Driving
Value Creation
Report to Shareholders 2016
Contents
GROUP OVERVIEW
02 Group Financial Highlights
04 Group at a Glance
06 Our Global Presence
08 Chairman’s Statement
Interview with the CEO
14
20 Board of Directors
24 Keppel Group Boards of Directors
26 Keppel Technology Advisory Panel
28 Senior Management
30
32 Significant Milestones in 2016
Investor Relations
02
PERFORMANCE REVIEW
Operating & Financial Review
34 Management Discussion & Analysis
36 Offshore & Marine
41 Property
44
49
53 Financial Review & Outlook
61 Group Structure
Infrastructure
Investments
GOVERNANCE & SUSTAINABILITY
62 Sustainability Highlights
Sustaining Growth
64 Corporate Governance
92 Risk Management
95 Regulatory Compliance
96 Environmental Performance
97 Product Excellence
Empowering Lives
98 Labour Practices & Human Rights
99 Safety & Health
Nurturing Communities
100 Our Community
34
62
101
FINANCIAL REPORT
Directors’ Statement &
Financial Statements
102 Directors’ Statement
108 Independent Auditor’s Report
114 Balance Sheets
115 Consolidated Profit and Loss Account
116 Consolidated Statement of
Comprehensive Income
117 Statements of Changes in Equity
120 Consolidated Statement of Cash Flows
123 Notes to the Financial Statements
173 Significant Subsidiaries &
Associated Companies
182
OTHER INFORMATION
182 Interested Person Transactions
183 Key Executives
191 Major Properties
196 Group Five-Year Performance
200 Group Value-Added Statements
201 Share Performance
202 Shareholding Statistics
203 Notice of Annual General Meeting
& Closure of Books
208 Corporate Information
209 Financial Calendar
211 Proxy Form
Driving
Value Creation
Keppel is a multi-business company committed to
providing robust solutions for sustainable urbanisation.
We are driving value creation by enhancing collaboration
and harnessing synergies within the Group. Focused on
being at the forefront of our chosen industries, we are
sharpening our competitive edge and developing new
platforms for growth.
Vision
A global company at the forefront of our chosen
industries, shaping the future for the benefit
of all our stakeholders – Sustaining Growth,
Empowering Lives and Nurturing Communities.
Mission
Guided by our operating principles and core values,
we will execute our businesses in Offshore & Marine,
Property, Infrastructure and Investments profitably,
safely and responsibly.
Operating Principles
1 Best value propositions to customers.
2 Tapping and developing best talents from our global workforce.
3 Cultivating a spirit of innovation and enterprise.
4 Executing our projects well.
5 Being financially disciplined to earn best risk-adjusted returns.
6 Clarity of focus and operating within our core competence.
7 Being prepared for the future.
View our report online:
www.kepcorp.com
01
Group Financial Highlights
Revenue
Net Profit
$6.8b
Decreased by 34% from $10.3 billion in FY 2015.
Revenue decreased mainly due to lower revenue
from the Offshore & Marine and Infrastructure
divisions, partially offset by higher revenue
from the Property Division.
$784m Decreased by 49% from $1.5 billion in FY 2015.
Net profit was lower mainly due to lower contribution
from the Offshore & Marine Division.
Return on Equity
6.9%
Decreased by 7.3 percentage points from 14.2%
in FY 2015.
Return on Equity decreased mainly due to lower
net profit and higher equity.
Economic Value Added
($140m)
Decreased by $788 million from $648 million
in FY 2015.
Economic Value Added was lower mainly due to
lower net operating profit after tax.
Earnings Per Share
$0.43
Decreased by 49% from $0.84 per share in FY 2015.
There was no significant dilution in Earnings Per Share
as no major capital call has been made since 1997.
Cash Dividend Per Share
20.0¢
Net Asset Value Per Share
Net Gearing Ratio
$6.42
0.56x
Down from FY 2015 cash dividend of 34.0 cents
per share.
Total distribution for FY 2016 comprises a proposed
final cash dividend of 12.0 cents per share and
the interim cash dividend of 8.0 cents per share
paid out in 3Q 2016.
Increased by 5% from $6.13 per share in FY 2015.
Increased slightly from 0.53x in FY 2015.
Free Cash Flow*
$576m Improved from cash outflow of $694 million
in FY 2015.
* Free cash flow excludes expansionary acquisitions and capex, and major divestments.
02
Keppel Corporation Limited Report to Shareholders 2016Group Overview Group Quarterly Results ($m)
Revenue
EBITDA
Operating profit
Profit before tax
Attributable profit
Earnings per share (cents)
For the year ($m)
Revenue
Profit
EBITDA
Operating
Before tax
Net profit
Operating cash flow
Free cash flow*
Economic value added
Per share
Earnings ($)
Net assets ($)
Net tangible assets ($)
At year-end ($m)
Shareholders’ funds
Non-controlling interests
Total equity
Net debt
Net gearing ratio (times)
Return on shareholders’ funds (%)
Profit before tax
Net profit
Shareholders’ value
Distribution (cents per share)
Interim dividend
Final dividend
Total distribution
Share price ($)
Total shareholder return (%)
1Q
2Q
3Q
4Q
1,743
334
278
278
211
11.6
1,625
292
234
285
205
11.3
1,459
238
185
286
225
12.4
1,940
168
98
206
143
7.9
2016
Total
6,767
1,032
795
1,055
784
43.2
1Q
2Q
3Q
4Q
2,814
464
398
455
360
19.8
2,563
479
414
498
397
21.9
2,440
425
371
470
363
20.0
2,479
366
331
574
405
22.3
2015
Total
10,296
1,734
1,514
1,997
1,525
84.0
2016
2015
% Change
6,767
1,032
795
1,055
784
330
576
(140)
0.43
6.42
6.34
11,659
675
12,334
6,966
0.56
8.8
6.9
8.0
12.0
20.0
5.79
(6.3)
10,296
1,734
1,514
1,997
1,525
(785)
(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)
-34%
-40%
-47%
-47%
-49%
n.m.
n.m.
n.m.
-49%
+5%
+4%
+5%
-19%
+3%
+9%
+6%
-50%
-51%
-33%
-45%
-41%
-11%
n.m.
03
n.m. = not meaningful
* Free cash flow excludes expansionary acquisitions and capex, and major divestments.
Group at a Glance
Creating value through our multi-business strategy.
Keppel Corporation
Offshore & Marine
Property
Infrastructure
Investments
How We Performed in 2016
Delivered 21 Offshore & Marine (O&M)
projects, and secured about $500 million
worth of non-drilling contracts.
Formed a joint venture with Shell
through Keppel O&M to supply LNG
bunker to vessels in Singapore.
Attained full ownership of the
property business with the completion
of Keppel Land’s Selective Capital
Reduction exercise.
Sold 5,720 homes, up 25% from 2015.
Proactive capital recycling strategy:
announced investments of $460 million
and divestments of $680 million in the
Property Division.
Named preferred bidder for Singapore’s
fourth desalination plant.
Expanded data centre portfolio by
over 45% in net lettable area to over
1.4 million square feet.
Completed the restructuring of the
Group’s asset management businesses
under Keppel Capital, and launched two
new data centre and property funds.
Our Strategic Focus for 2017/18
Drive collaboration across business
verticals, unleashing synergies from
Keppel’s multi-business model to
achieve our financial, people,
stakeholder and process goals.
Invest in R&D and innovation to develop
new capabilities and markets.
Sharpen project execution through
continuous improvements in safety,
productivity and efficiency.
Enhance people development and
bolster bench strength through talent
management and succession planning.
Maintain strong financial discipline,
seize opportunities to recycle assets,
and deploy capital astutely for the best
risk-adjusted returns.
Group Revenue ($m)
Revenue ($m)
Revenue ($m)
Revenue ($m)
$6,767m
$2,854m
$2,035m
$1,744m
13,965
13,283
12,380
10,296
6,767
8,556
7,963
7,126
6,241
2,854
2,979
2,035
1,823
1,711 1,629
3,452
2,831
2,914
2,037
1,744
134
91
Revenue ($m)
$134m
192
195
184
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
Group Net Profit ($m)
$784m
2,237
1,846 1,885
1,525
784
Net Profit ($m)
$29m
1,040
949
945
482
29
Net Profit ($m)
$620m
1,055
800
661
620
469
Net Profit ($m)
$99m
Net Profit ($m)
$36m
307
217
197
99
16
13
185
88
69
36
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
Group Net Profit by Division ($m)
Net Profit by Segment ($m)
Net Profit by Segment ($m)
Net Profit by Segment ($m)
Net Profit by Segment ($m)
1,525
784
185
197
661
482
36
99
620
29
2015
2016
Offshore & Marine
Infrastructure
Property
Investments
482
63
419
29
34
-5
2015
2016
Operations
Associates
661
620
112
56
215
237
153
167
346
-5
197
10
39
1
147
99
20
21
63
-5
185
127
36
58
64
-28
2015
2016
2015
2016
2015
2016
Property Trading
Hotels/Resorts
Property Investment
REIT
Energy & Environmental Infrastructure and Others
Logistics
Data Centres
REIT & Trust
Asset Management
Others
04
05
For more details on Offshore & Marine, see
pages 36–40
For more details on Property, see
pages 41–43
For more details on Infrastructure, see
pages 44–48
For more details on Investments, see
pages 49–52
Keppel Corporation Limited Report to Shareholders 2016Group Overview
Our Global Presence
Serving international customers
spanning more than 20 countries.
3
4
1
2
Total FY 2016 Revenue
$6,767m
Markets outside of Singapore contributed to about 58% of
the Group’s revenue for FY 2016.
1. North America
$361m
United States
2. South America
$399m
Brazil
3. Europe
$813m
Belgium
Bulgaria
Italy
Ireland
Netherlands
Germany
United Kingdom
4. Middle East
$186m
Azerbaijan
Qatar
United Arab Emirates
5
9
8
6
7
5. China & Hong Kong
$1,364m
7. Australia
$81m
6. Japan & South Korea
8. Singapore
$258m
$2,844m
9. Rest of Asia
$461m
India
Indonesia
Malaysia
Myanmar
Philippines
Vietnam
Business Divisions:
Offshore & Marine
Property
Infrastructure
Investments
06
07
Keppel Corporation Limited Report to Shareholders 2016Group Overview
Chairman’s Statement
Executing our multi-business strategy
with agility and discipline to capture growth
opportunities in sustainable urbanisation.
Lee Boon Yang
Chairman
08
Dear Shareholders,
Business was not as usual in 2016.
Keppel was hit by the proverbial perfect
storm, characterised by slower global
growth in both advanced and emerging
economies, growing insularism and
anti-globalisation sentiments in
developed economies, and volatility in
oil prices. Oil prices plunged to below
US$30 per barrel at the start of 2016,
before rising to about US$55 per barrel
in December, in the wake of the decision
by OPEC and other oil-producing
countries to cut production.
Keppel conducts diversified businesses
in more than 20 countries. We are always
ready to respond to challenges, just as
now, when we face severe headwinds
in the offshore and marine business.
Despite the rebound in oil price, we do
not envisage a quick turnaround in the
offshore business, which continues to
languish under the weak utilisation and
oversupply of rigs. We are anticipating
and preparing for a long and difficult
winter in the offshore sector.
Resilient Performance
Keppel’s multi-business strategy has
kept us resilient amid trying conditions.
For the whole of 2016, we achieved a net
profit of about $784 million, down 49%
from about $1.5 billion for 2015. This was
largely due to lower contributions from
the Offshore & Marine (O&M) Division
as well as additional provisions for
impairment during the year of $336 million,
mainly arising from our rightsizing of
Keppel Offshore & Marine (Keppel O&M)
and impairments of investments and
stocks & work-in-progress.
The Group’s Economic Value Added was a
negative $140 million for 2016 and our
Return on Equity (ROE) was 6.9%.
The Board of Directors is proposing a final
dividend of 12.0 cents per share. Together
with the interim cash dividend of 8.0 cents
per share distributed last August, we will
be paying out a total cash dividend of
20.0 cents per share to shareholders
for the whole of 2016.
Synergy and Collaboration
Keppel has a distinct blend of competencies
to provide solutions for sustainable
urbanisation. The Group is actively
seeking opportunities for growth in this
area, through meeting the growing demand
for energy, high quality homes and offices,
clean urban environments, good
infrastructure and digital connectivity.
Keppel Corporation Limited Report to Shareholders 2016Group Overview We continue to progress in our goal of transforming
Keppel into a global best-in-class company at the
forefront of our chosen industries.
We continue to progress in our goal of
transforming Keppel into a global
best-in-class company at the forefront of
our chosen industries. Over the year, we
made several strategic moves to grow
Keppel sustainably. We have sharpened
our business model and simplified our
corporate structure. We are working our
capital harder to seek the best possible
returns, fostering innovation and
collaboration, as well as harnessing
synergies across the Group’s businesses.
The full ownership of Keppel Land,
following the completion of its Selective
Capital Reduction exercise, has
strengthened our ability to capture
opportunities, recycle capital and
allocate resources across the Group
for optimal returns.
Another major corporate development
in 2016 was the completion of the
restructuring of the Group’s four asset
management businesses, namely
Keppel REIT Management, Alpha
Investment Partners (Alpha) and Keppel
Infrastructure Fund Management, as well
as a 50% interest in Keppel DC REIT
Management, under Keppel Capital.
The creation of Keppel Capital is a
significant component in our business
model. With total assets under
management (AUM) of $25 billion,
Keppel Capital will strengthen our capital
recycling platform and provide a steady
pillar of recurring income for the Group.
It will also work closely with the Group’s
other business units to expand our capital
base with co-investors, thus allowing us to
seize opportunities for growth without
putting a strain on our balance sheet.
We are heartened to see increasing
examples of successful collaboration
within the Group. For instance, Keppel
Land China and Alpha divested their 80%
stake in the company which owns the
mixed-use development, Life Hub @
Jinqiao in Shanghai, for US$517 million.
The divestment was based on the
property’s sale value of RMB 5.5 billion,
a significant premium over the original
purchase price of RMB 3.3 billion in
2013. Through innovative asset
management and enhancement efforts,
Keppel Land China and Alpha together
contributed to growing a profitable
mall with high occupancy and good
international retailers.
Another product of collaboration, the
newly-launched Alpha Data Centre Fund,
demonstrates how we can harness
strengths among different business
units. Alpha manages the fund and works
with Keppel Telecommunications &
Transportation (Keppel T&T) to create or
acquire assets. Meanwhile, Keppel Data
Centres Holding, a 70-30 joint venture
between Keppel T&T and Keppel Land,
will develop and project manage the
data centres in the fund, as well as
serve as the facility manager.
Opportunities may also arise in the
process to involve our other businesses
such as Keppel Infrastructure, for example,
to provide cooling and power solutions.
When the assets are matured, they can be
injected into Keppel DC REIT as part of the
deal flow pipeline or sold to other
interested buyers. There would also be
fees we can earn, which would contribute
to the Group’s recurring income. Whether
in data centres or other areas of Keppel’s
expertise, we will proactively seek more
opportunities for Keppel’s diverse units to
hunt as a pack along critical value chains.
Strengthening Governance
As we grow our businesses in an
increasingly complex international
operating environment, we continue to
strengthen our compliance and control
processes to ensure that our people,
Keppelites as we fondly call ourselves,
are well equipped to navigate the
challenges of myriad laws and regulations
in different jurisdictions.
We have put in place a new framework to
operationalise regulatory compliance and
foster an effective compliance culture.
The framework deals comprehensively
with the structure, people, policies and
activities required to identify, assess,
monitor and manage compliance risks.
Offshore & Marine
We have taken decisive measures to hunker
down in the face of strong headwinds
facing Keppel O&M, not just to survive
a long winter, but also ensure that we are
competitive in the long run and entrench
our leadership position in the global
offshore and marine industry.
For the whole of 2016, Keppel O&M reduced
its direct workforce by about 10,600
or 35%, with about 3,800 in Singapore
and 6,800 overseas. Subcontract
headcount in Singapore was also lowered
significantly. In tandem, we are cutting
our yard capacity and have mothballed
two overseas yards. In Singapore,
we are in the process of closing three
yards. The collective measures taken by
Keppel O&M have reduced overheads
significantly, achieving savings of some
$150 million year-on-year. The painful
but necessary rightsizing efforts at
Keppel O&M will have to continue.
Despite the challenging environment,
the O&M Division remained profitable
for the full year, and clinched new
contracts worth about $500 million.
Our yards continued to focus on executing
projects well, delivering more than 20
projects, including four jackup rigs,
an accommodation semisubmersible,
a land rig, several Floating Production
Storage and Offloading conversion and
fabrication jobs, as well as several
specialised vessels during the year.
In 2017, some 20 newbuild and conversion
projects are slated for delivery including
the world’s first-of-its-type floating
liquefaction vessel conversion, Golar Hilli.
Beyond dealing with immediate challenges,
Keppel O&M is exploring new markets
and opportunities, investing prudently
in R&D and building new capabilities
in preparation for the upturn. We are
also exploring ways to re-purpose the
technology that we have developed for
the offshore industry for other uses.
Following the completion of the
acquisition of Cameron’s offshore
product division, we have commenced
the operations of Keppel LeTourneau
since May 2016, with offices in the
United States, United Arab Emirates and
Singapore. The acquisition complements
Keppel O&M’s existing competencies,
and enables us to expand our business
in the provision of aftersales and
aftermarket services.
Keppel O&M’s extensive and proprietary
suite of offshore and marine solutions
is able to serve a wide spectrum
of customers in both drilling and
non-drilling markets, who continue
09
Chairman’s Statement
Our asset management businesses
are contributing to the Group’s capital
recycling strategy and providing stable
income streams over the longer term.
to require various solutions, be it for
oil production, offshore liquefaction,
or other purposes.
Keppel is well positioned to capture
opportunities across the value chain
in the growing gas market. Keppel O&M
has established a 50-50 joint venture
with Shell to supply LNG bunkering
services in Singapore’s port. More
recently, we have secured orders for
our first two dual-fuel diesel LNG tugs,
which will be built to Keppel’s award-
winning proprietary design.
As for the ongoing investigations in
Brazil, following further internal
investigations, Keppel recognised that
some transactions involving a former
agent of certain Keppel entities in Brazil
may be suspicious. Keppel has notified
the authorities in the relevant jurisdictions
of its intention to cooperate and work
towards the resolution of the underlying
issues arising from or in connection
with the transactions. I want to assure
all stakeholders that Keppel has a
zero-tolerance stance against any
form of illegal activity, including bribery
and corruption, involving its employees
or associates.
Property
Rapid urbanisation across key Asian
cities augurs well for our Property
Division as it achieved stronger
residential sales in 2016. About 5,720
homes were sold in 2016, with a total
sales value of about $2.3 billion.
This is about 25% higher than the
4,570 homes sold in 2015.
In China, despite the property
market cooling measures in selected
cities, we sold about 3,800 units,
approximately 16% more than in
2015. Market conditions in Vietnam,
especially Ho Chi Minh City, have
also been favourable, where we sold
1,520 units, a more than 60% increase
year-on-year. Despite the tepid property
market in Singapore, we sold 380 homes,
double the 190 units in 2015.
We are very focused on achieving a
high ROE for Keppel Land and to remain
a developer with one of the highest ROEs
in Asia. Throughout 2016, the Division
proactively recycled assets to achieve
higher returns, announcing 11
divestments totalling about $680 million.
At the same time, Keppel Land also
seized opportunities proactively,
investing about $460 million across
China, Vietnam and Indonesia.
On the commercial front, Keppel Land
has over a million square metres of gross
floor area under development. In line
with the strategy to strengthen our
commercial portfolio, we purchased
a stake in I12 Katong retail centre in
Singapore, as well as a newly-completed
retail development in the Jiading
District of Shanghai. We also opened
the Saigon Centre retail mall, anchored
by Takashimaya Department Store,
in Ho Chi Minh City. Our suite of Grade A
office buildings in key cities was
augmented with the completion of
International Financial Centre Jakarta
Tower Two and the topping off of Junction
City Tower in Yangon. We are also
Golar Hilli, the world’s
first-of-its-type
floating liquefaction
vessel conversion, will
be completed in 2017
for work in Cameroon.
10
Keppel Corporation Limited Report to Shareholders 2016Group Overview expanding our collaboration with
the Shwe Taung Group, a reputable
conglomerate in Myanmar, in Junction
City Phase 2.
Infrastructure
Keppel Infrastructure continues to
pursue growth opportunities in energy
and environmental infrastructure, both
in Singapore and overseas.
We concluded 2016 with the good news
that Keppel Infrastructure will Design,
Build, Own and Operate Singapore’s
fourth desalination plant with a
concession period of 25 years. To be
operational in 2020, it will be the first
in Singapore with the capability to
treat sea water, and also fresh water
from the Marina Reservoir, by using
reverse osmosis and other advanced
membrane technology.
In China, Keppel Seghers, a wholly-owned
subsidiary of Keppel Infrastructure,
continued to reinforce its position
as the leader among imported
waste-to-energy (WTE) technology
solutions providers in the country.
Keppel Seghers secured six contracts
to provide WTE technology and services,
including that from repeat customer
Shenzhen Energy Environment
Engineering Co for the Baoan WTE
plant, which is slated to become the
world’s largest WTE facility in terms
of incineration capacity.
Over in Qatar, we have completed
the handover and commenced the
operations and maintenance phase
for the solids stream and sludge
treatment facilities in the Doha
North Sewage Treatment Works. The
10-year operations and maintenance
phase of the contract will contribute to
stable income streams for the Group.
Meanwhile, Keppel Infrastructure
is preparing competitive products
and services to be ready for the
full liberalisation of Singapore’s
electricity market expected in 2018.
Our data centre business is tapping
the mega trends of data traffic,
cloud computing and big data to
grow rapidly. Seizing opportunities
over the year, our Group’s data
centre business increased its
footprint by more than 45%, in terms
of net lettable area, in markets
such as Hong Kong, Italy, the UK
and Germany.
During the year, we broke ground for
Keppel DC Singapore 4, the fourth
data centre in Singapore under Keppel
Data Centres. Keppel Data Centres
has also divested 90% of its stake
in Keppel DC Singapore 3 to Keppel
DC REIT, allowing the company to
recycle its capital.
In line with the evolving urban logistics
landscape, Keppel Logistics is
developing capabilities in omni-channel
distribution. The acquisition by Keppel
Logistics of e-commerce fulfilment
company, Courex, strengthens our
ability to tap opportunities in the
growing e-commerce sector.
Meanwhile, our distribution centre in
the Sino-Singapore Tianjin Eco-City has
begun operations and will cater to the
growing market in Northern China.
Investments
Our asset management businesses
are contributing to the Group’s capital
recycling strategy and providing
stable income streams over the
longer term.
Alpha, now under Keppel Capital,
launched the Alpha Data Centre Fund
and Alpha Asia Macro Trends Fund III
which have a combined target size
of US$1.5 billion. The two new funds
have since made their first acquisitions,
and when fully invested, can add
as much as US$3.5 billion to Keppel’s
total AUM.
Keppel DC REIT’s AUM increased
to approximately $1.4 billion with
13 data centres, three of which were
added to its portfolio in 2016.
KrisEnergy’s preferential offering of the
zero coupon secured notes with free
in-the-money detachable warrants was
fully subscribed by its shareholders.
The long-term fundamentals of the oil
and gas industry remain sound and we are
hopeful that we can extract good returns
from our investment in KrisEnergy when
the market improves. The successful
Consent Solicitation Exercise to term out
two existing notes, and issuance of the
zero coupon secured notes would allow
KrisEnergy to ride out the volatility in
the oil price.
Keppel Land continues
to see strong interest
in its projects in focus
cities in China, such as
V City in Chengdu.
11
Chairman’s Statement
Keppel upholds sustainability as a key pillar of our corporate
strategy and operations, so as to create enduring value
for all our stakeholders.
Keppel leads the Singapore Consortium
in the Sino-Singapore Tianjin Eco-City,
which has now completed its eighth year
of development. As the Eco-City matures,
we are drawing keen interest from
developers and home buyers. In 2016,
more than 6,300 homes were sold in
the Sino-Singapore Tianjin Eco-City.
Reflecting the market’s growing
confidence in the sustainable township,
the price of land sold in the Eco-City
has also been rising steadily.
Sustainability Matters
Keppel upholds sustainability as a key
pillar of our corporate strategy and
operations, so as to create enduring
value for all our stakeholders.
We are heartened that our sustainability
efforts have been recognised both
in Singapore and abroad. Keppel
Corporation was bestowed a Singapore
Apex Corporate Sustainability Award
2016 in the Sustainable Business category
(Large Organisation). Keppel has been
included in the Dow Jones Sustainability
Index for four consecutive years, and
is also listed on a number of other
sustainability indices, including the
MSCI Global Sustainability Index,
Euronext Vigeo Eiris Index – World
120 and all four sustainability indices
launched by the Singapore Exchange in
2016. We also participated in the CDP
(formerly Carbon Disclosure Project).
Even as we hunker down, we continue
to invest in the development and training
of our people. To allow Keppelites to
explore, develop and fulfil their
professional aspirations within the Group,
we are working towards harmonising our
human resources policies to facilitate
greater mobility of staff across different
businesses and geographies.
We also recognise the valuable
contributions made by earlier generations.
In November 2016, Keppel Fellows, an
alumni comprising former board members
of Keppel entities and selected members
of senior management, was established
to better engage distinguished former
Keppelites and tap their valuable
ideas and experience.
Safety remains our top priority.
With 35 awards under its belt, Keppel
was the single largest winner at the
2016 Workplace Safety and Health
Awards, organised by the Workplace
Safety and Health Council and Ministry
of Manpower, Singapore. In spite of
our best efforts, however, we suffered
seven fatalities across the Group
in 2016. We are deeply saddened by
the loss of our colleagues. We have
investigated these incidents and
will further strengthen our efforts
in our safety journey to ensure that
every Keppelite can go home safe,
every day.
Our commitment to sustainability
extends to the communities where we
operate, and the environment.
We are happy to contribute to enhance
Singapore’s biodiversity with the
commitment of more than $2 million
to establish the Keppel Discovery
Wetlands. This is a partnership with
the Singapore National Parks Board
to restore the freshwater forest
wetland ecosystem historically found
in the vicinity of the Singapore Botanic
Gardens, a UNESCO World Heritage
site. The 1.8-hectare forest wetlands
will enhance the biodiversity found in
the region and provide valuable
educational opportunities for
the public.
Keppel supports
Qatar’s vision
for sustainable
development with the
Doha North Sewage
Treatment Works.
12
Keppel Corporation Limited Report to Shareholders 2016Group Overview world for their dedication and hard
work in the face of daunting challenges.
With the support and confidence of
all our stakeholders, I am convinced
that the Keppel Group will emerge even
stronger after the downturn, as we have
done before.
Yours sincerely,
Lee Boon Yang
Chairman
9 March 2017
Since its opening in October 2015, the
Keppel Centre for Art Education at the
National Gallery Singapore has drawn
more than 300,000 visitors to discover
art through imaginative play. Guided
school tours and workshops introduce
visual literacy, analytical and interpretive
skills to students and supported
Singapore’s national curriculum. The
first of its kind in the region, the Centre
was established with a $12 million
commitment from Keppel.
Keppelites are also committed to make
a difference in the community through
volunteerism. In 2016, Keppel Volunteers
engaged with and cared for beneficiaries,
supported by Keppel Care Foundation,
with more than 8,000 hours in service.
Overseas chapters of Keppel Volunteers
were also established in the Philippines,
China, Vietnam and Brazil.
To communicate our sustainability
strategy, practices and performance,
Keppel Corporation produces an
annual sustainability report which
draws on internationally-recognised
standards of reporting, including the
Global Reporting Initiative. We will be
publishing Keppel Corporation’s seventh
sustainability report, which discusses
the economic, environmental and social
aspects of our activities and initiatives,
later this year. The report will be in
line with the new requirements on
sustainability reporting introduced by
the Singapore Exchange and will be
externally assured in adherence to the
AccountAbility AA1000 Assurance
Standard (2008). Brief highlights of our
sustainability efforts are also outlined
in this Annual Report.
Acknowledgements
On behalf of the Board, I would like to
express my deepest appreciation to
Mrs Oon Kum Loon, who retired from
the Board in end-April 2016 after
12 years of dedicated and outstanding
service. Prior to her retirement, she
was Chairman of the Board Risk
Committee, as well as a member of the
Audit Committee and Remuneration
Committee.
Reflecting solidarity in these troubled
times, senior management across
the Keppel Group took a voluntary
reduction in their monthly salary in
2016. The Directors of Keppel Corporation
are also proposing to lower Directors’
fees for 2016. While Keppel remains
profitable, the voluntary cuts by Directors
and senior management demonstrate
our collective resolve to deal with the
challenges that the Company faces.
I would like to thank my fellow directors
for their valuable guidance and
commitment to steer Keppel through
these difficult times. I am grateful to
our many partners and stakeholders for
their unflagging belief in and support for
Keppel. I also want to express my deep
appreciation to Keppelites around the
Mr Lawrence Wong
(second from right),
Minister for National
Development and
Second Minister for
Finance; Dr Lee
Boon Yang (far right),
Chairman of Keppel
Corporation; Mr Loh
Chin Hua (third from
right), CEO of Keppel
Corporation; and
Mrs Christina Ong (left),
Chairman of NParks,
planted a Keppel Tree
at the Keppel Discovery
Wetlands in Singapore
Botanic Gardens.
13
Interview with the CEO
Harnessing the Group’s synergies, we are
poised to create and capture value sustainably.
Loh Chin Hua
CEO
14
Q Despite the OPEC-led production
cuts and an increase in oil prices,
the market has yet to see a
resurgence in rig orders. What are
your thoughts on where the
industry is headed?
A Oil price is only one of several
factors determining when rig orders
will return. While the rebound is
positive for the offshore sector,
it is not sufficient on its own to
trigger an immediate improvement
in the operating environment.
Exploration and production
expenditures need to increase in
order for the market to improve.
And it may take a while before we
see a significant increase in capex
as oil companies and fleet operators
continue focusing on capital
discipline and improving their
balance sheets. Meanwhile, the
utilisation of existing rigs remains
weak, and the offshore market
will take time to absorb an
oversupply of newbuilds.
Although the winter in the offshore
business is expected to persist
for some time, we remain confident
of the longer term fundamentals
of the sector. Projects that are
well designed and executed in
a smart and cost-effective way
will be in demand. There will also
be other markets to explore such
as for gas and production solutions,
as well as opportunities to
re-purpose and maximise our
offshore technologies for other
non-drilling applications.
We have been through four cycles
in the past few decades, and
have emerged stronger each time.
The key is to stay focused and
nimble to tide through the difficult
period, bring down our overheads
to make Keppel Offshore & Marine
(Keppel O&M) leaner and more
competitive, and also strengthen the
Division with new capabilities and
innovations to take it into the future.
A good crisis is not to be wasted.
We will be working hard to ensure
that Keppel O&M emerges stronger
and further entrench our leadership
position in the offshore and marine
(O&M) sector.
Keppel Corporation Limited Report to Shareholders 2016Group Overview
Q Keppel has made steep
impairments of $336 million
for 2016, most of which were due
to the O&M Division. Do you
expect to make more impairments
in 2017, what would trigger the
decision to do so?
A Much of the impairments we made
in 2016 was related to the rightsizing
at Keppel O&M, such as the
mothballing and anticipated closing
of yards, in addition to impairments
of investments and stocks &
work-in-progress. While it is painful,
we believe that given the current
environment, the impairments are
prudent and necessary.
The provisions for impairments
have been through a robust review
process. They were deliberated at
length by the boards and audit
committees of both Keppel O&M
and Keppel Corporation, as well as
with external auditors.
As it stands now, the provisions that
have been made are appropriate and
adequate. We will continue to monitor
market conditions, work closely
with our customers and review our
assumptions on a quarterly basis,
as we have been doing.
I want to emphasise that
notwithstanding the difficult
conditions, Keppel O&M remained
profitable for 2016. This was possible
due to our prudent cost-cutting and
rightsizing measures. Keppel O&M’s
operating profit was $412 million and
operating margin was 14.4%, before
impairments of $277 million for fixed
assets, stocks & work-in-progress
and investments. This is
commendable, given the challenges
facing the industry.
Q Given the long and harsh winter
in the offshore sector, what other
opportunities are you exploring?
How is Keppel positioning itself
to capture these?
A We are riding out the offshore
downturn on a firm footing,
anchored by our multi-business
strategy. While many other industry
players struggle to keep afloat,
Keppel is still in a good position to
prudently invest for the future.
Our balance sheet remains strong
and will allow us to invest and take
advantage of opportunities that the
crisis may throw up.
Gas is expected to be the fastest-
growing fossil fuel for the next few
decades, with demand rising at 1.5%
per annum from now to 2040, to
make up a quarter of global energy
demand. Keppel is well positioned to
be an industry forerunner through
an extensive gas strategy that spans
the value chain from liquefaction to
transportation to power generation.
Together with Shell, we have the
ambition of building a global bunkering
network to serve shipowners across
their travel routes. Being the
forerunner in Liquefied Natural Gas
(LNG) bunkering allows us to push
the envelope for the use of LNG as a
marine fuel, creating pull-through
opportunities for our yards.
Meanwhile, Golar Hilli, when
delivered later in 2017, will be the
first-of-its-kind floating liquefaction
vessel conversion in the market,
putting us ahead of the curve.
Last year, we completed the acquisition
of Cameron’s LETOURNEAUTM suite
of jackup rig designs, as well as rig
kit, aftersales and aftermarket
businesses. We now have a market
share of about 40% of the world’s
jackup rigs in operation, giving us
better access to the aftersales and
aftermarket services sector.
Keppel LeTourneau is not only able
to provide aftersales field services
to ensure smooth and efficient rig
operations, but also cost effective,
integrated and practical inspection
engineering solutions that can reduce
rig downtime. It is also looking to
provide sensing technology, rig
analytics, drone inspection services
and enhanced 24/7 monitoring
solutions as part of the offerings
to fleet owners.
We will continue to leverage our
considerable capabilities to seize
opportunities such as Jones Act
Vessels for the US market, as well
as non-drilling solutions including
dredgers and specialised ships.
As we steel ourselves against the
storm, we believe that these efforts,
among others, will stand us in good
stead to entrench our leadership
position in the upturn.
Keppel O&M will continue
to pursue opportunities in
the non-drilling sector
such as for floating
production solutions.
15
Interview with the CEO
Q The Property Division has
performed commendably,
contributing 79% of the Group’s
net profit for FY 2016. Moving
forward, will there be less
emphasis on the O&M business?
A We are proud of Keppel O&M but
we are more than just an O&M or
even a property company. We are
a multi-business group, with
different verticals in the same line of
providing solutions for sustainable
urbanisation such as energy,
infrastructure, clean environments,
high quality homes and offices, and
connectivity. When we go through
turbulence and one of our engines
slows down, the other engines would
have to pick up the pace. And I am
glad that they have. Amidst the
challenging market environment
in 2016, we delivered a creditable
net profit of $784 million after
impairments, supported by our
multi-business strategy.
For our O&M business, we have
to recognise that we were at a
historically high level of activity just
before the crisis hit with oil prices
plunging in mid-2014. We had
enjoyed a good run in the O&M sector
with Keppel O&M contributing
$7.4 billion in profits to the Group over
the past 10 years. The future for
Keppel O&M remains bright but the
industry may take a few years before
it can return to the high points seen
in the last decade. The Group has
operated in cyclical industries for
many years and we have utilised
our multi-business approach well
to navigate downturns.
Whilst the industries we operate
in will have cycles, sustainable
urbanisation, and the solutions that
we provide, will enjoy many decades
of secular growth.
Looking ahead, our focus is to
continue delivering on our
multi-business strategy to show
that our model is sustainable,
scalable and able to generate
attractive returns for the Group.
Q How has the landscape changed
for Keppel Land in the light of
slower economic growth and
cooling measures in its core
markets? Will it be able to
maintain its performance in
the next few years?
A Cooling measures in recent years
have moderated the demand in
some of the markets where Keppel
Land operates, chiefly in China and
Singapore. Whilst the impact is
not positive for developers in the
short term, as a long-term player
in these markets, it is also in our
interest not to have asset bubbles
forming as any hard landing will
be quite disastrous.
Our sales of homes for the past two
years have registered remarkable
growth despite the challenging
headwinds in our core markets of
China and Singapore. This is partly
due to our focus on selected Tier-1
and -2 cities in China, and our early
mover’s advantage going into regional
growth markets more than 20 years
ago. Vietnam has been an important
contributor to home sales and we
have, today, one of the best
landbanks amongst foreign
developers in Ho Chi Minh City.
The property development business
has evolved in Asia over the years.
As economies developed and
experienced high growth, land
prices have also risen in tandem.
There is also healthy competition
for land as new local developers
emerged, many with strong balance
sheets. Fueled by strong ambitions,
they have contested aggressively
for land.
From time to time, land prices may
get too high and thus do not provide
good risk-adjusted returns for
developers. In the face of this new
reality, Keppel Land has grown to
become a multi-dimensional property
player. We will continue to buy
land selectively. With prices higher
now and growth more constrained
compared to the past, a landbanking
strategy may not work in some
markets. Keppel Land has also
taken to selling land when prices
were high and where development
profits did not justify the risks.
We have also successfully bought
completed assets, which we have
enhanced through active asset
management, before selling them.
We are also not averse to taking
positions in operating platforms,
especially in markets and segments
that may not be entirely open to a
foreign developer like Keppel Land.
Teaming up with strategic partners
like China Vanke has also yielded
good results for us.
Keppel Land will ride
on positive sentiments
in growth markets to
launch more projects,
such as Linden
Residences in Ho Chi
Minh City, Vietnam.
16
Keppel Corporation Limited Report to Shareholders 2016Group Overview
Whilst the general outlook for
property markets in Asia remains
positive in the long term,
Keppel Land can no longer rest
on what worked well for us in the
past. We have built new muscles and
capabilities and will wield them to
ensure that we continue to build
good homes, offices and commercial
buildings that are well sought-after
by buyers and tenants, whilst
generating the highest Return on
Equity (ROE).
To succeed in this environment,
we need to be agile and seize
opportunities. We have to evolve
our business approach, work our
assets harder, and better leverage
technology and innovation as we
address the changing environment,
from the wave of millennials to the
silver tsunami.
Q How are you adjusting to this
changing environment? What are
some of the opportunities that
you see in the property sector?
A Our goal for Keppel Land is to remain
a leading Asian property company
with one of the highest returns.
We do not necessarily have to be
the biggest industry player. Over
the last 10 years, Keppel Land had
turned in a respectable average
ROE of about 18.4% annually. It was
able to do so while building up a
substantial landbank across its key
and growth markets.
Looking ahead, the level of returns
from the property market throughout
Asia is not likely to be as high as it
was a decade ago. For us to maintain
a similar level of ROE, in line with
the Group’s objectives, we will need
to rightsize the property book and
turn the assets more actively.
In the immediate future, we will
continue to capitalise on positive
sentiments to launch projects for sale
in promising markets. Vietnam is one
such market where we are seeing
good demand growth, especially in
Ho Chi Minh City. We sold 1,520
homes there for the whole of 2016,
63% higher than the year before.
On the commercial front, we opened
our latest retail mall in Phase Two
of Saigon Centre in August, with
Takashimaya Department Store
as its anchor tenant. We expect to
complete this new phase, which
includes 44,000 square metres of
premium Grade A office space and
195 luxury serviced apartments,
by end-2017.
In tandem with property development,
Keppel Land has also been actively
recycling its assets. In 2016, it
announced 11 divestments amounting
to about $680 million, as well as
investments of about $460 million in
opportunities across China, Vietnam
and Indonesia. Some of these new
investments included completed
assets, such as the retail mall in
Shanghai’s up-and-coming Jiading
New City Core Area, which we will
manage and later monetise.
The strategy of selectively acquiring
newly-completed projects can also
give us access to prime real estate
within land scarce, gateway cities.
Life Hub @ Jinqiao, a mixed-use
development in Shanghai has proven
to be an excellent investment for
Keppel, and also Alpha’s investors.
We divested our 80% stake in the
development for US$517 million.
This was based on the property’s
sale value of RMB 5.5 billion,
which was close to a 70% premium
over the original purchase price of
RMB 3.3 billion three years ago.
Through innovative asset
management and enhancement
efforts, we contributed to growing
a profitable mall, and achieved
over 20% Internal Rate of Return
per annum without taking any
development risks.
Q Turning to the Infrastructure
Division, how do you plan
on building it into a bigger
contributor to the Group?
A We have been focused on
streamlining our Infrastructure
Division. Today, the Division’s core
businesses are in energy and
environmental infrastructure under
Keppel Infrastructure, as well as
data centres and logistics under
Keppel Telecommunications &
Transportation (Keppel T&T).
We are looking out for opportunities
to establish leadership positions
in these areas by investing
prudently in projects where
we can expect good returns.
In the past few years, we had
focused on trying to resolve the
The divestment of
Life Hub @ Jinqiao, a
collaboration between
Keppel Land China
and Alpha, yielded
good returns without
development risks.
17
Interview with the CEO
challenges with our overseas
Engineering, Procurement and
Construction (EPC) projects, which
are now behind us. I am pleased
that the Doha North Sewage
Treatment Works in Qatar is
turning in good recurring income
to the Group, having commenced
its 10-year operations and
maintenance contract.
More recently, we are proud to have
been awarded a contract by PUB,
Singapore’s national water agency, to
Design, Build, Own and Operate the
country’s fourth desalination plant.
Upon completion in 2020, the plant
will be the first in Singapore with the
ability to treat sea water, and fresh
water from the Marina Reservoir. This
project can provide the Group with 25
years of recurring income through
the operations and maintenance
contract and water purchase
agreement with PUB.
Looking ahead, Keppel Infrastructure
is re-doubling its focus to build up its
energy and environmental businesses
in partnership with Keppel Capital.
It is also preparing for the full
liberalisation of Singapore’s
electricity market in 2018, which
will open up new opportunities.
Over in the data centre space, the
proliferation of digitalisation, cloud
computing and big data analytics
will create even more demand for
Keppel T&T’s data centre services.
Through the Alpha Data Centre Fund
(Alpha DC Fund), Keppel T&T will
continue to grow its presence and
track record in key data centre hubs.
Keppel T&T will also continue
to build on its foundation in
third-party logistics, to develop
new muscles for solutions in
omni-channel distribution and urban
logistics. The acquisition of Courex,
an e-commerce fulfilment company,
will further strengthen Keppel T&T’s
ability to tap the growing
e-commerce sector in Singapore
and Southeast Asia.
Q Now that the integration of
Keppel’s asset managers is
complete, what are the
potential sectors or growth
opportunities that Keppel Capital
is pursuing?
18
A Leveraging the Group’s core
competencies, Keppel Capital is
well positioned to create innovative
investment solutions and connect
investors with high-grade real assets
in fast-growing sectors fuelled by
sustainable urbanisation trends. Data
centres, power and desalination plants,
LNG vessels and FPSOs are examples
of such real assets with long-term
cash flows that many institutional
investors are looking to invest in.
We have had good traction with
large pension and sovereign wealth
funds; what they are looking for is
an organisation with the ability not
only to build these real assets,
but also operate and manage
them well. The Alpha DC Fund and
Alpha Asia Macro Trends Fund III,
which Keppel Capital launched
in 2016, have received initial
commitments amounting to US$410
million, as well as made their first
asset acquisitions. In addition to
creating and managing these real
assets, we are also able offer avenues
for asset recycling through the real
estate and business trusts that
Keppel Capital manages.
The asset management platform,
enhanced through the establishment
of Keppel Capital, is thus a very
important component of our business
model; it is an engine to help unleash
our synergies as a multi-business
group. Co-investments into real
estate and infrastructure projects
undertaken by the Group will allow
us to grow faster without putting
a strain on our balance sheet.
Q Will we see asset management
becoming a more substantial
contributor to Keppel’s earnings
in the near future?
A Yes, we are gradually moving in
that direction. Asset management
is not a new business, it has been
a source of fee income to the Group
for some 14 years, beginning with
Alpha Investment Partners (Alpha)
in 2003 and then Keppel REIT
Management in 2006.
Today, the Group has four asset
managers, which are now part of
Keppel Capital. They collectively
manage some $25 billion of property
and infrastructure assets, and
contributed about $64 million
to the Group’s net profit for FY 2016,
which is an increase from the
$58 million in 2015.
With the ability to centralise both
regulated and non-regulated support
functions in Keppel Capital, we are
creating a larger platform with greater
focus, economies of scale and
synergy to drive performance and
grow recurring fee income. In the
process, we have also acquired new
muscles and the capacity to scale up
more quickly by getting our business
units to hunt in a pack.
Alpha, which used to focus primarily
on real estate private funds, has
grown its repertoire of expertise
by collaborating with Keppel T&T
on the Alpha DC Fund in the data
centre space. It is further leveraging
Keppel Infrastructure’s know-how
to pursue energy infrastructure
investments, and is also working
closely with Keppel O&M to explore
other opportunities.
Not only will we expand our capital
base and improve asset recycling
through Keppel Capital, but we can
also create potential pull-through work
for the Group’s business verticals.
Q How are you prioritising the
allocation of resources across
the diverse business verticals?
A We are always trying to make
our assets work harder for us.
I frequently remind my colleagues
in the business units that we are
OneKeppel with one balance sheet.
It helps that we have almost full
control over all our key business
verticals. That gives us flexibility to
allocate resources across the Group
to earn the best risk-adjusted returns
and achieve our strategic goals.
While the Group’s strategy is driven
from the centre, in assessing potential
projects, we take a bottom-up
approach. Our focus is on how we can
further enhance the Group’s value
proposition as a leading solutions
provider for sustainable urbanisation.
Maintaining good financial discipline
and an institutional-quality balance
sheet will stand us in good stead to
seize opportunities when they arise.
And we can potentially do a lot more
by bringing in like-minded co-investors
to expand our capital base.
Keppel Corporation Limited Report to Shareholders 2016Group Overview
Synergy
in motion
Driving collaboration across our business verticals, we empower the
Group with greater agility and financial strength to seize opportunities
in sustainable urbanisation and create value for all stakeholders.
Keppel Group
Keppel Group
Ecosystem for Value Creation & Capture
Stakeholders
Collective Strengths
Returns
Stakeholders
Financial
Co-investors
Provides capital
to ADCF
Keppel Capital
Manages ADCF
Keppel T&T
Keppel Land
Keppel Infrastructure
Seed capital into ADCF
and advise on data
centre development
Manage data centre
facilities
Provides power &
cooling services to
data centres
INVESTS
ONGOING
INVESTMENTS
DIVESTS
ALPHA DATA CENTRE FUND (ADCF)
GREENFIELD / BROWNFIELD DEVELOPMENT
COMPLETED DATA CENTRE
MATURED DATA CENTRE*
RENTAL
INCOME
DIVESTMENT
GAINS
Provides return on
investment from ADCF
Financial
Co-investors
Generates recurring
asset management fees
Keppel Capital
Keppel T&T
Keppel Land
Provides return on
investment from ADCF
Generates development
and advisory fees
Produces recurring
facility management fees
Generates recurring power
& cooling services income
Keppel Infrastructure
Keppel Capital
Unitholders
Keppel T&T
Manages
Keppel DC REIT
Invest in Keppel
DC REIT
KEPPEL DC REIT
Generates recurring asset
management fees
Keppel Capital
Keppel T&T
Provides REIT distributions
Unitholders
Provides share of REIT’s
profits
Keppel T&T
COLLABORATION
SCALABILITY
GROWTH
Bundling core competencies to offer
winning value propositions to customers
and investors.
Quality earnings growth, bolstered by
recurring income and the best
risk-adjusted returns.
* Matured assets could be monetised through the Keppel-managed real estate and business trusts,
or other third parties.
Designed and produced by Black Sun Pte Ltd
More assets in less time, spanning diverse classes and sectors.
As a multi-business group with
access to capital, and the ability
to invest when times are tough, we
will use this period to prudently
sow into strategic areas, building
new muscles to ensure that
Keppel is future-ready.
Q What level of returns do you
have in mind for the Group?
How confident are you of
achieving this with Keppel’s
business model?
A Our business model has been
generating good returns for
Keppel over the years. On
average, we have achieved an
ROE of 21.3% annually in the last
decade, including revaluations,
impairments and divestments.
We will continue to seek the best
risk-adjusted returns amidst a
difficult operating environment.
With an integrated asset
management arm, we will be able
to tap on co-investors to seize
more opportunities, without
straining our balance sheet.
Most real assets are costly to
develop and have relatively long
gestation periods. So instead of
developing, for example, one new
infrastructure asset from our
own resources, we can now aim
to create more assets together
with co-investors.
During the asset creation phase,
either from greenfield or
brownfield, our business units
in the various verticals can earn
project management fees or
even a developer’s or an EPC
margin. Once an asset is
developed, we can earn various
fees for asset management,
operations and maintenance,
as well as facilities and property
management, giving us multiple
bites of the cherry. And when
the asset has matured and been
de-risked, we can look forward to
monetising it through our real
estate or infrastructure trusts.
We are not required to invest
heavily in most of the private
funds that we run. We may
eventually hold stakes of about
5-10%, and still be entrusted
with operating and managing
the assets. The returns can
still be quite attractive, once we
add up all the potential fees
from our ecosystem. Of course,
to be successful, we must also
look after the interests of all our
stakeholders, including investors
who entrust Keppel Capital
with their funds. Protocols for
managing any potential conflicts
have to be clearly followed.
Ultimately, our goal is to create
good solutions for customers
and stakeholders that will
also make good investment
vehicles for both private and
public investors.
Q There are proponents for
Keppel to institute a minimum
level of absolute dividends,
what are your views on this?
A There are many considerations in
setting a dividend policy, which
have longer term implications for
a listed company. Our Board and
management have debated this.
The supporters of a minimum
dividend feel that it signals a
commitment to shareholders,
and would also support Keppel’s
share price in a down market.
For such a policy to be effective
however, the minimum dividend
must be a meaningful sum to
shareholders, and yet not too
onerous for the Company to
maintain over the long run.
We believe in rewarding shareholders
fairly and sustainably. While we do
not have an explicit dividend policy,
investors who have been following
Keppel Corporation know that we
have had a consistent track record
in distributing 40-50% of our
annual net profit as dividends.
For FY 2016, we declared a total
cash dividend of $0.20 per share,
which is equivalent to a 46%
payout ratio. This is higher than
the 40% paid out for FY 2015,
and is within a comfortable range.
It is very important that we are able
to pay stable dividends as well as
balance the Company’s capital
requirements, especially in the
challenging and uncertain period
before us. As we improve the overall
quality of earnings through our
business model, we will also grow
recurring income to better fund our
capital spending and dividends.
The proliferation of
digitalisation, cloud
computing and big data
analytics will create
even more demand for
Keppel’s data centres.
19
Group Overview
Board of Directors
Lee Boon Yang age 69
Chairman, Non-Executive
and Independent Director
Loh Chin Hua age 55
Executive Director and
Chief Executive Officer
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 2016):
7 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 2017):
Listed companies
Singapore Press Holdings Limited (Chairman)
Other principal directorships
Keppel Care Foundation Limited (Chairman);
Singapore Press Holdings Foundation Limited
(Chairman); Jilin Food Zone Pte Ltd (Chairman);
Jilin Food Zone Investment Holdings Pte. Ltd.
(Chairman)
Major Appointments (other than directorships):
Nil
Past Directorships held over the preceding
5 years (from 1 January 2012 to 31 December 2016):
Nil
Others:
Former Minister for Information,
Communications and the Arts (May 2003 to
March 2009); Former Member of Parliament
(December 1984 to April 2011)
Date of first appointment as a director:
1 January 2014
Date of last re-election as a director:
19 April 2016
Length of service as a director
(as at 31 December 2016):
3 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; CFA® charterholder
Present Directorships (as at 1 January 2017):
Listed companies
Keppel Telecommunication & Transportation
Ltd (Chairman)
Other principal directorships
Keppel Offshore & Marine Ltd (Chairman);
Keppel Land Limited (Chairman); Keppel
Infrastructure Holdings Pte. Ltd. (Chairman);
Keppel Capital Holdings Pte. Ltd. (Chairman);
Keppel Care Foundation Limited
Major Appointments (other than directorships):
Singapore Business Federation (Council Member);
National University of Singapore (Member of
Board of Trustees); Singapore Economic
Development Board (Board Member)
Past Directorships held over the preceding
5 years (from 1 January 2012 to 31 December 2016):
KrisEnergy Ltd; 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
20
Keppel Corporation Limited Report to Shareholders 2016
Tow Heng Tan age 61
Non-Executive and
Non-Independent Director
Alvin Yeo Khirn Hai age 55
Non-Executive and
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 2016):
12 years 4 months
Board Committee(s) served on:
Nominating Committee (Member);
Remuneration Committee (Member);
Board Risk Committee (Member)
Academic & Professional Qualification(s):
Fellow of the Association of Chartered Certified
Accountants; Fellow of the Chartered Institute
of Management Accountants
Present Directorships (as at 1 January 2017):
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;
Alexandra Health System Pte Ltd
Major Appointments (other than directorships):
Pavilion Capital International Pte. Ltd. (CEO);
Center for Asset Management Research &
Investment, NUS (Member); National Council
of Social Services (Member of Investment
Committee)
Past Directorships held over the preceding
5 years (from 1 January 2012 to 31 December 2016):
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
Date of first appointment as a director:
1 June 2009
Date of last re-election as a director:
19 April 2016
Length of service as a director
(as at 31 December 2016):
7 years 7 months
Board Committee(s) served on:
Audit Committee (Member);
Nominating Committee (Member)
Academic & Professional Qualification(s):
LLB Honours, King’s College London,
University of London; Gray’s Inn (Barrister-at-
Law); Senior Counsel, Singapore
Present Directorships (as at 1 January 2017):
Listed companies
United Industrial Corporation 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 Singapore Medical Council’s Panel of
Disciplinary Tribunal Chairmen (Member);
Panel of Disciplinary Tribunal Chairmen,
Supreme Court of Singapore (Member);
Fellow of the Singapore Institute of Arbitrators
Past Directorships held over the preceding
5 years (from 1 January 2012 to 31 December 2016):
Neptune Orient Lines Limited; 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)
21
Board of Directors
Tan Ek Kia age 68
Non-Executive and
Independent Director
Danny Teoh age 61
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 2016
Length of service as a director
(as at 31 December 2016):
6 years 3 months
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 2016):
6 years 3 months
Board Committee(s) served on:
Board Safety Committee (Chairman);
Board Risk Committee (Member);
Audit Committee (Member)
Board Committee(s) served on:
Audit Committee (Chairman);
Remuneration 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 2017):
Listed companies
DBS Group Holdings Ltd
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 2012 to 31 December 2016):
Singapore Olympic Foundation;
CapitaLand Mall Trust Management Limited
(Manager of CapitaMall Trust)
Others:
Former Managing Partner, KPMG LLP, Singapore;
Past member of KPMG’s International Board and
Council; Former Head of Audit and Risk Advisory
Services and Head of Financial Services
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 2017):
Listed companies
KrisEnergy Ltd; PT Chandra Asri Petrochemical
Tbk; Transocean Ltd
Other principal directorships
SMRT Corporation Ltd; 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 2012 to 31 December 2016):
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
22
Keppel Corporation Limited Report to Shareholders 2016Group Overview Tan Puay Chiang age 69
Non-Executive and
Independent Director
Till Vestring age 53
Non-Executive and
Independent Director
Veronica Eng age 63
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 2016):
4 years 7 months
Board Committee(s) served on:
Nominating Committee (Chairman);
Board Safety Committee (Member);
Board Risk Committee (Member)
Academic & Professional Qualification(s):
MBA (Distinction), New York University;
Bachelor of Science (First Class Honours),
University of Singapore
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 2016):
1 year 11 months
Date of first appointment as a director:
1 July 2015
Date of last re-election as a director:
19 April 2016
Length of service as a director
(as at 31 December 2016):
1 year 6 months
Board Committee(s) served on:
Remuneration Committee (Chairman);
Nominating Committee (Member)
Board Committee(s) served on:
Board Risk Committee (Chairman);
Audit 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
Present Directorships (as at 1 January 2017):
Listed companies
Nil
Present Directorships (as at 1 January 2017):
Listed companies
Inchcape plc
Other principal directorships
Singapore Power Limited;
SP Services Limited (Chairman)
Other principal directorships
Singapore Chinese Orchestra Company Limited;
Leap Philanthrophy Ltd
Major Appointments (other than directorships):
Nil
Major Appointments (other than directorships):
Partner, Bain & Company Southeast Asia
Past Directorships held over the preceding 5 years
(from 1 January 2012 to 31 December 2016):
Neptune Orient Lines Limited
Past Directorships held over the preceding 5 years
(from 1 January 2012 to 31 December 2016):
Nil
Others:
Former Chairman, ExxonMobil (China)
Investment Co. (2001 to 2007)
Others:
Nil
Academic & Professional Qualification(s):
Bachelor of Business Administration
(First Class Honours), University of Singapore
Present Directorships (as at 1 January 2017):
Listed companies
Nil
Other principal directorships
Keppel Capital Holdings Pte Ltd
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); Member of
Singapore’s Diversity Action Committee
Past Directorships held over the preceding 5 years
(from 1 January 2012 to 31 December 2016):
Permira Holdings Limited
Others:
Founding Partner of Permira (1985 to 2015);
Former Member of the Board and
Executive Committee of Permira
23
Keppel Group Boards of Directors
Keppel Offshore & Marine
Keppel Land
Loh Chin Hua
Chairman
Chief Executive Officer,
Keppel Corporation
Chow Yew Yuen
Chief Executive Officer
Loh Chin Hua
Chairman
Chief Executive Officer,
Keppel Corporation
Ang Wee Gee
Chief Executive Officer
Stephen Pan Yue Kuo
Chairman,
World-Wide Shipping Agency Limited
Tan Yam Pin
Former Managing Director,
Fraser and Neave Group
Prof Minoo Homi Patel
Professor of Mechanical Engineering,
Cranfield University, UK
Edward Lee
Singapore’s former Ambassador
to Indonesia
Dr Malcolm Sharples
President,
Offshore Risk & Technology Consulting Inc, USA
Koh-Lim Wen Gin
Former URA Chief Planner and
Deputy Chief Executive Officer
Yap Chee Meng
Former Senior Partner,
KPMG and COO of KPMG International
for Asia Pacific
Prof Huang Jing
Professor and Director,
Center on Asia and Globalisation,
LKY School of Public Policy,
National University of Singapore
Oon Kum Loon (Mrs)
Non-Executive,
Non-Independent Director
Willy Shee Ping Yah
Senior Advisor and
Former Chairman, CBRE
Chan Hon Chew
Chief Financial Officer,
Keppel Corporation
Keppel Infrastructure
Loh Chin Hua
Chairman
Chief Executive Officer,
Keppel Corporation
Dr Ong Tiong Guan
Chief Executive Officer
Chan Hon Chew
Chief Financial Officer,
Keppel Corporation
Chow Yew Yuen
Chief Executive Officer,
Keppel Offshore & Marine
Koh Ban Heng
Director
Khoo Chin Hean
Director
Tong Chong Heong
Director
Po’ad Bin Shaik Abu Bakar Mattar
Independent Director of Hong Leong
Finance Limited
Tan Ek Kia
Chairman, 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
Chan Hon Chew
Chief Financial Officer,
Keppel Corporation
Kevin Kwok Khien
Independent Director, Singapore Exchange Ltd
24
Keppel Infrastructure Fund
Management (Trustee-manager
of Keppel Infrastructure Trust)
Koh Ban Heng
Chairman
Independent Director
Mark Andrew Yeo Kah Chong
Independent Director
Dr Ong Tiong Guan
Chief Executive Officer,
Keppel Infrastructure
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
Christina Tan Hua Mui
Chief Executive Officer,
Keppel Capital
Keppel Telecommunications
& Transportation
Loh Chin Hua
Chairman
Chief Executive Officer,
Keppel Corporation
Thomas Pang Thieng Hwi
Executive Director and
Chief Executive Officer
Prof Neo Boon Siong
Dean and Canon Professor of Business at
the 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
Independent Director
Lee Ai Ming (Mrs)
Justice of Peace, Sr. Consultant,
Rodyk & Davidson LLP,
Advocate & Solicitor of the Supreme Court
of Singapore
Keppel Corporation Limited Report to Shareholders 2016Group Overview
Keppel Capital
Loh Chin Hua
Chairman
Chief Executive Officer,
Keppel Corporation
Christina Tan Hua Mui
Chief Executive Officer
Chan Hon Chew
Chief Financial Officer,
Keppel Corporation
Chow Yew Yuen
Chief Executive Officer,
Keppel Offshore & Marine
Ang Wee Gee
Chief Executive Officer,
Keppel Land
Dr Ong Tiong Guan
Chief Executive Officer,
Keppel Infrastructure
Thomas Pang Thieng Hwi
Chief Executive Officer,
Keppel Telecommunications &
Transportation
Tow Heng Tan
Chief Executive Officer,
Pavilion Capital International Pte. Ltd
Veronica Eng
Independent Director,
Keppel Corporation
Keppel REIT Management
(Manager of Keppel REIT)
Keppel DC REIT Management
(Manager of Keppel DC REIT)
Dr Chin Wei-Li, Audrey Marie
Chairman
Executive Chairman,
Vietnam Investing Associates – Financials
Singapore Private Limited
Tan Chin Hwee
Chief Executive Officer, Asia-Pacific,
Trafigura Pte Ltd
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
Prof Tan Cheng Han
Chairman, Centre for Law & Business,
Faculty of Law,
National University of Singapore
Christina Tan Hua Mui
Chief Executive Officer,
Keppel Capital
Penny Goh (Mrs)
Co-Chairman and Senior Partner,
Allen & Gledhill LLP
Chan Hon Chew
Chairman
Chief Financial Officer,
Keppel Corporation
Lee Chiang Huat
Independent Director
Leong Weng Chee
Independent Director
Lim Chin Hu
Managing Partner,
Stream Global Pte Ltd
Dileep Nair
Independent Director
Teo Cheng Hiang Richard
Independent Director
Dr Tan Tin Wee
Director, National Supercomputing Centre
(NSCC), Singapore and Chairman, A*STAR
Computational Resource Centre (ACRC),
(on secondment from Associate Professor,
Department of Biochemistry,
National University of Singapore)
Thomas Pang Thieng Hwi
Chief Executive Officer,
Keppel Telecommunications
& Transportation
Christina Tan Hua Mui
Chief Executive Officer,
Keppel Capital
k1 Ventures
Prof Neo Boon Siong
Chairman
Dean and Canon Professor of Business at
the Nanyang Business School,
Nanyang Technological University
Jeffrey Alan Safchik
Chief Executive Officer and
Chief Financial Officer
Dr Lee Suan Yew
Medical Practitioner and Past President
of the Singapore Medical Council
Alexandar Vahabzadeh
Co-Founder of Beaumont SA and
Beaumont Partners LLC
Prof Annie Koh
Vice President, Office of Business
Development, Singapore Management
University; Practice Professor of Finance,
Singapore Management University
Tan Poh Lee Paul
Group Controller,
Keppel Corporation
25
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.
KTAP convenes once 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 on
topical issues such as nuclear energy
and sludge co-incineration.
Over the years, KTAP members
have contributed a broad range
of ideas and technology foresight to
Keppel. The areas covered include
drilling, subsea construction, cooling,
waste-to-energy, as well as potentially
disruptive technologies. KTAP has
also been exploring advancing our
technologies and capabilities in
new areas.
Sven Bang Ullring
KTAP 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 to 2000
and President and CEO of NORCONSULT, Oslo
from 1981-1985. He worked for SKANSKA,
Malmo, Sweden from 1962 to 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 was the Chairman of the Maritime and
Port Authority of Singapore’s First, Second
and Third Maritime and Research and
Development Advisory Panel. He is a fellow
and Honorary fellow of the Norwegian
Academy of Technological Sciences, and a
fellow of the Royal Swedish Academy of
Engineering Sciences.
Professor Ng Wun Jern
BSc (Civil Engineering), QMC, University of
London; 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, and Professor of Environmental
Engineering in the School of Civil &
Environmental Engineering at Nanyang
Technological University. He has some 400
publications on water and wastewater
management, has founded spin-off companies
based on his IPs, and serves as technical
advisor to various environmental companies
across ASEAN, China and India.
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 a member of
the United States’ National Academy of
Engineering and a member of The Academy of
Medicine, Engineering and Science of Texas.
Professor Minoo Homi Patel
Fellow of the Royal Academy of Engineering,
the Institution of Mechanical Engineers and
the Royal Institution of Naval Architects;
Chartered Engineer; BSc (Eng) and PhD,
University of London and an Honorary Member
of the Royal Corps of Naval Constructors.
Professor Patel was formerly Head of the School
of Engineering at Cranfield University and is a
Founder Director of the science park company
BPP Technical Services Ltd and its subsidiary
BPP Cables Ltd. He also sits on the Boards of
Keppel Offshore & Marine and BMT Group Ltd.
Dr Malcolm Sharples
President, Offshore Risk & Technology
Consulting Engineering Inc.; BESc. (Engineering
Science), University of Western Ontario; PhD,
University of Cambridge; Athlone Fellow;
Fellow of the Society of Naval Architects and
Marine Engineers and Recipient of the Blakely
Smith Medal for work in Offshore Risk
Analysis; Registered Professional Engineer.
Dr Sharples was previously Vice President of
American Bureau of Shipping focusing on their
worldwide offshore business line, and President
of Noble Denton & Associates which offered
marine warranty engineering and surveying for
worldwide offshore operations.
Dr Brian Clark
Schlumberger Fellow Emeritus; B.S. Ohio
State University; PhD, Harvard University.
Dr Clark holds over 100 patents related to the
exploration and production of oil and gas,
primarily in wire line logging and logging while
drilling. He was recognised as the Outstanding
He consults worldwide on offshore structures/
vessels for regulatory compliance for USA and
Canadian offshore structures, safety audits,
process safety, and has been involved in accident
investigations as an expert witness for legal
proceedings. He is an active member of several
industry standards committees, including
Seated, from left: Loh Chin Hua (CEO of Keppel Corporation), Dr Lee Boon Yang (Chairman of Keppel Corporation), Dr Liu Thai-Ker and Professor Jim Swithenbank.
Standing, from left: Professor Tom Curtis, Ang Wee Gee (CEO of Keppel Land), Professor Minoo Patel, Dr Malcolm Sharples, Chow Yew Yuen (CEO of Keppel Offshore
& Marine), Sven Bang Ullring, Dr Brian Clark, Professor Stefan Thomke, Professor Chan Eng Soon, Professor Ng Wun Jern, Chua Kee Lock, Thomas Pang (CEO of
Keppel Telecommunications & Transportation), Dr Ong Tiong Guan (CEO of Keppel Infrastructure) and Professor Foong Sew Bun.
26
Keppel Corporation Limited Report to Shareholders 2016Group Overview SNAME, Canadian Standards Association,
ISO Committees, and has published numerous
papers on offshore structures including offshore
wind farms and post-mortem storm damages of
MODUs. He is a Director of Keppel Offshore &
Marine Ltd. and Keppel Amfels USA.
Professor Thomas (Tom) Curtis
BSc (Honours) 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, the
Biotechnology and Biological Sciences Research
Council Research Development Fellowship. He
currently leads the Engineering Frontiers for the
Engineering and Physical Sciences Research
Council’s (EPSRC) Engineering Biology Project.
Before entering academia, Professor Curtis worked
in construction and public health policy and has
worked in the US, Brazil, Bangladesh and Jordan.
Professor Jim Swithenbank
BSc, PhD, DSc, DEng, FREng, FInstE, FIChemE,
Energy and Environmental Engineering Group.
Professor Swithenbank is a Fellow of the Royal
Academy of Engineering, Chairman of the
Sheffield University Waste Incineration
Research Centre, and a member of numerous
international combustion and energy
committees. He was the President of the
Institute of Energy from 1986 to 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
Swithenbank’s current work is largely focused
on energy and environmental issues of CHP,
fossil fuels, biomass, wastes and hydrogen.
Professor Stefan Thomke
BSc (Electrical Engineering), University of
Oklahoma; MSc (Electrical & Computer
Engineering), Arizona State University; SM
(Operations Research), SM (Mgmt.), PhD
(Electrical Engineering & Mgmt.),
Massachusetts Institute of Technology; Dr.
rer. oec. (Honorary), HHL Leipzig Graduate
School of Management, 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 has chaired several of the
university’s executive education programmes.
Prior to joining Harvard, he was with McKinsey
& Company in Germany.
Professor Chan Eng Soon
B.Eng (First Class Honours) & M.Eng,
National University of Singapore (NUS);
PhD, Masachusetts Institute of Technology.
Professor Chan, Provost’s Chair Professor in
the Faculty of Engineering at the National
University of Singapore, is a Fellow of the
Singapore Academy of Engineering, Institute of
Marine Engineering, Science & Technology,
and the Institution of Engineers Singapore.
He is the CEO of the Technology Centre for
Offshore & Marine, Singapore and Programme
Director for Offshore & Marine in the Science &
Engineering Research Council of A*STAR.
Professor Chan was Vice Provost (Special
Duties) of NUS and Keppel Chair Professor in
the Faculty of Engineering. Prior to his Vice
Provost position, he was the Dean of the
Faculty of Engineering Faculty and Head of
the Civil Engineering Department. He was
also the Executive Director of the Centre
for Offshore Research and Engineering,
National University of Singapore, and Director
of Tropical Marine Science Institute.
Professor Chan has served on the Management
Board and Board of Governors of various
institutions and research centres. He now
contributes as a member of the Singapore
Workplace Safety and Health Council and the
Board of Directors of PUB and DSO National
Laboratories. Professor Chan’s 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 New South
Wales; 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. He is also the Founding Chairman
of Centre of Liveable Cities since 2008.
Dr Liu has served as the Adjunct Professor of
School of Design and Environment and the
Lee Kuan Yew School of Public Policy,
National University of Singapore. He is also
the Adjunct Professor in the College of
Humanities, Arts & Social Sciences,
Nanyang Technological University.
Dr Liu is a member of several governmental
bodies in Singapore, and planning advisor
to around 30 cities in China. He was 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
BSc. (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, he 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.
Mr Chua also serves as independent board
member of Yongmao Holdings Ltd, an SGX
listed company.
Professor Foong Sew Bun
Fellow, Singapore Computer Society;
Dip (Electronics and Communications Eng.)
Singapore Polytechnic; MSc. and BSc.
(Computer Science) University of Texas
at Austin.
Professor Foong is the Global Head of Digital
Transformation (Retail, Private Banking, Wealth)
for Standard Chartered Bank, responsible for
agile digital transformation of operations and
legacy to provide differentiating banking
services. Prior to Standard Chartered, Professor
Foong was with IBM from 2000 to Sep 2016,
where he started as the first Software Architect
for IBM India and South Asia, and eventually
became the first in IBM Asia Pacific and first
Singaporean to be recognised as an IBM
Distinguished Engineer in 2007/2008 for his
sustained track record of technical leadership
and innovations. As a former IBM executive,
Professor Foong led top clients of IBM and IBM
technical community as the Chief Technology
Officer for ASEAN and Singapore, Lead Cloud
Advisor in the global IBM Cloud Advisor
leadership team, Chairman of the IBM Growth
Market Unit Distinguished Engineers Board.
He served on top global IBM technical councils
including the corporate Technology Team
Advisory Council, IBM Academy of Technology
Leadership Team and the S&D Technical
Leadership Team.
Prior to IBM, Professor Foong spent 10 years in
IT industry with healthcare, banks, university,
and led design and implementation of top secret
fighter craft simulators for defence. He was
also an Adjunct Associate Professor with the
National University of Singapore from 2008 to
2013 and an Adjunct Professor since 2014.
Professor Foong serves in several major
government and industry committees, including
the Services and Digital Economy R&D Executive
Committee with National Research Foundation;
Deputy Chairman of the Institute of Singapore
Chartered Accountants IT Services Advisory
Committee; member of the Institute of
Singapore Chartered Accountants CFO
Committee; Singapore Polytechnic Department
of Electrical and Electronics Advisory
Committee; committees by the Singapore
Computer Society; and former Chairman and
Senior Advisor of the National Infocomm
Competency Framework Steering Committee.
27
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
(appointment till 19 Mar 2017)
Ng Ooi Hooi
President, Regional Investments
Keppel Land International
(appointment till 19 Mar 2017)
President, Singapore
Keppel Land International
(effective 20 Mar 2017)
Ben Lee Siew Keong
President
Keppel Land China
Linson Lim Soon Kooi
President, Vietnam
Keppel Land International
Sam Moon Thong
President, Indonesia
Keppel Land International
(appointment till 19 Mar 2017)
President, Regional Investments
Keppel Land International
(effective 20 Mar 2017)
Goh York Lin
President, Indonesia
Keppel Land International
(effective 20 Mar 2017)
Senior Management
Keppel Corporation
Loh Chin Hua
Chief Executive Officer
Chan Hon Chew
Chief Financial Officer
Corporate Services
Robert Chong
Director
Group Human Resources
Paul Tan
Group Controller
Kevin Chng
General Manager
Group Risk & Compliance
(effective 1 Jan 2017)
Jacob Tong
General Manager
Group Information Systems
Tay Guan Chew
General Manager
Group Tax
(effective 1 Jan 2017)
Jaggi Ramesh Kumar
General Manager
Group Health,
Safety & Environment
Louis Lim
Director
Group Strategy & Development
(effective 1 Jul 2016)
Tay Lim Heng
Director
Group Risk & Compliance
(appointment till 31 Dec 2016)
(seconded to SSTEC as Chief Executive Officer)
Eric Goh
Chief Representative, China
Linson Lim Soon Kooi
Country Representative, Vietnam
(effective 1 Aug 2016)
Goh York Lin
Country Representative, Myanmar
(effective 1 Aug 2016)
Khor Un-Hun
Director
Group Mergers & Acquisition
(effective 17 Oct 2016)
Cindy Lim Joo Ling
Director
Group Corporate Development
(effective 17 Oct 2016)
Magdeline Wong
General Manager
Group Tax
(retired on 31 Dec 2016)
Lynn Koh
General Manager
Group Treasury
Caroline Chang
General Manager
Group Legal
Ho Tong Yen
General Manager
Group Corporate Communications
Sepalika Kulasekera
General Manager
Group Internal Audit
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
(retired 4 Jul 2016)
Michael Chia Hock Chye
Managing Director
(Marine and Technology)
Keppel Offshore & Marine
Chris Ong Leng Yeow
Managing Director
Keppel FELS
(effective 5 Jul 2016)
Chor How Jat
Managing Director
Keppel Shipyard
Abu Bakar Bin Mohd Nor
Managing Director
Keppel Singmarine
28
Keppel Corporation Limited Report to Shareholders 2016Group Overview
Infrastructure
Dr Ong Tiong Guan
Chief Executive Officer
Keppel Infrastructure
Lim Siew Hwa
Chief Financial Officer
Keppel Infrastructure
Tan Boon Leng
Executive Director
(Environmental Infrastructure)
Keppel Infrastructure
(effective 1 Jan 2017)
Nicholas Lai Garchun
Executive Director
(Energy Infrastructure)
Keppel Infrastructure
(effective 1 Jan 2017)
Alan Tay Teck Loon
Executive Director
(Business Development)
Keppel Infrastructure
Thomas Pang Thieng Hwi
Chief Executive Officer
Keppel Telecommunications & Transportation
Tan Eng Hwa
Chief Financial Officer
Keppel Telecommunications & Transportation
Wong Wai Meng
Chief Executive Officer
Keppel Data Centres
Desmond Gay Kah Meng
Chief Executive Officer
Keppel Logistics
Investments
Christina Tan Hua Mui
Chief Executive Officer
Keppel Capital
(effective 1 Jul 2016)
Managing Director
Alpha Investment Partners
Paul Tham
Chief Financial Officer
Keppel Capital
(effective 1 Jul 2016)
Tan Swee Yiow
Chief Executive Officer
Keppel REIT Management
(effective 20 Mar 2017)
Ng Hsueh Ling
Chief Executive Officer
Keppel REIT Management
(stepped down on 31 Jan 2017)
Young Lok Kuan
Executive Director,
Portfolio Management
Alpha Investment Partners
Alvin Mah
Chief Investment Officer
Alpha Investment Partners
Khor Un-Hun
Chief Executive Officer
Keppel Infrastructure Fund Management
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
Atan Enjah
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
Joanne Chua Chor Hiang
President
Philip Lee Soon Fatt
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
29
Investor Relations
We are committed to clear, timely and consistent
communication with the investment community.
Shareholding by Investors
Institutions
Retail
Total
Shareholding by Geography
Keppel Corporation aspires be a
global company at the forefront of
its chosen industries, shaping the
future for the benefit of all stakeholders.
We believe that robust business
performance goes hand in hand with
the best corporate practices, including
effective investor relations (IR) and
good corporate governance.
attend to their questions, feedback
and information needs. Our long-term
contribution towards the Securities
Investors Association Singapore’s
Investor Education Programme has
benefitted some 2,400 of our retail
shareholders who had access to a
wide range of seminars, workshops
and other support services offered.
In 2016, we focused on enhancing
awareness and understanding of Keppel’s
multi-business strategy in the global
investment community, alongside
maintaining a balanced disclosure of
our operational and financial
performance as well as outlook.
%
54.3
45.7
100.0
Investor and Analyst Education
During the year, we held 135 meetings
and conference calls with institutional
investors, which included non-deal
roadshows reaching out to investors
in Hong Kong, Europe and the United
States of America. We also hosted
several site visits to our shipyards
in Singapore, as well as residential
and commercial properties in China
and Vietnam.
To engage a wider group of investors,
senior management gave presentations
at the annual Oil & Offshore Conference
organised by Pareto Securities in Oslo,
Norway, as well as to the Templeton
Emerging Markets Group in Singapore.
Presently, about 20 sell-side research
houses, with analysts based in Singapore
and Malaysia, provide coverage on
Keppel Corporation. We continue to
develop and maintain close interactions
with these research analysts, who
play an important role in the investment
community.
In 2016, top management including
the CEO, CFO and heads of strategic
business units gave briefings to help
the analysts better understand the
strategic intent of Keppel’s corporate
actions. These included sessions on the
restructuring of our asset management
businesses and participation in
KrisEnergy’s preferential offering of
senior secured zero coupon notes
with detachable warrants.
We also conducted a briefing for
analysts on the Property Division,
which has become the Group’s largest
earnings contributor following the
privatisation of Keppel Land in 2015.
In addition to the Company’s general
meetings, we continued to engage
our retail shareholders as well as
We engage regularly with the financial
community in an effort to continuously
improve IR practices.
Singapore
Asia (ex Singapore)
North America
Europe
Others*
Total
%
36.1
3.2
10.2
8.1
42.4
100.0
* Others include shareholders beyond the
Top 50, who collectively owned approximately
20% of the Company’s issued share capital as
at 10 February 2017.
During the year, we
continued to proactively
engage the investment
community through
site visits.
30
Keppel Corporation Limited Report to Shareholders 2016Group Overview
IR Resources
Our mobile-friendly corporate website
www.kepcorp.com continues to be
the key resource for stock exchange
announcements, quarterly results
and annual reports, investor events,
stock and dividend information and
investor presentation slides.
To ensure fair and prompt dissemination
of information, we post all new material
announcements on our website
immediately after they are released
to the Singapore Stock Exchange (SGX).
We hold ‘live’ webcasts of our results
briefings, which facilitate real-time
interaction with the top management
every quarter. A video archive of
the quarterly webcast, together
with the presentation materials and
management speeches, are released
on our website on the same day
the results are issued to the SGX.
A transcript of the questions and
answers from the webcast is also
posted online the following day.
Shareholder Information
As at 10 February 2017, institutions
formed 54.3% of our shareholder base,
while retail investors accounted for
the remaining 45.7%. Our shareholders
are geographically diversified across
Asia, North America and Europe.
Shareholders in Singapore held
approximately 36.1% of our issued
capital, while the rest of Asia held 3.2%,
North America 10.2% and Europe 8.1%.
IR Calendar 2016
The following key events and initiatives were organised in 2016 to engage
our investors and analysts:
1Q
2Q
4Q & FY 2015 results conference and
live webcast.
1Q 2016 live results webcast.
Analyst briefing on restructuring of
Keppel’s asset management businesses.
Group visit to Keppel FELS for clients
of JP Morgan.
Analyst briefing on the Property Division.
Annual General Meeting for FY 2015.
Non-deal roadshows to New York with
Bank of America Merrill Lynch, and to
Zurich and London with UBS.
Investor tour of the Sino-Singapore
Tianjin Eco-City.
3Q
4Q
2Q & 1H 2016 results conference and
live webcast.
3Q & 9M 2016 live results webcast.
Presentation at Pareto Securities’ 23rd
annual Oil & Offshore Conference in Oslo.
Non-deal roadshow to Hong Kong
with UBS.
Presentation to the Templeton Emerging
Markets Group.
Analyst briefing on preferential offering
of senior secured zero coupon notes with
detachable warrants by KrisEnergy.
Group visits to Keppel FELS and Keppel
Shipyard for clients of JP Morgan.
Investor tour of properties in Ho Chi
Minh City.
31
Significant Milestones in 2016
Q1
Corporate
Keppel Corporation was ranked as the
top Industrial Conglomerate on Corporate
Knights’ Global 100 Most Sustainable
Corporation in the World 2016.
Keppel Corporation announced the plans
to consolidate its interests in its four asset
managers – Keppel REIT Management,
Alpha Investment Partners (Alpha), Keppel
Infrastructure Fund Management and
Keppel DC REIT Management – under
Keppel Capital, a wholly-owned subsidiary.
Q2
Corporate
Keppel Corporation and Keppel REIT were
among 24 entities to be listed on the SGX
Sustainability Leaders Index.
Offshore & Marine
Keppel O&M completed the acquisition of
Cameron’s offshore product division, which
comprises the LETOURNEAUTM jackup rig
designs, as well as rig kit, aftersales and
aftermarket businesses.
32
Offshore & Marine
Property
Keppel FELS delivered three
KFELS B Class jackup rigs; Cantarell I
and Cantarell II were delivered to
Grupo R and Halul was delivered to
Gulf Drilling International.
Keppel Land added to its quality
portfolio of retail and mixed-use
properties with the acquisition of a
22.4% stake in I12 Katong lifestyle
mall in Singapore.
Keppel Offshore & Marine (Keppel O&M)
and Shell jointly won a licence to supply
Liquefied Natural Gas (LNG) bunkering
services in the Port of Singapore.
Keppel Land China was conferred the
Top 10 ASEAN Companies in China
award by the China-ASEAN Business
Council. It is the only company to
have received the accolade for four
consecutive years.
Keppel Land entered into a joint
venture to develop a prime waterfront
site in the Thu Thiem New Urban Area
in Ho Chi Minh City, Vietnam.
Infrastructure
Keppel Data Centres Holding (KDCH)
entered into a long-term collaboration
agreement with PCCW Global to
co-develop and market an international
carrier exchange in Hong Kong,
marking the expansion of Keppel
Telecommunications & Transportation’s
(Keppel T&T) footprint into the market.
Keppel O&M entered into a shareholders’
agreement with Rosneft Oil Company
and MHWirth to set up a Singapore
incorporated Joint Venture Company
(JVCO). The JVCO will establish a
wholly-owned design and engineering
centre in the Russian Federation,
focusing on the design and engineering
of mobile offshore drilling units for
shallow waters.
BrasFELS was awarded a Floating
Production Storage & Offloading (FPSO)
module fabrication and integration
project by repeat customer MODEC.
Keppel Singmarine delivered a
high-specification deepwater derrick
lay vessel, DLV 2000, to Hydro Marine
Services, a subsidiary of McDermott
International.
Keppel AmFELS delivered one of the
world’s largest Harsh Environment
Enhanced Mobility land rigs.
Property
Keppel Land subscribed for VND 500
billion convertible bonds in Nam Long
Investment Corporation.
Keppel Land’s successful Selective Capital
Reduction exercise was effected, resulting
in Keppel Corporation gaining full ownership
of the company.
Keppel Land topped off Junction City Tower
and opened Sedona Hotel Yangon’s Inya
Wing in Yangon, Myanmar.
Infrastructure
KDCH secured $84.5 million in contracts to
provide colocation and data centre services
at Keppel DC Singapore 3.
Investments
Keppel Infrastructure Trust (KIT) handed
over 1-Net North Data Centre to 1-Net,
which commenced its 20-year lease.
Keppel Corporation Limited Report to Shareholders 2016Group Overview Q3
Corporate
Keppel Corporation completed the restructuring
of its four asset managers under Keppel
Capital, a wholly-owned subsidiary.
Keppel Corporation ranked fifth in the annual
Governance and Transparency Index and was
selected as an index component of the Dow
Jones Sustainability Asia Pacific Index 2016.
At the 17th Securities Investors Association
(Singapore) Investors’ Choice Awards, Keppel
Corporation was awarded Winner of the Singapore
Corporate Governance Award Diversity category,
Merit of the Singapore Corporate Governance
Award Big Cap category and Winner of the
Internal Audit Excellence Award.
Keppel FELS delivered its fifth
high-specification accommodation
semisubmersible to Floatel International.
Keppel Land China announced the
acquisition of a newly-completed retail
development in Shanghai’s Jiading District.
Keppel AmFELS delivered Uxpanapa, a
KFELS B Class jackup rig, to Central Panuco,
a subsidiary of Perforadora Central.
Keppel Shipyard delivered Armada LNG
Mediterrana, an LNG Floating Storage Unit,
to Bumi Armada.
Keppel Singmarine secured contracts from
Jan De Nul Group to build three Trailing
Suction Hopper Dredgers.
Infrastructure
Keppel Seghers handed over the solids
stream and sludge treatment facilities in
the Doha North Sewage Treatment Works
to its client, and commenced the 10-year
operations and maintenance phase of
the contract.
KDCH secured contracts worth more than
$144 million for Keppel DC Singapore 3 and
Keppel DC Singapore 4.
Keppel O&M won 35 awards at the Workplace
Safety & Health Awards 2016.
Investments
Offshore & Marine
Property
Keppel O&M entered into a shareholders’
agreement with Shell to establish an LNG
bunkering business in Singapore.
Q4
Corporate
Keppel Corporation maintained its listing on
the Euronext Vigeo Index: World 120.
Offshore & Marine
Keppel O&M secured contracts to build
its first two dual-fuel diesel LNG tugs, and
signed a Memorandum of Understanding
with Shell to jointly explore opportunities in
using LNG as a fuel.
Building on its longstanding relationship,
Keppel Shipyard delivered three FPSO
units to the Bumi Armada Group.
Property
Keppel Land acquired an additional 40% stake
in Riviera Cove and divested its 60% stake in
Casuarina Cove in Ho Chi Minh City, Vietnam.
Keppel Land announced its partnership with
Metland, one of Indonesia’s leading property
developers, to jointy develop landed homes
on a 12-ha site in Tangerang, Greater Jakarta
in Indonesia.
Keppel Land opened Saigon Centre retail
mall in Ho Chi Minh City.
Keppel Land entered into a conditional
joint venture agreement with Shwe Taung
Group to develop Phase Two of Junction City
in Yangon.
Keppel Land China and Alpha divested
their stakes in Life Hub @ Jinqiao, Shanghai,
realising an internal rate of return of
over 20%.
Guangdong’s first Customs, Immigration,
Quarantine and Port-clearance post was
opened in Keppel Cove in Zhongshan, China.
Keppel Land and Keppel Infrastructure
harnessed strengths to make Bugis Junction
Towers the first Green Mark-certified office
to use renewable energy to fully power
its operations.
Infrastructure
Keppel Infrastructure was named the
preferred bidder by PUB, Singapore’s
national water agency, to Design, Build,
Own and Operate the nation’s fourth
desalination plant for a concession
period of 25 years.
Keppel Seghers secured two contracts
worth about US$40.4 million to
provide technology and services to
the Baoan waste-to-energy (WTE)
plant and the Nanshan II WTE plant in
Shenzhen, China.
Keppel DC REIT acquired a data centre in
Milan, Italy for EUR 37.3 million.
Keppel Capital received regulatory approval
to centralise certain regulated activities
carried out by its licensed asset managers
in addition to the non-regulated activities.
Keppel Capital saw the first closings of two
new private equity funds – the Alpha Data
Centre Fund and Alpha Asia Macro Trends
Fund III, with initial commitments of
US$410 million, out of a combined target
size of US$1.5 billion.
KDCH divested a 90% stake in Keppel DC
Singapore 3 to Keppel DC REIT.
Keppel Logistics acquired a 59.6% stake in
Courex, a Singapore-based e-commerce
fulfilment company.
Investments
Keppel DC REIT acquired the shell and core
building of a data centre in Cardiff, the UK,
for GBP 34 million.
The Alpha Data Centre Fund, in collaboration
with KDCH, acquired its first data centre,
Keppel DC Frankfurt 1 in Germany.
33
Operating & Financial Review
Management
Discussion
& Analysis
Free Cash Inflow
$576m
Improved from cash outflow of
$694m in FY 2015.
Earnings Per Share
$0.43
There was no significant dilution
as no major capital call has been
made since 1997.
We are configured for growth with prudent
financial discipline and a strong balance sheet.
Group Overview
Group net profit was $784 million for 2016,
down 49% from $1,525 million for 2015.
This was due largely to lower contributions
from the Offshore & Marine (O&M)
Division, additional provisions for
impairment of $336 million, mainly arising
from the rightsizing of Keppel Offshore &
Marine and impairments of investments
and stocks & work-in-progress.
Earnings Per Share (EPS) was 43.2 cents
for 2016, down 49% from 84.0 cents for
2015. Return on Equity (ROE) was 6.9%,
compared to 14.2% in the previous year.
Economic Value Added (EVA) was negative
$140 million for 2016, compared to
$648 million for 2015.
In 2016, cash inflow was $576 million,
compared to cash outflow of $694 million
in the previous year. Meanwhile, net
gearing for 2016 was 0.56 times.
Total cash dividend for 2016 will be
20.0 cents per share. This comprises a
proposed final cash dividend of 12.0 cents
per share and the interim cash dividend of
8.0 cents per share distributed in the third
quarter of 2016.
Segment Operations
Group revenue of $6,767 million was
$3,529 million or 34% lower than that
of the previous year. Revenue from the
O&M Division of $2,854 million was
54% below the $6,241 million for 2015.
This was due to lower volume of work,
the deferment of some projects and the
suspension of contracts with Sete Brasil.
Major jobs completed in 2016 include
four jackup rigs, a land rig, a derrick
lay vessel, an accommodation
semisubmersible and two Floating
Production Storage Offloading (FPSO)
vessel conversions. The Property Division
saw its revenue increase by 12% to
$2,035 million due mainly to higher
revenue from Singapore and China.
Revenue from the Infrastructure
Division contracted by $293 million
to $1,744 million, as a result of a drop
in revenue recorded by the power
and gas business due to lower prices
and volume.
Group net profit of $784 million
for 2016 was $741 million or 49%
lower than the previous year.
Profit from the O&M Division of
$29 million was $453 million lower
than that of the previous year, due
mainly to lower operating results
arising from lower revenue and
share of associated companies’ profits,
as well as the impairment of assets.
The negative variance was partially
offset by the absence the provision
Revenue ($m)
10,000
8,750
7,500
6,250
5,000
3,750
2,500
1,250
0
2014
2015
2016
34
Offshore & Marine
Property
Infrastructure
Investments
8,556
6,241
2,854
1,629
1,823
2,035
2,914
2,037
1,744
184
195
134
Total
13,283
10,296
6,767
Keppel Corporation Limited Report to Shareholders 2016Performance Review for losses for the Sete Brasil rigbuilding
contracts of about $230 million in 2015.
Net Profit ($m)
1,200
1,050
900
750
600
450
300
150
0
Offshore & Marine
Property
Infrastructure
Investments
2014
2015
2016
1,040
482
29
469
661
620
307
197
99
69
185
36
Total
1,885
1,525
784
Key Performance Indicators
2016
$ million
16 vs 15
% +/(-)
2015
$ million
15 vs 14
% +/(-)
Revenue
Net profit
Earnings Per Share
Return on Equity
Economic Value Added
Operating cash flow
Free cash flow*
Total cash dividend per share
6,767
784
43.2 cts
6.9%
(140)
330
576
20.0 cts
-34
-49
-49
-51
n.m.
n.m.
n.m.
-41
10,296
1,525
84.0 cts
14.2%
648
(785)
(694)
34.0 cts
-22
-19
-19
-24
-64
n.m.
n.m.
-29
* Free cash flow excludes expansionary acquisitions & capex, and major divestments.
2014
$ million
13,283
1,885
103.8 cts
18.8%
1,778
5
729
48.0 cts
Net profit from the Property Division
of $620 million fell by $41 million.
This was mainly due to lower fair value
gains on investment properties, lower
contributions from Singapore property
trading, and share of associated
companies’ profits and the absence of
cost write-back upon the finalisation of
project cost for Reflections at Keppel
Bay in 4Q 2015, partially offset by a
reversal of impairment of hospitality
assets. The lower share of associated
companies’ profits was due mainly
to lower share of fair value gains on
investment properties, partly offset
by the share of profits arising from
the divestment of stakes in Life Hub @
Jinqiao in China and 77 King Street
in Australia.
Meanwhile, net profit from the
Infrastructure Division of $99 million
was $98 million lower, due largely
to the absence of gains recognised in
2015. In 2015, there were gains from the
disposal of the 51% interest in Keppel
Merlimau Cogen Pte Ltd and the dilution
re-measurement of the combination
of Crystal Trust and CitySpring
Infrastructure Trust to form the
enlarged Keppel Infrastructure Trust.
These gains were partially offset
by the losses following the finalisation
of the cost to complete the Doha North
Sewage Treatment Works.
Profit from the Investments Division
decreased by $149 million due mainly
to share of losses and impairment
losses of an associated company,
and the absence of gains from sale
of investments in 2015, partially
offset by the share of profits from the
Sino-Singapore Tianjin Eco-City.
With a 79% share, the Property Division
was the largest contributor to Group
net profit in 2016. This was followed by
the Infrastructure Division with 13%
share, and the Investments Division
and the O&M Division at 4% each.
35
Operating & Financial Review
Offshore & Marine
We aim to be the preferred solutions partner
in the global offshore and marine industry.
Earnings Review
Despite a dearth of offshore rig orders,
the Offshore & Marine (O&M) Division
secured new contracts of about
$500 million for non-drilling solutions in
2016, leveraging its technology expertise
and track record for reliable execution.
As at year-end, non-drilling solutions
made up over half of the Division’s
$3.7 billion net orderbook.
The Division’s revenue for the year
was $2.9 billion, a decrease of 54%
year-on-year, mainly due to lower work
volume, some project deferments
and the suspension of contracts with
Sete Brasil.
Impairments amounting to $277 million
were made for fixed assets, stocks
& work-in-progress and investments
during the year. Excluding this, the
Division turned in a strong operating
profit of $412 million, translating
into an operating margin of 14.4%
for FY 2016.
The Division’s FY 2016 pre-tax earnings
of $90 million was $609 million or 87%
lower year-on-year, due mainly to lower
revenue and share of associated
companies’ profits, as well as the
aforementioned impairment of assets.
Accordingly, net profit of $29 million for
the year was $453 million or 94% lower
than for FY 2015.
by oil producing nations to cut crude
production by a target of 1.8 million barrels
per day (bpd). According to secondary
sources, OPEC production had decreased
by 890,000 bpd in January 2017, about
70% of its targeted 1.2 million bpd.
Despite oil prices doubling from a year
ago, capex by oil companies remained
subdued as they work on improving their
balance sheets while waiting for oil prices
to stabilise and settle at a sustainable
level. The market’s focus will be on the
response of US tight oil production,
which could potentially limit oil price
increases in 2017. Meanwhile, demand in
the offshore rigbuilding market remained
tepid as concerns over an oversupply of
rigs linger, coupled with an overhang of
rigs still under construction.
Operating Review
In response to the challenging external
environment, Keppel O&M continued
with its rightsizing efforts to streamline
operations and reduce overheads.
During the year, the company’s direct
global staff strength was reduced
by 35%, while its subcontract workforce
in Singapore came down by 13%.
It also mothballed two supporting
yards, PT Bintan Offshore and Keppel
Singmarine Brasil, in Indonesia and Brazil
respectively. In 2017, Keppel O&M intends
to complete the closure of three
supporting yards in Singapore.
Market Review
The agreement of the Organisation of
Petroleum Exporting Countries (OPEC)
and non-OPEC nations to cut supply
at the end of 2016 has renewed market
optimism and confidence. Since then,
oil prices have risen to around US$55 per
barrel. The market has seen active steps
The sum of Keppel O&M’s rightsizing
efforts in 2016 resulted in a year-on-year
reduction of $150 million in overheads.
The company will continue to streamline
its operations, optimise resource
deployment and manage costs to ride out
the offshore sector downturn and become
stronger, leaner and more competitive.
Earnings Highlights ($m)
Revenue
EBITDA
Operating Profit
Profit before Tax
Net Profit
Average Headcount (Number)
Manpower Cost
2016
2015
2014
2,854
300
135
90
29
22,191
821
6,241
744
597
699
482
29,004
1,170
8,556
1,366
1,224
1,365
1,040
31,542
1,284
Revenue
$2.9b
as compared to $6.2b for FY 2015.
Net Profit
$29m
as compared to $482m for FY 2015.
Major Developments in 2016
Delivered 21 major projects safely,
on time and on budget.
Completed the acquisition of Cameron’s
offshore product division, which
comprises the LETOURNEAUTM jackup
rig designs, as well as rig kit, aftersales
and aftermarket businesses.
Jointly won a licence with Shell to supply
Liquefied Natural Gas (LNG) bunker to
vessels in the Port of Singapore.
Secured an order to build three
dredgers worth about $100 million
from Jan De Nul Group.
Focus for 2017/18
Continue to focus on execution excellence,
resource optimisation, corporate
governance and risk management.
Leverage core competencies and
synergies across the Keppel Group to
build up new strengths and expand
solution offerings.
Invest prudently in R&D and new
capabilities to strengthen market
position for long-term growth.
Explore ways to re-purpose technology
from the offshore industry for
other uses.
36
Keppel Corporation Limited Report to Shareholders 2016Performance Review
Meanwhile, the company continued to
secure a steady stream of work from the
non-drilling sector, leveraging its technology
know-how and reliable execution.
In 2016, Keppel O&M delivered 21 major
projects safely, on time and on budget.
These consisted of, among others, four
jackup rigs, a land rig, an accommodation
semisubmersible (semi), a semi upgrade,
and six Floating Production Storage
Offloading (FPSO)/Floating Storage
Unit (FSU) modification and conversion
projects.
Keppel O&M remains committed
to investing prudently in R&D and
developing new capabilities to seize other
market opportunities. During the year, it
completed the acquisition of Cameron’s
offshore product division, which
comprises the LETOURNEAUTM jackup
rig designs, as well as the rig kit and
aftersales and aftermarket businesses.
Renamed Keppel LeTourneau, the
unit augments Keppel O&M’s existing
capabilities to provide a full-suite of
end-to-end jackup rig solutions to
its customers.
Through its subsidiary, Gas Technology
Development, Keppel O&M signed a
Memorandum of Understanding (MOU)
with Shell Eastern Petroleum (Shell),
to jointly explore opportunities to cater
to the demand for LNG as a fuel in
coastal areas, inland waterways and
the international marine sectors.
Keppel O&M further established a
50-50 joint venture (JV), FueLNG, with
Shell to supply LNG bunkering services
to vessels in the Port of Singapore.
FueLNG subsequently secured its first
two contracts from Shell to provide
bunkering services to two dual-fuel
diesel LNG tugs, which are being built
by Keppel Singmarine for Maju Maritime
and Keppel Smit Towage.
and Ocean Great White for long-time
customer Diamond Offshore.
As part of the strategy to grow its
presence in the non-drilling sector,
Keppel FELS is actively pursuing work
such as the design and construction of
production units, floating gas solutions,
power-generation vessels and offshore
wind-related projects, among others.
Fostering greater partnership with
customers, Keppel O&M entered into a
shareholders’ agreement with Rosneft
Oil Company and MHWirth to set up a
Singapore incorporated JV company.
The JV company will establish a
wholly-owned design and engineering
centre in the Russian Federation focused
on designing and engineering mobile
offshore drilling units for shallow waters.
Keppel Shipyard serviced over 400
vessels during the year, including 30 LNG
carriers. The yard also completed six
FPSO and FSU conversion and upgrading
projects, including the conversion of one
of the world’s largest FPSO vessels, the
Armada Olombendo, for Bumi Armada, as
well as a harsh environment FPSO for the
North Sea and a pipelay vessel upgrading
project for Saipem.
Looking ahead, the company will also
explore the re-purposing of its offshore
technology and solutions to capture
opportunities in the non-drilling sector.
Singapore
In 2016, Keppel FELS delivered three
jackup rigs safely, on time and on
budget to Gulf Drilling International
(GDI) and Grupo R, as well as its fifth
high-specification accommodation semi
to Floatel International. During the year, it
also completed 18 repair and modification
projects worth more than $100 million.
These included maintenance and
installation work on the semis Ocean Apex
Reinforcing its position as a global leader
for vessel modification, upgrading and
conversion, Keppel Shipyard secured
several contracts, including an FPSO
topside installation/integration job from
BW Offshore, an FPSO modification/
upgrade project from Woodside Energy
and a Floating Storage & Offloading (FSO)
turret fabrication job from SOFEC.
During the year, Keppel Singmarine
successfully delivered several projects
including a high-specification deepwater
derrick lay vessel to Hydro Marine
Services, a subsidiary of McDermott
International, as well as the yard’s
Keppel FELS delivered
Floatel Triumph,
a high-specification
accommodation semi,
safely and on time.
37
Operating & Financial Review
Offshore & Marine
fifth anchor handling tug to Seaways
International. It also launched Everest,
an ice-class multi-purpose vessel for
New Orient Marine safely and on time.
Everest is Keppel Singmarine’s 11th
newbuild ice-class vessel project.
In 2016, Keppel Singmarine clinched
several contracts to provide solutions for
marine operations, including three Trailing
Suction Hopper Dredgers from the Jan De
Nul Group. The yard also embarked on
constructing its first pair of dual-fuel
diesel LNG tugs for Maju Maritime and
Keppel Smit Towage, which are being
built to Keppel’s proprietary design.
The Rest of Asia
In China, Keppel Nantong continued to
support Keppel O&M’s projects and
constructed two 65-tonne bollard pull
Azimuth Stern Drive tugs for delivery to
an Indonesia-based owner. Meanwhile,
its sister yard Keppel Nantong Heavy
Industries supported Keppel FELS with
the construction of pontoons, columns
as well as the upper hull of a semi.
Over in the Philippines, Keppel Batangas
repaired over 50 vessels in 2016, a number
of which were from repeat customers. The
yard also completed the construction of
two 50-tonne bollard pull Azimuth Stern
Drive tugs. Keppel Batangas will continue
to focus on shiprepair, as well as look for
newbuilding project opportunities.
Meanwhile, Keppel Subic Shipyard repaired
over 20 vessels. With its 1,500-tonne
gantry crane and drydock facilities,
Keppel Subic Shipyard is equipped to
fabricate offshore structures and topside
modules, complementing Keppel Shipyard
in executing FPSO conversions. As part of
ongoing efforts to improve cost-efficiency,
the commercial departments at both
Keppel Batangas and Keppel Subic
Shipyard have been centralised.
to expand into new markets. The yard
also delivered Uxpanapa, a KFELS B Class
jackup rig, to Mexico’s Central Panuco,
a subsidiary of long-time customer
Perforadora Central. Uxpanapa will
be chartered by Mexican national
oil company PEMEX for work
offshore Mexico.
The Americas
In Brazil, BrasFELS delivered the FPSO
Cidade de Caraguatatuba MV27 to MODEC
in a collaborative effort with Keppel
Shipyard. The FPSO is being deployed to
support Petrobras’ operations in the Lapa
oilfield of the Santos Basin. This vessel
was the yard’s fourth FPSO project for
MODEC since 2012, all of which were
delivered safely and ahead of schedule.
Building on the longstanding partnership,
MODEC awarded an FPSO module
fabrication and integration project to
BrasFELS in 2016. During the year,
BrasFELS continued to diversify its repair
client base, securing its first repair jobs
from Ocean Rig UDW and Helix Energy
Solutions. It is currently working on three
FPSO projects. Meanwhile, Keppel
Singmarine Brasil completed a Platform
Supply Vessel for bareboat charter to
Galaxia Maritima.
Over in Texas, USA, Keppel AmFELS
delivered one of the world’s largest
harsh environment enhanced mobility
land rigs. Land rig construction is a
natural extension of Keppel AmFELS’
offshore jackup rig building business
and reflects Keppel’s continuous drive
Looking ahead, Keppel AmFELS will
pursue opportunities to service offshore
companies in the areas of rig repair,
conversion and reactivation, as well
as newbuild Jones Act Vessels for
the US market.
The North Sea
In the Netherlands, Keppel Verolme
delivered several repair jobs to
the satisfaction of its customers.
Consisting mainly of projects from
the non-drilling sector, these included
the repair of a dredger for Jan De Nul
Group. Keppel Verolme is well-positioned
to serve the needs of the North Sea
market, leveraging its strong track
record in executing complex offshore
work and its strategic location.
The Middle East
Situated at the crossroads of the
Arabian Gulf, Nakilat-Keppel Offshore &
Marine (N-KOM) services vessels
in the Middle East region as well as
gas carriers that call at the nearby
Ras Laffan terminal in Qatar.
In 2016, the yard repaired over
100 vessels, including tankers
and LNG carriers.
Senior management
from Keppel O&M
and McDermott
International
celebrated the
naming of DLV 2000,
a high-specification
deepwater derrick lay
vessel built to Keppel’s
proprietary design.
38
Keppel Corporation Limited Report to Shareholders 2016Performance Review N-KOM also successfully delivered its
first liftboat, Al Safliya, to Qatari rig
operator GDI, in a safe and timely manner
without any lost-time incidents. Built to
the ORCA 2500 design developed by
Keppel O&M’s design arm, Bennett
Offshore, Al Safliya is the first liftboat
to be wholly constructed in Qatar.
Meanwhile, Arab Heavy Industries continued
to build on its established track record for
shiprepair, conversion, shipbuilding and
steel fabrication. It repaired 131 vessels
during the year, adding 13 new clients to
its customer base in the process.
The Caspian Sea
Keppel O&M is well-positioned to meet
the exploration & production (E&P) needs
in the land-locked Caspian Sea through
Caspian Shipyard Company (CSC) and
Baku Shipyard in Azerbaijan.
CSC handed over several projects during
the year, including the Istiglal rig upgrade
to Caspian Drilling Company, as well as a
purpose-built jacket transportation and
launch barge to BP Exploration (Shah Deniz).
Meanwhile, the construction of Azerbaijan’s
first modern semi is progressing well, and
is in its final testing and commissioning
stage. The rig is being built to Keppel’s
proprietary DSS™ 38M design and is
customised for the harsh environment of
the Caspian Sea.
Baku Shipyard, the most modern
shipbuilding and shiprepair facility in the
Caspian Sea, completed 22 major repairs
and delivered three 80-passenger crew
boats to Azerbaijan Caspian Shipping
Company. Baku Shipyard is also busy with
the construction of a Subsea Construction
Vessel for deployment in the Shah Deniz
field in the Azeri sector of the Caspian Sea.
Business Outlook
The offshore downturn presents
opportunities to enhance the O&M
Division’s long-term sustainable,
competitive position, in preparation
for the upturn.
Apart from managing the immediate
challenges, Keppel O&M will further
strengthen its core competencies, as it
hones new capabilities to capture other
markets and revenue streams, leveraging
the Group’s multi-disciplinary strengths.
Offshore Rigs
Despite a gradual recovery in oil prices,
demand in the offshore rigbuilding market
is expected to remain tepid. The oversupply
of rigs remains a key concern, worsened
by the overhang of rigs still under
construction.
Notwithstanding this, and while E&P
companies continue to remain prudent
in their capex spending, pockets of
opportunities are still available.
The last quarter of 2016 witnessed the
approval of some capex investments.
Mexico’s successful deepwater oil block
auction saw the award of eight of the
10 blocks on offer to international oil
companies. BP approved the US$9 billion
Mad Dog 2 project, and Total S.A. and
China National Petroleum Corporation
signed an agreement to develop Iran’s
South Pars gas field.
Norwegian oil and gas company Statoil
has announced plans to drill around 30
exploration wells in 2017. Representing a
30% increase compared to 2016, more
than half of the wells will be drilled on the
Norwegian Continental Shelf. Meanwhile
in the Middle East and India, offshore E&P
activities remain robust as national
oil companies cash in on low dayrates
in the region.
With an extensive suite of proprietary
solutions, execution expertise and a global
network of yards, Keppel O&M is poised
to capture a fair share of offshore rig
opportunities when they return. Moreover,
with the formation of Keppel LeTourneau,
Keppel O&M now commands a share of
about 40% of the current fleet of jackups
in operation worldwide, which presents
opportunities to offer aftersales and
aftermarket services.
Apart from managing the immediate
challenges, Keppel O&M will further
strengthen its core competencies,
as it hones new capabilities to
capture other markets and revenue
streams, leveraging the Group’s
multi-disciplinary strengths.
In 2016,
Keppel AmFELS
delivered one of the
world’s largest harsh
environment enhanced
mobility land rigs.
39
Operating & Financial Review
Offshore & Marine
Shiprepair
The shiprepair market is expected to
remain challenging due to persistent
overcapacity. On one hand, tanker rates
are likely to remain volatile as both OPEC
and non-OPEC countries cut production;
on the other, fleet owners with tighter
capex budgets are limiting the scope
of their maintenance work to the
bare essentials.
Notwithstanding this, the ratification of
the water ballast treatment treaty by the
International Maritime Organisation (IMO)
has resulted in more enquiries for ballast
water management system installation.
Keppel O&M will continue to focus on
expanding its market share by improving
turnaround time and seeking niche
opportunities in the shiprepair segment.
Keppel O&M will also focus on streamlining
its operations to improve margins.
Floating Production Systems
Final Investment Decisions of oil fields
and FPSO projects continue to shift to
the right. The Energy Maritime Associates
estimates that in 2017, the Floating
Production System (FPS) orderbook
will fall back to levels seen during the
last downturn in 2009 and 2010.
To maximise operational efficiency
and withstand the challenging industry
conditions, contractors and shipyards
are moving towards standardising
FPS specifications to reduce cost
and delivery duration.
Keppel O&M will continue to monitor
the pipeline of projects and proactively
engage customers early to provide
cost-effective solutions.
Gas Solutions
The demand for gas is estimated to grow
at an average of 1.6% a year, and would
likely overtake coal as the second-largest
fuel source by 2035. The use of LNG
as an alternative marine fuel is also on
the rise as a result of emissions reduction
goals set by the IMO and the United Nations
Climate Change Conference. With lower
charter rates for LNG carriers, owners
have become more open to redeploying
existing assets such as Floating Storage
and Regasification Units.
Keppel O&M’s JV with Shell to supply
LNG bunkering services in Singapore,
coupled with an MOU to jointly explore
opportunities to cater to the demand
for LNG as a fuel in coastal areas, inland
waterways and the international marine
sectors, will enable us to capture growth
in this sector.
Meanwhile, Keppel Shipyard’s execution
of the world’s first-of-its-type floating
liquefaction vessel conversion for Golar
LNG is on track for completion in 2017.
The deployment of Golar Hilli in 2017
will put Keppel ahead of the curve for
floating LNG solutions.
With a wide spectrum of solutions for
both onshore and offshore liquefaction,
as well as LNG transportation solutions
including LNG carriers, tugs designed
with dual-fuel diesel LNG engines,
and the expertise in retrofitting vessel
engines to run on LNG, Keppel O&M is in
pole-position to capture opportunities
across the gas value chain.
Specialised Shipbuilding
Prospects in the specialised shipbuilding
market remain robust, particularly
for non-oil related solutions such as
dredgers, as well as vessels for subsea
construction, cable lay and rock dumping.
This augurs well for Keppel O&M, which
leverages its technology and construction
expertise, as well as its Near Market, Near
Customer strategy to serve customers in
niche markets.
As a consequence of the Jones Act,
which requires vessels travelling
between US ports to be US built,
owned and flagged, the current
US-built fleet is about 33-years old
on average, compared to 13-years old for
the global fleet. Through Keppel AmFELS
in Texas, Keppel O&M is well-placed
to capture opportunities in the
replacement cycle for the aged
Jones Act fleet.
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,
as well as cushion the impact of weak
demand for drilling rigs.
With a suite of robust
solutions, Keppel O&M
is poised to capture
opportunities in a
growing gas market.
40
Keppel Corporation Limited Report to Shareholders 2016Performance Review Property
We are committed to provide quality and
innovative urban living solutions in Asia.
Revenue
$2.0b
as compared to $1.8b for FY 2015.
Net Profit
$620m
as compared to $661m for FY 2015.
Major Developments in 2016
Sold about 5,720 homes in Asia, mostly
in China and Vietnam, 25% more than
the total number of units sold in 2015.
Divested about $680 million worth
of assets including an office building
in Sydney, a retail mall in Shanghai,
two townships in Chengdu and Wuxi,
and a hotel in Mandalay.
Invested about $460 million to
strengthen portfolio across China,
Vietnam, Indonesia, and Myanmar.
Focus for 2017/18
Invest strategically and opportunistically
in developed and emerging markets, as
well as in new and existing platforms,
projects and properties.
Tap demand in China and Vietnam with
over 13,000 launch-ready homes over
the next few years.
Actively scale up commercial presence
and leverage retail management
capability to strengthen portfolio of
retail and integrated developments.
Monetise assets strategically to recycle
capital and achieve higher returns.
Earnings Review
The Property Division generated
$2.0 billion in revenue, an increase of
$212 million or 12% from $1.8 billion in
FY 2015. This was mainly due to increased
revenue from its residential projects,
The Glades and Highline Residences in
Singapore, as well as 8 Park Avenue in
Shanghai, China. Pre-tax profit decreased
$89 million or 11% to $759 million in
FY 2016, due to lower fair value gains
on investment properties.
With the completion of Keppel Land’s
Selective Capital Reduction exercise
in 2016, we now have full ownership
of the Group’s Property Division. With
a net profit of $620 million for FY 2016,
the Property Division was the top
contributor to Group earnings at 79%
of total net profit.
Market Review
Singapore’s economy grew by 1.8%
in 2016, as slower global economic
growth and geopolitical risks impacted
manufacturing, trade and financial
services. Property cooling measures
continued to weigh on the Singapore
residential market. Conditions were
further exacerbated by global
uncertainties and rising interest rates.
Despite a 7.2% increase in the total
number of new homes sold in 2016 to
7,972 units, private residential prices
continued to fall by 3.1% in 2016.
According to CB Richard Ellis (CBRE),
Grade A Central Business District (CBD)
office rents dropped by 12.5%
year-on-year in 4Q 2016. Office rents
in the CBD are expected to continue to
face downward pressure from new
supply coming on stream and the
global economic slowdown.
In China, Gross Domestic Product
(GDP) growth was the lowest since
1990 at 6.7% in 2016, compared with
6.9% in 2015. Services accounted for
58.2% of the GDP growth, mainly due to
an increase in e-commerce and online
retail sales. China’s property market was
active with an increase of 22.4% and
36.1% in residential sales volume
and value respectively, in 2016.
In Vietnam, GDP growth was 6.2%
in 2016, bolstered by strong Foreign
Direct Investments and growth in
manufacturing and exports. According
to CBRE, approximately 35,000 out
of 37,400 launched apartments were
sold in Ho Chi Minh City, with average
prices increasing by 4.6% in 2016.
There was no new Grade A office supply
in 2016. Meanwhile, Keppel Land’s
Saigon Centre Phase 2 retail mall in
the CBD and four other projects in
the non-CBD areas added more than
192,000 square metres (sm) of retail
space in 2016.
Operating Review
Singapore
Keppel Land completed two major
developments in 2016. Corals at
Keppel Bay is a 366-unit condominium,
designed by world-renowned master
architect Daniel Libeskind, offering a
luxurious waterfront living experience.
The other project is The Glades, a 726-unit
condominium, located near the Tanah
Merah MRT station. The Glades is
Keppel Land’s first joint venture (JV)
project with China Vanke in Singapore.
Earnings Highlights ($m)
Revenue
EBITDA
Operating Profit
Profit before Tax
Net Profit
Average Headcount (Number)
Manpower Cost
2016
2015
2014
2,035
533
505
759
620
3,733
199
1,823
614
581
848
661
4,230
216
1,629
624
606
970
469
4,273
202
41
Operating & Financial Review
Property
Despite property cooling measures
weighing on the market, Keppel Land’s
Singapore properties performed
creditably during the year. We sold a total
of 380 residential units in Singapore in
2016, compared with 190 units in 2015, as
a result of improved market sentiments.
In addition, the completion of The Glades
and Corals at Keppel Bay allowed
potential buyers to view the finished
apartments and move in soon after.
Overseas
During the year, Keppel Land’s properties
in China continued to draw home buyers,
despite the implementation of property
cooling measures in various Tier-1
and Tier-2 cities. Amidst increasing
urbanisation and rising affluence in the
Chinese population, Keppel Land sold a
total of 3,800 homes in 2016, 16% higher
than the 3,280 units sold in 2015. This was
primarily due to the strong take-up of
Keppel Land’s homes in the Sino-Singapore
Tianjin Eco-City, V City and Park Avenue
Heights in Chengdu, Seasons Residence
in Shanghai, as well as Central Park City
township in Wuxi.
In Vietnam, Keppel Land’s residential
projects continued to deliver stellar
performance. We achieved a sales record
for the second consecutive year with 1,520
units sold in 2016, over 60% higher than
the 930 units sold in 2015. Riding on
positive home-buyer sentiments in the
country, Keppel Land launched four
residential projects namely Palm
Residence, Palm Heights, The View
(Riviera Point Phase 1B) and Linden
Residences (Empire City Phase 1), in Ho
Chi Minh City. All four launches achieved
high take-up rates, particularly Palm
Residences, which saw all 135 launched
units selling out over one weekend.
Keppel Land also boosted its commercial
presence in Vietnam during the year.
The Saigon Centre Phase 2 retail mall
opened in August 2016 and has since
become the preferred shopping
destination for international brands,
placing it at the forefront of Ho Chi Minh
City’s retail sector.
In Myanmar, Keppel Land achieved
significant milestones in its projects. We
topped off Junction City Tower, which offers
a net leasable area of about 33,400 sm of
premium Grade A office space, and also
opened Sedona Hotel Yangon’s Inya Wing.
Keppel Land is well-positioned to
meet the rising needs of international
businesses and tourism in Myanmar.
Capital Recycling for the Best
Risk-adjusted Returns
Our Property Division continued to
proactively review and seek opportunities
to recycle its assets. Keppel Land
announced 11 divestments in 2016.
Assets amounting to about $680 million
were monetised. In China, these included
the sale of the stake in Life Hub @ Jinqiao,
a retail mall in Shanghai jointly-owned
by Keppel Land and Alpha Investment
Partners (Alpha), a golf club in Jiangyin,
and two townships in Chengdu and Wuxi
respectively. Divestments in other parts of
the world included the sale of stakes in a
listed property vehicle in Thailand, a
condominium project in Sri Lanka,
a serviced apartment and an office
building in Hanoi, Vietnam and a hotel
in Mandalay, Myanmar.
As part of the Group’s capital recycling
strategy, Keppel Land invested about
$460 million in 2016, building up its
portfolio in China, Vietnam, Indonesia
and Myanmar. The company will continue
to proactively unlock value from existing
assets, while reinvesting its capital to
generate the best risk-adjusted returns
for the Group.
Deepening Presence in Key Markets
Keppel Land continued to strengthen its
presence in its core markets of Singapore
and China, and expand in its growth
markets of Vietnam and Indonesia. It also
seized opportunities in other emerging
markets and global gateway cities.
In 2016, Array Real Estate was rebranded
as Keppel Land Retail Management.
Strengthening its commercial portfolio,
Keppel Land acquired a 22.4% stake
in I12 Katong, a retail mall in Singapore,
and a newly completed retail mall in
Jiading, Shanghai. In Myanmar, it further
committed to a 40% stake in Junction City
Phase 2, a mixed development comprising
serviced apartments and offices,
During the year,
Keppel Land’s
Singapore residential
properties, such as
Corals at Keppel Bay,
performed well.
42
Keppel Corporation Limited Report to Shareholders 2016Performance Review following its initial 40% stake investment
in Junction City Office Tower in 2015.
Enlarging its footprint in Vietnam, Keppel
Land invested in several joint ventures in
Ho Chi Minh City, including one for Empire
City in the Thu Thiem New Urban Area, Ho
Chi Minh City’s new CBD. The first phase of
Empire City was launched in December
2016 and received positive response.
Keppel Land also increased its investment
in Nam Long Group, a leading affordable
housing developer in Ho Chi Minh City,
through the subscription of VND 500
billion (approximately S$30.4 million)
convertible bonds due in 2020.
In Jakarta, Keppel Land entered into a JV
with Metland Group, one of Indonesia’s
leading property developers, to develop
450 landed homes in Tangerang.
Restructuring of the Fund
Management Business
Following the completion of the
restructuring of our asset managers
under Keppel Capital, Keppel Land
divested its stakes in both Alpha and the
management company of Keppel REIT.
Keppel Land continues to maintain its
investments in the various funds of Alpha
and holds about 45% of Keppel REIT.
Through Alpha’s funds and Keppel REIT,
Keppel Land will continue to enjoy
investment opportunities in new markets
and recurring income, as well as
divestment gains from investment
properties in Singapore and overseas.
Business Outlook
Singapore
Singapore’s economy is not immune to
slowing global growth, as well as the
impact of increasing insularism
and anti-globalisation sentiments. Its
property cooling measures are expected
to continue and have a persistent
dampening effect on the market. However,
selective projects at good locations and
with strong value propositions will
continue to attract home buyers.
With sizeable new office space expected
to come on stream in 2017, Grade A
office occupancy and rents will continue
to moderate.
Overseas
Rapid urbanisation and a burgeoning
middle-class population will continue
to drive demand for quality homes
and prime commercial space in Asia.
Riding on these trends, Keppel Land
will tap demand with more than 18,000
overseas launch-ready homes over the
next three years.
China is expecting lower GDP growth in
2017 as the government takes steps to
avoid an asset bubble and the build-up of
non-performance loans in the economy.
Continuing property cooling measures
will curb run-away prices and keep
growth in the property market at a
more sustainable level in major cities.
Nonetheless, the property market
will continue to be supported by
rising affluence and demand from the
growing urban population.
In Vietnam, the government is expected
to continue to liberalise international
trade, as well as restructure banks and
state-owned enterprises. GDP growth
is expected at 6.7% in 2017, underpinned
by greater investment spending, wage
growth and access to credit which will fuel
private consumption. CBRE expects about
44,000 apartments to be launched in
2017, with more focus on the mid-end
and affordable segments. With a sizeable
landbank in Vietnam, we plan to launch
projects for sale in quick succession
over the next few years.
In Indonesia, the economy is expected
to grow between 5.1% and 5.4% per
annum from now to 2020, underpinned by
domestic consumption and government
infrastructure development. Since
August 2015, various economic stimulus
packages and tax amnesty have been
introduced to strengthen the economy
and encourage investments in Indonesia.
The residential market remains promising,
supported by rising affluence and a
growing population of young professionals
and families.
With a pipeline of about 66,000 residential
units and a commercial footprint of over
a million square metres of gross floor
area under development, Keppel Land
is poised to capture opportunities in
its target markets.
Opening Saigon
Centre retail mall
and Takashimaya
Department Store in
a symbolic ceremony
are Mr Ang Wee Gee
(third from left), CEO of
Keppel Land, and Mr
Shigeru Kimoto (third
from right), President
of Takashimaya.
The ceremony was
witnessed by H.E.
Mr Tran Vinh Tuyen
(second from right),
Vice Chairman of the
People’s Committee
of Ho Chi Minh City,
and Dr Lee Boon Yang
(second from left),
Chairman of Keppel
Corporation.
43
Operating & Financial Review
Infrastructure
We will focus on building the Infrastructure
Division into a stable contributor to the Group.
Earnings Review
The Infrastructure Division’s revenue of
$1.7 billion was $293 million or 14% lower
than 2015, mainly due to lower power and
gas revenue from Keppel Infrastructure,
as well as lower contributions from
Keppel Logistics.
The Division’s FY 2016 net profit of
$99 million was $98 million or 50% lower
than that of 2015, mainly due to the
absence of gains from the divestment of
a 51% stake in Keppel Merlimau Cogen
Pte Ltd and the dilution re-measurement
of the combination of Crystal Trust and
CitySpring Infrastructure Trust in 2015.
This represents 13% of the Group’s net
profit for FY 2016. Excluding revaluations,
impairments and divestments, Keppel
Infrastructure’s core operations remained
robust, delivering a net profit of $84 million
for FY 2016, $38 million or 83% higher
than FY 2015 on the same basis.
Energy Infrastructure
Market Review
In 2016, Singapore’s average electricity
demand grew at a year-on-year rate of
2.5%, outpacing the forecast Gross
Domestic Product (GDP) growth of
1.8% and the 1.0% increase in average
electricity demand in 2015. However,
intense competition in the electricity
market persisted as a result of increase
in capacity and the number of
independent electricity retailers.
In the electricity market, the Energy
Market Authority (EMA) implemented
demand-side bidding, which allows
consumers to submit bids for the purpose
of providing load curtailment. Keppel
Infrastructure is preparing competitive
products and services to be ready for
the full liberalisation of Singapore’s
electricity market expected in 2018.
During the year, two new Liquefied
Natural Gas (LNG) import licences
were awarded, allowing licensees to
bring in the next tranche of LNG imports.
In addition, EMA has made plans
to allow third-party spot LNG imports
and new piped natural gas imports
on a case-by-case basis, and is also
promoting the development of a
Secondary Gas Trading Market in
Singapore. As a gas importer, shipper,
retailer and large user in Singapore,
Keppel Infrastructure will continue
to look for opportunities to improve
its competitiveness in the Singapore
energy market.
Meanwhile, demand for district
cooling services (DCS) has grown at
a compounded annual growth rate
of nearly 9% since 2010, fuelled by cost
efficiency and government legislation
on energy efficiency.
Operating Review
In spite of challenging market conditions,
Keppel Infrastructure’s integrated gas,
power and utilities business delivered
creditable results in 2016. Keppel
Infrastructure now serves more
than 7,000 customers in Singapore,
underpinned by the active management
and optimisation of its gas supplies and
electricity sales portfolio.
Keppel Infrastructure is actively
collaborating with the other businesses
in Group to create synergies, and is also
looking into new and innovative ways
to provide customers with competitive
energy. In 2016, Keppel Infrastructure
entered into an agreement with Keppel
Land to supply renewable energy for the
latter’s corporate office at Bugis Junction
Towers, using photovoltaic panels
installed on the former’s premises.
Earnings Highlights ($m)
Revenue
EBITDA
Operating Profit
Profit before Tax
Net Profit
Average Headcount (Number)
Manpower Cost
2016
2015
2014
1,744
136
94
123
99
2,669
173
2,037
246
208
243
197
2,739
182
2,914
554
450
436
307
3,043
238
Revenue
$1.7b
as compared to $2.0b for FY 2015.
Net Profit
$99m
as compared to $197m for FY 2015.
Major Developments in 2016
Commenced the 10-year operations
and maintenance contract for Doha
North Sewage Treatment Works.
Secured six WTE technology and
services contracts.
Named preferred bidder for Singapore’s
fourth desalination plant.
Divested 90% of Keppel DC Singapore 3
to Keppel DC REIT.
Acquired a stake in e-commerce
fulfilment company, Courex.
Focus for 2017/18
Continue seeking out value-enhancing
projects, leveraging the Division’s
project development, engineering,
operations and maintenance expertise.
Improve operational efficiencies by
harnessing the strengths of an integrated
gas and power business platform.
Continue building up a portfolio of
quality data centre assets and providing
higher value services to customers.
Grow e-commerce and urban logistics
capabilities to capture opportunities
in Asia Pacific.
44
Keppel Corporation Limited Report to Shareholders 2016Performance Review
Keppel DHCS has scaled up its DCS
business through existing service corridors’
expansion and remains the largest DCS
service provider in Singapore. To date,
Keppel DHCS operates four plants in
Singapore with an aggregate capacity of
over 70,000 refrigeration tonnes in major
business and industrial parks. During the
year, Keppel DHCS commenced supplies
for three new contracts.
Business Outlook
Since the commencement of long-term
LNG imports into Singapore in 2013, there
has been an oversupply of generation
capacity in the country. However, without
any major planned power capacity coming
into the market in the near future, and
with the recent growth in electricity
demand, the oversupply situation may
alleviate in the coming years.
EMA’s implementation of Full Retail
Contestability, which is expected in the
second half of 2018, will see more than
1.3 million households becoming
contestable consumers with flexibility
to purchase electricity directly from
retailers, such as Keppel Electric, a
wholly-owned subsidiary of Keppel
Infrastructure. This provides an
opportunity for Keppel Infrastructure
to grow its retail market base.
Singapore’s evolving gas market presents
fresh opportunities for Keppel
Infrastructure, including a diversified
selection of LNG and pipeline gas
supplies. Keppel Infrastructure will
capitalise on these sources of gas to
provide customers with reliable and
competitive gas supply.
The demand for DCS in Singapore has
remained strong. To seed the next phase
of growth, Keppel DHCS is actively
exploring opportunities with various
government agencies and developers
to incorporate DCS concepts into
the master plans of upcoming major
cluster developments in Singapore.
Environmental Infrastructure
Market Review
Rapid global urbanisation and stricter
environmental regulations will underpin
the growth of the Environmental
Infrastructure business.
Tackling environmental issues has been
identified as one of the main priorities of
the Chinese government. As part of the
12th Five Year Plan, a target to treat up to
35% of the country’s municipal solid
waste by incineration was established by
the Chinese government. From 2011 to
2015, the progress of waste-to-energy
(WTE) projects had been lower than the
target. Arising from this shortfall of
incineration capacity, near-term
opportunities are expected, with more
than 200 WTE projects to be built in the
coming years.
The Chinese Government’s 13th Five
Year Plan, which emphasises innovation
and green development, is expected
to spur international cooperation
in technology and science. This will
provide more opportunities for Keppel
Seghers to leverage its WTE technology
to build strategic, long-term, local
collaborations, and create deeper
inroads into the environmental market
in China and beyond.
WTE has been gaining recognition in the
Southeast Asia region as a competitive
solution for municipal solid waste
management, while producing renewable
power. With a gradual but notable shift
in regulations and policies in support
of WTE solutions in markets such as
Indonesia and Thailand, Keppel Seghers
will ride on this development trend to
capture opportunities in new markets.
In Indonesia, the country is expected to
see the development of over two million
tonnes of WTE capacity from projects
in Jakarta and surrounding areas.
Meanwhile in Thailand, waste market
reforms and feed-in-tariffs point to
greater government support for the
development of WTE projects. About
19 WTE projects have been planned
or approved, and are expected to be
commissioned between 2017 and 2025.
Over in Europe, demand for WTE solutions
remains opportunistic as countries such
as Poland, Spain and Portugal continue
with efforts to fulfill the European Union’s
(EU) waste legislation. Keppel Seghers
continues to take a selective approach in
these target countries to build up its
pipeline of projects.
Keppel Infrastructure
is poised to capture
opportunities as the
Singapore energy
market continues
to evolve.
45
Operating & Financial Review
Infrastructure
In December 2016, Keppel
Infrastructure was named the preferred
bidder by PUB, Singapore’s national
water agency, to Design, Build, Own
and Operate Singapore’s fourth
desalination plant with a concession
period of 25 years.
Operating Review
In December 2016, Keppel Infrastructure
was named the preferred bidder by PUB,
Singapore’s national water agency, to
Design, Build, Own and Operate
Singapore’s fourth desalination plant
with a concession period of 25 years.
The project will further grow Keppel
Infrastructure’s business in the water
sector, and will harnesses the strengths
of the company’s integrated energy and
water business to create value and
support Singapore’s growth needs.
Subsequently, the Water Purchase
Agreement (WPA) was signed between
PUB and a wholly-owned subsidiary of
Keppel Infrastructure in January 2017.
In Qatar, Keppel Seghers handed over
the solids stream and sludge treatment
facilities in the Doha North Sewage
Treatment Works to its client. With this,
Keppel Infrastructure Services, a
wholly-owned subsidiary of Keppel
Infrastructure, commenced its 10-year
operations and maintenance phase of the
contract for the facilities, generating
recurring income for the Group.
In China, Keppel Seghers continues to
build on its track record as a leader
among imported WTE technology
solutions providers in the country.
During the year, Keppel Seghers secured
six contracts to provide WTE technology
and services, including two respectively
for the Baoan WTE plant and the Nanshan
II WTE plant. It is currently executing
seven WTE technology packages for
projects with a total incineration
capacity of over 14,000 tonnes per day.
All projects are progressing within their
contractual schedules and budgets.
In the water and wastewater sector,
the Tianjin Eco-City Reclamation Plant
commenced commercial operations
in August 2016.
Keppel Seghers also completed the
incineration capacity upgrade at the
Senoko WTE plant in August 2016, ahead
of schedule and within budget. Meanwhile,
the capacity upgrade of the Keppel
Seghers Ulu Pandan NEWater plant is
on track to be completed by mid-2017.
Business Outlook
Against the backdrop of rapid
urbanisation, depleting landfill capacity
and rising awareness of environmental
and pollution issues, there is an increasing
need for governments to look into
sustainable waste management solutions.
In China, driven by the government’s
priority in tackling environmental issues,
the country has targets set for both
pollutant emission reduction and
environment quality improvement in its
13th Five Year Plan. The focus on green
development and innovation presents
opportunities for Keppel Seghers to capture
new WTE projects, as well as to deepen
its footprint in China through strategic
collaborations with local players.
In Europe, the replacement and
upgrading of ageing facilities and rapid
development in new EU members will
provide more prospects in this sector.
The 25-year WPA was
signed by Dr Ong Tiong
Guan (second from
left), CEO of Keppel
Infrastructure, and Mr
Ng Joo Hee (second from
right), Chief Executive
of PUB, and witnessed
by Mr Loh Chin Hua
(extreme left), CEO of
Keppel Corporation,
and Mr Tan Gee Paw
(extreme right),
Chairman of PUB.
46
Keppel Corporation Limited Report to Shareholders 2016Performance Review Keppel Seghers will explore technological
development opportunities to expand
its WTE product offerings. Meanwhile,
Keppel Infrastructure will continue to
seek out value-enhancing projects and
strengthen its market position, leveraging
its project development, engineering,
operations and maintenance expertise.
Logistics
Market Review
Global economic conditions remained
challenging in 2016. In China, growth
moderated to 6.7% in 2016 as the
economy continued to rebalance towards
domestic-driven consumption and
services. This transition predominantly
impacted the manufacturing sector,
which is shedding excess capacity
while moving towards higher
value-added activities. Meanwhile,
rising protectionistic sentiments in
the US could affect emerging markets
in Asia, which have historically been
geared towards exports.
The logistics industry has witnessed an
increasing adoption of new technologies
and business models. Demand for
omni-channel and urban logistics
solutions are on the rise, while new
business models such as crowdsourcing
allow companies to scale up their
operations with little asset investment.
Keppel Logistics is fine-tuning its
strategy to adapt to the changing industry
landscape with a focus on strengthening
its core competencies, streamlining
processes and resource allocation.
Operating Review
In 2016, Keppel Logistics integrated its
operations in Southeast Asia and China as
part of its strategy to boost its offerings.
Despite industry headwinds, Keppel T&T
maintained good warehousing occupancy
across its facilities.
In Singapore, Keppel Logistics acquired
a 59.6% stake in Courex, a Singapore
e-commerce fulfilment provider, as part of
plans to gain a foothold in the e-commerce
space. Courex’s Business-to-Consumer
logistics capabilities complement the
company’s existing Business-to-Business
offerings, allowing Keppel Logistics to
provide comprehensive urban logistics
and omni-channel logistics solutions.
During the year, Indo-Trans Keppel Logistics
completed a 47,800-square feet (sf)
expansion of the Hiep Phuoc warehouse
in Ho Chi Minh City, Vietnam, which has
been fully taken up by a key customer.
Meanwhile in China, the Tianjin Eco-City
Distribution Centre commenced
operations in September 2016, servicing
customers in the food processing and
trading businesses. In addition, the
Keppel Wanjiang International Coldchain
Logistics Park in Anhui Province will
add more than 506,000 sf of shopfront
space, as well as about 518,000 sf of
coldroom and ambient warehouse space
to Keppel Logistics’ operations in China
when completed.
Despite slower growth in China’s domestic
economy, Keppel T&T’s Lanshi Port in
Foshan, Guangdong Province, maintained
its throughput, while Foshan Sanshui
Port’s throughput continued to grow,
driven by its favourable location and
operational efficiency. The Wuhu Sanshan
Port, located in Wuhu, Anhui Province,
achieved a stable throughput volume of
4.06 million tonnes amidst a slowdown in
the area’s manufacturing activities.
Business Outlook
The market outlook for trade,
consumption and investment in China
and Southeast Asia remains cautious.
Nevertheless, a shift towards domestic
consumption and intra-region trade will
continue to drive growth in import-led
logistics services in the region.
Keppel Logistics will continue to focus
on delivering quality logistics services
in these targeted markets and transform
its business model to capture new growth
in e-commerce, omni-channel and urban
logistics. Keppel Logistics will also seek
to improve cost efficiencies and explore
opportunities to recycle capital.
Data Centres
Market Review
The data centre market experienced
strong growth in 2016, underpinned
by the rise in cloud computing,
big data analytics and digitalisation.
The adoption of data centre colocation
has also been on the rise, as it offers
enterprises the benefit of seamless
expansion with minimal upfront
costs. Furthermore, in tandem
with growing data sovereignty trends
Keppel Logistics
will continue to
leverage technology
to deliver quality
urban logistics services
to its customers.
47
Operating & Financial Review
Infrastructure
is the need for businesses to store
data locally and for colocation service
providers with a presence in the
host country.
The operation of data centres requires
large amounts of energy. With increasing
focus on environmental protection, big
cloud service providers have announced
plans for carbon-neutral and innovative
energy-efficiency features in the design
and construction of data centres.
Capitalising on the positive market trends,
Keppel Data Centres Holding (KDCH) has
expanded its footprint beyond its current
geographies. Together with its associated
company Keppel DC REIT, KDCH has a
total of 17 facilities spanning nine
countries and over 1.4 million sf of net
lettable area. Its growth plan is supported
by strong capabilities in developing and
operating data centres, a commitment to
high efficiency and environmental
consciousness, as well as a dynamic
capital-recycling platform through
Keppel Capital and Keppel DC REIT.
Operating Review
Having achieved full commitment at
Keppel DC Singapore 3 since April 2016,
KDCH divested 90% of its shares in the
asset to Keppel DC REIT, at an agreed
value of approximately $202.5 million.
Also during the year, Keppel T&T divested
50% of its shares in Keppel DC REIT
Management to Keppel Capital, as part
of the Group’s restructuring of its asset
management businesses.
In early-2016, KDCH commenced
construction of Keppel DC Singapore 4,
which is expected to achieve its
Temporary Occupation Permit and
complete first phase fit-out in the
first half of 2017. Upon completion,
Keppel DC Singapore 4 will have about
183,000 sf of Gross Floor Area (GFA)
pre-committed.
In April 2016, KDCH signed a
collaboration agreement with PCCW
Global to co-develop an international
carrier exchange in Hong Kong,
offering connectivity-related managed
services to facilitate interconnects.
Upon completion in 2017, the
international carrier exchange
will feature high-quality Tier III
telecommunications centre space.
During the year, KDCH collaborated
with Alpha Investment Partners (Alpha)
to launch the US$500 million Alpha Data
Centre Fund (Alpha DC Fund). The Alpha
DC Fund aims to secure a portfolio of
quality assets across key data centre
hubs in Asia-Pacific and Europe.
When fully-invested, the Alpha DC
Fund is expected to fund up to
about US$1.0 billion worth of data
centre projects.
Through its collaboration with Alpha,
KDCH expanded its colocation footprint
with the acquisition of Keppel DC
Frankfurt 1 in Germany. The data centre,
which is currently leased to a leading
global financial institution, features
over 215,000 sf of GFA and is fitted to
Tier III-equivalent specifications.
In 2016, KDCH expanded its capabilities
with several strategic partnerships to
provide value-added services for its
customers. These partnerships included
a Memorandum of Understanding with
the National Supercomputing Centre
Singapore to explore supercomputing and
high-performance computing, as well as a
partnership with Quann, a Certis CISCO
unit specialising in managed security
services, to provide end-to-end
enterprise cyber security solutions.
Business Outlook
With increasing data centre outsourcing,
the global colocation market is expected
to grow at a compounded annual growth
rate of 12.8% from 2016 to 2022, reaching
a size of almost US$67 billion by 2022.
Keppel T&T will continue to expand
beyond its existing geographies and
capture opportunities to provide extended
services, leveraging the Alpha DC Fund
and Keppel DC REIT.
Through its collaboration with Alpha,
KDCH expanded its colocation footprint
with the acquisition of Keppel DC
Frankfurt 1 in Germany.
Keppel’s senior
management broke
ground for Keppel DC
Singapore 4 (formerly
known as Keppel
Datahub 3), expanding
our data centre
footprint in Singapore.
48
Keppel Corporation Limited Report to Shareholders 2016Performance Review Investments
We aim to create sustainable value for
shareholders by investing strategically and
growing our asset management business.
Revenue
$134m
as compared to $195m for FY 2015.
Net Profit
$36m
as compared to $185m for FY 2015.
Major Developments in 2016
Completed the restructuring of the
Group’s asset management businesses
under Keppel Capital.
Achieved first closings of two new private
equity funds, Alpha Data Centre Fund
and Alpha Asia Macro Trends Fund III.
Keppel REIT divested 77 King Street
in Sydney, Australia.
Keppel DC REIT added three data
centres in Italy, the UK and Singapore
to its portfolio.
KIT completed the capacity upgrade
for Senoko WTE plant on budget and
ahead of schedule.
Focus for 2017/18
Keppel Capital will grow the Group’s
asset management platform by
creating real assets in infrastructure
and real estate.
k1 Ventures will focus on managing
existing investments to drive
shareholder value and distribute excess
cash when investments are monetised.
M1 will continue building up its
capabilities to capitalise on new
opportunities.
KrisEnergy will focus on maintaining
production and maximising efficiencies.
Earnings Review
Following the completion of the
restructuring of our asset management
businesses under Keppel Capital, the
Investments Division now mainly comprises
Keppel Capital, as well as the Group’s
investments in k1 Ventures, M1 Limited,
KrisEnergy and the Sino-Singapore
Tianjin Eco-City (Eco-City).
The Investments Division generated a
revenue of $134 million for FY 2016,
a decrease of $61 million or 31%
from the previous year. The Division’s
pre-tax profit was $83 million, down
$124 million or 60% from the previous
year. This was mainly due to share of
losses from KrisEnergy and lower share
of profit from k1 Ventures, partially offset
by the share of profit from the Eco-City.
Accordingly, the Division delivered a
net profit of $36 million for FY 2016,
which represented 4% of the Group’s
total net profit for the year. This was
down from the net profit of $185 million
for FY 2015.
Keppel Capital
Operating Review
In July 2016, we completed a significant
restructuring exercise to consolidate
our interests in the Group’s asset
management businesses under
Keppel Capital. This includes 100%
interests in Keppel REIT Management
Limited, Alpha Investment Partners
Limited (Alpha) and Keppel Infrastructure
Fund Management Pte Ltd, as well as a
50% interest in Keppel DC REIT
Management Pte Ltd.
approximately $25 billion in real estate,
infrastructure and data centre assets as
at end-2016.
Following the restructuring, Keppel
Capital launched two new private equity
funds – the Alpha Data Centre Fund
(Alpha DC Fund) and Alpha Asia Macro
Trends Fund (AAMTF) III – which secured
initial commitments of US$410 million out
of a combined target size of US$1.5 billion.
Real Estate
Keppel REIT Management and Alpha
continued its proactive asset management
and value creation initiatives, as well as
strategic acquisitions and divestments.
2016 was a difficult year for the office
market. Notwithstanding the challenges,
Keppel REIT Management continued its
rigorous leasing efforts, which saw the
REIT maintaining a high tenant retention
rate of 95% and portfolio rate of 99.2%
as at end-2016. To maximise and capture
value for Unitholders, Keppel REIT divested
77 King Street in Sydney, Australia, in
January 2016. Looking into 2017, Keppel
REIT expects minimal leasing risks with
only 3.9% and 1.7% of leases due for
renewal and review respectively.
During the year, the third fund in the
AAMTF series, the AAMTF III, was launched
in response to demand from existing
investors, and acquired its first office
asset in Tokyo. With a target size of
US$1.0 billion, AAMTF III is well-positioned
to capture attractive returns by investing
in multi-asset classes across key gateway
cities in the region.
As a larger and integrated fund
management platform, Keppel Capital
had total assets under management of
In 2016, Alpha divested a total of 14
assets across Singapore, China and Japan
generating good returns for its investors.
Earnings Highlights ($m)
Revenue
EBITDA
Operating Profit
Profit before Tax
Net Profit
Average Headcount (Number)
Manpower Cost
2016
2015
2014
134
63
61
83
36
286
89
195
130
128
207
185
180
94
184
95
93
118
69
191
135
49
Operating & Financial Review
These included the divestment of Life Hub
@ Jinqiao in Shanghai through AAMTF II,
which realised an internal rate of return (IRR)
of over 20% on the sale of the development,
as well as the divestment of its Singapore
suburban retail portfolio which achieved
an IRR of over 50%.
Data Centre
Keppel DC REIT remains committed to
its pursuit of accretive acquisitions that
complement and strengthen its existing
portfolio. In 2016, Keppel DC REIT
announced three acquisitions including
investments in two new markets, Milan in
Italy and Cardiff in the UK, as well as the
acquisition of a 90% interest in Keppel DC
Singapore 3. These strategic additions
expanded the REIT’s geographical
footprint and enhanced income stability
for the portfolio.
The newly-launched Alpha DC Fund is a
collaborative effort between Alpha and
Keppel Telecommunications &
Transportation (Keppel T&T). The Alpha DC
Fund has a target fund size of US$500
million and is the first of its kind in Asia.
Riding on Keppel T&T’s expertise and
strong development track record, the fund
offers financial investors the opportunity
to participate in the fast-growing data
centre sector.
The Alpha DC Fund acquired its first data
centre in Frankfurt, Germany, Europe’s
key internet exchange. The Alpha DC Fund
is a showcase of how the Group’s diverse
businesses and expertise can be
harnessed to develop high quality real
assets that create value for investors.
Infrastructure
In September 2016, Keppel Infrastructure
Trust (KIT) completed the capacity upgrade
of the Senoko Waste-to-Energy (WTE)
Plant on budget and ahead of schedule.
This raised the contracted incineration
capacity of the plant by 10% to 2,310
tonnes per day, thereby increasing the
corresponding capacity payment
from the National Environment Agency
of Singapore.
In Singapore, KIT’s concessions met all
their contracted availability and delivery
requirements for the year. City Gas
continued to provide safe, reliable and
clean energy solutions including a variety
of energy-efficient gas applications to its
broad customer base in Singapore’s
residential, commercial and industrial
segments. 1-Net Singapore commenced
its 20-year triple net lease agreement
following the successful handover of
the 1-Net North Data Centre by KIT.
In Australia, the Basslink Interconnector
went out of service due to a subsea cable
fault in December 2015 and resumed
full services in June 2016.
Business Outlook
Synergies derived from increased
scale, improved operational efficiencies,
sharing of best practices and better
talent recruitment and retention will
place Keppel Capital’s asset managers
in a stronger position to grow and
improve their business performance.
Keppel Capital will play a key role in
working with business units across
the Keppel Group in developing,
owning and operating real assets,
while providing an effective capital
recycling platform, as well as access
to a broader base of capital through
co-investors.
Keppel Capital strives to be the
trusted partner for investors, and will
continue to seek growth opportunities
while maintaining its proactive asset
management approach to increase
returns from its real estate,
infrastructure and data centre
assets under management.
k1 Ventures
k1 Ventures (k1) is an investment
company with interests in real estate
and financial services.
For the financial year ended 30 June
2016, k1 reported revenue of $195 million,
an increase from $61 million in the
previous year. This was driven by
investment income from Knowledge
Universe Holdings (KUH) of $175 million
attributable mainly to the receipt
of cash distributions from the
sales of the US and international
childcare operations.
Keppel Capital will play a key role in
working with business units across
the Keppel Group in developing,
owning and operating real assets,
while providing an effective capital
recycling platform, as well as access
to a broader base of capital through
co-investors.
During the year,
Keppel DC REIT acquired
a 90% interest in
Keppel DC Singapore 3,
strengthening its
footprint in the key data
centre hub of Singapore.
50
Keppel Corporation Limited Report to Shareholders 2016Performance Review k1’s profit before tax was $144 million
for the year ended 30 June 2016,
compared to $32 million in the prior year.
EBITDA of $144 million was $99 million
above the prior year, driven by
investment income from KUH. Net
profit attributable to shareholders
for the year ended 30 June 2016 was
$141 million compared to $25 million
in the previous year.
For FY 2016, k1 paid out $162 million
through dividend and capital reduction
distributions. In June 2016, k1’s interest
in the remaining assets of KUH, which
consisted of the net cash reserves and
the real estate assets, was restructured
as a result of the sale of the operating
businesses. Consequently, k1 no longer
holds an interest in KUH except for a
direct pro-rata interest in the real estate
holding company, KUE 3 LP, in addition to
a contractual right to receive k1’s pro-rata
share of the net cash reserves that will
ultimately be distributed. The company’s
Put Right for the real estate investment
has been extended until 31 March 2017.
During the year, k1 continued to earn a
7% annual cash dividend on its Preferred
Units held in Guggenheim Capital.
k1 will continue to focus on actively
managing its existing investments
with the goal of monetising them when
appropriate, and distributing surplus
cash to enhance shareholder value.
M1
As at end-2016, M1’s total customer
base has grown to 2.18 million. During
the year, M1’s mobile customer base
increased by 5% to 2.02 million
while fibre customers increased by
25% to 160,000 from 2015. Its overall
market share increased to 23.8% as at
end-November 2016, compared to
23.4% as at end-2015.
In 2016, M1 continued to focus on
customer service, innovation and value
to further entrench M1 as the service
provider of choice. Its newly-launched
Entertainment Data plan and Upsized
Data package are specifically catered to
the heavy data users of today. M1 also
expanded its unique M1 Data Passport
service for customers to use their local
data bundles to 48 overseas destinations
as at end-2016, an increase from 29
destinations a year ago. To further
enhance the customer experience and
cater to the existing and future needs
of its customers, M1 began Singapore’s
first commercial Heterogeneous Network
(HetNet) deployment in 2016.
During the year, M1 participated in various
Smart Nation trials in Singapore and
continued to invest to test and deploy
new technologies.
In the corporate segment, M1 partnered
Ascendas-Singbridge in Singapore’s
biggest fibre upgrading project, installing
and enhancing fibre infrastructure at
70 Ascendas-Singbridge commercial
buildings to allow the tenants to enjoy
expedient access to fibre broadband
services. It also launched a selection
of new corporate managed services such
as the M1 Cyber Security Solutions Suite,
Hosted Unified Communications solution,
and SOHO fibre plan bundled with
business solutions, to further enhance
its connectivity solutions.
M1 will continue its transformative
journey to become a Smart
Communications Provider, building
up a portfolio of information and
communications technology, as well
as digital solutions enhanced with
data analytics, to capitalise on new
opportunities.
KrisEnergy
Trading conditions for KrisEnergy
remained challenging in 2016. The rout
in oil prices in 2014 and 2015 continued
in 2016 when markets witnessed
significant fluctuations. Brent crude oil
futures, a global benchmark, swung from
a low of US$27.88 per barrel in January
2016 to a 52-week high in December 2016
at US$56.82 per barrel.
Despite a modest recovery in the price
of crude oil in the later part of 2016,
confidence in the sector remained fragile.
In addition, uncertainty regarding the
magnitude of any further recovery as well
as its sustainability continued to plague
the market. The cumulative effects of the
precipitous drop and subsequent volatility
in oil markets had a significant impact
on KrisEnergy’s operations, financial
condition and prospects. This includes
the company’s traditional strategy of
financing investments in projects
through an optimal funding mix of
cash flow from operations, as well as
debt and equity finance.
KrisEnergy reported a net loss after
tax of US$237 million in FY 2016 despite
doubling revenues to US$143 million
for the period. This was mainly due to
non-cash charges for impairments on
producing assets, write-offs related
to relinquished contract areas and
depreciation, depletion and amortisation,
as well as higher financial costs.
During the year, KrisEnergy’s working
interest production averaged 16,136
barrels of oil equivalent per day, an
increase of 67% from FY 2015, and
is the highest annual average in the
company’s history. The increase resulted
from higher production at the B8/32
and B9A oil fields in the Gulf of Thailand,
as well as a full year of production at
both the Wassana and Nong Yao fields
in the Gulf of Thailand.
As at end-December 2016, working
interest for proved plus probable (2P)
reserves were estimated by Netherland,
Sewell & Associates, Inc (NSAI) at
96.6 million barrels of oil equivalent
(mmboe), a slight decrease from
105.9 mmboe in 2015. The decline
is associated with lower oil price
forecasts impacting the Wassana and
Nong Yao oil fields in the Gulf of Thailand,
as well as a downward adjustment
for the Wassana field to account for
lower production and performance.
In addition, NSAI recognised best
estimate contingent (2C) resources of
150.8 mmboe as at 31 December 2016.
An increase in KrisEnergy’s working
interest in the Cambodia Block A
development block from 52.3% to 95.0%
boosted resources for the asset to
9.8 mmboe from 5.4 mmboe as at
31 December 2015.
Holistic Financial Restructuring
In November 2016, KrisEnergy
launched a financial restructuring
process based on a revised business
plan. The plan is focused on maintaining
existing production rates and enhancing
operational efficiencies, as well as
the execution of development projects
in the Gulf of Thailand and Indonesia
to eventually increase production
and future cash flow.
A Consent Solicitation Exercise to
extend the maturity dates by five years,
among other terms, for KrisEnergy’s
issued debt was successfully concluded
in December 2016. Subsequently,
gross proceeds of $139.5 million
were raised in February 2017 from a
preferential offering of senior secured
debt with detachable warrants, in which
Keppel Corporation’s wholly-owned
subsidiary Keppel Oil & Gas Pte Ltd,
had successfully subscribed for
107,205,985 Notes with 964,853,865
Warrants, pursuant to an irrevocable
undertaking.
In line with the revised business
plan, steps are underway to rationalise
KrisEnergy’s asset portfolio to
51
Operating & Financial Review
Investments
reduce risk and raise additional
financing through farm-out and
potential divestment transactions,
as well as relinquishing assets judged
to be non-core.
While the immediate focus of operations
is on maintaining existing production
and near-term developments, KrisEnergy
will retain exploration assets that do not
require any significant funding in the
next two to three-year period.
Sino-Singapore Tianjin Eco-City
The Eco-City is on track to realising
its vision of becoming a model for
sustainable urbanisation, since breaking
ground eight years ago. To date, there are
over 70,000 people working and living in
the Tianjin Eco-City and over 4,500
registered companies1.
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 master developer
of the Eco-City.
2016 saw significant progress in the
provision of key amenities in the Eco-City.
With the opening of seven new schools
during the year, the Eco-City now has
14 schools with over 7,000 students.
Two neighbourhood centres, a general
hospital and a sports hall have also
commenced operations.
Adding to the amenities of the Eco-City,
construction has started on five
additional schools, three commercial
complexes, two healthcare centres and
a lifestyle centre. The Z4 rail line, which
will enhance the Eco-City’s connectivity
to other parts of Tianjin, also commenced
construction in 2016.
Zhenggao, met in April 2016 to affirm
the good progress achieved and
endorse plans in preparation for the
Eco-City’s tenth anniversary in 2018.
Over 6,300 homes were sold in the
Eco-City in 2016. Of these, SSTEC’s
projects sold 1,541 homes, achieving
a 27% increase in average prices as
compared to 2015. Reflecting the
improved home sales, land sales
also improved significantly in 2016.
In July 2016, two residential plots were
transacted at a land price of around
RMB 8,000 per square metre (sm) of
gross floor area (GFA), more than three
times the price of similar land sold
earlier in the year.
In response to the rising price of homes
and residential land, the Tianjin
government has implemented new cooling
measures to allow the residential market
to grow at a sustainable pace. The full
impact of the cooling measures will take
a while to be seen.
In 2017, SSTEC will focus on the next
phase of development in the Central
District where the joint venture will
start work on two residential projects.
To enhance amenities in the Eco-City,
the local government is developing
new iconic projects, such as the
Sino-Singapore Friendship Garden
and the Sino-Singapore Friendship
Library, as well as neighbourhood
and lifestyle centres.
The Sino-Singapore Tianjin Eco-City
Joint Working Committee, co-chaired
by Singapore’s Minister for National
Development Mr Lawrence Wong and
Chinese Minister for Housing and
Urban-Rural Development Mr Chen
In 2016, Keppel Land China sold 685
homes in the Eco-City. As at end-December
2016, Seasons Park had been fully sold
and Seasons Height had sold all of its
64 launched units. Meanwhile, almost
all of the 596 launched units in Seasons
Garden, as well as about 98% of the
285 launched units in Waterfront
Residences had been sold.
In the commercial space, Seasons City
is currently under construction and its
first phase is expected to be completed
in 2019. When fully developed, the
commercial development will add about
161,800 sm of GFA to the Eco-City.
Apart from Keppel Land, different
businesses within the Keppel Group
are contributing to the Eco-City’s
development. Keppel T&T’s logistics
distribution centre in the Eco-Industrial
Park commenced operations in 2H 2016.
Keppel Infrastructure’s district heating
and cooling system plant has been
operating well since 2013. During the year,
the company completed the upgrading of
its wastewater treatment plant which is
now able to treat up to 100,000 tonnes per
day of wastewater. Meanwhile, its water
reclamation plant is currently undergoing
commissioning and is expected to
commence operations in 2017.
1 These figures include the Tourism District and
Central Fishing Port.
The Sino-Singapore
Tianjin Eco-City is on
track to realising its
vision of becoming a
model for sustainable
urbanisation.
52
Keppel Corporation Limited Report to Shareholders 2016Performance Review Financial Review &
Outlook
We will sustain value creation through
execution excellence, technology innovation
as well as financial discipline.
Total Assets
$29.2b
Total assets increased by $0.3b to
$29.2b. The increase in non-current
assets was partially offset by
decrease in current assets.
Total Cash Dividend Per Share
$0.20
Total distribution to shareholders of
the Company and non-controlling
shareholders of subsidiaries for the
year amounted to $622 million.
Prospects
In 2016, the Offshore & Marine (O&M)
Division secured about $500 million worth
of new orders. Its net orderbook, excluding
the Sete rigs, stands at $3.7 billion in
end-2016. Faced with the global offshore
sector downturn, the Division is rightsizing
its operations for what is expected to be
an extended slowdown. The Division will
continue to focus on delivering its projects
well, exploring new markets and
opportunities, investing prudently in R&D
and building new capabilities to position
itself for the upturn. The Division is also
actively capturing opportunities in the
growing gas market and exploring ways to
re-purpose its technology for the offshore
industry for other uses.
core competencies in the energy and
environmental-related infrastructure
businesses to pursue promising growth
areas. On 20 January 2017, Keppel
Infrastructure signed a 25-year Water
Purchase Agreement with Public Utilities
Board (PUB), the national water agency,
for Singapore’s fourth desalination
plant at Marina East. Keppel
Telecommunications & Transportation
(Keppel T&T) will continue to develop its
data centre business locally and overseas.
Besides building complementary
capabilities in the growing e-commerce
business, Keppel T&T plans to transform
the logistics business from an asset-heavy
business to a high performing asset-light
service provider in urban logistics.
The Property Division sold about 5,720
homes in 2016, comprising about 3,800
in China, 1,520 in Vietnam and 380 in
Singapore. This is about 25% higher than
the 4,570 homes sold in 2015. Sales have
improved in China, Vietnam and Singapore.
In addition, Keppel REIT’s office buildings
in Singapore and Australia continued to
maintain high occupancy of 99.2% as at
end-2016. The Property Division will
remain focused on strengthening its
presence in its core and growth markets,
while seeking opportunities to unlock
value and recycle capital.
In the Infrastructure Division, Keppel
Infrastructure will continue to build on its
In the Investments Division, the
formation of Keppel Capital will allow
the Group to more effectively recycle
capital and expand its capital base with
co-investments, giving the Group greater
capacity to seize opportunities for growth
without putting a strain on our balance
sheet. Keppel Capital will create value for
investors and grow the Group’s asset
management business.
The Group will continue to execute its
multi-business strategy, capturing value
by harnessing our core strengths and
growing collaboration across divisions to
unleash potential synergies, while being
agile and investing for the future.
ROE & Dividend
%
30
24
18
12
6
0
Dividend
in specie
~ 28.6 cts/share
Plus
Dividend
in specie
~ 9.5 cts/share
Plus
cents
50
40
30
20
10
0
ROE
Full-Year Dividend
Interim Dividend
2011
2012
2013
2014
2015 2016
27.2
43.0
17.0
26.4
45.0
18.0
19.5
40.0
10.0
18.8
48.0
12.0
14.2
6.9
34.0
20.0
12.0
8.0
53
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
2016
$ million
16 vs15
+/(-)
2015
$ million
15 vs14
+/(-)
2014
$ million
766
-648
1,414
-1,342
2,756
225
29
(44)
(3)
973
+70
+4
-12
-180
-766
19,119
5.82%
-
(1,113)
+561
-0.06%
-
-22
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
19,231
6.45%
68
(1,172)
Economic Value Added
(140)
-788
648
-1,130
1,778
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% (2015: 5.0%);
(b) Risk-free rate of 2.50% (2015: 2.25%) based on yield-to-maturity of Singapore Government 10-year Bonds;
(c) Unlevered beta at 0.75 (2015: 0.83); and
(d) Pre-tax Cost of Debt at 2.45% (2015: 1.76%) using 5-year Singapore Dollar Swap Offer Rate plus 45 basis points (2015: 45 basis points).
5. For FY 2014, capital charge on surplus cash of $1,939 million was at the concession rate of 2.93% instead of WACC of 6.45%. This was due to the
accumulation of surplus cash resulting from the advanced borrowing programme.
EVA ($m)
2,100
1,800
1,500
1,200
900
600
300
0
-300
Shareholder Returns
Return on Equity (ROE) decreased to 6.9% in
2016 from 14.2% in the previous year, due to
lower profits and higher average total equity.
The Company will be distributing a total cash
dividend of 20.0 cents per share for 2016,
comprising a proposed final cash dividend
of 12.0 cents per share and the interim cash
dividend of 8.0 cents per share distributed in the
third quarter of 2016. Total cash dividend for
2016 represents 46% of Group net profit. On a
per share basis, this translates into a gross
yield of 3.5% on the Company’s last transacted
share price of $5.79 as at 31 December 2016.
Economic Value Added
In 2016, Economic Value Added (EVA) decreased
by $788 million to negative $140 million. This
was attributable to lower net operating profit
after tax and higher capital charge.
Capital charge increased by $22 million as a
result of higher Average EVA Capital, partly
offset by lower Weighted Average Cost of
Capital (WACC). WACC decreased from 5.88%
to 5.82% in 2015, mainly due to a decrease in
beta, partly offset by higher cost of debt.
Average EVA Capital increased by $561 million
from $18.56 billion in 2015 to $19.12 billion in
2016, mainly due to higher borrowings.
54
2010
697
2011
2012
2013
2014
838 1,430 1,142 1,778
2015
648
2016
-140
Keppel Corporation Limited Report to Shareholders 2016Performance Review
Financial Position
Group shareholders’ funds increased
from $11.10 billion as at 31 December 2015
to $11.66 billion as at 31 December 2016.
The increase was mainly attributable to
retained profits for FY 2016 and increase
in fair value on cash flow hedges. This
was partially offset by payment of final
dividend of 22.0 cents per share in respect
of financial year 2015 and interim dividend
of 8.0 cents per share in respect of the
first half year ended 30 June 2016 and
foreign exchange translation losses.
Group total assets of $29.23 billion as
at 31 December 2016 was $0.3 billion
or 1% higher than the previous year end.
Increase in non-current assets was
partially offset by decrease in current
assets. The increase in non-current
assets was due mainly to an increase in
receivables, additions and fair value
gains on investment properties in 2016,
partly offset by the depreciation and
impairment of fixed assets. Investments
in associated companies decreased due
largely to the dividends received and
impairment losses, partly offset by
acquisitions and further investments
in associated companies. The decrease
in current assets was due mainly to the
lower stocks & work-in-progress (WIP)
from the Property Division, and
impairment of stocks & WIP in the O&M
Division. This was partly offset by higher
debtors and bank balances due mainly
to higher billings in the O&M and
Property divisions.
Group total liabilities of $16.90 billion as
at 31 December 2016 was $0.09 billion
or 1% lower than the previous year end.
This was mainly due to the lower billings
on WIP in excess of related costs in the
O&M Division and a reduction in derivative
liabilities, partially offset by increased
bank borrowings for working capital
requirements and operational capital
expenditure.
Group net debt of $6.97 billion was
$0.60 billion higher than that as at
31 December 2015. This was due mainly
to dividend payments (by the Company
and its listed subsidiaries), the acquisition
of Cameron’s offshore product division,
acquisitions of further investments in
associated companies in the Property
Division, as well as other operational and
capital expenditure cash requirements.
These were partly offset by proceeds
from the disposal of subsidiaries in the
Property Division as well as dividends
received from investments and
associated companies.
Total Assets Owned ($m)
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
Total
2014
2,673
1,988
5,717
2015
2,846
3,272
6,029
2016
2,645
3,550
5,967
10,681
10,763
10,026
4,796
5,736
4,117
1,893
4,959
2,087
31,591
28,920
29,234
Total Liabilities Owed and Capital Invested ($m)
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
2014
2015
2016
10,381
11,096
11,659
4,347
9,178
7,383
302
830
8,362
8,259
373
675
7,516
9,053
331
31,591
28,920
29,234
55
Operating & Financial Review
Financial Review & Outlook
Total Shareholder Return (%)
120
100
80
60
40
20
0
(20)
(40)
(60)
(80)
10-year annualised TSR as at 2016
Keppel
STI
1.8%
2.8%
Keppel
STI
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)
2016
(6.3)
3.8
Source: Total Return Analysis for KCL & STI from Bloomberg
Net cash from operating activities was
$330 million for 2016 as compared to
net cash used in operating activities
of $785 million for 2015.
56
Total Shareholder Return
Keppel is committed to deliver value to
shareholders through earnings growth.
Towards achieving this, we will rely on
our multi-business strategy and core
strengths to build on what we have
done successfully, as well as seize new
opportunities when they arise.
Our 2016 Total Shareholder Return (TSR)
of negative 6.3% was 10.0 percentage
points below the benchmark Straits Times
Index’s (STI) TSR of positive 3.8%. Our
10-year annualised TSR growth rate of
1.8% was also lower than STI’s 2.8%.
Cash Flow
To better reflect our 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 from operating activities was
$330 million for 2016 as compared to
net cash used in operating activities of
$785 million for 2015. This was due mainly
to the slowdown in working capital
increases, and lower operational capital
expenditure from the O&M Division.
After excluding expansionary acquisitions,
capital expenditure and major divestments,
net cash from investment activities was
$246 million. The Group spent $214 million
on investments and operational capital
expenditure, mainly for the O&M and
Property divisions. After taking into
account the proceeds from divestments
and dividend income of $460 million,
the free cash inflow was $576 million.
Total distribution to shareholders of
the Company and non-controlling
shareholders of subsidiaries for the
year amounted to $622 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 the 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
Keppel Corporation Limited Report to Shareholders 2016Performance Review Cash Flow
Operating profit
Depreciation, amortisation & other non-cash items
Cash flow provided by operations before changes in working capital
Working capital changes
Interest receipt and payment & tax paid
Net cash from / (used in) operating activities
Investments & capital expenditure
Divestments & dividend income
Net cash from investing activities
Free Cash Flow*
2016
$ million
16 vs 15
+/(-)
2015
$ million
15 vs 14
+/(-)
2014
$ million
795
500
1,295
(643)
(322)
330
(214)
460
246
576
-719
+662
-57
+1,158
+14
+1,115
+63
+92
+155
+1,270
1,514
(162)
1,352
(1,801)
(336)
(785)
(277)
368
91
(694)
-859
+99
-760
-22
-8
-790
+385
-1,018
-633
-1,423
2,373
(261)
2,112
(1,779)
(328)
5
(662)
1,386
724
729
Dividend paid to shareholders of the Company & subsidiaries
(622)
+334
(956)
+73
(1,029)
* Free cash flow excludes expansionary acquisitions & capex, and major divestments.
currencies viz US dollars, European
and other Asian currencies. Foreign
currency exposures arise mainly from
the exchange rate movement of these
foreign currencies against the
Singapore dollar, which is the Group’s
measurement currency. The Group
utilises forward foreign currency
contracts to hedge its exposure to
specific currency risks relating to
receivables and payables. The bulk
of these forward foreign currency
contracts are entered into to hedge
any excess US dollars arising
from the O&M contracts based on
the expected timing of receipts.
The Group does not engage in foreign
currency trading.
– The Group hedges against price
fluctuations arising from 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 of High
Sulphur Fuel Oil (HSFO) 180-CST and
Dated Brent.
– The Group hedges against fluctuations
in electricity prices arising from 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. These may include cross
currency swaps, 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
2016 were $9.1 billion (2015: $8.3 billion
and 2014: $7.4 billion). At the end of 2016,
20% (2015: 10% and 2014: 24%) of Group
borrowings were repayable within one year
with the balance largely repayable more
than three years later.
Unsecured borrowings constituted
87% (2015: 85% and 2014: 86%) 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 $2.81 billion
(2015: $2.46 billion and 2014: $2.70 billion).
Fixed rate borrowings constituted
56% (2015: 65% and 2014: 66%) of total
borrowings with the balance at floating
rates. The Group has cross currency swap
and interest rate swap agreements with
notional amount totalling $1,678 million
whereby it receives foreign currency fixed
rate (in the case of the cross currency
swaps) and variable rates equal to SOR,
LIBOR and SHIBOR (in the case of interest
rate swaps) and pays fixed rates of
57
Operating & Financial Review
Financial Review & Outlook
between 1.27% 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
68% (2015: 65% and 2014: 65%) 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, that were denominated in
foreign currencies.
Weighted average tenor of the loan book
was around five years at the beginning
of 2016 and around four years at the end
of 2016 with a decrease in average cost
of funds.
Capital Structure & Financial Resources
The Group maintains a strong balance
sheet and an efficient capital structure to
maximise return for shareholders.
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
Total equity as at end-2016 was
$12.33 billion, compared to $11.93 billion
as at end-2015 and $14.73 billion as at
end-2014. The Group was in a net debt
position of $6,966 million as at end-2016,
which was above the $6,366 million as
at end-2015 and $1,647 million at the
end-2014. As at end-2016, the Group’s net
gearing ratio was 0.56 times, compared to
0.53 times as at end-2015.
Interest coverage was 15.35 times in 2014,
decreasing to 9.66 times in 2015 and to
4.35 times in 2016. Interest coverage in
2016 was lower due to lower Earnings
before Interest expense and Tax (EBIT)
and higher interest costs.
Cash flow coverage dropped from 1.02
times in 2014 to negative 2.53 times in
2015 before increasing to 2.12 times in
2016. This was mainly due to operational
cash inflow in 2016.
At the Annual General Meeting in 2016,
shareholders gave their approval for
mandate to buy back shares. During the
year, 590,000 shares were bought back
and held as treasury shares. The Company
also transferred 5,120,470 treasury shares
to employees upon vesting of shares
released under the KCL Share Plans
58
Net Cash/(Gearing)
Net Gearing = Borrowings – Cash
Total Equity
$m
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)
Total Equity
Net Cash / (Gearing)
2014
2015
2016
(1,647)
(6,366)
(6,966)
14,728
(0.11)
11,926
(0.53)
12,334
(0.56)
Interest Coverage
Interest Coverage = EBIT
Interest Cost
$m
3,200
2,400
1,600
800
0
No. of times
20
15
10
5
0
EBIT
Total Interest Cost
Interest Cover
2014
2015
2016
3,023
2,152
1,279
197
15.35
223
9.66
294
4.35
Cash Flow Coverage
Cash Flow Coverage = Operating Cash Flow + Interest Cost
Interest Cost
$m
900
600
300
0
(300)
(600)
No. of times
6
4
2
0
(2)
(4)
Total Interest Expense + Interest
Capitalised
Operating Cash Flow + Interest
Cash Flow Coverage
2014
2015
2016
197
202
1.02
223
(563)
(2.53)
294
624
2.12
Keppel Corporation Limited Report to Shareholders 2016Performance Review
and Share Option Scheme. As at the end
of the year, the Company had 2,232,510
treasury shares. Except for the transfer,
there was no other sale, transfer, disposal,
cancellation and/or use of treasury shares
during the year.
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-2016, total funds available
and unutilised facilities amounted to
$8.71 billion (2015: $8.86 billion).
Critical Accounting Policies
The Group’s significant accounting
policies are discussed in more detail in
the notes to the financial statements.
The preparation of financial statements
requires management to exercise its
judgment in the process of applying
the accounting policies. It also requires
the use of accounting estimates and
assumptions which affect the reported
amounts of assets, liabilities, income and
expenses. Critical accounting estimates
and judgment are described below.
Impairment of Loans and Receivables
The Group assesses at each balance
sheet date whether there is any objective
evidence that a loan and receivable is
impaired. The Group considers factors
such as the probability of insolvency or
significant financial difficulties of the
debtor and default or significant delay
in payments. When there is objective
evidence of impairment, the amount and
timing of future cash flows are estimated
based on historical loss experience
for assets with similar credit risk
characteristics. The carrying amounts of
trade, intercompany and other receivables
are disclosed in the balance sheet. As at
31 December 2016, the Group had credit
Debt Maturity ($m)
< 1 year
1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
> 5 years
Financial Capacity
1,835 (20%)
1,839 (20%)
1,493 (17%)
901 (10%)
634 ( 7%)
2,351 (26%)
$ million Remarks
Cash at Corporate Treasury
Credit facilities extended
to the Group
Total
193 9% of total cash of $2.09 billion
8,519 Credit facilities of $12.28 billion,
of which $3.76 billion was utilised
8,712
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.
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.
59
Operating & Financial Review
Financial Review & Outlook
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 22.
Revenue arising from additional claims
and variation orders, whether billed or
unbilled, is recognised when negotiations
have reached an advanced stage such
that it is probable that the customer will
accept the claims or approve the variation
orders, and the amount that it is probable
will be accepted by the customer can be
measured reliably.
The Group had previously entered into
contracts with Sete Brasil (Sete) for the
construction of six rigs for which progress
payments from Sete had ceased since
November 2014. During the financial year
ended 31 December 2015, an expected
loss of $228,000,000 was recognised,
taking into consideration cost of
completion, cost of discontinuance,
salvage cost and unpaid invoices with
regards to these rigs.
In April 2016, Sete filed for bankruptcy
protection and its authorised
representatives had been in discussion
with the Group on the eventual
completion and delivery of some of the
rigs. As at the balance sheet date,
management had performed an
evaluation of the reasonably possible
outcomes on these contracts and
concluded that no further loss on these
contracts is currently expected.
Appropriateness of Revenue
Recognition and Recoverability of
Construction Balances in Relation to
Offshore & Marine Projects
As at 31 December 2016, the Group had
several rigs/vessels that were under
construction for customers or had been
completed and were awaiting delivery to
the customers. With the downturn in the
offshore industry, some of the Group’s
customers had requested for amendments
to contract terms or deferral of delivery
dates of the rigs/vessels.
Management assesses each construction
project individually to ensure that the
recognition of revenue and margin on
these projects is appropriate, and the
related WIP (cost in excess of billings)
balances are recoverable. This
assessment requires management to
make judgment as to whether the Group’s
customers will be able to fulfil their
contractual obligations and take delivery
of the rigs/vessels at the contracted or
revised delivery date.
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.
60
Keppel Corporation Limited Report to Shareholders 2016Performance Review
Group Structure
KEPPEL CORPORATION LIMITED
Offshore & Marine
Property
Infrastructure
• Offshore rig design, construction,
repair and upgrading
• Ship conversion and repair
• Specialised shipbuilding
• Property development
• Investments
• Energy infrastructure
• Environmental infrastructure
• Infrastructure services
• Investments
• Logistics and data centres
Investments
• Asset management
• Investments
KEPPEL OFFSHORE &
MARINE LTD
KEPPEL LAND LIMITED
100%
100%
KEPPEL INFRASTRUCTURE
HOLDINGS PTE LTD
Keppel FELS Limited
100%
Keppel Shipyard Limited 100%
Keppel Land
International Limited
Southeast Asia and India
Keppel Land China
China
Keppel Bay Pte Ltd
Keppel REIT 4
Keppel Singmarine Pte Ltd 100%
Keppel LeTourneau
Keppel Nantong Shipyard
Company Limited
China
Offshore Technology
Development Pte Ltd
Deepwater Technology
Group Pte Ltd
Marine Technology
Development Pte Ltd
Keppel AmFELS LLC
United States
Keppel Verolme BV
The Netherlands
Keppel FELS Brasil SA
Brasil
Keppel Philippines Marine Inc
The Philippines
Keppel Subic Shipyard Inc
The Philippines
Caspian Shipyard Company
Limited
Azerbaijian
Arab Heavy Industries PJSC
United Arab Emirates
Nakilat-Keppel Offshore &
Marine Ltd
Qatar
100%
100%
100%
100%
100%
100%
100%
100%
98%
86%
51%
33%
20%
Dyna-Mac Holdings Limited4
24%
100%
ENERGY INFRASTRUCTURE
Keppel Gas Pte Ltd
Keppel Electric Pte Ltd
Keppel DHCS Pte Ltd
Keppel Merlimau Cogen
Pte Ltd5
100%
100%
45%
100%
100%
100%
100%
49%
KEPPEL CAPITAL HOLDINGS
PTE LTD
Keppel REIT Management
Limited
100%
100%
Alpha Investment Partners Ltd
100%
Keppel Infrastructure Fund
Management Pte Ltd
Keppel DC REIT Management
Pte Ltd6
100%
50%
K1 VENTURES LIMITED4
KRISENERGY LTD4
Cayman Islands
M1 LIMITED2 & 4
36%
40%
19%
ENVIRONMENTAL INFRASTRUCTURE
Keppel Seghers Pte Ltd
100%
INFRASTRUCTURE SERVICES
Keppel Seghers Engineering
Singapore Pte Ltd
100%
INVESTMENTS
Keppel Infrastructure Trust4
18%
KEPPEL TELECOMMUNICATIONS &
TRANSPORTATION LTD4
80%
LOGISTICS &
DATA CENTRES
Keppel Logistics Pte Ltd
Keppel Data Centres Holding
Pte Ltd
Keppel Logistics (Foshan)
Pte Ltd
China
100%
100%
70%
Keppel DC REIT3 & 4
35%
SINO-SINGAPORE TIANJIN ECO-CITY INVESTMENT AND DEVELOPMENT CO., LTD1
China
50%
GROUP CORPORATE SERVICES
Control & Accounts
Corporate Communications
Strategy & Development
Human Resources
Legal
Risk & Compliance
Mergers & Acquisitions/Corporate Development
Audit
Tax
Treasury
Information Systems
Health, Safety & Environment
Notes:
1 Owned by a Singapore Consortium, which is in turn 90%-owned by the Keppel Group.
2 Owned by Keppel Telecommunications & Transportation Ltd, an 80%-owned subsidiary of Keppel Corporation.
3 Owned by Keppel Telecommunications & Transportation Ltd (30%) and Keppel Land Limited (5%).
4 Public listed company.
5 Owned by Keppel Infrastructure Holdings Pte Ltd (49%) and Keppel Infrastructure Trust (51%).
6 Owned by Keppel Capital Holdings Pte Ltd (50%) and Keppel Telecommunications & Transportation Ltd (50%).
Updated as at 3 March 2017. The complete list of subsidiaries and significant associated companies is available at www.kepcorp.com.
61
Sustainability Highlights
Keppel places sustainability at the
heart of our strategy and operations,
so as to create enduring value
for our stakeholders - Sustaining
Growth, Empowering Lives and
Nurturing Communities.
Sustainability Framework
Sustaining Growth
Empowering Lives
Nurturing Communities
People are the cornerstone
of our businesses.
As a global citizen, Keppel believes
that as communities thrive, we thrive.
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.
As an employer of choice, we are
committed to grow and nurture
our talent pool through continuous
training and development to help
our people reach their full potential.
Innovation and delivering quality
products and services sharpen our
competitive edge.
We want to instil a culture of safety
so that everyone who comes to work
goes home safe.
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.
For more information, see
pages 64–97
For more information, see
pages 98–99
For more information, see
page 100
62
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability Managing Sustainability
We drive our businesses to create
positive impact and shared value for
our stakeholders.
Our Sustainability Framework articulates
our commitment to deliver value to all our
stakeholders through Sustaining Growth
in our businesses, Empowering Lives of
people and Nurturing Communities
wherever we operate.
Our management systems, policies and
guidelines, including our Employee Code
of Conduct; Health, Safety and Environment
Policy, and Supplier Code of Conduct,
translate our principles into practice by
setting standards both for our Company
and those whom we work with.
We publish sustainability reports annually,
and the next report will be published in
May 2017. Our sustainability reports draw
on internationally-recognised standards
of reporting, including the Global Reporting
Initiative (GRI). The upcoming report will be
brought in line with the new sustainability
reporting requirements by the Singapore
Exchange and externally assured in
adherence to the AccountAbility AA1000
Assurance Standard (2008).
This section contains a summary of our
approach on sustainability issues that
are most material to our business and
stakeholders.
Management Structure
The Keppel Corporation Board and
management are committed to ensure
responsible business practice. The
Group Sustainability Steering Committee
provides guidance on strategic and
operational issues. The committee is
chaired by Keppel Corporation CEO
Loh Chin Hua and comprises senior
management from across the Group.
A Working Committee, consisting of
discipline-specific working groups, executes
and reports on the Group’s efforts.
Material Issues
A robust process was undertaken to
identify and prioritise the Company’s
material environmental, social and
governance (ESG) issues. The assessments
were based on the foundational principles
of inclusivity and materiality outlined in
the AccountAbility AA1000 Principles
Standard (2008) as well as the Global
Reporting Initiative (GRI) Principles for
Defining Report Content – stakeholder
inclusiveness, sustainability context,
materiality and completeness. The
process, which took place from 2013 to
2015, was supported by an independent
consultant and involved stakeholder
consultations, workshops for senior
management, an assessment of
long-term global trends and an internal
review of our businesses. The resulting
Keppel Corporation Materiality Matrix
illustrates the relative importance of
the issues as seen by our stakeholders
(see diagram).
Stakeholder relations, including
engagement with customers, employees,
investors, media, government agencies
and communities where we operate, are
managed by departments at the corporate
level, as well as by functional divisions and
volunteer committees across our business
units worldwide.
We also engage with stakeholders on
broader issues through our membership
and support of multi-stakeholder initiatives
such as Global Compact Network Singapore
to advance the United Nations Global
Compact initiative and its 10 principles,
Singapore Institute of Directors to uphold
high standards of corporate governance, as
well as Workplace Safety & Health Council
to build industry capabilities to better
manage safety and health at work.
Best Practice Reporting
Keppel Corporation received a Singapore
Apex Corporate Sustainability Award 2016
in the Sustainable Business category
(Large Organisation) in 2016. The award
by Global Compact Network Singapore is
the most prestigious form of recognition
for companies in Singapore on Corporate
Social Responsibility and sustainability.
The key material ESG issues for
Keppel Corporation were reviewed in
2016 and deemed to remain relevant.
Stakeholder Engagement
Close collaboration with stakeholders
supports us in addressing sustainability
challenges. We continually engage
with, listen to and learn from our
stakeholders.
Keppel Corporation has also been part
of the widely respected Dow Jones
Sustainability Index for four consecutive
years. We participate in the CDP (formerly
Carbon Disclosure Project) and are listed on
a number of other sustainability indexes and
rankings, including MSCI Global Sustainability
Index, Euronext Vigeo Eiris Index – World 120
and all four sustainability indices launched
by the Singapore Exchange in 2016.
s
r
e
d
l
o
h
e
k
a
t
S
l
a
n
r
e
t
x
E
o
t
e
c
n
a
t
r
o
p
m
I
h
g
H
i
e
t
a
r
e
d
o
M
Product
Excellence
Labour Practices &
Human Rights
Corporate Governance
Safety & Health
Economic
Sustainability
Supply Chain &
Responsible Procurement
Environmental Performance
Community
Development
Moderate
High
Importance to Internal Stakeholders
Critical
Aspects of critical importance
Aspects of high importance
Rating determined by internal stakeholder exercise only
The Keppel Corporation
Materiality Matrix
illustrates the degree
of importance that
internal and external
stakeholders accord
to the Company’s
material issues.
63
Keppel Corporation Materiality Matrix
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
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
Governance Framework: KCL’s
governance structure is as follows:
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. He sets
guidelines on and monitors the flow of
information from management to the
Board to ensure that all material
information is provided in a timely
manner to the Board for the Board to
make good decisions. He also encourages
constructive relations between the
Board and management, and between
the executive and non-executive directors.
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.
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
64
of reference. All the board committees
are actively engaged and play an
important role in ensuring good corporate
governance in the Company and within
the Group. The responsibilities and
authority of the board committees are
set out in their respective terms of
reference (see Appendix for details).
The CEO, assisted by the management
team, makes strategic proposals to
the Board and after robust and
constructive board discussions, executes
the agreed strategy, manages and
develops the Group’s businesses and
implements the Board’s decisions. He is
supported by management committees
that direct and guide management on
operational policies and activities,
which includes:
(1) Investments & Major Projects Action
Committee (IMPAC), which evaluates,
guides and optimises proposed Group
investments and divestments
exceeding prescribed value thresholds;
(2) Management Development Committee,
which nominates candidates as nominee
directors to the boards of each unlisted
company or entity that the Company is
invested in (“Investee Company”) so as
to safeguard the Company’s investment.
In respect of Investee Companies that
are (a) listed on a stock exchange,
(b) managers or trustee-managers of
any collective investment schemes,
business trusts or any other trusts
which are listed on a stock exchange, or
(c) parent companies of the Company’s
core businesses, the Committee will
recommend the candidates for the
approval of the Nominating Committee;
(3) Central Finance Committee, which
reviews, guides and monitors
financial policies and activities of
Group companies;
(4) Enterprise Risk Management
Committee, which drives and
coordinates the Group’s risk
management efforts, and implements
the Enterprise Risk Management
framework and processes;
(5) Group Regulatory Compliance
Management Committee (Group RCMC),
which articulates the Group’s
commitment to regulatory compliance,
directs and supports the development
of over-arching compliance policies
and guidelines, and facilitates the
implementation and sharing of policies
and procedures across the Group2;
(6) Group Regulatory Compliance Working
Team (Group RCWT), which supports
the Group RCMC and oversees the
development and review of over-
arching compliance policies and
Board Risk
Committee
Board Safety
Committee
CHAIRMAN
BOARD
CHIEF EXECUTIVE
OFFICER
Corporate
Functions
IMPAC
Internal
Audit
Audit
Committee
Nominating
Committee
Remuneration
Committee
Management
Committees
Group
Sustainability
Steering
Committee
Group
Regulatory
Compliance
Management
Committee2
Central Finance
Committee
IT Steering
Committee
Group
Regulatory
Compliance
Working Team2
Governance FrameworkKeppel Corporation Limited Report to Shareholders 2016Governance & Sustainability
guidelines for the Group, as well
as reviewing training and
communication programmes2;
(7) Keppel IT Steering Committee,
which provides strategic information
technology (IT) leadership and ensures
IT strategy alignment in achieving
business strategies; and
(8) Group Sustainability Steering
Committee, which sets the
sustainability strategy and leads
performance in key focus areas.
Board Matters
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.
Board Strategic Review: The Board
periodically reviews and approves the
Group’s strategic plans. In FY 2014, the
Board approved the Group’s Vision 20203,
which sets out the vision, operating
principles and values of the Group, as well
as the roadmap4 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 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. To support the Board’s
oversight of the implementation of the
strategic plans, one business unit is
invited to each quarterly Board meeting
to present on its plans and current
challenges, and to 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 FY 2016, 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 is practicable after the relevant facts
have come to his/her knowledge. On an
annual basis, each director is also
required to submit details of his/her
associates for the purpose of monitoring
interested persons transactions.
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 after each
board meeting as well as on a need-be
basis. The number of board and board
committee meetings held in FY 2016, as
well as the attendance of each Board
member at these meetings, are disclosed
in Table 1 on page 66 of this report.
If a director were unable to attend a board
or board committee meeting, he/she
would still receive all the papers and
materials for discussion at that meeting.
He/she would review them and advise the
Chairman or board committee chairman of
his or her views and comments on the
matters to be discussed, so that they may
be conveyed to other members at the
meeting.
Internal Limits of Authority: The Company
has adopted internal guidelines setting
forth matters that require board approval.
Under these guidelines, (a) new
investments or increase in investments,
(b) acquisition and disposal of assets and
(c) capital equipment purchase and/or
lease, exceeding $30 million by any Group
company (not separately listed), and all
commitments to term loans and lines
of credit from banks and financial
institutions by the Company, require
the approval of the Board. Each Board
member has equal responsibility to
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 a board director.
All newly-appointed directors receive
a director tool-kit and 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
1 The Code of Corporate Governance 2012 issued by the Monetary Authority of Singapore on 2 May 2012.
2 The Group RCMC and Group RCWT were set up in October 2015 and operationalised in 2016.
3 With effect from FY 2014, 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.
4 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 in which the Group operates.
65
Corporate Governance
Table 1
Lee Boon Yang
Loh Chin Hua
Oon Kum Loon1
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia2
Danny Teoh3
Tan Puay Chiang
Till Vestring4
Veronica Eng5
No. of Meetings Held
Board
Meetings
11
11
5 of 5
10
9
11
11
11
10
11
11
Audit
-
-
3 of 3
-
4
1 of 1
5
-
-
5
5
Board Committee Meetings
Nominating
Remuneration
Safety
3
-
-
3
2
2 of 2
-
3
3
-
3
7
-
4 of 4
7
-
-
7
-
7
-
7
4
4
-
-
-
4
-
4
-
-
4
Risk
-
-
2 of 2
3
-
4
4
4
-
4
4
Notes:
1 Mrs Oon Kum Loon retired as director and ceased to be Chairman of the Board Risk Committee, and member of the Audit Committee and Remuneration Committee,
with effect from 1 May 2016.
2 Mr Tan Ek Kia ceased to be a member of the Nominating Committee, and was appointed as member of the Audit Committee, with effect from 1 August 2016.
3 Mr Danny Teoh stepped down as Chairman of the Remuneration Committee on 1 May 2016 but continues to be a member thereof.
4 Mr Till Vestring was appointed as Chairman of the Remuneration Committee on 1 May 2016.
5 Ms Veronica Eng was appointed as Chairman of the Board Risk Committee on 1 May 2016.
responsibilities of a director of a listed
company and industry-specific matters.
In FY 2016, some KCL directors attended
talks on topics relating to corporate
governance and compliance (including
case studies), competition law, financial
reporting updates and macroeconomic
trends. 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.
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.
On 1 May 2016, Mrs Oon Kum Loon retired
from the Board and Ms Veronica Eng
replaced Mrs Oon as Chairman of the
Board Risk Committee. On the same day,
Mr Till Vestring was appointed as
Chairman of the Remuneration Committee,
replacing Mr Danny Teoh who is the
66
Chairman of the Audit Committee.
Mr Teoh continues to be a member of the
Remuneration Committee. Further, Mr Tan
Ek Kia ceased to be a member of the
Nominating Committee and was appointed
as member of the Audit Committee, with
effect from 1 August 2016.
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 2017, 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 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 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 for 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
was not involved in any services that Bain
& Company provided to the Group; and
(c) he would recuse himself from any
decision making process undertaken
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability 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 and
non-executive director.
The Board concurred with the reasons set
forth by the Nominating Committee and
was of the view that Dr Lee Boon Yang,
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. None of the directors deemed
independent had served more than nine
years from date of first appointment.
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 nine
directors of whom seven are independent.
The Board is currently sourcing for a
suitable additional member. 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 81 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 FY 2016, there was one female
director out of a total of nine directors.
Board Information: The Board and
management fully appreciate that
fundamental to good corporate
governance is an effective and robust
Board whose members engage in open
and constructive debate and challenge
management on its assumptions and
proposals, and that for this to happen,
the Board, in particular, the non-executive
directors, must be kept well-informed
of the Company’s business and affairs
and be knowledgeable about the industry
in which the businesses operate.
The Company has therefore adopted
initiatives to put in place processes to
ensure that the non-executive directors
are well supported by accurate, complete
and timely information, have unrestricted
access to management, and have
sufficient time and resources to discharge
their oversight function effectively.
These initiatives include regular informal
meetings for management to brief the
directors on prospective deals and
potential developments at an early stage
before formal board approval is sought,
and the circulation of relevant information
on business initiatives, industry
developments, and analyst and press
commentaries on matters in relation to
the Company or the industries in which it
operates. A two-day off-site board
strategy meeting is organised annually
for in-depth discussion on strategic
issues and direction of the Group, to
give the non-executive directors a better
understanding of the Group and its
businesses, and to provide an opportunity
for the non-executive directors to
familiarise themselves with the
management team so as to facilitate
the Board’s review of the Group’s
succession planning and leadership
development programme.
Non-executive Directors’ Meetings:
The non-executive directors set aside
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.
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, four out
of five 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 Alvin Yeo
Independent Member
• Mr Till Vestring
Independent Member
The responsibilities of the NC are set out
on pages 79 and 80 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.
67
Corporate Governance
The NC leads the process and makes
recommendations to the Board as follows:
(a) NC reviews annually the balance and
diversity of skills, experience, gender
and knowledge required by the Board
and the size of the Board which would
facilitate decision-making.
(b) In the light of such review and in
consultation with management, the NC
assesses if there is any inadequate
representation in respect of any of those
attributes and if so, determines the role
and the desirable competencies for a
particular appointment.
(c) External help (for example, Singapore
Institute of Directors, search
consultants, open advertisement)
may be used to source for potential
candidates if need be. Directors
and management may also make
recommendations.
(d) NC meets with the short-listed
candidate(s) to assess suitability and
to ensure that the candidate(s) is/are
aware of the expectations and the
level of commitment required.
(e) NC makes recommendations to the
Board for approval.
The Board believes that orderly succession
and renewal is achieved as a result of
careful planning, where the appropriate
composition of the Board is continually
under review.
Criteria for Appointment of
New Directors
All new appointments are subject to the
recommendation of the NC based on the
following objective criteria:
(1) Integrity
(2) Independent mindedness
(3) Diversity – Possess core competencies
that meet the needs of the Company
and complement the skills and
competencies of the existing directors
on the Board
(4) Able to commit time and effort to carry
out duties and responsibilities
effectively
(5) Track record of making good decisions
(6) Experience in high-performing
companies
(7) Financially literate
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/her peers.
68
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/
herself for re-election at the annual
general meeting immediately following
his/her 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 page 66 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.
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, the level of commitment required
of the director’s other principal
commitments, and the respective directors’
actual conduct and participation on the
Board and board committees, including
availability and attendance at regular
scheduled meetings and ad-hoc
meetings, in making this determination.
In respect of FY 2016, 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/her 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 assessment for
FY 2016, all the directors performed
well. The NC was therefore satisfied that
in FY 2016, 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/her duties
as a 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/her capacity as a Nominee
Director. The policy also sets out the
internal process for the appointment
and resignation of a Nominee Director.
The policy would be reviewed and
amended as required to take into account
current best practices and changes in the
law and stock exchange requirements.
Key Information Regarding Directors
The following key information regarding
directors is set out in the following pages
of this Annual Report:
Pages 20 to 23: Academic and professional
qualifications, board committees served
on (as a member or Chairman), date of first
appointment as director, date of last
re-election as director, directorships or
chairmanships both present and past held
over the preceding five years in other listed
companies and other major appointments,
whether appointment is executive or
non-executive, whether considered by the
NC to be independent; and
Pages 103 to 104: 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
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability
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.
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/her to discharge his/her duties
effectively and the changes which should
be made to enhance the effectiveness of
the Board and/or board committees. The
assessment exercise also helps the
directors to focus on their key
responsibilities. The individual director
assessment exercise allows for peer review,
with a view to raising the quality of board
members. It also assists the NC in
determining whether to re-nominate
directors who are due for retirement at
the next annual general meeting, and in
determining whether directors with multiple
board representations are nevertheless
able to and have adequately discharged
their duties as directors of the Company.
Access to Information
Principle 6:
Board members to have complete,
adequate and timely information
As a general rule, board papers are
required to be distributed to the directors
at least seven days before the board
meeting so that the members may better
understand the matters prior to the board
meeting and discussion may be focused
on questions that the directors may have.
Directors are provided with tablet devices
to enable them to access and read the
board papers. However, sensitive matters
may be tabled at the meeting itself or
discussed without any papers being
distributed. Managers who can provide
additional insights into the matters at
hand would be present at the relevant
time during the board meeting.
The directors are also provided with
the names and contact details of the
Company’s senior management and
the Company Secretaries to facilitate
direct access to senior management
and the Company Secretaries.
The Company fully recognises that
the flow of relevant information on an
accurate and timely basis is critical for
the Board to be effective in the discharge
of its duties. Management is therefore
expected to provide the Board with
accurate information in a timely manner
concerning the Company’s progress or
shortcomings in meeting its strategic
business objectives or financial targets
and other information relevant to the
strategic issues facing the Company.
Management also provides the
Board members with management
accounts on a monthly basis and as the
Board may require from time to time.
Such reports keep the Board informed,
on a balanced and understandable basis,
of the Group’s performance, financial
position and prospects.
The Company Secretaries administer,
attend and prepare minutes of board
proceedings. They assist the Chairman
to ensure that board procedures (including
but not limited to assisting the Chairman
to ensure timely and good information
flow to the Board and board committees,
and between senior management and the
non-executive directors, and facilitating
orientation and assisting in the professional
development of the directors) are followed
and regularly reviewed to ensure effective
functioning of the Board, and that the
Company’s 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 of non-executive
directors, three out of four of whom
(including the Chairman) are
independent, namely:
• Mr Till Vestring
Independent Chairman
• Dr Lee Boon Yang
Independent Member
• Mr Danny Teoh
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
69
Corporate Governance
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 at end-2010, the KCL Restricted
Share Plan (the “KCL RSP”) and the
KCL Performance Share Plan (the
“KCL PSP”). In addition, the RC reviews
the Company’s obligations arising in the
event of termination of the executive
directors’ and key management
personnel’s contract of service, to
ensure that such contracts of service
contain fair and reasonable termination
clauses which are not overly generous.
The RC has access to expert advice from
external remuneration consultants
where required. In FY 2016, the RC sought
views on market practice and trends
from external remuneration consultants,
Aon Hewitt. The RC undertook a review of
the independence and objectivity of the
external remuneration consultants
through discussions with the external
remuneration consultants, and has
confirmed that the external remuneration
consultants had no relationships with
the Company which would affect their
independence and objectivity.
Annual Remuneration Report
Policy in Respect of Non-Executive
Directors’ Remuneration
Each non-executive director’s
remuneration comprises a basic fee,
attendance fee and, if the director is
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
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 on 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. The non-executive directors
participated in additional ad-hoc
meetings with management and are
not paid for attending such meetings.
Executive directors are not paid
directors’ fees.
The directors’ fee structure, which
remains unchanged since FY 2013,
is set out in Table 2.
Each of the non-executive directors
(including the Chairman) will receive
70% of his/her 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
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
70
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability 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
Economic Value Added (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 is aligned with the
interests of shareholders and promotes
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
goals, risk management and
controls measures, corporate social
responsibilities activities, employee
engagement, 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 to understand 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 Return on Equity (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 recognises 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 above, have been met. The RC
is therefore of the view that remuneration
is aligned to performance during FY 2016.
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 (
) of the total
EVA balance is credited to the executive’s
EVA Bank for payment in future years,
subject to the continued EVA performance
of the Company. The EVA bank concept is
used to defer incentive compensation
over a time horizon, to ensure that the
executive continues to generate
sustainable shareholder value over the
longer term. The EVA bank account is
designated on a personal basis and
represents the executive’s contribution
to the EVA performance of the Company.
Monies credited into the EVA bank are at
risk in that the amount in the bank can
decrease should EVA performance
turn negative in the future years.
KCL Share Plans
The KCL Share Plans are put in place
to increase the Group’s flexibility and
effectiveness in its continuing efforts to
reward, retain and motivate employees
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.
In 2014 / 2015, the Board undertook a
comprehensive review of the Group’s
strategy. Stretched performance targets
were set by the Board for 2020, resulting
in the need to transform the Group’s
business.
To achieve these targets, which are
reflected in a Group 2020 Scorecard,
Keppel would need to build strong verticals
and leverage on synergies across its
portfolio of businesses to unlock
shareholders’ value. The Group 2020
Scorecard targets are categorised into
four key areas – (i) Financial, (ii) Process,
71
Corporate Governance
(iii) Customers/Stakeholders, and (iv)
People; and requires the Management to
review and reconfigure processes and
systems, as well as to inculcate a
fundamental shift in mindset and
behaviours.
Given the changes required in the business
model and the highly complex nature of
the transformation, the Board has
endorsed a remuneration model to align
the transformation plan and executives’
remuneration. The one-time Transformation
Incentive Plan (“TIP”), which is awarded
in the form of performance shares under
KCL PSP, is a long-term incentive plan with
a five-year performance period. Subject
to meeting the performance conditions
set, the vesting date is in 2021. After taking
into account the ambitious performance
conditions, the Board had also allowed
for a re-testing of the performance
conditions at the end of 2021.
Executives will only benefit from the TIP
if the Group meets the stretched financial
and non-financial targets linked to the
Group 2020 Scorecard, and if the
executives meet or exceed their individual
performance targets. In order to align
the interests of the executives with
those of shareholders, the TIP is directly
linked to total shareholder return where
the total shareholder return condition
must be satisfied before any vesting
shall occur. In addition, the vested shares
are subject to a selling moratorium of
one year.
The RC has the discretion not to award
variable incentives in any year if an
executive is directly involved in a material
restatement of financial statements or
of misconduct resulting in restatement
of financial statements or of misconduct
resulting in financial loss to the Company.
Outstanding EVA bank, KCL RSP
and KCL PSP are also subject to RC’s
discretion before further payment or
vesting can occur.
Details of the KCL Share Plans are set
out on pages 105 to 107 and 135 to 137.
In FY 2016, the Group undertook several
rightsizing measures (in particular the
offshore and marine business) to stay
ahead in the tough operating
environment. In light of the continued
uncertainties looming over the offshore
and marine industry, KCL directors, key
management personnel and the Group’s
senior management took a further step
and collectively volunteered for a fee and
base pay reduction respectively. Besides
exemplifying solidarity across the Group,
this also signalled the importance of
maintaining a flexible cost structure.
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 2016
All non-executive directors volunteered
for a 10% reduction in their total fees
for FY 2016. Mr Loh Chin Hua’s monthly
base salary was also voluntarily
adjusted down by 10% with effect from
1 October 2016.
The resulting level and mix of each of the
directors’ remuneration after the
reduction are set out below:
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
Oon Kum Loon8
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia9
Danny Teoh10
Tan Puay Chiang
Till Vestring11
Veronica Eng12
1,158,600
–
–
–
–
–
–
–
–
–
1,199,155
–
–
–
–
–
–
–
–
–
1,511,745
–
–
–
–
–
–
–
–
–
–
472,500
55,654
125,055
102,060
137,505
152,439
135,135
110,271
124,045
–
202,500
23,851
53,595
43,740
58,931
65,331
57,915
47,259
53,162
n.m.6
–
–
–
–
–
–
–
–
–
1,207,500
–
–
–
–
–
–
–
–
–
873,000
–
–
–
–
–
–
–
–
–
5,950,0007
675,000
79,505
178,650
145,800
196,436
217,770
193,050
157,530
177,207
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 FY 2016 were met.
2 Based on the non-executive directors’ fee structure set out in Table 2, the total fees are $2,245,497. After applying the 10% voluntary non-executive directors’ fee reduction
on this amount, the resulting directors’ total fees amount to $2,020,948. The directors’ total fees are subject to shareholders’ approval at the Company’s Annual
General Meeting.
3 Shares awarded under the KCL PSP are subject to pre-determined performance targets over three- and five- year performance periods. Shares awarded under the
KCL RSP are subject to pre-determined performance targets set over a one-year performance period. As at 29 April 2016 (being the grant date), the estimated value
of each share granted in respect of the contingent awards under the KCL PSP were $3.05 (PSP) and $0.39 (PSP –TIP). The estimated value of each share granted in
respect of the contingent award under the KCL RSP Plan was $4.85. For the KCL PSP, the figures are based on the 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 70 of this report.
5 Mr Loh Chin Hua’s monthly base salary had been reduced by 10% with effect from 1 October 2016.
6 n.m. – not material
7 Total remuneration shown above for Mr Loh Chin Hua does not include vested share of carried interests for funds created during the time he was Managing Director
at Alpha Investment Partners. These carried interests are only earned at the end of the fund life and depends entirely on the actual performance of the funds after
they have been liquidated.
8 Mrs Oon Kum Loon retired from the Board with effect from 1 May 2016. Concurrently, Mrs Oon ceased to be Chairman of the Board Risk Committee and member of
the Audit Committee and Remuneration Committee. Fees are pro-rated accordingly.
9 Mr Tan Ek Kia ceased to be a member of the Nominating Committee and was appointed as a member of the Audit Committee with effect from 1 August 2016.
Fees are pro-rated accordingly.
10 Mr Danny Teoh ceased to be the Chairman of the Remuneration Committee with effect from 1 May 2016 but continues to be a member thereof. Fees are pro-rated
accordingly.
11 Mr Till Vestring ceased to be a member of the Remuneration Committee and was appointed as the Chairman of the Remuneration Committee with effect from 1 May
2016. Fees are pro-rated accordingly.
12 Ms Veronica Eng ceased to be a member of the Board Risk Committee and was appointed as the Chairman of the Board Risk Committee with effect from 1 May 2016.
Fees are pro-rated accordingly.
72
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability 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
($)13
RSP
Awards
Vesting
Date
Contingent
Awards
of RSP
Shares
Number of
RSP Shares
Vested
Value of
RSP Shares
Vested
($)13
2013
Awards
26 Feb
2016
0 to
139,80014
22,400
118,944
2014
Awards
28 Feb
2017
0 to
270,000
2015
Awards
28 Feb
2018
0 to
330,000
2016
Awards
28 Feb
2019
0 to
450,00015
26 Feb
2021
0 to
1,125,000
16
–
–
–
–
–
–
–
–
2013
Awards
2014
Awards
2015
Awards
2016
Awards
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
28 Feb 2017
28 Feb 2018
28 Feb 2019
87,99514
150,000
150,000
180,000
29,331
29,331
29,333
50,000
50,000
–
50,000
–
–
–
–
–
306,509
256,940
155,758
438,000
265,500
–
265,500
–
–
–
–
–
Notes:
13 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 performance conditions for FY 2016 were met.
14 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.
15 Refers to contingent shares awarded under the KCL PSP.
16 Refers to one-time contingent shares awarded under the KCL PSP – TIP.
The total remuneration paid to the key management personnel (who are not directors or the CEO) in FY 2016 was $14,595,840. 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:
Base/Fixed
Salary
Performance-Related Bonuses Earned17
(including EVA and non-EVA Bonuses)
Benefits-
in-Kind
Contingent awards of shares
Remuneration Band & Name of Key Management Personnel
Above $3,000,000 to $3,250,000
Ang Wee Gee
Above $2,750,000 to $3,000,000
Chan Hon Chew
Above $2,500,000 to $2,750,000
Ong Tiong Guan
Above $2,250,000 to $2,500,000
Chow Yew Yuen19
Above $2,000,000 to $2,250,000
Tan Hua Mui, Christina20
Above $1,250,000 to $1,500,000
Pang Thieng Hwi, Thomas
28%
22%
22%
42%
24%
29%
Paid
21%
30%
21%
–
44%
26%
Deferred
& at risk
PSP18
RSP
18%
18%
26%
–
9%
28%
n.m.
n.m.
n.m.
n.m.
n.m.
n.m.
19%
14%
15%
15%
15%
16%
35%
23%
12%
11%
11%
6%21
Notes:
17 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 FY 2016 were met.
18 Included one-time performance shares awarded under the KCL PSP - TIP.
19 Mr Chow Yew Yuen did not receive any performance-related bonus for FY 2016.
20 Ms Tan Hua Mui, Christina served as CEO, Keppel Capital and Managing Director, Alpha Investment Partners concurrently in 2016. Total remuneration shown
above for Ms Tan does not include vested share of carried interests for funds created in her role as 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.
21 On Keppel Telecommunications & Transportation Ltd (“KTT”) share based compensation scheme and KCL PSP - TIP. As at 29 April 2016 (being the grant date),
the estimated value of each share granted in respect of the contingent awards under the KTT PSP and KTT RSP were $0.76 and $1.30 respectively.
73
Corporate Governance
Remuneration of employees who
are immediate family members of a
Director or the Chief Executive Officer
No employee of the Company and its
subsidiaries was an immediate family
member of a director or the CEO and
whose remuneration exceeded $50,000
during the financial year ended
31 December 2016. “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 105 to 107 and
135 to 137 of this Annual Report for
details on the KCL Share Plans.
Accountability and Audit
Principle 10:
The Board should present a balanced
and understandable assessment of the
Company’s performance, position
and prospects
Principle 12:
Establishment of Audit Committee with
written terms of reference
The Board is responsible for providing
a balanced and understandable
assessment of the Company’s and
Group’s performance, position and
prospects, including interim and other
price sensitive public reports, and
reports to regulators (if required).
The Board has embraced openness and
transparency in the conduct of the
Company’s affairs, whilst preserving the
commercial interests of the Company.
Financial reports and other price
sensitive information are disseminated to
shareholders through announcements
via SGXNET, press releases, the
Company’s website, public webcast
and media and analyst briefings.
The Company’s Annual Report is accessible
on the Company’s website. The Company
also sends its Annual Report to all its
shareholders in CD-ROM format. In line
with the Company’s drive towards
sustainable development, the Company
encourages shareholders to read the
Annual Report from the CD-ROM or on
the Company’s website. Shareholders
may however request for a physical copy
at no cost.
Management provides all members of
the Board with management accounts,
which present a balanced and
understandable assessment of the
74
Company’s and Group’s performance,
position and prospects on a monthly basis
and as the Board may require from time
to time. Such reports keep the board
members informed of the Company’s and
Group’s performance, position and
prospects.
Audit Committee
The Audit Committee (AC) comprises the
following non-executive directors, all of
whom are independent:
• Mr Danny Teoh
Independent Chairman
• Mr Alvin Yeo
Independent Member
• Ms Veronica Eng
Independent Member
• Mr Tan Ek Kia
Independent Member
Mr Danny Teoh 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 Tan Ek Kia, who is a seasoned executive
in the oil and gas and petrochemicals
businesses and had held senior positions
in Shell, has sufficient financial
management knowledge and experience
to discharge his responsibilities as a
member of the Committee. Mr Danny
Teoh, Mr Tan Ek Kia and Ms Veronica Eng
are also members of the Board Risk
Committee (BRC), with Ms Veronica Eng
being the Chairman of the BRC.
None of the members of the AC were
partners or directors of the Company’s
existing external auditors within the last
12 months and none of the members of
the AC hold any financial interest in the
auditing firm.
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 78 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.
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 risk-based plan sufficiently
covered the effectiveness of controls
to mitigate the significant risks of the
Company. Such significant controls
comprise financial, operational, compliance
and IT controls. All significant audit
findings and recommendations put up
by the internal and the external auditors
were forwarded to the AC, and discussed
at AC meetings.
The AC reviewed and approved the Group
external auditor’s audit plan for the year.
The AC also undertook a review of the
independence and objectivity of the
external auditors through discussions
with the external auditors, as well as
reviewing the non-audit fees awarded
to them, and has confirmed that the
non-audit services performed by the
external auditors would not affect their
independence. For details of fees
payable to the auditors in respect of
audit and non-audit services, please
refer to Note 24 of the Notes to the
Financial Statements on page 157.
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability
The Company has complied with Rules
712, and Rule 715 read with 716 of the
SGX Listing Manual in relation to its
auditing firms.
(including the Chairman) are
independent and the remaining director
being a non-executive director who is
independent of management, namely:
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 internal audit
team attends the Company’s and the
Group’s key strategy sessions and
executive meetings, and is staffed with
professionals with sufficient expertise in
corporate governance, risk management,
internal controls, and other relevant
disciplines. The AC also reviewed the
training costs and programs attended by
the internal audit team to ensure that
their technical knowledge and skill sets
remain current and relevant.
The AC has reviewed the “Keppel
Whistle-Blower Protection Policy” (the
“Policy”) which provides for the mechanisms
by which employees and other persons
may, in confidence, raise concerns about
possible improprieties in business conduct,
and was satisfied that arrangements are
in place for the independent investigation
of such matters and for appropriate
follow-up action. To facilitate the
management of incidences of alleged
fraud or other misconduct, the AC is
guided by a set of guidelines to ensure
proper conduct of investigations and
appropriate closure actions following
completion of the investigations, including
administrative, disciplinary, civil and/or
criminal actions, and remediation of
control weaknesses that perpetrated the
fraud or misconduct so as to prevent a
recurrence.
In addition, the AC reviews the Policy
yearly to ensure that it remains current.
The details of the Policy are set out on
page 82 herein.
On a quarterly basis, management
reported to the AC the interested person
transactions (“IPTs”) in accordance with
the Company’s Shareholders’ Mandate
for IPT. The IPTs were reviewed by the
internal auditors. All findings were
reported during AC meetings.
Risk Management and
Internal Controls
Principle 11:
Sound system of risk management and
internal controls
The Board Risk Committee (BRC)
comprises the following non-executive
directors, four out of five of whom
• Ms Veronica Eng
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 was a Founding Partner
of Permira until September 2015 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.
Mr Danny Teoh, who is the Chairman
of the AC, is the second member of the
BRC. Mr Danny Teoh was the Managing
Partner of KPMG Singapore from October
2005 to October 2010. He was also the
Head of Audit and Risk Advisory Services
practices in Singapore as well as in Asia,
and served on its global team.
The third member is Mr Tow Heng Tan,
who has deep management experience
from his extensive business career
spanning the management consultancy,
investment banking and stock-broking
industries. Mr Tow was previously the
Chief Investment Officer of Temasek.
The fourth member is Mr Tan Puay
Chiang, who held various executive
management roles in his 37-year career
with Mobil and later ExxonMobil, and
has in-depth knowledge and experience
in the oil and gas industry and wide
international exposure.
The fifth member is Mr Tan Ek Kia, who is
a seasoned executive in the oil and gas
and petrochemicals businesses and had
held senior positions in Shell including
Vice President (Ventures and
Developments) of Shell Chemicals,
Asia Pacific and Middle East region,
Managing Director (Exploration and
Production) of Shell Malaysia, Chairman
of Shell North East Asia and Managing
Director of Shell Nanhai Ltd.
The BRC reviews and guides
management in the formulation of risk
policies and processes to effectively
identify, evaluate and manage significant
risks, to safeguard shareholders’ interests
and the Group’s assets. The Committee
reports to the Board on critical risk
issues, material matters, findings and
recommendations. The detailed
responsibilities of this Committee are
disclosed on page 79 herein.
The Group’s approach to risk
management is set out in the “Risk
Management” section on pages 92 to
94 of this Annual Report. The Group is
guided by a set of Risk Tolerance Guiding
Principles, as disclosed on page 92.
The Group 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
regular reviews of the adequacy and
effectiveness of the Group’s material
internal controls, including financial,
operational, compliance and IT 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.
The Group also has in place the
Keppel’s System of Management
Controls Framework (the “Framework”)
outlining the Group’s internal control
and risk management processes and
procedures. The Framework comprises
three Lines of Defence towards ensuring
the adequacy and effectiveness of the
Group’s system of internal controls and
risk management.
Under the first Line of Defence,
management is required to ensure
good corporate governance through the
implementation and management of
policies and procedures relevant to the
Group’s business scope and environment.
Such policies and procedures govern
75
Corporate Governance
Keppel’s System of Management Controls
Board Oversight
Assurance
4
3
2 Management &
Assurance
Frameworks
1 Business
Governance/
Rules of
Governance
s
m
e
t
s
y
S
Policies
Board of Directors
Business Unit Representation
Internal Audit
External Audit
Self-Assessment
Process
Enterprise Risk
Management
Regulatory
Compliance
IT Governance
Framework
P
r
o
c
e
s
s
e
s
Core Values, Corporate & Employee Conduct
Policy
Management
Compliance
Governance
Operational
Governance
Financial
Governance
People
financial, operational, information
technology and regulatory compliance
matters and are reviewed and updated
periodically. Compliance governance is
governed by the respective regulatory
compliance management committees
and working teams chaired by business
owners. 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. Where required,
action plans are developed to remedy
identified control gaps. Under the Group’s
Enterprise Risk Management Framework,
significant risks areas of the Group are
also identified and assessed, with
systems, policies and processes put in
place to manage and mitigate the
identified risks. Regulatory Compliance
supports and works alongside business
management to ensure relevant policies,
processes and controls are effectively
designed, managed and implemented to
ensure compliance risks and controls
are effectively managed.
Under the third Line of Defence, to assist
the Group to ascertain the adequacy
76
and effectiveness of the Group’s
internal controls, business units are
required to provide the Group 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 Group’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 CEO, Mr Loh Chin Hua and
CFO, 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 Group’s overall
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 2016, 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 2016, the
Group’s internal controls are adequate
and effective to address the financial,
operational, compliance and IT risks
which the Group considers relevant and
material to its current business scope
and environment.
The system of internal controls and risk
management established by the Group
provides reasonable, but not absolute,
assurance that the Group will not be
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability 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 Company’s internal audit functions
are serviced in-house (“Group Internal
Audit”). The role of Group Internal Audit
is to provide independent assurance to
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.
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, with an administrative reporting line
to the CEO of the Company.
The AC approves the hiring, removal,
evaluation and compensation of the
Head of Group Internal Audit.
As a member of the Institute of Internal
Auditors (“IIA”), Group Internal Audit
is guided by the International Standards
for the Professional Practice of Internal
Auditing set by the IIA. These standards
consist of attribute and performance
standards. External quality assessment
reviews are carried out at least
once every five years by qualified
professionals, with the last assessment
conducted in 2011, and the results
re-affirmed that the internal audit
activity conforms to the International
Standards. In line with IIA’s Quality
Assurance standards, an external quality
assessment is currently underway and
will be completed by end-February 2017.
Group Internal Audit staff performs a
yearly declaration of independence and
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 key risks, including
financial, operational, compliance
and information technology risks. 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 the areas
of highest risk within the Company.
All Group Internal Audit’s reports are
submitted to the AC for deliberation
with copies of these reports extended to
the Chairman, CEO and relevant senior
management officers. In addition, Group
Internal Audit’s summary of findings and
recommendations are discussed at the
AC meetings. To ensure timely and
adequate closure of audit findings, the
status of implementation of the actions
agreed by management is tracked and
discussed with the AC.
Shareholder Rights and
Communication with Shareholders
Principle 14:
Fair and equitable treatment of
shareholders and protection of
shareholders’ rights
Principle 15:
Regular, effective and fair communication
with shareholders
Principle 16:
Greater shareholder participation at
Annual General Meetings
In addition to the matters mentioned
above in relation to “Accountability”,
the Company’s Group Corporate
Communications Department (with
assistance from the Group Finance
and Group Legal Departments, when
required) regularly communicates with
shareholders, and receives and attends
to their queries and concerns.
The Company treats all its shareholders
fairly and equitably, and keeps all its
shareholders and other stakeholders
informed of its corporate activities,
including changes in the Company or
its business which would be likely to
materially affect the price or value of its
shares, on a timely basis.
The Company has in place an Investor
Relations Policy which sets out the
principles and practices that the
Company applies in order to provide
shareholders and prospective investors
with information necessary to make
well-informed investment decisions
and to ensure a level playing field.
The Investor Relations Policy is
published on the Company’s website
at www.kepcorp.com.
The Company employs various platforms
to effectively engage the shareholders
and the investment community, with an
emphasis on timely, accurate, fair and
transparent disclosure of information.
Engagement with shareholders and
other stakeholders takes many forms,
including “live” webcasts of quarterly
results and presentations, e-mail
communications, publications and
content on the Company’s website as
well as through facility visits, where
stakeholders may 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,
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.
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 FY 2016, the
Company hosted about 135 meetings
and conference calls with institutional
investors, including several facility visits
to its shipyards in Singapore, as well as
to its residential and commercial
properties in China and 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
77
Corporate Governance
immediately released to the public
via SGXNET and the press.
The Company ensures that shareholders
have the opportunity to participate
effectively and vote at shareholders’
meetings. In this regard, the
shareholders’ meetings 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, and vote on the resolutions
at shareholders’ meetings. 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, and the remuneration
of non-executive directors. 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. Specified intermediaries,
such as banks and capital markets
services licence holders which provide
custodial services, may however appoint
more than two proxies. This will enable
indirect investors, including CPF
investors, to be appointed as proxies
to participate in shareholders’ meetings.
Such indirect investors, where so
appointed, will have the same rights
as direct investors to vote at the
shareholders’ meetings.
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. 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.
78
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.
Where possible, all directors will attend
shareholders’ meetings. The Chairmen
of the Board and each board committee
are required to be present to address
questions at general meetings of
shareholders. External auditors are
also present at such meetings to assist
the directors 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
taken by management on the
recommendations and
observations.
1.4 Review the scope and result of
the external audit and the
independence and objectivity of
the external auditors.
1.5 Review the nature and extent of
non-audit services performed by
the external auditors to ensure their
independence and objectivity.
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.
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability
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 Company’s procedures
1.16 Ensure that the internal auditors and
external auditors have direct and
unrestricted access to the Chairman
of the Audit Committee.
1.17 Sub-delegate any of its powers within
its terms of reference as listed above
from time to time as the Audit
Committee may deem fit.
1.5 Review and monitor Management’s
responsiveness to the risks
and matters identified and
recommendations of the Group
Risk and Compliance department.
1.6 Provide timely input to the Board on
critical risk issues, material matters,
findings and recommendations.
for detecting fraud, its whistle-blower
policy and the 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 to ensure they are on
normal commercial terms and are
not prejudicial to the Company or its
minority shareholders.
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
for approval.
1.18 Perform such other functions as the
1.7 Review the Committee’s terms of
Board may determine.
reference annually and recommend
any proposed changes to the Board.
B. Board Risk Committee
1.1 Obtain recommendations on risk
tolerance and strategy from
Management, and where appropriate,
report 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 level of risk tolerance
and risk policies.
1.2 Review and discuss, as and when
appropriate, with Management the
Group’s risk governance structure and
framework including risk policies, risk
mitigation and monitoring processes
and procedures.
1.3 Receive and review 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.
1.8 Review and report to the Board
annually on the adequacy and
effectiveness of the Group’s risk
management and internal controls
systems, including financial,
operational, compliance and
information technology controls.
1.9 Perform such other functions as
the Board may determine.
1.10 Sub-delegate any of its powers
within its terms of reference as
listed above from time to time as
the Committee may deem fit.
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.
Attesting to our
commitment to good
corporate governance,
the Keppel Group
received a total of
five accolades at the
17th Investors’ Choice
Awards organised
by the Securities
Investors Association
(Singapore).
79
Corporate Governance
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/her 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/her
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
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.
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.
packages for each director as
well as for the key management
personnel.
1.2 Review the Company’s obligations
arising in the event of termination
of the executive directors’ and key
management personnel’s contracts
of service, to ensure that such
clauses are fair and reasonable
and not overly generous.
1.3 Consider whether directors should
be eligible for benefits under
long-term incentive schemes
(including weighing the use of share
schemes against the other types of
long-term incentive scheme).
1.4 Administer the Company’s
employee share option scheme
(the “KCL Share Option Scheme”),
and the Company’s Restricted
Share Plan and Performance
Share Plan (collectively, the
“KCL Share Plans”), in accordance
with the rules of the KCL Share
Option Scheme and KCL Share Plans.
effectiveness of the Board as a whole
and individual directors.
1.13 Perform such other functions as
the Board may determine.
1.5 Report to the Board on material
matters and recommendations.
1.7 Review the succession plans for the
Board (in particular, the Chairman)
and senior management (in
particular, the CEO).
1.14 Sub-delegate any of its powers
within its terms of reference as
listed above, from time to time as
this Committee may deem fit.
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.
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
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.
1.8 Review talent development plans.
1.9 Review the training and professional
development programmes for Board
members.
Keppel’s Board Safety
Committee regularly
conducts site visits to
the Group’s operations
in Singapore and
overseas, such as the
Doha North Sewage
Treatment Works
in Qatar.
80
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability 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.
Board Safety Committee
E
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.
1.6 Ensure that each business unit
complies with HSE legislation in the
country in which it operates as a
minimum and review any emerging
or new legislations that may
potentially impact the business units.
1.14 Perform such other functions as
the Board may determine.
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.
1.7 Keep abreast of developments
in the HSE world, discuss such
developments and best practices
and consider the desirability of
implementation in the Group.
1.2 Monitor HSE performance of
1.8
the Group companies, analyse
trends and accident root causes,
and recommend or propose
Group-wide initiatives for
improvement where appropriate to
ensure a robust HSE management
system is maintained.
1.3 Structure an audit programme of
Group companies’ HSE management
programme to verify effectiveness
and use its resources to lead the
execution of such audits, drawing
additional resources from the line
where needed.
1.4 Ensure a process is in place to have
fatalities and other major incidents
investigated by an independent
and competent team.
Introduce actions to enhance
safety awareness and culture
within the Group.
1.9 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.
1.10 Review the major changes to HSE
risk profile of the business units that
has changed or will change as a result
of new business, new market, new
product, etc. and the steps taken to
monitor, control and mitigate such
risks.
1.11 Consider management’s proposals
on safety-related matters.
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.
1.12 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.
Nature of Current Directors’ Appointments and Membership on Board Committees
Director
Board Membership
Audit
Nominating
Remuneration
Risk
Safety
Committee Membership
Lee Boon Yang
Chairman
Loh Chin Hua
Tow Heng Tan
Chief Executive Officer
Non-Independent &
Non-Executive
–
–
–
Member
Member
–
–
–
–
Member
Member
Member
Member
Member
Alvin Yeo Khirn Hai
Independent
Member
Member
–
Tan Ek Kia
Danny Teoh
Independent
Independent
Tan Puay Chiang
Independent
Till Vestring
Veronica Eng
Independent
Independent
–
–
–
–
Member
Chairman
Member
Member
–
Chairman
–
Member
Member
Member
Chairman
–
–
Member
Chairman
–
Member
–
–
Chairman
–
–
–
–
81
Corporate Governance
Board Assessment
Evaluation Processes
Board
Each board member is required to
complete a Board Evaluation Questionnaire
and send the Questionnaire direct to the
Independent Co-ordinator (IC) within five
working days. An “Explanatory Note” is
attached to the Questionnaire to clarify
the background, rationale and objectives
of the various performance criteria used in
the Board Evaluation Questionnaire with
the aim of achieving consistency in the
understanding and interpretation of the
questions. Based on the returns from
each of the directors, the IC prepares a
consolidated report and briefs the
Chairman of the Nominating Committee
(NC) and the Board Chairman on the
report. Thereafter, the IC presents the
report to the Board for discussion on the
changes which should be made to help
the Board discharge its duties more
effectively.
Individual Directors
The Board differentiates the assessment
of an executive director from that of
a Non-Executive Director (NED).
In the case of the assessment of the
individual executive director, each NED
is required to complete the executive
director’s assessment form and send
the form directly to the IC within 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.
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
82
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/she provides valuable inputs,
his/her ability to analyse, communicate
and contribute to the productivity of
meetings, and his/her 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/her role of director
seriously and works to further improve
his/her own performance, whether he/she
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/she is available when needed, and his/
her 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/her
employment) which in the view of a
Whistle-Blower acting in good faith, is:
illegal;
(a) dishonest, including but not limited to
theft or misuse of resources within
the Group;
(b) fraudulent;
(c) corrupt;
(d)
(e) other serious improper conduct;
(f) an unsafe work practice; or
(g) any other conduct which may cause
financial or non-financial loss to the
Group or damage to the Group’s
reputation.
A person who files a report or provides
evidence which he/she 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
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability appropriate investigative process to be
employed and corrective actions (if any)
to be taken. The AC Chairman will use his
best endeavours to ensure that there is
no conflict of interests on the part of any
person involved in the investigations.
All employees have a duty to cooperate
with investigations initiated under the
Policy. An employee may be placed on
administrative leave or investigatory
leave when it is determined by the
AC Chairman that it would be in the
best interests of the employee, the
Company or both. Such leave is not to
be interpreted as an accusation or a
conclusion of guilt or innocence of any
employee, including the employee on
leave. All participants in the investigation
must also refrain from discussing or
disclosing the investigation or their
testimony with anyone not connected
to the investigation. In no circumstance
should such persons discuss matters
relating to the investigation with the
person(s) who is/are subject(s) of the
investigation (“Investigation Subject(s)”).
Identities of the Whistle-Blower(s),
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.
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/she
has cooperated as a Whistle-Blower or
a witness in determining the suitable
disciplinary measure to be taken
against him/her.
subject to administrative and/or
disciplinary action.
Similarly, a person may be subject to
administrative and/or disciplinary action
if he/she 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/she 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
83
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
N.A.
corporate governance practices achieve
the objectives of the principles and
conform to the guidelines in the Code?
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
84
(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
There were no new directors appointed in the last financial year.
However, on an annual basis:
(a) the NC will review 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 will assess 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 will then meet 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; and
(d) NC will thereafter make recommendations to the Board
for approval.
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability Code of Corporate Governance 2012
Guidelines for Disclosure
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/herself for re-election at the annual general meeting
immediately following his/her 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/her peers.
Guideline 1.6
(a) Are new directors given formal training?
If not, please explain why.
Yes, all new directors undergo a comprehensive orientation
programme.
(b) What are the types of information and
training provided to (i) new directors and
(ii) existing directors to keep them up-to-
date?
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.
Sites 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.
Guideline 4.4
(a) What is the maximum number of listed
N.A.
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?
(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?
Instead of fixing a maximum number of listed company board
representation that a director may have, the NC assesses
holistically whether a director is able to and has been
adequately carrying out his/her duties as a director of the
Company, taking into account considerations as set out below.
The NC takes into account the results of the annual assessment
of the effectiveness of the individual director, the level
of commitment required of the director’s other principal
commitments, and the respective directors’ actual conduct
and participation on the Board and board committees, including
availability and attendance at regular scheduled meetings and
ad-hoc meetings, 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/her 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 82 of the Corporate
Governance Report.
(b) Has the Board met its performance
Yes.
objectives?
85
Corporate Governance
Code of Corporate Governance 2012
Guidelines for Disclosure
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.
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 for
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 was
not involved in any services that Bain & Company provided
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.
Guideline 2.4
Has any independent director served
on the Board for more than nine years
from the date of his/her first appointment?
If so, please identify the director and set
out the Board’s reasons for considering
him/her independent.
No.
86
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability Code of Corporate Governance 2012
Guidelines for Disclosure
Guideline
Questions
How has the Company complied?
Disclosure on Remuneration
Guideline 9.2
Guideline 9.3
Guideline 9.4
Guideline 9.6
Has the Company disclosed each director’s
and the CEO’s remuneration as well as
a breakdown (in percentage or dollar
terms) into base/fixed salary, variable or
performance-related income/bonuses,
benefits in kind, stock options granted,
share-based incentives and awards, and
other long-term incentives? If not, what are
the reasons for not disclosing so?
(a) Has the Company disclosed each
key management personnel’s
remuneration, in bands of S$250,000 or
in more detail, as well as a breakdown
(in percentage or dollar terms) into base/
fixed salary, variable or performance-
related income/bonuses, benefits in
kind, stock options granted, share-
based incentives and awards, and
other long-term incentives? If not, what
are the reasons for not disclosing so?
(b) Please disclose the aggregate
remuneration paid to the top five key
management personnel (who are not
directors or the CEO).
Yes.
Yes.
Aggregate remuneration paid to top six key management
personnel: S$14,595,840
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.
(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
RSP to the executive director and key management personnel
was fair and appropriate taking into account the extent to which
their KPIs and performance conditions for FY 2016 were met.
Please refer to pages 70 to 74 of the Corporate Governance
Report for more details.
87
Corporate Governance
Code of Corporate Governance 2012
Guidelines for Disclosure
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.
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.
88
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability Code of Corporate Governance 2012
Guidelines for Disclosure
Guideline
Questions
How has the Company complied?
Yes. The Board has received assurance from the CEO and the
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.
(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?
Guideline 12.6
(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.
The Group’s estimated audit fees payable to the external
auditors of the Company and other auditors of subsidiaries for
FY 2016 is S$4,820,000. The Group’s non-audit services fees
paid to external auditors of the Company and other auditors of
subsidiaries amounted to S$299,000.
(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.
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 FY 2016, the Company hosted about 135 meetings and
conference calls with institutional investors, including several
facility visits to its shipyards in Singapore, as well as to its
residential and commercial properties in China and 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 Department, 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, 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.
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.
89
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
Page Reference in this
Report
Page 64
Page 66
Page 65
Page 65
Pages 66 and 67
N.A.
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 67, 79 and 80
Guideline 4.4
The maximum number of listed company board representations which directors may hold should be disclosed
Guideline 4.6
Process for the selection, appointment and re-appointment of new directors to the Board, including the search
and nomination process
Guideline 4.7
Key information regarding directors, including which directors are executive, non-executive or considered by the
NC to be independent
Guideline 5.1
The Board should state in the company’s Annual Report how assessment of the Board, its board committees
and each director has been conducted. If an external facilitator has been used, the Board should disclose in the
company’s Annual Report whether the external facilitator has any other connection with the company or any of
its directors. This assessment process should be disclosed in the company’s Annual Report
Guideline 7.1
Names of the members of the RC and the key terms of reference of the RC, explaining its role and the authority
delegated to it by the Board
Guideline 7.3
Names and firms of the remuneration consultants (if any) should be disclosed in the annual remuneration
report, including a statement on whether the remuneration consultants have any relationships with the
company
Guideline 9
Clear disclosure of remuneration policies, level and mix of remuneration, and procedure for setting
remuneration
Guideline 9.1
Remuneration of directors, the CEO and at least the top five key management personnel (who are not also
directors or the CEO) of the company. The annual remuneration report should include the aggregate amount of
any termination, retirement and post-employment benefits that may be granted to directors, the CEO and the
top five key management personnel (who are not directors or the CEO)
Page 85
Page 68
Pages 20 to 23
Page 82
Pages 69 and 80
Page 70
Pages 70 to 73
Pages 70 to 73
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 72
90
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability Code of Corporate Governance 2012
Specific Principles and Guidelines for Disclosure
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 73
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 74
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 105 to 107 and
135 to 137
Pages 70 to 73
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
Pages 75 to 77
The commentary should include information needed by stakeholders to make an informed assessment of the
company’s internal control and risk management systems
The Board should also comment on whether it has received assurance from the CEO and the CFO: (a) that the
financial records have been properly maintained and the financial statements give true and fair view of the
company’s operations and finances; and (b) regarding the effectiveness of the company’s risk management and
internal control systems
Guideline 12.1
Names of the members of the AC and the key terms of reference of the AC, explaining its role and the authority
delegated to it by the Board
Guideline 12.6
Aggregate amount of fees paid to the external auditors for that financial year, and breakdown of fees paid in
total for audit and non-audit services respectively, or an appropriate negative statement
Guideline 12.7
The existence of a whistle-blowing policy should be disclosed in the company’s Annual Report
Guideline 12.8
Summary of the AC’s activities and measures taken to keep abreast of changes to accounting standards and
issues which have a direct impact on financial statements
Guideline 15.4
The steps the Board has taken to solicit and understand the views of the shareholders e.g. through analyst
briefings, investor roadshows or Investors’ Day briefings
Guideline 15.5
Where dividends are not paid, companies should disclose their reasons
Pages 74 and 78
Pages 74 and 89
Pages 82 and 83
Pages 74 and 75
Pages 77 and 78
N.A.
91
Risk Management
We adopt a balanced approach to risk management,
undertaking only appropriate and well-considered
risks to optimise returns.
Notwithstanding the headwinds, we
continued a disciplined pursuit of new
opportunities and revenue streams to
safeguard shareholders’ interests and
the Group’s assets. Supported by a robust
risk management system, we are able to
respond effectively to shifting business
demands and seize opportunities that
create value for our stakeholders.
Robust Enterprise Risk Management
Framework
Keppel’s 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 79 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.
Keppel’s risk governance framework,
set out on pages 75 to 77 under Principle
11 (Risk Management and Internal
Controls), 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. We recognise
the dynamic environment in which the
Group operates, and we continue to
92
refine the framework where necessary,
to ensure strong governance across
the Group.
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 to 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.
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 Guidebook
for Audit Committees.
A Risk and Compliance Committee,
comprising relevant subject matter
champions across the business units,
drives and coordinates Group-wide
initiatives. We keep abreast of the latest
developments and best practices by
participating in industry seminars and
interacting with risk management
practitioners.
As a Group, we adopt a balanced approach
to risk management. As not all risks can
be eliminated, we will only undertake
appropriate and well-considered risks to
optimise returns for the Group.
Strategic Risk
Market and Competition
The Group’s strategic risks comprise
market and competition risks. These include
market driven forces, evolving competitive
landscape, changing customer demands
and disruptive innovation. The Group
remains vulnerable to a number of
external factors including uncertainties
in the global economy, implications from
geo-political developments on globalisation
and threats of disruptive technology. These
risks receive constant high-level attention
throughout the year. We hold strategy
meetings to review business strategies,
formulate responses and take pre-emptive
action against these risks.
The BRC guides the Group in formulating
and reviewing risk policies and limits.
These are subject to periodic reviews to
ensure they continue to support business
objectives and are aligned to our risk
tolerance level. Taking into consideration
the prevailing business climate and the
Group’s risk appetite, the policies aim to
address risks effectively and proactively.
Investments and Divestments
We have an established process
for evaluating investment and divestment
decisions. Investments are monitored to
ensure they are on track in meeting the
Group’s strategic intent, investment
objectives and returns. These investment
decisions are guided by investment
parameters set on a Group-wide basis.
Together with the Board, the Investment
and Major Project Action Committee
(IMPAC) guides the Group to take
thoughtful risks in a controlled manner,
exercising the spirit of enterprise as well
as financial discipline to earn the best
risk-adjusted returns on invested capital.
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 as well as lessons learned.
The investment portfolio is constantly
monitored to ensure that performance is
on track to meet the Group’s strategic
intent and investment returns.
Human Resources
We maintain a significant emphasis on
attracting and building a talent pool. This
includes nurturing employees, maintaining
good industrial relations and fostering
a conducive work environment for our
employees. The Group continues to focus
on strengthening succession planning
and bench strength, as well as building
organisational capabilities to drive
business growth whilst maintaining our
choice employer status.
We recognise the importance of having a
risk-centric mindset and the ability to
identify, assess, develop and implement
mitigation actions, as well as monitor
risks. 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 by
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability embedding risk management in its key
leadership courses.
Operational Risk
Project Management
From the stage of initiation through to
completion, risk management processes
are integrated within project management
to facilitate early risk detection and
proactive management. 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, as well as 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 project execution stage, we carry
out project reviews and quality assurance
programmes to address issues involving
cost, schedule and quality. Project Key
Risk Indicators are used as early warning
signals. In addition, we conduct
knowledge sharing workshops to share
best practices and lessons learnt across
the Group. All these help to ensure that
projects are completed on time and within
budget, while meeting safety and quality
standards, as well as contract obligations.
Identification Risk Assessment standards
across our global operations, enhancing
competency of employees performing
safety-critical tasks, strengthening
operational controls, as well as developing
more proactive and leading matrices to
monitor HSE performance. Environmental
management practices in key operating
sites are also closely monitored. As a
Group, we continue to embrace and
leverage technology to improve HSE
processes and systems.
Business & Operational Processes
Through ongoing efforts to streamline
business processes, we have established
a common shared services platform
which allows us to achieve cost savings,
improve efficiency and productivity,
as well as enhance governance,
compliance and control.
We adopted ISO standards and
certifications to achieve standardisation
of processes and best practices. In
addition, procedures relating to defect
management, operations, project control
and supply chain management were
established to improve quality of
deliverables. We conduct regular reviews
of policies and authority limits to ensure
that they remain relevant in meeting
changing business requirements.
Health, Safety & Environment
Maintaining a high level of health, safety
and environmental (HSE) standards is
of paramount importance to the Group.
As such, we are constantly raising
awareness and building a HSE culture at
the ground level. Key initiatives include
driving a zero fatality strategy with a
roadmap focused on aligning Hazard
Business Continuity
We are committed to enhancing
operational resilience through a robust
Business Continuity Management (BCM)
Plan that will equip us to respond
effectively to disruptions, while continuing
with critical business functions and
minimising the impact on our people,
operations and assets. As a Group, we are
cognisant of the increasing threat of
terrorism risk and have increased efforts
in reviewing and testing our operational
preparedness and effectiveness of these
plans. Follow up actions are taken to
strengthen operational resilience and
key learning points are documented.
Crisis management and communication
procedures have also been embedded
into the Group’s BCM processes. 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 crises effectively while
safeguarding our people, assets and the
interests of our 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
loss of data.
Our IT security, governance and control
have been strengthened through the
alignment of IT policies, processes and
systems, and the consolidation of servers
and storages. We have also appointed
IT security officers and implemented
guided self-assessment to identify IT
security gaps.
Extensive training, including assessment
exercises, have been conducted on user
security education to heighten awareness
of IT threats. Measures and considerations
have also been taken to safeguard against
loss of information, data security, and
prolonged service disruption of critical
IT systems.
Talks and workshops
are organised to
keep Keppel’s
directors and senior
management abreast
of macroeconomic
trends, risks and
opportunities for
the Group.
93
Risk Management
Compliance Risk
Laws, Regulations & Compliance
Given the geographical diversity of
our businesses, we closely monitor
developments in laws and regulations in
countries where the Group operates, to
ensure that our businesses and operations
comply with all relevant laws and
regulations. We regularly engage with local
government authorities and agencies to
keep abreast of changes in regulations.
Recognising that non-compliance with
laws and regulations has potential
significant reputational and financial
impact, particular emphasis is placed on
regulatory compliance in all our operations.
More details on areas taken by the Group
in operationalising regulatory compliance
are set out on page 95 of this Report.
Financial Risk
Fraud, Misstatement of Financial
Statements & Disclosures
We continue to maintain a strong
emphasis on ensuring financial statements
are accurate and presented fairly in
accordance with applicable financial
reporting standards and framework.
Where appropriate, we leverage the expertise
of the engaged auditors in the interpretation
of financial reporting standards and
changes. Regular external and internal
audits are conducted to provide assurance
on accuracy of financial statements and
adequacy of the control framework
supporting the statements. We hold regular
training and education programmes to
enhance competency of finance managers
across the Group. Furthermore, Control
Awareness workgroups are organised to
share and strengthen knowledge, to
improve the control environment and
establish consistent practices.
Keppel’s System of Management Controls
framework outlines the Group’s internal
control and risk management processes
and procedures. For more details on the
framework, please refer to page 76 of
this Report.
Financial Management
Financial risk management relates to our
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.
At Keppel, we are focused on financial
discipline, deploying our capital to earn the
best risk-adjusted returns and maintaining
a strong balance sheet to seize
opportunities. This includes the
evaluation of counterparties against
pre-established guidelines.
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
94
For more details on the Group’s financial
risk management, please refer to pages
56 and 57 of this Report.
Impact assessment and stress tests
are performed to gauge the Group’s
exposure to changing market situations,
allowing for informed decision-making
and implementation of prompt mitigating
actions. We also regularly monitor
the concentration of exposure in the
countries where the Group operates.
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
Our management is committed
to fostering a strong risk-centric
culture, 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
An integral aspect of strategic and
budget reviews includes investment
and project planning risk management
at all levels of the businesses. As part
of the process, appropriate tools
and risk management methodology
are applied.
3. Training & Communication
Workshops are conducted regularly
to enhance risk management competency
across the Group. Through various
forums and in-house publications,
training and communication
programmes are also carried out
to reinforce discipline and garner
greater awareness.
4. Performance Evaluation
We seek to raise the accountability
of our employees for risk management
through the performance evaluation
process. A Group-wide survey is
conducted periodically 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.
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability Regulatory Compliance
Guided by our Core Values and Code of Conduct, we
are committed to observing all applicable laws and
regulations wherever we operate.
Keppel’s success and reputation is rooted
in a firm commitment to doing business
the right way. The tone for regulatory
compliance – zero tolerance for fraud,
bribery, corruption and violations of
laws and regulations – is set at the top.
During the year, we embarked on
several forums and platforms to raise
awareness and build competencies in
regulatory compliance.
and guidelines, and facilitate the
implementation and sharing of policies
and procedures across the Group. The
Group RCMC is in turn supported by the
Group Regulatory Compliance Working
Team (“Group RCWT”), which overseas the
development and review of over-arching
compliance policies and guidelines for the
Group, as well as reviewing training and
communication programmes.
Regulatory Compliance Framework
We have a defined framework and
continue to work towards strengthening
our policies and processes surrounding
regulatory compliance, to foster
a compliance-centric culture. The
framework deals with the structure,
people, policies and activities required for
management to identify, assess, mitigate
and monitor key compliance risks.
Governance Structure
The Board Risk Committee (BRC) supports
the Board in its oversight of regulatory
compliance and is responsible for driving
the Group’s compliance governance. The
Group Risk and Compliance Department
serves as a secretariat to the BRC,
reporting on the Group’s compliance
risks and mitigations.
Keppel’s Regulatory Compliance
Governance Structure is designed to
strengthen our corporate governance.
The Group Regulatory Compliance
Management Committee (“Group RCMC”)
is chaired by Keppel Corporation’s CEO
and its members include the heads of all
business units. The role of the Group
RCMC is to articulate the Group’s
commitment to regulatory compliance,
direct and support the development
of over-arching compliance policies
Each business unit in the Group has a
Risk and Compliance team that is
responsible for driving and administering
the compliance function and agenda for
the business unit. This includes providing
support to management through
expertise on subject matter, process
excellence and reporting to ensure
compliance risks are effectively managed.
Under the overall direction of the Group
RCMC and Group RCWT, business units
working in partnership with their
respective Risk and Compliance teams
are responsible for implementing the
Group’s Code of Conduct and regulatory
compliance policies and programmes.
They are also responsible for ensuring
that risk assessments in relation to
material regulatory compliance risks
are conducted and control measures are
appropriate to mitigate the identified risks
which the business units may face.
Policies And Procedures
Employee Code of Conduct
We have a strict Code of Conduct that
applies to all employees, who are required
to acknowledge and comply with the code.
The Code of Conduct sets out principles
to guide employees in carrying out their
duties and responsibilities to the highest
standards of personal and corporate
integrity when dealing with the Company,
customers and suppliers. It covers areas
such as conduct in the workplace and
business conduct, including anti-corruption
and conflict of interests. These policies
are reviewed regularly and updated to
reflect changes where required.
Supplier Code of Conduct
At the end of 2016, we established the
Supplier Code of Conduct to integrate
Keppel’s sustainability principles across
our supply chain, and positively influence
the environmental, social and governance
performance of our suppliers. Suppliers of
the Keppel Group of companies are
expected to abide by the Code, which
covers areas pertaining to business
conduct, labour practices, safety and
health, and environmental management.
Whistle-Blower Policy
Keppel’s Whistle-Blower Policy encourages
the reporting of suspected misconduct
through a clearly defined process and
reporting channel by which reports
can be made in confidence and without
fear of reprisal.
Training & Communications
Training is a key component within Keppel’s
regulatory compliance framework and we
continue to focus on refining our compliance
training programme and curriculum for
new and existing employees. Training
programmes are tailored to the audience
and we leverage Group-wide forums to
reiterate the key messages. Our employees
are also required to complete mandatory
annual e-training and assessment
covering key policies, as well as to
acknowledge that they have read and
understood our policies and declare any
potential conflicts of interest.
As part of continuous
efforts to foster a
compliance-centric
culture, regulatory
compliance trainings
and workshops are
carried out across
the Group, in Singapore
and overseas.
95
Environmental Performance
We are committed to optimise efficiencies
in our operations and minimise our
environmental footprint.
Sustainable Urbanisation
Keppel Seghers, a subsidiary of Keppel
Infrastructure, completed a substantial
part of the Doha North Sewage Treatment
Works project in Qatar and handed over
the wastewater and sludge treatment
facilities in the project to Ashghal, the
Public Works Authority.
The facility, spanning 4km by 4km, is
able to treat up to an average flow of
245,000m3 of wastewater a day using
advanced membrane and ultra-violet
treatment technologies. The high-grade
reclaimed water is used for non-potable
purposes, thus freeing up Doha’s
precious drinking water supply.
As part of the project, Keppel is also
developing a green buffer zone - a
sanctuary for migratory birds amid vast
desert sands, which is set for completion
in 2017. The reclaimed water is used to
irrigate the green buffer zone, while the
processed sludge is used as organic
fertiliser or in landscaping projects.
Keppel is proud to contribute to
sustainable urbanisation in Qatar.
Green Innovations
Keppel Data Centres Holding, a
subsidiary of Keppel Telecommunications
& Transportation (Keppel T&T),
participated in a trial with the Info-
communications Media Development
Authority of Singapore to develop
and deploy the world’s first Tropical
Data Centre.
via a power grid instead of the
less-efficient diesel generator.
Currently, a significant portion of
energy consumption in data centres
goes towards keeping temperatures and
humidity at low levels. By being able to
function optimally at higher temperatures
and humidity levels, Tropical Data
Centres are expected to reduce energy
consumption by up to 40%.
Harnessing Renewables
In 2016, Keppel Land’s corporate office
at Bugis Junction Towers became the
first Green Mark-certified office to be
fully powered by solar energy. The solar
energy is purchased from Keppel Electric.
With this new initiative, Keppel Land is
expected to offset about 150 tonnes of
carbon emissions every year.
Efficiency Upgrades
Alpha Investment Partners retrofitted
Ibis Novena Hotel Singapore, which is
owned by one of its funds, by replacing
the existing split unit air-cooled air-
conditioning system to a more efficient
water-cooled central air-conditioning
system. This upgrade is expected to
yield significant energy savings and
reduce greenhouse gas emissions.
To improve energy efficiency at
Keppel FELS’ yards, electric cables have
been rerouted to transmit electricity
Water Savings
Across the Group, Keppel’s businesses
use NEWater (treated wastewater from
sewage) where possible, to reduce the
usage of water from local catchment
and imported water. Other water
saving initiatives include installing
water-efficient equipment and devices,
encouraging good water usage habits
as well as improving leakage inspection
and response times.
At Keppel FELS, scrap materials from
the yard are reused to build passages
that channel rainwater from rooftop
gutters and drains to a tank for gas
hose testing.
Managing Emissions
Keppel aims to achieve a 16% improvement
in its carbon emissions from 2020
business-as-usual levels.
Protecting Biodiversity
Keppel Land’s premier waterfront
development, Corals at Keppel Bay, is
home to a thriving kaleidoscope of coral
reefs and marine life due to the company’s
efforts to conserve biodiversity. Corals
at the historic King’s Dock at Keppel Bay
are being transplanted to enhance the
existing habitat for marine life. This
initiative is a first by a private developer.
Keppel Land’s
corporate office at
Bugis Junction Towers
is fully powered by
solar energy from
Keppel Electric .
96
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability Product Excellence
We provide solutions for sustainable urbanisation,
harnessing the strengths of our businesses.
Highlights
The Keppel Group garnered 12 awards
at the Building & Construction
Authority of Singapore Awards 2016,
in acknowledgement of the Group’s
commitment to design, build and operate
properties that harmonise with the
environment. Separately, Keppel Land
was named Overall Best Developer for
Singapore, Vietnam and Myanmar while
Alpha Investment Partners won the
Overall Best Investment Manager at the
Euromoney Real Estate Awards.
Keppel Offshore & Marine (Keppel O&M)
was conferred the APAC Company of the
Year Award (Offshore & Marine Services)
at the Asia-Pacific Oil & Gas Awards
organised by the Oil and Gas Council.
Separately, cementing its reputation as a
premier shipyard in Asia, Keppel Shipyard
won the Shipbuilding and Repair Yard Award
at the ninth Seatrade Maritime Awards Asia.
In recognition of its commitment to service
excellence, Keppel Logistics, a subsidiary
of Keppel Telecommunications &
Transportation, received the Singapore
Logistics Service Provider of the Year award
at the Frost & Sullivan Asia Pacific Best
Practices Awards for the ninth year running.
Keppel O&M completed 21 project
deliveries. These included three jackup
drilling rigs, a high-specification
deepwater derrick lay vessel, five floating
production, storage and offloading
vessels as well as an accommodation
semisubmersible.
embrace innovation to improve our
value proposition to customers.
Keppel Infrastructure was selected
by Singapore’s national water agency,
PUB, to Design, Build, Own and Operate
Singapore’s fourth desalination plant.
The plant will be the first in Singapore
with the ability to treat sea water and
fresh water from the Marina Reservoir
by using reverse osmosis and other
advanced membrane technology.
Keppel Seghers, a subsidiary of Keppel
Infrastructure, successfully delivered its
proprietary waste-to-energy (WTE)
technology and services to two WTE
plants in Beijing and Yangzhou in China,
supporting the cities’ goals for
sustainable waste management. In
addition, Keppel Seghers was awarded six
projects to supply its WTE technology in
China, including for the plant in Shenzhen,
which is set to become the world’s largest
WTE facility (in terms of incineration
capacity) once completed.
Keppel Capital saw the first closing of two
new private equity funds – the Alpha Data
Centre Fund and Alpha Asia Macro Trends
Fund III, with initial capital commitments
of US$410 million, out of a combined
target size of US$1.5 billion.
Driving Innovation
To capture opportunities in a rapidly
changing environment, we continue to
Keppel O&M completed the acquisition
of LETOURNEAU™ jackup rig designs,
rig kit business as well as aftersales
and aftermarket services to broaden its
suite of jackup solutions. Keppel O&M
also secured contracts to build its first
two dual-fuel diesel Liquefied Natural
Gas harbour tugs to its award-winning
proprietary design.
To tap into the fast-growing e-commerce
sector, Keppel Logistics acquired a
stake in Singapore-based e-commerce
fulfilment company, Courex, to build
complementary capabilities and further
improve urban connectivity.
Customer Health & Safety
The Group 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.
Keppel is not aware of any violation of
laws, regulations and voluntary codes
pertaining to the provision, use,
health and safety of our products
and services in 2016.
Keppel Seghers
supports China’s
goals for sustainable
waste management by
providing technology
solutions and services
for WTE plants
across China.
97
Labour Practices & Human Rights
We adhere to fair employment practices, uphold
human rights principles, and empower our workforce
with opportunities for learning and development.
Fair Employment Practices
Our commitment to fair employment
practices is supported by our Employee
Code of Conduct, which sets the
tone in relation to the Group’s stance
against discrimination on any basis.
We embrace workforce diversity
and respect the values and cultures
of the communities in which we operate.
We adopt fair employment practices
and comply with labour laws across
our operations worldwide. In Singapore,
Keppel adheres to the practices
spelt out by The Tripartite Alliance
for Fair and Progressive Employment
Practices and endorses its Employers’
Pledge of Fair Employment Practices.
Human Rights
Keppel respects and upholds the
fundamental principles set out in the
United Nations Universal Declaration
of Human Rights and the International
Labour Organisation Declaration on
Fundamental Principles and Rights
at Work. Our approach to human rights
is articulated in our Corporate Statement
on Human Rights, and is guided by
general concepts from the United Nations
Guiding Principles on Business and
Human Rights.
We have zero tolerance for 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.
Our suppliers are expected to comply
with the Group’s Supplier Code of
Conduct, which holds them accountable
to responsible labour practices in
their operations.
Skills Development
Our people are our most valuable
resource. We aim to be an employer of
choice, and adopt a holistic approach
towards attracting and nurturing talent.
We hope to help every employee
maximise their 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.
We also offer internships to tertiary
students to expose them to the different
businesses across the Group.
Established in 2015, the Keppel
Leadership Institute, headquartered
in Singapore, offers a diverse
range of leadership and professional
development programmes,
delivered in modular and blended
approaches. The Institute grooms
global Keppel leaders, equipping
them with the capability and
confidence to drive our businesses
into the future.
Employee Engagement
We engage our employees through
feedback channels and activities
that forge stronger relationships.
Apart from the annual Global
Keppelites Forum, a Group-wide
townhall, we continue to build
camaraderie among employees
through various platforms, such
as the yearly Keppel Games,
a series of sports competitions
initiated by Keppelite Recreation
Club, and volunteer activities
organised by Keppel Volunteers.
The Keppel Global Employee
Engagement Survey in 2016 achieved
a strong response rate and a high
employee engagement score.
Employees at Keppel
regularly participate in
Group-wide activities
and forge stronger
bonds in the process.
98
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability Safety & Health
Safety is our core value. We are committed
to provide a safe and healthy 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 formulate
strategies, implement initiatives and
improve safety performance.
At the annual Keppel Leadership
Health, Safety and Environment (HSE)
Roundtable, senior management
shared insights and exchanged ideas on
improving Keppel’s safety performance.
The action plan generated during the
session was incorporated into the Group’s
safety roadmap.
Safety Review
We empower and train our stakeholders
to ensure that they are kept updated
on safety measures and best practices.
Training programmes are regularly
reviewed and improved to equip all
personnel, from workers to frontline
supervisors, with the competence to
handle any situation with confidence.
To further strengthen the Group’s safety
culture and achieve our shared safety
aspirations, we have begun to harmonise
and align safety standards for High
Impact Risk Activities across our
global operations.
Recognising Safe Behaviour
The Keppel Group Safety Convention in
2016 saw the continuation of the Keppel
Group Safety Awards, which recognises
employees who have gone the extra mile to
foster safe and healthy work environments.
Employees across the Group continue
to develop innovative solutions to improve
work processes and enhance safety in
their daily work. In 2016, a total of 53
Safety Innovation Teams submitted
Safety Innovation Projects – practical
solutions to address safety challenges
on the ground. Three Platinum, Five Gold,
12 Silver and 15 Bronze Awards were
presented to the winning teams.
Incident Reduction
Despite our arduous efforts, we suffered
seven fatalities globally in 2016. 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.
Every incident is preventable. The
Group places emphasis on the effective
dissemination of lessons learnt globally
through the Group HSE Alerts system.
Efforts to inculcate safety consciousness
include the sharing of best practices through
campaigns, newsletters and animations.
Safety Performance
The Group was conferred 35 awards at
the Workplace Safety and Health (WSH)
Awards 2016, organised by Singapore’s
Ministry of Manpower (MOM) and the
WSH Council. This is the largest number
of awards won by a single organisation
in Singapore.
Influencing Our Supply Chain
We work closely with all stakeholders,
including our contractors and
subcontractors, to maintain high safety
standards throughout our workforce.
Our subcontract workers undergo the
same safety training as direct employees.
To raise industry standards, we work
closely with MOM and the WSH Council to
roll out safety initiatives and to encourage
our subcontractors to equip themselves
with relevant safety certifications from
the WSH Council.
The Keppel Group has also been a regular
sponsor of annual national safety events,
including the 2016 editions of the WSH
Conference, National WSH Campaign
and bizSAFE Convention.
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.
Regular safety briefings
are conducted by our
frontline supervisors
to inculcate a strong
safety mindset among
our employees and
subcontractors.
99
Our Community
We aim to deliver lasting socio-economic benefit
to local communities through programmes
aligned with our corporate priorities.
We engage and nurture communities
wherever we are, with the aim of achieving
a sustainable future together.
In China, Keppel organised numerous
charity fundraisers in aid of underprivileged
children and youth in the community.
Keppel Care Foundation
Keppel Care Foundation is the Group’s
philanthropic arm. The foundation
supports impactful initiatives that are
in line with the focus areas of protecting
the environment, promoting education,
arts and culture as well as caring for
the underprivileged.
Keppel Volunteers
Employee volunteerism complements
and enriches our community investments.
Keppel Volunteers, the Group’s volunteer
movement, spearheads regular volunteer
activities. In 2016, employees across
the Group achieved over 8,000 hours
of community service, an increase of
3,000 hours over the 5,000 hours in 2015.
Global Outreach
Keppel is committed to uplift communities
wherever we operate. In 2016, the Group
formalised overseas chapters of Keppel
Volunteers in Brazil, China, the Philippines
and Vietnam.
In Brazil, BrasFELS engineers lead Teach-
It-Forward, a programme to benefit public
school children and youth in Angra dos Reis.
Classes are conducted for students in need.
Keppel’s community engagement
initiatives in the Philippines include the
College Scholarship programme and
Apprenticeship and Technical Skills
Training programme to help students with
financial difficulties and empower them
with skillsets. Acknowledging Keppel’s
efforts, the Philippines Economic Zone
Authority conferred Keppel Subic
Shipyard with the Outstanding
Community Projects Award in 2016.
In Vietnam, Keppel supports Words
on Wheels, a mobile library programme
to promote reading and independent
learning among 3,000 children in the
rural outskirts of Ho Chi Minh City.
Arts Advocate
Keppel has provided many platforms
to showcase artistic talents and
expose youths to the arts over the
years. In recognition of the Group’s
contributions, Singapore’s National Arts
Council presented Keppel with its ninth
consecutive Distinguished Patron
of the Arts Award in 2016.
The Keppel Centre for Art Education
at the National Gallery Singapore is the
region’s first art education facility of
its kind in the region. Established with
a $12 million commitment from Keppel,
the Centre has benefitted over 300,000
participants in 2016. Guided school
tours and workshops introduce visual
literacy, analytical and interpretive skills
to students and support Singapore’s
national curriculum.
Keppel Nights, developed in partnership
with Esplanade – Theatres on the Bay,
provides students from heartland
schools with access to world class
performances and exposure to various
art and cultural forms. Since its relaunch
in November 2013, the programme has
benefitted close to 20,000 students from
72 schools.
Conserving Biodiversity
Keppel committed $2.08 million to
the establishment of Keppel Discovery
Wetlands, a freshwater forest wetland
ecosystem historically found in the
vicinity of the Singapore Botanic Gardens.
The restored 1.8 hectare forest wetlands,
which is scheduled to open in 2017,
will enhance the biodiversity in the
area and provide opportunities for the
public to experience and learn about the
freshwater forest wetland habitat in the
heart of the city.
100
Keppel Volunteers
planted trees at
Keppel Discovery
Wetlands to signify the
Group’s commitment
to environmental
conservation.
Keppel Corporation Limited Report to Shareholders 2016Governance & Sustainability Directors’ Statement & Financial Statements
Contents
102 Directors’ Statement
108 Independent Auditor’s Report
114 Balance Sheets
115 Consolidated Profit and Loss Account
116 Consolidated Statement of
Comprehensive Income
117 Statements of Changes in Equity
120 Consolidated Statement of Cash Flows
123 Notes to the Financial Statements
173 Significant Subsidiaries &
Associated Companies
182 Interested Person Transactions
183 Key Executives
191 Major Properties
196 Group Five-Year Performance
200 Group Value-Added Statements
201 Share Performance
202 Shareholding Statistics
203 Notice of Annual General Meeting
& Closure of Books
208 Corporate Information
209 Financial Calendar
211 Proxy Form
101
Directors’ Statement
For the financial year ended 31 December 2016
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 2016.
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 114 to 181, 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 2016, 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)
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Tan Puay Chiang
Till Bernhard Vestring
Veronica Eng
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)
Alvin Yeo Khirn Hai
Tan Ek Kia
Veronica Eng
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 independent 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 independent auditors annually;
Reviewed the nature and extent of non-audit services performed by independent auditors;
Met with independent auditors and internal auditors, without the presence of management, at least annually;
Ensured that the internal audit function is adequately resourced and has appropriate standing within the Company, at least
annually;
Reviewed interested person transactions; and
Investigated any matters within the Audit Committee’s term of reference, whenever it deemed necessary.
The Audit Committee has recommended to the Board of Directors the nomination of PricewaterhouseCoopers LLP for
re-appointment as independent auditors at the forthcoming Annual General Meeting of the Company.
3.
Arrangements to enable directors to acquire shares or debentures
Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object
was 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.
102 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
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
(No. of ordinary shares)
Lee Boon Yang
Loh Chin Hua
Loh Chin Hua (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
Veronica Eng
(Unvested restricted shares to be delivered after 2013)
Loh Chin Hua
(Unvested restricted shares to be delivered after 2014)
Loh Chin Hua
(Unvested restricted shares to be delivered after 2015)
Loh Chin Hua
1.1.2016
or date of
appointment,
if later
197,000
332,824
38,500
30,888
28,789
24,225
32,000
16,825
44,825
32,600
7,103
55,000
4,000
Holdings At
31.12.2016
21.1.2017
234,000
534,557
38,500
40,888
28,789
32,225
42,000
26,825
56,825
42,600
7,103
61,000
4,000
234,000
534,557
38,500
40,888
28,789
32,225
42,000
26,825
56,825
42,600
7,103
61,000
4,000
29,333
-
-
100,000
50,000
50,000
150,000
100,000
100,000
(Contingent award of restricted shares to be delivered after 2016) 1
Loh Chin Hua
-
180,000
180,000
(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
(Contingent award of performance shares issued in 2016 to be
delivered after 2018) 2
Loh Chin Hua
(Contingent award of performance shares – Transformation Incentive Plan
issued in 2016 to be delivered after 2020) 2
Loh Chin Hua
93,171
-
-
180,000
180,000
180,000
220,000
220,000
220,000
-
-
300,000
300,000
750,000
750,000
(3.145% Fixed Rate Notes due 2022)
Tan Puay Chiang
$250,000
$250,000
$250,000
103
Directors’ Statement
4.
Directors’ interests in shares and debentures (continued)
Subsidiary
- Keppel Land Limited
(3.90% Fixed Rate Notes due 2024)
Tan Puay Chiang
Associated Companies
- Keppel REIT
(No. of units)
Lee Boon Yang
Loh Chin Hua
Loh Chin Hua (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
(No. of units)
Alvin Yeo Khirn Hai
Tan Puay Chiang
Holdings At
1.1.2016
or date of
appointment,
if later
31.12.2016
21.1.2017
$250,000
$250,000
$250,000
15,097
7,000
556,160
5,568
8,070
4,303
210,663
1,939
8,911
12,000
6,000
16,118
7,000
556,160
5,568
8,070
4,303
210,663
1,939
8,911
12,000
6,000
16,118
7,000
556,160
5,568
8,070
4,303
210,663
1,939
8,911
12,000
6,000
75,000
75,000
95,550
100,000
95,550
100,000
1
2
Depending on the achievement of pre-determined performance targets, the actual number of shares to be released could range from zero to the number
stated.
Depending on the achievement of pre-determined performance targets, the actual number of shares to be released could range from zero to 150% of the
number stated.
5.
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 367,500 Shares issued by
virtue of exercise of options and options to take up 3,428,000 Shares were cancelled during the financial year. At the end of the
financial year, there were 14,025,974 Shares under option as follows:
Date of grant
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
1.1.2016
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
Number of Share Options
Exercised
-
-
-
-
-
-
(367,500)
-
-
(367,500)
Cancelled
(80,300)
(150,300)
(462,800)
(1,243,000)
(481,800)
(488,400)
-
(257,400)
(264,000)
(3,428,000)
Balance at
31.12.2016
-
-
1,166,100
4,693,759
1,873,800
2,659,530
103,800
1,624,785
1,904,200
14,025,974
Exercise
price
$5.21
$6.36
$7.70
$11.17
$8.46
$8.73
$3.07
$6.86
$6.89
Date of
expiry
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.
104 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
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.
After a comprehensive review of the Group’s strategy in 2014/2015 where stretched performance targets were set by the Board
for 2020, a transformation incentive plan under the approved KCL PSP scheme with a five-year performance period to achieve the
stretched goals was implemented in 2016 (the “TIP”).
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 1,185,000 under KCL PSP, 5,625,000 under KCL PSP-TIP and 5,825,645 under KCL
RSP during the financial year. The number of Shares released was 133,100 under KCL PSP and 5,448,278 under KCL RSP during
the financial year. 122,600 Shares under the KCL PSP and 4,630,370 Shares under KCL RSP were vested during the financial year.
125,328 Shares under the KCL RSP were cancelled during the financial year. At the end of the financial year, there were 2,562,212
contingent Shares under the KCL PSP, 5,625,000 contingent Shares under the KCL PSP-TIP and 5,726,426 contingent Shares and
4,854,898 unvested Shares under the KCL RSP as follows:
Contingent awards:
Date of Grant
KCL PSP
28.3.2013
31.3.2014
31.3.2015
30.7.2015
29.4.2016
KCL PSP-TIP
29.4.2016
KCL RSP
31.3.2015
30.7.2015
29.4.2016
Balance at
1.1.2016
554,719
577,400
700,000
220,000
-
2,052,119
Number of Shares
Contingent
awards
granted
Adjustments
upon
release
Released
Cancelled
-
-
-
-
1,185,000
1,185,000
(421,619)
-
-
-
-
(421,619)
(133,100)
-
-
-
-
(133,100)
-
(12,318)
(37,295)
-
(70,575)
(120,188)
Balance at
31.12.2016
-
565,082
662,705
220,000
1,114,425
2,562,212
-
-
5,625,000
5,625,000
4,731,880
789,603
-
5,521,483
-
-
5,825,645
5,825,645
-
-
-
-
-
-
-
-
-
-
5,625,000
5,625,000
(4,683,980)
(764,298)
-
(5,448,278)
(47,900)
(25,305)
(99,219)
(172,424)
-
-
5,726,426
5,726,426
Awards released but not vested:
Date of Grant
KCL PSP
28.3.2013
KCL RSP
28.3.2013
31.3.2014
31.3.2015
30.7.2015
Balance at
1.1.2016
Released
Vested
Cancelled
Other
adjustments
Balance at
31.12.2016
Number of Shares
-
-
133,100
133,100
(122,600)
(122,600)
-
-
(10,500)
(10,500)
-
-
1,309,027
2,884,098
-
-
4,193,125
-
-
4,683,980
764,298
5,448,278
(1,296,338)
(1,455,300)
(1,622,391)
(256,341)
(4,630,370)
(7,512)
(43,792)
(57,024)
(17,000)
(125,328)
(5,177)
(10,000)
(14,630)
(1,000)
(30,807)
-
1,375,006
2,989,935
489,957
4,854,898
105
Directors’ Statement
6.
Share plans of the Company (continued)
The information on Directors of the Company participating in the KCL RSP, the KCL PSP and the KCL PSP-TIP and those employees
of a subsidiary who receive 5% or more of the total number of contingent award of shares granted to date is as follows:
Contingent awards:
Name of Director/Employee
KCL RSP
Director of the Company
Loh Chin Hua
Employees of a Subsidiary
Chow Yew Yuen
Ang Wee Gee
KCL PSP
Director of the Company
Loh Chin Hua
Employees of a Subsidiary
Chow Yew Yuen
Ang Wee Gee
KCL PSP-TIP
Director of the Company
Loh Chin Hua
Employees of a Subsidiary
Chow Yew Yuen
Ang Wee Gee
Awards released but not vested:
Name of Director/Employee
KCL RSP
Director of the Company
Loh Chin Hua
Employees of a Subsidiary
Chow Yew Yuen
Ang Wee Gee
KCL PSP
Director of the Company
Loh Chin Hua
Employee of a Subsidiary
Chow Yew Yuen
Aggregate
awards
granted since
commencement
of plans
to the end of
financial year
Aggregate other
adjustments
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
180,000
644,757
108,000
90,000
556,672
150,000
-
-
-
(464,757)
180,000
(448,672)
(60,000)
108,000
90,000
300,000
870,814
(101,014)
(69,800)
700,000
200,000
150,000
655,638
250,000
(97,138)
-
(68,500)
-
490,000
250,000
750,000
750,000
500,000
400,000
500,000
400,000
-
-
-
-
-
-
750,000
500,000
400,000
Aggregate
awards
released since
commencement
of plans
to the end of
financial year
Aggregate
awards
vested since
commencement
of plans
to the end of
financial year
Aggregate
awards
released but
not vested as
at the end of
financial year
464,757
(314,757)
150,000
448,672
60,000
(358,672)
(20,000)
90,000
40,000
69,800
(69,800)
68,500
(68,500)
-
-
106 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
No Director or employee received more than 5 percent or more of the total number of contingent award of Shares granted during
the financial year and aggregated to date, except for the following:
Name of Director/Employee
Loh Chin Hua
Chow Yew Yuen
Ang Wee Gee
Contingent shares
granted during the
financial year (%)
Aggregate
contingent shares
granted to date (%)
9.7%
6.4%
5.1%
5.1%
3.8%
1.8%
There are no contingent award of Shares granted to any of the Company’s controlling shareholders or their associates under the
KCL RSP, the KCL PSP and the KCL PSP-TIP.
7.
Share options and share plans of a subsidiary
The particulars of share option and share plans of a subsidiary of the Company are as follows:
Keppel Telecommunications & Transportation Ltd (“Keppel T&T”)
At the end of the financial year, there were 570,000 unissued shares of Keppel Telecommunications & Transportation Ltd under
option relating to Keppel T&T Share Option Scheme. In addition, there were 872,515 unvested shares and 1,142,500 contingent
shares granted under Keppel T&T Restricted Share Plan, and 635,000 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.
8.
Independent auditor
The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment.
On behalf of the Board
LEE BOON YANG
Chairman
LOH CHIN HUA
Chief Executive Officer
Singapore, 24 February 2017
107
Independent Auditor’s Report
to the Shareholders of Keppel Corporation Limited
For the financial year ended 31 December 2016
Our Opinion
In our opinion, the accompanying consolidated financial statements of Keppel Corporation Limited (“the Company”) and its subsidiaries
(“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 Companies Act, Chapter 50 (“the Act”) and Financial Reporting Standards in Singapore (“FRSs”) so as to give a true and
fair view of the consolidated financial position of the Group and the financial position of the Company as at 31 December 2016, and of the
consolidated financial performance, consolidated changes in equity and consolidated cash flows of the Group, and changes in equity of
the Company for the financial year ended on that date.
What we have audited
The financial statements of the Group and of the Company, comprise:
•
•
•
•
•
•
the balance sheets of the Group and of the Company as at 31 December 2016;
the consolidated profit and loss account of the Group for the year then ended;
the consolidated statement of comprehensive income of the Group for the year then ended;
the statements of changes in equity of the Group and of the Company for the year then ended;
the consolidated statement of cash flows of the Group for the year then ended; and
the notes to the financial statements, including a summary of significant accounting policies.
Basis for Opinion
We conducted our audit in accordance with Singapore Standards on Auditing (“SSAs”). Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority (“ACRA”) Code of Professional
Conduct and Ethics for Public Accountants and Accounting Entities (“ACRA Code”) together with the ethical requirements that are
relevant to our audit of financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the ACRA Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements
for the financial year ended 31 December 2016. These matters were addressed in the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Description of key audit matter
How our audit addressed the key audit matter
Downturn in the Oil and Gas industry
The downturn in the Oil and Gas industry has had a significant
impact on the financial statements of the Group, in particular
over the following areas:
i) Appropriateness of revenue recognition and recoverability
of work-in progress balances in relation to Offshore and
Marine construction contracts
(Refer to Note 13(a) to the financial statements)
As at 31 December 2016, the Group’s work-in-progress balances
of $4,043 million, comprised rigs/vessels under construction
contracts with customers, as well as stocks for sale.
With the downturn in the industry, some customers had
requested for amendments to contract terms or deferral
of delivery dates of the rigs/vessels. This would impact the
appropriateness of revenue and margin recognised, as well
as the recoverability of work-in-progress balances relating to
construction contracts.
Work-in-progress balances relating to construction contracts
where delivery dates had been deferred and the revised delivery
dates are more than 12 months from 31 December 2016
amounted to $869 million.
In addition, the estimated net realisable values of stocks have
also declined, impacting the recoverability of work-in-progress
balances relating to stocks.
108 Keppel Corporation Limited Report to Shareholders 2016
We reviewed management’s assessment of the risk of customers
defaulting on the contracts, and corroborated management’s
assessment against our understanding of the industry. We
read public announcements and other externally available
information that would be relevant to understanding the
financial position of the major customers.
Where there were requests by customers for amendments to
contract terms or deferral of delivery dates, we discussed with
management to understand their assessment of the impact of
these modifications.
We reviewed the terms of each contract as well as the terms of
the modifications to assess if management’s judgment on the
continued recognition of revenue and associated margin was
appropriate.
We also reviewed management’s assessment of the external
valuation of each rig/vessel, to assess if the related work-in-
progress balances of construction contracts and stocks would
be recoverable through sale, in the event that any of the Group’s
customers are unable to take delivery of the rigs/vessels at the
contracted or revised delivery date.
Financial Report Description of key audit matter
How our audit addressed the key audit matter
Based on our procedures, we found that management’s
judgment around the recognition of revenue, including
associated margin on the Group’s Offshore and Marine projects
for the financial year was appropriate. We also found that the
work-in-progress balances on construction contracts and stocks
were appropriately assessed to be recoverable.
We focused on this area because of the significant judgment
required in:
• assessing whether the Group’s customers will be able to
fulfill their contractual obligations and take delivery of the
rigs/vessels at the contracted or revised delivery dates; and
• estimating the net realisable values of stocks for sale.
Arising from management’s assessments relating to the above,
a write-down of $54 million was made on work-in-progress –
stocks.
ii) Assessment of impairment of fixed assets in relation to the
Group’s Offshore and Marine business
(Refer to Note 6 to the financial statements)
The Group has significant fixed assets relating to its Offshore and
Marine business, which include various rigbuilding, shipbuilding
and repair operations around the world.
We reviewed management’s identification of the rigbuilding,
shipbuilding and repair operations which contained indicators of
impairment at 31 December 2016.
The downturn has impacted these operations and indicated that
the related items of fixed assets may be impaired.
Management had performed an impairment review to assess the
recoverable amount of these fixed assets, with each rigbuilding,
shipbuilding and repair facility identified as an individual
cash-generating unit (CGU). Arising from the review, the Group
recognised an impairment charge of $148 million relating to
these fixed assets.
In respect of the CGUs where indicators of impairment were
present, we obtained the VIU calculations and evaluated
the reasonableness of the key inputs to these calculations
considering our knowledge of the business and our
understanding of the Offshore and Marine industry.
As appropriate, we involved our internal valuation specialists.
We also considered the adequacy of the Group’s disclosures in
relation to impairment of these fixed assets.
We focused on this area as the assessment of the recoverable
amount using value-in-use (VIU) models required management
to exercise significant judgment over the estimation of
forecasted cash flows and discount rates.
Based on our procedures, we found management’s assessment
of the recoverable amounts of the fixed assets relating to the
Group’s rigbuilding, shipbuilding and repair operations to be
appropriate.
iii) Assessment of impairment of investment in KrisEnergy
(Refer to Note 9 to the financial statements)
The Group has a 40% equity interest in KrisEnergy Ltd
(“KrisEnergy”), a company listed on the Singapore Stock
Exchange and engaged in the Oil and Gas industry.
At 31 December 2016, the carrying value of the Group’s
investment in KrisEnergy as a CGU was higher than the fair value
of the investment of $111 million, based on KrisEnergy’s share
price on that date.
The existence of the above impairment indicator required
management to estimate the recoverable amount of the
Group’s investment in KrisEnergy. This assessment was done
on a VIU basis using a discounted cash flow model. The Group
recognised an impairment charge of $46 million arising from
the assessment, bringing the carrying value of the Group’s
investment in KrisEnergy to $347 million.
We focused on this area as the assessment of the recoverable
amount required management to make cash flow projections
from 2017 to 2032 and to apply key estimates and assumptions
such as oil prices, discount rates, production volume, lifting
costs, reserves and operating costs.
We also found the disclosures in the financial statements in
respect of the impairment to be adequate.
We read recent public announcements made by KrisEnergy to
obtain an understanding of the financial position of KrisEnergy.
We evaluated the reasonableness of the estimates and
assumptions in the discounted cash flow model with the key
focus on the estimated future oil prices of US$59 to US$76 per
barrel, which was the most sensitive input to the model. We also
involved our internal valuation specialists in the evaluation of the
discounted cash flow model.
We considered the adequacy of the Group’s disclosures in the
financial statements in respect of the impairment.
Based on our procedures, we found the estimates and
assumptions within the discounted cash flow model to be
reasonable. We also found the disclosures in the financial
statements in respect of the impairment to be adequate.
109
Independent Auditor’s Report
Description of key audit matter
How our audit addressed the key audit matter
Financial exposure in relation to contracts with Sete Brasil
(Refer to Note 2(x)(ii) to the financial statements)
The Group’s customer, Sete Brasil (“Sete”) filed for bankruptcy
protection on 21 April 2016. Sete had previously contracted
with the Group for the construction of six rigs. Sete had stopped
making payments to the Group under these contracts since
November 2014. The Group suspended construction of these six
rigs in November 2015.
The difficulties faced by Sete, as well as the uncertain economic
and political conditions in Brazil, have resulted in significant
uncertainty on the outcome of these contracts.
In the prior year, an expected loss of $228 million was
recognised. During 2016, Sete’s authorised representatives had
been in discussion with the Group on the eventual completion
and delivery of some of the rigs.
As at the date of the financial statements, management has
determined that no further losses are expected.
We focused on this area because of the significant judgment
required in assessing if additional provision for losses on these
contracts was needed for the financial year ended
31 December 2016.
Investigations in relation to contracts entered into with
Petrobras and Sete Brasil
(Refer to Note 30 to the financial statements)
We enquired with management on their assessment of the
contracts with Sete, including their expectation of reasonably
possible outcomes on these contracts.
We reviewed the terms of each contract and correspondences
with Sete or its authorised representatives to validate the
assumptions applied by management. We also corroborated
management’s assessments against externally available
information.
We visited the Group’s Brazilian operations and met with their
management to obtain an understanding of the uncertainties in
the Brazilian market.
We also reviewed the Group’s disclosures in the financial
statements in respect of this matter.
Based on our procedures, we found management’s assessment
in respect of these contracts to be reasonable. We also found
that the disclosures in the financial statements in respect of this
matter to be adequate.
The Company had previously made announcements in relation to
allegations in Brazil that illegal payments were made by
Mr Zwi Skornicki in connection with contracts entered into
between certain Keppel entities with Petrobras and/or Sete
Brasil.
The Group is presently cooperating with authorities in Brazil
and other relevant jurisdictions investigating potential improper
arrangements and payments made in connection with certain
Keppel entities’ transactions or other business relationships.
We made enquiries of appropriate personnel within the Group
and evaluated the tone set by the Board and management, and
the Group’s approach to managing the risks arising from the
matter.
We discussed with the Audit Committee and met with the
Group’s investigation team, comprising internal and external
legal counsel and forensic specialists, to understand the scope,
approach and status of the investigation. We involved our own
forensic specialists in these discussions.
As at the date of the financial statements, investigations are still
ongoing and management has determined that it is premature to
predict the eventual outcome of this matter.
We also reviewed the disclosure in the financial statements in
relation to the matter.
We focused on this area because the outcome of the matter can
lead to fines, penalties or other implications to the Group.
Based on our procedures and representations obtained from
management and the Audit Committee, we found the disclosures
in the financial statements in respect of this matter to be
adequate.
110 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
Description of key audit matter
How our audit addressed the key audit matter
Revenue recognition using the percentage-of-completion
method
(Refer to Notes 2(q) and 22 to the financial statements)
During the year, the Group recognised revenue from its
rigbuilding, shipbuilding and repair, and long-term engineering
contracts (“construction projects”) based on the percentage-of-
completion (“POC”) method amounting to $2,706 million.
The POC on construction projects was measured by reference to
the percentage of the physical proportion of the contract work
completed.
We focused on this area because of the significant management
judgment required in:
•
•
the estimation of the physical proportion of the contract work
completed for the contracts; and
the estimation of total costs on the contracts, including
contingencies that could arise from variations to original
contract terms, and claims.
Valuation of properties held for sale
(Refer to Note 13(c) to the financial statements)
The Group has residential properties held for sale mainly in
China, Singapore, Indonesia and Vietnam.
The properties held for sale stated at the lower of cost and net
realisable values amounted to $5,771 million as at 31 December
2016. The determination of the estimated net realisable values of
these properties is highly dependent on the Group’s expectation
of future selling prices and the estimated cost to complete the
development project.
During the financial year, the Group recognised $19 million in
its profit and loss account to write down certain residential
properties held for sale to their net realisable values.
We focused on this area because of the significant judgment
required in making estimates of future selling prices and the
estimated cost to complete the development project. Continued
unfavourable market conditions in certain of the markets
which the Group operates might exert downward pressure on
transaction volumes and residential property prices. This could
lead to future trends in these markets departing from known
trends based on past experience. There is therefore a risk that
the estimates of carrying values at the date of the financial
statements exceed future selling prices, resulting in more losses
when the properties are sold.
In respect of construction projects, we sighted certified
progress reports from engineers, performed site visits, and
obtained confirmations from project owners to assess the
appropriateness of management’s estimates of the physical
proportion of work completed.
We evaluated the effectiveness of management’s controls over
the estimation of total costs and assessed the reasonableness of
key inputs in the cost estimation. We tested the appropriateness
of estimated costs by comparing these against actual costs
incurred.
We then recomputed the revenues and costs recognised for the
current financial year based on the respective POC and traced
these to the accounting records.
We also considered the adequacy of the Group’s disclosures in
respect of revenue from construction contracts.
Based on our procedures, we found that assumptions made in
the estimation of the percentage of work completed and of the
total costs in relation to the Group’s construction contracts to
be reasonable. We also found the disclosures in the financial
statements to be adequate.
In making estimates of future selling prices, management
took into account macroeconomic and real estate price trend
information. They also applied their knowledge of the business in
their regular review of these estimates.
We corroborated the Group’s forecast selling prices by
comparing the forecast selling price to, where available, recently
transacted prices and prices of comparable properties located in
the same vicinity as the properties held for sale.
We compared management’s budgeted total development
costs against underlying contracts with vendors and supporting
documents. We discussed with the project managers to
assess the reasonableness of estimated cost to complete
and corroborated the underlying assumptions made with our
understanding of past completed projects.
We focused on development projects with slower-than-expected
sales or with low or negative margins. For projects which are
expected to sell below cost, we assessed the reasonableness of
the provisions made.
We also considered the adequacy of the disclosures in the
financial statements, in describing the provisions made for
properties held for sale.
Based on our procedures, we were satisfied that management’s
estimates and assumptions were reasonable. We also found the
related disclosures in the financial statements to be adequate.
111
Independent Auditor’s Report
Description of key audit matter
How our audit addressed the key audit matter
Valuation of investment properties
(Refer to Note 7 to the financial statements)
The Group owns a portfolio of investment properties
comprising office buildings, residential property and mixed-use
development projects, located primarily in China, Singapore,
Indonesia and Vietnam.
We evaluated the qualifications and competence of the external
valuers. We considered the valuation methodologies used
against those applied by other valuers for similar property types.
We also considered other alternative valuation methods.
At 31 December 2016, investment properties stated at fair
values amounting to $3,550 million were determined based on
independent external valuations.
We focused on this area as the valuation process involved
significant judgment in determining the appropriate valuation
methodology to be used, and in estimating the underlying
assumptions to be applied. The valuations are highly sensitive
to key assumptions applied in deriving the capitalisation rate,
terminal yield, discount rate, net initial yield, replacement cost
and price of comparable plots.
We tested the reliability of inputs of the projected cash flows
used in the valuation to supporting lease agreements and
other documents. We corroborated the inputs such as the
capitalisation rate, terminal yield, discount rate, net initial
yield, replacement cost and price of comparable plots used in
the valuation by comparing them against historical rates and
available industry data, taking into consideration comparability
and market factors. Where the inputs were outside the expected
range, we undertook further procedures to understand the
reasons for these and, where necessary, held further discussions
with the valuers.
We also considered the adequacy of the disclosures in the
financial statements, in describing the inherent degree of
subjectivity and key assumptions used in the estimates. This
includes the relationships between the key unobservable inputs
and fair values.
The valuers are members of recognised professional bodies for
external valuers. We found the valuation methodologies used to
be in line with generally accepted market practices and the key
assumptions used were within the range of market data. We also
found the disclosures in the financial statements to be adequate.
Other information
Management is responsible for the other information. The other information comprises the “Directors’ Statement” and other sections of
the Keppel Corporation Limited Report to Shareholders 2016 (“Other Sections of the Annual Report”), but does not include the financial
statements and our auditor’s report thereon. We obtained the Directors’ Statement prior to the date of this auditor’s report. The Other
Sections of the Annual Report are expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we
obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in respect of the work we have described above and performed on the Directors’
Statement.
When we read the Other Sections of the Annual Report, if we conclude that there is a material misstatement therein, we are required to
communicate the matter to those charged with governance and take appropriate actions in accordance with SSAs.
Responsibilities of Management and Directors 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 Act and FRSs, 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.
In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either
intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The directors’ responsibilities include overseeing the Group’s financial reporting process.
112 Keppel Corporation Limited Report to Shareholders 2016
Financial Report Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SSAs, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and
to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the
financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
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.
The engagement partner on the audit resulting in this independent auditor’s report is Sim Hwee Cher.
PricewaterhouseCoopers LLP
Public Accountants and Chartered Accountants
Singapore, 24 February 2017
113
Balance Sheets
As at 31 December 2016
Share capital
Treasury shares
Reserves
Share capital & reserves
Non-controlling interests
Total equity
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
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
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
13
19
14
14
20
26
20
21
18
Group
Company
31 December
2016
$’000
1,288,394
(15,523)
10,386,078
11,658,949
674,691
31 December
2015
$’000
1,288,394
(49,011)
9,856,278
11,095,661
830,198
31 December
2016
$’000
1,288,394
(15,523)
5,346,838
6,619,709
-
31 December
2015
$’000
1,288,394
(49,011)
5,608,423
6,847,806
-
12,333,640
11,925,859
6,619,709
6,847,806
2,645,456
3,550,290
-
5,315,078
377,704
814,438
140,669
12,843,635
2,845,547
3,272,112
-
5,409,637
395,148
388,880
99,825
12,411,149
852
-
8,154,201
-
14,340
97,557
-
8,266,950
1,281
-
8,139,235
-
-
71,949
-
8,212,465
10,025,805
10,762,619
-
-
-
530,883
3,373,841
98,984
273,928
2,087,078
16,390,519
4,753,492
379,910
1,669,466
81,679
-
111,543
1,835,321
339,108
9,170,519
-
509,041
3,065,985
53,848
225,118
1,892,841
16,509,452
4,971,549
485,232
1,888,468
90,216
-
137,376
856,735
352,595
8,782,171
3,982,362
688
2,965
42,923
-
542
4,029,480
3,445,760
511
1,257
48,938
-
91
3,496,557
112,471
345,313
144,866
293,108
-
-
1,062,722
-
692,311
17,263
2,230,080
-
-
993,056
-
631,879
15,867
2,078,776
7,220,000
7,727,281
1,799,400
1,417,781
7,217,721
331,175
181,099
7,729,995
7,401,934
373,173
437,464
8,212,571
3,325,600
-
121,041
3,446,641
2,500,000
-
282,440
2,782,440
Net assets
12,333,640
11,925,859
6,619,709
6,847,806
The accompanying notes form an integral part of these financial statements.
114 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
Consolidated Profit and Loss Account
For the financial year ended 31 December 2016
Revenue
Materials and subcontract costs
Staff costs
Depreciation and amortisation
Other operating (expenses)/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
22
23
24
25
25
25
9
26
5
27
2016
$’000
6,767,264
(4,204,065)
(1,155,382)
(236,475)
(376,129)
795,213
15,179
124,093
(224,549)
344,986
1,054,922
(233,147)
2015
$’000
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)
821,775
1,592,965
783,928
37,847
821,775
1,524,622
68,343
1,592,965
43.2 cts
42.9 cts
84.0 cts
83.5 cts
The accompanying notes form an integral part of these financial statements.
115
Consolidated Statement of Comprehensive Income
For the financial year ended 31 December 2016
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
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
2016
$’000
2015
$’000
821,775
1,592,965
40,516
10,918
(10,868)
(21,925)
198,255
195,565
(482,205)
188,860
(121,569)
792
100,615
16,633
536
(14,352)
(40,599)
5,111
19,198
(29,374)
270,062
(213,955)
1,091,837
1,379,010
1,075,567
16,270
1,091,837
1,272,232
106,778
1,379,010
The accompanying notes form an integral part of these financial statements.
116 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
Statements of Changes in Equity
For the financial year ended 31 December 2016
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
Total
Equity
$’000
1,288,394
(49,011)
(383,540) 10,379,320
(139,502) 11,095,661
830,198 11,925,859
-
432,924
783,928
-
-
(141,285)
783,928
291,639
37,847
(21,577)
821,775
270,062
432,924
783,928
(141,285) 1,075,567
16,270
1,091,837
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36,031
(544,654)
-
-
(3,069)
-
-
36,557
(35,428)
-
-
-
-
-
-
(38,503)
38,503
-
9,403
109
-
-
33,488
(37,791)
(496,748)
-
-
-
-
-
-
-
-
-
-
-
(107)
-
(74)
-
-
-
(11,047)
-
33,488
(107)
(37,898)
(11,121)
(507,869)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(544,654)
36,031
-
379
(544,654)
36,410
-
(3,069)
(77,263)
-
(77,263)
(3,069)
1,129
-
-
-
1,129
-
9,403
(62,080)
(52,677)
109
49
158
(501,051)
(138,915)
(639,966)
-
514
514
(181)
(8,176)
(8,357)
-
(11,047)
(36,247)
11,047
(36,247)
-
(11,228)
(512,279)
(32,862)
(171,777)
(44,090)
(684,056)
Group
2016
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
Purchase of treasury shares
Treasury shares reissued
pursuant to share plans and
share option scheme
Transfer of statutory, capital
and other reserves to
revenue reserves
Cash subscribed by/
(return of capital to)
non-controlling shareholders
Contributions to defined
benefits plans
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
Other adjustments
Total change in ownership
interests in subsidiaries
Total transactions with owners
As at 31 December
1,288,394
(15,523)
11,486 10,655,379
(280,787) 11,658,949
674,691 12,333,640
* Details of other comprehensive income have been included in the consolidated statement of comprehensive income.
The accompanying notes form an integral part of these financial statements.
117
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
Total
Equity
$’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
Statements of Changes in Equity
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
Total transactions with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
-
-
-
799
-
(346)
(5,044)
10,270
308,538
(568,056)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(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)
(3,227,176)
-
(7,414)
(7,414)
303,494
(557,333)
(3,536,860)
(3,623,459)
(3,233,366)
(4,180,792)
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.
The accompanying notes form an integral part of these financial statements.
118 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
Company
2016
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
Dividends paid
Share-based payment
Purchase of treasury shares
Treasury shares reissued pursuant to
share plans and share option scheme
Total transactions with owners
Share
Capital
$’000
Treasury
Shares
$’000
Capital
Reserves
$’000
Revenue
Reserves
$’000
Total
$’000
1,288,394
(49,011)
199,713
5,408,710
6,847,806
-
-
-
-
-
-
-
-
-
-
-
-
14,340
14,340
269,666
-
269,666
269,666
14,340
284,006
-
-
(3,069)
36,557
33,488
-
34,491
-
(35,428)
(937)
(544,654)
-
-
-
(544,654)
(544,654)
34,491
(3,069)
1,129
(512,103)
As at 31 December
1,288,394
(15,523)
213,116
5,133,722
6,619,709
Company
2015
As at 1 January
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
The accompanying notes form an integral part of these financial statements.
119
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2016
Operating activities
Operating profit
Adjustments:
Depreciation and amortisation
Share-based payment expenses
Profit on sale of fixed assets
Adjustment to gain on disposal of data centres
Gain on disposal of subsidiaries
Loss on disposal of associated companies
Impairment/write-off of fixed assets
Impairment of intangibles
Impairment/(write-back of impairment) of investments
and associated company
Loss/(gain) associated with restructuring of operations and others
Fair value gain on investment properties
Loss/(profit) on sale of investments
Operational cash flow before changes in working capital
Working capital changes:
Stocks & work-in-progress
Debtors
Creditors
Investments
Intangibles
Amount due to/from associated companies
Interest received
Interest paid
Net income taxes paid
Net cash from/(used in) 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
Advances to/from associated companies
Dividends received from investments and associated companies
Net cash (used in)/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 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 from/(used in) financing activities
Net increase/(decrease) 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
The accompanying notes form an integral part of these financial statements.
120 Keppel Corporation Limited Report to Shareholders 2016
Note
2016
$’000
2015
$’000
795,213
1,513,631
236,475
39,969
(6,170)
(26,963)
(11,853)
-
121,934
-
119,971
1,637
(63,745)
4,172
1,210,640
450,992
(781,902)
(223,853)
(12,467)
(2,401)
10,708
651,717
132,685
(231,359)
(223,020)
330,023
(137,028)
(326,304)
(466,226)
80,218
174,964
19,208
(58,423)
403,660
(309,931)
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)
39,741
(449,523)
115,566
(149,141)
(302,399)
(785,497)
(2,559)
(567,812)
(1,158,417)
1,261,262
237,791
5,307
80,494
350,525
206,591
A
B
(8,357)
-
(3,227,301)
779
1,129
(52,677)
1,729,729
(912,372)
(3,069)
(544,654)
(77,263)
132,466
8,115
(2,574)
2,616,325
(1,692,712)
(49,367)
(872,479)
(83,225)
(3,302,439)
152,558
(3,881,345)
1,859,118
5,712,351
7,096
28,112
C
2,018,772
1,859,118
Financial Report
Notes to Consolidated Statement of Cash Flows
A.
Acquisition of Subsidiaries
During the financial year, net assets of subsidiaries acquired at their fair values were as follows:
Fixed assets
Intangibles
Stocks and work-in-progress
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
Goodwill arising from acquisition
Net assets acquired
Total purchase consideration
Less: Bank balances and cash acquired
2016
$’000
14,439
44,831
78,373
11,132
30
(9,790)
(235)
(1,208)
137,572
(514)
-
-
137,058
137,058
(30)
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)
Cash flow on acquisition
137,028
2,559
During the year, significant acquisition of subsidiaries mainly relates to the acquisition of 59.6% interest in Courex Pte Ltd and
acquisition of Cameron International Corporation’s (Cameron) offshore product division, which comprises the LeTourneauTM jackup
rig designs, rig kit business, as well as its aftersales and aftermarket service. 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 2016.
In the prior year, the Group acquired 75% interest in Array Real Estate Pte. Ltd. and additional interest of 50.1% in OWEC Tower
(AS), increasing our interest to 100%.
The accompanying notes form an integral part of these financial statements.
121
Consolidated Statement of Cash Flows
Notes to Consolidated Statement of Cash Flows (continued)
B.
Disposal of Subsidiaries
During the financial year, the book values of net assets of subsidiaries disposed were as follows:
Fixed assets
Investment properties
Long term investments
Stocks and work-in-progress
Debtors and other assets
Bank balances and cash
Assets classified as held for sale*
Creditors and other liabilities
Borrowings
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
Cash flow on disposal
2016
$’000
(18,512)
(74,062)
(54)
(49,047)
(63,458)
(19,095)
-
45,026
45,176
5,380
-
36,247
(92,399)
-
(92,399)
(11,853)
4,939
(99,313)
19,095
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
(80,218)
(1,261,262)
* 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
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 60% interest in Keppel CT Developments Pte Ltd, sale of
70% interest in Quang Ba Royal Park Joint Venture Co Ltd, sale of 45% interest in Keppel Thai Properties Public Company Ltd, sale
of 95% interest in Jiangyin Yangtze International Country Club, sale of 60% interest in Belwynn Hung Phu Joint Venture Limited
Liability and sale of 100% interest in Fernland Investment Pte Ltd.
Significant disposals in the prior year include the sale of 51% interest in Keppel Merlimau Cogen Pte Ltd and disposal of 80%
interest in BG Junction in Surabaya.
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
The accompanying notes form an integral part of these financial statements.
122 Keppel Corporation Limited Report to Shareholders 2016
2016
$’000
2015
$’000
2,087,078
1,892,841
(68,306)
2,018,772
(33,723)
1,859,118
Financial Report
Notes to the Financial Statements
For the financial year ended 31 December 2016
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
investments and asset management.
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 2016 and the balance sheet and statement of
changes in equity of the Company at 31 December 2016 were authorised for issue in accordance with a resolution of the Board of
Directors on 24 February 2017.
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 2016. 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:
•
•
•
•
•
•
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, 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
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.
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 obtaining control or ceasing control. 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 transferred, 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.
123
Notes to the Financial Statements
2.
Significant accounting policies (continued)
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 based on their respective interests in a subsidiary, even
if this results in the non-controlling interests having a deficit balance.
(c)
Fixed Assets
Fixed assets are initially stated at cost and subsequently carried at cost less accumulated depreciation and accumulated
impairment loss, if any. The cost initially recognised includes its purchase price and any cost that is directly attributable
to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by
management. Subsequent expenditure is added to the carrying amount only when it is probable that future economic
benefits will flow to the entity and the cost can be measured reliably. 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 60 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.
124 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
(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.
The cost of major renovations or improvements is capitalised and the carrying amounts of the replaced components 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. 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.
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.
Investments in subsidiaries are 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 net identifiable assets, liabilities and contingent liabilities of
the associated company recognised at the date of acquisition measured at their fair values 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 identifiable assets, liabilities and contingent liabilities measured at their fair
values over the cost of acquisition, after reassessment, is recognised immediately in the profit and loss account as a bargain
purchase gain.
(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 the net identifiable
assets acquired and the liabilities assumed measured at their fair values at acquisition date. 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.
125
Notes to the Financial Statements
2.
Significant accounting policies (continued)
Management Rights
Management rights acquired is initially recognised at cost and subsequently carried at cost less accumulated impairment
losses, if any. 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, customer contracts and customer relationships initially recognised at
cost and subsequently carried at cost less accumulated amortisation. 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 20 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. Transaction costs for investments held for trading are recognised immediately as expenses.
Investments are subsequently carried 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 and accumulated in the fair value reserve, 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 prices are 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 and accumulated in the hedging reserve, 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 Group documents at the inception of the transaction the relationship between the hedging instruments and hedged
items, as well as its risk management objective and strategies for undertaking various transactions. The Group also
documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives designated as
hedging instruments are highly effective in offsetting changes in fair value or cash flows of the hedged items.
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 electricity future contracts is determined
based on the Uniform Singapore Energy Price quarterly base load electricity futures prices quoted on the Singapore
Exchange. The fair value of interest rate caps and interest rate swaps are based on valuations provided by the Group’s
bankers.
126 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
(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. For cash subjected to restriction, assessment is made
on the economic substance of the restriction and whether they meet the definition of cash and cash equivalents.
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 (including work-in-progress), consumable materials and supplies are stated at the lower of cost and net realisable
value, cost being principally determined on the weighted average method. Net realisable value is the estimated selling price
in the ordinary course of business, less the estimated costs of completion and applicable variable selling expenses.
For work-in-progress in relation to construction contract, when contract costs incurred to date plus recognised profits
less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work.
For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised
losses, the surplus is shown as work-in-progress (billings in excess of costs). Amounts received before the related work is
performed are included in the statement of financial position, as a liability, as work-in-progress (billings in excess of costs).
Amounts billed for work performed but not yet paid by the customer are included in the balance sheet under debtors. When
it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense
immediately.
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
development.
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.
(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
In addition to the objective evidence of impairment described in the preceeding paragraph, 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 equity
investments, impairment losses previously recognised in the profit and loss account are not reversed through the profit and
loss account in a subsequent period.
127
Notes to the Financial Statements
2.
Significant accounting policies (continued)
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 (“CGU”s) 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 CGU, including goodwill,
exceeds the recoverable amount of the CGU. The recoverable amount of a CGU is the higher of the CGU’s fair value less
cost to sell and value-in-use. The impairment loss is allocated first to reduce the carrying amount of goodwill allocated to
the CGU 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 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 CGU to which the asset
belongs.
If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the
asset (or CGU) 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 carried 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. Provisions are not recognised for future operating losses.
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.
128 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
(o)
Leases
When a group company is the lessee
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
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;
Sale of goods and services;
Rental income from investment properties;
Investment and fee income; and
Dividend income.
-
-
-
-
Revenue recognition
Revenue from rigbuildings, shipbuildings and repairs, and long term engineering contracts is recognised based on the
percentage of completion method in proportion to the stage of completion and provided the outcome of such work can be
reliably estimated. The percentage of completion is measured by reference to the percentage of the physical proportion of
the contract work completed as determined by engineers’ estimates. Where applicable, anticipated losses on contracts in
progress are recognised in the profit and loss account.
Revenue recognition on partly completed properties, which are held for sale is based on the following methods:
−
−
−
For Singapore trading properties under progressive payment scheme, revenue and profit are recognised on the
percentage-of-completion method to reflect the continuous transfer of significant risks and rewards of the ownership
of the properties to the purchasers as construction progresses. The percentage of work completion is measured
based on the construction and related costs incurred to date as a proportion of the estimated total construction and
related costs;
For 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.
129
Notes to the Financial Statements
2.
Significant accounting policies (continued)
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, sales returns, rebates and discounts, and after eliminating sales within the
Group.
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 is recognised in the profit and loss account when the right to receive payment is established, and in the
case of fixed interest bearing investments, on a time proportion basis using the effective interest method.
Interest income is recognised on a time proportion basis using the effective interest method.
(r)
Borrowing Costs
Borrowing costs incurred to finance the development of properties and acquisition of fixed assets are capitalised during the
period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are taken to the
profit and loss account over the period of borrowing using the effective interest rate method.
(s) Employee Benefits
Defined Contribution Plan
The Group makes contributions to pension schemes as defined by the laws of the countries in which it has operations. In
particular, the Singapore companies make contributions to the Central Provident Fund in Singapore, a defined contribution
pension scheme. Contributions to pension schemes are recognised as an expense in the period in which the related service
is performed.
Employee Leave Entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the
estimated liability for leave as a result of services rendered by employees up to the balance sheet date.
Share Option Scheme and Share Plans
The Group operates share-based compensation plans. The fair value of the employee services received in exchange for
the grant of options, restricted shares and performance shares is recognised as an expense in the profit and loss account
with a corresponding increase in the share option and share plan reserve over the vesting period. The total amount to
be recognised over the vesting period is determined by reference to the fair values of the options, restricted shares and
performance shares granted on the respective dates of grant.
At each balance sheet date, the Group revises its estimates of the number of options that are expected to become
exercisable and share plan awards that are expected to vest on the vesting dates, and recognises the impact of the revision
of the estimates in the profit and loss account, with a corresponding adjustment to the share option and share plan reserve
over the remaining vesting period.
No expense is recognised for options or share plan awards that do not ultimately vest, except for options or share plan
awards where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the
market condition is satisfied, provided that all other performance and/or service conditions are satisfied.
The proceeds received from the exercise of options are credited to share capital when the options are exercised. When share
plan awards are released, the share plan reserve is transferred to share capital if new shares are issued, or to the treasury
shares account when treasury shares are re-issued to the employee.
130 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
(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.
Deferred income tax is measured at the tax rates that are expected to apply when the related deferred income tax asset/
liability is realised/settled, based on the tax rates and tax laws that have been enacted or substantively enacted by the
balance sheets date, and based on the tax consequence that will follow from the manner in which the Group expects, at the
balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred
tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Current and deferred tax are recognised as an expense or income in the profit and loss account, except when they relate to
items credited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise
from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into
account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities over cost.
(u) Foreign Currencies
Functional Currency
Items included in the financial statements of each entity in the Group are measured using the currency that best reflects the
economic substance of the underlying events and circumstances relevant to that entity (“functional currency”).
The financial statements of the Group and the balance sheet and statement of changes in equity of the Company are
presented in Singapore Dollars, which is the functional currency of the Company.
Foreign Currency Transactions
Transactions in foreign currencies are translated at exchange rates approximating those ruling at the transaction dates.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at exchange
rates approximating those ruling at that date. Exchange differences arising from translation of monetary assets and
liabilities are taken to the profit and loss account. Non-monetary items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are not retranslated.
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. Goodwill and fair value adjustments arising on
acquisition of a foreign entity are treated as assets and liabilities of the foreign subsidiaries and associated companies.
Exchange differences due to such currency translation are recognised in other comprehensive income and accumulated in
Foreign Exchange Translation Account until disposed.
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 from equity 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.
131
Notes to the Financial Statements
2.
Significant accounting policies (continued)
(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 and any directly attributable transaction
cost 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 Judgments
(i)
Critical judgments 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 judgments which is expected to have a significant effect on the amounts recognised in the financial
statements, apart from those involving estimations and as follows:
Control over Keppel REIT
The Group has approximately 45% (2015: approximately 46%) gross ownership interest of units in Keppel REIT as
at 31 December 2016. 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% (2015: approximately 40%) gross ownership interest of shares in KrisEnergy
Limited (“KrisEnergy”) as at 31 December 2016. 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 37% (2015: approximately 38%) 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 2016, 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.
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.
132 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
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. Management performed impairment tests on these
non-financial assets as at 31 December 2016. Refer to Note 6, 7, 8, 9 and 12 for more details.
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 22.
Revenue arising from additional claims and variation orders, whether billed or unbilled, is recognised when
negotiations have reached an advanced stage such that it is probable that the customer will accept the claims or
approve the variation orders, and the amount that it is probable will be accepted by the customer can be measured
reliably.
The Group had previously entered into contracts with Sete Brasil (“Sete”) for the construction of six rigs for which
progress payments from Sete had ceased since November 2014. During the financial year ended 31 December
2015, an expected loss of $228,000,000 was recognised, taking into consideration cost of completion, cost of
discontinuance, salvage cost and unpaid invoices with regards to these rigs.
In April 2016, Sete filed for bankruptcy protection and its authorised representatives had been in discussion with the
Group on the eventual completion and delivery of some of the rigs. As at the balance sheet date, management had
performed an evaluation of the reasonably possible outcomes on these contracts and concluded that no further loss
on these contracts is currently expected.
Appropriateness of revenue recognition and recoverability of construction balances in relation to Offshore & Marine
projects
As at 31 December 2016, the Group had several rigs/vessels that were under construction for customers or had
been completed and were awaiting delivery to the customers. With the downturn in the industry, some of the Group’s
customers had requested for amendments to contract terms or deferral of delivery dates of the rigs/vessels.
Management assesses each construction project individually to ensure that the recognition of revenue and margin on
these projects is appropriate, and the related work-in-progress (cost in excess of billings) balances are recoverable.
This assessment requires management to make judgment as to whether the Group’s customers will be able to fulfil
their contractual obligations and take delivery of the rigs/vessels at the contracted or revised delivery date.
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.
133
Notes to the Financial Statements
3.
Share capital
Group and Company
Number of Ordinary Shares (“Shares”)
Issued Share Capital
Treasury Shares
2016
2015
2016
2015
Balance at 1 January
Issue of shares under the share option scheme
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
1,817,910,180
-
-
1,817,768,227
139,900
2,053
-
-
-
-
1,817,910,180
-
-
-
-
1,817,910,180
(6,762,980)
-
-
367,500
122,600
4,630,370
(590,000)
(2,232,510)
Balance at 1 January
Issue of shares under the share option scheme
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)
2016
2015
1,288,394
-
-
-
-
-
-
1,288,394
1,287,595
779
20
-
-
-
-
1,288,394
2016
(49,011)
-
-
2,555
877
33,125
(3,069)
(15,523)
(5,932,000)
-
-
1,388,230
323,400
4,265,390
(6,808,000)
(6,762,980)
2015
(48,665)
-
-
11,396
2,653
34,972
(49,367)
(49,011)
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends declared by the Company.
In the prior year, the Company issued 139,900 Shares at an average weighted price of $5.57 per Share for cash upon exercise of
options under the KCL Share Option Scheme.
During the financial year, 122,600 (2015: 323,400) Shares under the KCL Performance Share Plan (“KCL PSP”) and 4,630,370
(2015: 4,267,443) Shares under the KCL Restricted Share Plan (“KCL RSP”) were vested.
During the financial year, the Company transferred 5,120,470 (2015: 5,977,020) treasury shares to employees under vesting
of shares released under the KCL Share Option Scheme and KCL Share Plans. The Company also purchased 590,000
(2015: 6,808,000) treasury shares in the Company in the open market during the financial year. The total amount paid was
$3,069,000 (2015: $49,367,000). 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:
Till Bernhard Vestring (Chairman)
Lee Boon Yang
Danny Teoh
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 number of Shares available under
the Scheme shall not exceed 15% of the issued share capital of the Company.
134 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
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
2016
2015
Number of
options
17,821,474
(367,500)
(3,428,000)
14,025,974
Weighted
average
exercise
price
$8.81
$3.07
$8.97
$8.92
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
Exercisable at 31 December
14,025,974
$8.92
17,821,474
$8.81
The weighted average share price at the date of exercise for options exercised during the financial year was $5.87 (2015: $8.87).
The options outstanding at the end of the financial year had a weighted average exercise price of $8.92 (2015: $8.81) and a
weighted average remaining contractual life of 1.4 years (2015: 2.3 years).
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.
After a comprehensive review of the Group’s strategy in 2014/2015 where stretched performance targets were set by the Board
for 2020, a transformation incentive plan under the approved KCL PSP scheme with a five-year performance period to achieve the
stretched goals was implemented in 2016 (the “TIP”). Executives will only benefit from the TIP if the Group meets the stretched
financial and non-financial targets linked to the Group 2020 Scorecard, and if the executives meet or exceed their individual
performance targets. In order to align the interests of the executives with those of shareholders, the TIP is directly linked to total
shareholder return where the total shareholder return conditions must be satisfied before any vesting shall occur.
Details of the KCL RSP and the KCL PSP are as follows:
KCL RSP
KCL PSP
KCL PSP-TIP
Plan Description Award of fully-paid ordinary shares
of the Company, conditional on
achievement of pre-determined
targets at the end of a one-year
performance period
Award of fully-paid ordinary
shares of the Company,
conditional on achievement of
pre-determined targets over a
three-year performance period
Award of fully-paid ordinary
shares of the Company,
conditional on achievement of
pre-determined targets over a
five-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)
(a) Absolute Total Shareholder’s
Return
(b) Corporate Scorecard
Achievement comprising
pre-determined stretched
financial and non-financial
targets for the Group
(c) Individual Performance
Achievement
Final Award
0% to 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
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
If pre-determined targets are
achieved, awards will vest at the
end of the five-year performance
period subject to fulfilment of
service requirements
135
Notes to the Financial Statements
3.
Share capital (continued)
Movements in the number of shares under the KCL RSP and the KCL PSP are as follows:
Contingent awards
Balance at 1 January
Granted
Adjustments upon released
Released
Cancelled
Balance at 31 December
Awards released but not vested:
Balance at 1 January
Released
Vested
Cancelled
Other adjustments
Balance at 31 December
2016
2015
KCL RSP
KCL PSP
KCL PSP-TIP
KCL RSP
KCL PSP
5,521,483
5,825,645
-
(5,448,278)
(172,424)
5,726,426
2,052,119
1,185,000
(421,619)
(133,100)
(120,188)
2,562,212
-
5,625,000
-
-
-
5,625,000
4,639,784
5,652,889
-
(4,585,541)
(185,649)
5,521,483
1,748,725
920,000
(240,406)
(376,200)
-
2,052,119
2016
2015
KCL RSP
KCL PSP
KCL RSP
KCL PSP
4,193,125
5,448,278
(4,630,370)
(125,328)
(30,807)
4,854,898
-
133,100
(122,600)
-
(10,500)
-
3,993,440
4,585,541
(4,267,443)
(118,413)
-
4,193,125
-
376,200
(323,400)
-
(52,800)
-
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 2016, there were 4,854,898 (2015: 4,193,125) shares under the KCL RSP that were released but not vested. At
the end of the financial year, the number of contingent Shares granted but not released was 5,726,426 (2015: 5,521,483) under
the KCL RSP, 2,562,212 (2015: 2,052,119) under the KCL PSP and 5,625,000 (2015: Nil) under the KCL PSP-TIP. Depending on
the achievement of pre-determined performance targets, the actual number of Shares to be released could range from zero
to a maximum of 5,726,426 under the KCL RSP, zero to a maximum of 3,843,318 under the KCL PSP and zero to a maximum of
8,437,500 under the KCL PSP-TIP.
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 29 April 2016 (2015: 31 March 2015), the Company granted contingent awards of 5,825,645 (2015: 4,863,286) Shares under
the KCL RSP, 1,185,000 (2015: 700,000) Shares under the KCL PSP and 5,625,000 (2015: Nil) Shares under the KCL PSP-TIP. The
estimated fair value of the shares granted amounts to $4.85 (2015: $8.29) under the KCL RSP, $3.05 (2015: $4.72) under the KCL
PSP and $0.78 (2015: Nil) under the KCL PSP-TIP.
136 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
In the prior year, on 30 July 2015, the Company granted contingent awards of 789,603 Shares under the KCL RSP and 220,000
Shares under the KCL PSP. The estimated fair value of the shares granted amounts to $7.14 under the KCL RSP and $3.04 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
2016
KCL RSP
KCL PSP
KCL PSP-TIP
29.04.2016
$5.40
29.04.2016
$5.40
29.04.2016
$5.40
21.89%
#
#
0.83 – 2.83 years
0.81% - 1.15%
*
21.89%
14.96%
68.0%
2.83 years
1.15%
*
21.89%
#
#
5.83 years
1.55%
*
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%
12.70%
#
#
2.92 years 0.58 - 2.58 years
0.85% - 1.31%
*
1.52%
*
12.70%
12.15%
48.10%
2.58 years
1.31%
*
#
*
This input is not required for the valuation of shares granted under the KCL RSP and KCL PSP-TIP.
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 and share plans of a subsidiary
Keppel Telecommunications & Transportation Ltd (“Keppel T&T”)
Details of share option and share plans granted by Keppel T&T are disclosed in its annual report.
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
2016
$’000
2015
$’000
Company
2016
$’000
2015
$’000
207,139
126,014
(410,797)
40,000
49,130
11,486
10,655,379
215,979
73,049
(790,756)
40,000
78,188
(383,540)
10,379,320
184,593
14,340
-
-
14,183
213,116
5,133,722
(280,787)
10,386,078
(139,502)
9,856,278
-
5,346,838
194,972
-
-
-
4,741
199,713
5,408,710
-
5,608,423
Movements in the Group’s and the Company’s reserves are set out in the Statements of Changes in Equity.
137
Notes to the Financial Statements
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 Ltd
Other subsidiaries with immaterial NCI
NCI percentage of
ownership interest and
voting interest
2016
$’000
49%
20%
2015
$’000
49%
20%
Carrying amount of NCI
Profit after tax
allocated to NCI
2016
$’000
2015
$’000
2016
$’000
2015
$’000
217,340
215,634
6,910
5,336
163,173
294,178
146,907
467,657
9,750
21,187
18,155
44,852
Total
674,691
830,198
37,847
68,343
Summarised financial information before inter-group elimination
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Less: NCI
Net assets
Revenue
Profit for the year
Total comprehensive income
Beijing Aether Property
Development Limited
Keppel Telecommunications &
Transportation Ltd
2016
$’000
930,180
3,418
136,606
353,186
443,806
-
443,806
-
14,104
(18,824)
2015
$’000
948,489
2,662
132,324
350,778
468,049
-
468,049
-
10,889
32,551
2016
$’000
2015
$’000
1,240,751
482,115
337,291
477,548
908,027
(111,363)
796,664
194,622
113,323
97,455
1,228,775
270,792
202,303
472,742
824,522
(102,013)
722,509
200,566
105,986
112,671
Net cash flow (used in)/from operations
(4,625)
(1,939)
48,935
49,988
Dividends paid to NCI
-
-
5,357
18,689
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
2016
$’000
(8,357)
8,176
-
(181)
2015
$’000
(3,227,301)
3,530,670
125
303,494
138 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
6.
Fixed assets
Group
2016
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
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Buildings
$’000
Vessels &
Floating Docks
$’000
Plant,
Machinery,
Equipment
& Others (1)
$’000
Capital
Work-in-
Progress
$’000
122,438
478
(1,057)
-
-
-
-
-
2,108,739
25,251
(3,771)
(5,229)
-
(22,056)
(157)
(77,661)
466,254
3,206
(22,685)
(2,679)
-
-
1,959,971
26,388
(21,810)
(14,153)
14,439
(7,096)
464,747
153,038
(220)
(1,193)
-
(20)
-
-
(754)
-
-
-
702
(921)
149,951
(24,580)
68,196
4,150
105,016
13,835
(323,865)
19,492
Total
$’000
5,122,149
208,361
(49,543)
(23,254)
14,439
(29,172)
(911)
(77,661)
-
11,976
At 31 December
121,640
2,150,487
516,442
2,075,836
311,979
5,176,384
Accumulated Depreciation
& Impairment Losses
At 1 January
Depreciation charge
Disposals
Write-back of impairment loss
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
55,515
4,755
-
-
-
-
-
-
-
-
(534)
847,556
55,229
(707)
(54,886)
46,955
(552)
(4,362)
(82)
(27,621)
(291)
(10,389)
207,121
25,784
(14,577)
-
37,153
(2,679)
-
-
-
-
2,328
1,166,410
144,319
(20,331)
(14,539)
39,503
(12,379)
(6,298)
429
-
291
7,378
-
-
-
-
60,104
-
-
-
-
-
325
2,276,602
230,087
(35,615)
(69,425)
183,715
(15,610)
(10,660)
347
(27,621)
-
(892)
59,736
850,850
255,130
1,304,783
60,429
2,530,928
61,904
1,299,637
261,312
771,053
251,550
2,645,456
Included in freehold land & buildings are freehold land amounting to $8,758,000 (2015: $8,913,000).
Certain fixed assets with carrying amount of $273,363,000 (2015: $260,809,000) are mortgaged to banks for loan facilities (Note 20).
Interest capitalised during the financial year amounted to $2,792,000 (2015: $5,417,000).
The Group has significant fixed assets in relation to its various rigbuilding, shipbuilding and repair operations around the world.
The downturn in the Offshore industry has impacted these operations, giving rise to the recognition of impairment loss amounting
to $148,043,000 (2015: Nil) during the financial year. These losses are presented within other operating expenses in the profit and
loss account and within Offshore & Marine Division’s results.
Each rigbuilding, shipbuilding and repair facilities has been identified as individual cash generating units (CGUs). The recoverable
amounts of these CGUs were determined using value-in-use models that incorporated cash flow projections based on financial
forecasts approved by management. Management had determined the forecasted cash flows based on past performance and its
current expectations of market development. These cash flows were discounted at discount rates ranging from 6% to 14%
(2015: Nil) per annum, depending on the location of the facilities.
139
Notes to the Financial Statements
6.
Fixed assets (continued)
The Group also recognised impairment losses amounting to $35,672,000 (2015: $7,537,000) relating to the Infrastructure
Division’s assets in China, of which $26,972,000 was for certain land and buildings. Sustained losses as a result of weaker
economic outlook had adversely affected the fair values and expected returns on these assets. The recoverable amounts of these
fixed assets are assessed based on fair value less costs to sell using direct comparison method based on certain estimates and
assumptions, such as price of comparable land plots ranging from $33 to $175 per square metre, gross development value and
total development cost. The fair value is within Level 3 of the fair value hierarchy.
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
Freehold
Land &
Buildings
$’000
Leasehold
Land &
Buildings
$’000
Vessels &
Floating Docks
$’000
Plant,
Machinery,
Equipment
& Others (1)
$’000
Capital
Work-in-
Progress
$’000
120,605
324
(616)
-
26
-
1,826,739
23,978
(1,101)
(126)
-
-
467,503
9,330
(476)
-
-
-
1,786,043
67,574
(28,736)
(13,645)
59
(369)
-
-
-
-
-
-
(302)
(248)
549,950
327,820
-
(91)
-
-
(1,945)
-
1,982
117
231,103
28,146
-
(10,103)
141,039
8,556
(374,124)
(36,863)
Total
$’000
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)
-
-
-
187,535
21,630
(476)
-
-
-
-
-
675
10,429
-
(1,568)
1,068,609
124,694
(26,876)
7,537
(13,255)
(342)
399
(102)
(675)
6,421
55,515
847,556
207,121
1,166,410
-
-
-
-
-
-
-
-
-
-
-
2,077,825
216,175
(28,201)
7,537
(13,381)
(342)
399
(102)
-
16,692
2,276,602
66,923
1,261,183
259,133
793,561
464,747
2,845,547
(1) Others comprise furniture, fittings and office equipment, cranes and small equipment and tools.
140 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
Company
2016
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
At 31 December
Net Book Value
2015
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
At 31 December
Net Book Value
(2) Others comprise furniture, fittings and office equipment.
Freehold
Land &
Buildings
$’000
Plant,
Machinery,
Equipment
& Others (2)
$’000
Total
$’000
1,233
-
-
8,490
443
(363)
9,723
443
(363)
1,233
8,570
9,803
1,141
79
-
7,301
793
(363)
8,442
872
(363)
1,220
7,731
8,951
13
839
852
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
141
Notes to the Financial Statements
7.
Investment properties
At 1 January
Development expenditure
Fair value gain
- Attributable to the Group (Note 24)
- Attributable to third parties under a contractual agreement
Subsidiary disposed
Reclassification
- Stocks and work-in-progress
- Fixed assets (Note 6)
Exchange differences
At 31 December
Group
2016
$’000
3,272,112
257,865
63,745
6,673
(74,062)
89,131
50,040
(115,214)
2015
$’000
1,987,515
729,391
128,874
7,853
(21,592)
404,761
146
35,164
3,550,290
3,272,112
The Group’s investment properties (including integral plant and machinery) are stated at Management’s 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 2016:
-
-
-
-
-
-
Colliers International Consultancy & Valuation (Singapore) Pte Ltd and Savills Valuation and Professional Services (S) Pte Ltd
for properties in Singapore;
Colliers International (Hong Kong) Limited and Colliers International Property Services (Beijing) Co., Ltd for properties in
China;
Savills Vietnam Co. Ltd for a property in Vietnam;
CBRE Limited for a property in the Netherlands;
Savills (UK) Limited for a property in United Kingdom; and
KJPP Willson dan Rekan (an affiliate of Knight Frank) for properties in Indonesia
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 $12,143,000 (2015: $6,006,000).
The Group has mortgaged certain investment properties of up to an aggregate amount of $517,726,000 (2015: $434,567,000) to
banks for loan facilities (Note 20).
During the year, the Group reclassified $89,131,000 (2015: $404,761,000) from property held for sale and $50,040,000 (2015:
$146,000) from fixed assets to investment properties as there is a change in use of the properties arising from the commencement
of operating leases to another party.
142 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
8.
Subsidiaries
Quoted shares, at cost
Market value: $766,654,000 (2015: $649,287,000)
Unquoted shares, at cost
Provision for impairment
Movements in the provision for impairment of subsidiaries are as follows:
At 1 January
Charge/(credit) to profit and loss account
At 31 December
Company
2016
$’000
2015
$’000
398,140
7,919,131
8,317,271
(163,070)
398,140
7,772,165
8,170,305
(31,070)
8,154,201
8,139,235
Company
2016
$’000
31,070
132,000
2015
$’000
72,070
(41,000)
163,070
31,070
Impairment of $132,000,000 made during the year mainly related to an investment holding subsidiary that holds equity
investments in the Oil & Gas segment. Due to the economic downturn in that segment, recoverable amount of the equity
investments, based on a value-in-use (“VIU”) calculation, was projected to be below the Company’s cost of investment. Cash flows
in the VIU calculation was discounted at 10% per annum.
Information relating to significant subsidiaries consolidated in the financial statements is given in Note 35.
9.
Associated companies
Quoted shares, at cost
Market value: $2,978,817,000
(2015: $2,830,012,000)
Unquoted shares, at cost
Provision for impairment
Share of reserves
Notes issued by an associated company
Group
2016
$’000
2015
$’000
3,080,800
1,640,502
4,721,302
(150,845)
4,570,457
499,621
5,070,078
245,000
2,993,194
1,578,241
4,571,435
(83,871)
4,487,564
677,073
5,164,637
245,000
5,315,078
5,409,637
Notes issued by an associated company are unsecured and mature in 2040. Interest is charged at 17.5% (2015: 17.5%)
per annum.
Movements in the provision for impairment of associated companies are as follows:
At 1 January
Impairment loss/(Write-back of impairment loss)
Exchange differences
At 31 December
Group
2016
$’000
83,871
66,504
470
2015
$’000
98,430
(16,728)
2,169
150,845
83,871
143
Notes to the Financial Statements
9.
Associated companies (continued)
Impairment loss made during the year mainly relates to the shortfall between the carrying amount of the costs of investment and
the recoverable amount of certain associated companies.
In the prior year, arising from the sale of certain assets in an associated company, the Group wrote back an impairment loss on
investment in associated companies.
The Group’s share of net profit of associated companies is as follows:
Share of profit before tax
Share of taxation (Note 26)
Share of net profit
Group
2016
$’000
2015
$’000
344,986
(72,361)
504,321
(68,415)
272,625
435,906
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
2016
$’000
27,548,402
13,557,616
5,530,224
951,985
2015
$’000
27,509,336
13,163,355
4,977,640
1,419,800
The carrying amount of the Group’s material associated companies, 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
Keppel DC REIT
Other associated companies (individually immaterial)
2016
$’000
1,844,738
284,320
347,397
392,834
2,445,789
5,315,078
2015
$’000
1,825,893
292,403
489,835
299,609
2,501,897
5,409,637
The summarised financial information of the material associated companies, 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
Less: Non-controlling interests
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/(loss)
Total comprehensive income
Fair value of ownership interest (if listed) **
Dividends received
144 Keppel Corporation Limited Report to Shareholders 2016
Keppel REIT
Keppel Infrastructure Trust
2016
$’000
290,193
7,245,132
7,535,325
59,869
2,576,898
2,636,767
4,898,558
(151,841)
4,746,717
45%
2,128,798
(284,060)
1,844,738
161,252
257,787
9,217
267,004
1,505,741
90,922
2015
$’000
163,949
7,261,469
7,425,418
89,945
2,557,625
2,647,570
4,777,848
(151,827)
4,626,021
46%
2,122,418
(296,525)
1,825,893
170,347
338,848
(47,713)
291,135
1,372,384
73,717
2016
$’000
516,723
3,601,919
4,118,642
937,324
1,727,348
2,664,672
1,453,970
(198,580)
1,255,390
18%
228,607
55,713
284,320
581,117
6,121
(6,695)
(574)
333,622
26,128
2015
$’000
479,298
3,636,180
4,115,478
203,453
2,311,239
2,514,692
1,600,786
(240,998)
1,359,788
18%
247,617
44,786
292,403
427,852
(1,603)
37,806
36,203
358,204
39,451
Financial Report
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Less: Non-controlling interests
Proportion of the Group’s ownership
Group’s share of net assets
Other adjustments
Carrying amount of the investment
Revenue
(Loss)/profit after tax
Other comprehensive income/(loss)
Total comprehensive (loss)/income
Fair value of ownership interest (if listed) **
Dividends received
KrisEnergy Limited *
Keppel DC REIT
2016
$’000
183,440
1,236,024
1,419,464
273,951
546,346
820,297
599,167
-
599,167
40%
239,607
107,790
347,397
182,474
(262,322)
300
(262,022)
110,679
-
2015
$’000
248,013
1,333,712
1,581,725
248,202
450,888
699,090
882,635
-
882,635
40%
354,378
135,457
489,835
67,161
66,781
(501)
66,280
99,312
-
2016
$’000
338,312
1,244,687
1,582,999
35,144
473,987
509,131
1,073,868
(343)
1,073,525
35%
375,841
16,993
392,834
99,139
50,943
(7,656)
43,287
466,534
17,595
2015
$’000
91,230
1,119,941
1,211,171
51,567
346,116
397,683
813,488
(374)
813,114
35%
284,661
14,948
299,609
103,494
104,937
(32,241)
72,696
313,709
9,461
*
As at the date of approval of these financial statements, the most recent available financial information on which equity accounting for the current year can
be practically applied are those financial information 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 2016, the fair value of Keppel REIT is below the carrying amount 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 2017 to 2032 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$59 to US$76 per barrel (for 2017 to 2032), is determined by taking reference from external information
sources. The discount rate used is 10%. The Group has recognised an impairment charge of $46,000,000 during the financial
year. The estimates and assumptions used 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 Group would
have recognised a further impairment charge of $40,000,000.
In addition, the Group carried out a review of the recoverable amount of an associated company held by its Offshore & Marine
Division, in consideration of the fact that the fair value of the investment is significantly below its carrying amount as at the
balance sheet date. The recoverable amount of the associated company was determined based on a value-in-use calculation
where cash flow projections were based on financial forecasts by management. Management had determined the forecasted cash
flows based on past performance and their current expectations of market development. Cash inflows were based on revenue
projections from existing order books with an estimate of the terminal growth rate of 2.0% after seven years and a discount rate
of 7.6% per annum on the cash flows. An impairment charge of $21,640,000 was recognised in the profit and loss account within
other operating expense as a result of the above review.
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 (loss)/income
Share of total comprehensive income
2016
$’000
287,995
(50,309)
(62,221)
175,465
2015
$’000
280,778
(49,233)
23,502
255,047
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 35.
145
Notes to the Financial Statements
10.
Investments
Available-for-sale investments:
Carried at fair value
- Quoted equity shares
- Unquoted equity shares
- Unquoted property funds
- Unquoted - others
Total – Carried at fair value
Carried at cost
- Unquoted equity shares
- Unquoted - others
Total – Carried at cost
Group
2016
$’000
2015
$’000
Company
2016
$’000
2015
$’000
12,878
47,736
174,154
11,788
246,556
116,446
5,729
122,175
11,732
34,725
162,663
10,544
219,664
130,439
45,045
175,484
-
14,340
-
-
14,340
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total available-for-sale investments
368,731
395,148
14,340
Investments at fair value through profit or loss:
- Unquoted equity shares
8,973
-
-
Total investments
377,704
395,148
14,340
Unquoted investments included a bond amounting to $41,700,000 (2015: $41,031,000) bearing interest at 4% (2015: 4%)
per annum which is maturing in 2027. During the financial year, an impairment loss of $35,971,000 (2015: Nil) was recorded based
on cash flow projections using financial forecasts approved by the management.
During the financial year, the Group recognised an impairment loss of $17,496,000 (2015: Nil) for certain unquoted equity
securities whose net asset values had been below cost for a prolonged period.
11. Long term assets
Staff loans
Derivative assets
Call option
Long term receivables and others
Less: Amounts due within one year and
included in debtors (Note 15)
Group
Company
2016
$’000
1,395
125,508
120,600
569,334
816,837
2015
$’000
1,586
71,624
114,600
214,786
402,596
2016
$’000
504
97,199
-
-
97,703
2015
$’000
486
71,569
-
-
72,055
(2,399)
(13,716)
(146)
(106)
814,438
388,880
97,557
71,949
Included in staff loans are interest-free advances to directors of related corporations amounting to $221,000 (2015: $262,000)
under an approved car loan scheme.
The call option granted to the Group is in connection with the disposal of its 87.51% equity interest in Ocean Properties Pte.
Ltd. that was held by a subsidiary to an associated company in 2011. As at 31 December 2016, the fair value was determined by
reference to the difference in valuations obtained from an independent professional valuer for the underlying investment property
based on the remaining 845-year leasehold and 94-year leasehold (2015: based on the remaining 846-year leasehold and 95-year
leasehold). The details of the valuation techniques and inputs used for the call option are disclosed in Note 32.
Long term receivables are unsecured, largely repayable after five years (2015: five years) and bears effective interest ranging from
2.00% to 11.00% (2015: 4.00% to 11.00%) per annum.
The carrying amounts of the long term receivables of the Group and Company approximate their fair values.
Included in the long term receivables is a secured, interest-bearing US$ loan amounting to $285,167,000 (2015: Nil) which is
repayable on 2025 by an associated company. In accordance with the Group’s accounting policy, this loan was recorded at its fair
value on initial recognition. The fair value was determined using the future cash flows of the instrument discounted at a market
borrowing rate of 3.64%. A loss of $42,656,000, representing the difference between the fair value and principal of the loan on
initial recognition, was recognised in the profit and loss account and presented within interest expense. The loan is secured and
cross-secured over several vessels together with other borrowings of the associated company.
146 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
12.
Intangibles
Group
2016
At 1 January
Additions
Amortisation
Subsidiary acquired
Reclassification
- Other intangible assets categories
Goodwill
$’000
Development
Expenditure
$’000
Management
Rights
$’000
Customer
Contracts
$’000
Customer
Relationships
$’000
59,270
-
-
-
7,145
838
(3,232)
15,533
16,757
-
-
-
16,653
-
(1,464)
-
-
1,563
(1,692)
29,298
Total
$’000
99,825
2,401
(6,388)
44,831
-
495
-
(495)
-
-
At 31 December
59,270
20,779
16,757
14,694
29,169
140,669
Cost
Accumulated amortisation
59,270
-
38,274
(17,495)
16,757
-
24,963
(10,269)
30,937
(1,768)
170,201
(29,532)
59,270
20,779
16,757
14,694
29,169
140,669
2015
At 1 January
Additions
Amortisation
Impairment loss
Subsidiary acquired
Exchange differences
60,742
-
-
(1,472)
-
-
6,361
40
(2,643)
-
3,245
142
16,757
-
-
-
-
-
17,872
-
(1,219)
-
-
-
At 31 December
59,270
7,145
16,757
16,653
Cost
Accumulated amortisation
59,270
-
21,791
(14,646)
16,757
-
24,963
(8,310)
59,270
7,145
16,757
16,653
For the purpose of impairment testing, goodwill is allocated to cash-generating units.
-
-
-
-
-
-
-
-
-
-
101,732
40
(3,862)
(1,472)
3,245
142
99,825
122,781
(22,956)
99,825
Out of the total goodwill of $59,270,000, goodwill allocated to the Infrastructure Division amounted to $57,178,000
(2015: $57,178,000). The recoverable amount of goodwill at the balance sheet date is based on current bid prices of the quoted
shares of the cash-generating unit.
The recoverable amount of management rights is determined based on cash flow projections from the provision of asset
management services using a pre-tax discount rate of 6.5% (2015: 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.
147
Notes to the Financial Statements
13. Stocks & work-in-progress
Work-in-progress:
- Construction contracts
- Stocks
Consumable materials and supplies
Finished products for sale
Properties held for sale
Construction contracts
- Billings on work-in-progress in excess of related costs
(a) Work-in-progress
Costs incurred and attributable profits (less foreseeable losses)
Provision for loss on work-in-progress
Less: Progress billings
Group
2016
$’000
3,316,559
727,092
4,043,651
125,727
85,889
5,770,538
(a)
(c)
2015
$’000
3,285,931
555,181
3,841,112
141,052
5,462
6,774,993
10,025,805
10,762,619
(b)
(1,669,466)
(1,888,468)
14,529,093
(59,839)
14,469,254
(10,425,603)
13,918,026
(4,498)
13,913,528
(10,072,416)
4,043,651
3,841,112
Included in the balance above is an amount of $868,535,000 relating to certain rig building contracts where the scheduled
delivery dates of the rigs had been deferred and the revised delivery dates are more than twelve months from
31 December 2016.
In the prior year, an expected loss of $228,000,000 was recognised in the work-in-progress in excess of related billings 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
Exchange differences
Amount written off
Reclassification
At 31 December
Group
2016
$’000
4,498
54,106
(29)
(361)
1,625
59,839
2015
$’000
4,498
-
-
-
-
4,498
During the financial year ended 31 December 2016, there was a write-down of $54,106,000 (2015: Nil) on work-in-progress -
stocks.
(b)
Billings on work-in-progress in excess of related costs
Costs incurred and attributable profits
Less: Progress billings
148 Keppel Corporation Limited Report to Shareholders 2016
Group
2016
$’000
2015
$’000
15,425,636
(17,095,102)
14,632,362
(16,520,830)
(1,669,466)
(1,888,468)
Financial Report
(c)
Properties held for sale
Properties under development
Land cost
Development cost incurred to date
Related overhead expenditure and recognised profits
Progress billings
Completed properties held for sale
Provision for properties held for sale
Movements in the provision for properties held for sale are as follows:
At 1 January
Charge to profit and loss account
Exchange differences
Amount written off
Subsidiary disposed
At 31 December
Group
2016
$’000
2015
$’000
3,039,080
842,811
282,593
(189,417)
3,975,067
1,867,887
5,842,954
(72,416)
3,873,471
1,406,564
603,972
(483,283)
5,400,724
1,458,228
6,858,952
(83,959)
5,770,538
6,774,993
83,959
19,008
(400)
(15,155)
(14,996)
34,260
55,471
80
(5,852)
-
72,416
83,959
The provision for properties held for sale is estimated taking into account estimated selling prices and estimated total
construction costs. The estimated selling prices are based on recent selling prices for the development project or
comparable projects and the prevailing market conditions. The estimated total construction costs include contracted
amounts plus estimated costs to be incurred based on historical trends. The provision is progressively reversed for those
residential units sold above their carrying amounts.
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:
Group
2016
$’000
2015
$’000
Aggregate amount of costs incurred and recognised profit (less recognised losses) to date
Less: Progress billings
1,414,377
(189,417)
2,578,392
(483,283)
At 31 December
1,224,960
2,095,109
Interest capitalised during the financial year amounted to $54,982,000 (2015: $56,441,000) at rates ranging from 0.93% to
3.91% (2015: 1.16% to 3.30%) per annum for Singapore properties and 0.05% to 15.00% (2015: 0.05% to 15.00%)
per annum for overseas properties.
Certain properties held for sale with carrying amount of $2,019,439,000 (2015: $1,760,257,000) are mortgaged to banks for
loan facilities (Note 20).
149
Notes to the Financial Statements
14. Amounts due from/to
Subsidiaries
Amounts due from
- trade
- advances
Provision for doubtful debts
Amounts due to
- trade
- advances
Company
2016
$’000
2015
$’000
86,001
3,902,961
3,988,962
(6,600)
482,912
2,969,448
3,452,360
(6,600)
3,982,362
3,445,760
900,632
162,090
111,063
881,993
1,062,722
993,056
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 up to 4.00% (2015: up
to 4.00%) per annum on interest-bearing advances.
Associated Companies
Amounts due from
- trade
- advances
Provision for doubtful debts
Amounts due to
- trade
- advances
Movements in the provision for doubtful debts are as follows:
At 1 January
Charge to profit and loss account
At 31 December
Group
2016
$’000
2015
$’000
Company
2016
$’000
61,117
470,897
532,014
(1,131)
110,047
399,040
509,087
(46)
530,883
509,041
16,094
95,449
54,316
83,060
111,543
137,376
46
1,085
1,131
46
-
46
688
-
688
-
688
-
-
-
-
-
-
2015
$’000
511
-
511
-
511
-
-
-
-
-
-
Advances to and from associated companies are unsecured and are repayable on demand. Interest is charged at rates ranging
from 0.13% to 8.90% (2015: 0.13% to 8.00%) per annum on interest-bearing advances.
150 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
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
Group
2016
$’000
2,672,847
(15,723)
2,657,124
2,399
199,867
88,321
22,693
35,317
12,314
25,104
-
150,507
38,101
86,132
69,789
730,544
(13,827)
716,717
2015
$’000
2,047,864
(8,759)
2,039,105
13,716
111,101
61,843
4,274
41,538
20,906
36,440
20,559
187,557
261,000
153,220
147,414
1,059,568
(32,688)
1,026,880
Total
3,373,841
3,065,985
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
41,447
11,435
(23,504)
-
172
29,495
12,242
(261)
(56)
27
At 31 December
29,550
41,447
16. Short term investments
Available-for-sale investments:
Quoted equity shares
Unquoted equity shares
Unquoted equity funds
Total available-for-sale investments
Investments held for trading:
Quoted equity shares
Total short term investments
Company
2016
$’000
-
-
-
146
2,173
168
-
-
32
446
-
-
-
-
-
2,965
-
2,965
2,965
-
-
-
-
-
-
2015
$’000
-
-
-
106
504
167
-
-
58
422
-
-
-
-
-
1,257
-
1,257
1,257
-
-
-
-
-
-
Group
2016
$’000
77,264
-
49,610
2015
$’000
77,121
1,315
47,167
126,874
125,603
147,054
99,515
273,928
225,118
151
Notes to the Financial Statements
17. Bank balances, deposits and cash
Bank balances and cash
Fixed deposits with banks
Amounts held under escrow accounts for overseas
acquisition of land, payment of construction
cost and liabilities
Amounts held under project accounts,
withdrawals from which are restricted to
payments for expenditures incurred on projects
Group
2016
$’000
437,654
1,436,485
2015
$’000
617,846
1,116,777
68,306
33,723
144,633
124,495
Company
2016
$’000
542
-
-
-
2,087,078
1,892,841
542
2015
$’000
91
-
-
-
91
Fixed deposits with banks of the Group mature on varying periods, substantially between 1 day to 3 months (2015: 1 day to
3 months). This comprises Singapore dollar fixed deposits of $10,051,000 (2015: $45,053,000) at interest rates ranging from
0.15% to 0.85% (2015: 0.00% to 2.70%) per annum, and foreign currency fixed deposits of $1,426,434,000 (2015: $1,071,724,000)
at interest rates ranging from 0.03% to 14.21% (2015: 0.00% to 14.22%) per annum.
18. 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
Derivative liabilities
Group
2016
$’000
589,834
64,788
424,376
1,277,276
1,955,100
209,726
194,673
37,719
2015
$’000
596,857
66,228
342,162
1,226,701
2,262,589
215,617
216,519
44,876
Company
2016
$’000
-
-
-
3,591
86,458
-
-
22,422
2015
$’000
-
-
-
2,828
123,634
-
-
18,404
4,753,492
4,971,549
112,471
144,866
112,885
68,214
142,421
295,043
54,409
66,632
59,802
222,638
181,099
437,464
121,041
282,440
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 2.03% to 4.31% (2015: 1.20% to 4.50%) per annum on interest-bearing advances.
152 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
19. Provisions
Group
2016
At 1 January
Net write-back to profit and loss account
Amount utilised
Exchange differences
At 31 December
2015
At 1 January
Net write-back to profit and loss account
Amount utilised
Exchange differences
At 31 December
20. Term loans
Group
Keppel Corporation Medium Term Notes
Keppel Land Medium Term Notes
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
(a)
(b)
(c)
(d)
(e)
(f)
(a)
(f)
Warranties
$’000
90,216
(1,450)
(7,153)
66
81,679
149,526
(48,564)
(7,804)
(2,942)
90,216
Due after
one year
$’000
1,700,000
880,700
120,000
282,000
1,216,914
3,202,320
2016
2015
Due within
one year
$’000
Due after
one year
$’000
Due within
one year
$’000
-
99,964
1,700,000
786,873
-
-
120,000
286,600
-
-
-
-
391,046
1,344,311
744,449
3,579,799
11,764
844,971
1,835,321
7,217,721
856,735
7,401,934
-
692,311
1,700,000
1,625,600
-
631,879
1,700,000
800,000
692,311
3,325,600
631,879
2,500,000
(a)
(b)
At the end of the financial year, notes issued under the US$3,000,000,000 Multi-Currency Medium Term Note Programme
by the Company amounted to $1,700,000,000 (2015: $1,700,000,000). The notes denominated in Singapore Dollars, are
unsecured and comprised fixed rate notes due from 2020 to 2042 (2015: from 2020 to 2042) with interest rates ranging from
3.10% to 4.00% (2015: 3.10% to 4.00%) per annum.
At the end of the financial year, notes issued under the US$3,000,000,000 Multi-Currency Medium Term Note Programme by
Keppel Land Limited and its wholly-owned subsidiary, Keppel Land Financial Services Pte. Ltd. amounted to $357,691,000
(2015: $351,753,000). The fixed rate notes denominated in Singapore Dollars, due in 2019, are unsecured and carried an
interest rate of 3.26% (2015: 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 $529,146,000 (2015: $528,947,000). The notes denominated in Singapore Dollars,
are unsecured and comprised fixed rate notes due from 2017 to 2024 (2015: 2017 to 2024) with interest rates ranging from
2.83% to 3.90% (2015: 2.83% to 3.90%) per annum.
(c)
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 (2015: $120,000,000). The fixed rates notes,
due in 2019, are unsecured and carried an interest rate of 2.63% (2015: 2.63%) per annum from August 2012 to
August 2017, and at 3.83% (2015: 3.83%) per annum from August 2017 to August 2019.
153
Notes to the Financial Statements
20. Term loans (continued)
(d)
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 $286,600,000 (2015: $282,000,000). 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 1.21% to 1.75% (2015: 1.12% to 1.21%) per annum.
(e)
The secured bank loans consist of:
-
-
-
-
-
A term loan of $175,874,000 (2015: $289,580,000) 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 1.28% to
2.68% (2015: 1.30% to 2.17%) per annum.
A term loan of $53,121,000 (2015: $53,121,000) 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 1.21% to 2.94%
(2015: 1.19% to 2.62%) per annum.
A term loan of $351,557,000 (2015: $395,409,000) 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 0.93% to
2.30% (2015: 1.16% to 2.30%) per annum.
A term loan of $50,000,000 (2015: Nil) drawn down by a subsidiary. The term loan is repayable between one to five
years and is secured on certain assets of the subsidiary. Interest is fixed at 2.62% (2015: Nil) per annum.
Other secured bank loans comprised $504,943,000 (2015: $490,568,000) of foreign currency loans. They are
repayable between one to seventeen (2015: one to seventeen) 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 1.60% to 10.89% (2015: 1.71% to 16.70%) per annum.
(f)
The unsecured bank and other loans of the Group totalling $4,924,110,000 (2015: $4,047,291,000) comprised
$3,136,786,000 (2015: $2,243,506,000) of loans denominated in Singapore dollar and $1,787,324,000 (2015:
$1,803,785,000) of foreign currency loans. They are repayable between one to fifteen (2015: one to sixteen) years. Interest
on loans denominated in Singapore dollar is based on money market rates ranging from 0.84% to 3.38% (2015: 1.05% to
2.90%) per annum. Interest on foreign currency loans is based on money market rates ranging from 0.25% to 13.76% (2015:
0.60% to 13.80%) per annum.
The unsecured bank loans of the Company totalling $2,317,911,000 (2015: $1,431,879,000) comprise $1,707,350,000
(2015: $972,620,000) of loans denominated in Singapore dollar and $610,561,000 (2015: $459,259,000) of foreign currency
loans. They are repayable within one to seven years (2015: one to six years). Interest on loans denominated in Singapore
dollar is based on money market rates ranging from 0.84% to 3.38% (2015: 1.32% to 2.21%) per annum. Interest on foreign
currency loans is based on money market rates ranging from 0.41% to 2.30% (2015: 0.79% to 2.57%) per annum.
The Group has mortgaged certain properties and assets of up to an aggregate amount of $2,810,528,000 (2015: $2,455,633,000) to
banks for loan facilities.
The fair values of term loans for the Group and Company are $9,055,975,000 (2015: $8,269,763,000) and $4,024,498,000
(2015: $3,127,116,000) 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
154 Keppel Corporation Limited Report to Shareholders 2016
Group
2016
$’000
2015
$’000
Company
2016
$’000
2015
$’000
1,839,458
3,027,749
2,350,514
1,087,608
3,870,282
2,444,044
400,000
1,000,000
1,925,600
-
500,000
2,000,000
7,217,721
7,401,934
3,325,600
2,500,000
Financial Report
21. 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
2016
$’000
115,424
152,751
96,334
364,509
(29,711)
(3,623)
(33,334)
2015
$’000
123,573
148,684
137,972
410,229
(26,981)
(10,075)
(37,056)
331,175
373,173
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 $86,814,000 (2015: $81,145,000) 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 $740,332,000 (2015: $759,758,000) 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. Tax losses amounting to $363,106,000 (2015: $355,968,000) can
be carried forward for a period of one to five years subsequent to the year of the loss, while the remaining tax losses have no expiry
date.
Movements in deferred tax liabilities and assets are as follows:
At
Charged/
(credited) to
1 January profit or loss
$’000
$’000
Charged/
(credited)
to other
comprehen-
sive Subsidiaries Subsidiaries
acquired
$’000
disposed
$’000
income
$’000
Reclassifi-
cation
$’000
Exchange
At
differences 31 December
$’000
$’000
Group
2016
Deferred Tax Liabilities
Accelerated tax depreciation
Investment properties valuation
Offshore income & others
Total
Deferred Tax Assets
Other provisions
Unutilised tax benefits
Total
123,573
148,684
137,972
410,229
(9,212)
9,662
(39,261)
(38,811)
(26,981)
(10,075)
(37,056)
(2,650)
6,292
3,642
-
-
(14)
(14)
-
-
-
-
(4,380)
(853)
(5,233)
1,208
-
-
1,208
(50)
-
(50)
-
-
-
-
-
-
-
(55)
-
(55)
(145)
(1,215)
(1,510)
(2,870)
115,424
152,751
96,334
364,509
25
160
185
(29,711)
(3,623)
(33,334)
Net Deferred Tax Liabilities
373,173
(35,169)
(14)
(5,283)
1,208
(55)
(2,685)
331,175
2015
Deferred Tax Liabilities
Accelerated tax depreciation
Investment properties valuation
Offshore income & others
Total
Deferred Tax Assets
Other provisions
Unutilised tax benefits
Total
107,375
132,404
119,875
359,654
21,985
15,833
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)
(19)
496
1,066
1,543
123,573
148,684
137,972
410,229
(796)
-
(796)
(74)
(1,060)
(1,134)
(26,981)
(10,075)
(37,056)
Net Deferred Tax Liabilities
302,493
78,552
(2,216)
(650)
558
(5,973)
409
373,173
155
Notes to the Financial Statements
22. Revenue
Revenue from construction contracts
Sale of property
- Recognised on completion of construction method
- Recognised on percentage of completion method
Sale of goods
Rental income from investment properties
Revenue from services rendered
Profit on sale of investments
Dividend income from quoted shares
Others
23. Staff costs
Wages and salaries
Employer’s contribution to Central Provident Fund
Share options and share plans granted to Directors and employees
Other staff benefits
24. Operating profit
Operating profit is arrived at after charging/(crediting) the following:
Included in direct costs:
Fair value (gain)/loss 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
156 Keppel Corporation Limited Report to Shareholders 2016
Group
2016
$’000
2015
$’000
2,705,985
6,201,379
1,064,540
797,071
118,808
59,718
2,017,761
-
3,163
218
1,069,553
536,628
23,667
76,625
2,323,868
59,780
4,796
177
6,767,264
10,296,473
Group
2016
$’000
909,671
80,687
39,969
125,055
2015
$’000
1,259,855
106,631
55,221
178,303
1,155,382
1,600,010
Group
2016
$’000
2015
$’000
(4,236)
(23,366)
1,376,888
13,465
14,985
1,161,273
20,975
22,746
13,618
102
6,956
14,933
78
6,707
Financial Report
Included in other operating expense/(income):
Rental expense
- operating leases
Impairment/write-off of fixed assets
Impairment/(write-back of impairment) of investments and
associated company
Provision for stocks and work-in-progress
Provision for doubtful debts
Fair value gain on investment properties (Note 7)
Fair value loss on
- investments
- forward foreign exchange contracts
(Gain)/loss on differences in foreign exchange
Profit on sale of fixed assets
Loss on sale of investments
Gain on disposal of subsidiaries
Loss on disposal of associated companies
Adjustment to gain on disposal of data centres
Loss/(gain) associated with restructuring of operations and others
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
Auditor’s remuneration
- auditors of the Company
- other auditors of subsidiaries
Non-audit fees paid to
- auditors of the Company
- other auditors of subsidiaries
25.
Investment income, interest income and interest expenses
Investment income from:
Shares - quoted outside Singapore
Shares - unquoted
Interest income from:
Bonds, debentures and deposits
Associated companies
Interest expenses on notes, loans and overdrafts
Fair value gain on interest rate caps and swaps
Group
2016
$’000
2015
$’000
105,618
121,934
119,971
74,532
11,435
(63,745)
15,914
1,289
(26,150)
(6,170)
4,123
(11,853)
-
(26,963)
1,637
2,139
2,973
2,357
2,463
54
245
109,627
8,018
(16,728)
59,064
12,242
(128,874)
21,883
8,350
3,092
(3,251)
4,805
(218,770)
18,823
-
(65,876)
2,519
2,589
1,495
4,405
75
572
Group
2016
$’000
103
15,076
2015
$’000
1,866
13,100
15,179
14,966
74,546
49,547
91,879
27,441
124,093
119,320
(225,760)
1,211
(160,950)
6,106
(224,549)
(154,844)
157
Notes to the Financial Statements
26. Taxation
(a)
Income tax expense
Tax expense comprised:
Current tax
Adjustment for prior year’s tax
Share of taxation of associated companies (Note 9)
Others
Deferred tax movement:
Movements in temporary differences (Note 21)
Group
2016
$’000
243,458
(39,419)
72,361
(8,084)
2015
$’000
265,299
(66,456)
68,415
58,619
(35,169)
78,552
233,147
404,429
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% (2015: 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
Net income taxes (paid)/received
Subsidiary acquired
Subsidiaries disposed
Reclassification
- tax recoverable and others
Group
2016
$’000
2015
$’000
1,054,922
1,997,394
179,337
(108,737)
199,795
(10,860)
13,031
(39,419)
339,557
(217,668)
294,996
(6,007)
60,007
(66,456)
233,147
404,429
Group
Company
2016
$’000
352,595
(2,044)
243,458
(39,419)
(223,020)
-
(97)
2015
$’000
462,699
1,759
265,299
(66,456)
(302,399)
205
(33)
2016
$’000
15,867
-
7,700
(6,931)
627
-
-
2015
$’000
14,000
-
9,500
(6,978)
(655)
-
-
7,635
(8,479)
-
-
At 31 December
339,108
352,595
17,263
15,867
158 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
27. Earnings per ordinary share
Net profit attributable to shareholders
Adjustment for dilutive potential ordinary shares
of subsidiaries and associated companies
Group
2016
$’000
2015
$’000
Basic
Diluted
Basic
Diluted
783,928
783,928
1,524,622
1,524,622
-
(443)
-
(443)
Adjusted net profit
783,928
783,485
1,524,622
1,524,179
Number of Shares
’000
Number of Shares
’000
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)
1,814,792
-
1,814,792
11,566
1,814,546
-
1,814,546
10,479
1,814,792
1,826,358
1,814,546
1,825,025
Earnings per ordinary share
43.2 cts
42.9 cts
84.0 cts
83.5 cts
28. Dividends
A final cash dividend of 12.0 cents per share tax exempt one-tier (2015: final cash dividend of 22.0 cents per share tax exempt one-
tier) in respect of the financial year ended 31 December 2016 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 8.0 cents per share tax exempt one-tier (2015: 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
2016 will be 20.0 cents per share (2015: 34.0 cents per share).
During the financial year, the following distributions were made:
A final cash dividend of 22.0 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 8.0 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the current financial year
$’000
399,411
145,243
544,654
159
Notes to the Financial Statements
29. Commitments
(a) Capital commitments
Capital expenditure/commitments 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 mainly in property development companies
- for commitments to private funds
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
2016
$’000
2015
$’000
261,950
46,730
376,308
169,953
108,422
313,196
-
1,276,559
(34,584)
32,703
85,065
196,059
22,694
119,204
402,812
6,733
865,270
(11,436)
1,241,975
853,834
There was no significant future capital expenditure/commitment for 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
2016
$’000
94,214
326,154
806,359
2015
$’000
92,057
295,390
834,417
1,226,727
1,221,864
Company
2016
$’000
121
40
-
161
2015
$’000
129
171
-
300
(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
2016
$’000
104,100
212,861
81,721
2015
$’000
180,740
165,622
67,295
398,682
413,657
Company
2016
$’000
2015
$’000
-
-
-
-
-
-
-
-
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.
160 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
30. Contingent liabilities and guarantees (unsecured)
Guarantees in respect of banks and other loans
granted to subsidiaries and associated companies
Bank guarantees
Others
Group
2016
$’000
470,035
4,556
327
2015
$’000
195,231
7,583
378
Company
2016
$’000
2015
$’000
1,715,102
-
-
1,428,160
-
-
474,918
203,192
1,715,102
1,428,160
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.
The Company refers to its earlier announcements on 9 February 2015, 23 February 2016, 29 April 2016, 5 May 2016, 24 July 2016,
3 August 2016, and 3 October 2016 in relation to allegations in Brazil that illegal payments were made by Mr Zwi Skornicki in
connection with contracts entered into between certain Keppel entities with Petrobras and/or Sete Brasil.
The Group continues to cooperate with authorities in Brazil and other relevant jurisdictions investigating potential improper
arrangements and payments made in connection with certain Keppel entities’ transactions or other business relationships.
At the date of these financial statements, investigations are still ongoing and it is premature to predict the eventual outcome.
Accordingly, the potential for any fines, penalties or other consequences cannot currently be assessed. It is also not yet possible to
identify the timescale in which these issues might be resolved.
31. Significant related party transactions
Other than the related party information disclosed elsewhere in the financial statements, there were no other significant related
party transactions during the financial year.
32. Financial risk management
The Group operates internationally and is exposed to a variety of financial risks, comprising market risk (including currency risk,
interest rate risk and price risk), credit risk and liquidity risk. Financial risk management is carried out by the Keppel Group
Treasury Department in accordance with established policies and guidelines. These policies and guidelines are established by the
Group Central Finance Committee and are updated to take into account changes in the operating environment. This committee is
chaired by the Chief Financial Officer of the Company and includes Chief Financial Officers of the Group’s key operating companies
and Head Office specialists.
Market Risk
(i)
Currency risk
The Group has receivables and payables denominated in foreign currencies viz US dollars, European and other Asian
currencies. The Group’s foreign currency exposures arise mainly from the exchange rate movement of these foreign
currencies against the functional currencies of the respective Group entities. To hedge against the volatility of future cash
flows caused by changes in foreign currency rates, the Group utilises forward foreign currency contracts and other foreign
currency hedging instruments to hedge the Group’s exposure to specific currency risks relating to investments, receivables,
payables and other commitments. Group Treasury Department monitors the current and projected foreign currency cash
flow of the Group and aims to reduce the exposure of the net position in each currency by borrowing in foreign currency and
other currency contracts where appropriate.
As at the end of the financial year, the Group has outstanding forward foreign exchange contracts with notional amounts
totalling $7,865,165,000 (2015: $8,444,817,000). The net negative fair value of forward foreign exchange contracts is
$270,025,000 (2015: net negative fair value of $398,172,000) comprising assets of $138,169,000 (2015: $117,644,000)
and liabilities of $408,194,000 (2015: $515,816,000). 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 $7,716,396,000 (2015: $8,425,838,000). The net negative fair value of forward foreign exchange contracts is
$265,342,000 (2015: net negative fair value of $395,239,000) comprising assets of $137,860,000 (2015: $120,507,000)
and liabilities of $403,202,000 (2015: $515,746,000). These amounts are recognised as derivative assets and derivative
liabilities.
161
Notes to the Financial Statements
32. Financial risk management (continued)
Other than the above hedged foreign currency contracts, the unhedged currency exposure of financial assets and financial
liabilities denominated in currencies other than the respective entities’ functional currencies are as follows:
Group
Financial Assets
Debtors
Investments
Bank balances, deposits & cash
Financial Liabilities
Creditors
Term loans
Company
Financial Assets
Debtors
Bank balances, deposits & cash
USD
$’000
2016
Euro
$’000
Others
$’000
USD
$’000
157,984
248,108
324,295
67,650
504,611
1,910
-
190
84,893
56,334
118,732
653,801
224,929
493,705
853
17,105
23,340
193,176
58,880
1,383,672
2015
Euro
$’000
10,116
-
4,436
354
-
Others
$’000
259,838
49,237
168,233
75,099
89,487
40
97
-
-
67
538
30
50
-
-
99
784
Sensitivity analysis for currency risk
If the relevant foreign currency change against SGD by 5% (2015: 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
2016
$’000
2015
$’000
Equity
2016
$’000
2015
$’000
(4,524)
4,524
(795)
795
(14,858)
14,858
705
(705)
7
(7)
3
(3)
12,466
(12,466)
11,326
(11,326)
-
-
-
-
-
-
-
-
(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 20). As at the end of the financial year, the Group has interest rate swap
agreements with notional amount totalling $1,678,235,000 (2015: $1,711,435,000) whereby it receives variable rates equal
to SIBOR, LIBOR and SHIBOR (2015: SIBOR, LIBOR and SHIBOR) and pays fixed rates of between 1.27% and 4.90%
(2015: 0.85% and 4.90%) on the notional amount.
The net negative fair value of interest rate swaps for the Group is $10,605,000 (2015: net negative fair value of $1,959,000)
comprising assets of $2,703,000 (2015: $3,475,000) and liabilities of $13,308,000 (2015: $5,434,000). These amounts are
recognised as derivative assets and derivative liabilities.
Sensitivity analysis for interest rate risk
If interest rates increase/decrease by 0.5% (2015: 0.5%) with all other variables held constant, the Group’s profit before tax
would have been lower/higher by $19,060,000 (2015: $10,681,000) as a result of higher/lower interest expense on floating
rate loans.
162 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
(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 $579,270,000 (2015: $687,042,000) and $Nil
(2015: $7,030,000) respectively. The net positive fair value of HSFO forward contracts for the Group is $57,122,000
(2015: net negative fair value of $257,618,000) comprising assets of $83,215,000 (2015: $70,000) and liabilities
of $26,093,000 (2015: $257,688,000). The net fair value of Dated Brent forward contracts for the Group is $Nil
(2015: net negative fair value of $1,337,000). 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 $6,964,000 (2015: $15,955,000). The net negative fair values of electricity futures
contracts is $124,000 (2015: net positive fair value of $4,283,000) comprising assets of $405,000 (2015: $4,283,000) and
liabilities of $529,000 (2015: $Nil). These amount are recognised as derivative assets and derivative liabilities.
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% (2015: 5%) with all other variables held constant, the Group’s
hedging reserve in equity would have been higher/lower by $31,820,000 (2015: $21,471,000) and $Nil (2015: $285,000)
respectively as a result of fair value changes on cash flow hedges.
If prices for electricity futures contracts increase/decrease by 5% (2015: 5%) with all other variables held constant, the
Group’s hedging reserve in equity would have been lower/higher by $15,000 (2015: $584,000) as a result of fair value
changes on cash flow hedges.
If prices for quoted investments increase/decrease by 5% (2015: 5%) with all other variables held constant, the Group’s
profit before tax would have been higher/lower by $7,353,000 (2015: $4,976,000) 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 $4,507,000 (2015: $4,443,000) 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. The Group adopts stringent procedures on extending credit terms to customers
and on the monitoring of credit risk. The credit policy spells out clearly the guidelines on extending credit terms to customers,
including monitoring the process and using related industry’s practices as reference. This includes assessment and valuation of
customers’ credit reliability and periodic review of their financial status to determine the credit limits to be granted. Customers are
also assessed based on their historical payment records. Where necessary, customers may also be requested to provide security
or advance payment before services are rendered. The Group’s policy does not permit non-secured credit risk to be significantly
centralised in one customer or a group of customers.
The maximum exposure to credit risk is the carrying amount of financial assets which are mainly debtors, amounts due from
associated companies and bank balances, deposits and cash.
(i)
Financial assets that are neither past due nor impaired
Debtors and amounts due from associated companies that are neither past due nor impaired are substantially companies
with good collection track record with the Group. Bank deposits, forward foreign exchange contracts, interest rate caps and
interest rate swaps are mainly transacted with banks of high credit ratings assigned by international credit-rating agencies.
163
Notes to the Financial Statements
32. Financial risk management (continued)
(ii)
Financial assets that are past due but not impaired/partially impaired
The age analysis of trade debtors past due but not impaired/partially impaired is as follows:
Past due zero to three months but not impaired
Past due three to six months but not impaired
Past due over six months and partially impaired
Group
2016
$’000
120,531
74,905
1,262,615
2015
$’000
490,383
99,625
575,680
1,458,051
1,165,688
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
Department 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 20.
The following table details the liquidity analysis for derivative financial instruments and borrowings of the Group and the Company
based on contractual undiscounted cash inflows/(outflows).
Within
one year
$’000
Within
one to
two years
$’000
Within
two to
five years
$’000
After
five years
$’000
5,417,222
(5,688,831)
1,419,776
(1,402,107)
681,250
(663,117)
55,851
(17,390)
25,690
(7,354)
1,673
(1,349)
-
-
-
-
513
(495)
(1,542,315)
-
(142)
(2,011,240)
-
-
(3,415,261)
-
-
(2,794,455)
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)
Group
2016
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
Net-settled electricity futures contracts
- Receipts
- Payments
Borrowings
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
164 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
Company
2016
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Borrowings
2015
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
5,286,287
(5,559,747)
(312,060)
1,405,221
(1,387,357)
(486,119)
675,651
(657,486)
(1,230,036)
-
-
(2,262,454)
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)
In addition to the above, creditors (Note 18) of the Group and the Company have a maturity profile of within one year from the
balance sheet date.
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 undertakings for the financial year ended 31 December 2016.
Externally imposed capital undertakings 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 total equity not exceeding ratios ranging from
2.00 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 equity. Net borrowings are calculated as bank balances, deposits & cash (Note 17) less total term loans (Note 20).
Net debt
Total equity
Net gearing ratio
Group
2016
$’000
6,965,964
12,333,640
0.56x
2015
$’000
6,365,828
11,925,859
0.53x
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.
165
Notes to the Financial Statements
32. Financial risk management (continued)
The following table presents the assets and liabilities measured at fair value.
Group
2016
Financial assets
Derivative financial instruments
Call option
Investments
- Available-for-sale investments
- Investments at fair value through profit or loss
Short term investments
- Available-for-sale investments
- Investments held for trading
Financial liabilities
Derivative financial instruments
Non-financial assets
Investment Properties
- Commercial and residential, completed
- Commercial, under construction
2015
Financial assets
Derivative financial instruments
Call option
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 and residential, completed
- Commercial, under construction
Company
2016
Financial assets
Derivative financial instruments
Investments
- Available-for-sale investments
Financial liabilities
Derivative financial instruments
2015
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
166 Keppel Corporation Limited Report to Shareholders 2016
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
12,878
-
77,264
147,054
224,492
-
11,788
-
49,610
-
-
120,600
221,890
8,973
-
-
224,492
120,600
246,556
8,973
126,874
147,054
237,196
285,890
351,463
874,549
-
-
-
-
-
-
448,124
-
448,124
-
-
-
1,639,368
1,910,922
1,639,368
1,910,922
3,550,290
3,550,290
125,472
-
-
114,600
125,472
114,600
11,732
10,544
197,388
219,664
77,121
99,515
47,167
-
-
-
124,288
99,515
188,368
183,183
311,988
683,539
-
-
-
-
-
-
-
-
-
-
780,275
-
780,275
-
-
-
1,382,322
1,889,790
1,382,322
1,889,790
3,272,112
3,272,112
140,122
-
140,122
-
140,122
411,945
120,507
515,746
14,340
14,340
-
-
-
14,340
154,462
411,945
120,507
515,746
Financial Report
There have been no transfers between Level 1, Level 2 and Level 3 for the Group and Company in 2016 and 2015.
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
Fair value gain recognised in profit or loss
Exchange differences
Group
Company
2016
$’000
311,988
56,200
(53,629)
(183)
30,955
5,962
170
2015
$’000
264,840
34,854
(16,711)
(1,646)
25,462
5,100
89
2016
$’000
-
-
-
-
14,340
-
-
At 31 December
351,463
311,988
14,340
2015
$’000
-
-
-
-
-
-
-
-
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
2016
$’000
3,272,112
257,865
70,418
-
(74,062)
89,131
50,040
(115,214)
2015
$’000
1,987,515
729,391
136,727
-
(21,592)
404,761
146
35,164
3,550,290
3,272,112
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.
167
Notes to the Financial Statements
32. Financial risk management (continued)
The following table presents the valuation techniques and key inputs that were used to determine the fair value of financial
instruments and investment properties categorised under Level 3 of the fair value hierarchy.
Description
Investments
Call option
Fair value
as at
31 December
2016
$’000
230,863
Valuation
Techniques
Unobservable
Inputs
Range of
Unobservable
Inputs
Net asset value and/or
discounted cash flow
Net asset value *
Discount rate
Not applicable
11%
120,600
Direct comparison method and
investment method
Investment Properties
- Commercial and residential,
completed
1,526,498
Direct comparison method,
investment method, income
capitalisation method,
cost replacement method
and/or discounted cash flow
method
- Commercial, under
construction
1,910,922
Direct comparison method,
and/or residual method
Description
Investments
Call option
Fair value
as at
31 December
2015
$’000
197,388
Valuation
Techniques
Unobservable
Inputs
Range of
Unobservable
Inputs
Net asset value and/or
discounted cash flow
Net asset value *
Discount rate
Not applicable
12%
114,600
Direct comparison method and
investment method
Transacted price of
comparable properties
(psf)
Capitalisation rate
$3,000 to $3,400
3.5% to 3.75%
Discount rate
Occupancy rate
Terminal yield
Capitalisation rate
Price of comparable
land plots (psm)
Transacted price of
comparable properties
(psf)
4.30% to 13.70%
95%
7.25% to 7.70%
7.70% to 12.50%
$9,513 to $13,213
$1,296 to $1,532
Price of comparable
land plots (psm)
Gross development
value ($’million)
$9,513 to $13,213
$3,788
Transacted price of
comparable properties
(psf)
Capitalisation rate
$3,000 to $3,400
3.5% to 3.75%
Discount rate
Occupancy rate
Terminal yield
Capitalisation rate
Monthly effective
rental (psm)
Transacted price of
comparable properties
(psf)
Price of comparable
land plots (psm)
Gross development
value ($’million)
Construction costs
incurred ($’million)
Capitalisation rate
Occupancy rate
4.25% to 14.00%
95% to 99%
7.25% to 11.00%
7.00% to 12.50%
$21 to $79
$1,346 to $1,680
$8,152 to $12,738
$3,182
$91
6.00%
95%
Investment Properties
- Commercial and residential,
completed
1,263,322
Direct comparison method,
investment method, income
capitalisation method
and/or discounted cash flow
method
- Commercial, under
construction
1,889,790
Direct comparison method,
residual method, cost
replacement method and/or
income capitalisation method
*
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.
168 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
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.
33. Segment analysis
The Group is organised into business units based on their products and services, and has four reportable operating segments as
follows:
(i)
Offshore & Marine
Principal activities include offshore rig design, construction, repair and upgrading, ship conversions and repair, and
specialised shipbuilding. The Division has operations in Brazil, China, Singapore, United States and other countries.
(ii) 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.
(iii)
(iv)
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 fund management, KrisEnergy Limited, M1 Limited,
k1 Ventures Ltd, Sino-Singapore Tianjin Eco-City Investment and Development Co., Limited and equities.
Prior to 2016, the Group had presented the contribution of its asset management businesses within the Infrastructure Division
and the Property Division accordingly. Following the consolidation of the interests in the Group’s four asset management
businesses under its wholly-owned subsidiary, Keppel Capital Holdings Pte. Ltd. (“KCH”), the contributions from these businesses
are presented in the Investments Division from 2016. The 2015 segment information has been restated to align to the current
reportable segment presentation.
In addition, profit on sale of the asset management business from the Infrastructure Division and Property Division to KCH has
been excluded from the segment results of these divisions.
169
Notes to the Financial Statements
33. Segment analysis (continued)
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
2016
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
Impairment loss/(write-back of
impairment loss)
Geographical information
2,853,509
405
2,853,914
2,035,435
6,445
2,041,880
1,744,075
24,537
1,768,612
134,245
67,188
201,433
-
(98,575)
(98,575)
6,767,264
-
6,767,264
134,972
940
58,180
(151,718)
504,744
12,031
26,845
(62,036)
47,384
89,758
(40,911)
48,847
277,277
758,861
(132,631)
626,230
93,766
(6)
45,729
(18,347)
1,900
123,042
(23,005)
100,037
48,429
2,214
251,312
(237,119)
18,425
83,261
(36,600)
46,661
28,491
20,356
48,847
620,281
5,949
626,230
98,856
1,181
100,037
36,300
10,361
46,661
13,302
-
(257,973)
244,671
795,213
15,179
124,093
(224,549)
-
-
-
-
-
-
-
344,986
1,054,922
(233,147)
821,775
783,928
37,847
821,775
10,321,883
8,418,854
1,903,029
16,043,419
6,901,118
9,142,301
3,338,699
1,833,488
1,505,211
6,873,596
7,090,497
(216,901)
(7,343,443)
(7,343,443)
-
29,234,154
16,900,514
12,333,640
587,366
93,434
164,775
2,709,067
388,564
27,888
993,847
311,650
42,076
1,024,798
1,283
1,736
278,643
(50,398)
34,548
46,000
-
-
-
-
5,315,078
794,931
236,475
308,793
Singapore
$’000
4,405,789
6,089,036
China
$’000
Brazil
$’000
Other Far East
& ASEAN
countries
$’000
1,101,948
3,068,712
390,663
316,728
478,099
1,412,271
Other
countries
$’000
390,765
764,746
Elimination
$’000
Total
$’000
-
-
6,767,264
11,651,493
External sales
Non-current assets
Other than Singapore and China, no single country accounted for 10% or more of the Group’s revenue for the financial year ended
31 December 2016.
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 2016.
Note: Pricing of inter-segment goods and services is at fair market value.
170 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
Offshore
& Marine
$’000
Property
$’000
Infrastructure
$’000
Investments
$’000
Elimination
$’000
Total
$’000
6,240,549
799
6,241,348
1,823,104
4,833
1,827,937
2,037,285
32,538
2,069,823
195,535
63,992
259,527
-
(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
580,394
10,223
28,538
(76,608)
305,721
848,268
(174,543)
673,725
208,344
(400)
24,428
(25,162)
36,025
243,235
(31,214)
212,021
114,023
1,803
158,340
(157,332)
90,562
207,396
(16,686)
190,710
481,470
35,039
516,509
660,945
12,780
673,725
197,410
14,611
212,021
184,797
5,913
190,710
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
1,524,622
68,343
1,592,965
10,063,097
8,692,893
1,370,204
15,974,497
7,184,724
8,789,773
3,005,808
1,930,793
1,075,015
7,011,771
6,320,904
690,867
(7,134,572)
(7,134,572)
-
28,920,601
16,994,742
11,925,859
568,116
212,100
147,691
2,739,462
895,909
33,292
928,650
505,869
37,243
1,173,409
112,391
1,811
3,606
55,476
(7,737)
-
-
-
-
-
5,409,637
1,726,269
220,037
51,345
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
Impairment loss/(write-back of
impairment loss)
Geographical information
Singapore
$’000
6,930,287
5,916,298
China
$’000
Brazil
$’000
Other Far East
& ASEAN
countries
$’000
1,157,686
3,291,552
1,011,602
288,560
580,618
1,168,113
Other
countries
$’000
616,280
962,598
Elimination
$’000
Total
$’000
-
-
10,296,473
11,627,121
External sales
Non-current assets
Other than Singapore and China, 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.
171
Notes to the Financial Statements
34. 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
FRS 116 Leases
Amendments to FRS 12 Recognition of Deferred Tax Assets for Unrealised Losses
Amendments to FRS 7 Disclosure Initiative
Amendments to FRS 102 Share-based Payments
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 five-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, FRS 109 Financial Instruments was issued which replaces FRS 39 Financial Instruments: Recognition
and Measurement. The standard introduces new requirements for classification and measurement of financial instruments,
impairment of financial assets, 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.
FRS 116 Leases
FRS 116 will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance
leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are
recognised. The only exceptions are short-term and low-value leases. The accounting for lessors will not change significantly.
The standard will affect primarily the accounting for the Group’s operating leases. The future minimum rental expense payable
under significant non-cancellable leases is disclosed in Note 29. FRS 116 will take effect from financial years beginning on or after
1 January 2019. However, the Group has yet to determine to what extent these commitments will result in the recognition of an
asset and a liability for future payments and how this will affect the Group’s profit and classification of cash flows.
Some of the commitments may be covered by the exception for short-term and low-value leases and some commitments may
relate to arrangements that will not qualify as leases under FRS 116.
35. Significant subsidiaries and associated companies
Information relating to significant subsidiaries consolidated in these financial statements and significant associated companies
whose results are equity accounted for is given in the following pages.
172 Keppel Corporation Limited Report to Shareholders 2016
Financial Report
Significant Subsidiaries and Associated Companies
Gross
Interest
Effective Equity
Interest
Cost of Investment
2016
%
2016
%
2015
%
2016
$’000
2015
$’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)
Keppel AmFELS, LLC (1a)
100
100
100
100
100
100
Keppel FELS Baltech Ltd (1a)
100
100
100
Keppel FELS Brasil SA (1a)
100
100
100
Keppel Letourneau USA, Inc (n)(1a)
100
100
-
Keppel Offshore & Marine
Engineering Services Mumbai
Pte Ltd (1a)
Keppel Offshore & Marine
Technology Centre Pte Ltd
Keppel Offshore & Marine USA
Inc (1a)
Keppel Sea Scan Pte Ltd
100
100
100
100
100
100
100
100
100
100
100
100
Keppel Verolme BV (1a)
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
Research and experimental
development on deepwater engineering
#
Brazil
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
Construction, fabrication and repair of
drilling rigs and offshore production
facilities
#
Brazil
Procurement of equipment and
materials for the construction of
offshore production facilities
#
Singapore
Project management, engineering and
procurement
#
#
Brazil
USA
#
Bulgaria
#
Brazil
-
USA
#
India
Ship owning
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
Design and license of various offshore
rigs and platforms
Marine and offshore engineering
services
#
Singapore
Research & development on marine
and offshore engineering
#
#
USA
Offshore and marine-related services
Singapore
Trading and installation of hardware,
industrial, marine and building related
products, leasing and provision of
services
#
Netherlands
Construction and repair of offshore
drilling rigs and shiprepairs
173
Significant Subsidiaries and Associated Companies
Gross
Interest
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
KV Enterprises BV (3)
KVE Adminstradora de Bens
Imoveis Ltda (1a)
2016
%
100
100
2016
%
100
100
2015
%
100
100
Lindel Pte Ltd
100
100
100
Offshore Technology Development
Pte Ltd
100
100
100
Regency Steel Japan Ltd (1a)
51
51
51
Associated Companies
Asian Lift Pte Ltd
50
50
50
Atwin Offshore & Marine Pte Ltd
FloaTEC Singapore Pte Ltd
Floatel International Ltd (2)
30
50
50
30
50
50
30
50
50
Marine Housing Services Pte Ltd
50
50
50
Seafox 5 Ltd (2)
49
49
49
Marine
Subsidiaries
Keppel Shipyard Ltd
100
100
100
Keppel Philippines Marine Inc (1a)
Alpine Engineering Services Pte Ltd
Blastech Abrasives Pte Ltd
98
100
100
98
100
100
98
100
100
Keppel Nantong Heavy Industry
Co Ltd (1a)
Keppel Nantong Shipyard
Company Ltd (1a)
100
100
100
100
100
100
Keppel Singmarine Pte Ltd
100
100
100
Keppel Smit Towage Pte Ltd
Keppel Subic Shipyard Inc (1a)
KS Investments Pte Ltd
KSI Production Pte Ltd (3)
Maju Maritime Pte Ltd
Marine Technology Development
Pte Ltd
Associated Companies
Arab Heavy Industries PJSC (1a)
Dyna-Mac Holdings Ltd
Nakilat - Keppel Offshore &
Marine Ltd (1a)
PT Limin KST
PV Keez Pte Ltd
51
87+
100
100
51
51
86+
100
100
51
51
86+
100
100
51
100
100
100
33
24
20
49
20
33
24
20
25
20
33
24
20
25
20
174 Keppel Corporation Limited Report to Shareholders 2016
2016
$’000
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
2015
$’000
#
#
Netherlands
Holding of long-term investments
Brazil
Holding of long-term investments and
property management
#
Singapore
Project management, engineering and
procurement
#
Singapore
Production of jacking systems
#
Japan
Sourcing, fabricating and supply of
specialised steel components
#
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
Provision of housing services for
marine workers
#
Isle of Man
Owning and leasing of multi-purpose
self-elevating platforms
#
Singapore
Ship repairing, shipbuilding and
conversions
#
#
#
Philippines
Shipbuilding and repairing
Singapore
Marine contracting
Singapore
Painting, blasting, shot blasting,
process and sale of slag
#
China
#
China
Engineering and construction of
specialised vessels
Engineering and construction of
specialised vessels
#
#
Singapore
Shipbuilding and repairing
Singapore
Provision of towage services
3,020
3,020
Philippines
Shipbuilding and repairing
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
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
Indonesia
Provision of towage services
Singapore
Chartering of ships, barges and boats
with crew
Financial Report
Gross
Interest
Effective Equity
Interest
Cost of Investment
2016
%
2016
%
2015
%
2016
$’000
2015
$’000
Country of
Incorporation
/Operation
Principal Activities
PROPERTY
Subsidiaries
Keppel Land Ltd
100
100
99
4,716,367
4,716,367
Singapore
Holding, management and investment
company
Keppel Land China Ltd
Keppel Bay Pte Ltd
100
100
100
100
99
100+
#
#
Keppel Philippines Properties
80+
80+
79+
493
Inc (1a)
Aether Ltd (2)
Agathese Pte Ltd
Aintree Assets Ltd (3)
Bayfront Development Pte Ltd
Beijing Aether Property
Development Ltd (2)
Beijing Kingsley Property
Development Co Ltd (1a)
Broad Elite Investments Ltd (3)
Changzhou Fushi Housing
Development Pte Ltd (1a)
51
100
100
100
51
51
100
100
100
51
51
99
99
99
51
100
100
99
100
100
100
100
99
99
Chengdu Hillstreet Development
Co Ltd (1a)
100
100
99
Chengdu Hilltop Development
Co Ltd (1a)
Chengdu Shengshi Jingwei
Real Estate Co Ltd (1a)
Dattson Pte Ltd
DC REIT Holdings Pte Ltd
Double Peak Holdings Ltd (3)
Estella JV Co Ltd(1a)
Evergro Properties Ltd
First King Properties Ltd (3)
Floraville Estate Pte Ltd
Greenfield Development Pte Ltd
Harbourfront One Pte Ltd
Harvestland Development Pte Ltd
Hillsvale Resort Pte Ltd
Hillwest Pte Ltd
Jencity Ltd (3)
Jiangyin Evergro Properties
Co Ltd (1a)
KeplandeHub Ltd
Keppel Bay Property Development
(Shenyang) Co Ltd (1a)
Keppel China Marina Holdings
Pte Ltd
Keppel China Township
Development Pte Ltd
100
100
99
100
100
99
100
100
100
98
100
100
100
100
100
100
100
100
90
99
100
100
100
100
100
98
100
100
100
100
100
100
100
100
90
99
100
100
99
99
99
97
99
99
99
99
100+
99
99
99
89
98
99
99
100
100
99
100
100
99
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Investment holding
626
493
#
#
#
#
#
Singapore
Property development
Philippines
Investment holding
HK
Investment holding
Singapore
Investment holding
BVI/Asia
Investment holding
Singapore
Investment holding
China
Property investment
#
China
Property development
#
#
BVI/China
Investment holding
China
Property development
#
China
Property development
#
China
Property development
#
China
Property development
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Investment holding
Singapore
Investment holding
BVI/Singapore
Investment holding
Vietnam
Property development
Singapore
Investment holding
Jersey
Investment holding
Singapore
Investment holding
Singapore
Investment holding
Singapore
Property investment
Singapore
Property development
Singapore
Investment holding
Singapore
Investment holding
BVI/Vietnam
Investment holding
China
Property development
Singapore
Investment holding
China
Property development
#
Singapore
Investment holding
#
Singapore
Investment holding
175
Significant Subsidiaries and Associated Companies
Gross
Interest
Effective Equity
Interest
Cost of Investment
2016
%
2016
%
2015
%
2016
$’000
2015
$’000
Country of
Incorporation
/Operation
Principal Activities
Keppel Digihub Holdings Ltd
100
100
99
Keppel Heights (Wuxi) Property
Development Co Ltd (1a)
Keppel Hong Da (Tianjin Eco-City)
Property Development Co Ltd (2)
Keppel Hong Yuan (Tianjin Eco-City)
Property Development Co Ltd (1a)
Keppel Lakefront (Nantong)
Property Development Co Ltd (1a)
Keppel Lakefront (Wuxi) Property
Development Co Ltd (1a)
Keppel Land (Saigon Centre) Ltd (1a)
Keppel Land Financial Services
Pte Ltd
Keppel Land International Ltd
Keppel Land Properties Pte Ltd
Keppel Land Realty Pte Ltd
Keppel Land Watco IV Co Ltd (1a)
Keppel Land Watco V Co Ltd (1a)
Keppel REIT Investment Pte Ltd
Keppel REIT Property Management
Pte Ltd
Keppel Tianjin Eco-City Holdings
Pte Ltd
Keppel Tianjin Eco-City
Investments Pte Ltd
100
100
99
100+
100+
100+
100+
100+
100+
100
100
99
100
100
99
100
100
100
100
100
68
68
100
100
100
100
100
100
100
68
68
100
100
99
99
99
99
99
68
68
99
99
100+
100+
100+
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Investment, management and holding
company
#
China
Property development
#
China
Property development
#
China
Property development
#
China
Property development
#
China
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 management services
#
Singapore
Investment holding
100+
100+
100+
126,137
126,137
Singapore
Investment holding
Keppel Township Development
100
100
99
(Shenyang) Co Ltd (1a)
Kingsdale Development Pte Ltd
Kingsley Investment Pte Ltd
Krystal Investments Pte Ltd (n)
Main Full Ltd (1a)
Mansfield Developments Pte Ltd
Merryfield Investment Pte Ltd
Ocean & Capital Properties Pte Ltd
Oceansky Pte Ltd
OIL (Asia) Pte Ltd
Parksville Development Pte Ltd
Pasir Panjang Realty Pte Ltd
Pembury Properties Ltd (3)
Portsville Pte Ltd
PT Harapan Global Niaga (1a)
PT Kepland Investama (1a)
PT Puri Land Development (1a)
PT Ria Bintan (1a)
86
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
86
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
46
85
99
-
99
99
99
99
99
99
99
99
99
99
99
99
99
46
176 Keppel Corporation Limited Report to Shareholders 2016
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
China
Property development
#
#
-
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Investment holding
Singapore
Investment holding
Singapore
Investment holding
HK
Investment holding
Singapore
Property development
Singapore
Investment holding
Singapore
Property and investment holding
Singapore
Investment holding
Singapore
Investment holding
Singapore
Property investment
Singapore
Investment holding
BVI/Singapore
Investment holding
Singapore
Investment holding
Indonesia
Property development
Indonesia
Property investment and development
Indonesia
Property development
Indonesia
Golf course ownership and operation
Financial Report
Gross
Interest
Effective Equity
Interest
Cost of Investment
2016
%
2016
%
2015
%
2016
$’000
2015
$’000
Country of
Incorporation
/Operation
Principal Activities
PT Sentral Tanjungan Perkasa (1a)
PT Straits-CM Village (1a)
Riviera Cove JV LLC (1a)
Riviera Point LLC (1a)
Saigon Centre Investment Ltd (3)
Saigon Sports City Ltd (1a)
Shanghai Floraville Land Co Ltd (1a)
Shanghai Hongda Property
Development Co Ltd (1a)
Shanghai Ji Xiang Land Co Ltd (2)
Shanghai Jinju Real Estate
Development Co Ltd (1a)
Shanghai Maowei Investment
Consulting Co Ltd (1a)
Shanghai Merryfield Land Co Ltd (1a)
Shanghai Pasir Panjang Land
Co Ltd (1a)
Sherwood Development Pte Ltd
Spring City Golf & Lake Resort
Co Ltd (1a)
Spring City Resort Pte Ltd
Straits Greenfield Ltd (2)
Straits Properties Ltd
Straits Property Investments
Pte Ltd
80
100
100
75
100
100
99
100
100
100
80
39
100
75
100
90
99
99
100
99
79
39
60
74
99
89
98
99
99
99
100
99
99
99
99
70
80
100
100
100
100
99
99
70
69
100
100
100
100
98
98
69
68
99
99
99
99
Success View Enterprises Ltd (3)
100+
100+
100+
Sunsea Yacht Club (Zhongshan)
Co Ltd (1a)
Sunseacan Investment (HK)
Co Ltd (1a)
100
80
79
80
80
79
Third Dragon Development Pte Ltd
100
100
99
Tianjin Fulong Property
Development Co Ltd (1a)
Tianjin Fushi Property
Development Co Ltd (2)
Tianjin Keppel Hong Hui
Procurement Headquarter
Co Ltd (1a)
Triumph Jubilee Ltd (3)
West Gem Properties Ltd (3)
Wiseland Investment (Myanmar)
Ltd (1a)
Atlantic Marina Services
(Asia-Pacific) Pte Ltd
100
100
99
100
100
99
100
100
99
100
100
100
100
100
100
99
99
99
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Indonesia
Property development
Indonesia
Hotel ownership and operations
Vietnam
Vietnam
BVI/HK
Property development
Property development
Investment holding
Vietnam
Property development
China
China
China
China
Property development
Property development
Property development
Property development
#
China
Investment holding
#
#
#
#
China
China
Property development
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
#
China
Property development
#
China
Trading of construction materials
#
#
BVI/China
Investment holding
Jersey
Investment holding
# Myanmar
Hotel ownership and operations
100+
100+
100+
1,460
1,460
Singapore
Investment holding
FELS Property Holdings Pte Ltd
100
100
100
78,214
78,214
Singapore
Investment holding
FELS SES International Pte Ltd
98+
98+
98+
Keppel Houston Group LLC (3)
100+
100+
100+
48
#
48
#
Singapore
Investment holding
USA
Property investment
177
Significant Subsidiaries and Associated Companies
Gross
Interest
Effective Equity
Interest
2016
%
2016
%
2015
%
Keppel Kunming Resort Ltd (1a)
100+
100+
98+
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
2016
$’000
4
2015
$’000
4
HK
Property investment
100+
100+
100+
122,785
122,785
Singapore
Property development and investment
76
74
74
67
35
67
35
66
35
50
50
50
50
50
50
40
67
50
40
25
43
68
68
68
45
5
25
25
33
40
67
50
40
25
43
68
68
68
45
5
25
25
33
40
66
50
-
25
43
68
68
68
46
5
25
25
33
40
40
40
45
45
-
25
42
25
25
42
25
25
42
25
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Vietnam
Property investment
#
#
BVI/Vietnam
Investment holding
China
Property investment
#
China
Property development
#
Singapore
Investment holding
# Myanmar
Property investment and development
#
#
-
#
#
#
#
#
#
#
#
#
#
BVI/Vietnam
Investment holding
Vietnam
Vietnam
Property development
Property development
Singapore
Property management
Singapore
Investment holding
Vietnam
Vietnam
Vietnam
Property investment and development
Property investment and development
Property investment and development
Singapore
Real estate investment trust
Vietnam
Trading of development properties
Indonesia
Property development
Indonesia
Development of holiday resort
Singapore
Property management
# Malaysia
Property investment
-
Vietnam
Property Development
#
#
#
Singapore
Investment holding
Vietnam
Property development
Singapore
Property development
#
Vietnam
Property investment
100
100
100
445,892
445,892
Singapore
Investment holding
Keppel Point Pte Ltd
Petro Tower Ltd (1a)
Associated Companies
Bellenden Investments Ltd (3)
Chengdu Taixin Real Estate
Development Co Ltd (2)
CityOne Development (Wuxi)
Co Ltd (2)
CityOne Township Development
Pte Ltd (2)
City Square Office Co Ltd (2)
Davinelle Ltd (3)
Dong Nai Waterfront City LLC (1a)
Empire City Limited LLC (n)(2)
EM Services Pte Ltd
Equity Rainbow II Pte Ltd (2)
Keppel Land Watco I Co Ltd (1a)
Keppel Land Watco II Co Ltd (1a)
Keppel Land Watco III Co Ltd (1a)
Keppel REIT
Nam Long Investment
Corporation (1a)
PT Pulomas Gemala Misori (2)
PT Purimas Straits Resorts (2)
Raffles Quay Asset Management
Pte Ltd (2)
Renown Property Holdings (M)
Sdn Bhd (1a)
Quoc Loc Phat Joint Stock
Company (n)(2)
SAFE Enterprises Pte Ltd (2)
South Rach Chiec LLC (1a)
Suzhou Property Development
Pte Ltd (2)
INFRASTRUCTURE
Subsidiaries
Keppel Infrastructure Holdings
Pte Ltd
Energy Infrastructure
Subsidiaries
Keppel Energy Pte Ltd
Keppel Electric Pte Ltd
100
100
100
100
100
100
#
#
#
#
#
Singapore
Investment holding
Singapore
Electricity, energy and power supply
and general wholesale trade
#
Singapore
Purchase and sale of gaseous fuels
Keppel Gas Pte Ltd
100
100
100
178 Keppel Corporation Limited Report to Shareholders 2016
Vietcombank Tower 198 Ltd (2)
30
30
30
Financial Report
Gross
Interest
Effective Equity
Interest
2016
%
2016
%
2015
%
Keppel DHCS Pte Ltd
100
100
100
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
2016
$’000
#
2015
$’000
#
Singapore
Development of district heating and
cooling system for the purpose of air
cooling and other utility services
Associated Companies
Keppel Merlimau Cogen Pte Ltd (2)
49
49
49
Environmental Infrastructure
Subsidiaries
Keppel Seghers Pte Ltd
100
100
100
Keppel Seghers Holdings BV (1a)
Keppel Seghers Belgium NV (1a)
100
100
100
100
100
100
Associated Companies
Tianjin Eco-City Energy Investment
& Construction Co Ltd (2)
20
20
20
Tianjin Eco-City Environmental
Protection Co Ltd (2)
20
20
20
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
Investments
Subsidiaries
Keppel Integrated Engineering Ltd
Keppel Prince Engineering
Pty Ltd (1a)
100
100
100
100
100
100
Keppel XTE Investments Pte Ltd
100
100
100
18
50
18
50
18
50
Associated Companies
Keppel Infrastructure Trust (2)
GE Keppel Energy Services
Pte Ltd (2)
Logistics & Data Centres
Subsidiaries
Keppel Telecommunications &
Transportation Ltd
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
Singapore
Commercial power generation
#
Singapore
Provision of environmental,
technologies, engineering works &
construction activities
#
#
Netherlands
Investment holding
Belgium
Provider of services and solutions to
the environmental industry related to
solid waste treatment
#
China
#
China
Investment and implementation
of energy and utilities related
infrastructure
Investment, construction and
operation of infrastructure for
environmental protection
#
Singapore
Provision of technical support
including engineering, construction,
operations and maintenance of plants
and facilities
#
Singapore
Engineering works, construction and
O&M of plants and facilities
#
Singapore
Engineering works, construction and
O&M of plants and facilities
#
#
Singapore
Investment holding
Australia
Metal fabrication
#
Singapore
Investment holding
#
#
Singapore
Infrastructure business trust
Singapore
Precision engineering, repairing,
services and agencies
80
80
80
397,647
397,647
Singapore
Investment, management and holding
company
Keppel Logistics Pte Ltd
100
80
80
Keppel Logistics (Foshan) Ltd (2)
70
56
56
Keppel Logistics (Foshan Sanshui
Port) Co Ltd (2)
60
33
33
#
#
#
#
Singapore
Integrated logistics services and
supply chain solutions
#
China
#
China
Integrated logistics port operations,
warehousing and distribution
Integrated logistics port operations
and warehousing
179
Significant Subsidiaries and Associated Companies
Gross
Interest
Effective Equity
Interest
Cost of Investment
2016
%
2016
%
2015
%
2016
$’000
2015
$’000
Country of
Incorporation
/Operation
Principal Activities
Jilin Sino-Singapore Food Zone
International Logistics Co Ltd (2)
Keppel Wanjiang International
Coldchain Logistics Park (Anhui)
Co Ltd (2)
Courex Pte Ltd (n)(2)
Keppel Data Centres Pte Ltd
Keppel Data Centres Holding
Pte Ltd
Keppel DC Singapore 1 Ltd
(formerly known as Keppel
Digihub Ltd)
Keppel DC Singapore 2 Pte Ltd
(formerly known as Keppel
Datahub Pte Ltd)
Keppel DC Investment Holdings
Pte Ltd
70
56
56
60
48
48
60
100
47
80
100+
86+
-
80
86+
100+
86+
86+
100+
86+
86+
100
80
80
Keppel Communications Pte Ltd
100
80
80
Keppel Telecoms Pte Ltd
100
80
80
Associated Companies
Asia Airfreight Terminal Company
Ltd (2)
10
8
8
Computer Generated Solutions
21
16
16
Inc (2)
Keppel DC REIT (2)
35+
29+
29+
Radiance Communications Pte Ltd
50
40
40
SVOA Public Company Ltd (2)
32
25
25
Wuhu Sanshan Port Co Ltd (2)
50
40
40
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
INVESTMENTS
Subsidiaries
Keppel Capital Holdings Pte Ltd
100
100
100
783,000
Alpha Investment Partners Ltd
100
100
Keppel DC REIT Management
Pte Ltd
Keppel Infrastructure Fund
Management Pte Ltd
100+
90+
99
80
100
100
100
Keppel REIT Management Ltd
100
100
99
Keppel Philippines Holdings Inc (1a)
Alpha Real Estate Securities Fund
Kephinance Investment Pte Ltd
Kepinvest Singapore Pte Ltd
(formerly known as Keppel Real
Estate Investment Pte Ltd)
65+
99
100
100
64+
99
100
100
59+
98
100
100
180 Keppel Corporation Limited Report to Shareholders 2016
#
#
#
#
-
#
#
China
#
China
Integrated logistics services,
warehousing and distribution
Integrated logistics services, food
trading hub, warehousing and
distribution
-
#
#
Singapore
Warehousing and distribution
Singapore
Investment holding
Singapore
Investment holding
#
Singapore
Data centre facilities management
#
Singapore
Data centre facilities management
#
Singapore
Investment holding
#
Singapore
Trading and provision of
communications systems and
accessories
#
Singapore
Investment holding
#
HK
Operation of an air cargo handling
terminal
#
USA
IT consulting and outsourcing provider
#
Singapore
Data centre real estate investment
trust
#
Singapore
Distribution and maintenance of
communications equipment and
systems
#
Thailand
Distribution of IT products and
telecommunications services
#
China
Integrated logistics services and port
operations
-
#
#
Singapore
Investment holding
Singapore
Fund management
Singapore
Real estate investment trust
management and investment holding
#
Singapore
Trust management
#
Singapore
Investment advisory and property
management
-
#
Philippines
Investment holding
Singapore
Investment holding
90,000
90,000
Singapore
Investment holding
18,425
764,400
Singapore
Investment holding
Financial Report
Gross
Interest
Effective Equity
Interest
2016
%
2016
%
2015
%
Kepital Management Ltd (1a)
100
100
100
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
2016
$’000
#
2015
$’000
#
HK
Investment company
Keppel Group Eco-City
Investments Pte Ltd
Keppel Funds Investment Pte Ltd
Keppel GMTN Pte Ltd
Keppel Investment Ltd
Keppel Oil & Gas Pte Ltd
Kepventure Pte Ltd
KI Investments (HK) Ltd (1a)
Primero Investments Pte Ltd
Singapore Tianjin Eco-City
Investment Holdings Pte Ltd
100+
100+
100+
126,744
126,744
Singapore
Investment holding
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90+
90+
90+
#
10
#
#
#
10
#
#
Singapore
Investment company
Singapore
Investment holding
Singapore
Investment company
Singapore
Investment holding
594,922
484,355
Singapore
Investment holding
#
#
#
#
#
#
#
HK
Investment company
Singapore
Investment company
Singapore
Investment holding
#
BVI
Investment holding
Substantial Enterprises Ltd (3)
100+
100+
100+
Travelmore Pte Ltd
100
100
100
265
265
Singapore
Travel agency
Associated Companies
k1 Ventures Ltd (2)
KrisEnergy Ltd (2)
M1 Ltd (2)
Sino-Singapore Tianjin Eco-City
Investment and Development
Co., Ltd (2)
Total
Subsidiaries
36
40
19
50
36
40
15
45
36
40
15
45
#
#
#
#
#
#
#
#
Singapore
Investment holding
Cayman
Islands
Exploration for, and the development
and production of oil and gas
Singapore
Telecommunications services
China
Property development
8,307,153 8,160,187
Notes:
(i) All the companies are audited by PricewaterhouseCoopers LLP, Singapore except for the following:
(1a) Audited by overseas practice of PricewaterhouseCoopers LLP;
(2) Audited by other firms of auditors; and
(3) Not required to be audited by law in the country of incorporation and companies disposed, liquidated and struck off.
In accordance to Rule 716 of The Singapore Exchange Securities Trading Limited – Listing Rules, the Audit Committee and Board of Directors of the Company
confirmed that they are satisfied that the appointment of different auditors for its subsidiaries and significant associated companies would not compromise the
standard and effectiveness of the audit of the Company.
The shareholdings of these companies are held jointly with other subsidiaries.
The shareholdings of these companies are held by subsidiaries of Keppel Corporation Limited.
(ii) +
(iii) #
(iv)
(v) The subsidiaries’ place of business is the same as its country of incorporation, unless otherwise specified.
(vi) Abbreviations:
(n) These companies were incorporated/acquired during the financial year.
British Virgin Islands (BVI)
Hong Kong (HK)
United Arab Emirates (UAE)
United States of America (USA)
(vii) The Company has 243 significant subsidiaries and associated companies as at 31 December 2016. 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.
181
Interested Person Transactions
The Group has obtained a general mandate from shareholders of the Company for interested person transactions in the Annual General
Meeting held on 19 April 2016. 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
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
Pavilion Gas Pte Ltd
PSA International Group
SembCorp Marine Group
Singapore Power Group
Singapore Technologies Engineering Group
Singapore Telecommunications Group
Temasek Holdings Group
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)
2016
$’000
-
-
-
-
-
-
-
-
280
-
-
-
-
-
-
-
-
-
-
-
-
-
2015
$’000
-
225,717
-
-
-
-
-
-
-
-
-
-
-
-
180,926
-
-
-
-
-
-
-
2016
$’000
-
-
389
1,482
-
4,635
-
1,567
899
-
16,938
474
-
-
-
50,000
208
55
526
5,437
1,160
1,810
2015
$’000
200,000
104
1,360
4,871
39,354
4,881
5,600
12,300
342
182
415
1,267
161
80,000
24,436
-
143
77
-
29,064
2,439
-
Total Interested Person Transactions
280
406,643
85,580
406,996
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.
182 Keppel Corporation Limited Report to Shareholders 2016
Other Information
Key Executives
Chan Hon Chew, 51
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,
Keppel Telecommunications & Transportation Ltd, KrisEnergy Ltd and Keppel Capital Holdings Pte 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, 62
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.
He is a Director on the Boards of Keppel Offshore & Marine Technology Centre Pte Ltd, FloaTEC LLC, Keppel FELS Limited, Keppel
Shipyard Limited, Keppel Infrastructure Holdings Pte Ltd and Keppel Capital Holdings Pte Ltd and is also the Chairman of Keppel FELS
Brasil SA, 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.
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.
183
Key Executives
Michael Chia Hock Chye, 64
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 the Executive Director of Keppel FELS Limited from 2002 to 2009 with overall responsibility of the
business management of the company. Subsequently, Mr Chia was also Deputy Chairman of Keppel Integrated Engineering Ltd from
2009 to 2011 and Chief Executive Officer from 2009 to 2010. He was Director (Group Strategy & Development) of Keppel Corporation
Limited from January 2011 to January 2013. 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 served 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, 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.
Chris Ong Leng Yeow, 42
Bachelor and Master Degree in Electrical and Electronics Engineering from National University of Singapore.
Mr Ong is the Managing Director of Keppel FELS with effect from 5 July 2016. Prior to this appointment, he was the Deputy Managing
Director of Keppel FELS. Mr Ong’s career began in Keppel FELS since 1999 as a Commissioning Superintendent (E&I) and he has held
appointments as Project Engineer, Section Manager, Deputy Engineering Manager, Assistant General Manager (Engineering), General
Manager (Engineering), Acting Executive Director (Operation) and Executive Director (Commercial).
In addition to his current appointment, he is also board member of The Institute of Technical Education Board of Governors (BOG), a
member of the Association of Singapore Marine Industries, a member of the Workplace Safety & Health (WSH) Council Marine Industries
Committee and a member of the U EnTech Steering Committee.
Mr Ong 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 Ong is the Chairman of Bennett Offshore LLC, Keppel LeTourneau USA Inc, Bintan Offshore Fabricators Pte Ltd and Keppel SLP LLC
and a director of various subsidiaries or associated companies of Keppel Offshore & Marine Ltd.
Past principal directorships in the last five years
Mod Prefab Private Limited.
184 Keppel Corporation Limited Report to Shareholders 2016
Other Information Chor How Jat, 55
Master of Science in Marine Technology, University of Newcastle Upon Tyne; Bachelor of Engineering (Honours) in Naval Architect &
Shipbuilding, 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 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 Keppel Philippines Marine Inc., Keppel Batangas Shipyard, Keppel Subic Shipyard Inc.,
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 Singapore Maritime Foundation
(SMF) Advisory Panel.
Past principal directorships in the last five years
KSI Production Pte Ltd.
Abu Bakar Bin Mohd Nor, 51
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 Safety 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 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 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, Gas Technology Development Pte Ltd and FueLNG Pte Ltd.
He sits on the Bureau Veritas South East Asia Technical Committee as well as the Workplace Safety and Health Council (Marine
Industries) Committee. He is also on 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 the Ministry of Defence, Singapore such as Member of the
Advisory Council on Community Relations in Defence, Reward and Recognition Committee for Defence and was a Member of the SAFRA
Management Committee where he chaired various SAFRA Clubs as Chairman and Vice-Chairman.
Mr Abu Bakar is the Chief of Staff (NEEX Liaison Officer) of HQ2 PDF Comd, 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.
In recognition of his contributions to the SAF and community, he received the Formation NSmen of the Year award in 1998 and the SAF
NSmen of the Year award in 1999. He was also awarded the Commendation Medal (Military) in 2002, the Public Service Medal (Pingat
Bakti Masyarakat) in 2009, and the Public Administration Medal Bronze (Military) in 2015.
Past principal directorships in the last five years
Nil.
185
Key Executives
Ang Wee Gee, 55
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 which is listed on the Philippine Stock Exchange and Chairman of Keppel Thai Properties Public Company
Limited which was listed on The Stock Exchange of Thailand. Mr Ang was also the Group’s Country Head for Vietnam as well as Head of
Keppel Land Hospitality Management Pte Ltd. He previously held various positions in business and project development for Singapore
and overseas markets, and corporate planning in the Group’s hospitality management arm.
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.
Mr Ang is currently a member of the Board of the Building and Construction Authority of Singapore.
Past principal directorships in the last five years
Various subsidiaries and associated companies of Keppel Land Limited.
Tan Swee Yiow, 56
Bachelor of Science (First Class Honours) in Estate Management, National University of Singapore; Master of Business Administration in
Accountancy, Nanyang Technological University.
Mr Tan was appointed CEO and Executive Director of Keppel REIT Management Limited, the Manager of Keppel REIT, with effect from 20
March 2017.
Prior to his current appointment, Mr Tan was President, Singapore, in Keppel Land and concurrently Head, Keppel Land Hospitality
Management. He had oversight of the Keppel Land Group’s Investment and development operations in Singapore, as well as its
hospitality management arm. Mr Tan has been with the Keppel Land Group since 1990. He was the CEO of the Manager when Keppel
REIT was listed in April 2006, a role that he held till 2009.
Mr Tan is a Board Member and President of Singapore Green Building Council and a Member of World Green Building Council’s Corporate
Advisory Board. He also serves as Honorary Treasurer on the Management Council of Real Estate Developers’ Association of Singapore
and sits on the Workplace Safety Health Council (Construction and Landscape Committee).
Past principal directorships in the last five years
Keppel Thai Properties Public Company Ltd, Keppel REIT Management Ltd and other subsidiaries and associated companies of Keppel
Land Limited.
Ben Lee Siew Keong, 44
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.
186 Keppel Corporation Limited Report to Shareholders 2016
Other Information Linson Lim Soon Kooi, 55
Bachelor of Engineering, Monash University, Australia; Member of the Institute of Engineers, Malaysia.
Mr Lim joined Keppel Land Group in 1995, and is currently President, Vietnam, Keppel Land International. He was appointed Country
Representative, Vietnam for Keppel Corporation in August 2016.
In 2005, Mr Lim was conferred Certificate of Merit by H.E. Phan Van Khai then Prime Minister of Vietnam and H.E. Dao Dinh Binh, then
Minister of Transport for his contribution to the joint ventures of Sedona Suites, Royal Park in Hanoi, and Saigon Centre in Ho Chi
Minh City (“HCMC”) respectively. In 2008, he was conferred Insignia of HCMC by H.E. Le Hoang Quan, then Chairman of HCMC People’s
Committee for his contribution and relationship with the city.
He is concurrently the General Director of Keppel Land Vietnam. He is also a Director of a number of subsidiaries and associates in the
Keppel Land Group. Mr Lim is also a Board Director of Nam Long Group
Past principal directorships in the last five years
Keppel Philippines Properties Inc (Chairman).
Ong Tiong Guan, 58
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), Keppel Seghers Pte Ltd, Keppel Capital Holdings Pte Ltd and Energy Studies Institute.
Past principal directorships in the last five years
Keppel Merlimau Cogen Pte Ltd and GE Keppel Energy Services Pte Ltd.
Tan Boon Leng, 52
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.
187
Key Executives
Nicholas Lai Garchun, 49
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, Energy Infrastructure
of Keppel Infrastructure Holdings Pte Ltd and continues to drive value in the power and gas, and district heating and cooling 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.
Alan Tay Teck Loon, 47
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 Keppel Infrastructure Fund Management Pte Ltd (the Trustee-Manager of Keppel Infrastructure Trust).
Past principal directorships in the last five years
J.P. Morgan Asset Management Real Assets (Singapore) Pte Ltd, Eco Management Korea Holdings Inc. and GE Keppel Energy Services
Pte Ltd.
Thomas Pang Thieng Hwi, 52
Bachelor of Arts (Engineering) and Master of Arts (Honorary Award), University of Cambridge (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, associated companies and
joint venture companies. He is also a director on the boards of Keppel Capital Holdings Pte Ltd and Keppel DC REIT Management Pte Ltd
(Manager of Keppel DC REIT).
Past principal directorships in the last five years
Various subsidiaries and associated companies of Keppel Telecommunications & Transportation Ltd, Keppel DC REIT and Keppel
Infrastructure Trust.
188 Keppel Corporation Limited Report to Shareholders 2016
Other Information Wong Wai Meng, 48
Bachelor of Engineering (Electrical and Electronic Engineering), Nanyang Technological University
Mr Wong is the Chief Executive Officer of Keppel Data Centres. He has more than 20 years of experience in the Information and
Communications Technology (ICT) industry. Prior to joining Keppel Telecommunications & Transportation Ltd, 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 is currently the Second Vice Chairman in the Executive Committee Council of Singapore IT Federation (SiTF) and a committee
member in the Technology Strategy Committee of Mount Alvernia Hospital.
Past principal directorships in the last five years
E&E Technology Pte Ltd (Taiwan); Green House Group Pte Ltd; Frontline Solutions Pte Ltd; iASPire.Net Pte Ltd; BT Singapore Pte Ltd; BT
Global Solutions Pte Ltd; BT Global Services Technologies Pte Ltd; Frontline Technologies Corporation Ltd.
Desmond Gay Kah Meng, 56
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 Telecommunications &
Transportation Ltd, which offers integrated third-party logistics solutions. Mr Gay is also a Director of a number of subsidiaries and
associated companies of the group including Courex Pte. Ltd, Keppel Logistics (Foshan) Limited, Keppel Logistics (Tianjin Eco-City)
Limited, PT Keppel Puninar Logistics and Indo-Trans Keppel Logistics Vietnam Co. Ltd.
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.
Christina Tan Hua Mui, 51
Bachelor of Accountancy (Honours), National University of Singapore; CFA® charterholder.
Ms Tan is the CEO of Keppel Capital Holdings Pte Ltd (Keppel Capital) and Managing Director of Alpha Investment Partners Limited
(Alpha).
Keppel Capital is the Keppel Group’s asset management arm, which includes the asset managers Keppel REIT Management, Keppel
Infrastructure Fund Management, Keppel DC REIT Management and Alpha. Ms Tan is a founding member of Alpha, and has been actively
involved in all phases of the firm’s development since 2003. As Managing Director, she sits on the Investment Committee for all Alpha-
managed funds and is instrumental in developing as well as implementing the portfolio strategy for all the funds.
Ms Tan has over 20 years of expertise and experience in investing and fund management across the US, Europe and Asia. She previously
served as the Chief Financial Officer of GRA (Singapore) Private Limited, the Asian real estate fund management arm of the Prudential
Insurance Company of America, managing more than US$1 billion in real estate funds. Prior to that, she was the Treasury Manager with
Chartered Industries of Singapore, managing the group’s cash positions and investments. Ms Tan started her career with Ernst & Young
before joining the Government of Singapore Investment Corporation (GIC).
Ms Tan holds a Bachelor of Accountancy (Honours) from the National University of Singapore and is a CFA® charterholder.
Ms Tan’s principal directorships include Keppel Capital, Alpha, Keppel REIT Management Limited (the manager of Keppel REIT), Keppel
DC REIT Management Pte Ltd (the manager of Keppel DC REIT) and Keppel Infrastructure Fund Management Pte Ltd (the trustee-
manager of Keppel Infrastructure Trust).
Past principal directorships in the last five years
Nil.
189
Key Executives
Khor Un-Hun, 47
Bachelor of Accountancy (First Class Honours), Nanyang Technological University.
Mr Khor 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. He is concurrently the Director (Group Mergers & Acquisitions) of Keppel Corporation Limited.
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.
Chua Hsien Yang, 39
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 more than
15 years of experience in mergers and acquisitions, real estate investments, fund management, business development and asset
management in the real estate sector within the Asia Pacific region.
Prior to joining Keppel DC REIT Management Pte Ltd, Mr Chua headed the investment team of Keppel REIT Management Limited
for six years. 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.
190 Keppel Corporation Limited Report to Shareholders 2016
Other Information Major Properties
Held By
Completed properties
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
Keppel REIT
45%
Keppel DC REIT
29%
Bugis Junction
Towers
Victoria Street,
Singapore
Ocean Financial
Centre
Collyer Quay,
Singapore
One Raffles 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 82,962 sqm
Land area: 15,496 sqm
Two office towers of
50-storey and 29-storey
99 years leasehold
Commercial office building with
rentable area of 123,636 sqm
Marina Bay
Financial Centre
(Phase 1)
Marina Boulevard, with ancillary retail space
Singapore
Land area: 33,219 sqm
Two office towers of
33-storey and 50-storey
99 years leasehold
Commercial office building with
rentable area of 161,553 sqm
Marina Bay
Financial Centre
(Phase 2)
Marina Boulevard,
Singapore
275 George Street
Brisbane,
Australia
Land area: 9,710 sqm
46-storey office tower
with retail podium
99 years leasehold
Commercial office building with
rentable area of 124,488 sqm
Land area: 3,655 sqm
30-storey office tower
Freehold
Commercial office building with
rentable area of 41,748 sqm
8 Exhibition Street
Melbourne,
Australia
Land area: 4,329 sqm
35-storey office tower
with ancillary retail space
Freehold
Commercial office building with
rentable area of 45,920 sqm
8 Chifley Square
Sydney,
Australia
David Malcolm
Justice Centre
(f.k.a. Office
Tower on the
Old Treasury
Building site)
Perth,
Australia
Keppel DC
Singapore 1
(f.k.a. S25)
Serangoon,
Singapore
Keppel DC
Singapore 2
(f.k.a. T25)
Tampines,
Singapore
Gore Hill Data
Centre
Sydney,
Australia
Almere Data
Centre
Amsterdam,
Netherlands
Land area: 1,581 sqm
34-storey office tower
99 years leasehold
Commercial office building with
rentable area of 19,350 sqm
Land area: 2,947 sqm
33-storey office tower
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
option for another
30 years
Data centre with rentable area
of 10,192 sqm
Land area: 5,000 sqm
5-storey data centre
30 years lease with
option for another
30 years
Data centre with rentable area
of 3,447 sqm
Land area: 6,692 sqm
4-storey data centre
Freehold
Data centre with rentable area
of 8,450 sqm
Land area: 7,930 sqm
Freehold
Data centre with rentable area
of 11,000 sqm
Keppel DC Dublin 1 Land area: 20,275 sqm
(f.k.a. Citadel 100
Data Centre)
Dublin,
Ireland
40 years leasehold
Data centre with rentable area
of 6,328 sqm
191
Major Properties
Held By
Keppel DC Singapore 3
Pte Ltd
(f.k.a. Keppel Datahub 2
Pte Ltd) #
Effective
Group
Interest
86%
Location
Keppel DC
Singapore 3
(f.k.a. T27)
Tampines,
Singapore
Description and
Approximate
Land Area
Land area: 5,000 sqm
Tenure
Usage
30 years lease with
option for another
30 years
Data centre with rentable area
of 5,000 sqm
Mansfield Development
Pte Ltd
100%
Keppel Towers and Land area: 9,127 sqm
Keppel Towers 2
Hoe Chiang Rd,
Singapore
27-storey and 13-storey
office towers
Freehold
Commercial office building with
rentable area of 39,958 sqm
Keppel Bay Pte Ltd
100%
100%
HarbourFront One Pte Ltd 100%
Sherwood Development
Pte Ltd
70%
DC REIT Holdings
22%
Reflections
at Keppel Bay
Singapore
Corals
at Keppel Bay
Singapore
Keppel Bay Tower
HarbourFront
Avenue,
Singapore
The Glades
Tanah Merah,
Singapore
I12 Katong,
East Coast Road
and Joo Chiat Road,
Singapore
Land area: 83,538 sqm
99 years leasehold
Land area: 38,830 sqm
99 years leasehold
A 1,129-unit waterfront
condominium development
A 366-unit waterfront
condominium development
Land area: 17,267 sqm
18-storey office tower
99 years leasehold
Commercial office building with
rentable area of 36,015 sqm
Land area: 31,882 sqm
99 years leasehold
A 726-unit condominium
development
Land area: 7,261 sqm
99 years leasehold
A 6-storey shopping mall
Spring City Golf &
Lake Resort Co
(owned by Kingsdale
Development Pte Ltd)
Tianjin Fushi Property
Development Co Ltd
Shanghai Hongda
Property Development
Co Ltd
69%
100%
99%
Spring City Golf
& Lake Resort
Kunming,
China
Serenity Villa
Tianjin,
China
The Springdale
Shanghai,
China
Land area: 2,884,749 sqm
Two 18-hole golf courses,
a club house
70 years lease
(residential)
50 years lease
(golf course)
Land area: 128,685 sqm
70 years leasehold
Land area: 264,090 sqm
70 years lease
(residential)
40 years lease
(commercial)
Integrated resort comprising
golf courses, resort homes
and resort facilities
A 340-unit residential
development in Tianjin Eco-City
A 2,596-unit residential
development with commercial
facilities in Pudong District
Shanghai Pasir Panjang
Land Co Ltd
99%
Eight Park Avenue
Shanghai,
China
Land area: 33,432 sqm
70 years leasehold
A 918-unit residential
development
Shanghai Ji Xiang Land
Co Ltd
100%
Seasons Residence Land area: 71,621 sqm
Shanghai,
China
70 years leasehold
PT Straits-CM Village
39%
Club Med Ria Bintan Land area: 200,000 sqm
Bintan,
Indonesia
30 years lease with
option for another
50 years
A 1,102-unit residential
development in Nanxiang,
Jiading District
A 302-room beachfront hotel
PT Kepland Investama
100%
100%
International
Financial Centre
(Tower 1)
Jakarta,
Indonesia
International
Financial Centre
(Tower 2)
Jakarta,
Indonesia
Land area: 10,428 sqm
20 years lease with
option for another
20 years
A prime office development with
rentable area of 27,933 sqm
Land area: 10,428 sqm
20 years lease with
option for another
20 years
A prime office development with
rentable area of 50,200 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
rentable area of 10,536 sqm
office and 89 units of serviced
apartments
192 Keppel Corporation Limited Report to Shareholders 2016
Other Information
Held By
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
Straits Greenfield Ltd
100%
Sedona Hotel Yangon Land area: 40,516 sqm
Yangon,
Myanmar
50 years BOT with
option for another
two 10-years
A 5-star hotel in Yangon with
797 rooms
First King Properties Ltd
100%
Office Development Land area: 1,947 sqm
75 King William
9-storey office tower
Street
London,
United Kingdom
Freehold
Commercial office building with
rentable area of 11,731 sqm
Properties under development
Keppel Bay Pte Ltd
100%
Keppel DC Singapore 4
Pte Ltd
86%
Keppel Bay Plot 6
Singapore
Keppel DC
Singapore 4
Tampines,
Singapore
Land area: 43,701 sqm
99 years leasehold
A proposed 86-unit waterfront
condominium development
Land area: 6,805 sqm
30 years lease with
option for another
30 years
Data centre
*(2017)
Harvestland Development 100%
Pte Ltd
Highline Residences Land area: 10,991 sqm
Tiong Bahru,
Singapore
99 years leasehold
A 500-unit condominium
development
*(2018)
Beijing Aether Property
Development Ltd
51%
Commercial
Development
Beijing,
China
Land area: 26,081 sqm
40/50 years leasehold An office and retail development
in Chaoyang District
*(2019)
Shanghai Floraville Land
Co Ltd
99%
Park Avenue Central Land area: 28,488 sqm
Shanghai,
China
70 years leasehold
An office and retail development
*(2021)
Shanghai Jinju Real Estate 99%
Development Co Ltd
Chengdu Taixin Real Estate 35%
Development Co Ltd
Spring City Golf &
Lake Resort
69%
Keppel Heights (Wuxi)
Property Development
Pte Ltd
100%
Sheshan Riviera
Shanghai,
China
V-City
Chengdu,
China
Spring City Golf
& Lake Resort
Kunming,
China
Park Avenue
Heights
Wuxi,
China
Keppel Lakefront (Wuxi)
Property Development
Co Ltd
100% Waterfront
Residence
Wuxi,
China
Land area: 175,191 sqm
70 years leasehold
Land area: 167,000 sqm
70 years lease
(residential)
40 years lease
(commercial)
Land area: 2,157,361 sqm
70 years leasehold
Land area: 66,010 sqm
Land area: 215,230 sqm
Keppel Township
Development (Shenyang)
Co Ltd
100%
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
100% Waterfront
Residence
Tianjin,
China
Land area: 103,683 sqm
70 years leasehold
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)
A 217-unit landed development
in Sheshan
*(2017 Phase 1)
A 5,761-unit residential
development with retail facilities
*(2018 Phase 2)
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 Liangxi District
*(2017 Phase 1)
A 1,486-unit residential
development with commercial
and SOHO facilities in Binhu
District
*(2017 Phase 7A)
A 2,794-unit residential
township with integrated
facilities in Shenbei New District
A 4,294-unit residential
development with office and
retail space
*(2018)
A 341-unit landed development
in Tianjin Eco-City
*(2017 Phase 3)
193
Description and
Approximate
Land Area
Land area: 50,782 sqm
Tenure
Usage
70 years lease
(residential)
40 years lease
(commercial)
A 1,535-unit residential
development with commercial
facilities in Jinjiang District
*(2017 Phase 3B)
Major Properties
Held By
Chengdu Hillstreet
Development Co Ltd
Effective
Group
Interest
100%
Chengdu Hilltop
Development Co Ltd
100%
Chengdu Shengshi Jingwei 100%
Real Estate Co Ltd
Sunsea Yacht Club
(Zhongshan) Co Ltd
80%
Location
Park Avenue
Heights
Chengdu,
China
Hill Crest Villa
Chengdu,
China
Serenity Villa
Chengdu,
China
Keppel Cove
Zhongshan,
China
Land area: 249,330 sqm
70 years leasehold
Land area: 286,667 sqm
70 years leasehold
Land area: 891,752 sqm
70 years lease
(residential)
40 years lease
(commercial)
70 years lease
(residential)
40 years lease
(commercial)
Jiangyin Evergro
Properties Co Ltd
99%
Stamford City
Jiangyin,
China
Land area: 82,987 sqm
Keppel Lakefront
(Nantong) Property
Development Co Ltd
100% Waterfront
Residence
Nantong,
China
MIP 59th and Third
Development LLC
83%
Residential
Development
New York,
United States
Land area: 172,215 sqm
70 years leasehold
Land area: 13,100 sqm
Freehold
PT Harapan Global Niaga
100% West Vista
Land area: 28,851 sqm
Land area: 26,406 sqm
30 years lease with
option for another
20 years
50 years BOT with
option for another
two 10-years
Land area: 8,355 sqm
50 years leasehold
Land area: 640,477 sqm
50 years leasehold
Land area: 302,093 sqm
50 years leasehold
Land area: 25,393 sqm
50 years leasehold
Land area: 3,667,127 sqm
50 years leasehold
Jakarta,
Indonesia
Junction City
Tower
Yangon,
Myanmar
Saigon Centre
(Phase 2 & 3)
Ho Chi Minh City,
Vietnam
Saigon Sports City
Ho Chi Minh City,
Vietnam
Palm City
(South Rach Chiec)
Ho Chi Minh City,
Vietnam
Estella Heights
Ho Chi Minh City,
Vietnam
Dong Nai
Waterfront City
Dong Nai Province,
Vietnam
Tinterland Pte Ltd
40%
Keppel Land Watco II & III
Co Ltd
68%
Saigon Sports City Ltd
90%
South Rach Chiec LLC
42%
Estella JV Co Ltd
98%
Dong Nai Waterfront
City LLC (owned by
Portsville Pte Ltd)
50%
Industrial Properties
Keppel FELS Limited
100%
A 274-unit landed development
in Xinjin County
*(2020 Phase 2)
A 573-unit landed development
in Xinjin County
*(2020 Phase 2)
A 1,647-unit residential
development with a mix of villas
and apartments, and integrated
marina lifestyle facilities
*(2018 Phase 2)
A 1,478-unit residential
development with commercial
and SOHO facilities
*(2019 Phase 3C & 3D)
A 1,199-unit residential
development
A residential-cum-retail
development at Upper East Side
in Manhattan
A 2,855-unit residential
development with ancillary shop
houses
*(2019)
A mix-used development in CBD
*(2017)
Commercial building with
rentable area of 37,551 sqm
retail, 35,859 sqm office and
195 units of serviced apartments
*(2017)
A 3,900-unit residential township,
commercial complexes and
public sports facilities
*(2020 Phase 1)
A 6,100-unit residential township
and commercial space
*(2017 Phase 1, 2019 Phase 2)
A 872-unit residential
development with commercial
space in An Phu Ward, District 2
*(2018)
A 7,850-unit residential township
with commercial space in Long
Thanh District
*(2021 Phase 1)
Jurong, Pioneer,
Crescent and
Tuas South Yard,
Singapore
Land area: 742,834 sqm
buildings, workshops,
building berths, drydocks
and wharves
16 - 30 years
leasehold
Oil rigs, offshore and marine
construction, repair, fabrication,
assembly and storage
194 Keppel Corporation Limited Report to Shareholders 2016
Other Information
Held By
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Estaleiro BrasFELS Ltda
100%
Angra dos Reis,
Rio de Janeiro,
Brazil
Land area: 409,020 sqm
buildings, workshops,
drydock, berths and wharf
Tenure
Usage
30 years leasehold
Offshore oil rig construction
and repair
Keppel Shipyard Limited
100%
Benoi and
Pioneer Yard,
Singapore
Land area: 799,111 sqm
buildings, workshops,
drydocks and wharves
30 years leasehold
Shiprepairing, shipbuilding and
marine construction
Expected year of completion
*
# Divested to Keppel DC REIT on 20 January 2017
195
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
Total Equity
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
Average headcount (number)
Wages & salaries ($ million)
2012
2013
2014
13,965
2,621
3,256
2,237
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)
12,380
2,134
2,794
1,846
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)
13,283
2,373
2,889
1,885
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)
Restated
2015
10,296
1,514
1,997
1,525
6,118
6,030
16,672
100
-
28,920
8,362
8,259
373
-
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)
2016
6,767
795
1,055
784
6,196
5,967
16,931
141
-
29,235
7,336
9,053
512
-
12,334
11,659
675
12,334
55.2
43.2
20.0
6.42
6.34
8.8
6.9
2.2
(0.56)
36,070
1,628
38,878
1,748
39,049
1,859
36,153
1,662
28,879
1,282
Notes:
1. Earnings per share are calculated based on the Group profit by reference to the weighted average number of shares in issue during the year.
2.
In calculating return on shareholders’ funds, average shareholders’ funds has been used.
196 Keppel Corporation Limited Report to Shareholders 2016
Other Information
2016
Group revenue of $6,767 million for 2016 was $3,529 million or 34% lower than that for the full year of 2015. The Offshore & Marine
Division’s revenue of $2,854 million was 54% below the $6,241 million for 2015 because of lower volume of work, deferment of some
projects and the suspension of the Sete Brasil contracts. Major jobs completed in 2016 include four jackup rigs, a land rig, a derrick lay
vessel, an accommodation semisubmersible and two FPSO conversions. The Property Division saw its revenue increase by 12% to $2,035
million due mainly to higher revenue from Singapore and China. Revenue from the Infrastructure Division contracted by $293 million to
$1,744 million as a result of a drop in revenue recorded by the power and gas business from lower prices and volume.
The Group’s pre-tax profit for the current year was $1,055 million, $942 million or 47% below the previous year. The Offshore & Marine
Division reported a $609 million drop in pre-tax profit to $90 million due mainly to lower operating results arising from lower revenue,
lower share of associated companies’ profits and impairment of assets. Impairment of assets in the year amounted to $277 million and
comprises impairment of fixed assets, stocks & work-in-progress and investments. The negative variance was partially offset by the
absence of provision for losses for the Sete Brasil rig building contracts of about $230 million in 2015. The Property Division’s profit of
$759 million for 2016 was $89 million or 11% lower than 2015 due mainly to lower fair value gains on investment properties, lower
contribution from Singapore property trading, lower share of associated companies’ profits and the absence of cost write-back upon
finalisation of project cost for Reflections at Keppel Bay in 4Q2015, partially offset by reversal of impairment of hospitality assets. The
lower share of associated companies’ profits was due mainly to lower share of fair value gains on investment properties, partly offset
by share of profits arising from divestment of the stake in Life Hub @ Jinqiao and 77 King Street. Profit from the Infrastructure Division
decreased by $120 million to $123 million due mainly to lower fair value gains on data centres and the absence of gains recognised in
2015. In 2015, there were gains from disposal of the 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, which were
partially offset by the losses following finalisation of the cost to complete the Doha North Sewage Treatment Plant. Pre-tax profit of the
Investments Division decreased by $124 million to $83 million due mainly to share of losses and impairment losses of an associated
company, and the absence of gain from sale of investments last year, partially offset by share of profits from Sino-Singapore Tianjin Eco-City.
Taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders was $784 million,
$741 million or 49% lower than last year. The Property Division was the largest contributor to Group net profit at 79%, followed by the
Infrastructure Division’s 13%, the Investments Division’s and the Offshore & Marine Division’s at 4% each.
2015
Group revenue of $10,296 million for 2015 was $2,987 million or 22% lower than that for the full year of 2014. The 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
semisubmersible, one FPSO conversion, one depletion compression platform, one floating crane and an FPSO integration. The Property
Division saw its revenue increase by 12% to $1,823 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 $877 million to $2,037 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 Engineering, Procurement and Construction (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 $848 million for 2015 was $122 million or 13% 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 $192 million to $243 million. The gain from disposal of 51% interest in
Keppel Merlimau Cogen Pte Ltd and dilution re-measurement gain from the combination of Crystal Trust and CitySpring Infrastructure
Trust to form the enlarged Keppel Infrastructure Trust were partially offset by the losses following finalisation of the cost to complete
the Doha North Sewage Treatment Works and the reduced contribution from the power and gas business. There were also gains from
divestment of data centre assets and Keppel FMO in 2014.
Revenue ($ billion)
Pre-Tax Profit ($ million)
Net Profit ($ million)
12
9
6
3
0
2,800
2,100
1,400
700
0
2,000
1,500
1,000
500
0
2012
14.0
2013
12.4
2014
13.3
2015
10.3
2016
6.8
2012
3,256
2013
2,794
2014
2,889
2015
1,997
2016
1,055
2012
2,237
2013
1,846
2014
1,885
2015
1,525
2016
784
197
Group Five-Year Performance
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 43%, followed by the Offshore
& Marine Division’s 32%, the Infrastructure Division’s 13% and the Investments Division’s at 12%.
2014
Group revenue of $13,283 million for 2014 was $903 million or 7% higher than that for the full year of 2013. Offshore & Marine Division’s
revenue of $8,556 million was 20% above the S$7,126 million for 2013, driven mainly by progress from on-going jobs. Major jobs
completed in 2014 include 7 jackup rigs, 3 FPSO upgrades, 2 FPSO conversions, one FPSO integration and one semi upgrade. Revenue
from the Infrastructure Division decreased by $538 million to $2,914 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 $1,629 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 $365 million to $435 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 $970 million for 2014 was $407 million or 30% 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 25%, the Infrastructure Division’s 16% and the Investments Division’s at 4%.
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 jackups, 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 $620 million to $3,452 million due to higher revenue contributed by the co-generation power plant in Singapore. Property
Division saw its revenue weakened by 43% to $1,711 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 21% to $70 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 $1,377
million was 22% lower than profit of $1,757 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 $144 million.
Taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders was $1,846 million, $391
million or 17% lower than last year. The Offshore & Marine Division was the largest contributor to Group net profit at 51%, followed by the
Property Division’s 43%.
Shareholders’ Fund ($ billion)
Capital Employed ($ billion)
Market Capitalisation ($ billion)
10
7.5
5.0
2.5
0
12
9
6
3
0
20
15
10
5
0
2012
9.2
2013
9.7
2014
10.4
2015
11.1
2016
11.7
2012
13.6
2013
13.7
2014
14.7
2015
11.9
2016
12.3
2012
19.8
2013
20.2
2014
16.0
2015
11.8
2016
10.5
198 Keppel Corporation Limited Report to Shareholders 2016
Other Information 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
$2,831 million. Lower revenue from EPC contracts was partly offset by higher revenue generated from the co-generation power plant
in Singapore. Revenue from Property Division of $2,979 million was 103% 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 rigbuilding contracts. Profit from Infrastructure Division increased by
64% to $58 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 $1,757 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,
$291 million or 15% higher than last year. The Property Division was the largest contributor to Group net profit at 48%, followed by the
Offshore & Marine Division’s 42%.
199
Group Value-Added Statements
($ 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
Total Distribution
Balance retained in the business:
Depreciation & amortisation
Non-controlling interests share of profits
in subsidiaries
Retained profit for the year
2012
2013
2014
2015
2016
13,965
(9,779)
4,186
12,380
(8,696)
3,684
13,283
(9,474)
3,809
10,296
(7,365)
2,931
167
603
225
5,181
1,579
501
135
212
789
1,136
3,216
211
306
1,448
1,965
158
626
361
4,829
1,668
397
125
175
1,357
1,657
3,722
242
376
489
1,107
145
504
563
5,021
1,733
462
134
266
763
1,163
3,358
265
276
1,122
1,663
134
504
402
3,971
1,600
404
155
83
872
1,110
3,114
220
(15)
652
857
6,767
(4,393)
2,374
139
345
(187)
2,671
1,155
233
225
77
545
847
2,235
236
(39)
239
436
5,181
4,829
5,021
3,971
2,671
Average headcount (number)
36,070
38,878
39,049
36,153
28,879
Productivity data:
Gross value added per employee ($’000)
Gross value added per dollar employment cost ($)
Gross value added per dollar sales ($)
116
2.65
0.30
95
2.21
0.30
98
2.20
0.29
81
1.83
0.28
82
2.06
0.35
($ million)
5,000
4,000
3,000
2,000
1,000
0
5,181
4,829
5,021
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
2,671
436
847
233
1,155
2012
2013
2014
2015
2016
Depreciation & Retained Profit
Interest Expenses & Dividends
Taxation
Wages, Salaries & Benefits
200 Keppel Corporation Limited Report to Shareholders 2016
Other Information
Share Performance
TURNOVER (million)
SHARE PRICES ($)
400
300
200
180
160
140
120
100
80
60
40
20
0
40
30
20
18
16
14
12
10
8
6
4
2
0
2012
2013
2014
2015
2016
Turnover
High and Low Prices
Share Price ($) *
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)
2012
2013
2014
2015
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
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. Earnings per share are calculated based on the Group net profit by reference to the weighted average number of shares in issue during the year.
2. Volume weighted average share price is used in calculating distribution yield and net price earnings ratio.
3. Last transacted share price is used in calculating distribution yield, net price earnings ratio and net price to book ratio.
* Historical share prices are not adjusted for special dividends, capital distribution and dividend in specie.
2016
5.79
6.56
4.64
5.46
43.2
20.0
3.7
12.6
6.34
5.79
3.5
13.4
0.9
201
Shareholding Statistics
As at 3 March 2017
Issued and Fully paid-up capital (including Treasury Shares) : $1,288,393,382.98
Issued and Fully paid-up capital (excluding Treasury Shares) : $1,253,601,698.45
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
: 1,812,843,070
: 5,067,110 (0.28%)
: Ordinary Shares
: One Vote Per Share. The Company cannot exercise any
voting right in respect of treasury shares.
Size of Shareholdings
1 - 99
100 - 1,000
1,001 - 10,000
10,001 - 1,000,000
1,000,001 & Above
Total
Twenty Largest Shareholders
Temasek Holdings (Private) Limited
Citibank Nominees Singapore Pte Ltd
DBS Nominees Pte Ltd
HSBC (Singapore) Nominees Pte Ltd
United Overseas Bank Nominees Pte Ltd
DBSN Services Pte Ltd
Raffles Nominees (Pte) Ltd
BNP Paribas Securities Services
OCBC Nominees Singapore Pte Ltd
OCBC Securities Private Ltd
DB Nominees (S) Pte Ltd
Shanwood Development Pte Ltd
Oh Choon Lian
UOB Kay Hian Pte Ltd
Phillip Securities Pte Ltd
Maybank Kim Eng Securities Pte Ltd
Societe Generale Singapore Branch
BNP Paribas Nominees Singapore Pte Ltd
Chen Chun Nan
DBS Vickers Securities (S) Pte Ltd
Total
Substantial Shareholder
No. of
Shareholders
189
16,907
45,756
9,343
37
%
0.26
23.41
63.35
12.93
0.05
No. of
Shares
7,041
13,876,356
178,752,908
279,314,134
1,340,892,631
%
0.00
0.76
9.86
15.41
73.97
72,232
100.00
1,812,843,070
100.00
No. of
Shares
371,408,292
324,841,755
181,409,260
99,676,592
82,291,699
70,884,219
54,895,513
52,335,597
12,396,374
7,683,285
7,535,549
7,040,000
5,776,182
5,326,878
4,148,761
3,808,422
3,796,419
3,748,082
3,618,100
3,298,970
%
20.49
17.92
10.01
5.50
4.54
3.91
3.03
2.89
0.68
0.42
0.41
0.39
0.32
0.30
0.23
0.21
0.21
0.20
0.20
0.18
1,305,919,949
72.04
%
0.05
Total Interest
No. of Shares
%
372,266,233
20.53
Temasek Holdings (Private) Limited
371,408,292
20.49
857,941
Direct Interest
Deemed Interest
No. of Shares
%
No. of Shares
Note:
Temasek Holdings (Private) Limited is deemed interested in 857,941 shares in which its subsidiaries and associated companies have direct or deemed interests.
Public Shareholders
Based on the information available to the Company as at 3 March 2017, approximately 79% 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.
202 Keppel Corporation Limited Report to Shareholders 2016
Other Information
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 49th Annual General Meeting of the Company will be held at Suntec Singapore Convention and
Exhibition Centre, Summit 1 – 2, Level 3, Raffles Boulevard Suntec City, Singapore 039593 on Friday, 21 April 2017 at 3.00 p.m. to transact
the following business:
Ordinary Business
1.
2.
3.
4.
5.
To receive and adopt the Directors’ Statement and Audited Financial Statements for the year ended
31 December 2016.
Resolution 1
To declare a final tax-exempt (one-tier) dividend of 12.0 cents per share for the year ended 31 December 2016
(2015: final tax-exempt (one-tier) dividend of 22.0 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 Regulation 83 of the Constitution of the Company (“Constitution”) and who, being eligible, offers himself for
re-election pursuant to Regulation 84 of the Constitution (see Note 3):
(i) Mr Till Vestring
(ii) Mr Danny Teoh
(iii) Mr Tow Heng Tan
To approve the sum of S$2,020,948 as Directors’ fees for the year ended 31 December 2016 (2015: S$2,314,310)
(see Note 4).
Resolution 3
Resolution 4
Resolution 5
Resolution 6
To re-appoint PricewaterhouseCoopers LLP as the auditors of the Company, and authorise the Directors to fix
their remuneration.
Resolution 7
Special Business
To consider and, if thought fit, approve with or without any modifications, the following ordinary resolutions:
6.
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 8
(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
(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;
203
Notice of Annual General Meeting & Closure of Books
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 5).
7.
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”);
(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;
204 Keppel Corporation Limited Report to Shareholders 2016
Resolution 9
Other Information
(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 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 (as hereinafter defined), 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 6).
8.
That:
(1)
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 2 to this Notice of Annual General
Meeting (“Appendix 2”)), or any of them, to enter into any of the transactions falling within the types of
Interested Person Transactions described in Appendix 2, with any person who falls within the classes
of Interested Persons described in Appendix 2, provided that such transactions are made on normal
commercial terms and in accordance with the review procedures for Interested Person Transactions as
set out in Appendix 2 (the “IPT Mandate”);
(2)
(3)
(4)
the IPT Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until
the date that the next annual general meeting is held or is required by law to be held, whichever is the earlier;
the Audit Committee of the Company be and is hereby authorised to take such action as it deems proper in
respect of such procedures and/or to modify or implement such procedures as may be necessary to take
into consideration any amendment to Chapter 9 of the Listing Manual 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 7).
To transact such other business which can be transacted at the annual general meeting of the Company.
Resolution 10
205
Notice of Annual General Meeting & Closure of Books
NOTICE IS ALSO HEREBY GIVEN THAT:
(a)
(b)
the Share Transfer Books and the Register of Members of the Company will be closed on 28 April 2017 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 28 April 2017 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 28 April 2017 will be entitled to the proposed final dividend. The proposed final
dividend, if approved at this annual general meeting, will be paid on 11 May 2017; and
the electronic copy of the Company’s Annual Report 2016 will be published on the Company’s website on 30 March 2017. The
Company’s website address is http://www.kepcorp.com, and the electronic copy of the Annual Report 2016 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 2016, 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/Leon Ng
Company Secretaries
Singapore, 30 March 2017
206 Keppel Corporation Limited Report to Shareholders 2016
Other Information Notes:
1. 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 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.
2. 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 72 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 Till Vestring will, upon his re-election, continue to serve as the Chairman of Remuneration Committee and a member of the Nominating Committee. Mr Vestring
is a partner in Bain & Company’s Southeast Asia office and has more than 20 years of management consulting experience in Asia, advising leading companies on
portfolio strategy, growth, mergers and acquisitions, organisation and performance improvement. He is a leader in Bain’s Industrial Goods & Services practice and
a member of Bain’s Telecommunications, Media and Technology practice. Mr Vestring also sits on the boards of Inchcape plc, the Singapore Chinese Orchestra and
Leap201.
Mr Danny Teoh will, upon his re-election, continue to serve as the Chairman of Audit Committee and a member of the Remuneration and Board Risk Committees.
Mr Teoh spent 27 years in KPMG LLP, Singapore and over the years, held various senior positions including member of KPMG International Board and Council,
Head of the Audit and Risk Advisory Services and Head of Financial Services. He was the Managing Partner of KPMG LLP, Singapore from 2005 to 2010. His other
directorships include DBS Group Holdings Ltd, DBS Bank Ltd, Changi Airport Group (Singapore) Pte Ltd, Jurong Town Corporation and Ascendas-Singbridge Pte Ltd.
He is Chairman of the Audit Committees of DBS Group Holdings Ltd and Changi Airport Group (Singapore) Pte Ltd. He is also a member of the Risk and Nominating
Committees of DBS Group Holdings Ltd.
Mr Tow Heng Tan will, upon his re-election, continue to serve as a member of the Nominating, Remuneration and Board Risk Committees. Mr Tow has an extensive
business career spanning the management consultancy, investment banking and stockbroking industries. He is currently the Chief Executive Officer of Pavilion
Capital International Pte. Ltd, a wholly-owned subsidiary of Temasek Holdings (Private) Limited (Temasek Holdings). Prior to joining Temasek Holdings in September
2002, he was Senior Director of Business Development at DBS Vickers Securities (Singapore) Pte Ltd. From 1993 to 2001, Mr Tow was Managing Director of Lum
Chang Securities Pte Ltd. Mr Tow was also formerly Temasek Holdings’s Chief Investment Officer. Mr Tow also sits on the board of ComfortDelGro Corporation
Limited, among others.
Mr Till Vestring and Mr Danny Teoh are considered by the board of Directors to be independent Directors. Please see pages 22 and 23 of the Company’s Annual Report.
4. Resolution 6 is to approve the payment of an aggregate sum of S$2,020,948 as Directors’ fees for the non-executive Directors of the Company for FY2016. In light of
the continued uncertainties overlooming the offshore and marine industry, all non-executive directors volunteered for a 10% reduction in their total fees for FY2016.
If approved, each of the non-executive Directors (including the Chairman) will receive 70% of his/her total Directors’ fees in cash (“Cash Component”) 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 72 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 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 8 is passed, and any subsequent bonus issue, consolidation or sub-division of Shares.
6. Resolution 9 relates to the renewal of the Share Purchase Mandate which was originally approved by Shareholders on 18 February 2000 and was last renewed at the
annual general meeting of the Company on 19 April 2016. At this annual general meeting, the Company is seeking a lower “Maximum Limit” of 5 per cent. of the total
number of issued Shares, which is lower than the 10 per cent. limit allowed under the Listing Manual. Please refer to Appendix 1 to this Notice of Annual General
Meeting for details.
7. Resolution 10 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 2 to this Notice of Annual General Meeting for
details.
8. 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.
207
Corporate Information
Board of Directors
Lee Boon Yang (Chairman)
Loh Chin Hua (Chief Executive Officer)
Tow Heng Tan
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Tan Puay Chiang
Till Vestring
Veronica Eng
Audit Committee
Danny Teoh (Chairman)
Alvin Yeo Khirn Hai
Veronica Eng
Tan Ek Kia
Remuneration Committee
Till Vestring (Chairman)
Lee Boon Yang
Danny Teoh
Tow Heng Tan
Nominating Committee
Tan Puay Chiang (Chairman)
Lee Boon Yang
Tow Heng Tan
Alvin Yeo
Till Vestring
Board Risk Committee
Veronica Eng (Chairman)
Tow Heng Tan
Danny Teoh
Tan Puay Chiang
Tan Ek Kia
Board Safety Committee
Tan Ek Kia (Chairman)
Lee Boon Yang
Loh Chin Hua
Tan Puay Chiang
Company Secretaries
Caroline Chang
Leon Ng
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
PricewaterhouseCoopers LLP
Public Accountants and Chartered
Accountants
8 Cross Street #17-00
PWC Building
Singapore 048424
Audit Partner: Sim Hwee Cher
Year appointed: 2016
208 Keppel Corporation Limited Report to Shareholders 2016
Other Information Financial Calendar
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
Despatch of Annual Report to Shareholders
Annual General Meeting
2016 Proposed final dividend
Books closure date
Payment date
FY 2017
Financial year-end
Announcement of 2017 1Q results
Announcement of 2017 2Q results
Announcement of 2017 3Q results
Announcement of 2017 full year results
31 December 2016
18 April 2016
21 July 2016
20 October 2016
26 January 2017
30 March 2017
21 April 2017
5.00 p.m., 28 April 2017
11 May 2017
31 December 2017
April 2017
July 2017
October 2017
January 2018
209
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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/SRS monies to buy ordinary
shares in the capital of Keppel Corporation Limited (“Shares”), this report is
forwarded to them at the request of their Agent Banks/SRS Operators 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 Agent Bank/SRS Operator so that his Agent
Bank/SRS Operator may appoint him as its proxy within the specified timeframe.
(Agent Banks/SRS Operators: 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 30 March 2017.
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
%
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 to be held
on Friday, 21 April 2017 at Suntec Singapore Convention and Exhibition Centre, Summit 1 – 2, Level 3, Raffles Boulevard Suntec
City, Singapore 039593 at 3.00 p.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the
resolutions to be proposed at the meeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies
will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the meeting and at any
adjournment thereof.
Resolutions
Number of Votes
For *
Number of Votes
Against *
Ordinary Business
1. Adoption of Directors’ Statement and Audited Financial Statements
2. Declaration of Dividend
3. Re-election of Mr Till Vestring as Director
4. Re-election of Mr Danny Teoh as Director
5. Re-election of Mr Tow Heng Tan as Director
6. Approval of fees to non-executive Directors
7. Re-appointment of Auditors
Special Business
8.
9. Renewal of Share Purchase Mandate
10. Renewal of Shareholders’ Mandate for Interested Person Transactions
Issue of additional Shares and convertible instruments
*
If you wish to exercise all your votes “For” or “Against” the relevant Resolution, please tick (“4”) within the relevant box provided. Alternatively, if you wish
to exercise your votes for both “For” and “Against” the relevant Resolution, please indicate the number of Shares in the boxes provided.
Dated this day of 2017
Total Number of
Shares held
Signature(s) or Common Seal of Member(s)
IMPORTANT: Please read the notes overleaf before completing this Proxy Form.
Glue all sides firmly. Stapling and spot sealing are disallowed.
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.
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, an Agent Bank/SRS Operator 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 (“Companies Act”).
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. 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.
4. 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 72 hours before the time appointed for the Annual General Meeting.
5. 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.
6. 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.
7. 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 shall be entitled to 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
Inspired 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