
Keppel FELS
CHARLES FOO CHEE LEE
DIRECTOR/ADVISOR
KOMtech
30
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
INFRASTRUCTURE
PROPERTY
UNIONS
DR ONG TIONG GUAN
CHIEF EXECUTIVE OFFICER
Keppel Infrastructure
BG (NS) TAY LIM HENG
MANAGING DIRECTOR
(WASTE-TO-ENERGY)
Keppel Infrastructure
NICHOLAS LAI GARCHUN
EXECUTIVE DIRECTOR
(GAS-TO-POWER)
Keppel Infrastructure
TAN BOON LENG
EXECUTIVE DIRECTOR
(X-TO-ENERGY)
Keppel Infrastructure
ALAN TAY TECK LOON
DIRECTOR, BUSINESS DEVELOPMENT
Keppel Infrastructure
CINDY LIM JOO LING
GENERAL MANAGER
(INFRASTRUCTURE SERVICES)
GENERAL MANAGER (BUSINESS
PROCESS MANAGEMENT)
Keppel Infrastructure
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)
ANG WEE GEE
CHIEF EXECUTIVE OFFICER
Keppel Land
KEPPEL FELS EMPLOYEES’ UNION
VINCENT HO MUN CHOONG
PRESIDENT
CHOO CHIN TECK
COMPANY SECRETARY
Keppel Land
DIRECTOR (CORPORATE SERVICES)
Keppel Land International
ATYYAH HASSAN
GENERAL SECRETARY
DAVID LIM KIN WAI
EXECUTIVE SECRETARY
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 SOON KOOI
PRESIDENT (VIETNAM &
THE 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
Keppel REIT Management
CHRISTINA TAN HUA MUI
MANAGING DIRECTOR
Alpha Investment Partners
KEPPEL EMPLOYEES UNION
RAZALI BIN MAULOD
PRESIDENT
MOHD YUSOF BIN MOHD
GENERAL SECRETARY
SHIPBUILDING & MARINE
ENGINEERING EMPLOYEES’ UNION
TOMMY GOH HOCK WAH
PRESIDENT
EILEEN YEO CHOR GEK
GENERAL SECRETARY
MAH CHEONG FATT
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
Total Shareholder
Return (TSR)
9%
This is above STI’s benchmark
TSR of 3% in 2013.
10-year TSR Growth
21%
(Compounded)
This is significantly higher than
STI’s compounded annual
TSR growth rate of 8%.
Amidst volatility and uncertainty,
investor relations play a critical role to
provide our shareholders with a timely,
accurate and fair account of the
Group’s performance.
Guided by clearly defined principles
and practices in our Investor Relations
Policy, Keppel’s dedicated investor
relations team supports the
management to proactively build
and strengthen long-term relationships
with the investing public through
multiple platforms.
ENGAGING INVESTORS
In 2013, Keppel Corporation held
about 230 investor meetings and
conference calls for institutional
investors. The top management
also went on non-deal roadshows
to Australia, Japan, Hong Kong
and the US.
At these meetings, the senior
management team meets and briefs
investors, keeping them abreast of the
Company’s strategic directions and
business developments. Such proactive
outreach deepens relationships
with long-term shareholders and
cultivates new ones.
During the year, the Company
created opportunities to acquaint
investors with its key businesses by
organising site visits to major operation
centres in Singapore and overseas.
In particular, the investing community
demonstrated keen interest in Keppel’s
offshore division which delivered a
record 22 rigs in 2013. In response to
this, several yard tours and dialogue
sessions were organised for institutional
investors attending major conferences
in Singapore. Fund managers and
analysts attended rig naming
ceremonies and through the yard
visits better appreciated the
operations of Keppel’s yards.
Several visits were organised to the
BrasFELS shipyard in Brazil and Keppel
Telecommunications & Transportation’s
(Keppel T&T) logistics facilities in
Singapore and China as well.
Keppel also participated in the annual
Oil & Offshore Conference organised
by Pareto Securities in Norway where
management strengthened ties with
investors and industry stakeholders.
ENHANCING COMMUNICATION
To reach out more effectively to our
stakeholders worldwide, the Company
held ‘live’ webcasts of its quarterly
results briefings. The webcasts allowed
the global investing community to view
the presentations and engage with the
management in real time.
Keppel Corpora†ion Limited Report to Shareholders 2013
1. Institutional
investors visit
Keppel’s yards to
better understand
our operations.
32
CONFIGURED
FOR GROWTH
SIGNIFICANT EVENTS
March
• Keppel Corporation issued US$200 million
floating rate notes due in 2020, under
the US$2 billion Euro Medium Term Note
Programme established in January 2013.
April
• Ocean Mineral Singapore was formed to
explore the ocean’s seabed for polymetallic
nodules. The company has since applied to
the International Seabed Authority for
its first seabed exploration license.
July
• Keppel Corporation announced that CEO
Mr Choo Chiau Beng would be succeeded by
CFO Mr Loh Chin Hua on 1 January 2014.
• Keppel Corporation raised its stake in
KrisEnergy from 15.3% to 31.4%.
August
• To commemorate its 45th anniversary,
Keppel Corporation committed $12 million
to National Art Gallery’s Centre for Art
Education to benefit children and youths.
November
• Keppel Corporation announced the
appointment of Mr Chan Hon Chew to
succeed Mr Loh Chin Hua as CFO with effect
from 1 February 2014.
• Keppel Corporation contributed $360,000
to relaunch Keppel Nights in partnership with
Esplanade – Theatres on the Bay to cultivate
lifelong arts engagement among youths in
heartland schools.
December
• Keppel Corporation announced the
appointment of Mr Loh Chin Hua, CFO and
CEO-designate as an executive director of
its Board, with effect from 1 January 2014.
Mr Loh was also appointed as Chairman to
Keppel Land’s Board with effect from
1 January 2014, and as non-independent
and non-executive director to Keppel T&T’s
Board with effect from 1 December 2013.
Market-sensitive news is always promptly
posted on Keppel Corporation’s website,
www.kepcorp.com, at the start or end
of each market day, as well as on the
Singapore Exchange website. This ensures
that important company information is
promptly disseminated and made easily
accessible to shareholders.
A mobile version of the corporate
website has been launched to step up
communications with the prolific use
of mobile phones. Tailored for easy
navigation on-the-go, the mobile website
aims to enhance the Company’s outreach
and users’ experience.
With the increasing focus on
environmental, social and governance
issues, Keppel Corporation seeks to
provide stakeholders insights into the
Company’s sustainability efforts through
a sustainability report produced in
compliance with the Global Reporting
Initiative G3.1 Guidelines.
The Company also actively solicits
investors’ feedback and closely monitors
analyst and media reports to continuously
improve on its investor relations efforts.
Contact details of the Company’s investor
relations personnel are placed on the
corporate website for shareholders to
make enquiries or provide feedback.
Any significant concerns or constructive
suggestions will be communicated to
the management.
DELIVERING VALUE
Keppel Corporation stood by its
commitment to reward shareholders
fairly in a year of intense competition
and policy headwinds in 2013.
Keppel Corporation’s share price gained
5% over the year to close at $11.19 at the
end of 2013, outperforming STI’s decline
of about 1% in the same period.
The Company has proposed a total
dividend distribution of 49.5 cents per share
for 2013. This includes a proposed final
cash dividend of 30.0 cents per share, in
addition to an interim cash dividend of
10.0 cents per share and dividend in specie
of Keppel REIT units equivalent to 9.5 cents
per share paid out in 3Q 2013. The proposed
cash payout for 2013 represents 51% of
the Group’s net profit for the year.
Investor Relations
33
Investor Relations
INVESTOR RELATIONS CALENDAR
In addition to meetings and conference calls with local and overseas
institutional investors, the following events were organised in 2013 to engage
the investing community:
1Q 2013
2Q 2013
3Q 2013
4Q 2013
• Held FY 2012 results
press and analysts’
conference and a
‘live’ webcast.
• Went on non-deal
roadshows to
Hong Kong and
Australia with CIMB
and Credit Suisse
respectively.
• Hosted a group visit
to Keppel FELS and
Keppel Shipyard
with Credit Suisse.
• Hosted a site visit
to BrasFELS shipyard
in Brazil with
Morgan Stanley.
• Held 3Q & 9M 2013
results briefing via
a ‘live’ webcast.
• Hosted analysts at
a naming ceremony
for the 21st rig
delivered by
Keppel FELS in 2013.
• Hosted a group
investor visit to
Keppel FELS shipyard
with Morgan Stanley.
• Hosted an investor
visit to the Group’s
logistics facilities
in Foshan, China.
• Held 1Q 2013
results briefing via
a ‘live’ webcast.
• Convened Annual
General Meeting.
• Convened
Extraordinary General
Meeting (EGM) on the
proposed distribution
of dividend in specie of
Keppel REIT units.
• Went on non-deal
roadshows to the US
with Citigroup and to
Hong Kong and Japan
with Daiwa.
• Hosted analysts at
naming ceremonies
in Keppel FELS.
• Hosted group visits
to Keppel FELS’
shipyard for Deutsche
Bank, Nomura,
AmInvestment
and Temasek.
• Held 2Q & 1H 2013
results press and
analysts’ conference
and a ‘live’ webcast.
• Convened EGM on the
proposed distribution
of dividend in specie of
Keppel REIT units.
• Went on a non-deal
roadshow to the US
with JP Morgan.
• Participated in Pareto
Securities’ 20th
annual Oil & Offshore
Conference in Norway.
• Hosted analysts and
fund managers at a
naming ceremony
in Keppel FELS.
• Hosted a group of
global investors at
BrasFELS shipyard
with UBS.
• Hosted visits for
investors and analysts
to the Group’s logistics
facilities and Waste-
to-Energy plant.
34
Keppel Corpora†ion Limited Report to Shareholders 2013
Awards & Accolades
CONFIGURED
FOR GROWTH
CORPORATE
GOVERNANCE &
TRANSPARENCY
SINGAPORE CORPORATE AWARDS
• KEPPEL CORPORATION
– Bronze, Best Managed Board
– Silver, Best Annual Report
(Market capitalisation of $1 billion
and above)
• KEPPEL TELECOMMUNICATIONS &
TRANSPORTATION (KEPPEL T&T)
– Gold, Best Annual Report
– Silver, Best Investor Relations
(Market capitalisation of
$300 million to below $1 billion)
• KEPPEL REIT
– Gold, Best Annual Report
(REITs & Business Trusts)
SECURITIES INVESTORS
ASSOCIATION OF SINGAPORE (SIAS)
INVESTORS’ CHOICE AWARDS
• KEPPEL CORPORATION
– First Runner-Up, Singapore
Corporate Governance Award
(Big Cap)
• KEPPEL T&T
– Winner, Singapore Corporate
Governance Award (Mid Cap)
• K-GREEN TRUST
– Merit, Singapore Corporate
Governance Award
(REITs/Business Trust)
• KEPPEL LAND
– Merit, Singapore Corporate
Governance Award (Big Cap)
– Runner-up, Most Transparent
Company (Property)
INSTITUTIONAL INVESTOR
MAGAZINE’S ALL-ASIA EXECUTIVE
TEAM RANKING
• KEPPEL CORPORATION
– Asia’s Best Investor Relations
(Conglomerates) as voted by
Sell-side: Second position
– Asia’s Best CEO (Conglomerates)
as voted by Buy & Sell-sides
– Asia’s Best CFO (Conglomerates)
as voted by Sell-side
– Asia’s Most Honoured Company:
20th of 181 Asian companies
– Best Singapore Company
ALPHA SOUTHEAST ASIA
INSTITUTIONAL INVESTOR
CORPORATE AWARDS
• KEPPEL CORPORATION
– Best Annual Report in Singapore
– Top three companies with the
strongest adherence to corporate
governance in Singapore
– Top six most preferred companies
by institutional investors
Keppel’s companies were recognised at the SIAS Investors’ Choice Awards 2013 for best practices
in corporate governance and transparency.
GOVERNANCE AND TRANSPARENCY
INDEX (GTI)
• Keppel Corporation (3rd), Keppel
Land (5th) and Keppel T&T (15th)
have been ranked among GTI’s
Top 20 for the fifth consecutive year.
• Keppel Land received the following
accolades at the Euromoney Real
Estate Awards:
• SINGAPORE
– Best Office and Business Developer
BUSINESS EXCELLENCE
• Keppel Offshore & Marine
(Keppel O&M) was conferred the
Singapore 1000 Sales/Turnover
Excellence Award at the Singapore
1000 & Singapore SME 1000 Awards.
• Keppel Offshore & Marine
Technology Centre’s E-Semi project
received the Outstanding Maritime
Research & Development and
Technology Award at the Singapore
International Maritime Awards.
• Keppel FELS’ DSSTM 20NS
accommodation semisubmersible
design was conferred the Institution
of Engineers Singapore Prestigious
Engineering Achievement Award.
• Keppel FELS Brasil’s BrasFELS
shipyard received the PNQS Award
for excellence in quality and
sustainability from Brazil’s National
Union of Naval Construction,
Repair and Offshore Industry
and the ARO Foundation.
• Nakilat-Keppel O&M won the
Shiprepair/Shipyard Award for
the second year running at the
Seatrade Middle East & Indian
Subcontinent Awards.
• INDONESIA
– Best Residential Developer
• VIETNAM
– Best Developer
– Best Residential Developer
– Best Office and Business Developer
– Best Mixed-use Developer
• Reflections at Keppel Bay clinched
the Gold Award under the Residential
(High Rise) category at the FIABCI
Prix d’Excellence Awards.
• Marina Bay Financial Centre
was named Best Commercial
Development in Southeast Asia (SEA)
while Marina Bay Suites was
lauded the Best Condominium
Development in SEA and Best
Condominium in Singapore at the
annual SEA Property Awards.
• Ocean Financial Centre set the
Guinness World Record for the
World’s Largest Vertical Garden,
and clinched the Skyrise Greenery
Awards (Excellence) by the
National Parks Board.
• Marina at Keppel Bay was named
International Marina of the Year
2013 – 2014 by the Marine Industries
Association Australia, while its
City Reef project won the Best
Environmental Initiative award.
Awards & Accolades
35
Awards & Accolades
• Keppel Land Hospitality
Management was accorded the
following awards at the World
Travel Awards:
– Spring City Golf & Lake Resort,
Kunming, China
Asia’s Leading Golf Resort
– Sedona Hotel Yangon, Myanmar
Myanmar’s Leading Hotel for
the sixth consecutive year
– Sedona Hotel Mandalay, Myanmar
Myanmar’s Leading Resort
– Sedona Suites Ho Chi Minh City,
Vietnam
Vietnam’s Leading
Serviced Apartments
SUSTAINABILITY
• Keppel Corporation was the only
industrial conglomerate and one
of four Singaporean companies
listed as a component of the Dow
Jones Sustainability Asia Pacific
Index (DJSI Asia Pacific) 2013/2014.
Keppel Land was listed on the DJSI
World and Asia Pacific Indices for
the third and fourth consecutive
years respectively.
• Keppel Corporation was one of two
Singaporean companies included
in the Euronext Vigeo World 120
Index, which recognises companies
with the highest Environment,
Social and Governance rankings.
• Keppel Land and Keppel T&T
were conferred Top Honour
and Achievement of Excellence
respectively in the Sustainable
Business Awards (Large Enterprise)
category at Singapore Business
Federation’s Singapore
Sustainability Awards.
• Keppel Land was ranked 17th in
the Global 100 Most Sustainable
Corporations in the World, topping
Asian firms and the international
real estate sector.
• Keppel Land was named the
Regional Sector Leader for Asia
and Office sector in the Global
Real Estate Sustainability
Benchmark Report.
• Keppel Land won the prestigious
Eco-Advocate Award at the
inaugural Asia-Pacific Enterprise
Leadership Awards.
• Keppel Land was included in
The Sustainability Yearbook for
the fourth consecutive year. The
Yearbook features the top 15% of
the world's largest companies in
sustainability leadership.
• Keppel Land was the Green
Champion at the Singapore
Compact Corporate Social
Responsibility (CSR) Awards.
• Keppel Land clinched the Most
Admired ASEAN Enterprise award in
the CSR (Large Company) category
at the ASEAN Business Awards.
• At the Singapore Environmental
Achievement Awards by Singapore
Environment Council, Keppel Land
topped the services category
while Keppel DHCS clinched
the Merit award.
BUILDING AND CONSTRUCTION
AUTHORITY (BCA) GREEN
MARK AWARDS
• SINGAPORE
– Keppel DHCS’ Changi Business
Park District Cooling System plant
extension, Platinum
– Corals at Keppel Bay, GoldPlus
– The Glades, GoldPlus
– The Luxurie, Gold
– Keppel Digihub, Certified
• OVERSEAS
– Sino-Singapore Tianjin Eco-City’s
Low Carbon Living Lab, Platinum
– Hill Crest Residence in Spring City
Golf & Lake Resort in Kunming,
China, Gold
• Reflections at Keppel Bay received
the BCA Universal Design Mark
(Residential category)
Platinum Award.
CORPORATE CITIZENRY
• The Keppel Group won the
President’s Award for Philanthropy
(Corporate) for best practices
in community involvement and
corporate philanthropy.
• The Keppel Group garnered its sixth
consecutive Distinguished Patron
of the Arts Award from Singapore’s
National Arts Council.
• Keppel Care Foundation, Keppel
O&M and Keppel Logistics
Singapore were awarded Corporate
Gold, Silver and Bronze respectively
at the Community Chest Awards.
Keppel Shipyard received the
10-Year Outstanding SHARE Award,
while Keppel FELS and Keppel
Singmarine received
SHARE Platinum Awards.
• Keppel Corporation received
the Singapore Lyric Opera’s
Patron Award.
36
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
1. The Group secured
32 WSH awards in
2013, the highest
number of safety
awards achieved
by a single
organisation.
2. Reflections
at Keppel Bay
has won many
green awards
including the BCA
Universal Design
Mark (Residential
category)
Platinum Award.
• Keppel FELS was bestowed the
Plaque of Commendation (Star)
for promoting industrial relations,
worker welfare and workfare and
supporting National Trades
Union Congress initiatives
and programmes.
• For its economic and social
contributions to the country,
Keppel Land China was ranked
among the Top 10 ASEAN
companies in China by the
China-ASEAN Business Council
for the second consecutive year.
SAFETY
• The Keppel Group secured 32
Workplace Safety & Health (WSH)
Awards conferred by the WSH
Council and Singapore’s Ministry
of Manpower. This is the highest
number of safety awards achieved
by a single organisation.
• Keppel Shipyard won safety awards
at the Seatrade Asia Awards, Lloyd’s
List Global Awards and Lloyd’s List
Asia Awards.
• Keppel Logistics Foshan won Model
Enterprise in Safety Culture and
was a runner-up in the Foshan City
Industrial Injury Prevention and
Safety Advancement Awards.
HUMAN RESOURCES
• Keppel Corporation was
bestowed the Human Capital
Breakthrough Award by Human
Capital Singapore for improving
human capital and group-wide
talent management practices.
• Keppel O&M received the Best
Graduate Development and Best
Health & Wellbeing accolades
at the 10th Annual Human
Resources Management Awards.
• Keppel FELS was awarded the
Plaque of Commendation (Star)
award at National Trades Union
Congress (NTUC) May Day
Awards for its efforts to
promote strong industrial
relations, worker welfare
and workfare.
• Keppel DHCS clinched
the Bronze Award at the
International Exposition
on Team Excellence
by the Singapore
Productivity Association.
1
2
Awards & Accolades
37
CONFIGURED
FOR GROWTH
In the 2013 Annual Reports of the Keppel Group
of Companies, the distinctive Keppel spur is reflected
in the tangram, a symbol of flexibility and creativity in
shaping endless possibilities. Likewise, in a world of
volatility, Keppel Corporation continually strives to
configure all its components and competencies into
a cohesive and optimal whole to capture
value and enjoy sustainable growth.
Proprietary Designs
Power Generation
30
Jackup, semisubmersible
and drillship solutions
1,300MW
Residential Pipeline
66,000
Capacity fully operational
Homes across Asia
CONFIGURED FOR GROWTH
GROWING BEYOND 45
1960
1968
Keppel Shipyard
was inaugurated
1850
1859
Singapore’s first
graving dock was
built at New Harbour,
later renamed
Keppel Harbour
1970
1972
Keppel came under
local management
1973
Keppel Shipyard built a
new shipyard in Jurong
and took a majority stake
in offshore rig builder,
Far East Levingston
Shipbuilding (FELS)
1975
First overseas venture:
Established Keppel
Philippines Shipyard
1976
Started shipbuilding
business: Acquired
Singmarine Shipyard
1978
Provided financial
services with
Shin Loong Finance
1980
1980
Keppel Shipyard was
listed on Singapore
Stock Exchange
1983
Diversified into property
and shipping: Acquired
Straits Steamship Company
1985
FELS developed its rig
building technology
1986
Keppel Corporation
was incorporated.
Acquired ex-Mitsubishi
Yard, a cornerstone for
FELS’ growth
1989
Straits Steamship Co
renamed Straits Steamship
Land; Shipping Division
was listed as Steamers
Maritime Holdings
CONFIGURED
FOR GROWTH
2010
2011
K-Green Trust
was listed
2012
Launched Keppel
Care Foundation
1990
1990
Acquired Asia
Commercial Bank and
renamed it Keppel Bank
Expanded into
USA, UAE, Vietnam,
China and Azerbaijan
1993
Keppel led
the Singapore
consortium in the
Suzhou Industrial Park
1994
Established
Offshore Technology
Development
1997
Telecommunications
company, M1,
was launched
Acquired TatLee
Bank and renamed
it Keppel TatLee
1999
Acquired stake in
Singapore Petroleum
Company (SPC)
2000
2000
Launched KFELS
B Class rig
Expanded into Brazil,
the Netherlands and Qatar
Initiated
Keppel Volunteers
2001
Divested its banking and
financial services business
2002
Consolidated shipyard
operations to become
Keppel Offshore & Marine
Acquired Keppel
Seghers Technology
2005
Keppel Land led in the
development of Marina
Bay Financial Centre
2006
Established K-REIT Asia,
now known as Keppel REIT
2008
Became leader of the
Singapore consortium
for the Sino-Singapore
Tianjin Eco-City
2009
Divested SPC
GLOBAL
EVENTS
40
1965
Singapore’s
independence
1980
Oil crisis
1985
Global recession
1993
Oil price
collapse
1999
Dot.com
bubble
burst
2002
SARS
outbreak
2008
Global
Financial
Crisis
1997
Asian
Financial Crisis
2000
Property
downturn
Keppel Corpora†ion Limited Report to Shareholders 2013
Configured for Growth Growing Beyond 45
41
CONFIGURED FOR GROWTH
GROWING BEYOND 45
Keppelites,
as our people fondly
call themselves, are
building on success
and an unstoppable
Can Do! culture.
As a small island nation, Singapore
has had to navigate deftly global
tides, and punch far above its weight
in order to thrive. Likewise, Keppel,
which started as a small shiprepair
yard, had to eke out a niche in the
global arena to stand tall as a
multi-national conglomerate today.
Even as we make strides ahead,
we recognise that we are an
integral part of the community
and remember that the future is
a shared one.
We are focused on making a great
company better.
2013 was a year in celebration for
Keppel as we took the opportunity
to reflect on our strengths and
achievements, recharge and innovate
for the future and engage our people
and all our stakeholders more deeply,
wherever we operate.
Keppelites, as our people fondly call
themselves, are building on success
and an unstoppable Can Do! culture.
We appreciate that only by
understanding the past are we able
to build for the future.
The story of Keppel continues to be
intertwined with that of Singapore.
Focus
Having survived and even
thrived through many crises and
challenges, we recognise that our
multi-business strategy has and
continues to work well for us.
From designing and building
the global benchmark-setting
KFELS B Class jackup and the
iconic Reflections at Keppel Bay to
the quality Waste-to-Energy plant
in the Qatari desert, the Keppel
stamp of excellence distinguishes
us from the competition.
We have clarity of focus. Even as we
look for new opportunities, we will
not stray from our core and close
adjacencies. We strive to be the
leader in all our chosen businesses
and continue to provide our
customers with the best value
proposition so that Keppel is their
choice partner.
Our steadfast discipline and
prudence have ensured a solid
balance sheet which provides us
the financial strength to invest in
growth and seize opportunities.
Crises create opportunities for the
ready. At the same time, we
exercise discipline to prune
non-core businesses and assets,
monetise and recycle capital to
bring better returns.
We have clarity of
focus. Even as we look
for new opportunities,
we will not stray from
our core and close
adjacencies.
We are mindful of volatility and that
credit markets could change quickly.
Maintaining a strong balance sheet
and diverse sources of funding will
give us the flexibility to capitalise
on opportunities when they arise.
As a Group, we have in 2012 and
2013 tapped about $2.3 billion
of fixed-rate debt with average
maturity of almost 11 years.
The Group’s fund-raising moves
were completed before the
announcement of the US Federal
tapering and subsequent rise in
interest rates.
We have patiently executed on our
Near Market, Near Customer strategy
which is reaping results. Our early
mover advantage in Brazil was
planted some 13 years ago when we
began operating the BrasFELS yard
in Angra dos Reis and today, it has
become the most comprehensive
offshore and marine facility in Latin
America. Presently, we are building
for Sete Brazil six semisubmersibles
based on Keppel’s DSS TM 38E design
which are well-suited to meet the
stringent requirements of the
deepwater “Golden Triangle”
region of Brazil, West Africa
and the Gulf of Mexico.
1
2
3
42
Keppel Corpora†ion Limited Report to Shareholders 2013
We are reinforcing our Near Market,
Near Customer strategy, expanding
and enhancing our network of yards,
with our latest move to capture
opportunities from the continued
growth of the Gulf of Mexico.
Keppel Offshore & Marine (Keppel
O&M) has inked a Memorandum of
Understanding with subsidiaries of
Mexico’s national oil company and
the world’s fifth-largest crude oil
producer, PEMEX to jointly develop,
own and operate a yard facility.
The yard is strategically located in
Altamira along the coast of the Gulf
of Mexico, where its first phase will
support the construction of six KFELS
B Class jackup drilling rigs.
We have been a strong supporter of
PEMEX’s oil and gas programme with
some 19 projects delivered and on
order for Mexico presently. Through
our partnership with PEMEX, we
will tap each other’s technological
expertise and know-how to provide
comprehensive solutions for the
Mexican market.
1. Keppel’s growth story
has seen each generation
of Keppelites pick up the
baton and strive for
greater heights.
2. The Keppel Can Do!
culture and strong
core values bond our
40,000-strong people
across the globe.
3. Our Near Market, Near
Customer strategy has
spawned a global network
of 20 shipyards to better
serve our customers.
CONFIGURED FOR GROWTH
GROWING BEYOND 45
CONFIGURED
FOR GROWTH
1
2
Distinction
Who would have
imagined that a
Singapore company
would, in the last decade,
build half of the world’s
new jackup rigs?
In 2013, Keppel FELS delivered
21 rigs on time or ahead of schedule
and safely, setting a new record for
the most number of offshore rig
deliveries by a company in a single
year. Our previous record was
13 in 2009. This remarkable
feat was achieved through
application of new technology
and equipment as well as innovative
construction methodology.
Excellent execution has long been
Keppel’s hallmark. Our projects are
delivered on time, on budget and
incident free. We will not be content
with what has been achieved but
continue to push the boundaries
of our performance.
Keppelites are challenged to enhance
our customers’ businesses through
innovation that harnesses the breadth
and depth of our experience and
expertise as well as global network
and world-class products. We will
1. The Keppel-
NUS Corporate
Laboratory will
pursue research
thrusts centred on
Future Systems,
Future Yards and
Future Resources
to maintain
Singapore’s global
leadership in the
offshore and
marine industry.
2. Sitting on a
site which was
previously
Keppel’s Harbour
Yard, Keppel Bay
has become a
showcase for
world-class
waterfront homes.
keep collaborating with our
customers, industry partners and the
academia to think up new solutions
using the best technology on offer.
2013 was also marked by a deeper
collaboration between Keppel and
the academia to offer innovative
solutions for oil and gas exploration
and production in ultra-deep water
and Arctic environments. Keppel
Corporation and the National
University of Singapore (NUS)
announced on 25 November
2013 the setting up of the
Keppel-NUS Corporate Laboratory,
in collaboration with the National
Research Foundation, Prime
Minister’s Office, Singapore.
Marine Technology Centre, the
Corporate Laboratory will develop
capabilities and technologies to
maintain Singapore’s position as a
global leader in the offshore and
marine industry.
Professor Chan Eng Soon,
Co-Chairman of Keppel-NUS
Corporate Laboratory and Dean,
Faculty of Engineering at NUS,
commented, “The establishment
of the Keppel-NUS Corporate
Laboratory will provide a unique
platform to build synergy between
industry and academia. It will
certainly create a culture for thinking
out of the box in addressing real
world problems. As it is imperative
that we leapfrog ahead in innovation
and technology towards expanding
Singapore’s investment in the
offshore industry, we need to nurture
engineer leaders and experts capable
of going beyond frontiers in coming
out with holistic solutions for
complex challenges of the future.”
In the same vein, the innovative
spirit embedded in Keppel Land’s
DNA has propelled its transformation
from a Singapore commercial
landlord to one of Asia’s leading
property developers with a sterling
portfolio of investment-grade office
buildings, integrated townships, and
residential developments. In 2013,
Keppel Land embarked on a brand
refresh exercise with the philosophy
– Thinking Unboxed – articulating
Keppel’s constant commitment
to innovation.
The Keppel-NUS Corporate
Laboratory will create a synergistic
industry-university partnership to
pursue three main research thrusts
which are centred on Future Systems,
Future Yards and Future Resources to
meet the future challenges of the
offshore industry.
Its vision is to be a global
technology centre of excellence
in the pursuit of resources from
harsh environments and ocean
beds while preserving and sustaining
our environment. Its mission is to
undertake Research & Development
through Keppel’s core competencies
and NUS’ research expertise in
solutions for Deepwater, Arctic
and other fields.
Leveraging the expertise of NUS
research centres such as the NUS
Centre for Offshore Research &
Engineering and NUS Tropical Marine
Science Institute, as well as Keppel’s
research unit Keppel Offshore &
Configured for Growth Growing Beyond 45
45
CONFIGURED FOR GROWTH
GROWING BEYOND 45
Engagement
Our businesses are configured
for growth, providing sustainable
solutions to meet the world’s needs
for energy, homes, connectivity and
a clean environment. We want to
build not just a world-class company
but also a sustainable one, upheld by
integrity and accountability. In
shaping Keppel’s future, we embrace
sustainability not only as a guiding
principle, but also on strategic and
operational levels.
Sustainability issues are managed
and communicated at all levels of
the Keppel Group. We recognise that
business and sustainability goals are
best unified through an active
engagement process with our
stakeholders. Importantly, the
commitment of senior management
is crucial to successfully engage
Keppelites as well as provide
leadership and direction for the
Group’s performance against
sustainability indicators.
We continue to document and track
our progress in our sustainability
reports which communicate
our aspirations, plans, actions,
performance and commitment to
grow the Company holistically. All
our reports draw on internationally-
recognised standards of reporting,
including the Global Reporting
Initiative (GRI) Sustainability
Reporting Guidelines 3.1 and the
Guide to Sustainability Reporting
for Listed Companies published by
the Singapore Exchange.
Our sustainability journey has
charted encouraging strides. Keppel
Corporation is the only industrial
conglomerate and one of only four
Singapore companies to be listed as
an index component of the Dow
Jones Sustainability Asia Pacific
Index (DJSI Asia Pacific) 2013/2014.
Keppel Land was listed on the Dow
Jones Sustainability World Index for
the third consecutive year and the
DJSI Asia Pacific Index for the fourth
consecutive year. It was also listed in
the prestigious Global 100 Most
Sustainable Corporations in the
World 2014, clinching the 17th
We want to build not just
a world-class company
but also a sustainable
one, upheld by integrity
and accountability.
1. Our top
management
walks the talk in
reaching out to the
underprivileged.
2. Keppel
Corporation
marked its 45th
anniversary in 2013
by giving back to
the community.
position globally and placing it tops
among Asian as well as real estate
companies worldwide.
We recognise that as communities
thrive, we thrive. Tapping our
collective strength, Keppelites are
encouraged to become responsible
citizens with a genuine concern for
the well-being of others, especially
those of the underprivileged.
In commemoration of Keppel
Corporation’s 45th anniversary,
August was designated as the Keppel
Community Month during which we
engaged our business units and
volunteers worldwide in sustainable
projects to benefit children, youths
and the environment. Beyond
providing funds, we championed the
giving of time, knowledge and
expertise to serve the communities.
The month-long campaign rallied
Keppelites in doing good across
businesses and across boundaries.
In Singapore, Keppelites served more
than 9,000 hours in community
service, exceeding the 5,000 hours
pledged to the President’s Challenge
2013. In addition, the Keppel Young
Leaders also embarked on a project
under the President’s Challenge to
review and refine the business
models of social enterprises,
beginning with those under Keppel’s
adopted charity, the Association for
Persons with Special Needs.
We continued our sponsorship of
the Keppel-Singapore Table Tennis
Association (STTA) Awards Night to
honour Singapore’s top table tennis
talents for their achievements. Our
partnership with STTA builds on a
three-year agreement to fund the
Keppel Corporation Clementi Zone
Training Centre. The Centre offers
professional table tennis coaching for
Singaporeans aged 5 to 11 years old
with the aim of broadening the base
of competitive players to be infused
into the National Youth Squads. Both
initiatives aim to grow and develop
sporting champions in Singapore.
Keppel has also been a longstanding
supporter of the arts as we believe
that a vibrant arts scene will help to
forge our national identity and
CONFIGURED
FOR GROWTH
strengthen community ties.
We partnered Esplanade-
Theatres on the Bay to relaunch
Keppel Nights and cultivate
life-long arts engagement among
the young. Keppel contributed
$360,000 in support of the
programme to provide students
from some 20 heartland schools
in Singapore with access to shows
presented by the Esplanade.
To create a legacy for nurturing
a new generation of creative and
critical thinkers through art education,
Keppel Corporation committed
$12 million to the National Art
Gallery in support of its centre for
art education which will be named
the Keppel Centre for Art Education.
The Keppel Centre for Art
Education will be the first
dedicated art education facility
of its kind in Singapore and the
region. It is projected to engage
250,000 children and youths every
year when it opens its doors in 2015,
and will provide an immersive and
creative learning environment,
and resources for educators
and researchers.
Aiming higher
We have grown to be more than
40,000 strong in over 30 countries
around the world. The Keppel
Can Do! culture and our core values
of passion, integrity, customer focus,
people-centredness, safety, agility
and innovativeness, collective
strength and accountability will
continue to bind us and drive us.
Our pioneers had shown us the
Keppel way by walking the talk
before our core values even found
articulation. As we contemplate on
so rich an inheritance built over
forty five years, we know that the
bar is set high. We must aim higher,
stay hungry and ensure we are
not overtaken by technology,
rivals or shifting markets.
Keppelites are charged afresh to take
the Company to greater heights.
1
1
2
Configured for Growth Growing Beyond 45
47
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-2013 had total assets
of $30.06 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 2013. Also discussed are
the impact of key business activities on
the Group’s performance, challenges in
the operating environment, as well as
long-term strategies which Keppel
uses to shape its future.
Contents
49 – Group Structure
50 – Management Discussion
& Analysis
52 – Offshore & Marine
64 – Infrastructure
72 – Property
80 – Investments
82 – Financial Review & Outlook
48
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
GROUP STRUCTURE
Keppel Corporation Limited
OFFSHORE & MARINE
INFRASTRUCTURE
PROPERTY
INVESTMENTS
• Off shore rig design,
construction, repair
and upgrading
• Ship conversion and repair
• Specialised shipbuilding
• Gas-to-Power
• Waste-to-Energy
• X-to-Energy
• Logistics and data centres
• Property development
• Property fund management
• Property trusts
• Investments
• Telco
100%
KEPPEL BAY PTE LTD2
100%
K1 VENTURES LIMITED
36%
KEPPEL OFFSHORE
& MARINE LTD
100%
Keppel FELS Limited
100%
KEPPEL
INFRASTRUCTURE
HOLDINGS PTE LTD
Gas-to-Power
Keppel Shipyard Limited
100%
Keppel Merlimau
Cogen Pte Ltd
100%
Keppel Singmarine Pte Ltd
100%
Keppel Gas Pte Ltd
100%
100%
Keppel Electric Pte Ltd
100%
KRISENERGY LTD
Cayman Islands
M1 LIMITED3
31%
20%
KEPPEL LAND LIMITED
Keppel Land
International Limited
Southeast Asia and India
Keppel Land China
China
Alpha Investment
Partners Ltd
55%
100%
100%
100%
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
Keppel FELS Brasil SA
Brazil
Keppel Singmarine
Brasil Ltda
Brazil
Keppel Philippines
Marine Inc
The Philippines
100%
100%
100%
Waste-to-Energy
Keppel REIT
45%
Keppel Seghers
Engineering Singapore
Pte Ltd
100%
X-to-Energy
100%
Keppel DHCS Pte Ltd
100%
100%
K-Green Trust
49%
100%
100%
KEPPEL
TELECOMMUNICATIONS
& TRANSPORTATION LTD
80%
Logistics & Data Centres
98%
Keppel Logistics Pte Ltd
100%
Keppel Data Centres
Holding Pte Ltd
Keppel Logistics (Foshan)
Pte Ltd
China
100%
70%
Keppel Subic Shipyard Inc
The Philippines
Caspian Shipyard
Company Limited
Azerbaijan
86%
45%
Arab Heavy Industries PJSC
United Arab Emirates
33%
Nakilat-Keppel
Offshore & Marine Ltd
Qatar
Dyna-Mac Holdings
Limited
20%
24%
1 Owned by a Singapore
Consortium, which is in
turn 90%-owned by the
Keppel Group.
2 Owned by Keppel Corporation
Limited (70%) and Keppel Land
Limited (30%).
3 Owned by Keppel
Telecommunications
& Transportation Ltd,
an 80%-owned subsidiary
of Keppel Corporation.
Updated as at 6 March 2014.
The complete list of subsidiaries
and signifi cant associated
companies is available at
Keppel Corporation’s website
www.kepcorp.com.
GROUP CORPORATE
SERVICES
SINO-SINGAPORE TIANJIN ECO-CITY INVESTMENT
AND DEVELOPMENT CO., LTD1
China
50%
Control &
Accounts
Corporate
Communications
Strategy &
Development
Corporate
Development/
Planning
Human
Resources
Legal
Risk
Management
Audit
Tax
Treasury
Information
Systems
Operating & Financial Review Group Structure
49
Operating & Financial Review
MANAGEMENT
DISCUSSION &
ANALYSIS
Operating Cash Flow
$625m
Mainly due to higher receipts
from rig deliveries and new
orders secured by the
Offshore & Marine Division.
Total Distribution Per Share
49.5cts
Total distribution for the year
will be about $894 million.
We are configured for growth with prudent
financial discipline and a strong balance sheet.
Key Performance Indicators
Revenue
Net profi t before
revaluation, major
impairment and
divestments
Revaluation, major
impairment and
divestments
Attributable profi t after
revaluation, major
impairment and
divestments
Operating cash fl ow
Free cash fl ow**
Economic Value
Added (EVA)*
Earnings Per Share (EPS)*
Return On Equity (ROE)*
Total Distribution
Per Share
2013
$ million
12,380
13 vs 12
% +/(-)
-11
2012
$ million
13,965
12 vs 11
% +/(-)
+39
2011
$ million
10,082
1,412
-26
1,914
+28
1,491
434
+34
323
-29
455
1,846
625
642
939
78.2 cts
14.9 %
49.5 cts
-17
-38
+3
-32
-27
-34
-33
2,237
1,006
625
1,375
106.8 cts
22.6 %
+15
n.m.
n.m.
+34
+27
+9
1,946
(224)
(297)
1,024
83.8 cts
20.8 %
73.6 cts
+71
43.0 cts
* Figures exclude revaluation, major impairment and divestments.
** Free cash fl ow excludes expansionary acquisitions and capex, and major divestments.
GROUP OVERVIEW
In the absence of one-off gains
from Reflections at Keppel Bay
as well as sale of some equity
investments in 2012, Group net profit
before revaluation, major impairment
and divestments decreased by 26%
to $1,412 million. The compounded
annual growth for net profit before
revaluation, major impairment and
divestments from 2008 to 2013
was 5.5%. Attributable profit after
revaluation, major impairment and
divestments was $1,846 million.
EPS declined by 27% to 78.2 cents.
ROE was 14.9%. At $939 million,
EVA was $436 million lower than
the previous year.
Net cash from operating activities
dropped 38% to $625 million as
compared to $1,006 million in 2012.
This was due mainly to higher
operational activities in the prior year.
Net cash from investment activities was
$17 million. The Group spent $489 million
on investments and operational capital
expenditure, mainly in the Offshore &
Marine Division. After taking into account
proceeds from divestments and dividend
income of $506 million, the resulting
free cash inflow was $642 million.
Total distribution for 2013 will be
49.5 cents per share. This comprises
a final proposed dividend of 30.0 cents
per share, an interim cash dividend
of 10.0 cents per share and a special
dividend in specie of eight Keppel REIT
units for every 100 shares held in the
Company (equivalent to 9.5 cents per
share) distributed in 3Q 2013. The total
distribution for the year will be about
$894 million.
50
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
Revenue ($ million)
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Off shore &
Marine
Infrastructure
Property Investments
Total
2011
2012
2013
5,706
7,963
7,126
2,863
2,832
3,459
1,467
3,018
1,768
46
152
27
10,082
13,965
12,380
Net Profi t* ($ million)
1,200
1,000
800
600
400
200
0
(200)
2011
2012
2013
Off shore &
Marine
1,064
937
930
Infrastructure
Property Investments
Total
82
(1)
(14)
300
784
442
45
194
54
1,491
1,914
1,412
* Figures exclude revaluation, major impairment and divestments.
SEGMENT OPERATIONS
Group revenue of $12,380 million
was $1,585 million or 11% below
that of the previous year. Revenue
from the Offshore & Marine Division
of $7,126 million was $837 million
or 11% lower due mainly to several
newly commenced jobs which have
not reached the threshold for
revenue recognition. Revenue
from the Infrastructure Division
of $3,459 million was $627 million
or 22% higher due mainly to greater
revenue contributed by the
co-generation power plant in
Singapore. Revenue from the
Property Division of $1,768 million
fell by $1,250 million or 41% due
largely to a decline in sales recognition
of Reflections at Keppel Bay.
Group net profit of $1,412 million
was $502 million or 26% lower than
that of the previous year. Profit from
the Offshore & Marine Division of
$930 million was $7 million lower
than that of the prior year. Losses
from the Infrastructure Division were
$14 million in 2013 as compared
to $1 million in 2012. Losses arising
from cost overruns pertaining to
the Engineering Procurement
and Construction contracts were
eased by better performance at
the co-generation power plant.
Profit from the Property Division of
$442 million declined by 44% largely
due to reduced contributions from
Reflections at Keppel Bay, partly
offset by higher profit from China
and gains from the sale of the Jakarta
Garden City project. Profit from the
Investments Division decreased
due to fewer disposals of equity
investments during the year.
Operating & Financial Review Management Discussion & Analysis
51
Operating & Financial Review
We aim to be the preferred solutions partner
in the global offshore and marine industry.
OFFSHORE & MARINE
Profi t Before Tax*
$1,187m
as compared to FY 2012’s $1,181 million.
1
Net Profi t*
$930m
as compared to FY 2012’s $937 million.
MAJOR DEVELOPMENTS IN 2013
• Delivered a record number of 22
rigs worldwide.
• Achieved record net orderbook
of $14.2 billion as at end-2013.
• Inaugurated Baku Shipyard in
Azerbaijan and signed an MOU
with PEMEX for a yard in Mexico.
• Launched Keppel-NUS Corporate
Laboratory to augment innovation
and R&D efforts.
FOCUS FOR 2014/2015
• Sharpen execution and grow
technology expertise to amplify
value proposition.
• Boost productivity through
innovation.
• Harness synergy of global yards
and leverage Near Market, Near
Customer strategy to seize
opportunities in new markets
and adjacent businesses.
• Maintain emphasis on talent
management and Health,
Safety and the Environment.
EARNINGS REVIEW
The Offshore & Marine Division secured
about $7 billion of new orders for 2013.
The net orderbook stood at a record high
of $14.2 billion with deliveries extending
into 2019. Revenue of $7,126 million
was $837 million or 11% lower.
Operating profit margin for 2013 was
14.7%, an improvement from last year’s
13.5%. Pre-tax earnings increased 1% to
$1,187 million due to an increase in share
of associated companies’ profits, partly
offset by a decrease in operating results.
Net profit of $930 million was $7 million
or 1% lower than in 2012. This Division
remains the largest contributor to
Group net profit with a 66% share.
MARKET REVIEW
Most of 2013 was fraught with
uncertainties and anxieties mainly over
the impact of the tapering of the US’
quantitative easing. While the global
economy is showing gradual signs of
improvement, there remain concerns
over the sustainability of growth,
threat of higher global interest rates,
deflation risks in the Eurozone
and the contagion impact of China’s
slower economic expansion.
In spite of these global currents,
Brent crude price hovered around
US$100 per barrel during the year,
sustaining the impetus for exploration
and production (E&P) spending.
In the near term, a potential increase
in non-OPEC oil supply is expected
to add downward pressure on prices.
The impact of this, however, could be
partially cushioned by a concurrent,
gradual rise in oil demand that is
forecast to reach 92.5 million
barrels per day in 2014.
OPERATING REVIEW
2013 was a record year for Keppel O&M
whose continuous productivity
improvements have enabled it to
deliver 22 rigs, a tension leg wellhead
platform (TLWP), five Floating Production
Storage and Offloading (FPSO)/
Floating Storage and Offloading (FSO)
conversion and upgrading projects
and eight specialised vessels to the
satisfaction of customers worldwide.
52
Keppel Corpora†ion Limited Report to Shareholders 2013
Earnings Highlights ($ million)
Revenue
EBITDA*
Operating Profi t*
Profi t before Tax*
Net Profi t*
Manpower (Number)
Manpower Cost
2013
7,126
1,181
1,044
1,187
930
31,487
1,173
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
Net Profi t* ($ million)
2013
2012
2011
* Figures exclude revaluation, major impairment and divestments.
1. Keppel FELS
continued to
support the
growing Mexican
market with its
benchmark-setting
KFELS B Class
jackup, here
in delivery
to customer,
CP Latina.
2. 2013 was a record
year as Keppel
delivered 22 rigs to
customers globally.
930
937
1,064
CONFIGURED
FOR GROWTH
Amidst stiff competition, the company
continued to win the confidence of
drillers and operators, and secured
new orders worth about $7 billion
in 2013, pushing its net orderbook
to a new high of $14.2 billion,
with deliveries and revenue visibility
stretching till 2019.
Keppel’s position as the industry’s
preferred solutions partner was
further entrenched with wide market
acceptance of its in-house designs.
Notably, Keppel O&M’s proprietary
solutions constituted all 21 of the
newbuild rig orders received by
the company in 2013.
The KFELS B Class jackup, in particular,
has become an undisputable industry
standard, accounting for one-third
of the jackups delivered in the past
13 years. As at end of 2013, another
23 such units were in various stages
2
Operating & Financial Review Offshore & Marine
53
Operating & Financial Review
OFFSHORE & MARINE
of construction in Keppel’s yards.
To expand its breadth of product
offerings, Keppel O&M announced
that it would proceed to construct
the CAN-DO drillship, a design that
was developed in close consultation
with drillers, oil companies and
vendors. The company is also in
negotiations with Golar LNG to
embark on the world’s first Floating
Liquefied Natural Gas (FLNG) vessel
conversion as well.
Expanding on its Near Market,
Near Customer strategy, Keppel O&M
signed a Memorandum of
Understanding (MOU) with Mexico’s
national oil company, PEMEX, to
develop, own and operate a new
shipyard in Mexico that will initially
support the construction of six
KFELS B Class jackups. Meanwhile,
Baku Shipyard, its second yard facility
in Azerbaijan, was inaugurated.
OFFSHORE
Through seamless project management
and the synergy of satellite yards in the
region, Keppel FELS delivered 21 rigs
either on time or ahead of schedule
in 2013, far surpassing its previous
record of 13 rigs in 2009.
to order its fourth repeat unit.
Other significant new orders secured
include five KFELS Super B Class
jackups from long-time customer
Transocean, and five KFELS B Class
jackups from Grupo R.
Among the satisified global customers
were Arabian Drilling Company, Asia
Offshore Drilling, CP Latina, Ensco,
Gulf Drilling International, Hercules
Offshore, Japan Drilling Company
and Transocean, some of whom had
also awarded early delivery bonuses
for their rigs.
In 2013, Keppel FELS continued
to win contracts from returning
customers such as Star Drilling,
Clearwater and Floatel International.
Ensco, which had taken delivery
of its first KFELS Super A Class jackup
during the year, also returned
Amidst the heavy workload,
Keppel FELS continued to put
Health, Safety and Environment
as its top priority. It was conferred
13 project awards by Singapore’s
Workplace Safety and Health (WSH)
Council as well as the Silver Award
for its piping safety squad and
safety performance by the
Association of Singapore Marine
Industries. Separately, its harsh
environment accommodation
semisubmersible (semi) design,
DSSTM 20NS, was also honoured
with a Prestigious Engineering
Achievement Award from the
Institution of Engineers Singapore.
Record Number of Rig Deliveries in 2013
No.
Project
Newbuild jackups
Model
Customer
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
AOD I
AOD II
AOD III
ArabDrill 50
ArabDrill 60
B341
Dynamic Vision
La Santa Maria
La Covadonga
Laurus
UMW Naga 4
HAKURYU-11
KFELS B Class
KFELS B Class
KFELS B Class
KFELS B Class
KFELS B Class
KFELS B Class
KFELS B Class
KFELS B Class
KFELS B Class
KFELS B Class
KFELS B Class
Asia Off shore Drilling
Asia Off shore Drilling
Asia Off shore Drilling
Arabian Drilling Company
Arabian Drilling Company
Gulf Drilling International
Vision Drilling
CP Latina
CP Latina
Integradora de Servicios Petroleros Oro Negro
UMW Oil & Gas Corporation
KFELS Super B Class
Japan Drilling Company
Transocean Siam Driller
KFELS Super B Class
Transocean Andaman
KFELS Super B Class
Transocean Ao Thai
KFELS Super B Class
ENSCO 120
ENSCO 121
Hercules Triumph
Hercules Resilience
Papaloapan
KFELS Super A Class
KFELS Super A Class
KFELS Super A Class
KFELS Super A Class
LeTourneau SII6E
Transocean
Transocean
Transocean
Ensco
Ensco
Hercules Off shore
Hercules Off shore
Perforadora Central
Newbuild semisubmersibles
21
22
Sapura Kencana Esperanza
Floatel Victory
KFELS SSDT™ 3600E
KFELS SSAU™ 5000NG
Sapura Kencana
Floatel International
54
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
SIGNIFICANT EVENTS
February
• Keppel FELS Brasil and Keppel Shipyard
respectively secured contracts from
MTOPS to integrate the topside modules
of an FPSO, and SBM Offshore
to fabricate an internal turret for a
newbuild FPSO unit, with a combined
contract value of $200 million.
• Keppel FELS secured three contracts worth
US$300 million to build a KFELS B Class
jackup for Star Drilling as well as upgrade
the semis ENSCO 5006 for Ensco and
Ocean Patriot for Diamond Offshore.
March
• Keppel FELS secured contracts from
Mexican drilling company, Grupo R,
to build four KFELS B Class jackups
worth US$820 million.
April
• Keppel FELS clinched a US$225 million
contract to build a KFELS B Class jackup
for long-time customer Ensco.
• Keppel FELS won a contract worth
US$226 million from Falcon Energy Group
to construct a KFELS Super B Class jackup.
May
• Keppel Shipyard completed refurbishment
and integration works on EMAS Offshore’s
FPSO, Perisai Kamelia.
1
1. BrasFELS has
enhanced its
productivity with
a 2,000-tonne
gantry crane.
Operating & Financial Review Offshore & Marine
55
In the US, Keppel AmFELS won its fifth
jackup order from Mexico’s Perforadora
Central. The Brownsville yard delivered
the third jackup in 2Q 2013, and is
presently building the fourth unit which
will be completed in mid-2014. Keppel
AmFELS also secured several repair
contracts, including work on Noble
Drilling’s jackup, Noble John Sandifer.
Over in Latin America, Keppel FELS
Brasil won a contract from repeat
customer, MODEC and Toyo Offshore
Production Systems (MTOPS), to
integrate the topside modules of an
FPSO. It was also engaged by Diamond
Offshore to upgrade and repair the semi
Ocean Quest, a job which the BrasFELS
yard in Angra dos Reis turned around
in three months.
Activity levels at BrasFELS remained high
with several major deliveries in 2013.
These included the conversion of
FPSO Cidade de Paraty, which was
completed jointly with Keppel Shipyard,
and the upgrading of the drillship Noble
Roger Eason. Meanwhile, Brazil’s first
TLWP, P-61, arrived at the Papa Terra
field in the Campos Basin in early 2014,
following the successful integration of
its topsides and lower hull at BrasFELS.
During the year, BrasFELS struck steel
for the second of six DSS™ 38E semis
for Sete Brasil. Work on the first semi
remains on track, with its hull arriving in
Brazil from Singapore in January 2014.
As part of ongoing yard improvements,
BrasFELS completed the assembly
of a 2,000-tonne gantry crane which
will triple its lifting capacity and
enhance its flexibility.
In Azerbaijan, Caspian Shipyard Company
(CSC) and Keppel FELS won a contract to
build a DSS™ 38M drilling semi for State
Oil Company of Azerbaijan Republic
(SOCAR). Construction of the semi began
in December 2013. CSC also constructed
and launched a floating dock for Baku
Shipyard, and integrated a 31-year-old
jackup, Prime Exerter, for Ezion Exerter
Ltd. Destined for deployment in
Turkmenistan, Prime Exerter was first
cut up at Keppel Verolme before it was
brought into the Caspian Sea through
the Volga-Don canal for integration.
Operating & Financial Review
OFFSHORE & MARINE
1
For greater work efficiency and safety,
CSC acquired a CNC Plasma Cutting
Machine to automate and improve the
quality of steel plate cutting. It is also
upgrading its blasting and painting halls
to accommodate larger blocks.
In China, Keppel Nantong Heavy
Industries’ 26.6-ha yard expansion was
substantially completed. The satellite
yard is now well-equipped to support
Keppel O&M group’s offshore projects,
including jackups and semis.
Keppel Verolme continued to receive a
steady flow of repair, upgrade and special
periodic survey work for a diverse range
of North Sea vessels in 2013. These
included repairs on a pair of semis,
a jackup, an FPSO and a crane vessel.
During the year, repairs on Saipem’s
Scarabeo 5 semi were completed while
Rowan Gorilla VI jackup’s repair and
upgrade are ongoing.
It also completed and installed a
floating, self-erecting substation
platform for Global Tech 1, an offshore
wind park in the German Exclusive
Economic Zone in the North Sea.
During the year, Keppel Verolme
received a permit from the city of
Rotterdam to decommission aged
infrastructure and old offshore rigs
in the North Sea.
MARINE
Keppel Shipyard repaired 383 vessels
in 2013, up from 298 in 2012, with
tankers, container vessels, gas carriers,
drilling vessels and offshore supply
vessels contributing substantially to
the business. Over 80% of the repair
revenues for the year came from
repeat customers and companies
with fleet agreements. Keppel Shipyard
also signed new repair fleet agreements
with CGG Group and Western Geco,
as well as renewed existing ones with
Mitsui O.S.K. Lines (MOL), JX Tanker
Company, McDermott International
and Nippon Yusen Kaisha.
In 2013, Keppel Shipyard completed
three FPSO and one FSO conversion/
upgrading projects. At year-end, there
were eight FPSO conversion projects
1. The expansion of
the Raffles Dock
enables Keppel Shipyard
to accommodate a
wider range of
modern vessels.
2. Keppel is positioned
to meet the rising
demand for floating
accommodation units.
56
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
SIGNIFICANT EVENTS
June
• Keppel O&M, through its subsidiaries
Caspian Rigbuilders BV and Caspian
Shipyard Company, secured a contract
from Caspian Drilling Company to
build a DSSTM 38M semi worth about
US$800 million for SOCAR.
July
• Keppel FELS won a US$210 million
order to build a KFELS B Class jackup
for PV Drilling Overseas.
• Keppel FELS secured a US$206 million
contract from Grupo R to build the
latter’s fifth KFELS B Class jackup.
• Keppel Shipyard completed conversion
projects–FPSO OSX-2 for SBM Offshore
and FSO Mayumba for the Perenco Group.
• Keppel announced that Mr Chow Yew Yuen,
COO of Keppel O&M, would succeed
Mr Tong Chong Heong as CEO of Keppel O&M
with effect from 1 February 2014.
August
• Keppel FELS was awarded a US$206 million
contract to build a KFELS B Class jackup
for Parden Holding.
• Keppel FELS won a contract worth about
US$280 million from Floatel International to
build its fifth accommodation semi.
2
Operating & Financial Review Offshore & Marine
57
and three turret fabrication projects in
progress. Making headway in the gas
sector, Keppel Shipyard concluded
the Front-End Engineering and Design
(FEED) study to convert a Liquefied
Natural Gas (LNG) carrier into an FLNG
vessel for Golar LNG. It also completed
a feasibility study to convert an LNG
Carrier into an Ethane Carrier for
the Singapore arm of France-based
international wholesale energy market
leader, the EDF Group.
Keppel Shipyard further demonstrated
its versatility in meeting the needs
of the shipping industry through the
installation of a Ballast Water Treatment
System on MOL’s Very Large Crude
Carrier (VLCC) Libra Trader, and a
Mewis Duct System on AP Moller’s
tanker, Maersk Ingrid.
Putting safety first, Keppel Shipyard
clocked a total of 50.3 million man-hours
without lost-time incidents in 2013.
It won top safety accolades from
Seatrade, Lloyd’s List Global and Lloyd’s
List Asia, as well as eight safety and
health awards from Singapore’s WSH
Council for various projects.
As part of ongoing yard enhancements,
Keppel Shipyard completed the
widening and lengthening of its
Raffles Dock and added fabrication
space to the Tuas Yard. The newly
expanded Raffles Dock, now measuring
400 metres by 64 metres, enables
Keppel Shipyard to accommodate
the new generation of ultra-large
containerships.
In spite of the challenging business
environment and soft repair market
in the Philippines, Keppel Batangas
Shipyard (Keppel Batangas) and
Keppel Subic Shipyard (Keppel Subic)
completed a total of 108 repair projects.
Meanwhile, shipbuilding activities
continued to provide a source of
revenue. In 2013, Keppel Batangas
delivered the 4,000 dwt bulk
ore/fuel carrier Fly Resilience
to Ok Tedi, while Keppel Subic
worked on newbuildings such as the
Malampaya Phase 3 (MP3) Depletion
Compression Platform (DCP)
for Shell Philippines Exploration,
Operating & Financial Review
OFFSHORE & MARINE
SIGNIFICANT EVENTS
September
• Baku Shipyard, jointly developed by
Keppel O&M, SOCAR and Azerbaijan
Investment Company, was officially
opened by President of Azerbaijan,
H.E. Ilham Aliyev.
• Keppel Shipyard secured two FPSO
conversion contracts worth $190 million
in total from SBM Offshore and
M3nergy Offshore.
• Keppel O&M entered into a sale and
purchase agreement with KazStroyService
Global Engineering to divest Keppel
Kazakhstan. The sale was completed
in February 2014.
October
• Keppel FELS secured two repeat KFELS B
Class jackup orders worth US$440 million
from an affiliate of Clearwater
Capital Partners.
• Keppel O&M signed an MOU with
subsidiaries of Mexico’s national oil
company, PEMEX, to jointly develop,
own and operate a yard facility in
Mexico. The first phase will support the
construction of six KFELS B Class jackups.
• Keppel AmFELS won a contract from a
subsidiary of Mexican driller, Perforadora
Central, to build a KFELS B Class jackup
worth US$240 million.
1
and the coal transshipper crane
barge, Ratu Giok 5.
Both Philippine yards continued
to improve their capabilities in
fabricating offshore structures.
Keppel Batangas was upgraded with
additional assembly areas, cutting
machines, lifting equipment
and cranes. Keppel Subic added
fabrication areas for topsides and
substructures, assembly areas,
pipe shops, warehouses, and of
noteworthy is a 1,500-tonne gantry
crane that enables it to take on
large-scale offshore projects
such as the MP3 DCP.
In the United Arab Emirates,
Arab Heavy Industries (AHI) repaired
183 vessels, mostly from returning
customers including Van Oord ACZ,
Boskalis Westminster, Swire Pacific
Offshore, Al Jazeera Marine and the
Abu Dhabi Petroleum Ports Operating
Company. During the year, AHI
upgraded and mobilised three jackup
lift boats for Hercules Offshore,
as well as repaired and upgraded a
well-stimulation vessel for Halliburton
Company. It also converted a jackup
rig into an accommodation platform
for Atlantic Marine Services and an
Anchor Handling Tug Supply (AHTS)
vessel into a diving support vessel
for SMIT International.
Since commencing operations in
2010, Nakilat-Keppel Offshore &
Marine (N-KOM) in Qatar has built
up a solid track record by delivering
over 200 marine, offshore and
onshore projects, and established
its renown as the Middle East’s
foremost shipyard. In 2013, the yard
won the Shiprepair/Shipyard Award
for the second year running at
Seatrade’s Middle East and Indian
Subcontinent Awards.
Leveraging its strong presence in
the regional offshore repair market,
N-KOM expanded its services to include
on-site servicing of offshore platforms.
It also has an Onshore and Industrial
Engineering division, which specialises
in refurbishing and setting up land
rigs as well as fabricating related
components such as mudtanks.
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Keppel Corpora†ion Limited Report to Shareholders 2013
2
In response to the Arabian Gulf’s
growing gas market, N-KOM is
positioning itself as the choice provider
of LNG solutions in the region and
has repaired 80 gas carriers as
at end-2013.
SPECIALISED SHIPBUILDING
In 2013, Keppel Singmarine made
incident-free deliveries such as a
multi-purpose dive support vessel to
SBM Offshore, a 65-tonne bollard pull
anchor handling tug to repeat customer
Seaways International, as well as a
container vessel and a dual-purpose
bulk carrier to Ok Tedi Mining.
Strengthening its track record for Arctic
offshore support vessels, Keppel
Singmarine received a Letter of Intent
from Bumi Armada to construct three
ice-class vessels to be chartered to
LUKOIL upon delivery in late 2015.
To seize opportunities from the rising
global demand for LNG and supporting
infrastructure, Keppel Singmarine
forged a strategic partnership with
France’s Gaztransport & Technigaz
(GTT), the global leader in the design
and construction of membrane
containment systems for maritime
transportation and storage of LNG.
As the only shipbuilder in Singapore
with a license to build GTT’s
designs, Keppel Singmarine is
in pole position to cater to the growing
demand for optimised, high quality
LNG carriers.
During the year, Keppel Singmarine
continued to mechanise its processes
by adding an automatic pipe dispenser
and conveyor transfer system, a robotic
profile cutter and a T-bar robotic
welding machine.
In China, Keppel Nantong Shipyard
delivered two 45-tonne bollard pull
Azimuth Stern Drive (ASD) tugs to
Keppel Smit Towage and two
50-tonne bollard pull ASD tugs to
Keppel Smit Towage’s joint value
partner in Malaysia. Its ongoing
projects include the Asian Hercules III
floating crane, upper hull blocks for
Keppel FELS’ rigs and a jib for Asian
Hercules II. The yard further secured
an order from Smit Shipping Singapore
for two submersible barges, and will
continue to ramp up its capabilities in
support of Keppel O&M’s operations.
CONFIGURED
FOR GROWTH
1. The opening of
Baku Shipyard
enables Keppel to
better serve the
Caspian region.
2. Keppel O&M
invests in
automation
and process
improvements to
increase efficiency
and productivity.
Operating & Financial Review Offshore & Marine
59
Operating & Financial Review
OFFSHORE & MARINE
Global E&P Spending Forecast
Capital Spending
(US$ millon)
1,200,000
1,100,000
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Actual Estimates
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
United States
Canada
Outside North America
Source: Barclays Research
In Brazil, Keppel Singmarine Brasil
delivered two 45-tonne bollard pull
ASD harbour tugs to Smit Rebras,
and is presently completing another
two similar units. The yard is
concurrently constructing two
4,500 dwt platform supply vessels.
The second phase of the Santa Catarina
yard comprising a 10-tonne gantry
crane, a warehouse, a steel stock area
and an 80-metre panel line was largely
completed in 2013. Work continues
on the blasting chamber, a 220-metre
wharf and a new hull fabrication shop
with mobile shelters.
In the Caspian, the first phase of the
62-ha Baku Shipyard was inaugurated
by Azerbaijan President Ilham Aliyev in
September 2013. Baku Shipyard is the
largest and most modern shipbuilding
and repair facility in the Caspian.
Soon after the inauguration,
Baku Shipyard made its maiden
delivery of a 50-tonne bollard pull
ASD tug to SOCAR Shipping, which
awarded the yard another contract
for five crew boats. Baku Shipyard’s
growing order backlog includes
fabricating pontoons and columns
for the SOCAR semi being built by
CSC and Keppel FELS.
INDUSTRY OUTLOOK
Global E&P capital expenditure is
expected to remain robust, increasing
6% year-on-year to reach a record
US$723 billion in 2014, according
to a Barclays Capital survey. While
the oil majors are cutting back on
capital spending in the interim,
there is room for budgets to grow
in the longer-term as reserves,
increasingly found in complex and
more technologically challenging
fields, require investments in
higher-specification equipment.
At the same time, the national oil
companies’ ambitions to push ahead
with their drilling programmes should
provide support for E&P spending,
which would increasingly be channeled
towards drilling, evaluation and
completion activities.
Prospects for harsh-environment
markets including the Norwegian
Continental Shelf (NCS) and Russian
Arctic remain healthy. Wood Mackenzie
expects Norwegian oil production
to increase in 2014, for the first time
since 2001, ending a long period
of decline. The ramping up of new
field developments would play a
key role in raising the country’s oil
production levels.
Some 40% of existing NCS-compliant
rigs are above 20 years old, signaling
an impending need for replacements.
The older units, which are costly to
overhaul in accordance with the
latest requirements, are also
increasingly being redeployed for
operations in other less-stringent
regions. This trend bodes well for the
demand for Keppel O&M’s range of
NCS-compliant rig designs.
Mexico is another bright spot in
the offshore and marine industry.
The passing of a landmark energy
reform bill in December 2013 heralds
a potential influx of capital and
deepwater expertise from international
investors, following years of
under-investment in the sector.
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Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
SIGNIFICANT EVENTS
November
• Keppel FELS won a US$1.1 billion
order from Transocean to build five
KFELS Super B Class jackups, with
options for another five units.
• Keppel FELS secured a US$265 million
contract to build a repeat KFELS Super
A Class jackup for Ensco.
• The Keppel-NUS Corporate Laboratory,
an R&D initiative jointly established by
Keppel and the National University of
Singapore, was launched by Singapore’s
Deputy Prime Minister Teo Chee Hean.
• N-KOM in Qatar marked the completion
of its 200th project since its opening
in 2010.
December
• Keppel Shipyard and Keppel Nantong
secured five contracts worth about
$150 million in total. These include an FPSO
upgrading and refurbishing contract from
Bumi Armada, a renewal and equipment
overhaul contract from Apache Energy, a
turret fabrication contract from EMAS AMC,
and contracts to build two submersible
barges for Smit Shipping Singapore.
1. N-KOM completed
its 200th project
in its third year of
operations.
Operating & Financial Review Offshore & Marine
1
61
This will boost demand for both
deepwater and shallow water rigs
significantly. Keppel O&M has been
supporting the development of
Mexico’s oil and gas industry over the
years, and is well-positioned to capture
opportunities via its partnership with
PEMEX for a shipyard in Altamira.
While the macro environment
continues to be challenging in
2014, the Offshore & Marine Division
will remain focused on defending
its leadership position by reinforcing
its execution prowess, technology
leadership and customer
relationships. It will also seek
new growth areas and invest to
enlarge its value propositions to
the global oil and gas industry.
DRILLING RIGS
Jackup demand across most regions
remains strong, particularly in the
Middle East, Mexico, Southeast Asia
and India. Pareto Securities expects
continued strength in jackup dayrates
through 2014, supported by a high
global jackup fleet utilisation of
97% and a record fleet backlog.
The attrition of jackups, totaling
40 units in the past five years,
also points to momentum in the
replacement cycle.
The floater market continues to face
interim headwinds as international
oil companies start to defer their
deepwater exploration campaigns
to ease near-term cash flow, and
while the market gradually absorbs
the large number of newbuild
deepwater rig deliveries.
Nonetheless, Douglas-Westwood
still expects deepwater expenditure
to reach US$260 billion between
2014 and 2018, a 130% increase
over the preceding five-year period.
Africa is forecast to experience
the greatest growth in deepwater
activities, as East African natural
gas developments begin production.
Latin America, meanwhile, will
remain the largest deepwater
market. An anticipated rise in
development drilling in the medium
term should also encourage
demand for floaters.
Operating & Financial Review
OFFSHORE & MARINE
1
SHIPREPAIR
There is cautious optimism in the
shipping industry as analysts forecast
an improvement in overall freight rates
in 2014. Nonetheless, the shiprepair
business environment will remain
challenging. Shipyards with a good
understanding of market needs
and capable of delivering quick and
quality turnarounds will be better
poised to secure jobs.
PRODUCTION UNITS AND
SPECIALISED SHIPS
Long-term prospects for the FPSO
conversion segment remain healthy.
As at end-2013, International Maritime
Associates reported that 234 floating
production projects are in various
stages of planning. About 55% of these
projects involve FPSOs, another 25%
liquefaction or regasification floaters
and 5% storage/offloading floaters.
Modification and redeployment
of existing FPSOs are anticipated to
satisfy only about 20% of future
FPSO requirements. Brazil, Africa
and Southeast Asia remain the
top deployment areas for
production floaters.
The demand for Offshore Support
Vessels is well supported by rising
offshore drilling activities, and
production and decommissioning work.
As exploration activities move into
deeper waters in places such as Brazil,
Africa, Southeast Asia and the North
Sea, more construction and subsea
support vessels will be required.
NEW GROWTH AREAS
Keppel O&M continues to keep a keen
eye on the world’s evolving energy
landscape and invest in R&D to meet
the changing needs of its global
customers with cost-effective solutions.
As E&P moves further offshore and more
of these fields enter the development
phase, there is a need for vessels
capable of performing development
and completion drilling in addition to
exploration drilling. To meet these
needs, the Keppel CAN-DO drillship
was developed with features such as a
large functional deck space to allow for
the installation of additional third-party
equipment. The CAN-DO drillship also
62
Keppel Corpora†ion Limited Report to Shareholders 2013
caters for a double blowout preventer
stack to fulfill more stringent safety
requirements post-Macondo. Market
response to the CAN-DO drillship
has been encouraging.
With an increasing number of oil
and gas fields nearing their expected
depletion date, more vessels capable
of maintenance, well-intervention
and decommissioning work will be
needed by the industry. Seafox 5,
a Multi-Purpose Self-Elevating
Platform delivered by Keppel FELS in
2012, is an example of a versatile and
stable rig which can support a broad
range of offshore maintenance and
construction services. Keppel O&M’s
ability to leverage and apply its market
knowledge and technology expertise
innovatively for a variety of offshore
applications puts it in a strong
position to capture opportunities
in this segment.
Increasing demand for gas, coupled
with the requirement for short-to
medium-term import solutions,
has seen the floating regasification
and liquefaction sector experience
rapid growth in recent years.
Douglas-Westwood forecasts
total expenditure on floating LNG
to reach US$64.4 billion by 2020.
Liquefaction infrastructure is expected
to make up two-thirds of this spending,
while import and regasification facilities
such as LNG carriers constitute the
remaining one-third. FLNG conversions,
which Keppel is equipped to perform,
present a cost-effective solution with
good market potential.
Looking ahead, the Offshore & Marine
Division will continue to focus on
developing differentiated rig and
vessel solutions and services that
will add value to the dynamic global
oil and gas industry. To fortify its
leadership position, Keppel O&M will
partner trend-setting customers as
well as universities to sharpen its
technology know-how for innovative
solutions in new offshore frontiers.
The launch of the Keppel-NUS
Corporate Laboratory to pursue
three main research thrusts – Future
Systems, Future Yards and Future
Resources – is a step forward in
Keppel’s strategy to secure its position
as a global leader in the offshore
and marine industry.
2
CONFIGURED
FOR GROWTH
1. Keppel O&M
continues to focus
on innovating
differentiated
rig and vessel
solutions to meet
the needs of
customers.
2. Brazil’s first TLWP
P-61, is an example
of how Keppel
continues to
provide customer-
driven solutions
through ongoing
technology and
process innovation.
Operating & Financial Review Offshore & Marine
63
Operating & Financial Review
We will grow our energy-related infrastructure
solutions, as well as logistics and data centre
businesses.
INFRASTRUCTURE
Profi t Before Tax*
$43m
as compared to FY 2012’s $42 million.
1
Net Loss*
$14m
as compared to FY 2012’s net loss
of $1 million.
MAJOR DEVELOPMENTS IN 2013
• Keppel Energy and Keppel Integrated
Engineering were reorganised into
Keppel Infrastructure.
• Keppel Merlimau Cogen (KMC)
plant’s 800MW expansion became
fully operational.
• Expanded logistics network with
acquisition of third river port, Sanshui
Port in China and development
of air logistics hub in Singapore.
• Grew portfolio of data centres
in Ireland, the Netherlands
and Singapore.
FOCUS FOR 2014/2015
• Optimise operational efficiency
of existing assets.
• Complete Engineering,
Procurement and Construction
(EPC) projects in Qatar and the UK.
• Grow expertise in Waste-to-Energy
(WTE) technology package
development.
• Focus on meeting demand for
quality integrated logistics services
and data centre space.
EARNINGS REVIEW
Infrastructure Division’s revenue
increased by $627 million to
$3,459 million due to higher revenue
contributed by the co-generation
power plant in Singapore. Profit before
tax increased slightly by $1 million to
$43 million as a result of improved
performance in its power and gas
business and a reversal of provision
following the finalisation of the sale
of a power barge, offset by losses
arising from cost overruns pertaining
to the EPC contracts.
To sharpen focus and enhance resource
efficiencies, Keppel Energy and Keppel
Integrated Engineering were reorganised
in May 2013 to become Keppel
Infrastructure. The new entity will drive
the Group’s strategy to invest in, own
and operate competitive energy and
infrastructure solutions and services.
year growth of 2.8% in 2013, at a similar
pace with 2012.
During the year, Keppel’s additional
generation capacity of 800 megawatt
(MW) came on stream in Singapore.
The Energy Market Authority also
announced a further liberalisation of the
retail market in 2014, as well as plans to
develop an electricity futures market.
In May 2013, Singapore’s Liquefied
Natural Gas (LNG) terminal commenced
commercial operations marking
another significant milestone in the
local energy sector.
OPERATING REVIEW
Keppel Infrastructure’s Gas-to-Power
(GTP) business delivered another year
of good results amidst intensifying
competition from new entrants and
increased supply in the market.
GAS-TO-POWER
MARKET REVIEW
Singapore’s average electricity demand
continued to register modest year-on-
KMC completed its 800MW expansion
ahead of schedule and within budget.
This brings the total generation
capacity of KMC to 1,300MW.
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Keppel Corpora†ion Limited Report to Shareholders 2013
Earnings Highlights ($ million)
Revenue
EBITDA*
Operating Profi t*
Profi t before Tax*
Net (Loss)/Profi t*
Manpower (Number)
Manpower Cost
2013
3,459
120
39
43
(14)
3,358
244
2012
2,832
84
29
42
(1)
4,175
278
2011
2,863
155
102
120
82
4,552
255
Net (Loss)/Profi t* ($ million)
2013
2012
2011
* Figures exclude revaluation, major impairment and divestments.
-14
-1
82
1. The Infrastructure
Division seeks
to optimise
operations to
deliver value.
2. KMC’s 800MW
expansion was
completed ahead
of schedule.
CONFIGURED
FOR GROWTH
KMC’s expansion will improve efficiency,
redundancy as well as allow Keppel
Infrastructure to better serve the
needs of consumers in Singapore.
In addition, Keppel commenced
the first flow of gas from its second
gas sales agreement with Petronas
in early 2013. Together with the
commercial operation of the Singapore
LNG terminal in May 2013, these
developments mark a new milestone
in the enhancement of Singapore’s
energy security.
BUSINESS OUTLOOK
In 2014, the retail contestability
threshold for consumers will be
lowered gradually from the current
10,000 kilowatt per hour (kWh) to
8,000 kWh on 1 April, and subsequently
to 4,000 kWh on 1 October. With these
measures, about 11,000 non-residential
consumers will have the choice of
2
Operating & Financial Review Infrastructure
65
Operating & Financial Review
INFRASTRUCTURE
1
procuring electricity from retailers,
apart from SP Services Limited.
Keen competition is likely to persist
in the coming years as additional
generation units from both existing
power companies and new entrants
come into commercial operations.
The implementation of demand
response in the electricity market and
the anticipated development of an
electricity futures market in Singapore
will also bring about both opportunities
and challenges for the sector.
WASTE-TO-ENERGY &
WATER TREATMENT
MARKET REVIEW
Currently, the amount of waste
generated per person per day has
doubled from the World Bank estimate
of 0.64kg a decade ago, and is expected
to triple in the next decade. Climate
change has also prompted policy makers
around the world to seek out alternative
energy sources and reduce reliance on
non-renewables. Urbanisation issues,
the need to protect health with
proper sanitation, as well as stricter
environmental regulations continue
to underpin growth in both WTE and
wastewater treatment sectors.
OPERATING REVIEW
Keppel Infrastructure was focused on
executing its EPC projects in 2013.
In Qatar, physical construction
of the Doha North Sewage Treatment
Plant is largely completed and testing
is underway. The Qatar Domestic
Solid Waste Management Works has
successfully completed its second
year of operations processing some
600,000 tonnes of municipal waste
in 2013 while meeting all regulatory
requirements.
In the UK, Keppel Seghers started
the testing and commissioning of
Phase I of the Greater Manchester
Energy-from-Waste Plant.
1. K-Green Trust
continually enhances
and upgrades its
existing assets for
better performance.
2. Dr Ong Tiong Guan,
CEO of the newly
incorporated Keppel
Infrastructure,
engaging staff in a
townhall meeting
on the company’s
strategy and focus.
66
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
SIGNIFICANT EVENTS
January
• Securus Fund achieved its second closing
at US$170 million.
March
• Securus Fund acquired a 50% stake in
Citadel 100, a data centre in Dublin, Ireland.
• Keppel Logistics leased a two-hectare site
from JTC Corporation to develop an air
logistics hub in Tampines Logistics Park.
April
• Securus Fund acquired its sixth data centre,
the Almere Data Centre in Amsterdam,
the Netherlands.
• Keppel Data Centres announced plans to
develop its third data centre in Singapore.
• Wuhu Sanshan Port (Phase 1) in Anhui
Province, China, began operations.
May
• Keppel Energy and Keppel Integrated
Engineering were reorganised under
a newly incorporated entity, Keppel
Infrastructure Holdings.
• Keppel Telecommunications &Transportation
(Keppel T&T) commenced work on its
Tianjin Eco-City Integrated Logistics
Distribution Centre.
2
Operating & Financial Review Infrastructure
67
Meanwhile, in Bialystok, Poland, site
works by Keppel Seghers’ consortium
are underway following the award of
the Building and Environmental permit.
Over in China, Keppel Seghers has
successfully completed two major
WTE projects in Shenzhen and Chengdu
applying its proprietary technology.
The Shenzhen project is currently
the largest WTE plant in China with a
capacity to treat 4,200 tonnes per day
(tpd) of municipal waste daily. In terms
of new contracts, two WTE technology
supply contracts were secured in Beijing
and Yangzhou with a capacity of
1,800 tpd and 610 tpd respectively.
In addition, the joint venture
between Keppel and Tianjin Eco-City
Investment and Development Co Ltd
has successfully secured a 25-year
concession agreement from the
Eco-City Administrative Committee
to build, own and operate a water
reclamation plant in the Tianjin
Eco-City. The proposed water
reclamation plant will include a
wastewater effluent polishing unit
with the capacity of 100,000m3 per
day and a water recycling facility that
will produce 20,000m3 per day of
recycled water. It will upgrade treated
wastewater effluent from an existing
wastewater treatment plant to meet
the most stringent national standards
for wastewater discharge, serving the
entire Tianjin Eco-City.
BUSINESS OUTLOOK
Governments are compelled to look
into sustainable environmental
solutions against the backdrop of
rapid urbanisation, pollution and
climate change issues.
In Singapore, the National
Environment Agency is planning
for a new WTE facility under the
Public Private Partnership scheme.
In Southeast Asia as a whole, WTE is
gaining acceptance underpinned by
attractive Feed-in Tariffs and other
government initiatives to promote
the development of renewable and
sustainable energy.
In China, 208 WTE plants were
incorporated into the country’s 12th
Operating & Financial Review
INFRASTRUCTURE
1
1. Keppel DHCS
rolled out energy-
efficient initiatives
at all its plants
to improve cost
competitiveness.
2. Building on
its repute for
quality and
reliable logistics
and distribution
services, Keppel
T&T acquired a
third port project
in China.
Five Year Plan (2011 – 2015),
reflecting the new leadership’s priority
in tackling environmental issues.
Meanwhile in Hong Kong, there is a
fundamental shift in the way urban
waste is managed, driven by a need to
sustain development. At the centre of
this shift is the plan to build the world’s
first modern 3,000 tpd WTE facility
on a reclaimed island.
WTE is expected to become a key
solution for addressing the Middle
East’s significant renewable energy
targets and short-term plans to divert
waste from existing landfills.
Keppel Seghers will consider carefully
the opportunities in environmental
engineering with a focus on the
WTE market. Apart from providing
technology packages, it will also
explore investments in and provide
operation and maintenance services
for WTE plants.
X-TO-ENERGY
The X-to-Energy division drives
Keppel Infrastructure’s efforts to
seek out efficiencies and new frontiers
in the energy sector. It currently
comprises the Group’s district
cooling systems (DCS) business
and infrastructure business trust.
MARKET REVIEW
The demand for district cooling
services in Singapore remained
positive in 2013, continuing its
growth rate of 6% per annum
since 2010.
Both municipal waste treatment
and NEWater requirements showed
modest growth.
OPERATING REVIEW
During the year, Keppel DHCS
secured a tender to design, build,
own and operate a DCS plant
for MediaCorp’s new campus at
Mediapolis@one-north. This new
Mediapolis DCS plant is slated for
completion in 2Q 2015.
Keppel DHCS also secured a
contract to provide DCS services to
the Rohde & Schwarz building within
the existing service corridor of its DCS
plant in Changi Business Park. Keppel
DHCS’ clientele would expand to
include media, communications and
information as well as aviation training
centres by 2015.
Keppel DHCS continued to roll out
its energy efficiency initiatives at all
its DCS plants to improve overall cost
competitiveness. These initiatives
included implementing linear
programming to optimise operations
as well as retiring inefficient chillers
and older equipment.
In August 2013, Keppel DHCS’
district heating and cooling plant in
Tianjin Eco-City commenced its first
supply of heated and chilled water.
The plant is equipped with a geothermal
technology that extracts renewable
energy from the ground which would
help to lower the overall carbon
footprint of Tianjin Eco-City.
In 2013, KGT completed the installation
of a one-megawatt peak solar
photovoltaic (PV) system on the
rooftops of Keppel Seghers Ulu Pandan
NEWater plant as part of its asset
enhancement programme to reduce
electricity intake from the grid and
improve carbon footprint. This is
the single largest solar PV installation
in Singapore in 2013. Since its
commissioning on 18 February 2013,
the solar PV has exceeded its
performance targets.
BUSINESS OUTLOOK
Keppel DHCS, as part of the new
Keppel Infrastructure, seeks to harness
synergies from various business units
within the group such as Keppel
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SIGNIFICANT EVENTS
June
• Keppel DHCS secured a tender to design,
build, own and operate a new DCS plant
for MediaCorp’s new campus at
Mediapolis@one-north, and a contract
to provide DCS services to the Rohde &
Schwarz building at Changi Business Park.
• KMC plant completed its 800MW-capacity
expansion to 1,300 MW.
July
• Keppel Logistcs (Foshan) Limited
announced its acquisition of a 60% stake
in Sanshui Port, in Foshan City, Guangdong
Province, marking Keppel T&T’s third river
port in China.
August
• Keppel DHCS’ district heating and
cooling plant in the Tianjin Eco-City
commenced services.
• Keppel Seghers secured a contract to
provide a technology package for a WTE
plant in Gao An Tun, Beijing, China.
September
• Keppel T&T commenced work on the
Keppel Wanjiang International Coldchain
Logistics Park in Anhui Province, China.
November
• Keppel Seghers secured a contract
to provide a technology package for
a WTE plant in Yangzhou city,
Jiangsu Province, China.
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Operating & Financial Review Infrastructure
69
Electric, a top electricity retailer
in the Singapore electricity market,
and Keppel FMO, a major facilities
management company in Singapore,
to provide more comprehensive,
value-added services to existing
and prospective customers.
Apart from its focus on securing
new customers within the service
corridors of its three DCS plants in
Singapore, Keppel DHCS will expand
its offerings to the retail cooling
segment. More building owners and
developers are looking for cooling
solutions that are more energy
efficient. Keppel DHCS will be
able to bring its expertise to these
customers by installing dedicated
cooling systems within the
customers’ premises.
Meanwhile, KGT will continue to
pursue enhancement and expansion
opportunities for all its three assets.
In addition, the Trustee-Manager
will seek out suitable acquisitions
across Asia Pacific and Europe
to boost its portfolio, including
Sponsor-developed assets.
LOGISTICS
MARKET REVIEW
The Southeast Asian region
performed relatively well in 2013 in
spite of subdued growth worldwide,
supported by strong domestic demand
and rising investments. Plans to build
up key infrastructure for logistics
and transportation in highways,
container ports and logistics parks
are underway in the region.
China achieved a modest GDP growth
of 7.7% in 2013. With the Central
Government’s renewed focus on
domestic consumption, the country
remains committed to develop the
infrastructure and logistics sectors,
especially in the area of food logistics
and food safety. The long-term
prospects remain promising.
OPERATING REVIEW
Keppel T&T’s Logistics Division
continued to achieve high
occupancy rates in its logistics
facilities in Singapore, Malaysia and
Vietnam. To meet rising demand,
Operating & Financial Review
INFRASTRUCTURE
1
Keppel Logistics Pte Ltd (Keppel Logistics)
renewed its leases for external parties’
warehouse facilities at 81 Tuas South
Road and 31 Jurong Port Road in 2013
for three and two years respectively.
To diversify into higher-value sectors
such as time-critical logistics, Keppel
Logistics secured a 2-ha land plot in
Tampines Logistics Park from JTC
Corporation in 1H 2013. Construction
works have started for a new four-storey
ramp-up warehouse facility, which is
expected to be completed by 1Q 2015.
Keppel Logistics’ portfolio was further
diversified with new customers
secured in the offshore and marine,
fast moving consumer goods and
publication sectors.
Keppel T&T’s river port in Wuhu, Anhui
Province which began operations in
April 2013, handled more than two
million tonnes of cargo in 2013.
Throughput volume for Lanshi Port in
Guangdong Province remained high as
well at 237,000 TEUs. During the year,
Keppel T&T further strengthened its
presence in the Pearl River Delta region
with the acquisition of a 60% stake in
Foshan Sanshui Port Development Co.,
Ltd (Sanshui port).
Keppel T&T continued to make
headway in the food logistics segment
with the ongoing construction of the
Sino-Singapore Jilin Food Zone
International Logistics Park in Jilin
province and Keppel Wanjiang
International Coldchain Logistics Park
in Anhui Province. The food logistics
parks will serve as one-stop centres
offering integrated services in
warehousing, cold chain logistics,
cross-docks, transportation, trading
and food safety inspection.
BUSINESS OUTLOOK
Rapid urbanisation and the increasing
demand for specialist logistics providers
present windows of opportunities.
Keppel T&T will continue to focus on
its core competencies and grow its
presence in Southeast Asia and China.
Southeast Asia is expected to remain
on its growth trajectory in tandem with
the development of the region’s
infrastructure and financial institutions.
The rate of growth, however, could be
uneven across countries impacted by
relative levels of political instability.
Meanwhile, China’s rising domestic
consumption, underpinned by
increasingly assertive domestic
1. The data centre
business is sustained
by growing trends
in cloud computing,
e-commerce and
social media.
2. Keppel Wanjiang
International
Coldchain Logistics
Park will provide a
one-stop centre for
quality food logistics
services in Anhui
Province.
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consumers, is expected to sustain the
Chinese economy despite slow growth
in the Western economies.
Keppel T&T is poised to ride on growing
demand in its key markets for reliable,
advanced logistics solutions with a
new distribution centre in Tianjin and
a food logistics park in Jilin and Anhui
Provinces each, as well as through its
increased stake of 51% in Indo-Trans
Keppel Logistics Vietnam Co. Ltd.
DATA CENTRES
MARKET REVIEW
The global trend for energy efficient,
automated and co-location data
centres remained strong in 2013,
backed by resilient demand from
the IT, finance and civil service
sectors and robust fundamentals
in the generation of big data and
proliferation of third party outsourcing
and cloud computing.
Sector growth in Europe and Asia
Pacific was underpinned by continual
requirements for tighter data security,
better disaster control and recovery
as well as greater systems integration.
Meanwhile, Singapore’s data centre
players such as Equinix, SingTel and
Digital Realty Trust heightened their
expansion, acquisition and development
activities during the year.
OPERATING REVIEW
Keppel T&T’s data centres continued
to operate at near full occupancy.
To enjoy greater economies of scale
as well as cater for clients’ expansion
needs, Keppel Data Centres Holding
Pte Ltd announced the development
of its third data centre in Singapore,
Keppel Datahub 2 in April 2013.
Besides development work, the data
centre division also focused on enhancing
its assets during the year. Keppel Data
Centre Facility Management in
particular, supported the second and
final phase expansion of the Gore Hill
Data Centre in Sydney, Australia.
Through Securus Data Property Fund,
Keppel T&T acquired the remaining
50% stake in Citadel 100 in Dublin,
Ireland as well as a 100% stake in
Almere Data Centre in Amsterdam,
the Netherlands. With these latest
additions, the Fund now holds a
diversified portfolio of six high quality
assets spread across Europe and
Asia Pacific.
BUSINESS OUTLOOK
The continued growth of the Internet
and use of mobile devices is expected
to fuel demand for data centre space.
Moreover, the increasing popularity
of cloud computing is likely to spur
demand for complementary services
such as co-location in which
Keppel T&T specialises.
These trends present opportunities for
Keppel T&T’s data centre business to
grow in Asia, Europe and Middle East.
The company will continue to adopt
innovative energy-efficient solutions in
its operations, and develop or acquire
high quality data centres that meet
industry standards for availability,
sustainability and security.
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Operating & Financial Review Infrastructure
71
Operating & Financial Review
We are committed to provide urban living solutions
through property development and property
fund management.
1
PROPERTY
Profi t Before Tax*
$853m
as compared to
FY 2012’s $1,276 million.
Net Profi t*
$442m
as compared to
FY 2012’s $784 million.
MAJOR DEVELOPMENTS IN 2013
• Invested over $1 billion in selective
acquisitions in core markets of
Singapore and China.
• Sold more than 4,400 homes,
mostly in China and Singapore.
• Formed strategic alliance with
China Vanke.
• Divested 51% stake in Jakarta
Garden City to recycle capital.
• Grew assets under management by
Keppel REIT and Alpha Investment
Partners (Alpha) to $17.7 billion.
FOCUS FOR 2014/2015
• Focus on Singapore, China,
Indonesia and Vietnam.
• Expand commercial portfolio
overseas.
• Scale up in high-growth cities
and invest opportunistically in
growth markets.
• Recycle capital actively for
higher returns.
• Grow fee income from fund
management.
EARNINGS REVIEW
Revenue from the Property
Division of $1,768 million was
$1,250 million below that of the
previous year mainly from decline
in sales recognition of Reflections
at Keppel Bay units arising
from the deliveries of residential
units sold under the deferred
payment scheme in 2012 which
was not repeated in 2013.
Pre-tax profit dropped by
33% to $853 million in the
current year. This reduction was
partially offset by higher contribution
of profit from China and gains from
the sale of the Jakarta Garden City
project. With net profit at
$442 million, the Division
contributed 31% to Group’s
overall earnings.
MARKET REVIEW
The Singapore economy
registered a 4.1% growth in GDP
for 2013, higher than the 1.9%
growth in 2012.
The Singapore residential market
was affected by the Total Debt
Servicing Ratio (TDSR) restriction
and the Additional Buyer’s Stamp
Duty (ABSD) introduced in the year.
Demand for new homes fell to
about 14,948 units in 2013.
Price growth has also eased,
increasing by about 1.1% in 2013,
compared with 2.8% in 2012.
The office market saw healthy
demand with islandwide take-up
of 2.1 million sf in 2013, an increase
of 61% from 1.3 million sf in 2012.
Grade A rents grew 2.1% to $9.75 psf
in the fourth quarter of 2013, after
holding at $9.55 psf for three
consecutive quarters.
In China, the economy
grew a modest 7.7% in 2013.
The property market saw
robust take-up in 2013, driven by
pent-up demand. The Indonesian
economy expanded 5.8% in 2013,
moderated from the 6.2%
growth in 2012.
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Earnings Highlights ($ million)
Revenue
EBITDA*
Operating Profi t*
Profi t before Tax*
Net Profi t*
Manpower (Number)
Manpower Cost
2013
1,768
690
666
853
442
4,321
158
2012
3,018
1,178
1,157
1,276
784
4,280
126
Net Profi t* ($ million)
2013
2012
2011
* Figures exclude revaluation, major impairment and divestments.
2011
1,467
472
457
582
300
3,210
136
442
784
300
1. With quality
design and
comprehensive
amenities,
Park Avenue
Heights in
Chengdu was
positively received
by the market.
2. Marina Bay
Financial Centre
was opened in
grand ceremony
by Singapore’s
Prime Minister Lee
Hsien Loong on
15 May 2013.
The residential market saw
continued growth in take-up
rates and prices.
The office market remained
steady with active leasing
interests. Supported by strong
demand coupled with
limited new supply, Grade A
rents continued to increase
in 2013, driven mainly by new
developments in the prime
Sudirman area, according to
Jones Lang LaSalle.
Vietnam has shown signs of
economic recovery. GDP growth
increased slightly to 5.4% in 2013
compared with 5.0% in 2012.
Home buying sentiments are
improving as interest rates fall.
Developers have also introduced
flexible payment terms and
promotions to attract buyers.
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Operating & Financial Review Property
73
Operating & Financial Review
PROPERTY
1
The retail sector remains resilient
with active take-up from food
and beverage groups and
international brands.
OPERATING REVIEW
SINGAPORE
Keppel Land sold 370 homes
in 2013, mostly from Corals at
Keppel Bay and The Glades which
were launched during the year.
Sales in Singapore were lower
compared to the 430 units
sold in 2012, as take-up was
affected by the TDSR restrictions
on mortgages and the ABSD.
During the year, the company
acquired a CBD-fringe site close
to the Tiong Bahru MRT station
for the development of about
500 homes.
Commitment at Marina Bay Financial
Centre (MBFC) Tower 3 increased
to 95% as at end-December 2013.
OVERSEAS
Keppel Land sold 3,870 units in
China in 2013, more than double
the 1,650 units sold in 2012.
The year saw strong sales from
The Springdale in Shanghai,
The Botanica in Chengdu and
Stamford City in Jiangyin.
Riding on strong pent-up demand,
Keppel Land China launched new
projects and phases. The launch of
two new blocks at 8 Park Avenue
and Seasons Residence in Shanghai,
Park Avenue Heights in Chengdu
and Stamford City Phase 3 in
Jiangyin saw good take-up.
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SIGNIFICANT EVENTS
January
• Mr Ang Wee Gee succeeded Mr Kevin Wong
as CEO of Keppel Land.
February
• Keppel Land China and Alpha jointly
acquired Life Hub @ Jinqiao, a retail mail
in Shanghai.
April
• Keppel Land and China Vanke entered into
a strategic partnership to jointly develop
properties in Singapore and China, the first
being The Glades at Singapore’s Tanah Merah
in which Vanke acquired a 30% stake.
• Keppel Land acquired a prime residential
site in Tiong Bahru for the development
of about 500 homes.
May
• Marina Bay Financial Centre was officially
opened by Singapore’s Prime Minister
Lee Hsien Loong on 15 May 2013.
June
• A new brand philosophy for Keppel Land,
‘Thinking Unboxed’, was unveiled and
exemplifies its drive for innovation
to continually deliver quality products
and services.
• Keppel Land China acquired a prime 17.5-ha
residential site in Shanghai’s Sheshan area to
develop about 200 landed homes.
• Keppel REIT acquired a 50% stake in
8 Exhibition Street, a premium freehold
building, in the CBD of Melbourne, Australia.
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Operating & Financial Review Property
75
With the limited supply of landed
homes, Keppel Land China seized
opportunities to acquire two residential
sites in Shanghai and Tianjin Eco-City.
Together, these sites will yield about
550 homes targeted at affluent buyers.
To deepen its presence in China,
Keppel Land has formed a strategic
alliance with the country’s largest
residential developer, China Vanke,
to tap on the developer’s vast
network in its home market.
In line with its strategy to grow
its commercial portfolio overseas,
Keppel Land China and Alpha jointly
acquired a stake in a completed retail
mall, Life Hub @ Jinqiao in Shanghai.
It also plans to develop Park Avenue
Central in Shanghai into a retail-cum-
office development.
Keppel Land is also developing
International Financial Centre
Jakarta Tower 2 in Indonesia,
a Grade A office development in
the CBD, as well as Saigon Centre
Phase 2 in Vietnam, located
along Ho Chi Minh City’s main
thoroughfare, Le Loi Boulevard.
In Indonesia, Keppel Land sold
its stakes in the Jakarta Garden
City residential township and
1. Corals at Keppel
Bay achieved good
take-up in 2013.
2. The Group
expanded its
commercial
portfolio in
Shanghai with the
acquisition of a
stake in a retail mall
Life Hub @ Jinqiao.
Operating & Financial Review
PROPERTY
1
Hotel Sedona Manado. The net
proceeds from these divestments
will be reinvested in Indonesia, with
a focus on Jakarta. In January 2014,
the company acquired a site
along Jakarta’s Outer Ring Road
for the development of more
than 1,200 homes.
In Vietnam, 170 units were
sold at the Group’s residential
development, The Estella,
in Ho Chi Minh City, as buying
sentiments improved.
FUND MANAGEMENT
Assets under management by
Keppel REIT and Alpha grew 16%
to $17.7 billion as at end-2013.
Keppel REIT, which has a pan-Asian
mandate, further expanded its
footprint in Australia with the
acquisition of 8 Exhibition Street in
Melbourne and a new office tower
to be built on the Old Treasury
Building site in Perth. Keppel REIT
has achieved full occupancy for
all its properties in Singapore.
The REIT’s liquidity has improved
with a larger free float of 55%,
up from 24%, following Keppel
Corporation’s divestment of its stake
and distribution in specie, as well as
the placement of new units.
Alpha’s follow-on fund, Alpha Asia
Macro Trends Fund II, achieved
a final closing of US$1.65 billion.
The fund has made several
acquisitions in Singapore, China
and Taiwan. Alpha also divested
several assets in Singapore, Seoul,
Tokyo and Bangkok held by
its other funds.
BUSINESS OUTLOOK
SINGAPORE
The residential market is expected
to remain challenging in 2014,
with the continued impact of
the TDSR and ABSD. However,
the cut-back in government
land sales may help to stabilise
the market. Keppel Land will
monitor the market for the launch
of its Tiong Bahru project in
the first half of 2014.
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SIGNIFICANT EVENTS
October
• Work commenced on Phase 2 of Sedona
Hotel Yangon.
• Keppel Land China acquired a 10.4-ha
prime residential site in Tianjin Eco-City
to develop 346 low-rise homes.
• 8 Chifley Square, a Keppel REIT-Mirvac
property in Sydney, was officially opened.
November
• Keppel Land completed the divestment of
its stake in Jakarta Garden City, enabling
the company to pursue other opportunities
in Indonesia, with a focus on Jakarta.
December
• With Ocean Financial Centre achieving full
occupancy, all of Keppel REIT’s Singapore
properties have attained 100% occupancy.
2
1. In addition to
achieving full
occupancy, Ocean
Financial Centre
set the Guinness
World Record for
having the World’s
Largest Vertical
Garden.
2. 8 Chifley Square
is Australia’s first
commercial
building with a
vertical “village”
concept that
offers contiguous,
inter-connected
office spaces.
Operating & Financial Review Property
77
The pipeline of new office supply
in the next two years is limited
with only one new Grade A
development of about 700,000 sf
expected to be completed.
CBRE expects office rents to
strengthen in 2014 and 2015,
led by the Grade A market.
The Group will continue to seek
good tenants for its remaining
space at MBFC Tower 3.
OVERSEAS
Demand for quality homes in Asia
will continue to be supported by
economic wealth, urbanisation and
a rising middle class. The property
tightening measures will prevent
the formation of property bubbles
and allow for sustainable growth
of the residential markets.
Keppel Land China will monitor the
market to launch new projects such
as Waterfront Residence in Nantong
and Hill Crest Villa in Chengdu.
In Indonesia, the mid- to high-end
residential market is expected to
remain stable and the demand for
Grade A office should see further
growth supported by the country’s
positive economic performance.
The Group has commenced
leasing for International Financial
Centre Jakarta Tower 2.
In Vietnam, Grade A rents are
expected to hold steady on
limited supply in the CBD.
FUND MANAGEMENT
Keppel REIT’s strong portfolio
occupancy will continue to provide
good returns. The REIT will focus
on retaining strong tenants and
pursuing selective income-accretive
acquisitions to grow its earnings.
Alpha will continue to leverage
its local network and disciplined
investment approach as well as
develop innovative management
and enhancement strategies to
deliver risk-adjusted returns for its
investors. Outside Asia, Alpha will
seek to expand its footprint to
capitalise on new trends if the
opportunity arises.
Operating & Financial Review
PROPERTY
1
LOOKING AHEAD
Keppel Land will continue to focus
on its core markets of Singapore
and China as well as strengthen
its presence in growth markets of
Indonesia and Vietnam.
It will also invest opportunistically
in markets with good growth
potential such as Myanmar and
Sri Lanka, where the company
has a first-mover advantage.
Keppel Land will undertake
a disciplined and proactive
approach in the divestment
of its assets to achieve
higher returns.
Riding on its reputable brand
name and experience as a premier
office developer in Singapore,
Keppel Land will also continue
to seek prime sites to expand its
commercial portfolio overseas.
1. Keppel Land will expand
its commercial portfolio
overseas with prime mixed
developments such as
Seasons City in Tianjin
Eco-City (depicted here
in an artist’s impression).
2. ESM Goh Chok Tong (third
from right) and Tianjin Vice
Mayor Zong Guoying (second
from right) accompanied by
Dr Lee Boon Yang (fourth from
right), Chairman of Keppel
Corporation, were briefed on
the progress in Tianjin Eco-City.
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Tianjin Eco-City
Into its fifth year of progress,
the Sino-Singapore Tianjin Eco-City
(Tianjin Eco-City) has been steadily
transformed into a modern
eco-township with offices,
commercial hubs, schools
and other amenities.
SSTEC’s Eco-Business Park also
welcomed its first tenants in 2013.
Significantly, the Low Carbon Living
Laboratory (LCLL) was completed
and awarded Green Mark Platinum
status by Singapore’s Building and
Construction Authority (BCA).
Today, the Tianjin Eco-City is home
to about 10,000 residents and has
attracted more than 1,000 registered
companies with over RMB700 million
in registered capital. About 60
Singaporean companies have
participated in the development
of the city, with a total investment
of US$850 million to-date.
Top leaders including Chinese
President Xi Jinping, as well as
Singapore’s Emeritus Senior Minister
Goh Chok Tong, and Minister
for National Development
Khaw Boon Wan visited the
Tianjin Eco-City in 2013 and
recognised the project’s progress
and achievements.
Keppel leads the Singapore
consortium, and works in tandem
with its Chinese partners to
guide our 50-50 joint venture - the
Sino-Singapore Tianjin Eco-City
Investment and Development Co.
(SSTEC) in its role as the master
developer of the Tianjin Eco-City.
The property market in the Tianjin
Eco-City saw some improvement in
2013. As at end-December, more than
3,600 homes were sold in the Tianjin
Eco-City, of which 1,560 were from
projects under SSTEC.
KEPPEL’S BUSINESSES IN
THE ECO-CITY
Keppel continued to invest and
participate in the growth of Tianjin
Eco-City through its property
and infrastructure divisions.
As at end-February 2014,
about 84% of 1,105 launched
units in Keppel’s Seasons Park
have been sold. Seasons Garden,
comprising 1,190 apartments,
was launched in November 2013.
16 units have been sold as at
end-February 2014.
Seasons City, also known as
the commercial sub-centre,
will comprise three office towers
and retail premises with GFA of
about 162,000 sm. Phase 1 will
feature an office tower and a
retail complex, with GFA of
20,000 sm each. Construction
has commenced and is targeted
for completion in 2017.
In 2013, Keppel Land acquired
a 10.4-ha prime residential site
in the Start-Up Area to develop
346 low-rise homes. Meanwhile,
Keppel’s newly refurbished golf
course in the Tianjin Eco-City
has opened its doors for play.
In the Eco-Business Park,
Keppel’s district heating and
cooling system plant has
commenced commercial operations.
Over at the Eco-Industrial Park,
construction has commenced on
Keppel T&T’s logistics distribution
centre, which will be completed
in 2014.
Keppel FMO signed an agreement
to partner SSTEC in the areas of
sustainable facilities management
and eco-maintenance services.
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79
Operating & Financial Review
We are focused on delivering value to shareholders
and seeking growth opportunities.
INVESTMENTS
Profi t Before Tax*
$80m
as compared to FY 2012’s $196 million.
1
Net Profi t*
$54m
as compared to FY 2012’s $194 million.
MAJOR DEVELOPMENTS IN 2013
• k1 Ventures’ sale of interest in
McMoRan Exploration Company
(MMR) contributed to the dividend
distribution of 3.0 cents per share.
• KrisEnergy was listed on the
Singapore Exchange on 19 July 2013.
• M1 became the first
telecommunications operator
in Singapore to offer 4G prepaid
broadband service.
FOCUS FOR 2014/2015
• k1 Ventures will manage its
investment portfolio to maximise
shareholder value, and distribute
excess cash as investments are
monetised.
• KrisEnergy will seek acquisitions
in countries and basins where
it has extensive knowledge and
experience.
• M1 will strengthen its position by
improving on customer experience
and providing value-added services.
EARNINGS REVIEW
Pre-tax earnings from the Investments
Division decreased by $116 million to
$80 million for the year mainly due to
fewer disposals of equity investments in
2013. Net profit was $54 million compared
to $194 million for the previous year.
and the absence of impairment losses
at its transportation leasing business,
Helm Holding Corporation (Helm)
which was present in the prior year.
Net profit attributable to shareholders
was $54.6 million compared to
$11.9 million in the prior year.
K1 VENTURES
k1 Ventures (k1) is an investment
company invested across targeted
sectors including transportation leasing,
education, financial services and
automotive retail.
For the financial year ended 30 June 2013,
k1 reported revenue of $168.0 million
compared to $78.7 million in the prior year.
Operating profit was $71.2 million
compared to a loss of $58.7 million in
the prior year, and profit before tax was
$69.1 million compared to a loss of
$60.6 million in the prior year. The
improvement in profit before tax was due
to the sale of MMR for $29.8 million,
investment income of $27.7 million from
Knowledge Universe Holdings LLC (KUH)
For 2013, k1 paid total dividends of
3.0 cents per share to shareholders,
increasing cumulative distributions to
shareholders to 26.3 cents per share or
more than $540 million since 2005.
On 21 February 2014, k1 entered into
an agreement for the sale of its 80.1%
stake in Helm to Wells Fargo Bank for
approximately US$152 million. The
transaction is expected to be completed
during the second quarter of 2014. The
closing is subject to regulatory approval
and other customary conditions.
k1’s investment in Guggenheim Capital
continued to perform as expected,
with a delivery of a 7% annual dividend
from the Preferred Units. Knowledge
Universe Holdings’ global education
80
Keppel Corpora†ion Limited Report to Shareholders 2013
Earnings Highlights ($ million)
Revenue
EBITDA*
Operating Profi t*
Profi t before Tax*
Net Profi t*
Manpower (Number)
Manpower Cost
Net Profi t* ($ million)
2013
2012
2011
2013
27
25
25
80
54
198
93
2012
152
134
133
196
194
170
95
2011
46
20
20
58
45
155
93
54
194
45
* Figures exclude revaluation, major impairment and divestments.
CONFIGURED
FOR GROWTH
business, KUE, also performed well.
In October 2013, KUE completed the
sale of Busy Bees Holdings Limited (UK)
for a total consideration of approximately
£242 million. In addition, the Canadian
International School in Singapore had
achieved increased student enrollment.
China Grand Auto, k1’s investment in
automotive retail, had abandoned its
planned initial public offering on the
Shanghai Stock Exchange, and had
instead decided to pursue a listing
in Hong Kong.
1. M1 recorded strong
performance
driven by a
growing customer
base and higher
revenue from
mobile data.
2. Keppel increased
its stake in
KrisEnergy to
31.4% in 2013.
KRISENERGY
KrisEnergy is an independent upstream
oil and gas company with a portfolio
stretching from the Surma Basin in
Bangladesh in the west to the Papuan
Basin in the east, and from offshore
southern China in the north to Indonesia
in the south. It was listed on the
Singapore Exchange on 19 July 2013.
As at 31 December 2013, KrisEnergy held
interests in 16 assets, eight as operator,
in Bangladesh, Cambodia, Indonesia,
Thailand and Vietnam. Net production
amounted to about 7,000 barrels of oil
per day from the Bangora gas field
onshore Bangladesh and two oil and gas
producing blocks in the Gulf of Thailand.
2
In 2014, KrisEnergy will proceed with the
drilling of up to 13 exploration and appraisal
wells, development wells, as well as the
construction and installation of up to
three platforms. There are also plans to
acquire five 2D and 3D seismic surveys.
M1
M1, a leading integrated
telecommunications provider in
Singapore, is 20% owned by Keppel
Telecommunications and Transportation.
Net profit after tax increased 9.4% to
$160.2 million. The company’s overall
mobile market share was stable at 25.1%
with 2.11 million mobile customers and
its fibre customer base grew by over 63%
to 85,000 customers.
In 2013, M1 became the first
telecommunications operator in Singapore
to offer 4G prepaid broadband service.
To deliver a better customer experience,
it embarked on a network enhancement
programme and rolled out a 3G radio
network on a 900MHz spectrum.
Operating & Financial Review Investments
81
Operating & Financial Review
FINANCIAL
REVIEW &
OUTLOOK
We will build on our core strengths, focusing on
execution excellence and technology innovation
to enhance our value proposition.
Revenue by Segments 2013
1
Off shore & Marine
Infrastructure
Property
Investments
Total
%
58
28
14
–
100
Net Profi t by Segments 2013
Off shore & Marine
Infrastructure
Property
Investments
Total
%
66
(1)
31
4
100
1. Financial prudence
and strategic
capital recycling
enable the Group
to maximise value
for shareholders.
PROSPECTS
The Offshore & Marine Division
secured about $7 billion worth
of orders in 2013, bringing its net
orderbook to a record high of
$14.2 billion at year-end with
deliveries extending into 2019.
The Division continues to be
optimistic about job prospects
as demand for rigs and Floating
Production Storage and Offloading
units remain healthy.
In the Infrastructure Division,
Keppel Infrastructure continues
to focus on its power and gas,
environmental and energy
efficiency businesses. The
expanded capacity of the Keppel
Merlimau Cogen plant will
allow Keppel Infrastructure to
enhance its domestic presence.
At the same time, the Infrastructure
Division endeavours to complete its
ongoing Engineering, Procurement and
Construction projects efficiently.
Keppel Telecommunications &
Transportation continues to grow
both its logistics business and
data centre portfolio locally and
in overseas markets.
In 2013, the Property Division
sold about 370 residential units
in Singapore primarily from
The Glades at Tanah Merah, Corals
at Keppel Bay and The Luxurie
in Sengkang. Marina Bay Financial
Centre Tower 3 was about 95%
committed as at end-2013.
In China, the Division sold about
3,870 residential units, more than
double 2012’s.
82
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
ROE & Dividend
%
25
20
15
10
5
0
Dividend
in specie
~ 20.9 cts/share
Plus
Dividend
in specie
~ 28.6 cts/share
Plus
Dividend
in specie
~ 9.5 cts/share
Plus
cents
50
40
30
20
10
0
2008 2009 2010 2011 2012 2013
21.8
ROE
Full-Year
Dividend
31.8
Interim Dividend 12.7
22.5
20.8
20.8
22.6
14.9
34.6
13.6
38.2
14.5
43.0
17.0
45.0
18.0
40.0
10.0
Note: ROE excludes revaluation, major impairment and divestments.
EVA ($ million)
1,400
1,200
1,000
800
600
400
200
0
2008
2009
2010
2011
2012
2013
837
953
964 1,024 1,375
939
Note: Figures exclude revaluation, major impairment and divestments.
The fund management business
continues to grow with total assets
under management by Keppel REIT
and Alpha Investment Partners as at
end-2013 increasing to $17.7 billion
as compared to $15.3 billion in the
preceding period. The Property Division
intends to maintain focus on
its key markets of Singapore, China,
Indonesia and Vietnam.
The Group will build on its core
strengths and continue to focus on
execution excellence, timely deliveries
and technology innovation amidst
a challenging environment.
SHAREHOLDER RETURNS
Return On Equity (ROE) declined to 14.9%
mainly as a result of the lower net profit.
The Company will be making
a total distribution of 49.5 cents
per share for 2013. This comprises a
final proposed dividend of 30.0 cents
per share, the special dividend
in specie of eight Keppel REIT units
for every 100 shares held in the
Company (equivalent to 9.5 cents
per share) and the interim dividend
of 10.0 cents per share distributed
in the third quarter of 2013. Total
distribution for 2013 represents
63% of Group net profit before
revaluation, major impairment
and divestments of $1,412 million.
This is equivalent to a gross yield
of 4.4% on the Company’s last
transacted share price as at
31 December 2013.
ECONOMIC VALUE ADDED (EVA)
In 2013, EVA excluding major
impairment and divestments
decreased by $436 million to
$939 million. This was attributable
to lower operating profit and
higher capital charge.
Capital charge rose by $123 million
as a result of higher Average EVA
Capital, partially offset by lower
Weighted Average Cost of Capital
(WACC). Average EVA Capital
increased by $2.22 billion from
$16.71 billion to $18.93 billion.
WACC decreased from 6.06% to
6.00% mainly due to a decrease
in the risk-free rate.
Operating & Financial Review Financial Review & Outlook
83
Operating & Financial Review
FINANCIAL REVIEW & OUTLOOK
EVA
Profi t after tax and major impairment and divestments (Note 1)
Adjustment for:
Interest expense
Interest expense on non-capitalised leases
Tax eff ect on interest expense adjustments (Note 2)
Provisions, deferred tax, amortisation and other adjustments
Net Operating Profi t After Tax (NOPAT)
Average EVA Capital Employed (Note 3)
Weighted Average Cost of Capital (Note 4)
Capital Charge
2013
million
1,975
13 vs 12
+/(-)
-278
2012
million
2,253
12 vs 11
+/(-)
+706
2011
million
1,547
164
16
(25)
148
2,278
-16
–
+4
+125
-165
180
16
(29)
23
2,443
+60
-3
-7
+3
+759
120
19
(22)
20
1,684
18,934
6.00%
(1,136)
+2,223
-0.06%
-123
16,711
6.06%
(1,013)
+4,251
-0.73%
-167
12,460
6.79%
(846)
Economic Value Added
1,142
-288
1,430
+592
838
Comprising:
EVA excluding major impairment and divestments
EVA of major impairment and divestments
939
203
1,142
-436
+148
-288
1,375
55
1,430
+351
+241
+592
1,024
(186)
838
Notes:
1. Profi t 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. WACC 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% (2012: 6%);
(b) Risk-free rate of 1.3224% (2012: 1.6780%) based on yield-to-maturity of Singapore Government 10-year Bonds;
(c) Unlevered beta at 0.83 (2012: 0.79); and
(d) Pre-tax Cost of Debt at 0.89% (2012: 1.90%) using 5-year Singapore Dollar Swap Off er Rate plus 80 basis points (2012: 55 basis points).
The Group has been registering positive
EVA since 2004 which reflects its
commitment to maximise shareholders’
value through the effective and efficient
management of resources.
FINANCIAL POSITION
Group shareholders’ funds increased
from $9.25 billion as at 31 December 2012
to $9.70 billion as at 31 December 2013.
The increase was mainly attributable to
retained profits for 2013 and foreign
exchange translation gains, partially offset
by fair value loss on cash flow hedges,
payment of final dividend and distribution
of dividend in specie of Keppel REIT
units for 2012, as well as payment of
interim dividend and distribution of
dividend in specie of Keppel REIT units
for the half year ended 30 June 2013.
Group total assets of $30.06 billion as
at 31 December 2013 were $0.85 billion
or 2.9% higher than the previous year
end’s. The increase in fixed assets was
Total Assets Owned ($ million)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Fixed assets
Properties
Investments
Stocks & work-in-progress
Debtors & others
2011
2012
2013
2,716
4,610
5,350
6,605
2,797
3,337
5,423
5,909
7,661
2,822
3,798
2,188
6,192
8,995
3,318
Bank balances, deposits & cash
Total
3,021
25,099
4,055
5,565
29,207 30,056
84
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
Total Liabilities Owed & Capital Invested ($ million)
35,000
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
2011
2012
2013
7,699
4,062
8,194
4,877
9,246
4,332
8,059
7,208
9,701
3,988
8,825
7,100
267
25,099
362
442
29,207 30,056
10-year CAGR TSR as at 2013
Keppel
STI
21%
8%
largely due to capital expenditure for
the expansion of Keppel Merlimau
Cogen plant, acquisition of an industrial
building by the Infrastructure Division
for the development of a new data
centre and other operational capex.
Deconsolidation of Keppel REIT due to
loss of control caused a reduction in
investment properties. Higher stocks &
work-in-progress were due to land
acquisition costs and development
expenditure incurred for projects in the
Property Division, partly offset by lower
work-in-progress in the Offshore &
Marine Division.
Group total liabilities were $16.37 billion
at 31 December 2013 as compared to
$15.63 billion as at 31 December 2012.
The lower level of term loans was mainly
a result of the deconsolidation of
Keppel REIT, partly offset by additional
bank borrowings taken up for working
capital requirements, operational capital
expenditure and acquisitions. The
decrease in creditors was attributable
mainly to deconsolidation of Keppel
REIT partially offset by the purchase
consideration payable in relation to the
acquisition of a residential site in Sheshan
area in Shanghai by the Property Division.
Total Shareholder Return (%)
120
100
80
60
40
20
0
(20)
(40)
(60)
(80)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Keppel
STI
48.7
21.6
32.5
19.3
65.3
32.4
51.7
21.0
(64.4)
(47.1)
100.8
70.8
47.0
13.4
(6.4)
(14.0)
22.9
23.3
9.0
3.2
Note:
Keppel Corporation’s Compounded Annual Growth Rate (CAGR) TSR of 21% over the past ten years is signifi cantly
higher than STI’s CAGR TSR of 8%.
Source: Bloomberg
Operating & Financial Review Financial Review & Outlook
85
Operating & Financial Review
FINANCIAL REVIEW & OUTLOOK
Group net debt of $1.54 billion is
$1.61 billion lower than that as at
31 December 2012 due mainly to
the deconsolidation of Keppel REIT,
partly offset by capital expenditure,
investments in associated companies
and dividend payments.
TOTAL SHAREHOLDER RETURN (TSR)
Keppel is committed to deliver value to
shareholders through earnings growth.
Towards achieving this, the Group will
build on its core strengths and continue
to focus on execution excellence, timely
deliveries and technology innovation.
The Company’s 2013 Total Shareholder
Return (TSR) of 9.0% was 5.8 percentage
points above the benchmark Straits
Times Index’s (STI) TSR of 3.2%. Over
the past ten years, its Compounded
Annual Growth Rate (CAGR) TSR of
21% was also significantly higher
than STI’s CAGR TSR of 8%.
FREE CASH FLOW
To better reflect its operational
free cash flow, the Group had
excluded expansionary acquisitions
(e.g. investment properties) and capital
expenditure (e.g. expansion of the
co-generation power plant), meant
for long-term growth for the Group,
and major divestments from its
free cash flow.
Net cash from operating activities
dropped 38% to $625 million for 2013
Free Cash Flow
as compared to $1,006 million for
2012. This was due mainly to higher
operational activities in the prior year.
After excluding expansionary
acquisitions and capital expenditure,
and major divestments, net cash from
investment activities was $17 million.
The Group spent $489 million on
investments and operational capital
expenditure, mainly from the Offshore
& Marine Division. After taking into
account proceeds from divestments
and dividend income of $506 million,
the resulting free cash inflow
was $642 million.
Total distribution to shareholders
of the Company and non-controlling
shareholders of subsidiaries for
the year amounted to $843 million.
FINANCIAL RISK MANAGEMENT
The Group operates internationally
and is exposed to a variety of
financial risks, comprising market
(currency, interest rate and price),
credit and liquidity risks. Financial risk
management is carried out by the
Keppel Group Treasury Department
in accordance with established
policies and guidelines.
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’s financial risk management
is discussed in more detail in the
notes to the financial statements.
In summary:
• The Group has receivables
and payables denominated in
foreign currencies viz US dollars,
European and other Asian
currencies. Foreign currency
exposures arise mainly from the
exchange rate movement of
these foreign currencies against
Singapore dollar, which is
the Group’s measurement
currency. The Group utilises
forward foreign currency contracts
to hedge its exposure to 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.
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
• The Group hedges against price
fluctuations arising on purchase
of natural gas. Exposure is
managed via fuel oil forward
Operating profi t
Depreciation, amortisation & other non-cash items
Cash fl ow provided by operations before changes in working capital
Working capital changes
Interest receipt and payment & tax paid
Net cash from/(used in) operating activities
Investments & capital expenditure
Divestments & dividend income
Net cash from/(used in) investing activities
Free Cash Flow*
* Free cash fl ow excludes expansionary acquisitions and capex, and major divestments.
2013
million
1,774
144
1,918
(733)
(560)
625
(489)
506
17
642
13 vs 12
+/(-)
-622
-100
-722
+715
-374
-381
+85
+313
+398
+17
2012
million
2,396
244
2,640
(1,448)
(186)
1,006
(574)
193
(381)
625
12 vs 11
+/(-)
+499
+11
+510
+583
+137
+1,230
-252
-56
-308
+922
2011
million
1,897
233
2,130
(2,031)
(323)
(224)
(322)
249
(73)
(297)
Dividend paid to shareholders of
the Company & subsidiaries
(843)
+158
(1,001)
-119
(882)
86
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
contracts, whereby the price
of natural gas is indexed to a
benchmark fuel price indices,
High Sulphur Fuel Oil (HSFO)
180-CST and Dated Brent.
• 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.
• The Group maintains flexibility in
funding by ensuring that ample
working capital lines are available
at any one time.
• The Group adopts stringent
procedures on extending credit
terms to customers and the
monitoring of credit risk.
BORROWINGS
The Group borrows from local
and foreign banks in the form
of short-term and long-term loans,
project loans and bonds. Total Group
borrowings as at the end of 2013
was $7.1 billion (2012: $7.2 billion
and 2011: $4.9 billion). At the end of
2013, 7% (2012: 14% and 2011: 17%)
of Group borrowings were repayable
within one year with the balance
largely repayable between one
and five years.
Unsecured borrowings constituted
87% (2012: 81% and 2011: 72%) of
total borrowings with the balance
Debt Maturity ($ million)
< 1 year
1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
> 5 years
secured by properties and other
assets. Secured borrowings are
mainly for funding investment
properties and project finance loans
for property development projects.
The net book value of properties
and assets pledged/mortgaged
to financial institutions amounted
to $2.90 billion (2012: $3.10 billion
and 2011: $4.20 billion).
Fixed rate borrowings constituted
53% (2012: 57% and 2011: 51%)
of total borrowings with the
balance at floating rates. The Group
has interest rate swap agreements
with notional amount totaling
$1,141 million whereby it receives
variable rates equal to SIBOR
and LIBOR and pays fixed rates
of between 1.27% and 3.62%
on the notional amount. Details
of these derivative instruments
are disclosed in the notes to
the financial statements.
Singapore dollar borrowings
represented 67% (2012: 82% and
2011: 90%) of total borrowings.
The balances were mainly in
US dollars, Renminbi 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 around five years
at the beginning and end of 2013
with a slight decrease in average
cost of funds.
517 (7%)
1,731 (24%)
349 (5%)
639 (9%)
1,327 (19%)
2,537 (36%)
Operating & Financial Review Financial Review & Outlook
87
Operating & Financial Review
FINANCIAL REVIEW & OUTLOOK
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 of
the Group and divestment proceeds
from low yielding and non-core assets
will provide resources to grow the
Group’s businesses.
Every new investment will have to
satisfy strict criteria for return on
investment, cash 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 2013
was $13.69 billion as compared to
$13.58 billion as at end 2012 and
$11.76 billion as at end 2011.
The Group was in a net debt position
of $1,535 million as at end of 2013.
This was an improvement from the
net debt position of $3,153 million at
the end of 2012 and net debt position
of $1,857 million in 2011. The Group’s
net gearing ratio was 0.11 times at the
end of 2013.
Interest coverage decreased from
15.59 times in 2011 to 15.46 times in
2012 and to 11.05 times in 2013. Interest
coverage in 2013 has reduced because
of lower EBIT, partially offset by higher
borrowings and interest expense.
Cash flow coverage improved from
negative 0.53 times in 2011 to positive
6.50 times in 2012 and dropped to
4.02 times in 2013. This was mainly due
to lower operating cash flows in 2013.
At the Annual General Meeting in 2013,
shareholders gave their approval for
the mandate to buy back shares. The
Company did not exercise this mandate.
FINANCIAL RESOURCES
The Group continues to tap the
debt capital market at competitive
terms and for longer tenures.
As part of its liquidity management,
the Group has built up adequate cash
Net Cash/(Gearing)
Net Gearing = Borrowings – Cash
Capital Employed
$ million
15,000
10,000
5,000
0
(5,000)
No. of times
1.5
1.0
0.5
0
(0.5)
2011
2012
2013
Net Cash / (Debt)
(1,857)
(3,153)
(1,535)
Capital Employed
Net Cash / (Gearing)
11,761
(0.16)
13,578 13,689
(0.11)
(0.23)
Interest Coverage
Interest Coverage = EBIT
Interest Cost
$ million
No. of times
3,200
2,400
1,600
800
0
EBIT
Total Interest Cost
Interest Cover
40
30
20
10
0
2011
2012
2013
2,276
2,829
2,288
146
15.59
183
15.46
207
11.05
Cash Flow Coverage
Cash Flow Coverage = Operating Cash Flow + Interest Cost
Interest Cost
$ million
1,200
800
400
0
(400)
Operating Cash Flow +
Interest
Total Interest Expense +
Interest Capitalised
Cash Flow Coverage
No. of times
15
10
5
0
(5)
2011
2012
2013
(78)
1,189
832
146
(0.53)
183
6.50
207
4.02
88
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
reserves and short-term marketable
securities as well as sufficient undrawn
banking facilities and a capital market
programme. Funding of working capital
requirements, capital expenditure and
investment needs is made through
a mix of short-term money market
borrowings and medium/long-term
loans and bonds.
The Group maintains flexibility in
funding by ensuring that ample working
capital lines are available at any one
time. Cash flow, debt maturity profile
and overall liquidity position are actively
reviewed on an ongoing basis.
As at end of 2013, total funds available
and unutilised facilities amounted to
$9.40 billion (2012: $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 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
amount of assets, liabilities, income and
expenses. Critical accounting estimates
and judgment are described below.
IMPAIRMENT OF LOANS
AND RECEIVABLES
The Group assesses at each balance
sheet date whether there is any objective
evidence that a loan and receivable is
impaired. The Group considers factors
such as the probability of insolvency
or significant financial difficulties of the
debtor and default or significant delay
in payments. When there is objective
evidence of impairment, the amount
and timing of future cash flows are
estimated based on historical loss
experience for assets with similar
credit risk characteristics. The carrying
amounts of trade, intercompany and
other receivables are disclosed in
the balance sheet.
IMPAIRMENT OF AVAILABLE-FOR-
SALE INVESTMENTS
The Group follows the guidance
of FRS 39 in determining whether
available-for-sale investments are
considered impaired. The Group
evaluates, among other factors, the
duration and extent to which the fair
value of an investment is less than its
cost, the financial health of and the
near-term business outlook of the
investee, including factors such as
industry and sector performance,
changes in technology and operational
and financing cash flow. The fair values
of available-for-sale investments are
disclosed in the balance sheet.
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, contract cost
Financial Capacity
Cash at Corporate Treasury
Credit facilities extended to
the Group
Total
$ million
3,499
5,896
9,395
Remarks
63% of total cash of $5.56 billion
Credit facilities of $8.82 billion,
of which $2.92 billion was utilised
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 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 where the amount
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 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 opinion of
legal and technical expertise.
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
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.
Innovation and delivering
quality products and services
sharpen our competitive edge.
Page 92-121
EMPOWERING
LIVES
People are the cornerstone
of our businesses.
As an employer of choice,
we are committed to grow
and nurture our talent pool
through continuous training
and development to help
our people reach their
full potential.
We want to instill a culture
of safety so that everyone
who comes to work goes
home safe.
Page 122-123
NURTURING
COMMUNITIES
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.
Page 124
Managing Sustainability
Managing Sustainability
CONFIGURED
FOR GROWTH
We recognise
sustainability as a central
factor in our long-term
competitiveness, and
strive to continue to
be a responsible
corporate citizen.
Keppel committed $12 million to the National
Art Gallery, Singapore in support of its centre
for art education, which aims to nurture a new
generation of creative and critical thinkers.
A successful business is synonymous
with a sustainable business.
We recognise sustainability as a
central factor in our long-term
competitiveness, and strive to continue
to be a responsible corporate citizen.
Our sustainability report will be
published in July 2014, and 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 and our
management approaches in the
following pages.
MANAGEMENT STRUCTURE
Sustainability issues are managed and
communicated at 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 the economic,
environmental and social concerns
of our stakeholders. Issues were
systematically placed on a numerical
scale where higher priority issues
were assigned higher scores
(1 – Low, 5 – Critical). 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.
We conducted a stakeholder
consultation exercise in 2013 to
review our priority areas and material
issues in economic, environmental
and social dimensions. The exercise
was facilitated by an independent
sustainability consultancy and
involved a sample pool of customers,
employees, government contacts,
investors, analysts, suppliers, and
non-governmental organisations
that provide social services or
undertake community development.
We are refining our existing practices
and communications in line with
feedback received from the exercise,
and will provide more details in
the sustainability report.
In addition, we aim to help
address sustainability issues
through our participation in and
support of corporate social
responsibility initiatives in areas such
as manpower, workplace safety and
health and environmental protection.
BEST PRACTICE REPORTING
Our sustainability reports draw
on internationally-recognised
standards of reporting, including
the Global Reporting Initiative (GRI)
3.1 guidelines. We are reviewing
our corporate reporting processes
to prepare for the transition to
reporting in accordance with GRI’s
fourth generation guidelines (G4)
launched in May 2013.
External assurance provides an
objective evaluation of how well
we report our sustainability
performance. Our sustainability
report will be assured by DNV
Business Assurance in accordance
with the AA1000 Assurance Standard
2008 and ISAE3000.
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 20121 (the “2012 Code”).
The following describes the
Company’s corporate governance
practices with specific reference
to the 2012 Code.
BOARD’S CONDUCT OF AFFAIRS
Principle 01:
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;
set the Company’s values and
standards (including ethical
standards);
•
• 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;
• assume responsibility for corporate
governance; and
• consider sustainability issues such
as environmental and social factors
as part of its strategic formulation.
The Keppel Group was recognised for governance and transparency at the Singapore Corporate
Awards 2013.
judgment in the best interests of
the Company. This is one of the
performance criteria for the peer and
self assessment on the effectiveness of
the individual directors. Based on the
results of the peer and self assessment
carried out by the directors for FY 2013,
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 have been updated
with effect from 1 January 2013 following
the issuance of the 2012 Code. The new
responsibilities of the respective board
committees are disclosed in the
Appendix to this report.
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 2013,
as well as the attendance of each
board member at these meetings,
are disclosed in Table 1 on page 93.
If a director were unable to attend a
board or board committee meeting,
he or she would receive all the papers
and materials for discussion at that
meeting. He or she would review them
and advise the Chairman or the board
committee chairman of his or her views
and comments on the matters to be
discussed so that they may 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
Independent Judgment: All directors
are expected to exercise independent
Meetings: The Board meets six times
a year and as warranted by particular
Note:
1 The Code of Corporate Governance 2012 issued by the Monetary Authority of Singapore on 2 May 2012.
92
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
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. 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 site visits
and management presentations on
the Group’s businesses, strategic
plans and objectives.
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 2013, some KCL directors attended
a two-day course on “Enhancing Board
Stewardship” and talks on topics relating
to the global macro-economic
development, the financial, political,
and economic risks of emerging
countries in which the Group operates,
and updates on financial reporting and
technical standards, among others.
BOARD COMPOSITION AND
SUCCESSION PLANNING
Principle 02:
Strong and independent element
on the Board
Training: The directors are provided
with continuing education in areas such
as directors’ duties and responsibilities,
corporate governance, changes in
financial reporting standards, insider
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.
There is a process of refreshing the Board
progressively over time so that the
experience of longer serving directors
can be drawn upon while tapping into
new external perspectives and insights
which more recent appointees bring to
the Board’s deliberation. Two long-
serving Senior Executive Directors, Mr
Choo Chiau Beng and Mr Tong Chong
Heong retired from the Board on 1
January 2014 and 1 February 2014
respectively. Mr Loh Chin Hua succeeded
Mr Choo as Chief Executive Officer
and Executive Director of the Company
on 1 January 2014. He will be seeking
re-election at the Company’s upcoming
Annual General Meeting.
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. The Committee carried
out the review on the independence of
each non-executive director in early
January 2014 based on the respective
directors’ self-declaration in the
Director’s Independence
Table 1
Lee Boon Yang
Choo Chiau Beng 1
Loh Chin Hua 1
Tony Chew Leong-Chee
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai 2
Tan Ek Kia 3
Danny Teoh
Tan Puay Chiang
Teo Soon Hoe
Tong Chong Heong 4
No. of Meetings Held
Board
Meetings
10
10
–
9
10
10
9
8
10
9
10
9
10
Board Committee Meetings
Audit
–
–
–
5
Nominating
8
–
–
9
Remuneration
7
–
–
–
5
–
3
–
5
–
–
–
5
–
9
–
9
–
–
–
–
9
7
7
–
–
7
–
–
–
7
Safety
4
4
–
–
–
–
–
4
–
4
–
–
4
Non-Executive
Directors’ Meeting
(without presence
of management)
2
–
–
2
2
2
2
2
2
2
–
–
2
Risk
–
–
–
–
4
4
3
–
4
4
–
–
4
Notes:
1 Mr Choo Chiau Beng retired as Senior Executive Director and CEO of the Company, and ceased to be a member of the Board Safety Committee,
on 1 January 2014. Mr Loh Chin Hua was appointed as Executive Director and CEO of the Company on the same day and will be seeking re-election as
director at the Annual General Meeting.
2 Mr Alvin Yeo ceased to be a member of the Board Risk Committee, and was appointed as a member of the Nominating Committee on 23 January 2014.
3 Mr Tan Ek Kia was appointed as a member of the Board Risk Committee, on 23 January 2014.
4 Mr Tong Chong Heong retired as Senior Executive Director of the Company and CEO of Keppel Off shore & Marine Ltd, on 1 February 2014.
Sustainability Report Highlights Sustaining Growth – Corporate Governance
93
SUSTAINING GROWTH
Corporate Governance
Checklist and their actual performance
on the Board and board committees.
In this connection, the Committee
noted that Mr Alvin Yeo is Senior Partner
of WongPartnership LLP which is one
of the law firms providing legal services
to the Keppel Group. Mr Yeo had
declared to the Committee that he
did not have a 10% or more stake in
WongPartnership LLP and did not advise
the Group in a professional capacity,
nor did he involve himself in the
selection and appointment of legal
counsels for the Group. The Committee
also took into account Mr Yeo’s actual
performance on the Board and
board committees and the outcome
of the recent self and peer Individual
Director Performance assessment, and
agreed that Mr Yeo has been exercising
independent judgment in the best
interests of the Company in the
discharge of his director’s duties
and should therefore continue to be
deemed an independent director.
The Committee (save for Mr Tan Ek
Kia who abstained from deliberation
in this matter) also noted that Mr Tan
Ek Kia is a non-executive director on
the board of Transocean Ltd which
has business dealings with the
Keppel Offshore & Marine Group.
Mr Tan had declared to the Committee
that he was not involved in the
negotiation of contracts or business
dealings between the companies.
The Committee also took into account
Mr Tan’s actual performance on the
Board and the board committees and
the outcome of the recent self and
peer Individual Director Performance
assessment, and agreed 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
therefore continue to be deemed
an independent director.
Further, a director who is directly
associated with a 10% shareholder is
deemed as non-independent under
the 2012 Code. Mr Tow Heng Tan was
previously the Chief Investment Officer
of Temasek Holdings (Private) Limited
(“Temasek”). He ceased to be employed
by Temasek since 2012 and is currently
the CEO of Pavilion Capital International
Pte Ltd, a wholly-owned subsidiary of
Temasek. As Mr Tow has not left the
employment of Temasek for more than
three years, the Committee continued
to deem Mr Tow as a non-independent
non-executive director.
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
deliberation in this matter) noted that
Mr Tony Chew and Mrs Oon Kum Loon
were respectively first appointed to the
Board on 16 April 2002 and 15 May 2004.
However, the Committee considered
that Mr Chew and Mrs Oon have each
demonstrated independent judgment
at board and board committee meetings,
and was of the firm view that they have
been exercising independent judgment
in the best interests of the Company
in the discharge of their respective
director’s duties. The Committee
therefore continued to deem Mr Chew
and Mrs Oon as independent directors.
The Board concurred with the reasons
set forth by the Nominating Committee
and was of the view 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,
was 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 up to 12 members,
which would facilitate effective decision
making. The Board currently comprises
a majority of independent directors with
a total of ten 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 an
appropriate balance and diversity of
skills, experience, gender, knowledge
of the Group, core competencies
such as accounting or finance,
business or management experience,
industry knowledge, strategic
planning 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
94
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
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.
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 03:
Chairman and CEO 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 of the
Company. Mr Choo Chiau Beng was
CEO of the Company until 1 January
2014 when he was succeeded by
Mr Loh Chin Hua.
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.
BOARD MEMBERSHIP
Principle 04:
Formal and transparent process for
the appointment and re-appointment
of directors to the Board
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 and non-executive directors.
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,
four out of five of whom (including the
Chairman) are independent; namely:
At annual general meetings and other
shareholders’ meetings, the Chairman
ensures constructive dialogue between
shareholders, the Board and management.
• Mr Tony Chew
Independent Chairman
• Dr Lee Boon Yang
Independent Member
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 CEO, assisted by the management
team, makes strategic proposals to the
Board and after robust and constructive
board discussion, executes the agreed
strategy, manages and develops the
Group’s businesses and implements
the Board’s decisions.
• Mr Tow Heng Tan
Non-Executive and
Non-Independent Member
• Mr Tan Ek Kia
Independent Member
• Mr Alvin Yeo
Independent Member
(w.e.f 23 January 2014)
The responsibilities of the NC are set
out on page 110 herein.
The Board Directors bring diverse expertise and experience to the Group.
Sustainability Report Highlights Sustaining Growth – Corporate Governance
95
SUSTAINING GROWTH
Corporate Governance
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:
(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 the light of such review and in
consultation with management,
the NC assesses if there is any
inadequate representation in
respect of any 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
candidate(s) to assess suitability and
to ensure that the candidate(s) is/
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
/or 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 upcoming
Annual General Meeting the re-election
of a new director, Mr Loh Chin Hua.
Mr Loh Chin Hua is currently the CEO
of the Company, after having served
as its Chief Financial Officer, from
1 January 2012 to 1 January 2014,
playing a pivotal role in all its major
investment initiatives and financial
decisions as well as shaping the Group’s
business strategy. Mr Loh has over
25 years of experience in real estate
investing and fund management
spanning the USA, Europe and Asia.
He joined the Keppel Group in 2002
as the Managing Director of Alpha
Investment Partners Ltd. Prior to this, he
was the Managing Director at Prudential
Investment Inc leading its Asian real
estate fund management business and
overseeing all investment and asset
management for the real estate funds
managed out of Asia. Mr Loh began
his career with the Government of
Singapore Investment Corporation,
where he held key appointments in
its San Francisco office and was head
of the European real estate group in
London before returning to Singapore
to head the Asian real estate group.
RE-NOMINATION OF DIRECTORS
The NC is also charged with the
responsibility of re-nomination with
regards to the director’s contribution
and performance (such as attendance,
preparedness, participation and
candour), with reference to the results
of the performance assessment of an
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.
ANNUAL REVIEW OF DIRECTORS’
INDEPENDENCE
The NC is also charged with
determining the “independence”
status of the directors annually.
Please refer to pages 93 and 94
herein on the basis of the NC’s
determination as to whether
a director should or should
not be deemed independent.
Directors exchanging perspectives to enhance the Group’s strategic governance.
96
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
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/or have other
principal commitments. As a guide,
directors should not have more than six
listed company board representations
and/or other principal commitments.
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 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 2013, the NC was of the view that
each director has given sufficient time
and attention to the affairs of the
Company and has been able to discharge
his duties as director effectively. 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 Corporation 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 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
2013, all the directors performed well.
The NC was therefore satisfied that in
FY 2013, 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
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 21 to 25: 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 129: Shareholding in the
Company and its subsidiaries.
BOARD PERFORMANCE
Principle 05:
Formal assessment of the effectiveness
of the Board and board committees
and the contribution by each director to
the effectiveness of the Board
The Board has implemented
formal processes for assessing the
effectiveness of the Board as a whole
and its board committees, 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 relationships
or any other connections 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, 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 06:
Board members to have complete,
adequate and timely information
As a general rule, board papers are
required to be sent to the directors
at least seven days before the board
meeting so that the members may
better understand the matters prior to
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97
SUSTAINING GROWTH
Corporate Governance
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
insights 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 and as the Board
may require from time to time. Such
reports keep the Board informed,
on a balanced and understandable
basis of the Group’s performance,
position and prospects.
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 Singapore
Exchange Securities Trading Limited
(“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 07:
The procedure for developing policy on
executive remuneration and for fixing
remuneration packages of individual
directors should be formal and transparent
Principle 08:
The level and structure of directors’ fees
are aligned with the long-term interests of
the Company and appropriate to attract,
retain and motivate directors to provide
good stewardship of the Company
The level and structure of key management
remuneration are aligned with the long-
term interests and risk policies of the
Company and appropriate to attract,
retain and motivate key management to
successfully manage the Company
Principle 09:
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.
The RC has access to expert
advice from external remuneration
consultants where required.
In FY 2013, the RC sought views
on market practices and trends
from external remuneration
consultants, Aon Hewitt. The RC
undertook a review of the
independence 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.
98
Keppel Corpora†ion Limited Report to Shareholders 2013
ANNUAL REMUNERATION REPORT
POLICY IN RESPECT OF
NON-EXECUTIVE DIRECTORS’
REMUNERATION
Each non-executive director’s
remuneration comprises a basic fee,
attendance fee and, if the director is
required to travel out of his/her country
of residence to attend meetings or
events or for any other purpose of the
Company, travel allowance. 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.
The RC, in consultation with Aon Hewitt,
conducted a review of the framework
for non-executive directors’ remuneration
taking into consideration the increasing
demands and responsibilities of the
non-executive directors, prevailing market
conditions and referencing directors’
fees against comparable benchmarks.
The Board agreed with the RC’s
recommendation that the directors’
fee structure be revised set out in
Table 2 below:
Each of the non-executive directors
(including the Chairman) will receive
70% of his total directors’ fees in cash
(“Cash Component”) and 30% in the
form of KCL shares (“Remuneration
Shares”)(both amounts subject to
adjustment as described below). The
actual number of Remuneration Shares,
to be purchased from the market on
the first trading day immediately after
the date of the Annual General Meeting
(“Trading Day”) for delivery to the
respective non-executive directors, will
be based on the market price of the
Company’s shares on the SGX-ST on
the Trading Day. The actual number of
Remuneration Shares will be rounded
down to the nearest thousand and
any residual balance will be paid in
cash. Such 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 aggregate directors’ fees for
non-executive directors are subject to
shareholders’ approval at the Annual
General Meeting. The Chairman and
the non-executive directors will abstain
from voting, and will procure their
Table 2
Board Chairman
Board Member
Audit Committee
Board Risk Committee
Remuneration Committee
Board Safety Committee
Nominating Committee
Chairman
$50,000
$50,000
$35,000
$35,000
$30,000
Board & Non-Executive
Directors’ Meetings
Committee Meeting
Singapore
Overseas
Singapore
Overseas
Basic Fee (per annum)
$750,000 (all-in)
$81,000
Additional Fees for
Membership in Board
Committees (per annum)
Member
$27,000
$27,000
$23,000
$23,000
$18,000
Attendance Fee (per meeting)
$3,000
$5,000
$1,500
$3,000
Director’s Allowance (for overseas travel)
$1,000 per event day
CONFIGURED
FOR GROWTH
respective associates to abstain from
voting in respect of this resolution.
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 are
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 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 are aligned with the
interests of shareholders and promote
the long-term success of the company.
The mix of fixed and variable reward is
considered appropriate for the Group
and for each individual role.
The compensation structure is directly
linked to corporate and individual
performance, both in terms of financial,
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SUSTAINING GROWTH
Corporate Governance
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 scorecard areas have
been chosen because they
support how the Group
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
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
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.
The RC also recognised the need for a
reasonable alignment between risk and
remuneration to discourage excessive
risk taking. Therefore, in determining
the compensation structure, the RC
had taken into account the risk policies
and risk tolerance of the Group as well
as the time horizon of risks, and
incorporated risks-adjustments into the
compensation structure through several
initiatives, including but not limited to:
(a) prudent funding of annual cash
incentives;
(b) bonus deferrals under the EVA
performance incentive plans;
(c) vesting of contingent share awards
under the KCL Share Plans being
subject to KPIs and/or performance
conditions being met; and
(d) potential forfeiture of variable
incentives in any year due to
misconduct.
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.
In determining the actual quantum of
variable component of remuneration,
the RC had taken into account the
extent to which the performance
conditions, set forth above, have been
met. The RC is therefore of the view
that remuneration is aligned to
performance during FY 2013.
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 is paid
out provided the total EVA balance is
positive. The remaining two-thirds
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.
100
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
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
turn negative 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 selected
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 pages 154
to 157 of this Annual Report.
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 2013
The level and mix of each of the
directors’ remuneration are set
out in Table 3 below:
Table 3
Base/
Fixed
Salary
($)
Performance-Related
Bonuses Earned 1
(including EVA and
non-EVA Bonuses) ($)
Directors’ Total Fees 2
($)
Benefi ts
-in-Kind
($)
Contingent
Awards of
Shares3
($)
Total
Remuneration
($)
Deferred &
at Risk
Cash
component 7
Shares
component 7
Paid
PSP
RSP
Remuneration &
Name of Director
Choo Chiau Beng
1,408,054 4 2,320,653 3,391,937
Tong Chong Heong
1,021,100
1,616,766 2,275,548
1,021,400
1,079,126 1,207,168
–
–
–
–
–
–
n.m.5 535,333 6
n.m. 475,2008
n.m. 657,000
Teo Soon Hoe
Lee Boon Yang
Tony Chew Leong-Chee
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Tan Puay Chiang
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
525,000
225,000
130,200
55,800
164,500
70,500
146,300
62,700
119,700
51,300
125,650
53,850
172,900
120,400
74,100
51,600
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,655,977
5,388,614
3,964,694
750,000
186,000
235,000
209,000
171,000
179,500
247,000
172,000
Notes:
1 The RC is satisfi ed that the quantum of performance-related bonuses earned by the Senior Executive Directors was fair and appropriate taking into account the
extent to which their KPIs for FY 2013 were met.
2 The directors’ total fees are subject to shareholders’ approval at the Company’s annual general meeting.
3 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 28 March 2013 (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 $7.30 and $10.54 respectively. For the KCL PSP, the fi gures are based on the fair value of the PSP shares at 100% of the award and the fi gures
may not be indicative of the actual value at vesting which can range from 0% to 150% of the award.
Includes leave encashment of $78,554.
4
5 n.m. - not material
6 Mr Choo Chiau Beng has retired as CEO and Senior Executive Director of the Company on 1 January 2014 and was appointed as Senior Advisor to the Board of
KCL on the same day. The outstanding KCL PSP awards that have not fulfi lled the three-year performance period will be pro-rated to his last day of employment
service (i.e. 31 December 2013) in accordance with the KCL PSP policy on staff retirement.
7 The amounts stated may be adjusted as indicated on page 99 of this report.
8 Further to the announcement on Mr Tong Chong Heong’s retirement on 18 July 2013, he has retired as Senior Executive Director of the Company, and CEO of
Keppel Off shore & Marine Ltd, on 1 February 2014. He was appointed as Senior Advisor to the Boards of Keppel Off shore & Marine Ltd and Keppel Infrastructure
Holdings Pte Ltd on the same day. Hence, the outstanding KCL PSP awards that have not fulfi lled the three-year performance period will be pro-rated to his last
day of employment service (i.e. 31 January 2014) in accordance with the KCL PSP policy on staff retirement.
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SUSTAINING GROWTH
Corporate Governance
PSP and RSP Shares granted and vested to the Senior Executive Directors are shown below:
PSP
Awards
Vesting
Date
Contingent
Awards
of PSP
Shares
Number
of PSP
Shares
Vested
Value
of PSP
Shares
Vested ($) 9
RSP
Awards
Vesting
Date
Contingent
Awards
of RSP
Shares
Number
of RSP
Shares
Vested
Value
of RSP
Shares
Vested
($) 9
Name of Senior
Executive Directors
Choo Chiau Beng
2010
Awards
28 Feb 2013
0 to
495,000 10
481,800 5,540,700
2010
Awards
28 Feb 2011 160,000 10
50,000
585,000
2011
Awards
28 Feb 2014
0 to
434,800 11
2012
Awards 6
2013
Awards 6
2010
Awards
Tong Chong Heong
27 Feb 2015
26 Feb 2016
0 to
227,900 11
0 to
113,900 11
28 Feb 2013
0 to
297,000 10
289,100 3,324,650
2011
Awards
28 Feb 2014
0 to
279,500 11
2012
Awards8
2013
Awards8
2010
Awards
Teo Soon Hoe
27 Feb 2015
26 Feb 2016
0 to
194,300 11
0 to
101,100 11
28 Feb 2013
0 to
330,000 10
321,200 3,693,800
–
–
–
–
–
–
–
–
–
–
–
–
2011
Awards
28 Feb 2014
0 to
279,500 11
2012
Awards
2013
Awards
27 Feb 2015
26 Feb 2016
0 to
139,800 11
0 to
139,800 11
–
–
–
–
–
–
28 Feb 2012
28 Feb 2013
55,000
607,750
55,000
632,500
28 Feb 2012 141,642 11
46,700
516,035
28 Feb 2013
28 Feb 2014
–
–
0
0
46,700
537,050
–
–
–
–
–
–
28 Feb 2011
96,000 10
30,000
351,000
28 Feb 2012
28 Feb 2013
33,000
364,650
33,000
379,500
28 Feb 2012
91,057 11
30,000
331,500
28 Feb 2013
28 Feb 2014
–
–
0
0
30,000
345,000
–
–
–
–
–
–
28 Feb 2011 106,670 10
33,300
389,610
28 Feb 2012
28 Feb 2013
36,685
405,369
36,685
421,878
28 Feb 2012
91,057 11
30,000
331,500
28 Feb 2013
28 Feb 2014
–
–
0
0
30,000
345,000
–
–
–
–
–
–
2011
Awards
2012
Awards
2013
Awards
2010
Awards
2011
Awards
2012
Awards
2013
Awards
2010
Awards
2011
Awards
2012
Awards
2013
Awards
Notes:
9 The value of the shares vested under KCL PSP and RSP is computed based on the closing price of the shares on the date on which the shares are listed
on SGX-ST. The RC is satisfi ed that the value of the shares vested under the KCL PSP and RSP to the Senior Executive Directors was fair and appropriate
taking into account the extent to which their KPIs and performance conditions for FY 2013 were met.
10 Arising from the bonus issue of one bonus share for every ten existing ordinary shares in 2011, the RC approved the adjustments to unvested shares
under the award.
11 Arising from the distribution of Keppel REIT unit by way of dividend in specie on the basis of one Keppel REIT unit for every fi ve KCL ordinary shares on
8 May 2013 and eight Keppel REIT units for every 100 KCL ordinary shares on 13 September 2013, the RC approved the adjustments to unvested
shares under the award.
102
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
The total remuneration paid to the key management personnel (who are not directors or the CEO) in FY 2013 was $21,914,000.
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 below:
Remuneration Band & Name of Key Management Personnel
Above $4,750,000 to $5,000,000
Loh Chin Hua 12
Above $3,750,000 to $4,000,000
Chow Yew Yuen
Above $2,500,000 to $2,750,000
Ang Wee Gee
Chia Hock Chye, Michael
Ong Tiong Guan
Above $2,250,000 to $2,500,000
Wong Kok Seng
Above $1,250,000 to $1,500,000
Chor How Jat
Above $750,000 to $1,000,000
Hoe Eng Hock
Above $500,000 to $750,000
Pang Hee Hon
Base/
Fixed
Salary
Performance-Related
Bonuses Earned
(including EVA and
non-EVA Bonuses)
Benefi ts-
in-Kind
Contingent Awards
of Shares
Deferred
& at Risk
Paid
PSP
RSP
17%
23%
29%
n.m.
13%
18%
15%
20%
25%
n.m.
16%
24%
25%
18%
17%
27%
17%
20%
24%
23%
24%
n.m.
n.m.
n.m.
16% 13
8% 13
17%
16%
25%
23%
20%
27%
33%
n.m.
20%
– 14
27%
18%
16%
n.m.
52%
30%
18%
n.m.
–
–
39%
– 14
53%
13%
5%
n.m.
13% 15
16% 15
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 depends entirely on the actual
performance of the funds after they have been liquidated.
13 On Keppel Land Ltd (“KLL”) share-based compensation scheme. As at 28 March 2013 (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 $2.796 and $3.597 respectively.
14 With eff ect from 2012 onwards, offi cers who are retired and re-employed on contract basis would no longer be eligible to participate in the KCL RSP awards.
15 On Keppel Telecommunications & Transportation Ltd (“KTT”) share-based compensation scheme. As at 3 April 2013 (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 $0.89 and $1.35 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 CEO
No employee of the Company and its
subsidiaries was an immediate family
member of a director or the CEO
and whose remuneration exceeded
$50,000 during the financial year ended
31 December 2013. “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
pages 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 12:
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).
The Board has embraced openness
and transparency in the conduct of
the Company’s affairs, whilst preserving
the commercial interests of the
Company. Financial reports and
other price-sensitive information are
disseminated to shareholders through
announcements via SGXnet to the SGX,
press releases, the Company’s website,
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 and as the Board
may require from time to time.
Such reports keep the board members
informed of the Company’s and
Group’s performance, position
and prospects.
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. Mr Danny
Teoh and Mrs Oon Kum Loon are
both members of the Board Risk
Committee (BRC), with Mrs Oon
being the Chairman of the BRC.
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 page 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.
Changes to accounting standards
and accounting issues which have
a direct impact on the financial
statements were reported to the AC,
and highlighted by the external auditors
in their quarterly reviews with the AC.
In addition, the AC members are invited
to the Company’s annual finance
seminars where relevant changes to
the accounting standards that will
impact the Keppel Group of Companies
are shared by, and discussed with
accounting practitioners from one
of the leading accounting firms.
The AC also reviewed and approved
the Group internal auditor’s plan
to ensure that the plan covered
sufficiently in terms of audit
scope in reviewing the significant
internal controls of the Company.
Such significant controls comprise
financial, operational, compliance
and information technology controls.
All audit findings and recommendations
104
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
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put up by the internal and the external
auditors were forwarded to the AC.
Significant issues were discussed at
these meetings.
The AC reviewed and approved the
Group external auditor’s audit plan for
the year. The AC also undertook a
review of the independence and
objectivity of the external auditors
through discussions with the external
auditors as well as reviewing the
non-audit fees awarded to them,
and has 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 175
of this Annual Report.
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 AC 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 AC also
reviewed the training costs and
programmes attended by the internal
audit team to ensure that their technical
knowledge and skill sets remain
current and relevant.
The AC 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 AC 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.
RISK MANAGEMENT AND
INTERNAL CONTROLS
Principle 11:
Sound system of risk management and
internal controls
The BRC comprises the following
non-executive directors, four out of five
of whom (including the Chairman) are
independent and the remaining director
being a non-executive director who is
independent of management; namely:
• Mrs Oon Kum Loon
Independent Chairman
• Mr Danny Teoh
Independent Member
• Mr Tow Heng Tan
Non-Executive
Non-Independent Member
• Mr Tan Puay Chiang
Independent Member
• Mr Tan Ek Kia
Independent Member
(w.e.f 23 January 2014)
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 AC. Mr
Danny Teoh, who is the Chairman of
the AC, is the second member of the
BRC. 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. Mr Tow was previously the
Chief Investment Officer of Temasek.
The fourth 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. With effect from
23 January 2014, Mr Alvin Yeo
retired as a member of the BRC.
On the same day, Mr Tan Ek Kia was
appointed as the fifth member of the
BRC. Mr Tan is a seasoned executive in
the oil and gas and petrochemicals
businesses and had held senior
positions in Shell including Vice
President (Ventures and Developments)
of Shell Chemicals, Asia Pacific and
Middle East region, Managing Director
(Exploration and Production) of
Shell Malaysia, Chairman of Shell
North East Asia and Managing Director
of Shell Nanhai Ltd.
The BRC 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 pages
109 and 110 herein.
The Company’s approach to risk
management is set out in the
“Risk Management” section on
pages 116 to 119 of this Annual Report.
The Group is guided by a set of
Risk Tolerance Guiding Principles,
approved by the Board in FY 2013,
as disclosed on page 116.
Sustainability Report Highlights Sustaining Growth – Corporate Governance
105
SUSTAINING GROWTH
Corporate Governance
4. Board
Oversight
3. Assurance
2. Management
& Assurance
Frameworks
1. Business
Governance/
Rules of
Governance
S
M
E
T
S
Y
S
Keppel’s System of Management Controls
POLICIES
Board of Directors
Business Unit
Representation
Compliance
Internal
Audit
External
Audit
Self-Assessment
Process
Enterprise Risk
Management
Fraud Risk
Management
P
R
O
C
E
S
S
E
S
Core Values, Corporate & Employee Conduct
Policy
Management
Operational
Governance
Financial
Governance
PEOPLE
The Company also has in place a Risk
Management Assessment Framework
which was established to facilitate the
Board’s assessment on the adequacy
and effectiveness of the Group’s risk
management system. The framework
lays out the governing policies, processes
and systems pertaining to each of
the key risk areas of the Group and
assessments are made on the adequacy
and effectiveness of the Group’s risk
management system in managing
each of these key risk areas.
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 towards ensuring
the adequacy and effectiveness of
the Group’s system of internal controls
and risk management.
KCL’s Group Internal Audit also
conduct an annual review of the
adequacy and effectiveness of the
Group’s material internal controls,
including financial, operational,
compliance and information technology
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
Under the first Line of Defence,
management is required to ensure
good corporate 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. Employees
are also guided by the Group’s core
values and expected to comply strictly
with the Employee Code of Conduct.
Under the second Line of Defence,
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
control gaps. Under the Group’s
Enterprise Risk Management Framework,
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 Line of Defence, to
assist the Company to ascertain the
106
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
adequacy and effectiveness 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 and risk
management. Such assurances are also
sought from the Company’s internal
and external auditors based on their
independent assessments.
The Board, supported by the AC and
BRC, oversees the Group’s system of
internal controls and risk management.
The Board has received assurance from
the Chief Executive Officer, Mr Loh
Chin Hua and Senior Executive Director,
Mr Teo Soon Hoe that, amongst others:
(a) the financial records of the Group
have been properly maintained and
the financial statements give a true
and fair view of the operations and
finances of the Group;
(b) the internal controls of the Group
are adequate and effective to
address the financial, operational,
compliance and information
technology risks which the Group
considers relevant and material
to its current business scope
and environment and that they
are not aware of any material
weaknesses in the system of
internal controls; and
(c) they are satisfied with the adequacy
and effectiveness of the Group’s risk
management system.
For FY 2013, based on the review of the
Group’s governing framework, systems,
policies and processes in addressing
the key risks under the Group’s Risk
Management Assessment Framework,
the monitoring and review of the
Group’s overall performance and
representation from the management,
the Board, with the concurrence of the
BRC, is of the view that the Group’s
risk management system remains
adequate and effective.
For FY 2013, 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 and
effective to address the financial,
operational, compliance and information
technology risks which the Group
considers relevant and material to its
current business scope and environment.
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:
Effective and independent internal audit
function that is adequately resourced
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”).
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 CEO
of the Company.
The AC approves the hiring, removal,
evaluation and compensation of
the Head of Group Internal Audit.
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, and the results
re-affirmed that the internal audit
activity conforms to the International
Standards. Group Internal Audit staff
perform a yearly declaration to
confirm their adherence to the
Employee Code of Conduct as well
as the Code of Ethics established
by the IIA, from which the principles of
objectivity, competence, confidentiality
and integrity are based.
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. An annual audit plan is
developed using a structured risk
and control assessment framework.
Audits are planned based on the
results of the assessment, with priority
given to auditing 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, CEO and 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 AC.
SHAREHOLDER RIGHTS AND
COMMUNICATION WITH
SHAREHOLDERS
Principle 14:
Fair and equitable treatment of
shareholders and protection of
shareholders’ rights
Sustainability Report Highlights Sustaining Growth – Corporate Governance
107
SUSTAINING GROWTH
Corporate Governance
Principle 15:
Regular, effective and fair communication
with shareholders
Principle 16:
Greater shareholder participation at
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.
The Company treats all its shareholders
fairly and equitably and keeps all its
shareholders and other stakeholders
informed of its corporate activities,
including changes in the Company or
its business which would be likely to
materially affect the price or value of
its shares, on a timely basis.
The Company has in place an Investor
Relations Policy which sets out the
principles and practices that the
Company applies in order to provide
shareholders and prospective investors
with information necessary to make
well-informed investment decisions
and to ensure a level playing field.
The Investor Relations Policy is
published on the Company’s website
at www.kepcorp.com.
The Company employs various
platforms to effectively engage the
shareholders and the investment
community, with an emphasis on
timely, accurate, fair and transparent
disclosure of information. Engagement
with shareholders and other
stakeholders takes many forms,
including ‘live’ webcasts of quarterly
results and presentations, e-mail
communications, publications and
content on the Company’s website.
In addition to shareholder meetings,
senior management meet with
investors, analysts and the media, as
well as participate in conference calls,
roadshows and industry conferences
organised by major brokerage firms
throughout the year to solicit and
understand the views of the investment
Mr Chow Yew Yuen, CEO of Keppel O&M, engages stakeholders regularly.
community. In FY 2013, the Company
held about 230 investor meetings,
conference calls and facility visits for
Singapore and overseas institutional
investors. Senior management went on
non-deal roadshows to Australia, Japan,
Hong Kong, and the United States.
Such meetings provide useful platforms
for management to engage with
investors and analysts.
to be debated and decided upon.
Shareholders are also informed of the
rules, including voting procedures,
governing such meetings.
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.
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.
The Company ensures that
shareholders have the opportunity
to participate effectively and vote at
shareholders’ meeting. Shareholders
are informed of shareholders’
meetings through notices published
in the newspapers and via SGXnet,
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
At shareholders’ meetings, each
distinct issue is proposed as a separate
resolution. To ensure transparency,
the Company conducts electronic poll
voting for shareholders/proxies present
at the meeting for all the resolutions
proposed at the general meeting.
Votes cast for and against and the
respective percentages, on each
resolution will be displayed ‘live’ to
shareholders/proxies immediately after
each poll conducted. The total number
of votes cast for or against the resolutions
and the respective percentages are also
announced in a timely manner after
the general meeting via SGXnet.
The Chairmen of the Board and each
board committee are required to be
present to address questions at general
meetings of shareholders. External
auditors are also present at such
meetings to assist the directors
108
Keppel Corpora†ion Limited Report to Shareholders 2013
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FOR GROWTH
in addressing 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.
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).
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.
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 Guidelines on
Disclosure of Dealings in Securities
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.
1.3 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.
1.12 Review interested person
transactions.
1.13 Investigate any matters within the
Committee’s purview, whenever
it deems necessary.
1.14 Report to the Board on
1.4 Review the independence and
objectivity of the external auditors.
material matters, findings and
recommendations.
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.
1.9 Ensure that the internal audit
function is adequately resourced
and has appropriate standing within
the Company, at least annually.
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
1.15 Review the 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 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
extent of significant risks which
the Group overall may take in
achieving its strategic objectives
and the overall Group’s levels of
risk tolerance and risk policies.
1.2 Review and discuss, as and when
appropriate, with management
the Group’s risk governance
structure and its risk policies,
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.
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109
SUSTAINING GROWTH
Corporate Governance
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
on critical risk issues.
1.7 Review the Committee’s terms
of reference annually and
recommend any proposed
changes to the Board.
1.8 Perform such other functions as
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 Assess annually the effectiveness
of the Board as a whole and
individual directors.
1.7 Review the succession plans
for the Board (in particular,
the Chairman) and senior
management (in particular,
the CEO).
the Board may determine.
1.8 Review talent development plans.
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
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.
1.9 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 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
and Keppel Infrastructure
Holdings Pte Ltd),
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.
1.11 Report to the Board on material
matters and recommendations.
1.12 Review the Committee’s terms
of reference annually and
recommend any proposed
changes to the Board.
1.5 Recommend to the Board the
1.13 Perform such other functions as
process for the evaluation of the
performance of the Board,
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
employee share option scheme
(the “KCL Share Option Scheme”),
and the Company’s Restricted
Share Plan and Performance
Share Plan (collectively, the “KCL
Share Plans”), in accordance with
the rules of the KCL Share Option
Scheme and KCL Share Plans.
1.5 Report to the Board on material
matters and recommendations.
1.6 Review the Committee’s terms
of reference annually and
recommend any proposed
changes to the Board.
1.7 Perform such other functions as
the Board may determine.
1.8 Sub-delegate any of its
powers within its terms of
reference as listed above, from
time to time as the Committee
may deem fit.
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CONFIGURED
FOR GROWTH
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.
The Board Safety Committee examines the effectiveness of Keppel’s safety management system,
including training and monitoring practices.
1.4 Assist in enhancing safety awareness
and culture within the Group.
1.6 Consider management’s proposals
1.9 Perform such other functions
on safety-related matters.
as the Board may determine.
1.5 Ensure that the safety functions
1.7 Carry out such investigations
in Group companies are adequately
resourced (in terms of number,
qualification, and budget) and
have appropriate standing within
the organisation.
into safety-related matters as the
Committee deems fit.
1.8 Report to the Board on
material matters, findings and
recommendations.
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.
NATURE OF CURRENT DIRECTORS’ APPOINTMENTS AND MEMBERSHIPS ON BOARD COMMITTEES
Director
Board Membership
Audit
Nominating
Remuneration
Risk
Committee Membership
Lee Boon Yang
Chairman
Loh Chin Hua
Chief Executive Offi cer
–
–
Member
Member
–
Tony Chew Leong-Chee
Independent
Member
Chairman
–
–
Oon Kum Loon
Independent
Member
–
Member
Chairman
–
Member
Member
Member
Tow Heng Tan
Non-Independent &
Non-Executive
Alvin Yeo Khirn Hai
Independent
Tan Ek Kia
Danny Teoh
Tan Puay Chiang
Independent
Independent
Independent
Teo Soon Hoe
Senior Executive Director
Member
–
Chairman
–
–
Member
Member
–
–
Member
Chairman
–
–
–
Chairman
–
–
Member
Member
–
–
Member
–
Safety
Member
Member
–
–
–
–
–
–
–
–
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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 Independent Co-ordinator prepares
a consolidated report and briefs the
Chairman of the Nominating Committee
(“NC”) and the Board Chairman on the
report. Thereafter, the IC presents the
report for discussion at a meeting of
the non-executive directors (“NEDs”),
chaired by the Board Chairman.
The IC will thereafter present the report
to the Board together with the
recommendations of the NEDs for
discussion on the changes which
should be made to help the Board
discharge its duties more effectively.
Individual Directors
The Board differentiates the assessment
of an executive director from that of
an 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
NC Chairman 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 non-executive and
executive) 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 NC Chairman 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 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, board and board committee
composition, board independence,
board processes, board information
and accountability, board performance
in relation to discharging its principal
functions and ensuring the integrity
and quality of financial reporting to
stakeholders, board committee
performance in relation to discharging
their responsibilities set out in their
respective terms of reference.
The individual director’s performance
criteria are categorised into four
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); and (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).
The assessment of the Chairman of
the Board is based on, among others,
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.
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CONFIGURED
FOR GROWTH
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.
Reportable Conduct refers to any act
or omission by an employee of the
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.
Employees are encouraged to report
suspected Reportable Conduct to 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.
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.
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:
(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.
Sustainability Report Highlights Sustaining Growth – Corporate Governance
113
SUSTAINING GROWTH
Corporate Governance
Code of Corporate Governance 2012
Specifi c Principles and Guidelines for Disclosure
Relevant Guideline or Principle
Guideline 1.3
Delegation of authority, by the Board to any board committee, to make decisions on certain board matters
Guideline 1.4
The number of meetings of the Board and board committees 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 guidelines
Guideline 1.6
The induction, orientation and training provided to new and existing directors
Guideline 2.3
The Board should identify in the Company’s Annual Report each director it considers to be independent.
Where the Board considers a director to be independent in spite of the existence of a relationship as stated in
the Code that would otherwise deem a director not to be independent, the nature of the director’s relationship
and the reasons for considering him as independent should be disclosed
Guideline 2.4
Where the Board considers an independent director, who has served on the Board for more than nine years
from the date of his fi rst appointment, to be independent, the reasons for considering him as independent
should be disclosed
Guideline 3.1
Relationship between the Chairman and the CEO where they are immediate family members
Guideline 4.1
Names of the members of the NC and the key terms of reference of the NC, explaining its role and the
authority delegated to it by the Board
Guideline 4.4
The maximum number of listed company board representations which directors may hold should be disclosed
Guideline 4.6
Process for the selection, appointment and re-appointment of new directors to the Board, including the search
and nomination process
Page Reference
in this Report
Page 92
Page 93
Pages 92 and 93
Page 93
Page 94
Page 94
Not Applicable
Pages 95 and 110
Page 97
Page 96
Guideline 4.7
Key information regarding directors, including which directors are executive, non-executive or considered by
the NC to be independent
Pages 21 to 25
and 94
Guideline 5.1
The Board should state in the Company’s Annual Report how assessment of the Board, its board committees
and each director has been conducted. If an external facilitator has been used, the Board should disclose in the
Company’s Annual Report whether the external facilitator has any other connection with the Company or any
of its directors.
Pages 97 and 112
Guideline 7.1
Names of the members of the RC and the key terms of reference of the RC, explaining its role and the
authority delegated to it by the Board
Pages 98 and 110
Guideline 7.3
Names and fi rms of the remuneration consultants (if any) should be disclosed in the annual remuneration report,
including a statement on whether the remuneration consultants have any relationships with the Company
Page 98
Guideline 9
Clear disclosure of remuneration policies, level and mix of remuneration, and procedure for setting
remuneration
Guideline 9.1
Remuneration of directors, the CEO and at least the top fi ve key management personnel (who are not also
directors or the CEO) of the Company. The annual remuneration report should include the aggregate amount
of any termination, retirement and post-employment benefi ts that may be granted to directors, the CEO and
the top fi ve key management personnel (who are not directors or the CEO)
Pages 99 to 103
Pages 101 to 103
114
Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
Page Reference
in this Report
Pages 101 and 102
Page 103
Relevant Guideline or Principle
Guideline 9.2
Fully disclose the remuneration of each individual director and the CEO on a named basis. There will be a
breakdown (in percentage or dollar terms) of each director’s and the CEO’s remuneration earned through
base/fi xed salary, variable or performance-related income/bonuses, benefi ts-in-kind, stock options granted,
share-based incentives and awards, and other long-term incentives
Guideline 9.3
Name and disclose the remuneration of at least the top fi ve key management personnel (who are not directors
or the CEO) in bands of S$250,000. There will be a breakdown (in percentage or dollar terms) of each key
management personnel’s remuneration earned through base/fi xed salary, variable or performance-related
income/bonuses, benefi ts-in-kind, stock options granted, share-based incentives and awards, and other
long-term incentives. In addition, the Company should disclose in aggregate the total remuneration paid to
the top fi ve key management personnel (who are not directors or the CEO). As best practice, companies are
also encouraged to fully disclose the remuneration of the said top fi ve key management personnel
Guideline 9.4
Details of the remuneration of employees who are immediate family members of a director or the CEO,
and whose remuneration exceeds S$50,000 during the year. This will be done on a named basis with clear
indication of the employee’s relationship with the relevant director or the CEO. Disclosure of remuneration
should be in incremental bands of S$50,000
Page 104
Guideline 9.5
Details and important terms of employee share schemes
Guideline 9.6
For greater transparency, companies should disclose more information on the link between remuneration
paid to the executive directors and key management personnel, and performance. The annual remuneration
report should set out a description of performance conditions to which entitlement to short-term and
long-term incentive schemes are subject, an explanation on why such performance conditions were chosen,
and a statement of whether such performance conditions are met
Pages 104,130,131,
155 to 157
Page 100
Guideline 11.3
The Board should comment on the adequacy and eff ectiveness of the internal controls, including fi nancial,
operational, compliance and information technology controls, and risk management systems
Pages 104 to 107
The commentary should include information needed by stakeholders to make an informed assessment of the
company’s internal control and risk management systems
The Board should also comment on whether it has received assurance from the CEO and the CFO: (a) that
the fi nancial records have been properly maintained and the fi nancial statements give true and fair view of the
company’s operations and fi nances; and (b) regarding the eff ectiveness of the company’s risk management
and internal control systems
Guideline 12.1
Names of the members of the AC and the key terms of reference of the AC, explaining its role and the
authority delegated to it by the Board
Pages 104 and 109
Guideline 12.6
Aggregate amount of fees paid to the external auditors for that fi nancial year, and breakdown of fees paid in
total for audit and non-audit services respectively, or an appropriate negative statement
Pages 105 and 174
to 175
Guideline 12.7
The existence of a whistle-blowing policy should be disclosed in the Company’s Annual Report
Guideline 12.8
Summary of the AC’s activities and measures taken to keep abreast of changes to accounting standards and
issues which have a direct impact on fi nancial statements
Guideline 15.4
The steps the Board has taken to solicit and understand the views of the shareholders e.g. through analyst
briefi ngs, investor roadshows or Investors’ Day briefi ngs
Guideline 15.5
Where dividends are not paid, companies should disclose their reasons
Page 113
Page 104
Page 108
Not Applicable
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115
SUSTAINING GROWTH
Risk Management
1
As a conglomerate operating in over
30 countries, Keppel is exposed to
diverse risks relating to its industries, the
competition, technology advancement,
policies and regulations, finance and
human resources among others,
which could impact its businesses.
The Group responds to these potential
threats by maintaining a robust risk
management system and processes,
which will equip it to manage the
challenges, as well as seize opportunities
in an uneven business terrain.
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 to 110 of this Report.
During the year, the Board approved
three risk tolerance guiding principles
for the Group. These guiding principles
serve to determine the nature and
extent of the significant risks, which
the Board is willing to take in achieving
its strategic objectives.
These three risk tolerance guiding
principles are:
1. Risk taken should be carefully
evaluated, commensurate with
rewards and in line with the
Group’s core strengths and
strategic objectives.
2. No risk arising from any single area
of operation, investment or
undertaking should be so huge
as to endanger the entire Group.
3. The Group adopts zero tolerance
towards safety incidents,
non-compliance with laws and
regulations, as well as acts such
as fraud, bribery and corruption.
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
to 107 under Principle 11 (Risk
Management and Internal Controls).
The risk management assessment
framework was also established to
facilitate management and BRC in
determining the adequacy and
effectiveness of the risk management
system within the Group. Ongoing
improvements are made to strengthen
the existing risk governance. As part of
the control assurance process, Keppel
Corporation is in the process of
implementing the Control Self-
Assessment and a Group-wide IT risk
assessment. Keppel’s Enterprise Risk
Management (ERM) framework, a
component of Keppel’s System of
Management Controls, provides the
Group with a holistic and systematic
approach in risk management. It outlines
the reporting structure, monitoring
mechanisms, as well as specific risk
management processes and tools,
including Group policies and limits, in
addressing the key risks in the Group.
These collectively enable the Group to
monitor closely any potential operational,
financial and reputational impact arising
from its 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 ISO 31000:2009 standards,
Singapore Standard ISO 22313 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
practitioners in the field. An ERM
Committee, comprising management-
nominated champions from across
business units, drives and coordinates
Group-wide risk management initiatives.
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 their potential benefits.
STRATEGIC RISK
Strategic risks pertain to the Group’s
business plans and strategies, as well
as uncertainties associated with the
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CONFIGURED
FOR GROWTH
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,
which encourages
prudent risk-taking in
decision-making and
business processes.
countries and industries in which
Keppel operates. These include
changing laws and regulations;
evolving competitive landscape;
changing customer demands; shifting
technology and product innovation.
Risk considerations form an integral
part of the Group’s strategic and
budget reviews, policy formulation
and revision, projects, investments
as well as in the assessment of
management performance. Strategic
risks are reviewed periodically with
the Board to ensure that the Group
is resilient in dealing with adversity
and agile in pursuing opportunities.
At the macro level, the BRC guides
the Group in formulating and reviewing
its risk policies and limits. 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 the contractual risk
implications 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.
2
1. The annual
joint emergency
exercise with
Singapore’s
Home Team
tests and
strengthens
Keppel O&M’s
emergency
response plans.
2. Emergency
drills were held
to ensure that
operations are
crisis-ready.
Sustainability Report Highlights Sustaining Growth – Risk Management
117
SUSTAINING GROWTH
Risk Management
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
The effectiveness and efficiency
of employees, integrity of internal
controls, systems and processes,
as well as external events are
areas of risks associated to
the Group’s operations.
Integrating risk management processes
with business operations and project
execution across all business units
facilitates early risk detection and
proactive management of these risks.
Formalised guidelines, procedures,
internal training and tools are used
to provide guidance in assessing,
mitigating and monitoring risks.
Knowledge-sharing platforms are
also advocated to propagate good
practices and lessons learnt from
various projects and operations.
The Group’s operations are mainly
project-based, and executed over
extended periods of time. The Group
adopts a standardised, systematic 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
green-field 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 subjected to close
monitoring and oversight by dedicated
committees. Project teams and
management also use Key Risk
Indicators as early warning signals
of 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 its risk-mitigating actions,
the Group regularly reviews the scope,
type and adequacy of its insurance
coverage taking into account the
1
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 focus on
improving financial discipline, deploying
its capital to earn the best risk-adjusted
returns and maintaining a strong
balance sheet to seize opportunities.
An example of these processes includes
evaluating counterparties against
pre-established guidelines. For more
details on financial risk management,
please refer to page 86 of this Report.
BOLSTERING OPERATIONAL
READINESS
The Group is committed to enhancing
its operational resilience through the
establishment of a robust BCM plan
that will equip it to respond effectively
to potential crises and external threats,
while minimising any impact on its
people, operations and assets.
The Group is constantly scanning
for emergent threats that may
affect its global operations. Its BCM
methodology involves enterprise-wide
planning, the prioritising of key resources
and working with interdependencies
to support business continuity.
Led by their BCM committees,
business units in various locations
conduct a range of simulations under
a broad spectrum of disruptions to
enhance their operational preparedness.
These plans are tested and refined
frequently to ensure that the responses
developed are feasible and effective.
The business continuity plan enables
the Group to respond effectively to
disruptions resulting from internal
and external events while it continues
to operate its critical business functions.
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CONFIGURED
FOR GROWTH
2
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 interests of key
stakeholders and the Group’s
reputation. Crisis communication
procedures have also been embedded
into the Group’s BCM processes.
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, which encourages
prudent risk-taking in decision-making
and business processes.
ERM workshops are conducted
regularly to enhance risk management
competency of management staff.
Continuous education and
communications through various
forums and in-house publications
have also helped to reinforce
discipline and awareness among
employees. The Company also
seeks to raise staff accountability
for risk management through the
performance evaluation process.
PROACTIVE RISK MANAGEMENT
The Group will continue to review
and refine its risk management
methodology, systems and processes,
to ensure that its risk management
system remains adequate and
effective. A robust risk management
system will strengthen the Group’s
operational resilience and equip it to
respond to challenges and capture
growth opportunities.
1. The Group takes a
proactive approach
towards environmental
management and
protection and
propagates best
practices through
knowledge-sharing
platforms – in photo,
Mr Khaw Boon Wan,
Singapore’s Minister for
National Development,
(second from right),
during a tour of Ocean
Financial Centre hosted
by Mr Ang Wee Gee,
CEO of Keppel Land
(third from right).
2. Keppel’s robust BCM
measures equip the
Group to respond
effectively to
external threats.
Sustainability Report Highlights Sustaining Growth – Risk Management
119
SUSTAINING GROWTH
Environmental Performance
We are committed to conduct
business in a manner that is
environmentally-benign. Risk and
sustainability-based strategies are used
to assess, avoid, reduce and mitigate
environmental risks and impacts by
operations across the Group.
ENHANCING ENERGY EFFICIENCY
In 2013, Keppel’s businesses groupwide
continued to improve resource
efficiencies through process
improvements and the development
and adoption of more efficient
equipment and technology.
The Group’s Offshore & Marine
Division collaborated with equipment
manufacturers and developed energy
efficient blowers for use in shipyard
operations, as well as systems for
cranes to convert kinetic energy from
braking into usable electricity.
In the Infrastructure Division,
Keppel Seghers and Keppel DHCS
continued to incorporate renewable
energy and innovative green
technology. The Keppel Seghers Ulu
Pandan NEWater Plant and Keppel
DHCS Plant at Changi Business Park
harness solar energy with photovoltaic
cell installations of one megawatt-peak
and 510 kilowatt-peak systems
respectively, which are among the
largest in Singapore. The systems have
been generating renewable energy
since early 2013.
MEETING GREEN STANDARDS
Keppel FELS’ rigs are designed and
built to International Maritime
Organisation Marine Environment
Protection Committee standards.
Keppel FELS has further implemented
the superior zero-discharge system
in several of its rig designs, including
the KFELS SSDT TM semisubmersible
drilling tender and KFELS Super
A Class harsh-environment jackup.
By exceeding international standards,
Keppel FELS helps customers further
minimise environmental pollution
at sites where they operate.
Keppel Land adopts a proactive
approach towards environmental
management and protection to create
a sustainable future. The company aims
to achieve at least the Building and
Construction Authority (BCA) Green
Mark Gold Plus and Gold standards for
all of its new properties in Singapore
and overseas respectively. By 2015,
the Company also targets for all of its
completed commercial buildings in
Singapore to achieve at least the
BCA Green Mark Gold Plus standard.
MANAGING RESOURCES
The Group continually seeks ways
to reduce water use and preserve
water quality through the design
and operation of our facilities,
recycling and reusing, and measures
to prevent water pollution.
REDUCING WASTE & EMISSIONS
Groupwide, we minimise waste
by recycling or reusing materials
where possible. At Keppel Logistics,
materials utilised during operations,
such as wooden pallets and
stretch wraps, are reused or
recycled. Keppel Logistics’
environmentally-friendly practices
extend to the services that it offers
to clients. The company is one
of the pioneers of ‘reverse logistics’,
which helps reduce waste due to
faulty products, thus generating
more value for clients.
Emissions from the Group’s power
generation and Waste-to-Energy (WTE)
businesses are well below the strict
limits stipulated by Singapore’s Code
on Pollution Control and the
European Union’s Waste Incineration
Directive (2000/76/EC). The Group
continues to carry out regular
maintenance and upgrades for its
facilities to improve performance.
Emissions for the Keppel Seghers
Senoko WTE Plant improved
following the successful
completion of its flue gas
treatment upgrade project.
1
1. The Keppel Seghers
Ulu Pandan NEWater
Plant features
one of the largest
photovoltaic cell
installations in
Singapore.
2. Ocean Financial
Centre is the first
office development
in Singapore to
achieve the highest
BCA Green Mark
Platinum Award, and
is the Guinness World
Record Holder for
the World’s Largest
Vertical Garden.
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Keppel Corpora†ion Limited Report to Shareholders 2013
CONFIGURED
FOR GROWTH
SUSTAINING GROWTH
Product Excellence
2
Keppel is committed to deliver products
and services that are world-class, reliable
and sought after for their high quality,
safety and enduring value.
QUALITY EXECUTION
Keppel FELS, a wholly-owned subsidiary
of Keppel Offshore & Marine (Keppel
O&M), is a leading designer, builder and
repairer of high-performance mobile
offshore rigs. In particular, its proprietary
KFELS B Class jackup design, developed
by its technology arms Offshore
Technology Development and Bennett
Offshore, has become the industry
benchmark for jackups, with over 70
units delivered and on order.
Our hallmark quality also characterises
Keppel’s property business. As a
leading developer, Keppel Land’s
sterling portfolio of award-winning
and sustainable developments such
as Ocean Financial Centre, Marina Bay
Financial Centre and Reflections at
Keppel Bay contribute towards the
creation of distinctive skylines and
vibrant communities.
INNOVATION FOCUS
One of the Group’s key drivers of growth
is its focus on research and development.
In 2013, Keppel Corporation and the
National University of Singapore (NUS)
announced the setting up of the
Keppel-NUS Corporate Laboratory,
in collaboration with Singapore’s
National Research Foundation.
The laboratory will create a synergistic
industry-university partnership to
pursue research thrusts to meet the
challenges of the offshore industry.
GLOBAL FOOTPRINT
The Group’s Near Market, Near Customer
strategy is bolstered by our global
presence in over 30 countries. This
strategy enables us to stay abreast of
market trends and be responsive to
customers’ changing needs globally.
Notably, in 2013, Keppel O&M extended
its global footprint with the signing of a
Memorandum of Understanding (MOU)
with subsidiaries of Mexico’s national oil
company PEMEX, to jointly develop,
own and operate a yard facility located
in Altamira in Mexico. When the
first phase of yard development is
completed, the yard will support
the construction of six KFELS B
Class jackups for PEMEX.
CUSTOMER HEALTH & SAFETY
Due care and diligence are exercised
in the design, construction, and
operation of the Group’s products
and services to ensure that they are
fit for their intended use and do not
pose hazards to customers’ health
and safety. Health and safety impacts
during all life cycle stages of the
Group’s products are constantly
assessed and mitigated.
COMPLIANCE
Keppel subscribes to best practices
and complies with applicable
legislations and relevant requirements.
In 2013, the Group has not identified
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.
Sustainability Report Highlights Sustaining Growth – Product Excellence
121
EMPOWERING LIVES
Labour Practices & Human Rights
1
We embrace diversity and inclusiveness,
uphold fair employment practices and
grow the capabilities of our workforce
to create a work culture where all
employees take a shared responsibility
in achieving our business goals.
FAIR EMPLOYMENT PRACTICES
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 upholds and respects the
fundamental principles set out in the
United Nations Universal Declaration
of Human Rights and the International
Labour Organisation’s Declaration on
Fundamental Principles and Rights at
Work. Our approach to human rights
is informed and guided by general
concepts from the United Nations
Guiding Principles on Business
and Human Rights.
Our commitment to human rights
is supported by our Employee Code
of Conduct and articulated in our
Corporate Statement on Human Rights,
published on our website.
We work closely with our unions and
subcontractors to maintain healthy and
harmonious working relationships with
employees. About 45% of our global
workforce is covered by Collective
Agreements.
EMPLOYEE ENGAGEMENT
In 2013, Keppel worked with an
independent research firm to
complete our annual Employee
Engagement Survey. The survey
involved over 5,700 employees from
Singapore, China, Philippines and
the Netherlands and achieved a
76% response rate.
LEARNING & DEVELOPMENT
We grow the skills and capabilities
of our workforce with a structured
learning and development framework.
Programmes by qualified training
providers and our in-house Keppel
College and training centres equip
employees with the necessary skills
at different career stages.
Keppel College programmes are
co-developed with reputable business
schools and industry subject matter
experts to provide effective and
holistic leadership development.
The training centres cater to technical
and core skills qualification, providing
upgrading and certifications. In 2013,
Keppel invested $19.2 million in the
training and development of our
employees globally.
The Group continues to engage
employees through mentorship
schemes, dialogue sessions and town
hall meetings. Feedback received
through these various channels helps
us refine and improve our human
resource policies.
TALENT MANAGEMENT &
SUCCESSION PLANNING
Keppel’s established talent and
succession management framework
focuses on high-potential and
high-performing employees.
Employees are given opportunities
to fulfil their career aspirations through
job rotations, stretch-assignments
and overseas postings. Our talent
management process works in tandem
with succession planning to create
a robust leadership pipeline.
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Keppel Corpora†ion Limited Report to Shareholders 2013
EMPOWERING LIVES
Safety & Health
CONFIGURED
FOR GROWTH
Keppel remains committed to create
a safe and healthy work environment
for all our stakeholders. We align
safety standards across the Group,
taking into consideration the
industry-specific challenges that
each of our businesses face.
To address such challenges,
the Keppel Corporation Board
Safety Committee, supported by the
Inter-Strategic Business Unit Safety
Committee, embarked on several
initiatives in 2013.
STRONG MANAGEMENT
COMMITMENT
Keppel’s management establishes
a strong safety culture by visibly
embracing safety as a core value.
This visible safety leadership serves
both as a method of demonstrating
commitment and a platform for
managers to engage employees.
A roundtable was organised to raise
top company executives’ awareness
of behavioural-safety management
techniques. In addition, business units
held regular meetings, walkabouts and
site visits involving board members and
senior management.
ROAD MAP IMPLEMENTATION
Our three-year review exercise
in collaboration with Du Pont
Company (Singapore) was
concluded in 2013. The findings
affirmed that Keppel’s commitment
to safety is consistent across the
organisation, and identified gaps to
be addressed within each business
unit’s road map. Business units have
since received guidance to improve
their safety and health practices in
line with the four key thrusts of
the Keppel Workplace Safety
and Health (WSH) 2018 Strategy –
establishing an integrated
framework, implementing an effective
management system, enhancing
ownership and strengthening
partnerships.
HIGH IMPACT RISK
ASSESSMENT ACTIVITIES
Animation videos and pamphlets
highlighting safe work practices
to address high impact risks will
be ready in 2014 to aid supervisors
in briefing workers. By introducing
process-based methodologies that
facilitate engagement with workers,
we aim to develop a strong
sense of individual and collective
ownership of safety among
stakeholders at all levels.
INCIDENT REDUCTION
Keppel has consistently achieved
an average reduction of 20% in
its Accident Frequency Rate (AFR)
and Accident Severity Rate (ASR)
since 2008.
Whilst we are making headway
in reducing our AFR and ASR,
we suffered two fall-related
fatalities globally. This has
strengthened our resolve to strive
for a zero-incident workplace.
SAFETY PERFORMANCE
Affirming Keppel’s commitment
to safety, the WSH Council and
Singapore’s Ministry of Manpower
awarded the Keppel Group with
32 WSH Awards in 2013.
We have further streamlined our global
incident reporting system, utilising
technology for better trend analysis
and data security. In analysing
near-miss cases efficiently, we are
better equipped to reduce the risk of
hazards. We are focused on meeting
our safety targets for 2014.
2
1. Over 600
employees
and their family
members
participated in
Keppel’s annual
Walk-N-Fun
Day aimed
at promoting
healthy living
and camaraderie.
2. Keppel continues
to equip
employees and
subcontractors
with training on
workplace safety
procedures.
Sustainability Report Highlights Empowering Lives – Safety & Health
123
NURTURING COMMUNITIES
Our Community
Keppel Volunteers collaborated with Yayasan Mendaki to refurbish the Rumah Anak Sholeh Inayah
orphanage in Bintan, Indonesia, and equip the children with computer skills.
Keppel believes that our business
operations should generate both
economic and social capital to nurture
the diverse communities in which we
operate. We make community
investments in education, catalyse
community development and
support environmental initiatives.
In 2013, our employees committed
over 9,000 volunteer hours to
community engagement initiatives.
In addition, August has been designated
as the Keppel Community Month.
KEPPEL CARE FOUNDATION
Keppel Care Foundation, a registered
charity under Singapore’s Charities Act,
sharpens, coordinates and sustains the
Group’s community contributions.
Established in 2012, the Foundation
provides assistance to the
underprivileged, promotes education
and encourages eco-friendly initiatives.
The Group has pledged up to 1% of its
annual profits to the Foundation.
EMPOWERING THROUGH EDUCATION
Keppel gave $5.38 million to the
National University of Singapore,
Nanyang Technological University,
Singapore Institute of Technology and
Singapore University of Technology
and Design to enhance academic
and learning excellence, provide
scholarships and bursaries for students
from economically disadvantaged
backgrounds and enrich teaching
and research.
UPLIFTING COMMUNITIES
ENRICHING LIVES THROUGH THE ARTS
Keppel committed $12 million to the
National Art Gallery, Singapore to
establish the Keppel Centre for Art
Education. Slated to open in 2015,
the Centre will provide an immersive
and creative learning environment
for a projected 250,000 children
and youths annually.
To cultivate life-long arts
engagement among the young,
Keppel re-launched Keppel Nights in
partnership with Esplanade-Theatres
on the Bay to provide students from
30 heartland schools in Singapore
with access to shows at the theatre.
Keppel committed $360,000 over
two years towards the programme.
HELPING THE
UNDERPRIVILEGED
Keppel contributed $1.5 million
to the President’s Challenge, which
provides funding to over 50 social
service organisations in Singapore.
To improve the living and learning
conditions for residents of Rumah
Anak Sholeh Inayah orphanage in
Bintan, Indonesia, Keppel Volunteers
collaborated with Yayasan Mendaki
to refurbish rooms and conduct
IT learning sessions. In Singapore,
Keppel also worked with Mendaki
to deliver food hampers to
low-income households
during the month of Ramadan.
CHAMPIONING THOUGHT
LEADERSHIP
Keppel Corporation supported
the Singapore International Energy
Week, World Engineers Summit
and Sustainable Ocean Summit
events in 2013 to provide valuable
platforms to share insights and
champion thought leadership on
the challenges and opportunities
in addressing pressing
environmental concerns.
124
Keppel Corpora†ion Limited Report to Shareholders 2013
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 Statement of Changes in Equity
141 Consolidated Statement of Cash Flows
144 Notes to the Financial Statements
190 Significant Subsidiaries &
Associated Companies
201 Interested Person Transactions
202 Key Executives
212 Major Properties
217 Group Five-Year Performance
221 Group Value-Added Statements
222 Share Performance
223 Shareholding Statistics
224 Notice of Annual General Meeting
& Closure of Books
229 Corporate Information
230 Financial Calendar
231 Proxy Form
125
CONFIGUREDFOR GROWTH
Directors’ Report
For the financial year ended 31 December 2013
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 2013.
1.
Directors
The Directors of the Company in office at the date of this report are:
Lee Boon Yang (Chairman)
Loh Chin Hua (Chief Executive Officer) (appointed on 1 January 2014)
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
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, compliance and information technology 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 LimitedReport to Shareholders 2013
4.
Directors’ interests 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)
Loh Chin Hua
Loh Chin Hua (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
(Unvested restricted shares to be delivered after 2012)
Loh Chin Hua
(Contingent award of restricted shares to be delivered after 2013)1
Loh Chin Hua
(Contingent award of performance shares issued in 2010 to be
delivered after 2012)2
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
(Contingent award of performance shares issued in 2011 to be
delivered after 2013)2
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
1.1.2013
Holdings At
31.12.2013
21.1.2014
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
53,000
4,627,032
220,000
**
**
20,000
63,200
54,000
19,888
28,789
15,225
32,000
6,825
31,825
23,600
7,103
5,241,365
2,464,640
53,000
*
*
25,000
38,500
20,000
63,200
54,000
19,888
28,789
15,225
32,000
6,825
31,825
23,600
7,103
5,241,365
2,464,640
847,000
2,530,000
1,528,000
594,000
2,530,000
1,332,000
*
2,530,000
1,332,000
55,000
36,685
33,000
93,300
60,000
60,000
**
**
330,000
220,000
198,000
-
-
-
48,242
31,057
31,057
**
**
-
-
-
*
-
-
*
31,057
31,057
51,762
87,995
*
-
-
280,000
180,000
180,000
289,866
186,342
186,342
*
186,342
186,342
Directors’ Report
127
CONFIGUREDFOR GROWTH
Directors’ Report
4.
Directors’ interests in shares and debentures (continued)
(Contingent award of performance shares issued in 2012 to be
delivered after 2014)2
Choo Chiau Beng
Loh Chin Hua
Teo Soon Hoe
Tong Chong Heong
(Contingent award of performance shares issued in 2013 to be
delivered after 2015)2
Choo Chiau Beng
Loh Chin Hua
Teo Soon Hoe
Tong Chong Heong
(3.145% Fixed Rate Notes due 2022)
Tan Puay Chiang
Keppel Land Limited
(Ordinary shares)
Choo Chiau Beng
Loh Chin Hua
Oon Kum Loon (Mrs)
Tow Heng Tan (deemed interest)
Alvin Yeo Khirn Hai (deemed interest)
Tan Ek Kia
Danny Teoh
(Unvested restricted shares to be delivered after 2011)1
Loh Chin Hua
(3.51% Fixed Rate Notes due 2015)
Tan Puay Chiang
(3.90% Fixed Rate Notes due 2024)
Tan Puay Chiang
Keppel REIT
(Units)
Lee Boon Yang
Choo Chiau Beng
Choo Chiau Beng (deemed interest)
Loh Chin Hua
Loh Chin Hua (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
128
1.1.2013
Holdings At
31.12.2013
21.1.2014
220,000
**
90,000
180,000
151,903
**
93,171
129,555
*
77,643
93,171
129,555
-
**
-
-
75,917
**
93,171
67,389
*
93,171
93,171
67,389
$250,000
$250,000
$250,000
850,315
**
-
95
10,000
11,400
100,000
850,315
**
2,000
95
10,000
11,400
100,000
*
99,600
2,000
95
10,000
11,400
100,000
**
**
96,000
$250,000
$250,000
$250,000
$250,000
$250,000
$250,000
-
6,260,000
-
**
**
-
-
-
-
10
-
100,000
-
-
-
-
600,000
-
14,840
7,508,968
61,600
**
**
5,600
17,696
12,320
5,568
8,070
4,263
108,960
1,911
8,911
12,000
6,000
2,067,582
764,899
14,840
*
*
7,000
556,160
5,600
17,696
12,320
5,568
8,070
4,263
108,960
1,911
8,911
12,000
6,000
2,067,582
764,899
Keppel Corporation LimitedReport to Shareholders 2013
Keppel Telecommunications & Transportation Ltd
(Ordinary shares)
Teo Soon Hoe
Keppel Philippines Holdings, Inc
(“B” shares of one Peso each)
Choo Chiau Beng
Teo Soon Hoe
1.1.2013
Holdings At
31.12.2013
21.1.2014
28,000
28,000
28,000
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 the
number stated.
2 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.
* Mr Choo Chiau Beng and Mr Tong Chong Heong had resigned as Directors of the Company with effect from 1 January 2014 and 1 February 2014
respectively following their retirements.
** Mr Loh Chin Hua was appointed as the Group Chief Executive Officer and a Director of the Company on 1 January 2014.
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 5,335,750 Shares
issued by virtue of exercise of options and options to take up 146,500 Shares were cancelled during the financial year. At
the end of the financial year, there were 24,832,315 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
1.1.2013
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
Exercised
(5,500)
(85,800)
(47,800)
(368,000)
(413,100)
(114,700)
(557,800)
(1,165,615)
(533,400)
(821,865)
(1,222,170)
(5,335,750)
Cancelled
-
-
-
-
(4,400)
(64,900)
(20,900)
(29,900)
(8,800)
(8,800)
(8,800)
(146,500)
Balance at
31.12.2013
11,000
272,800
335,500
961,900
2,074,400
6,473,200
3,119,300
3,701,100
1,117,600
2,932,485
3,833,030
24,832,315
The information on Directors of the Company participating in the Scheme is as follows:
Exercise
price
$3.42
$5.07
$5.21
$6.36
$7.70
$11.17
$8.46
$8.73
$3.07
$6.86
$6.89
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
Options
granted
during the
financial year
-
-
-
Name of Director
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
Aggregate
options
exercised since
Aggregate
options
lapsed since
commencement commencement
of the Scheme
to the end of
financial year
of the Scheme
to the end of
financial year
(4,416,250)
(2,879,250)
(2,180,200)
(573,750)
(573,750)
(410,000)
Aggregate
options
outstanding as
at the end of
financial year
594,000
2,530,000
1,332,000
There are no options granted to any of the Company’s controlling shareholders or their associates under the Scheme.
Directors’ Report
129
CONFIGUREDFOR GROWTH
Directors’ Report
7.
Share plans of the Company
The KCL Performance Share Plan (“KCL PSP”) and KCL Restricted Share Plan (“KCL RSP”) 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 PSP and KCL RSP are disclosed in Note 3 to the financial statements.
The number of contingent Shares granted was 845,000 under KCL PSP and 4,300,500 under KCL RSP during the financial
year. The number of Shares released was 1,092,100 under KCL PSP and 4,075,068 under KCL RSP during the financial
year. 1,092,100 Shares under the KCL PSP and 3,935,605 Shares under KCL RSP were vested during the financial year.
68,586 Shares under the KCL RSP were cancelled during the financial year. At the end of the financial year, there were
1,901,333 contingent Shares under the KCL PSP and 4,383,491 contingent Shares and 4,040,616 unvested Shares under
the KCL RSP as follows:
Contingent awards:
Date of grant
KCL PSP
30.6.2010
30.6.2011
29.6.2012
28.3.2013
KCL RSP
29.6.2012
28.3.2013
Balance at
1.1.2013
748,000
640,000
741,314
-
2,129,314
Number of Shares
Contingent
awards
granted
Adjustments
upon
release
Released
Cancelled
Other
adjustments
Balance at
31.12.2013
-
-
-
845,000
845,000
344,100
-
-
-
344,100
(1,092,100)
-
-
-
(1,092,100)
-
-
(132,635)
(270,787)
(403,422)
-
22,550
26,119
29,772
78,441
-
662,550
634,798
603,985
1,901,333
4,103,656
-
4,103,656
-
4,300,500
4,300,500
-
-
-
(4,075,068)
-
(4,075,068)
(28,588)
(67,906)
(96,494)
-
150,897
150,897
-
4,383,491
4,383,491
Awards released but not vested:
Date of grant
KCL PSP
30.6.2010
KCL RSP
30.6.2010
30.6.2011
29.6.2012
Balance at
1.1.2013
Released
Vested
Cancelled
Other
adjustments
Balance at
31.12.2013
Number of Shares
-
-
1,092,100
1,092,100
(1,092,100)
(1,092,100)
-
-
-
-
-
-
1,278,035
2,677,411
-
3,955,446
-
-
4,075,068
4,075,068
(1,248,335)
(1,323,161)
(1,364,109)
(3,935,605)
(715)
(13,559)
(54,312)
(68,586)
(28,985)
(6,758)
50,036
14,293
-
1,333,933
2,706,683
4,040,616
130
Keppel Corporation LimitedReport to Shareholders 2013
Aggregate
awards
not released as
at the end of
financial year
-
87,995
-
-
517,686
170,814
372,684
383,286
Aggregate
awards
released but
not vested as
at the end of
financial year
48,242
51,762
31,057
31,057
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
Loh Chin Hua
Teo Soon Hoe
Tong Chong Heong
KCL PSP
Choo Chiau Beng
Loh Chin Hua
Teo Soon Hoe
Tong Chong Heong
Aggregate
awards
adjusted upon
Aggregate
awards
granted since
Aggregate
awards
released since
Contingent commencement commencement commencement commencement
of plans
to the end of
financial year
Aggregate
other
release since adjustments since
of plans
to the end of
financial year
of plans
to the end of
financial year
of plans
to the end of
financial year
awards granted
during the
financial year
-
85,000
-
-
290,000
160,000
190,000
180,000
-
-
-
-
-
2,995
-
-
(290,000)
(75,000)
(190,000)
(180,000)
220,000
90,000
90,000
180,000
1,020,000
165,000
560,000
720,000
151,800
-
101,200
91,100
(172,314)
5,814
32,684
(138,714)
(481,800)
-
(321,200)
(289,100)
Awards released but not vested:
Name of Director
KCL RSP
Choo Chiau Beng
Loh Chin Hua
Teo Soon Hoe
Tong Chong Heong
KCL PSP
Choo Chiau Beng
Teo Soon Hoe
Tong Chong Heong
Aggregate
awards
Aggregate
other
released since adjustments since
Aggregate
awards
vested since
commencement commencement commencement
of plans
to the end of
financial year
of plans
to the end of
financial year
of plans
to the end of
financial year
290,000
75,000
190,000
180,000
481,800
321,000
289,100
11,642
1,762
7,727
7,057
(253,400)
(25,000)
(166,670)
(156,000)
-
-
-
(481,800)
(321,000)
(289,100)
-
-
-
There are no contingent award of Shares granted to any of the Company’s controlling shareholders or their associates
under the KCL RSP and the KCL PSP.
Other than Choo Chiau Beng who received 1,090,067 or 5.6% 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
CONFIGUREDFOR GROWTH
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, unissued shares of Keppel Land Limited under option comprised $499,800,000
principal amount of 1.875% Convertible Bonds due 2015 at a conversion price of $6.72 per share and 1,977,120
options under the Keppel Land Share Option Scheme. In addition, there were 867,800 unvested shares and
1,927,800 contingent shares granted under Keppel Land Restricted Share Plan, and 1,010,000 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 and financial statements of Keppel Land
Limited.
(b) Keppel Telecommunications & Transportation Ltd (“Keppel T&T”)
At the end of the financial year, there were 1,275,000 unissued shares of Keppel Telecommunications &
Transportation Ltd under option relating to Keppel T&T Share Option Scheme. In addition, there were 546,700
unvested shares and 1,042,000 contingent shares granted under Keppel T&T Restricted Share Plan, and 680,000
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.
9.
AUDITORS
The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.
On behalf of the Board
Loh Chin Hua
Chief Executive Officer
Singapore, 25 February 2014
Teo Soon Hoe
Senior Executive Director
132
Keppel Corporation LimitedReport to Shareholders 2013
Statement by Directors
For the financial year ended 31 December 2013
We, LOH CHIN HUA 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 200 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 2013, 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 when they fall due.
On behalf of the Board
Loh Chin Hua
Chief Executive Officer
Singapore, 25 February 2014
Teo Soon Hoe
Senior Executive Director
Statement by Directors
133
CONFIGUREDFOR GROWTH Independent Auditors’ Report
to the Members of Keppel Corporation Limited
For the financial year ended 31 December 2013
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 2013, 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 200.
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 2013 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 Chartered Accountants
Singapore
Cheung Pui Yuen
Partner
Appointed on 21 April 2011
25 February 2014
134
Keppel Corporation LimitedReport to Shareholders 2013 Balance Sheets
As at 31 December 2013
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
Note
3
4
GROUP
COMPANY
31 December
2013
$’000
1,205,877
8,495,304
9,701,181
3,987,682
31 December
2012
$’000
1,123,590
8,122,362
9,245,952
4,332,174
31 December
2013
$’000
1,205,877
4,489,022
5,694,899
-
31 December
2012
$’000
1,123,590
4,581,934
5,705,524
-
13,688,863
13,578,126
5,694,899
5,705,524
5
6
7
8
9
10
11
12
13
13
14
15
16
17
12
18
13
13
19
26
20
19
21
3,798,279
2,187,858
-
5,482,173
264,745
278,917
86,240
12,098,212
3,337,433
5,423,060
-
5,266,602
225,380
175,489
109,608
14,537,572
882
-
5,094,452
-
-
218
-
5,095,552
559
-
4,933,380
-
-
168
-
4,934,107
8,994,726
7,660,898
-
-
-
1,037,206
1,915,747
445,073
5,564,656
17,957,408
-
696,737
1,839,085
417,107
4,055,176
14,669,003
3,465,513
9,430
33,804
-
2,466
3,511,213
2,655,295
1,719
157,737
-
3,773
2,818,524
5,409,197
5,465,666
275,189
191,872
2,714,983
163,603
1,619,475
145,169
-
-
-
71,699
516,665
465,387
473
9,342,007
-
63,495
1,005,554
764,862
-
9,064,221
951,328
3
160,838
19,575
-
1,406,933
-
-
329,206
-
-
21,097
-
542,175
8,615,401
5,604,782
2,104,280
2,276,349
6,582,861
441,889
7,024,750
6,202,345
361,883
6,564,228
1,500,000
4,933
1,504,933
1,500,000
4,932
1,504,932
Net assets
13,688,863
13,578,126
5,694,899
5,705,524
See accompanying notes to the financial statements.
Balance Sheets
135
CONFIGUREDFOR GROWTH
Consolidated Profit and Loss Account
For the financial year ended 31 December 2013
Revenue
Materials and subcontract costs
Staff costs
Depreciation and amortisation
Other operating income/(expenses)
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 distributed/proposed
Total distribution
Note
22
23
24
25
25
25
8
26
27
28
2013
$’000
12,380,419
(8,603,659)
(1,668,237)
(242,292)
268,138
2,134,369
14,033
144,189
(124,718)
625,867
2,793,740
(397,366)
2012
$’000
13,964,841
(9,506,893)
(1,578,749)
(210,512)
(47,512)
2,621,175
6,701
160,776
(134,933)
602,548
3,256,267
(500,619)
2,396,374
2,755,648
1,845,792
550,582
2,396,374
2,237,299
518,349
2,755,648
102.3 cts
101.2 cts
124.8 cts
123.6 cts
10.0 cts
30.0 cts
9.5 cts
49.5 cts
18.0 cts
27.0 cts
28.6 cts
73.6 cts
See accompanying notes to the financial statements.
136
Keppel Corporation LimitedReport to Shareholders 2013
Consolidated Statement of
Comprehensive Income
For the financial year ended 31 December 2013
Profit for the year
Items that may be reclassified subsequently to profit and loss account:
Available-for-sale assets
- Fair value changes arising during the year
- Realised and transferred to profit and loss account
Cash flow hedges
- Fair value changes arising during the year, net of tax
- Realised and transferred to profit and loss account
Foreign exchange translation
- Exchange difference arising during the year
- Realised and transferred to profit and loss account
Share of other comprehensive income of associated companies
- Available-for-sale assets
- Cash flow hedges
- Foreign exchange translation
Items that will not be reclassified to profit and loss account:
Share of other comprehensive income of associated companies
- Revaluation surplus
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
2013
$’000
2012
$’000
2,396,374
2,755,648
13,552
28
30,690
(49,948)
(204,730)
7,468
217,394
(2,377)
73,628
37,876
(312,556)
(1,378)
(5,847)
(2,152)
2,881
1,539
(5,751)
(16,755)
-
14,479
(77,296)
(124,663)
2,319,078
2,630,985
1,721,456
597,622
2,319,078
2,200,049
430,936
2,630,985
See accompanying notes to the financial statements.
Consolidated Statement of Comprehensive Income
137
CONFIGUREDFOR GROWTH
Statements of Changes in Equity
For the financial year ended 31 December 2013
Attributable to owners 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
1,123,590
682,263
7,815,216
(375,117) 9,245,952
4,332,174
13,578,126
-
1,845,792
-
1,845,792
550,582
2,396,374
(192,887)
-
68,551
(124,336)
47,040
(77,296)
(192,887)
1,845,792
68,551
1,721,456
597,622
2,319,078
-
52,813
(1,356,523)
-
1,102
(1,102)
-
-
-
-
-
-
82,287
-
-
(42,538)
-
82,287
11,377
(1,357,625)
-
-
-
-
-
-
-
-
-
-
-
(2,266)
-
-
(2,266)
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,356,523)
52,813
-
1,610
(1,356,523)
54,423
-
-
-
-
(174,629)
(174,629)
-
39,749
-
65,348
-
(1,069)
65,348
39,749
(1,069)
(1,263,961)
(108,740)
(1,372,701)
-
23,535
23,535
(2,266)
(259)
(2,525)
-
-
(859,713)
(859,713)
3,063
3,063
(2,266)
(833,374)
(835,640)
-
-
-
-
-
-
-
Group
2013
As at 1 January
Total comprehensive
income for the year
Profit for the year
Other comprehensive
income *
Total comprehensive
income for the year
Transactions with 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
Shares issued
Other adjustments
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
Disposal of interest in
subsidiaries without loss
of control
Total changes in ownership
interests in subsidiaries
Total transactions with
owners
82,287
11,377
(1,359,891)
-
(1,266,227)
(942,114) (2,208,341)
As at 31 December
1,205,877
500,753
8,301,117
(306,566)
9,701,181
3,987,682 13,688,863
* 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 LimitedReport to Shareholders 2013
Attributable to owners 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
6,358,404
(135,498)
7,699,375
4,061,920
11,761,295
-
2,237,299
-
2,237,299
518,349
2,755,648
202,369
-
(239,619)
(37,250)
(87,413)
(124,663)
202,369
2,237,299
(239,619)
2,200,049
430,936
2,630,985
-
47,237
(789,456)
-
122
(122)
-
-
-
107,478
-
-
(25,050)
-
-
-
142
107,478
22,309
(789,436)
-
-
-
-
-
-
(2,772)
8,949
-
-
(2,772)
8,949
107,478
19,537
(780,487)
-
-
-
-
-
-
-
-
-
-
-
-
-
(789,456)
47,237
-
2,221
(789,456)
49,458
-
-
-
-
(211,912)
(211,912)
-
82,428
142
85,325
-
373
85,325
82,428
515
(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)
(653,472)
(160,682)
(814,154)
-
-
-
-
-
-
-
Group
2012
As at 1 January
Total comprehensive
income for the year
Profit for the year
Other comprehensive
income *
Total comprehensive
income for the year
Transactions with 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
Shares issued
Other adjustments
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
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.
Statements of Changes in Equity
139
CONFIGUREDFOR GROWTH
Statements of Changes in Equity
Company
2013
As at 1 January
Share
Capital
$’000
Capital
Reserves
$’000
Revenue
Reserves
$’000
Capital
Employed
$’000
1,123,590
180,396
4,401,538
5,705,524
Profit/total comprehensive income for the year
-
-
1,255,575
1,255,575
Transactions with owners, recognised directly in equity
Dividend paid
Share-based payment
Shares issued
Total transactions with owners
As at 31 December
Company
2012
As at 1 January
-
-
82,287
82,287
-
50,574
(42,538)
8,036
(1,356,523)
-
-
(1,356,523)
(1,356,523)
50,574
39,749
(1,266,200)
1,205,877
188,432
4,300,590
5,694,899
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
Shares issued
Other adjustments
Total transactions with owners
-
-
107,478
-
107,478
-
43,950
(25,050)
-
18,900
(789,456)
-
-
142
(789,314)
(789,456)
43,950
82,428
142
(662,936)
As at 31 December
1,123,590
180,396
4,401,538
5,705,524
See accompanying notes to the financial statements.
140
Keppel Corporation LimitedReport to Shareholders 2013
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2013
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 of impairment of associated companies
Write-back of 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 operating activities
Investing activities
Acquisition of subsidiaries
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 without loss of control
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
Note
2013
$’000
2012
$’000
2,134,369
2,621,175
242,292
55,362
(3,865)
(307,726)
-
(2,818)
(43,088)
(156,284)
1,918,242
(2,046)
(442,710)
(147,562)
(60,219)
(769)
(107,618)
27,298
1,184,616
145,058
(120,080)
(584,931)
624,663
(103,555)
(472,791)
(936,060)
534,062
-
33,088
267,391
(677,865)
39,749
65,348
135,513
5,154,702
(3,024,586)
-
(668,506)
(174,629)
1,527,591
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
A
B
C
Net increase in cash and cash equivalents
Cash and cash equivalents as at 1 January
1,474,389
4,055,176
1,214,670
3,020,454
Effects of foreign exchange translation on cash and cash equivalents
34,618
(179,948)
Cash and cash equivalents as at 31 December
D
5,564,183
4,055,176
See accompanying notes to the financial statements.
Consolidated Statement of Cash Flows
141
CONFIGUREDFOR GROWTH
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:
Fixed assets
Investment properties
Stocks & work-in-progress
Debtors
Bank balances and cash
Shareholders’ loans
Creditors
Bank borrowings
Current and deferred taxation
Total identifiable net assets at fair value
Non-controlling interest measured at non-controlling interests’
proportionate share of the net assets
Amount previously accounted for as associated companies
Net assets acquired
Assumption of shareholders’ loans
Total purchase consideration
Less: Advance payment made in prior year
Less: Deferred payments
Less: Bank balances and cash acquired
Cash flow on acquisition
2013
$’000
67,643
133,420
325,264
1,681
6,775
(122,911)
(5,562)
(50,607)
(51,472)
304,231
(23,535)
(45,498)
235,198
122,911
358,109
-
(247,779)
(6,775)
103,555
2012
$’000
109,998
732,409
235,551
2,017
33,059
(142,489)
(314,268)
-
(141,198)
515,079
(225,401)
(10,546)
279,132
142,489
421,621
(207,930)
(64,367)
(33,059)
116,265
Significant acquisitions during the year include the acquisition of remaining 50% interest in Parksville, 100% interest in
Shanghai Jinju Real Estate Development Co. Ltd, which owns a residential site in Sheshan, Songjiang District in Shanghai
for development of landed homes and 60% interest in a river port in Sanshui, Guangdong Province.
In the prior year, the Group acquired an interest in Aether Pte Ltd, which indirectly owns 51% interest in Beijing Aether
Property Development Ltd. The Group also acquired additional 36% interest in Kingsdale Group and 100% interest in
Chengdu Shengshi Jingwei Real Estate Investment Co. Ltd.
See accompanying notes to the financial statements.
142
Keppel Corporation LimitedReport to Shareholders 2013
B.
Disposal of Subsidiaries
During the financial year, the book values of net assets of subsidiaries disposed were as follows:
Fixed assets
Investment properties
Investment in associated company
Intangible assets
Stocks & work-in-progress
Debtors and other assets
Bank balances and cash
Creditors and other liabilities
Borrowings
Current and deferred taxation
Non-controlling interests deconsolidated
Amount accounted for as associated company
Amount accounted for as amount owing from associated company
Distribution of dividend in specie
Net assets disposed of
Net profit on disposal
Realisation of foreign currency translation reserve and capital reserve
Sale proceeds
Less: Bank balances and cash disposed
Cash flow on disposal
2013
$’000
(9,371)
(3,757,083)
(1,941,645)
(15,549)
(123,156)
(122,852)
(91,200)
171,058
2,424,159
13,827
859,713
(2,592,099)
1,407,821
222,651
688,017
(273,610)
(307,726)
(43,926)
(625,262)
91,200
(534,062)
2012
$’000
(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)
Significant disposals in the year include the divestment of a subsidiary, Montfort Development Pte Ltd, which has a 50%
interest in Hotel Sedona Manado in Indonesia, the deconsolidation of Keppel REIT due to loss of control and the disposal
of 51% interest in PT Mitra Sindo Makmur and PT Mitra Sindo Sukses, which jointly developed a township development
Jakarta Garden City in Jakarta, Indonesia. In the prior year, the Group completed the divestment of its partial interest in
Saigon Centre Phase 1 and 2.
C. Disposal of interest in a subsidiary without loss of control
During the financial year, the Group disposed of a 30% interest in its subsidiary, Sherwood Development Pte Ltd to
Wkdeveloper Sig I Private Limited, a wholly-owned subsidiary company of Vanke Property (Hong Kong) Company Limited.
There was no gain or loss arising from this disposal as the 30% interest was sold at its net carrying value.
D. Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and balances with banks. Cash and cash equivalents in the
consolidated statement of cash flows comprise the following balance sheet amounts:
Bank balances, deposits and cash
Bank overdrafts
2013
$’000
5,564,656
(473)
5,564,183
2012
$’000
4,055,176
-
4,055,176
See accompanying notes to the financial statements.
Consolidated Statement of Cash Flows
143
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
For the financial year ended 31 December 2013
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 2013 and the balance sheet and
statement of changes in equity of the Company at 31 December 2013 were authorised for issue in accordance with a
resolution of the Board of Directors on 25 February 2014.
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 or amended FRS and Interpretations of FRS (“INT FRS”) that are
effective for annual periods beginning on or after 1 January 2013. 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 1
Revised FRS 19
FRS 113
Amendments to FRS 107
Amendments to FRS 16
Amendments to FRS 32
Presentation of Items of Other Comprehensive Income
Employee Benefits
Fair Value Measurement
Disclosures - Offsetting Financial Assets and Financial Liabilities
Property, Plant and Equipment
Financial Instruments: Presentation
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 1 Presentation of Items of Other Comprehensive Income
The Amendments to FRS 1 change the grouping of items presented in other comprehensive income. Items that can
be reclassified to the profit and loss account at a future point in time will be presented separately from items which
will never be reclassified. As the amendments only affect the presentation of items that are already recognised in other
comprehensive income, there is no impact on the Group’s financial position and financial performance upon adoption of
these amendments.
144
Keppel Corporation LimitedReport to Shareholders 2013
FRS 113 Fair Value Measurement
FRS 113 provides a single source of guidance for all fair value measurements and disclosures about fair value
measurements. FRS 113 does not change when an entity is required to use fair value, but rather provides guidance on
how to measure fair value under FRS when fair value is required or permitted by FRS. The Group’s policy is to revalue its
investment properties on an annual basis. The adoption of FRS 113 does not have any material impact on the accounting
policies of the Group. The Group has incorporated the additional disclosures required by FRS 113 in the financial
statements.
(b) Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries as at the
balance sheet date.
The results of subsidiaries acquired or disposed of during the financial year are included or excluded from the
consolidated financial statements from their respective dates of acquisition or disposal. All intercompany transactions,
balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the asset transferred. Where necessary,
adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those
of the Group.
Acquisition of subsidiaries is accounted for using the 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 the profit and loss account 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.
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
recognised in other comprehensive income in respect of that former subsidiary are reclassified to the profit and loss
account 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 the profit and
loss account.
On a transaction-by-transaction basis, the measurement of non-controlling 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 the profit and loss account.
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.
Notes to the Financial Statements
145
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
2.
Significant accounting policies (continued)
(c)
Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and any impairment in value. When the carrying amount of
an asset is greater than its estimated recoverable amount, it is written down to its recoverable amount. Profits or losses
on disposal of fixed assets are included in the profit and loss account.
Depreciation of fixed assets is calculated on a straight-line basis to write off the cost of the fixed assets over their
estimated useful lives. No depreciation is provided on freehold land and capital work-in-progress. The estimated useful
lives of other fixed assets are as follows:
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.
(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 the profit and loss account.
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Keppel Corporation LimitedReport to Shareholders 2013
(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 the profit and loss account 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 unquoted equity investments whose fair value cannot be reliably measured using alternative
valuation methods, they are carried at cost less any impairment loss.
For investments held for trading, gains and losses arising from changes in fair value are included in the profit and loss
account.
For available-for-sale investments, gains and losses arising from changes in fair value are recognised directly in other
comprehensive income, until the investment is disposed of or is determined to be impaired, at which time the cumulative
gain or loss previously recognised in other comprehensive income is reclassified to the profit and loss account.
The fair value of investments that are traded in active markets is based on quoted market prices at the balance sheet date.
The quoted market price is the current bid prices. The fair value of investments that are not traded in an active market is
determined using valuation techniques. Such techniques include using recent arm’s length transactions, reference to the
underlying net asset value of the investee companies and discounted cash flow analysis.
(i)
Derivative Financial Instruments and Hedge Accounting
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently re-measured at fair value. Derivative financial instruments are carried as assets when the fair value is positive
and as liabilities when the fair value is negative.
Gains or losses arising from changes in fair value of derivative financial instruments that do not qualify for hedge
accounting are taken to the profit and loss account.
For cash flow hedges, the effective portion of the gains or losses on the hedging instrument is recognised directly in
other comprehensive income, while the ineffective portion is recognised in the profit and loss account. Amounts taken
to other comprehensive income are reclassified to the profit and loss account when the hedged transaction affects the
profit and loss account.
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”) and Dated Brent forward contracts is determined using
forward HSFO and Dated Brent prices provided by the Group’s key counterparty. The fair value of interest rate caps and
interest rate swaps are based on valuations provided by the Group’s bankers.
Notes to the Financial Statements
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Notes to the Financial Statements
2.
Significant accounting policies (continued)
(j)
Financial Assets
Financial assets include cash and bank balances, trade, intercompany and other receivables and investments. Trade,
intercompany and other receivables are stated initially at fair value and subsequently at amortised cost 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.
(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 the profit and loss account - 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.
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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.
(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 initially at fair value and subsequently at amortised cost. 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.
Notes to the Financial Statements
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Notes to the Financial Statements
2.
Significant accounting policies (continued)
(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.
(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 and provided 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, revenue and profit are recognised on the
percentage-of-completion method to reflect the continuous transfer of significant risks and rewards of the ownership
of the properties to the purchasers as construction progresses. The percentage of work completion is measured
based on the construction and related costs incurred to date as a proportion of the estimated total construction and
related costs;
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
-
-
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Keppel Corporation LimitedReport to Shareholders 2013
- 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)
(s)
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.
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.
Notes to the Financial Statements
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Notes to the Financial Statements
2.
Significant accounting policies (continued)
(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.
(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.
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Keppel Corporation LimitedReport to Shareholders 2013
(x) Critical Accounting Estimates and Judgements
(i)
(ii)
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.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet
date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are as follows:
Impairment of loans and receivables
The Group assesses at each balance sheet date whether there is any objective evidence that a loan and receivable
is impaired. The Group considers factors such as the probability of insolvency or significant financial difficulties
of the debtor and default or significant delay in payments. When there is objective evidence of impairment, the
amount and timing of future cash flows are estimated based on historical loss experience for assets with similar
credit risk characteristics. The carrying amounts of trade, intercompany and other receivables are disclosed in the
balance sheet.
Impairment of available-for-sale investments
The Group follows the guidance of FRS 39 in determining whether available-for-sale investments are considered
impaired. The Group evaluates, among other factors, the duration and extent to which the fair value of an
investment is less than its cost, the financial health of and the near-term business outlook of the investee, including
factors such as industry and sector performance, changes in technology and operational and financing cash 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
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Notes to the Financial Statements
3.
Share capital
Ordinary Shares (“Shares”)
Issued and paid up:
Balance at 1 January
Issue of shares under the
share option scheme
GROUP AND COMPANY
Number of Shares
2013
2012
Amount
2013
$’000
2012
$’000
1,797,607,004
1,783,716,751
1,123,590
1,016,112
5,335,750
11,156,255
39,729
82,425
Issue of shares under KCL PSP
1,092,100
-
6,128
-
Issue of shares under KCL RSP
3,935,605
2,733,998
36,430
25,053
Balance at 31 December
1,807,970,459
1,797,607,004
1,205,877
1,123,590
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends declared by the
Company.
During the financial year, the Company issued 5,335,750 (2012: 11,156,255) Shares at an average weighted price of $7.45
(2012: $7.39) per Share for cash upon exercise of options under the KCL Share Option Scheme.
During the financial year, 1,092,100 (2012: Nil) Shares under the KCL Performance Share Plan (“KCL PSP”) and 3,935,605
(2012: 2,733,998) Shares under the KCL Restricted Share Plan (“KCL RSP”) were vested.
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.
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.
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Keppel Corporation LimitedReport to Shareholders 2013
Movements in the number of share options and their weighted average exercise prices are as follows:
Balance at 1 January
Exercised
Cancelled
Balance at 31 December
2013
2012
Number of
options
30,314,565
(5,335,750)
(146,500)
24,832,315
Weighted
average
exercise
price
$8.49
$7.45
$9.32
$8.30
Number of
options
41,616,020
(11,156,255)
(145,200)
30,314,565
Exercisable at 31 December
24,832,315
$8.30
30,314,565
Weighted
average
exercise
price
$8.21
$7.39
$11.49
$8.49
$8.49
The weighted average share price at the date of exercise for options exercised during the financial year was $11.12 (2012:
$10.98). The options outstanding at the end of the financial year had a weighted average exercise price of $8.30 (2012:
$8.49) and a weighted average remaining contractual life of 4.4 years (2012: 5.5 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
Economic Value Added
a)
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
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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
Adjustments upon released
Released
Cancelled
Other adjustments
Balance at 31 December
Awards released but not vested:
Balance at 1 January
Released
Vested
Cancelled
Other adjustments
Balance at 31 December
2013
2012
KCL RSP
KCL PSP
KCL RSP
KCL PSP
4,103,656
4,300,500
-
(4,075,068)
(96,494)
150,897
4,383,491
2,129,314
845,000
344,100
(1,092,100)
(403,422)
78,441
1,901,333
4,158,177
4,159,000
-
(4,158,177)
(55,344)
-
4,103,656
1,388,000
780,000
-
-
(38,686)
-
2,129,314
3,955,446
4,075,068
(3,935,605)
(68,586)
14,293
4,040,616
-
1,092,100
(1,092,100)
-
-
-
2,652,870
4,158,177
(2,733,998)
(121,603)
-
3,955,446
-
-
-
-
-
-
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 2013, there were 4,040,616 (2012: 3,955,446) 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 4,383,491 (2012: 4,103,656)
under the KCL RSP and 1,901,333 (2012: 2,129,314) 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 a maximum of 4,383,491 under the
KCL RSP and range from zero to a maximum of 2,852,000 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 LimitedReport to Shareholders 2013
On 28 March 2013 (2012: 29 June 2012), the Company granted contingent awards of 4,300,500 (2012: 4,159,000)
shares under the KCL RSP and 845,000 (2012: 780,000) shares under the KCL PSP. The estimated fair value of the shares
granted ranges from $10.14 to $10.95 (2012: $9.33 to $10.08) under the KCL RSP and amounts to $8.82 (2012: $8.28)
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
2013
KCL RSP
KCL PSP
2012
KCL RSP
KCL PSP
28.03.2013
$11.20
28.03.2013
$11.20
29.06.2012
$10.28
29.06.2012
$10.28
27.48%
#
#
0.75 to 2.75 years
0.15% to 0.36%
*
27.48%
25.34%
83.50%
2.75 years
0.36%
*
28.06%
#
#
0.5 to 2.5 years
0.18% - 0.25%
*
28.06%
25.76%
84.90%
2.5 years
0.25%
*
#
*
This input is not required for the valuation of shares granted under the KCL RSP.
Expected dividend yield is based on management’s forecast.
The expected volatilities are based on the historical volatilities of the Company’s share price and the MXAPJIN price over
the previous 36 months immediately preceding the grant date. The expected term used in the model is based on the
grant date and the end of the performance period.
Details of share plans granted by Keppel Land Limited and Keppel Telecommunications & Transportation Ltd, subsidiaries
of the Company are disclosed in the annual reports of the respective publicly-listed subsidiaries.
4.
Reserves
Capital Reserves
Share option and share plan reserve
Fair value reserve
Hedging reserve
Bonus issue by subsidiaries
Others
Revenue Reserves
Foreign Exchange
Translation Account
GROUP
2013
$’000
COMPANY
2012
$’000
2013
$’000
2012
$’000
208,431
192,023
1,298
40,000
59,001
500,753
198,156
181,662
204,546
40,000
57,899
682,263
188,432
-
-
-
-
188,432
180,396
-
-
-
-
180,396
8,301,117
7,815,216
4,300,590
4,401,538
(306,566)
(375,117)
-
-
8,495,304
8,122,362
4,489,022
4,581,934
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
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
5.
Fixed assets
Group
2013
Cost
At 1 January
Additions
Disposals
Write-off
Subsidiaries acquired
Subsidiaries disposed
Reclassification
- Stocks
- Other assets
- Other fixed assets
categories
Exchange differences
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Buildings
$’000
Vessels &
Floating Docks
$’000
Plant,
Machinery
& Equipment
$’000
Capital
Work-in-
Progress
$’000
Total
$’000
111,512
11,165
(869)
-
-
-
1,549,020
68,829
(418)
(245)
63,516
(9,968)
448,445
40,777
(39,706)
-
-
-
2,092,551
76,608
(23,286)
(4,498)
3,947
(1,383)
1,037,992
490,776
-
(1,248)
180
-
5,239,520
688,155
(64,279)
(5,991)
67,643
(11,351)
-
-
-
-
-
-
(839)
(821)
(24,161)
1,492
(25,000)
671
1,684
(2,830)
173,702
14,389
2,573
(2,152)
910,075
(9,005)
(1,088,034)
1,899
-
2,301
At 31 December
120,662
1,858,825
449,937
3,043,349
418,896
5,891,669
Accumulated Depreciation &
Impairment Losses
At 1 January
Depreciation charge
Disposals
Write-off
Subsidiaries disposed
Reclassification
- Stocks
- Other fixed assets
categories
Exchange differences
41,774
4,622
(611)
-
-
-
-
(968)
664,917
50,502
(299)
-
(1,354)
-
4,851
4,583
161,627
22,523
(12,391)
-
-
1,033,769
156,005
(22,381)
(4,509)
(626)
-
-
149
(34)
(4,851)
(3,908)
At 31 December
44,817
723,200
171,908
1,153,465
-
-
-
-
-
-
-
-
-
1,902,087
233,652
(35,682)
(4,509)
(1,980)
(34)
-
(144)
2,093,390
Net Book Value
75,845
1,135,625
278,029
1,889,884
418,896
3,798,279
158
Keppel Corporation LimitedReport to Shareholders 2013
Group
2012
Cost
At 1 January
Additions
Disposals
Write-off
Subsidiaries acquired
Subsidiaries disposed
Reclassification
- Stocks
- Other assets
- Other fixed assets
categories
Exchange differences
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Buildings
$’000
Vessels &
Floating Docks
$’000
Plant,
Machinery
& Equipment
$’000
Capital
Work-in-
Progress
$’000
Total
$’000
102,542
6,320
(5,325)
-
-
(111)
-
-
1,446,784
6,448
(6,760)
(72)
103,794
(21,527)
-
-
10,078
(1,992)
46,122
(25,769)
412,244
18,094
(18,703)
-
-
-
(16,147)
315
58,122
(5,480)
2,118,150
83,209
(20,360)
(1,383)
5,501
(182,585)
594,740
701,967
-
(927)
703
-
-
(11)
-
(4,818)
127,235
(37,205)
(241,557)
(12,116)
4,674,460
816,038
(51,148)
(2,382)
109,998
(204,223)
(16,147)
(4,514)
-
(82,562)
At 31 December
111,512
1,549,020
448,445
2,092,551
1,037,992
5,239,520
Accumulated Depreciation &
Impairment Losses
At 1 January
Depreciation charge
Disposals
Write-off
Subsidiaries disposed
Reclassification
- Stocks
Exchange differences
37,536
3,892
(1,617)
-
(111)
-
2,074
634,357
43,330
(2,928)
-
-
98
(9,940)
151,024
24,913
(9,811)
-
-
1,136,026
128,949
(19,091)
(1,205)
(182,466)
(2,090)
(2,409)
366
(28,810)
At 31 December
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
Certain plant, machinery and equipment with carrying amount of $102,112,000 (2012: $65,204,000) are mortgaged to
banks for loan facilities (Note 19).
Interest capitalised during the financial year amounted to $4,671,000 (2012: $9,968,000).
Notes to the Financial Statements
159
CONFIGUREDFOR GROWTH
Freehold
Land &
Buildings
$’000
Plant,
Machinery
& Equipment
$’000
Total
$’000
1,419
45
-
6,894
687
(385)
8,313
732
(385)
1,464
7,196
8,660
1,144
76
-
6,610
327
(379)
7,754
403
(379)
1,220
6,558
7,778
244
638
882
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)
1,144
6,610
275
284
9,377
306
(1,929)
7,754
559
Notes to the Financial Statements
5.
Fixed assets (continued)
Company
2013
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
At 31 December
Net Book Value
2012
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
At 31 December
Net Book Value
160
Keppel Corporation LimitedReport to Shareholders 2013
6.
Investment properties
At 1 January
Development expenditure
Fair value gain
- Attributable to the Group (Note 24)
- Attributable to third parties under a contractual agreement
Subsidiary acquired
Subsidiary disposed
Reclassification
- Stocks and work-in-progress
Exchange differences
At 31 December
GROUP
2013
$’000
5,423,060
247,769
156,284
4,685
133,420
(3,757,083)
(9,200)
(11,077)
2012
$’000
4,610,107
24,551
172,101
-
732,409
(81,710)
-
(34,398)
2,187,858
5,423,060
The Group’s investment properties (including integral plant and machinery) are stated at Directors’ valuations based on
the following valuations (open market value basis), performed on an annual basis, by independent firms of professional
valuers as at 31 December 2013:
- Colliers International Consultancy & Valuation (Singapore) Pte Ltd for properties in Singapore;
- 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
- Agency for Real Estate Affairs Co., Ltd for a property in Thailand.
Based on valuations performed by the independent valuers, management has analysed the appropriateness of the fair
value changes.
Interest capitalised during the financial year amounted to $1,067,000 (2012: $694,000).
The Group has mortgaged certain investment properties of up to an aggregate amount of $588,400,000 (2012:
$2,123,730,000) to banks for loan facilities (Note 19).
7.
Subsidiaries
Quoted shares, at cost
Market value: $3,505,684,000 (2012: $4,008,470,000)
Unquoted shares, at cost
Provision for impairment
Movements in the provision for impairment of subsidiaries are as follows:
At 1 January
(Credit)/charge to profit and loss account
At 31 December
COMPANY
2013
$’000
2012
$’000
2,083,839
3,066,728
5,150,567
(56,115)
2,083,822
3,470,628
5,554,450
(621,070)
5,094,452
4,933,380
COMPANY
2013
$’000
621,070
(564,955)
2012
$’000
475,000
146,070
56,115
621,070
Notes to the Financial Statements
161
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
7.
Subsidiaries (continued)
During the financial year, arising from the sale of certain subsidiaries of the Company to another wholly-owned subsidiary,
provision for impairment of investments in these subsidiaries had been written-back. This transaction has no material
impact on the Group’s consolidated financial statements.
During the previous year, provision for impairment amounting to $146,070,000 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 35.
8.
Associated companies
Quoted shares, at cost
Market value: $3,066,879,000
(2012: $1,062,078,000)
Unquoted shares, at cost
Provision for impairment
Share of reserves
Advances to associated companies
Movements in the provision for impairment of associated companies are as follows:
At 1 January
Write-back of impairment loss (Note 24)
Disposal
Exchange differences
At 31 December
GROUP
2013
$’000
2012
$’000
2,283,983
163,766
2,447,749
(149,498)
2,298,251
2,646,263
4,944,514
537,659
651,580
1,470,846
2,122,426
(157,901)
1,964,525
2,121,333
4,085,858
1,180,744
5,482,173
5,266,602
GROUP
2013
$’000
157,901
(2,818)
(6,446)
861
2012
$’000
166,687
(7,673)
-
(1,113)
149,498
157,901
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 1.87% to 2.02%
(2012: 1.23% to 3.85%) per annum. During the financial year, the Group wrote back an impairment loss of $2,818,000
(2012: $7,673,000) on investment in associated companies.
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
2013
$’000
2012
$’000
625,867
(57,608)
602,548
(27,096)
568,259
575,452
162
Keppel Corporation LimitedReport to Shareholders 2013
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
GROUP
2013
$’000
22,641,871
9,769,863
5,020,684
1,453,096
2012
$’000
22,196,158
9,952,448
4,688,181
1,788,221
Information relating to significant associated companies whose results are included in the financial statements is given in
Note 35.
9.
Investments
Available-for-sale investments:
Quoted equity shares
Unquoted equity shares
Unquoted property funds
Quoted bonds
10. Long term assets
GROUP
2013
$’000
52,251
88,319
112,222
11,953
2012
$’000
1,442
79,923
133,044
10,971
264,745
225,380
Staff loans
Long term receivables and others
Less: Amounts due within one year and
included in debtors (Note 14)
Provision for doubtful debts
Movements in the provision for doubtful debts are
as follows:
At 1 January
Charged to profit and loss account
Exchange differences
At 31 December
GROUP
COMPANY
2013
$’000
1,751
296,145
297,896
(14,261)
283,635
(4,718)
2012
$’000
1,916
185,013
186,929
(11,440)
175,489
-
278,917
175,489
-
4,577
141
4,718
-
-
-
-
2013
$’000
440
-
440
(222)
218
-
218
-
-
-
-
2012
$’000
341
-
341
(173)
168
-
168
-
-
-
-
Included in staff loans are interest-free advances to certain Directors amounting to $50,000 (2012: $90,000) and to
directors of related corporations amounting to $116,000 (2012: $238,000) under an approved car loan scheme.
Long term receivables are unsecured, largely repayable after five years and bears effective interest ranging from 0.11% to
11.00% (2012: 2.00% to 13.00%) per annum.
The fair value of long term receivables for the Group is $290,530,000 (2012: $186,486,000). The carrying amount of long
term receivables for the Company approximates its fair value. These fair values, under Level 2 of the fair value hierarchy,
are computed on the discounted cash flow basis using discount rates based upon market-related rates for similar
instruments as at the balance sheet date.
Notes to the Financial Statements
163
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
11.
Intangibles
Group
2013
At 1 January
Additions
Amortisation
Subsidiary disposed
Exchange differences
At 31 December
Goodwill
$’000
Development
Expenditure
$’000
Customer
Contracts
$’000
Total
$’000
59,270
-
-
-
-
29,779
769
(7,172)
(15,549)
52
20,559
-
(1,468)
-
-
109,608
769
(8,640)
(15,549)
52
59,270
7,879
19,091
86,240
Cost
Accumulated amortisation
59,270
-
21,800
(13,921)
24,963
(5,872)
106,033
(19,793)
2012
At 1 January
Additions
Amortisation
Exchange differences
At 31 December
59,270
7,879
19,091
86,240
59,270
-
-
-
17,276
20,839
(7,960)
(376)
22,027
-
(1,468)
-
98,573
20,839
(9,428)
(376)
59,270
29,779
20,559
109,608
Cost
Accumulated amortisation
59,270
-
52,304
(22,525)
24,963
(4,404)
136,537
(26,929)
59,270
29,779
20,559
109,608
For the purpose of impairment testing, goodwill is allocated to cash-generating units.
Goodwill allocated to Offshore & Marine division amounted to $2,092,000 (2012: $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 7.44% (2012: 7.22%). 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 (2012: $57,178,000). The recoverable amount of
goodwill at the balance sheet date is based on current bid prices of the quoted shares of the cash-generating unit.
164
Keppel Corporation LimitedReport to Shareholders 2013
12. Stocks & work-in-progress
Work-in-progress in excess of related billings
Stocks
Properties held for sale
GROUP
2013
$’000
1,679,714
330,293
6,984,719
8,994,726
2012
$’000
2,258,599
234,296
5,168,003
7,660,898
(a)
(c)
(d)
Billings on work-in-progress in excess of related costs
(b)
(2,714,983)
(1,619,475)
(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
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
(d)
Properties held for sale
Properties under development
Land cost
Development cost incurred to date
Related overhead expenditure
Progress billings
Completed properties held for sale
Provision for properties held for sale
7,705,970
(4,491)
7,701,479
(6,021,765)
9,649,476
(4,443)
9,645,033
(7,386,434)
1,679,714
2,258,599
4,443
48
4,491
4,137
306
4,443
13,544,089
(16,259,072)
9,754,918
(11,374,393)
(2,714,983)
(1,619,475)
224,755
105,538
170,007
64,289
330,293
234,296
5,081,312
1,190,765
459,667
(577,528)
6,154,216
860,396
7,014,612
(29,893)
3,434,710
684,975
292,601
(315,487)
4,096,799
1,099,770
5,196,569
(28,566)
6,984,719
5,168,003
Notes to the Financial Statements
165
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
12. Stocks & work-in-progress (continued)
Movements in the provision for properties held for sale are as follows:
At 1 January
Charge/(write-back) to profit and loss account
Amount utilised
Exchange differences
At 31 December
GROUP
2013
$’000
28,566
1,383
-
(56)
2012
$’000
41,016
(6,656)
(4,780)
(1,014)
29,893
28,566
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
2,900,451
(668,576)
1,724,447
(340,918)
2,231,875
1,383,529
Interest capitalised during the financial year amounted to $78,409,000 (2012: $48,184,000) at rates ranging from
0.58% to 2.50% (2012: 0.67% to 2.50%) per annum for Singapore properties and 3.34% to 10.00% (2012: 2.01% to
17.80%) per annum for overseas properties.
Certain properties held for sale with carrying amount of $2,204,792,000 (2012: $915,740,000) are mortgaged to
banks for loan facilities (Note 19).
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
2013
$’000
2012
$’000
COMPANY
2013
$’000
2012
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,372
3,449,741
3,472,113
(6,600)
5,153
2,656,742
2,661,895
(6,600)
3,465,513
2,655,295
156,772
794,556
175,533
153,673
951,328
329,206
6,600
6,600
Advances to and from subsidiaries are unsecured and are repayable on demand. Interest is charged at rates ranging from
0.00% to 8.00% (2012: 0.00% to 4.02%) per annum on interest-bearing advances.
166
Keppel Corporation LimitedReport to Shareholders 2013
Associated Companies
Amounts due from
- trade
- advances
Provision for doubtful debts
Amounts due to
- trade
- advances
Movements in the provision for doubtful debts are
as follows:
At 1 January
Charge/(write-back) to profit and loss account
At 31 December
GROUP
2013
$’000
2012
$’000
COMPANY
2013
$’000
198,498
838,994
1,037,492
(286)
121,974
574,970
696,944
(207)
9,430
-
9,430
-
1,037,206
696,737
9,430
21,402
50,297
12,053
51,442
71,699
63,495
207
79
286
238
(31)
207
-
3
3
-
-
-
2012
$’000
1,719
-
1,719
-
1,719
-
-
-
-
-
-
Advances to and from associated companies are unsecured and are repayable on demand. Interest is charged at rates
ranging from 0.22% to 12.50% (2012: 0.13% to 12.50%) per annum on interest-bearing advances.
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
GROUP
COMPANY
2013
$’000
1,118,868
(10,500)
1,108,368
2012
$’000
1,171,118
(11,392)
1,159,726
14,261
62,483
63,623
50,050
13,900
59,400
14,419
37,464
-
37,132
120,808
125,267
117,327
11,440
111,515
47,698
174,227
14,614
66,160
15,288
31,127
16,457
-
31,572
18,421
57,367
2013
$’000
-
-
-
222
693
326
32,229
-
-
50
284
-
-
-
-
-
2012
$’000
-
-
-
173
350
365
156,513
-
-
40
296
-
-
-
-
-
215
248
-
-
113,496
829,845
(22,466)
807,379
108,800
704,934
(25,575)
679,359
-
33,804
-
33,804
-
157,737
-
157,737
Total
1,915,747
1,839,085
33,804
157,737
Notes to the Financial Statements
167
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
14. Debtors (continued)
Movements in the provision for doubtful debts are as follows:
At 1 January
Write-back to profit and loss account
Amount written off
Subsidiary disposed
Exchange differences
GROUP
2013
$’000
36,967
(2,322)
(1,634)
(94)
49
2012
$’000
67,831
(28,151)
(2,367)
43
(389)
At 31 December
32,966
36,967
15. Short term investments
Available-for-sale investments:
Quoted equity shares
Unquoted equity shares
Unquoted unit trust
Unquoted debt securities
COMPANY
2013
$’000
2012
$’000
-
-
-
-
-
-
-
-
-
-
-
-
GROUP
2013
$’000
320,002
1,172
40,383
1,892
2012
$’000
301,189
1,137
48,265
1,802
Total available-for-sale investments
363,449
352,393
Investments held for trading:
Quoted equity shares
Total short term investments
16. Bank balances, deposits and cash
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
81,624
64,714
445,073
417,107
GROUP
2013
$’000
2012
$’000
3,938,778
1,520,308
2,542,851
1,322,014
6,582
18,653
98,988
171,658
COMPANY
2013
$’000
2,466
-
-
-
2012
$’000
3,773
-
-
-
5,564,656
4,055,176
2,466
3,773
Fixed deposits with banks of the Group mature on varying periods, substantially between 1 day to 3 months (2012: 1
day to 3 months). This comprises Singapore dollar fixed deposits of $82,761,000 (2012: $140,590,000) at interest rates
ranging from 0.00% to 2.81% (2012: 0.01% to 4.44%) per annum, and foreign currency fixed deposits of $1,437,547,000
(2012: $1,181,424,000) at interest rates ranging from 0.00% to 10.50% (2012: 0.01% to 14.50%) per annum.
168
Keppel Corporation LimitedReport to Shareholders 2013
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
2013
$’000
757,308
73,551
236,395
121,191
1,453,693
2,242,368
312,833
175,891
35,967
2012
$’000
878,560
120,720
114,052
110,092
1,245,140
2,485,719
344,921
135,133
31,329
2013
$’000
-
-
-
104,067
2,827
151,329
-
-
16,966
2012
$’000
-
-
-
37,134
3,302
137,171
-
-
14,265
5,409,197
5,465,666
275,189
191,872
Advances from non-controlling shareholders of certain subsidiaries are unsecured and are repayable on demand. Interest
is charged at rates ranging from 1.90% to 6.68% (2012: 0.81% to 4.20%) per annum on interest-bearing advances.
18. Provisions
Group
2013
At 1 January
Charge to profit and loss account
Amount utilised
Exchange differences
Warranties
$’000
Claims
$’000
Total
$’000
130,169
18,134
(448)
5,743
15,000
-
(5,000)
5
145,169
18,134
(5,448)
5,748
At 31 December
153,598
10,005
163,603
2012
At 1 January
Charge/(write-back) to profit and loss account
Amount utilised
Exchange differences
115,899
17,792
(288)
(3,234)
15,004
(3)
-
(1)
130,903
17,789
(288)
(3,235)
At 31 December
130,169
15,000
145,169
Notes to the Financial Statements
169
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
19. Term loans
Group
Keppel Corporation Medium Term Notes
Keppel Land Medium Term Notes
Keppel Land 2.5% Convertible Bonds 2013
Keppel Land 1.875% Convertible Bonds 2015
Keppel Telecommunications & Transportation
Medium Term Notes
Bank and other loans
- secured
- unsecured
(a)
(b)
(c)
(d)
(e)
(f)
(g)
2013
2012
Due within
one year
$’000
Due after
one year
$’000
Due within
one year
$’000
Due after
one year
$’000
-
-
-
-
-
1,500,000
899,000
-
491,188
-
75,000
296,609
-
1,500,000
889,750
-
486,800
120,000
-
120,000
198,619
318,046
741,725
2,830,948
171,831
462,114
1,219,852
1,985,943
516,665
6,582,861
1,005,554
6,202,345
Company
Keppel Corporation Medium Term Notes
Unsecured bank loans
(a)
(g)
-
160,838
1,500,000
-
160,838
1,500,000
-
-
-
1,500,000
-
1,500,000
(a)
(b)
At the end of the financial year, notes issued under the US$3,000,000,000 Multi-Currency Medium Term Note
Programme by the Company amounted to $1,500,000,000 (2012: $1,500,000,000). The notes are unsecured
and comprised fixed rate notes due from 2020 to 2042 (2012: from 2020 to 2042) with interest rates ranging from
3.10% to 4.00% (2012: 3.10% to 4.00%) per annum.
At the end of the financial year, notes issued under the US$3,000,000,000 Multi-Currency Medium Term Note
Programme by Keppel Land Limited and its wholly-owned subsidiary, Keppel Land Financial Services Pte. Ltd.
amounted to $314,000,000 (2012: $304,750,000). The fixed rate notes, due in 2019, are unsecured and carried an
interest rate of 3.26% (2012: 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 $585,000,000 (2012: $660,000,000). The notes are unsecured
and comprised fixed rate notes due from 2015 to 2024 (2012: 2013 to 2024) with interest rates ranging from 2.67%
to 3.90% (2012: 2.67% to 3.90%) per annum.
(c)
The $300,000,000 2.50%, 7 year convertible bonds, convertible at the option of bondholders to Keppel Land
Limited ordinary shares at a conversion price of $5.58 per share, were issued in 2006 by Keppel Land Limited.
During the financial year, $600,000 of the bond was converted and cancelled pursuant to the exercise of
conversion rights by a bondholder. Keppel Land Limited redeemed the remaining $299,400,000 upon maturity on
23 June 2013. Interest was payable semi-annually.
The convertible bonds are recognised on the balance sheet as follows:
Balance at 1 January
Interest expense
Interest paid
Conversion to ordinary shares of Keppel Land Limited
Redemption upon maturity
Liability component at 31 December
170
GROUP
2013
$’000
296,609
7,018
(3,627)
(600)
(299,400)
2012
$’000
289,426
14,683
(7,500)
-
-
-
296,609
Keppel Corporation LimitedReport to Shareholders 2013
Interest expense on the convertible bonds was calculated based on the effective interest method by applying the
interest rate of 4.78% (2012: 4.78%) per annum for an equivalent non-convertible bond to the liability component of
the convertible bonds.
(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.
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
2013
$’000
486,800
-
13,763
(9,375)
2012
$’000
482,683
(200)
13,692
(9,375)
491,188
486,800
Interest expense on the convertible bonds is calculated based on the effective interest method by applying the
interest rate of 2.50% (2012: 2.50%) per annum for an equivalent non-convertible bond to the liability component of
the convertible bonds.
(e)
At the end of the financial year, notes issued under the S$500,000,000 Multi-Currency Medium Term
Note Programme by Keppel Telecommunications & Transportation Ltd, amounted to $120,000,000 (2012:
$120,000,000). The fixed rates notes, due in 2019, are unsecured and carried an interest rate of 2.63% (2012: 2.63%)
per annum from August 2012 to August 2017, and at 3.83% (2012: 3.83%) per annum from August 2017 to August
2019.
(f)
The secured bank loans consist of:
- A term loan of $137,000,000 (2012: $240,000,000) drawn down by a subsidiary. The term loan is repayable in
2014 and is secured on certain assets of the subsidiary. Interest is based on money market rates ranging from
0.58% to 1.25% (2012: 0.67% to 1.25%) per annum.
- A term loan of $38,000,000 (2012: $Nil) drawn down by a subsidiary. The term loan is repayable in 2015 and
is secured on the investment property of the subsidiary. Interest is based on money market rates ranging from
1.37% to 1.44% (2012: Nil %) per annum.
- A term loan of $244,428,000 (2012: $158,600,000) drawn down by a subsidiary. The term loan is repayable
in 2016 and is secured on the investment property of the subsidiary. Interest is based on money market rates
ranging from 1.42% to 1.49% (2012: 1.08% to 1.23%) per annum.
- A term loan of $290,000,000 (2012: $Nil) drawn down by a subsidiary. The term loan is repayable in 2017 and
is secured on certain assets of the subsidiary. Interest is based on money market rates ranging from 1.26% to
1.33% (2012: Nil %) per annum.
- Term loans of $22,400,000 (2012: $35,200,000) drawn down by subsidiaries. The term loans are repayable
between one to two years and are secured on certain fixed assets of the subsidiaries. Interest is based on
money market rates ranging from 0.79% to 0.82% (2012: 0.93% to 0.99%) per annum.
- Other secured bank loans comprised $208,516,000 (2012: $104,103,000) of foreign currency loans. They are
repayable between one to six 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 6.33% to 16.70% (2012: 6.77% to 9.93%) per
annum.
Notes to the Financial Statements
171
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
19. Term loans (continued)
(g)
The unsecured bank and other loans of the Group totalling $3,148,994,000 (2012: $2,448,057,000) comprised
$1,340,492,000 (2012: $1,528,224,000) of loans denominated in Singapore dollar and $1,808,502,000 (2012:
$919,833,000) of foreign currency loans. They are repayable between one to seven (2012: one to five) years.
Interest on loans denominated in Singapore dollar is based on money market rates ranging from 0.86% to 2.90%
(2012: 0.83% to 2.98%) per annum. Interest on foreign currency loans is based on money market rates ranging from
0.75% to 10.17% (2012: 0.71% to 17.80%) per annum.
The unsecured bank loans of the Company totalling $160,838,000 (2012: $Nil), denominated foreign currency, are
repayable within one (2012: Nil) month and are based on money market rates ranging from 0.75% to 2.91% (2012:
Nil%) per annum.
The Group has mortgaged certain properties and assets of up to an aggregate amount of $2,895,304,000 (2012:
$3,104,674,000) to banks for loan facilities.
The fair values of term loans for the Group and Company are $6,809,218,000 (2012: $7,281,995,000) and $1,641,236,000
(2012: $1,533,629,000) respectively. These fair values, under Level 2 of the fair value hierarchy, 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
2013
$’000
2012
$’000
COMPANY
2013
$’000
2012
$’000
1,731,231
2,314,607
2,537,023
632,410
3,314,279
2,255,656
-
-
1,500,000
-
-
1,500,000
6,582,861
6,202,345
1,500,000
1,500,000
20. Bank overdrafts
As at 31 December 2013, interest on the bank overdrafts was payable at the banks’ prevailing prime rate of 5.72% per
annum. The bank overdrafts are secured by certain assets of a subsidiary.
21. Deferred taxation
Deferred tax liabilities:
Accelerated tax depreciation
Investment properties valuation
Offshore income & others
Deferred tax assets:
Other provisions
Unutilised tax benefits
GROUP
2013
$’000
2012
$’000
288,306
124,183
139,257
551,746
232,894
120,937
83,405
437,236
(37,600)
(72,257)
(109,857)
(39,847)
(35,506)
(75,353)
COMPANY
2013
$’000
-
-
4,933
4,933
-
-
-
2012
$’000
-
-
4,932
4,932
-
-
-
Net deferred tax liabilities
441,889
361,883
4,933
4,932
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.
172
Keppel Corporation LimitedReport to Shareholders 2013
The Group has unutilised tax losses and capital allowances of $444,251,000 (2012: $672,597,000) 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.
Movements in deferred tax liabilities and assets are as follows:
At
1 January
$’000
Charged/
(credited) to
profit or loss
$’000
Charged/
(credited)
to other
comprehensive
income
$’000
Subsidiaries
disposed
$’000
Subsidiaries
acquired
$’000
Reclassifi-
cation
$’000
Exchange
At
differences 31 December
$’000
$’000
Group
2013
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
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
Company
2013
Deferred Tax Liabilities
Offshore income
2012
Deferred Tax Liabilities
Offshore income
232,894
55,259
120,937
3,291
83,405
437,236
3,011
61,561
(39,847)
(35,506)
(75,353)
2,195
(35,813)
(33,618)
-
-
229
229
-
-
-
361,883
27,943
229
182,322
49,801
12,820
1,939
-
-
-
-
-
-
-
-
-
-
-
674
-
50,595
51,269
-
-
-
51,269
-
(8,388)
115,228
-
-
-
-
-
-
-
-
-
-
(521)
288,306
(45)
124,183
2,017
1,451
139,257
551,746
52
(938)
(886)
(37,600)
(72,257)
(109,857)
565
441,889
771
232,894
(662)
120,937
108,019
303,161
(1,038)
50,702
(639)
(639)
-
(8,388)
19,275
134,503
(41,172)
(41,172)
(1,040)
(931)
83,405
437,236
(11,090)
(8,590)
(19,680)
(28,996)
(27,516)
(56,512)
-
-
-
44
-
44
-
-
-
-
-
-
195
600
795
(39,847)
(35,506)
(75,353)
283,481
(5,810)
(639)
(8,344)
134,503
(41,172)
(136)
361,883
4,932
1
4,936
(4)
-
-
-
-
-
-
-
-
-
4,933
-
4,932
Notes to the Financial Statements
173
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
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
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
Fair value (gain)/loss on
- investments
- forward foreign exchange contracts
- interest rate caps and swaps
174
GROUP
2013
$’000
2012
$’000
7,226,479
7,969,213
683,737
713,709
34,937
199,675
3,514,581
6,880
421
2,070,632
574,224
41,202
246,536
3,056,114
6,175
745
12,380,419
13,964,841
GROUP
2013
$’000
1,326,667
109,763
55,362
176,445
2012
$’000
1,255,631
120,140
49,882
153,096
1,668,237
1,578,749
GROUP
2013
$’000
1,419
4,369
2,371
2012
$’000
1,480
4,522
1,672
783
1,621
30,144
110
12,259
233,652
1,482
8,640
(3,865)
(537)
(9,350)
15,474
(9,877)
30,821
131
12,108
201,084
1,177
9,428
(16,689)
(150,441)
(9,682)
48,327
1,549
Keppel Corporation LimitedReport to Shareholders 2013
Charge/(write-back) for
- warranties
- claims
Provision/(write-back) for stocks and work-in-progress
Provision/(write-back) for doubtful debts
Bad debts written off – trade debts
Cost of stocks & properties held for sale recognised as expense
Stocks written off
Rental expense
- operating leases
Direct operating expenses
- investment properties that generated rental income
(Gain)/loss on differences in foreign exchange
Gain on disposal of subsidiaries
Gain on disposal of associated companies
Write-back of impairment of associated companies (Note 8)
Fair value gain on investment properties (Note 6)
Write-back for restructuring of operations and others
Non-audit fees paid to
- auditors of the Company
- other auditors of subsidiaries
25.
Investment income, interest income and interest expenses
Investment income from:
Shares - quoted outside Singapore
Shares - unquoted
Interest income from:
Bonds, debentures, deposits and associated companies
Interest expenses on:
Bonds, debentures, fixed term loans and overdrafts
Fair value gain/(loss) on interest rate caps and swaps
GROUP
2013
$’000
2012
$’000
18,134
-
4,173
2,255
719
1,021,080
75
(780)
(3)
(4,579)
(28,151)
59
1,765,235
99
84,622
77,643
41,895
(23,881)
(307,726)
-
(2,818)
(156,284)
(43,088)
67,377
34,341
(30,004)
(3,120)
(7,673)
(172,101)
(12,000)
35
359
268
1,490
GROUP
2013
$’000
1,849
12,184
14,033
2012
$’000
2,230
4,471
6,701
144,189
160,776
(134,595)
9,877
(133,384)
(1,549)
(124,718)
(134,933)
Notes to the Financial Statements
175
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
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
2013
$’000
2012
$’000
370,197
(36,132)
57,608
(22,250)
512,937
(20,843)
27,096
(12,761)
27,943
(5,810)
397,366
500,619
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% (2012: 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
(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
2013
$’000
2012
$’000
2,793,740
3,256,267
474,936
(259,183)
145,703
(14,778)
86,820
(36,132)
553,565
(283,810)
258,328
(16,574)
9,953
(20,843)
397,366
500,619
GROUP
COMPANY
2013
$’000
764,862
(8,225)
370,197
(36,132)
(592,453)
203
(13,827)
-
(19,121)
(117)
2012
$’000
478,911
(14,302)
512,937
(20,843)
(213,619)
6,695
(5,832)
41,172
(20,598)
341
2013
$’000
21,097
-
7,000
(6,200)
(2,205)
-
-
-
-
(117)
2012
$’000
22,244
-
11,000
(5,638)
(6,626)
-
-
-
-
117
At 31 December
465,387
764,862
19,575
21,097
176
Keppel Corporation LimitedReport to Shareholders 2013
27. Earnings per ordinary share
Net profit attributable to shareholders
Adjustment for dilutive potential ordinary shares
of subsidiaries and associated companies
GROUP
2013
$’000
2012
$’000
Basic
Diluted
Basic
Diluted
1,845,792
1,845,792
2,237,299
2,237,299
-
(844)
-
(844)
Adjusted net profit
1,845,792
1,844,948
2,237,299
2,236,455
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
1,805,198
-
1,805,198
18,038
1,792,992
-
1,792,992
17,055
1,805,198
1,823,236
1,792,992
1,810,047
Earnings per ordinary share
102.3 cts
101.2 cts
124.8 cts
123.6 cts
28. Dividends
A final dividend of 30.0 cents per share tax exempt one-tier (2012: final dividend of 27.0 cents per share tax exempt one-
tier) in respect of the financial year ended 31 December 2013 has been proposed for approval by shareholders at the next
Annual General Meeting to be convened.
Together with the interim dividend comprising a cash dividend of 10.0 cents per share tax exempt one-tier (2012: 18.0
cents per share tax exempt one-tier) and a special dividend in specie of 8 Keppel REIT units for every 100 shares in the
Company equivalent to 9.5 cents per share (2012: special dividend in specie of one Keppel REIT unit for every 5 shares
in the Company equivalent to 28.6 cents per share), total distributions paid and proposed in respect of the financial year
ended 31 December 2013 will be 49.5 cents per share (2012: 73.6 cents per share).
During the financial year, the following distributions were made:
A final dividend of 27.0 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the previous financial year
A special dividend in specie of one (1) Keppel REIT unit for every five (5) shares
in the Company, equivalent to 28.6 cents per share, in respect of the
previous financial year
An interim dividend of 10.0 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the current financial year
A special dividend in specie of eight (8) Keppel REIT units for every
one hundred (100) shares in the Company, equivalent to 9.5 cents per share,
in respect of the current financial year
$’000
487,771
516,675
180,735
171,342
1,356,523
Notes to the Financial Statements
177
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
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
GROUP
2013
$’000
2012
$’000
67,709
216,324
134,871
87,308
291,362
455,240
156,676
237,174
68,448
881,202
(267,244)
182,049
307,536
189,093
1,512,588
(424,464)
613,958
1,088,124
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
2013
$’000
2012
$’000
97,494
310,580
917,194
78,208
218,042
683,079
1,325,268
979,329
COMPANY
2013
$’000
128
47
-
175
2012
$’000
122
167
-
289
(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
2013
$’000
2012
$’000
COMPANY
2013
$’000
2012
$’000
166,001
259,806
152,263
272,020
591,996
135,848
578,070
999,864
-
-
-
-
-
-
-
-
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.
178
Keppel Corporation LimitedReport to Shareholders 2013
30. Contingent liabilities and guarantees (unsecured)
Guarantees in respect of banks and other loans
granted to subsidiaries and associated companies
Bank guarantees
Others
GROUP
2013
$’000
2012
$’000
COMPANY
2013
$’000
2012
$’000
544,354
183,035
1,833,292
1,745,784
63,062
59,686
537
29,444
-
-
-
-
607,953
272,165
1,833,292
1,745,784
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.
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 functional currencies of the respective Group entities. 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 $9,185,298,000 (2012: $9,141,571,000). The net negative fair value of forward foreign exchange
contracts is $77,275,000 (2012: net positive fair value $127,198,000) comprising assets of $27,818,000 (2012:
$164,566,000) and liabilities of $105,093,000 (2012: $37,368,000). 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 $8,949,991,000 (2012: $8,954,546,000). The net negative fair value of forward foreign exchange
contracts is $71,838,000 (2012: net positive fair value $119,379,000) comprising assets of $32,229,000 (2012:
$156,513,000) and liabilities of $104,067,000 (2012: $37,134,000). These amounts are recognised as derivative
financial instruments in debtors (Note 14) and creditors (Note 17).
Notes to the Financial Statements
179
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
32. Financial risk management (continued)
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
2013
Euro
$’000
Others
$’000
USD
$’000
2012
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
91,747
161,410
1,673
8,475
52,685
86,944
36,056
172,186
1,687
5,095
14,486
100,031
1,809,771
118,633
131,729
2,156,741
29,016
155,233
89,456
1,607,207
6,455
-
18,415
14,645
69,735
1,075,223
9,218
-
36,365
-
32
15
-
-
-
-
118
1,134
-
30
40
-
-
-
50
117
1,332
-
Sensitivity analysis for currency risk
If the relevant foreign currency change against SGD by 5% (2012: 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
2013
$’000
2012
$’000
2013
$’000
2012
$’000
10,276
(10,276)
5,670
(5,670)
52,435
(52,435)
1,078
(1,078)
8,096
(8,096)
422
(422)
8,617
(8,617)
256
(256)
2
(2)
4
(4)
-
-
-
-
(ii)
Interest rate risk
The Group is exposed to interest rate risk for changes in interest rates primarily for debt obligations, placements in
the money market and investments in bonds. The Group policy is to maintain a mix of fixed and variable rate debt
instruments with varying maturities. Where necessary, the Group uses derivative financial instruments to hedge
interest rate risks.
The Group enters into interest rate swap agreements to hedge the interest rate risk exposure arising from its S$
and US$ 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 $1,140,845,000 (2012: $1,421,237,000) whereby it receives variable rates
equal to SIBOR and LIBOR (2012: SIBOR) and pays fixed rates of between 1.27% and 3.62% (2012: 0.88% and 3.62%)
on the notional amount.
180
Keppel Corporation LimitedReport to Shareholders 2013
The net negative fair value of interest rate swaps for the Group is $3,694,000 (2012: $54,957,000) comprising assets
of $10,922,000 (2012: $Nil) and liabilities of $14,616,000 (2012: $54,957,000). These amounts are recognised as
derivative financial instruments in debtors (Note 14) and creditors (Note 17).
Sensitivity analysis for interest rate risk
If interest rates increase/decrease by 0.5% (2012: 0.5%) with all other variables held constant, the Group’s profit
before tax would have been lower/higher by $11,081,000 (2012: $8,298,000) 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 benchmark
fuel price indices, High Sulphur Fuel Oil (HSFO) 180-CST and Dated Brent. As at the end of the financial year, the
Group has outstanding HSFO and Dated Brent forward contracts with notional amounts totalling $421,604,000
(2012: $437,241,000) and $10,450,000 (2012: $Nil) respectively. The net positive fair value of HSFO forward
contracts for the Group is $9,604,000 (2012: net negative fair value $8,106,000) comprising assets of $11,042,000
(2012: $9,661,000) and liabilities of $1,438,000 (2012: $17,767,000). The net positive fair value of Dated Brent
forward contracts for the Group is $224,000 (2012: $Nil) comprising assets of $268,000 (2012: $Nil) and liabilities
of $44,000 (2012: $Nil). These amounts are recognised as derivative financial instruments in debtors (Note 14) and
creditors (Note 17).
The Group is exposed to equity securities price risk arising from equity investments classified as investments held
for trading and available-for-sale investments. To manage its price risk arising from investments in equity securities,
the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the
Group.
Sensitivity analysis for price risk
If prices for HSFO and Dated Brent increase/decrease by 5% (2012: 5%) with all other variables held constant, the
Group’s hedging reserve in equity would have been higher/lower by $21,560,000 (2012: $21,457,000) and $534,000
(2012: $Nil) respectively as a result of fair value changes on cash flow hedges.
If prices for quoted investments increase/decrease by 5% (2012: 5%) with all other variables held constant, the
Group’s profit before tax would have been higher/lower by $4,081,000 (2012: $3,236,000) 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 $20,632,000 (2012: $17,545,000) 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.
Notes to the Financial Statements
181
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
32. Financial risk management (continued)
(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
2013
$’000
258,699
11,819
107,576
2012
$’000
96,601
40,348
51,777
378,094
188,726
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.
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
2013
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
Net-settled Dated Brent forward contracts
- Receipts
- Payments
Borrowings
2012
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
Borrowings
Within
one year
$’000
Within
one to
two years
$’000
Within
two to
five years
$’000
After
five years
$’000
4,696,325
(4,752,995)
3,086,863
(3,112,213)
1,293,663
(1,308,256)
9,393
(866)
1,558
(277)
91
(257)
-
-
-
(38)
268
(44)
(677,879)
-
-
(1,881,053)
-
-
(2,639,036)
-
-
(3,055,002)
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)
182
Keppel Corporation LimitedReport to Shareholders 2013
Company
2013
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Borrowings
2012
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
4,487,427
(4,540,047)
(212,343)
3,068,707
(3,093,639)
(51,480)
1,290,404
(1,305,007)
(154,440)
-
-
(1,946,368)
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)
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 the
previous financial year. The Group and the Company are in compliance with externally imposed capital requirements for
the financial year ended 31 December 2013.
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
2013
$’000
2012
$’000
1,535,343
3,152,723
13,688,863
13,578,126
0.11x
0.23x
Fair Value of Financial Instruments and Investment Properties
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:
• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
• Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs). Fair value
is determined by reference to the net tangible assets of the investments.
Notes to the Financial Statements
183
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
32. Financial risk management (continued)
The following table presents the assets and liabilities measured at fair value.
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
50,050
-
50,050
64,204
-
129,433
193,637
320,002
81,624
42,275
-
-
-
362,277
81,624
465,830
92,325
129,433
687,588
-
-
-
-
-
-
121,191
-
121,191
-
-
136,910
1,205,222
845,726
-
1,205,222
845,726
136,910
136,910
2,050,948
2,187,858
174,227
-
174,227
1,442
-
153,555
154,997
301,189
64,714
50,067
-
-
-
351,256
64,714
367,345
224,294
153,555
745,194
-
-
-
-
-
110,092
-
110,092
-
-
3,210
4,661,019
758,831
-
4,661,019
758,831
3,210
3,210
5,419,850
5,423,060
Group
2013
Financial assets
Derivative financial instruments
Investments
- Available-for-sale investments
Short term investments
- Available-for-sale investments
- Investments held for trading
Financial liabilities
Derivative financial instruments
Non-financial assets
Investment Properties
- Commercial, completed
- Commercial, under construction
- Residential, completed
2012
Financial assets
Derivative financial instruments
Investments
- Available-for-sale investments
Short term investments
- Available-for-sale investments
- Investments held for trading
Financial liabilities
Derivative financial instruments
Non-financial assets
Investment Properties
- Commercial, completed
- Commercial, under construction
- Residential, completed
184
Keppel Corporation LimitedReport to Shareholders 2013
Company
2013
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
2012
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
32,229
104,067
156,513
37,134
-
-
-
-
32,229
104,067
156,513
37,134
There have been no transfer between Level 1, Level 2 and Level 3 for the Group and Company during 2013 and 2012.
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 loss recognised in other comprehensive income
Exchange differences
At 31 December
2013
$’000
153,555
498
(18,394)
(6,438)
212
129,433
The following table presents the reconciliation of investment properties measured at fair value based on significant
unobservable inputs (Level 3).
Group
At 1 January
Development expenditure
Fair value gain
Subsidiary disposed
Reclassification – stocks and work-in-progress
Exchange differences
At 31 December
2013
$’000
5,419,850
247,769
160,689
(3,757,083)
(9,200)
(11,077)
2,050,948
The fair value of financial instruments categorised under Level 1 of the fair value hierarchy is based on published market
bid prices at the balance sheet date.
The fair value of financial instruments categorised under Level 2 of the fair value hierarchy are fair valued under valuation
techniques with market observable inputs. These include forward pricing and swap models utilising present value
calculations using inputs such as observable foreign exchange rates (forward and spot rates), interest rate curves and
forward rate curves and discount rates that reflects the credit risks of various counterparties.
The fair value of residential investment property categorised under Level 2 is based on comparable market transactions
that consider sales of similar properties that have been transacted in the open market. The most significant input is selling
price per square feet.
Notes to the Financial Statements
185
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
32. Financial risk management (continued)
The following table presents the valuation techniques and key inputs that were used to determine the fair value of
financial instruments and investment properties categorised under Level 3 of the fair value hierarchy.
Description
Fair value
as at
31 December
2013
$’000
Available-for-sale investments
129,433
Investment Properties
- Commercial, completed
1,205,222
Valuation
Techniques
Net asset value and/or
discounted cash flow
Unobservable
Inputs
Range of
Unobservable
Inputs
Net asset value*
Not applicable
Direct comparison method,
income capitalisation method
and/or discounted cash flow
method
Discount rate
4.25% to
14.04%
Transacted price
of comparable
property (psf)
$1,850 to
$1,950
Occupancy rate
70% to 100%
Capitalisation rate
Monthly effective
rental (psm)
4.00% to
13.50%
$20 to $70
- Commercial, under
construction
845,726
Direct comparison method
and/or residual method
Price of comparable $4,240 to
land plots (psm)
$4,570
Gross development $570 to $850
value ($’million)
* Fair value of unquoted equity instruments is determined by reference to the underlying assets value of the investee companies, which comprise mainly
investment properties stated at fair value.
The financial instruments and investment properties categorised under Level 3 of the fair value hierarchy are generally
sensitive to the various unobservable inputs tabled above. A significant movement of each input would result in significant
change to the fair value of the respective asset/liability.
The Group’s finance team assessed the fair value of available-for-sale investments on a quarterly basis.
Valuation process of investment properties is described in Note 6.
33. Segment analysis
The Group is organised into business units based on their products and services, and has four reportable operating
segments as follows:
(i) 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.
(ii)
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 LimitedReport to Shareholders 2013
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:
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
Offshore & Marine
$’000
Infrastructure
$’000
Property
$’000
Investments
$’000
Elimination
$’000
Total
$’000
7,126,354
3,588
7,129,942
3,459,332
57,041
3,516,373
1,767,532
5,130
1,772,662
27,201
72,115
99,316
12,380,419
-
(137,874)
-
(137,874) 12,380,419
1,059,031
2,340
76,371
(11,545)
75,508
1,201,705
(221,269)
980,436
69,243
-
1,379
(28,168)
30,810
73,264
(43,414)
29,850
981,332
11,568
55,413
(71,361)
462,248
1,439,200
(112,979)
1,326,221
17,501
125
124,374
(119,730)
57,301
79,571
(19,704)
59,867
944,709
35,727
980,436
15,541
14,309
29,850
831,770
494,451
1,326,221
53,772
6,095
59,867
7,262
-
(113,348)
106,086
-
-
-
-
-
-
-
2,134,369
14,033
144,189
(124,718)
625,867
2,793,740
(397,366)
2,396,374
1,845,792
550,582
2,396,374
8,070,683
5,681,553
2,389,130
3,833,349
3,011,183
822,166
15,674,360
7,515,138
8,159,222
7,918,618
5,600,273
2,318,345
(5,441,390) 30,055,620
16,366,757
(5,441,390)
13,688,863
-
Associated companies
Additions to non-current assets
Depreciation and amortisation
506,732
384,981
136,741
586,607
333,751
80,476
3,799,594
490,827
24,583
589,240
200,061
492
-
-
-
5,482,173
1,409,620
242,292
Geographical information
External sales
Non-current assets
Singapore
$’000
9,288,023
7,959,719
Far East &
other ASEAN
countries
$’000
1,162,208
2,900,428
Americas
$’000
1,340,961
504,663
Other
countries
$’000
589,227
189,740
Elimination
$’000
Total
$’000
-
-
12,380,419
11,554,550
Other than Singapore, no single country accounted for 10% or more of the Group’s revenue for the financial year ended
31 December 2013.
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 2013.
Note: Pricing of inter-segment goods and services is at fair market value.
Notes to the Financial Statements
187
CONFIGUREDFOR GROWTH
Notes to the Financial Statements
33. Segment analysis (continued)
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
-
(224,425)
(224,425)
13,964,841
-
13,964,841
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
123,769
102
135,993
(112,058)
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
9,710
-
(132,278)
122,568
-
-
-
-
-
-
-
2,621,175
6,701
160,776
(134,933)
602,548
3,256,267
(500,619)
2,755,648
2,237,299
518,349
2,755,648
7,661,325
5,225,085
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)
(5,197,089)
-
29,206,575
15,628,449
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
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.
188
Keppel Corporation LimitedReport to Shareholders 2013
34. 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:
Revised FRS 27
Revised FRS 28
FRS 110
FRS 111
FRS 112
Amendments to FRS 32
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)
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 does not expect any significant impact on
the consolidated financial statements of the Group except for certain reclassifications (if any) in the consolidated
balance sheet in the period of initial adoption.
(b)
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 does not expect any significant impact on the consolidated financial statements of the Group in the
period of initial adoption.
(c)
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 disclosures required. As this is a disclosure standard, it will have
no impact on the financial position or financial performance of the Group when implemented.
35. Significant subsidiaries and associated companies
Information relating to significant subsidiaries consolidated in these financial statements and significant associated
companies whose results are equity accounted for is given in the following pages.
Notes to the Financial Statements
189
CONFIGUREDFOR GROWTH
Significant Subsidiaries and
Associated Companies
Gross
Interest
2013
%
Effective Equity
Interest
2013
%
2012
%
Cost of Investment
2012
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
OFFSHORE & MARINE
Offshore
Subsidiaries
Keppel Offshore and Marine
Ltd
100
100
100 801,720 801,720
Singapore
Investment holding
Keppel FELS Limited
100
100
100
#
#
Singapore
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
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
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Angra Propriedades &
Administracao Ltd(1a)
AzerFELS Pte Ltd
Benniway Pte Ltd
Caspian Shipyard Company
Ltd(1a)
Deepwater Technology
Group Pte Ltd
100
100
100
68
88
75
60
88
45
60
88
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)
100
Hygrove Investments Ltd(4)
Keppel AmFELS, LLC(3)
100
100
100
100
100
100
100
100
Keppel FELS Baltech Ltd(3)
100
100
100
Keppel FELS Brasil SA(1a)
100
100
100
100
100
100
Keppel Offshore & Marine
Engineering Services
Mumbai Pte Ltd(3)
(formerly known as
Keppel FELS Offshore &
Engineering Services
Mumbai Pte Ltd)
Keppel Offshore & Marine
Technology Centre Pte Ltd
190
100
100
100
#
#
Singapore
Research & development on
marine and offshore engineering
Keppel Corporation LimitedReport to Shareholders 2013
Gross
Interest
2013
%
Effective Equity
Interest
2013
%
2012
%
Cost of Investment
2012
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
Keppel Offshore & Marine
USA Inc(3)
100
100
100
Keppel Sea Scan Pte Ltd
100
100
100
Keppel Singmarine Brasil
Ltda(1a)
100
100
100
Keppel Verolme BV(1a)
100
100
100
KV Enterprises BV(1a)
KVE Adminstradora de Bens
Imoveis Ltda(1a)
100
100
100
100
100
100
Lindel Pte Ltd
100
100
100
Marine & Offshore Protection
& Preservation BV(1a)
Navegantes Administracoes
de Bens Moveis e Imoveis
Ltda(1a)
Offshore Technology
Development Pte Ltd
100
100
100
100
100
100
100
100
100
Prismatic Services Ltd(4)
100
100
100
Regency Steel Japan Ltd(1a)
51
51
51
Topaz Atlantic Unlimited(4)
Wideluck Enterprises Ltd(4)
Willalpha Ltd(4)
100
100
100
100
100
100
100
100
100
Associated Companies
Asian Lift Pte Ltd
50
50
50
FloaTEC Singapore Pte Ltd
Floatel International Pte Ltd(3)
50
50
50
50
50
47
Keppel Kazakhstan LLP(3)
50
50
50
Marine Housing Services
Pte Ltd
50
50
50
OWEC Tower AS(3)
50
50
50
Seafox 5 Ltd(1a)
49
49
49
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# USA
#
Singapore
Offshore and marine-related
services
Trading and installation of
hardware, industrial, marine and
building related products, leasing
and provision of services
#
Brazil
Shipbuilding
# Netherlands Construction and repair of
offshore drilling rigs and
shiprepairs
# Netherlands Holding of long-term investments
#
Brazil
#
Singapore
Holding of long-term investments
and property management
Project management, engineering
and procurement
# 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
#
Singapore
# Norway
offshore drilling units and
structures and specialised vessels
Provision of housing services for
marine workers
Offshore wind turbine jacket
foundation design and engineering
#
Isle of Man Owning and leasing of multi-
purpose self-elevating platforms
Significant Subsidiaries and Associated Companies
191
CONFIGUREDFOR GROWTH
Significant Subsidiaries and Associated Companies
Gross
Interest
2013
%
Effective Equity
Interest
2013
%
2012
%
Cost of Investment
2012
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
Marine
Subsidiaries
Keppel Shipyard Limited
100
100
100
Keppel Philippines Marine
98
98
98
Inc(1a)
Alpine Engineering Services
Pte Ltd
100
100
100
Blastech Abrasives Pte Ltd
100
100
100
Keppel Nantong Heavy
Industry Co Ltd(3)
Keppel Nantong Shipyard
Company Ltd(3)
100
100
100
100
100
100
Keppel Singmarine Pte Ltd
100
100
100
Keppel Smit Towage Pte Ltd
51
51
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
#
#
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
51
100
100
51
100
100
100
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)
33
33
33
24
49
20
24
25
20
24
25
20
PV Keez Pte Ltd
20
20
20
#
#
#
#
#
#
#
#
#
#
#
#
#
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
INFRASTRUCTURE
Subsidiaries
Keppel Infrastructure Holdings
Pte Ltd (n)
X-to-Energy
Subsidiaries
100
100
- 445,892
-
Singapore
Investment holding
Keppel DHCS Pte Ltd
100
100
100
#
#
Singapore
Development of district heating
and cooling system for the
purpose of air cooling and other
utility services
Associated Companies
K-Green Trust
49
49
49
#
#
Singapore
Infrastructure business trust
192
Keppel Corporation LimitedReport to Shareholders 2013
Waste-to-Energy
Subsidiaries
Keppel Integrated Engineering
Ltd
Keppel Seghers Holdings
Pte Ltd
Gross
Interest
2013
%
Effective Equity
Interest
2013
%
2012
%
Cost of Investment
2012
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
100
100
100
-
779,721
Singapore
Investment holding
100
100
100
#
Singapore
Investment holding
#
#
Keppel Seghers Belgium NV(1a)
100
100
100
#
Belgium
Keppel Seghers UK Ltd(1a)
100
100
100
#
# United
Kingdom
Associated Companies
Tianjin Eco-City Energy
Investment & Construction
Co Ltd(3)
Tianjin Eco-City Environmental
Protection Co Ltd(3)
20
20
20
20
20
20
#
#
# China
# China
Provider of services and solutions
to the environmental industry
related to solid waste, waste-water
and sludge management
Design, supply and installation of
flue gas treatment equipment
Investment and implementation of
energy and utilities related
infrastructure
Investment, construction and
operation of infrastructure for
environmental protection
Gas-to-Power
Subsidiaries
Keppel Energy Pte Ltd
Keppel Electric Pte Ltd
100
100
100
100
100
100
Keppel Gas Pte Ltd
Keppel Merlimau Cogen
Pte Ltd
100
100
100
100
100
100
- 330,914
Singapore
Investment holding
#
#
#
#
Singapore
Electricity, energy and power
supply and general wholesale
trade
#
#
Singapore
Purchase and sale of gaseous fuels
Singapore
Commercial power generation
Infrastructure Services
Subsidiaries
Keppel Seghers Engineering
Singapore Pte Ltd
100
100
100
#
#
Singapore
Keppel FMO Pte Ltd
100
100
100
#
#
Singapore
Provision of environmental
engineering services specialising
in WTE plants and biosolids and
sludge treatment
Construction, project and facilities
management and operational
maintenance of industrial and
commercial complexes
Associated Companies
GE Keppel Energy Services
Pte Ltd(2)
50
50
50
#
#
Singapore
Precision engineering, repairing,
services and agencies
Significant Subsidiaries and Associated Companies
193
CONFIGUREDFOR GROWTH
Significant Subsidiaries and Associated Companies
Gross
Interest
2013
%
Effective Equity
Interest
2013
%
2012
%
Cost of Investment
2012
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
Others
Subsidiaries
FELS Cranes Pte Ltd
100
100
100
Keppel Prince Engineering
Pty Ltd(2a)
Keppel Seghers Hong Kong
Ltd(1a)
100
100
100
100
100
100
#
#
#
#
Singapore
Fabrication of heavy cranes and
provision of marine-related
equipment
#
Australia
Metal fabrication
# HK
Engineering contracting and
investment holding
80
80
80 397,647 397,647
Singapore
Logistics & Data Centres
Subsidiaries
Keppel Telecommunications &
Transportation Ltd(2)
Jilin Sino-Singapore Food
Zone International Logistics
Co Ltd(3)
Keppel Communications
Pte Ltd(2)
70
56
56
100
80
80
Keppel Data Centres Holding
Pte Ltd(2)
100+
73+
73+
Keppel Data Centres Pte Ltd(2)
100
80
80
Keppel Datahub Pte Ltd(2)
100+
73+
73+
Keppel Digihub Ltd(2)
100+
73+
73+
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
Pte Ltd(2)
-
-
80
Associated Companies
Advanced Research Group
Co Ltd(2a)
Asia Airfreight Terminal
Company Ltd(3)
45
36
36
-
-
8
Citadel 100 Datacenters Ltd(3)
50
40
40
Computer Generated
Solutions Inc(3)
Radiance Communications
Pte Ltd(2)
21
17
17
50
40
40
Securus Data Property Fund
Pte Ltd(3)
35
28
24
194
# China
Investment, management and
holding company
Integrated logistics services,
storage and distribution
#
Singapore
#
Singapore
Trading and provision of
communications systems and
accessories
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
Disposed
#
Thailand
IT publication and business
information
# HK
Disposed
#
Ireland
# USA
#
Singapore
Data centre facilities and co-
location services
IT consulting and outsourcing
provider
Distribution and maintenance of
communications equipment and
systems
#
Singapore
Investment holding
#
#
#
#
#
#
#
#
#
-
#
-
#
#
#
#
Keppel Corporation LimitedReport to Shareholders 2013
Gross
Interest
2013
%
Effective Equity
Interest
2013
%
2012
%
Cost of Investment
2012
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
Securus Guernsey 2 Ltd(3)
51
41
41
SVOA Public Company Ltd(2a)
32
26
26
#
#
# Guernsey/
Australia
Data centre facilities and co-
location services
#
Thailand
Distribution of IT products and
telecommunications services
PROPERTY
Subsidiaries
Keppel Land Ltd(2)
55
55
55 1,685,699 1,685,682
Singapore
Holding, management and
investment company
Keppel Land China Ltd(2)
100
55
55
Keppel Bay Pte Ltd
100+
86+ 86+
Keppel Philippines Properties
80+
57+
57+
#
626
493
#
Singapore
Investment holding
626
493
Singapore
Property development
Philippines
Investment holding
Inc(2a)
Aether Ltd(3)
Aintree Assets Ltd(4)
Alpha Investment Partners
Ltd(2)
Bayfront Development Pte
Ltd(2)
Beijing Aether Property
Development Ltd(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)
Castlehigh Pte Ltd(2)
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(3)
DL Properties Ltd(2)
Double Peak Holdings Ltd(4)
Estella JV Co Ltd(2a)
Evergro Properties Ltd(2)
Greenfield Development
Pte Ltd(2)
Hillwest Pte Ltd(2)
International Centre Co Ltd(1a)
51
100
100
28
55
55
28
55
55
100
55
55
51
28
28
100
55
55
60
33
33
90
100
100
100
49
55
55
55
49
55
55
55
100
55
55
100
55
55
100
55
55
100
55
55
65
100
55
100
35
55
30
55
36
55
30
55
100
55
55
100
79
55
59
55
59
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# 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
Singapore
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
#
#
Singapore
Investment holding
Vietnam
Property investment
Significant Subsidiaries and Associated Companies
195
CONFIGUREDFOR GROWTH
Significant Subsidiaries and Associated Companies
Gross
Interest
2013
%
Effective Equity
Interest
2013
%
2012
%
Cost of Investment
2012
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
Jiangyin Evergro Properties
Co Ltd(3)
KeplandeHub Ltd(2)
Keppel Al Numu Development
Ltd(2a)
Keppel Bay Property
Development (Shenyang)
Co Ltd(3)
Keppel China Marina Holdings
Pte Ltd(2)
Keppel China Township
Development Pte Ltd(2)
99
54
54
100
51
55
28
55
28
100
55
55
100
55
55
100
55
55
Keppel Heights (Wuxi) Property
Development Co Ltd(n)(3)
100
55
-
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
75
75
100
55
55
100
55
55
100
55
55
100
55
55
100
55
55
Keppel Land Financial Services
Pte Ltd(2)
100
55
55
Keppel Land International
Ltd(2)
Keppel Land Properties Pte
Ltd(2)
100
55
55
100
55
55
Keppel Land Realty Pte Ltd(2)
100
55
55
Keppel Land Watco IV Co
Ltd(2a)
Keppel Land Watco V Co
Ltd(2a)
Keppel Puravankara
Development Pvt Ltd(2a)
Keppel REIT Investment Pte
Ltd(2)
Keppel REIT Management
Ltd(2)
Keppel REIT Property
Management Pte Ltd(2)
Keppel Thai Properties Public
Co Ltd(2a)
68
37
37
68
37
37
51
28
28
100
55
55
100
55
55
100
55
55
45
25
25
196
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# China
Property development
#
#
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
# China
Property development
#
Singapore
Property development
# HK
Investment holding
#
Singapore
Property development and
investment
#
Singapore
Financial services
#
Singapore
Property services
#
Singapore
Investment holding
#
Singapore
Property development and
investment
#
Vietnam
#
Vietnam
Property investment and
development
Property investment and
development
#
India
Property development
#
Singapore
Investment holding
#
Singapore
Property fund management
#
Singapore
Property management services
#
Thailand
Property development and
investment
Keppel Corporation LimitedReport to Shareholders 2013
Gross
Interest
2013
%
Effective Equity
Interest
2013
%
2012
%
Cost of Investment
2012
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
Keppel Tianjin Eco-City
Holdings Pte Ltd(2)
Keppel Tianjin Eco-City
Investments Pte Ltd(2)
100+
75+
75+
#
#
Singapore
Investment holding
100+
75+
75+ 126,137
64,725
Singapore
Investment holding
Keppel Township Development
100
55
55
(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)
Oceansky Pte Ltd(2)
OIL (Asia) Pte Ltd(2)
Parksville Development Pte
Ltd(2)
86
47
47
100
100
100
55
55
55
55
55
55
100
55
55
100
55
55
100
100
100
55
55
55
55
55
27
Pembury Properties Ltd(4)
100
55
55
PT Kepland Investama(2a)
100
55
55
PT Mitra Sindo Makmur(1a)
PT Mitra Sindo Sukses(1a)
-
-
-
-
PT Ria Bintan(1a)
100
25
28
28
25
PT Sentral Supel Perkasa(2a)
80
44
44
PT Sentral Tanjungan
Perkasa(2a)
PT Straits CM 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 Jinju Real Estate
Investment Co Ltd(n)(3)
80
44
44
100
70
60
75
100
100
99
21
38
33
41
55
49
54
21
38
32
41
55
49
54
100
55
55
100
55
55
100
55
-
-
Shanghai Maowei Investment
Consulting Co Ltd(n)(3)
100
55
#
#
#
#
#
#
#
#
#
#
#
#
-
-
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# China
Property development
#
Singapore
Investment holding
#
#
#
Singapore
Investment holding
Singapore
Investment holding
Singapore
Property development
#
Singapore
Investment holding
#
Singapore
Property and investment holding
#
#
#
#
Singapore
Investment holding
Singapore
Investment holding
Singapore
Property investment
BVI/
Singapore
Investment holding
#
Indonesia
Property investment and
development
#
#
#
Indonesia
Disposed
Indonesia
Disposed
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
Investment holding
Significant Subsidiaries and Associated Companies
197
CONFIGUREDFOR GROWTH
Significant Subsidiaries and Associated Companies
Gross
Interest
2013
%
Effective Equity
Interest
2013
%
2012
%
Cost of Investment
2012
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
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(3)
99
54
54
99
54
54
99
54
54
70
38
55
80
38
38
Spring City Resort Pte Ltd(2)
Straits Greenfield Ltd(3)
Straits Properties Ltd(2)
100
100
100
55
55
55
55
55
55
Straits Property Investments
Pte Ltd(2)
100
55
55
Success View Enterprises Ltd(4)
100
Sunsea Yacht Club (Zhongshan) 100
Co Ltd(3)
75
44
75
44
Sunseacan Investment (HK)
Co Ltd(3)
Third Dragon Development
Pte Ltd(2)
Tianjin Fushi Property
Development Co Ltd(3)
Tianjin Merryfield Property
Development Co Ltd(3)
Triumph Jubilee Ltd(4)
Wiseland Investment Myanmar
Ltd(3)
Atlantic Marina Services
(Asia-Pacific) Pte Ltd
80
44
44
100
55
55
100
55
55
100
55
55
100
100
55
55
55
55
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# 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
# China
Property development
#
BVI/China
Investment holding
# Myanmar
Hotel ownership and operations
100+
91+
91+
1,460
1,460
Singapore
Investment holding
Esqin Pte Ltd
100
FELS Property Holdings Pte Ltd
100
100
100
100
100
11,001
11,001
Singapore
Investment holding
78,214
78,214
Singapore
Investment holding
FELS SES International Pte Ltd
98+
90+ 90+
Harbourfront One Pte Ltd
70
65
65
48
#
48
#
Singapore
Investment holding
Singapore
Property development
Keppel Group Eco-City
Investments Pte Ltd
100+
84+ 84+ 126,744
126,744
Singapore
Investment holding
Keppel Houston Group LLC(4)
100
86
86
Keppel Kunming Resort Ltd(3)
100+
91+
91+
#
4
# USA
4 HK
Property investment
Property investment
Keppel Point Pte Ltd
100+
86+ 86+ 122,785
122,785
Singapore
Property development and
investment
100
100
100 764,400 764,400
Singapore
Investment holding
Keppel Real Estate Investment
Pte Ltd
Petro Tower Ltd(3)
Singapore Tianjin Eco-City
Investment Holdings Pte Ltd
Substantial Enterprises Ltd(4)
100
84
84
198
76
90
69
76
69
76
#
#
#
#
#
Vietnam
Property investment
Singapore
Investment holding
#
BVI/China
Investment holding
Keppel Corporation LimitedReport to Shareholders 2013
Gross
Interest
2013
%
Effective Equity
Interest
2013
%
2012
%
Cost of Investment
2012
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
Associated Companies
Asia Real Estate Fund
Management Ltd(2)
Central Boulevard
Development Pte Ltd(2)
50
27
27
33
18
18
CityOne Development (Wuxi)
Co Ltd(3)
50
27
27
CityOne Township
Development Pte Ltd(2)
Dong Nai Waterfront City
LLC(2a)
EM Services Pte Ltd(1a)
Equity Rainbow II Pte Ltd(n)(2a)
Harbourfront Three Pte Ltd(3)
Harbourfront Two Pte Ltd(3)
Keppel Land Watco I Co Ltd(2a)
Keppel Land Watco II Co
Ltd(2a)
Keppel Land Watco III Co
Ltd(2a)
Keppel Magus Development
Pvt Ltd(3)
Keppel REIT(2)
PT Pantai Indah Tateli(2a)
PT Pulomas Gemala Misori(3)
PT Purimas Straits Resorts(3)
Raffles Quay Asset
Management Pte Ltd(2)
50
27
27
50
27
27
25
43
39
39
68
14
23
34
34
37
14
-
34
34
37
68
37
37
68
37
37
38
21
21
46
-
25
25
33
25
-
14
14
18
54
27
14
14
18
Renown Property Holdings (M)
Sdn Bhd(2a)
40
22
22
SAFE Enterprises Pte Ltd(3)
Sino-Singapore Tianjin
Eco-City Investment and
Development Co., Ltd(1a)
25
50
14
38
14
38
Suzhou Property Development
Pte Ltd(3)
25
14
14
Vietcombank Tower 198 Ltd(3)
30
27
27
INVESTMENTS
Subsidiaries
Keppel Philippines Holdings
55+
55+
55+
Inc(2a)
Alpha Real Estate Securities
Fund
96
96
99
Devan International Ltd(4)
100
100
100
#
#
#
#
#
#
#
#
#
#
#
#
#
#
-
#
#
#
#
#
#
#
#
-
#
#
#
Singapore
Fund management
#
Singapore
Property development
# China
Property development
#
Singapore
Investment holding
#
Vietnam
Property development
#
Singapore
Property management
- China
Property investment
Singapore
Property development
Singapore
Property development
#
#
#
Vietnam
#
Vietnam
#
Vietnam
Property investment and
development
Property investment and
development
Property investment and
development
#
India
Property development
#
#
#
#
#
Singapore
Real estate investment trust
Indonesia
Disposed
Indonesia
Property development
Indonesia
Development of holiday resort
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)
100
100
100
#
# Mauritius
Investment holding
Significant Subsidiaries and Associated Companies
199
CONFIGUREDFOR GROWTH
Significant Subsidiaries and Associated Companies
Gross
Interest
2013
%
Effective Equity
Interest
2012
%
Country of
Incorporation
/Operation
Principal Activities
Cost of Investment
2012
$’000
2013
$’000
Kephinance Investment Pte Ltd
100
Kepital Management Ltd(3)
Keppel Funds Investment Pte
Ltd(n)
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
100
100
100
100
100
100
2013
%
100
100
100
100
100
100
100
100
100
100
100 90,000 90,000
Singapore
Investment holding
100
-
100
100
100
#
#
10
#
#
# HK
Investment company
-
Singapore
Investment company
10
Singapore
Investment holding
#
#
Singapore
Investment company
Singapore
Investment holding
100 484,355 284,924
Singapore
Investment holding
100
100
100
#
#
# HK
Investment company
#
Singapore
Investment company
265
265
Singapore
Travel agency
Associated Companies
k1 Ventures Ltd
KrisEnergy Ltd(2)
36
31
36
31
36
20
M1 Ltd(2)
19
15
16
#
#
#
#
#
Singapore
BVI
Investment holding
Exploration for, and the
development and production of
oil and gas
#
Singapore
Telecommunications services
Total
Subsidiaries
Notes:
5,151,000 5,554,883
(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)
(v) The subsidiaries’ place of business is the same as its country of incorporation, unless otherwise specified.
(vi) Abbreviations:
(n) These companies were incorporated during the financial year.
British Virgin Islands (BVI) United Arab Emirates (UAE)
Hong Kong (HK)
United States of America (USA)
(vii) The Company has 244 significant subsidiaries and associated companies as at 31 December 2013. 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.
200
Keppel Corporation LimitedReport to Shareholders 2013
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 19 April 2013. 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
Integradora de Servicios Petroleros Oro Negro
Mapletree Investments Group
MediaCorp Group
Neptune Orient Lines Group
PSA International Group
SATS Group
Sembcorp Industries 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
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)
2013
$’000
2012
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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)
2013
$’000
5,400
-
3,969
3,600
-
175
17,140
7,712
527
1,625
-
1,646
2,135
70
-
-
201
90,000
-
21,284
-
715
315
-
7,000
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
163,514
1,083,161
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
201
CONFIGUREDFOR GROWTH
Key Executives
In addition to the Chief Executive Officer (Mr Loh Chin Hua) and Senior Executive Director (Mr Teo Soon Hoe), the following are
the key executive officers (“Key Executives”) of the Company and its principal subsidiaries:
Choo Chiau Beng, 66
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.
Mr Choo was Chief Executive Officer of Keppel Corporation Limited from 1 January 2009 to 1 January 2014. He was Executive
Director of Keppel Corporation Limited since 1983 and Senior Executive Director since 2005. Upon his retirement on 1 January
2014, Mr Choo was appointed Senior Advisor to the Board of Keppel Corporation Limited.
Mr Choo sits on the Boards of Keppel Care Foundation Limited and KrisEnergy Ltd. He is a Board Member of Energy Studies
Institute and National Research Foundation, a Board & Council Member of American Bureau of Shipping, the Chairman of
Centre for Maritime Studies of the National University of Singapore (NUS) and the Council Member of Singapore of Asean
Council on Petroleum (ASCOPE). He is also the Chairman of the Board of Governors of Raffles Institution, a member of the
Singapore University of Technology and Design’s Board of Trustees and a member of the Management Board of Institute for
Engineering Leadership of NUS.
Mr Choo was conferred the Public Service Star Award (BBM) in August 2004, The Meritorious Service Medal in 2008 and NTUC
Medal of Commendation (Gold) Award in May 2007. He is Singapore’s Non-Resident Ambassador to Brazil.
Past principal directorships for the last 5 years
Keppel Corporation Limited, Keppel Land Limited, Keppel Offshore & Marine Ltd, Keppel Infrastructure Holdings Pte Ltd, k1
Ventures Limited, Keppel Land China Limited, Maritime and Port Authority of Singapore, Singapore Maritime Foundation Limited,
Singapore Petroleum Company, Singapore Refining Company and SMRT Corporation Ltd.
Tong Chong Heong, 67
Graduate of Management Development Programme, Harvard Business School; Stanford-NUS Executive Programme; Diploma
in Management Studies, The University of Chicago Graduate Business School
Mr Tong was Chief Executive Officer of Keppel Offshore & Marine Ltd from 1 January 2009 to 1 February 2014 and was
responsible for the overall management and operations of Keppel Offshore & Marine Ltd. He was Executive Director of Keppel
Corporation Limited since 2009 and Senior Executive Director from 2011 to 2014. Upon his retirement on 1 February 2014, he
was appointed Senior Advisor to the Boards of Keppel Offshore & Marine Ltd and Keppel Infrastructure Holdings Pte Ltd.
Mr Tong was appointed Commander of the Volunteer Special Constabulary (VSC) from 1995 to 2001 and was honoured with
Singapore Public Service Medal at the 1999 National Day Award. He was awarded the Medal of Commendation (Gold) Award at
NTUC May Day 2010. He is a member of Board of Institute of Technical Education (ITE) Governors, NTUC-U Care Fund Board
of Trustees, DNV Southeast Asia Offshore Committee and Singapore Maritime Institute Governing Council. He had served
as Vice President/President of Association of Singapore Marine Industries (1993-1996) and is a member of Society of Naval
Architects and Marine Engineers (USA), American Bureau of Shipping and Nippon Kaiji Kyokai (Class NK). He is a Fellow of The
Royal Institute of Naval Architects (RINA) UK, Institute of Marine Engineering, Science & Technology and the Society of Project
Managers.
Past principal directorships in the last five years
Keppel Corporation Limited, Keppel Offshore & Marine Ltd and Keppel Infrastructure Holdings Pte Ltd.
202
Keppel Corporation LimitedReport to Shareholders 2013 Chan Hon Chew, 48
Bachelor of Accountancy (Honours); Chartered Accountant, Institute of Chartered Accountants in Australia; Chartered Financial
Analyst, CFA Institute; Chartered Accountant (Singapore), Institute of Singapore Chartered Accountants.
Mr Chan is the Chief Financial Officer of Keppel Corporation Limited, appointed with effect from 1 February 2014.
Prior to joining Keppel Corporation, Mr Chan was with Singapore Airlines Limited (SIA) and served as Senior Vice President
(SVP) of Finance since June 2006. As SVP Finance, Mr Chan was responsible for a diverse range of functions including investor
relations, corporate accounting and reporting, treasury, risk management and insurance. He was also involved in SIA’s strategic
planning process and had represented SIA as Director on the Boards of various companies including Tiger Airways and Virgin
Atlantic Airways Limited.
Prior to SIA, Mr Chan was Assistant General Manager for Finance and Corporate Services at Wing Tai Holdings Limited where he
oversaw all financial matters as well as tax, legal and corporate secretarial functions from 1998 to 2003.
Mr Chan was appointed by Singapore’s Ministry of Finance to the Board of the Singapore Accountancy Commission in April
2013. He was also elected to the Council of the Institute of Singapore Chartered Accountants in July 2013.
Mr Chan is a Director of Keppel Infrastructure Holdings Pte Ltd and Keppel Offshore & Marine Ltd.
Past principal directorships in the last five years
Tiger Airways Holdings Limited, Singapore Aviation & General Insurance Company (Pte) Ltd and RCMS Properties Private
Limited.
Chow Yew Yuen, 59
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 Executive Officer of Keppel Offshore & Marine Ltd on 1 February 2014. Prior to this, he
was the Chief Operating Officer of Keppel Offshore & Marine Ltd since 1 March 2012 and before that, 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 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, Keppel FELS Limited, Keppel Shipyard Limited,
Keppel Marine Agencies LLC, Bennett & Associates LLC, and Keppel Infrastructure Holdings Pte Ltd.
Mr Chow is also a Vice President of Association of Singapore Marine Industries, a Council Member of Singapore Accreditation
Council, a member of The American Bureau of Shipping, a member of ABS Offshore Technical Committee and a member of
ABS Southeast Asia Regional Committee.
Past principal directorships in the last five years
Keppel Energy Pte Ltd.
Key Executives
203
CONFIGUREDFOR GROWTH Key Executives
Michael Chia Hock Chye, 61
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 & Marine Ltd and Managing Director of
Keppel Offshore & Marine Technology Centre. He was Director (Group Strategy & Development) of Keppel Corporation
Limited from January 2011 to January 2013. He was the Executive Director of Keppel FELS Limited from 2002 to 2009, with
overall responsibility of the business management of the company. Mr Chia was also Deputy Chairman of Keppel Integrated
Engineering Ltd from 2009 to 2011 and Chief Executive Officer from 2009 to 2010. He has more than 28 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;
a member of 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 principal directorships include Keppel Telecommunications & Transportation Ltd, Keppel Shipyard Limited, FloaTEC LLC,
Floatel International 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, Nakilat Keppel Offshore & Marine Ltd and Dyna-Mac Holdings Ltd.
Past principal directorships in the last five years
Floatec Singapore Pte Ltd, Keppel Infrastructure Fund Management Pte Ltd, Keppel AmFELS Inc (USA), Keppel FELS Limited and
Keppel Integrated Engineering Ltd.
Wong Kok Seng, 63
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 & 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 Industry Co. Ltd., FloaTEC LLC, Floatec Singapore Pte Ltd, Offshore Technology Development Pte Ltd, Bintan
Offshore Fabricators Pte Ltd (Chairman), Seafox 5 Limited, Keppel Offshore & Marine Technology Centre Pte Ltd, Bennett &
Associates, LLC (Chairman), Deepwater Technology Group Pte Ltd, Regency Steel Japan Ltd and Caspian Shipyard Company
Ltd.
Past principal directorships in the last five years
Nil
204
Keppel Corporation LimitedReport to Shareholders 2013 Chor How Jat, 52
Bachelor of Science (Honours) in Naval architecture, University of Newcastle Upon Tyne; Master of Science in Marine
Technology, University of Newcastle Upon Tyne; General Management Program, Harvard Business School.
Mr Chor is the Managing Director of Keppel Shipyard Limited since October 2012. Mr Chor began his professional career with
Keppel Offshore and Marine Ltd in 1988 and held appointments as Shiprepair Manager, Deputy Shipyard Manager, Shipyard
Manager of Keppel Shipyard Limited, General Manager (Operations) of Keppel FELS Limited in 2004 and Executive Director of
Keppel Shipyard in January 2011.
Mr Chor serves as Director on the Boards of Keppel Shipyard Limited, Asian Lift Pte Ltd, Keppel Philippines Marine Inc, Keppel
Batangas Shipyard, Keppel Subic Shipyard Inc., Keppel Offshore & Marine Technology Centre Pte Ltd, Keppel Singmarine Pte
Ltd and KSI Production Ltd. Mr Chor is also Director and Chairman of Blastech Abrasives Pte Ltd, Nusa Maritime Pte Ltd, Alpine
Engineering Services Pte Ltd and Blue Ocean Solutions Pte Ltd.
In addition, Mr Chor is a council member of Association of Singapore Marine Industries (ASMI) and a member of Workplace
Safety and Health Council (Marine Industries), American Bureau of Shipping, ClassNK Singapore Technical Committee of
Nippon Kaiji Kyokai, AIDS Business Alliance - the Health Promotion Board and Lloyd’s Register South East Asia Technical
Committee (SEATC).
Past principal directorships in the last five years
Japan Regency Steel Limited, Atwin Offshore and Marine Pte Ltd and Keppel FELS Offshore and Engineering Services Mumbai
Pvt Ltd.
Hoe Eng Hock, 62
Bachelor of Science in Marine Engineering (First Class Honours), 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 in 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 and Chairman of Prime Steelkit Pte
Ltd. He is also on the Boards of Keppel Nantong Shipyard Co Ltd, Keppel Smit Towage Pte Ltd, Maju Maritime Pte Ltd, Marine
Technology Development Pte Ltd, Keppel Offshore & Marine Technology Centre Pte Ltd, 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 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
Foo Kok Seng, 51
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 Pte Ltd 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 sits on the Boards of DPS Bristol (Holdings), Keppel AmFELS LLC, Keppel Offshore & Marine Technology Centre Pte Ltd,
Offshore Technology Development Pte Ltd, Regency Steel Japan Ltd, and Caspian Rigbuilders Pte Ltd. He is also a Member of
Energy Ventures Advisory Board.
Past principal directorships in the last five years
Arab Heavy Industries, Keppel FELS Offshore and Engineering Services Mumbai Pvt Ltd and Blue Ocean Solutions Pte Ltd.
Key Executives
205
CONFIGUREDFOR GROWTH Key Executives
Aziz Amirali Merchant, 49
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; General Management Program,
Harvard Business School.
Mr Merchant is the Executive Director (Deepwater), Keppel Offshore & Marine Technology Centre Pte Ltd; Executive Director,
Deepwater Technology Group (DTG); and Executive Director (Engineering), Keppel FELS Limited.
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 Offshore & Marine Engineering Services Mumbai
Private Ltd and Fernvale Pte Ltd.
Mr Merchant is the Member of the Ngee Ann Polytechnic Marine & Offshore Technology Advisory Committee, American
Bureau of Shipping South East Asia Technical Committee and Lloyds Technical Committee. He is a Fellow of the Society of
Naval Architects and Marine Engineers Singapore, The Royal Institution of Naval Architects and Institute of Marine Engineering,
Science & Technology.
Past principal directorships in the last five years
Nil
Wong Fook Seng, 61
MSC (Financial Management) from the University of London, UK; MBA (Nanyang Fellows/MIT) from Nanyang Technological
University, Singapore.
Mr Wong started his career in the marine industry 45 years ago as an apprentice and has been with Keppel FELS Limited for the
last 34 years. He is currently the Executive Director (Process Excellence & Planning) having just relinquished his last position as
the 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 had led various initiatives that helped transform the processes and systems of Keppel FELS to meet the
challenges of a sudden upsurge in market demand culminating in the delivery of 21 rigs in 2013 alone, a record for the company.
Mr Wong was involved in setting up and heading various subsidiaries of Keppel FELS, both locally and overseas. He had also
served as a director on the boards of some of these subsidiaries and currently sits on the board of Keppel FELS Limited and
Lindel Pte Ltd and serving as an alternate director to the Chairman of Green Scan Pte Ltd and Keppel Sea Scan Pte Ltd. His
overseas assignments included countries such as Vietnam, Brazil and Kazakhstan.
Mr Wong was an Adjunct Associate Professor with National University of Singapore, School of Design and Environment and
currently sits on their school advisory committee. Among his various public contributions, he was the sole Singapore judge on a
panel of 3 judges for the Maxa Award in 2010, the pinnacle award for manufacturing excellence in Singapore.
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
Toh Ko Lin, 62
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. He also serves as 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 Shipyard Limited (since 16 September 2013) and an alternate director of Keppel Smit Towage Pte Ltd
and Maju Maritime Pte Ltd.
He began his career in ship repair and specialised 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
206
Keppel Corporation LimitedReport to Shareholders 2013 Ong Leng Yeow, 39
Bachelor and Master Degree in Electrical and Electronics Engineering from National University of Singapore.
Mr Ong is appointed General Manager of Engineering Department of Keppel FELS Limited since 2011 where he is responsible
for the execution of engineering on projects and also on technical marketing of company’s suite of products. He is currently
the Acting Executive Director, Operations of Keppel FELS Limited.
Mr Ong’s career began in Keppel FELS since 1999 as a Commissioning Superintendent (E&I) where he was involved in system
startups in Keppel FELS and AMFELS. He moved on to join the Engineering Department and was involved in several technical
contract negotiations with major customers, like BP, Shell, Ensco, Transocean, Gulf Drilling etc.
Mr Ong sits on the Boards of Keppel FELS Limited, Keppel Offshore & Marine Technology Centre Pte Ltd, Offshore Technology
Development Pte Ltd, Keppel FEL Engineering Shenzhen Co Ltd, Keppel Nantong Shipyard Co Ltd and Keppel Nantong Heavy
Industry Co Ltd.
Past principal directorships in the last five years
Nil
Ong Tiong Guan, 55
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 and was appointed Deputy Chairman of Keppel Integrated Engineering Ltd
on April 2013.
Upon reorganisation of Keppel Energy Pte Ltd and Keppel Integrated Engineering Ltd under a newly incorporated entity, Keppel
Infrastructure Holdings Pte Ltd in May 2013, Dr Ong was appointed as Chief Executive Officer of Keppel Infrastructure and is
responsible for Keppel Corporation’s energy infrastructure business.
Dr Ong’s career spans across the energy industry from engineering and contracting to investment and ownership of energy
assets.
His directorships include Keppel Infrastructure Holdings Pte Ltd, Keppel Energy Pte Ltd, Keppel Electric Pte Ltd, Keppel
Merlimau Cogen Pte Ltd, Keppel Gas Pte Ltd, Pipenet Pte Ltd, Keppel Integrated Engineering Ltd, Keppel DHCS Pte Ltd, Keppel
Infrastructure Services Pte Ltd, Keppel Energy Ventures Pte Ltd, Keppel FELS Power Pte Ltd and GE Keppel Energy Pte Ltd.
Past principal directorships in the last five years
Corporacion Electrica Nicaraguense S.A. and Termoguayas Generation S.A.
Tay Lim Heng, 50
Bachelor (Honours) in Engineering Science and Economics, University of Oxford; Masters in Public Administration, Harvard
University; Advanced Management Programme, Harvard Business School.
BG(Ret) Tay is Managing Director (Waste-to-Energy) and also concurrently Managing Director (Keppel Seghers) under KeppeI
Infrastructure Holdings Pte Ltd. He was the Chief Executive Officer of Keppel Integrated Engineering from January 2011 to April
2013, and Deputy Chief Executive Officer from June to December 2010. Prior to joining Keppel Group, BG(Ret) 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(Ret) 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, GE Keppel Energy
Services Pte Ltd, EM Services Pte Ltd, Singapore Tianjin Eco-City Investment Holdings Pte Ltd, Keppel Shipyard Limited and
Keppel Singmarine Pte Ltd. He is the President of the Singapore Water Association.
Past principal directorships in the last five years
DSO National Laboratory, Singapore.
Key Executives
207
CONFIGUREDFOR GROWTH Key Executives
Nicholas Lai Garchun, 46
Master of Applied Science from Macquarie University, Sydney; Bachelor of Social Sciences (Second Upper Honours) from
National University of Singapore.
Mr Lai joined Keppel Energy Pte Ltd (then known as Keppel Fels Energy Pte Ltd) in 2002 as Assistant General Manager,
Development to bring in more business opportunities for the company. Subsequently, his portfolio evolved to focus on growing
gas and power generation capabilities and divesting non-core assets, in his capacity as General Manager. Today, he is the
Executive Director, Gas-to-Power of Keppel Infrastructure Holdings Pte Ltd and continues to drive value to the gas and power
businesses.
Mr Lai worked in Singapore Trade Development Board (currently known as IE Singapore) and Ministry of Trade & Industry in
his early career, with an overseas stint in Hong Kong. He held an international business development role in Singapore Power
International and a finance director role in a subsidiary of SembCorp Industries prior to joining Keppel Energy.
He is a Director of Keppel Energy Pte Ltd, Keppel Merlimau Cogen Pte Ltd, Keppel Electric Pte Ltd, Keppel Gas Pte Ltd, Pipenet
Pte Ltd and Keppel Energy Ventures Pte Ltd.
Past principal directorships in the last five years
Nil
Tan Boon Leng, 49
Master of Science in Management (Distinction) from Imperial College, London; Bachelor of Science with Second Upper
Honours in Computer Science from University College London.
Mr Tan joined Keppel Energy Pte Ltd (then known as Keppel Fels Energy Pte Ltd) in 2000 as General Manager (Development),
to spearhead the company’s business development activities. He was responsible for the successful implementation of
Keppel Merlimau Cogen (KMC) Phase 1 (500MW) project and the subsequent 800MW expansion. He was also responsible
for the company’s retail and trading operations in the Singapore electricity market before his new appointment under Keppel
Infrastructure Holdings Pte Ltd.
Upon the reorganisation of Keppel Energy Pte Ltd and Keppel Integrated Engineering Ltd under a newly incorporated entity,
Keppel Infrastructure Holdings Pte Ltd in May 2013, Mr Tan was appointed the Executive Director, X-to-Energy of Keppel
Infrastructure Holdings Pte Ltd to manage and grow the energy and related infrastructure business (save for Gas-to-Power and
Waste-to-Energy). Companies under X-to-Energy include Keppel DHCS (District Heating and Cooling Systems) and Keppel
Infrastructure Fund Management Pte Ltd, which is the trustee-manager of K-Green Trust, a business trust with an investment
focus on “green” infrastructure assets in Singapore, Asia, Europe and the Middle East.
Mr Tan sits on the Boards of Keppel Infrastructure Fund Management Pte Ltd, Keppel DHCS Pte Ltd, Keppel Seghers UK Ltd and
Keppel Energy Ventures Pte Ltd.
Past principal directorships in the last five years
Keppel Gas Pte Ltd, Pipenet Pte Ltd and GE Keppel Energy Services Pte Ltd.
Alan Tay Teck Loon, 44
Bachelor of Business Administration (Honours), National University of Singapore.
Mr Tay is Director, Business Development of Keppel Infrastructure Holdings Pte Ltd, with overall responsibility for the business
development of the company and its subsidiaries. Prior to joining Keppel Group, Mr Tay was Head of South East Asia for
JPMorgan Asset Management, Global Real Assets – Asian Infrastructure, a private equity fund focused on infrastructure and
related resources investments across Asia. He was also a member of the fund’s Investment Committee.
Mr Tay’s experience spans across mergers & acquisitions, greenfield development, joint venture, disposal, debt and equity fund
raising transactions throughout Asia, covering power, natural gas, waste-to-energy, transportation, banking, property, water,
shipyard and manufacturing sectors.
He is a Director of GE Keppel Energy Services Pte Ltd.
Past principal directorships in the last five years
J.P. Morgan Asset Management Real Assets (Singapore) Pte Ltd and Eco Management Korea Holdings Inc.
208
Keppel Corporation LimitedReport to Shareholders 2013 Cindy Lim Joo Ling, 36
Bachelor of Engineering (Mechanical & Production) with Second Upper Honours from the Nanyang Technological University;
Executive MBA from the Singapore Management University; General Management Programme at Harvard Business School.
Ms Lim is currently the General Manager of Infrastructure Services at Keppel Infrastructure Holdings Pte Ltd which focuses on
maximising the value of assets through value-added and reliable operation and maintenance services and excellent health,
safety and environment performance. Ms Lim is also concurrently, General Manager of Business Process Management at
Keppel Infrastructure and oversees innovation and process excellence, information technology and enterprise risk management.
Prior to her current appointment, she was the General Manager (Group Human Resources) of Keppel Corporation. Ms Lim
started her career as a management system auditor and consultant before she joined Keppel FELS in 2001 as a Quality System
Engineer. She had since held several leadership positions at Keppel FELS and Keppel Offshore & Marine Ltd in Quality System,
Process Excellence and Talent Management.
Ms Lim sits on the Boards of Keppel Seghers Engineering Singapore Pte Ltd, Keppel FMO Pte Ltd, GE Keppel Energy Services Pte
Ltd, Keppel Infrastructure Services Pte Ltd, Keppel Nantong Shipyard Co. Ltd and Travelmore Pte Ltd.
Past principal directorships in the last five years
Alpine Engineering Services Pte Ltd and Prime Steelkit Pte Ltd.
Pang Hee Hon, 53
Bachelor of Science and Bachelor of Commerce, University of Birmingham; Masters in Public Administration, Harvard University.
Mr Pang is the Chief Executive Officer of Keppel Telecommunications & Transportation Ltd, appointed with effect from
4 January 2010. Prior to that, Mr Pang was the Deputy President (Operations) of ST Electronics (Info-Software Systems) and
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 and ST Electronics (e-Services) Pte Ltd.
Thomas Pang Thieng Hwi, 49
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 (Trustee-Manager of K-Green
Trust (“KGT”)) since 29 June 2010. As the Chief Executive Officer 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 serves as Director on the Boards of Keppel Seghers Tuas Waste-to-Energy Plant Pte Ltd, Senoko Waste-to-Energy Pte
Ltd and Keppel Seghers Newater Development Co Pte Ltd (trustees of KGT’s sub-trusts), as well as Caspian Rig Builders Pte Ltd.
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
Key Executives
209
CONFIGUREDFOR GROWTH Key Executives
Ang Wee Gee, 52
Bachelor of Science summa cum laude, University of Denver, USA; Master of Business Administration, Imperial College,
University of London, UK.
Mr Ang joined the Keppel Land Group in 1991 and was appointed Chief Executive Officer of Keppel Land Limited on 1 January
2013.
Prior to his appointment as Chief Executive Officer of Keppel Land, Mr Ang held senior management positions in the Group.
He was 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 and, prior to that, 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 are listed on the Philippine
Stock Exchange and The Stock Exchange of Thailand respectively. Mr Ang previously held positions in business and project
development for Singapore and overseas markets, and corporate planning in the Group’s hospitality arm. He was also the
Group’s country head for Vietnam as well as the head of Keppel Land Hospitality Management Pte Ltd, the Group’s hotel and
serviced apartment management company.
Prior to joining Keppel Land Group, Mr Ang acquired diverse experience in the hotel, real estate and management consulting
industries in the USA, Hong Kong and Singapore.
Past principal directorships in the last five years
Various subsidiaries and associated companies of Keppel Land Limited.
Tan Swee Yiow, 53
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. He is concurrently Head of its hospitality management arm, Keppel Land Hospitality
Management Pte Ltd.
Mr Tan is a Director of a number of subsidiary and associated companies of the Group including Keppel Bay Pte Ltd, 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 and 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 and
the Workplace Safety Health Council (Construction and Landscape Committee).
Past principal directorships in the last five years
Asia No. 1 Property Fund, Keppel Thai Properties Public Company Ltd, Keppel REIT Management Ltd, EM Services Pte Ltd and
other subsidiaries and associated companies within the Keppel Land Group.
Ho Cheok Kong, 57
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.
Past principal directorships in the last five years
Nil
210
Keppel Corporation LimitedReport to Shareholders 2013 Ng Hsueh Ling, 47
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 24 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.
Past principal directorships in the last five years
The National Art Gallery, Singapore, 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, 48
Bachelor of Accountancy (Honours) degree from the National University of Singapore; Chartered Financial Analyst.
Ms Tan is the Managing Director of Alpha Investment Partners (AIP). She sits on the Investment Committee for all Funds and
is also a Board Member of AIP. Ms Tan has more than 20 years of real estate and investment management experience. As a
founding member, she has been actively involved in all phases of the firm’s development since 2003. She is also instrumental
in developing and implementing the portfolio strategy for all Alpha-managed funds. The firm is currently one of the largest pan-
Asian managers with above S$10 billion in assets under management.
Ms Tan previously served as 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.
Before GRA (Singapore), 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).
Past principal directorships in the last five years
Sun Vista Trading Limited, Finestar Investment Limited, Beautimint Development Limited, Fortune Door Holding Limited, Pacific
Gain Worldwide Ltd, Baccarat International Limited, Grand Fortune House Limited, Bisdale Limited, Pogain Limited, Asia Real
Estate Fund Management Limited, Hillsborough Limited and Growth Partners IV Holdings Ltd.
Key Executives
211
CONFIGUREDFOR GROWTH Major Properties
Held By
Completed properties
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
Keppel REIT
25%
30-storey office building 99 years leasehold Commercial office building
with rentable area of
20,554 sqm
(92.8% of the strata area)
15-storey office building 99 years leasehold Commercial office building
with rentable area of
22,761 sqm
Land area: 6,109 sqm
43-storey office building
999 years leasehold Commercial office building
with rentable area of
82,174 sqm
(99.9% interest)
Land area: 20,505 sqm
99 years leasehold An integrated development
comprising office, retail and
428 condominium units
Prudential Tower
Cecil Street &
Church Street,
Singapore
Bugis Junction
Towers
Victoria Street,
Singapore
Ocean Financial
Centre
Collyer Quay,
Singapore
Marina Bay
Financial Centre
(Phase 1)/Marina
Bay Residences
Marina Boulevard/
Central Boulevard,
Singapore
One Raffles Quay
Singapore
Land area: 11,367 sqm
Two office towers
99 years leasehold Commercial office building
with rentable area of
41,318 sqm
(1/3 interest)
Commercial office building
with rentable area of
20,874 sqm
(50% interest)
Commercial office building
with rentable area of
13,748 sqm
99 years leasehold Commercial office buildings
Freehold
with rentable area of
9.682 sqm
(50% interest)
Commercial office buildings
with rentable area of
22,446 sqm
(50% interest)
275 George Street Land area: 7,074 sqm
Brisbane,
Australia
30-storey Grade A
commercial building
Freehold
Freehold
77 King Street
Sydney,
Australia
8 Chifley square
Sydney,
Australia
Land area: 1,284 sqm
Grade A commercial
building with office
and retail space
Land area: 1,581 sqm
34-storey premium
Grade commercial
building
8 Exhibition Street Land area: 4,329 sqm
Melbourne,
Australia
35-storey Grade A
commercial building
with office and retail
space
212
Keppel Corporation LimitedReport to Shareholders 2013
Held By
Central Boulevard
Development Pte Ltd
Effective
Group
Interest
18%
Location
Marina Bay
Financial Centre
(Phase 2)/
Marina Boulevard/
Central Boulevard,
Singapore
Description and
Approximate
Land Area
Land area: 9,710 sqm
46-storey office towers
with retail podium
Tenure
Usage
99 years leasehold Commercial office building
with rentable area of
123,671 sqm
Parksville Development
Pte Ltd
55%
Mansfield Development 55%
Pte Ltd
DL Properties Ltd
35%
Marina Bay Suites/ Land area: 5,300 sqm
Marina Boulevard/
Central Boulevard,
Singapore
99 years leasehold A 221-unit luxury
condominium development
Nassim Woods,
Tanglin Road,
Singapore
Keppel Towers
Hoe Chiang Rd,
Singapore
GE Tower
Hoe Chiang Rd,
Singapore
Equity Plaza
Cecil Street,
Singapore
Land area: 5,785 sqm
99 years leasehold A 35-unit luxurious
condominium development
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
32,580 sqm
Commercial office building
with rentable area of
7,378 sqm
Land area: 2,177 sqm
28-storey office building
99 years leasehold Commercial office building
with rentable area of
23,468 sqm
HarbourFront One
Pte Ltd
65%
Keppel Bay Tower Land area: 17,267 sqm
HarbourFront
Avenue,
Singapore
18-storey office building
99 years leasehold Commercial office building
with rentable area of
36,015 sqm
HarbourFront Two
Pte Ltd
34%
Keppel Bay Pte Ltd
86%
Spring City Golf &
Lake Resort Co
(owned by Kingsdale
Development Pte Ltd)
38%
Equity Rainbow II Pte Ltd 20%
HarbourFront
Tower One and
Two
HarbourFront
Place,
Singapore
Reflections
at Keppel Bay
Singapore
Spring City Golf
& Lake Resort
Kunming,
China
Land area: 10,923 sqm
18-storey and 16-storey
office buildings
99 years leasehold Commercial office buildings
with rentable area of
48,618 sqm
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
Life Hub @ Jinqiao Land area: 59,956 sqm
Shanghai,
China
50 years lease
A retail and office
development with rentable
area of 79,214 sqm
Major Properties
213
CONFIGUREDFOR GROWTH
Major Properties
Held By
Effective
Group
Interest
PT Straits-CM Village
21%
PT Kepland Investama
55%
Location
Club Med
Ria Bintan
Bintan,
Indonesia
International
Financial Centre
(Tower 1)
Jakarta,
Indonesia
Description and
Approximate
Land Area
Tenure
Usage
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 I
Co Ltd
37%
Properties under development
Sherwood Development 38%
Pte Ltd
Keppel Bay Pte Ltd
86%
Keppel Land (Mayfair)
Pte Ltd
55%
Saigon Centre
(Phase 1)
Ho Chi Minh City, cum serviced
Vietnam
Land area: 2,730 sqm
25-storey office, retail
apartments
development
50 years lease
Commercial building with
rentable area of 10,443 sqm
office, 3,663 sqm retail,
305 sqm post office and
89 units of serviced
apartments
The Glades
Tanah Merah,
Singapore
Keppel Bay
Plot 3 and 6,
Singapore
The Lakefront
Residences
Lakeside Drive,
Singapore
Land area: 31,882 sqm
99 years leasehold A 726-unit condominium
development
*(2017)
Land area: 82,531 sqm
99 years leasehold Waterfront condominium
development
*(2018)
Land area: 16,117 sqm
99 years leasehold A 629-unit condominium
development
*(2015)
Keppel Land Realty
Pte Ltd
55%
The Luxurie
Compassvale Road,
Singapore
Land area: 17,700 sqm
99 years leasehold A 622-unit condominium
development
*(2015)
Harvestland Development 55%
Pte Ltd
Beijing Aether Property
Development Ltd
28%
Residential
development,
Tiong Bahru,
Singapore
Commercial
Development
Beijing,
China
Land area: 10,991 sqm
99 years leasehold A 500-unit condominium
development
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
214
An office and retail
development in Chaoyang
District
*(2016)
A 1,102-unit residential
development in Nanxiang
Town, Jiading District
*(2015)
A 918-unit residential
apartment development
(Plot B)
*(2015)
Keppel Corporation LimitedReport to Shareholders 2013
Effective
Group
Interest
55%
Held By
Shanghai Hongda
Property Development
Co Ltd
Shanghai Jinju Real
Estate Development
Co Ltd
54%
Spring City Golf &
Lake Resort
38%
Location
The Springdale
Shanghai,
China
Landed
Development
Shanghai,
China
Spring City Golf
& Lake Resort
Kunming,
China
Description and
Approximate
Land Area
Tenure
Usage
Land area: 264,090 sqm 70 years lease
(residential)
40 years lease
(commercial)
Land area: 175,000 sqm 70 years lease
Land area: 2,157,361 sqm 70 years lease
Keppel Lakefront (Wuxi)
Property Development
Co Ltd
55%
Waterfront
Residence
Wuxi,
China
Land area: 215,230 sqm 70 years lease
(residential)
40 years lease
(commercial)
CityOne Development
(Wuxi) Co Ltd
27%
Central Park City
Wuxi,
China
Land area: 352,534 sqm 70 years lease
(residential)
40 years lease
(commercial)
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
A 2,667-unit residential
development with integrated
facilities
*(2014)
A 200-unit landed
development
*(2015 Phase 1)
Integrated resort comprising
golf courses, resort homes
and resort facilities (Hillcrest
Residence Phase 2B)
*(2014)
A 2,500-unit prime
residential development with
commercial facilities in
Binhu District
*(2019)
A 4,984-unit residential
township development with
integrated facilities
*(2015 Phase 3)
A 2,794-unit residential
township with integrated
facilities in Shenbei New
District in Shenyang
A mixed development,
primarily residential
(4,354-units) together with
some commercial space
*(2014 Phase 1 & 2014/2015
Phase 2)
A 340-unit residential
development in Tianjin
Eco-City
*(2014)
Tianjin Fushi Property
Development Co Ltd
55%
Chengdu Hillstreet
Development Co Ltd
55%
Chengdu Hilltop
Development Co Ltd
55%
Serenity Villa
Tianjin,
China
Park Avenue
Heights
Chengdu,
China
Hill Crest Villa
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
A 274-unit villa development
in Xinjin County
*(2014 Phase 1)
Major Properties
215
CONFIGUREDFOR GROWTH
Major Properties
Held By
Chengdu Century
Development Co Ltd
Effective
Group
Interest
24%
Location
The Botanica
Chengdu,
China
Description and
Approximate
Land Area
Tenure
Usage
Land area: 419,775 sqm 70 years lease
(residential)
40 years lease
(commercial)
Sunsea Yacht Club
(Zhongshan) Co Ltd
44%
Zhongshan Marina Land area: 891,752 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)
Keppel Lakefront
(Nantong) Property
Development Co Ltd
55%
Waterfront
Residence
Nantong,
China
Land area: 172,215 sqm 70 years lease
Estella JV Co Ltd
30%
The Estella
Ho Chi Minh City,
Vietnam
Land area: 47,906 sqm 50 years lease
A 9,664-unit residential
township development with
integrated facilities
*(2014 Phase 7)
A 1,647-unit residential
development with a mix of
villas and apartments, and
integrated marina lifestyle
facilities
*(2014 Phase 1)
A 1,477-unit mixed
development with
residential, office and retail
space
*(2014 Phase 2 & 2017
Phase 3)
A 1,199-unit residential
development
*(2014 Phase 1)
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 space in Long
Thanh District
*(2018-2021 Phase 1)
Dong Nai Waterfront
City LLC (owned by
Portsville Pte Ltd)
27%
Industrial properties
Keppel FELS Limited
100%
Land area: 3,667,127 sqm 50 years lease
Dong Nai
Waterfront City
Dong Nai Province,
Vietnam
Jurong, Pioneer,
Crescent and
Tuas South Yard,
Singapore
Land area: 741,773 sqm 3 - 30 years
buildings, workshops,
building berths,
drydocks 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
buildings, workshops,
drydocks and wharves
leasehold
Shiprepairing, shipbuilding
and marine construction
* Expected year of completion
216
Keppel Corporation LimitedReport to Shareholders 2013
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)
2009
2010
2011
2012
2013
11,990
9,140
10,082
13,965
12,380
1,424
1,748
1,190
1,556
1,889
1,307
1,897
2,177
1,491
2,396
2,695
1,914
1,774
2,163
1,412
1,540
1,591
1,946
2,237
1,846
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
8,760
5,909
14,428
110
29,207
8,059
7,208
362
13,578
9,246
4,332
13,578
105.4
130.4
83.8
106.8
109.4
43.0
4.32
4.26
26.2
20.8
1.9
(0.16)
124.8
73.6
5.14
5.08
27.6
22.6
1.4
(0.23)
5,986
6,192
17,792
86
30,056
8,825
7,100
442
13,689
9,701
3,988
13,689
96.3
78.2
102.3
49.5
5.37
5.32
18.4
14.9
1.6
(0.11)
31,775
1,372
31,360
1,367
33,747
1,433
38,390
1,579
39,364
1,668
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. In calculating return on shareholders’ funds, average shareholders’ funds has been used.
Group Five-Year Performance
217
CONFIGUREDFOR GROWTH
Group Five-Year Performance
2013
Group revenue was $12,380 million as compared to $13,965 million for 2012. Many jobs started during the year have not
reached the stage of revenue recognition resulting in the revenue of Offshore & Marine Division falling by 11% to $7,126 million.
In 2013, 22 major new builds, comprising 20 jack-ups, an accommodation semi and a semi-submersible, were completed.
Other significant jobs completed include a drillship upgrade, a semi upgrade, several FPSO projects and a diving support vessel.
Revenue from Infrastructure Division increased by $627 million to $3,459 million due to higher revenue contributed by the co-
generation power plant in Singapore. Property Division saw its revenue weakened by 41% to $1,768 million mainly from decline
in sales recognition of Reflections at Keppel Bay units arising from the deliveries of residential units sold under the deferred
payment scheme in 2012 which was not repeated in 2013.
At the pre-tax level (before revaluation, major impairment and divestments), Group profit went down by $532 million from
$2,695 million in 2012 to $2,163 million for the current year. Offshore & Marine Division posted a higher pre-tax profit of
$1,187 million mainly from an increase in share of associated companies’ profits partly offset by a decrease in operating results.
Profit from Infrastructure Division picked up by 2% to $43 million due mainly to improved performance by its power and gas
business. There was also a reversal of provision following the finalisation of the sale of the power barge. This was partly offset
by losses arising from cost overruns pertaining to the EPC contracts. Property Division profit of $853 million was 33% lower
than profit of $1,276 million for 2012. Reflections at Keppel Bay recorded higher profits in the previous year as it benefited
from revenue recognition from the deliveries of residential units sold under the deferred payment scheme. This reduction
was partially offset by higher contribution of profit from China and profit from the sale of Jakarta Garden City project. Fewer
disposals of equity investments in 2013 resulted in the decline of Investments Division’s profit to $80 million.
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 $1,276 million due to higher contribution from associated companies and higher contribution from Reflections
at Keppel Bay.
Revenue ($ billion)
Pre-Tax Profit ($ million) *
Net Profit ($ million) *
15
10
5
0
3,000
2,000
1,000
0
3,000
2,000
1,000
0
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
12.0
9.1
10.1
14.0
12.4
1,748
1,889
2,177
2,695
2,163
1,190
1,307
1,491
1,914
1,412
* Figures exclude revaluation, major impairment and divestments.
218
Keppel Corporation LimitedReport to Shareholders 2013 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.
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 $488 million, an increase of 33% over the preceding year. This
was mainly attributable to higher contribution from several residential projects in Singapore, China and Vietnam, and share of
profit of the associated company developing Marina Bay Suites in Singapore. Profit from Investments Division was lower as the
previous year included contribution from Singapore Petroleum Company which was disposed in June 2009.
Shareholders’ Funds ($ billion)
Capital Employed ($ billion)
Market Capitalisation ($ billion)
12
8
4
0
15
10
5
0
30
20
10
0
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
5.9
6.6
7.7
9.2
9.7
8.7
9.7
11.8
13.6
13.7
13.1
18.2
16.6
19.8
20.2
Group Five-Year Performance
219
CONFIGUREDFOR GROWTH Group Five-Year Performance
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 $368 million, 8% higher. Earnings have increased because of higher
revenue recognition from residential properties and share of profit of associated companies developing Marina Bay Residences
in Singapore. Profit from Investments was lower following the disposal of Singapore Petroleum Company in June 2009.
220
Keppel Corporation LimitedReport to Shareholders 2013 Group Value-Added Statements
($ million)
Value added from:
Revenue earned
Less: purchases of materials and services
Gross value added from operation
In addition:
Interest and investment income
Share of associated companies’ profits *
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
2009
2010
2011
2012
2013
11,990
(9,020)
2,970
9,140
(6,028)
3,112
10,082
(6,544)
3,538
13,965
(9,779)
4,186
12,380
(8,696)
3,684
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
167
266
562
5,181
1,579
501
135
212
789
1,136
158
356
631
4,829
1,668
397
125
175
1,357
1,657
Total Distribution
2,440
2,962
2,857
3,216
3,722
Balance retained in the business:
Depreciation & amortisation
Non-controlling interests share of profits
in subsidiaries
Retained profit for the year
174
85
967
1,226
189
420
600
1,209
208
765
1,222
2,195
211
306
1,448
1,965
242
376
489
1,107
3,666
4,171
5,052
5,181
4,829
Number of employees
31,775
31,360
33,747
38,390
39,364
Productivity data:
Gross value added per employee ($’000)
Gross value added per dollar employment cost ($)
Gross value added per dollar sales ($)
Notes:
*
Figures exclude revaluation, major impairment and divestments.
Depreciation & Retained Profit
Interest Expenses & Dividends
Taxation
Wages, Salaries & Benefits
93
2.16
0.25
99
2.28
0.34
105
2.47
0.35
109
2.65
0.30
94
2.21
0.30
($ million)
6,000
5,000
4,000
3,000
2,000
1,000
0
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
5,181
1,965
1,136
501
1,579
4,829
1,107
1,657
397
1,668
2009
2010
2011
2012
2013
Group Value-Added Statements
221
CONFIGUREDFOR GROWTH
Share Performance
Turnover (million)
400
Share Prices ($)
40
300
200
180
160
140
120
100
80
60
40
20
0
30
20
18
16
14
12
10
8
6
4
2
0
2009
2010
2011
2012
2013
Turnover
High and Low Prices
Share Price ($)*
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 ($)
Distribution yield (%) (Note 3)
Net price earnings ratio (Note 3)**
Net price to book ratio (Note 3)
Net assets backing ($)
2009
2010
2011
2012
2013
7.48
7.91
3.61
5.82
67.9
55.5
9.5
8.6
7.48
7.4
11.0
2.2
3.3
10.29
10.42
7.15
8.27
74.3
38.2
4.6
11.1
10.29
3.7
13.8
2.8
3.7
9.30
12.18
7.02
9.88
83.8
43.0
4.4
11.8
9.30
4.6
11.1
2.2
4.3
11.00
11.67
9.32
10.75
106.8
73.6
6.9
10.1
11.00
6.7
10.3
2.2
5.1
11.19
11.93
10.01
10.87
78.2
49.5
4.6
13.9
11.19
4.4
14.3
2.1
5.3
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.
Notes:
1.
2. Volume weighted average share price is used in calculating distribution yield and net price earnings ratio.
3.
* Historical share prices are not adjusted for special dividends, capital distribution and dividend in specie.
** Figures exclude revaluation, major impairment and divestments.
Last transacted share price is used in calculating distribution yield, net price earnings ratio and net price to book ratio.
222
Keppel Corporation LimitedReport to Shareholders 2013
Shareholding Statistics
As at 4 March 2014
Total number of issued shares
Issued and fully paid-up capital : $1,261,265,694.01
Class of Shares
: 1,814,043,858
: 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 4 March 2014
Temasek Holdings (Private) Limited
Citibank Nominees Singapore Pte Ltd
DBS Nominees Pte Ltd
DBSN Services Pte Ltd
HSBC (Singapore) Nominees Pte Ltd
BNP Paribas Securities Services
United Overseas Bank Nominees Pte Ltd
Raffles Nominees (Pte) Ltd
Bank of Singapore Nominees Pte Ltd
Shanwood Development Pte Ltd
DB Nominees (S) Pte Ltd
Teo Soon Hoe
Choo Chiau Beng
OCBC Nominees Singapore Pte Ltd
UOB Kay Hian Pte Ltd
Lim Chee Onn
OCBC Securities Private Ltd
Phillip Securities Pte Ltd
Tong Chong Heong
BNP Paribas Nominees Singapore Pte Ltd
Total
Number of
Shareholders
2,352
35,310
5,472
36
%
5.45
81.79
12.68
0.08
Number of
Shares
638,881
107,783,682
172,831,345
1,532,789,950
%
0.03
5.94
9.53
84.50
43,170
100.00
1,814,043,858
100.00
Number of
Shares
371,408,292
315,810,999
268,643,911
170,763,408
142,887,238
70,689,502
68,646,849
33,599,008
14,858,930
7,040,000
6,532,045
5,451,322(i)
5,153,574(ii)
5,143,852
3,829,221
3,544,282
3,129,087
3,109,438
2,774,597(iii)
2,762,590
1,505,778,145
%
20.47
17.41
14.81
9.41
7.88
3.90
3.78
1.85
0.82
0.39
0.36
0.30
0.28
0.28
0.21
0.20
0.17
0.17
0.15
0.15
83.01
Notes:
(i)
(ii)
(iii)
Includes 44,000 shares held by OCBC Nominees Singapore Pte Ltd on his behalf.
Includes 1,740,000 shares held by HSBC (Singapore) Nominees Pte Ltd, 554,000 shares held by DBS Nominees Pte Ltd and 200,000 shares held by Citibank
Nominees Singapore Pte Ltd respectively on his behalf.
Includes 660,000 shares held by HSBC (Singapore) Nominees Pte Ltd, 220,000 shares held by OCBC Securities Pte Ltd, 700,000 shares held by Citibank
Nominees Singapore Pte Ltd, 50,000 shares held by DMG & Partners Securities Pte Ltd and 400,000 shares held by Bank of Singapore Nominees Pte Ltd
respectively on his behalf.
Substantial Shareholders
Temasek Holdings (Private) Limited
Aberdeen Asset Management PLC
Aberdeen Asset Management Asia Limited
371,408,292
-
-
20.47%
-
-
12,540,271
107,190,900
102,546,900
0.69%
5.91%
5.65%
383,948,563
107,190,900
102,546,900
Direct Interest
Deemed Interest
Total Interest
No. of Shares
%
No. of Shares
%
No. of Shares
%
21.17%
5.91%
5.65%
Notes:
(i) Temasek Holdings (Private) Limited is deemed to be interested in an aggregate of 12,540,271 shares in which its subsidiaries and associated companies have an
interest.
(ii) Aberdeen Asset Management PLC (AAMPLC) is deemed to be interested in an aggregate of 107,190,900 shares held by various accounts managed or advised by
AAMPLC over which AAMPLC has disposal and voting rights.
(iii) Aberdeen Asset Management Asia Limited (AAMAL) is deemed to be interested in an aggregate of 102,546,900 shares held by various accounts managed or
advised by AAMAL over which AAMAL has disposal and voting rights.
Public Shareholders
Based on the information available to the Company as at 4 March 2014, approximately 66% of the issued shares of the Company
is held by the public and therefore, pursuant to Rules 723 and 1207 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 4 March 2014, there are no treasury shares held.
Shareholding Statistics
223
CONFIGUREDFOR GROWTH
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 46th 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 Thursday,
17 April 2014 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 2013.
Resolution 1
To declare a final tax-exempt (one-tier) dividend of 30 cents per share for the year ended 31 December
2013 (2012: final tax-exempt (one-tier) dividend of 27 cents per share).
Resolution 2
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 2):
(i) Mr Tony Chew Leong-Chee
(ii) Mr Tow Heng Tan
(iii) Mr Danny Teoh
To re-elect Mr Loh Chin Hua, 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 2).
Resolution 3
Resolution 4
Resolution 5
Resolution 6
To approve the sum of S$2,149,500 as directors’ fees for the year ended 31 December 2013
(2012: $1,575,436.51) (see Note 3).
Resolution 7
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
224
Keppel Corporation LimitedReport to Shareholders 2013
(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);
(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 a general meeting) the authority conferred by this
Resolution shall continue in force until the conclusion of the next annual general meeting of the
Company or the date by which the next annual general meeting is required by law to be held,
whichever is the earlier (see Note 4).
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”);
Resolution 10
Notice of Annual General Meeting & Closure of Books
225
CONFIGUREDFOR GROWTH
Notice of Annual General Meeting & Closure of Books
(2)
unless varied or revoked by the members of the Company in a general meeting, the authority
conferred on the directors of the Company pursuant to the Share Purchase Mandate may be
exercised by the directors at any time and from time to time during the period commencing from
the date of the passing of this Resolution and expiring on the earlier of:
(a)
the date on which the next annual general meeting of the Company is held or is required by
law to be held; or
(b)
the date on which the purchases or acquisitions of Shares by the Company pursuant to the
Share Purchase Mandate are carried out to the full extent mandated;
(3)
in this Resolution:
“Maximum Limit” means that number of issued Shares representing five (5) per cent. of the total
number of issued Shares as at the date of the last annual general meeting or at the date of the
passing of this Resolution, whichever is higher, unless the Company has effected a reduction of
the share capital of the Company in accordance with the applicable provisions of the Companies
Act, at any time during the Relevant Period (as hereafter defined), in which event the total number
of issued Shares shall be taken to be the total number of issued Shares as altered (excluding any
treasury Shares that may be held by the Company from time to time);
“Relevant Period” means the period commencing from the date on which the last annual general
meeting was held and expiring on the date the next annual general meeting is held or is required
by law to be held, whichever is the earlier, after the date of this Resolution; and
“Maximum Price”, in relation to a Share to be purchased or acquired, means the purchase price
(excluding brokerage, stamp duties, commission, applicable goods and services tax and other
related expenses) which is:
(a)
(b)
in the case of a Market Purchase, 105 per cent. of the Average Closing Price (as hereafter
defined); and
in the case of an Off-Market Purchase pursuant to an equal access scheme, 120 per cent. of
the Average Closing Price,
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 5).
226
Keppel Corporation LimitedReport to Shareholders 2013
Resolution 11
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”);
(2)
(3)
(4)
the IPT Mandate shall, unless revoked or varied by the Company in general meeting, continue in
force until the date that the next annual general meeting is held or is required by law to be held,
whichever is the earlier;
the Audit Committee of the Company be and is hereby authorised to take such action as it deems
proper in respect of such procedures and/or to modify or implement such procedures as may be
necessary to take into consideration any amendment to Chapter 9 of the Listing Manual of the
SGX-ST which may be prescribed by the SGX-ST from time to time; and
the directors of the Company and/or any of them be and are hereby authorised to complete and
do all such acts and things (including, without limitation, executing such documents as may be
required) as they and/or he may consider necessary, expedient, incidental or in the interests of the
Company to give effect to the IPT Mandate and/or this Resolution (see Note 6).
To transact such other business which can be transacted at the annual general meeting of the Company.
NOTICE IS ALSO HEREBY GIVEN THAT:
(a)
(b)
the Share Transfer Books and the Register of Members of the Company will be closed on 25 April 2014 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
25 April 2014 will be registered to determine shareholders’ entitlement to the proposed final dividend.
Shareholders whose securities accounts with The Central Depository (Pte) Limited are credited with
Shares as at 5.00 p.m. on 25 April 2014 will be entitled to the proposed final dividend. The proposed final
dividend if approved at this annual general meeting will be paid on 7 May 2014; and
the electronic copy of the Company’s Annual Report 2013 will be published on the Company’s website
on 26 March 2014. The Company’s website address is http://www.kepcorp.com, and the electronic
copy of the Annual Report 2013 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 2013, 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, 26 March 2014
Notice of Annual General Meeting & Closure of Books
227
CONFIGUREDFOR GROWTH Notice of Annual General Meeting & Closure of Books
Notes:
1. A member is entitled to appoint one proxy or two proxies to attend and vote in his place. A proxy need not be a member of the Company. The instrument
appointing a proxy must be deposited at the registered office of the Company at 1 HarbourFront Avenue, #18-01 Keppel Bay Tower, Singapore 098632, not less
than 48 hours before the time appointed for holding the annual general meeting.
2. Detailed information on these directors can be found in the “Board of Directors” and “Directors and Key Executives” sections of the Company’s Annual Report.
Mr Tony Chew Leong-Chee will upon re-election continue to serve as Chairman of the Nominating Committee, and member of the Audit Committee. Mr Chew
is the Executive Chairman of Asia Resource Corporation and Chairman of KFC Vietnam. Companies which he founded include Pepsi-Cola Vietnam, International
Beverages Company Myanmar and JetstarAsia Pte Ltd. Mr Chew plays an active role in promoting regional business, having served on the Trade Development
Board, Economic Review Sub-Comm for Entrepreneurship and Internationalisation, Regional Business Forum, and GPC Resource Panel for Finance, Trade and
Industry. He is presently Chairman of Singapore Business Federation, Governing Board member of the Economic Research Institute for ASEAN and East Asia, the
Chinese Development Assistance Council Board of Trustees, and Advisor to the Singapore Institute of International Affairs.
Mr Tow Heng Tan will upon his re-election continue to serve as a member of the Nominating Committee, Remuneration Committee and Board Risk Committee.
Mr Tow has an extensive business career spanning the management consultancy, investment banking and stockbroking industries. He is currently the Chief
Executive Officer of Pavilion Capital International Pte. Ltd, a wholly-owned subsidiary of Temasek Holdings (Private) Ltd (“Temasek Holdings”). Mr Tow was also
formerly Temasek Holdings’s Chief Investment Officer. Prior to joining Temasek Holdings in September 2002, he was Senior Director of Business Development
at DBS Vickers Securities (Singapore) Pte Ltd. From 1993 to 2001, Mr Tow was Managing Director of Lum Chang Securities Pte Ltd.
Mr Danny Teoh will upon his re-election continue to serve as the Chairman of the Audit Committee and Remuneration Committee, and a member of the Board
Risk Committee. Mr Teoh spent 27 years in KPMG LLP, Singapore and over the years, held various senior positions including member of KPMG International Board
and Council, Head of the Audit and Risk Advisory Services and Head of Financial Services. He was the Managing Partner of KPMG LLP, Singapore from October
2005 and he retired from KPMG in September 2010. His other directorships include DBS Group Holdings Ltd, DBS Bank Ltd, CapitaMall Trust Management Limited
(the manager of CapitaMall Trust), Changi Airport Group (Singapore) Pte Ltd and Jurong Town Corporation. He is Chairman of the Audit Committees of DBS
Group Holdings Ltd, Changi Airport Group (Singapore) Pte Ltd and Jurong Town Corporation. He is also a member of the Risk and Nominating Committees of
DBS Group Holdings Ltd.
Mr Loh Chin Hua is currently the Chief Executive Officer of the Company, after having served as its Chief Financial Officer from 1 January 2012 to 1 January 2014,
playing a pivotal role in all its major investment initiatives and financial decisions as well as shaping the Group’s business strategy. Mr Loh has over 25 years of
experience in real estate investing and fund management spanning the USA, Europe and Asia. He joined the Keppel Group in 2002 as the Managing Director of
Alpha Investment Partners Ltd. Prior to this, he was the Managing Director at Prudential Investment Inc leading its Asian real estate fund management business
and overseeing all investment and asset management for the real estate funds managed out of Asia. Mr Loh began his career with the Government of Singapore
Investment Corporation, where he held key appointments in its San Francisco office and was head of the European real estate group in London before returning
to Singapore to head the Asian real estate group.
Mr Tony Chew Leong-Chee and Mr Danny Teoh are considered by the Board to be independent directors. Please see page 94 of the Company’s Annual Report.
3. Resolution 7 is to approve the payment of an aggregate sum of S$2,149,500 as directors’ fees for the non-executive directors of the Company for FY 2013.
If approved, each of the non-executive directors (including the Chairman) will receive 70% of his total directors’ fees in cash (“Cash Component”) and 30% in
the form of shares in the capital of the Company (“Remuneration Shares”) (both amounts subject to adjustment as described below). The actual number of
Remuneration Shares, to be purchased from the market on the first trading day immediately after the date of the Annual General Meeting (“Trading Day”) for
delivery to the respective non-executive directors, will be based on the market price of the Company’s shares on the SGX-ST on the Trading Day. The actual
number of Remuneration Shares will be rounded down to the nearest thousand and any residual balance will be paid in cash.
The Remuneration Shares will rank pari passu with the then existing issued Shares. Details of the directors’ remuneration can be found on page 101 of the
Company’s Annual Report. The non-executive directors will abstain from voting, and will procure that their respective associates to abstain from voting, in respect
of this Resolution.
4. 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.
5. 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 19 April 2013. 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 to this Notice of Annual General Meeting for further details.
6. 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 to this Notice of Annual
General Meeting for details.
228
Keppel Corporation LimitedReport to Shareholders 2013
Corporate Information
BOARD OF DIRECTORS
NOMINATING COMMITTEE
REGISTERED OFFICE
Lee Boon Yang (Chairman)
Loh Chin Hua (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
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
Alvin Yeo Khirn Hai
BOARD RISK COMMITTEE
Oon Kum Loon (Mrs) (Chairman)
Tow Heng Tan
Danny Teoh
Tan Puay Chiang
Tan Ek Kia
BOARD SAFETY
COMMITTEE
Tan Ek Kia (Chairman)
Lee Boon Yang
Loh Chin Hua
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
OUE Downtown 2
#32-00
Singapore 068809
Audit Partner: Cheung Pui Yuen
Year appointed: 2011
Corporate Information
229
CONFIGUREDFOR GROWTH 31 December 2013
18 April 2013
18 July 2013
17 October 2013
23 January 2014
26 March 2014
17 April 2014
5.00 p.m., 25 April 2014
7 May 2014
31 December 2014
April 2014
July 2014
October 2014
January 2015
Financial Calendar
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
Despatch of Annual Report to Shareholders
Annual General Meeting
2013 Proposed final dividend
Books closure date
Payment date
FY 2014
Financial year-end
Announcement of 2014 1Q results
Announcement of 2014 2Q results
Announcement of 2014 3Q results
Announcement of 2014 full year results
230
Keppel Corporation LimitedReport to Shareholders 2013 l
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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. 8 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
%
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 17 April 2014 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.
Resolutions
Number of Votes
For *
Number of Votes
Against *
Ordinary Business
1. Adoption of Directors’ Report and Audited Financial Statements
2. Declaration of dividend
3. Re-election of Mr Tony Chew Leong-Chee as director
4. Re-election of Mr Tow Heng Tan as director
5. Re-election of Mr Danny Teoh as director
6. Re-election of Mr Loh Chin Hua as director
7. Approval of directors’ fees to non-executive directors
8. Re-appointment of Auditors
Special Business
9.
Issue of additional 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 (4) 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 2014
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
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Notes:
1.
2.
3.
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.
Completion and return of this instrument appointing a proxy or proxies shall not preclude a member from attending and voting at
the meeting. Any appointment of a proxy or proxies will be revoked if a member attends the meeting in person, and in such event,
the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy or proxies, to
the meeting.
Fold along this line (1)
The Company Secretary
Keppel Corporation Limited
1 HarbourFront Avenue
#18-01 Keppel Bay Tower
Singapore 098632
Affix
Postage
Stamp
Fold along this line (2)
4.
5.
6.
7.
8.
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.
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