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AGILITY
Capturing Value
Report to
Shareholders
2014
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
VISION
A global company at the forefront
of our chosen industries, shaping
the future for the benefit of all
our stakeholders – Sustaining
Growth, Empowering Lives and
Nurturing Communities.
MISSION
Guided by our operating
principles and core values,
we will execute our businesses
in Offshore & Marine, Property,
Infrastructure and Investments
profitably, safely and responsibly.
OPERATING PRINCIPLES
1 Best value propositions
to customers.
2 Tapping and developing
best talents from our
global workforce.
3 Cultivating a spirit of
innovation and enterprise.
4 Executing our projects well.
5 Being financially disciplined to
earn best risk-adjusted returns.
6 Clarity of focus and operating
within our core competence.
7 Being prepared for the future.
AGILITY
Capturing Value
Agility marks the ability of the Keppel Group to
respond to market and environmental changes in
ways that drive performance and build competitive
advantage. We are configured with our financial and
organisational strengths to navigate challenging
terrain and scour new markets, offer new solutions
through innovation, and execute with precision and
enhanced productivity.
Contents
GROUP OVERVIEW
FINANCIAL STATEMENTS
Directors’ Report
& Financial Statements
134 Directors’ Report
140 Statement by Directors
141 Independent Auditors’ Report
142 Balance Sheets
143 Consolidated Profit & Loss Account
144 Consolidated Statement of
Comprehensive Income
145 Statement of Changes in Equity
148 Consolidated Statement
of Cash Flows
151 Notes to the Financial Statements
205 Significant Subsidiaries &
Associated Companies
OTHER INFORMATION
216 Interested Person Transactions
217 Key Executives
226 Major Properties
232 Group Five-Year Performance
236 Group Value-Added Statements
237 Share Performance
238 Shareholding Statistics
239 Notice of Annual General Meeting
& Closure of Books
244 Corporate Information
245 Financial Calendar
247 Proxy Form
01 Key Figures for 2014
02 Group Financial Highlights
04 Group at a Glance
06 Keppel Around the World
08 Chairman’s Statement
Interview with the CEO
14
21 Board of Directors
26 Keppel Group Boards of Directors
28 Keppel Technology Advisory Panel
30 Senior Management
Investor Relations
32
35 Awards & Accolades
38 Agility
– Capturing Value
OPERATING & FINANCIAL REVIEW
47 Group Structure
48 Management Discussion & Analysis
50 Offshore & Marine
62
Infrastructure
70 Property
78
82 Financial Review & Outlook
Investments
GOVERNANCE & SUSTAINABILITY
90 Sustainability Report Highlights
Sustaining Growth
92 Corporate Governance
124 Risk Management
128 Environmental Performance
129 Product Excellence
Empowering Lives
130 Labour Practices & Human Rights
131 Safety & Health
Nurturing Communities
132 Our Community
Edited and Compiled by
Group Corporate Communications, Keppel Corporation
Designed by
Sedgwick Richardson
01
Key Figures
for 2014
Net Profit
$1,885m
Increased 2% from
FY 2013’s $1,846 million.
Net profit increased due mainly to the
Offshore & Marine and Infrastructure
business, as well as gains from disposals
of data centre assets, Keppel FMO Pte Ltd,
Equity Plaza, Prudential Tower and
MBFC Tower 3 in FY 2014. These were
partially offset by lower contribution
from the sale of residential properties.
Earnings Per Share
$1.04
Increased 2% from
FY 2013’s $1.02 per share.
There was no significant dilution in
Earnings Per Share because no major
capital call was made since 1997.
Net Asset Value Per Share
$5.73
Increased 7% from
FY 2013’s $5.37 per share.
Net Gearing Ratio
0.11x
Comparable to 0.11x as at end-2013.
Net gearing remained at a healthy level.
Economic Value Added
$1,778m
Increased $636 million from
FY 2013’s $1,142 million.
The record high Economic Value
Added was due mainly to higher
gains from divestment of assets.
Cash Dividend Per Share
48.0cts
Increased 20% from FY 2013’s cash
dividend of 40.0 cents per share.
Total distribution for FY 2013
comprised a total cash dividend of
40.0 cents per share and a special
distribution in specie of eight
Keppel REIT units for every
100 shares held in the Company
(equivalent to 9.5 cents per share).
Revenue
$13.3b
Increased 7% from
FY 2013’s $12.4 billion.
Revenue increased due mainly
to higher revenue recognition
from the ongoing Offshore
& Marine jobs and better
performance of the logistics
and data centre businesses.
These were partially offset by
lower revenue from the power
generation plant.
Return On Equity
18.8%
Decreased by 0.7 percentage
point from FY 2013’s 19.5%.
Despite higher net profits,
Return On Equity decreased due
mainly to higher equity.
Key Figures for 2014
02
Group Financial
Highlights
+2%
from FY 2013
EARNINGS PER SHARE ($)
FY 2014
FY 2013
No significant dilution in
Earnings Per Share because
no major capital call was
made since 1997.
1.04
1.02
-4%
from FY 2013
RETURN ON EQUITY (%)
FY 2014
FY 2013
Despite higher net profits,
Return On Equity decreased
due to higher equity.
18.8
19.5
+7%
from FY 2013
NET ASSET VALUE PER SHARE ($)
FY 2014
FY 2013
Increased 7% from FY 2013’s
$5.37 per share.
5.73
5.37
+56%
from FY 2013
ECONOMIC VALUE ADDED ($ million)
FY 2014
FY 2013
The record high Economic
Value Added was due mainly
to higher gains from divestment
of assets.
1,778
1,142
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
03
GROUP QUARTERLY RESULTS ($ million)
2014
Revenue
EBITDA
Operating profit
Profit before tax
Net profit
Earnings per share (cents)
1Q
2Q
3Q
4Q
Total
2,996
478
415
492
339
18.7
3,177
533
467
593
406
22.3
3,185
632
565
642
414
22.9
3,925 13,283
2,639
2,373
2,889
1,885
103.8
996
926
1,162
726
39.9
1Q
2,759
451
397
496
357
19.8
2Q
3,076
482
423
519
347
19.2
2013
3Q
2,947
633
568
670
457
25.3
4Q
Total
3,598 12,380
2,377
2,134
2,794
1,846
102.3
811
746
1,109
685
38.0
2014
2013
% Change
13,283
12,380
2,639
2,373
2,889
1,885
5
729
1,778
1.04
5.73
5.67
10,381
4,347
14,728
1,647
0.11
22.4
18.8
12.0
36.0
–
48.0
8.85
(17.8)
2,377
2,134
2,794
1,846
637
654
1,142
1.02
5.37
5.32
9,701
3,988
13,689
1,535
0.11
23.0
19.5
10.0
30.0
9.5
49.5
11.19
9.0
+7%
+11%
+11%
+3%
+2%
-99%
+11%
+56%
+2%
+7%
+7%
+7%
+9%
+8%
+7%
–
-3%
-4%
+20%
+20%
-100%
-3%
-21%
n.m.
For the year ($ million)
Revenue
Profit
EBITDA
Operating
Before tax
Net profit
Operating cash flow
Free cash flow *
Economic Value Added (EVA)
Per share
Earnings ($)
Net assets ($)
Net tangible assets ($)
At year-end ($ million)
Shareholders’ funds
Non-controlling interests
Capital employed
Net debt
Net gearing ratio (times)
Return on shareholders’ funds (%)
Profit before tax
Net profit
Shareholders’ value
Distribution (cents per share)
Interim dividend
Final dividend
Special distribution in specie
Total distribution
Share price ($)
Total Shareholder Return (%)
n.m. = not meaningful
* Free cash flow excludes expansionary acquisitions and capex, and major divestments.
Group Financial Highlights
04
Group at
a Glance
05
KEPPEL CORPORATION
Revenue ($ million)
$13,283m
7%
increase from
FY 2013’s $12,380m.
13,283
12,380
13,965
10,082
9,140
OFFSHORE
& MARINE
Revenue ($ million)
$8,556m
8,556
7,963
7,126
5,706
5,577
INFRASTRUCTURE
PROPERTY
INVESTMENTS
Revenue ($ million)
Revenue ($ million)
Revenue ($ million)
$2,934m $1,729m $64m
3,459
2,934
2,832
2,863
2,510
3,018
152
1,729
1,768
1,467
4
1
0
2
3
1
0
2
2
1
0
2
1
1
0
2
1,042
0
1
0
2
27
3
1
0
2
64
4
1
0
2
46
1
1
0
2
11
0
1
0
2
2
1
0
2
4
1
0
2
3
1
0
2
2
1
0
2
1
1
0
2
0
1
0
2
4
1
0
2
3
1
0
2
2
1
0
2
1
1
0
2
0
1
0
2
4
1
0
2
3
1
0
2
2
1
0
2
1
1
0
2
0
1
0
2
Net Profit ($ million)
Net Profit ($ million)
Net Profit ($ million)
Net Profit ($ million)
Net Profit ($ million)
$1,885m
2%
increase from
FY 2013’s $1,846m.
$1,040m
$320m
$482m
$43m
2,237
1,885
1,846
1,946
1,591
1,040
945
949
1,019
962
320
4
1
0
2
3
1
0
2
2
1
0
2
1
1
0
2
0
1
0
2
4
1
0
2
3
1
0
2
2
1
0
2
1
1
0
2
0
1
0
2
15
3
1
0
2
16
2
1
0
2
4
1
0
2
1
1
0
2
-8
0
1
0
2
-79
1,078
918
832
673
482
4
1
0
2
3
1
0
2
2
1
0
2
1
1
0
2
0
1
0
2
194
35
0
1
0
2
17
1
1
0
2
43
4
1
0
2
54
3
1
0
2
2
1
0
2
STRATEGIC DIRECTIONS
FOCUS FOR 2015/2016
FOCUS FOR 2015/2016
FOCUS FOR 2015/2016
FOCUS FOR 2015/2016
• Stay focused on multi-business model and core competencies,
while seeking opportunities in close adjacencies.
• Sharpen execution to extract value
from backlog of orders.
• 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.
• Harness synergy of global yards
to provide newbuild, repair and
upgrading solutions to customers.
• Maintain emphasis on technology
development to sharpen
competitiveness.
• Seize opportunities in new markets
and adjacent businesses for
long-term growth.
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
• Complete the proposed combination
of KIT and CIT, enhance the asset
portfolio and seek acquisition
opportunities.
• Invest strategically and
opportunistically in developed and
emerging markets, new platforms,
projects and properties.
• Scale up commercial
presence overseas.
• Monetise assets to recycle capital.
• Grow fund management businesses
for steady recurring income.
• Step up sustainability efforts.
• Complete the Engineering,
Procurement and Construction
projects in the UK and Qatar.
• Grow expertise in Waste-to-Energy
technology package deployment
and expand market share in
Singapore and China.
• Expand logistics business in
target markets in Asia Pacific, and
grow a pipeline of quality data
centre assets for injection into the
newly-listed Keppel DC REIT.
Group at a Glance
• k1 Ventures will manage its
investment portfolio to create
shareholder value and distribute
excess cash as and when its
investments are monetised.
• KrisEnergy will focus on executing
its planned development
projects, maximising production
efficiencies and controlling
capital expenditure.
• M1 will focus on delivering better
user experience to further increase
market competitiveness.
06
Keppel Around
the World
Russia
Belgium
Bulgaria
Ireland
Poland
The Netherlands
United Kingdom
United States
With a global presence
in 30 countries, we
leverage our Near Market,
Near Customer strategy
to create sustainable
growth and value.
Brazil
Offshore & Marine
Infrastructure
Property
Investment
Total FY 2014 Revenue
$13,283m
Group revenue was 7% higher
than in FY 2013.
Azerbaijan
Qatar
UAE
India
Sri Lanka
Malaysia
Singapore
Australia
07
Japan &
South Korea
China &
Hong Kong
Myanmar
Thailand
Vietnam
Indonesia
The Philippines
North America
$2,745m
South America
$1,846m
Singapore
$3,941m
China & Hong Kong
$695m
Rest of the World
$1,079m
Europe
$1,872m
Middle East
$882m
Japan & South Korea
$78m
Australia
$145m
* The figures are based on the geographic locations of the Keppel Group’s customers.
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
Keppel Around the World
08
Chairman’s
Chairman’s
Statement
Statement
LEE BOON YANG
CHAIRMAN
Amidst industry headwinds,
Keppel continues to respond
with agility to deliver solid
results. In 2014, we posted
a net profit of $1.9 billion and
a Return on Equity of 18.8%.
Economic Value Added grew
56% to a record of $1.8 billion.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 09
Keppel has been
consistent in sharing
the rewards of its
sterling performance.
On average, almost
half of our annual
net profit is
distributed to
shareholders
each year.
Dear Shareholders,
2014 has been a challenging year, fraught with uncertainties in the global economy and
geo-political tensions. Market jitters intensified as oil prices plunged in the latter half of the
year, from a height of US$115 a barrel in June 2014 to under US$50 at the start of 2015.
Volatility is expected to persist in 2015 as markets react to the slowing global growth
and price declines in oil and other commodities. Escalating geo-political tensions in
some regions will continue to threaten the uneven and brittle global recovery.
RESILIENT PERFORMANCE
Amidst these headwinds, Keppel continues to deliver solid results. In 2014, we achieved
a full year net profit of $1.9 billion, 2% higher than 2013. Return on Equity (ROE) was
marginally lower at 18.8% compared to 19.5% a year ago. Economic Value Added grew
56% to a record of $1.8 billion.
The Group registered four successive quarters of revenue growth in 2014. Turnover of
$13.3 billion for the whole year improved 7% or $0.9 billion over the previous year, as a
result of higher revenue from our Offshore & Marine (O&M) Division. With greater
revenue and divestment gains, operating profit grew 11% to $2.4 billion.
Keppel has been consistent in sharing the rewards of its sterling performance. On average,
almost half of our annual net profit is distributed to shareholders each year. The Board
is pleased to propose a final dividend of 36 cents per share for 2014. This takes the full
year cash dividend to 48 cents per share, compared to the total cash payout of 40 cents
per share in 2013.
Our vision is to be a global company at the forefront of our chosen industries, shaping
the future for the benefit of all our stakeholders. We will focus on our core competencies,
to execute our businesses in O&M, Property, Infrastructure and Investments profitably,
safely and responsibly.
OFFSHORE & MARINE
Rising costs and the sharp decline in oil prices in the last three quarters have eroded
returns for oil companies, causing them to review and put some of their planned
exploration and production projects on hold. Current dayrates for ultradeep and
deepwater rigs have fallen by a third since 2013, although that for high specification
jackups have remained more resilient, declining by about 15% since early 2014.
The oncoming fleet of unchartered shallow and deepwater rigs, to be delivered in
the 2015-2016 period, has also fueled concerns of an oversupply.
As a global leader in the offshore and marine industry, Keppel is not immune to business
cycles and market headwinds. While we cannot be certain of how long oil prices will take
to recover and stabilise, we believe that they are not sustainable at the current low levels
for an extended period. The market will have to move towards a new equilibrium, driven
by demand and supply.
The environment in Brazil, where we have been operating for the past 15 years, continues
to be challenging. Recent funding difficulties for Sete Brasil have raised concerns on the rigs
that we are building for them. However, we are confident that Brazil will require these rigs
and we have been assured by our customer of their relentless efforts to secure financing
for them. We remain committed to delivering these rigs according to the contracts.
The oil and gas industry has had a long history of volatility. Keppel Offshore & Marine
(Keppel O&M), however, has emerged more resilient through several past crises.
Despite the present uncertainties, we are convinced of the long-term fundamentals
discussed in the industry review section of this report. I am also confident that Keppel O&M
is robust enough to ride out of this downturn as it had done in previous cycles.
Chairman’s Statement
10
Chairman’s
Statement
Today, Keppel O&M is in a much stronger position. In FY 2014, the company
secured $5.5 billion of contracts, bringing several new and innovative solutions to
market such as the Floating LNG vessel conversions, the KFELS N Plus jackup and
the LB310 liftboat, among others. By year-end, the Division had amassed a solid
$12.5 billion backlog with established customers. This will cushion us comfortably
for the next two years.
Building on our Near Market, Near Customer strategy, we look forward to finalise
our partnerships with Petroleos Mexicanos (PEMEX) and the Titan Petrochemicals
Group, both of which promise quality growth for Keppel in different geographies.
Our joint venture with PEMEX to develop a yard in Altamira is well-timed with
the opening up of the Mexico’s oil and gas sector. There will be demand growth
for offshore solutions for years to come as the country seeks to boost its crude
oil production, which has fallen since 2004, by a million barrels a day.
The 30-year Management Services Agreement to operate the Titan Quanzhou
Shipyard in Fujian Province will enable us to compete for orders to serve the
exploration and production demand in Chinese waters.
We will continue to build on our Near Market, Near Customer strategy as well
as core strengths in execution and technology innovation through sustained
investments in research and development and productivity. Our efforts will
position Keppel to ride the next up cycle, offering even better solutions to
customers worldwide.
INFRASTRUCTURE
Our concerted efforts to reshape and strengthen the Infrastructure Division
into a sturdy pillar for the Group are starting to bear fruit. In December 2014,
we successfully listed Asia’s first data centre REIT on the Singapore Exchange,
raising a total of $513 million through a landmark initial public offering (IPO).
Keppel DC REIT’s portfolio, constituting $1 billion of Assets Under Management
(AUM), comprises eight high-quality data centres which are strategically located
in seven key data centre hubs across Asia-Pacific and Europe. We are confident of
developing Keppel DC REIT into a strategic contributor to the Group just as how we
have grown Keppel REIT into one of Singapore’s largest listed REITs with an AUM
of $8.2 billion today, from just $631 million in 2005.
Riding on strong demand for quality data centre space in Europe, Keppel
Telecommunications & Transportation (Keppel T&T) acquired Almere Data Centre 2
in the Netherlands last year. Almere 2 offers over 5,000 square metres (sm) of
data centre space, and is strategically located next to Almere 1, which has already
been injected into Keppel DC REIT. Keppel T&T also commenced operations of a
10,000-sm warehouse in Australia, as well as completed its Tampines Logistics
Hub in Singapore and a distribution centre in Vietnam.
Since the formation of Keppel Infrastructure (KI) over a year ago, we have made
steady progress streamlining our focus on energy-related infrastructure and
services. In November 2014, we announced the proposed combination of
Keppel Infrastructure Trust (KIT) with CitySpring Infrastructure Trust, and the
planned injection of 51% interest in Keppel Merlimau Cogen Pte Ltd, which owns
the 1,300 MW co-generation plant, into the enlarged entity.
These transactions will create the largest listed Singapore infrastructure-focused
business trust with a market capitalisation of more than $2 billion and total assets
of over $4 billion. KIT, with improved scale and liquidity, will be better positioned
for future growth.
RAISED
$513m
through the IPO of
Keppel DC REIT in 2014.
UNLOCKED VALUE
OF APPROXIMATELY
$1b
in the Property Division from
the sale of MBFC Tower 3
and other assets in 2014.
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
11
01
01
Keppel O&M’s solid
contract backlog
of $12.5 billion
with established
customers will keep
our yards busy for
the next two years.
We will continue to grow Keppel DC REIT and KIT by creating and stabilising a pipeline of
quality assets for injection while recycling our capital for better returns.
With the completion of the Doha North Sewage Treatment Works in Qatar and Phase 2
of the Greater Manchester Energy-from-Waste Plant in the UK close at hand, we are
turning our attention to grow KI as a stable contributor to the Group’s bottom line. During
the year, we continued to streamline our operations with the divestment of our facilities
management business, Keppel FMO.
PROPERTY
The protracted effects of cooling measures in Singapore and China have resulted in slower
home sales for Keppel Land, which sold over 2,000 units in Asia in 2014, compared to
about 4,400 units a year ago. The headwinds are likely to keep a lid on demand from
homebuyers and residential prices in Singapore. China, on the other hand, has started to
relax its housing and monetary policies in some cities since 3Q 2014, resulting in
better sales volumes.
Keppel Land will continue to monitor the markets closely to launch residential projects
from its pipeline of about 70,000 homes across Asia. It is also actively developing its
portfolio of commercial properties overseas, which comprises about 819,000 sm of gross
floor area. Its joint venture with Array Holdings, a retail management firm which is involved
in managing one of the larger portfolios of regional malls in Singapore and Malaysia, is part
of our strategy to develop Keppel Land into a multi-faceted property player.
Even as we extend our pipeline of residential and commercial developments, we will continue
to actively prune our portfolio, unlocking value and recycling capital for better returns. We
have extracted almost $1 billion from the sale of Marina Bay Financial Centre (MBFC) Tower 3
and other divestments in 2014. This adds to our war chest for opportunistic investments
such as the mixed-use development in New York and a freehold office building in London,
which will enable us to tap into key global cities with growth potential.
Both New York and London investments will be managed by Keppel Land’s fund
management subsidiary, Alpha Investment Partners. More than an example of dexterity in
seizing opportunities for higher returns, it also showcases how we leverage the collective
strength of Keppel’s business units for growth. Our fund management businesses
will continue to feature strongly in the Group’s capital recycling strategy for matured
projects, while providing stable income streams over the longer term.
Chairman’s Statement
12
Chairman’s
Statement
01
01
The divestment of
MBFC Tower 3 adds
to the war chest for
new investments.
CORPORATE SUSTAINABILITY
Sustainability is a key factor in underpinning Keppel’s long-term competitiveness.
We are committed to Sustaining Growth in our businesses, Empowering Lives of
people and Nurturing Communities wherever we operate.
We started building our sustainability framework in 2009 to guide the Group’s
efforts in managing and developing such priorities. Our efforts, driven by the top
management, have also imbued a greater consciousness of and ownership for
Environmental, Social and Governance (ESG) matters within the Group over the years.
In 2014, Keppel Corporation was listed as a component of several global sustainability
indices for outstanding ESG performance. These include the Euronext Vigeo World
120 index, the MSCI Global Sustainability Index and the Dow Jones Sustainability Asia
Pacific Index 2013/14. Keppel Corporation also topped the Governance & Transparency
Index as the best governed and most transparent listed company in Singapore.
Safety is a core value which influences decisions at every level in Keppel. Our Board
Safety Committee was established in 2006 to lead efforts in building a strong safety
culture in the Group.
We are committed to creating a safe workplace for all our employees and other
stakeholders. We regret that despite our best efforts, we suffered four fatalities
globally in 2014. We are deeply saddened by the loss of colleagues and friends.
We have investigated these incidents thoroughly and instituted measures to
prevent any such recurrence. Lessons learnt have been extensively shared
across the Group. Our resolve to ensure that no one gets hurt at Keppel’s
workplaces has only strengthened.
In addition to ensuring the safety and well-being of our employees, we encourage
and enable them to pursue learning and professional development opportunities.
In 2014, we invested $14.2 million in the training and development of our employees
globally. Besides collaborating with reputable business schools and industry
experts to develop effective and holistic leadership programmes, we established
training centres to upgrade employees’ technical skills and qualifications.
Our practice of providing employees with multiple pathways for career
advancement was lauded by Singapore’s Prime Minister Lee Hsien Loong
during his National Day Rally Speech in 2014.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 13
Keppel’s efforts in
providing employees
with multiple
pathways for career
advancement
was lauded by
Singapore’s Prime
Minister Lee Hsien
Loong during his
National Day Rally
Speech in 2014.
Our commitment to sustainability extends to our communities. Keppel Care Foundation
was launched in 2012, with the objectives to assist the needy and underprivileged,
promote education, and encourage eco-conscious initiatives. Our Keppel Volunteers
have expanded the range of supported causes to include elderly care, education
and environmental protection, as well as introduced initiatives that leverage our
employees’ skills and interests.
In the past year, we have made efforts to better integrate our community initiatives for
greater focus and impact. Beyond monetary contributions, Keppel Volunteers will be
supporting Keppel Care Foundation through engaging its beneficiaries and taking part
in joint activities. Keppel Volunteers will also be forming overseas chapters to further
encourage corporate volunteerism in the countries where we operate.
We will be publishing Keppel Corporation’s fifth sustainability report, which discusses
the economic, environmental and social aspects of our activities in line with the Global
Reporting Initiative standards. Highlights of our sustainability efforts are outlined in
this Annual Report.
BOARD APPOINTMENT
I would like to express my deep appreciation of the late Mr Teo Soon Hoe who had
served on the Board as an Executive Director for 28 of his 40 years of faithful service
to Keppel. Mr Teo had made tremendous contributions to the Group’s growth
through the decades.
Keppel’s leadership transition in 2014 has been smooth and successful. I am confident
that with continued support of all stakeholders, our leadership team headed by
Group CEO, Mr Loh Chin Hua will be able to propel the Group to greater heights.
On behalf of the Board, I am pleased to welcome Mr Till Vestring as Independent Director
on the Company’s Board. Mr Vestring is a partner in Bain & Company’s Southeast Asia
office. He has spent over two decades in Asia, providing management consulting to a
wide spectrum of companies in industrials, airlines and telecoms. As Keppel continues
to grow multiple businesses on a global scale, Mr Vestring’s expertise in portfolio strategy,
mergers and acquisitions, organisation and performance improvement will be invaluable.
LOOKING AHEAD
With our emphasis on sustainable and long-term growth, the Board and management
team have shaped a clear vision and strategy to guide the Group towards our goals.
This means building on our multi-business model and diverse strengths to ensure that
we not only perform well today but also shape future success.
I would like to thank my fellow directors for the hard work and valuable input, and
our many partners and stakeholders for their unwavering support. This, coupled
with the dedication of Keppelites worldwide, puts us in a strong position to meet
challenges and seize new opportunities to grow the Keppel Group as a strong and
best-in-class conglomerate.
Yours sincerely,
LEE BOON YANG
CHAIRMAN
3 March 2015
Chairman’s Statement
14
Interview with
the CEO
LOH CHIN HUA
CEO
We aspire to be the
best-in-class global
conglomerate with
strong verticals,
offering the best value
propositions to our
customers through
a continuous focus
on enterprise and
innovation, anchored
on strong execution.
Describe your first year at the
helm of Keppel Corporation.
How do you see Keppel under
your leadership?
I am privileged to be guided and supported by a strong and wise Board,
building on the solid foundation of my predecessors Chiau Beng and the late
Soon Hoe. Backed by a loyal and dedicated team fired by the Can Do! Spirit,
the leadership transition not only at Keppel Corporation but also the business
units, I must say, has been enviably smooth.
Our vision is to become a global leader in our chosen industries, shaping
the future, doing well and doing good, for the benefit of all our stakeholders.
We aspire to be the best-in-class global conglomerate with strong verticals,
offering the best value propositions to our customers through a continuous
focus on enterprise and innovation, anchored on strong execution. Our focus
on businesses that support the world’s need for energy as well as trends in
urbanisation, energy efficiency and sustainability remains unchanged.
There are immediate tasks navigating the headwinds we are facing in the
Offshore & Marine (O&M) and Property businesses. But we are staying the
course on a multi-year roadmap with reasonable targets to take the Group
into 2020, to achieve growth, build a stronger Keppel, and develop and
maximise the potential of our people.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014
15
With the sharp decline in oil
prices and global exploration
and production spending cuts,
how will Keppel navigate
the downturn?
The turbulence in the industry today has not altered the long-term
fundamentals of this business. The world’s growing population will
demand more energy while major producing oil fields are declining rapidly.
At an average decline rate of 5% each year, the world could lose as much
as 20-30 million barrels per day (mbpd) within 5 years, which is about the
average consumption rate in Asia.
As conventional reserves are exhausted, oil companies will need to push
the limits of technology to gain access to resources in deeper water and
harsher frontiers, which today’s low oil prices do not effectively support.
The oil and gas sector will inevitably move towards a new equilibrium,
driven by demand and supply dynamics, as experienced in previous cycles.
As things stand today, the over production of oil is no more than 1.5 mbpd,
less than 2% of the 93 mbpd of total oil production.
While we cannot be certain how long before oil price stabilises, before
companies find comfort in E&P spending, Keppel is in a stronger position
today with a solid contract backlog of $12.5 billion as at end-2014, filled
mainly by established customers. This will keep our yards busy for the next
two years, and allow us to remain selective of projects that translate into
reasonable margins for the Group, without taking undue risks.
Keppel is in a stronger position
today with a solid contract backlog
of $12.5 billion as at end-2014, filled
mainly by established customers.
Despite current oil price levels, some offshore prospects are still viable in
geographies such as Southeast Asia, the Middle East and Latin America.
We are also likely to see an acceleration in the replacement of the large
global fleet of rigs aged 25 years and above.
Granted that not all new rigs will be delivered as scheduled, those that do
enter the market in 2015-2016 are likely to take on lower dayrates to stay
active. This will force older rigs which are less efficient and less productive
into idling. They are likely to be scrapped as they are costly to upgrade
and re-deploy.
We have seen an average attrition rate of 12 rigs per year from 2011-2014,
compared to four rigs annually in the preceding 11-year period. The scrapping
is healthy for the offshore drilling industry as capacity is being taken
out from the market gradually, making headroom for dayrates to rise again.
The market will find its equilibrium.
We will continue to build on our core strengths in execution and technology,
as well as invest in R&D and productivity to come up with even better solutions
and value propositions for our customers. We will also continue to extend
our Near Market, Near Customer strategy by accessing the Mexican and
Chinese rig markets, both of which hold huge promise.
Interview with the CEO
16
Interview with
the CEO
Do you expect any customers
to cancel or reschedule
projects which Keppel’s yards
are currently executing?
No, we do not expect any rig cancellations. Over the years, Keppel has been
disciplined about taking on well-defined contracts with acceptable pricing and
payment terms from reputable customers to ensure that the Group is adequately
compensated for the risks that it will assume.
The situation in Brazil seems to
have worsened with Petrobras’
corruption scandal and Sete
Brasil’s funding problems. What
is the impact on your operations
in Brazil and how is Keppel
mitigating the risks?
Our orderbook is filled mainly by established customers who have made substantial
down payments for their rigs. It would not make sense for any of them to cancel
their projects, which are progressing well on track.
We will, if genuine need arises, facilitate customers who seek to defer their rig
deliveries but they may have to incur additional costs.
I would like to reassure our stakeholders of the Group’s integrity and our Code
of Conduct which prohibits bribery and corruption, among other unethical
behaviours. We comply strictly with international standards of anti-corruption,
as well as the applicable laws and regulations of our host countries, guided by
the Group’s robust risk management framework and internal controls.
The first three of six DSSTM 38E semisubmersibles being constructed for
Sete Brasil at our BrasFELS shipyard are on track. They are respectively over
85%, 50% and 25% completed and we have received payments for them up to
November last year. We have also received a 10% down payment for the
remaining three units.
Although there have been some delays in further payments, we do not expect
Sete Brasil to cancel their projects with Keppel, considering the significant
progress that we have achieved on the construction of these rigs.
01
KEPPEL CORPORATION LIMITED Report to Shareholders 2014
17
01
Keppel has endeavored to
offer value-added technology
and solutions to its customers,
such as the Floatel Victory
built for Chevron.
With the present market
conditions, there should be many
good merger and acquisition
opportunities in the O&M sector.
How do you plan to capture
opportunities for growth?
We have also been assured by our customer that they have been working hard
to get long-term funding in place.
Despite the challenging market in Brazil, Keppel has been able to navigate it well
over the past 15 years by being prudent. We scope our contracts very carefully
and are mindful of only taking on projects that we are confident of executing safely,
on time, on budget and within good margins. We have also been investing
sensibly to enhance our facilities, execution and productivity, so as to ensure
that we are always functioning at an optimal level. Over commitment in capex
spending in good years for a cyclical industry can be value destroying; this is
something we have always been very disciplined on.
In addition to Petrobras and Sete Brasil, BrasFELS also serves a diverse base of
other operators and drillers such as Modec, Noble, Diamond and Ensco. While
remaining watchful of developments in Brazil, I am confident of our ability to
weather the present uncertainties. Until Petrobras puts its house in order,
short-term news flow from Brazil is expected to be negative.
Sure, there will be many opportunities that surface in times like these, when
valuations are depressed, which Keppel can consider because of our strong
balance sheet. However, the key is to ensure that all potential acquisitions fit in
well with the Group, and bring an acceptable level of risk adjusted returns.
Strong execution is integral to the Group’s long-term success, and we have
been active and hands-on in managing all our business units and ensuring that
they have the required resources to excel. Our shareholders are reaping the
benefits of our long-established global network, comprising mainly mothballed or
brownfield shipyards that we have acquired at attractive prices and then turned
into productive, high-yielding assets. Had we invested heavily in building brand
new yards in the last couple of years, we would have been stricken by the
current downturn.
That said, we remain committed to build and grow all our businesses in ways
that will give us sustainable competitive advantages and ensure that Keppel
can continue to provide the best value propositions to our customers. We will
continue to invest sensibly in R&D to come up with viable technology that can be
commercialised in the near term, as well as better processes to raise the skillsets
and productivity of our yards. We will also explore potential partnerships with
customers in niche markets that require solutions for floating accommodation,
Floating LNG, and Plug and Abandonment, to name a few.
The property sector continues
to be challenged by residential
cooling measures in Singapore
and China, as well as slower
growth in some developing
countries where Keppel is present.
What are your long-term plans
to improve returns from the
Property Division?
We believe that the medium to long-term outlook for property is good in the
countries where we operate.
The prolonged cooling measures were intended by the governments of Singapore
and China to prevent asset bubbles. While having kept a lid on home demand
and prices, they have not undermined the inherent potential of these property
markets nor the need to cater more homes for the widening middle-income
group. That China has started to unwind some of its housing and monetary
policies since 3Q 2014 is an encouraging sign.
Our goal is to develop Keppel Land into a multi-faceted property player, riding on
urbanisation trends in Asia. Apart from residential development and trading,
Keppel Land is also growing its presence in the commercial sector which
Interview with the CEO
18
Interview with
the CEO
continues to do well. Capitalising on our strong-cash, low-debt position,
we are well-poised to seize attractive deals that may not be available
in more normal market conditions. For instance, we have been able to
capture growth prospects in key global cities ahead of economic recovery
through selective private equity-type investments in New York and London,
leveraging the expertise of Alpha Investment Partners (Alpha).
Our long-term growth plans for the Property Division is underpinned by an
active capital recycling strategy. In 2014 alone, Keppel Land extracted net
proceeds of over $1 billion from divestments, adding to our war chest for
new investments. We will continue to monetise matured projects while
generating stable income streams through our established property fund
management business.
01
01
Keppel Land
continues to
strengthen its
presence in Asia with
iconic projects such
as the International
Financial Centre
in Jakarta.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 19
What is the longer term
strategy for the Infrastructure
Division, and how does it
fit it with your vision for
the Group?
Please elaborate on Keppel’s
capital recycling strategy
and what you think would be
the optimal capital structure
for the Group.
Interview with the CEO
Rapidly growing populations and rising incomes in emerging cities will give rise to
vast opportunities for infrastructure, energy and property across the world. Our key
businesses, be it O&M, Infrastructure or Property, are each uniquely positioned to
meet the long-term needs of urbanisation in a sustainable way.
Since Keppel Infrastructure (KI) was formed over a year ago, we have steadily
sharpened our focus on energy-related infrastructure and services, and made
good progress on wrapping up the outstanding Engineering, Procurement and
Construction (EPC) projects in Qatar and the UK. We have also been pre-qualified
to tender for Singapore’s sixth incineration plant.
To fully exploit our core strengths in project engineering and development, we will
converge on building, owning and operating our own infrastructure assets, which
we can potentially recycle for higher returns when they mature.
To this end, we announced that we would combine Keppel Infrastructure Trust (KIT)
with CitySpring Infrastructure Trust, as well as the planned injection of 51% interest
in Keppel Merlimau Cogen Pte Ltd, which owns the 1,300 MW co-geration plant,
into the enlarged entity. With better scale and liquidity from a market capitalisation
of above $2 billion and total assets of over $4 billion post-transactions, KIT would be
well-positioned for future growth.
In the same vein, we listed Keppel DC REIT on the Singapore Exchange, raising
a total of $513 million through a landmark initial public offering. Keppel DC REIT’s
portfolio comprises eight high-quality data centres across Asia Pacific and Europe,
constituting $1 billion of assets under management.
Both KI and Keppel Telecommunications and Transportation will continue to fuel
the growth of their respective fund management units by developing a stable
pipeline of quality assets for injection, while earning recurring income such as
operations and maintenance fees and facilities management fees. These initiatives
are part of our concerted efforts to reshape and strengthen the Infrastructure
Division into a sturdy third pillar for the Group.
Our goal is to maintain an institutional quality balance sheet with sufficient
headroom to pursue interesting opportunities across our industries and pay
sustainable dividends. As a Group, we do not see ourselves gearing up too much,
or beyond 1x, to generate higher returns. This means that we have to do things
differently, looking at our margins, asset turns, and making our assets work
much harder.
We believe that Keppel Corporation can capture value by capitalising on its ability
to create good infrastructure and real estate assets, which we can own, manage
and stabilise before monetising. Matured assets are better suited to the real estate
and business trusts, whose investors seek stable, recurring income and are
prepared to accept lower returns on those assets.
As Keppel Corporation’s shareholders are looking for higher returns, we will have to
continue recycling capital rigourously to earn the best risk-adjusted returns from our
assets. Over the past five years, we have been able to realise gains from revaluations,
impairments and divestments (RID) averaging $400 million per year. Gains from RID
are a recurring aspect of the Group’s earnings and should not be viewed as one-offs. In
fact, they are part and parcel of our business, from which we pay dividends. For FY2014,
we will be distributing 46% of our entire net profit, which includes RID, to shareholders.
20
Interview with
the CEO
Some brokers have applied
an even wider conglomerate
discount to Keppel Corporation’s
stock following the proposed
offer to privatise Keppel Land.
What are your views on this?
What will the Group’s earnings
mix look like in the future?
01
Gore Hill Data
Centre in Australia
was among several
assets injected into
the newly-listed
Keppel DC REIT as
part of the Group’s
efforts to recycle
capital and maximise
shareholder value.
Keppel’s current business mix is the result of a deliberate and considered
strategy, which has been constantly refined with the guidance of our Board.
We have, over the years, been disciplined both in investing for growth as well
as pruning non-core operations and assets for better returns. This has instilled
in Keppel the acumen, agility and financial strength to emerge stronger and
more resilient with every crisis.
We will continue to invest in growing all our businesses. In the next two years,
our O&M Division would continue to bolster the Group’s earnings with its
$12.5 billion net orderbook, while the Property Division could stand to benefit
from the gradual unwinding of cooling measures in China as well as improving
markets in Vietnam and Indonesia. Finally, with the EPC contracts largely
concluded, we would be able to grow our Infrastructure Division into a
valuable contributor to the bottom line.
Our strong performance and earnings visibility in the current climate
suggest that the conglomerate discount applied by some analysts is
unreasonable. With a market capitalisation of about $15.9 billion in February
2015, Keppel Corporation has been trading at single-digit multiples, although
our performance and dividend distributions have been consistently strong.
RID, which has contributed to the Group’s performance year on year,
should not be dismissed. Ultimately, we would like market appraisals to
reflect the true long-term value that Keppel will create.
01
KEPPEL CORPORATION LIMITED Report to Shareholders 2014
Board of
Directors
21
Loh Chin Hua, 53
Executive Director and
Chief Executive Officer
Date of first appointment as a director:
1 January 2014
Date of last re-election as a director:
17 April 2014
Length of service as a director
(as at 31 December 2014):
1 year
Board Committee(s) served on:
Board Safety Committee (Member)
Academic & Professional Qualification(s):
Bachelor in Property Administration,
Auckland University; Presidential Key
Executive MBA, Pepperdine University;
Chartered Financial Analyst
Present Directorships
(as at 1 January 2015):
Listed companies
Keppel Land Limited (Chairman);
Keppel Telecommunications &
Transportation Ltd (Chairman);
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 2010
to 31 December 2014):
Keppel REIT Management Limited
(Manager of Keppel REIT);
Keppel Energy Pte Ltd;
Keppel Land China Limited;
Various fund companies under
management of Alpha Investment
Partners Limited
Others:
Nil
Lee Boon Yang, 67
Chairman
Non-Executive and
Independent Director
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 2014):
5 years 8 months
Board Committee(s) served on:
Remuneration Committee (Member);
Nominating Committee (Member);
Board Safety Committee (Member)
Academic & Professional Qualification(s):
B.V.Sc Hon (2A),
University of Queensland, 1971
Present Directorships
(as at 1 January 2015):
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);
Jilin Food Zone Investment Holdings
Pte Ltd (Chairman)
Major Appointments
(other than directorships):
Nil
Past Directorships held over the
preceding 5 years (from 1 January 2010
to 31 December 2014):
Nil
Others:
Former Minister for Information,
Communications and the Arts
(May 2003 to March 2009);
Former Member of Parliament
(December 1984 to April 2011)
LEE BOON YANG
LOH CHIN HUA
Board of Directors
Oon Kum Loon (Mrs), 64
Non-Executive and
Independent Director
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 2014):
10 years 8 months
Board Committee(s) served on:
Board Risk Committee (Chairman);
Audit Committee (Member);
Remuneration Committee (Member)
Academic & Professional Qualification(s):
Bachelor of Business Administration
(Honours), University of Singapore
Present Directorships
(as at 1 January 2015):
Listed companies
Keppel Land Limited
Other principal directorships
Singapore Power Limited;
Jurong Port Pte Ltd
Major Appointments
(other than directorships):
Nil
Past Directorships held over the
preceding 5 years (from 1 January 2010
to 31 December 2014):
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;
SP PowerAssets Limited; PowerGas Limited
Others:
Former Chief Financial Officer of DBS Group
22
Board of
Directors
Tony Chew Leong-Chee, 68
Non-Executive and
Independent Director
Date of first appointment as a director:
16 April 2002
Date of last re-election as a director:
17 April 2014
Length of service as a director
(as at 31 December 2014):
12 years 9 months
Board Committee(s) served on:
Nominating Committee (Chairman);
Audit Committee (Member)
Academic & Professional Qualification(s):
Trained as agronomist at Ko Plantations
Berhad and Serdang Agricultural College,
Malaysia
Present Directorships
(as at 1 January 2015):
Listed companies
Intraco Limited (Alternate Director)
Other principal directorships
Asia Resource Corporation Pte Ltd (Executive
Chairman); Singapore Health Services Pte Ltd;
Air Alliance Pte Ltd (Chairman); Alliance Asia
Holdings Pte Ltd (Chairman); Alliance Asia
Investment Private Limited (Chairman);
Alliance One Myanmar Co., Ltd; ARC
Investment Pte Ltd; 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 (Co-Chairman);
Myanmar Supply Chain and Marketing
Services Company Limited (Co-Chairman);
Pontirep Investments Limited (Chairman);
Representations International Pte Ltd
(Chairman); Representations International
(H.K.) Ltd (Chairman); Resource Pacific
Holdings Pte Ltd (Chairman)
Major Appointments
(other than directorships):
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; ACCORD
Employers & Business Council (Co-Chairman)
Past Directorships held over the
preceding 5 years (from 1 January 2010
to 31 December 2014):
Duke-NUS Graduate Medical School
Singapore (Chairman); Singapore Business
Federation (Chairman); SBF Holdings Pte Ltd
(Chairman); SBF-PICO Events Pte Ltd; Tianjin
Summer Palace Winery and Distillery Co Ltd;
International Property Developments J.S.
Corporation (Vietnam)
Others:
Conferred Singapore National Day Meritorious
Service Medal (2013); Public Service Star
(2008); Public Service Medal (2001) and
NUS Outstanding Service Award (2011)
TONY CHEW LEONG-CHEE
OON KUM LOON (MRS)
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 23
Alvin Yeo Khirn Hai, 53
Non-Executive and
Independent Director
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 2014):
5 years 7 months
Board Committee(s) served on:
Audit Committee (Member);
Nominating Committee (Member)
Academic & Professional Qualification(s):
LLB Honours, King’s College London,
University of London;
Gray’s Inn (Barrister-at-Law);
Senior Counsel, Singapore Court of Singapore
Present Directorships
(as at 1 January 2015):
Listed companies
United Industrial Corporation Limited;
Neptune Orient Lines Limited
Other principal directorships
Thomson Medical Pte Ltd
Major Appointments
(other than directorships):
WongPartnership LLP (Chairman and Senior
Partner); Monetary Authority of Singapore
advisory panel to advise the Minister on
appeals under various financial services
legislation (Member); The Court of the
Singapore International Arbitration Centre
(Member); The ICC Commission on
Arbitration (Member); The Court of the
London Court of International Arbitration
(Member); Fellow of the Singapore Institute
of Arbitrators; Member of Parliament
Past Directorships held over the
preceding 5 years (from 1 January 2010
to 31 December 2014):
Asian Civilisations Museum;
Clifford Chance Wong Pte Ltd;
Singapore Land Limited;
Tuas Power 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
Tow Heng Tan, 59
Non-Executive and
Non-Independent Director
Date of first appointment as a director:
15 September 2004
Date of last re-election as a director:
17 April 2014
Length of service as a director
(as at 31 December 2014):
10 years 4 months
Board Committee(s) served on:
Nominating Committee (Member);
Remuneration Committee (Member);
Board Risk Committee (Member)
Academic & Professional Qualification(s):
Fellow of the Association of Chartered
Certified Accountants;
Fellow of the Chartered Institute of
Management Accountants
Present Directorships
(as at 1 January 2015):
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;
Capitaland Township Holdings Pte Ltd;
ST Asset Management Ltd
Major Appointments
(other than directorships):
Pavilion Capital International Pte Ltd (CEO);
Center for Asset Management Research
& Investment, NUS (Member);
National Council of Social Services
(Member of Investment Committee);
SAFRA Board of Governors (Member);
Woodlands Integrated Healthcare Campus
Board Development Committee (Member)
Past Directorships held over the
preceding 5 years (from 1 January 2010
to 31 December 2014):
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
Board of Directors
TOW HENG TAN
ALVIN YEO KHIRN HAI
24
Board of
Directors
Tan Ek Kia, 66
Non-Executive and
Independent Director
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 2014):
4 years 3 months
Board Committee(s) served on:
Board Safety Committee (Chairman);
Nominating Committee (Member);
Board Risk Committee (Member)
Academic & Professional Qualification(s):
BSc Mechanical Engineering
(First Class Hons), Nottingham University,
United Kingdom; Management
Development Programme, International
Institute for Management Development,
Lausanne, Switzerland; Fellow of the
Institute of Engineers, Malaysia; Chartered
Engineer of Engineering Council, United
Kingdom; Member of Institute of Mechanical
Engineer, United Kingdom
Present Directorships
(as at 1 January 2015):
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 2010
to 31 December 2014):
CitySpring Infrastructure Management
Pte Ltd (as Trustee-Manager of CitySpring
Infrastructure Trust)
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
TAN EK KIA
DANNY TEOH
Danny Teoh, 59
Non-Executive and
Independent Director
Date of first appointment as a director:
1 October 2010
Date of last re-election as a director:
17 April 2014
Length of service as a director
(as at 31 December 2014):
4 years 3 months
Board Committee(s) served on:
Audit Committee (Chairman);
Remuneration Committee (Chairman);
Board Risk Committee (Member)
Academic & Professional Qualification(s):
Member of the Institute of Chartered
Accountants in England & Wales
Present Directorships
(as at 1 January 2015):
Listed companies
DBS Bank Ltd;
DBS Group Holdings Ltd;
Capital Mall Trust Management Limited
(Manager of CapitaMall Trust)
Other principal directorships
Changi Airport Group (Singapore) Pte Ltd;
JTC Corporation;
DBS Bank (China) Limited;
DBS Foundation Ltd
Major Appointments
(other than directorships):
Nil
Past Directorships held over the
preceding 5 years (from 1 January 2010
to 31 December 2014):
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;
Singapore Olympic Foundation
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
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 25
Till Vestring, 51
Non-Executive and
Independent Director
Date of first appointment as a director:
16 February 2015
Date of last re-election as a director:
n.a.
Length of service as a director
(as at 31 December 2014):
n.a.
Board committee(s) served on:
Nil
Academic & Professional Qualification(s):
Master of Economics, University of Bonn,
Germany; Master of Business Administration,
Haas School of Business,
University of California, Berkeley
Present directorships
(as at 16 February 2015):
Listed companies
Inchcape plc
Other principal directorships
Singapore Chinese Orchestra Company
Limited; Leap Philanthrophy Ltd;
Brocon Investment Co. Ltd
Major Appointments
(other than directorships):
Partner, Bain & Company Southeast Asia
Past directorships held over the
preceding 5 years (from 1 January 2010
to 31 December 2014):
Nil
Others:
Nil
Tan Puay Chiang, 67
Non-Executive and
Independent Director
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 2014):
2 years 7 months
Board Committee(s) served on:
Board Safety Committee (Member);
Board Risk Committee (Member)
Academic & Professional Qualification(s):
MBA (Distinction), New York University;
Bachelor of Science (First Class Honours),
University of Singapore
Present Directorships
(as at 1 January 2015):
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 2010
to 31 December 2014):
Nil
Others:
Former Chairman, ExxonMobil (China)
Investment Co. (2001 to 2007)
Board of Directors
TAN PUAY CHIANG
TILL VESTRING
26
Keppel Group
Boards of Directors
KEPPEL
TELECOMMUNICATIONS
& TRANSPORTATION
Loh Chin Hua
CHAIRMAN
Chief Executive Officer,
Keppel Corporation
Thomas Pang Thieng Hwi
Executive Director and
Chief Executive Officer
Prof Bernard Tan Tiong Gie
Professor of Physics,
National University of Singapore
Wee Sin Tho
Senior Advisor,
Office of the President,
National University of Singapore
Tan Boon Huat
Independent Director
Prof Neo Boon Siong
Professor (Division of Strategy,
Management and Organisation),
Nanyang Business School,
Nanyang Technological University
Karmjit Singh
Independent Director
Lim Chin Leong
Former Chairman of Asia,
Schlumberger
Chan Hon Chew
Chief Financial Officer,
Keppel Corporation
Khor Poh Hwa
Advisor (Township and
Infrastructure Development),
Keppel Corporation
KEPPEL
INFRASTRUCTURE
HOLDINGS
Loh Chin Hua
CHAIRMAN
Chief Executive Officer,
Keppel Corporation
Dr Ong Tiong Guan
Chief Executive Officer
Chan Hon Chew
Chief Financial Officer,
Keppel Corporation
Chow Yew Yuen
Chief Executive Officer,
Keppel Offshore & Marine
Ong Ye Kung
Director,
Group Strategy & Development,
Keppel Corporation
Koh Ban Heng
Director
Khoo Chin Hean
Director
KEPPEL INFRASTRUCTURE
FUND MANAGEMENT
(TRUSTEE-MANAGER OF
KEPPEL INFRASTRUCTURE
TRUST)
Khor Poh Hwa
CHAIRMAN
Advisor (Township and
Infrastructure Development),
Keppel Corporation
Alan Ow Soon Sian
Independent Director
Paul Ma Kah Woh
Independent Director
Quek Soo Hoon
Operating Partner,
iGlobe Partners (II) Pte Ltd
Thio Shen Yi
Joint Managing Director,
TSMP Law Corporation
Dr Ong Tiong Guan
Chief Executive Officer,
Keppel Infrastructure Holdings Pte Ltd
Tan Boon Leng
Executive Director (X-to-Energy),
Keppel Infrastructure Holdings Pte Ltd
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 Aerospace,
Transport and Manufacturing,
Cranfield University, UK
Dr Malcolm Sharples
President,
Offshore Risk & Technology
Consulting Inc, USA
Po’ad Bin Shaik Abu Bakar Mattar
Independent Director of Hong Leong
Finance Limited
Tan Ek Kia
Director
Lim Chin Leong
Former Chairman of Asia,
Schlumberger
Robert D. Somerville
Director,
GasLog Ltd
Sit Peng Sang
Director
Chan Hon Chew
Chief Financial Officer,
Keppel Corporation
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
27
Dr Tan Tin Wee
Chairman,
A*STAR Computational
Resource Centre
Thomas Pang Thieng Hwi
Chief Executive Officer,
Keppel Telecommunications &
Transportation
K1 VENTURES
Steven Jay Green
CHAIRMAN/
CHIEF EXECUTIVE OFFICER
Former US Ambassador to
Singapore
Dr Lee Suan Yew
Medical Practitioner and
Past President of the
Singapore Medical Council
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
Tan Poh Lee Paul
Group Controller,
Keppel Corporation
KEPPEL LAND
Loh Chin Hua
CHAIRMAN
Chief Executive Officer,
Keppel Corporation
Ang Wee Gee
Executive Director and
Chief Executive Officer
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 URA Chief Planner and
Deputy Chief Executive Officer
Yap Chee Meng
Former Senior Partner,
KPMG and COO of KPMG
International for Asia Pacific
Prof Huang Jing
Professor and Director,
Center on Asia and Globalisation,
LKY School of Public Policy,
National University of Singapore
Oon Kum Loon (Mrs)
Non-Executive,
Non-Independent Director
Chan Hon Chew
Chief Financial Officer,
Keppel Corporation
Keppel Group Boards of Directors
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
Independent Director
Daniel Chan Choong Seng
Managing Director,
DCG Capital Pte Ltd
Lor Bak Liang
Director,
Werone Connect Pte Ltd
Ang Wee Gee
Executive Director and
Chief Executive Officer,
Keppel Land
Prof Tan Cheng Han
Professor of Law,
National University of Singapore
Lim Kei Hin
Chief Financial Officer,
Keppel Land
KEPPEL DC REIT
MANAGEMENT
(MANAGER OF
KEPPEL DC REIT)
Chan Hon Chew
CHAIRMAN
Chief Financial Officer,
Keppel Corporation
Lee Chiang Huat
Independent Director
Leong Weng Chee
Independent Director
Lim Chin Hu
Managing Partner,
Stream Global Pte Ltd
Dileep Nair
Singapore High Commissioner
to Ghana
Teo Cheng Hiang Richard
Independent Director
28
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 and
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).
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
Dr Clark holds 96 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 Ltd 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.
Dr Sharples is a Director of the Offshore
Energy Centre, a non-profit educational
institution and museum. Previously
he was Vice President of the 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, process
safety, and has been involved in accident
investigations on offshore matters as
an expert witness for legal proceedings.
He is an active member of the Canadian
Standards Association on arctic
structures, offshore structures and
offshore wind farms. He is a Director
of Keppel Offshore & Marine Ltd.
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 at the
University of Newcastle upon Tyne,
and a recipient of the Engineering and
Physical Sciences Dream Fellowship,
the Royal Academy of Engineering
Global Research Fellowship, and
the Biotechnology and Biological
Sciences Research Council Research
Development Fellowship. He currently
leads the Engineering Frontiers for the
Engineering and Physical Sciences
Research Council’s (EPSRC) Engineering
Biology Project. 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 Research Centre,
and a 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
with over 400 refereed papers
to his credit and the holder of more
than 30 patents.
Professor Ng Wun Jern
BSc (Civil Engineering) QMC London
University, MSc (Water Resources)
and PhD University of Birmingham,
PE(S), FIES, FSEng.
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.
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
University, he was with McKinsey &
Company in Germany.
29
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 Professor of the University of
São Paulo, Department of Naval
Architecture & Ocean Engineering of
Polytechnic School, and Director of
the Numerical Offshore Tank Centre.
He has been working as a coordinator
of the development of the New
Research Center in Santos City
conceived by Petrobras. Recently,
he was nominated as Distinguished
Professor of Yokohama National
University. He has also coordinated
several development projects in the
field of naval and ocean engineering,
mainly related to offshore systems
and military vessels, and is working
on advanced methods to analyse
moored floating systems.
Professor Saif Benjaafar
M.S. and PhD (Industrial Engineering),
Purdue University and BS (Electrical
Engineering), University of Texas at Austin.
Professor Chan Eng Soon
B.Eng (First class honours) & M.Eng,
National University of Singapore (NUS),
and PhD, MIT.
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 was also a founding faculty
member of the Singapore University
of Technology and Design (SUTD) where
he served as Head of Pillar and Professor
for Engineering Systems and Design,
and led 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 Chan is a Fellow of the
Singapore Academy of Engineering
and Member IES. He is Vice Provost
of NUS, and Keppel Chair Professor.
He was Dean of Engineering Faculty,
NUS. Prior to his deanship, Professor
Chan headed the then Civil Engineering
Department and served as Executive
Director of the Centre for Offshore
Research and Engineering, NUS
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 of
Governors of Republic Polytechnic,
Singapore. His research interests
include marine hydrodynamics,
wave-structure interactions, sediment
transport and coastal processes.
(From left) First row: Dr Brian Clark, Loh Chin Hua (CEO of Keppel Corporation), Sven Bang Ullring, Dr Lee Boon Yang (Chairman of Keppel Corporation),
Professor Minoo Homi Patel. Second row: Professor Tom Curtis, Chow Yew Yuen (CEO of Keppel Offshore & Marine), Dr Malcolm Sharples,
Professor Jim Swithenbank. Last row: Professor Chan Eng Soon, Professor Stefan Thomke, Professor Ng Wun Jern, Professor Saif Benjaafar.
Not in photo – Professor Kazuo Nishimoto.
Keppel Technology Advisory Panel
30
Senior
Management
KEPPEL CORPORATION
CORPORATE SERVICES
OFFSHORE & MARINE
Robert Chong
DIRECTOR
GROUP HUMAN RESOURCES
Wang Look Fung
DIRECTOR
GROUP CORPORATE AFFAIRS
Paul Tan
GROUP CONTROLLER
Ong Ye Kung
DIRECTOR
GROUP STRATEGY & DEVELOPMENT
Tay Lim Heng
DIRECTOR
GROUP RISK MANAGEMENT
Lynn Koh
GENERAL MANAGER
GROUP TREASURY
Magdeline Wong
GENERAL MANAGER
GROUP TAX
Caroline Chang
GENERAL MANAGER
GROUP LEGAL
Tan Eng Hwa
GENERAL MANAGER
GROUP INTERNAL AUDIT
Jacob Tong
GENERAL MANAGER
GROUP INFORMATION SYSTEMS
Jaggi Ramesh Kumar
GENERAL MANAGER
GROUP HEALTH,
SAFETY & ENVIRONMENT
Goh Toh Sim
CHIEF REPRESENTATIVE (CHINA)
Chow Yew Yuen
CHIEF EXECUTIVE OFFICER
Keppel Offshore & Marine
Wong Ngiam Jih
CHIEF FINANCIAL OFFICER
Keppel Offshore & Marine
Wong Kok Seng
MANAGING DIRECTOR
(OFFSHORE / KEPPEL FELS)
Keppel Offshore & Marine
Michael Chia Hock Chye
MANAGING DIRECTOR
(MARINE & TECHNOLOGY)
Keppel Offshore & Marine / KOMtech
Chor How Jat
MANAGING DIRECTOR
Keppel Shipyard
Abu Bakar Bin Mohd Nor
MANAGING DIRECTOR
Keppel Singmarine
Hoe Eng Hock
MANAGING DIRECTOR
(SPECIAL PROJECTS, MARINE)
Lai Ching Chuan
DIRECTOR
(CORPORATE DEVELOPMENT)
Keppel Offshore & Marine
Dr Foo Kok Seng
EXECUTIVE DIRECTOR
KOMtech / Offshore Technology
Development
Aziz Amirali Merchant
EXECUTIVE DIRECTOR
KOMtech / Deepwater Technology
Group / Engineering, Keppel FELS
Wong Fook Seng
EXECUTIVE DIRECTOR (PROCESS
EXCELLENCE & PLANNING)
Keppel FELS
Chris Ong Leng Yeow
EXECUTIVE DIRECTOR
(COMMERCIAL)
Keppel FELS
Mohamed Sahlan Bin Salleh
EXECUTIVE DIRECTOR
(OPERATIONS)
Keppel FELS
Louis Chow Wai Laye
EXECUTIVE DIRECTOR
(COMMERCIAL)
Keppel Shipyard
Loh Chin Hua
CHIEF EXECUTIVE OFFICER
Chan Hon Chew
CHIEF FINANCIAL OFFICER
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
31
PROPERTY
UNIONS
Toh Ko Lin
EXECUTIVE DIRECTOR
(COMMERCIAL)
Keppel Singmarine
Edmund Lek Hwee Chong
EXECUTIVE DIRECTOR
(OPERATIONS)
Keppel Singmarine
INFRASTRUCTURE
Dr Ong Tiong Guan
CHIEF EXECUTIVE OFFICER
Keppel Infrastructure
Patrick Kong Yoon Seen
CHIEF FINANCIAL OFFICER
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
EXECUTIVE DIRECTOR
(BUSINESS DEVELOPMENT)
Keppel Infrastructure
Cindy Lim Joo Ling
EXECUTIVE DIRECTOR
(INFRASTRUCTURE SERVICES)
Keppel Infrastructure
Ang Wee Gee
CHIEF EXECUTIVE OFFICER
Keppel Land
Choo Chin Teck ^
JOINT COMPANY SECRETARY
Keppel Land
DIRECTOR
(CORPORATE SERVICES)
Keppel Land International
Lim Kei Hin
CHIEF FINANCIAL OFFICER
Keppel Land International
Tan Swee Yiow
PRESIDENT
(SINGAPORE)
Keppel Land International
Ho Cheok Kong
PRESIDENT
Keppel Land China
Linson Lim 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
Khor Un-Hun
CHIEF EXECUTIVE OFFICER
Keppel Infrastructure Fund Management
Ng Hsueh Ling
CHIEF EXECUTIVE OFFICER
Keppel REIT Management
Christina Tan Hua Mui
MANAGING DIRECTOR
Alpha Investment Partners
Thomas Pang Thieng Hwi
CHIEF EXECUTIVE OFFICER
Keppel Telecommunications &
Transportation
Chan Shui Har
DEPUTY CHIEF EXECUTIVE OFFICER
CHIEF FINANCIAL OFFICER
Keppel Telecommunications &
Transportation
Vincent Ko Woon Chun
CHIEF EXECUTIVE OFFICER
Keppel Logistics (China Business Unit)
Chua Hsien Yang
CHIEF EXECUTIVE OFFICER
Keppel Data Centre REIT Management
Keppel FELS Employees’ Union
Vincent Ho Mun Choong
PRESIDENT
Atyyah Hassan
GENERAL SECRETARY
David Lim Kin Wai
EXECUTIVE SECRETARY
Keppel Employees Union
Razali Bin Maulod
PRESIDENT
Mohd Yazam Bin Mahmood
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
Lim Heng Khee
PRESIDENT
Lim Kuang Beng
GENERAL SECRETARY
Sylvia Choo Sor Chew
EXECUTIVE SECRETARY
Union of Power &
Gas Employees
Tay Seng Chye
PRESIDENT
Nachiappan RKS
GENERAL SECRETARY
S. Thiagarajan
EXECUTIVE SECRETARY
Senior Management
^ Note: Choo Chin Teck stepped down as
Joint Company Secretary on 31 Dec 2014
and retired on 31 Mar 2015.
32
01
Investor
Relations
Total Cash
Dividend Payout
46%
of Group net profit
for FY 2014.
10-year Total Shareholder
Return (TSR) Growth
13.7%
(Compounded)
This is above STI’s
compounded annual TSR
growth rate of 7.6%.
01
We host
regular site
visits as part of
our outreach to
the investment
community.
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
We believe it is important to provide
a timely, transparent, accurate and
balanced account of the Keppel Group’s
performance to our shareholders as
part of good corporate governance.
Through a structured Investor Relations
(IR) programme, we seek to help
investors better understand our
businesses, operating climate and
strategic directions, as well as
encourage feedback.
Our consistent efforts in equipping
investors to make well-informed
investment decisions will help to
achieve fair valuation of our Company,
which sustains value for shareholders.
As at 13 February 2015, institutions
formed 63.2% of our shareholder base,
while retail shareholders accounted for
the remaining 36.8%. Our shareholders
are geographically diversified across
countries in Asia, North America,
Europe and other regions.
ENGAGING INVESTORS
To better engage the international
investment community as well as
ensure a level playing field, our
management and IR personnel held
360 meetings and conference calls
with institutional investors in 2014.
We continued to travel widely for
non-deal roadshows to meet investors
across countries such as Canada,
Germany, Hong Kong, Japan, Malaysia,
Norway, the Netherlands, Switzerland,
the UK and the US. We also hosted
several facility visits to our shipyards,
plants and data centres in Singapore
as well as tours of our Brazilian yard
in Angra dos Reis.
Apart from the regular results
webcasts and conferences, we held
analyst briefings for major corporate
announcements such as Keppel
Offshore & Marine’s (Keppel O&M)
Management Services Agreement
(MSA) with the Titan Petrochemicals
Group (Titan). These briefings provide
platforms to effectively communicate
the Company’s developments as
well as address potential concerns
from the market.
We continued to engage our retail
shareholders outside of the Company’s
general meetings and renewed our
long-term sponsorship of the Securities
33
SHAREHOLDING BY INVESTORS
SHAREHOLDING BY GEOGRAPHY
SIGNIFICANT EVENTS
January
• Mr Loh Chin Hua was
appointed CEO of Keppel
Corporation and an
Executive Director to the
Board on 1 January 2014.
February
• Mr Chan Hon Chew was
appointed CFO of Keppel
Corporation on 1 February 2014.
March
• Keppel Corporation extended
its sole sponsorship of the
Lee Kuan Yew World City Prize
with a further commitment
of $1.75 million, bringing its
total commitment to date
to $3.5 million. The latest
contribution supports another
five cycles of the biennial
award from 2020 to 2028.
• The Sino-Singapore Tianjin
Eco-City was selected as a
National Green Building Base
by the China Green Building
Council at the seventh Plenary
Committee Meeting of the
China Green Building Council.
May
• Keppel Corporation hosted
the 77th ASEAN Council on
Petroleum National Committee
& Associated Meetings,
a platform for strengthening
synergy and fostering
cooperation in Southeast
Asia’s petroleum sector.
July
• Ocean Mineral Singapore
received approval from
the International Seabed
Authority for its first seabed
exploration licence.
October
• The Sino-Singapore Tianjin
Eco-City’s National Green
Development Demonstration
Plan was approved by
China’s State Council.
Institutions
Retail
Total
%
63.2
36.8
Singapore
Asia (ex Singapore)
100.0
North America
Europe
Others*
Total
%
36.1
6.4
13.2
9.9
34.4
100.0
* Others comprise shareholders beyond the Top 50, who collectively owned
approximately 20% of the Company’s issued share capital as at 13 February 2015.
as the Best Governed and Most
Transparent Listed Company
in Singapore. We were also
conferred the Singapore
Corporate Governance Award
for big-cap companies by the
SIAS during the year.
SUSTAINING VALUE
Despite the competitive landscape
and the oil price volatility in 2014,
Keppel Corporation continued to
maintain a solid dividend payout,
backed by strong financial
performance and a robust
balance sheet.
To reward shareholders fairly,
our Board has proposed a total
cash dividend of 48 cents per share
for 2014. This includes a proposed
final cash dividend of 36 cents
per share and an interim cash
dividend of 12 cents per share paid
in 3Q 2014. The total cash payout
proposed represents 46% of
our net profit for 2014.
Investors Association Singapore’s (SIAS)
Investor Education Programme,
which benefits some 2,400 of Keppel
Corporation’s retail shareholders.
Our website www.kepcorp.com is
a key channel through which we
communicate and broadcast company
news to the investment community.
With the proliferation of mobile
devices, we launched our iOS and
Android compatible mobile website in
February 2014 to enhance investors’
access to company information.
We also included a mobile-friendly
version of our live quarterly results
webcast with a function that allows
viewers to post questions to our
management in real time. We will
continue to enhance the features
of our website and other platforms
to facilitate investor’s access to
important company information.
Our ongoing efforts to improve
communications with investors
have been recognised by the
investment community. In 2014,
Keppel Corporation topped the
Governance & Transparency Index
Investor Relations
34
Investor
Relations
INVESTOR RELATIONS CALENDAR
The following events and initiatives
were organised in 2014 as part of
ongoing efforts to enhance our
outreach to investors and analysts:
4Q 2014
• 3Q & 9M 2014 live
results webcast.
• Non-deal roadshows
to Los Angeles
and San Francisco
with JP Morgan.
• Group visits to
Keppel FELS with
Morgan Stanley and
Fearnley Fonds.
1Q 2014
• FY 2013 results
conference and
live webcast.
• Launched a mobile-
friendly corporate
website with webcast
and question-and-
answer capabilities.
• Non-deal roadshows
to Kuala Lumpur with
DMG-OSK, and to
London, Frankfurt and
Zurich with UBS.
• Group visits to
Keppel FELS with
DMG-OSK and
Citigroup.
• Group tour of Keppel
Merlimau Cogen plant
with Credit Suisse.
2Q 2014
• 1Q 2014 live
results webcast.
• Convened Annual
General Meeting.
• Held analysts’ briefing
for Keppel O&M’s
MSA with Titan.
• Non-deal roadshows to
Houston with Citigroup,
and to Hong Kong and
Japan with Daiwa.
• Group visits to
Keppel FELS for clients
of Deutsche Bank,
Nomura and DBS.
• Hosted a Citigroup
analyst’s visit to
Keppel Nantong
Shipyard in China.
3Q 2014
• 2Q & 1H 2014 results
conference and
live webcast.
• Participated in
Pareto Securities’ 21st
annual Oil & Offshore
Conference in Norway.
• Non-deal roadshows
to New York, Boston
and Toronto with
Citigroup, and to
Amsterdam with
Credit Suisse.
• Shipyard visits for
clients and analysts
of AmInvestment
and DNB Bank.
• Group visits to Keppel’s
Brazilian shipyard with
Credit Suisse and UBS.
• Investor visits to
• Site visits to data
• Group visit to the
logistics facilities and a
WTE plant in Singapore.
centres and
infrastructure plants
in Singapore.
Sino-Singapore Tianjin
Eco-City in China.
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
Awards &
Accolades
35
• Keppel Shipyard received the
• Ocean Financial Centre and
Marina Bay Suites respectively
garnered FIABCI Singapore Property
Awards in the Office and High-Rise
Residential categories.
• Marina at Keppel Bay was
reaccredited with 5 Gold Anchors
at the Marina Industries Association
Australia Awards, the highest
accreditation under the International
Rating Scheme for Marinas.
• Keppel Land Hospitality Management
clinched following awards:
– Royal Sedona Suite at Sedona
Hotel Yangon
Myanmar’s Leading Hotel Suite,
World Travel Awards 2014
– Sedona Suites Ho Chi Minh City
Vietnam’s Leading Serviced
Apartments, World Travel
Awards 2014
– Ria Bintan Golf Club
Best Golf Course in Indonesia
and Second Runner-Up for
Best Golf Course in Asia Pacific,
Asian Golf Awards 2014
– Spring City Golf & Lake Resort
Second Runner-Up for
Best Golf Course in China,
Asian Golf Awards 2014
Top Golf Course in China by
Golf Magazine (China Edition)
Gold Caddie Service Award, Top
Golf Courses Awards 2013/14
Top 18 Famous Holes,
China Awards
– Eco-City International Country
Club won the Gold Award
(Wetlands category) at the Top
Golf Courses Awards 2013/14.
• Keppel Corporation’s 45th
anniversary video, entitled
Shaping the Future, received
two Gold Awards of Excellence
at the Communicator Awards,
and a Platinum Award at the
AVA Digital Awards.
• Corals at Keppel Bay secured the
Bronze Award for its advertisement
campaign at the SPH IINK Awards.
Shipbuilding & Repair Yard Award
at the Seatrade Asia Awards.
• Keppel Logistics was named
Singapore Domestic Logistics
Service Provider of the Year at
the Frost & Sullivan Singapore
Excellence Awards.
• Keppel Land received eight
accolades at the Euromoney
Real Estate Awards:
SINGAPORE
– Best Developer
– Best Residential Developer
– Best Office and Business
Developer
– Best Leisure/Hotel Developer
VIETNAM
– Best Developer
– Best Residential Developer
– Best Office and Business
Developer
– Best Mixed-use Developer
• Keppel Land received the Channel
NewsAsia Innovation Luminary
Award 2014.
• Keppel Land was among the
Top 10 developers in Singapore
and Vietnam recognised at the
BCI Asia Awards.
• Keppel Land was conferred the
Asia Excellence Brand Award by
Yazhou Zhoukan.
• Keppel Land garnered the
Most Admired ASEAN Enterprise
(Corporate Excellence category)
and the National Award for
Corporate Excellence (Large
Company) at the ASEAN
Business Award.
• Keppel Land won four awards
at Singapore Good Design
Mark Awards:
– Ocean Financial Centre won the
SG Mark Standard Award as well
as a Gold Award for its green wall.
– The Glades won two standard
awards for its Sliding Integrated
Multi-function Wall System as well
as the Interactive Multimedia Wall
at its sales gallery.
•
International Financial Centre
Jakarta was named the Best
Commercial Development in
Indonesia and the Best Green
Development at the Southeast
Asia Property Awards.
CORPORATE GOVERNANCE
& TRANSPARENCY
SINGAPORE CORPORATE AWARDS
• KEPPEL CORPORATION
– Silver, Best Managed Board
(Market capitalisation of
$1 billion and above)
SECURITIES’ INVESTORS
ASSOCIATION OF SINGAPORE (SIAS)
INVESTORS’ CHOICE AWARDS
• KEPPEL CORPORATION
– Winner, Singapore Corporate
Governance Award (Big Cap)
• KEPPEL
TELECOMMUNICATIONS &
TRANSPORTATION (KEPPEL T&T)
– Winner, Singapore Corporate
Governance Award (Mid Cap)
• KEPPEL LAND
– Runner-up, Most Transparent
Company (Property)
ALPHA SOUTHEAST ASIA
INSTITUTIONAL INVESTOR
CORPORATE AWARDS
• Keppel Corporation was among
Singapore’s top three companies
singled out for the strongest
adherence to corporate governance.
GOVERNANCE AND TRANSPARENCY
INDEX (GTI)
• Keppel Corporation topped the
GTI as the best governed and
most transparent listed company
in Singapore, while Keppel Land
and Keppel T&T respectively
emerged in 6th and 21st positions.
FINANCEASIA’S ANNUAL POLL
• KEPPEL CORPORATION
– Winner, Best Managed Board and
Best Investor Relations in Singapore
– Runner-up, Best Corporate
Governance
– Runner-up, Best Corporate Social
Responsibility
– Runner-up, Most Committed
to a Strong Dividend Policy
BUSINESS EXCELLENCE
• Keppel FELS achieved the Guinness
World Record “Largest manufacturer
of offshore Rigs – current” for
delivering 21 offshore rigs in 2013.
• Keppel FELS’ DSSTM 38E rig design
was bestowed the Industrial
Structure Award at the Singapore
Structural Awards.
Awards & Accolades
36
Awards &
Accolades
01
For its high safety standards,
the Keppel Group won 39
Workplace Safety and
Health (WSH) Awards
in 2014, topping 2013’s
record of 32 awards.
02
Ms Wang Look Fung,
Director of Group Corporate
Affairs, Keppel Corporation,
received the “Sustainable
Business Award” on behalf
of Keppel Corporation
from Mr Lee Yi Shyan (left),
Senior Minister of State for
Trade and Industry, and
National Development.
03
The Glades condominium
received the BCA Green Mark
GoldPlus award.
SUSTAINABILITY
• Keppel Corporation was selected
as a component of the Dow Jones
Sustainability Asia Pacific Index
(DJSI Asia Pacific) 2013/14,
the Euronext Vigeo World 120
Index and the MSCI Global
Sustainability Index.
• Keppel Corporation was
conferred the Sustainable
Business Award (Merit) by the
Singapore Business Federation.
• Keppel Land remained on the
DJSI World and Asia Pacific Indices
as well as MSCI Global Socially
Responsible and Sustainability
Indices. It was also included in the
MSCI World Environmental, Social
and Governance Index as well as
the Sustainability Yearbook 2014.
• Keppel Land won the Sustainable
Business Award for energy
management conferred by the
Singapore Business Federation.
• Keppel REIT was named the
Regional Leader for Office
Sector (Large Cap) in Asia by the
Global Real Estate Sustainability
Benchmark 2014 and ranked
17th position in the Global 100
Most Sustainable Corporations
in the World.
• Keppel REIT clinched the
Sustainability Award for business
leadership at the inaugural
Asia Pacific Regional Network
Leadership Awards by the World
Green Building Council.
BUILDING AND CONSTRUCTION
AUTHORITY (BCA) GREEN
MARK AWARDS
• Keppel Land was awarded
the Green Mark Champion
Award 2014.
SINGAPORE
– Keppel Bay Tower, Platinum
– Bugis Junction Towers, Platinum
– Keppel Datahub Two, Platinum
and BCA-IDA Green Mark
Platinum
– Highline Residences, GoldPlus
– Prudential Tower, GoldPlus
– Corals at Keppel Bay, the
Universal Design Mark GoldPlus
– The Glades, GoldPlus
OVERSEAS
– Central Park City Plot One
in Wuxi, Gold
– Stamford City Block Five in
Jiangyin, Gold
• Mr Lim Tow Fok, Keppel Land’s
General Manager, Property
Management and Knowledge
Management, was awarded the
Green Building Individual Award.
01
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
37
• Ocean Financial Centre and
Prudential Tower were awarded
the Water Efficient Building
(Silver) Certifications by the
Public Utilities Board.
• Highline Residences and The
Glades attained the Landscape
Excellence Assessment
Framework Certifications by
the National Parks Board.
• Marina at Keppel Bay was named
the Green Maritime Company
of the Year at the Asia Boating
Awards 2014.
• Tanah Sutera, the management
company of Keppel Land’s
integrated township development
in Johor, Malaysia, clinched the
Merit award (Regional) at the
Singapore Environment
Achievement Awards.
• Sino-Singapore Tianjin Eco-City
was named the National Green
Building Base by the China Green
Building Council while its Low
Carbon Living Lab was conferred
3 stars by China’s Green Building
Design Label.
CORPORATE CITIZENRY
• The Keppel Group garnered its
seventh consecutive Distinguished
Patron of The Arts Award from
Singapore’s National Arts Council.
• Keppel Land China was ranked
among the Top 10 ASEAN
companies in China by the
China-ASEAN Business Council for
the third consecutive year, while
Mr Ang Wee Gee, CEO of Keppel
Land, was named among the Top
ASEAN Entrepreneurs in China.
• Sino-Singapore Tianjin Eco-City
Investment and Development
Co Ltd was conferred the Tianjin
Charity Star Company Award at
“The Third Tianjin Charity Star
Selection Activity”.
• Keppel Care Foundation was
awarded Corporate Gold at the
Community Chest Awards.
SAFETY
• The Keppel Group clinched 39
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 an organisation.
• Nakilat-Keppel Offshore & Marine
won the Safety & Security
Award at the Maritime
Standard Middle East & Indian
Subcontinent Awards.
• Keppel Land won the Merit award
at the International Safety Awards.
HUMAN RESOURCES
• Keppel Corporation was named
the Most Attractive Employer
under the Engineering Sector
Services category at the
Randstad Awards.
• Mr Chor How Jat, Managing
Director of Keppel Shipyard,
was awarded the Medal of
Commendation at the National
Trades Union Congress May
Day Awards.
• Keppel Land was conferred
the Singapore HR Award for
leading HR Practices in learning
and human capital development,
as well as special mentions for
talent management, retention
& succession planning,
and compensation &
rewards management.
02
03
Awards & Accolades
INNOVATING SOLUTIONS
Our strategic businesses, with solid execution
and established presence in key markets,
will innovate sustainable solutions to address the
world’s urgent needs for homes and a clean
environment with energy and connectivity.
SEIZING OPPORTUNITIES
Our strong financial position will enable
us to seize opportunities selectively in new
adjacencies and growth platforms for the best
risk adjusted returns, hunting as a pack and
leveraging our collective strength.
Capturing
Value
We will grow Keppel to be
amongst the best-in-class
conglomerates in the world,
capturing value by being
agile but sure-footed in
every move. We will develop
strong verticals producing
quality earnings through
prudent resource allocation
and a capital constraint
mindset, talent development
and management and
a continuous focus on
technology innovation.
40 WORDS
Cities of
Opportunities
Urbanisation is rising at
an unprecedented speed
and scale. About 1.4 million
people are moving into urban
areas every week. By 2050,
two thirds of the world’s
population will live, work and
play in cities.
41BY 2030
28
IN 2014
megacities
Economic growth in the emerging economies will
enable some 3 billion people to rise into the ranks of
the middle class in the next 15 years. In less than two
decades, the world will have as many as 41 mega-cities,
up from 28 in 2014, and many more fast-growing urban
settlements across Asia and Africa. This means new
demand for food, travel, energy, housing, proper
sanitation, schools and hospitals, and for businesses
meeting countless needs.
Despite its challenges, urbanisation can promote
sustainable growth if managed well by increasing
productivity, enabling innovation and new ideas to
emerge, as well as optimising the use of energy, land
and natural resources. Through its key businesses in
Offshore & Marine, Infrastructure and Property, Keppel
is primed to meet the needs of our urbanising world.
Creating
Value with
Agility
With a global footprint in 30 countries,
Keppel Corporation leverages its international
network, resources and talents to grow its
key businesses. Our vision is to be a global
company at the forefront of our chosen
industries, shaping the future for the benefit
of all our stakeholders - Sustaining Growth,
Empowering Lives and Nurturing Communities.
Renewables
Hydro
Nuclear
Gas
Oil
Coal
FUEL CONSUMPTION
+35% from 2010 to 2040
billion tonnes of oil equivalent
18
15
12
9
6
3
0
1965
Source: BP
2000
2035
POWER NEEDS
+85% from 2010 to 2040
thousand Terawatt hours
40
30
20
10
Environment
Offshore &
Marine
Property
Building
Sustainable
Communities
Energy
Connectivity
Infrastructure
WASTE GENERATION
LOGISTICS OUTSOURCING
2.2billion
tonnes of municipal solid waste generated annually
by 2025, up from today’s 1.3 billion tonnes.
US$925billion
in global third-party logistics revenue by 2020.
LANDFILLS
BIG DATA CREATION
zettabytes
30
28.1
20
10
0.4
2008
0
Source: BroadGroup
4.0
2013
2018F
2010
0
Source: ExxonMobil
2020
2030
2040
12%
of current global methane emissions are
produced by landfills.
42
43
1.1
Robust deepwater rigs
1.2
Arctic rigs and ice-class vessels
Fueling Growth
The rate of global urbanisation, combined with
rising living standards, is likely to double energy
demand by 2050.
Oil
In the next few decades,
population and income growth
are expected to create new
demands for energy, driving up
global energy consumption by
about 35% from 2010 to 2040.
Underpinning this increase is the
energy consumption of developing
countries or economies which is
estimated to rise by as much as
70% over the same period.
Despite the growing focus on
renewable energy, fossil fuels,
namely oil, gas and coal, are
projected to continue providing
over 80% of the world’s energy
needs, meeting two-thirds of
the increase in energy demand
over the next two decades.
To meet rising global energy
demand as well as offset
declining production from
matured onshore and shallow
water basins, the petroleum
industry has set out to conquer
extreme environments in search
of new reserves for the future.
Continuous advancements in
technologies are needed to
open doors to these
unconventional resources,
while keeping costs low and
production high.
With over 30 proprietary rig and
ship designs and counting, Keppel
Offshore & Marine is innovating
to meet the complex needs of
operators and drillers worldwide
with reliable, cost-effective and
highly-productive solutions.
1.3
Combined-cycle gas turbine
power plant
Natural Gas
Natural gas, which is the
cleanest burning fossil fuel,
is the cheapest and fastest way
for most countries to meet their
growing energy requirements
while reducing carbon emissions.
Projected to rise by 65% from 2010
to 2040, the global demand for
natural gas, driven primarily by
Asia, is set to be the fastest
growing among energy sources.
Liquefied Natural Gas (LNG), which
is shippable across long distances,
is expected to help meet most of
this demand, overtaking pipelines
as the dominant form of traded gas
in the next two decades. The
proliferation of LNG demand is also
spurring the development of new
technologies to unlock more gas
reserves and bring them to
consumers in distant markets,
while keeping overall costs low.
Drawing from rich expertise
of having completed over a
hundred complex oil and gas
vessel conversion projects,
coupled with a growing pool of
in-house Floating LNG expertise,
Keppel is positioned to provide
solutions for the offshore LNG
value chain, spanning the
liquefaction, transportation
and regasification processes.
Building Sustainable
Communities
Built-up urban areas worldwide will increase by
1.2 million square kilometres between 2000 and
2030, nearly tripling that in 2000.
1.1 – 1.2
From ultradeep
waters hundreds
of kilometres
offshore to the
frigid Arctic, Keppel
O&M is developing
viable, safe and
productive solutions
to meet the needs
of operators and
drillers in extreme
environments.
1.3
Keppel has a
growing presence in
the natural gas value
chain. In addition to
providing solutions
for offshore LNG,
we also built, own
and manage Keppel
Merlimau Cogen,
a combined-cycle
gas turbine power
plant in Singapore,
which is more
efficient and less
carbon-intensive
than coal-fired plants.
Property
Development
The world is at the threshold of
rapid economic and social change,
as millions flock into urban areas
drawn by the new wealth of these
cities. Alongside growth, the
greatest social migration of all
time brings with it pressing
urban management challenges,
fueling the urgency for
sustainable development.
As one of Asia’s premier property
companies, Keppel Land is shaping
the future of cities, old and new,
by transforming cityscapes and
living spaces with innovative,
eco-friendly solutions. With a
pipeline of over 70,000 homes
and 819,000 square metres of
gross commercial space across Asia,
Keppel Land is meeting the needs
and aspirations of city-dwellers,
balancing commercial viability with
environmental sustainability.
Power Plant
C02 Emissions
(grams per kilowatt hour)
COAL-FIRED
PLANTS
COMBINED-
CYCLE PLANTS
436 915
Gas-to-Power
Electricity is used to power
economies, modernise cities,
improve living standards, and
manufacture products, among
thousands of other everyday
uses. With continuing economic
growth, urbanisation and a
widening middle class, global
electricity demand is forecast
to rise by about 85% between
2010 and 2040.
Natural gas, due to its relatively
clean burning nature, is becoming
an increasingly popular fuel for
electricity generation. Natural
gas is expected to supply 135%
more electricity in 2040 than in
2010, overtaking coal as the
largest source of electricity.
Keppel Infrastructure, with its
unique exposure across the
Gas-to-Power value chain, is
well-placed to provide reliable
solutions for the import,
shipping and retail of natural
gas, power generation as well
as electricity supply.
2.1
Sino-Singapore Tianjin Eco-City
Special Feature
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 44
45
Waste-to-
Energy
Rapidly rising living standards
and consumption patterns are
creating huge volumes of waste
in cities, at levels often far
beyond what governments and
their agencies can manage. Such
intense waste accumulation has
encroached upon the ecosystem
and human health, undermining
the promise of the better quality
of life that affluence affords.
Cities are grappling with the
costs of managing their massive
waste, and disposal techniques
and technologies, among other
environmental issues.
Keppel Infrastructure, through
Keppel Seghers, is a leading
specialist in Waste-to-Energy
(WTE), a technology which
converts non-recyclable waste
materials into usable heat or
electricity through incineration.
This process of recovering
energy from waste generates
renewable energy and reduces
landfills, which produce
methane. Keppel’s proven and
patented WTE technologies
have been successfully
implemented in more than
100 facilities around the world,
and continue to help cities
come to grips with their waste.
District
Cooling
Air conditioning and heating,
energy intensive as they are,
have become an essential
part of urban development.
Fortuitously, the clustering
of production and residential
areas within cities also provide
great potential for reducing the
use of fossil fuels in cooling
and heating.
Centrally chilled and hot water
processing plants, such as those
developed and run by Keppel
DHCS in Singapore and China,
can effectively serve the
air-conditioning needs of
dozens of office, industrial and
residential buildings at a time.
At a District Heating and
Cooling Systems (DHCS)
plant, water is chilled or
heated to the designed
temperature and
continuously supplied
through a network of
distribution pipes to the
buildings within a district.
The resulting economies
of scale and reduced
environmental footprint
make DHCS plants an
energy-efficient, cost-
effective and eco-friendly
solution for urban areas.
2.1 – 2.4
Model for sustainable
development - The Sino-
Singapore Tianjin Eco-City
brings to bear Keppel’s
strong competencies in
master planning, property
development, environmental
engineering and logistics
to create a harmonious and
green community that meets
urbanisation needs for up to
350,000 residents in China.
2.2 Waste incineration technology
2.3 District cooling systems
2.4 Quality living environment
Keppel T&T has a strong track
record for owning, designing
and managing highly resilient
and energy-efficient data centres
in Asia-Pacific and Europe.
It helps both private and public
organisations alike ensure
smooth operations through
reliable and cost-effective
data centre co-location and
business contingency services.
The Company’s bespoke data
centre offerings will enable
more organisations to
manage their operating costs
and eco-footprint in the
digital economy.
Logistics
Cities are fueled by the movement
of essential resources such as
food, healthcare equipment and
other goods quickly and efficiently
from where they are produced
to where people consume and
use them.
Keppel T&T is one of Asia’s
leading providers of integrated
third-party logistics solutions
backed by world-class distribution
centres, warehouse facilities,
river ports and IT infrastructure.
The company offers one-stop
solutions to help businesses
across food, healthcare, retail,
offshore & marine and publishing
sectors manage their entire supply
chain seamlessly from the inbound
movement of raw materials to
the delivery of finished goods.
3.1 – 3.2
Keppel T&T is providing
reliable and efficient
infrastructure solutions
and services to enhance
the flow of information,
goods and services
between citizens
and businesses in
urban centres.
3.1
Eco-friendly data centres
3.2
Integrated logistics solutions
Connecting People
and Businesses
Citizens and businesses of smart cities will
enjoy high levels of sustainable collaboration,
productivity, and economic growth.
Unlike the railways, roads, and
telephone lines that used to
pave the way for new cities and
new connections, urbanisation
in the 21st century is powered by
the flow of information, networks,
goods and services.
Better and more productive
urban areas can be built to
support economic prosperity
and sustainable development
by weaving together people,
services, community infrastructure
and information. Through offering
quality integrated services and
solutions in logistics and data
centres, Keppel T&T is connecting
people and businesses, as well
as contributing towards more
resource-efficient, livable and
eco-friendly cities.
Special Feature
Data Centres
About 90% of the data in the
world was created in just
the last two years alone. The
surge in cloud computing,
e-commerce, online shopping
and businesses outsourcing their
IT infrastructure are just some of
the key trends stoking demand
for quality data centres.
While data centres are commonly
run by large companies or
government agencies, they are
also increasingly used to provide
fast-growing cloud solutions for
private and business applications.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 46
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-2014 had total assets of $31.6 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 reviews the strategic, market and business
aspects of Keppel Group’s operations and financial
performance, based on its consolidated financial
statements as at 31 December 2014. Also discussed are
the impacts of key business activities on the Group’s
performance, challenges in the operating environment,
as well as the long-term strategies which Keppel uses
to shape its future.
CONTENTS
47 Group Structure
48 Management
Discussion & Analysis
50 Offshore & Marine
62
Infrastructure
70 Property
78
Investments
82 Financial Review
& Outlook
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
47
GROUP STRUCTURE
Keppel Corporation Limited
OFFSHORE & MARINE
INFRASTRUCTURE
PROPERTY
INVESTMENTS
• Offshore rig design, construction,
• Gas-to-Power
• Property development
• Investments
repair and upgrading
• Ship conversion and repair
• Specialised shipbuilding
• Waste-to-Energy
• X-to-Energy
• Logistics and data centres
• Property fund management
• Telco
• Property trusts
KEPPEL OFFSHORE
& MARINE LTD
100% KEPPEL
INFRASTRUCTURE
HOLDINGS PTE LTD
100% KEPPEL BAY PTE LTD 2
100% K1 VENTURES LIMITED 5 36%
Keppel FELS Limited
100%
Gas-to-Power
KEPPEL LAND LIMITED 5
55% KRISENERGY LTD 5
Cayman Islands
Keppel Shipyard Limited
100% Keppel Merlimau
Cogen Pte Ltd
Keppel Singmarine Pte Ltd
100% Keppel Gas Pte Ltd
100% Keppel Land
International Limited
Southeast Asia and India
100% Keppel Land China
China
Keppel Nantong Shipyard
Company Limited
China
100% Keppel Electric Pte Ltd
100% Alpha Investment
Partners Ltd
Offshore Technology
Development Pte Ltd
100%
Waste-to-Energy
Keppel REIT 5
100%
M1 LIMITED 3 & 5
100%
100%
45%
31%
19%
Deepwater Technology
Group Pte Ltd
100% Keppel Seghers
Engineering Singapore
Pte Ltd
100%
Marine Technology
Development Pte Ltd
100%
X-to-Energy
Keppel AmFELS LLC
United States
Keppel Verolme BV
The Netherlands
Keppel FELS Brasil SA
Brazil
Keppel Singmarine
Brasil Ltda
Brazil
Keppel Philippines
Marine Inc 5
The Philippines
100% Keppel DHCS Pte Ltd
100%
100% Keppel Infrastructure Trust 5
49%
100%
100%
KEPPEL
TELECOMMUNICATIONS
& TRANSPORTATION LTD 5
80%
Logistics & Data Centres
98% Keppel Logistics Pte Ltd
100%
Keppel Subic Shipyard Inc
The Philippines
86% Keppel Data Centres
Holding Pte Ltd
100%
Caspian Shipyard
Company Limited
Azerbaijan
51% Keppel Logistics (Foshan)
Pte Ltd
China
Arab Heavy Industries PJSC
United Arab Emirates
33% Keppel DC REIT 4 & 5
70%
35%
Nakilat-Keppel
Offshore & Marine Ltd
Qatar
Dyna-Mac Holdings Limited 5
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.
4 Owned by Keppel
Telecommunications &
Transportation (30%) and
Keppel Land Limited (5%)
5 Public listed company
Updated as at 6 March 2015.
The complete list of subsidiaries
and significant associated
companies is available at
Keppel Corporation’s website
www.kepcorp.com.
GROUP CORPORATE
SERVICES
SINO-SINGAPORE TIANJIN ECO-CITY INVESTMENT
AND DEVELOPMENT CO., LTD 1
China
50%
Control &
Accounts
Corporate
Communications
Strategy &
Development
Corporate
Development/
Planning
Human
Resources
Legal
Risk
Management
Audit
Tax
Treasury
Information
Systems
Health,
Safety &
Environment
Operating & Financial Review
Group Structure
48
Operating &
Financial Review
MANAGEMENT
DISCUSSION &
ANALYSIS
We are configured for
growth with prudent
financial discipline and
a strong balance sheet.
FREE CASH FLOW
$729m
EARNINGS PER SHARE
$1.04
There was no significant dilution as no
major capital call was made since 1997.
GROUP OVERVIEW
Group net profit attributable to
shareholders increased by 2% to
$1,885 million. The compounded
annual growth for net profit from
2009 to 2014 was 4.1% and for the
period from 2004 to 2014 was 15.1%.
EPS went up by 2% to $1.04. ROE
was 18.8%. EVA, at a record high
of $1,778 million, was $636 million
above that of the previous year.
Net cash from operating activities
dropped by 99% to $5 million
as compared to $637 million for
2013 due mainly to higher working
capital requirements from the
Offshore & Marine and Property
Divisions, despite higher operating
profit in the current year.
To better reflect its operational free
cash flow, the Group had excluded
expansionary acquisitions (e.g.
investment properties) and capital
expenditure (e.g. building of new
logistics or data centre facilities),
meant for long-term growth for
the Group, and major divestments.
After excluding expansionary
acquisitions & capital expenditure
and major divestments, net cash
from investment activities was
$724 million. The Group spent
$662 million on investments and
operational capital expenditure,
mainly from the Offshore &
Marine Division. After taking
into account proceeds from
divestments and dividend income
of $1,386 million, the resulting
free cash inflow was $729 million.
Total cash dividend for 2014 will be
48 cents per share, 20% higher
than the prior year’s total cash
dividend of 40 cents per share.
This comprised a final proposed
cash dividend of 36 cents
per share and the interim cash
dividend of 12 cents per share
distributed in 3Q 2014. The
total distribution for 2014 is
approximately $870 million.
The total distribution for the
prior year of 49.5 cents per share
included a total cash dividend
of 40 cents per share and a
special distribution in specie of
Keppel REIT units equivalent to
9.5 cents per share.
SEGMENT OPERATIONS
Group revenue of $13,283 million
was $903 million or 7% above
that of the previous year. Revenue
from the Offshore & Marine
Division of $8,556 million was
$1,430 million higher due to
Source: Barclays Research
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 49
higher revenue recognition from
ongoing projects. Revenue from the
Infrastructure Division of $2,934 million
was $525 million lower due mainly to
lower revenue recorded by the power
generation plant in Singapore, partly
offset by higher revenue from the
logistics and data centre businesses.
Revenue from the Property Division
of $1,729 million fell by $39 million
due largely to lower contribution from
residential property sales in Singapore
and the deconsolidation of Keppel REIT
from 31 August 2013, partly offset by
the sale of a residential development
in Jeddah, Saudi Arabia.
Group net profit of $1,885 million was
$39 million or 2% higher than that of the
previous year. Profit from the Offshore
& Marine Division of $1,040 million was
$95 million or 10% higher than in 2013.
Better operating results and higher
interest income were partly offset by a
lower share of associated companies’
profits and higher tax expense. Profit
from the Infrastructure Division of
$320 million was $305 million higher
due largely to better operating results
as well as gains from divestments of
data centre assets and Keppel FMO Pte
Ltd. Profit from the Property Division of
$482 million declined by $350 million
or 42% due largely to lower operating
results, lower fair value gains on
investment properties and the absence
of gains from the deconsolidation
of Keppel REIT.
This was partially offset by gains from
the disposals of Equity Plaza, Prudential
Tower and its one-third interest in
Marina Bay Financial Centre (MBFC)
Tower 3 in 2014. Profit from the
Investments Division decreased by
$11 million or 20% to $43 million due
mainly to higher overheads partly
offset by profit from the disposal of
investments and a write-back of
impairment of investments.
The Offshore & Marine Division was
the largest contributor to Group net
profit with a 55% share followed by
the Property Division at 26%, the
Infrastructure Division at 17% and
the Investments Division at 2%.
KEY PERFORMANCE INDICATORS
Revenue
Net profit
Operating cash flow
Free cash flow*
Economic Value Added (EVA)
Earnings per Share (EPS)
Return on Equity (ROE)
Total cash dividend per share**
2014
$ million
13,283
1,885
5
729
1,778
$1.04
18.8%
48 cts
14 vs 13
% +/(-)
+7
+2
-99
+11
+56
+2
-4
+20
2013
$ million
12,380
1,846
637
654
1,142
$1.02
19.5%
40 cts
13 vs 12
% +/(-)
-11
-17
-37
+4
-20
-18
-26
-11
2012
$ million
13,965
2,237
1,011
630
1,430
$1.25
26.4%
45 cts
* Free cash flow excludes expansionary acquisitions & capex, and major divestments.
** Total distributions for FY 2013 and FY 2012 included non-cash special distributions in specie of Keppel REIT units equivalent to 9.5 cts per share and 28.6 cts
per share respectively.
REVENUE ($ million)
NET PROFIT ($ million)
10,000
8,750
7,500
6,250
5,000
3,750
2,500
1,250
0
1,200
1,050
900
750
600
450
300
150
0
Offshore &
Marine
Infrastructure
Property Investments
Total
2012
2013
2014
7,963
2,832
7,126
8,556
3,459
2,934
3,018
1,768
1,729
152
27
64
13,965
12,380
13,283
2012
2013
2014
Offshore &
Marine
949
945
1,040
Infrastructure
Property Investments
Total
16
15
320
1,078
194
832
482
54
43
2,237
1,846
1,885
Operating & Financial Review
Management Discussion & Analysis
50
Operating &
Financial Review
OFFSHORE
& MARINE
We aim to be the
preferred solutions
partner in the
global offshore and
marine industry.
PROFIT BEFORE TAX
$1,365m
as compared to FY 2013’s $1,202 million.
NET PROFIT
$1,040m
as compared to FY 2013’s $945 million.
MAJOR DEVELOPMENTS
IN 2014
Entrenched track record in
ultra-high specification jackups
by delivering the world’s largest
jackups, and securing a contract
to build the first proprietary
KFELS N Plus jackup.
Secured two contracts to perform
the world’s first-of-its-type
Floating LNG conversions.
Secured contracts to build
specialised vessels, such as the
two ice-class supply vessels for
a subsidiary of Bumi Armada,
and a Subsea Construction
Vessel (SCV) for BP Exploration
(Shah Deniz) Ltd.
FOCUS FOR
2015/2016
Sharpen execution to extract
value from backlog of orders.
Harness synergy of global
yards to provide newbuild,
repair and upgrading solutions
to customers.
Maintain emphasis on
technology development to
sharpen competitiveness.
Seize opportunities in new
markets and adjacent businesses
for long-term growth.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 51
EARNINGS REVIEW
The Offshore & Marine Division
was entrusted with $5.5 billion of
new orders in 2014, bringing its net
orderbook as at year end to $12.5 billion,
with deliveries and revenue visibility
extending to 2019.
NET PROFIT ($ million)
FY 2014
FY 2013
FY 2012
1,040
945
949
EARNINGS HIGHLIGHTS ($ million)
Revenue
EBITDA
Operating Profit
Profit before Tax
Net Profit
2014
2013
2012
8,556
1,366
1,224
1,365
1,040
7,126
1,196
1,059
1,202
945
7,963
1,223
1,089
1,193
949
Manpower (Number)
31,597
31,487
29,765
Manpower Cost
1,194
1,173
1,080
01
Keppel O&M’s CEO,
Mr Chow Yew Yuen
(middle) showcases
the Company’s
suite of innovative
solutions to Mr S
Iswaran, Minister,
Prime Minister’s
Office and Second
Minister for Home
Affairs and Trade
and Industry.
01
Revenue of $8,556 million was
$1,430 million or 20% higher due
to higher revenue recognition from
ongoing projects. Operating profit
margin for FY 2014 was 14.3%,
compared to last year’s 14.7%.
Pre-tax earnings improved 14% to
$1,365 million on better operating
results and higher interest income,
partially offset by lower share of
associated companies’ profits.
Net profit of $1,040 million was
$95 million or 10% higher than in
2013. The Division remains the
largest contributor to Group net
profit with a 55% share.
MARKET REVIEW
After an unprecedented period of
Brent oil price stability at levels of
above US$90 per barrel for most
of the last four years, oil prices
declined sharply from June 2014
to less than US$50 per barrel at
the start of 2015. This decline was
mainly attributed to demand and
supply factors and exacerbated
by geopolitical tensions.
Returns for oil companies have
also been eroded by rising costs
and the sharp decline in oil price.
These have in turn raised hurdle
rates for new project sanctions,
and caused some oil companies
to reduce their exploration and
production (E&P) budgets.
Oil companies’ cost-cutting has
likewise put the supply chain
under pressure.
Dayrates for drilling rigs have also
taken a beating. As at early-2015,
the dayrates for ultra-deep and
deepwater rigs have dropped
around 34% from a year ago, while
those for high-specification jackups
have been more resilient, decreasing
by about 15% since January 2014.
Operating & Financial Review
Offshore & Marine
52
Operating &
Financial Review
OFFSHORE & MARINE
NUMBER OF OFFSHORE RIGS SCRAPPED
Units
20
18
16
14
12
10
8
6
4
2
0
18
14
11
7
7
8
8
4
2
1
4
3
2
1
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Jackup rig
Semisubmersible rig
Drillship
Source: IHS-Petrodata & Nomura Research
However, even at current price levels,
offshore prospects are still viable in
certain geographies such as Southeast
Asia, Latin America and the Middle
East. With a slowdown in E&P activities,
production capacity is expected to
gradually fall, bringing the market
to an equilibrium.
There is also a visible acceleration in
the replacement cycle for aging rigs.
Presently, over 50% of global jackups
and semisubmersibles are 25 years
old and above. 48 rigs alone were
scrapped from 2011-2014, translating
to an average attrition rate of 12 rigs
per year in the last four years, compared
to four rigs per year in the preceding
11 years from 2000-2010.
As older rigs are due for the
five-year surveys and require massive
investments to upgrade, scrapping
will become an increasingly attractive
option for drilling contractors seeking
to preserve capital. Major drillers such
as Transocean and Diamond have
begun scrapping their old rigs.
This scrapping trend bodes well for
the offshore drilling business as
capacity is being taken out from the
market gradually, making headroom
for dayrates to rise again.
OPERATING REVIEW
With strong operational capabilities
and extensive experience in delivering
a wide spectrum of offshore and
marine projects, Keppel Offshore
& Marine (Keppel O&M) remained
the choice partner for newbuild,
repair and upgrading services
amongst international owners
and operators in 2014.
It continued to stay ahead in the
industry, delivering differentiated
and value-adding solutions to a
diversified customer base. Worldwide,
Keppel O&M’s yards delivered seven
rigs, seven Floating Production Storage
and Offloading (FPSO) conversions,
and nine specialised vessels in a
timely and safe manner during the
year. In particular, the delivery of the
world’s largest jackups, Maersk Intrepid
and Maersk Interceptor, to Maersk
Drilling, further strengthened Keppel
FELS’s (Keppel FELS) sterling
rigbuilding track record.
01
The two Maersk
CJ70 rigs delivered
by Keppel FELS in
2014 are the largest
harsh environment
jackups in the world.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 53
01
SIGNIFICANT EVENTS
February
• Mr Chow Yew Yuen was
appointed CEO of Keppel
O&M on 1 February 2014.
• Keppel FELS secured a
KFELS B Class jackup rig
contract from UMW
Oil & Gas Corporation
worth US$218 million.
• Keppel FELS also secured
contracts to build three
high-specification KFELS B
Class jackup rigs worth
about US$650 million
from new customer,
Fecon International Corp.
March
• Keppel FELS delivered the
world’s largest jackup, the
CJ70 Maersk Intrepid, to
Maersk Drilling. This would
be followed by the delivery
of an identical second unit,
Maersk Interceptor,
in August 2014.
• Keppel FELS secured a
contract from TS Offshore to
construct the first proprietary
KFELS N Plus jackup worth
about US$500 million.
• Keppel Singmarine
secured three contracts
from a subsidiary of Bumi
Armada to build two
ice-class supply vessels and
an ice-class multi-purpose
duty-rescue vessel.
• Keppel Nantong secured an
order from KSP Towage to
construct two tugs, to be
deployed in Malaysia.
Keppel O&M marked significant
milestones with some of the new orders,
such as sealing the first-of-its kind
Floating LNG (FLNG) vessel conversion
contracts with Golar LNG, as well as
signing the first proprietary KFELS N
Plus newbuild contract with TS Offshore.
Baku Shipyard, which was inaugurated
at end-2013, also secured its first
major newbuild contract – a subsea
construction vessel from BP
Exploration (Shah Deniz).
Our Near Market, Near Customer
strategy and focus on innovation in
technological offerings were evident
in Keppel O&M’s strategic moves
during the year.
Keppel O&M signed a 30-year
management services agreement
with the Titan Petrochemicals Group
to manage the Titan Quanzhou
Shipyard in Fujian, China.
Titan Quanzhou Shipyard is one of the
largest shipyards in China, occupying
a total area of 110 hectares along
3,600 metres of coastline. In light of
the growth in oil and gas consumption
and focus on domestic production
in China, we expect an increasing
demand for high-specification
offshore rigs and production
vessels in the country.
Across its global network,
Keppel O&M continued to
enhance its yards’ capabilities and
upgrade their facilities to improve
productivity and competitiveness.
These well-equipped and strategically
located yards around the world
are well-positioned to leverage
Keppel O&M’s technological
edge and execution track record
to seize pockets of opportunities
in the market, amidst a challenging
macro environment.
Operating & Financial Review
Offshore & Marine
54
Operating &
Financial Review
OFFSHORE & MARINE
01
The KFELS B Class
jackup Jindal Explorer
was delivered to Star
Drilling on time, on
budget and with a
perfect safety record.
02
Construction of the
first DSSTM 38E Semi
at BrasFELS is well
on track.
OFFSHORE
In 2014, Keppel FELS completed
six rigs on time or ahead of schedule
for drilling contractors such as Maersk
Drilling, ENSCO, UMW Oil & Gas, Gulf
Drilling International and Star Drilling.
Notably, the two mammoth Maersk
Drilling CJ70 jackup rigs delivered
during the year are the largest jackups
ever built in the world, and are now
drilling on long-term contracts offshore
Norway for oil majors, Total and Det
norske oljeselskap ASA.
Keppel FELS also delivered 15 repair and
upgrading projects to its longstanding
clients such as Diamond Offshore,
Ensco, Transocean, Seadrill, Japan
Drilling and COSL, amongst others.
Keppel FELS not only secured jackup
and semisubmersible orders from
repeat clients, but also expanded
its product offerings and clientele
during the year. Besides the proprietary
KFELS N Plus newbuild contract from
TS Offshore, Keppel FELS won three
newbuild contracts from new
customer, Fecon International, for
its proven and high-performance
KFELS B Class jackup.
As part of ongoing yard enhancements,
a new gantry crane with a 700-tonne
lifting capacity was installed in
Keppel FELS’ Pioneer Yard in Singapore
in 2014. This enables the yard to
construct rig modules in larger blocks
so as to expedite the rig building
process and increase productivity
and cost efficiency.
As part of Keppel O&M’s network
of satellite yards in Asia, Keppel
Nantong Heavy Industries continued
to contribute to the smooth
execution of the Group’s offshore
projects, such as the fabrication
of pontoons and columns of the
accomodation semi, Floatel Triumph.
Total steel fabrication output in
the yard reached a commendable
32,000 tonnes.
Keppel O&M’s yards in the Americas
were also bustling with newbuild
and repair works during the year.
Well-positioned to tap local demand,
Keppel FELS Brasil’s yard in Angra
dos Reis, BrasFELS, and Keppel
AmFELS have continued to deepen
their presence and leadership in
the Americas.
01
KEPPEL CORPORATION LIMITED Report to Shareholders 2014
55
02
SIGNIFICANT EVENTS
April
• Keppel FELS signed a
conditional management
services agreement with
Titan Petrochemicals Group to
manage the Titan Quanzhou
shipyard in Fujian, China.
• Baku Shipyard secured a
contract worth US$378 million
from BP Exploration (Shah
Deniz) to design and build
a Subsea Construction
Vessel (SCV).
• Keppel FELS signed an
engineering services
agreement with Workfox B.V,
a subsidiary of the Seafox
Group, to embark on an
engineering study for
a purpose-built Plug &
Abandonment jack up with
accommodation features.
July
• Keppel Shipyard secured
a contract to convert an
FPSO for Armada Kraken,
a wholly owned subsidiary
of Bumi Armada.
• Keppel Shipyard sealed a
contract worth about
US$735 million with Golar
LNG to perform the world’s
first-of-its-type conversion of
an existing Moss LNG carrier,
the HILLI, into a Floating
Liquefaction Vessel.
This was followed by the
inking of a second FLNG
contract with Golar LNG
in December 2014.
BrasFELS secured projects from repeat
customers such as Ensco, Diamond,
Noble as well as new customers such
as Aban Abraham. To enhance work
efficiency, the yard added a new 2,000-
tonne Goliath Gantry Crane together
with other equipment and workshops.
Keppel AmFELS has been active in
supporting Mexican operators. In 2014,
it fortified its longstanding partnership
with Perforadora Central with the
on-time and safe delivery of its fourth
jackup rig and the ongoing construction
of the fifth.
Leveraging its capabilities and track
record for drilling rigs, Keppel AmFELS
diversified its solution offerings with
an engineering, procurement and
construction contract for one of
the world’s largest land drilling
rigs capable of operating in
harsh conditions.
With one of the largest drydocks
in Europe and a strategic location in
Rotterdam, Netherlands, close to
the oil and gas fields of the UK and
Norway, Keppel Verolme has been the
choice yard for seagoing vessels and
floating offshore units in the region.
During the year, Keppel Verolme secured
several significant repair projects
including jackups, semis heavy lift
vessels, as well as the world’s largest
cruise ship, “Oasis of the Seas”.
Operating & Financial Review
Offshore & Marine
56
Operating &
Financial Review
OFFSHORE & MARINE
01
MARINE
In 2014, Keppel Shipyard repaired
a total of 418 vessels, a 9% increase
from 2013.
The yard also completed six FPSO
conversions/upgrades in 2014, bringing
its total number of FPSO/FSO/FSRU
conversion, upgrading and repair
projects completed to 116. Since 2006,
it has been delivering an average of
seven conversions each year, staying
as a market leader of the segment.
During the year, Keppel Shipyard
signed new repair fleet agreements
with Delta Tankers and Koyo Kaiun,
while renewing agreements with
NYK, JX Ocean, and McDermott
International. It also signed new
drydocking agreements with the CGG
Group and MISC during the year.
The conversion contract for the first-of-
its-kind FLNG vessel from Golar LNG
is the fruition of a year-long Front-End
Engineering and Design study in
partnership with Keppel Shipyard’s
longtime customer. Recognising the
strength of the concept and design,
Golar LNG returned to Keppel Shipyard
for a second identical unit at end-2014.
To improve workflow and enhance
the safety and productivity of its
workforce, Keppel Shipyard extended
and deepened its quays in Benoi Yard.
The Load Out Quay at Benoi Quay 1
was completed in early 2014.
Besides being a builder of robusttugs
and offshore support vessels, Keppel
Nantong Shipyard (Keppel Nantong)
is an important support yard for the
Singapore home base. To augment its
capabilities, Keppel Nantong will be
constructing a new slipway in 2015,
allowing it to launch and service larger
and heavier offshore vessels.
Keppel Nantong delivered two units
of 50-Tonne ASD tugs on schedule
and received a safety bonus in 2014.
The yard also delivered the Boskalis
Giant 5 Submersible Barge ahead of
schedule and the sister vessel, Giant 6,
is on track to be delivered by 1Q 2015.
Boskalis’ confidence in the yard was
reflected by the repeat order for
the Giant 7 Submersible Barge in
September 2014.
and Keppel Subic Shipyard (Keppel
Subic), leveraged their close business
relationships fostered over the years to
clinch repair projects from both major
domestic shipping companies and
foreign clients. The two shipyards
repaired a total of 98 vessels in 2014.
Keppel Batangas has been actively
formalising repair fleet agreements
to meet the drydocking requirements
of major domestic shipping operators
in the Philippines. These are expected
to generate sustainable revenue from
the local shipping industry. Keppel
Batangas also expects to tap demand
arising from the vessel acquisition
programme of the Philippine Navy.
In 2014, Keppel Subic delivered the coal
transshiper crane barge, “Ratu Giok 5”,
to Indonesian client, PT Pelayaran
Kartika Samudra Adijaya. It has also
delivered the Malampaya Phase 3
Depletion Compression Platform (DCP)
for Shell Philippines Exploration,
which was subsequently delivered
in February 2015.
The two shipyards under Keppel
Philippines Marine (KPMI), Keppel
Batangas Shipyard (Keppel Batangas)
Both Keppel Batangas and Keppel Subic
are upgrading their yard facilities to
construct offshore support vessels and
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 57
01
Keppel Shipyard is
converting two FLNG
vessels for longtime
customer Golar LNG.
SIGNIFICANT EVENTS
02
July
Keppel Shipyard
entrenched its
position as the
market leader in
FPSO conversion
and upgrading,
having completed
six of such projects
in 2014.
02
• Keppel FELS delivered
ENSCO 122, the third ultra-
premium harsh environment
jackup rig in the ENSCO 120
Series, ahead of schedule.
• N-KOM clinched a liftboat
newbuild contract and a six-
year repair and maintenance
contract with a combined
value of US$110 million from
Gulf Drilling International
(GDI), a subsidiary of Gulf
International Services.
August
• Keppel FELS delivered its
fourth KFELS B Class jackup
rig, Dukhan, to GDI of Qatar
nine days ahead of schedule,
on budget and with a perfect
safety record.
• Keppel FELS secured a
contract from GDI to build a
repeat KFELS B Class jackup
rig worth US$227 million, with
options for two more units.
structures such as Platform Support
Vessels (PSV) and DCPs, as well as
to complement Keppel Shipyard in
executing FPSO conversion projects.
Keppel O&M’s yards in the Arabian
Gulf, Arab Heavy Industries (AHI) and
Nakilat-Keppel Offshore & Marine
(N-KOM), were formed through
landmark partnerships with the
Ajman Government in the United Arab
Emirates, and the world’s leading LNG
transporter, Nakilat, respectively.
AHI has built a solid track record
as one of the most established shipyards
in the Gulf region. In 2014, AHI repaired
113 vessels for a mix of international
and local clients such as Boskalis, Smit
Lamnalco, Van Oord Ship Management
and Middle East Dredging Co. AHI also
converted an offshore support vessel,
Deep Cleaner, into a well-stimulation
vessel for Navispec Marine Services.
Operating & Financial Review
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Operating &
Financial Review
OFFSHORE & MARINE
01
Keppel Subic
has delivered
the Malampaya
Phase 3 Depletion
Compression
Platform to
Shell Philippines
Exploration in
February 2015.
Since its inauguration in 2010, N-KOM
has undertaken more than 300 projects
for the marine, offshore and onshore
industries. Its regional shiprepair market
share increased to about 18% in 2014.
Leveraging its shareholders’ strengths
and capabilities, N-KOM continued to
widen its solutions offerings and climb
up the value chain.
During the year, N-KOM clinched a
liftboat newbuild contract and a six-year
repair and maintenance contract from
Gulf Drilling International, a subsidiary of
Qatar’s largest oilfield service company,
Gulf International Services. Besides the
contract from Qatar Primary Materials
Company for the construction of a
floating jetty, N-KOM has attracted
new customers on both the marine
and offshore fronts, such as Odfjell,
Dynacom, V Ships, Aegean Bunkering
and Shelf Drilling.
SPECIALISED SHIPBUILDING
Keppel Singmarine, which helms
Keppel O&M’s specialised shipbuilding
business, clinched multiple contracts
in 2014. These include a contract from
repeat customer, Seaways International,
to build a 100-tonne bollard pull
Anchor Handling Tug (AHT) vessel,
and another contract for hull
construction and outfitting works for
BP’s Subsea Construction Vessel won
by Keppel O&M’s Baku Shipyard.
Since building its first icebreaker in
2006, Keppel Singmarine has continued
to build up its capabilities in the design
and construction of ice-class vessels.
In 2014, it bolstered its expertise with
contracts for two ice-class supply
vessels and a ice-class multipurpose
duty-rescue vessel from Bumi Armada,
and another ice-class multipurpose
vessel from New Orient Marine.
01
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 59
SIGNIFICANT EVENTS
October
• Keppel Shipyard and Keppel
Nantong secured contracts
worth a total of $153 million
for the conversion of an FPSO
vessel for Armada Cabaca
Limited and the construction
of a submersible barge,
Giant 7, for Smit Shipping.
• Keppel FELS secured a
contract from BOT Lease Co
Ltd, an affiliated company of
The Bank of Tokyo-Mitsubishi
UFJ, for a KFELS Super B
Class jackup rig worth
about US$240 million.
November
• Keppel AmFELS delivered
its fourth jackup rig,
Coatzacoalcos, to
Perforadora Central
on time, within budget
and with zero lost-time
incidents.
• Keppel FELS was conferred
the title of “Largest
manufacturer of offshore
rigs - current” by the
Guinness World Records for
delivering 21 rigs in 2013.
December
• Keppel FELS delivered a
third KFELS B Class jackup
drilling rig to Star Drilling,
an associate company of
India’s D P Jindal Group.
• Keppel Shipyard delivered
the FPSO vessel Bertam to
Lundin Petroleum and the
Petronas group.
Keppel Singmarine successfully
delivered two projects including
a bulk carrier and a catamaran air
dive support vessel (DSV). DLV 2000,
the derrick pipe-laying vessel for
McDermott was also launched safely
during the year.
Besides newbuild projects, CSC
also undertook several repair projects
during the year. These include
shipyard services to Swire’s Seabed
Supporter vessel, and repair and
upgrading works on four of BUE
Marine Limited’s vessels.
Expanding its suite of technological
solutions to meet the demands of
the specialised shipbuilding market,
Keppel Singmarine signed a Technical
Assistance and License Agreement
with France’s Gaztransport &
Technigaz (GTT) in early 2014.
GTT is a global leader in the design
and construction of membrane
containment systems used in LNG
carriers. The strategic partnership
makes Keppel Singmarine the only
shipbuilder in Singapore with a
license for GTT’s design.
2014 also marked Keppel Singmarine’s
foray into the buoyant liftboat
market. It clinched its first contract
from N-KOM to support the
construction of a liftboat, which
is seen as a more efficient and
cost-effective alternative to the
traditional offshore service vessels.
Keppel Singmarine Brasil, which
focuses on the construction of
offshore support vessels to service
Brazil’s offshore oil fields, delivered
three 45-tonne bollard pull ASD
harbour tugs to SMIT Rebras in 2014.
Three harbour tugs for SMIT Rebras
and two 4,500 DWT platform supply
vessels for Guanabara Navegacao
Ltda are under construction.
Over in Azerbaijan, an important oil
and gas supplier to the European
markets, Keppel O&M is well-positioned
in the captive Caspian market through
its two yards, Caspian Shipyard
Company (CSC) and Baku Shipyard.
Leveraging the synergy of Keppel
O&M’s yards in Singapore and
Azerbaijan, the construction of the
DSSTM38M semisubmersible for
SOCAR progressed on track, with
the columns and bracings built
in Singapore and towed to CSC
for integration.
Operating & Financial Review
Offshore & Marine
CSC added equipment to improve
efficiency and execution. These
included a new CNC plasma cutting
machine, a rotary telescopic handler,
forklifts, a 15-tonne side loader and
a semi-auto welding machine.
Upgrading of the blasting and
painting halls started in September
2014, and are expected to be
completed in early 2015.
Inaugurated by the President of
Azerbaijan, H.E. Ilham Aliyev, in
September 2013, Baku Shipyard has
since achieved several milestones.
In 2014, it secured a contract from
BP Exploration (Shah Deniz) to design
and build a Subsea Construction
Vessel. This new flagship vessel for the
Caspian Sea will provide essential
support for the construction of subsea
structures which will form the biggest
subsea production system in the
region. Baku Shipyard also secured
a contract to build three 80-men
crew boats for Caspar.
Complementing CSC, Baku Shipyard
delivered two pontoons for CSC’s
DSSTM38M semisubmersible. Building
up its track record in shiprepair in the
region, Baku Shipyard secured and
completed 27 such jobs for customers
such as Topaz Marine, Swire, Caspian
Marine Services and Azerbaijan
Caspian Shipping Company.
Baku Shipyard is ramping up its
capabilities in terms of infrastructure
and human capital to improve
offerings to international ship owners
in the Caspian Sea, complement its
sister yard CSC, as well as position
itself to capture spillover jobs from
the Shah Deniz II development.
In recognition of its quality
management system, Baku Shipyard
secured the ISO 9001-2008
certification in 2014.
60
Operating &
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OFFSHORE & MARINE
01
INDUSTRY OUTLOOK
Exploration and production activity in
shallow waters will likely stay muted in
the short to medium term. According
to Pareto Securities, National oil
companies such as Saudi Aramco
and PEMEX are expected to keep their
overall rig count steady in 2015.
Nonetheless, these oil companies
will be looking to optimise their costs
by seeking reduced dayrates for the
jackups that they are chartering.
The floater market is expected to be
challenging, according to RS Platou
which expects a drop in floater
demand of around 2-3% in 2015.
Floater backlog will continue to be
eroded, with 40% of the actively
marketed floater fleet coming off
contract from 4Q 2015 to 2Q 2016.
With a sizeable contract backlog
stretching into 2019, Keppel O&M
is well-positioned to tide over the
slowdown in the industry. It will
also leverage its global network
of yards to tap demand in regions
that are more resilient.
OFFSHORE RIGS
There are still pockets of
opportunities for oilfield services
in shallow-water reservoirs where
breakeven oil prices for production
is lower than current oil prices.
The Middle East oil and gas market
for example, remains robust as
many of the fields are in shallow
waters, fully developed and have
low marginal costs of production.
For Mexico and India, oil and gas
exploration and development remains
necessary for energy self-sufficiency.
Upstream licensing in Mexico has
kicked off with the release of 109
exploration and 60 production blocks,
including shallow-water acreage,
on offer to foreign oil companies.
This could stimulate rig demand
in Mexico in the longer term.
According to Wood Mackenzie,
the local content requirement
in Mexico is set to reach
35% by 2025.
Having kept a keen eye on
developments in Mexico over the
years and signed an MOU with
PEMEX for the development of
a yard in Mexico, Keppel O&M
is well-positioned to support the
country’s oil and gas development.
Keppel O&M continues its focus
on technology and Research &
Development (R&D) to meet
customers’ requirements for
robust and cost-effective solutions.
It is expanding its suite of
proprietary designs, such as
the harsh-environment capable
KFELS E and J Class jackup
designs for the North Sea.
SHIPREPAIR AND
PRODUCTION UNITS
The shiprepair market is expected
to be challenging as recovery for
most shipping sectors remains
slow. The container shipping
sector continues to grapple with
overcapacity, facing pressure on
freight and charter rates, although
the increase in scrapping activity
could improve the supply-demand
equilibrium in the longer term.
There is optimism for tankers as
rates have been boosted due to
higher demand for lower-priced
crude oil and for use as storage
for crude oil. Lower bunker fuel
costs also translate to better
margins for shipping companies,
which could provide a lift for
shiprepair activities.
Despite the recent drop in crude
oil prices likely to delay oil field
FinaI Investment Decisions, the
long-term fundamentals for FPSO/
FSO/FLNG projects remain intact.
According to the Energy Market
Authority, regions like Southeast
Asia, Africa and Brazil are still active
for production unit projects.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 61
Keppel O&M has successfully
navigated numerous challenging
cycles in the past four decades and
has emerged stronger each time.
Keppel O&M’s overarching strategy
of delivering solutions that can create
value for customers will continue to
be relevant amidst a challenging
market environment.
With a sizeable contract
backlog stretching into
2019, Keppel O&M is
well-positioned to tide
over the slowdown
in the industry, and
enhance its niche
products to provide
customers with the best
value propositions.
02
01
Growing track
record - Baku
Shipyard has
secured a
contract from BP
Exploration to build
a flagship Subsea
Construction Vessel
for the Caspian Sea.
02
Despite the low oil
price environment,
Keppel is able to
capture value by
offering customers a
wide range of cost-
effective products
and services.
The outlook for FLNG conversions
remains promising. The two FLNG
conversions that Keppel Shipyard
is undertaking are both near-shore
vessels, providing efficient alternative
liquefaction solutions for piped
gas from onshore terminals. Aside
from FPSO/FSO/FLNG projects,
there are also opportunities in turret
fabrication for newbuild FPSO/FSOs.
SPECIALISED SHIPS
Maintaining and/or enhancing oil
production levels for existing fields
should remain a key theme for the
industry. This will entail the repair and
maintenance of existing production
platforms, which, in turn, require a
diverse supply of offshore support
vessels, liftboats and accommodation
semisubmersibles.
Versatile and experienced in
building a wide spectrum of
specialised ships, Keppel O&M is
well-placed to meet this demand.
Operating & Financial Review
Offshore & Marine
62
Operating &
Financial Review
INFRASTRUCTURE
We will focus on
developing our energy-
related infrastructure
solutions, as well as
logistics and data
centre businesses.
PROFIT BEFORE TAX
$452m
as compared to FY 2013’s $73 million.
NET PROFIT
$320m
as compared to FY 2013’s $15 million.
MAJOR DEVELOPMENTS
IN 2014
K-Green Trust was renamed
Keppel Infrastructure Trust (KIT)
with an expanded investment
mandate.
The combination of KIT with
CitySpring Infrastructure Trust
(CIT) was proposed along with
the injection of 51% of Keppel
Merlimau Cogen Pte Ltd into
the enlarged trust.
The Greater Manchester Energy-
from-Waste Plant and Doha
North Sewage Treatment Works
achieved significant milestones.
Keppel DC REIT was listed on
the Main Board of the Singapore
Exchange Securities Trading
Limited (SGX-ST) raising
$512.9 million through the
initial public offering.
FOCUS FOR
2015/2016
Complete the proposed
combination of KIT and CIT,
enhance the asset portfolio and
seek acquisition opportunities.
Complete the Engineering,
Procurement and Construction
(EPC) projects in the UK
and Qatar.
Grow expertise in Waste-to-Energy
(WTE) technology package
deployment and expand market
share in Singapore and China.
Expand logistics business in target
markets in Asia Pacific, and grow
a pipeline of quality data centre
assets for injection into the
newly-listed Keppel DC REIT.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 63
NET PROFIT ($ million)
FY 2014
FY 2013
FY 2012
320
15
16
EARNINGS HIGHLIGHTS ($ million)
Revenue
EBITDA
Operating Profit
Profit before Tax
Net Profit
Manpower (Number)
Manpower Cost
2014
2013
2012
01
2,934
3,459
2,832
570
466
452
320
150
101
69
73
15
46
58
16
2,728
231
3,358
4,175
244
278
Keppel
Infrastructure
Trust will acquire
a 51% stake in
Keppel Merlimau
Cogen Pte Ltd,
which owns the
1,300 MW co-
generation plant
on Jurong Island.
01
EARNINGS REVIEW
The Infrastructure Division’s revenue
decreased by $525 million to
$2,934 million due to lower revenue
contributed by Keppel Infrastructure’s
(KI) power generation plant, partially
offset by higher revenue from Keppel
Telecommunications & Transportation’s
(Keppel T&T) logistics and data centre
businesses. Profit before tax increased
by $379 million to $452 million, due
mainly to better operating results from
both KI and Keppel T&T, as well as
gains from divestments of data centre
assets and Keppel FMO Pte Ltd. The
Division contributed 17% to the Group’s
net profit for FY 2014.
GAS-TO-POWER
MARKET REVIEW
In 2014, Singapore’s average electricity
demand grew at a year-on-year rate of
3.6%, higher than the 2.8% increase in
2013. However, competition intensified
with the commercialisation of additional
generation capacity from both new
entrants and existing players. This has
led to oversupply and margin pressures
in the local energy sector.
The Energy Market Authority has
launched several initiatives with
intention to encourage further growth
in the Singapore energy market.
Such initiatives include the scaling
back of electricity vesting levels,
issuing Request for Proposals for the
appointment of Liquefied Natural Gas
importers, and further liberalising the
electricity retail market.
OPERATING REVIEW
Despite the industry headwinds, KI’s
Gas-to-Power business delivered
another year of commendable results
and maintained its lead in the electricity
retail market, leveraging its integrated
business platform.
Following the upgrading of Keppel
Merlimau Cogen’s generation capacity
from 800 megawatt (MW) to 1,300 MW
in 2013, we have been focused on
improving the operational efficiency
and flexibility of the power plant.
In line with its portfolio strategy, KI
entered into a conditional agreement
Operating & Financial Review
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Operating &
Financial Review
INFRASTRUCTURE
01
Singapore’s Prime
Minister Lee Hsien Loong
(third from left) visited
Keppel Seghers’ booth
at WasteMET Asia during
the CleanEnviro Summit
in Singapore.
02
Keppel Seghers has
successfully handed over
Phase 1 of the Greater
Manchester EfW Plant.
to divest a 51% stake of Keppel Merlimau
Cogen Pte Ltd, which owns the 1,300
MW co-generation plant, to KIT for a
cash consideration of $510 million.
The proceeds from the divestment
will help strengthen KI’s balance sheet.
BUSINESS OUTLOOK
The oversupply is expected to be
sustained and weigh on the electricity
market in the coming years.
On a positive note, the retail
contestability threshold for consumers
will be further lowered to 2,000 kilowatt
per hour (kWh) on 1 July 2015, after the
reduction from 10,000 kWh to 4,000 kWh
in 2014. This will provide about 10,000
more non-residential consumers with
the choice of procuring electricity from
retailers apart from SP Services Ltd,
adding to the current pool of 23,000
non-residential consumers.
WASTE-TO-ENERGY
MARKET REVIEW
Rapid urbanisation and stricter
environment regulations will continue
to underpin growth in the Waste-to-
Energy (WTE) sector. For example,
environmental issues emerging from
China’s rapid industrialisation are seen
as one of the most pressing challenges.
As part of its efforts to promote proper
treatment of municipal solid waste, the
Chinese National Environmental Bureau
introduced a more stringent set of
emission standards in 2014. The more
stringent regulations of the WTE sector
will benefit credible players with proven
technologies, like Keppel.
Growing interest in the WTE projects
have also been demonstrated in the
Gulf Cooperation Council region.
On the technology front, KI has continued
to develop its core technology catering
for the increased demand of higher
capacity incineration lines and better
energy efficiency in the WTE market.
OPERATING REVIEW
In the UK, Phase 1 of the Greater
Manchester EfW Plant has been handed
over successfully. The handover of
Phase 2 is expected to take place
in 1H 2015.
01
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 65
02
SIGNIFICANT EVENTS
January
• Keppel Logistics increased
its 40% stake in Indo-Trans
Keppel Logistics Vietnam Co
Ltd (ITKL) to 51%, making it
a subsidiary of the company.
• Keppel T&T ventured
into Australia with the
incorporation of a new
subsidiary, Keppel Logistics
(Australia) Pty Ltd.
March
• Keppel Infrastructure
Fund Management received
unitholders’ approval to
rename K-Green Trust as
Keppel Infrastructure Trust,
and expand its investment
mandate.
• Keppel Datahub 2 became
the first new data centre
in Singapore to achieve
Platinum Award for the
BCA-IDA Green Mark.
May
• ITKL broke ground for a
new distribution centre
located in the Vietnam-
Singapore Industrial Park 1
in Binh Duong Province.
August
• Keppel Logistics’ first
10,000 sm warehouse
in Brisbane, Australia
commenced operations.
In Qatar, the Doha North Sewage
Treatment Works started
commissioning with handover
expected to be in 1H 2015. The Qatar
Domestic Solid Waste Management
Centre has completed its third year
of operations with high performance
in terms of plant availability and
treatment capacity.
In China, we have been working on
the installation of our proprietary WTE
technology package in two projects in
Beijing and Yangzhou, Jiangsu. Both
projects are progressing within their
contractual schedules and budgets.
In Bialystok, Poland, engineering work
and procurement of the WTE plant,
built by the consortium between
Keppel Seghers and Budimex, were
almost finished in 2014. The civil
construction has been well advanced
with all of the heavy lifting of key
components completed during
the year. The plant is scheduled to
undertake pressure testing of its
boiler in early-2015, followed by an
extensive commissioning.
BUSINESS OUTLOOK
The global municipal solid waste is
estimated by the World Bank to
increase from about 1.3 billion tonnes/
year now to 2.2 billion tonnes/year
by 2025, driven mainly by population
growth. This, coupled with the
limitation of landfill space, will lead to
an ever-increasing demand of proper
waste treatment solutions, such as WTE.
In Singapore, KI is one of the few
players pre-qualified by the National
Environment Agency (NEA) for the
Design-Build-Own-Operate (DBOO)
tender of a WTE plant with a minimum
capacity of 2,400 tonnes/day.
Meanwhile, KIT had committed in
September 2014 to enhance the
contracted incineration capacity of the
Senoko WTE plant by up to 10%. The
upgrading works is expected to take
place between 3Q 2015 and 3Q 2016.
Operating & Financial Review
Infrastructure
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Operating &
Financial Review
INFRASTRUCTURE
01
01
Keppel Logistics’
newly-completed
Tampines Logistic Hub
is well-positioned to
serve high value-added
industries.
The proposed
combination of KIT and
CIT, and the acquisition
of Keppel Merlimau
Cogen Pte Ltd, which
owns the 1,300 MW
co-generation plant, will
raise KIT’s total assets
from $600 million to
over $4 billion.
In Hong Kong, we expect the
government to proceed with the
development of the HK$19.2 billion
integrated waste management facility.
It will be a state-of-the-art modern
WTE plant built on a reclaimed island,
with a capacity of 3,600 tonnes/day.
The demand of WTE solutions in
Europe will also be driven by the
replacement and upgrading of aging
facilities, and the rapid development
of newer European Union (EU)
members, such as Poland.
X-TO-ENERGY
The X-to-Energy Division comprises
the Group’s district cooling systems
(DCS) business and infrastructure
business trust.
MARKET REVIEW
The demand for district cooling services
in Singapore remained strong, achieving
a compound annual growth rate of 11%
since 2010. The government-led drive
for energy efficiency and legislative
changes, e.g. requiring more buildings
to obtain Green Mark certifications,
provides greater impetus for growth
in this sector.
Keppel DHCS has broadened its market
segment to include office, biomedical,
research & development, wafer
fabrication, media, communications
& information, and aviation training
facilities. It has also expanded its modus
operandi by offering retail cooling
systems within customers’ premises.
OPERATING REVIEW
Keppel DHCS’ retail cooling facilities
for Keppel Logistics commenced
operations in 3Q 2014. It also expanded
its clientele at the Changi Business Park
to include Haite High-Tech Aviation
Training Centre, Rigel Innovation
Hub and Soo Kee Jewellery Group.
Development of the DCS plant at
Mediapolis is slated for completion
in 3Q 2015. The plant will be
connected to the existing DCS
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
67
SIGNIFICANT EVENTS
October
• For the fourth time since
2009, Keppel Logistics
was named the Singapore
Domestics Logistics Service
Provider of the Year at the
annual Frost & Sullivan
Asia Pacific Best Practices
Awards 2014.
November
• Keppel Data Centres Holding
acquired Almere Data Centre 2
in the Netherlands.
• Construction of ITKL’s
distribution centre in the
Vietnam-Singapore Industrial
Park 1 was completed.
December
• Construction of the
Tampines Logistics Hub in
Singapore was completed.
• Keppel DC REIT made a
strong debut upon listing
on the SGX-ST. It became the
first data centre REIT listed
in Asia and also the largest
REIT IPO in Singapore in 2014
with $512.9 million raised.
plant in Biopolis to form an integrated
DCS network at the one-north
precinct. During the year, Keppel
DHCS rolled out several initiatives
to improve energy efficiency and
cost competitiveness of its plants,
such as the implementation of
linear programming to optimise
operations and the retirement of
inefficient equipment.
In November 2014, Keppel DHCS’
Tianjin plant started supplying to
Huang Wei Zhi Jia. This has not
only brought its total number of
customers to six in Tianjin, but also
lowered its carbon footprint by
increasing the utilisation of its
geothermal heating system to
meet 80% of the heating demand.
BUSINESS OUTLOOK
Despite the stiff competition in the retail
cooling segment due to the relatively
low entry barriers for smaller and new
entrants, Keppel DHCS is optimistic
about acquiring new customers in
Singapore and Southeast Asia, riding
on its competitive cooling solutions.
Keppel Infrastructure Fund
Management, in its capacity as
trustee-manager of KIT, entered into
agreements to combine KIT and
CitySpring Infrastructure Trust (CIT),
and to acquire KI’s 51% stake in
Keppel Merlimau Cogen Pte Ltd, which
owns a 1,300 MW co-generation plant
in Singapore. Upon completion of both
transactions, KIT’s total assets will
increase from around $600 million to
over $4 billion, making it the largest
Singapore infrastructure-focused
business trust listed on the SGX-ST.
This will place KIT in a better position
to capture asset enhancement
opportunities for its enlarged asset
portfolio, and to work with its sponsor
for further acquisition opportunities.
LOGISTICS
MARKET REVIEW
The Southeast Asian economy
performed well amidst uneven
recovery in the global economy.
Strong domestic demand and
increasing foreign direct
Operating & Financial Review
Infrastructure
investments continued to drive
the region’s growth.
China’s economic growth rate
tapered to 7.4% in 2014. Moderate
growth is seen as the Chinese
economy matures and shifts towards
service oriented industries.
OPERATING REVIEW
Keppel Logistics continued to achieve
high occupancy rates in its logistics
facilities across Southeast Asia
and China.
In Singapore, the Tampines Logistics
Hub’s construction was completed
in December 2014 and is expected
to commence operations in
2Q 2015. The BCA Green Mark
award-winning warehouse facility
will add 32,400 sm of warehouse
space to its Singapore portfolio.
Meanwhile, Indo-Trans Keppel Logistics
completed its new warehouse facility in
the Vietnam-Singapore Industrial Park 1
in November 2014. It also embarked
on the expansion of its Tien Son
warehouse facility in Bac Ninh Province
with an additional 3,500 sm.
In Malaysia, Keppel Logistics bolstered
its warehousing capacity with the
lease of a new 4,200 sm warehouse
adjacent to its Shah Alam facility.
During the year, Keppel Logistics
entered into the Australian market.
Its wholly-owned subsidiary, Keppel
Logistics (Australia), commenced
operations in August 2014, managing
a 10,000 sm warehouse in Brisbane.
In China, Keppel T&T’s Sanshui Port in
Guangdong Province maintained a
high throughput volume despite the
slowdown in the country’s economic
growth. The preliminary works for the
expansion of Sanshui Port have
also commenced.
The river port in Wuhu, Anhui Province
also achieved a better throughput
volume of over 4.4 million tonnes in
FY 2014. However, throughput at the
Lanshi Port continued to be affected by
the traffic restrictions in Foshan City.
68
Operating &
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INFRASTRUCTURE
01
Keppel DC REIT
debuted strongly on
the SGX-ST as its largest
REIT IPO in 2014 with
$512.9 million raised.
02
Keppel T&T’s data centre
business is set to grow
via its newly-listed REIT
platform in the target
markets of Asia, Australia
and Europe (Almere 1 & 2
in picture).
The integrated distribution centre
in the Sino-Singapore Tianjin
Eco-City is close to completion and
is expected to commence operations
in 2015. The food logistics parks in
China are being developed.
BUSINESS OUTLOOK
The economic growth in Southeast
Asia is expected to accelerate,
as the gradual recovery in advanced
economies boosts demand for the
region’s exports. In addition, the
region’s economic integration is
set to deepen with the proposed
establishment of the ASEAN
Economic Community. This will
further encourage cross-border
trade and fuel demand for
logistics services.
In October 2014, the Chinese
government unveiled its six-year plan
to develop the country’s infrastructure
and improve the efficiency of its
domestic supply chain. Coupled with
strengthened domestic demand,
the outlook of China’s logistics
sector remains positive.
Keppel T&T is well-positioned
for future growth, riding on
increasing demand for quality
logistics services in countries
where it operates. It will continue
to leverage its core competencies
and explore opportunities to
further expand its business in
target markets in Asia Pacific.
DATA CENTRES
MARKET REVIEW
Global demand for data centre
services remained strong in 2014,
backed by growth in e-commerce,
cloud computing and big data.
Expansion and acquisition activities
in the industry have intensified.
Research shows that the global
co-location market has surpassed
US$25 billion in revenue in 2014
and market expansion has begun
01
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 69
02
currently manages a diversified
portfolio of eight high-quality
data centre assets in Europe and
Asia-Pacific, with an aggregate
appraised value of approximately
$1 billion as at 30 September 2014.
BUSINESS OUTLOOK
With the increasing digitisation of
the global economy, demand of
data creation and storage is expected
to grow. Other drivers include growing
adoption of cloud computing,
greater compliance and regulatory
requirements on data security,
and increasing outsourcing of
data centre services.
These trends present opportunities
for Keppel T&T’s data centre business
to grow via its REIT-development
company strategy in its target markets.
Besides acquiring high-occupancy,
income-producing data centre assets
through Keppel DC REIT, Keppel T&T
also looks to expand its portfolio by
developing green and brown field
projects when opportunities arise.
Upon attaining near full occupancy,
the new assets will be offered to the
REIT for capital recycling.
to take off in the Asia-Pacific and
EMEA (Europe, the Middle East
and Africa) regions.
OPERATING REVIEW
In 2014, Keppel T&T’s data centres
continued to operate at near full
occupancies. As part of its efforts
to address existing clients’
capacity expansion requirements
and to enjoy greater economies
of scale, Keppel Data Centres
Holding (KDCH) completed the
development of Keppel Datahub 2,
an award-winning green data centre
facility with a lettable area of
approximately 47,000 sf.
In November 2014, Keppel T&T
expanded its footprint in Europe
by entering into a conditional sale
and purchase agreement with
Borchveste Almere 2 BV for the
acquisition of Almere Data Centre 2
(Almere 2). Almere 2 is located next
to Almere 1, a fully occupied data
centre acquired in 2013. The facility
will have a lettable area of 53,800 sf
when fully fitted out.
In December 2014, Keppel T&T
marked a new milestone with the
successful listing of Keppel DC REIT,
the first data centre REIT listed in Asia.
Keppel DC REIT Management (KDCRM),
the manager of Keppel DC REIT,
Operating & Financial Review
Infrastructure
Keppel T&T will focus
on expanding its
logistics business
in target markets in
Asia Pacific as well as
growing a pipeline of
quality data centre
assets for injection
into the newly-listed
Keppel DC REIT.
70
Operating &
Financial Review
PROPERTY
We are committed
to provide urban living
solutions through
property development
and property
fund managent.
PROFIT BEFORE TAX
$1,017m
as compared to FY 2013’s $1,439 million.
NET PROFIT
$482m
as compared to FY 2013’s $832 million.
MAJOR DEVELOPMENTS
IN 2014
Sold about 2,450 homes,
mostly in China and Singapore.
Generated $1 billion in net
proceeds from asset divestments
for capital recycling.
Committed $1.1 billion in
investments into new and
existing projects.
Strengthened retail management
capability with the acquisition of
a 75% stake in Array Real Estate.
Grew Assets Under Management
by Keppel REIT and Alpha
Investment Partners (Alpha)
to $18.7 billion.
FOCUS FOR
2015/2016
Invest strategically and
opportunistically in developed
and emerging markets,
new platforms, projects
and properties.
Scale up commercial
presence overseas.
Monetise assets to
recycle capital.
Grow fund management
businesses for steady
recurring income.
Step up sustainability efforts.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 71
NET PROFIT ($ million)
FY 2014
FY 2013
FY 2012
1,078
832
482
EARNINGS HIGHLIGHTS ($ million)
2014
2013
2012
1,729
686
667
1,017
482
4,224
173
1,768
1,006
981
1,439
832
4,321
158
3,018
1,374
1,353
1,809
1,078
4,280
126
01
Keppel Land injected
its one-third interest
in MBFC Tower 3
into Keppel REIT as
part of its capital
recycling strategy.
Revenue
EBITDA
Operating Profit
Profit before Tax
Net Profit
Manpower (Number)
Manpower Cost
01
EARNINGS REVIEW
Revenue from the Property Division
of $1,729 million was $39 million or 2%
below that of the previous year, due to
lower sales in Singapore. In addition,
Keppel REIT did not contribute any
revenue in 2014 as it was deconsolidated
from 31 August 2013. This was partly
offset by the sale of a residential
development in Jeddah, Saudi Arabia.
Pre-tax profit decreased by
$422 million or 29% to $1,017 million
for FY 2014. Lower operating results,
lower fair value gains on investment
properties and absence of gains from
the deconsolidation of Keppel REIT
recognised in 2013 was partially offset
by gains from disposal of Equity Plaza,
Prudential Tower and Marina Bay
Financial Centre (MBFC) Tower 3 in
2014. With a net profit at $482 million,
the Division contributed 26% to the
Group’s net profit.
MARKET REVIEW
The Singapore economy registered
a 2.9% growth in GDP for 2014,
lower than the 4.4% growth in 2013
amid uncertainties in the global
economic environment.
The Singapore residential market
continued to be affected by the Total
Debt Servicing Ratio restriction and
the Additional Buyer’s Stamp Duty
introduced last year. Demand for
new homes fell to about 7,300 units
in 2014 and private residential prices
also eased by 4% year-on-year.
The office market saw a positive
take-up rate of Grade A office space
in the CBD, supported by limited
new supply and healthy demand
from diverse sectors such as energy,
commodities, insurance, IT &
e-commerce as well as professional
services. According to CB Richard
Ellis (CBRE), core CBD office
occupancy improved to 95.7% as at
end-2014 compared with 95.2% as at
end-2013. Grade A office rents rose
14.9% year-on-year from $9.75 psf
to $11.20 psf as at end-2014.
In China, the economy registered
slower growth of 7.4% in 2014
Operating & Financial Review
Property
72
Operating &
Financial Review
PROPERTY
01
01
Highline Residences
located in Tiong
Bahru, named by
Vogue Magazine as
the fourth coolest
neighbourhood
in the world, sold
more than a quarter
of its 500 units at
end-2014.
02
In China, market
sentiments
improved in the
last quarter of
2014 following
the relaxation of
mortgage rules and
cut in interest rates.
compared with 7.7% in 2013 on the
back of a weaker manufacturing
sector, lower investments and a
softer property market. The residential
market was impeded by government
cooling measures, which include
the home purchase restrictions and
tighter mortgage rulings as China’s
government seeks to maintain a
stable and sustainable market.
In Vietnam, robust exports and
rising foreign investments lifted
the economy’s growth rate to 6%
in 2014, an improvement from the
5.4% growth in 2013. In Ho Chi Minh
City (HCMC), the improved economic
conditions and infrastructure
development helped boost buyers’
confidence, which in turn helped
recovery in the residential market.
In HCMC, the office market remained
steady with active leasing interests,
supported by strong demand for
prime office space coupled with
limited new supply. The city’s
retail sector continued to benefit
from the influx of international
brands into the market amidst limited
new supply.
OPERATING REVIEW
SINGAPORE
Keppel Land sold 304 residential units
in Singapore in 2014, compared with
370 units in 2013. Sales were mainly
from Highline Residences located in
Tiong Bahru, a heritage-rich estate
which was named by Vogue Magazine
as the fourth coolest neighbourhood
in the world. Highline Residences
sold 148 units, out of the total 500
units as at end-2014.
Keppel Land acquired a 75% stake in
Array Real Estate, a retail management
company with an experienced team
involved in developing and managing
three million square feet (sf) of retail
space. This will further strengthen
Keppel Land’s expertise in commercial
developments and at the same time,
enable it to become a multi-faceted
property player.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 OVERSEAS
In China, market sentiments improved
in the last quarter of 2014 following the
relaxation of mortgage rules and cut in
interest rates. Keppel Land completed
a record number of 5,100 residential
units in 2014 and has a healthy pipeline
to meet the pent-up demand.
Keppel Land sold about 490 units
in the fourth quarter, an improvement
from about 360 units sold in the
third quarter. For the whole year,
approximately 1,900 units were sold,
mostly from Central Park City in Wuxi,
The Botanica in Chengdu, Stamford
City in Jiangyin and The Springdale
in Shanghai.
In Vietnam, Keppel Land achieved
steady home sales with about
160 units sold in 2014, mainly
from The Estella and Riviera Point.
Following the sell-out success of
The Estella, a special preview of
Estella Heights, Keppel Land’s
second residential development
in HCMC’s District 2, was organised
in mid-January 2015. Response was
encouraging, with 120 units sold
out of the 150 units launched.
Monetisation of Assets for Recycling
In Singapore, Keppel Land divested
its one-third stake in MBFC Tower 3
to Keppel REIT, a 65% stake in Equity
Plaza and its entire 30% stake in two
data centres. Overseas divestments
included a 51% interest in Al Mada
Towers, a residential project in Jeddah,
Saudi Arabia and Elita Garden Vista
residential development in Kolkata,
India. In total, these divestments
generated net proceeds of $1 billion.
Keppel Land has also committed
$1.1 billion in investments into new
and existing projects in Singapore
and overseas during the year. These
strategic moves reflect Keppel Land’s
strategy to actively prune its portfolio
and thereby unlocking, recycling
and investing the capital for better
returns to shareholders.
02
73
SIGNIFICANT EVENTS
January
• Mr Lim Kei Hin was
appointed to the Board of
Keppel REIT Management
as Non-Independent
Non-Executive Director.
• Keppel Land deepened its
presence in Indonesia with
the acquisition of a residential
site in West Jakarta.
May
• Keppel REIT divested its
interest in Prudential Tower
for $512 million.
June
• Keppel Land and Alpha
divested their interests in
Equity Plaza.
July
• Mr Chan Hon Chew was
appointed to the Keppel Land
Board with effect from
1 July 2014.
• Keppel Land entered
into an agreement with
Tien Phuoc Co Ltd to acquire
an additional 43% stake in
Estella Heights.
• Keppel Land partnered
Macklowe Properties for a
prime residential development
in New York City.
Operating & Financial Review
Property
74
Operating &
Financial Review
PROPERTY
01
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
Scaling Up Presence in Key Markets
Keppel Land continues to deepen
its presence in key markets in Asia.
It acquired a second residential site in
West Jakarta, Indonesia in early 2015.
The 4.6-ha site is located close to
West Vista, Keppel Land’s latest
high-rise condominium development
in Indonesia. With these two projects
in place, Keppel Land is in a strong
position to tap on the city’s growing
demand for well-planned residential
developments.
As part of its strategy to invest
opportunistically in key global cities
with good growth potential, Keppel
Land acquired a residential cum retail
development in Manhattan, New York
in July 2014. The Manhattan project
will be managed by Alpha. More than
an example of dexterity in seizing
opportunities for higher returns, it also
showcases how the collective strength
of Keppel’s business units can be
harnessed for more value and growth.
Expanding Overseas
Commercial Presence
Leveraging its expertise in mixed-use
developments, Keppel Land is
developing several new prime
commercial projects overseas.
In Myanmar, Keppel Land has
acquired a 40% stake in a Grade A
office development in Yangon’s CBD.
At Saigon Centre Phase 2 in HCMC, a
Grade A office tower will be developed
in addition to the retail podium which
will house Takashimaya’s flagship
store in Vietnam. Keppel Land is also
redeveloping International Financial
Centre Jakarta Tower 1 in Indonesia
and expanding the SM-KL project in
Ortigas, Manila with an office and
retail development under Phase 2.
Upon completion, these projects will
be transformed into higher yielding
investments for the Group.
Growing Fund Management
Both Keppel REIT and Alpha continue to
proactively manage their portfolios and
funds through selective acquisitions and
divestments. Keppel REIT’s acquisition of
a one-third stake in MBFC Tower 3 and
75
02
SIGNIFICANT EVENTS
September
• Keppel REIT entered into
an agreement with Bayfront
Development Pte Ltd to
acquire a one-third interest
in MBFC Tower 3.
• Keppel Land entered into
an agreement to sell its 80%
effective shareholding in BG
Junction to Silverise Enterprise
Ltd and PT Pelangi Arjuna.
• Keppel REIT completed
the sale of its interest in
Prudential Tower.
October
• Keppel Land embarked
on developing an office
tower and expanding the
retail space in a mixed-use
development in Manila.
• Keppel Land announced
the redevelopment of
International Financial
Centre Jakarta Tower 1.
• Keppel Land announced the
divestment of its 51% interest
in Al Mada Towers in Jeddah,
Saudi Arabia.
November
• Keppel Land announced
the proposed divestment
of its 30% interest in the
data centres S25 and T25 to
Keppel DC REIT.
December
• Keppel Land acquired a 40%
stake in a Grade A office
tower in Yangon.
• Keppel Land acquired a 75%
stake in retail management
company Array Real Estate.
01
Alpha Asia Macro
Trends Fund II
continues to make
strategic acquisitions
such as Olive Tower
in Seoul.
02
Leveraging on its
expertise in mixed-
use developments,
Keppel Land is
developing prime
commercial projects
overseas such as
Saigon Centre, in
Ho Chi Minh City.
divestment of its 92.8% interest in Prudential
Tower have strengthened its position as
the leading landlord of Grade A offices in
Singapore’s business and financial districts.
Alpha Asia Macro Trends Fund II, a fund
managed by Alpha, acquired International
Capital Plaza in Shanghai, YG Tower and
Olive Tower in Seoul as well as a site for
the development of luxury apartments in
Taipei. Alpha’s other funds divested a total
of five properties in Singapore and Japan
during the year.
The fund management business will
continue to feature strongly in the Group’s
capital recycling strategy for matured
projects, while providing stable income
streams over the long term.
BUSINESS OUTLOOK
SINGAPORE
2015 is expected to be another challenging
year. Global growth will be affected by
uncertain economic prospects in the
Eurozone and Japan. Despite the global
headwinds, the Singapore economy is
expected to expand by 2-4% in 2015. As
the government is unlikely to lift the property
cooling measures soon, the residential
market is expected to stay subdued.
Conversely, the Grade A office market is
expected to enjoy robust rental growth in
2015 on limited new supply (0.7 million sf
compared to 2.5 million sf in 2014).
Operating & Financial Review
Property
01
76
Operating &
Financial Review
PROPERTY
01
Ocean Financial
Centre, a building
99.9% owned by
Keppel REIT, continues
to provide strong
rental income with full
committed occupancy
as at end-2013.
02
As China’s first
National Green
Development
Demonstration Zone,
the Sino-Singapore
Tianjin Eco-City is
a role model for
the country’s
urbanisation plans.
Keppel Land will
continue to exercise
discipline, monitor
the markets closely
and time its new
residential launches
to ride on the market
recovery in Asia.
OVERSEAS
Economic growth, rising urbanisation
and a growing middle-class population
will continue to drive demand for
quality homes and prime commercial
space in Asia. Growth in China’s GDP is
expected to slow about to 7% in 2015.
Nevertheless, policy easing in China is
expected to translate into a gradual
recovery for the residential market.
In Vietnam, as part of the government’s
efforts to overhaul the financial system,
banks have been increasing lending
and that has helped to stimulate
the economy. Coupled with the
new foreign property ownership law,
which will be effective from 1 July 2015,
Vietnam’s housing market is expected
to improve. This should translate into
a healthy boost in demand for our
Vietnam properties.
In Indonesia, demand for apartments
in Jakarta remains healthy with
a growing middle class and
the increasing preference for
condominiums given the higher
price of landed homes.
Keppel Land will continue to exercise
discipline, monitor the markets closely
and time its new residential launches
to ride on the market recovery in Asia.
FUND MANAGEMENT
Keppel REIT is expected to see healthy
rental reversions for its quality portfolio
of buildings in prime CBD locations.
Alpha will continue to actively
manage its funds and seek out
potential acquisition and divestment
opportunities. Building on its leading
position in Asia, it will explore new
initiatives and products to enhance
returns to its investors.
Capitalising on its strong-cash,
low-debt position, Keppel Land will
continue to seek out new investments
as well as look into its existing property
portfolio for growth opportunities.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 77
SINO-SINGAPORE TIANJIN ECO-CITY
The Sino-Singapore Tianjin
Eco-City (Sino-Singapore Eco-City)
is home to about 20,000 residents
and has attracted around 1,400
registered companies. In 2014,
478 new companies registered
in the Sino-Singapore Eco-City,
with registered capital of
RMB12.1 billion. Notably, four new
schools were opened in 2014,
bringing the total number of
students in the city to over 2,300.
In addition, survey works have
started on the Z4 line, a key light
rail link connecting the Sino-
Singapore Eco-City to the rest
of Tianjin Binhai New Area, and
construction is scheduled to
begin in 2015.
Keppel leads the Singapore
consortium, and works in tandem
with its Chinese partner to guide
our 50-50 joint venture – the
Sino-Singapore Tianjin Eco-City
Investment and Development Co.,
Ltd. (SSTEC) in its role as the
master developer of the Sino-
Singapore Eco-City.
During the year, more than 4,000
homes were sold in the Sino-
Singapore Eco-City, of which 1,731
were from projects under SSTEC.
In October 2014, the removal of
home-purchase restrictions and
relaxation of mortgage policies gave
a significant boost to home sales.
Top leaders including China’s
Minister of Housing and Urban-Rural
Development Chen Zhenggao and
Singapore’s Minister in the Prime
Minister’s Office and Second
Minister for Foreign Affairs and the
Environment and Water Resources,
Grace Fu visited the Sino-Singapore
Eco-City in 2014 and recognised the
project’s progress and achievements.
Significantly, China’s State Council
approved the implementation plan
for it to be China’s first National
Green Development Demonstration
Zone. The development was also
named a “National Green Building
Base” by the China Green Building
Council in 2014.
CONTRIBUTING TOWARDS
SUSTAINABLE DEVELOPMENT
Keppel continued to invest and
participate in the growth of the
Sino-Singapore Eco-City through its
various business units. As at end
January 2015, about 92% of 1,363
launched units in Keppel’s Seasons
Park have been sold. Seasons Garden,
comprising 1,190 apartments, has
sold 26% of 128 launched units as
at end-January 2015. Waterfront
Residence, which comprises 341
low-rise homes, will launch its first
phase in 2015.
Meanwhile, Phase 1 of Seasons City,
a mixed-use development, is
targeted for completion in 2017.
Keppel Telecommunications &
Transportation has completed
construction of its logistics
distribution centre in the
Eco-Industrial Park while
Keppel Infrastructure’s water
reclamation plant will start
commercial operations in 2015.
In the Eco-Business Park,
Keppel’s district heating and
cooling system plant has been
operating well since 2013, and
is able to maximise the utilisation
of geothermal energy. The plant
is also pursuing the possibility
of tapping on waste heat to
further improve the heating
production efficiency.
During the year, Keppel Offshore
& Marine signed a Memorandum
of Understanding to set up
a technology centre in the
Sino-Singapore Eco-City.
02
Operating & Financial Review
Property
78
Operating &
Financial Review
INVESTMENTS
We are focused
on delivering value
to shareholders
and seeking growth
opportunities.
PROFIT BEFORE TAX
$55m
as compared to FY 2013’s $80 million.
NET PROFIT
$43m
as compared to FY 2013’s $54 million.
MAJOR DEVELOPMENTS
IN 2014
k1 Ventures completed the sale
of Long Haul Holding Corp (Helm)
and distributed total dividends
of 7.5 cents per share in 2014.
KrisEnergy grew its portfolio to
19 contract areas in Southeast
Asia, 12 of which are operated
by the company.
M1 launched a nationwide
300Mbps 4G network,
and introduced a fibre
cloud-based data centre
with enhanced offerings to
enterprise customers.
FOCUS FOR
2015/2016
k1 Ventures will manage
its investment portfolio to
create shareholder value
and distribute excess cash
as and when its investments
are monetised.
KrisEnergy will focus on
executing its planned
development projects,
maximising production
efficiencies and controlling
capital expenditure.
M1 will focus on delivering
better user experience
to further increase market
competitiveness.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 79
NET PROFIT ($ million)
FY 2014
FY 2013
FY 2012
194
43
54
EARNINGS HIGHLIGHTS ($ million)
2014
2013
2012
64
17
16
55
43
183
135
27
25
25
80
54
198
93
152
134
133
196
194
170
95
01
KrisEnergy has 19
oil and gas assets
in Bangladesh,
Cambodia, Indonesia,
Thailand and Vietnam
as at end-2014.
Revenue
EBITDA
Operating Profit
Profit before Tax
Net Profit
Manpower (Number)
Manpower Cost
01
with a delivery of a 7% annual dividend
from the Preferred Units.
In December 2014, Knowledge
Universe Education, a subsidiary
of Knowledge Universe Holdings,
completed the sale of its international
platforms including its early childhood
education business and the Canadian
International School in Singapore.
KRISENERGY
2014 marked a step change for
KrisEnergy Ltd, a Singapore-listed
independent Exploration and
Production (E&P) operator in the
upstream oil and gas industry.
During the year, KrisEnergy expanded
its portfolio of operated assets,
made advances in several oil and gas
development projects, and reported
EARNINGS REVIEW
Pre-tax earnings from the Investments
Division decreased by $25 million or
31% to $55 million for the year due
mainly to higher overheads. This was
partly offset by profit from disposal
of investments and write-back of
impairment of investments. Net profit
was $43 million for FY 2014, compared
to $54 million for the previous year.
K1 VENTURES
k1 Ventures (k1) is an investment
company with interests in education
and financial services.
For the financial year ended 30 June
2014, k1 reported revenue from
continuing operations of $32 million,
a decrease of $64 million compared
to the prior year. This was due to the
absence of divestment gains from
McMoRan Exploration Company in
FY2013, and a decrease in investment
income from Knowledge Universe
Holdings LLC.
Operating profit from continuing
operations was $26 million compared
to $65 million in the prior year.
EBITDA from continuing operations of
$26 million was $40 million below the
prior year as a result of lower investment
income. Net profit from continuing
operations attributable to shareholders
was $20 million compared to
$52 million in the prior year.
For FY 2014, k1 paid total dividends
of 7.5 cents per share to shareholders,
increasing cumulative distributions to
shareholders to 33.8 cents per share or
more than $700 million since 2005.
In December 2014, TPG Capital’s
Newbridge Asia Advisors IV sold all of
its economic interests in China Grand
Automotive Services Co Ltd (China
Grand Auto), including k1’s entire interest
in China Grand Auto. The proceeds
of approximately US$32 million
received from the sale will be
distributed to shareholders as an
interim dividend of 1.5 cents per
share on 12 February 2015.
k1’s investment in Guggenheim Capital
continued to perform as expected,
Operating & Financial Review
Investments
80
Operating &
Financial Review
INVESTMENTS
strong growth in its production and
proved plus probable (2P) reserves.
Average net production increased 161%
to 7,612 barrels of oil equivalent per day
(boepd) as a result of a full-year’s
contribution from the Bangora gas field
in Block 9 onshore Bangladesh, which
accounted for 5,477 boepd. The B8/32
and B9A oil and gas fields in the Gulf of
Thailand produced an average of 2,134
boepd net to the company in 2014.
Improved reservoir performance at
the Bangora field also partly contributed
to a 120% uplift in KrisEnergy’s 2P
reserves to 71.0 million barrels of oil
equivalent (mmboe) as at 31 December
2014. Other additions stemmed from
the conversion of best estimate
contingent (2C) resources to 2P
reserves associated with the Wassana
oil discovery in Block G10/48 in the
Gulf of Thailand and the Lengo gas
accumulation in the Bulu production
sharing contract (PSC) offshore East
Java, Indonesia.
KrisEnergy increased its working
interest in G10/48 to 100% from
25% in May 2014 and took over
operatorship of this block, which
contains three oil discoveries
including Wassana. Presently under
development, the Wassana project
accounted for 13.6 mmboe of the
increase in KrisEngergy’s 2P reserves.
The field is expected to commence
operations in 2H 2015, with production
reaching a plateau of about 10,000
barrels of oil per day.
The Lengo gas field in the Bulu PSC
accounted for 25.4 mmboe of the
growth in 2P reserves, following the
approval of the development plan by
the Indonesian authorities in December
2014. The development comprises
an initial four producing wells, an
unmanned wellhead platform and a
65km pipeline to transport the gas to
shore. The production of the Lengo
gas field is expected to start in 2017.
PORTFOLIO GROWTH
KrisEnergy’s other acquisitions
in 2014 included a 41.7% non-operated
working interest in Block A Aceh
onshore Sumatra, Indonesia. The field
contains three gas discoveries with an
approved development plan and
associated 2C resources of 30.4 mmboe.
The company acquired an additional
30% working interest in Cambodia
Block A in the Gulf of Thailand and took
over as operator. It is now negotiating
with the Cambodian authorities over
the development of the Apsara oil field.
During the year, KrisEnergy received
direct government awards for projects
which it operates such as the Sakti PSC
offshore East Java and Block 115/09
offshore north-central Vietnam. It also
took a 45% non-operated working
interest in the SS-11 exploration
acreage offshore Bangladesh.
The company’s portfolio comprised
19 contract areas at the end of 2014
in Bangladesh, Cambodia, Indonesia,
Thailand and Vietnam. It operates
12 of the blocks, which contain a
combination of exploration and
appraisal targets, development
projects and producing fields.
BUSINESS OUTLOOK
The precipitous fall in global
benchmark oil prices since June 2014
to under US$50 a barrel has been
sorely felt throughout the E&P,
oil services and marine industries
across all geographies.
Despite the turbulence in the oil
markets, KrisEnergy’s strategy of
portfolio diversification across a wide
range of fiscal and regulatory regimes,
and its business expansion within the
oil and gas industry, provides some
cushion against the lower oil prices.
KrisEnergy’s 2014 production profile
was 18% oil versus 82% gas, where
gas sales in Asia are under long-term
contract at either a fixed price as in the
case of Bangladesh or adjusted every
six months as in Thailand.
The company remains on track to
execute all its planned development
projects starting with the Nong Yao and
Wassana oil fields in the Gulf of Thailand
in 2H 2015, followed by two gas fields
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 81
01
01
M1 has partnered
operators globally to
provide its customers
coverage and
roaming services in
over 230 countries
and territories.
in Indonesia in 2017. With limited
near-term exploration obligations
under its concessions, KrisEnergy
is able to adjust its work programme
to maximise production efficiencies
and control capital expenditure.
It will also explore possible cost
savings without compromising
its operations and health and
safety standards.
M1
As at end-2014, M1’s mobile customer
base was 1.85 million. Its postpaid
customer base grew 19,000 to
1.15 million, with the number of
customers on tiered data plans
increasing to 66%, from 49% a year
ago. The prepaid segment was
impacted by a regulatory change in
April 2014 that reduced the number
of pre-paid SIM cards per customer
from ten to three, and as a result,
M1’s prepaid customer base decreased
to 703,000. Fibre customer base
increased by 18,000 to 103,000,
driven by M1’s attractive fibre
broadband plans and upgraded
service offerings.
During the year, M1 continued to
enhance the customer experience
through the introduction of faster
networks, including the launch
of Singapore’s first nationwide
300Mbps LTE-Advanced network.
Corporate customers were able to
enjoy the benefits of fibre services
through M1’s attractively priced
500Mbps and 1Gbps plans, and
all new 10Gbps service, the fastest
fibre service on the Next Generation
Nationwide Broadband Network
(NGNBN) that was made available
in May 2014 to cater to corporate
customers with high-bandwidth
needs such as banks and cloud-
service providers. M1 also launched
a new state-of-the-art data centre
in October 2014, alongside a suite
of attractive cloud-based solutions,
further broadening its proposition
to the corporate segment.
Based on current economic
outlook and barring unforeseen
circumstances, M1 estimates
moderate growth in net profit
after tax for 2015.
Operating & Financial Review
Investments
82
Operating &
Financial Review
FINANCIAL
REVIEW &
OUTLOOK
We will build on
our core strengths in
execution excellence,
technology innovation
as well as financial
displine to sustain
value creation.
TOTAL ASSETS
$31.6b
Mainly due to higher working capital for the
Offshore & Marine and Property divisions.
TOTAL CASH DIVIDEND PER SHARE
48cts
Total cash dividend for the year was
about $870 million.
PROSPECTS
The fall in oil prices, the expected
reduction in global oil and gas
upstream spending and the
projected oversupply of oil rigs has
created a challenging environment.
The Offshore & Marine (O&M)
Division secured $5.5 billion of
orders for the year, bringing its net
order book at the end of 2014 to
$12.5 billion with deliveries
extending into 2019. The healthy
order book will keep the yards
busy for 2015 and 2016. The global
consumption of energy is projected
to grow and is expected to sustain
the oil and gas business. The O&M
Division will continue to leverage
technology and innovation to
improve its competitive edge as
well as productivity and efficiency.
It will focus on expanding its Near
Market, Near Customer strategy.
In the Infrastructure Division,
Keppel Infrastructure (KI) will remain
focused on its power and gas,
as well as its other energy-related
infrastructure businesses. KI’s
planned disposal of its 51% stake in
the Keppel Merlimau Cogen Pte
Ltd, which owns the 1,300 MW
co-generation plant, to Keppel
Infrastructure Trust (KIT) will
unlock capital and position it to
capture new growth opportunities.
Keen competition is likely to
persist in the electricity market
but KI’s integrated gas-to-power
business platform will enable it to
weather the challenges ahead.
Keppel Telecommunications &
Transportation (Keppel T&T) will
continue to develop both logistics
and data centre businesses locally
and overseas. It will also focus on
growing a pipeline of quality data
centre assets for injection into the
newly-listed Keppel DC REIT.
During the year, the Property
Division sold about 300 homes
in Singapore and 2,100 homes
overseas. Total assets under
management by Keppel REIT
and Alpha stood at $18.7 billion
as at end-2014. The Division will
continue to maintain its presence
in its core and growth markets
while seeking to invest
opportunistically. It also seeks
to strengthen its commercial
portfolio overseas.
The Group will continue to
execute its multi-business strategy,
building on its core strengths
and strong foundations, while
staying agile to seize new
opportunities.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 83
SHAREHOLDER RETURNS
Despite higher net profits, Return on
Equity (ROE) was lower at 18.8% for
2014 due mainly to higher equity.
The Company will be distributing a total
cash dividend of 48 cents per share for
2014 comprising a final proposed cash
dividend of 36 cents per share and the
interim cash dividend of 12 cents per
share distributed in 3Q 2014. Total cash
dividend for 2014 represents 46% of
Group net profit. On a per share basis,
it translates into a gross yield of 5.4%
on the Company’s last transacted
share price of $8.85 as at 31 December
2014. Over the past six years, total
distribution payout represents 40%
to 83% of Group net profit.
ECONOMIC VALUE ADDED (EVA)
In 2014, EVA rose by $636 million to
$1,778 million. This was attributable to
higher operating profit, partially offset
by higher capital charge.
The increase in operating profit was
due to better operating results from the
Offshore & Marine and Infrastructure
Divisions, as well as divestment gains
from investment properties and data
centre assets.
Capital charge increased by $36 million
as a result of higher Weighted Average
Cost of Capital (WACC) and higher
Average EVA Capital, partially offset by
the adjustment for surplus cash. WACC
increased from 6.00% to 6.45% mainly
due to an increase in risk-free rate and
pre-tax cost of debt. Average EVA
Capital increased by $297 million
from $18.93 billion to $19.23 billion.
The Group registered positive EVA
since 2004, which reflects the Group’s
commitment to maximise shareholders’
value through effective and efficient
management of resources.
FINANCIAL POSITION
Group shareholders’ funds increased
from $9.70 billion at 31 December 2013
to $10.38 billion at 31 December 2014.
The increase was mainly attributable
to the retained profits for 2014, partially
offset by payment of final dividend of
30 cents per share for FY 2013 and
tax-exempt one-tier interim dividend
of 12 cents per share for 1H 2014,
fair value loss on available-for-sale
assets and cash flow hedges, and
share buybacks during the year.
Group total assets of $31.55 billion at
31 December 2014 was $1.50 billion or
5% higher than the previous year end.
Increase in current assets was partially
offset by decrease in non-current assets.
REVENUE BY SEGMENTS 2014
NET PROFIT BY SEGMENTS 2014
Offshore & Marine
Infrastructure
Property
Investments
Total
%
64
22
13
1
100
Offshore & Marine
Infrastructure
Property
Investments
Total
%
55
17
26
2
100
ROE & DIVIDEND
EVA ($ million)
%
30
24
18
12
6
0
Distribution
in specie
~ 20.9 cts/share
Plus
Distribution
in specie
~ 28.6 cts/share
Plus
Distribution
in specie
~ 9.5 cts/share
Plus
cents
50
40
30
20
10
2,100
1,800
1,500
1,200
900
600
300
2009 2010 2011 2012 2013 2014
2009 2010 2011 2012 2013 2014
0
0
ROE
29.1
25.3
27.2
26.4
19.5
18.8
1,306
697
838 1,430 1,142 1,778
Full-Year
Dividend
Interim
Dividend
34.6
38.2
43.0
45.0
40.0
48.0
13.6
14.5
17.0
18.0
10.0
12.0
Operating & Financial Review
Financial Review & Outlook
84
Operating &
Financial Review
FINANCIAL REVIEW & OUTLOOK
EVA
Profit after tax (Note 1)
Adjustment for:
Interest expense
Interest expense on non-capitalised leases
Tax effect on interest expense adjustments (Note 2)
Provisions, deferred tax, amortisation & other adjustments
2014
$ million
14 vs 13
+/(-)
2013
$ million
13 vs 12
+/(-)
2012
$ million
2,769
+794
1,975
-278
2,253
133
23
(27)
52
-31
+7
-2
-96
164
16
(25)
148
-16
-
+4
+125
-165
180
16
(29)
23
2,443
Net Operating Profit After Tax (NOPAT)
2,950
+672
2,278
Average EVA Capital Employed (Note 3)
Weighted Average Cost of Capital (Note 4)
Adjustment for surplus cash (Note 5)
Capital Charge
19,231
+297
6.45%
+0.45%
68
(1,172)
68
-36
18,934
6.00%
-
+2,223
-0.06%
-
16,711
6.06%
-
(1,136)
-123
(1,013)
Economic Value Added
1,778
+636
1,142
-288
1,430
Notes:
1. Profit after tax 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, interest-bearing liabilities, timing provisions, present value of operating
leases and other adjustments.
4. Weighted Average Cost of Capital is calculated in accordance with the Keppel Group EVA Policy as follows:
(a) Cost of Equity using Capital Asset Pricing Model with market risk premium set at 5.5% (2013: 6.0%);
(b) Risk-free rate of 2.45% (2013: 1.32%) based on yield-to-maturity of Singapore Government 10-year Bonds;
(c) Unlevered beta at 0.83 (2013: 0.83); and
(d) Pre-tax Cost of Debt at 1.58% (2013: 0.89%) using 5-year Singapore Dollar Swap Offer Rate plus 45 basis points (2013: 80 basis points).
5. For FY 2014, capital charge on surplus cash of $1,939 million was at the concession rate of 2.93% instead of WACC of 6.45%. This was due to the accumulation
of surplus cash resulting from the advanced borrowing programme.
Higher current assets were mainly due
to reclassification of the Keppel Merlimau
Cogen power plant from fixed assets
to assets classified as held for sale,
higher stocks and work-in-progress for the
O&M Division, acquisitions of development
sites and expenditure incurred for
development projects for the Property
Division, and higher debtors arising
from the O&M and Property divisions.
The increase in current assets was partially
offset by repayment of advances due
from associated companies.
Lower non-current assets were due mainly
to decreases in fixed assets, investment
properties and associated companies.
Lower fixed assets were largely due to
reclassification of the Keppel Merlimau
Cogen power plant to assets classified
as held for sale, sale of data centre assets
by the Infrastructure Division, partly offset
by construction of logistics warehouses
and other operational capital expenditure.
Lower investment properties were mainly
due to the sale of Equity Plaza.
TOTAL ASSETS OWNED ($ million)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Fixed assets
Properties
Investments
2012
2013
2014
3,337
3,798
2,673
5,423
2,188
1,988
5,909
6,192
5,718
Stocks & work-in-progress
7,661
8,995 10,681
Debtors & others
2,822
3,318
4,759
Bank balances, deposits & cash
4,055
5,565
5,736
Total
29,207 30,056 31,555
KEPPEL CORPORATION LIMITED Report to Shareholders 2014
85
TOTAL LIABILITIES OWED & CAPITAL INVESTED ($ million)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2012
2013
2014
Shareholders’ funds
9,246
9,701 10,381
Non-controlling interests
4,332
3,988
4,347
Creditors
8,059
8,825
9,178
Term loans & bank overdrafts
7,208
7,100
7,383
Other liabilities
Total
362
442
266
29,207 30,056 31,555
10-year CAGR TSR as at 2014
Keppel
STI
13.7%
7.6%
Lower associated companies were mainly
from dividends received from associated
companies and sale of Marina Bay Financial
Centre (MBFC) Tower 3, partly offset by
share of the associated companies’ profits.
Group total liabilities of $16.83 billion at
31 December 2014 were $0.46 billion or 3%
above that as at 31 December 2013. This
was due mainly to higher borrowings taken
up for working capital requirements, increase
in creditors from higher billings by suppliers
offset by lower billings on work-in-progress
in excess of related costs in the O&M and
Infrastructure Divisions.
Group net debt of $1.65 billion is $0.11 billion
higher than that as at 31 December 2013
due mainly to borrowings for land
acquisition in the Property Division,
dividend payments (by the Company and
its listed subsidiaries) and other operational
and capital expenditure requirements.
The higher debts were partly offset by net
proceeds from disposals of Equity Plaza,
MBFC Tower 3, data centre assets and
Keppel FMO Pte Ltd, and repayment of
advances due from associated companies.
TOTAL SHAREHOLDER RETURN (%)
120
100
80
60
40
20
0
(20)
(40)
(60)
(80)
2005
2006
2007
2008
2009
2010
2011
2012
2013
Keppel
STI
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
2014
(17.8)
9.5
Source: Bloomberg
Operating & Financial Review
Financial Review & Outlook
86
Operating &
Financial Review
FINANCIAL REVIEW & OUTLOOK
TOTAL SHAREHOLDER
RETURN (TSR)
Keppel is committed to deliver value to
shareholders through earnings growth.
Towards achieving this, the Group will
rely on its multi-business strategy and
its core strengths, build on what it had
done successfully and seize new
opportunities when they arise.
Our 2014 TSR of negative 17.8% was
27.3 percentage points below the
benchmark Straits Times Index’s (STI)
TSR of positive 9.5%. This was mainly
due to a decrease in Keppel’s share
price as at end-2014 arising from the
sharp decline in oil prices. However, the
Company’s Compounded Annual
Growth Rate (CAGR) TSR over the past
ten years of 13.7% was higher than STI’s
CAGR TSR of 7.6%.
CASH FLOW
To better reflect its operational free
cash flow, the Group has excluded
expansionary acquisitions (e.g.
investment properties) and capital
expenditure (e.g. building of new
logistics or data centre facilities),
meant for long-term growth for the
Group, and major divestments.
capital requirements from the Offshore
& Marine and Property divisions.
After excluding expansionary
acquisitions, capital expenditure and
major divestments, net cash from
investment activities was $724 million.
The Group spent $662 million on
investments and operational capital
expenditure, mainly for the Offshore
& Marine Division. After taking into
account the proceeds from
divestments and dividend income
of $1,386 million, the free cash
inflow was $729 million.
Total distribution to shareholders of
the Company and non-controlling
shareholders of subsidiaries for the
year amounted to $1,029 million.
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.
operating environment. This committee
is chaired by the Chief Financial
Officer of the Company and includes
Chief Financial Officers of the Group’s
key operating companies and Head
Office specialists.
The Group’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
the Offshore & Marine contracts
based on the expected timing of
receipts. The Group does not
engage in foreign currency trading.
Net cash from operating activities
dropped by 99% to $5 million for 2014
as compared to $637 million for 2013.
This was due mainly to higher working
These policies and guidelines are
established by the Group Central
Finance Committee and are updated
to take into account changes in the
• The Group hedges against price
fluctuations arising on purchase of
natural gas. Exposure is managed via
fuel oil forward contracts, whereby
FREE CASH FLOW
Operating profit
Depreciation, amortisation & other non-cash items
Cash flow provided by operations before changes in working capital
Working capital changes
Interest receipt and payment & tax paid
Net cash from operating activities
Investments & capital expenditure
Divestments & dividend income
Net cash from investing activities
Free Cash Flow*
2014
$ million
14 vs 13
+/(-)
2013
$ million
13 vs 12
+/(-)
2012
$ million
2,373
(261)
2,112
(1,779)
(328)
5
(662)
1,386
724
729
+239
-47
+192
-1,056
+232
-632
-173
+880
+707
+75
2,134
(214)
1,920
(723)
(560)
637
(489)
506
17
654
-487
-233
-720
+720
-374
-374
+85
+313
+398
+24
2,621
19
2,640
(1,443)
(186)
1,011
(574)
193
(381)
630
* Free cash flow excludes expansionary acquisitions & capex, and major divestments.
Dividend paid to shareholders of
the Company & subsidiaries
(1,029)
-186
(843)
+158
(1,001)
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 87
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 2014 was $7.4 billion
(2013: $7.1 billion and 2012: $7.2 billion).
At the end of 2014, 24% (2013: 7% and
2012: 14%) of Group borrowings were
repayable within one year with the
balance largely repayable more than
three years later.
Unsecured borrowings constituted
86% (2013: 87% and 2012: 81%) of total
borrowings with the balance secured
by properties and other assets.
Secured borrowings are mainly for
financing of 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 $2.70 billion
(2013: $2.90 billion and 2012:
$3.10 billion).
Fixed rate borrowings constituted
66% (2013: 53% and 2012: 57%) of
total borrowings with the balance at
floating rates. The Group has interest
rate swap agreements with notional
amount totaling $1,138 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 65% (2013: 67% and 2012:
82%) 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 2014 with a slight
decrease in average cost of funds.
CAPITAL STRUCTURE &
FINANCIAL RESOURCES
The Group maintains a strong balance
sheet and an efficient capital structure
to maximise return 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 best
risk-adjusted 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 2014
was $14.73 billion as compared to
$13.69 billion as at end 2013 and
$13.58 billion as at end 2012. The
Group was in a net debt position of
$1,647 million as at end of 2014, which
was slightly above the $1,535 million as
at end of 2013 and an improvement
from the net debt position of $3,153
million at the end of 2012. The Group’s
net gearing ratio was 0.11 times at the
end of 2014, same as that of end-2013.
Interest coverage was 18.52 times
in 2012, decreasing to 13.89 times in
2013 and then increasing to 15.35
times in 2014. Interest coverage in
2014 was higher due to higher EBIT
and lower interest costs.
Cash flow coverage dropped from
6.50 times in 2012 to 3.97 times in
2013 and 1.11 times in 2014. This was
mainly due to lower operating cash
flows in 2014.
At the Annual General Meeting in 2014,
shareholders gave their approval for
mandate to buy back shares. During
the year, 5,932,000 shares were bought
back and held as treasury shares.
There was no sale, transfer, disposal,
cancellation and/or use of treasury
shares during the year.
DEBT MATURITY ($ million)
< 1 year
1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
> 5 years
Operating & Financial Review
Financial Review & Outlook
1,796 (24%)
137 (2%)
951 (13%)
1,412 (19%)
897 (12%)
2,190 (30%)
88
Operating &
Financial Review
FINANCIAL REVIEW & OUTLOOK
FINANCIAL RESOURCES
The Group continues to be able to tap into
the debt capital market at competitive terms.
As part of its liquidity management, the Group
has built up adequate cash reserves and
short-term marketable securities as well as
sufficient undrawn banking facilities and capital
market programme. Funding of working
capital requirements, capital expenditure and
investment needs was made through a mix
of short-term money market borrowings and
medium/long-term loans and bonds and
through the equity capital market.
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
is actively reviewed on an ongoing basis.
As at end of 2014, total funds available and
unutilised facilities amounted to $11.02 billion
(2013: $9.40 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
amounts 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. As at 31 December 2014, the Group had
credit risk exposure to an external group of
companies for receivables that are past due.
Management had considered any changes
in the credit quality of the debtors when
determining the allowance for doubtful
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)
2012
2013
2014
Net Cash / (Debt)
Capital Employed
(3,153)
(1,535)
(1,647)
13,578
13,689
14,728
Net Cash / (Gearing)
(0.23)
(0.11)
(0.11)
INTEREST COVERAGE
Interest Coverage = EBIT
Interest Cost
$ million
3,600
2,700
1,800
900
0
No. of times
40
30
20
10
0
2012
2013
2014
EBIT
3,391
2,918
3,023
Total Interest Cost
183
210
197
Interest Cover
18.52
13.89
15.35
CASH FLOW COVERAGE
Cash Flow Coverage = Operating Cash Flow + Interest Cost
Interest Cost
$ million
1,400
1,050
700
350
0
No. of times
20
15
10
5
0
Operating Cash Flow +
Interest
Total Interest Expense +
Interest Capitalised
Cash Flow Coverage
2012
2013
2014
1,190
835
219
183
6.50
210
3.97
197
1.11
KEPPEL CORPORATION LIMITED Report to Shareholders 2014
89
receivables. Management performs on-
going assessments on the ability of its
debtors to repay the amounts owing to
the Group. These assessments include
the review of the customers’ credit-
standing and the ability of customers
to secure long-term financing for the
ongoing projects. Management had
assessed that no allowance for
doubtful debt is required.
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) of the financial statements.
Significant assumptions are required
in determining the stage of completion,
the extent of the contract cost incurred,
the estimated total contract revenue
and contract cost and the recoverability
of the contracts. In making the
assumption, the Group evaluates
by relying on past experience and
the work of engineers. Revenue from
construction contracts is disclosed in
Note 24 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 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
FINANCIAL CAPACITY
$ million
Remarks
Cash at Corporate Treasury
4,016
70% of total cash of $5.74 billion
Credit facilities extended to the Group
7,004 Credit facilities of $9.17 billion,
of which $2.17 billion was utilised
Total
11,020
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.
CONTROL OVER KEPPEL REIT
The Group has approximately 45% gross
ownership interest of units in Keppel
REIT as at 31 December 2014 and 2013.
Keppel REIT is managed by Keppel REIT
Management Limited (KRML), a
wholly-owned subsidiary of the Group.
The Group has provided an undertaking
to the trustee of Keppel REIT to grant
the unitholders the right to endorse or
re-endorse the appointment of directors
of KRML at the annual general meetings
of Keppel REIT. The Group has
determined that it continues to have
significant influence over Keppel REIT.
CONTROL OVER KIT
The Group has 49% gross ownership
interest of units in KIT as at 31 December
2014 and 2013. Determining whether
the Group has control over KIT requires
management to exercise its judgment.
In exercising its judgment, management
considers the proportion of its voting
rights and whether it can control the
relevant activities of KIT. The business
purpose and relevant activities of KIT
are stated in the Deed of Trust which
requires a special resolution to amend.
In addition, the Board of Directors of
KIT/Keppel Infrastructure Fund
Management Pte Ltd, its trustee-
manager, comprises more than 50%
independent directors. Management
concluded that the Group does not
have sufficient dominant vesting
interest to exert control over KIT and the
Deed of Trust and therefore the Group
only has significant influence over KIT.
Operating & Financial Review
Financial Review & Outlook
Sustainability
Report
Highlights
Keppel is committed to deliver value to all our
stakeholders through Sustaining Growth in our
businesses, Empowering Lives of people and
Nurturing Communities wherever we operate.
SUSTAINING
GROWTH
PAGE 92 – 129
EMPOWERING
LIVES
PAGE 130 – 131
Our commitment to
business excellence is
driven by our unwavering
focus on strong corporate
governance and prudent
risk management.
Resource efficiency is our
responsibility and makes
good business sense.
People are the cornerstone
of our businesses.
As an employer of choice,
we are committed to grow
and nurture our talent
pool through continuous
training and development
to help our people reach
their full potential.
Innovation and delivering
quality products and
services sharpen our
competitive edge.
We want to instill a culture
of safety so that everyone
who comes to work goes
home safely.
NURTURING
COMMUNITIES
PAGE 132
As a global citizen,
Keppel believes
that as communities
thrive, we thrive.
We engage and nurture
communities wherever
we are, with the aim of
achieving a sustainable
future together.
As leaders in our
businesses, we support
industry initiatives and
encourage open dialogue
to promote growth.
Managing
Sustainability
91
We recognise sustainability as a central
factor in our long-term competitiveness
and are committed to be a responsible
corporate citizen.
At the conclusion of this exercise in
2015, we will have conducted separate
materiality analyses for all our business
units. The results will serve as guidance
for the Group’s future sustainability
actions and reporting processes.
STAKEHOLDER ENGAGEMENT
Recognising that business and
sustainability goals are best aligned
through proactive stakeholder
engagement, we conducted a
stakeholder consultation
exercise in 2013.
Facilitated by an independent
sustainability consultancy, the exercise
involved a sample pool of customers,
employees, government contacts,
investors, analysts, suppliers and
non-governmental organisations
in a review of our priority areas and
economic, environmental and social
efforts. We have refined our existing
practices and communications in line
with the feedback received.
We also address sustainability issues
through our 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
preparing to report in accordance
with the GRI G4 guidelines.
External assurance provides an
objective evaluation of how well we
report our sustainability performance.
Our sustainability report will be
assured externally in accordance
with the AA1000 Assurance Standard
2008 and ISAE3000.
01
Our sustainability report will be
published in July 2015. It will articulate
our performance in six key focus areas:
Corporate Governance and Risk
Management, Environmental
Performance, Product Excellence,
Safety & Health, Labour Practices &
Human Rights, and Community
Development. This section contains
a concise review of these areas and
our management approaches.
MANAGEMENT STRUCTURE
Sustainability issues are managed
and communicated at all levels of
the Group. The Group Sustainability
Steering Committee comprises
senior management from across
the Keppel Group and sets our
sustainability strategy.
Supporting the Steering Committee
is the Working Committee, consisting
of six functional teams, that executes
our sustainability strategy and reports
our performance.
MATERIALITY ANALYSIS
To identify and prioritise the economic,
environmental and social concerns of
the Company and our stakeholders,
we undertook a materiality analysis
with an independent sustainability
consultancy in 2014.
Business unit senior management and
employees first completed an online
survey on issues most material to their
operations, before discussing and
finalising these issues at workshops
specific to their business units.
01
We strive to be a responsible
corporate citizen, integrating
sustainability into our business
strategies and reaching out to
communities where we operate.
Sustainability Report Highlights
Managing Sustainability
92
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 1:
Effective board to lead and control
the Company
Role: The principal functions of the
Board are to:
• decide on matters in relation to
the Group’s activities which are
of a significant nature, including
decisions on strategic directions
and guidelines and the approval
of periodic plans and major
investments and divestments;
• oversee the business and affairs
of the Company, establish, with
management, the strategies
and financial objectives to be
implemented by management,
and monitor the performance
of management;
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.
Independent Judgment: All directors
are expected to exercise independent
judgment in the best interests of the
01
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 2014,
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 are disclosed in the
Appendix to this report.
Meetings: The Board meets six times
a year and as warranted by particular
circumstances. Telephonic attendance
and conference via audio-visual
communication at board meetings
are allowed under the Company’s
Articles of Association. Further, the
non-executive directors meet without
the presence of management on a
need basis. The number of board,
board committee, and non-executive
director meetings held in FY2014, 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 still receive all the
papers and materials for discussion at
that meeting. He or she would review
them and advise the Chairman or
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
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
Note:
1 The Code of Corporate Governance 2012 issued by the Monetary Authority of Singapore on 2 May 2012.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 93
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.
Training: The directors are provided
with continuing education in areas
such as directors’ duties and
responsibilities, corporate governance,
changes in financial reporting
standards, changes in the Companies
Act, continuing listing obligations
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 2014, some KCL directors
attended talks on topics relating to the
global macro-economic development,
the financial, political, and economic
risks of emerging countries which the
Group operates, board leadership,
safety and updates on financial
reporting and technical standards,
among others. Directors were also
updated on the obligations under the
Personal Data Protection Act and the
policies and processes adopted by the
Company for compliance.
BOARD COMPOSITION AND
SUCCESSION PLANNING
Principle 2:
Strong and independent element
on the Board
Board Composition and Succession
Planning: To discharge its oversight
responsibilities, the Board must be an
effective board which can lead and
control the business of the Group.
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 the new external
perspectives and insights which
more recent appointees bring to
the Board’s deliberation.
01
Keppel Corporation
was conferred the
Silver Award for Best
Managed Board
(market capitalisation
of $1 billion and above)
at the Singapore
Corporate Awards.
TABLE 1
Board
Meetings
Audit
Nominating
Remuneration
Safety
Risk
Board Committee Meetings
Non-Executive
Directors’ Meeting
(without presence
of management)
Lee Boon Yang
Loh Chin Hua1
Tony Chew Leong-Chee
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai2
Tan Ek Kia3
Danny Teoh
Tan Puay Chiang
Till Vestring4
Teo Soon Hoe5
Tong Chong Heong6
No. of Meetings Held
9
9
9
9
9
8
9
8
9
-
3 out of 3
2 out of 2
9
-
-
6
6
-
5
-
6
-
-
-
-
6
3 out of 3
-
4
-
4
3 out of 3
4
-
-
-
-
-
4
6
-
-
6
6
-
-
6
-
-
-
-
6
4
4
-
-
-
-
4
-
4
-
-
-
4
-
-
-
4
3
-
3 out of 3
4
4
-
-
-
4
4
-
4
4
4
4
4
4
4
-
-
-
4
Notes:
1 Mr Loh Chin Hua was appointed as a member of the Board Safety Committee with effect from 28 February 2014.
2 Mr Alvin Yeo ceased to be a member of Board Risk Committee and was appointed as a member of the Nominating Committee, with effect from 23 January 2014.
3 Mr Tan Ek Kia was appointed as a member of the Board Risk Committee with effect from 23 January 2014.
4 Mr Till Vestring was appointed as a non-executive and independent director with effect from 16 February 2015 and will be seeking re-election at the annual
general meeting.
5 The late Mr Teo Soon Hoe retired as Senior Executive Director of the Company with effect from 1 June 2014.
6 Mr Tong Chong Heong retired as Senior Executive Director of the Company and CEO of Keppel Offshore Marine Ltd with effect from 1 February 2014.
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
94
SUSTAINING
GROWTH
Corporate
Governance
Board Independence: The Nominating
Committee determines on an annual
basis whether or not a director is
independent bearing in mind the 2012
Code’s definition of an “independent
director” and guidance as to
relationships the existence of which
would deem a director not to be
independent. The Committee carried
out the review on the independence
of each non-executive director in
January 2015 based on the respective
directors’ self-declaration in the
Directors’ Independence Checklist
and their actual performance on the
Board and board committees.
In this connection, the Committee
(save for Mr Alvin Yeo who abstained
from deliberation in this matter) 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
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 at all times 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 and independent
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 board committees and the
outcome of the recent self and peer
Individual Director Performance
assessment and agreed that Mr Tan
has at all times 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 also noted that
Mr Till Vestring is a partner in
Bain & Company’s Southeast Asia
office, which undertook a consulting
assignment for the Company in early
2014. Mr Vestring had declared to the
Committee that (a) he would be joining
the Board in his private and individual
capacity, and not as an employee of
Bain & Company, (b) he would not
be involved in any future engagement
of Bain & Company and therefore
would have no financial gains from
consulting services provided;
and (c) he would recuse himself
from any decision making process
undertaken by the Board or board
committees in connection with
awarding a consultancy contract
and Bain & Company was involved.
The Committee took into account
Mr Vestring’s declaration and agreed
that he should 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 chief executive
officer of Pavilion Capital International
Pte Ltd, a wholly-owned subsidiary
of Temasek. As Mr Tow is currently
employed by a wholly-owned
subsidiary of Temasek, the Committee
(save for Mr Tow who abstained from
deliberation in this matter) 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 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, Mr Tan Puay Chiang
and Mr Till Vestring 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
10 to 12 members, which would
facilitate effective decision making.
The Board currently comprises majority
independent directors with a total
of 10 directors of whom 8 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 112 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
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 95
skills, experience, gender, knowledge
of the Group, core competencies such
as accounting or finance, business or
management experience, industry
knowledge, strategic planning
experience and customer-based
experience or knowledge, required
for the Board and the board
committees to be effective.
Board Information: The Board and
management fully appreciate that
fundamental to good corporate
governance is an effective and robust
Board whose members engage in open
and constructive debate and challenge
management on its assumptions and
proposals, and that for this to happen,
the Board, in particular, the non-
executive directors, must be kept well
informed of the Company’s business
and affairs and be knowledgeable about
the industry in which the businesses
operate. The Company has therefore
adopted initiatives to put in place
processes to ensure that the non-
executive directors are well supported
by accurate, complete and timely
information, have unrestricted access
to management, and have sufficient
time and resources to discharge their
oversight function effectively. These
initiatives include regular informal
meetings for management to brief
the directors on prospective deals and
potential developments at an early stage
before formal board approval is sought,
and the circulation of relevant
information on business initiatives,
industry developments and analyst
and press commentaries on matters in
relation to the Company or the industries
in which it operates. A two-day off-site
board strategy meeting is organised
annually for in-depth discussion on
strategic issues and direction of the
Group, to give the non-executive
directors a better understanding of the
Group and its businesses and to provide
an opportunity for the non-executive
directors to familiarise themselves
with the management team so as to
facilitate the Board’s review of the
Group’s succession planning and
leadership development programme.
Non-executive Directors’ Meetings:
The non-executive directors set aside
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
time at each scheduled quarterly
meeting to meet 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. Such meetings may also
be scheduled on a need-be basis.
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
Principle 3:
Chairman and Chief Executive Officer
should in principle be separate persons
to ensure appropriate balance of power,
increased accountability and greater
capacity of the board for independent
decision making
Dr Lee Boon Yang is the non-executive
and independent Chairman of the
Company. Mr Loh Chin Hua is the
CEO of the Company.
The Chairman, with the assistance of
the Company Secretaries, schedules
meetings and prepares meeting agenda
to enable the Board to perform its duties
responsibly having regard to the flow of
the Company’s operations.
The Chairman sets guidelines on and
monitors the flow of information from
management to the Board to ensure
that all material information are provided
in a timely manner to the Board for
it to make good decisions. He also
encourages constructive relations
between the Board and management,
and between the executive directors
and non-executive directors.
At annual general meetings and other
shareholders’meetings, the Chairman
ensures constructive dialogue between
shareholders, the Board and
management.
The Chairman takes a leading role in
the Company’s drive to achieve and
maintain a high standard of corporate
governance with the full support of
the directors, Company Secretaries
and management.
96
SUSTAINING
GROWTH
Corporate
Governance
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.
BOARD MEMBERSHIP
Principle 4:
Formal and transparent process for the
appointment and re-appointment of
directors to the Board
NOMINATING COMMITTEE
The Company has established a
Nominating Committee (NC) to, among
other things, make recommendations
to the Board on all board appointments
and oversee the Board and senior
management’s succession and
leadership development plans. The
NC comprises entirely non-executive
directors, 4 out of 5 of whom
(including the Chairman) are
independent; namely:
• Mr Tony Chew
Independent Chairman
• Dr Lee Boon Yang
Independent Member
• Mr Tow Heng Tan
Non-Executive and
Non-Independent Member
• Mr Tan Ek Kia
Independent Member
• Mr Alvin Yeo
Independent Member
The responsibilities of the NC are set
out on pages 110 and 111 herein.
PROCESS FOR APPOINTMENT OF
NEW DIRECTORS AND BOARD
SUCCESSION PLANNING
The NC is responsible for reviewing
the succession plans for the Board.
In this regard, it has put in place a
formal process for the renewal of
the Board and the selection of new
directors. The NC leads the process
and makes recommendations to the
Board as follows:
(a) NC reviews annually the balance
and diversity of skills, experience,
gender and knowledge required by
the Board and the size of
01
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.
(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
(d) NC meets with the short-listed
(7) Financially literate
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.
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 Till Vestring.
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:
Mr Vestring is a partner in Bain &
Company’s Southeast Asia office and
has more than 20 years of management
consulting experience in Asia, advising
leading companies on portfolio strategy,
growth, mergers and acquisitions,
merger integration, organisation and
performance improvement. From 2007
to 2013, Mr Vestring served as the
Managing Partner of Bain’s Southeast
Asia operations with offices in Singapore,
KEPPEL CORPORATION LIMITED Report to Shareholders 2014
97
Jakarta, Kuala Lumpur and Bangkok.
He is a leader in Bain’s Industrial Goods
& Services practice and a member of
Bain’s Telecommunications, Media and
Technology practices.
RE-NOMINATION OF DIRECTORS
The NC is also charged with the
responsibility of re-nomination having
regard to the director’s contribution
and performance (such as attendance,
preparedness, participation and
candour), with reference to the results
of the assessment of the performance
of the individual director by his peers.
The directors submit themselves
for re-nomination and re-election at
regular intervals of at least once every
three years. Pursuant to the Company’s
Articles of Association, one-third of the
directors retire from office at the
Company’s annual general meeting,
and a newly appointed director must
submit himself for re-election at the
annual general meeting immediately
following his appointment.
ANNUAL REVIEW OF DIRECTORS’
INDEPENDENCE
The NC is also charged with determining
the “independence” status of the directors
annually. Please refer to page 94 herein
on the basis of the NC’s determination
as to whether a director should or
should not be deemed independent.
ANNUAL REVIEW OF DIRECTORS’
TIME COMMITMENTS
The NC has adopted internal
guidelines addressing competing time
commitments that are faced when
directors serve on multiple boards and/
or have other principal commitments.
As a guide, directors should not have
more than six listed company board
representations and/or other principal
commitments.
The NC determines annually whether
a director with other listed company
board representations and/or other
principal commitments is able to and
has been adequately carrying out his
duties as a director of the Company.
The NC takes into account the results of
the assessment of the effectiveness of
the individual director, and the
respective directors’ actual conduct
on the Board, in making this
determination. In respect of FY2014,
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 on
his directorships and commitments
(including his directorship on the
boards of Transocean Ltd and SMRT
Corporation Ltd). Noting Mr Tan’s
strong contribution on the Board and
that he had stepped down as director
of the trustee-manager of CitySpring
Infrastructure Trust, NC was of the
view that Mr Tan would be able to
continue to adequately carry out his
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 FY2014, all the
directors performed well. The NC was
therefore satisfied that in FY2014,
where a director had other listed
company board representations and/
or other principal commitments, the
director was able and had been
adequately carrying out his duties as
director of the Company.
NOMINEE DIRECTOR POLICY
At the recommendation of the NC,
the Board approved the adoption of
the KCL Nominee Director Policy in
January 2009. For the purposes of
the policy, a “Nominee Director” is
a person who, at the request of KCL,
acts as director (whether executive or
non-executive) on the board of another
company or entity (“Investee Company”)
to oversee and monitor the activities
of the relevant Investee Company so
as to safeguard KCL’s investment in
the company.
The purpose of the policy is to
highlight certain obligations of a
person while acting in his capacity as
a Nominee Director. The policy also
sets out the internal process for the
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
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 135 to 136: Shareholding in the
Company and its subsidiaries.
BOARD PERFORMANCE
Principle 5:
Formal assessment of the effectiveness
of the Board and Board Committees and
the contribution by each director to the
effectiveness of the Board
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.
01
The directors submit
themselves for
re-nomination and
re-election at the
Company’s annual
general meetings
at least once every
three years.
98
SUSTAINING
GROWTH
Corporate
Governance
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 Great Eastern Holdings Ltd,
and currently Advisor to Far East
Organisation, 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 6:
Board members to have complete,
adequate and timely information
As a general rule, board papers are
required to be distributed to the
directors at least seven days before the
board meeting so that the members
may better understand the matters
prior to the board meeting and
discussion may be focused on
questions that the directors may have.
Directors are provided with tablet
devices to enable them to access and
read the board papers. 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, financial
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 7:
The procedure for developing policy on
executive remuneration and for fixing
remuneration packages of individual
directors should be formal and transparent
Principle 8:
The level and structure of director fees are
aligned with the long-term interest 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 interest and risk policies
of the Company and appropriate to attract,
retain and motivate key management to
successfully manage the Company
Principle 9:
There should be clear disclosure of
remuneration policy, level and mix
of remuneration, and procedure for
setting remuneration
REMUNERATION COMMITTEE
The Remuneration Committee (RC)
comprises entirely non-executive
directors, three out of four of whom
(including the Chairman) are
independent; namely:
• Mr Danny Teoh
Independent Chairman
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 99
• 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 in
respect of the outstanding options
granted prior to the termination of
the KCL Share Option Scheme in
end 2010, 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 FY2014, the RC sought views on
market practice 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 and objectivity.
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 directors’ fee structure, which
is the same as that for FY2013,
is set out in Table 2.
TABLE 2
Board Chairman
Board Member
Audit Committee
Board Risk Committee
Remuneration Committee
Board Safety Committee
Nominating Committee
Board & Non-Executive
Directors’ Meetings
Committee Meeting
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
Chairman
$50,000
$50,000
$35,000
$35,000
$30,000
Singapore
Overseas
Singapore
Overseas
Director’s Allowance (for overseas travel)
$1,000 per event day
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
100
SUSTAINING
GROWTH
Corporate
Governance
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 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 is subject to
shareholders’ approval at the Annual
General Meeting. The Chairman and
the non-executive directors will abstain
from voting, and will procure their
respective associates to abstain from
voting in respect of this resolution.
REMUNERATION POLICY
IN RESPECT OF EXECUTIVE
DIRECTORS AND OTHER KEY
MANAGEMENT PERSONNEL
The Company advocates a
performance-based remuneration
system that is highly flexible
and responsive to the market,
Company’s, business unit’s and
individual employee’s performance.
In designing the compensation
structure, the RC seeks to ensure that
the level and mix of remuneration is
competitive, relevant and appropriate
in finding a balance between current
versus long-term compensation and
between cash versus equity incentive
compensation. The total remuneration
mix comprises 3 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 RSP and the KCL PSP. 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,
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:
a. There are four scorecard
areas that the Company has
identified as key to measuring
the performance of the Group
(i) Commercial/Financial;
(ii) Customers; (iii) Process; and
(iv) People;
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 plan;
(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.
b. The four scorecards areas have
been chosen because they
In determining the actual quantum
of variable component of
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 101
01
Exercising active
stewardship of
the Company, the
directors of Keppel
Corporation make
regular visits to the
Group’s overseas
projects, such as
Riviera Point in
Ho Chi Minh City.
01
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 on pages 137 to 138 and 163 to 166.
remuneration, the RC had taken
into account the extent to which
the performance conditions, set
forth on page 100, have been met.
The RC is therefore of the view
that remuneration is aligned to
performance during FY2014.
In order to align the interests of senior
executive directors and executive
director with that of shareholders,
the senior executive directors and
executive director 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 (⅓) is paid
out provided the total EVA balance is
positive. The remaining two-third (⅔) of
the total EVA balance is credited to the
executive’s EVA Bank for payment in
future years, subject to the continued
EVA performance of the Company.
The EVA bank concept is used to defer
incentive compensation over a time
horizon to ensure that the executive
continues to generate sustainable
shareholder value over the longer term.
The EVA bank account is designated
on a personal basis and represents the
executive’s contribution to the EVA
performance of the Company. Monies
credited into the EVA bank are at risk in
that the amount in the bank can
decrease should EVA performance
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
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
102
SUSTAINING
GROWTH
Corporate
Governance
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 2014
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) ($)
Directors’ Total Fees 2
($)
Benefits
-in-Kind
($)
Contingent
Awards of
Shares 3
($)
Total
Remuneration
($)
Deferred &
at Risk
Cash
component 4
Shares
component 4
Paid
PSP
RSP
Remuneration &
Name of Director
Loh Chin Hua5
929,400 1,475,600 2,086,400
Tong Chong Heong
148,5647 132,506
170,946
Teo Soon Hoe
Lee Boon Yang
Tony Chew Leong-Chee
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai12
Tan Ek Kia13
Danny Teoh
Tan Puay Chiang
515,5549 728,696 1,048,551
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
525,000
225,000
126,000
168,000
136,850
113,779
146,211
168,700
123,900
54,000
72,000
58,650
48,763
62,662
72,300
53,100
n.m.6 1,213,200 1,546,500
7,251,100
n.m.
n.m.
–
83,57610
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
452,0168
2,376,37711
750,000
180,000
240,000
195,500
162,542
208,873
241,000
177,000
Notes:
1 The RC is satisfied that the quantum of performance-related bonuses earned by the senior executive directors and executive director was fair and appropriate
taking into account the extent to which their KPIs for FY2014 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 31 March 2014 (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 $6.74 and $10.31 respectively. For the KCL PSP, the figures are based on the fair value of the PSP shares at 100% of the award and the figures
may not be indicative of the actual value at vesting which can range from 0% to 150% of the award.
4 The amounts stated may be adjusted as indicated on page 100 of this report.
5 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.
6 n.m. - not material
7 Mr Tong Chong Heong has retired as Senior Executive Director of the Company and CEO of Keppel Offshore & Marine Ltd (“KOM”) on 1 February 2014 and was
appointed as Senior Advisor to the boards of KOM and Keppel Infrastructure Holdings Pte Ltd (“KIH”) on the same day. The remuneration shown above includes
leave encashment of $63,360.
8 Total remuneration shown above for Mr Tong Chong Heong does not include the engagement fees for his role as Senior Advisor to the boards of KOM and KIH.
9 The late Mr Teo Soon Hoe has retired as Senior Executive Director of the Company on 1 June 2014 and was appointed as the Company’s nominee director on
the boards of Tianjin Eco-City companies and k1 Ventures Limited on the same day. The remuneration shown above includes leave encashment of $87,729.
10 Consequent to the retirement of the late Mr Teo Soon Hoe with effect from 1 June 2014, the outstanding KCL PSP awards that have not fulfilled the three-year
performance period will be pro-rated to his last day of employment service (i.e. 31 May 2014) in accordance with the KCL PSP policy on staff retirement.
11 Total remuneration shown above for the late Mr Teo Soon Hoe does not include the engagement fees for his role as nominee director on the boards of
Tianjin Eco-City companies and k1 Ventures Limited.
12 Mr Alvin Yeo ceased as member of Board Risk Committee with effect from 23 January 2014 and was appointed as member of Nominating Committee on the
same day. Fees for memberships in both board committees are pro-rated accordingly.
13 Mr Tan Ek Kia was appointed as member of Board Risk Committee with effect from 23 January 2014. Fees for membership in Board Risk Committee are
pro-rated accordingly.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014
103
PSP and RSP Shares granted and vested to the Senior Executive Directors and Executive Director are shown below:
PSP
Awards
Vesting
Date
Contingent
Awards
of PSP
Shares
Number
of PSP
Shares
Vested
Value of
PSP
Shares
Vested
($)14
RSP
Awards
Vesting
Date
Contingent
Awards
of RSP
Shares
Number
of RSP
Shares
Vested
Value of
RSP
Shares
Vested
($)14
Name of Senior
Executive Directors
and Executive Director
Loh Chin Hua
2012
Awards
27 Feb 2015
0 to
116,50015
2013
Awards
26 Feb 2016
0 to
139,80015
2014
Awards
28 Feb 2017
0 to
270,000
–
–
–
–
–
–
2012
Awards
2013
Awards
28 Feb 2013
76,762 15 25,000 287,500
28 Feb 2014
27 Feb 2015
25,881 270,456
–
–
28 Feb 2014
87,995 15 29,331 306,509
27 Feb 2015
26 Feb 2016
2014
Awards
27 Feb 2015 150,000
–
–
–
–
–
–
26 Feb 2016
28 Feb 2017
Tong Chong Heong
2010
Awards
28 Feb 2013
0 to
297,00016
289,100 3,324,650
2010
Awards
28 Feb 2011
96,000 16 30,000 351,000
2011
Awards
28 Feb 2014
0 to
279,50015
178,900 1,869,505
2011
Awards
2012
Awards17
2013
Awards17
2010
Awards
27 Feb 2015
26 Feb 2016
28 Feb 2013
0 to
194,30015
0 to
101,100 15
0 to
330,000 16
–
–
–
–
321,200 3,693,800
2012
Awards
2013
Awards
2010
Awards
Teo Soon Hoe
2011
Awards
28 Feb 2014
0 to
279,500 15
178,900 1,869,505
2011
Awards
2012
Awards10
2013
Awards10
2014
Awards10
27 Feb 2015
0 to
112,500 15
26 Feb 2016
28 Feb 2017
0 to
65,90015
0 to
18,600
–
–
–
–
–
–
2012
Awards
2013
Awards
2014
Awards
28 Feb 2012
28 Feb 2013
33,000 364,650
33,000 379,500
28 Feb 2012
91,057 15 30,000 331,500
28 Feb 2013
28 Feb 2014
30,000 345,000
31,057 324,546
–
–
0
0
–
–
–
–
28 Feb 2011 106,670 16 33,300 389,610
28 Feb 2012
28 Feb 2013
36,685 405,369
36,685 421,878
28 Feb 2012
91,057 15 30,000 331,500
28 Feb 2013
28 Feb 2014
30,000 345,000
31,057 324,546
–
–
–
0
0
0
–
–
–
–
–
–
Notes:
14 The value of the shares vested under KCL PSP and RSP is computed based on the market price of the shares when the shares are credited to the employee’s CDP
account. The RC is satisfied that the value of the shares vested under the KCL PSP and RSP to the senior executive directors and executive director was fair and
appropriate taking into account the extent to which their KPIs and performance conditions for FY2014 were met.
15 Arising from the distribution of Keppel REIT unit by way of dividend in-specie on the basis of 1 Keppel REIT unit for every 5 KCL ordinary shares on 8 May 2013 and
8 Keppel REIT units for every 100 KCL ordinary shares on 13 September 2013, the RC approved the adjustments to unvested shares under the award.
16 Arising from the bonus issue of one bonus share for every 10 existing ordinary shares in 2011, the RC approved the adjustments to unvested shares under the award.
17 Consequent to the retirement of Mr Tong Chong Heong with effect from 1 February 2014, the outstanding KCL PSP awards that have not fulfilled 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.
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
104
SUSTAINING
GROWTH
Corporate
Governance
The total remuneration paid to the key management personnel (who are not directors or the CEO) in FY2014 was
$22,893,803. 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 $5,250,000 to $5,500,000
Chow Yew Yuen
Above $3,000,000 to $3,250,000
Ang Wee Gee
Wong Kok Seng
Above $2,750,000 to $3,000,000
Chan Hon Chew
Chia Hock Chye, Michael
Ong Tiong Guan
Above $1,750,000 to $2,000,000
Chor How Jat
Above $1,000,000 to $1,250,000
Pang Thieng Hwi, Thomas
Base/
Fixed
Salary
Performance-Related
Bonuses Earned 18
(including EVA and
non-EVA Bonuses)
Paid
Deferred
& at Risk
Benefits
in-Kind
Contingent Awards
of Shares
PSP
RSP
14%
22%
30%
n.m.
17%
17%
25%
14%
18%
17%
17%
31%
34%
34%
19%
21%
27%
36%
28%
26%
25%
n.m.
n.m.
11%19
16%
6%19
– 20
n.m.
2% 21
n.m.
7%
14%
15%
13%
22%
22%
23%
16%
14%
n.m.
11%
36%
28%
30%
23%
n.m.
–
19%22
Notes:
18 The RC is satisfied that the quantum of performance-related bonuses earned by the key management personnel was fair and appropriate taking into account the
extent to which their KPIs for FY2014 were met.
19 On Keppel Land Limited (“KLL”) share based compensation scheme. As at 31 March 2014 (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 $1.678 and $3.180 respectively.
20 With effect from 2012 onwards, officers who are retired and re-employed on contract basis would no longer be eligible to participate in the KCL RSP awards.
21 Mr Michael Chia has reached the statutory retirement age of 62 on 19 December 2014. Arising from his statutory retirement and having served KOM for more
than 30 years, he was entitled to KOM’s retirement benefits of $63,775.
22 Mr Thomas Pang stepped down as the CEO of Keppel Infrastructure Fund Management Pte Ltd (Trustee-Manager of Keppel Infrastructure Trust) on 15 May 2014
and was appointed as the CEO-designate of Keppel Telecommunications & Transportation Ltd (“KTT”) on the same day. He was appointed as the CEO of KTT
with effect from 1 July 2014. Prior to his appointment with KTT, Mr Thomas Pang was a participant of KCL RSP scheme.
REMUNERATION OF EMPLOYEES
WHO ARE IMMEDIATE FAMILY
MEMBERS OF A DIRECTOR OR THE
CHIEF EXECUTIVE OFFICER
No employee of the Company and its
subsidiaries was an immediate family
member of a director or the CEO and
whose remuneration exceeded
$50,000 during the financial year
ended 31 December 2014. “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 137 to 138 and
163 to 166 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.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 105
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 relevant 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 110 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
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
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
five times, and with the internal auditors
six times during the year, and at least
one of these meetings was conducted
without the presence of management.
During the year, the 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
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 26 of the Notes to the
Financial Statements on page 187.
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 programs 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.
106
SUSTAINING
GROWTH
Corporate
Governance
In addition, the AC reviews the
Policy yearly to ensure that it remains
current. The details of the Policy are
set out on pages 113 and 114 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 Board Risk Committee (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 and
Non-independent Member
• Mr Tan Puay Chiang
Independent Member
• Mr Tan Ek Kia
Independent Member
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. The
fifth member is Mr Tan Ek Kia, who 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 are
disclosed on page 110 herein.
The Company’s approach to risk
management is set out in the
“Risk Management” section on pages
124 and 127 of this Annual Report.
The Group is guided by a set of
Risk Tolerance Guiding Principles,
as disclosed on page 125.
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.
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
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.
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.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014
107
KEPPEL’S SYSTEM OF MANAGEMENT CONTROLS (KSMC)
POLICIES
BOARD OF DIRECTORS
BUSINESS UNIT
REPRESENTATION
COMPLIANCE
INTERNAL
AUDIT
EXTERNAL
AUDIT
SELF-ASSESSMENT
PROCESS
ENTERPRISE RISK
MANAGEMENT
FRAUD RISK
MANAGEMENT
IT GOVERNANCE
FRAMEWORK
PROCESSES
CORE VALUES, CORPORATE & EMPLOYEE CONDUCT
POLICY
MANAGEMENT
OPERATIONAL
GOVERNANCE
FINANCIAL
GOVERNANCE
SYSTEMS
4. Board
Oversight
3. Assurance
2. Management
& Assurance
Frameworks
1. Business
Governance/
Rules of
Governance
PEOPLE
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 Chief Executive Officer,
Mr Loh Chin Hua and Chief Financial
Officer, Mr Chan Hon Chew, 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 of the view that the
Group’s risk management system
is adequate and effective.
For FY2014, 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 is adequate and effective.
For FY2014, 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,
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 adequacy and effectiveness
of the Group’s internal controls,
business units are required to
provide the Company with written
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
108
SUSTAINING
GROWTH
Corporate
Governance
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 5 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 performs
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
Principle 15:
Regular, effective and fair
communication with shareholders
Principle 16:
Greater shareholder participation
at Annual General Meetings
In addition to the matters mentioned
above in relation to “Access to
Information/Accountability”, the
Company’s Group Corporate
Communications Department (with
assistance from the Group Finance
and Group Legal Departments, when
required) regularly communicates with
shareholders and receives and attends
to their queries and concerns.
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 content on the Company’s
website as well as facility visits.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 109
In addition to shareholder meetings,
senior management meet with investors,
analysts and the media, as well as
participate in industry conferences to
solicit and understand the views of the
investment community. In FY2014, the
Company hosted 360 meetings and
conference calls with institutional
investors, including several facility
visits to its shipyards, plants and
data centres in Singapore and Brazil.
Management also traveled widely for
non-deal roadshows to meet investors
across countries. Such meetings provide
useful platforms for management to
engage with investors and analysts.
Further, the Company launched its
mobile-friendly website with live
webcast features in February 2014, to
enhance investors’ access to company
information via smartphones.
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 to be debated and decided
upon. Shareholders are also informed
of the rules, including voting procedures,
governing such meetings.
general meetings of shareholders.
External auditors are also present at
such meetings to assist the directors
to address shareholders’ queries,
if necessary.
The Company is not implementing
absentia voting methods such as
voting via mail, e-mail or fax until
security, integrity and other pertinent
issues are satisfactorily resolved.
If any shareholder is unable to attend,
he is allowed to appoint up to two
proxies to vote on his behalf at the
meeting through proxy forms sent
in advance.
At shareholders’ meetings, each
distinct issue is proposed as a separate
resolution. 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
The Company Secretaries prepare
minutes of shareholders’ meetings,
which incorporates substantial
comments or queries from
shareholders and responses
from the Board and management.
These minutes are available to
shareholders upon their requests.
SECURITIES TRANSACTIONS
INSIDER TRADING POLICY
The Company has a formal Insider
Trading Policy and 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 and guidelines have 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
01
01
Keppel has been
actively engaging
shareholders and
the investment
community through
various platforms,
such as site visit.
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Sustaining Growth – Corporate Governance
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SUSTAINING
GROWTH
Corporate
Governance
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.
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 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.
APPENDIX
BOARD COMMITTEES –
RESPONSIBILITIES
A. AUDIT COMMITTEE
1.1 Review financial statements
and formal announcements
relating to financial performance,
and review significant financial
reporting issues and judgments
contained in them, for better
assurance of the integrity of such
statements and announcements.
1.2 Review and report to the Board at
least annually the adequacy and
effectiveness of the Group’s internal
controls, including financial,
operational, compliance and
information technology controls
(such review can be carried out
internally or with the assistance of
any competent third parties).
1.3 Review audit plans and reports
of the external auditors and
internal auditors, and consider
the effectiveness of actions or
policies taken by management
on the recommendations
and observations.
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 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.
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 Group Risk
Management department.
1.6 Provide timely input to the Board
1.12 Review interested person
on critical risk issues.
transactions.
1.13 Investigate any matters within the
Committee’s purview, whenever it
deems necessary.
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
1.4 Review the independence and
1.14 Report to the Board on material
the Board may determine.
objectivity of the external auditors.
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.
1.15 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.
1.9 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.
1.7 Make recommendations to the
Board on the proposals to the
shareholders on the appointment,
re-appointment and removal
of the external auditors, and
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.
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.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014
111
schemes, business trusts, or
any other trusts which are listed
on the Singapore Exchange or
any other stock exchange; and
management personnel, and the
specific remuneration packages
for each director as well as for the
key management personnel.
(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.),
1.2 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.
1.11 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.
1.13 Perform such other functions as
the Board may determine,
1.14 Sub-delegate any of its powers
within its terms of reference as
listed above, from time to time as
this Committee may deem fit.
D. REMUNERATION COMMITTEE
1.1 Review and recommend to the
Board a framework of remuneration
for Board members and key
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).
01
Keppel Corporation’s
Board Safety Committee
Chairman, Mr Tan Ek Kia
(left) visited BrasFELS
in May 2014 to better
understand the yard’s
HSE programmes
and practices.
01
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.
1.4 Decide, where a director has other
listed company board
representation and/or other
principal commitments, whether
the director is able to and has been
adequately carrying out his duties
as director of the Company.
1.5 Recommend to the Board the
process for the evaluation of the
performance of the Board, the
board committees and individual
directors, and propose objective
performance criteria to assess
the effectiveness of the Board
as a whole and the contribution
of each director.
1.6 Annual assessment of the
effectiveness of the Board as a
whole and individual directors.
1.7 Review the succession plans for
the Board (in particular, the
Chairman) and senior management
(in particular, the CEO).
1.8 Review talent development plans.
1.9 Review the training and
professional development
programs 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
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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.
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 Ensure there is a set of Group
Health, Safety and Environment
(“HSE”) policies and standards
to guide HSE operation and
performance across the Group.
1.2 Monitor HSE performance of the
Group companies, analyse trends
and accident root causes, and
recommend or propose Group-wide
initiatives for improvement where
appropriate to ensure a robust HSE
management system is maintained.
1.3 Structure an audit programme
of Group companies’ HSE
management programme to
verify effectiveness and use
its resources to lead the
execution of such audits, drawing
additional resources from the
line where needed.
1.4 Make greater use of its HSE
staff to lead serious accident
investigations.
1.5 Review serious accident and near
miss incident investigation reports
timely to understand underlying
root causes and introduce Group-
wide initiatives or remedial
measures where appropriate.
developments and best practices
and consider the desirability of
implementation in the Group.
1.9
Introduce actions to enhance
safety awareness and culture
within the Group.
1.10 Ensure that the safety functions
in Group companies are
adequately resourced (in terms
of number, qualification and
budget) and have appropriate
standing within the organisation.
1.11 Consider management’s
proposals on safety-related
matters.
1.12 Carry out such investigations
into safety-related matters as
the Committee deems fit.
1.13 Report to the Board on
material matters, findings
and recommendations.
1.6 Follow up on key actions initiated
as the Board may determine.
1.14 Perform such other functions
by the Committee.
1.7 Ensure that each Group company
complies with HSE legislation
in the country in which it operates
as a minimum.
1.8 Keep abreast of developments in
the HSE world, discuss such
1.15 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 MEMBERSHIP ON BOARD COMMITTEES
Committee Membership
Director
Board Membership
Audit
Nominating Remuneration
Risk
Safety
Lee Boon Yang
Loh Chin Hua
Chairman
Chief Executive Officer
–
–
–
Member
Member
Tony Chew Leong-Chee
Independent
Member
Chairman
–
–
Independent
Member
–
Member
Chairman
–
Member
Member
Member
–
–
–
–
Member
Member
–
–
–
–
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Tan Puay Chiang
Till Vestring
Non-Independent &
Non-Executive
Independent
Independent
Independent
Independent
Independent
Member
Member
–
Member
–
–
Member
Chairman
Chairman
–
–
–
–
–
Chairman
Member
–
–
–
Member
Member
–
–
KEPPEL CORPORATION LIMITED Report to Shareholders 2014
113
BOARD ASSESSMENT
EVALUATION PROCESSES
Board
Each board member is required
to complete a Board Evaluation
Questionnaire and send the
Questionnaire direct to the
Independent Co-ordinator (“IC”)
within five working days. An “Explanatory
Note” is attached to the Questionnaire
to clarify the background, rationale
and objectives of the various
performance criteria used in the
Board Evaluation Questionnaire with
the aim of achieving consistency in the
understanding and interpretation of
the questions. Based on the returns
from each of the directors, the IC
prepares a consolidated report and
briefs the Chairman of the Nominating
Committee (“NC”) and the Board
Chairman on the report. Thereafter,
the IC presents the report to the Board
for discussion on the changes which
should be made to help the Board
discharge its duties more effectively.
Individual Directors
The Board differentiates the
assessment of an executive director
from that of a NED.
In the case of the assessment of
the individual executive director,
each NED is required to complete
the executive director’s assessment
form and send the form directly to
the IC within five working days. It is
emphasised that the purpose of the
assessment is to assess the executive
director on his performance on the
Board (as opposed to his executive
performance). The executive director
is 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
to the Board for discussion. The NC
Chairman will thereafter meet with
the executive director to provide the
necessary feedback on his board
performance with a view to improving
his board performance and
shareholder value.
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
As for the assessment of the
performance of the NEDs, each director
(both NEDs and executive director)
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
to the Board for discussion. 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 to
the Board for discussion.
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.
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
114
SUSTAINING
GROWTH
Corporate
Governance
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.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 115
CODE OF CORPORATE GOVERNANCE 2012
Guidelines for Disclosure
Guideline
General
Questions
How has the Company complied?
(a) Has the Company complied with all the principles
and guidelines of the Code? If not, please state
the specific deviations and the alternative corporate
governance practices adopted by the Company
in lieu of the recommendations in the Code.
b) In what respect do these alternative corporate
governance practices achieve the objectives of
the principles and conform to the guidelines in
the Code?
Yes
N.A.
Board Responsibility
Guideline 1.5
What are the types of material transactions which
require approval from the Board?
Members of the Board
Guideline 2.6
(a) What is the Board’s policy with regard to diversity in
identifying director nominees?
(b) Please state whether the current composition of the
Board provides diversity on each of the following
– skills, experience, gender and knowledge of the
Company, and elaborate with numerical data where
appropriate.
(a) New investments or increase in
investments exceeding $30 million by
any Group company (not separately
listed);
(b) Acquisition and disposal of assets
exceeding $30 million by any Group
company (not separately listed);
(c) Capital equipment purchase and/
or lease exceeding $30 million by
any Group company (not separately
listed), and
(d) All commitments to term loans and
lines of credit from banks and financial
institutions by the Company
The Nominating Committee (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. Thereafter, 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.
The NC is satisfied that the Board and
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.
(c) What steps has the Board taken to achieve the
balance and diversity necessary to maximise its
effectiveness?
There is a process of refreshing the Board
progressively.
See Guideline 4.6 below on process for
nomination of new directors and Board
succession planning.
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Guideline 4.6
Please describe the board nomination process for the
Company in the last financial year for (i) selecting and
appointing new directors and (ii) re-electing incumbent
directors.
Guideline 1.6
(a) Are new directors given formal training? If not,
please explain why.
(b) What are the types of information and training
provided to (i) new directors and (ii) existing
directors to keep them up-to-date?
Guideline 4.4
(a) What is the maximum number of listed company
board representations that the Company has
prescribed for its directors? What are the reasons for
this number?
For new directors
(a) The NC reviewed the balance and
diversity of skills, experience, gender
and knowledge required by the Board
and the size of the Board which
would facilitate decision-making.
(b) In light of such review and in
consultation with management,
the NC assessed if there was any
inadequate representation in respect
of any of those attributes and
determined the role and the desirable
competencies for a particular
appointment.
(c) NC met with the short-listed
candidates to assess suitability and
to ensure that the candidates were
aware of the expectations and the
level of commitment required.
(d) NC made recommendations to
the Board for approval.
For incumbent directors
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.
NC recommended the re-nomination
of directors to the Board for approval,
having regard to the director’s
contribution and performance (such as
attendance, preparedness, participation
and candour), with reference to the
results of the assessment of the
performance of the individual director
by his peers.
Yes, all new directors undergo a
comprehensive orientation programme.
All directors are provided with
continuing education in areas such as
directors’ duties and responsibilities,
corporate governance, changes
in financial reporting standards,
changes in the Companies Act,
continuing listing obligations and
industry-related matters.
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.
Directors should not have more than 6
listed company board representations
and/or other principal commitments.
This serves as a guide and the NC takes
into account other factors in deciding
on the capacity of director.
(b) If a maximum number has not been determined,
Not Applicable
what are the reasons?
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 (c) What are the specific considerations in deciding on
the capacity of directors?
Board Evaluation
Guideline 5.1
(a) What was the process upon which the Board
reached the conclusion on its performance for the
financial year?
117
The NC takes into account the results
of the annual assessment of the
effectiveness of the individual director,
and the respective directors’ actual
conduct on the Board, in determining
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.
An independent third party (the
“Independent Co-ordinator”) was
appointed to assist in collating and
analysing the returns of the board
members for the annual assessment.
Based on the returns from each of the
directors, the Independent Co-ordinator
prepared a consolidated report and
briefed the Chairman of the NC and
the Board Chairman on the report.
Thereafter, the Independent Co-ordinator
presented the report to the Board for
discussion on the changes which should
be made to help the Board discharge its
duties more effectively.
The detailed process is set out on page
113 of the Corporate Governance Report.
Independence of Directors
Guideline 2.1
(b) Has the Board met its performance objectives?
Does the Company comply with the guideline on the
proportion of independent directors on the Board? If
not, please state the reasons for the deviation and the
remedial action taken by the Company.
Yes
Yes
Guideline 2.3
(a) Is there any director who is deemed to be
independent by the Board, notwithstanding the
existence of a relationship as stated in the Code that
would otherwise deem him not to be independent?
If so, please identify the director and specify the
nature of such relationship.
(b) What are the Board’s reasons for considering him
independent? Please provide a detailed explanation.
Yes, Mr Alvin Yeo is Senior Partner of
WongPartnership LLP which is one of
the law firms providing legal services to
the Keppel Group.
Mr Tan Ek Kia is a non-executive and
independent director on the board
of Transocean Ltd which has business
dealings with the Keppel Offshore &
Marine Group.
Mr Till Vestring is a partner of Bain &
Company’s Southeast Asia office, which
undertook a consulting assignment for
the Company in early 2014.
Mr Alvin Yeo had declared to the NC
that he did not have a 10% or more
stake in WongPartnership LLP and did
not involve himself in the selection and
appointment of legal counsels for the
Group. The NC 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 at all times 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.
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
118
SUSTAINING
GROWTH
Corporate
Governance
Mr Tan Ek Kia had declared to the NC that
he was not involved in the negotiation of
contracts or business dealings between
the companies. The NC also took into
account Mr Tan’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 Tan has
at all times 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.
Mr Till Vestring had declared to the NC
that (a) he would be joining the Board in
his private and individual capacity, and
not as an employee of Bain & Company,
(b) he would not be involved in any
future engagement of Bain & Company
and therefore would have no financial
gains from consulting services provided;
and (c) he would recuse himself from
any decision making process undertaken
by the Board or board committees in
connection with awarding a consultancy
contract and Bain & Company was
involved. The NC took into account
Mr Vestring’s declaration and agreed
that he should be deemed an
independent director.
Yes. Mr Tony Chew and Mrs Oon Kum
Loon are both independent directors who
have served on the Board for more than
nine years from date of first appointment.
The NC 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 at all times
been exercising independent judgment
in the best interests of the Company in
the discharge of their director’s duties.
Yes
Yes
Aggregate remuneration paid:
S$22,893,803
Guideline 2.4
Has any independent director served on the Board
for more than nine years from the date of his first
appointment? If so, please identify the director and
set out the Board’s reasons for considering him
independent.
Disclosure on Remuneration
Guideline 9.2
Guideline 9.3
Has the Company disclosed each director’s and
the CEO’s remuneration as well as a breakdown (in
percentage or dollar terms) into base/fixed salary,
variable or performance-related income/bonuses,
benefits in kind, stock options granted, share-based
incentives and awards, and other long-term incentives?
If not, what are the reasons for not disclosing so?
(a) Has the Company disclosed each key management
personnel’s remuneration, in bands of S$250,000 or
in more detail, as well as a breakdown (in percentage
or dollar terms) into base/fixed salary, variable or
performance-related income/bonuses, benefits in
kind, stock options granted, share-based incentives
and awards, and other long-term incentives? If not,
what are the reasons for not disclosing so?
(b) Please disclose the aggregate remuneration paid to
the top five key management personnel (who are not
directors or the CEO).
Guideline 9.4
Is there any employee who is an immediate family
member of a director or the CEO, and whose
remuneration exceeds S$50,000 during the year?
If so, please identify the employee and specify the
relationship with the relevant director or the CEO.
No
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 119
The total remuneration mix comprises
3 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 Plans (“KCL RSP”) and
the KCL Performance Share Plans (“KCL
PSP”). The EVA performance incentive
plan and the KCL Share Plans are long
term incentive plans.
The compensation structure is directly
linked to corporate and individual
performance, both in terms of financial,
non-financial performance and the
creation of shareholder wealth. The
key performance indicators (“KPIs”) for
awarding of annual cash incentives are
based on the four scorecard areas that
the Company has identified as key to
measuring the performance of the Group
– (i) Commercial/Financial; (ii) Customers;
(iii) Process; and (iv) People. For the
long-term incentive plans, performance
conditions that are aligned with
shareholder interests such as ROE, Total
Shareholder Return and EVA are selected
for equity awards.
Yes, the performance conditions were
met and the Remuneration Committee
is satisfied that the quantum of
performance-related bonuses and
the value of shares vested under the
KCL PSP and RSP to the senior executive
directors, executive director and
key management personnel was fair
and appropriate taking into account
the extent to which their KPIs for
FY2014 were met.
Please refer to pages 99 to 104 of the
Corporate Governance Report for details.
The Company has adopted initiatives
to put in place processes to ensure that
the non-executive directors are well
supported by accurate, complete and
timely information, and have unrestricted
access to management.
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.
Guideline 9.6
(a) Please describe how the remuneration received by
executive directors and key management personnel
has been determined by the performance criteria.
(b) What were the performance conditions used to
determine their entitlement under the short-term
and long-term incentive schemes?
(c) Were all of these performance conditions met? If
not, what were the reasons?
Risk Management and Internal Controls
Guideline 6.1
What types of information does the Company provide
to independent directors to enable them to understand
its business, the business and financial environment as
well as the risks faced by the Company? How frequently
is the information provided?
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
120
SUSTAINING
GROWTH
Corporate
Governance
A two-day off-site board strategy
meeting is organised annually for
in-depth discussion on strategic issues
and direction of the Group, to give
the non-executive directors a better
understanding of the Group and its
businesses and to provide an opportunity
for the non-executive directors
to familiarise themselves with the
management team so as to facilitate
the Board’s review of the Group’s
succession planning and leadership
development programme.
Aside from board papers, management
is also 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,
financial position and prospects.
Management surfaces key risk issues
for discussion and confers with the Board
Risk Committee and the Board regularly.
Guideline 13.1
Does the Company have an internal audit function? If
not, please explain why.
Yes
Guideline 11.3
(a) In relation to the major risks faced by the Company,
including financial, operational, compliance,
information technology and sustainability, please
state the bases for the Board’s view on the adequacy
and effectiveness of the Company’s internal controls
and risk management systems.
The Board oversees the Group’s
system of internal controls and risk
management with the support
from Audit Committee and Board
Risk Committee.
Board’s view on the adequacy and
effectiveness of the Company’s
internal controls is 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 Audit Committee has concurred
with this view.
The Board’s view on the adequacy
and effectiveness of the Company’s
risk management system is 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
Risk Committee has concurred
with this view.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 Guideline 12.6
In respect of the past 12 months, has the Board
received assurance from the CEO and the CFO as well
as the internal auditor that: (i) the financial records have
been properly maintained and the financial statements
give true and fair view of the Company’s operations and
finances; and (ii) the Company’s risk management and
internal control systems are effective? If not, how does
the Board assure itself of points (i) and (ii) above?
(a) Please provide a breakdown of the fees paid in total
to the external auditors for audit and non-audit
services for the financial year.
(b) If the external auditors have supplied a substantial
volume of non-audit services to the Company,
please state the bases for the Audit Committee’s
view on the independence of the external auditors.
Communication with Shareholders
Guideline 15.4
(a) Does the Company regularly communicate with
shareholders and attend to their questions?
How often does the Company meet with
institutional and retail investors?
(b) Is this done by a dedicated investor relations team
(or equivalent)? If not, who performs this role?
(c) How does the Company keep shareholders informed
of corporate developments, apart from SGXNET
announcements and the annual report?
121
Yes
The estimated audit fees payable to the
external auditors of the Company for FY
2014 is S$1,550,000. Non audit services
fees paid to external auditor of the
Company amounted to S$118,000.
The Audit Committee undertook a review
of the independence and objectivity of the
external auditors through discussions with
the external auditors as well as reviewing
the non-audit fees awarded to them, and
has confirmed that the non-audit services
performed by the external auditors would
not affect their independence.
Yes.
In FY 2014, the Company hosted 360
meetings and conference calls with
institutional investors, including several
facility visits to its shipyards, plants and
data centres in Singapore and Brazil.
Management also traveled widely for
non-deal roadshows to meet investors
across countries.
In addition to addressing the retail
shareholders’ questions over the phone
and email, the Company also engaged
retail shareholders’ through its general
meetings and long-term sponsorship
of Securities Investors Association
Singapore’s Investor Education
Programme.
This role is performed by Group
Communications Department (with
assistance from the Group Finance and
Group Legal Department, where required)
Engagement with shareholders and
other stakeholders take many forms
including live webcasts of quarterly
results briefings, email communications,
publications and content on the
Company’s website as well as through
facility visits. Senior management also
meets with investors, analysts and the
media, as well as participates in industry
conferences to solicit and understand the
views of the investment community.
The Company launched its mobile-
friendly website with live webcast
features in February 2014, to enhance
investors’ access to company information
via smartphones.
Guideline 15.5
If the Company is not paying any dividends for the
financial year, please explain why.
N.A.
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
122
SUSTAINING
GROWTH
Corporate
Governance
CODE OF CORPORATE GOVERNANCE 2012
Specific Principles and Guidelines for Disclosure
Relevant Guideline or Principle
Guideline 1.3
Delegation of authority, by the Board to any board committee, to make decisions on
certain board matters
Guideline 1.4
The number of 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 first 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
Guideline 4.7
Key information regarding directors, including which directors are executive, non-executive or
considered by the NC to be independent
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. This assessment process should be disclosed in the company’s Annual Report
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
Guideline 7.3
Names and firms 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
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 five 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 benefits that may be granted
to directors, the CEO and the top five key management personnel (who are not directors or the CEO)
Page Reference
in this Report
Page 92
Page 93
Page 92
Page 93
Page 94
Page 94
Not Applicable
Pages 96 and 110
Page 97
Pages 96 and 97
Pages 21 to 25
Pages 98 and 113
Pages 98,99,111
and 112
Page 99
Pages 99 to 104
Pages 102 to 104
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 123
Pages 102 and 103
Page 104
Page 104
Pages 137 to 138
and 163 to 166
Pages 99 to 104
Pages 106 to 108
Pages 105 and 110
Pages 105,121
and 187 to 188
Pages 113 and 114
Page 105
Pages 108 and 109
Not Applicable
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/fixed salary, variable or performance-related income/bonuses,
benefits 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 five 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/fixed salary, variable or performance-related income/bonuses, benefits 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 five 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 five 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
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
Guideline 11.3
The Board should comment on the adequacy and effectiveness of the internal controls,
including financial, operational, compliance and information technology controls, and risk
management systems
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 financial records have been properly maintained and the financial statements
give true and fair view of the company’s operations and finances; and (b) regarding the
effectiveness 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
Guideline 12.6
Aggregate amount of fees paid to the external auditors for that financial year, and breakdown
of fees paid in total for audit and non-audit services respectively, or an appropriate
negative statement
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 financial statements
Guideline 15.4
The steps the Board has taken to solicit and understand the views of the shareholders e.g.
through analyst briefings, investor roadshows or Investors’ Day briefings
Guideline 15.5
Where dividends are not paid, companies should disclose their reasons.
Sustainability Report Highlights
Sustaining Growth – Corporate Governance
124
SUSTAINING
GROWTH
Risk
Management
01
We recognise that
not all risks can be
eliminated, especially
in instances where
the cost of minimising
these risks outweighs
the potential benefits.
To optimise returns
for the Group, we
will only undertake
appropriate and
well-considered risks.
01
Keppel Corporation’s
and Keppel Land’s Board
Safety Committees and
senior management
visited Keppel Land’s
Saigon Centre project
site in Ho Chi Minh City.
KEPPEL CORPORATION LIMITED
Report to Shareholders 2014
2014 was a challenging year for the
Group. Falling oil prices and declining
day rates in the offshore industry,
installed capacity surplus in the power
generation sectors and continued
headwinds in some property markets
present uncertainties, which reinforce
the importance of risk management
for the Group.
Remaining competitive in this dynamic
environment requires a continuous,
disciplined pursuit of new opportunities
and revenue streams to grow the
Group’s businesses. A robust risk
management system and astute
processes will equip us to respond
effectively to shifting business demands
and seize opportunities to create
value for our stakeholders.
ROBUST ENTERPRISE RISK
MANAGEMENT FRAMEWORK
Our Board is responsible for governing
risks and ensuring that 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 the risk
management framework as well as
various risk policies and guidelines.
Our management surfaces key risk
issues for discussion and confers
with the BRC and the Board regularly.
An annual Assessment of Adequacy
and Effectiveness of Keppel Group’s
Risk Management System is discussed
in the BRC and the Board.
Terms of reference of the BRC are
disclosed on page 110 of this Report.
The Board has put in place three risk
tolerance guiding principles for the
Group. These guiding principles serve
to determine the nature and extent of
the significant risks, which our Board
is willing to take in achieving its
strategic objectives.
125
and tools, as well as Group policies
and limits, in addressing the key
risks in the Group.
THE KEPPEL GROUP’S
FIVE-STEP RISK
MANAGEMENT PROCESS
STEP
IDENTIFY
Understand business
strategy and identify risks.
STEP
ASSESS
Assess risk level based
on impact and likelihood
of occurrence.
STEP
MITIGATE
Develop action plans
to mitigate risks.
STEP
IMPLEMENT
Communicate and
implement action plan.
STEP
MONITOR
Monitor and review.
THE KEPPEL GROUP’S
FIVE-STEP RISK
MANAGEMENT PROCESS
The Group’s five-step risk
management process consists of
risk identification, risk assessment,
formulation of risk mitigation
measures, communication &
implementation, and monitoring
& review. The assessment process
takes into account both the
impact and likelihood of the risks
occurring, and also covers financial,
operational and reputational
aspects. Tools such as risk rating
matrix, key risk indicator and
risk register are used as part
of this process.
Our ERM framework is reviewed
regularly, taking into account
changes in the business and
operating environments.
References are made to the
Singapore Code of Governance,
ISO31000 standards for Risk
Management, ISO 22301 for
Business Continuity Management
(BCM) as well as the Guidebook
for Audit Committees (2014).
We keep abreast of the latest
developments and good
practices in risk management
by participating in seminars and
interacting with field practitioners.
An ERM Committee, comprising
management-nominated
champions across the
business units, drives and
coordinates risk management
initiatives Group-wide.
As a Group, we take a balanced
approach to risk management.
We recognise that not all risks
can be eliminated, especially
in instances where the cost of
minimising these risks outweighs
the potential benefits. To optimise
returns for the Group, we will
only undertake appropriate
and well-considered risks.
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 a 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.
Our risk governance framework
is set out on pages 106-108 under
Principle 11 (Risk Management and
Internal Controls). This framework
facilitates management and the
BRC in determining the adequacy
and effectiveness of the Group’s
risk management system. It is
continuously improved upon
to strengthen risk governance.
During the year, Keppel Corporation
implemented the Control
Self-Assessment and a Group-wide
IT risk assessment as part of our
control assurance process.
Risk management is an integral
part of strategic, operational and
financial decision-making at all
levels of the Group. Keppel’s
holistic approach to identifying
and managing risks not only instills
a strong risk ownership across
the organisation but also reduces
uncertainties associated with
executing our strategies, allowing
us to harness opportunities
with agility.
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,
specific risk management processes
Sustainability Report Highlights
Sustaining Growth – Risk Management
126
SUSTAINING
GROWTH
Risk
Management
01
01
Dr Thierry Apoteker,
Chief Economist and
CEO of Thierry Apoteker
Consultant updated
the directors and
senior management
on the global
macroeconomic outlook.
Group-wide basis. All major investments
are subject to due diligence processes
and are evaluated by the Investment
and Major Project Action Committee
(IMPAC) and/or the Board. This ensures
that the potential investments are in
line with the Group’s strategic intent,
investment or divestment objective,
underlying risk factors and the required
risk-adjusted rate of return. The IMPAC
is supported by a working committee
in ensuring that risk considerations
are well thought-out.
This systematic evaluation process
requires our investment team to
identify and incorporate the risks and
corresponding mitigating actions as
part of their 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
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
analyses 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,
we monitor changes in concentration
exposures associated with investments
in the countries where the Group
operates. Close monitoring of the
changes in the business, economic,
political, regulatory and competitive
landscape in our host countries gives
the management better insights into
impending developments.
OPERATIONAL RISK
The effectiveness and efficiency of
our 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
STRATEGIC RISK
Strategic risks pertain to the Group’s
business plans and strategies,
as well as uncertainties associated
with the countries and industries in
which Keppel operates. These include
market driven forces, 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
our 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 remain relevant to support
business objectives, effectively and
proactively address risks faced in
business operations, consider the
prevailing business climate and are
aligned to the Group’s risk tolerance.
Our investment decisions are guided
by investment parameters set on a
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 127
The focus is on building resilience
and capabilities to counter crises
effectively and safeguard the interest
of key stakeholders and the Group’s
reputation. Crisis communication
procedures have also been embedded
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.
Our management is committed to
fostering 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. Group-wide surveys are
also conducted to gauge the level
of risk awareness in the Group.
The Company also seeks to
raise staff accountability for
risk management through the
performance evaluation process.
PROACTIVE RISK
MANAGEMENT
We are constantly scanning for
emergent threats that may affect
our businesses. Through close
collaboration with stakeholders,
we will continue to review our risk
management system to ensure that
it remains adequate and effective.
This will allow the Group to capitalise
on growth opportunities while
managing the risks of a challenging
business environment.
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. We adopt
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 new 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 (KRIs) 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 our risk-mitigating actions,
we regularly review the scope, type and
adequacy of our insurance coverage
taking into account the availability of
such cover and its cost, as well as the
likelihood and magnitude of potential
risks involved. This exercise is carried
out with the advice and support of
selected insurance brokers.
Sustainability Report Highlights
Sustaining Growth – Risk Management
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. Examples of these
processes include evaluating
counterparties against pre-established
guidelines. For more details on
financial risk management, please
refer to pages 86-87 of this Report.
BOLSTERING OPERATIONAL
READINESS
We are committed to enhancing the
Group’s operational resilience through
a robust BCM plan that will equip us to
respond effectively to potential crises
and external threats, while minimising
any impact on our people, operations
and assets. Our BCM methodology
involves enterprise-wide planning,
the prioritising of key resources
and working with stakeholders to
support business continuity.
Led by their BCM committees,
business units in various locations
conduct a range of simulations
under a broad spectrum of disruption
to enhance their operational
preparedness. These plans are
being 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 continuing with
critical business functions.
The Group’s crisis management
and communication plans are also
continually reviewed and refined
to equip us to respond to crises in
an orderly and coordinated way,
as well as to expedite recovery.
128
SUSTAINING
GROWTH
Environmental
Performance
01
By enhancing our resource efficiency,
developing energy-efficient products
and services, leveraging emissions-
reducing technology and supporting
conservation activities, Keppel strives
to conduct its businesses in an
environmentally-benign manner.
We have begun to harness renewable
energy. The one megawatt peak (MWp)
photovoltaic cell rooftop installation
at Keppel Seghers Ulu Pandan
NEWater Plant generated some
1,300 megawatt hours (MWh) of
renewable energy in 2014.
to achieve a 16% improvement in
its greenhouse gas (GHG) intensity
indicator from 2020 business-as-usual
(BAU) levels, aligned with Singapore’s
aim to reduce GHG by 16% below
2020 BAU levels, contingent on a
legally-binding global agreement.
ENHANCING RESOURCE
EFFICIENCY
Keppel Logistics leveraged cross-
business synergies with Keppel DHCS to
implement chilled water air-conditioning
systems for its warehouses and office
buildings, which have generated
reductions in electricity consumption
since 2H 2014.
Keppel Shipyard developed a
regenerative energy system for its
Tuas Tower Crane which turns the
inertia generated from crane
movements into electricity to lower
the energy input for operations.
Resource consumption is regularly
reported to senior management.
We optimise water use by reusing
water, using NEWater (high-grade
reclaimed water) and improving water
fittings and processes. To minimise
waste, we recycle materials such as
scrap metals at our shipyards and
waste-to-energy (WTE) plants.
INTEGRATING ENERGY
EFFICIENCY
For incorporating energy efficiency
into its projects, Keppel Land was
named the Building and Construction
Authority of Singapore (BCA) Green
Mark Champion 2014. By end-2015, all
of Keppel Land’s completed properties
in Singapore will meet the Green Mark
GoldPlus standard. All new projects in
Singapore and overseas will achieve
at least the BCA Green Mark GoldPlus
and Gold standards respectively.
Keppel Datahub 2 was the first newly
built data centre in Singapore to achieve
the Platinum Award for BCA-IDA Green
Mark, the highest green accolade
awarded by BCA and Infocomm
Development Authority of Singapore
for data centres.
MANAGING IMPACTS
The Group’s Energy Efficiency
Committee oversees our carbon
management strategy. Keppel aims
Emissions from our power generation
and WTE businesses in 2014 were
well within the limits stipulated by
Singapore’s Code on Pollution Control
and the European Union Waste
Incineration Directive (2000/76/EC).
KOMtech developed an exhaust
gas desulfurisation system for marine
engine exhausts, enabling ship owners
to mitigate environmental impact
when using conventional marine
fuel oil in sea areas designated as
Emission Control Areas.
ENGAGING STAKEHOLDERS
To inculcate a green mindset
amongst stakeholders, Keppel Land
collaborated with Royal Philips to
offer its tenants a zero-capex scheme
to replace existing conventional
office lamps with energy-efficient
Light-Emitting Diode (LED) lighting.
Royal Philips and tenants will share
the projected cost efficiencies
of up to 60%.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 Product
Excellence
The Keppel brand has grown to
become synonymous with world-class
execution, quality and innovation.
EXECUTION EXCELLENCE
Keppel Offshore & Marine (Keppel O&M)
continues to strengthen its robust
delivery track record. In 2014, its
subsidiary Keppel FELS, a world leader
in the design and construction of
high-performance mobile offshore rigs,
was conferred a Guinness World Record
as the “largest manufacturer of offshore
rigs” for delivering 21 rigs in 2013.
A leading sustainable developer,
Keppel Land was ranked fourth in
the Global 100 Most Sustainable
Corporations in the World 2015,
coming up top in Asia and amongst
real estate companies globally.
Keppel Seghers, a subsidiary of Keppel
Infrastructure, is a leading provider of
imported waste-to-energy (WTE)
solutions. For its engineering excellence,
Keppel Seghers’ WTE Plant in Bao’an,
Shenzhen, China, was the only WTE
plant to achieve a “National Outstanding
Engineering Project” Gold Medal from
the China Association of Construction
Enterprise Management.
02
129
INNOVATION DRIVE
Spurred by a culture of innovation,
Keppel stays at the forefront of its
chosen industries.
Keppel Shipyard has undertaken the
world’s first conversion of a Floating
Liquefaction Vessel utilising a
constructability methodology that
improves productivity and safety,
leveraging the yard’s valuable experience
from past conversion projects.
To advance innovation in energy-efficient
building solutions, Keppel Land pledged
its support to the Green Building
Innovation Cluster, established by the
Building and Construction Authority
of Singapore to explore collaborative
projects and large scale test-bedding
of innovative technologies.
GEOGRAPHIC DIVERSIFICATION
Keppel continues to seek out growth
opportunities with its Near Market,
Near Customer strategy.
Fortifying its capability to serve the
domestic market in China, Keppel O&M
signed a conditional agreement to
manage the Titan Shipyard in Quanzhou.
Keppel Land made its maiden investment
in the United States with a prime
residential development in Manhattan,
New York City. Elsewhere, Keppel
Logistics expanded to Australia
with a 10,000 square metres
warehouse in Brisbane.
CUSTOMER HEALTH & SAFETY
Keppel exercises due care and
diligence in the design, construction
and operation of its products and
services to ensure they are fit for use
and do not pose health or safety
hazards. We monitor potential health
and safety impacts throughout the life
cycle of our products and services,
mitigating them where necessary.
COMPLIANCE
Keppel subscribes to best practices and
complies with all applicable legislations
and requirements. In 2014, the Group did
not identify any non-compliance with
laws, regulations and voluntary codes
concerning the provision, use, health
and safety of its products and services.
4th
Keppel Land was ranked
fourth in the Global 100
Most Sustainable
Corporations in the
World 2015.
01
Keppel Datahub 2
(right) was the first
newly built data
centre in Singapore
to achieve the
Platinum Award for
BCA-IDA Green Mark
by BCA and IDA.
02
Keppel FELS set
a Guinness World
Record for delivering
21 rigs in 2013.
Sustainability Report Highlights
Sustaining Growth – Product Excellence
130
EMPOWERING
LIVES
Labour Practices
& Human Rights
01
Our people are our greatest asset;
their pride, passion and commitment
are essential to the Group’s success.
Committed to be an employer of choice,
we adopt fair and ethical labour practices,
respect human rights and empower
employees to realise their full potential.
FAIR EMPLOYMENT PRACTICES
In Singapore, we support the principles
of the Tripartite Alliance for Fair
Employment Practices and endorse the
Tripartite Alliance’s Employers’ Pledge of
Fair Employment Practices. We comply
with local labour regulations across our
global operations and with minimum
wage laws, where such laws exist.
HUMAN RIGHTS
As articulated in our Corporate Statement
on 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, which applies to our over
40,000 employees in more than 30
countries. About 46% of our global
workforce is covered by Collective
Agreements.
SKILLS DEVELOPMENT
We encourage and enable employees
to pursue professional development
opportunities. In 2014, Keppel invested
$14.2 million in the training and
development of our employees globally.
Besides collaborating with reputable
business schools and industry experts to
develop leadership programmes, we
have established training centres for
employees to upgrade their technical
skills and qualifications.
Keppel’s commitment to provide
employees with multiple pathways to
success was lauded by Singapore’s
Prime Minister Lee Hsien Loong during
his National Day Rally Speech in 2014.
Mr Lee’s comments drew from his
experiences visiting Keppel O&M in
Singapore and interviewing employees.
EMPLOYEE ENGAGEMENT
We engage our employees through
channels that enhance communication
and camaraderie.
During town hall meetings, Keppel’s
senior management engage employees
in insightful dialogues. Keppel Young
Leaders provides high-potential
employees with additional exposure to
senior management and peers in other
business units through initiatives such
as annual symposiums, case studies
and strategic reviews.
To promote friendly competition,
ignite team spirit and encourage
healthy lifestyles, Keppelite Recreation
Club organises the annual Keppel
Games, a series of sports competitions
open to all employees.
$14.2m
Invested in the training
and development of
our employees globally.
“Keppel illustrates
that you can progress
by acquiring deep
skills and knowledge
throughout your
career…by learning on
the job, or by going for
higher qualifications as
you work and progress
swiftly, or both.”
Mr Lee Hsien Loong
Prime Minister of Singapore
01
The Keppel Games
promotes friendly
competition, ignites team
spirit and encourages
healthy lifestyles
among employees.
02
Our commitment to
uphold a strong safety
culture extends to
our entire workforce,
including employees
and subcontractors.
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 Safety
& Health
131
Safety is a Keppel core value and
impacts decisions at every level across
the Group. Keppel is committed to
create an incident-free workplace for
all our stakeholders.
The Keppel Corporation Board Safety
Committee (BSC), supported by the
Inter-Strategic Business Unit Safety
Committee, leads efforts to implement
initiatives and improve performance.
HIGH-LEVEL COMMITMENT
Underscoring Keppel’s strong safety
culture, the BSC and senior management
conduct site visits to engage operational
staff. In 2014, the BSC visited Keppel
Offshore & Marine’s BrasFELS yard in
Angra dos Reis, Brazil; Keppel Land’s
projects in Ho Chi Minh City, Vietnam;
and Keppel Infrastructure’s Senoko
Waste-to-Energy Plant in Singapore.
Senior management reviewed safety
objectives and discussed strategies
to strengthen alignment across the
Group during sessions such as a CEO
roundtable with Ken Woodward, who
holds an Order of the British Empire
(O.B.E.) for services to health and safety.
HOLISTIC APPROACH
Recognising that fatigue and poor
health often contribute to accidents,
we implement comprehensive and
holistic measures to improve the
well-being of our workforce.
In 2014, Keppel Shipyard completed
the construction of a Well-Being and
Support Centre which will provide
holistic health and medical services,
as well as counselling for workers.
Initiatives at other business units
include exercise programmes and
healthy lifestyle campaigns.
SUBCONTRACTOR ENGAGEMENT
To ensure that our safety messages
are understood by our multinational
and multicultural workforce, especially
subcontractors, Keppel Shipyard has
trained experienced foreign workers as
mentors to discuss Workplace Safety
and Health (WSH) issues with fellow
workers in their native language.
The Keppel Safety Training
Centre educates contractors and
subcontractors on topics such as
working at height and fire-fighting to
ensure alignment with the Group’s
safety practices.
INCIDENT REDUCTION
Despite our best efforts, our Accident
Frequency Rate and Accident Severity
Rate increased in 2014 as we suffered
four fatalities globally. We are deeply
saddened by the loss of our colleagues.
We have thoroughly investigated the
incidents and reviewed our existing
control measures to prevent similar
incidents from recurring.
SAFETY PERFORMANCE
In recognition of Keppel’s commitment
to improve workplace safety,
Singapore’s WSH Council and the
Ministry of Manpower awarded the
Group 39 WSH Awards in 2014.
We will continue to refine our processes
to further strengthen our safety culture
for the benefit of all our stakeholders.
02
Sustainability Report Highlights
Empowering Lives – Safety & Health
132
NURTURING
COMMUNITIES
Our
Community
As communities thrive, we thrive.
Shaped by this belief, we conduct our
businesses in a socially responsible
manner and commit up to 1% of the
Group’s annual net profits to worthy
social causes.
adopted charity, the Association for
Persons with Special Needs. Since
2008, Keppel Volunteers has organised
blood donation drives held in multiple
business units in Singapore to make it
easier for Keppelites to donate.
CARING FOR THE COMMUNITY
Across our global operations, we reach
out to the underprivileged and needy.
In Vietnam, Keppel Land’s Water for
Life and Words on Wheels programmes
help improve the quality of life for the
less fortunate. In the Philippines,
Keppel Batangas Shipyard provides
vocational training for local out-of-
school youth to equip them with
employment skills and opportunities.
KEPPEL CARE FOUNDATION
Keppel Care Foundation, a registered
charity under Singapore’s Charities Act,
coordinates and sustains the Group’s
community contributions to provide
assistance to the underprivileged,
promote education and encourage
eco-friendly initiatives.
KEPPEL VOLUNTEERS
Our community efforts are bolstered
by a robust culture of volunteerism.
In 2014, Keppel Volunteers led regular
activities with beneficiaries such as
Bright Hill Evergreen Home and our
SUPPORTING THE ARTS
Keppel Corporation sponsors Keppel
Nights, a partnership with Esplanade
– Theatres on the Bay that cultivates a
love for the arts among students from
heartland schools by giving them
access to world-class performances.
To nurture a new generation of
creative and critical thinkers, Keppel
Corporation committed $12 million to
the National Art Gallery to establish
the Keppel Centre for Art Education,
slated to open in 2H 2015.
Keppel Corporation was named a
Distinguished Patron of the Arts by
Singapore’s National Arts Council for
the seventh consecutive year in 2014.
ADVOCATING SUSTAINABILITY
To strengthen thought leadership on
sustainable urban and environmental
solutions, Keppel sponsored the World
Cities Summit, Singapore International
Water Week and CleanEnviro Summit
Singapore in 2014.
As Gold Members of Singapore
Compact, Keppel Corporation
and Keppel Land supported the
International Singapore Compact
Corporate Social Responsibility Summit
2014 where business leaders, academics
and policy makers shared insights
on achieving sustainable growth.
LEE KUAN YEW WORLD CITY PRIZE
To stimulate innovation in urban
development that creates vibrant,
liveable and sustainable communities,
Keppel Corporation extended its sole
sponsorship of the Lee Kuan Yew World
City Prize with a further commitment
of $1.75 million in 2014, bringing our
total commitment to $3.5 million.
The contribution will sponsor another
five cycles of the biennial award
from 2020 to 2028.
01
The Group gives
back to the
communities where
we operate through
outreach activities
and community
contributions.
01
KEPPEL CORPORATION LIMITED Report to Shareholders 2014 Directors’ Report &
Financial Statements
133
Contents
134 Directors’ Report
140 Statement by Directors
141 Independent Auditors’ Report
142 Balance Sheets
143 Consolidated Profit & Loss Account
144 Consolidated Statement of
Comprehensive Income
145 Statements of Changes in Equity
148 Consolidated Statement of Cash Flows
151 Notes to the Financial Statements
205 Significant Subsidiaries &
Associated Companies
216 Interested Person Transactions
217 Key Executives
226 Major Properties
232 Group Five-Year Performance
236 Group Value-Added Statements
237 Share Performance
238 Shareholding Statistics
239 Notice of Annual General Meeting
& Closure of Books
244 Corporate Information
245 Financial Calendar
247 Proxy Form
134
Directors’ Report
For the financial year ended 31 December 2014
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 2014.
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
Till Bernhard Vestring (appointed on 16 February 2015)
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 or 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 Restricted Share Plan, KCL Performance
Share Plan and Remuneration Shares to Directors of the Company.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
135
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
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)
(Unvested restricted shares to be delivered after 2012)
Loh Chin Hua
(Unvested restricted shares to be delivered after 2013)
Loh Chin Hua
1.1.2014
Holdings At
31.12.2014
21.1.2015
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
173,000
180,212
38,500
25,000
69,200
54,000
24,888
28,789
19,225
32,000
10,825
37,825
27,600
7,103
173,000
180,212
38,500
25,000
69,200
54,000
24,888
28,789
19,225
32,000
10,825
37,825
27,600
7,103
51,762
25,881
25,881
87,995
58,664
58,664
(Contingent award of restricted shares to be delivered after 2014)1
Loh Chin Hua
-
150,000
150,000
(Contingent award of performance shares issued in 2012 to be
delivered after 2014)2
Loh Chin Hua
(Contingent award of performance shares issued in 2013 to be
delivered after 2015)2
Loh Chin Hua
(Contingent award of performance shares issued in 2014 to be
delivered after 2016)2
Loh Chin Hua
(3.145% Fixed Rate Notes due 2022)
Tan Puay Chiang
Keppel Land Limited
(Ordinary shares)
Loh Chin Hua
Oon Kum Loon (Mrs)
Tow Heng Tan (deemed interest)
Alvin Yeo Khirn Hai (deemed interest)
Tan Ek Kia
Danny Teoh
Directors’ Report
77,643
77,643
77,643
93,171
93,171
93,171
-
180,000
180,000
$250,000
$250,000
$250,000
99,600
2,000
95
10,000
11,400
100,000
150,400
14,000
95
10,000
11,400
100,000
150,400
14,000
95
10,000
11,400
100,000
136
Directors’ Report
4.
Directors’ interests in shares and debentures (continued)
(Contingent award of performance shares issued in 2011 to be
delivered after 2013)2
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
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)
KEPPEL DC REIT
(Units)
Oon Kum Loon (Mrs)
Alvin Yeo Khirn Hai
Tan Puay Chiang
1.1.2014
Holdings At
31.12.2014
21.1.2015
96,000
-
-
$250,000
$250,000
$250,000
$250,000
$250,000
$250,000
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
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
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
-
-
-
75,000
75,000
75,000
75,000
75,000
75,000
1
2
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.
Depending on the achievement of pre-determined performance targets, the actual number of shares to be released could range from zero to 150% of
the number stated.
5.
Directors’ receipt and entitlement to contractual benefits
Since the beginning of the financial year, no Director of the Company has received or become entitled to receive a
benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract
made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a
company in which he has a substantial financial interest except as disclosed in the notes to the financial statements and
salaries, bonuses and other benefits in their capacity as directors of the Company which are disclosed in the Corporate
Governance Report.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
137
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 4,936,211 Shares
issued by virtue of exercise of options and options to take up 325,600 Shares were cancelled during the financial year.
At the end of the financial year, there were 19,570,504 Shares under option as follows:
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
1.1.2014
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
Number of Share Options
Exercised
Cancelled
-
(253,000)
(253,000)
(678,900)
(402,500)
(1,841)
(763,700)
(523,670)
(241,500)
(810,000)
(1,008,100)
(4,936,211)
-
-
-
-
-
(325,600)
-
-
-
-
-
(325,600)
Balance at
31.12.2014
11,000
19,800
82,500
283,000
1,671,900
6,145,759
2,355,600
3,177,430
876,100
2,122,485
2,824,930
19,570,504
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
There are no options granted to any of the Company’s controlling shareholders or their associates under the Scheme.
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 577,400 under KCL PSP and 4,750,386 under KCL RSP during the
financial year. The number of Shares released was 636,100 under KCL PSP and 4,309,301 under KCL RSP during the
financial year. 636,100 Shares under the KCL PSP and 4,225,457 Shares under KCL RSP were vested during the financial
year. 131,020 Shares under the KCL RSP were cancelled during the financial year. At the end of the financial year, there
were 1,748,725 contingent Shares under the KCL PSP and 4,639,784 contingent Shares and 3,993,440 unvested Shares
under the KCL RSP as follows:
Contingent awards:
Balance at
1.1.2014
Contingent
awards
granted
Adjustments
upon
release
Released
Cancelled
Balance at
31.12.2014
Number of Shares
662,550
634,798
603,985
-
1,901,333
-
-
-
577,400
577,400
(26,450)
-
-
-
(26,450)
(636,100)
-
-
-
(636,100)
-
(18,192)
(49,266)
-
(67,458)
-
616,606
554,719
577,400
1,748,725
4,383,491
-
4,383,491
-
4,750,386
4,750,386
-
-
-
(4,309,301)
-
(4,309,301)
(74,190)
(110,602)
(184,792)
-
4,639,784
4,639,784
Date of grant
KCL PSP
30.6.2011
29.6.2012
28.3.2013
31.3.2014
KCL RSP
28.3.2013
31.3.2014
Directors’ Report
138
Directors’ Report
7.
Share plans of the Company (continued)
Awards released but not vested:
Date of grant
KCL PSP
30.6.2011
KCL RSP
30.6.2011
29.6.2012
28.3.2013
Balance at
1.1.2014
Released
Vested
Cancelled
Balance at
31.12.2014
Number of Shares
-
-
636,100
636,100
(636,100)
(636,100)
-
-
-
-
1,333,933
2,706,683
-
4,040,616
-
-
4,309,301
4,309,301
(1,324,202)
(1,384,232)
(1,517,023)
(4,225,457)
(9,731)
(47,177)
(74,112)
(131,020)
-
1,275,274
2,718,166
3,993,440
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
Loh Chin Hua
KCL PSP
Loh Chin Hua
Awards released but not vested:
Name of Director
KCL RSP
Loh Chin Hua
Aggregate
awards
granted since
commencement
of plans
to the end of
financial year
Contingent
awards granted
during the
financial year
Aggregate
awards
released since
commencement
Aggregate
awards
of plans not released as
at the end of
financial year
to the end of
financial year
150,000
314,757
(164,757)
150,000
180,000
350,814
-
350,814
Aggregate
awards
released since
commencement
of plans
to the end of
financial year
Aggregate
awards
vested since
commencement
of plans
to the end of
financial year
Aggregate
awards
released but
not vested as
at the end of
financial year
164,757
(80,212)
84,545
There are no contingent award of Shares granted to any of the Company’s controlling shareholders or their associates
under the KCL RSP and the KCL PSP.
No director or employee received more than 5 percent or more of the total number of contingent award of Shares
granted to date.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
139
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 956,719 unvested shares and
2,073,719 contingent shares granted under Keppel Land Restricted Share Plan, and 1,410,000 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 800,000 unissued shares of Keppel Telecommunications &
Transportation Ltd under option relating to Keppel T&T Share Option Scheme. In addition, there were 747,600
unvested shares and 1,015,000 contingent shares granted under Keppel T&T Restricted Share Plan, and 325,000
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
Lee Boon Yang
Chairman
Loh Chin Hua
Chief Executive Officer
Singapore, 25 February 2015
Directors’ Report
140
Statement by Directors
For the financial year ended 31 December 2014
We, LEE BOON YANG and LOH CHIN HUA 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 142 to 215 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 2014, 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
Lee Boon Yang
Chairman
Loh Chin Hua
Chief Executive Officer
Singapore, 25 February 2015
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014 Independent Auditors’ Report
141
to the Members of Keppel Corporation Limited
For the financial year ended 31 December 2014
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 2014, 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 information, as set out on pages 142 to 215.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with
the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards and for devising
and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are
safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are
recorded as necessary to permit the preparation of true and fair profit and loss 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 2014
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 2015
Independent Auditor’s Report
142
Balance Sheets
As at 31 December 2014
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
Assets classified as held for sale
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
Liabilities directly associated with
assets classified as held for sale
Net current assets
Non-current liabilities
Term loans
Deferred taxation
Other non-current liabilities
Note
3
4
5
6
7
8
9
10
11
12
Group
Company
31 December
2014
$’000
1,287,595
9,093,167
10,380,762
4,346,879
31 December
2013
$’000
1,205,877
8,495,304
9,701,181
3,987,682
31 December
2014
$’000
1,287,595
4,542,906
5,830,501
-
31 December
2013
$’000
1,205,877
4,489,022
5,694,899
-
14,727,641
13,688,863
5,830,501
5,694,899
2,673,015
1,987,515
-
4,988,444
358,366
258,397
101,732
10,367,469
3,798,279
2,187,858
-
5,482,173
264,745
278,917
86,240
12,098,212
694
-
5,067,567
-
-
321
-
5,068,582
882
-
5,094,452
-
-
218
-
5,095,552
13
10,681,123
8,994,726
-
-
14
14
15
16
17
18
19
13
20
14
14
21
28
22
18
21
23
19
-
630,552
2,509,589
371,451
5,736,001
19,928,716
1,258,640
21,187,356
-
1,037,206
1,915,747
445,073
5,564,656
17,957,408
-
17,957,408
4,100,374
471
26,288
-
2,308
4,129,441
-
4,129,441
3,465,513
9,430
33,804
-
2,466
3,511,213
-
3,511,213
5,432,754
5,284,617
492,168
228,167
2,397,376
149,526
2,714,983
163,603
-
-
-
-
-
137,188
1,795,635
462,699
-
10,375,178
-
71,699
516,665
465,387
473
9,217,427
1,004,570
-
290,511
14,000
-
1,801,249
951,328
3
160,838
19,575
-
1,359,911
450,017
10,825,195
-
9,217,427
-
1,801,249
-
1,359,911
10,362,161
8,739,981
2,328,192
2,151,302
5,586,908
266,412
148,669
6,001,989
6,582,861
441,889
124,580
7,149,330
1,500,000
-
66,273
1,566,273
1,500,000
4,933
47,022
1,551,955
Net assets
14,727,641
13,688,863
5,830,501
5,694,899
See accompanying notes to the financial statements.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
Consolidated Profit and
Loss Account
For the financial year ended 31 December 2014
143
Note
2014
$’000
2013
$’000
24
25
26
27
27
27
9
28
29
13,282,979
(9,244,629)
(1,732,964)
(265,136)
333,170
2,373,420
11,936
133,104
(134,024)
504,176
2,888,612
(462,362)
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)
2,426,250
2,396,374
1,884,798
541,452
2,426,250
1,845,792
550,582
2,396,374
103.8 cts
102.8 cts
102.3 cts
101.2 cts
Revenue
Materials and subcontract costs
Staff costs
Depreciation and amortisation
Other operating income
Operating profit
Investment income
Interest income
Interest expenses
Share of results of associated companies
Profit before tax
Taxation
Profit for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
Earnings per ordinary share
- basic
- diluted
See accompanying notes to the financial statements.
Consolidated Profit and Loss Account
144
Consolidated Statement of
Comprehensive Income
For the financial year ended 31 December 2014
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
- 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
2014
$’000
2013
$’000
2,426,250
2,396,374
(47,295)
(34,553)
13,552
28
(505,083)
(24,112)
(204,730)
7,468
128,500
23,570
73,628
37,876
(3,732)
14,401
23,650
(5,847)
(2,152)
2,881
996
-
Other comprehensive income for the year, net of tax
(423,658)
(77,296)
Total comprehensive income for the year
2,002,592
2,319,078
Attributable to:
Shareholders of the Company
Non-controlling interests
1,393,768
608,824
2,002,592
1,721,456
597,622
2,319,078
See accompanying notes to the financial statements.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
Statements of
Changes in Equity
For the financial year ended 31 December 2014
145
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
1,205,877
500,753
8,301,117
(306,566)
9,701,181
3,987,682
13,688,863
-
1,884,798
-
1,884,798
541,452
2,426,250
(606,009)
-
114,979
(491,030)
67,372
(423,658)
(606,009)
1,884,798
114,979
1,393,768
608,824
2,002,592
Group
2014
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
Dividends paid
Share-based payment
Purchase of treasury shares
Transfer of statutory, capital
and other reserves from
revenue reserves
Dividend paid to
non-controlling
shareholders
Cash subscribed by
non-controlling
shareholders
Shares issued
Contributions to defined
benefits plans
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
Total change in ownership
interests in subsidiaries
Total transactions with
owners
-
-
-
-
-
-
-
-
-
81,718
-
-
-
53,701
(48,665)
(762,906)
-
-
2,092
(2,092)
-
-
(47,422)
13,228
-
-
-
-
-
18
81,718
(27,066)
(764,980)
-
-
-
-
-
-
(5,678)
1,819
-
-
(5,678)
1,819
81,718
(32,744)
(763,161)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(762,906)
53,701
(48,665)
-
2,327
-
(762,906)
56,028
(48,665)
-
-
-
-
(265,603)
(265,603)
-
34,296
13,228
18
12,196
-
1,501
-
12,196
34,296
14,729
18
(710,328)
(249,579)
(959,907)
-
7,204
7,204
(3,859)
(5,736)
(9,595)
-
(1,516)
(1,516)
(3,859)
(48)
(3,907)
(714,187)
(249,627)
(963,814)
As at 31 December
1,287,595
(138,000)
9,422,754
(191,587)
10,380,762
4,346,879
14,727,641
* 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
146
Statements of Changes in Equity
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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
147
Company
2014
As at 1 January
Share
Capital
$’000
Capital
Reserves
$’000
Revenue
Reserves
$’000
Capital
Employed
$’000
1,205,877
188,432
4,300,590
5,694,899
Profit/total comprehensive income for the year
-
-
862,575
862,575
Transactions with owners,
recognised directly in equity
Dividend paid
Share-based payment
Shares issued
Purchase of treasury shares
Other adjustments
Total transactions with owners
-
-
81,718
-
-
81,718
-
50,284
(47,422)
(48,665)
-
(45,803)
(762,906)
-
-
-
18
(762,888)
(762,906)
50,284
34,296
(48,665)
18
(726,973)
As at 31 December
1,287,595
142,629 4,400,277
5,830,501
Company
2013
As at 1 January
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
-
-
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)
As at 31 December
1,205,877
188,432
4,300,590
5,694,899
See accompanying notes to the financial statements.
Statements of Changes in Equity
148
Consolidated Statement
of Cash Flows
For the financial year ended 31 December 2014
Operating activities
Operating profit
Adjustments:
Depreciation and amortisation
Share-based payment expenses
Profit on sale of fixed assets and an investment property
Write-back of provision for restructuring of operations
Gain on disposal of subsidiaries
Gain on disposal of associated companies
Impairment/write-off of fixed assets
Fair value gain on investment properties
Write-back of impairment of investments
Operational cash flow before changes in working capital
Working capital changes:
Stocks & work-in-progress
Debtors
Creditors
Investments
Intangibles
Advances to/from associated companies
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
Proceeds from disposal of fixed assets and an investment property
Proceeds from disposal of associated companies and return of capital
Dividends received from investments and associated companies
Net cash from/(used in) investing activities
Financing activities
Acquisition of additional interest in subsidiaries
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
Purchase of treasury shares
Dividend paid to shareholders of the Company
Dividend paid to non-controlling shareholders of subsidiaries
Net cash (used in)/ from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents as at beginning of year
Effects of exchange rate changes on the balance of
cash held in foreign currencies
Note
2014
$’000
2013
$’000
2,373,420
2,134,369
265,136
56,461
(289,214)
(4,752)
(48,647)
(145,184)
7,746
(54,569)
(47,971)
2,112,426
(2,181,890)
(764,052)
257,521
(99,496)
(10)
1,008,696
333,195
130,371
(130,818)
(328,031)
4,717
(268,768)
(398,680)
(594,931)
125,097
973,588
629,910
410,401
876,617
242,292
55,362
(3,865)
(43,088)
(307,726)
-
1,482
(156,284)
(2,818)
1,919,724
(7,443)
(416,516)
(130,472)
(60,219)
(769)
(107,618)
1,196,687
145,058
(120,080)
(584,931)
636,734
(103,555)
(472,791)
(936,060)
534,062
33,088
-
267,391
(677,865)
(9,600)
34,296
12,196
-
1,066,375
(794,844)
(48,665)
(762,906)
(265,603)
(768,751)
-
39,749
65,348
135,513
5,154,702
(3,024,586)
-
(668,506)
(174,629)
1,527,591
112,583
1,486,460
5,557,601
4,036,523
42,167
34,618
A
B
C
Cash and cash equivalents as at end of year
D
5,712,351
5,557,601
See accompanying notes to the financial statements.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
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
Investment in associated company
Intangibles
Stocks and work-in-progress
Debtors and other assets
Bank balances and cash
Shareholders’ loans
Creditors
Borrowings
Current and deferred taxation
Total identifiable net assets at fair value
Non-controlling interests measured at non-controlling interests’
proportionate share of the net assets
Amount previously accounted for as associated companies
Fair value gain on remeasurement of previously held equity
interests in subsidiaries acquired
Goodwill arising from acquisition
Gain on bargain purchase arising from acquisition
Net assets acquired
Payment of deferred consideration for prior year’s acquisition of
a subsidiary
Assumption of shareholders’ loans
Total purchase consideration
Less: Deferred payments
Less: Bank balances and cash acquired
Cash flow on acquisition
149
2014
$’000
21,352
-
14
16,757
-
12,817
1,432
-
(8,056)
(11,486)
(102)
32,728
(7,204)
(4,243)
(219)
1,472
(113)
22,421
247,779
-
270,200
-
(1,432)
268,768
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
Significant acquisitions during the year mainly relates to acquisition of additional interest in Indo-Trans Keppel Logistics
Vietnam Co., Ltd, from 40% to 51% and additional interest in Securus Partners Pte Ltd from 50% to 100%. Payment of
deferred consideration relates to Shanghai Jinju Real Estate Development Co. Ltd (“Shanghai Jinju”). The newly acquired
subsidiaries had no material impact on the Group’s consolidated statement of comprehensive income, both from the
dates of their acquisitions as well as assuming their acquisitions had been effected as at 1 January 2014.
In the prior year, the Group acquired the remaining 50% interest in Parksville, 100% interest in Shanghai Jinju, 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.
See accompanying notes to the financial statements.
Consolidated Statement of Cash Flows
150
Consolidated Statement
of Cash Flows
Notes to Consolidated Statement of Cash Flows (continued)
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 and 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
Less: Deferred proceeds
Cash flow on disposal
2014
$’000
2013
$’000
(7,019)
-
(49,426)
(457)
(116)
(37,028)
(3,084)
20,187
-
862
1,516
(74,565)
-
-
-
(74,565)
(48,647)
(7,699)
(130,911)
3,084
2,730
(125,097)
(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)
Significant disposals in the year include the sale of entire interest in Berich Enterprises Limited, divestment of Boxtel
Investments Limited, which holds a 30% interest in Securus Guernsey 2 Limited, and divestment of Keppel FMO Pte Ltd.
In the prior year, the Group completed 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 PTMSS and PTMSM, which jointly developed a township development Jakarta Garden City in
Jakarta, Indonesia.
C. Disposal of interest in a subsidiary without loss of control
In the prior year, the Group disposed of its 30% interest in its subsidiary, Sherwood Development Pte Ltd to 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
Amounts held under escrow accounts for
overseas acquisition of land, payment of
construction cost and liabilities
See accompanying notes to the financial statements.
2014
$’000
2013
$’000
5,736,001
-
5,564,656
(473)
(23,650)
5,712,351
(6,582)
5,557,601
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
Notes to the
Financial Statements
For the financial year ended 31 December 2014
151
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 2014 and the balance sheet and
statement of changes in equity of the Company at 31 December 2014 were authorised for issue in accordance with a
resolution of the Board of Directors on 25 February 2015.
2.
Significant accounting policies
(a) Basis of Preparation
The financial statements have been prepared in accordance with the provisions of the Singapore Companies Act
and Singapore Financial Reporting Standards (“FRS”). The financial statements have been prepared under the
historical cost convention, except as disclosed in the accounting policies below.
Adoption of New and Revised Standards
In the current year, the Group adopted the new/revised FRS that are effective for annual periods beginning on
or after 1 January 2014. Changes to the Group’s accounting policies have been made as required, in accordance
with the transitional provisions in the respective FRS.
The following are the new or amended FRS that are relevant to the Group:
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 adoption of the above new or amended FRS did not have any significant impact on the financial statements
of the Group, except as disclosed below:
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. The adoption
of FRS 112 has no significant impact on the accounting policies of the Group. The Group has incorporated the
additional disclosures required by FRS 112 in the financial statements.
Notes to the Financial Statements
152
Notes to the Financial Statements
2.
Significant accounting policies (continued)
(b) Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries as at
the balance sheet date.
The results of subsidiaries acquired or disposed of during the financial year are included or excluded from
the consolidated financial statements from their respective dates of acquisition or disposal. All intercompany
transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure
consistency of accounting policies with those of the Group.
Acquisition of subsidiaries is accounted for using the 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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
153
(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 (including structured entities) over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity.
Investment in subsidiary is stated in the financial statements of the Company at cost less accumulated
impairment losses. On disposal of a subsidiary, the difference between net disposal proceeds and carrying
amount of the investment is taken to profit or loss.
(f)
Associated Companies
An associated company is an entity, not being a subsidiary, over which the Group has significant influence, but
not control.
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 less impairment loss, if any. The Group’s share of profit or loss and other comprehensive
income of the associated company is included in the consolidated profit and loss account and other
comprehensive income respectively. The Group’s share of net assets of the associated company is included in
the consolidated 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.
Notes to the Financial Statements
154
Notes to the Financial Statements
2.
Significant accounting policies (continued)
(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.
Management Rights
Management rights acquired is initially recognised at cost and subsequently carried at cost less accumulated
impairment losses. The useful life of the management rights is estimated to be indefinite because management
believes there is no foreseeable limit to the period over which the management rights is expected to generate net
cash inflows for the Group.
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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
155
(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.
(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.
Notes to the Financial Statements
156
Notes to the Financial Statements
2.
Significant accounting policies (continued)
(l)
Impairment of Assets
Financial Assets
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a
group of financial assets is impaired and recognises an allowance for impairment when such evidence exists.
Loans and receivables
Significant financial difficulties of the debtor and default or significant delay in payments are objective evidence
that the financial assets are impaired. The carrying amount of these assets is reduced through the use of
an allowance account and the loss is recognised in the profit and loss account. When the asset becomes
uncollectible, the carrying amount is written off against the allowance account. If, in a subsequent period,
the amount of the impairment loss decreases and the decrease can be objectively measured, the previously
recognised impairment loss is reversed to the extent that the carrying amount does not exceed the amortised
cost had no impairment been recognised in the prior periods. The amount of reversal is recognised in the profit
and loss account.
Investments
Significant or prolonged decline in the fair value of the investment below its cost is considered in determining
whether the investment is impaired. If any such evidence exists for available-for-sale financial assets, the
cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in 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.
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.
Management rights are tested for impairment annually and whenever there is an indication that the management
rights 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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
157
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.
(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.
Notes to the Financial Statements
158
Notes to the Financial Statements
2.
Significant accounting policies (continued)
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) Assets classified as held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met only
when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present
condition. Management must be committed to the sale, which should be expected to qualify for recognition as a
completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities
of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether
the Group will retain a non-controlling interest in its former subsidiary after the sale.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous
carrying amount and fair value less costs to sell.
(q) 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.
-
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. Where
applicable, anticipated losses on contracts in progress are recognised in the profit and loss account.
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
- 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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
159
When losses are expected, they are recognised in full 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.
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.
(r)
(s)
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
160
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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
161
(w) Segment Reporting
The Group has four reportable segments, namely Offshore & Marine, Infrastructure, Property and Investments.
Management monitors the results of each of these operating segments for the purpose of making decisions on
resource allocation and performance assessment.
(x) Critical Accounting Estimates and Judgements
(i)
Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, the management is of the opinion that there
is no instance of application of judgements which is expected to have a significant effect on the amounts
recognised in the financial statements, apart from those involving estimations and as follows:
Control over Keppel REIT
The Group has approximately 45% gross ownership interest of units in Keppel REIT as at 31 December
2014 and 2013. Keppel REIT is managed by Keppel REIT Management Limited (“KRML”), a wholly-owned
subsidiary of the Group. The Group has provided an undertaking to the trustee of Keppel REIT to grant the
unitholders the right to endorse or re-endorse the appointment of directors of KRML at the annual general
meetings of Keppel REIT. The Group has determined that it continues to have significant influence over
Keppel REIT.
Control over Keppel Infrastructure Trust
The Group has 49% gross ownership interest of units in Keppel Infrastructure Trust (“KIT”) as at 31 December
2014 and 2013. Determining whether the Group has control over KIT requires management to exercise
its judgement. In exercising its judgement, management considers the proportion of its voting rights and
whether it can control the relevant activities of KIT. The business purpose and relevant activities of KIT are
stated in the Deed of Trust which requires a special resolution to amend. In addition, the Board of Directors
of KIT/Keppel Infrastructure Fund Management Pte Ltd, its trustee-manager, comprises more than 50%
independent directors. Management concluded that the Group does not have sufficient dominant vesting
interest to exert control over KIT and the Deed of Trust and therefore the Group only has significant
influence over KIT.
(ii)
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year, are as follows:
Impairment of loans and receivables
The Group assesses at each balance sheet date whether there is any objective evidence that a loan and
receivable is impaired. The Group considers factors such as the probability of insolvency or significant
financial difficulties of the debtor and default or significant delay in payments. When there is objective
evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss
experience for assets with similar credit risk characteristics. The carrying amounts of trade, intercompany
and other receivables are disclosed in the balance sheet. As at 31 December 2014, the Group has credit risk
exposure to an external group of companies for receivables that are past due. Management has considered
any changes in the credit quality of the debtors when determining the allowance for doubtful receivables.
Management performs on-going assessments on the ability of its debtors to repay the amounts owing
to the Group. These assessments include the review of the customers’ credit-standing and the ability of
customers to secure long-term financing for the ongoing projects. Management has assessed that no
allowance for doubtful debt is required.
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.
Notes to the Financial Statements
162
Notes to the Financial Statements
2.
Significant accounting policies (continued)
Impairment of non-financial assets
Determining whether the carrying value of a non-financial asset is impaired requires an estimation of
the value in use of the cash-generating units. This requires the Group to estimate the future cash flows
expected from the cash-generating units and an appropriate discount rate in order to calculate the present
value of the future cash flows. The carrying amounts of fixed assets, investment properties and intangibles
are disclosed in the balance sheet.
Revenue recognition
The Group recognises contract revenue based on the 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 24.
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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
163
3.
Share capital
Balance at 1 January
Issue of shares under the
share option scheme
Issue of shares under KCL PSP
Issue of shares under KCL RSP
Treasury shares purchased
Balance at 31 December
Balance at 1 January
Issue of shares under the
share option scheme
Issue of shares under KCL PSP
Issue of shares under KCL RSP
Treasury shares purchased
Balance at 31 December
Group and Company
Number of Ordinary Shares (“Shares”)
Issued Share Capital
Treasury Shares
2014
2013
1,807,970,459
1,797,607,004
4,936,211
636,100
4,225,457
-
1,817,768,227
5,335,750
1,092,100
3,935,605
-
1,807,970,459
2014
-
-
-
-
5,932,000
5,932,000
Issued Share Capital
Treasury Shares
Amount (S$’000)
2014
2013
1,205,877
1,123,590
34,315
5,418
41,985
-
1,287,595
39,729
6,128
36,430
-
1,205,877
2014
-
-
-
-
48,665
48,665
2013
-
-
-
-
-
-
2013
-
-
-
-
-
-
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 4,936,211 (2013: 5,335,750) Shares at an average weighted price of $6.95
(2013: $7.45) per Share for cash upon exercise of options under the KCL Share Option Scheme.
During the financial year, 636,100 (2013: 1,092,100) Shares under the KCL Performance Share Plan (“KCL PSP”) and
4,225,457 (2013: 3,935,605) Shares under the KCL Restricted Share Plan (“KCL RSP”) were vested.
The Company acquired 5,932,000 (2013: nil) treasury shares in the Company in the open market during the financial
year. The total amount paid was $48,665,000 (2013: $nil) and this is presented as a component within shareholders’
equity (Note 4). There was no sale, transfer, disposal, cancellation and/or use of treasury shares during the financial
year.
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.
Notes to the Financial Statements
164
Notes to the Financial Statements
3.
Share capital (cotinued)
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.
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
2014
2013
Number of
options
24,832,315
(4,936,211)
(325,600)
19,570,504
Weighted
average
exercise
price
$8.30
$6.95
$11.17
$8.60
Number of
options
30,314,565
(5,335,750)
(146,500)
24,832,315
Exercisable at 31 December
19,570,504
$8.60
24,832,315
Weighted
average
exercise
price
$8.49
$7.45
$9.32
$8.30
$8.30
The weighted average share price at the date of exercise for options exercised during the financial year was $10.52
(2013: $11.12). The options outstanding at the end of the financial year had a weighted average exercise price of $8.60
(2013: $8.30) and a weighted average remaining contractual life of 3.4 years (2013: 4.4 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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
165
Details of the KCL RSP and the KCL PSP are as follows:
KCL RSP
KCL PSP
Plan Description
Award of fully-paid ordinary shares of the
Company, conditional on achievement of
pre-determined targets at the end of a
one-year performance period
Award of fully-paid ordinary shares of
the Company, conditional on
achievement of pre-determined targets
over a three-year performance period
Performance Conditions
Return on Equity
a) Economic Value Added
b) Absolute Total Shareholder’s Return
c) Relative Total Shareholder’s Return
to MSCI Asia Pacific Ex-Japan
Industrials Index (MXAPJIN)
Final Award
0% or 100% of the contingent award
granted, depending on achievement of
pre-determined targets
0% to 150% of the contingent award
granted, depending on achievement of
pre-determined targets
Vesting Condition
and Schedule
If pre-determined targets are achieved,
awards will vest equally over three years
subject to fulfillment of service requirements
If pre-determined targets are achieved,
awards will vest at the end of the
three-year performance period subject
to fulfillment of service requirements
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
2014
2013
KCL RSP
KCL PSP
KCL RSP
KCL PSP
4,383,491
4,750,386
-
(4,309,301)
(184,792)
-
4,639,784
1,901,333
577,400
(26,450)
(636,100)
(67,458)
-
1,748,725
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
4,040,616
4,309,301
(4,225,457)
(131,020)
-
3,993,440
-
636,100
(636,100)
-
-
-
3,955,446
4,075,068
(3,935,605)
(68,586)
14,293
4,040,616
-
1,092,100
(1,092,100)
-
-
-
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 2014, there were 3,993,440 (2013: 4,040,616) 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 4,639,784 (2013:
4,383,491) under the KCL RSP and 1,748,725 (2013: 1,901,333) 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
4,639,784 under the KCL RSP and range from zero to a maximum of 2,623,088 under the KCL PSP.
Notes to the Financial Statements
166
Notes to the Financial Statements
3.
Share capital (cotinued)
The fair values of the contingent award of shares under the KCL RSP and the KCL PSP are determined at the grant date
using Monte Carlo simulation method which involves projection of future outcomes using statistical distributions of key
random variables including share price and volatility.
On 31 March 2014 (2013: 28 March 2013), the Company granted contingent awards of 4,750,386 (2013: 4,300,500)
shares under the KCL RSP and 577,400 (2013: 845,000) shares under the KCL PSP. The estimated fair value of the
shares granted amounts to $10.31 (2013: $10.54) under the KCL RSP and $6.74 (2013: $7.30) 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
2014
2013
KCL RSP
KCL PSP
KCL RSP
KCL PSP
31.03.2014
$10.89
31.03.2014
$10.89
28.03.2013 28.03.2013
$11.20
$11.20
24.65%
#
#
0.75 - 2.75 years
0.35% - 0.70%
*
24.65%
22.45%
88.80%
2.75 years
0.70%
*
27.48%
#
#
0.75 - 2.75 years
0.15% - 0.36%
*
27.48%
25.34%
83.50%
2.75 years
0.36%
*
#
*
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
Treasury shares
Others
Revenue Reserves
Foreign Exchange
Translation Account
Group
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
212,764
102,818
(516,050)
40,000
(48,665)
71,133
(138,000)
9,422,754
208,431
192,023
1,298
40,000
-
59,001
500,753
8,301,117
191,294
-
-
-
(48,665)
-
142,629
4,400,277
188,432
-
-
-
-
-
188,432
4,300,590
(191,587)
9,093,167
(306,566)
8,495,304
-
4,542,906
-
4,489,022
Movements in the Group’s and the Company’s reserves are set out in the Statements of Changes in Equity.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
167
5. Non-controlling interests
The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:
Keppel Land Limited
Other individually
immaterial subsidiaries
Total
2014
$’000
2013
$’000
2014
$’000
2013
$’000
2014
$’000
2013
$’000
NCI percentage of
ownership interest and
voting interest
45%
45%
Carrying amount of NCI
3,963,440
3,670,586
383,439
317,096
4,346,879
3,987,682
Profit after tax allocated to NCI
412,319
533,519
129,133
17,063
541,452
550,582
Summarised financial information before inter-group elimination
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Revenue
Profit for the year
Total comprehensive income
Net cash flow from operations
Dividends paid to NCI
Keppel Land Limited
2014
$’000
2013
$’000
4,817,660
9,709,888
(3,384,532)
(2,998,078)
8,144,938
5,696,259
8,126,268
(4,110,879)
(2,226,061)
7,485,587
1,497,177
823,238
959,895
1,461,048
903,954
1,029,548
200,443
(1,308,680)
190,248
100,722
During the financial year, the Group acquired additional interest in certain subsidiaries of the Company from its non-
controlling interests. The following summarises the effect of the change in the Group’s ownership interest on the equity
attributable to owners of the Company:
Amounts paid on changes in ownership interest in subsidiaries
Non-controlling interest acquired
Others
Total amount recognised in equity reserves
2014
$’000
(9,600)
5,736
5
(3,859)
Notes to the Financial Statements
168
6.
Fixed assets
Group
2014
Cost
At 1 January
Additions
Disposals
Write-off
Subsidiaries acquired
Subsidiaries disposed
Reclassification
- Stocks
- Investment
properties (Note 7)
- Other fixed assets
Categories
- Assets classified as
held for sale (Note 18)
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
120,662
591
(307)
-
-
(1,121)
1,858,825
15,970
(123,721)
(715)
4,566
-
449,937
22,485
(18,254)
(50)
15,343
-
3,043,349
86,575
(176,570)
(1,315)
1,443
(15,882)
418,896
434,666
(8,923)
(506)
-
-
5,891,669
560,287
(327,775)
(2,586)
21,352
(17,003)
-
-
-
(64,008)
341
123,028
-
-
-
-
103,238
103,238
(66,250)
(90)
(130,348)
265,085
(388,454)
-
-
439
-
12,794
-
(1,958)
(1,353,571)
3,179
(12,666)
3,789
(1,366,237)
18,243
At 31 December
120,605
1,826,739
467,503
1,786,043
549,950
4,750,840
Accumulated Depreciation
& Impairment Losses
At 1 January
Depreciation charge
Disposals
Impairment loss/write-off
Subsidiaries disposed
Reclassification
- Stocks
- Investment
properties (Note 7)
- Assets classified as
held for sale (Note 18)
Exchange differences
44,817
4,525
(234)
-
(129)
-
-
-
663
723,200
54,222
(15,091)
5,711
-
-
(1,131)
-
5,128
171,908
21,647
(5,798)
-
-
1,153,465
182,377
(59,427)
(551)
(9,855)
-
-
358
(2,150)
-
(222)
(198,015)
2,407
-
-
-
-
-
-
-
-
-
2,093,390
262,771
(80,550)
5,160
(9,984)
358
(3,281)
(198,015)
7,976
At 31 December
49,642
772,039
187,535
1,068,609
-
2,077,825
Net Book Value
70,963
1,054,700
279,968
717,434
549,950
2,673,015
Included in freehold land & buildings are freehold land amounting to $11,254,000 (2013: $11,854,000).
Certain plant, machinery and equipment with carrying amount of $74,657,000 (2013: $102,112,000) are mortgaged to
banks for loan facilities (Note 21).
Interest capitalised during the financial year amounted to $2,364,000 (2013: $5,973,000).
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
169
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
Notes to the Financial Statements
170
Notes to the Financial Statements
6.
Fixed assets (continued)
Company
2014
Cost
At 1 January
Additions
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
At 31 December
Net Book Value
2013
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
At 31 December
Net Book Value
Freehold
Land &
Buildings
$’000
Plant,
Machinery
& Equipment
$’000
Total
$’000
1,464
-
7,196
238
8,660
238
1,464
7,434
8,898
1,220
76
6,558
350
7,778
426
1,296
6,908
8,204
168
526
694
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
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
7.
Investment properties
At 1 January
Development expenditure
Fair value gain
- Attributable to the Group (Note 26)
- Attributable to third parties under a contractual agreement
Disposal
Subsidiary acquired
Subsidiary disposed
Reclassification
- Stocks and work-in-progress
- Fixed assets (Note 6)
Exchange differences
At 31 December
171
Group
2014
$’000
2013
$’000
2,187,858
34,644
5,423,060
247,769
54,569
7,983
(454,712)
-
-
-
127,067
30,106
156,284
4,685
-
133,420
(3,757,083)
(9,200)
-
(11,077)
1,987,515
2,187,858
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 2014:
- Colliers International Consultancy & Valuation (Singapore) Pte Ltd for properties in Singapore;
- CBRE (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 $1,285,000 (2013: $1,067,000).
The Group has mortgaged certain investment properties of up to an aggregate amount of $239,230,000 (2013:
$588,400,000) to banks for loan facilities (Note 21).
During the financial year, the Group, through its subsidiary, D.L. Properties Ltd, divested its entire interest in Equity Plaza,
resulting in a gain of $32 million attributable to shareholders of the Company.
The investment properties that had been reclassified from fixed assets are attributable to a data centre under
development in Singapore which is stated at cost as the fair value cannot be reliably measured until development is
substantially completed.
Notes to the Financial Statements
172
Notes to the Financial Statements
8.
Subsidiaries
Quoted shares, at cost
Market value: $3,548,692,000 (2013: $3,505,684,000)
Unquoted shares, at cost
Provision for impairment
Movements in the provision for impairment of subsidiaries are as follows:
At 1 January
Charge/(credit) to profit and loss account
At 31 December
Company
2014
$’000
2013
$’000
2,083,839
3,055,798
5,139,637
(72,070)
2,083,839
3,066,728
5,150,567
(56,115)
5,067,567
5,094,452
Company
2014
$’000
56,115
15,955
2013
$’000
621,070
(564,955)
72,070
56,115
Impairment made during the year mainly relates to the shortfall between the carrying amount of the costs of
investment and the recoverable amount of a subsidiary.
During the previous 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.
Information relating to significant subsidiaries consolidated in the financial statements is given in Note 38.
9.
Associated companies
Quoted shares, at cost
Market value: $3,482,487,000
(2013: $3,066,879,000)
Unquoted shares, at cost
Provision for impairment
Share of reserves
Advances to associated companies
Group
2014
$’000
2013
$’000
2,801,642
1,441,871
4,243,513
(98,430)
4,145,083
843,361
4,988,444
-
2,283,983
1,488,781
3,772,764
(149,498)
3,623,266
1,321,248
4,944,514
537,659
4,988,444
5,482,173
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
Movements in the provision for impairment of associated companies are as follows:
At 1 January
Write-back of impairment loss
Disposal
Exchange differences
At 31 December
173
Group
2014
$’000
149,498
(47,971)
(3,940)
843
2013
$’000
157,901
(2,818)
(6,446)
861
98,430
149,498
Long term advances to associated companies were repaid during the financial year. In the prior year, interest was
charged at rates ranging from 1.87% to 2.02% per annum on these advances. During the financial year, arising from
the sale of certain assets in an associated company, the Group wrote back an impairment loss of $47,971,000 (2013:
$2,818,000) 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 28)
Share of net profit
Group
2014
$’000
2013
$’000
504,176
(72,096)
625,867
(57,608)
432,080
568,259
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
2014
$’000
21,031,854
8,479,519
5,021,596
1,075,579
2013
$’000
22,641,871
9,769,863
5,020,684
1,453,096
The carrying amount of the Group’s material associates, all of which are equity accounted for and whose activities are
strategic to the Group’s activities, are as follows:
Group
2014
$’000
1,833,180
290,577
335,655
2,529,032
2013
$’000
1,568,444
308,543
336,797
3,268,389
4,988,444
5,482,173
Keppel REIT
Keppel Infrastructure Trust
KrisEnergy Limited
Other associates
Notes to the Financial Statements
174
Notes to the Financial Statements
9.
Associated companies (continued)
The summarised financial information of the material associates, not adjusted for the Group’s proportionate share,
based on its FRS financial statements and a reconciliation with the carrying amount of the investment in the
consolidated financial statements are as follows:
Keppel REIT
Keppel Infrastructure Trust
KrisEnergy Limited *
2014
$’000
2013
$’000
2014
$’000
2013
$’000
2014
$’000
2013
$’000
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Proportion of the Group’s
ownership
Group’s share of net assets
Other adjustments
Carrying amount of
the investment
Revenue
Profit after tax
Other comprehensive income
Total comprehensive income
Fair value of ownership
interest (if listed) **
Dividends received
225,467
7,103,937
7,329,404
380,371
2,491,613
2,871,984
4,457,420
125,833
6,649,706
6,775,539
399,176
2,479,370
2,878,546
3,896,993
138,392
472,634
611,026
19,930
-
19,930
591,096
130,848
511,681
642,529
14,883
10
332,590
709,489
1,042,079
44,198
430,065
14,893 474,263
627,636 567,816
45%
2,018,320
(185,140)
45%
1,744,684
(176,240)
49%
290,642
(65)
49%
308,609
31%
178,294
(66) 157,361
1,833,180
184,093
371,902
(11,469)
360,433
1,568,444
290,577
174,043 65,451
534,928
12,709
(90,092)
-
12,709
444,836
308,543
67,113
14,183
-
14,183
335,655
101,531
(43,236)
8
(43,228)
444,392
404,687
849,079
31,061
231,733
262,794
586,285
31%
184,093
152,704
336,797
89,345
(37,825)
(76)
(37,901)
1,751,331
102,442
1,478,925
76,463
329,812
24,217
323,619
24,217
206,978
-
412,313
-
*
Financial information is available as at 30 September for the current year at the time of reporting and equity accounting is applied on financials from
October of the preceding year to September of the current year. The difference in reporting period has no material impact on the Group’s consolidated
financial statements.
** Based on the quoted market price at 31 December (Level 1 in the fair value hierarchy).
As at 31 December 2014, the fair values of Keppel REIT and KrisEnergy Limited are below the carrying amounts of the
Group’s ownership interest. Management is of the view that no impairment is required as they are held for long term
and their recoverable amounts are more than their carrying amounts.
Aggregate information about the Group’s investments in associated companies that are not individually material are as
follows:
Share of profit before tax
Share of taxation
Share of other comprehensive income
Share of total comprehensive income
2014
$’000
2013
$’000
338,916
(58,852)
38,786
318,850
422,420
(50,516)
16,375
388,279
Information relating to significant associated companies, including information on principal activities, country
of operation/incorporation and proportion of ownership interest, and whose results are included in the financial
statements is given in Note 38.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
10.
Investments
Available-for-sale investments:
Quoted equity shares
Unquoted equity shares
Unquoted property funds
Unquoted funds - others
Quoted bonds
11.
Long term assets
Staff loans
Long term receivables and others
Less: Amounts due within one year and
included in debtors (Note 15)
Provision for doubtful debts
175
Group
2014
$’000
2013
$’000
67,690
142,677
136,760
11,239
-
52,251
88,319
112,222
-
11,953
358,366
264,745
Group
Company
2014
$’000
1,799
270,151
271,950
(13,553)
258,397
-
2013
$’000
1,751
296,145
297,896
(14,261)
283,635
(4,718)
258,397
278,917
2014
$’000
402
-
402
(81)
321
-
321
2013
$’000
440
-
440
(222)
218
-
218
Movements in the provision for doubtful debts are as follows:
Group
Company
At 1 January
Credit/ (charge) to profit and loss account
Exchange differences
2014
$’000
4,718
(4,489)
(229)
2013
$’000
-
4,577
141
At 31 December
-
4,718
2014
$’000
2013
$’000
-
-
-
-
-
-
-
-
Included in staff loans are interest-free advances to certain Directors amounting to $nil (2013: $50,000) and to directors
of related corporations amounting to $114,000 (2013: $116,000) under an approved car loan scheme.
Long term receivables are unsecured, largely repayable after five years (2013: five years) and bears effective interest
ranging from 4.00% to 11.00% (2013: 0.11% to 11.00%) per annum.
The fair value of long term receivables for the Group is $268,815,000 (2013: $290,530,000). 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
176
Notes to the Financial Statements
12.
Intangibles
Group
2014
At 1 January
Additions
Amortisation
Subsidiary acquired
Subsidiary disposed
Exchange differences
Goodwill
$’000
Development
Expenditure
$’000
Management
Rights
$’000
Customer
Contracts
$’000
Total
59,270
-
-
1,472
-
-
7,879
10
(1,146)
-
(457)
75
-
-
-
16,757
-
-
19,091
-
(1,219)
-
-
-
86,240
10
(2,365)
18,229
(457)
75
At 31 December
60,742
6,361
16,757
17,872
101,732
Cost
Accumulated amortisation
60,742
-
19,244
(12,883)
16,757
-
24,963
(7,091)
121,706
(19,974)
60,742
6,361
16,757
17,872
101,732
2013
At 1 January
Additions
Amortisation
Subsidiary disposed
Exchange differences
59,270
-
-
-
-
29,779
769
(7,172)
(15,549)
52
At 31 December
59,270
7,879
Cost
Accumulated amortisation
59,270
-
21,800
(13,921)
59,270
7,879
-
-
-
-
-
-
-
-
-
20,559
-
(1,468)
-
-
109,608
769
(8,640)
(15,549)
52
19,091
86,240
24,963
(5,872)
106,033
(19,793)
19,091
86,240
For the purpose of impairment testing, goodwill is allocated to cash-generating units.
Goodwill allocated to Offshore & Marine division amounted to $2,092,000 (2013: $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 7.96% (2013: 7.44%). 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 $58,650,000 (2013: $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.
The recoverable amount of management rights is determined based on cash flow projections from the provision of
asset management services using a pre-tax discount rate of 9.0% (2013: nil%). The key assumptions are those regarding
the discount rate and expected changes to assets under management and net property income of these assets.
As at 31 December 2014, any reasonably possible changes to the key assumptions applied above is not likely to cause
the recoverable amounts of goodwill and management rights to be below the respective carrying amounts.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
177
13. Stocks & work-in-progress
Work-in-progress in excess of related billings
Consumable materials and supplies
Finished products for sale
Properties held for sale
Group
2014
$’000
(a)
(c)
3,339,234
173,936
15,968
7,151,985
10,681,123
2013
$’000
1,679,714
224,755
105,538
6,984,719
8,994,726
Billings on work-in-progress in excess of related costs
(b)
(2,397,376)
(2,714,983)
(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)
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
12,897,402
(4,498)
12,892,904
(9,553,670)
7,705,970
(4,491)
7,701,479
(6,021,765)
3,339,234
1,679,714
4,491
7
4,498
4,443
48
4,491
13,320,254
(15,717,630)
13,544,089
(16,259,072)
(2,397,376)
(2,714,983)
4,682,842
1,168,308
466,399
(460,349)
5,857,200
1,329,045
7,186,245
(34,260)
5,081,312
1,190,765
459,667
(577,528)
6,154,216
860,396
7,014,612
(29,893)
7,151,985
6,984,719
Notes to the Financial Statements
178
Notes to the Financial Statements
13. Stocks & work-in-progress (continued)
Movements in the provision for properties held for sale are as follows:
At 1 January
Charge to profit and loss account
Exchange differences
At 31 December
Group
2014
$’000
29,893
4,019
348
2013
$’000
28,566
1,383
(56)
34,260
29,893
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
2,629,799
(555,267)
2,900,451
(668,576)
2,074,532
2,231,875
Interest capitalised during the financial year amounted to $59,199,000 (2013: $78,409,000) at rates ranging from
0.55% to 3.30% (2013: 0.58% to 2.50%) per annum for Singapore properties and 0.05% to 8.00% (2013: 3.34% to
10.00%) per annum for overseas properties.
Certain properties held for sale with carrying amount of $2,327,841,000 (2013: $2,204,792,000) are mortgaged to
banks for loan facilities (Note 21).
14. Amounts due from/to
Subsidiaries
Amounts due from
- trade
- advances
Provision for doubtful debts
Amounts due to
- trade
- advances
Company
2014
$’000
2013
$’000
311,955
3,795,019
4,106,974
(6,600)
22,372
3,449,741
3,472,113
(6,600)
4,100,374
3,465,513
218,638
785,932
156,772
794,556
1,004,570
951,328
Movements in the provision for doubtful debts are
as follows:
At 1 January/31 December
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% (2013: 0.00% to 8.00%) per annum on interest-bearing advances.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
179
Group
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
Associated Companies
Amounts due from
- trade
- advances
Provision for doubtful debts
Amounts due to
- trade
- advances
139,223
491,375
630,598
(46)
198,498
838,994
1,037,492
(286)
630,552
1,037,206
43,665
93,523
21,402
50,297
137,188
71,699
Movements in the provision for doubtful debts are
as follows:
At 1 January
(Write-back)/charge to profit and loss account
At 31 December
286
(240)
46
207
79
286
471
-
471
-
471
-
-
-
-
-
-
9,430
-
9,430
-
9,430
-
3
3
-
-
-
Advances to and from associated companies are unsecured and are repayable on demand. Interest is charged at rates
ranging from 0.22% to 8.00% (2013: 0.22% to 12.50%) per annum on interest-bearing advances.
15. Debtors
Trade debtors
Provision for doubtful debts
Long term receivables due within one year (Note 11)
Sundry debtors
Prepaid project cost & prepayments
Derivative financial instruments (Note 34)
Tax recoverable
Goods & Services Tax receivable
Interest receivable
Deposits paid
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
2014
$’000
2013
$’000
2014
$’000
2013
$’000
1,433,609
(6,538)
1,427,071
1,118,868
(10,500)
1,108,368
13,553
153,874
60,923
8,923
9,139
62,585
17,152
35,959
67,717
155,116
149,896
225,041
14,261
62,483
63,623
50,050
13,900
59,400
14,419
37,464
37,132
120,808
125,267
117,327
-
-
-
81
731
225
24,829
-
-
57
365
-
-
-
-
-
-
-
222
693
326
32,229
-
-
50
284
-
-
-
-
-
215
-
-
145,597
1,105,475
(22,957)
1,082,518
113,496
829,845
(22,466)
807,379
-
26,288
-
26,288
-
33,804
-
33,804
Total
2,509,589
1,915,747
26,288
33,804
Notes to the Financial Statements
180
Notes to the Financial Statements
15. Debtors (continued)
Movements in the provision for doubtful debts are as follows:
Group
Company
At 1 January
Charge/(write-back) to profit and loss account
Amount written off
Subsidiary disposed
Exchange differences
2014
$’000
32,966
2,945
(1,472)
(4,874)
(70)
2013
$’000
36,967
(2,322)
(1,634)
(94)
49
At 31 December
29,495
32,966
16. Short term investments
Available-for-sale investments:
Quoted equity shares
Unquoted equity shares
Unquoted unit trust
Unquoted debt securities
Total available-for-sale investments
Investments held for trading:
Quoted equity shares
Total short term investments
17. Bank balances, deposit and cash
2014
$’000
2013
$’000
-
-
-
-
-
-
-
-
-
-
-
-
Group
2014
$’000
2013
$’000
217,704
1,217
42,209
-
320,002
1,172
40,383
1,892
261,130
363,449
110,321
81,624
371,451
445,073
Bank balances and cash
Fixed deposits with banks
Amounts held under escrow accounts for
overseas acquisition of land,
payment of construction cost and liabilities
Amounts held under project accounts,
withdrawals from which are restricted to
payments for expenditures incurred on projects
Group
Company
2014
$’000
2013
$’000
2,587,578
3,028,583
3,938,778
1,520,308
23,650
6,582
96,190
98,988
2014
$’000
2,308
-
-
-
2013
$’000
2,466
-
-
-
5,736,001
5,564,656
2,308
2,466
Fixed deposits with banks of the Group mature on varying periods, substantially between 1 day to 3 months (2013: 1 day
to 3 months). This comprises Singapore dollar fixed deposits of $1,943,175,000 (2013: $82,761,000) at interest rates
ranging from 0.00% to 2.75% (2013: 0.00% to 2.81%) per annum, and foreign currency fixed deposits of $1,085,408,000
(2013: $1,437,547,000) at interest rates ranging from 0.00% to 11.57% (2013: 0.00% to 10.50%) per annum.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
181
18. Assets classified as held for sale and liabilities directly associated with assets classified as held for sale
On 18 November 2014, Keppel Energy Pte Ltd, a wholly-owned subsidiary of the Company, entered into a conditional
sale and purchase agreement with Keppel Infrastructure Fund Management Pte. Ltd., in its capacity as trustee-manager
of Keppel Infrastructure Trust (“KIT”), to divest 102 ordinary shares, representing 51% of the issued and paid-up share
capital of Keppel Merlimau Cogen Pte Ltd (“KMC”) to KIT.
The completion of the transaction is conditional, amongst others, the approval of KIT Unitholders for the transaction,
the equity fund raising to fund the transaction, and regulatory consents and approvals being obtained. In accordance
with FRS 105 Non-current Assets Held for Sale and Discontinued Operations, the assets and liabilities of KMC have been
presented separately as “assets classified as held for sale” and “liabilities directly associated with assets classified as
held for sale” as follows:
Assets classified as held for sale
Fixed assets (Note 6)
Stocks & work-in-progress in excess of related billings
Debtors
Bank balances, deposits & cash
Liabilities directly associated with assets classified as held for sale
Creditors
Deferred taxation
KMC is included in the Infrastructure Division for purpose of segmental reporting.
19. Creditors
Group
2014
$’000
1,168,222
27,437
61,595
1,386
1,258,640
284,787
165,230
450,017
Trade creditors
Customers’ advances and deposits
Progress billings received
Derivative financial instruments (Note 34)
Sundry creditors
Accrued operating expenses
Advances from non-controlling shareholders
Retention monies
Interest payables
Group
Company
2014
$’000
2013
$’000
805,240
67,895
282,763
350,100
1,357,466
2,118,849
223,945
187,323
39,173
757,308
73,551
236,395
121,191
1,453,693
2,117,788
312,833
175,891
35,967
2014
$’000
-
-
-
341,075
2,780
131,304
-
-
17,009
2013
$’000
-
-
-
104,067
2,827
104,307
-
-
16,966
5,432,754
5,284,617
492,168
228,167
Other non-current liabilities:
Accrued operating expenses
148,669
124,580
66,273
47,022
The carrying amount of the non-current liabilities approximates the fair value.
Advances from non-controlling shareholders of certain subsidiaries are unsecured and are repayable on demand.
Interest is charged at rates ranging from 1.20% to 3.48% (2013: 1.90% to 6.68%) per annum on interest-bearing
advances.
Notes to the Financial Statements
182
Notes to the Financial Statements
20. Provisions
Group
2014
At 1 January
Charge to profit and loss account
Amount utilised
Exchange differences
Warranties
$’000
Claims
$’000
Total
$’000
153,598
649
(3,458)
(1,263)
10,005
-
(10,005)
-
163,603
649
(13,463)
(1,263)
At 31 December
149,526
-
149,526
2013
At 1 January
Charge to profit and loss account
Amount utilised
Exchange differences
At 31 December
21. Term loans
Group
Keppel Corporation Medium Term Notes
Keppel Land Medium Term Notes
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)
130,169
18,134
(448)
5,743
15,000
-
(5,000)
5
145,169
18,134
(5,448)
5,748
153,598
10,005
163,603
2014
2013
Due within
one year
$’000
Due after
one year
$’000
Due within
one year
$’000
Due after
one year
$’000
-
154,994
495,649
1,500,000
854,083
-
-
120,000
-
-
-
-
1,500,000
899,000
491,188
120,000
123,234
1,021,758
915,945
2,196,880
198,619
318,046
741,725
2,830,948
1,795,635
5,586,908
516,665
6,582,861
Company
Keppel Corporation Medium Term Notes
Unsecured bank loans
(a)
(f)
-
290,511
1,500,000
-
-
160,838
1,500,000
-
290,511
1,500,000
160,838
1,500,000
(a) 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 (2013: $1,500,000,000). The notes are unsecured
and comprised fixed rate notes due from 2020 to 2042 (2013: from 2020 to 2042) with interest rates ranging
from 3.10% to 4.00% (2013: 3.10% to 4.00%) per annum.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
183
(b) 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 $325,339,000 (2013: $314,000,000). The fixed rate notes, due in 2019, are unsecured and carried
an interest rate of 3.26% (2013: 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 $683,738,000 (2013: $585,000,000). The notes are unsecured
and comprised fixed rate notes due from 2015 to 2024 (2013: 2015 to 2024) with interest rates ranging from 2.67%
to 3.90% (2013: 2.67% to 3.90%) per annum.
(c)
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
Interest expense
Interest paid
Liability component at 31 December
2014
$’000
491,188
13,836
(9,375)
2013
$’000
486,800
13,763
(9,375)
495,649
491,188
Interest expense on the convertible bonds is calculated based on the effective interest method by applying the
interest rate of 2.50% (2013: 2.50%) per annum for an equivalent non-convertible bond to the liability component
of the convertible bonds.
(d) 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 (2013:
$120,000,000). The fixed rates notes, due in 2019, are unsecured and carried an interest rate of 2.63% (2013:
2.63%) per annum from August 2012 to August 2017, and at 3.83% (2013: 3.83%) per annum from August 2017 to
August 2019.
(e)
The secured bank loans consist of:
- A term loan of $38,000,000 (2013: $38,000,000) 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 1.44% to 1.48% (2013: 1.37% to 1.44%) per annum.
- A term loan of $289,370,000 (2013: $290,000,000) 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 1.90% (2013: 1.26% to 1.33%) per annum.
- A term loan of $46,621,000 (2013: $nil) drawn down by a subsidiary. The term loan is repayable in 2018 and
is secured on certain assets of the subsidiary. Interest is based on money market rates ranging from 1.20% to
1.71% (2013: nil%) per annum.
- A term loan of $394,861,000 (2013: $nil) drawn down by a subsidiary. The term loan is repayable in 2019 and
is secured on certain assets of the subsidiary. Interest is based on money market rates ranging from 1.02% to
1.16% (2013: nil%) per annum.
- A term loan of $nil (2013: $137,000,000) drawn down by a subsidiary. The term loan was repaid in 2014
and was previously secured on certain assets of the subsidiary. Interest was based on money market rates
ranging from nil% to nil% (2013: 0.58% to 1.25%) per annum.
Notes to the Financial Statements
184
Notes to the Financial Statements
21. Term loans (continued)
- A term loan of $nil (2013: $244,428,000) drawn down by a subsidiary. The term loan was repaid in 2014 and
was previously secured on the investment property of the subsidiary. Interest was based on money market
rates ranging from nil% to nil% (2013: 1.42% to 1.49%) per annum.
- Term loans of $9,600,000 (2013: $22,400,000) drawn down by subsidiaries. The term loans are repayable
within a year (2013: one to two years) and are secured on certain fixed assets of the subsidiaries. Interest is
based on money market rates ranging from 0.80% to 0.87% (2013: 0.79% to 0.82%) per annum.
- Other secured bank loans comprised $260,727,000 (2013: $208,516,000) of foreign currency loans. They
are repayable between one to five (2013: 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 3.03%% to
16.70% (2013: 6.33% to 16.70%) per annum.
(f)
The unsecured bank and other loans of the Group totalling $3,218,638,000 (2013: $3,148,994,000) comprised
$1,215,834,000 (2013: $1,340,492,000) of loans denominated in Singapore dollar and $2,002,804,000 (2013:
$1,808,502,000) of foreign currency loans. They are repayable between one to six (2013: one to seven) years.
Interest on loans denominated in Singapore dollar is based on money market rates ranging from 0.83% to 4.50%
(2013: 0.86% to 2.90%) per annum. Interest on foreign currency loans is based on money market rates ranging
from 0.38% to 10.73% (2013: 0.75% to 10.17%) per annum.
The unsecured bank loans of the Company totalling $290,511,000 (2013: $160,838,000), denominated foreign
currency, are repayable within one to six months (2013: one month) and are based on money market rates
ranging from 0.38% to 3.30% (2013: 0.75% to 2.91%) per annum.
The Group has mortgaged certain properties and assets of up to an aggregate amount of $2,704,286,000 (2013:
$2,895,304,000) to banks for loan facilities.
The fair values of term loans for the Group and Company are $7,426,920,000 (2013: $6,809,218,000) and
$1,787,799,000 (2013: $1,641,236,000) 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
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
137,015
3,260,206
2,189,687
1,731,231
2,314,607
2,537,023
-
-
1,500,000
-
-
1,500,000
5,586,908
6,582,861
1,500,000
1,500,000
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
185
22. 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 were secured by certain assets of a subsidiary.
23. Deferred taxation
Group
Company
2014
$’000
2013
$’000
2014
$’000
Deferred tax liabilities:
Accelerated tax depreciation
Investment properties valuation
Offshore income & others
Deferred tax assets:
Provisions
Unutilised tax benefits
107,385
132,404
119,875
359,664
288,306
124,183
139,257
551,746
(30,938)
(62,314)
(93,252)
(37,600)
(72,257)
(109,857)
Net deferred tax liabilities
266,412
441,889
-
-
-
-
-
-
-
-
2013
$’000
-
-
4,933
4,933
-
-
-
4,933
Net deferred tax liabilities are determined by offsetting deferred tax assets against deferred tax liabilities of the same
entities. Deferred tax assets are recognised for unutilised tax benefits carried forward to the extent that realisation of
the related tax benefits through future taxable profits is probable.
The Group has unrecognised deferred tax liabilities of $59,239,000 (2013: $51,156,000) for taxes that would be payable
on the undistributed earnings of certain subsidiaries as these earnings would not be distributed in the foreseeable
future and the Group is in a position to control the timing of the reversal of the temporary differences.
The Group has unutilised tax losses and capital allowances of $389,130,000 (2013: $444,251,000) for which no deferred
tax benefit is recognised in the balance sheet. These tax losses and capital allowances can be carried forward and used
to offset against future taxable income subject to meeting certain statutory requirements by those companies with
unrecognised tax losses and capital allowances in their respective countries of incorporation. The unutilised tax losses
and capital allowances do not have expiry dates.
Notes to the Financial Statements
186
Notes to the Financial Statements
23. Deferred taxation (continued)
Movements in deferred tax liabilities and assets are as follows:
Charged/
(credited)
to other
comprehen-
sive Subsidiaries
acquired
$’000
income
$’000
Reclassifi-
cation
$’000
Liabilities
directly
associated
with assets
classified as
held for sale
(Note 18)
$’000
Exchange
At
differences 31 December
$’000
$’000
At
Charged/
(credited) to
1 January profit or loss
$’000
$’000
Group
2014
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
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
288,306
6,711
124,183
7,744
-
-
139,257
551,746
(22,585)
(8,130)
2,351
2,351
(37,600)
(72,257)
(109,857)
3,923
(1,626)
2,297
-
-
-
441,889
(5,833)
2,351
-
-
-
-
-
-
-
-
-
-
-
-
(187,300)
(332) 107,385
-
477
132,404
-
(187,300)
852
997
119,875
359,664
568
(7,087)
(6,519)
2,180
19,890
22,070
(9)
(1,234)
(1,243)
(30,938)
(62,314)
(93,252)
(6,519)
(165,230)
(246) 266,412
232,894
55,259
120,937
3,291
-
-
674
-
83,405
437,236
3,011
61,561
229
229
50,595
51,269
(39,847)
(35,506)
(75,353)
2,195
(35,813)
(33,618)
-
-
-
-
-
-
361,883
27,943
229
51,269
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(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
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
187
Group
2014
$’000
2013
$’000
8,547,313
7,226,479
860,351
564,962
25,602
91,105
3,185,654
7,776
216
683,737
713,709
34,937
199,675
3,514,581
6,880
421
13,282,979
12,380,419
Group
2014
$’000
1,406,861
105,077
56,461
164,565
2013
$’000
1,326,667
109,763
55,362
176,445
1,732,964
1,668,237
Group
2014
$’000
1,550
4,232
2,355
2013
$’000
1,419
4,369
2,371
956
783
23,521
127
9,391
262,771
7,746
2,365
(289,214)
(8,008)
15,002
27,389
(3,170)
30,144
110
12,259
233,652
1,482
8,640
(3,865)
(4,805)
(9,350)
15,474
(9,877)
24. 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
25. 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
26. 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
Impairment/write-off of fixed assets
Amortisation of intangibles
Profit on sale of fixed assets and an investment property
Profit on sale of investments
Fair value loss/(gain) on
- investments
- forward foreign exchange contracts
- interest rate caps and swaps
Notes to the Financial Statements
188
Notes to the Financial Statements
26. Operating profit (continued)
Charge for warranties
Provision for stocks and work-in-progress
Provision for doubtful debts
Cost of stocks & properties held for sale recognised as expense
Rental expense
- operating leases
Direct operating expenses
- investment properties that generated rental income
Loss/(gain) on differences in foreign exchange
Gain on disposal of subsidiaries
Gain on disposal of associated companies
Write-back of impairment of investments
Fair value gain on investment properties (Note 7)
Write-back of provision for restructuring of operations and others
Non-audit fees paid to
- auditors of the Company
- other auditors of subsidiaries
27.
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 on interest rate caps and swaps
Group
2014
$’000
649
2,699
2,945
1,038,024
2013
$’000
18,134
4,173
2,255
1,021,080
107,153
84,622
23,802
7,513
(48,647)
(145,184)
(47,971)
(54,569)
(4,752)
41,895
(23,881)
(307,726)
-
(2,818)
(156,284)
(43,088)
118
463
35
359
Group
2014
$’000
4,169
7,767
2013
$’000
1,849
12,184
11,936
14,033
133,104
144,189
(137,194)
3,170
(134,595)
9,877
(134,024)
(124,718)
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
28. Taxation
(a)
Income tax expense
Tax expense comprised:
Current tax
Adjustment for prior year’s tax
Share of taxation of associated companies (Note 9)
Others
Deferred tax movement:
Movements in temporary differences (Note 23)
189
Group
2014
$’000
2013
$’000
397,319
(33,512)
72,096
32,292
370,197
(36,132)
57,608
(22,250)
(5,833)
27,943
462,362
397,366
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:
Group
2014
$’000
2013
$’000
2,888,612
2,793,740
491,064
(181,507)
113,793
(1,564)
74,088
(33,512)
474,936
(259,183)
145,703
(14,778)
86,820
(36,132)
462,362
397,366
Group
Company
2014
$’000
2013
$’000
465,387
143
397,319
(33,512)
(332,610)
102
(862)
764,862
(8,225)
370,197
(36,132)
(592,453)
203
(13,827)
2014
$’000
19,575
-
7,000
(12,575)
-
-
-
(33,268)
-
(19,121)
(117)
-
-
2013
$’000
21,097
-
7,000
(6,200)
(2,205)
-
-
-
(117)
462,699
465,387
14,000
19,575
Profit before tax
Tax calculated at tax rate of 17% (2013: 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
- tax recoverable and others
Others
At 31 December
Notes to the Financial Statements
190
Notes to the Financial Statements
29. Earnings per ordinary share
Net profit attributable to shareholders
Adjustment for dilutive potential ordinary shares
of subsidiaries and associated companies
Group
2014
$’000
2013
$’000
Basic
Diluted
Basic
Diluted
1,884,798
1,884,798
1,845,792
1,845,792
-
(1,730)
-
(844)
Adjusted net profit
1,884,798
1,883,068
1,845,792
1,844,948
Weighted average number of ordinary shares
(excluding treasury shares)
Adjustment for dilutive potential ordinary shares
Weighted average number of ordinary shares
used to compute earnings per share
(excluding treasury shares)
Number of Shares
’000
Number of Shares
’000
1,815,042
-
1,815,042
16,461
1,805,198
-
1,805,198
18,038
1,815,042
1,831,503
1,805,198
1,823,236
Earnings per ordinary share
103.8 cts
102.8 cts
102.3 cts
101.2 cts
30. Dividends
A final cash dividend of 36.0 cents per share tax exempt one-tier (2013: final cash dividend of 30.0 cents per share
tax exempt one-tier) in respect of the financial year ended 31 December 2014 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 12.0 cents per share tax exempt one-tier (2013: cash
dividend of 10.0 cents per share tax exempt one-tier and special distribution in specie of 8 Keppel REIT units for every
100 shares in the Company equivalent to 9.5 cents per share), total distributions paid and proposed in respect of the
financial year ended 31 December 2014 will be 48.0 cents per share (2013: 49.5 cents per share).
During the financial year, the following distributions were made:
A final cash dividend of 30.0 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the previous financial year
An interim cash dividend of 12.0 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the current financial year
$’000
544,887
218,019
762,906
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
31. Commitments
(a) Capital commitments
Capital expenditure not provided for in the financial statements:
In respect of contracts placed:
- for purchase and construction of investment properties
- for purchase of other fixed assets
- for purchase/subscription of shares in other companies
Amounts approved by Directors in addition to contracts placed:
- for purchase and construction of investment properties
- for purchase of other fixed assets
- for purchase/subscription of shares in other companies
Less: Non-controlling shareholders’ shares
191
Group
2014
$’000
2013
$’000
71,047
131,798
250,079
67,709
216,324
134,871
142,310
412,767
23,073
1,031,074
(272,267)
156,676
237,174
68,448
881,202
(267,244)
758,807
613,958
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
Company
2014
$’000
2013
$’000
2014
$’000
109,170
349,888
1,029,104
97,494
310,580
917,194
1,488,162
1,325,268
49
-
-
49
2013
$’000
128
47
-
175
(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
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
147,020
222,717
151,902
166,001
259,806
152,263
521,639
578,070
-
-
-
-
-
-
-
-
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.
Notes to the Financial Statements
192
Notes to the Financial Statements
32. Contingent liabilities and guarantees (unsecured)
Guarantees in respect of banks and other loans
granted to subsidiaries and associated companies
Bank guarantees
Others
Group
Company
2014
$’000
2013
$’000
2014
$’000
2013
$’000
452,719
544,354
1,664,968
1,833,292
30,165
63,062
619
537
-
-
-
-
483,503
607,953
1,664,968
1,833,292
The financial effects of FRS 39 relating to financial guarantee contracts issued by the Company are not material to the
financial statements of the Company and therefore are not recognised.
33. Significant related party transactions
Other than the related party information disclosed elsewhere in the financial statements, there were no other significant
related party transactions during the financial year.
34. 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 $9,753,671,000 (2013: $9,185,298,000). The net negative fair value of forward
foreign exchange contracts is $315,776,000 (2013: net negative fair value of $77,275,000) comprising assets
of $25,907,000 (2013: $27,818,000) and liabilities of $341,683,000 (2013: $105,093,000). These amounts are
recognised as derivative financial instruments in debtors (Note 15), creditors (Note 19) and assets classified as held
for sale and liabilities directly associated with assets classified as held for sale (Note 18).
As at the end of the financial year, the Company has outstanding forward foreign exchange contracts with
notional amounts totalling $9,625,812,000 (2013: $8,949,991,000). The net negative fair value of forward
foreign exchange contracts is $316,246,000 (2013: net negative fair value of $71,838,000) comprising assets
of $24,829,000 (2013: $32,229,000) and liabilities of $341,075,000 (2013: $104,067,000). These amounts are
recognised as derivative financial instruments in debtors (Note 15) and creditors (Note 19).
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
193
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
2014
Euro
$’000
Others
$’000
USD
$’000
2013
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
265,883
197,589
21,144
-
287,090
56,891
91,747
161,410
1,673
8,475
52,685
86,944
405,770
29,310
72,229
1,809,771
118,633
131,729
69,543
1,010,277
645
56,119
29,773
240,752
89,456
1,607,207
6,455
-
18,415
14,645
26
27
-
-
126
1,036
32
15
-
-
118
1,134
Sensitivity analysis for currency risk
If the relevant foreign currency change against SGD by 5% (2013: 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
2014
$’000
2013
$’000
2014
$’000
2013
$’000
(20,346)
20,346
10,276
(10,276)
9,849
(9,849)
(314)
314
5,670
(5,670)
3
(3)
2
(2)
-
-
-
-
8,096
(8,096)
422
(422)
-
-
(ii)
Interest rate risk
The Group is exposed to interest rate risk for changes in interest rates primarily for debt obligations, placements
in the money market and investments in bonds. The Group policy is to maintain a mix of fixed and variable rate
debt instruments with varying maturities. Where necessary, the Group uses derivative financial instruments to
hedge interest rate risks.
The Group enters into interest rate swap agreements to hedge the interest rate risk exposure arising from its S$
and US$ variable rate term loans (Note 21). As at the end of the financial year, the Group has interest rate swap
agreements with notional amount totalling $1,138,161,000 (2013: $1,140,845,000) whereby it receives variable
rates equal to SIBOR and LIBOR (2013: SIBOR and LIBOR) and pays fixed rates of between 1.27% and 3.62% (2013:
1.27% and 3.62%) on the notional amount.
Notes to the Financial Statements
194
Notes to the Financial Statements
34. Financial risk management (continued)
The net negative fair value of interest rate swaps for the Group is $14,047,000 (2013: net negative fair value
of $3,694,000) comprising assets of $379,000 (2013: $10,922,000) and liabilities of $14,426,000 (2013:
$14,616,000). These amounts are recognised as derivative financial instruments in debtors (Note 15), creditors
(Note 19) and assets classified as held for sale and liabilities directly associated with assets classified as held for
sale (Note 18).
Sensitivity analysis for interest rate risk
If interest rates increase/decrease by 0.5% (2013: 0.5%) with all other variables held constant, the Group’s profit
before tax would have been lower/higher by $6,855,000 (2013: $11,081,000) 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 $583,635,000
(2013: $421,604,000) and $11,284,000 (2013: $10,450,000) respectively. The net negative fair value of HSFO
forward contracts for the Group is $219,752,000 (2013: net positive fair value of $9,604,000) comprising assets
of $nil (2013: $11,042,000) and liabilities of $219,752,000 (2013: $1,438,000). The net negative fair value of
Dated Brent forward contracts for the Group is $3,519,000 (2013: net positive fair value of $224,000) comprising
assets of $nil (2013: $268,000) and liabilities of $3,519,000 (2013: $44,000). These amounts are recognised as
derivative financial instruments in debtors (Note 15), creditors (Note 19) and assets classified as held for sale and
liabilities directly associated with assets classified as held for sale (Note 18).
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% (2013: 5%) with all other variables held constant,
the Group’s hedging reserve in equity would have been higher/lower by $18,194,000 (2013: $21,560,000) and
$388,000 (2013: $534,000) respectively as a result of fair value changes on cash flow hedges.
If prices for quoted investments increase/decrease by 5% (2013: 5%) with all other variables held constant, the
Group’s profit before tax would have been higher/lower by $5,516,000 (2013: $4,081,000) 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 $14,267,000 (2013: $20,632,000) as a result of higher/lower fair value
gains on available-for-sale investments.
The various sensitivity rates used in the sensitivity analysis for currency, interest rate and price risks represent rates
generally used internally by management when assessing the various risks.
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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
195
(i)
Financial assets that are neither past due nor impaired
Debtors and amounts due from associated companies that are neither past due nor impaired are substantially
companies with good collection track record with the Group. Bank deposits, forward foreign exchange contracts,
interest rate caps and interest rate swaps are mainly transacted with banks of high credit ratings assigned by
international credit-rating agencies.
(ii)
Financial assets that are past due but not impaired/partially impaired
The age analysis of trade debtors past due but not impaired/partially impaired is as follows:
Past due 0 to 3 months but not impaired
Past due 3 to 6 months but not impaired
Past due over 6 months and partially impaired
Group
2014
$’000
531,853
32,519
116,011
2013
$’000
258,699
11,819
107,576
680,383
378,094
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 15.
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 21.
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).
Within
one year
$’000
Within
one to
two years
$’000
Within
two to
five years
$’000
After
five years
$’000
4,680,313
(4,899,429)
2,541,804
(2,641,733)
2,245,217
(2,292,699)
(164,727)
(51,865)
(3,160)
-
-
-
(3,519)
(1,945,561)
-
(268,190)
-
(3,617,775)
-
(2,630,933)
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)
Group
2014
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Payments
Net-settled Dated Brent forward contracts
- Payments
Borrowings
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
Notes to the Financial Statements
196
Notes to the Financial Statements
34. Financial risk management (continued)
Company
2014
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Borrowings
2013
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
4,527,663
(4,698,470)
(342,159)
2,541,804
(2,641,733)
(51,460)
2,245,217
(2,292,699)
(154,380)
-
-
(1,894,846)
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)
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 2014. Externally imposed capital requirements are mainly debt
covenants included in certain loans of the Group and the Company requiring the Group or certain subsidiaries of the
Company to maintain net gearing to capital employed not exceeding ratios ranging from 2.75 to 3.00 times.
Management monitors capital based on the Group net gearing. The Group net gearing is calculated as net borrowings
divided by total capital. Net borrowings are calculated as bank balances, deposits & cash (Note 17) less total term loans
(Note 21) plus bank overdrafts (Note 22). Total capital refers to capital employed under equity.
Net debt
Total capital
Net gearing ratio
Group
2014
$’000
2013
$’000
1,646,542
1,535,343
14,727,641
13,688,863
0.11x
0.11x
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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
197
The following table presents the assets and liabilities measured at fair value.
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
8,923
-
8,923
67,690
11,239
155,340
234,269
217,704
110,321
42,209
-
-
-
259,913
110,321
395,715
62,371
155,340
613,426
-
-
-
-
-
-
350,100
-
350,100
-
-
123,500
784,931
952,017
-
784,931
952,017
123,500
123,500
1,736,948
1,860,448
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
Group
2014
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
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
Notes to the Financial Statements
198
Notes to the Financial Statements
34. Financial risk management (continued)
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Company
2014
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
2013
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
-
-
-
-
24,829
341,075
32,229
104,067
-
-
-
-
24,829
341,075
32,229
104,067
There have been no transfer between Level 1, Level 2 and Level 3 for the Group and Company during 2014 and 2013.
The following table presents the reconciliation of financial instruments measured at fair value based on significant
unobservable inputs (Level 3).
At 1 January
Purchases
Sales
Fair value gain/(loss) recognised in other comprehensive income
Exchange differences
At 31 December
Group
2014
$’000
129,433
33,094
(15,946)
8,696
63
2013
$’000
153,555
498
(18,394)
(6,438)
212
155,340
129,433
The following table presents the reconciliation of investment properties measured at fair value based on significant
unobservable inputs (Level 3).
At 1 January
Development expenditure
Fair value gain
Disposal
Subsidiary disposed
Reclassification
- Stocks and work-in-progress
Exchange differences
At 31 December
Group
2014
$’000
2013
$’000
2,050,948
34,644
75,962
(454,712)
-
5,419,850
247,769
160,689
-
(3,757,083)
-
30,106
(9,200)
(11,077)
1,736,948
2,050,948
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
199
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
available-for-sale investments categorised under Level 2 of the fair value hierarchy are based on the net asset value in
the fund managers’ valuation reports at the balance sheet date and is derived from prices from an observable market.
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.
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
2014
$’000
Valuation
Techniques
Available-for-sale investments
155,340
Investment Properties
- Commercial, completed
784,931
Net asset value and/or
discounted cash flow
Direct comparison method,
income capitalisation method
and/or discounted cash flow
method
Unobservable
Inputs
Range of
Unobservable
Inputs
Net asset value*
Not applicable
Discount rate
4.25% to
14.99%
Occupancy rate
70% to 98%
Terminal yield
Capitalisation rate
Monthly effective
rental (psm)
10.41% to
11.15%
7.00% to
12.50%
$18 to $78
- Commercial, under
construction
952,017
Direct comparison method
and/or residual method
Price of comparable $10,075 to
land plots (psm)
$11,289
Gross development $598 to $893
value ($’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.
Notes to the Financial Statements
200
Notes to the Financial Statements
34. Financial risk management (continued)
Description
Fair value
as at
31 December
2013
$’000
Valuation
Techniques
Available-for-sale investments
129,433
Net asset value and/or
discounted cash flow
Unobservable
Inputs
Range of
Unobservable
Inputs
Net asset value*
Not applicable
Investment Properties
- Commercial, completed
1,205,222
Direct comparison method,
income capitalisation method
and/or discounted cash flow
method
Discount rate
4.25% to
14.04%
- Commercial, under
construction
845,726
Direct comparison method
and/or residual method
Occupancy rate
Terminal yield
Capitalisation rate
70% to 100%
9.40% to
12.00%
4.00% to
13.50%
$20 to $70
Monthly effective
rental (psm)
Price of comparable $4,240 to
land plots (psm)
Gross development $570 to $850
value ($’million)
$4,570
*
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 7.
35. 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 KrisEnergy Limited, M1 Limited,
k1 Ventures Ltd, and equities.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
201
Management monitors the results of each of the above operating segments for the purpose of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on net profit or loss.
Information regarding the Group’s reportable segments is presented in the following table:
Offshore & Marine
$’000
Infrastructure
$’000
Property
$’000
Investments
$’000
Elimination
$’000
Total
$’000
2014
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
8,556,252
491
8,556,743
2,933,358
50,835
2,984,193
1,729,348
3,619
1,732,967
64,021
69,758
133,779
-
(124,703)
(124,703)
13,282,979
-
13,282,979
1,223,828
7,472
88,812
(12,257)
57,346
1,365,201
(272,706)
1,092,495
465,727
-
960
(44,741)
29,348
451,294
(44,530)
406,764
381,209
1,017,137
(140,024)
877,113
1,039,684
52,811
1,092,495
319,990
86,774
406,764
481,993
395,120
877,113
667,280
3,558
26,066
(60,976)
18,152
906
134,251
(134,602)
(1,567)
-
(116,985)
118,552
2,373,420
11,936
133,104
(134,024)
504,176
2,888,612
(462,362)
2,426,250
1,884,798
541,452
2,426,250
36,273
54,980
(5,102)
49,878
43,131
6,747
49,878
-
-
-
-
-
-
-
9,626,640
7,299,871
2,326,769
4,263,143
3,311,344
951,799
16,340,181
7,417,171
8,923,010
8,954,630
6,428,567
2,526,063
(7,629,769)
(7,629,769)
-
31,554,825
16,827,184
14,727,641
539,932
268,402
141,816
649,565
489,995
104,219
3,205,343
234,956
18,601
593,604
268
500
-
-
-
4,988,444
993,621
265,136
Singapore
$’000
Brazil
$’000
Far East &
other ASEAN
countries
$’000
External sales
Non-current assets
9,292,272
5,705,455
1,841,396
325,563
1,478,354
3,196,615
Other
countries
$’000
670,957
523,073
Elimination
$’000
Total
$’000
-
-
13,282,979
9,750,706
Other than Singapore and Brazil, no single country accounted for 10% or more of the Group’s revenue for the financial
year ended 31 December 2014.
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 2014.
Note: Pricing of inter-segment goods and services is at fair market value.
Notes to the Financial Statements
202
Notes to the Financial Statements
35. Segment analysis (continued)
Offshore & Marine
$’000
Infrastructure
$’000
Property
$’000
Investments
$’000
Elimination
$’000
Total
$’000
2013
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
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
-
(137,874)
(137,874)
12,380,419
-
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)
(5,441,390)
-
30,055,620
16,366,757
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
Singapore
$’000
Brazil
$’000
Far East &
other ASEAN
countries
$’000
External sales
Non-current assets
9,288,023
7,959,719
1,087,682
187,095
1,162,208
2,900,428
Other
countries
$’000
842,506
507,308
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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
203
36. Non-adjusting events after balance sheet date
On 23 January 2015, the Company announced that it intends to make a voluntary unconditional cash offer for all the
issued ordinary shares of Keppel Land Limited (“KLL”) other than those already owned, controlled or agreed to be
acquired by the Company as at the date of the offer. Pursuant to Section 215 of the Companies Act, the Company
intends to exercise its right to compulsorily acquire all the shares not acquired under the offer in the event that the
Company reaches or exceeds the Compulsory Acquisition Threshold. Thereafter, the Company will then proceed to
delist KLL from the Singapore Stock Exchange. Please refer to the Offer Document dated 12 February 2015 for more
details. Upon successful full privatisation of KLL, on a pro-forma basis, the Group’s share capital and reserves as at 31
December 2014 is estimated to increase from approximately $10.38 billion to $10.77 billion and its net profit attributable
to shareholders of the Company for FY2014 is estimated to increase from approximately $1.9 billion to $2.1 billion. As at
the date of authorisation for issue of the financial statements, the transaction has not been completed.
37. New accounting standards and interpretations
At the date of authorisation of these financial statements, the following new/revised FRSs, INT FRSs and amendments
to FRS that are relevant to the Group and the Company were issued but not effective:
• Amendments to FRS 19 (2011) Defined Benefit Plans: Employee Contributions
•
•
•
•
•
Improvements to Financial Reporting Standards (January 2014)
Improvements to Financial Reporting Standards (February 2014)
Improvements to Financial Reporting Standards (November 2014)
FRS 115 Revenue from Contracts with Customers
FRS 109 Financial Instruments
Consequential amendments were also made to various standards as a result of these new/revised standards.
The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS in future periods
will not 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:
FRS 115 Revenue from Contracts with Customers
In November 2014, FRS 115 was issued which establishes a single comprehensive model for entities to use in accounting
for revenue arising from contracts with customers. FRS 115 will supersede the current revenue recognition guidance
including FRS 18 Revenue, FRS 11 Construction Contracts and the related interpretations when it becomes effective.
The core principle of FRS 115 is that an entity should recognise revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:
• Step 1: Identify the contract(s) with a customer
• Step 2: Identify the performance obligations in the contract
• Step 3: Determine the transaction price
• Step 4: Allocate the transaction price to the performance obligations in the contract
• Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Under FRS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the
goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive
guidance has been added in FRS 115 to deal with specific scenarios. Furthermore, extensive disclosures are required by
FRS 115.
FRS 115 will take effect from financial years beginning on or after 1 January 2017. The Group is currently evaluating the
impact of the changes in the period of initial adoption.
Notes to the Financial Statements
204
Notes to the Financial Statements
37. New accounting standards and interpretations (continued)
FRS 109 Financial Instruments
In December 2014, the Accounting Standards Council issued the final version of FRS 109 Financial Instruments which
reflects all phases of the financial instruments project and replaces FRS 39 Financial Instruments: Recognition and
Measurement. The standard introduces new requirements for classification and measurement, impairment, and
hedge accounting. FRS 109 is effective for annual periods beginning on or after 1 January 2018, with early application
permitted. Retrospective application is required, but comparative information is not compulsory in the year of adoption.
The adoption of FRS 109 will have an effect on the classification and measurement of the Group’s financial assets, but
no impact on the classification and measurement of the Group’s financial liabilities. The Group is currently evaluating
the impact of the changes in the period of initial adoption.
38. 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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
Significant Subsidiaries
and Associated Companies
205
Gross
Interest
2014
%
Effective Equity
Interest
Cost of Investment
2014
%
2013
%
2014
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
100
100
100 801,720 801,720
Singapore
Investment holding
100
100
100
#
#
Singapore
OFFSHORE & MARINE
Offshore
Subsidiaries
Keppel Offshore and
Marine Ltd
Keppel FELS Ltd
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
Holding of long-term investments
Construction and repair of
offshore drilling rigs
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
Holding of long-term investments
Holding of long-term investments
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
#
#
#
Brazil
Singapore
Azerbaijan
#
Singapore
#
Brazil
#
#
#
#
#
#
#
#
#
Singapore
Singapore
Brazil
Singapore
Brazil
BVI
USA
Bulgaria
Brazil
#
India
#
Singapore
Research & development on
marine and offshore engineering
#
USA
Offshore and marine-related
services
Angra Propriedades &
Administracao Ltd (1a)
AzerFELS Pte Ltd
Caspian Shipyard Company
LLC(1a)
(formerly known as
Caspian Shipyard
Company Ltd)
Deepwater Technology
Group Pte Ltd
100
100
100
68
75
68
51
60
45
100
100
100
Estaleiro BrasFELS Ltda(1a)
100
100
100
FELS Offshore Pte Ltd
Fernvale Pte Ltd
FSTP Brasil Ltda(1a)
100
100
75
100
100
75
100
100
75
FSTP Pte Ltd
75
75
75
Guanabara Navegacao
Ltda(1a)
Hygrove Investments Ltd(4)
Keppel AmFELS, LLC(3)
100
100
100
100
100
100
100
100
100
Keppel FELS Baltech Ltd(3)
100
100
100
Keppel FELS Brasil SA(1a)
100
100
100
Keppel Offshore & Marine
Engineering Services
Mumbai Pte Ltd(3)
Keppel Offshore & Marine
Technology Centre Pte
Ltd
Keppel Offshore & Marine
USA Inc(3)
100
100
100
100
100
100
100
100
100
Significant Subsidiaries and Associated Companies
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
206
Significant Subsidiaries
and Associated Companies
Gross
Interest
2014
%
Effective Equity
Interest
Cost of Investment
2014
%
2013
%
2014
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
Keppel Sea Scan Pte Ltd
100
100
100
Keppel Singmarine Brasil
Ltda(1a)
Keppel Verolme BV(1a)
100
100
100
100
100
100
KV Enterprises BV(1a)
KVE Adminstradora de Bens
100
100
100
100
100
100
Imoveis Ltda(1a)
Lindel Pte Ltd
Navegantes Administracoes
de Bens Moveis e Imoveis
Ltda(1a)
Offshore Technology
Development Pte Ltd
Regency Steel Japan Ltd(1a)
100
100
100
100
100
100
100
100
100
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
Atwin Offshore & Marine
Pte Ltd
FloaTEC Singapore Pte Ltd
Floatel International Ltd(3)
50
50
50
30
30
30
50
50
50
50
50
47
Keppel Kazakhstan LLP(4)
Marine Housing Services
Pte Ltd
Seafox 5 Ltd(3)
-
50
-
50
50
50
49
49
49
Marine
Subsidiaries
Keppel Shipyard Ltd
100
100
100
Keppel Philippines Marine
98
98
98
Inc(1a)
Alpine Engineering Services
Pte Ltd
Blastech Abrasives Pte Ltd
100
100
100
100
100
100
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
-
#
#
#
#
#
#
#
Singapore
#
Brazil
Trading and installation of
hardware, industrial, marine and
building related products,
leasing and provision of services
Shipbuilding
# Netherlands Construction and repair of
Brazil
offshore drilling rigs and
ship repairs
# Netherlands Holding of long-term investments
Holding of long-term investments
#
and property management
Project management,
engineering and procurement
Shipbuilding
Singapore
Brazil
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Production of jacking systems
Japan
BVI
BVI
BVI
Sourcing, fabricating and supply
of specialised steel components
Holding of long-term investments
Holding of long-term investments
Holding of long-term investments
Singapore
Singapore
Provision of heavy-lift equipment
and related services
Investment holding company
Singapore
Bermuda
Manufacturing and repair of oil rigs
Operating accommodation and
construction support vessels
(floatels) for the offshore oil and
gas industry
Kazakhstan Disposed
Singapore
Provision of housing services for
marine workers
Isle of Man Owning and leasing of
multi-purpose self-elevating
platforms
Singapore
Philippines
Ship repairing, shipbuilding and
conversions
Shipbuilding and repairing
Singapore Marine contracting
Singapore
Painting, blasting, shot blasting,
process and sale of slag
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
207
Gross
Interest
2014
%
Effective Equity
Interest
Cost of Investment
2014
%
2013
%
2014
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
100
100
100
100
100
100
#
#
# China
# China
100
51
87+
100
51
86+
#
100
51
#
86+ 3,020
#
#
3,020
Singapore
Singapore
Philippines
Engineering and construction of
specialised vessels
Engineering and construction of
specialised vessels
Shipbuilding and repairing
Provision of towage services
Shipbuilding and repairing
100
100
51
100
100
100
51
100
100
100
51
100
33
33
33
24
40
49
20
24
40
25
20
24
40
25
20
20
20
20
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Holding of long-term investments
Singapore
BVI/Norway Holding of long-term investments
Singapore
Singapore
Provision of towage services
Provision of technical
consultancy for ship design and
engineering works
UAE
Shipbuilding and repairing
Singapore
Philippines
# Malaysia
# Qatar
Investment holding
Fabrication and assembly of
topside modules for FPSOs and
FSOs
Provision of towage services
Ship repairing
#
Singapore
Chartering of ships, barges and
boats with crew
100
100
100 445,892 445,892
Singapore
Investment holding
Keppel Nantong Heavy
Industry Co Ltd(3)
Keppel Nantong Shipyard
Company Ltd(3)
Keppel Singmarine Pte Ltd
Keppel Smit Towage Pte Ltd
Keppel Subic Shipyard
Inc(1a)
KS Investments Pte Ltd
KSI Production Pte Ltd(4)
Maju Maritime Pte Ltd
Marine Technology
Development Pte Ltd
Associated Companies
Arab Heavy Industries
PJSC(1a)
Dyna-Mac Holdings Ltd(3)
Dyna-Mac Keppel
Philippines Inc(3)
Kejora Resources Sdn Bhd(3)
Nakilat-Keppel Offshore &
Marine Ltd(1a)
PV Keez Pte Ltd
INFRASTRUCTURE
Subsidiaries
Keppel Infrastructure
Holdings Pte Ltd
X-to-Energy
Subsidiaries
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
Keppel Infrastructure Trust
(formerly known as
K-Green Trust)
Waste-to-Energy
Subsidiaries
Keppel Seghers Pte Ltd
(formerly known as
Keppel Seghers Holdings
Pte Ltd)
49
49
49
#
#
Singapore
Infrastructure business trust
100
100
100
#
#
Singapore
Provision of environmental,
technologies, engineering works
& construction activities
Significant Subsidiaries and Associated Companies
208
Significant Subsidiaries
and Associated Companies
Gross
Interest
2014
%
Effective Equity
Interest
Cost of Investment
2014
%
2013
%
2014
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
#
#
#
#
#
#
#
#
#
-
#
#
#
#
#
Belgium
#
United
Kingdom
Provider of services and
solutions to the environmental
industry related to solid waste
treatment
Design, supply and installation of
flue gas treatment equipment
# China
# China
Investment and implementation
of energy and utilities related
infrastructure
Investment, construction and
operation of infrastructure for
environmental protection
#
#
#
#
#
#
Singapore
Singapore
Singapore
Singapore
Investment holding
Electricity, energy and power
supply and general wholesale
trade
Purchase and sale of gaseous fuels
Commercial power generation
Singapore
Singapore
Engineering works, construction
and O&M of plants and facilities
Disposed
#
Singapore
Precision engineering, repairing,
services and agencies
#
#
Singapore
Investment holding
Australia
Metal fabrication
# HK
Investment holding
Keppel Seghers Belgium
NV(1a)
100
100
100
Keppel Seghers UK Ltd(1a)
100
100
100
Associated Companies
Tianjin Eco-City Energy
20
20
20
Investment & Construction
Co Ltd(3)
Tianjin Eco-City
Environmental Protection
Co Ltd(3)
Gas-to-Power
Subsidiaries
20
20
20
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
100
100
100
-
-
100
50
50
50
100
100
100
100
100
100
100
100
100
Infrastructure Services
Subsidiaries
Keppel Seghers Engineering
Singapore Pte Ltd
Keppel FMO Pte Ltd(4)
Associated Companies
GE Keppel Energy Services
Pte Ltd(2)
Others
Subsidiaries
Keppel Integrated
Engineering Ltd
Keppel Prince Engineering
Pty Ltd(2a)
Keppel Seghers Hong Kong
Ltd(1a)
Logistics & Data Centres
Subsidiaries
Keppel Telecommunications
& Transportation Ltd(2)
Jilin Sino-Singapore Food
Zone International
Logistics Co Ltd(3)
80
80
80 397,647 397,647
Singapore
70
56
56
#
# China
Investment, management and
holding company
Integrated logistics services,
storage and distribution
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
209
Gross
Interest
2014
%
Effective Equity
Interest
Cost of Investment
2014
%
2013
%
2014
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
Keppel Communications
Pte Ltd(2)
100
80
80
Keppel Data Centres
Pte Ltd(2)
Keppel Data Centres
Holding Pte Ltd(2)
Keppel Datahub Pte Ltd(2)
100
80
80
100+
73+
73+
100+
73+
73+
Keppel Digihub Ltd(2)
100+
73+
73+
Keppel DC REIT
Management Pte Ltd(2)
(formerly known as
Keppel Data Centre
Investment Management
Pte Ltd)
Keppel DC Investment
Holdings Pte Ltd(2)
(formerly known as
TradeOneAsia Pte Ltd)
Keppel Logistics (Foshan)
Ltd(3)
100
80
80
100
80
80
70
56
56
Keppel Logistics Pte Ltd(2)
100
80
80
Keppel Telecoms Pte Ltd(2)
100
80
80
Associated Companies
Advanced Research Group
Co Ltd(2a)
Asia Airfreight Terminal
Company Ltd(3)
Citadel 100 Datacenters
Ltd(3)
Computer Generated
Solutions Inc(3)
Keppel DC REIT(n)(3)
Radiance Communications
Pte Ltd(2)
45
36
36
10
-
8
-
8
54
21
17
17
35+
50
27+
40
-
40
Securus Data Property Fund
Pte Ltd(3)
Securus Guernsey 2 Ltd(4)
-
-
-
-
28
44
SVOA Public Company
Ltd(2a)
Wuhu Sanshan Port Co
Ltd(3)
32
26
26
50
40
40
#
#
#
#
#
#
#
#
#
#
#
#
-
#
#
#
-
-
#
#
#
Singapore
#
#
#
#
#
Singapore
Singapore
Singapore
Singapore
Singapore
Trading and provision of
communications systems and
accessories
Investment holding
Data centre facilities and
co-location services
Data centre facilities and
co-location services
Data centre facilities and
co-location services
Investment holding and fund
management
#
Singapore
Datacentre asset management
services
# China
#
#
Singapore
Singapore
Integrated logistics port
operations, warehousing and
distribution
Integrated logistics services and
supply chain solutions
Investment holding
#
Thailand
# HK
#
#
-
#
Ireland
USA
Singapore
Singapore
#
Singapore
IT publication and business
information
Operation of air cargo handling
terminal
Disposed
IT consulting and outsourcing
provider
Investment holding
Distribution and maintenance of
communications equipment and
systems
Disposed
# Guernsey/
Disposed
Australia
Thailand
#
# China
Distribution of IT products and
telecommunications services
Integrated logistics services and
port operations
Significant Subsidiaries and Associated Companies
210
Significant Subsidiaries
and Associated Companies
Gross
Interest
2014
%
Effective Equity
Interest
Cost of Investment
2014
%
2013
%
2014
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
PROPERTY
Subsidiaries
Keppel Land Ltd(2)
55
55
55 1,685,699 1,685,699
Singapore
55
86+
57+
55
86+
57+
#
626
493
#
626
493
Singapore
Singapore
Philippines
Holding, management and
investment company
Investment holding
Property development
Investment holding
Keppel Land China Ltd(2)
Keppel Bay Pte Ltd
Keppel Philippines Properties
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)
D.L. Properties Ltd(2)
Double Peak Holdings Ltd(4)
Estella JV Co Ltd(2a)
Evergro Properties Ltd(2)
Floraville Estate Pte Ltd(2)
Greenfield Development
Pte Ltd(2)
Harvestland Development
Pte Ltd(2)
Hillsvale Resort Pte Ltd(2)
Hillwest Pte Ltd(2)
International Centre Co
Ltd(1a)
100
100+
80+
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
100
100
35
55
30
55
55
55
35
55
30
55
55
55
100
55
55
100
100
79
55
55
59
55
55
59
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# HK
#
#
BVI/Asia
Singapore
Investment holding
Investment holding
Fund management
#
Singapore
Investment holding
# China
Property investment
# China
Property development
#
#
#
Vietnam
Property development
Singapore
BVI/China
Investment holding
Investment holding
Singapore
#
# China
Investment holding
Property development
# China
Property development
# China
Property development
# China
Property development
# China
Property development
#
#
#
#
#
#
#
#
#
#
Singapore
BVI/
Singapore
Vietnam
Singapore
Singapore
Singapore
Property investment
Investment holding
Property development
Property investment and
development
Investment holding
Investment holding
Singapore
Property development
Singapore
Singapore
Vietnam
Investment holding
Investment holding
Property investment
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
211
Gross
Interest
2014
%
Effective Equity
Interest
Cost of Investment
2014
%
2013
%
2014
$’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)
Keppel Digihub Holdings
Ltd(2)
Keppel Heights (Wuxi)
Property Development
Co Ltd(3)
Keppel Hong Da
(Tianjin Eco-City) Property
Development Co Ltd(3)
Keppel Hong Yuan
(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 Financial
Services Pte Ltd(2)
Keppel Land International
Ltd(2)
Keppel Land Properties Pte
Ltd(2)
Keppel Land Realty Pte
Ltd(2)
Keppel Land Watco 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)
99
54
54
100
55
55
51
100
28
55
28
55
100
55
55
100
55
55
100
55
55
100
55
55
100+
75+
75+
100+
75+
75+
100
55
55
100
55
55
100
55
55
100
55
55
100
55
55
100
55
55
100
55
55
100
55
55
68
37
37
68
37
37
51
28
28
100
55
55
100
55
55
100
55
55
Significant Subsidiaries and Associated Companies
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# China
Property development
#
Singapore
Investment holding
#
# China
Saudi Arabia Property development
Property development
Singapore
Investment holding
Singapore
Investment holding
#
#
#
Singapore
# China
Investment, management and
holding company
Property development
# China
Property development
# China
Property development
# China
Property development
# China
Property development
#
Singapore
Property development
# HK
Investment holding
#
#
#
#
#
#
#
#
#
#
Singapore
Financial services
Singapore
Property services
Singapore
Investment holding
Singapore
Property development
Vietnam
Vietnam
India
Property investment and
development
Property investment and
development
Property development
Singapore
Investment holding
Singapore
Property fund management
Singapore
Property management services
212
Significant Subsidiaries
and Associated Companies
Gross
Interest
2014
%
Effective Equity
Interest
Cost of Investment
2014
%
2013
%
2014
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
45
25
25
100+
75+
75+
#
#
#
#
Thailand
Singapore
Property development and
investment
Investment holding
100+
75+
75+ 126,137 126,137
Singapore
Investment holding
Keppel Thai Properties Public
Co Ltd(2a)
Keppel Tianjin Eco-City
Holdings Pte Ltd(2)
Keppel Tianjin Eco-City
Investments Pte Ltd(2)
Keppel Township
Development (Shenyang)
Co Ltd(3)
Kingsdale Development Pte
Ltd(2)
Kingsley Investment Pte
Ltd(2)
Le-Vision Pte Ltd(2)
Mansfield Developments
Pte Ltd(2)
Merryfield Investment Pte
Ltd(2)
Ocean & Capital Properties
Pte Ltd(2)
Oceansky Pte Ltd(2)
OIL (Asia) Pte Ltd(2)
Parksville Development Pte
Ltd(2)
Pembury Properties Ltd(4)
100
55
55
86
47
47
100
55
55
100
100
55
55
55
55
100
55
55
100
55
55
100
100
100
55
55
55
55
55
55
100
55
55
PT Harapan Global
Niaga(n)(2a)
PT Kepland Investama(2a)
100
55
-
100
55
55
PT Ria Bintan(1a)
100
25
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 Centre Investment
Ltd(4)
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)
80
44
44
100
70
60
75
100
21
38
33
41
55
21
38
33
41
55
100
55
55
100
99
49
54
49
54
100
54
54
100
55
55
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# China
Property development
#
#
#
#
#
#
#
#
#
#
-
#
#
#
#
#
#
#
#
#
#
Singapore
Investment holding
Singapore
Investment holding
Singapore
Singapore
Investment holding
Property development
Singapore
Investment holding
Singapore
Property and investment holding
Singapore
Singapore
Singapore
Investment holding
Investment holding
Property investment
BVI/
Singapore
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Investment holding
Property development
Property investment and
development
Golf course ownership and
operation
Property investment and
development
Property development
Indonesia
Vietnam
Hotel ownership and operations
Property investment
Vietnam
Vietnam
Singapore
Property development
Property development
Investment holding
BVI/HK
Investment holding
Vietnam
#
# China
Property development
Property development
# China
Property development
# China
Property development
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
213
Gross
Interest
2014
%
Effective Equity
Interest
Cost of Investment
2014
%
2013
%
2014
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
Shanghai Jinju Real Estate
Investment Co Ltd(3)
Shanghai Maowei
Investment Consulting
Co Ltd(3)
Shanghai Merryfield Land
Co Ltd(3)
Shanghai Pasir Panjang
Land Co Ltd(3)
Sherwood Development
Pte Ltd(2)
Spring City Golf & Lake
Resort Co Ltd(3)
Spring City Resort Pte Ltd(2)
Straits Greenfield Ltd(3)
Straits Properties Ltd(2)
Straits Property Investments
Pte Ltd(2)
Success View Enterprises
Ltd(4)
Sunsea Yacht Club
(Zhongshan) Co Ltd(3)
Sunseacan Investment (HK)
Co Ltd(3)
Third Dragon Development
Pte Ltd(2)
Tianjin Fushi Property
Development Co Ltd(3)
Tianjin Keppel Hong Hui
Procurement Headquarter
Co Ltd(3)
Triumph Jubilee Ltd(4)
Wiseland Investment
Myanmar Ltd(3)
Atlantic Marina Services
(Asia-Pacific) Pte Ltd
Esqin Pte Ltd
FELS Property Holdings
Pte Ltd
FELS SES International
Pte Ltd
Harbourfront One Pte Ltd
Keppel Group Eco-City
Investments Pte Ltd
Keppel Houston Group
LLC(4)
Keppel Kunming Resort
Ltd(3)
Keppel Point Pte Ltd
100
54
55
100
54
55
99
54
54
99
54
54
70
38
38
80
38
38
100
100
100
100
55
55
55
55
55
55
55
55
100+
75+
75+
100
44
44
80
44
44
100
55
55
100
55
55
100
55
55
100
100
55
55
55
55
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# China
Property development
# China
Investment holding
# China
Property development
# China
Property development
#
Singapore
Property development
# China
#
Singapore
# Myanmar
Singapore
#
Singapore
#
Golf club operations and
development and property
development
Investment holding
Hotel ownership and operations
Property development
Investment holding
#
BVI/China
Investment holding
# China
# HK
Development of marina lifestyle
cum residential properties
Investment holding
#
Singapore
# China
Investment holding and
marketing agent
Property development
# China
Trading of construction materials
#
BVI/China
# Myanmar
Investment holding
Hotel ownership and operations
100+
91+
91+ 1,460
1,460
Singapore
Investment holding
100
100
100
100
100 11,001
100 78,214
11,001
78,214
Singapore
Singapore
Investment holding
Investment holding
98+
90+
90+
48
48
Singapore
Investment holding
70
100+
65
84+
65
#
#
84+ 126,744 126,744
Singapore
Singapore
Property development
Investment holding
100
86
86
100+
91+
91+
#
4
#
USA
Property investment
4 HK
Property investment
100+
86+
86+ 122,785 122,785
Singapore
Property development and
investment
Significant Subsidiaries and Associated Companies
214
Significant Subsidiaries
and Associated Companies
Gross
Interest
2014
%
Effective Equity
Interest
Cost of Investment
2014
%
2013
%
2014
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
100
100
100 764,400 764,400
Singapore
Investment holding
76
90
69
76
69
76
100
84
84
-
-
27
67
-
37
-
37
18
50
27
27
50
27
27
67
50
25
43
39
39
68
37
27
14
23
34
34
37
37
27
14
23
34
34
37
68
37
37
68
37
37
-
-
21
45
25
25
33
25
14
14
18
25
14
14
18
40
22
22
25
50
14
38
14
38
25
14
14
30
27
27
#
#
#
-
#
-
#
#
#
#
#
#
#
#
#
#
#
-
#
#
#
#
#
#
#
#
#
#
#
Vietnam
Singapore
Property investment
Investment holding
#
BVI
Investment holding
#
#
#
Singapore
Liquidated
BVI/Vietnam
Singapore
Investment holding
Disposed
# China
Property development
#
#
#
Singapore
Investment holding
BVI/Vietnam
Vietnam
Investment holding
Property development
Singapore
#
# China
#
#
#
Singapore
Singapore
Vietnam
Vietnam
Vietnam
India
Property management
Property investment
Property development
Property development
Property investment and
development
Property investment and
development
Property investment and
development
Disposed
Singapore
Indonesia
Indonesia
Singapore
Real estate investment trust
Property development
Development of holiday resort
Property management
# Malaysia
Property investment
Singapore
#
# China
Investment holding
Property development
#
Singapore
Property development
#
Vietnam
Property investment
#
#
#
#
#
#
#
Keppel Real Estate
Investment Pte Ltd
Petro Tower Ltd(3)
Singapore Tianjin Eco-City
Investment Holdings Pte
Ltd
Substantial Enterprises Ltd(4)
Associated Companies
Asia Real Estate Fund
Management Ltd(2)
Bellenden Investments Ltd(4)
Central Boulevard
Development Pte Ltd(2)
CityOne Development (Wuxi)
Co Ltd(3)
CityOne Township
Development Pte Ltd(2)
Davinelle Ltd(4)
Dong Nai Waterfront City
LLC(2a)
EM Services Pte Ltd(1a)
Equity Rainbow II Pte Ltd(2)
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 Pulomas Gemala Misori(3)
PT Purimas Straits Resorts(3)
Raffles Quay Asset
Management Pte Ltd(2)
Renown Property Holdings (M)
Sdn Bhd(2a)
SAFE Enterprises Pte Ltd(3)
Sino-Singapore Tianjin
Eco-City Investment and
Development Co., Ltd(1a)
Suzhou Property
Development Pte Ltd(3)
Vietcombank Tower 198
Ltd(3)
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
215
Gross
Interest
2014
%
Effective Equity
Interest
Cost of Investment
2014
%
2013
%
2014
$’000
2013
$’000
Country of
Incorporation
/Operation
Principal Activities
INVESTMENTS
Subsidiaries
Keppel Philippines Holdings
60+
59+
55+
98
98
96
-
#
-
#
Philippines
Investment holding
Singapore
Investment holding
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
#
100
#
100+
100 90,000
#
10,480
90,000
BVI
BVI
Singapore
Investment holding
Investment company
Investment holding
100
100
100
100
#
#
# HK
#
Singapore
Investment company
Investment company
100
100
100
100
100
100
100
10
10
100
#
#
100
100
#
#
100 484,355 484,355
#
100
#
100
265
100
Singapore
Singapore
Singapore
Singapore
# HK
#
265
Singapore
Singapore
Investment holding
Investment company
Investment holding
Investment holding
Investment company
Investment company
Travel agency
Inc(2a)
Alpha Real Estate Securities
Fund
Devan International Ltd(4)
Kep Holdings Ltd(4)
Kephinance Investment
Pte Ltd
Kepital Management Ltd(3)
Keppel Funds Investment
Pte Ltd
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
Associated Companies
k1 Ventures Ltd
KrisEnergy Ltd(2)
M1 Ltd(2)
19
15
15
36
31
36
31
36
31
#
#
#
#
#
Singapore
BVI
#
Singapore
Investment holding
Exploration for, and the
development and production of
oil and gas
Telecommunications services
Total
Subsidiaries
5,140,520 5,151,000
Notes:
(i) All the companies are audited by Deloitte & Touche LLP, Singapore except for the following:
(1a) Audited by overseas practice of Deloitte Touche Tohmatsu Limited;
(2) Audited by Ernst & Young LLP, Singapore;
(2a) Audited by overseas practice of Ernst & Young LLP;
(3) Audited by other firms of auditors; and
(4) Not required to be audited by law in the country of incorporation and companies disposed, liquidated and struck off.
In accordance to Rule 716 of The Singapore Exchange Securities Trading Limited – Listing Rules, the Audit Committee and Board of Directors of the
Company confirmed that they are satisfied that the appointment of different auditors for its subsidiaries and significant associated companies would not
compromise the standard and effectiveness of the audit of the Company.
The shareholdings of these companies are held jointly with other subsidiaries.
The shareholdings of these companies are held by subsidiaries of Keppel Corporation Limited.
(ii) +
(iii) #
(iv) (n) These companies were incorporated during the financial year.
(v) The subsidiaries’ place of business is the same as its country of incorporation, unless otherwise specified.
(vi) Abbreviations:
British Virgin Islands (BVI)
Hong Kong (HK)
United Arab Emirates (UAE)
United States of America (USA)
(vii) The Company has 243 significant subsidiaries and associated companies as at 31 December 2014. Subsidiaries and associated companies are considered as
significant (a) in accordance to Rule 718 of The Singapore Exchange Securities Trading Limited – Listing Rules, or (b) by reference to the significance of their
economic activities.
Significant Subsidiaries and Associated Companies
216
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 17 April 2014. 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
Integradora de Servicios Petroleros Oro Negro
Mapletree Investments Group
Neptune Orient Lines Group
PSA International Group
SATS Group
Sembcorp Industries Group
Sembcorp Marine Group
Singapore Power Group
Singapore Technologies Engineering Group
Singapore Telecommunications Group
Temasek Holdings Group
Transaction for the Purchase of Goods and Services
Certis CISCO Security Group
Gas Supply Pte Ltd
Mapletree Investments Group
PSA International Group
Sembcorp Marine Group
Singapore Power Group
Singapore Technologies Engineering Group
Singapore Telecommunications Group
Temasek Holdings Group
Total Interested Person Transactions
Aggregate value of all
interested person
transactions during
the financial year
under review (excluding
transactions less than
$100,000 and transactions
conducted under
shareholders’ mandate
pursuant to Rule 920)
Aggregate value of all
interested person
transactions conducted
under a shareholders’
mandate pursuant
to Rule 920 of the
SGX Listing Manual
(excluding transactions
less than $100,000)
2014
$’000
2013
$’000
2014
$’000
2013
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
182,980
–
113,760
210
1,021
–
–
2,315
–
1,183
–
3,758
4,210
85,000
730
669
195
400
12,748
5,200
511
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
–
–
414,890
163,514
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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
Key Executives
217
In addition to the Chief Executive Officer (Mr Loh Chin Hua), the following are the key executive officers (“Key Executives”) of
the Company and its principal subsidiaries:
Chan Hon Chew, 49
Bachelor of Accountancy (Honours); Chartered Financial Analyst, Member of the Institute of Chartered Accountants Australia
and Institute of the 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’s principal directorships include Keppel Offshore & Marine Ltd, Keppel Land Limited, Keppel Infrastructure Holdings
Pte Ltd and Keppel Telecommunications & Transportation Ltd. He is also the Chairman of Keppel DC REIT Management Pte
Ltd (Manager of Keppel DC REIT).
Past principal directorships in the last five years
Tiger Airways Holdings Limited, Singapore Aviation & General Insurance Company (Pte) Ltd and RCMS Properties Private
Limited.
Teo Soon Hoe, 65 (Deceased)
Bachelor of Business Administration, University of Singapore; Member of the Wharton Society of Fellows, University of
Pennsylvania.
Mr Teo was Senior Executive Director on the Board of Keppel Corporation Limited.
Mr Teo began his career with the Keppel Group in 1975 when he joined Keppel Shipyard. He rose through the ranks and
was seconded to various subsidiaries of the Keppel Group before assuming the position of Group Finance Director in 1985,
a position that he held till 2011. Upon his retirement as Senior Executive Director on 1 June 2014, he continued to represent
Keppel Corporation Limited as its nominee director on the boards of the Sino-Singapore Tianjin Eco-city companies and k1
Ventures Limited. He was also appointed by Keppel Land Limited and Keppel Telecommunications & Transportation Ltd as
Senior Advisor to their respective boards, and was Chairman of M1 Limited.
Past principal directorships in the last five years
Keppel Corporation Limited, Keppel Telecommunications & Transportation Ltd, Keppel Land Limited, Keppel Infrastructure
Fund Management Pte Ltd (Trustee-Manager of Keppel Infrastructure Trust), Keppel Philippines Holdings, Inc, M1 Limited and
k1 Ventures Limited.
Key Executives
218
Key Executives
Tong Cheong Heong, 68 (Retired)
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 the 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 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. He is a Fellow of Institute of Directors since 2008. Mr Tong is currently a Director of SIA Engineering Company Ltd.
Past principal directorships in the last five years
Keppel Corporation Limited, Keppel Offshore & Marine Ltd and Keppel Infrastructure Holdings Pte Ltd.
Chow Yew Yuen, 60
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 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. 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.
In the Americas (the United States, Mexico and Brazil), Mr Chow is Chairman of Keppel AmFELS, LLC, Keppel FELS Brasil SA
and Keppel Offshore & Marine USA, Inc.
He also serves as the Chairman of Keppel Singmarine Pte Ltd, Keppel Philippines Holdings Inc, Keppel Sea Scan Pte Ltd
and Green Scan Pte Ltd. He is a Director on the Boards of Keppel Offshore & Marine Technology Centre Pte Ltd, FloaTEC
LLC, Keppel FELS Limited, Keppel Shipyard Limited, Keppel Marine Agencies LLC, Bennett & Associates LLC, and Keppel
Infrastructure Holdings Pte Ltd.
Mr Chow’s other appointments include being a member of Workplace Safety and Health (WSH) Council, Vice President
of Association of Singapore Marine Industries and a member of Singapore Accreditation Council, ABS Offshore Technical
Committee, ABS Southeast Asia Regional Committee and DNV GL South East Asia & Pacific Committee.
Past principal directorships in the last five years
Keppel Energy Pte Ltd.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014 219
Wong Kok Seng, 64
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 Ltd and also Managing Director of Keppel FELS
Limited. Prior to this appointment, he was the Executive Director of Keppel FELS Limited. His career in Keppel FELS Limited
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 the Keppel Group as Project Director of Keppel Land Limited, Executive Director of
Keppel Singmarine Pte Ltd and Senior General Manager (Group Procurement) of Keppel Offshore & Marine Ltd.
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, Deepwater
Technology Group Pte Ltd, Regency Steel Japan Ltd, Caspian Shipyard Company Ltd, Keppel Amfels LLC, Keppel FELS Brasil,
Greenscan Pte Ltd, Keppel Sea Scan Pte Ltd and Keppel Singmarine Pte Ltd.
Past principal directorships in the last five years
Nil
Michael Chia Hock Chye, 62
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 30 years of
management experience in corporate development, engineering, operations and commercial.
Mr Chia 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 currently 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, 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 Shipyard Limited, Keppel FELS 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 Integrated
Engineering Ltd and Keppel Telecommunications & Transportation Ltd.
Key Executives
220
Key Executives
Chor How Jat, 53
Bachelor of Engineering (Honours) in Naval Architect & Shipbuilding, 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 1989 and held appointments as Shiprepair Manager of Keppel Shipyard Limited, Deputy
Shipyard Manager, Shipyard Manager of Keppel FELS Limited, General Manager (Operations) of Keppel FELS Limited and
Executive Director of Keppel Shipyard Limited.
Mr Chor serves as Director on the Board 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, KS Investments Pte Ltd, Keppel Sea Scan Pte Ltd, Green Scan Pte Ltd and Keppel FELS Limited. Mr Chor is also 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 Nominating Committee, ClassNK Singapore
Technical Committee of Nippon Kaiji Kyokai, Lloyd’s Register South East Asia Technical Committee (SEATC) and AIDS
Business Alliance - the Health Promotion Board.
Past principal directorships in the last five years
Japan Regency Steel Limited, Atwin Offshore and Marine Pte Ltd, Keppel FELS Offshore and Engineering Services Mumbai
Pvt. Ltd. and KSI Production Pte Ltd.
Abu Bakar Bin Mohd Nor, 49
Master of Business Administration, Singapore Management University, Diploma in Building, Singapore Polytechnic
Mr Abu Bakar Mohd Nor is the Managing Director of Keppel Singmarine Pte Ltd, appointed with effect from 1 November
2014. Prior to this appointment, he was the Chief Executive Officer of Nakilat-Keppel Offshore & Marine (N-KOM), since
2011. He began his career in the HSE department at Keppel Shipyard Limited and rose through the ranks, holding various
appointments in the Operations and Commercial departments.
Mr Abu Bakar sits on various Boards in the Keppel Group companies and associates, such as Keppel Shipyard Limited,
Arab Heavy Industries PJSC, Keppel Singmarine Pte Ltd, Keppel Sea Scan Pte Ltd, Green Scan Pte Ltd, Marine Technology
Development Pte Ltd, Keppel FELS Limited, Keppel Offshore & Marine Technology Centre Pte Ltd, Nakilat Keppel Offshore &
Marine Pte Ltd and Baku Shipyard LLC.
He has also held various appointments at the national and industry levels such as Member of the Singapore Workplace Safety
& Health Council (Marine Industries) Sub-Committee, Council Member of the Association of Singapore Marine Industries
(ASMI) where he chaired the Safety Committee during his tenure. He has also served in various committees of the Ministry of
Defence, Singapore such as Member of the Advisory Council on Community Relations in Defence, Reward and Recognition
Committee for Defence and was a Member of the SAFRA Management Committee where he chaired various SAFRA Clubs as
Chairman and Vice-Chairman.
Mr Abu Bakar is a Brigade Commander, holding the rank of Colonel (National Service) in the Singapore Armed Forces (SAF).
He also served as the Singapore President’s Honorary Aide-de-Camp to both Mr Ong Teng Cheong and Mr Nathan during
their tenure as the President of Singapore.
Past Principal directorships in the last five years
Alpine Engineering Services Pte Ltd, Blastech Abrasives Pte Ltd and Primesteelkit Pte Ltd
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
221
Ong Tiong Guan, 56
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 in 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 Keppel Infrastructure Holdings
Pte Ltd in May 2013, Dr Ong was appointed Chief Executive Officer of Keppel Infrastructure Holdings Pte Ltd, responsible for
the Keppel Group’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 principal directorships include Keppel Infrastructure Holdings Pte Ltd, Keppel Energy Pte Ltd, Keppel Electric Pte Ltd,
Keppel Gas Pte Ltd, Keppel Merlimau Cogen Pte Ltd, Keppel DHCS Pte Ltd, Keppel Infrastructure Services Pte Ltd, Keppel
Infrastructure Fund Management Pte Ltd (Trustee-Manager of Keppel Infrastructure Trust), GE Keppel Services Pte Ltd and
Keppel Seghers Pte Ltd.
Past principal directorships in the last five years
Nil
Nicholas Lai Garchun, 47
Master of Applied Finance 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 Pte Ltd.
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
Key Executives
222
Key Executives
Tan Boon Leng, 50
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 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 Keppel Infrastructure
Holdings Pte Ltd in May 2013, Mr Tan was appointed the Executive Director, X-to-Energy of Keppel Infrastructure Holdings Pte
Ltd. 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 Keppel Infrastructure Trust. In December 2013, he was also
appointed to the Board of Keppel Seghers Belgium NV and took on the role as Project Sponsor based in UK to oversee the
execution of the 750,000 tons/year Energy from Waste Plant under construction in Runcorn, UK.
Mr Tan sits on the Boards of Keppel Infrastructure Fund Management Pte Ltd, Keppel DHCS Pte Ltd, Keppel Seghers Belgium
NV, 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, 45
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 the 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.
Cindy Lim Joo Ling, 37
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 Executive Director of Infrastructure Services at Keppel Infrastructure Holdings Pte Ltd, which focuses
on maximising the value of assets through value-added and reliable operations and maintenance services and excellent
health, safety and environment performance. Ms Lim also 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 Limited.
Ms Lim started her career as a management system auditor and consultant before she joined Keppel FELS Limited in 2001
as a Quality System Engineer. She had since held several leadership positions at Keppel FELS Limited 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, GE Keppel Energy Services Pte Ltd, Keppel
Infrastructure Services Pte Ltd, KMC O&M Pte Ltd, Keppel Seghers Pte Ltd, Keppel Seghers O&M Pte Ltd, Kepfels
Engineering Pte Ltd and Keppel FMO (India) Pte Ltd.
Past principal directorships in the last five years
Alpine Engineering Services Pte Ltd, Prime Steelkit Pte Ltd, Keppel FMO Pte Ltd, Keppel Nantong Shipyard Co. Ltd, Keppel
Nantong Heavy Industry Co. Ltd, Keppel FELS Offshore and Engineering Services Mumbai Pvt Limited and Travelmore (Pte)
Ltd.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014 223
Khor Un-Hun, 45
Bachelor of Accountancy (First Class Honours), Nanyang Technological University
Mr Khor Un-Hun has been the Chief Executive Officer of Keppel Infrastructure Fund Management Pte Ltd, the Trustee-
Manager of Keppel Infrastructure Trust (KIT), since May 2014. As the Chief Executive Officer, he is responsible for working
with the Board to determine the strategy for KIT. He works with other members of the Trustee-Manager’s management team
to execute the stated strategy of the Trustee-Manager.
Mr Khor joined Keppel Infrastructure Holdings Pte Ltd (KI) as Development Director in April 2014, where he worked on KI’s
various business development initiatives.
Prior to joining KI, Mr Khor spent most of his career in the banking industry, during which he was involved in a wide range of
mergers and acquisitions, financial advisory, capital markets and debt transactions across different sectors throughout Asia.
He held various positions in the corporate finance teams of Deutsche Bank and ING Bank in Singapore and Hong Kong
before becoming Managing Director and Head of Corporate Finance, Asia at ING Bank. He was also a Member of ING Bank’s
Regional Management Committee.
Principal directorships in the last five years
Nil
Thomas Pang Thieng Hwi, 50
Master of Arts (Honourary Award) and Bachelor of Arts (Engineering), University of Cambridge; Investment Management
Certificate from The CFA Society of the UK.
Mr Pang is currently Executive Director and Chief Executive Officer of Keppel Telecommunications & Transportation Ltd, a
position he held since July 2014. From June 2010 to June 2014, he was Chief Executive Officer of Keppel Infrastructure Fund
Management Pte Ltd, the Trustee-Manager of Keppel Infrastructure Trust (KIT), responsible for working with the board to
determine the strategy for KIT.
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 General Manager (Corporate
Development) in 2007 and oversaw the investment, mergers and acquisitions, and strategic planning of Keppel Offshore
& Marine Ltd, during which he assisted in Keppel Offshore & Marine’s expansion into Japan, Indonesia, China, Qatar and
Azerbaijan, as well as the establishment of Keppel Offshore & Marine Technology Centre.
Prior to that, he was an investment manager with Vertex Management (United Kingdom) 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 the Assistant Head (Services
Group, Enterprise Development Division) at the Economic Development Board of Singapore from 1988 to 1995.
Past principal directorships in the last five years
Keppel Seghers Newater Development Co Pte Ltd, Keppel Seghers Tuas Waste-To-Energy Plant Pte Ltd,
Senoko Waste-To-Energy Pte Ltd and Caspian Rigbuilders Pte Ltd.
Chua Hsien Yang, 37
Bachelor of Engineering (Civil), University of Canterbury; Master of Business Administration, University of Western Australia.
Mr Chua is the Chief Executive Officer of Keppel DC REIT Management Pte Ltd (Manager of Keppel DC REIT). Mr Chua has
13 years of experience in fund management, business development and asset management in the real estate and hospitality
sectors in the Asia-Pacific region.
Prior to that, Mr Chua held the position of Senior Vice President of Keppel REIT Management Limited since 2008, where he
headed the investment team. He was previously with Ascott Residence Trust Management Limited as Director of Business
Development and Asset Management, and with Hotel Plaza Limited (now known as Pan Pacific Hotels Group Limited) as
Assistant Vice President of Asset Management.
Past principal directorships in the last five years
Mirvac 8 Chifley Pty Limited and Mirvac (Old Treasury) Pty Limited.
Key Executives
224
Key Executives
Ang Wee Gee, 53
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 Limited, 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 Limited
which was formed in 2010 to own and operate Keppel Land Limited’s businesses in China. Prior to that, he was Executive
Director and Chief Executive Officer, International of Keppel Land International Limited, responsible for the Group’s overseas
businesses. He was also Chairman of Keppel Philippines Properties Inc and Keppel Thai Properties Public Company Limited,
which are listed on the Philippine Stock Exchange and The Stock Exchange of Thailand respectively. Mr Ang previously held
various positions in business and project development for Singapore and overseas markets, and corporate planning in the
Group’s hospitality management arm. He was also the Group’s Country Head for Vietnam as well as Head of Keppel Land
Hospitality Management Pte Ltd.
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, 54
Bachelor of Science (First Class Honours) in Estate Management, National University of Singapore; Master of Business
Administration in Accountancy, Nanyang Technological University.
Mr Tan joined the Keppel Land Group in 1990 and is currently President (Singapore), overseeing the Group’s investment and
development operations 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 subsidiaries 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 Singapore Green Building Council and a Member of 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 of Keppel Land Limited.
Ho Cheok Kong, 58
Bachelor of Engineering (Honours, 2nd Upper) from the University of Western Australia under the Colombo Plan Scholarship.
Mr Ho first joined the Keppel Land Group in 1990. He is currently President of Keppel Land China Limited, a wholly-owned
subsidiary of Keppel Land Limited which owns and 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 business operations of all projects in China.
Past principal directorships in the last five years
Nil
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014 225
Ng Hsueh Ling, 48
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 works with the Board of the Manager to set the strategy for the REIT and make
recommendations to the Trustee of Keppel REIT. Ms Ng leads the management team of the Manager to deliver stable and
sustainable returns to Keppel REIT Unitholders by proactively optimising and enhancing the property portfolio.
With over 25 years of experience in the real estate industry, Ms Ng has been involved in the strategic sourcing, investment,
asset and portfolio management and development of assets in key Asian cities. She has also extensive fund management
experience in the areas of real estate fund product creation, deal origination, distribution and structuring of real estate-based
financial products.
Ms Ng previously served as the Senior Vice President (Funds Business) as well as the Chief Executive Officer (Korea and
Japan) of Ascendas Pte Ltd. She has also held key positions at CapitaLand Commercial Ltd and CapitaLand Financial 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, and Raffles Quay Asset Management Pte Ltd.
Christina Tan Hua Mui, 49
Bachelor of Accountancy (Honours), 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 AIP’s development since 2003. She is also instrumental in
developing and implementing the portfolio strategy for all Alpha-managed funds. AIP is currently one of the largest pan-Asian
managers with over S$10 billion in assets under management.
Ms Tan previously served as 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.
Prior to that, Ms Tan was the Treasury Manager of Chartered Industries of Singapore. Ms Tan started her career with Ernst &
Young LLP prior to joining the Government of Singapore Investment Corporation (GIC).
Past principal directorships in the last five years
Asia Real Estate Fund Management Limited, Hillsborough Limited, Growth Partners IV Holdings Ltd, Sino-Sing Alpha Partners
HK Limited, and AAJ Investment Pte Ltd.
Key Executives
226
Major Properties
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
Held By
Completed properties
Keppel REIT
25%
Bugis Junction
Towers
Victoria Street,
Singapore
15-storey office tower
99 years leasehold Commercial office building
with rentable area of
22,760 sqm
Land area: 20,505 sqm 99 years leasehold Commercial office building
Marina Bay
Two office towers of
Financial Centre
(Phase 1)
33-storey and 50-storey
Marina Boulevard, with ancillary retail space
Singapore
with rentable area of
162,039 sqm
Marina Bay
Financial Centre
(Phase 2)
Marina Boulevard,
Singapore
Ocean Financial
Centre
Collyer Quay,
Singapore
One Raffles Quay
Singapore
Land area: 9,710 sqm
46-storey office tower
with retail podium
99 years leasehold Commercial office building
with rentable area of
124,674 sqm
Land area: 6,109 sqm
43-storey office tower
999 years leasehold Commercial office building
with rentable area of
82,256 sqm
Land area: 11,367 sqm
Two office towers of
50-storey and 29-storey
99 years leasehold Commercial office building
with rentable area of
123,828 sqm
275 George Street Land area: 7,074 sqm
Brisbane,
30-storey office tower
Australia
Freehold
Commercial office building
with rentable area of
41,748 sqm
77 King Street
Office Tower
Sydney,
Australia
8 Chifley Square
Sydney,
Australia
Land area: 1,284 sqm
18-storey office tower
Freehold
Commercial office building
with rentable area of
13,622 sqm
Land area: 1,581 sqm
34-storey office tower
99 years leasehold Commercial office building
with rentable area of
19,350 sqm
8 Exhibition Street Land area: 4,329 sqm
35-storey office tower
Melbourne,
Australia
Freehold
Commercial office building
with rentable area of
44,890 sqm
S25
Serangoon,
Singapore
T25
Tampines,
Singapore
Land area: 7,333 sqm
6-storey data centre
30 years lease with Data centre with rentable
option for another
30 years
area of 10,180 sqm
Land area: 5,000 sqm
5-storey data centre
30 years lease with Data centre with rentable
option for another
30 years
area of 3,427 sqm
Keppel DC REIT
27%
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
227
Held By
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
Gore Hill Data
Centre
Sydney,
Australia
Almere Data
Centre
Amsterdam,
Netherlands
Citadel 100 Data
Centre
Dublin,
Ireland
T27
Tampines,
Singapore
Land area: 6,692 sqm
4-storey data centre
Freehold
Data centre with rentable
area of 8,450 sqm
Land area: 7,930 sqm
Freehold
Data centre with rentable
area of 11,000 sqm
Land area: 20,275 sqm
40 years leasehold Data centre with rentable
area of 6,322 sqm
Land area: 5,000 sqm
30 years lease with Data centre with rentable
option for another
30 years
area of 4,645 sqm
Keppel Datahub 2 Pte Ltd 73%
Marina Bay Suites
Pte Ltd ^
18%
Marina Bay Suites Land area: 5,300 sqm
Singapore
99 years leasehold A 221-unit luxury
condominium development
Parksville Development
Pte Ltd
55%
Nassim Woods,
Tanglin Road,
Singapore
Land area: 5,785 sqm
99 years leasehold A 35-unit luxurious
condominium development
Mansfield Development 55%
Pte Ltd
Keppel Towers and Land area: 9,127 sqm
Keppel Towers 2
Hoe Chiang Rd,
Singapore
27-storey and 13-storey
office towers
Freehold
Commercial office building
with rentable area of
39,958 sqm
HarbourFront One
Pte Ltd
65%
Keppel Bay Tower Land area: 17,267 sqm
HarbourFront
18-storey office tower
Avenue,
Singapore
99 years leasehold Commercial office building
with rentable area of
36,015 sqm
HarbourFront Two
Pte Ltd
34%
Keppel Bay Pte Ltd
86%
HarbourFront
Tower One
and Two
HarbourFront
Place,
Singapore
Reflections
at Keppel Bay
Singapore
Land area: 10,923 sqm
18-storey and 16-storey
office towers
99 years leasehold Commercial office building
with rentable area of
48,541 sqm
Land area: 83,538 sqm 99 years leasehold A 1,129-unit waterfront
condominium development
Spring City Golf &
Lake Resort Co
(owned by Kingsdale
Development Pte Ltd)
38%
Spring City Golf
& Lake Resort
Kunming,
China
Land area: 2,884,749 sqm 70 years lease
Two 18-hole golf
courses, a club house
(residential)
50 years lease
(golf course)
Integrated resort
comprising golf courses,
resort homes and resort
facilities
Tianjin Fushi Property
Development Co Ltd
55%
Serenity Villa
Tianjin,
China
Land area: 128,685 sqm 70 years leasehold A 340-unit residential
development in Tianjin
Eco-City
Major Properties
228
Major Properties
Held By
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Equity Rainbow II Pte Ltd 23%
Life Hub @ Jinqiao Land area: 59,956 sqm
Shanghai,
China
Tenure
Usage
50 years leasehold A retail and office
development with rentable
area of 79,214 sqm
PT Straits-CM Village
21%
PT Kepland Investama
55%
Keppel Land Watco I
Co Ltd
37%
Properties under development
Sherwood Development 38%
Pte Ltd
Keppel Bay Pte Ltd
86%
Club Med Ria
Bintan
Bintan,
Indonesia
International
Financial Centre
(Tower 1)
Jakarta,
Indonesia
Saigon Centre
(Phase 1)
Ho Chi Minh City,
Vietnam
The Glades
Tanah Merah,
Singapore
Keppel Bay
Plot 3 and 6,
Singapore
Land area: 200,000 sqm 30 years lease with A 302-room beachfront
option for another
50 years
hotel
Land area: 10,428 sqm
20 years lease with A prime office development
option for another with rentable area of
20 years
27,933 sqm
Land area: 2,730 sqm
25-storey office, retail
cum serviced
apartments development
50 years leasehold Commercial building with
rentable area of 10,443 sqm
office, 3,663 sqm retail,
305 sqm post office and
89 units of serviced
apartments
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)
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 Pte Ltd
55%
Highline Residences Land area: 10,991 sqm
Tiong Bahru,
Singapore
99 years leasehold A 500-unit condominium
development
*(2018)
An office and retail
development in Chaoyang
Dictrict
*(2017)
Beijing Aether Property
Development Ltd
28%
Commercial
Development
Beijing,
China
Land area: 26,081 sqm
40/50 years
leasehold
Shanghai Ji Xiang Land
Co Ltd
55%
Seasons Residence Land area: 71,621 sqm
Shanghai,
China
70 years leasehold A 1,102-unit residential
development in Nanxiang,
Jiading District
*(2015)
Shanghai Pasir Panjang
Land Co Ltd
54%
Eight Park Avenue Land area: 33,432 sqm
Shanghai,
China
70 years leasehold A 918-unit residential
development
*(2015)
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
229
Held By
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
Shanghai Floraville Land 54%
Co Ltd
Park Avenue
Central
Shanghai,
China
Shanghai Hongda
Property Development
Co Ltd
54%
The Springdale
Shanghai,
China
Shanghai Jinju Real
Estate Development
Co Ltd
54%
Spring City Golf &
Lake Resort
38%
Landed
Development
Shanghai,
China
Spring City Golf
& Lake Resort
Kunming,
China
Land area: 28,488 sqm
70 years leasehold An office and retail
Land area: 264,090 sqm 70 years lease
(residential)
40 years lease
(commercial)
development
*(2019)
A 2,596-unit residential
development with
commercial and SOHO
facilities in Pudong District
*(2015)
Land area: 175,191 sqm
70 years leasehold A 217-unit landed
Land area: 2,157,361 sqm 70 years leasehold
development in Shenshan
*(2016 Phase 1)
Integrated resort
comprising golf courses,
resort homes and resort
facilities (Hill Crest
Residence Phase 2B)
*(2016)
A 1,393-unit residential
development with
commercial and SOHO
facilities in Binhu District
(*2019)
A 5,339-unit residential
township development
with commercial and
SOHO facilities in Binhu
District
*(2016)
A 2,794-unit residential
township with integrated
facilities in Shenbei New
District
A 4,354-unit residential
development with office
and retail space
*(2016)
A 1,535-unit residential
development with
commercial facilities in
Jinjiang District
*(2016)
Keppel Lakefront (Wuxi) 55%
Property Development
Co Ltd
Waterfront
Residence
Land area: 215,230 sqm 40 years lease
(commercial)
70 years lease
(residential)
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
Keppel Hongda
(Tianjin Eco-City) Property
Development Co Ltd
75%
Chengdu Hillstreet
Development Co Ltd
55%
Development in
Sino-Singapore
Tianjin Eco-City
Tianjin,
China
Park Avenue
Heights
Chengdu,
China
Land area: 348,312 sqm 50 years lease
(residential)
40 years lease
(commercial)
Land area: 365,722 sqm 70 years lease
Land area: 50,782 sqm
(residential)
40 years lease
(commercial)
70 years lease
(residential)
40 years lease
(commercial)
Major Properties
230
Major Properties
Held By
Chengdu Hilltop
Development Co Ltd
Effective
Group
Interest
55%
Location
Hill Crest Villa
Chengdu,
China
Chengdu Shengshi
Jingwei Real Estate
Investment Co Ltd
55%
Serenity Villa
Chengdu,
China
Description and
Approximate
Land Area
Tenure
Usage
Land area: 249,330 sqm 70 years leasehold A 274-unit landed
development in Xinjin
County
*(2015 Phase 1)
Land area: 286,667 sqm 70 years leasehold A 573-unit landed
Sunsea Yacht Club
(Zhongshan) Co Ltd
44%
Keppel Cove
Zhongshan,
China
Land area: 891,752 sqm 70 years lease
(residential)
40 years lease
(commercial)
development in Xinjin
Country
*(2015 Phase 1)
A 1,647-unit residential
development with a mix of
villas and apartments, and
integrated marina lifestyle
facilities
*(2015 Phase 1)
Jiangyin Evergro
Properties Co Ltd
54%
Stamford City
Jiangyin,
China
Land area: 82,987 sqm
70 years lease
(residential)
40 years lease
(commercial)
A 1,573-unit residential
development with
commercial and SOHO
facilities
*(2017 Phase 3)
Keppel Lakefront
(Nantong) Property
Development Co Ltd
55%
MIP 59th and Third
Development LLC
45%
PT Harapan Global Niaga 55%
South Rach Chiec LLC
23%
Estella JV Co Ltd
30%
Dong Nai Waterfront
City LLC (owned by
Portsville Pte Ltd)
27%
Waterfront
Residence
Nantong,
China
Residential
Development
New York,
United States
West Vista
Jakarta,
Indonesia
Waterfront
Residential
Township
Ho Chi Minh City,
Vietnam
Estella Heights
Ho Chi Minh City,
Vietnam
Land area: 172,215 sqm
70 years leasehold A 1,199-unit residential
Land area: 13,750 sqm
Freehold
development
*(2015 Phase 1)
A residential-cum-retail
development at Upper
East Side in Manhattan
Land area: 28,903sqm
30 years lease with A 2,854-unit residential
option for another
20 years
development with ancillary
shop houses
*(2018)
Land area: 302,093 sqm 50 years leasehold A 945-unit residential
township and commercial
space
*(2018-2020 Phase 1)
Land area: 25,393 sqm
50 years leasehold A 872-unit residential
development with
commercial space in
An Phu Ward, District 2
*(2018)
Land area: 3,667,127 sqm 50 years leasehold A 11,715-unit residential
Dong Nai
Waterfront City
Dong Nai Province,
Vietnam
township with commercial
space in Long Thanh
District
*(2018-2021 Phase 1)
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
231
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
Held By
Industrial properties
Keppel FELS Limited
100%
Jurong, Pioneer,
Crescent and
Tuas South Yard,
Singapore
Land area: 743,021 sqm
buildings, workshops,
building berths,
drydocks and wharves
16 - 30 years
leasehold
Oil rigs, offshore and
marine construction,
repair, fabrication,
assembly and storage
Estaleiro BrasFELS Ltda
100%
Angra dos Reis,
Rio de Janeiro,
Brazil
Land area: 409,020 sqm 30 years leasehold Offshore oil rig
building, workshops,
drydock, berths and
wharf
construction and repair
Keppel Shipyard Limited
100%
Benoi and
Pioneer Yard,
Singapore
Land area: 799,111 sqm
buildings, workshops,
drydocks and wharves
30 years leasehold Shiprepairing, shipbuilding
and marine construction
^ On 16 December 2014, the Group disposed of its one-third interest in Central Boulevard Development Pte Ltd (“CBD”) to Keppel REIT. However the Group
continues to retain its rights, liabilities, benefits and obligations pertaining to Marina Bay Suites Pte Ltd, a wholly-owned subsidiary of CBD, through an
undertaking deed entered into between the Group and Keppel REIT.
Expected year of completion
*
Major Properties
232
Group Five-Year
Performance
Selected Profit & Loss Account Data
($ million)
Revenue
Operating profit
Profit before tax
Net profit attributable to shareholders
of the Company
Selected Balance Sheet Data
($ million)
Fixed assets & properties
Investments
Stocks, debtors, cash & long term assets
Intangibles
Assets classified as held for sale
Total assets
Less:
Creditors
Borrowings
Other liabilities
Liabilities directly associated with
assets classified as held for sale
Net assets
Share capital & reserves
Non-controlling interests
Capital employed
Per Share
Earnings (cents) (Note 1):
Before tax
After tax
Total distribution (cents)
Net assets ($)
Net tangible assets ($)
Financial Ratios
Return on shareholders’ funds (%) (Note 2):
Profit before tax
Net profit
Dividend cover (times)
Net cash/(gearing) (times)
Employees
Number
Wages & salaries ($ million)
2010
2011
2012
2013
2014
9,140
1,671
2,550
10,082
2,824
3,313
13,965
2,621
3,256
12,380
2,134
2,794
13,283
2,373
2,889
1,591
1,946
2,237
1,846
1,885
5,451
4,618
11,467
108
0
21,644
7,689
4,068
232
0
9,655
6,619
3,036
9,655
110.1
90.4
38.2
3.75
3.69
30.8
25.3
2.4
0.02
7,326
5,350
12,325
99
0
25,100
8,195
4,877
267
0
11,761
7,699
4,062
11,761
130.9
109.4
43.0
4.32
4.26
32.5
27.2
2.5
(0.16)
8,760
5,909
14,428
110
0
29,207
8,059
7,208
362
0
13,578
9,246
4,332
13,578
148.5
124.8
73.6
5.14
5.08
31.4
26.4
1.7
(0.23)
5,986
6,192
17,792
86
0
30,056
8,825
7,100
442
0
13,689
9,701
3,988
13,689
120.5
102.3
49.5
5.37
5.32
23.0
19.5
2.1
(0.11)
4,661
5,718
19,815
102
1,259
31,555
8,728
7,383
266
450
14,728
10,381
4,347
14,728
123.9
103.8
48.0
5.73
5.67
22.4
18.8
2.2
(0.11)
31,360
1,367
33,747
1,433
38,390
1,579
39,364
1,668
38,732
1,733
Notes:
1.
2.
Earnings per share are calculated based on the Group profit by reference to the weighted average number of shares in issue during the year.
In calculating return on shareholders’ funds, average shareholders’ funds has been used.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
233
2014
Group revenue of $13,283 million for 2014 was $903 million or 7% higher than that for the full year of 2013. Offshore & Marine
Division’s revenue of $8,556 million was 20% above the S$7,126 million for 2013, driven mainly by progress from on-going
jobs. Major jobs completed in 2014 include 7 jack-up rigs, 3 FPSO upgrades, 2 FPSO conversions, one FPSO integration
and one semi upgrade. Revenue from the Infrastructure Division decreased by $525 million to $2,934 million mainly due to
lower revenue contributed by Keppel Infrastructure’s power generation plant, partially offset by stronger contribution from
Keppel Telecommunications & Transportation’s logistics and data centre businesses. The Property Division saw its revenue
weakened by 2% to $1,729 million mainly from weaker sales in Singapore. In addition, Keppel REIT did not contribute any
revenue in 2014 as it was deconsolidated from 31 August 2013. This was partly offset by sale of a residential development in
Jeddah, Saudi Arabia.
The Group’s pre-tax profit for the current year was $2,889 million, $95 million or 3% above the previous year. The Offshore
& Marine Division posted a higher pre-tax profit of $1,365 million mainly from better operating results and higher interest
income partially offset by lower share of associated companies’ profits. Profit from the Infrastructure Division increased
by $379 million to $452 million due mainly to better operating results from both Keppel Infrastructure and Keppel
Telecommunications & Transportation as well as gains from divestments of data centre assets and Keppel FMO. The Property
Division’s profit of $1,017 million for 2014 was $422 million or 29% below that of 2013. Lower operating results, lower fair value
gains on investment properties and absence of gains from deconsolidation of Keppel REIT recognised in 2013 was partially
offset by gains from the disposals of Equity Plaza, Prudential Tower and MBFC T3 in 2014.
Taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders was $1,885
million, $39 million or 2% higher than last year. The Offshore & Marine Division was the largest contributor to Group net profit
at 55%, followed by the Property Division’s 26%, the Infrastructure Division’s 17% and the Investments Division’s at 2%.
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, Group profit went down by $462 million from $3,256 million in 2012 to $2,794 million for the current year.
Offshore & Marine Division posted a higher pre-tax profit of $1,202 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 24% to $73
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
Engineering, Procurement and Construction (EPC) contracts. Property Division profit of $1,439 million was 20% lower than
profit of $1,809 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. There were also lower
gains from investment properties in 2013. This reduction was partially offset by higher contribution of profit from China, profit
from the sale of Jakarta Garden City project and gain from deconsolidation of Keppel REIT during the current year. Fewer
disposals of equity investments in 2013 resulted in the decline of Investments Division’s profit to $80 million.
Taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders was $1,846
million, $391 million or 17% lower than last year. The Offshore & Marine Division was the largest contributor to Group net profit
at 51%, followed by the Property Division’s 45%.
REVENUE ($ billion)
PRE-TAX PROFIT ($ million)
Net Profit ($ million)
15
12
9
6
3
0
3,500
2,800
2,100
1,400
700
0
2500
2000
1500
1000
500
0
2010
9.1
2011
10.1
2012
14.0
2013
12.4
2014
13.3
2010
2,550
2011
3,313
2012
3,256
2013
2,794
2014
2,889
2010
1,591
2011
1,946
2012
2,237
2013
1,846
2014
1,885
Group Five-Year Performance
234
Group Five-Year Performance
2012
Group revenue of $13,965 million was 39% higher than 2011. Revenue from Offshore & Marine Division of $7,963 million
was 40% above that of the previous year due to higher volume of work. The Division completed and delivered two
semisubmersible rigs, one semisubmersible rig upgrade, four jack-up rigs, one multi-purpose self-elevating platform, one
drillship outfitting, four FPSO conversions/upgrades, one FPSO module fabrication and integration, one FSU upgrade, one
pipelay vessel completion, two specialised vessels and several upgrade/repair projects. Revenue from Infrastructure Division
decreased slightly by $31 million or 1% to $2,832 million. Lower revenue from EPC 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, Group profit of $3,256 million was 2% lower than 2011. Pre-tax earnings from Offshore & Marine Division
decreased by 13% to $1,193 million, principally because of lower margins for rig building contracts. Profit from Infrastructure
Division increased by 66% to $59 million as a result of better performance from Keppel Energy, partly offset by losses from
Keppel Integrated Engineering. Profit from Property Division decreased from $1,875 million to $1,809 million due to lower
net fair value gain on investment properties, partly offset by higher contribution from associated companies and higher
contribution from Reflections at Keppel Bay.
Taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders was $2,237
million, $291 million or 15% higher than last year. The Property Division was the largest contributor to Group net profit at 48%,
followed by the Offshore & Marine Division’s 42%.
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, Group profit of $3,313 million was 30% higher than FY 2010. Pre-tax earnings from Offshore & Marine
Division increased by 13% to $1,371 million. This was due to cost savings and higher margins on jobs. Profit from Infrastructure
Division was $35 million in 2011 as compared to a loss of $44 million in 2010. This was mainly attributable to better
performance from Keppel Energy and lower provisions for cost overruns and completion delays for the EPC contract in Qatar.
Property Division recorded profit of $1,875 million, an increase of 41% over the preceding year. This was mainly attributable
to higher contribution from several residential projects in Singapore, China and Vietnam as well as higher net fair value gain
on investment properties. Profit from Investments Division was lower due to higher costs and impairment of non-performing
assets in 2011.
Taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders was $1,946
million, $355 million or 22% higher than last year. The Offshore & Marine Division was the largest contributor to Group net
profit at 52%, followed by the Property Division’s 47%.
SHAREHOLDERS’ FUNDS ($ billion)
CAPITAL EMPLOYED ($ billion)
MARKET CAPITALISATION ($ billion)
12.5
10
7.5
5.0
2.5
0
15
12
9
6
3
0
25
20
15
10
5
0
2010
6.6
2011
7.7
2012
9.2
2013
9.7
2014
10.4
2010
9.7
2011
11.8
2012
13.6
2013
13.7
2014
14.7
2010
18.2
2011
16.6
2012
19.8
2013
20.2
2014
16.0
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014 235
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 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, Group profit of $2,550 million was 23% higher than FY 2009. Pre-tax earnings from Offshore & Marine
Division increased by 14% to $1,210 million. This was due to improved margins driven by cost efficiencies and higher
productivity on delivered contracts. Loss from Infrastructure Division of $44 million in 2010 was higher than the loss of $19
million in 2009. This was mainly attributable to losses from EPC contracts in Qatar, partly offset by better performance from
the cogen power plant in Singapore and the absence of impairment of non-performing assets recorded in 2009. Property
Division recorded profit of $1,332 million, an increase from the $338 million profit recorded in the preceding year. This was
mainly attributable to the net fair value gain on investment properties in 2010 as compared to the impairment of investment
properties recorded in 2009, as well as 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 profit from the disposal of Singapore Petroleum Company.
Taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders was $1,591
million, $51 million or 3% higher than last year. The Offshore & Marine Division was the largest contributor to Group net profit
at 61%, followed by the Property Division’s 42%, partially offset by losses in the Infrastructure Division.
Group Five-Year Performance
236
Group Value-Added
Statements
($ 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
Other operating (expenses) / income
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
2010
2011
2012
2013
2014
9,140
(6,028)
3,112
10,082
(6,544)
3,538
13,965
(9,779)
4,186
12,380
(8,696)
3,684
13,283
(9,474)
3,809
120
1,054
(115)
4,171
1,367
409
65
130
991
1,186
139
448
927
5,052
1,433
444
98
158
724
980
167
603
225
5,181
1,579
501
135
212
789
1,136
158
626
361
4,829
1,668
397
125
175
1,357
1,657
145
504
563
5,021
1,733
462
134
266
763
1,163
Total Distribution
2,962
2,857
3,216
3,722
3,358
Balance retained in the business:
Depreciation & amortisation
Non-controlling interests share of profits
in subsidiaries
Retained profit for the year
189
208
211
242
265
420
600
1,209
765
1,222
2,195
306
1,448
1,965
376
489
1,107
276
1,122
1,663
4,171
5,052
5,181
4,829
5,021
Number of employees
31,360
33,747
38,390
39,364
38,732
Productivity data:
Gross value added per employee ($’000)
Gross value added per dollar employment cost ($)
Gross value added per dollar sales ($)
99
2.28
0.34
105
2.47
0.35
109
2.65
0.30
94
2.21
0.30
98
2.20
0.29
($ million)
6,000
5,000
4,000
3,000
2,000
1,000
Depreciation & Retained Profit
Interest Expenses & Dividends
Taxation
Wages, Salaries & Benefits
0
5,052
5,181
4,829
5,021
4,171
1,209
1,186
409
2,195
980
444
1,965
1,107
1,663
1,136
501
1,657
1,163
397
462
1,367
1,433
1,579
1,668
1,733
2010
2011
2012
2013
2014
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
Share Performance
237
TURNOVER (million)
SHARE PRICES ($)
400
300
200
180
160
140
120
100
80
60
40
20
0
40
30
20
18
16
14
12
10
8
6
4
2
0
2010
2011
2012
2013
2014
Turnover
High and Low Prices
Share Price ($)*
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)
Net assets backing ($)
At Year End
Share price ($)
Distribution yield (%) (Note 3)
Net price earnings ratio (Note 3)
Net price to book ratio (Note 3)
2010
2011
2012
2013
2014
10.29
10.42
7.15
8.27
90.4
38.2
4.6
9.1
3.69
10.29
3.7
11.4
2.8
9.30
12.18
7.02
9.88
109.4
43.0
4.4
9.0
4.26
9.30
4.6
8.5
2.2
11.00
11.67
9.32
10.75
124.8
73.6
6.9
8.6
5.08
11.00
6.7
8.8
2.2
11.19
11.93
10.01
10.87
102.3
49.5
4.6
10.6
5.32
11.19
4.4
10.9
2.1
8.85
11.24
7.91
10.01
103.8
48.0
4.8
9.6
5.70
8.85
5.4
8.5
1.6
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.
*
Last transacted share price is used in calculating distribution yield, net price earnings ratio and net price to book ratio.
Historical share prices are not adjusted for special dividends, capital distribution and distribution in specie.
Share Performance
238
Shareholding Statistics
As at 4 March 2015
Issued and Fully paid-up capital (including Treasury Shares) : $1,288,393,382.98
Issued and Fully paid-up capital (excluding Treasury Shares) : $1,278,782,809.54
Number of Issued shares (including Treasury Shares)
Number of Issued shares (excluding Treasury Shares)
Number/Percentage of Treasury Shares
Class of Shares
Voting Rights
: 1,817,910,180
: 1,816,736,960
: 1,173,220 (0.06%)
: Ordinary Shares
: One Vote Per Share. The Company cannot exercise any
voting right in respect of treasury shares.
Size of Shareholdings
1 - 99
100 - 1,000
1,001 - 10,000
10,001 - 1,000,000
1,000,001 & Above
Total
Twenty Largest Shareholders as at 4 March 2015
Temasek Holdings (Private) Limited
Citibank Nominees Singapore Pte Ltd
DBS Nominees Pte Ltd
HSBC (Singapore) Nominees Pte Ltd
DBSN Services Pte Ltd
BNP Paribas Securities Services
Raffles Nominees (Pte) Ltd
United Overseas Bank Nominees Pte Ltd
Bank of Singapore Nominees Pte Ltd
DB Nominees (S) Pte Ltd
OCBC Nominees Singapore Pte Ltd
Shanwood Development Pte Ltd
Teo Soon Hoe
Choo Chiau Beng
UOB Kay Hian Pte Ltd
OCBC Securities Private Ltd
DBS Vickers Securities (S) Pte Ltd
BNP Paribas Nominees Singapore Pte Ltd
Phillip Securities Pte Ltd
Tong Chong Heong
Total
Substantial Shareholders
Number of
Shareholders
82
14,721
38,346
7,311
41
60,501
%
0.14
24.33
63.38
12.08
0.07
Number of
Shares
2,520
12,685,598
144,263,803
226,230,777
1,433,554,262
%
0.00
0.70
7.94
12.45
78.91
100.00
1,816,736,960
100.00
Number of
Shares
371,408,292
293,178,607
239,964,089
121,873,266
92,908,020
77,217,383
61,711,947
54,149,815
20,154,013
12,887,622
7,844,728
7,040,000
6,166,322
5,246,274
5,208,371
5,024,143
3,914,170
3,890,109
3,412,388
2,993,597
%
20.45
16.14
13.21
6.71
5.11
4.25
3.40
2.98
1.11
0.71
0.43
0.39
0.34
0.29
0.29
0.27
0.21
0.21
0.19
0.16
1,396,193,156
76.85%
Direct Interest
Deemed Interest
Total Interest
No. of Shares
%
No. of Shares
%
No. of Shares
%
Temasek Holdings (Private) Limited
Aberdeen Asset Management PLC
Aberdeen Asset Management Asia Limited
BlackRock, Inc
The PNC Financial Services Group, Inc
371,408,292
-
-
-
-
20.45%
-
-
-
-
9,296,996
131,541,136
122,664,400
99,805,217
99,805,821
0.51%
7.24%
6.75%
5.49%
5.49%
380,705,288
131,541,136
122,664,400
99,805,217
99,805,821
20.96%
7.24%
6.75%
5.49%
5.49%
Notes:
(i) Temasek Holdings (Private) Limited is deemed interested in an aggregate of 9,296,996 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 131,541,136 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 122,664,400 shares held by various accounts managed or
advised by AAMAL over which AAMAL has disposal and voting rights.
(iv) BlackRock, Inc is deemed to be interested in an aggregate of 99,805,217 shares held through its various subsidiaries.
(v) The PNC Financial Services Group, Inc is deemed to be interested in the 99,805,217 shares held through BlackRock, Inc through its over 20% ownership of
BlackRock, Inc. as well as 604 ordinary shares represented by 302 American Depository Receipts through other entities.
Public Shareholders
Based on the information available to the Company as at 4 March 2015, 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.
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
Notice of Annual General
Meeting & Closure of Books
239
eppel
Corporation
Keppel Corporation Limited
Co Reg No. 196800351N
(Incorporated in the Republic of Singapore)
NOTICE IS HEREBY GIVEN that the 47th Annual General Meeting of the Company will be held at Raffles City
Convention Centre, Stamford Ballroom (Level 4), 80 Bras Basah Road, Singapore 189560 on Friday, 17 April
2015 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 2014.
Resolution 1
To declare a final tax-exempt (one-tier) dividend of 36.0 cents per share for the year ended
31 December 2014 (2013: final tax-exempt (one-tier) dividend of 30.0 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/herself for re-election
pursuant to Article 81C (see Note 2):
(i)
Dr Lee Boon Yang
(ii) Mrs Oon Kum Loon
(iii) Mr Tan Puay Chiang
To re-elect Mr Till Vestring, 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$2,154,915 as directors’ fees for the year ended 31 December 2014 (2013:
$2,149,500) (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
Notice of Annual General Meeting & Closure of Books
240
Notice of Annual General Meeting
& Closure of Books
(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 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
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014
241
(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).
Notice of Annual General Meeting & Closure of Books
242
Notice of Annual General Meeting
& Closure of Books
9.
That:
(1)
approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual of the
SGX-ST, for the Company, its subsidiaries and target associated companies (as defined in
Appendix 2 to this Notice of Annual General Meeting (“Appendix 2”)), or any of them, to enter
into any of the transactions falling within the types of Interested Person Transactions described
in Appendix 2, with any person who falls within the classes of Interested Persons described
in Appendix 2, provided that such transactions are made on normal commercial terms and
in accordance with the review procedures for Interested Person Transactions as set out in
Appendix 2 (the “IPT Mandate”);
Resolution 11
(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 24 April 2015 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 24 April 2015 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 24 April 2015 will be entitled to the proposed final
dividend. The proposed final dividend if approved at this annual general meeting will be paid on 6 May 2015; and
the electronic copy of the Company’s Annual Report 2014 will be published on the Company’s website on 26 March
2015. The Company’s website address is http://www.kepcorp.com, and the electronic copy of the Annual Report 2014
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 2014, 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/Kelvin Chua
Company Secretaries
Singapore, 26 March 2015
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014 243
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” section of the Company’s Annual Report.
Dr Lee Boon Yang will upon re-election continue to serve as the Chairman of the Board and member of the Nominating Committee, Remuneration Committee
and Board Safety Committee. Dr Lee was formerly Minister for Informations, Communications and the Arts, and Member of Parliament. He stood as a candidate
in the Singapore General Elections in 1984 and won the Jalan Besar parliamentary seat, which he held for six consecutive terms till his retirement in 2011. He
is currently also the Chairman of the boards of Singapore Press Holdings Limited, Singapore Press Holdings Foundation Limited and Keppel Care Foundation
Limited.
Mrs Oon Kum Loon will upon her re-election continue to serve as the Chairman of the Board Risk Committee and member of the Audit Committee and
Remuneration Committee. Mrs Oon is a veteran banker with about 30 years of extensive experience, having held a number of management and executive
positions with the DBS Group. She was the Chief Financial Officer of the bank until September 2003. Prior to that, Mrs Oon was the Managing Director & Head
of Group Risk Management, responsible for the development and implementation of a group-wide integrated risk management framework. She is currently a
director of Keppel Land Limited, Singapore Power Limited and Jurong Port Pte Ltd.
Mr Tan Puay Chiang will upon his re-election continue to serve as a member of the Board Risk Committee and Board Safety Committee. Mr Tan was formerly
Chairman, ExxonMobil (China) Investment Co. During his 37-year career with Mobil and later ExxonMobil, he held executive management roles in Australia,
Singapore and the United States. These included the executive positions of Vice-President, Mobil Research & Technology Corp, United States; and Chairman of
Mobil Oil Australia. His other directorships include Neptune Orient Lines Limited, Singapore Power Limited and SP Services Limited. He is also a member of the
Board of the Energy Studies Institute at the National University of Singapore.
Mr Till Vestring is a partner in Bain & Company’s Southeast Asia office and has more than 20 years of management consulting experience in Asia, advising
leading companies on portfolio strategy, growth, mergers and acquisitions, merger integration, organisation and performance improvement. From 2007 to 2013,
Mr Vestring served as the Managing Partner of Bain’s Southeast Asia operations with offices in Singapore, Jakarta, Kuala Lumpur and Bangkok. He is a leader in
Bain’s Industrial Goods & Services practice and a member of Bain’s Telecommunications, Media and Technology practices.
Dr Lee Boon Yang, Mrs Oon Kum Loon, Mr Tan Puay Chiang and Mr Till Vestring 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$2,154,915 as directors’ fees for the non-executive directors of the Company for FY2014. 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 102 of the
Company’s Annual Report. The non-executive directors will abstain from voting, and will procure that their respective associates 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 17 April 2014. 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.
7. Personal Data Privacy:
By submitting an instrument appointing proxy or proxies, and/or representative(s) to attend, speak and vote at the annual general meeting and/or any adjournment
thereof, a member (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents or service providers) for the
purpose of the processing, administration and analysis by the Company (or its agents or service providers) of proxies and representatives appointed for the
annual general meeting (including any adjournment thereof), and in order for the Company (or its agents or service providers) to comply with any applicable laws,
listing rules, regulations and/or guidelines (collectively, the “Purposes”), and (ii) warrants that where the member discloses the personal data of the member’s
proxy(ies) and/or representative(s) to the Company (or its agents or service providers), the member has obtained the prior consent of such proxy(ies) and/or
representative(s) for the collection, use and disclosure of such individual’s personal data for the Purposes.
Notice of Annual General Meeting & Closure of Books
244
Corporate Information
BOARD OF DIRECTORS
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
Till Vestring
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
NOMINATING COMMITTEE
Tony Chew Leong-Chee (Chairman)
Lee Boon Yang
Tow Heng Tan
Tan Ek Kia
Alvin Yeo
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
Kelvin Chua
REGISTERED OFFICE
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
KEPPEL CORPORATION LIMITEDReport to Shareholders 2014 Financial Calendar
245
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
Despatch of Annual Report to Shareholders
Annual General Meeting
2014 Proposed final dividend
Books closure date
Payment date
FY 2015
Financial year-end
Announcement of 2015 1Q results
Announcement of 2015 2Q results
Announcement of 2015 3Q results
Announcement of 2015 full year results
31 December 2014
16 April 2014
24 July 2014
21 October 2014
22 January 2015
26 March 2015
17 April 2015
5.00 p.m., 24 April 2015
6 May 2015
31 December 2015
April 2015
July 2015
October 2015
January 2016
Financial Calendar
This page is intentionally left blank
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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
CPF Investors
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.
Personal Data Privacy
By submitting an instrument appointing proxy or proxies and/or representative(s), a
member of the Company accepts and agrees to the personal data privacy terms set out
in the Notice of Annual General Meeting dated 26 March 2015.
I/We (Name) (NRIC/Passport Number)
of (Address)
being a member/members 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 Company
(“AGM”) to be held on 17 April 2015 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 Dr Lee Boon Yang as director
4. Re-election of Mrs Oon Kum Loon as director
5. Re-election of Mr Tan Puay Chiang as director
6. Re-election of Mr Till Vestring as director
7. Approval of directors’ fee to non-executive directors
8. Re-appointment of Auditors
Special Business
9.
10. Renewal of Share Purchase Mandate
11. Renewal of Shareholders’ Mandate for Interested Person Transactions
Issue of additional shares and convertible instruments
*
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 2015
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 member 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 member of the Company. Where a member of the Company 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 the 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 member of the Company 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,
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 members of the Company 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 members 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.
VISION
A global company at the forefront
of our chosen industries, shaping
the future for the benefit of all
our stakeholders – Sustaining
Growth, Empowering Lives and
Nurturing Communities.
MISSION
Guided by our operating
principles and core values,
we will execute our businesses
in Offshore & Marine, Property,
Infrastructure and Investments
profitably, safely and responsibly.
OPERATING PRINCIPLES
1 Best value propositions
to customers.
2 Tapping and developing
best talents from our
global workforce.
3 Cultivating a spirit of
innovation and enterprise.
4 Executing our projects well.
5 Being financially disciplined to
earn best risk-adjusted returns.
6 Clarity of focus and operating
within our core competence.
7 Being prepared for the future.
AGILITY
Capturing Value
Agility marks the ability of the Keppel Group to
respond to market and environmental changes in
ways that drive performance and build competitive
advantage. We are configured with our financial and
organisational strengths to navigate challenging
terrain and scour new markets, offer new solutions
through innovation, and execute with precision and
enhanced productivity.
Contents
GROUP OVERVIEW
FINANCIAL STATEMENTS
Directors’ Report
& Financial Statements
134 Directors’ Report
140 Statement by Directors
141 Independent Auditors’ Report
142 Balance Sheets
143 Consolidated Profit & Loss Account
144 Consolidated Statement of
Comprehensive Income
145 Statement of Changes in Equity
148 Consolidated Statement
of Cash Flows
151 Notes to the Financial Statements
205 Significant Subsidiaries &
Associated Companies
OTHER INFORMATION
216 Interested Person Transactions
217 Key Executives
226 Major Properties
232 Group Five-Year Performance
236 Group Value-Added Statements
237 Share Performance
238 Shareholding Statistics
239 Notice of Annual General Meeting
& Closure of Books
244 Corporate Information
245 Financial Calendar
247 Proxy Form
01 Key Figures for 2014
02 Group Financial Highlights
04 Group at a Glance
06 Keppel Around the World
08 Chairman’s Statement
Interview with the CEO
14
21 Board of Directors
26 Keppel Group Boards of Directors
28 Keppel Technology Advisory Panel
30 Senior Management
Investor Relations
32
35 Awards & Accolades
38 Agility
– Capturing Value
OPERATING & FINANCIAL REVIEW
47 Group Structure
48 Management Discussion & Analysis
50 Offshore & Marine
62
Infrastructure
70 Property
78
82 Financial Review & Outlook
Investments
GOVERNANCE & SUSTAINABILITY
90 Sustainability Report Highlights
Sustaining Growth
92 Corporate Governance
124 Risk Management
128 Environmental Performance
129 Product Excellence
Empowering Lives
130 Labour Practices & Human Rights
131 Safety & Health
Nurturing Communities
132 Our Community
Edited and Compiled by
Group Corporate Communications, Keppel Corporation
Designed by
Sedgwick Richardson
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AGILITY
Capturing Value
Report to
Shareholders
2014
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