Safety
Execution
Readiness
Execution
Value
Enterprise
Talent
Readiness
Discipline
Innovation
Integrity
Leadership
Value
Focus
People-Centredness Safety Talent
Innovation
Accountability
Innovation
Can Do
Accountabilty
Execution
Discipline
Value
Execution Safety
Enterprise
Collective Strength
Value Talent Agility
Capital
Readiness Value
Safety People-Centredness
Integrity
Governance
Can Do
People-Centredness
Innovation
Collective Strength
Execution Enterprise
ReadinessTalent
Acumen
Accountability
Focus
Agility
Safety
Execution
Collective
Strength
Agility Talent Readiness
People-Centredness
Innovation
Can Do
Talent
Execution
Integrity
Value
Customer Focus
Value Talent Innovation
Scalability
Accountability Discipline Focus
Discipline
Execution Enterprise
Collective Strength
Focus
Value Talent Innovation
Discipline
Readiness
Synergy
Customer Focus
Accountability
People-Centredness
Collective Strength
Harnessing
Strengths
Report to Shareholders 2015
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.
Operating Principles
1 Best value propositions
to customers.
2 Tapping and developing
best talents from our
global workforce.
3 Cultivating a spirit of
Harnessing
Strengths
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.
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.
The Keppel Group
harnesses and synergises
the distinctive strengths
of its multi businesses to
capture opportunities arising
from the global demand
for energy, sustainable
urbanisation and connectivity.
Our strong culture and
enduring values drive our
people to strive for execution
excellence and operational
efficiency. With financial
discipline and sharp focus
on optimising returns,
we will seize opportunities
as well as innovate solutions
and services to build a
long-term and competitive
position and capture
sustainable returns for
our stakeholders.
Group Overview
Financial Statements
Directors’ Statement
& Financial Statements
130 Directors’ Statement
136 Independent Auditors’ Report
137 Balance Sheets
138 Consolidated Profit & Loss Account
139 Consolidated Statement of
Comprehensive Income
140 Statement of Changes in Equity
143 Consolidated Statement of
Cash Flows
146 Notes to the Financial Statements
198 Significant Subsidiaries &
Associated Companies
Other Information
209 Interested Person Transactions
210 Key Executives
219 Major Properties
225 Group Five-Year Performance
229 Group Value-Added Statements
230 Share Performance
231 Shareholding Statistics
232 Notice of Annual General Meeting
& Closure of Books
237 Corporate Information
238 Financial Calendar
239 Proxy Form
01 Key Figures for 2015
02 Group Financial Highlights
04 Group at a Glance
06 Keppel Around the World
08 Chairman’s Statement
14 Harnessing Strengths
18
Interview with the CEO
27 Board of Directors
32 Keppel Group Boards of Directors
34 Keppel Technology Advisory Panel
36 Senior Management
38
41 Awards & Accolades
Investor Relations
Operating & Financial Review
43 Group Structure
44 Management Discussion
& Analysis
46 Offshore & Marine
58 Property
66
74
78 Financial Review & Outlook
Infrastructure
Investments
Governance & Sustainability
86 Sustainability Report Highlights
Sustaining Growth
88 Corporate Governance
120 Risk Management
124 Environmental Performance
125 Product Excellence
Empowering Lives
126 Labour Practices & Human Rights
127 Safety & Health
Nurturing Communities
128 Our Community
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Key Figures for 2015
Key Figures
for 2015
0101
Revenue
Net Profit
$10.3b
Decreased 22% from FY 2014’s $13.3 billion.
Revenue decreased due mainly to lower volume of work
in the Offshore & Marine Division and lower revenue from
the Infrastructure Division. This was partially offset by the
Property Division’s higher revenue from China.
$1,525m
Decreased 19% from FY 2014’s $1,885 million.
Net profit decreased due mainly to the Offshore & Marine
and Infrastructure divisions, partially offset by higher
contribution from the Property Division arising
from lower non-controlling interest following the
privatisation of Keppel Land Limited.
Return On Equity
Economic Value Added
14.2%
Decreased by 4.6 percentage points from
FY 2014’s 18.8%.
Return on Equity decreased due mainly to the
decline in net profit and higher equity.
$648m
Decreased $1,130 million from FY 2014’s
$1,778 million.
Economic Value Added was lower due mainly
to lower net operating profit after tax.
Earnings Per Share
Cash Dividend Per Share
$0.84
Decreased 19% from FY 2014’s $1.04 per share.
There was no significant dilution in Earnings Per Share
because no major capital call has been made since 1997.
34.0cts
Decreased 29% from FY 2014’s cash dividend of
48.0 cents per share.
Total distribution for 2015 will comprise a final
proposed cash dividend of 22.0 cents per share and
an interim cash dividend of 12.0 cents per share.
Net Asset Value Per Share
Net Gearing Ratio
$6.13
0.53x
Increased 7% from FY 2014’s $5.73 per share.
Increased from FY 2014’s net gearing of 0.11x.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 0202
Keppel Corporation Limited Report to Shareholders 2015
Group Financial
Highlights
Earnings Per Share ($)
Return On Equity (%)
FY 2014
1.04
FY 2015
0.84
FY 2014
18.8
FY 2015
14.2
Net Asset Value Per Share ($)
Economic Value Added ($ million)
FY 2014
5.73
FY 2015
6.13
FY 2014
1,778
FY 2015
648
Keppel Corporation LimitedReport to Shareholders 2015 Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Group Financial Highlights
0303
Group Quarterly Results ($ million)
Revenue
EBITDA
Operating profit
Profit before tax
Attributable profit
Earnings per share (cents)
1Q
2,814
464
398
455
360
19.8
2Q
2,563
479
414
498
397
21.9
3Q
2,440
425
371
470
363
20.0
2015
4Q
Total
2,479
366
331
574
405
22.3
10,296
1,734
1,514
1,997
1,525
84.0
1Q
2,996
478
415
492
339
18.7
2Q
3,177
533
467
593
406
22.3
3Q
3,185
632
565
642
414
22.9
4Q
3,925
996
926
1,162
726
39.9
2014
Total
13,283
2,639
2,373
2,889
1,885
103.8
2015
2014
% Change
For the year ($ million)
Revenue
Profit
EBITDA
Operating
Before tax
Net profit
Operating cash flow
Free cash flow*
Economic Value Added
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
Total distribution
Share price ($)
Total Shareholder Return (%)
10,296
13,283
1,734
1,514
1,997
1,525
(705)
(694)
648
0.84
6.13
6.07
11,096
830
11,926
6,366
0.53
17.7
14.2
12.0
22.0
34.0
6.51
(22.3)
2,639
2,373
2,889
1,885
5
729
1,778
1.04
5.73
5.67
10,381
4,347
14,728
1,647
0.11
22.4
18.8
12.0
36.0
48.0
8.85
(17.8)
-22%
-34%
-36%
-31%
-19%
n.m.
n.m.
-64%
-19%
+7%
+7%
+7%
-81%
-19%
+287%
n.m.
-21%
-24%
–
-39%
-29%
-26%
n.m.
n.m. = not meaningful
* Free cash flow excludes expansionary acquisitions and capex, and major divestments.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 04
04
Keppel Corporation Limited Report to Shareholders 2015
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Group at a Glance
05
05
Group at
a Glance
Offshore & Marine
Property
Infrastructure
Investments
Keppel Corporation
Revenue ($ million)
Revenue ($ million)
Revenue ($ million)
Revenue ($ million)
Revenue ($ million)
$6,241m
8,556
7,963
7,126
5,706
6,241
$1,926m
3,018
1,768 1,729
1,926
1,467
$2,058m
3,459
2,863
2,832
2,934
2,058
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
Net Profit ($ million)
$481m
1,019
949
945
1,040
481
Net Profit ($ million)
$701m
1,078
918
832
701
482
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
Net Profit ($ million)
$207m
320
207
-8
16
15
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
$71m
152
27
64
71
46
1
1
0
2
3
1
0
2 2
1
0
2
4
1
0
2
5
1
0
2
Net Profit ($ million)
$136m
194
136
17
1
1
0
2
54
3
1
0
2
43
4
1
0
2
2
1
0
2
5
1
0
2
$10,296m
19%
20%
1%
13,965
13,283
12,380
10,082
10,296
Revenue
by Segment
60%
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
Net Profit ($ million)
$1,525m
9%
46%
Net Profit
by Segment
31%
14%
2,237
1,946
1,846 1,885
1,525
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
Focus For 2016/2017
Focus For 2016/2017
Focus For 2016/2017
Focus For 2016/2017
Focus For 2016/2017
1 Execute existing
backlog of orders on
time and on budget.
2 Continue to rightsize
operations in tandem with
workload requirements.
3 Invest prudently in
R&D, productivity and
core competencies for
long-term growth.
1 Invest strategically and
opportunistically in developed
and emerging markets, in new
and existing platforms,
projects and properties.
2 Tap demand in China and
Vietnam with over 14,000
launch-ready homes over
the next few years.
3 Actively scale up commercial
presence and leverage retail
management capability to
build new growth platforms.
4 Monetise assets strategically
to recycle capital and achieve
good returns.
1 Continue seeking out
value-enhancing projects,
leveraging the Division’s
project development,
engineering, operations and
maintenance expertise.
2 Improve operational
efficiencies by harnessing the
strengths of an integrated gas
and power business platform.
3 Continue building up a
portfolio of quality data centres
and providing higher value
services to customers.
4 Enhance capability to deliver
high-value, efficient logistics
services in Asia Pacific.
1 Keppel Capital will focus
on integrating and growing
the Group’s asset
management platform.
2 k1 Ventures will focus on
managing existing investments
to drive shareholder value and
distribute excess cash when
investments are monetised.
3 M1 will focus on enhancing
customer experience to
maintain its market position.
4 KrisEnergy will focus
on maintaining production
and maximising efficiencies.
1 Stay focused on the multi-business
model, harnessing the Group’s
core strengths to achieve its
financial, people, stakeholder
and process goals.
2 Sharpen execution through
constant improvements in safety,
productivity and efficiency.
3 Invest continuously in R&D and
innovation to provide customers
with the best value proposition
and cultivate a spirit of enterprise.
4 Bolster bench strength
through talent management
and succession planning.
5 Enhance collaboration
across business verticals to
create synergy.
6 Maintain strong financial
discipline and deploy
capital astutely to seize
opportunities for the best
risk-adjusted returns.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other InformationKeppel Corporation LimitedReport to Shareholders 2015 06
06
Keppel Corporation Limited Report to Shareholders 2015
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Keppel Around the World
07
07
Keppel Around
the World
We leverage our
global network to
create sustainable
growth and value.
Offshore & Marine
Property
Infrastructure
Investments
United States
Brazil
Bulgaria
Ireland
The Netherlands
Germany
United Kingdom
Qatar
UAE
Azerbaijan
India
Myanmar
Thailand
Vietnam
Japan &
South Korea
Malaysia
Singapore
China & Hong Kong
Indonesia
Philippines
Australia
Total FY 2015 Revenue
North America
South America
Singapore
China & Hong Kong
Rest of the World
$10,296m
Group revenue was 22% lower than
in FY 2014.
$1,449m
$1,009m
$2,980m
$1,479m
$820m
Europe
Middle East
Japan & South Korea
Australia
$1,903m
$358m
$222m
$76m
* The figures are based on the geographic locations of the Keppel Group’s customers.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other InformationKeppel Corporation LimitedReport to Shareholders 2015
0808
Keppel Corporation Limited Report to Shareholders 2015
Chairman’s
Statement
Lee Boon Yang
Chairman
Against a challenging
backdrop, Keppel
performed creditably,
demonstrating how
our multi-business
strategy stands
Keppel in good stead
during testing times.
Key Developments in 2015
The privatisation of Keppel Land fully aligned the
interests of our Property Division with the Group,
providing a strong pillar for earnings.
Keppel Infrastructure Trust was successfully
combined with CitySpring Infrastructure Trust
and 51% of Keppel Merlimau Cogen was injected
into the enlarged trust.
Keppel Offshore & Marine is in the process
of acquiring the LETOURNEAUTM rig designs
and aftermarket business to further broaden
our suite of solutions.
Keppel Corporation LimitedReport to Shareholders 2015 Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Chairman’s Statement
0909
Dear Shareholders,
to invest during tough times when
opportunities present themselves.
2015 was a very eventful year for Singapore.
We celebrated SG50 to mark fifty successful
years as a nation, built on foundations laid by the
pioneer generation. We marked the passing of
our Founding Prime Minister Mr Lee Kuan Yew.
We had a General Election which saw the
government return with a resounding mandate
thus renewing confidence in Singapore’s
further growth and vitality for the future.
It was also a challenging year for businesses
buffeted by international financial volatility
and slowing growth in emerging markets
including China. At the same time, violent
acts of terrorism and pockets of geopolitical
tension continue to threaten the already
vulnerable global economy.
We are committed to
strengthen and
transform the
Company into a
global best-in-class
conglomerate at the
forefront of our
chosen industries.
The continuing mismatch between supply and
demand for oil had also depressed oil prices,
to below US$30 per barrel at the start of 2016.
The sharp fall in oil price has had significant
repercussions not just on the oil and gas
industry, but the international economy.
Resilient Conglomerate
Against this challenging backdrop, Keppel
performed creditably, demonstrating how
our multi-business strategy stands Keppel in
good stead during testing times.
For the whole of 2015, we achieved a net profit
of about $1.53 billion, albeit down 19% from
$1.89 billion in 2014. Higher contributions
from Property and Investments were offset
by lower profits from Offshore & Marine and
Infrastructure, which included the provisions
for the Sete Brasil projects and Doha North
Sewage Treatment Works, as well as lower
income from the power and gas business and
the absence of gains from data centre assets
which were divested in 2014 to Keppel DC REIT.
The Group generated positive Economic
Value Added of $648 million in 2015, while our
Return on Equity (ROE) was 14.2%. Taking into
account the Group’s performance as well as
the Company’s needs for future growth, the
Board is pleased to propose a final dividend
of 22 cents per share. Together with the interim
cash dividend of 12 cents per share, this brings
the full year cash dividend to 34 cents per
share for 2015.
Strategic Moves
One of Keppel’s key strengths as a multi-
business conglomerate with a strong balance
sheet is our access to capital and ability
We are committed to strengthen and
transform the Company into a global
best-in-class conglomerate at the forefront
of our chosen industries. We have simplified
our corporate structure, and will be sharpening
our business model, recycling capital to seek
the best possible returns, and promoting
innovation, collaboration and synergy
across the Group’s businesses.
The privatisation of Keppel Land in 2015
was a strategic move that has fully aligned the
interests of our Property Division with the
Group. It was immediately accretive and is
providing a strong pillar for earnings and
long-term value creation, with the Property
Division contributing 46% of the Group’s
net profit in 2015.
The full ownership of this Division has
strengthened our ability to rightsize the balance
sheet of our property business to capture
opportunities, recycle capital and allocate
resources across the Group for optimal returns
and deliver on our multi-business strategy.
In January 2016, in a major restructuring exercise
to grow the contribution from our Investments
Division, Keppel Corporation announced plans
to consolidate our interests in business trust
management, real estate investment trust
management and fund management
businesses (collectively, Asset Management)
under the wholly-owned subsidiary Keppel
Capital Holdings Pte Ltd (Keppel Capital).
Keppel’s Asset Management businesses
currently manage $26 billion of quality
assets and contributed about $60 million
of profits in 2015.
The consolidation under Keppel Capital is also
part of our transformation strategy. We plan
to grow our assets under management and
expand our capital platform for co-investing.
Creating and developing high quality real
estate and infrastructure assets, as well as
stabilising and monetising them to generate
strong cash flow and recurring income are
integral parts of Keppel’s business. Subject
to obtaining the relevant approvals, we aim
to complete the proposed consolidation by
the second half of 2016.
Offshore & Marine
With oil price plunging to its lowest in more
than a decade, oil companies have cut back
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 10
Chairman’s
Statement
Net Profit
$1.53b
of which the Property Division
contributed 46% to the Group’s
net profit.
spending on exploration and production,
and several drilling contractors have scaled
back their fleet renewal and expansion plans.
As a global leader in offshore and marine,
Keppel is not spared from the storm
hitting the industry.
In Brazil, a key customer base, political and
economic challenges as well as the Lava
Jato scandal continue to erode confidence.
After our customer Sete Brasil ceased payments
over a year ago, Keppel had proactively taken
steps to mitigate our exposure by slowing
the construction of their rigs.
By the end of 2015, we stopped construction
altogether and will not resume work until we
receive further payments.
We await further clarity on the situation as the
Sete Brasil board mulls over the future plans
for the company. In prudence, we have made
a provision of about $230 million for the Sete
Brasil projects, after assessing the status of
the construction progress, payments received,
amounts due to vendors and other factors.
Notwithstanding the challenges we currently
face, Keppel remains positive about the
long-term fundamentals of the offshore and
marine industry. Despite the increasing focus
on renewable energy, we believe fossil fuels
will continue to account for the lion’s share
of global energy demand in the foreseeable
future. We expect oil price to eventually reach
a sustainable equilibrium, driven by, among
others, continuing demand for energy from
a rising middle class and the increasing
urbanisation in developing countries.
With our extensive suite of offshore and
marine solutions and continuous investment
in R&D, Keppel Offshore & Marine is able
to serve a wide spectrum of customers in
both drilling and non-drilling markets,
who continue to require various solutions,
be it for oil production, subsea construction,
or offshore liquefaction. In 2015, we secured
orders amounting to about $1.8 billion.
Of Keppel O&M’s current $9.0 billion net
orderbook, non-drilling solutions make up
more than a third.
To deal with the downturn, we are keeping our
overheads under control and rightsizing our
operations and resources. Our network of yards
and large pool of contract workers give us
considerable flexibility in workforce deployment.
Even as we work at reducing costs and
optimising current operations, we are still
investing prudently in R&D, as well as
improving our productivity and core
competencies. For instance, Keppel O&M is in
the process of acquiring the LETOURNEAUTM
rig designs and aftermarket business to
broaden our suite of jackup rig design solutions
and aftermarket sales and services.
01
Keppel Corporation LimitedReport to Shareholders 2015 Chairman’s Statement
01 The world’s first-of-
its-kind FLNG Vessel
conversion project,
the Hilli, undertaken
by Keppel Shipyard for
its customer Golar LNG,
is progressing on schedule
and on budget.
11
In 2015, a new design and
technology arm, Gas Technology
Development, was set up to
sharpen our efforts in developing
solutions for Liquefied Natural Gas
(LNG) markets. This includes the
development of a suite of products
with LNG applications as well as
designs for LNG support vessels
and LNG systems for vessels.
In January 2016, Keppel O&M and
the BG Group (now part of Royal
Dutch Shell) won a joint bid to
supply LNG bunker to vessels in
the Port of Singapore. The move is
in line with Keppel’s strategy to
provide solutions for the global
LNG market.
As the shipping industry’s
demand for green solutions
continues to rise, we will also be
able to help meet the needs for
sustainable shipping with our
growing LNG solutions, such as
tug designs with dual-fuel diesel
LNG engines and the retrofitting
of vessel engines to run on LNG.
Property
Our Property Division performed
well in 2015, despite headwinds.
In Singapore, with the property
market cooling measures
remaining in force, the residential
market continued to be subdued.
However, this was offset by
the improved sales of homes
in other key cities in Asia.
In 2015, Keppel Land sold about
4,570 homes, almost double
the units taken up in 2014.
About 72% of these were sold in
China and another 20% in Vietnam.
Despite media reports of an
oversupplied property market in
China, Keppel’s experience has
been positive in the cities where
we operate. We sold 3,280 homes
in the country, as compared to
some 1,900 units in 2014.
China’s easing of monetary
measures has improved market
sentiments and housing demand.
Given real estate’s status as a
pillar industry of the economy, we
believe the Chinese government
will provide the necessary support
for the sector, and maintain stable
and sustainable growth in the
property market over the long term.
Vietnam, our second largest
overseas residential market after
China, has recovered after almost
five years of housing slump.
With the country’s strong GDP
growth, growing middle class
and low interest rate, we expect
the upward momentum in the
residential market to continue.
Keppel Land seized opportunities
to recycle capital from its property
assets in line with the Group’s focus
on higher returns, including for
example, the sale of BG Junction
in Surabaya, Indonesia. We also
invested some $615 million in a
residential site in West Jakarta,
an office building in London, and a
joint venture for a prime residential
development in Chengdu with
partner China Vanke.
Continued economic development
as well as a rising middle-class
population will fuel demand
for quality homes and prime
commercial space in Asia.
Keppel Land will continue to tap
demand in property markets
across Asia with about 20,000
launch-ready homes in its portfolio,
mostly in China. At the same time,
Keppel Land is actively developing
its portfolio of commercial
properties which has increased
to about 840,000 square metres
of gross floor area.
In the property fund management
business, total assets under
management by Keppel REIT and
Alpha Investment Partners have
increased 10% from $18.7 billion
as at end-2014 to $20.5 billion
as at end-2015.
In 2015, Keppel REIT completed its
acquisition of three prime retail
units at 8 Exhibition Street in
Melbourne and in early 2016, it
divested its 100% interest in 77
King Street in Sydney, Australia,
for A$160 million, resulting in a
gain of approximately A$28 million.
Meanwhile, Alpha’s Asia Macro
Trends Fund II has invested in
three prime office properties
with City Development. With
the success of the first two
Asia Macro Trends Funds, it is
embarking on its third such fund.
Our asset management
businesses will continue to
feature strongly in the Group’s
capital recycling strategy and
provide stable income streams
over the longer term.
Infrastructure
Over the past year, developments
in our Infrastructure Division
demonstrate our continuing plans
to grow this third business vertical.
We achieved significant
milestones for our Engineering,
Procurement and Construction
(EPC) projects in 2015. In the first
half of the year, Keppel Seghers
handed over Phases 1 and 2 of
the Greater Manchester Energy-
from-Waste facility in the UK to
the client. We closed the year
with Keppel Seghers achieving
a substantial handover of the
Doha North Sewage Treatment
Works in Qatar to the client.
At the same time, Keppel Seghers
also commenced the operations
and maintenance phase of the
contract for its liquids stream,
solids thickening and dewatering
facilities for 10 years.
Over in Poland, Keppel Seghers
handed over, on schedule and
on budget, the Bialystok waste-
to-energy combined heat and
power project to the client,
Bialystok’s municipal solid
waste management company,
on 31 December 2015.
With the weight of the EPC
projects off our shoulders, our
team can now focus on building
Keppel Infrastructure into a
stable contributor to the Group’s
bottom line, pursuing growth
opportunities in areas such as
gas-to-power and waste-to-
energy, both in Singapore
and overseas.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 12
Chairman’s
Statement
01
01 Keppel Land will
continue to unlock value
and recycle capital to
generate better returns
for the Group.
Our data centre and logistics
businesses under Keppel
Telecommunications &
Transportation (Keppel T&T)
are also making good progress.
Keppel T&T embarked on its
fourth data centre development
in Singapore. In October,
Keppel T&T opened Almere Data
Centre 2, its first greenfield data
centre in Europe. Meanwhile,
our T27 data centre in Tampines,
which is more than 80% occupied,
is on track for injection into
Keppel DC REIT. In Logistics,
Keppel T&T commenced
operations at its Tampines
Logistics Hub in Singapore and a
distribution centre in Vietnam.
Keppel DC REIT, Asia’s first data
centre REIT to be listed on the
Singapore Exchange, was active
in its first year of operations. It
acquired Intellicentre 2 in Australia
and maincubes Data Centre in
Germany, adding to its portfolio of
high-quality data centres across
Asia Pacific and Europe, which
amounted to over $1 billion of
assets under management.
Another major milestone was
the combination of Keppel
Infrastructure Trust (KIT) with
CitySpring Infrastructure Trust.
During the year, Keppel
Infrastructure injected 51% of
Keppel Merlimau Cogen (KMC),
which owns the 1,300-MW power
plant on Jurong Island, into
the enlarged KIT, as part of its
efforts to unlock value from
matured assets in its portfolio.
The enlarged trust, with the
inclusion of KMC, is Singapore’s
largest listed infrastructure
business trust with total assets
of over $4 billion.
Commitment to Sustainability
In 2015, a historic agreement was
reached at COP21 in Paris, with
the commitment by 195 nations
to reduce emissions and work at
keeping global warming to below
2 degrees. While governments
around the world will come up
with their respective national
contributions and measures to
achieve these targets, it will take
the will and support of all sectors
of society to combat climate
change effectively.
As a conglomerate operating
globally, Keppel places
sustainability at the heart of our
corporate strategy and operations,
so as to create enduring value
for all our stakeholders – sustaining
growth, empowering lives
and nurturing communities.
Sustainability is a key factor in
underpinning Keppel’s long-term
competitiveness, and we will work
with our stakeholders to create
a more sustainable future.
Reflecting our strong commitment
to sustainable development,
Keppel Corporation earned a
place amongst the prestigious
Global 100 Most Sustainable
Corporations in the World 2016,
ranking at the top of the Industrial
Conglomerates category and
55th worldwide. We are also
listed as an index component
of the Dow Jones Sustainability
Indices (DJSI) Asia Pacific Index,
the MSCI Global Sustainability
Index and the Euronext Vigeo
World 120 Index. The Company
recently won the Singapore
Sustainable Business Awards
for Strategy and Sustainability
Management.
Keppelites are our most important
asset, and Keppel is committed to
providing multiple pathways to
success for those who will rise to
the challenge across geographies,
industries and functions. During
the year, the Company invested
$14.2 million in the training and
development of its employees.
Keppel Corporation LimitedReport to Shareholders 2015 Chairman’s Statement
13
Keppel is committed
to providing multiple
pathways to success
for those who will
rise to the challenge
across geographies,
industries and
functions.
In April 2015, we opened the Keppel Leadership
Institute, whose vision is developing global
leaders who exemplify Keppel’s core values to
grow sustainable businesses and touch lives.
Since its opening, the Institute has provided a
spectrum of enriching courses and events as
well as collaborative spaces for thousands of
Keppelites from Singapore and overseas.
Safety, our core value, will always be
first priority. Our Board Safety Committee,
established in 2006, continues its relentless
efforts to build a strong safety culture in the
Group. In spite of our safety focus, sadly, we
suffered four fatalities in 2015. We are deeply
saddened by the loss of our colleagues.
We have investigated these incidents
thoroughly and rigorously, and instituted
measures to prevent any recurrence.
Our commitment to sustainability extends
to our communities. Shaping the future of
our communities, the Keppel Centre for
Art Education at the National Gallery
Singapore was opened in November 2015.
As a Founding Patron of the Gallery, we
committed $12 million to establish the Centre,
which is set to benefit some 250,000 children,
youths and families a year, nurturing
generations of creative and critical thinkers
through art education.
In the past year, Keppel Volunteers continued
to support Keppel Care Foundation through
engaging and caring for our beneficiaries
through a variety of activities promoting
education and wellness. On top of the existing
programmes, Keppel Volunteers aims to
further engage our middle management
and senior staff by tapping their experience
and expertise for skills-based volunteering.
This initiative will not only enhance the
management skills of our charities but also
make every sponsored dollar go the extra
mile for our beneficiaries.
To communicate its sustainability strategy,
practices and performance, Keppel Corporation
produces an annual Sustainability Report
in accordance with Global Reporting Initiative
guidelines and Singapore Exchange’s Guide to
Sustainability Reporting for Listed Companies.
Our Sustainability Report is validated in
accordance with the DNV GL Protocol for
Verification of Sustainability Reporting, which
draws on AccountAbility’s AA1000 Assurance
Standard 2008 and the International Standard
on Assurance Engagements 3000 by the
International Federation of Accountants.
We will be publishing Keppel Corporation’s
sixth sustainability report, which discusses
the economic, environmental and social
aspects of our activities and initiatives.
Highlights of our sustainability efforts
are outlined in this Annual Report.
Acknowledgements
On behalf of the Board, I would like to
express my deep appreciation to Mr Tony Chew,
who retired from the Board in May 2015
after 13 years of distinguished service.
The Keppel Group benefited from his
extensive business experience, wisdom
and entrepreneurial spirit. Tony was
Lead Independent Director from 2006
to 2009, and had served as Chairman
of the Nominating Committee from
2009 to 2015.
We are pleased to welcome Ms Veronica Eng
as Independent Director on the Board.
Ms Eng comes to Keppel with extensive
and in-depth knowledge and experience
in capital management, investment, value
creation and risk management. She will
contribute to the Board’s efforts to guide
Management to achieve better performance
for the Group.
The business environment that we operate
in is changing rapidly. Amidst the challenging
economic landscape, the Board and
Management will continue to build on
the Company’s business model and push
ahead with our transformative efforts.
I would like to thank my fellow directors
for their invaluable advice, guidance and
commitment to steer Keppel safely through
the troubled waters. I also thank our many
partners and stakeholders for their unwavering
confidence in Keppel. Last but not least,
I commend Keppelites worldwide for their
dedication and drive, which enable the
Keppel Group to turn adversity to advantage
and emerge stronger than before.
Yours sincerely,
Lee Boon Yang
Chairman
2 March 2016
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information Value
Talent
Innovation
Enterprise
DisciplineIntegrityExecution
Readiness
Accountability
Talent
Focus
Collective
Strengths
Harnessing
Leadership
IntegrityReadiness
Innovation
Strengths Governance
People-Centredness
Execution
Can
Do
Accountabilty
Execution
Discipline
Value
Readiness
Safety
People-Centredness
Value
Focus
Readiness
Can Do
People-Centredness
Innovation
Capital
Collective Strength
Can Do
Execution Enterprise
Talent
Acumen
Execution
Customer
Value Talent Innovation Accountability
Scalability
Collective Strength
Value Talent
Accountability Enterprise Value
Agility
Execution
Discipline
Integrity
Focus
Safety
Innovation
Discipline
Collective Strength
Synergy
Execution
Accountability
Agility
We will leverage and enhance
strengths intrinsic in our different
businesses, promote collaboration
and harness human, knowledge
and financial capital across
the Group to forge sustainable
growth for Keppel.
Leadership
Keppel aims to build
strong and leading
businesses, recognised
for world-class quality,
innovation and
execution excellence.
We have chosen to be in the
businesses where we can
become frontrunners and
create the most value.
Our distinctive blend of
businesses provides innovative
and sustainable solutions to
address the world’s needs for
energy, connectivity and clean
urban living environments.
Capital
Building resilience,
Keppel exercises
prudent capital
allocation and
disciplined financial
management, with a
focus on returns.
Through good or challenging
times, we keep vigilance on
our gearing and cash flows,
maintaining an institutional
quality balance sheet. We are
focused on improving productivity,
as well as making our assets work
harder and recycling them at the
right time for the best returns.
Scalability
With our key verticals
shaping up strongly,
Keppel can better
harness the Group’s
core strengths to
capture growth
opportunities.
We have built a robust ecosystem
for recycling assets created
by our business verticals to
support long-term growth
and value creation. We will also
tap like-minded co-investors
to expand our capital base,
equipping the Group with even
greater financial capacity to grow.
Governance
Our businesses are
underpinned by Keppel’s
core value of integrity
which drives corporate
governance from the
highest level.
We believe that a genuine
commitment to good corporate
governance is essential to the
sustainability of our businesses
and performance. We will
continue to maintain strong
Board independence and
oversight, as well as steadfast
commitment in ensuring that
good business ethics are
practised across the Group.
Acumen
Keppel’s key strengths
as a conglomerate
include access to capital
and the ability to make
timely investments
for future growth.
With keen market and industry
knowledge, Keppel is agile to
seize opportunities, innovating
and integrating solutions to
tap strategic megatrends.
By investing in our people,
processes and technology,
we can create and capture
value in every aspect of
our businesses.
Synergy
Our multi-business
model draws on
complementary
strengths of our verticals,
extracting synergies and
tapping opportunities to
create greater value.
We seek to generate synergy and
accelerate growth by “hunting
as a pack” and exploring new
avenues for collaboration across
our businesses, capitalising on
our wealth of industry knowledge,
expertise and networks. We are
well-placed to reap economies of
scale and share best practices
across the Group.
Creating
Sustainable
Value
Keppel is building on a robust ecosystem to create and
capture greater value from all businesses of the Group,
leveraging its core competencies in Technology & Innovation,
Engineering & Project Management, Operations & Maintenance
and Capital Management.
Design + Build
Project-Based
Sales + Services
Operation
Own + Operate
Revaluation & Divestment
Stabilise + Monetise
Fee-based
Trusts + Funds
Newbuild, repair &
upgrading projects
Residential projects
Technology packages
Keppel’s
Business Model
Our business model will
capture value at every step
of the way, from the time we
create an asset till even after
we inject it into a trust or fund
that we manage.
Development profit
Multiple
Earnings
Streams:
Operating income
Operations fee
Property managment fee
Facility management fee
Repair/service fee
Capital gain
Asset management fee
Operations fee
Property
management fee
Facility management fee
A Robust
Ecosystem that
harnesses collective
strengths and
expertise for growth
enhances operational
resilience and agility
sharpens competitive
advantage
enables effective
capital recycling for
the best returns
improves quality
and stability of
earnings across
business cycles
Midstream assetsCommercial propertiesPlants & data centresUnlocking valueRecycling & reinvesting capital for higher returnsFund managementOperating & maintenance servicesFacilities & property managementTECHNOLOGY & INNOVATIONCAPITAL MANAGEMENTOPERATIONS & MAINTENANCEENGINEERING & PROJECT MANAGEMENT 18
Interview with
the CEO
Loh Chin Hua
CEO
The market has yet
to fully recognise
Keppel’s merits as
a conglomerate.
We have a set of unique
strengths and potential
synergies which can
be harnessed across
the Group.
Keppel is fighting-fit and prepared to weather the volatile conditions,
drawing on our collective strengths and hunting as a pack.
We have, over the past two years, streamlined and restructured
our key business verticals thoughtfully, sharpening focus, building
resilience and growing our competitive advantage.
We are staying the course on a multi-business strategy, which has
steadied the Group reliably through many a cyclical downturn.
Creating and capturing higher value from all parts of Keppel, we will
drive collaboration across verticals for synergy and recycle capital
for the best possible returns.
Mr Loh Chin Hua, CEO of Keppel Corporation discusses how
the Group is adapting to meet the challenges and transforming
itself for the future.
Keppel Corporation LimitedReport to Shareholders 2015 Interview with the CEO
19
Q
The low oil price
environment has taken a
toll on Keppel. Are there any
aspects of the Company that
investors need to give more
consideration to in the
current climate?
With access to capital and the ability to invest when
times are tough, we will use this period to prudently
sow into strategic areas and build new muscles to
ride the upturn.
A
Keppel is more than just an Offshore &
Marine company. Our results in 2015
would have been much weaker had
we been so. We are a multi-business
group, and our strategy takes into
consideration the different cycles
of our businesses.
As we have shown, business cycles
do attenuate in a diversified
conglomerate such as Keppel.
In spite of strong headwinds,
as a Group, we made about $1.53 billion
in profits for FY 2015 due to higher
contributions from the Property and
Investments divisions cushioning
the impact of weaker earnings from
Offshore & Marine.
These are creditable results, which
point to how a sound and well-executed
multi-business strategy can steady
a ship in rough waters.
Of course, we want our engines firing
on all cylinders. But even when we go
through turbulence and one of the
engines slows down, the other engines
would be able to pick up the pace.
I believe that the market has yet
to fully recognise Keppel’s merits
as a conglomerate; that we have
a set of unique strengths and
potential synergies which can be
harnessed, particularly through the
cross-pollination of our business units.
The resilience and strength of
Keppel should not be overlooked
in the current environment. As a
conglomerate, with access to capital
and the ability to invest when times
are tough, we will use this period
to prudently sow into strategic
areas and build new muscles to
ride the upturn.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 20
Interview with
the CEO
Q
The offshore and marine
industry is slipping deeper
into the doldrums, with
deflated oil prices, the crisis in
Brazil and more project delays
and possible cancellation
risks. How will Keppel
weather the long winter?
Q
Working capital needs
should increase as more of
your customers defer their rig
deliveries. Are you concerned
about the Group’s gearing,
and what are you doing to
keep it at a reasonable level?
A
We are entering into the offshore industry
downturn on a firm footing, anchored by our
multi-business strategy. As distance tests a
horse’s strength, so are we confident of riding
out the turbulence and emerging stronger, like
how we have done so over the past 48 years.
In spite of the challenges, Keppel Offshore &
Marine (Keppel O&M) is still doing well, and
had contributed $481 million or to a third of
the Group’s income for the whole of 2015.
Excluding the $230 million provision made for
its projects with Sete Brasil, Keppel O&M’s
underlying operating margins would have been
17.1% for 4Q 2015 and 13.4% for FY 2015.
These are very respectable results, and they
attest to the robustness of our core Offshore &
Marine operations.
We know that this is a cyclical business.
And even when times were better, we had
been careful not to over-invest in growing our
capacities. Our prudence has served us well.
However, we need to continue adapting
ourselves to weather the present storm.
The adjustment process is not simple, and
we have to take a pragmatic approach to
restructuring. Keppel O&M is keeping vigilant
and rightsizing its operations to ensure that it
keeps its overheads under control. In 2015,
Keppel O&M’s overall direct staff strength
came down by about 17% or about 6,000
positions, while its subcontract workforce in
Singapore was lowered by 24% or about 7,900
positions. Manpower had also been redeployed
from offshore to marine operations where
resources are needed to manage a steady
stream of repair and conversion projects.
After carefully assessing the situation in Brazil,
we had stopped work on our semisubmersible
projects for Sete Brasil by the end of 2015.
We had also made a provision of $230 million
for them, taking into account our construction
progress, payments received and what is
due from the customer and to our vendors,
amongst other areas. This provision had
been reviewed and approved by our Board and
auditors. We think that it is appropriate and
adequate for now, until there is more clarity
on the situation and options available.
While some of our customers may have
delayed their rig deliveries, the cancellation
risks are not likely to be great as we have been
disciplined in taking on quality contracts with
sound pricing and payment terms. We will
continue to work hand-in-glove with our
customers, ensuring that we execute and
deliver quality projects to their satisfaction.
A
Amidst the current challenges, we are keeping
a watchful eye on our gearing and cash flows,
exercising financial discipline to maintain an
institutional quality balance sheet.
We will continue to execute our orderbook well,
and deliver our projects on time and within
budget. Our focus will be on improving margins
and productivity, and rightsizing. These efforts
will help ensure that we can remain profitable
in Offshore & Marine even with a lower top line.
For our asset heavy businesses, we would
want our assets to work harder and recycle
them at the right time. The creation of Keppel
Capital will not only improve our ability to
recycle capital into the various REITs and
Trusts but also allow us to expand our capital
base through the creation of private funds in our
real estate, infrastructure and energy space.
A case in point is how we have raised
about $3.5 billion by recycling property and
infrastructure assets like Marina Bay Financial
Centre Tower 3, Keppel Merlimau Cogen (KMC)
and our data centres. That, coupled with the
deconsolidation of Keppel REIT from our balance
sheet in 2013, has enabled us to privatise
Keppel Land for $3 billion whilst still keeping
our net gearing at a comfortable level.
We will be maintaining our debt to equity
ratio below 1x; this is a comfortable level for a
diversified group like Keppel. It will keep us nimble
whilst providing sufficient headroom to respond
to opportunities and challenges effectively.
Keppel Corporation LimitedReport to Shareholders 2015 Interview with the CEO
21
Q
Notwithstanding the present
gloom, which are some of the
bright spots you see in the
Offshore & Marine business?
How is Keppel making use of
this crisis period to prepare
itself to capture these
opportunities?
Q
What about the other
businesses in the Group?
The takeover of Keppel Land
was the most significant
corporate action in 2015,
how has that met your
objectives?
At the Group level, we now have a simpler
corporate structure with better control over
all our key business verticals.
A
While the oil and gas industry that we
serve is tracking a difficult path to recovery,
I am confident that the market, supported
by sound fundamentals, will eventually
rebalance itself. The current low oil prices
will gradually boost demand and reduce
supply. At some point, the oil companies
would have to spend to replenish
their reserves.
Meanwhile, our focus in 2016 will be on
executing our projects with our customers
well, and delivering them safely, on time
and on budget. We will continue pursuing
opportunities in the non-drilling market
where there is still demand for solutions
like accommodation semisubmersibles,
Plug & Abandonment jackups, liftboats
and specialised vessels.
We will also seek out opportunities in
niche markets where we can establish a
competitive advantage through our
technology and Near Market, Near Customer
strategy. The acquisition of LETOURNEAUTM
for instance, will not only expand our suite
of jackup rig designs but also broaden
aftermarket sales and services to customers.
A
The Property Division, at 46%, was the largest
contributor to the Group’s net profit for 2015.
This has clearly bolstered our performance
and speaks volumes of the timeliness of
Keppel Land’s privatisation.
Not only was it immediately accretive,
Keppel Land’s privatisation had also brought
the interests of our Property Division into full
alignment with the Group. The transaction
has resulted in $252 million of additional
contributions to Keppel Corporation, after
taking in the interest cost of $15 million.
The gas industry continues to be a very
interesting space where Keppel’s aspirations
and capabilities in the LNG business stretch
across the value chain. Alongside the FLNG
solutions that we are converting for Golar LNG,
we have also expanded our technology suite
with onshore and offshore liquefaction and
LNG transportation solutions.
We have recently been awarded a licence to
supply LNG bunker to vessels in the Port of
Singapore jointly with BG Group, now Shell.
Together, we will deliver end-to-end bunkering
solutions in 2017, leveraging their diversified
LNG portfolio and Keppel O&M’s expertise
servicing in LNG vessels. As the demand for
green solutions in the shipping industry rises,
we will be in a strategic position to cater
solutions and services such as designing tugs
with dual-fuel diesel LNG engines and
retrofitting vessel engines to run on LNG.
We shall not waste a good crisis. This downturn
presents opportunities to improve on our
expertise and processes and grow our
competitive advantage. As we hunker down,
we will also continue investing prudently
in our human capital and new capabilities,
which will stand us well in the upturn.
At the Group level, we now have a simpler
corporate structure and better control over
all our key business verticals. With the ability
to regulate the property balance sheet in
response to opportunities, we can more
effectively recycle capital and allocate
resources across the Group for the best
possible returns.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 22
Interview with
the CEO
Q
What are your aspirations
for the Property Division
now that Keppel Land has
been privatised?
Q
There has been quite
a bit of restructuring in
Infrastructure, what are
your plans for this Division?
Concerning the difficult
Engineering Procurement
and Construction (EPC)
projects in the UK and
Qatar, are you finally
out of the woods?
A
Keppel has been in Property for more than
30 years. We know this business very well
and have built up a strong track record and
brand name in Asia. In terms of Return on
Equity, Keppel Land is one of the best
performing property companies in Asia,
returning an average of 18.9% per annum
for a decade since 2006.
A
Since the integration of Keppel Energy and
Keppel Integrated Engineering in mid-2013,
we have covered good ground in reshaping
our Infrastructure Division into a stable
third leg for the Group. Today, this Division
comprises Keppel Infrastructure, which
focuses on energy-related infrastructure, and
Keppel Telecommunications & Transportation
(Keppel T&T), which operates our data centre
and logistics businesses. It is a much clearer
and more efficient structure.
Through streamlining and the divestment
of non-core operations such as the facilities
management company Keppel FMO, Keppel
Infrastructure has brought sharper focus to
our environmental engineering business.
This has also given us the needed clarity and
bandwidth to tackle our challenging EPC
projects in the UK and Qatar. These projects,
I am pleased to say, have been largely
completed and handed over in 2015.
Our aim 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 continues
to do well.
To be a leader in the property industry does
not mean that we have to be the biggest player.
We want instead to be a property developer
with the highest return in Asia, and that
will be our focus for the Property Division
moving forward.
Our EPC journey, arduous as it was, has
equipped us with invaluable experience and
insights for creating high quality infrastructure
assets worldwide. With a difficult chapter
behind us, our team will focus on opportunities
to build, own and operate related assets.
These will be in areas where we have strong
technical knowledge and deep understanding
of the markets and key value chains.
Like Property, the Infrastructure business is
asset heavy. Once these assets have been
stabilised and de-risked, we will monetise
them and recycle the capital into projects
with a higher rate of return. Replicating the
success achieved between Keppel Land
and Keppel REIT, we launched Keppel DC REIT
at end-2014 and merged Keppel Infrastructure
Trust with CitySpring Infrastructure Trust
in 2015.
Through the injection of data centre assets and
51% of KMC respectively into Keppel DC REIT
and Keppel Infrastructure Trust, we have
gained a total of $419 million. Being Sponsor to
our REITs and Trust, we continue to participate
in the growth of our asset management units,
whilst building up a solid platform for the
Group to recycle its capital.
Keppel Corporation LimitedReport to Shareholders 2015 Interview with the CEO
23
Q
Tell us more about what is
happening to the Investments
Division, which until now
had been mainly a segment
for reporting non-core
investments. What is
the thinking behind the
integration of the Group’s
asset managers under
Keppel Capital Holdings
in this Division?
By enlarging the pie with like-minded
co-investors, we can give the Group even
greater financial capacity to grow.
A
We are taking a long term view on developing
our Investments Division into a pillar of
recurring income for the Group.
Through the years, Keppel has built up an
enviable track record for developing high
quality assets, as well as operating and
managing them. Today, we oversee a total
portfolio of $26 billion in property and
infrastructure assets, which has grown
at a rate of 30% per annum for over a decade
since 2006. For FY 2015, Alpha Investment
Partners (Alpha), the managers of Keppel REIT
and Keppel DC REIT and the Trustee-Manager
of Keppel Infrastructure Trust, contributed
a total of $60 million in recurring fee
income to the Group.
To sustain growth and value creation, we need
to build and maintain a robust ecosystem
for recycling assets created by our business
verticals. This was the objective for integrating
our asset managers under Keppel Capital,
and reporting them as a new segment in
our Investments Division.
This timely restructuring provides greater
focus and scale to our asset management
business and the vehicles managed.
By bringing together the strengths of our
four asset managers, we can create synergies
by centralising certain non-regulated
support functions, as well as enhance
talent recruitment and retention, and the
sharing of best practices.
Many institutional investors have told us
that they want to get closer to the coal face to
own niche assets in the offshore and marine,
infrastructure and data centre industries.
These investors appreciate a partner like
Keppel who is not only able to create quality
assets but also manage them, and who is
prepared to align interests by putting in part
of its balance sheet.
Through Keppel Capital, we will be looking to
create more private funds and co-investment
vehicles with like-minded investors, which will
expand our capital base to seize opportunities
without putting a strain on our balance sheet.
By enlarging the pie with like-minded
co-investors, we can give the Group even
greater financial capacity to grow.
A
Q
With diverse businesses
each having their own
needs, how would you
prioritise capital allocation
across the Group?
We are acutely mindful of deploying our
capital to earn the best risk-adjusted returns.
With a simplified corporate structure and
almost full control of the Group’s key business
verticals, we now have more flexibility in
deploying capital and other resources across
the Group than before.
When we select projects, we take a bottom-up
approach, which allows us to assign resources
to those that best meet our strategic goals
and hurdle rates. We can also look forward to
growing our capital base, tapping co-investors
with the likes of pension and sovereign
wealth funds and other institutions to seize
opportunities in our chosen sectors.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 24
Interview with
Interview with
the CEO
the CEO
Q
We have looked at each
business unit in some detail,
the next question is, how will
you make Keppel into a
greater whole than the sum
of its parts?
We are acutely mindful of deploying our capital to
earn the best risk-adjusted returns.
A
That’s a good question. What we are
looking for is 1+1+1+1 equals 6 or 8,
instead of just 4. To realise our full
potential as a conglomerate and to open up
new growth opportunities, our business
units need to collaborate even more with
one another, capitalising on the wealth of
expertise, industry knowledge and
networks that they have.
The Sino-Singapore Tianjin Eco-City is a
showcase for how we have been able to
bring our various business divisions
together to create impactful projects.
Starting from barren saline and alkaline
land in 2008, the Tianjin Eco-City has
now become one of the best known
green developments in China, with some
50,000 people working and living there.
Other synergies are also emerging
through Keppel T&T and Keppel Land’s
joint venture to develop data centres,
as well as Keppel Land and M1’s
partnership to offer smart living
solutions at our properties.
Looking ahead, there will be more
opportunities for Keppel’s diverse units
to link up and participate along critical
value chains, be they in the harvesting,
transportation and retailing of natural
gas or the development of townships
and data centres. In all these areas,
Keppel Capital can play a part by
creating investment opportunities
for investors and at the same time
pull through projects for our
business verticals.
Net Profit by Income Type ($m)
$m
2,000
1,600
1,200
800
400
0
1,885
470
415
1,000
FY 2014
1,525
515
407
603
FY 2015
Project-based
Recurring Income
Capital Gains & Revaluations
Keppel Corporation LimitedReport to Shareholders 2015 Interview with the CEO
25
Q
How are you preparing
the Group to fully capture
the synergies and deliver
creditable performance
across cycles?
A
With our key verticals firming up well,
we can better work the Group’s core strengths
in technology and innovation; engineering
and project management; operating and
maintenance and capital management
to create more growth opportunities.
The goal of our business model is to
capture value at every step of the way,
from the time we create an asset till even
after we inject it into a trust or fund that
we manage. The ability to improve the
overall quality of earnings with more
recurring income will help us fund
our capital spending and dividends.
Until now, we have been playing more
to the left in terms of real estate,
infrastructure and investments where
the businesses tend to be asset heavy.
To offer our customers the best value
propositions in line with our aim of
generating good returns, we will need to
provide higher-value solutions and services
to the right of our value chains. We will
also have to co-create and collaborate
with our customers, suppliers and other
stakeholders to stay ahead of the game.
Q
Keppel is renowned for
being a well-run company.
What else are you doing to
facilitate growth and make
the Group more efficient?
A
The simplified corporate structure
encourages collaboration across our
verticals by aligning them to the Group’s
objectives and reducing administrative
layers and costs. We are looking at further
enhancing the way we bring people,
processes and technology together to
consistently create value.
In addition to providing turnkey solutions and
services, such as developing homes for sale
and building, converting and repairing offshore
vessels, which Keppel has been very good at,
we can also create quality assets across our
business lines to generate stable cash flows
for the Group over a longer period.
We can develop office buildings, data centres,
power and waste-to-energy plants, as well as
midstream assets such as FLNG vessels,
and then own, manage and operate them.
Operations and maintenance expertise is
a key differentiator for Keppel; it not only
complements our ability to create quality
assets but also generates streams of
recurring income for us.
Once our assets have been stabilised
and de-risked, we will need to recycle them
and reinvest the capital into new projects
with higher returns. This is where our asset
management units play a key role. As we
provide asset management and operations
and maintenance services for the assets
injected into our business trust and REIT
vehicles, we will earn stable, recurring fees
to bolster our bottom line. All sources of
earnings are important to us, and we will
harness them for growth.
By putting in place shared services and
supporting functions such as IT and human
resources, we can optimise the delivery of
cost-effective, flexible and reliable services to
all units. Not only will we achieve economies
of scale from these measures, we will also be
able to exercise better governance and share
best practices across the Group.
Shared services will add resilience into our
ecosystem, enabling our operating units to
focus on managing and growing the businesses
to become leaders of their respective fields.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 26
Interview with
the CEO
Q
Which critical factors will
determine Keppel’s future
success and enable it to
achieve its longer term
objectives?
We are creating an ecosystem that is robust,
scalable and self-sustaining to take Keppel into
the future. It will foster a dynamic environment
for greater collaboration, innovation and the
creation of synergies.
A
Business is not as usual. To stay on
top of our game, we need to be in tune
with the significant shifts in the external
environment that could spell opportunity
or potential disruption to our businesses.
International responses to climate change
in the wake of COP 21, the digitisation
of the global economy, and the rise of
millennials in the market place and
workforce are just some examples.
We need to stay nimble whilst keeping
a watchful eye over these events.
Our corporate milestones in the past two
years serve to reinforce Keppel’s business
verticals and shape market leaders
in our Property, Infrastructure and
Investments divisions. These are part of
our growth plan towards 2020. We are
resolved to imbue a spirit of enterprise
and culture of innovation that will keep
Keppel agile, resilient and future-ready.
Through our business model, we are
creating an ecosystem that is robust,
scalable and self-sustaining to take
Keppel into the future. It will foster a
dynamic environment for greater
collaboration, innovation and the
creation of synergies.
People are the most vital resource that
we have in our ecosystem. My leadership
team and I are committed to manage
succession as well as attract the right
talents and develop them to their full
potential. In April 2015, we opened the
Keppel Leadership Institute, our very own
global leadership development centre
to groom leaders and equip them to
drive and support the long term growth
of our businesses.
We will continue providing more
opportunities for our talents to grow
in their careers across geographies,
industries and functions. Ultimately,
we need them to espouse the same
passion and core values that orientate
us towards the true North. Last year,
we also introduced a set of operating
principles to guide us in running and
providing stewardship for our
many businesses.
The world is changing continuously
and so must we. Even as we strive do well,
we must also do good, holding ourselves
to the highest ethical standards, and
creating enduring, positive social impact
wherever we plant our flag. I am confident
that we can take advantage of the
downturn to transform Keppel into an
even stronger company, creating and
sustaining value for generations to come.
This is our time.
Keppel Corporation LimitedReport to Shareholders 2015 Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
2727
Board of Directors
Board of
Directors
Our Board of
Directors brings to
the table their
diverse expertise for
the Group’s strategic
governance, and
seeks to act in
the best interest
of the Group and
our shareholders
at all times.
Lee Boon Yang age 68
Chairman, Non-Executive
and Independent Director
Date of first appointment as a director:
1 May 2009
Date of last re-election as a director:
17 April 2015
Length of service as a director
(as at 31 December 2015):
6 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 2016):
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)
Loh Chin Hua age 54
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 2015):
2 years
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 2016):
Listed companies
Keppel Telecommunication & Transportation Ltd
(Chairman); KrisEnergy Ltd
Other principal directorships
Keppel Offshore & Marine Ltd (Chairman); Keppel
Land Limited (Chairman); Keppel Infrastructure
Holdings Pte. Ltd. (Chairman); Alpha Investment
Partners Limited (Chairman)
Major Appointments
(other than directorships):
Nil
Major Appointments
(other than directorships):
Nil
Past Directorships held over the preceding 5 years
(from 1 January 2011 to 31 December 2015):
Nil
Others:
Former Minister for Information, Communications
and the Arts (May 2003 to March 2009);
Former Member of Parliament (December 1984
to April 2011)
Past Directorships held over the preceding 5 years
(from 1 January 2011 to 31 December 2015):
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
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
2828
Keppel Corporation Limited Report to Shareholders 2015
Board of
Directors
Oon Kum Loon (Mrs) age 65
Non-Executive and
Independent Director
Date of first appointment as a director:
15 May 2004
Date of last re-election as a director:
17 April 2015
Length of service as a director
(as at 31 December 2015):
11 years 8 months
Tow Heng Tan age 60
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 2015):
11 years 4 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
Board Committee(s) served on:
Nominating (Member); Remuneration (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 2016):
Listed companies
Nil
Other principal directorships
Keppel Land Limited;
Singapore Power Limited;
Jurong Port Pte Ltd
Major Appointments
(other than directorships):
Nil
Past Directorships held over the preceding 5 years
(from 1 January 2011 to 31 December 2015):
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
Present Directorships
(as at 1 January 2016):
Listed companies
ComfortDelGro Corporation Limited
Other principal directorships
Pavilion Capital Holdings Pte Ltd;
Pavilion Capital International Pte Ltd;
Fullerton Financial Holdings Pte Ltd;
ST Asset Management Ltd
Major Appointments
(other than directorships):
Pavilion Capital International Pte. Ltd. (CEO);
Centre for Asset Management Research &
Investment, NUS (Board Member); National Council
of Social Services (Member of Investment Committee)
Past Directorships held over the preceding 5 years
(from 1 January 2011 to 31 December 2015):
CapitaLand Township Holdings Pte. Ltd.
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
Keppel Corporation LimitedReport to Shareholders 2015 Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Board of Directors
2929
Alvin Yeo Khirn Hai age 54
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 2015):
6 years 7 months
Tan Ek Kia age 67
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 2015):
5 years 3 months
Board Committee(s) served on:
Audit Committee (Member); Nominating
Committee (Member)
Board Committee(s) served on:
Board Safety Committee (Chairman); Nominating
Committee (Member); Board Risk Committee (Member)
Academic & Professional Qualification(s):
LLB Honours, King’s College London, University
of London; Gray’s Inn (Barrister-at-Law);
Senior Counsel
Present Directorships
(as at 1 January 2016):
Listed companies
United Industrial Corporation Limited;
Neptune Orient Lines Limited
Other principal directorships
Thomson Medical Pte Ltd; Valencia C.F
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
Past Directorships held over the preceding 5 years
(from 1 January 2011 to 31 December 2015):
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;
Former Member of Parliament (2006 to 2015)
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 2016):
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); Dialog Systems
(Asia) Pte Ltd
Major Appointments
(other than directorships):
Nil
Past Directorships held over the preceding 5 years
(from 1 January 2011 to 31 December 2015):
CitySpring Infrastructure Management Pte Ltd (as
Trustee-Manager of CitySpring Infrastructure Trust);
City Gas Pte Ltd
Others:
Former Vice President (Ventures and Developments)
of Shell Chemicals, Asia Pacific and Middle East
region (based in Singapore); Former Chairman,
Shell companies in North East Asia; Former Managing
Director, Shell Malaysia Exploration and Production
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 3030
Keppel Corporation Limited Report to Shareholders 2015
Board of
Directors
Danny Teoh age 60
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 2015):
5 years 3 months
Tan Puay Chiang age 68
Non-Executive and
Independent Director
Date of first appointment as a director:
20 June 2012
Date of last re-election as a director:
17 April 2015
Length of service as a director
(as at 31 December 2015):
3 years 7 months
Board Committee(s) served on:
Audit Committee (Chairman); Remuneration
Committee (Chairman); Board Risk
Committee (Member)
Board Committee(s) served on:
Nominating Committee (Chairman);
Board Safety Committee (Member);
Board Risk Committee (Member)
Academic & Professional Qualification(s):
Member of the Institute of Chartered
Accountants in England & Wales
Present Directorships
(as at 1 January 2016):
Listed companies
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 Ltd; DBS Bank (China)
Limited; DBS Foundation Ltd; Ascendas-Singbridge
Pte Ltd
Major Appointments
(other than directorships):
Nil
Past Directorships held over the preceding 5 years
(from 1 January 2011 to 31 December 2015):
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
Academic & Professional Qualification(s):
MBA (Distinction), New York University;
Bachelor of Science (First Class Honours),
University of Singapore
Present Directorships
(as at 1 January 2016):
Listed companies
Neptune Orient Lines Limited
Other principal directorships
Singapore Power Limited;
SP Services Limited (Chairman)
Major Appointments
(other than directorships):
Energy Studies Institute, NUS
Past Directorships held over the preceding 5 years
(from 1 January 2011 to 31 December 2015):
Nil
Others:
Former Chairman, ExxonMobil (China) Investment Co.
(2001 to 2007)
Keppel Corporation LimitedReport to Shareholders 2015
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Board of Directors
3131
Till Vestring age 52
Non-Executive and
Independent Director
Date of first appointment as a director:
16 February 2015
Date of last re-election as a director:
17 April 2015
Length of service as a director
(as at 31 December 2015):
11 months
Veronica Eng age 62
Non-Executive and
Independent Director
Date of first appointment as a director:
1 July 2015
Date of last re-election as a director:
n.a.
Length of service as a director
(as at 31 December 2015):
6 months
Board Committee(s) served on:
Remuneration Committee (Member); Nominating
Committee (Member)
Board Committee(s) served on:
Audit Committee (Member); Board Risk Committee
(Member)
Academic & Professional Qualification(s):
Master of Economics, University of Bonn, Germany;
Master of Business Administration, Haas School of
Business, University of California, Berkeley
Academic & Professional Qualification(s):
Bachelor of Business Administration
(First Class Honours), University of Singapore
Present Directorships
(as at 1 January 2016):
Listed companies
Inchcape plc
Other principal directorships
Singapore Chinese Orchestra Company Limited;
Leap Philanthrophy Ltd
Major Appointments
(other than directorships):
Partner, Bain & Company Southeast Asia
Past Directorships held over the preceding 5 years
(from 1 January 2011 to 31 December 2015):
Nil
Others:
Nil
Present Directorships
(as at 1 January 2016):
Listed companies
Nil
Other principal directorships
Nil
Major Appointments
(other than directorships):
Professor (Practice), NUS Business School; Centre
for Asset Management Research and Investments,
NUS Business School (Board Member); Asia Private
Equity Institute, SMU (Advisory Board Member)
Past Directorships held over the preceding 5 years
(from 1 January 2011 to 31 December 2015):
Permira Holdings Limited; Permira Europe III GP
Limited; Permira (Europe) Limited IV GP Limited;
Permira IV Managers Limited
Others:
Founding Partner of Permira (1985 to 2015);
Former Member of the Board and
Executive Committee of Permira
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
3232
Keppel Corporation Limited Report to Shareholders 2015
Keppel Group
Boards of Directors
Keppel Offshore
& Marine
Loh Chin Hua
Chairman
Chief Executive Officer,
Keppel Corporation
Chow Yew Yuen
Chief Executive Officer
Keppel Infrastructure
Holdings
Loh Chin Hua
Chairman
Chief Executive Officer,
Keppel Corporation
Dr Ong Tiong Guan
Chief Executive Officer
Stephen Pan Yue Kuo
Chairman,
World-Wide Shipping Agency Limited
Chan Hon Chew
Chief Financial Officer,
Keppel Corporation
Prof Minoo Homi Patel
Professor of Mechanical Engineering,
Cranfield University, UK
Chow Yew Yuen
Chief Executive Officer,
Keppel Offshore & Marine
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
Chairman of Star Energy Group
Holdings Pte Ltd
Lim Chin Leong
Former Chairman of Asia,
Schlumberger
Robert D. Somerville
Vice Chairman,
Maine Maritime Academy
Board of Trustee
Sit Peng Sang
Director
Chan Hon Chew
Chief Financial Officer,
Keppel Corporation
Koh Ban Heng
Director
Khoo Chin Hean
Director
Tong Chong Heong
Director
(effective 1 Feb 2016)
Keppel Infrastructure
Fund Management
(Trustee-manager of
Keppel Infrastructure
Trust)
Koh Ban Heng
Chairman
Independent Director
Mark Andrew Yeo Kah Chong
Independent Director
Quek Soo Hoon
Operating Partner,
iGlobe Partners (II) Pte Ltd
Dr Ong Tiong Guan
Chief Executive Officer,
Keppel Infrastructure Holdings Pte Ltd
Thio Shen Yi
Joint Managing Director,
TSMP Law Corporation
Daniel Cuthbert Ee Hock Huat
Independent Director
Kunnasagaran Chinniah
Independent Director
Alan Tay Teck Loon
Executive Director (Business
Development), Keppel Infrastructure
Holdings Pte Ltd
Keppel
Telecommunications
& Transportation
Loh Chin Hua
Chairman
Chief Executive Officer,
Keppel Corporation
Thomas Pang Thieng Hwi
Executive Director and
Chief Executive Officer
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
Lee Ai Ming (Mrs)
Justice of the Peace; Consultant,
Rodyk & Davidson LLP, Advocate &
Solicitor of the Supreme Court of
Singapore
Keppel Corporation LimitedReport to Shareholders 2015
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Keppel Group Boards of Directors
3333
Keppel Land
Loh Chin Hua
Chairman
Chief Executive Officer,
Keppel Corporation
Ang Wee Gee
Executive Director and
Chief Executive Officer
Keppel REIT
Management
(Manager
of Keppel REIT)
Dr Chin Wei-Li, Audrey Marie
Chairman
Executive Chairman,
Vietnam Investing Associates –
Financials Singapore Private Limited
Tan Yam Pin
Former Managing Director,
Fraser and Neave Group
Ng Hsueh Ling
Chief Executive Officer
Edward Lee
Singapore’s former Ambassador
to Indonesia
Tan Chin Hwee
Chief Executive Officer, Asia-Pacific,
Trafigura Group Pte Ltd
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,
Centre on Asia and Globalisation,
LKY School of Public Policy,
National University of Singapore
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
Chief Executive Officer,
Keppel Land
Dileep Nair
Singapore High Commissioner
to Ghana
Teo Cheng Hiang Richard
Independent Director
Dr Tan Tin Wee
Director, National Supercomputing Centre
(NSC), Singapore and Chairman, A*STAR
Computational Resource Centre (ACRC),
(on secondment from Department
of Biochemistry, National University
of Singapore)
Thomas Pang Thieng Hwi
Chief Executive Officer,
Keppel Telecommunications &
Transportation
k1 Ventures
Steven Jay Green
Chairman/
Chief Executive Officer
Former US Ambassador to Singapore
(1997 to 2001)
Dr Lee Suan Yew
Medical Practitioner and
Former President of the
Singapore Medical Council
Oon Kum Loon (Mrs)
Non-Executive,
Non-Independent Director
Chan Hon Chew
Chief Financial Officer,
Keppel Corporation
Prof Tan Cheng Han
Chairman, Centre for Law & Business,
Faculty of Law, National University
of Singapore
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,
Singapore Management University
Paul Tan
Group Controller,
Keppel Corporation
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
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 3434
Keppel Corporation Limited Report to Shareholders 2015
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
M.S., Swiss Federal Institute of
Technology (ETH), Zurich.
Mr Ullring was Chairman of the Executive
Board of Det Norske Veritas, Oslo from
1985-2000 and President and CEO of
NORCONSULT, Oslo from 1981-1985.
He worked for SKANSKA, Malmo,
Sweden from 1962-1981 and was
Director of the International Department
from 1972. He was an Independent
Director on Keppel Corporation’s
Board from 2000 to April 2012.
He is the Chairman of the Board of The
Fridtjof Nansen Institute, Oslo, Norway.
He was the Chairman of the Maritime
and Port Authority of Singapore’s First,
Second and Third Maritime and
Research and Development Advisory
Panel. He is a Fellow and Honorary
Fellow of the Norwegian Academy of
Technological Sciences, and a Fellow
of the Royal Swedish Academy of
Engineering Sciences.
Dr Brian Clark
Schlumberger Fellow;
B.S., Ohio State University;
PhD, Harvard University (1977).
Dr Clark holds 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.
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 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; BSc.
(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. Previously, he was Vice
President of the American Bureau of
Shipping, and President of Noble Denton.
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
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.
Keppel Corporation LimitedReport to Shareholders 2015 Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Keppel Technology Advisory Panel
3535
Seated, from left: Loh Chin Hua (CEO of Keppel Corporation), Dr Lee Boon Yang (Chairman of Keppel Corporation), and Dr Liu Thai-Ker.
Standing, from left: Professor Chan Eng Soon, Professor Tom Curtis, Professor Stefan Thomke, Professor Minoo Patel, Dr Malcolm Sharples,
Chow Yew Yuen (CEO of Keppel Offshore & Marine), Sven Bang Ullring, Dr Brian Clark, Professor Ng Wun Jern, Chua Kee Lock,
Professor Jim Swithenbank, and Professor Kazuo Nishimoto.
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 Chan Eng Soon
B.Eng (First class honours) & M.Eng,
National University of Singapore
(NUS), and PhD, MIT.
Professor Chan is a Fellow of the
Singapore Academy of Engineering
and Member IES. He is 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.
Dr Liu Thai-Ker
B. Architecture (First Class honours and
University Medal) and Doctor of Science
honoris causa, University of N.S.W;
Master in City planning with Parson’s
Memorial Medal, Yale University.
Dr Liu is an architect-planner and
Senior Director of RSP Architects
Planners & Engineers Pte Ltd. Dr Liu is
also the Founding Chairman of Centre
of Liveable Cities since 2008. He has
served as the Adjunct Professor of
School of Design and Environment
and the Lee Kuan Yew School of Public
Policy, NUS. He is also the Adjunct
Professor in the College of Humanities,
Arts & Social Sciences, NTU.
Dr Liu is a member of several
governmental bodies in Singapore,
and planning advisor to around 30
cities in China. He is the Architect-
Planner and CEO of the Housing &
Development Board from 1969 to 1989
and CEO and Chief Planner of Urban
Redevelopment Authority from 1989 to
1992. Dr Liu served as the Chairman of
the National Arts Council from 1996 to
June 2005; and Singapore Tyler Print
Institute from 2000 to 2009. He served
as the chairperson of the External
Review Panel, Arts Quality Framework
appointed by the Ministry of Education
in 2009 and a founding member of the
Board of Trustees, Arts & Culture
Development Fund, Ministry of
Information, Communications and
the Arts in 2010.
Chua Kee Lock
BS. Mechanical Engineering,
University of Wisconsin at Madison;
M. Eng, Stanford University.
Mr Chua is the Group President &
CEO of Vertex Venture Holdings Ltd.
Prior to joining Vertex Group, Mr Chua
was the President and Executive
Director of Biosensors International
Group, Ltd. From 2003 to 2006,
Mr Chua was a managing director of
Walden International. Between 1987
to 1997 and 2001 to 2003, he served in
various senior roles within the NatSteel
Group. Positions held included Vice
President of Transpac Capital, CEO of
Intraco Ltd and Deputy President of
NatSteel Ltd. Between 1998 to 2000,
Mr Chua was the Co- Founder and
President of MediaRing.com Ltd, a
voice-over-Internet services company
which was successfully listed in
Singapore in late 1999.
He serves on the boards of several
companies, and is an Independent
Director of Logitech International S.A.
Mr Chua is also a board member of
Yongmao Holdings. He is also a
Member of Mainly I Love Kids (MILK)
Charity as well as a Member of the
Practising Management Consultants
Certification Board.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 36
Senior
Management
Keppel Corporation
Loh Chin Hua
Chief Executive Officer
Chan Hon Chew
Chief Financial Officer
Corporate Services
Robert Chong
Director
Group Human Resources
Wang Look Fung
Director
Group Corporate Affairs
(retired 31 Dec 2015)
Paul Tan
Group Controller
Ong Ye Kung
Director
Group Strategy & Development
(stepped down on 30 Sep 2015)
Lim Meng Ann
Director
Corporate Development / Planning
(oversees Group Strategy &
Development effective 1 Oct 2015)
Tay Lim Heng
Director
Group Risk Management
Magdeline Wong
General Manager
Group Tax
Lynn Koh
General Manager
Group Treasury
Caroline Chang
General Manager
Group Legal
Ho Tong Yen
General Manager
Group Corporate Communications
(effective 1 Jul 2015)
Tan Eng Hwa
General Manager
Group Internal Audit
(seconded to Keppel
Telecommunications &
Transportation on 1 Jan 2016)
Sepalika Kulasekera
General Manager
Group Internal Audit
(effective 1 Jan 2016)
Jacob Tong
General Manager
Group Information Systems
Jaggi Ramesh Kumar
General Manager
Group Health,
Safety & Environment
Goh Toh Sim
Chief Representative, China
(stepped down on 29 Feb 2016)
Eric Goh
Chief Representative, China
(effective 1 Mar 2016)
Offshore & Marine
Chow Yew Yuen
Chief Executive Officer
Keppel Offshore & Marine
Wong Ngiam Jih
Chief Financial Officer
Keppel Offshore & Marine
Wong Kok Seng
Managing Director
(Offshore and Keppel FELS)
Keppel Offshore & Marine
Michael Chia Hock Chye
Managing Director
(Marine and Technology)
Keppel Offshore & Marine
Chor How Jat
Managing Director
Keppel Shipyard
Abu Bakar Bin Mohd Nor
Managing Director
Keppel Singmarine
Hoe Eng Hock
Managing Director
(Special Projects, Marine)
Chris Ong Leng Yeow
Deputy Managing Director
Keppel FELS
Dr Foo Kok Seng
Executive Director
Offshore Technology Development
Shallow Water Technology, KOMtech
Aziz Amirali Hasham Merchant
Executive Director
KOMtech
Deepwater Technology Group
Marine Technology Development
Lai Ching Chuan
Director
(Corporate Development)
Keppel Offshore & Marine
Yong Chee Min
Director
(HSE and Special Projects)
Keppel Offshore & Marine
Jeffery Shiu Chow
Director
(Legal)
Keppel Offshore & Marine
Dr Lee Chay Hoon
Director
(Organisation Development and
Human Resources)
Keppel Offshore & Marine
Wong Fook Seng
Executive Director
(Quality System and
Process Excellence)
Keppel FELS
Mohamed Sahlan Bin Salleh
Executive Director
(Operations)
Keppel FELS
Louis Chow Wai Laye
Executive Director
(Commercial)
Keppel Shipyard
Albert Kee Heok Seng
Executive Director
(Operations)
Keppel Shipyard
Edmund Lek Hwee Chong
Executive Director
(Operations)
Keppel Singmarine
President
Keppel Nantong Shipyard /
Keppel Nantong Heavy Industry
Keppel Corporation LimitedReport to Shareholders 2015 37
Senior Management
Property
Ang Wee Gee
Chief Executive Officer
Keppel Land
Lim Kei Hin
Chief Financial Officer
Keppel Land International
Tan Swee Yiow
President
(Singapore)
Keppel Land International
Ho Cheok Kong
President
Keppel Land China
(stepped down on 29 Feb 2016)
Director, Special Projects
Keppel Land International
(effective 1 Mar 2016)
Lee Siew Keong, Ben
President
Keppel Land China
(effective 1 Mar 2016)
Linson Lim Soon Kooi
President
(Vietnam)
Keppel Land International
Sam Moon Thong
President
(Indonesia)
Keppel Land International
Ng Ooi Hooi
President
(Regional Investments)
Keppel Land International
Ng Hsueh Ling
Chief Executive Officer
Keppel REIT Management
Christina Tan Hua Mui
Managing Director
Alpha Investment Partners
CEO (Designate)
Keppel Capital International
(effective 25 Jan 2016)
Infrastructure
Dr Ong Tiong Guan
Chief Executive Officer
Keppel Infrastructure
Patrick Kong Yoon Seen
Chief Financial Officer
Keppel Infrastructure
(stepped down on 31 Jan 2016)
Lim Siew Hwa
Chief Financial Officer
Keppel Infrastructure
(effective 1 Mar 2016)
Tan Boon Leng
Executive Director
(Waste-to-Energy)
(X-to-Energy)
Keppel Infrastructure
Nicholas Lai Garchun
Executive Director
(Gas-to-Power)
Keppel Infrastructure
Alan Tay Teck Loon
Executive Director
(Business Development)
Keppel Infrastructure
Cindy Lim Joo Ling
Executive Director
(Infrastructure Services)
Keppel Infrastructure
Khor Un-Hun
Chief Executive Officer
Keppel Infrastructure Fund
Management
Thomas Pang Thieng Hwi
Chief Executive Officer
Keppel Telecommunications &
Transportation
Chan Shui Har
Deputy Chief Executive Officer
Keppel Telecommunications &
Transportation
Tan Eng Hwa
Chief Financial Officer
Keppel Telecommunications &
Transportation
(effective 1 Jan 2016)
Desmond Gay Kah Meng
Chief Executive Officer
Keppel Logistics
(South East Asia & Australia)
(effective 1 Dec 2015)
Vincent Ko Woon Chun
Chief Executive Officer
Keppel Logistics (China)
Wong Wai Meng
Chief Executive Officer
Keppel Data Centre
(effective 18 Jan 2016)
Chua Hsien Yang
Chief Executive Officer
Keppel DC REIT Management
Unions
Keppel FELS Employees’ Union
Vincent Ho Mun Choong
President
Atyyah Binte 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
NTUC Central Committee Member
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
Abdul Samad Bin Abdul Wahab
General Secretary
S. Thiagarajan
Executive Secretary
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 3838
Keppel Corporation Limited Report to Shareholders 2015
Investor
Relations
01 Mr Chan Hon Chew,
CFO of Keppel Corporation,
engages an analyst
at the Company’s
results briefing.
Total Cash Dividend Payout
40%
of Group net profit for FY 2015.
10-year Total Shareholder
Return (TSR) Growth
7.8%
This is above STI’s annualised
TSR growth rate of 5.0%.
01
Amidst a challenging
macroeconomic environment,
we remain focused on engaging
the financial community
regularly and in a timely manner,
providing them with an accurate
and balanced account of the
Keppel Group’s performance
and highlights. Through a
structured Investor Relations (IR)
programme, we seek to help
the financial community better
understand our multi-business
strategy with the aim of achieving
fair valuation.
Keppel continues to engage
investors both locally and
overseas, so as to maintain a
diversified and robust shareholder
base. As at 10 February 2016,
institutional investors formed
57.8% of our issued capital, while
retail shareholders formed the
remaining 42.2%. Our shareholder
base remains geographically
diverse, spreading across Asia,
North America and Europe.
Engaging Investors
As part of ongoing communication
with shareholders and investors,
the management and IR team
held some 230 meetings and
conference calls with institutional
investors in 2015.
During the year, senior management
continued to travel widely for
non-deal roadshows to meet
investors in Canada, France,
Hong Kong, the UK and the US. We
also hosted several site visits to our
shipyards in Singapore, as well as
to our properties in Vietnam.
Besides the regular results
webcasts and conferences, we
conducted analyst briefings for
major corporate announcements
such as the privatisation of
Keppel Land. We also organised
roadshows in Singapore and
Hong Kong, and held conference
calls with shareholders in the US
and the UK to communicate the
rationale for the privatisation.
Keppel Corporation LimitedReport to Shareholders 2015 Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Investor Relations
3939
Significant Events
January
Keppel Corporation launched the
voluntary unconditional cash offer
for Keppel Land on 23 January 2015.
March
Keppel Corporation launched an
interactive version of its Annual
Report, ensuring that the report is
user-friendly, easily accessible
and enhanced for viewing on
mainstream mobile devices.
July
Keppel Corporation achieved
total shareholding of over 99% in
Keppel Land at the completion of
the privatisation of the latter.
August
Keppel Corporation was ranked
third in the annual Governance and
Transparency Index.
September
Keppel Corporation was listed
as an index component of the
Dow Jones Sustainability Indices
Asia Pacific Index for the third
consecutive year. The Company
was also included as a constituent
of the MSCI Global Sustainability
Index and the Euronext Vigeo
World 120 Index.
In 2015, Keppel continued to
strengthen ties with industry
stakeholders, participating in
the annual Oil & Offshore
Conference organised by Pareto
Securities in Oslo, Norway.
With an increasing rate of global
smartphone penetration and
a shift toward a “paperless
society”, we launched an
interactive version of our
Annual Report, which is also
mobile-friendly. Since the launch
of our Annual Report microsite
in March 2015, monthly website
traffic has more than doubled.
In addition, Keppel Corporation’s
2015 Annual Report was ranked
within the Top 400 Best Annual
Reports globally by ReportWatch.
Keppel’s corporate website
continues to be the key channel
through which we communicate
and broadcast company news
to the public in a timely manner.
We will continue to enhance
our communication channels and
platforms to facilitate access to
important corporate information
and news.
Sustaining Value
Despite headwinds in the
Offshore & Marine industry and
plunging oil prices, Keppel’s
dividend payout for FY 2015
was underpinned by higher
contributions from our other
business units.
Balancing Keppel’s performance
as well as the Company’s needs
for future growth, our Board
proposed a total cash dividend of
34 cents per share for FY 2015.
This represents a 40% payout
ratio, including an interim cash
dividend of 12 cents per share
paid out in August 2015, and a
proposed final cash dividend of
22 cents per share.
We remain committed to
building sustainable value for
our shareholders, harnessing
strengths across the Group to
capture value through a robust
multi-business strategy.
Shareholding by Investors
Shareholding by Geography
Institutions
Retail
Total
%
57.8
42.2
100
Singapore
Asia (ex Singapore)
North America
Europe
Others*
Total
%
35.7
5.7
11.5
8.6
38.5
100
* Others comprise shareholders beyond the Top 50, who collectively owned approximately
20% of the Company’s issued share capital as at 10 February 2016.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
40
Investor
Relations
Investor Relations Calendar
Apart from regular meetings and conference calls with global
institutional investors, the following events and initiatives were
organised in 2015 to engage the financial community:
1Q 2015
• 4Q & FY 2014 results conference
and live webcast.
• Media and analysts’ briefing
on the voluntary unconditional
cash offer for Keppel Land.
• Launched the Keppel Corporation
Annual Report microsite.
2Q 2015
• 1Q 2015 live results webcast.
• Convened the Annual General
Meeting.
• Hosted group visits to Keppel
FELS with DNB Markets
Shipping (Norway) and Bank of
America Merrill Lynch.
3Q 2015
• 2Q & 1H 2015 results
conference and live webcast.
• Participated in Pareto
Securities’ 22nd annual
Oil & Offshore Conference
in Norway.
• Hosted Sumitomo Mitsui
Trust for a site visit to yards
in Singapore.
• Went on non-deal roadshows
in Singapore and Hong Kong
with DBS and Credit Suisse.
• Went on non-deal roadshows
to New York, Boston and
Toronto with Barclays,
and to London, Edinburgh
and Paris with UBS.
• Hosted group visits to
Keppel FELS for clients of
Daiwa and JP Morgan.
• Hosted a site visit to The
Estella and Saigon Centre in
Ho Chi Minh City for a group of
institutional investors.
4Q 2015
• 3Q & 9M 2015 live results
webcast.
• Went on a non-deal roadshow
to Hong Kong with Bank of
America Merrill Lynch.
• Hosted an investor’s visit to
The Estella in Ho Chi Minh City.
Keppel Corporation LimitedReport to Shareholders 2015 Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Awards & Accolades
Awards &
Accolades
Corporate Governance &
Transparency
Singapore Corporate Awards
• Keppel Corporation
– Gold, Best Managed Board
(Market capitalisation of
$1 billion and above)
Securities’ Investors
Association of Singapore (SIAS)
Investors’ Choice Awards
• Keppel Corporation
– Runner-up, Singapore
Corporate Governance Award
(Big Cap)
– Runner-up, Internal Audit
Excellence Award
– Special Recognition, Ms Tan
Eng Hwa, Internal Audit
Excellence Award
Governance and Transparency
Index (GTI)
• Keppel Corporation was
ranked third in the annual GTI
as one of the best governed
and most transparent listed
companies in Singapore.
ASEAN Corporate Governance
Scorecard
• Keppel Corporation was among
Singapore’s Top 25 listed
companies in terms of
corporate governance.
Business Excellence
Corporate Citizenry
• Keppel Corporation was
conferred the Business
China Enterprise Award at the
Business China Awards 2015.
• Keppel Corporation received
Channel NewsAsia’s (CNA)
Innovation Luminary Award 2015.
• Sino-Singapore Tianjin Eco-City’s
wastewater reclamation plant
attained the Green Star Grade II
accreditation for industrial
buildings from China’s Ministry
of Housing and Urban-Rural
Development.
Sustainability
• Keppel Corporation was
maintained as a component of
the Dow Jones Sustainability
Index for the third consecutive
year, and was listed on the
MSCI Global Sustainability
Index and the Euronext Vigeo
World 120 Index.
• Keppel Corporation was
conferred the Strategy and
Sustainability Management
Award at the Sustainable
Business Awards Singapore.
• Keppel Corporation was
conferred the Distinguished
Patron of the Arts award by
Singapore’s National Arts
Council for the eighth
consecutive year.
• Keppel Care Foundation was
awarded the Corporate Gold
Award at the Community
Chest Awards.
Safety
• Keppel Group clinched
35 Workplace Safety & Health
(WSH) Awards conferred by the
WSH Council and Singapore’s
Ministry of Manpower. This is
the highest number of WSH
awards won by a single
organisation in 2015.
Human Resources
• Keppel Corporation was
named the Most Attractive
Employer in the Engineering
and Construction Sector at the
Randstad Awards.
4141
01 The Keppel Group took
centrestage at the WSH
Awards 2015, sweeping a
total of 35 awards.
01
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 42
Operating &
Financial Review
Keppel Corporation creates sustainable value
through its key businesses in Offshore & Marine,
Property, Infrastructure and Investments.
The Group serves a wide customer base through
its global presence, and as at end-2015 had
total assets of $28.9 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
solutions 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 the Keppel Group’s operations and financial
performance, based on its consolidated financial statements
as at 31 December 2015. Also discussed are the impact 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
43 Group Structure
44 Management Discussion & Analysis
46 Offshore & Marine
58 Property
66 Infrastructure
74 Investments
78 Financial Review & Outlook
Keppel Corporation LimitedReport to Shareholders 2015 Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Group Structure
Group Structure
Keppel Corporation Limited
Offshore & Marine
Property
• Offshore rig design, construction,
• Property development
repair and upgrading
• Ship conversion and repair
• Specialised shipbuilding
• Property fund management
• Property trusts
Infrastructure
• Gas-to-Power
• Waste-to-Energy
• X-to-Energy
• Logistics and data centres
Investments7
• Investments
• Telco
KEPPEL OFFSHORE &
MARINE LTD
100%
KEPPEL LAND LIMITED
99%
KEPPEL INFRASTRUCTURE
HOLDINGS PTE LTD
100%
K1 VENTURES LIMITED 5
Keppel FELS Limited
100%
Keppel Land
International Limited
Southeast Asia and India
100%
Gas-to-Power
KRISENERGY LTD 5
Cayman Islands
Keppel Shipyard Limited
100%
Keppel Land China
China
100%
Keppel Gas Pte Ltd
100%
M1 LIMITED 3 & 5
Keppel Singmarine Pte Ltd
100%
Alpha Investment
Partners Ltd
100%
Keppel Electric Pte Ltd
100%
4343
36%
40%
19%
100%
Keppel REIT 5
46%
Keppel Merlimau Cogen
Pte Ltd6
49%
100%
KEPPEL BAY PTE LTD 2
100%
Waste-to-Energy
Keppel Nantong Shipyard
Company Limited
China
Offshore Technology
Development Pte Ltd
Deepwater Technology
Group Pte Ltd
Marine Technology
Development Pte Ltd
Keppel AmFELS LLC
United States
Keppel Verolme BV
The Netherlands
100%
100%
100%
100%
Keppel FELS Brasil SA
Brazil
100%
KEPPEL
TELECOMMUNICATIONS
Keppel Singmarine
Brasil Ltda
Brazil
Keppel Philippines Marine Inc
The Philippines
Keppel Subic Shipyard Inc
The Philippines
Caspian Shipyard
Company Limited
Azerbaijan
Arab Heavy Industries PJSC
United Arab Emirates
Nakilat-Keppel Offshore &
Marine Ltd
Qatar
100%
98%
86%
51%
33%
20%
Dyna-Mac Holdings Limited 5
24%
Keppel Seghers Engineering
Singapore Pte Ltd
100%
X-to-Energy
Keppel DHCS Pte Ltd
100%
Keppel Infrastructure Trust 5
18%
KEPPEL
TELECOMMUNICATIONS &
TRANSPORTATION LTD 5
80%
Logistics & Data Centres
Keppel Logistics Pte Ltd
100%
Keppel Data Centres Holding
Pte Ltd
100%
Keppel Logistics (Foshan)
Pte Ltd
China
Keppel DC REIT 4 & 5
70%
35%
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.
6 Owned by Keppel Infrastructure
Holdings Pte Ltd (49%) and
Keppel Infrastructure Trust (51%).
7 Keppel Corporation has announced
its plans to consolidate the Group’s
asset management businesses
under Keppel Capital Holdings
Pte Ltd in the Investments Division
by 2H 2016.
Updated as at 4 March 2016.
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
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 44
Operating &
Financial Review
Management
Discussion
& Analysis
Free Cash Outflow
$694m
Earnings Per Share
$0.84
There was no significant dilution as no
major capital call was made since 1997.
We are configured for growth with
prudent financial discipline and a strong
balance sheet.
Group Overview
Group net profit attributable
to shareholders decreased
by 19% to $1,525 million.
The compounded annual growth
for net profit from 2010 to 2015
was negative 0.8%, and for the
period from 2005 to 2015 was
positive 10.5%.
Earnings Per Share went down
by 19% to 84.0 cents. ROE was
14.2%. Eonomic Value Added of
$648 million was $1,130 million
below that of the previous year.
Net cash used in operating
activities was $705 million as
compared to net cash from
operating activities of $5 million
for 2014, due mainly to lower
operational cash inflow.
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 and
capital expenditure and major
divestments, net cash from
investment activities was
$11 million. The Group spent
$357 million on investments and
operational capital expenditure,
mainly from the Offshore &
Marine Division. After taking
into account proceeds from
divestments and dividend
income of $368 million, the
resulting free cash outflow
was $694 million.
Total cash dividend for 2015 will
be 34.0 cents per share, 29% lower
than the prior year’s total cash
dividend of 48.0 cents per share.
This comprises a final proposed
cash dividend of 22.0 cents
per share and the interim cash
dividend of 12.0 cents per share
distributed in the third quarter
of 2015. The total distribution
for the year is approximately
$617 million.
Segment Operations
Group revenue of $10,296 million
was $2,987 million or 22% below
that of the previous year. Revenue
from the Offshore & Marine Division
of $6,241 million was $2,315 million
lower due to lower volume of work,
deferment of some projects and
cessation of work on Sete Brasil’s
projects. Revenue from the Property
Division rose by $197 million to
$1,926 million. This was due
mainly to higher revenue from
China, partly offset by lower
revenue from Singapore. Revenue
from the Infrastructure Division of
$2,058 million was $876 million
lower, due mainly to lower revenue
recorded by the power and gas
business from lower prices and
volume, as well as the absence
of revenue from Keppel FMO
Pte Ltd which was disposed in
December 2014.
Group net profit of $1,525 million
was $360 million or 19% lower
than that of the previous year.
Profit from the Offshore & Marine
Division of $481 million was
$559 million lower than that of
the previous year, due mainly to
lower operating results, provisions
for the Sete Brasil projects and
lower net interest income, partly
offset by higher contributions from
associated companies. Net profit
from the Property Division of
$701 million rose by $219 million
because of lower non-controlling
interest following the privatisation
Keppel Corporation LimitedReport to Shareholders 2015 Management Discussion & Analysis
45
Revenue ($ 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
7,126
8,556
6,241
2013
2014
2015
Property
Infrastructure
Investments
Total
1,768
1,729
1,926
3,459
2,934
2,058
27
64
71
12,380
13,283
10,296
2013
2014
2015
Offshore
& Marine
945
1,040
481
Property
Infrastructure
Investments
832
482
701
15
320
207
54
43
136
Total
1,846
1,885
1,525
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**
2015
$ million
10,296
1,525
(705)
(694)
648
84.0 cts
14.2%
34.0 cts
15 vs 14
% +/(-)
2014
$ million
14 vs 13
% +/(-)
2013
$ million
-22
-19
n.m.
n.m.
-64
-19
-24
-29
13,283
1,885
5
729
1,778
103.8 cts
18.8%
48.0 cts
+7
+2
-99
+11
+56
+2
-4
+20
12,380
1,846
637
654
1,142
102.3 cts
19.5%
40.0 cts
* Free cash flow excludes expansionary acquisitions & capex, and major divestments.
** Total distributions for FY 2013 included non-cash special distributions in specie of Keppel REIT units equivalent to 9.5 cents per share.
of Keppel Land Limited, higher
fair value gains on investment
properties and cost write-back
upon finalisation of project cost
for Reflections at Keppel Bay,
partially offset by a lower
contribution from associated
companies and higher net
interest expenses. Profit from
the Infrastructure Division of
$207 million was $113 million
lower due mainly to the losses
following finalisation of the
cost to complete the Doha
North Sewage Treatment Works,
partly offset by the gain from
divestment of 51% interest in
Keppel Merlimau Cogen to
Keppel Infrastructure Trust (KIT)
and the dilution re-measurement
gain from the combination of
Crystal Trust and CitySpring
Infrastructure Trust to form
the enlarged KIT. Profit from
the Investments Division
increased by $93 million,
due mainly to higher profit
from sale of investments and
higher share of profits from
k1 Ventures and KrisEnergy.
The Property Division was the
largest contributor to Group
net profit with a 46% share,
followed by the Offshore & Marine
Division with 32% share, the
Infrastructure Division with
14% share and the Investments
Division with 8% share.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 46
Operating &
Financial Review
Offshore
& Marine
Profit Before Tax
$699m
as compared to FY 2014’s $1,365 million.
Net Profit
$481m
as compared to FY 2014’s $1,040 million.
We aim to be the preferred solutions partner
in the global offshore & marine industry.
Major Developments in 2015
Focus for 2016/2017
Entered into an agreement
Execute existing
backlog of orders on
time and on budget.
Continue to rightsize
operations in tandem
with workload
requirements.
Invest prudently in
R&D, productivity and
core competencies for
long-term growth.
to acquire Cameron’s
offshore rig business,
which comprises the
LETOURNEAUTM jackup
rig designs, rig kit business
and aftermarket services.
Reinforced expertise as
a total solutions provider
for the offshore & marine
industry with the delivery
of the world’s deepest
FPSO vessel, Turritella,
to SBM Offshore.
Signed a contract with
Golar to perform the
conversion of a third Moss
Liquefied Natural Gas (LNG)
carrier into a Floating
Liquefaction facility (FLNG).
Keppel Corporation LimitedReport to Shareholders 2015 Offshore & Marine
47
Net Profit ($ million)
FY 2013
945
FY 2014
1,040
FY 2015
481
01 Celebrating the world’s
first triple rig naming
are Mr Chan Chun Sing
(seated), Minister,
Prime Minister’s Office,
and Secretary-General,
National Trades Union
Congress, with the lady
sponsors as well as senior
management of Grupo R
and Keppel.
01
Earnings Review
The Offshore & Marine (O&M)
Division was entrusted with
$1.8 billion of new orders, bringing
the value of its net orderbook to
$9.0 billion as at end-2015, with
deliveries and revenue visibility
extending to 2020. Non-drilling
solutions make up more than a
third of the net orderbook.
The Division’s revenue of
$6,241 million for the year was
$2,315 million or 27% lower
than in 2014, due mainly to
lower volume of work done and
cessation of work on Sete Brasil’s
projects as at end-2015.
A provision of about $230 million
was made for the Sete Brasil
projects in 4Q 2015, after
assessing the construction
progress, payment status and
amounts due to vendors amongst
other areas.
Excluding this provision, the
Division turned in a strong
operating profit margin of 13.4%
for FY 2015, attesting to its robust
core operations. Pre-tax earnings
of $699 million was $666 million
or 49% lower year-on-year, due to
lower operating results and the
aforesaid provision, partially
offset by higher contributions
from associated companies.
Net profit of $481 million for the
year was $559 million or 54%
lower than in 2014.
Market Review
After plunging from a high of over
US$100 per barrel in June 2014,
oil price continued on a downward
trend throughout 2015 before
closing at a 12-year low of
US$30 per barrel at the start of
2016, due to the mismatch in
global demand and supply.
Against this backdrop, oil
companies have not only cut back
on capital expenditures but also
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other InformationEarnings Highlights ($ million) 2015 2014 2013Revenue 6,2418,5567,126EBITDA 7441,3661,196Operating Profit 5971,2241,059Profit before Tax 6991,3651,202Net Profit 4811,040945Manpower (Number)26,41131,59731,487Manpower Cost1,1361,1941,173 48
Operating &
Financial Review
Offshore & Marine
01
Keppel O&M
will continue to
focus on rightsizing
its operations,
improving productivity
and optimising
resource deployment
to meet the
challenges of the
current downturn in
the offshore sector.
renegotiated contracts with rig owners
to lower dayrates in return for longer charter
periods. Several drilling contractors have
scaled back their fleet renewal and expansion
plans. New orders for production units
have also slowed down, as operators defer
their investment decisions in this low oil
price environment.
Meanwhile, confidence in Brazil, one of
the world’s largest energy producers,
has been further shaken by political and
economic challenges, as well as ongoing
investigations into corruption allegations
against national oil company Petrobras
and its business associates. Sete Brasil,
the owner of 29 rigs meant for the pre-salt
exploration for Petrobras, was afflicted
with financial difficulties and had ceased
payments to all its vendors since
November 2014.
Meanwhile, decommissioning work is
expected to increase with a rising number
of aging platforms in the North Sea that
need to be retired safely.
Operating Review
The O&M Division will remain busy in 2016,
with the execution of both existing and new
projects from its backlog. In addition to a
growing base of non-drilling solutions, the
Division is also increasing its focus on
modifications, upgrading, conversions and
repairs to augment its work load.
Keppel O&M will continue to focus on rightsizing
its operations, improving productivity and
optimising resource deployment to meet the
challenges of the current offshore sector
downturn. This will help ensure that overheads
are kept under control and equip the company
for tougher market conditions.
Keppel Corporation LimitedReport to Shareholders 2015 Offshore & Marine
49
Leveraging its flexibility to scale and
redeploy manpower, Keppel O&M has
been able to channel resources from
offshore to marine operations, where
there is an ongoing stream of repair and
conversion projects. During the year, the
company’s direct global staff strength
was brought down by 17%. Over the
same period, its subcontract workforce
in Singapore was reduced by 24%.
Notwithstanding the headwinds,
Keppel O&M remains steadfast in
delivering its projects safely, on time
and within budget to the satisfaction
of its customers. During the year,
it delivered seven jackup rigs and
several non-drilling projects including
a Depletion Compression Platform
to Shell Philippines Exploration, a
Floating Production Storage/Offloading
(FPSO) vessel to SBM Offshore, an
accommodation semisubmersible to
Floatel International and three ice-class
vessels to Bumi Armada. In particular,
the delivery of ultra-harsh jackup rig,
Maersk Integrator, to Maersk Drilling
30 days ahead of schedule, on budget
and with a perfect safety record,
reinforces its quality hallmark.
01 Keppel Offshore &
Marine will continue
to work closely with
customers, ensuring
that we execute and
deliver quality projects
to their satisfaction.
02 ARABDRILL 70, a
KFELS B Class jackup rig,
was delivered to Arabian
Drilling Company, three
days ahead of schedule,
on budget and with a
perfect safety record.
Significant Events
January
Keppel FELS delivered
YUNUEN, a KFELS B Class
jackup rig to PEMEX.
Keppel Singmarine secured
three contracts worth a
total of $330 million to build
a multi-purpose vessel,
a multi-task Anchor Handling
Tug and a liftboat.
February
Keppel FELS delivered the
fourth high-specification
accommodation
semisubmersible to Floatel
International.
Keppel FELS delivered the
ultra-harsh jackup rig, Maersk
Integrator, to Maersk Drilling
30 days ahead of schedule,
on budget and with a perfect
safety record.
Keppel FELS delivered PV
Drilling VI, a KFELS B Class
jackup rig, to PV Drilling
Overseas. It is the 100th
jackup rig built by Keppel FELS
since 1970.
02
Keppel Subic Shipyard
delivered a Depletion
Compression Platform,
the first such platform
to be constructed in the
Philippines, to Shell Philippines
Exploration BV.
N-KOM repaired its 100th
LNG carrier.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
50
Operating &
Financial Review
Offshore & Marine
01 Mr Claus V.
Hemmingsen (left), CEO
of Maersk Drilling and
member of the Executive
Board in the Maersk
Group and Mr Chow
Yew Yuen, CEO of Keppel
Offshore & Marine,
celebrating the delivery
the ultra-harsh jackup
rig, Maersk Integrator,
to Maersk Drilling.
02 Keppel seeks to
enhance its suite of
solutions by acquiring
the LETOURNEAU™
jackup rig designs, rig kit
and aftermarket service
businesses.
Even as Keppel O&M works at
reducing costs and optimising
operations, it is still investing
prudently in R&D as well as
improving its productivity and core
competencies. To enhance its
market position, the Company
entered into an agreement
with Cameron International
Corporation to acquire its offshore
rig business, which comprises the
LETOURNEAU™ jackup rig designs,
rig kit business and aftermarket
services. This opportune and
strategic acquisition will broaden
Keppel O&M’s suite of jackup
rig design offerings, enable the
sale of rig kits, as well as offer
customers an expanded range
of aftermarket products
and services.
gas sector. Since its formation,
GTD has been working with
trendsetting owners and operators
to develop reliable and cost-effective
solutions across the gas value
chain, including both onshore and
offshore liquefaction and LNG
transportation.
Making further headway in the
gas business, Keppel O&M
together with BG Group (BG)
were awarded a licence in 2016
to supply LNG bunker to vessels
in the Port of Singapore. A 50-50
joint venture will be formed to
deliver end-to-end bunkering
solutions, leveraging BG’s
diversified LNG portfolio and
Keppel O&M’s expertise in
servicing LNG vessels.
In July 2015, Keppel O&M
established a new design and
technology arm, Gas Technology
Development Pte Ltd (GTD), with
the aim of deepening its capabilities
and innovative solutions for the
Offshore
In 2015, seven jackup rigs were
delivered safely, on budget, and
on time to customers including
Arabian Drilling, Ensco, Maersk
Drilling, PEMEX and PV Drilling.
01
Keppel O&M continues to work
closely with its customers to
ensure that projects are delivered
to their satisfaction.
Besides being the global leader
in the design and construction
of offshore rigs, Keppel FELS is
also trusted for quality repair
and modification projects. During
the year, Keppel FELS completed
16 repair projects for drilling
contractors like Ensco, Diamond
Offshore and Stena Drilling.
Keppel FELS intensified its focus
on the non-drilling market and
secured a new liftboat order
from Crystal Heights Holdings.
This solution was designed by
Keppel O&M’s design subsidiary,
Bennett Offshore, in collaboration
with Keppel FELS.
BrasFELS delivered the FPSO
Cidade de Itaguai MV26 project
to MODEC, which is the yard’s
fifth FPSO delivery since 2010.
Keppel Corporation LimitedReport to Shareholders 2015
Offshore & Marine
51
All five projects were completed safely
and ahead of schedule. The yard also
repaired semisubmersibles for Ensco
and Odebrecht, as well as a pipelaying
support vessel for Technip/Odebrecht.
On average, the construction of the first
four semisubmersibles for Sete Brasil had
progressed by less than 4% each quarter
since the start of 2015, while minimal
work had been done on the last two rigs.
With the cessation of payments from
Sete Brasil since November 2014, BrasFELS
had stopped work on all six rigs for the
customer as at end-2015.
Significant Events
March
Keppel FELS delivered a KFELS B
Class jackup rig, KUKULKAN,
to PEMEX safely, on time and
on budget.
May
Keppel FELS held the world’s first
triple rig naming ceremony for
three KFELS B Class jackup rigs
– CANTARELL I, CANTARELL II and
CANTARELL III – built for Grupo R.
02
Asian Lift, a joint venture between
Keppel O&M and Smit Singapore,
celebrated the naming of Asian
Hercules III, the largest and most
versatile sheerleg crane of its kind
in the world.
July
Keppel FELS secured a contract
from Crystal Heights to build
a high-specification liftboat
worth US$85 million.
Keppel Shipyard signed a contract
worth about US$684 million with
Golar Gandria N.V. to perform the
conversion of a Moss type LNG
carrier, the GANDRIA, into a Golar
Floating Liquefaction facility.
Keppel O&M won 34 awards
at the 2015 Workplace Safety
and Health Awards.
August
Keppel Shipyard secured an
FPSO conversion contract as well
as three repair, upgrade and
modification contracts worth a
total of about $125 million.
Keppel O&M entered into a Stock
and Asset Purchase Agreement
with Cameron International
Corporation, to acquire its offshore
rig business, which comprises the
LETOURNEAUTM jackup rig designs,
rig kit business and aftermarket
services for US$100 million.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
52
Operating &
Financial Review
Offshore & Marine
Over in Brownsville, Texas,
Keppel AmFELS continued
to fortify its longstanding
partnerships with customers,
sealing contracts from Noble Drilling
to upgrade a semisubmersible for
deployment in the Gulf of Mexico.
The yard is also constructing its
fifth jackup for Perforadora
Central. Keppel AmFELS is also
currently constructing one of the
world’s largest land drilling rigs,
which is capable of operating in
harsh conditions.
In the Netherlands, Keppel
Verolme completed several repair
jobs to the satisfaction of its
customers. These included two
semisubmersibles, a jackup rig
and a heavy lift vessel. The yard
was also active in tendering for
jobs to decommission old
platforms. With its strategic
location and expertise in complex
offshore work, Keppel Verolme
is well-placed to serve the
decommissioning market in
the North Sea.
Marine
Keppel Shipyard maintained its
shiprepair volume in Singapore,
servicing a total of 428 vessels
for the year. The yard also
converted and upgraded two
FPSOs, fabricated four turrets
and modified a mooring system.
To date, Keppel Shipyard has
completed 118 conversion and
upgrading projects, including
FPSOs, and 75 turrets/mooring
systems, entrenching its market
leadership in this segment.
During the year, Keppel Shipyard
secured a contract from Golar
LNG Limited to perform the
conversion of a third Moss LNG
carrier into a Floating LNG Vessel.
It also won a contract from TOTE
Services to convert the world’s
first large Roll-on/Roll-off cargo
vessel which will operate on a
dual-fuel diesel LNG propulsion
system. The Roll-on/Roll-off
cargo vessel is expected to
arrive in the second half of 2016.
A new 250-tonne quay crane
was recently installed at
Keppel Shipyard’s Benoi facility
to support the execution of a
steady stream of marine work.
In China, Keppel Nantong
successfully delivered the
Asian Hercules III floating crane
to Asian Lift, two ice-class
supply vessels to Bumi Armada,
as well as the Giant 6 and 7
semisubmersible barges to
Boskalis. It is presently working
with the Nantong authorities
on the necessary approvals
to construct a new airbag
launching slipway that will
enable the yard to build larger
and heavier vessels.
01
Keppel Corporation LimitedReport to Shareholders 2015 Offshore & Marine
53
Significant Events
September
Keppel FELS delivered UMW
Naga 8, a KFELS B Class jackup
rig, to Malaysia’s UMW Oil &
Gas Corporation Berhad. It was
completed 32 days ahead of
schedule, on budget and with
a perfect safety record.
Keppel Singmarine delivered
three ice-class vessels on
schedule and with a perfect
safety record to Bumi Armada.
October
Keppel FELS delivered
ARABDRILL 70, a KFELS B Class
jackup rig, to Arabian Drilling
Company. It was completed
three days ahead of schedule,
on budget and with a perfect
safety record. The ARABDRILL
70 is the fourth KFELS B Class
jackup rig to work for
the customer.
Keppel Shipyard delivered the
world’s deepest FPSO vessel,
Turritella, to SBM Offshore.
December
Keppel Shipyard secured two
conversion contracts – an LNG
FSU vessel for Armada Floating
Gas Storage and an FPSO vessel
awarded by Yinson Production
(West Africa).
BrasFELS secured an FPSO
integration contract awarded
by MODEC Offshore Production
Systems (Singapore).
CSC secured a barge enhancement
contract awarded by BP
Exploration (Shah Deniz).
02
01 Keppel Shipyard
has secured three
contracts from Golar LNG
for the conversion of
Moss LNG carriers into
FLNG vessels.
02 Keppel Nantong
Heavy Industry in China
completed its first
delivery to Keppel FELS
since commencing
operations in 2013.
Meanwhile, its sister yard Keppel Nantong
Heavy Industry delivered about 21,000 tonnes
of jackup and semisubmersible components
to Keppel FELS.
Keppel Batangas and Keppel Subic repaired
a total of 107 vessels and achieved 7.5 million
safe working man-hours without any lost
time incidents. They also supported Keppel
FELS in its offshore construction projects.
During the year, Keppel Batangas continued
to improve on operational efficiency, adding
new equipment and modifying its yard layout
to improve workflow and productivity, as well
as reduce costs.
Keppel Subic, having expanded its plate
storage area, is now able to handle steel
plates easily. The yard will continue to work
with Keppel Shipyard to secure high value
jobs such as FPSO and other marine
conversion projects.
Together, Nakilat-Keppel O&M (N-KOM) in
Qatar and Arab Heavy Industries (AHI) in the
United Arab Emirates, are poised to serve
more customers in the Arabian Gulf.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
54
Operating &
Financial Review
Offshore & Marine
Keppel O&M has
undergone several
challenging cycles
throughout its
history, emerging
stronger and more
resilient each time.
01
AHI is an established provider of an entire
spectrum of shiprepair, conversion,
shipbuilding and steel fabrication services.
In 2015, AHI repaired 138 vessels for both
international and local customers such
as Boskalis, McDermott International
and Middle East Dredging Co, and also
began constructing a Self-Installing
Platform for TOA Corporation.
Meanwhile, N-KOM’s versatility has enabled
it to secure and execute a diverse range of
projects. In 2015, the yard completed the
world’s first Main Engine Gas Injection
conversion project for a Nakilat Q-Max LNG
carrier. This vessel was modified to run
on LNG as an alternative fuel. During the year,
N-KOM’s new floating dock, which is the
largest of its kind in the world, drydocked
its first vessel.
Specialised Shipbuilding
In 2015, Keppel Singmarine sealed several
new contracts including an ice-class
multi-purpose vessel for New Orient Marine,
a multi-task Anchor Handling Tug for
repeat customer Seaways and a contract
to provide technical services for N-KOM.
Keppel Singmarine is set to deepen its
track record for the design and construction
of ice-class vessels. Including the
latest contract with New Orient Marine,
Keppel Singmarine has been involved in
constructing a total of 12 ice-class vessels.
Of these vessels, three were delivered to
Bumi Armada in 2015.
During the year, Keppel Singmarine
expanded its suite of solutions to meet the
demand for specialised ships in the LNG
sector. Riding on the prestigious Gastech
conference, it launched new designs
for LNG carriers, bunker vessels, barges and
tugs, including a 65-tonne dual-fuelled LNG
Azimuth Stern Drive (ASD) tug, which
was the winner of the Maritime and Port
Authority of Singapore’s Outstanding
Maritime Research and Development and
Technology Award.
Keppel Corporation LimitedReport to Shareholders 2015 Offshore & Marine
01 N-KOM launched
its first liftboat built
for its longtime client,
Gulf Drilling International
in November 2015.
02 In 2015, Keppel
Singmarine successfully
delivered two ice-class
supply vessels and one
ice-class multi-purpose
duty-rescue vessel to
Bumi Armada.
55
Over in Brazil, Keppel Singmarine Brasil
delivered the last of six harbour tugs to
Rebras-Rebocadores do Brasil. In 2016,
the yard will continue to focus on completing
two 4,500 deadweight tonnage platform
supply vessels.
Keppel O&M is well-positioned to capture
opportunities in the Caspian Sea through
Caspian Shipyard Company (CSC) and
Baku Shipyard in Azerbaijan.
CSC secured two major upgrade contracts
in 2015 from repeat customers Caspian Drilling
Company (CDC) and BP. The construction of
Azerbaijan’s first modern semisubmersible
rig, the DSS 38MTM semisubmersible, is
progressing well at CSC and is scheduled for
delivery by end-2016. Baku Shipyard, one of the
most modern shipbuilding and repair facilities
in the Caspian Sea, secured and completed 31
repair and upgrading projects during the year.
These included the upgrading of the
semisubmersible Dada Gorgud for CDC.
Industry Outlook
Keppel O&M has undergone several
challenging cycles throughout its history,
emerging stronger and more resilient
each time. The present offshore downturn
presents the opportunity to enhance
the company’s long-term sustainable,
competitive position as it readies itself
for the upturn.
Offshore Rigs
With oil prices at current low levels,
the replacement cycle for aging rigs
might be accelerated as new rigs
entering the market at lower dayrates
are forcing old units out of the market.
The attrition of old rigs will hasten a
rebalance of demand and supply for
the rig market in the longer term.
Since June 2014, 14 jackups and
42 floaters have been removed from
the global rig fleet, compared to just
10 jackups scrapped in the preceding
one and a half years.
02
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 56
Operating &
Financial Review
Offshore & Marine
01
01 Keppel Shipyard
delivered the world’s
deepest FPSO vessel,
Turritella, to SBM
Offshore in August 2015.
02 Mr S Iswaran (centre
with red tie), Singapore
Minister for Trade and
Industry (Industry),
being briefed by
Mr Michael Chia (left), MD
(Marine and Technology),
Keppel O&M, and
Mr Chor How Jat (right),
MD, Keppel Shipyard,
at the opening of the
Gastech Singapore
Pavilion.
The rig market in the Middle East has
been resilient, with the number of rigs
employed remaining constant. In addition,
the lifting of sanctions in Iran could bolster
rig demand. In Mexico, the award of three
shallow-water blocks by the country’s
Natural Hydrocarbons Commission is
an encouraging sign and may stimulate
demand for jackups and floaters eventually.
Even with the current low oil prices, the
long-term fundamentals of Mexico’s
offshore oil and gas industry remain strong.
Keppel O&M is well-positioned to capture
opportunities from the opening up of
Mexico’s oil and gas sector.
Shiprepair
The shiprepair market is expected to remain
subdued, with charter rates staying low for
most merchant vessel types. Dry bulk and
container operators continue to be affected by
weak growth in global trade and persistent
overcapacity. While tanker rates have picked up
slightly in the last quarter of 2015, ship owners
are observed to only perform essential work.
Nonetheless, pockets of opportunities
have emerged in the area of retrofit work such
as dual-fuel conversion. Keppel O&M will
continue to maintain its existing client base
while expanding its market.
With its extensive suite of proprietary
solutions and prudent investment in R&D,
Keppel O&M is able to serve a wide spectrum
of customers in both drilling and non-drilling
markets. Non-drilling solutions made up more
than a third of Keppel O&M’s orderbook as at
end-2015. With its own series of liftboat and
multi-purpose vessel designs, Keppel O&M
will be able to support its customers in the
maintenance of most shallow-water oil
and gas fields.
Production Units
It is estimated that more than half of the
251 floating production system projects under
planning are FPSO units and liquefaction/
regasification floaters. According to Douglas-
Westwood, global LNG capital expenditure
could reach as much as US$259 billion by
2019. This would include spending on baseload
onshore and offshore liquefaction equipment,
LNG carriers and regasification for onshore
and offshore terminals.
Keppel Corporation LimitedReport to Shareholders 2015 Offshore & Marine
LNG Solutions
Building on its experience and track record
for complex offshore conversion projects,
Keppel O&M is poised to become a total
solutions provider for the LNG industry.
In 2008, it successfully converted the world’s
first Floating Storage and Regasification Unit
(FSRU), which was closely followed by the
award of two more FRSU projects. In 2014,
it became the first shipyard to undertake an
FLNG conversion.
In recent years, the company has equipped
itself to capture a wider range of opportunities
in the gas business, expanding its offerings to
include both onshore and offshore liquefaction,
as well as LNG transportation solutions.
PreNEx (Pre-cooled Nitrogen Expansion) is
Keppel’s proprietary natural gas liquefaction
technology. It offers a simple, safe and reliable
liquefaction alternative and can be employed
for offshore and onshore purposes. LNG
produces considerably lower emissions than
conventional marine fuel and can significantly
reduce a vessel’s environmental impact.
With the licence to supply LNG bunker
to vessels in the Port of Singapore,
Keppel O&M and BG will collaborate to
deliver end-to-end bunkering solutions,
combining LNG sourced from BG’s diversified
LNG portfolio and Keppel O&M’s expertise
with LNG vessels. The first LNG bunker
delivery is slated for 2017.
The prospect of supplying LNG as a fuel
for ships in Singapore, one of the world’s
most strategic ports, is encouraging. As
the shipping industry’s demand for green
solutions continues to rise, Keppel O&M
will also be able to meet the needs for
sustainable shipping by offering solutions
such as barges, carriers and dual-fuel tugs
that can run on LNG, as well as the retrofitting
of vessels to run on this fuel source.
Looking ahead, Keppel O&M’s concerted
gas strategy and its enhanced suite
of non-drilling solutions, will help to
create new opportunities for the company
and cushion the impact of weak demand
for drilling rigs.
57
02
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 58
Operating &
Financial Review
Property
We are committed to providing quality and
innovative urban living solutions in Asia.
Profit Before Tax
$896m
as compared to FY 2014’s $1,017 million.
Net Profit
$701m
as compared to FY 2014’s $482 million.
Major Developments in 2015
Focus for 2016/2017
Privatisation of Keppel Land.
Invest strategically
Invested $615 million to
strengthen portfolio in
key markets in China
and Indonesia, and
opportunistically in the UK.
Sold about 4,570 homes
in Asia, mostly in China
and Vietnam, almost twice
the total number of units
sold in 2014.
Grew assets under
management by
Keppel REIT and Alpha
Investment Partners (Alpha)
by 9.6% to $20.5 billion
as at end-2015.
and opportunistically in
developed and emerging
markets, in new and
existing platforms,
projects and properties.
Tap demand in China and
Vietnam with over 14,000
launch-ready homes over
the next few years.
Actively scale up
commercial presence
and leverage retail
management capability
to build new growth
platforms.
Monetise assets
strategically to recycle
capital and achieve
good returns.
Keppel Corporation LimitedReport to Shareholders 2015 Property
Net Profit ($ million)
FY 2013
832
FY 2014
482
FY 2015
701
01 Topping out
International Financial
Centre Jakarta Tower 2
were (from left):
Mr Kim Kyung-Jun,
Senior Executive Vice
President, Samsung C&T
Corporation; Mr Ang
Wee Gee, CEO of
Keppel Land; H.E.
Mr Anil Kumar Nayar,
Singapore’s Ambassador
to the Republic of
Indonesia; Guest-of-
Honour Mr Franky
Sibarani, Chairman of
Indonesia Investment
Coordinating Board;
Mr Loh Chin Hua, CEO of
Keppel Corporation and
Chairman of Keppel Land;
and Ms Meri Ernahani,
Assistant Deputy
Governor of Jakarta
for Industry, Trade and
Transportation.
59
01
Earnings Review
The Property Division generated
revenue of $1,926 million, an
increase of $197 million or 11.4%
compared to $1,729 million in
FY 2014, due mainly to higher
revenue from China partly
offset by lower revenue from
Singapore. Pre-tax profit
decreased by $121 million or
11.9% to $896 million for FY 2015
due to lower divestment gains.
The Property Division, with
its net profit of $701 million,
contributed 46% to the Group’s
net profit in 2015.
The privatisation of Keppel Land
was a strategic move that has
fully aligned the interests of
the Property Division with the
Group, and is providing a strong
pillar for earnings and long-term
value creation. The full ownership
of this Division gives us the ability
to rightsize the balance sheet of
the property business to seize
opportunities, recycle capital and
allocate resources across the
Group for optimal returns.
Market Review
Singapore’s economy grew at a
modest 2.0% in 2015, largely
due to the economic slowdown
in China and its contagion
impact on the commodity and
manufacturing sectors.
Property cooling measures
implemented since 2013
continued to weigh on the
Singapore residential market.
Conditions were further
exacerbated by global
uncertainties and rising
interest rates. A total of
7,440 new homes were sold
in 2015, a slight increase
from the 7,316 units sold
in 2014. This was largely
attributed to price cuts
and monetary incentives
offered by developers.
Private residential prices
fell by 3.7% year-on-year
in 2015 compared with the
4.0% decline in 2014.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other InformationEarnings Highlights ($ million) 2015 2014 2013Revenue 1,9261,7291,768 EBITDA 6716861,006 Operating Profit 636667981 Profit before Tax 8961,0171,439 Net Profit 701482832 Manpower (Number)4,2364,2244,321 Manpower Cost189173158
60
Operating &
Financial Review
Property
01
Private residential prices are expected to
be soft as potential buyers continue to stay
at the sidelines, deterred by Additional
Buyer’s Stamp Duty (ABSD) and other
property cooling measures.
According to CB Richard Ellis, CBD office
rents dropped by 7.1% year-on-year in 4Q
2015. This was primarily attributed to the
slowdown in China’s economy, weaker business
sentiments and rationalisation by tenants.
Office rents in the CBD are expected to face
downward pressure with new supply coming
onstream and continued global economic
slowdown in developed countries.
In China, the slowest Gross Domestic Product
(GDP) growth was registered in 25 years
at 6.9% in 2015, compared to 7.3% in 2014.
The slowdown is traced to a depressed
manufacturing output, global economic
slowdown and uncertainties, rising debt,
volatile financial markets, a softer property
market and weaker business sentiments.
Meanwhile, Vietnam achieved a GDP growth
of 6.7% in 2015, the highest since 2007,
and is projected to maintain its lead in 2016
as the fastest growing economy of the six
major ASEAN countries. Its recovering
economy is a result of improvements in
infrastructure and greater business
confidence. The policy change to allow for
foreign ownership of property in July 2015
revived investments and helped lift property
sales. Demand for office space is expected
to remain steady, supported by strong
demand and lack of new supply. Over the
longer term, we can expect to see marked
movements in the commercial market with
more office developments in the pipeline.
Domestic players continue to dominate
the retail market although an increasing
number of international retailers have
flocked to Vietnam with the opening of
several large-scale malls in 2015.
Operating Review
Singapore
Keppel Land sold a total of 192 residential
units in Singapore in 2015, compared to
304 units sold in 2014, due to negative
market sentiments and unfavourable cooling
measures. More than half of the 192 units
sold were contributed by The Glades.
Following Keppel Land’s acquisition of a
75% majority stake in Array Real Estate,
the retail division has since been renamed
Keppel Land Retail Management (KLRM)
Keppel Corporation LimitedReport to Shareholders 2015 Property
61
Significant Events
January
Keppel Land acquired a
4.6-ha site in West Jakarta,
Indonesia for a residential
development.
Keppel Land was ranked
fourth in Corporate Knights’
Global 100 Most Sustainable
Corporations in the World.
Keppel Land acquired a 75%
stake in retail management
company Array Real Estate,
which was later renamed
Keppel Land Retail
Management.
February
Keppel Land acquired a
freehold nine-storey office
building in London, UK, from
Aberdeen Property Trust.
Keppel Land and China Vanke,
extended their strategic
alliance into China to jointly
develop a prime residential
estate in Chengdu.
March
Keppel Land raised its stake in
Estella Heights in Ho Chi Minh
City from 55% to 98%.
Keppel REIT topped out the
Old Treasury Building office
tower in Perth, Australia.
August
Keppel Land topped out
International Financial Centre
Jakarta Tower 2, a landmark
commercial development in
the CBD of Jakarta, Indonesia.
02
01 Saigon Centre Phase 2
will meet the demand of
Vietnam’s fast growing
office and retail market.
The retail mall will
open in the second
half of 2016.
02 Keppel Land achieved
strong take-up for V City
in Chengdu (pictured),
its first joint-venture
project in China with
China Vanke.
to reflect its new identity as the retail
management and development specialist
arm. The retail division has consolidated
resources in China and Vietnam to work on
the retail and mixed-use developments
under construction. It is also looking at
expanding its presence in Indonesia.
Leveraging KLRM’s experience and network
to capture opportunities both locally and
abroad, Keppel Land acquired a 22.4%
stake in 112 Katong lifestyle mall, of which
the remaining 77.6% stake is owned by a
fund advised by Alpha. The investment will
add to Keppel Land’s quality portfolio of
retail and mixed-use properties.
Overseas
In China, Keppel Land sold a total of 3,280
homes in 2015 compared with about 1,900
units sold in 2014. This was primarily due to
strong take-up at V City in Chengdu, its first
joint-venture project in China with China
Vanke, Seasons Residence in Shanghai, as
well as Central Park City township in Wuxi.
The easing of home purchase restrictions
and monetary measures has helped the
residential property market to recover.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 62
Operating &
Financial Review
Property
01 The Alpha Asia
Macro Trends Fund II
invested in a portfolio
of three office buildings
including Manulife Centre
(pictured) through a
joint office investment
platform with CDL.
02 Keppel Land
expanded its hospitality
portfolio in Myanmar
with the new 29-storey
Inya Wing at Sedona
Hotel Yangon (pictured)
which was soft opened in
October 2015.
In Vietnam, Keppel Land achieved
a sales record in 2015 with 930
units, which was more than five
times the 164 units sold in 2014.
This was made possible with an
improved economy, a growing
middle class and the relaxation
of foreign housing ownership
restrictions implemented in July
2015. Estella Heights, Keppel
Land’s latest development in
District 2 of Ho Chi Minh City,
sold 670 units in less than a year
following its launch in 2015.
Monetisation of Assets
for Capital Recycling
Keppel Land has monetised almost
$2.4 billion worth of assets to
achieve higher returns for its
shareholders in the last two years.
The Property Division continued
to proactively review and seek
opportunities to recycle its assets.
In 2015, Keppel Land sold BG
Junction in Surabaya, Indonesia.
In January 2016, Keppel REIT
sold the office building at
77 King Street, in Sydney, and
achieved a divestment gain
of A$28 million.
Keppel Land invested a total of
$615 million into strengthening
its portfolio in China, Indonesia
and the UK during the year.
The acquisitions were in line with
Keppel Land’s commitment to
constantly review its landbank
and actively unlock, recycle
and re-invest capital to generate
better returns.
Deepening Presence in
Key Markets
Over the last two years, Keppel
Land continued to strengthen
its presence in its core markets
of Singapore and China,
expand in growth markets of
Vietnam and Indonesia, as well
as seize opportunities in other
emerging markets and global
gateway cities.
Keppel Land acquired a 40%
stake in a Grade A 23-storey
office tower in Yangon, a joint
venture project with established
local property developer,
Shwe Taung Group. It will
be part of the mixed-use
Junction City development in
Yangon’s CBD. The Property
01
Division also formed a joint
venture with China Vanke to
develop a 16.7-ha residential
project in Chengdu, China.
Growing Fund Management
Both Alpha and Keppel REIT
continued to proactively
manage their portfolios and
funds through acquisitions
and divestments. In January
2016, Keppel REIT divested
its interest in 77 King Street
in Sydney, Australia, and
achieved a gain of A$28 million.
Additionally, Alpha has partnered
City Developments Limited,
through Alpha Asia Macro
Trends Fund II, to create a
joint office investment platform
which includes three assets
– Central Mall (Office Tower),
7 & 9 Tampines Grande and
Manulife Centre valued at
approximately $1.1 billion.
The platform would enable
Alpha to invest in a portfolio
of well-located office properties
in Singapore, with opportunities
for rental reversions in the
medium term.
Keppel Corporation LimitedReport to Shareholders 2015 Property
63
Both Alpha and Keppel REIT are part of
the Group’s capital recycling platform
and contribute toward generating steady
income streams.
Moving ahead, Keppel intends to
consolidate its interests in the Group’s
asset management businesses, including
Alpha and the manager of Keppel REIT,
under Keppel Capital Holdings in the
Investments Division.
Business Outlook
Singapore
Singapore’s growth is expected to remain
slow in 2016. Primary factors include the
slowing growth in China, plunging oil prices
The privatisation
of Keppel Land was
a strategic move
that has fully aligned
the interests of the
Property Division
with the Group, and
is providing a strong
pillar for earnings
and long-term
value creation.
Significant Events
September
Keppel REIT topped the Global
Real Estate Sustainability
Benchmark 2015.
October
Keppel Land’s Sedona Hotel
Yangon in Myanmar celebrated
the opening of its new Inya Wing,
which features an additional
431 guest rooms and suites.
02
December
Keppel Land and M1 launched
the pilot Smart Lives programme
at The Luxurie in Singapore.
Keppel Corporation and
Keppel Land completed a
share swap transaction with
Mapletree Investments, thus
consolidating the Keppel Group’s
ownership of Keppel Bay Tower.
Alpha, through Alpha Asia
Macro Trends Fund II, partnered
City Developments (CDL) in a
joint office investment platform
to acquire three of CDL’s prime
office assets.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
01
64
Operating &
Financial Review
Property
as well as impact of the US’
monetary policy normalisation.
Property cooling measures are
unlikely to be lifted, and with a
new supply of completed homes
coming onstream, as well as the
deadline for ABSD for unsold
homes kicking in for developers,
the residential market is expected
to be subdued with continued
price falls.
Grade A office occupancy and
rents are expected to face
downward pressure in the near
term due to the impending new
office supply in 2H 2016.
Overseas
Economic and financial reforms
leading to improved business
confidence and increased domestic
consumption, as well as a rising
middle-class population will fuel
the demand for quality homes and
prime commercial space in Asia.
China’s continued easing of
monetary measures will help to
boost housing demand. Meanwhile,
reforms to reduce industrial
overcapacity and an inventory of
unsold homes, as well as lower
business costs will generate a
balanced demand-supply with
stable prices and inventory.
In Vietnam, the strong inflow
of foreign investments, robust
consumption as well as the
introduction of new foreign
property ownership laws, which
came into effect on 1 July 2015,
will help generate a healthy
demand for properties located
in prime districts.
In Indonesia, with effect from
January 2016, foreigners can
own homes including landed
properties in Jakarta for up to
80 years on the condition that
they are living, working or
investing in the country.
This move will bolster foreign
investments in Indonesia
and provide further growth
opportunities for Keppel Land.
Keppel Corporation LimitedReport to Shareholders 2015 Property
65
Sino-Singapore Tianjin Eco-City
Seven years since it broke ground,
the Sino-Singapore Tianjin Eco-City
(Sino-Singapore Eco-City) is on
track to realising its vision of
becoming a thriving, sustainable
community. Today, more than
50,000 people are working and
living in the Sino-Singapore
Eco-City and over 3,000 companies
have invested in the city.
Leading the Singapore consortium,
Keppel works 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.
Presently, there are seven schools
in the city with six more to be
opened in 2016. Two new
neighbourhood centres, a sports
centre and a general hospital were
completed in 2015. Upgrading
works for the Eco-Business Park
is ongoing to model the project
after Singapore’s one-north. In
addition, preparatory work has
started on the Z4 line, which links
the Eco-City to the other parts of
Tianjin. Construction on the line
will start in 1H 2016.
The Sino-Singapore Eco-City’s
home sales achieved a record
high in 2015, with over 6,000
units sold. Of these, SSTEC’s
projects sold 2,946 units,
71% higher than in 2014.
Riding on improving local
market sentiments, the city’s
development will focus on
the central district, which
includes a Sino-Singapore
Friendship Garden and the
renowned Tianjin Nankai
Middle School.
The Sino-Singapore Eco-City
continues to attract attention
from leaders of both countries.
During his state visit to China
in July 2015, Singapore
President Dr Tony Tan visited
the Eco-City and reaffirmed the
success of the Sino-Singapore
Eco-City as a platform to
foster mutual understanding
and deepen the friendship
between the two governments.
Additionally, Chinese President
Xi Jinping highlighted the
Eco-City as a successful
cooperation project between
China and Singapore during
his state visit to Singapore in
November 2015.
Keppel continued to participate
in and contribute towards the
growth of the Sino-Singapore
Eco-City. As at end-January 2016,
about 97% of units at Keppel’s
Seasons Park have been sold.
In the same period, 79% of
the 480 launched units in the
1,190-unit Seasons Garden
were sold. Meanwhile, 90%
of the 341 low-rise homes in
Waterfront Residence were
sold as at end-January 2016.
Seasons City, Keppel’s commercial
development, is presently
under construction and its
first phase is expected to be
completed in 2019.
Keppel Telecommunications
& Transportation’s logistics
distribution centre in the
Eco-Industrial Park will commence
operations in 1H 2016.
Keppel Infrastructure’s (KI) district
heating and cooling system plant
has been operating well since
2013 and is able to maximise the
utilisation of geothermal energy.
The construction of KI’s water
reclamation plant is also
progressing well and is due for
completion in 1Q 2016.
02
01 Located in the
heritage-rich estate of
Tiong Bahru, Highline
Residences is well-
connected by public
transportation and
supported by a wide
range of facilities
and amenities.
02 Singapore President
Dr Tony Tan (first
row, third from right),
accompanied by
Dr Lee Boon Yang
(first on the
President’s right),
Chairman of Keppel
Corporation, visited
the Sino-Singapore
Eco-City during his
state visit to China
in July 2015.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 66
Operating &
Financial Review
Infrastructure
Profit Before Tax
$256m
as compared to FY 2014’s $452 million.
Net Profit
$207m
as compared to FY 2014’s $320 million.
We will focus on building the Infrastructure
Division into a stable contributor to the Group
by developing our energy-related infrastructure,
logistics and data centre businesses.
Major Developments in 2015
Focus for 2016/2017
Delivered on Engineering,
Continue seeking out
Procurement and
Construction projects:
• Handed over the Greater
Manchester Energy-from-
Waste (EfW) Plant in
the UK.
• Achieved substantial
handover of the Doha
North Sewage Treatment
Works (DNSTW) in Qatar
and commenced a 10-year
operations and maintenance
phase for its liquids stream,
solid thickening and
dewatering facilities.
value-enhancing projects,
leveraging the Division’s
project development,
engineering, operations
and maintenance expertise.
Improve operational
efficiency by harnessing
the strengths of an
integrated gas and power
business platform.
Continue building up a
portfolio of quality data
centres and providing
higher value services
to customers.
• Handed over the Bialystok
waste-to-energy combined
heat and power (WTE CHP)
project in Poland.
Enhance capability
to deliver high value,
efficient logistics services
in Asia Pacific.
Completed the combination
of Keppel Infrastructure
Trust (KIT) with CitySpring
Infrastructure Trust and
injected 51% of Keppel
Merlimau Cogen (KMC)
into the enlarged trust.
Keppel DC REIT acquired
two data centres in Sydney,
Australia and Offenbach
am Main, Germany within
the first year of its Initial
Public Offering.
Keppel Telecommunications &
Transportation (Keppel T&T)
commenced operations at its
Tampines Logistics Hub in
Singapore and a distribution
centre in Vietnam.
Keppel Corporation LimitedReport to Shareholders 2015
Infrastructure
67
Net Profit ($ million)
FY 2013
15
FY 2014
320
FY 2015
207
Earnings Review
The Infrastructure Division’s
revenue decreased by $876
million or 30% to $2,058 million,
due mainly to lower revenue from
Keppel Infrastructure’s (KI) power
generation plant and the absence
of revenue from Keppel FMO Pte
Ltd, which was disposed in 2014.
Profit before tax decreased by
$196 million or 43% to $256 million,
as a result of losses recognised
for the DNSTW, as well as the
absence of gains from the sale of
data centre assets by Keppel T&T
in 2014, partially offset by gains
from the divestment of a 51%
stake in KMC and the combination
of KIT and CIT. In FY 2015, the
Division contributed 14% to the
Group’s net profit.
Gas-to-Power
Market Review
In 2015, Singapore’s average
electricity demand grew slightly
at a year-on-year rate of 1.0%,
compared to 3.6% in 2014,
mirroring a slowdown in the
growth of Singapore’s economy.
The business climate in Singapore
was challenging in 2015 due to
overcapacities in electricity
generation and gas supply as
well as the arrival of new entrants
into the market, all of which
exerted downward pressure
on profit margins.
01
01 Dr Ong Tiong Guan, CEO
of Keppel Infrastructure,
sharing on the company’s
directions.
In the electricity market, the
Energy Market Authority (EMA)
launched the Electricity Futures
Market and announced plans
to fully liberalise the electricity
market to include domestic
households. This would enable
households to purchase electricity
directly from private retailers
in the second half of 2018.
Keppel is readying itself to
secure a broader customer
base after the full liberalisation
of the electricity market.
In 2015, there were
developments in the regulatory
framework in the gas market for
future long-term and spot
Liquefied Natural Gas (LNG)
imports. There was also an
increase in the number of
gas retailer licensees entering
the market, intensifying
the competition.
Operating Review
Amidst increasing competition
and changing regulations in the
industry, KI’s Gas-to-Power
business continued to deliver
creditable results in 2015.
In June 2015, KI completed
the injection of a 51% stake
of KMC, which owns the
1,300-MW co-generation plant
on Jurong Island, into KIT for
a cash consideration of
$510 million. The proceeds
from the divestment of KMC
strengthened KI’s balance sheet.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other InformationEarnings Highlights ($ million) 2015 2014 2013Revenue 2,0582,9343,459EBITDA 285570150Operating Profit 22146669Profit before Tax 25645273Net Profit 20732015Manpower (Number)2,7502,7283,358Manpower Cost181231244 68
Operating &
Financial Review
Infrastructure
KI will continue
to seek out
value-enhancing
projects, leveraging its
project development,
engineering,
operations and
maintenance
expertise to
strengthen its
market position.
Business Outlook
The Singapore energy market
has been experiencing an
oversupply of generation capacity
since 2013, when the long-term
LNG supply commenced flow in
Singapore. Since then, generation
companies in Singapore have
experienced margin compression
as a result of increasing capacity,
and it is expected that this
oversupply will continue to weigh
on the Singapore electricity and
gas market in the coming years.
Following the launch of the
Electricity Futures Market by
EMA, the next major development
in the electricity market will
be Full Retail Contestability,
which is scheduled to be
implemented by 2018. This will
see about 1.2 million households
becoming contestable consumers.
To increase KI’s market share
and extract greater downstream
value from the gas supply chain,
KI will be focusing on initiatives
to differentiate itself in the type
and quality of product offerings,
such as bundling electricity,
utilities, cooling services and
gas supply to customers.
01
Waste-to-Energy
Market Review
The global WTE industry is driven
primarily by government regulatory
policies and rapid urbanisation.
01 In June 2015, KI
completed the injection
of a 51% stake of KMC,
which owns the 1,300-MW
co-generation plant
on Jurong Island, into KIT.
02 Keppel Seghers
handed over Phase 2 of
the Greater Manchester
EfW facility in the UK in
April 2015. Combined
with Phase 1 which was
handed over in January
2015, the entire facility
(pictured) is able to
process up to 850,000
tonnes of refuse-derived
fuel per annum, making
it one of the largest and
most efficient combined
heat and power facilities
in the world.
In China, tackling environmental
issues has been identified as
one of the main priorities by the
Chinese government. The Chinese
government has set a target to
treat up to 35% of the country’s
municipal solid waste by
incineration as part of its 12th
Five Year Plan. This implies a
compounded annual growth rate
in WTE treatment capacity of
14% per annum from 2015 to
2020, with an estimated total
investment of RMB120 billion
over the next five years.
In Europe, the European
Commission adopted an ambitious
new Circular Economy Package to
help European businesses and
consumers to make the transition
to a stronger and more circular
economy, where resources are
used in a more sustainable way.
This package will contribute to
“closing the loop” of product life
cycles through greater recycling
Keppel Corporation LimitedReport to Shareholders 2015 Infrastructure
69
and re-use, and bring benefits to
both the environment and the
economy. Keppel Seghers’ recently
completed Bialystok WTE CHP
project in Poland, which includes
an advanced bottom ash recycling
plant, is set to contribute to the
European Union’s (EU) Circular
Economy initiatives.
Operating Review
In the UK, Keppel Seghers
successfully handed over Phase 1
and 2 of the Greater Manchester
EfW facility, which is one of the
largest waste and renewable
projects in Europe.
In Qatar, Keppel Seghers
substantially handed over the
DNSTW to the client in December
2015. In addition, as part of the
graduated handover process for
the Design-Build-Operate project,
Keppel Seghers has commenced
its 10-year operations and
maintenance phase for its liquids
stream, solid thickening and
dewatering facilities. The DNSTW
is Keppel Seghers’ second
landmark project in Qatar. This is
in addition to the Domestic Solid
Waste Management Centre, which
was handed over in October 2011.
In China, Keppel Seghers is
currently executing five WTE
technology package projects
with a total incineration capacity
of 7,600 tonnes per day. All
projects are progressing within
their contractual schedules
and budgets.
In Poland, Keppel Seghers
handed over the Bialystok WTE
CHP project to its client in
December 2015. The project was
delivered on schedule and on
budget, and is among the first
WTE plants in Poland to achieve
commercial operation.
Business Outlook
Against the backdrop of
rapid urbanisation, depleting
landfill capacity and increased
awareness of environmental
and pollution issues, there is
a growing need for governments
to look into sustainable waste
management solutions.
Significant Events
January
Keppel Seghers handed over
Phase 1 of the Greater Manchester
EfW facility in the UK.
Keppel Seghers secured a contract
to provide a technology package
to a WTE plant in Beijing’s
Changping District.
February
Indo-Trans Keppel Logistics
Vietnam (ITKL) officially opened
its distribution centre in the
Vietnam-Singapore Industrial
Park 1 in Binh Duong province.
April
Keppel Seghers handed over
Phase 2 of the Greater Manchester
EfW facility in the UK.
Keppel Seghers secured a
contract to provide a technology
package for a WTE plant
in Beijing, China.
Tampines Logistics Hub in
Singapore commenced
operations.
02
May
Keppel completed the combination
of KIT with CIT to form the largest
Singapore infrastructure-focused
business trust.
Keppel DC REIT announced
its maiden post-IPO acquisition
of Intellicentre 2 in Sydney,
Australia.
Keppel DC REIT was added to the
MSCI Singapore Small Cap Index
within six months from listing.
KIT raised $525 million in
Singapore’s largest equity
during the year for the acquisition
of KMC.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
70
Operating &
Financial Review
Infrastructure
In China, driven by the
government’s priority in tackling
environmental issues, it is
expected that 2020 targets will
be set for both pollutant emission
reduction and environment quality
improvement in the upcoming
13th Five Year Plan.
In Hong Kong, Keppel Seghers
was one of the four shortlisted
companies who will be invited to
submit a Design-Build-Operate
proposal for the HK$19.2 billion
Integrated Waste Management
Facility. This state-of-the-art
WTE plant will have the capacity
to treat 3,600 tonnes per day of
waste and will be built on a
reclaimed island.
In Europe, the replacement and
upgrading of ageing facilities and
rapid development in new EU
members will provide more
opportunities in this sector.
For example, Poland has emerged
as one of the most promising
WTE markets in Europe with
financial support from the EU.
KI will continue to seek out
value-enhancing projects,
leveraging its project development,
engineering, operations and
01 Keppel Seghers
handed over, on
schedule and on budget,
the Bialystok WTE
CHP project in Poland
(pictured) to the client.
02 Keppel Logistics
leverages technology
to provide quality and
innovative services for
its customers.
maintenance expertise to
strengthen its market position.
X-to-Energy
The X-to-Energy division drives KI’s
efforts to improve efficiencies and
explore new frontiers in the energy
sector. It comprises Keppel DHCS,
our district cooling and heating
systems business, and KIT, an
infrastructure business trust
listed on the Singapore Exchange.
As part of the Group’s plans to
grow its asset management
business, Keppel intends to
consolidate its interests in KIFM
under Keppel Capital Holdings in
the Investments Division.
Market Review
Demand for District Cooling
Services (DCS) in Singapore has
remained strong. Aggregate
DCS demand at Keppel DHCS’
existing service corridors, namely
at Changi Business Park, Biopolis,
Woodlands Wafer Fab Park and
Mediapolis, has maintained a
compounded annual growth rate
of 11% since 2010.
The demand for energy efficiency,
which requires all new and existing
buildings that undergo major
retrofitting works to achieve Green
Mark certification, has provided
growth opportunities for Keppel
DHCS’ retail cooling business.
The Company has since secured
two additional retail cooling
contracts in 2015.
Operating Review
In 2015, Keppel DHCS secured four
contracts for its Changi Business
Park and Biopolis facilities,
with contract sums totalling
$108.5 million. With Keppel DHCS’
fourth plant achieving Temporary
Occupation Permit in October
2015, both the Mediapolis and
Biopolis DCS plants are now
integrated, allowing for greater
reliability and economies of scale.
Keppel DHCS continued to make
improvements on energy efficiency
and achieved cost savings in its
plants, cutting down energy
consumption by more than six
gigawatt hours during the year.
In July 2015, the Keppel DHCS’
Tianjin plant commenced its first
supply to Tsinghua University’s
Institute for Electronics and
Technology. As part of ongoing
efforts to lower its carbon
footprint and improve cost
competitiveness, the plant
01
Keppel Corporation LimitedReport to Shareholders 2015 Infrastructure
71
Significant Events
June
KIT completed the acquisition
of a 51% stake in KMC.
July
Keppel Data Centres Holding
(KDCH) announced plans to
develop its fourth data centre
in Singapore. Phase 1 is
expected to be completed
by 2016.
02
September
KIT was included as a constituent
member of the FTSE ST Large/
Mid Cap Index and FTSE ST
Mid Cap Index.
October
Keppel DC REIT entered into
a forward sale and purchase
agreement to acquire maincubes
Data Centre. The data centre
is expected to be completed
in 2018.
KDCH officially opened
Almere Data Centre 2 in the
Netherlands.
ITKL completed the extension
of a warehouse in Bac Ninh,
Vietnam, for a key customer in
the electronics sector.
November
KDCH completed the acquisition
of 20 Tampines Street 92
to build its fourth data centre
in Singapore.
December
Keppel Puninar Logistics
commenced operations for
one of the leading e-commerce
players in Indonesia.
Keppel Seghers achieved
substantial handover of the
DNSTW in Qatar, and handed
over the Bialystok WTE CHP
project in Poland.
continued to optimise the
utilisation of the renewable
geothermal system, which supplied
about 80% of the plant’s heating
requirements in 2015. Additionally,
Keppel DHCS is also in the midst
of negotiation with a local energy
company to receive waste heat
from a nearby power plant.
2015 saw the successful
combination of KIT and CitySpring
Infrastructure Trust, as well as the
completion of the acquisition of
KI’s 51% stake in KMC which owns
a 1,300-MW co-generation plant
on Jurong Island. With these
transactions, KIT is the largest
Singapore infrastructure-focused
business trust listed on the
Singapore Exchange with total
assets of over $4 billion.
In Singapore, KIT’s plants met all
their contracted availability and
delivery requirements. City Gas
continued to deliver stable growth
while DataCentre One will begin
generating revenue once its
construction is completed in
early 2016. In Australia, Basslink,
which operates the electricity
interconnector between
Victoria and Tasmania, achieved
99.5% availability for most of
2015 and met all its statutory
reporting obligations.
Business Outlook
The market outlook for DCS
remains positive as the
Singapore government
continues to work towards
major cluster developments
to further intensify land use.
Keppel DHCS will continue to
grow and expand its presence
within its existing service
corridors where it enjoys
a natural competitive advantage
and pursue opportunities in
the Retail Cooling business in
specific regional markets.
As the Trustee-Manager of KIT,
Keppel Infrastructure Fund
Management (KIFM) will
identify and evaluate suitable
acquisitions, including those
from the sponsor KI, under its
investment mandate to grow
the Trust.
Logistics
Market Review
2015 was mired by another
year of growth slowdown in the
Chinese economy as it continued
its structural transition towards
a more consumption-driven
economy. Exports and imports
were hit by a slow recovery in
external trade and a softening in
domestic consumption, after a
period of overheated growth.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
72
Operating &
Financial Review
Infrastructure
The impact from China’s slowdown
was felt across the region, as
most Southeast Asia countries
experienced softer growth.
The drop in commodity prices and
slow recovery of the region’s key
trading partners, such as Japan
and the Eurozone posed
challenges to the export-reliant
economies in the region.
Operating Review
Even as competition intensified,
demand for logistics services and
warehouse space in the region
remained firm. Keppel Logistics
achieved improved occupancy
rates in its facilities across
Southeast Asia.
In Singapore, Keppel Logistics
commenced operations in its new
warehouse facility at Tampines
Logistics Hub in April 2015,
achieving a healthy occupancy
rate in its first year of operations.
For its operational and business
excellence, Keppel Logistics was
named the Best Land Freight
Forwarder in Singapore at the
ASEAN Transport and Logistics
Awards 2015.
In Malaysia, Keppel Logistics is
planning to increase its capacity
with a new 45,000 sf warehouse
facility located next to its existing
Shah Alam facility. Keppel Puninar
Logistics, a joint venture between
Keppel Logistics and PT Puninar
Jaya in Indonesia, expanded its
client base with new customers in
the fast moving consumer goods
(FMCG), e-Commerce and food
sectors. The Company now
has logistic operations in three
cities –Jakarta, Medan and
Balikpapan – and will continue to
target customers in FMCG and
healthcare sectors, and identify
strategic locations to grow its
network in the country.
ITKL commenced operations at
its new warehouse in Vietnam-
Singapore Industrial Park 1, and
also completed the expansion
of its Tien Son warehouse in
Bac Ninh province.
In China, despite slowdown in
the country’s economic growth,
Keppel T&T’s Sanshui Port in
Guangdong province achieved
a strong throughput growth of
25% year-on-year with the
enhancement of services to
customers, while Lanshi Port
continued to be affected by the
traffic control measures in
Foshan, Guangdong. The Wuhu
Sanshan Port in Wuhu City, Anhui
achieved a throughput volume of
4.5 million tonnes amidst the
overall slowdown in the area’s
manufacturing activities.
01
During the year, the new integrated
distribution centre in the Sino-
Singapore Tianjin Eco-City was
completed. This distribution
centre in Tianjin as well as
Keppel Wanjiang International
Coldchain Logistics Park in Anhui
are expected to commence
operations over the course of 2016.
Business Outlook
China’s economic expansion is
expected to remain moderate as
the country continues its transition
towards a more balanced and
sustainable growth model.
Nevertheless, new opportunities
for the logistics sector are emerging
on the back of China’s efforts to
establish trade corridors linking
China and Europe over land
and sea.
In Southeast Asia, the formation of
the ASEAN Economic Community
in December 2015 is expected to
bolster intra-ASEAN trade and
contribute to the establishment
of a more globally competitive
single market and production base.
At the same time, other projects
and initiatives to integrate the
wider Asia Pacific region, such
as the Regional Comprehensive
Economic Partnership and the
Trans-Pacific Partnership, will
boost trade and enhance growth
in the region.
Keppel Corporation LimitedReport to Shareholders 2015 Infrastructure
01 During the year,
Keppel DC REIT made
its maiden acquisition
with Intellicentre 2 in
Sydney, Australia.
02 Officiating at the
opening ceremony of
Almere Data Centre
2, Keppel T&T’s first
greenfield data centre in
Europe was (from L-R),
Mr Alexander Van Der
Hooft, EVP Operations
Business Market, KPN;
Mr Thomas Pang, CEO
of Keppel T&T; Prof. Dr.
Jan Peter Balkenende,
Former Prime Minister
of the Netherlands and
Partner of, Corporate
Responsibility at EY; and
Mr Mark Psol, Vice Mayor
of the City of Almere
for Finance, Economic
Affairs and Municipal
Real Estate.
73
Investments, intra-Asia trade and
consumption demand in Southeast
Asia and China are likely to remain
positive. Keppel T&T, will remain
focused on its target markets
to deliver high-value logistics
services to its customers through
innovation and adoption of
new technologies.
Data Centres
Market Review
Global demand for data centres
was strong in 2015, backed by
the growth of cloud computing
and colocation hosting. During
the year, the data centre market
saw consolidation via mergers,
acquisitions and partnerships.
A recent research by Allied
Analytics shows that the global
colocation market is expected to
reach US$51.8 billion by 2020,
with Asia leading the pack in
terms of growth rate.
Operating Review
With strong customer demand in
the pipeline, Keppel Datahub 2 in
Singapore is currently undergoing
its final phase of fit-out. In October
2015, Keppel T&T celebrated the
opening of Almere Data Centre 2,
its first greenfield data centre
development in Europe. The new
facility is a high quality Tier 3
colocation data centre with lettable
area of approximately 118,000 sf.
In November 2015, the Company
completed the acquisition of a
property in Tampines, which
will be developed into Keppel
Datahub 3, its fourth data centre
in Singapore. Keppel Datahub 3
will feature approximately
183,000 sf of Gross Floor Area
and Tier III, carrier neutral
specifications. Phase 1 is expected
to be completed by 2016.
Following the sale of the data
centre assets to Keppel DC REIT in
2014, Keppel T&T through KDCH
continued to operate as the
Facility Manager of the REIT’s
assets in Singapore.
In its first year of operations since
listing on the Singapore Exchange
in December 2014, Keppel DC
REIT acquired Intellicentre 2
in Sydney, Australia as well as
made a forward purchase of
maincubes Data Centre in
Offenbach am Main, Germany.
The data centre is expected to be
completed in 2018. As the manager
of Keppel DC REIT, Keppel DC REIT
Management (KDCRM) currently
manages a diversified portfolio
of nine high-quality assets in
Asia Pacific and Europe, valued
at approximately $1.07 billion as
at end-2015.
Keppel intends to consolidate
its interests in the Group’s
asset management businesses,
including KDCRM, under
Keppel Capital Holdings in the
Investments Division.
Business Outlook
With increasing urbanisation and
digitisation of the global economy,
the demand for data centres
is expected to remain strong.
Other demand drivers include
growing requirements for higher
rack density, flexibility and
scalability of offerings. These
trends present opportunities
for Keppel T&T to grow via its
Development Company-REIT
strategy. Looking ahead,
Keppel T&T will focus on
expanding its portfolio of
high-end data centre assets by
developing green and brownfield
projects, as well as through
acquisitions via the REIT.
02
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
74
Operating &
Financial Review
Investments
We are focused on delivering sustainable value
to shareholders by investing strategically and
growing our asset management businesses.
Profit Before Tax
$146m
as compared to FY 2014’s $55 million.
Net Profit
$136m
as compared to FY 2014’s $43 million.
Major Developments in 2015
Focus for 2016/2017
Keppel Corporation
announced plans to
consolidate its interests
in business trust, REIT and
fund management under
Keppel Capital Holdings
(Keppel Capital).
k1 Ventures completed
the sale of its childcare
operating business and
received a cash distribution
of US$61.5 million from
Knowledge Universe Holdings.
M1 launched Voice
over LTE which provides
customers with higher
quality voice calls, and
introduced XGPON
connectivity which offers
speeds of up to 10 Gbps.
KrisEnergy achieved first
oil in two new oil fields
located in the Gulf of
Thailand.
Keppel Capital will
focus on integrating
and growing the Group’s
asset management
platform.
k1 Ventures will focus
on managing existing
investments to drive
shareholder value and
distribute excess cash
when investments
are monetised.
M1 will focus on
enhancing customer
experience to maintain
its market position.
KrisEnergy will focus on
maintaining production
and maximising
efficiencies.
Keppel Corporation LimitedReport to Shareholders 2015 Investments
75
Net Profit ($ million)
FY 2013
54
FY 2014
43
FY 2015
136
for FY 2015, due mainly to higher
contributions from k1 Ventures
and KrisEnergy. Net profit for
the year was $136 million, an
increase of $93 million or 216%,
from $43 million in FY 2014.
k1 Ventures
k1 Ventures (k1) is an investment
company with interests in
education and financial services.
For the financial year ended
30 June 2015, k1 reported revenue
from continuing operations of
$60.6 million, an increase of
92% from the prior year. This
was driven mainly by the sale of
k1’s investment in China Grand
Automotive (China Auto), partially
offset by a decrease in investment
income. In the previous year, k1
received K12 Inc shares distributed
by Knowledge Universe.
Operating profit for the year ended
30 June 2015 was $26.3 million
compared to $25.8 million in
the previous period. EBITDA
from continuing operations of
$45.0 million was $19.5 million
higher than the prior year, driven
mainly by profit from the sale of
China Auto. Net profit attributable
to shareholders was $24.9 million,
compared to $20.1 million in the
previous year.
For FY 2015, k1 paid total
dividend of 4.0 cents per share*,
increasing cumulative distributions
to 35.3 cents per share* or more
than $742 million since 2005.
01 The financial services
firm, Guggenheim Capital
which k1 has invested
in, grew its assets under
management to over
US$240 billion during
the year.
* Up to 30 June 2015 and
based on the number
of shares before share
consolidation.
01
The Investments Division is
Keppel’s fourth business vertical,
which presently comprises
mainly the Group’s investments
in k1 Ventures, M1 Limited and
KrisEnergy.
In January 2016, Keppel
Corporation announced a
significant restructuring exercise
to consolidate its interests in
Alpha Investment Partners
and the managers of Keppel
Infrastructure Trust, Keppel DC
REIT and Keppel REIT under
Keppel Capital, and report them
under a new segment as part of
the Investments Division.
as well as expand its capital base
with co-investors. This will also
improve the performance of the
asset managers and the funds,
REITs and business trusts that
they manage by centralising certain
non-regulated support functions
and creating a larger vehicle that
will enhance the recruitment and
retention of talent, and sharing of
best practices.
This restructuring will bring
greater focus and scale to our
asset management business, as
we grow the Investments Division
into a steady pillar of recurring
income for the Group.
Through Keppel Capital, we
aim to grow our assets under
management, strengthen the
Group’s capital-recycling platform,
Earnings Review
Pre-tax earnings from the
Investments Division increased by
$91 million or 166% to $146 million
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other InformationEarnings Highlights ($ million) 2015 2014 2013Revenue 716427EBITDA 611725Operating Profit 601625Profit before Tax 1465580Net Profit 1364354Manpower (Number)177183198Manpower Cost9413593 76
Operating &
Financial Review
Investments
01 In 2015, M1
continued to focus
on delivering superior
customer experience
and was recognised in
IDA’s network survey
as delivering the best
4G experience.
02 As at 31 December
2015, KrisEnergy’s
total working interest
in 2P reserves was
106 mmboe, an increase
of 49% from 2014.
In August 2015, Knowledge
Universe Education (KUE) sold
its US early-childhood education
operating business, thereby
completing the divesture of both
its US and international education
platforms. k1 received a cash
distribution of approximately
US$61.5 million, representing
a majority of its share of net
proceeds from the sale.
M1
As at end-2015, M1’s total
customer base was 2.06 million.
During the year, mobile customer
base increased 76,000 to
1.93 million, while fibre customer
base grew 25,000 to 128,000.
Overall mobile market share
increased to 23.4% as at
end-November 2015, compared
to 22.9% as at end-2014.
During the year, the financial
services firm, Guggenheim Capital,
grew its assets under management
to over US$240 billion. In addition
to the 7% annual dividend
from Preferred Units held in
Guggenheim Capital, k1 also
received cumulative supplemental
special cash distributions of
about US$2.6 million.
k1 will focus on actively managing
its existing investments with
the goal to monetise them when
appropriate, and distribute surplus
cash to drive shareholder value.
In 2015, M1 continued to
focus on delivering superior
customer experience, which
has led M1’s mobile network
to be recognised in Infocomm
Development Authority’s
network survey as delivering
the best 4G experience.
M1 was also conferred the
Award of Excellence in IT
sector at the Singapore
Productivity Awards 2015,
and further extended its lead
at consulting firm Frost &
Sullivan’s 2015 Customer
Experience study.
01
Key products and services
launched during the year included
the well-received mySIM postpaid
plans, which offer the best value
plans for customers who prefer to
buy their own smartphones and
the flexibility to decide how often
they wish to upgrade them.
M1’s Data Passport service,
which enables customers to use
their existing mobile data bundle
for overseas roaming across 29
countries, has also helped drive a
45% increase in data roaming
users year-on-year.
In the corporate segment,
M1 introduced an innovative
mobile Point of Sale solution
that transforms smartphones
and tablets into terminals that
accept card payments, and
further expanded its suite of
XGPON connectivity services
to offer speeds of up to 10Gbps.
M1 also worked with Keppel Land
Limited to launch the M1-Keppel
Smart Lives programme to provide
Keppel Corporation LimitedReport to Shareholders 2015 77
02
of contingent resources to 2P reserves
for the gas developments in Block A Aceh
onshore North Sumatra; and an upward
revision in reserve estimates for the
Bangora gas field in Block 9 onshore
Bangladesh and the G10/48 licence
in Thailand.
Business Outlook
KrisEnergy’s management has consistently
applied prudent financial discipline.
In 2016, the Company will substantially
cut capital expenditure to US$50.8 million
from US$224.7 million in 2015, when it
reduces general and administrative
expenses by a third.
In 2016, KrisEnergy will focus on
maintaining production and maximising
efficiencies. With minimal operational
commitments, KrisEnergy is able to
exercise flexibility in its asset portfolio.
The opening weeks of 2016 saw Brent crude
oil prices deteriorating further to below
US$30 per barrel. In view of this, KrisEnergy
will be deferring all exploration expenditure
until oil and gas prices improve. Future
development projects will be funded
through a combination of project financing
and free cash flow from operations.
Investments
smart living solutions for Keppel Land’s
residential and commercial properties.
Based on the current economic outlook
and barring unforeseen circumstances,
M1 anticipates stable performance
for FY 2016.
KrisEnergy
2015 was a seminal year for Singapore-listed
independent exploration and production
(E&P) operator, KrisEnergy as it completed
two new oil developments in the Gulf of
Thailand. A successful exploration drilling
programme resulted in an approved production
licence for a future oil development. These
milestones, together with strong growth in
production to over 19,000 barrels of oil
equivalent per day (boepd) in early 2016
and a 49% uplift in proved plus probable (2P)
reserves to 106 million barrels of oil equivalent
(mmboe), underpin KrisEnergy’s vision to
become a sustainable and best-in-class E&P
operator in Asia.
In August 2015, KrisEnergy produced first oil
at the Wassana oil field in the Gulf of Thailand
just 15 months after the company took control
of operations for the G10/48 contract area.
Upon completion of the drilling programme in
January 2016, production at the Wassana
field hit a peak of approximately 12,800 barrels
of oil per day (bopd), above the original
forecast for the plateau rate of 10,000 bopd.
Also in the Gulf of Thailand, production was
further boosted by the start-up of the Nong
Yao oil field in June 2015.
KrisEnergy’s total average working interest
production in January 2016 was around
19,000 boepd from five fields, namely B8/32,
B9A, Wassana and Nong Yao in the Gulf of
Thailand, and the Bangora gas field in Block 9
onshore Bangladesh. This is against an
average rate of about 9,700 boepd for 2015.
With five out of six wells encountering
commercial volumes of hydrocarbons,
successful exploration, coupled with
progress in advancing gas development in
Indonesia, led to an uplift in 2P reserves
for the fifth consecutive year.
As at 31 December 2015, KrisEnergy’s total
working interest in 2P reserves was 106 mmboe,
an increase of 49% from 2014. The increase
was attributed to four discoveries in the
Rossukon area in G6/48 and the subsequent
approval of the production licence for the
Rossukon field development; the conversion
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 78
Operating &
Financial Review
Financial
Review &
Outlook
Total Assets
$28.9b
Total assets decreased from $31.6b
to $28.9b. The decrease in current
assets was partially offset by an
increase in non-current assets.
Total Cash Dividend Per Share
34cts
Total distribution for the year was
approximately $617 million.
We will sustain value creation through
execution excellence, technology innovation
as well as financial discipline.
Prospects
The Offshore & Marine Division
secured $1.8 billion of new orders
in 2015. Its net orderbook stands
at $9.0 billion, with deliveries
extending into 2020. Faced with
the global sector downturn, the
Division is rightsizing its operations
and staying vigilant for what could
be an extended slowdown, while
at the same time building new
capabilities and positioning itself
to seize opportunities when the
upturn comes.
The Property Division sold about
4,570 homes in 2015, comprising
about 3,280 in China, 930 in
Vietnam, 190 in Singapore and 130
in Indonesia. This is significantly
higher than the 2,450 homes
sold in 2014. The improvement
is mainly attributable to sales in
China and Vietnam. Total assets
under management by Keppel
REIT and Alpha have grown from
$18.7 billion as at end-2014 to
$20.5 billion as at end-2015.
Keppel REIT’s office buildings in
Singapore and Australia continued
to maintain high occupancy of
99.3% as at end-2015. The
Division will remain focused on
strengthening its presence in its
core and growth markets, seeking
opportunities to unlock value
and recycle capital, as well as
growing its fund management
business for a sustainable
recurring income stream.
In the Infrastructure Division,
Keppel Infrastructure (KI) will
remain focused on its power
and gas, as well as its other
energy-related infrastructure
businesses. The successful
handing over of both phases of
the Greater Manchester Energy-
from-Waste Plant in the UK and
the Bialystok waste-to-energy
combined heat and power
project in Poland, as well as
the substantial handover of the
Doha North Sewage Treatment
Works in Qatar, allow KI to pursue
other promising growth areas
in infrastructure. The Singapore
electricity market is still
expected to remain competitive,
but KI’s integrated power and
gas business platform will
enable it to weather the
challenges ahead through driving
synergies and value creation
across its diversified portfolio.
Keppel Telecommunications &
Transportation will continue to
develop both logistics and data
centre businesses locally and
overseas. It will also focus on
growing a portfolio of quality
data centre assets for injection
into Keppel DC REIT. Total
assets under management
by Keppel DC REIT were about
$1.2 billion as at end-2015.
The Group will continue to
execute its multi-business
strategy, capturing value by
harnessing its core strengths
and growing collaboration across
divisions to unleash potential
synergies, while being agile
and investing for the future.
Shareholder Returns
ROE decreased to 14.2% in 2015
from 18.8% in 2014.
The Company will be distributing
total cash dividend of 34.0 cents
per share for 2015, comprising a
final proposed cash dividend of
22.0 cents per share and the
interim cash dividend of 12.0 cents
per share distributed in the
third quarter of 2015. Total cash
dividend for 2015 represents 40%
of Group net profit. On a per share
basis, it translates into a gross
Keppel Corporation LimitedReport to Shareholders 2015 Financial Review & Outlook
Revenue By Segments 2015
%
Net Profit By Segments 2015
Offshore & Marine
Property
Infrastructure
Investments
Total
61
19
20
–
100
Offshore & Marine
Property
Infrastructure
Investments
Total
79
%
32
46
14
8
100
ROE & Dividend
EVA ($ million)
Dividend
in specie
~ 20.9 cts/share
Plus
Dividend
in specie
~ 28.6 cts/share
Plus
Dividend
in specie
~ 9.5 cts/share
Plus
%
30
24
18
12
6
0
2,100
1,800
1,500
1,200
900
600
300
0
cents
50
40
30
20
10
0
ROE
Full-Year
Dividend
Interim
Dividend
2009 2010 2011 2012 2013 2014 2015
26.4
29.1
14.2
25.3
19.5
27.2
18.8
34.6
38.2
43.0
45.0
40.0
48.0
34.0
13.6
14.5
17.0
18.0
10.0
12.0
12.0
2010
2011
2012
2013
2014
2015
697
838 1,430 1,142 1,778
648
yield of 5.2% on the Company’s
last transacted share price of
$6.51 as at 31 December 2015.
Economic Value Added
In 2015, Economic Value Added
(EVA) decreased by $1,130 million
to $648 million. This was
attributable to lower net
operating profit after tax, partially
offset by lower capital charge.
Capital charge decreased by
$81 million as a result of lower
Weighted Average Cost of Capital
(WACC) and lower Average EVA
Capital. WACC decreased from
6.45% to 5.88% mainly due to a
decrease in risk-free rate, partly
offset by higher cost of debt.
Average EVA Capital decreased by
$673 million from $19.23 billion
to $18.56 billion mainly because
of lower non-controlling interest,
resulting from the privatisation
of Keppel Land Limited and the
consolidation of the remaining
30% interest in Harbourfront
One Pte Ltd.
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 $10.38 billion as
at 31 December 2014 to $11.10 billion
as at 31 December 2015. The increase
was mainly attributable to retained
profits for 2015. In addition, the
difference between non-controlling
interests adjusted and the fair
value of the consideration paid,
arising from the privatisation
of Keppel Land Limited, was
recognised in equity attributable
to shareholders of the Company.
This was partially offset by payment
of final dividend of 36.0 cents per
share in respect of financial year
2014 and interim dividend of
12.0 cents per share in respect of
the first half year ended 30 June
2015, fair value loss on cash flow
hedges and available-for-sale
assets as well as fair value realised
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
80
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
Net Operating Profit After Tax (NOPAT)
Average EVA Capital Employed (Note 3)
Weighted Average Cost of Capital (Note 4)
Adjustment for surplus cash (Note 5)
Capital Charge
2015
$ million
15 vs14
+/(-)
2014
$ million
14 vs13
+/(-)
2013
$ million
1,414
-1,342
2,756
+781
1,975
155
25
(32)
177
1,739
18,558
5.88%
-
(1,091)
+22
+2
-5
+112
-1,211
-673
-0.57%
-68
+81
133
23
(27)
65
2,950
-31
+7
-2
-83
+672
19,231
+297
6.45% +0.45%
+68
-36
68
(1,172)
164
16
(25)
148
2,278
18,934
6.00%
-
(1,136)
Economic Value Added
648
-1,130
1,778
+636
1,142
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 of 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 5.0% (2014: 5.5%);
(b) Risk-free rate of 2.25% (2014: 2.45%) based on yield-to-maturity of Singapore Government 10-year Bonds;
(c) Unlevered beta at 0.83 (2014: 0.83); and
(d) Pre-tax Cost of Debt at 1.76% (2014: 1.58%) using 5-year Singapore Dollar Swap Offer Rate plus 45 basis points (2014: 45 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.
on disposal of available-for-sale assets.
Non-controlling interest of $0.83 billion was
$3.52 billion lower because of the privatisation
of Keppel Land Limited and the consolidation
of the remaining 30% interest in Harbourfront
One Pte Ltd, which holds Keppel Bay Tower.
Group total assets of $28.92 billion as at
31 December 2015 were $2.67 billion or 8%
lower than the previous year end. Decrease
in current assets was partially offset by
increase in non-current assets.
The decrease in current assets was due mainly
to disposal of Keppel Merlimau Cogen Pte Ltd
(KMC), lower bank balances, deposits & cash,
largely due to fund used for the privatisation of
Keppel Land Limited and capital expenditure,
as well as repayment of advances due from
associated companies. This was partly offset
by higher level of debtors, due mainly to
higher billings from the Offshore & Marine
and Property Divisions.
Non-current assets were higher due mainly to
increase in investment properties from the
acquisition of a freehold office building in
Total Assets Owned ($ million)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Fixed assets
Properties
Investments
Stocks & work-in-progress
Debtors & others
Bank balances, deposits & cash
2013
3,798
2,188
6,192
8,995
3,318
5,565
2014
2,673
1,988
5,717
2015
2,846
3,272
6,097
10,681
10,650
4,796
5,736
4,162
1,893
Total
30,056
31,591
28,920
Keppel Corporation LimitedReport to Shareholders 2015 Financial Review & Outlook
81
London and the fair value gain on
investment properties in 2015.
Park Avenue Central in Shanghai
was reclassified from stocks &
work-in-progress to investment
properties, in line with the
intention to develop the property
for investment purpose. In addition,
the increase in associated
companies was largely due to
the recognition of KMC as an
associated company following the
sale of 51% interest under the
Infrastructure Division as well as
the additional investments and
acquisitions in the Property
Division, additional investment in
KrisEnergy Ltd, partly offset by
divestment of 39% interest in
Harbourfront Two Pte Ltd, which
holds Harbourfront Towers 1
and 2. Group total liabilities of
$16.99 billion as at 31 December
2015 were $0.13 billion or 1%
higher than the previous year end.
This was mainly due to increased
bank borrowings for working
capital requirements, operational
capital expenditure, increase in
creditors arising from higher billings
by suppliers and privatisation of
Keppel Land Limited. This was
offset by the derecognition of
liabilities directly associated
with KMC and the lower billings
on work-in-progress in excess of
related costs in the Offshore &
Marine Division.
Group net debt of $6.37 billion
was $4.72 billion higher than
that as at 31 December 2014 due
mainly to the cash payments for
the acquisition of Keppel Land’s
shares, dividend payments
(by the Company and its listed
subsidiaries), acquisition of a
freehold office building in London,
acquisition of the remaining 30%
interest in Keppel Bay Tower, and
other operational and capex cash
requirements. These were partly
offset by proceeds from the
disposal of KMC and 39% interest
in Harbourfront Towers 1 and 2
as well as repayment of advances
due from associated companies.
Total Shareholder Return
Keppel is committed to deliver
value to shareholders through
earnings growth. Towards
achieving this, the Group will
rely on its multi-business
10-year annualised TSR as at 2015
Keppel
STI
7.8%
5.0%
Total Liabilities Owed and Capital Invested ($ million)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Shareholders’ funds
Non-controlling interests
Creditors
Term loans & bank
overdrafts
Other liabilities
Total
2013
9,701
3,988
8,825
2014
2015
10,381
11,096
4,347
9,178
830
8,362
7,100
7,383
8,259
442
302
373
30,056
31,591
28,920
Total Shareholder Return (%)
120
100
80
60
40
20
0
(20)
(40)
(60)
(80)
Keppel
STI
2006
65.3
32.4
2007
51.7
21.0
2008
(64.4)
(47.1)
2009
100.8
70.8
2010
47.0
13.4
2011
(6.4)
(14.0)
2012
22.9
23.3
2013
9.0
3.2
2014
(17.8)
9.5
2015
(22.3)
(11.4)
Source: Total Return Analysis for KCL & STI from Bloomberg
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 82
Operating &
Financial Review
Financial Review & Outlook
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 (used in) / from operating activities
Investments & capital expenditure
Divestments & dividend income
Net cash from investing activities
Free Cash flow*
* Free cash flow excludes expansionary acquisitions & capex, and major divestments.
2015
$ million
15 v 14
+/(-)
2014
$ million
14 v 13
+/(-)
2013
$ million
1,514
(158)
1,356
(1,725)
(336)
(705)
(357)
368
11
(694)
-859
+103
-756
+54
-8
-710
+305
-1,018
-713
-1,423
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
Dividend paid to shareholders of the Company & subsidiaries
(956)
+73
(1,029)
-186
(843)
strategy and its core strengths,
build on what it had done
successfully and seize new
opportunities when they arise.
Our 2015 Total Shareholder Return
(TSR) of negative 22.3% was
10.9 percentage points below the
benchmark Straits Times Index’s
(STI) TSR of negative 11.4%. This
was mainly due to a sharp decline
in Keppel’s share prices as at
end-2015 arising from the
corresponding sharp decline
in oil prices. However, our 10-year
annualised TSR growth rate of
7.8% was higher than STI’s 5.0%.
Cash Flow
To better reflect its operational
free cash flow, the Group had
excluded expansionary acquisitions
(e.g. investment properties) and
capital expenditure (e.g. building
of new logistics or data centre
facilities) meant for long-term
growth for the Group, and
major divestments.
Net cash used in operating activities
was $705 million for 2015 as
compared to net cash from
operating activities of $5 million
for 2014. This was due mainly to
lower operational cash inflow.
After excluding expansionary
acquisitions, capital expenditure
and major divestments, net cash
from investment activities was
$11 million. The Group spent
$357 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 $368 million, the
free cash outflow was $694 million.
Total distribution to shareholders
of the Company and non-controlling
shareholders of subsidiaries for
the year amounted to $956 million.
Financial Risk Management
The Group operates internationally
and is exposed to a variety of
financial risks, comprising market
risk (including currency risk,
interest rate risk and price risk),
credit risk and liquidity risk.
Financial risk management is
carried out by the Keppel Group
Treasury Department in
accordance with established
policies and guidelines.
These policies and guidelines
are established by the Group
Central Finance Committee and
are updated to take into account
changes in the operating
environment. This committee is
chaired by the Chief Financial
Officer of the Company and includes
Chief Financial Officers of the
Group’s key operating companies
and Head Office specialists.
The Group’s financial risk
management is discussed in more
detail in the notes to the financial
statements. In summary:
• The Group has receivables and
payables denominated in
foreign currencies viz US
dollars, European and other
Asian currencies. Foreign
currency exposure arises
mainly from the exchange
rate movement of these
foreign currencies against
the Singapore dollar, which is
the Group’s measurement
currency. The Group utilises
forward foreign currency
contracts to hedge its
exposure to specific currency
risks relating to receivables
and payables. The bulk of
these forward foreign currency
contracts are entered into to
hedge any excess US dollars
arising from the Offshore &
Marine contracts based on the
expected timing of receipts.
The Group does not engage in
foreign currency trading.
• The Group hedges against price
fluctuations arising on purchase
of natural gas. Exposure is
managed via fuel oil forward
contracts, whereby the price
of natural gas is indexed to
benchmark fuel price indices,
High Sulphur Fuel Oil (HSFO)
Keppel Corporation LimitedReport to Shareholders 2015 Financial Review & Outlook
83
180-CST and Dated Brent.
Debt Maturity ($ million)
• The Group hedges against
fluctuations in electricity
prices via its daily sales of
electricity. Exposure to price
fluctuations is managed via
electricity futures contracts.
• 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 2015 were $8.3 billion
(2014: $7.4 billion and 2013:
$7.1 billion). At the end of 2015,
10% (2014: 24% and 2013: 7%)
of Group borrowings were
repayable within one year with
the balance largely repayable
more than three years later.
Unsecured borrowings
constituted 85% (2014: 86% and
2013: 87%) 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
$2.46 billion (2014: $2.70 billion
and 2013: $2.90 billion).
< 1 year
1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
> 5 years
857 (10%)
1,088 (13%)
2,030 (26%)
907 (11%)
933 (11%)
2,444 (30%)
Fixed rate borrowings constituted
65% (2014: 66% and 2013: 53%)
of total borrowings with the balance
at floating rates. The Group has
interest rate swap agreements
with notional amount totalling
$1,711 million whereby it receives
variable rates equal to SIBOR,
LIBOR and SHIBOR and pays
fixed rates of between 0.85%
and 4.90% on the notional
amount. Details of these
derivative instruments are
disclosed in the notes to the
financial statements.
Singapore dollar borrowings
represented 65% (2014: 65% and
2013: 67% ) of total borrowings.
The balances were mainly in US
dollars and Renminbi. 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 2015
with an increase 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.
Every new investment will have to
satisfy strict criteria for return on
investment, cash flow generation,
EVA creation and risk management.
New investments will be structured
with an appropriate mix of equity
and debt after careful evaluation
and management of risks.
Capital Structure
Capital employed as at the end
of 2015 was $11.93 billion as
compared to $14.73 billion as at
end-2014 and $13.69 billion as at
end-2013. The Group was in a net
debt position of $6,366 million as
at end-2015, which was above the
$1,647 million as at end-2014 and
$1,535 million as at end-2013.
The Group’s net gearing ratio was
0.53 times as at the end of 2015,
compared to 0.11 times as at the
end of 2014.
Interest coverage was 13.89 times
in 2013, increasing to 15.35 times
in 2014 before decreasing to 9.66
times in 2015. Interest coverage in
2015 is lower due to lower EBIT
and higher interest costs.
Cash flow coverage dropped from
4.03 times in 2013 to 1.02 times
in 2014 and negative 2.17 times in
2015. This was mainly due to lower
operational cash inflow in 2015.
At the Annual General Meeting in
2015, shareholders gave their
approval for the mandate to buy
back shares. As at 1 January
2015, the Company has 5,932,000
treasury shares. During the year,
6,808,000 shares were bought
back. The Company also
transferred 5,977,020 treasury
shares to employees upon vesting
of shares released under the KCL
Share Plans and Share Option
Scheme. As at 31 December 2015,
the Company has 6,762,980
treasury shares. Except for the
transfer, there was no other sale,
transfer, disposal, cancellation
and/or use of treasury shares
during the year.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 84
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 2015, total funds
available and unutilised facilities
amounted to $8.81 billion
(2014: $11.02 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 2015, 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, the possibility of
discontinuance of the projects
and the cost incurred to-date
when determining the allowance
for doubtful receivables and
its expected loss. Management
performs ongoing 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 possibility of discontinuance
of the projects. Management has
assessed that no allowance for
doubtful debt and expected loss
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
Net Cash/(Gearing)
Net Gearing = Borrowings – Cash
Capital Employed
$ million
15,000
10,000
5,000
0
(5,000)
(10,000)
No. of times
1.5
1.0
0.5
0
(0.5)
(1.0)
Net Cash / (Debt)
Capital Employed
Net Cash / (Gearing)
2013
2014
2015
(1,535)
(1,647)
(6,366)
13,689
(0.11)
14,728
(0.11)
11,926
(0.53)
Interest Coverage
Interest Coverage = EBIT
Interest Cost
$ million
3,200
2,400
1,600
800
0
EBIT
Total Interest Cost
Interest Cover
Cash Flow Coverage
No. of times
20
15
10
5
0
2013
2014
2015
2,918
3,023
2,152
210
13.89
197
15.35
223
9.66
Cash Flow Coverage = Operating Cash Flow + Interest Cost
Interest Cost
$ million
No. of times
900
600
300
0
(300)
(600)
6
4
2
0
(2)
(4)
Operating Cash Flow +
Interest
Total Interest Expense +
Interest Capitalised
Cash Flow Coverage
2013
2014
2015
847
202
(482)
210
4.03
197
1.02
223
(2.17)
Keppel Corporation LimitedReport to Shareholders 2015
Financial Review & Outlook
85
Financial Capacity
$ million Remarks
Cash at Corporate Treasury
Credit facilities extended
to the Group
265 14% of total cash of $1.89 billion
8,595 Credit facilities of $11.50 billion,
of which $2.91 billion was utilised
Total
8,860
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,
investments in subsidiaries,
investment in associates and joint
ventures, 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 23 and an
expected loss of $228,000,000
(2014: Nil) was recognised in 2015
based on the estimated costs to
completion, including cost of
discountinuance and salvage
cost with regards to certain rig
building contracts.
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 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
46% (2014: approximately 45%)
gross ownership interest of units
in Keppel REIT as at 31 December
2015. 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 other
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 KrisEnergy
The Group has approximately 40%
(2014: approximately 31%) gross
ownership interest of shares in
KrisEnergy Limited (KrisEnergy)
as at 31 December 2015. The
management assessed whether
or not the Group has control over
KrisEnergy based on whether
it has the practical ability to
direct the relevant activities
of KrisEnergy. In exercising
its judgment, management
considers the relative size and
dispersion of the shareholdings
owned by the other shareholders.
Taking into consideration the
approximately 38% (2014:
approximately 45%) interest held
by another single shareholder
of KrisEnergy, management
concluded that the Group does
not have sufficient dominant
vesting interest to exert control
over KrisEnergy and therefore
continues to have significant
influence over KrisEnergy.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 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
Empowering
Lives
Nurturing
Communities
Our commitment to
business excellence is
driven by our unwavering
focus on strong corporate
governance and prudent
risk management.
Resource efficiency is our
responsibility and makes
good business sense.
Innovation and delivering
quality products and
services sharpen our
competitive edge.
People are the cornerstone
of our businesses.
As an employer of choice,
we are committed to
grow and nurture our talent
pool through continuous
training and development
to help our people reach
their full potential.
We want to instil a culture
of safety so that everyone
who comes to work goes
home safely.
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.
Pages 88 –125
Pages 126 –127
Page 128
87
01 We strive to work
with our stakeholders
to be a responsible
corporate citizen.
Sustainability Report Highlights – Managing Sustainability
Managing
Sustainability
We strive to create sustainable growth and value for our stakeholders
by executing our businesses profitably, safely and responsibly.
consolidated review of issues
material to Keppel Corporation.
We have incorporated the
findings and recommendations
to improve our sustainability
strategy and processes.
Stakeholder Engagement
We continue to proactively
engage our stakeholders
and refine our existing
practices and communications
in line with feedback received.
We address sustainability
issues through our support of
corporate social responsibility
initiatives in areas such
as manpower, workplace
safety, as well as health and
environmental protection.
We also sponsored and
participated in arts, education
and community initiatives.
Best Practice Reporting
We publish sustainability reports
annually, and the next report
will be published in July 2016.
Our sustainability reports draw
on internationally-recognised
standards of reporting, including
the Global Reporting Initiative
(GRI). The upcoming report will
be developed in accordance
with GRI G4.0 guidelines.
The reports’ contents are
defined by materiality analyses
and stakeholder engagement
exercises, and are accessible
at our corporate website
www.kepcorp.com.
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
Keppel embraces sustainability
not only as a guiding principle,
but on strategic and operational
levels. This section contains a
concise review of our management
approaches in the key areas of
Corporate Governance and Risk
Management, Environmental
Performance, Product Excellence,
Safety & Health, Labour
Practices & Human Rights
and Our Community.
Management Sub-Committee
was formed in 2015.
Materiality Analysis
To identify and prioritise the
economic, environmental and
social concerns of the Group
and our stakeholders, we worked
on materiality analyses with an
independent consultant. The
latest exercise was concluded
in early 2015.
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 Group and sets
our sustainability strategy.
Supporting the Steering
Committee is the Working
Committee, consisting of several
sub-committees, that executes
our sustainability strategy
and reports on performance.
To strengthen the management
of environmental, social and
governance impacts along our
supply chain, a Supply Chain
During the exercise, we carried
out an internal review of our
businesses, and considered
external stakeholder issues
as well as long-term global
trends which could impact
our businesses.
To gain deeper insights, we
extended the analysis with
separate workshops to engage
senior management of Keppel
Offshore & Marine and Keppel
Infrastructure. The findings
were analysed together with
recently-concluded materiality
analyses of Keppel Land and
Keppel Telecommunications
& Transportation for a
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information Board Strategic Review: The
Board periodically reviews and
approves the Group’s strategic
plans. In FY2014, the Board
approved the Group’s Vision
20202 which sets out the vision,
operating principles and values of
the Group, and the roadmap3 to
take the Group’s businesses into
2020 to achieve faster growth,
build a stronger Keppel that fully
captures the significant synergies
within and among its Group
companies, and fully develop
the potential of its people.
Review Process: A rigorous
process is in place to support the
Board in reviewing and monitoring
the Group’s strategic plans,
including providing directors
with the necessary context and
opportunity to undertake effective
and robust deliberation and
debate. In this regard, a two-day
off-site board strategy meeting is
organised annually for in-depth
discussion on strategic issues
and direction of the Group. This
is followed by an update of each
business unit’s strategic plans
for alignment with the Group’s
strategy. In addition, in FY2015,
management presented a study
of the key drivers underpinning
high performance conglomerates
and proposed initiatives to
focus the Group’s efforts in
strengthening these areas.
To support the Board’s oversight
of the implementation of the
strategic plans, a progress
update is provided to the directors
ahead of the following year’s
off-site board strategy meeting.
In addition, one business unit is
invited to each quarterly Board
meeting to present on its
immediate plans and current
challenges and provide the Board
an opportunity to perform an
in-depth review into each of the
Group’s core businesses.
Independent Judgment: All
directors are expected to exercise
independent judgment in the
best interests of the Company.
This is one of the performance
criteria for the peer and self
assessment on the effectiveness
of the individual directors. Based
on the results of the peer and self
assessment carried out by the
directors for FY2015, all directors
have discharged this duty
consistently well.
Conflicts of Interest: Every
director is required to declare
any conflict of interest in a
transaction or proposed
transaction with the Company
as soon as practicable after the
relevant facts have come to his
knowledge. On an annual basis,
each director is also required to
submit details of his associates
for the purpose of monitoring
interested persons transactions.
Sustaining Growth
01 The Keppel Group
took centrestage at the
Singapore Corporate
Awards 2015 with four
awards, including
the most prestigious
Best Managed Board
Gold Award won by
Keppel Corporation.
01
88
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.
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
89
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 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.
Management Committees: In addition to
board committees, the Company has
management committees that direct and
guide management on operational policies
and activities, which include (1) Investments &
Major Projects Action Committee (IMPAC):
Evaluates, guides and optimises proposed
Group investments and divestments exceeding
prescribed value thresholds; (2) Central
Finance Committee: Reviews, guides and
monitors financial policy and activities of
Group companies; (3) Group Sustainability
Steering Committee: Sets sustainability
strategy and leads performance in key focus
areas; (4) Enterprise Risk Management
Committee: Drives and coordinates the Group’s
risk management efforts, and implements the
Enterprise Risk Management framework and
processes; and (5) Keppel IT Steering
Committee: Provides strategic information
technology (IT) leadership and ensures
IT strategy alignment in achieving
business strategies.
Meetings: The Board meets six times a year
and as warranted by particular circumstances.
Board meetings are scheduled and circulated
to the directors prior to the start of the
financial year to allow directors to plan ahead
to attend such meetings, so as to maximise
participation. Telephonic attendance and
conference via audio-visual communication
at board meetings are allowed under the
Company’s constitution. Further, the
non-executive directors meet without the
presence of management on a need-be
basis. The number of board, board committee,
and non-executive director meetings held in
FY2015, as well as the attendance of each
Board member at these meetings, are
disclosed in Table 1.
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.
Notes:
1 The Code of Corporate Governance 2012
issued by the Monetary Authority of
Singapore on 2 May 2012.
2 With effect from FY2014, the vision of
the Company is to be a global company
at the forefront of its chosen industries,
shaping the future for the benefit
of all its stakeholders – sustaining
Growth, Empowering Lives and
Nurturing Communities. Guided by its
operating principles and core values,
the Company’s mission is to execute its
business in Offshore & Marine, Property,
Infrastructure and Investments profitably,
safely and responsibly.
3 This roadmap includes four broad areas
for sustainable growth: (1) Business:
Setting the overarching strategies,
targets, and key actions to be undertaken
by the business units; (2) People: Building
a robust succession pipeline and
continued strong employee satisfaction;
(3) Process: Pursuing excellence in
safety, productivity and innovation; and
(4) Corporate Citizenry: Formalising and
further organising community outreach
efforts to positively impact communities
which the Group operates.
Table 1
Lee Boon Yang
Loh Chin Hua
Tony Chew Leong-Chee1
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Tan Puay Chiang2
Till Vestring3
Veronica Eng4
No. of Meetings Held
Board
Meetings
11
11
6 of 6
11
10
11
10
11
11
7 of 7
4 of 4
11
Audit
–
–
3 of 3
6
–
4
–
6
–
–
2 of 2
6
Board Committee Meetings
Nominating
Remuneration
Safety
Risk
Non-Executive
Directors’ Meeting
(without presence of
management)
6
–
4 of 4
–
5
6
6
–
2 of 2
2 of 2
–
6
8
–
–
7
8
–
–
8
–
3 of 3
–
8
4
4
–
–
–
–
4
–
4
–
–
4
–
–
–
4
3
–
4
4
4
–
1 of 1
4
3
–
2 of 2
3
3
3
3
3
3
2 of 2
1 of 1
3
Notes:
1 Mr Tony Chew Leong-Chee retired as director and ceased as Chairman of the Nominating Committee, and member of the Audit Committee with effect from 1 May 2015.
2 Mr Tan Puay Chiang was appointed as a member of the Nominating Committee with effect from 17 April 2015 and subsequently, as Chairman of the Nominating
Committee with effect from 1 May 2015.
3 Mr Till Vestring was appointed as a non-executive and independent director with effect from 16 February 2015, and was appointed as member of the Remuneration
Committee and Nominating Committee on 1 May 2015.
4 Ms Veronica Eng was appointed as a non-executive and independent director with effect from 1 July 2015, and was appointed as a member of the Audit Committee and
Board Risk Committee on 23 July 2015.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 90
Corporate
Governance
Sustaining Growth
Internal Limits of Authority:
The Company has adopted
internal guidelines setting
forth matters that require board
approval. Under these guidelines,
(a) new investments or increase
in investments, (b) acquisition and
disposal of assets and (c) capital
equipment purchase and/or lease,
exceeding $30 million by any
Group company (not separately
listed), and all commitments to
term loans and lines of credit from
banks and financial institutions
by the Company, require the
approval of the Board. Each Board
member has equal responsibility
to oversee the business and affairs
of the Company. 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 FY2015, some KCL directors
attended talks on topics relating
to updates to Companies Act,
the global macro-economic
development, the financial,
political, and economic risks
of emerging countries, board
leadership, and innovation.
Site visits are also conducted
periodically for directors to
familiarise them with the
operations of the various
businesses so as to enhance
their performance as board or
board committee members. In
FY2015, members of the Board
Safety Committee visited the
International Financial Centre
Jakarta (IFC) Tower 2, which
is under development, to
reinforce the Group’s commitment
to safety.
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.
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 2016 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 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 exercised 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 exercised 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 Till
Vestring who abstained from
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
91
deliberation in this matter) also
noted that Mr Till Vestring is a
partner in Bain & Company’s
Southeast Asia office which has
performed consulting services
to the Group. Mr Vestring had
declared to the Committee that
(a) he did not have a 10% or more
stake in Bain & Company,
(b) he would not be involved in
any future services that Bain &
Company provides to the Group;
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 also took
into account Mr Vestring’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 Vestring has at all
times exercised independent
judgment in the best interests of
the Company in the discharge of
his director’s duties and should
therefore continue to be deemed
an independent director.
Further, a director who is directly
associated with a 10% shareholder
is deemed as non-independent
under the 2012 Code. Mr Tow
Heng Tan was previously the Chief
Investment Officer of Temasek
Holdings (Private) Limited
(“Temasek”). He ceased to be
employed by Temasek since
2012 and is currently the 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
noted that Mrs Oon Kum Loon
was first appointed to the Board
on 15 May 2004. However, the
Committee considered that
Mrs Oon has demonstrated
independent judgment at Board,
and board committee meetings,
and was of the firm view that
she has exercised independent
judgment in the best interests
of the Company in the discharge
of her director’s duties. The
Committee therefore continued
to deem Mrs Oon as an
independent director.
The Board concurred with the
reasons set forth by the
Nominating Committee and was
of the view that Dr Lee Boon Yang,
Mrs Oon Kum Loon, Mr Alvin Yeo,
Mr Tan Ek Kia, Mr Danny Teoh,
Mr Tan Puay Chiang, Mr Till
Vestring and Ms Veronica Eng
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 108 herein.
Board Competency:
The Nominating Committee is
satisfied that the Board and the
board committees comprise
directors who, as a group, provide
an appropriate balance and
diversity of skills, experience,
gender, knowledge of the Group,
core competencies such as
accounting or finance, business or
management experience, human
resource, risk management,
technology, mergers and
acquisitions, legal, international
perspective, industry knowledge,
strategic planning experience and
customer-based experience or
knowledge, required for the Board
and the board committees to be
effective. In this respect, the
Nominating Committee
recognises the merits of gender
diversity in relation to the
composition of the Board and, in
identifying suitable candidates for
new appointment to the Board,
would ensure that female
candidates are included for
consideration. Having said that,
gender is but one aspect of
diversity and new directors will
continue to be selected based on
objective criteria set as part of the
process for appointment of new
directors and Board succession
planning. In FY2015, there were
2 female directors out of a total
of 10 directors, representing 20%
of the entire Board.
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,
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 92
Corporate
Governance
Sustaining Growth
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 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 the Board to make good
decisions. He also encourages
constructive relations between
the Board and management, and
between the executive directors
and non-executive directors.
At annual general meetings and
other shareholders’ 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.
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, five out of six
of whom (including the Chairman)
are independent; namely:
• Mr Tan Puay Chiang
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
• Mr Till Vestring
Independent Member
The responsibilities of the NC are
set out on page 107 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 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
Keppel Corporation LimitedReport to Shareholders 2015
Sustaining Growth – Corporate Governance
93
advertisement) may be used to
source for potential candidates
if need be. Directors and
management may also
make recommendations.
(d) NC meets with the short-listed
candidate(s) to assess
suitability and to ensure that
the candidate(s) is/are aware
of the expectations and the
level of commitment required.
(e) NC makes recommendations
to the Board for approval.
The Board believes that orderly
succession and renewal is
achieved as a result of careful
planning, where the appropriate
composition of the Board is
continually under review.
Criteria for Appointment
of New Directors
All new appointments are subject
to the recommendation of the
NC based on the following
objective criteria:
(1) Integrity
(2) Independent mindedness
(3) Diversity – Possess core
competencies that meet the
needs of the Company and
complement the skills and
competencies of the existing
directors on the Board
(4) Able to commit time and effort
to carry out duties and
responsibilities effectively –
proposed director does not
have more than six listed
company board
representations and/or other
principal commitments
(5) Track record of making
good decisions
(6) Experience in high-performing
companies
(7) Financially literate
Adopting the above appointment
process and criteria, the Board
will be recommending at the
upcoming annual general meeting
the re-election of a new director,
Ms Veronica Eng.
Ms Eng was a Founding Partner of
Permira, an international private
equity firm and an adviser to
funds with committed capital of
€25 billion investing across five
sectors, namely Consumer,
Financial Services, Healthcare,
Industrials and Technology. Over
her 30-year career with Permira,
Ms Eng held a number of key
positions in the firm and had
extensive experience in a wide
range of roles in relation to its
funds’ investments across sectors
and geographies. She served on
the Board of Permira and its
Executive Committee, chaired the
Investment Committee and was
the Fund Minder to various
Permira funds. In addition, she
had oversight of Permira’s
firm-wide risk management as
well as its operations in Asia.
Ms Eng sits on the Board of the
Centre for Asset Management
Research and Investments at
NUS Business School, and the
Advisory Board of Asia Private
Equity Institute at Singapore
Management University. She is
also a Professor (Practice) at the
NUS Business School.
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 constitution,
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 Board
Committees Composition
The NC reviews the composition of
the board committees on an
annual basis to ensure that they
comprise members with the
necessary qualifications and
skills to discharge their
responsibilities effectively.
Annual Review of Directors’
Independence
The NC is also charged with
determining the “independence”
status of the directors annually.
Please refer to pages 90 and 91
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
FY2015, 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 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
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 94
Corporate
Governance
Sustaining Growth
assessment for FY2015, all the
directors performed well. The NC
was therefore satisfied that in
FY2015, where a director had
other listed company board
representations and/or other
principal commitments, the
director was able and had been
adequately carrying out his duties
as director of the Company.
Nominee Director Policy
At the recommendation of
the NC, the Board approved the
adoption of the KCL Nominee
Director Policy in January 2009.
For the purposes of the policy,
a “Nominee Director” is a person
who, at the request of KCL, acts
as director (whether executive
or non-executive) on the board
of another company or entity
(“Investee Company”) to oversee
and monitor the activities of the
relevant Investee Company so
as to safeguard KCL’s investment
in the company.
The purpose of the policy is to
highlight certain obligations of a
person while acting in his capacity
as a Nominee Director. The policy
also sets out the internal
process for the appointment and
resignation of a Nominee Director.
The policy would be reviewed and
amended as required to take into
account current best practices
and changes in the law and stock
exchange requirements.
Key Information
Regarding Directors
The following key information
regarding directors is set out in
the following pages of this
Annual Report:
whether considered by the NC
to be independent; and
Pages 131 to 132: 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.
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.
Pages 27 to 31: 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,
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
Keppel Corporation LimitedReport to Shareholders 2015
Sustaining Growth – Corporate Governance
95
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
constitution 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, four
out of five of whom (including
the Chairman) are independent;
namely:
• Mr Danny Teoh
Independent Chairman
• Dr Lee Boon Yang
Independent Member
• Mrs Oon Kum Loon
Independent Member
• Mr Till Vestring
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
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 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 FY2015, 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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
96
Corporate
Governance
Sustaining Growth
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
remains unchanged since FY2013,
is set out in Table 2.
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 three
key components; that is, annual
fixed cash, annual performance
incentive, and the KCL Share Plans.
The annual fixed cash component
comprises the annual basic salary
plus any other fixed allowances
which the Company benchmarks
with the relevant industry market
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
Keppel Corporation LimitedReport to Shareholders 2015
Sustaining Growth – Corporate Governance
97
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 ways:
(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) Financial;
(ii) Process;
(iii) Stakeholders; and
(iv) People.
Some of the key sub-targets
within each of the scorecard
areas include key financial
indicators, safety KPI,
enhancing risk management
and controls measure,
corporate social
responsibilities activities,
employee engagement level,
talent development and
succession plan;
b. The four scorecard areas
have been chosen because
they support how the Group
achieves its strategic
objectives. The framework
provides a link for staff in
understanding how they
contribute to each area of
the scorecard, and therefore
to the Company’s overall
strategic goals. This is
designed to achieve a
consistent approach and
understanding across
the Group;
(c) by selecting performance
conditions such as ROE,
Total Shareholder Return
and EVA for equity awards
that are aligned with
shareholder interests;
(d) by requiring those KPIs or
conditions to be met in order
for the At Risk components of
remuneration to be awarded
or to vest; and
(e) by forfeiting the At Risk
components of remuneration
when those KPIs or
conditions are not met at
a satisfactory level.
The RC also recognised the need
for a reasonable alignment
between risk and remuneration to
discourage excessive risk taking.
Therefore, in determining the
compensation structure, the RC
had taken into account the risk
policies and risk tolerance of the
Group as well as the time horizon
of risks, and incorporated
risk-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.
The RC is of the view that the
overall level of remuneration is not
considered to be at a level which
is likely to promote behaviours
contrary to the Group’s risk profile.
In determining the actual quantum
of variable component of
remuneration, the RC had taken
into account the extent to which
the performance conditions, set
forth on page 97, have been met.
The RC is therefore of the view
that remuneration is aligned to
performance during FY2015.
In order to align the interests
of executive director and key
management personnel with that
of shareholders, the executive
director and key management
personnel are remunerated partially
in the form of shares in the Company
and are encouraged to hold such
shares while they remain in the
employment of the Company.
The directors, the CEO and the key
management personnel (who are
not directors or the CEO) are
remunerated on an earned basis
and there are no termination,
retirement and post-employment
benefits that are granted over and
above what has been disclosed.
Long-term Incentive Plans
EVA Incentive Plan
Each year, the current year’s
EVA bonus earned is added to the
accrued EVA bank balance of the
preceding year and thereafter
one-third (
) is paid out provided
the total EVA balance is positive.
The remaining two-third (
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
) of
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
98
Corporate
Governance
Sustaining Growth
designated on a personal basis
and represents the executive’s
contribution to the EVA
performance of the Company.
Monies credited into the EVA bank
are at risk in that the amount in
the bank can decrease should
EVA performance turn negative
in the future years.
KCL Share Plans
The KCL Share Plans are put in
place to increase the Group’s
flexibility and effectiveness in its
continuing efforts to reward,
retain and motivate employees to
achieve superior performance and
to motivate them to continue to
strive for the Group’s long-term
shareholder value. The KCL Share
Plans also aim to strengthen the
Group’s competitiveness in
attracting and retaining talented
key senior management and
employees. The KCL RSP applies to
a broader base of employees while
the KCL PSP applies to a selected
group of key management
personnel. Generally, it is envisaged
that the range of performance
targets to be set under the KCL RSP
and the KCL PSP will be different,
with the latter emphasising
stretched or strategic targets aimed
at sustaining longer-term growth.
The RC has the discretion not
to award variable incentives in
any year if an executive is directly
involved in a material restatement
of financial statements or of
misconduct resulting in
restatement of financial
statements or of misconduct
resulting in financial loss to the
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 2015
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 Earned1
(including EVA and
non-EVA Bonuses)
($)
Directors’ Total Fees2
($)
Benefits-
in-Kind
($)
Contingent
awards of shares3
($)
Total
Remuneration
($)
Paid
Deferred
& at risk
Cash
component4
Shares
component4
PSP
RSP
Remuneration & Name of Director
Loh Chin Hua5
Lee Boon Yang
Tony Chew Leong-Chee7
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Tan Puay Chiang8
Till Vestring9
Veronica Eng10
1,190,600
1,497,367
1,757,533
–
–
n.m.6
1,038,400
1,243,500
6,727,400
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
525,000
225,000
51,709
167,650
142,100
121,800
148,400
177,100
140,579
88,768
56,911
22,161
71,850
60,900
52,200
63,600
75,900
60,248
38,044
24,390
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
750,000
73,870
239,500
203,000
174,000
212,000
253,000
200,827
126,812
81,301
Notes:
1 The RC is satisfied that the quantum of performance-related bonuses earned by the executive director was fair and appropriate taking into account the extent to which his
KPIs for FY2015 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 2015 (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 $4.72
and $8.29 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 96 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 depend entirely on the actual performance of the funds
after they have been liquidated.
6 n.m. - not material
7 Mr Tony Chew Leong-Chee retired from the Board with effect from 1 May 2015. Concurrently, Mr Chew ceased to be Chairman of the Nominating Committee and member of
the Audit Committee. Fees are pro-rated accordingly.
8 Mr Tan Puay Chiang was appointed as member of Nominating Committee with effect from 17 April 2015. Subsequently, Mr Tan was appointed as Chairman of the
Nominating Committee on 1 May 2015. Fees are pro-rated accordingly.
9 Mr Till Vestring was appointed as a non-executive and independent director with effect from 16 February 2015. Subsequently, Mr Vestring was appointed as a member
of the Remuneration Committee and Nominating Committee on 1 May 2015. Fees are pro-rated accordingly.
10 Ms Veronica Eng was appointed as a non-executive and independent director with effect from 1 July 2015. Fees are pro-rated accordingly. Subsequently, Ms Eng was
appointed as a member of the Audit Committee and Board Risk Committee on 23 July 2015. Fees are pro-rated accordingly.
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
99
PSP and RSP Shares granted and vested for the executive director are shown below:
Name of
Executive Director
Loh Chin Hua
PSP
Awards
Vesting
Date
Contingent
Awards
of PSP
Shares
Number of
PSP Shares
Vested
Value of
PSP Shares
Vested
($)11
RSP
Awards
Vesting
Date
Contingent
Awards
of RSP
Shares
Number of
RSP Shares
Vested
Value of
RSP Shares
Vested
($)11
2012
Awards
27 Feb
2015
0 to
47,400
415,224
116,50012
2013
Awards
26 Feb
2016
0 to
139,80012
2014
Awards
28 Feb
2017
0 to
270,000
2015
Awards
28 Feb
2018
0 to
330,000
–
–
–
–
–
–
2012
Awards
2013
Awards
2014
Awards
2015
Awards
28 Feb 2013
28 Feb 2014
27 Feb 2015
28 Feb 2014
27 Feb 2015
26 Feb 2016
27 Feb 2015
26 Feb 2016
28 Feb 2017
26 Feb 2016
28 Feb 2017
28 Feb 2018
76,76212
87,99512
150,000
150,000
25,000
25,881
25,881
29,331
29,331
–
50,000
–
–
–
–
–
287,500
270,456
226,718
306,509
256,940
–
438,000
–
–
–
–
–
Notes:
11 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 executive director was fair and appropriate taking into account the extent to
which his KPIs and the performance conditions for FY2015 were met.
12 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.
The total remuneration paid to the key management personnel (who are not directors or the CEO) in FY2015 was $14,859,387. The level
and mix of each of the key management personnel (who are not also directors or the CEO) in bands of $250,000 are set out below:
Remuneration Band & Name of Key Management Personnel
Above $4,750,000 to $5,000,000
Chow Yew Yuen
Above $3,000,000 to $3,250,000
Ang Wee Gee
Chan Hon Chew
Above $2,750,000 to $3,000,000
Ong Tiong Guan
Above $1,250,000 to $1,500,000
Pang Thieng Hwi, Thomas
Base/ Fixed
Salary
Performance-Related
Bonuses Earned13
(including EVA and
non-EVA Bonuses)
Paid
Deferred
& at risk
Benefits-
in-Kind
Contingent awards of shares
PSP
RSP
19%
23%
26%
n.m.
16%
16%
27%
22%
26%
32%
23%
16%
n.m.
n.m.
10%14
14%14
12%
18%
20%
23%
26%
n.m.
11%
20%
29%
25%
22%
n.m.
14%
10%15
Notes:
13 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 FY2015 were met.
14 With the delisting of Keppel Land Ltd (“KLL”) from SGX-ST with effect from 9.00am (Singapore time) on 16 July 2015, KLL officers will participate in KCL share based
compensation scheme from 2015 onwards. As at 30 July 2015 (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 $3.04 and $7.14 respectively.
15 On Keppel Telecommunications & Transportation Ltd (“KTT”) share based compensation scheme. As at 10 April 2015 (being the grant date), the estimated fair value of each
share granted in respect of the contingent awards under the KTT PSP and KTT RSP were $1.71 and $1.81 respectively.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Sustaining Growth
100
Corporate
Governance
Company. Outstanding EVA bank,
KCL RSP and KCL PSP are
also subject to RC’s discretion
before further payment or
vesting can occur.
Details of the KCL Share Plans
are set out in pages 133 to
135 and 159 to 160 of this
Annual Report.
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 2015. “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 133 to 135 and 159
to 160 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).
interests of the Company.
Financial reports and other price
sensitive information are
disseminated to shareholders
through announcements via
SGXNET, press releases, the
Company’s website, public
webcast as well as media and
analyst briefings.
The Company’s Annual Report is
accessible on the Company’s
website. The Company also sends
its Annual Report to all its
shareholders in CD-ROM format.
In line with the Company’s
drive towards sustainable
development, the Company
encourages shareholders to read
the Annual Report from the
CD-ROM or on the Company’s
website. Shareholders may
however request for a physical
copy at no cost.
Management provides all
members of the Board with
management accounts which
present a balanced and
understandable assessment of
the Company’s and Group’s
performance, position and
prospects on a monthly basis
and as the Board may require
from time to time. Such reports
keep the board members
informed of the Company’s and
Group’s performance, position
and prospects.
Audit Committee
The Audit Committee (AC)
comprises the following
non-executive directors, all of
whom are independent:
• Mr Danny Teoh
Independent Chairman
• Mrs Oon Kum Loon
Independent Member
• Mr Alvin Yeo
Independent Member
• Ms Veronica Eng
Independent Member
The Board has embraced
openness and transparency in the
conduct of the Company’s affairs,
whilst preserving the commercial
Mr Danny Teoh, Mrs Oon Kum
Loon and Ms Veronica Eng
have recent and relevant
accounting and related financial
management expertise and
in-depth experience. 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,
Mrs Oon Kum Loon and
Ms Veronica Eng are 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 106 herein.
The AC has explicit authority
to investigate any matter within its
responsibilities, full access to and
co-operation by management and
full discretion to invite any director
or executive officer to attend its
meetings, and reasonable resources
(including access to external
consultants) to enable it to
discharge its functions properly.
The Company has an internal audit
team which, 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 five times during
the year, and at least one of these
meetings was conducted without
the presence of management.
During the year, the AC performed
independent reviews 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.
Keppel Corporation LimitedReport to Shareholders 2015
Sustaining Growth – Corporate Governance
101
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 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 25 of the
Notes to the Financial Statements
on page 182.
As part of ongoing good
corporate governance initiatives,
competitive proposals were
sought during the year
from various audit firms to
undertake the audit of the
Group for the financial year
ending 31 December 2016.
After due evaluation by the AC,
the Board accepted the AC’s
recommendation for a change of
external auditor for the financial
year ending 31 December 2016,
subject to approval by shareholders
at the forthcoming annual
general meeting.
The Company has complied with
Rules 712, and Rule 715 read with
716 of the SGX Listing Manual in
relation to its auditing firms.
The AC also reviewed the
adequacy of the internal audit
function and is satisfied that the
team is adequately resourced and
has appropriate standing within
the Company. The AC also
reviewed the training costs
and programmes attended by the
internal audit team to ensure
that their technical knowledge
and skill sets remain current
and relevant.
The AC has reviewed the Keppel
Whistle-Blower Protection Policy
(the “Policy”) which provides
for the mechanisms by which
employees and other persons
may, in confidence, raise concerns
about possible improprieties
in financial reporting or other
matters, and was satisfied that
arrangements are in place for
the independent investigation of
such matters and for appropriate
follow-up action. To facilitate the
management of incidences of
alleged fraud or other misconduct,
the AC is guided by a set of
guidelines to ensure proper
conduct of investigations and
appropriate closure actions
following completion of the
investigations, including
administrative, disciplinary,
civil and/or criminal actions,
and remediation of control
weaknesses that perpetrated
the fraud or misconduct so as
to prevent a recurrence.
In addition, the AC reviews the
Policy yearly to ensure that it
remains current. The details
of the Policy are set out on
pages 110 and 111 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, five out of six
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
• Ms Veronica Eng
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
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
102
Corporate
Governance
Sustaining Growth
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 sixth member is
Ms Veronica Eng, who was a
Founding Partner of Permira and
has extensive experience in a wide
range of roles in relation to its
funds’ investments across sectors
and geographies. She served on
the Board of Permira and its
Executive Committee, chaired the
Investment Committee and was
the Fund Minder to various
Permira funds. In addition,
she had oversight of Permira’s
firm-wide risk management as
well as its operations in Asia.
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 107 herein.
comprises three Lines of Defence
towards ensuring the adequacy
and effectiveness of the Group’s
system of internal controls and
risk management
The Company’s approach to risk
management is set out in the
“Risk Management” section on
pages 120 to 123 of this Annual
Report. The Group is guided by a
set of Risk Tolerance Guiding
Principles, as disclosed on
page 120.
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 conducts 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
Keppel’s System of Management
Controls Framework (the
“Framework”) outlining the
Group’s internal control and risk
management processes and
procedures. The Framework
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 regulatory
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
a self-assessment exercise on
an annual basis. This exercise
requires such business units
to assess the status of their
respective internal controls
and risk management via
self-assessment questionnaires.
Action plans would then be
drawn up to remedy identified
control gaps. Under the Group’s
Enterprise Risk Management
Framework, significant risk 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
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
103
4
Board
Oversight
3
2
1
Assurance
Management
& Assurance
Frameworks
Business
Governance/
Rules of
Governance
Systems
Keppel’s System of Management Controls (KSMC)
Policies
BOARD OF DIRECTORS
BUSINESS UNIT
REPRESENTATION
INTERNAL
AUDIT
EXTERNAL
AUDIT
SELF-ASSESSMENT
PROCESS
ENTERPRISE RISK
MANAGEMENT
FRAUD RISK
MANAGEMENT
IT GOVERNANCE
FRAMEWORK
Processes
CORE VALUES, CORPORATE & EMPLOYEE CONDUCT
POLICY
MANAGEMENT
COMPLIANCE
GOVERNANCE
OPERATIONAL
GOVERNANCE
FINANCIAL
GOVERNANCE
People
of the Group’s internal controls,
business units are required to
provide the Company with written
assurances as to the adequacy
and effectiveness of their system
of internal controls and risk
management. Such assurances
are also sought from the
Company’s internal and external
auditors based on their
independent assessments.
The Board, supported by the AC
and BRC, oversees the Group’s
system of internal controls and
risk management.
The Board has received
assurance from 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.
Based on the review of the
Group’s governing framework,
systems, policies and processes
in addressing the key risks
under the Group’s Enterprise
Risk Management 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, as at
31 December 2015, the Group’s
risk management system is
adequate and effective.
Based on the Group’s
framework of management
control, the internal control
policies and procedures
established and maintained
by the Group, and the regular
audits, monitoring and reviews
performed by the internal and
external auditors, the Board,
with the concurrence of the AC,
is of the opinion that, as at
31 December 2015, 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,
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 104
Corporate
Governance
Sustaining Growth
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.
the IIA. These standards consist
of attribute and performance
standards. External quality
assessment reviews are carried
out at least once every five years
by qualified professionals, with
the last assessment conducted in
2011, and the results re-affirmed
that the internal audit activity
conforms to the International
Standards. Group Internal Audit
staff 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.
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
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”,
the Company’s Group Corporate
Communications Department
(with assistance from the Group
Finance and Group Legal
Departments, when required)
regularly communicates with
shareholders and receives and
attends to their queries
and concerns.
The Company treats all its
shareholders fairly and equitably
and keeps all its shareholders and
other stakeholders informed of its
corporate activities, including
changes in the Company or its
business which would be likely to
materially affect the price or value
of its shares, on a timely basis.
The Company has in place an
Investor Relations Policy which
sets out the principles and
practices that the Company
applies in order to provide
shareholders and prospective
investors with information
necessary to make well-informed
investment decisions and to
ensure a level playing field.
The Investor Relations Policy is
published on the Company’s
website at www.kepcorp.com.
The Company employs various
platforms to effectively engage
the shareholders and the
investment community, with
an emphasis on timely, accurate,
fair and transparent disclosure
of information. Engagement
with shareholders and other
stakeholders takes many
forms, including “live” webcasts
of quarterly results and
presentations, e-mail
communications, publications
and content on the Company’s
website as well as through facility
visits, where stakeholders may
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
105
raise any queries or concerns that
they may have. The Company’s
mobile-friendly website is also
continually updated with the
latest information concerning
the Company, such as the latest
updates on business and
operations, quarterly financial
statements, materials provided
at analysts and media briefings,
Group corporate structure, annual
reports, and notices of general
meetings. Contact details of
the investor relations department
are also set out on the website
to facilitate any queries from
investors. During the year,
the Company improved the
reader-friendliness of its annual
report with the launch of an
interactive microsite.
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
FY2015, the Company hosted
some 230 meetings and
conference calls with institutional
investors, including several site
visits to its shipyards and logistics
facilities in Singapore, as well as
to its residential and commercial
properties in Vietnam.
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.
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 is not selectively
disclosed, and on the rare
occasion when such information
is inadvertently disclosed, it
is immediately released to the
public via SGXNET and the press.
The Company ensures that
shareholders have the opportunity
01
01 Keppel actively
engages with
shareholders and the
financial community
through various
platforms, such as
meetings and site visits.
to participate effectively and vote
at shareholders’ meeting. In this
regard, the shareholders’ meeting
are generally held in central
locations which are easily
accessible by public
transportation. 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.
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.
Any payment of interim dividend
or, upon receipt of shareholders’
approval at annual general
meetings, final dividend, will be
paid to all shareholder in an
equitable and timely manner.
At shareholders’ meetings,
each distinct issue is proposed
as a separate resolution. Such
resolutions include matters of
significance to shareholders such
as, where applicable, proposed
amendments to the Company’s
constitution, the authorisation
to issue additional shares, the
transfer of significant assets,
re-election of directors, and the
remuneration of non-executive
directors. The rationale for the
resolutions to be proposed at
the meeting is set out in the
notices to the meeting or its
accompanying appendices.
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. A scrutineer
is also appointed to count and
validate the votes cast at the
meetings. 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. Each share is entitled
to one vote.
The Chairmen of the Board
and each board committee are
required to be present to address
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
106
Corporate
Governance
Sustaining Growth
questions at 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.
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 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.
Directors and CEO are also
required to report their dealings
in the Company’s securities
within two business days.
Appendix
Board Committees –
Responsibilities
A. Audit Committee
1.1 Review financial statements
and formal announcements
relating to financial
performance, and review
significant financial reporting
issues and judgments
contained in them, for better
assurance of the integrity
of such statements and
announcements.
1.2 Review and report to the
Board at least annually the
adequacy and effectiveness
of the Group’s internal
controls, including financial,
operational, compliance
and information technology
controls (such review can
be carried out internally or
with the assistance of any
competent third parties).
1.3 Review audit plans and
reports of the external
auditors and internal
auditors, and consider
the effectiveness of
actions or policies taken
by management on the
recommendations
and observations.
1.4 Review the independence
and objectivity of the
external auditors.
1.5 Review the nature and
extent of non-audit services
performed by the auditors.
1.6 Meet with external auditors
and internal auditors, without
the presence of management,
at least annually.
1.7 Make recommendations
to the Board on the proposals
to the shareholders on the
appointment, re-appointment
and removal of the external
auditors, and approve the
remuneration and terms
of engagement of the
external auditors.
1.8 Review the adequacy
and effectiveness of the
Company’s internal audit
function, at least annually.
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.
1.12 Review interested person
transactions.
1.13 Investigate any matters
within the Committee’s
purview, whenever it
deems necessary.
1.14 Report to the Board on
material matters, findings
and recommendations.
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.
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
107
1.17 Sub-delegate any of its
1.9 Sub-delegate any of its
1.7 Review the succession plans
powers within its terms of
reference as listed above
from time to time as the
Committee may deem fit.
powers within its terms of
reference as listed above
from time to time as the
Committee may deem fit.
for the Board (in particular,
the Chairman) and senior
management (in particular,
the CEO).
B. Board Risk Committee
1.1 Receive, as and when
appropriate, reports and
recommendations from
management on risk
tolerance and strategy,
and recommend to the
Board for its determination
the nature and extent of
significant risks which
the Group overall may
take in achieving its
strategic objectives
and the overall Group’s
levels of risk tolerance
and risk policies.
1.2 Review and discuss, as and
when appropriate, with
management, the Group’s
risk governance structure
and its risk policies, risk
mitigation and monitoring
processes and procedures.
1.3 Receive and review at least
quarterly reports from
management on major risk
exposures and the steps
taken to monitor, control
and mitigate such risks.
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 on critical risk issues.
1.7 Review the Committee’s
terms of reference annually
and recommend any
proposed changes to
the Board.
1.8 Perform such other functions
as the Board may determine.
C. Nominating Committee
1.1 Recommend to the Board the
appointment/re-appointment
of directors.
1.2 Annual review of balance and
diversity of skills, experience,
gender and knowledge
required by the Board,
and the size of the Board
which would facilitate
decision-making.
1.3 Annual review of
independence of each
director, and to ensure that
the Board comprises at least
one-third independent
directors. In this connection,
the Nominating Committee
should conduct particularly
rigorous review of the
independence of any
director who has served
on the Board beyond nine
years from the date of his
first appointment.
1.4 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.
1.8 Review talent development
plans.
1.9 Review the training and
professional development
programmes for Board
members.
1.10 Review and, if deemed fit,
approve recommendations
for nomination of candidates
as nominee director (whether
as chairman or member)
to the board of directors
of investee companies
which are:
(i)
listed on the Singapore
Exchange or any other
stock exchange;
(ii) managers or trustee-
managers of any
collective investment
schemes, business
trusts, or any other
trusts which are listed
on the Singapore
Exchange or any other
stock exchange; and
(iii) parent companies of the
Company’s core
businesses which are
unlisted (that is, as at
the date hereof, Keppel
Offshore & Marine Ltd,
Keppel Land Limited
and Keppel
Infrastructure Holdings
Pte. Ltd.).
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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 108
Corporate
Governance
Sustaining Growth
1.14 Sub-delegate any of its powers within
its terms of reference as listed above,
from time to time as the Committee
may deem fit.
D. Remuneration Committee
1.1 Review and recommend to the Board a
framework of remuneration for Board
members and key management
personnel, and the specific remuneration
packages for each director as well as for
the key management personnel.
1.2 Review the Company’s obligations arising
in the event of termination of the executive
directors’ and key management
personnel’s contracts of service, to
ensure that such clauses are fair and
reasonable, and not overly generous.
1.3 Consider whether directors should be
eligible for benefits under long-term
incentive schemes (including weighing
the use of share schemes against
the other types of long-term incentive
schemes).
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.
Nature of Current Directors’ Appointments and Membership on Board Committees
Director
Lee Boon Yang
Loh Chin Hua
Oon Kum Loon
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Tan Puay Chiang
Till Vestring
Veronica Eng
Board Membership
Chairman
Chief Executive Officer
Independent
Non-Independent &
Non-Executive
Independent
Independent
Independent
Independent
Independent
Independent
Audit
Nominating
Remuneration
Committee Membership
Member
Member
Risk
–
–
Safety
Member
Member
–
–
Member
–
Member
–
Chairman
–
–
Member
Member
Member
Member
Chairman
Member
Member
–
–
–
–
Member
Member
Member
–
–
–
–
Chairman
–
Member
–
–
–
Chairman
–
–
Chairman
–
Member
Member
Member
–
–
Member
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
109
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.
1.6 Follow up on key actions
initiated 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
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.
1.14 Perform such other
functions as the Board
may determine.
01
01 Safety is a core value.
It is conscientiously
ingrained in Keppel’s
organisational culture
and reaffirmed by all
stakeholders at the
annual Keppel Safety
Convention.
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.
Individual Directors
The Board differentiates the
assessment of an executive
director from that of a non-
executive director (“NED”).
Board Assessment
Evaluation Processes
Board
Each board member is required
to complete a Board Evaluation
Questionnaire and send the
Questionnaire directly 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.
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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information Sustaining Growth
110
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
at a meeting of the NEDs.
The NC Chairman will thereafter
meet with the NEDs individually
to provide the necessary
feedback on their respective
board performance with a
view to improving their
board performance and
shareholder value.
Chairman
The Chairman Evaluation Form
is completed by each director
(both non-executive and
executive) and sent directly to
the IC within five working days.
Based on the returns, the IC
prepares a consolidated report
and briefs the NC Chairman
and Board Chairman on the
report. Thereafter, the IC
presents the report 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 and 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 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)
(e) other serious improper
illegal;
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
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
111
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.
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
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
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information Sustaining Growth
112
Corporate
Governance
Code of Corporate Governance 2012
Guidelines for Disclosure
Guideline
General
Questions
How has the Company complied?
(a) Has the Company complied with
Yes
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?
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.
(c) What steps has the Board taken
to achieve the balance and
diversity necessary to maximise
its effectiveness?
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 4.6
(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 the board committees
comprise directors who as a group provide an appropriate
balance and diversity of skills, experience, gender, knowledge
of the Group, core competencies such as accounting or finance,
business or management experience, human resource, risk
management, technology, mergers and acquisitions, legal,
international perspective, industry knowledge, strategic
planning experience and customer-based experience
or knowledge, required for the Board and the board
committees to be effective.
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.
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 are aware of the expectations
and the level of commitment required.
(d) NC made recommendations to the Board for approval.
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
113
Guideline
Questions
How has the Company complied?
For incumbent directors
Pursuant to the Company’s constitution, 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.
Site visits are also conducted periodically for directors to
familiarise them with the operations of the various businesses so
as to enhance their performance as board or board
committee members.
Directors should not have more than six 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.
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?
(b) If a maximum number has not been
determined, what are the reasons?
N.A.
(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?
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 109 of the Corporate
Governance Report.
(b) Has the Board met its
performance objectives?
Yes
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 114
Corporate
Governance
Sustaining Growth
Guideline
Questions
How has the Company complied?
Independence of Directors
Guideline 2.1
Guideline 2.3
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.
(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.
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.
Yes
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 has performed consulting services to the Group.
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 exercised 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 Tan Ek Kia had declared to the NC that he was not involved in
the negotiation of contracts or business dealings between the
Keppel Offshore & Marine Group and TransOcean Ltd. 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 exercised 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 did not have
a 10% or more stake in Bain & Company, (b) he would not be
involved in any future services that Bain & Company provides
to the Group; 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 also took into account
Mr Vestring’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 Vestring has at all times exercised 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.
Yes. Mrs Oon Kum Loon is an independent director who
has served on the Board for more than nine years from
date of first appointment.
The NC considered that Mrs Oon has demonstrated independent
judgment at Board, and board committee meetings, and was
of the firm view that she has exercised independent judgment
in the best interests of the Company in the discharge of her
director’s duties.
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
115
Guideline
Questions
How has the Company complied?
Disclosure on Remuneration
Guideline 9.2
Guideline 9.3
Guideline 9.4
Yes
Yes
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
Aggregate remuneration paid: S$14,859,387
remuneration paid to the top five key
management personnel (who are not
directors or the CEO).
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
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?
The total remuneration mix comprises three key components; that
is, annual fixed cash, annual performance incentive, and the
KCL Share Plans. The annual fixed cash component comprises
the annual basic salary plus any other fixed allowances which the
Company benchmarks with the relevant industry market median.
The annual performance incentive is tied to the Company’s,
business unit’s and individual employee’s performance, inclusive of
a portion which is tied to EVA performance. The KCL Share Plans are
in the form of two share plans approved by shareholders, the KCL
Restricted Share 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) Financial; (ii) Process; (iii) Stakeholders; 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.
The RC is satisfied that the quantum of performance-related
bonuses and the value of shares vested under the KCL PSP and KCL
RSP to the executive director and key management personnel was
fair and appropriate after taking into account the extent to which
their KPIs and performance conditions for FY2015 were met.
Please refer to pages 96 to 100 of the Corporate Governance Report
for more details.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 116
Corporate
Governance
Sustaining Growth
Guideline
Questions
How has the Company complied?
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?
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.
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.
On an annual basis, the Board reviews the Group’s key risks
and assesses the adequacy and effectiveness of the risk
management system.
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.
The 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
Enterprise Risk Management 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 LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
117
Guideline
Questions
How has the Company complied?
Guideline 12.6
(b) 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.
Yes. The Board has received assurance from the CEO and CFO on
points (i) and (ii). The Board received assurance from the internal
auditor on the adequacy and effectiveness of the Company’s
internal control systems.
The Group’s estimated audit fees payable to the external auditors
of the Company and other auditors of subsidiaries for FY2015 is
S$5,900,000. The Group’s non audit services fees paid to external
auditor of the Company and other auditors of subsidiaries
amounted to S$647,000.
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.
Communication with Shareholders
Guideline 15.4
(a) Does the Company regularly
Yes.
communicate with shareholders
and attend to their questions? How
often does the Company meet with
institutional and retail investors?
In FY2015, the Company hosted some 230 meetings and conference
calls with institutional investors, including several site visits to
its shipyards in Singapore, as well as to its properties in Vietnam.
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.
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.
(b) Is this done by a dedicated investor
relations team (or equivalent)? If not,
who performs this role?
This role is performed by Group Corporate Communications
Department (with assistance from the Group Finance and
Group Legal departments, where required)
(c) How does the Company keep
shareholders informed of corporate
developments, apart from SGXNET
announcements and the annual report?
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. The
Company’s mobile-friendly website is also continually updated
with the latest information concerning the Company, such as the
latest updates on business and operations, quarterly financial
statements, materials provided at analysts and media briefings,
Group corporate structure, annual reports, and notices of general
meetings. Contact details of the investor relations department
are also set out on the website to facilitate any queries from
investors. During the year, the Company improved the
reader-friendliness of its annual report with the launch of
an interactive microsite.
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.
Guideline 15.5
If the Company is not paying any dividends
for the financial year, please explain why.
N.A.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 118
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
Sustaining Growth
Page Reference in this Report
Page 89
Page 89
Page 90
Page 90
Pages 90 and 91
Page 91
N.A.
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
Pages 92 and 107
Guideline 4.4
The maximum number of listed company board representations which directors may hold should be disclosed
Page 93
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)
Pages 92 and 93
Pages 27 to 31
Pages 94 and 109
Pages 95 and 108
Page 95
Pages 96 to 100
Pages 98 and 99
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
Page 98
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Corporate Governance
119
Relevant Guideline or Principle
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
Page Reference in this Report
Page 99
Guideline 9.4
Details of the remuneration of employees who are immediate family members of a director or the CEO, and
whose remuneration exceeds S$50,000 during the year. This will be done on a named basis with clear indication
of the employee’s relationship with the relevant director or the CEO. Disclosure of remuneration should be in
incremental bands of S$50,000
Page 100
Guideline 9.5
Details and important terms of employee share schemes
Guideline 9.6
For greater transparency, companies should disclose more information on the link between remuneration
paid to the executive directors and key management personnel, and performance. The annual remuneration
report should set out a description of performance conditions to which entitlement to short-term and
long-term incentive schemes are subject, an explanation on why such performance conditions were chosen,
and a statement of whether such performance conditions are met
Pages 133 to 135 and
159 to 160
Pages 97 and 98
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
Page 103
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
Pages 100 and 106
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
Page 101
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.
Pages 110 and 111
Pages 100 and 101
Pages 104 to 106
N.A.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 120
Risk
Management
As a Group, we take
a balanced approach
to risk management,
recognising that
not all risks can be
eliminated. To optimise
returns for the Group,
we will only undertake
appropriate and
well-considered risks.
01 Talks and workshops
are organised to keep
Keppel’s directors and
senior management
abreast of economic
trends, risks and
opportunities for
the Group.
Sustaining Growth
01
Staying competitive in a complex and
dynamic environment requires a continuous,
disciplined pursuit of new opportunities and
revenue streams. Supported by a robust risk
management system, the Group’s unique
combination of strengths 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. Assisted by the Board Risk
Committee (BRC), the Board provides valuable
advice to management in formulating the
risk management framework, policies and
guidelines. Our management surfaces key
risk issues for discussion with the BRC and
the Board regularly.
The terms of reference for the BRC are
disclosed on page 107 of this Report.
The Board has put in place three risk tolerance
guiding principles for the Group. These principles
serve to determine the nature and extent of the
significant risks, which our Board is willing to
take in achieving its strategic objectives.
These 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 does not condone safety
breaches or lapses, 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 101 to 104 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.
Risk management is an integral part
of decision-making across the Group.
Keppel’s holistic approach to
identifying and managing risks not
only instills ownership but reduces
uncertainties associated with executing
our strategies.
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, processes and tools,
as well as policies and limits, in addressing
the Group’s key risks.
Keppel Corporation LimitedReport to Shareholders 2015 Sustaining Growth – Risk Management
121
Our ERM framework is constantly
refined, ensuring relevance in a
dynamic operating environment.
References are made to the
Singapore Code of Corporate
Governance, ISO 31000, ISO 22313
and the 2014 Guidebook for Audit
Committees.
We keep abreast of the latest
developments and best practices
by participating in industry
seminars and interacting with
risk management practitioners.
An ERM Committee, comprising
risk champions across the business
units, drives and coordinates
Group-wide initiatives.
As a Group, we take a balanced
approach to risk management,
recognising that not all risks can
be eliminated. To optimise returns
for the Group, we will only
undertake appropriate and
well-considered risks.
The Group’s five-step risk
management process consists
of identification, assessment,
formulation of mitigation
measures, communication and
implementation, and monitoring
and review. The process takes into
account both the impact and
likelihood of the risks identified.
Strategic Risk
Market, Competition
and Technology
The strategic risks for Keppel
Group includes market,
competition and technology risks.
These include market driven
forces, evolving competitive
landscape, changing customer
demands and disruptive
innovation. These risks receive
constant high-level attention
through the year. Strategy
meetings are held to review
business strategies, formulate
strategic responses and take
pre-emptive mitigations.
The BRC guides the Group in
formulating and reviewing risk
policies and limits. These are
subject to periodic reviews to
ensure relevance in supporting
business objectives and
alignment to the Group’s risk
tolerance level. Policies aim
to address risks effectively
and proactively, taking into
consideration the prevailing
business climate.
Investment and Divestment
The Group has an established
process for evaluating investment
and divestment proposals.
The Investment and Major
Project Action Committee (IMPAC),
together with the Board, guides
the Group to take thoughtful risks
to earn the best risk-adjusted
returns, while exercising the
spirit of enterprise. Financial
discipline is exercised with capital
allocated to the right projects.
This systematic evaluation
process requires our investment
teams to identify the risks and
corresponding mitigating
actions in their proposals.
Investment risk assessment
involves rigorous due diligence,
feasibility studies and sensitivity
analyses of key assumptions
and variables. Some factors
considered in the assessment
include alignment to Group
strategy, financial viability,
country-specific political and
regulatory developments,
contractual risk implications
and lessons learned. The
investment portfolio is constantly
monitored to ensure that
performance is on track to
meet the strategic intent and
investment returns.
Human Resource
To drive the Group’s growth,
emphasis is placed on attracting
the best talent, nurturing
employees, maintaining good
industrial relations and fostering
a conducive work environment.
The Group continues to focus on
improving succession planning,
bench strength and maintaining
choice employer status.
Keppel recognises that it is vital
for staff to imbibe a risk-centric
mindset and have the ability to
assess and manage risks at work.
Keppel Leadership Institute,
established as a global centre
to groom leaders and equip them
with the capabilities to drive
and support Keppel’s growth,
helps to inculcate this mindset
through the embedment of
risk management in key
leadership courses.
The Keppel Group’s Five-Step Risk Management Process
Step 1
Step 2
Step 3
Step 4
Step 5
Identify
Understand
business strategy
and identify risks.
Assess
Assess risk level based
on impact and likelihood
of occurrence.
Mitigate
Develop action plans
to mitigate risks.
Implement
Communicate and
implement action plans.
Monitor
Monitor and review.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information Sustaining Growth
122
Risk
Management
Operational Risk
Project Management
Risk management processes
are integrated with project
management from the initiation
stage through to completion.
The Group adopts a systematic
assessment and monitoring
process to help manage the key
risks for each project. Particular
attention is given to technically
challenging and high-value
projects, including greenfield
developments, and those that
involve new technology or
operations in a new country.
Projects are managed in
accordance to the respective
country’s environmental laws
and labour practices.
At the execution stage, project
reviews and quality assurance
programmes are carried out to
address issues involving cost,
schedule and quality. Key Risk
Indicators are used as early
warning signals. Knowledge
sharing workshops are conducted
to share best practices across the
Group, building lessons learnt into
case studies for future reference.
All this helps to ensure that projects
are completed on time and within
budget, while meeting safety and
quality standards.
Health, Safety & Environment
The Group places great emphasis
in maintaining a high level of health,
safety and environmental (HSE)
standards. A CEO Roundtable
group reviews safety efforts and
considers ideas to improve safety.
There are ongoing efforts to raise
HSE awareness and culture at
the ground level, and align HSE
systems and standards via a
global HSE information and
management framework.
Particular attention is placed on
training in identified high risk
activities such as lifting and
movement of vehicles.
Business & Operational
Processes
Continuing efforts are placed
on streamlining business process
with a common shared services
platform that allows the Group
to achieve cost-savings,
improvement in efficiency and
productivity, and enhancement
in governance and control at
the same time.
ISO standards and certifications
were adopted to achieve
standardisation of processes
and best practices. Procedures
relating to defect management,
operations, project control and
supply chain management were
established to improve quality
of deliverables. A regular review
of policies and authority limits
is carried out to ensure that
they remain relevant in meeting
changing business requirements.
Laws & Regulations
The Group monitors closely
developments in laws and
regulations in the countries
that we operate in to ensure that
our businesses and operations
comply with all relevant laws
and regulations. We regularly
engage with government
authorities and agencies to keep
abreast of changes in regulations.
Particular emphasis is placed
on regulatory compliance in all
our operations.
Business Continuity
We are committed to enhancing
the Group’s operational resilience
through a robust Business
Continuity Management (BCM)
Plan. Keppel’s BCM Plan enables
us to respond effectively to
disruptions while continuing with
critical business functions.
Crisis management and
communication procedures
have been embedded into the
Group’s BCM processes to bolster
operational readiness. These
procedures are constantly
refined to allow us to respond in
an orderly and coordinated way,
as well as to expedite recovery.
Our focus is on building
capabilities to respond to crisis
effectively while safeguarding
our people, assets and the
interest of stakeholders.
Information Technology
The Group has in place an
Information Technology (IT)
security framework to address
evolving IT security threats, such
as hacking, malware, mobile
threats and data-loss.
The Group’s IT security, governance
and control have been strengthened
through the alignment of IT
policies, processes and systems,
and the consolidation of servers
and storages. Extensive training
was carried out on user security
education, and assessment
exercises were conducted to
heighten awareness of threats.
Measures and considerations have
also been taken to safeguard
against loss of information, data
security, and prolonged service
unavailability of critical IT systems.
Financial Risk
Misstatement of Financial
Statements, Fraud and
Corruption
Policies such as the Whistle-
Blower Protection Policy and
the Employee Code of Conduct
established a clear tone from the
top with regard to business and
ethics conduct. The Group adopts
a strong anti-corruption stance.
The internal control systems and
processes are monitored closely.
Keppel’s System of Management
Control Framework outlines the
Group’s internal control and risk
management processes and
procedures. For more details on
the framework, please refer to
page 103 of this Report.
Financial and Capital
Financial risk management relates
to the Group’s ability to meet
financial obligations and mitigate
credit, liquidity, currency and
interest rate risks. Policies and
financial authority limits are
reviewed regularly to incorporate
changes in the operating and
control environment.
The Group focuses on financial
discipline, deploying its capital
to earn the best risk-adjusted
Keppel Corporation LimitedReport to Shareholders 2015
Sustaining Growth – Risk Management
123
returns and maintaining a
strong balance sheet to seize
opportunities. This includes
the evaluation of counterparties
against pre-established
guidelines. For more details
on financial risk management,
please refer to pages 82 to 83
of this Report.
Impact assessment and stress
tests are performed to gauge
the Group’s exposure to changing
market situations. This allows
for informed decision-making
and prompt mitigating actions.
We regularly monitor the
concentration exposure in the
countries where we operate.
Risk-Centric Culture
Effective risk management
hinges not only on systems and
processes, but also on mindsets
and attitudes. The Group fosters
a risk-centric culture through
four key areas.
1. Leadership
Keppel’s top management is
committed to fostering a strong
risk-centric culture in the Group,
showing strong support for risk
management initiatives. Key
messages encouraging prudent
risk-taking in decision-making
and business processes are
interwoven into major meetings,
speeches and publications.
2. Risk Management Process
Management of risks is an
integral aspect of strategic and
budget review, as well as for
investment and project planning.
Risk considerations are taken at
all levels of the businesses, with
tools and risk management
methodology applied as part
of the process.
3. Training & Communication
ERM workshops are conducted
regularly to enhance risk
management competency
across the Group. Training and
communication are also carried
out through various forums and
in-house publications. This has
helped to reinforce discipline
and garner greater awareness
across the Group.
4. Performance Evaluation
Keppel seeks to raise the
accountability of its employees
for risk management through the
performance evaluation process.
A Group-wide survey is conducted
to assess the level of risk
awareness amongst employees.
Proactive Risk Management
We remain vigilant against
emerging threats that may
affect our different businesses.
Through close collaboration with
stakeholders, we will continue
to review our risk management
system to ensure that it remains
adequate and effective.
Leadership
Strong top
management
support on
Risk Management
initiatives
Risk messages
in key meetings,
speeches &
publications
Risk
Management
as a
component of
performance
appraisal
Clear
accountability
& ownership
Performance
Evaluation
Risk-Centric
Culture
Robust Risk
Management
framework &
guidelines
Consistent
use of Risk
Management
methodology
& tools
Risk
Management
Process
Transparency
in information
sharing
Competence
in Risk
Management
Training &
Communication
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information Sustaining Growth
01 Keppel
Telecommunications &
Transportation’s Almere
Data Centre 2, in the
Netherlands, incorporates
an environmentally-
conscious design.
02 Keppel continues
to fortify its core
competencies and invest
in people, technology
and R&D.
124
Environmental
Performance
Keppel is committed to operate in an environmentally-conscious
manner and comply with environmental rules and regulations.
Photovoltaic cell installations
are in operation at Ocean
Financial Centre, Ulu Pandan
NEWater Plant and Changi
Business Park DCS plant.
Meanwhile, Keppel T&T’s
distribution centre in the
Sino-Singapore Tianjin Eco-City
utilises a solar water heater
for its sanitary system.
Water Efficiency
Water consumption in Keppel
Merlimau Cogen Plant has
reduced significantly following
the implementation of an
Automatic Blowdown Control
system. The system measures
water chemistry and computes
the precise amount of water
that should be discarded to
maintain the quality of water
used by the steam turbines
to generate steam, which
in turn minimises water
losses, yields operating cost
savings and improves
operational efficiency.
Managing Emissions
Keppel aims to achieve a 16%
improvement in its greenhouse
gas (GHG) emissions from
2020 business-as-usual
(BAU) levels.
Working with Stakeholders
Keppel Land WATCO, the
Keppel Land-led joint venture
behind Saigon Centre in
Vietnam’s Ho Chi Minh City,
collaborated with Philips
Lighting Vietnam to retrofit
the lighting system of
Saigon Centre Phase 1.
This is an extension of a
2014 collaboration between
Keppel Land and Philips in
Singapore. With the lighting
replacements, office tenants
have benefitted from
improved lighting ambience
and visual comfort.
Green Technology
Keppel Telecommunications &
Transportation’s (Keppel T&T)
first greenfield data centre in
Europe, Almere Data Centre 2,
is a high quality facility with an
environmentally-conscious design.
Among its green features are a
chilled-water cooling system that
uses ambient air for cooling and
Dynamic Rotary Uninterruptible
Power Systems (DRUPs), which
are more efficient and produce
less chemical waste.
In Sydney, Keppel REIT’s 8 Chifley
Square is a 5-star energy-rated
property under the National
Australian Built Environment Rating
System. The commercial building
houses an onsite tri-generation
plant that generates electricity
using a gas engine, which is twice as
efficient as coal-fired power stations
and reduces carbon emissions.
The tri-generation technology is
recognised under Australia’s
Green Star Design as a carbon
and demand reduction initiative.
01
Efficiency Upgrades
Keppel Offshore & Marine
upgraded the conventional
lights at several yards to
LED lights and motion lighting,
and installed induction
lights as dock yard lights for
improved luminance and
energy savings.
In 2015, Keppel Infrastructure’s
district cooling division upgraded
two sets of chiller systems
and implemented a linear
programming-based real-time
smart control system at its
district cooling system (DCS)
plant at Changi Business Park.
It also upgraded the fan blades
at Woodlands Wafer Fab Park
DCS plant to highly efficient
aerofoil blades.
At the Ulu Pandan NEWater Plant,
the cooling load consumption
in the motor control centre room
was further reduced by redesigning
the partition to optimise cooling
of electrical equipment.
Keppel Corporation LimitedReport to Shareholders 2015 125
02
Sustaining Growth – Product Excellence
Product
Excellence
The Keppel brand is synonymous with world-class execution,
quality and innovation. Our Offshore & Marine, Property,
Infrastructure and Investments divisions provide holistic and
sustainable solutions to meet the needs of an urbanising world.
In 2015, Keppel O&M inked
an agreement to acquire the
LETOURNEAU™ rig designs
and aftermarket business to
broaden its suite of jackup rig
design solutions and better
support customers through
aftermarket sales and services.
Keppel O&M also expanded its
natural gas solutions suite for
both onshore and offshore
liquefaction and LNG
transportation.
Geographic Diversification
Seizing opportunities in
promising cities around the
world, Keppel Land invested
some $615 million to strengthen
its portfolio in West Jakarta,
London and Chengdu.
Keppel T&T embarked on its
fourth data centre development
in Singapore and opened its
first greenfield data centre in
Europe. In the logistics business,
Keppel T&T commenced operations
at its Tampines Logistics Hub in
Singapore and a distribution
centre in Vietnam. Elsewhere,
Keppel REIT completed its
acquisition of three prime retail
units at 8 Exhibition Street in
Melbourne, Australia, and
Keppel DC REIT acquired
Intellicentre 2 in Australia and
made a forward acquisition
of maincubes Data Centre
in Germany.
Customer Health & Safety
Keppel exercises due care and
diligence in the design, construction
and operation of its products and
services to ensure that they are fit
for use and do not pose health or
safety hazards. We monitor and
mitigate potential health and
safety impacts throughout the life
cycle of our products and services.
Compliance
Keppel subscribes to best practices
and complies with all applicable
legislations and requirements.
In 2015, 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.
Execution Excellence
In recognition of the
environmentally-friendly design
and construction of its buildings
and facilities, the Keppel Group
received eight accolades at
the Building & Construction
Authority of Singapore Awards
2015 ceremony.
Keppel Seghers, a subsidiary of
Keppel Infrastructure, provided
its proprietary Waste-to-Energy
(WTE) technology and services
to three WTE plants in Beijing
and Guilin in China, supporting
the cities’ goals for sustainable
waste management.
In 2015, Keppel Offshore & Marine
(Keppel O&M) handed over seven
quality jackup drilling rigs and
several non-drilling solutions to
its customers. These included a
Depletion Compression Platform
to Shell Philippines Exploration, an
accommodation semisubmersible
to Floatel International and
three Floating Production Storage
& Offloading vessels, among
other specialised vessels
and equipment.
Keppel Logistics, a subsidiary
of Keppel Telecommunications
& Transportation (Keppel T&T),
received the ASEAN Transport
and Logistics Awards for
being the Best Land Freight
Forwarder in Singapore, as
testament to its operational
and business excellence.
Driving Innovation
Despite the challenging
environment, we continue to
invest prudently in research
and development.
In recognition of our excellence
in innovation, Keppel Corporation
received Channel NewsAsia’s
Innovation Luminary Award.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 126
Labour Practices
& Human Rights
Our people are our most valuable resource. We adhere to fair employment
practices, respect and uphold human rights principles, and invest in
developing and training our workforce. In doing so, we attract and
retain the best talent and grow the capabilities of our people.
Empowering Lives
01 Keppel leverages
platforms, such as
Singapore’s National
Day events, to create
opportunities for
employees to build
camaraderie and forge
stronger bonds.
02 The well-being
and safety of all our
stakeholders are among
our top priorities.
01
Our Code of Conduct sets out the
rules by which the Group operates.
Fair Employment Practices
We adopt fair employment
practices and comply with
labour laws across our operations
worldwide. In Singapore, Keppel
subscribes to the principles spelt
out by The Tripartite Alliance for
Fair Employment Practices and
endorses the Tripartite Alliance’s
Employers’ Pledge of Fair
Employment Practices.
We aim to provide a work
environment that fosters
mutual respect, and prohibit
discrimination on any basis.
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 articulated in our Corporate
Statement on Human Rights, and
informed and guided by general
concepts from the United Nations
Guiding Principles on Business
and Human Rights.
We do not tolerate unethical labour
practices such as child labour,
forced labour, slavery and human
trafficking in any of our operations.
Keppel also supports the
elimination of exploitative labour.
Skills Development
We adopt a holistic approach
towards attracting and developing
talent, with the aim of maximising
our employees’ potential.
Keppel offers structured learning
programmes to enhance the skills
and capabilities of our workforce.
Our Training Centres equip workers
with technical and core skills
qualifications and support the
upgrading and certification of
skillsets. The Group also offers
internships to tertiary students
to expose them to the company
and related industries.
In 2015, we established
Keppel Leadership Institute,
headquartered in Singapore,
to groom global Keppel Leaders
who imbibe our core values and are
guided by our operating principles.
The Institute exemplifies the
Group’s commitment towards
developing leaders and equipping
them with capabilities to drive
our businesses into the future.
Employee Engagement
We engage our employees
through initiatives that enhance
communication and foster bonding
across the Group.
The inaugural Global Keppelites
Forum, a Group-wide townhall,
was held in January 2015. At the
platform, Mr Loh Chin Hua, CEO of
Keppel Corporation, shared the
Group’s vision and priorities with
some 3,000 employees across 70
locations, many of whom were tuned
in via an interactive online portal.
We believe that cohesive teams
make for a productive workforce,
and we continue to ignite team spirit
through various platforms, such as
the annual Keppel Games, a series
of sports competitions organised
by Keppelite Recreation Club.
Keppel Corporation LimitedReport to Shareholders 2015 127
Five Key Safety Principles
1. Every incident is
preventable.
2. HSE is an integral part
of our business.
3. HSE is a line responsibility.
4. Everyone is empowered
to stop any unsafe work.
5. A strong safety culture
is achieved through
teamwork.
Empowering Lives – Safety & Health
Safety &
Health
Safety is our core value. We are committed to create an
incident-free workplace for all our stakeholders.
Commitment from the Top
The Keppel Corporation Board Safety Committee
(BSC), supported by the Inter-Strategic Business
Unit Safety Committee, leads efforts to
implement initiatives and improve performance.
To further strengthen the coordination of safety
efforts across the Group, Keppel Corporation
appointed a dedicated General Manager of
Group Health, Safety and Environment (HSE)
in January 2015.
At the annual Keppel Leadership HSE
Roundtable and inaugural Global HSE Workshop,
senior management and safety personnel
discussed insights and ideas on improving
Keppel’s safety performance. The actions
and solutions generated during the sessions
were converted into a roadmap for the next
phase of our safety journey.
Safety Review
The BSC has reviewed and refreshed our
Group HSE Policy and five Key Safety Principles
which will serve as the basis of how safety is
managed across the Group.
Recognising Safe Behaviour
The Keppel Safety Convention 2015 saw
the launch of the Keppel Group Safety
Awards to recognise employees who
have gone the extra mile to foster a
safe and healthy work environment.
The Keppel Group Safety Photography
Competition was held for employees
to capture and share snapshots of
best practices, further promoting
safe behaviour.
Incident Reduction
While our Accident Frequency Rate
improved in 2015, our Accident Severity
Rate was up, as we suffered four fatalities
globally. We are saddened by the loss
of our colleagues and have thoroughly
investigated the causes, stepped up efforts
to prevent recurrences and shared the
lessons learnt across the Group. We have
put in place a Group HSE Alerts system to
better disseminate lessons learnt across
our global operations and ensure preventive
measures are taken promptly.
Based on analyses of past incidents, “vehicle
movement” was added as an area of focus
under our High Impact Risk Activity framework,
through which we aim to strengthen safety
practices when working with moving vehicles.
Safety Performance
The Keppel Group received 35 awards at
the Workplace Safety and Health (WSH)
Awards 2015, organised by Singapore’s
WSH Council and Ministry of Manpower.
02
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 128
Our
Community
Nurturing Communities
Nurturing Communities
We strive to positively impact the communities where we operate by
contributing time and resources. The Keppel Group commits up to 1%
of annual net profit to worthy social causes.
Keppel Care Foundation
The Group’s philanthropic arm,
Keppel Care Foundation,
supports initiatives to protect the
environment, promote education
and care for the underprivileged.
Community Development
In Vietnam, Keppel Land sponsors
Words on Wheels, a mobile library
programme that promotes child
literacy in the rural outskirts of
Ho Chi Minh City.
Keppel Volunteers
Our community initiatives are
bolstered by a robust culture of
volunteerism. Keppel Volunteers
organise regular activities for
beneficiaries in Singapore such
as Thye Hua Kwan Moral Society,
a non-profit group of charities,
and Association for Persons
with Special Needs. In 2015,
employees across the Group
achieved close to 5,000 hours
of community service.
We have also embarked on
skills-based volunteering. In
June 2015, a group of Keppel’s
finance professionals held
workshops at Care Corner, a
non-profit organisation, to equip
low-income families with
financial literacy skills.
To date, over 50 Keppelites have
made seven volunteer trips under
the programme, conducting
English lessons and other
learning activities.
In Brazil, BrasFELS engineers lead
Teach-It-Forward, a programme
to benefit public school youth in
Angra dos Reis. Besides
conducting Portuguese and
mathematics classes for students
in need of extra academic help,
the volunteers give talks at high
schools, sharing their academic
and professional journeys to
inspire the students.
Arts Advocate
Established with a $12 million
commitment from Keppel, the
Keppel Centre for Art Education
at the National Gallery Singapore
is the region’s first art education
facility specially designed to
expose young visitors to the arts.
Keppel is a Founding Patron of the
Gallery, Singapore’s newest visual
arts institution which opened in
November 2015.
We sponsor Keppel Nights, a
partnership with Esplanade –
Theatres On The Bay, to provide
students from heartland schools
with access to world class
performances. Since its re-launch
in November 2013, the programme
has benefitted over 9,000 students
from 44 schools.
Fostering Co-operation
To strengthen partnerships between
corporates and non-profits, Keppel
sponsored and hosted a Corporate
Giving Practitioner Networking
Session, organised by Singapore’s
National Volunteer and Philanthropy
Centre, National Council of Social
Service and Community Chest in
September 2015.
01
01 The Keppel Centre
for Art Education at
the National Gallery
Singapore is designed to
spark the imagination of
young visitors.
Keppel Corporation LimitedReport to Shareholders 2015 Directors’ Statement &
Financial Statements
129
Contents
130 Directors’ Statement
136 Independent Auditors’ Report
137 Balance Sheets
138 Consolidated Profit & Loss Account
139 Consolidated Statement of
Comprehensive Income
140 Statements of Changes in Equity
143 Consolidated Statement of Cash Flows
146 Notes to the Financial Statements
198 Significant Subsidiaries &
Associated Companies
209 Interested Person Transactions
210 Key Executives
219 Major Properties
225 Group Five-Year Performance
229 Group Value-Added Statements
230 Share Performance
231 Shareholding Statistics
232 Notice of Annual General Meeting
& Closure of Books
237 Corporate Information
238 Financial Calendar
239 Proxy Form
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
130
Directors’ Statement
For the financial year ended 31 December 2015
The Directors present their statement 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 2015.
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 137 to 208 are drawn up so as to give a true and fair view of the financial position of the Group
and of the Company as at 31 December 2015, and the financial performance, changes in equity and the 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.
1.
Directors
The Directors of the Company in office at the date of this statement are:
Lee Boon Yang (Chairman)
Loh Chin Hua (Chief Executive Officer)
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)
Veronica Eng (appointed on 1 July 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)
Oon Kum Loon (Mrs)
Alvin Yeo Khirn Hai
Veronica Eng (appointed on 1 July 2015)
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 nominates Messrs PricewaterhouseCoopers LLP for appointment as the external auditors of the Company in
place of the retiring auditors, Messrs Deloitte & Touche LLP, 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 Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Directors’ Statement
131
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)
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)
Till Bernhard Vestring
(Unvested restricted shares to be delivered after 2012)
Loh Chin Hua
(Unvested restricted shares to be delivered after 2013)
Loh Chin Hua
(Unvested restricted shares to be delivered after 2014)
Loh Chin Hua
(Contingent award of restricted shares to be delivered after 2015) 1
Loh Chin Hua
(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
(Contingent award of performance shares issued in 2015 to be
delivered after 2017) 2
Loh Chin Hua
(3.145% Fixed Rate Notes due 2022)
Tan Puay Chiang
Holdings At
1.1.2015
or date of
appointment,
if later
31.12.2015
21.1.2016
173,000
180,212
38,500
69,200
54,000
24,888
28,789
19,225
32,000
10,825
37,825
27,600
7,103
-
197,000
332,824
38,500
76,200
54,000
30,888
28,789
24,225
32,000
16,825
44,825
32,600
7,103
55,000
197,000
332,824
38,500
76,200
54,000
30,888
28,789
24,225
32,000
16,825
44,825
32,600
7,103
55,000
25,881
-
-
58,664
29,333
29,333
150,000
100,000
100,000
-
150,000
150,000
77,643
-
-
93,171
93,171
93,171
180,000
180,000
180,000
-
220,000
220,000
$250,000
$250,000
$250,000
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
132
Directors’ Statement
4.
Directors’ interests in shares and debentures (continued)
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
(3.51% Fixed Rate Notes due 2015)
Tan Puay Chiang
(3.90% Fixed Rate Notes due 2024)
Tan Puay Chiang
1.1.2015
or date of
appointment,
if later
150,400
14,000
95
10,000
11,400
100,000
$250,000
Holdings At
31.12.2015
21.1.2016
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$250,000
$250,000
$250,000
(Keppel Land Limited was delisted from the Official List of the Singapore Exchange Securities Trading Limited on 16 July 2015
following the completion of the voluntary unconditional cash offer (the “Offer”) and subsequent exercise under Section 215(3) of
the Companies Act (Chapter 50 of Singapore) for shares in Keppel Land Limited by Keppel Corporation Limited. As at the close
of the Offer, all outstanding share options granted under the Keppel Land Share Option Scheme were tendered in acceptance of
the options proposal made by Keppel Corporation Limited and subsequently cancelled. In connection with the delisting, it has
been determined by the Remuneration Committee of Keppel Land Limited that all outstanding awards under the Keppel Land
Restricted Share Plan and Keppel Land Performance Share Plan will, subject to the fulfilment of the vesting conditions, be settled
by cash payments as permitted under the rules of the aforementioned share plans.)
Keppel REIT
(Units)
Lee Boon Yang
Loh Chin Hua
Loh Chin Hua (deemed interest)
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
14,840
7,000
556,160
17,696
12,320
5,568
8,070
4,263
108,960
1,911
8,911
12,000
6,000
15,097
7,000
556,160
17,696
12,320
5,568
8,070
4,303
210,663
1,911
8,911
12,000
6,000
15,097
7,000
556,160
17,696
12,320
5,568
8,070
4,303
210,663
1,911
8,911
12,000
6,000
75,000
75,000
75,000
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.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Directors’ Statement
133
5.
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 1,528,130 Shares issued by
virtue of exercise of options and options to take up 220,900 Shares were cancelled during the financial year. At the end of the
financial year, there were 17,821,474 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
1.1.2015
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
Number of Share Options
Exercised
Cancelled
(11,000)
(19,800)
(2,200)
(132,700)
(43,000)
-
-
(17,600)
(404,800)
(240,300)
(656,730)
(1,528,130)
-
-
-
-
-
(209,000)
-
(11,900)
-
-
-
(220,900)
Balance at
31.12.2015
-
-
80,300
150,300
1,628,900
5,936,759
2,355,600
3,147,930
471,300
1,882,185
2,168,200
17,821,474
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.
6.
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 920,000 under KCL PSP and 5,652,889 under KCL RSP during the financial year. The
number of Shares released was 376,200 under KCL PSP and 4,585,541 under KCL RSP during the financial year. 323,400 Shares
under the KCL PSP and 4,267,443 Shares under KCL RSP were vested during the financial year. 118,413 Shares under the KCL RSP
were cancelled during the financial year. At the end of the financial year, there were 2,052,119 contingent Shares under the KCL
PSP and 5,521,483 contingent Shares and 4,193,125 unvested Shares under the KCL RSP as follows:
Contingent awards:
Date of grant
KCL PSP
29.6.2012
28.3.2013
31.3.2014
31.3.2015
30.7.2015
KCL RSP
31.3.2014
31.3.2015
30.7.2015
Balance at
1.1.2015
Contingent
awards
granted
Adjustments
upon
release
Released
Cancelled
Number of Shares
616,606
554,719
577,400
-
-
1,748,725
-
-
-
700,000
220,000
920,000
(240,406)
-
-
-
-
(240,406)
(376,200)
-
-
-
-
(376,200)
-
-
-
-
-
-
Balance at
31.12.2015
-
554,719
577,400
700,000
220,000
2,052,119
4,639,784
-
-
4,639,784
-
4,863,286
789,603
5,652,889
-
-
-
-
(4,585,541)
-
-
(4,585,541)
(54,243)
(131,406)
-
(185,649)
-
4,731,880
789,603
5,521,483
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
134
Directors’ Statement
6.
Share plans of the Company (continued)
Awards released but not vested:
Date of grant
KCL PSP
29.6.2012
KCL RSP
29.6.2012
28.3.2013
31.3.2014
Balance at
1.1.2015
Released
Vested
Cancelled
Other
adjustments
Balance at
31.12.2015
Number of Shares
-
-
376,200
376,200
(323,400)
(323,400)
-
-
(52,800)
(52,800)
-
-
1,275,274
2,718,166
-
3,993,440
-
-
4,585,541
4,585,541
(1,272,168)
(1,371,290)
(1,623,985)
(4,267,443)
(3,106)
(37,849)
(77,458)
(118,413)
-
-
-
-
-
1,309,027
2,884,098
4,193,125
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
KCL PSP
Loh Chin Hua
Aggregate
awards
granted since
commencement
of plans
to the end of
financial year
Aggregate other
adjustment
since
commencement
of plans
to the end of
financial year
Aggregate
awards
released since
commencement
of plans
to the end of
financial year
Aggregate
awards
not released as
at the end of
financial year
Contingent
awards granted
during the
financial year
150,000
464,757
-
(314,757)
150,000
220,000
570,814
(30,243)
(47,400)
493,171
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
314,757
(185,424)
129,333
47,400
(47,400)
-
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 Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Directors’ Statement
135
7.
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 Telecommunications & Transportation Ltd (“Keppel T&T”)
At the end of the financial year, there were 595,000 unissued shares of Keppel Telecommunications & Transportation Ltd
under option relating to Keppel T&T Share Option Scheme. In addition, there were 841,415 unvested shares and 1,001,781
contingent shares granted under Keppel T&T Restricted Share Plan, and 490,000 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’ Statement of Keppel Telecommunications & Transportation Ltd.
(b) Keppel Land Limited (“Keppel Land”)
Keppel Land Limited was delisted from the Official List of the Singapore Exchange Securities Trading Limited on 16 July
2015 following the completion of the voluntary unconditional cash offer (the “Offer”) and subsequent exercise under Section
215(3) of the Companies Act (Chapter 50 of Singapore) for shares in Keppel Land Limited by Keppel Corporation Limited. As
at the close of the Offer, all outstanding share options granted under the Keppel Land Share Option Scheme were tendered
in acceptance of the options proposal made by Keppel Corporation Limited and subsequently cancelled. In connection with
the delisting, it has been determined by the Remuneration Committee of Keppel Land Limited that all outstanding awards
under the Keppel Land Restricted Share Plan and Keppel Land Performance Share Plan will, subject to the fulfilment of the
vesting conditions, be settled by cash payments as permitted under the rules of the aforementioned share plans.
On behalf of the Board
LEE BOON YANG
Chairman
LOH CHIN HUA
Chief Executive Officer
Singapore, 24 February 2016
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
136
Independent Auditors’ Report
to the Members of Keppel Corporation Limited
For the financial year ended 31 December 2015
Report on the Financial Statements
We have audited the accompanying financial statements of Keppel Corporation Limited (“Company”) and its subsidiary corporations
(“Group”) which comprise the balance sheets of the Group and the Company as at 31 December 2015, the consolidated profit and loss
account, consolidated 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 137 to 208.
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 financial statements and to maintain accountability of assets.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance 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 financial position of the Group and of the Company as at 31 December 2015 and the financial performance,
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 subsidiary corporations
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
24 February 2016
Keppel Corporation Limited Report to Shareholders 2015 Directors’ Statement & Financial Statements - Balance Sheets
Balance Sheets
As at 31 December 2015
137
Share capital
Treasury shares
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
Derivative assets
Short term investments
Bank balances, deposits & cash
Assets classified as held for sale
Current liabilities
Creditors
Derivative liabilities
Billings on work-in-progress
in excess of related costs
Provisions
Amounts due to:
- subsidiaries
- associated companies
Term loans
Taxation
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
3
4
5
6
7
8
9
10
11
12
13
14
14
15
16
17
18
19
13
20
14
14
21
27
18
21
22
19
Group
Company
31 December
2015
$’000
1,288,394
(49,011)
9,856,278
11,095,661
830,198
31 December
2014
$’000
1,287,595
(48,665)
9,141,832
10,380,762
4,346,879
31 December
2015
$’000
1,288,394
(49,011)
5,608,423
6,847,806
-
31 December
2014
$’000
1,287,595
(48,665)
4,591,571
5,830,501
-
11,925,859
14,727,641
6,847,806
5,830,501
2,845,547
3,272,112
-
5,521,756
350,103
283,464
99,825
12,372,807
2,673,015
1,987,515
-
4,988,444
358,366
294,478
101,732
10,403,550
1,281
-
8,139,235
-
-
380
-
8,140,896
694
-
5,067,567
-
-
321
-
5,068,582
10,650,500
10,681,123
-
-
-
509,041
3,144,822
125,472
225,118
1,892,841
16,547,794
-
16,547,794
4,971,549
780,275
1,888,468
90,216
-
137,376
856,735
352,595
9,077,214
-
630,552
2,500,666
8,923
371,451
5,736,001
19,928,716
1,258,640
21,187,356
5,082,654
350,100
2,397,376
149,526
-
137,188
1,795,635
462,699
10,375,178
-
9,077,214
450,017
10,825,195
3,445,760
511
1,257
120,507
-
91
3,568,126
-
3,568,126
4,100,374
471
1,459
24,829
-
2,308
4,129,441
-
4,129,441
144,866
515,746
151,093
341,075
-
-
993,056
-
631,879
15,867
2,301,414
-
2,301,414
-
-
1,004,570
-
290,511
14,000
1,801,249
-
1,801,249
7,470,580
10,362,161
1,266,712
2,328,192
7,401,934
373,173
142,421
7,917,528
5,586,908
302,493
148,669
6,038,070
2,500,000
-
59,802
2,559,802
1,500,000
-
66,273
1,566,273
Net assets
11,925,859
14,727,641
6,847,806
5,830,501
See accompanying notes to the financial statements.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
138
Consolidated Profit and
Loss Account
For the financial year ended 31 December 2015
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
Note
2015
$’000
2014
$’000
23
24
25
26
26
26
9
27
5
28
10,296,473
(7,023,337)
(1,600,010)
(220,037)
60,542
1,513,631
14,966
119,320
(154,844)
504,321
1,997,394
(404,429)
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)
1,592,965
2,426,250
1,524,622
68,343
1,592,965
1,884,798
541,452
2,426,250
84.0 cts
83.5 cts
103.8 cts
102.8 cts
See accompanying notes to the financial statements.
Keppel Corporation Limited Report to Shareholders 2015
139
2015
$’000
2014
$’000
1,592,965
2,426,250
(10,868)
(21,925)
(47,295)
(34,553)
(475,351)
182,006
(505,083)
(24,112)
100,615
16,633
128,500
23,570
5,111
19,198
(29,374)
(3,732)
14,401
23,650
-
996
(213,955)
(423,658)
1,379,010
2,002,592
1,272,232
106,778
1,379,010
1,393,768
608,824
2,002,592
Directors’ Statement & Financial Statements - Consolidated Statement of Comprehensive Income
Consolidated Statement of
Comprehensive Income
For the financial year ended 31 December 2015
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
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
See accompanying notes to the financial statements.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
Attributable to owners of the Company
Share
Capital
$’000
Treasury
Shares
$’000
Capital
Reserves
$’000
Revenue
Reserves
$’000
Foreign
Exchange
Translation
Account
$’000
Share
Capital &
Reserves
$’000
Non-
controlling
Interests
$’000
Capital
Employed
$’000
1,287,595
(48,665)
(89,335)
9,422,754
(191,587) 10,380,762
4,346,879 14,727,641
-
(304,475)
1,524,622
-
-
52,085
1,524,622
(252,390)
68,343
38,435
1,592,965
(213,955)
(304,475)
1,524,622
52,085
1,272,232
106,778
1,379,010
140
Statements of Changes
in Equity
For the financial year ended 31 December 2015
Group
2015
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
Dividend paid to non-controlling
shareholders
Shares issued
Purchase of treasury shares
Treasury shares reissued
pursuant to share plans and
share option scheme
Transfer of statutory, capital and
other reserves from
revenue reserves
Cash subscribed by/(return of
capital to) non-controlling
shareholders
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
48,882
(872,479)
-
-
799
-
-
-
(49,367)
-
(20)
-
49,021
(40,906)
-
-
-
-
-
-
-
-
4,127
(4,127)
1,407
1,824
-
-
-
12
799
(346)
15,314
(876,594)
-
-
-
-
-
-
-
-
-
-
(5,044)
-
308,538
-
(5,044)
308,538
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(872,479)
48,882
-
779
(49,367)
8,115
-
-
346
(872,479)
49,228
(83,225)
-
-
(83,225)
779
(49,367)
-
-
8,115
-
1,407
(3,981)
(2,574)
1,824
12
261
-
2,085
12
(860,827)
(86,599)
(947,426)
-
1,224
1,224
303,494
-
(3,530,670)
(7,414)
(3,227,176)
(7,414)
303,494
(3,536,860)
(3,233,366)
(557,333)
(3,623,459)
(4,180,792)
Total transactions with owners
799
(346)
10,270
(568,056)
As at 31 December
1,288,394
(49,011)
(383,540) 10,379,320
(139,502) 11,095,661
830,198 11,925,859
*
Details of other comprehensive income have been included in the consolidated statement of comprehensive income.
See accompanying notes to the financial statements.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Statements of Changes in Equity
141
Attributable to owners of the Company
Share
Capital
$’000
Treasury
Shares
$’000
Capital
Reserves
$’000
Revenue
Reserves
$’000
Foreign
Exchange
Translation
Account
$’000
Share
Capital &
Reserves
$’000
Non-
controlling
Interests
$’000
Capital
Employed
$’000
Group
2014
As at 1 January
1,205,877
500,753
8,301,117
(306,566)
9,701,181
3,987,682 13,688,863
-
(606,009)
1,884,798
-
-
114,979
1,884,798
(491,030)
541,452
67,372
2,426,250
(423,658)
(606,009)
1,884,798
114,979
1,393,768
608,824
2,002,592
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
Dividend paid to non-controlling
shareholders
Shares issued
Purchase of treasury shares
Transfer of statutory, capital and
other reserves from
revenue reserves
Cash subscribed by non-controlling
shareholders
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
-
-
-
-
-
-
-
-
-
-
-
-
53,701
(762,906)
-
-
81,718
-
-
-
(48,665)
-
(47,422)
-
-
-
-
-
-
-
-
-
-
-
-
2,092
(2,092)
-
13,228
-
-
-
18
81,718
(48,665)
21,599
(764,980)
-
-
-
-
-
-
-
-
-
-
(5,678)
-
1,819
-
(5,678)
1,819
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(762,906)
53,701
-
2,327
(762,906)
56,028
-
34,296
(48,665)
(265,603)
-
-
(265,603)
34,296
(48,665)
-
-
-
-
12,196
12,196
13,228
18
1,501
-
14,729
18
(710,328)
(249,579)
(959,907)
-
7,204
7,204
(3,859)
-
(5,736)
(1,516)
(9,595)
(1,516)
(3,859)
(48)
(3,907)
(714,187)
(249,627)
(963,814)
Total transactions with owners
81,718
(48,665)
15,921
(763,161)
As at 31 December
1,287,595
(48,665)
(89,335)
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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
142
Statements of Changes in Equity
Company
2015
As at 1 January
Share
Capital
$’000
Treasury
Shares
$’000
Capital
Reserves
$’000
Revenue
Reserves
$’000
Total
$’000
1,287,595
(48,665)
191,294
4,400,277
5,830,501
Profit/Total comprehensive income for the year
-
-
-
1,880,900
1,880,900
Transactions with owners, recognised
directly in equity
Dividends paid
Share-based payment
Shares issued
Purchase of treasury shares
Treasury shares reissued pursuant to share plans
and share option scheme
Other adjustments
Total transactions with owners
-
-
799
-
-
-
799
-
-
-
(49,367)
49,021
-
(346)
-
49,345
(20)
-
(40,906)
-
8,419
(872,479)
-
-
-
-
12
(872,467)
(872,479)
49,345
779
(49,367)
8,115
12
(863,595)
As at 31 December
1,288,394
(49,011)
199,713
5,408,710
6,847,806
Company
2014
As at 1 January
1,205,877
Profit/Total comprehensive income for the year
-
-
-
188,432
4,300,590
5,694,899
-
862,575
862,575
Transactions with owners, recognised
directly in equity
Dividends paid
Share-based payment
Shares issued
Purchase of treasury shares
Other adjustments
Total transactions with owners
-
-
81,718
-
-
81,718
-
-
-
(48,665)
-
(48,665)
-
50,284
(47,422)
-
-
2,862
(762,906)
-
-
-
18
(762,888)
(762,906)
50,284
34,296
(48,665)
18
(726,973)
As at 31 December
1,287,595
(48,665)
191,294
4,400,277
5,830,501
See accompanying notes to the financial statements.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Consolidated Statement of Cash Flows
Consolidated Statement
of Cash Flows
For the financial year ended 31 December 2015
Operating activities
Operating profit
Adjustments:
Depreciation and amortisation
Share-based payment expenses
Profit on sale of fixed assets and investment property
Gain on disposal of subsidiaries
Loss/(gain) on disposal of associated companies
Impairment/write-off of fixed assets
Impairment of intangibles
Write-back of impairment of investments
and associated company
Gains associated with restructuring of operations and others
Fair value gain on investment properties
Profit on sale 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 (used in)/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 associated companies and return of capital
Proceeds from disposal of fixed assets and investment properties
Dividends received from investments and associated companies
Net cash from investing activities
Financing activities
Acquisition of additional interest in subsidiaries
Proceeds from share issues
Proceeds from reissuance of treasury shares pursuant to
share option scheme
(Return of capital to)/Proceeds from non-controlling shareholders
of subsidiaries
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 financing activities
Net (decrease)/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
Cash and cash equivalents as at end of year
See accompanying notes to the financial statements.
143
Note
2015
$’000
2014
$’000
1,513,631
2,373,420
220,037
55,221
(3,251)
(218,770)
18,823
8,018
1,472
(16,728)
(65,876)
(128,874)
(54,975)
1,328,728
(1,000,672)
(728,391)
(253,491)
164,602
(40)
120,235
(369,029)
115,566
(149,141)
(302,399)
(705,003)
(2,559)
(567,812)
(1,158,417)
1,261,262
237,791
5,307
350,525
126,097
265,136
56,461
(289,214)
(48,647)
(145,184)
7,746
-
(47,971)
(4,752)
(54,569)
(8,008)
2,104,418
(2,181,890)
(764,052)
257,521
(91,488)
(10)
1,008,696
333,195
130,371
(130,818)
(328,031)
4,717
(268,768)
(398,680)
(594,931)
125,097
629,910
973,588
410,401
876,617
(3,227,301)
779
(9,600)
34,296
8,115
-
(2,574)
2,616,325
(1,692,712)
(49,367)
(872,479)
(83,225)
(3,302,439)
12,196
1,066,375
(794,844)
(48,665)
(762,906)
(265,603)
(768,751)
(3,881,345)
112,583
5,712,351
5,557,601
A
B
28,112
42,167
C
1,859,118
5,712,351
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
144
Consolidated Statement
of Cash Flows
Notes to Consolidated Statement of Cash Flows
A.
Acquisition of Subsidiaries
During the financial year, the fair values of net assets of subsidiaries acquired were as follows:
Fixed assets
Investment in associated company
Intangibles
Debtors and other assets
Bank balances and cash
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
Consideration transferred
Payment of deferred consideration for prior year’s acquisition of
a subsidiary
Total purchase consideration
Less: Bank balances and cash acquired
Cash flow on acquisition
2015
$’000
85
-
3,245
2,970
2,433
(3,381)
(222)
(763)
4,367
(1,224)
(490)
-
2,339
-
4,992
-
4,992
(2,433)
2,559
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
Significant acquisition of subsidiaries during the year mainly relates to acquisition of 75% interest in Array Real Estate Pte. Ltd. and
acquisition of additional 50.1% interest in OWEC Tower (AS) increasing our interest to 100%. 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 2015.
In the prior year, the Group acquired additional interest of 11% in Indo-Trans Keppel Logistics Vietnam Co., Ltd, increasing our
interest to 51% and additional interest of 50% in Securus Partners Pte Ltd, increasing our interest to 100%. Payment of deferred
consideration relates to Shanghai Jinju Real Estate Development Co. Ltd.
See accompanying notes to the financial statements.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Consolidated Statement of Cash Flows
145
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
Assets classified as held for sale*
Creditors and other liabilities
Current and deferred taxation
Liabilities directly associated with assets classified as held for sale *
Non-controlling interests deconsolidated
Amount accounted for as associated company
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
2015
$’000
(27)
(21,592)
-
-
-
(1,283)
(8,281)
(1,607,677)
3,317
683
394,868
7,414
(1,232,578)
(40,498)
(1,273,076)
(218,770)
(10,053)
(1,501,899)
240,637
-
(1,261,262)
2014
$’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)
* Breakdown of assets classified as held for sale and liabilities directly associated with assets classified as held for sale:
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
2015
$’000
(1,168,222)
(27,843)
(179,256)
(232,356)
(1,607,677)
207,611
187,257
394,868
Significant disposal of subsidiaries during the year include the sale of 51% interest in Keppel Merlimau Cogen Pte Ltd and disposal
of 80% interest in BG Junction in Surabaya.
Significant disposals in the prior 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.
C.
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
Amounts held under escrow accounts for overseas acquisition of land,
payment of construction cost and liabilities
See accompanying notes to the financial statements.
2015
$’000
2014
$’000
1,892,841
5,736,001
(33,723)
1,859,118
(23,650)
5,712,351
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
146
Notes to the Financial
Statements
For the financial year ended 31 December 2015
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 2015 and the balance sheet and statement of
changes in equity of the Company at 31 December 2015 were authorised for issue in accordance with a resolution of the Board of
Directors on 24 February 2016.
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 2015. 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:
Amendments to FRS 19 (2011)
Improvements to Financial Reporting Standards (January 2014)
Improvements to Financial Reporting Standards (February 2014)
Defined Benefit Plans: Employee Contributions
The adoption of the above new or amended FRS did not have any significant impact on the financial statements of the Group.
(b) Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including
structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:
-
-
-
Has power over the investee;
Is exposed, or has rights, to variable returns from its involvement with the investee; and
Has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control listed above.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
147
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting
rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company
considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are
sufficient to give it power, including:
-
-
-
-
The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote
holders;
Potential voting rights held by the Company, other vote holders or other parties;
Rights arising from other contractual arrangements; and
Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability
to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous
shareholders’ meetings.
The financial statements 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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
148
Notes to the Financial Statements
2.
Significant accounting policies (continued)
(c)
Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and any impairment in value. When the carrying amount of
an asset is greater than its estimated recoverable amount, it is written down to its recoverable amount. Profits or losses on
disposal of fixed assets are included in the profit and loss account.
Depreciation of fixed assets is calculated on a straight-line basis to write off the cost of the fixed assets over their estimated
useful lives. No depreciation is provided on freehold land and capital work-in-progress. The estimated useful lives of other
fixed assets are as follows:
Buildings on freehold land
Leasehold land & buildings
Vessels & floating docks
Plant, machinery & equipment
Furniture, fittings & office equipment
Cranes
Small equipment and tools
20 to 50 years
Over period of lease (ranging from 15 to 80 years)
10 to 20 years
5 to 30 years
2 to 10 years
5 to 30 years
2 to 20 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.
(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.
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Directors’ Statement & Financial Statements - Notes to the Financial Statements
149
(g)
Intangibles
Goodwill
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over net of the
acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. 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.
(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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
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Notes to the Financial Statements
2.
Significant accounting policies (continued)
(j)
Financial Assets
Financial assets include cash and bank balances, trade, intercompany and other receivables and investments. Trade,
intercompany and other receivables are stated initially at fair value and subsequently at amortised cost as reduced by
appropriate allowances for estimated irrecoverable amounts.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and bank
deposits and are subject to an insignificant risk of changes in value.
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when the Company
and the Group has a legally enforceable right to set off the recognised amounts; and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously. A right to set-off must be available today rather than being
contingent on a future event and must be exercisable by any of the counterparties, both in the normal course of business
and in the event of default, insolvency or bankruptcy.
(k)
Stocks & Work-in-Progress
Stocks, consumable materials and supplies are stated at the lower of cost and net realisable value, cost being principally
determined on the weighted average method.
Work-in-progress is stated at the lower of cost (comprising direct labour, material costs, direct expenses and an appropriate
allocation of production overheads) and net realisable value, which is arrived at after providing for anticipated losses, if any,
when the possibility of loss is ascertained.
Completed properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land
and construction, related overhead expenditure, financing charges and other net costs incurred during the period of
construction.
Properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land and construction,
related overheads expenditure, and financing charges incurred during the period of development. Net realisable value
represents the estimated selling price less costs to be incurred in selling the property. Upon completion of construction,
they are transferred to completed properties held for sale.
Each property under development is accounted for as a separate project. Where a project comprises more than one
component or phase with a separate temporary occupation permit, each component or phase is treated as a separate
project, and interest and other net costs are apportioned accordingly.
Progress claims made against work-in-progress are offset against the cost of work-in-progress and the profits recognised
on partly completed long-term contracts less any provision required to reduce cost to estimated realisable value.
(l)
Impairment of Assets
Financial Assets
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of
financial assets is impaired and recognises an allowance for impairment when such evidence exists.
Loans and receivables
Significant financial difficulties of the debtor and default or significant delay in payments are objective evidence that the
financial assets are impaired. The carrying amount of these assets is reduced through the use of an allowance account
and the loss is recognised in the profit and loss account. When the asset becomes uncollectible, the carrying amount is
written off against the allowance account. If, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be objectively measured, the previously recognised impairment loss is reversed to the extent that the carrying
amount does not exceed the amortised cost had no impairment been recognised in the prior periods. The amount of reversal
is recognised in the profit and loss account.
Investments
Significant or prolonged decline in the fair value of the investment below its cost is considered in determining whether the
investment is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured
as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset
previously recognised in the profit and loss account - is removed from equity and recognised in the profit and loss account.
For available-for-sale investments, impairment losses previously recognised in the profit and loss account are not reversed
through the profit and loss account until the investment is disposed of.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
151
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.
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. Interest expense
calculated using the effective interest method is recognised over the term of the borrowings in accordance with the Group’s
accounting policy for borrowing costs (see below).
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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
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Notes to the Financial Statements
2.
Significant accounting policies (continued)
(o)
Leases
When a group company is the lessee
Finance leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. Assets held under finance leases are recognised as assets of the Group at their fair values at the
inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the
lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance charges are charged directly to the profit and loss account.
Contingent rentals are recognised as expenses in the periods in which they are incurred.
Operating leases
Leases of assets in which the Group does not transfer substantially all the risks and rewards of ownership of the assets by
the lessor are classified as operating leases. Payments made under operating leases (net of any incentive received from
lessor) are taken to the profit and loss account on a straight-line basis over the period of the lease. When an operating
lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is
recognised as an expense in the period in which termination takes place.
When a group company is the lessor
Finance leases
Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in
the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the
Group’s net investment outstanding in respect of the leases.
Operating leases
Assets leased out under operating leases are included in investment properties and are stated at fair values. Rental income
(net of any incentive given to lessee) is recognised on a straight-line basis over the lease term.
(p) 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.
-
-
-
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
153
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.
When losses are expected, they are recognised in full in the accounts after adequate allowance has been made for
estimated costs to completion including cost of discontinuance and salvage cost. Any expenditure incurred on abortive
projects is written off in the profit and loss account.
Revenue from the sale of products is recognised when all the following conditions are satisfied:
-
-
The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
The amount of revenue can be measured reliably;
It is probable that the economic benefits associated with the transaction will flow to the entity; and
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
-
-
-
Sales are stated net of goods and services tax and sales returns.
Revenue from the rendering of services including electricity supply and logistic services is recognised over the period in
which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual
services provided as a proportion of the total services to be performed.
Rental income from operating leases on investment properties are recognised on a straight-line basis over the lease term.
Dividend income from investments is recognised when the right to receive payment is established, and in the case of fixed
interest bearing investments, on a time proportion basis using the effective interest method.
Interest income is recognised on a time proportion basis using the effective interest method.
(r)
(s)
Borrowing Costs
Borrowing costs incurred to finance the development of properties and acquisition of fixed assets are capitalised during the
period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are taken to the
profit and loss account over the period of borrowing using the effective interest rate method.
Employee Benefits
Defined Contribution Plan
The Group makes contributions to pension schemes as defined by the laws of the countries in which it has operations. In
particular, the Singapore companies make contributions to the Central Provident Fund in Singapore, a defined contribution
pension scheme. Contributions to pension schemes are recognised as an expense in the period in which the related service
is performed.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
154
Notes to the Financial Statements
2.
Significant accounting policies (continued)
Employee Leave Entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the
estimated liability for leave as a result of services rendered by employees up to the balance sheet date.
Share Option Scheme and Share Plans
The Group operates share-based compensation plans. The fair value of the employee services received in exchange for
the grant of options, restricted shares and performance shares is recognised as an expense in the profit and loss account
with a corresponding increase in the share option and share plan reserve over the vesting period. The total amount to
be recognised over the vesting period is determined by reference to the fair values of the options, restricted shares and
performance shares granted on the respective dates of grant.
At each balance sheet date, the Group revises its estimates of the number of options that are expected to become
exercisable and share plan awards that are expected to vest on the vesting dates, and recognises the impact of the revision
of the estimates in the profit and loss account, with a corresponding adjustment to the share option and share plan reserve
over the remaining vesting period.
No expense is recognised for options or share plan awards that do not ultimately vest, except for options or share plan
awards where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the
market condition is satisfied, provided that all other performance and/or service conditions are satisfied.
The proceeds received from the exercise of options are credited to share capital when the options are exercised. When share
plan awards are released, the share plan reserve is transferred to share capital if new shares are issued.
(t)
Income Taxes
Current income tax is recognised at the amounts expected to be paid to or recovered from the tax authorities, using the tax
rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.
Deferred income tax assets/liabilities are recognised for deductible/taxable temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts. The principal temporary differences arise from depreciation,
valuation of investment properties, unremitted offshore income and future tax benefits from certain provisions not allowed
for tax purposes until a later period. Deferred tax assets are recognised to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred
tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Current and deferred tax are recognised as an expense or income in the profit and loss account, except when they relate to
items credited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise
from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into
account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities over cost.
(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.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
155
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. Profit or loss 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.
Disposal or partial disposal of a foreign operation
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity
that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of
the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.
Any exchange differences that have previously been attributed to non-controlling interests are derecognised, but they are
not reclassified to profit or loss.
In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate
share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit
or loss. For all other partial disposals (i.e. of associates or jointly controlled entities that do not result in the Group losing
significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to
profit or loss.
(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.
When shares are reacquired by the Company, the amount of consideration paid is recognised directly in equity. Reacquired
shares are classified as treasury shares and presented as a deduction from total equity. When treasury shares are
subsequently sold or reissued, the cost of treasury shares is reversed from the treasury shares account and the realised gain
or loss on sale or reissue, net of any directly attributable incremental transaction costs, is recognised in non-distributable
capital reserve. Voting rights related to treasury shares are nullified for the Group and no dividends are allocated to them
respectively.
(w) Segment Reporting
The Group has four reportable segments, namely Offshore & Marine, Property, Infrastructure 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 46% (2014: approximately 45%) gross ownership interest of units in Keppel REIT as
at 31 December 2015. 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 other
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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
156
Notes to the Financial Statements
2.
Significant accounting policies (continued)
Control over KrisEnergy
The Group has approximately 40% (2014: approximately 31%) gross ownership interest of shares in KrisEnergy
Limited (“KrisEnergy”) as at 31 December 2015. The management assessed whether or not the Group has control over
KrisEnergy based on whether it has the practical ability to direct the relevant activities of KrisEnergy. In exercising
its judgement, management considers the relative size and dispersion of the shareholdings owned by the other
shareholders. Taking into consideration the approximately 38% (2014: approximately 45%) interest held by another
single shareholder of KrisEnergy, management concluded that the Group does not have sufficient dominant vesting
interest to exert control over KrisEnergy and therefore continues to have significant influence over KrisEnergy.
(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 2015, 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, the possibility of
discontinuance of the projects and the cost incurred to-date when determining the allowance for doubtful receivables
and its expected loss. 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 possibility of
discontinuance of the projects. Management has assessed that no allowance for doubtful debt and expected loss 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, investments in subsidiaries, investment in associates and joint ventures, investment
properties and intangibles are disclosed in the balance sheet.
Revenue recognition and contract cost
The Group recognises contract revenue and contract cost 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 23
and an expected loss of $228,000,000 (2014: Nil) was recognised in 2015 based on the estimated costs to completion
including cost of discontinuance and salvage cost with regards to certain rig building contracts.
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.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
157
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.
3.
Share capital
Group and Company
Number of Ordinary Shares (“Shares”)
Issued Share Capital
Treasury Shares
2015
2014
2015
2014
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 transferred pursuant to
share option scheme
Treasury shares transferred pursuant to KCL PSP
Treasury shares transferred pursuant to KCL RSP
Treasury shares purchased
Balance at 31 December
1,817,768,227
139,900
-
2,053
-
-
-
-
1,817,910,180
1,807,970,459
4,936,211
636,100
4,225,457
-
-
-
-
1,817,768,227
5,932,000
-
-
-
(1,388,230)
(323,400)
(4,265,390)
6,808,000
6,762,980
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 transferred pursuant to
share option scheme
Treasury shares transferred pursuant to KCL PSP
Treasury shares transferred pursuant to KCL RSP
Treasury shares purchased
Balance at 31 December
Issued Share Capital
Treasury Shares
Amount (S$’000)
2015
2014
1,287,595
779
-
20
-
-
-
-
1,288,394
1,205,877
34,315
5,418
41,985
-
-
-
-
1,287,595
2015
48,665
-
-
-
(11,396)
(2,653)
(34,972)
49,367
49,011
-
-
-
-
-
-
-
5,932,000
5,932,000
2014
-
-
-
-
-
-
-
48,665
48,665
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 139,900 (2014: 4,936,211) Shares at an average weighted price of $5.57 (2014:
$6.95) per Share for cash upon exercise of options under the KCL Share Option Scheme.
During the financial year, 323,400 (2014: 636,100) Shares under the KCL Performance Share Plan (“KCL PSP”) and 4,267,443
(2014: 4,225,457) Shares under the KCL Restricted Share Plan (“KCL RSP”) were vested.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
158
Notes to the Financial Statements
3.
Share capital (continued)
During the financial year, the Company transferred 5,977,020 (2014: nil) treasury shares to employees under vesting of shares
released under the KCL Share Option Scheme and KCL Share Plans. The Company also purchased 6,808,000 (2014: 5,932,000)
treasury shares in the Company in the open market during the financial year. The total amount paid was $49,367,000 (2014:
$48,665,000). Except for the transfer, there was no other sale, 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.
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
2015
2014
Number of
options
19,570,504
(1,528,130)
(220,900)
17,821,474
Weighted
average
exercise
price
$8.60
$5.82
$11.04
$8.81
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
Exercisable at 31 December
17,821,474
$8.81
19,570,504
$8.60
The weighted average share price at the date of exercise for options exercised during the financial year was $8.87 (2014: $10.52).
The options outstanding at the end of the financial year had a weighted average exercise price of $8.81 (2014: $8.60) and a
weighted average remaining contractual life of 2.3 years (2014: 3.4 years).
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
Directors’ Statement & Financial Statements - Notes to the Financial Statements
159
KCL Share Plans
The KCL Restricted Share Plan (“KCL RSP”) and KCL Performance Share Plan (“KCL PSP”) were approved by the Company’s
shareholders at the Extraordinary General Meeting of the Company on 23 April 2010. The two share plans are administered by the
Remuneration Committee.
Details of the KCL RSP and the KCL PSP are as follows:
Plan Description
KCL RSP
KCL PSP
Award of fully-paid ordinary shares of the
Company, conditional on achievement of
pre-determined targets at the end of a
one-year performance period
Award of fully-paid ordinary shares of
the Company, conditional on achievement of
pre-determined targets over a three-year
performance period
Performance Conditions
Return on Equity
a) Economic Value Added
b) Absolute Total Shareholder’s Return
c) Relative Total Shareholder’s Return to
MSCI Asia Pacific Ex-Japan Industrials
Index (MXAPJIN)
Final Award
0% or 100% of the contingent award
granted, depending on achievement of
pre-determined targets
0% to 150% of the contingent award granted,
depending on achievement of pre-determined
targets
Vesting Condition
and Schedule
If pre-determined targets are achieved,
awards will vest equally over three years
subject to fulfilment of service requirements
If pre-determined targets are achieved,
awards will vest at the end of the three-year
performance period subject to fulfilment 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
Balance at 31 December
Awards released but not vested:
Balance at 1 January
Released
Vested
Cancelled
Other adjustments
Balance at 31 December
2015
2014
KCL RSP
KCL PSP
KCL RSP
KCL PSP
4,639,784
5,652,889
-
(4,585,541)
(185,649)
5,521,483
3,993,440
4,585,541
(4,267,443)
(118,413)
-
4,193,125
1,748,725
920,000
(240,406)
(376,200)
-
2,052,119
-
376,200
(323,400)
-
(52,800)
-
4,383,491
4,750,386
-
(4,309,301)
(184,792)
4,639,784
4,040,616
4,309,301
(4,225,457)
(131,020)
-
3,993,440
1,901,333
577,400
(26,450)
(636,100)
(67,458)
1,748,725
-
636,100
(636,100)
-
-
-
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 2015, there were 4,193,125 (2014: 3,993,440) 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 5,521,483 (2014: 4,639,784) under the KCL
RSP and 2,052,119 (2014: 1,748,725) 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 5,521,483 under the KCL RSP and range from zero to a
maximum of 3,078,179 under the KCL PSP.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
160
Notes to the Financial Statements
3.
Share capital (continued)
The fair values of the contingent award of shares under the KCL RSP and the KCL PSP are determined at the grant date using
Monte Carlo simulation method which involves projection of future outcomes using statistical distributions of key random
variables including share price and volatility.
On 31 March 2015 (2014: 31 March 2014), the Company granted contingent awards of 4,863,286 (2014: 4,750,386) shares under
the KCL RSP and 700,000 (2014: 577,400) shares under the KCL PSP. The estimated fair value of the shares granted amounts
to $8.29 (2014: $10.31) under the KCL RSP and $4.72 (2014: $6.74) under the KCL PSP. On 30 July 2015, the Company granted
contingent awards of 789,603 (2014: nil) shares under the KCL RSP and 220,000 (2014: nil) shares under the KCL PSP. The
estimated fair value of the shares granted amounts to $7.14 (2014: nil) under the KCL RSP and $3.04 (2014: nil) 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
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
2015
2015
KCL RSP
KCL PSP
KCL RSP
KCL PSP
31.03.2015
$9.00
31.03.2015
$9.00
30.07.2015
$7.80
30.07.2015
$7.80
14.21%
#
#
0.92 - 2.92 years
1.12% - 1.52%
*
14.21%
12.35%
63.8%
2.92 years
1.52%
*
12.70%
#
#
0.58 - 2.58 years
0.85% - 1.31%
*
12.70%
12.15%
48.10%
2.58 years
1.31%
*
2014
KCL RSP
KCL PSP
31.03.2014
$10.89
31.03.2014
$10.89
24.65%
#
#
0.75 - 2.75 years
0.35% - 0.70%
*
24.65%
22.45%
88.80%
2.75 years
0.70%
*
#
*
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.
Share option schemes and share plans of subsidiaries
(a) Keppel Telecommunications & Transportation Ltd (“Keppel T&T”)
Details of share plans granted by Keppel Telecommunications & Transportation Ltd are disclosed in its annual report.
(b) Keppel Land Limited (“Keppel Land”)
Keppel Land Limited was delisted from the Official List of the Singapore Exchange Securities Trading Limited on 16 July
2015 following the completion of the voluntary unconditional cash offer (the “Offer”) and subsequent exercise under Section
215(3) of the Companies Act (Chapter 50 of Singapore) for shares in Keppel Land Limited by Keppel Corporation Limited. As
at the close of the Offer, all outstanding share options granted under the Keppel Land Share Option Scheme were tendered
in acceptance of the options proposal made by Keppel Corporation Limited and subsequently cancelled. In connection with
the delisting, it has been determined by the Remuneration Committee of Keppel Land Limited that all outstanding awards
under the Keppel Land Restricted Share Plan and Keppel Land Performance Share Plan will, subject to the fulfilment of the
vesting conditions, be settled by cash payments as permitted under the rules of the aforementioned share plans.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
161
4.
Reserves
Capital Reserves
Share option and share plan reserve
Fair value reserve
Hedging reserve
Bonus issue by subsidiaries
Others
Revenue Reserves
Foreign Exchange
Translation Account
Group
2015
$’000
2014
$’000
Company
2015
$’000
2014
$’000
215,979
73,049
(790,756)
40,000
78,188
(383,540)
10,379,320
212,764
102,818
(516,050)
40,000
71,133
(89,335)
9,422,754
194,972
-
-
-
4,741
199,713
5,408,710
(139,502)
9,856,278
(191,587)
9,141,832
-
5,608,423
191,294
-
-
-
-
191,294
4,400,277
-
4,591,571
Movements in the Group’s and the Company’s reserves are set out in the Statements of Changes in Equity.
5.
Non-controlling interests
The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:
Beijing Aether Property Development
Limited
Keppel Telecommunications &
Transportation Limited
Keppel Land Limited
Other individually immaterial subsidiaries
2015
$’000
49%
20%
1%
NCI percentage of
ownership interest and
voting interest
Carrying amount of NCI
2015
$’000
2014
$’000
Profit after tax
allocated to NCI
2015
$’000
2014
$’000
2014
$’000
49%
215,634
203,768
5,336
10,936
20%
45%
146,907
59,486
408,171
142,529
3,474,948
525,634
18,155
10,165
34,687
48,830
341,567
140,119
Total
830,198
4,346,879
68,343
541,452
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
Keppel Land Limited
2015
$’000
2014
$’000
6,599,959
8,257,426
3,945,646
2,279,143
8,632,596
4,817,660
9,709,888
3,384,532
2,998,078
8,144,938
1,598,260
560,701
749,084
1,497,177
823,238
959,895
Beijing Aether Property
Development Limited
Keppel Telecommunications &
Transportation Limited
2015
$’000
948,489
2,662
132,324
378,808
440,019
-
10,889
12,591
2014
$’000
876,082
1,077
126,803
334,503
415,853
-
22,318
23,495
2015
$’000
1,228,775
270,792
202,303
472,742
824,522
200,566
105,986
112,671
2014
$’000
992,705
410,259
183,109
427,294
792,561
224,563
308,189
317,276
Net cash flow from/(used in) operations
495,565
200,443
(1,939)
(1,489)
49,988
84,581
Dividends paid to NCI
20,728
190,248
-
-
18,689
64,686
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
162
Notes to the Financial Statements
5.
Non-controlling interests (continued)
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
6.
Fixed assets
2015
$’000
(3,227,301)
3,530,670
125
303,494
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Buildings
$’000
Vessels &
Floating Docks
$’000
Plant,
Machinery,
Equipment
& Others (1)
$’000
Capital
Work-in-
Progress
$’000
2014
$’000
(9,600)
5,736
5
(3,859)
Total
$’000
Group
2015
Cost
At 1 January
Additions
Disposals
Write-off
Subsidiaries acquired
Subsidiaries disposed
Reclassification
- Stocks and other assets
- Investment properties (Note 7)
- Other fixed assets categories
Exchange differences
120,605
324
(616)
-
26
-
-
-
1,982
117
1,826,739
23,978
(1,101)
(126)
-
-
-
-
231,103
28,146
467,503
9,330
(476)
-
-
-
-
-
-
(10,103)
1,786,043
67,574
(28,736)
(13,645)
59
(369)
(302)
(248)
141,039
8,556
549,950
327,820
-
(91)
-
-
(1,945)
-
(374,124)
(36,863)
4,750,840
429,026
(30,929)
(13,862)
85
(369)
(2,247)
(248)
-
(10,147)
At 31 December
122,438
2,108,739
466,254
1,959,971
464,747
5,122,149
Accumulated Depreciation
& Impairment Losses
At 1 January
Depreciation charge
Disposals
Impairment loss/write-off
Subsidiaries disposed
Reclassification
- Stocks and other assets
- Investment properties (Note 7)
- Other fixed assets categories
Exchange differences
At 31 December
Net Book Value
49,642
4,797
(334)
-
-
-
-
-
1,410
772,039
65,054
(515)
(126)
-
-
-
675
10,429
187,535
21,630
(476)
-
-
-
-
-
(1,568)
1,068,609
124,694
(26,876)
(5,718)
(342)
399
(102)
(675)
6,421
55,515
847,556
207,121
1,166,410
-
-
-
-
-
-
-
-
-
-
2,077,825
216,175
(28,201)
(5,844)
(342)
399
(102)
-
16,692
2,276,602
66,923
1,261,183
259,133
793,561
464,747
2,845,547
Included in freehold land & buildings are freehold land amounting to $8,913,000 (2014: $11,254,000).
Certain fixed assets with carrying amount of $260,809,000 (2014: $137,215,000) are mortgaged to banks for loan facilities (Note 21).
Interest capitalised during the financial year amounted to $5,417,000 (2014: $2,364,000).
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
163
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Buildings
$’000
Vessels &
Floating Docks
$’000
Plant,
Machinery,
Equipment
& Others (1)
$’000
Capital
Work-in-
Progress
$’000
Total
$’000
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
120,662
591
(307)
-
-
(1,121)
-
-
341
-
439
1,858,825
15,970
(123,721)
(715)
4,566
-
-
(64,008)
123,028
-
12,794
449,937
22,485
(18,254)
(50)
15,343
-
-
-
-
3,043,349
86,575
(176,570)
(1,315)
1,443
(15,882)
-
(66,250)
265,085
418,896
434,666
(8,923)
(506)
-
-
103,238
(90)
(388,454)
5,891,669
560,287
(327,775)
(2,586)
21,352
(17,003)
103,238
(130,348)
-
-
(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
At 31 December
49,642
772,039
187,535
1,068,609
-
-
-
-
-
-
-
-
-
-
2,093,390
262,771
(80,550)
5,160
(9,984)
358
(3,281)
(198,015)
7,976
2,077,825
Net Book Value
70,963
1,054,700
279,968
717,434
549,950
2,673,015
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
164
Notes to the Financial Statements
6.
Fixed assets (continued)
Company
2015
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
At 31 December
Net Book Value
2014
Cost
At 1 January
Additions
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
At 31 December
Net Book Value
(1) Others comprise furniture, fittings and office equipment, cranes and small equipment and tools.
Freehold
Land &
Buildings
$’000
Plant,
Machinery,
Equipment
& Others (1)
$’000
Total
$’000
1,464
-
(231)
7,434
1,406
(350)
8,898
1,406
(581)
1,233
8,490
9,723
1,296
76
(231)
6,908
743
(350)
1,141
7,301
92
1,189
8,204
819
(581)
8,442
1,281
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
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
165
7.
Investment properties
At 1 January
Development expenditure
Fair value gain
- Attributable to the Group (Note 25)
- Attributable to third parties under a contractual agreement
Disposal
Subsidiary disposed
Reclassification
- Stocks and work-in-progress
- Fixed assets (Note 6)
Exchange differences
At 31 December
Group
2015
$’000
2014
$’000
1,987,515
729,391
2,187,858
34,644
128,874
7,853
-
(21,592)
404,761
146
35,164
54,569
7,983
(454,712)
-
-
127,067
30,106
3,272,112
1,987,515
The Group’s investment properties (including integral plant and machinery) are stated at Directors’ assessments based on the
following valuations (open market value basis), performed on an annual basis, by independent firms of professional valuers as at
31 December 2015:
-
-
-
-
-
-
-
Colliers International Consultancy & Valuation (Singapore) Pte Ltd for properties in Singapore;
Colliers International (Hong Kong) Limited for properties in China;
CBRE (Vietnam) Co. Ltd for properties in Vietnam;
CBRE Limited for a property in the Netherlands;
KJPP Wilson & Rekan (an affiliate of Knight Frank) for properties in Indonesia;
Savills (UK) Limited for a property in United Kingdom; 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 $6,006,000 (2014: $1,285,000).
The Group has mortgaged certain investment properties of up to an aggregate amount of $434,567,000 (2014: $239,230,000) to
banks for loan facilities (Note 21).
In the prior 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.
During the year, the Group reclassified land and related costs for a property in China amounting to $404,761,000, from property
held for sale to investment property, due to a change in the local government’s city planning and the Group’s decision to develop
the land for future use as an investment property. The land was originally designated for residential development purpose.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
166
Notes to the Financial Statements
8.
Subsidiaries
Quoted shares, at cost
Market value: $649,287,000 (2014: $3,548,692,000)
Unquoted shares, at cost
Provision for impairment
Movements in the provision for impairment of subsidiaries are as follows:
At 1 January
(Credit)/charge to profit and loss account
At 31 December
Company
2015
$’000
2014
$’000
398,140
7,772,165
8,170,305
(31,070)
2,083,839
3,055,798
5,139,637
(72,070)
8,139,235
5,067,567
Company
2015
$’000
72,070
(41,000)
2014
$’000
56,115
15,955
31,070
72,070
During the year, provision of impairment amounting to $41,000,000 was written-back as a result of increase in the estimated
recoverable amount of a subsidiary.
Impairment made in the prior year mainly relates to the shortfall between the carrying amount of the costs of investment and the
recoverable amount of a subsidiary.
Information relating to significant subsidiaries consolidated in the financial statements is given in Note 36.
9.
Associated companies
Quoted shares, at cost
Market value: $2,830,012,000
(2014: $3,482,487,000)
Unquoted shares, at cost
Provision for impairment
Share of reserves
Notes issued by an associated company
Group
2015
$’000
2014
$’000
2,993,194
1,578,241
4,571,435
(83,871)
4,487,564
789,192
5,276,756
245,000
2,801,642
1,441,871
4,243,513
(98,430)
4,145,083
843,361
4,988,444
-
5,521,756
4,988,444
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
Directors’ Statement & Financial Statements - Notes to the Financial Statements
167
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
Group
2015
$’000
98,430
(16,728)
-
2,169
2014
$’000
149,498
(47,971)
(3,940)
843
83,871
98,430
Notes issued by an associated company are unsecured and considered to be part of investment in associated companies. The
notes mature in 2040 and may be redeemed at a redemption price equal to 100% of the principal amount together with interest
accrued up to the date of redemption. Interest is charged at 17.5% per annum.
During the financial year, arising from the sale of certain assets in an associated company, the Group wrote back an impairment
loss of $16,728,000 (2014: $47,971,000) 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 27)
Share of net profit
Group
2015
$’000
2014
$’000
504,321
(68,415)
504,176
(72,096)
435,906
432,080
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
2015
$’000
27,509,336
13,163,355
4,977,640
1,419,800
2014
$’000
21,031,854
8,479,519
5,021,596
1,075,579
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:
Keppel REIT
Keppel Infrastructure Trust
KrisEnergy Limited
Other associates
2015
$’000
1,938,012
292,403
489,835
2,801,506
5,521,756
2014
$’000
1,833,180
290,577
335,655
2,529,032
4,988,444
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
168
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:
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
Keppel REIT
Keppel Infrastructure Trust
KrisEnergy Limited *
2015
$’000
2014
$’000
2015
$’000
163,949
7,261,469
7,425,418
89,945
2,709,452
2,799,397
4,626,021
46%
2,122,418
(184,406)
1,938,012
170,347
338,848
(47,713)
291,135
225,467
7,103,937
7,329,404
380,371
2,491,613
2,871,984
4,457,420
45%
2,018,320
(185,140)
1,833,180
184,093
371,902
(11,469)
360,433
1,372,384
73,717
1,751,331
102,442
466,304
3,625,406
4,091,710
170,699
2,327,535
2,498,234
1,593,476
18%
290,172
2,231
292,403
382,599
18,839
26,211
45,050
358,204
39,451
2014
$’000
138,392
472,634
611,026
19,930
-
19,930
591,096
49%
290,642
(65)
290,577
65,451
12,709
-
12,709
329,812
24,217
2015
$’000
2014
$’000
248,013
1,333,712
1,581,725
248,202
450,888
699,090
882,635
40%
354,378
135,457
489,835
67,161
66,781
(501)
66,280
99,312
-
332,590
709,489
1,042,079
44,198
430,065
474,263
567,816
31%
178,294
157,361
335,655
101,531
(43,236)
8
(43,228)
206,978
-
*
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 2015, 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.
For the investment in KrisEnergy Limited (“KrisEnergy”), management performed an assessment on the recoverable amount
using a discounted cash flow model based on a cash flow projection from 2016 to 2022 with a terminal value and applying certain
estimates and assumptions, such as oil prices, discount rates, production volume, lifting costs, reserves and operating costs.
The assumption for oil prices, ranging from US$55 to US$80 per barrel (for 2016 to 2022), is determined by taking reference
from external information sources. The discount rate used is 10%. These estimates and assumptions are subject to risk and
uncertainty. Therefore, there is a possibility that changes in circumstances will impact these projections, which may impact the
recoverable amount of the investment in KrisEnergy. If the estimated oil prices applied to the discounted cash flows had been 10%
lower than management’s estimates, the carrying amount would be lowered by $64,000,000.
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
2015
$’000
314,026
(50,906)
13,797
276,917
2014
$’000
338,916
(58,852)
38,786
318,850
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 36.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
169
10.
Investments
Available-for-sale investments:
Quoted equity shares
Unquoted equity shares
Unquoted property funds
Unquoted funds - others
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
Movements in the provision for doubtful debts are as follows:
At 1 January
Charge to profit and loss account
Exchange differences
At 31 December
Group
2015
$’000
11,732
165,164
162,663
10,544
2014
$’000
67,690
142,677
136,760
11,239
350,103
358,366
Group
Company
2015
$’000
1,586
295,594
297,180
(13,716)
283,464
-
2014
$’000
1,799
306,232
308,031
(13,553)
294,478
-
283,464
294,478
2015
$’000
486
-
486
(106)
380
-
380
2014
$’000
402
-
402
(81)
321
-
321
Group
2015
$’000
-
-
-
-
2014
$’000
4,718
(4,489)
(229)
-
Company
2015
$’000
2014
$’000
-
-
-
-
-
-
-
-
Included in staff loans are interest-free advances to directors of related corporations amounting to $262,000 (2014: $114,000)
under an approved car loan scheme.
Long term receivables are unsecured, largely repayable after five years (2014: five years) and bears effective interest ranging from
4.00% to 11.00% (2014: 4.00% to 11.00%) per annum.
The fair value of long term receivables for the Group is $296,909,000 (2014: $304,896,000). 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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
170
Notes to the Financial Statements
12.
Intangibles
Group
2015
At 1 January
Additions
Amortisation
Impairment loss
Subsidiary acquired
Exchange differences
At 31 December
Goodwill
$’000
Development
Expenditure
$’000
Management
Rights
$’000
Customer
Contracts
$’000
Total
$’000
60,742
-
-
(1,472)
-
-
6,361
40
(2,643)
-
3,245
142
16,757
-
-
-
-
-
17,872
-
(1,219)
-
-
-
101,732
40
(3,862)
(1,472)
3,245
142
59,270
7,145
16,757
16,653
99,825
Cost
Accumulated amortisation
59,270
-
21,791
(14,646)
16,757
-
24,963
(8,310)
122,781
(22,956)
2014
At 1 January
Additions
Amortisation
Subsidiary acquired
Subsidiary disposed
Exchange differences
At 31 December
59,270
7,145
16,757
16,653
99,825
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
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
For the purpose of impairment testing, goodwill is allocated to cash-generating units.
Goodwill allocated to the Offshore & Marine Division amounted to $2,092,000 (2014: $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 6.99% (2014: 7.96%). 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 the Infrastructure Division amounted to $57,178,000 (2014: $58,650,000). 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% (2014: 9.0%). 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 2015, apart from the impairment loss on goodwill of a subsidiary, 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 Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
171
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
2015
$’000
(a)
(c)
3,841,112
141,052
5,462
6,662,874
2014
$’000
3,339,234
173,936
15,968
7,151,985
10,650,500
10,681,123
Billings on work-in-progress in excess of related costs
(b)
(1,888,468)
(2,397,376)
(a) Work-in-progress in excess of related billings
Costs incurred and attributable profits
Provision for loss on work-in-progress
Less: Progress billings
13,918,026
(4,498)
13,913,528
(10,072,416)
12,897,402
(4,498)
12,892,904
(9,553,670)
3,841,112
3,339,234
The work-in-progress in excess of related billings included the recognition of expected losses of $228,000,000 (2014: Nil)
with regards to certain rig building contracts.
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
Group
2015
$’000
4,498
-
4,498
2014
$’000
4,491
7
4,498
14,632,362
(16,520,830)
13,320,254
(15,717,630)
(1,888,468)
(2,397,376)
3,761,352
1,406,564
603,972
(483,283)
5,288,605
1,458,228
6,746,833
(83,959)
4,682,842
1,168,308
561,317
(555,267)
5,857,200
1,329,045
7,186,245
(34,260)
6,662,874
7,151,985
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
172
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
Amount written off
At 31 December
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
Group
2015
$’000
34,260
55,471
80
(5,852)
2014
$’000
29,893
4,019
348
-
83,959
34,260
2,466,273
(483,283)
2,629,799
(555,267)
1,982,990
2,074,532
Interest capitalised during the financial year amounted to $56,441,000 (2014: $59,199,000) at rates ranging from 1.16% to
3.30% (2014: 0.55% to 3.30%) per annum for Singapore properties and 0.05% to 15.00% (2014: 0.05% to 8.00%) per annum
for overseas properties.
Certain properties held for sale with carrying amount of $1,760,257,000 (2014: $2,327,841,000) 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
2015
$’000
2014
$’000
482,912
2,969,448
3,452,360
(6,600)
311,955
3,795,019
4,106,974
(6,600)
3,445,760
4,100,374
111,063
881,993
218,638
785,932
993,056
1,004,570
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 4.00% (2014: 0.00% to 8.00%) per annum on interest-bearing advances.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
Associated Companies
Amounts due from
- trade
- advances
Provision for doubtful debts
Amounts due to
- trade
- advances
Movements in the provision for doubtful debts are as follows:
At 1 January
Write-back to profit and loss account
At 31 December
Group
2015
$’000
2014
$’000
Company
2015
$’000
110,047
399,040
509,087
(46)
139,223
491,375
630,598
(46)
509,041
630,552
54,316
83,060
43,665
93,523
137,376
137,188
46
-
46
286
(240)
46
511
-
511
-
511
-
-
-
-
-
-
173
2014
$’000
471
-
471
-
471
-
-
-
-
-
-
Advances to and from associated companies are unsecured and are repayable on demand. Interest is charged at rates ranging
from 0.13% to 8.00% (2014: 0.22% to 8.00%) 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
Tax recoverable
Goods & Services Tax receivable
Interest receivable
Deposits paid
Advance land payments
Recoverable accounts
Accrued receivables
Advances to subcontractors
Advances to non-controlling shareholders
of subsidiaries
Provision for doubtful debts
Total
Group
2015
$’000
2014
$’000
2,047,864
(8,759)
2,039,105
1,433,609
(6,538)
1,427,071
13,716
189,938
61,843
4,274
41,538
20,906
36,440
20,559
187,557
261,000
153,220
13,553
153,874
60,923
9,139
62,585
17,152
35,959
67,717
155,116
149,896
225,041
147,414
1,138,405
(32,688)
1,105,717
145,597
1,096,552
(22,957)
1,073,595
3,144,822
2,500,666
Company
2015
$’000
-
-
-
106
504
167
-
-
58
422
-
-
-
-
-
1,257
-
1,257
1,257
2014
$’000
-
-
-
81
731
225
-
-
57
365
-
-
-
-
-
1,459
-
1,459
1,459
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
174
Notes to the Financial Statements
15. Debtors (continued)
Movements in the provision for doubtful debts are as follows:
At 1 January
Charge to profit and loss account
Amount written off
Subsidiary disposed
Exchange differences
At 31 December
16. Short term investments
Available-for-sale investments:
Quoted equity shares
Unquoted equity shares
Unquoted unit trust
Total available-for-sale investments
Investments held for trading:
Quoted equity shares
Total short term investments
17. Bank balances, deposits and cash
Group
2015
$’000
29,495
12,242
(261)
(56)
27
2014
$’000
32,966
2,945
(1,472)
(4,874)
(70)
41,447
29,495
Company
2015
$’000
2014
$’000
-
-
-
-
-
-
-
-
-
-
-
-
Group
2015
$’000
2014
$’000
77,121
1,315
47,167
217,704
1,217
42,209
125,603
261,130
99,515
110,321
225,118
371,451
Company
2015
$’000
91
-
-
-
2014
$’000
2,308
-
-
-
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
2015
$’000
2014
$’000
617,846
1,116,777
2,587,578
3,028,583
33,723
23,650
124,495
96,190
Fixed deposits with banks of the Group mature on varying periods, substantially between 1 day to 3 months (2014: 1 day to 3
months). This comprises Singapore dollar fixed deposits of $45,053,000 (2014: $1,943,175,000) at interest rates ranging from
0.00% to 2.70% (2014: 0.00% to 2.75%) per annum, and foreign currency fixed deposits of $1,071,724,000 (2014: $1,085,408,000)
at interest rates ranging from 0.00% to 14.22% (2014: 0.00% to 11.57%) per annum.
1,892,841
5,736,001
91
2,308
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
175
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 (“KE”), 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.
As at 31 December 2014, 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” in accordance with FRS 105 Non-current Assets Held for
Sale and Discontinued Operations 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
Group
2014
$’000
1,168,222
27,437
61,595
1,386
1,258,640
284,787
165,230
450,017
In June 2015, KE entered into an equity transfer agreement to dispose of its 51% stake of KMC and the transaction was
completed.
19. Creditors
Trade creditors
Customers’ advances and deposits
Proceeds received from sale of properties
Sundry creditors
Accrued operating expenses
Advances from non-controlling shareholders
Retention monies
Interest payables
Other non-current liabilities:
Accrued operating expenses
Group
2015
$’000
596,857
66,228
342,162
1,226,701
2,262,589
215,617
216,519
44,876
2014
$’000
805,240
67,895
282,763
1,357,466
2,118,849
223,945
187,323
39,173
Company
2015
$’000
-
-
-
2,828
123,634
-
-
18,404
2014
$’000
-
-
-
2,780
131,304
-
-
17,009
4,971,549
5,082,654
144,866
151,093
142,421
148,669
59,802
66,273
The carrying amount of the non-current liabilities approximates their 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 4.50% (2014: 1.20% to 3.48%) per annum on interest-bearing advances.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
176
Notes to the Financial Statements
20. Provisions
Group
2015
At 1 January
Write-back to profit and loss account
Amount utilised
Exchange differences
At 31 December
2014
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
Keppel GMTN Floating Rate Notes
Bank and other loans
- secured
- unsecured
Company
Keppel Corporation Medium Term Notes
Unsecured bank loans
Warranties
$’000
Claims
$’000
Total
$’000
149,526
(48,564)
(7,804)
(2,942)
90,216
-
-
-
-
-
149,526
(48,564)
(7,804)
(2,942)
90,216
153,598
649
(3,458)
(1,263)
10,005
-
(10,005)
-
163,603
649
(13,463)
(1,263)
149,526
-
149,526
2015
2014
Due within
one year
$’000
Due after
one year
$’000
Due within
one year
$’000
Due after
one year
$’000
-
-
-
-
-
1,700,000
880,700
-
120,000
282,000
-
154,994
495,649
1,500,000
854,083
-
-
-
120,000
260,800
11,764
844,971
1,216,914
3,202,320
123,234
1,021,758
915,945
1,936,080
856,735
7,401,934
1,795,635
5,586,908
-
631,879
1,700,000
800,000
-
290,511
1,500,000
-
631,879
2,500,000
290,511
1,500,000
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(a)
(g)
(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 $1,700,000,000 (2014: $1,500,000,000). The notes are unsecured and comprised fixed rate notes
due from 2020 to 2042 (2014: from 2020 to 2042) with interest rates ranging from 3.10% to 4.00% (2014: 3.10% to 4.00%)
per annum.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
177
(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 $351,753,000
(2014: $325,339,000). The fixed rate notes, due in 2019, are unsecured and carried an interest rate of 3.26% (2014: 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 $528,947,000 (2014: $683,738,000). The notes are unsecured and comprised fixed rate
notes due from 2017 to 2024 (2014: 2015 to 2024) with interest rates ranging from 2.83% to 3.90% (2014: 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 was payable
semi-annually. On 25 April 2012, $200,000 of the bond was converted and cancelled pursuant to the exercise of conversion
rights by a bondholder. On 18 August 2015, an aggregate amount of $160,500,000 of the bond were redeemed and
subsequently cancelled pursuant to the exercise of the Delisting Put Right of the bonds by the bondholders. Keppel Land
Limited redeemed the remaining $339,300,000 upon maturity on 29 November 2015.
The convertible bonds are recognised on the balance sheet as follows:
At 1 January
Interest expense
Interest paid/accrued
Redemption upon maturity
Liability component at 31 December
2015
$’000
495,649
11,899
(7,748)
(499,800)
2014
$’000
491,188
13,836
(9,375)
-
-
495,649
Interest expense on the convertible bonds is calculated based on the effective interest method by applying the interest
rate of 2.50% (2014: 2.50%) per annum for an equivalent non-convertible bond to the liability component of the convertible
bonds.
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 (2014: $120,000,000). The fixed rates notes,
due in 2019, are unsecured and carried an interest rate of 2.63% (2014: 2.63%) per annum from August 2012 to August
2017, and at 3.83% (2014: 3.83%) per annum from August 2017 to August 2019.
At the end of the financial year, US$200,000,000 notes issued under the US$2,000,000,000 Euro Medium Term Note
Programme by Keppel GMTN Pte Ltd amounted to $282,000,000 (2014: $260,800,000). The floating rate notes due in 2020
are unsecured and bear interest rate payable quarterly at 3-month US Dollar London Interbank Offered Rate plus 0.89% per
annum and ranging from 1.12% to 1.21% (2014: 1.12% to 1.13%) per annum.
(d)
(e)
(f)
The secured bank loans consist of:
-
-
-
A term loan of $289,580,000 (2014: $289,370,000) 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 1.30% to 2.17%
(2014: 1.26% to 1.90%) per annum.
A term loan of $53,121,000 (2014: $46,621,000) 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 1.19% to 2.62%
(2014: 1.20% to 1.71%) per annum.
A term loan of $395,409,000 (2014: $394,861,000) 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 1.16% to 2.30%
(2014: 1.02% to 1.16%) per annum.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
178
Notes to the Financial Statements
21. Term loans (continued)
-
-
-
A term loan of $nil (2014: $38,000,000) drawn down by a subsidiary. The term loan was repaid in 2015 and was
previously secured on the investment property of the subsidiary. Interest was based on money market rates ranging
from nil% to nil% (2014: 1.44% to 1.48%) per annum.
Term loans of $nil (2014: $9,600,000) drawn down by subsidiaries. The term loans were repaid in 2015 and were
secured on certain fixed assets of the subsidiaries. Interest was based on money market rates ranging from nil% to
nil% (2014: 0.80% to 0.87%) per annum.
Other secured bank loans comprised $490,568,000 (2014: $260,727,000) of foreign currency loans. They are
repayable between one to seventeen (2014: one to five) years and are secured on investment property and certain
fixed and other assets of the subsidiaries. Interest on foreign currency loans is based on money market rates ranging
from 1.71% to 16.70% (2014: 3.03% to 16.70%) per annum.
(g)
The unsecured bank and other loans of the Group totaling $4,047,291,000 (2014: $2,957,838,000) comprised $2,243,506,000
(2014: $1,215,834,000) of loans denominated in Singapore dollar and $1,803,785,000 (2014: $2,002,804,000) of foreign
currency loans. They are repayable between one to sixteen (2014: one to six) years. Interest on loans denominated in
Singapore dollar is based on money market rates ranging from 1.05% to 2.90% (2014: 0.83% to 4.50%) per annum. Interest
on foreign currency loans is based on money market rates ranging from 0.60% to 13.80% (2014: 0.38% to 10.73%) per
annum.
The unsecured bank loans of the Company totaling $1,431,879,000 (2014: $290,511,000) comprise $972,620,000 (2014:
nil) of loans denominated in Singapore dollar and $459,259,000 (2014: $290,511,000) of foreign currency loans. They are
repayable within one to six months (2014: one to six months). Interest on loans denominated in Singapore dollar is based
on money market rates ranging from 1.32% to 2.21% (2014: nil) per annum. Interest on foreign currency loans is based on
money market rates ranging from 0.79% to 2.57% (2014: 0.38% to 3.30%) per annum.
The Group has mortgaged certain properties and assets of up to an aggregate amount of $2,455,633,000 (2014: $2,704,286,000) to
banks for loan facilities.
The fair values of term loans for the Group and Company are $8,269,763,000 (2014: $7,426,920,000) and $3,127,116,000 (2014:
$1,787,799,000) 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
2015
$’000
2014
$’000
Company
2015
$’000
2014
$’000
1,087,608
3,870,282
2,444,044
137,015
3,260,206
2,189,687
-
500,000
2,000,000
-
-
1,500,000
7,401,934
5,586,908
2,500,000
1,500,000
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
179
22. Deferred taxation
Deferred tax liabilities:
Accelerated tax depreciation
Investment properties valuation
Offshore income & others
Deferred tax assets:
Provisions
Unutilised tax benefits
Net deferred tax liabilities
Group
2015
$’000
2014
$’000
Company
2015
$’000
2014
$’000
123,573
148,684
137,972
410,229
107,375
132,404
119,875
359,654
(26,981)
(10,075)
(37,056)
(30,938)
(26,223)
(57,161)
373,173
302,493
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 $81,145,000 (2014: $59,239,000) 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 $438,111,000 (2014: $389,130,000) 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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
180
Notes to the Financial Statements
22. Deferred taxation (continued)
Movements in deferred tax liabilities and assets are as follows:
At
1 January
$’000
Charged/
(credited) to
profit or loss
$’000
Charged/
(credited)
to other
comprehen-
sive
income
$’000
Subsidiaries
disposed
$’000
Subsidiaries
acquired
$’000
Reclassifi-
cation
$’000
Liabilities
directly
associated
with assets
classified as
held for sale
(Note 18)
$’000
Exchange
differences
$’000
At
31 December
$’000
107,375
21,985
132,404
15,833
-
-
119,875
359,654
18,699
56,517
(2,216)
(2,216)
(30,938)
(26,223)
(57,161)
4,827
17,208
22,035
-
-
-
(601)
(49)
-
(650)
-
-
-
10
-
548
558
-
-
-
(5,177)
-
-
(5,177)
(796)
-
(796)
302,493
78,552
(2,216)
(650)
558
(5,973)
-
-
-
-
-
-
-
-
(19)
123,573
496
148,684
1,066
1,543
137,972
410,229
(74)
(1,060)
(1,134)
(26,981)
(10,075)
(37,056)
409
373,173
288,306
6,701
124,183
7,744
-
-
139,257
551,746
(22,585)
(8,140)
2,351
2,351
(37,600)
(52,867)
(90,467)
3,923
14,231
18,154
-
-
-
461,279
10,014
2,351
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(187,300)
(332)
107,375
-
477
132,404
-
(187,300)
852
997
119,875
359,654
568
(7,087)
(6,519)
2,180
19,890
22,070
(9)
(390)
(399)
(30,938)
(26,223)
(57,161)
(6,519)
(165,230)
598
302,493
Group
2015
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
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
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
181
23. 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
Profit on sale of investments
Dividend income from quoted shares
Others
24. 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
25. Operating profit
Operating profit is arrived at after charging/(crediting) the following:
Included in materials and subcontract costs:
Fair value loss/(gain) on
- investments
- forward foreign exchange contracts
Cost of stocks & properties held for sale recognised as expense
Direct operating expenses
- investment properties that generated rental income
Included in staff costs:
Key management’s emoluments
(including executive directors’ remuneration)
- short-term employee benefits
- post-employment benefits
- share options and share plans granted
Group
2015
$’000
2014
$’000
6,201,379
8,547,313
1,069,553
536,628
23,667
76,625
2,323,868
59,780
4,796
177
860,351
564,962
25,602
91,105
3,155,767
29,887
7,776
216
10,296,473
13,282,979
Group
2015
$’000
1,259,855
106,631
55,221
178,303
2014
$’000
1,406,861
105,077
56,461
164,565
1,600,010
1,732,964
Group
2015
$’000
2014
$’000
13,465
14,985
1,161,273
(82)
21,805
1,038,024
22,746
23,802
14,933
78
6,707
23,521
127
9,391
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
182
Notes to the Financial Statements
25. Operating profit (continued)
Included in other operating expense/(income):
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
Impairment/write-off of fixed assets
Profit on sale of fixed assets and investment property
Loss on sale of investments
Fair value loss/(gain) on
- investments
- forward foreign exchange contracts
- interest rate caps and swaps
Provision for stocks and work-in-progress
Provision for doubtful debts
Rental expense
- operating leases
Loss on differences in foreign exchange
Gain on disposal of subsidiaries
Loss/(gain) on disposal of associated companies
Write-back of impairment of investments and associated company
Fair value gain on investment properties (Note 7)
Gain associated with restructuring of operations and others
Non-audit fees paid to
- auditors of the Company
- other auditors of subsidiaries
26.
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
2015
$’000
1,495
4,405
2,519
2,589
8,018
(3,251)
4,805
21,883
8,350
(6,106)
59,064
12,242
109,627
3,092
(218,770)
18,823
(16,728)
(128,874)
(65,876)
2014
$’000
1,550
4,232
2,355
956
7,746
(289,214)
21,879
15,084
5,584
(3,170)
2,699
2,945
107,153
7,513
(48,647)
(145,184)
(47,971)
(54,569)
(4,752)
75
572
118
463
Group
2015
$’000
1,866
13,100
2014
$’000
4,169
7,767
14,966
11,936
119,320
133,104
(160,950)
6,106
(137,194)
3,170
(154,844)
(134,024)
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
183
27. 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 22)
Group
2015
$’000
2014
$’000
265,299
(66,456)
68,415
58,619
397,319
(33,512)
72,096
16,445
78,552
10,014
404,429
462,362
The income tax expense on the results of the Group differ from the amount of income tax expense determined by applying
the Singapore standard rate of income tax to profit before tax due to the following:
Profit before tax
Tax calculated at tax rate of 17% (2014: 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
Group
2015
$’000
2014
$’000
1,997,394
2,888,612
339,557
(217,668)
294,996
(6,007)
60,007
(66,456)
491,064
(181,507)
133,816
(21,587)
74,088
(33,512)
404,429
462,362
Group
2015
$’000
462,699
1,759
265,299
(66,456)
(302,763)
205
(33)
2014
$’000
465,387
143
397,319
(33,512)
(332,610)
102
(862)
Company
2015
$’000
14,000
-
9,500
(6,978)
(655)
-
-
2014
$’000
19,575
-
7,000
(12,575)
-
-
-
(8,115)
(33,268)
-
-
At 31 December
352,595
462,699
15,867
14,000
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
184
Notes to the Financial Statements
28. Earnings per ordinary share
Net profit attributable to shareholders
Adjustment for dilutive potential ordinary shares
of subsidiaries and associated companies
Group
2015
$’000
2014
$’000
Basic
Diluted
Basic
Diluted
1,524,622
1,524,622
1,884,798
1,884,798
-
(443)
-
(1,730)
Adjusted net profit
1,524,622
1,524,179
1,884,798
1,883,068
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
1,814,546
-
1,814,546
10,479
1,815,042
-
1,815,042
16,461
1,814,546
1,825,025
1,815,042
1,831,503
Earnings per ordinary share
84.0 cts
83.5 cts
103.8 cts
102.8 cts
29. Dividends
A final cash dividend of 22.0 cents per share tax exempt one-tier (2014: final cash dividend of 36.0 cents per share tax exempt one-
tier) in respect of the financial year ended 31 December 2015 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 (2014: cash dividend of
12.0 cents per share tax exempt one-tier), total distributions paid and proposed in respect of the financial year ended 31 December
2015 will be 34.0 cents per share (2014: 48.0 cents per share).
During the financial year, the following distributions were made:
A final cash dividend of 36.0 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
654,398
218,081
872,479
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
185
30. Commitments
(a)
Capital commitments
Capital expenditure not provided for in the financial statements:
In respect of contracts placed:
- for purchase and construction of investment properties
- for purchase of other fixed assets
- for purchase/subscription of shares in other companies
Amounts approved by Directors in addition to contracts placed:
- for purchase and construction of investment properties
- for purchase of other fixed assets
- for purchase/subscription of shares in other companies
Less: Non-controlling shareholders’ shares
Group
2015
$’000
2014
$’000
32,703
85,065
218,753
71,047
131,798
250,079
119,204
402,812
6,733
865,270
(11,436)
142,310
412,767
23,073
1,031,074
(272,267)
853,834
758,807
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
2015
$’000
2014
$’000
100,296
330,872
874,680
109,170
349,888
1,029,104
1,305,848
1,488,162
Company
2015
$’000
129
171
-
300
2014
$’000
49
-
-
49
(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
2015
$’000
2014
$’000
Company
2015
$’000
2014
$’000
224,961
271,613
147,644
147,020
222,717
151,902
644,218
521,639
-
-
-
-
-
-
-
-
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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
186
Notes to the Financial Statements
31. Contingent liabilities and guarantees (unsecured)
Guarantees in respect of banks and other loans
granted to subsidiaries and associated companies
Bank guarantees
Others
Group
2015
$’000
2014
$’000
Company
2015
$’000
2014
$’000
506,410
7,583
378
452,719
30,165
619
1,428,160
-
-
1,664,968
-
-
514,371
483,503
1,428,160
1,664,968
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.
32. 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.
33. 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 $8,444,817,000 (2014: $9,753,671,000). The net negative fair value of forward foreign exchange contracts is
$398,172,000 (2014: net negative fair value of $315,776,000) comprising assets of $117,644,000 (2014: $25,907,000) and
liabilities of $515,816,000 (2014: $341,683,000). These amounts are recognised as derivative assets and derivative liabilities.
As at the end of the financial year, the Company has outstanding forward foreign exchange contracts with notional amounts
totalling $8,425,838,000 (2014: $9,625,812,000). The net negative fair value of forward foreign exchange contracts is
$395,239,000 (2014: net negative fair value of $316,246,000) comprising assets of $120,507,000 (2014: $24,829,000) and
liabilities of $515,746,000 (2014: $341,075,000). These amounts are recognised as derivative assets and derivative liabilities.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
187
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
2015
Euro
$’000
Others
$’000
USD
$’000
2014
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
653,801
224,929
10,116
-
259,838
49,237
265,883
197,589
21,144
-
287,090
56,891
493,705
4,436
168,233
405,770
29,310
72,229
58,880
1,383,672
354
-
75,099
89,487
69,543
1,010,277
645
56,119
29,773
240,752
30
50
-
-
99
784
26
27
-
-
126
1,036
The Company has a number of investments in foreign subsidiaries, whose net assets are exposed to currency translation
risk. The Group does not currently designate its foreign currency denominated debt as a hedging instrument for the purpose
of hedging the translation of its foreign operations.
Sensitivity analysis for currency risk
If the relevant foreign currency change against SGD by 5% (2014: 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
2015
$’000
2014
$’000
Equity
2015
$’000
2014
$’000
(14,858)
14,858
(20,346)
20,346
11,326
(11,326)
9,849
(9,849)
705
(705)
(314)
314
3
(3)
3
(3)
-
-
-
-
-
-
-
-
(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 SGD, USD
and Renminbi 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 $1,711,435,000 (2014: $1,138,161,000) whereby it receives variable rates equal
to SIBOR, LIBOR and SHIBOR (2014: SIBOR and LIBOR) and pays fixed rates of between 0.85% and 4.90% (2014: 1.27% and
3.62%) on the notional amount.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
188
Notes to the Financial Statements
33. Financial risk management (continued)
The net negative fair value of interest rate swaps for the Group is $1,959,000 (2014: net negative fair value of $14,047,000)
comprising assets of $3,475,000 (2014: $379,000) and liabilities of $5,434,000 (2014: $14,426,000). These amounts are
recognised as derivative assets and derivative liabilities.
Sensitivity analysis for interest rate risk
If interest rates increase/decrease by 0.5% (2014: 0.5%) with all other variables held constant, the Group’s profit before tax
would have been lower/higher by $6,064,000 (2014: $6,855,000) 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 $687,042,000 (2014: $583,635,000) and $7,030,000 (2014:
$11,284,000) respectively. The net negative fair value of HSFO forward contracts for the Group is $257,618,000 (2014:
net negative fair value of $219,752,000) comprising assets of $70,000 (2014: $nil) and liabilities of $257,688,000 (2014:
$219,752,000). The net negative fair value of Dated Brent forward contracts for the Group is $1,337,000 (2014: net negative
fair value of $3,519,000). These amounts are recognised as derivative assets and derivative liabilities.
The Group hedges against fluctuations in electricity prices via its daily sales of electricity. Exposure to price fluctuations is
managed via electricity futures contracts. As at the end of the financial year, the Group has outstanding electricity futures
contracts with notional amounts totalling $15,955,000 (2014: $nil). The net positive fair values of electricity futures contracts
is $4,283,000 (2014: $nil). The amount is recognised as derivative assets.
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% (2014: 5%) with all other variables held constant, the Group’s
hedging reserve in equity would have been higher/lower by $21,471,000 (2014: $18,194,000) and $285,000 (2014: $388,000)
respectively as a result of fair value changes on cash flow hedges.
If prices for electricity futures contracts increase/decrease by 5% (2014: nil%) with all other variables held constant, the
Group’s hedging reserve in equity would have been higher/lower by $584,000 (2014: $nil) as a result of fair value changes on
cash flow hedges.
If prices for quoted investments increase/decrease by 5% (2014: 5%) with all other variables held constant, the Group’s
profit before tax would have been higher/lower by $4,976,000 (2014: $5,516,000) 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 $4,443,000 (2014: $14,267,000) 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 Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
189
(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
2015
$’000
490,383
99,625
575,680
2014
$’000
531,853
32,519
116,011
1,165,688
680,383
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).
Group
2015
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
Net-settled Dated Brent forward contracts
- Payments
Net-settled electricity futures contracts
- Receipts
Borrowings
2014
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Payments
Net-settled Dated Brent forward contracts
- Payments
Borrowings
Within
one year
$’000
Within
one to
two years
$’000
Within
two to
five years
$’000
After
five years
$’000
4,944,156
(5,140,189)
2,147,922
(2,320,481)
921,027
(930,107)
15
(185,283)
55
(72,405)
(1,337)
-
-
-
-
-
-
-
-
-
4,283
(1,057,296)
-
(1,257,867)
-
(4,268,375)
-
(2,907,365)
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)
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
190
Notes to the Financial Statements
33. Financial risk management (continued)
Company
2015
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Borrowings
2014
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
4,925,225
(5,120,786)
(706,839)
2,147,922
(2,320,481)
(74,861)
921,027
(930,107)
(721,327)
-
-
(2,390,181)
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)
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 2015.
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). Total
capital refers to capital employed under equity.
Net debt
Total capital
Net gearing ratio
Group
2015
$’000
6,365,828
11,925,859
0.53x
2014
$’000
1,646,542
14,727,641
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 Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
191
The following table presents the assets and liabilities measured at fair value.
Group
2015
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
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
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
125,472
-
125,472
11,732
10,544
197,388
219,664
77,121
99,515
47,167
-
-
-
124,288
99,515
188,368
183,183
197,388
568,939
-
-
-
-
-
-
780,275
-
780,275
-
-
119,000
1,263,322
1,889,790
-
1,263,322
1,889,790
119,000
119,000
3,153,112
3,272,112
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
911,998
952,017
-
911,998
952,017
123,500
123,500
1,864,015
1,987,515
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
192
Notes to the Financial Statements
33. Financial risk management (continued)
Company
2015
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
2014
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
120,507
515,746
24,829
341,075
-
-
-
-
120,507
515,746
24,829
341,075
There have been no transfer between Level 1, Level 2 and Level 3 for the Group and Company during 2015 and 2014.
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
Impairment loss
Fair value gain recognised in other comprehensive income
Exchange differences
At 31 December
Group
2015
$’000
155,340
34,854
(16,711)
(1,646)
25,462
89
2014
$’000
129,433
33,094
(15,946)
-
8,696
63
197,388
155,340
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
- Fixed assets
Exchange differences
At 31 December
Group
2015
$’000
1,864,015
407,585
141,227
-
(21,592)
726,567
146
35,164
2014
$’000
2,050,948
34,644
75,962
(454,712)
-
-
127,067
30,106
3,153,112
1,864,015
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
193
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
2015
$’000
Valuation
Techniques
Unobservable
Inputs
Range of
Unobservable
Inputs
Available-for-sale investments
197,388
Investment Properties
- Commercial, completed
1,263,322
Net asset value and/or
discounted cash flow
Direct comparison method,
investment method, income
capitalisation method
and/or discounted cash flow
method
- Commercial, under
1,889,790
construction
Direct comparison method,
residual method, cost
replacement method and/or
income capitalisation method
Net asset value*
Not applicable
Discount rate
4.25% to 14.00%
Occupancy rate
95% to 99%
Terminal yield
7.25% to 11.00%
Capitalisation rate
7.00% to 12.50%
Monthly effective
rental (psm)
$21 to $79
Price of comparable
land plots (psm)
$8,152 to $12,738
Gross development
value ($’million)
Construction costs
incurred ($’million)
Capitalisation rate
Occupancy rate
$3,182
$91
6.00%
95%
*
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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
194
Notes to the Financial Statements
33. Financial risk management (continued)
Description
Fair value
as at
31 December
2014
$’000
Available-for-sale investments
155,340
Investment Properties
- Commercial, completed
911,998
Valuation
Techniques
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
10.41% to 11.15%
Capitalisation rate
7.00% to 12.50%
Monthly effective
rental (psm)
$18 to $78
- Commercial, under
construction
952,017
Direct comparison method
and/or residual method
Price of comparable $10,075 to $11,289
land plots (psm)
Gross development
value ($’million)
$598 to $893
*
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.
34. Segment analysis
The Group is organised into business units based on their products and services, and has four reportable operating segments as
follows:
(i)
(ii)
(iii)
(iv)
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.
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.
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.
Investments
The Investments Division consists mainly of the Group’s investments in KrisEnergy Limited, M1 Limited, k1 Ventures Ltd, and
equities.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
195
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
Property
$’000
Infrastructure
$’000
Investments
$’000
Elimination
$’000
Total
$’000
2015
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
6,240,549
799
6,241,348
1,926,447
4,624
1,931,071
2,058,398
32,538
2,090,936
71,079
64,201
135,280
-
(102,162)
(102,162)
10,296,473
-
10,296,473
596,784
3,340
69,783
(43,425)
72,013
698,495
(181,986)
516,509
636,481
10,916
29,026
(76,608)
296,640
896,455
(183,720)
712,735
220,643
-
24,509
(25,162)
36,025
256,015
(33,387)
222,628
45,637
710
157,771
(157,332)
99,643
146,429
(5,336)
141,093
14,086
-
(161,769)
147,683
-
-
-
-
1,513,631
14,966
119,320
(154,844)
504,321
1,997,394
(404,429)
1,592,965
481,470
35,039
516,509
700,482
12,253
712,735
207,127
15,501
222,628
135,543
5,550
141,093
-
-
-
1,524,622
68,343
1,592,965
10,063,097
8,692,893
1,370,204
16,412,086
7,196,762
9,215,324
3,034,226
1,936,768
1,097,458
6,473,168
6,230,295
242,873
(7,061,976)
(7,061,976)
-
28,920,601
16,994,742
11,925,859
568,116
212,100
147,691
3,251,468
895,909
33,815
928,650
505,869
37,324
773,522
112,391
1,207
-
-
-
5,521,756
1,726,269
220,037
External sales
Non-current assets
Singapore
$’000
Brazil
$’000
6,930,287
6,028,417
1,011,602
288,560
Far East &
other ASEAN
countries
$’000
1,738,304
4,459,665
Other
countries
$’000
616,280
962,598
Elimination
$’000
Total
$’000
-
-
10,296,473
11,739,240
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 2015.
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 2015.
Note: Pricing of inter-segment goods and services is at fair market value.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
196
Notes to the Financial Statements
34. Segment analysis (continued)
Offshore & Marine
$’000
Property
$’000
Infrastructure
$’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
1,729,348
3,619
1,732,967
2,933,358
50,835
2,984,193
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
667,280
3,558
26,066
(60,976)
381,209
1,017,137
(140,024)
877,113
465,727
-
960
(44,741)
29,348
451,294
(44,530)
406,764
18,152
906
134,251
(134,602)
36,273
54,980
(5,102)
49,878
1,039,684
52,811
1,092,495
481,993
395,120
877,113
319,990
86,774
406,764
43,131
6,747
49,878
(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
9,626,640
7,299,871
2,326,769
16,376,262
7,453,252
8,923,010
4,263,143
3,311,344
951,799
8,954,630
6,428,567
2,526,063
(7,629,769)
(7,629,769)
-
31,590,906
16,863,265
14,727,641
539,932
268,402
141,816
3,205,343
234,956
18,601
649,565
489,995
104,219
593,604
268
500
-
-
-
4,988,444
993,621
265,136
External sales
Non-current assets
Singapore
$’000
Brazil
$’000
9,292,272
5,705,455
1,841,396
325,563
Far East &
other ASEAN
countries
$’000
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, 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.
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Notes to the Financial Statements
197
35. 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:
•
•
•
•
•
•
•
•
•
FRS 115 Revenue from Contracts with Customers
FRS 109 Financial Instruments
Improvements to Financial Reporting Standards (November 2014)
Amendments to FRS 27 Separate Financial Statements: Equity Method in Separate Financial Statements
Amendments to FRS 16 Property, Plant and Equipment and FRS 38 Intangible Assets: Clarification of Acceptable Methods of
Depreciation and Amortisation
Amendments to FRS 111 Joint Arrangements : Accounting for Acquisitions of Interests in Joint Operations
Amendments to FRS 110 Consolidated Financial Statements and FRS 28 Investments in Associates and Joint Ventures: Sale
or Contribution of Assets between an Investor and its Associate or Joint Venture
Amendments to FRS 110 Consolidated Financial Statements, FRS 112 Disclosure of Interests in Other Entities, FRS 28
Investments in Associates and Joint Ventures - Investment Entities: Applying the Consolidation Exception
Amendments to FRS 1 Presentation of Financial Statements: Disclosure Initiative
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 2018. The Group is currently evaluating the impact of
the changes in the period of initial adoption.
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.
36. Significant subsidiaries and associated companies
Information relating to significant subsidiaries consolidated in these financial statements and significant associated companies
whose results are equity accounted for is given in the following pages.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
198
Significant Subsidiaries and
Associated Companies
Gross
Interest
2015
%
Effective Equity
Interest
2015
%
2014
%
Cost of Investment
2015
$’000
2014
$’000
Country of
Incorporation
/Operation
Principal Activities
OFFSHORE & MARINE
Offshore
Subsidiaries
Keppel Offshore and Marine Ltd
Keppel FELS Ltd
100
100
100
100
100
100
Angra Propriedades &
Administracao Ltd(1a)
AzerFELS Pte Ltd
Benniway Pte Ltd
Caspian Shipyard Company
LLC(1a)
Deepwater Technology Group
Pte Ltd
100
100
100
68
68
68
100
100
100
75
51
51
100
100
100
Estaleiro BrasFELS Ltda(1a)
100
100
100
FELS Offshore Pte Ltd
Fernvale Pte Ltd
100
100
100
100
100
100
FSTP Brasil Ltda(1a)
75
75
75
FSTP Pte Ltd
75
75
75
Guanabara Navegacao Ltda(1a)
Hygrove Investments Ltd(4)
Keppel AmFELS, LLC(3)
100
100
100
100
100
100
100
100
100
Keppel FELS Baltech Ltd(3)
100
100
100
Keppel FELS Brasil SA(1a)
100
100
100
Keppel Offshore & Marine
Engineering Services Mumbai
Pte Ltd(3)
Keppel Offshore & Marine
Technology Centre Pte Ltd
100
100
100
100
100
100
801,720
801,720
Singapore
Investment holding
#
#
Singapore
Construction, fabrication and repair
of offshore production facilities and
drilling rigs, power barges,
specialised vessels and other
offshore production facilities
Holding of long-term investments
and property management
#
Brazil
#
#
#
Singapore
Holding of long-term investments
Singapore
Holding of long-term investments
Azerbaijan
Construction and repair of offshore
drilling rigs
#
Singapore
#
Brazil
Research and experimental
development on deepwater
engineering
Engineering, construction and
fabrication of platforms for the oil
and gas sector, shipyard works and
other general business activities
Singapore
Holding of long-term investments
#
#
Singapore
#
Brazil
#
Singapore
#
#
#
Brazil
BVI
USA
#
Bulgaria
#
Brazil
#
India
Construction, fabrication and repair
of drilling rigs and offshore
production facilities
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
#
Singapore
Research & development on marine
and offshore engineering
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Significant Subsidiaries and Associated Companies
199
Gross
Interest
2015
%
Effective Equity
Interest
2015
%
2014
%
Cost of Investment
2015
$’000
2014
$’000
Country of
Incorporation
/Operation
Principal Activities
Keppel Offshore & Marine USA
100
100
100
Inc(3)
Keppel Sea Scan Pte Ltd
100
100
100
Keppel Singmarine Brasil
Ltda(1a)
100
100
100
Keppel Verolme BV(1a)
100
100
100
KV Enterprises BV(1a)
KVE Adminstradora de Bens
Imoveis Ltda(1a)
100
100
100
100
100
100
Lindel Pte Ltd
100
100
100
Navegantes Administracoes
de Bens Moveis e Imoveis
Ltda(1a)
Offshore Technology
Development Pte Ltd
100
100
100
100
100
100
Regency Steel Japan Ltd(1a)
51
51
51
Topaz Atlantic Unlimited(4)
Wideluck Enterprises Ltd(4)
Willalpha Ltd(4)
100
100
100
100
100
100
100
100
100
Associated Companies
Asian Lift Pte Ltd
Atwin Offshore & Marine Pte Ltd
FloaTEC Singapore Pte Ltd
Floatel International Ltd(3)
50
50
50
30
50
50
30
50
50
30
50
50
Marine Housing Services Pte Ltd
50
50
50
Seafox 5 Ltd(3)
49
49
49
Marine
Subsidiaries
Keppel Shipyard Ltd
100
100
100
Keppel Philippines Marine Inc(1a)
98
98
98
Alpine Engineering Services
Pte Ltd
100
100
100
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
USA
#
Singapore
Offshore and marine-related
services
Trading and installation of
hardware, industrial, marine and
building related products, leasing
and provision of services
#
Brazil
Shipbuilding
# Netherlands Construction and repair of offshore
drilling rigs and shiprepairs
# Netherlands Holding of long-term investments
#
Brazil
#
Singapore
Holding of long-term investments
and property management
Project management, engineering
and procurement
#
Brazil
Shipbuilding
#
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
Provision of heavy-lift equipment
and related services
#
#
#
Singapore
Investment holding company
Singapore
Manufacturing and repair of oil rigs
Bermuda
Operating accommodation and
construction support vessels
(floatels) for the offshore oil and gas
industry
#
Singapore
#
Isle of Man
Provision of housing services for
marine workers
Owning and leasing of multi-
purpose self-elevating platforms
#
Singapore
Ship repairing, shipbuilding and
conversions
#
#
Philippines
Shipbuilding and repairing
Singapore
Marine contracting
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
200
Significant Subsidiaries and
Associated Companies
Gross
Interest
2015
%
Effective Equity
Interest
2015
%
2014
%
Cost of Investment
2015
$’000
2014
$’000
Country of
Incorporation
/Operation
Principal Activities
Blastech Abrasives Pte Ltd
100
100
100
Keppel Nantong Heavy Industry
Co Ltd(3)
Keppel Nantong Shipyard
Company Ltd(3)
100
100
100
100
100
100
Keppel Singmarine Pte Ltd
100
100
100
Keppel Smit Towage Pte Ltd
51
51
51
#
#
#
#
#
#
Singapore
#
China
#
China
Painting, blasting, shot blasting,
process and sale of slag
Engineering and construction of
specialised vessels
Engineering and construction of
specialised vessels
#
#
Singapore
Shipbuilding and repairing
Singapore
Provision of towage services
Keppel Subic Shipyard Inc(1a)
87+
86+
86+
3,020
3,020
Philippines
Shipbuilding and repairing
KS Investments Pte Ltd
KSI Production Pte Ltd(4)
Maju Maritime Pte Ltd
Marine Technology Development
Pte Ltd
100
100
51
100
100
51
100
100
51
100
100
100
Associated Companies
Arab Heavy Industries PJSC(1a)
Dyna-Mac Holdings Ltd(3)
Nakilat - Keppel Offshore &
Marine Ltd(1a)
33
24
20
33
24
20
33
24
20
PV Keez Pte Ltd
20
20
20
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Holding of long-term investments
BVI/Norway Holding of long-term investments
Singapore
Provision of towage services
Singapore
Provision of technical consultancy
for ship design and engineering
works
UAE
Shipbuilding and repairing
Singapore
Investment holding
Qatar
Ship repairing
#
Singapore
Chartering of ships, barges and
boats with crew
PROPERTY
Subsidiaries
Keppel Land Ltd(2)
99
99
55 4,716,367 1,685,699
Singapore
Holding, management and
investment company
55
86+
57+
28
55
55
55
28
Keppel Land China Ltd(2)
Keppel Bay Pte Ltd
100
99
100+ 100+
Keppel Philippines Properties
80+
79+
Inc(2a)
Aether Ltd(3)
Aintree Assets Ltd(4)
51
100
Alpha Investment Partners Ltd(2)
100
Bayfront Development Pte Ltd(2)
100
51
99
99
99
51
Beijing Aether Property
Development Ltd(3)
Beijing Kingsley Property
Development Co Ltd(3)
Belwynn-Hung Phu Joint Venture
LLC(2a)
Broad Elite Investments Ltd(4)
Castlehigh Pte Ltd(4)
51
100
99
55
60
60
33
100
-
99
-
55
55
#
626
493
#
#
#
#
#
#
#
#
-
#
Singapore
Investment holding
626
493
#
#
#
#
#
Singapore
Property development
Philippines
Investment holding
HK
Investment holding
BVI/Asia
Investment holding
Singapore
Fund management
Singapore
Investment holding
China
Property investment
#
China
Property development
#
Vietnam
Property development
#
#
BVI/China
Investment holding
Singapore
Liquidated
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Significant Subsidiaries and Associated Companies
201
Gross
Interest
2015
%
Effective Equity
Interest
2015
%
2014
%
100
99
55
100
99
55
100
99
55
100
99
55
100
99
55
65
100
98
100
100
100
100
65
99
97
99
99
99
99
35
55
30
55
-
55
55
100
99
55
100
100
79
90
99
99
99
79
89
98
55
55
59
49
54
100
99
55
100
51
99
51
55
28
100
99
55
100
99
55
100
99
55
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 Co Ltd(3)
D.L. Properties Ltd(2)
Double Peak Holdings Ltd(4)
Estella JV Co Ltd(2a)
Evergro Properties Ltd(2)
First King Properties Ltd(n)(4)
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)
Jencity Ltd(4)
Jiangyin Evergro Properties
Co Ltd(3)
K-Commercial Management
Pte Ltd(2)
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)
100
99
55
Keppel Heights (Wuxi) Property
Development Co Ltd(3)
Keppel Hong Da (Tianjin Eco-City)
Property Development Co Ltd(3)
100
99
55
100+ 100+
75+
Country of
Incorporation
/Operation
Principal Activities
Cost of Investment
2015
$’000
2014
$’000
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
China
Property development
#
China
Property development
#
China
Property development
#
China
Property development
#
China
Property development
#
#
#
#
-
#
#
Singapore
Property investment
BVI/Singapore Investment holding
Vietnam
Property development
Singapore
Investment holding
Jersey
Investment holding
Singapore
Investment holding
Singapore
Investment holding
#
Singapore
Property development
#
#
#
#
#
Singapore
Investment holding
Singapore
Investment holding
Vietnam
Property investment
BVI/Vietnam
Investment holding
China
Property development
#
Singapore
Investment holding
#
#
Singapore
Investment holding
Saudi Arabia Property development
#
China
Property development
#
Singapore
Investment holding
#
Singapore
Investment holding
#
Singapore
Investment, management and
holding company
#
China
Property development
#
China
Property development
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
202
Significant Subsidiaries and
Associated Companies
Gross
Interest
2015
%
Effective Equity
Interest
2015
%
2014
%
100+ 100+
75+
100
99
55
100
99
55
100
100
99
99
55
55
100
99
55
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)
100
100
100
68
99
99
99
68
55
55
55
37
Keppel Land Watco V Co Ltd(2a)
68
68
37
Keppel REIT Investment
Pte Ltd(2)
Keppel REIT Management Ltd(2)
Keppel REIT Property
Management Pte Ltd(2)
Keppel Thai Properties Public
Co Ltd(2a)
Keppel Tianjin Eco-City Holdings
Pte Ltd(2)
Keppel Tianjin Eco-City
Investments Pte Ltd(2)
100
99
55
100
100
99
99
55
55
45
45
25
100+ 100+
75+
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
2015
$’000
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
2014
$’000
#
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
Property investment and
development
Property investment and
development
#
Singapore
Investment holding
#
#
Singapore
Property fund management
Singapore
Property management services
#
Thailand
Property development and
investment
#
Singapore
Investment holding
100+ 100+
75+ 126,137
126,137
Singapore
Investment holding
Keppel Township Development
100
99
55
(Shenyang) Co Ltd(3)
Kingsdale Development Pte Ltd(2)
Kingsley Investment Pte Ltd(2)
Le-Vision Pte Ltd(4)
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)
Portsville Pte Ltd(2)
86
100
-
100
100
100
100
100
100
100
100
85
99
-
99
99
99
99
99
99
99
99
47
55
55
55
55
55
55
55
55
55
55
#
#
#
-
#
#
#
#
#
#
#
#
#
China
Property development
#
#
#
#
#
#
#
#
#
#
#
Singapore
Investment holding
Singapore
Investment holding
Singapore
Liquidated
Singapore
Property development
Singapore
Investment holding
Singapore
Property and investment holding
Singapore
Investment holding
Singapore
Investment holding
Singapore
Property investment
BVI/Singapore Investment holding
Singapore
Investment holding
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Significant Subsidiaries and Associated Companies
203
Gross
Interest
2015
%
Effective Equity
Interest
2015
%
2014
%
Cost of Investment
2015
$’000
2014
$’000
Country of
Incorporation
/Operation
Principal Activities
PT Harapan Global Niaga(2a)
PT Kepland Investama(2a)
PT Puri Land Development(n)(2a)
PT Ria Bintan(1a)
PT Sentral Supel Perkasa(2a)
PT Sentral Tanjungan Perkasa(2a)
PT Straits-CM Village(1a)
Quang Ba Royal Park JV Co(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)
Shanghai Jinju Real Estate
Development 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(2a)
Straits Properties Ltd(2)
Straits Property Investments
Pte Ltd(2)
100
100
100
100
-
80
100
70
60
75
100
100
100
99
100
100
100
99
99
99
46
-
79
39
64
60
74
99
99
89
98
99
99
99
55
55
-
25
44
44
21
38
33
41
55
55
49
54
54
55
54
100
99
54
99
98
54
99
98
54
70
80
100
100
100
100
69
68
99
99
99
99
38
38
55
55
55
55
Success View Enterprises Ltd(4)
100+ 100+
75+
Sunsea Yacht Club (Zhongshan)
Co Ltd(3)
100
79
44
Sunseacan Investment (HK)
Co Ltd(3)
Third Dragon Development
Pte Ltd(2)
Tianjin Fulong Property
Development Co Ltd(3)
80
79
44
100
99
55
100
99
55
#
#
#
#
-
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
-
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Indonesia
Property development
Indonesia
Property investment and
development
Indonesia
Property development
Indonesia
Golf course ownership and
operation
Indonesia
Disposed
Indonesia
Property development
Indonesia
Hotel ownership and operations
Vietnam
Vietnam
Vietnam
Property investment
Property development
Property development
Singapore
Investment holding
BVI/HK
Investment holding
Vietnam
Property development
China
China
China
China
Property development
Property development
Property development
Property development
#
China
Investment holding
#
China
Property development
#
China
Property development
#
#
Singapore
Property development
China
Golf club operations and
development and property
development
#
Singapore
Investment holding
# Myanmar
Hotel ownership and operations
#
#
#
#
Singapore
Property development
Singapore
Investment holding
BVI/China
Investment holding
China
Development of marina lifestyle
cum residential properties
#
HK
Investment holding
#
Singapore
Investment holding and marketing
agent
#
China
Property development
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
204
Significant Subsidiaries and
Associated Companies
Gross
Interest
2015
%
Effective Equity
Interest
2015
%
2014
%
100
99
55
100
99
55
100
100
100
99
99
99
55
-
55
Country of
Incorporation
/Operation
Principal Activities
Cost of Investment
2015
$’000
2014
$’000
#
#
#
#
#
#
China
Property development
#
China
Trading of construction materials
#
-
BVI/China
Investment holding
Jersey
Investment holding
# Myanmar
Hotel ownership and operations
100+ 100+
91+
1,460
1,460
Singapore
Investment holding
100
100
100
100
100
100
11,001
78,214
11,001
Singapore
Investment holding
78,214
Singapore
Investment holding
Tianjin Fushi Property
Development Co Ltd(3)
Tianjin Keppel Hong Hui
Procurement Headquarter
Co Ltd(3)
Triumph Jubilee Ltd(4)
West Gem Properties Ltd(n)(4)
Wiseland Investment (Myanmar)
Ltd(2a)
Atlantic Marina Services
(Asia-Pacific) Pte Ltd
Esqin Pte Ltd
FELS Property Holdings Pte Ltd
FELS SES International Pte Ltd
98+
98+
Harbourfront One Pte Ltd
100+ 100+
90+
65+
48
#
48
#
Singapore
Investment holding
Singapore
Property development
Keppel Group Eco-City
Investments Pte Ltd
100+ 100+
84+ 126,744
126,744
Singapore
Investment holding
Keppel Houston Group LLC(4)
100+ 100+
Keppel Kunming Resort Ltd(3)
100+
98+
86+
91+
#
4
#
4
USA
HK
Property investment
Property investment
Keppel Point Pte Ltd
100+ 100+
86+ 122,785
122,785
Singapore
Property development and
investment
Keppel Real Estate Investment
Pte Ltd
100
100
100
764,400
764,400
Singapore
Investment holding
Petro Tower Ltd(3)
76
74
69
Singapore Tianjin Eco-City
90+
90+
76+
Investment Holdings Pte Ltd
Substantial Enterprises Ltd(4)
100+ 100+
84+
Associated Companies
Bellenden Investments Ltd(4)
Chengdu Taixin Real Estate
Development Co Ltd(n)(3)
CityOne Development (Wuxi)
Co Ltd(3)
CityOne Township Development
Pte Ltd(2)
67
35
66
35
37
-
50
50
27
50
50
27
City Square Office Co Ltd(n)(2a)
40
40
-
Davinelle Ltd(4)
Dong Nai Waterfront City LLC(2a)
EM Services Pte Ltd(3)
Equity Rainbow II Pte Ltd(2)
Harbourfront Three Pte Ltd(3)
Harbourfront Two Pte Ltd(3)
67
50
25
43
-
-
66
50
25
43
-
-
37
27
14
23
34
34
#
#
#
#
#
#
#
#
#
#
#
#
-
-
#
#
Vietnam
Property investment
Singapore
Investment holding
#
BVI
Investment holding
#
-
BVI/Vietnam
Investment holding
China
Property investment
#
China
Property development
#
Singapore
Investment holding
- Myanmar
Property investment and
development
#
#
#
#
#
#
BVI/Vietnam
Investment holding
Vietnam
Property development
Singapore
Property management
China
Property investment
Singapore
Disposed
Singapore
Disposed
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Significant Subsidiaries and Associated Companies
205
Gross
Interest
2015
%
Effective Equity
Interest
2015
%
2014
%
Cost of Investment
2015
$’000
2014
$’000
Country of
Incorporation
/Operation
Principal Activities
Keppel Land Watco I Co Ltd(2a)
68
68
37
Keppel Land Watco II Co Ltd(2a)
68
68
37
Keppel Land Watco III Co Ltd(2a)
68
68
37
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)
46
25
25
33
46
25
25
33
25
14
14
18
40
40
22
25
50
25
45
14
38
25
25
14
Vietcombank Tower 198 Ltd(1a)
30
30
27
#
#
#
#
#
#
#
#
#
#
#
#
#
Vietnam
#
Vietnam
#
Vietnam
Property investment and
development
Property investment and
development
Property investment and
development
#
#
#
#
Singapore
Real estate investment trust
Indonesia
Property development
Indonesia
Development of holiday resort
Singapore
Property management
# Malaysia
Property investment
#
#
Singapore
Investment holding
China
Property development
#
Singapore
Property development
#
Vietnam
Property investment
INFRASTRUCTURE
Subsidiaries
Keppel Infrastructure Holdings
Pte Ltd
X-to-Energy
Subsidiaries
100
100
100
445,892
445,892
Singapore
Investment holding
Keppel DHCS Pte Ltd
100
100
100
Keppel Infrastructure Fund
Management Pte Ltd
100
100
100
Keppel XTE Investments Pte Ltd
100
100
100
Associated Companies
Keppel Infrastructure Trust
18
18
49
Waste-to-Energy
Subsidiaries
Keppel Seghers Pte Ltd
100
100
100
Keppel Seghers Holdings BV(1a)
100
100
100
#
#
#
#
#
#
#
Singapore
Development of district heating and
cooling system for the purpose of
air cooling and other utility services
#
Singapore
Trust management services
#
Singapore
Investment holding
#
Singapore
Infrastructure business trust
#
Singapore
Provision of environmental,
technologies, engineering works &
construction activities
# Netherlands
Investment holding
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
206
Significant Subsidiaries and
Associated Companies
Gross
Interest
2015
%
Effective Equity
Interest
2015
%
2014
%
Keppel Seghers Belgium NV(1a)
100
100
100
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
2015
$’000
#
2014
$’000
#
Belgium
Provider of services and solutions to
the environmental industry related
to solid waste treatment
Keppel Seghers UK Ltd(1a)
100
100
100
#
#
United
Kingdom
Design and construction of
waste-to-energy plants
Associated Companies
Tianjin Eco-City Energy
20
20
20
Investment & Construction
Co Ltd(3)
Tianjin Eco-City Environmental
Protection Co Ltd(3)
20
20
20
Gas-to-Power
Subsidiaries
Keppel Energy Pte Ltd
Keppel Electric Pte Ltd
100
100
100
100
100
100
Keppel Gas Pte Ltd
100
100
100
Associated Companies
Keppel Merlimau Cogen Pte Ltd
49
49
100
Infrastructure Services
Subsidiaries
Keppel Infrastructure Services
Pte Ltd
100
100
100
KMC O&M Pte Ltd
100
100
100
Keppel Seghers Engineering
Singapore Pte Ltd
100
100
100
#
#
#
#
#
#
#
#
#
#
China
#
China
Investment and implementation of
energy and utilities related
infrastructure
Investment, construction and
operation of infrastructure for
environmental protection
#
#
Singapore
Investment holding
Singapore
Electricity, energy and power supply
and general wholesale trade
#
Singapore
Purchase and sale of gaseous fuels
#
Singapore
Commercial power generation
#
Singapore
#
Singapore
#
Singapore
Provision of technical support
including engineering, construction,
operations and maintenance of
plants and facilities
Engineering works, construction
and O&M of plants and facilities
Engineering works, construction
and O&M of plants and facilities
Associated Companies
GE Keppel Energy Services
Pte Ltd(2)
Others
Subsidiaries
Keppel Integrated Engineering Ltd
Keppel Prince Engineering
Pty Ltd(2a)
50
50
50
#
#
Singapore
Precision engineering, repairing,
services and agencies
100
100
100
100
100
100
#
#
#
#
Singapore
Investment holding
Australia
Metal fabrication
Keppel Corporation Limited Report to Shareholders 2015
Directors’ Statement & Financial Statements - Significant Subsidiaries and Associated Companies
207
Gross
Interest
2015
%
Effective Equity
Interest
2015
%
2014
%
Cost of Investment
2015
$’000
2014
$’000
Country of
Incorporation
/Operation
Principal Activities
Logistics & Data Centres
Subsidiaries
Keppel Telecommunications &
Transportation Ltd(2)
80
80
80
397,647
397,647
Singapore
Keppel Logistics Pte Ltd(2)
100
80
80
Keppel Logistics (Foshan) Ltd(3)
70
56
56
Keppel Logistics (Foshan
Sanshui Port) Co Ltd(3)
60
33
33
Jilin Sino-Singapore Food Zone
70
56
56
International Logistics Co Ltd(3)
Keppel Wanjiang International
Coldchain Logistics Park
(Anhui) Co Ltd (3)
60
48
48
Keppel Data Centres Pte Ltd(2)
100
80
80
Keppel Data Centres Holding
Pte Ltd(2)
100+
86+
73+
Keppel Datahub Pte Ltd(2)
100+
86+
73+
Keppel Digihub Ltd(2)
100+
86+
73+
Keppel DC REIT Management
Pte Ltd(2)
Keppel DC Investment Holdings
Pte Ltd(2)
Keppel Communications
Pte Ltd(2)
100
80
80
100
80
80
100
80
80
Keppel Telecoms Pte Ltd(2)
100
80
80
Associated Companies
Asia Airfreight Terminal
Company Ltd(3)
10
8
8
Computer Generated Solutions
21
16
16
Inc(3)
Keppel DC REIT(3)
35+
29+
27+
Radiance Communications
Pte Ltd(2)
50
40
40
SVOA Public Company Ltd(2a)
32
25
25
Wuhu Sanshan Port Co Ltd(3)
50
40
40
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Investment, management and
holding company
Integrated logistics services and
supply chain solutions
#
China
Integrated logistics port operations,
warehousing and distribution
#
China
Port operations
#
China
#
China
Integrated logistics services,
warehousing and distribution
Integrated logistics services,
warehousing and distribution
Singapore
Investment holding
#
#
Singapore
#
Singapore
#
Singapore
Data centre facilities and
co-location services
Data centre facilities and
co-location services
Data centre facilities and
co-location services
#
Singapore
Investment holding and fund
management
#
Singapore
Investment holding
#
Singapore
Trading and provision of
communications systems and
accessories
#
Singapore
Investment holding
#
HK
#
USA
Operation of an air cargo handling
terminal
IT consulting and outsourcing
provider
#
Singapore
Data centre real estate investment
trust
#
Singapore
#
Thailand
#
China
Distribution and maintenance of
communications equipment and
systems
Distribution of IT products and
telecommunications services
Integrated logistics services and
port operations
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
208
Significant Subsidiaries and
Associated Companies
Gross
Interest
2015
%
Effective Equity
Interest
2015
%
2014
%
Cost of Investment
2015
$’000
2014
$’000
Country of
Incorporation
/Operation
Principal Activities
INVESTMENTS
Subsidiaries
Keppel Philippines Holdings
60+
59+
59+
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)
98
100
100
100
100
100
100
100
100
100
100
100
100
98
98
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
36
40
36
40
36
31
M1 Ltd(2)
19
15
15
-
#
#
#
-
Philippines
Investment holding
#
#
#
Singapore
Investment holding
BVI
BVI
Investment holding
Investment company
90,000
90,000
Singapore
Investment holding
#
#
10
#
#
#
#
HK
Investment company
Singapore
Investment company
10
Singapore
Investment holding
#
#
Singapore
Investment company
Singapore
Investment holding
484,355
484,355
Singapore
Investment holding
#
#
#
#
HK
Investment company
Singapore
Investment company
265
265
Singapore
Travel agency
#
#
#
#
#
Singapore
Investment holding
BVI
Exploration for, and the
development and production of oil
and gas
#
Singapore
Telecommunications services
Total
Subsidiaries
8,171,188 5,140,520
Notes:
(i)
Audited by other firms of auditors; and
Audited by Ernst & Young LLP, Singapore;
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)
(2a) Audited by overseas practice of Ernst & Young LLP;
(3)
(4) Not required to be audited by law in the country of incorporation and companies disposed, liquidated and struck off.
In accordance to Rule 716 of The Singapore Exchange Securities Trading Limited – Listing Rules, the Audit Committee and Board of Directors of the Company confirmed that
they are satisfied that the appointment of different auditors for its subsidiaries and significant associated companies would not compromise the standard and effectiveness of
the audit of the Company.
(ii)
+
(iii) #
(n)
(iv)
The subsidiaries’ place of business is the same as its country of incorporation, unless otherwise specified.
(v)
Abbreviations:
(vi)
British Virgin Islands (BVI)
Hong Kong (HK)
The shareholdings of these companies are held jointly with other subsidiaries.
The shareholdings of these companies are held by subsidiaries of Keppel Corporation Limited.
These companies were incorporated/acquired during the financial year.
United Arab Emirates (UAE)
United States of America (USA)
(vii) The Company has 249 significant subsidiaries and associated companies as at 31 December 2015. 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.
Keppel Corporation Limited Report to Shareholders 2015
Interested Person Transactions
Interested Person
Transactions
209
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 2015. During the financial year, the following interested person transactions were entered into by the Group:
Name of Interested Person
Transaction for the Sale of Goods and Services
CapitaLand Group
CapitaMalls Asia Group
Mapletree Investments Group
Neptune Orient Lines Group
PSA International Group
SATS Group
SembCorp Marine Group
Singapore Airlines Group
Singapore Power Group
Singapore Technologies Engineering Group
Singapore Telecommunications Group
Temasek Holdings Group
Transaction for the Purchase of Goods and Services
Certis CISCO Security Group
CapitaMalls Asia 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)
2015
$’000
2014
$’000
2015
$’000
2014
$’000
-
-
225,717
-
-
-
-
-
-
-
-
-
-
-
-
180,926
-
-
-
-
-
-
406,643
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
200,000
104
1,360
4,871
39,354
4,881
5,600
12,300
342
182
415
1,181
161
80,000
24,436
143
77
-
28,914
2,439
-
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
406,760
414,890
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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
210
Key Executives
Chan Hon Chew, 50
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 Accounting Standard Council in November 2015. 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.
Chow Yew Yuen, 61
Bachelor of Science in Mechanical Engineering (First Class Honours), University of Newcastle Upon Tyne; Attended Advanced
Management Programme at Harvard Business School.
Mr Chow was appointed as 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 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, Deepwater
Technology Group Pte Ltd, Marine Technology Development Pte Ltd and Offshore Technology Development 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, and Keppel Infrastructure Holdings Pte Ltd.
Mr Chow’s other appointments include being President of the Association of Singapore Marine Industries, Chairman of National Work
At Heights Safety Taskforce, member of Workplace Safety & Health Council, Singapore Accreditation Council, member and Director of
Singapore Maritime Foundation as well as member of 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 Limited Report to Shareholders 2015 Key Executives
211
Wong Kok Seng, 65
Bachelor of Science (Honours) in Naval Architecture, University of Newcastle Upon Tyne; Attended the Program for Management
Development in Harvard Business School.
Mr Wong is the Managing Director (Offshore and Keppel FELS) 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 (Chairman), 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, 63
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 31 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. He was a Board Member of the Singapore Maritime Foundation from 2005 to 2015 and was also appointed as Chairman
from 2010 to 2015. 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, 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
Keppel AmFELS Inc (USA), Keppel Integrated Engineering Ltd, Keppel Telecommunications & Transportation Ltd., FELS Crane Pte Ltd,
Keppel Offshore & Marine USA, Keppel Energy Pte Ltd, Offshore Technology Development Pte Ltd and Marine Technology Development
Pte Ltd.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 212
Key Executives
Chor How Jat, 54
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 in 1989 and held appointments as Shiprepair Manager of Keppel Shipyard Limited; Deputy Shipyard Manager,
Shipyard Manager of Keppel FELS Limited in 2001 and 2002 respectively; General Manager (Operations) of Keppel FELS Limited in 2004;
and Executive Director of Keppel Shipyard in January 2011.
Mr Chor serves as Director on the 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, Keppel FELS Limited and Gas Technology Development Pte Ltd. Mr Chor is also
Director and Chairman of Blastech Abrasives Pte Ltd, Nusa Maritime Pte Ltd, Alpine Engineering Services Pte Ltd and Blue Ocean
Solutions Pte Ltd.
In addition, Mr Chor is a member of Workplace Safety and Health Council (Marine Industries), a member of the American Bureau of
Shipping, American Bureau of Shipping Committee Member of The Marine Technical Committee (TMTC), 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, 50
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, Baku Shipyard LLC,
Keppel Nantong Shipyard Co Ltd., Keppel Nantong Heavy Industry Co Ltd, Keppel Singmarine Brasil Ltda, Keppel Singmarine Philippines,
Inc, Maju Maritime Pte Ltd, Keppel Smit Towage Pte Ltd and Gas Technology Development Pte Ltd.
He is also a member of the American Bureau of Shipping and sits on the Bureau Veritas South East Asia Technical Committee as well
as the Board of Trustees of the Singapore Institute of Technology. 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 Singapore’s Ministry of Defence 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 Limited Report to Shareholders 2015
Key Executives
213
Ong Tiong Guan, 57
Bachelor of Engineering (First Class Honours), Monash University; Doctor of Philosophy (Ph.D.) under Monash Graduate Scholarship,
Monash University.
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 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
Tan Boon Leng, 51
Bachelor of Science (Second Upper Honours) in Computer Science from University College London; Master of Science in Management
(Distinction) from Imperial 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 tonnes per year Energy-from-Waste
Plant under construction in Runcorn, UK. In March 2015, he was also appointed as Executive Director, Waste-to-Energy of Keppel
Infrastructure.
Mr Tan sits on the Boards of Keppel DHCS Pte Ltd, Keppel Seghers Belgium NV, Keppel Seghers UK Ltd, Keppel Energy Ventures Pte Ltd,
Fels Cranes Pte Ltd, Keppel Environmental China Investments Pte Ltd, Keppel XTE Developments Pte Ltd and KepFels Engineering Pte Ltd.
Past principal directorships in the last five years
Keppel Gas Pte Ltd, Pipenet Pte Ltd, GE Keppel Energy Services Pte. Ltd. and Keppel Infrastructure Fund Management Pte Ltd.
Nicholas Lai Garchun, 48
Bachelor of Social Sciences (Second Upper Honours) from National University of Singapore; Master of Applied Finance from Macquarie
University, Sydney.
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 in the gas and power businesses.
Mr Lai worked in the 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 and Keppel Fels Power Pte Ltd.
Past principal directorships in the last five years
Nil
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 214
Key Executives
Alan Tay Teck Loon, 46
Bachelor of Business Administration (Honours), National University of Singapore.
Mr Tay is Executive 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 and 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 and Keppel Infrastructure Fund Management 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, 38
Bachelor of Engineering (Mechanical & Production) (Second Upper Honours), 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. Keppel Infrastructure
Services focuses on delivering reliable and value-added operations and maintenance services and specialised HSE, technical and
project expertise in order to harness maximum values for the asset owners. Ms Lim also oversees Business Process Excellence, covering
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 management and leadership positions at Keppel FELS Limited, Keppel Offshore & Marine Ltd and Keppel
Corporation Limited in Quality System, Process Excellence, Talent Management and Human Resources.
Ms Lim sits on the Boards of Keppel Infrastructure Services Pte Ltd, Keppel Seghers Engineering Singapore Pte Ltd, Keppel Seghers Pte
Ltd, Keppel Seghers O&M Pte Ltd, GE Keppel Energy Services Pte Ltd, KMC 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.
Khor Un-Hun, 46
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.
Past principal directorships in the last five years
Nil
Keppel Corporation Limited Report to Shareholders 2015 Key Executives
215
Thomas Pang Thieng Hwi, 51
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.
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. 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.
Mr. Pang currently holds directorships in several Keppel Telecommunication & Transportation subsidiaries, associates and joint venture
companies.
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.
Desmond Gay Kah Meng, 55
Bachelor of Business Administration and Master of Business Administration (Finance), Roosevelt University, Chicago, USA
Mr Gay is the Chief Executive Officer of Keppel Logistics Pte Ltd, a wholly owned subsidiary of Keppel T&T, which offers integrated third-
party logistics solutions. Prior to his appointment, Mr Gay was the CEO of JGL Group Ltd, an Asia-based third-party logistics provider of
integrated forwarding and logistics solutions, spanning over nine countries. As an industry veteran with more than 22 years of experience
in the logistics industry, he held increasingly senior management positions in companies including Air Express International, DHL Danzas
Air and Ocean, DHL Exel Supply Chain within Deutsche Post AG, DTW Logistics Group (former joint venture partner of FEDEX China) and
Jacobson Companies.
Past principal directorships in the last five years
JGL Holding (S) Pte Ltd, Jacobson Global Logistics (S) Pte Ltd, JGL Group Limited and Jacobson Global Logistics (Hong Kong) Limited
Vincent Ko Woon Chun, 63
Bachelor of Commerce (Accounting), Nanyang University; Fellow of the Institute of Certified Public Accountants of Singapore; Diploma in
Management Studies, the University of Chicago Graduate School of Business.
Mr Ko is the Chief Executive Officer, Logistics China of Keppel Telecommunications & Transportation (Keppel T&T). He started his career
when he joined the Keppel Group in March 1980 as an Accountant with Keppel Shipyard Limited. During his career with the Keppel
Group, he has held various management appointments in Singapore, China and Hong Kong with Keppel Land International Ltd, Straits
Steamship Company Ltd (now known as Keppel Land Limited) and Keppel Corporation Limited.
He was appointed as the Company’s Divisional Director, China Business Unit in January 1998 and in February 2004 assumed the position
of Executive Director. He is also Executive Chairman and Chief Executive Officer for Keppel Logistics (Foshan) Limited and Keppel
Logistics (Hong Kong) Ltd and is a director of various other Keppel T&T subsidiaries.
Past principal directorships in the last five years
Nil
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 216
Key Executives
Wong Wai Meng, 47
Bachelor of Engineering (Electrical and Electronic Engineering) (First Class Honours), Nanyang Technological University
Mr Wong is the Chief Executive Officer of Keppel Data Centres with effect from 18 January 2016.
Mr Wong has more than 20 years of experience in the Information and Communications Technology (ICT) industry. Prior to joining Keppel
Telecommunications &Transportation, he was Vice President of BT Advise BT Global Services across Asia Pacific, Middle East, Africa
and Turkey (AMEA) where he managed the company’s practices in business consulting, systems integration, software development,
networking, mobility, collaboration and security. He was also CEO of the BT Frontline group of companies where he played a critical role in
the integration of BT Frontline into BT Global Services.
Mr Wong holds the Honorary Secretary appointment in the Executive Committee Council of Singapore IT (SiTF) and is also a Senior
Member in the Singapore Computer Society. Mr Wong is also a Committee Member in the Technology Strategy Committee of Mount
Alvernia Hospital.
Past principal directorships in the last five years
BT Singapore Pte Ltd, BT Global Solutions Pte Ltd, BT Global Services Technologies Pte Ltd, iASPire.Net Pte Ltd, Green House Group Pte
Ltd and Frontline Solutions Pte Ltd.
Chua Hsien Yang, 38
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 14 years of
experience in fund management, business development and asset management in the real estate and hospitality sectors.
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.
Ang Wee Gee, 54
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.
Keppel Corporation Limited Report to Shareholders 2015 Key Executives
217
Tan Swee Yiow, 55
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 the 1st Vice President of Singapore Green Building Council and a Member of World Green Building Council’s Corporate
Advisory Board. He also serves as Honorary Secretary 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 Ltd, Keppel Thai Properties Public Company Ltd, Keppel REIT Management Ltd, EM Services Pte Ltd and other
subsidiaries and associated companies of Keppel Land Limited.
Ben Lee Siew Keong, 43
Bachelor of Science (Building), (Second Class Upper Honours), National University of Singapore; Master of Applied Finance from the
University of Western Sydney
Mr Ben Lee is the President of Keppel Land China, a wholly-owned subsidiary of Keppel Land Limited which owns and operates Keppel
Land Group’s businesses in China. He was previously General Manager, Operations (and before that, General Manager, Business
Development) of Keppel Land China. Based in Shanghai since 2007, Mr. Lee currently oversees the business operations of all the projects
in various cities in China (including Shanghai, Beijing, Tianjin, Chengdu, Wuxi, Nantong, Jiangyin, Shenyang, Kunming and Zhongshan).
Prior to joining Keppel Land Group, Mr. Lee was Senior Investment Manager in one of China’s largest state-owned property company, Poly
Property Group, doing business development and investment in China. He also worked as a Marketing Manager with Citibank N.A. in
Singapore. He started his career as a project manager in the construction industry.
Mr Lee is a Director of a number of subsidiary companies and associated companies in the Keppel Land Group.
Past principal directorships in the last five years
Nil
Ms Ng Hsueh Ling, 49
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. Ms Ng works with the Board to set the strategy for Keppel 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 unitholders by proactively
optimising and enhancing the property portfolio.
With over 26 years of experience in the real estate industry, Ms Ng has been involved in the strategic sourcing, investment, asset and
portfolio management as well as the 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) and the Chief Executive Officer (Korea and Japan) of Ascendas Pte
Ltd. She has also held senior 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. She is also a
director of various subsidiaries and associated companies of Keppel REIT.
Past principal directorships in the last five years
The National Art Gallery, Singapore.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 218
Key Executives
Christina Tan Hua Mui, 50
Bachelor of Accountancy (Honours), National University of Singapore; Chartered Financial Analyst.
Ms Tan is CEO-Designate of Keppel Capital Holdings Pte Ltd and is also 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$12 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.
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,
AAJ Investment Pte Ltd, Myrick Investment Private Limited and Chiba Investment Private Limited.
Keppel Corporation Limited Report to Shareholders 2015 Major Properties
Major Properties
219
Held By
Completed properties
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
Keppel REIT
46%
Bugis Junction
Towers
Victoria Street,
Singapore
Ocean Financial
Centre
Collyer Quay,
Singapore
15-storey office tower
99 years leasehold Commercial office building
with rentable area of
22,760 sqm
Land area: 6,109 sqm
43-storey office tower
999 years leasehold Commercial office building
with rentable area of
82,131 sqm
One Raffles Quay
Singapore
Land area: 11,367 sqm
Two office towers of
50-storey and 29-storey
99 years leasehold Commercial office building
with rentable area of
123,678 sqm
Marina Bay
Financial Centre
(Phase 1)
Marina Boulevard, with ancillary retail
Singapore
Land area: 34,155 sqm
Two office towers of
33-storey and 50-storey
space
99 years leasehold Commercial office building
with rentable area of
161,805 sqm
Marina Bay
Financial Centre
(Phase 2)
Marina Boulevard,
Singapore
Land area: 9,710 sqm
46-storey office tower
with retail podium
275 George Street Land area: 7,074 sqm
Brisbane,
30-storey office tower
Australia
8 Exhibition Street Land area: 4,329 sqm
35-storey office tower
Melbourne,
with ancillary retail
Australia
space
99 years leasehold Commercial office building
with rentable area of
124,581 sqm
Freehold
Freehold
Commercial office building
with rentable area of
41,748 sqm
Commercial office building
with rentable area of
45,900 sqm
8 Chifley Square
Sydney,
Australia
Office Tower on
the Old Treasury
Building Site
Perth,
Australia
S25
Serangoon,
Singapore
T25
Tampines,
Singapore
Land area: 1,581 sqm
34-storey office tower
Land area: 2,945 sqm
33-storey office tower
99 years leasehold Commercial office building
with rentable area of
19,350 sqm
99 years leasehold Commercial office building
with rentable area of
31,176 sqm
Land area: 7,333 sqm
6-storey data centre
30 years lease with Data centre with rentable area
option for another
30 years
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
29%
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
220
Major Properties
Held By
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Gore Hill Data
Centre
Sydney,
Australia
Almere Data
Centre
Amsterdam,
Netherlands
Citadel 100
Data Centre
Dublin,
Ireland
T27
Tampines,
Singapore
Nassim Woods
Tanglin Road,
Singapore
Keppel Towers
and Keppel
Towers 2
Hoe Chiang Rd,
Singapore
Keppel Datahub 2
Pte Ltd
86%
Parksville Development 99%
Pte Ltd
Mansfield Development 99%
Pte Ltd
Land area: 6,692 sqm
4-storey data centre
Tenure
Freehold
Usage
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 6,328 sqm
Land area: 5,000 sqm
30 years lease with Data centre with rentable area
option for another
30 years
of 5,000 sqm
Land area: 5,785 sqm
99 years leasehold A 35-unit luxurious
condominium development
Land area: 9,127 sqm
27-storey and 13-storey
office towers
Freehold
Commercial office building
with rentable area of
39,958 sqm
HarbourFront One
Pte Ltd
100% Keppel Bay Tower Land area: 17,267 sqm
18-storey office tower
HarbourFront
Avenue,
Singapore
99 years leasehold Commercial office building
with rentable area of
36,015 sqm
Keppel Bay Pte Ltd
100% Reflections
Land area: 83,538 sqm
99 years leasehold A 1,129-unit waterfront
at Keppel Bay
Singapore
condominium development
Spring City Golf &
Lake Resort Co
(owned by Kingsdale
Development Pte Ltd)
& Lake Resort
68%
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
99%
Serenity Villa
Tianjin,
China
Land area: 128,685 sqm
70 years leasehold A 340-unit residential
development in Tianjin
Eco-City
Equity Rainbow II
Pte Ltd
Shanghai Hongda
Property Development
Co Ltd
43%
99%
Life Hub@Jinqiao Land area: 59,956 sqm
Shanghai,
China
50 years leasehold A retail and office
The Springdale
Shanghai,
China
Land area: 264,090 sqm
70 years lease
(residential)
40 years lease
(commercial)
development with rentable
area of 79,214 sqm
A 2,596-unit residential
development with commercial
facilities in Pudong District
Keppel Corporation Limited Report to Shareholders 2015
Major Properties
221
Held By
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Shanghai Pasir Panjang 98%
Land Co Ltd
Eight Park Avenue Land area: 33,432 sqm
Shanghai,
China
Tenure
Usage
70 years leasehold A 918-unit residential
development
PT Straits-CM Village
39%
PT Kepland Investama
99%
Club Med
Ria Bintan
Bintan,
Indonesia
International
Financial Centre
(Tower 1)
Jakarta,
Indonesia
Land area: 200,000 sqm
30 years lease with A 302-room beachfront hotel
option for another
50 years
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
Keppel Land Watco I
Co Ltd
68%
Saigon Centre
(Phase 1)
Ho Chi Minh City,
Vietnam
Land area: 2,730 sqm
25-storey office, retail
cum serviced apartments
development
50 years leasehold Commercial building with
Land area: 1,947 sqm
9-storey office tower
Freehold
rentable area of 10,430 sqm
office, 3,809 sqm retail,
305 sqm post office and 89
units of serviced apartments
Commercial office building
with rentable area of
11,731 sqm
First King Properties Ltd 99%
Properties under development
Sherwood Development 69%
Pte Ltd
75 King William
Street
London,
United Kingdom
The Glades
Tanah Merah,
Singapore
Land area: 31,882 sqm
99 years leasehold A 726-unit condominium
development
*(2017)
Keppel Bay Pte Ltd
100% Corals at
Land area: 38,830 sqm
99 years leasehold A 366-unit waterfront
Keppel Bay
Singapore
condominium development
*(2018)
100% Keppel Bay Plot 6 Land area: 43,701 sqm
99 years leasehold A proposed 86-unit waterfront
Harvestland Development 99%
Pte Ltd
Beijing Aether Property
Development Ltd
51%
Shanghai Ji Xiang Land
Co Ltd
99%
Singapore
Highline
Residences
Tiong Bahru,
Singapore
Commercial
Development
Beijing,
China
Seasons
Residence
Shanghai,
China
Land area: 10,991 sqm
99 years leasehold A 500-unit condominium
condominium development
Land area: 26,081 sqm
40/50 years
leasehold
development
*(2018)
An office and retail
development in Chaoyang
District
*(2017)
Land area: 71,621 sqm
70 years leasehold A 1,102-unit residential
development in Nanxiang,
Jiading District
*(2016 Phase 4)
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
222
Major Properties
Held By
Effective
Group
Interest
Shanghai Floraville Land 98%
Co Ltd
Shanghai Jinju Real
Estate Development
Co Ltd
Spring City Golf &
Lake Resort
99%
68%
Keppel Heights (Wuxi)
Property Development
Pte Ltd
99%
Keppel Lakefront (Wuxi) 99%
Property Development
Co Ltd
Location
Park Avenue
Central
Shanghai,
China
Hill Crest Villa
Shanghai,
China
Spring City Golf
& Lake Resort
Kunming,
China
Park Avenue
Heights
Wuxi,
China
Waterfront
Residence
Wuxi,
China
Description and
Approximate
Land Area
Tenure
Usage
Land area: 28,488 sqm
70 years leasehold An office and retail
development
*(2019)
Land area: 175,191 sqm
70 years leasehold A 217-unit landed
Land area: 2,157,361 sqm 70 years leasehold
Land area: 66,010 sqm
Land area: 215,230 sqm
development in Sheshan
*(2016 Phase 1)
Integrated resort comprising
golf courses, resort homes
and resort facilities (Hill Crest
Residence Phase 2B)
*(2018)
A 1,048-unit residential
development with commercial
facilities in Beitang District
*(2018)
A 2,360-unit residential
development with commercial
and SOHO facilities in Binhu
District
*(2016)
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)
70 years lease
(residential)
40 years lease
(commercial)
70 years lease
(residential)
40 years lease
(commercial)
70 years lease
(residential)
40 years lease
(commercial)
50 years lease
(residential)
40 years lease
(commercial)
70 years lease
(residential)
40 years lease
(commercial)
Land area: 103,683 sqm
70 years leasehold A 341-unit landed
development in Tianjin
Eco-City
*(2016 Phase 1 & 2)
Land area: 50,782 sqm
70 years lease
(residential)
40 years lease
(commercial)
A 1,535-unit residential
development with commercial
facilities in Jinjiang District
*(2017)
Land area: 249,330 sqm
70 years leasehold A 274-unit landed
development in Xinjin County
*(2017 Phase 2)
CityOne Development
(Wuxi) Co Ltd
50%
Central Park City
Wuxi,
China
Land area: 352,534 sqm
Keppel Township
Development (Shenyang)
Co Ltd
99%
The Seasons
Shenyang,
China
Land area: 348,312 sqm
Land area: 365,722 sqm
Keppel Hong Da
(Tianjin Eco-City)
Property Development
Co Ltd
100% Development in
Sino-Singapore
Tianjin Eco-City
Tianjin,
China
Tianjin Fulong Property
Development Co Ltd
99%
Chengdu Hillstreet
Development Co Ltd
99%
Chengdu Hilltop
Development Co Ltd
99%
Waterfront
Residence
Tianjin,
China
Park Avenue
Heights
Chengdu,
China
Hill Crest Villa
Chengdu,
China
Keppel Corporation Limited Report to Shareholders 2015
Major Properties
223
Effective
Group
Interest
99%
Held By
Chengdu Shengshi
Jingwei Real Estate
Co Ltd
Sunsea Yacht Club
(Zhongshan) Co Ltd
79%
Jiangyin Evergro
Properties Co Ltd
Keppel Lakefront
(Nantong) Property
Development Co Ltd
98%
99%
MIP 59th and Third
Development LLC
82%
PT Harapan Global Niaga 99%
PT Kepland Investama
99%
Location
Serenity Villa
Chengdu,
China
Keppel Cove
Zhongshan,
China
Stamford City
Jiangyin,
China
Waterfront
Residence
Nantong,
China
Residential
Development
New York,
United States
West Vista
Jakarta,
Indonesia
International
Financial Centre
(Tower 2)
Jakarta,
Indonesia
Description and
Approximate
Land Area
Tenure
Usage
Land area: 286,667 sqm
70 years leasehold A 573-unit landed
Land area: 891,752 sqm
70 years lease
(residential)
40 years lease
(commercial)
development in Xinjin County
*(2016 Phase 1)
A 1,647-unit residential
development with a mix of
villas and apartments, and
integrated marina lifestyle
facilities
*(2016 Phase 1)
Land area: 82,987 sqm
70 years lease
(residential)
40 years lease
(commercial)
A 1,478-unit residential
development with commercial
and SOHO facilities
*(2018 Phase 3)
Land area: 172,215 sqm
70 years leasehold A 1,199-unit residential
development
Land area: 13,750 sqm
Freehold
A residential-cum-retail
development at Upper East
Side in Manhattan
Land area: 28,851 sqm
Land area: 10,428 sqm
30 years lease with A 2,855-unit residential
option for another
20 years
development with ancillary
shop houses
*(2018)
20 years lease with A prime office development
option for another with rentable area of
20 years
50,200 sqm
*(2016)
South Rach Chiec LLC
42%
South Rach Chiec Land area: 302,093 sqm
Ho Chi Minh City,
Vietnam
50 years leasehold A 4,700-unit residential
township and commercial
space
*(2018 Phase 1)
Estella JV Co Ltd
97%
Estella Heights
Ho Chi Minh City,
Vietnam
Land area: 25,393 sqm
50 years leasehold A 872-unit residential
development with commercial
space in An Phu Ward,
District 2
*(2018)
Dong Nai Waterfront
City LLC (owned by
Portsville Pte Ltd)
50%
Dong Nai
Waterfront City
Dong Nai Province,
Vietnam
Land area: 3,667,127 sqm 50 years leasehold A 11,500-unit residential
township with commercial
space in Long Thanh District
*(2019 Phase 1)
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
224
Major Properties
Held By
Industrial properties
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
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
Keppel Shipyard Limited 100% Benoi and
Pioneer Yard,
Singapore
*
Expected year of completion
Land area: 409,020 sqm
buildings, workshops,
drydock, berths and
wharf
Land area: 799,111 sqm
buildings, workshops,
drydocks and wharves
30 years leasehold Offshore oil rig construction
and repair
30 years leasehold Shiprepairing, shipbuilding
and marine construction
Keppel Corporation Limited Report to Shareholders 2015
Group Five-Year Performance
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)
225
2011
2012
2013
2014
2015
10,082
2,824
3,313
13,965
2,621
3,256
12,380
2,134
2,794
13,283
2,373
2,889
10,296
1,514
1,997
1,946
2,237
1,846
1,885
1,525
7,326
5,350
12,325
99
-
25,100
8,195
4,877
267
-
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
-
29,207
8,059
7,208
362
-
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
-
30,056
8,700
7,100
567
-
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
19,851
102
1,259
31,591
8,579
7,383
451
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)
6,118
6,097
16,606
100
-
28,921
8,220
8,259
516
-
11,926
11,096
830
11,926
104.6
84.0
34.0
6.13
6.07
17.7
14.2
2.5
(0.53)
33,747
1,433
38,390
1,579
39,364
1,668
38,732
1,733
33,574
1,600
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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
226
Group Five-Year Performance
2015
Group revenue of $10,296 million for 2015 was $2,987 million or 22% lower than that for the full year of 2014. Offshore & Marine
Division’s revenue of $6,241 million was 27% below the $8,556 million for 2014 due to lower volume of work, deferment of some projects
and the suspension of the Sete Brasil contracts. Major jobs completed in 2015 include seven jack-up rigs, an accommodation semi,
one FPSO conversion, one depletion compression platform, one floating crane and an FPSO integration. The Property Division saw its
revenue increase by 11% to $1,926 million due mainly to higher revenue from China partly offset by lower revenue from Singapore and
the absence of the sale of a residential development in Jeddah, Saudi Arabia which was sold in 2014. Revenue from the Infrastructure
Division contracted by $876 million to $2,058 million as a result of a drop in revenue recorded by the power and gas business due to lower
prices and volume, lower revenue from EPC projects, lower contribution from the data centre business, as well as absence of revenue
from Keppel FMO Pte Ltd which was disposed in December 2014.
The Group’s pre-tax profit for the current year was $1,997 million, $892 million or 31% below the previous year. The Offshore & Marine
Division reported a $666 million drop in pre-tax profit to $699 million. Lower operating results arising from lower revenue, provision for
losses for Sete Brasil rig building contracts of about $230 million and lower net interest income were partially offset by an increase in
share of associated companies’ profits. The Property Division’s profit of $896 million for 2015 was $121 million or 12% below that of
2014. This was due mainly to lower operating results, reduction in share of associated companies’ profits, higher net interest expense
and absence of gains from the disposal of investment properties (Equity Plaza, Prudential Tower and MBFC T3 were disposed in 2014),
partly offset by higher fair value gains on investment properties and cost write-back upon finalisation of project cost for the Reflections
at Keppel Bay. Profit from the Infrastructure Division decreased by $196 million to $256 million. The gain from disposal of 51% interest in
Keppel Merlimau Cogen Pte Ltd and dilution re-measurement gain from the combination of Crystal Trust and CitySpring Infrastructure
Trust to form the enlarged Keppel Infrastructure Trust were partially offset by the losses following finalisation of the cost to complete
the Doha North Sewage Treatment Works and the reduced contribution from the power and gas business. There were also gains from
divestment of data centre assets and Keppel FMO in 2014.
Taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders was $1,525 million, $360
million or 19% lower than last year. The Property Division was the largest contributor to Group net profit at 46%, followed by the Offshore
& Marine Division’s 32%, the Infrastructure Division’s 14% and the Investments Division’s at 8%.
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 $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, $39
million or 2% higher than last year. The Offshore & Marine Division was the largest contributor to Group net profit at 55%, followed by the
Property Division’s 26%, the Infrastructure Division’s 17% and the Investments Division’s at 2%.
Revenue ($ billion)
Pre-Tax Profit ($ million)
Net Profit ($ million)
15
12
9
6
3
0
3,500
2,800
2,100
1,400
700
0
2,500
2,000
1,500
1,000
500
0
2011
10.1
2012
14.0
2013
12.4
2014
13.3
2015
10.3
2011
3,313
2012
3,256
2013
2,794
2014
2,889
2015
1,997
2011
1,946
2012
2,237
2013
1,846
2014
1,885
2015
1,525
Keppel Corporation Limited Report to Shareholders 2015 Group Five-Year Performance
227
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 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 on 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%.
2012
Group revenue of $13,965 million was 39% higher than 2011. Revenue from Offshore & Marine Division of $7,963 million was 40%
above that of the previous year due to higher volume of work. The Division completed and delivered two semisubmersible rigs,
one semisubmersible rig upgrade, four jack-up rigs, one multi-purpose self-elevating platform, one drillship outfitting, four FPSO
conversions/upgrades, one FPSO module fabrication and integration, one FSU upgrade, one pipelay vessel completion, two specialised
vessels and several upgrade/repair projects. Revenue from Infrastructure Division decreased slightly by $31 million or 1% to $2,832
million. Lower revenue from Engineering, Procurement and Construction contracts was partly offset by higher revenue generated from
the co-generation power plant in Singapore. Revenue from Property Division of $3,018 million was 106% above 2011. The lumpy revenue
was due mainly to higher contributions from Reflections at Keppel Bay following the delivery of residential units sold under the deferred
payment scheme to the purchasers. This high level of revenue is not expected in 2013 as revenue recognition from sale of Reflections at
Keppel Bay is expected to be lower.
At the pre-tax level, 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, $291
million or 15% higher than last year. The Property Division was the largest contributor to Group net profit at 48%, followed by the Offshore
& Marine Division’s 42%.
Shareholders’ Fund ($ 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
2011
7.7
2012
9.2
2013
9.7
2014
10.4
2015
11.1
2011
11.8
2012
13.6
2013
13.7
2014
14.7
2015
11.9
2011
16.6
2012
19.8
2013
20.2
2014
16.0
2015
11.8
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 228
Group Five-Year Performance
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 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, $355
million or 22% higher than last year. The Offshore & Marine Division was the largest contributor to Group net profit at 52%, followed by the
Property Division’s 47%.
Keppel Corporation Limited Report to Shareholders 2015 Group Value-Added Statements
Group Value-Added
Statements
($ 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
229
2011
2012
2013
2014
2015
10,082
(6,544)
3,538
13,965
(9,779)
4,186
12,380
(8,696)
3,684
13,283
(9,474)
3,809
10,296
(7,365)
2,931
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
134
504
402
3,971
1,600
404
155
83
872
1,110
3,114
220
(15)
652
857
Total Distribution
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
208
211
242
265
765
1,222
2,195
306
1,448
1,965
376
489
1,107
276
1,122
1,663
5,052
5,181
4,829
5,021
3,971
Number of employees
33,747
38,390
39,364
38,732
33,574
Productivity data:
Gross value added per employee ($’000)
Gross value added per dollar employment cost ($)
Gross value added per dollar sales ($)
105
2.47
0.35
109
2.65
0.30
94
2.21
0.30
98
2.20
0.29
87
1.83
0.28
($ million)
6,000
5,000
4,000
3,000
2,000
1,000
0
Depreciation & Retained Profit
Interest Expenses & Dividends
Taxation
Wages, Salaries & Benefits
5,052
5,181
4,829
5,021
2,195
980
444
1,433
1,965
1,107
1,663
3,971
1,136
501
1,579
1,657
397
1,163
462
1,668
1,733
857
1,110
404
1,600
2011
2012
2013
2014
2015
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
230
Share Performance
TURNOVER (million)
SHARE PRICES ($)
400
300
200
180
160
140
120
100
80
60
40
20
0
40
30
20
18
16
14
12
10
8
6
4
2
0
2011
2012
2013
2014
2015
Turnover
High and Low Prices
Share Price ($) *
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)
2011
2012
2013
2014
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
2015
6.51
9.54
6.20
7.92
84.0
34.0
4.3
9.4
6.07
6.51
5.2
7.8
1.1
Notes:
1.
2.
3.
*
Earnings per share are calculated based on the Group net profit by reference to the weighted average number of shares in issue during the year.
Volume weighted average share price is used in calculating distribution yield and net price earnings ratio.
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 dividend in specie.
Keppel Corporation Limited Report to Shareholders 2015
Shareholding Statistics
Shareholding Statistics
As at 2 March 2016
231
Issued and Fully paid-up capital (including Treasury Shares) : $1,288,393,382.98
Issued and Fully paid-up capital (excluding Treasury Shares) : $1,269,792,617.55
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
: 1,815,230,963
: 2,679,217 (0.15%)
: Ordinary Shares
: One Vote Per Share. The Company cannot exercise any
voting right in respect of treasury shares.
Number of
Shareholders
97
17,485
48,030
9,759
40
%
0.13
23.19
63.69
12.94
0.05
Number of
Shares
3,325
14,485,878
187,552,211
297,034,777
1,316,154,772
%
0.00
0.80
10.33
16.36
72.51
75,411
100.00
1,815,230,963
100.00
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 2 March 2016
Temasek Holdings (Private) Limited
Citibank Nominees Singapore Pte Ltd
DBS Nominees Pte Ltd
HSBC (Singapore) Nominees Pte Ltd
United Overseas Bank Nominees Pte Ltd
Raffles Nominees (Pte) Ltd
DBSN Services Pte Ltd
BNP Paribas Securities Services
Bank of Singapore Nominees Pte Ltd
Morgan Stanley Asia (S) Securities Pte Ltd
OCBC Nominees Singapore Pte Ltd
DB Nominees (S) Pte Ltd
UOB Kay Hian Pte Ltd
OCBC Securities Private Ltd
Shanwood Development Pte Ltd
Choo Chiau Beng
Phillip Securities Pte Ltd
DBS Vickers Securities (S) Pte Ltd
Merrill Lynch (S’pore) Pte Ltd
BNP Paribas Nominees Singapore Pte Ltd
Total
Substantial Shareholders
Number of
Shares
371,408,292
239,284,652
218,909,656
104,122,085
70,324,695
61,869,309
59,402,289
46,035,954
25,883,769
11,914,917
11,885,045
9,401,820
9,269,317
8,738,182
7,040,000
5,305,474
4,659,088
4,372,070
4,062,109
3,969,349
1,277,858,072
%
20.46
13.18
12.06
5.74
3.87
3.41
3.27
2.54
1.43
0.66
0.65
0.52
0.51
0.48
0.39
0.29
0.26
0.24
0.22
0.22
70.40
%
20.69
5.36
5.87
5.87
Direct Interest
Deemed Interest
Total Interest
No. of Shares
%
No. of Shares
%
No. of Shares
Temasek Holdings (Private) Limited
Aberdeen Asset Management PLC
BlackRock, Inc
The PNC Financial Services Group, Inc
371,408,292
-
-
-
20.46
-
-
-
4,077,675
97,263,536
106,560,363
106,560,473
0.23
5.36
5.87
5.87
375,485,967
97,263,536
106,560,363
106,560,473
Notes:
(i)
(ii) Aberdeen Asset Management PLC (AAMPLC) is deemed interested in an aggregate of 97,263,536 shares held by various accounts managed or advised by AAMPLC over which
Temasek Holdings (Private) Limited is deemed interested in 4,077,675 shares in which its subsidiaries and associated companies have direct or deemed interests.
AAMPLC has disposal and voting rights.
(iii) BlackRock, Inc is deemed interested in an aggregate of 106,560,363 shares held through its various subsidiaries.
(iv) The PNC Financial Services Group, Inc is deemed interested in the 106,560,363 shares held through BlackRock, Inc through its over 20% ownership of BlackRock, Inc. as well as
110 shares represented by 55 American Depository Receipts through other entities.
Public Shareholders
Based on the information available to the Company as at 2 March 2016, approximately 67% 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.
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
232
Notice of Annual General Meeting
& Closure of Books
eppel
Corporation
Keppel Corporation Limited
Company Registration No. 196800351N
(Incorporated in the Republic of Singapore)
NOTICE IS HEREBY GIVEN that the 48th Annual General Meeting of the Company will be held at Raffles City Convention
Centre, Canning & Padang Ballrooms (Level 4), 80 Bras Basah Road, Singapore 189560 on Tuesday, 19 April 2016 at
10.30 a.m. to transact the following business:
Ordinary Business
1.
2.
3.
4.
5.
6.
To receive and adopt the Directors’ Statement and Audited Financial Statements for the year ended
31 December 2015.
Resolution 1
To declare a final tax-exempt (one-tier) dividend of 22.0 cents per share for the year ended 31 December 2015
(2014: final tax-exempt (one-tier) dividend of 36.0 cents per share).
Resolution 2
To re-elect the following directors of the Company (“Directors”), each of whom will be retiring by rotation pursuant
to Article 81B of the Articles of Association comprising part of the Constitution of the Company (“Constitution”)
and who, being eligible, offers himself for re-election pursuant to Article 81C of the Articles of Association
comprising part of the Constitution (see Note 3):
(1) Mr Alvin Yeo
(2) Mr Tan Ek Kia
(3) Mr Loh Chin Hua
To re-elect Ms Veronica Eng, whom being appointed by the board of Directors after the last annual general
meeting of the Company, will retire in accordance with Article 81A(1) of the Articles of Association comprising
part of the Constitution and who, being eligible, offers herself for re-election (see Note 3).
Resolution 3
Resolution 4
Resolution 5
Resolution 6
To approve the sum of S$2,314,310 as Directors’ fees for the year ended 31 December 2015 (2014: S$2,154,915)
(see Note 4).
Resolution 7
To appoint PricewaterhouseCoopers LLP as the auditors of the Company, in place of the retiring auditors, Deloitte
& Touche LLP, to hold office until the conclusion of the next annual general meeting of the Company and authorise
the Directors to fix their remuneration (see Note 5).
Resolution 8
Special Business
To consider and, if thought fit, to pass with or without any modifications, the following resolutions, of which Resolutions
9, 10 and 11 will be proposed as ordinary resolutions and Resolution 12 will be proposed as a special resolution:
7.
That pursuant to Section 161 of the Companies Act, Chapter 50 of Singapore (the “Companies Act”), authority be
and is hereby given to the Directors 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 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
Keppel Corporation Limited Report to Shareholders 2015
Notice of Annual General Meeting & Closure of Books
233
(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 while the authority was in force;
provided that:
(i)
(ii)
(iii)
(iv)
the aggregate number of Shares to be issued pursuant to this Resolution (including Shares to be issued
in pursuance of Instruments made or granted pursuant to this Resolution and any adjustment effected
under any relevant Instrument) shall not exceed fifty (50) per cent. of the total number of issued Shares
(excluding treasury shares) (as calculated in accordance with sub-paragraph (ii) below), of which the
aggregate number of Shares to be issued other than on a pro rata basis to shareholders of the Company
(including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution
and any adjustment effected under any relevant Instrument) shall not exceed five (5) per cent. of the total
number of issued Shares (excluding treasury shares) (as calculated in accordance with sub-paragraph (ii)
below);
(subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading
Limited (“SGX-ST”)) for the purpose of determining the aggregate number of Shares that may be issued
under sub-paragraph (i) above, the percentage of issued Shares shall be calculated based on the total
number of issued Shares (excluding treasury shares) at the time this Resolution is passed, after adjusting
for:
(a)
new Shares arising from the conversion or exercise of convertible securities or share options or
vesting of share awards which are outstanding or subsisting as at the time this Resolution is passed;
and
(b)
any subsequent bonus issue, consolidation or sub-division of Shares;
in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of
the Companies Act, the listing manual of the SGX-ST (“Listing Manual”) (unless such compliance has been
waived by the SGX-ST) and the Constitution for the time being in force; and
(unless revoked or varied by the Company in a general meeting) the authority conferred by this Resolution
shall continue in force until the conclusion of the next annual general meeting of the Company or the date
by which the next annual general meeting is required by law to be held, whichever is the earlier (see Note 6).
Resolution 10
8.
That:
(1)
for the purposes of the Companies Act, the exercise by the Directors 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 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 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”);
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information
234
Notice of Annual General Meeting
& Closure of Books
(2)
(unless varied or revoked by the members of the Company in a general meeting) the authority conferred
on the Directors 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)
(b)
the date on which the next annual general meeting of the Company is held or is required by law to be
held; or
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 passing of this Resolution, unless the Company has at any time during
the Relevant Period (as hereinafter defined) reduced its share capital by a special resolution under Section
78C of the Companies Act, or the court has, at any time during the Relevant Period, made an order under
Section 78I of the Companies Act confirming the reduction of share capital of the Company, in which event
the total number of issued Shares shall be taken to be the total number of issued Shares as altered by the
special resolution of the Company or the order of the court, as the case may be. Any Shares which are held
as treasury shares will be disregarded for purposes of computing the five (5) per cent. limit;
“Relevant Period” means the period commencing from the date of the passing of this Resolution and
expiring on the date the next annual general meeting is held or is required by law to be held, whichever is
the earlier; 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 and/or any of them be and are hereby authorised to complete and do all such acts and
things (including without limitation, executing such documents as may be required) as they and/or he
may consider necessary, expedient, incidental or in the interests of the Company to give effect to the
transactions contemplated and/or authorised by this Resolution (see Note 7).
Keppel Corporation Limited Report to Shareholders 2015
235
Resolution 11
Notice of Annual General Meeting & Closure of Books
9.
That:
(1)
(2)
(3)
(4)
approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual, for the Company, its
subsidiaries and target associated companies (as defined in Appendix 3 to this Notice of Annual General
Meeting (“Appendix 3”)), or any of them, to enter into any of the transactions falling within the types of
Interested Person Transactions described in Appendix 3, with any person who falls within the classes
of Interested Persons described in Appendix 3, 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 3 (the “IPT Mandate”);
the IPT Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until
the date that the next annual general meeting is held or is required by law to be held, whichever is the
earlier;
the Audit Committee of the Company be and is hereby authorised to take such action as it deems proper in
respect of such procedures and/or to modify or implement such procedures as may be necessary to take
into consideration any amendment to Chapter 9 of the Listing Manual which may be prescribed by the
SGX-ST from time to time; and
the Directors and/or any of them be and are hereby authorised to complete and do all such acts and
things (including, without limitation, executing such documents as may be required) as they and/or he
may consider necessary, expedient, incidental or in the interests of the Company to give effect to the IPT
Mandate and/or this Resolution (see Note 8).
10.
That the regulations contained in the new Constitution submitted to this annual general meeting and, for the
purpose of identification, as set out in Annexure 4A to Appendix 4 to this Notice of Annual General Meeting, be
approved and adopted as the Constitution in substitution for, and to the exclusion of, the existing Constitution
(see Note 9).
Resolution 12
To transact such other business which can be transacted at the annual general meeting of the Company.
NOTICE IS ALSO HEREBY GIVEN THAT:
(a)
(b)
the Share Transfer Books and the Register of Members of the Company will be closed on 26 April 2016 at 5.00 p.m., for the preparation
of dividend warrants. Duly completed transfers of Shares received by the Company’s Share Registrar, B.A.C.S. Private Limited, at 8
Robinson Road, #03-00 ASO Building, Singapore 048544 up to 5.00 p.m. on 26 April 2016 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 26 April 2016 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 2016; and
the electronic copy of the Company’s Annual Report 2015 will be published on the Company’s website on 28 March 2016. The
Company’s website address is http://www.kepcorp.com, and the electronic copy of the Annual Report 2015 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 2015, 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, 28 March 2016
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 236
Notice of Annual General Meeting
& Closure of Books
Notes:
1.
2.
A member of the Company entitled to attend and vote at a meeting of the Company, and who is not a Relevant Intermediary (as hereinafter defined) is entitled to appoint one proxy or
two proxies to attend and vote in his place. A member of the Company who is a Relevant Intermediary is entitled to appoint more than two proxies to attend and vote in his place, but
each proxy must be appointed to exercise the rights attached to a different Share or Shares held by such member. A proxy need not be a member of the Company.
“Relevant Intermediary” has the meaning ascribed to it in Section 181 of the Companies Act.
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. 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 as at 72 hours before the time appointed for holding the annual general meeting as certified by The Central Depository (Pte) Limited to the Company.
3. Detailed information on these Directors can be found in the “Board of Directors” section of the Company’s Annual Report.
Mr Alvin Yeo will, upon his re-election, continue to serve as a member of the Audit Committee and Nominating Committee. Mr Alvin Yeo is the Chairman and Senior Partner of
WongPartnership LLP, a member of the Monetary Authority of Singapore’s advisory panel to advise the Minister of Finance on appeals under various financial services legislation, the
Singapore International Arbitration Centre’s Council of Advisors and the Loudon Court of International Arbitration, as well as a Fellow of the Singapore Institute of Arbitrators. He is
also a director and chairman of the remuneration committee of United Industrial Corporation Limited.
Mr Tan Ek Kia will, upon his re-election, continue to serve as the Chairman of the Board Safety Committee and member of the Nominating Committee and Board Risk Committee. Mr
Tan is a seasoned executive in the oil and gas and petrochemicals business. Prior to his retirement as the Vice President (Ventures and Developments) of Shell Chemicals, Asia Pacific
and Middle East region (based in Singapore) in September 2006, Mr Tan held senior positions in Shell including Managing Director (Exploration and Production) of Shell Malaysia,
Chairman of Shell North East Asia and Managing Director of Shell Nanhai Ltd (both based in Beijing, China). His other directorships include SMRT Corporation Ltd, Transocean Ltd,
KrisEnergy Ltd and PT Chandra Asli Petrochemical Tbk.
Mr Loh Chin Hua will, upon his re-election, continue to serve as a member of Board Safety Committee. Mr Loh is currently the Chief Executive Officer of the Company, after having
served as its Chief Financial Officer from 1 January 2012 to 1 January 2014, playing a pivotal role in all its major investment initiatives and financial decisions as well as shaping
the Group’s business strategy. Mr Loh has over 25 years of experience in real estate investing and fund management spanning the United States of America, Europe and Asia. He
joined the Keppel Group in 2002 as the Managing Director of Alpha Investment Partners Ltd. Prior to this, he was the Managing Director at Prudential Investment Inc leading its
Asian real estate fund management business and overseeing all investment and asset management for the real estate funds managed out of Asia. Mr Loh began his career with the
Government of Singapore Investment Corporation, where he held key appointments in its San Francisco and London office.
Ms Veronica Eng will, upon her re-election, continue to serve as a member of the Audit Committee and Board Risk Commitee. Ms Eng was a Founding Partner of Permira. Over her
30-year career with Permira, Ms Eng held a number of key positions in the firm and had extensive experience in a wide range of roles in relation to its funds’ investments across
sectors and geographies. She served on the board of Permira and its Executive Committee, chaired the Investment Committee and was the Fund Minder to various Permira funds.
In addition, she also had oversight of Permira’s firm-wide risk management as well as its operations in Asia. Ms Eng sits on the Board of the Centre for Asset Management Research
& Investments at National University of Singapore’s Business School, and the Advisory Board of Asia Private Equity Institute at Singapore Management University. She is also a
Professor (Practice) at the National University of Singapore’s Business School.
Mr Alvin Yeo, Mr Tan Ek Kia and Ms Veronica Eng are considered by the board of Directors to be independent Directors. Please see pages 29 and 31 of the Company’s Annual Report.
4. Resolution 7 is to approve the payment of an aggregate sum of S$2,314,310 as Directors’ fees for the non-executive Directors of the Company for FY2015. If approved, each of the
non-executive Directors (including the Chairman) will receive 70% of his total Directors’ fees in cash and 30% in the form of Shares (“Remuneration Shares”) (both amounts subject
to adjustment as described below). The actual number of Remuneration Shares, to be purchased from the market on the first trading day immediately after the date of the annual
general meeting (“Trading Day”) for delivery to the respective non-executive Directors, will be based on the market price of the Company’s Shares on the SGX-ST on the Trading Day.
The actual number of Remuneration Shares will be rounded down to the nearest thousand and any residual balance will be paid in cash.
The Remuneration Shares will rank pari passu with the then existing issued Shares. Details of the Directors’ remuneration can be found on page 98 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.
5. Resolution 8 relates to the appointment of PricewaterhouseCoopers LLP (“PwC”) as the auditors of the Company, in place of the retiring auditors, Deloitte & Touche LLP (“Deloitte”).
Please refer to Appendix 1 to this Notice of Annual General Meeting for details. In accordance with the requirements of Rule 1203(5) of the Listing Manual:
(a)
(b)
(c)
(d)
(e)
the outgoing auditors, Deloitte, have confirmed in writing that they are not aware of any professional reasons why the new auditors, PwC, should not accept appointment as
auditors of the Company;
the Company confirms that there were no disagreements with the retiring auditors, Deloitte, on accounting treatments within the last 12 months of the date of this Notice of
Annual General Meeting;
the Company confirms that, other than as set out in Appendix 1 to this Notice of Annual General Meeting, it is not aware of any circumstances connected with the proposed
change of auditors that should be brought to the attention of shareholders;
the specific reasons for the proposed change of auditors are disclosed in Appendix 1 to this Notice of Annual General Meeting; and
the Company confirms that it is in compliance with Rule 712 and Rule 715 read with Rule 716 of the Listing Manual in relation to the appointment of PwC as the auditors of the
Company.
6. Resolution 9 is to empower the Directors from the date of this 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 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 (“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.
7.
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 2015. 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. limit allowed under the Listing Manual. Please refer to Appendix 2 to this Notice of Annual General Meeting for further details.
8. 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. Please refer to Appendix 3 to this Notice of Annual General Meeting for details.
9. Resolution 12 is to adopt a new Constitution. The proposed new Constitution largely comprises the existing provisions of the memorandum and articles of association of the Company
and incorporates various changes, primarily to give effect to the amendments made to the Companies Act and ensure consistency with the prevailing listing rules as set out in the
Listing Manual. Please refer to Appendix 4 to this Notice of Annual General Meeting for details.
10. 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.
Keppel Corporation Limited Report to Shareholders 2015
Corporate Information
Corporate Information
237
Board of Directors
Lee Boon Yang (Chairman)
Loh Chin Hua (Chief Executive Officer)
Oon Kum Loon (Mrs)
Tow Heng Tan
Alvin Yeo
Tan Ek Kia
Danny Teoh
Tan Puay Chiang
Till Vestring
Veronica Eng
Audit Committee
Danny Teoh (Chairman)
Oon Kum Loon (Mrs)
Alvin Yeo
Veronica Eng
Remuneration Committee
Danny Teoh (Chairman)
Lee Boon Yang
Oon Kum Loon (Mrs)
Tow Heng Tan
Till Vestring
Nominating Committee
Tan Puay Chiang (Chairman)
Lee Boon Yang
Tow Heng Tan
Tan Ek Kia
Alvin Yeo
Till Vestring
Board Risk Committee
Oon Kum Loon (Mrs) (Chairman)
Tow Heng Tan
Danny Teoh
Tan Puay Chiang
Tan Ek Kia
Veronica Eng
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
8 Robinson Road
#03-00 ASO Building
Singapore 048544
Auditors
Deloitte & Touche LLP
Public Accountants and Chartered
Accountants
6 Shenton Way
OUE Downtown 2
#33-00
Singapore 068809
Audit Partner: Cheung Pui Yuen
Year appointed: 2011
Group Overview / Operating & Financial Review / Governance & Sustainability / Financial Statements / Other Information 238
Financial Calendar
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
Despatch of Annual Report to Shareholders
Annual General Meeting
2015 Proposed final dividend
Books closure date
Payment date
FY 2016
Financial year-end
Announcement of 2016 1Q results
Announcement of 2016 2Q results
Announcement of 2016 3Q results
Announcement of 2016 full year results
31 December 2015
16 April 2015
23 July 2015
22 October 2015
21 January 2016
28 March 2016
19 April 2016
5.00 p.m., 26 April 2016
6 May 2016
31 December 2016
April 2016
July 2016
October 2016
January 2017
Keppel Corporation Limited Report to Shareholders 2015 eppel
Corporation
Keppel Corporation Limited
Company Registration No. 196800351N
(Incorporated in the Republic of Singapore)
ANNUAL GENERAL MEETING
Proxy Form
IMPORTANT
1. Relevant Intermediaries (as defined in Section 181 of the Companies Act,
Chapter 50 of Singapore), may appoint more than two proxies to attend and vote
at the Annual General Meeting.
2. For CPF/SRS investors who have used their CPF monies to buy ordinary shares
in the capital of Keppel Corporation Limited (“Shares”), this report is forwarded
to them at the request of their CPF Agent Banks and is sent solely FOR
INFORMATION ONLY.
3. This Proxy Form is not valid for use by CPF/SRS investors and shall be ineffective
for all intents and purposes if used or purported to be used by them.
4. A CPF/SRS investor who wishes to attend the Annual General Meeting as proxy
has to submit his request to his CPF Agent Bank so that his CPF Agent Bank may
appoint him as its proxy within the specified timeframe. (CPF Agent Bank: Please
refer to Notes 2(b) and 4 on the reverse side of this form on the required details.)
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 28 March 2016.
I/We, (Name) (NRIC/Passport/UEN Number)
of (Address)
being a member or members of KEPPEL CORPORATION LIMITED (the “Company”) hereby appoint:
Name
Address
NRIC/
Passport Number
Proportion of Shareholdings
(Ordinary Shares)
No. of Shares
%
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and/or (delete as appropriate)
Name
Address
NRIC/
Passport Number
Proportion of Shareholdings
(Ordinary Shares)
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 19 April 2016 at Raffles City Convention Centre, Canning & Padang Ballrooms (Level 4), 80 Bras Basah Road, Singapore
189560 at 10.30 a.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 *
F
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Ordinary Business
1. Adoption of Directors’ Statement and Audited Financial Statements
2. Declaration of dividend
3. Re-election of Mr Alvin Yeo as Director
4. Re-election of Mr Tan Ek Kia as Director
5. Re-election of Mr Loh Chin Hua as Director
6. Re-election of Ms Veronica Eng as Director
7. Approval of fees to non-executive Directors
8. Appointment of Pricewaterhouse Coopers LLP as auditors of the Company
Special Business
9.
10. Renewal of Share Purchase Mandate
11. Renewal of Shareholders’ Mandate for Interested Person Transactions
12. Adoption of the new Constitution
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 2016
Total Number of
Shares held
______________________________________
Signature(s) or Common Seal of Member(s)
IMPORTANT: Please read the notes overleaf before completing this Proxy Form.
Fold and glue firmly along dotted line
Notes:
1.
Please insert the total number of Shares held by you. If you only have Shares entered against your name in the Depository Register (as defined in Part IIIAA
of the Securities and Futures Act, Chapter 289 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 proxy form shall be deemed to relate to all the Shares held by you (in
both the Register of Members and the Depository Register).
2.
(a)
A member of the Company entitled to attend and vote at a meeting of the Company, and who is not a Relevant Intermediary, 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.
(b)
A member of the Company who is a Relevant Intermediary is entitled to appoint more than two proxies to attend and vote at a meeting of the Company,
but each proxy must be appointed to exercise the rights attached to a different Share or Shares held by such member. Where more than one proxy
is appointed, the number and class of Shares in relation to which each proxy has been appointed shall be specified in the proxy form. In relation to
a Relevant Intermediary who wishes to appoint more than two proxies, it should annex to the proxy form the list of proxies, setting out, in respect
of each proxy, the name, address, NRIC/Passport Number and proportion of shareholding (number of Shares, class of Shares and percentage) in
relation to which the proxy has been appointed. For the avoidance of doubt, a CPF Agent Bank who intends to appoint CPF/SRS investors as its
proxies shall comply with this Note.
(c)
“Relevant Intermediary” has the meaning ascribed to it in Section 181 of the Companies Act, Chapter 50 of Singapore.
Affix
Postage
Stamp
Fold along this line (1)
The Company Secretary
Keppel Corporation Limited
1 HarbourFront Avenue
#18-01 Keppel Bay Tower
Singapore 098632
Fold along this line (2)
3.
4.
5.
6.
7.
Completion and return of the proxy form 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 proxy form, to the meeting.
The proxy form 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 proxy form appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the proxy form 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 a proxy form 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 proxy form, failing which the proxy form 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 proxy form appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true
intentions of the appointor are not ascertainable from the instructions of the appointor specified in the proxy form. 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 proxy form lodged if such members are
not shown to have Shares entered against their names in the Depository Register as at 72 hours before the time appointed for holding the Annual General
Meeting as certified by The Central Depository (Pte) Limited to the Company.
Edited and Compiled by
Group Corporate Communications, Keppel Corporation
Designed by
Sedgwick Richardson
Keppel Corporation Limited
(Incorporated in the Republic of Singapore)
1 HarbourFront Avenue
#18-01 Keppel Bay Tower
Singapore 098632
Tel: (65) 6270 6666
Fax: (65) 6413 6391
Email: keppelgroup@kepcorp.com
www.kepcorp.com
Co Reg No: 196800351N