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BUILDING A
SUSTAINABLE
FUTURE
Annual Report 2020
AS ONE
INTEGRATED
BUSINESS
We will harness the strengths
and expertise of the Group
to provide solutions for
sustainable urbanisation
that are good for the planet,
for people and for Keppel.
VISION
A trusted global company building
a sustainable future.
MISSION
We deliver solutions for sustainable
urbanisation safely, responsibly
and profitably.
URBAN
URBAN
DEVELOPMENT
DEVELOPMENT
ASSET
ASSET
MANAGEMENT
MANAGEMENT
ENERGY &
ENERGY &
ENVIRONMENT
ENVIRONMENT
CONNECTIVITY
CONNECTIVITY
EDITED AND COMPILED BY
Group Corporate Communications, Keppel Corporation
DESIGNED BY
Black Sun Pte Ltd
GOVERNANCE
Corporate Governance
Risk Management
Regulatory Compliance
FINANCIAL REPORT
Directors’ Statement
Independent Auditor’s Report
Balance Sheets
Consolidated Profit and Loss Account
Consolidated Statement of
Comprehensive Income
Statements of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Significant Subsidiaries, Associated
Companies and Joint Ventures
OTHER INFORMATION
Interested Person Transactions
Key Executives
Major Properties
Group Five-Year Performance
Group Value-Added Statements
Share Performance
Shareholding Statistics
Notice of Annual General Meeting
and Closure of Books
Corporate Information
Financial Calendar
78
110
114
118
123
134
135
136
137
140
143
208
217
218
224
230
234
235
236
237
242
243
GROUP OVERVIEW
Key Figures
Group Financial Highlights
Global Presence
Chairman’s Statement
Interview with the CEO
Vision 2030 – Blazing the Trail
Eco-system for Value Creation
Sustainability Framework
Board of Directors
Keppel Group Boards of Directors
Keppel Technology Advisory Panel
Senior Management
Investor Relations
Significant Milestones
PERFORMANCE REVIEW
Operating & Financial Review
— Energy & Environment
— Urban Development
— Connectivity
— Asset Management
— Management Discussion & Analysis
— Financial Review & Outlook
— Group Structure
2
3
4
6
12
18
20
22
28
32
34
36
38
40
42
49
55
59
62
64
77
GROUP OVERVIEW
KEY FIGURES
2
REVENUE
$6.6b
Decreased 13% from FY 2019’s $7.6 billion.
Lower contributions from the Energy &
Environment, Urban Development and
Asset Management segments were partly
offset by higher revenue from Connectivity.
NET (LOSS)/PROFIT
($506)m
Compared to FY 2019’s net profit
of $707 million.
Apart from Keppel Offshore & Marine,
all key business units remained profitable
in FY 2020. Excluding impairments of
$952 million mainly due to the offshore
& marine business, the Group’s net profit
was $446 million for FY 2020.
MSCI ESG RATING
AAA
Received the highest AAA rating in the
Morgan Stanley Capital International
(MSCI) ESG ratings in February 2021.
Ranked among the top 8% of global
industrial conglomerates, based on
environmental, social and governance
(ESG) criteria, in the MSCI All Country
World Index. Keppel has held the rating
since February 2020.
RETURN ON EQUITY
(4.6)%
Compared to positive 6.3% for FY 2019.
Return on Equity for FY 2020 was negative
due to the net loss registered.
(LOSS)/EARNINGS PER SHARE
EMPLOYEE ENGAGEMENT SCORE
($0.28)
Compared to earnings per share
of $0.39 for FY 2019.
Net loss of $506 million for FY 2020
translated to a loss per share of $0.28.
87%
This was higher than Mercer’s global
average of 80%.
CASH DIVIDEND PER SHARE
NET ASSET VALUE PER SHARE
COVID-19 RELIEF EFFORTS
10.0cts
Compared to FY 2019’s cash dividend
of 20.0 cents per share.
Total distribution for FY 2020 comprises
a proposed final cash dividend of 7.0 cents
per share and an interim cash dividend of
3.0 cents per share.
NET GEARING RATIO
0.91x
Increased from FY 2019’s net gearing
of 0.85x.
Net gearing increased mainly due to
impact from lower equity due to the
significant impairments recorded in
FY 2020, as well as increase in net
debt arising from investments made,
working capital requirements and
dividend payments.
$5.90
Decreased 4% from FY 2019’s
$6.17 per share.
>$5m
Committed to support communities
affected by the pandemic in Singapore
and overseas.
FREE CASH INFLOW^
$497m
Compared to FY 2019’s outflow
of $653 million.
This was mainly due to lower working
capital requirements and higher proceeds
from divestments.
WORKPLACE SAFETY AND
HEALTH AWARDS
21 Awards
The highest number of awards won
by a single organisation in 2020.
^
Free cash flow excludes expansionary acquisitions & capital expenditure, and major divestments.
Annual Report 2020
GROUP OVERVIEW
GROUP FINANCIAL HIGHLIGHTS
3
GROUP QUARTERLY/HALF-YEARLY RESULTS ($ million)
Revenue
EBITDA
Operating (loss)/profit
(Loss)/Profit before tax
Attributable (loss)/profit
(Loss)/Earnings per share (cents)
For the year ($ million)
Revenue
Profit
EBITDA
Operating
Before tax
Net (Loss)/Profit
Operating cash flow
Free cash flow*
Economic Value Added (EVA)
Per share
(Loss)/Earnings ($)
Net assets ($)
Net tangible assets ($)
At year-end ($ million)
Shareholders’ funds
Non-controlling interests
Total equity
Net debt
Net gearing ratio (times)
Return on shareholders’ funds (%)
(Loss)/Profit before tax
Net (Loss)/Profit
Shareholders’ value
Distribution (cents per share)
Interim dividend
Final dividend
Total distribution
Share price ($)
Total shareholder return (%)
2020
2H
1H
Total
1Q
2Q
2019
3Q
4Q
Total
3,182
3,392
6,574
1,531
1,784
2,067
2,198
52
(149)
(357)
(537)
(29.5)
370
157
102
31
1.7
422
8
(255)
(506)
(27.8)
389
322
283
203
11.2
262
160
206
153
8.4
289
183
227
159
8.8
312
212
238
192
10.5
7,580
1,252
877
954
707
38.9
2020
2019
% Change
6,574
422
8
(255)
(506)
202
497
(1,368)
(0.28)
5.90
5.02
10,728
428
11,156
10,123
0.91
(2.4)
(4.6)
3.0
7.0
10.0
5.38
(18.6)
7,580
1,252
877
954
707
(825)
(653)
188
0.39
6.17
5.25
11,211
435
11,646
9,874
0.85
7.9
6.3
8.0
12.0
20.0
6.77
18.5
-13
-66
-99
n.m.f.
n.m.f.
n.m.f.
n.m.f.
n.m.f.
n.m.f.
-4
-4
-4
-2
-4
3
7
n.m.f.
n.m.f.
-63
-42
-50
-21
n.m.f.
* Free cash flow excludes expansionary acquisitions & capital expenditure, and major divestments.
n.m.f. = No meaningful figure
Keppel Corporation Limited
GROUP OVERVIEW
GLOBAL PRESENCE
4
TOTAL FY 2020 REVENUE
$6.6b
Markets outside of Singapore
contributed about 41% of the
Group’s revenue for FY 2020.
5
EUROPE
$374m
• Belgium
• Germany
•
•
Italy
Ireland
• The Netherlands
• The United Kingdom
ASIA
$5,246m
• China
•
•
India
Indonesia
• Japan
• Malaysia
• Myanmar
• The Philippines
• Singapore
• South Korea
• Vietnam
NORTH AMERICA
$644m
• The United States
MIDDLE EAST
$105m
• Qatar
• The United Arab Emirates
SOUTH AMERICA
$72m
• Brazil
AUSTRALIA
$133m
Annual Report 2020
Keppel Corporation Limited
6
GROUP OVERVIEW
CHAIRMAN’S STATEMENT
7
BUILDING A
SUSTAINABLE
FUTURE
As part of Vision 2030,
we are working towards becoming
one integrated business, providing solutions
for sustainable urbanisation.
However, despite the many challenges
brought about by COVID-19, Keppel
continues to strive for growth and success.
In May 2020, we unveiled Vision 2030,
our long-term strategy to guide the
Group’s growth and transformation.
VISION 2030
From a conglomerate of largely unrelated
parts, we are working towards becoming
one integrated business, providing
solutions for sustainable urbanisation.
We will focus on four key segments
that are part of a connected value chain,
namely Energy & Environment,
Urban Development, Connectivity
and Asset Management. We are also
deepening intra-company collaboration
and adopting a OneKeppel approach
to harness the synergies of the Group
DEAR SHAREHOLDERS,
2020 will long be remembered as the year
of the COVID-19 pandemic. The pandemic
infected more than 100 million people
worldwide and caused the death of
more than two million victims by
end-February 2021. It inflicted immense
human suffering, ravaged the global
economy and disrupted life everywhere.
Recent progress in the development and
rollout of COVID-19 vaccines has given
hope of bringing the pandemic under
control. However, the virus continues
to spread in many countries, with new
mutations emerging and threatening
new waves of infection. We are thus not
out of the woods yet, but must continue
to rigorously implement safe management
measures as we continue the global fight
against the coronavirus.
As a multi-business company operating in
more than 20 countries, Keppel has also
been severely impacted by the pandemic,
especially our offshore & marine (O&M)
business, which was badly hurt by the
plunge in global demand for oil.
LEE BOON YANG Chairman
WE ARE DEEPENING COLLABORATION
AND ADOPTING A ONEKEPPEL APPROACH
TO HARNESS THE SYNERGIES OF THE GROUP
AND CAPTURE NEW PROFIT POOLS.
and capture new profit pools that might not
be available to individual business entities.
In the last few months, we have progressively
announced different steps that Keppel is
taking to execute Vision 2030. These include
the announcement last September of our
plans to monetise $3–5 billion of identified
assets over three years, which will be
redeployed to seize new opportunities.
We have since made good progress towards
the target, with announced divestments
of more than $1.2 billion from October
to December. We will continue our asset
monetisation programme in the year ahead
and recycle capital to fund new initiatives.
Earlier this year, we also announced bold
plans to transform Keppel Offshore & Marine
(Keppel O&M) to be more relevant and
competitive amidst the global energy transition.
Keppel O&M will exit the offshore rigbuilding
business, after completing its existing
uncompleted rigs, and will progressively
exit low value-adding repairs and other
activities with low bottom-line contribution.
Keppel O&M will instead transit to
being a developer and integrator of
offshore energy and infrastructure assets,
focusing on work with higher value capture.
As we execute the transformation of
Keppel O&M, we will also continue to
explore inorganic options, though there
is no assurance that any transaction
will materialise.
In line with Keppel’s sharpened business
focus, we have decided to divest our
logistics business, and are currently
engaging potential buyers. We have
also announced new initiatives in
the development of onshore and
offshore renewable energy assets,
urban development and asset management,
among others. These are just some of
the changes and new initiatives that the
Company will be implementing as we
pursue Vision 2030.
Annual Report 2020
Keppel Corporation Limited
GROUP OVERVIEW
8
CHAIRMAN’S STATEMENT
9
CASH DIVIDEND PER SHARE
10.0cts
Total cash distribution
proposed for FY 2020.
FINANCIAL PERFORMANCE
For FY 2020, Keppel sustained a net loss
of $506 million, due to impairments
of $952 million, which were mainly
in the O&M business. Most of these
impairments were recorded in 2Q 2020,
following the sharp drop in oil demand
and oil prices, which were triggered
by the pandemic.
Apart from Keppel O&M, all key business
units remained profitable, with Keppel
Infrastructure, Keppel Capital and
Keppel Telecommunications & Transportation
achieving higher net profits year-on-year (yoy).
Excluding impairments, FY 2020’s net
profit would have been $446 million,
underpinned by the resilient performance
of Keppel’s business units, many of which
provide essential services and continued
operating throughout the pandemic.
In appreciation of our shareholders for
their continued confidence and support
for Keppel in this difficult environment,
the Board of Directors has proposed a
final cash dividend of 7.0 cents per share
for FY 2020. Together with the interim
cash dividend of 3.0 cents per share,
we will be paying out a total cash dividend
of 10.0 cents per share to shareholders
for the whole of 2020.
ENERGY & ENVIRONMENT
Over the past few years, Keppel O&M has
been increasingly pivoting to renewables
and cleaner fossil fuels such as Liquefied
Natural Gas (LNG). This strategy has borne
fruit. Despite the very tough environment, it
secured new order wins of about $1.0 billion
in 2020, with offshore renewables and
LNG solutions making up 65% of new
orders. Keppel O&M’s net orderbook
stood at $3.3 billion as at end-2020,
of which close to 82% comprises
renewables and gas solutions.
Keppel Infrastructure delivered strong results
and continued to grow as a steady contributor
to the Group, underpinned by improved
performance in the Energy Infrastructure
and Environmental Infrastructure businesses.
During the year, Keppel Infrastructure secured
$2.1 billion worth of waste-to-energy (WTE)
and district cooling contracts across
Singapore, India and Thailand.
Apart from Keppel O&M, all key business units remained profitable,
with many providing essential services and continuing to operate
throughout the pandemic.
In February 2021, Prime Minister Lee Hsien Loong (third from left) together with Minister for Sustainability and the Environment, Ms Grace Fu (fourth from right) officiated at the
opening of the iconic KMEDP.
Despite disruptions caused by the
pandemic, the iconic Keppel Marina
East Desalination Plant (KMEDP) was
completed on schedule and commenced
operations in June 2020. On 4 February 2021,
we were honoured to have Prime Minister
Lee Hsien Loong officiate at the official
opening of the plant. It is Singapore’s first
dual-mode desalination plant, capable
of treating seawater and reservoir water,
and will contribute to enhancing Singapore’s
water security.
Keppel Renewable Energy has also
announced its first renewables project,
namely the development of a 500MW
solar farm in Queensland, Australia.
We will continue to explore opportunities
in renewable energy assets.
URBAN DEVELOPMENT
During the year, Keppel Land announced
asset divestments of about $1.3 billion,
and continued to grow its business with
the acquisition of a stake in a co-living
solutions provider as well as new projects
in China and India.
by slower approval for the launch of
new projects, though the underlying
demand remains strong. In Singapore,
home sales improved, reflecting the
continuing demand for high-quality and
well-located homes.
CONNECTIVITY
The pandemic changed the way many
people worked. Working from home
and virtual meetings became the norm.
These changes have driven up demand for
communication services and data centres.
These home sales figures do not
include the approximately 8,200 units
sold en-bloc from the announced
divestments of our stakes in four
residential projects across China
and Vietnam.
Our total residential landbank stands at
about 54,000 homes, with the majority
in China and Vietnam, and a growing
portfolio in India.
Keppel Urban Solutions continued to
seek opportunities as a master developer
of smart, sustainable urban townships,
tapping the diverse capabilities of the
Keppel Group. It continues to collaborate
with Keppel Land on the development
of the 64-hectare Saigon Sports City,
which combines high-quality urban living
with vibrant and healthy lifestyles.
In 2020, Keppel Data Centres added two
new data centre development projects
in Singapore and China to its portfolio.
Following the success of the inaugural
Alpha Data Centre Fund, we have launched
the new Keppel Data Centre Fund II,
which will allow us to further expand
our data centre footprint, without relying
just on our balance sheet.
M1 provides essential communications
services and remained relatively resilient
despite the pandemic. While roaming and
prepaid revenue were affected by COVID-19
related travel restrictions, M1 has expanded
its market share to have the second largest
postpaid base in Singapore, based on both
the number of customers and revenue.
A major coup for M1 in 2020 was securing
the 5G network license together with StarHub,
which will see M1 roll out 5G network
coverage across Singapore. The sharing
of network resources with StarHub will
allow M1 to push out 5G service at more
affordable cost. M1’s transformation is also
progressing well. It has recently unveiled
its refreshed brand identity and launched
Keppel O&M extended its track record in offshore renewables, securing a $600 million contract to build one of the
world’s largest offshore wind turbine installation vessels for Dominion Energy in the US.
Keppel Land sold about 3,340 residential units,
mainly in China, Vietnam and Singapore.
Home sales were lower yoy, due to economic
headwinds in China, as well as fewer new
projects launched in the Chinese market.
In Vietnam, home sales were affected
In China, the Sino-Singapore Tianjin Eco-City
continues to grow steadily with a vibrant
community. During the year, the master
developer sold two residential land plots
and two industrial plots.
Annual Report 2020
Keppel Corporation Limited
GROUP OVERVIEW
10
CHAIRMAN’S STATEMENT
and we have continued to invest in training
and talent development. I am heartened
to see that notwithstanding the challenging
external environment, Keppelites remain
highly engaged. In the 2020 Employee
Engagement Survey, we achieved an
engagement score of 87%, significantly
higher than Mercer’s global average of 80%.
As part of the Group’s succession planning,
we have carried out leadership renewal in a
few key business units. These next generation
leaders are part of the team that formulated
Vision 2030 and are well-placed to collaborate
with the rest of the Group to realise our
common vision.
Compliance remains a key focus area.
In December 2020, we announced that
Keppel O&M had complied with and
successfully concluded the Deferred
Prosecution Agreement which it had entered
into with the U.S. Department of Justice
three years ago, thus bringing closure to
a very painful chapter in Keppel’s history.
Reflecting Keppel’s zero tolerance for
corruption, we have continued to enhance
our compliance measures, including
progressively rolling out the ISO 37001
Anti-Bribery Management System across
business units. Apart from Keppel O&M,
which had achieved global certification in
2019, the Singapore entities of both Keppel
Land and Keppel Data Centres also achieved
ISO 37001 certification in 2020.
Safety is one of Keppel’s core values,
and we continue to enhance the Group’s
safety performance, including through
harnessing technology such as data
analytics and artificial intelligence to
improve our health and safety systems
and processes. At the Singapore Workplace
Safety & Health Awards 2020, Keppel won
21 awards, the highest number by a single
organisation for the year. In 2020, our total
recordable injury rate improved. However,
sadly, we suffered one fatality at a yard
in Singapore. We have thoroughly
investigated the incident and put in
place enhanced training and other
measures to prevent recurrence.
Keppel believes in contributing to the
community, wherever we operate.
We committed over $5 million to the fight
against COVID-19, in Singapore and overseas,
including donating to The Courage Fund in
Singapore. I would like to thank the directors
and staff of the Keppel Group for their
generous contributions to these efforts.
Beyond lending a hand to communities most
affected by COVID-19, we also continued
to provide care for the underprivileged and
support environmental causes. Through the
Keppel Care Foundation, we donated $2 million
to the National Kidney Foundation to open
the first dialysis centre in Singapore which
is co-located within a hospital compound.
As part of Vision 2030’s focus on sustainability, Keppel is exploring the development of floating data centres, which are
more energy efficient than traditional land-based ones.
We are making sustainability our business,
by providing solutions that contribute to a
cleaner and greener world, such as renewable
energy, WTE plants and green buildings.
its new digital connectivity platform,
which is expected to significantly improve
customer experience.
ASSET MANAGEMENT
Asset Management functions both as a
vertical for the Group, and a horizontal which
promotes collaboration across businesses,
while also serving as a platform for capital
recycling and tapping third-party investments
for growth. Keppel Capital performed well
in FY 2020, with assets under management
growing to $37 billion by end-2020,
compared to $33 billion a year ago.
Despite COVID-19 related travel restrictions,
Keppel Capital-managed funds raised
total equity of about $4.5 billion from
institutional investors during the year,
reflecting the strong demand from
investors for assets with long-term
sustainable cashflow. Keppel Capital has
also launched and achieved first close for
several funds spanning different asset
classes, including real estate, data centres
and infrastructure.
the core of our strategy. We are committed
to running our businesses sustainably,
with long-term targets for reducing carbon
emissions, as well as water and waste
intensities. Environmental sustainability has
been woven into the performance appraisal
of senior management across the Group,
and an internal shadow carbon price has
been included in the evaluation of all major
investment decisions.
We are also making sustainability
our business, by providing solutions that
contribute to a cleaner and greener world,
such as renewable energy, WTE plants
and green buildings. Reflecting our
commitment to contribute to greening
the built environment, Keppel Bay Tower,
where Keppel Corporation is headquartered,
has been certified by the Building and
Construction Authority (BCA) as Singapore’s
first Green Mark Platinum (Zero Energy)
commercial building. In addition, we are
exploring floating data centres, which
are more energy efficient than traditional
land-based ones.
BUILDING A SUSTAINABLE FUTURE
As part of Vision 2030, the Board and
management have put sustainability at
The realisation of Vision 2030 depends
on people, our most important asset,
11
COMMUNITY CONTRIBUTION
>$5m
Committed to fight COVID-19,
in Singapore and overseas.
VOLUNTEER HOURS
>10,000 hrs
Of community outreach and
service by Keppelites globally.
We also committed to plant 10,000 trees in
Singapore over the next five years, in support
of the National Parks Board’s One Million
Trees Movement. Beyond providing financial
support, our staff also contributed more
than 10,000 hours of volunteer community
outreach and service globally, including both
physical events held in compliance with safe
management measures, as well as creative
virtual engagement programmes.
ACKNOWLEDGEMENTS
As Keppel had announced earlier, I will be
retiring from the Board on 23 April 2021,
immediately after the upcoming Annual
General Meeting (AGM). I will be succeeded
by Mr Danny Teoh, a longstanding director
of the Company with sharp business
acumen and strong expertise in governance,
finance and risk management, whom I am
confident will provide effective leadership to
the Board and management as Keppel
continues its growth and transformation.
It has been a great privilege and honour
for me to have served as the Chairman of
the Board for close to 12 years. I am deeply
grateful to shareholders for your support, and
for the opportunity to have worked with many
outstanding Board members and dedicated
Keppelites to build on the Keppel story.
We would also like to thank our non-executive
and independent directors, Mr Alvin Yeo and
Mr Tan Ek Kia, who will be retiring at the
conclusion of the upcoming AGM. We are
grateful to Alvin for his close to 12 years
of distinguished service and wise counsel,
and Ek Kia, whose extensive experience in
the energy business and the field of HSE
(health, safety and the environment) has
greatly benefitted the Board and Company
for almost 11 years.
In addition, I would like to thank my fellow
directors for their commitment and valuable
guidance during this past year, which has
been exceptionally challenging. I am also
grateful to our many partners, customers
and stakeholders for their support and
confidence in Keppel as we navigate these
uncharted waters.
Finally, my appreciation goes to the thousands
of Keppelites around the world, including the
migrant workers who are an important part
of our workforce, for their hard work, dedication
and resilience, as we continued to run our
operations and provide essential services to
the community despite the pandemic.
While the global economic outlook remains
uncertain, we have a clear vision of the future
that we want to create. Guided by Vision 2030,
the Group will work as OneKeppel and
collaborate with our partners and stakeholders
to build a sustainable future.
Yours sincerely,
LEE BOON YANG
Chairman
26 February 2021
Keppel Volunteers distributed festive care packs to beneficiaries as part of the Group’s support for vulnerable
communities affected by COVID-19.
Annual Report 2020
Keppel Corporation Limited
GROUP OVERVIEW
INTERVIEW WITH THE CEO
12
LOH CHIN HUA Chief Executive Officer
GUIDED BY VISION 2030, WE WILL GROW
KEPPEL AS AN INTEGRATED BUSINESS
PROVIDING SOLUTIONS FOR SUSTAINABLE
URBANISATION, WITH SUSTAINABILITY AT
THE CORE OF OUR STRATEGY.
Q 2020 was a very challenging year.
Beyond the financial impact, how has
the COVID-19 pandemic changed
Keppel’s outlook and strategy?
A COVID-19 caused considerable human
suffering and disruption to the global
economy. But it also engendered fast
and furious experimentation the world
over, giving rise to new ways of working
and new business models. Keppel was
fortunate to have embarked on our
digitalisation journey a few years ago,
which allowed us to transit quickly
to working from home, or from
almost anywhere.
In May 2020, despite the pandemic,
we unveiled Vision 2030, our long-term
roadmap to grow and transform
Keppel into an integrated business
providing solutions for sustainable
urbanisation. We will focus on four key
areas, namely Energy & Environment,
Urban Development, Connectivity
and Asset Management, all part of
Annual Report 2020
a connected value chain, while putting
sustainability at the core of our strategy.
The macrotrends that Vision 2030
seeks to address, such as rapid
urbanisation, the energy transition,
climate change, digitalisation
and super liquidity, were identified
pre-COVID-19 but remain highly
relevant today. If anything, some
of these trends have been further
accelerated by the pandemic, and we
have to act quickly and decisively to
transform and seize opportunities.
With a sharpened business focus and
an asset-light model, we will take a
disciplined approach to capital allocation,
and proactively unlock capital that can
be recycled into growth opportunities.
As part of our Vision, we have identified
a group of assets with a carrying
value of $17.5 billion that can
potentially be monetised over time.
These assets do not include our key
business platforms or fixed assets
such as the yards that we operate,
nor do they include some of the
units that we hold in the REITs and
business trust to align interests with
their Unitholders.
We have set ourselves the target
to monetise about $3–5 billion of
this substantial asset pool over the
next three years, which will provide
the balance sheet space for us to
invest in the many exciting growth
opportunities we have identified across
our business lines.
Q Vision 2030 seems quite far out.
How will Keppel keep up the energy
and momentum? Are there plans to
bring the targets forward?
A Vision 2030 has been well-received
by our stakeholders, and also the
investment community. But I have
sometimes been asked, “Why 10 years?
Does Keppel plan to take this long to
realise the Vision?”
13
2030 was chosen to give our younger
leaders a longer runway to boldly re-imagine
a Future Keppel, unencumbered by our
current areas of businesses. It is not
our intention to take a decade to execute
the Vision. Now that we have determined
our future direction, we will accelerate
the execution of our Vision. Internally,
we have adopted a rallying cry of
“2030 by 2025”. Most initiatives can
be achieved by 2025, although some
may take a bit longer.
To monitor and drive the implementation
of Vision 2030, we established a
Transformation Office and also launched
a 100-day plan at end-September 2020
with the goal of expediting our plans
and invigorating Keppelites with
the excitement and urgency of a
Day-1 company.
Our 100-day plan yielded very encouraging
results. During this time, we announced
over a dozen different initiatives,
including asset monetisation as well
as growth initiatives, such as securing
new offshore and onshore renewables
projects, growing our urban development
business, and launching new funds
aligned to Keppel’s areas of business.
Significantly, we announced over
$1.2 billion in divestments between
October and December 2020,
putting us well on track to achieving
our three-year target of $3–5 billion.
In line with our sharpened business
focus and financial discipline, we also
carried out a strategic review of our
offshore & marine (O&M) business.
We believe that we have a very compelling
plan for the organic transformation
of Keppel O&M. It would not only
enhance Keppel O&M’s competitiveness
and relevance amidst the energy
transition but also bring the company
more in line with Keppel’s Vision
and Mission. The Group will also
benefit from Keppel O&M’s sharpened
focus and capabilities as we provide
diverse solutions for sustainable
urbanisation. Should we decide in
future to undertake inorganic actions,
the organic restructuring of Keppel O&M
would also enhance its attractiveness
to other parties.
Q What are some of the opportunities
arising from the restructuring of
Keppel O&M?
A The bold organic transformation of
our O&M business will see us seizing
opportunities in the energy transition
and contributing further up the value
chain, in line with Vision 2030. Through
the restructuring, we aim to create
a slimmer and more competitive
Keppel O&M that is people- and
asset-light. In creating the three
different parts of the business, Rig Co,
Dev Co and Op Co, we have ring-fenced
the legacy assets and will contain any
further capital outflow beyond the initial
funding, as we work towards resolving
this legacy issue.
In the meantime, Op Co, undistracted
by the legacy assets, can focus on
transforming the rest of Keppel O&M
to be a developer and integrator of
offshore energy and infrastructure
assets, focusing on higher value
aspects such as design, engineering
and procurement. It will exit the
offshore rigbuilding business, and
progressively withdraw from low
value-adding repairs and other activities
with low bottom-line contribution.
In positioning Op Co higher up
the value chain as a developer and
integrator, we may not need the
same yard capacity and footprint.
In this respect, Op Co will review
and streamline its yard operations,
including repurposing the yards for
other uses. Op Co will also work
towards creating higher value-adding
jobs, while subcontracting the more
labour-intensive work to third parties,
including other yards.
With the energy transition, there will
be a stronger push in the energy
mix for renewables and cleaner fuels
like liquefied natural gas. Keppel O&M
has a good head start in this respect,
with gas and renewables solutions
making up over 80% of its net
orderbook of $3.3 billion at the
end of 2020. Keppel O&M will continue
to build on this traction to invest in
new capabilities that will enable it to
seize new opportunities. These include
renewables, gas solutions, production
assets such as Floating Production
Storage and Offloading units, as well
as new energy solutions like hydrogen
and tidal energy.
With the conclusion of the 100-day plan,
we are pursuing the next waves of
initiatives. In the year ahead, we will
continue our asset monetisation
programme as we recycle capital into
new opportunities and growth engines.
We will not stop at the $3–5 billion
monetisation target. If conditions are
favourable, we will continue to do
even more.
Q Can you share the thinking
behind the strategic review of
Keppel’s O&M business? Are you
still considering inorganic options?
A The intense headwinds faced by the
O&M industry have been accelerated
over the past year, with the Group taking
$952 million of impairments in FY 2020,
mainly in the O&M business. Quite clearly,
business as usual is not an option. It is
thus critical to have a good organic plan
that we can work on immediately to
tackle the pressing challenges facing
Keppel O&M, even as we explore
inorganic options.
Keppel Corporation Limited
Keppel announced the monetisation of over $1.2 billion of assets from October to December 2020, including
Keppel Bay Tower in Singapore, and is well on track to achieving the Group’s 3-year target.
GROUP OVERVIEW
14
INTERVIEW WITH THE CEO
The bold organic transformation of our O&M business will see us
seizing opportunities in the energy transition and contributing further
up the value chain.
We will also explore how Keppel O&M’s
offshore rig technology can be repurposed
for other uses, including collaborating
with other Keppel business units to offer
diverse urbanisation solutions such as
offshore and nearshore infrastructure
and floating data centre parks.
I am confident that over time,
Keppel O&M will be transformed
into a nimble industry leader that is
well-positioned for the global energy
transition and also a strong contributor
to the Group’s target Return on Equity
(ROE) of 15%.
Q What about the logistics business?
What is the rationale for divesting
the business when global demand
for logistics seems to be growing,
especially during the pandemic?
A
It is true that the logistics business has
been a beneficiary of the COVID-19
pandemic. We have seen strong growth
in the demand for urban logistics and
channel management. The decision
to divest, however, is in line with the
more focused and disciplined approach
towards capital allocation which we have
committed to as part of Vision 2030.
We believe we have a good logistics
business, but it is currently subscale.
While it is possible for us to invest more
capital and grow the business over the
long term, we believe that a third party
may be able to provide a better eco-system
to scale up the business. Thus far,
we have received strong interest
from potential buyers. We are currently
evaluating the bids and have shortlisted
a few parties for deeper engagement.
We are keeping our options open and
may decide either to divest our logistics
business completely or continue holding
a minority stake.
Q You have spoken about making
sustainability a business for
Keppel as part of Vision 2030.
What are some of the key initiatives
and developments on this front?
A We believe that our shareholders, as
well as investors of our private funds,
appreciate companies like Keppel,
who embrace sustainable practices,
Detailed engineering of an offshore wind farm substation.
The new Keppel O&M will focus on higher value-adding work as a developer and integrator of offshore energy
and infrastructure.
Annual Report 2020
and can also provide innovative solutions
that contribute to a greener and better
world. We are also seeing growing
interest from other stakeholder groups,
including governments and customers,
to work with us on different infrastructure
and urban development projects that
contribute to a more sustainable future.
We are applying the lens of sustainability
to the Group’s major investment decisions.
With the risks and impact of climate
change becoming more evident, we have
introduced a shadow carbon price in
the evaluation of all major investments.
This would help us better understand
the carbon footprint of our business
activities and the possible impact of
future carbon taxes, and also avoid
potential stranded assets.
Over and above running our business
in a sustainable and environmentally
responsible manner, we see Keppel
playing a significant role in helping
businesses and communities become
more sustainable through the solutions
that we provide. Beyond the solutions
that Keppel is already well-known for,
such as waste-to-energy (WTE) and
water solutions, district cooling plants,
green buildings and townships, we are
pushing boundaries to explore and
develop new solutions that can contribute
to combatting climate change, while also
opening up new profit pools for the Group.
Under the auspices of the National
Research Foundation, Keppel Data
Centres Holding (KDCH) joined hands
with several industry leaders to develop
the first end-to-end decarbonisation
process in Singapore that can help
reduce carbon intensity across key
sectors such as energy, chemicals
and construction. Such carbon
capture, utilisation and sequestration
technologies can potentially be
implemented in KDCH’s own operations,
as well as various parts of Keppel to
create cleaner products and solutions
that help to advance climate action and
the circular economy. In the same vein,
we are exploring floating data centre
technologies as well as other innovative
solutions including a cold energy
harnessing facility and a hydrogen
powered tri-generation plant to reduce
the carbon footprint of data centres.
15
The Tuas Nexus Integrated Waste Management Facility, to be developed by a Keppel-led consortium, will contribute to Singapore’s sustainable urbanisation.
We are also advancing our presence in
the renewables space as a developer,
owner and operator of renewable
energy infrastructure. In December 2020,
Keppel Renewable Energy announced the
development of a large-scale, greenfield
solar farm in Queensland, Australia.
To be completed in 2023, the 500MW
solar farm will be connected to the
national energy market for consumers
and also businesses seeking sustainable
energy solutions, including Keppel-related
companies in Australia. We have announced
a target to expand the Group’s portfolio of
renewable energy assets to 7GW by 2030.
Collectively, our expertise in green data
centre technologies and ability to tap
renewable energy puts Keppel in a good
position as we work with the authorities in
Singapore and other countries to develop
new low carbon data centres, as well as with
our customers who are increasingly focused
on sustainability. What I have shared are
just a few examples of the many exciting
opportunities that we see in various parts
of our business. There would be even
more growth opportunities, new profit
pools and synergy unleashed as we link up
our varied offerings and solutions across
an integrated value chain as OneKeppel.
Q Keppel had secured WTE and
district cooling contracts worth
about $2.1 billion in 2020. What are
some of the key opportunities ahead?
A Keppel Infrastructure continued to grow as
a steady contributor to the Group. In 2020,
Keppel Corporation Limited
Keppel Infrastructure secured $2.1 billion
worth of WTE and district cooling
contracts across Singapore, India and
Thailand. Some of these come with long
concessions of 20–30 years, adding to
the visibility of recurring income from the
operation and maintenance of the assets.
At the end of June 2020, commercial
operations began at Keppel Marina East
Desalination Plant (KMEDP). KMEDP
was officially inaugurated by Singapore’s
Prime Minister Lee Hsien Loong on
4 February 2021. It was a proud moment
for Keppel, having contributed to
strengthening Singapore’s water security
with an asset that will also provide a
steady stream of operating income and
cashflow over the next 25 years.
solutions. With the launch of new funds
such as the Keppel Asia Infrastructure
Fund (KAIF), we are well-positioned
to seize growth opportunities and
scale the business in partnership with
co-investors, and without relying just
on our own balance sheet.
Q What is the outlook for the property
business and how is Keppel adapting
to the changing landscape?
A Of the approximately $17.5 billion of
monetisable assets that we have identified
across the Group, about 30% or $5.3 billion
comprises our quality residential landbank
and residential development projects
that are held at cost.
Meanwhile, site works for Singapore’s
first Integrated Water and Solid Waste
Treatment Facility, Tuas Nexus,
commenced in September 2020.
Over in Hong Kong, we continued to
make progress on the construction of the
integrated waste management facility
project, albeit at a slower pace due to
disruptions from the COVID-19 pandemic.
As at October 2020, Keppel Electric was
the leading Open Electricity Market retailer
with an approximate 23% market share
of residential consumers in Singapore.
We expect to see continuing urbanisation
in the post COVID-19 world, which will
present substantial opportunities for
Keppel across our spectrum of energy
and environmental infrastructure
The strategy of activating our sizeable
landbank has served us well. For the
whole of 2020, Keppel Land announced
asset divestments of about $1.3 billion.
This includes four residential projects
across China and Vietnam, which are
equivalent to about 8,200 units sold
en-bloc, over and above the 3,340 homes
that Keppel Land sold in the normal
course of business during the year.
The progress in capital recycling also
reflects the discipline we have instilled
in the business to evaluate and turn our
assets regularly. We have shared earlier
that Keppel Land’s revalued net asset
value (RNAV) was $10.3 billion at the
end of 2018. This was approximately
$5.68 per share of Keppel Corporation,
which represents a good premium
GROUP OVERVIEW
16
INTERVIEW WITH THE CEO
compared to its book value of about
$4.49 per share then. The RNAV of
Keppel Land had edged up further in
our last internal evaluation in early-2020.
In many Asian cities where land prices
have risen significantly, we are well-placed
to realise the true value of our assets
by divesting some of our land parcels or
projects, while working with like-minded
partners to co-develop others.
From time to time, we may still acquire
land plots, but only when it makes sense.
Through Keppel Urban Solutions (KUS),
we will also be seeking opportunities
as a horizontal master developer for
integrated townships. KUS will work with
other technology and solutions providers
to create new smart districts, towns and
cities. Keppel Land can develop some of
the plots vertically into homes, offices and
commercial spaces. In a sense, creating
developable land from large tracts of raw
land, by leveraging the Group’s capabilities
in energy, environmental engineering,
urban development and connectivity, will
ultimately provide better margins. KUS can
also bring in other property developers to
provide more diversity in the design and
construction of the cityscape. We will also
stay nimble, and focus on acquiring new
capabilities and business models, such as
in co-living and co-working, to address the
new opportunities ahead, including the
evolution of real estate as a service.
Q What is the outlook for the data
centre business?
A As the world becomes more digitalised
and connected, the demand for
data centres will continue to grow
rapidly. Our data centre business
has been a foremost example of the
potential and multiplier effect that
our various business units have when
they collaborate with one another to
create better, smarter solutions.
KDCH, together with the private data centre
funds under Keppel Capital and also
Keppel DC REIT, generated total earnings
of about $598 million, on average
shareholders’ funds of about $382 million
since 2014. This does not include the
approximately $541 million premium over
the carrying value of Keppel’s stake in
Keppel DC REIT as at 31 December 2020.
Alpha Data Centre Fund (Alpha DC Fund),
a collaboration between KDCH and
Keppel Capital, has grown its portfolio to
have over 1.38 million square feet of
gross floor area in key economic centres
across Asia Pacific and Europe. During
the year, Alpha DC Fund announced that
it was investing about RMB1.5 billion for
a greenfield data centre development
Annual Report 2020
M1 has increased its market share to have the second largest postpaid base in Singapore, based on both the number
of customers and revenue.
in Huizhou, Guangdong Province.
This marked Keppel’s first data centre
development in mainland China.
Following the success of Alpha DC Fund,
we have launched the US$1 billion
Keppel Data Centre Fund II (KDC Fund II)
and raised more than US$500 million
as at December 2020. KDC Fund II will
focus on making strategic investments
in fast-growing cities across Asia Pacific
and Europe, widening our presence in
these markets.
As we expand our data centre business
in collaboration with third-party investors,
we will continue to draw on our engineering
nous as well as the Group’s diverse
capabilities to create greener solutions
and better assets that will be valued
by our customers and investors.
Q Can you talk about M1’s progress
since its privatisation? What kind of
opportunities does the securing of a
5G standalone licence in Singapore
open up for the Group?
A M1 has been contributing meaningfully
to the Group since its privatisation. The
company has performed commendably
over the past year in spite of COVID-19,
increasing its market share to have
the second largest postpaid base in
Singapore, based on both the number
of customers and revenue.
M1 to provide 5G services at an affordable
cost to consumers and businesses.
Presently, M1 is in the process of rolling
out its 5G SA network and has gained
swift traction by becoming Singapore’s
first telco to open up 5G access to all
its customers, without any restrictions
on the number of sign-ups or plans.
The real benefits of 5G however,
extend beyond faster download speed
for consumers to enabling the low
latency and network slicing that have vast
applications for industries and businesses.
To this end, M1 has been actively
collaborating with industry leaders as well
as government agencies to conduct trials
of 5G use cases that will help to advance
Singapore’s smart nation ambition.
For instance, M1 is partnering IBM,
Infocomm Media Development Authority
and Samsung to conduct Singapore’s
first 5G Industry 4.0 trial that aims to
demonstrate the transformative impact of
5G for enterprises. 5G’s capabilities such
as faster data transfer and more rapid
response times, when coupled with
other transformative technologies like
artificial intelligence, can enable significant
improvements to production, service,
quality control and testing across a
broad range of industries. M1 is also
collaborating with DBS to jointly develop
digital banking solutions and provide
bundled services to large corporates
and small-to-medium enterprises.
A significant milestone in 2020 was
the securing of a 5G standalone (SA)
licence jointly with StarHub. The sharing
of resources with StarHub will enable
M1’s expanding capabilities are a strong
complement to the Group’s business
operations as well as diverse solutions
17
for sustainable urbanisation. Whether in
Singapore or overseas, we can leverage
M1’s data analytics capabilities to glean
actionable insights that can be applied in
our master development projects and
smart cities, and to provide connectivity
to the increasing number of smart assets,
leveraging both Internet of Things and
Industrial Internet of Things. This greatly
amplifies the possibilities, and also the
potential for unlocking synergy as our
business units collaborate as OneKeppel.
Q The Asset Management business
has achieved good traction in 2020,
in spite of the pandemic. Why is
this so, and can you talk about the
opportunities that excite Keppel?
A Our Asset Management business serves
as a financial twin to our other segments,
providing funding and opportunities
for monetisation once a solution is
commercialised, de-risked and cashflow
generative. In FY 2020, our Asset
Management business was the second
largest contributor to the Group (after
Urban Development), with a net profit of
$280 million for FY 2020, which included a
mark-to-market gain of $131 million from
the reclassification of the Group’s interest
in Keppel Infrastructure Trust from an
associated company to an investment.
2020 was a prolific year for Keppel Capital,
which launched a series of new private
fund initiatives across data centres,
education, infrastructure, logistics,
mezzanine debt and real estate, and
raised total equity of about $4.5 billion
from global institutional investors. While
COVID-19 imposed restrictions on travel,
Keppel Capital was able to leverage its
strong network and overseas offices
to continue engaging investors. During
the year, Keppel Capital completed over
$7 billion worth of acquisitions and
divestments and saw a healthy increase
in asset management fees. By end-2020,
Keppel Capital’s assets under management
had risen to $37 billion, a 12% growth
over $33 billion in the year before.
These achievements not only reflect
strong demand from investors for assets
with long-term sustainable cashflow, but
also their desire to work with Keppel Capital,
which is part of the larger Keppel Group
and eco-system. The Group’s capabilities
in creating and operating real assets
are an attractive proposition for the
investors of Keppel Capital’s funds.
Another added advantage that Keppel
has is our established platform consisting
of listed REITs and a business trust that
can help to monetise these assets
when they have been de-risked and
are cashflow generating.
Keppel Corporation Limited
As we continue to advance our asset-light
model, gains from the monetisation of assets
would add to the pool of profits from which
we pay out dividends.
Keppel, as co-investor and sponsor in
these private funds and listed vehicles,
has also benefitted from this virtuous
cycle of value creation. In FY 2020,
our stakes in the various private funds
and listed trusts yielded $195 million
in net contributions to the Group.
In addition, the private funds, such as
KAIF and KDC Fund II, enable us to
scale our business by tapping third-party
funds while reducing the burden on our
balance sheet. And as we continue to
provide services, such as development,
operation and maintenance or asset
management, these various sources
of fees will give us multiple bites of
the cherry and contribute towards
growing the Group’s recurring income.
Q What are the plans to allocate the
capital unlocked from the asset
monetisation programme? Will the
Company consider giving special
dividends to shareholders?
A An integral part of Vision 2030 is to have
a more disciplined approach to asset
allocation. We have in place a set of
metrics, and will prudently assess each
investment based on its ability to meet
the Group’s ROE target, scalability, the
potential for synergy and creation of
new profit pools, and also alignment with
our Vision, Mission and environmental,
social and governance goals.
Funds unlocked from the monetisation
of assets would initially go toward
reducing our net gearing. This is already
taking place, and we have seen our
net gearing lower from 1.0x as at
end-June 2020 to 0.91x as at end-2020.
Looking ahead, we will also have funding
requirements for our growth initiatives.
There are a number of exciting areas
across our segments including renewable
energy, environmental solutions,
data centres, smart and connected
urban developments, as well as
asset management.
We recognise that dividends are important
to our shareholders. Even though 2020
was a difficult year, the Board has proposed
a final dividend of 7.0 cents per share,
taking into consideration metrics such
as the free cash inflow.
As we continue to advance our asset-light
model, gains from the monetisation of
assets would add to the pool of profits
from which we pay out dividends. We will
also explore how best to create value
with the surplus funds unlocked. This
could include returning some capital to
shareholders over time, particularly in
periods where growth opportunities may
be fewer or priced inappropriately.
Q How is Keppel developing its
people to drive the achievement
of Vision 2030?
A To achieve Vision 2030, we need to
have the right people, with the right
mindsets and skillsets, who are agile
and ever-ready to learn and adapt in this
fast-changing world.
I am heartened to see that despite
the challenging external environment,
we continue to have a high employee
engagement score of 87%; higher
than Mercer’s global average of 80%.
In the same survey, more than 90%
of Keppelites indicated that they were
motivated to do more than what was
required to help the Company succeed.
We are committed to leadership
development and succession planning,
which are pivotal to the long-term success
of any company. We have announced
leadership renewal in several key
business units, which took effect from
15 February 2021. These next generation
leaders were personally involved in
formulating Vision 2030 and will work
together with the rest of the Group in
pursuit of our common vision.
In 2020, we were honoured to be
named again by Forbes as one of the
World’s Best Employers. We will continue
to invest in training and developing our
employees, to allow them to reach their
full potential.
Despite the impact of COVID-19,
I am cautiously optimistic about the
future. We will continue to build on
our strengths, harness technology and
promote collaboration as OneKeppel,
as we work towards the achievement
of Vision 2030.
18
19
VISION 2030
BLAZING
THE TRAIL
Keppel aims to be a powerhouse of end-to-end
solutions for sustainable urbanisation, an ESG leader
advancing climate action, as well as a valuable company
with a strong growth trajectory, delivering 15% ROE,
steady recurring income and good dividends.
As one integrated business, Keppel will contribute to
building a sustainable future for all stakeholders.
FOUR FOCUS AREAS
KEY MACROTRENDS THAT
VISION 2030 SEEKS TO ADDRESS
Energy & Environment
Urban Development
Connectivity
Asset Management
Energy Transition,
Climate Change
Rapid Urbanisation,
Ageing Populations
Digitalisation
Super
Liquidity
“The macrotrends that Vision 2030 seeks to address
were identified pre-COVID-19 but remain highly relevant
today. If anything, some of these trends have been
further accelerated by the pandemic. We have to act
quickly and decisively to seize these opportunities.”
LOH CHIN HUA
CEO of Keppel Corporation
A NEW CHAPTER
At the end of May 2020, Vision 2030
was launched amid the global
COVID-19 pandemic, paving the way
for Keppel’s next phase of growth and
renewal, with sustainability at the core
of its strategy. The long-term roadmap,
charted with close to 30 next generation
leaders from across the Group, converges
Keppel’s diverse subsidiaries to be one
integrated business providing sustainable
urbanisation solutions across the four
key areas of Energy & Environment,
Urban Development, Connectivity and
Asset Management.
FUNDING GROWTH
Through its fast-expanding private equity
platform which manages $18 billion1 in
assets, Keppel will also tap third-party funds
to create and operate real assets, thereby
enlarging its capital base to seize more
growth opportunities.
For more information on Keppel’s eco-system for
value creation, please refer to pages 20 and 21.
MONETISABLE ASSETS (%)
ACCELERATING EXECUTION
Following the launch of Vision 2030, Keppel
rolled out further plans in September 2020
to accelerate its implementation.
To fuel its ambitious growth plans,
Keppel has earmarked a sizeable pool
of assets with a total carrying value of
about $17.5 billion2 that can be monetised
over time and channelled towards its
initiatives. Keppel has set a target to
monetise $3–5 billion of these assets in
the next three years, which will unleash
capital for re-investments and unlock
value for shareholders.
At the end of September 2020, a
transformation office was established
to drive the execution of Vision 2030,
focusing on six comprehensive
workstreams spanning growth initiatives,
asset monetisation and portfolio
optimisation, cost and cash management,
sustainability, technology and innovation,
and people and organisation.
To expedite execution of the Vision,
the Group launched a 100-day plan, and
announced more than a dozen different
initiatives from end-September 2020 to
early-January 2021, including the strategic
review of its offshore & marine (O&M)
business. Over this period, Keppel also
announced divestments of about
$1.2 billion, as it continues its progress
towards its three-year asset
monetisation target.
MAKING WAVES
The 100-day plan achieved creditable
results with all business units
and invigorated Keppelites rallying
as OneKeppel.
100-DAY PLAN
AT A GLANCE
• Announced key appointments of
next generation business unit leaders
who were involved in formulating
Vision 2030.
• Announced over $1.2 billion in asset
monetisation out of $3–5 billion target.
• Announced bold transformation of
the O&M business to position for the
global energy transition.
• Announced plans to divest the
logistics business.
• Announced the securing of offshore
and onshore renewables-related
projects including a solar farm
development in Australia.
• Announced new urban development
and district cooling projects.
• Launched new funds across multiple
asset classes.
Following the conclusion of the 100-day
plan, Keppel is keeping up the momentum
through further waves of initiatives to bring
Vision 2030 forward. Keppel will focus on
seizing opportunities across its business
segments, while continuing to drive its
asset monetisation programme beyond
the three-year target of $3–5 billion. The
Company will also execute plans arising
from the strategic reviews of its O&M and
logistics businesses, with a focus on
transforming Keppel O&M into a nimble
developer and integrator of offshore energy
and infrastructure assets that will contribute
both to the energy transition and towards
achieving the Group’s ROE target.
Landbank & Development Projects
Assets for REITs/Trust or Sale3
Non-core assets
Funds/Investments that can be
liquidated over time
40.0
28.0
22.0
10.0
Total
$17.5 billion2
100.0
1 As at end-2020.
2 Based on the Group’s balance sheet as at 30 June 2020. These assets do not include Keppel’s key business
platforms, fixed asset and some of the REITs and Trust units that Keppel holds to align interests with Unitholders.
Includes assets under development.
3
Annual Report 2020
Keppel Corporation Limited
GROUP OVERVIEW
ECO-SYSTEM FOR VALUE CREATION
20
21
AS ONE INTEGRATED BUSINESS, WE WILL HARNESS THE STRENGTHS
OF THE GROUP TO MEET THE WORLD’S GROWING NEEDS FOR
SUSTAINABLE URBANISATION SOLUTIONS.
Our business model, underpinned by strong collaboration across
verticals, provides a robust eco-system that allows us to create
and capture value from all parts of the Group. From the time an
asset is being created till after its injection into a Keppel-managed
trust or fund, our business model produces multiple income streams
and enables us to create and capture value across the value chain.
To fuel Keppel’s growth, we are also expanding the Group’s capital
base, bringing on board like-minded co-investors through our private
funds to seize opportunities and accelerate asset creation without
putting a strain on our balance sheet. We can also turn our assets
efficiently through our business model, unlocking value and recycling
capital to achieve the best risk-adjusted returns for our stakeholders.
ENERGY & ENVIRONMENT
URBAN DEVELOPMENT
CONNECTIVITY
ASSET MANAGEMENT
We provide a wide range of energy and
environmental solutions that are essential
for sustainable development.
• Keppel Offshore & Marine
• Keppel Infrastructure
• Keppel Renewable Energy
• KrisEnergy
We provide compelling urban solutions
including vibrant homes, offices, as well as
commercial and integrated developments.
• Keppel Land
• Keppel Urban Solutions
• Sino-Singapore Tianjin Eco-City
We connect people and businesses
in the digital economy.
• Keppel Data Centres
• M1
• Keppel Logistics
We create enduring value with quality
investment products and platforms.
• Keppel Capital
• Private funds
• Listed REITs & Trust
For more information, please refer to page 42.
For more information, please refer to page 49.
For more information, please refer to page 55.
For more information, please refer to page 59.
Design and Build
a. Own and Operate
Stabilise and Monetise
REITs and Trust
The Group has a strong track record in designing and
developing high-quality real assets including offshore
and onshore infrastructure, residential and commercial
properties, data centres, power plants and more.
Private Funds
Through the private funds that it creates and manages,
Keppel can also bring on board investors, such as pension
and sovereign wealth funds, to co-invest in the development
of assets across its business verticals. This expands
Keppel’s capital base to seize opportunities while it earns
recurring fees from managing the private funds.
Keppel owns and operates many of the assets it creates
which can be retained as investments, yielding long-term,
steady cashflows and recurring income. Business units
can earn fees from leasing out and operating such assets.
They can also earn fees from rendering project and
asset management services to the private funds
created by Keppel.
b. Turnkey
The Group also sells products and provides turnkey
solutions to its customers. Some of the assets created,
such as vessels and homes, will be handed over to customers
when they are completed. In this phase of asset creation,
business units can earn development margins from the
sale of their solutions.
The assets held as investments by Keppel and its private
funds contribute revaluation gains to the Group. As these
assets mature and are de-risked and stabilised, the Group
can monetise them through divestments to its listed REITs
and Trust as well as third parties. This process for turning
assets enables the Group to pursue the best risk-adjusted
returns by unlocking value and recycling capital to seize
new growth opportunities.
The Group sponsors and manages real estate, data centre
and infrastructure trusts across its business lines, which it
leverages as platforms to recycle capital. Mature assets are
well suited to the REITs and Trust, whose investors seek stable,
recurring income.
The injection of assets to the REITs and Trust helps to grow
the total portfolio of assets managed by the Group.
The Group will continue to earn fee income from asset
management, as well as the operation and maintenance of
the assets.
In addition, through its stakes in the listed vehicles, the Group
continues to benefit from the performance and contributions
of the REITs and Trust.
Income Streams
Project-based income
Recurring income
Revaluation & divestment gains
Employees
Customers
Governments
Shareholders & Investors
Suppliers
Local Communities
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For more information on the value we create for our stakeholders, please refer to our Sustainability Report – to be published in May 2021.
Annual Report 2020
Keppel Corporation Limited
GROUP OVERVIEW
SUSTAINABILITY FRAMEWORK
22
WE ARE COMMITTED TO ENVIRONMENTAL STEWARDSHIP,
RESPONSIBLE BUSINESS PRACTICES AND NURTURING
OUR PEOPLE AND COMMUNITIES WHEREVER WE OPERATE.
Our Strategy
Keppel provides solutions for sustainable urbanisation, focusing on four key areas comprising Energy & Environment, Urban Development,
Connectivity and Asset Management. With sustainability at the core of our strategy, we harness the strengths and expertise of our
business units to develop, operate and maintain real assets, which provide diverse solutions that are good for the planet, for people
and for the Company.
The three strategic thrusts under our sustainability framework are (1) Environmental Stewardship; (2) Responsible Business; and
(3) People and Community.
ENVIRONMENTAL
STEWARDSHIP
RESPONSIBLE
BUSINESS
PEOPLE AND
COMMUNITY
As part of Keppel’s Vision 2030,
we are progressively guiding and
refocusing our portfolio towards
sustainable urbanisation solutions,
through evaluating their fit with Keppel’s
Vision, Mission and environmental,
social and governance (ESG) goals, as
well as internal shadow carbon pricing
and climate risk assessments. We
have set high-impact sustainability
goals and publicly committed to
long-term targets to reduce our carbon,
waste and water intensity. We are
tapping our engineering nous to
explore greener solutions, and will
continue to explore opportunities in
renewable energy assets.
The long-term sustainability
of our business is driven at the
highest level of the organisation
through a strong and effective board,
good corporate governance and
prudent risk management. We are
driving innovation to seize opportunities,
and through our integrated business
model, we seek to improve both
the magnitude and quality of our
earnings with more recurring income,
while enhancing returns through
active capital recycling. We work
closely with stakeholders in our
value chain to enhance their
sustainability performance.
People are the cornerstone of
our businesses. We are committed
to providing a safe and healthy
workplace, as well as investing in
training and developing our people
to help them reach their full potential.
We strive to build vibrant and
inclusive communities, through
supporting initiatives that protect
the environment and promoting
education and care for the
underprivileged, with the goal of
building a sustainable future together.
23
Sustainability is at the core of our strategy. For Keppel, this goes beyond reducing carbon emissions or the environmental
impact of our operations. We believe in making sustainability our business, by developing solutions that can contribute to
building a cleaner and greener world, while creating enduring value for our stakeholders.
We believe that our focus on sustainability sets Keppel apart and is an important differentiator for the Group. We consider
ESG issues in the determination of our strategy and policies, and are committed to supporting the United Nations (UN)
Sustainable Development Goals. Keppel Corporation is also a signatory of the UN Global Compact, and we are committed
to the Compact’s 10 universal principles.
MEASURING PERFORMANCE
Balanced Scorecard
The Company’s balanced scorecard
aligns compensation with corporate and
individual performance, both in terms of
financial and non-financial performance.
Key sub-targets within each of the
scorecard areas include key financial
indicators, safety goals, risk management,
compliance and controls measures,
environmental sustainability, employee
engagement, talent development and
succession planning.
GOVERNANCE
Management Structure
The key material ESG factors for Keppel Corporation have been identified and are regularly
reviewed by Keppel Corporation’s Board of Directors and management. The Board maintains
active oversight over sustainability issues, including overseeing the management and
monitoring of ESG factors, and takes them into consideration in the determination of the
Company’s strategic direction and policies. The Group Sustainability Steering Committee,
chaired by Keppel Corporation’s Chief Executive Officer Loh Chin Hua and comprising senior
management from across the Group, provides guidance on the Group’s sustainability strategy.
The Group Sustainability Working Committee, comprising discipline-specific working groups,
executes, monitors and reports on the Group’s efforts. Our management systems, policies
and guidelines, including the Keppel Group Code of Conduct; Health, Safety and Environment
Policy, and the Keppel Supplier Code of Conduct translate our principles into practice by
setting standards for both our Company and those whom we work with. These policies are
regularly reviewed and refined when necessary, in line with international best practices.
Strong Governance Framework
Keppel is focused on upholding high standards of corporate governance. We have a
strong and independent board, with nine independent directors out of a total of 11 directors,
and are committed to good business ethics. We maintain clear, consistent and regular
communication with shareholders.
Keppel’s System of Management Controls Framework
The Framework comprises the Three-Lines Model towards ensuring the adequacy and
effectiveness of the Group’s system of internal controls and risk management, as disclosed
on page 93. The Control Self-Assessment programme, a Second Line in the Framework,
was refreshed in 2020, digitised, and repositioned as a central tool for controls. The digitisation
process enhances efficiency and brings about new opportunities for automated controls
and continuous monitoring.
For more information on Governance, please refer to page 78.
Employees
Customers
Governments
Shareholders & Investors
Suppliers
Local Communities
MSCI ACWI ESG Leaders Index and
MSCI World ESG Leaders Index
iEdge SG ESG Leaders Index and
iEdge SG ESG Transparency Index
FTSE4Good Index
Euronext Vigeo Eiris Index –
World 120
Industry Mover in the S&P Global
Sustainability Yearbook 2021
For more information, view our Sustainability Report on our website at www.kepcorp.com
We publish sustainability reports annually, and the next report will be published in May 2021. Our sustainability reports draw on international standards of reporting,
including the Global Reporting Initiative Standards, and are externally assured. The reports are also aligned with sustainability reporting requirements by the
Singapore Exchange.
Annual Report 2020
Keppel Corporation Limited
A- in CDP Climate
Change Assessment;
Among Most Improved
Companies for the year 2020,
in the Hong Kong, Macau
and Southeast Asia region
Forbes World’s Best
Employers 2020
The Keppel Group won
21 Workplace Safety and
Health Awards
Community Spirit
Platinum Award at
the Community Chest
Awards 2020
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GROUP OVERVIEW
24
SUSTAINABILITY FRAMEWORK
25
WE ARE COMMITTED TO THE INTERNATIONAL SUSTAINABLE DEVELOPMENT AGENDA, AND LEVERAGE
COLLABORATION AND PARTNERSHIP TO SUPPORT THE ACHIEVEMENT OF THE UNITED NATIONS SUSTAINABLE
DEVELOPMENT GOALS (SDGs). WE HAVE INCORPORATED 10 OF THE SDGs AS A SUPPORTING FRAMEWORK
TO GUIDE OUR SUSTAINABILITY STRATEGY.
STRATEGIC PILLARS MATERIAL ISSUES
SDGs
APPROACH
HIGHLIGHTS
STRATEGIC PILLARS MATERIAL ISSUES
SDGs
APPROACH
HIGHLIGHTS
Environmental
Stewardship
Climate Action
We seek to grow our business and seize
opportunities created by macrotrends
such as climate change, energy transition
and urbanisation.
We are refocusing our portfolio on
sustainable urban solutions, including
through the use of internal shadow carbon
pricing and climate risk assessments.
Amidst the global energy transition,
and reflecting Keppel’s commitment to
support climate action, Keppel Offshore
& Marine (Keppel O&M) has been pivoting
towards renewables and cleaner fossil
fuels such as liquefied natural gas.
Keppel O&M will also exit the offshore
rigbuilding business, after completing
the existing rigs under construction.
The iconic Keppel Marina East Desalination
Plant, Singapore’s first large-scale, dual-mode
desalination plant, capable of treating either
seawater or rainwater from the Marina Reservoir,
commenced operations in June 2020. It is
capable of producing about 30 million gallons
of fresh drinking water per day. In addition,
the ability to switch from treating rainwater
to seawater during drier seasons strengthens
Singapore’s water supply resilience in the face
of increasing rainfall uncertainty caused by
climate change.
Keppel O&M secured a contract to build the
first offshore wind turbine installation vessel
in the US, which is also one of the largest
vessels of its kind in the world.
Keppel Renewable Energy entered into an
agreement to undertake its first solar farm
project in Australia.
Keppel has adopted an evolutionary shadow
carbon pricing policy to mitigate climate-related
risks in the mid to long term, prepare for
tougher climate legislation and higher
carbon prices, and also avoid stranded assets.
It starts at US$20 per tonne of carbon dioxide
equivalent (tCO2e) in 2020 and will progressively
increase to US$50/tCO2e over time.
In addition, Keppel supported environmental
initiatives such as the National Parks Board’s
One Million Trees movement, with a $3 million
commitment that will go towards the planting
of 10,000 trees over the next five years in
parks and nature reserves in Singapore.
In line with Keppel’s focus on sustainability
and to advance the study of environmental
sciences, Keppel partnered with the
Nanyang Technological University (NTU)
to establish the Keppel Environmental
Studies Gold Medals. The Medals will be
awarded to the top graduating students of
NTU’s Bachelor of Science in Environmental
Earth Systems Science.
Environmental
Management
We are committed to minimising our
environmental impact, and are focused
on sustainable management and efficient
use of natural resources.
We have set high-impact sustainability goals
and publicly committed to long-term targets
in terms of reducing our carbon intensity,
as well as waste and water use.
We aim to reduce waste generation
through resource efficiency, recycling
and reuse of natural resources.
Keppel Bay Tower, where Keppel Corporation
is headquartered, was certified by the
Building and Construction Authority (BCA)
as Singapore’s first Green Mark Platinum
(Zero Energy) commercial building.
Since the end of 2018, Keppel’s corporate
headquarters in Singapore has been powered
by renewable energy. We are also acquiring
carbon credits to offset Scope 3 emissions
from business travel and employee commuting,
thus allowing our corporate office to achieve
carbon neutrality for the whole of 2020.
Keppel achieved an A- in CDP’s benchmark
assessment on climate change, and a B- in
the assessment on water security.
Responsible
Business
Economic
Sustainability
COVID-19 has accelerated many macrotrends,
such as increasing digitalisation, e-commerce
and the energy transition, which we had
identified as part of Vision 2030.
Keppel’s business operations generate
employment, opportunities for suppliers
and tax revenues for governments.
Corporate
Governance
& Risk
Management
We believe sustainability can be a good
business, and will seize opportunities
in areas such as green developments,
environmental solutions, renewables,
new energy and circular economy solutions.
As part of risk management, Keppel has
robust business continuity plans in place
to safeguard against the disruption of
business operations.
We are committed to being an effective,
accountable and transparent institution,
and will conduct ourselves according to
the highest ethical standards and comply
with all applicable laws and regulations
wherever we operate. Our tone on
regulatory compliance is clear and
consistently reiterated from the top of
the organisation. We have zero tolerance
for fraud, bribery, corruption and violation
of laws and regulations.
We have set targets to invest in
sustainability-linked innovation, and are
tapping our engineering nous to explore
greener solutions such as floating data
centres, which are more energy efficient
than traditional land-based ones. We are
collaborating with partners to study
hydrogen infrastructure for power
generation and cooling, as well as
the development of carbon capture,
utilisation and sequestration systems.
Keppel’s business continuity plans were
activated following the COVID-19 outbreak,
allowing us to continue operating effectively
despite the implementation of various
measures to curb the spread of the
pandemic around the world, including
working from home.
Keppel’s businesses provide many essential
services – such as power generation, water
and waste treatment, telecommunications,
data centres and logistics – and we continued
to operate during the pandemic, including the
Circuit Breaker period in Singapore.
Keppel O&M has complied with and
successfully concluded the Deferred
Prosecution Agreement which it had
entered into with the U.S. Department
of Justice three years ago.
Reflecting Keppel’s zero tolerance for corruption,
we have continued to enhance our compliance
measures, including rolling out the ISO 37001
Anti-Bribery Management System across
business units. Beyond Keppel O&M, which
had achieved global certification in 2019, the
Singapore entities of both Keppel Land and
Keppel Data Centres also achieved ISO 37001
certification in 2020.
In recognition of Keppel’s strong corporate
governance disclosures and practices, the
Company was ranked sixth on the Singapore
Governance and Transparency Index 2020.
Supply Chain
& Responsible
Procurement
The Group recognises the importance
of supply chain risk management and
sustainable procurement in building
operational resilience.
The Group did not experience any major
supply chain disruptions during the pandemic,
in part due to the supplier diversification
programmes in place.
Product Quality
& Safety
We are committed to building a resilient
and diversified supply chain, and we work
closely with our suppliers to make a positive
impact on their sustainability performance.
We exercise due care and diligence in the
design, construction and operation of our
products and services to ensure that they
do not pose hazards to customers.
All our suppliers are qualified in accordance
with our requisition and purchasing policies,
screened based on ESG criteria, and
are expected to sign and abide by the
Supplier Code of Conduct.
We consider proper design, handling,
storage and disposal of materials starting
from the planning stage of our projects. At the
project execution stage, we carry out project
reviews and quality assurance programmes.
We will continue to engage our customers
for continuous service improvements.
Annual Report 2020
Keppel Corporation Limited
GROUP OVERVIEW
26
SUSTAINABILITY FRAMEWORK
27
STRATEGIC PILLARS MATERIAL ISSUES
SDGs
APPROACH
HIGHLIGHTS
STRATEGIC PILLARS MATERIAL ISSUES
SDGs
APPROACH
HIGHLIGHTS
People and
Community
Occupational
Safety & Health
Providing a safe and healthy working
environment for all stakeholders is
fundamental to our commitment to
conducting business responsibly.
Keppel’s first priority in our response to the
COVID-19 pandemic was to safeguard the
health and safety of our employees,
customers and stakeholders.
People and
Community
Labour Practices,
Talent
Management &
Human Rights
Our businesses spark economic growth,
productivity and jobs. Our hiring policies
ensure equal employment opportunities
for all, and we are committed to investing
in nurturing our human capital.
Keppel is committed to nurturing and developing
our employees. As part of the Group’s succession
planning and talent development, we announced
leadership renewal in a few key business units,
effective on 15 February 2021.
We are also strong advocates for safety
and health in the broader community, and
champion national and industry initiatives
to raise standards and drive innovation
in these aspects.
Senior management and union representatives of Keppel O&M distributed care packs to frontline staff and
migrant workers.
Following the start of the pandemic, the Group
rolled out a series of measures, including
more frequent cleaning of office facilities and
temperature screening, as well as implementing
split teams, alternative work sites, safe distancing
and working from home where practical.
In addition, across the Group’s business units,
pandemic representatives have been identified
and trained in the protocols and procedures
to handle confirmed and suspected cases
of COVID-19.
From April to June 2020, four COVID-19
clusters were announced by Singapore’s
Ministry of Health (MOH) at Keppel Shipyard
and at the two dormitories operated by
Keppel Housing. We worked closely with the
authorities to minimise the spread of the
coronavirus, including assisting with contact
tracing, as well as thoroughly deep cleaning
and disinfecting both workplaces and
dormitories. As no more new cases were
linked to these clusters, the clusters were
progressively closed. All four clusters were
closed by MOH by August 2020. The two
dormitories which were gazetted as isolation
areas in April 2020 were also de-gazetted by
August 2020 as the situation improved.
The workforce at Keppel O&M’s yards in
Singapore was reduced from 24,000 in
early-March 2020 to around 1,200 for
much of the second quarter to minimise
transmission risk at the workplace.
The workforce progressively increased
over time, and reached about 19,500 by
end-2020, with safe management measures
in place.
As work resumed at Keppel O&M’s yards,
we continued to implement robust safe
management measures to ensure the health
and safety of our workforce, including migrant
workers. Such measures include dividing
the yards into separate zones to further
increase segregation and reduce the risk
of transmissions. Shift work arrangements
were also put in place to reduce the worker
density at the yard. We are also working
closely with the Singapore authorities to
conduct rostered swabbing of the workers.
Beyond Keppel O&M, various safe management
measures are also being implemented at
our different worksites, plants and projects
around the world, in compliance with the
relevant regulations, to prevent the spread
of the virus.
Keppel clinched 21 awards at the Workplace
Safety and Health Awards 2020, which is the
highest number of awards won by a single
organisation for the year.
We uphold and respect the fundamental
principles set out in the UN Universal
Declaration of Human Rights and the
International Labour Organisation’s
declaration on fundamental principles
and rights at work. Our stance on
human rights is articulated in our
corporate statement on human rights,
while our stance on diversity and inclusion
is articulated in our corporate statement
on diversity and inclusion. Both statements
are publicly available online.
Community
Development
Through collaboration with our stakeholders,
we mobilise and share knowledge, expertise
and technology, as well as financial and
human resources to support the achievement
of the SDGs.
We encourage and promote effective public,
public-private and civil society partnerships
through the sponsorship and support of
thought leadership and dialogue platforms.
We continue to actively engage staff, despite
COVID-19 and work-from-home arrangements.
We achieved an Employee Engagement Score
of 87% in 2020, which is higher than Mercer’s
global average of 80%.
IT collaborative tools and platforms are used to
facilitate telecommuting, and virtual townhalls
and other staff engagement initiatives were
launched to facilitate communication and ensure
that employees’ needs were addressed despite
COVID-19. These included team building activities,
mental wellness talks and virtual fitness classes,
as well as medical teleconsultation services.
An employee assistance programme was also rolled
out to provide mental health support for employees
and their dependents whereby employees can
tap on the services of licensed counsellors from
the Singapore Counselling Centre for counselling
sessions, if such services are needed.
Since the start of the COVID-19 pandemic, Keppel
has committed over $5 million to provide support
to communities affected by the pandemic
in Singapore and overseas. This includes a
$4.2 million package to support vulnerable
communities, including lower income households
in 1- and 2-room HDB flats who were given
rebates through M1, Keppel Electric and City Gas,
frontline staff, and other communities affected
by COVID-19. Recognising the challenging
environment faced by many Small and Medium
Enterprises (SMEs) in Singapore, Keppel also
improved payment terms to SMEs to help
improve their cashflow over a six-month period.
Beyond supporting those affected by COVID-19,
Keppel also made a $2 million donation towards
a new National Kidney Foundation dialysis
centre at Yishun Community Hospital, which
commenced operations in November 2020.
Despite the restrictions imposed by COVID-19,
Keppel Volunteers achieved over 10,000 hours
of community work in 2020.
In 2020, the Group invested $9.6 million1 in
social investment spending.
Keppel Care Foundation, the Group’s
philanthropic arm, has disbursed over
$47 million since its launch in 2012.
SOCIAL INVESTMENT SPENDING BY
PROJECT TYPE IN 20201 (%)
Healthcare/Care for the Underprivileged
The Arts/Sports/Community Development Projects
Education
Environment
Industry Advancement
Total
$9.6 million
63.7
15.6
11.5
6.9
2.3
100.0
1 Includes contributions from Keppel directors and employees in support of COVID-19 relief efforts.
Annual Report 2020
Keppel Corporation Limited
GROUP OVERVIEW
BOARD OF DIRECTORS
28
Board Committees
N
Nominating Committee
A Audit Committee
R
Remuneration Committee
BR Board Risk Committee
BS
Board Safety Committee
Annual Report 2020
LEE BOON YANG
AGE 73
LOH CHIN HUA
AGE 59
Chairman
Non-Executive and Independent Director
Executive Director and
Chief Executive Officer
R
N BS
BS
Date of first appointment as a director:
1 May 2009
Date of first appointment as a director:
1 January 2014
Date of last re-election as a director:
20 April 2018
Date of last re-election as a director:
23 April 2019
Length of service as a director
(as at 31 December 2020):
11 years 8 months
Length of service as a director
(as at 31 December 2020):
7 years
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
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 2021):
Listed companies
Singapore Press Holdings Limited (Chairman)
Present Directorships (as at 1 January 2021):
Listed companies
Nil
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 2016 to
31 December 2020):
Nil
Others:
Former Minister for Information,
Communications and the Arts (May 2003 to
March 2009); Former Member of Parliament
(December 1984 to April 2011)
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 Telecommunications & Transportation
Ltd (Chairman); Keppel Care Foundation
Limited; M1 Limited
Major Appointments (other than directorships):
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 2016 to
31 December 2020):
KrisEnergy Ltd; Various fund companies
under management of Alpha Investment
Partners Limited; Various companies under
Keppel Group of companies
Others:
Nil
29
ALVIN YEO KHIRN HAI
AGE 59
TAN EK KIA
AGE 72
DANNY TEOH
AGE 65
Non-Executive and
Independent Director
Non-Executive and
Independent Director
Non-Executive and
Independent Director
NA
BS
BR
A
A
R
BR
Date of first appointment as a director:
1 June 2009
Date of first appointment as a director:
1 October 2010
Date of first appointment as a director:
1 October 2010
Date of last re-election as a director:
23 April 2019
Date of last re-election as a director:
23 April 2019
Date of last re-election as a director:
2 June 2020
Length of service as a director
(as at 31 December 2020):
11 years 7 months
Length of service as a director
(as at 31 December 2020):
10 years 3 months
Length of service as a director
(as at 31 December 2020):
10 years 3 months
Board Committee(s) served on:
Audit (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 2021):
Listed companies
United Overseas Bank Limited
Other principal directorships
Valencia C.F; GlobalORE Pte Ltd
Major Appointments (other than directorships):
WongPartnership LLP (Chairman and Senior
Partner); Monetary Authority of Singapore
advisory panel to advise the Minister on appeals
under various financial services legislation
(Member); The Court of the Singapore
International Arbitration Centre (Member);
The 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 2016 to
31 December 2020):
Thomson Medical Pte. Ltd.; Neptune Orient
Lines Limited; Jubilant Pharma Limited;
United Industrial Corporation Limited
Others:
Past member: Senate of the Academy of Law;
the Council of the Law Society; the board of
the Civil Service College; Former Member of
Parliament (2006 to 2015)
Keppel Corporation Limited
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):
BSc Mechanical Engineering (First Class Honours),
Nottingham University, United Kingdom;
Management Development Programme,
International Institute for Management
Development, Lausanne, Switzerland;
Fellow of the Institute of Engineers, Malaysia;
Chartered Engineer of Engineering Council,
United Kingdom; Member of Institute of
Mechanical Engineers, United Kingdom
Present Directorships (as at 1 January 2021):
Listed companies
KrisEnergy Ltd (Chairman); 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;
Singapore LNG Corporation Pte Ltd
Major Appointments (other than directorships):
Nil
Past Directorships held over the preceding
5 years (from 1 January 2016 to
31 December 2020):
Nil
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
Academic & Professional Qualification(s):
Associate member of the Institute of Chartered
Accountants in England & Wales
Present Directorships (as at 1 January 2021):
Listed companies
Nil
Other principal directorships
M1 Limited (Chairman); DBS Bank (Taiwan) Ltd
Major Appointments (other than directorships):
Nil
Past Directorships held over the preceding
5 years (from 1 January 2016 to
31 December 2020):
CapitaLand Mall Trust Management Limited
(Manager of CapitaLand Mall Trust);
JTC Corporation; Ascendas-Singbridge Pte. Ltd.;
DBS Bank (China) Limited; Changi Airport Group
(Singapore) Pte Ltd; DBS Group Holdings Ltd;
DBS Bank Ltd; DBS Foundation Ltd
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,
KPMG LLP
GROUP OVERVIEW
30
BOARD OF DIRECTORS
TILL VESTRING
AGE 57
VERONICA ENG
AGE 67
JEAN-FRANÇOIS MANZONI AGE 59
Non-Executive and
Independent Director
Non-Executive and
Independent Director
Non-Executive and
Independent Director
NR
BR
A
N
BR
Date of first appointment as a director:
16 February 2015
Date of first appointment as a director:
1 July 2015
Date of first appointment as a director:
1 October 2018
Date of last re-election as a director:
2 June 2020
Date of last re-election as a director:
2 June 2020
Date of last re-election as a director:
23 April 2019
Length of service as a director
(as at 31 December 2020):
5 years 11 months
Length of service as a director
(as at 31 December 2020):
5 years 6 months
Length of service as a director
(as at 31 December 2020):
2 years 3 months
Board Committee(s) served on:
Remuneration Committee (Chairman);
Nominating Committee (Member)
Board Committee(s) served on:
Board Risk Committee (Chairman);
Audit Committee (Member)
Board Committee(s) served on:
Nominating Committee (Chairman);
Board Risk Committee (Member)
Academic & Professional Qualification(s):
Master of Economics, University of Bonn, Germany;
Master of Business Administration, Haas School
of Business, University of California, Berkeley
Present Directorships (as at 1 January 2021):
Listed companies
Inchcape plc
Other principal directorships
Leap Philanthrophy Ltd; Banteasy Srey
Development Limited; Advanced Micro Foundry
Pte. Ltd.; Delaware Consulting International
CVBA
Major Appointments (other than directorships):
Advisory Partner, Bain & Company Southeast Asia
Past Directorships held over the preceding
5 years (from 1 January 2016 to
31 December 2020):
Singapore Chinese Orchestra Company Limited
Others:
Nil
Academic & Professional Qualification(s):
Bachelor of Business Administration
(First Class Honours), University of Singapore
Present Directorships (as at 1 January 2021):
Listed companies
Nil
Other principal directorships
Keppel Capital Holdings Pte. Ltd.;
Eastspring Investments Group Pte. Ltd.
Academic & Professional Qualification(s):
DBA, Harvard Business School, Boston;
MBA, McGill University, Montreal; Bachelor,
Business Administration, l’Ecole des Hautes
Etudes Commerciales de Montréal; Fellow of
the Singapore Institute of Directors
Present Directorships (as at 1 January 2021):
Listed companies
Nil
Major Appointments (other than directorships):
Professor (Practice), NUS Business School
Other principal directorships
IMD Foundation Board; IMD Scholarship
Foundation
Past Directorships held over the preceding
5 years (from 1 January 2016 to
31 December 2020):
Nil
Others:
Founding Partner of Permira (1985 to 2015);
Former Member of the Board and Executive
Committee of Permira
Major Appointments (other than directorships):
President and Nestlé Professor, International
Institute for Management Development (IMD),
Switzerland; Member of several International
Advisory panels, including Digital Switzerland
and Russian Presidential Academy of
National Economy and Public Administration
Past Directorships held over the preceding
5 years (from 1 January 2016 to
31 December 2020):
Singapore Civil Service College;
Association to Advance Collegiate Schools
of Business (AACSB) International
Others:
Nil
Annual Report 2020
31
TEO SIONG SENG
AGE 66
THAM SAI CHOY
AGE 61
PENNY GOH
AGE 68
Non-Executive and
Non-Independent Director
Non-Executive and
Independent Director
Non-Executive and
Independent Director
R
BS
A
BR
A
BR
Date of first appointment as a director:
1 November 2019
Date of first appointment as a director:
1 November 2019
Date of first appointment as a director:
2 January 2020
Date of last re-election as a director:
2 June 2020
Date of last re-election as a director:
2 June 2020
Date of last re-election as a director:
2 Jun 2020
Length of service as a director
(as at 31 December 2020):
1 year 2 months
Length of service as a director
(as at 31 December 2020):
1 year 2 months
Length of service as a director
(as at 31 December 2020):
1 year
Board Committee(s) served on:
Remuneration Committee (Member);
Board Safety Committee (Member)
Board Committee(s) served on:
Audit Committee (Member);
Board Risk Committee (Member)
Board Committee(s) served on:
Audit Committee (Member);
Board Risk Committee (Member)
Academic & Professional Qualification(s):
Degree (First Class Honours) in Naval
Architecture and Ocean Engineering from
the University of Glasgow, United Kingdom
Present Directorships (as at 1 January 2021):
Listed companies
Singamas Container Holdings Ltd.; COSCO
Shipping Holding Co., Ltd.; COSCO Shipping
Energy Transportation Co., Ltd.; Wilmar
International Limited
Other principal directorships
Pacific International Lines (Pte) Ltd
Major Appointments (other than directorships):
Singapore Chinese Chamber of Commerce &
Industry (Honorary President); Business China
(Director); The United Republic of Tanzania in
Singapore (Honorary Consul)
Past Directorships held over the preceding
5 years (from 1 January 2016 to
31 December 2020):
The Standard Club Asia Ltd; Singapore
Maritime Institute; Duke-NUS Development
Committee; Enterprise Singapore
Others:
Former Member of Future Economy Council
Academic & Professional Qualification(s):
Bachelor of Arts (Honours) in Economics,
University of Leeds, United Kingdom;
Fellow of the Institute of Singapore Chartered
Accountants and the Institute of Chartered
Accountants in England and Wales
Present Directorships (as at 1 January 2021):
Listed companies
DBS Group Holdings Limited
Other principal directorships
DBS Bank Ltd.; DBS Bank (China) Limited;
DBS Foundation Ltd; EM Services Pte Ltd
(Chairman); Keppel Offshore & Marine Ltd;
Mount Alvernia Hospital; Singapore
International Arbitration Centre
Major Appointments (other than directorships):
Accounting and Corporate Regulatory Authority
(Board member); Nanyang Polytechnic
(Board member)
Past Directorships held over the preceding
5 years (from 1 January 2016 to
31 December 2020):
Singapore Accountancy Commission;
KPMG Group of Companies; Singapore
Institute of Directors (Chairman);
Housing & Development Board
Academic & Professional Qualification(s):
Bachelor of Law (Honours), University
of Singapore
Present Directorships (as at 1 January 2021):
Listed companies
Keppel REIT Management Limited (the Manager
of Keppel REIT) (Chairman)
Other principal directorships
HSBC Bank (Singapore) Limited;
Singapore Totalisator Board
Major Appointments (other than directorships):
Allen & Gledhill LLP (Senior Adviser)
Past Directorships held over the preceding
5 years (from 1 January 2016 to
31 December 2020):
Mapletree Logistics Trust Management Ltd
(the Manager of Mapletree Logistics Trust);
Eastern Development Private Limited; Eastern
Development Holdings Pte Ltd; Allen & Gledhill
Regulatory & Compliance Pte. Ltd.
Others:
Former Co-Chairman and Senior Partner
of Allen & Gledhill LLP
Others:
Nil
Keppel Corporation Limited
GROUP OVERVIEW
KEPPEL GROUP BOARDS OF DIRECTORS
32
KEPPEL OFFSHORE & MARINE
KEPPEL LAND
KEPPEL TELECOMMUNICATIONS
& TRANSPORTATION
LOH CHIN HUA
Chairman
Chief Executive Officer,
Keppel Corporation
CHRIS ONG LENG YEOW
Chief Executive Officer
STEPHEN PAN YUE KUO
Chairman,
World-Wide Shipping Agency Limited
PO’AD BIN SHAIK ABU BAKAR MATTAR
Independent Director,
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
Member,
Maine Maritime Academy Board of Trustee
LOH CHIN HUA
Chairman
Chief Executive Officer,
Keppel Corporation
LOUIS LIM
Chief Executive Officer
(effective 15 Feb 2021)
TAN SWEE YIOW
Senior Managing Director
of Urban Development,
Keppel Corporation
TAN YAM PIN
Former Managing Director,
Fraser and Neave Group
KOH-LIM WEN GIN
Former URA Chief Planner and
Deputy Chief Executive Officer
YAP CHEE MENG
Former Senior Partner,
KPMG Singapore and
COO of KPMG International
for the Asia Pacific Region
CHAN HON CHEW
Chief Financial Officer,
Keppel Corporation
THAM SAI CHOY
Independent Director,
Keppel Corporation
WILLY SHEE PING YAH
Senior Advisor and Former Asia Chairman,
CBRE
CHAN HON CHEW
Chief Financial Officer,
Keppel Corporation
LOH CHIN HUA
Chairman
Chief Executive Officer,
Keppel Corporation
THOMAS PANG THIENG HWI
Chief Executive Officer
PROF NEO BOON SIONG
Director
KARMJIT SINGH
Director
LIM CHIN LEONG
Director
CHAN HON CHEW
Chief Financial Officer,
Keppel Corporation
KHOR POH HWA
Director
MRS LEE AI MING
Senior Consultant,
Dentons Rodyk & Davidson LLP
KEPPEL INFRASTRUCTURE
LOH CHIN HUA
Chairman
Chief Executive Officer,
Keppel Corporation
CINDY LIM
Chief Executive Officer
(effective 15 Feb 2021)
CHAN HON CHEW
Chief Financial Officer,
Keppel Corporation
KHOO CHIN HEAN
Director
SHIRISH APTE
Director
LOUIS LIM
Chief Executive Officer,
Keppel Land
Annual Report 2020
33
KEPPEL DC REIT MANAGEMENT
(MANAGER OF KEPPEL DC REIT)
KEPPEL PACIFIC OAK US REIT
MANAGEMENT (MANAGER OF
KEPPEL PACIFIC OAK US REIT)
CHRISTINA TAN HUA MUI
Chairman
Chief Executive Officer,
Keppel Capital
KENNY KWAN
Lead Independent Director and Principal,
Baker & McKenzie
LEE CHIANG HUAT
Independent Director
DR TAN TIN WEE
Chief Executive,
National Supercomputing Centre, Singapore
DILEEP NAIR
Independent Director
LOW HUAN PING
Independent Director
PETER MCMILLAN III
Chairman
Co-founder,
Pacific Oak Capital Advisors LLC
SOONG HEE SANG
Lead Independent Director
JOHN J. AHN
President,
Whitehawk Capital Partners, L.P.
KENNETH TAN JHU HWA
Co-Managing Partner and Managing Director,
Southern Capital Group Private Limited
PAUL THAM
Chief Executive Officer,
Keppel REIT Management
(Manager of Keppel REIT)
THOMAS PANG THIENG HWI
Chief Executive Officer,
Keppel Telecommunications & Transportation
M1
KEPPEL INFRASTRUCTURE FUND
MANAGEMENT (TRUSTEE-MANAGER
OF KEPPEL INFRASTRUCTURE TRUST)
KOH BAN HENG
Chairman
(appointment till 1 Feb 2021)
DANIEL CUTHBERT EE HOCK HUAT
Chairman
(effective 1 Feb 2021)
THIO SHEN YI
Joint Managing Director,
TSMP Law Corporation
DANNY TEOH
Chairman
Director
MANJOT SINGH MANN
Chief Executive Officer
LOH CHIN HUA
Chief Executive Officer,
Keppel Corporation
CHAN HON CHEW
Chief Financial Officer,
Keppel Corporation
TAN WAH YEOW
Director
MARK ANDREW YEO KAH CHONG
Independent Director
GUY DANIEL HARVEY SAMUEL
Director
KUNNASAGARAN CHINNIAH
Independent Director
SUSAN CHONG SUK SHIEN
Independent Director
(effective 5 Mar 2021)
CHRISTINA TAN HUA MUI
Chief Executive Officer,
Keppel Capital
THOMAS PANG THIENG HWI
Chief Executive Officer,
Keppel Telecommunications & Transportation
JANICE WU SUNG SUNG
Executive Vice President,
Corporate Development,
Singapore Press Holdings
JULIAN TAN WOON-KA
Chief of Digital Business,
Singapore Press Holdings
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
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)
MRS PENNY GOH
Chairman
Senior Adviser,
Allen & Gledhill LLP
ALAN RUPERT NISBET
Independent Director
LEE CHIANG HUAT
Independent Director
LOR BAK LIANG
Independent Director
CHRISTINA TAN HUA MUI
Chief Executive Officer,
Keppel Capital
TAN SWEE YIOW
Senior Managing Director,
Urban Development
IAN RODERICK MACKIE
Independent Director
FONG MUN NGIN, MERVYN
Independent Director
(effective 1 Mar 2021)
Keppel Corporation Limited
GROUP OVERVIEW
KEPPEL TECHNOLOGY ADVISORY PANEL
34
From left: Professor Stefan Thomke, Mr Loh Chin Hua (CEO of Keppel Corporation), Mr Peter Noble, Professor Ng Wun Jern, Mr Chua Kee Lock,
Dr Lee Boon Yang (Chairman of Keppel Corporation) and Dr Romain Debarre.
THE KEPPEL
TECHNOLOGY
ADVISORY PANEL
SEEKS TO ADVANCE
THE GROUP’S
TECHNOLOGY
LEADERSHIP.
Established in 2004, the Keppel Technology
Advisory Panel (KTAP) includes eminent
business leaders and industry experts from
across the world. KTAP members provide
technology foresight for Keppel, advise on
strategic projects and provide contacts to
broaden Keppel’s networks.
In 2020, KTAP focused on the Vision 2030
themes of Energy & Environment, Urban
Development, Connectivity and Asset
Management, with individual topics dedicated
to the Vision 2030 growth engines. These
topics included the energy transition and
the resultant opportunities in renewable
energy such as offshore wind and hydrogen;
the increasing demand for PropTech across
asset classes; the 5G eco-system, as well
as the changes in consumer behaviour and
lifestyle as a result of COVID-19, amongst
others. This lays the foundation for Keppel’s
transformation plans to be one integrated
business and a provider of end-to-end
solutions for sustainable urbanisation.
PROFESSOR NG WUN JERN
Chairman
BSc (Civil Engineering) QMC London University;
MSc (Water Resources) and PhD University
of Birmingham, PE(S), CE (S), FIES, MSAEng
Professor Ng was the founding Executive
Director at the Nanyang Environment &
Water Research Institute, and President’s
Chair Professor at the School of Civil &
Environmental Engineering, Nanyang
Technological University. He has some
400 publications on water, wastewater and
waste management, and soil remediation.
He has founded spin-off companies based
on his IPs, and serves as technical advisor to
government agencies, established environmental
companies, incubators and private equity funds
while also guiding start-up companies active in
ASEAN, China and South Asia.
Annual Report 2020
35
PROFESSOR STEFAN THOMKE
PETER NOBLE
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
Fellow, Land Medalist and Past-President,
Society of Naval Architects & Marine
Engineering, USA; Fellow and Vice President,
The Institute of Marine Engineering,
Science and Technology, UK;
Fellow, Canadian Academy of Engineering;
Offshore Technology Distinguished
Achievement Award for Individuals;
B.Sc. Naval Architecture, University of Glasgow
Mr Noble is a naval architect and ocean
engineer with a wide range of expertise
and experience in the marine and offshore
industries. His career has included positions
with shipyards, ship and offshore design
consultants, offshore and marine research
and development companies, and major
classification societies, as well as chief naval
architect with an international oil company.
He currently undertakes consulting and
advisory assignments across a broad range
of topics relating to ocean engineering.
Mr Noble holds a number of patents and
is active on the advisory boards of several
universities and institutions.
DR ROMAIN DEBARRE
PhD French Petroleum Institute & CNRS,
MBA HEC Paris, MSc IFP-School
Dr Debarre is the Managing Director of
the Kearney Energy Transition Institute.
He brings a combined experience in energy,
business strategy and scientific research.
He is a recognised energy expert who forges
close ties between governments, companies
and academics to leverage technological
opportunities and reduce carbon emissions.
Prior to joining Kearney, Dr Debarre was with
Schlumberger Business Consulting, where
he led the SBC Energy Institute. He previously
worked in corporate finance, managed strategy
consulting projects in the energy sector in
various countries and spent several years in
scientific research and development. He is
the co-author of several reports on energy
technologies and energy transition topics.
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.
CHUA KEE LOCK
BSc. (Mechanical Engineering),
University of Wisconsin at Madison;
M.Eng, Stanford University
Mr Chua is CEO of Vertex Holdings,
a Singapore-headquartered venture capital
investment holding company.
Vertex Group is a global venture capital network
comprising four early stage technology focused
funds (Vertex Ventures China, Vertex Ventures
Israel, Vertex Ventures US, Vertex Ventures
SEA & India), an early stage healthcare-focused
fund (Vertex Ventures HC) and a growth stage
fund (Vertex Growth). Each of these funds
is managed by independent and separate
General Partnerships and investment teams,
with Vertex Holdings providing anchor funding
alongside significant third party capital
commitments. He is concurrently Managing
Partner of Vertex Ventures SEA & India as
well as Chairman of Vertex Growth Fund.
Prior to this, Mr Chua held senior positions
in Biosensors International Group, a
developer/manufacturer of medical devices,
Walden International, a US-headquartered
venture capital firm, NatSteel, a Singapore
industrial products company, and Intraco,
a Singapore-listed trading/distribution
company. He also co-founded MediaRing,
a provider of voice-over-internet, which
later listed on Singapore’s stock exchange.
He currently serves on the boards of several
companies, including Yongmao, a Singapore
public-listed company.
Keppel Corporation Limited
GROUP OVERVIEW
SENIOR MANAGEMENT
36
KEPPEL CORPORATION
LOH CHIN HUA
Chief Executive Officer
CHAN HON CHEW
Chief Financial Officer
CORPORATE SERVICES
CINDY LIM
Director
Group Corporate Development
Managing Director
Keppel Urban Solutions
(appointments till 14 Feb 2021)
FRANCOIS VAN RAEMDONCK
Director
Group Strategy & Development
Managing Director
Keppel Technology & Innovation
CHUA HSIEN YANG
Director
Group Mergers & Acquisitions
(effective 15 Feb 2021)
YEO MENG HIN
Director
Group Human Resources
LYNN KOH
Director
Group Treasury
HO TONG YEN
Director
Group Corporate Communications
CAROLINE CHANG
General Manager
Group Legal
TOK SOO HWA
General Manager
Group Control & Accounts
SEPALIKA KULASEKERA
General Manager
Group Internal Audit
KENNY MOK
General Manager
Group Risk & Compliance
TAY GUAN CHEW
General Manager
Group Tax
JASON CHIN
General Manager
Group Information Technology
Annual Report 2020
MARTIN LING
General Manager
Group Cyber Security
(effective 1 Jan 2021)
JAGGI RAMESH KUMAR
General Manager
Group Health, Safety & Environment
ERIC GOH
Chief Representative, China
LINSON LIM
Chief Representative, Vietnam
HO KIAM KHEONG
India Representative
TAY LIM HENG
Chief Executive Officer
Sino-Singapore Tianjin Eco-City
Investment and Development
ENERGY & ENVIRONMENT
CHRIS ONG
Chief Executive Officer
Keppel Offshore & Marine
KEVIN CHNG
Chief Financial Officer
Keppel Offshore & Marine
CHOR HOW JAT
Managing Director
(Conversions & Repairs)
Keppel Offshore & Marine
TAN LEONG PENG
Managing Director
(New Builds)
Keppel Offshore & Marine
RON MACLNNES
President
Keppel Offshore & Marine USA
and Keppel LeTourneau
MOHD SAHLAN BIN SALLEH
President
Keppel AmFELS
MARLIN KHIEW
President
Keppel FELS Brasil
LEONG KOK WENG
President
Keppel Philippines Marine
NG SENG CHONG
President
Keppel Nantong Shipyard
Keppel Nantong Heavy Industries
(effective 1 Jan 2021)
DR ONG TIONG GUAN
Chief Executive Officer
Keppel Infrastructure
(appointment till 14 Feb 2021)
CINDY LIM
Chief Executive Officer
Keppel Infrastructure
(effective 15 Feb 2021)
LIM SIEW HWA
Chief Financial Officer
Keppel Infrastructure
TAN BOON LENG
Managing Director,
Project Development and Corporate Office
Keppel Infrastructure
JANICE BONG
Executive Director,
Power and Gas
Keppel Infrastructure
CHUA YONG HWEE
Executive Director,
New Energy
Keppel Infrastructure
JACKSON GOH
Executive Director,
Environment
Keppel Infrastructure
MILO DOCHOW
Executive Director,
Corporate Development
Keppel Infrastructure
URBAN DEVELOPMENT
TAN SWEE YIOW
Chief Executive Officer
Keppel Land
(appointment till 14 Feb 2021)
Senior Managing Director
Urban Development
(effective 15 Feb 2021)
LOUIS LIM
Chief Executive Officer
(effective 15 Feb 2021)
Chief Operating Officer
(appointment till 14 Feb 2021)
Keppel Land
TAN BOON PING
Chief Financial Officer
Keppel Land
BEN LEE
Chief Operating Officer
(effective 15 Feb 2021)
President, China
Keppel Land
37
ASSET MANAGEMENT
UNIONS
CHRISTINA TAN
Chief Executive Officer
Keppel Capital
BRIDGET LEE
Chief Operating Officer
Keppel Capital
(effective 15 Feb 2021)
Chief Executive Officer
Keppel Capital Alternative Asset
ANG SOCK CHENG
Chief Financial Officer
Keppel Capital
PAUL THAM
Chief Executive Officer
Keppel REIT Management
MATTHEW POLLARD
Chief Executive Officer
Keppel Infrastructure Fund Management
CHUA HSIEN YANG
Chief Executive Officer
Keppel DC REIT Management
(appointment till 14 Feb 2021)
ANTHEA LEE
Chief Executive Officer
Keppel DC REIT Management
(effective 15 Feb 2021)
DAVID SNYDER
Chief Executive Officer
Keppel Pacific Oak US REIT Management
ALVIN MAH
Chief Executive Officer
Alpha Investment Partners
DEVARSHI DAS
Chief Executive Officer
(Infrastructure)
Keppel Capital Alternative Asset
KEPPEL FELS EMPLOYEES’ UNION
MAHMOOD BIN ALI
President
ATYYAH BINTI HASSAN
General Secretary
KEPPEL EMPLOYEES’ UNION
MOHAMED NASIR AHMAD
President
ATAN ENJAH
General Secretary
SHIPBUILDING & MARINE
ENGINEERING EMPLOYEES’ UNION
EILEEN YEO
General Secretary
NTUC Central Committee Member
SINGAPORE INDUSTRIAL &
SERVICES EMPLOYEES’ UNION
SAZALI BIN ZAINAL
President
RICHARD SIM
General Secretary
SYLVIA CHOO
Executive Secretary
UNION OF POWER & GAS EMPLOYEES
TAY SENG CHYE
President
ABDUL SAMAD BIN ABDUL WAHAB
General Secretary
S. THIAGARAJAN
Executive Secretary
NG OOI HOOI
President, Singapore and
Regional Investments
Keppel Land
JOSEPH LOW
President, Vietnam
Keppel Land
(effective 15 Feb 2021)
LINSON LIM
President, Vietnam
Keppel Land
(appointment till 14 Feb 2021)
SAMUEL HENRY NG
President, Indonesia
Keppel Land
(effective 15 Feb 2021)
GOH YORK LIN
President, Indonesia
Keppel Land
(appointment till 14 Feb 2021)
HO KIAM KHEONG
President, India
Keppel Land
CONNECTIVITY
THOMAS PANG
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
Chief Executive Officer
Keppel Logistics
MANJOT SINGH MANN
Chief Executive Officer
M1
LEE KOK CHEW
Chief Financial Officer
M1
MUSTAFA KAPASI
Chief Commercial Officer
M1
DENIS SEEK
Chief Technical Officer
M1
WILLIS SIM
Chief Corporate Sales and
Solutions Officer
M1
NATHAN BELL
Chief Digital Officer
M1
Keppel Corporation Limited
In 2020, we stepped up efforts to engage
the investment community via digital
means amidst the COVID-19 pandemic.
These include helping the investment
community understand how Keppel
was seizing opportunities, responding
to the pandemic, Keppel’s Vision 2030
(which was unveiled in May 2020), as well
as the subsequent plans to accelerate
the execution of Vision 2030.
Vision 2030 outlined Keppel’s long-term
growth and transformation strategy to be
an integrated business, providing solutions
for sustainable urbanisation. As part
of Vision 2030, Keppel has focused its
business on four key areas, namely
Energy & Environment, Urban Development,
Connectivity and Asset Management, all part
of a connected value chain. Through regular
disclosures and continuous efforts to
engage analysts and investors, we seek
to help the investment community better
understand Keppel’s strategy and keep
abreast of the Group’s progress and
latest developments.
INVESTOR AND ANALYST
ENGAGEMENT
During the year, we held about 210
virtual meetings and conference calls
with institutional investors, including
virtual non-deal roadshows with investors
from Hong Kong, Malaysia, Singapore,
the UK and the US, and an online
conference organised by the Singapore
Exchange (SGX) and Credit Suisse. We also
held our inaugural virtual Annual General
Meeting (AGM), which was attended by
some 230 shareholders.
During the year, we transited to half-yearly
reporting in accordance with the SGX’s
regulation on risk-based quarterly reporting.
Notwithstanding this, Keppel Corporation
continued to provide voluntary business
updates in between the half-yearly results,
in line with our commitment to maintain
good communication with shareholders
and the investment community.
Presently, 15 sell-side research houses,
with analysts based in Singapore and
Malaysia, provide coverage on Keppel
Corporation. In addition to semi-annual
results briefings and voluntary business
updates, we held briefings for media and
analysts on the Company’s Vision 2030.
We continue to actively engage and
maintain close interactions with our
sell-side analysts, working with them
to help the investment community better
understand and appreciate the value
of the Company.
As part of our ongoing efforts to engage
retail shareholders, Keppel Corporation’s
Chief Executive Officer and Chief Financial
Officer updated our retail shareholders
on the Company’s developments at the
annual meeting organised by Securities
Investors Association (Singapore) (SIAS).
The event, which was held virtually
this year, drew about 120 participants.
In 2020, our contribution towards the
SIAS Investor Education Programme
benefitted around 2,500 retail shareholders,
who as complimentary members of
the Association, enjoy access to a wide
range of seminars, workshops and
other support.
GROUP OVERVIEW
INVESTOR RELATIONS
38
WE ARE COMMITTED
TO CLEAR, TIMELY
AND CONSISTENT
COMMUNICATION
WITH THE INVESTMENT
COMMUNITY.
SHAREHOLDING BY INVESTORS (%)
Institutions
Retail
Total
51.2
48.8
100.0
SHAREHOLDING BY GEOGRAPHY (%)
Singapore
Asia (ex Singapore)
North America
Europe
Others*
Total
32.6
5.6
9.4
7.8
44.6
100.0
* Others comprise the rest of the world, as well as
unidentified holdings and holdings below the
analysis threshold as at 10 February 2021.
Keppel Corporation’s senior management engaged the media and investment community at the 2H & FY 2020
results webcast.
Annual Report 2020
39
INVESTOR RELATIONS RESOURCES
To ensure fair and timely dissemination
of information, we post all announcements
on our corporate website promptly after
they are released on SGXNet.
Despite COVID-19, in 2020, we continued
to hold “live” webcasts of our half-yearly
results briefings, which facilitate real-time
interaction with Keppel’s senior management.
An archive of the webcast and management
speeches, together with the presentation
materials, are made available on our website
on the same day the results are released
on SGXNet. A transcript of the questions
and answers session is also released on
SGXNet and posted on our website before
the start of the next trading day.
Similarly, the presentation materials
of our voluntary business updates are
made available at our website on the
same day they are released on SGXNet,
while a transcript of the questions and
answers session held with analysts is
also released on SGXNet and posted
on our website before the start of the
next trading day.
To facilitate shareholders’ communication
with the Board of Directors, shareholders
were invited to submit their questions
for the Board prior to our inaugural virtual
AGM. The responses to key questions
received from shareholders were released
on SGXNet and made available on our
website prior to the event. In the same spirit,
the presentation materials, results and
minutes of the virtual AGM were also
released on SGXNet and made available
on our website concurrently.
Dr Lee Boon Yang, Chairman of Keppel Corporation (right) and the Company’s Board of Directors interacted with
shareholders at the Company’s virtual AGM in 2020.
CORPORATE WEBSITE
Our mobile-friendly corporate website
www.kepcorp.com provides access
to company announcements, half-yearly
results and voluntary business updates,
annual reports, investor events, stock
and dividend information and investor
presentation slides. Contact information
of our Investor Relations (IR) personnel
(email: investor.relations@kepcorp.com)
can also be found on the website. All IR
activities are guided by the principles and
guidelines set out in the Company’s IR
policy, which is regularly reviewed and
available on Keppel Corporation’s website.
The policy articulates guiding principles that
ensure the timely, transparent and accurate
disclosures of material information.
Following the unveiling of Vision 2030,
we refreshed the corporate website
to reflect the Company’s new business
segments, which highlight our focus
and growth areas. We also augmented
our website with videos and social media
sharing links, thereby further improving
our website’s interactivity and accessibility.
SHAREHOLDER INFORMATION
As at 10 February 2021, institutions
formed 51.2% of our shareholder base,
while retail investors accounted for
the remaining 48.8%. Shareholders in
Singapore held approximately 32.6%
of our issued capital, while those in the
rest of Asia held 5.6%, North America
9.4% and Europe 7.8%.
INVESTOR RELATIONS CALENDAR
The following key events were held in 2020 to engage our investors and analysts:
Q1
4Q & FY 2019 results
conference and live webcast.
Q2
1Q 2020 results teleconference
for media & analysts.
Q3
2Q & 1H 2020 online results
conference and live webcast.
Virtual non-deal roadshows
with investors from Malaysia,
Hong Kong, the US and the UK.
Virtual non-deal roadshow with
investors in Singapore and
overseas hosted by UBS.
Media & analyst virtual briefing
on Vision 2030.
Media & analyst virtual briefing
on the next steps in Vision 2030.
Live webcast of Keppel
Corporation’s 52nd AGM,
held by electronic means.
Keppel Corporation’s
Virtual Meeting for Retail
Shareholders hosted by SIAS.
Participation in the SGX-Credit
Suisse Singapore Virtual
Corporate Day.
Virtual non-deal roadshow with
investors in Singapore and
overseas hosted by JP Morgan.
Q4
3Q & 9M 2020 business
updates teleconference for
media & analysts.
Keppel Corporation Limited
GROUP OVERVIEW
SIGNIFICANT MILESTONES
40
Q1
Corporate
Keppel Corporation was upgraded to a triple-A
rating in the Morgan Stanley Capital International
environmental, social and governance ratings.
Energy & Environment
Keppel Offshore & Marine (Keppel O&M)
delivered two projects, namely the fifth of
11 jackup rigs to Borr Drilling and a Floating
Production Storage and Offloading (FPSO) vessel
modification and upgrading project to Yinson.
Keppel Infrastructure secured contracts from
Abellon Clean Energy worth about $18 million
to supply waste-to-energy (WTE) technology
solutions and services to WTE plants in
Gujarat, India.
Urban Development
Keppel Land entered Taicang City in Jiangsu,
China, with the acquisition of a 49% stake
in a 5.85-hectare (ha) residential site for
about $97 million.
Keppel Land announced the divestment
of Stamford City in Jiangyin, Jiangsu,
China for a consideration of about
$95 million.
Connectivity
M1 and Starhub submitted a joint bid for a
5G licence in Singapore.
Asset Management
Keppel Capital launched the US$1 billion
Keppel Asia Infrastructure Fund (KAIF),
which achieved its first closing.
FPSO Abigail-Joseph, delivered to Yinson,
is Keppel O&M’s 134th floating production vessel.
As its first asset, KAIF acquired
a 30% interest in Gimi MS Corporation,
which owns the Gimi FLNG vessel.
Q2
Corporate
Keppel Corporation unveiled Vision 2030
to drive the Company’s long-term strategy
and transformation.
Energy & Environment
Keppel O&M delivered the sixth of 11
jackup rigs to Borr Drilling.
Keppel Infrastructure, through a Keppel-led
consortium, secured a contract worth about
$1.5 billion to develop a WTE facility and a
materials recovery facility for Singapore’s Tuas
Nexus Integrated Waste Management Facility.
Keppel Infrastructure commenced
commercial operations for Keppel Marina
East Desalination Plant, Singapore’s fourth
desalination plant.
Keppel Infrastructure Trust and Keppel Energy,
through a joint venture (JV), secured a
7-year $700 million sustainability-linked loan
from DBS Bank and OCBC Bank for their
jointly owned gas-fired co-generation plant,
Keppel Merlimau Cogen Plant.
Keppel O&M and Energy Market Authority
(EMA) forged a $10 million partnership and
signed a Memorandum of Understanding
(MOU) to develop energy solutions for the
marine sector.
Keppel O&M announced the development
of the Floating Living Lab, the first-of-its-kind
offshore floating testbed in Singapore.
Urban Development
Sino-Singapore Tianjin Eco-City Investment and
Development Co., Ltd. (SSTEC) sold a residential
land plot in the Sino-Singapore Tianjin Eco-City
(Eco-City) for about RMB 1.2 billion.
Annual Report 2020
Connectivity
Keppel Data Centres Holding (KDCH)
signed MOUs with Toll Group and
Royal Vopak respectively to study the
feasibility of developing a Floating Data
Centre Park (FDCP) and LNG-to-power
infrastructure in Singapore.
KDCH signed an MOU with Mitsubishi
Heavy Industries Asia Pacific to
jointly explore the implementation
of the hydrogen powered tri-generation
plant concept for data centres
in Singapore.
M1, IMDA, IBM and Samsung announced a
collaboration on Singapore’s first 5G
Industry 4.0 trial to demonstrate the
transformative impact of 5G for enterprises.
M1, IMDA and Maritime and Port Authority of
Singapore partnered with Airbus to conduct
coastal 5G standalone network trials at the
Singapore Maritime Drone Estate.
Asset Management
KAIF, together with the Fund’s co-investment
vehicles, achieved its second closing with
aggregate commitments of US$570 million
including impending commitments.
KDCH and Singapore Press Holdings
announced the development of a new
data centre to be located at Genting Lane
in Singapore.
Alpha Investment Partners (Alpha),
together with Manulife and Mega
Manunggal Property, launched a new
Indonesian logistics property venture.
M1 and Starhub were granted the
final 5G network license award from
Infocomm Media Development
Authority (IMDA).
Keppel Telecommunications & Transportation
sold about 2.33% of the total issued units in
Keppel DC REIT for a total cash consideration
of about $92 million.
Development of the Eco-City continued in 2020 with the sale of two residential land plots in the Central and South districts.
Q3
Corporate
Keppel reaffirmed Vision 2030 and announced
asset monetisation plans to unlock value
from assets, as well as the strategic review
of the offshore & marine business.
Keppel Corporation achieved sixth position,
out of almost 600 Singapore-listed companies,
in the Singapore Governance and Transparency
Index 2020.
Energy & Environment
Keppel O&M secured four contracts
worth about $270 million namely
two FPSO fabrication and
integration projects, an LNG
carrier to Floating Storage and
Regasification Unit conversion and
a newbuild Trailing Suction Hopper
Dredger (TSHD).
Keppel DHCS and its JV partners
secured a contract worth about
$330 million for a district cooling system
in Bangkok, Thailand.
Urban Development
Keppel Land announced a collaboration
with TVS Emerald to jointly develop
a premium residential project in
Chennai, India.
SSTEC sold two industrial land plots
in the Eco-Innovation Park with a total area
of 8.44 ha.
Connectivity
KEAF acquired a 70% stake in a school property
operated by Malvern College Chengdu as its first asset.
M1 launched its 5G non-standalone network
to all customers.
41
KDCH signed an MOU with other
industry leaders to jointly develop
Singapore’s first end-to-end
decarbonisation process.
Asset Management
Keppel Capital entered into a strategic
cooperation with the National Pension
Service of Korea to explore investment
opportunities for private infrastructure
in Asia.
Keppel Capital raised more than
half of its target commitment of
US$500 million for the Keppel Education
Asset Fund (KEAF). The Fund acquired,
as its first asset, a 70% stake in
a premium bilingual K12 school property
operated by Malvern College Chengdu
in Sichuan, China.
Alpha Data Centre Fund expanded into
China with the planned development
of a greenfield data centre located
in the Tonghu Smart City in Huizhou,
Guangdong, China. Keppel Data Centres
will collaborate with local partners to
implement global best practices for
operations in this data centre.
Q4
Corporate
As part of the 100-day plan under
Vision 2030, the Group progressively
announced over $1.2 billion of divestments.
The Keppel Group swept 21 awards at the
Workplace Safety and Health Awards 2020.
The Keppel Group was recognised for its
sustainability efforts in the 2020 Global Real
Estate Sustainability Benchmark assessment.
Keppel Corporation announced leadership
changes for several key business units as
part of the Group’s succession planning and
leadership renewal.
Keppel Corporation scored an A- in the CDP
2020 Climate Change Assessment.
Energy & Environment
Keppel Renewable Energy entered into an
agreement to acquire a 45% stake in Harlin
Solar, to develop and manage the construction
and operation of a large-scale greenfield
solar farm in Queensland, Australia.
Keppel O&M secured contracts worth about
$700 million for the engineering, procurement
and construction of one of the world’s largest
wind turbine installation vessels in the US
from Dominion Energy, as well as an FPSO
conversion project from a repeat customer.
Keppel Corporation Limited
Keppel O&M delivered three projects namely an
LNG carrier to Avenir LNG, an LNG bunkering
vessel to FueLNG and a TSHD to Jan De Nul.
Keppel O&M announced the successful
conclusion of its US Deferred
Prosecution Agreement.
Keppel Land acquired a strategic minority
stake in Cove Living.
Keppel Land announced divestments
of five projects across China, Singapore,
the UK and Vietnam for a total consideration
of over $1.2 billion.
Keppel DHCS secured a $300 million contract
from JTC to build, own and operate a district
cooling system (DCS) plant in Bulim Phase 1
of the Jurong Innovation District in Singapore.
Keppel O&M and EMA jointly awarded a
research grant to a consortium led by
Envision Digital to pilot Singapore’s first
floating Energy Storage System.
Urban Development
Keppel Land formed a JV partnership to
own and develop an 8.4-ha residential site
in Jiading District, Shanghai, China.
Keppel DHCS will build, own and operate a DCS plant in
Bulim Phase 1 of Singapore’s Jurong Innovation District.
SSTEC sold the last residential land plot
in the Eco-City’s South District for about
RMB 669 million.
Connectivity
KDCH, City Gas and City-OG Gas Energy
Services signed an MOU to explore using
LNG and hydrogen to power KDCH’s FDCP
in Singapore.
Asset Management
Keppel Capital and Keppel Land launched
the US$600 million Keppel Vietnam Fund,
which achieved its first closing.
Keppel Capital launched its second data
centre fund, Keppel Data Centre Fund II,
with target fund size of US$1 billion,
which achieved its first closing.
Keppel REIT acquired Pinnacle Office Park
in Sydney, Australia and announced the
proposed acquisition of Keppel Bay Tower
in Singapore.
Keppel Capital launched the follow-on
Alpha Asia Macro Trends Fund IV
with a target fund size of US$1 billion,
which achieved its first closing.
42
PERFORMANCE REVIEW
OPERATING &
FINANCIAL REVIEW
ENERGY &
ENVIRONMENT
WE PROVIDE A WIDE
RANGE OF ENERGY
AND ENVIRONMENTAL
SOLUTIONS THAT
ARE ESSENTIAL
FOR SUSTAINABLE
DEVELOPMENT.
EARNINGS HIGHLIGHTS ($ million)
Revenue
EBITDA
Operating Profit/(Loss)
Loss before Tax
Net Loss
Average Headcount (Number)
Manpower Cost
2020
3,943
(671)
(822)
(1,251)
(1,181)
12,732
643
2019
4,969
268
116
(121)
(101)
12,838
688
2018
4,322
83
(39)
(168)
(169)
13,082
601
MAJOR DEVELOPMENTS IN 2020
FOCUS FOR 2021/2022
Conducted strategic review of O&M business,
and has since announced plans to
transform Keppel O&M and position it
higher up the value chain as a developer
and integrator of offshore energy and
infrastructure assets.
Keppel O&M secured new order wins of
about $1 billion, with offshore renewables
and LNG solutions making up 65% of
new orders.
Keppel Infrastructure secured $2.1 billion
worth of WTE and district cooling contracts
across Singapore, India and Thailand.
Keppel Renewable Energy (KRE) announced
its first solar farm project, which is located
in Australia.
Execute strategic transformation of
Keppel O&M, and capture opportunities
in both existing and new markets.
Develop opportunities in target markets with
a focus on value-enhancing environmental
projects for Keppel Infrastructure.
Further strengthen Keppel Infrastructure’s
retail and marketing capabilities.
Expand cooling business in local and
overseas markets, and leverage MET Group
to grow European presence.
Continue to explore opportunities in the
renewable energy sector through KRE.
Deepen collaboration across business units
to develop better and smarter solutions,
as well as with Keppel Capital to tap
third-party funds for growth.
Annual Report 2020
43
EARNINGS REVIEW
The Energy & Environment segment provides
solutions and services spanning offshore
& marine (O&M), energy infrastructure
and renewables, as well as environmental
infrastructure. The segment includes
Keppel O&M, Keppel Infrastructure and
Keppel Renewable Energy, as well as the
Group’s investment in associate KrisEnergy.
Revenue from Energy & Environment
decreased by $1 billion or 21% to $3.9 billion
for FY 2020, due mainly to lower revenue
from the O&M business arising from
the significant downtime as a result of
COVID-19, fewer new contracts in 2020
and the termination and deferment of
some projects during the year. In addition,
revenue was affected by lower progressive
revenue recognition from waste-to-energy
(WTE) projects under development.
For FY 2020, Energy & Environment reported
a net loss of $1.2 billion, compared to a
net loss of $101 million for FY 2019, after
impairments of $908 million which related
mainly to Keppel O&M’s contract assets,
receivables, stocks and share of impairment
provisions from Floatel. The O&M business,
which was particularly affected by the
COVID-19 crisis and the fall in global
demand for oil, was faced with deferments
and terminations of some projects.
Excluding impairments, the segment’s net
loss was $273 million for the whole of 2020.
Weaker performance in the O&M business,
which had been impacted by slower
progress on projects due to significant
downtime as a result of COVID-19, was
partly offset by higher contributions from
the energy infrastructure and environmental
infrastructure businesses, as well as the
absence of a share of loss from KrisEnergy
and fair value loss on KrisEnergy warrants
as compared to FY 2019.
OPERATING REVIEW
ENERGY
Offshore & Marine
In 2020, Keppel O&M was significantly
affected by the COVID-19 pandemic,
following the sharp fall in global demand
for oil. The pandemic also brought about
many challenges ranging from supply
chain disruptions to lockdowns. Notably,
COVID-19 and the measures to contain its
spread caused a sharp drop in manpower
at Keppel O&M’s yards in Singapore in the
second and third quarters. As at end-2020,
work has resumed at all yards, with safe
management measures in place.
During the year, Keppel O&M reduced
its direct headcount to 10,500 as at
end-2020, from 13,500 as at end-2019.
Keppel O&M has put in place cost
management measures which will reduce
Keppel Corporation Limited
Keppel O&M’s floating living lab will be a launchpad for the development and test bedding of sustainable marine
solutions in Singapore.
annual overheads by over $90 million
starting from 2021, and is working on
further cost reduction. Keppel O&M will
continue to manage its costs carefully
as it navigates industry headwinds.
In line with the Group’s Vision 2030,
Keppel O&M continued to strengthen its
offerings in the growing renewables and
gas-related segments. Keppel O&M secured
new order wins of about $1 billion in 2020,
with offshore renewables and Liquefied
Natural Gas (LNG) solutions making up
65% of new orders.
Key contracts secured in 2020 include a
Jones Act compliant wind installation vessel
for Dominion Energy worth $600 million,
as well as a high-specification Trailing
Suction Hopper Dredger (TSHD) for Manson
Construction, an LNG carrier to Floating
Storage and Regasification Unit conversion,
and module integration for two Floating
Production Storage & Offloading (FPSO) units.
As at end-2020, Keppel O&M’s orderbook
stood at $3.3 billion, of which over 80%
related to renewables and gas solutions.
Despite the operational challenges and
disruptions brought about by COVID-19,
Keppel O&M continued to focus on
the execution of existing projects.
During the year, Keppel O&M delivered
two jackup rigs to Borr Drilling, a TSHD
to Jan De Nul, and an LNG bunkering
vessel to Avenir LNG. Keppel O&M also
Keppel O&M secured
new order wins of about
$1 billion in 2020, with
offshore renewables and
LNG solutions making up
65% of new orders.
completed two FPSO vessel conversion/
modification projects and the fabrication
of a turret.
In Singapore, Keppel O&M repaired
208 vessels in 2020, compared to 288 vessels
in 2019, as fewer vessels were docked at
the yards due to border closures related
to COVID-19. Keppel O&M also completed
27 scrubber and 34 Ballast Water Treatment
Systems (BWTS) retrofit projects in 2020.
Meanwhile, in the Philippines, Keppel Subic
and Keppel Batangas repaired a total
of 98 vessels in 2020 for domestic and
foreign customers, including four BWTS
retrofit projects.
In Brazil, BrasFELS secured its seventh
FPSO-related contract from MODEC.
The yard continued to support its repeat
customer with offshore services on several
FPSO units including FPSO Fluminense and
FPSO Cidade de Niteroi, amongst others.
PERFORMANCE REVIEW
44
OPERATING & FINANCIAL REVIEW
ENERGY & ENVIRONMENT
In the US, work on two dual-fuel containerships
for Pasha Hawaii is ongoing at Keppel O&M’s
yard in Brownsville, Texas. The vessels are
scheduled for delivery in 2021.
Living Lab (FLL). To be completed in 2023, the
FLL will be a launchpad for the development
and test bedding of sustainable marine
solutions in Singapore.
As part of Keppel O&M’s digital transformation,
it has operationalised its AssetCare digital
services solution at the Keppel O&M
Digital Space and Living Lab in Singapore.
In 2020, AssetCare was used to complete
a remote survey from Singapore to certify
that Cantarell III, operating offshore Mexico,
was fit for service. Cantarell III is one of the
industry’s first drilling rigs with Smart Notations
equipped with AssetCare.
In line with Keppel’s Vision 2030 push
towards sustainability, Keppel O&M
announced a partnership with Energy
Market Authority (EMA) to develop
innovative energy solutions in the marine
sector. The partnership aims to develop
energy solutions in the areas of distributed
energy resources, digitalisation and
emerging low carbon alternatives.
In 2020, Keppel O&M and EMA jointly
awarded a research grant to a consortium
led by Envision Digital to pilot Singapore’s
first floating Energy Storage System (ESS).
Keppel O&M will work with the consortium
to deploy a 7.5MW/7.5MWh lithium-ion
battery ESS on Keppel O&M’s Floating
In 2020, Keppel O&M announced that it had
successfully complied with its obligations
under the Deferred Prosecution Agreement
(DPA) entered into with the U.S. Department
of Justice in December 2017, and that the
DPA had accordingly concluded. The DPA
was part of Keppel O&M’s global resolution
with criminal authorities in the US, Brazil
and Singapore.
Floatel International Ltd (Floatel), in which
Keppel O&M holds a 49.92% stake through
a wholly-owned subsidiary, FELS Offshore
Pte Ltd (FELS Offshore), reported in February
2020 that its liquidity was under pressure
and cast significant doubt on Floatel’s ability
to continue as a going concern.
has committed to use reasonable endeavours
to procure the provision and funding of a new
US$100,000,000 Revolving Credit Facility
(RCF) for Floatel, and another member of the
Group may provide credit support for the
RCF in the form of risk participation.
By 12 February 2021, Floatel’s restructuring
plan had received the necessary approvals
from the various stakeholders. At the date
of these financial statements, Floatel’s
restructuring was progressing well and
Keppel was also in advanced discussions
with financial institutions to provide the RCF.
More details on Floatel’s restructuring can
be found on page 74 of this annual report.
Energy Infrastructure
Keppel’s energy infrastructure business
performed well in 2020 despite challenging
market conditions which were further
exacerbated by COVID-19.
On 5 December 2020, Floatel entered into
a Lock-Up Agreement with FELS Offshore,
an ad hoc group of holders of Floatel’s 9%
senior secured 1L Bonds, other consenting
1L Bondholders and certain 2L Bondholders,
which commits the aforementioned
stakeholders to use reasonable endeavours
to implement a comprehensive financial and
corporate restructuring of the Floatel group.
Under this Lock-Up Agreement, FELS Offshore
During the year, Keppel Electric maintained
its position as one of Singapore’s leading
electricity retailers, with a commercial and
industrial (C&I) retail market share of 13%
as at November 2020. It also retained
its position as Singapore’s largest Open
Electricity Market (OEM) electricity provider,
with a market share of 23% as at October
2020. While the C&I retail market was
impacted due to the COVID-19 pandemic,
OFFSHORE & MARINE
STRATEGIC REVIEW
Amidst the global energy transition and
major disruptions facing the oil industry,
Keppel Corporation announced plans to
carry out a comprehensive transformation
of Keppel O&M to better align it to
Keppel’s Vision 2030. The goal of the
restructuring is to create a slimmer
and more competitive Keppel O&M
that is well-placed to support the energy
transition, even as Keppel continues to
explore inorganic options.
Reflecting Keppel’s commitment to
sustainability, Keppel O&M will exit
the offshore rigbuilding business,
after completing the existing rigs under
construction. In line with the Group’s more
disciplined approach towards capital
allocation, Keppel O&M will not undertake
any new project requiring large upfront
capex or without milestone payments.
It will also progressively exit low
Annual Report 2020
value-adding repairs and other activities
with low bottom-line contribution, and
focus on higher value-adding work.
As part of the transformation, Keppel O&M’s
business will be restructured into three parts:
a Rig Co and a Development Co (Dev Co),
which will be transient entities created to
hold its about $2.9 billion worth of completed
and uncompleted rig assets; and most
importantly, an Operating Co (Op Co),
comprising the rest of Keppel O&M, which
will be transformed into an asset-light
and people-light developer and integrator
of offshore energy and infrastructure
assets, focusing on design, engineering
and procurement.
As part of its people-light and asset-light
approach, fabrication work would be
subcontracted to its eco-system of
contractors, including other yards.
Keppel O&M’s yard operations will be
streamlined, including repurposing
or divesting part of its global network
of yards. At the same time, the Op Co
will invest in capability building as it
seizes new opportunities. It will seek
opportunities in floating infrastructure
and infrastructure-like projects that can
deliver predictable streams of cashflow,
including renewable energy projects such
as offshore wind farms and solar farms,
gas solutions, production assets and new
energy solutions such as hydrogen and
tidal energy. It will also collaborate with
other Keppel business units and harness
the synergies of the Group to provide diverse
solutions for sustainable urbanisation, such
as offshore and nearshore infrastructure
and floating data centre parks, and also
explore how Keppel O&M’s offshore
rig technology can be repurposed for
other uses.
With a healthy balance sheet and
undistracted by its stranded rig assets,
the Op Co will seize opportunities in the
energy transition, and is expected to be
self-sustaining, financially independent
and profitable over time.
45
Expected to be completed in 2023, the
solar farm project will have a capacity of
at least 500MW and can generate enough
energy to power over 142,000 average
Australian homes. When operationally ready,
the solar farm will be connected to the
national energy market (NEM) for public
consumption and will also provide renewable
energy through the NEM to businesses seeking
sustainable energy solutions, including
Keppel-related companies in Australia.
Others
2020 was a challenging year for KrisEnergy
as it continued to navigate headwinds
arising from COVID-19, macroeconomic
factors and oil price volatility, while
executing its financial restructuring.
KrisEnergy continued to make progress
since the announcement of its final
restructuring proposal in August 2020.
On 30 December 2020, the Revolving Credit
Facility’s maturity date was extended for an
initial period of six months to 30 June 2021
with a further extension to 30 June 2024
upon successful completion of the
restructuring. KrisEnergy had, as at
February 2021, also obtained the necessary
acceptances from its scheme creditors
and noteholders for its restructuring plans.
As the final stage in the restructuring
process, KrisEnergy will be convening
an Extraordinary General Meeting for
shareholders of the company to approve
the issuance of shares for the proposed
conversion of the company’s debt to equity.
In parallel with the ongoing restructuring,
KrisEnergy also achieved a significant
operational milestone in December 2020
with the commencement of production
at the first of five development wells in
Mini Phase 1A of the Cambodia Block A (CBA)
offshore oil field.
Keppel is a significant direct creditor of
KrisEnergy, arising from its holding of zero
coupon notes due 2024 issued by KrisEnergy,
with detachable warrants, as well as
an up to US$87 million CBA loan facility.
Keppel also holds an indirect interest,
through a bilateral contract with DBS Bank
(DBS), in a claim of about $247 million of
outstanding principal as at 31 December 2020
owed by KrisEnergy to DBS. In addition,
Keppel also has contract assets with carrying
value of about $29 million in relation to a
construction contract for a production barge
for KrisEnergy. As at the date of this report,
Keppel Corporation holds an approximate
40% equity interest in KrisEnergy.
ENVIRONMENT
In April 2020, Keppel Seghers, through
a Keppel-led consortium, secured a
$1.5 billion engineering, procurement and
construction contract for the Tuas Integrated
Keppel Infrastructure secured $2.1 billion of new contracts in 2020, including a contract to build, own and operate a
DCS plant in Bulim Phase 1 of the Jurong Innovation District.
especially during the Circuit Breaker period
in Singapore, the impact was cushioned by
a notable increase in electricity consumption
by Keppel Electric’s sizeable residential base.
Keppel Gas’ performance remained resilient
in 2020 despite COVID-19, as most of
its customers operated in essential or
key industry sectors. In 2020, Keppel Gas
remained focused on providing customised
and diversified solutions such as alternative
pricing structures. This customer-centric
approach enabled the company to grow
its customer base in 2020.
Likewise, Pipenet continued to expand in
2020, securing several long-term service
corridor and utility contracts with new
customers on Jurong Island in Singapore.
Pipenet also successfully completed a
pipe rack construction for JTC Corporation
(JTC). Meanwhile, completion of the
construction of pipelines and ancillary
facilities for JTC on Jurong Island was
delayed to 2H 2021 due to COVID-19.
2020 was an active year for Keppel DHCS.
In Singapore, Keppel DHCS was awarded
a $300 million contract by JTC to build,
own and operate a new 14,000 Refrigeration
Tonnes (RT) district cooling system (DCS)
plant to be located in the upcoming Bulim
Phase 1 of the Jurong Innovation District.
Keppel DHCS’ 30-year operation &
maintenance phase of the contract will
commence in 2022. Deepening its presence
in Singapore, Keppel DHCS also secured
five new long-term retail cooling contracts.
In Thailand, as part of a consortium
with Thai renewable energy company,
BCPG Public Company, and Thai engineering
Keppel Corporation Limited
consultancy, TEAM Consulting Engineering
and Management Public Company,
Keppel DHCS was awarded a contract
for a 18,000 RT DCS plant worth about
$330 million. Keppel DHCS will lead the
20-year operation & maintenance phase
of the contract which is expected to
commence in 2022.
In Europe, MET Group, in which
Keppel Infrastructure has a 20% stake,
expanded its new energy portfolio with
the acquisition of a 42MW wind park in
Bulgaria, as part of its growth strategy
to develop a significant new energy
portfolio in the Central and Eastern
Europe regions.
In response to disruptions from the
COVID-19 pandemic, Keppel Infrastructure
adopted a more agile model for its operations
& maintenance business. During the year,
the teams at the various DCS facilities in
Singapore studied the implementation of
remote monitoring and centralised their
operations where possible. These initiatives
will be progressively rolled out to improve
operational excellence and support the
expansion of the new energy business.
Renewable Energy
During the year, Keppel Renewable Energy
(KRE) entered into an agreement to acquire
a 45% stake in Harlin Solar to develop
a large-scale, greenfield solar farm in
Queensland, Australia. This acquisition
is in line with Keppel’s Vision 2030,
which puts sustainability at the core
of the Group’s strategy, and envisages
the Group growing its renewable
energy portfolio as it contributes
to the accelerating energy transition.
PERFORMANCE REVIEW
46
OPERATING & FINANCIAL REVIEW
ENERGY & ENVIRONMENT
In 2020, significant progress was made on the land reclamation works for the HKIWMF.
Waste Management Facility (IWMF) Phase 1
from the National Environmental Agency.
The IWMF will be Singapore’s first integrated
facility to treat multiple waste streams.
Under the contract, the consortium will design,
construct and commission a 2,900 tonnes
per day (tpd) WTE facility to treat incinerable
waste, as well as a 250 tpd Materials
Recovery Facility (MRF) with advanced
technologies to sort metals, paper, cardboard
and plastics automatically. The MRF will
improve sorting efficiency and improve the
overall domestic recycling rate in Singapore.
In June 2020, Keppel Infrastructure
commenced commercial operations for the
dual-mode Keppel Marina East Desalination
Plant (KMEDP) in Singapore and began
the plant’s 25-year concession period.
The successful completion of KMEDP
and commencement of operations despite
COVID-19 attests to Keppel Infrastructure’s
execution excellence, resilience and Can Do
spirit. The plant can produce up to 137,000m3
of fresh drinking water daily from either
seawater or water from the Marina Reservoir,
depending on the prevailing weather
conditions. During rainy weather, the plant
will utilise rainwater collected in the reservoir
to produce potable water, which requires
less energy and fewer steps in the treatment
process as compared to desalination.
In China, Keppel Seghers maintained
its track record as a leading imported
WTE technology solutions provider.
In 2020, it successfully commissioned
three plants, including Baoan III WTE plant
in Shenzhen, one of the world’s largest
WTE facilities. Keppel Seghers is
currently executing another three
projects in China.
In Australia, the WTE project in Kwinana
achieved good progress on the engineering
design work and delivery of key equipment
despite disruptions due to COVID-19.
Completion of the project is expected
in 2022.
In Hong Kong, engineering design work on
the HKIWMF has progressed well. Along with
significant progress in reclamation works,
prefabrication of the plant’s process modules
commenced in 2020.
In response to COVID-19, Keppel’s
environmental infrastructure operations
& maintenance teams effectively
implemented the necessary business
contingency plans and safe management
measures to ensure continuity of the
essential services it provides. These
include split team arrangements and
extra temporary living arrangements for
its workers. Through the diligence and
hard work of the local and overseas teams,
Keppel Infrastructure delivered uninterrupted
operations safely across its operations
in 2020.
Annual Report 2020
47
With its wide range of technical expertise in the energy sector,
Keppel is building new muscles and developing solutions to
support the energy transition.
MARKET REVIEW & OUTLOOK
ENERGY
In 2020, travel restrictions and
government-imposed lockdowns to
curb the spread of the COVID-19 virus
had a considerable impact on global energy
demand, particularly for oil, which experienced
a sharp decline in demand. The global
transition to cleaner sources of fuel was
further accelerated as governments and
oil majors fast-tracked plans in the shift
towards gas and renewables.
During the year, global gas demand
remained relatively resilient, declining
by about 2.5% according to the
International Energy Agency (IEA).
Global gas prices, however, experienced
significant volatility between January
and April 2020. According to IEA, following
a series of OPEC production cuts, rebound
in global demand for oil, as well as improved
market optimism, gas demand and prices
have since recovered as of early-2021,
as colder winters increased demand and
tightened supply. Looking further ahead,
DNV GL estimates that natural gas, as a
transition fuel, is projected to overtake oil
to become the world’s largest energy
source by 2026.
Demand for renewable energy on the other
hand, saw a small overall increase of 1% in
2020 on the back of growing international
concerns about climate change. In 2020,
net installed renewable capacity grew
by nearly 4% globally to reach 200GW,
underpinned by increases in China and
the US.
Amidst the hastening energy transition,
the shares of gas, renewables and new
energy solutions in the energy mix are
expected to continue growing. With its
wide range of technical expertise in the
energy sector, Keppel is building new
muscles and developing solutions to
support the energy transition.
Offshore Energy & Renewables
In 2020, six new floating production units
were awarded, compared to 17 units in
2019. While Energy Maritime Associates
(EMA) expects further project delays in
2021, cancellations of production units
are not expected. Looking ahead,
EMA expects total capital spending
on floating production systems to reach
US$83 billion by 2025, with Brazil leading
the way.
Keppel Corporation Limited
In the LNG space, Wood Mackenzie
estimates that global LNG demand would
continue to grow by about 4% per annum
from now till 2030 and believes that
continuing improvement in the macro
environment and gas prices would help
to clear up the backlog of final investment
decisions (FIDs) for several major liquefaction
projects. Despite delays in FIDs for LNG
projects, Keppel O&M continues to receive
interest for its Floating Liquefied Natural Gas
(FLNG) conversion solution, following the
success of Hilli Episeyo, the world’s
first converted FLNG vessel.
Meanwhile, offshore wind is expected
to be a strong contributor to post-COVID
economic recovery worldwide. The Global
Wind Energy Council estimates that
over 205GW of new offshore wind
capacity would be added globally
through to 2030, led by Asia Pacific
and Europe. In a separate report,
the American Wind Energy Association
estimates that the US market alone
has the potential to develop about
86GW of offshore wind projects by 2050,
of which some 14 developments, with
a total of over 9GW, are expected to be
operational by 2026.
Keppel O&M, with its wide-ranging design
and development capabilities for solutions
such as wind turbine foundations, substation
platforms and installation and support
vessels, is well-placed to support the
global offshore wind market.
In 2021, IEA expects 196GW of renewable
capacity additions, an increase of 18%
from 2020’s additions. In the solar PV sector,
IEA anticipates nearly 117GW of installations
globally in 2021, about 10% higher than
2020’s installations.
In response to the growing opportunities,
KRE will continue to focus on the
development of utility-scale wind and
solar projects, as well as integrating
state-of-the-art technology, energy storage
systems and digital platforms for the
efficient management of renewables assets.
KRE will collaborate with other Keppel
business units and harness the Group’s
capabilities to develop, own and operate
renewable energy infrastructure in a
cost-efficient, safe and reliable manner.
It will also work with the Group’s asset
management platforms, including the
Keppel Asia Infrastructure Fund, to attract
third-party funding for its projects.
Gas & Power
In Singapore, the government has launched
a Request for Proposal for the importation
and sale of re-gasified LNG in Singapore.
This presents an opportunity for Keppel Gas
to diversify its LNG source. Keppel Gas will
KRE will collaborate with other Keppel business units and harness the technical and commercial capabilities across
the Group to develop, own and operate renewable energy infrastructure.
PERFORMANCE REVIEW
48
OPERATING & FINANCIAL REVIEW
ENERGY & ENVIRONMENT
With its advanced technology and strong execution
track record, Keppel is well-positioned to support
governments and industries with its sustainable
environmental solutions.
the world have become more proactive
in sourcing sustainable waste management
and water solutions amidst fast-depleting
landfill capacities, rising public awareness
of environmental issues and increased
water demand. There has also been increasing
interest by various governments to adopt
WTE technology as the preferred long-term
waste management solution. More countries
are also exploring water recycling solutions
to cater to the increasing water demand
from their growing populations.
In China, sustainable waste management
remains a focus area of the government.
With over 100 WTE facilities expected
to be built in the next few years, China
will continue to be a focus market for
Keppel Seghers.
As WTE facilities rapidly gain acceptance
as a long-term cost-effective solution
for municipal waste management, major
cities across Southeast Asia are potential
markets for Keppel Seghers. Leveraging
its track record and technical expertise,
Keppel Seghers will also continue to explore
opportunities in Australia, the UK and Europe.
Looking ahead, Keppel Seghers will
continue to focus on enhancing its
technology expertise and sharpening
its operating capabilities. It will also work
with Keppel Capital to develop and invest
in infrastructure projects in line with
Keppel’s Vision 2030 and grow recurring
income for the Group.
waste management and sanitation solutions.
The pandemic resulted in the increased
generation of a wide variety of medical
waste such as masks, gloves and various
protective equipment. Lockdowns across the
world also increased the delivery of products,
groceries and food, leading to a rise in
disposable packaging and municipal waste.
The focus on climate change and
environmental degradation have also
increased in importance worldwide. The
continuing global mindset shift towards
zero waste and a circular economy model
will continue to drive policies toward a
greater focus on sustainable and integrated
waste management solutions.
With its advanced technology and strong
execution track record, Keppel Seghers is
well-positioned to support governments
and industries with its sustainable
environmental solutions.
The post COVID-19 world will continue
to urbanise, presenting huge opportunities
for Keppel Seghers. Governments around
continue to deepen its collaboration with
industry partners to enhance its ability to
procure highly competitive gas supplies from
the global market, and to add value through
innovative gas solutions for its customers.
In the wholesale energy market, Singapore’s
average electricity demand fell 2.5% year-on-
year, compared to 2019’s moderately
positive growth rate, mainly due to the
economic downturn and reduced electricity
consumption on the back of COVID-19.
This lower offtake is expected to continue
in the near to medium term.
In Singapore, the ongoing development of
the Forward Capacity Market, which will
introduce a structure for advance capacity
payments, is set to alter the dynamics
of the current energy-only market where
generation companies are remunerated
based on the electricity that they produce.
The changes in Singapore’s energy market
presents both challenges and opportunities
for Keppel Electric. Keppel Electric will
continue to optimise its power portfolio and
stay ahead in the rapidly changing market
environment. Looking ahead, Keppel Electric
will improve the customer experience and
provide new, sustainable bundled products.
District Cooling
Similarly, the DCS sector was impacted
by COVID-19, with Singapore’s Circuit
Breaker measures resulting in short-term
load reduction. Nevertheless, with new
customers signed on during the year,
Keppel DHCS continued to grow at a
compounded annual growth rate of 7.2%
since 2010. Keppel DHCS will continue to
pursue growth opportunities in Asia to
expand its geographical reach.
Keppel Infrastructure’s robust track
record across gas, power, DCS and
pipeline corridor services places it in
good stead to seize opportunities in
its existing markets, as well as adjacent
new energy spaces. Focusing on
new energy, Keppel Infrastructure will
continue to collaborate with MET Group,
leveraging its extensive presence in Europe
to jointly pursue investment opportunities.
ENVIRONMENT
The COVID-19 pandemic has altered
waste generation dynamics globally,
driving the need for nations to relook at
Annual Report 2020
As countries develop and urbanise, governments have become more proactive in sourcing water solutions, such as
those provided by Keppel, to support the increased demand for water.
PERFORMANCE REVIEW
OPERATING &
FINANCIAL REVIEW
URBAN
DEVELOPMENT
WE PROVIDE
COMPELLING
URBAN SOLUTIONS
INCLUDING VIBRANT
HOMES, OFFICES, AS
WELL AS COMMERCIAL
AND INTEGRATED
DEVELOPMENTS.
EARNINGS HIGHLIGHTS ($ million)
Revenue
EBITDA
Operating Profit
Profit before Tax
Net Profit
Average Headcount (Number)
Manpower Cost
2020
1,275
645
605
720
438
2,576
166
2019
1,336
545
507
676
483
2,792
176
2018
1,340
1,083
1,050
1,201
950
3,059
204
MAJOR DEVELOPMENTS IN 2020
FOCUS FOR 2021/2022
Keppel Land sold about 3,340 homes in
Asia, mainly in Singapore, China and Vietnam.
Keppel Land announced asset divestments
totalling about $1.3 billion for the whole of
2020, spanning Singapore, China, Vietnam
and the UK.
Keppel Land announced the acquisition
of a stake in a co-living solutions provider,
as well as new residential projects in
China and India.
SSTEC sold two residential land plots
and two industrial land plots in the
Sino-Singapore Tianjin Eco-City.
Accelerate asset monetisation at Keppel Land,
unlocking capital that can be reinvested for
growth and higher returns across the Group.
Invest in and develop expertise in property
technology and new real estate solutions.
Invest strategically and selectively in
new projects across Asia.
Continue to seek new opportunities in
master development, and develop Saigon
Sports City in Vietnam.
Continue to develop the Sino-Singapore
Tianjin Eco-City in China as a model for
sustainable urbanisation.
Deepen collaboration across business units
to develop better and smarter solutions, as
well as with Keppel Capital to tap third-party
funds for growth.
Keppel Corporation Limited
PERFORMANCE REVIEW
50
OPERATING & FINANCIAL REVIEW
URBAN DEVELOPMENT
KEPPEL LAND’S TOTAL ASSET DISTRIBUTION
BY COUNTRY (%)
as at 31 December 2020
Singapore
China
Vietnam
Indonesia
Others
Total
33.8
46.0
9.2
5.4
5.6
$14.8 billion
100.0
KEPPEL LAND’S TOTAL ASSET DISTRIBUTION
BY SEGMENT (%)
as at 31 December 2020
Property Trading
Property Investments
Others
Total
$14.8 billion
100.0
48.0
44.5
7.5
Annual Report 2020
EARNINGS REVIEW
The Urban Development segment’s
business activities span property trading
and investment as well as end-to-end
master development. The segment includes
Keppel Land and Keppel Urban Solutions, as
well as the Group’s investment in associated
company, the Sino-Singapore Tianjin Eco-City
Investment and Development Co., Ltd (SSTEC).
In FY 2020, revenue from Urban Development
decreased by $61 million to $1,275 million
mainly due to lower revenue generated
from hospitality and commercial properties
and lower revenue from property trading
projects in Singapore and Vietnam. These
were partly offset by higher revenue from
property trading projects in China.
Net profit from the segment decreased
by $45 million to $438 million for
FY 2020, mainly due to the absence of
tax write-backs as compared to FY 2019
and lower contribution from Singapore
and Vietnam property trading projects.
These were partly offset by higher fair
value gains from investment properties,
higher contribution from property trading
projects in China, as well as higher
contribution from SSTEC.
OPERATING REVIEW
PROPERTY DEVELOPMENT
In 2020, Keppel Land continued to unlock
capital to seek new growth opportunities in
line with the Group’s Vision 2030 roadmap.
During the year, Keppel Land announced
six asset divestments worth about
$1.3 billion across Singapore, China,
Vietnam and the UK.
In Singapore, the announced divestment
of Keppel Bay Tower (KBT) to Keppel REIT
is a prime example of how Keppel is
able to create and extract value across
the lifespan of an asset through the
Group’s value creation eco-system.
Over the holding period of about 20 years,
the total profit from KBT, including the
total capital gains and operating profit
attributable to Keppel Corporation and
Keppel Land, was about $426 million.
Following the divestment, the Group will
continue to derive fees from rendering
property management services, as well
as benefit from rental income and any
potential capital value appreciation in
KBT through Keppel’s stake in Keppel REIT.
During the year, Keppel Land expanded its
portfolio with the announced acquisitions
of stakes in two residential projects in China
and India. Focused on generating higher
returns, Keppel Land will continue to turn its
assets proactively through en-bloc sales and
divestments, while investing strategically
to capture growth opportunities as well as
build new capabilities.
Keppel Land continued to create new operating
platforms and adjacent services to complement
its core real estate business. In 2020,
Keppel Land acquired a stake in Cove,
one of Southeast Asia’s fastest growing
co-living companies. It is also collaborating
with Keppel Capital’s 50% owned US-based
senior living operator, Watermark Retirement
Communities, to acquire new knowledge
and insights into the sector.
With a pipeline of about 54,000 residential
units and a total commercial portfolio of
1.7 million square metres (sm) of gross floor
area (GFA) in key Asian cities, including
commercial properties under development,
Keppel Land is well-positioned to capitalise
on the long-term demand for homes, office
and retail spaces in its target markets.
China
Despite the COVID-19 pandemic, home buyer
interest remained strong in China. During
the year, Keppel Land sold about 2,110 units,
compared to about 3,400 units sold in 2019,
mainly due to fewer sales launches in 2020.
The drop in home sales year-on-year (yoy)
was also because Keppel Land had brought
forward some of 2020’s pipeline of project
launches to 2019, riding on the positive sales
momentum in that year.
Home sales in 2020 were mainly from
Waterfront Residences, Park Avenue Heights
and Seasons Residences in Wuxi, Seasons
Residences in Shanghai, City Park in Chengdu,
as well as China Chic in Nanjing. Despite
COVID-19, Keppel Land sold 1,335 units in
Wuxi in 2020, 29% higher yoy, riding on positive
take-up from three project launches in Wuxi.
Keppel Land continued to focus on the
Jing-Jin-Ji region, Yangtze River Delta,
Greater Bay Area and the Chengdu metropolis
to capture opportunities. During the year,
Keppel Land deepened its presence in
Shanghai’s residential market with the
acquisition of a 15% stake in a residential
project in Jiading District. The project launched
360 units in March 2021, and sold 90% of
the released units on the day of launch.
Following the lifting of lockdown measures
in various Chinese cities, the performance
of Keppel Land’s commercial assets quickly
stabilised due to their good locations and on
the back of overall economic growth. In 2020,
Keppel Land completed asset enhancement
initiatives (AEI) at The Kube in Zhangjiang,
Shanghai and Westmin Plaza in Guangzhou.
Both assets are generating higher rental
income following the completion of the AEI.
Singapore
As showflats closed due to the Circuit Breaker
in Singapore, Keppel Land introduced virtual
show galleries and digitalised the sales process.
Keppel Land also leveraged technology to
51
RESIDENTIAL LANDBANK
54,000
High-quality homes across
key Asian cities.
COMMERCIAL PORTFOLIO
1.7m sm
In total gross floor area, of which
half is under development.
During the year, Keppel Land announced
6 asset divestments worth about $1.3 billion
across Singapore, China, Vietnam and the UK.
safeguard office tenants’ health and well-being
during the pandemic, such as through the
implementation of facial recognition for
contactless access, mobile application access,
as well as installing Ultraviolet-C lights for air
sterilisation, amongst other measures.
In 2020, Keppel Land sold about 370 residential
units in Singapore, higher than the 250 units
sold in 2019. These were mainly from The
Garden Residences, which sold about 330 units
during the year. As at end-2020, the project
was 93% sold and is expected to be completed
in 2021. Also during the year, 38 units were
sold at Reflections and Corals at Keppel Bay.
The two projects at Keppel Bay were 97%
and 87% sold respectively as at end-2020.
In January 2021, Keppel Land, together with
Mapletree Investments, launched The Reef at
King’s Dock. The project saw strong take-up with
over 90% of the 300 units released sold over the
launch weekend. The project will be developed
into a luxury, waterfront living development
and is expected to be completed by 2025.
Keppel Land is also developing 19 Nassim into
a luxurious 101-unit condominium which will
be completed in 2023. Meanwhile, plans for
Keppel Bay Plot 6, a residential site located
on Keppel Island, are currently under review.
The redevelopment of Keppel Towers into a
full commercial development is currently in
progress. Meanwhile, Keppel Land’s retail
mall i12 Katong, which closed in 2020 for
major asset enhancement works, is expected
to re-open in 2H 2021. The mall will be a
showpiece for new retail concepts.
In November 2020, Keppel Land and Sustainable
Singapore Gallery, managed by PUB, launched
a public outreach programme, “R.I.S.E. to the
Challenge”, to raise awareness on rising sea
levels and climate action. The programme
comprises a series of exhibitions and workshops
to be conducted over the next two years.
In 2020, Keppel Land received international
recognition at the Global Real Estate
Sustainability Benchmark 2020. It also received
the Building and Construction Authority’s (BCA)
Quality Excellence Award - Quality Champion
(Platinum) for the second consecutive year,
and several accolades for residential projects
in Singapore including The Reef at King’s Dock
and 19 Nassim. Notably, in December 2020,
Upon completion of the asset enhancement works in 2021, Keppel Land’s retail mall i12 Katong will be a showpiece for new retail concepts.
Keppel Corporation Limited
PERFORMANCE REVIEW
52
OPERATING & FINANCIAL REVIEW
URBAN DEVELOPMENT
Keppel Land’s residential development, Celesta Rise in HCMC, Vietnam, sold almost all of the 519 launched units within a month.
KBT became the first commercial building in
Singapore to receive the Green Mark Platinum
(Zero Energy) certification from BCA.
Vietnam
Due to slower approval of new project
launches, Keppel Land sold about 550 units
in 2020, compared to 950 units in 2019. 2020’s
home sales were mainly from Celesta Rise,
as well as Narra Residences, The View and
The Infiniti, all of which are in Ho Chi Minh City
(HCMC). As at end-2020, Narra Residences
and The Infiniti were 88% and 95% sold
respectively, while The View was fully sold.
Notwithstanding the slower approval of
new launches, the demand for quality homes
remained strong in Vietnam. In November
2020, Keppel Land launched 519 units of
Celesta Rise and almost all the launched
units were sold out within a month.
In December 2020, Keppel Land,
in collaboration with Keppel Capital,
launched the US$600 million Keppel
Vietnam Fund, a Vietnam-focused real
estate fund, and achieved a first closing
of US$400 million. The fund seeks to invest
alongside Keppel Land in real estate projects,
including residential and commercial properties,
as well as mixed-use projects and townships
in Vietnam, with a focus on HCMC and Hanoi.
Others
In Indonesia, Keppel Land sold 115 units in
West Vista, slightly more than the 97 units
Annual Report 2020
sold in 2019. Meanwhile, the final phase of
The Riviera at Puri was launched with most
of the released units sold as at end-2020.
Occupancy of co-living units at West Vista
remained stable at about 80% in 2020. In the
commercial sector, Keppel Land commenced
operations of KLOUD, its serviced co-office
platform, at IFC Tower 2 in Jakarta.
In India, sales at Provident Park Square
in Bangalore continued at a steady pace,
with about 67% of launched units sold as
at end-2020. Keppel Land and its partner
Rustomjee Group have embarked on
developing the residential and supporting
retail units in the 51.4-hectare (ha) integrated
township development in Thane, Mumbai.
In partnership with Puravankara, Keppel Land
is developing its first commercial development
in Bangalore, which is expected to be completed
in 2025. During the year, Smartworks, one of
India’s leading home-grown flexible space
operators, in which Keppel Land is invested,
achieved a footprint of 2.3 million sf and
47,000 desks across major cities in India,
and continues to scale up steadily.
Keppel Land remains on the lookout for
investment opportunities that dovetail with
Keppel’s Vision 2030 goals. It will continue to
deepen collaboration with other Keppel business
units, focus on assets that provide more
recurrent and sustainable income streams, as
well as leverage third-party funds through Keppel
Capital to expand its capital base for growth.
URBAN SOLUTIONS
Keppel Urban Solutions (KUS) is an
end-to-end master developer of smart,
sustainable urban townships that leverages
the Group’s capabilities and strong track
record in the planning and development
of large-scale projects in Asia Pacific.
In Vietnam, the development of Saigon
Sports City (SSC), a collaboration between
KUS and Keppel Land, continued to progress
during the year. SSC is poised to be a core
township within the HCMC New Innovation
District that will see the amalgamation of
Districts 2, 9 and Thu Duc into a vibrant
and environmentally resilient district.
As an integrated sports-centric township,
SSC will offer innovative and sustainable
urban solutions to create a high-quality live,
work and play environment.
In China, KUS is working with Keppel Land
China to transform the 166-ha precinct in
the Northern District of the Sino-Singapore
Tianjin Eco-City into a model for smart and
environmentally-responsible urban living.
KUS is well-positioned to provide and
deliver integrated digital and physical
next-generation urban infrastructure solutions,
in line with the sustainable development
goals set out in China’s 14th Five-Year Plan
and 2060 carbon neutrality goals.
KUS is currently developing its proprietary
Keppel Smart City Operating System (KOS),
which will serve as a digital platform for the
development and operation of large-scale
townships. When completed, KOS can
harness the power of data to provide a
more efficient environment for the operation
and maintenance of the Group’s assets
and developments.
SINO-SINGAPORE TIANJIN ECO-CITY
Keppel leads the Singapore consortium,
which works with its Chinese partner
to guide the 50-50 joint venture (JV),
SSTEC, in its role as master developer
of the Sino-Singapore Tianjin Eco-City
(Eco-City).
Over the years, the Eco-City has evolved
into a vibrant community with diverse
amenities including 20 schools with
more than 15,000 students, neighbourhood
centres, libraries, a hospital and three health
services centres, among others. To date,
120,000 people1 live in the Eco-City which
has over 10,000 registered companies1.
In 2020, the Eco-City continued to gain
traction as a leading smart Eco-City.
The Eco-City continued to enhance its
smart developments and achieved full
5G coverage across its built-up areas.
Despite a soft property market in Tianjin
in 2020, the Eco-City remained an attractive
residential township. A total of about 4,000
homes were sold in 2020, of which about
290 homes were from projects developed
by SSTEC.
Reflecting the market’s continued confidence
in the Eco-City’s future growth, SSTEC
successfully sold two residential land plots
in the Start-Up Area and the Central District,
as well as two industrial plots in the Northern
District in 2020. SSTEC is currently focusing
on developing the future city centre in the
Central District of the Eco-City.
To further the Eco-City’s goal of promoting
sustainable urbanisation, the China-Singapore
Tianjin Eco-City Administrative Committee
(ECAC), the Keppel Group, SSTEC and
other Chinese partners will jointly establish
the Global Institute for Sustainable Urban
Development (Sino-Singapore Tianjin Eco-City)
as a platform to publicise, promote and
export the Eco-City’s development experience
to various Chinese cities and also other
countries along the Belt and Road.
During the year, various business units in
the Keppel Group continued to contribute
towards the Eco-City’s development.
In 2020, Keppel Land sold 150 homes in
the Eco-City. Since 2008, Keppel Land has
launched a total of about 5,100 homes in
the Eco-City, of which about 95% have been
sold. Meanwhile, Phase 1 of Seasons City,
Keppel Land’s commercial development
in the Eco-City, is on track for completion
in 2021.
During the year, Keppel Land handed over
Seasons Heights, the Eco-City’s first smart
53
estate, to homeowners. Seasons Heights
is a pilot development under the Guidelines
for the Construction of Smart Residential
Areas in Tianjin Eco-City, which were jointly
established by the ECAC, Keppel Land, SSTEC
and other Tianjin partners, and includes some
30 smart technology applications, such as
a 5G contactless thermal scanner and
smart waste sorting stations. Meanwhile,
Keppel Telecommunications & Transportation’s
logistics distribution centre in the Eco-City
and the Sino-Singapore Tianjin Eco-City
Water Reclamation Centre, a JV between
Keppel Infrastructure and Tianjin Eco-City
Investment and Development Co., Ltd,
continued to operate well, despite the
disruptions caused by COVID-19.
MARKET REVIEW & OUTLOOK
Rapid urbanisation and a fast-growing
middle class continue to drive demand
for high-quality urban living solutions
in many Asian cities. In addition, rapidly
ageing populations are also expected
to drive demand for customised urban
living solutions. Meanwhile, new trends
in co-living and co-working are being
fuelled by accelerated digitalisation,
changing demographics as well as the
shift towards work-from-home and other
flexible working arrangements accelerated
by the COVID-19 pandemic.
As a Group, Keppel will continue to position
itself to seize opportunities arising from
this changing landscape by leveraging
its sizeable property portfolio and the
diverse strengths of the Group to develop
integrated, smart urban solutions as
well as launch new real estate concepts.
Keppel will further enhance its solutions
offerings through continual investments
in technology and to hone new capabilities
for co-living, co-working and senior living,
among others.
CHINA
In China, Gross Domestic Product (GDP)
growth in 2020 was 2.3%, and the Chinese
government has targeted GDP growth
of over 6% for 2021. During the year,
China’s residential market saw gradual
improvements, with total transacted value
and volume increasing by 10.8% and 3.2%
yoy respectively. There was also continued
demand for homes in Tier-2 cities such
as Nanjing, Wuxi and Chengdu where
Keppel Land is present.
To rein in a potential residential bubble,
the Chinese government introduced
control measures for specific cities
where there were signs of overheating,
Keppel Land’s Seasons Heights, which was handed over to homeowners in 2020, is the Eco-City’s first smart estate.
1 These figures include the Central Fishing Port
and Tourism District.
Keppel Corporation Limited
PERFORMANCE REVIEW
54
OPERATING & FINANCIAL REVIEW
URBAN DEVELOPMENT
Keppel will focus on building better and smarter capabilities in the areas of property
technology and new real estate solutions to offer a full suite of urban living solutions
that are underpinned by technology.
selling price (ASP) in the high-end segment
decreased by 1% yoy, while ASP in the
mid-end segment increased 5% yoy.
In the commercial space, Grade A office
rent fell 5.3% yoy, while occupancy rate
reduced to about 82% due to new office
supply and the impact of COVID-19.
2021. Notwithstanding the headwinds,
the long-term outlook for office
and residential markets of key Indian
cities remains positive, as they are
backed by sound fundamentals
including rapid urbanisation and
rising household incomes.
OTHERS
In Indonesia, 2020 GDP contracted by
2.07% yoy. However, ADB expects this
to turn into a growth of 5.3% in 2021.
In the short term, JLL expects the Grade A
office and high-rise apartment markets
to continue facing headwinds due to
oversupply. Conversely, demand for
landed housing is expected to remain
resilient due to strong fundamentals.
In India, ADB forecasts real GDP to
contract by 9% in 2020. This is expected
to recover to a forecasted 8% growth in
To meet the emerging trends and
differentiate itself, Keppel will focus on
building better and smarter capabilities
in the areas of property technology and
new real estate solutions to offer a full
suite of urban living solutions that are
underpinned by technology.
Leveraging the Group’s strengths,
Keppel Land, KUS and SSTEC will
continue to collaborate with one another,
as well as with other business units, to
develop compelling urban solutions that
contribute to sustainable urbanisation.
Residents at Cove’s co-living properties in Singapore.
Keppel is building new capabilities to tap the rising trends in co-living and co-working which are fuelled by accelerated
digitalisation and changing demographics.
and also introduced the “Three Red Lines”
to tighten developers’ access to bank loans.
While the measures have had no immediate
impact on Keppel’s operations in China
during the year, the Group will continue
to monitor the developments closely.
Meanwhile, China’s commercial sector
as a whole continued to draw investments,
although pressure on occupancies and
rental growth in Tier-1 cities persists.
SINGAPORE
Singapore’s residential property remained
resilient, despite its economy contracting
by 5.4% in 2020 due to COVID-19. According
to the Urban Redevelopment Authority,
9,982 homes were sold in 2020, compared
to 9,912 units sold in 2019. Meanwhile,
the 2020 private property price index rose
2.2% yoy.
Against the backdrop of COVID-19,
CBRE estimated that Grade A (Core CBD)
office rents in 2020 declined by 10% yoy,
reversing gains seen in 2019. Weaker demand
also led to a higher vacancy rate of 6.2% in
2020, a 2% increase yoy. This was mitigated
by improved demand from the technology
and insurance sectors in 2020. Singapore
remains an attractive destination for
companies looking to operate in the region,
even as companies explore flexible working
arrangements and review their office
requirements following COVID-19.
Amidst the challenging macro environment,
Keppel Land will focus on executing its
current residential and commercial projects
under development, while continuing to
look out for good business opportunities
in Singapore.
VIETNAM
In Vietnam, GDP rose by about 2.9% yoy
in 2020, and the Asian Development Bank
(ADB) expects Vietnam’s GDP to grow
by 6.3% in 2021. Despite COVID-19,
the residential market in HCMC remained
strong, underpinned by economic growth,
stable foreign investments, high urbanisation
rate and a growing middle class.
According to CBRE Vietnam, over 17,000
units were launched in HCMC in 2020,
as compared to 27,000 in 2019, with an
absorption rate of about 88%. Average
Annual Report 2020
PERFORMANCE REVIEW
OPERATING &
FINANCIAL REVIEW
CONNECTIVITY
WE CONNECT PEOPLE
AND BUSINESSES IN
THE DIGITAL ECONOMY.
EARNINGS HIGHLIGHTS ($ million)
Revenue
EBITDA
Operating Profit
Profit before Tax
Net Profit
Average Headcount (Number)
Manpower Cost
2020
1,220
259
46
29
13
2,446
204
2019
1,128
385
210
196
136
1,990
193
2018
182
(5)
(27)
5
–
1,490
67
MAJOR DEVELOPMENTS IN 2020
FOCUS FOR 2021/2022
Embarked on a new data centre development
in Singapore with SPH, as well as a
greenfield data centre in Huizhou, China.
Continue to expand portfolio of quality
data centre assets and provide higher value
services to customers.
M1 secured one of Singapore’s 5G
standalone licences jointly with StarHub,
and unveiled its new brand identity and
digital connectivity platform.
Conducted strategic review of logistics
business, in line with sharpened focus
under Vision 2030. In 1Q 2021, further
announced plans to divest the logistics
business to a third party.
Continue to explore innovative solutions to
reduce the carbon footprint of data centres.
Continue to drive M1’s transformation as
a digital and bespoke communications
solution provider and the 5G network rollout.
Work towards divestment of the
logistics business.
Deepen collaboration across business
units to develop better and smarter
solutions, as well as with Keppel Capital
to tap third-party funds for growth.
Keppel Corporation Limited
PERFORMANCE REVIEW
56
OPERATING & FINANCIAL REVIEW
CONNECTIVITY
Alpha DC Fund entered into the fast-growing data centre market in China with the development of a greenfield data centre in Tonghu Smart City in Huizhou, Guangdong.
Digitalisation, accelerated by COVID-19 and flexible
working arrangements, continues to drive demand
for data centres.
EARNINGS REVIEW
The Connectivity segment includes
Keppel Telecommunications & Transportation
(Keppel T&T) and M1, whose business
activities span data centres and logistics,
as well as telecommunications.
In 2020, Connectivity recorded a revenue
of $1.2 billion, up $92 million from
$1.1 billion in 2019, mainly due to higher
revenue from M1 which was consolidated
from March 2019. This was partly offset by
lower contribution from Keppel Logistics
following the divestment of some Chinese
logistics assets in November 2019.
The segment turned in a net profit of
$13 million for 2020, as compared to
$136 million for 2019, mainly due to the
absence of the fair value gain recognised
in 2019 from the remeasurement of the
previously held interest in M1 at acquisition
date, as well as lower contribution from M1.
These were partly offset by gain from the
disposal of interest in Business Online
Public Company Limited, and lower losses
from the logistics business.
OPERATING REVIEW
DATA CENTRES
In 2020, Keppel Data Centres Holding
(KDCH) continued to pursue expansion
opportunities in target markets, while
enhancing its capabilities and service
offerings to meet the growing demand
for big data and connectivity.
During the year, KDCH and Alpha Data
Centre Fund (Alpha DC Fund) expanded
its portfolio with two new data centres
in Singapore and China. Including these,
KDCH has five data centres under
development across Singapore, China,
Malaysia, Indonesia and Australia. As at
end-2020, the Group had a portfolio of
28 data centres across 19 cities in Asia
Pacific and Europe, including data centres
under development.
Despite COVID-19, KDCH’s operations
remained stable. Data centres are
classified as essential services in
Singapore, and the Group’s data centres
around the world continued operating
throughout the pandemic. In 2020,
Annual Report 2020
KDCH continued to receive enquiries from
customers on new data centre capacity.
Digitalisation, accelerated by COVID-19
and flexible working arrangements, continues
to drive demand for data centres.
Building on the success of Alpha DC Fund,
Keppel launched the US$1 billion
Keppel Data Centre Fund II (KDC Fund II)
and achieved a first close of more than
US$500 million. KDC Fund II will focus
on making strategic investments in
the fast-growing data centre sector in
Asia Pacific and Europe.
As part of Keppel’s commitment to
sustainability, the Group is actively taking
steps to reduce the carbon footprint of its
data centres. During the year, Keppel T&T,
in collaboration with other business units
in the Group, entered into several strategic
partnerships with external parties to
explore innovative new solutions including
a cold energy harnessing facility and a
hydrogen powered tri-generation plant
for data centres in Singapore.
With the support of the National Research
Foundation, Keppel T&T also signed a
memorandum of understanding (MOU)
with other industry leaders namely Chevron,
Pan-United and Surbana Jurong, to harness
their combined resources and jointly develop
the first end-to-end decarbonisation process
in Singapore. The collaboration aims to
accelerate the development of a highly
integrated clean and energy efficient
carbon capture, utilisation & sequestration
system that can help advance a low-carbon
economy and be applied to potential
commercial developments in Singapore.
phases of flight, including operations
in the designated drone-fly zones.
This continues Singapore’s efforts to
build an open and inclusive 5G innovative
eco-system around the use-cases of port
operations, and incident management
and response.
57
buyers. Keppel is keeping its options open and
may decide to divest the logistics business
completely or retain a minority stake.
During the year, COVID-19 presented
growth opportunities for Keppel Logistics
as work-from-home arrangements and other
pandemic-related curbs increased demand
for e-commerce and urban logistics. Keppel
Logistics ramped up its storage capacity to
support the increase in customers’ warehousing
needs. In 2020, warehousing occupancy
in Singapore averaged about 80%.
UrbanFox, an omnichannel logistics and
channel management solutions brand,
also benefitted from the surge in e-commerce
on the back of COVID-19. In 2020, the
company tripled its Gross Merchandise
Value in Singapore and doubled total
last mile deliveries as compared to 2019.
UrbanFox also continued to expand its
overseas operations in Vietnam and
Malaysia in 2020, and currently handles
70 brands across the two countries.
M1 also announced a partnership with
IBM, IMDA and Samsung to conduct
Singapore’s first 5G Industry 4.0 trial
to demonstrate the transformative
impact of 5G for enterprises across
various sectors. M1 is also collaborating
with DBS to jointly develop digital
banking solutions and provide bundled
services to large corporates and
small-to-medium enterprises.
In January 2021, M1, Continental
Automotive Singapore and JTC
Corporation jointly announced a
collaboration to conduct autonomous
transport systems 5G SA trials for
Autonomous Mobile Robots operations.
LOGISTICS
As part of the more focused and disciplined
approach towards capital allocation under
Vision 2030, Keppel announced plans to
divest its third-party logistics business in
Southeast Asia (SEA) and Australia, as well
as its channel management business to a
third party who may be better able to
scale up the business. Rothschild & Co
was appointed as Keppel T&T’s financial
adviser and has been engaging potential
In Vietnam, Indo-Trans Keppel Logistics
consolidated its operations into nine
warehouses from 10 previously.
In Australia, the occupancy rate of
its warehouse in Rochedale, Brisbane
increased to 85% as at end-2020.
In China, Keppel Logistics’ operations
continued with minimal disruption despite
COVID-19. In Anhui province, cargo handling
M1, through its 5G network rollout in Singapore, is set to help create more 5G use-cases and applications for
businesses and communities.
TELECOMMUNICATIONS
As at end-2020, M1’s customer base
was 2.08 million, down from 2.33 million
customers year-on-year (yoy). This was
largely driven by the drop in prepaid
customers following the reduction in
incoming travellers and less activity in the
foreign workers’ segment due to COVID-19.
On the other hand, M1 grew both its
postpaid and fibre customer base by
5% and 2.7% yoy respectively.
As part of its business transformation,
M1 unveiled a new brand identity and
also launched Bespoke mobile plans
that provide subscribers with more
flexibility in the selection of products and
services as well as payment schedules.
Following a comprehensive revamp of
its technology stack in February 2021,
M1 launched its new digital connectivity
platform, which is set to greatly improve
customer experience, and will also roll out
a series of made-to-measure new offerings
progressively over the rest of the year.
In June 2020, M1 secured a 5G standalone
(SA) license jointly with StarHub, enabling
M1 to provide 5G service at an affordable
cost to customers. The 5G rollout is
expected to create more use-cases
for 5G applications for businesses and
communities alike. The benefits of 5G
extend beyond faster download speed for
consumers, but also to the low latency and
network slicing that have vast applications
for industries and businesses.
M1 is Singapore’s first telco to open
up 5G access to all its customers,
without any limitations on the number
of sign-ups or restrictions on any plans.
In September 2020, M1 launched its
5G non-standalone (NSA) network.
The 5G NSA network enables M1’s mobile
users to enjoy the benefits of 5G including
ultra-low latency and faster speeds ahead
of the SA network rollout.
In 2020, M1 embarked on several 5G trials
and collaborations with technology companies
and government agencies. In partnership
with the Infocomm Media Development
Authority (IMDA), the Maritime and
Port Authority of Singapore (MPA)
and Airbus, M1 is conducting real-world
environment coastal 5G network trials
at the Singapore Maritime Drone Estate,
to ensure unmanned aerial vehicles can
operate safely and efficiently during all
Keppel Corporation Limited
PERFORMANCE REVIEW
58
OPERATING & FINANCIAL REVIEW
CONNECTIVITY
M1 will leverage 5G and
its digital solutions to
collaborate with other
Keppel business units in
enhancing the Group’s
suite of solutions for
sustainable urbanisation.
at the Wuhu Sanshan Port increased as
cargo was diverted from neighbouring
ports. Meanwhile, operations remained
stable at the Keppel Logistics Tianjin
Eco-City warehouse and Keppel Wanjiang
Integrated Cold Chain Logistics Park.
MARKET REVIEW & OUTLOOK
DATA CENTRES
In 2020, the COVID-19 pandemic triggered
an accelerated wave of digital transformation
and adoption of new ways of working,
underscoring the importance of digital
connectivity. Additionally, the continued
rise of Internet of Things, big data and
cloud-based services also drove demand
for data centres.
Today, large enterprises consume
the bulk of the colocation services as
businesses aim to decrease operational
expenses. According to P&S Intelligence,
this is expected to drive the growth of the
global data centre colocation market at a
compounded annual growth rate of 14.8%
between 2020 and 2030.
Data centres will be key to enabling 5G
in all applications and devices. To create
a seamless wireless network connecting
devices and applications, centres of data
exchange will need to be located near
end-users.
Leveraging digitalisation trends, KDCH
will continue to work closely with Keppel
Capital and Keppel DC REIT to proactively
seek new development and acquisition
opportunities in the Asia Pacific and Europe.
It will also continue to collaborate with
other Keppel business units to sharpen its
value proposition, especially in the areas
of enhancing connectivity, and explore
innovative and sustainable data centre
designs and technologies, such as floating
data centre parks.
DIGITAL CONNECTIVITY
In the 5G space, GSM Association
reported that by 2025, 5G will account
for 20% of global connections, with
take-up predominantly in developed Asia,
North America and Europe. Of the
US$1.1 trillion expected investments
in mobile capex globally, about 80%
would be for 5G networks. In Singapore,
the 5G SA network will be rolled out over
the next few years and is expected to be
fully ready by 2025. In the year ahead,
M1 will focus on rolling out its 5G SA
network to all customers, as well as
executing 5G use-case trials in collaboration
with industry partners and government
agencies which will help to advance
Singapore’s Smart Nation initiative and
Industry 4.0.
As Singapore works at progressively
reopening the economy, M1 will continue
to offer a range of solutions and services
to its enterprise customers and small and
medium-sized enterprises, helping them
thrive in the new landscape with new ways
of working. M1 will also leverage 5G
and its digital solutions to collaborate
with other Keppel business units in
enhancing the Group’s suite of solutions
for sustainable urbanisation.
LOGISTICS
E-commerce has been growing rapidly
in recent years and was given a further
boost in 2020 by COVID-19. According
to The Economic Intelligence Unit,
gross domestic product of SEA countries
are estimated to grow by between 3% to 6%
in 2021. In addition, research firm PPRO
expects SEA’s e-commerce market to grow
5.5% in 2021, as the economies continue
to grow and develop.
Notwithstanding the growth in demand for
urban logistics and channel management,
Keppel is engaging potential buyers to
divest its logistics business in line with
Keppel’s Vision 2030 and its more disciplined
approach towards capital allocation. For
now, Keppel will keep its options open and
may decide to divest the logistics business
completely or retain a minority stake.
KDCH is pursuing innovative new data centre solutions, such as floating data centre parks, to increase the energy efficiency as well as lower the carbon footprint of its assets.
Annual Report 2020
PERFORMANCE REVIEW
OPERATING &
FINANCIAL REVIEW
ASSET
MANAGEMENT
WE CREATE
ENDURING VALUE
WITH QUALITY
INVESTMENT
PRODUCTS AND
PLATFORMS.
EARNINGS HIGHLIGHTS ($ million)
Revenue
EBITDA
Operating Profit
Profit before Tax
Net Profit
Average Headcount (Number)
Manpower Cost
2020
2019
2018
135
276
273
304
280
216
43
145
123
120
239
214
206
39
119
106
106
220
192
197
40
MAJOR DEVELOPMENTS IN 2020
FOCUS FOR 2021/2022
Keppel Capital grew its assets under
management1 (AUM) from $33 billion as
at end-2019 to $37 billion as at end-2020,
and raised total equity of about $4.5 billion
in 2020.
Continue to grow the asset management
business through harnessing the Group’s
synergies to co-create cashflow
generating real assets for investors
and Unitholders.
Keppel’s listed REITs and Trust continued
to grow through strategic acquisitions
to deliver sustainable returns to Unitholders.
Keppel Capital’s private funds had
an active year with the launch of
new funds and strategic investments,
as well as proactive asset management
and value creation initiatives.
Collaborate with Keppel’s various
business units to tap third-party funds
for growth and achieve higher returns
for the Group.
Engender pull-through work for various
business units in the creation of quality
real assets.
1 Gross asset value of investments and uninvested capital commitments on leveraged basis to project
fully-invested AUM.
Keppel Corporation Limited
PERFORMANCE REVIEW
60
OPERATING & FINANCIAL REVIEW
ASSET MANAGEMENT
EARNINGS REVIEW
The Asset Management segment comprises
Keppel Capital, as well as the Group’s
holdings in the listed REITs and business
trust, and private funds.
In FY 2020, Asset Management recorded a
revenue of $135 million, $10 million lower
than FY 2019, mainly due to lower acquisition
and divestment fees, partly offset by higher
management fees.
The segment generated a net profit of
$280 million for FY 2020, a 31% growth
from FY 2019, bolstered by gains from the
reclassification of Keppel Infrastructure Trust
(KIT), sale of units in Keppel DC REIT, divestment
of interest in Gimi MS Corporation, as well
as dividend income from KIT and higher
contribution from Keppel DC REIT. These were
partly offset by mark-to-market losses from
investments, lower investment income and
lower contributions from Keppel REIT and
Alpha Data Centre Fund (Alpha DC Fund), as
well as the absence of a dilution gain arising
from Keppel DC REIT’s private placement
exercise in 2019.
OPERATING REVIEW
Keppel Capital’s AUM1 grew approximately 12%
to $37 billion as at end-2020 from $33 billion
as at end-2019, while asset management
fees2 were $165 million in FY 2020, up from
$149 million in FY 2019. In 2020, Keppel Capital
completed over $7 billion of acquisitions and
divestments. It also launched a series of new
private fund initiatives across data centres,
education, infrastructure, logistics, mezzanine
debt and real estate, raising total equity of
approximately $4.5 billion from sovereign
wealth funds and global institutional investors.
REAL ESTATE
In 2020, Keppel REIT Management remained
focused on executing its portfolio optimisation
strategy to improve portfolio yield, as well
as generating stable income for the REIT
and delivering sustainable growth in total
Unitholder returns. During the year, Keppel
REIT achieved practical completion for the
Victoria Police Centre3 in Melbourne, Australia,
and acquired Pinnacle Office Park in Sydney’s
Macquarie Park, a key Australian metropolitan
office market. It also announced the proposed
acquisition of Keppel Bay Tower in Singapore
from Keppel Land, which complements the
REIT’s core CBD offering. The acquisition
is consistent with both the Keppel Group’s
eco-system for value creation and Keppel
REIT’s strategy of strengthening and
diversifying its portfolio, while staying
focused on its core markets.
Keppel REIT expanded its presence in Australia with the acquisition of Pinnacle Office Park in Sydney’s Macquarie Park.
Keppel REIT’s portfolio performance remained
resilient in 2020, supported by its quality
well-located assets with established tenants
from diversified sectors. As at end-2020,
Keppel REIT reported high portfolio committed
occupancy of 97.9% and a long portfolio
weighted average lease expiry (WALE) of
6.7 years.
the leasing activity occurring mainly in
Seattle – Bellevue/Redmond, Atlanta and
Sacramento. As at end-2020, portfolio
committed occupancy was at 92.3% and
portfolio WALE at 3.8 years4, while rental
reversion was 10.2%, driven mainly by strong
rent growth in Seattle – Bellevue/Redmond,
Sacramento and Austin.
While telecommuting has become widely
adopted during the COVID-19 pandemic, the
Manager believes that companies will continue
to need office space, although the form and
function will evolve in line with the new ways of
working and safe management considerations.
In their evaluation of office requirements,
tenants are likely to take into account the need
for more robust business continuity plans,
increased health and safety requirements,
as well as spaces to facilitate collaboration,
and to build corporate identity and culture.
According to JLL Research, many businesses
in the US are re-evaluating their space needs
and moving toward decentralising their
workforce. KORE’s suburban office buildings
and business campuses are well positioned
to benefit from the potential shift away from
downtown and CBD locations. At the same time,
KORE’s strategic exposure to the historically
fast-expanding technology hubs provides
future income resilience as businesses
accelerate their digital transformation
strategies due to COVID-19.
Looking ahead, office spaces may be
re-designed to cater to changing needs.
Instead of traditional work desks and cubicles,
more spaces for employees to meet, learn,
brainstorm, interact and collaborate may be
created. There may also be greater focus on
health and wellness, which are already key
features at Keppel REIT’s properties. Keppel
REIT will continue to be nimble, customer-
focused and adapt to meet the evolving market
requirements. The Manager will continue to
optimise Keppel REIT’s portfolio and calibrate
its leasing and investment strategy to meet
potential shifts in occupier demand.
Meanwhile, Keppel Pacific Oak US REIT’s (KORE)
leasing momentum held steady, with most of
Meanwhile, Prime US REIT, in which Keppel
Capital is a strategic partner, completed the
maiden accretive acquisition of Park Tower
in Sacramento, California, partially funded
by proceeds from a US$120 million
private placement.
During the year, Alpha Investment Partners
(Alpha) launched the follow-on Alpha Asia
Macro Trends Fund IV (AAMTF IV),
achieving first close of US$295 million
including co-investments.
In collaboration with Keppel Land,
Alpha launched the Keppel Vietnam Fund,
a Vietnam-focused real estate fund with a
first closing of US$400 million.
1 Gross asset value of investments and uninvested capital commitments on leveraged basis to project fully-invested AUM.
2
Includes 100% fees from subsidiary managers, joint ventures and associated entities, as well as share of fees based on shareholding stake in associates with which Keppel
has strategic alliance.
3 Formerly known as 311 Spencer Street.
4 By cash rental income.
Annual Report 2020
61
KDC Fund II has attracted initial capital
commitments from various financial
institutional investors and achieved a
first close of over US$500 million.
Keppel Capital also announced a strategic
cooperation with National Pension Service
of Korea to explore investment opportunities
for private infrastructure in Asia.
DATA CENTRES
Keppel DC REIT Management delivered strong
performance supported by acquisitions. The
REIT strengthened its European presence
with the acquisitions of the remaining
999-year leasehold land interest at Keppel DC
Dublin 1 in Ireland, Kelsterbach Data Centre
in Germany and Amsterdam Data Centre in
the Netherlands. Capitalising on strong
demand for data centre space, the Manager
embarked on proactive asset enhancement
initiatives to improve portfolio returns,
including fitout works to convert unutilised
space to data centre space and improve
energy efficiency at various facilities.
As at end-2020, Keppel DC REIT’s portfolio
occupancy remained high at 97.8% with
a long WALE of 6.8 years by leased area,
which will continue to provide income
visibility to Unitholders.
In the private equity space, Alpha DC Fund,
the Group’s first data centre fund launched in
2016, continued to expand its portfolio with
quality assets. During the year, Alpha DC Fund
made its first foray into China’s fast-growing
data centre market, through the acquisition
and development of a high-specification
data centre in Huizhou’s Tonghu Smart City
in Guangdong Province for RMB 1.5 billion.
By end-2020, Alpha DC Fund’s portfolio spanned
over 1.38 million square feet of gross floor
area with investments in key economic hubs
including Singapore, Malaysia, Indonesia,
Germany, Australia and China.
Building on the success of Alpha DC Fund,
Keppel Capital launched the US$1 billion
Keppel Data Centre Fund II (KDC Fund II),
which will focus on strategic data centre
investments in Asia Pacific and Europe.
INFRASTRUCTURE
In March 2020, KIT was reclassified from
an associated company to an investment of
Keppel. KIT, in which Keppel retains a strategic
interest, delivered resilient performance in
FY 2020, driven by robust operations and
growth across its portfolio of essential and
highly defensive businesses and assets
through the COVID-19 pandemic.
During the year, KIT announced the
acquisition of Philippine Tank Storage
International (Holdings) Inc., which owns
Philippine Coastal Storage & Pipeline
Corporation, the largest petroleum products
import storage facility in the Philippines.
The acquisition, which was completed in
January 2021, increases KIT’s exposure to
essential evergreen businesses, strengthening
long-term sustainability of cash flows and the
Trust’s growth prospects.
In the private equity space, Keppel Capital
achieved rolling closes for the Keppel Asia
Infrastructure Fund (KAIF), with total aggregate
capital commitments close to its target
fund size of US$1 billion. KAIF will leverage
Keppel Capital’s fund management expertise
and investor network, and amalgamate these
with the Group’s project development and
asset management capabilities, to grow its
portfolio which will include both operational
assets and select greenfield projects in the
Asia Pacific region. During the year, KAIF
acquired an interest in the Gimi FLNG facility,
which is currently undergoing conversion at
Keppel Offshore & Marine.
ALTERNATIVE ASSETS
In 2020, Keppel Capital entered the private
educator sector with the Keppel Education
Asset Fund, raising more than half of its target
commitment of US$500 million. As its first
investment, the Fund acquired a 70% stake in
a premium K12 school property in China. Other
education-related assets in the Fund’s deal
pipeline include properties located in Singapore,
Australia, China, South Korea and Vietnam.
Keppel Capital also completed the acquisition
of a 50% interest in Watermark Retirement
Communities, a US senior living operator.
Alpha, together with Manulife Financial
Corporation and Mega Manunggal Property,
launched a new venture focusing on Indonesia’s
fast-growing logistics property sector. Comprising
Keppel-MMP Indonesia Logistics Fund,
an Indonesian parallel fund, as well as
co-investment capital from Manulife, the venture
has attained an initial close of US$100 million.
MARKET REVIEW & OUTLOOK
As a result of the COVID-19 pandemic,
which has further accelerated the growth
of the digital economy, sectors such as data
centres and logistics performed well in 2020.
Quality and well-located office properties have
also demonstrated resilience and Keppel Capital
continues to see keen competition for such
office assets. In the real estate space, there
could be increased demand for city-fringe or
metropolitan office spaces as some tenants
seek cost-effective solutions or hub-and-spoke
business models for both regular operations
and business continuity purposes.
On the other hand, the pandemic and the
disruptions that it has created may give rise
to opportunities to acquire quality alternative
assets at potentially attractive valuations.
These include various asset classes such as
infrastructure, senior living and education,
which are well sought after by investors.
In line with Vision 2030, which charts the
Group’s growth as one integrated business
providing solutions for sustainable urbanisation,
Keppel Capital will work closely with business
units across the Group to co-create real
assets that the Group can develop, own and
operate, thus pursuing growth opportunities
and capturing new profit pools.
Moving forward, Keppel Capital will continue
to harness the Group’s synergies to co-create
quality solutions and deliver higher returns to
shareholders and investors. Keppel Capital will
continue toward its goal of being the trusted
choice for investors looking to invest in prime
real assets that the Keppel Group can
develop and operate.
Keppel Capital is expanding its portfolio with new asset classes such as education assets.
Keppel Corporation Limited
62
PERFORMANCE REVIEW
OPERATING &
FINANCIAL REVIEW
MANAGEMENT
DISCUSSION
& ANALYSIS
WE WILL CREATE
VALUE THROUGH
OUR FOUR KEY
BUSINESS AREAS,
WHICH ARE PART
OF A CONNECTED
VALUE CHAIN.
KEY PERFORMANCE INDICATORS
2020
$ million
20 vs 19
% +/(-)
Revenue
Net (loss)/profit
(Loss)/Earnings Per Share
Return on Equity
Economic Value Added
Operating cash flow
Free cash flow1
Total cash dividend per share
6,574
(506)
(27.8) cts
(4.6)%
(1,368)
202
497
10.0 cts
(13)
n.m.f.
n.m.f.
n.m.f.
n.m.f.
n.m.f.
n.m.f.
(50)
2019
$ million
7,580
707
38.9 cts
6.3%
188
(825)
(653)
20.0 cts
19 vs 18
% +/(-)
2018
$ million
27
(25)
(26)
(25)
(29)
n.m.f.
n.m.f.
(33)
5,965
948
52.3 cts
8.4%
263
125
515
30.0 cts2
1 Free cash flow excludes expansionary acquisitions & capital expenditure, and major divestments.
2 Comprised a proposed final cash dividend of 15.0 cents per share, an interim cash dividend of 10.0 cents
per share and a special cash dividend of 5.0 cents per share.
n.m.f. = No meaningful figure
GROUP OVERVIEW
The Group reported a net loss of $506 million
for 2020, compared to a net profit of
$707 million a year ago, after impairments
of $952 million mainly due to the offshore &
marine (O&M) business. Excluding impairments
in both years, the Group would have registered
a net profit of $446 million for 2020, as
compared to a net profit of $828 million
for 2019. Apart from Keppel O&M, all key
business units remained profitable in 2020.
Loss per share was 27.8 cents, as compared to
earnings per share of 38.9 cents in 2019. Return
on Equity (ROE) was negative 4.6%, compared to
positive 6.3% for 2019. Economic Value Added
(EVA) was negative $1,368 million for 2020,
compared to positive $188 million for 2019.
Free cash inflow was $497 million, compared
to free cash outflow of $653 million for 2019,
mainly due to lower working capital
requirements and higher proceeds from
en-bloc sales. Net gearing for 2020 was
0.91 times, compared to 0.85 times for 2019.
Total cash dividend for 2020 will be 10.0 cents
per share. This comprises a proposed final
cash dividend of 7.0 cents per share, as well
as an interim cash dividend of 3.0 cents per
share paid in the third quarter of 2020.
SEGMENT OPERATIONS
Group revenue of $6,574 million for 2020
was $1,006 million or 13% lower than the
preceding year. Revenue from Energy &
Environment decreased by $1,026 million
or 21% to $3,943 million led by lower
revenue in the O&M business due to slower
progress from certain on-going projects
as a result of COVID-19 related disruptions,
the suspension of revenue recognition on
Awilco contracts, fewer new contracts
secured in 2020 and the deferment of
some projects, which were partly offset
by revenue from new projects. The lower
revenue was also due to lower electricity
sales, lower progressive revenue recognition
from the Hong Kong Integrated Waste
Management Facility project, as well as
the completion of the Keppel Marina East
Desalination Plant project in the second
quarter of 2020 in the infrastructure business.
Major jobs delivered by the O&M business
in 2020 include two jackup rigs, a dual-fuel
Annual Report 2020
63
REVENUE ($ million)
4,900
4,200
3,500
2,800
2,100
1,400
700
0
2018
2019
2020
Energy &
Environment
Urban
Development
Connectivity
Asset
Management
Corporate
& Others
4,322
4,969
3,943
1,340
1,336
1,275
182
1,128
1,220
119
145
135
2
2
1
NET (LOSS)/PROFIT ($ million)
1,000
750
500
250
0
-250
-500
-750
-1,000
-1,250
2018
2019
2020
Energy &
Environment
Urban
Development
Connectivity
Asset
Management
Corporate
& Others
(169)
(101)
(1,181)
950
483
438
–
136
13
192
214
280
(25)
(25)
(56)
Profit from Connectivity was $13 million,
which was $123 million below that of 2019.
This was mainly due to the absence of a
fair value gain recognised in 2019 from the
remeasurement of previously held interest
in M1 at acquisition date, as well as lower
contribution from M1. These were partly
offset by gain from the disposal of interest
in Business Online Public Company Limited,
and lower losses from the logistics business.
Asset Management’s profit increased
by $66 million to $280 million mainly due
to a mark-to-market gain of $131 million
recognised from the reclassification of the
Group’s interest in Keppel Infrastructure Trust
(KIT) from an associated company to an
investment following the loss of significant
influence over KIT, a gain from sale of units in
Keppel DC REIT, a gain from divestment of
interest in Gimi MS Corporation, as well as
dividend income from KIT and higher
contribution from Keppel DC REIT. These
were partly offset by mark-to-market losses
from investments, lower investment income
and lower contributions from Keppel REIT and
Alpha Data Centre Fund, as well as the absence
of a dilution gain arising from Keppel DC REIT’s
private placement exercise in 2019.
In 2020, losses in the Energy & Environment
segment were partly offset by profits from
the Urban Development, Asset Management
and Connectivity segments.
bunker tanker, a Floating Production Storage
and Offloading (FPSO) vessel modification
and upgrading project, a Liquefied Natural Gas
(LNG) Carrier, a trailing suction hopper dredger
and a production barge. Revenue from
Urban Development decreased by $61 million
to $1,275 million mainly due to lower
revenue generated from hospitality and
commercial properties and lower revenue
from property trading projects in Singapore
and Vietnam, which were partly offset
by higher revenue from property trading
projects in China. Revenue for Connectivity
grew by $92 million to $1,220 million
mainly due to M1, which was consolidated
from March 2019. This was partly offset
by lower contribution from the logistics
business following the divestment of certain
China logistics assets in November 2019.
Revenue from Asset Management decreased
by $10 million to $135 million mainly due
to lower acquisition and divestment fees,
partly offset by higher management fees.
Group net loss attributable to shareholders
was $506 million as compared to net profit
of $707 million in 2019. The net loss for
2020 included impairment provisions, largely
from the O&M business, amounting to
$952 million. Excluding these impairments,
the Group achieved a net profit of $446 million
which was 46% or $382 million lower than
the net profit of $828 million (excluding
impairments) for 2019.
Energy & Environment’s net loss was
$1,181 million as compared to net loss of
$101 million in 2019. Excluding impairments
of $908 million, the net loss was $273 million.
This was largely due to weaker performance
in the O&M business, which had been
impacted by slower progress on projects
due principally to significant downtime as
a result of COVID-19, higher share of losses
from associated companies and joint ventures,
higher net interest expense, and fair value
loss on investment, which were partially
mitigated by lower overheads and government
relief measures related to the COVID-19
pandemic. These were partly offset by higher
contributions from the energy infrastructure
and environmental infrastructure businesses,
as well as the absence of a share of loss
from KrisEnergy and the fair value loss on
KrisEnergy warrants as compared to 2019.
Profit from Urban Development decreased
by $45 million to $438 million mainly due to
lower write-backs of tax provision as compared
to 2019, higher taxation from property
trading projects in China, as well as lower
contributions from associated companies
and joint ventures. These were partly offset
by higher fair value gains from investment
properties, higher contributions from
property trading projects in China,
as well as higher contribution from
the Sino-Singapore Tianjin Eco-City.
Keppel Corporation Limited
64
PERFORMANCE REVIEW
OPERATING &
FINANCIAL REVIEW
FINANCIAL
REVIEW &
OUTLOOK
WE WILL SUSTAIN
VALUE CREATION
THROUGH EXECUTION
EXCELLENCE,
TECHNOLOGY
INNOVATION AND
FINANCIAL DISCIPLINE.
Annual Report 2020
PROSPECTS
VISION 2030
A key highlight during the year was the
unveiling of Keppel’s Vision 2030 in May 2020.
Vision 2030 is a roadmap to guide the Group’s
strategy and transformation as one integrated
business providing solutions for sustainable
urbanisation. Building on Keppel’s strengths
in engineering, developing and operating
specialised assets, as well as capital and
asset management, the Group will focus on
four key business areas, namely Energy &
Environment, Urban Development, Connectivity
and Asset Management – all part of a
connected value chain.
As part of the Group’s sharpened business
focus and asset-light model, Keppel is taking
a disciplined approach to capital allocation,
to deploy more capital to our growth platforms
and create value from more integration and
synergies within the Group, while continuing
to recycle capital to enhance the Group’s
overall return.
In September 2020, the Group embarked on
further steps in the Vision 2030 roadmap,
including the strategic review of the offshore
& marine (O&M) business, and a $3–5 billion
asset monetisation programme over three
years to free up the Group’s balance sheet to
pursue new growth opportunities. To this end,
a transformation office was established to
drive the implementation of Vision 2030 to
create sustainable value for all stakeholders,
while a 100-day programme was also
launched to expedite execution.
Between October and December 2020,
the Group announced divestments worth
over $1.2 billion, well on its way to meeting
the three-year target, as well as various
new initiatives to take Keppel forward on
its growth trajectory.
After a tumultuous year during which
the COVID-19 pandemic caused immense
human suffering and battered the global
economy, the recent progress in vaccine
development and distribution gives hope
that the end of the pandemic may be in
sight. However, the situation remains
volatile as COVID-19 continues to spread
internationally. Keppel would need to
continue to rigorously implement safe
management measures to curb the further
spread of the virus, and safeguard the
health and well-being of our employees
and stakeholders.
Notwithstanding the adverse impact
of COVID-19, the pandemic has also
accelerated many macrotrends
that the Group had identified as part
of Vision 2030, including growing
digitalisation and e-commerce. At the
same time, international concerns
about climate change continue to grow,
accelerating the energy transition and
spurring the need for different solutions
that contribute to a more sustainable future.
Together, these trends are expected to
further drive the demand for solutions for
sustainable urbanisation, and create
new opportunities for the Group.
65
BUSINESS SEGMENTS
In the Energy & Environment segment,
Keppel Offshore & Marine’s (Keppel O&M)
net orderbook, excluding the Sete rigs,
stood at $3.3 billion as at 31 December 2020.
The O&M industry continues to face
severe challenges arising from the impact
of COVID-19 and the fall in global demand
for oil, which significantly impacted the
performance of the segment. While the
market for oil-related solutions remains
weak, Keppel O&M has over the past
few years pivoted to cleaner fossil
fuels such as LNG and renewables,
which together made up about 65%
of the approximately $1 billion of new
orders it had secured in 2020.
On 28 January 2021, the Group announced
that, amidst the global energy transition and
major disruptions facing the oil industry, it will
carry out a comprehensive transformation
of Keppel O&M to better align it to the
Group’s Vision 2030 and to create a more
competitive Keppel O&M that is well-placed
to support the energy transition. As part of
the transformation, Keppel O&M’s business
will be reorganised into three parts, namely a
Rig Co and a Development Co (Dev Co),
which will be transient entities created to
hold approximately $2.9 billion worth of
completed and uncompleted rig assets,
and an Operating Co (Op Co) comprising
the rest of Keppel O&M. This reorganisation
into distinct parts provides better clarity
for Keppel O&M to focus on its plans.
Keppel O&M’s completed rigs will be placed
under Rig Co, which will put the completed
rigs to work, or sell them if there are
suitable opportunities. Uncompleted rigs
will come under Dev Co, which will focus
on completing the rigs while prudently
managing cash flow.
Op Co will progressively transit to a
developer and integrator role, focusing on
design, engineering and procurement. It will
exit the offshore rigbuilding business and
progressively exit low value-adding repairs
and other activities with low bottom-line
contribution. Op Co will seek opportunities
in floating infrastructure and infrastructure-
like projects that can deliver predictable
streams of cash flow, including renewables
projects such as offshore wind farms and
solar farms, gas solutions, production
assets and new energy solutions such as
hydrogen and tidal energy. The reorganisation
has commenced and the transformation
is expected to be executed over the next
two to three years. Reflecting its new focus,
Keppel O&M will carry out a rebranding
exercise and refine its vision and purpose.
Meanwhile, Keppel Infrastructure will
continue to develop opportunities in its target
markets with a focus on value-enhancing
energy and environmental projects.
Keppel Corporation Limited
Keppel Infrastucture will further strengthen
its retail and marketing capabilities, and
also expand its district cooling business in
Singapore and overseas. It will also leverage
MET Group, in which it has a 20% stake,
to grow its European presence.
FREE CASH INFLOW
$497m
As compared to outflow of
$653 million for FY 2019.
With the goal of growing the Group’s
renewable energy portfolio to
7GW by 2030, a new business unit,
Keppel Renewable Energy, was set up
to explore opportunities as a developer
and operator of renewable energy assets.
In December 2020, Keppel Renewable
Energy announced the planned
development of a 500MW solar farm
in Australia, and will continue to seek
other opportunities in renewables.
In the Urban Development segment,
Keppel Land sold about 3,340 homes in
2020, which comprised about 2,110 in China,
370 in Singapore, 550 in Vietnam, 140 in
Indonesia and 170 in India. It will remain
focused on its key markets such as China,
Singapore and Vietnam, and scale up in
other markets such as India and Indonesia,
while actively seeking opportunities
to unlock value and recycle capital.
Keppel Urban Solutions will harness
opportunities as an end-to-end master
developer of smart, sustainable cities.
Starting with Saigon Sports City in
Ho Chi Minh City, Vietnam, Keppel Urban
Solutions will also explore opportunities in
other cities across Asia. The Sino-Singapore
Tianjin Eco-City Investment and Development
Company Ltd will continue to drive the
further development of the Sino-Singapore
Tianjin Eco-City (Eco-City), including
selling land parcels to accelerate the
Eco-City’s development.
In the Connectivity segment, M1 will
complement the Group’s mission as
a solutions provider for sustainable
urbanisation. Through a multi-year
transformation plan, M1 seeks to
develop and implement new strategic
and operational plans to sharpen its
competitive edge, increase its momentum
in digital transformation and undertake
growth initiatives. It will focus on
strengthening its consumer business
to meet changing customer needs and
expectations, developing platforms
and initiatives to support enterprise
customers, collaborating actively with
other Keppel entities to create smarter
and future-ready offerings, and working
closely with Singapore government
agencies, industry players and enterprises
to co-develop 5G use cases. With the
award of the 5G network licence to M1
and Starhub Limited by the Infocomm
Media Development Authority (IMDA),
M1 is starting to rollout its 5G standalone
network coverage across Singapore.
TOTAL CASH DIVIDEND
PER SHARE
10.0cts
This comprises a proposed final
cash dividend of 7.0cts/share, as
well as an interim cash dividend
of 3.0cts/share paid in 3Q 2020.
Keppel Telecommunications & Transportation
(Keppel T&T) will, in collaboration with
Keppel Capital, continue to actively
pursue new development opportunities
to grow its data centre footprint beyond
its traditional areas of operation, while
concurrently exploring innovative new
solutions to reduce the environmental
footprint of its data centres and strengthen
its market position. Following a strategic
review of the logistics business, Keppel T&T
has decided to divest its logistics portfolio
in Southeast Asia and Australia, and has
launched the sale process through its
financial advisor.
In the Asset Management segment,
Keppel Capital continues to leverage
the Group’s core competencies to
create innovative investment solutions
and connect investors with quality real
assets in fast-growing sectors fuelled by
urbanisation trends. This includes seizing
growth opportunities across our chosen
sectors, as well as expanding into new
markets and alternative asset classes.
During the year, Keppel Capital launched
and achieved two closings for the
Keppel Asia Infrastructure Fund, as well
as first close for several funds, namely
the Keppel-Pierfront Private Credit Fund,
the Keppel MMP-Indonesia Logistics Fund,
the Keppel Education Asset Fund and
the Keppel Vietnam Fund. Riding on the
success of the earlier funds, Keppel Capital
also launched and achieved first close
for the follow-on Alpha Asia Macro Trends
Fund IV and Keppel Data Centre Fund II.
The listed REITs and Trust also continued
to grow through strategic acquisitions
during the year.
The Keppel Group will continue to execute
its integrated business strategy to provide
solutions for sustainable urbanisation by
deepening collaboration across business
units, being agile and innovative as it invests
in the future.
PERFORMANCE REVIEW
66
OPERATING & FINANCIAL REVIEW
FINANCIAL REVIEW & OUTLOOK
ROE & DIVIDEND
%
18
12
6
0
-6
cents
45
30
15
0
-15
ROE (%)
Full-Year Dividend (cts)
Interim Dividend (cts)
2015
14.2
34
12
2016
2017
2018
2019
2020
6.9
20
8
6.91
22
8
8.4
30
152
6.3
20
8
(4.6)
10
3
1 Excludes one-off financial penalty from global resolution & related costs.
2
Includes special cash dividend of 5.0cts/share.
EVA ($ million)
700
350
0
-350
-700
-1,050
-1,400
EVA
2015
648
2016
(140)
2017
(839)
2018
263
2019
2020
188
(1,368)
SHAREHOLDER RETURNS
Return on Equity (ROE) was negative 4.6%,
compared to positive 6.3% in the previous
year, mainly due to net loss recorded as
compared to net profit in the previous year.
The Company will be distributing a total
cash dividend of 10.0 cents per share
for 2020, comprising a proposed final
cash dividend of 7.0 cents per share
as well as the interim cash dividend
of 3.0 cents per share distributed
in the third quarter of 2020. On a per
share basis, it translates into a gross
yield of 1.9% on the Company’s last
transacted share price of $5.38 as at
31 December 2020.
ECONOMIC VALUE ADDED
In 2020, Economic Value Added (EVA)
decreased by $1,556 million to negative
$1,368 million. This was attributable to
net operating loss after tax and higher
capital charge.
Capital charge increased by $15 million
as a result of higher Average EVA Capital,
partly offset by lower Weighted Average
Cost of Capital (WACC). WACC decreased
from 5.47% to 4.95% mainly due to a
decrease in risk-free rate and lower Cost
of Debt. Average EVA Capital increased
by $2,188 million from $18.07 billion
to $20.25 billion mainly due to
higher borrowings.
Profit/(loss) 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)
WACC (%) (Note 4)
Capital Charge
2020
$ million
20 vs 19
+/(-)
2019
$ million
19 vs 18
+/(-)
2018
$ million
(732)
(1,526)
794
(103)
897
292
–
(50)
125
(365)
20,254
4.95
(1,003)
(21)
–
3
3
(1,541)
2,188
(0.52)
(15)
313
–
(53)
122
1,176
18,066
5.47
(988)
108
(20)
(14)
46
17
1,533
0.05
(92)
205
20
(39)
76
1,159
16,533
5.42
(896)
EVA
(1,368)
(1,556)
188
(75)
263
Notes:
1. Profit/(loss) 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 averages of net assets, interest-bearing liabilities, timing of provisions and other adjustments.
4. WACC is calculated in accordance with the Keppel Group EVA Policy as follows:
a. Cost of Equity using Capital Asset Pricing Model with market risk premium set at 5.0% (2019: 5.0%);
b. Risk-free rate of 1.75% (2019: 2.27%) based on yield-to-maturity of Singapore Government 10-year Bonds;
c. Unlevered beta at 0.72 (2019: 0.72); and
d. Pre-tax Cost of Debt at 1.48% (2019: 2.09%) using 5-year Singapore Dollar Swap Offer Rate plus 60 basis points (2019: 60 basis points).
Annual Report 2020
TOTAL ASSETS OWNED ($ million)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Fixed assets
Properties
Right-of-use assets
Associated companies, joint ventures & investments
Stocks
Contract assets
Debtors & others
Bank balances, deposits & cash
Total
2018
2,373
2,851
–
6,825
5,496
3,213
3,849
1,981
2019
2,902
3,022
760
7,121
5,543
3,497
6,693
1,784
2020
2,716
3,674
583
7,355
4,959
2,657
7,682
2,480
26,588
31,322
32,106
TOTAL LIABILITIES OWED AND CAPITAL INVESTED ($ million)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Shareholders’ funds
Non-controlling interests
Creditors
Contract liabilities
Term loans & bank overdrafts
Lease liabilities
Other liabilities
Total
2018
2019
2020
11,268
11,211
10,728
309
5,355
1,918
7,549
–
189
435
5,795
1,825
428
5,831
2,072
11,060
12,039
597
399
564
444
26,588
31,322
32,106
Keppel Corporation Limited
67
FINANCIAL POSITION
Group shareholders’ funds decreased by
$0.48 billion to $10.73 billion at 31 December
2020. The decrease was mainly attributable
to retained losses for 2020, payment of final
dividend of 12.0 cents per share in respect
of financial year 2019, payment of interim
dividend of 3.0 cents per share in respect of
the half year ended 30 June 2020 and fair
value losses from cash flow hedges, partly
offset by foreign exchange translation gains.
In 4Q 2020, the Group announced the
divestment of interests in Chengdu Hilltop
Development Co Ltd (Chengdu Hilltop),
Dong Nai Waterfront City LLC (Dong Nai
Waterfront), Keppel Bay Tower Pte Ltd
(Keppel Bay Tower), and First King Properties
Limited (First King Properties). These
divestments would be completed upon the
fulfillment of certain conditions precedent.
In accordance with SFRS(I) 5 Non-current
Assets Held for Sale and Discontinued
Operations, the assets and liabilities of
Keppel Bay Tower and First King Properties,
as well as the investments in Chengdu Hilltop
and Dong Nai Waterfront that are accounted
for as associated companies, have been
presented separately as assets classified as
held for sale and liabilities directly associated
with assets classified as held for sale as at
31 December 2020.
Group total assets were $32.11 billion as at
31 December 2020, $0.78 billion higher than
the previous year-end. Non-current assets
increased mainly due to a reclassification
from stocks to investment properties, fair
value gains in investment properties and an
increase in investments and long-term assets,
partly offset by a decrease in investments
in associated companies, joint ventures and
fixed assets, as well as the reclassification
of investment properties, fixed assets,
right-of-use assets and investments in
associated companies to assets classified
as held for sale in relation to the divestments
mentioned above. The increase in current
assets was due mainly to increases in bank
balances and deposits & cash, partly offset by
a reclassification from stocks to investment
properties and decrease in contract assets.
Group total liabilities of $20.95 billion as
at 31 December 2020 were $1.27 billion
higher than the previous year-end. This was
largely attributable to the increase in term
loans and contract liabilities, partly offset
by the decrease in amounts due to
associated companies and joint ventures.
Group net debt increased by $0.25 billion to
$10.12 billion as at 31 December 2020.
Group net gearing ratio increased from
85% as at 31 December 2019 to 91% at
31 December 2020. This was largely driven
by the impact from lower equity due to the
PERFORMANCE REVIEW
68
OPERATING & FINANCIAL REVIEW
FINANCIAL REVIEW & OUTLOOK
TOTAL SHAREHOLDER RETURN (%)
50
40
30
20
10
0
-10
-20
-30
-40
-50
Keppel
STI
Source: Bloomberg
CASH FLOW
Operating profit
10-year annualised TSR as at 2020
-2.3%
Keppel
2.3%
STI
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
2017
30.9
22.0
2018
(16.4)
(6.5)
2019
18.5
9.4
2020
(18.6)
(8.1)
Depreciation, amortisation & other non-cash items
Cash flow provided by operations before changes in working capital
Provisions made for stocks, contract assets and doubtful debts
Working capital changes
Interest receipt and payment & tax paid
Net cash from/(used in) operating activities
Investments & capital expenditure
Divestments & dividend income
Advances from/(to) associated companies & joint ventures
Net cash from investing activities
Free cash flow1
2020
$ million
20 vs 19
+/(-)
2019
$ million
19 vs 18
+/(-)
2018
$ million
8
30
38
701
(107)
(430)
202
(451)
687
59
295
497
(869)
(87)
(956)
662
1,369
(48)
1,027
(113)
274
(38)
123
877
117
994
39
(178)
611
433
(84)
(1,476)
(1,157)
(382)
(825)
(338)
413
97
172
(142)
(950)
112
(644)
314
(218)
1,150
(653)
(1,168)
1,055
(494)
561
123
(319)
(240)
125
(450)
1,057
(217)
390
515
Dividend paid to shareholders of the Company & subsidiaries
(297)
133
(430)
116
(546)
1 Free cash flow excludes expansionary acquisitions & capital expenditure, and major divestments.
significant impairments recorded in the
current year, as well as increase in net debt
arising from investments made, working
capital requirements and dividend payments.
TOTAL SHAREHOLDER RETURN
Keppel is committed to delivering value
to shareholders through earnings growth.
Guided by Vision 2030, the Group will
leverage our business model and harness
our unique strengths, as well as the synergies
of the Group, to seize opportunities.
Our 2020 Total Shareholder Return (TSR) of
negative 18.6% was 10.5 percentage points
below the benchmark Straits Times Index’s
Annual Report 2020
(STI) TSR of negative 8.1%. Our 10-year
annualised TSR growth rate was negative
2.3% as compared to STI’s positive 2.3%.
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
data centre facilities), meant for long-term
growth for the Group and major divestments.
After excluding expansionary acquisitions,
capital expenditure and major divestments,
net cash from investment activities was
$295 million. The Group spent $451 million
on investments and operational capital
expenditure. After taking into account
the proceeds from divestments, dividend
income of $687 million and net advances
from associated companies and joint
ventures of $59 million, the free cash inflow
was $497 million.
Net cash from operating activities was $202 million
for 2020 as compared to net cash used in operating
activities of $825 million for 2019. This was due
mainly to lower working capital requirements.
Total distribution to shareholders of the
Company and non-controlling shareholders
of subsidiaries for the year amounted to
$297 million.
69
NET CASH/(GEARING)
Net Gearing = Borrowings + Lease Liabilities – Cash
Total Equity
$ million
18,000
12,000
6,000
0
-6,000
-12,000
Net Debt
Total Equity
Net Gearing
No. of times
3
2
1
0
-1
-2
2018
2019
2020
(5,567)
(9,874)
(10,123)
11,577
11,646
11,156
(0.48)
(0.85)
(0.91)
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 Keppel’s Group Treasury
department in accordance with established
policies and guidelines. These policies and
guidelines are established by the Group
Central Finance Committee and are updated
to take into account changes in the operating
environment. This committee is chaired by
the Chief Financial Officer of the Company
and includes Chief Financial Officers of the
Group’s key operating companies and Head
Office specialists.
The Group’s financial risk management is
discussed in more detail in the notes to the
financial statements. In summary:
•
The Group has receivables and payables
denominated in foreign currencies with the
largest exposures arising from US dollars,
Brazilian Real and Renminbi. Foreign
currency exposures arise mainly from
the exchange rate movements 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.
natural gas is indexed to the 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 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, swaptions 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.
•
•
•
•
BORROWINGS1
The Group borrows from local and foreign
banks in the form of short-term and long-term
loans and project loans. The Group also taps
the debt capital market via issuance of
primarily Singapore dollar bonds. Total Group
borrowings excluding lease liabilities as at
end-2020 were $12.0 billion (2019: $11.1 billion
and 2018: $7.5 billion). As at end-2020,
37% (2019: 41% and 2018: 20%) of Group
borrowings were repayable within one year,
with the balance largely repayable more
than three years later.
•
The Group hedges against price
fluctuations arising from the purchase of
natural gas that affect cost. Exposure to
price fluctuations is managed via fuel oil
forward contracts, whereby the price of
Unsecured borrowings constituted 94%
(2019: 96% and 2018: 92%) of total borrowings
with the balance secured by properties and
other assets. Secured borrowings are mainly
for financing of investment properties and
Keppel Corporation Limited
project finance loans for property development
projects. The net book value of properties
and assets pledged/mortgaged to financial
institutions amounted to $2.22 billion
(2019: $0.96 billion and 2018: $1.07 billion).
Fixed rate borrowings constituted 62%
(2019: 63% and 2018: 67%) of total borrowings
after taking into account the effect of
derivative financial instruments with the
balance at floating rates. The Group has
cross currency swap and interest rate swap
agreements with notional amounts totalling
$4,681 million whereby it receives foreign
currency fixed rate or variable rate equal to
EURIBOR (in the case of the cross-currency
swaps) and variable rates equal to SOR and
LIBOR (in the case of the interest rate swaps)
and pays fixed rates of between 0.19%
and 3.62% on the notional amount.
Details of these derivative financial
instruments are disclosed in the notes
to the financial statements.
Singapore dollar borrowings represented
73% (2019: 78% and 2018: 75%) of total
borrowings after taking into account the
effect of derivative financial instruments.
The balance was mainly in US dollars.
Foreign currency borrowings were drawn
to hedge against the Group’s overseas
investments and receivables that were
denominated in foreign currencies.
The weighted average tenor of the Group’s
debt was about three years at end-2019
and at end-2020 with a decrease in average
cost of funds as compared to end-2019.
CAPITAL STRUCTURE &
FINANCIAL RESOURCES
The Group maintains a strong balance sheet
and an efficient capital structure to maximise
returns for shareholders.
New investments are evaluated against
strict criteria including return on investment,
cash flow generation, risk management as
well as environmental, social and governance
considerations. 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-2020 was $11.16 billion
as compared to $11.65 billion as at end-2019
and $11.58 billion as at end-2018. The Group
was in a net debt (including lease liabilities)
position of $10,123 million as at end-2020,
which was above the $9,874 million as at
end-2019 and the $5,567 million as at end-2018.
The Group’s net gearing ratio was 0.91 times
as at end-2020, compared to 0.85 times as
at end-2019.
1 Borrowings exclude lease liabilities.
PERFORMANCE REVIEW
70
OPERATING & FINANCIAL REVIEW
FINANCIAL REVIEW & OUTLOOK
INTEREST COVERAGE
Interest Coverage = EBIT
Interest Cost
$ million
1,500
1,000
500
0
EBIT
Total Interest Cost
Interest Cover
Note: EBIT = Profit before tax + Interest expense
No. of times
6
4
2
0
2018
2019
1,450
1,266
242
5.99
336
3.77
2020
38
337
0.11
CASH FLOW COVERAGE
Cash Flow Coverage = Operating Cash Flow + Interest Cost
Interest Cost
$ million
600
400
200
0
-200
-400
-600
No. of times
6
4
2
0
-2
-4
-6
Operating Cash Flow + Interest
Total Interest Expense + Interest Capitalised
Cash Flow Coverage
2018
367
242
1.52
2019
(489)
336
(1.46)
2020
539
337
1.60
DEBT MATURITY ($ million)
4,800
4,000
3,200
2,400
1,600
800
0
<1 year
1-2 years
2-3 years
3-4 years
4-5 years
>5 years
4,432
2,037
1,798
1,142
1,099
1,531
Note: The borrowings exclude lease liability.
Interest coverage decreased from 5.99
times in 2018 to 3.77 times in 2019 before
decreasing to 0.11 times in 2020. Interest
coverage in 2020 was lower due to lower
Earnings before Interest expense and
Tax (EBIT).
Cash flow coverage decreased from
1.52 times in 2018 to -1.46 times in 2019
before increasing to 1.60 times in 2020.
This was mainly due to operational
cash inflow in 2020, as compared to
an outflow in 2019.
At the annual general meeting in 2020,
shareholders gave their approval for
the mandate to buy back shares. During
the year, 3,866,628 shares were bought
back and held as treasury shares. The
Company also transferred 2,829,890
treasury shares to employees upon vesting
of shares released under the KCL Share
Plans. As at end-2020, the Company had
3,051,474 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 as well as sufficient undrawn
banking facilities and capital market
programmes. Funding of working capital
requirements, capital expenditure and
investment needs was made through
a mix of short-term money market
borrowings, bank loans as well as
medium/long-term bonds via the debt
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 are actively
reviewed on an ongoing basis.
As at end-2020, total available credit
facilities, including cash at Corporate
Treasury and bank guarantee facilities,
amounted to $6.53 billion (2019: $8.19 billion).
Annual Report 2020
71
FINANCIAL CAPACITY
$ million
Remarks
Cash at Corporate Treasury
728
29% of total cash of $2.48 billion
Available credit facilities to the Group
5,806 Credit facilities of $12.08 billion,
of which $6.28 billion was utilised
Total
6,534
CRITICAL ACCOUNTING JUDGMENTS
& ESTIMATES
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 judgments
and estimates are described below.
COVID-19 and volatility in oil prices
The evolving situation of the COVID-19
pandemic and volatility in oil prices,
including the sharp reduction in global oil
demand, could impact the assessment of
the carrying amounts of the Group’s assets
and liabilities. As these events and
conditions have significant financial
reporting implications, Accounting and
Corporate Regulatory Authority of Singapore
(ACRA) had published financial reporting
practice guidance notes in May and
December 2020 highlighting key focus areas
when preparing and reviewing the financial
statements, especially in areas where
estimates, assumptions and judgment are
required. In the assessment for the current
year, management has carried out a review
to assess the assumptions used in the
assessment of the carrying values of certain
assets of the Group. Management has
exercised judgment in determining the
significant assumptions used and has
relied on information currently available,
including the COVID-19 official updates
from the authorities, experts’ consensus on
global oil prices and the work performed by
independent advisors on certain assets, in
the assessment of the appropriateness of
the carrying values of the Group’s assets,
including but not limited to the following
assets as at 31 December 2020:
• Recoverability of contract assets
and receivable balances in relation
to offshore & marine construction
contracts with Sete Brasil and
other customers
• Valuation of investment properties
•
Estimation of net realisable value
of stocks
Keppel Corporation Limited
•
•
Impairment of non-financial assets
Investments in associated companies and
joint ventures, including KrisEnergy Limited
(KrisEnergy) and Floatel International
Limited (Floatel) and related exposures
As the COVID-19 situation continues
to evolve, the Group will proactively
implement measures to mitigate the
potential impact on the Group. Should
the COVID-19 situation take a longer
than expected period to recover and/or
the recovery of long-term oil prices,
dayrates or utilisation rates take a longer
period or fall to a lower level than expected,
the assessment of the carrying amounts
of the assets of the Group could be
impacted, and material provisions
may be made and additional liabilities
may arise in the subsequent financial years.
Recoverability of contract assets
and receivable balances in relation to
offshore & marine construction contracts
Contracts with Sete Brasil (Sete)
The Group had previously entered into
contracts with Sete for the construction of
six rigs for which progress payments from
Sete had ceased since November 2014.
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. In October 2019, the Settlement
Agreement as well as the winning bid
proposal for Magni Partners (Bermuda) Ltd
(Magni) to purchase four Sete subsidiaries,
two of which are special-purpose entities
(SPEs) for uncompleted rigs constructed by
the Group, were approved by the creditors.
As part of the Settlement Agreement,
which is subject to fulfilment of certain
conditions precedent, the Group will
take over ownership of the remaining four
uncompleted rigs and will be able to explore
various options to extract the best value
from these assets. The Engineering,
Procurement and Construction (EPC)
contracts and related agreements entered
into in relation to these four rigs will be
deemed to be amicably terminated,
with no penalties, refunds and/or any
additional amounts being due to any party,
and the parties will waive all rights to
any claims. The Group has a receivable
of approximately US$260 million
from Sete and this amount has been
included in Sete’s court-approved Judicial
Reorganisation Plan. The outstanding amount
will be paid to the Group proportionally and
pari passu with other creditors of Sete as
part of, and out of proceeds of, its Judicial
Reorganisation Plan.
In December 2019, Petrobras issued a
press release to communicate their Board’s
approval on the continuation of four charter
agreements, and for Magni and their operator
Etesco to step in as the new party to the
agreements. Since then, the Group has been
in constructive discussions with Magni to
finalise the construction contracts for the
two rigs and with Sete to close out the
condition precedents in the Settlement
Agreement. As a result of the global COVID-19
pandemic and the extended time required
for Magni to secure financing, finalisation of
the agreements between the various parties
has been delayed. On 12 November 2020,
Petrobras issued a press release stating that
their mediation agreement deadline with
Sete had been extended to 31 January 2021
for Sete to conclude their sale transaction.
As of the date of these financial statements,
Magni had yet to secure the full financing
required to complete the sale transaction
with Sete.
On 26 January 2021, Petrobras issued
a media release to inform that it had
received notification from Sete that it would
not be able to comply with the conditions in
the mediation agreement by the extended
due date of 31 January 2021 and Sete had
requested to begin a new negotiation with
Petrobras. The Executive Board of Petrobras
has authorised this request from Sete,
in search of a joint solution with Sete.
Notwithstanding that the deadline to
complete the mediation agreement has
not been extended, the Group believes that
Petrobras, in approving a new negotiation,
will continue to seek solutions for these rigs
with the relevant stakeholders which may
yield several other alternative arrangements
between the stakeholders. The Group will
also be in active discussions with Sete and
Magni, as Sete enters into the new negotiation
with Petrobras.
Management estimated the net present
value of the cash flows relating to the
construction contract for two rigs with Magni.
In addition, management performed
an assessment to estimate the cost of
discontinuance of related agreements
of the EPC contracts with Sete, offset by
possible options in extracting value from the
uncompleted rigs and possible payout from
the Judicial Reorganisation Plan.
Arising from the above assessment,
the loss allowance for trade debtors of
PERFORMANCE REVIEW
72
OPERATING & FINANCIAL REVIEW
FINANCIAL REVIEW & OUTLOOK
$183,000,000 (2019: $183,000,000) and
the provision for related contract costs of
$245,000,000 (2019: $245,000,000) made
in prior years remain adequate to address
the cost of discontinuance, salvage cost
and unpaid progress billings relating to
EPC contracts with Sete.
Taking into consideration cost of completion,
cost of discontinuance, salvage cost and
unpaid progress billings with regards
to these rigs, the total cumulative
loss recognised in relation to these rig
contracts amounted to $476,000,000 as
at 31 December 2020 (31 December 2019:
$476,000,000).
The above assessment had been made with
the following key assumptions:
i. Petrobras will continue to require the
rigs for execution of its business plans
and will charter them at the dayrates
and tenure previously agreed with Sete;
ii. Magni will be able to secure financing
to complete the purchase of the
rigs with Sete and complete the
construction contract with the Group
at the terms previously discussed
with Magni; and
iii. The future costs of construction of the
rigs are not materially different from
management’s current estimation.
At the date of these financial statements,
the commencement of a new negotiation
between Petrobras and Sete has been
authorised by the Executive Board of
Petrobras. Should the conclusion of the
negotiation result in significant changes to
the key assumptions above, additional
material provision may be required,
including adjustments to the net carrying
amounts (net of total cumulative losses
as described above) relating to the Sete
contracts amounting to $113,645,000 as
at 31 December 2020.
Other contracts
As at 31 December 2020, the Group had
several rigs that were under construction
for customers, where customers had
requested for deferral of delivery dates
of the rigs in prior years and have higher
counterparty risks. In the event that
the customers are unable to fulfil
their contractual obligations, the Group
can exercise the right to retain payments
received to date and retain the titles
to the rigs.
The Group had also delivered rigs
to customers where receipt of the
construction revenue had been deferred
under certain financing arrangements,
amounting to $848,117,000 as at 31
December 2020 (2019: $778,734,000)
of which $772,443,000 (2019: $638,973,000)
is secured on the rigs and $75,674,000
(2019: $139,761,000) is unsecured but the
Group has obtained parental guarantee
from the customers.
Management has assessed each
deferred construction project individually
to make judgment as to whether the
customers will be able to fulfil their
contractual obligations and take delivery
of the rigs at the revised delivery dates.
Management has also performed an
assessment of the expected credit
loss on contract assets and trade
receivables of deferred projects and
of rigs delivered on financing arrangements
to determine if a provision for expected
loss is necessary.
The global economic environment has
been and continues to be significantly
affected by COVID-19. The oil & gas
industry, in particular, has experienced an
unprecedented and very difficult period
as a result of lower expected demand.
The Group remains cognisant of these
developments and has been closely
monitoring the market and industry
developments relating to utilisation rates,
dayrates, oil price outlook and other
relevant information.
For the above contract assets and
secured trade receivables, in the event
that the customers are unable to
fulfil their contractual obligations,
management has considered that the
most likely outcome for the rigs delivered
or under construction is for the Group
to take possession of these assets and
charter them out to work. The value
of the rig on this basis would be based
on an estimation of the Value-in-use (VIU)
of the rig, i.e. through estimating the
net present value of cash flows from
operating the rig over the useful life
of the asset.
Management has engaged independent
professional firms to assist in their
assessment on whether the VIU of the
rigs would exceed the carrying values of
contract assets and trade receivables as
at 31 December 2020. The VIU model used
by the independent firm is consistent with
prior years and is based on Discounted
Cash Flow calculations that cover each
class of rig. In addition to the independent
firm responsible for the valuation based
on VIU calculations, management has
also engaged a separate industry expert to
independently provide a view of the market
outlook, assumptions and parameters
As at 31 December 2020
Gross balance
Less: Expected credit loss
Balance, 1 January
Currency alignment
Impairment charged
Reclassification (Note 15)
Balance, 31 December
Net balance
As at 31 December 2019
Gross balance
Less: Expected credit loss
Balance, 1 January and 31 December
Net balance
Annual Report 2020
Financing to customers
Contract assets
$’000
Secured
$’000
Unsecured
$’000
Total
$’000
2,933,715
871,605
138,595
3,943,915
21,000
–
430,842
(19,301)
432,541
2,501,174
–
(4,634)
103,796
–
99,162
772,443
–
(2,894)
65,815
–
62,921
75,674
21,000
(7,528)
600,453
(19,301)
594,624
3,349,291
3,345,020
638,973
139,761
4,123,754
21,000
3,324,020
–
–
21,000
638,973
139,761
4,102,754
73
which are used in the valuations based
on the estimation of VIU. Key inputs into
the estimation of the VIU include dayrates
and cost assumptions, utilisation rates,
discount rates and estimated commencement
of deployment of the assets. The valuation
of the rigs would decrease if the expected
income from operating the rigs decline,
or discount rates were higher, or the
estimated commencement of deployment
was delayed.
Management has also appointed an
independent advisor to conduct
an assessment of the recoverability
of unsecured receivables as at
31 December 2020.
Accordingly, the Group recognised
an expected credit loss allowance of
$430,842,000 (2019: $nil) on contract
assets, and $169,611,000 (2019: $nil) on
long-term receivables during the financial
year ended 31 December 2020, as shown
in the table on page 72.
The valuations of the rigs based on
estimated VIU are most sensitive to
discount rates and dayrates.
• A discount rate of 7% has been used in
the valuation as at 31 December 2020
(31 December 2019: 6.8%). An increase
of 1% of the discount rate would increase
the expected credit loss by approximately
$7,000,000 (31 December 2019: $nil).
• A decrease in dayrates of US$5,000
per day across the entire asset useful
life of 25 years would not result in
any further expected credit loss
(31 December 2019: $nil).
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 (CGUs). This requires
the Group to estimate the future cash flows
expected from the CGUs and an appropriate
discount rate in order to calculate the
present value of the future cash flows.
Management performed impairment
tests on fixed assets (Note 6), investments
in subsidiaries (Note 9), investments in
associated companies and joint ventures
(Note 10), and intangibles (Note 13) as at
31 December 2020.
Management has performed the
impairment assessment of its investments
in KrisEnergy and Floatel and related
exposures on the basis of the restructuring
steps taken by these investees. Refer to
Note 10(c) and Note 10(f) respectively
for more details on the impairment
assessment of Group’s investments
in KrisEnergy and Floatel.
Keppel Corporation Limited
Management has also performed an
impairment assessment of the goodwill
arising from acquisition of M1. Details
of the impairment testing is disclosed
in Note 13.
KrisEnergy
On 14 August 2019, KrisEnergy made
an application to the High Court of the
Republic of Singapore to commence a
court-supervised process to reorganise
its liabilities and seek a moratorium against
enforcement actions and legal proceedings
by creditors against KrisEnergy pursuant
to section 211B of the Companies Act
(Cap. 50). It has also requested a suspension
of trading of its securities on Singapore
Exchange Securities Trading Ltd (SGX).
At the date of these financial statements,
the moratorium has been further extended
to 16 April 2021.
In April 2020, the Group entered into a credit
facility agreement with two wholly-owned
indirect subsidiaries of KrisEnergy
(the Borrowers), with the Group agreeing
to grant a project financing loan in two or
more tranches for an aggregate principal
amount not exceeding US$87 million
(the CBA Loan Facility) to the Borrowers.
As at 31 December 2020, the total aggregate
amount of funds drawn down by the
Borrowers through the CBA Loan Facility
was US$57,700,000.
KrisEnergy published an initial restructuring
proposal on 16 June 2020, followed by
the publication of the final restructuring
proposal on 21 August 2020. The final
restructuring proposal is to be implemented
via four inter-conditional processes that
require the consent of the requisite majority
of each respective group of creditors
and shareholders:
•
•
•
•
reaching an agreement for an extension
of secured Revolving Credit Facility
(RCF) with the lender;
conversion of debts and claims into
equity for unsecured creditors under
the Scheme of Arrangement (Scheme);
partial conversion of claims into equity
for Zero Coupon Noteholders under the
Consent Solicitation Exercise (CSE)
requisite approval from the shareholders
for the issuance of new shares in the
restructuring proposal in Extraordinary
General Meeting (EGM)
On 30 December 2020, the RCF maturity
date was extended for an initial period of
6 months to 30 June 2021 with a further
extension to 30 June 2024 upon successful
completion of restructuring. A Scheme was
released by KrisEnergy on 20 November
2020 setting out the details of the proposed
restructuring terms. On 14 January 2021,
the unsecured creditors of KrisEnergy
approved the Scheme through a Singapore
court supervised process. The Scheme was
effective on 15 February 2021, following
the lodgment of a copy of the order of
the Court approving the Scheme with the
Registrar of Companies. The CSE process
for KrisEnergy’s zero coupon noteholders
that was launched on 20 January 2021
has been approved on 11 February 2021.
As at the date of these financial statements,
the final component of the restructuring,
which is the EGM to seek KrisEnergy
shareholders’ approval for the issuance
of new shares pursuant to the Scheme
and the CSE, had not yet taken place.
Management performed an impairment
assessment to estimate the recoverable
amount of the Group’s exposures in
KrisEnergy as at 31 December 2020.
Management reviewed the cash flow
projections prepared by its financial
advisor who estimated the amount of
cash available from producing assets and
forecasted production from assets under
development, taking into consideration
the relative priority of each group of
stakeholders to these cash flows based
on their respective rights. The cash flow
estimates were based on forecasted oil
prices, determined by taking reference
from external information sources, ranging
from US$50 to US$62 per barrel for 2021
to 2029 (2019: US$63 to U$70 per barrel for
2020 to 2028). The impairment assessment
has taken into consideration the terms
of restructuring.
Based on the impairment assessment,
an impairment provision of $39,200,000 was
recognised for the year ended 31 December
2020, and the carrying amount of the
Group’s investment in the zero-coupon
notes was reduced to $35,084,000.
No impairment allowance was made
against the loan receivable and contract
assets, and no liabilities were recorded for
the Group’s guarantee given to the bank for
the loan granted to KrisEnergy as the Group
has priority over the cash flows on the assets
of KrisEnergy. In the financial year ended
31 December 2019, management had
performed a similar assessment and
recognised an impairment charge of
$37,000,000 on the equity investment.
The estimates and assumptions used
are subject to risk and uncertainty. If the
oil prices were to decrease by 2% across
the forecasted period of 2021 to 2029, the
estimated cash available from producing
assets and forecasted production from
assets under development would decrease,
and this would result in an additional
impairment of $34,400,000.
PERFORMANCE REVIEW
74
OPERATING & FINANCIAL REVIEW
FINANCIAL REVIEW & OUTLOOK
Floatel
In February 2020, Floatel reported that its
financial situation was unsustainable as
liquidity was under pressure. There was a
material uncertainty as to whether Floatel
would be able to service its secured financial
liabilities and net working capital requirements
for the coming 12 months, which cast
significant doubt on Floatel’s ability to
continue as a going concern. The long-term
viability of Floatel’s business depends on it
finding a solution to its financial situation.
On 5 December 2020, at the expiry of the
forbearance under a Forbearance Agreement
entered into between Floatel and certain
bondholders, Floatel entered into a Lock-Up
Agreement with FELS Offshore Pte Ltd
(the member of the Group with the equity
interest in Floatel), an ad hoc group
(the AHG) of holders of Floatel’s 9%
senior secured 1L Bondholders, and
other consenting 1L Bondholders holding
in aggregate over 56% by value of the
1L Bonds and 2L Bondholders holding in
aggregate close to 13% of the 2L Bonds
(the Lock-Up Agreement). The Lock-Up
Agreement commits Floatel, the Group,
the AHG and any acceding 1L Bondholders
and 2L Bondholders to use reasonable
endeavours to implement a comprehensive
financial and corporate restructuring of the
Floatel group (the Restructuring). As part
of the Lock-Up Agreement, FELS Offshore
Pte Ltd has committed to use reasonable
endeavours to procure the provision and
funding of a new US$100,000,000 Revolving
Credit Facility (RCF) for Floatel and another
member of the Group may provide credit
support for the RCF in the form of a
risk participation.
On 16 December 2020, Floatel announced
an increased level of support of the Lock-Up
Agreement by the 1L (more than 2/3) and
2L Bondholders. In addition, the terms
of new warrants to be issued were also
agreed in a revised Lock-Up Agreement
on 14 December 2020. On 8 January 2021,
bank lenders of Floatel agreed to accept a
cash settlement of US$46,000,000 less
Lenders’ advisory fees for full settlement
of amounts owing to them and release of
the charge on one of the five vessels owned
by Floatel. On 12 February 2021, the 2L
Bondholders approved the restructuring.
As the loan from the relevant member of
the Group to Floatel is considered as part
of the Group’s net investment in Floatel
(i.e. settlement is neither planned nor
foreseen), management has continued
to equity account for its share of loss in
Floatel’s results against the carrying value
of the loan to Floatel, after reducing the
carrying value of the equity investment in
Floatel to zero as of 30 June 2020. For the
financial year ended 31 December 2020,
Annual Report 2020
the Group has recognised a total share of
operating loss from Floatel of $82,779,000
and share of impairment loss of vessels of
$228,107,000. The latter was estimated
based on industry parameters provided
by an independent industry advisor and
adopted in the VIU calculation of the
vessels. In addition, the carrying value of
preference shares, based on the fair value
assessment conducted by an independent
financial advisor using the dividend discount
model had similarly been written down to nil
as at 31 December 2020.
The Group has considered that the recovery
of its net investment in Floatel is dependent
on Floatel successfully carrying out the
Restructuring and continuing operation
of its fleet of vessels. Management has
retained an independent financial advisor to
support the review of Floatel’s business plan
and cash flow projections. In the event that
the Restructuring of Floatel fails to go through,
Floatel would not have adequate cash from
its operations and cash on hand to continue
as a going concern beyond year 2021 and
in this scenario the Group’s investment in
Floatel is not expected to be recoverable.
As at the date of these financial statements,
the Restructuring is progressing positively
and the Group is in advanced stages of
discussion with financial institutions to
provide the US$100,000,000 RCF.
Revenue recognition and contract cost
The Group recognises contract revenue
and contract cost over time by referencing
the Group’s progress towards completing
the construction of the contract work.
The stage of completion is measured in
accordance with the accounting policy
stated in Note 2.20. Significant assumptions
are required in determining the stage of
completion and significant judgment is
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. In making
the assumption, the Group evaluates by
relying on past experience and the work
of engineers. Revenue from construction
contracts is disclosed in Note 24.
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
determinations are 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.
EIG Energy Fund XIV, L.P., et al. v.
Keppel Offshore & Marine Ltd., (United States
District Court, Southern District of New York)
In February 2018, the Company’s subsidiary,
Keppel Offshore & Marine Ltd (Keppel O&M)
was served a summons by eight investment
funds (Plaintiffs) managed by EIG Management
Company, LLC (EIG) where a civil action
was commenced by the Plaintiffs pursuant
to the Racketeer Influenced and Corrupt
Organizations Act (RICO) in the United States
District Court, Southern District of New York.
The Plaintiffs sought damages for its loss
of investment of US$221 million in Sete,
trebled under RICO to US$663 million, plus
interest, costs and mandatory attorneys’
fees under RICO.
This new lawsuit came after an earlier civil
action commenced by eight of EIG’s managed
funds in the United States District Court,
District of Columbia against, among others,
the Company and Keppel O&M. The case was
dismissed by the Court on 30 March 2017.
In March 2018, Keppel O&M submitted a letter
pursuant to the Court’s rules seeking permission
to file a motion to dismiss the Complaint. In April
2018, in response to Keppel O&M’s letter, the
Plaintiffs filed the First Amended Complaint
which added, among other things, a state law
claim for aiding and abetting fraud.
In July 2018, Keppel O&M filed a motion to
dismiss the First Amended Complaint. The
Plaintiffs filed their brief in opposition to the
motion in August 2018 and Keppel O&M filed
its reply brief in August 2018.
In May 2020, the Court issued an order granting
in part and denying in part Keppel O&M’s
75
motion to dismiss. The Court dismissed the
Plaintiffs’ civil RICO conspiracy claim but found
that the First Amended Complaint adequately
pleaded an aiding and abetting fraud claim
under New York state law and denied
Keppel O&M’s motion to dismiss that claim.
Consequently, the Plaintiffs currently seek
damages of US$221,000,000 (without the
earlier treble damage claim of US$663 million
under RICO in respect of which Keppel O&M
has been successful in dismissing the claim),
plus punitive damages, interest, attorneys’ fees,
costs and disbursements, based on their
remaining claim for aiding and abetting fraud.
Management is of the view that the remaining
claim for aiding and abetting fraud is
without merit and Keppel O&M will vigorously
defend itself. As at the date of these financial
statements, it is premature to predict or
determine the eventual outcome of this
remaining claim and hence, the potential
amount of loss cannot currently be assessed.
Termination of two mid-water
semisubmersible drilling rig contracts
As disclosed in Note 2.28(b)(ix), a subsidiary
of Keppel Offshore & Marine Ltd (KOM
subsidiary) terminated two contracts with
subsidiaries of a customer for the construction
of two mid-water semisubmersible drilling
rigs for harsh environment use:
i.
In June 2020, the buyer under the first of
these contracts (First Contract) alleged a
breach of contract by the KOM subsidiary
and purportedly terminated the First
Contract and sought recovery of the
payments already made to the KOM
subsidiary with interest. The allegations
by the buyer were refuted and the
purported termination of the contract
was rejected by the KOM subsidiary.
The buyer subsequently failed to pay an
instalment due under the First Contract.
Non-payment of any instalment by the
customer is a default in accordance with
the First Contract, entitling the KOM
subsidiary to terminate the First Contract,
retain all payments received to date
(approximately US$54 million), and seek
compensation for the work done to date
and claim ownership of the rig. The KOM
subsidiary had therefore issued a notice
of termination of the First Contract to the
buyer and commenced arbitration to
enforce its rights under the First Contract
against the buyer.
approximately US$43 million and to seek
reimbursement of the KOM subsidiary’s
costs of the project to the date
of termination.
Subsequent to the issuance of this notice
of termination, the KOM subsidiary has
received a notice from the buyer
purporting to terminate the Second
Contract, alleging breaches under
the Second Contract. As it had already
terminated the Second Contract, the
KOM subsidiary’s position is that the
notice of termination can have no effect.
In any event, the KOM subsidiary refutes
the abovementioned allegations by the
buyer in the notice.
The Group is working with legal advisors
to enforce its rights and will continue to
evaluate the potential financial impact in
consultation with its advisors. Based on
currently available information, no provision
was made in respect of the recovery of the
payments already made to the Group by
the two buyers.
Global resolution with criminal authorities
in relation to corrupt payments
In 2017, Keppel O&M reached a global resolution
with the criminal authorities in the US, Brazil
and Singapore in relation to corrupt payments
made in relation to Keppel O&M’s various
projects with Petrobras and Sete Brasil in Brazil,
which were made with knowledge or approval
of former Keppel O&M executives. Fines in
an aggregate amount of US$422,216,980,
or equivalent to approximately $570 million,
paid/payable had been allocated between the
three jurisdictions.
As part of the global resolution, Keppel O&M
accepted a Conditional Warning from the
Corrupt Practices Investigation Bureau (CPIB)
in Singapore, and entered into a Deferred
Prosecution Agreement (DPA) with the U.S.
Department of Justice (DOJ), while Keppel
FELS Brasil S.A., a wholly-owned subsidiary
of Keppel O&M, entered into a Leniency
Agreement with the Public Prosecutor’s
Office in Brazil, the Ministerio Publico Federal
(MPF), which became effective following the
approval of the Fifth Chamber for Coordination
and Review of the MPF in April 2018. In addition,
Keppel Offshore & Marine USA, Inc (KOM USA),
also a wholly-owned subsidiary of Keppel O&M,
pleaded guilty to one count of conspiracy to
violate the U.S. Foreign Corrupt Practices Act
and entered into a Plea Agreement with the DOJ.
ii.
In December 2020, the KOM subsidiary
issued a notice of termination of the
second of these contracts (Second
Contract) and commenced arbitration
to enforce its rights under the Second
Contract against the buyer, which rights
include the right to retain the amounts
already paid by the buyer to date of
Keppel O&M has successfully complied with
its obligations under the DPA and the DPA
has accordingly concluded. Keppel O&M has
also been in compliance with its obligations
under the Conditional Warning issued by the
CPIB and the Leniency Agreement entered
into with the MPF. As part of the applicable
fines payable under the global resolution, a
Keppel Corporation Limited
PERFORMANCE REVIEW
76
OPERATING & FINANCIAL REVIEW
FINANCIAL REVIEW & OUTLOOK
sum of US$52,777,122.50 (less any penalties
that Keppel O&M may pay to specified
Brazilian authorities) was payable to CPIB
within three years from the date of the
Conditional Warning and has been included
in accrued expenses since FY 2017. The
discussions with the specified Brazilian
authorities remain ongoing, and CPIB has
agreed to extend this three-year period for
a further 12 months until 22 December 2021.
In June 2020, the Company announced that
it was brought to the Company’s attention
that the Office of the Comptroller General
of Brazil (CGU) has published a notice in
the Official Gazette (Notice) to the effect
that CGU has initiated an administrative
enforcement procedure (AEP) against
Keppel O&M, Prismatic Services Ltd.,
Keppel FELS Ltd., Keppel FELS Brasil S.A.,
and BrasFELS S.A., in relation to alleged
irregularities under the Brazilian Anti-Corruption
Statute, and appointed two CGU officials
to form a panel to preside over the
proceedings. The Company has been
advised that, following the issuance of the
Notice, the CGU would carry out further
internal investigations, and the panel has
to thereafter decide whether any summons
is to be served on the defendants, and if so,
the defendants will then have 30 days
thereafter to file a defence. Neither the
Notice nor any summons has been served
on any of the foregoing entities to-date.
The Notice does not provide any factual
particulars and the Company is therefore
currently unable to assess the matter or its
impact, if any. The Company understands
from CGU that the AEP will not affect
the ongoing negotiations with the Brazil
authorities, and that the AEP has been
suspended pending these ongoing discussions.
Over the course of the DPA reporting period,
Keppel Group continued its remediation
efforts and implemented significant
compliance enhancements across its
businesses. Keppel O&M’s successful
completion of the DPA reflects Keppel
Group’s ongoing commitment to ethics,
integrity and robust controls in all its
business operations. In 2019, Keppel O&M
successfully achieved global certification
for the ISO 37001 Anti-Bribery Management
System, and Keppel is progressively
implementing the same standard
throughout the Group.
Anti-bribery and corruption compliance
audits were also performed on entities
within the Keppel O&M Group. These audits
revealed that the enhanced policies and
procedures put in place to-date were,
in general, functioning as intended.
The results of the audits performed in
2020 were satisfactory with no adverse
findings requiring follow-up actions.
Annual Report 2020
Based on currently available information,
no additional provision was made in
relation to the ongoing discussions with
the specified Brazilian authorities.
Useful lives of network and related
application systems
The cost of network and related application
systems is depreciated on a straight-line
basis over the assets’ estimated economic
useful lives. Management estimated
the useful lives of these fixed assets
to be within five to 25 years. These are
common life expectancies applied in the
telecommunications industry. Changes
in the expected level of usage and
technological developments could impact
the economic useful life and the residual
values of these assets. Therefore, future
depreciation charges could be revised. The
carrying amounts of the Group’s network
and related application systems at the end
of the reporting period are disclosed in
Note 6 to the financial statements.
Revaluation of investment properties
The Group carries its investment properties
at fair value with changes in fair value
being recognised in profit and loss account,
determined annually by independent
professional valuers on the highest
and best use basis except for significant
investment properties which are revalued
on a half-yearly basis.
For the purpose of the financial statements
for the year ended 31 December 2020,
valuations were obtained from the valuers
for the Group’s investment properties,
and the resultant fair value changes were
recognised in the profit and loss account.
In determining the fair values, the valuers
have used valuation techniques which involve
certain estimates. The key assumptions
to determine the fair value of investment
properties include market-corroborated
capitalisation rate, price of comparable plots
and properties, net initial yield and discount
rate. The valuation reports obtained from
independent valuers for certain properties
have highlighted the heightened uncertainty
of the COVID-19 outbreak and material
valuation uncertainty where a higher
degree of caution should be attached to
the valuation than would normally be the
case. Accordingly, the valuation of these
investment properties may be subjected
to more fluctuation than during normal
market conditions.
In relying on the valuation reports,
management has exercised its judgment
to ensure that the valuation methods
and estimates are reflective of current
market conditions. The carrying amount
of investment properties and the key
assumptions used to determine the fair
value of the investment properties are
disclosed in Notes 7 and 34.
Estimating net realisable value of stocks
The net realisable value of stocks
represents the estimated selling price
for these stocks less all estimated cost
of completion and costs necessary to
make the sale.
As at 31 December 2020, stocks
under work-in-progress amounted to
$1,072,890,000 (after a provision of
$41,508,000 recognised in FY 2020 and
$50,000,000 in prior years). This amount
included a balance of $447,337,000
which were transferred from contract
assets during FY 2020 as described
in Note 2.28(b)(vi) – Termination of
Two Mid-Water Semisubmersible
Drilling Rig Contracts.
The assessment of the carrying value of
these stocks were performed in conjunction
with the recoverability assessment of
contract assets based on a VIU approach
as described in Note 2.28(b)(ii).
Based on the results of the assessments,
the Group recognised an impairment
provision of $41,508,000 on stocks under
work-in-progress during the financial year
ended 31 December 2020.
The valuation of these stocks under
work-in-progress based on estimated
VIU are most sensitive to discount rates
and dayrates.
• An increase of 1% of the discount rate
would result in an impairment of
approximately $158,000,000
(31 December 2019: $nil).
• A decrease in dayrates of US$5,000
per day across the entire asset life of
25 years would result in an impairment
of approximately $21,000,000
(31 December 2019: $nil).
For properties held for sale, provision
is arrived at after 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 estimates and
assumptions used are subject to risk
and uncertainty in view of the economic
uncertainty brought about by the
COVID-19 pandemic. 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.
PERFORMANCE REVIEW
OPERATING & FINANCIAL REVIEW
GROUP STRUCTURE
77
KEPPEL CORPORATION LIMITED
ENERGY & ENVIRONMENT
URBAN DEVELOPMENT
CONNECTIVITY
ASSET MANAGEMENT
• Offshore & Marine
• Energy Infrastructure
• Environmental Infrastructure
• Renewable Energy
• Property Development
& Investment
• End-to-End Master Development
• Data Centres
• Telecommunications
• Logistics
• Asset Management
• REITs & Trust
• Private Funds
KEPPEL OFFSHORE &
MARINE LTD
KEPPEL LAND LIMITED
KEPPEL TELECOMMUNICATIONS &
TRANSPORTATION LTD
KEPPEL CAPITAL HOLDINGS
PTE LTD
Keppel FELS Limited
Keppel Shipyard Limited
Keppel Singmarine Pte Ltd
Keppel LeTourneau
Keppel Nantong Shipyard
Company Limited
China
Offshore Technology
Development Pte Ltd
100%
100%
100%
100%
100%
100%
100%
Keppel Marine &
Deepwater Technology Pte Ltd
100%
Keppel AmFELS LLC
United States
Keppel FELS Brasil SA
Brasil
Keppel Philippines Marine Inc
The Philippines
Keppel Subic Shipyard Inc
The Philippines
Floatel International Ltd
Bermuda
KEPPEL INFRASTRUCTURE
HOLDINGS PTE LTD
Keppel Gas Pte Ltd
Keppel Electric Pte Ltd
Keppel DHCS Pte Ltd
Keppel Seghers Pte Ltd
Keppel Infrastructure
Services Pte Ltd
100%
100%
98%
86%
50%
100%
100%
100%
100%
100%
100%
Keppel Merlimau Cogen Pte Ltd 49%
KEPPEL RENEWABLE
ENERGY PTE LTD
KRISENERGY LTD4
Cayman Islands
100%
40%
Keppel Corporation Limited
Keppel Data Centres Holding
Pte Ltd6
Keppel Logistics Pte Ltd
UrbanFox Pte Ltd
M1 LIMITED2
100%
100%
100%
100%
100%
Keppel Land
– various holding companies
Southeast Asia and India
Keppel Land China
China
Keppel Bay Pte Ltd
KEPPEL URBAN SOLUTIONS
PTE LTD
100%
100%
100%
100%
100%
SINO-SINGAPORE TIANJIN
ECO-CITY INVESTMENT AND
DEVELOPMENT CO., LTD1
China
50%
Keppel REIT Management
Limited
100%
100%
Alpha Investment Partners Ltd 100%
Keppel Infrastructure Fund
Management Pte Ltd
Keppel DC REIT
Management Pte Ltd5
Keppel Capital Alternative
Asset Pte Ltd
Keppel Pacific Oak US REIT
Management Pte Ltd
Keppel REIT3,4
Keppel DC REIT4,7
KEPPEL PACIFIC OAK
US REIT4
100%
100%
100%
50%
49%
21%
7%
GROUP CORPORATE SERVICES
Control & Accounts
Information Technology
Strategy & Development
Corporate Communications
Internal Audit
Cyber Security
Legal
Tax
Treasury
Health, Safety & Environment
Mergers & Acquisitions
Human Resources
Risk & Compliance
Notes:
1 Owned by a Singapore Consortium, which is in turn 90%-owned by the Keppel Group.
2 Owned by Keppel Telecommunications & Transportation Ltd (19%), a wholly-owned subsidiary of Keppel Corporation,
and Konnectivity (81%), a company jointly owned by Keppel Corporation and Singapore Press Holdings.
3 Owned by Keppel Land Limited (43%) and Keppel Capital Holdings Pte Ltd (6%).
4 Public listed company.
5 Owned by Keppel Capital Holdings Pte Ltd (50%) and Keppel Telecommunications & Transportation Ltd (50%).
6 Owned by Keppel Telecommunications & Transportation Ltd (70%) and Keppel Land Limited (30%).
7 Owned by Keppel Telecommunications & Transportation Ltd (20.6%) and Keppel DC REIT Management Pte Ltd (0.4%).
Updated as at 10 March 2021. The complete list of subsidiaries and significant associated companies is available at
https://www.kepcorp.com/annualreport2020.
GOVERNANCE
CORPORATE GOVERNANCE
78
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 business and
performance, and directors must at all times act
objectively in the best interests of the Company.
This report sets out an overview of our corporate
governance practices and adheres to the
principles of the Code of Corporate Governance
2018 (the “2018 CG Code”), with references
to the accompanying Practice Guidance.
BOARD’S CONDUCT OF AFFAIRS
PRINCIPLE 1:
The Company is headed by an effective
Board which is collectively responsible and
works with management for the long-term
success of the Company.
PRINCIPLE 3:
There is a clear division of responsibilities
between the leadership of the Board and
management, and no one individual has
unfettered powers of decision-making.
Dr Lee Boon Yang is the non-executive and
independent Chairman of the Company.
Mr Loh Chin Hua is the Chief Executive Officer
(“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 are provided in
a timely manner to the Board for the Board
to make good decisions. He also encourages
constructive relations between the Board and
management, and between the executive and
non-executive directors (“NEDs”). At board
meetings, the Chairman encourages a full
and frank exchange of views, drawing out
contributions from all directors so that the
debate benefits from the full diversity of views,
in a robust yet collegiate setting. At annual
general meetings and other shareholders’
meetings, the Chairman ensures constructive
dialogue between shareholders, the Board
and management. The Chairman sets the
right ethical and behavioural tone and 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 of reference. All the Board committees
Annual Report 2020
Governance Framework: KCL’s governance structure is as follows:
GOVERNANCE FRAMEWORK 2020
Board Risk
Committee
Audit
Committee
Internal
Audit
BOARD
Nominating
Committee
Remuneration
Committee
Board Safety
Committee
CHIEF EXECUTIVE
OFFICER
Corporate
Functions
IMPAC
Group Regulatory
Compliance
Management
Committee
Group Regulatory
Compliance
Working Team
Management
Committees
Central Finance
Committee
IT Steering
Committee
Management
Development
Committee
Group
Sustainability
Steering Committee
Technology and
Data Risk Committee
are actively engaged and play an important
role in ensuring good corporate governance
in the Company and within the Group, and
the Board is kept updated on discussions of
the committees via circulation of minutes and
regular updates by the respective chairmen of
the committees at Board meetings. The terms
of reference are reviewed on an annual basis,
along with the board committees’ structures
and membership, to ensure their continued
relevance and effectiveness. The composition
and terms of reference of the respective board
committees setting out their responsibilities
and authority are in Appendix 1.
The CEO, assisted by the management team,
makes strategic proposals to the Board and
after robust and constructive board discussion,
executes the agreed strategy, manages
and develops the Group’s businesses and
implements the Board’s decisions. He is
supported by management committees that
direct and guide management on operational
policies and activities, which include:
1.
Investments & Major Projects Action
Committee (“IMPAC”), which guides the
Group in exercising a spirit of enterprise
as well as prudence to earn optimal
risk adjusted returns on invested capital
for its chosen lines of business, taking
into consideration the relevant risks
in a controlled manner;
2. Management Development Committee
(“MDC”), 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 recommends the candidates
for the approval of the Nominating
Committee (“NC”). The MDC also
provides inputs, guidance and direction
on operational policies and human
resources/organisational matters;
79
3. Central Finance Committee, which reviews,
guides and monitors financial policies
and activities of Group companies;
4. Group Regulatory Compliance
Management Committee (“Group RCMC”),
which articulates the Group’s commitment
to regulatory compliance, directs and
supports the development of overarching
compliance policies and guidelines,
and facilitates the implementation and
sharing of policies and procedures
across the Group;
5. Group Regulatory Compliance Working
Team (“Group RCWT”), which supports
the Group RCMC and oversees the
development and review of overarching
compliance policies and guidelines for
the Group, as well as review training and
communication programmes;
6. Keppel IT Steering Committee, which
provides strategic information technology
(“IT”) leadership and ensures IT strategy
alignment in achieving business strategies;
7. Group Sustainability Steering Committee,
which sets sustainability strategy and
leads performance in key focus areas; and
8. Technology and Data Risk Committee,
which operationalises the Technology
and Data Risk Management operating
standards programme that enhances the
Group’s safeguards, resilience and
responses to cyberthreats.
BOARD MATTERS
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.
The Company has adopted internal
guidelines setting forth matters that require
Board approval. Material items that require
Board approval include strategic directions,
annual budget, financial results and dividend
declaration. Further, all transactions exceeding
$150 million by any Group company (not
separately listed) require the approval of the
Board. For transactions between $30 million
and $150 million, IMPAC will determine if
Board approval is required, depending on
the individual considerations for each case.
Role: The principal functions of the
Board are to:
•
provide entrepreneurial leadership
and decide on matters in relation to
the Group activities which are of a
significant nature, including decisions on
strategic directions and guidelines and
Keppel Corporation Limited
•
•
•
•
•
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
(including appropriate focus on value
creation, innovation and sustainability),
monitor the performance of management
and ensure that the Company has the
necessary resources to meet its
strategic objectives;
set the Company’s values, standards
(including ethical standards), appropriate
tone-from-the-top and desired
organisational culture, and put in place
policies, structures and mechanism
to ensure such values, standards and
culture are complied with;
constructively challenge management
and hold them accountable for
performance and ensure proper
accountability within the Group;
oversee processes for evaluating
the adequacy and effectiveness of
internal controls, risk management,
financial reporting and compliance,
and satisfy itself as to the adequacy
and effectiveness of such processes;
be responsible for the governance of risk
and ensure that management maintains
a sound system of risk management and
internal controls, to effectively monitor
and manage risks so as to safeguard the
interests of the Company and its
stakeholders, and achieve an appropriate
balance between risks and company
performance; and
•
assume responsibility for corporate
governance and ensure transparency and
accountability to key stakeholder groups.
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
assessment of the individual directors.
Based on the result of the peer assessment
carried out by the directors for FY 2020, all
directors have discharged this duty well.
Conflicts of Interest: Each director must
promptly disclose conflicts of interest,
whether direct or indirect, in relation to
any transaction or proposed transaction.
In this connection, the Company has in place
a “Keppel Group – Directors’ Conflict of
Interest Policy” to guide directors in identifying,
disclosing and managing situations of actual
or potential conflicts, as well as situations
which may be perceived to be conflicts
of interest. Every director is required to
promptly disclose any conflict of interest,
whether direct or indirect, in relation to a
transaction or proposed transaction with the
Company as soon as is practicable after the
relevant facts have come to his/her
knowledge, and recuse himself/herself
when the conflict-related matter is discussed
unless the Board is of the opinion that his/her
presence and participation is necessary
to enhance the efficacy of such discussions,
and abstain from voting in relation to
conflict-related matters. On an annual basis,
each director is also required to submit details
of his/her associates for the purpose of
monitoring interested persons transactions.
Board Strategic Review: The Board
periodically reviews and approves the
Group’s strategic plans.
A two-day off-site board strategy meeting is
organised annually for in-depth discussion on
strategic issues and the direction of the Group,
to give the NEDs a better understanding of
the Group and its business, and to provide
an opportunity for the NEDs 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.
In FY 2020, the focus of the strategy
meeting was on Vision 2030, a long-term
roadmap to guide the Group’s strategy and
transformation, which was announced via
SGXNet in May 2020. From a conglomerate
of diverse parts, the Company will refocus
its portfolio to be an integrated business,
providing end-to-end solutions for sustainable
urbanisation, with sustainability placed at the
core of its strategy. Building on the Group’s
strengths in engineering, developing and
operating specialised assets, as well as capital
and asset management, the Company will focus
on four key business areas, namely Energy &
Environment, Urban Development, Connectivity
and Asset Management – all part of a connected
value chain. As part of the Group’s sharpened
business focus and asset-light model,
the Company is also taking a disciplined
approach to capital allocation, to deploy more
capital to its growth platforms and unlock
value from more integration and synergies
within the Group, while continuing to recycle
capital to enhance the Group’s overall return.
In September 2020, the Group embarked
on further steps in the Vision 2030 roadmap,
including the strategic review of the offshore
& marine business, and a $3–5 billion asset
monetisation programme over three years to
free up the Group’s balance sheet to pursue
new growth opportunities. To this end,
a transformation office was established to
drive the implementation of Vision 2030 and
create sustainable value for all stakeholders.
The Transformation Office provides
regular updates to the Board.
GOVERNANCE
80
CORPORATE GOVERNANCE
Meetings: The Board meets six times a year and as warranted by particular circumstances. Board meetings are scheduled and the schedule
is 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 (“Constitution”). Further, the NEDs meet without the presence of management from time to time and on a needs basis, and any
relevant feedback would be shared and discussed with the executive director. The attendance of each Board member at the annual general
meeting and the board and board committee meetings held in FY 2020, are disclosed in the table below:
ATTENDANCE
Lee Boon Yang
Loh Chin Hua
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Till Vestring
Veronica Eng
Jean-François Manzoni
Teo Siong Seng1
Tham Sai Choy2
Penny Goh3
No. of Meetings Held
2020 annual
general meeting4 Board Meetings
Audit
Nominating
Remuneration
Safety
Risk
Board Committee Meetings
1
1
1
1
1
1
1
1
1
1
1
1
10
10
9
9
10
10
10
10
10
10
10
10
–
–
6
6
6
–
6
–
–
5
5
6
4
–
4
–
–
4
–
4
–
–
–
4
4
–
–
–
4
4
–
–
3
–
–
4
4
4
–
4
–
–
–
–
–
3
–
4
–
–
–
4
4
–
4
4
–
3
3
4
Notes:
1 Mr Teo Siong Seng was appointed as a member of the Remuneration Committee and Board Safety Committee with effect from 1 February 2020.
2 Mr Tham Sai Choy was appointed as a member of the Audit Committee and Board Risk Committee with effect from 1 February 2020.
3 Mrs Penny Goh was appointed to the Board as a non-executive and independent director with effect from 2 January 2020, and was appointed as a member of the
Audit Committee and Board Risk Committee with effect from 1 February 2020.
4 Refers to the annual general meeting held on 2 June 2020.
If a director was 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/her views
and comments on the matters to be
discussed so that they may be conveyed to
other members at the meeting.
Non-executive Directors’ Meetings: The
NEDs meet as needed at the end of each
scheduled quarterly meeting without
the presence of management to discuss
matters such as board processes,
risk and compliance matters, succession
planning and leadership development,
and performance management and
remuneration matters.
Company Secretaries: 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 NEDs, and facilitating orientation and
assisting in the professional development
of the directors) are followed and regularly
reviewed to ensure effective functioning of
Annual Report 2020
the Board, and that the 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.
Access to 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 must be
kept well informed of the Company’s
business and affairs, and be knowledgeable
about the industry in which the business
units operate. The Company has therefore
adopted initiatives to put in place processes
to ensure that the NEDs 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. 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.
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 facilitate their
access to and review of board materials.
However, sensitive matters may be tabled at
the meeting itself and discussed. 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.
Regular informal meetings are held for
management to brief the directors on
prospective deals and potential developments
81
at an early stage before formal
board approval is sought, and 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 is circulated to the directors
from time to time. 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.
The Board also reviews the budget on an
annual basis, and any material variance
between the projections and actual
results would be disclosed and explained.
Management also provides the Board
members with management accounts
on a monthly basis and as the Board may
require from time to time, to keep the Board
informed, on a balanced and understandable
basis, of the Group’s performance, financial
position and prospects.
Orientation: A formal letter is sent to
newly-appointed directors upon their
appointment explaining their roles, duties,
obligations and responsibilities 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 business,
strategic plans and objectives.
Training: 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,
corporate social responsibility, risk governance
and management, the roles and responsibilities
of a director of a listed company and industry-
specific matters. In FY 2020, some KCL
directors attended talks on topics relating to
the digital economy, macroeconomic trends,
sustainable urbanisation, energy transition,
innovation investments, and corporate
governance. E-training was also conducted
on the Group’s policies on anti-corruption,
personal data protection, competition law and
cyber security. Site visits are also conducted
periodically to familiarise directors with the
operations of the various business units so
as to enhance their performance as board
or board committee members. All induction,
training and development costs are at the
Company’s expense.
Keppel Corporation Limited
BOARD COMPOSITION AND
SUCCESSION PLANNING
PRINCIPLE 2:
The Board has an appropriate level of
independence and diversity of thought and
background in its composition to enable it
to make decisions in the best interests of
the Company.
PRINCIPLE 4:
The Board has a formal and transparent
process for the appointment and
re-appointment of directors, taking into
account the need for progressive renewal
of the Board.
NOMINATING COMMITTEE
The NC comprises entirely non-executive
and independent directors, namely:
• Prof Jean-François Manzoni
Independent Chairman
• Dr Lee Boon Yang
Independent Member
• Mr Alvin Yeo
Independent Member
• Mr Till Vestring
Independent Member
The NC is responsible for making
recommendations to the Board on board
appointments, overseeing the Board and senior
management’s succession and leadership
development plans and conducting annual
review of board diversity, board size, board
independence and directors’ commitment.
The detailed terms of reference of this
Committee are disclosed on page 100 herein.
BOARD SUCCESSION PLANNING
The Board believes that orderly succession
and renewal are achieved as a result of careful
planning, where the appropriate composition
of the Board is continually under review. In this
regard, the Board has put in place a formal
process for the renewal of the Board and the
selection of new directors 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. The NC leads
the process and makes recommendations to
the Board on the appointment of new directors
and re-nomination of directors.
As announced on 24 February 2021,
Dr Lee Boon Yang will retire as non-executive
Process for appointment of new directors
Process for re-nomination of retiring directors
a. The NC reviews annually the balance and mix
a. Pursuant to the Constitution,
one-third of the directors shall retire
from office at the Company’s annual
general meeting every year, and a
director appointed after the last annual
general meeting shall only hold office
until the next annual general meeting.
If eligible, these directors may submit
themselves for re-election.
b. The NC reviews each director’s
eligibility, 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 and his/her tenure.
c. NC makes recommendations to the
Board for approval.
of skills, knowledge, experience, and other aspects
of diversity such as gender and age, and the size of
the Board which would facilitate decision-making.
In this review, the NC would also take into account
the needs of the Group, the collective skills and
competencies of the Board and service tenure
spread of the directors.
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. The NC will, in all cases, take into consideration the
following objective criteria identified as necessary
for the Board and board committees to be effective:
i. Integrity
ii. Independent mindedness
iii. Ability to commit time and effort to carry out duties
and responsibilities effectively
iv. Track record of making good decisions
v. Experience in high-performing companies
vi. Financial literacy
d. External help (for example, Singapore Institute of
Directors and search consultants) may be used to
source for potential candidates if need be. Directors
and management may also make recommendations.
e. The 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.
f. The NC makes recommendations to the Board
for approval.
GOVERNANCE
82
CORPORATE GOVERNANCE
and independent Chairman and Director of
the Company at the conclusion of the upcoming
annual general meeting. Mr Danny Teoh, who is
currently the Chairman of the Audit Committee
and a member of the Remuneration and
Board Risk Committees, will succeed
Dr Lee Boon Yang as non-executive and
independent Chairman.
In addition to Dr Lee Boon Yang, Mr Alvin Yeo
and Mr Tan Ek Kia, who have both similarly
served for more than nine years on the Board,
have indicated their intention to retire at the
conclusion of the upcoming annual general
meeting. Dr Lee Boon Yang, Mr Alvin Yeo and
Mr Tan Ek Kia will therefore be retiring by
rotation pursuant to the Constitution, and
although eligible, will not be seeking re-election.
Prof Jean-François Manzoni will also be
retiring by rotation pursuant to the Constitution
but being eligible, will be seeking re-election.
The NC has reviewed his eligibility, contribution
and performance, and taking into account
the results of his recent peer assessment,
is of the view that Prof Jean-François Manzoni
has given sufficient time and attention to the
affairs of the Company and has been able
to discharge his duties as director effectively.
The Board, at the recommendation of NC,
had therefore approved the re-nomination
of Prof Jean-François Manzoni at the
upcoming annual general meeting.
ALTERNATE DIRECTOR
The Company has no alternate directors
on the Board.
ANNUAL REVIEW OF BOARD DIVERSITY
The Company recognises that diversity in
relation to composition of the Board provides
a range of perspectives and insights needed to
support good decision-making for the benefit
of the Group, and is committed to ensuring that
the Board comprises directors who, as a group,
provide an appropriate balance and mix of skills,
knowledge, experience, and other aspects of
diversity (such as gender and age) so as to
promote the inclusion of different perspectives
and ideas, mitigate against groupthink and
ensure that the Company has the opportunity
to benefit from all available talent. In identifying
suitable candidates for new appointments to
the Board, the NC would ensure that female
candidates were included for consideration.
The final decision on the appointment of
directors would be based on and driven by
merits against the objective criteria set by the
Board from time to time on the recommendation
of the NC, after having regards to the benefits
of diversity and the needs of the Board.
The Company has in place a Board Diversity
Policy that sets out the framework and
approach for the Board to set its qualitative
and measurable quantitative objectives for
achieving diversity, and to annually assess
the progress in achieving these objectives.
Annual Report 2020
Objectives identified under Board Diversity Policy
The objectives identified in FY 2019 to be fulfilled by the end of FY 2021, and the progress
towards achieving such objectives, are set out below:
Objectives
Progress
Appoint at least two additional
independent directors with
some of the core competencies
already present on the Board,
by end-FY 2020 for succession
planning purposes.
Broaden the skill set of directors
on the Board by appointing at
least one director with the relevant
expertise and experience that would
complement those already on the
Board and which would help drive
the Group’s strategy.
Improve gender diversity over a 3-year
period by ensuring that at least 20%
of the Board will comprise female
directors by the end of FY 2021.
Mr Tham Sai Choy was appointed as a non-executive and
independent director with effect from 1 November 2019.
Mr Tham was Managing Partner of KPMG Singapore and
then Chairman of KPMG Asia Pacific before he retired in
2017. He was a member of KPMG’s global board, and had
served on its executive committee and risk committee, and
chaired its compensation and nominations committee.
As a member of the executive committee, Mr Tham was
responsible for KPMG’s global strategies and planning,
including developing the firm’s capabilities in cyber security,
data analytics and digital transformation. Mr Tham also
worked with many of Singapore’s listed companies in their
audits and other consultancy work over his 36 years of practice.
He was appointed as a board member with a view of being
the successor to Mr Danny Teoh in the roles of Audit Committee
Chairman and Board Risk Committee member.
Mrs Penny Goh was appointed as a non-executive and
independent director with effect from 2 January 2020. Mrs Goh
was Co-Chairman and Senior Partner of Allen & Gledhill LLP,
where she had, for many years, headed the firm’s corporate
real estate practice. She advises listed corporations, private
equity property funds, sovereign wealth funds and real estate
investment trusts, and has extensive experience in a broad
range of corporate real estate transactions for commercial,
industrial and logistics projects in Singapore and the Asia
Pacific, involving investment, joint development and profit
participation structures. Mrs Goh was appointed with a view
to succeeding Mr Alvin Yeo as a board member with legal
expertise and to enhance the gender diversity of the Board.
Mr Teo Siong Seng was appointed as a non-executive and
independent director with effect from 1 November 2019
(and subsequently re-designated as non-executive and
non-independent director with effect from 3 February 2021).
His strong background, knowledge and experience in the
China market, experience in growing businesses in frontier
countries such as East and West Africa, and his knowledge
and experience from serving as Chairman of the Singapore
Business Federation, Honorary President of the Singapore
Chinese Chamber of Commerce & Industry and as director
of Business China, would enhance the balance and breadth
of skills of the Board, and help drive the Group’s strategy.
The female representation on the Board is currently 18%.
This objective will be met with the appointment of an
additional female director by the end of FY 2021.
The annual assessment is led by the NC as part
of the process for appointment of new directors
and board succession planning. To help the
NC identify gaps (if any) in skills, knowledge,
experience and other aspects of diversity in
the board composition in any given year of
assessment, each member of the Board is
required to complete a Board Diversity Matrix
to indicate which of the list of skills, knowledge,
experience and other aspects of diversity
(identified by the NC, and set out in the Board
Diversity Matrix, as being able to contribute
to the Company’s strategy and business) the
board member possesses. The returns from
the board members are then consolidated
into a single Board Diversity Matrix to highlight
the Board’s current mix of skills, knowledge,
experience and other aspects of diversity and
gaps therein if any. The Board will, taking into
consideration the recommendations of the
NC, review and agree annually the qualitative
and measurable quantitative objectives for
achieving diversity on the Board.
The NC conducted an assessment in January
2021 and is satisfied that the Board and the
board committees comprise directors who as
a group provide an appropriate balance and
mix of skills, knowledge, experience and other
aspects of diversity. The NC is also satisfied
that the directors, as a group, possess core
competencies required for the Board and the
board committees to be effective, taking into
account the Company’s strategy and business.
Board Diversity Matrix (as of 31 December 2020)
Directors’ Skills, Knowledge and Experience
• Accounting/finance
• Business or management experience
• Human resource
• Risk management
• Policy/economics
• Mergers and acquisitions
•
•
•
•
• Customer-based experience
Legal
International perspective
Industry knowledge
Strategic planning experience
or knowledge
• China experience
Nevertheless, the NC noted the need for
new appointment of directors for succession
planning purposes, given the retirement
of three non-executive and independent
directors at the upcoming annual general
meeting. Post annual general meeting,
there will be one independent director who
would have served for more than nine years
on the Board, and two more who would
have served more than nine years in 2024.
Taking into account feedback from the
recent board assessment exercise,
the NC was of the view that the Board
could benefit from directors with strong
knowledge, experience and expertise in
(i) digital economy/technology, (ii) renewable
energy, (iii) regional market experience,
(iv) sustainability, (v) mergers and acquisitions
and (vi) corporate finance. The NC will
also continue to work towards fulfilling the
objective of increasing female representation
on the Board to at least 20% by end-FY 2021.
The Board, at the recommendation of the NC,
had therefore set a new objective under the
Board Diversity Policy, which was to appoint
at least three to four additional independent
directors by end-FY 2023, with relevant expertise
and experience that would complement
those already on the Board and which would
help drive the Group’s Vision 2030 strategy,
and for succession planning.
ANNUAL REVIEW OF
BOARD INDEPENDENCE
Board Independence: The NC determines on
an annual basis whether or not a director is
independent. In January 2021, the NC carried
out the review on the independence of each
director based on the respective directors’
self-declaration in the Directors’ Independence
Checklist and their actual performance on
the Board and board committees, taking into
account the listing rules on the circumstances
in which a director will not be deemed
independent and guidance in the 2018 CG
Code as to the circumstances in which a
director should not be deemed independent.
83
Other Aspects of Diversity
GENDER (%)
RACE OR ETHNICITY (%)
Male
Female
Total
81.8
18.2
100.0
Chinese
Caucasian
Total
81.8
18.2
100.0
AGE (%)
LENGTH OF SERVICE (%)
55–60
61–65
66–70
71–75
Total
36.4
18.2
27.2
18.2
100.0
1–4 years
5–8 years
9 years and above
Total
36.4
27.2
36.4
100.0
of philanthropic endowments and gifts
from Temasek and other donors. NC noted
that Ms Eng did not hold any executive or
management role in Temasek Trustee, which
administered Temasek Trust, and would recuse
herself in the event of a potential of conflict of
interest. Taking these factors into consideration,
along with her invaluable contributions to
the Board and board committees, and the
outcome of the recent peer Individual Director
Performance assessment, the NC unanimously
agreed that Ms Eng has at all times exercised
independent judgment in the best interests of
the Company in the discharge of her director’s
duties and should therefore continue to be
deemed an independent director.
COUNTRY OF ORIGIN, NATIONALITY OR
CULTURAL BACKGROUND (%)
Singaporean
German
Malaysian
Canadian
Total
72.7
9.1
9.1
9.1
100.0
In this connection, the NC noted that
Ms Veronica Eng had declared that she was
a member of the Investment Committee of
Temasek Trust, which was established by
Temasek Holdings (Private) Limited (“Temasek”)
(a controlling shareholder of the Company) to
provide financial oversight and governance
The NC also noted that Mr Teo Siong Seng
had declared that he was the Executive
Chairman and Managing Director of Pacific
International Lines (Private) Limited (“PIL”)
which is in the process of implementing a
restructuring. Under the restructuring, Heliconia
Capital Management Pte Ltd (“Heliconia”),
Keppel Corporation Limited
GOVERNANCE
84
CORPORATE GOVERNANCE
a subsidiary of Temasek, has offered a
comprehensive financing package of up to
US$600 million to PIL. If the restructuring is
successful, Heliconia will hold a majority
interest in PIL. Although all the NC members
were confident that Mr Teo would be able to
continue to exercise independent judgment in
the best interests of the Company, market
perception might be different and the NC
was therefore of the view that the prudent
approach would be to re-designate Mr Teo as
a non-executive and non-independent director.
The NC noted that Mr Tham Sai Choy had
declared his directorship on DBS Group Holdings
and DBS Bank which provided services to the
Group. The NC considered that such interests
had already been declared to the Board, and that
Mr Tham would abstain from voting whenever
there was potential conflict of interest. The NC
further considered that, as DBS is a leading
bank in Singapore and Southeast Asia, it was
not unexpected that its services would be
sought by the Group from time to time. Taking
these factors into consideration, along with
his invaluable contributions to the Board and
board committees, and the outcome of the
recent peer Individual Director Performance
assessment, the NC unanimously agreed
that Mr Tham 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 NC noted that Mrs Penny Goh is a Senior
Advisor of Allen & Gledhill LLP (“A&G”) which
provided legal services to the Group. She had
declared that she did not hold a partnership
interest in A&G and is not involved in the
selection and appointment of legal advisors
of the Group and did not regard the business
relationship with A&G as something that
could affect her independent judgment.
The NC further considered that, as A&G was
one of the top law firms in Singapore, it was
not unexpected that its services would be
sought by the Group from time to time.
Taking these factors into consideration,
along with her invaluable contributions to
the Board and board committees, and the
outcome of the recent peer Individual Director
Performance assessment, the NC unanimously
agreed that Mrs Goh has at all times exercised
independent judgment in the best interests of
the Company in the discharge of her director’s
duties and should therefore continue to be
deemed an independent director.
The NC further noted that the following
directors had served beyond nine years and
their independence should therefore be
subject to rigorous review.
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 NC
Annual Report 2020
that although he is a partner with a 5% or
more stake in WongPartnership LLP, he did
not involve himself in the selection and
appointment of the legal advisor for the Group,
and that he supported the selection of legal
advisor based on objective criteria. In addition,
the NC noted that, WongPartnership LLP
being one of the top law firms in Singapore,
it was not unexpected that its services
would be sought by the Group from time to
time. Taking these factors into consideration,
along with his invaluable contributions on
the Board and board committees, and the
outcome of the recent peer Individual
Director Performance assessment, the NC
(save for Mr Yeo who abstained from
deliberation on this matter) unanimously
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 is a non-executive and
independent director on the board
of TransOcean Ltd and Chairman of
KrisEnergy Ltd, both of which have business
dealings with the Keppel Offshore & Marine
(“Keppel O&M”) Group from time to time.
Mr Tan had declared to the NC that he
recused himself whenever there was
potential conflict of interest and continued
to exercise independent judgment. The NC
also took into account Mr Tan’s invaluable
contributions on the Board and board
committees and the outcome of the
recent peer Individual Director Performance
assessment, and unanimously 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 Danny Teoh had declared his interest
in Workflowww International Limited
and XM Studios Pte Ltd., which could be
suppliers of services to M1 Limited (“M1”).
The NC considered that both the interests
had already been declared to the Board
and Mr Teoh has abstained from voting
whenever there was potential conflict
of interest. The NC further noted that
Mr Teoh was a director of DBS Group
Holdings which provided services to the
Group, a role from which he had stepped
down from on 31 March 2020. The NC
nevertheless considered that, as DBS is a
leading bank in Singapore and Southeast
Asia, it was not unexpected that its services
would be sought by the Group from time
to time. Taking into account his invaluable
contributions on the Board and board
committees and the outcome of the recent
peer Individual Director Performance
assessment, the NC unanimously agreed
that Mr Teoh 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.
Dr Lee Boon Yang has served on the Board
beyond nine years. Taking into consideration,
among other things, his invaluable contributions
to the Board and board committees, his
outstanding rating in respect of his performance
as Board Chairman and director in the
recent Chairman and peer Individual Director
Performance assessment exercise, and that
there were no other circumstances that would
deem him non-independent, the NC (save for
Dr Lee who abstained from deliberation on this
matter) agreed unanimously that Dr Lee 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.
Following the review, the NC was of the
view that Dr Lee Boon Yang, Mr Alvin Yeo,
Mr Tan Ek Kia, Mr Danny Teoh, Mr Till Vestring,
Ms Veronica Eng, Prof Jean-François Manzoni,
Mr Tham Sai Choy and Mrs Penny Goh
should be deemed independent, while
Mr Teo Siong Seng should be re-designated
as a non-executive and non-independent
director. The Board has reviewed the basis
of the NC’s recommendations, and concurred
with the assessment of independence in
respect of the above-mentioned directors.
The re-designation of Mr Teo Siong Seng
was with effect from 3 February 2021.
In view of the above, the Board currently
comprises majority independent directors,
with a total of 11 directors of whom nine
are independent.
Lead Independent Director: The NC has
deliberated and decided that it was not
necessary to appoint a Lead Independent
Director given the majority independence
of the Board and that the Chairman was
independent. Further, matters affecting
the Chairman such as succession and
remuneration were deliberated by the
board committees where the majority
of the members (including the Chairman)
were independent directors, and where
the Chairman was conflicted, he would
recuse himself and abstain from voting.
Taking into account the independence and
diversity of the Board, the NC is of the view
that the Board has an appropriate level of
independence and diversity of thought and
background in its composition to enable it to
make decisions in the best interests of
the Company.
ANNUAL REVIEW OF BOARD SIZE
The Board, in concurrence with the NC,
was of the view that a Board size of 11 to 12
directors would be appropriate to facilitate
effective decision-making, taking into account
85
the nature and scope of the operations
of the Company, the requirements of the
Company’s business and the need to avoid
undue disruptions from changes to the
composition of the Board and board
committees. With the retirement of three
directors at the upcoming annual general
meeting, the NC will continue to search for
additional directors to be appointed to enhance
diversity and for succession planning purposes.
No individual or small group of individuals
dominate the Board’s decision-making.
ANNUAL REVIEW OF
DIRECTORS’ COMMITMENTS
The NC assesses 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/her duties as a
director of the Company. Instead of fixing
a maximum number of listed company
board representations and/or other principal
commitments 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 the results
of the assessment of the effectiveness of the
individual director, the level of commitment
required of the director’s listed company
board representations and/or other principal
commitments, and the director’s actual
conduct and participation on the Board and
board committees, including availability and
attendance at regular scheduled meetings
and ad hoc meetings. The NC is of the view
that such an assessment is sufficiently
robust to detect and address, on a timely
basis, any time commitment issues that may
hinder the effectiveness of the directors.
The NC conducted an assessment in
January 2021 and is 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, 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 2020,
all the directors performed well. The NC was
therefore satisfied that in FY 2020, 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 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”
Keppel Corporation Limited
is a person who, at the request of the Company,
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
the Company’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 28 to 31: Academic and professional
qualifications, board committees served
on (as a member or Chairman), date of
first appointment as director, date of last
re-election as director, directorships or
chairmanships both present and past held
over the preceding five years in other listed
companies and other major appointments,
whether appointment is executive or
non-executive, whether considered by the
NC to be independent, and details of their
membership on board committees; and
Page 119: Shareholding in the Company
and its subsidiaries.
BOARD PERFORMANCE
PRINCIPLE 5:
The Board undertakes a formal annual
assessment of its effectiveness as a whole,
and that of each of its board committees and
individual directors.
The Board has implemented formal processes
for assessing the effectiveness of the Board
as a whole, each of its board committees,
the contribution by the Chairman and
peer and self-assessment of the individual
directors to the effectiveness 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. Mr Michael Lim,
former Chairman of PricewaterhouseCoopers
and Land Transport Authority, and currently
Chairman of Nomura Singapore Limited, was
appointed for this role. Mr Michael Lim does
not have business relationships or any other
connections with the Company or its directors
which may affect his independent judgment.
GOVERNANCE
86
CORPORATE GOVERNANCE
Formal Process and Performance Criteria:
The evaluation processes and performance
criteria are disclosed in Appendix 1 to
this report. The performance criteria were
substantially similar to that adopted in the
previous years.
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
allowed 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 helped 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 assisted 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 were
nevertheless able to and had adequately
discharged their duties as directors of
the Company.
Based on feedback from the directors, the
Board and board committees continued to
perform and fulfil its duties and responsibilities.
REMUNERATION REPORT
PRINCIPLE 6:
The Board has a formal and transparent
procedure for developing policies on director
and executive remuneration, and for fixing the
remuneration packages of individual directors
and key management personnel. No director is
involved in deciding his/her own remuneration.
PRINCIPLE 7:
The level and structure of remuneration of
the Board and key management personnel
are appropriate and proportionate to the
sustained performance and value creation
of the Company, taking into account the
strategic objectives of the Company.
PRINCIPLE 8:
The Company is transparent on its remuneration
policies, level and mix of remuneration,
the procedure for setting remuneration,
and the relationships between remuneration,
performance and value creation.
REMUNERATION COMMITTEE
For FY 2020, the Remuneration Committee
(“RC”) comprised entirely non-executive and
independent directors, namely:
• Mr Till Vestring
Independent Chairman
• Dr Lee Boon Yang
Independent Member
• Mr Danny Teoh
Independent Member
• Mr Teo Siong Seng
(from 1 February 2020)
Independent Member (re-designated
as Non-Executive and Non-Independent
Member with effect from 3 February 2021)
With Mr Teo’s re-designation as a non-executive
and non-independent director with effect
from 3 February 2021, the RC currently
comprises entirely non-executive directors,
three out of four of whom (including the
Chairman) are independent.
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, thereby
maximising 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, share-based
incentives and awards, benefits-in-kind and
termination payments) and the specific
remuneration packages for each director
and the key management personnel. The RC
also reviews the remuneration of senior
management and administers the KCL Share
Option Scheme in respect of the outstanding
options granted prior to the termination of
the KCL Share Option Scheme in end-2010,
the KCL Restricted Share Plan (the “KCL RSP”)
and the KCL Performance Share Plan
(the “KCL PSP”). In addition, the RC reviews
the Company’s obligations arising in the event
of termination of the executive directors’
and key management personnel’s contract
of service, to ensure that such contracts of
service contain fair and reasonable termination
clauses which are not overly generous.
The detailed terms of reference of this
Committee are disclosed on page 101 herein.
Access to Expert Advice: The RC has access
to expert advice from external remuneration
consultants where required. In FY 2020, the
RC sought views from external remuneration
consultants, Aon Hewitt, on market practice and
trends, and benchmarks against comparable
organisations. 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.
POLICY IN RESPECT OF NON-EXECUTIVE
DIRECTORS’ REMUNERATION
Each NED’s remuneration comprises
a basic fee and an additional fee for
services performed on board committees.
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 directors’ fee structure
is regularly benchmarked with comparable
listed companies to ensure that their
remuneration is fair and appropriate.
The directors’ fee structure, which remained unchanged from FY 2017, is set out in the table below.
DIRECTORS’ FEE STRUCTURE
Board Chairman
Board Member
Audit Committee
Board Risk Committee
Remuneration Committee
Board Safety Committee
Nominating Committee
Annual Report 2020
Basic Fee (per annum)
$750,000 (all-in)
$108,000
Additional Fees for Membership in
Board Committees (per annum)
Chairman
$67,000
$67,000
$47,000
$47,000
$40,000
Member
$36,000
$36,000
$31,000
$31,000
$24,000
87
The NEDs participated in additional ad hoc
meetings with management during the year
and are not paid for attending such meetings.
Executive directors are not paid directors’ fees.
Shareholders’ approval for the payment of
directors’ fees will be sought at each annual
general meeting. If approved, each of the
NEDs (including the Chairman) will receive
70% of his/her total directors’ fees in cash
(“Cash Component”) and 30% in the form
of shares in the Company (“Remuneration
Shares”) (both amounts are subject to
adjustment as described below). The Cash
Component is paid half-yearly in arrears.
The Remuneration Shares are paid after the
next annual general meeting has been held.
The actual number of Remuneration Shares,
to be purchased from the market on the
first trading day immediately after the date
of the next annual general meeting provided
that it does not fall within any applicable
restricted period of trading (“Trading Day”)
for delivery to the respective NEDs, will be
based on the market price of the Company’s
shares on the SGX on the Trading Day. In
the event that the first trading day after the
date of the next annual general meeting falls
within a restricted period of trading, the
Remuneration Shares will be purchased on
the first trading day immediately after the
end of the restricted period of trading. 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 NEDs is
intended to align the interests of the NEDs
with those of the shareholders’ and the
long-term interests of the Company. An NED
who steps down before the payment of the
Remuneration Shares will receive all of his/her
directors’ fees for FY 2021 (calculated on a
pro-rated basis, where applicable) in cash.
The aggregate directors’ fees for NEDs
for FY 2021 are subject to shareholders’
approval at the upcoming annual general
meeting. The amount of directors’ fees has
been computed taking into consideration the
number of board committee representations
by the NEDs and also caters for additional
fees (if any) which may be payable due to the
formation of additional Board Committees,
or additional Board or Board Committee
members being appointed in the course
of FY 2021. In the event that the amount
proposed is insufficient, approval will be
sought at the next annual general meeting
before payments are made to the NEDs
for the shortfall amount. The Chairman and
the NEDs will abstain from voting and will
procure their respective associates to abstain
from voting in respect of this resolution.
The RC is of the view that the remuneration
of NEDs is appropriate to their level of
contribution, taking into account factors such
Keppel Corporation Limited
as effort, time spent and responsibilities, and
to attract, retain and motivate the directors to
provide good stewardship of the Company.
REMUNERATION POLICY IN RESPECT
OF EXECUTIVE DIRECTOR AND OTHER
KEY MANAGEMENT PERSONNEL
The Company advocates a performance-based
remuneration system that is highly flexible
and responsive to the market, the Company’s,
business unit’s and individual employee’s
performance, and is aligned with shareholders’
and other stakeholders’ interests.
The RC periodically reviews the Company’s
scorecard and remuneration structure to
ensure that it supports the Group’s vision
and long-term strategy. In designing the
remuneration 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 remuneration, and between cash
versus equity incentive remuneration, and
appropriate to attract, retain and motivate
key management personnel to successfully
manage the Company for the longer term.
The total remuneration structure reflects
the following four key objectives:
a. Shareholder Alignment: To incorporate
performance measures that are aligned
to shareholders’ interests;
b. Long-term Orientation: To motivate
employees to drive sustainable
long-term growth;
c. Simplicity: To ensure that the remuneration
structure is easy to understand and
communicate to stakeholders; and
d. Synergy: To facilitate talent mobility
and enhance collaboration across
business units.
The total remuneration structure comprises
three components; that is, annual fixed cash,
annual performance bonus 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 size of the Company’s annual
performance bonus pot is determined
by the Group’s financial and non-financial
performance and is distributed to employees
based on their individual performance. The
KCL Share Plans are in the form of two share
plans approved by shareholders, the KCL RSP
and the KCL PSP. A portion of the annual
performance bonus is granted in the form
of deferred shares that are awarded under
the KCL RSP. The KCL PSP comprises
performance targets determined on an
annual basis. The KCL RSP and KCL PSP
are long-term incentive plans which vest
over a longer-term horizon. Executives who
have a greater ability to influence Group
outcomes have a greater proportion of their
overall remuneration at risk. The Company
performs regular benchmarking reviews
on employees’ total remuneration to ensure
market competitiveness.
The RC exercises broad discretion and
independent judgment in ensuring that the
amount and mix of remuneration 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 remuneration structure is directly linked
to corporate and individual performance,
both in terms of financial and non-financial
performance. This link is achieved in the
following ways:
a. by placing a significant portion of
executives’ remuneration at risk
(“At Risk component”) and subject to
a vesting schedule;
b. by incorporating appropriate key
performance indicators (“KPIs”) for
awarding of annual performance bonus:
i. For FY 2020, there were four scorecard
areas that the Company has identified
as key to measuring the performance
of the Group – (i) Financial and
Business Drivers; (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,
compliance and controls measures,
environmental sustainability,
employee engagement, talent
development and succession planning;
ii. To more closely align the annual
scorecard targets with the Company’s
Vision 2030 goals, the FY 2021
scorecard has been further finetuned
to reflect the following key focus
areas– (i) Financial; (ii) Vision 2030
Value Creation and Transformation;
(iii) Process and Stakeholders; and
(iv) People. The emphasis on the
Company’s Vision 2030 targets in
the annual scorecard ensures the
longer-term targets are cascaded in
the form of annual KPIs;
iii. The scorecard areas have been
chosen because they support how
the Group achieves its strategic
objectives. The framework provides
a link for employees to understand
how they contribute to each area
of the scorecard, and therefore
GOVERNANCE
88
CORPORATE GOVERNANCE
to the Company’s overall strategic
goals. This is designed to achieve
a consistent approach and
understanding across the Group.
The RC reviews and approves the
scorecard each year and the annual
performance bonus is determined
thereafter based on the scorecard
achievement. The annual performance
bonus comprises both cash bonus
and deferred shares awards that
vest equally over three years,
thereby aligning employees with
shareholders’ interests;
c. by selecting performance conditions
for the KCL PSP awards, namely
Total Shareholder Return, Return on
Capital Employed and Net Profit that
are aligned with shareholders’ interests;
d. by requiring those conditions to be met
in order for the At Risk components
of remuneration to be awarded or
vested; and
e. by forfeiting the At Risk components
of remuneration when those 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
remuneration structure, the RC takes
into account the risk policies and risk
tolerance of the Group as well as the
time horizon of risks, and incorporates
risk-adjustments into the remuneration
structure through several initiatives,
including but not limited to:
a. prudent funding of annual
performance bonus;
b. granting a portion of the annual
performance bonus in the form
of deferred shares, to be awarded
under the KCL RSP;
c. vesting of contingent share awards
under the KCL PSP being subject to
performance conditions being met;
d. potential forfeiture of variable incentives
in any year due to misconduct;
e.
requiring the executive director and
key management personnel to hold
a minimum number of shares under
the share ownership guideline; and
f. exercising discretion to ensure that
remuneration decisions are aligned
to the Company’s long-term strategy
and performance and discourage
excessive risk-taking.
Annual Report 2020
Financial
Vision 2030
Value Creation &
Transformation
People
Process &
Stakeholders
Corporate
Scorecard
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, has been met. The RC
is therefore of the view that remuneration
is aligned to performance during FY 2020.
In order to align the interests of the
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 executive director and
key management personnel are required
to hold at least two times of their annual
fixed pay in the form of shares in the
Company, while other key senior
management are required to hold at least
1.5 times of their annual fixed pay under the
share ownership guideline so as to maintain
a beneficial ownership stake in the
Company, thus further aligning their
interests with shareholders.
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
KCL Share Plans
The KCL Share Plans are put in place to
reward, retain and motivate employees
to achieve superior performance and
to motivate them to continue to strive
for 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
REMUNERATION STRUCTURE
VISION, MISSION, VISION 2030 STRATEGIES
Corporate Scorecard
Performance Bonus
Performance Shares
Cash Bonus
Deferred Shares
89
a broader base of employees while the
KCL PSP applies to a selected group of
key management personnel. The range
of performance targets to be set under
the KCL PSP emphasises stretched or
strategic targets aimed at sustaining
longer-term growth.
The RC has the discretion not to award
variable incentives in any year if an executive
is directly involved in a material restatement
of financial statements, in misconduct resulting
in restatement of financial statements, or
in misconduct resulting in financial loss to
the Company. Outstanding performance
bonuses, KCL RSP and KCL PSP are also
subject to the RC’s discretion before further
payment or vesting can occur.
Details of the KCL Share Plans are set out
on page 161.
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 2020
In March 2020, the Company announced
a COVID-19 package to help the Singapore
community weather COVID-19. The CEO
and senior executive management of the
Company contributed one month of their
base salaries to the package to support
national efforts to combat COVID-19,
while other members of the Company’s
senior management contributed half
a month of their salaries. All NEDs
contributed 8% of their total fees to
support this effort.
In recognition of the required rightsizing
of Keppel O&M, the CEO, senior executive
management of the Company and
management of Keppel O&M volunteered
to take a base salary reduction of between 5%
and 10% with effect from 1 September 2020
as a demonstration of collective resolve and
to set the tone from the top. Mr Loh Chin Hua
volunteered to adjust his monthly base
salary down by 10% with effect from
1 September 2020. In solidarity with the
management team, the directors of the
Company and Keppel O&M volunteered
for an additional 10% reduction in their
FY 2020 annual fees.
Based on the NEDs’ fee structure
set out earlier, the total FY 2020 fees
would have amounted to $2,473,258.
However, after excluding the voluntary
8% contribution to the COVID-19 package
and the 10% NEDs’ voluntary fee reduction,
the resulting directors’ total fees for FY 2020
are $2,028,071.
The level and mix of each of the directors’ remuneration are set out below:
Base/Fixed
Salary
($)
Performance-Related
Cash Bonuses Earned1
($)
Directors’ Total Fees2
($)
Cash
component4
Shares
component4
Remuneration &
Name of Director
Loh Chin Hua
Lee Boon Yang
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Till Vestring
Veronica Eng
Jean-François Manzoni
Teo Siong Seng7
Tham Sai Choy8
Penny Goh9
1,123,360
1,404,298
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
430,500
96,432
130,298
138,908
102,746
121,114
105,616
94,566
99,820
99,650
–
184,500
41,328
55,842
59,532
44,034
51,906
45,264
40,528
42,780
42,707
n.m.5
–
–
–
–
–
–
–
–
–
–
Benefits-
in-Kind
($)
Contingent
Awards of Shares3
($)
Total
Remuneration
($)
PSP
RSP
1,346,850
1,299,133
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,173,6416
615,000
137,760
186,140
198,440
146,780
173,020
150,880
135,094
142,600
142,357
Notes:
1 The RC is satisfied that the quantum of performance-related cash bonuses earned by the executive director was fair and appropriate taking into account the extent to
which his KPIs for FY 2020 were met.
2 Based on the NEDs’ fee structure set out earlier, the total fees amount to $2,473,258. After excluding the voluntary contribution to the COVID-19 package and the 10% NEDs’
fee reduction, the resulting directors’ total fees is $2,028,071. This amount is within the sum of up to $2,480,000 approved at the annual general meeting held on 2 June 2020.
3 Shares awarded under the KCL PSP are subject to pre-determined performance targets over a three-year performance period. As at 31 March 2020, being the grant date
for the contingent awards under the KCL PSP, the estimated value of each share was $3.69. As at 15 February 2021, being the grant date for the contingent deferred shares
award under the KCL RSP, the estimated value of each share was $4.98. For the KCL PSP, the figures are based on the value of the PSP shares at 100% of the award and
the figures may not be indicative of the actual value at vesting which can range from 0% to 150% of the award.
4 The amounts stated may be adjusted as indicated on page 87 of this report.
5 n.m. – not material
6 Total remuneration shown above for Mr Loh Chin Hua does not include vested share of carried interests for funds created during the time he was Managing Director at
Alpha Investment Partners. These carried interests are only earned at the end of the fund life and depends entirely on the actual performance of the funds after they have
been liquidated.
7 Mr Teo Siong Seng was appointed as a member of the Remuneration and Board Safety Committees with effect from 1 February 2020. Fees are prorated accordingly.
8 Mr Tham Sai Choy was appointed as a member of the Audit and Board Risk Committees with effect from 1 February 2020. Fees are prorated accordingly.
9 Mrs Penny Goh was appointed to the Board with effect from 2 January 2020 and as a member of the Audit and Board Risk Committees with effect from 1 February 2020.
Fees are prorated accordingly.
Keppel Corporation Limited
GOVERNANCE
90
CORPORATE GOVERNANCE
PSP and RSP Shares granted and vested for the Executive Director are shown below:
PSP
Awards
Vesting
Date
Contingent
Awards
of PSP
Shares
Number of
PSP Shares
Vested
Value of
PSP Shares
Vested
($)1
RSP
Awards
Vesting
Date
Contingent
Awards
of RSP
Shares
Number of
RSP Shares
Vested
Value of
RSP Shares
Vested
($)1
Name of
Executive Director
Loh Chin Hua
2016
Awards
28 Feb
2022
2017
Awards
2018
Awards3
28 Feb
2020
26 Feb
2021
0 to 1,125,0002
–
–
2018
Awards
28 Feb 2018
28 Feb 2019
272,352
0 to 495,000
201,300
1,287,434
28 Feb 2020
0 to 480,000
2019
Awards
28 Feb
2022
0 to 547,500
2020
Awards
28 Feb
2023
0 to 547,500
–
–
–
–
–
–
2019
Awards
2020
Awards
2021
Awards
28 Feb 2019
28 Feb 2020
26 Feb 2021
28 Feb 2020
26 Feb 2021
28 Feb 2022
26 Feb 2021
28 Feb 2022
28 Feb 2023
262,403
301,887
260,870
90,784
90,784
90,784
87,467
87,467
–
100,629
–
–
–
–
–
714,470
565,584
580,618
544,919
559,404
–
643,583
–
–
–
–
–
Notes:
1 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 2020 were met.
2 Refers to one-time contingent shares awarded under the KCL PSP – Transformation Incentive Plan.
3 As the targets of the 2018 PSP award were set before the onset of the COVID-19 pandemic, the RC decided to extend the performance period of the award for one more year.
The achievements in Year 2018, 2019 and 2021 will be used to determine the vesting level of the award at the end of the extended performance period.
The total remuneration paid to the key management personnel (who are not directors or the CEO) in FY 2020 was $13,424,874. 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
Cash Bonuses Earned1 (%)
Benefits-
in-Kind (%)
Contingent Awards of Shares
PSP (%)
RSP (%)
Remuneration Band & Name of Key Management Personnel
Above $2,500,000 to $2,750,000
Chan Hon Chew
Ong Tiong Guan
Above $2,000,000 to $2,250,000
Tan Hua Mui, Christina2
Above $1,500,000 to $1,750,000
Tan Swee Yiow
Above $1,250,000 to $1,500,000
Ong Leng Yeow, Chris
Pang Thieng Hwi, Thomas
Manjot Singh Mann
25
22
26
35
36
32
44
29
31
27
24
–
27
21
n.m.3
n.m.3
n.m.3
n.m.3
n.m.3
n.m.3
6
20
19
22
20
29
17
14
26
28
25
21
35
24
15
Notes:
1 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 2020 were met.
2 Total remuneration shown above for Ms Tan Hua Mui, Christina does not include vested share of carried interests for funds created during the time she was Managing
Director at Alpha Investment Partners. These carried interests are only earned at the end of the fund life and depend entirely on the actual performance of the funds after
they have been liquidated.
3 n.m. – not material
Annual Report 2020
91
REMUNERATION OF EMPLOYEES WHO
ARE SUBSTANTIAL SHAREHOLDERS
OF THE COMPANY OR ARE IMMEDIATE
FAMILY MEMBERS OF A DIRECTOR
OR THE CHIEF EXECUTIVE OFFICER
OR A SUBSTANTIAL SHAREHOLDER
OF THE COMPANY
No employee of the Company and its
subsidiaries is a substantial shareholder
of the Company or an immediate family
member of a director, the CEO or a substantial
shareholder of the Company and whose
remuneration exceeded $100,000 during
the financial year ended 31 December 2020.
“Immediate family member” means the
spouse, child, adopted child, step-child,
brother, sister and parent.
AUDIT COMMITTEE
PRINCIPLE 10:
The Board has an Audit Committee
which discharges its duties objectively.
The Audit Committee (“AC”) comprises
entirely non-executive and independent
directors, namely:
• Mr Danny Teoh
Independent Chairman
• Mr Alvin Yeo
Independent Member
• Ms Veronica Eng
Independent Member
• Mr Tan Ek Kia
Independent Member
• Mr Tham Sai Choy
(from 1 February 2020)
Independent Member
• Mrs Penny Goh
(from 1 February 2020)
Independent Member
The AC’s primary role is to assist the
Board with ensuring the integrity of
financial reporting and the adequacy and
effectiveness of the system of internal
controls and risk management. The AC
has explicit authority to investigate any
matter within its responsibilities, full access
to and co-operation by management,
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
properly discharge its responsibilities.
Mr Danny Teoh, Ms Veronica Eng and
Mr Tham Sai Choy have recent, relevant
and in-depth experience in accounting and
related financial management. 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 gained from
serving on audit committee(s) of other
listed companies. Mr Tan Ek Kia has
significant experience in the oil and gas
Keppel Corporation Limited
and petrochemicals businesses, having
held senior positions in an industry leading
organisation, and has sufficient financial
management knowledge and experience
to discharge his responsibilities as a
member of the Committee. Mrs Penny Goh
has extensive experience in a broad range
of corporate real estate transactions
for commercial, industrial and logistics
projects in Singapore and Asia Pacific,
involving investment, joint development
and profit participation structures, and
has the practical knowledge of the issues
and considerations affecting the Committee
to discharge her responsibilities as a
member of the Committee. Mr Danny Teoh,
Mr Tan Ek Kia, Ms Veronica Eng,
Mr Tham Sai Choy and Mrs Penny Goh
are also members of the Board Risk
Committee (“BRC”), with Ms Veronica Eng
being the Chairperson. None of the members
of the AC were partners or directors of the
Company’s current external auditors within
the last two years and none of the members
of the AC hold any financial interest in
the auditing firm.
The detailed terms of reference of the
Committee are set out on page 99 herein.
AUDIT
The AC met with the external auditors
five times during the year and at least one
of these meetings was without the presence
of management and the internal auditors.
The AC also met with the internal auditors
five times during the year, and at least one
of these meetings was conducted without
the presence of management and the
external auditors.
The AC reviewed and approved the Group
external auditor’s audit plan for the year
and assessed the quality of the work carried
out by the external auditors in accordance
with the Audit Quality Indicators Disclosure
Framework published by the Accounting
and Corporate Regulatory Authority (“ACRA”)
and is satisfied with the performance.
Taking into account the requirements
under the Accountants Act (Chapter 2)
of Singapore, the AC undertook a review
of the independence and objectivity of the
external auditors through discussions with
the external auditors as well as reviewing
the audit and non-audit fees awarded to
them and has confirmed that the non-audit
services performed by the external auditors
would not affect their independence.
For details of fees payable to the auditors
in respect of audit and non-audit services,
please refer to Note 26 of the Notes to the
Financial Statements on page 188.
The Company has complied with Rule 712,
and Rule 715 read with Rule 716 of the
SGX Listing Manual in relation to its
auditing firms.
The Company also has an in-house internal
audit function (“Group Internal Audit”),
which together with the external auditors,
report their findings and recommendations
to the AC independently. 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. In this aspect,
Group Internal Audit conducts regular
reviews of the adequacy and effectiveness
of the Group’s key internal controls,
including financial, operational, compliance
and IT controls, and risk management.
Any significant non-compliance or
failures in internal controls together with
recommendations for improvements are
reported to the AC. Group Internal Audit
also undertakes investigations as directed
by the AC.
Group Internal Audit has direct access
to the AC and unfettered access to all
the documents, records, properties and
personnel of the Group. The AC approves
the hiring, removal, evaluation and
compensation of the Head of Group
Internal Audit, whose primary line of
reporting is to the Chairman of the AC,
with an administrative reporting line to
the CEO of the Company. The AC reviewed
the adequacy and effectiveness of
Group Internal Audit and is satisfied that
the team is independent, effective and
adequately resourced with persons with
relevant qualifications and experience,
and has appropriate standing within the
Company. Group Internal Audit 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 programmes attended
by Group Internal Audit to ensure that their
technical knowledge and skill sets remain
current and relevant.
As a member of the Institute of Internal
Auditors (“IIA”), Group Internal Audit is
guided by the International Professional
Practices Framework set out by the IIA.
External quality assessment reviews are
carried out at least once every five years
by qualified professionals, with the last
assessment conducted in 2016 and the
next to be conducted in 2021. The results
re-affirmed that the internal audit activity
conforms to the International Standards
for the Professional Practice of Internal
Auditing. Group Internal Audit staff perform
a yearly declaration of independence and
confirm their adherence to the Keppel Group
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.
GOVERNANCE
92
CORPORATE GOVERNANCE
The purpose, authority and responsibility of
Group Internal Audit are formally defined in
an internal audit charter, which is approved by
the AC. The internal audit charter establishes
Group Internal Audit’s position within the
organisation, including the nature of its
functional reporting relationship with the AC;
authorises access to records, personnel, and
physical properties relevant to the performance
of engagements; and defines the scope of
internal audit activities. The Charter mandates
Group Internal Audit to maintain a quality
assurance and improvement programme
that covers all aspects of the internal audit
activity, including the evaluation of its
conformance with the Standards, and
an evaluation of whether internal auditors
apply the IIA’s Code of Ethics.
During the year, Group Internal Audit adopted
a risk-based auditing approach that focuses
on key risks, including financial, operational,
compliance and IT risks. An annual audit
plan is developed using a structured risk and
control assessment framework, and this
plan is reviewed and approved by the AC to
ensure that the risk-based plan sufficiently
covered the effectiveness of controls to
mitigate the significant financial, operational,
compliance and IT risks of the Company.
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 personnel.
In addition, significant audit findings and
recommendations put up by the internal
and the external auditors are reported to
the AC and discussed at 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.
The AC also reviews the effectiveness
of the actions taken by management on
the recommendations made by Group
Internal Audit and the external auditors.
FINANCIAL MATTERS
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 meetings
with the AC. In addition, the AC members
are also invited to the Company’s finance
seminars held from time to time 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.
During the year, the AC performed an
independent review of the financial statements
of the Company before the announcement
Annual Report 2020
of the Company’s first quarter, second
quarter 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.
In its review of the financial statements of
the Group and the Company for FY 2020, the
AC reviewed the key areas of management’s
judgment and estimates applied for key
financial issues, including valuation of
investment properties and development
properties held for sale, assessment of
impairment of investments in KrisEnergy
Limited and Floatel International Limited,
recoverability of contract assets, material
receivables and stocks, financial exposure
in relation to contracts with Sete Brasil, global
resolution with criminal authorities in relation
to corrupt payments, revenue recognition,
and the impairment assessment of goodwill
arising from the acquisition of M1, that might
affect the integrity of the financial statements.
The AC also considered the report from
the external auditors, including their findings
on the key audit matters as set out in the
independent auditor’s report for the financial
year ended 31 December 2020.
In addition to the findings of the external
auditors, the AC took into consideration
the methodology applied in determining
the valuation and value-in-use of different
asset classes, including the reasonableness
of the estimates and key assumptions used.
The AC also reviewed management’s
assessment of recoverability of contract
assets, material receivables and stocks,
as well as financial exposure in relation to
contracts with Sete Brasil, including cash
flow estimates relating to the settlement
agreement between the Group and Sete Brasil
as well as a proposal by Magni Partners
(Bermuda) Ltd, assessment on whether there
was a potential for any additional provision in
relation to the corrupt payments, as well as
estimates of the total costs and physical
proportion of work completed in determining
the stage of completion. Furthermore, external
independent valuations as well as opinions
from internal and external legal counsel,
where applicable, were considered when
reviewing management’s assessment.
The AC concurs with the methodology,
accounting treatment and estimates
adopted, as well as the disclosures made
in the financial statements for each
of the key audit matters set out by the
external auditors in their report.
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. Significant matters
raised through the whistle-blowing channel
are reported to the Board.
The details of the Policy are set out on
page 104 hereto. The AC reviews the Policy
yearly to ensure that it remains current.
INTERESTED PERSON TRANSACTION
The Company has established policies
and procedures for reviewing and approving
interested person transactions (“IPTs”) in
accordance with the general mandate from
shareholders that such transactions are
made on normal commercial terms and
will not be prejudicial to the interests of
the Company and its minority shareholders.
Management reported the IPTs to the AC
in accordance with the mandate. These
IPTs were reviewed by the internal auditors,
and all findings were reported during
AC meetings.
Details of IPTs entered into by the Group
in FY 2020 are set out on page 217 of this
Annual Report.
RISK MANAGEMENT AND
INTERNAL CONTROLS
PRINCIPLE 9:
The Board is responsible for the governance
of risk and ensures that management
maintains a sound system of risk management
and internal controls, to safeguard the
interests of the Company and its shareholders.
The BRC comprises entirely non-executive
and independent directors, namely:
• Ms Veronica Eng
Independent Chairperson
• Mr Danny Teoh
Independent Member
• Mr Tan Ek Kia
Independent Member
• Prof Jean-François Manzoni
Independent Member
• Mr Tham Sai Choy
WHISTLE-BLOWER POLICY
The AC has reviewed the Keppel Whistle-
Blower Policy (the “Policy”) which provides
for the mechanisms by which employees
and other persons may, in confidence, raise
(from 1 February 2020)
Independent Member
• Mrs Penny Goh
(from 1 February 2020)
Independent Member
93
KEPPEL’S SYSTEM OF MANAGEMENT CONTROLS
POLICIES
4
Board Oversight
Board of Directors
3
Assurance
Business Unit
Representation
Internal
Audit
External
Audit
2
Management &
Assurance Frameworks
Self Assessment
Process
Enterprise Risk
Management
Regulatory
Compliance
IT Governance
Framework
S
M
E
T
S
Y
S
P
R
O
C
E
S
S
E
S
1
Business Governance/
Rules of Governance
Core Values, Corporate & Employee Conduct
Policy
Management
Compliance
Governance
Operational
Governance
Financial
Governance
PEOPLE
The BRC considers the nature and extent
of the significant risks which the Company
may take in achieving its strategic
objectives and value creation; and reviews
and guides management in the formulation
of risk policies and processes to effectively
identify, evaluate and manage significant
risks, to safeguard shareholders’ interests,
the Group’s assets and ensure corporate
sustainability. The Committee reports to
the Board on critical risk issues, material
matters, findings and recommendations.
The detailed terms of reference of this
Committee are disclosed on page 99 herein.
The Group Risk and Compliance department,
working in conjunction with the business teams,
has supported management in applying
the Enterprise Risk Management (“ERM”)
Framework to ensure significant risks across
the Group are assessed and adequately
mitigated. This is performed through the
monitoring of risk matters across the Group,
conduct of training, site visits, participation
at IMPAC meetings, and implementation of
risk related policies and standards. The ERM
Framework was established to guide Group
entities in managing risks and also facilitate
the Board’s assessment of the adequacy
and effectiveness of the Group’s system
and processes in managing risks. It lays out
the governance mechanisms and principles,
policies and processes, and system
pertaining to how Group entities should
identify, assess, mitigate, communicate and
monitor or escalate significant risk matters.
Keppel Corporation Limited
Risk assessments are performed at
each business unit and agreed with senior
management before being consolidated
to form the Group Risk Assessment.
Further assessments are performed at the
Group and articulation of each key risk area,
grouped by sub-groups within Strategic,
Operational, Compliance and Financial risk,
and the mitigation plans where applicable,
are provided to the Board and BRC at
quarterly meetings. This is complemented
by education and awareness, resources
and expertise, and assessment or feedback,
which are ongoing in nature.
The Group’s approach to risk management
and the key risks of the Group are set out in
the “Risk Management” section on page 110
of this Annual Report. The Group is guided
by a set of Risk Tolerance Guiding Principles,
as disclosed on page 110.
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 the Three-Lines Model towards
ensuring the adequacy and effectiveness
of the Group’s system of internal controls
and risk management.
Under the First Line, management is required
to ensure good corporate governance through
the implementation and management of
policies and procedures relevant to the Group’s
business scope and environment. Such policies
and procedures govern financial, operational
(including IT) and regulatory compliance matters
and are reviewed and updated periodically.
Compliance governance is governed by the
respective regulatory compliance management
committees and working teams. Employees
are also guided by the Group’s Core Values
and expected to comply strictly with the
Keppel Group Code of Conduct.
Under the Second Line, significant business
units and entities scoped in for control self
assessment (“CSA entities”) are required
to conduct a self-assessment exercise
on an annual basis (“CSA”). This exercise
requires such business units and CSA
entities to assess the status of their
respective risk management processes
and internal controls via self-assessment.
Where required, action plans are developed
to remedy identified control gaps. The CSA
programme was enhanced in FY 2020
through the refresh of group baseline controls,
optimisation of controls automation, continuous
monitoring and digitisation of CSA. As described
under the Group’s ERM Framework, relevant
and material risk areas of the Group are also
identified and assessed, with systems, policies
and processes put in place to manage and
mitigate identified risk areas should they
exceed beyond internal thresholds of appetite.
It includes the reporting and oversight structure
involving both boards and management of
the Group and business divisions and seeks
to embed sound risk management practice
in business decisions and operations across
Group entities. Regulatory Compliance
GOVERNANCE
94
CORPORATE GOVERNANCE
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. The IT Governance
Framework aims to strengthen IT controls and
manage IT risks by providing the necessary
security and resilience towards effective
business continuity. The framework was
further strengthened in January 2021 through
the formalisation of a Keppel Cybersecurity
governance structure and the establishment
of a Keppel Cybersecurity Service Centre.
ii. updating and adopting several standard
operating procedures (“SOP”) and
guidance at Keppel O&M, including:
updating guidance on controls for
commercial agents; standardising its
ISO 37001 Anti-Bribery Management
Systems controls; enhanced due
diligence procedures with regard to
false positives; issuing an SOP requiring
due diligence on potential clients prior to
initial meetings; and adopting enhanced
controls assurance processes, including
enhanced procedures for dealing with
scrap at Keppel O&M’s business units;
iii. conducting training – primarily by video
conference or internet-based training
including: new hire training, anti-bribery
and corruption refresher training, diligence
and screening training, third-party risk
training for commercial functions,
supplier training, compliance training for
agents, internal audit training, gifts and
hospitality training, business associate
training, and other training programmes
in Singapore, USA, Brazil, Philippines,
China, Bulgaria, India, UAE, and elsewhere;
iv. conducting due diligence upon and
reviewing all potential third-party
associates, declining or removing them
where appropriate, and revalidating
third-party associates in accordance
with prescribed periodic risk-cycles;
v. enhancing monitoring of gifts and
hospitality with a dashboard and
instituting local currency limits for
Keppel O&M’s overseas operations;
vi. digitalisation of due diligence processes
through a Group-wide internet sharepoint,
facilitating a centralised repository,
as well as better information sharing
and access across the Group;
vii. enhancing processes and procedures
for the declaration of conflicts of interest
in key projects and tenders, implementing
contemporaneous declarations as part
of the project workflow (in addition to
the annual certification);
viii. strengthening processes and procedures
for oversight of commercial agents and
intermediaries. These include a more
systematic and continual oversight over
the activities and work of commercial
agents and intermediaries on an ongoing
basis with regular activity reports,
including those relating to proper books
and records keeping, and training on
ethical expectations and interactions
with end-customers and other end-parties;
Under the Third Line, to assist the Group to
ascertain the adequacy and effectiveness of
the Group’s internal controls, business units’
CEOs and Chief Financial Officers (“CFO”)
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.
ENHANCEMENTS TO COMPLIANCE
PROGRAMME IN FY 2020
At Keppel, accountability is a core value.
As our Keppel Group Code of Conduct states,
“we care how results are achieved, not just
that they are attained.” Implementing that
core value through enhancing our regulatory
compliance process and by reminding every
Keppelite of that value is a focus of attention
for us, our boards, and officers and line
managers across the globe.
This section provides an overview of the
improvements and enhancements that
have been made to strengthen Keppel’s
compliance programme over the past year.
Further details of our compliance initiatives
are set out on pages 114 to 116 of this
Annual Report. The Company is committed
to a continuous review and, where necessary
and appropriate, further improvements and
enhancements to the Group’s compliance
programme will be made.
The Group has taken the following steps
over the past year to further enhance its
internal controls, policies and procedures:
i.
introducing a Group-wide Sanctions
Compliance Policy in accordance with
The US Department of the Treasury’s
Office of Foreign Assets Control’s
compliance guidelines including tailor-made
compliance procedures calibrated based
on each business unit’s risk profile, and
conducting training sessions by external
counsel to provide business units with
more clarity and appreciation of sanctions
risk and enhance their ability to identify
and escalate sanctions issues in the
course of carrying out business;
Annual Report 2020
domain sources of entities, including
state-owned enterprises (“SOE”),
to assist employees in identifying
higher-risk entities;
x.
instituting Group-wide information sharing
and lessons learned at Regulatory and
Compliance Management Committee
(“RCMC”) and Regulatory and Compliance
Working Team (“RCWT”) sessions;
xi. producing in-house videos on compliance
topics for use in training programmes; and
xii. making the Keppel Group Code of
Conduct and Anti-Bribery Policy publicly
available across the Group’s websites,
including https://www.kepcorp.com/en/
sustainability/our-focus-areas/
#tab-corporate-governance.
In 2019, Keppel O&M also completed the
ISO 37001 (Anti-Bribery Management System)
certification for its global operations in the
USA, Brazil, Middle East, China, the Philippines,
India and Bulgaria, thus completing the
attainment of ISO 37001 certification at all
Keppel O&M operating entities in Singapore
and globally. In 2020, Keppel Land and
Keppel Data Centres also obtained ISO 37001
(Anti-Bribery Management System) certification
of its operating entities in Singapore.
THE GROUP’S COMPLIANCE
PROGRAMME
The Group’s compliance programme
also includes the following:
i. a compliance governance structure
that is overseen by RCMC and RCWT,
bringing together senior management,
compliance personnel, and other core
function leads to discuss compliance
enhancements and address compliance
issues as they arise;
ii. a 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 Group are expected to abide by
the Supplier Code of Conduct, which
covers areas pertaining to business
conduct (including specific anti-bribery
provisions), labour practices, safety and
health, and environmental management;
iii. risk-based due diligence process for
all third-party associates who represent
the Group in business dealings,
including our joint venture partners,
to assess the compliance risk of the
business partner; and
ix.
improving screening databases through
reputable specialist database screening
tools and generally available public
iv. the dedicated independent Group-wide
compliance function has reporting lines
independent of business divisions. The
95
Head of the Group’s compliance function
has a primary line of reporting to the
Chairman of the BRC, with an administrative
reporting line to the CFO of the Company.
The Group’s compliance programme is and
will be subjected to a periodic review to ensure
it meets the following standards, i.e. that:
1. Board and Senior Management
Commitment
The Group’s senior management,
including members of the Board,
provide continuous, clear and explicit
support to the compliance programme.
2. Policies and Procedures
The Group continuously implements and
communicates its corporate policy against
violations of any anti-corruption laws. This
policy has been and will continue to be
documented in writing, include appropriate
measures to reduce the prospect of
violations of anti-corruption laws, and
encourage and support the observance
of compliance policies and procedures
by personnel at all levels of the Group.
These anti-corruption policies and
procedures apply to all directors, officers
and employees and, where necessary and
appropriate, outside parties acting on
behalf of Keppel, including but not limited
to, agents and intermediaries, consultants,
representatives, partners and suppliers.
Individuals at all levels of Keppel comply
with the Keppel Group Code of Conduct
and its compliance policies and procedures.
Such policies and procedures address,
among other areas:
a. gifts;
b. hospitality, entertainment and expenses;
c. agent fees;
d. political contributions;
e. donations and sponsorships;
f.
facilitation payments; and
g. solicitation and extortion.
The Group ensures that:
a. books, records and accounts are
in reasonable detail, and accurately
and fairly reflect the transactions and
disposition of assets; and
b.
the Group develops and maintains
a system of internal accounting
controls, sufficient to provide
reasonable assurance that:
of financial statements in
conformity with generally
accepted accounting principles
or any other criteria applicable to
such statements, and to maintain
accountability for assets;
iii. access to assets shall only be
permitted in accordance with the
Group’s general guidelines or
specific authorisation; and
iv. the recorded accountability for
assets shall be compared with
the existing assets at reasonable
intervals and appropriate
action be taken with respect
to any differences.
3. Periodic Risk-based Review
The Group continues to enhance
its compliance policies and procedures
on the basis of a periodic risk assessment
to ensure their continued effectiveness,
taking into account relevant developments
such as international and industry
standards, and addressing the individual
circumstances of the Group, and in
particular corruption risks, including
but not limited to its geographical
organisation and sectors of
industrial operation.
4. Training and Orientation
The Group continuously ensures that
its compliance policies and procedures
are communicated effectively to all
employees, including officers, directors,
and where necessary and appropriate,
agents and business partners. These
mechanisms include:
a. periodic focused ‘gate-keeper’
training for senior management
members (including directors),
employees in positions of leadership,
and targeted training for employees
in positions otherwise exposed to
corruption risks, and where necessary
and appropriate, compliance training
for agents and business partners;
and annual e-training for directors,
officers and employees; and
b. corresponding certifications by
such senior management members
(including directors), employees, agents
and business partners, acknowledging
their understanding of policies and
conformity with training requirements.
i.
transactions are performed
in accordance with the
Group’s general guidelines
or specific authorisation;
ii.
transactions are recorded as
necessary to permit preparation
5.
Internal Reporting, Communications
and Investigation
The Group maintains a system for the
internal reporting/communication of
potential violations of compliance
policies and procedures and applicable
laws, that ensures as far as possible
confidentiality to the whistle-blower
and investigation subjects.
The Group maintains a process for
receiving internal reports/communications
with sufficient resources to respond and
document allegations of violations of
compliance policies and procedures
and applicable law. When necessary,
the Group undertakes independent
investigations of the alleged violations.
Due to travel restrictions imposed in light
of COVID-19, in 2020, key investigations
into whistle-blower complaints alleging
misconduct (of any kind) have been
conducted by local third-party forensic
and investigations specialists.
6. Enforcement and Discipline
The Group maintains and, where necessary,
improves its mechanisms designed
to effectively enforce its compliance
policies and procedures including, where
appropriate, the imposition of disciplinary
measures in the case of violations.
The Group institutes disciplinary measures
with reference to, among other things,
violations of compliance policies and
procedures and applicable law by its
senior management (including directors)
and employees. Such procedures are
applied consistently and fairly, regardless
of the position held by, or the perceived
importance of the senior management
member (including directors) or employee.
Where misconduct is discovered,
measures are taken promptly to cease the
misconduct or irregularities, and remedy
the harm resulting from such misconduct.
7. Third-party Relationships
The Group continues to implement the
following procedures with reference to
its agents and business partners:
a. due diligence relating to the
hiring of third-parties;
b. appropriate oversight of
third-parties; and
c. seeking reciprocal commitments
regarding ethical conduct from
third-parties, associates and
business partners.
When necessary, the Group includes
in contracts with third-parties, agents
and business partners, anti-corruption
provisions, which may include the following:
a. commitment to act in accordance
with applicable laws;
b.
right to conduct audits of the books
and records of third-parties, agents
or business partners; and
Keppel Corporation Limited
GOVERNANCE
96
CORPORATE GOVERNANCE
c.
right to terminate a contract due to
violations of compliance policies
and procedures or any applicable
anti-corruption law by any third-party,
agent or business partner.
The Group also communicates its
Sanctions Compliance Policy to all
counterparties of the Group as relevant,
to ensure that in all dealings with such
counterparties, they are made aware of,
and agree to comply with, all applicable
sanctions and export control laws
and regulations.
In addition, risk-based screening of
counterparties to identify sanctions-
related risks is also conducted. Where
appropriate on a risk-based consideration,
contracts with such counterparties
would contain sanctions and export
control compliance clauses.
financial, operational, compliance
and IT controls) and risk management
systems were adequate and effective
to address the risks which the Group
considers relevant and material to
its operations.
Based on the internal controls and
enterprise-wide risk management
framework established and maintained
by the Group, work performed by internal
and external auditors, and reviews
performed by management, the AC and
BRC, as well as the assurances set out
above, the Board is of the view that, as of
31 December 2020, the Group’s internal
controls (including financial, operational,
compliance and IT controls) and risk
management systems were adequate
and effective to address the risks which
the Group considers relevant and material
to its operations.
8. Mergers, Acquisitions and
Corporate Restructuring
The Group implemented a Mergers and
Acquisitions Compliance Due Diligence
process which gives guidance and
sets out requirements for compliance
due diligence checks and steps to be
performed on potential merger and
acquisition target entities.
The Group applies its compliance
codes, policies and procedures in a
speedy and efficient manner to newly
acquired businesses or entities, and
conducts training for new employees,
senior management (including directors),
agents and business partners.
9. Monitoring and Developments
The Group conducts continuous
monitoring of its compliance programme
to enhance its effectiveness in
preventing and detecting violations
of its compliance policies.
ANNUAL ASSURANCE
The Board has received assurance:
a.
b.
from the CEOs and CFOs of each of
the Group’s business divisions and
the CEO and CFO of the Company that,
as of 31 December 2020, the financial
records of the Group have been properly
maintained and the financial statements
for the year ended 31 December 2020
give a true and fair view of the Group’s
operations and finances; and
from the CEO and CFO of the Company,
CEOs and CFOs of each of the Group’s
business divisions, and other key
management personnel responsible for
risk management and internal control
systems that, as of 31 December 2020,
the Group’s internal controls (including
Annual Report 2020
The Board notes that the system of internal
controls and risk management established
by the Group provides reasonable, but not
absolute, assurance that the Group will
not be adversely affected by any event
that could be reasonably foreseen as it
strives to achieve its business objectives.
In this regard, the Board also notes
that no system of internal controls and
risk management can provide absolute
assurance against the occurrence
of material errors, poor judgment in
decision-making, human error, losses,
fraud and other irregularities.
The AC and BRC concur with the Board’s
view that, as of 31 December 2020, the
Group’s internal controls (including financial,
operational, compliance and IT controls)
and risk management systems were
adequate and effective to address the
risks which the Group considers relevant
and material to its operations.
SHAREHOLDER RIGHTS AND
COMMUNICATION WITH
SHAREHOLDERS
PRINCIPLE 11:
The Company treats all shareholders fairly
and equitably in order to enable them to
exercise shareholders’ rights and have
the opportunity to communicate their
views on matters affecting the Company.
The Company gives shareholders a balanced
and understandable assessment of its
performance, position and prospects.
PRINCIPLE 12:
The Company communicates regularly with
its shareholders and facilitates the participation
of shareholders during general meetings
and other dialogues to allow shareholders
to communicate their views on various
matters affecting the Company.
PRINCIPLE 13:
The Board adopts an inclusive approach by
considering and balancing the needs and
interests of material stakeholders, as part of
its overall responsibility to ensure that the
best interests of the Company are served.
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, and can be viewed at or downloaded
from https://www.kepcorp.com/en/
investors/annual-general-meeting, and
shareholders are encouraged to read the
Annual Report on the Company’s website.
Shareholders may, however, request for a
physical copy at no cost.
The Company adopts a stakeholder
engagement framework developed in
accordance with the AA1000 Accountability
Stakeholder Engagement Standard,
whereby stakeholders are defined to be
individuals, groups of individuals or
organisations that affect and/or could be
affected by Keppel’s activities, products
or services and associated performance.
The Company engages its stakeholders
regularly in the determination of its material
areas of focus. Materiality assessments
are important components of the Company’s
sustainability strategy and reporting.
The Company’s materiality assessments
are based on the AA1000 Accountability
Principles of Inclusivity and Materiality,
as well as the Global Reporting Initiative
(“GRI”) Principles for Defining Report Content
— stakeholder inclusiveness, sustainability
context, materiality and completeness.
Materiality with respect to sustainability
reporting, as defined by GRI Standards,
includes topics and indicators that reflect
the organisation’s significant economic,
environmental and social impacts;
and would substantively influence the
assessments and decisions of stakeholders.
The Company has identified and prioritised
its material environmental, social and
governance issues. An overview of the
Company’s approach to sustainability
management can be found on page 22
of this report. More details of the Company’s
97
updates on business and operations,
half-yearly financial statements, voluntary
business updates and dividend information,
materials provided at analysts and media
briefings, annual reports, as well as
information on general meetings including
presentations and minutes. Contact details
of the Investor Relations department
(email: investor.relations@kepcorp.com)
are also set out on the website to
facilitate any queries from investors.
In addition to shareholder meetings,
senior management engages investors,
analysts and the media, as well as attends
roadshows and industry conferences
organised by major brokerage firms
to solicit and understand the views of
the investment community. In FY 2020,
most physical roadshows and meetings
were replaced by virtual engagements
due to COVID-19 related safe management
measures. The Company hosted about
210 virtual meetings and conference calls
with institutional investors, including virtual
non-deal roadshows with investors from
Hong Kong, Malaysia, Singapore, the UK
and the US, and participated in an online
conference organised by SGX and Credit
Suisse. In 2020, the Company organised
briefings for media and analysts, as well as
calls with investors, to help the media and
investment community better understand
the Company’s performance, including how
Keppel was responding to the pandemic,
the Company’s Vision 2030, as well as the
subsequent 100-day plan to accelerate the
execution of the Vision.
The Company has, since 2017, been
collaborating with the Securities Investors
Association (Singapore) to hold briefings
for retail shareholders. In FY 2020’s virtual
session, the Company’s CEO and CFO
engaged about 120 retail shareholders on
the Company’s strategy and performance.
All materials presented on these occasions
are also made available on the SGXNet and
the Company’s website in a timely manner,
to ensure fair disclosure of information for
the benefit of all shareholders.
ANNUAL GENERAL MEETING
In view of the COVID-19 situation, the
Company’s annual general meeting
in 2020 was convened and held by
electronic means pursuant to the
COVID-19 (Temporary Measures)
(Alternative Arrangements for Meetings
for Companies, Variable Capital Companies,
Business Trusts, Unit Trusts and Debenture
Holders) Order 2020 (“COVID-19 (Temporary
Measures)”). Alternative arrangements
relating to attendance at the annual
general meeting via electronic means
(including arrangements by which the
meeting can be electronically accessed
Senior management of Keppel addressed questions from media and the investment community at the Company’s
2H & FY 2020 results webcast.
management approach, priorities, targets
and performance reviews in key areas will
be made available through its externally
audited Sustainability Report, prepared in
accordance with the GRI Standards,
published annually in May.
The Company’s Corporate Communications
department (with assistance from other
departments as required) regularly
communicates with shareholders and
receives and attends to their queries
and concerns.
On 7 February 2020, the SGX’s regulation
on risk-based quarterly reporting came
into effect, whereby listed companies may,
unless otherwise required by the SGX,
report their results semi-annually.
The Company has moved to semi-annual
reporting in FY 2020, but continues to
provide voluntary business updates in
between its half-yearly financial reports.
The Company stands committed to
engaging shareholders and the investment
community through clear, timely and
consistent communications.
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 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,
and sets out the mechanism through which
shareholders may contact the Company
with questions and through which the
Company may respond to such questions.
This is to allow for an ongoing exchange
of views so as to actively engage and
promote regular, effective and fair
communication with shareholders.
Keppel Corporation Limited
The Company employs various platforms to
effectively engage the investment community
and other stakeholders, with an emphasis
on timely, accurate, fair and transparent
disclosure of information. Engagement with
stakeholders takes many forms, including
“live” webcasts of financial results and
presentations, email communications,
publications and content on the Company’s
corporate website, as well as through facility
visits when possible, where shareholders
may raise any queries or concerns that they
may have. Presentation materials of the
Company’s half-yearly financial statements
and voluntary business updates are made
available on its website on the same day
they are released on SGXNet, while a
transcript of the questions and answers
session held with media and analysts is
also released on SGXNet and posted on
the Company’s website before the start
of the next trading day.
The Company’s mobile-responsive
website is regularly updated with the
latest information. These include latest
GOVERNANCE
98
CORPORATE GOVERNANCE
via live audio-visual webcast or live
audio-only stream), submission of questions
to the Chairman of the Meeting in advance
of the annual general meeting, addressing
of substantial and relevant questions at,
or prior to, the annual general meeting
and voting by appointing the Chairman of
the Meeting as proxy at the annual general
meeting, were put in place for the annual
general meeting. The notice of meeting and
documents relating to the business of the
annual general meeting (which included the
rules governing the annual general meeting)
were circulated to shareholders by electronic
means via publication on SGXNet and the
Company’s website. Further, responses
to questions submitted by shareholders
prior to the meeting were uploaded to
SGXNet and the Company’s website
prior to the event and addressed at the
annual general meeting itself.
The COVID-19 (Temporary Measures)
will continue to apply to the Company
at the upcoming annual general meeting
to be held in respect of FY 2020.
Prior to the pandemic and the COVID-19
(Temporary Measures) coming into effect,
the Company’s general meetings were
generally held physically in central locations
which are easily accessible by public
transportation, ensuring that shareholders
have the opportunity to participate effectively
and vote at such meetings. Shareholders
are informed of the meetings through
notices published in the newspapers
and via SGXNet, and reports or circulars
sent or made available to all shareholders.
If any shareholder is unable to participate
at the physical meeting, he/she is allowed
to appoint up to two proxies to vote on
his/her 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 appoint
more than two proxies. This will enable
indirect investors, including CPF investors,
to be appointed as proxies to participate
in the physical meetings. Such indirect
investors, where so appointed, will have
the same rights as direct investors to
vote at the physical meeting.
To ensure transparency, the Company
conducts electronic poll voting for
shareholders/proxies present at the
physical meeting for all the resolutions
proposed at the general meeting. Shareholders
are also informed of the rules, including
voting procedures, governing such general
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.
Regardless whether a general meeting is
held physically or via electronic means,
shareholders are invited to put forth any
questions they may have on the motions to
be debated and decided upon, and vote on
the resolutions at general meetings. Each
distinct issue is proposed as a separate
resolution. Such resolutions include matters
of significance to shareholders such as,
where applicable, proposed amendments
to the Constitution, the authorisation to issue
additional shares, the transfer of significant
assets, re-election of directors, and the
remuneration of non-executive directors.
The rationale for the resolutions to be
proposed at the meeting is set out in the
notices to the meeting or their accompanying
appendices. However, where the issues are
interdependent and linked so as to form one
significant proposal, the Company may
propose “bundled resolutions” and will set out
the reasons and material implication in the
notices to the meeting or its accompanying
appendices. A scrutineer will be appointed
to count and validate the votes cast at the
meetings. 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 the
general meetings. The chairmen of the Board
and each board committee are required to
be present to address questions at general
meetings. External auditors are also present
at such meetings to assist the directors to
address shareholders’ queries, if necessary.
The Constitution of the Company allows
for absentia voting at general meetings.
However, the Company is not implementing
absentia voting methods such as voting
via mail, email or fax until security,
integrity and other pertinent issues are
satisfactorily resolved.
The Company Secretaries prepare minutes
of general meetings, which incorporate
substantial and relevant comments or
queries from shareholders relating to the
agenda of the meeting and responses from
the Board and management. These minutes
are available to shareholders upon their
requests. All minutes of general meeting will
be published on the Company’s website as
soon as practicable. Minutes of the annual
general meeting held in 2020 were
published on both the Company’s website
and SGXNet within one month after
the meeting.
The Company is committed to rewarding
shareholders fairly and sustainably, while
balancing the payment of dividends with
its capital requirements to ensure that the
best interests of the Company are served.
While it does not have a formal dividend
policy, the Company has a consistent
track record for distributing about 40 to
50% of its annual net profit as dividends.
Any payment of interim dividend or, upon
receipt of shareholders’ approval at annual
general meetings, final dividend, will be paid
to all shareholders in an equitable and
timely manner. For FY 2020, the Company
will be paying out a total cash dividend of
10.0 cents per share to shareholders.
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 and associated companies,
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.
Pursuant to Rule 1207(19)(c) of the Listing
Manual, the Company and its officers
should not deal in the Company’s securities
during the period commencing two weeks
before the announcement of the Company’s
financial statements for each of the first
three quarters of its financial year and one
month before the announcement of the
Company’s full year financial statements
(if the Company announces its quarterly
financial statements), or one month before
the announcement of the Company’s half
year and full year financial statements
(if the Company does not announce
its quarterly financial statements)
(the “Embargo Period(s)”).
The Company had issued circulars to its
directors and officers informing that the
Company and its officers must not deal
in listed securities of the Company during
the Embargo Period(s), 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.
Annual Report 2020
99
APPENDIX 1
BOARD COMMITTEES –
RESPONSIBILITIES
A. AUDIT COMMITTEE
1.1 Review financial statements and
1. 8 Review the nature and extent of
non-audit services performed
by the external auditors, to ensure
their independence and objectivity.
1. 18 Review the AC’s terms of reference
annually and recommend any
proposed changes to the Board
for approval.
announcements relating to financial
performance, and significant financial
reporting issues and judgments
contained in them, for better assurance
of the integrity of such statements
and announcements.
1. 9 Meet with external auditors
1. 19 Perform such other functions as the
(without the presence of management
and internal auditors) and internal
auditors (without the presence of
management and external auditors),
at least annually.
Board may determine.
1. 20 Ensure that the Head of Internal Audit
and external auditors have direct and
unrestricted access to the Chairman
of the AC.
1.2 Review and report to the Board
at least annually on the adequacy
and effectiveness of the Group’s
internal controls, including financial,
operational, compliance and
information technology controls,
and risk management in relation
to financial reporting and other
financial-related risks (such review
can be carried out internally or with
the assistance of any competent
third parties).
1.3 a.
Review the Board’s comment on the
adequacy and effectiveness of the
Group’s internal control systems,
and state whether it concurs with
the Board’s comments.
b.
Where there are material
weaknesses identified in the
Group’s internal control systems,
to consider and recommend the
necessary steps to be taken to
address them.
1. 4 Review the assurance from the CEO
and CFO on the financial records
and financial statements and the
assurance and steps taken by the
CEO and other key management
personnel who are responsible,
regarding the adequacy and
effectiveness of the Group’s
internal control systems.
1. 5 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. 6 Review the adequacy, effectiveness
and independence of the external
audit function and internal audit
function, at least annually, and report
the AC’s assessment to the Board.
1. 7 Review the scope and results
of the external audit function
and internal audit function,
at least annually.
1. 10 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. 11 Ensure that the internal audit function
is adequately resourced and staffed
with persons with the relevant
qualifications and experience,
and has appropriate standing within
the Company, at least annually.
1. 12 Decide on the appointment, termination,
evaluation and remuneration of
the Head of Internal Audit, or the
accounting/auditing firm or corporation
to which the internal audit function
is outsourced.
1. 13 Review the Whistle-Blower Policy
and the Company’s procedures for
detecting and preventing fraud, and
other arrangements for concerns
about possible improprieties in
financial reporting or other matters
to be safely raised, independently
investigated and appropriately
followed up on.
1. 14 Report significant matters raised
through the whistle-blowing channel
to the Board.
1. 15 Review IPTs to ensure they are on
normal commercial terms and are not
prejudicial to the interests of the
Company or its minority shareholders
and determine methods or procedures
for assessing that the transaction
prices are adequate for transactions
to be carried out on normal
commercial terms, and that they will
not prejudice the Company or its
minority shareholders.
1. 16 Investigate any matters within
the AC’s purview, whenever it
deems necessary.
1. 17 Report to the Board on material matters,
findings and recommendations.
1. 21 Sub-delegate any of its powers
within its terms of reference as
listed above from time to time as
the AC may deem fit.
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 levels of risk tolerance,
risk parameters 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
strategy, risk culture, risk assessment,
risk mitigation and monitoring
processes and procedures.
1.3 Review the IT governance and
cybersecurity framework to ascertain
alignment with business strategy
and Group risk tolerance including
monitoring the adequacy of IT
capability and capacity to ensure
business objectives are well-supported
with adequate measures to safeguard
corporate information, operating
assets, and effectively monitor the
performance, quality and integrity
of IT service delivery.
1.4 Receive and review quarterly reports
from management on the Group’s risk
profile and major risk exposures, and
the steps taken to monitor, control
and mitigate such risks, to ensure
that such risks are managed within
acceptable levels.
1.5 Review the Group’s risk management
capabilities including capacity,
resourcing, systems, training,
communication channels as well
as competencies in identifying
and managing new risk types.
Keppel Corporation Limited
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100
CORPORATE GOVERNANCE
1.6 Receive and review updates
1.15 a.
from management to assess the
adequacy and effectiveness of the
Group’s compliance framework in line
with relevant laws, regulations and
best practices.
1.7 Through interactions with the
Head of Group Risk and Compliance,
review and oversee performance
of the Group’s implementation of
compliance programmes.
1.8 Review and monitor the Group’s
approach to ensuring compliance
with regulatory commitments,
including progress of remedial
actions where applicable.
Review the Board’s comment on the
adequacy and effectiveness of the
Group’s risk management systems
and state whether it concurs with
the Board’s comments.
b.
Where there are material
weaknesses identified in the
Group’s risk management
systems, to consider and
recommend the necessary steps
to be taken to address them.
1.16 Ensure that the Head of Group Risk
and Compliance function has direct
and unrestricted access to the
Chairman of the Committee.
1.17 Perform such other functions as the
1.5 Assess, 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.
1.6 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, the board committees and
the contribution of the Chairman
and each director.
1.9 Review the adequacy, effectiveness
Board may determine.
1.7 Annual assessment of the
and independence of the Group’s Risk
and Compliance function, at least
annually, and report the Committee’s
assessment to the Board.
1.18 Review the Committee’s terms of
reference annually and recommend
any proposed changes to the Board.
effectiveness of the Board as a
whole, the board committees and
the contribution of the Chairman
and individual directors.
1.10 Review and monitor management’s
responsiveness to the risks, matters
identified and recommendations of the
Group Risk and Compliance function.
1.19 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 the succession plans
for the Board (in particular,
the Chairman), the CEO and
other key management personnel.
1.11 Provide timely input to the Board on
critical risk and compliance issues,
material matters, findings and
recommendations.
1.12 Review management’s proposals
in respect of strategic transactions
and new risk focused products,
focusing, in particular, on the risk and
compliance aspects and implications
of the proposed action for the risk
tolerance of the Group, and make
recommendations to the Board.
1.13 Review the assurance and steps
taken by the CEO and other key
management personnel for their
relevant areas of responsibilities,
regarding the adequacy and
effectiveness of the Group’s risk
management system.
C. NOMINATING COMMITTEE
1.1 Recommend to the Board the
1.9 Review talent development plans.
appointment and re-appointment
of directors (including alternate
directors, if any).
1.10 Review the training and professional
development programmes for
Board members.
1.2 Annual review of the structure
and size of the Board and board
committees, and the balance and
mix of skills, knowledge, experience
and other aspects of diversity such
as gender and age.
1.11 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:
1.3 Recommend to the Board a
Board Diversity Policy (including
the qualitative, and measurable
quantitative objectives (as appropriate)
for achieving board diversity),
and conduct an annual review of
the progress towards achieving
these objectives.
i.
listed on the SGX 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 SGX or any other stock
exchange; and
iii. parent companies of the Company’s
core businesses which are unlisted.
1.12 Report to the Board on material
matters and recommendations.
1.14 Review and report to the Board
annually on the adequacy and
effectiveness of the Group’s risk
management systems, including
financial, operational, compliance
and IT controls.
1.4 Annual review of the independence
of each director, and to ensure that
the Board comprises (a) majority
NEDs, and (b) at least one-third,
or (if Chairman is not independent)
a majority of independent directors.
Annual Report 2020
101
1.13 Review the NC’s terms of reference
annually and recommend any proposed
changes to the Board for approval.
to provide good stewardship of
the Company and key management
personnel to successfully manage the
Group for the long term.
1.4 Ensure a process is in place to have
fatalities and other major incidents
investigated by an independent and
competent team.
1.14 Perform such other functions as the
Board may determine.
1.6 Set performance measures
1.15 Sub-delegate any of its powers within
its terms of reference as listed above,
from time to time as this Committee
may deem fit.
D. REMUNERATION COMMITTEE
1.1 Review and recommend to the Board
a framework of remuneration for
Board members and key management
personnel, and the specific remuneration
packages for each director as well as
for the key management personnel,
including review of all long-term and
short-term incentive plans, with a view
to aligning the level and structure of
remuneration to the Group’s long-term
strategy and performance.
1.2 Consider all aspects of remuneration
to ensure that they are fair, and review
the Company’s obligations arising in
the event of termination of the executive
directors’ and key management
personnel’s contracts of service, to
ensure that such clauses are fair and
reasonable, and not overly generous.
1.3 Consider whether directors should
be eligible for benefits under long-term
incentive schemes (including weighing
the use of share schemes against
the other types of long-term
incentive schemes).
and determine targets for any
performance-related pay schemes.
1.7 Administer the Company’s Restricted
Share Plan and Performance Share
Plan (collectively, the “KCL Share
Plans”), in accordance with the rules
of the KCL Share Plans.
1.8 Report to the Board on material
matters and recommendations.
1.9 Review the RC’s terms of reference
annually and recommend any
proposed changes to the Board.
1.10 Perform such other functions as
the Board may determine.
1.11 Sub-delegate any of its powers
within its terms of reference as
listed above, from time to time
as the RC may deem fit.
Save that a member of this Committee
shall not be involved in the deliberations in
respect of any remuneration, compensation,
award of shares or any form of benefits to
be granted to him/her.
E.
BOARD SAFETY COMMITTEE
1.1 Ensure there is a set of Group Health,
Safety and Environment (“HSE”) policies
and standards to guide HSE operations
and performance across the Group.
1.5 Review serious accident and near
miss incident investigation reports
in a timely manner to understand
underlying root causes and introduce
Group-wide initiatives or remedial
measures where appropriate.
1.6 Ensure that each Group company
complies with HSE legislation in the
country in which it operates as a
minimum and review any emerging or
new legislation that may potentially
impact the Group company.
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.
1.8
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 each Group company 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.
1.4 Review the ongoing appropriateness
1.11 Consider management’s proposals
1.2 Monitor HSE performance of
on safety-related matters.
and relevance of the remuneration
policy to ensure that the level and
structure of the remuneration are
appropriate and proportionate to
the sustained performance and value
creation of the Company, taking into
account the strategic objectives of
the Group.
the Group and its business units,
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.
1.5 Monitor the level and structure of
remuneration for directors and
key management personnel relative
to the internal and external peers
and competitors, to ensure that the
remuneration is appropriate to attract,
retain and motivate the directors
1.3 Structure an audit of business units’
HSE management programmes
to verify effectiveness and
use its resources to lead the
execution of such audits, drawing
additional resources from the line
where needed.
Keppel Corporation Limited
1.12 Carry out such investigations into
safety-related matters as the
Committee deems fit.
1.13 Report to the Board on material matters,
findings and recommendations.
1.14 Perform such other functions as the
Board may determine.
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.
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102
CORPORATE GOVERNANCE
NATURE OF DIRECTORS’ APPOINTMENTS AND MEMBERSHIP ON BOARD COMMITTEES
The current composition of the Board Committees are as follows:
Committee Membership
Director
Audit Committee
Nominating Committee
Remuneration Committee
Board Risk Committee
Board Safety Committee
–
Lee Boon Yang
Non-Executive and
Independent Chairman and Director –
Loh Chin Hua
Executive Director
Alvin Yeo
Non-Executive and
Independent Director
Tan Ek Kia
Non-Executive and
Independent Director
Danny Teoh
Non-Executive and
Independent Director
Till Vestring
Non-Executive and
Independent Director
Veronica Eng
Non-Executive and
Independent Director
Jean-Francois Manzoni
Non-Executive and
Independent Director
Teo Siong Seng
Non-Executive and
Non-Independent Director
Tham Sai Choy
Non-Executive and
Independent Director
Penny Goh
Non-Executive and
Independent Director
–
–
–
Member
Member
Chairman
Member
Member
Member
Member
Member
–
–
–
–
Member
–
–
–
–
–
Member
Member
–
Member
Chairman
Member
Member
Member
Chairman
–
–
Chairman
–
–
Chairman
Member
–
–
–
–
–
–
–
Member
–
Member
–
–
Member
Member
–
–
Following the retirement of three non-executive
and independent directors with effect
from 23 April 2021, immediately after the
conclusion of the upcoming annual general
meeting, and assuming that there is no
appointment of new directors, the Board
will have eight members, the majority of
whom are non-executive and independent
and the board committees will continue
to comprise majority non-executive
and independent directors (including
the Chairman).
BOARD ASSESSMENT
EVALUATION PROCESSES
Board
Each board member is required to complete
a Board Evaluation Questionnaire and send
the Questionnaire directly to the Independent
Co-ordinator (“IC”) within five working days.
An “Explanatory Note” is attached to the
Questionnaire to clarify the background,
rationale and objectives of the various
performance criteria used in the Board
Evaluation Questionnaire with the aim of
achieving consistency in the understanding
and interpretation of the questions. Based
on the returns from each of the directors,
the IC prepares a consolidated report and
briefs the Chairman of the 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.
Board Committees
Each member of a board committee is
required to complete a Board Committee
Questionnaire and send the Questionnaire
direct to the IC within five working days.
Based on the returns from each of
the members of a board committee,
the IC prepares a consolidated report
and briefs the Chairmen of the respective
board committees.
Individual Directors
The Board differentiates the assessment
of an executive director from that of an NED.
In the case of the assessment of the
individual executive director, each NED
is required to complete the executive
director’s assessment form and send
the form directly to the IC within five
working days. It is emphasised that the
purpose of the assessment is to assess the
executive director on his/her 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 in
consultation with the Board Chairman
thereafter meet with the executive director,
where necessary, to provide feedback
to the executive director on his/her
board performance with a view to
improving his/her 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
Annual Report 2020
103
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 at a meeting of the NEDs.
The NC Chairman will in consultation with
the Board Chairman, thereafter meet with
the NEDs individually where necessary,
to provide feedback to the NEDs 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,
standards of conduct, 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 performance criteria for the board
committee evaluation are in respect of
the committee size and composition,
meeting frequency and procedures,
training and resources, and board
committee performance in relation to
discharging their responsibilities set out
in their respective terms of reference.
The executive 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 is responsive
to comments raised by the board are
taken into account); (2) knowledge
(under which factors as to the director’s
industry and business knowledge,
whether he/she provides valuable inputs,
his/her understanding of finance and
accounts, and his/her knowledge of the
Company and its strategies are taken
into consideration); (3) director’s duties
(under which factors as to whether the
director provides insights on the Company’s
Keppel Corporation Limited
day-to-day operation, whether the director
takes his/her role of director seriously
and works to further improve his/her
own performance, whether the director
listens and discusses objectively, whether
the director provides management’s view
without undermining management
accountability and whether he/she
assists to inform NEDs of pertinent
issues or developments 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 email, telephone, written notes etc
are considered).
The NED’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, meeting preparation and
whether he/she constructively challenges
management and helps develop proposals
on strategy 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 email, telephone,
written notes etc are considered).
The assessment of the Chairman of
the Board is based on, among others,
his leadership, 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 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,
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104
CORPORATE GOVERNANCE
whether he ensured that meetings were
conducted in a manner that facilitated
open communication and meaningful
participation, whether he encouraged
constructive relations between Board
and management and between directors,
whether he ensured constructive dialogue
with shareholders and other stakeholders,
whether he promoted high standards of
corporate governance, and set the right
ethical and behavioural tone, 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.
or contract worker appointed by a company
within the Group, which occurred in the
course of his/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:
a. dishonest, including but not limited
to theft or misuse of resources
within the Group;
fraudulent;
b.
c. corrupt;
d.
e. other serious improper conduct;
f. an unsafe work practice; or
g. any other conduct which may
illegal;
KEPPEL WHISTLE-BLOWER POLICY
The Keppel Whistle-Blower Policy (the “Policy”)
took effect on 1 September 2004 and
was enhanced on 15 February 2017
and 1 May 2019 to encourage reporting in
good faith of suspected Reportable Conduct
(as defined below) by establishing clearly
defined and centralised 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
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 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
WHISTLE-BLOWER REPORTING MECHANISM
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 (Group Internal Audit)
is the Receiving Officer for the purposes
of the Policy and is responsible for the
administration, implementation and
oversight of 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),
SUPERVISOR
RECEIVING OFFICER
AC CHAIRMAN
1
2
5
3
6
4
7
EMPLOYEE
Reporting Channels
NON-EMPLOYEE
Annual Report 2020
105
he/she may make the report directly to the
Receiving Officer or the AC Chairman.
Other whistle-blowers may report a
suspected Reportable Conduct directly to
the Receiving Officer or the AC Chairman,
or via the whistle-blower reporting channels
that the Group has established. There is an
email hotline (kpmgethicsline@kpmg.com)
and local toll-free numbers in Singapore,
Brazil, China, USA, Vietnam, Indonesia, the
Philippines, Australia, the UK and Germany.
Manning of the whistle-blower hotline has
been outsourced to a third party (“KPMG”)
and provides for reporting in the languages
listed above. KPMG also maintains the
aforementioned email hotline and an on-line
portal, the link to which is available on the
“Contact Us” section of the Company’s
website at www.kepcorp.com.
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
to allow for proper assessment of the
nature, extent and urgency of preliminary
investigative procedures to be undertaken.
INVESTIGATION
Every Protected Report (referring
to a report made in good faith that
discloses suspected Reportable Conduct)
received will be assessed by the Receiving
Officer, who will review the information
disclosed, interview the whistle-blower(s)
when required and if contactable and,
either exercising his/her own discretion
or in consultation with the Investigation
Advisory Committee, make recommendations
to the AC Chairman as to whether the
circumstances warrant an investigation.
If the AC Chairman or the AC (if the AC
Chairman consults the other AC members),
determines that an investigation should be
carried out, the AC Chairman or the AC
(as the case may be) shall determine
the appropriate investigative process
to be employed and the corrective or
remedial actions (if any) to be taken.
The AC Chairman and the Investigation
Advisory Committee (if consulted) will
use their respective best endeavours to
ensure that there is no conflict of interests
on the part of any person involved in the
investigations. The Investigation Advisory
Committee (comprising representatives
from each of the Group Human Resources,
Group Legal and Group Risk & Compliance
departments, or such other representatives
as the AC may determine) assists the AC
Chairman with overseeing the investigation
process and any matters arising therefrom.
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. Under no circumstance
should such person(s) discuss matters
relating to the investigation with the
person(s) who is/are subject(s) of the
investigation (“Investigation Subject(s)”).
Identities of whistle-blowers, 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 good faith in
accordance with the Policy or having
participated in an 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.
Keppel Corporation Limited
GOVERNANCE
106
CORPORATE GOVERNANCE
APPENDIX 2
Rule 720(6) of the Listing Manual of the SGX-ST
The information required under Rule 720(6) read with Appendix 7.4.1 of the Listing Manual in respect of the Director whom the Company is
seeking re-election by shareholders at the upcoming annual general meeting to be held in 2021 is set out below.
Name of Director
Date of Appointment
Date of last re-appointment (if applicable)
Age
Country of principal residence
Jean-François Manzoni
1 October 2018
23 April 2019
59
Switzerland
The Board’s comments on this appointment (including rationale,
selection criteria, and the search and nomination process)
The process for the re-nomination of director to the Board, is set out in
page 81 of this Annual Report.
Whether the appointment is executive, and if so,
the area of responsibility
Job Title (e.g. Lead ID, AC Chairman, AC Member etc.)
Professional qualifications
Working experience and occupation(s) during the past 10 years
Non-executive
Non-executive and Independent Director; Nominating Committee (Chairman);
Board Risk Committee (Member)
DBA, Harvard Business School, Boston; MBA, McGill University,
Montreal; Bachelor, Business Administration, l’Ecole des Hautes Etudes
Commerciales de Montréal; Fellow of the Singapore Institute of Directors
2016 to Present:
President and Nestlé Professor, International Institute for Management
Development (IMD)
2011 to 2016:
Shell Chair in Human Resources and Organisational Development,
and Professor of Management Practice, INSEAD Singapore
Shareholding interest in the listed issuer and its subsidiaries
108,000 (direct interests)
Any relationship (including immediate family relationships)
with any existing director, existing executive officer, the issuer
and/or substantial shareholder of the listed issuer or of any of
its principal subsidiaries
Conflict of interest (including any competing business)
Undertaking (in the format set out in Appendix 7.7) under Rule 720(1)
has been submitted to the listed issuer
No
No
Yes
Other Principal Commitments including Directorships
– Past (for the last 5 years)
Singapore Civil Service College; Association to Advance Collegiate
Schools of Business (AACSB) International
Other Principal Commitments including Directorships – Present
President and Nestlé Professor, International Institute for Management
Development (IMD), Switzerland; Member of several International Advisory
panels, including Digital Switzerland and Russian Presidential Academy of
National Economy and Public Administration
a. Whether at any time during the last 10 years, an application or
No
a petition under any bankruptcy law of any jurisdiction was filed
against him or against a partnership of which he was a partner at
the time when he was a partner or at any time within 2 years from
the date he ceased to be a partner?
b. Whether at any time during the last 10 years, an application
No
or a petition under any law of any jurisdiction was filed against
an entity (not being a partnership) of which he was a director
or an equivalent person or a key executive, at the time when he
was a director or an equivalent person or a key executive of that
entity or at any time within 2 years from the date he ceased to
be a director or an equivalent person or a key executive of that
entity, for the winding up or dissolution of that entity or, where that
entity is the trustee of a business trust, that business trust, on the
ground of insolvency?
c. Whether there is any unsatisfied judgment against him?
d. Whether he has ever been convicted of any offence, in Singapore
or elsewhere, involving fraud or dishonesty which is punishable
with imprisonment, or has been the subject of any criminal
proceedings (including any pending criminal proceedings of
which he is aware) for such purpose?
No
No
Annual Report 2020
107
Name of Director
e. Whether he has ever been convicted of any offence, in Singapore or
elsewhere, involving a breach of any law or regulatory requirement
that relates to the securities or futures industry in Singapore or
elsewhere, or has been the subject of any criminal proceedings
(including any pending criminal proceedings of which he is aware)
for such breach?
Jean-François Manzoni
No
f. Whether at any time during the last 10 years, judgment has
No
been entered against him in any civil proceedings in Singapore or
elsewhere involving a breach of any law or regulatory requirement
that relates to the securities or futures industry in Singapore or
elsewhere, or a finding of fraud, misrepresentation or dishonesty
on his part, or he has been the subject of any civil proceedings
(including any pending civil proceedings of which he is aware)
involving an allegation of fraud, misrepresentation or dishonesty
on his part?
g. Whether he has ever been convicted in Singapore or elsewhere
No
of any offence in connection with the formation or management
of any entity or business trust?
h. Whether he has ever been disqualified from acting as a director
or an equivalent person of any entity (including the trustee of
a business trust), or from taking part directly or indirectly in the
management of any entity or business trust?
No
i. Whether he has ever been the subject of any order, judgment or
No
ruling of any court, tribunal or governmental body, permanently or
temporarily enjoining him from engaging in any type of business
practice or activity?
j. Whether he has ever, to his knowledge, been concerned with
the management or conduct, in Singapore or elsewhere,
of the affairs of: —
i. any corporation which has been investigated for a breach of
any law or regulatory requirement governing corporations in
Singapore or elsewhere; or
ii. any entity (not being a corporation) which has been investigated for
a breach of any law or regulatory requirement governing such
entities in Singapore or elsewhere; or
No
No
No
iii. any business trust which has been investigated for a breach
No
of any law or regulatory requirement governing business trusts
in Singapore or elsewhere; or
iv. any entity or business trust which has been investigated for
a breach of any law or regulatory requirement that relates
to the securities or futures industry in Singapore or elsewhere,
No
in connection with any matter occurring or arising during that period
when he was so concerned with the entity or business trust?
k. Whether he has been the subject of any current or past investigation
No
or disciplinary proceedings, or has been reprimanded or issued
any warning, by the Monetary Authority of Singapore or any other
regulatory authority, exchange, professional body or government
agency, whether in Singapore or elsewhere?
Any prior experience as a director of an issuer listed on the Exchange?
Yes
If yes, please provide details of prior experience.
Professor Manzoni has been a director on the Board of the Company
since 2018.
If no, please state if the director has attended or will be attending
training on the roles and responsibilities of a director of a listed issuer
as prescribed by the Exchange.
N.A.
Please provide details of relevant experience and the nominating
committee’s reasons for not requiring the director to undergo training
as prescribed by the Exchange (if applicable).
Keppel Corporation Limited
GOVERNANCE
108
CORPORATE GOVERNANCE
APPENDIX 3
Summary of Disclosures of 2018 CG Code
Rule 710 of the SGX Listing Manual requires Singapore listed companies to describe their corporate governance practices with specific
reference to the 2018 CG Code in their annual reports for financial years commencing on or after 1 January 2019. This summary of
disclosures describes our corporate governance practices with specific reference to the disclosure requirement under the 2018 CG Code.
Principles
BOARD MATTERS
The Board’s Conduct of Affairs
Principle 1
Provision 1.1
Provision 1.2
Provision 1.3
Provision 1.4
Provision 1.5
Provision 1.6
Provision 1.7
Board Composition and Guidance
Principle 2
Provision 2.1
Provision 2.2
Provision 2.3
Provision 2.4
Provision 2.5
Chairman and Chief Executive Officer
Principle 3
Provision 3.1
Provision 3.2
Provision 3.3
Board Membership
Principle 4
Provision 4.1
Provision 4.2
Provision 4.3
Provision 4.4
Provision 4.5
Board Performance
Principle 5
Provision 5.1
Provision 5.2
REMUNERATION MATTERS
Procedures for Developing Remuneration Policies
Principle 6
Provision 6.1
Provision 6.2
Provision 6.3
Provision 6.4
Level and Mix of Remuneration
Principle 7
Provision 7.1
Provision 7.2
Provision 7.3
Annual Report 2020
Page Reference in this Report
Page 79
Page 81
Page 79
Pages 81 to 96 and 99 to 101
Pages 80 and 85
Pages 80 and 81
Page 80
Pages 83 and 84
Pages 83 and 84
Pages 83 and 84
Pages 82 and 83
Page 80
Page 78
Page 78
Page 84
Pages 81 to 85 and 100
Page 81
Page 81
Pages 83 and 84
Pages 28 to 31 and 85
Pages 85 to 86 and 102 to 104
Pages 85 to 86 and 102 to 104
Pages 86 and 101
Page 86
Pages 86 and 101
Page 86
Pages 86 to 91
Pages 86 to 91
Pages 86 to 91
109
Page Reference in this Report
Pages 89 and 90
Page 91
Pages 86 to 91
Pages 92 and 99
Page 96
Pages 91 and 99
Page 91
Page 91
Page 91
Page 91
Pages 97 and 98
Pages 97 and 98
Pages 80, 97 and 98
Page 98
Page 98
Page 98
Pages 96 to 98
Page 97
Page 97
Page 96
Page 96
Page 96
Disclosure on Remuneration
Principle 8
Provision 8.1
Provision 8.2
Provision 8.3
ACCOUNTABILITY AND AUDIT
Risk Management and Internal Controls
Principle 9
Provision 9.1
Provision 9.2
Audit Committee
Principle 10
Provision 10.1
Provision 10.2
Provision 10.3
Provision 10.4
Provision 10.5
SHAREHOLDER RIGHTS AND RESPONSIBILITIES
Shareholder Rights and Conduct of General Meetings
Principle 11
Provision 11.1
Provision 11.2
Provision 11.3
Provision 11.4
Provision 11.5
Provision 11.6
Engagement with Shareholders
Principle 12
Provision 12.1
Provision 12.2
Provision 12.3
MANAGING STAKEHOLDER RELATIONSHIPS
Engagement with Stakeholders
Principle 13
Provision 13.1
Provision 13.2
Provision 13.3
Keppel Corporation Limited
110
GOVERNANCE
RISK MANAGEMENT
WE UNDERTAKE ONLY APPROPRIATE AND
WELL-CONSIDERED RISKS, CONSIDERING THEIR
IMPACT TO OUR BUSINESS, STAKEHOLDERS,
AND LONG-TERM CORPORATE SUSTAINABILITY.
Keppel adopts a balanced approach
to risk management to optimise
business returns while considering
their holistic impact on corporate
sustainability. Managing risk is
integral to how we develop and
execute our business strategies. It is
grounded in our operating principles
and belief that a balanced and holistic
risk-reward methodology is key to
our commitment to environmental,
social and governance (ESG) issues,
and to delivering long-term value for
our stakeholders.
Our Risk-Centric Culture and Enterprise
Risk Management (ERM) Framework
enable the Group to respond to the
dynamic business environment and
shifting business demands, and to
seize new value-added opportunities.
RISK-CENTRIC CULTURE
Mindsets and attitudes are key to
effective risk management. The Group
fosters a risk-centric culture through
several aspects.
ENTERPRISE RISK
MANAGEMENT FRAMEWORK
Relevant and material risk issues
are surfaced for discussion with
the Board Risk Committee (BRC)
and the Board to keep them apprised
in a timely manner. Through the BRC,
the Board advises management
in formulating and implementing
the risk management framework,
policies and guidelines.
The terms of reference for the BRC
are disclosed on pages 99 and 100 of
this report. The Board has defined three
risk tolerance guiding principles for the
Group which determine the nature and
extent of the significant risks which the
Board is willing to take to achieve
business goals.
These principles are:
1. Risk taken should be carefully
evaluated, commensurate with
rewards and be 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; and
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 92 to 96 under Principle 9
(Risk Management and Internal Controls),
allows management and the Board
to determine the adequacy and
effectiveness of the Group’s risk
management system.
As a group, we are cognisant of the dynamic
environment in which we operate. We
constantly enhance the framework and
systems where necessary, to ensure risk
management remains an integral part of
decision-making and operations.
Keppel’s ERM framework, a component of
Keppel’s System of Management Controls,
provides the Group with a systematic
approach to identify and manage risks.
It outlines the requirement for each
business unit (BU) to recognise key risk
areas affecting its operations and to
classify the impact and likelihood of
these risks in a register for prioritisation
and management. The ERM framework
also provides the reporting structure,
monitoring mechanisms, processes
and tools used, as well as any policies,
TRANSPARENCY &
COMPETENCY
We promote transparency
in information sharing
and escalation of
risk-related matters,
incidents, near-misses
or events of interest.
Risk identification
and assessment are
embedded in key control
processes and Group-
wide surveys are
conducted periodically to
assess risk awareness
amongst employees.
TRAINING & COMMUNICATIONS
Training and communications support
competency across all employees and
occur through various forums, in-house
publications and sharing of lessons learnt.
Risk management is regularly reinforced
as a discipline and developed through
awareness and practice.
FRAMEWORK & VALUES
We are guided by the ERM
framework, core values,
mission and vision,
in managing risks.
RISK-CENTRIC CULTURE
LEADERSHIP & GOVERNANCE
Keppel’s Board and management are
fully committed to fostering a strong
risk-centric culture and consistently
partake in reviewing risks in all areas
of business. Key messages encouraging
prudent risk-taking in decision-making
and business processes are interwoven
into major meetings, and decision-making
to enable optimal risk management.
OWNERSHIP &
ACCOUNTABILITY
We advocate ownership and
accountability of risks across all
employees via the performance
evaluation process.
This is evident in our risk
processes which emphasise
having clear owners for major
risk areas.
PROCESS & METHODS
An integral aspect of
strategic and operational
decision-making includes
considering and managing
risks at all levels of business.
A key part of the process
is the identification and
assessment of risks using
the five-step method:
(1) identifying;
(2) assessing;
(3) mitigating;
(4) communicating; and
(5) monitoring.
Underlying the five-step
method is a detailed risk
definition and reporting
framework for risk
oversight by the Board
and management.
Annual Report 2020
111
Figure 1
ERM FRAMEWORK
INCORPORATING SUSTAINABILITY
RISKS AND MATERIAL ISSUES
STRATEGIC
External environment
and execution of
business strategy
OPERATIONAL
People, processes, systems
and Health, Safety and
Environment (HSE) issues
COMPLIANCE
Compliance with
laws and regulations;
license to operate
FINANCIAL
Internal financial
management and controls
EMERGING
Evolving or emerging
threat(s) that affect business
OPPORTUNITIES
Potential areas of
competitive advantage
arising from various risks
standards or limits to be applied in managing
some of the Group’s key risk areas.
Our ERM framework is also constantly
refined to ensure it remains relevant in our
operating environment and where required,
is tailored to the requirements of each BU.
The framework takes reference from the
Singapore Code of Corporate Governance,
the COSO Enterprise Risk Management –
Integrated Framework, ISO 22301:2012,
ISO 31000 and the Guidebook for
Board Risk Committees.
Both management and risk leads across
BUs drive and coordinate Group-wide
activities and initiatives. These are facilitated
by regular meetings to ensure that pertinent
risks are identified, assessed and mitigated
in a timely manner. Beyond operational
activities, we continually improve on our risk
practices taking reference from the latest
industry developments and best practices.
2020 was a transformative year for Keppel.
This was not only due to the impact
of COVID-19, but also the launch of
Vision 2030, which defines our roadmap
into the next decade.
Keppel Corporation Limited
The key risks identified for FY 2020
encapsulate mainly our existing businesses
and the transformation we have chosen
to undertake. We remain committed
to addressing each issue as they arise,
in line with our philosophy of undertaking
only appropriate and well-considered
risks to optimise returns in a balanced
and holistic manner, to deliver long-term
value for all our stakeholders.
STRATEGIC RISKS
MARKET & COMPETITION
A large part of the Group’s strategic
risks include market-driven forces,
evolving competitive landscapes,
changing customer demands and
disruptive innovation. We remain
vulnerable to other external factors
including volatility in the global economy,
implications of geopolitical developments,
intense competition in core markets and
disruptive technology. For example, the
COVID-19 pandemic impacted the Group’s
operations in nearly all our key markets.
Despite the many COVID-19 challenges
faced by our businesses, including
difficult economic and market conditions,
mandated office closures and travel
restrictions, the Group continued to
operate resiliently, and remained focused
on reviewing our business strategies, as
well as formulating responses and taking
pre-emptive actions against emerging risks.
During the year, the Board and management
oversaw the launch and execution of
Vision 2030 and the establishment of
the Transformation Office to oversee and
coordinate Vision 2030-related activities.
As the Group transforms, risk management
policies and principles will be continually
refined to support our business objectives.
STRATEGIC VENTURES,
INVESTMENTS & DIVESTMENTS
We have an established process for
evaluating investment and divestment
decisions including strategic ventures.
We ensure that these endeavours are well
monitored and aligned with the Group’s
strategic intent, investment objectives and
desired returns. Where required, we may
recalibrate some strategies in response
to the changing business environment.
Together with the Board, the Investment
and Major Project Action Committee guides
the Group to ensure that risks taken are
considered and controlled in a manner
that exercises the spirit of enterprise and
prudence to earn the best risk-adjusted
returns on invested capital across
our businesses.
The evaluation of risks for strategic ventures
involves rigorous due diligence, feasibility
studies and sensitivity analyses of key
assumptions and variables. Critical factors
considered include alignment with the Group’s
strategy, financial viability, country-specific
political and regulatory developments,
contractual risk implications, as well as
previous lessons learnt. In 2020, we introduced
an internal shadow carbon pricing in the
evaluation of major investment decisions.
The Group’s investment portfolios are
constantly monitored to ensure that
performance is on track to meet our
strategic intent and returns.
SUSTAINABILITY & CLIMATE CHANGE
Sustainability covers a broad range of
key material issues, many of which have
been identified and managed according to
the Group’s ERM framework. In particular,
risks and opportunities relating to sustainability,
climate change and the environment are
fundamental to the Group. These relate
to both physical and transitional risks.
The Group supports the Taskforce
on Climate-related Financial Disclosures
and has worked towards incorporating
its recommendations in our reporting
framework. Details on sustainability-related
material issues to the Group can be found
on pages 22 to 27 of this report.
As part of Vision 2030, we place sustainability
at the core of our strategy. The Group’s
Sustainability Risk Management Framework
is integrated with our ERM framework
(Figure 1) and guides Group companies on
the specific processes and methods applied
in identifying, assessing and managing
sustainability-related risks and opportunities.
This includes third-party risks from vendors
and suppliers. As part of Sustainability Risk
Management, we assess opportunities
for the Group in its sustainability strategy
and are committed to strengthening our
organisational capabilities in responding
to climate-related risks and opportunities.
More details will be provided in our
Sustainability Report, which will be
published in May 2021.
CUSTOMER & STAKEHOLDER EXPERIENCE
The Group operates in many geographies
and has multiple customer touchpoints,
including retail consumers in the
telecommunications, retail electricity,
e-commerce and gas businesses. Beyond
customers, other stakeholders include
regulators, partners, investors, employees
and the local communities in which we
operate. We place utmost importance on
Customer and Stakeholder Experience as
such matters have direct bearing on trust
and brand reputation. As such, we consistently
monitor our products and services for safety,
quality and reliability. We respect customer/
stakeholder feedback and post-sales support;
and are committed to uphold personal
data privacy, product safety and related
matters including our responsiveness to
GOVERNANCE
112
RISK MANAGEMENT
inputs from stakeholders across various
engagement channels.
HUMAN RESOURCES
We place a strong emphasis on attracting and
developing a wide pool of talent. To ensure
we have the necessary skillsets to enable
Keppel’s transition into its next phase of
growth, we have considered both internal
and external development programmes. This
includes nurturing employees, maintaining
good industrial relations and fostering
a conducive work environment. We are
committed to strengthening succession
planning and bench strength, as well as
building or acquiring new organisational
capabilities to drive business growth,
whilst maintaining our status as an
employer of choice.
In our talent development programmes,
we emphasise the importance of having a
risk-centric mindset to inculcate the ability
to identify and assess risks, develop and
implement mitigating actions, and monitor
residual risks. The Keppel Leadership
Institute helps to inculcate this mindset
by embedding risk management in its
key leadership courses.
OPERATIONAL RISKS
PROJECT MANAGEMENT
From project initiation through to completion,
risk management is an integral part of project
management activities to facilitate early
detection and proactive management of
operational risks. We adopt a systematic
assessment and monitoring process to help
manage key project risks. Attention is given
to technically challenging and high-value
projects, including greenfield developments,
the deployment of new technology and/or
operations in new geographies.
During project execution, we conduct
project reviews and quality assurance
programmes to address issues involving
cost, schedule and quality. Project Key
Risk Indicators are used as early warning
signals to determine if remedial actions are
required. A Project Operational Set-up Guide
detailing the key risk areas is available for
BUs looking to implement large projects.
We also conduct knowledge-sharing
workshops to share best practices
and lessons learnt across the Group.
the Group, particularly at the ground level
where the risks are greatest. With the outbreak
of COVID-19, the Group has placed high
emphasis on staff health by ensuring
that measures are taken and government
regulations properly followed, so as to protect
employees from potential exposure. Efforts
have been made across BUs to manage staff
movement and ensure relevant precautions,
such as the use of personal protective
equipment and temperature screening.
Other key HSE initiatives include our Zero
Fatality Strategy with a roadmap focused on
aligning High Impact Risk Activities standards
across our global operations, enhancing
competency of employees performing
safety-critical tasks, strengthening
operational controls, deploying Root Cause
Analysis investigation standards across the
Group, as well as developing more proactive
and leading risk indicators/matrices to
monitor HSE performance standards.
Environmental management is also a major
area of focus and key operating sites are
closely monitored for compliance with
environmental standards.
In 2020, the Group clinched 21 awards at
the Workplace Safety and Health (WSH)
Awards for exemplary safety performance,
implementation of strong WSH management
systems and efforts to create solutions that
improve workplace safety.
BUSINESS & OPERATIONAL PROCESSES
The Group is connected by common shared
services and platforms which enable us to
better manage our processes and costs
while enhancing efficiency, productivity,
compliance and controls. We have adopted
ISO standards and certifications in major
business areas to standardise processes
and keep up with industry best practices.
In addition, procedures relating to defect
management, operations, project control and
supply chain management continue to be
refined to improve the quality of deliverables.
We continue to embark on digitalisation
and automation to optimise our processes
while taking a risk-based approach. We also
continually evaluate procedures, policies
and authority limits to ensure that they
remain relevant in meeting business needs.
These processes help to keep project
delivery on time and within budget,
without compromising on safety, quality,
regulatory and contractual obligations.
HEALTH, SAFETY & ENVIRONMENT
We uphold high standards of safety, and
this translates into constant vigilance to
foster a strong HSE-centric culture across
BUSINESS CONTINUITY
We are committed to maintaining
operational resilience with Business
Continuity Management (BCM) standards
that equip us with the capability to respond
effectively to business disruptions. We are
cognisant of major risks of natural disasters,
fire, pandemics, terrorism and cyber-attacks
as well as the failure of critical equipment/
systems and industrial accidents. On major
incidents, the Group Incident Reporting and
Crisis Management operating standard
guides us in management and response,
while our Business Continuity Plans address
post-event mitigation. These are coordinated
by management and the Group BCM Steering
Committee, which provide sponsorship,
direction and guidance to ensure a constant
readiness-to-respond state. We continually
extend and strengthen our capabilities
in responding to major incidents/crises
with the aim of safeguarding our people,
assets, stakeholders’ interests and the
Company’s reputation.
In 2020, the COVID-19 pandemic resulted
in the activation of Group-wide business
continuity plans to protect employees
and other stakeholders, whilst maintaining
key operations. A COVID-19 Taskforce,
comprising key senior management
across the Group, was formed to coordinate
centralised and timely responses, as well
as review scenarios to ensure stability
of the Group’s operations and supply
chains. In 2020, the Group focused on
the well-being of staff and stakeholders,
ensuring that safe management measures
are in place across facilities.
We also recognise cyber threat as an
emerging area of potential business
disruption and maintain a Group Cyber
Incident Response plan, which references
local and international standards, and
details our response and recovery protocols.
Table-top exercises are also organised to
validate the effectiveness of these protocols.
We continue to monitor key disruptive threats
to our business operations and adapt our
plans to ensure operational resilience.
CYBER SECURITY, DATA PROTECTION
AND TECHNOLOGY
As technology increasingly dominates
business activities, we recognise the
importance of cyber threats globally.
Technology and data security risks,
including outsourced services, are an
integral part of the Group’s business risk.
We have established a technology governance
structure and risk framework to address
both general technology and data security
controls, covering key areas such as cyber
security, business disruption, theft/loss of
confidential data and data integrity.
The Group continued to implement the
Technology and Data Risk Management
Programme in 2020. This involves the
identification, assessment and management
of critical technology and data assets
according to leading industry guidelines
such as those by the Cyber Security Agency
Annual Report 2020
113
of Singapore (CSA) and the US National
Institute of Standards and Technology.
The programme not only seeks to improve
technology and data security standards
but also to inculcate a culture of cyber
awareness amongst employees.
of compliance and ethical standards
in the way we conduct our business.
Our emphasis is clear and consistently
emphasised. We have zero tolerance for
fraud, bribery, corruption and violation of
laws and regulations.
In 2020, the Group also embarked on
various initiatives to continually strengthen
our technology security, governance and
controls through the refinement and
alignment of our policies, processes and
systems, as well as the consolidation of
servers and storage. We worked closely
with industry professionals to define a
cyber security governance structure and
enhance our information technology policies
and practices to ensure alignment with
industry standards. Extensive training and
assessment exercises were conducted
during year to heighten overall awareness of
technology and data threats. These include
the safeguarding of critical corporate data
assets against the loss of availability of
critical systems to disruptions.
In terms of use of technology, technical
teams and experts from across the
Group enable us to keep abreast of
evolving technology. The response is
either calibrated at each BU or managed
strategically at the Group with the
assistance of Keppel Technology and
Innovation, which drives Group-wide
adoption of new technology and innovation.
The Keppel Technology Advisory Panel,
comprising leading academics, researchers
and advisors from a wide range of related
industries, also regularly advises the Group
in areas of technological innovation.
COMPLIANCE RISKS
LAWS, REGULATIONS & COMPLIANCE
Given the geographical diversity of our
businesses, we closely monitor developments
in relevant laws and regulations of countries
where the Group operates to ensure
compliance. We regularly keep updated on
changes to laws and regulations, ensuring
that we can assess our exposure and risks
effectively, recognising that non-compliance
with laws and regulations may have a
detrimental effect on both the financial
performance and reputation of Keppel.
Significant risk areas, such as those relating
to potential corruption, are surfaced by
management and where applicable,
assessed by the Board. With respect to
corruption, significant risks include areas
where external agents are used for
business development.
We are committed to enhancing our regulatory
compliance policies and procedures to
ensure that the Group maintains a high level
Keppel Corporation Limited
In 2020, we continued to make
improvements to our regulatory compliance
programme, refining our processes,
broadening employee understanding, and
ensuring that compliance awareness and
principles are entrenched in all activities.
We also recognise the importance of sanctions
risks owing to the escalation of trade and
other sanctions in many countries. More
details of our Compliance programme can
be found on pages 114 to 116 of this report.
FINANCIAL RISKS
FRAUD, MISSTATEMENT OF FINANCIAL
STATEMENTS & DISCLOSURES
We maintain a strong emphasis on
ensuring that financial statements are
accurate and presented fairly in accordance
with applicable financial reporting standards
and frameworks.
Regular external and internal audits are
conducted to provide assurance on
the accuracy of financial statements
and adequacy of the internal control
framework supporting the statements.
Where required, we leverage the expertise
of the auditors we have engaged in the
interpretation of financial reporting
standards and changes. We also conduct
regular training and education programmes
to enhance the capabilities of the Group’s
finance managers.
In 2020, we enhanced our internal
control framework to support a
more data-driven approach to control
assessments. Deployment of the eCSA
tool allowed all covered BUs to better
review and report key control assessments
and assurance activities, improving
accuracy and transparency in the
annual assurance process.
Keppel’s System of Management Controls
framework outlines our internal control
and risk management processes and
procedures. For more details, please refer
to pages 93 and 94 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. Details can be found on
page 69 of this report. In this area, policies
and financial authority limits are reviewed
regularly to incorporate changes in the
operating and control environment.
We are focused on financial discipline
and seek to deploy our capital to optimise
risk-adjusted returns for shareholders,
while maintaining a strong balance sheet
to seize new opportunities. In 2020,
as global economies faced stresses
from the economic impact of COVID-19,
the Group maintained a proactive
approach to liquidity management and
averted short-term funding stresses
that were affecting many organisations
across markets.
Our procedures include the evaluation
of counterparties and other related
risks against pre-established internal
guidelines. We conduct impact
assessments and stress tests to
gauge the Group’s potential financial
exposure to changing market situations,
to enable informed decision-making
and the implementation of prompt
mitigating actions. We also regularly
monitor our asset concentration exposure
in countries where we operate, to ensure
that our portfolio of assets, investments
and businesses are diversified against
the systemic risks of operating in a
specific geography.
PROACTIVE MANAGEMENT OF
RISKS & OPPORTUNITIES
Effective risk management is a
dynamic approach and encompasses
the evaluation of both risks and
opportunities. Managing risk is an
inherent part of seizing opportunities.
Hence, we do not fear risks but recognise
the need to proactively manage them
as part and parcel of business operations.
The marrying of risks and opportunities
allows us to take a business-centric
approach to risk management, aligning
business activities with risk considerations,
and discussing issues in an open and
transparent manner, enabling us to
pursue optimal risk-return initiatives.
We continually evolve our framework
and processes to ensure effectiveness
and relevance. Much of these depend
on our ability to remain connected and
vigilant to emerging risks or opportunities.
Across the Group, we identify and review
these in various meetings throughout
the year. Where applicable, these are
further developed and discussed at
various governance committees
to determine action or response.
We recognise that our systems and
processes provide reasonable but
not absolute assurance and hence
continually improve to ensure that
our ability to manage and respond to
risks and opportunities remains relevant
and effective.
114
GOVERNANCE
REGULATORY COMPLIANCE
THE TONE FOR REGULATORY COMPLIANCE IS
DRIVEN FROM THE TOP AND RESONATES WITH
OUR EMPLOYEES AT EVERY LEVEL. WE REMAIN
VIGILANT AND DETERMINED TO BUILD A
DISCIPLINED AND SUSTAINABLE COMPANY.
Each BU has a dedicated Compliance Lead.
He/she is supported by the respective
risk and compliance teams and is
responsible for driving and administering
the compliance programme and agenda
for the BU. This includes providing support
to BU management with subject matter
expertise, process excellence and regular
reporting to ensure that compliance risks
are effectively assessed, managed and
mitigated. We continue to strengthen the
Group’s Compliance teams with additional
professional and experienced officers.
Under the direction of Group RCMC
and Group RCWT, BUs are responsible for
implementing the Keppel Group Code of
Conduct and regulatory compliance policies
and procedures. They are also responsible
for ensuring that risk assessments of
material regulatory compliance risks are
conducted, and that control measures are
practical, adequate and effective.
REGULATORY COMPLIANCE
FRAMEWORK
Our regulatory compliance framework
focuses on critical pillars covering
the areas of culture; policies and
procedures; training and communication;
key compliance processes; compliance
risk assessment, reviews and monitoring,
and compliance resources.
The Group Regulatory Compliance
Management Committee (Group RCMC)
is chaired by Keppel Corporation’s
Chief Executive Officer and its members
include all BU heads. The role of the
Group RCMC is to articulate the Group’s
commitment to regulatory compliance,
as well as direct and support the
development and implementation
of over-arching compliance policies
and guidelines.
The Group RCMC is supported by the
Group Regulatory Compliance Working
Team (Group RCWT), which is chaired
by the Head of Group Risk & Compliance.
The Group RCWT oversees the development
and review of pertinent regulatory
compliance matters, over-arching
compliance policies and guidelines for
the Group, as well as reviews training
and communication programmes.
Compliance
Resources
Culture
Compliance,
Risk Assessment,
Review & Monitoring
REGULATORY
COMPLIANCE
FRAMEWORK
Policies &
Procedures
Key Compliance
Processes
Training &
Communications
We are guided by our core values and code
of conduct. We will do business the right
way and comply with all applicable laws and
regulations wherever we operate. We strive
to deliver outstanding performance, whilst
maintaining the highest ethical standards.
We are clear with our tone for regulatory
compliance, which is consistently emphasised
from the top and throughout all levels of
the Group. We do not tolerate fraud, bribery,
corruption or any violation of laws
and regulations.
STRATEGIC OBJECTIVES
We have made significant progress in
embedding a robust compliance framework
and process throughout the Group.
In addition to Keppel Offshore & Marine
obtaining ISO 37001 Anti-Bribery Management
Systems certification for all units globally in
2019, Keppel Land and Keppel Data Centres
entities in Singapore have also attained
ISO 37001 certification in 2020, attesting
to our commitment in implementing the
same standard throughout the Group.
This will ensure consistency in application
and operational effectiveness of the
compliance programme.
Our compliance framework commensurates
with the size, role and activity of each business
unit (BU), with appropriate compliance
control systems to effectively detect
and remedy potential gaps. We are
committed to forging a sustainable
compliance framework that supports
the Group’s growth and vision.
GOVERNANCE STRUCTURE
Our Regulatory Compliance Governance
Structure is designed to strengthen corporate
governance. The Board Risk Committee
(BRC) supports the Board in its oversight
of regulatory compliance and is responsible
for driving the Group’s implementation
of compliance and governance systems.
Group Risk & Compliance serves as a
secretariat to the BRC, assessing and
reporting on compliance risks, controls
and mitigation.
Annual Report 2020
115
A key aspect of the framework is the
structure of the compliance organisation.
The Head of Group Risk & Compliance
reports directly to the Chairman of the BRC.
Similarly, the Compliance Leads of the
BUs have direct reporting lines to the
respective BU Audit and Risk Committees.
Furthermore, BU Compliance Leads
report directly to the Head of Group Risk
& Compliance. This reporting structure
reinforces independence of the function
and enables management and the Board
to provide continuous, clear and explicit
support, and credence to the Group’s
compliance programme.
CULTURE
Culture and mindset are critical in
ensuring effectiveness and durability of
our compliance programme. Management
has a key role in setting the right tone and
walking the talk. This helps to embed a
strong and robust regulatory compliance
programme and culture that permeate
all levels.
Posters on anti-bribery, anti-corruption and
reporting mechanisms are displayed in our
offices globally and we issue Group-wide
bulletins on relevant topical issues to
apprise, inform and reinforce compliance
principles and messages. Key tone from
the top messages are also delivered
periodically by BU heads to employees.
Compliance moments were introduced
as part of the agenda at meetings,
where pertinent compliance topics and
learnings are shared. We continue to
work on initiatives to foster a positive
compliance-centric culture.
POLICIES & PROCEDURES
EMPLOYEE CODE OF CONDUCT
We have a strict Code of Conduct (Code)
that applies to all employees, who are
required to acknowledge and comply
with the Code.
The Code sets out important principles
to guide employees in executing their
duties and responsibilities to the highest
standards of business integrity. It covers
areas from conduct in the workplace
to business conduct, including clear
provisions on prohibitions against bribery
and corruption, and conflicts of interests
amongst others. In the interest of clarity
and transparency, the Code is publicly
available on the Group’s and BUs’ websites.
We continue to review and enhance the
Code to ensure that it stays updated and
properly instructive. Appropriate disciplinary
action, including suspension/termination
of employment, is taken if an employee is
found to have violated the Code.
We have procedures to ensure that
disciplinary actions are carried out
consistently and fairly across all levels
of employees. All third parties who
represent Keppel in business dealings,
including joint venture (JV) partners, are
also required to comply with and follow
the requirements of the Code.
SUPPLIER CODE OF CONDUCT
The acknowledgement to abide
by our Supplier Code of Conduct is
mandatory for all key suppliers across
the Group. The areas covered within
the Supplier Code of Conduct include
proper business conduct, human rights,
fair labour practices, stringent safety
and health standards and responsible
environmental management.
WHISTLE-BLOWER POLICY
Keppel’s Whistle-Blower Policy encourages
the reporting of suspected bribery, violations
or misconduct through a clearly-defined
process and reporting channel, by which
reports can be made in confidence and
without fear of reprisal. The whistle-blower
reporting channels, found on page 104 of
this report, are widely communicated and
made accessible.
PERSONAL DATA PRIVACY ACT (PDPA)
Guidance is provided to employees on
the Personal Data Protection Commission’s
advisory guidelines to ensure that the
Group complies with the requirements
of the PDPA. Further to the amendments
announced in November 2020, the Group’s
guidelines will be updated accordingly.
COMPLIANCE POLICIES
We maintain a comprehensive list of
policies covering compliance-related
matters including anti-bribery, gifts and
hospitality, agent fees, donations and
sponsorships, solicitation and extortion,
conflict of interest and insider trading,
amongst others. These policies are
reviewed periodically to ensure that
they commensurate with the activities
and business plans in the jurisdictions in
which the Group operates. Group policies
are applicable to all BUs and unless the
jurisdictional regulatory requirements are
more stringent, these policies represent
the minimum standards for the Group.
Concerted efforts are taken to ensure all
compliance policies, including translated
versions, are made available and accessible
to employees.
Keppel Corporation Limited
GOVERNANCE
116
REGULATORY COMPLIANCE
In 2020, we developed a Group Sanctions
Compliance policy and BU-specific sanctions
programme, building on our current
Regulatory Compliance programme and
controls. We are now even better able to
monitor updates on sanctions requirements
and guide respective BUs in navigating
through increasingly complex sanctions
and export control laws.
TRAINING & COMMUNICATIONS
Training is an essential component of
Keppel’s regulatory compliance framework.
Our programmes are tailored to specific
audiences and we leverage Group-wide
forums to reiterate key messages.
We have a comprehensive annual e-learning
training programme which is mandatory
for directors, officers and employees.
The content of the training covers the
Keppel Group Code of Conduct and key
principles underlying our compliance
policies. Directors, officers and employees
are required to undergo assessments
to successfully complete the training.
In addition, directors, officers and
employees are also required to formally
acknowledge their understanding of policies
and declare any potential or actual conflicts
of interest. Training on anti-bribery and
the Keppel Group Code of Conduct
in multi-languages was also carried out
for industrial/general workers. In 2020,
E-training outlining the principles
underpinning the Group’s policies and
key areas to note when representing or
acting on Keppel’s behalf were rolled out
for high-risk third-party associates (TPA).
We continue to refine our compliance
training programmes and curriculum.
We are also focused on developing and
tailoring training content to varying
target groups and training needs.
Such training conducted in 2020
included Conflict of Interest and
Sanction Compliance webinars.
In addition to policy-related training
programmes, we conduct training focused
on the line managers’ responsibilities in
developing the desired culture and mindset
regarding compliance. These responsibilities
include the need to establish and maintain
effective internal controls to ensure that
processes are robust, and that potential
gaps are identified and mitigated in a
timely manner.
We also leverage opportunities at various
management conferences and employee
meetings to emphasise the importance
of compliance.
To drive greater compliance awareness and
knowledge throughout the Group, we issued
a quarterly news bulletin on compliance,
risk and control matters. We also introduced
a quiz element which garnered positive
feedback and responses across BUs, in part
demonstrating a heightened awareness and
understanding of ethics and compliance
considerations amongst employees.
KEY PROCESSES
DUE DILIGENCE
We continue to improve our risk-based due
diligence process for all TPAs who represent
the Group in business dealings, including
our JV partners, to assess the compliance
risk of the business partner. In addition
to background checks, the due diligence
process incorporates requirements for TPAs
to acknowledge understanding and compliance
with the Keppel Group Code of Conduct.
OTHER PROCESSES
As part of our ongoing review of policies and
procedures, we ensure compliance oversight
is embedded in key processes including
areas such as gifts and hospitality, agent
fees, donations and sponsorships, as well as
conflicts of interest. We also actively seek
opportunities for digitisation and explore the
use of data analytics to enhance value and
ensure efficiency of our compliance processes.
RISK ASSESSMENT,
REVIEW & MONITORING
We continually develop compliance
resources and framework. This will enable
the Compliance team to conduct independent
risk assessments to identify and mitigate key
compliance risks. Regular discussions are
held with all BUs, focusing on risk assessments
including specific compliance risks identified
for each BU. Separately, independent reviews
of compliance risks are executed within the
scope of internal audits, including thematic
reviews of the effectiveness of key aspects
of our compliance programmes. These
reviews provide valuable insights and
opportunities for us to improve our
processes and programmes.
ISO 37001 processes also assist in risk
assessment exercises, providing even more
systematic coverage and evaluations.
Our training aims to engender positive
compliance mindsets and culture, and we
see this guiding our employees in critical
facets of their work. Training focused on
building risk and compliance competencies
are also organised to ensure that we are
apprised on changes in approaches, best
practices and tools.
RESOURCES
We recognise the need for an experienced
compliance team to effectively support
compliance advisory, as well as to ensure
that compliance programmes and controls
are effectively implemented. The Board and
management are committed to ensuring
that we sustain a strong compliance function.
Annual Report 2020
DIRECTORS’ STATEMENT AND FINANCIAL STATEMENTS
117
FINANCIAL REPORT
Directors’ Statement
Independent Auditor’s Report
Balance Sheets
Consolidated Profit and Loss Account
Consolidated Statement of
Comprehensive Income
Statements of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Significant Subsidiaries, Associated
Companies and Joint Ventures
OTHER INFORMATION
Interested Person Transactions
Key Executives
Major Properties
Group Five-Year Performance
Group Value-Added Statements
Share Performance
Shareholding Statistics
Notice of Annual General Meeting
and Closure of Books
Corporate Information
Financial Calendar
118
123
134
135
136
137
140
143
208
217
218
224
230
234
235
236
237
242
243
Keppel Corporation Limited
118 DIRECTORS’ STATEMENT
For the financial year ended 31 December 2020
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 2020.
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 134 to 216, 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 2020, 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)
Alvin Yeo Khirn Hai
Tan Ek Kia
Danny Teoh
Till Bernhard Vestring
Veronica Eng
Jean-François Manzoni
Teo Siong Seng
Tham Sai Choy
Penny Goh
2.
Audit Committee
The Audit Committee of the Board of Directors comprises six independent non-executive Directors. Members of the Committee are:
Danny Teoh (Chairman)
Alvin Yeo Khirn Hai
Tan Ek Kia
Veronica Eng
Tham Sai Choy
Penny Goh
The Audit Committee carried out its function in accordance with the Singapore Companies Act, including the following:
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Reviewed financial statements and announcements relating to financial performance, and significant financial reporting issues
and judgments contained in them;
Reviewed the adequacy and effectiveness of financial, operational, compliance and information technology controls, as well as
risk management in relation to financial reporting and other financial-related risks;
Reviewed the Board’s comment on the adequacy and effectiveness of the Group’s internal control systems, and state whether it
concurs with the Board’s comments; and if there are material weaknesses identified in the Group’s internal controls, to consider
and recommend the necessary steps to be taken to address them;
Reviewed the assurance from the CEO and CFO on the financial records and financial statements and the assurance and steps
taken by the CEO and other key management personnel who are responsible, regarding the adequacy and effectiveness of the
Group’s internal control systems;
Reviewed audit scopes, plans and reports of the Company’s external and internal auditors and considered effectiveness of
actions taken by management on the recommendations and observations;
Reviewed the adequacy, effectiveness, independence and objectivity of the external auditors and internal auditors annually;
Reviewed the scope and results of the external audit function and internal audit function;
Reviewed the nature and extent of non-audit services performed by external auditors;
Met with external auditors and internal auditors, without the presence of management, at least annually;
Ensured that the internal audit function is adequately resourced and staffed with persons with the relevant qualifications and
experience, and has appropriate standing within the Company, at least annually;
Reviewed the whistle-blower policy and the Company’s procedures for detecting and preventing fraud and other arrangements
for concerns about possible improprieties in financial reporting or other matters to be safely raised, independently investigated
and appropriately followed up on;
Reviewed interested person transactions;
Investigated any matters within the Audit Committee’s terms of reference, whenever it deemed necessary;
Reported to the Board on material matters, findings and recommendations;
Reviewed the Audit Committee’s terms of reference annually and recommended proposed changes to the Board for approval; and
Ensured the Head of Internal Audit and external auditors have direct and unrestricted access to the Chairman of the Audit
Committee.
The Audit Committee has recommended to the Board of Directors the nomination of PricewaterhouseCoopers LLP for re-appointment
as independent auditors and approved the remuneration and terms of engagement at the forthcoming annual general meeting of the
Company.
Annual Report 2020
FINANCIAL REPORT
119
3.
4.
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.
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)
Alvin Yeo Khirn Hai
Alvin Yeo Khirn Hai (deemed interest)
Tan Ek Kia
Danny Teoh
Till Bernhard Vestring
Veronica Eng
Jean-François Manzoni
Tham Sai Choy
Penny Goh
Keppel Corporation Limited
(Unvested restricted shares to be delivered after 2017)
Loh Chin Hua
(Unvested restricted shares to be delivered after 2018)
Loh Chin Hua
(Unvested restricted shares to be delivered after 2019)
Loh Chin Hua
(Contingent award of performance shares issued in 2017 to be
delivered after 2019)¹
Loh Chin Hua
(Contingent award of performance shares issued in 2018 to be
delivered after 2020)¹
Loh Chin Hua
(Contingent award of performance shares issued in 2019 to be
delivered after 2021)¹
Loh Chin Hua
(Contingent award of performance shares issued in 2020 to be
delivered after 2022)¹
Loh Chin Hua
Holdings At
1.1.2020
or date of
appointment,
if later
31.12.2020
21.1.2021
322,000
358,000
358,000
1,310,592
1,860,772
1,860,772
38,500
51,225
42,000
51,825
83,825
81,000
28,000
1,000
155,570
30,000
38,500
59,225
42,000
62,825
94,825
89,000
38,000
108,000
155,570
30,000
38,500
59,225
42,000
62,825
94,825
89,000
38,000
108,000
155,570
30,000
90,784
-
-
174,936
87,469
87,469
-
201,258
201,258
330,000
-
-
320,000
320,000
320,000
365,000
365,000
365,000
-
365,000
365,000
(Contingent award of performance shares – Transformation Incentive Plan
issued in 2016 to be delivered after 2021)¹
Loh Chin Hua
750,000
750,000
750,000
¹
Depending on the achievement of pre-determined performance targets, the actual number of shares to be released could range from zero to 150% of the number
stated.
Keppel Corporation Limited
120 DIRECTORS’ STATEMENT
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 no Shares issued by virtue of
exercise of options and options to take up 910,900 Shares were cancelled during the financial year. At the end of the financial year,
there were no Shares under option as follows:
Date of grant
09.02.10
Balance at
1.1.2020
910,900
910,900
Number of Share Options
Exercised
-
-
Cancelled
(910,900)
(910,900)
Balance at
31.12.2020
-
-
Exercise
Price
$6.89
Date of
expiry
08.02.20
There are no options granted to any of the Company’s controlling shareholders or their associates under the Scheme.
6.
Share plans of the Company
The KCL Performance Share Plan (“KCL PSP”) and KCL Restricted Share Plan (“KCL RSP”) were approved by the Company’s
shareholders at the Extraordinary General Meeting of the Company on 23 April 2010.
Details of share plans awarded under the KCL PSP, KCL PSP-Transformation Incentive Plan (“KCL PSP-TIP”), KCL PSP – M1
Transformation Incentive Plan (“KCL PSP-M1 TIP”), KCL RSP and KCL RSP-Deferred Shares are disclosed in Note 3 to the financial
statements and as follows:
Balance at
1.1.2020
1,070,000
1,180,000
1,635,000
-
3,885,000
Number of Shares
Contingent
awards
granted
Adjustments
upon
release
Released
Cancelled
-
-
-
1,585,000
1,585,000
(417,300)
(652,700)
-
-
-
-
-
-
-
-
(50,000)
(50,000)
(417,300)
(652,700)
(100,000)
Balance at
31.12.2020
-
1,180,000
1,585,000
1,535,000
4,300,000
3,585,967
2,000,000
-
5,585,967
-
-
1,280,000
1,280,000
-
-
-
127,900
295,600
423,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(119,197)
(124,599)
(100,000)
(343,796)
3,466,770
1,875,401
1,180,000
6,522,171
-
-
-
127,900
295,600
423,500
Balance at
1.1.2020
Awards
granted
Adjustments
upon
release
Released
Cancelled
Balance at
31.12.2020
Number of Shares
-
-
5,318,164
5,318,164
(1,709)
(1,709)
(5,316,455)
(5,316,455)
-
-
-
-
Contingent awards:
Date of Grant
KCL PSP
28.4.2017
30.4.2018
30.4.2019
31.3.2020
KCL PSP-TIP
29.4.2016
28.4.2017
28.2.2020
KCL PSP-M1 TIP
17.2.2020
17.2.2020
Awards:
Date of Grant
KCL RSP-Deferred shares
17.2.2020
Annual Report 2020
FINANCIAL REPORT
121
Awards released but not vested:
Date of Grant
KCL PSP
28.4.2017
KCL RSP
31.3.2014
31.3.2015
29.4.2016
KCL RSP-Deferred shares
23.2.2018
15.2.2019
18.4.2019
17.2.2020
Balance at
1.1.2020
Released
Vested
Cancelled
Other
adjustments
Balance at
31.12.2020
Number of Shares
-
-
652,700
652,700
(652,700)
(652,700)
3,600
7,300
15,341
26,241
1,214,799
2,488,090
209,675
-
3,912,564
-
-
-
-
-
-
-
5,316,455
5,316,455
(3,600)
(7,300)
(14,741)
(25,641)
(1,179,731)
(1,229,719)
(103,822)
(1,801,864)
(4,315,136)
-
-
-
-
(600)
(600)
(35,068)
(100,644)
(4,122)
(104,979)
(244,813)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,157,727
101,731
3,409,612
4,669,070
No Director of the Company received any contingent award of Shares granted under the KCL RSP and KCL PSP, except for the
following:
Contingent
awards
granted since
Aggregate Aggregate other
adjustments
since
Aggregate
awards
released since
awards commencement commencement commencement
granted
of plans
to the end of
during the
financial year
financial year
of plans
to the end of
financial year
of plans
to the end of
financial year
Aggregate
awards
not released as
at the end of
financial year
-
644,757
- (644,757)
-
365,000 2,250,814
(752,714) (448,100) 1,050,000
-
750,000
-
-
750,000
awards
granted since
Aggregate Aggregate other
adjustments
since
Aggregate
awards
released since
Awards commencement commencement commencement
granted
of plans
to the end of
during the
financial year
financial year
of plans
to the end of
financial year
of plans
to the end of
financial year
Aggregate
awards
not released as
at the end of
financial year
301,887
836,642
- (836,642)
-
Contingent awards:
KCL RSP
Executive Director
Loh Chin Hua
KCL PSP
Executive Director
Loh Chin Hua
KCL PSP-TIP
Executive Director
Loh Chin Hua
Awards:
KCL RSP-Deferred shares
Executive Director
Loh Chin Hua
Keppel Corporation Limited
122 DIRECTORS’ STATEMENT
6.
Share plans of the Company (continued)
Awards released but not vested:
KCL RSP
Executive Director
Loh Chin Hua
KCL RSP-Deferred shares
Executive Director
Loh Chin Hua
KCL PSP
Executive Director
Loh Chin Hua
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
644,757
(644,757)
-
836,642
(547,915)
288,727
448,100
(448,100)
-
No Director or employee received 5% or more of the total number of contingent award of Shares granted during the financial year and
aggregated to date, except for the following:
Executive Director
Loh Chin Hua
Contingent
shares granted
during the
financial year (%)
Aggregate
contingent
shares granted
to date (%)
7.7%
6.6%
There are no contingent award of Shares granted to any of the Company’s controlling shareholders or their associates under the KCL
RSP, KCL RSP-Deferred shares, the KCL PSP, KCL PSP-TIP and the KCL PSP-M1 TIP.
7.
Independent auditor
The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment.
On behalf of the Board
LEE BOON YANG
Chairman
Singapore, 26 February 2021
LOH CHIN HUA
Chief Executive Officer
Annual Report 2020
FINANCIAL REPORT
INDEPENDENT AUDITOR’S REPORT
to the Members of Keppel Corporation Limited
For the financial year ended 31 December 2020
Report on the audit of the financial statements
123
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”), Singapore Financial Reporting Standards (International) (“SFRS(I)s”) and International Financial
Reporting Standards (“IFRSs”) 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 2020, 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 Company and the Group comprise:
•
•
•
•
•
•
•
the balance sheets of the Group and of the Company as at 31 December 2020;
the consolidated profit and loss account of the Group for the financial year then ended;
the consolidated statement of comprehensive income of the Group for the financial year then ended;
the consolidated statement of changes in equity of the Group for the financial year then ended;
the statement of changes in equity of the Company for the financial year then ended;
the consolidated statement of cash flows of the Group for the financial 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 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.
Our Audit Approach
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the accompanying financial
statements. In particular, we considered where management made subjective judgments; for example, in respect of significant accounting
estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also
addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence
of bias that represented a risk of material misstatement due to fraud.
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 2020. 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.
Keppel Corporation Limited
FINANCIAL REPORT 124 INDEPENDENT AUDITOR’S REPORT
to the Members of Keppel Corporation Limited
Key Audit Matter
How our audit addressed the Key Audit Matter
We reviewed the term sheet with Magni and correspondences with
Sete or its authorised representatives to validate the assumptions
applied by management. We discussed with management on
the latest developments and understood management’s position
on why they believe the settlement agreement will continue to
progress.
For the two impending construction contracts with Magni, we
assessed the amount and timing of gross cash inflows from
Magni to the term sheet. We also assessed the total cost of
completing the construction of the rigs through discussions with
project managers and corroborating the amounts to an approved
budget plan. We obtained management’s calculation of the
discount rate used and evaluated its reasonableness based on our
understanding of the settlement agreement with Magni.
For the remaining four undelivered rigs, we reviewed
management’s computation of the provisions and corroborated
the inputs against supporting documents and externally available
information.
Based on our procedures, we found management’s assessment
in respect of the provisions for expected credit loss and contract
related costs from these contracts to be reasonable on the
basis of the key assumptions made by management. The
ongoing negotiations may result in significant changes to the key
assumptions and additional material provision may be required,
including adjustments to the net carrying amounts relating to the
Sete contracts.
We also considered the disclosures in the financial statements
in respect of this matter and found that the disclosures in the
financial statements in respect of this matter to be adequate.
1. Financial exposure in relation to contracts with Sete Brasil
Participacoes S.A. (“Sete”)
(Refer to Notes 2.28 (b)(ii) and 12 to the financial statements)
The Group had entered into contracts with Sete for the
construction of six rigs for which payments from Sete had ceased
since November 2014 and in April 2016, Sete filed for bankruptcy
protection. In October 2019, Sete’s creditors approved the
Settlement Agreement as well as a proposal by Magni Partners
(Bermuda) Ltd (“Magni”) to purchase Sete’s four subsidiaries, two
of which are special-purpose entities (“SPEs”) for uncompleted
rigs constructed by the Group. As part of the Agreement, which is
subject to fulfillment of certain conditions precedent, the Group
will take over ownership of the remaining four uncompleted rigs
and will be able to explore various options to extract the best
value from these assets. In December 2019, Petrobras approved
the continuation of four charter agreements with Sete, and for
Magni and their operator Etesco to step in as the new party to
the agreements. As a result of the global Coronavirus Disease
2019 ("COVID-19") pandemic and the extended time required for
Magni to secure financing, finalisation of the agreements between
the various parties were delayed. As at the balance sheet date,
the agreements were not completed and in January 2021, Sete
informed Petrobras that it would not be able to comply with the
conditions precedent by the extended deadline of 31 January
2021. Sete and Petrobras agreed to begin a new negotiation, in
search of a joint solution.
Management believes that Petrobras, in approving a new
negotiation with Sete, will continue to seek solutions on these
rigs with the relevant stakeholders which may yield several other
alternative arrangements between the stakeholders. The Group
will also be in active discussions with Sete and Magni in the new
negotiation.
Management estimated the net present value of the cash flows
relating to the construction contract for two rigs with Magni. In
addition, management performed an assessment to estimate
the cost of discontinuance of related contracts with Sete, offset
by possible options in extracting value from the uncompleted
remaining four rigs and possible payout from the Judicial
Reorganisation Plan. The loss allowance for trade debtors of
$183 million and the provision for related contract costs of
$245 million made in prior years remain adequate to address the
cost of discontinuance, salvage cost and unpaid progress billings
relating to the contracts with Sete.
The assessment is made with the following key assumptions:
• Petrobras will continue to require the rigs for execution of
its business plans and will charter them at the day rates and
tenure previously agreed with Sete;
• Magni will be able to secure financing to complete the
purchase of the rigs with Sete and complete the construction
contract with the Group at the terms previously discussed with
Magni; and
The future cost of construction of the rigs are not materially
different from management’s current estimation.
•
Should the conclusion of the negotiation result in significant
changes to the key assumptions above, additional material
provision may be required, including adjustments to the net
carrying amounts (net of total cumulative losses recognised of
$476 million) relating to the Sete contracts amounting to
$114 million as at 31 December 2020.
Annual Report 2020
FINANCIAL REPORT
Key Audit Matter
How our audit addressed the Key Audit Matter
125
1. Financial exposure in relation to contracts with Sete Brasil
Participacoes S.A. (“Sete”) (continued)
We focused on this area because the assessment of the outcome
of the negotiation and the estimation of the recoverable value of
the rigs and other assets relating to the Sete contracts requires
management judgment in which several estimates and key
assumptions are applied.
2. Recoverability of trade receivables, contract assets and
stocks (work-in-progress) in relation to Offshore and Marine
(“O&M”) business unit
(Refer to Notes 2.28(b)(ii), 2.28(b)(ix), 12, 14 and 15 to the
financial statements)
As at 31 December 2020, the Group has:
(i) Stocks under work-in-progress (“WIP”) amounting to $1,073
million;
(ii) Contract assets relating to certain rigbuilding contracts where
the scheduled delivery dates of the rigs had been deferred and
have higher counterparty risks, amounting to $1,654 million;
and
(iii) Trade receivables amounting to $848 million where the rigs
had been delivered but the receipt of construction revenue
deferred under certain financing arrangements.
In 2020, the Group recognised the following impairment from its
assessment of recoverability of these assets:
(i) $42 million to write down its WIP to their net realisable value
(“NRV”);
(ii) $431 million of expected credit loss on its contract assets; and
(iii) $170 million of expected credit loss on its trade receivables.
We focused on this area because significant judgment and
assumptions are required in:
(i) estimating the NRV of the WIP balance; and
(ii) estimating the expected credit loss of the contract assets and
trade receivables balance.
For the above contract assets and secured trade receivables, in
the event that the customers are unable to fulfil their contractual
obligations, management has considered the most likely outcome
is for the Group to take possession of the rigs delivered or under
construction and charter it out to work with an operator. On this
basis, the value of the rigs delivered or under construction and
the NRV of the WIP balance is their Value-in-use (“VIU”) estimated
using the Discounted Cash Flow (“DCF”) model.
Management assessed the VIU of the rigs with the assistance of
independent professional firms. In addition to the independent
professional firm responsible for estimating the VIU based on
DCF model, management has also engaged a separate industry
advisor to provide a view of the market outlook, assumptions and
industry parameters used as inputs to the DCF calculations. The
most significant inputs to the DCF calculations include day rates,
cost assumptions, utilisation rates, discount rates and estimated
commencement of deployment of the assets. The valuation of
the assets based on their estimated VIUs are most sensitive to
discount rates and day rates.
Management had also appointed an independent financial advisor
to conduct an assessment of the recoverability of unsecured trade
receivables as at 31 December 2020.
Keppel Corporation Limited
We reviewed management’s estimation of the NRV of the WIP
and estimation of the expected credit loss on contract assets on
deferred delivery and trade receivables under certain financing
arrangements.
We assessed the most significant inputs to the DCF calculations
of the NRV/VIU of the rigs and engaged our valuation expert to
review the discount rates applied. We also assessed the basis of
estimating the recoverable amounts of the unsecured receivable
adopted by the independent financial advisor. We assessed
the sensitivity of the cash flow projections with respect to the
key assumptions including discount rate and day rates, on the
estimation of the VIU of the rigs.
Based on our procedures, we found management’s key judgments
and basis of estimation over the NRV of the WIP and the recovery
of contract assets on deferred delivery and trade receivables under
certain financing arrangements to be appropriate.
In respect of the independent professional firms, we found that
the firms possessed the requisite competency and experience to
assist management in the assessment of the valuations.
We also considered the adequacy of the disclosures in the
financial statements in respect of this matter and found the
disclosures in the financial statements in respect of the key
judgments and sources of estimation uncertainty to be adequate.
Subsequent to 31 December 2020, the Group announced that
it will be transforming its O&M business unit, involving the
reorganising of these assets, over the next two to three years. The
eventual execution of the transformation plan, together with the
future development in the oil market may cause the recoverable
amounts of these assets to be different from those estimated as
at 31 December 2020.
126 INDEPENDENT AUDITOR’S REPORT
to the Members of Keppel Corporation Limited
Key Audit Matter
How our audit addressed the Key Audit Matter
3.
Impairment assessment of investments in associated
companies
(Refer to Notes 2.28(b)(iii) and 10 to the financial statements)
As at 31 December 2020, the Group has investments in associated
companies and joint ventures amounting to $5,991 million.
Material associated companies where impairment indicators
exist included KrisEnergy Limited (“KrisEnergy”) and Floatel
International Limited (“Floatel”).
Investment in KrisEnergy and related exposures
We read recent public announcements made by KrisEnergy to
obtain an understanding of the financial position of KrisEnergy and
the proposed terms of restructuring. We read relevant agreements
between the Group and KrisEnergy. We held discussions with
management and the independent financial advisor to understand
the relative priority of each group of stakeholders over cash flows
from KrisEnergy and the impact of the terms of the restructuring
to the recoverability of the Group investments in KrisEnergy.
For cash flows prepared by the independent financial advisor, we
evaluated the reasonableness of the estimates and assumptions
in the cash flow projections, including the estimates of reserves
available and estimated future oil prices of US$50 to US$62
per barrel for 2021 to 2029. We assessed the sensitivity of the
cash flow projections with respect to key assumptions including
discount rate and future oil prices.
In respect of the independent financial advisor for the Group,
we assessed that they possessed the requisite competency
and experience to assist management in the assessment of the
recoverable amount of KrisEnergy.
We also considered the adequacy of the disclosures in the
financial statements in respect of this matter.
Based on our procedures, we found the key judgments and basis
of estimating the available cash flows for the Group’s investment
in KrisEnergy to be reasonable, on the basis of a successful
restructuring that is still pending approval by the shareholders
of KrisEnergy. We also found the disclosures in the financial
statements in respect of the key judgments and sources of
estimation uncertainty to be adequate.
As disclosed in Note 10(c), as at 31 December 2020, the Group’s
investment in KrisEnergy and related exposures comprise:
•
•
•
$35 million of zero-coupon notes;
$77 million of project financing loan receivable;
$29 million of contract assets in relation to a production barge;
and
guarantee amounting to $247 million in respect of a bank loan
granted to KrisEnergy.
•
In August 2019, trading of KrisEnergy’s shares on the Singapore
Exchange was suspended as KrisEnergy applied for a debt
moratorium to the High Court of Republic of Singapore. Further
extension of the debt moratorium was approved till 16 April 2021.
On 30 December 2020, the maturity date of KrisEnergy’s bank loan
was extended to 30 June 2021 and this will be further extended
to 30 June 2024 upon successful completion of KrisEnergy’s
restructuring. A scheme of arrangement (“Scheme”) setting out
details of the restructuring terms was approved by the Scheme
creditors on 14 January 2021. On 11 February 2021, the zero-
coupon note holders approved the amendment of the terms of
zero-coupon notes. The restructuring is pending final approval
from the shareholders of KrisEnergy.
Management performed an impairment assessment to estimate
the recoverable amount of the Group’s exposure in KrisEnergy as
at 31 December 2020 on the basis of a successful restructuring.
Management reviewed the cash flow projections prepared by its
financial advisor who estimated the amount of cash available
from producing assets and forecasted production from assets
under development, taking into consideration the relative priority
and rights to cash flows of each group of stakeholders. The cash
flow estimates were based on forecasted oil prices, determined
by taking reference from external information sources, ranging
from US$50 to US$62 per barrel for 2021 to 2029. The impairment
assessment had also taken into consideration the terms of the
restructuring.
Arising from the impairment assessment, an impairment loss of
$39 million was recognised in 2020 against the carrying amount of
the zero-coupon notes. No impairment was recognised against the
other exposures as the Group has priority over the cash flows on
the assets under the terms of these instruments.
We focused on this area as the assessment of the recoverable
amount involves making projections of cash flows arising from
producing assets and assets under development in which several
estimates and key assumptions were applied.
Annual Report 2020
FINANCIAL REPORT
127
Key Audit Matter
How our audit addressed the Key Audit Matter
Investments in Floatel International Limited (“Floatel”)
As disclosed in Note 10(f), as at 31 December 2020, the Group’s
investment in Floatel amounted to $96 million, after equity
accounting for its share of operating loss of Floatel of $83 million
and share of impairment losses on the carrying value of Floatel’s
vessels amounting to $228 million. The Group also recognised
$10 million of fair value loss on its investment in preference
shares issued by Floatel in 2020.
In February 2020, Floatel reported that its liquidity was under
pressure and there were conditions which cast significant doubt
on Floatel’s ability to continue as a going concern. On 5 December
2020, Floatel, the Group, an ad hoc group of holders of Floatel’s 9%
senior secured 1L Bondholders, other consenting 1L Bondholders
and certain 2L Bondholders entered into a lock-up agreement,
(the “Lock-Up Agreement”) which committed the parties to
use reasonable endeavours to implement a comprehensive
financial and corporate restructuring of the Floatel group (the
“Restructuring”).
A successful restructuring is critical in ensuring the long term
viability of Floatel’s business and consequently the recoverability
of the Group’s investment in Floatel. The restructuring entails
various steps, including the commitment of the Group to use
reasonable endeavours to procure the provision and funding of a
new US$100,000,000 revolving credit facility (“RCF”) for Floatel, as
well as the possible provision of credit support for the RCF in the
form of a risk participation.
On 8 January 2021, bank lenders of Floatel accepted a cash
settlement of US$46,000,000 for full settlement of amounts owing
to them and release of the charge on Floatel Endurance.
On 12 February 2021, the 2L Bondholders approved the
restructuring which will facilitate a more expeditious restructuring
process.
Management has engaged an independent financial advisor
to support the review of Floatel’s business plan and cash flow
projections, as well as the recoverable amount of the Group’s
investment in Floatel as at 31 December 2020 on the basis of the
Restructuring.
With respect to the impairment of Floatel vessels, the recoverable
amounts of the vessels were determined, with the assistance of
an independent industry advisor, based on their VIU, using a DCF
model.
We focused on this area as the assessment of the recoverability
of the Group’s investment in Floatel and impairment of vessels
held by Floatel required management’s judgment in which several
estimates and key assumptions were applied.
We read the public announcements made by Floatel on its
financial results for the current financial year as well as those
relating to the ongoing restructuring.
We discussed with management to obtain an understanding of the
restructuring progress of Floatel. We corroborated the information
obtained to the reports and analysis from the independent
financial advisor and the independent industry advisor, as well
as our understanding of the business environment that Floatel is
operating in.
For the recoverability of the net investment in Floatel, we reviewed
the valuation report prepared by the independent financial advisor
and held discussions to understand their basis of determining the
recoverable amount of the Group’s investment in Floatel.
For the recoverable amounts of the Floatel vessels, we reviewed
the estimated VIU calculation prepared based on industry
parameters provided by an independent industry advisor and held
discussions to understand their analysis of the market outlook and
method of estimating the VIUs. We engaged our valuation expert
to evaluate the appropriateness of the discount rate used in the
estimation of the recoverable amount of Floatel’s vessels as part
of the impairment review of the vessels.
In respect of the financial advisor and industry advisor engaged
by the Group, we assessed that they possessed the requisite
competency and experience to assist management in the
assessment of the recoverable amount of the Group’s investment
in Floatel.
For the fair value of preference shares, we reviewed the valuation
report prepared by the independent financial advisor and assessed
the reasonableness of the inputs.
We also considered the adequacy of the disclosures in the
financial statements in respect of this matter.
Based on the procedures performed, we found management’s
assessment to be consistent with the results of the audit
procedures performed on the basis of the Restructuring of
Floatel, including the conclusion of the US$100,000,000 RCF from
financial institutions. We also found the disclosures in the financial
statements in respect of this matter to be adequate.
Keppel Corporation Limited
128 INDEPENDENT AUDITOR’S REPORT
to the Members of Keppel Corporation Limited
Key Audit Matter
How our audit addressed the Key Audit Matter
We obtained an understanding of management’s compliance and
governance regime, including the progress of its implementation,
through enquiries of appropriate personnel within the Group and
attendance at the board of directors’ meetings.
We read the reporting by KOM to DOJ and CPIB. We discussed
with management to understand the results of the anti-bribery and
corruption compliance audits performed during the year.
We obtained an understanding of the progress of ongoing
discussions that the Group is having with the relevant authorities.
We discussed the reasonableness and the adequacy of the
provision made by management with an external legal counsel
appointed by the Group.
In respect of the external legal counsel engaged by the Group,
we assessed that they possessed the requisite competency and
experience in the assessment of the adequacy of provision made
by management.
Based on our procedures and representations obtained from
management, we found management’s assessment of the matter,
including the ongoing discussions with the specified Brazilian
authorities to be appropriate.
We also considered the adequacy of the disclosures in the
financial statements in respect of this matter. We found the
disclosures in the financial statements to be adequate.
4. Global resolution with criminal authorities in relation to
corrupt payments
(Refer to Note 2.28(b)(vi) to the financial statements)
In December 2017, a wholly-owned subsidiary, Keppel Offshore
and Marine Ltd (“KOM”) reached a global resolution with the
Corrupt Practices Investigation Bureau (“CPIB”) in Singapore, the
U.S. Department of Justice (“DOJ”), and the Public Prosecutor’s
Office in Brazil, Ministério Público Federal (“MPF”) in relation to
corrupt payments made in Brazil by Zwi Skornicki, a former agent
of certain Keppel subsidiaries in the O&M division.
In December 2020, KOM has successfully complied with its
obligations under the Deferred Prosecution Agreement (“DPA”)
with the DOJ and the DPA has accordingly concluded. In addition,
KOM has also been in compliance with its obligations under the
Conditional Warning issued by CPIB and the Leniency Agreement
with MPF. As part of the applicable fines payable under the global
resolution, a further US$52,777,123 (less any penalties that KOM
may pay to specified Brazilian authorities) was payable to CPIB
within three years from the date of the Conditional Warning
and has been included in accrued expenses since FY 2017.
The discussions with the specified Brazilian authorities remain
ongoing, and CPIB has agreed to extend this three-year period for
a further 12 months until 22 December 2021.
In 2020, the Office of the Comptroller General of Brazil (“CGU”)
published a notice in the Official Gazette (“Notice”) to the effect
that CGU had initiated an administrative enforcement procedure
(“AEP”) against KOM and certain subsidiaries, in relation to alleged
irregularities under the Brazilian Anti-Corruption Statute. Following
the issuance of the Notice, the CGU would carry out further
internal investigations and summons may be served. Neither the
Notice nor any summons has been served on any of the foregoing
entities to date.
The Notice did not provide any factual particulars and the
Company is therefore currently unable to assess the matter or its
impact, if any. The Company understands from CGU that the AEP
will not affect the ongoing negotiations with the Brazil authorities,
and that the AEP has been suspended pending these ongoing
discussions.
As part of the global resolution with the authorities, the Group had
also committed to strengthening the compliance and governance
regime in KOM. Anti-bribery and corruption compliance audits
were also performed on entities within the KOM Group. These
audits revealed that the enhanced policies and procedures put in
place to date were, in general, functioning as intended.
Based on currently available information, no additional provision
was made in relation to the ongoing discussions with the specified
Brazilian authorities.
We focused on this area because of the management judgment
required in determining whether additional provision is required
in view of the ongoing discussions with the specified Brazilian
authorities.
Annual Report 2020
FINANCIAL REPORT
Key Audit Matter
How our audit addressed the Key Audit Matter
129
5. Revenue recognition based on measurement of progress
towards performance obligation
(Refer to Notes 2.28(b)(iv) and 24 to the financial statements)
During the year, the Group recognised $1,705 million of revenue
relating to its rigbuilding, shipbuilding and repairs, and long term
engineering contracts (“construction contracts”). The Group
recognises revenue over time by reference to the Group’s progress
towards completing the construction of the contract work.
The stage of completion was measured by reference to either
the percentage of the physical proportion of the contract work
completed or the proportion of contract costs incurred to date to
the estimated total contract costs.
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.
•
6. Valuation of properties held for sale
(Refer to Notes 2.28(b)(ix) and 14 to the financial statements)
As at 31 December 2020, the Group has residential properties held
for sale of $3,597 million mainly in China, Singapore, Indonesia
and Vietnam.
Properties held for sale are stated at the lower of cost and net
realisable values. The determination of the carrying value and
whether to recognise any foreseeable losses for properties held
for sale is highly dependent on the estimated cost to complete
each development and the estimated selling price.
For certain development projects, fair values based on
independent valuation reports are used to determine the net
realisable value of these properties.
We focused on this area as significant judgment is required in
making estimates of future selling prices and the estimated
cost to complete the development project. In instances where
independent valuation reports are used, the valuation process
involves 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 discount rate
and price of comparable plots and properties.
Keppel Corporation Limited
In respect of construction contracts where progress was
measured based on the percentage of the physical proportion
of the contract work completed, 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.
In respect of construction contracts where progress was
measured based on the proportion of contract costs incurred
to date to the estimated total contract costs, 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 recognised for the current
financial year based on the respective percentage of completion
and traced these to the accounting records.
We also considered the adequacy of the Group’s disclosures in
respect of this matter.
Based on our procedures, we found assumptions made in the
measurement of the progress of construction contracts to
be reasonable. We also found the disclosures in the financial
statements to be adequate.
We found that, in making its estimates of future selling prices,
the Group took into account macroeconomic and real estate
price trend information, and the potential financial impact of the
COVID-19 pandemic in the estimates. Senior management applied
their knowledge of the business in their regular review of these
estimates.
We corroborated the Group’s forecasted selling prices by
comparing the forecasted 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.
For projects where management has used independent valuation
reports as a basis to determine the net realisable value, we
evaluated the qualifications and competence of the external
valuer and considered the valuation methodologies used against
those applied by other valuers for similar property type. We tested
the reliability of inputs used in the valuation and corroborated
key inputs such as the discount rate and price of comparable
plots and properties 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 effect of additional factors and, when necessary,
held further discussions with the valuers.
130 INDEPENDENT AUDITOR’S REPORT
to the Members of Keppel Corporation Limited
Key Audit Matter
How our audit addressed the Key Audit Matter
6. Valuation of properties held for sale (continued)
Continued unfavourable market conditions in certain of the
markets in 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 these financial
statements exceed future selling prices, resulting in losses when
the properties are sold.
Furthermore, the COVID-19 pandemic has resulted in significant
economic uncertainty in the current and future economic
environment and there is heightened uncertainty inherent in
estimating the impact of the pandemic on future selling prices of
the development properties.
7. Valuation of investment properties
(Refer to Notes 7 and 34 to the financial statements)
As at 31 December 2020, the Group owns a portfolio of investment
properties of $3,674 million comprising mainly office buildings,
hotels, retail malls and mixed-use development projects, located
primarily in China, Singapore, Indonesia and Vietnam.
Investment properties are stated at their fair values based on
independent external valuations.
We focused on this area as the valuation process involves
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 such as the capitalisation rate, discount
rate, net initial yield and price of comparable plots and properties.
Furthermore, the valuation reports obtained from independent
property valuers for certain investment properties have highlighted
the heightened uncertainty of the COVID-19 outbreak and material
valuation uncertainty, where a higher degree of caution should
be attached to the valuation than would normally be the case.
Accordingly, the valuation of these investment properties may
be subjected to more fluctuation than during normal market
conditions.
We focused our work on development projects with slower-than-
expected sales or with low or negative margins. For projects which
are expected to sell below cost, we checked the computations of
the foreseeable losses.
We also considered the adequacy of the disclosures in the
financial statements, in describing the allowance for foreseeable
losses 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.
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, and how
the impact of the COVID-19 pandemic and market uncertainty
has been considered by the independent property valuers in
determining the valuation of investment properties. We also
considered other alternative valuation methods.
We tested the reliability of inputs of the projected cash flows
used in the valuation to support lease agreements and other
documents. We corroborated the inputs such as the capitalisation
rate, net initial yield, discount rate and price of comparable
plots used in the valuation methodology 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 and the
impact of COVID-19 on the valuation of investment properties,
as we consider them as likely to be significant to users of the
financial statements given the estimation uncertainty and
sensitivity of the valuations.
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.
Annual Report 2020
FINANCIAL REPORT
131
Key Audit Matter
How our audit addressed the Key Audit Matter
8.
Impairment assessment of goodwill arising from acquisition
of subsidiary – M1 Limited (“M1”)
(Refer to Notes 2.28(iii) and 13 to the financial statements)
In February 2019, the Group obtained controlling interest in M1
through an 80% owned subsidiary at a purchase consideration
of $1,232 million. A goodwill of $988 million was recognised on
acquisition of M1.
An annual impairment assessment was performed on the goodwill
arising from acquisition of M1 where the recoverable amount
of M1 as a Cash-generating unit (“CGU”) is estimated. Where
the recoverable amount of M1 is determined to be less than the
Group’s carrying amount of the M1 CGU (including the goodwill),
an impairment loss will be recognised.
The recoverable value of the M1 CGU as at 31 December 2020
was determined on a VIU basis using a DCF model.
The assessment of the VIU of M1 CGU required significant
judgment in estimating the underlying assumptions including
the revenue growth rate, long term growth rate and discount
rate. Based on management’s assessment, no impairment loss
was recognised as the recoverable amount was higher than the
carrying value (including goodwill) of the M1 CGU.
We assessed the appropriateness of the underlying assumptions
made by management in their cash flow projections, including
the revenue growth rate, long term growth rate and discount rate
based on the economic and industry conditions relevant to M1
business. We checked whether the cash flow projections were
based on the approved business plan. We involved our valuation
expert in evaluating the valuation methodology and the discount
rate applied by management.
We assessed the sensitivity of the cash flow projections and
other key assumptions including discount rate and long term
growth rate on the impairment assessment and the impact on the
headroom over the carrying value.
Based on our procedures and representations obtained from
management, we found management’s impairment assessment
of the goodwill on acquisition of M1 to be appropriate.
We also considered the adequacy of the disclosures in the
financial statements in respect of this matter. We found the
disclosures in the financial statements to be adequate.
Keppel Corporation Limited
132 INDEPENDENT AUDITOR’S REPORT
to the Members of Keppel Corporation Limited
Other information
Management is responsible for the other information. The other information comprises the “Directors’ Statement” (but does not include the
financial statements and our auditor’s report thereon) which we obtained prior to the date of this auditor’s report and other sections of the
Keppel Corporation Limited Annual Report 2020 (“Other Sections of the Annual Report”) which 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 this regard.
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, SFRS(I)s and IFRSs, 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.
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.
Annual Report 2020
FINANCIAL REPORT
133
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 Yeoh Oon Jin.
PricewaterhouseCoopers LLP
Public Accountants and Chartered Accountants
Singapore, 26 February 2021
Keppel Corporation Limited
134 BALANCE SHEETS
As at 31 December 2020
Share capital
Treasury shares
Reserves
Share capital & reserves
Non-controlling interests
Total equity
Represented by:
Fixed assets
Investment properties
Right-of-use assets
Subsidiaries
Associated companies and joint ventures
Investments
Deferred tax assets
Long term assets
Intangibles
Current assets
Stocks
Contract assets
Amounts due from:
- subsidiaries
- associated companies and joint ventures
Debtors
Derivative assets
Short term investments
Bank balances, deposits & cash
Assets classified as held for sale
Current liabilities
Creditors
Derivative liabilities
Contract liabilities
Provisions for warranties
Amounts due to:
- subsidiaries
- associated companies and joint ventures
Term loans
Lease liabilities
Taxation
Liabilities directly associated with assets classified as held for sale
Net current assets
Non-current liabilities
Term loans
Lease liabilities
Deferred tax liabilities
Other non-current liabilities
Note
Group
2020
$’000
2019
$’000
Company
2020
$’000
2019
$’000
3
3
4
5
6
7
8
9
10
11
23
12
13
14
15
16
16
17
18
19
1,305,668
1,291,722
1,305,668
1,291,722
(13,690)
(14,009)
(13,690)
(14,009)
9,436,480
9,933,140
10,728,458
11,210,853
427,446
435,178
8,185,085
9,477,063
-
6,772,318
8,050,031
-
11,155,904
11,646,031
9,477,063
8,050,031
2,715,753
3,674,075
582,706
-
5,990,613
1,229,492
159,427
1,756,399
1,608,824
2,901,845
3,022,091
759,929
5,764
-
11,204
7,273
-
12,833
-
7,962,538
7,962,528
6,350,845
649,069
76,454
1,579,908
1,682,981
-
22,196
5,096
39,828
-
-
19,230
9,256
14,213
-
17,717,289
17,023,122
8,046,626
8,025,333
4,959,427
2,657,231
5,542,755
3,497,476
-
-
-
-
-
-
9,804,710
7,280,724
493,269
563,578
2,531,075
2,748,484
124,547
134,634
41,050
121,581
2,479,715
1,783,514
152
12,273
38,206
-
574
705
8,844
18,544
-
1,047
13,379,898
14,298,438
9,855,915
7,309,864
36
1,008,692
-
-
-
14,388,590
14,298,438
9,855,915
7,309,864
20
4,603,677
4,604,544
59,143
119,481
2,072,303
1,824,965
39,449
36,448
63,808
30,614
-
-
78,725
19,988
-
-
-
-
201,959
156,867
335,908
490,286
-
-
4,432,602
4,555,237
3,406,552
3,400,430
69,377
358,802
67,387
248,425
4,198
29,155
4,154
31,523
11,971,261
11,946,773
3,736,286
3,691,687
115,220
-
-
-
12,086,481
11,946,773
3,736,286
3,691,687
2,302,109
2,351,665
6,119,629
3,618,177
7,606,594
6,504,394
4,529,017
3,498,203
494,527
443,547
318,826
530,052
399,028
295,282
7,725
-
11,498
-
152,450
83,778
8,863,494
7,728,756
4,689,192
3,593,479
15
21
16
16
22
8
28
36
22
8
23
20
Net assets
11,155,904
11,646,031
9,477,063
8,050,031
The accompanying notes form an integral part of these financial statements.
Annual Report 2020
FINANCIAL REPORT
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the financial year ended 31 December 2020
135
Revenue
Materials and subcontract costs
Staff costs
Depreciation and amortisation
Impairment loss on financial assets and contract assets
Other operating income - net
Operating profit
Investment income
Interest income
Interest expenses
Share of results of associated companies and joint ventures
Profit/(loss) before tax
Taxation
Profit/(loss) for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
Earnings per ordinary share
- basic
- diluted
Note
2020
$’000
2019
$’000
24
6,574,342
7,579,703
(4,591,235)
(5,266,594)
25
(1,120,128)
(1,163,231)
26
26
27
27
27
10
28
5
29
(413,506)
(651,082)
210,010
8,401
29,346
162,053
(292,266)
(162,221)
(254,687)
(253,407)
(375,294)
(74,367)
176,284
876,501
64,594
177,675
(312,716)
147,413
953,467
(192,329)
(508,094)
761,138
(505,860)
(2,234)
(508,094)
706,975
54,163
761,138
(27.8) cts
(27.7) cts
38.9 cts
38.7 cts
The accompanying notes form an integral part of these financial statements.
Keppel Corporation Limited
FINANCIAL REPORT
136 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the financial year ended 31 December 2020
Profit/(loss) for the year
Items that may be reclassified subsequently to profit and loss account:
Cash flow hedges
- Fair value changes arising during the year, net of tax
- Realised and transferred to profit and loss account
Foreign exchange translation
- Exchange difference arising during the year
- Realised and transferred to profit and loss account
Share of other comprehensive income of associated companies and joint ventures
- Cash flow hedges
- Foreign exchange translation
Items that will not be reclassified subsequently to profit and loss account:
Financial assets, at FVOCI
- Fair value changes arising during the year
Foreign exchange translation
- Exchange difference arising during the year
Share of other comprehensive income of associated companies and joint ventures
- Financial assets, at FVOCI
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive (loss)/income for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
2020
$’000
2019
$’000
(508,094)
761,138
(100,148)
125,112
(91,161)
115,750
135,212
17,247
(100,310)
7,345
(27,370)
69,751
219,804
(18,898)
(76,952)
(164,226)
65,246
(78,459)
1,882
(1,936)
(429)
66,699
342
(80,053)
286,503
(244,279)
(221,591)
516,859
(221,151)
(440)
(221,591)
462,946
53,913
516,859
The accompanying notes form an integral part of these financial statements.
Annual Report 2020
FINANCIAL REPORT
STATEMENTS OF CHANGES IN EQUITY
For the financial year ended 31 December 2020
137
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
Group
2020
As at 1 January 2020
1,291,722
(14,009)
126,099 10,470,627
(663,586) 11,210,853
435,178 11,646,031
Total comprehensive
income for the year
Loss 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 (Note 30)
Share-based payment
Dividend paid to non-controlling
shareholders
Purchase of treasury shares
Treasury shares reissued
pursuant to share plans
Transfer of statutory, capital and
other reserves from
revenue reserves
Cash subscribed by non-controlling
shareholders
Contributions to defined
benefits plans
Other adjustments
Total contributions by and
distributions to owners
Changes in ownership interests
in subsidiaries
Acquisition of additional interest
in subsidiaries
Disposal of interest in subsidiaries
Total change in ownership
interests in subsidiaries
-
-
-
-
-
-
-
-
-
-
-
-
-
(19,040)
-
(505,860)
-
(505,860)
(2,234)
(508,094)
62,499
-
222,210
284,709
1,794
286,503
62,499
(505,860)
222,210
(221,151)
(440)
(221,591)
-
(273,078)
(273,078)
36,302
-
-
(273,078)
36,302
36,302
-
-
-
-
-
-
-
-
-
-
-
13,946
19,359
(33,305)
-
-
-
-
-
-
-
-
(10,436)
11,763
(1,327)
-
(1,474)
(960)
-
-
-
-
-
-
-
(24,325)
(24,325)
(19,040)
-
-
-
-
-
(19,040)
-
-
-
16,888
16,888
(1,474)
(960)
6
-
(1,468)
(960)
13,946
319
(9,873)
(261,315)
(1,327)
(258,250)
(7,431)
(265,681)
-
-
-
-
-
-
(2,994)
-
(2,994)
-
-
-
-
-
-
(2,994)
-
2,334
(2,195)
(660)
(2,195)
(2,994)
139
(2,855)
Total transactions with owners
13,946
319
(12,867)
(261,315)
(1,327)
(261,244)
(7,292)
(268,536)
As at 31 December 2020
1,305,668
(13,690)
175,731
9,703,452
(442,703) 10,728,458
427,446 11,155,904
*
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.
Keppel Corporation Limited
FINANCIAL REPORT
138
STATEMENTS OF CHANGES IN EQUITY
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
Group
2019
As at 1 January 2019
1,291,722
(45,073)
194,943
10,241,638
(493,669) 11,189,561
306,133
11,495,694
-
706,975
-
706,975
54,163
761,138
(74,112)
-
(169,917)
(244,029)
(250)
(244,279)
(74,112)
706,975
(169,917)
462,946
53,913
516,859
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 (Note 30)
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 from
revenue reserves
Cash subscribed by
non-controlling shareholders
Contributions to defined
benefits plans
Other adjustments
Total contributions by and
distributions to owners
Changes in ownership interests
in subsidiaries
Acquisition of a subsidiary
Acquisition of additional interest in
subsidiaries
Disposal of interest in subsidiaries
Effects of acquiring part of
non-controlling interests
in a subsidiary
Total change in ownership
interests in subsidiaries
Total transactions with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,543)
-
(417,938)
34,991
-
-
-
-
-
-
35,607
(35,472)
-
-
-
-
9,821
(9,821)
-
(4,041)
(31)
-
-
-
31,064
5,268
(427,759)
-
-
-
-
-
-
-
-
-
-
-
(50,227)
-
-
(50,227)
31,064
5,268
(477,986)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(417,938)
34,991
-
(417,938)
125
35,116
-
(11,623)
(11,623)
(4,543)
135
-
-
-
-
-
(4,543)
135
-
1,207
1,207
(4,041)
(31)
(415)
(4,456)
-
(31)
(391,427)
(10,706)
(402,133)
-
308,001
308,001
(50,227)
(173,390)
(223,617)
-
-
(50,864)
(50,864)
2,091
2,091
(50,227)
(441,654)
85,838
75,132
35,611
(366,522)
As at 31 December 2019
1,291,722
(14,009)
126,099
10,470,627
(663,586) 11,210,853
435,178
11,646,031
*
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.
The accompanying notes form an integral part of these financial statements.
Annual Report 2020
FINANCIAL REPORT
Company
2020
As at 1 January 2020
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
139
Share
Capital
$000
Treasury
Shares
$000
Capital
Reserves
$000
Revenue
Reserves
$000
Total
$000
1,291,722
(14,009)
205,112
6,567,206
8,050,031
-
-
-
-
-
-
-
-
-
-
-
(19,040)
19,359
319
-
1,681,793
1,681,793
1,055
1,055
-
1,055
1,681,793
1,682,848
-
(273,078)
(273,078)
36,302
-
(33,305)
-
-
-
36,302
(19,040)
-
2,997
(273,078)
(255,816)
Treasury shares reissued pursuant to share plans
Total transactions with owners
13,946
13,946
As at 31 December 2020
1,305,668
(13,690)
209,164
7,975,921
9,477,063
Company
2019
As at 1 January 2019
1,291,722
(45,073)
202,141
6,194,448
7,643,238
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
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,543)
35,607
31,064
-
790,696
2,273
2,273
-
790,696
790,696
2,273
792,969
-
(417,938)
(417,938)
36,170
-
(35,472)
-
-
-
36,170
(4,543)
135
698
(417,938)
(386,176)
As at 31 December 2019
1,291,722
(14,009)
205,112
6,567,206
8,050,031
The accompanying notes form an integral part of these financial statements.
Keppel Corporation Limited
140 CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended 31 December 2020
Operating activities
Operating profit
Adjustments:
Depreciation and amortisation
Share-based payment expenses
(Gain)/Loss on sale of fixed assets and an investment property
Gain on disposal of subsidiaries
(Gain)/Loss on disposal of associated companies
Gain from sale of units in associated companies
Impairment/write-off of fixed and intangible assets
Impairment of associated companies
Fair value gain on investment properties
(Gain)/Loss from change in interest in associated companies
Fair value gain on remeasurement of previously held interest
upon acquisition of subsidiary
Gain from reclassification of associated companies to fair value through
other comprehensive income investments
Fair value gain on remeasurement of remaining interest in an associated company
Unrealised foreign exchange differences
Operational cash flow before changes in working capital
Working capital changes:
Stocks
Contract assets
Debtors
Creditors
Contract liabilities
Investments
Intangibles
Amount due to/from associated companies and joint ventures
Interest received
Interest paid
Net income taxes paid
Net cash from/(used in) operating activities
Investing activities
Acquisition of a subsidiary
Acquisition and further investment in associated companies and joint ventures
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
(Advances to)/repayment from associated companies and joint ventures
Dividends received from investments, associated companies and joint ventures
Net cash used in investing activities
Financing activities
Acquisition of additional interest in subsidiaries
Proceeds from reissuance of treasury shares pursuant to share option scheme
Proceeds from non-controlling shareholders of subsidiaries
Proceeds from term loans
Repayment of term loans
Principal element of lease payments
Purchase of treasury shares
Dividend paid to shareholders of the Company
Dividend paid to non-controlling shareholders of subsidiaries
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents as at 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.
The accompanying notes form an integral part of these financial statements.
Annual Report 2020
Note
2020
$’000
2019
$’000
8,401
876,501
413,506
39,882
1,667
(63,995)
(34,419)
(48,010)
62,075
48,686
(265,230)
1,615
375,294
37,255
(6,277)
(64,469)
22
-
8,432
35,915
(101,020)
(27,114)
-
(158,376)
(124,769)
(26,034)
24,990
38,365
(349,684)
872,481
(427,146)
352,164
272,478
(74,375)
(1,859)
(49,486)
632,938
132,046
(385,248)
(177,284)
202,452
-
(743,600)
(487,640)
331,761
318,141
3,187
58,778
245,270
(274,103)
(450)
-
1,881
2,240,500
(1,159,414)
(53,413)
(19,040)
(273,078)
(24,325)
712,661
-
-
17,434
993,597
(72,104)
(159,551)
(806,164)
(15,610)
(77,990)
(274,421)
(662)
(30,093)
(442,998)
179,503
(298,099)
(263,856)
(825,450)
(1,143,012)
(652,576)
(516,794)
27,117
106,117
16,094
96,625
378,422
(1,688,007)
(223,652)
135
1,178
4,392,341
(1,342,450)
(47,306)
(4,543)
(417,938)
(11,623)
2,346,142
A
B
641,010
(167,315)
1,777,244
1,971,844
(9,781)
(27,285)
C
2,408,473
1,777,244
FINANCIAL REPORT
141
Foreign
exchange
movement
$’000
(9,554)
31 December
2020
$’000
12,039,196
(28,175)
563,904
Foreign
exchange
movement
$’000
9,813
31 December
2019
$’000
11,059,631
Reconciliation of liabilities arising from financing activities
2020
Non-cash changes
1 January 2020
$’000
Net proceeds/
(payment) of
principal
$’000
Reclassified
as liabilities
directly
associated
with assets
classified as
held for sale
$’000
Addition during
the year
$’000
Remeasure-
ment of
lease liabitities
$’000
Disposal of
subsidiaries
$’000
Term loans
11,059,631
1,081,086
(91,967)
-
-
597,439
(53,413)
-
25,668
22,385
Lease
liabilities
2019
-
-
1 January 2019
$’000
Net proceeds/
(payment) of
principal
$’000
Adoption
SFRS(I) 16
$’000
Addition during
the year
$’000
Acquisition of
subsidiaries
$’000
Disposal of
subsidiaries
$’000
Non-cash changes
Term loans
7,548,509
3,049,891
-
-
Lease
liabilities
-
(47,306)
573,363
47,508
451,418
44,771
Notes to Consolidated Statement of Cash Flows
A.
Acquisition of a subsidiary
During the financial year, net assets of subsidiaries acquired at their fair values were as follows:
Fixed assets and investment properties
Right-of-use assets
Intangible assets
Stocks
Contract assets
Debtors and other assets
Bank balances and cash
Creditors and other liabilities
Borrowings and lease liabilities
Current and deferred taxation
Non-controlling interests consolidated
Total identifiable net assets at fair value
Non-controlling interests measured at fair value
Amount previously accounted for as an associated company
Goodwill arising from acquisition
Gain on remeasurement of previously held equity interest
at fair value at acquisition date
Net assets acquired
Total purchase consideration
Less: Bank balances and cash acquired
Cash outflow on acquisition
-
(6,713)
(14,184)
597,439
2020
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2019
$’000
772,654
44,324
610,516
34,745
163,121
197,211
88,991
(241,555)
(496,189)
(251,498)
(2,091)
920,229
(308,001)
(210,137)
988,288
(158,376)
1,232,003
1,232,003
(88,991)
1,143,012
Acquisition in prior year relates to the Group’s 80% owned subsidiary, Konnectivity Pte Ltd, which acquired approximately 81% equity
interest in M1 Limited. The Group’s wholly-owned subsidiary, Keppel Telecommunications & Transportation Ltd, holds the remaining 19%
equity interest in M1 Limited.
The accompanying notes form an integral part of these financial statements.
Keppel Corporation Limited
142 CONSOLIDATED STATEMENT OF CASH FLOWS
B.
Disposal of Subsidiaries
During the financial year, the book values of net assets of subsidiaries disposed were as follows:
Fixed assets and investment properties
Right-of-use assets
Stocks
Debtors and other assets
Associated companies
Bank balances and cash
Creditors and other liabilities
Borrowings and lease liabilities
Current and deferred taxation
Non-controlling interests deconsolidated
Amount accounted for as an associated company
Net assets disposed of
Net profit on disposal
Realisation of foreign currency translation reserve
Sale proceeds
Less: Bank balances and cash disposed
Less: (Deferred proceeds received)/proceeds receivable
Cash inflow on disposal
2020
$’000
(192)
-
(293,591)
(10,377)
(158,670)
(5,352)
251,693
-
-
2,195
2019
$’000
(80,973)
(4,433)
(95,065)
(17,350)
-
(26,053)
41,357
6,713
1,891
50,099
(214,294)
(123,814)
59,927
(154,367)
(63,995)
(2,950)
26,984
(96,930)
(64,469)
(7,335)
(221,312)
(168,634)
5,352
(115,801)
26,053
115,464
(331,761)
(27,117)
During the year, disposal relates to the First FLNG Holdings Pte Ltd, First FLNG Sub-Fund Holdings Pte Ltd, Jiangyin Evergro Properties Co.,
Ltd (JEP) and Chengdu Hilltop Development Co Ltd (CHD). First FLNG Holdings Pte Ltd owns 30% interest in Gimi MS Corporation, while JEP
owns a residential and commercial mixed-use sited located in Jiangyin, China and CHD owns Hill Crest Villas on a 24.9 hectare site located
in Mumashan, Chengdu China. During the year, the Group also received deferred proceeds from FY 2019 sale of 70% interest in Dong Nai
Waterfront City LLC.
Disposal in the prior year relates to the sale of 70% interest in Dong Nai Waterfront City LLC, Keppel Logistics (Foshan Sanshui Port) Company
Ltd and Keppel Logistics (Hong Kong) Ltd.
C.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and balances with banks. Cash and cash equivalents in the consolidated statement of cash
flows comprise the following balance sheet amounts:
Bank balances, deposits and cash
Amounts held under escrow accounts for overseas acquisition of land,
payment of construction cost, claims and liabilities
2020
$’000
2019
$’000
2,479,715
1,783,514
(71,242)
(6,270)
2,408,473
1,777,244
Annual Report 2020
FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
143
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 production facilities and drilling rigs design, construction, fabrication and repair, ship conversions and repair and
specialised shipbuilding;
power generation, renewables, environmental engineering and infrastructure operation and maintenance;
property development and investment, as well as master development;
provision of telecommunications services, retail sales of telecommunications equipment and accessories, development and
operation of data centres, and provision of logistics solutions; and
management of private funds and listed real estate investment and business trusts.
The financial statements of the Group for the financial year ended 31 December 2020 and the balance sheet and statement of changes
in equity of the Company at 31 December 2020 were authorised for issue in accordance with a resolution of the Board of Directors on
26 February 2021.
2.
Significant accounting policies
2.1 Basis of Preparation
The financial statements have been prepared in accordance with the provisions of the Singapore Companies Act, Singapore Financial
Reporting Standards (International) (“SFRS(I)s”) and International Financial Reporting Standards (“IFRSs”). All references to SFRS(I)s
and IFRSs are referred to collectively as SFRS(I)s in these financial statements, unless specified otherwise. The financial statements
have been prepared under the historical cost convention, except as disclosed in the accounting policies below.
2.2 Adoption of New and Revised Standards
The Group adopted the new/revised SFRS(I)s, SFRS(I) Interpretations and amendments to SFRS(I)s that are effective for annual
periods beginning on or after 1 January 2020. Changes to the Group’s accounting policies have been made as required, in accordance
with the transitional provisions in the respective SFRS(I)s, SFRS(I) Interpretations and amendments to SFRS(I)s.
The following are the new or amended SFRS(I)s, SFRS(I) Interpretations and amendments to SFRS(I)s, that are relevant to the Group:
•
•
•
•
•
Amendments to SFRS(I) 1-1 Presentation of Financial Statements and SFRS(I) 1-8 Accounting Policies, Changes in Accounting
Estimates and Errors (Definition of Material)
Amendments to SFRS(I) 3 Business Combinations (Definition of a Business)
Amendments to SFRS(I) 9, SFRS(I) 1-39 and SFRS(I) 7 Interest Rate Benchmark Reform
Amendments to SFRS(I) Leases (Covid-19-Related Rent Concessions)
Amendments to Conceptual Framework for Financial Reporting
The adoption of the above new or amended SFRS(I)s, SFRS(I) Interpretations and amendments to SFRS(I)s did not have any significant
impact on the financial statements of the Group.
Interest Rate Benchmark Reform
In accordance with the transition provisions, the Group has adopted the amendments to SFRS(I) 9 and SFRS(I) 7 effective 1 January
2020 retrospectively to hedging relationships that existed at the start of the reporting period or were designated thereafter, and to the
amount accumulated in the cash flow hedge reserve at that date.
The amendments provide temporary relief from applying specific hedge accounting requirements to hedging relationships directly
affected by inter-bank offered rate (IBOR) reform. The reliefs have the effect that IBOR reform should not generally cause hedge
accounting to terminate. However, any hedge ineffectiveness continues to be recorded in the income statement. The reliefs will cease
to apply when the uncertainties arising from interest rate benchmark reform are no longer present.
Note 2.28(a)(iii) provides information about the uncertainty arising from IBOR reform for hedging relationships for which the Group
has applied the reliefs. No changes were required to any of the amounts recognised in the current or prior period as a result of these
amendments.
Keppel Corporation Limited
FINANCIAL REPORT
144 NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
2.3 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.
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.
2.4 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
Buildings on leasehold land
Vessels & floating docks
Plant, machinery & equipment
Networks and related application systems
Furniture, fittings & office equipment
Cranes
Small equipment and tools
20 to 50 years
Over period of lease (ranging from 10 to 50 years)
10 to 30 years
3 to 30 years
5 to 25 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.
Annual Report 2020
FINANCIAL REPORT
145
2.5
Investment Properties
Investment properties comprise completed properties and properties under construction or re-development held to earn rental and/or
for capital appreciation and right-of-use assets relating to leasehold land that is held for long term capital appreciation or for a currently
indeterminate use. Investment properties are initially recognised at cost and subsequently measured at fair value, determined annually
based on valuations by independent professional valuers, except for significant investment properties which are revalued on a
half-yearly basis. 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.
2.6 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.
2.7 Associated Companies and Joint Ventures
An associated company is an entity, not being a subsidiary, over which the Group has significant influence, but not control.
A joint venture is an entity, not being a subsidiary, over which the Group has joint control as a result of contractual arrangements, and
rights to the net assets of the entities.
Investments in associated companies and joint ventures are stated in the Company’s financial statements at cost less any impairment
losses. On disposal of an associated company or a joint venture, 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 and joint ventures 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 or joint venture is included in the consolidated profit and loss account and consolidated statement of
comprehensive income respectively. The Group’s share of net assets of the associated company or joint venture is included in the
consolidated balance sheet.
When the Group’s investment in an associated company or a joint venture is held by, or is held indirectly through, a subsidiary that is
a venture capital organisation, or a mutual fund, unit trust and similar entities, the Group may elect to measure that investment at fair
value through profit or loss. This election is made separately for each associated company or joint venture, at initial recognition of the
associated company or joint venture.
Any excess of the cost of acquisition over the Group’s share of net identifiable assets, liabilities and contingent liabilities of the
associated company or joint venture 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.
2.8
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.
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NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
Spectrum Rights
These comprise expenditure relating to one-time charges paid to acquire spectrum rights and telecommunications licenses or access
codes. These intangible assets are measured initially at cost and subsequently carried at cost less any accumulated amortisation and
any accumulated impairment losses. Spectrum rights are amortised on a straight-line basis over the estimated economic useful life of
4 to 17 years.
Brand
The brand was acquired as part of a business combination completed in the prior financial year. The brand value will be amortised over
the useful life which is estimated to be 30 years.
Customer Contracts and Customer Relationships
Customer contracts and customer relationships are identified and recognised separately from goodwill. The cost of customer
contracts and relationships is at their fair value at the acquisition date and subsequently carried at cost less accumulated amortisation
and accumulated impairment losses. 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 2 to 20 years.
Other Intangible Assets
Other intangible assets include development expenditure and internet protocol (IP) address, 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.
Other intangible assets also include management rights which is initially recognised at cost upon acquisition 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.
2.9 Service Concession Arrangement
The Group has an existing service concession arrangement with a governing agency (the grantor) to design, build, own and operate a
desalination plant in Singapore. Under the service concession arrangement, the Group will operate the plant for 25 years. At the end of
the concession period, the grantor may require the plant to be handed over in a specified condition or to be demolished at reasonable
costs borne by the grantor. Such service concession arrangement falls within the scope of SFRS(I) INT 12 Service Concession
Arrangements.
The Group constructs the plant (construction services) used to provide public services and operates and maintains the plant (operation
services) for the concession period as specified in the contract. The Group recognises and measures revenue in accordance with
SFRS(I) 15 for the services it performs.
The Group recognises a financial asset arising from the provision of the construction services when it has a contractual right to receive
fixed and determinable amounts of payments irrespective of the output produced. The consideration receivable is measured initially at
fair value and subsequently measured at amortised amount using the effective interest method.
2.10 Financial Assets
The Group classifies its financial assets in the following measurement categories:
-
-
-
Amortised cost;
Fair value through other comprehensive income (“FVOCI”); and
Fair value through profit or loss (“FVPL”).
The classification depends on the Group’s business model for managing the financial assets as well as the contractual terms of the
cash flows of the financial asset. Financial assets with embedded derivatives are considered in their entirety when determining whether
their cash flows are solely payment of principal and interest. The Group reclassifies debt instruments when and only when its business
model for managing those assets changes.
Purchases and sale of financial assets are recognised on the trade date when the Group commits to purchase or sell the assets.
At initial recognition, the Group measures a financial asset at its fair value including, in the case of a financial asset not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at fair value through profit or loss are expensed in the profit and loss account.
(i)
Debt instruments
Debt instruments mainly comprise of cash and bank balances, trade, intercompany and other receivables (excluding
prepayments) 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.
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Debt instruments that are held for collection of contractual cash flows where those cash flows represent solely payments
of principal and interest are measured at amortised cost. A gain or loss on a debt instrument that is subsequently measured
at amortised cost and is not part of a hedging relationship is recognised in the profit and loss account when the asset is
derecognised or impaired. Interest income from these financial assets is recognised in the profit and loss account using the
effective interest rate method.
Debt instruments that are held for trading as well as those that do not meet the criteria for classification as amortised cost or
FVOCI are classified as FVPL. Movement in fair values and interest income is recognised in the profit and loss account in the
period in which it arises.
Debt instruments that are held for collection of contractual cash flows and for sale, and where the assets’ cash flows
represent solely payments of principal and interest, are classified as FVOCI. Movements in fair values are recognised in other
comprehensive income (“OCI”) and accumulated in fair value reserve, except for the recognition of impairment gains or losses,
interest income and foreign exchange gains and losses, which are recognised in the profit and loss account. When the financial
asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to the profit and loss
account. Interest income from these financial assets is recognised in the profit and loss account using the effective interest rate
method.
(ii) Equity investments
The Group subsequently measures all its equity investments at their fair values. Equity investments are classified as FVPL with
movements in their fair values recognised in the profit and loss account in the period in which the changes arise. For equity
investments where the Group has elected to recognise changes in fair value in OCI, movements in fair values are presented as
“fair value changes” in OCI. Dividends from equity investments are recognised in the profit and loss account.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all risks and rewards of ownership.
On disposal of a debt instrument, the difference between the carrying amount and the sale proceeds is recognised in the profit
and loss account. Any amount previously recognised in other comprehensive income relating to that asset is reclassified to the
profit and loss account.
On disposal of an equity investment, the difference between the carrying amount and sales proceed is recognised in the profit
and loss account if there was no election made to recognise fair value changes in other comprehensive income. If there was
an election made, any difference between the carrying amount and sale proceeds would be recognised in other comprehensive
income and transferred to retained profits along with the amount previously recognised in other comprehensive income relating
to that asset.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and bank
deposits which are subject to an insignificant risk of change 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.
2.11 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.
For fair value hedges, changes in the fair value of the designated hedging instruments are recognised in the profit and loss account.
The hedged item is adjusted to reflect change in its fair value in respect of the risk hedged, with any gain or loss recognised in 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 objectives 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.
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NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
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.
2.12 Investments
Investments include equity investments classified as FVPL and FVOCI and debt investments classified as FVPL. See further in Note
2.10.
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.
2.13 Stocks
Stocks, consumable materials and supplies are stated at the lower of cost and net realisable value, cost being principally determined
on the weighted average method. 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.
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.
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.
2.14 Contract Assets and Contract Liabilities
For contract where the customer is invoiced on a milestone payment schedule or over the period of the contract, a contract asset is
recognised if the value of the contract work transferred by the Group exceed the receipts from the customer, and a contract liability is
recognised if the receipts from the customer exceed the value of the contract work transferred by the Group.
2.15 Impairment of Assets
Financial Assets
The Group assesses on a forward looking basis the expected credit losses associated with its debt financial assets carried at
amortised cost and fair value through other comprehensive income. The impairment methodology applied depends on whether there
has been a significant increase in credit risk. Note 34 details how the Group determines whether there has been a significant increase
in credit risk.
For trade receivables and contract assets, the Group applies the simplified approach permitted by the SFRS(I) 9, which requires
expected lifetime losses to be recognised from initial recognition of the receivables.
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 or joint venture 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, the recoverable amount is determined for CGU to which the asset belongs.
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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.
2.16 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 Note
2.22).
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.
2.17 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.
2.18 Leases
When a Group company is the lessee
At the inception of the contract, the Group assesses if the contract contains a lease. A contract contains a lease if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration. Reassessment is only required
when the terms and conditions of the contract are changed.
Right-of-use assets
The Group recognises a right-of-use asset and lease liability at the date which the underlying asset is available for use. Right-of-use
assets are measured at cost which comprises the initial measurement of lease liabilities adjusted for any lease payments made at or
before the commencement date and lease incentive received. Any initial direct costs that would not have been incurred if the lease
had not been obtained are added to the carrying amount of the right-of-use assets. The right-of-use asset is subsequently depreciated
using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the
end of the lease term.
Right-of-use assets (except for those which meets the definition of an investment property) are presented as a separate line on the
balance sheets. Right-of-use assets which meets the definition of an investment property is presented within “Investment Properties”
and accounted for in accordance with Note 2.5.
Lease liabilities
The initial measurement of lease liability is measured at the present value of the lease payments discounted using the implicit rate in
the lease, if the rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate.
Lease payments include the following:
-
-
Fixed payment (including in-substance fixed payments), less any lease incentives receivables;
Variable lease payment that are based on an index or rate, initially measured using the index or rate as at the commencement
date;
Amount expected to be payable under residual value guarantees;
The exercise price of a purchase option, if is reasonably certain to exercise the option; and
Payment of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
-
-
-
For contract that contain both lease and non-lease components, the Group allocates the consideration to each lease component on the
basis of the relative stand-alone price of the lease and non-lease component.
Lease liabilities are presented as a separate line on the balance sheets.
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NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
Lease liability is measured at amortised cost using the effective interest method. Lease liability shall be remeasured when:
-
-
-
There is a change in future lease payments arising from changes in an index or rate;
There is a change in the Group’s assessment of whether it will exercise an extension option; or
There is a modification in the scope or the consideration of the lease that was not part of the original term.
Lease liability is remeasured with a corresponding adjustment to the right-of-use asset, or is recorded in profit or loss if the carrying
amount of the right-of-use asset has been reduced to zero.
Short term and low value leases
The Group has elected to not recognise right-of-use assets and lease liabilities for short-term leases that have lease terms of 12
months or less and low value leases. Lease payments relating to these leases are expensed to profit or loss on a straight-line basis
over the lease term.
Variable lease payments
Variable lease payments that are not based on an index or a rate are not included as part of the measurement and initial recognition
of the lease liability. The Group recognises these lease payments in profit or loss in the periods that triggered such lease payments.
Details of the variable lease payments are disclosed in Note 8.
Rent concessions
The Group has elected to apply the optional practical expedient under Amendments to SFRS(I) 16 Leases (Covid-19-Related Rent
Concessions).
Under the practical expedient, the Group, as a lessee, has elected not to assess whether a rent concession is a lease modification, if all
the following conditions are met:
-
The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the
consideration for the lease immediately preceding the change;
Any reduction in lease payments affects only payments originally due on or before 30 June 2021; and
There is no substantive change to other terms and conditions of the lease.
-
-
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.
2.19 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.
2.20 Revenue
Revenue consists of:
-
-
-
-
-
-
Revenue recognised on rigbuilding, shipbuilding and repairs, property construction and long term engineering contracts;
Sale of goods;
Rendering of services;
Rental income from investment properties;
Investment and fee income; and
Dividend income.
Revenue recognition
The Group enters into rigbuilding, shipbuilding and repairs, property construction and long term engineering contracts with customers.
These contracts are fixed in prices. Revenue is recognised when the control over the contract work is transferred to the customer.
At contract inception, the Group assesses whether the Group transfers control of the contract work over time or at a point in time by
determining if (a) its performance does not create an asset with an alternative use to the Group; and (b) the Group has an enforceable
right to payment for performance completed to date.
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The contract work, except for overseas property construction contracts, has no alternative use for the Group due to contractual
restriction, and the Group has enforceable rights to payment arising from the contractual terms. For these contracts, revenue is
recognised over time by reference to the Group’s progress towards completing the construction of the contract work. For overseas
property construction contracts, the Group does not have enforceable rights to payment arising from the contractual terms. Revenue
from overseas property construction contracts is recognised at a point in time when the rights to payment become enforceable.
The measure of progress for rigbuilding contracts, and shipbuilding and repair contracts, is determined based on the estimation of the
physical proportion of the contract work completed for the contracts with reference to engineers’ estimates. The measure of progress
for property construction and long term engineering contracts is determined based on the proportion of contract costs incurred to date
to the estimated total contract costs. Costs incurred that are not related to the contract or that do not contribute towards satisfying a
performance obligation are excluded from the measure of progress.
An impairment loss is recognised in the profit or loss to the extent that the carrying amount of capitalised contract costs exceeds the
expected remaining consideration less any directly related costs not yet recognised as expenses.
Revenue from sale of goods is recognised when the Group satisfies a performance obligation by transferring control of a promised
good or service to the customer. The amount of revenue recognised is the amount of the transaction price allocated to the satisfied
performance obligation.
Revenue from the rendering of services including electricity supply, logistic services, operations and maintenance under service
concession arrangements, and telecommunication 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.
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.
Rental income from operating leases on investment properties is 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.
2.21 Government Grants
Grants from the government are recognised as a receivable at their fair value when there is reasonable assurance that the grant will be
received and the Group will comply with all the attached conditions.
Government grants receivable are recognised as income over the periods necessary to match them with the related costs which they
are intended to compensate, on a systematic basis. Government grants relating to expenses are shown separately as other income.
2.22 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.
For Singapore trading properties which the Group recognises revenue over time, borrowing costs on the portion of the property
not ready for transfer of control to the purchasers are capitalised until the time when control is capable of being transferred to the
purchasers.
2.23 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.
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NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
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.
2.24 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 sheet 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.
2.25 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, associated companies and joint
ventures 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, associated companies and joint ventures 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, associated companies and joint ventures. Exchange
differences due to such currency translation are recognised in other comprehensive income and accumulated in Foreign Exchange
Translation Account until disposal.
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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 associated company 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 associated companies 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.
2.26 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.
2.27 Segment Reporting
The Group has five main segments, of which there are six reportable operating segments, namely Offshore & Marine, Infrastructure &
Others, Urban Development, Connectivity, Asset Management and Corporate & Others. Management monitors the results of each of
the main segments for the purpose of making decisions on resource allocation and performance assessment.
2.28 Critical Accounting Judgments and Estimates
(a)
Critical judgments in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, 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:
(i)
(ii)
Control over Keppel REIT
The Group has approximately 49% (2019: approximately 49%) gross ownership interest of units in Keppel REIT as at
31 December 2020. 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 does not have control over Keppel REIT but continues to have significant influence over the
investment.
Control over KrisEnergy Limited
The Group has approximately 40% (2019: approximately 40%) gross ownership interest of shares in KrisEnergy Limited
(“KrisEnergy”) as at 31 December 2020. The management assessed whether 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 20% interest held by two other shareholders of KrisEnergy, management concluded
that the Group does not have sufficient dominant vesting interest to exert control over KrisEnergy but continues to have
significant influence over the investment.
(iii)
Interest rate benchmark reform Phase 1 relief
Following the global financial crisis, the reform and replacement of benchmark interest rates such as the Singapore Swap
Offer Rate (“SOR”), USD London Interbank Offered Rate (“LIBOR”) and other Interbank Offered Rates (“IBORs”) has become
a priority for global regulators. There is currently uncertainty around the timing and precise nature of these changes.
To transit existing contracts and agreements that reference IBORs to replacement benchmark rates, adjustments for
term differences and credit differences might need to be applied to enable the two benchmark rates to be economically
equivalent on transition.
The greatest change will be amendments to the contractual terms of the floating-rate loans as well as the associated
swaps and the corresponding update of the hedge designation. Amendments will also be made to the contractual terms
of certain receivables that are IBOR-referenced.
Keppel Corporation Limited
154
NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
Relief applied
The Group has applied the following reliefs that were introduced by the amendments made to SFRS(I) 9 Financial Instruments:
a.
b.
c.
When considering the ‘highly probable’ requirement, the Group has assumed that the IBOR interest rate on which the
Group’s hedged debt is based does not change as a result of the reform;
In assessing whether the hedge is expected to be highly effective on a forward-looking basis, the Group has assumed that
the IBOR interest rate on which the cash flows of the hedged debt and the interest rate swap that hedges it are based is
not altered by the reform; and
The Group has not recycled the cash flow hedge reserve relating to the period after the reforms are expected to take effect.
Assumptions made
In calculating the change in fair value attributable to the hedged risk of floating-rate loan, the Group has made the following
assumptions that reflect its current expectations:
a.
b.
Existing floating-rate loans will progressively move to the replacement benchmark rates from 2021 onwards and the
spread adjustment between the current and replacement benchmark rates will be similar to the spread adjustment
included in the interest rate swap used as the hedging instrument; and
No other material changes to the terms of the floating-rate loans, other than the transition to the replacement benchmark
rates, are anticipated.
(b)
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:
(i)
Coronavirus Disease 2019 (“COVID-19”) and volatility in oil prices
The evolving situation of the outbreak of the COVID-19 and volatility in oil prices, including the sharp reduction in global
oil demand, could impact the assessment of the carrying amounts of the Group’s assets and liabilities. As these events
and conditions have significant financial reporting implications, Accounting and Corporate Regulatory Authority of
Singapore (“ACRA”) had published financial reporting practice guidance notes in May and December 2020 highlighting key
focus areas when preparing and reviewing the financial statements, especially in areas where estimates, assumptions
and judgment are required. In the assessment for the current year, management has carried out a review to assess the
assumptions used in the assessment of the carrying values of certain assets of the Group. Management has exercised
judgment in determining the significant assumptions used and has relied on information currently available, including the
COVID-19 official updates from the authorities, the experts’ consensus on global oil prices and the work performed by
independent advisors on certain assets, in the assessment of the appropriateness of the carrying values of the Group’s
assets, including but not limited to the following assets as at 31 December 2020:
•
•
•
•
•
Recoverability of contract assets and receivable balances in relation to offshore & marine construction contracts
with Sete Brasil and other customers;
Valuation of investment properties;
Estimation of net realisable value of stocks;
Impairment of non-financial assets; and
Investments in associated companies and joint ventures, including KrisEnergy Limited and Floatel International
Limited and related exposures.
As the COVID-19 situation continues to evolve, the Group will proactively implement measures in mitigating the potential
impact on the Group. Should the COVID-19 situation take a longer than expected period to recover and/or the recovery of
the long term oil prices, dayrates or utilisation rates take a longer period or to a lower level than expected, the assessment
of the carrying amounts of the assets of the Group could be impacted, and material provisions may be made and
additional liabilities may arise in the subsequent financial years.
(ii)
Recoverability of contract asset and receivable balances in relation to offshore & marine construction contracts
Contracts with Sete Brasil (“Sete”)
The Group had previously entered into contracts with Sete for the construction of six rigs for which progress payments
from Sete had ceased since November 2014. 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. In
October 2019, the Settlement Agreement as well as the winning bid proposal for Magni Partners (Bermuda) Ltd (“Magni”)
to purchase four Sete subsidiaries, two of which are special-purpose entities (“SPEs”) for uncompleted rigs constructed
by the Group, was approved by the creditors. As part of the Settlement Agreement, which is subject to fulfilment of certain
conditions precedent, the Group will take over ownership of remaining four uncompleted rigs and will be able to explore
various options to extract the best value from these assets. The Engineering, Procurement and Construction (EPC)
contracts and related agreements entered into in relation to these four rigs will be deemed to be amicably terminated,
with no penalties, refunds and/or any additional amounts being due to any party, and the parties will waive all rights to
any claims. The Group has a receivable of approximately US$260 million from Sete and this amount has been included in
Sete’s court-approved Judicial Reorganisation Plan. The outstanding amount will be paid to the Group proportionally and
pari passu with other creditors of Sete as part of, and out of proceeds of, its Judicial Reorganisation Plan.
Annual Report 2020
FINANCIAL REPORT
155
In December 2019, Petrobras issued a press release to communicate their Board’s approval on the continuation of four
charter agreements, and for Magni and their operator Etesco to step in as the new party to the agreements. Since then,
the Group has been in constructive discussions with Magni to finalise the construction contracts for the two rigs and with
Sete to close out the condition precedents in the Settlement Agreement. As a result of the global COVID-19 pandemic
and the extended time required for Magni to secure financing, finalisation of the agreements between the various parties
have been delayed. On 12 November 2020, Petrobras issued a press release that their mediation agreement deadline with
Sete has been extended to 31 January 2021 for Sete to conclude their sale transaction. As of the date of these financial
statements, Magni has yet to secure the full financing required to complete the sale transaction with Sete.
On 26 January 2021, Petrobras issued a media release to inform that it had received notification from Sete that it will not
be able to comply with the conditions in the mediation agreement by the extended due date of 31 January 2021 and Sete
had requested to begin a new negotiation with Petrobras. The Executive Board of Petrobras has authorised this request
from Sete, in search of a joint solution with Sete.
Notwithstanding that the deadline to complete the mediation agreement has not been extended, the Group believes that
Petrobras, in approving a new negotiation, will continue to seek for solutions on these rigs with the relevant stakeholders
which may yield several other alternative arrangements between the stakeholders. The Group will also be in active
discussions with Sete and Magni as Sete enters into the new negotiation with Petrobras.
Management estimated the net present value of the cash flows relating to the construction contract for two rigs with
Magni. In addition, management performed an assessment to estimate the cost of discontinuance of related agreements
of the EPC contracts with Sete, offset by possible options in extracting value from the uncompleted rigs and possible
payout from the Judicial Reorganisation Plan.
Arising from the above assessment, the loss allowance for trade debtors of $183,000,000 (2019: $183,000,000) and the
provision for related contract costs of $245,000,000 (2019: $245,000,000) made in prior years remain adequate to address
the cost of discontinuance, salvage cost and unpaid progress billings relating to EPC contracts with Sete.
Taking into consideration cost of completion, cost of discontinuance, salvage cost and unpaid progress billings with
regards to these rigs, the total cumulative loss recognised in relation to these rig contracts amounted to $476,000,000 as
at 31 December 2020 (31 December 2019: $476,000,000).
The above assessment had been made with the following key assumptions:
(i)
Petrobras will continue to require the rigs for execution of its business plans and will charter them at the dayrates
and tenure previously agreed with Sete;
(ii) Magni will be able to secure financing to complete the purchase of the rigs with Sete and complete the construction
contract with the Group at the terms previously discussed with Magni; and
The future cost of construction of the rigs are not materially different from management’s current estimation.
(iii)
At the date of these financial statements, the commencement of a new negotiation between Petrobras and Sete has been
authorised by the Executive Board of Petrobras. Should the conclusion of the negotiation result in significant changes
to the key assumptions above, additional material provision may be required, including adjustments to the net carrying
amounts (net of total cumulative losses as described above) relating to the Sete contracts amounting to $113,645,000 as
at 31 December 2020.
Other contracts
As at 31 December 2020, the Group had several rigs that were under construction for customers where customers had
requested for deferral of delivery dates of the rigs in prior years and have higher counterparty risks. In the event that the
customers are unable to fulfil their contractual obligations, the Group can exercise the right to retain payments received to
date and retain title to the rigs.
The Group had also delivered rigs to customers where receipt of the construction revenue have been deferred under
certain financing arrangements, amounting to $848,117,000 as at 31 December 2020 (2019: $778,734,000) of which
$772,443,000 (2019: $638,973,000) is secured on the rigs and $75,674,000 (2019: $139,761,000) is unsecured but the
Group has obtained parental guarantee from the customers.
Management has assessed each deferred construction project individually to make judgment as to whether the
customers will be able to fulfil their contractual obligations and take delivery of the rigs at the revised delivery dates.
Management has also performed an assessment of the expected credit loss on contract assets and trade receivables
of deferred projects and of rigs delivered on financing arrangements to determine if a provision for expected loss is
necessary.
The global economic environment has been and continues to be significantly affected by COVID-19 and the oil and gas
industry, in particular, has experienced an unprecedented and very difficult period as a result of lower expected demands.
The Group remains cognizant of these developments and have been closely monitoring the market and industry
developments relating to utilisation rates, dayrates, oil price outlook and other relevant information.
Keppel Corporation Limited
156
NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
For the above contract assets and secured trade receivables, in the event that the customers are unable to fulfil their
contractual obligations, management has considered the most likely outcome for the rigs delivered or under construction
is for the Group to take possession of the asset and charter it out to work with an operator. The value of the rig on this
basis would be based on an estimation of the Value-in-use (“VIU”) of the rig, i.e. through estimating the net present value
of cash flows from operating the rig over the useful life of the asset.
Management has engaged independent professional firms to assist in their assessment on whether the VIU of the rigs
would exceed the carrying values of contract assets and trade receivables as at 31 December 2020. The VIU model used
by the independent firm is consistent with prior years and is based on Discounted Cash Flow calculations that cover each
class of rig. In addition to the independent firm responsible for the valuation based on VIU calculations, management
has also engaged a separate industry expert to independently provide a view of the market outlook, assumptions and
parameters which are used in the valuations based on estimation of VIU. Key inputs into the estimation of the VIU include
dayrates and cost assumptions, utilisation rates, discount rates and estimated commencement of deployment of the
assets. The valuation of the rigs would decrease if the expected income from operating the rigs decline, or discount rates
were higher, or the estimated commencement of deployment were delayed.
Management has also appointed an independent advisor to conduct an assessment of the recoverability of unsecured
receivables as at 31 December 2020.
Accordingly, the Group recognised an expected credit loss allowance of $430,842,000 (2019: $nil) on contract assets, and
$169,611,000 (2019: $nil) on long term receivables during the financial year ended 31 December 2020 as follows:
As at 31 December 2020
Gross balance
Less: Expected credit loss
Balance, 1 January
Currency alignment
Impairment charged
Reclassification (Note 15)
Balance, 31 December
Net balance
As at 31 December 2019
Gross balance
Less: Expected credit loss
Contract assets
$’000
Financing to customers
Secured
$’000
Unsecured
$’000
Total
$’000
2,933,715
871,605
138,595
3,943,915
21,000
-
430,842
(19,301)
432,541
2,501,174
-
(4,634)
103,796
-
99,162
772,443
-
(2,894)
65,815
-
62,921
75,674
21,000
(7,528)
600,453
(19,301)
594,624
3,349,291
3,345,020
638,973
139,761
4,123,754
Balance, 1 January and 31 December
Net balance
21,000
3,324,020
-
-
638,973
139,761
21,000
4,102,754
The valuations of the rigs based on estimated VIU are most sensitive to discount rates and dayrates.
•
•
A discount rate of 7% has been used in the valuation as at 31 December 2020 (31 December 2019: 6.8%). An
increase of 1% of the discount rate would increase the expected credit loss by approximately S$7,000,000
(31 December 2019: $nil).
A decrease in dayrates of US$5,000 per day across the entire asset useful life of 25 years would not result in any
further expected credit loss (31 December 2019: $nil).
(iii)
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 ("CGU"s). This requires the Group to estimate the future cash flows expected from the CGUs
and an appropriate discount rate in order to calculate the present value of the future cash flows. Management performed
impairment tests on fixed assets (Note 6), investments in subsidiaries (Note 9), investments in associated companies and
joint ventures (Note 10), and intangibles (Note 13) as at 31 December 2020.
Management has performed the impairment assessment of its investments in KrisEnergy Limited (“KrisEnergy”) and
Floatel International Limited (“Floatel”) and related exposures on the basis of the restructuring steps taken by these
investees. Refer to Note 10(c) and Note 10(f) respectively for more details on the impairment assessment of Group’s
investments in KrisEnergy and Floatel.
Management has also performed an impairment assessment of the goodwill arising from acquisition of M1 Limited.
Details of the impairment testing is disclosed in Note 13.
Annual Report 2020
FINANCIAL REPORT
157
(iv) Revenue recognition and contract cost
The Group recognises contract revenue and contract cost over time by reference to the Group’s progress towards
completing the construction of the contract work. The stage of completion is measured in accordance with the
accounting policy stated in Note 2.20. Significant assumptions are required in determining the stage of completion
and significant judgment is 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. In making the assumption, the Group evaluates by relying on past experience and the
work of engineers. Revenue from construction contracts is disclosed in Note 24.
(v)
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.
(vi) 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.
EIG Energy Fund XIV, L.P., et al. v. Keppel Offshore & Marine Ltd., (United States District Court, Southern District of New
York)
In February 2018, the Company’s subsidiary, Keppel Offshore & Marine Ltd (“KOM”) was served a summons by eight
investment funds (“Plaintiffs”) managed by EIG Management Company, LLC (“EIG”) where a civil action was commenced
by the Plaintiffs pursuant to the Racketeer Influenced and Corrupt Organizations Act (“RICO”) in the United States District
Court, Southern District of New York. The Plaintiffs sought damages for its loss of investment of US$221 million in Sete,
trebled under RICO to US$663 million, plus interest, costs and mandatory attorneys’ fees under RICO.
This new lawsuit came after an earlier civil action commenced by eight of EIG’s managed funds in the United States
District Court, District of Columbia against, among others, the Company and KOM. The case was dismissed by the Court
on 30 March 2017.
In March 2018, KOM submitted a letter pursuant to the Court’s rules seeking permission to file a motion to dismiss the
Complaint. In April 2018, in response to KOM’s letter, the Plaintiffs filed the First Amended Complaint which added,
among other things, a state law claim for aiding and abetting fraud.
In July 2018, KOM filed a motion to dismiss the First Amended Complaint. The Plaintiffs filed their brief in opposition to
the motion in August 2018, and KOM filed its reply brief in August 2018.
In May 2020, the Court issued an order granting in part and denying in part KOM’s motion to dismiss. The Court dismissed
the Plaintiffs’ civil RICO conspiracy claim but found that the First Amended Complaint adequately pleaded an aiding and
abetting fraud claim under New York state law and denied KOM’s motion to dismiss that claim.
Consequently, the Plaintiffs currently seek damages of US$221,000,000 (without the earlier treble damage claim of
US$663 million under RICO in respect of which KOM has been successful in dismissing the claim), plus punitive damages,
interest, attorneys’ fees, costs and disbursements, based on their remaining claim for aiding and abetting fraud.
Management is of the view that the remaining claim for aiding and abetting fraud is without merit and KOM will vigorously
defend itself. As at the date of these financial statements, it is premature to predict or determine the eventual outcome of
this remaining claim and hence, the potential amount of loss cannot currently be assessed.
Keppel Corporation Limited
158
NOTES TO THE FINANCIAL STATEMENTS
2.
Significant accounting policies (continued)
Termination of Two Mid-Water Semisubmersible Drilling Rig Contracts
As disclosed in Note 2.28(b)(ix), a subsidiary of Keppel Offshore & Marine Ltd (“KOM subsidiary”) terminated two contracts
with subsidiaries of a customer for the construction of two mid-water semisubmersible drilling rig for harsh environment
use:
(i)
In June 2020, the buyer under the first of these contracts (“First Contract”) alleged a breach of contract by the
KOM subsidiary and purportedly terminated the First Contract and sought recovery of the payments already made
to the KOM subsidiary with interest. The allegations by the buyer were refuted and the purported termination
of the contract was rejected by the KOM subsidiary. The buyer subsequently failed to pay an instalment due
under the First Contract. Non-payment of any instalment by the customer is a default in accordance with the
First Contract, entitling the KOM subsidiary to terminate the First Contract, retain all payments received to date
(approximately US$54 million), and seek compensation for the work done to date and claim ownership of the rig.
The KOM subsidiary had therefore issued a notice of termination of the First Contract to the buyer and commenced
arbitration to enforce its rights under the First Contract against the buyer.
(ii)
In December 2020, the KOM subsidiary issued a notice of termination of the second of these contracts (“Second
Contract”) and commenced arbitration to enforce its rights under the Second Contract against the buyer, which
rights include the right to retain the amounts already paid by the buyer to date of approximately US$43 million and
to seek reimbursement of the KOM subsidiary’s costs of the project to the date of termination.
Subsequent to the issuance of this notice of termination, the KOM subsidiary has received a notice from the buyer
purporting to terminate the Second Contract, alleging breaches under the Second Contract. As it had already
terminated the Second Contract, the KOM subsidiary’s position is that the notice of termination can have no effect.
In any event, the KOM subsidiary refutes the abovementioned allegations by the buyer in the notice.
The Group is working with legal advisors to enforce its rights and will continue to evaluate the potential financial impact in
consultation with its advisors. Based on currently available information, no provision was made in respect of the recovery
of the payments already made to the Group by the two buyers.
Global resolution with criminal authorities in relation to corrupt payments
In 2017, KOM reached a global resolution with the criminal authorities in the United States of America, Brazil and
Singapore in relation to corrupt payments made in relation to KOM’s various projects with Petrobras and Sete Brasil
in Brazil, which were made with knowledge or approval of former KOM executives. Fines in an aggregate amount of
US$422,216,980, or equivalent to approximately S$570 million, paid/payable had been allocated between the three
jurisdictions.
As part of the global resolution, KOM accepted a Conditional Warning from the Corrupt Practices Investigation Bureau
(“CPIB”) in Singapore, and entered into a Deferred Prosecution Agreement (“DPA”) with the U.S. Department of Justice
(“DOJ”), while Keppel FELS Brasil S.A., a wholly-owned subsidiary of KOM, entered into a Leniency Agreement with the
Public Prosecutor’s Office in Brazil, the Ministerio Publico Federal (“MPF”) which became effective following the approval
of the Fifth Chamber for Coordination and Review of the MPF in April 2018. In addition, Keppel Offshore & Marine USA, Inc
(“KOM USA”), also a wholly-owned subsidiary of KOM, pleaded guilty to one count of conspiracy to violate the U.S. Foreign
Corrupt Practices Act and entered into a Plea Agreement with the DOJ.
KOM has successfully complied with its obligations under the DPA and the DPA has accordingly concluded. KOM has also
been in compliance with its obligations under the Conditional Warning issued by the CPIB and the Leniency Agreement
entered into with the MPF. As part of the applicable fines payable under the global resolution, a sum of US$52,777,122.50
(less any penalties that KOM may pay to specified Brazilian authorities) was payable to CPIB within three years from the
date of the Conditional Warning and has been included in accrued expenses since FY 2017. The discussions with the
specified Brazilian authorities remain ongoing, and CPIB has agreed to extend this three-year period for a further
12 months until 22 December 2021.
It has been brought to the Company’s attention that the Office of the Comptroller General of Brazil (“CGU”) has published
a notice in the Official Gazette (“Notice”) to the effect that CGU has initiated an administrative enforcement procedure
(“AEP”) against KOM, Prismatic Services Ltd., Keppel FELS Ltd., Keppel FELS Brasil S.A., and BrasFELS S.A., in relation
to alleged irregularities under the Brazilian Anti-Corruption Statute, and appointed two CGU officials to form a panel to
preside over the proceedings. The Company has been advised that, following the issuance of the Notice, the CGU would
carry out further internal investigations, and the panel has to thereafter decide whether any summons is to be served on
the defendants, and if so, the defendants will then have 30 days thereafter to file a defence. Neither the Notice nor any
summons has been served on any of the foregoing entities to date.
The Notice does not provide any factual particulars and the Company is therefore currently unable to assess the matter
or its impact, if any. The Company understands from CGU that the AEP will not affect the ongoing negotiations with the
Brazil authorities, and that the AEP has been suspended pending these ongoing discussions.
Annual Report 2020
FINANCIAL REPORT
159
Over the course of the DPA reporting period, Keppel Group continued its remediation efforts and implemented significant
compliance enhancements across its businesses. KOM’s successful completion of the DPA reflects Keppel Group’s
ongoing commitment to ethics, integrity and robust controls in all its business operations. In 2019, KOM successfully
achieved global certification for the ISO 37001 Anti-Bribery Management System, and Keppel is progressively
implementing the same standard throughout the Group.
Anti-bribery and corruption compliance audits were also performed on entities within the KOM Group. These audits
revealed enhanced policies and procedures put in place to date were, in general, functioning as intended. The results of
the audits performed in 2020 were satisfactory with no adverse findings requiring follow-up actions.
Based on currently available information, no additional provision was made in relation to the ongoing discussions with the
specified Brazilian authorities.
(vii) Useful lives of network and related application systems
The cost of network and related application systems is depreciated on a straight-line basis over the assets’ estimated
economic useful lives. Management estimated the useful lives of these fixed assets to be within 5 to 25 years. These
are common life expectancies applied in the telecommunications industry. Changes in the expected level of usage and
technological developments could impact the economic useful life and the residual values of these assets, therefore,
future depreciation charges could be revised. The carrying amounts of the Group’s network and related application
systems at the end of the reporting period are disclosed in Note 6 to the financial statements.
(viii) Revaluation of investment properties
The Group carries its investment properties at fair value with changes in fair value being recognised in the profit and loss
account, determined annually by independent professional valuers on the highest and best use basis except for significant
investment properties which are revalued on a half-yearly basis.
For the purpose of the financial statements for the year ended 31 December 2020, valuations were obtained from the valuers
for the Group’s investment properties, and the resultant fair value changes were recognised in the profit and loss account.
In determining the fair values, the valuers have used valuation techniques which involve certain estimates. The key
assumptions to determine the fair value of investment properties include market-corroborated capitalisation rate, price of
comparable plots and properties, net initial yield and discount rate. The valuation reports obtained from independent valuers
for certain properties have highlighted the heightened uncertainty of the COVID-19 outbreak and material valuation uncertainty
where a higher degree of caution should be attached to the valuation than would normally be the case. Accordingly, the
valuation of these investment properties may be subjected to more fluctuation than during normal market conditions.
In relying on the valuation reports, management has exercised its judgment to ensure that the valuation methods
and estimates are reflective of current market conditions. The carrying amount of investment properties and the key
assumptions used to determine the fair value of the investment properties are disclosed in Notes 7 and 34.
(ix)
Estimating net realisable value of stocks
The net realisable value of stocks represent the estimated selling price for these stocks less all estimated cost of
completion and costs necessary to make the sale.
As at 31 December 2020, stocks under work-in-progress amounted to $1,072,890,000 (after a provision of $41,508,000
recognised in FY 2020 and $50,000,000 in prior years). This amount included a balance of $447,337,000, which were
transferred from contract assets during FY 2020 as described in Note 2.28(b)(vi) – Termination of Two Mid-Water
Semisubmersible Drilling Rig Contracts.
The assessment of the carrying value of these stocks were performed in conjunction with the recoverability assessment
of contract assets based on a VIU approach as described above in Note 2.28(b)(ii).
Based on the results of the assessments, the Group recognised an impairment provision of $41,508,000 on stocks under
work-in-progress during the financial year ended 31 December 2020.
The valuation of these stocks under work-in-progress based on estimated VIU are most sensitive to discount rates and
dayrates.
•
•
An increase of 1% of the discount rate would result in an impairment of approximately $158,000,000 (31 December
2019: $nil).
A decrease in dayrates of US$5,000 per day across the entire asset life of 25 years would result in an impairment of
approximately $21,000,000 (31 December 2019: $nil).
For properties held for sale, provision is arrived at after taking into account estimated selling prices and estimated
total construction costs. The estimated selling prices are based on recent selling prices for the development project
or comparable projects and the prevailing market conditions. The estimates and assumptions used are subject to risk
and uncertainty in view of the economic uncertainty brought about by the COVID-19 pandemic. The estimated total
construction costs include contracted amounts plus estimated costs to be incurred based on historical trends. The
provision is progressively reversed for those residential units sold above their carrying amounts.
Keppel Corporation Limited
160
NOTES TO THE FINANCIAL STATEMENTS
3.
Share capital
Balance at 1 January
Issue of shares under share plan
Treasury shares transferred pursuant to
share option scheme
Treasury shares transferred pursuant to share plans
Treasury shares purchased
Balance at 31 December
Balance at 1 January
Issue of shares under share plan
Treasury shares transferred pursuant to
share option scheme
Treasury shares transferred pursuant to share plans
Treasury shares purchased
Balance at 31 December
Group and Company
Number of Ordinary Shares (“Shares”)
Issued Share Capital
Treasury Shares
2020
2019
2020
2019
1,818,394,180
1,818,394,180
(2,014,736)
(5,936,044)
2,163,587
-
-
-
-
-
-
-
1,820,557,767
1,818,394,180
-
-
2,829,890
(3,866,628)
(3,051,474)
-
44,000
4,647,308
(770,000)
(2,014,736)
Issued Share Capital
Treasury Shares
Amount ($’000)
2020
2019
2020
2019
1,291,722
(14,009)
(45,073)
1,291,722
13,946
-
-
-
1,305,668
1,291,722
-
-
-
-
-
-
19,359
(19,040)
(13,690)
-
334
35,273
(4,543)
(14,009)
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends declared by the Company.
During the financial year, 4,340,777 (2019: 4,266,708) Shares under the KCL Restricted Share Plan (“KCL RSP”) and 652,700 (2019:
380,600) Shares under the KCL Performance Share Plan (“KCL PSP”) were vested.
During the financial year, the Company transferred 2,829,890 (2019: 4,691,308) treasury shares to employees under vesting of Shares
released under the KCL Share Plans. The Company also purchased 3,866,628 (2019: 770,000) treasury shares in the Company in the
open market during the financial year. The total amount paid was $19,040,000 (2019: $4,543,000). 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
Teo Siong Seng
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 closing 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.
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.
Annual Report 2020
FINANCIAL REPORT
161
Movements in the number of share options and their weighted average exercise prices are as follows:
Balance at 1 January
Exercised
Cancelled
Expired
Balance at 31 December
Exercisable at 31 December
2020
2019
Number of
options
910,900
-
-
(910,900)
-
Weighted
average
exercise
price
$6.89
-
-
$6.89
-
Number of
options
1,890,185
(44,000)
(935,285)
-
910,900
-
-
910,900
Weighted
average
exercise
price
$6.74
$3.07
$6.77
-
$6.89
$6.89
As at 31 December 2020, there were no unexercised options for unissued ordinary shares under the KCL Share Options Scheme.
In 2019, the weighted average share price at the date of exercise for options exercised was $6.03. The options outstanding as at
31 December 2019 had a weighted average exercise price of $6.89 and a weighted average remaining contractual life of 0.1 year.
KCL Share Plans
The KCL Restricted Share Plan (“KCL RSP”) and KCL Performance Share Plan (“KCL PSP”) were approved by the Company’s
shareholders at the Extraordinary General Meeting of the Company on 23 April 2010. The two share plans are administered by the
Remuneration Committee.
Details of the KCL RSP, the KCL RSP-Deferred Shares, the KCL PSP, the KCL PSP – Transformation Incentive Plan (“KCL PSP-TIP”) and
the KCL PSP – M1 Transformation Incentive Plan (“KCL PSP-M1 TIP”) are as follows:
KCL RSP
KCL RSP-Deferred Shares
KCL PSP
Plan Description
Award of fully-paid ordinary shares
of the Company, conditional on
achievement of pre-determined
targets at the end of a one-year
performance period
Award of fully-paid ordinary shares
of the Company
Performance Conditions
Return on Equity
-
0% to 100% of the contingent award
granted, depending on achievement
of pre-determined targets
If pre-determined targets are
achieved, awards will vest equally
over three years subject to
fulfilment of service requirements
100% of the awards granted
Awards will vest equally over three
years subject to fulfilment of service
requirements
Award of fully-paid ordinary shares
of the Company, conditional on
achievement of pre-determined
targets over a three-year
performance period
(a) Absolute Total Shareholder’s
Return
(b) Return on Capital Employed
(c) Net Profit
0% to 150% of the contingent award
granted, depending on achievement
of pre-determined targets
If pre-determined targets are
achieved, awards will vest at the
end of the three-year performance
period subject to fulfilment of
service requirements
KCL PSP-TIP
KCL PSP-M1 TIP
Award of fully-paid ordinary shares
of the Company, conditional on
achievement of pre-determined
targets over a six-year performance
period
Two separate awards of fully-paid
ordinary shares of the Company,
conditional on achievement of pre-
determined targets over a three-year
and six-year performance period
respectively
(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
(a) Net Profit
(b) Corporate Scorecard
Achievement comprising pre-
determined stretched financial
and non-financial targets for the
Group
(c) Net Promoter Score
(d) Individual Performance
Achievement
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
If pre-determined targets are
achieved, awards will vest at the end
of the six-year performance period
subject to fulfilment of service
requirements
If pre-determined targets are
achieved, the two separate awards
will vest at the end of the three-year
and six-year performance period
subject to fulfilment of service
requirements
Final Award
Vesting Condition
and Schedule
Plan Description
Performance Conditions
Final Award
Vesting Condition
and Schedule
Keppel Corporation Limited
162
NOTES TO THE FINANCIAL STATEMENTS
3.
Share capital (continued)
Movements in the number of shares under the KCL RSP, the KCL RSP-Deferred Shares, the KCL PSP, the KCL PSP-TIP, and the KCL
PSP-M1 TIP are as follows:
2020
2019
KCL RSP-
Deferred
Shares
KCL PSP
KCL PSP-TIP
KCL PSP-
M1 TIP
KCL RSP-
Deferred
Shares
KCL PSP
KCL PSP-TIP
Contingent awards/
Awards (KCL RSP-
Deferred Shares)
Balance at 1 January
Granted
Adjustments upon
released
Released
Cancelled
Balance at 31 December
-
5,318,164
3,885,000
1,585,000
5,585,967
1,280,000
-
-
423,500
4,234,171
2,895,000
1,635,000
(1,709)
(5,316,455)
-
-
(417,300)
(652,700)
(100,000)
-
-
(343,796)
-
-
-
4,300,000
6,522,171
423,500
-
(4,234,171)
(264,400)
(380,600)
-
-
-
(380,000)
3,885,000
5,585,967
5,965,967
-
-
-
Awards released but not vested:
Balance at 1 January
Released
Vested
Cancelled
Other adjustments
Balance at 31 December
2020
2019
KCL RSP
KCL RSP-
Deferred
Shares
KCL RSP
KCL RSP-
Deferred
Shares
26,241
-
3,912,564
5,316,455
1,630,118
-
2,586,237
4,234,171
(25,641)
(4,315,136)
(1,565,032)
(2,701,676)
(600)
(244,813)
(38,845)
(203,511)
-
-
-
-
(2,657)
4,669,070
26,241
3,912,564
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 2020, there were no awards released but not vested (2019: 26,241) under the KCL RSP and 4,669,070 (2019:
3,912,564) Shares under the KCL RSP-Deferred Shares that were released but not vested. At the end of the financial year, the number of
contingent award of Shares granted but not released was 4,300,000 (2019: 3,885,000) under the KCL PSP, 6,522,171 (2019: 5,585,967)
under the KCL PSP-TIP, and 423,500 (2019: nil) under the KCL PSP-M1 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 6,450,000 under the KCL PSP,
zero to a maximum of 9,783,257 under the KCL PSP-TIP and zero to a maximum of 635,250 under the KCL PSP-M1 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 17 February 2020 (2019: 15 February 2019 and 18 April 2019), the Company granted awards of 5,318,164 (2019: 3,908,536 and
325,635) Shares under the KCL RSP-Deferred Shares and the estimated fair value of the Shares granted were $6.48 (2019: $5.84 and
$6.51). On 31 March 2020 (2019: 30 April 2019), the Company granted contingent awards of 1,585,000 (2019: 1,635,000) Shares under
the KCL PSP and the estimated fair value of the Shares granted was $3.69 (2019: $5.60). On 28 February 2020, the Company granted
contingent awards of 1,280,000 Shares under the KCL PSP-TIP and the estimated fair value of the Shares granted was $1.92. On
17 February 2020, the Company granted contingent awards of 423,500 Shares under the KCL PSP-M1 TIP and the estimated fair value
of the Shares granted were $6.31 and $5.72 respectively.
Annual Report 2020
FINANCIAL REPORT
163
The significant inputs into the model are as follows:
Date of grant
Prevailing share price at date of grant
Expected volatility of the Company
Expected term
Risk free rate
Expected dividend yield
Date of grant
Prevailing share price at date of grant
Expected volatility of the Company
Expected term
Risk free rate
Expected dividend yield
2020
KCL RSP-
Deferred Shares
KCL PSP
KCL PSP-TIP
KCL PSP-M1 TIP
17.02.2020
31.03.2020
28.02.2020
17.02.2020
$6.72
23.89%
$5.29
26.02%
$6.34
24.07%
0.00 - 2.00 years
2.92 years
1.99 years
$6.72
23.89%
2.00 and
5.00 years
1.48% - 1.50%
*
0.87%
*
1.28%
1.50% and 1.53%
*
*
2019
KCL RSP-
Deferred Shares
KCL RSP-
Deferred Shares
KCL PSP
15.02.2019
18.04.2019
30.04.2019
$6.08
21.29%
$6.74
21.24%
$6.77
21.29%
0.00 - 2.00 years
0.00 - 1.86 years
2.84 years
1.94% - 1.95%
1.90% - 1.93%
*
*
1.92%
*
*
Expected dividend yield is based on management’s forecast.
The expected volatilities are based on the historical volatilities of the Company’s share 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.
4.
Reserves
Group
2020
$’000
2019
$’000
Company
2020
$’000
2019
$’000
Capital reserves
Share option and share plans reserve
Fair value reserve
Hedging reserve
Bonus issue by subsidiaries
Others
Revenue reserves
Foreign exchange translation account
190,711
47,470
210,412
(17,300)
(218,544)
(192,864)
40,000
116,094
175,731
40,000
85,851
190,711
22,196
(1,911)
-
187,032
19,230
-
-
(1,832)
(1,150)
126,099
209,164
205,112
9,703,452
10,470,627
7,975,921
6,567,206
(442,703)
(663,586)
-
-
9,436,480
9,933,140
8,185,085
6,772,318
Share option and share plans reserve amounting to $23,380,000 as at 31 December 2020 was reclassified to the “Others” category
within Capital Reserves.
Keppel Corporation Limited
164
NOTES TO THE FINANCIAL STATEMENTS
4.
Reserves (continued)
Movements in the Group’s and the Company’s reserves are set out in the Statements of Changes in Equity. Movements in hedging
reserve by risk categories are as follows:
Group
2020
As at 1 January
Transfer of hedging reserve from revenue reserve
Fair value changes arising during the year, net of tax
Realised and transferred to profit and loss account
- Revenue
- Materials and subcontract costs
- Other operating income – net
- Interest expenses
- Exchange difference
Share of associated companies and joint ventures’
fair value gains
As at 31 December
2019
As at 1 January
Fair value changes arising during the year, net of tax
Realised and transferred to profit and loss account
- Revenue
- Materials and subcontract costs
- Other operating income – net
- Interest expenses
Share of associated companies and joint ventures’
fair value gains
Less: Non-controlling interests
As at 31 December
Foreign
exchange risk
$’000
Interest
rate risk
$’000
Price risk
$’000
Total
$’000
(10,425)
(89,236)
(109)
-
(50,212)
(119,894)
(2,317)
5,179
15,319
-
(319)
848
-
26,424
(2,119)
-
(3,937)
(48,621)
(23,433)
(205,610)
(93,203)
(23,165)
69,958
-
82,097
-
-
-
-
35,687
(192,864)
(23,274)
(100,148)
(2,317)
86,957
16,167
26,424
(2,119)
(27,370)
(218,544)
(27,498)
7,474
(18,628)
(84,976)
(152,690)
(13,659)
(198,816)
(91,161)
18,700
(2,301)
(8,274)
-
-
-
-
34,479
1,213
261
(20,111)
-
-
73,146
-
-
-
-
18,700
70,845
(8,274)
34,479
(18,898)
261
(10,425)
(89,236)
(93,203)
(192,864)
The changes in fair value of the hedging instruments approximate the changes in fair value of the hedged items, which resulted in
minimal hedge ineffectiveness recognised in profit or loss.
Annual Report 2020
FINANCIAL REPORT
165
5.
Non-controlling interests
The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:
Konnectivity Pte. Ltd.
Keppel Telecommunications &
Transportation Ltd
Other subsidiaries with
immaterial NCI
Total
NCI percentage of
ownership interest and
voting interest
2020
$’000
20%
-
2019
$’000
20%
-
Carrying amount of NCI
2020
$’000
2019
$’000
306,897
310,858
-
-
Profit after tax
allocated to NCI
2020
$’000
9,182
-
2019
$’000
9,308
739
120,549
124,320
(11,416)
44,116
427,446
435,178
(2,234)
54,163
Summarised financial information before inter-group elimination
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Less: NCI
Revenue
Profit for the year
Total comprehensive income
Net cash flow from operations
Total comprehensive income allocated to NCI
Dividends paid to NCI
Konnectivity Pte. Ltd.
2020
$’000
2019
$’000
2,396,955
2,433,048
413,821
331,564
577,638
488,817
481,089
508,007
1,901,574
1,932,769
(367,088)
(378,477)
1,534,486
1,554,292
1,074,090
51,544
51,339
950,002
62,306
77,305
292,801
194,627
9,149
11,729
13,110
8,900
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/payable on changes in ownership interest in subsidiaries
Non-controlling interest acquired
Total amount recognised in equity reserves
2020
$’000
(660)
(2,334)
2019
$’000
(223,617)
173,390
(2,994)
(50,227)
Keppel Corporation Limited
166
NOTES TO THE FINANCIAL STATEMENTS
6.
Fixed assets
Group
2020
Cost
At 1 January
Additions
Disposals
Write-off
Subsidiaries acquired
Subsidiaries disposed
Reclassification
- ROU asset
- Stocks
- Other fixed assets categories
- Asset held for sale (Note 36)
Exchange differences
Freehold
Land &
Buildings
$’000
Buildings on
Leasehold
Land
$’000
Vessels &
Floating
Docks
$’000
Networks
and Related
Application
Systems
$’000
Plant,
Machinery,
Equipment
& Others (1)
$’000
Capital
Work-in-
Progress
$’000
Total
$’000
114,791
374
-
-
-
-
1,968,811
3,263
(1,341)
-
-
-
-
-
859
-
2,089
(6,281)
-
10,379
(58,764)
(2,073)
533,604
14,585
(1,876)
-
-
-
-
-
(11,384)
-
(7,990)
645,963
72,296
(2,360)
-
-
-
2,162,118
86,801
(22,867)
(3,029)
-
(621)
137,572
44,102
(627)
(11)
-
-
5,562,859
221,421
(29,071)
(3,040)
-
(621)
-
-
8,420
-
-
(142)
-
2,352
(623)
(15,249)
-
7,778
(10,626)
-
1,069
(6,423)
7,778
-
(59,387)
(22,154)
At 31 December
118,113
1,913,994
526,939
724,319
2,208,740
179,257
5,671,362
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
Impairment
Write-off
Subsidiaries disposed
Reclassification
- ROU asset
- Stocks
- Other fixed assets categories
- Asset held for sale (Note 36)
Exchange differences
At 31 December
Net Book Value
66,035
2,869
-
-
-
-
-
-
(4)
-
1,486
884,340
50,002
(1,214)
34,573
-
-
6,849
-
456
(4,701)
(2,068)
159,877
15,582
(1,876)
-
-
-
-
-
6,592
-
(3,875)
63,476
91,823
(226)
-
-
-
1,440,840
134,710
(20,901)
1,595
(2,070)
(429)
-
-
-
-
(3)
(42)
-
(326)
(526)
(7,881)
46,446
-
-
-
-
-
-
-
(6,718)
-
918
2,661,014
294,986
(24,217)
36,168
(2,070)
(429)
6,807
-
-
(5,227)
(11,423)
70,386
968,237
176,300
155,070
1,544,970
40,646
2,955,609
47,727
945,757
350,639
569,249
663,770
138,611
2,715,753
Included in freehold land & buildings are freehold land amounting to $6,427,000 (2019: $7,295,000).
Certain fixed assets with carrying amount of $119,016,000 (2019: $123,940,000) are mortgaged to banks for loan facilities (Note 22).
Interest capitalised during the financial year amounted to $nil (2019: $436,000).
Each rigbuilding, shipbuilding and repair facilities in the Energy & Environment segment has been identified as individual 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 11%
(2019: 7% to 12%) per annum, depending on the location of the facilities.
During the year, the Group recognised an impairment loss of $19,694,000 (2019: $nil) for property, plant and equipment in the Energy &
Environment segment, which was based on the difference between the recoverable amount and the net book value of the fixed assets.
During the year, the Group recognised an impairment loss of $6,919,000 (2019: $4,910,000) in the Urban Development segment, which
was based on the difference between the recoverable amount and the net book value of a fixed asset. The recoverable amount was
based on fair value determined using the income approach.
During the year, the Group recognised an impairment loss of $9,555,000 (2019: $3,514,000) on certain buildings and equipment in the
Connectivity segment, due to lower recoverable amounts subsequent to sustained losses generated from these assets, as a result of
weaker economic outlook which adversely affected fair values and expected returns of these assets. The recoverable amounts were
assessed to be fair value less costs of disposal.
Annual Report 2020
FINANCIAL REPORT
167
Freehold
Land &
Buildings
$’000
Buildings on
Leasehold
Land
$’000
Vessels &
Floating
Docks
$’000
Networks
and Related
Application
Systems
$’000
Plant,
Machinery,
Equipment
& Others (1)
$’000
Capital
Work-in-
Progress
$’000
Total
$’000
Group
2019
Cost
At 1 January
Additions
Disposals
Write-off
Subsidiaries acquired
Subsidiaries disposed
Reclassification
114,301
247
(165)
-
-
-
Investment properties
-
- Other fixed assets categories
Exchange differences
-
210
198
1,877,691
5,723
(2,549)
(120)
73,042
(102,844)
58,764
72,534
(13,430)
355,159
333
(393)
-
-
-
-
184,778
(6,273)
-
57,575
(11,069)
-
546,496
-
-
52,961
-
2,037,569
76,791
(24,388)
(3,883)
103,805
(31,349)
347,618
71,322
(16)
-
49,311
(200)
4,732,338
211,991
(38,580)
(4,003)
772,654
(134,393)
-
17,359
(13,786)
-
(327,842)
(2,621)
58,764
-
(35,912)
At 31 December
114,791
1,968,811
533,604
645,963
2,162,118
137,572
5,562,859
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
Impairment
Write-off
Subsidiaries disposed
Reclassification
- Other fixed assets categories
Exchange differences
At 31 December
Net Book Value
62,927
3,167
(160)
-
-
-
(135)
236
856,048
54,820
(1,627)
7,456
(120)
(30,597)
151,155
12,097
(393)
-
-
-
-
68,606
(5,130)
-
-
-
1,369,949
127,315
(22,287)
893
(3,875)
(22,823)
46,819
-
-
75
-
-
2,486,898
266,005
(29,597)
8,424
(3,995)
(53,420)
2,357
(3,997)
-
(2,982)
-
-
(2,222)
(6,110)
-
(448)
-
(13,301)
66,035
884,340
159,877
63,476
1,440,840
46,446
2,661,014
48,756
1,084,471
373,727
582,487
721,278
91,126
2,901,845
(1) Others comprise furniture, fittings and office equipment, cranes and small equipment and tools.
Company
2020
Cost
At 1 January
Additions
Disposals
Write-off
At 31 December
Accumulated Depreciation
At 1 January
Depreciation charge
Disposals
Write-off
At 31 December
Net Book Value
2019
Cost
At 1 January
Additions
Disposals
Reclassification to other fixed asset categories
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.
Keppel Corporation Limited
Freehold
Land &
Buildings
$’000
Plant,
Machinery,
Equipment
& Others (2)
$’000
Capital
Work-in-
Progress
$’000
1,233
-
-
-
1,233
1,233
-
-
-
1,233
-
1,233
-
-
-
1,233
1,233
-
-
1,233
-
17,538
552
(29)
(22)
18,039
10,265
2,047
(29)
(8)
12,275
5,764
8,791
2,617
(9)
6,139
17,538
8,254
2,020
(9)
10,265
7,273
-
-
-
-
-
-
-
-
-
-
-
6,139
-
-
(6,139)
-
-
-
-
-
-
Total
$’000
18,771
552
(29)
(22)
19,272
11,498
2,047
(29)
(8)
13,508
5,764
16,163
2,617
(9)
-
18,771
9,487
2,020
(9)
11,498
7,273
168
NOTES TO THE FINANCIAL STATEMENTS
7.
Investment properties
At 1 January
Development expenditure
Fair value gain (Note 26)
Disposal
Reclassification
- Assets held for sale (Note 36)
- Stocks (Note 14)
- Fixed assets (Note 6)
- Right-of-use assets (Note 8)
Exchange differences
At 31 December
Group
2020
$’000
2019
$’000
3,022,091
2,857,145
266,219
268,430
-
(650,062)
714,733
-
-
52,664
304,803
101,020
(834)
-
-
(58,764)
(158,357)
(22,922)
3,674,075
3,022,091
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) by independent firms of professional valuers as at 31 December 2020:
-
-
-
-
-
Cushman & Wakefield VHS Pte Ltd and Knight Frank Pte Ltd for properties in Singapore;
Cushman & Wakefield Limited and Beijing Colliers International Real Estate Valuation Co., Ltd for properties in China;
Colliers International Vietnam for properties in Vietnam;
KJPP Willson dan Rekan (an affiliate of Knight Frank) for properties in Indonesia; and
Cushman & Wakefield India Pvt Ltd for a property in India.
Based on valuations performed by the independent valuers, management has analysed the appropriateness of the fair value changes.
Interest capitalised within development expenditure during the financial year amounted to $24,526,000 (2019: $12,751,000).
The Group has mortgaged certain investment properties of carrying value amounting to $1,815,790,000 as at 31 December 2020
(2019: $828,355,000) to banks for loan facilities (Note 22).
In 2020, the Group reclassified $714,733,000 from properties held for sale to investment properties upon change of use of the asset
from property trading to holding for capital gain and/or rental yield.
In 2019, the Group reclassified from investment properties to fixed assets and right-of-use assets for the owner-occupied portion of the
property amounting to $58,764,000 and $158,357,000 respectively.
8.
Right-of-use assets (leases)
Leases
The Group as lessee
Leasehold land & buildings
The Group leases several lands, offices, retail stores and shipyards for use in its operations.
Plant, machinery, equipment & others
The Group leases equipment and vehicles for office and operation use, mainly in the Energy & Environment segment.
Base station sites
The Group leases base station sites to facilitate transmission of telecommunication services.
There are no externally imposed covenants on these lease arrangements.
Annual Report 2020
FINANCIAL REPORT
Right-of-use assets
Group
2020
Net Book Value
At 1 January
Additions
Depreciation
Impairment loss
Disposal
Write-off
Remeasurement
Reclassification
- Fixed assets (Note 6)
- Assets held for sale (Note 36)
Exchange differences
At 31 December
2019
Net Book Value
At 1 January
Adoption of SFRS(I) 16
Additions
Depreciation
Subsidiaries acquired
Subsidiaries disposed
Reclassification
-
Investment properties (Note 7)
Exchange differences
At 31 December
169
Leasehold
Land &
Buildings
$’000
Plant,
Machinery,
Equipment
& Others (1)
$’000
735,348
12,752
(56,373)
(2,879)
-
(570)
22,637
13,230
(154,281)
(15,881)
9,376
1,103
(3,620)
-
(27)
(1,342)
-
-
-
(442)
Base
Station
Sites
$’000
15,205
14,100
(5,378)
-
-
-
(252)
-
-
-
Total
$’000
759,929
27,955
(65,371)
(2,879)
(27)
(1,912)
22,385
13,230
(154,281)
(16,323)
553,983
5,048
23,675
582,706
-
583,181
43,522
(55,054)
24,101
(4,433)
158,357
(14,326)
735,348
-
8,945
3,669
(3,453)
240
-
-
(25)
-
-
760
(5,538)
19,983
-
-
-
-
592,126
47,951
(64,045)
44,324
(4,433)
158,357
(14,351)
9,376
15,205
759,929
(1) Others comprise furniture, fittings, office equipment and motor vehicles.
The right-of-use asset relating to the leasehold land presented under investment properties (Note 7) is stated at fair value and has a
carrying amount at balance sheet date of $7,916,000 (2019: $9,703,000).
Total cash outflow for all the leases was $85,747,000 (2019: $83,038,000), comprising repayment of principal of $53,413,000 (2019:
$47,306,000) and interest payment of $32,334,000 (2019: $35,732,000).
Certain right-of-use assets with carrying amount of $11,105,000 (2019: $11,689,000) are mortgaged to banks for loan facilities (Note 22).
Company
2020
Net Book Value
At 1 January
Depreciation
Additions
At 31 December
2019
Net Book Value
At 1 January
Adoption of SFRS(I) 16
Depreciation
At 31 December
(2) Others comprise office equipment.
Keppel Corporation Limited
Leasehold
Land &
Buildings
$’000
Plant,
Machinery,
Equipment
& Others (2)
$’000
12,620
(3,807)
2,218
11,031
-
15,902
(3,282)
12,620
213
(68)
28
173
-
279
(66)
213
Total
$’000
12,833
(3,875)
2,246
11,204
-
16,181
(3,348)
12,833
170
NOTES TO THE FINANCIAL STATEMENTS
8.
Right-of-use assets (leases) (continued)
Total cash outflow for all the leases was $4,201,000 (2019: $4,197,000), comprising repayment of principal of $3,916,000 (2019:
$3,822,000) and interest payment of $285,000 (2019: $375,000).
Lease expense not capitalised in lease liabilities
Short-term leases
Low-value leases
Variable lease payments which do not depend on an index or rate
Group
2020
$’000
22,582
892
317
2019
$’000
29,987
1,992
327
As at 31 December 2020, future cash outflows to which the Group is potentially exposed that are not reflected in the measurement of
lease liabilities include variable lease payments, $496,808,000 (2019: $623,194,000) for extension options and $55,678,000 (2019: $nil)
for committed leases which have yet to commenced.
The leases for retail stores contain variable lease payments that are based on a percentage of sales generated by the stores ranging
from 0.3% to 3.0% (2019: 0.3% to 3.0%), on top of fixed payments. The Group negotiates variable lease payments for a variety of
reasons, including minimising the fixed costs base for newly established stores. Such variable lease payments are recognised to profit
or loss when incurred and amounted to $317,000 for the financial year ended 31 December 2020 (2019: $327,000). The extension
options are for certain properties of the Group. The Group negotiates extension options to optimise operational flexibility in terms of
managing these assets in the Group’s operations.
The following table details the liquidity analysis for lease liabilities of the Group and the Company based on contractual undiscounted
cash flows.
Within one year
Within one to two years
Within two to five years
After five years
Total
Group
Company
2020
$’000
96,104
86,291
193,279
478,179
2019
$’000
79,224
116,712
209,894
452,642
2020
$’000
4,127
4,052
4,016
-
2019
$’000
4,140
4,047
8,021
-
853,853
858,472
12,195
16,208
The Group as lessor
The Group leases out commercial space to non-related parties under non-cancellable operating leases. At the end of the reporting
period, the Group’s undiscounted future minimum lease receivables under non-cancellable operating leases contracted for at the end
of the reporting period but not recognised as receivables are as follows:
Group
2020
$’000
64,501
43,041
38,305
36,316
21,869
59,601
2019
$’000
92,565
76,988
37,549
30,409
24,071
50,821
263,633
312,403
Within one year
In the second year
In the third year
In the fourth year
In the fifth year
After the fifth year
Total
Annual Report 2020
FINANCIAL REPORT
9.
Subsidiaries
Quoted shares, at cost
Market value: $5,800,000 (2019: $6,204,000)
Unquoted shares, at cost
Provision for impairment
Movements in the provision for impairment of subsidiaries are as follows:
At 1 January
Charge to profit and loss account
At 31 December
171
Company
2020
$’000
2019
$’000
493
8,442,614
8,443,107
(480,569)
493
8,442,604
8,443,097
(480,569)
7,962,538
7,962,528
Company
2020
$’000
480,569
-
2019
$’000
351,785
128,784
480,569
480,569
Impairment of $128,784,000 made in 2019 mainly relates to an investment holding subsidiary that holds oil & gas equity investments.
Impairment loss was made arising from the impairment exercise performed (Note 10). Due to the economic downturn in oil & gas
industry, recoverable amount of the equity investments was projected to be below the Company’s cost of investment. Management
had performed an assessment on the recoverable amount based on the cash flow estimates of the underlying assets.
Information relating to significant subsidiaries consolidated in the financial statements is given in Note 39.
10. Associated companies and joint ventures
Quoted shares, at cost
Market value: $2,945,022,000 (2019: $3,508,132,000)
Unquoted shares, at cost
Loan receivable from associated company
Provision for impairment
Share of reserves
Carrying amount of equity interest
Notes issued by associated companies (net of provision for impairment)
Advances to associated companies and joint ventures
Group
2020
$’000
2019
$’000
2,703,470
2,746,346
156,553
5,606,369
(152,509)
5,453,860
10,884
5,464,744
280,084
245,785
3,279,240
2,372,316
-
5,651,556
(197,392)
5,454,164
238,251
5,692,415
319,284
339,146
5,990,613
6,350,845
Notes issued by an associated company of $245,000,000 are unsecured and will mature in 2040. The remaining Notes are denominated in
Singapore Dollars, secured and will mature in 2024. Interest is charged at rates ranging from 0% to 17.5% (2019: 0% to 17.5%) per annum.
Advances to associated companies and joint ventures are unsecured and are not repayable within the next 12 months. Interest is
charged at rates ranging from 1.1% to 3.0% (2019: 2.5% to 7.0%) per annum on interest-bearing advances.
Movements in the provision for impairment of associated companies and joint ventures are as follows:
At 1 January
Impairment loss
Disposal
Reclassification to FVOCI
Exchange differences
At 31 December
Group
2020
$’000
197,392
9,486
(18,733)
(35,640)
4
2019
$’000
161,367
35,915
-
-
110
152,509
197,392
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.
Keppel Corporation Limited
172
NOTES TO THE FINANCIAL STATEMENTS
10. Associated companies and joint ventures (continued)
The carrying amount of the Group’s material associated companies, all of which are equity accounted for, are as follows:
Keppel REIT
Keppel Infrastructure Trust
KrisEnergy Limited
Keppel DC REIT
Sino-Singapore Tianjin Eco-City Investment and
Development Co., Limited
Floatel International Limited
Other associated companies and joint ventures
(a)
(b)
(c)
(d)
(e)
(f)
2020
$’000
2019
$’000
1,898,249
1,960,518
-
35,084
420,124
636,366
95,668
2,905,122
5,990,613
301,669
74,284
449,964
570,384
311,000
2,683,026
6,350,845
The summarised financial information of the material associated companies, not adjusted for the Group’s proportionate share, based
on its SFRS(I) financial statements and a reconciliation with the carrying amount of the investment in the consolidated financial
statements are as follows:
(a) Keppel REIT
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 equity interest
Revenue
Profit after tax
Other comprehensive income/(loss)
Total comprehensive income
Fair value of ownership interest (if listed) **
Dividends received
** Based on the quoted market price at 31 December (Level 1 in the fair value hierarchy)
2020
$’000
175,433
7,588,935
7,764,368
223,179
2,321,056
2,544,235
5,220,133
(721,783)
4,498,350
49%
2,206,891
(308,642)
1,898,249
170,223
279
24,911
25,190
2019
$’000
142,317
7,307,046
7,449,363
159,690
2,125,893
2,285,583
5,163,780
(578,931)
4,584,849
49%
2,245,659
(285,141)
1,960,518
164,053
141,670
(82,772)
58,898
1,872,365
2,044,903
69,808
90,144
Annual Report 2020
FINANCIAL REPORT
173
(b) Keppel Infrastructure Trust (“KIT”)
The Group has 18.2% direct ownership interest in KIT as at 31 December 2020. KIT’s business is conducted through its Trustee-
Manager, Keppel Infrastructure Funds Management Pte Ltd (“KIFM”), a wholly-owned subsidiary of Keppel Capital Holdings Pte
Ltd (“KC”) which is in turn a wholly-owned subsidiary of Keppel Corporation Limited.
During the year, the Group assessed that it no longer has significant influence over KIT due to a reduction in board
representation, as well as KC’s undertaking to the Trustee-Manager to grant the other unitholders of KIT the right to endorse
or re-endorse the appointment of the directors of KIFM at the annual general meetings of KIT. Accordingly, KIT has been
reclassified from an associated company to an investment carried at fair value through other comprehensive income (Note 11)
on 1 March 2020 and a mark-to-market gain of $130,547,000 was recorded upon the reclassification.
Summarised financial information of KIT, not adjusted for the Group’s proportionate share, based on its SFRS(I) financial
statements and a reconciliation with the carrying amount of the investment in the consolidated financial statements for the
comparative period were 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 equity interest
Revenue
Profit after tax
Other comprehensive loss
Total comprehensive loss
Fair value of ownership interest (if listed)**
Dividends received
**
Based on the quoted market price at 31 December (Level 1 in the fair value hierarchy)
(c) KrisEnergy Limited *
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net liabilities
Proportion of the Group’s ownership
Group’s share of net assets
Carrying amount of equity interest
Notes issued by associated company
Revenue
Loss after tax
Other comprehensive income/(loss)
Total comprehensive loss
Fair value of ownership interest (if listed) **
Dividends received
2019
$’000
1,029,248
3,974,027
5,003,275
1,706,097
1,583,009
3,289,106
1,714,169
(389,763)
1,324,406
18%
241,042
60,627
301,669
1,566,715
10,194
(92,591)
(82,397)
490,886
30,134
2019
$’000
174,986
699,330
874,316
878,467
82,323
960,790
(86,474)
40%
-
-
74,284
74,284
148,591
(220,060)
176
(219,884)
n.a.
-
2020
$’000
118,213
535,774
653,987
871,927
151,626
1,023,553
(369,566)
40%
-
-
35,084
35,084
102,855
(294,931)
(36)
(294,967)
n.a.
-
*
**
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.
KrisEnergy Limited had suspended trading of its securities on the Singapore Exchange Securities Ltd with effect from 14 August 2019 (the last closing
price before trading suspension was S$0.03 per share).
Keppel Corporation Limited
174
NOTES TO THE FINANCIAL STATEMENTS
10. Associated companies and joint ventures (continued)
Investments in KrisEnergy Limited and related exposures
Equity interest
Zero-coupon notes
Carrying amount
Other related exposures:
Warrants
Loan receivable
Contract assets ¹
Guarantee ²
2020
$’000
-
35,084
35,084
-
77,193
29,225
247,340
2019
$’000
-
74,284
74,284
-
-
20,541
262,825
Note 11
Note 12
Note 15
Note 32
¹
²
In relation to a construction contract for a production barge for KrisEnergy.
In relation to a bilateral agreement between the Group and a bank, on the bank loan granted to KrisEnergy.
On 14 August 2019, KrisEnergy has made an application to the High Court of the Republic of Singapore to commence a court-
supervised process to reorganise its liabilities and seek a moratorium against enforcement actions and legal proceedings by
creditors against KrisEnergy pursuant to section 211B of the Companies Act (Cap. 50). It has also requested a suspension of
trading of its securities on Singapore Exchange Securities Trading Ltd (“SGX”). At the date of these financial statements, the
moratorium has been further extended to 16 April 2021.
In April 2020, the Group entered into a credit facility agreement with two wholly-owned indirect subsidiaries of KrisEnergy
(the “Borrowers”), with the Group agreeing to grant a project financing loan in two or more tranches for an aggregate principal
amount not exceeding US$87 million (the “CBA Loan Facility”) to the Borrowers. As at 31 December 2020, the total aggregate
amount of funds drawn down by the Borrowers through the CBA Loan Facility was US$57,700,000.
KrisEnergy published an initial restructuring proposal on 16 June 2020, followed by the publication of the final restructuring
proposal on 21 August 2020. The final restructuring proposal is to be implemented via the four inter-conditional processes that
require the consent of the requisite majority of each respective group of creditors and shareholders:
•
•
•
•
reaching an agreement for an extension of secured Revolving Credit Facility (“RCF”) with the lender;
conversion of debts and claims into equity for unsecured creditors under the Scheme of Arrangement (“Scheme”);
partial conversion of claims into equity for Zero Coupon Noteholders under the Consent Solicitation Exercise (“CSE”); and
requisite approval from the shareholders for the issuance of new shares in the restructuring proposal in Extraordinary
General Meeting (“EGM”).
On 30 December 2020, the RCF maturity date was extended for an initial period of 6 months to 30 June 2021 with a further
extension to 30 June 2024 upon successful completion of restructuring. A Scheme was released by KrisEnergy on 20 November
2020 setting out the details of the proposed restructuring terms. On 14 January 2021, the unsecured creditors of KrisEnergy
approved the Scheme through a Singapore court supervised process. The Scheme was effective on 15 February 2021, following
the lodgment of a copy of the order of the Court approving the Scheme with the Registrar of Companies. The CSE process
for KrisEnergy’s zero coupon note holders that was launched on 20 January 2021 has been approved on 11 February 2021.
As at the date of these financial statements, the final component of the restructuring which is the EGM to seek KrisEnergy
shareholders’ approval for the issuance of new shares pursuant to the Scheme and the CSE has not yet taken place.
Management performed an impairment assessment to estimate the recoverable amount of the Group’s exposures in KrisEnergy
as at 31 December 2020. Management reviewed the cash flow projections prepared by its financial advisor who estimated
the amount of cash available from producing assets and forecasted production from assets under development, taking into
consideration the relative priority of each group of stakeholders to these cash flows based on their respective rights. The
cash flow estimates were based on forecasted oil prices, determined by taking reference from external information sources,
ranging from US$50 to US$62 per barrel for 2021 to 2029 (2019: US$63 to U$70 per barrel for 2020 to 2028). The impairment
assessment has taken into consideration the terms of restructuring.
Based on the impairment assessment, an impairment provision of $39,200,000 was recognised for the year ended 31 December
2020, and the carrying amount of the Group’s investment in the zero-coupon notes was reduced to $35,084,000. No impairment
allowance was made against the loan receivable, contract assets and no liabilities were recorded for the Group’s guarantee
given to the bank for the loan granted to KrisEnergy as the Group has priority over the cash flows on the assets of KrisEnergy. In
the financial year ended 31 December 2019, management had performed a similar assessment and recognised an impairment
charge of $37,000,000 on the equity investment.
The estimates and assumptions used are subject to risk and uncertainty. If the oil prices were to decrease by 2% across the
forecasted period of 2021 to 2029, the estimated cash available from producing assets and forecasted production from assets
under development would decrease, and this would result in an additional impairment of $34,400,000.
Annual Report 2020
FINANCIAL REPORT
175
2020
$’000
304,561
3,045,267
3,349,828
233,618
1,133,968
1,367,586
1,982,242
2019
$’000
279,952
2,648,042
2,927,994
108,157
917,289
1,025,446
1,902,548
(37,590)
(34,530)
1,944,652
1,868,018
21%
407,405
12,719
420,124
265,571
171,728
7,491
179,219
961,363
22,367
23%
434,688
15,276
449,964
194,826
111,108
(33,789)
77,319
790,198
31,898
2020
$’000
2019
$’000
1,173,770
1,073,996
490,242
478,339
1,664,012
1,552,335
308,518
26,475
334,993
324,787
29,261
354,048
1,329,019
1,198,287
-
-
1,329,019
1,198,287
50%
664,510
(28,144)
636,366
575,559
147,871
-
50%
599,144
(28,760)
570,384
475,001
155,705
-
147,871
155,705
38,471
27,351
(d) Keppel DC REIT
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 equity interest
Revenue
Profit after tax
Other comprehensive income/(loss)
Total comprehensive income
Fair value of ownership interest (if listed) **
Dividends received
**
Based on the quoted market price at 31 December (Level 1 in the fair value hierarchy).
(e) Sino-Singapore Tianjin Eco-City Investment and Development Co., Limited
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 equity interest
Revenue
Profit after tax
Other comprehensive income
Total comprehensive income
Dividends received
Keppel Corporation Limited
176
NOTES TO THE FINANCIAL STATEMENTS
10. Associated companies and joint ventures (continued)
(f)
Floatel International Limited
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Proportion of the Group’s ownership
Group’s share of net assets
Other adjustments
Carrying amount of equity interest
Loan receivable
Revenue
Loss after tax
Other comprehensive loss
Total comprehensive loss
Dividends received
Investments in Floatel International Limited
Equity interest
Loan receivable
Carrying amount
Other related exposures:
Preference shares
Loan receivable
2020
$’000
109,865
1,017,819
1,127,684
883,371
366,279
1,249,650
(121,966)
50%
(60,885)
-
(60,885)
156,553
95,668
112,384
(730,863)
(19,419)
(750,282)
2019
$’000
137,367
1,655,424
1,792,791
79,669
1,105,306
1,184,975
607,816
50%
303,422
7,578
311,000
-
311,000
250,286
(100,572)
(1,039)
(101,611)
-
-
2020
$’000
2019
$’000
-
311,000
95,668
95,668
-
311,000
Note 11
Note 12
-
-
10,449
155,425
In February 2020, Floatel reported that its financial situation is unsustainable as liquidity is under pressure. There is a material
uncertainty as to whether Floatel will be able to service its secured financial liabilities and net working capital requirements for
the coming 12 months, which casts significant doubt on Floatel’s ability to continue as a going concern. The long term viability
of Floatel’s business depends on it finding a solution to its financial situation.
On 5 December 2020, at the expiry of the forbearance under a Forbearance Agreement entered into between Floatel and certain
bondholders, Floatel entered into a Lock-Up Agreement with FELS Offshore Pte Ltd (the member of the Group with the equity
interest in Floatel), an ad hoc group (the “AHG”) of holders of Floatel’s 9% senior secured 1L Bondholders, and other consenting
1L Bondholders holding in aggregate over 56% by value of the 1L Bonds and 2L Bondholders holding in aggregate close to 13%
of the 2L Bonds (the “Lock-Up Agreement”). The Lock-Up Agreement commits Floatel, the Group, the AHG and any acceding
1L Bondholders and 2L Bondholders to use reasonable endeavours to implement a comprehensive financial and corporate
restructuring of the Floatel group (the “Restructuring”). As part of the Lock-Up Agreement, FELS Offshore Pte Ltd has committed
to use reasonable endeavours to procure the provision and funding of a new US$100,000,000 revolving credit facility (“RCF”) for
Floatel and another member of the Group may provide credit support for the RCF in the form of a risk participation.
On 16 December 2020, Floatel announced an increased level of support of the Lock-Up Agreement by the 1L (more than ²/3) and
2L Bondholders. In addition, the terms of new warrants to be issued were also agreed in a revised Lock-Up Agreement on 14
December 2020.
On 8 January 2021, bank lenders of Floatel agreed to accept a cash settlement of US$46,000,000 less Lenders’ advisory fees for
full settlement of amounts owing to them and release of the charge on one of the five vessels owned by Floatel.
On 12 February 2021, the 2L Bondholders approved the Restructuring.
Annual Report 2020
FINANCIAL REPORT
177
As the loan from the relevant member of the Group to Floatel is considered as part of the Group’s net investment in Floatel (i.e.
settlement is neither planned nor foreseen), management has continued to equity account for its share of loss in Floatel’s results
against the carrying value of the loan to Floatel, after reducing the carrying value of the equity investment in Floatel to zero as
of 30 June 2020. For the financial year ended 31 December 2020, the Group has recognised a total share of operating loss from
Floatel of $82,779,000 and share of impairment loss of vessels of $228,107,000. The latter was estimated based on industry
parameters provided by an independent industry advisor and adopted in the VIU calculation of the vessels. In addition, the
carrying value of preference shares, based on the fair value assessment conducted by an independent financial advisor using
the dividend discount model had similarly been written down to nil as at 31 December 2020.
The Group has considered that the recovery of its net investment in Floatel is dependent on Floatel successfully carrying out
the Restructuring and continuing operation of its fleet of vessels. Management has retained an independent financial advisor
to support the review of Floatel’s business plan and cash flow projections. In the event that the Restructuring of Floatel fails to
go through, Floatel would not have adequate cash from its operations and cash on hand to continue as a going concern beyond
year 2021 and in this scenario the Group’s investment in Floatel is not expected to be recoverable.
As at the date of these financial statements, the Restructuring is progressing positively and the Group is in advanced stages of
discussion with financial institutions to provide the US$100,000,000 RCF.
Aggregate information about the Group’s investments in other associated companies and joint ventures are as follows:
Share of results
Share of other comprehensive income/(loss)
Share of total comprehensive income
2020
$’000
42,459
17,903
60,362
2019
$’000
143,006
(12,439)
130,567
Information relating to significant associated companies and joint ventures, 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 39.
11.
Investments
Investments at fair value through other comprehensive income (“OCI”):
- Quoted equity shares
- Unquoted equity shares
- Unquoted property funds
Total investments at fair value through OCI
Investments at fair value through profit or loss:
- Quoted equity shares
- Unquoted equity shares
- Unquoted - others
Total investments at fair value through profit or loss
Group
2020
$’000
504,612
212,609
105,070
822,291
66,014
319,300
21,887
407,201
2019
$’000
12,336
107,396
95,227
214,959
82,399
330,143
21,568
434,110
Company
2020
$’000
-
22,196
-
22,196
-
-
-
-
2019
$’000
-
19,230
-
19,230
-
-
-
-
Total investments
1,229,492
649,069
22,196
19,230
The breakdown of the investments at fair value through other comprehensive income is as follows:
Quoted equity units in a public infrastructure trust managed by
a related company
Unquoted property funds managed by a related company
Unquoted equity shares in real estate industry
Quoted and unquoted equity shares in oil and gas industry
Others
Group
2020
$’000
495,432
105,070
76,693
32,139
112,957
2019
$’000
-
95,227
39,381
39,477
40,874
Company
2020
$’000
-
-
22,196
-
-
2019
$’000
-
-
19,230
-
-
822,291
214,959
22,196
19,230
Quoted equity units in a public infrastructure trust refers to the Group’s investment in Keppel Infrastructure Trust which was
reclassified from associated company (Note 10(b)) to an investment carried at fair value through other comprehensive income arising
from loss of significant influence during the current financial year.
Unquoted investments included a bond amounting to $21,887,000 (2019: $21,568,000) bearing interest at 4% (2019: 4%) per annum
which is maturing in 2027.
Unquoted equity shares included preference shares issued by Floatel International Limited, an associated company (Note 10(f)) which
was written down to $nil (2019: $10,449,000).
Keppel Corporation Limited
178
NOTES TO THE FINANCIAL STATEMENTS
12. Long term assets
Staff loans
Derivative assets
Contract assets
Call option
Service concession receivable
Trade receivables
Long term receivables and others
Less: Amounts due within one year
and included in debtors (Note 17)
Group
Company
2020
$’000
100
48,723
73,458
156,643
362,366
875,810
254,753
1,771,853
2019
$’000
277
14,791
99,523
157,518
351,041
638,973
327,925
1,590,048
2020
$’000
2
39,288
-
-
-
-
540
39,830
2019
$’000
50
11,918
-
-
-
-
2,279
14,247
(15,454)
(10,140)
(2)
(34)
1,756,399
1,579,908
39,828
14,213
Included in staff loans are interest-free advances to directors of related corporations amounting to $2,000 (2019: $30,000) under an
approved car loan scheme.
Contract assets primarily relate to the Group’s right to consideration for development units delivered to customers under the pay-and-
stay scheme, as well as for handset and equipment delivered and accepted by customers but not yet billed at the reporting date. As at
1 January 2019, the Group did not have a non-current contract assets balance.
The call option granted to the Group is in connection with the disposal of its 87.51% equity interest in Ocean Properties LLP (formerly
known as Ocean Properties Private Limited) to Keppel REIT in 2011. The Group has an option to acquire the same shares exercisable
at the price of $1 upon the expiry of 99 years from 14 December 2011 under the share purchase agreement. The call option may be
exercised earlier upon the occurrence of certain specified events as stipulated in the call option deed. As at 31 December 2020, 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 841-year leasehold and 90-year leasehold (2019: based on the remaining 842-year
leasehold and 91-year leasehold). The details of the valuation techniques and inputs used for the call option are disclosed in Note 34.
The service concession receivable relates to a service concession arrangement with a governing agency of the Government of
Singapore (the grantor) to design, build, own and operate a desalination plant in Singapore, which has a capacity to produce 137,000
cubic metres of fresh drinking water per day. The plant has officially commenced operations on 29 June 2020. The Group has a
contractual right under the concession arrangement to receive fixed and determinable amounts of payment during the concession
period of 25 years irrespective of the output produced. At the end of the concession period, the grantor may require the plant to be
handed over in a specified condition or to be demolished at reasonable costs borne by the grantor. In arriving at the carrying value of
the service concession arrangement as at the end of the reporting year, effective interest rates of 4.08% (2019: 4.22%) per annum were
used to discount the future expected cash flows.
Trade receivables are related to financing arrangements for delivered rigs where the Group has retained title. $369,508,000 (2019:
$125,444,000) is due from one customer and bears floating interest at LIBOR plus a margin, and repayable in 2024 and 2025. The
remainder is due from another customer, bears fixed interest and repayable in February 2024, December 2029 and on demand. The
customer has options for early repayment. During the year, the Group recognised an expected credit loss allowance of $169,611,000
(2019: $nil) on the trade receivables as detailed in Note 2.28(b)(ii). As at 1 January 2019, the Group did not have a long term trade
receivables balance.
Long term receivables are largely repayable after three years (2019: five years) and bears effective interest ranging from 4.00% to
15.00% (2019: 2.00% to 12.00%) per annum.
Included in other receivables is an unsecured, interest-free advance to an investee which matures on 31 December 2024. For the
financial year ended 31 December 2020, the Group recognised $21,979,000 (2019: $nil) allowance for doubtful debt after taking into
account the financial condition of the investee.
Included in other receivables is a secured loan receivable from KrisEnergy Limited, an associated company, repayable on 30 April 2024
and bears a fixed interest rate of 15.00% per annum, as disclosed in Note 10(c).
Included in other receivables are claims receivable which represents claims from customer for long term contracts. For the financial
year ended 31 December 2020, the Group has written-back $3,893,000 (31 December 2019: recognised $15,021,000) of loss allowance
on claims receivable arising from the unwinding of discounting effects due to changes to the expected timing of receipt.
In 2019, included in the other receivables is an unsecured, interest-bearing US Dollar loan amounting to $155,425,000 which is
repayable in 2025 by Floatel International Limited, an associated company. During the financial year ended 31 December 2020, this
loan was reclassified to investment in associated company as it is considered as part of the Group’s net investment in Floatel, as
disclosed in Note 10(f).
Annual Report 2020
FINANCIAL REPORT
179
13.
Intangibles
Group
2020
At 1 January
Additions
Impairment loss
Amortisation
Exchange differences
Goodwill
$’000
Development
Expenditure
$’000
Brand
$’000
Customer
Spectrum Contracts and
Rights Relationships
$’000
$’000
Others
$’000
Total
$’000
1,047,558
-
-
-
-
16,811
1,558
-
(1,456)
(164)
269,853
141,935
189,025
17,799
1,682,981
-
-
301
-
(9,252)
(17,683)
-
-
-
(23,015)
(24,670)
312
-
-
(88)
-
1,859
(23,015)
(53,149)
148
At 31 December
1,047,558
16,749
260,601
124,553
141,652
17,711
1,608,824
Cost
1,047,558
38,258
277,563
130,031
227,598
17,873
1,738,881
Accumulated amortisation
-
(21,509)
(16,962)
(5,478)
(85,946)
(162)
(130,057)
1,047,558
16,749
260,601
124,553
141,652
17,711
1,608,824
2019
At 1 January
Additions
Acquisition of a subsidiary
Amortisation
Exchange differences
59,270
18,017
-
988,288
-
-
662
-
(1,693)
(175)
-
-
-
-
34,963
16,757
129,007
-
-
662
277,563
156,670
175,167
1,116
1,598,804
(7,710)
(14,735)
(21,032)
-
-
(73)
(74)
-
(45,244)
(248)
At 31 December
1,047,558
16,811
269,853
141,935
189,025
17,799
1,682,981
Cost
Accumulated amortisation
1,047,558
-
36,885
(20,074)
277,563
156,670
228,334
17,873
1,764,883
(7,710)
(14,735)
(39,309)
(74)
(81,902)
1,047,558
16,811
269,853
141,935
189,025
17,799
1,682,981
Impairment testing of goodwill
For the purpose of impairment testing, goodwill is allocated to cash-generating units (“CGU”s).
Out of the total goodwill of $1,047,558,000, goodwill allocated from the acquisition of M1 Limited amounted to $988,288,000.
During the year, the Group recognised an impairment loss of $23,015,000 (2019: $nil) on customer relationship in the Energy &
Environment segment. In view that the subsidiary has been making losses since acquisition and the adverse global economic
environment which was significantly affected by COVID-19, the recoverability of the intangible asset - customer relationship was
uncertain. Accordingly, the intangible asset - customer relationship was fully impaired.
In 2019, the Group’s 80% owned subsidiary, Konnectivity Pte Ltd, acquired approximately 81% equity interest in M1 Limited. The
Group’s wholly-owned subsidiary, Keppel Telecommunications and Transportation Ltd holds the remaining 19% equity interest in M1
Limited.
The recoverable amount of M1 as a CGU was determined based on its value-in-use using a discounted cash flow model based on cash
flow projections by management covering a 5-year period, and cash flows beyond the 5-year period were extrapolated using a terminal
growth rate of 1.46% (2019: 1.47%), premised on the estimated long term growth rate for the country where the CGU operates. Cash
flows were discounted using a discount rate of 7% (2019: 8%) per annum.
The recoverable amount was estimated to be higher than the carrying value of the M1 CGU. Accordingly, no impairment of goodwill
was recognised in 2020 and 2019. The calculation of value-in-use for the CGU is sensitive to the terminal growth rate and the discount
rate applied. Any possible reasonable change in the terminal growth rate and discount rate used in the calculation of the value-in-use
amount would not cause any impairment to goodwill.
Keppel Corporation Limited
180
NOTES TO THE FINANCIAL STATEMENTS
14. Stocks
Consumable materials and supplies
Finished products for sale
Work-in-progress (net of provision)
Properties held for sale
Group
2020
$’000
190,370
99,087
1,072,890
3,597,080
(a)
2019
$’000
141,876
114,854
653,814
4,632,211
4,959,427
5,542,755
For work-in-progress balances, the Group determines the estimated net realisable value based on arrangements to market the
work-in-progress and discounted cash flow models. The work-in-progress balance includes contract assets which were reclassified
to stocks during the year, as disclosed in Note 15. The provision for consumable materials, finished products for sale and supplies
work-in-progress to write down its carrying value to its net realisable value at the end of the financial year was $146,202,000 (2019:
$100,530,000). See Note 2.28(b)(ix) for further disclosures on key estimates made in estimating NRV of the Group’s work-in-progress.
(a)
Properties held for sale
Properties under development
Land cost
Development cost incurred to date
Related overhead expenditure
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
2020
$’000
2019
$’000
1,988,513
2,770,384
622,565
196,676
2,807,754
809,313
3,617,067
585,200
252,501
3,608,085
1,049,343
4,657,428
(19,987)
(25,217)
3,597,080
4,632,211
Group
2020
$’000
25,217
2,252
(127)
(1,253)
(6,102)
2019
$’000
28,156
-
34
(2,973)
-
19,987
25,217
The provision for properties held for sale is arrived at after taking into account estimated selling prices and estimated total construction
costs. Estimated selling prices are based on recent selling prices for the development project or comparable projects and the prevailing
market conditions. 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.
During the year, properties amounting to $274,452,000 (2019: $nil) in value and included in the above balances were mortgaged to the
banks as securities for borrowings as referred to in Note 22.
During the year, the Group reclassified $714,733,000 from properties held for sale to investment properties due to change of use of the
assets from property trading to holding for capital gain and/or rental yield. The Group also reclassified $11,999,000 from property held
for sale to fixed asset and $4,221,000 from fixed asset to property held for sale due to change in use of the assets.
Interest capitalised during the financial year amounted to $19,980,000 (2019: $24,258,000) at rates of 0.80% to 2.50% (2019: 2.18% to
3.97%) per annum for Singapore properties and 3.00% to 7.00% (2019: 2.74% to 7.00%) per annum for overseas properties.
Annual Report 2020
FINANCIAL REPORT
15. Contract assets/liabilities
Contract assets
Contract liabilities
181
Group
31 December
2020
$’000
2019
$’000
1 January
2019
$’000
2,657,231
3,497,476
3,212,712
2,072,303
1,824,965
1,918,547
During the year, contract assets amounting to $447,337,000 (net of the expected credit loss allowance of $19,301,000), as described in
Note 2.28(b)(ix), were reclassified to stocks – work-in-progress.
Contract assets relating to certain rigbuilding contracts where the scheduled dates of the rigs have been deferred and have higher
counter-party risks amounted to $1,653,547,000 (2019: $1,431,744,000). See Note 2.28(b)(ii) – Other contracts for further disclosures
on key estimates used in estimating the expected credit loss on these contract assets.
Contract liabilities included proceeds received from sale of properties of $971,638,000 (2019: $847,317,000). Remaining contract
liabilities of $1,100,665,000 (2019: $977,648,000) are recorded when receipts from customers exceed the value of work transferred
where the customer is invoiced on a milestone payment schedule.
Revenue recognised during the financial year ended 31 December 2020 in relation to contract liability balance at 1 January 2020 was
$816,736,000 (2019: $583,878,000).
The aggregate amount of the transaction price allocated to the remaining performance obligation is $5,490,832,000 (2019: $5,568,204,000)
and the Group expects to recognise this revenue over the next 1 to 4 years (2019: 1 to 5 years).
Movements in the allowance for expected credit loss for contract assets are as follows:
2020
$’000
21,000
430,842
(19,301)
432,541
At 1 January
Charge to profit and loss account (Note 26)
Reclassified to stocks - work-in-progress (Note 14)
At 31 December
16. Amounts due from/to
Subsidiaries
Amounts due from
- trade
- advances
Allowance for expected credit loss
Amounts due to
- trade
- advances
Group
31 December
2019
$’000
1 January
2019
$’000
21,000
21,000
-
-
-
-
21,000
21,000
Company
2020
$’000
2019
$’000
112,547
9,698,763
9,811,310
88,028
7,199,296
7,287,324
(6,600)
(6,600)
9,804,710
7,280,724
4,138
197,821
6,045
150,822
201,959
156,867
Advances to and from subsidiaries are unsecured and are repayable on demand. Interest is charged at rates up to 4.00% (2019: up to
4.00%) per annum on interest-bearing advances.
Keppel Corporation Limited
182
NOTES TO THE FINANCIAL STATEMENTS
16. Amounts due from/to (continued)
Associated Companies and Joint Ventures
Amounts due from
- trade
- advances
Allowance for expected credit loss
Amounts due to
- trade
- advances
Movements in the allowance for expected credit loss are as follows:
At 1 January
Charge to profit and loss account
At 31 December
Group
2020
$’000
2019
$’000
Company
2020
$’000
2019
$’000
160,987
349,170
510,157
140,502
439,556
580,058
(16,888)
(16,480)
493,269
563,578
49,213
286,695
78,187
412,099
335,908
490,286
16,480
408
15,998
482
16,888
16,480
152
-
152
-
152
-
-
-
-
-
-
705
-
705
-
705
-
-
-
-
-
-
Advances to and from associated companies and joint ventures are unsecured and are repayable on demand. Interest is charged at
rates ranging from 0.09% to 15.00% (2019: 0.75% to 11.50%) per annum on interest-bearing advances.
17. Debtors
Trade debtors
Allowance for expected credit loss
Long term receivables due within one year (Note 12)
Sundry debtors
Prepayments
Tax recoverable
Value Added Tax receivable
Interest receivable
Deposits paid
Recoverable accounts
Accrued receivables
Purchase consideration receivable from disposal
of a subsidiary
Advances to subcontractors
Advances to non-controlling shareholders
of subsidiaries
Allowance for expected credit loss
Group
2020
$’000
2019
$’000
Company
2020
$’000
1,806,269
1,947,537
(241,871)
(261,680)
1,564,398
1,685,857
15,454
271,238
159,834
5,029
174,904
17,043
23,995
39,142
10,140
238,128
210,550
6,057
107,177
14,002
30,600
49,493
225,951
219,599
-
48,037
115,801
50,406
3,524
984,151
(17,474)
966,677
26,528
1,078,481
(15,854)
1,062,627
7
-
7
2
1,042
85
-
370
21
374
8,166
2,206
-
-
-
12,266
-
12,266
Total
2,531,075
2,748,484
12,273
2019
$’000
1
-
1
34
464
87
-
-
21
380
7,702
155
-
-
-
8,843
-
8,843
8,844
Annual Report 2020
FINANCIAL REPORT
183
Movements in the allowance for expected credit loss are as follows:
At 1 January
Charge to profit and loss account
Amount written off
Subsidiary acquired
Subsidiaries disposed
Exchange differences
Reclassified to assets held for sale
Total
Group
2020
$’000
277,534
29,989
(43,707)
-
(257)
(4,034)
(180)
2019
$’000
264,017
16,015
(7,443)
9,225
(4,296)
16
-
259,345
277,534
Company
2020
$’000
2019
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
As at 1 January 2019, the Group’s net trade debtors amounted to $1,584,149,000.
18. Short term investments
Total investments at fair value through other comprehensive income:
Quoted equity shares
Investments at fair value through profit or loss:
Quoted equity shares
Unquoted debt instrument
Total investments at fair value through profit or loss
Total short term investments
Group
2020
$’000
2019
$’000
35,802
27,821
78,492
20,340
98,832
74,300
19,460
93,760
134,634
121,581
Investments at fair value through other comprehensive income are mainly in the oil and gas industry listed in Singapore.
19. 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,
claims and liabilities
Amounts held under project accounts,
withdrawals from which are restricted to payments
for expenditures incurred on projects
Group
Company
2020
$’000
1,211,166
933,606
2019
$’000
843,519
760,421
71,242
6,270
263,701
173,304
2020
$’000
574
-
-
-
2019
$’000
1,047
-
-
-
2,479,715
1,783,514
574
1,047
Fixed deposits with banks of the Group mature on varying periods, substantially between 1 day to 6 months (2019: 1 day to 6 months).
This comprises Singapore Dollars fixed deposits of $148,389,000 (2019: $75,752,000) at interest rates substantially ranging from
0.05% to 0.19% (2019: 0.75% to 1.98%) per annum, and foreign currency fixed deposits of $785,217,000 (2019: $684,669,000) at
interest rates substantially ranging from 0.01% to 6.80% (2019: 0.01% to 7.20%) per annum.
The bank balances at 31 December 2020 include an amount of $107,000 (2019: $384,000) pledged to a bank in relation to certain
banking arrangement.
Cash and cash equivalents of $763,958,000 (2019: $470,497,000) held in the People’s Republic of China are subject to local exchange
control regulations. These regulations place restriction on the amount of currency being exported other than through dividends and
capital repatriation upon liquidations.
Keppel Corporation Limited
184
NOTES TO THE FINANCIAL STATEMENTS
20. Creditors
Trade creditors
Customers’ advances and deposits
Sundry creditors
Accrued expenses
Advances from non-controlling shareholders
Retention monies
Interest payables
Other non-current liabilities:
Accrued expenses
Derivative liabilities
Group
Company
2020
$’000
746,994
130,551
975,910
2,356,154
149,593
199,245
45,230
2019
$’000
854,892
117,673
650,300
2,595,432
149,200
179,982
57,065
2020
$’000
1,433
-
3,562
31,620
-
-
27,193
2019
$’000
4,816
-
3,124
40,749
-
-
30,036
4,603,677
4,604,544
63,808
78,725
94,164
224,662
168,176
127,106
24,114
128,336
25,000
58,778
318,826
295,282
152,450
83,778
The carrying amount of the non-current liabilities approximates their fair value.
Advances from non-controlling shareholders of certain subsidiaries are unsecured and are repayable on demand. Interest is charged at
rates ranging from 1.80% to 4.94% (2019: 1.83% to 4.94%) per annum on interest-bearing advances.
21. Provisions for warranties
At 1 January
Charge/(Write-back) to profit and loss account
Amount utilised
Exchange differences
At 31 December
22. 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
Group
2020
$’000
36,448
2,352
(13)
662
2019
$’000
69,614
(14,365)
(18,601)
(200)
39,449
36,448
2020
2019
Due within
one year
$’000
Due after
one year
$’000
Due within
one year
$’000
Due after
one year
$’000
-
-
-
-
2,653,932
629,617
100,000
-
500,000
99,904
-
273,240
1,900,000
629,507
100,000
-
110,485
4,322,117
596,215
3,626,830
98,599
3,583,494
310,859
3,564,028
4,432,602
7,606,594
4,555,237
6,504,394
-
3,406,552
2,653,932
1,875,085
500,000
2,900,430
1,900,000
1,598,203
3,406,552
4,529,017
3,400,430
3,498,203
(a)
(b)
(c)
(d)
(e)
(f)
(a)
(f)
(a)
(b)
At the end of the financial year, notes issued under the US$5,000,000,000 Multi-Currency Medium Term Note Programme by
the Company amounted to $2,653,932,000 (2019: $2,400,000,000). The notes denominated in Singapore Dollars, US Dollars and
Japanese Yen, are unsecured and comprised fixed rate notes due from 2022 to 2042 (2019: from 2020 to 2042) with interest
rates ranging from 0.88% to 4.00% (2019: 3.00% 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 $329,767,000 (2019:
$399,737,000). The notes denominated in Singapore Dollars, are unsecured and comprised fixed rate notes due in 2023 (2019:
2020 to 2023), with interest rates ranging from 2.68% to 2.84% (2019: 2.68% to 2.84%) per annum.
Annual Report 2020
FINANCIAL REPORT
185
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 $299,850,000 (2019: $329,674,000). The notes denominated in Singapore Dollars, are
unsecured and comprised fixed rate notes due from 2022 to 2024 (2019: 2022 to 2024) with interest rates ranging from 3.80%
to 3.90% (2019: 3.80% to 3.90%) per annum.
(c)
(d)
At the end of the financial year, notes issued under the $500,000,000 Multi-Currency Medium Term Note Programme by Keppel
Telecommunications & Transportation Ltd, amounted to $100,000,000 (2019: $100,000,000). The fixed rates notes, due in 2024,
are unsecured and carried an interest rate of 2.85% per annum from September 2017 to September 2022 and 3.85% per annum
from September 2022 to September 2024 (2019: 2.85% per annum from September 2017 to September 2022 and 3.85% per
annum from September 2022 to September 2024).
As at 31 December 2019, there were US$200,000,000 notes issued under the US$2,000,000,000 Euro Medium Term Note
Programme by Keppel GMTN Pte Ltd that amounted to $273,240,000. The floating rate notes due in 2020 were unsecured and
bore interest rate payable quarterly at 3-month US Dollar London Interbank Offered Rate plus 0.89% per annum and ranging from
2.92% to 3.69% per annum. The notes were repaid in April 2020 and no notes were issued thereafter.
(e)
The secured bank loans consist of:
-
-
-
-
-
A term loan of $50,000,000 drawn down by a subsidiary. The term loan is repayable in 2023 and is secured on certain
assets of the subsidiary. Interest is based on money market rates range of 0.90% to 2.28% per annum.
A term loan of $43,950,000 drawn down by a subsidiary. The term loan is repayable in 2032 and is secured on certain
assets of the subsidiary. Interest is based on money market rates range of 2.38% to 4.43% per annum.
A term loan of $41,726,000 drawn down by a subsidiary. The term loan is repayable in 2033 and is secured on certain
assets of the subsidiary. Interest is based on money market rates range of 2.38% to 4.43% per annum.
A term loan of $276,279,000 drawn down by a subsidiary. The term loan is repayable in 2035 and is secured on certain
assets of the subsidiary. Interest is based on money market rates of 4.31% per annum.
Other secured bank loans totalling $294,745,000 (2019: $268,446,000) comprised $84,088,000 (2019: $nil) of loans
denominated in Singapore Dollars and $210,657,000 (2019: $268,446,000) of foreign currency loans. They are repayable
within one to seven (2019: one to eight) years and are secured on investment properties and certain fixed and other assets
of the subsidiaries. Interest on foreign currency loans is based on money market rates ranging from 0.70% to 13.25%
(2019: 1.82% to 12.50%) per annum.
(f)
The unsecured bank and other loans of the Group totalling $7,948,947,000 (2019: $7,147,522,000) comprised $4,972,916,000
(2019: $5,113,132,000) of loans denominated in Singapore Dollars and $2,976,031,000 (2019: $2,034,390,000) of foreign
currency loans. They are repayable within one to eleven (2019: one to twelve) years. Interest on loans denominated in Singapore
Dollars is based on money market rates ranging from 0.58% to 3.08% (2019: 1.08% to 3.38%) per annum. Interest on foreign
currency loans is based on money market rates ranging from 0.50% to 8.58% (2019: 0.96% to 9.41%) per annum.
The unsecured bank loans of the Company totalling $5,281,637,000 (2019: $4,498,633,000) comprised $3,142,000,000 (2019:
$3,186,162,000) of loans denominated in Singapore Dollars and $2,139,637,000 (2019: $1,312,471,000) of foreign currency
loans. They are repayable within one to five years (2019: one to five years). Interest on loans denominated in Singapore Dollars
is based on money market rates ranging from 0.58% to 3.08% (2019: 1.08% to 3.38%) per annum. Interest on foreign currency
loans is based on money market rates ranging from 0.50% to 3.24% (2019: 0.96% to 3.24%) per annum.
The Group has mortgaged certain properties and assets of up to an aggregate amount of $2,220,363,000 (2019: $963,984,000) to
banks for loan facilities.
The fair values of term loans for the Group and Company are $12,014,024,000 (2019: $10,875,283,000) and $7,845,496,000 (2019:
$6,723,252,000) respectively. These fair values, under Level 2 of the fair value hierarchy, are computed on the discounted cash flow
method using discount rates based upon the borrowing rates 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
Keppel Corporation Limited
Group
2020
$’000
2019
$’000
Company
2020
$’000
2019
$’000
2,036,433
4,038,732
1,531,429
1,191,134
4,048,673
1,264,587
1,000,000
2,379,017
1,150,000
550,000
1,798,203
1,150,000
7,606,594
6,504,394
4,529,017
3,498,203
186
NOTES TO THE FINANCIAL STATEMENTS
23. Deferred taxation
Deferred tax liabilities
Deferred tax assets
Net deferred tax liabilities
Group
2020
$’000
443,547
(159,427)
2019
$’000
399,028
(76,454)
284,120
322,574
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 $61,237,000 (2019: $76,713,000) for taxes that would be payable on the
undistributed earnings of certain subsidiaries and associated companies 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 $890,221,000 (2019: $927,729,000) 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 $212,649,000 (2019: $208,632,000) can be carried
forward for a period of one to ten years subsequent to the year of the loss, while the remaining tax losses have no expiry date.
Included in the deferred tax assets are deferred tax credits recognised in FY 2020 amounting to approximately $74 million arising from
expected credit losses on contract assets in relation to completed rigs from certain offshore & marine construction contracts (Note
2.28(b)(ii)). The Group has been actively seeking to deploy, including charter or sale of these completed rigs which in turn provide
greater certainty of the crystallisation of the expected credit losses. Such cumulative expected credit losses are claimable as tax
losses, when realised, and utilised against any taxable profits of the claimant or may be transferred to other Singapore incorporated
related companies of the Group via group tax relief. The Group expects that there are sufficient taxable profits within the Group to
utilise such tax losses within the next 2 to 3 years.
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
2020
Deferred Tax Liabilities
Accelerated tax depreciation
Investment properties valuation
Offshore income & others
Total
Deferred Tax Assets
Other provisions
Unutilised tax benefits
Lease liabilities
Total
295,789
75,175
79,430
9,906
38,354
2,377
450,394
50,637
-
-
73
73
(18,043)
(94,206)
(212)
(88,146)
(21,631)
8,972
(51)
-
-
(127,820)
(85,285)
(212)
Net Deferred Tax Liabilities
322,574
(34,648)
(139)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,197)
(67) 301,431
(148)
3,316
116,697
-
893
82,773
(4,345)
4,142
500,901
-
(642)
(113,103)
(4,701)
(338)
(84,213)
-
2,217
(19,465)
(4,701)
1,237
(216,781)
(9,046)
5,379
284,120
Annual Report 2020
FINANCIAL REPORT
187
Charged/
(credited)
to other
comprehen-
sive Subsidiaries Subsidiaries
acquired
$’000
disposed
$’000
income
$’000
Reclassifi-
cation
$’000
Exchange Adoption of
At
SFRS(I) 16 31 December
$’000
$’000
differences
$’000
At
Charged/
(credited) to
1 January profit or loss
$’000
$’000
2019
Deferred Tax Liabilities
Accelerated tax depreciation
116,707
(20,122)
Investment properties valuation
Offshore income & others
Total
49,843
80,163
26,857
(81)
246,713
6,654
-
-
(23)
(23)
(2,307)
203,666
-
-
-
-
(2,307)
203,666
23
-
(294)
(271)
(108)
(2,070)
295,789
(1,525)
(335)
-
-
75,175
79,430
(1,968)
(2,070)
450,394
Deferred Tax Assets
Other provisions
Unutilised tax benefits
Lease liabilities
Total
(34,740)
16,726
(97,316)
5,667
-
(2,567)
(132,056)
19,826
4
-
-
4
-
-
580
580
-
-
-
-
78
1,196
(1,454)
(111)
2,307
-
-
(18,043)
(88,146)
860
(19,050)
(21,631)
(180)
3,056
(19,050)
(127,820)
Net Deferred Tax Liabilities
114,657
26,480
(19)
(1,727)
203,666
(451)
1,088
(21,120)
322,574
24. Revenue
Revenue from contracts with customers
Revenue from construction contracts
Sale of property
Sale of goods
Sale of electricity, utilities and gases
Revenue from telecommunication services
Revenue from other services rendered
Other sources of revenue
Rental income from investment properties
Others
Sales are made with credit terms that are consistent with market practice.
25. Staff costs
Wages and salaries
Employer’s contribution to Central Provident Fund
Share plans granted to Director and employees
Other staff benefits
Group
2020
$’000
1,705,056
1,176,590
396,346
2019
$’000
2,418,931
1,207,359
373,728
1,912,901
2,172,045
714,894
575,234
620,475
661,233
6,481,021
7,453,771
93,321
-
122,500
3,432
6,574,342
7,579,703
Group
2020
$’000
893,717
77,722
39,882
108,807
2019
$’000
924,839
86,486
37,255
114,651
1,120,128
1,163,231
Keppel Corporation Limited
188
NOTES TO THE FINANCIAL STATEMENTS
26. Operating profit
Operating profit is arrived at after charging/(crediting) the following:
Included in materials and subcontract costs:
Fair value (gain)/loss on
investments
-
- forward foreign exchange contracts
Cost of stocks & contract assets 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 plans granted
Included in impairment loss on financial assets and contract assets:
Allowance for expected credit loss (Note 12 & 17)
Bad debts written-off
Allowance for expected credit loss for contract assets (Note 15)
Included in other operating income - net:
Government grant income
Impairment/write-off of fixed and intangible assets
Impairment of associated companies (Note 10)
Provision for stocks
Fair value gain on investment properties * (Note 7)
Fair value (gain)/loss on
investments
-
- forward foreign exchange contracts
Gain on differences in foreign exchange
(Profit)/Loss on sale of fixed assets and an investment property
Profit on sale of investments
Gain on disposal of subsidiaries
(Gain)/Loss on disposal of associated companies
Gain from sale of units in associated companies
(Gain)/Loss from change in interest in associated companies
Fair value gain on remeasurement of previously held interest upon
acquisition of a subsidiary
Fair value gain on remeasurement of remaining interest
in an associated company
Gain from reclassification of associated companies to investments
carried at fair value through other comprehensive income
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
Auditors’ remuneration
- auditors of the Company
- other auditors of subsidiaries
Non-audit fees paid to
- auditors of the Company
- other auditors of subsidiaries
Group
2020
$’000
2019
$’000
-
(3,430)
1,051,028
(4,462)
13,675
1,094,686
36,473
42,258
9,728
92
10,203
219,668
572
430,842
(155,284)
62,075
48,686
50,502
(265,230)
61,023
(11,578)
(29,806)
1,667
-
(63,995)
(34,419)
(48,010)
1,615
11,471
105
9,943
31,036
43,331
-
(3,034)
8,432
35,915
7,571
(101,020)
15,328
2,028
(39,632)
(6,277)
(164)
(64,469)
22
-
(27,114)
-
(158,376)
(26,034)
(124,769)
2,323
3,753
3,545
2,099
1,730
178
-
-
2,537
2,332
3,343
1,833
611
150
Government grant income of $105,327,000 (2019: $nil) was recognised during the financial year under the Jobs Support Scheme
(“JSS”). The JSS is a temporary scheme introduced in the Singapore Budget 2020 to help enterprises retain local employees. Under the
JSS, employers will receive cash grants in relation to the gross monthly wages of eligible employees.
*
The effect of rental guarantee of $3,200,000 to be provided to Keppel REIT, an associated company, as part of the sale consideration for Keppel Bay Tower Pte.
Ltd was included in the fair value gain on Keppel Bay Tower. Details of the divestment transaction are disclosed in Note 36.
Annual Report 2020
FINANCIAL REPORT
27.
Investment income, interest income and interest expenses
Investment income from:
Shares - quoted
Shares - unquoted
Interest income from:
Bonds, debentures, deposits and others
Associated companies and joint ventures
Service concession arrangement
Interest expenses on notes, loans and overdrafts
Interest expenses on lease liabilities
Fair value gain on interest rate caps and swaps
28. Taxation
(a)
Income tax expense
Tax expense comprised:
Current tax
Adjustment for prior year’s tax
Others
Deferred tax (Note 23)
Current deferred tax
Adjustment for prior year’s tax
Land appreciation tax:
Current year
189
Group
2020
$’000
20,763
8,583
29,346
81,112
66,745
14,196
2019
$’000
42
64,552
64,594
101,548
63,664
12,463
162,053
177,675
(260,126)
(31,964)
(176)
(277,143)
(35,732)
159
(292,266)
(312,716)
Group
2020
$’000
181,889
(14,168)
14,779
182,500
(57,355)
22,707
(34,648)
2019
$’000
175,880
(88,696)
5,934
93,118
26,480
-
26,480
105,555
72,731
253,407
192,329
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/(Loss) before tax
Share of (profit)/loss of associated companies and joint ventures, net of tax
Profit/(Loss) before tax and share of profit of associated companies and joint ventures
Tax calculated at tax rate of 17% (2019: 17%)
Income not subject to tax
Expenses not deductible for tax purposes
Unrecognised tax benefits
Effect of different tax rates in other countries
Adjustment for prior year’s tax
Effects of changes in tax rates
Land appreciation tax
Effect of tax reduction on land appreciation tax
Keppel Corporation Limited
Group
2020
$’000
(254,687)
162,221
(92,466)
(15,719)
(102,858)
216,061
37,444
30,774
8,539
-
105,555
(26,389)
2019
$’000
953,467
(147,413)
806,054
137,029
(89,266)
125,067
32,169
21,478
(88,696)
-
72,731
(18,183)
253,407
192,329
190
NOTES TO THE FINANCIAL STATEMENTS
28. Taxation (continued)
(b) Movement in current income tax liabilities
At 1 January
Exchange differences
Tax expense
Adjustment for prior year’s tax
Land appreciation tax
Net income taxes paid
Subsidiaries acquired
Subsidiaries disposed
Reclassification
- tax recoverable and others
- deferred tax
-
liabilities directly associated with assets
classified as held for sale
Group
2020
$’000
248,425
3,528
181,889
(14,168)
105,555
2019
$’000
297,922
(6,506)
175,880
(88,696)
72,731
(177,284)
(263,856)
-
-
19,803
(4,701)
(4,245)
47,832
(164)
12,831
451
-
Company
2020
$’000
2019
$’000
31,523
43,519
-
5,744
(13,900)
-
5,788
-
-
-
-
-
-
15,800
(27,796)
-
-
-
-
-
-
-
At 31 December
358,802
248,425
29,155
31,523
29. Earnings per ordinary share
Group
2020
$’000
2019
$’000
Basic
Diluted
Basic
Diluted
Net profit/(loss) attributable to shareholders
(505,860)
(505,860)
706,975
706,975
Weighted average number of ordinary shares
(excluding treasury shares)
Adjustment for dilutive potential ordinary shares
Weighted average number of ordinary shares used
Number of Shares
'000
Number of Shares
'000
1,818,398
1,818,398
1,815,701
1,815,701
-
9,267
-
9,668
to compute earnings per share (excluding treasury shares)
1,818,398
1,827,665
1,815,701
1,825,369
Earnings per ordinary share
(27.8) cts
(27.7) cts
38.9 cts
38.7 cts
30. Dividends
A final cash dividend of 7.0 cents per share tax exempt one-tier (2019: final cash dividend of 12.0 cents per share tax exempt one-tier)
in respect of the financial year ended 31 December 2020 has been proposed for approval by shareholders at the next annual general
meeting to be convened.
Together with the interim cash dividend of 3.0 cents per share tax exempt one-tier (2019: interim cash dividend of 8.0 cents per share
tax exempt one-tier), total distributions paid and proposed in respect of the financial year ended 31 December 2020 will be 10.0 cents
per share (2019: 20.0 cents per share).
During the financial year, the following distributions were made:
A final cash dividend of 12.0 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 3.0 cents per share tax exempt one-tier on the issued
and fully paid ordinary shares in respect of the current financial year
In the prior year, total distributions of $417,938,000 were made.
$’000
218,462
54,616
273,078
Annual Report 2020
FINANCIAL REPORT
31. 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 mainly in
property development companies
Less: Non-controlling shareholders’ share
191
Group
2020
$’000
2019
$’000
179,635
6,426
165,437
1,235,373
130,682
6,777
329,685
357,634
931,732
265,833
155,213
246,436
58,450
175,658
2,842,886
1,402,085
(36,962)
(33,225)
2,805,924
1,368,860
There was no significant future capital expenditure/commitment for the Company.
(b)
Lessee’s lease commitments
The Group has adopted SFRS(I) 16 Leases on 1 January 2019. Under the new standard, an asset (the right to use the leased
item) and a financial liability to pay rentals are recognised on balance sheet. The right-of-use assets and lease liabilities are
disclosed in Note 8.
32. Contingent liabilities and guarantees (unsecured)
Guarantees in respect of banks and other loans
granted to subsidiaries, associated companies
and joint ventures
Bank guarantees
Share of lease rental guarantees granted by
associated companies and joint ventures
Group
2020
$’000
730,002
299,082
172,518
2019
$’000
615,611
73,319
-
Company
2020
$’000
2019
$’000
823,419
1,685,269
-
-
-
-
1,201,602
688,930
823,419
1,685,269
See Note 2.28(b)(vi) for further disclosures relating to the Group’s claims and litigations.
Included in the above guarantees is a bilateral agreement between the Group and a bank which guaranteed a bank loan granted to
KrisEnergy Limited, an associated company, amounting to $247,340,000 (2019: $262,825,000). The guarantee is secured on the assets
of KrisEnergy Limited. See further details in Note 10(c).
The financial effects of SFRS(I) 9 relating to financial guarantee contracts issued by the Company are not material to the financial
statements of the Company and therefore are not recognised.
Keppel Corporation Limited
192
NOTES TO THE FINANCIAL STATEMENTS
33. Significant related party transactions
In addition to the related party information disclosed elsewhere in the financial statements, the Group has significant related party
transactions as follows:
Sales of goods and/or services to
- associated companies and joint ventures
- other related parties
Purchase of goods and/or services from
- associated companies and joint ventures
- other related parties
Treasury transactions with
- associated companies and joint ventures
34. Financial risk management
Group
2020
$’000
187,708
77,721
2019
$’000
246,684
73,164
265,429
319,848
255,347
130,038
145,853
126,981
385,385
272,834
22,368
36,378
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 via US Dollars, Renminbi and other 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, cross currency swap agreements 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 $4,704,600,000 (2019: $4,333,439,000). The net positive fair value of forward foreign exchange contracts is $39,872,000
(2019: net positive fair value of $3,796,000) comprising assets of $76,769,000 (2019: $30,022,000) and liabilities of $36,897,000
(2019: $26,226,000). 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 $4,704,600,000 (2019:
$4,205,443,000). The net positive fair value of forward foreign exchange contracts is $39,872,000 (2019: net positive fair value
of $4,839,000) comprising assets of $76,769,000 (2019: $30,022,000) and liabilities of $36,897,000 (2019: $25,183,000). These
amounts are recognised as derivative assets and derivative liabilities.
As at the end of the financial year, the Group has outstanding cross currency swap agreements with notional amounts totalling
$930,757,000 (2019: $361,644,000). The net negative fair value of cross currency swap agreements is $32,952,000 (2019: net
negative fair value of $13,002,000) comprising assets of $15,870,000 (2019: $7,918,000) and liabilities of $48,822,000 (2019:
$20,920,000). These amounts are recognised as derivative assets and derivative liabilities.
Annual Report 2020
FINANCIAL REPORT
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:
193
2020
RMB
$’000
BRL
$’000
Others
$’000
USD
$’000
2019
RMB
$’000
BRL
$’000
Others
$’000
USD
$’000
40,209
410,654
89,452
540,315
Group
Financial Assets
Debtors
Investments
Bank balances,
deposits & cash
Financial Liabilities
Creditors
Term loans
Lease Liabilities
Company
Financial Assets
Debtors
Investments
Bank balances, deposits & cash
Financial Liabilities
Creditors
Term loans
Lease Liabilities
759
312,242
-
-
137,781
197,823
535,178
439,487
613
1,372
37
18,949
47,303
312,279
354,553
1,021,968
40,885
1,105
19,538
1,787,903
-
1,828,788
-
157
1,262
11,381
148,939
-
136,595
997,104
-
-
-
1,629
318,767
-
41,209
42,838
1,052
9,683
215
-
53
318,820
18,542
-
-
119,434
149,314
38,380
307,128
12,362
180,882
726
19,538
160,320
1,133,699
10,950
18,542
193,970
USD
$’000
1,274
-
-
1,274
4,454
1,784,895
-
1,789,349
2020
RMB
$’000
Others
$’000
USD
$’000
2019
RMB
$’000
Others
$’000
71
-
163
234
163
-
157
320
-
-
6
6
579
-
612
1,191
75
4,333
97,662
965,903
-
-
54
-
219
273
207
9,683
215
-
-
1
1
10
89,370
-
97,737
970,236
10,105
89,380
Sensitivity analysis for currency risk
If the relevant foreign currency change against SGD by 5% (2019: 5%) with all other variables held constant, the effects will be as
follows:
Group
USD against SGD
- Strengthened
- Weakened
RMB against SGD
- Strengthened
- Weakened
BRL against SGD
- Strengthened
- Weakened
Company
USD against SGD
- Strengthened
- Weakened
RMB against SGD
- Strengthened
- Weakened
Keppel Corporation Limited
Profit before tax
2020
$’000
2019
$’000
Equity
2020
$’000
2019
$’000
(72,729)
72,729
(13,259)
13,259
8,161
(8,161)
7,631
(7,631)
6
(6)
1,594
(1,594)
12,149
(12,149)
12,462
(12,462)
(89,604)
89,604
(48,801)
48,801
(4)
4
(474)
474
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
194
NOTES TO THE FINANCIAL STATEMENTS
34. Financial risk management (continued)
(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 Singapore dollar
and US dollar variable rate term loans (Note 22). As at the end of the financial year, the Group has interest rate swap agreements
with notional amount totalling $3,750,209,000 (2019: $2,489,733,000) whereby it receives variable rates equal to SOR and LIBOR
(2019: SOR and LIBOR) and pays fixed rates of between 0.19% and 3.62% (2019: 1.41% and 3.62%) on the notional amount.
These interest rate swap agreements are held for hedging interest rate risk arising from variable rate borrowings, with interest
rates ranging from 1-month to 6-month SOR and 1-month to 6-month USD-LIBOR. This amounts to 25% (2019: 22%) of the
Group’s total amount of borrowings excluding notional amounts of $667,720,000 (2019: $nil) relating to highly probable future
borrowings.
The net negative fair value of interest rate swaps for the Group is $175,861,000 (2019: net negative fair value of $108,661,000)
comprising assets of $583,000 (2019: $444,000) and liabilities of $176,444,000 (2019: $109,105,000). These amounts are
recognised as derivative assets and derivative liabilities.
Sensitivity analysis for interest rate risk
If interest rates increase/decrease by 0.5% (2019: 0.5%) with all other variables held constant, the Group’s profit before tax would
have been lower/higher by $22,950,000 (2019: $24,025,000) as a result of higher/lower interest expense on floating rate loans.
(iii) Price risk
The Group hedges against fluctuations arising on the purchase of natural gas that affect cost. Exposure to price fluctuations is
managed via fuel oil forward contracts, whereby the price of natural gas is indexed to benchmark fuel price indices, 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 $476,200,000 (2019: $690,044,000) and $37,602,000 (2019: $63,885,000) respectively. The
net positive fair value of HSFO forward contracts for the Group is $53,373,000 (2019: net negative fair value of $96,885,000)
comprising assets of $70,890,000 (2019: $7,592,000) and liabilities of $17,517,000 (2019: $104,477,000). These amounts are
recognised as derivative assets and derivative liabilities. The net positive fair value of Dated Brent forward contracts for the
Group of $5,071,000 (2019: net negative fair value of $2,361,000) comprising assets of $7,253,000 (2019: $2,305,000) and
liabilities of $2,182,000 (2019: $4,666,000). 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 $43,492,000 (2019: $142,980,000). The net negative fair value of electricity futures
contracts is $187,000 (2019: net positive fair value of $5,447,000) comprising assets of $1,763,000 (2019: $7,560,000) and
liabilities of $1,950,000 (2019: $2,113,000). These amounts are recognised as derivative assets and derivative liabilities.
The Group is exposed to equity securities price risk arising from equity investments classified as investments at fair value
through profit or loss and investments at fair value through other comprehensive income. 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% (2019: 5%) with all other variables held constant, the Group’s
hedging reserve in equity would have been higher/lower by $26,479,000 (2019: $29,658,000) and $2,118,000 (2019: $3,075,000)
respectively as a result of fair value changes on cash flow hedges.
If prices for electricity futures contracts increase/decrease by 5% (2019: 5%) with all other variables held constant, the Group’s
hedging reserve in equity would have been lower/higher by $2,154,000 (2019: $6,877,000) as a result of fair value changes on
cash flow hedges.
If prices for quoted investments increase/decrease by 5% (2019: 5%) with all other variables held constant, the Group’s profit
before tax would have been higher/lower by $7,226,000 (2019: $7,835,000) as a result of higher/lower fair value gains on
investments at fair value through profit or loss, and the Group’s fair value reserve in other comprehensive income would have
been higher/lower by $27,021,000 (2019: $2,008,000) as a result of higher/lower fair value gains on investments at fair value
through other comprehensive income.
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.
Annual Report 2020
FINANCIAL REPORT
195
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 Group assesses on a forward-looking basis the ECLs associated with its financial assets which are mainly debtors, amounts due
from associated companies and joint ventures and bank balances, deposits and cash.
ECLs are probability-weighted estimates of credit losses. Credit losses are measured at the present value of all cash shortfalls (i.e.
the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects
to receive). ECLs are discounted at the effective interest rate of the financial asset. At each balance sheet date, the Group assesses
whether financial assets carried at amortised cost and at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one
or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. These events
include probability of insolvency, significant financial difficulties of the debtor and default or significant delay in payments.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating
ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This
includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit
assessment and includes forward-looking information.
The Group uses a provision matrix to measure the ECLs. In measuring the ECLs, assets are grouped based on shared credit risk
characteristics and days past due. In calculating the expected credit loss rates, the Group considers historical loss rates for each
category of customers and adjusts to reflect current and forward-looking macroeconomic factors affecting the ability of the customers
to settle the receivables.
Trade receivables and contract assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to
engage in a repayment plan with the Group.
The Group’s credit risk exposure in relation to debtors under SFRS(I) 9 as at 31 December 2020 that have not been assessed on a
contract-by-contract basis are set out in the provision matrix as follows:
Energy & Environment
Expected loss rate
Gross carrying amount
Loss allowance
Connectivity
Expected loss rate
Gross carrying amount
Loss allowance
Contract
assets
$’000
Current
$’000
1 to 3 months
$’000
3 to 6 months
$’000
> 6 months
$’000
Total
$’000
Trade receivables
-
-
-
2.3%
85,649
1,932
1.4%
177,642
2,402
0.4%
123,005
543
10.0%
20,470
2,052
2.7%
42,643
1,165
21.6%
1,583
342
19.7%
14,665
2,894
30.5%
5,893
1,798
29.3%
24,851
7,281
113,595
6,124
382,806
14,285
For the remaining subsidiaries which transact with low volume of customers and customers are monitored individually for credit
loss assessment, the receivables (including concession service receivable and contract assets) are assessed individually for lifetime
expected credit losses at each reporting date. In calculating the expected credit loss, the Group uses a probability-weighted amount
that is determined by evaluating a range of possible outcomes. The possible outcomes include an unbiased estimate of the possibility
that a credit loss occurs and the possibility that no credit loss occurs even if the most likely outcome is no credit loss.
Individual customer will be evaluated periodically for its credit risk and the credit risk assessment is based on historical, current and
forward-looking information such as:
-
-
-
-
Historical financial and default rate of the customer
Any publicly available information on the customer
Any macroeconomic or geopolitical information relevant to the customer
Any other objectively supportable information on the quality and abilities of the customer’s management relevant for its
performance
Keppel Corporation Limited
196
NOTES TO THE FINANCIAL STATEMENTS
34. Financial risk management (continued)
Urban Development
For investment properties, the Group manages credit risks arising from tenants defaulting on their rental by requiring the tenants to
furnish cash deposits, and/or banker’s guarantees. The Group also has a policy of regular review of debt collection and rental contracts
are entered into with customers with an appropriate credit history.
In measuring the ECL, trade debtors and contract assets are grouped based on shared credit risk characteristics and days past due.
The Group has therefore concluded that the expected loss rates for trade debtors are a reasonable approximation of the loss rates for
the contract assets.
In calculating the ECL rates, the Group considers historical loss rates for each category of customers and adjusts to reflect current and
forward-looking macroeconomic factors affecting the ability of the customers to settle the receivables.
Trade debtors and contract assets are written off when there is no reasonable expectation of recovery.
Debtors and amounts due from associated companies and joint ventures that are neither past due nor impaired are substantially
companies with good collection track record with the Group or have strong financial capacity.
The Company has assessed that its subsidiaries have strong financial capacity to meet the contractual cash flow obligations and
hence does not expect significant credit losses.
Asset Management
The Group minimises credit risk by dealing with companies with good payment track record and by placing cash balances with
financial institutions.
In respect of credit exposure to the associated companies and joint ventures, the Group minimises credit risk through regular
monitoring of the associated companies and joint ventures’ financial standing.
As at 31 December 2020 and 2019, there are no significant financial assets that are past due and/or impaired.
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 22. 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
2,609,428
2,029,812
122,527
(2,604,977)
(1,990,822)
(116,080)
61,533
(13,667)
9,035
(3,840)
322
(10)
7,253
(2,182)
1,685
(1,851)
-
-
78
(99)
-
-
-
-
-
-
-
-
-
-
-
-
(4,664,730)
(2,218,566)
(4,351,381)
(1,924,124)
Group
2020
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
Net-settled Dated Brent forward contracts
- Receipts
- Payments
Net-settled electricity futures contracts
- Receipts
- Payments
Borrowings
Annual Report 2020
FINANCIAL REPORT
197
Within
one year
$’000
Within
one to
two years
$’000
Within
two to
five years
$’000
After
five years
$’000
3,113,245
(3,107,938)
773,921
(766,231)
478,026
(468,296)
5,583
(91,720)
2,305
(3,581)
1,808
(11,095)
-
(1,085)
200
(1,661)
-
-
-
-
-
-
-
-
6,701
(1,639)
(4,775,144)
859
(474)
(1,403,358)
-
-
(4,359,758)
-
-
(1,597,868)
2,609,428
(2,604,977)
(3,538,694)
2,029,812
(1,990,822)
(1,106,646)
122,527
(116,080)
(2,586,867)
-
-
(1,412,822)
2,986,032
(2,979,943)
(3,525,789)
773,921
(766,231)
(656,062)
478,026
(468,296)
(1,986,035)
-
-
(1,455,148)
Group
2019
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Net-settled HSFO forward contracts
- Receipts
- Payments
Net-settled Dated Brent forward contracts
- Receipts
- Payments
Net-settled electricity futures contracts
- Receipts
- Payments
Borrowings
Company
2020
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Borrowings
2019
Gross-settled forward foreign exchange contracts
- Receipts
- Payments
Borrowings
In addition to the above, creditors (Note 20) 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 2020. 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 risk based on the Group’s net gearing. Net gearing is calculated as net debt divided by total equity. Net
debt is calculated as total term loans (Note 22) and total lease liabilities (Note 8) less bank balances, deposits & cash (Note 19).
Net debt
Total equity
Net gearing ratio
Fair Value of Financial Instruments and Investment Properties
Group
2020
$’000
2019
$’000
10,123,385
11,155,904
0.91x
9,873,556
11,646,031
0.85x
The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the
measurement. The fair value hierarchy has the following levels:
•
•
•
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices)
Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs). Fair value is
determined by reference to the net tangible assets of the investments.
Keppel Corporation Limited
198
NOTES TO THE FINANCIAL STATEMENTS
34. Financial risk management (continued)
The following table presents the assets and liabilities measured at fair value.
Group
2020
Financial assets
Derivative financial instruments
Call option
Investments
-
-
Investments at fair value through other comprehensive income
Investments at fair value through profit or loss
Short term investments
-
-
Investments at fair value through other comprehensive income
Investments at fair value through profit or loss
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
504,611
66,014
35,802
78,492
173,270
-
-
102,749
-
20,340
-
156,643
317,680
238,438
-
-
173,270
156,643
822,291
407,201
35,802
98,832
684,919
296,359
712,761
1,694,039
Financial liabilities
Derivative financial instruments
Non-financial assets
Investment Properties
- Commercial and residential, completed
- Commercial, under construction
- Assets classified as held for sale
Group
2019
Financial assets
Derivative financial instruments
Call option
Investments
-
-
-
-
-
-
-
-
-
Investments at fair value through other comprehensive income
Investments at fair value through profit or loss
Short term investments
-
-
Investments at fair value through other comprehensive income
Investments at fair value through profit or loss
12,336
82,399
27,821
74,300
283,805
-
283,805
-
-
650,062
1,166,637
2,507,438
-
1,166,637
2,507,438
650,062
650,062
3,674,075
4,324,137
55,841
-
-
54,975
-
19,460
-
157,518
202,623
296,736
-
-
55,841
157,518
214,959
434,110
27,821
93,760
Financial liabilities
Derivative financial instruments
Non-financial assets
Investment Properties
- Commercial and residential, completed
- Commercial, under construction
Company
2020
Financial assets
Derivative financial instruments
Investments
-
Investments at fair value through other comprehensive income
Financial liabilities
Derivative financial instruments
2019
Financial assets
Derivative financial instruments
Investments
-
Investments at fair value through other comprehensive income
Financial liabilities
Derivative financial instruments
196,856
130,276
656,877
984,009
-
-
-
-
-
-
-
-
-
-
-
-
246,587
-
246,587
-
-
-
1,667,822
1,354,269
1,667,822
1,354,269
3,022,091
3,022,091
77,494
-
77,494
-
22,196
77,494
22,196
158,950
30,462
-
30,462
-
-
19,230
19,230
22,196
99,690
158,950
30,462
19,230
49,692
78,766
-
78,766
There have been no significant transfers between Level 1, Level 2 and Level 3 for the Group and Company in 2020 and 2019.
Annual Report 2020
FINANCIAL REPORT
199
The following table presents the reconciliation of financial instruments measured at fair value based on significant unobservable inputs
(Level 3).
At 1 January
Subsidiaries acquired
Purchases
Sales
Fair value gain/(loss) recognised in other comprehensive income
Fair value gain/(loss) recognised in profit or loss
Reclassification
- Associates/Joint Ventures
- Others
Exchange differences
Distribution
Return on capital
Capitalisation of interest on advances extended to an investee
Group
2020
$’000
656,877
-
73,091
(19,224)
60,350
(36,852)
(44,750)
(559)
(978)
(1,965)
(3,429)
30,200
2019
$’000
520,356
23,884
225,294
(39,171)
(73,059)
18,197
-
(865)
366
(10,366)
(7,759)
-
Company
2020
$’000
2019
$’000
19,230
16,957
-
-
-
-
-
-
2,966
2,273
-
-
-
-
-
-
-
-
-
-
-
-
-
-
At 31 December
712,761
656,877
22,196
19,230
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
Reclassification
- Assets held for sale
- Stocks & WIP
- Fixed assets
Exchange differences
At 31 December
Group
2020
$’000
2019
$’000
3,022,091
2,857,145
266,219
268,430
-
(650,062)
714,733
-
52,664
304,803
101,020
(834)
-
-
(217,121)
(22,922)
3,674,075
3,022,091
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.
Keppel Corporation Limited
200
NOTES TO THE FINANCIAL STATEMENTS
34. 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
Fair value
as at
31 December
2020
$’000
Valuation Techniques
Unobservable Inputs
Range of
unobservable
Inputs
556,118 Net asset value, discounted cash flow
Net asset value *
Not applicable
and binomial option pricing, market
comparative
Call option
156,643
Direct comparison method and
investment method
Discount rate
Growth rate
8.00%
6.24%
Cost of equity
15.85%
Adjusted market multiple
1.4x
Transacted price of
comparable properties
(psf)
$1,600 to $3,721
Capitalisation rate
3.50%
Investment Properties
- Commercial and residential,
completed
1,166,637
Investment method, discounted cash
flow method and/or direct comparison
method;
Discount rate
7.25% to 12.50%
Capitalisation rate
4.25% to 10.50%
Residual method;
Capitalisation method
Net initial yield
6.20%
Transacted price of
comparable properties
(psm)
Transacted price of
comparable properties
(psf)
$4,914 to $6,615
$2,835 to $3,046
Terminal capitalisation rate
9.00%
- Commercial, under construction
2,507,438
Direct comparison method, discounted
cash flow method, and/or residual
value method
Transacted price of
comparable land plots
(psm)
$7,930 to $18,770
Gross development value
($’million)
$527 to $2,042
Discount rate
12.50% to 18.00%
*
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.
Annual Report 2020
FINANCIAL REPORT
201
Description
Investments
Fair value
as at
31 December
2019
$’000
Valuation Techniques
Unobservable Inputs
Range of
unobservable
Inputs
499,359 Net asset value, discounted cash flow,
and/or market comparative
Net asset value *
Not applicable
Call option
157,518
Direct comparison method and
investment method
Investment Properties
- Commercial and residential,
completed
1,667,822
Investment method, discounted cash
flow method and/or direct comparison
method;
Residual method
Discount rate
11%
Adjusted market multiple
1.4x
Terminal growth rate
2.5%
Transacted price of
comparable properties
(psf)
$2,200 to $2,865
Capitalisation rate
3.50%
Discount rate
5.60% to 12.76%
Capitalisation rate
3.75% to 9.00%
Net initial yield
3.93% to 5.85%
Price of comparable land
plots (psm)
$5,032 to $6,773
Transacted price of
comparable properties
(psf)
$1,616 to $3,502
- Commercial, under construction
1,354,269
Direct comparison method, discounted
cash flow method, and/or residual
value method
Price of comparable land
plots (psm)
$8,121 to $19,219
Gross development value
($’million)
$510 to $1,897
*
Fair value of unquoted equity instruments is determined by reference to the underlying assets value of the investee companies, which comprise mainly
investment properties stated at fair value.
The financial instruments and investment properties categorised under Level 3 of the fair value hierarchy are generally sensitive to the
various unobservable inputs tabled above. A significant movement of each input would result in significant change to the fair value of
the respective asset/liability.
The Group’s finance team assessed the fair value of investments at fair value through other comprehensive income on a quarterly
basis.
Valuation process of investment properties is described in Note 7.
Keppel Corporation Limited
202
NOTES TO THE FINANCIAL STATEMENTS
35. Segment analysis
The Group is organised into business units based on their products and services. On 28 May 2020, the Group unveiled its Vision
2030 to drive its strategy as one integrated business providing solutions for sustainable urbanisation. As part of Vision 2030, the
Group reorganised its businesses under five main segments, namely Energy & Environment, Urban Development, Connectivity, Asset
Management, and Corporate & Others. The objective of the reorganisation was for the Group to streamline and focus its business
units on the key business areas. The revised segment reporting will now comprise five main segments with six reportable operating
segments as follows:
(i)
Energy & Environment
The Energy & Environment segment is focused on business areas relating to the safe and efficient harvesting of energy sources,
serving the offshore & marine industry with an array of vessel solutions and services, renewables, and providing cities with
power, as well as solutions for waste and water & wastewater treatment. The segment comprises two reportable operating
segments, being Offshore & Marine and Infrastructure & Others.
Offshore & Marine - Principal activities include offshore production facilities and drilling rig design, construction, fabrication
and repair, ship conversions and repair, and specialised shipbuilding. The operating segment has operations in Brazil, China,
Singapore, the United States and other countries.
Infrastructure & Others - Principal activities include power generation, renewables, environmental engineering and infrastructure
operation and maintenance. The operating segment has operations in China, Singapore, Switzerland, the United Kingdom, and
other countries.
(ii) Urban Development
Principal activities include property development and investment, as well as master development. The segment has operations
in China, India, Indonesia, Singapore, Vietnam and other countries.
(iii) Connectivity
Principal activities include the provision of telecommunications services, retail sales of telecommunications equipment and
accessories, development and operation of data centres and provision of logistics solutions. The segment has operations in
China, Singapore and other countries. Keppel Logistics (“KLOG”) contributed about 2% and 4% of the Group’s total revenue and
net loss respectively for the financial year ended 31 December 2020. KLOG accounted for about 1% of the Group’s total assets
and total liabilities as at 31 December 2020.
(iv) Asset Management
Principal activities include management of private funds and listed real estate investment and business trusts. The segment
operates mainly in Singapore.
(v) Corporate & Others
The Corporate & Others segment consists mainly of treasury operations, research & development, investment holdings and
provision of management and other support services.
Management monitors the results of each of the above main 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 operating segments is presented in the following table, with the segment information for the prior year ended 31 December
2019 restated to reflect the change in composition of the reportable segments.
Annual Report 2020
FINANCIAL REPORT
Energy & Environment
Infrastructure
& Others
$’000
Offshore
& Marine
$’000
Asset
Subtotal Development Connectivity Management
$’000
Urban
$’000
$’000
$’000
203
Corporate &
Others
$’000
Elimination
$’000
Total
$’000
1,573,455
2,369,889
3,943,344
1,275,473
1,220,011
134,784
730
-
6,574,342
526
10,335
10,861
9,407
5,280
295
76,422
(102,265)
-
1,573,981
2,380,224
3,954,205
1,284,880
1,225,291
135,079
77,152
(102,265) 6,574,342
(909,633)
87,263
(822,370)
605,488
46,010
273,601
(93,891)
(437)
3,449
60,429
-
3,449
61,414
121,843
1,035
39,518
175
1,972
23,273
1,414
-
6,001
393,668
(400,949)
162,053
(196,885)
(9,859)
(206,744)
(56,055)
(33,224)
(39,700)
(357,929)
401,386
(292,266)
8,401
29,346
(330,421)
(16,594)
(347,015)
129,917
(1,373,061)
122,224
(1,250,837)
719,903
13,689
28,622
40,476
712
303,651
(56,026)
93,667
(28,262)
65,405
(278,745)
(13,917)
(26,169)
19
(1,279,394)
93,962
(1,185,432)
441,158
14,705
277,482
(56,007)
2020
Revenue
External sales
Inter-segment sales
Total
Segment Results
Operating profit
Investment income
Interest income
Interest expenses
Share of results of
associated companies and
joint ventures
Profit before tax
Taxation
Profit for the year
Attributable to:
Shareholders of Company
(1,274,847)
94,178
(1,180,669)
437,796
13,244
279,525
(55,756)
Non-controlling interests
(4,547)
(216)
(4,763)
3,362
1,461
(2,043)
(251)
(1,279,394)
93,962
(1,185,432)
441,158
14,705
277,482
(56,007)
External revenue from contracts
with customers
- At a point in time
- Over time
112,699
10,644
123,343
1,032,449
1,460,756
2,359,245
3,820,001
159,962
380,812
829,570
1,573,455
2,369,889
3,943,344
1,192,411
1,210,382
Other sources of revenue
-
-
-
83,062
9,629
12,388
122,396
134,784
-
Total
1,573,455
2,369,889
3,943,344
1,275,473
1,220,011
134,784
100
-
100
630
730
Other Information
Segment assets
Segment liabilities
Net assets
Investment in associated companies
and joint ventures
Additions to non-current assets
Depreciation and amortisation
Impairment loss/(write-back of
impairment loss) on
non-financial assets
Allowance for expected credit loss
and bad debt written-off
Geographical information
8,777,983
2,484,217 11,262,200 14,516,978
4,020,059
3,974,802 11,359,061 (13,027,221) 32,105,879
9,436,503
1,960,318 11,396,821
7,956,375
2,819,371
1,868,694
9,935,935 (13,027,221) 20,949,975
(658,520)
523,899
(134,621) 6,560,603
1,200,688
2,106,108
1,423,126
- 11,155,904
360,838
205,170
566,008
2,300,945
203,330
2,920,330
61,835
119,566
91,090
31,312
152,925
150,878
537,537
39,461
156,757
213,461
384,483
2,655
521,411
42,225
563,636
9,184
27,853
(8,487)
186,818
1,385
188,203
22,902
9,153
-
-
1,397
7,051
(81)
(18)
-
-
-
-
-
5,990,613
1,233,099
413,506
592,105
220,240
Singapore
$’000
4,563,849
8,400,031
China/
Hong Kong
$’000
1,161,182
3,660,816
Other Far East
& ASEAN
countries
$’000
258,109
1,878,137
Brazil
$’000
47,252
240,893
Other
countries
$’000
543,950
392,094
Elimination
$’000
Total
$’000
-
-
6,574,342
14,571,971
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 2020.
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 2020.
Note: Pricing of inter-segment goods and services is at fair market value.
Keppel Corporation Limited
-
-
-
-
-
-
-
-
-
-
-
-
(162,221)
(254,687)
(253,407)
(508,094)
(505,860)
(2,234)
(508,094)
1,549,092
4,931,929
6,481,021
93,321
6,574,342
204
NOTES TO THE FINANCIAL STATEMENTS
35. Segment analysis (continued)
Energy & Environment
Infrastructure
& Others
$’000
Offshore
& Marine
$’000
Asset
Subtotal Development Connectivity Management
$’000
Urban
$’000
$’000
$’000
Corporate &
Others
$’000
Elimination
$’000
Total
$’000
2019
Revenue
External sales
Inter-segment sales
Total
Segment Results
Operating profit
Investment income
Interest income
Interest expenses
Share of results of
associated companies and
joint ventures
Profit before tax
Taxation
Profit for the year
Attributable to:
Shareholders of Company
Non-controlling interests
External revenue from contracts
with customers
- At a point in time
- Over time
Other sources of revenue
Total
Other Information
Segment assets
Segment liabilities
Net assets
Investment in associated companies
and joint ventures
Additions to non-current assets
Depreciation and amortisation
Impairment loss/(write-back of
impairment loss) of
non-financial assets
Allowance for expected credit loss
and bad debt written-off
Geographical information
2,219,397
321
2,219,718
2,749,175
13,436
2,762,611
4,968,572
13,757
4,982,329
1,336,236
11,187
1,347,423
1,128,158
1,840
1,129,998
144,922
13
144,935
1,815
93,693
95,508
-
(120,490)
(120,490)
7,579,703
-
7,579,703
76,848
4,988
74,444
(195,664)
38,585
-
64,911
(11,230)
115,433
4,988
139,355
(206,894)
507,174
215
48,697
(62,430)
210,342
1,410
1,982
(47,058)
120,034
47,920
955
(39,467)
(76,602)
10,061
352,570
(322,631)
120
-
(365,884)
365,764
876,501
64,594
177,675
(312,716)
(56,823)
(96,207)
32,515
(63,692)
(116,894)
(24,628)
(13,848)
(38,476)
(173,717)
(120,835)
18,667
(102,168)
181,963
675,619
(175,406)
500,213
29,452
196,128
(22,592)
173,536
109,715
239,157
(25,527)
213,630
-
(36,602)
12,529
(24,073)
(63,190)
(502)
(63,692)
(38,304)
(172)
(38,476)
(101,494)
(674)
(102,168)
483,235
16,978
500,213
135,693
37,843
173,536
214,373
(743)
213,630
(24,832)
759
(24,073)
96,643
2,122,754
2,219,397
-
2,219,397
12,383
2,736,792
2,749,175
-
2,749,175
109,026
4,859,546
4,968,572
-
4,968,572
999,497
223,302
1,222,799
113,437
1,336,236
340,149
779,348
1,119,497
8,661
1,128,158
32,915
108,676
141,591
3,331
144,922
1,312
-
1,312
503
1,815
-
-
-
-
-
-
-
-
-
-
-
-
147,413
953,467
(192,329)
761,138
706,975
54,163
761,138
1,482,899
5,970,872
7,453,771
125,932
7,579,703
9,491,154
8,787,599
703,555
2,189,734 11,680,888 13,819,442
6,408,601
1,798,314 10,585,913
7,410,841
1,094,975
391,420
4,246,087
2,909,821
1,336,266
3,591,131
1,826,692
1,764,439
9,102,783 (11,118,771) 31,321,560
9,063,273 (11,118,771) 19,675,529
- 11,646,031
39,510
645,946
95,440
121,126
215,377
13,640
31,222
861,323
109,080
152,348
2,176,732
622,622
38,275
170,507
105,691
174,900
3,140,738
357,098
2,761
1,545
10,101
7,010
6,827
37,769
44,596
4,908
3,729
(1,315)
-
9,115
15,602
24,717
385
5,652
547
43,066
-
-
-
-
-
6,350,845
1,204,592
375,294
51,918
74,367
Singapore
$’000
5,704,097
8,741,671
China/
Hong Kong
$’000
1,005,803
3,111,521
Other Far East
& ASEAN
countries
$’000
429,351
1,891,462
Brazil
$’000
83,769
286,862
Other
countries
$’000
356,683
686,175
Elimination
$’000
Total
$’000
-
-
7,579,703
14,717,691
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 2019.
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 2019.
Note: Pricing of inter-segment goods and services is at fair market value.
Annual Report 2020
FINANCIAL REPORT
205
36. Assets classified as held for sale and liabilities directly associated with assets classified as held for sale
(i)
Chengdu Hilltop Development Co Ltd (“CHD”)
On 10 November 2020, the Company announced that its indirect wholly-owned subsidiary, Hillwest Pte Ltd, is divesting 100%
of the equity interest in CHD to Chengdu Longfor Development Co Ltd, with the divestment occurring in two tranches. The first
tranche divestment comprising 50% equity interest in CHD has been completed as at 31 December 2020. The transfer of the
remaining 50% interest was completed on 4 February 2021 (Note 38).
(ii) Dong Nai Waterfront City LLC (“DNWC”)
On 1 December 2020, the Company announced that its indirect wholly-owned subsidiary, Portsville Pte. Ltd., is divesting its
remaining 30% interest in DNWC to Nam Long Investment Corporation. The divestment is expected to be completed in the first
half of 2021, conditional upon certain conditions precedent being fulfilled, including but not limited to, the issuance of a new
Enterprise Registration Certificate by the relevant Vietnamese authorities.
(iii) Keppel Bay Tower Pte. Ltd. (“KBTPL”)
On 23 December 2020, Agathese Pte. Ltd. and Keppel Land (Singapore) Pte. Ltd., both indirect wholly-owned subsidiaries of the
Company, entered into a sale and purchase agreement with RBC Investor Services Trust Singapore Limited (acting in its capacity
as trustee of Keppel Real Estate Investment Trust (“Keppel REIT”)), to divest 100% of the issued and paid-up share capital of
KBTPL to Keppel REIT.
The transaction is subject to and conditional upon, among others, the approval of the Unitholders of Keppel REIT at an
extraordinary general meeting, and approvals from the relevant authorities. Upon approval, the transaction is expected to be
completed in the second quarter of 2021.
(iv) First King Properties Limited (“First King”)
On 24 December 2020, the Company announced that its indirect wholly-owned subsidiary, West Gem Properties Limited, is
divesting its 100% equity interest in First King to ZGC King William Holdings Limited. The divestment was completed on 29
January 2021 (Note 38).
In accordance to SFRS(I) 5 Non-current Assets Held for Sale and Discontinued Operations, the assets and liabilities of KBTPL and
First King have been presented separately as “assets classified as held for sale” and “liabilities directly associated with assets
classified as held for sale”, and the investments in CHD and DNWC that are accounted for as associated companies have been
presented as “assets classified as held for sale” in the consolidated balance sheet as at 31 December 2020. Details of the assets
classified as held for sale and liabilities directly associated with assets classified as held for sale are as follows:
Assets classified as held for sale
Fixed assets
Investment properties
Right-of-use assets
Associated companies
Debtors
Bank balances, deposits & cash
Liabilities directly associated with assets classified as held for sale
Creditors
Term loans
Taxation
Deferred tax liabilities
Other non-current liabilities
As at
31 December
2020
$’000
54,160
650,062
154,281
125,882
7,999
16,308
1,008,692
7,987
91,967
4,245
4,345
6,676
115,220
The assets and liabilities classified as held for sale are included in Urban Development for the purpose of segmental reporting.
Keppel Corporation Limited
206
NOTES TO THE FINANCIAL STATEMENTS
37. New accounting standards and interpretations
At the date of authorisation of these financial statements, the following new/revised SFRS(I)s, SFRS(I) Interpretations and amendments
to SFRS(I)s that are relevant to the Group and the Company were issued but not effective:
•
Amendments to SFRS(I) 9, SFRS(I) 1-39, SFRS(I) 7, SFRS(I) 4 and SFRS(I) 16: Interest Rate Benchmark Reform - Phase 2
(effective for annual periods beginning on or after 1 January 2021)
Hedge relationships
As described in Note 2.2, the Group adopted the ‘Phase 1’ amendments on 1 January 2020 which provided temporary relief from
applying specific hedge accounting requirements to hedging relationships directly affected by IBOR reform.
The ‘Phase 2’ amendments, which will become effective for the Group for the annual period beginning on 1 January 2021,
address issues arising during interest rate benchmark reform, including specifying when the ‘Phase 1’ amendments will cease to
apply, when hedge designations and documentation should be updated, and when hedges of the alternative benchmark rate as
the hedged risk are permitted.
Financial instruments and lease liabilities
For financial instruments measured using amortised cost measurement, the ‘Phase 2’ amendments provide a practical
expedient which require changes to the basis for determining the contractual cash flows required by interest rate benchmark
reform to be reflected by adjusting their effective interest rate. No immediate gain or loss is recognised. This practical expedient
exists for lease liabilities as well. These expedients are only applicable to changes that are required by interest rate benchmark
reform, which is the case if, and only if, the change is necessary as a direct consequence of interest rate benchmark reform and
the new basis for determining the contractual cash flows is economically equivalent to the previous basis.
•
Amendments to SFRS(I) 1-16 Property, Plant and Equipment - Proceeds before Intended Use (effective for annual periods
beginning on or after 1 January 2022)
•
•
The amendment to SFRS(I) 1-16 Property, Plant and Equipment (PP&E) prohibits an entity from deducting from the cost of an
item of PP&E any proceeds received from selling items produced while the entity is preparing the asset for its intended use.
It also clarifies that an entity is ‘testing whether the asset is functioning properly’ when it assesses the technical and physical
performance of the asset. The financial performance of the asset is not relevant to this assessment.
Entities must disclose separately the amounts of proceeds and costs relating to items produced that are not an output of the
entity’s ordinary activities.
Amendments to SFRS(I) 1-37: Onerous Contracts – Cost of Fulfilling a Contract (effective for annual periods beginning on or after
1 January 2022)
An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceed the
economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting
from the contract, which is the lower of the costs of fulfilling it and any compensation or penalties arising from failure to fulfil
it. The amendment to SFRS(I) 1-37 clarifies that the direct costs of fulfilling a contract include both the incremental costs of
fulfilling the contract and an allocation of other costs directly related to fulfilling contracts.
Amendments to SFRS(I) 1-1 Classification of Liabilities as Current or Non-current (effective for annual periods beginning on or
after 1 January 2023)
The narrow-scope amendments to SFRS(I) 1-1 Presentation of Financial Statements clarify that liabilities are classified as
either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected
by the expectations of the entity or events after the reporting date (e.g. the receipt of a waiver or a breach of covenant). The
amendments also clarify what SFRS(I) 1-1 means when it refers to the ‘settlement’ of a liability.
The amendments could affect the classification of liabilities, particularly for entities that previously considered management’s
intentions to determine classification and for some liabilities that can be converted into equity.
The management anticipates that the adoption of the above SFRS(I)s, SFRS(I) Interpretations and amendments to SFRS(I)s 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.
Annual Report 2020
FINANCIAL REPORT
207
38. Subsequent events
(i)
On 28 January 2021, the Group announced that, amidst the global energy transition and major disruptions facing the oil industry,
it will carry out a comprehensive transformation of its wholly-owned subsidiary, Keppel Offshore & Marine Ltd (“KOM”), to better
align it to the Group’s Vision 2030 and to create a more competitive KOM that is well-placed to support the energy transition.
As part of the transformation, KOM’s business will be reorganised into three parts, being a Rig Co and a Development Co (“Dev
Co”), which will be transient entities created to hold assets including its approximately $2.9 billion worth of completed and
uncompleted rig assets, and an Operating Co (“Op Co”) comprising the rest of KOM. This reorganisation into distinct parts
provides better clarity for the Group to focus on the requisite resources to deliver on the respective plans.
KOM’s completed rigs will be placed under the Rig Co, which will put the completed rigs to work, or sell them if there are suitable
opportunities. Uncompleted rigs will come under the Dev Co, which will focus on completing the rigs, while prudently managing
cashflow. Op Co will progressively transit to a developer and integrator role, focusing on design, engineering and procurement,
exit the offshore rigbuilding business and progressively exit low value adding repairs including other activities with low bottom line
contribution. Op Co will seek opportunities in floating infrastructure and infrastructure-like projects that can deliver predictable
streams of cashflow, including renewables projects such as offshore wind farms and solar farms, gas solutions, production
assets and new energy solutions such as hydrogen and tidal energy.
The reorganisation has commenced and the transformation is expected to be executed over the next two to three years.
Reflecting its new focus, KOM will carry out a rebranding exercise and refine its vision and purpose.
(ii)
On 29 January 2021, the Group completed the divestment of its 100% equity interest in First King Properties Limited (“First King”)
at a consideration of GBP73.6 million (approximately S$131.1 million). The consideration was arrived on a willing-buyer and
willing-seller basis. The assets and liabilities of First King have been presented separately as “assets classified as held for sale”
and “liabilities directly associated with assets classified as held for sale” on the balance sheet as at 31 December 2020 (Note 36).
(iii) On 1 February 2021, Myanmar declared a one year State of Emergency. The situation in Myanmar and international reactions
(including economic sanctions, if any) remain fluid. The impact on the economy, foreign investments and the Group’s
investments in Myanmar remain unclear at the date of this financial report. The Group will continue to assess the impact of the
State of Emergency on the Group’s investments in Myanmar.
As at 31 December 2020, the Group has a hospitality asset and an investment in a joint venture whose primary business is in
property investment with a carrying value of $107 million and $22 million respectively in Myanmar. These two investments
accounted for about 0.4% and 1.2% of the Group’s total assets and net assets respectively.
(iv) On 4 February 2021, the Group completed the divestment of its remaining 50% interest in Chengdu Hilltop Development Co Ltd
(“CHD”) for a consideration of RMB630 million (approximately S$130.1 million). The consideration was arrived on a willing-buyer
and willing-seller basis. The Group’s share of net book value of CHD has been presented separately as “assets classified as held
for sale” on the balance sheet as at 31 December 2020 (Note 36).
39. Significant subsidiaries, associated companies and joint ventures
Information relating to significant subsidiaries consolidated in these financial statements and significant associated companies and
joint ventures whose results are equity accounted for is given in the following pages.
Keppel Corporation Limited
208 SIGNIFICANT SUBSIDIARIES, ASSOCIATED COMPANIES
AND JOINT VENTURES
Gross
Interest
2020
%
Effective Equity
Interest
Cost of Investment
2020
%
2019
%
2020
$’000
2019
$’000
Country of
Incorporation
/Operation
Principal Activities
ENERGY & ENVIRONMENT
Offshore & Marine
Subsidiaries
Keppel Offshore and Marine Ltd
Keppel FELS Ltd
100
100
100
100
100
100
Angra Propriedades &
Administracao Ltda(1a)
Estaleiro BrasFELS Ltda(1a)
FELS Offshore Pte Ltd
Fernvale Pte Ltd
FSTP Brasil Ltda(1a)
FSTP Pte Ltd
100
100
100
100
75
75
100
100
100
100
75
75
100
100
100
100
75
75
Keppel AmFELS, LLC
100
100
100
Keppel FELS Brasil SA(1a)
100
100
100
Keppel Letourneau USA, Inc
Keppel Offshore & Marine
USA Inc
KV Enterprises BV(3)
KVE Adminstradora de Bens
Imoveis Ltda(1a)
PT Bintan Offshore(1a)
100
100
100
100
99
100
100
100
100
60
100
100
100
100
60
Offshore Partners Pte Ltd
100
100
100
51
100
100
100
100
100
51
100
100
100
100
100
51
100
100
100
100
100
Regency Steel Japan Ltd(1a)
FELS Asset Co Pte Ltd
FELS Asset Co 2 Pte Ltd
Offshore Partners 2 Pte Ltd
Lenity Pioneer Pte Ltd
Keppel Shipyard Ltd
Annual Report 2020
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
Engineering, construction and
fabrication of platforms for the oil
and gas sector, shipyard works
and other general business
activities
# Brazil
# Brazil
# Singapore
Holding of long-term investments
# Singapore
# Brazil
Construction, fabrication and
repair of drilling rigs and offshore
production facilities
Procurement of equipment and
materials for the construction of
offshore production facilities
# Singapore
Project management, engineering
and procurement
# USA
# Brazil
# USA
# USA
Construction and repair of
offshore drilling rigs and offshore
production facilities
Engineering, construction and
fabrication of platforms for the oil
and gas industry
Design and license of various
offshore rigs and platforms
Offshore and marine-related
services
# Netherlands Holding of long-term investments
# Brazil
Holding of long-term investments
and property management
#
Indonesia
Offshore engineering and
construction
# Singapore
Arrange, syndicate and/or provide
financing to customers of Keppel
Group
# Japan
Sourcing, fabricating and supply
of specialised steel components
# Singapore
Chartering of ships, barges and
boats with crew
# Singapore
Chartering of ships, barges and
boats with crew
# Singapore
Chartering of ships, barges and
boats with crew
# Singapore
Service activities related to oil
and gas extraction
# Singapore
Ship repairing, shipbuilding and
conversions
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
FINANCIAL REPORT
209
Country of
Incorporation
/Operation
Principal Activities
Cost of Investment
2020
$’000
2019
$’000
#
#
#
#
# Philippines
Shipbuilding and repairing
# China
# China
Engineering and construction of
specialised vessels
Engineering and construction of
specialised vessels
# Singapore
Shipbuilding and repairing
3,020
3,020 Philippines
Shipbuilding and repairing
#
#
#
#
#
#
#
#
#
#
# Singapore
Holding of long-term investments
# Singapore
Provision of heavy-lift equipment
and related services
# Bermuda
Operating accommodation and
construction support vessels
(floatels) for the offshore oil and
gas industry
#
Isle of Man
Owning and leasing of multi-
purpose self-elevating platforms
# UAE
Shipbuilding and repairing
# Singapore
Provision of towage services
# Singapore
Provision of towage services
# Qatar
Ship repairing
# Singapore
Chartering of ships, barges and
boats with crew
# Singapore
Provide end-to-end LNG
bunkering supply solution
2019
%
98
100
100
100
86+
100
50
50
49
33
51
51
20
20
50
100
445,892
445,892 Singapore
Investment holding
#
#
#
#
#
#
#
#
#
# Singapore
Investment holding
# Singapore
Electricity, energy and power
supply and general wholesale
trade
# Singapore
Purchase and sale of gaseous
fuels
# Singapore
# Singapore
Development of district heating
and cooling system for the
purpose of air cooling and other
utility services
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
# United
Kingdom
Design and construction of
waste-to-energy plants
# Singapore
Design and construction of
desalination plant
Keppel Philippines Marine
Inc(1a)
Keppel Nantong Heavy Industry
Co Ltd(1a)
Keppel Nantong Shipyard
Company Ltd(1a)
Keppel Singmarine Pte Ltd
Keppel Subic Shipyard Inc(1a)
KS Investments Pte Ltd
Associated Companies and
Joint Ventures
Asian Lift Pte Ltd
Floatel International Ltd(1a)
Blue Tern Holding AS(2)
Arab Heavy Industries PJSC(2)
Keppel Smit Towage Pte Ltd
Maju Maritime Pte Ltd
Nakilat - Keppel Offshore &
Marine Ltd(2)
PV Keez Pte Ltd(2)
FueLNG Pte Ltd(2)
Infrastructure & Others
Subsidiaries
Keppel Infrastructure Holdings
Pte Ltd
Keppel Energy Pte Ltd
Keppel Electric Pte Ltd
Keppel Gas Pte Ltd
Keppel DHCS Pte Ltd
Gross
Interest
2020
%
98
100
100
100
87+
100
50
50
49
33
51
51
20
20
50
100
100
100
100
100
Effective Equity
Interest
2020
%
98
100
100
100
86+
100
50
50
49
33
51
51
20
20
50
100
100
100
100
100
100
100
100
100
Keppel Seghers Pte Ltd
100
100
100
Keppel Seghers Holdings BV(1a)
Keppel Seghers Belgium NV(1a)
Keppel Seghers UK Ltd(1a)
Marina East Water Pte Ltd
100
100
100
100
100
100
100
100
100
100
100
100
Keppel Corporation Limited
210
SIGNIFICANT SUBSIDIARIES, ASSOCIATED COMPANIES
AND JOINT VENTURES
Keppel Infrastructure Services
Pte Ltd
Keppel Seghers Engineering
Singapore Pte Ltd
Keppel Integrated Engineering
Ltd
Keppel XTE Investments Pte Ltd
Kepinvest Holdings Pte Ltd
Kepinvest Singapore Pte Ltd
Associated Companies and
Joint Ventures
Keppel Merlimau Cogen
Pte Ltd(2)
MET Holding AG(1a)(n)
Tianjin Eco-City Energy
Investment & Construction
Co Ltd(1a)
KrisEnergy Ltd(2)
URBAN DEVELOPMENT
Subsidiaries
Keppel Land Ltd
Keppel Land China Ltd
Keppel Land Estate Pte Ltd
Keppel Bay Pte Ltd
Gross
Interest
2020
%
100
100
100
100
100
100
49
20
20
40
100
100
100
100
Effective Equity
Interest
Cost of Investment
Country of
Incorporation
/Operation
Principal Activities
2020
%
100
2019
%
100
2020
$’000
#
2019
$’000
# Singapore
Provision of technical support
including engineering,
construction, operations and
maintenance of plants and
facilities
100
100
100
100
100
49
20
20
40
100
100
100
100
100
100
100
100
100
49
-
20
40
#
#
#
# Singapore
Engineering works, construction
and O&M of plants and facilities
# Singapore
Investment holding
# Singapore
Investment holding
10
10 Singapore
Investment holding
20,000
20,000 Singapore
Investment holding
#
#
#
#
# Singapore
Commercial power generation
- Switzerland
Integrated energy company
# China
# Cayman
Islands
Investment and implementation
of energy and utilities related
infrastructure
Exploration for, and the
development and production of
oil and gas
100
4,793,367
4,793,367 Singapore
Holding, management and
investment company
100
100
100
#
#
#
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Property development
Keppel Philippines Properties
87+
87+
87+
493
493 Philippines
Investment holding
Inc(1a)
Agathese Pte Ltd
Bellenden Investments Ltd(3)
Broad Elite Investments Ltd(3)
Cesario Pte Ltd
Changzhou Fushi Housing
Development Pte Ltd(1a)
Chengdu Hillstreet Development
Co Ltd(1a)
Chengdu Shengshi Jingwei
Real Estate Co Ltd(1a)
Corredance Pte Ltd
Corson Pte Ltd
Dattson Pte Ltd
Davinelle Ltd(3)
Domenico Pte Ltd
Double Peak Holdings Ltd(3)
Estella JV Co Ltd(1a)
Annual Report 2020
100
67
100
100
100
100
100
100
100
100
67
100
100
98
100
67
100
100
100
100
100
100
100
100
67
100
100
98
100
67
100
100
100
100
100
100
100
100
67
100
100
98
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# Singapore
Investment holding
# BVI
# BVI
Investment holding
Investment holding
# Singapore
Investment holding
# China
Property development
# China
Property development
# China
Property development
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Investment holding
# BVI
Investment holding
# Singapore
Investment holding
# BVI
Investment holding
# Vietnam
Property development and
investment
FINANCIAL REPORT
211
Gross
Interest
Effective Equity
Interest
2020
%
100
100
100
100
100
100
100
2020
%
100
100
100
100
100
100
100
2019
%
100
100
100
100
100
100
100
Country of
Incorporation
/Operation
Principal Activities
Cost of Investment
2020
$’000
2019
$’000
#
#
#
#
#
#
#
# China
Investment holding
# Singapore
Property investment and
development
# Jersey
Property investment
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Property investment
# Singapore
Investment holding
Eternal Commercial Ltd(1a)
Evergro Properties Ltd
First King Properties Ltd(3)
Floraville Estate Pte Ltd
Greenfield Development Pte Ltd
Keppel Bay Tower Pte Ltd
Hillwest Pte Ltd
Keppel Point Pte Ltd
100+
100+
100+
122,785
122,785 Singapore
Property development and
investment
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
84
84
100
100
100
100
100
100
100
100
100
100
100
84
84
100
100
100
100
100
100
100
100
100
100
100
84
84
100
100
100
100
100
100
100
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# BVI
Investment holding
# Singapore
Property development/
investment
# Singapore
Investment trust
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Investment holding
# China
Property development
# China
Property development
# China
Property development
# China
Property development
# HK
Investment holding
# Singapore
Investment holding
# Singapore
Financial services
# Singapore
Property services
# Vietnam
Property development
# Vietnam
Property development
# Vietnam
Property services
# China
Property development
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Investment holding
# China
Property services
Jencity Ltd(3)
K-Commercial Pte Ltd
Katong Retail Trust
Kapler Pte Ltd
KeplandeHub Ltd
Keppel Digihub Holdings Ltd
Keppel Heights (Wuxi) Property
Development Co Ltd(1a)
Keppel Hong Da
(Tianjin Eco-City) Property
Development Co Ltd(1a)
Keppel Hong Yuan
(Tianjin Eco-City) Property
Development Co Ltd(1a)
Keppel Lakefront (Wuxi)
Property Development
Co Ltd(1a)
Keppel Land (Saigon Centre)
Ltd(1a)
Keppel Land (Singapore) Pte Ltd
Keppel Land Financial Services
Pte Ltd
Keppel Land International
(Management) Pte Ltd
Keppel Land Watco IV Co Ltd(1a)
Keppel Land Watco V Co Ltd(1a)
Keppel Land Vietnam Co Ltd(1a)
Keppel Seasons Residences
Property Development (Wuxi)
Co., Ltd(1a)
Keppel Tianjin Eco-City Holdings
Pte Ltd
Keppel Tianjin Eco-City
Investments Pte Ltd
Keppel Tianjin Eco-City Three
Pte Ltd
Keppel Tianjin Eco-City Two
Pte Ltd
Keppel Yong Xiang Corporate
Management (Shanghai)
Company Ltd(1a)
Keppel Corporation Limited
212
SIGNIFICANT SUBSIDIARIES, ASSOCIATED COMPANIES
AND JOINT VENTURES
Gross
Interest
2020
%
Effective Equity
Interest
Cost of Investment
2020
%
2019
%
2020
$’000
2019
$’000
Country of
Incorporation
/Operation
Principal Activities
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
99
100
100
100
100
100
100
99
99
70
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
99
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
99
100
100
99
99
99
99
100
100
99
99
99
99
70
99
99
99
99
70
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Investment holding
# HK
Investment holding
# Singapore
Property development
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Property development
# Singapore
Investment holding
# Singapore
Investment holding
# BVI
Investment holding
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Investment holding
#
#
#
#
#
Indonesia
Property development
Indonesia
Property investment
Indonesia
Property development
Indonesia
Property development
Indonesia
Property development
# Vietnam
Property development
# BVI
Investment holding
# Vietnam
Property development
# China
Property investment
# China
Property investment
# China
Property investment
# China
Property management service
# China
Property development
# China
Property development/
investment
# China
Property development
# China
Property development
# China
Investment holding
# China
Property development
# China
Property development
# Singapore
Property development
Tosalco Pte Ltd
Krystal Investments Pte Ltd
Joysville Investment Pte Ltd
Main Full Ltd(1a)
Mansfield Developments Pte Ltd
Merryfield Investment Pte Ltd
Oceansky Pte Ltd
OIL (Asia) Pte Ltd
Oscario Pte Ltd
Parksville Development Pte Ltd
Pasir Panjang Realty Pte Ltd
Peplamo Pte Ltd
Pembury Properties Ltd(3)
Pisamir Pte Ltd
Portsville Pte Ltd
Pre-1 Investments Pte Ltd
PT Harapan Global Niaga(1a)
PT Kepland Investama(1a)
PT Puri Land Development(1a)
PT Sukses Manis Indonesia(1a)
PT Sukses Manis Tangguh(1a)
Riviera Point LLC(1a)
Saigon Centre Investment Ltd(3)
Saigon Sports City Ltd(1a)
Beijing Changsheng Consultant
Co Ltd(1a)
Beijing Changsheng Property
Management Co Ltd(1a)
Shanghai Floraville Land
Co Ltd(1a)
Shanghai Fengwo Apartment
Management Co. Ltd(1a)
Shanghai Hongda Property
Development Co Ltd(1a)
Shanghai Ji Lu Land Co Ltd(1a)
Shanghai Ji Xiang Land
Co Ltd(1a)
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
Annual Report 2020
FINANCIAL REPORT
213
Gross
Interest
2020
%
80
100
100
100
Effective Equity
Interest
2020
%
69
100
100
100
2019
%
69
100
100
100
Country of
Incorporation
/Operation
Principal Activities
Cost of Investment
2020
$’000
2019
$’000
#
#
#
#
# China
Golf club operations and
development and property
development
# Singapore
Investment holding
# Myanmar
Hotel ownership and operations
# Singapore
Investment holding
100+
100+
100+
126,744
126,744 Singapore
Investment holding
Spring City Golf & Lake Resort
Co Ltd(1a)
Spring City Resort Pte Ltd
Straits Greenfield Ltd(2)
Straits Property Investments
Pte Ltd
Keppel Group Eco-City
Investments Pte Ltd
Singapore Tianjin Eco-City
Investment Holdings Pte Ltd
Substantial Enterprises Ltd(3)
Tianjin Fulong Property
Development Co Ltd(1a)
The9 Computer Technology
Consulting (Shanghai)
Ltd(1a)(n)
90+
90+
90+
100+
100
100+
100
100+
100
100
100
-
West Gem Properties Ltd(3)
100
100
100
Associated Companies and
Joint Ventures
Chengdu Hilltop Development
Co Ltd(1a)
Chengdu Taixin Real Estate
Development Co Ltd(2)
Chengdu Wanji Real Estate
Development Co Ltd(2)
City Square Office Co Ltd(2)
Dong Nai Waterfront City LLC(1a)
Empire City LLC(2)
EM Services Pte Ltd
Garden Development Pte Ltd
Kapstone Construction Private
Limited(1a)(n)
Keppel Land Watco I Co Ltd(1a)
Keppel Land Watco II Co Ltd(1a)
Keppel Land Watco III Co Ltd(1a)
Harbourfront Three Pte Ltd
Nam Long Investment
Corporation(2)
Nanjing Jinsheng Real Estate
Development Co Ltd(1a)
Nanjing Zhijun Property
Development Co Ltd(2)
North Bund Pte Ltd(2)
Raffles Quay Asset
Management Pte Ltd(2)
Renown Property Holdings (M)
Sdn Bhd(1a)
Keppel Corporation Limited
50
35
30
40
30
40
25
60
49
61
61
61
39
10
40
25
30
33
40
50
35
30
40
30
40
25
60
49
61
61
61
39
10
40
25
30
33
40
100
35
30
40
30
40
25
60
-
61
61
61
39
10
40
25
30
33
40
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# Singapore
Investment holding
# BVI
Investment holding
# China
Property development
- China
Investment holding
# Jersey
Investment holding
# China
Property development
# China
Property development
# China
Property development
# Myanmar
Property development
# Vietnam
Property development
# Vietnam
Property development
# Singapore
Property management
# Singapore
Property development
-
India
# Vietnam
# Vietnam
# Vietnam
Real estate construction and
development
Property investment and
development
Property investment and
development
Property investment and
development
# Singapore
Property development and
investment
# Vietnam
Trading of development
properties
# China
Property development
# China
Property development
# Singapore
Investment holding
# Singapore
Property management
# Malaysia
Property investment
214
SIGNIFICANT SUBSIDIARIES, ASSOCIATED COMPANIES
AND JOINT VENTURES
Country of
Incorporation
/Operation
Principal Activities
Cost of Investment
2020
$’000
2019
$’000
#
#
#
#
#
#
# China
Property development
# Vietnam
Property development
# Singapore
Property development
# Vietnam
Property investment
# Singapore
Investment holding
# China
Investment holding
100
621,299
621,299 Singapore
Investment, management and
holding company
#
#
#
#
#
#
1
#
#
#
#
#
#
#
#
#
# Singapore
Integrated logistics services and
supply chain solutions
# China
Integrated logistics services, food
trading hub, warehousing and
distribution
# Singapore
Investment holding
# Singapore
Investment holding and
management services
# Singapore
Trading and provision of
communications systems and
accessories
# Singapore
Investment holding
1 Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Telecommunications services
# Singapore
Retail sales of telecommunication
equipment and accessories
# Singapore
Provision of fixed and other
related telecommunication
services
# HK
# USA
# USA
Operation of an air cargo
handling terminal
IT consulting and outsourcing
provider
Water-cooled data centre leasing,
colocation and interconnection
services
# Thailand
Distribution of IT products and
telecommunications services
# China
Integrated logistics services and
port operations
Gross
Interest
2020
%
50
Effective Equity
Interest
2020
%
45
2019
%
45
42
25
30
30
30
100
100
60
100
100+
42
25
30
30
30
100
100
60
100
100+
42
25
30
30
30
100
60
100
100+
Sino-Singapore Tianjin Eco-City
Investment and Development
Co., Ltd(1a)
South Rach Chiec LLC(1a)
Suzhou Property Development
Pte Ltd(1a)
Vietcombank Tower 198 Ltd(2)
Vision (III) Pte Ltd(2)
Win Up Investment Ltd(2)
CONNECTIVITY
Subsidiaries
Keppel Telecommunications &
Transportation Ltd
Keppel Logistics Pte Ltd
Keppel Wanjiang International
Coldchain Logistics Park
(Anhui) Co Ltd(2)
Keppel Data Centres Pte Ltd
Keppel Data Centres Holding
Pte Ltd
Keppel Communications Pte Ltd
100
100
100
Keppel Telecoms Pte Ltd
Keppel Konnect Pte Ltd
Konnectivity Pte Ltd
M1 Limited
M1 Shop Pte Ltd
M1 Net Ltd
Associated Companies and
Joint Ventures
Asia Airfreight Terminal(2)
Computer Generated Solutions
Inc(2)
Nautilus Data Technologies
Inc(2)
SVOA Public Company Ltd(2)
Wuhu Sanshan Port Co Ltd(2)
100
100
80
100+
100+
100+
10
21
14
32
50
100
100
80
84+
84+
84+
10
21
14
32
50
100
100
80
84+
84+
84+
10
21
19
32
50
Annual Report 2020
FINANCIAL REPORT
ASSET MANAGEMENT
Subsidiaries
Keppel Capital Holdings Pte Ltd
Keppel Capital Investment
Holdings Pte Ltd
Alpha Investment Partners Ltd
Keppel DC REIT Management
Pte Ltd
100
100
100
100+
100
100
100
100+
Keppel Capital Alternative Asset
Pte Ltd
100
100
Keppel Capital Two Pte Ltd
100
100
215
Gross
Interest
2020
%
Effective Equity
Interest
Cost of Investment
2020
%
2019
%
2020
$’000
2019
$’000
Country of
Incorporation
/Operation
Principal Activities
100
100
100
100+
100
100
100
100
100
100
100
100
783,000
783,000 Singapore
Investment holding
#
#
#
#
#
#
#
#
#
#
#
#
#
#
#
# Singapore
Investment holding
# Singapore
Fund management
# Singapore
Real estate investment trust
management and investment
holding
# Singapore
Fund management
# Singapore
To arrange, syndicate and/or
provide financing for investing
activities
# Singapore
Investment holding
# USA
Investment holding
# Singapore
Investment advisory and property
fund management
# BVI
Investment holding
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Investment holding
# Singapore
Data centre facilities and
colocation services
# Singapore
Real estate investment trust
# Singapore
Real estate investment trust
90,000
90,000 Singapore
Investment holding
#
#
#
# Singapore
Investment company
# Singapore
Investment company
# Singapore
Investment holding
594,922
594,922 Singapore
Investment holding
8,403,253
8,403,253
100
100
100
100
100
100
100
100
100
100
100
100
99
99
99
21
49
8
100
100
100
100
100
21
49
7
100
100
100
100
100
23
49
7
100
100
100
100
100
Keppel Capital Three Pte Ltd
Keppel Capital US Holding Inc(3)
Keppel REIT Management Ltd
Aintree Assets Ltd(3)
Keppel REIT Investment Pte Ltd
Keppel DC Investment Holdings
Pte Ltd
Alpha Real Estate Securities
Fund
Associated Companies and
Joint Ventures
Keppel DC REIT
Keppel REIT
Keppel Pacific Oak US REIT(2)
CORPORATE & OTHERS
Subsidiaries
Kephinance Investment Pte Ltd
Keppel Funds Investment
Pte Ltd
Keppel Investment Ltd
Keppel Oil & Gas Pte Ltd
Kepventure Pte Ltd
Total Subsidiaries
Keppel Corporation Limited
216
SIGNIFICANT SUBSIDIARIES, ASSOCIATED COMPANIES
AND JOINT VENTURES
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 and joint ventures does not compromise the
standard and effectiveness of the audit of the Company.
(ii)
+ The shareholdings of these companies are held jointly with other subsidiaries.
(iii) # The shareholdings of these companies are held by subsidiaries of Keppel Corporation Limited.
(iv)
(n) These companies were incorporated/acquired during the financial year.
(v) The subsidiaries’ place of business is the same as its country of incorporation, unless otherwise specified.
(vii) Abbreviations:
British Virgin Islands (BVI)
United Arab Emirates (UAE)
Hong Kong (HK)
United States of America (USA)
(viii) The Company has 216 significant subsidiaries, associated companies and joint ventures as at 31 December 2020. Subsidiaries, associated companies and joint ventures
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.
Annual Report 2020
FINANCIAL REPORT
INTERESTED PERSON TRANSACTIONS
217
The Group has obtained a general mandate from shareholders of the Company for interested person transactions in the Annual General
Meeting held on 2 June 2020. During the financial year, the following interested person transactions were entered into by the 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)
2020
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
279
121
191,002
37,478
336,690
962
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)
2020
$’000
5,802
1,986
4,732
88
122,968
297
2,597
8,735
168
7,800
57,701
63
1
1
27,733
2,118
55,000
219
698
82
396
149
5,286
36,851
1,533
–
–
–
–
–
–
Name of Interested Person
Nature of relationship
Transaction for the Sale of Goods and Services
Temasek Holdings Group (other than the below)
PSA International Group
SembCorp Marine Group
SembCorp Industries Group
CapitaLand Group
Singapore Power Group
Singapore Technologies Engineering Group
Singapore Telecommunications Group
Singapore Airlines Group
Mapletree Investments Group
Keppel Infrastructure Trust Group
Pavilion Energy Group
Certis CISCO Security Group
SMRT Corporation Group
Transaction for the Purchase of Goods and Services
Temasek Holdings Group (other than the below)
Certis CISCO Security Group
Pavilion Energy Group
PSA International Group
SembCorp Marine Group
SembCorp Industries Group
CapitaLand Group
Singapore Power Group
Singapore Technologies Engineering Group
Singapore Telecommunications Group
SMRT Corporation Group
Treasury Transactions
Pavilion Energy Group
SembCorp Marine Group
Keppel Infrastructure Trust Group
CapitaLand Group
Joint Venture and Related Transactions
Temasek Holdings Group (other than the below)
Clifford Capital Group
Temasek Holdings
(Private) Limited is a
controlling shareholder
of the Company.
The other named
interested persons are
its associates.
Temasek Holdings
(Private) Limited is a
controlling shareholder
of the Company.
The other named
interested persons are
its associates.
Temasek Holdings
(Private) Limited is
a controlling
shareholder of the
Company. The named
interested persons
are its associates.
Temasek Holdings
(Private) Limited is
a controlling
shareholder of
the Company. The
other named
Interested persons
are its associates.
Total Interested Person Transactions
566,532
343,004
Save for the interested person transactions disclosed above, there were no other material contracts entered into by the Company and its
subsidiaries involving the interests of its chief executive officer, directors or controlling shareholders, which are either still subsisting at the
end of the financial year or, if not then subsisting, entered into since the end of the previous financial year.
Keppel Corporation Limited
OTHER INFORMATION
218 KEY EXECUTIVES
Chan Hon Chew, 55
Bachelor of Accountancy (Honours), National University of Singapore; CFA® charterholder; Member of Chartered Accountants Australia and
New Zealand and Fellow Member of the 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 Limited, Mr Chan was with Singapore Airlines Limited (SIA) and served as Senior Vice President (SVP) of
Finance since June 2006. As SVP of 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 joining 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 serves on the management board of the Institute of System Science, National University of Singapore since 15 April 2015.
Mr Chan’s principal directorships include Keppel Offshore & Marine Ltd, Keppel Land Limited, Keppel Infrastructure Holdings Pte Ltd, Keppel
Telecommunications & Transportation Ltd, Keppel Capital Holdings Pte Ltd and M1 Limited.
Past principal directorships in the last five years
KrisEnergy Ltd and Keppel DC REIT Management Pte Ltd (the Manager of Keppel DC REIT).
Dr Ong Tiong Guan, 62
Bachelor of Engineering (First Class Honours), Monash University; Doctor of Philosophy (Ph.D.) under Monash Graduate Scholarship, Monash
University, Australia.
Dr Ong was appointed Keppel Energy Pte Ltd’s Executive Director in November 1999. He became Managing Director of Keppel Energy Pte Ltd
with effect from 1 May 2003 and was appointed Deputy Chairman of Keppel Integrated Engineering Ltd on April 2013.
Upon reorganisation of Keppel Energy Pte Ltd and Keppel Integrated Engineering Ltd under Keppel Infrastructure Holdings Pte Ltd in May
2013, Dr Ong was appointed Chief Executive Officer of Keppel Infrastructure Holdings Pte Ltd, responsible for the Keppel Group’s energy
infrastructure business. Dr Ong stepped down as CEO of Keppel Infrastructure Holdings Pte Ltd with effect from 15 February 2021 and was
appointed as Advisor with effect from the same date.
Dr Ong’s career spans across the energy industry from engineering and contracting to investment and ownership of energy assets.
Past principal directorships in the last five years
Keppel Infrastructure Holdings Pte Ltd, Keppel Capital Holdings Pte Ltd, Keppel Merlimau Cogen Pte Ltd, GE Keppel Energy Services Pte Ltd,
Keppel Infrastructure Fund Management Pte Ltd (Trustee-Manager of Keppel Infrastructure Trust) and Energy Studies Institute.
Christina Tan Hua Mui, 55
Bachelor of Accountancy (Honours), National University of Singapore; CFA® charterholder.
Ms Tan is the Chief Executive Officer of Keppel Capital Holdings Pte Ltd (Keppel Capital), Chairman of Keppel DC REIT Management Pte Ltd
(the Manager of Keppel DC REIT) and Deputy Chairman of Alpha Investment Partners Limited (Alpha).
Ms Tan has more than 20 years of experience and expertise in investing and fund management across the United States, 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.
Ms Tan’s principal directorships include Keppel Capital, Keppel REIT Management Limited (the Manager of Keppel REIT), Keppel DC REIT
Management Pte Ltd (the Manager of Keppel DC REIT), Keppel Infrastructure Fund Management Pte Ltd (the Trustee-Manager of Keppel
Infrastructure Trust) and the two private fund managers under Keppel Capital, being Alpha and Keppel Capital Alternative Asset Pte Ltd
(KCAA). She also sits on the Investment Committees for the private funds managed by Alpha and KCAA.
Past principal directorships in the last five years
Nil
Annual Report 2020
OTHER INFORMATION
219
Chris Ong Leng Yeow, 46
Bachelor and Master Degree in Electrical and Electronics Engineering, National University of Singapore.
Mr Ong is the Chief Executive Officer of Keppel Offshore & Marine Ltd (Keppel O&M) with effect from 1 July 2017. Prior to this appointment,
he was Acting Chief Executive Officer of Keppel O&M. Mr Ong’s career began in Keppel FELS in 1999 as a Commissioning Superintendent
(E&I) and he has held appointments such as Project Engineer, Section Manager, Deputy Engineering Manager, Assistant General Manager
(Engineering), General Manager (Engineering), Acting Executive Director (Operations), Executive Director (Commercial) and Managing Director
of Keppel FELS Limited.
In addition to his current appointment, Mr Ong is also board member of The Institute of Technical Education Board of Governors, a member
of the U EnTech Steering Committee, a member of the Keppel Chair Professor Management/Selection Committee and a member of
Governance Board of Keppel-NUS Corporate Laboratory. He was appointed a Board Member of the Maritime and Port Authority of Singapore
on 2 February 2018.
Mr Ong is a member of the American Bureau of Shipping; member of the council of Stiftelsen Det Norske Veritas, DNV GL South East Asia and
Pacific Committee, as well as Bureau Veritas Asia-Australia Committee.
Mr Ong is the Chairman of Keppel Amfels LLC, Keppel Nantong Heavy Industry Co Ltd, Keppel Nantong Shipyard Co Ltd, Asian Lift Pte Ltd,
Keppel FELS Brasil S.A. and FueLNG Pte Ltd. He is also a director of various subsidiaries or associated companies of Keppel O&M. He is also
a director of Keppel Technology and Innovation Pte Ltd.
Past principal directorships in the last five years
Various subsidiaries and associated companies of Keppel O&M.
Tan Swee Yiow, 60
Bachelor of Science (First Class Honours) in Estate Management, National University of Singapore, Master of Business Aministration in
Accountancy, Nanyang Technological University.
Mr Tan has been appointed Senior Managing Director of Urban Development at Keppel Corporation with effect from 15 February 2021.
Mr Tan joined the Keppel Group in 1990. Prior to his current appointment, Mr Tan was the Chief Executive Officer and Executive Director
of Keppel Land Limited from 1 January 2019 to 14 February 2021 and Chief Executive Officer and Executive Director of Keppel REIT
Management Limited (the Manager of Keppel REIT) from 20 March 2017 to 31 December 2018.
Mr Tan continues to serve on the Boards of Keppel Land Limited and Keppel REIT Management Limited as a Non-Executive Director. He
is also a Director and Secretary of the World Green Building Council Board and Immediate Past President of the Singapore Green Building
Council. Mr Tan serves as Deputy Chairman of the Workplace Safety and Health Council (Construction and Landscape Committee) and is first
Vice-President on the Management Committee of Real Estate Developers’ Association of Singapore.
Past principal directorships in the last five years
Nil
Thomas Pang Thieng Hwi, 56
Bachelor of Arts (Engineering) and Master of Arts (Honorary Award), University of Cambridge.
Mr Pang is currently Executive Director and Chief Executive Officer of Keppel Telecommunications & Transportation Ltd (Keppel T&T), a
position he held since July 2014. From June 2010 to June 2014, he was Chief Executive Officer of Keppel Infrastructure Fund Management
Pte Ltd, the Trustee-Manager of Keppel Infrastructure Trust (KIT).
Mr Pang joined Keppel Offshore & Marine Ltd (Keppel O&M) in 2002 as a Senior Manager (Merger Integration Office) to assist in the merger
and 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, as well as strategic planning of Keppel O&M. Prior to that, Mr Pang 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 subsidiaries, associates and joint venture companies of Keppel T&T. He is also a director of
Keppel Capital Holdings Pte Ltd, Keppel DC REIT Management Pte Ltd (the Manager of Keppel DC REIT), Keppel Technology and Innovation
Pte Ltd and M1 Limited.
Past principal directorships in the last five years
Various subsidiaries and associated companies of Keppel T&T and Keppel DC REIT.
Keppel Corporation Limited
220
KEY EXECUTIVES
Manjot Singh Mann, 55
Master of Management Studies (Marketing and Sales Management), University of Bombay; Bachelor of Engineering (Mechanical Engineering),
University of Jabalpur.
Mr Mann assumed the Chief Executive Officer role at M1 Limited (M1) on 6 December 2018 and was appointed to the Board of M1 on 11
June 2019.
Mr Mann has about 30 years of operational leadership experience across diverse geographical markets and a unique blend of insights and
perspectives in the rapidly evolving telecommunications industry.
Prior to joining M1, Mr Mann served as CEO at Pareteum Asia, a leading cloud software platform company, where he was appointed to
expand NASDAQ-listed Pareteum Corporation’s footprint in Asia. He was previously Global CEO (Communications and Convergence) of
Lebara Mobile (UK), one of the largest multinational, pan-European mobile virtual network operators in the world. He was also the former CEO
of Hutchison Telecommunication in Jakarta, Indonesia.
Past principal directorship in the last five years
Pareteum Asia Pte Ltd and Lebara Service Centre Limited.
Louis Lim, 48
Master and Bachelor (Economics), Massachusetts Institute of Technology; MBA, INSEAD.
Mr Lim was appointed the Chief Executive Officer of Keppel Land Limited on 15 February 2021, after having served as its Chief Operating
Officer since January 2018.
Mr Lim was previously Director of Group Strategy & Development at Keppel Corporation Limited, where he was responsible for Keppel’s
corporate strategy and worked with Keppel’s business units on their strategic priorities. He was concurrently Managing Director of Keppel
Technology and Innovation Pte Ltd, a change agent and innovation catalyst for the Keppel Group which aims to transform how Keppel
harnesses technology and innovation to create value for stakeholders.
Prior to joining the Keppel Group, Mr Lim was a Partner with Bain & Company where he led the firm’s Consumer Products & Retail as well
as Organisation and Change Management practices in Southeast Asia. Mr Lim was also responsible for human capital development and
recruitment for Bain in the region.
Mr Lim is a board member of Keppel Infrastructure Holdings Pte Ltd and is also a director of various subsidiaries of Keppel Corporation
Limited and Keppel Land Limited.
Past principal directorships in the last five years
Nil
Cindy Lim, 43
Bachelor of Engineering (Mechanical & Production) (Second Upper Honours) from Nanyang Technological University; Executive MBA,
Singapore Management University.
Ms Lim joined Keppel in 2001. She was appointed the Chief Executive Officer of Keppel Infrastructure Holdings Pte Ltd (Keppel Infrastructure)
on 15 February 2021.
In her 20 years with Keppel, Ms Lim has held various leadership positions. She was the Director of Group Corporate Development (GCD)
of Keppel Corporation Limited and concurrently the Managing Director of Keppel Urban Solutions Pte Ltd (KUS), an end-to-end integrated
master developer of liveable, smart and sustainable precincts and townships in the Asia-Pacific region. As the Director of GCD, she focused
on harnessing collaboration and synergies across the business units and functions within the Keppel Group. As the Managing Director of
KUS, she led the unit to capture business opportunities, tapping on the megatrends of rapid urbanisation and the increasing global focus on
sustainability.
Prior to these, Ms Lim was the Executive Director of Infrastructure Services in Keppel Infrastructure, where she stewarded the business by
driving plants’ efficiency and reliability, health, safety & environment (HSE) performance, as well as developing procurement strategies. She
has diverse experience in operation and process excellence, as well as people and organisation management.
Her principal directorships include Keppel Infrastructure, Keppel Infrastructure Services Pte Ltd, KUS, Primus I Investment Holdings Pte Ltd,
Primus II Investment Holdings Pte Ltd, Kobleen Pte Ltd, Mulwort Pte. Ltd, Leklier Pte Ltd and MET Holding AG.
Past principal directorships in the last five years
Keppel Infrastructure Fund Management Pte Ltd (Trustee-Manager of Keppel Infrastructure Trust) and Keppel Rewards Pte Ltd.
Annual Report 2020
OTHER INFORMATION 221
Bridget Lee Siow Pei, 49
Master of Management, JL Kellogg Graduate School of Management, Northwestern University; Bachelor of Accountancy, Nanyang
Technological University.
Ms Lee is the Chief Executive Officer (CEO) and Executive Director of Keppel Capital Alternative Asset Pte Ltd, a wholly-owned subsidiary of
Keppel Capital Holdings Pte Ltd (Keppel Capital). Prior to assuming the role of CEO, Ms Lee helped to spearhead the efforts in the investment
of new platforms and initiatives in Keppel Capital. Ms Lee is also Chief Operating Officer of Keppel Capital, with effect from 15 February 2021.
Ms Lee has more than 20 years of experience in investment, corporate finance and mergers and acquisitions with various financial
institutions in Asia and the United States. Her track record in transactions ranges from private equity, joint ventures, capital market
transactions, as well as listed companies’ merger and acquisitions, to funds and real assets investments.
Prior to joining Keppel Capital, Ms Lee was with Mapletree Investments as Senior Vice President of Investment overseeing the China market.
She was also with other global financial organisations including Temasek Holdings.
Past principal directorships in last five years
Nil
Paul Tham Wei Hsing, 39
Bachelor of Science in Civil & Environmental Engineering, Cornell University; Master in Business Administration, Singapore Management
University.
Mr Tham is the Chief Executive Officer of Keppel REIT Management Limited (the Manager of Keppel REIT).
Before his current appointment, Mr Tham served as the Manager’s Deputy Chief Executive Officer. He was also the Chief Financial Officer of
Keppel Capital Holdings Pte Ltd (Keppel Capital), the asset management arm of Keppel Corporation Limited, overseeing finance, compliance,
legal and investor relations. Prior to that, he was part of Keppel Corporation’s Group Strategy & Development department, where he played a
key role in the formation of Keppel Capital.
Before Keppel, Mr Tham served as a management consultant for Bain & Company working with leading global companies in Asia Pacific
across a range of topics including financial performance management and growth strategy. Mr Tham started his career as a structural
engineer in New York and has experience with building developments and infrastructure.
Mr Tham is also a Director of Keppel Pacific Oak US REIT Management Pte. Ltd. (the Manager of Keppel Pacific Oak US REIT).
Past principal directorships in the last five years
Nil
Matthew R. Pollard, 53
Bachelor of Arts Degree, Columbia University; Master in Business Administration, University of Chicago.
Mr Pollard was appointed Chief Executive Officer (CEO) of Keppel Infrastructure Fund Management Pte Ltd, the Trustee-Manager of Keppel
Infrastructure Trust (KIT), with effect from 1 July 2018.
As CEO of the Trustee-Manager, Mr Pollard is responsible for working with the Board to determine the strategy for KIT. He works with other
members of the Trustee-Manager’s management team to execute the stated strategy of the Trustee-Manager.
Mr Pollard joined Keppel Capital Holdings Pte Ltd (Keppel Capital) as Managing Director, Infrastructure, in November 2017.
Prior to joining Keppel Capital, Mr Pollard spent more than 28 years of his career in investment banking, direct investment and
entrepreneurship, of which 25 years have been in Asia. He has been involved in the energy, power, renewable and infrastructure sectors his
entire career.
Mr Pollard was founder and managing director of Capital Partners Group, Singapore, from 2014 to 2017. He was Head of Infrastructure (Asia)
at Arcapita Group from 2008 to 2013. In addition, he was the Chairman of China-based Honiton Energy Group from 2009 to 2015. Prior to
joining Arcapita Bank, Mr Pollard held senior positions in the energy and utilities teams of Citigroup, Dresdner Kleinwort Wasserstein, Enron
Corp, and Power Pacific Co.
Past principal directorships in last five years
Nil
Keppel Corporation Limited
222
KEY EXECUTIVES
Chua Hsien Yang, 43
Bachelor of Engineering (Civil), University of Canterbury; Master of Business Administration, University of Western Australia.
Mr Chua assumed the role of Director of Group Mergers & Acquisitions at Keppel Corporation Limited on 15 February 2021.
Prior to his appointment, he served as Chief Executive Officer of Keppel DC REIT Management Pte Ltd (the Manager of Keppel DC REIT) since
the listing of the REIT in 2014 till 14 February 2021.
Mr Chua has extensive experience in the real estate fund management and hospitality industries, including mergers and acquisitions, real
estate investments, business development and asset management globally. Prior to joining the Keppel DC REIT Management, Mr Chua was
Senior Vice President of Keppel REIT Management Limited (the Manager of Keppel REIT) where he headed the investment team.
From 2006 to 2008, Mr Chua was Director of Business Development and Asset Management at Ascott Residence Trust Management Limited
(the Manager of Ascott Residence Trust) and before that, he was with Hotel Plaza Limited (now known as Pan Pacific Hotels Group Limited)
as Assistant Vice President of Asset Management, where he was responsible for the business development and asset management activities
of group-owned properties.
Past principal directorships in the last five years
Various subsidiaries and associated companies of Keppel DC REIT.
Ms Anthea Lee, 47
Bachelor of Science (Estate Management), Second Class Honours (Upper Division), National University of Singapore; Master of Science
(International Construction Management), Nanyang Technological University.
With effect from 15 February 2021, Ms Lee is the Chief Executive Officer of Keppel DC REIT Management Pte Ltd (the Manager of Keppel
DC REIT). Ms Lee has over 20 years of experience in real estate investment, business development, asset management and project
management.
She joined the Manager in 2015 as Head of Investment and Asset Management and has been instrumental in growing Keppel DC REIT
through various accretive acquisitions. She was appointed Deputy CEO and Head of Investment in 2018, and has been actively involved in all
aspects of Keppel DC REIT’s business.
Prior to joining the Manager, Ms Lee was Vice President, Investment at Keppel REIT Management Limited (the Manager of Keppel REIT),
managing regional investments and divestments. Before joining the Keppel Group in 2006, she was with JTC Corporation and Ascendas Land,
where she was responsible for business development, asset management and project management of industrial and business park facilities
and development for approximately 10 years.
Past principal directorships in the last five years
Nil
David Eric Snyder, 50
Bachelor of Science in Business Administration, Biola University.
Mr Snyder was part of the management team that led the successful listing of Keppel Pacific Oak US REIT and has been the Chief Executive
Officer and Chief Investment Officer since its listing on 9 November 2017. Prior to his current appointment, Mr Snyder was a consultant to
KBS Capital Advisors where he managed the AFRT portfolio.
From 2008 to 2015, Mr Snyder was the Chief Financial Officer (CFO) of KBS Capital Advisors and five of its non-traded REITs. In addition to
his CFO responsibilities, he led the negotiation for the transfer of the AFRT portfolio comprised of over 800 properties valued at over US$1.7
billion. He subsequently managed that portfolio for KBS Real Estate Investment Trust.
From 1998 to 2008, Mr Snyder was the Financial Controller for Nationwide Health Properties, a publicly-traded healthcare REIT. Prior to that
he was the Director of Financial Reporting for Regency Health Services.
Mr Snyder started his career as an auditor at Arthur Andersen LLP after graduating from Biola University.
Past principal directorships in the last five years
Nil
Annual Report 2020
OTHER INFORMATION 223
Alvin Mah, 49
Bachelor of Business Administration (Honours), National University of Singapore; CFA® charterholder.
Mr Mah is the Chief Executive Officer of Alpha Investment Partners Limited (Alpha). He currently sits on the Investment Committee for
various funds under management and is also an Executive Director of Alpha’s Board. Prior to his current appointment, Mr Mah served as the
Chief Investment Officer, leading all investment efforts including crafting the investment strategies for the various funds.
Mr Mah has been active in Asian finance and investment activities for about 25 years and has conducted investments in key Asian markets.
He is well-versed in various aspects of investment and finance, having played key leadership roles in investment and banking. With a wide-
ranging exposure to finance, he has been able to customise structured solutions to meet specific investment objectives and has done
pioneering work for structured real estate investments, including Real Estate Investment Trusts and securitisation.
Past principal directorships in last five years
Nil
Devarshi Das, 49
Master of Business Administration, University of Chicago Booth School of Business; Master of Science in Civil Engineering, Purdue University;
Bachelor of Technology in Civil Engineering, Indian Institute of Technology.
Mr Das is the Chief Executive Officer (CEO), Infrastructure, Keppel Capital Alternative Asset Pte Ltd, a wholly-owned subsidiary of Keppel
Capital Holdings Pte Ltd (Keppel Capital). He joined Keppel Capital in January 2019 and is focused on building the private infrastructure fund
business. Mr Das has more than 20 years of private equity, principal investment and financial services experience.
Prior to Keppel Capital, Mr Das was the CEO of Capital Advisors Partners Asia Pte Ltd (CapAsia). Mr Das joined CapAsia, an infrastructure
private equity fund manager specialising in mid-market energy and infrastructure companies and assets, at the launch of its first fund in
2006. Over a tenure of more than 12 years in CapAsia, Mr Das was involved in all aspects of fund management of multiple funds and a key
executive of their funds. He was on the board of various portfolio companies representing the power, transportation, renewable energy and
telecommunications sectors.
Prior to CapAsia, Mr Das was with Australia and New Zealand Bank in their Project and Structured Finance group in Singapore. Mr Das also
has principal investment experience in the United States (US). He worked in the US energy industry for Enron Energy Services as an asset
investment manager, and also worked for Sempra Energy Solutions on investments into their contracted energy assets. Mr Das has also
acted as a product manager for the commercial auto insurance product of Progressive Insurance where he was responsible for the product
profitability across various midwestern states in the US.
Past principal directorships in last five years
Nil
Keppel Corporation Limited
224
MAJOR PROPERTIES
Held By
Completed properties
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
Ocean Financial
Centre
Collyer Quay,
Singapore
One Raffles Quay,
Singapore
Marina Bay Financial
Centre Towers 1 and
2, and Marina Bay
Link Mall
Marina Boulevard,
Singapore
Marina Bay Financial
Centre Tower 3
Marina Boulevard,
Singapore
275 George Street
Brisbane,
Australia
Land area: 6,221 sqm
43-storey office tower with
ancillary retail space
Land area: 15,497 sqm
Two office towers of
50-storey and 29-storey
Land area: 33,220 sqm
Two office towers of
33-storey and 50-storey with
ancillary retail space
999 years leasehold
Commercial office building with
rentable area of 81,450 sqm
99 years leasehold
Commercial office building with
rentable area of 123,042 sqm
99 years leasehold
Commercial office building with
rentable area of 161,243 sqm
Land area: 9,710 sqm
46-storey office tower with
retail podium
99 years leasehold
Commercial office building with
rentable area of 124,171 sqm
Land area: 3,655 sqm
31-storey office tower
Freehold
Commercial office building with
rentable area of 41,720 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 45,043 sqm
8 Chifley Square
Sydney,
Australia
David Malcolm
Justice Centre
Perth,
Australia
311 Spencer Street
Melbourne,
Australia
Pinnacle Office Park
Sydney,
Australia
T Tower
Seoul,
South Korea
Keppel DC
Singapore 1
Serangoon,
Singapore
Keppel DC
Singapore 2
Tampines,
Singapore
Keppel DC
Singapore 3
Tampines,
Singapore
Keppel DC
Singapore 4
Tampines,
Singapore
Land area: 1,581 sqm
30-storey office tower
99 years
leasehold
Commercial office building with
rentable area of 19,334 sqm
Land area: 2,947 sqm
33-storey office tower
99 years
leasehold
Commercial office building with
rentable area of 31,175 sqm
Land area: 5,136 sqm
40-storey office tower
Freehold
Commercial office building with
rentable area of 67,666 sqm
Land area: 23,355 sqm
Three office towers of
8- storey, 7-storey and
4-storey
Freehold
Commercial office building with
rentable area of 35,132 sqm
Land area: 5,346 sqm
28-storey office tower
Freehold
Commercial office building with
rentable area of 21,216 sqm
Land area: 7,333 sqm
6-storey data centre
Land area: 5,000 sqm
5-storey data centre
Land area: 5,000 sqm
5-storey data centre
30 years lease with
option for another
30 years
30 years lease with
option for another
30 years
30 years lease with
option for another
30 years
Data centre with rentable area
of 10,193 sqm
Data centre with rentable area
of 3,575 sqm
Data centre with rentable area
of 5,103 sqm
Land area: 6,805 sqm
5-storey data centre
30 years lease
and extended for
another 30 years
Data centre with rentable area
of 7,854 sqm
Keppel REIT
49%
Keppel DC REIT
21%
Annual Report 2020
OTHER INFORMATION 225
Location
Keppel DC
Singapore 5
Jurong,
Singapore
DC1
Riverside Road,
Singapore
Gore Hill Data Centre
Sydney,
Australia
Almere Data Centre
Amsterdam,
Netherlands
Keppel DC Dublin 1
Dublin,
Ireland
Keppel DC Dublin 2
Dublin,
Ireland
maincubes Data
Centre
Offenbach am Main,
Germany
Kelsterbach Data
Centre
Kelsterbach,
Germany
The Plaza Buildings
8th Street, Bellevue,
Washington,
USA
Bellevue Technology
Center
24th Street, Bellevue,
Washington,
USA
The Westpark
Portfolio
8200-8644 154th
Avenue NE Redmond,
Washington,
USA
Description and
Approximate
Land Area
Tenure
Usage
Land area: 7,742 sqm
5-storey data centre
30 years lease
Data centre with rentable area
of 8,717 sqm
Land area: 8,538 sqm
5-storey data centre
70 years and
5 months lease
Data centre with rentable area
of 19,864 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
3-storey data centre
Freehold
Data centre with rentable area
of 11,000 sqm
Land area: 20,275 sqm
2-storey data centre
999 years
leasehold
Data centre with rentable area
of 6,328 sqm
Land area: 13,900 sqm
Single-storey data centre
999 years
leasehold
Data centre with rentable area
of 2,383 sqm
Land area: 5,596 sqm
4-storey data centre
Freehold
Data centre with rentable area
of 9,016 sqm
Land area: 46,369 sqm
5-storey data centre
Freehold
Data centre with rentable area
of 50,248 sqm
Land area: 16,295 sqm
16 and 10 storey multi-
tenanted office buildings
Freehold
Commercial office building with
rentable area of 45,615 sqm
Land area: 188,570 sqm
Office campus featuring
9 multi-tenanted office
buildings
Freehold
Commercial office buildings
with rentable area of 30,705 sqm
Freehold
Land area: 167,621 sqm
Business campus
comprising 19 office
buildings and 2 flex buildings
which are multi-tenanted
Commercial office and flex
buildings with rentable area of
72,667 sqm
Westmoor Center
Westmoor Drive,
Colorado,
USA
Land area: 176,953 sqm
Business campus featuring
6 multi-tenanted office
buildings
Freehold
Commercial office building with
rentable area of 56,939 sqm
1800 West Loop
South
Houston,
USA
Maitland
Promenade I & II
485 & 495 N Keller
Road,
Florida,
USA
Land area: 7,627 sqm
A 21-storey high rise office
multi-tenanted property
Freehold
Commercial office building with
rentable area of 37,171 sqm
Land area: 78,379 sqm
Office campus featuring
2 multi-tenanted office
buildings
Freehold
Commercial office building with
rentable area of 42,804 sqm
One Twenty Five
125 East John
Carpenter Freeway,
Texas,
USA
Land area: 25,594 sqm
Office complex comprising
2 office buildings and a
7-storey parking garage
which are multi-tenanted
Freehold
Commercial office building with
rentable area of 41,371 sqm
Held By
Effective
Group
Interest
Keppel Pacific Oak US REIT
7%
Keppel Corporation Limited
226 MAJOR PROPERTIES
Description and
Approximate
Land Area
Tenure
Usage
Land area: 83,538 sqm
99 years leasehold
A 1,129-unit waterfront
condominium development
Land area: 38,830 sqm
99 years leasehold
A 366-unit waterfront
condominium development
Land area: 10,441 sqm
18-storey office tower
99 years leasehold
Commercial office
building with rentable area of
35,916 sqm
Land area: 7,261 sqm
99 years leasehold
A 6-storey shopping mall
Land area: 3,546 sqm
50 years lease (office)
40 years lease (retail)
A 11-storey office tower with
ancillary retail space in Haidian
District
Land area: 3,686 sqm
50 years lease
A 4-storey office building at the
core area of Zhangjiang high-
tech Park
Land area: 9,278 sqm
Land area: 2,507,653 sqm
Two 18-hole golf courses
50 years lease (office)
40 years lease (retail)
A 17-storey office tower with
ancillary retail space in Liwan
District
70 years lease
(residential)
50 years lease
(golf course)
Integrated resort
comprising golf courses, resort
homes and resort facilities
Land area: 13,373 sqm
50 years lease (office)
40 years lease (retail)
A mixed-use development in
Hongkou District
Land area: 16,427 sqm
50 years lease (office)
40 years lease (retail)
A mixed-use development in
Hongkou District
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
Land area: 2,018,390 sqm
Freehold
A township comprising
residential units, commercial
space and recreational facilities
in Skudai
Land area: 26,406 sqm
50 years BOT with
option for another two
10-years
A mixed-use development in
CBD
Land area: 32,000 sqm
50 years BOT with
option for another two
10-years
A 5-star hotel in Yangon with
789 rooms
Land area: 1,940 sqm
9-storey office tower
Freehold
Commercial office building with
rentable area of 11,731 sqm
Held By
Keppel Bay Pte Ltd
Effective
Group
Interest
100%
100%
Keppel Bay Tower Pte Ltd(a)
100%
Katong Retail Trust
100%
100%
100%
Beijing Changsheng
Property Management
Co Ltd
China The9 Interactive
(Shanghai) Ltd, The9
Computer Technology
Consulting (Shanghai)
Ltd and Shanghai Kai E
Information Technology
Co Ltd
Win Up Investment Ltd
30%
Spring City Golf & Lake
Resort Co (owned by
Kingsdale Development
Pte Ltd)
69%
North Bund Pte Ltd
30%
Vision (III) Pte Ltd
30%
PT Kepland Investama
100%
Tanah Sutera
Development Sdn Bhd
18%
City Square Office Co Ltd
40%
Straits Greenfield Ltd
100%
First King Properties Ltd(c)
100%
Location
Reflections
at Keppel Bay
Singapore
Corals at
Keppel Bay
Singapore
Keppel Bay Tower
HarbourFront
Avenue,
Singapore
I12 Katong
East Coast Road,
Singapore
Linglong Tiandi
Beijing,
China
The Kube
Shanghai,
China
Westmin Plaza
Guangzhou,
China
Spring City Golf
& Lake Resort
Kunming,
China
International Bund
Gateway (f.k.a
North Bund Plaza)
Shanghai,
China
Trinity Tower
Shanghai,
China
International
Financial Centre
(Tower 2)
Jakarta,
Indonesia
Taman Sutera and
Taman Sutera Utama
Johor Bahru,
Malaysia
Junction City Tower
(Phase 1)
Yangon,
Myanmar
Sedona Hotel Yangon
Yangon,
Myanmar
75 King William
Street
London,
United Kingdom
Annual Report 2020
OTHER INFORMATION Held By
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
227
Keppel Land Watco I Co Ltd
61%
Keppel Land Watco II & III
Co Ltd
61%
Properties under development
Garden Development
Pte Ltd
60%
K-Commercial Pte Ltd
100%
Parksville Development
Pte Ltd
100%
Keppel Bay Pte Ltd
100%
Shanghai Floraville Land
Co Ltd
99%
Shanghai Jinju Real Estate
Development Co Ltd
99%
Saigon Centre
(Phase 1)
Ho Chi Minh City,
Vietnam
Saigon Centre
(Phase 2)
Ho Chi Minh City,
Vietnam
The Garden
Residences
Serangoon,
Singapore
Keppel Towers and
Keppel Towers 2
Hoe Chiang Road,
Singapore
19 Nassim
Nassim Hill,
Singapore
Keppel Bay Plot 6
Singapore
Park Avenue Central
Shanghai,
China
Sheshan Riviera
Shanghai,
China
Chengdu Hilltop
Development Co Ltd(d)
50%
Chengdu Shengshi Jingwei
Real Estate Co Ltd
100%
Chengdu Wanji Real Estate
Development Co Ltd
30%
Hill Crest Villas
Chengdu,
China
Serenity Villas
Chengdu,
China
City Park
Chengdu,
China
Land area: 2,730 sqm
25-storey office, retail
cum serviced apartments
development
50 years leasehold
Land area: 8,355 sqm
50 years leasehold
Land area: 17,189 sqm
99 years leasehold
Land area: 9,126 sqm
Freehold
Land area: 5,785 sqm
99 years leasehold
Land area: 43,701 sqm
99 years leasehold
Commercial building with
rentable area of 11,683 sqm
office and 10,099 sqm of
serviced apartments
Commercial building with
rentable area of 37,600 sqm
retail, 34,000 sqm office
and 195 units of serviced
apartments
A 613-unit condominium
development
*(2021)
Commercial office
buildings
*(2024)
A 101-unit condominium
development
*(2023)
A proposed 86-unit waterfront
condominium development
Land area: 27,958 sqm
40 years lease (retail)
50 years lease (office)
An office and retail
development
*(2023)
Land area: 175,191 sqm
70 years lease
(residential)
40 years lease
(commercial)
A 217-unit landed development
in Sheshan
*(2022 Phase 2)
Land area: 249,330 sqm
70 years leasehold
A 274-unit landed development
in Xinjin County
Land area: 286,667 sqm
70 years leasehold
Land area: 47,261 sqm
70 years leasehold
Keppel Heights (Wuxi)
Property Development
Co Ltd
100%
Park Avenue Heights
Wuxi,
China
Land area: 66,010 sqm
Keppel Lakefront (Wuxi)
Property Development
Co Ltd
100%
Waterfront
Residences
Wuxi,
China
Land area: 215,230 sqm
Keppel Seasons
Residences Property
Development (Wuxi)
Co Ltd
100%
Seasons Residences
Wuxi,
China
Land area: 180,258 sqm
Keppel Hong Da
(Tianjin Eco-City) Property
Development Co Ltd
100%
Development in
Sino-Singapore
Tianjin Eco-City
Tianjin,
China
Land area: 313,265 sqm
70 years lease
(residential)
40 years lease
(commercial)
70 years lease
(residential)
40 years lease
(commercial)
70 years lease
(residential)
40 years lease
(commercial)
70 years lease
(residential)
40 years lease
(commercial)
Keppel Corporation Limited
A 867-unit landed development
in Xinjin County
*(2021 Phase 2)
A 772-unit landed development
in Tianfu New Area
*(2021)
A mixed-use development with
1,281 residential units with
commercial facilities in Liangxi
District
(*2021 Phase 3)
A 1,403-unit residential
development with commercial
and SOHO facilities in Binhu
District
*(2021 Phase 6)
A 2,904-unit residential
development with integrated
facilities in Xinwu District
*(2021 Phases 2 & 3)
A 4,297-unit residential
development with retail space
*(2021 Seasons Residences
Phase 3B)
228 MAJOR PROPERTIES
Effective
Group
Interest
100%
Location
Seasons City in
Sino-Singapore
Tianjin Eco-City
Tianjin,
China
Description and
Approximate
Land Area
Tenure
Usage
Land area: 40,451 sqm
40 years leasehold
A commercial sub-centre
comprising a retail complex and
three office towers
*(2021 Phase 1)
Held By
Keppel Hong Yuan
(Tianjin Eco-City) Property
Development Co Ltd/
Keppel Hong Tai (Tianjin
Eco-City) Property
Development Co Ltd/
Keppel Hong Teng
(Tianjin Eco-City) Property
Development Co Ltd
Nanjing Jinsheng Real
Estate Development Co Ltd
40%
China Chic
Nanjing,
China
Land area: 87,790 sqm
Land area: 38,285 sqm
Land area: 84,000 sqm
70 years lease
(residential)
40 years lease
(commercial)
70 years lease
(residential)
40 years lease
(commercial)
70 years lease
(residential)
A 1,589-unit residential
development in the core of
Nanjing Jiangbei New Area
*(2021 Phase 2, 2022 Phase 3)
A mixed-use development with
about 181 residential units
and 417 commercial units in
Xuanwu District
*(2022)
A 1,566-unit residential
development in Jiading District
(*2022)
Land area: 10,428 sqm
20 years lease with
option for another 20
years
A prime office
development with rentable area
of 70,000 sqm
Land area: 28,851 sqm
30 years lease with
option for another 20
years
A 2,855-unit residential
development with ancillary
shop houses
Land area: 2,850,774 sqm
Freehold
A township comprising
residential units, commercial
space and recreational facilities
in Skudai
Land area: 26,406 sqm
50 years BOT with
option for another two
10-years
A mixed-use development in
CBD
*(2024)
Land area: 638,737 sqm
50 years leasehold
Land area: 146,000 sqm
50 years leasehold
Land area: 477,575 sqm
Freehold
Land area: 1,974,000 sqm
50 years leasehold
A township with about 4,300
apartments, commercial
complexes and public sports
facilities
*(2024 Phase 1)
A residential development
with commercial space in
Thu Thiem New Urban Area,
District 2
*(2021 Phase 1)
A 7,100 residential unit
integrated township
development located in Thane
(*2032)
A residential township
with about 6,600 units and
commercial space in Long
Thanh District
Nanjing Zhijun Property
Development Co Ltd
25%
Shanghai Xindi Real Estate
Co Ltd
15%
PT Kepland Investama
100%
PT Harapan Global Niaga
100%
Tanah Sutera Development
Sdn Bhd
18%
City Square Tower Co Ltd
40%
Saigon Sports City Ltd
100%
Empire City LLC
40%
Kapstone Construction
Private Limited
49%
Dong Nai Waterfront City
LLC (owned by
Portsville Pte Ltd)(b)
30%
Noblesse IX (f.k.a
Xuanwu Mixed-use
Devt)
Nanjing,
China
Upview, Shanghai
Shanghai,
China
International
Financial Centre
(Tower 1)
Jakarta,
Indonesia
West Vista at Puri
Jakarta,
Indonesia
Taman Sutera and
Taman Sutera Utama
Johor Bahru,
Malaysia
Junction City Tower
(Phase 2)
Yangon,
Myanmar
Saigon Sports City
Ho Chi Minh City,
Vietnam
Empire City
Ho Chi Minh City,
Vietnam
Urbania Township
Mumbai,
India
Dong Nai
Waterfront City
Dong Nai Province,
Vietnam
Annual Report 2020
OTHER INFORMATION 229
Held By
Industrial properties
Effective
Group
Interest
Location
Description and
Approximate
Land Area
Tenure
Usage
Keppel FELS Limited
100%
Keppel Shipyard Limited
100%
*
Expected year of completion
Notes:
Pioneer and
Crescent Yard,
Singapore
Land area: 522,097 sqm
buildings, workshops,
building berths, drydocks
and wharves
Benoi and
Pioneer Yard,
Singapore
Land area: 799,116 sqm
buildings, workshops,
drydocks and wharves
16 - 30 years leasehold Offshore oil rig construction
and repair
30 years leasehold
Shiprepairing, shipbuilding and
marine construction
(a) A conditional sale & purchase agreement has been entered to divest 100% of the issued and paid-up share capital of Keppel Bay Tower Pte Ltd to Keppel REIT (refer to
Note 36 in the notes to financial statements)
(b) Portsville Pte. Ltd. is divesting its remaining 30% interest in Dong Nai Waterfront City LLC to Nam Long Investment Corporation (refer to Note 36 in the notes to financial
statements)
(c) Divestment completed on 29 January 2021 (refer to Note 38 in the notes to financial statements)
(d) Divestment completed on 4 February 2021 (refer to Note 38 in the notes to financial statements)
Keppel Corporation Limited
230 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 &
right-of-use assets
Associated companies, joint ventures and investments
Stocks, contract assets, debtors, cash & long term assets
Intangibles
Total assets
Less:
Creditors and contract liabilities
Borrowings & lease liabilities
Other liabilities
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)
2016
2017
2018
2019
2020
6,767
901
1,088
784
6,195
6,076
17,532
141
29,944
8,034
9,053
512
12,345
11,668
677
12,345
57.1
43.2
20.0
6.43
6.35
9.1
6.9
2.2
5,964
801
442^
196^
5,965
1,055
1,245
948
5,894
6,575
16,084
133
28,686
8,298
7,793
622
11,973
11,443
530
11,973
23.3 ^
10.8 ^
22.0
6.29
6.22
3.7
1.7
0.5
5,224
6,825
14,410
129
26,588
6,912
7,549
550
11,577
11,268
309
11,577
67.7
52.3
30.0 *
6.22
6.15
10.8
8.4
1.7 *
7,580
877
954
707
6,684
7,121
15,834
1,683
31,322
7,325
11,657
694
11,646
11,211
435
11,646
48.8
38.9
20.0
6.17
5.25
7.9
6.3
1.9
(0.56)
(0.46)
(0.48)
(0.85)
6,574
8
(255)
(506)
6,972
7,355
16,170
1,609
32,106
7,585
12,603
762
11,156
10,728
428
11,156
(14.3)
(27.8)
10.0
5.90
5.02
(2.4)
(4.6)
(2.8)
(0.91)
28,879
1,282
21,862
1,107
18,186
1,018
18,297
1,187
18,452
1,166
^
*
Includes the one-off financial penalty from the global resolution and related costs of $619 million.
Includes the special dividend paid of 5.0 cents per share.
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.
Annual Report 2020
OTHER INFORMATION
231
2020
Group revenue of $6,574 million for 2020 was $1,006 million or 13% lower than the preceding year. Revenue from Energy & Environment
decreased by $1,026 million or 21% to $3,943 million led by lower revenue in the offshore & marine business due to slower progress from
certain on-going projects as a result of COVID-19 related disruptions, suspension of revenue recognition on Awilco contracts, fewer new
contracts secured in 2020 and deferment of some projects, which were partly offset by revenue from new projects. The lower revenue was
also due to lower electricity sales, lower progressive revenue recognition from the Hong Kong Integrated Waste Management Facility project,
as well as the completion of the Keppel Marina East Desalination Plant project in 2Q 2020 in the infrastructure business. Major jobs delivered
by the offshore & marine business in 2020 included two jackup rigs, a dual-fuel bunker tanker, a Floating Production Storage and Offloading
vessel (FPSO) modification and upgrading project, a LNG Carrier, a dredger and a production barge. Revenue from Urban Development
decreased by $61 million to $1,275 million mainly due to lower revenue generated from hospitality and commercial properties and lower
revenue from property trading projects in Singapore and Vietnam, which were partly offset by higher revenue from property trading projects
in China. Revenue for Connectivity grew by $92 million to $1,220 million mainly due to M1 which was consolidated from March 2019, partly
offset by lower contribution from the logistics business following the divestment of some China logistics assets in November 2019. Revenue
from Asset Management decreased by $10 million to $135 million mainly due to lower acquisition and divestment fees, partly offset by higher
management fees.
Group pre-tax loss for 2020 was $255 million, as compared to pre-tax profit of $954 million in 2019. Excluding impairments of $1,030 million,
pre-tax profit of the Group was $775 million, which was $302 million or 28% lower than $1,077 million (excluding impairments) in 2019.
Energy & Environment’s pre-tax loss was $1,251 million as compared to pre-tax loss of $121 million in 2019. Excluding impairments of $982
million, the pre-tax loss was $269 million. This was largely due to weaker performance in the offshore & marine business, which had been
impacted by slower progress on projects due principally to significant downtime as a result of COVID-19, share of losses from associated
companies and joint ventures, higher net interest expense, and fair value loss on investment, which were partially offset by lower overheads
and government relief measures related to the COVID-19 pandemic. These were partly offset by higher contributions from the energy
infrastructure and environmental infrastructure businesses, as well as the absence of share of loss from KrisEnergy and fair value loss on
KrisEnergy warrants as compared to 2019. Pre-tax profit from Urban Development increased by $44 million to $720 million mainly due to
higher fair value gains from investment properties, higher contribution from property trading projects in China, as well as higher contribution
from the Sino-Singapore Tianjin Eco-City. These were partly offset by lower contribution from associated companies and joint ventures.
Pre-tax profit of Connectivity was $29 million, which was $167 million below that in 2019. This was mainly due to the absence of fair value
gain recognised in 2019 from the remeasurement of previously held interest in M1 at acquisition date, as well as lower contribution from M1.
These were partly offset by gain from the disposal of interest in Business Online Public Company Limited, and lower losses from the logistics
business. Pre-tax profit from Asset Management increased by $65 million to $304 million mainly due to mark-to-market gain recognised from
the reclassification of the Group’s interest in KIT from an associated company to an investment following the loss of significant influence
over KIT, gain from sale of units in Keppel DC REIT, gain from divestment of interest in Gimi MS Corporation, as well as dividend income from
KIT and higher contribution from Keppel DC REIT. These were partly offset by mark-to-market losses from investments, lower investment
income and lower contributions from Keppel REIT and Alpha Data Centre Fund, as well as absence of dilution gain arising from Keppel DC
REIT’s private placement exercise in 2019.
Taxation expenses increased by $61 million or 32% mainly due to lower write-backs of tax provision as compared to 2019 and higher taxation
from property trading projects in China, partly offset by the deferred tax credit recognised in 2020 in relation to the impairment provisions
for contract assets. Non-controlling interests were $57 million lower than the preceding year. Taking into account income tax expenses and
non-controlling interests, net loss attributable to shareholders for 2020 was $506 million as compared to net profit of $707 million in the
preceding year. Losses in the Energy & Environment business were partly offset by profits from the Urban Development, Asset Management
and Connectivity businesses.
2019
Group revenue of $7,580 million for 2019 was $1,615 million or 27% higher than in the preceding year. Revenue from Energy & Environment
improved by $647 million or 15% to $4,969 million mainly due to higher revenue recognition from ongoing projects in the offshore & marine
business, increased sales in the power and gas business, as well as higher progressive revenue recognition from the Keppel Marina East
Desalination Plant project and the Hong Kong Integrated Waste Management Facility project, partly offset by the absence of revenue
recognised in 2018 from the sale of jackup rigs to Borr Drilling Limited. Major jobs delivered by the offshore & marine business in 2019
included five jackup rigs, three FPSO/FSRU conversions and four dredgers. Revenue from Urban Development decreased marginally by
$4 million to $1,336 million mainly due to lower revenue from property trading projects in Singapore, partly offset by higher revenue from
property trading projects in China. Revenue from Connectivity increased by $946 million to $1,128 million mainly due to the consolidation of
M1. Revenue from Asset Management increased by $26 million to $145 million as a result of higher asset management and acquisition fees.
Revenue ($ billion)
Pre-Tax Profit ($ million)
Net Profit ($ million)
8.0
6.4
4.8
3.2
1.6
0
1,500
1,125
750
375
0
-375
1,200
800
400
0
-400
-800
2016
2017
2018
2019
2020
6.8
6.0
6.0
7.6
6.6
2016
1,088
2017
442^
2018
2019
2020
1,245
954
(255)
2016
784
2017
196^
2018
948
2019
2020
707
(506)
^
Includes the one-off financial penalty and related costs of $619 million.
Keppel Corporation Limited
232 GROUP FIVE-YEAR PERFORMANCE
Group pre-tax profit for the current year was $954 million, $291 million or 23% below the previous year. Energy & Environment’s pre-tax loss
was $121 million as compared to pre-tax loss of $168 million in 2018. The lower loss was mainly due to higher operating results arising
from higher revenue, lower impairment provisions and lower net interest expense from the offshore & marine business, as well as higher
contributions from energy infrastructure and environmental infrastructure, and lower provision for impairment of an associated company,
partly offset by share of losses from associated companies and the absence of write-back of provisions for claims in 2018 in the offshore &
marine business, higher fair value loss on KrisEnergy warrants and lower contributions from infrastructure services. Pre-tax profit from Urban
Development decreased by $525 million to $676 million mainly due to the lower gains from the en-bloc sale of development projects in 2019
(disposal of a partial interest in the Dong Nai project in Vietnam) as compared to 2018 (Keppel China Marina Holdings Pte Ltd, Keppel Bay
Property Development (Shenyang) Co. Ltd., Keppel Township Development (Shenyang) Co. Ltd. and Quoc Loc Phat Joint Stock Company),
the absence of gain from divestment as compared against 2018 (Aether Limited), lower contribution from property trading projects in
Singapore, higher net interest expense and lower share of profit from the Sino-Singapore Tianjin Eco-City, partly offset by higher contribution
from property trading projects in China, higher fair value gains on investment properties and higher contribution from associated companies.
Pre-tax profit of Connectivity increased by $191 million to $196 million mainly due to fair value gain from the remeasurement of the previously
held interest in M1 at acquisition date and higher contributions from M1 resulting from the consolidation, partly offset by financing cost
and amortisation of intangibles arising from the acquisition of M1 and lower contribution from the logistics business. Pre-tax profit of Asset
Management increased by $19 million to $239 million mainly due to higher asset management fees and investment income, and higher fair
value gains on data centres, partly offset by lower share of associated companies’ profits as well as the absence of gain arising from the sale
of stake in Keppel DC REIT in 2018.
Taxation expenses decreased by $92 million or 32% mainly due to lower taxable profits. Non-controlling interests were $42 million higher than
in the preceding year. Taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders for 2019
was $707 million, a decrease of $241 million from $948 million in 2018. Urban Development was the largest contributor to the Group’s net
profit with a 68% share, followed by Asset Management’s 30% and Connectivity’s 19%, while Energy & Environment and Corporate & Others
contributed negative 14% and negative 3% to the Group’s net profit respectively.
2018
Group revenue of $5,965 million for 2018 was at almost the same level as in 2017. Revenue from Energy & Environment improved by $490
million or 13% to $4,322 million mainly due to revenue recognition in relation to the jackup rigs sold to Borr Drilling Limited and higher revenue
recognition from ongoing projects in the offshore & marine business, as well as increased sales in the power and gas business, partly offset
by lower progressive revenue recognition from the Keppel Marina East Desalination Plant project. Major jobs completed and delivered
by the offshore & marine business in 2018 included two jackup rigs, a gas carrier refurbishment, two Floating Production Storage and
Offloading (FPSO) conversions, a Roll-on/Roll-off (RORO) conversion and two dual-fuel Liquified Natural Gas (LNG) tugs. Revenue from Urban
Development decreased by $442 million to $1,340 million mainly due to lower revenue from Singapore, China and Vietnam property trading.
Revenue from Connectivity increased by $5 million to $182 million mainly due to higher contribution from the data centre business. Revenue
from Asset Management decreased by $20 million to $119 million mainly due to lower asset management fees.
Group pre-tax profit for the current year was $1,245 million, $803 million or 182% above the previous year. Group pre-tax profit for 2017
included $619 million for the one-off financial penalty and related costs. Excluding the one-off financial penalty and related costs from 2017,
Group pre-tax profit for 2018 of $1,245 million was $184 million or 17% above the pre-tax profit of $1,061 million for 2017.
Energy & Environment’s pre-tax loss was $168 million as compared to pre-tax loss, excluding the one-off financial penalty and related costs,
of $202 million in 2017. This was mainly due to higher operating results in the offshore & marine business arising from higher revenue, write-
back of provisions for claims and lower net interest expense, lower share of loss from KrisEnergy and higher contribution from environmental
infrastructure and infrastructure services, partly offset by higher impairment provisions in the offshore & marine business, absence of gain
from divestment of Keppel Verolme, lower contribution from energy infrastructure, provision for impairment of an associated company, and
absence of gain from divestment of GE Keppel Energy Services Pte Ltd compared against last year. Pre-tax profit from Urban Development
increased by $273 million to $1,201 million mainly due to en-bloc sales of development projects (Keppel China Marina Holdings Pte Ltd,
Keppel Bay Property Development (Shenyang) Co. Ltd., Keppel Township Development (Shenyang) Co. Ltd. and Quoc Loc Phat Joint Stock
Company) and gain from divestment of the stake in Aether Limited. The positive variance was partly offset by lower fair value gains on
investment properties, lower contribution from Singapore and China property trading, lower share of profit from land sales in the Sino-
Singapore Tianjin Eco-City and other associated companies. Pre-tax profit of Connectivity decreased by $46 million to $5 million mainly due
to higher operating losses from the logistics business, fair value loss on a data centre asset, and absence of the fair value gain on investment
recognised in 2017. Profits from Asset Management increased by $47 million to $220 million mainly due to higher share of associated
companies’ profits, gains from change in interest in associated companies, dilution gain following Keppel DC REIT’s private placement
exercise and the gain arising from the sale of stake in Keppel DC REIT, partly offset by lower asset management fees.
Shareholders’ Fund ($ billion)
Total Equity ($ billion)
Market Capitalisation ($ billion)
12
9.6
7.2
4.8
2.4
0
15
12
9
6
3
0
15
12
9
6
3
0
2016
11.7
2017
11.4
2018
11.3
2019
11.2
2020
10.7
2016
12.3
2017
12.0
2018
11.6
2019
11.6
2020
11.2
2016
10.5
2017
13.4
2018
10.7
2019
12.3
2020
9.8
Annual Report 2020
OTHER INFORMATION 233
Taking into account income tax expenses and non-controlling interests, and excluding the one-off financial penalty from the global resolution
and related costs of $619 million in 2017, net profit attributable to shareholders for 2018 was $948 million, an increase of $133 million
from $815 million in 2017. Urban Development was the largest contributor to the Group’s net profit with a 100% share, followed by Asset
Management’s 20% and Connectivity at breakeven, while Energy & Environment and Corporate & Others contributed negative 18% and
negative 2% to the Group’s net profit respectively.
2017
Group revenue of $5,964 million for 2017 was $803 million or 12% below that of 2016. Revenue from Energy & Environment declined by
$578 million to $3,832 million mainly due to lower volume of work and deferment of some projects in the offshore & marine business, partly
offset by increased sales in the power and gas business and progressive revenue recognition from the Keppel Marina East Desalination
Plant project. Major jobs completed and delivered by the offshore & marine business in 2017 include a semisubmersible (semi), a subsea
construction vessel, an FPSO conversion, an FPSO topsides installation/integration, a module fabrication & integration, a floating LNG
conversion and an ice-class multi-purpose vessel project. Revenue from Urban Development decreased by $253 million to $1,782 million
mainly due to lower revenue from China and Singapore, partly offset by higher revenue from Vietnam. Revenue from Connectivity decreased
by $11 million to $177 million mainly due to lower contributions from the data centre business resulting from the absence of contribution
from Keppel DC Singapore 3, which was injected into Keppel DC REIT in January 2017. Revenue from Asset Management increased by $9
million to $139 million mainly due to higher performance and acquisition fees.
Group pre-tax profit for the current year was $442 million, $646 million or 59% below the previous year. Excluding the one-off financial penalty from the
global resolution and related costs, the Group registered a pre-tax profit of $1,061 million which is $27 million lower than that of the preceding year.
Energy & Environment’s pre-tax loss in 2017 was $821 million. Excluding the one-off financial penalty from the global resolution and related
costs, Energy & Environment’s pre-tax loss was $202 million as compared to pre-tax profit of $12 million in 2016. This was mainly due to
lower operating results in the offshore & marine business arising from lower revenue and higher share of associated companies’ losses,
higher share of loss from KrisEnergy and recognition of fair value loss on KrisEnergy warrants, partly offset by lower impairment provisions
and lower net interest expense in the offshore & marine business, higher contributions from Energy Infrastructure, the gain on divestment of
its interest in GE Keppel Energy Services Pte Ltd, as well as the write-back of provision for impairment of an associated company. Provisions
in the offshore & marine business mainly for impairment of fixed assets, stocks & works-in-progress (WIP), investments and an associated
company, and restructuring costs, of $140 million in 2017 was lower than the $277 million impairment provisions recorded in 2016. Pre-tax
profit from Urban Development of $928 million was $134 million or 17% higher than that in 2016. This was mainly due to higher share of
profit from the Sino-Singapore Tianjin Eco-City, higher fair value gains on investment properties and higher contribution from Singapore and
Vietnam property trading, and en-bloc sales of development projects, partly offset by lower share of associated companies’ profits, mainly
resulting from the absence of the gains from divestment of the stakes in Life Hub @ Jinqiao and 77 King Street last year, and the absence
of reversal of impairment for hospitality assets. Profits from Connectivity increased marginally by $1 million to $51 million mainly due to
recognition of fair value gain on investment, partly offset by lower contribution from the logistics business and the data centre business,
resulting from the absence of contribution from Keppel DC Singapore 3, which was injected into Keppel DC REIT in January 2017. Pre-tax
profit of Asset Management decreased by $5 million to $173 million mainly due to lower share of associated companies’ profits, partly offset
by higher performance and acquisition fees.
Taking into account income tax expenses and non-controlling interests, and excluding the one-off financial penalty from the global resolution
and related costs of $619 million, net profit attributable to shareholders was $815 million, an increase of $31 million from last year. Urban
Development was the largest contributor to the Group’s net profit with an 89% share, followed by Asset Management’s 19%, Corporate &
Others’ 11% and Connectivity’s 4%, while Energy & Environment contributed negative 23% to the Group’s net profit.
2016
Group revenue of $6,767 million for 2016 was $3,529 million or 34% lower than that for the full year of 2015. Energy & Environment’s revenue
of $4,410 million was 45% below the $8,091 million for 2015 mainly due to lower volume of work, deferment of some projects and the
suspension of the Sete contracts in the offshore & marine business, as well as lower revenue recorded by the power and gas business from
lower prices and volume. Major jobs completed by the offshore & marine business in 2016 include four jackup rigs, a land rig, a derrick lay
vessel, an accommodation semi and two FPSO conversions. Urban Development saw its revenue increase by 12% to $2,035 million mainly
due to higher revenue from Singapore and China. Revenue from Connectivity increased by $1 million to $188 million mainly due to higher
revenue from the data centre business, partly offset by lower contributions from the logistics business. Revenue from Asset Management
remained unchanged at $130 million.
The Group’s pre-tax profit for the current year was $1,088 million, $903 million or 45% below the previous year. Energy & Environment
reported a $762 million drop in pre-tax profit to $12 million mainly due to lower operating results in the offshore & marine business arising
from lower revenue, lower share of associated companies’ profits and impairment of assets, share of loss from KrisEnergy, provision for
impairment of an associated company and absence of gains recognised in 2015. In 2015, there were gains from disposal of the 51% interest
in Keppel Merlimau Cogen Pte Ltd. Impairment of assets in the offshore & marine business for the year amounted to $277 million and
comprises impairment of fixed assets, stocks & WIP and investments. The negative variance was partially offset by the absence of provision
for losses for the Sete rigbuilding contracts of about $230 million in 2015 and the losses following finalisation of the cost to complete the
Doha North Sewage Treatment Plant. Urban Development’s profit of $794 million for 2016 was $66 million or 9% higher than 2015 mainly due
to higher share of associated companies’ profits, reversal of impairment of hospitality assets and share of profits from the Sino-Singapore
Tianjin Eco-City, partly offset by lower fair value gains on investment properties, lower contribution from Singapore property trading and
the absence of cost write-back upon finalisation of project cost for Reflections at Keppel Bay in 4Q 2015. The higher share of associated
companies’ profits was mainly due to share of profits arising from divestment of the stake in Life Hub @ Jinqiao and 77 King Street, partly
offset by lower share of fair value gains on investment properties. Profits from Connectivity decreased by $34 million to $50 million mainly
due to lower fair value gains on data centres and provision for impairments for logistics assets, partly offset by an adjustment to gain on
disposal of data centres as a result of revised property tax assessments. Pre-tax profit of Asset Management decreased by $142 million to
$178 million mainly due to lower share of associated companies’ profits and absence of gains recognised in 2015 relating to the dilution
re-measurement gain from the combination of Crystal Trust and CitySpring Infrastructure Trust to form the enlarged Keppel Infrastructure
Trust. The lower share of associated companies’ profits was mainly due to lower share of fair value gains on investment properties.
Taking into account income tax expenses and non-controlling interests, net profit attributable to shareholders was $784 million, $741 million
or 49% lower than last year. Urban Development was the largest contributor to Group net profit at 74%, followed by Asset Management’s 20%,
Connectivity’s 5% and Corporate & Others’ 7%, while Energy & Environment contributed negative 6% to the Group’s net profit.
Keppel Corporation Limited
234 GROUP VALUE-ADDED STATEMENTS
($ 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 and joint ventures' profits
Other operating income / (expenses)
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
One-off financial penalty & related costs
2016
2017
2018
2019
2020
6,767
(4,287)
2,480
139
272
(187)
2,704
1,155
266
225
77
545
847
-
5,964
(4,119)
1,845
158
291
196
5,965
(3,926)
2,039
174
221
186
7,580
(5,379)
2,201
242
147
215
2,490
2,620
2,805
1,027
244
189
27
364
580
619
988
285
205
20
526
751
-
1,163
192
313
12
418
743
-
6,574
(4,724)
1,850
191
(162)
(308)
1,571
1,120
253
292
24
273
589
-
Total Distribution
2,268
2,470
2,024
2,098
1,962
Balance retained in the business:
Depreciation & amortisation
Non-controlling interests share of profits in subsidiaries
Retained profit for the year
236
(39)
239
436
212
(25)
(167)
20
182
(8)
422
596
375
43
289
707
414
(26)
(779)
(391)
2,704
2,490
2,620
2,805
1,571
Average headcount (number)
28,879
21,862
18,186
18,297
18,452
Productivity data:
Gross value added per employee ($’000)
Gross value added per dollar employment cost ($)
Gross value added per dollar sales ($)
86
2.15
0.37
84
1.80
0.31
112
2.06
0.34
120
1.89
0.29
100
1.65
0.28
2,704
2,490
2,620
2,805
1,571
($ million)
3,000
2.150
1,400
750
0
-750
2016
2017
2018
2019
2020
One-off financial penalty and related cost
Depreciation & Retained Profit
Interest Expenses & Dividends
Taxation
-
436
847
266
619
20
580
244
Wages, Salaries & Benefits
1,155
1,027
-
596
751
285
988
-
707
743
192
-
(391)
589
253
1,163
1,120
Annual Report 2020
OTHER INFORMATION
SHARE PERFORMANCE
235
Turnover
(million)
Share Prices
($)
400
300
200
180
160
140
120
100
80
60
40
20
0
40
30
20
18
16
14
12
10
8
6
4
2
0
2016
2017
2018
2019
2020
Turnover
High and Low Prices
Share Price ($)*
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)
2016
2017
2018
2019
2020
5.79
6.56
4.64
5.46
43.2
20.0
3.7
12.6
6.35
5.79
3.5
13.4
0.9
7.35
7.83
5.73
6.79
10.8 ^
22.0
3.2
62.9
6.22
7.35
3.0
68.1
1.2
5.91
8.92
5.67
7.35
52.3
30.0 @
4.1 @
14.1
6.15
5.91
5.1 @
11.3
1.0
6.77
6.97
5.67
6.38
38.9
20.0
3.1
16.4
5.25
6.77
3.0
17.4
1.3
5.38
6.87
4.08
5.37
(27.8)
10.0
1.9
(19.3)
5.02
5.38
1.9
(19.4)
1.1
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.
Notes:
1.
2. Volume weighted average share price is used in calculating distribution yield and net price earnings ratio.
3.
*
^
@
Last transacted share price is used in calculating distribution yield, net price earnings ratio and net price to book ratio.
Historical share prices are not adjusted for special dividends, capital distribution and dividend in specie.
Includes the one-off financial penalty from the global resolution and related costs of $619 million.
Includes the special dividend paid of 5.0 cents per share.
Keppel Corporation Limited
OTHER INFORMATION
236 SHAREHOLDING STATISTICS
As at 4 March 2021
Issued and Fully paid-up capital (including Treasury Shares) : $1,305,667,320.62
Issued and Fully paid-up capital (excluding Treasury Shares) : $1,303,135,405.34
Number of Issued Shares (including Treasury Shares)
Number of Issued Shares (excluding Treasury Shares)
Number/Percentage of Treasury Shares
Number/Percentage of Subsidiary Holdings ¹
Class of Shares
Voting Rights (excluding Treasury Shares)
: 1,820,557,767
: 1,820,023,070
: 534,697 (0.03%)
: 0 (0%)
: Ordinary Shares
: One Vote Per Share
The Company cannot exercise any voting rights in respect of treasury shares. Subject to the Companies Act, Chapter 50, subsidiaries cannot
exercise any voting rights in respect of shares held by them as subsidiary holdings.
Size of Shareholdings
1 - 99
100 - 1,000
1,001 - 10,000
10,001 - 1,000,000
1,000,001 and Above
Total
Twenty Largest Shareholders
Temasek Holdings (Private) Limited
Citibank Nominees Singapore Pte Ltd
DBS Nominees (Private) Limited
DBSN Services Pte. Ltd.
HSBC (Singapore) Nominees Pte Ltd
Raffles Nominees (Pte.) Limited
United Overseas Bank Nominees (Private) Limited
OCBC Nominees Singapore Private Limited
BPSS Nominees Singapore (Pte.) Ltd.
DB Nominees (Singapore) Pte Ltd
OCBC Securities Private Limited
Merrill Lynch (Singapore) Pte. Ltd.
Phillip Securities Pte Ltd
UOB Kay Hian Private Limited
BNP Paribas Nominees Singapore Pte. Ltd.
Shanwood Development Pte Ltd
Maybank Kim Eng Securities Pte. Ltd.
Chen Chun Nan
CGS-CIMB Securities (Singapore) Pte. Ltd.
Lim Chee Onn
Total
No. of
Shareholders
225
16,576
45,777
10,698
28
%
0.31
22.61
62.45
14.59
0.04
No. of
Shares
8,037
13,254,048
183,181,199
329,195,871
1,294,383,915
%
0.00
0.73
10.06
18.09
71.12
73,304
100.00
1,820,023,070
100.00
No. of
Shares
371,408,292
273,266,250
251,781,203
82,143,394
79,785,231
60,927,964
50,064,822
15,287,403
14,693,696
13,391,517
10,541,165
10,285,249
9,322,529
8,427,435
7,370,201
7,040,000
5,325,705
3,957,000
3,341,514
2,579,282
%
20.40
15.01
13.83
4.51
4.38
3.35
2.75
0.84
0.81
0.74
0.58
0.57
0.51
0.46
0.40
0.39
0.29
0.22
0.18
0.14
1,280,939,852
70.36
Substantial Shareholders (as shown in the Register of Substantial Shareholders)
Temasek Holdings (Private) Limited ²
371,408,292
20.40
BlackRock, Inc. ³
-
-
10,282,769
92,637,845
0.56
5.09
381,691,061
92,637,845
20.97
5.09
Direct Interest
Deemed Interest
Total Interest
No. of Shares
%
No. of Shares
%
No. of Shares
%
Notes:
¹
²
³
"Subsidiary holdings" is defined in the Listing Manual to mean shares referred to in Sections 21(4), 21(4B), 21(6A) and 21(6C) of the Companies Act, Chapter 50.
Temasek Holdings (Private) Limited is deemed interested in 10,282,769 shares in which its subsidiaries and associated companies have direct or deemed interests.
BlackRock, Inc is deemed interested in 92,637,845 shares held through its subsidiaries.
Public Shareholders
Based on the information available to the Company as at 4 March 2021, approximately 78% 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.
Annual Report 2020
OTHER INFORMATION
NOTICE OF ANNUAL GENERAL MEETING AND CLOSURE OF BOOKS
237
eppel
Corporation
Keppel Corporation Limited
Company Registration No. 196800351N
(Incorporated in the Republic of Singapore)
NOTICE IS HEREBY GIVEN that the 53rd Annual General Meeting of the Company will be convened and held by electronic means (see Notes 1
to 8) on Friday, 23rd April 2021 at 3.00 p.m. (Singapore time) 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 2020.
Resolution 1
To declare a final tax-exempt (one-tier) dividend of 7.0 cents per share for the year ended 31 December 2020 (2019:
final tax-exempt (one-tier) dividend of 12.0 cents per share).
Resolution 2
To re-elect Professor Jean--François Manzoni, who 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 9).
Resolution 3
To approve the sum of up to S$2,491,000 as directors’ fees for the year ending 31 December 2021 (2020: S$2,028,071)
(see Note 10).
Resolution 4
To re-appoint PricewaterhouseCoopers LLP as the auditors of the Company, and authorise the directors of the
Company (“Directors”) to fix their remuneration.
Resolution 5
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 6
(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;
provided that:
(i)
(ii)
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 and subsidiary holdings) (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 and subsidiary holdings) (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 and subsidiary holdings) at the time this Resolution is passed, after
adjusting for:
Keppel Corporation Limited
OTHER INFORMATION
238
NOTICE OF ANNUAL GENERAL MEETING AND CLOSURE OF BOOKS
Resolution 7
(iii)
(iv)
7.
That:
(1)
(a)
new Shares arising from the conversion or exercise of convertible securities or share options or vesting
of share awards which are outstanding or subsisting as at the time this Resolution is passed; and
(b)
any subsequent bonus issue, consolidation or sub-division of Shares;
and in sub-paragraph (i) above and this sub-paragraph (ii), “subsidiary holdings” has the meaning given to it in
the listing manual of the SGX-ST (“Listing Manual”);
in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of
the Companies Act, the 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 AGM of the Company or the date by which the next AGM is
required by law to be held, whichever is the earlier (see Note 11).
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 (“Relevant Period”) commencing from the date of the passing of this Resolution and
expiring on the earliest of:
(a)
the date on which the next AGM of the Company is held;
(b)
the date on which the next AGM of the Company is required by law to be held; or
(c)
the date on which the purchases or acquisitions of Shares by the Company pursuant to the Share
Purchase Mandate are carried out to the full extent mandated;
(3)
in this Resolution:
“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 purchases or
acquisitions of Shares are made and deemed to be adjusted for any corporate action that occurs during the
relevant five-day period and the day on which the purchases or acquisitions are made, or in the case of Off-
Market Purchases, 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;
“Maximum Limit” means that number of issued Shares representing two (2) 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, 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 and any subsidiary
holdings will be disregarded for purposes of computing the two (2) per cent. limit;
Annual Report 2020
OTHER INFORMATION
239
“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
shall not exceed, whether pursuant to a Market Purchase or an Off-Market Purchase, 105 per cent. of the
Average Closing Price; and
“subsidiary holdings” has the meaning given to it in the Listing Manual; 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, he or she 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 12).
8.
That:
Resolution 8
(1)
(2)
(3)
(4)
approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual, for the Company, its
subsidiaries and target associated companies (as defined in Appendix 2 to this Notice of AGM (“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”);
the IPT Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the
date that the next AGM 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, he or she 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 13).
To transact such other business which can be transacted at this AGM.
NOTICE IS ALSO HEREBY GIVEN THAT the Share Transfer Books and the Register of Members of the Company will be
closed on 30 April 2021 at 5.00 p.m., for the preparation of dividend warrants. Duly completed transfers of Shares received
by the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte Ltd, at 50 Raffles Place #32-01 Singapore
Land Tower Singapore 048623 up to 5.00 p.m. on 30 April 2021 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 30 April 2021 will be entitled to the proposed final dividend. The proposed final dividend if
approved at this AGM will be paid on 11 May 2021.
BY ORDER OF THE BOARD
Caroline Chang/Kenny Lee
Company Secretaries
Singapore, 1 April 2021
Keppel Corporation Limited
240
NOTICE OF ANNUAL GENERAL MEETING AND CLOSURE OF BOOKS
Notes:
1. This AGM is being convened and will be held by electronic means pursuant to the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies,
Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020. This Notice of AGM will be sent to members by electronic means via
publication on the Company’s website at https://www.kepcorp.com/en/investors/annual-general-meeting and the SGXNet. Printed copies of this Notice of AGM will also
be sent to members.
2. The proceedings of this AGM will be broadcasted “live” through an audio-and-video webcast and an audio-only stream. Members and investors holding Shares through the
Central Provident Fund (“CPF”) or Supplementary Retirement Scheme (“SRS”) (“CPF/SRS investors”) who wish to follow the proceedings must pre-register at https://www.
kepcorp.com/en/agm2021 no later than 3.00 p.m. on 20 April 2021. Following verification, an email containing instructions on how to join the “live” broadcast will be sent
to authenticated persons by 22 April 2021.
Investors holding Shares through relevant intermediaries (as defined in Section 181 of the Companies Act) (“Investors”) (other than CPF/SRS investors) will not be able to
pre-register at https://www.kepcorp.com/en/agm2021 for the “live” broadcast of the AGM. Such Investors who wish to participate in the “live” broadcast of the AGM should
instead approach his/her relevant intermediary as soon as possible in order to make the necessary arrangements to pre-register. The relevant intermediary is required to
submit a consolidated list of participants (setting out in respect of each participant, his/her name, email address and NRIC/Passport number) to the Company’s Share
Registrar, Boardroom Corporate & Advisory Services Pte Ltd, via email to keppel@boardroomlimited.com no later than 3.00 p.m. on 20 April 2021.
3. There will be no personal attendance at the AGM. A member will also not be able to vote online on the resolutions to be tabled for approval at the AGM. A member
(whether individual or corporate) must appoint the Chairman of the AGM (“Chairman”) as his/her/its proxy to attend, speak and vote on his/her/its behalf at the
AGM if such member wishes to exercise his/her/its voting rights at the AGM. The Chairman, as proxy, need not be a member of the Company. The instrument for the
appointment of proxy (“proxy form”) will be sent to members and may be accessed at the Company’s website at https://www.kepcorp.com/en/investors/annual-general-
meeting or the SGXNet. Where a member (whether individual or corporate) appoints the Chairman as his/her/its proxy, he/she/it must give specific instructions as to voting,
or abstentions from voting, in respect of a resolution in the proxy form, failing which the appointment of the Chairman as proxy for that resolution will be treated as invalid.
4. The proxy form is not valid for use by Investors (including CPF/SRS investors) and shall be ineffective for all intents and purposes if used or purported to be used by them.
An Investor who wishes to vote should instead approach his/her/its relevant intermediary as soon as possible to specify his/her/its voting instructions. A CPF/SRS investor
who wishes to vote should approach his/her CPF Agent Bank or SRS Operator by 5.00 p.m. on 14 April 2021, being 7 working days before the date of the AGM to submit
his/her voting instructions.
5. The proxy form must be submitted to the Company in the following manner:
(a)
if submitted by post, be lodged with the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte Ltd, at 50 Raffles Place #32-01 Singapore Land
Tower Singapore 048623; or
(b)
if submitted electronically, be submitted via email to keppel@boardroomlimited.com,
in either case, by 3.00 p.m. on 20 April 2021, being 72 hours before the time appointed for holding this AGM.
A member who wishes to submit the proxy form must complete and sign the proxy form, before submitting it by post to the address provided above, or before scanning
and sending it by email to the email address provided above.
Members are encouraged to submit completed proxy forms electronically via email.
6.
In the case of members of the Company whose Shares are entered against their names in the Depository Register, the Company may reject any proxy form submitted if
such members are not shown to have Shares entered against their names in the Depository Register (as defined in Part IIIAA of the Securities and Futures Act, Chapter 289
of Singapore), as at 72 hours before the time appointed for holding this AGM as certified by The Central Depository (Pte) Limited to the Company.
7. Members and Investors may submit questions relating to the business of the AGM by 3.00 p.m. on 20 April 2021:
(a) via the pre-registration website at https://www.kepcorp.com/en/agm2021;
(b) by email to investor.relations@kepcorp.com; or
(c) by post to the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte Ltd, at 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623.
Members and Investors are encouraged to submit their questions via the pre-registration website or by email. The Company will endeavour to answer all substantial and
relevant questions prior to the AGM through publication on SGXNet and the Company’s website at https://www.kepcorp.com/en/investors/annual-general-meeting, or at
this AGM.
8. All documents (including the Annual Report 2020, proxy form, this Notice of AGM and appendices to this Notice of AGM) or information relating to the business of this AGM
have been, or will be, published on SGXNet and/or the Company’s website at https://www.kepcorp.com/en/investors/annual-general-meeting. Members and Investors are
advised to check SGXNet and/or the Company’s website regularly for updates.
9. Detailed information on these directors can be found in the “Board of Directors” section of the Annual Report 2020.
Professor Jean-François Manzoni will, upon his re-election, continue to serve as Chairman of the Nominating Committee and a member of the Board Risk Committee.
Professor Manzoni is currently the President (Dean) and Nestlé Professor at the International Institute for Management Development (IMD) in Switzerland, where he is
based. He had served as Professor of Leadership and Organisational Development at IMD and directed, among other programmes, IMD’s Breakthrough Program for Senior
Executives. Professor Manzoni’s research, teaching, and consulting activities are focused on leadership, the development of high-performance organisations and corporate
governance. Professor Manzoni is also a member of several International Advisory Panels, including Digital Switzerland, and the Russian Presidential Academy of National
Economy and Public Administration. Professor Manzoni is considered by the board of Directors to be an independent Director.
Dr Lee Boon Yang, Mr Alvin Yeo Khirn Hai and Mr Tan Ek Kia will be retiring by rotation pursuant to Regulation 83 of the Constitution, and although eligible, are not seeking
re-election pursuant to Regulation 84 of the Constitution.
10. Resolution 4 is to approve the payment of Directors’ fees for the non-executive Directors of the Company during FY2021. The amount of fees has been computed taking
into consideration the number of board committee representations by the non-executive directors and also caters for additional fees (if any) which may be payable due
to the formation of additional Board Committees, or additional Board or Board Committee members being appointed in FY2021. In the event that the amount proposed is
insufficient, approval will be sought at the next AGM in the financial year ending 31 December 2022 (“2022 AGM”) before any payments are made to non-executive Directors
for the shortfall. 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 Cash Component is intended to be paid half-yearly in
arrears. The Remuneration Shares are intended to be paid after the 2022 AGM has been held. The actual number of Remuneration Shares, to be purchased from the market
on the first trading day immediately after the date of the 2022 AGM provided that it does not fall within any applicable restricted period of trading (“2022 Trading Day”) for
delivery to the respective non-executive Directors, will be based on the market price of the Shares on the SGX-ST on the 2022 Trading Day. In the event that the first trading
day after the date of the 2022 AGM falls within a restricted period of trading, the Remuneration Shares will be purchased on the first trading day immediately after the end
of the restricted period of trading. 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. A non-executive director who steps down before the payment of the share component
will receive all of his Directors’ fees for FY2021 (calculated on a pro-rated basis, where applicable) in cash.
Details of the Directors’ remuneration for FY2020 are set out on page 89 of the Annual Report 2020. The non-executive Directors will abstain from voting, and will procure
that their respective associates abstain from voting, in respect of Resolution 4.
Annual Report 2020
OTHER INFORMATION
241
11. Resolution 6 is to empower the Directors from the date of this AGM until the date of the next AGM 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 and subsidiary holdings) (with a sub-limit of 5 per cent. of the total number of Shares
(excluding treasury Shares and subsidiary holdings) 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. For the purpose of determining the total number of Shares (excluding treasury Shares
and subsidiary holdings) that may be issued, the percentage of issued Shares shall be based on the total number of issued Shares (excluding treasury Shares and subsidiary
holdings) 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 were issued and are outstanding or subsisting at the time that Resolution 6 is passed, and any subsequent bonus issue, consolidation or
sub-division of Shares.
12. Resolution 7 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 AGM
of the Company on 2 June 2020. At this AGM, the Company is seeking a “Maximum Limit” of 2 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 AGM for details.
13. Resolution 8 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 AGM for details.
14. Any reference to a time of day is made by reference to Singapore time.
15. Personal Data Privacy:
By submitting the proxy form appointing the Chairman to attend, speak and vote at the AGM and/or any adjournment thereof, a member 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 the appointment of the Chairman as proxy for the AGM (including any adjournment thereof), and the preparation and
compilation of the attendance lists, minutes and other documents relating to the AGM (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.
In the case of a member who is a relevant intermediary, by submitting the consolidated list of participants set out in Note 2 of this Notice of AGM, such member represents
and warrants that it has obtained the prior consent of the individuals for the collection, use and disclosure by the Company (or its agents or service providers) of the
personal data of such individuals 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 the participation of such individuals in the broadcast and proceedings of the AGM (including any adjournment thereof), and the preparation
and compilation of the attendance lists, minutes and record of questions asked, and other documents relating to the AGM (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.
Keppel Corporation Limited
242 CORPORATE INFORMATION
BOARD OF DIRECTORS
Lee Boon Yang (Chairman)
Loh Chin Hua (Chief Executive Officer)
Alvin Yeo
Tan Ek Kia
Danny Teoh
Till Vestring
Veronica Eng
Jean-François Manzoni
Teo Siong Seng
Tham Sai Choy
Penny Goh
AUDIT COMMITTEE
Danny Teoh (Chairman)
Alvin Yeo
Tan Ek Kia
Veronica Eng
Tham Sai Choy
Penny Goh
REMUNERATION COMMITTEE
Till Vestring (Chairman)
Lee Boon Yang
Danny Teoh
Teo Siong Seng
NOMINATING COMMITTEE
Jean-François Manzoni (Chairman)
Lee Boon Yang
Alvin Yeo
Till Vestring
BOARD RISK COMMITTEE
Veronica Eng (Chairman)
Danny Teoh
Tan Ek Kia
Jean-François Manzoni
Tham Sai Choy
Penny Goh
BOARD SAFETY COMMITTEE
Tan Ek Kia (Chairman)
Lee Boon Yang
Loh Chin Hua
Teo Siong Seng
COMPANY SECRETARIES
Caroline Chang
Kenny Lee
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
Boardroom Corporate & Advisory
Services Pte Ltd
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
AUDITORS
PricewaterhouseCoopers LLP
Public Accountants and Chartered
Accountants
7 Straits View
Marina One East Tower
Level 12
Singapore 018936
Audit Partner: Yeoh Oon Jin
Year appointed: 2018
Annual Report 2020
OTHER INFORMATION FINANCIAL CALENDAR
243
FY 2020
Financial year-end
Announcement of 2020 1Q results
Announcement of 2020 2Q results
Announcement of 2020 3Q Business Updates
Announcement of 2020 full year results
Despatch of Annual Report to Shareholders
Annual General Meeting
2020 Proposed final dividend
Books closure date
Payment date
FY 2021
Financial year-end
Announcement of 2021 1Q Business Updates
Announcement of 2021 half year results
Announcement of 2021 3Q Business Updates
Announcement of 2021 full year results
31 December 2020
29 April 2020
30 July 2020
29 October 2020
28 January 2021
1 April 2021
23 April 2021
5.00 p.m., 30 April 2021
11 May 2021
31 December 2021
22 April 2021
29 July 2021
28 October 2021
27 January 2022
Keppel Corporation Limited
OTHER INFORMATION This page is intentionally left blank
PROXY FORM
eppel
Corporation
Keppel Corporation Limited
Company Registration No. 196800351N
(Incorporated in the Republic of Singapore)
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IMPORTANT
1. This AGM (as defined below) will be held by electronic means pursuant to the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies,
Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020. The Notice of AGM and this proxy form will be sent to members by
electronic means via publication on the Company’s website at https://www.kepcorp.com/en/investors/annual-general-meeting and the SGXNet. Printed copies of the
Notice of AGM and this proxy form will also be sent to members.
2. Alternative arrangements relating to attendance at the AGM via electronic means (including arrangements by which the meeting can be electronically accessed via “live”
audio-and-video webcast or “live” audio-only stream), submission of questions to the Chairman (as defined below) in advance of the AGM, addressing of substantial
and relevant questions at the AGM and voting by appointing the Chairman as proxy at the AGM, are set out in Notice of AGM and the accompanying Company’s
announcement dated 1 April 2021. This announcement may be accessed at the Company’s website at https://www.kepcorp.com/en/investors/annual-general-meeting
and the SGXNet.
3. There will be no personal attendance at the AGM. A member will also not be able to vote online on the resolutions to be tabled for approval at the AGM. A member
(whether individual or corporate) must appoint the Chairman as his/her/its proxy to attend, speak and vote on his/her/its behalf at the AGM if such member wishes
to exercise his/her/its voting rights at the AGM. The Chairman, as proxy, need not be a member of the Company.
4. This proxy form is not valid for use by investors holding shares in the Company (“Shares”) through relevant intermediaries (as defined in Section 181 of the Companies
Act (Chapter 50 of Singapore)) (“Investors”) (including investors holding through Central Provident Fund (“CPF”) or Supplementary Retirement Scheme (“SRS”) (“CPF/
SRS investors”)) and shall be ineffective for all intents and purposes if used or purported to be used by them. An Investor who wishes to vote should instead approach
his/her relevant intermediary as soon as possible to specify voting instructions. A CPF/SRS investor who wishes to vote should approach his/her CPF Agent Bank or SRS
Operator by 5.00 p.m. on 14 April 2021, being 7 working days before the date of the AGM to submit his/her vote.
5. Personal Data Privacy: By submitting this proxy form, a member of the Company accepts and agrees to the personal data terms set out in the Notice of AGM dated 1
April 2021.
6. Please read the notes overleaf which contain instructions on, inter alia, the appointment of the Chairman as a member’s proxy to attend, speak and vote on his/her/
its behalf at the AGM.
ANNUAL GENERAL MEETING
I/We ____________________________________________________________(Name(s)) _________________________ (NRIC/Passport Number/Co Reg Number)
of _________________________________________________________________________________________________________________________________ (Address)
being a member or members of KEPPEL CORPORATION LIMITED (the “Company”) hereby appoint the Chairman of the Annual General Meeting
(“Chairman”) as my/our proxy to attend, speak and vote on my/our behalf at the 53rd Annual General Meeting of the Company (“AGM”) to be
held by way of electronic means on Friday, 23rd April 2021 at 3.00 p.m. and at any adjournment thereof in the following manner:
For *
Against *
Abstain *
Ordinary Business
Resolutions
1. Adoption of Directors’ Statement and Audited Financial Statements
2. Declaration of Dividend
3. Re-election of Professor Jean-François Manzoni as Director
4. Approval of fees to non-executive Directors for FY2021
5. Re-appointment of Auditors
Special Business
6.
Issue of additional shares and convertible instruments
7. Renewal of Share Purchase Mandate
8. Renewal of Shareholders’ Mandate for Interested Person Transactions
*
You may tick (4) within the relevant box to vote for or against, or abstain from voting, in respect of all your Shares for each resolution. Alternatively, if you may indicate the
number of Shares that you wish to vote for or against, and/or abstain from voting, for each resolution in the relevant box. In the absence of specific directions in respect
of a resolution, the appointment of the Chairman as your proxy for that resolution will be treated as invalid.
Dated this _________________ day of ____________________________ 2021
Total Number of
Shares held
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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.
Notes:
1. A member should insert the total number of Shares held in the proxy form. If a member only has Shares entered against his/her/its name in the Depository Register (as
defined in Part IIIAA of the Securities and Futures Act, Chapter 289 of Singapore), he/she/it should insert that number of Shares. If he/she/it only has Shares registered
in his/her/its name in the Register of Members, he/she/it should insert that number of Shares. However, if he/she/it has Shares entered against his/her/its name in
the Depository Register and Shares registered in his/her/its name in the Register of Members, he/she/it should insert the aggregate number of Shares entered against
his/her/its name in the Depository Register and registered in his/her/its 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 the member (in both the Register of Members and the Depository Register).
2. There will be no personal attendance at the AGM. A member will also not be able to vote online on the resolutions to be tabled for approval at the AGM. A member
(whether individual or corporate) must appoint the Chairman as his/her/its proxy to attend, speak and vote on his/her/its behalf at the AGM if such member wishes
to exercise his/her/its voting rights at the AGM. The Chairman, as proxy, need not be a member of the Company. Where a member (whether individual or corporate)
appoints the Chairman as his/her/its proxy, he/she/it must give specific instructions as to voting, or abstentions from voting, in respect of a resolution in the proxy form,
failing which the appointment of the Chairman as proxy for that resolution will be treated as invalid.
3. This proxy form is not valid for use by Investors and shall be ineffective for all intents and purposes if used or purported to be used by them. An Investor who wishes to
vote should instead approach his/her relevant intermediary as soon as possible to specify voting instructions. A CPF/SRS investor who wishes to vote should approach
his/her CPF Agent Bank or SRS Operator by 5.00 p.m. on 14 April 2021, being 7 working days before the date of the AGM to submit his/her vote.
Fold along this line (1)
Affix
Postage
Stamp
Keppel Corporation Limited
c/o Boardroom Corporate & Advisory Services Pte Ltd
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
Fold along this line (2)
4. The proxy form must be submitted with the Company in the following manner:
(a)
if submitted by post, be lodged with the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte Ltd, at 50 Raffles Place #32-01 Singapore Land
Tower Singapore 048623; or
(b)
if submitted electronically, be submitted via email to keppel@boardroomlimited.com,
in either case, by 3:00 p.m. on 20 April 2021, being 72 hours before the time appointed for holding this AGM.
A member who wishes to submit the proxy form must complete and sign the proxy form, before submitting it by post to the address provided above, or before scanning
and sending it by email to the email address provided above.
Members are encouraged to submit completed proxy forms electronically via email.
5. The proxy form 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. The Company shall be entitled to reject the proxy form 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 AGM as certified by The Central Depository (Pte) Limited to the
Company.
7. Any reference to a time of day is made by reference to Singapore time.
NOTES
NOTES
EDITED AND COMPILED BY
Group Corporate Communications, Keppel Corporation
DESIGNED BY
Black Sun Pte Ltd
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
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