I N V E S T I N G I N A S U S T A I N A B L E F U T U R E K E P P E L L T D . A N N U A L R E P O R T 2 0 2 3 ANNUAL REPORT 2023 INVESTING IN A SUSTAINABLE FUTURE OVERVIEW Key Figures Financial Highlights Chairman’s Statement Interview with the CEO Vision 2030 in Action — Highlights of Achievements in 2023 — Focus Areas in 2024 Our Business Model Technology & Innovation Sustainability Framework Board of Directors Boards of Directors of Listed REITs & Business Trust Keppel Technology Advisory Panel Senior Management Investor Relations 4 5 6 10 16 19 20 22 24 30 34 35 36 38 PERFORMANCE REVIEW Operating & Market Review — Fund Management and Investment Platforms 40 — Operating Platform 46 — Infrastructure 48 — Real Estate 52 — Connectivity 56 60 71 Financial Review Corporate Structure GOVERNANCE Corporate Governance at a Glance Corporate Governance Risk Management Regulatory Compliance FINANCIAL REPORT Directors’ Statement Independent Auditor’s Report Balance Sheets Consolidated Profit or Loss Account Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity/ Statement 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 Value-Added Statements Share Performance Shareholding Statistics Notice of Annual General Meeting and Closure of Books Corporate Information Financial Calendar 72 74 111 118 122 128 136 137 138 139 142 145 218 227 228 234 239 244 245 246 247 253 254 * Unless otherwise stated, the “Company” refers to Keppel Ltd., and “Keppel” or “Group” refers to Keppel Ltd. and its subsidiaries. INVESTING IN A SUSTAINABLE FUTURE As a global asset manager with deep operating capabilities, Keppel matches capital from investors with sustainability solutions to meet some of the world’s most pressing needs across the energy transition, rapid urbanisation and increasing digitalisation. We are investing in a sustainable future, delivering quality solutions to customers and good returns to investors. GLOBAL ASSET MANAGER & OPERATOR With a robust asset management track record as well as deep operating capabilities spanning decades, Keppel provides an unrivalled value proposition to investors seeking opportunities in alternative real assets that meet some of the world’s most pressing needs in Infrastructure, Real Estate and Connectivity. MEGATRENDS Resilient macrotrends are driving demand for Keppel’s alternative assets and sustainability solutions. Our deep expertise in engineering, developing and operating specialised assets worldwide puts us at the forefront to seize the arising opportunities. INVESTMENT PRODUCTS Our ability to deploy capital across the capital stack, be they perpetual vehicles, private funds or bespoke mandates, allows Keppel to offer investors diverse fund products and multiple access points across the risk-return spectrum. PROPRIETARY ASSETS We are uniquely placed to give investors of our private funds and listed real estate and business trusts exclusive access to strategic real assets in Keppel’s proprietary pipeline, many of which offer critical infrastructure and prime real estate solutions that produce strong inflation-protected cash flows. Energy Transition & Climate Change 1 Key Private Funds & Listed Vehicles Keppel Asia Infrastructure Fund Series Keppel Core Infrastructure Fund Keppel Private Credit Fund Keppel Infrastructure Trust Rapid Urbanisation 2 Keppel Sustainable Urban Renewal Fund Keppel Asia Macro Trends Fund Series Keppel Vietnam Fund Keppel REIT Increasing Digitalisation 3 Alpha Data Centre Fund Keppel DC Fund II Keppel DC REIT Private Fund Listed Vehicle Keppel Sakra Cogen Plant Singapore’s first hydrogen-ready and most advanced power plant Keppel Marina East Desalination Plant Singapore’s first large-scale, dual-mode desalination plant that treats both rainwater and seawater Keppel South Central Next-generation smart, super low energy commercial building in Singapore’s CBD Park Avenue Central Prime office and retail development in the heart of downtown Shanghai Datapark+ Scalable and efficient modular data centre park Bifrost Cable System Largest capacity high-speed transmission cable across the Pacific Ocean DRIVING PERFORMANCE WITH STRONG CORE VALUES AGILE We are ever ready to innovate and change to be resilient and competitive in a rapidly evolving world. CAN DO We embrace a spirit of enterprise and passion for excellence, with the courage and tenacity to overcome the odds and deliver on our promises. TRUSTED We guard our fiduciary duty zealously, upholding high standards of governance as a steward of capital and a reliable partner to our investors, customers and stakeholders. 2 KEPPEL LTD. ANNUAL REPORT 2023 3 OVERVIEW Key Figures FINANCIAL HIGHLIGHTS REVENUE1 $7.0b Increased 5% from FY 2022’s $6.6 billion. Higher contributions from the Infrastructure and Connectivity segments were partly offset by lower revenue from the Real Estate segment. NET PROFIT $4.1b Achieved highest profit on record. More than quadruple that of FY 20222. About $3.3 billion was from gains from the divestment of the offshore and marine (O&M) business. RETURN ON EQUITY 37.9% Increased significantly as compared to 8.1% for FY 2022. Excluding discontinued operations, ROE improved to 8.2% in FY 2023 from 7.3% in FY 2022. FUNDS UNDER MANAGEMENT3 EARNINGS PER SHARE TOTAL DIVIDEND PER SHARE $55b $2.28 $2.70 Increased 10% yoy from $50 billion as at end-2022. When Phase 1 of the Aermont acquisition is completed, Funds Under Management (FUM) would grow to about $79 billion. Increased significantly from FY 2022’s $0.52 per share. Net profit of approximately $4.1 billion for FY 2023 translated to earnings per share of $2.28. Higher than FY 2022’s 33.0 cents per share. Comprises total cash distribution of $0.34 per share and dividends in specie of Sembcorp Marine (now Seatrium) shares4 and Keppel REIT units5. FEE-TO-FUM RATIO6 51 bps NET GEARING RATIO TOTAL SHAREHOLDER RETURNS8 0.90x 61.1% Comparable to ratio of 53 bps in 2022. Asset Management Fees7 amounted to $283 million in FY 2023, compared to $267 million in FY 2022. Higher than FY 2022’s 0.78x ratio. Mainly due to higher net debt as a result of net cash outflow from the divestment of the O&M business, and lower equity arising from the two dividends in specie and cash dividends paid in FY 2023. Higher compared to 49.3% in 2022. This is 13 times the Straits Times Index’s Total Shareholder Return of 4.7% in 2023. SUSTAINABILITY HIGHLIGHTS ENVIRONMENTAL CONTRIBUTION President’s Award Received the President’s Award for the Environment, the highest environmental accolade for individuals, educational institutions and organisations in Singapore. EMPLOYEE ENGAGEMENT CONTRIBUTION TO WORTHY CAUSES 86% $4.3m Higher than Keppel’s score of 84% in 2022 and above Mercer’s global norm of 80% in 2023. Contributed to social investment spending and industry advancement. 1 Revenue from continuing operations. 2 Excluding discontinued operations, net profit increased to $885 million from $839 million in FY 2022. 3 Gross asset value of investments and uninvested capital commitments on a leveraged basis to project fully-invested FUM. 4 Amounted to $2.19, rounded to the nearest two decimal places; calculated based on a division of (a) the cash equivalent amount of the dividend declared by the Company of $3,845 million, by (b) the Company’s issued and paid-up share capital as at the Record Date of 1,751,959,918 Keppel Shares (excluding treasury shares). 5 Based on the closing market price of $0.835 per Keppel REIT unit on 6 November 2023, the cash equivalent amount of the dividend declared by the Company was $294 million, equivalent to $0.167 per share. 6 Fee-to-FUM ratio is on a run-rate basis and is computed based on average FUM for the year. 7 Includes 100% fees from subsidiary managers, joint ventures and associated entities, as well as share of fees based on a shareholding stake in an associate with which Keppel has a strategic alliance. 8 Source: Bloomberg 4 KEPPEL LTD. OVERVIEW Financial Highlights HALF-YEARLY RESULTS ($ million) Revenue – Continuing operations Operating profit – Continuing operations EBITDA – Continuing operations Profit before tax – Continuing operations Attributable profit – Continuing operations Attributable profit – Discontinued operations Attributable profit Earnings per share (cents) For the year ($ million) Revenue – Continuing operations Profit Operating – Continuing operations EBITDA – Continuing operations Before tax – Continuing operations Net profit – Continuing operations Net profit – Discontinued operations Net profit Operating cash flow Free cash flow1 Per share ($) Earnings Net assets Net tangible assets At year end ($ million) Shareholders’ funds Perpetual securities Non-controlling interests Total equity Net debt Net gearing ratio (times) Adjusted net debt to EBITDA2 Return on shareholders’ funds (%) Profit before tax Net profit Shareholders’ value Distribution (cents per share) Interim cash dividend Final cash dividend Dividend in specie Total distribution Share price ($) Total shareholder returns (%) n.m.f. denotes no meaningful figure. 2023 2H 1H 3,716 3,251 572 826 603 445 3,182 3,627 203.0 504 873 610 440 – 440 24.6 Total 6,967 1,076 1,699 1,213 885 3,182 4,067 227.6 2022 2H 1H 3,356 3,264 355 684 551 434 64 498 27.9 210 672 544 405 24 429 24.2 Total 6,620 565 1,356 1,095 839 88 927 52.1 2023 2022 % Change 6,967 1,076 1,699 1,213 885 3,182 4,067 58 (384) 2.28 5.85 4.98 10,307 402 308 11,017 9,873 0.90 4.6 40.3 37.9 15.0 19.0 235.7 269.7 7.07 61.1 6,620 565 1,356 1,095 839 88 927 260 (408) 0.52 6.38 5.49 11,178 401 334 11,913 9,238 0.78 5.1 10.5 8.1 15.0 18.0 – 33.0 7.26 49.3 5% 90% 25% 11% 6% >500% 339% -78% -6% 337% -8% -9% -8% 0% -8% -8% 7% 15% -10% 284% 367% 0% 6% n.m.f. >500% -3% 24% 1 FY 2023’s figure included a $500 million cash component realised as part of the divestment of discontinued operations, which is presented as cash inflow from financing activities in the financial statements. The inclusion herein is for better comparability and understanding of free cash flow. 2 Adjusted net debt is defined as net debt less carrying value of non-income producing undeveloped land and properties held for sale (completed and under development), while EBITDA refers to profit before depreciation, amortisation, net interest expense and tax. ANNUAL REPORT 2023 5 OVERVIEW Chairman’s Statement INVESTING IN A SUSTAINABLE FUTURE Keppel delivered strong performance in FY 2023. On the back of the disposal gain from the combination of Keppel Offshore & Marine and Sembcorp Marine, we achieved a record profit of $4.1 billion, with Return on Equity of 37.9%. DEAR SHAREHOLDERS, 2023 was one of the most transformational years in Keppel’s history. We began the year with the divestment of Keppel Offshore & Marine. This was followed by the unveiling of the next phase of our Vision 2030 strategy, where we shed our conglomerate structure to become a horizontally integrated company – a global asset manager and operator, with deep capabilities in Infrastructure, Real Estate and Connectivity. This is the culmination of a multi-year journey which saw Keppel privatising our separately listed business units, growing our asset management business, and simplifying our corporate structure and business. Our goal is to build an agile company that is more focused, leaner, flatter, better able to take quick decisions and unlock synergies to grow at speed and scale. On the back of the disposal gain of approximately $3.3 billion from the combination of Keppel Offshore & Marine and Sembcorp Marine, we achieved a record profit of $4.1 billion, with Return on Equity of 37.9%. Excluding the discontinued offshore and marine operations, net profit from continuing operations grew 6% year on year to $885 million. As part of Vision 2030, we have focused on growing recurring income, which made up $773 million or 88% of Keppel’s net profit from continuing operations in FY 2023. This is a marked increase of 54% from $503 million in the preceding year. In 2023, Keppel delivered Total Shareholder Returns1 (TSR) of 61.1%, 13 times the STI’s TSR of 4.7%. This was following the TSR of 49.3% achieved in 2022, as we continued to focus on creating value for our shareholders. Despite a volatile external environment, with conflicts in Ukraine and the Middle East, tensions between major global powers, slow global growth, high interest rates, and extreme climate events, Keppel delivered strong performance in FY 2023. Taking into account the Company’s strong performance, the Board of Directors has proposed a final cash dividend of 19 cents per share. Together with the interim cash dividend of 15 cents per share, we will be paying out a total cash dividend of 34 cents per 1 Source: Bloomberg 2 Based on Sembcorp Marine’s closing price of 11.5 cents per share on 1 March 2023, the first trading day following completion of the combination transaction. 3 Based on the closing price of $0.835 per Keppel REIT unit on 6 November 2023, the completion date of the DIS. 4 Includes 100% fees from subsidiary managers, joint ventures and associated entities, as well as share of fees based on a shareholding stake in an associate with which Keppel has strategic alliance. 5 Gross asset value of investments and uninvested capital commitments on a leveraged basis to project fully-invested FUM. DANNY TEOH Chairman Keppel shareholders would be receiving total dividends amounting to about $2.70 per Keppel share, comprising a total cash dividend of 34 cents per share and the DIS of Sembcorp Marine shares and Keppel REIT units. share for the whole of FY 2023, slightly higher than the total cash dividend of 33 cents paid for FY 2022. This does not include the distribution in specie (DIS) on 1 March 2023 of approximately 19.1 Sembcorp Marine (now Seatrium) shares to our shareholders for every Keppel share held, with a value of $2.19 per Keppel share2, or the DIS of Keppel REIT units with a value of $0.167 per Keppel share3 on 6 November 2023. Including the DIS of Sembcorp Marine shares and Keppel REIT units, Keppel shareholders would be receiving total dividends amounting to about $2.70 per Keppel share for FY 2023. GROWING AS AN ASSET MANAGER AND OPERATOR Notwithstanding more cautious investor sentiments globally, we continued to grow our asset management business. In FY 2023, our private funds and listed trusts generated a total of $283 million4 in asset management fees, a 6% increase year on year. We raised a total of about $2.3 billion in equity, and completed $2.5 billion worth of acquisitions and $500 million in divestments. We also announced the proposed acquisition of Aermont Capital (Aermont), a leading European real estate asset manager. This is a significant step forward in our strategy to be a global asset manager. It brings together two like-minded asset managers with complementary capabilities, so that we can grow even faster together and also provide better value propositions to our investors or Limited Partners (LPs). When Phase 1 of the acquisition is completed this year, it would give Keppel an immediate and strong foothold in Europe, significantly expanding our presence beyond the Asia Pacific. The senior team at Aermont, with their extensive asset management track record and networks, will add considerable value to Keppel. We will also be able to leverage Aermont’s longstanding relationships with its global clients to widen our network of blue-chip LPs. As at end-2023, Keppel’s Funds Under Management (FUM) had grown to $55 billion from $50 billion in the preceding year5. When Phase 1 of the Aermont acquisition is completed, our FUM would grow to about $79 billion, bringing us close to 80% of our interim target of $100 billion by end-20265. 6 KEPPEL LTD. ANNUAL REPORT 2023 7 OVERVIEW Chairman’s Statement Investors in our private funds, REITs and business trust appreciate our operating capabilities, which distinguish us from pure financial investors, and find our active value adding approach to creating superior returns appealing. We continued to execute our asset-light strategy, with $5.4 billion in asset monetisation announced by end-December 2023, since the start of the programme in October 2020. Of this amount, $947 million was announced in 2023. We exceeded the higher end of our $3-$5 billion asset monetisation target ahead of schedule and are now working towards our next cumulative target of $10-$12 billion by the end of 2026. The significant capital unlocked would allow us to invest in growth initiatives as well as reward shareholders. SEIZING OPPORTUNITIES IN SUSTAINABLE DEVELOPMENT At the United Nations Climate Change Conference (COP 28) last December, the international community agreed to transition away from fossil fuels, triple renewable energy capacity globally, and accelerate zero- and low-emission technologies. These developments are very much in line with Keppel’s climate transition plans and bode well for many of the solutions that Keppel provides, including renewables; the development of the Keppel Sakra Cogen Plant, Singapore’s first hydrogen-ready and most advanced power plant; the exploration of how carbon capture can be integrated into Waste-to-Energy Plants in Singapore; our sustainable urban renewal initiatives as well as innovative efforts to green data centres. The global transition away from fossil fuels and towards zero- and low-emission technologies bodes well for many of the solutions that Keppel provides, including renewables and the development of the Keppel Sakra Cogen Plant, Singapore’s first hydrogen-ready and most advanced power plant (in picture). 8 KEPPEL LTD. With increasing digitalisation, accentuated by machine learning and Generative ArtificiaI Intelligence, we also see increasing demand for digital connectivity, including data centres, subsea fibre cables and 5G-enabled digital telecommunication services. These are also areas where Keppel has strong capabilities. The fact that Keppel has strong track records in both fund management as well as the development and operation of specialised assets is one of our key differentiators. Investors in our private funds, REITs and business trust appreciate our operating capabilities, which distinguish us from pure financial investors, and find our active value adding approach to creating superior returns appealing. SUSTAINABILITY AT THE CORE OF OUR STRATEGY Keppel has long been committed to sustainability. We are focused on running the Company responsibly and have set targets to reduce carbon emissions, increase renewable energy utilisation and reduce water usage and waste. For us, sustainability is not just a question of compliance or corporate social responsibility, but a key part of how we create value. We invest in and create solutions which help our customers and communities reduce or avoid carbon emissions and better manage their environmental impacts, as they progress on their net zero journeys. In 2023, we were honoured to receive the President’s Award for the Environment, the highest environmental accolade in Singapore. We also continued to receive strong endorsement from global environmental, social and governance (ESG) indices. We are included in the Dow Jones Sustainability World and Asia Pacific Indices, and continued to receive the highest MSCI AAA ESG rating. We also continued to advance our safety journey, and achieved zero fatalities across our global operations during the year. We believe that strong corporate governance and effective risk management are essential to the long-term sustainability of our business. As part of our efforts to achieve a good balance of skills, knowledge, experience as well as diversity among directors, we welcomed Ms Ang Wan Ching as an Independent Director on the Board with effect from July 2023. Wan Ching brings to the Board a wealth of experience in global investment, especially in private funds and alternative assets, which is particularly relevant as we grow as a global asset manager and operator. We remain prudent in risk management, including keeping our cost of funds competitive amidst a high interest rate environment. As at end-2023, about 66% of our borrowings were on fixed rates, with interest cost of 3.75% and weighted tenor of about three years1. Given the current challenging market conditions in China, we are also carefully monitoring and progressively derisking our portfolio. Our Real Estate Division has monetised over $3 billion of assets in China since 2017, recognised total profits of more than $1 billion, and repatriated more than $5 billion of cash over the same period. 1 Including perpetual securities. In 2023, Keppel was conferred the President’s Award for the Environment, the highest environmental accolade for individuals, educational institutions and organisations that have made outstanding contributions towards the environment and sustainability, as well as building a climate-resilient future for Singapore. As the Company transformed, we remained focused on creating a supportive environment for work and career development. In our 2023 Employee Engagement Survey, we received an engagement score of 86%, 2 percentage points higher year on year and 6 percentage points higher than Mercer’s global norm. 89% of respondents indicated that they are proud to work for Keppel and support Keppel’s transformation to be a global asset manager and operator. We also continued to invest in training and development as well as succession planning, with our workforce achieving an average of more than 23 hours of training per person during the year, higher than our target of 20 hours. Keppel has always believed that when our communities thrive, we thrive. In 2023, we contributed $4.3 million to worthy causes, including donations made through our philanthropic arm, Keppel Care Foundation. These include supporting a new Keppel Professorship in Sustainability Solutions at the National University of Singapore, providing bursaries for students from lower income families, and supporting persons with disabilities, among others. Overseas, we extended the very well-received Living Well programme, which provides vulnerable communities with access to clean water, in Vietnam and India, leveraging Keppel’s capabilities in water solutions. ACKNOWLEDGEMENTS I would like to express my deep appreciation to fellow directors for their dedicated service and wise counsel, which helped Keppel to transform and deliver strong results amidst an uncertain environment. I would in particular like to thank Mr Till Vestring, Ms Veronica Eng and Professor Jean-François Manzoni, who will be stepping down from the Board immediately after the upcoming AGM. Till, Veronica and Jean-François contributed For us, sustainability is not just a question of compliance or corporate social responsibility, but a key part of how we create value. actively to the Board during a challenging and exciting period for the Company, including navigating the uncharted waters of the COVID-19 pandemic, as well as overseeing the formulation of our Vision 2030 strategy and transformation to be an asset manager and operator. I am also grateful to our shareholders, partners and other stakeholders for their confidence in and support of Keppel. Lastly, I would like to express my appreciation to Keppelites around the world for their many contributions as we accelerated our transformation journey. We will continue to work closely with our different stakeholders to build a sustainable future together. Yours sincerely, DANNY TEOH Chairman 1 March 2024 ANNUAL REPORT 2023 9 OVERVIEW Interview with the CEO CREATING ENDURING VALUE Keppel’s multi-dimensional transformation has seen us turn from a balance sheet player into an asset-light asset manager, from a conglomerate with vertical silos into a horizontally integrated company with end-to-end value chains. Q How would you describe Keppel’s transformation We have successfully harnessed our industrial roots and progress over the past few years? A We have made significant progress over the years to transform and adapt to the changing environment. A lot of what we see today is the result of many years of restructuring, from the privatisations of Keppel Land, followed by M1 and Keppel Telecommunications & Transportation, to the formation of Keppel Capital. 2023 was a major milestone in our journey. We successfully divested the offshore and marine business, achieved the highest net profit on record in Keppel’s 55-year history, and delivered outstanding value to shareholders. All of these were achieved as we executed our ambitious plans to restructure and evolve the Company under what we call “Project Darwin”. Keppel’s multi-dimensional transformation has seen us turn the Company from brown to green, from a balance sheet player into an asset-light asset manager and from a conglomerate with vertical silos into a horizontally integrated company with end-to-end value chains. Our earnings have also pivoted from lumpy orderbook and trading profits to what is now mostly recurring income. to transform the Company into a global asset manager and operator. Our strong investment track record, built up over 20 years, as well as our operating capabilities and domain knowledge in the key segments of Infrastructure, Real Estate and Connectivity, provide an unparalleled value proposition to the investors of our private funds, REITs and business trust. Investors also find our active value adding approach to creating superior returns appealing. Keppel’s shareholders have benefitted – and will continue to benefit – from our transformation. Keppel today is run more efficiently as one company. We are executing one business strategy, and exploiting synergies among our three segments to create greater value for our end customers, investors and shareholders. Our earnings, now much more recurring, should attract growth multiples, rather than being valued based on price to book and discount to Revalued Net Asset Value with a further holding company discount. In fact, over 80% of the analysts who currently cover Keppel no longer apply a conglomerate discount to our stock. LOH CHIN HUA Chief Executive Officer Keppel’s shareholders have benefitted – and will continue to benefit – from our transformation. Keppel today is run more efficiently as one company. We are executing one business strategy, and exploiting synergies among our three segments to create greater value for our end customers, investors and shareholders. Reflecting the significant changes in the Company, with effect from 1 January 2024, we have changed our name from Keppel Corporation Limited to Keppel Ltd., marking a new chapter in our corporate journey. Keppel harnesses its competencies to build and manage assets, especially those in the alternative real asset space, to create unparalleled value for LPs. But we are not done yet. The direction has been set. We will scale up our Funds Under Management (FUM), grow recurring income and monetise our assets, as we accelerate the execution of our Vision 2030 strategy. I am confident that Keppel is well positioned to ride the next S-curve of quality, sustainable growth. Q How is Keppel different from other asset managers? A Institutional investors are increasingly looking for General Partners who can provide more than just financial investment solutions. They are looking for partners with the competencies to build and manage assets, especially those in the alternative real asset space. Keppel, with the DNA of an asset manager as well as strong operating capabilities, presents a very attractive proposition to our Limited Partners (LPs). We are able to draw on our deep domain expertise, whether it is in the energy transition, infrastructure, connectivity or real estate solutions, to create alphas for the funds that we manage. Some large financial investors aspire to become operators but they do not have those competencies and need to acquire the necessary assets and platforms. 10 KEPPEL LTD. ANNUAL REPORT 2023 11 OVERVIEW Interview with the CEO LPs are expected to remain highly selective of investment strategies and asset classes, with a preference for sectors underpinned by resilient macrotrends, such as the energy transition, climate action and digitalisation, all of which are driving demand for Keppel’s solutions. In contrast, at Keppel, we have already been operators for a long time, with rich experience in engineering, developing and managing innovative solutions and providing essential services that help to address some of the world’s most pressing challenges. Conversely, there may also be operators out there who want to be asset managers, but they lack the DNA and the track record for investing third-party capital and running private funds. Ultimately, LPs are entrusting us with significant investments which may be locked up for as long as 10 years. They would want to ensure that their interests are well taken care of by a trusted partner. At Keppel, we uphold our fiduciary duty zealously. We know what investors require, and we have built a strong track record and reputation on an LP-first mindset. Our competitive advantage as an asset manager and operator with deep expertise in sustainability solutions is a key differentiator that sets us apart from our peers. Q Looking forward over the next few years, which opportunities excite you most in asset management? A Private markets have experienced some headwinds in the past couple of years from fears of recession and elevated interest rates. With inflation starting to ease and interest rates stabilising, market liquidity should gradually improve in the latter part of 2024, availing more opportunities for fundraising and dealmaking. However, LPs are expected to remain highly selective of investment strategies and asset classes, with a preference for sectors underpinned by resilient macrotrends, such as the energy transition, climate action and digitalisation, all of which are driving demand for Keppel’s solutions. Over the next few years, infrastructure is expected to be one of the fastest-growing asset classes, underpinned by the global push for cleaner energy, decarbonisation and digital connectivity solutions. A significant amount of capital will be required not only to replace ageing infrastructure but also to provide more advanced solutions needed for sustainable development. With conditions in the capital markets improving, we will continue to pursue our quality deal flow pipeline of over $14 billion, the majority of which are in the Infrastructure and Connectivity segments. By leveraging Keppel’s domain knowledge and operating expertise in multiple asset classes, we can provide more fund products with strong value propositions to our LPs. Q As Keppel transforms its earnings stream with a focus on growing recurring income, how sustainable are Keppel’s earnings, especially the contributions from Infrastructure? A Our recurring income has been steadily rising over the past three years. In FY 2023, it rose 54% year on year to $773 million, bolstered by improved contributions from our Infrastructure Division, which has succeeded in becoming more asset-light and shifting away from lumpy engineering, procurement and construction profits towards steadier trading and fee-based income. As we continue to pursue opportunities in renewables, clean energy and decarbonisation solutions, we are also expanding the pipeline of long-term contracts that provide stable income with good earnings visibility. One such example was the GlobalFoundries power purchase agreement inked in January 2024, which will see Keppel providing electricity to power the customer’s Singapore operations for more than 15 years. As at end-2023, about 60% of our contracted generation capacity was locked in for three years and above, up from 36% just six months prior in June 2023. Concurrently, our growing base of infrastructure-related supply and service contracts stacked up to $4.3 billion at end-2023, with revenues to be earned over the next 10-15 years. New engines such as Energy-as-a-Service are also contributing to our growth, making up more than half of this substantial contract backlog. More recently in February 2024, we were appointed to design and build a large-scale solar photovoltaic system at Changi Airport, which we will own and operate for 25 years. We are excited by the many opportunities in the infrastructure space. We are confident of not just sustaining our performance but also growing both profits and returns from this segment through our asset-light model. Q China continues to be a difficult market. How has your strategy for the market changed? A Keppel has been in China over three decades. While China is still an important market for us, we have de-risked our investments significantly over the last few years, in line with our asset-light strategy. Since 2017, our Real Estate Division has monetised over $3 billion of assets in China, including $94 million in 2023, and recognised total profits of more than $1 billion. We have also repatriated more than $5 billion of cash from China over the same period. Q Following the acquisition of Aermont Capital (Aermont), what are your plans for mergers & acquisitions (M&As) moving forward? What would you be looking out for in potential M&A targets? Today, we have a remaining landbank in China of about $1 billion held at historical costs in our books1. As we continue to seek monetisation opportunities, we will also be looking out for opportunities and attractive asset deals that may surface when markets undergo distress. To be clear, we believe that China, with its sizeable market, still holds good potential over the medium to long term. However, it is important to recognise that China today is very different from what it was 10 years ago, and the country’s needs have also evolved. With this in mind, we have developed a new China playbook that focuses on the energy transition, infrastructure, sustainable urban renewal and data centres – areas aligned to China’s longer-term sustainable development goals, and where Keppel has strong differentiation and value add. With our deep know-how in sustainability solutions, and established presence in China, Keppel is well-placed to create value for investors and customers in this market in the long run. A As we expand our business, we are looking out not just for good assets but also top talent and strong capabilities that can add value to Keppel as well as bolster our value proposition to global LPs. We do not have a standard playbook for M&A – the key is to find platforms run by good people who share the same values, and with whom we can grow. For us, Aermont was a rare find, and the acquisition checks all of the boxes for both sides. Aermont was looking for a partner that could add strong value to its platform and was drawn to Keppel’s expertise in the energy transition, infrastructure and connectivity. While real estate is an area that Keppel is very familiar with, we have not had a significant presence in this asset class outside of the Asia Pacific. So there was very little overlap between us, and Aermont can serve as our platform in Europe. 1 Based on the carrying values of residential landbank and development projects held by subsidiaries. Over the next few years, infrastructure is expected to be one of the fastest-growing asset classes, underpinned by the global push for cleaner energy, decarbonisation and digital connectivity solutions. 12 KEPPEL LTD. ANNUAL REPORT 2023 13 OVERVIEW Interview with the CEO If you were to drill down into the way Aermont creates value for their LPs, you will find that it is not unlike Keppel’s own approach. In fact, both our companies share very similar operating cultures and values. As asset managers, neither of us are pure financial investors. Aermont’s emphasis on value adding and active management, as well as its operator-oriented approach are a strong fit with Keppel. Furthermore, we believe that the senior team at Aermont, with their extensive track record and networks in Europe, would add significant value to Keppel as we work together to co-create new fund products for global LPs. Inorganic deals work like an accelerator, i.e. they allow us to reach our goals in a shorter time. But good ones are hard to come by. We cannot just rely on M&A alone to get to our $200 billion FUM target and will still have to drive organic growth. As we explore opportunities to acquire synergistic platforms in areas such as infrastructure and connectivity, we are also planning bigger flagship funds bearing Keppel’s hallmark, such as the Keppel Sustainable Urban Renewal Fund and the Keppel Asia Infrastructure Fund series. We are also working towards the launch of our third data centre fund in 2024. Q What are Keppel’s asset monetisation plans moving forward, to get to $10 – $12 billion by end-2026? A A big part of the $17.5 billion pool of monetisable assets that we identified on our balance sheet as at June 2020 was in real estate. Since the launch of our asset monetisation programme in October 2020, we have announced the monetisation of about $5.4 billion in assets as at end-2023, well ahead of our $3-$5 billion target. A substantial part of this was from our residential landbank, which are low-returning assets that take up balance sheet space and incur holding costs. At the start of our monetisation programme, we had about $4 billion worth of residential landbank and development projects, and we have since brought that down by around half, to about $2.1 billion by the end of 20231. Going forward, we will continue to accelerate the monetisation of our remaining landbank. In addition, we also have the Asset Co vendor notes worth about $4.3 billion that we are hopeful of monetising over the next few years, riding on improving market conditions in the offshore sector. When we succeed in monetising the vendor notes and landbank, it will liberate an additional $6.3 billion from our balance sheet and allow us to achieve our $10-$12 billion cumulative monetisation target by end-2026. And as we continue to improve Keppel’s performance, expanding both recurring income and margins, we will get much closer to a Return on Equity of 15% on a sustainable basis – this is a target that we are confident of achieving well before 2030. Q As Keppel advances on its strategy to be an asset- light company, what are your priorities in terms of capital allocation? A Capital management is a key part of our transformation, which focuses on driving capital-efficient growth. At the end of 2023, we had total assets of $26.8 billion on our balance sheet, a decrease of about 17% As we ink the next chapter of Keppel’s growth story, we will continue to streamline the organisation and our processes to become fitter, more agile and more capital-efficient. compared to $32.3 billion as at end-2021. Over the same period, our FUM expanded by more than 30% to about $55 billion from $42 billion at the end of 20212. As we have been paying out 50-60% of our annual net profit as cash dividends over the past few years, in addition to the in-specie distributions of the then Sembcorp Marine shares and Keppel REIT units in 2023, our balance sheet has reduced while our FUM continued to grow. We have demonstrated both our commitment to work our assets harder, as well as our willingness to return capital to shareholders. Being an asset-light company means that we will be less reliant on our balance sheet for growth moving forward. As we scale up to reach our FUM targets of $100 billion in 2026, and $200 billion in 2030, our investments will be done mainly through, or together with, our private funds and listed real estate and infrastructure trusts. In addition, our strategies to grow recurring income and drive asset monetisation would collectively release more funds, and I expect that there will be more than enough for investments and to pay down debt, as well as reward our shareholders. Q Almost every company is talking about sustainability. What is Keppel’s approach and how is Keppel’s sustainability approach different from other companies? A Keppel takes our commitment to sustainability seriously. We have announced our target to halve Scope 1 and 2 emissions by 2030 compared to our 2020 baseline, and achieve net zero Scope 1 and 2 emissions by 2050. Given the good progress we are making, I am confident we would be able to get to our net zero target well ahead of 2050. More than just running our operations responsibly, sustainability is a key part of our business. We are providing sustainability and decarbonisation solutions that help our customers and communities on their net zero journeys. These include the importation of renewable energy into Singapore, the development of the Keppel Sakra Cogen Plant, Singapore’s most advanced and first hydrogen-ready power plant, our Sustainable Urban Renewal initiatives, and our efforts to green our data centres, among others. capacity globally, transition away from fossil fuels, and accelerate zero- and low-emission technologies. These are sustainability solutions that Keppel is already focused on. I have therefore often said that Keppel is at the right space, at the right time. Our ability to match third-party capital with sustainability expertise and real assets, will allow us to help the world progress towards a greener and brighter future, while delivering investment solutions with good returns to our LPs. Q How are you preparing the organisation to drive the next phase of Keppel’s growth? A The bold multi-year transformation that we have undertaken builds on Keppel’s unique strengths to make it an even better, and future-ready, company – one that is strongly positioned to harness the opportunities of today by investing in and creating solutions for a sustainable future. Notwithstanding the restructuring and changes within the Company, I am heartened to see that our employee engagement score has improved year on year, supported by Keppelites who are proud to work for Keppel and be part of its transformation. As we ink the next chapter of Keppel’s growth story, we will continue to streamline the organisation and our processes to become fitter, more agile and more capital-efficient. We will further invest in our human capital, developing our people to remain relevant in a changing landscape, while bolstering the Company’s capabilities in areas such as asset management and digitalisation. We will fully leverage technology, including artificial intelligence, to do our jobs better and faster. In line with our sharpened focus, we have adopted a refreshed and shorter set of Core Values – Agile, Can Do, and Trusted – or ACT for short. Being Agile is to be ever ready to innovate and change in a rapidly evolving world. Can Do, which has long been a defining attribute of Keppel, encompasses courage, a spirit of enterprise and passion for excellence. Being Trusted by our stakeholders, is pivotal to the success of our business, whether it is our shareholders, LPs, regulators or customers who put their faith in us. Guided by our Core Values, I am confident that Keppel will continue to create superior returns and enduring value for generations to come as an asset manager and operator. The proposed strategic acquisition of leading European asset manager Aermont Capital will give Keppel a strong foothold in Europe and significantly expand its presence beyond Asia Pacific. From left: Ms Christina Tan, CEO, Fund Management and CIO of Keppel Ltd.; Mr Léon Bressler, Chairman of Aermont Capital; Mr Loh Chin Hua, CEO of Keppel Ltd.; and Mr Paul Golding, Managing Partner of Aermont Capital. At the United Nations Climate Change Conference (COP 28) in December 2023, the international community pledged to triple renewable energy 1 Based on the carrying values of residential landbank and development projects held by subsidiaries. 2 Gross asset value of investments and uninvested capital commitments on a leveraged basis to project fully-invested FUM. 14 KEPPEL LTD. ANNUAL REPORT 2023 15 OVERVIEW Vision 2030 in Action HIGHLIGHTS OF ACHIEVEMENTS IN 2023 In 2023, we divested our offshore and marine business and shed our conglomerate structure to become a global asset manager and operator. 1 Accelerate Business Transformation Growing Fund Management and Investment Platforms • Announced strategic acquisition of leading European asset manager Aermont Capital. • Achieved Funds Under Management (FUM) of $55 billion by end-20231, with a pro-forma FUM of $79 billion including Aermont Capital’s FUM1,2. • Raised about $2.3 billion in equity, completed $2.5 billion in acquisitions and divested $0.5 billion of assets. • Continued to make good progress on fund initiatives, including closings for the Keppel Core Infrastructure Fund and the China-focused Sustainable Urban Renewal programme. Scaling Up in Vision 2030 Growth Areas • Expanded business in renewables, clean energy and environmental solutions, and secured $1.6 billion of Energy-as-a-Service contracts in 2023. • Pioneering utility-scale power interconnection in ASEAN, and expected to contribute 1.3 GW out of Singapore’s 4 GW low-carbon electricity importation target. • Broke ground for Keppel Sakra Cogen Plant, Singapore’s first hydrogen-ready power plant. • Grew portfolio of renewable projects to 4 GW3 from 2.6 GW at end-2022. 2 Drive Financial Performance Net Profit $4.1b more than quadruple of $927 million in FY 2022 Recurring Income $773m comprising 88% of net profit from continuing operations; 54% higher compared to $503 million in FY 2022 Gearing 0.90x at end-2023, compared to 0.78x at end-2022 ROE 37.9%4 compared to 8.1% for FY 2022 Total Dividend $2.70 dividend per share, comprising 34 cents cash dividend and $2.36 dividends in specie of Sembcorp Marine shares5 and Keppel REIT units6, compared to 33 cents per share for FY 2022 • Developed Real Estate-as-a-Service offerings, implementing sustainable urban renewal initiatives in eight projects across Asia Pacific and launched Sindora Living, Keppel’s senior living brand and operating platform for Asia, as well as its first assisted living community in Nanjing, China. • Driving development of energy-efficient data centres with proposed 1 GW Datapark+ and Floating Data Centre Module. • Making good progress on the Bifrost Cable System, with cable laying operations about 50% completed as at end-2023. • M1 transforming into a cloud native connectivity platform, with all mass consumers migrated onto new digital platform, and growing enterprise revenues. Simplifying and Focusing Our Business • Completed divestment of offshore and marine business. • Shed conglomerate structure to become one integrated company, with a new governance model and harmonised processes, as well as centralised and optimised support functions. • Renamed Keppel Corporation as Keppel Ltd. to signal the start of a new chapter with effect from 1 January 2024. Outperforming Asset Monetisation Targets • Announced asset monetisation of about $5.4 billion since 4Q 2020, including $947 million announced in 2023. • Exceeded upper range of $3-$5 billion asset monetisation target ahead of schedule. • $4.1 billion cash released as at end-2023. Building a Tech-Enabled Company • Accelerating Keppel-wide digitalisation initiatives, such as the establishment of a data lake providing reliable data to accelerate decision making. 1 Gross asset value of investments and uninvested capital commitments on a leveraged basis to project fully-invested FUM. 2 Assumes that the acquisition of the first 50% stake in Aermont Capital was completed on 31 December 2023. 3 On a gross basis and includes projects under development. 4 Excluding discontinued operations and loss from the dividend in specie of Keppel REIT units, ROE improved to 9.3% in FY 2023 from 7.3% in FY 2022. 5 Amounted to $2.19, rounded to the nearest two decimal places; calculated based on a division of (a) the cash equivalent amount of the dividend declared by the Company of $3,845 million, by (b) the Company’s issued and paid-up share capital as at the Record Date of 1,751,959,918 Keppel Shares (excluding treasury shares). 6 Based on the closing market price of $0.835 per Keppel REIT unit on 6 November 2023, the cash equivalent amount of the dividend declared by the Company was $294 million, equivalent to $0.167 per share. 16 KEPPEL LTD. ANNUAL REPORT 2023 17 OVERVIEW Vision 2030 in Action 3 Develop Human Capital 4 Enhance Governance, Compliance, Risk Management and Safety 5 Champion Sustainability Continue Staff Engagement and Development • Ranked one of the World’s Best Employers 2023 by Forbes and World’s Best Companies 2023 by TIME. • Certified by Top Employers Institute as a Top Employer in Singapore and China for the fifth and second consecutive years, respectively. Ranked in the top 10% of companies assessed in Singapore. Governance • Augmented Board’s skills, knowledge, experience and diversity with appointment of new independent director with global experience in alternative private fund investments. • Passed ISO 37001 surveillance audits as well as maintained ISO 37001 certification across all in-scope entities. • Recognised as one of Vietnam’s Best Workplaces 2023 by the Great Place to Work Institute. • Achieved strong engagement score of 86% amidst transformation, higher than 2022 (84%) and above Mercer’s global norm (80%). Significantly improved Employee Net Promoter Score of 24, up from 3 in 2022. • Achieved average of more than 23 training hours per employee, higher than the target of 20 hours. Enhance Succession Planning • Met succession planning targets for identified critical positions. • Conferred the Gold Award at the Singapore Corporate Awards for having the Best Managed Board among listed companies with a market capitalisation of $1 billion and above. Compliance and Risk Management • Enhanced risk assessments to include macro-economic and topical risks. • Tracked risks related to Keppel’s transformation and enhanced measures to manage key transformation-related risks. • Established Suspicious Transaction Reporting Framework to strengthen Anti-Money Laundering controls across Keppel. • Established Artificial Intelligence (AI) Governance and Data Governance frameworks to manage the rising risks associated with the use of AI within Keppel, and to promote standards for how data is used, managed and protected. • Conducted financial impact assessment of climate-related physical risks for key assets across different climate scenarios. Safety • Achieved zero fatalities across global operations. • Received two Workplace Safety and Health Performance Awards (Silver). Work Towards ESG Goals, Including Carbon Emissions Reduction Targets1 • Received the President’s Award for the Environment, the highest environmental accolade for individuals, educational institutions and organisations that have made outstanding contributions towards the environment and sustainability, as well as building a climate- resilient future for Singapore. • Named winners in the Singapore Corporate Sustainability Award (Big Cap) at the SIAS Investors’ Choice Awards 2023 and the Sustainable Solutions category at the Singapore Apex Corporate Sustainability Awards 2023, organised by UN Global Compact Network Singapore. • Continued to be included in the DJSI World and Asia Pacific Indices; maintained MSCI AAA ESG rating. • Continued to work on reducing Scope 1 and 2 carbon emissions, as well as waste and water. • Tracking all 15 relevant categories of Scope 3 emissions and working with value chain and portfolio of investments to enhance energy efficiency and reduce emissions where possible. • Unveiled new Keppel-wide Diversity, Equity and Inclusion Policy. Make a Positive Impact on the Community Volunteers • Completed more than 11,000 hours of community service, exceeding target of 8,000 hours. Social Investments & Industry Advancement • $4.3 million contributed to social investment spending and industry advancement. 1 Further details will be provided in Keppel’s Sustainability Report to be published in May 2024. FOCUS AREAS IN 2024 Accelerate Vision 2030 Transformation and Growth as Global Asset Manager and Operator • Work towards FUM targets of $100 billion by 2026 and $200 billion by 2030. Drive Financial Performance • Achieve Vision 2030 financial targets, including mid- to long-term ROE target of 15%. • Grow recurring income. • Maintain net gearing below 1.0x. Enhance Discipline & Controls • Ensure strong governance, risk management, compliance, controls and safety standards. • Continue to execute Zero Fatality Strategy. • Complete Phase 1 of proposed acquisition of Aermont Capital. • Deliver strong performance across segments. • Continue efforts to reach $10-$12 billion in cumulative asset monetisation by end-2026. • Work towards attaining $60-$70 million in savings from synergy capture by end-2026. • Continue digitalisation efforts to support business transformation. Develop Human Capital • Continue to deepen staff engagement. • Develop talent pool and grow capabilities in line with Vision 2030 transformation. • Enhance succession planning. Champion Sustainability • Work towards ESG goals, including long-term carbon emissions reduction targets. • Make a positive impact on the community. 18 KEPPEL LTD. ANNUAL REPORT 2023 19 OVERVIEW Our Business Model Keppel’s horizontally integrated business model enhances the resilience of our earnings. Keppel’s differentiated model as a horizontally integrated asset manager and operator distinguishes us from other companies which are pure financial investors or operators. It allows us to derive multiple earnings streams from the Fund Management, Investment and Operating platforms, across the life cycles of the real assets that we invest in, develop, operate or manage. Leveraging our strong track record in real assets, Keppel is focused on scaling up our recurring asset management and operating income streams while progressively pivoting away from lumpy earnings, e.g., from property development, thus enhancing the resilience and visibility of our earnings. Our horizontal reporting structure reflects Keppel’s multiple earnings streams and highlights the growth and scalability of our recurring income. RECURRING 88% of net profit from continuing operations was from recurring income in FY 2023, vs 60% in FY 2022 54% growth in recurring income year on year, from $503 million to $773 million Asset Management Income Operating Income Valuation Items Development/EPC Capital Recycling OTHERS • Management fees • Performance fees • Transaction fees Keppel earns recurring fees from managing listed real estate and infrastructure trusts and private funds. • Sale of gas, electricity, utilities • Leasing income • Operations & maintenance • Facility management • Property management • Investment income Keppel earns recurring income from operations, including from the sale of gas, electricity and utilities; leasing and managing assets; as well as providing telecommunication services. • Property valuation • Mark-to-market gains/losses • Engineering, procurement and construction (EPC) • Development • Disposal gains/losses • Gains from enbloc sales Keppel recognises gains/losses from revaluation of investment properties or from mark-to-market investments. Keppel earns from EPC contracts, property trading and asset development. Beyond gains from divestments or enbloc sales, capital recycling allows Keppel to allocate capital to investments with higher returns, leveraging our asset-light model. Keppel applies its Sustainable Urban Renewal (SUR) solutions to enhance the efficiency, sustainability performance and valuation of its real estate assets under management. (In picture: The Bank of Korea’s Sogong Annex Facility in Seoul, which is undergoing SUR asset enhancements.) Keppel is a strong operator with a track record for engineering, developing and operating specialised assets, including Keppel Merlimau Cogen, a 1,300 MW Combined Cycle Gas Turbine power plant in Singapore. Keppel is in a unique position to offer Limited Partners access to proprietary assets, such as the Bifrost Cable System, which it is developing together with Facebook (now Meta) and PT. Telekomunikasi Indonesia International. Keppel integrates its capabilities in district heating and cooling, solar energy and electric vehicle charging to offer Energy-as-a-Service, a subscription-based solution to help businesses decarbonise their operations. 20 KEPPEL LTD. ANNUAL REPORT 2023 21 OVERVIEW Technology & Innovation Innovation has long served as a potent differentiator for Keppel. Embracing innovation strengthens our unique value proposition as a global asset manager and operator focused not only on delivering enduring value to our Limited Partners (LPs) and our shareholders but also creating a sustainable future. themes such as accelerating the development of sustainability and energy transition solutions; adopting a full ecosystem and value chain approach to address complex problems; and embedding customer centricity and digitalisation. We leverage innovation to catalyse growth through our virtuous investment cycle, with the shared objective of delivering attractive risk-adjusted returns to our LPs. Our Fund Management and Investment platforms harness digitalisation and artificial intelligence (AI) to improve the way we deploy capital, engage investors and manage our portfolio. Our Operating Platform leverages innovation to design new commercialisable solutions and drive superior asset performance, applying our deep domain knowledge to value-add to the real assets in our listed vehicles and private funds. While each of our three segments – Infrastructure, Real Estate and Connectivity – is exploring specific innovation themes relevant to their industries, they also share common ACCELERATING DIGITALISATION AND USAGE OF AI Across our platforms and centralised functions, we are focused on accelerating digitalisation. Efforts include hallmark projects such as the set-up of our Keppel Data Exchange that allows for multiple streams of data to be integrated in a Keppel-wide data lake. It incorporates robust data policies and governance, as well as the development of an Extended Planning & Analysis platform across all three platforms to enable more efficient financial reporting, planning and forecasting. We are also on a journey to embed digitalisation into our integrated asset management activities to enhance data-driven decision making and promote greater agility. Those initiatives are jointly driven by our platform or division leaders and Keppel’s Digital Office and coordinated through our Digital Transformation Steering Committee chaired by Keppel’s Chief Digital Officer. In addition, with the rapid growth of AI and in particular Generative AI (GenAI) technology, Keppel convened an internal AI Forum to actively support experimentation and adoption of AI and Machine Learning across our platforms. This is conducted through risk-managed and guardrail-protected sandboxes for early-stage prototyping, proof of concept and minimum viable product development, in close collaboration with external ecosystem partners. INNOVATION ECOSYSTEM Keppel also taps into external networks through ecosystem partnerships with industry stakeholders including institutes of higher learning, government agencies, global and local corporates, venture funds and start-ups. Stakes in start-ups and venture capital funds (e.g., Fifth Wall) help to broaden our exposure to the start-up ecosystem and accelerate learning on ongoing market developments and technology trends. We adopt a multi-pronged approach to innovation, looking at efforts across three categories: 1 INCREMENTAL INNOVATION 2 NEW INNOVATIVE SOLUTIONS/DISRUPTIVE INNOVATION 3 TECHNOLOGY FORESIGHT Enhance and defend current solutions Accelerate the commercialisation of new innovative solutions We focus on levers to defend and enhance our existing solutions, by improving customer experience, and reducing costs to develop and operate our assets. We leverage innovation to design and develop unique customer solutions in our key areas of focus, looking at ways to enhance our value proposition and build on the strengths of our ecosystem of partners to future-proof our business and reduce the time to commercialisation. Scan technology trends to identify future growth engines and anticipate potential disruptions on the horizon Further out in the horizon, we actively explore longer-term opportunities and potential disruptions, under our Technology Foresight umbrella. This aims to future-proof our business, both in terms of identifying future growth engines, and anticipating where we could face disruptions. 22 KEPPEL LTD. CARBON CAPTURE TECHNOLOGY FOR A SUSTAINABLE FUTURE Our Infrastructure Division is focused on decarbonising flue gases emitted from waste-to-energy (WTE) plants through carbon capture technologies. Carbon Capture and Storage (CCS) is one of the few carbon dioxide reduction technologies capable of realising negative emissions by permanently storing the captured biogenic carbon fraction. Many synergies exist between WTE and CCS technologies. Our Infrastructure Division has developed in-house knowledge on optimising the integration of the two technologies with regard to key parameters such as energy provision. This involved detailed engineering work for Feasibility and Pre-Front End Engineering Design Studies on full-scale CCS projects with WTE for Viridor in the UK (approximately 1 million tonnes of CO2 per annum), and for the National Environment Agency in Singapore (over 3 million tonnes of CO2 per annum). Proven current CCS technologies typically enable approximately 95% of the CO2 present within WTE flue gases to be captured. The captured CO2 can then be utilised in carbonation processes, mineralised or used in the production of sustainable fuels. Alternatively, the CO2 can be transported and sequestered permanently in depleted gas or oil fields or aquifers. As part of value chain development, the Infrastructure Division is able to advise on the transportation and storage of the captured CO2, given its in-house knowledge on WTE and CCS. These innovations serve to reduce the overall cost of treatment per tonne of CO2 captured. In-house process and cost modelling have also enabled optimised design of “CCS-ready” WTE plants. This allows for smoother retrofitting of future CCS technologies, thus delivering both time and financial savings in the operation of these infrastructure assets. Artist impression of a carbon capture facility. FLOATING DATA CENTRES To enhance our sustainability efforts, the Data Centres and Networks Division is pursuing innovative ideas with industry partners and clients to design and build innovative new assets such as the Floating Data Centre (FDC). Leading hyperscalers prefer data centres to be close to the heart of major cities, which are often coastal cities that face unique demographic, environmental, and spatial challenges. After extensive brainstorming and innovation development, Keppel is pioneering nearshore FDCs to provide a sustainable solution for the growth of the modern digital economy. FDCs can be moored permanently or temporarily in nearshore sites. They are mobile, scalable, and customisable. Given its mobility and modular design, a new FDC module can be readily developed and deployed, while the older FDC modules can be reassigned to other locations, contributing to a circular economy. FDCs also have an attractive value proposition for land-scarce regions, as they enable more efficient use of land and free up valuable space for other urban uses. Situated at nearshore locations, FDCs integrate the use of seawater for cooling to substantially reduce the consumption of treated water. FDC modules can be constructed at shipyards in a controlled environment, which expedites their time-to-market and at the same time minimises disruption to shoreside operations at the intended wharf locations. ANNUAL REPORT 2023 23 OVERVIEW Sustainability Framework We are committed to environmental stewardship, responsible business practices, and investing in people and communities wherever we operate. OUR STRATEGY Keppel has a two-pronged sustainability strategy of running our business sustainably, and making sustainability our business by providing solutions that contribute to global sustainable development and decarbonisation efforts. Our approach to sustainability is underpinned by the three pillars of (i) Environmental Stewardship, (ii) Responsible Business, and (iii) People and Community, which address the environmental, social and governance (ESG) aspects of sustainability. s r e d l o h e k a t s r u o r o f e u l a v e t a e r c e w w o H n o i t i n g o c e R ENVIRONMENTAL STEWARDSHIP RESPONSIBLE BUSINESS PEOPLE AND COMMUNITY We are committed to combatting climate change, improving resource efficiency and reducing our environmental impact. We are refocusing Keppel’s portfolio on solutions for a sustainable future, such as renewables, clean energy and decarbonisation solutions. We have set quantitative targets to reduce our Scope 1 and 2 carbon emissions, water and waste as well as to increase renewable energy utilisation, and grow our portfolio of renewable energy assets. We are monitoring the latest developments in climate change and taking steps to manage climate-related risks and seize opportunities by providing solutions that contribute to climate action. 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, including the evaluation of ESG risks. We are driving innovation across the Company. We are leveraging technology and our asset-light model to invest in and create solutions that contribute to a sustainable future, while generating value for all our stakeholders. We are also working closely with stakeholders in our value chain to enhance their sustainability performance. People are the cornerstone of our business. We are committed to diversity, employee well-being, workplace health and safety, and investing in the training and development of our employees to help them reach their full potential. We strive to create value and uplift communities wherever we operate. We support initiatives that contribute to protecting the environment, promoting education and caring for the underprivileged, with the goal of building a sustainable future together. We have committed to contribute up to 1% of Keppel’s recurring income to worthy causes. Dow Jones Sustainability World Index Dow Jones Sustainability Asia Pacific Index 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 World 120 Index For more information, view our Sustainability Report on our website at www.keppel.com We publish sustainability reports annually, and the next report will be published in May 2024. 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. 24 KEPPEL LTD. SUSTAINABILITY GOVERNANCE The Board and management of Keppel are committed to sustainability, which is at the core of the Company’s strategy. The Board and management consider sustainability issues in the Company’s business and strategy, determine the material ESG factors and oversee the management and monitoring of the material ESG factors. Sustainability-related topics, including environmental and climate change issues, as well as social and governance aspects, are regularly discussed by the Board, which meets six times a year, and as warranted by circumstances. Since July 2022, sustainability has been included in the agenda of each Board meeting. The Board Sustainability and Safety Committee (BSSC) was established in 2022 to provide even greater focus on sustainability matters, with the role of the former Board Safety Committee subsumed under the BSSC. The BSSC is chaired by non-independent and non-executive director Mr Teo Siong Seng, and its members comprise Chairman of Keppel Ltd. Mr Danny Teoh, CEO and Executive Director Mr Loh Chin Hua, as well as Independent Director Mr Olivier Blum, who has extensive experience in sustainability. The BSSC meets at least four times a year. Its roles include monitoring international sustainability-related trends and developments, reviewing the Company’s sustainability strategy, ensuring that Keppel has in place an effective sustainability governance structure, overseeing the adoption of and progress towards the Company’s sustainability goals, reviewing the processes for identifying, assessing and managing climate-related risks and opportunities, and overseeing the Company’s health, safety, and environmental performance, among others. The BSSC also makes regular visits to Keppel’s projects and work sites, including interacting with our contractors and suppliers, to monitor and better understand Keppel’s sustainability and safety performance. Each quarter, the Chairman of the BSSC provides an update to the Board on key issues deliberated by the BSSC. The BSSC also considers management’s proposals on sustainability-related policies and practices and makes recommendations to the Board where relevant. performance, including sustainability issues. MExCo also determines Keppel’s key sustainability policies and targets, before they are presented to the BSSC. MExCo is chaired by Keppel’s CEO and its members include the Chief Financial Officer, the CEOs of Keppel’s platforms and divisions, the Chief Sustainability Officer (CSO) and selected members of senior management. The CSO, who reports to the CEO as well as the BSSC, coordinates and drives Keppel’s sustainability efforts. The CSO chairs the Sustainability Working Committee, comprising heads of corporate functions and representatives from Keppel’s platforms and divisions, which monitors and executes the Company’s sustainability efforts. The CSO also heads Keppel’s Sustainability department, which manages different aspects of the Company’s sustainability efforts, including preparing Keppel’s sustainability report. While the BSSC maintains broad oversight over sustainability issues, other Board Committees, namely the Audit, Nominating, Remuneration and Board Risk Committees, also address specific aspects of sustainability relevant to their respective committees. At the management level, the Management Executive Committee (MExCo), which meets every month, oversees Keppel’s strategy and To embed sustainability throughout the Company and ensure accountability, sustainability targets have been included in the performance appraisal of senior management across the Company, including both annual remuneration and long-term incentives. Environmental sustainability targets, including carbon emissions reduction, account for 7.5% of the Company’s performance scorecard. President’s Award for the Environment 2023 Singapore Corporate Awards 2023 Best Managed Board Award – Gold (Market capitalisation of $1 billion and above) Singapore Apex Corporate Sustainability Awards 2023 Winner in Sustainable Solutions category Securities Investors Association (Singapore) Investors’ Choice Awards 2023 Singapore Corporate Sustainability Award (Big Cap) World’s Best Companies 2023 by TIME ANNUAL REPORT 2023 25 OVERVIEW Sustainability Framework CONTRIBUTING TO SUSTAINABLE DEVELOPMENT The Board and management of Keppel review annually and determine the environmental, social and governance (ESG) factors material to Keppel’s business, considering its business strategy, stakeholder concerns and how its interactions with the environment and society give rise to sustainability- related risks and opportunities. The materiality review helps Keppel to focus its sustainability strategy, management practices and reporting on the most significant impacts and factors to create sustainable value over the long term. In 2023, Keppel conducted an internal review of the material ESG factors, taking reference from the SGX guidelines on Sustainability Reporting as well as guidance from the GRI1. We are also studying the new standards issued by ISSB2 and considering how they can be incorporated, where relevant, in Keppel’s sustainability disclosures. Recognising the overlaps and similarities in themes between the topics of Economic Contribution to Society and Community Development, the two topics were merged into a single material ESG factor, Contribution to Society. Keppel’s revised set of six material ESG factors were grouped under the three sustainability pillars of Environmental Stewardship, Responsible Business as well as People and Community, which correspond with the environmental, governance and social aspects of sustainability respectively. Further details will be provided in Keppel’s Sustainability Report to be published in May 2024. As a company committed to sustainability, Keppel contributes, both directly and indirectly, towards the United Nations Sustainable Development Goals (SDGs). We have identified 10 SDGs which represent Keppel’s most significant impacts on the sustainable development agenda. They include areas where Keppel is making the most positive impacts on the SDGs, as well as areas where we have a responsibility to prevent and mitigate potential negative impacts. The table below outlines how Keppel is contributing to the SDGs, organised based on our material ESG factors. Environmental Stewardship Material Factor Impact on SDGs Climate Action & Environmental Management Keppel is committed to both running our business sustainably, and making sustainability our business through investing in and creating solutions that contribute to a greener world. This involves focusing our portfolio on sustainability-related solutions and innovations, building resilience against climate change risks, and seizing climate-related opportunities for growth. Keppel has committed to halve our Scope 1 and 2 carbon emissions by 2030, compared to 2020 levels, and achieve net zero by 2050. We have been tracking Scope 3 emissions since 2019 and have expanded our coverage to all categories relevant to Keppel. Since 2020, Keppel has adopted a shadow carbon pricing policy to evaluate major investment decisions in order to contribute to climate action, mitigate climate-related risks, prepare for tougher climate legislation and higher carbon prices, and avoid stranded assets. We are also committed to minimising our environmental impact. Keppel has set a target to grow our renewable energy portfolio to 7 GW by 2030, and has announced renewables projects with a total capacity of 4 GW as at end-2023, including projects under development. Within our operations, Keppel has set a target for 50% of our electricity use to be from renewable energy sources by 2025, with a view to reaching 100% by 2030. In 2023, we actively expanded our business in climate and environment-related areas, such as the import of renewable energy into Singapore, the development of Singapore’s first hydrogen-ready and most advanced power plant, sustainable urban renewal and the development of greener data centres. Further details on Keppel’s business initiatives can be found on pages 40 to 59. Responsible Business Corporate Governance & Risk Management Keppel recognises that good corporate governance is essential to the sustainability of the Company’s business, and that non-compliance with laws and regulations may pose financial and reputational risks. We are committed to ensuring strong corporate governance and regulatory compliance, robust risk management, including of sustainability-related risks, as well as high standards of ethical business conduct, including zero tolerance for fraud, bribery, and corruption. Keppel continued to adopt an effective and balanced approach to risk management to optimise returns, while taking into consideration business risks and corporate sustainability. We focused on managing the global macro risks and mitigating the impact on business where possible. Cybersecurity risk continues to be one of our significant risks and we continuously enhance our technology controls to prevent and detect cyber-attacks. We also focused on climate-related risks to monitor and assess the impact of climate change on business operations and assets, in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Further details on Keppel’s approach towards corporate governance and risk management can be found on pages 72 to 120. Supply Chain Management Keppel believes in building a resilient, responsible, and diversified supply chain. We are committed to integrating sustainability criteria in the selection, monitoring and evaluation of suppliers and engaging with suppliers to adopt sustainable and responsible business practices, to minimise social and environmental impacts as well as manage risks across our supply chains. All our suppliers are selected in accordance with our requisition and purchasing policies and screened based on ESG criteria. Qualified suppliers are expected to sign and abide by Keppel’s Supplier Code of Conduct, which is publicly available online3. As part of our efforts to enhance sustainability performance within our supply chain, Keppel also collaborated with UN Global Compact Network Singapore to provide carbon management training for our suppliers from Small and Medium Enterprises. 26 KEPPEL LTD. People and Community Material Factor Impact on SDGs Human Capital Management People are fundamental to the Company’s performance. We seek to build a highly trained workforce led by people-centric leaders. We are committed to providing meaningful and purposeful work, building positive employee well-being, upholding fair employment practices, and empowering a diverse and engaged workforce. We continued to conduct our annual Employee Engagement Survey, and received an engagement score of 86% in 2023, 2 percentage points higher year on year and 6 percentage points higher than Mercer’s global norm. 89% of our staff indicated that they are proud to work for Keppel. In recognition of how we develop and look after our people, Keppel was listed in 2023 as one of the World’s Best Employers by Forbes, by The Straits Times as one of Singapore’s Best Employers, and by the Great Place to Work Institute as one of Vietnam’s Best Workplaces. Keppel was also named by TIME magazine in its inaugural list of the World’s Best Companies. In 2024, Keppel was re-certified as a Top Employer in Singapore and China by the Top Employers Institute. Health & Safety Keppel is committed to providing a safe and healthy working environment. We believe in a proactive safety culture and advocate for continuous improvements in health and safety standards, both in our operations and in the broader community. The Company’s leadership sets the tone and leads by example in strengthening our safety culture. We also engage and empower the workforce to speak up when they encounter any unsafe act or practice. We ensure high safety standards for our products and services to safeguard customer health and safety. In 2023, Keppel achieved our zero-fatality target across our global operations. We will continue to strive to further improve our safety performance through regular audits, feedback mechanisms and engagement with stakeholders. Contribution to Society Keppel creates value for all stakeholders through running a successful and resilient business, which provides good dividends for shareholders, jobs for communities, and tax revenue for governments. In 2023, Keppel achieved a net profit of $4.1 billion. Total cash dividend for FY 2023 was 34 cents per share. Including the distributions in specie of then Sembcorp Marine shares and Keppel REIT units, total dividends amount to about $2.70 per Keppel share for FY 2023. By growing our business as a provider of sustainability-related solutions, Keppel contributes to the economic advancement of society, while also advancing environmental sustainability. Keppel is committed to ensuring that its approach towards tax management is executed responsibly and with integrity. Keppel’s Tax department monitors and maintains oversight of Keppel’s tax matters by working closely with the relevant business and finance teams as well as other internal stakeholders on various tax planning initiatives and tax compliance matters. Keppel aims to uplift and give back to communities wherever we operate, building lasting positive relationships and effective partnerships, including through staff volunteerism. We invest in worthy causes, focusing on supporting education, caring for the underprivileged, and protecting the environment. In 2023, Keppel invested around $4.3 million in social investment spending and industry advancement, including more than $3.3 million disbursed through Keppel Care Foundation, Keppel’s philanthropic arm. Key projects undertaken by Keppel in the past year include collaborating with the National University of Singapore to establish a new Keppel Professorship in Sustainability Solutions at the NUS College of Design and Engineering (CDE) and enhance the Keppel Bursary for Engineering for CDE undergraduates; supporting SPD’s new senior care centre, as well as SPD’s Sheltered Workshop which provides vocational training and supported employment to persons with disabilities; contributing to the Garden City Fund to support the planting of trees in Singapore; supporting the Singapore Environment Council’s School Green Awards; donating to Willing Hearts to enhance the sustainability of its operations through the replacement and electrification of its trucks and installation of electric vehicle charging points at its premises; as well as the extension of the Living Well programme to provide vulnerable communities in India and Vietnam with access to clean water. Beyond financial support, Keppel staff also volunteer their time and services to the community. In 2023, Keppel Volunteers contributed more than 11,000 hours of community work, higher than the target of 8,000 hours. SOCIAL INVESTMENT SPENDING AND INDUSTRY ADVANCEMENT BY PROJECT TYPE IN 2023 (%) Healthcare/Care for the Underprivileged Environment The Arts/Sports/Community Development Projects Industry Advancement Education Total $4.3 million 30.4 27.3 18.1 6.4 17.8 100.0 1 Global Reporting Initiative 2 3 All new suppliers that provide Keppel with products and services valued at $200,000 or more per contract or over cumulative purchase orders in the prior International Sustainability Standards Board calendar year are required to sign and abide by Keppel’s Supplier Code of Conduct. ANNUAL REPORT 2023 27 OVERVIEW Sustainability Framework KEPPEL’S CLIMATE TRANSITION PLAN Keppel is committed to supporting the global ambition to reach net zero CO2 emissions by 2050. We have identified Climate Action and Environmental Management as a material ESG factor for the Company and put in place a governance structure to manage sustainability-related topics, including climate change. We have conducted climate scenario analyses and developed plans to address the risks and opportunities posed by climate change. Our climate transition plan includes the three pillars of business transformation, running our business sustainably, and making sustainability our business through providing solutions that contribute to sustainable development. Business Transformation As part of Keppel’s Vision 2030, we have been progressively transforming our business. In early 2021, we announced that the then Keppel Offshore & Marine (KOM) would exit the newbuild rig business after completing the existing rigs under construction. In 2022, we further announced the proposed divestment of KOM, which was completed in February 2023. Today, Keppel is a global asset manager and operator, focused on investing in and creating solutions for a sustainable future across our Infrastructure, Real Estate and Connectivity segments. Running our Business Sustainably We have set targets to reduce carbon emissions in line with the goal of limiting global warming to 1.5°C above pre-industrial levels. We are committed to halving Keppel’s Scope 1 and 2 emissions by 2030, compared to our 2020 baseline, and achieve net zero Scope 1 and 2 emissions by 2050. By the end of 2022, Keppel has achieved a reduction of 17.6%, compared to 2020. Details on Keppel’s carbon emissions reduction in 2023 will be disclosed in our upcoming Sustainability Report, to be published in May 2024. We are tracking all 15 relevant categories of our Scope 3 emissions and working with our value chain and portfolio of investments to enhance energy efficiency and reduce their emissions where possible. The vast majority of Keppel’s current Scope 3 emissions relate to the sale and use of natural gas, which forms around 95% of the fuel mix for power generation in Singapore. As Singapore’s power grid decarbonises, we expect these Scope 3 emissions to reduce accordingly. In the meantime, Keppel is contributing to decarbonising the grid through initiatives such as renewable energy importation and the development of Singapore’s first hydrogen-ready power plant. Since 2020, we have implemented shadow carbon pricing in the evaluation of major investment decisions. We also consider climate-related risks and opportunities in our investment decisions to seize opportunities and reduce the risks of stranded assets in the low-carbon transition. Making Sustainability our Business Keppel is also contributing to the climate transition with the solutions we invest in and create, such as renewables, clean energy, decarbonisation solutions, environmental solutions, sustainable urban renewal, and greener data centres. We have set a target to grow Keppel’s portfolio of renewable energy assets to 7 GW by 2030. As at end-2023, we have announced a renewable energy portfolio of about 4 GW, including projects under development. To highlight how Keppel’s solutions such as waste-to-energy plants, district cooling and green buildings contribute to the climate transition, we have been disclosing the avoided/reduced emissions arising from our offerings. In January 2024, Keppel launched our inaugural Sustainability-linked Financing Framework and also secured $1 billion of sustainability- linked revolving credit facilities, with preferential interest margins tied to Keppel’s achievement of specific sustainability performance targets. Keppel is contributing to the climate transition with the solutions we invest in and create, such as renewables, clean energy, decarbonisation solutions, environmental solutions, sustainable urban renewal and greener data centres. 28 KEPPEL LTD. CONTRIBUTING TO THE CLIMATE TRANSITION Fund Management and Investment Platforms Keppel, through its Fund Management and Investment platforms, is a signatory to the United Nations-supported Principles for Responsible Investment and is committed to incorporating ESG issues into our investment analysis and decision-making processes. These include considering climate-related risks and opportunities and contributing to global decarbonisation efforts. All the listed REITs and business trust that Keppel manages have set carbon emission reduction targets and are actively monitoring their progress towards them. The private funds that Keppel manages are progressively tracking their Scope 1 and 2 carbon emissions in line with their respective mandates and sector-specific considerations, and aim to reduce their emissions where possible. In 2022, we launched the Keppel Sustainable Urban Renewal Fund, which contributes to sustainable urbanisation by investing in the retrofitting and rejuvenation of older buildings, to contribute to urban renewal and circularity, while also enhancing asset performance and value. As we continue our Vision 2030 journey, we expect an increasing quantum of Keppel’s Funds Under Management to be focused on assets related to sustainable development. Keppel is also monitoring evolving best practices among global asset managers, and will explore setting targets for new private funds which are aligned with the global ambition of net zero by 2050. Operating Platform Keppel’s Operating Platform contributes in different ways to sustainable development. Infrastructure Real Estate Connectivity Our Infrastructure Division, which operates essential services like power generation and waste treatment that are hard-to-abate sectors, has been proactively driving decarbonisation initiatives. In 2022, Keppel commenced the inaugural import of renewable energy into Singapore through the Lao PDR- Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP). This is intended to be a pathfinder towards realising the broader ASEAN Power Grid vision of multilateral electricity trading in the region. In 2023, Keppel further secured conditional approvals from Singapore’s Energy Market Authority for renewable energy imports of 1 GW from Cambodia, and 300 MW from Indonesia. We are developing the Keppel Sakra Cogen Plant, Singapore’s first hydrogen- ready and most advanced power plant which is targeted to be operational by 2026. The emissions intensity of Keppel’s Singapore power portfolio in 2023 is approximately 0.37 tCO2/MWh. Keppel aims to lower this intensity to a target of 0.27 tCO2/MWh by 2035, as Keppel phases out emissions-intensive energy generation and expands its renewables and low carbon energy portfolio including carbon capture and alternative new energy like green hydrogen and ammonia. Keppel has also signed a Memorandum of Understanding with the Singapore National Environment Agency to study the feasibility of carbon capture at Singapore’s waste-to-energy (WTE) plants, which would enable WTE plants to achieve net zero emissions, or potentially even net negative emissions, in their operations. Our Real Estate Division has committed to reduce its absolute Scope 1 and 2 emissions by 100% by 2030, and to reduce its Scope 3 emissions from purchased goods and services by 20% per square metre by 2030. These targets were validated by the Science-Based Target Initiative (SBTi). In addition, we are pivoting from traditional property development to sustainable urban renewal with a mission to acquire, retrofit, future-proof and extend the lifespan of older commercial buildings, to reduce energy use and avoid embodied carbon emissions. Our Data Centres and Networks Division has been exploring innovative proposals to reduce the carbon footprint of data centres, including floating data centres and green data centre parks. It aims to achieve net zero Scope 1 and 2 emissions for all. M1 has adopted the ICT sector guidance and committed to reduce its Scope 1 and 2 emissions by 46.2% and Scope 3 emissions from purchased goods and services, capital goods and upstream leased assets by 42% by 2030 from 2020 base year. These targets have also been validated by SBTi. KI@Changi, Singapore’s first Green Mark Platinum Positive Energy building under the new Green Mark scheme. ANNUAL REPORT 2023 29 OVERVIEW Board of Directors DANNY TEOH, 68 LOH CHIN HUA, 62 TILL VESTRING, 60 Chairman Non-Executive and Non-Independent Director Executive Director and Chief Executive Officer Non-Executive and Lead Independent Director N R SS SS R N Date of first appointment as a director: 1 October 2010 Date of first appointment as a director: 1 January 2014 Date of first appointment as a director: 16 February 2015 Date of last re-election as a director: 21 April 2023 Date of last re-election as a director: 22 April 2022 Date of last re-election as a director: 21 April 2023 Length of service as a director (as at 31 December 2023): 13 years 3 months Length of service as a director (as at 31 December 2023): 10 years Length of service as a director (as at 31 December 2023): 8 years 11 months Board Committee(s) served on: Nominating Committee (Member); Remuneration Committee (Member); Board Sustainability and Safety Committee (Member) Academic & Professional Qualification(s): Associate member of the Institute of Chartered Accountants in England & Wales Present Directorships (as at 1 January 2024): Listed companies Nil Other principal directorships Nil Major Appointments (other than directorships): Nil Past Directorships held over the preceding 5 years (from 1 January 2019 to 31 December 2023): Ascendas – Singbridge Pte. Ltd.; DBS Bank (China) Limited; Changi Airport Group (Singapore) Pte Ltd; DBS Group Holdings Ltd; DBS Bank Ltd; DBS Foundation Ltd; DBS Bank (Taiwan) Ltd; M1 Limited Others: Former Managing Partner, KPMG LLP, Singapore; Past member of KPMG’s International Board and Council; Former Head of Audit and Risk Advisory Services and Head of Financial Services, KPMG LLP Board Committee(s) served on: Board Sustainability and Safety Committee (Member) Board Committee(s) served on: Remuneration Committee (Chairman); Nominating 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 2024): Listed companies Nil Other principal directorships Keppel Management Ltd. (Chairman); Keppel Infrastructure Holdings Pte. Ltd. (Chairman); Keppel Capital Holdings Pte. Ltd. (Chairman); Keppel Telecommunications & Transportation Ltd (Chairman); Keppel Care Foundation Limited; M1 Limited (Chairman) Major Appointments (other than directorships): National University of Singapore (Member of Board of Trustees) Past Directorships held over the preceding 5 years (from 1 January 2019 to 31 December 2023): Various fund companies under management of Keppel Fund Management Limited; Various companies under Keppel; Singapore Economic Development Board (Board Member); EDB Investments Pte Ltd (Board Member) Others: Nil Academic & Professional Qualification(s): Master of Economics, University of Bonn, Germany; Master of Business Administration, Haas School of Business, University of California, Berkeley Present Directorships (as at 1 January 2024): Listed companies Nil Other principal directorships Leap Philanthrophy Ltd; Advanced Micro Foundry Pte. Ltd.; Delaware Consulting International CVBA; AP Technologies Group Pte. Ltd. Major Appointments (other than directorships): Advisory Partner, Bain & Company Southeast Asia Past Directorships held over the preceding 5 years (from 1 January 2019 to 31 December 2023): Inchcape plc; Keppel Telecommunications & Transportation Ltd Others: Nil Board Committees N Nominating Committee A Audit Committee R Remuneration Committee BR Board Risk Committee SS Board Sustainability and Safety Committee 30 KEPPEL LTD. VERONICA ENG, 70 Non-Executive and Independent Director JEAN-FRANÇOIS MANZONI, 62 TEO SIONG SENG, 69 Non-Executive and Independent Director Non-Executive and Non-Independent Director BR A N R SS Date of first appointment as a director: 1 July 2015 Date of first appointment as a director: 1 October 2018 Date of first appointment as a director: 1 November 2019 Date of last re-election as a director: 21 April 2023 Date of last re-election as a director: 23 April 2021 Date of last re-election as a director: 22 April 2022 Length of service as a director (as at 31 December 2023): 8 years 6 months Length of service as a director (as at 31 December 2023): 5 years 3 months Length of service as a director (as at 31 December 2023): 4 years 2 months Board Committee(s) served on: Board Risk Committee (Chairman); Audit Committee (Member) Board Committee(s) served on: Nominating Committee (Chairman); Remuneration Committee (Member) Board Committee(s) served on: Board Sustainability and Safety Committee (Chairman) Academic & Professional Qualification(s): Bachelor of Business Administration (First Class Honours), University of Singapore Present Directorships (as at 1 January 2024): Listed companies Nil Other principal directorships 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 2024): 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 2019 to 31 December 2023): Keppel Capital Holdings Pte. Ltd. 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 Past Directorships held over the preceding 5 years (from 1 January 2019 to 31 December 2023): Association to Advance Collegiate Schools of Business (AACSB) International Others: Nil Academic & Professional Qualification(s): Degree in Naval Architecture and Ocean Engineering, University of Glasgow, United Kingdom Present Directorships (as at 1 January 2024): Listed companies Singamas Container Holdings Ltd.; Wilmar International Limited Other principal directorships Pacific International Lines (Pte) Ltd; PIL Pte. Ltd. Major Appointments (other than directorships): The United Republic of Tanzania in Singapore (Honorary Consul) Past Directorships held over the preceding 5 years (from 1 January 2019 to 31 December 2023): Enterprise Singapore (Board Member); COSCO Shipping Energy Transportation Co., Ltd.; Business China; COSCO Shipping Holding Co., Ltd. Others: National University of Singapore (Pro-Chancellor); Singapore Chinese Chamber of Commerce & Industry (Honorary President); Immediate Past Chairman of Singapore Business Federation ANNUAL REPORT 2023 31 OVERVIEW Board of Directors THAM SAI CHOY, 64 Non-Executive and Independent Director PENNY GOH, 71 Non-Executive and Independent Director SHIRISH APTE, 71 Non-Executive and Independent Director A N BR A BR R N R BR Date of first appointment as a director: 1 November 2019 Date of first appointment as a director: 2 January 2020 Date of first appointment as a director: 1 July 2021 Date of last re-election as a director: 22 April 2022 Date of last re-election as a director: 2 June 2020 Date of last re-election as a director: 22 April 2022 Length of service as a director (as at 31 December 2023): 4 years 2 months Board Committee(s) served on: Audit Committee (Chairman); Nominating Committee (Member); Board Risk Committee (Member) Length of service as a director (as at 31 December 2023): 4 years Length of service as a director (as at 31 December 2023): 2 years 6 months Board Committee(s) served on: Audit Committee (Member); Board Risk Committee (Member); Remuneration Committee (Member) Board Committee(s) served on: Nominating Committee (Member); Remuneration Committee (Member); Board Risk Committee (Member) 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 2024): Listed companies DBS Group Holdings Limited Other principal directorships DBS Bank Ltd.; DBS Bank (China) Limited; DBS Foundation Ltd; EM Services Pte Ltd (Chairman); Singapore International Arbitration Centre Major Appointments (other than directorships): Nanyang Polytechnic (Board member); Mount Alvernia Hospital (Board Member) Past Directorships held over the preceding 5 years (from 1 January 2019 to 31 December 2023): Singapore Institute of Directors (Chairman); Housing & Development Board; Accounting and Corporate Regulatory Authority; Keppel Offshore & Marine Ltd Others: Nil Academic & Professional Qualification(s): Bachelor of Law (Honours), University of Singapore Present Directorships (as at 1 January 2024): Listed companies Nil 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 2019 to 31 December 2023): Keppel REIT Management Limited (the Manager of Keppel REIT); 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.; Keppel Land Limited (now known as Keppel Management Ltd.) Others: Former Co-Chairman and Senior Partner of Allen & Gledhill LLP Academic & Professional Qualification(s): Qualified as a Member of the Institute of Chartered Accountants in England and Wales; Member of the Institute of Chartered Accountants, India Present Directorships (as at 1 January 2024): Listed companies Standard Chartered PLC, London Other principal directorships Singapore Life Holdings Pte. Ltd.; Singlife Financial Advisers Pte. Ltd. (Chairman) Major Appointments (other than directorships): Nil Past Directorships held over the preceding 5 years (from 1 January 2019 to 31 December 2023): IHH Healthcare Berhad, Malaysia; Acibadem Healthcare, Turkey; Integrated Hospitals and Healthcare Bhd; Citi Bank Handlowy, Poland; CG Power & Industrial Solutions; Clifford Capital Holdings Pte Ltd; Clifford Capital Pte Ltd; Fortis Healthcare Limited, India; Pierfront Capital Mezzanine Fund Pte Ltd; Pierfront Capital Fund Management Pte. Ltd.; KP Management (GL) Pte. Ltd.; KPCF Investments Pte. Ltd.; Commonwealth Bank of Australia; Fullerton India Credit Company Limited, India; Keppel Infrastructure Holdings Pte. Ltd. Others: Nil 32 KEPPEL LTD. OLIVIER BLUM, 53 Non-Executive and Independent Director JIMMY NG, 59 Non-Executive and Independent Director ANG WAN CHING, 57 Non-Executive and Independent Director SS A BR A BR Date of first appointment as a director: 1 May 2022 Date of first appointment as a director: 1 May 2022 Date of first appointment as a director: 1 July 2023 Date of last re-election as a director: 21 April 2023 Date of last re-election as a director: 21 April 2023 Date of last re-election as a director: N.A. Length of service as a director (as at 31 December 2023): 1 year 8 months Length of service as a director (as at 31 December 2023): 1 year 8 months Board Committee(s) served on: Board Sustainability and Safety Committee (Member) Board Committee(s) served on: Audit Committee (Member); Board Risk Committee (Member) Length of service as a director (as at 31 December 2023): 6 months Board Committee(s) served on: Audit Committee (Member); Board Risk Committee (Member) Academic & Professional Qualification(s): Master Business Administration and General Management, Grenoble Business School (GEM), France Present Directorships (as at 1 January 2024): Listed companies Nil Other principal directorships Delta Dore, France; Aveva Group PLC, United Kingdom; Luminous Power Technologies (P) Ltd, India (Chairman) Academic & Professional Qualification(s): Bachelor of Science Degree in Information Systems, National University of Singapore Masters in Business Administration, Nanyang Technological University Academic & Professional Qualification(s): Bachelor of Arts (First Class Honours) in Philosophy, Politics and Economics, University of Oxford; Masters of Business Administration (Dean’s List), INSEAD (France) Present Directorships (as at 1 January 2024): Listed companies Nil Present Directorships (as at 1 January 2024): Listed companies Bavaria Industries Group AG (Germany) Other principal directorships Singapore Clearing House Pte Ltd; Evolve Digitech Pte Ltd Major Appointments (other than directorships): Nil Major Appointments (other than directorships): Steering Committee of Asian Institute of Digital Finance (Committee Member) Past Directorships held over the preceding 5 years (from 1 January 2019 to 31 December 2023): Nil Others: Nil Past Directorships held over the preceding 5 years (from 1 January 2019 to 31 December 2023): Nil Others: Nil Other principal directorships AS Beteiligungen und Vermögensverwaltungs GmbH (Germany); HQ Capital GmbH & Co KG (Germany) Major Appointments (other than directorships): Montana Capital Partners AG (Switzerland) (Member of Investment Committee) Past Directorships held over the preceding 5 years (from 1 January 2019 to 31 December 2023): HQ Holding GmbH & Co KG (Germany) Others: Nil ANNUAL REPORT 2023 33 OVERVIEW Boards of Directors of Listed REITs & Business Trust KEPPEL REIT MANAGEMENT (MANAGER OF KEPPEL REIT) Tan Swee Yiow Chairman Ian Roderick Mackie Lead Independent Director Alan Rupert Nisbet Independent Director Christina Tan Chief Executive Officer, Fund Management and Chief Investment Officer, Keppel Mervyn Fong Independent Director Yoichiro Hamaoka Independent Director Carol Anne Tan Independent Director KEPPEL INFRASTRUCTURE FUND MANAGEMENT (TRUSTEE-MANAGER OF KEPPEL INFRASTRUCTURE TRUST) Daniel Cuthbert Ee Hock Huat Chairman Mark Andrew Yeo Kah Chong Independent Director Susan Chong Suk Shien Founder & President, Greenpac (S) Pte Ltd Adrian Chan Independent Director Ng Kin Sze Independent Director Christina Tan Chief Executive Officer, Fund Management and Chief Investment Officer, Keppel KEPPEL DC REIT MANAGEMENT (MANAGER OF KEPPEL DC REIT) KEPPEL PACIFIC OAK US REIT MANAGEMENT (MANAGER OF KEPPEL PACIFIC OAK US REIT) Christina Tan Chairman Chief Executive Officer, Fund Management and Chief Investment Officer, Keppel Kenny Kwan Lead Independent Director Yeo Siew Eng Independent Director Low Huan Ping Independent Director Chua Soon Ghee Independent Director Andrew Tan Independent Director Thomas Pang Thieng Hwi Chief Executive Officer, Data Centres and Networks, Keppel Peter McMillan III Chairman Co-founder, Pacific Oak Capital Advisors LLC Soong Hee Sang Lead Independent Director Kenneth Tan Jhu Hwa Chief Executive Officer, Southern Capital Group Private Limited Sharon Wortmann Independent Director Lawrence Sperling Independent Director Bridget Lee Chief Executive Officer, Keppel Capital Alternative Asset and Chief Investment Officer, Real Estate, Keppel 34 KEPPEL LTD. OVERVIEW Keppel Technology Advisory Panel Established in 2004, the Keppel Technology Advisory Panel (KTAP) brings together a global team of thought leaders and business veterans from key industries relevant to Keppel. Through the networks and worldview of the member advisors, KTAP supports Keppel’s transformation initiatives and efforts to stay up to date with the changing global technology landscape. Supported by Keppel’s internal innovation ecosystem, KTAP guides technology foresight and future thinking across the platforms and operating divisions, providing input for innovation priorities. Advisors are also heavily involved in nurturing Keppel’s collaboration with external innovation ecosystems globally. In addition, KTAP convenes Keppel’s annual technology foresight conference, which brings together thought leaders across academia, startups and industries to share their perspectives on emerging technology and megatrends with our senior management, board members and guests from our valued partners. This year, we introduced an exhibition zone where our external ecosystem technology partners came together to showcase curated solutions around Machine Learning, Robotics and Generative Artificial Intelligence (GenAI). This was in line with the topical focus for the day themed “The Year of AI”, where a mix of 11 distinguished speakers and internal Keppel teams engaged the audience with exciting demonstrations, showcasing where the business is innovating in the AI space and sharing their views on the impact of GenAI on industries relevant to Keppel. The event also featured a second topical stream themed “Demographics & assets in a new era” which examined emerging trends and the interplay between tech and society, as a means of understanding our future customers and their environment. In this stream, five speakers shared their views around the new society and the future of living and assets. Moving forward, KTAP will continue to stay close to important technology trends and market developments and continue to drive Keppel’s exploration of future frontiers of innovation. First row from left: Professor Cheong Koon Hean, Mr Danny Teoh (Chairman of Keppel Ltd.), Dr Ng Wun Jern (Chairman of KTAP), Mr Loh Chin Hua (CEO of Keppel Ltd.) and Mr Ed Ansett. Second row from left: Mr Chua Kee Lock and Dr Romain Debarre. KTAP MEMBERS DR NG WUN JERN (CHAIRMAN) Dr Ng founded the Nanyang Environment & Water Research Institute (NEWRI) in 2007 and led it for 10 years. He was President’s Chair Professor and is Emeritus 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, which include commercialised IPs. Dr Ng serves as scientific/technical advisor to government agencies, established environmental companies, incubators and private equity funds, and guides start-up companies in ASEAN, China, South Asia, and the Middle East. ED ANSETT Mr Ansett is the founder and chairman of i3 Solutions Group, a consulting engineering firm, specialising in data centres and mission- critical facilities. He is a specialist and pioneer in the field of high reliability critical facilities. PROFESSOR CHEONG KOON HEAN Professor Cheong is concurrently chairman of Ministry of National Development’s Centre for Livable Cities Advisory Panel and Singapore University of Technology and Design’s Lee Kuan Yew Centre for Innovative Cities. She was formerly CEO of the Housing & Development Board and the Urban Redevelopment Authority and currently sits on the boards of National University of Singapore and CapitaLand Group. She continues to advise on planning and sustainability issues to public and private organisations both locally and internationally. CHUA KEE LOCK Mr Chua is the Group President & 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). He is concurrently Managing Partner of Vertex Ventures SEA & India, and Chairman of Vertex Growth Fund. DR ROMAIN DEBARRE Dr Debarre is the Managing Director of the Kearney Energy Transition Institute and a Partner in Kearney’s Energy & Process Industries Practice. He possesses diverse 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. ANNUAL REPORT 2023 35 OVERVIEW Senior Management KEPPEL CORPORATE SERVICES Loh Chin Hua Chief Executive Officer Christina Tan Chief Executive Officer, Fund Management Chief Investment Officer Kevin Chng Chief Financial Officer Louis Lim Chief Executive Officer, Real Estate Francois van Raemdonck Managing Director & Head, Transformation & Innovation Chua Hsien Yang Managing Director & Head, Mergers & Acquisitions Yeo Meng Hin Chief Human Resource Officer Ho Tong Yen Chief Sustainability Officer Cindy Lim Chief Executive Officer, Infrastructure Managing Director & Head, Corporate Communications Thomas Pang Chief Executive Officer, Data Centres and Networks Manjot Singh Mann Chief Executive Officer, M1 Chief Digital Officer 36 KEPPEL LTD. Tok Soo Hwa Deputy Chief Financial Officer Tay Guan Chew Managing Director & Head, Tax Jason Chin Managing Director & Head, Information Technology Martin Ling Managing Director & Head, Cyber Security Aw Boon Tiong Managing Director & Head, Treasury Loh Kee Huat Managing Director & Head, Health, Safety & Environment Managing Director & Head, Risk & Compliance Jason Chua Managing Director & Head, Legal (appointment till 29 February 2024) Karen Teo Company Secretary Managing Director & Head, Legal & Corporate Secretariat (effective 1 March 2024) Eric Goh Chief Representative, China Chief Executive Officer, China Fund Management Linson Lim Chief Representative, Vietnam Ho Kiam Kheong Chief Representative, India President, India Real Estate Robert Sung Chief Representative, Korea Chief Executive Officer, Korea Keppel Investment Management Teo Eng Cheong Chief Executive Officer Sino-Singapore Tianjin Eco-City Investment and Development FUND MANAGEMENT AND INVESTMENT Bridget Lee Chief Investment Officer, Real Estate Chief Executive Officer Keppel Capital Alternative Asset Jopy Chiang Chief Investment Officer, Infrastructure Lee Hui Fang Deputy Chief Investment Officer, Data Centres Ang Sock Cheng Chief Operating Officer Koh Wee Lih Chief Executive Officer Keppel REIT Management Loh Hwee Long Chief Executive Officer Keppel DC REIT Management Kevin Neo Chief Executive Officer Keppel Infrastructure Fund Management David Snyder Chief Executive Officer Keppel Pacific Oak US REIT Management Galen Lee Chief Executive Officer, Real Estate and Data Centre Funds Keppel Fund Management Sharon Tay Chief Executive Officer, Keppel Asia Infrastructure Fund Keppel Capital Alternative Asset Jee Kim Chief Executive Officer, Keppel Core Infrastructure Fund Keppel Capital Alternative Asset Carina Lim Chief Executive Officer, Keppel Education Asset Fund Keppel Capital Alternative Asset Karsten Simpson Head, Australia Ken Negishi Head, Japan INFRASTRUCTURE CONNECTIVITY UNIONS Tan Boon Leng Managing Director, Projects Wong Wai Meng Chief Executive Officer, Data Centres Janice Bong Managing Director, Power & Renewables Jonathan Sim Managing Director (North Asia), Data Centres Jackson Goh Managing Director, Environment Jimmy Tan Managing Director (Operations), Data Centres Chua Yong Hwee Managing Director, New Energy Loo Tong Mun President, Networks Lee Kok Chew Chief Financial Officer, M1 Mustafa Kapasi Chief Commercial Officer, M1 Denis Seek Chief Technical Officer, M1 Mark Tan Chief Enterprise Strategy & Business Officer, M1 Jan Morgenthal Chief Digital Officer, M1 REAL ESTATE Samuel Henry Ng President, Singapore Managing Director, Sustainable Urban Renewal & Nearshore Development Wong Liang Kit President, China Managing Director, Keppel Urban Solutions Joseph Low President, Vietnam Managing Director, Retail (effective 1 March 2024) Allen Tan President, Indonesia & Regional Investments Managing Director, Urban Living Keith Low Managing Director, Retail (appointment till 29 February 2024) Nathanial Farouz Managing Director, Senior Living Mohamed Nasir Ahmad President Keppel Employees Union Atan Enjah General Secretary Keppel Employees Union Muhammad Shariffudin President Singapore Industrial & Services Employees’ Union Richard Sim General Secretary Singapore Industrial & Services Employees’ Union Desmond Tan Executive Secretary Singapore Industrial & Services Employees’ Union Tay Seng Chye President Union of Power & Gas Employees Abdul Samad Bin Abdul Wahab General Secretary Union of Power & Gas Employees Felix Ong Executive Secretary Union of Power & Gas Employees ANNUAL REPORT 2023 37 OVERVIEW Investor Relations We build trust and create value through active and transparent communication with shareholders and the investment community. In 2023, we achieved pivotal milestones in Keppel’s transformation as a global asset manager and operator. As we executed our strategy, we also intensified our interactions with shareholders and the investment community, using varied platforms to communicate our plans and progress. Strong perfomance, together with stakeholder engagement, enabled Keppel to outperform the market and deliver sterling returns to shareholders in 2023. STAKEHOLDER ENGAGEMENT Keppel employs various platforms to provide current and prospective investors with the necessary information to make well-informed investment decisions, with an emphasis on timely, accurate and transparent disclosure of information. During the year, we had about 280 meetings with institutional investors from Singapore and overseas. These meetings included various site visits and roadshows in Singapore and abroad, as well as Keppel’s inaugural Investor Day, which was organised in collaboration with Citigroup and attended by over 40 local and international investors. In addition to semi-annual results briefings and voluntary business updates, we held briefings for media and analysts, and meetings with investors on key initiatives, namely the unveiling of Keppel’s transformation plans to be a global asset manager and operator, as well as the proposed acquisition of leading European asset manager, Aermont Capital. In 2023, we convened our Annual General Meeting (AGM) as well as an Extraordinary General Meeting (EGM) to seek shareholders’ approval for the dividend in specie (DIS) of Keppel REIT (KREIT) units and change of our company name from Keppel Corporation Limited to Keppel Ltd.. At both the AGM and EGM, shareholders were provided opportunities to submit questions prior to the meetings. The responses to substantial and relevant pre-submitted questions were addressed in writing, released on SGXNet and made available on our website prior to the meetings. The Board further addressed all questions raised by shareholders during the AGM and EGM. The presentation materials, voting results and meeting minutes were also released on SGXNet and our website. Keppel values regular and constructive dialogue with retail shareholders. At an annual briefing hosted by Securities Investors Association (Singapore) (SIAS), our Chief Executive Officer and Chief Financial Officer updated more than 140 retail shareholders on Keppel’s developments and transformation plans. We have been a long-term sponsor of the SIAS Investor Education Programme. Through our regular contributions, more than 2,200 retail shareholders benefit from complimentary SIAS memberships each year. RECOGNITION FOR CORPORATE GOVERNANCE PRACTICES In 2023, Keppel received awards in recognition of our corporate governance practices, which include open and transparent shareholder communications. At the Singapore Corporate Awards (SCA) 2023, Keppel received the Gold Award for having the Best Managed Board among listed companies with a market capitalisation of $1 billion and above. The SCA recognises exemplary corporate governance practices, and the Best Managed Board Award seeks to raise the benchmark for best board practices, with a focus on areas such as transparency and accountability. At the SIAS Investors’ Choice Awards 2023, Keppel was conferred the new Singapore Corporate Sustainability Award (Big Cap). The award aims to recognise companies that have achieved high levels of corporate sustainability performance while achieving good business and financial results. INVESTOR RELATIONS RESOURCES All announcements are made available on our website immediately after they are released to SGXNet to ensure fair, equal, and timely dissemination of information. In 2023, Keppel conducted live webcasts of our half-yearly results briefings which are publicly accessible online, as well as media and analyst teleconferences for our 1Q and 3Q voluntary business updates. Archives of the webcasts, SHAREHOLDING BY INVESTORS (%) as at 15 February 2024 Institutions Retail Total 50.0 50.0 100.0 SHAREHOLDING BY GEOGRAPHY (%) as at 15 February 2024 Singapore Asia (excluding Singapore) Europe North America Others* Total 33.6 2.5 8.8 12.7 42.4 100.0 * Others comprise the rest of the world, as well as unidentified holdings and holdings below the analysis threshold. 38 KEPPEL LTD. Spotlight SHOWCASING TRANSFORMATION AND GROWTH AT KEPPEL’S INAUGURAL INVESTOR DAY On 14 August 2023, Keppel held its inaugural Investor Day which drew over 40 institutional investors from Singapore, Hong Kong, the United States and the United Kingdom to the live event at the Ritz-Carlton, Millenia Singapore. Hosted by Citigroup, Keppel’s senior mangement presented and took questions from investors on the Company’s transformation and strategy as a global asset manager and operator. The Investor Day culminated in an asset tour where participants were introduced to KI@Changi, Singapore’s first Green Mark Platinum Positive Energy building under the new Green Mark scheme, which houses Keppel’s leading-edge, smart operations nerve centre and is annexed to Keppel’s Changi District Cooling Systems Plant. Our Total Shareholder Return of 61.1% significantly outperformed the Straits Times Index’s total return of 4.7% in 2023.1 management speeches and presentation materials were made available at our website on the same day the results and business updates are released on SGXNet. Transcripts of the question- and-answer sessions were released on SGXNet and posted on our website prior to the start of the next trading day. Our mobile-responsive website (www.keppel.com) serves as an accessible repository of company information, such as announcements, results and voluntary business updates, annual reports, stock and dividend information, and presentations. Shareholders and investors can subscribe to email alerts or reach out to our Investor Relations personnel via the dedicated email address (investor.relations@keppel.com) or the contact number found at our website. 1 Source: Bloomberg INVESTOR RELATIONS CALENDAR The following key events were held in 2023 to engage shareholders, investors and analysts: Q1 Q2 Q3 Q4 2H & FY 2022 results conference and live webcast 1Q 2023 business update teleconference for media and analysts 2Q & 1H 2023 results conference and live webcast 3Q & 9M 2023 business update teleconference for media and analysts Post-results group investor meeting hosted by CGS-CIMB Post-business update group investor meeting hosted by UOB Post-results group investor meeting hosted by Macquarie Post-business update group investor meeting hosted by CGS-CIMB Citigroup’s Vietnam C-Suite Forum investor tour of real estate assets in Vietnam Non-deal roadshow to Hong Kong, hosted by DBS Investor Day hosted by Citigroup 55th AGM Media and analyst briefing on Keppel’s transformation Group investor meeting hosted by DBS Non-deal roadshow to Kuala Lumpur, hosted by Citigroup Annual briefing for retail shareholders, hosted by SIAS EGM on the DIS of KREIT units and the company name change Media and analyst briefing on the proposed acquisition of Aermont Capital Group investor meeting hosted by Citigroup ANNUAL REPORT 2023 39 PERFORMANCE REVIEW Operating & Market Review FUND MANAGEMENT AND INVESTMENT PLATFORMS Keppel connects investors with sustainability solutions and real assets through diverse fund products across the risk-return spectrum. PROGRESS IN 2023 FOCUS FOR 2024/2025 • Drive organic growth through new funds for infrastructure, sustainable urban renewal, education, data centres and private credit. • Continue to evolve and grow deal pipeline of more than $14 billion as at end-2023. • Complete acquisition of initial 50% stake in Aermont Capital and co-create new fund products. • Explore opportunities to acquire other platforms to bolster asset management capabilities including in Infrastructure and Connectivity. • Raised about $2.3 billion in equity, completed $2.5 billion in acquisitions, and divested $0.5 billion of assets. • Grew FUM to $55 billion in 2023, from $50 billion in 20221. • Expanding asset management capabilities beyond Asia Pacific through proposed acquisition of leading European real estate manager Aermont Capital. • Achieved US$575 million first close for Keppel Core Infrastructure Fund and launched Fund II of Keppel Asia Infrastructure Fund. • Secured initial equity commitments of $300 million for China-focused sustainable urban renewal programme. • Secured private investors to invest in Keppel’s share of the Bifrost Cable System. • Consolidated 100% ownership of Keppel Credit Fund Management (formerly Pierfront Capital Fund Management). The Fund Management and Investment platforms focus on raising capital, creating fund products, managing asset portfolios and driving capital deployment decisions across asset classes, to achieve quality investment returns for our clients. The global economy continued to face turbulence in 2023. The confluence of high inflation and interest rates, restrictive monetary policies, geopolitical conflicts in Ukraine and the Middle East, and volatile financial markets precipitated a challenging environment for fundraising and dealmaking activities. Asset transactions in 2023 were constrained by wide bid-ask gaps as prospective buyers held back in view of the increasing cost of capital, and the risks of asset devaluation from rising capitalisation rates in certain asset classes such as office and retail. With inflation rates easing in most major economies, several major central banks are expected to start reducing policy rates by 2H 2024. Market liquidity is thus expected to gradually improve in the latter half of 2024, presenting more opportunities for dealmaking. Amid the volatile environment, a growing pool of investors, including sovereign wealth funds and pension funds, are seeking to allocate capital to real assets with inflation-protected cash flows. The aggregate capital raise for alternative assets is projected to grow from about US$4.3 trillion in 2010 to US$26.5 trillion in 2028, representing a 5.2x increase1. Keppel is uniquely placed as a global asset manager with a strong track record in asset management of over 20 years, complemented by its deep domain knowledge and operating capabilities in real assets across the Infrastructure, Real Estate and Connectivity segments. Keppel has extensive experience in engineering, developing, and operating specialised assets in Singapore and across the world. Limited Partners (LPs) of the private 40 KEPPEL LTD. ANNUAL REPORT 2023 41 1 Gross asset value of investments and uninvested capital commitments on a leveraged basis to project fully-invested FUM. 1 Source: Preqin, January 2024 PERFORMANCE REVIEW Operating & Market Review Fund Management and Investment Platforms CONNECTING INVESTORS WITH REAL ASSET OPPORTUNITIES ACROSS THE RISK-RETURN SPECTRUM Debt Debt Core Core+ Value Add Opportunistic Equity China Logistics Property Fund Keppel Vietnam Fund Flagship Keppel Data Centre Fund Series Keppel Asia Macro Trends Fund Series Flagship Keppel Sustainable Urban Renewal Fund Keppel REIT Keppel Pacific Oak US REIT Prime US REIT Separate Accounts Flagship Keppel Core Infrastructure Fund Keppel DC REIT Keppel Indo Logistics Fund Keppel Infrastructure Trust Flagship Keppel Private Credit Fund Flagship Keppel Education Asset Fund Flagship Keppel Asia Infrastructure Fund Series Infrastructure Real Estate Connectivity Listed Private Illustrative Risk-Return Profile funds managed by Keppel can thus enjoy exclusive access to strategic real assets in Keppel’s proprietary pipeline, many of which offer critical infrastructure, connectivity and prime real estate solutions, including those that produce strong inflation- protected cash flows. Keppel’s ability to deploy capital across the capital stack, be they perpetual vehicles (such as REITs and business trusts), private funds or bespoke mandates, allows Keppel to offer investors diverse fund products and multiple access points across the risk-return spectrum. Keppel, through its Fund Management and Investment platforms, is a signatory of the United Nations- supported Principles for Responsible Investment and is committed to adopting and implementing the six Principles, where possible. Keppel also considers various environmental, ASSETS UNDER MANAGEMENT1 ($ billion) FUNDS UNDER MANAGEMENT2 ($ billion) ASSET MANAGEMENT FEES3 ($ million) 75 60 45 30 15 0 75 60 45 30 15 0 350 280 210 140 70 0 Infrastructure Real Estate Connectivity Total End- 2022 16.1 38.4 8.0 62.5 End- 2023 19.9 39.3 8.5 67.7 Infrastructure Real Estate Connectivity Total End- 2022 11.0 31.0 8.0 50.0 End- 2023 15.0 32.0 8.0 55.0 Infrastructure Real Estate Connectivity Total End- 2022 72.0 154.0 41.0 267.0 End- 2023 86.0 157.0 40.0 283.0 1 Includes carrying values of identified assets on the balance sheet, as well as gross asset values of certain identified underlying assets held in joint ventures, that can be potentially converted into fee-bearing FUM. Notes receivables (vendor notes issued by Asset Co) amounting to c.$4.3 billion is included. 42 KEPPEL LTD. 2 Gross asset value of investments and uninvested capital commitments on a leveraged basis to project fully-invested FUM. 3 Includes 100% fees from subsidiary managers, joint ventures and associated entities, as well as share of fees based on a shareholding stake in an associate with which Keppel has a strategic alliance. social and governance (ESG) factors across its investment vehicles, to ensure material ESG risks and opportunities are managed throughout the life cycle of the investments. In 2023, Keppel secured $283 million in asset management fees, up 6% year on year. During the year, our private funds and listed real estate and business trusts raised about $2.3 billion in equity and completed $2.5 billion in acquisitions. We also achieved several fundraising milestones in 2023, as our Fund Management Platform built on existing fund series as well as developed new, attractive fund products targeted at global institutional investors. We achieved the first closing of our flagship open-ended infrastructure fund, the Keppel Core Infrastructure Fund (KCIF), and the closing of a China-focused programme as part of Keppel’s Sustainable Urban Renewal (SUR) strategy. Keppel’s global Funds Under Management (FUM) stood at $55 billion as at end-2023, up from $50 billion as at end-20221. We will continue to work towards our FUM target of $100 billion by end-2026 and to accelerate growth towards the 2030 FUM target of $200 billion through both organic growth and opportunistic acquisitions. In a major step forward in the Company’s strategy to be a global asset manager and operator, in November 2023, we announced the proposed acquisition of Aermont Capital (Aermont), a leading European real estate manager. The acquisition of Aermont would significantly expand Keppel’s asset management business beyond the Asia Pacific, giving us an immediate and strong foothold in Europe, as well as broaden our global network of Limited Partners. When Phase 1 of the Aermont acquisition is completed, Keppel’s FUM would grow to about $79 billion, close to 80% of our interim target of $100 billion by end-2026. In 2023, Keppel also acquired the remaining 50% interest in Keppel Credit Fund Management (formerly Pierfront Capital Fund Management) and consolidated our ownership of the private debt platform. This is in line with Keppel’s strategy to seize opportunities from the rising demand for alternative lending solutions and the growing Asian private debt space. Keppel harnesses its deep operating capabilities to provide LPs with exclusive access to attractive infrastructure, real estate and connectivity assets. INFRASTRUCTURE Infrastructure is expected to be one of the fastest-growing asset classes in the years ahead, driven by strong underlying megatrends, particularly decarbonisation and the push for renewables in the global energy transition. There are also vast opportunities for private capital to augment governments’ budgets stretched by the COVID-19 pandemic, to help expand renewable energy capacity globally, transition away from fossil fuels, and accelerate zero- and low-emission technologies. As an asset class, infrastructure is highly defensive and attractive in today’s volatile environment, with its ability to provide steady cash flows while passing through rising costs amid an inflationary environment. Recent mergers and acquisitions (M&As) involving global financial asset managers and infrastructure operators attest to the robust investor demand for this asset class. Keppel, with its established track record as an infrastructure asset manager and operator, is well positioned to capture opportunities and add value to investors through its investment products. In 2023, we achieved the first closing of KCIF, our flagship open-ended infrastructure fund with initial capital and co-investment commitments of US$575 million out of a target size of US$2.5 billion. KCIF will focus on highly defensive and essential infrastructure assets across developed markets in the Asia Pacific, which will provide stable, 1 Gross asset value of investments and uninvested capital commitments on a leveraged basis to project fully-invested FUM. ANNUAL REPORT 2023 43 PERFORMANCE REVIEW Operating & Market Review Fund Management and Investment Platforms Spotlight KEPPEL’S REAL ESTATE PLATFORM IN EUROPE Aermont’s emphasis on value adding and active management, as well as its operator-oriented approach to portfolio management, are a strong fit with Keppel’s strengths as an asset manager and operator. In November 2023, we announced the proposed acquisition of leading European real estate manager, Aermont Capital (Aermont), marking a pivotal step in Keppel’s transformation to be a global asset manager and operator. To be executed over two phases in 2024 and 2028 respectively, the transaction brings together two like-minded asset managers with complementary capabilities to accelerate growth and enhance the value proposition to private fund investors. The highly synergistic acquisition will expand Keppel’s asset management capabilities beyond Asia Pacific to Europe, where Aermont’s geographic footprint and investment strategies complement Keppel’s capabilities with minimal overlaps. It will expand Keppel’s blue-chip clientele through Aermont’s longstanding relationships with over 50 global LPs. It will also bolster Keppel’s talent pool with an experienced senior team with a proven track record and extensive networks in Europe, and whose values, culture and operator- oriented approach to creating long-term value are a strong fit with Keppel. Established in 2007, Aermont is an independent asset management business and a leader in opportunistic real estate investments, with a proactive operator-oriented approach emphasising prime assets and leading businesses across core Western European markets. As at end-December 2023, Aermont had a total FUM of $24 billion across four active funds and a single asset vehicle1. Following the acquisition of the initial 50% stake in Phase 1, Keppel will focus on maintaining and supporting Aermont’s success while working with its team to jointly develop new fund products and initiatives, leveraging Keppel’s expertise in alternative assets such as private credit funds and data centres. With further value add from Keppel, Aermont has the potential to grow its FUM from $24 billion to approximately $60 billion by 20301. 1 Gross asset value of investments and uninvested capital commitments on a leveraged basis to project fully-invested FUM. 44 KEPPEL LTD. long-term, predictable cash flows. These include assets with proven operating track records, long concessions with credit-worthy counterparties and those that are regulated. With its private funds – KCIF, the Keppel Asia Infrastructure Fund Series and Keppel Private Credit Fund – as well as SGX-listed Keppel Infrastructure Trust (KIT), Keppel is able to provide investors with a spectrum of investment opportunities across the capital stack and cater to different risk profiles. Tapping into the growing need for renewable energy, Keppel, together with KIT, jointly acquired a 16.3% stake in Fäbodliden II, a 17 MW Swedish onshore wind farm in 2023. Along with the additional 26 MW of grid capacity awarded to Borkum Riffgrund 2, which is partially owned by KIT and Keppel, these assets will expand Keppel’s wind energy portfolio to 1 GW. KIT has also announced its proposed acquisition of a 45% stake in a solar portfolio with a projected combined generation capacity of 585 MW from Enpal, a German renewable energy company, marking KIT’s first acquisition in the solar energy sector. REAL ESTATE With the built environment making up about 40% of global carbon emissions, sustainable real estate is fast becoming a key priority for future investments. Older, less sustainable buildings are becoming increasingly undesirable and difficult to finance and are at risk of becoming stranded assets in the future, thereby boosting demand for new or retrofitted buildings that are more energy-efficient. To manage their carbon footprints, more companies are also planning to exit less carbon-efficient commercial spaces. These trends present opportunities for Keppel to harness its strong operating capabilities and implement SUR initiatives on the assets in the REITs and private funds managed by Keppel, to help improve the efficiency, sustainability performance and valuation of these commercial buildings. Following the successful acquisition of INNO88 Tower in Seoul, Keppel Asia Macro Trends Fund IV partnered with a Co-investment Programme committed by a leading Korean financial institution to jointly acquire the Bank of Korea’s Sogong Annex Facility (now known as K-Finance Tower). Keppel is implementing its SUR solutions to refurbish and modernise K-Finance Tower and seeks to capitalise on the healthy office leasing demand and limited supply in Seoul to generate attractive returns. Keppel leverages its operational expertise in data centres and power to future-proof data centre infrastructure by deploying artificial intelligence and machine learning, as well as incorporating sustainable design and energy-efficiency solutions. Keppel also continued to seek opportunities in alternative asset classes that are more resilient compared to commercial real estate which is facing headwinds in certain markets. In 2023, the Keppel Education Asset Fund (KEAF) acquired two education assets in Sydney, Australia, bringing Keppel’s total portfolio in Australia to AU$4.8 billion of infrastructure, prime commercial and data centre assets. Besides Australia, KEAF also increased its stake in a premium K12 international school in Singapore, further strengthening its foothold in a market where demand is strong. Keppel continues to source for deals to capitalise on rising trends in the real estate market, including the increased focus on green and sustainable buildings, rising income in the Asian middle-class and the growing opportunities for the living sector, including Build-to-Rent apartments, Purpose-Built Student Accommodation and Senior Living apartments. CONNECTIVITY Demand for data centre capacity is growing exponentially, as more businesses and consumers use over-the-top platforms, cloud computing and artificial intelligence. With over a decade of operational expertise, Keppel is well positioned to capture arising opportunities to create value for the investors of our data centre private funds and listed REIT. To meet the demand for more sustainable data centres, Keppel is leveraging its innovative proprietary solutions to optimise the data centre power usage effectiveness of its assets. With the ability to provide renewable energy for its assets, Keppel can support customers’ net zero ambitions while future-proofing data centre infrastructure. During the year, Keppel also secured private investors to invest in a 60% share of the Company’s stake in Bifrost Cable System, the first subsea fibre cable system directly connecting Singapore to the West Coast of North America via Indonesia through the Java Sea and Celebes Sea. ANNUAL REPORT 2023 45 PERFORMANCE REVIEW Operating & Market Review OPERATING PLATFORM Keppel harnesses its deep operating capabilities to create alternative real assets and solutions serving the energy transition, sustainable development and digital connectivity. The Operating Platform is horizontally integrated with the Fund Management and Investment platforms and helps to drive value creation by developing, operating and optimising assets. Keppel’s Operating Platform possesses deep capabilities in engineering, developing and operating assets. It delivers critical solutions and services across Infrastructure, Real Estate and Connectivity to address some of the world’s most pressing challenges in the face of climate change and rapid urbanisation and increasing digitalisation. These offerings span power, renewables, clean energy, decarbonisation and sustainability solutions, green buildings as well as digital infrastructure. Horizontally integrated with the Fund Management and Investment platforms, the Operating Platform contributes its expertise to create, operate and optimise real assets across the investment cycle. Working in concert, the platforms drive superior asset performance and investment outcomes for Keppel’s private funds and listed real estate and business trusts, while advancing the Company’s asset-light strategy and recurring income growth. The Infrastructure Division has a strong international track record for developing and managing critical infrastructure such as power generation, waste-to-energy, district cooling and water treatment plants, as well as providing related services for a spectrum of energy and environmental needs. Keppel, through the Infrastructure Division, is the first company in Singapore to successfully import renewable energy. It is also developing the Keppel Sakra Cogen Plant, the country’s first-to-market hydrogen- ready power plant. To help companies decarbonise their operations, the Infrastructure Division also offers Energy-as-a-Service, a subscription service that bundles solutions such as district cooling, solar energy, electric vehicle charging and smart energy management. The Real Estate Division, with its extensive experience in Asian real estate, provides innovative urban space solutions spanning sustainable urban renewal, senior living, urban living, retail and large-scale integrated developments. The Real Estate Division leverages its operating capabilities to help build quality asset pipelines as well as contribute towards asset enhancement initiatives leveraging its sustainable urban renewal solutions to create value for Keppel’s private funds and listed REITs. The Connectivity segment, which comprises the Data Centres and Networks Division and M1, possesses deep expertise in designing, developing and operating high-quality data centres and subsea cable systems, as well as providing 5G network and solutions to consumers and enterprises. As a leader in data centres, the Data Centres and Networks Division is developing higher-capacity and more sustainable digital infrastructure to support rapid digitalisation. In doing so, the Division helps to build quality asset pipelines as well as operate specialised assets for Keppel’s private funds and listed data centre REIT. M1 is Singapore’s first digital network operator, providing a suite of communications services, including mobile, fixed line and fibre offerings, to over two million customers. As a cloud native digital platform, M1 harnesses its strong synergies with the operating divisions to offer smarter bundled solutions and enterprise services that help customers in their digital transformation. 1 Includes carrying values of identified assets on the balance sheet, as well as gross asset values of certain identified underlying assets held in joint ventures, that can be potentially converted into fee-bearing FUM. Notes receivables (vendor notes issued by Asset Co) amounting to c.$4.3 billion is included. INFRASTRUCTURE 5.9 GW Energy portfolio comprising 4 GW of renewables and 1.9 GW of gas projects REAL ESTATE $39.3b In real estate assets under management1 CONNECTIVITY 32 Data Centres Assets across Asia Pacific and Europe 46 KEPPEL LTD. ANNUAL REPORT 2023 47 PERFORMANCE REVIEW Operating & Market Review Operating Platform INFRASTRUCTURE We provide compelling end-to-end solutions spanning power, renewables, clean energy and decarbonisation, which are essential for sustainable development. PROGRESS IN 2023 FOCUS FOR 2024/2025 • First to import renewable energy under LTMS-PIP, with ~270 GWh imported by end-2023. • Grew proportion of long-term power contracts (3 years and above) from about 36% of total contracted generation capacity as at end-June 2023 to about 60% as at end-December 2023. • Made good progress on the construction of the Keppel Sakra Cogen Plant, Singapore’s first-to-market hydrogen-ready power plant. • Signed MOUs with international partners including GenZero, Masdar, and AM Green to explore various low-carbon energy solutions such as hydrogen, ammonia, and bioenergy. • Gained strong traction in EaaS solutions, securing $1.6 billion worth of contracts in 2023. • Grow the integrated power business and explore strategic opportunities to provide longer-term energy solutions. • Continue to maintain a robust and balanced portfolio of long-term power contracts with stable recurring income. • Fortify Keppel’s leadership in the Singapore power sector through low carbon electricity import. • Further develop pipeline of strategic infrastructure assets for private funds and listed infrastructure trust. • Continue to execute projects well and safely, including the Keppel Sakra Cogen power plant. • Continue to expand market share for proprietary EaaS and WTE solutions. 48 KEPPEL LTD. Infrastructure is expected to be one of the fastest-growing asset classes, supported by global trends such as the energy transition and the push for decarbonisation. At the United Nations Climate Change Conference (COP 28) in 2023, there were calls to triple renewable energy capacity globally, transition away from fossil fuels, and accelerate zero- and low-emission technologies. With extensive global engineering, development and operating experience, Keppel’s Infrastructure segment is at the forefront of providing sustainability solutions and services in areas such as renewables, clean energy and decarbonisation. The global energy transition and climate action are driving demand for Keppel’s renewables, clean energy, decarbonisation and environmental solutions. As part of a horizontally integrated value chain, Keppel’s Infrastructure Division works with the Fund Management and Investment platforms to build quality asset pipelines for Keppel’s private funds and listed infrastructure trust. Focused on an asset-light model with recurring income, the Infrastructure Division provides Energy-as-a-Service (EaaS) solutions on subscription, enabling firms to decarbonise their assets and operations with minimal upfront investments. The Division also confers significant strategic advantages to the Real Estate and Connectivity segments by working with them to future-proof their assets and solutions with low-carbon energy. INTEGRATED POWER BUSINESS The Singapore Wholesale Electricity Market (SWEM) was volatile in 1H 2023 amidst geopolitical tensions, increased electricity demand and inflationary pressures, which resulted in high electricity prices. However, following measures put in place by the Energy Market Authority (EMA) to stabilise the energy market and enhance Singapore’s energy security and resilience, electricity prices have stabilised since 2H 2023. Despite the volatile market conditions, Keppel’s integrated power business performed strongly, bolstered by growth in contracts and improved operational efficiency. Keppel’s market position in the SWEM expanded, with its commercial and industrial retail market share increasing to 15% (excluding SP Services) as at December 2023. In addition, Keppel signed a multi-year Power Purchase Agreement with GlobalFoundries (GF) in January 2024 to provide 150 to 180 MW of electricity annually to power GF’s Singapore site commencing May 2024. Come 2026, GF will also be a significant offtaker from the upcoming hydrogen-ready Keppel Sakra Cogen Plant, contracting about 25% of the plant’s total generation capacity ANNUAL REPORT 2023 49 PERFORMANCE REVIEW Operating & Market Review Operating Platform – Infrastructure for over 15 years. By the end of 2023, about 60% of Keppel’s contracted generation capacity was locked in for three years and above, a sharp increase from just 36% six months prior in June 2023. As the first and only licensed company to start importing low-carbon power via the Lao PDR-Thailand-Malaysia- Singapore Power Integration Project (LTMS-PIP) in 2022, Keppel is well-placed to help pioneer the decarbonisation of Singapore’s power sector. In 2023, Keppel was awarded two conditional approvals from EMA to import low-carbon electricity from renewable energy sources in Cambodia and Indonesia respectively. Keppel’s Infrastructure Division will continue working with its partners to finalise the technical, commercial, and regulatory aspects of its electricity import projects, with the goal of providing reliable and competitive low-carbon electricity to customers. While market conditions may continue to be volatile, Keppel’s integrated power business is largely insulated against fluctuations in energy prices, bolstered by its end-to-end value chain. To sustain growth and performance, Keppel will also continue to actively pursue opportunities to provide longer-term energy solutions which will contribute to multiple recurring income streams. 1.9 0.1 1.0 2.9 5.9 1.9 2.4 4.3 ENERGY PORTFOLIO (GW) Gas Renewables – Hydro Renewables – Wind Renewables – Solar Total LONG-TERM SUPPLY & SERVICE CONTRACTS ($ billion) as at 31 December 2023 Operations & Maintenance EaaS Total POWER CONTRACTS1 (%) June 2023 December 2023 >10 years 3-10 years 1-3 years <1 year Total 1 Based on Keppel’s existing generation capacity. 50 KEPPEL LTD. June 2023 December 2023 1.0 35.0 41.0 23.0 19.0 40.0 31.0 10.0 100.0 100.0 DECARBONISATION & SUSTAINABILITY SOLUTIONS Energy-as-a-Service Decarbonisation technologies play a crucial role in the energy transition, but they often require heavy capital investments which can be prohibitive for businesses. Keppel’s Infrastructure Division provides EaaS, a cost-effective, subscription-based solution, to help drive widespread adoption of cleaner energy solutions. The EaaS solution, which integrates Keppel’s capabilities in district cooling, solar energy and electric vehicle (EV) charging, has gained strong traction since its introduction in late 2022. About $1.6 billion worth of EaaS contracts were secured in 2023, out of a total of $2.4 billion worth of EaaS contracts secured as at end-December 2023. These include Keppel’s appointment as the District Cooling operator for the upcoming Jurong Lake District in Singapore which has a total design capacity of over 29,000 Refrigeration Tonnes, as well as new contracts from across China, Thailand and Vietnam. Keppel manages two state-of-the-art operation nerve centres in Singapore and Vietnam, which underpin the efficiency, reliability and scalability of Keppel’s EaaS solutions. At these centres, the Infrastructure Division can remotely monitor and optimise all its energy assets in real-time, leveraging digital technology, artificial intelligence and machine learning. Meanwhile, Keppel’s EV charging brand, Volt, has expanded its network to over 200 chargers as at end-December 2023, riding on strong growth in the adoption of electric vehicles in Singapore. More recently in February 2024, Keppel was appointed to design and build a large-scale solar photovoltaic (PV) system at Changi Airport, which Keppel will own and operate for 25 years. The solar PV system can generate enough solar energy to allow Changi Airport Group to reduce its carbon emissions by about 20,000 tonnes each year. Further afield, Keppel will seek opportunities to offer EaaS alongside its real estate and connectivity solutions to drive asset-light growth. Keppel’s $4.3 billion infrastructure supply and service contract backlog as at end-2023 provides earnings visibility over the next 10-15 years. Environment Keppel’s proven waste-to-energy (WTE) technology enables effective solid waste management and energy recovery, and also helps cities avoid methane emissions which might arise if the waste was sent directly to landfills. More details on the avoided emissions arising from Keppel’s solutions will be disclosed in Keppel’s Sustainability Report to be published in May 2024. In 2023, Keppel made good progress constructing the Hong Kong Integrated Waste Management Facility (IWMF) and Singapore’s Tuas Nexus IWMF, which attained about 80% and over 50% completion respectively by year-end. Keppel has successfully delivered the prefabricated modules for the Hong Kong IWMF, the first to adopt the modularisation method of construction within the global WTE industry. In the UK, Keppel secured the renewal of the five-year Technical Support Agreement for the Runcorn Phase 1 & 2 Energy-from-Waste (EfW) facilities. Designed and built by Keppel, the combined Runcorn EfW is one of the largest and most efficient EfW projects in the UK. As a leader in environmental solutions, Keppel is working on integrating carbon capture technology with its WTE plants to create a carbon-negative solution for waste management. During the year, Keppel successfully completed feasibility and pre-Front End Engineering Design (FEED) studies for the integration of a large-scale carbon capture facility with the Runcorn EfW. As the original designer and builder of the Runcorn EfW, Keppel is well positioned to advise on the possible synergies between the Runcorn EfW facility and the proposed carbon capture facility. Meanwhile, in Singapore, Keppel and the National Environment Agency are in advanced stages of a joint study on the feasibility of implementing carbon capture technology at selected WTE plants in Singapore. New Energy Keppel is intensifying its work with international partners on supply chains for low-carbon hydrogen and hydrogen-derived fuels, such as When completed, the hydrogen-ready Keppel Sakra Cogen Plant will be the most cutting-edge and energy efficient power plant in Singapore, which will translate into superior performance, including lower emission intensity and higher operational flexibility. green ammonia, as part of Keppel’s plans to capitalise on the growth of the hydrogen economy. In May 2023, Keppel joined the Central Queensland hydrogen project (CQ-H2) to develop one of the largest green hydrogen projects in Australia as part of an international consortium. FEED studies for the CQ-H2 project have kickstarted with support from the Australian Renewable Energy Agency. Leveraging the green hydrogen feedstock from CQ-H2, Keppel is developing a downstream green ammonia project in Gladstone with Incitec Pivot Limited, which can produce up to 850,000 tonnes per annum of green ammonia for Australia as well as international export. In Singapore, Keppel signed a Memorandum of Understanding (MOU) with ExxonMobil to explore low-carbon hydrogen and ammonia for scalable commercial and industrial applications that can support both Jurong Island’s sustainability goals and Singapore’s hydrogen strategy. The collaboration would help to realise the vast potential of low carbon ammonia as a fuel as well as feedstock for refinery and petrochemical operations. Besides low-carbon solutions, Keppel is also actively engaging its partners on various sustainability solutions including bioenergy. In 2023, Keppel signed separate MOUs with GenZero, Masdar and AM Green to explore projects in areas such as biomethane, biomethanol and Sustainable Aviation Fuel. Bioenergy, a form of renewable energy generated from organic materials such as purpose-grown crops and organic waste, is poised to play a pivotal role in the ongoing energy transition and offers numerous advantages to decarbonise hard-to- abate industries such as aviation and the heavy-duty transport sector. ANNUAL REPORT 2023 51 PERFORMANCE REVIEW Operating & Market Review Operating Platform REAL ESTATE We provide sustainable and innovative urban space solutions, focusing on sustainable urban renewal and senior living. PROGRESS IN 2023 FOCUS FOR 2024/2025 • Announced monetisation of • Accelerate asset monetisation and $830 million of residential and commercial assets in Singapore and the region. • Implementing sustainable urban renewal initiatives in eight projects across Asia Pacific, with combined asset value of $7.5 billion. • Launched Sindora Living, a senior living operating platform for Asia, and opened Keppel’s flagship assisted living community in Nanjing, China. • Signed Memoranda of Understanding with DBS and UOB to provide REaaS solutions to businesses and assets owners in Asia. unlock capital that can be re-invested for growth and higher returns, leveraging Keppel’s asset-light model. • Work on securing new sustainable urban renewal projects in existing markets in Asia. • Continue expanding senior living footprint through exploring opportunities in priority markets of China and Singapore, as well as other markets in Asia Pacific, Europe and the US. 52 KEPPEL LTD. With decades of real estate development and management experience in Asia, Keppel harnesses its deep operating capabilities to create value for investors, customers and governments through its end-to-end value chain. Keppel’s Real Estate Division works with the Fund Management and Investment platforms to build quality asset pipelines and leverages its Sustainable Urban Renewal (SUR) Keppel’s innovative SUR solutions integrate people, AI-driven technology and processes to bolster the sustainability performance of commercial buildings. capabilities to perform asset enhancement initiatives for Keppel’s private funds and listed trusts. As part of Keppel’s asset-light business model, the Real Estate Division also provides Real Estate-as-a-Service (REaaS) solutions such as SUR to help businesses decarbonise their assets and operations. SUSTAINABLE URBAN RENEWAL The built environment is responsible for some 40% of the world’s carbon emissions, and its decarbonisation is one of the most cost-effective ways to mitigate climate change. Retrofitting existing assets can be a greener, less costly and faster-to-market solution compared to demolition and redevelopment. It also allows asset owners to cater to evolving user preferences by upgrading their buildings to be smarter, better connected and more sustainable. Drawing on its strong operating capabilities in real estate, Keppel has developed an innovative SUR initiative, which integrates people, processes and AI-driven technology to open up new possibilities in the rejuvenation of older commercial buildings. Keppel’s SUR solutions deploy the latest technologies to reduce buildings’ operational and embodied carbon, driving energy and water efficiency and extending the lifespan of aging buildings. SUR also uses spatial programming to implement intelligent workspace solutions and introduces best-in-class amenities and placemaking activities to support changing work preferences. Given their versatility, Keppel’s SUR solutions and methodology can also be applied to the design, development and operation of new buildings. Keppel’s SUR solutions are being implemented in eight assets, namely Keppel Bay Tower, Ocean Financial Centre and Keppel South Central in Singapore; The Kube and Park Avenue Central in Shanghai, China; Saigon Centre in Ho Chi Minh City, Vietnam; INNO88 Tower in Seoul, South Korea, and Kohinoor in Pune, India. ANNUAL REPORT 2023 53 PERFORMANCE REVIEW Operating & Market Review Operating Platform – Real Estate The Division is expanding its SUR offerings in Asia Pacific and also actively working with Keppel’s private funds to offer SUR capabilities as part of asset enhancement initiatives that can help to bolster the efficiency, sustainability performance and valuations of their asset portfolios. journeys. Through these collaborations, Keppel can offer SUR-related solutions including spatial programming and workplace solutions to businesses and asset owners can help improve their building performance and uplift asset values. During the year, Keppel partnered Singapore banks DBS and UOB to jointly develop and provide businesses across the region with a comprehensive suite of sustainability and digitalisation solutions to support their decarbonisation Looking ahead, the Division will continue to pursue a strong pipeline of over 20 assets to retrofit and decarbonise, as well as explore opportunities to offer SUR for a wider range of hospitality, healthcare and industrial assets. SENIOR LIVING Many countries are seeing ageing populations amid low fertility rates and longer life expectancies. Coupled with rising affluence and a focus on healthy ageing, the demand for assisted-living communities is growing, particularly in countries such as China and Singapore. Keppel sees opportunities to cater to the large and generally underserved senior populations in these markets, using an asset-light model. Keppel has built in-house capabilities across the senior living segment, Spotlight SINO-SINGAPORE TIANJIN ECO-CITY: A MODEL FOR SUSTAINABLE DEVELOPMENT The Sino-Singapore Tianjin Eco-City (Eco-City), which marked its 15th anniversary in 2023, is a showcase of Keppel’s strong expertise in sustainability-related solutions, as well as its ability to integrate them to advance sustainable development. Keppel leads the Singapore consortium, which works with its Chinese partner to guide the 50-50 joint venture, Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd. (SSTEC), in its role as master developer of the Eco-City. In addition, Keppel also contributes to the Eco-City’s growth by developing green residential and commercial developments, and through joint ventures with its Chinese partners, provides diverse infrastructure solutions such as renewable energy, water treatment and district heating and cooling services. During the year, SSTEC sold two residential plots and an industrial plot for RMB 1.15 billion, as well as over 1,100 homes in its projects. To attract more green companies to the Eco-City, SSTEC commenced development of the new Green 54 KEPPEL LTD. Keppel drives the growth of the Eco-City by developing green residential and commercial developments, and providing infrastructure solutions such as renewable energy, water treatment and district heating and cooling services. Innovation Park in the central district of the Eco-City. SSTEC has also signed a collaboration agreement with the Singapore University of Technology and Design to set up a research and innovation centre in the Eco-City, and further enhance the Eco-City as a “living lab” for the innovation and development of green and low-carbon technologies. At the 15th Sino-Singapore Tianjin Eco-City Joint Steering Council Meeting in December 2023, which was co-chaired by Deputy Prime Minister and Minister for Finance of Singapore, Lawrence Wong, and Vice Premier of the State Council of the People’s Republic of China, Ding Xuexiang, Singapore and China unveiled a new project collaboration framework that will strengthen the Eco-City’s role as a pathfinder for climate-friendly cities, and broaden bilateral cooperation across the areas of green growth, low-carbon living, ecological resilience, innovation, talent development and governance. including development and operational expertise, drawing from experience through its investment in Watermark Retirement Communities in the US. Keppel continues to build up a strong ecosystem of clinical, research, recruitment and technology partners to offer differentiated senior living services. Meanwhile, Keppel opened its flagship project – a 400-bed premier assisted living community in Nanjing, China – under its senior living platform, Sindora Living. Sindora Living redefines senior living by focusing on empowering programmes for seniors of all conditions, with a strong emphasis on personalised life plans, holistic care, and smart management systems with a human heart. The Sindora Living platform and its Nanjing community will serve as a launchpad for Keppel to offer related asset management and operating services in China and other parts of Asia. REAL ESTATE INVESTMENT Despite challenging market conditions in 2023, Keppel continued to monetise its real estate portfolio in Asia, announcing $830 million in asset monetisations. We also sold 3,100 homes across Singapore, China, Vietnam, Indonesia and India. As part of its asset-light strategy, Keppel is selectively investing in development projects, leveraging its operating capabilities and networks, to connect investors of its private funds with real estate opportunities in Asia. This would in turn enable Keppel to grow its Funds Under Management. In Singapore, the Division made progress in the development of the iconic Keppel South Central, a next-generation smart and super low energy building located in Tanjong Pagar. When completed in early 2025, the new building will add to Keppel’s asset pipeline of approximately 650,000 square feet of technology-forward spaces – comprising Grade A offices, flexible workspaces, retail and event spaces as well as a diverse range of indoor and outdoor amenities. As part of Keppel’s refreshed China playbook and pivot away from Keppel is implementing SUR initiatives across eight projects in Asia Pacific, including the INNO88 Tower in South Korea. developing and selling homes, Keppel will focus on sustainability-related solutions in sectors benefiting from tailwinds and government support, and where Keppel has strong differentiation and value add. These include Keppel’s focus areas across the energy transition, sustainable urban renewal, senior living and data centres. Keppel is also bringing together partners and investors in China to invest in good projects in the country, as part of the Company’s “China-for-China” asset management strategy. In Vietnam, strong government emphasis on infrastructure development, an expanding middle-class population and young workforce continue to drive demand for Keppel’s real estate solutions. During the year, the Real Estate Division jointly invested in two residential projects with the Keppel Vietnam Fund and Khang Dien Group in Ho Chi Minh City, where the partners will jointly develop over 200 landed homes and 600 high-rise apartments. In India, the demand for office space is expected to remain strong due to the return-to-office policy by top IT companies and increasing number of global capability centres. The robust office market, along with a trend of occupiers wanting to shift to quality and sustainable buildings, bodes well for Keppel’s active search to expand its office portfolio across key micro markets in Mumbai, Pune, Bangalore, Hyderabad, Chennai and the Delhi National Capital Region. Building on its strong track record in the master development of smart, sustainable urban townships, the Real Estate Division secured consultancy contracts to provide master planning, smart city solutions and estate management advisory services for projects in Jinan and Suzhou in China, as well as Sri Lanka. Meanwhile, Keppel continued to engage various Singapore government agencies on the feasibility and benefits of nearshore developments as coastal protection solutions, and completed various related technical tests. The Division has also obtained relevant IP certifications for nearshore solutions in Singapore, enabling Keppel to further engage corporates, institutes of higher learning and business partners on potential collaboration. During the year, Keppel was recognised for its strong sustainability efforts in the real estate space. In the 2023 GRESB Assessment, Keppel’s Real Estate Division was ranked second place in the Diversified – Office/ Residential/Non-listed/Core category for its strong Environmental, Social and Governance (ESG) performance. It also retained its Green Star rating, which recognises entities with commendable scores across the benchmark’s ESG components. ANNUAL REPORT 2023 55 PERFORMANCE REVIEW Operating & Market Review Operating Platform CONNECTIVITY We connect people, businesses and countries in the digital economy. PROGRESS IN 2023 FOCUS FOR 2024/2025 • Achieved ready-for-service status for first phase of Building 1 of Keppel Data Centre Campus at Genting Lane. • Achieved full utilisation at first two phases of Huailai Data Centre in Greater Beijing. • Continued to make progress on the Floating Data Centre Module (FDCM) and DataPark+, with final investment decision for the FDCM expected in 1H 2024, and actively engaged government agencies on DataPark+. • Completed close to 50% of overall cable laying operations for Bifrost Cable System. • M1 achieved nationwide 5G standalone network coverage ahead of schedule in 1Q 2023. • M1 completed consumer migration to its new cloud native digital platform. • M1 launched its “solution-in-a-box” offering with a suite of plug-and-play 5G solutions for companies to boost 5G adoption and deployment. • Accelerate data centre portfolio expansion overseas in Asia Pacific and Europe. • Continue to develop innovative data centre solutions, such as DataPark+ and the FDCM. • Target for Bifrost Cable System to go into commercial service by end-2024. • Pursue subsea cable opportunities in Asia and other emerging markets with Joint Build Partners. • Grow the enterprise business with more 5G-enabled solutions for enterprises and industries. • Develop innovative solutions and drive 5G-enabled advancements across industries through collaboration between M1 and Keppel’s operating divisions. 56 KEPPEL LTD. Strong growth in social media and video streaming, the adoption of cloud computing, and emergence of Generative Artificial Intelligence (GenAI), are driving up computing power, bandwidth, and latency requirements worldwide. These in turn underpin the demand for advanced digital infrastructure, such as data centres and fibre networks, as well as 5G connectivity. Keppel delivers high-quality data centres, subsea fibre cables and 5G connectivity and applications, harnessing the power of its end-to-end value chain. Keppel’s Connectivity segment comprises the Data Centres and Networks Division and M1. The former possesses deep expertise in designing, developing and operating high-quality data centres and subsea cable systems, while M1 provides 5G network and solutions for consumers and enterprises. As part of a horizontally integrated value chain, the Data Centres and Networks Division works with the Fund Management and Investment platforms to build quality asset pipelines for Keppel’s private funds and listed data centre REIT. The Data Centres and Networks Division also benefits from strategic access to low-carbon energy provided by Keppel’s Infrastructure Division, which helps to power and future-proof its assets and solutions. DATA CENTRES Amid climate and energy security concerns, data centre operators are expected to provide higher capacity and rack densities for their clients, while improving carbon emissions and the power usage efficiency of their assets. In Singapore, Keppel DC Singapore 7, the first complex situated within the Keppel Data Centre Campus at Genting Lane, has been in service since 1Q 2023. Meanwhile, the second complex, Keppel DC Singapore 8, achieved structural completion in March 2024, with the first phase of the complex expected to be ready for service in 3Q 2024. For Keppel Data Centre Fund II’s data centres in China, the first two phases of Huailai Data Centre in Greater Beijing have achieved full utilisation, while the Shanghai Data Centre was ready for service in early-2024. Keppel is accelerating the pursuit of data centre projects in new markets across the Asia Pacific, which is one of the fastest-growing regions for digital infrastructure. Home to digitally-connected populations, the Asia Pacific benefits from a high penetration rate of mobile devices and social networking applications, as well as the expansion of 5G networks. ANNUAL REPORT 2023 57 PERFORMANCE REVIEW Operating & Market Review Operating Platform – Connectivity The proposed DataPark+ is a 1 GW nearshore sustainable data centre campus that is envisioned to be powered by hydrogen and solar energy, and can save nearly 21 billion litres of water annually through the use of seawater for cooling. In addition to portfolio expansion, Keppel is also exploring ways to future-proof data centre infrastructure by deploying AI and machine learning for predictive failure analyses, as well as incorporating sustainable design and energy-efficiency solutions. To this end, the Data Centres and Networks Division is working with the Infrastructure Division as well as international partners to harness green energy sources that can help to improve the power utilisation and reduce the carbon emissions of Keppel’s data centres. Keppel also continues to explore disruptive innovations, such as the energy-efficient Floating Data Centre Module, which is expected to reach final investment decision in 1H 2024. The Data Centres and Networks Division has also been actively engaging government agencies and authorities to advance the development of DataPark+, a 1 GW nearshore net zero data centre campus concept. DataPark+ is envisioned to be a self-sustaining, carbon neutral campus that will operate on clean energy derived from a private smart grid powered by sustainable hydrogen and solar energy. DataPark+ is engineered to tap seawater for its cooling needs. This is estimated to reduce the use of treated water for cooling by about 21 billion litres annually, enough to fill 1,200 Olympic size swimming pools. Featuring a modular design, DataPark+ can be developed in phases in tandem with demand, and the availability of clean and low carbon energy. By aggregating cooling and power requirements, DataPark+ is designed to greatly enhance the efficiency of data centre operations. SUBSEA CABLE SYSTEMS In 2023, the Bifrost Cable System, the largest capacity high-speed transmission cable and subsea connectivity hub across the Pacific Ocean, achieved financial close, with Keppel securing private investors to take a 60% stake in Keppel’s share of the fibre pairs. The construction of Bifrost is progressing well, with key milestones achieved, including the necessary permits and licenses for marine installation. Cable laying operations were close to 50% completed as at end-December 2023, with cable laying activities in the international waters of the Pacific Ocean fully completed. Construction of the landing facilities in Singapore, Indonesia, Mexico, and 58 KEPPEL LTD. the US have commenced. When completed, these landing facilities will integrate the subsea cable with data centre infrastructure, to create an ecosystem of throughput connectivity. When Bifrost achieves commercial service status, currently expected in end-2024, it will connect Singapore directly to the west coast of North America, bolstering connectivity by providing a route through Indonesia, the Philippines and Guam. The Data Centres and Networks Division is also working with Keppel’s Fund Management and Investment platforms to explore opportunities to invest in and develop more subsea cables in Asia and other emerging markets. DIGITAL CONNECTIVITY As part of its multi-year digital transformation, M1 accelerated the rollout of highly personalised services and completed the migration of all its mass consumer customers to its new cloud native digital platform. The new platform supports streamlined digital services, enables an efficient digital experience for customers through automation, enhances sustainability through future-proofing of the business, and optimises resources with cloud native applications. M1 is looking to harness AI and GenAI to further enhance its productivity and service quality in customer experience and engagement. For instance, it is exploring the integration of ChatGPT with its chatbot, as well as the deployment of Salesforce AI which can help improve information accuracy and service speed of call agents. smart estate vehicle and tourism sectors. In 2023, M1 launched its 5G-powered “solutions-in-a-box” offering, the first of its kind in Southeast Asia. The suite of SMART solutions include applications for worker safety to detect risk and forecast accidents, real-time security surveillance and management solutions at sea, autonomous robotics for the inspection of critical assets, and workforce productivity solutions. The solution’s plug-and-play approach provides hassle-free integration and deployment of 5G-powered solutions for companies. M1 drives growth by providing best-in-class 5G solutions to consumers and enterprises through its cloud-native connectivity platform. In 2023, M1’s growing enterprise business saw an increase in revenue of 27% year on year, driven by robust demand for its information and communications technology services, digital connectivity, hybrid multi-cloud offerings, as well as infrastructure and application modernisation services to help enterprise customers with their digital transformation. In the realm of AI and data management, enterprise customers seek swift, on-demand, and flexible provisioning of graphics processing units (GPUs). M1 is collaborating closely with its key enterprise clients to provide GPU-as-a-Service solutions, enabling enterprises to harness GPU resources to address diverse, multiple workloads with ease, while enjoying substantial cost savings. M1 completed its nationwide 5G standalone network rollout ahead of schedule in 1Q 2023, and has since achieved nationwide outdoor 5G coverage for all consumers. M1 has implemented over 50 5G solutions in partnerships with various enterprises across the maritime, energy, utilities, M1 continues to harness its strong synergies with Keppel’s operating divisions, including bundling enterprise services for colocation data centre clients, as well as enabling smarter product features for several of Keppel’s customer- facing services. ANNUAL REPORT 2023 59 PERFORMANCE REVIEW FINANCIAL REVIEW We will create value through astute asset management, execution excellence and strong financial discipline. OVERVIEW Keppel achieved a net profit of close to $4.1 billion for 2023, more than quadruple that of 2022, due to the recognition of a disposal gain of approximately $3.3 billion from the successful divestment of Keppel Offshore & Marine (KOM). KEY PERFORMANCE INDICATORS Revenue1 Net profit Earnings Per Share Return On Equity Operating cash flow Free cash flow2 Total dividend per share 2023 $ million 6,967 4,067 227.6 cts 37.9% 58 (384) $2.703,4 Total cash dividend per share 34.0 cts n.m.f. denotes no meaningful figure. 23 vs 22 % +/(-) 5 339 337 368 (78) (6) n.m.f. 3 2022 $ million 6,620 927 52.1 cts 8.1% 260 (408) $0.33 33.0 cts 1 Revenue from continuing operations. 2 FY 2023’s figure included a $500 million cash component realised as part of the divestment of 3 4 discontinued operations, which is presented as cash inflow from financing activities in the financial statements. The inclusion herein is for better comparability and understanding of free cash flow. Includes dividend in specie of Sembcorp Marine (now Seatrium) shares, which amounted to $2.19, rounded the nearest two decimal places; calculated based on a division of (a) the cash equivalent amount of the dividend declared by the Company of $3,845 million, by (b) the Company’s issued and paid-up share capital as at the Record Date of 1,751,959,918 Keppel Shares (excluding treasury shares). Includes dividend in specie of Keppel REIT units; based on the closing market price of $0.835 per Keppel REIT unit on 6 November 2023, the cash equivalent amount of the dividend declared by the Company was $294 million, equivalent to $0.167 per share. 60 KEPPEL LTD. Excluding discontinued operations and the loss from the dividend in specie of Keppel REIT units (DIS loss), net profit was $996 million in 2023, 19% higher than the $839 million in 2022. All segments were profitable with stronger year on year performance from Infrastructure and Connectivity. In 2023, Infrastructure was the top performer, delivering a net profit of almost $700 million. Contribution from the Real Estate segment remained resilient with $426 million in net earnings, despite challenging market conditions in China1. Net profit from Connectivity grew year on year and accounted for approximately 14% of the net profit from continuing operations. The full-year performance including discontinued operations translated to earnings per share of $2.28, as compared to $0.52 in 2022. Correspondingly, Return On Equity (including discontinued operations) (ROE) was 37.9% as compared to 8.1% in 2022. Free cash outflow was $384 million2 in 2023 as compared to the free cash outflow of $408 million in 2022. This was mainly due to a lower level of investments and capital expenditures, higher divestment proceeds and dividend income, as well as advances from associated companies and joint ventures, partly offset by an increase in working capital requirements. In addition, as KOM had a net cash balance of $968 million, the completion of the divestment resulted in a net cash outflow, partially offset by the receipt of a $500 million cash consideration. Net gearing increased from 0.78x a year ago to 0.90x at the end of 2023 due to higher net debt as well as a lower equity base. Adjusted net debt to EBITDA3 improved to 4.6x, from 5.1x as at the end of 2022 mainly due to higher proportionate increase in EBITDA as compared to the increase in adjusted net debt. Total dividends for 2023 amounts to about $2.70 per Keppel share, as compared to $0.33 per Keppel share in 2022. This comprises a proposed final cash dividend of 19.0 cents per share and an interim cash dividend of 15.0 cents per share paid in the 1 Excluding DIS loss of $111 million. 2 Included a $500 million cash component realised as part of the divestment of discontinued operations, which is presented as cash inflow from financing activities in the financial statements. The inclusion herein is for better comparability and understanding of free cash flow. 3 Adjusted net debt is defined as net debt less carrying value of non-income producing undeveloped land and properties held for sale (completed and under development), while EBITDA refers to profit before depreciation, amortisation, net interest expense and tax. NET PROFIT $4.1b Highest profit recorded by Keppel in 55 years; more than quadruple that of 2022 ANNUAL REPORT 2023 61 PERFORMANCE REVIEW Financial Review RECURRING INCOME FROM CONTINUING OPERATIONS $773m Rose 54% year on year; makes up 88% of net profit in 2023 compared to 60% in 2022 third quarter of 2023, as well as the dividends in specie of Sembcorp Marine (now Seatrium) shares and Keppel REIT units amounting to $2.191 per share and $0.1672 per share respectively. MULTIPLE INCOME STREAMS Excluding the results of discontinued operations, net profit from continuing operations was $885 million, with positive contributions from all income streams. Underpinned by robust operating earnings from Infrastructure, recurring income, which comprises asset management net profit and operating income3, grew 54% to $773 million from $503 million a year ago. Valuation gains declined mainly due to lower revaluation gains from investment properties. Development & Engineering, Procurement and Construction (EPC) earnings were 14% higher year on year at $178 million led by higher contributions from Singapore trading projects and the Sino-Singapore Tianjin Eco-City. Excluding the DIS loss, gains from capital recycling increased by $145 million primarily due to completion of several asset monetisations by Real Estate and Connectivity segments. Net loss from Corporate Activities was $256 million, as compared to $20 million in FY 2022, mainly due to the impact from the classification of interest expense associated with the vendor notes and lower fair value gains from investments. SEGMENT OPERATIONS Revenue from continuing operations of $6,967 million was $347 million or 5% higher than 2022. Revenue from the Infrastructure segment increased by $556 million or 13% to $4,846 million. The increase was led by higher electricity sales, partly offset by lower gas sales and lower progressive revenue from Infrastructure recognition from environmental projects in 2023. Asset management fee revenue from Infrastructure was higher year on year mainly due to higher management fees arising from better performance achieved by MULTIPLE INCOME STREAMS ($ million) 1,500 1,200 900 600 300 0 -300 -600 Asset Management Operating3 Valuation Development/EPC Capital Recycling Corporate Activities DIS Loss Net Profit 2022 91 412 225 156 (25) (20) – 839 2023 86 687 181 178 120 (256) (111) 885 1 Dividend in specie of Sembcorp Marine (now Seatrium) shares rounded to the nearest two decimal places; calculated based on a division of (a) the cash equivalent amount of the dividend declared by the Company of $3,845 million, by (b) the Company’s issued and paid-up share capital as at the Record Date of 1,751,959,918 Keppel Shares (excluding treasury shares). 2 Dividend in specie of Keppel REIT units; based on the closing market price of $0.835 per Keppel REIT unit on 6 November 2023, the cash equivalent amount of the dividend declared by the Company was $294 million, equivalent to $0.167 per share. 3 Refers to recurring income from operations, including from the sale of gas, electricity and utilities; leasing and managing properties; telecommunication services; as well as investment income and share of recurring operating results of associated companies. 62 KEPPEL LTD. Keppel Infrastructure Trust (KIT) and the change in KIT’s fee structure that took effect in 2H 2022. These were partly offset by lower acquisition fees in 2023. Revenue from the Real Estate segment decreased by $232 million to $764 million largely due to lower revenue from property trading projects in China as a result of fewer units completed and handed over during the year, partly offset by higher contributions from property trading projects in Singapore. Asset management fee revenue from Real Estate remained stable year on year. Revenue from the Connectivity segment increased by $18 million to $1,351 million mainly due to M1 reporting higher mobile and enterprise revenues, including contribution from Glocomp Systems (M) Sdn Bhd acquired in May 2022, partly offset by lower handset sales, as well as lower revenue from the logistics business following the divestment of the logistics portfolio in South-East Asia in July 2022. Asset management fee revenue from Connectivity remained stable year on year. Net profit from continuing operations of $885 million was $46 million or 6% higher than 2022. Excluding the DIS loss, net profit rose by 19% year on year to $996 million. The Infrastructure segment registered a net profit of $699 million in 2023, which was $402 million or 135% higher than the $297 million net profit recorded in 2022. Underpinned by higher net generation and margins, the integrated power business delivered stronger results for the year. The segment also saw higher returns from sponsor stakes in the form of higher distributions and fair value gains in 2023. In 2022, there was also a provision for supply chain cost escalation in the environment business. The higher returns in 2023 were partially offset by higher interest expense, and lower share of results from an associated company following a dilution of interest in 2H 2022. Infrastructure asset management net profit was higher year on year mainly due to higher fee revenue which was partly offset by higher overheads. Net profit from the Real Estate segment decreased by $149 million to REVENUE1 ($ million) 5,600 4,800 4,000 3,200 2,400 1,600 800 0 2022 2023 1 Numbers are for continuing operations. NET PROFIT/(LOSS) ($ million) Infrastructure Real Estate Connectivity 4,290 4,846 996 764 1,333 1,351 Corporate Activities 1 6 3,600 1,200 900 600 300 0 -300 2022 2023 Infrastructure Real Estate Connectivity 297 699 464 315 98 127 Corporate Activities Discontinued Operations (20) (256) 88 3,182 $315 million. Excluding the DIS loss, the segment’s net profit was $38 million or 8% lower year on year, mainly due to lower fair value gains from investment properties, lower contribution from property trading projects in China, as well as higher net interest expense. These were partly offset by a higher contribution from the Sino-Singapore Tianjin Eco-City, as well as higher gains from asset monetisation and fair value gains from investments. The Real Estate Division completed the monetisation of seven assets across Vietnam, India, the Philippines, China, Myanmar and Singapore in the current year, as compared to the monetisation of two assets in China in 2022. Asset management net profit was lower year on year mainly due to higher overheads. The Connectivity segment’s net profit of $127 million was $29 million higher than that in 2022, mainly due to improved earnings contribution from M1, a gain from the divestment of SVOA Public Company Limited and lower losses from the logistics business following the divestment of Keppel Logistics SEA in July 2022. These were partly offset by lower fair value gains on data centres, and fair value losses on investments. Asset management net profit from Connectivity remained stable year on year. ANNUAL REPORT 2023 63 PERFORMANCE REVIEW Financial Review OPERATING PROFIT/(LOSS)1 ($ million) 1,000 800 600 400 200 0 -200 -400 2022 2023 1 Numbers are for continuing operations. 2 Includes elimination. EBITDA1 ($ million) 1,000 800 600 400 200 0 -200 -400 2022 2023 1 Numbers are for continuing operations. 2 Includes elimination. PROFIT/(LOSS) BEFORE TAX1 ($ million) 1,000 800 600 400 200 0 -200 -400 2022 2023 1 Numbers are for continuing operations. 64 KEPPEL LTD. Net loss from Corporate Activities was $256 million as compared to $20 million in 2022. In the prior year, significant fair value gains were recognised from investments in new technology and start-ups, in particular, Envision AESC Global Investment L.P.. The fair value gains from investments were lower, while net interest expense (financing costs relating to the vendor notes are reported under Corporate Activities following completion of the Asset Co Transaction in February 2023) and overheads were higher year on year. Taxation increased mainly due to higher taxable profit from the Infrastructure segment, which was partially offset by lower taxable profit from the Real Estate segment. Taking into account income tax expenses, non-controlling interests and profit attributable to holders of perpetual securities, net profit from continuing operations attributable to shareholders for 2023 was $885 million, and $996 million if the DIS loss were excluded. Including discontinued operations, net profit attributable to shareholders was $4,067 million, which was $3,140 million higher than in the prior year. Discontinued operations recorded a net profit of $3,182 million, comprising two months’ performance from KOM, excluding certain out-of-scope assets, for the period from 1 January to 28 February 2023, as well as a gain on disposal of approximately $3.3 billion following the completion of the disposal of KOM at the end of February 2023. In contrast, the net profit from discontinued operations of $88 million in 2022 had included gains from the divestment of Keppel Smit Towage Pte Limited and Maju Maritime Pte Ltd, as well as the cessation of the depreciation for the relevant assets classified under disposal group held for sale. SHAREHOLDER RETURNS ROE was 37.9% in 2023, compared to 8.1% in the previous year. Taking into account our strong performance, and to reward shareholders for their confidence in the Company, the Company will be Infrastructure Real Estate Connectivity 143 722 320 330 81 103 Corporate Activities2 21 (79) Infrastructure Real Estate Connectivity 338 849 711 636 277 299 Corporate Activities2 30 (85) Infrastructure Real Estate Connectivity 345 809 617 475 139 160 Corporate Activities (6) (231) ROE & DIVIDEND % 40 35 30 25 20 15 10 5 0 -5 -10 TOTAL DIVIDENDS $2.70 per share Comprising a total cash distribution of $0.34 per share and dividends in specie of Sembcorp Marine (now Seatrium) shares and Keppel REIT units amounting to $2.191 per share and $0.1672 per share respectively. cents 320 280 240 200 160 120 80 40 0 -40 -80 ROE (%) Full Year Dividend (cents) Interim Dividend (cents) 2019 6.3 20 8 2020 (4.6) 10 3 2021 2022 9.1 33 12 8.1 33 15 2023 37.9 270* 15 * Includes dividends in specie of Sembcorp Marine (now Seatrium) shares and Keppel REIT units amounting to $2.191 per share and $0.1672 per share respectively. distributing total dividends of about $2.70 per share for 2023, comprising a proposed final cash dividend of 19.0 cents per share and the interim cash dividend of 15.0 cents per share distributed in the third quarter of 2023, as well as the dividends in specie of Sembcorp Marine (now Seatrium) shares and Keppel REIT units amounting to $2.191 per share and $0.1672 per share respectively. On a per share basis, it translates into a gross yield of 38% on Keppel’s share price of $7.07 as at 31 December 2023. 1 Dividend in specie of Sembcorp Marine (now Seatrium) shares rounded to the nearest two decimal places; calculated based on a division of (a) the cash equivalent amount of the dividend declared by the Company of $3,845 million, by (b) the Company’s issued and paid-up share capital as at the Record Date of 1,751,959,918 Keppel Shares (excluding treasury shares). 2 Dividend in specie of Keppel REIT units; based on the closing market price of $0.835 per Keppel REIT unit on 6 November 2023, the cash equivalent amount of the dividend declared by the Company was $294 million, equivalent to $0.167 per share. ANNUAL REPORT 2023 65 PERFORMANCE REVIEW Financial Review TOTAL ASSETS OWNED ($ million) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Fixed assets Investment properties Right-of-use assets Associated companies, joint ventures & investments Notes receivables Stocks Contract assets Debtors & others Bank balances, deposits & cash Disposal group and assets classified as held for sale 2022 977 4,283 241 8,323 – 2,301 342 3,926 1,142 9,530 2023 902 4,665 214 8,474 4,286 2,110 424 4,135 1,266 362 Total 31,065 26,838 TOTAL LIABILITIES OWED AND CAPITAL INVESTED ($ million) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Shareholders’ funds Perpetual securities Non-controlling interests Creditors Contract liabilities Term loans Lease liabilities Other liabilities Liabilities directly associated with disposal group and assets classified as held for sale Total 2022 11,178 401 334 3,970 210 10,181 199 368 4,224 31,065 2023 10,307 402 308 3,798 165 10,960 179 412 307 26,838 66 KEPPEL LTD. FINANCIAL POSITION Shareholders’ funds decreased by $0.87 billion to $10.31 billion as at 31 December 2023. The decrease was mainly attributable to payments of the final dividend of 18.0 cents per share in respect of financial year 2022, the interim dividend of 15.0 cents per share in respect of the half-year ended 30 June 2023, the dividends in specie of Sembcorp Marine (now Seatrium) shares and Keppel REIT units, as well as a decrease in fair value of cash flow hedges and fair value reserves, partly offset by retained profits (including the gain on disposal of KOM) and foreign exchange translation gains during the year. Total assets were $26.84 billion as at 31 December 2023, $4.23 billion lower than the previous year end. This was mainly attributable to the disposal of assets arising from the completion of the Asset Co Transaction and the Proposed Combination, partly offset by an addition of notes receivables, and an increase in investment properties, debtors and investments. Management also took into consideration climate-related issues and there was no material impact on Keppel’s financial reporting in FY 2023. Total liabilities of $15.82 billion as at 31 December 2023 were $3.33 billion lower than the previous year end. This was largely attributable to the disposal of liabilities arising from the completion of the Asset Co Transaction and the Proposed Combination, partly offset by the net drawdown of term loans. Net debt increased by $0.64 billion to $9.87 billion as at 31 December 2023, driven largely by dividend payments, investments and additions of fixed assets and investment properties, 10-year annualised TSR as at 2023 4.1% Keppel 4.1% STI TOTAL SHAREHOLDER RETURNS (%) 70 60 50 40 30 20 10 0 -10 -20 -30 Keppel STI 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) 2021 (1.5) 13.6 2022 49.3 8.4 2023 61.1 4.7 as well as an outflow of cash that was previously deposited with Keppel by KOM, partly offset by the $500 million cash received under the Proposed Combination and proceeds from other divestments completed during the year. Total equity decreased by $0.90 billion mainly due to decrease in shareholders’ funds as explained above. As a result, net gearing ratio as at 31 December 2023 was 90%, an increase from 78% as at 31 December 2022. TOTAL SHAREHOLDER RETURNS Our 2023 Total Shareholder Return (TSR) of 61.1% was 56.4 percentage points above the benchmark Straits Times Index’s (STI) TSR of 4.7%. Our 10-year annualised TSR growth rate was 4.1%, same as STI’s 4.1%. CASH FLOW Net cash from operating activities was $58 million for 2023. Net cash used in investing activities was $442 million. Keppel spent $1,399 million on investments and operational capital expenditure. After taking into account the proceeds from divestments and dividend income of $1,258 million, net of outflow from divestment of discontinued operations1 of $468 million and net advances to associated companies, joint ventures and joint venture partner of $167 million, the free cash outflow was $384 million. CASH FLOW Operating profit Depreciation, amortisation & other non-cash items Cash flow provided by operations before changes in working capital Working capital changes Interest receipt and payment & tax paid Net cash from operating activities Investments & capital expenditure Divestments & dividend income Divestment of discontinued operations1 Advances to associated companies, joint ventures and joint venture partner Net cash used in investing activities Free cash flow Dividend paid to shareholders of the Company & subsidiaries 2023 $ million 4,272 (3,406) 866 (398) (410) 58 (1,399) 1,258 (468) 167 (442) (384) (598) 23 vs 22 +/(-) 3,545 (3,000) 545 (903) 156 (202) 217 99 (468) 378 226 24 (78) 2022 $ million 727 (406) 321 505 (566) 260 (1,616) 1,159 – (211) (668) (408) (676) 1 FY 2023’s figure included a $500 million cash component realised as part of the divestment of discontinued operations, which is presented as cash inflow from financing activities in the financial statements. The inclusion herein is for better comparability and understanding of free cash flow. ANNUAL REPORT 2023 67 PERFORMANCE REVIEW Financial Review About 66% of Keppel’s borrowings, including perpetual securities, were on fixed rates as at end-2023, with an average cost of funds of 3.75% and weighted-average tenor of about three years. SECURED/UNSECURED BORROWINGS (%) FIXED/FLOATING BORROWINGS (%) Secured Unsecured Total 7 93 100 Fixed4 Floating Total BORROWINGS BY CURRENCY (%) DEBT MATURITY2 ($ million) SGD USD Others Total 60 31 9 100 >5 Years 4–5 Years 3–4 Years 2–3 Years 1–2 Years <1 Year Total 1,377 1,542 1,733 1,483 2,403 2,422 10,960 100% The lower free cash outflow as compared to the prior year was mainly due to higher operational cash flow before changes in working capital of $545 million, lower investments and capital expenditure, higher divestment proceeds and dividend income as well as advances from associated companies and joint ventures, partly offset by increase in working capital requirements and divestment of discontinued operations1. Proceeds from divestments completed during the year included SM Keppel Land, Inc., Chengdu Taixin Real Estate Development Co., Ltd. and Greenfield Development Pte. Ltd., which are part of Keppel’s asset monetisation programme, as well as the disposal of Seatrium shares. In 2023, Keppel’s investments included two residential projects in Binh Trung Real Estate Company Limited and Doan Nguyen House Trading Investment Company Limited, and capital expenditures. Total distribution to shareholders of the Company and non-controlling shareholders of subsidiaries for the year amounted to $598 million. BORROWINGS2 Keppel’s borrowings comprise short-term money market loans, bank term loans, project finance loans, as well as medium and long-term bonds. Total borrowings excluding lease liabilities as at the end of 2023 were $11.0 billion (2022: $10.2 billion). At the end of 2023, 22% (2022: 35%) of Keppel’s borrowings were repayable within one year with the balance largely repayable more than two years later. As at the end of 2023, our Adjusted Net Debt to EBITDA3 remained at a healthy 4.6x, as compared to 5.1x as at the end of 2022. 64 36 100 13% 13% 16% 13% 23% 22% 1 Included a $500 million cash component realised as part of the divestment of discontinued operations, which is presented as cash inflow from financing activities in the financial statements. The inclusion herein is for better comparability and understanding of free cash flow. 2 Borrowings exclude lease liabilities. 3 Adjusted net debt is defined as net debt less carrying value of non-income producing undeveloped land and properties held for sale (completed and under development), while EBITDA refers to profit before depreciation, amortisation, net interest expense and tax. 4 Excludes perpetual securities which have been accounted for as equity. Including perpetual securities, fixed rate borrowings would be 66%. 68 KEPPEL LTD. ADJUSTED NET DEBT TO EBITDA $ million 12,000 10,500 9,000 7,500 6,000 4,500 3,000 1,500 0 No. of times 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 Adjusted Net Debt EBITDA Adjusted Net Debt to EBITDA 2022 6,934 1,356 5.1 2023 7,783 1,699 4.6 NET DEBT/GEARING Net Gearing = Borrowings + Lease Liabilities – Cash Total Equity $ million 12,000 10,500 9,000 7,500 6,000 4,500 3,000 1,500 0 Net Debt Total Equity Net Gearing No. of times 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 2022 9,238 11,913 0.78 2023 9,873 11,017 0.90 Unsecured borrowings constituted 93% (2022: 93%) of total borrowings, with the balance secured by properties and other assets. Secured borrowings are mainly for financing of investment properties and property development projects. The net book value of properties and assets pledged/mortgaged to financial institutions amounted to $2.24 billion (2022: $2.17 billion). Fixed rate borrowings constituted 64%1 (2022: 66%) of total borrowings after taking into account the effect of derivative financial instruments, with the balance at floating rates. Excluding notional hedge amount relating to highly probable future borrowings, Keppel has cross currency swap and interest rate swap agreements with notional amount totalling $6,003 million whereby it receives foreign currency fixed rates and variable rates equal to AUD BBSY and USD SOFR (in the case of cross currency swaps) and variable rates equal to SOR, SORA and USD-LIBOR and USD SOFR (in the case of interest rate swaps) and pays fixed rates of between 0.12% and 3.75% on the notional amount. Details of these derivative financial instruments are disclosed in the notes to the financial statements. Singapore dollar borrowings represented 60% (2022: 64%) 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 Keppel’s overseas investments and receivables that were denominated in foreign currencies. The weighted average tenor of Keppel’s borrowings, including perpetual securities, was about three years at the end of 2023 and at the end of 2022, with an average cost of funds of 3.75% at the end of 2023 as compared to 3.24% at the end of 2022. 1 Exclude perpetual securities which have been accounted for as equity. Including perpetual securities, fixed rate borrowings would be 66%. ANNUAL REPORT 2023 69 PERFORMANCE REVIEW Financial Review CAPITAL STRUCTURE & FINANCIAL RESOURCES Keppel maintains a strong balance sheet and an efficient capital structure to maximise return for shareholders. Capital Structure Total equity at end-2023 was $11.02 billion as compared to $11.91 billion as at end-2022. Keppel was in a net debt (including lease liabilities) position of $9,873 million as at end-2023, which was above the $9,238 million as at end-2022. Net gearing ratio was 0.90x as at end-2023, compared to 0.78x as at end-2022. During the year, the Company transferred 10,334,248 treasury shares to employees upon vesting of shares released under the Keppel Share Plans. As at the end of the year, the Company had 58,263,601 treasury shares. Except for the transfer, there was no other sale, transfer, disposal, cancellation and/or use of treasury shares during the year. Keppel’s strong financial capacity allows us to drive transformation and pursue growth opportunities in line with Vision 2030, as well as reward our shareholders. Financial Resources As part of its liquidity management, Keppel maintains adequate cash reserves as well as sufficient undrawn short-term money market facilities, committed revolving credit facilities, commercial paper and debt capital market programmes. Funding of working capital requirements, capital expenditure and investment needs was made through a mix of short-term money market loans, bank term loans, project finance loans and medium/long term bonds. As at end-2023, total available credit facilities, including cash held in Treasury and bank guarantee facilities, amounted to $6.20 billion (2022: $5.83 billion). CRITICAL ACCOUNTING JUDGMENTS & ESTIMATES Keppel’s material accounting policy information is discussed in more detail in the notes to the financial statements. The preparation of financial statements requires management to exercise its judgments 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 in Note 2.27 to the financial statements. FINANCIAL CAPACITY Cash held in Treasury Available credit facilities Total 70 KEPPEL LTD. $ million Remarks 178 14% of total cash of $1.27 billion 6,020 Credit facilities of $9.62 billion, of which $3.60 billion was utilised 6,198 PERFORMANCE REVIEW Corporate Structure Keppel Fund Management Platform Investment Platform Operating Platform Business Segments Infrastructure Real Estate Connectivity Private Fund Managers Keppel Fund Management Keppel Capital Alternative Asset Keppel Credit Fund Management Listed REITs & Business Trust Managers Keppel Infrastructure Fund Management Keppel REIT Management Keppel DC REIT Management Keppel Pacific Oak US REIT Management Prime US REIT Management Centralised Functions ANNUAL REPORT 2023 71 GOVERNANCE Corporate Governance at a Glance The Board and management of Keppel firmly believe that a strong commitment to good corporate governance is essential to the sustainability of Keppel’s business and performance. BOARD COMPOSITION DASHBOARD 75% Independent directors 83.4% With less than 9 years of tenure BOARD GENDER DIVERSITY AGE Female Male 25% 75% 0 The Board of Directors engaging shareholders in person at the Company’s Annual General Meeting in 2023. 50–55 years 56–60 years 61–65 years 66–70 years 71–75 years 8.3% 25.0% 25.0% 33.4% 8.3% COUNTRY OF ORIGIN/NATIONALITY/ CULTURAL BACKGROUND Singaporean German Canadian British French RACE OR ETHNICITY 66.8% 8.3% 8.3% 8.3% 8.3% Chinese Caucasian Indian 66.7% 25.0% 8.3% CORPORATE GOVERNANCE Good corporate governance starts with a company’s Board of Directors, who play a crucial role in ensuring transparency, accountability, optimal performance, and good processes and practices in the company. Keppel’s Board is led by Chairman Mr Danny Teoh, who takes a leading role and works with the other directors and senior management to set the right ethical and behavioural tone in Keppel’s drive to achieve and maintain a high standard of corporate governance. To assist the Board in the discharge of its oversight function, various board committees, namely the Audit, Board Risk, Nominating, Remuneration, and Board Sustainability and Safety Committees, have been constituted with clear written terms of reference. All the board committees are actively engaged and play an important role in ensuring good corporate governance within Keppel. RISK MANAGEMENT AND REGULATORY COMPLIANCE Keppel adopts a balanced approach to risk management to optimise returns while considering their impact on corporate sustainability. Managing risks effectively is an integral part of the way in which Keppel develops and executes its business strategies. It is grounded in the belief that a balanced risk-reward methodology is the optimal approach. This applies to all aspects of Keppel’s business, and particularly, its commitment to environmental, social and governance issues and Keppel’s commitment to deliver long-term value to our stakeholders. Keppel is guided by its core values and code of conduct. Keppel will do business the right way and comply with all applicable laws and regulations in whichever countries it operates. Keppel strives to deliver outstanding performance, whilst maintaining the highest ethical standards in line with applicable laws and regulations. HOW THE COMPANY COMPLIES WITH THE 2018 CG CODE 1. Board Matters Board’s Conduct of Affairs Board Composition and Succession Planning Board Performance 2. Remuneration Report 3. Audit Committee 4. Risk Management and Internal Controls 5. Shareholder Rights and Communication with Shareholders Page 74 79 84 84 91 93 98 72 KEPPEL LTD. ANNUAL REPORT 2023 73 GOVERNANCE Corporate Governance The Board and management of Keppel firmly believe that a strong commitment to good corporate governance is essential to the sustainability of Keppel’s business and performance, and directors must at all times act objectively in the best interests of Keppel. This report sets out an overview of our corporate governance practices and adherence 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. Mr Danny Teoh is the Chairman of the Company. He was appointed as a non-executive and independent Chairman with effect from 23 April 2021 and was re-designated as non-executive and non-independent Chairman with effect from 1 January 2022 in view of him having served for more than 9 years on the Board. 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 Keppel’s operations. He further sets guidelines on and monitors the flow of information from management to the Board to ensure that all material information is provided in a timely manner to the Board for the Board to make good decisions. He also encourages constructive relations between the Board and management. At board meetings, the Chairman encourages a full and frank exchange of views, drawing out contributions from all directors so that the debate 74 KEPPEL LTD. Keppel’s governance structure is as follows: GOVERNANCE FRAMEWORK 2023 Board Risk Committee Board Sustainability and Safety Committee Chairman Board Chief Executive Officer Internal Audit Audit Committee Nominating Committee Remuneration Committee Real Estate Segment Committee Infrastructure Segment Committee Data Centres & Networks Segment Committee Corporate Functions Regulatory Compliance Management Committee Regulatory Compliance Working Team Investments & Major Projects Action Committee Management Executive Committee Central Finance Committee Management Committees Technology and Data Risk Committee Digital Transformation Steering Committee Sustainability Working Committee Cyber Security Steering Committee Business Continuity Management Steering Committee Business Continuity Management Working Committee benefits from the full diversity of views, in a robust yet collegiate setting. At general 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. Mr Till Vestring is the Lead Independent Director of the Company. He was appointed Lead Independent Director with effect from 1 November 2021 in view of Mr Teoh’s re-designation as a non-executive and non-independent Chairman. As Lead Independent Director, Mr Vestring supports the Chairman and the Board to ensure effective corporate governance in managing the affairs of the Company, provides leadership in situations where the Chairman is conflicted and facilitates communication between the Board and shareholders or other stakeholders of the Company as necessary. He is also available to shareholders and other stakeholders of the Company where they have concerns and for which their previous contact through the normal channels of the Chairman and management has failed to resolve the matter or has been inadequate or inappropriate. He is also the chairman of the Remuneration Committee and a member of the Nominating Committee. In view of Mr Vestring’s step down from the Board at the upcoming Annual General Meeting of the Company, Mr Shirish Apte will be appointed Lead Independent Director in Mr Vestring’s stead. To assist the Board in the discharge of its oversight function, various board committees, namely the Audit, Board Risk, Nominating, Remuneration, and Board Sustainability and Safety Committees, have been constituted with clear written terms of reference. All the board committees are actively engaged and play an important role in ensuring good corporate governance in the Company and within Keppel, 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 of the respective committees 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. Mr Loh Chin Hua is the Chief Executive Officer (“CEO”) of the Company. He, assisted by the management team, makes strategic proposals to the Board and after robust and constructive discussion by the Board, executes the agreed strategy, manages and develops the business and implements the Board’s decisions. He is supported by committees that direct and guide management on operational policies and activities, which include: 1. Investments & Major Projects Action Committee, which guides Keppel 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 Executive Committee (“MexCo”), which brings together the CEO and CFO of the Company, the CEO and CIO of Keppel’s Fund Management and Investment platforms, and the CEOs of Keppel’s operating divisions (Real Estate, Infrastructure and Data Centres and Networks), and selected members of Keppel’s senior management, to review, deliberate and approve major business, governance, organisation/people, strategy & transformation, and risk management related decisions that impact Keppel or a substantial part of Keppel; to delegate their implementation to specific groups or individuals; to review and track progress of previously approved decisions; and oversee the development and review of overarching compliance policies and guidelines for Keppel. MexCo also oversees sustainability issues, including determining Keppel’s policies and targets; 3. Segment Committees, which cover management matters across the Fund Management, Investment and Operating platforms relating to Real Estate, Infrastructure, and Data Centres and Networks. The Segment Committees were introduced pursuant to Keppel’s transformation from a conglomerate structure into a cohesive horizontally integrated structure. Matters discussed quarterly at each Segment Committee meeting include sustainability and safety, risk and compliance, audit, internal controls, financial-related matters, business, operations and strategy. The Segment Committees report key issues and discussions at these meetings to the Board; 4. Regulatory Compliance Management Committee (“RCMC”), which articulates our 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. Discussions on such matters also take place as part of MexCo meetings; 5. Regulatory Compliance Working Team, which together with Risk & Compliance, supports the RCMC and oversees the development and review of overarching compliance policies and guidelines for Keppel, as well as reviews the training and communication programmes; 6. Central Finance Committee, which reviews, guides and monitors financial policies and activities; 7. Digital Transformation Steering Committee, which provides strategic guidance and endorses technology vision, initiatives and policies to achieve alignment and optimisation in achieving business strategies; 8. Sustainability Working Committee, which drives, coordinates and monitors the execution of Keppel’s sustainability efforts; 9. Cyber Security Steering Committee, which guides Keppel’s overall cyber security vision and strategy and provides oversight on cyber security risks and initiatives to safeguard information assets and interests; 10. Business Continuity Management Steering Committee, which guides the effective development and implementation of a robust business continuity plan and ensures continuous improvement to enhance Keppel’s operational readiness through the review of Business Continuity Management (“BCM”) plans and exercises; and 11. Business Continuity Management Working Committee, which supports the Business Continuity Management Steering Committee and coordinates with respective business divisions and department BCM coordinators in developing detailed plans in the prevention, preparedness, response, continuity, and recovery of critical business functions. The role of the Transformation Office, which was previously established to drive the implementation of Keppel’s Vision 2030, has now been embedded within MexCo. ANNUAL REPORT 2023 75 GOVERNANCE Corporate Governance BOARD MATTERS The directors have equal responsibility to oversee the business and affairs of Keppel. Management on the other hand is responsible for day-to-day operation and administration in accordance with the policies and strategy set by the Board. Role: The principal functions of the Board are to: • provide entrepreneurial leadership and decide on matters in relation to Keppel’s activities which are of a significant nature, including decisions on strategic directions and guidelines and the approval of periodic plans and major investments and divestments; • oversee the business and affairs of Keppel, 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 Keppel has the necessary resources to meet its strategic objectives; • 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 Keppel 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. The Company has also 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 require the approval of the Board. For transactions between $30 million and $150 million, the Investments & Major Projects Action Committee will determine if Board approval is required, depending on the individual considerations for each case. set Keppel’s values, standards (including ethical standards), appropriate tone from the top and desired organisational culture, and put in place policies, structures and mechanisms to ensure such values, standards and culture are complied with; Independent Judgment: The Company’s directors are required to exercise independent judgment in the best interests of the Company. Based on the result of the peer assessment carried out by the directors for FY 2023, 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 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 constructively challenge management and hold them accountable for performance and ensure proper accountability within Keppel; • 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; 76 KEPPEL LTD. 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 discussion, 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 Keppel’s strategic plans. An off-site Board strategy meeting is organised annually for in-depth discussions on Keppel’s strategy. The offsite Board strategy meeting, which includes directors as well as senior management, includes a review of the progress made, deep-dive discussions on key strategic issues, and alignment on the strategic direction going forward. It provides a good platform for the non-executive directors to have a deep understanding of Keppel and its segments and get to know the current and future leadership teams. For FY 2023, the focus of the strategy meeting was centred on Keppel’s transformation into a global asset manager and operator. The meeting included in-depth discussions and review of the strategy, priorities and growth for each of our three segments, along our new operating model which integrates our Fund Management, Investment and Operating activities horizontally. The meeting also included organisation-wide items such as people & talent strategy, digitalisation, and sustainability. 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”). The attendance of each Board member at the annual general meeting (“AGM”), extraordinary general meeting (“EGM”), and the board and board committee meetings held in FY 2023, are disclosed in the table below: ATTENDANCE Danny Teoh Loh Chin Hua Till Vestring Veronica Eng Jean-François Manzoni Teo Siong Seng Tham Sai Choy Penny Goh Shirish Apte Olivier Blum Jimmy Ng Ang Wan Ching1 No. of Meetings Held 2023 Annual General Meeting 2023 Extraordinary General Meeting Board Meetings Audit Nominating Remuneration Sustainability and Safety Risk Board Committee Meetings 1 1 1 1 1 0 1 1 1 1 1 0 1 1 1 1 1 1 1 1 1 1 1 0 1 1 8 8 8 8 8 7 8 8 8 7 8 – – – 6 – – 6 6 6 – – 5 out of 5 3 out of 3 8 6 4 – 4 – 4 – – – – – – 4 4 – 4 – 4 – – 4 – – – 4 4 4 – – – 4 – – – 3 – 4 – – – 4 – – 4 4 4 – 4 2 out of 2 4 Note: 1 Ms Ang Wan Ching was appointed as a non-executive and independent Director and a member of the Audit Committee and the Board Risk Committee with effect from 1 July 2023. Barring unforeseen circumstances, directors are expected to attend all board and board committee meetings. 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 and/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’ (“NED”) Meetings: NED meetings, chaired by the Board Chairman, are held at the end of each scheduled quarterly board 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. Any relevant feedback is shared and discussed with the CEO. Independent Directors’ (“ID”) Meetings: ID meetings, chaired by the Lead Independent Director, are held on a need-be basis after the NEDs’ meetings at the end of each scheduled quarterly board meeting, without the presence of the Board Chairman, non- independent director, and management. In FY 2023, ID meetings were held twice a year in January and July, without the presence of the Board Chairman, non-independent director and CEO. Relevant feedback was shared and discussed with the Board Chairman. Company Secretaries: The Company Secretaries administer, attend and prepare minutes of board proceedings. They assist the Board Chairman to ensure that board procedures (including but not limited to assisting the Board 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 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 Board 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. ANNUAL REPORT 2023 77 GOVERNANCE Corporate Governance 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 Keppel’s business and affairs and be knowledgeable about the industries in which Keppel operates. Keppel 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 the Company Secretaries, 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 directors 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 Board is briefed on prospective deals and potential developments 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 Keppel or the industries in which it operates are circulated to the directors from time to time. Management is also expected to provide the Board with accurate information in a timely manner concerning Keppel’s progress or shortcomings in meeting its strategic business objectives or financial targets and other information relevant to the strategic issues facing Keppel. In this aspect, the Board is regularly updated on new projects and the progress of Keppel’s pivot to becoming a global asset manager and operator. 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 Keppel’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 Keppel’s business, strategic plans and objectives. Training: Directors are provided with continuing education in areas such as directors’ duties and responsibilities, corporate governance, risk management, 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. Site visits are also conducted periodically for directors to familiarise them with the operations of the various segments so as to enhance their performance as board or board committee members. All induction, training and development costs are at the Company’s expense. In FY 2023, some directors attended talks on topics relating to sustainability, digitalisation and AI, decarbonisation, Energy-as-a-Service, health, safety & environment, technology foresight, China’s business environment, risk management, corporate governance and macroeconomic trends. E-training was also conducted on Keppel’s Code of Conduct and its policies on anti-bribery, gifts & hospitality, conflict of interest, health, safety & environment, solicitations and extortions, donations and sponsorships, whistle-blowing, insider trading, cyber security and anti-money laundering and countering the financing of terrorism. All directors have also attended sustainability training courses mandated by Singapore Exchange Regulation (“SGX RegCo”). Each director is also invited to participate in the annual Keppel Technology Advisory Panel conference, which brings together thought leaders across academia, startups and industries to share their perspectives on emerging technology and megatrends with our senior management, board members and guests from our valued partners. In the one-day event held in FY 2023, over 15 distinguished speakers engaged the audience across two content streams: “The Year of AI” and “Demographics & Assets in a New Era”. This entailed engaging demonstrations, showcasing where Keppel’s business is innovating in the AI space and sharing their views on the impact of Generative Artificial Intelligence (“GenAI”) on industries relevant to Keppel, and emerging trends and the interplay between tech and society, as a means of understanding our future customers and their environment. This time, the event also included an exhibition zone where external ecosystem technology partners came together to showcase curated solutions around Machine Learning, Robotics and GenAI. After the main conference, there was also a subsequent closed door event for the Board of Directors and management to further discuss Keppel’s approach to innovation and review the progress made across each segment. Oversight of subsidiaries: Key issues and discussions relating to the business and other operational related matters of the Company’s subsidiaries are reported by each of Keppel’s Real Estate, Infrastructure, and Data Centre & Networks Segment 78 KEPPEL LTD. Committees, to the Board. The Chief Investment Officers of Keppel’s Fund Management and Investment platforms and Chief Executive Officer of each of Keppel’s Infrastructure, Real Estate and Data Centre & Networks divisions lead the update to the Board at such meetings. This allows for efficient and coordinated decision making while enabling the Board to maintain appropriate oversight through the adoption of a risk-based approach for escalation of material or significant matters, and leveraging the existing risk management framework for high risk matters to be reported at the Company’s board committees’ meetings, and where applicable, Board meetings. The Board receives summaries of these discussions prior to each Board meeting. Minutes of the discussions are also shared promptly with the Board. 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 Nominating Committee (“NC”) comprises entirely NEDs, the majority of whom (including the chairman of the NC) are independent, namely: • Prof Jean-François Manzoni Independent Chairman • Mr Danny Teoh Non-Executive and Non-Independent Member • Mr Till Vestring Independent Member • Mr Tham Sai Choy (from 1 January 2024) Independent Member • Mr Shirish Apte (from 1 January 2024) 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’ commitments. The detailed terms of reference of the NC are disclosed on page 104 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 recommendation to the Board on the appointment of new directors and re-nomination of directors. Process for appointment of new directors Process for re-nomination of retiring Directors a. NC reviews annually the balance and mix of skills, knowledge, experience, diversity of profiles (including gender and age) and Board size which would facilitate decision-making. In this review, the NC would also take into account the needs of Keppel, the collective skills and competencies of the Board and service tenure spread of the directors. 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. In the light of such review and in b. NC reviews each director’s eligibility, 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. 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. The NC will in all cases take into c. NC makes recommendations to the Board for approval. consideration the following objective criteria identified as necessary for the Board and board committees to be effective: i. Integrity ii. Independent mindedness iii. Able 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. 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. NC makes recommendations to the Board for approval. ANNUAL REPORT 2023 79 GOVERNANCE Corporate Governance Annual Review of Board Diversity Keppel recognises that diversity in relation to composition of the Board provides a range of perspectives, insights and challenge needed to support good decision making for the benefit of Keppel, 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, age, race/ethnicity and nationality) so as to promote the inclusion of different perspectives and ideas, mitigate against groupthink and ensure that Keppel has the opportunity to benefit from all available talent. The final decision on the appointment of directors would be based on 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. 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 Achievement of Qualitative and measurable Quantitative Objectives Identified Under the Board Diversity Policy for the period FY 2023 to FY 2025, and Adoption of New Rolling 3-year Board Diversity Objective for the Period FY 2024 to FY 2026 The objectives identified by the NC in January 2023 for the period FY 2023 to FY 2025 were reviewed in January 2024. The progress towards achieving such objectives as at the end of FY 2023 are set out below: Objectives Progress Source for candidates with deep knowledge and experience in investment, infrastructure/ engineering and relevant regional expertise, while being mindful of age and gender diversity. Ms Ang, who was appointed as an independent director to the Board with effect from 1 July 2023, has in-depth experience and expertise in global investment, especially in private funds and alternative assets. Her appointment supports the acceleration of Keppel’s transformation to be a leading global alternative real asset manager with deep operating capabilities. aspects of diversity in the board composition in any given year of assessment, each member of the Board is required to complete a Board and Skills Diversity Matrix to indicate which of the list of skills, talents, knowledge, experience and other aspects of diversity (identified by the NC, and set out in the Board and Skills Diversity Matrix, as being able to contribute to Keppel’s strategy and business) the Board member possesses. The returns from the Board members are then consolidated into a single Board and Skills 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. In January 2024, in view of the progress that had been made in respect of the diversity objectives previously identified, a further review of the skills, knowledge, talents, experience and other aspects of diversity that had been identified to help accelerate Keppel’s transformation to become a global asset manager and operator, and for succession planning purposes, was undertaken. It was noted by the NC that the focus of the Board diversity objectives for the next rolling 3-year period from FY 2024 to FY 2026 could be appropriately consolidated as shown in the diagram below. Objective To consider and align the optimum size and skill matrix of the Board in light of Keppel’s new business direction as a global asset manager and operator, with a focus on candidates with specialisations in asset management and infrastructure know-how, while being mindful of the various pertinent diversity factors such as gender, age, race/ethnicity and nationality. 80 KEPPEL LTD. Other Aspects of Diversity TENURE (%) RACE OR ETHNICITY (%) GENDER (%) 0–4 years 5–9 years Above 9 years Total 41.7 41.7 16.6 100.0 Chinese Caucasian Indian Total 66.7 25.0 8.3 100.0 Female Male Total 25.0 75.0 100.0 AGE (%) COUNTRY OF ORIGIN, NATIONALITY OR CULTURAL BACKGROUND (%) 51–55 56–60 61–65 66–70 71–75 Total 8.3 25.0 25.0 33.4 8.3 100.0 Singaporean German Canadian British French Total 66.8 8.3 8.3 8.3 8.3 100.0 Skills, Knowledge, Talents and Experience • Finance/Accounting • Risk Management • Sustainability • Digital/Technology • Mergers & Acquisitions • Corporate Finance/Banking and Finance Management • Human Resource • Legal • Strategic Planning Experience • Customer-based experience or knowledge • Industry Knowledge – Infrastructure • Industry Knowledge – Real Estate • Industry Knowledge – Connectivity • Industry Knowledge – Asset Management • International Perspective • Regional Experience • Renewable Energy • Policy/Economics • Business/Entrepreneurship • Corporate Governance ANNUAL REPORT 2023 81 GOVERNANCE Corporate Governance Retirements and Re-nomination For the upcoming AGM, Mr Till Vestring, Ms Veronica Eng, Prof Jean-François Manzoni and Mrs Penny Goh will be retiring by rotation pursuant to the Constitution. Mrs Penny Goh, being eligible, will be seeking re-election. Mr Vestring, Ms Eng, and Prof Manzoni, although eligible, will not be seeking re-election. Ms Ang Wan Ching, having been appointed after the AGM held in FY 2023, will also be retiring at the upcoming AGM, and being eligible, will be seeking re-election. The NC has reviewed the abovementioned directors’ eligibility, contribution and performance, and taking into account the results of the recent peer assessment, are of the view that the directors have given sufficient time and attention to the affairs of Keppel and have been able to discharge their duties as directors effectively. The Board, at the recommendation of the NC, approved the re-nomination of Mrs Penny Goh and Ms Ang Wan Ching at the upcoming AGM. Succession Planning for Key Management Personnel The NC reviews bi-annually, succession plans for key management personnel, taking into account Keppel’s long-term strategy and objectives, the orderly succession of key management personnel, and contingency planning for preparedness against sudden and unforeseen changes. A Board Mentorship framework was introduced in 2021 to support the development of a new generation of leaders, and was in place for FY 2023. The objective was for Board members to act as a sounding board and provide seasoned counsel and feedback to enable the new leadership to perform their roles more effectively. A senior leadership development programme was also put in place as part of Keppel’s continuing efforts to widen its bench strength by developing senior leaders both individually and collectively as a group. Annual Review of Board Independence The NC determines on an annual basis whether or not a director is independent. In January 2024, 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. In this connection, the NC noted that Mr Danny Teoh had served more than nine years on the Board and, consistent with the approach taken since the re-designation of Mr Teoh as non-executive and non-independent Chairman with effect from 1 January 2022, deemed Mr Teoh as non-independent. The NC noted Mr Till Vestring had declared himself independent by virtue of the absence of ties, relationships or obligations to Keppel. Taking these factors into consideration, along with his invaluable contributions to the Board and board committees, the NC unanimously agreed that Mr Vestring had at all times exercised independent judgment in the best interests of Keppel in the discharge of his director’s duties and should therefore continue to be deemed an independent director. Ms Eng had at all times exercised independent judgment in the best interests of Keppel in the discharge of her director’s duties and should therefore continue to be deemed an independent director. The NC noted that Prof Jean-François Manzoni had declared himself independent. Noting Prof Jean-François Manzoni’s absence of relationship to Keppel which could interfere or be perceived to interfere with his independent judgment, the absence of circumstances which would deem him to be non-independent, and his invaluable contributions to the Board and board committees, the NC unanimously agreed that Prof Jean-François Manzoni had at all times exercised independent judgment in the best interests of Keppel in the discharge of his director’s duties and should therefore continue to be deemed an independent director. The NC noted that Mr Teo Siong Seng had declared his position as Executive Chairman of Pacific International Lines Pte Ltd which is majority owned by Heliconia Capital Management Pte. Ltd., a wholly-owned subsidiary of Temasek. Although all the NC members were confident that Mr Teo would be able to continue to exercise independent judgment in the best interests of Keppel, the NC considered that market perception might be different and hence decided to deem Mr Teo as a non-executive and non-independent director. The NC noted that Ms Veronica Eng had declared herself independent and declared her position as member of the Investment Committee of Temasek Trust, which was established by Temasek to provide financial oversight and governance of philanthropic endowments and gifts from Temasek and other donors. Noting that Ms Eng did not hold any executive or management role in Temasek Trust, along with Ms Eng’s invaluable contributions to the Board and board committees, the NC unanimously agreed that The NC noted that Mr Tham Sai Choy had declared his directorship on DBS Group Holdings, DBS Bank Ltd., and DBS Bank (China) Limited, which provide banking services to Keppel. 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 was a leading bank in Singapore and Southeast Asia, it was not unexpected that its services would be sought by 82 KEPPEL LTD. Keppel from time to time. Taking these factors into consideration, along with Mr Tham’s invaluable contributions to the Board and board committees, the NC unanimously agreed that Mr Tham had at all times exercised independent judgment in the best interests of Keppel 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 provides legal services to Keppel. Mrs Goh had declared that she did not hold a partnership interest in A&G and was not involved in the selection and appointment of legal advisors of Keppel 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 Keppel from time to time. Taking these factors into consideration, along with her invaluable contributions to the Board and board committees, the NC unanimously agreed that Mrs Goh had at all times exercised independent judgment in the best interests of Keppel in the discharge of her director’s duties and should therefore continue to be deemed an independent director. The NC noted that Mr Shirish Apte had declared himself independent. Noting Mr Shirish Apte’s absence of relationship to Keppel which could interfere or be perceived to interfere with his independent judgment, the absence of circumstances which would deem him to be non-independent, and his invaluable contributions to the Board and board committees, the NC unanimously agreed that Mr Shirish Apte had at all times exercised independent judgment in the best interests of Keppel in the discharge of his director’s duties and should therefore continue to be deemed an independent director. The NC noted that Mr Jimmy Ng is the Group Head of Operations at DBS Bank which provides banking services to Keppel. The NC considered that such interests had already been declared to the Board, and that Mr Ng would abstain from voting whenever there was potential conflict of interest. The NC further considered that, as DBS was a leading bank in Singapore and Southeast Asia, it was not unexpected that its services would be sought by Keppel from time to time. Taking these factors into consideration, along with Mr Ng’s invaluable contributions to the Board and board committees, the NC unanimously agreed that Mr Ng had at all times exercised independent judgment in the best interests of Keppel in the discharge of his director’s duties and should therefore continue to be deemed an independent director. The NC noted that Mr Olivier Blum declared himself independent and that he was an executive Vice President of Schneider Electric’s Energy Management business. Noting Mr Blum’s declaration that Schneider Electric is a minor supplier of Keppel, and Mr Blum’s invaluable contributions to the Board and board committees, the NC unanimously agreed that Mr Blum had at all times exercised independent judgment in the best interests of Keppel in the discharge of his director’s duties and should therefore continue to be deemed an independent director. The NC noted that Ms Ang Wan Ching had declared herself independent. Noting Ms Ang’s absence of relationship to Keppel which could interfere or be perceived to interfere with her independent judgment, the absence of circumstances which would deem her to be non-independent, and her invaluable contributions to the Board and board committees, the NC unanimously agreed that Ms Ang had at all times exercised independent judgment in the best interests of Keppel in the discharge of her director’s duties and should therefore continue to be deemed an independent director. Following the review, the NC was of the view that Mr Till Vestring, Ms Veronica Eng, Prof Jean-François Manzoni, Mr Tham Sai Choy, Mrs Penny Goh, Mr Shirish Apte, Mr Olivier Blum, Mr Jimmy Ng and Ms Ang Wan Ching should be deemed independent, while Mr Danny Teoh and Mr Teo Siong Seng should be deemed non-executive and non-independent directors. The Board has reviewed the basis of the NC’s recommendations and concurred with the assessment of independence in respect of the abovementioned directors. In view of the above, the Board currently comprises a majority of independent directors, with a total of 12 directors of whom nine are independent. Taking into account the independence and diversity of the Board, the NC was 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 Keppel. However, the NC also noted the need for appointment of additional directors with relevant expertise and experience that would complement those already on the Board, which would help drive Keppel’s asset management strategy and infrastructure know-how, and would contribute to the Board’s ongoing renewal. Annual Review of Board Size The Board, in concurrence with the NC, was of the view that a Board size of 12 directors would be appropriate to facilitate effective decision making, taking into account the nature and scope of the operations of Keppel, the requirements of Keppel’s business and the need to avoid undue disruptions from changes to the composition of the Board and board committees. The NC will continue to consider and review the optimum Board size and skill matrix given Keppel’s new business direction, bearing in mind pertinent diversity factors and succession planning considerations. No individual or small group of individuals dominate the Board’s decision making. ANNUAL REPORT 2023 83 GOVERNANCE Corporate Governance 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 2024 and was of the view that each director has given sufficient time and attention to the affairs of Keppel 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 recent individual director assessment for FY 2023, all the directors performed well. The NC was therefore satisfied that in FY 2023, 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 Company’s Nominee Director Policy in January 2009. For the purposes of the policy, a “Nominee Director” 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. Alternate Director The Company has no alternate directors on the Board. Key Information Regarding Directors The following key information regarding directors is set out in the following pages of this Annual Report: Pages 30 to 33: 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 Pages 124 to 125: 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, and the contribution by the Chairman and peer assessment of the individual directors to the effectiveness of the Board. The evaluation for FY 2023 was conducted by the NC Chairman. The evaluation process is set out on page 106 of this Annual Report. Formal Process and Performance Criteria: The evaluation processes and performance criteria are disclosed in Appendix 1. The performance criteria was similar to that adopted in 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 allow him/her to discharge his/her duties effectively and the changes which should be made to enhance the effectiveness of the Board and/or board committees. The assessment exercise also helps directors to focus on their key responsibilities and allows for peer review with a view to raising the quality of Board members. It also assists the NC in determining whether to re-nominate directors who are due for retirement at the next AGM, and in determining whether directors with multiple board representations were nevertheless able to and have adequately discharged their duties as directors of the Company. 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 or 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. 84 KEPPEL LTD. Principle 8: The company is transparent on its remuneration policies, level and mix of remuneration, the procedure for setting remuneration, and the relationship between remuneration, performance and value creation. REMUNERATION COMMITTEE The Remuneration Committee (“RC”) comprises entirely non-executive directors, the majority of whom (including the chairman of the RC) are independent, namely: • Mr Till Vestring Independent Chairman • Mr Danny Teoh Non-Independent Member • Prof Jean-François Manzoni Independent Member • Mrs Penny Goh Independent Member • Mr Shirish Apte (from 1 January 2024) Independent Member The RC is responsible for ensuring a formal and transparent procedure for developing policies on director and 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 Keppel Restricted Share Plan and Keppel Performance Share Plan (the “Keppel RSP” and “Keppel PSP”). The Keppel RSP 2020 and the Keppel PSP 2020 (collectively, the “New Share Plans”) were approved by shareholders at the AGM held on 2 June 2020. In addition, the RC reviews Keppel’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 the RC are disclosed on pages 104 to 105 herein. Access to Expert Advice: The RC has access to expert advice from external remuneration consultants where required. In FY 2023, the RC sought views from external remuneration consultant, Willis Towers Watson, 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 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. The RC, in consultation with Willis Towers Watson, conducted a review of the NED fee structure in 2023/2024. The review took into account a variety of factors, including prevailing market practices and referencing the fees against comparable benchmarks locally and globally, as well as the roles and responsibilities of the Board and board committees. The revised directors’ fee structure will take effect from FY 2024 onwards and is set out in the table below. Shareholders’ approval for the payment of directors’ fees will be sought at each AGM. If approved, each NED (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 subject to adjustment as described below, and such shares, “Remuneration Shares”). The Cash Component is paid half-yearly in arrears. The Remuneration Shares are paid after the next 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 next AGM provided DIRECTORS’ FEE STRUCTURE Board Chairman Board Member Lead Independent Director Audit Committee Board Risk Committee Remuneration Committee Board Sustainability and Safety Committee Nominating Committee Basic Fee (per annum) $750,000 (all-in) $120,000 $24,000 Additional Fees for Membership in Board Committees (per annum) Chairman $67,000 $67,000 $47,000 $47,000 $40,000 Member $43,000 $38,000 $31,000 $31,000 $28,000 ANNUAL REPORT 2023 85 GOVERNANCE Corporate Governance 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 shares of the Company on the SGX on the Trading Day. In the event that the first trading day after the date of the next 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. 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. A NED who steps down before the payment of the Remuneration Shares will receive all of his directors’ fees for that year (calculated on a pro-rated basis, where applicable) in cash. The aggregate directors’ fees for NEDs for FY 2024 are subject to shareholders’ approval at the forthcoming AGM. 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 2024. In the event that the amount proposed is insufficient, approval will be sought at the next AGM 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 as effort, 86 KEPPEL LTD. Outcomes Financial Corporate Scorecard Enablers People & Stakeholders Drivers Vision 2030 Value Creation & Transformation time spent and responsibilities, and to attract, retain and motivate the directors to provide good stewardship of the Company. The total remuneration structure reflects the following four key objectives: 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 external environment and performance of Keppel and individual employees, 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 Keppel’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 Keppel for the longer term. 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 communicated to stakeholders; and d. Synergy: To facilitate talent mobility and enhance collaboration across Keppel. The total remuneration structure comprises three components; that is, annual fixed cash, annual performance bonus and the New Share Plans. The annual fixed cash component comprises the annual basic salary plus any other fixed allowances. The size of the Company’s annual performance bonus pot is determined by Keppel’s financial and non-financial performance and is distributed to employees based on their individual performance. For FY 2023, contingent shares were awarded under the New Share Plans. The Keppel RSP and Keppel PSP are long-term incentive plans which vest over a longer-term horizon. A portion of the annual performance bonus is granted in the form of deferred shares that are awarded under the Keppel RSP. The Keppel PSP comprises performance targets determined on an annual basis. Executives who have a greater ability to influence particular 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 Keppel. The mix of fixed and variable reward is considered appropriate for Keppel 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; Some of the key sub-targets within each of the scorecard areas include key financial indicators, sustainability, safety, risk management, compliance and controls, employee engagement, talent development and succession planning. ii. The scorecard areas have been chosen because they support how Keppel achieves its strategic objectives. The framework provides a link for employees to understand how they contribute to each area of the scorecard, and therefore to Keppel’s overall strategic goals. This is designed to achieve a consistent approach and understanding across Keppel. 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 Keppel PSP awards, namely Total Shareholder Returns, Return on Equity, Net Profit and Reduction in Carbon Emissions, that are aligned with shareholders’ interests; b. by incorporating appropriate key performance indicators (“KPIs”) for awarding of annual performance bonus: d. by requiring those conditions to be met in order for the At-Risk components of remuneration to be awarded or vested; and i. For FY 2023, there are three scorecard areas that the Company has identified as key to measuring the performance of Keppel and aligned with the Vision 2030 goals – (i) Drivers – Vision 2030 Value Creation and Transformation; (ii) Outcomes – Financials; and (iii) Enablers – People and Stakeholders. 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 Keppel 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 Keppel RSP; c. vesting of contingent share awards under the Keppel 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 Keppel’s long-term strategy and performance and discourage excessive risk taking. 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 Keppel’s risk profile. In determining the actual quantum of variable component of remuneration, the RC had taken into account the extent to which the corporate and individual performance conditions, set forth above, have been met. Based on the outcome of the evaluation, the RC recommends the total remuneration for the key management for the Board’s approval. The Board and RC are of the view that the remuneration is aligned to performance during FY 2023. ANNUAL REPORT 2023 87 GOVERNANCE Corporate Governance 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 Keppel. The executive director and key management personnel are required to hold at least 2 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 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. Keppel Long-term Incentive Plans Keppel Share Plans The Keppel 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 Keppel Share Plans also aim to strengthen Keppel’s competitiveness in attracting and retaining talented key senior management and employees. The Keppel RSP applies to a broader base of employees while the Keppel PSP applies to a selected group of key management personnel. The range of performance targets to be set under the Keppel PSP emphasise stretched targets aimed at sustaining longer-term growth. REMUNERATION STRUCTURE Vision 2030 Strategies Corporate Scorecard Performance Bonus Performance Shares Cash Bonus Deferred Shares Given Keppel’s strong focus on providing sustainability-related solutions, various aspects of the remuneration framework have been enhanced for a stronger alignment with this focus. Sustainability related targets relating to Keppel’s own carbon footprint as well as commercialisable solutions have been incorporated in various incentive programmes, including the annual scorecard that determines the annual performance bonus pool for all employees, the 3-year Keppel PSP that is awarded to a selected group of key management personnel as well as the one-time 5-year V2030 PSP-TIP that was awarded to selected senior management and key employees who will be contributing significantly towards the attainment of Vision 2030. The weightages of the sustainability targets vary across the various programmes, weighing up to 25% for the 3-year Keppel PSP awards. Under the terms of the New Share Plans, shares awarded pursuant to the New Share Plans may be clawed back in the event of among others, misconduct (including a breach of laws), or violation of policies and compliance standards which had or is likely to cause financial loss or reputational harm to Keppel or which may be detrimental to the interests of Keppel. Outstanding performance bonuses and share awards under the New Share Plans are also subject to the RC’s discretion before further payment or vesting can occur. Details of the Keppel Share Plans are set out in pages 125 to 127, and pages 160 to 163. TARGETS OF THE 3-YEAR KEPPEL PERFORMANCE SHARE PLAN Sustainability Growth Capital Efficiency Shareholder Value Creation 88 KEPPEL LTD. 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 2023 The level and mix of remuneration of each of the Company’s directors are set out below: Base/Fixed Salary ($) Performance-related Cash Bonuses Earned1 ($) Directors’ Total Fees2 ($) Cash component5 Shares component5 Benefits- in-kind ($) Share Awards3,4 ($) Total Remuneration ($) Remuneration & Name of Director Loh Chin Hua Danny Teoh Till Vestring8 Veronica Eng9 Jean-François Manzoni Teo Siong Seng Tham Sai Choy Penny Goh10 Shirish Apte11 Olivier Blum Jimmy Ng Ang Wan Ching12 1,254,056 2,727,346 – – – – – – – – – – – – – – – – – – – – – – – 525,000 143,500 152,600 125,300 108,500 149,100 154,000 132,300 97,300 102,200 66,694 – 225,000 61,500 65,400 53,700 46,500 63,900 66,000 56,700 41,700 43,800 28,583 n.m.6 – – – – – – – – – – – PSP RSP 2,295,000 2,725,000 – – – – – – – – – – – – – – – – – – – – – – 9,001,4027 750,000 205,000 218,000 179,000 155,000 213,000 220,000 189,000 139,000 146,000 95,277 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 2023 were met. 2 Based on the NEDs’ fee structure set out in the 2022 Annual Report, the total fees amount to $2,509,277. The directors’ total fees are subject to shareholders’ approval at the Company’s Annual General Meeting. 3 Shares awarded under the Keppel PSP are subject to pre-determined performance targets over a three-year performance period. As at 28 April 2023, being the grant date for the contingent awards under the Keppel PSP, the estimated value of each share was $5.10. For the Keppel 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 award of Keppel RSP deferred shares was granted for Mr Loh Chin Hua’s performance and contributions in FY 2023. The Company’s 2023 volume-weighted average share price of $6.01 was used to determine the number of Keppel RSP deferred shares to be awarded to him as well as his FY 2023 total remuneration. As at 15 February 2024, being the grant date for the awards under the Keppel RSP, the estimated value of each share was $7.04. 5 The amounts stated may be adjusted as indicated on pages 85 to 86 of this report. 6 n.m. – not material 7 Total remuneration shown above for Mr Loh Chin Hua does not include vested share of carried interests for funds created during the time he was Managing Director at Keppel Fund Management Ltd. These carried interests are only earned at the end of the fund life and depends entirely on the actual performance of the funds after they have been liquidated. 8 Mr Till Vestring retired as a member of the Board of Keppel Telecommunications & Transportation Ltd with effect from 31 October 2023 and will receive a prorated fee of $37,500 for his services rendered in the year. 9 Ms Veronica Eng retired as a member of the Board of Keppel Capital Holdings Pte Ltd with effect from 31 October 2023 and will receive a prorated fee of $37,500 for her services rendered in the year. 10 Mrs Penny Goh retired as a member of the Board of Keppel Land Limited (n.k.a. Keppel Management Ltd.) with effect from 31 October 2023 and will receive a prorated fee of $37,500 for her services rendered in the year. 11 Mr Shirish Apte retired as a member of the Board of Keppel Infrastructure Holdings Pte Ltd with effect from 31 October 2023 and will receive a prorated fee of $37,479 for his services rendered in the year. 12 Ms Ang Wan Ching was appointed to the Board and as a member of the Audit Committee and Board Risk Committee with effect from 1 July 2023. Fees are prorated accordingly. ANNUAL REPORT 2023 89 GOVERNANCE Corporate Governance Shares granted and vested to the Executive Director pursuant to the Keppel PSP and the Keppel RSP are shown below: PSP Awards Vesting Date Awards of PSP Shares Number of PSP Shares Vested Value of PSP Shares Vested ($)1 RSP Awards Vesting Date Awards of RSP Shares Number of RSP Shares Vested Value of RSP Shares Vested ($)1 0 to 782,9254 343,100 1,863,033 2021 Awards 26 Feb 2021 298,2624 86,956 446,954 147,533 870,445 28 Feb 2022 301,887 86,956 519,997 Name of Executive Director Loh Chin Hua 2019 Awards2 2020 Awards2 2021 Awards 28 Feb 2023 31 Mar 2023 29 Feb 2024 29 Feb 2024 27 Feb 2026 0 to 782,9254 0 to 782,9254 0 to 2,080,6503,4 2022 Awards 28 Feb 2025 0 to 858,0004 2023 Awards 27 Feb 2026 0 to 675,000 – – – – – 28 Feb 2023 31 Mar 2023 86,958 37,392 472,182 220,613 28 Feb 2022 510,7754 132,325 791,304 28 Feb 2023 31 Mar 2023 29 Feb 2024 132,325 718,525 56,900 335,710 – – 28 Feb 2023 640,1184 114,106 619,596 – – – – – 2022 Awards 2023 Awards 31 Mar 2023 29 Feb 2024 28 Feb 2025 2024 Awards 29 Feb 2024 453,411 28 Feb 2025 27 Feb 2026 99,265 585,664 – – – – – – – – Notes: 1 The value of the shares vested under the Keppel 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 Keppel 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 2023 were met. 2 As the targets of the 2019 and 2020 PSP awards were set before the onset of the COVID-19 pandemic, the RC decided to extend the performance period of the awards by 1 more year. The achievements in Year 2019, 2021 and 2022 were used to determine the vesting level of the 2019 PSP award at the end of the extended performance period, while the achievements in Year 2021, 2022 and 2023 will be used to determine the vesting level of the 2020 PSP award at the end of the extended performance period. 3 Refers to one-time contingent shares awarded under the Vision 2030 Keppel PSP – TIP. 4 Arising from the distribution of Seatrium Limited (formerly known as Sembcorp Marine Ltd) (“Seatrium”) shares by way of distribution in specie on the basis of 19.085033835 Seatrium shares per Keppel Ltd. share held on 28 February 2023, the RC approved the adjustments to unvested shares under the award. 90 KEPPEL LTD. The total remuneration paid to key management personnel (who are not directors or the CEO) in FY 2023 was $17,966,354. The level and mix of remuneration of each of such key management personnel (who are not directors or the CEO) are set out below: Remuneration Band and Name of Key Management Personnel2 Above $3,750,000 to $4,000,000 Tan Hua Mui, Christina3,4 Above $2,750,000 to $3,000,000 Lim Joo Ling, Cindy4 Above $2,500,000 to $2,750,000 Lim Lu-Yi, Louis Above $2,250,000 to $2,500,000 Manjot Singh Mann Above $2,000,000 to $2,250,000 Pang Thieng Hwi, Thomas Base/ Fixed Salary (%) Performance-related Cash Bonuses Earned1 (%) Benefits- in-kind (%) Contingent Awards of Shares 20 21 25 31 27 29 29 26 22 25 n.m. n.m. n.m. 3 n.m. PSP (%) RSP (%) 22 22 24 22 23 29 28 25 22 25 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 2023 were met. 2 Mr Chan Hon Chew retired with effect from 31 December 2023. He received a total remuneration in the band of above $4,250,000 to $4,500,000 for 2023. His remuneration comprised 19% in base/fixed salary, 58% in performance-related cash bonuses earned and 23% in awards of shares (PSP). 67% of the performance-related cash bonuses earned has been paid in 2024 while the remaining cash bonuses will be payable in 2025 and 2026. 3 Total remuneration shown above for Ms Christina Tan does not include vested share of carried interests for funds created during the time she was Managing 4 Director at Keppel Fund Management Ltd. 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. In addition to the remuneration disclosed above, in view of the extraordinary contributions put in by Ms Christina Tan and Ms Cindy Lim towards the attainment of Keppel’s transformation objectives, a one-off Special Bonus award comprising cash bonus and Keppel RSP deferred shares had been granted to them. The Company’s 2023 volume-weighted average share price of $6.01 was used to determine the number of contingent Keppel RSP deferred shares to be awarded. Shares awarded under the Keppel RSP are subject to vesting over a 3-year period. As at 15 February 2024, being the grant date for the contingent awards under the Keppel RSP, the estimated value of each share was $7.04. The cash bonus and deferred shares awards are each in the range of above $0 to $250,000 for both individuals. 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 2023. “Immediate family member” means the spouse, child, adopted child, step-child, sibling and parent. The Audit Committee (“AC”) comprises entirely independent directors, namely: • Mr Tham Sai Choy Independent Chairman • Ms Veronica Eng Independent Member • Mrs Penny Goh Independent Member • Ms Ang Wan Ching (from 1 July 2023) Independent Member • Mr Shirish Apte (until 31 December 2023) Independent Member • Mr Jimmy Ng (from 1 January 2024) Independent Member AUDIT COMMITTEE Principle 10: The Board has an Audit Committee which discharges its duties objectively. 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 Tham Sai Choy, Ms Veronica Eng and Ms Ang Wan Ching have recent, relevant and in-depth experience in accounting and financial management. Mrs Penny Goh has extensive experience in advising on 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 issues and considerations affecting the Committee to discharge her responsibilities as a member of the Committee. Mr Jimmy Ng has prior ANNUAL REPORT 2023 91 GOVERNANCE Corporate Governance experience leading a global internal audit function and spearheading its transformation, and possesses recent, relevant and in-depth experience in technology, data analytics and driving digital innovations. Mr Tham Sai Choy, Ms Veronica Eng, Mrs Penny Goh, Ms Ang Wan Ching and Mr Jimmy Ng are also members of the Board Risk Committee, 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 AC are set out on pages 102 to 103 herein. AUDIT The AC met with the external auditors five times during the year and one of the meetings included sessions held without the presence of management and the internal auditors. The AC also met with the internal auditors five times during the year, of which one of these meetings was conducted without the presence of management and the external auditors, and the other four meetings included private sessions held with the internal auditors to discuss whistle-blower reports and investigation updates. The AC reviewed and approved the 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 and noted their performance to be adequate. Taking into account the requirements under the Accountants Act 2004 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 28 of the Notes to the Financial Statements on page 192. 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 (“Internal Audit”) which, together with the external auditors, report their findings and recommendations to the AC independently. The role of Internal Audit is to provide independent assurance to the AC to ensure that Keppel maintains a sound system of internal controls. In this aspect, Internal Audit conducts regular reviews of the adequacy and effectiveness of Keppel’s key internal controls, including financial, operational, compliance and information technology controls, and risk management. Any significant non-compliance or failures in internal controls together with recommendations for improvements are reported to the AC. Internal Audit also undertakes investigations as directed by the AC. Internal Audit has direct access to the AC and unfettered access to all the documents, records, properties and personnel of Keppel. The AC approves the hiring, removal, evaluation and compensation of the Head of Internal Audit, whose primary line of reporting is to the chairman of the AC, with an administrative reporting line to the CEO of Keppel. The AC reviewed the adequacy and effectiveness of 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 Keppel. Internal Audit attends Keppel’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 Internal Audit to ensure that their technical knowledge and skill sets remain current and relevant. The purpose, authority and responsibility of Internal Audit are defined in the Audit Charter, which is reviewed annually and approved by the AC. The Audit Charter establishes 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 internal audit engagements; and defines the scope of internal audit activities. The Audit Charter mandates 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 Institute of Internal Auditors’ (“IIA”) Code of Ethics. Internal Audit is guided by the International Professional Practices Framework established 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 2021. The results re-affirmed that the internal audit activity generally conforms to the International Standards for the Professional Practice of Internal Auditing. Internal Audit staff perform a yearly declaration of independence and confirm their adherence to Keppel’s 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. Internal Audit adopts a risk-based auditing approach that focuses on key risks, including financial, operational, compliance and information technology risks. An annual audit plan is developed using a structured risk and control assessment framework. This plan is reviewed and approved by the AC, who are also apprised on material changes to the plan regularly. Audits are planned based on the results of the assessment, with priority given to high risks. All Internal Audit’s reports are circulated to the relevant senior management personnel for deliberation with copies of these reports extended to the AC, Chairman and CEO. During AC meetings, significant audit findings and recommendations put up by 92 KEPPEL LTD. the internal and the external auditors are reported and discussed, together with reviews of the effectiveness of the actions taken by management on the recommendations made by Internal Audit and the external auditors. To ensure timely and adequate closure of audit recommendations, the status of implementation of the actions agreed by management is tracked and reported to the AC. During the year, the AC carried out a review of certain work practices in Internal Audit and, in view of the departure of the Head of Internal Audit, the AC appointed Irving Low and Tea Wei Li as co-Interim Heads of Internal Audit. 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. During the year, the AC performed an independent review of the financial statements of Keppel before the announcement of Keppel’s first half 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 Keppel for FY 2023, the AC reviewed the key areas of management’s judgments and estimates applied for key financial issues, including valuation of investment properties and development properties held for sale, revenue recognition and contract cost, impairment assessment of goodwill arising from the acquisition of M1, the divestment of Keppel Offshore & Marine and related undertakings and warranties, the assessment of the valuation and accounting for the vendor notes in relation to Asset Co, and the accounting and disclosure of material subsequent events, that might affect the integrity of the financial statements. The AC took into consideration the methodology applied in determining the valuation of different asset classes, including the reasonableness of the estimates and key assumptions used. In addition, external independent valuations, work performed by independent professional firms and the financial advisor, as well as opinions from internal and external legal counsel, where applicable, were considered when reviewing management’s assessment. 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 2023. 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. 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 concerns about possible improprieties in business conduct and will be treated fairly and, to the extent possible, protected from reprisal, 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 allowed the perpetration of fraud or misconduct so as to prevent recurrence. Significant matters raised through the whistle-blowing channel are reported to the Board. The details of the Policy are set out on pages 119 hereto. The AC reviews the Policy yearly to ensure that it remains current. Interested Person Transactions Keppel has established the Keppel Interested Person Transactions (“IPT”) Policy which lays out the procedures sufficiently for reviewing, approving, tracking and reporting IPTs in accordance with Chapter 9 of the SGX-ST Listing Manual and pursuant to the general mandate from shareholders that allows for such transactions where made on normal commercial terms and not be prejudicial to the interests of Keppel and its minority shareholders. IPT policies and procedures were reviewed by the internal auditors and findings with management’s remedial actions were reported during AC meetings. Details of IPTs entered into by Keppel in FY 2023 are set out on page 227 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 Board Risk Committee (“BRC”) comprises entirely independent directors, namely: • Ms Veronica Eng Independent Chairperson • Mr Tham Sai Choy Independent Member • Mrs Penny Goh Independent Member • Mr Shirish Apte Independent Member • Mr Jimmy Ng Independent Member • Ms Ang Wan Ching (from 1 July 2023) Independent Member The BRC considers the nature and extent of the significant risks which Keppel 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, ANNUAL REPORT 2023 93 GOVERNANCE Corporate Governance KEPPEL’S SYSTEM OF MANAGEMENT CONTROLS Board of Directors Management Internal Audit First Line Business Governance • Core Values • Code of Conduct • Financial Controls • Operational Controls • Compliance Controls • Technology Controls Second Line Management Assurance Framework • Control Self-Assessment • Enterprise Risk Management • Regulatory Compliance • Technology & Cyber Security Governance Third Line Independent Assurance • Independent & Objective Assurance External Assurance Providers Accountability, reporting Delegation, direction, resources, oversight Alignment, communication, coordination, collaboration evaluate and manage significant risks, to safeguard shareholders’ interests and Keppel’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 the BRC are disclosed on pages 103 to 104 herein. The Risk & Compliance (“R&C”) function, working in conjunction with the business teams, supports management in applying the Enterprise Risk Management (“ERM”) Framework to ensure significant risks are assessed and adequately mitigated. This is performed through the monitoring of risk matters, conduct of training, site visits, participation at IMPAC meetings, and implementation of risk-related policies and standards. The ERM Framework was established to guide Keppel in managing risks and also facilitate the Board’s assessment of the adequacy and effectiveness of Keppel’s risk management system and processes for managing risks. It lays out the governance mechanisms and principles, policies and processes, and system pertaining to how Keppel should identify, assess, mitigate, communicate, and monitor or escalate significant risk matters. Risk assessments are performed at the respective platforms and divisions and agreed with senior management before being consolidated to form Keppel’s risk assessment. Further assessments are performed and each key risk area is grouped by sub-groups within Strategic, Financial, Operational, Compliance and IT, 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. Our approach to risk management and our key risks are set out in the “Risk Management” section on pages 111 to 117 of this Annual Report. We are guided by a set of Risk Tolerance Guiding Principles, as disclosed on page 111. Keppel also has in place its System of Management Controls (“KSMC”) outlining our internal control and risk management processes and procedures. The KSMC comprises the Three-Lines Model to ensure the adequacy and effectiveness of Keppel’s system of internal controls and risk management. Under the First Line of Business Governance, the respective platforms and divisions management, supported by their respective line functions and committees, are responsible for the identification and mitigation of risks (including financial, operational, compliance and IT risks) in the course of running their business. Appropriate policies, procedures, and controls are implemented and operationalised in line with Keppel’s risk appetite where applicable. Employees are also guided by the Keppel’s Core Values and expected to comply strictly with Keppel’s Code of Conduct. Keppel Cyber Security Centre consists of Cyber Technology and Cyber Operations pillars, partnering business and managing cyber risks through advisory, building, and running sustainable next-generation solutions to combat 94 KEPPEL LTD. evolving cyber threats while meeting business objectives. Under the Second Line, Management Assurance Frameworks are established to enable oversight and governance over operations and activities undertaken by management under the First Line. The platforms and divisions and entities scoped in for control self-assessment (“CSA”) are required to conduct a self-assessment exercise to assess the status of their respective internal controls on an annual basis. The annual CSA exercise is overseen by Control Assurance. Remedial actions are implemented to address all control gaps identified during the CSA exercise. R&C, working in conjunction with the respective platforms and divisions line functions and committees, oversees the implementation of Keppel’s ERM Framework to ensure that risks are identified, assessed and mitigated and that risks fall within the established risk appetite and tolerance. In respect of regulatory compliance, the respective platforms and divisions line functions and committees support and work alongside R&C to ensure relevant policies, processes and controls are effectively designed, implemented and managed to mitigate compliance risks that Keppel face in the course of their business. The Technology Governance Framework overseen by Keppel Information Technology aims to align technology strategy to enterprise vision, whilst strengthening technology controls and security, and managing technology risks for Keppel. The Technology Governance Framework consists of a uniform framework structure and methodology to enable Keppel to monitor and manage technology risks better and more effectively, as well as to ensure that activities associated with technology are aligned with the overall business objectives through the establishment of the three (3) pillars in Technology Governance (i.e. Policy, Technology Risk Management and Compliance). The Technology Governance Framework aims to provide an approach to ensure technology risks are identified and adequately mitigated in the design, operation, use, and management of Keppel’s computing resources taking into consideration statutory, regulatory, contractual, and security requirements. This framework covers the use of all technology systems and assets within Keppel, including 3rd party service providers. The Head of Cyber Security, providing oversight to Keppel Cyber Security Centre and Cyber Governance, has a reporting line to the Board Risk Committee through the Head of Risk & Compliance, to reinforce independence and facilitate Board oversight. Cyber Security drives the enterprise vision, strategy and programme to ensure that Keppel’s technology assets are adequately protected from cyber threats. Cyber Governance maintains cyber policies, which are aligned with industry standards as well as local regulators’ requirements to ensure effective management of cybersecurity risks. Cyber assurance and compliance programmes are executed to ensure developed processes and controls are effective and adhered to. The Data Governance Framework aims to establish a common minimum level of data governance maturity. It seeks to create a consistent and proper management of data assets. The Third Line comprises independent assurance, including internal and external audit. Internal audit provides the Board and Keppel’s senior management with independent assurance over the adequacy and effectiveness of the system of internal controls, risk management and governance, while external audit considers the internal controls relevant to Keppel’s preparation of financial statements and performs tests on such internal controls, where they are assessed to be necessary, in support of the audit opinion issued on the financial statements of Keppel. Enhancements to Compliance Programme in FY 2023 At Keppel, being Trusted is a core value. As Keppel’s Code of Conduct states, “we care how results are achieved, not just that they are attained.” Implementing that core value through enhancing Keppel’s regulatory compliance process and by reminding every Keppelite of that core value is a focus of attention for Keppel, Keppel’s directors 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 Keppel’s compliance initiatives are set out on pages 118 to 120 of this Annual Report. Keppel is committed to a continuous review and, where necessary and appropriate, further improvements and enhancements to Keppel’s compliance programme will be made. Keppel has taken the following steps over the past year to further enhance its internal controls, policies and procedures: a. During the year, the applicable in-scope entities achieved ISO 37001 certification/re-certification, which follows the ISO 37001 certification achieved by our overseas entities in India, Belgium and Qatar in 2022. b. Implementation and enhancement of an integrated system (Ethixbase) for onboarding and monitoring of Third-Party Associates and a Conflicts of Interest (COI) App for declaration of such potential conflicts in key projects. c. E-training modules were enhanced to cover Personal Data Protection in the 2023 Annual Training and Declaration of Keppel Policies. ANNUAL REPORT 2023 95 GOVERNANCE Corporate Governance Keppel’s Compliance Programme Keppel’s compliance programme also includes the following: a. a compliance governance structure that is overseen by a Regulatory Compliance Management Committee and Regulatory Compliance Working Team, bringing together senior management, compliance personnel, and other core function leads to discuss compliance enhancements and address compliance issues as they arise; b. a Supplier Code of Conduct, to integrate Keppel’s sustainability principles across our supply chain, and positively influence the environmental, social and governance (“ESG”) performance of our suppliers. Keppel’s suppliers 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; 2. Policies and Procedures Keppel continuously implements and communicates its corporate policy against violations of any anti-corruption laws. This policy includes 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 Keppel. 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 Keppel’s Code of Conduct and its compliance policies and procedures. Such policies and procedures address, among other areas: c. risk-based due diligence process for all third-party associates who represent Keppel in business dealings, including our joint venture partners, to assess the compliance risk of the business partner; and a. gifts and hospitality; b. dealing with third party associates – due diligence; c. political contributions; d. donations and sponsorships; e. facilitation payments; and f. solicitation and extortion. d. the dedicated independent Keppel ensures that: a. books, records and accounts are in reasonable detail, and accurately and fairly reflect the transactions and disposition of assets; and b. It develops and maintains a system of internal accounting controls, sufficient to provide reasonable assurance that: i. transactions are performed in accordance with the general guidelines or specific authorisation; compliance function has reporting lines independent of Keppel’s platforms and divisions. The Head of Risk & Compliance has a primary line of reporting to the chairman of the BRC, with an administrative reporting line to the CFO of the Company. Keppel’s compliance programme is and will be subjected to a periodic review to ensure it meets the following standards, i.e.: 1. Board and Senior Management Commitment Keppel’s senior management, including members of the Board, provide continuous, clear and explicit support to the compliance programme. 96 KEPPEL LTD. 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 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 Keppel 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 Keppel and its platforms and divisions, and in particular corrupt practices risks, including but not limited to its geographical organisation and sectors of industrial operation. 4. Training and Orientation Keppel 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. a mandatory annual e-learning training and declaration covering all employees comprising the Keppel’s Code of Conduct and all other key compliance policies. For 2023, new e-training modules included Personal Data Protection. Where necessary and appropriate, compliance training for agents and business partners were also conducted during the year. ii. transactions are recorded as necessary to permit preparation of financial statements in conformity 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. 5. Internal Reporting, Communication and Investigation Keppel 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. Keppel 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, Keppel undertakes independent investigations of the alleged violations. 6. Enforcement and Discipline Keppel maintains and, where necessary, improves its processes to effectively enforce its compliance policies and procedures including, where appropriate, the imposition of disciplinary measures in the case of violations. Keppel 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 Keppel continues to implement the following procedures with reference to its agents and business partners: a. due diligence relating to the engagement 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, Keppel 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 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. Keppel also communicates its Sanctions Compliance Policy to all counterparties of Keppel 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. 8. Mergers, Acquisitions and Corporate Restructuring Keppel performs appropriate compliance due diligence checks on potential merger and acquisition target entities. Also, Keppel applies its compliance codes, policies and procedures for adoption by newly acquired businesses or entities, and conducts training for new employees, senior management (including directors), agents and business partners. 9. Monitoring and Developments Keppel 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. from the CEOs and CFOs of each of Keppel’s business divisions and the CEO and CFO of the Company that, as of 31 December 2023, the financial records of Keppel have been properly maintained and the financial statements for the year ended 31 December 2023 give a true and fair view of Keppel’s operations and finances; and b. from the CEO and CFO of the Company, the CEOs and CFOs of each of Keppel’s business divisions, and other key management personnel responsible for risk management and internal control systems that, as of 31 December 2023, Keppel’s internal controls (including financial, operational, compliance and IT controls) and risk management systems were adequate and effective to address the risks which Keppel considers relevant and material to its operations. Based on the internal controls and enterprise-wide risk management framework established and maintained by Keppel, 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 2023, Keppel’s internal controls (including financial, operational, compliance and IT controls) and risk management systems were adequate and effective to address the risks which Keppel considers relevant and material to its operations. ANNUAL REPORT 2023 97 GOVERNANCE Corporate Governance The Board notes that the system of internal controls and risk management established by Keppel provides reasonable, but not absolute, assurance that Keppel 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 2023, Keppel’s internal controls (including financial, operational, compliance and IT controls) and risk management systems were adequate and effective to address the risks which Keppel 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: During the year, Keppel held briefings for media and analysts, and meetings with investors on key initiatives, including the unveiling of Keppel’s transformation plans to be a global asset manager and operator. The Board is responsible for providing a balanced and understandable assessment of Keppel’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 Keppel’s affairs, whilst preserving the commercial interests of Keppel. Financial reports and other price-sensitive information are disseminated to shareholders through announcements via SGXNet, media releases, Keppel’s website, public webcasts and media and analyst briefings. Keppel’s Annual Report is accessible on Keppel’s website, and can be viewed at or downloaded from https://www.keppel.com/en/ investors/annual-reports/. Shareholders are encouraged to read the Annual Report on Keppel’s website, but may also request for a physical copy at no cost. activities, products or services and associated performance. Keppel engages its stakeholders regularly in the determination of its material areas of focus. Materiality assessments are important components of Keppel’s sustainability strategy and reporting. Keppel’s materiality assessments take reference from the SGX guidelines on Sustainability Reporting, as well as guidance from the Global Reporting Initiative (GRI). Materiality as defined by GRI includes topics and indicators that reflect the organisation’s significant economic, environmental, and social impacts on external stakeholders. In addition, Keppel took into consideration the new standards from the International Sustainability Standards Board (ISSB) which state that information is material if it could affect an entity’s prospects, and if omitting, misstating or obscuring that information could influence decisions of primary users of general purpose financial reports. 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. Keppel adopts a comprehensive stakeholder engagement approach, whereby stakeholders are defined to be individuals, groups of individuals or organisations that affect and/or could be affected by Keppel’s Keppel has identified and prioritised its material ESG issues. An overview of Keppel’s approach to sustainability management can be found on pages 24 to 29 of this report. More details of Keppel’s management approach, 98 KEPPEL LTD. 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. Keppel’s Corporate Communications department (with assistance from other departments as required) regularly communicates with shareholders and receives and attends to their queries and concerns. Keppel treats all its shareholders fairly and equitably and keeps all its shareholders and other stakeholders informed of its corporate activities, including changes in Keppel or its business, which would be likely to materially affect the price or value of its shares, on a timely basis. Keppel has in place an Investor Relations Policy which sets out the principles and practices that Keppel 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 Keppel’s website at https://www.keppel.com/en/ investors/investor-relations-policy/, and sets out the mechanism through which shareholders may contact Keppel with questions and through which Keppel 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 announces its financial statements on a half-yearly basis, but continues to provide voluntary business updates in between its half-yearly financial reports. Keppel stands committed to engaging shareholders and the investment community through clear, timely and consistent communications. 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 briefings, email communications, publications and content on Keppel’s corporate website, as well as through facility visits, where shareholders may raise any queries or concerns that they may have. Presentation materials of Keppel’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 transcripts of the question-and-answer sessions held during the webcasts or media and analyst briefings are released on SGXNet and posted on Keppel’s website before the start of the next trading day. Keppel’s mobile-responsive website is regularly updated with the latest information. These include company announcements, half-yearly results and voluntary business updates, annual reports, investor events, stock and dividend information, investor presentation slides, as well as information on general meetings, including presentations and minutes. Contact details of the Investor Relations personnel (email: investor. relations@keppel.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 to solicit and understand the views of the investment community. In 2023, Keppel held about 280 meetings with institutional investors from Singapore and overseas. These meetings included various site visits and roadshows in Singapore and abroad, and Keppel’s inaugural Investor Day, which was organised in collaboration with Citigroup and attended by over 40 local and international investors. Keppel employs various platforms to effectively engage the investment Keppel has, since 2017, been collaborating with the Securities Investors Association (Singapore) to hold briefings for retail shareholders. In 2023, Keppel held its annual briefing on Keppel’s developments, drawing more than 140 shareholders. All materials presented on these occasions were also made available on the SGXNet and Keppel’s website in a timely manner, to ensure fair disclosure of information for the benefit of all shareholders. Annual General Meeting and Extraordinary General Meeting In 2023, the Company held its AGM and an EGM to seek shareholders’ approval for the proposed special dividend in specie of units in Keppel REIT and the proposed change of name of the Company from “Keppel Corporation Limited” to “Keppel Ltd.”. Both general meetings were held physically, in line with Keppel’s practice prior to the pandemic and following the cessation of the COVID-19 (Temporary Measures). The Company’s general meetings are 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. ANNUAL REPORT 2023 99 GOVERNANCE Corporate Governance Shareholders are invited to submit questions they may have on the motions to be debated and decided upon, to the Chairman of the meetings prior to the general meetings. Responses to substantial and relevant questions submitted by shareholders prior to the meetings are uploaded to SGXNet and Keppel’s website prior to the events and addressed at the general meetings. The CEO of the Company will give a presentation at the AGM, providing further elaboration to shareholders. At the general meetings, shareholders are invited to put forth any further 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 NEDs. 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. 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. A scrutineer will be appointed to count and validate the votes cast at the meetings. Votes cast for and against and the respective percentages, on each resolution will be displayed live to shareholders/ proxies immediately after each poll is conducted. The total number of votes cast for or against the resolutions and the respective percentages are also announced in a timely manner after the general meeting via SGXNet. Each share is entitled to one vote. Where possible, all directors will attend the general meetings of the Company. 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 allows for absentia voting at general meetings. However, the Company is not implementing absentia voting methods such as voting via mail, email or fax for security, integrity and related considerations. 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 meetings will be published on the Company’s website as soon as practicable. Minutes of the AGM and EGM held in 2023 were published on both the Company’s website and SGXNet within one month from the respective meetings. 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 Keppel are served. While it does not have a formal dividend policy, the Company has a track record for distributing about 50% to 60% of its annual net profit as dividends. Any payment of interim dividend or, upon receipt of shareholders’ approval at AGMs, final dividend, will be paid to all shareholders in an equitable and timely manner. For FY 2023, the Company will be paying out a total cash dividend of 34 cents per share to shareholders, on top of a distribution in specie of Seatrium Limited (formerly known as Sembcorp Marine Ltd) shares and a special dividend in specie of Keppel REIT units. 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 Keppel’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 them that the Company and its 100 KEPPEL LTD. officers must not deal in listed securities of the Company during the applicable Embargo Period(s), and if they are in possession of unpublished price-sensitive information. Directors and the CEO are also required to report their dealings in the Company’s securities within two business days. BOARD SUSTAINABILITY AND SAFETY COMMITTEE In May 2022, the Board established the Board Sustainability and Safety Committee (“BSSC”) to sharpen Keppel’s focus on sustainability. The role of the former Board Safety Committee was subsumed under the terms of reference of the BSSC. The BSSC comprises both independent and non-independent directors, namely: • Mr Teo Siong Seng Non-independent and Non-executive Chairman • Mr Danny Teoh Non-Independent Member • Mr Olivier Blum Independent Member • Mr Loh Chin Hua Non-independent Member The BSSC’s roles include reviewing Keppel’s sustainability strategy and its integration with commercial objectives, ensuring that Keppel has in place effective sustainability and safety governance structures, as well as overseeing the adoption of and progress towards Keppel’s sustainability and health, safety and environment (“HSE”) goals. The BSSC also monitors international sustainability-related trends and developments, and reviews the processes for identifying, assessing and managing climate-related risks and opportunities. In addition, the BSSC plays a pro-active role in reviewing material changes in Keppel’s HSE risk profile, and oversees the management of significant HSE risks and strategic In 2023, the BSSC visited the Keppel South Central project site, as well as the construction site of the Singapore Integrated Waste Management Facility. plans, such as Keppel’s Zero Fatality Strategy as well as the digital transformation of HSE processes. The BSSC meets at least four times a year. It considers management’s reports and proposals, and reports to the Board on material sustainability and safety issues, as well as its findings and recommendations, where relevant. In 2023, sustainability issues deliberated by the BSSC included Keppel’s sustainability roadmap, targets and key workplans, including Keppel’s decarbonisation strategy. The BSSC also reviewed Keppel’s material ESG factors, the assessment of climate-related risks and opportunities faced by Keppel, in line with the recommendations of the Task Force on Climate-related Financial Disclosures, as well as the evolving international sustainability reporting standards. In addition, the BSSC reviewed Keppel’s sustainability-related policies, including Keppel’s Environmental Sustainability Policy, its new Diversity, Equity and Inclusion Policy and its Sustainability-Linked Financing Framework. In addition to meetings, the BSSC makes regular site visits to better understand the issues faced by operating divisions, and also strengthen Keppel’s safety culture and commitment to sustainability through demonstrating visible leadership. The site visits allow the BSSC to interact directly with the Company’s contractors, suppliers, and workers, thus gaining deeper insights into Keppel’s sustainability and safety performance. In 2023, the BSSC visited the Keppel South Central project site, as well as the construction site of the Singapore Integrated Waste Management Facility. The detailed terms of reference of the BSSC are disclosed on page 105 herein. ANNUAL REPORT 2023 101 GOVERNANCE Corporate Governance APPENDIX 1 BOARD COMMITTEES – RESPONSIBILITIES A. Audit Committee 1.1 Review financial statements and 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. 1.2 Review and report to the Board at least annually on the adequacy and effectiveness of Keppel’s internal controls, including financial, operational, compliance and information technology controls, and risk management systems 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). a. Review the Board’s comment on the adequacy and effectiveness of the Keppel’s internal control systems, and risk management systems, and state whether it concurs with the Board’s comments. b. Where there are material weaknesses identified in the Keppel’s internal control systems, to consider and recommend the necessary steps to be taken to address them. 1.3 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 Keppel’s internal control systems. 1.4 Internal and External Audit a. Review the adequacy, effectiveness and independence, scope and results of the internal and external audit function, at least annually and report the Audit Committee’s assessment to the Board. b. Ensure that the Head of Internal Audit and external auditors have 102 KEPPEL LTD. direct and unrestricted access to the chairman of the Audit Committee, and that they are able to meet separately and privately to discuss matters and concerns. c. Monitor and assess the role and effectiveness of the internal audit function, including the internal audit charter, plans, activities (including consulting services), staffing budget, resources and organisational structure of the internal audit function. d. Ensure that the internal audit function is adequately resourced and staffed with persons with the relevant qualifications and experience, and has appropriate standing within Keppel. e. Review audit plans and reports of the external auditors and on a periodic basis the internal auditors, management’s responsiveness to any findings and recommendations to the extent set out/identified, and effectiveness of any follow up actions taken. f. Ensure that a Quality Assurance Review on internal audit function is independently conducted at least once every five years. g. Decide and approve 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. h. 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. i. Review the nature and extent of non-audit services performed by the external auditors, to ensure their independence and objectivity. 1.5 Oversee the establishment and operation of the whistle-blower process. Review the whistle-blower policy and Keppel’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. 1.6 Review interested party transactions to ensure they are on normal commercial terms and are not prejudicial to the interests of Keppel 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 Keppel or its minority shareholders. 1.7 Investigate any matters within the Audit Committee’s purview, whenever it deems necessary. 1.8 Perform such other functions as the Board may determine. 1.9 Report to the Board on the Audit Committee’s proceedings at the next Board meeting, including: a. the significant issues and judgments that the Audit Committee considered in relation to the financial statements, and how these issues were addressed; b. the Audit Committee’s assessment of the adequacy and effectiveness of internal control and risk management systems that relate to financial reporting and other financial- related risks and controls, and any material matters, findings and recommendations; c. the Audit Committee’s assessment of the adequacy, effectiveness and independence of the internal audit function; d. the Audit Committee’s assessment of the independence and objectivity of the external auditors, taking into consideration factors including the aggregate and respective fees paid for audit and non-audit services provided by the external auditors; e. the Audit Committee’s assessment of the quality of the work carried out by the external auditors, and the basis of such assessment; and f. the significant matters raised through the whistle- blower channel. 1.10 The Audit Committee shall ensure proper disclosure and reporting to shareholders on interested party transactions as required by the SGX Listing Manual. 1.11 The Audit Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed. 1.12 The Audit Committee shall produce a report on its activities to be included in the Company’s annual report. The report should also disclose the measures taken by the Committee members to keep abreast of changes to accounting standards and issues which have a direct impact on financial statements; and an explanation of how the prospects of Keppel have been assessed, over what period it has done so, and why the Board should consider it to be appropriate to use that period. 1.13 Review the Audit Committee’s terms of reference annually and recommend any proposed changes to the Board for approval. 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 Keppel overall may take in achieving its strategic objectives and the overall Keppel’s levels of risk tolerance, risk parameters and risk policies. 1.2 Review and discuss, as and when appropriate, with Management on Keppel’s risk governance structure and framework including risk policies, risk strategy, risk culture, risk assessment, risk mitigation and monitoring processes and procedures. 1.10 Assess the need to obtain independent legal advice or appoint a compliance adviser in relation to sanctions-related risks applicable to Keppel5. 1.3 Review the Information Technology (IT) governance and cybersecurity framework to ascertain alignment with business strategy and Keppel’s 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 Keppel’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 Keppel’s risk management capabilities including capacity, resourcing, systems, training, communication channels as well as competencies in identifying and managing new risk types. 1.6 Receive and review updates from Management to assess the adequacy and effectiveness of Keppel’s compliance framework in line with relevant laws, regulations and best practices. 1.7 Assess Keppel’s exposure or nexus to sanctions-related risks on an on-going basis1 and monitor Keppel’s risk of becoming subject to, or violating, any sanctions-related laws and regulations (“Sanction Law”)2. 1.8 Ensure that adequate and effective control measures have been implemented to protect Keppel’s interests in relation to any sanctions-related risks3. 1.11 Ensure timely and accurate disclosures to shareholders, Singapore Exchange Securities Limited (“SGX”) and other relevant authorities and continuously monitor the validity of the information provided to shareholders, SGX and other relevant authorities6. 1.12 Through interactions with the Head of Risk and Compliance, review and oversee performance of Keppel’s implementation of compliance programmes. 1.13 Review and monitor Keppel’s approach to ensuring compliance with regulatory commitments, including progress of remedial actions where applicable. 1.14 Review the adequacy, effectiveness and independence of Keppel’s Risk & Compliance function, at least annually, and report the Committee’s assessment to the Board. 1.15 Review and monitor Management’s responsiveness to the risks, matters identified and recommendations of the Risk and Compliance function. 1.16 Provide timely input to the Board on critical risk and compliance issues (including sanctions-related risks), material matters, findings and recommendations. 1.17 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 Keppel and make recommendations to the Board. 1.9 Where Keppel has exposure or nexus to sanctions-related risks, review and assess, on an annual basis, whether there has been a material change in Keppel’s risk of being subject to any Sanction Law4. 1 Para 1.3 of the article issued by SGX on 7 March 2022 titled “Regulator’s Column: What SGX expects of issuers in respect of sanctions-related risks, subject or activity” (“SGX Sanctions Article”) 2 Para 1.4(b) of the SGX Sanctions Article. 3 Para 1.3 of the SGX Sanctions Article. 4 Para 1.4 of the SGX Sanctions Article. 5 Para 1.5 of the SGX Sanctions Article. 6 Para 1.5 of the SGX Sanctions Article. ANNUAL REPORT 2023 103 GOVERNANCE Corporate Governance 1.18 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 Keppel’s risk management system. 1.19 Review and report to the Board annually on the adequacy and effectiveness of Keppel’s risk management systems, including financial, operational, compliance, information technology controls and consideration with respect to any sanctions-related risks1. 1.20 a. Review the Board’s comment on the adequacy and effectiveness of Keppel’s risk management systems and state whether it concurs with the Board’s comments. b. Where there are material weaknesses identified in Keppel’s risk management systems, to consider and recommend the necessary steps to be taken to address them. 1.21 Ensure that the Head of Risk & Compliance has direct and unrestricted access to the Chairman of the Committee. 1.22 Perform such other functions as the Board may determine. 1.23 Review the Committee’s terms of reference annually and recommend any proposed changes to the Board. 1.24 Sub-delegate any of its powers within its terms of reference as listed above from time to time as the Committee may deem fit. C. Nominating Committee 1.1 Recommend to the Board the appointment and re-appointment of directors (including alternate directors, if any). 1.2 Annual review of the structure and size of the Board and Board Committees, and the balance and mix of skills, knowledge, 1 Para 1.4(b) of the SGX Sanctions Article. 104 KEPPEL LTD. experience, and other aspects of diversity such as gender, age, race/ethnicity and nationality. 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. 1.4 Annual review of the independence of each director, and to ensure that the Board comprises (a) majority non-executive directors, and (b) at least one-third, or (if Chairman is not independent) a majority of independent directors. 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 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. 1.7 Annual assessment of the effectiveness of the Board as a whole, the Board Committees and the contribution of the Chairman and individual directors. 1.8 Review the succession plans for the Board (in particular, the Chairman), the CEO and other key management personnel. 1.9 Review talent development plans. 1.10 Review the training and professional development programmes for Board members. 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: a. listed on the Singapore Exchange or any other stock exchange; b. managers or trustee-managers of any collective investment schemes, business trusts, or any other trusts which are listed on the Singapore Exchange or any other stock exchange; and c. parent companies of the Company’s core businesses which are unlisted. 1.12 Report to the Board on material matters and recommendations. 1.13 Review the Nominating Committee’s terms of reference annually and recommend any proposed changes to the Board for approval. 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 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 Keppel’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 scheme). 1.4 Review the ongoing appropriateness 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 Keppel. 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 to provide good stewardship of the Company and key management personnel to successfully manage Keppel for the long term. 1.6 Set performance measures and determine targets for any performance-related pay schemes. 1.7 Administer the Company’s Restricted Share Plan and Performance Share Plan (collectively, the “Keppel Share Plans”), in accordance with the rules of the Keppel Share Plans. 1.8 Report to the Board on material matters and recommendations. 1.9 Review the Remuneration Committee’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 Remuneration Committee may deem fit. Save that a member of this Committee shall not be involved in the deliberations in respect of any remuneration, compensation, award of shares or any form of benefits to be granted to him. E. Board Sustainability and Safety Committee Sustainability 1.1 Review the Company’s sustainability strategy, with reference to industry peers and expectations, to ensure that they are relevant to evolving local and global sustainability trends and developments. 1.2 Ensure that the Company has in place an effective governance structure for sustainability matters. 1.3 Review annually the reasons for and the process of selecting the ESG factors identified to be material to Keppel’s business, taking into account the prevailing business strategy, market conditions and stakeholder concerns. 1.4 Review annually the processes for identifying, assessing, and managing climate-related risks and opportunities across the 4 pillars of governance, strategy, risk management, and metrics and targets, and related reporting aligned with the Task Force on Climate-related Financial Disclosures. 1.5 Oversee the adoption of the Company’s sustainability goals and targets, as well as management’s plans and progress towards achieving the goals and targets. 1.6 Consider management’s proposals and recommendations on sustainability related policies and practices and make recommendations to the Board where relevant. 1.7 Monitor the Company’s performance against previously disclosed targets in relation to identified material ESG factors. 1.8 Monitor the integration of the Company’s sustainability strategy into the Company’s general commercial objectives and align the management of key sustainability issues and impacts with the Company’s broader business and sustainability strategy. 1.9 Monitor international sustainability- related trends and developments and consider the implications on the Company’s sustainability strategy. 1.10 Review stakeholder engagement plan(s) to ensure that stakeholders’ concerns are meaningfully captured and addressed. 1.11 Review and approve the independent assurance and audit process, and assess annually the adequacy and effectiveness of the process. 1.12 Review the Company’s diversity and inclusion management. 1.13 Review the Company’s sustainability reporting and sustainability-related disclosures. Safety 1.14 Review the policies, practices and performance of the Company relating to safety, including in particular the safe condition and responsible operation of Keppel’s assets and business, as well as employee health and well-being. 1.15 Ensure that the safety functions in Keppel are adequately resourced (in terms of number, qualification and budget) and have appropriate standing within the organisation. 1.16 Monitor HSE performance of the Company, analyse trends and accident root causes, and recommend or propose company- wide initiatives for improvement where appropriate to ensure a robust HSE management system is maintained. 1.17 Review the major changes to HSE risk profile of Keppel 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. 1.18 Structure an audit programme of the Company’s HSE management programme to verify effectiveness and use its resources to lead the execution of such audits, drawing additional resources from the line where needed. 1.19 Ensure a process is in place to have fatalities and other major incidents investigated by an independent and competent team. 1.20 Review any major incident that impact, or has the potential to impact, the Company’s safety, environmental and social performance. ANNUAL REPORT 2023 105 GOVERNANCE Corporate Governance NATURE OF DIRECTORS’ APPOINTMENTS AND MEMBERSHIP ON BOARD COMMITTEES The Board currently has 12 members, the majority of whom are non-executive and independent and each board committee (except for the Board Sustainability and Safety Committee) comprise at least three members, a majority of whom (including the Chairman) are non-executive and independent. The current composition of the Board Committees are as follows: Audit Committee Nominating Committee Remuneration Committee Board Risk Committee Board Sustainability and Safety Committee Committee Membership Director Danny Teoh Loh Chin Hua Till Vestring Veronica Eng Jean-François Manzoni Teo Siong Seng Tham Sai Choy Penny Goh Shirish Apte Olivier Blum Jimmy Ng Ang Wan Ching – – – Member Member – – Member Chairman – – – Member – – Chairman Chairman Member – – – Chairman Member Member – – – Member Member Member – – – – – Member Member – – – – – Member Member Member – Member Member Member Member – – Chairman – – – Member – – BOARD ASSESSMENT Evaluation Processes for FY 2023 Each Board member was required to complete a survey prepared by the NC Chairman setting out questions on various aspects of the Board’s and its Committees’ composition, functioning and performance. The NC Chairman then conducted one-on-one interviews with each director. Based on the feedback, the NC Chairman aggregated and integrated the quantitative and qualitative feedback received, and prepared a consolidated report and briefed the NC members and the Board Chairman on the report. Thereafter, the NC Chairman presented the report to the Board for discussion on the changes which should be made to help the Board discharge its duties more effectively. Thereafter and where necessary, the NC chairman will in consultation with the Board Chairman meet with directors individually to provide feedback on their respective board performance with a view to improving their board performance and shareholder value. Performance Criteria The performance criteria for the Board included board size, board and board composition and independence, board dynamics and culture, board processes, board information management and communication, board accountability and performance, CEO performance oversight and succession planning, director development, risk management and board committee effectiveness. KEPPEL WHISTLE-BLOWER POLICY The Keppel Whistle-Blower Policy (the “Policy”) took effect on 1 September 2004 and was enhanced on 15 February 2017, 1 May 2019, 1 November 2021, 1 February 2023 and 1 January 2024 to encourage reporting in good faith of suspected Reportable Conduct (as defined below). The Policy clearly defines and centralises 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 a Keppel company director, officer, employee, or a third party associate that provides services or engages in business activities on behalf of a Keppel company, which occurred in the course of his or her work (whether or not the act is within the scope of his or her employment) which in the view of a Whistle-Blower acting in good faith, is: a. dishonest, including but not limited to theft or misuse of Keppel resources; b. fraudulent; c. corrupt; d. illegal; e. other serious improper conduct; f. an unsafe work practice; or g. any other conduct which may cause financial or non-financial loss to Keppel or damage to Keppel’s reputation. A person who files a report or provides evidence which he or 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 including termination of employment or other contract as the case may be. Similar actions may be taken against any person who subjects (i) a person who has made or intends to make a report in accordance with the Policy, or (ii) a person who was called or may be called as a witness, to any form of reprisal which would not have occurred if he or she did not intend to or had not made the report or be a witness. 106 KEPPEL LTD. The Head of 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. He reports directly to the AC Chairman. REPORTING MECHANISM Whistle-Blowers may report a suspected Reportable Conduct via the independently managed Whistle-blower reporting channels that Keppel has established. There is an email hotline (kpmgethicsline@kpmg.com) and local toll-free numbers for Singapore, Asia (China, India, Indonesia, Japan, Malaysia, the Philippines, South Korea and Vietnam), Europe (Belgium, Germany, Netherlands and United Kingdom), Americas (Brazil and United States of America) and Oceania (Australia). Manning of the whistle-blower hotlines have been outsourced to an independent third party (KPMG) and provides for reporting in the languages listed above. KPMG also maintains the aforementioned email hotline and an online portal, the link to which is available in the “Contact Us” section of Keppel’s website at www.keppel.com. Reports can also be made directly to the Receiving Officer or the AC Chairman. The Policy emphasises that 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 exercise his/her own discretion or in consultation with the Investigation Advisory Committee, make recommendations to the AC Chairman. Where the circumstances warrant WHISTLE-BLOWER REPORTING MECHANISM Supervisor Receiving Officer AC Chairman 1 2 3 4 5 Employee Reporting Channels Non-Employee an investigation, the AC Chairman or the AC (as the case may be) 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 Keppel’s Human Resources, Legal and 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. The Receiving Officer, in consultation with the Investigation Advisory Committee, will prepare a report on her findings including recommendations on any corrective or remedial actions to be taken, and such report shall be submitted to the AC Chairman upon the conclusion of the investigation into any Reportable Conduct. The AC Chairman (whether in the exercise of his own discretion or in consultation with the AC) shall determine the adequacy of corrective or remedial actions proposed (if any). Identities of Whistle-Blowers, participants of the investigations and the Investigation Subject(s) will be kept confidential to the extent possible. In 2023, amongst the reported incidents of breaches to our Code of Conduct received through the Whistle-Blower reporting channels, there were three reports alleging corruption or bribery, one incident related to conflict of interest and another four incidents related to workplace discrimination. All the complaints were followed up and that were no substantiation of the allegations for concluded reviews or those that are currently under review. None of the reported incidents were related to customer privacy data, money laundering or insider trading. NO REPRISAL No person will be subject to any reprisal (such as any detrimental or unfair treatment) 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. ANNUAL REPORT 2023 107 GOVERNANCE 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 directors whom the Company is seeking re-election by shareholders at the upcoming annual general meeting to be held in 2024, is set out below. Name of Director Date of Appointment Date of last re-appointment (if applicable) Age Country of principal residence Penny Goh 2 January 2020 2 June 2020 71 Singapore Ang Wan Ching 1 July 2023 N.A. 57 Germany 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 79 of this Annual Report Whether the appointment is executive, and if so, the area of responsibility Non-executive Non-executive Job Title (e.g. Lead ID, AC Chairman, AC Member etc.) Non-Executive and Independent Director; Audit Committee (Member); Board Risk Committee (Member) Non-Executive and Independent Director; Audit Committee (Member); Board Risk Committee (Member) Professional qualifications Bachelor of Law (Honours), University of Singapore Bachelor of Arts (First Class Honours) in Philosophy, Politics and Economics, University of Oxford; Masters of Business Administration (Dean’s List), INSEAD (France). Working experience and occupation(s) during the past 10 years Co-Chairman and Senior Partner, Allen & Gledhill LLP (2017 to 2019); Partner, Allen & Gledhill LLP (Prior to 2017) Member of Supervisory Board, HQ Capital GmbH & Co KG (Germany) – from April 2023 to present Member of Supervisory Board, HQ Holding GmbH & Co KG (Germany) – from March 2021 to March 2023 External Investment Committee Member, British International Investment plc (UK) – from 2014 to March 2023 External Investment Committee Member, Montana Capital Partners AG (Switzerland) – from 2012 to present Member of Supervisory Board, Bavaria Industries Group AG (Germany) – from 2012 to present Shareholding interest in the listed issuer and its subsidiaries 53,000 (direct interest) in the Company Nil 304,408 (direct interest) in Keppel REIT 286,600 (direct interest) in Keppel DC REIT 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 Other Principal Commitments including Directorships – Past (for the last 5 years) No No Yes No No Yes HQ Holding GmbH & Co KG (Germany) Keppel REIT Management Limited (the manager of Keppel REIT); 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.; Keppel Land Limited (n.k.a. Keppel Management Ltd.) Other Principal Commitments including Directorships – Present Allen & Gledhill LLP (Senior Adviser); HSBC Bank (Singapore) Limited; Singapore Totalisator Board Bavaria Industries Group AG (Germany); AS Beteiligungen und Vermögensverwaltungs GmbH (Germany); HQ Capital GmbH & Co KG (Germany); Montana Capital Partners AG (Switzerland) (Member of Investment Committee) 108 KEPPEL LTD. Name of Director Penny Goh Ang Wan Ching a. Whether at any time during the last 10 years, an application or 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 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? 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? f. Whether at any time during the last 10 years, judgment has 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? No No No No No No g. Whether he has ever been convicted in Singapore or elsewhere of any offence in connection with No 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? i. Whether he has ever been the subject of any order, judgment or 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: No No No i. any corporation which has been investigated for a breach of any law or regulatory requirement No 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 iii. any business trust which has been investigated for a breach of any law or regulatory requirement governing business trusts in Singapore or elsewhere; or No No iv. any entity or business trust which has been investigated for a breach of any law or regulatory No requirement that relates to the securities or futures industry in Singapore or elsewhere, 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 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? If yes, please provide details of prior experience. No No Yes Keppel REIT Management Limited (the manager of Keppel REIT); Mapletree Logistics Trust Management Ltd (the manager of Mapletree Logistics Trust) 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). No No No No No No No No No No No No No No No No No Nil Ms Ang has completed the Listed Entity Directors’ programme organised by the Singapore Institute of Directors ANNUAL REPORT 2023 109 GOVERNANCE 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. This summary of disclosures describes our corporate governance practices with specific reference to the disclosure requirement under the 2018 CG Code. Principles Page Reference in this Report Principles Page Reference in this Report 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 Pages 93 to 94 Page 97 Pages 91 to 93, 102 to 103 Pages 91 to 92 Page 92 Page 92 Page 92 Pages 98 to 100 Page 100 Pages 77, 100 Page 100 Page 100 Page 100 Pages 98 to 100 Page 99 Page 99 Pages 98 to 99 Page 98 Page 99 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 Disclosure on Remuneration Principle 8 Provision 8.1 Provision 8.2 Provision 8.3 Page 76 Page 78 Page 76 Pages 79 to 98, 102 to 106 Pages 77, 84 Page 78 Pages 77 to 78 Pages 82 to 83 Pages 82 to 83 Pages 82 to 83 Pages 79 to 81 Page 77 Pages 74, 75 Pages 74, 75 Page 74 Pages 79 to 84, 104 Page 79 Page 79 Pages 82 to 83 Pages 78, 84 Page 84 Page 106 Pages 84 to 91, 104 to 105 Page 85 Pages 84 to 91, 104 to 105 Page 85 Pages 84 to 91 Pages 84 to 91 Pages 84 to 91 Pages 84 to 91 Page 91 Pages 84 to 91 110 KEPPEL LTD. GOVERNANCE Risk Management Keppel adopts a balanced approach to risk management to optimise returns while considering their impact on corporate sustainability. Managing risks effectively is an integral part of the way in which we develop and execute our business strategies. We undertake only appropriate and well- considered risks, taking into account the impact to our business, stakeholders, and long-term corporate sustainability. It is grounded in our operating principles and belief that a balanced risk-reward methodology is the optimal approach. This applies to all aspects of our business, and particularly, our commitment to environmental, social and governance (ESG) issues and our commitment to deliver long-term value to our stakeholders. Our Risk-Centric Culture and Enterprise Risk Management (ERM) Framework enables us to respond to the dynamic economic environment, evolving business demands, as well as to seize new business opportunities. RISK-CENTRIC CULTURE Mindsets and attitudes are key to effective risk management. Keppel fosters a risk-centric culture through several aspects as shown in Figure 1. 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 103 to 104 of this report. The Board has set out three risk tolerance guiding principles to determine the nature and extent of material risks which the Board is prepared to take in achieving Keppel’s strategic objectives1. These principles are: 1. Risks taken should be carefully evaluated, commensurate with rewards and be in line with Keppel’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 Keppel; and 3. Keppel does not condone safety breaches or lapses, non-compliance with laws and regulations, as well as acts such as fraud, bribery and corruption. Figure 1 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 Keppel-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 and core values 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. 1 The risk tolerance principles apply to all material risks identified, including strategic, financial, operational, compliance and IT risks. ANNUAL REPORT 2023 111 GOVERNANCE Risk Management Figure 2 ERM Framework Strategic External environment and execution of business strategy Financial Internal financial management and controls Operational People, processes, systems and Health, Safety and Environment issues Compliance Compliance with laws and regulations; license to operate IT Technology, cybersecurity, systems Emerging Evolving or emerging threats that affect business Opportunities Potential areas of competitive advantage arising from various risks Incorporating Sustainability Risks and Material Issues Keppel’s risk governance framework, set out on pages 93 to 98 under Principle 9 (Risk Management and Internal Controls), allows the Board and management to determine the adequacy and effectiveness of Keppel’s risk management system. Along with our shifting business landscapes, Keppel is cognisant of the dynamic environment in which it operates. We constantly enhance the framework and systems where necessary, to ensure risk management remains an integral part of our daily decision- making process and operations. Keppel’s ERM framework, a component of Keppel’s System of Management Controls, provides a systematic approach to identify and manage risks. It outlines the requirement for the respective platforms and divisions to recognise key risk areas affecting operations. Each identified risk is assessed for impact and likelihood based on a set of defined impact and likelihood criteria. Impact criteria include, but are not limited to, financial, operational, regulatory and legal. The effectiveness of existing risk management measures is considered before arriving at the risk rating and risk prioritisation. The risk levels of all the key risk areas are detailed in a risk register and risk matrix. The ERM framework also establishes the reporting structure, monitoring mechanisms, processes and tools used, as well as any policies, standards or limits to be applied in managing key risk areas. Keppel’s ERM framework is also constantly enhanced to ensure it remains relevant in our operating environment and where required, is tailored to the requirements of the respective platforms and divisions. The framework takes reference from the Singapore Code of Corporate Governance, the COSO Enterprise Risk Management – Integrated Framework, ISO 22301:2019, ISO 31000:2018 and the Board Risk Committee Guide published by the Singapore Institute of Directors. Management and risk teams across the platforms and divisions closely drive and coordinate Keppel-wide activities and initiatives under the ERM framework. These are facilitated by regular meetings on policies or standards, or to ensure that pertinent risks are identified, assessed and mitigated in a timely manner. Beyond operational activities, we continually improve our risk processes taking reference from industry developments and best practices. The key risks identified for FY 2023 encapsulate both existing business activities and the transformation and growth initiatives under Vision 2030, which includes the divestment of the offshore and marine (O&M) business. We are committed to addressing these risks in line with our philosophy of undertaking only appropriate and well-considered risks to optimise returns in a balanced and holistic manner, with an objective to deliver sustainable long-term value to our stakeholders. STRATEGIC RISKS Market & Competition The major drivers of Keppel’s strategic risk include market forces, evolving competition, changing customer demands, and disruptive technology. Keppel is also exposed to other external factors like volatility in the global economy such as high interest rates, elevated inflation and volatility in global markets, and geopolitical tensions. Despite the many challenges, we have adapted and continued to operate resiliently in 2023. We had proactively taken mitigating actions to adjust and adapt our strategies and responses. During the year, the Board and management stayed focused on the execution of Vision 2030. As Keppel evolves to become a global asset manager and operator creating solutions for a sustainable future, we will continually refine and enhance our risk management framework to support our business and objectives. Strategic Ventures, Investments & Divestments Keppel adopts a structured process for evaluating investment and divestment decisions, including strategic ventures. These endeavours are monitored to ensure alignment with our strategic intent, investment objectives and desired returns. Strategies are revised and updated, where required, in response to the changing business environment. The Investment and Major Project Action Committee works closely with the Board to provide guidance in ensuring that any such 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 business. The evaluation of risks for strategic ventures involves rigorous due diligence, feasibility studies and sensitivity analyses of key assumptions or variables. Key factors considered include the project’s alignment with our strategy, financial viability, country-specific political and regulatory developments, contractual risk implications, sustainability 112 KEPPEL LTD. considerations, as well as past lessons learnt. Our investment portfolios are constantly monitored to ensure that the performance of any such venture is on track to meet its strategic intent and returns. For the divestment of our O&M business in 2023, committees were set up to monitor the progress of the divestment activities and corresponding risks were tracked to ensure timely resolution. Climate Change Keppel’s climate change risks form part of the material ESG issues addressed by the Board and management. We have been incorporating the recommendation of the Task Force on Climate-related Financial Disclosures (TCFD)1 in our reporting framework since 2020 to articulate climate-related risks and opportunities that can have a financial impact on our business. Climate change risks are reviewed and assessed within our ERM framework which guides Keppel on the processes and methods applied in identifying, assessing and managing sustainability-related risks. As part of climate change risk management, we assess both physical and transition risks for Keppel and strengthen our organisational capabilities in response to climate change. The Board Sustainability and Safety Committee (BSSC) reviews the processes for identifying, assessing, and managing climate-related risks and opportunities across the four pillars of governance, strategy, risk management, and metrics and targets, and related reporting aligned with the recommendations of the Task Force on Climate-related Financial Disclosures. The BSSC also oversees the adoption of Keppel’s sustainability goals and targets, as well as management’s plans and progress towards achieving the goals and targets. Keppel has been conducting qualitative analyses of the physical impact of climate change since 2021. In 2023, Keppel conducted a further quantitative analysis focusing on the vulnerability of 19 key assets across our Infrastructure, Real Estate and Connectivity divisions, to physical climate risks over the time periods of 2030, 2050 and 2070. The assets are located across Singapore, China, Vietnam, Indonesia and India, and had a total asset value of $4.9 billion as at end-2022. Based on the assessment, the top three physical risks faced by these assets were extreme water level, extreme temperature and extreme precipitation. The average annual financial impact from physical damage for 2030 for these 19 assets was assessed to range from approximately $14 million to $16 million, based on the Shared Socioeconomic Pathways (SSP): SSP1-2.6, SSP2-4.5 and SSP5-8.5 scenarios, and was assessed to be not material for Keppel. Keppel is currently also conducting a quantitative assessment of the transition risks associated with climate change. The analysis focuses on two key aspects of transition risks which are more readily quantifiable, namely the impact of carbon taxes on power generation assets and other assets subject to carbon taxes, and the indirect impact in terms of the rising price of electricity over time in key markets where Keppel operates. More details will be provided in our Sustainability Report 2023, which will be published in May 2024. Customer & Stakeholder Experience Keppel operates in numerous geographies and has multiple customer touchpoints, including retail consumers in the telecommunications, retail electricity, e-commerce, gas businesses, senior living and commercial retail buildings. Other stakeholders include our regulators, vendors, investors, partners, employees, and the communities in which we operate. We value customer and stakeholder experiences, which have a direct bearing on trust and brand reputation. Hence, we consistently monitor our products and services for safety, quality and reliability. We continually review feedback and post-sales support, and commit ourselves to upholding personal data privacy, product safety and related matters including our responsiveness to inputs from all stakeholders. Human Resources We place a strong emphasis on attracting and developing a high- performing talent pool. To drive our new engines of growth under Vision 2030, we leverage both internal and external programmes to develop the necessary skillsets to enable Keppel’s next phase of growth. 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 and acquiring new organisational capabilities in line with our strategic objectives, whilst maintaining our status as an employer of choice. We emphasise the importance of having a risk-centric mindset, and developing the ability to identify and assess risks, implement mitigating actions, and monitor residual risks in all employees. Keppel Leadership Institute helps to create this mindset by embedding risk management in its leadership courses. OPERATIONAL RISKS Project Management Risk management is an integral part of all projects from initiation to completion to facilitate early detection and proactive management of operational risks. We adopt a systematic risk assessment and monitoring process with special attention 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, regular reviews are conducted along with quality assurance programmes to address issues such as cost, schedule and quality. Project Key Risk Indicators are used as early warning signals to determine if intervention is required. We also conduct knowledge-sharing workshops to share best practices or lessons learnt across Keppel. 1 TCFD has fulfilled its remit and disbanded in October 2023. Following the publication of the inaugural ISSB Standards – IFRS S1 and IFRS S2 – the Financial Stability Board has asked the IFRS Foundation to take over the monitoring of the progress on companies' climate-related disclosures from TCFD. ANNUAL REPORT 2023 113 GOVERNANCE Risk Management These risk management processes help ensure our project delivery is on time and within budget, without compromising on safety or quality, as well as regulatory and contractual obligations. Health, Safety & Environment Keppel is committed to upholding the highest standards of safety in all aspects of our business operations. We continue to focus on and emphasise the importance of staff health and safety by implementing appropriate processes and ensuring adherence to industry standards, regulations, or government guidelines to protect employees or other stakeholders from potential exposure to health or safety hazards. Health, Safety & Environment (HSE) policies, practices and performance, including trends, root cause analysis as well as improvement actions, are discussed and deliberated at the Board Sustainability & Safety Committee (BSSC) on a regular basis. This ensures that there is a robust HSE management system in place. We make efforts to ensure adherence to workplace health and safety precautions, such as conducting risk assessments and thorough inspections of equipment and work areas prior to work commencing. A strong HSE culture is cultivated through various initiatives. This includes regular safety training for employees, where they are educated on safety protocols, procedures, and industry best practices. Keppel also encourages employees to actively participate in identifying and reporting any potential safety hazards, creating a shared purpose of collective ownership and responsibility. Every worker is empowered to stop any unsafe work and this is continuously being reinforced through our Speak Up for Safety Campaign. Keppel’s Zero Fatality Strategy aligns High Impact Risk Activities standards across our global operations. This is achieved by enhancing the competency of employees performing safety-critical tasks, strengthening operational controls, establishing Root Cause Analysis investigation standards across Keppel, as well as deploying leading risk indicators/ metrices to monitor HSE performance standards. In 2023, Keppel won two Workplace Safety and Health Awards for exemplary safety performance, implementation of robust HSE management systems, and efforts to innovate solutions that improve HSE. Environmental management is also a critical area of focus for Keppel and all major operating sites globally are closely monitored for compliance with relevant local or global environmental standards, including protection of the environment and biodiversity. Business & Operational Processes As part of the next phase of Vision 2030, Keppel embarked on a major reorganisation to fast-track our transformation into a global asset manager with deep operating capabilities. The conglomerate structure was removed to form a horizontally integrated structure comprising the Fund Management, Investment and Operating platforms. With the simplification of the organisation structure that consolidated the former business units into one Operating Platform and their integration with the Fund Management and Investment platforms, Keppel can realise significant synergies, including through centralising and optimising its support functions. This aims to build a nimble and efficient company which is better able to scale up quickly, empowered by technology and automation. To manage the complex transformation across people, processes and technology, a Programme Office was set up to orchestrate the programme, coordinate across the various workstreams and ensure a smooth transition into our new operating model, which is now in effect. These workstreams covered activities such as operating model and processes, system changes, corporate governance, communications and change management, among others. Regular Steering and Working Committee meetings at different levels were held at a rigorous cadence to drive programme implementation, track key risks and make decisive actions to resolve issues. The leadership team provided strong alignment and one tone from the top which are critical to the success of the transformation. To operationalise the new model, there was extensive cross-functional collaboration across businesses, functions and systems teams. Communications and training through various channels were held to manage the change and ensure that employees are updated on the transformation journey and are acquainted with the new organisation structure, the processes and any changes to their roles. While we have successfully transitioned to the new operating model, we will need to continue optimising our processes, foster greater integration and leverage technology in order to be more efficient and capture further synergies as we scale up. Taking a risk-based approach, we seek to improve digitalisation and automation in enhancing or optimising our processes. We also continually evaluate our procedures, policies and authority limits to ensure that they stay relevant. Business Continuity We are committed to Business Continuity Management (BCM) standards that equip us with the capability to respond effectively to business disruptions. We plan for contingencies in the event of major catastrophes occurring in our operating regions. This includes events such as natural disasters, fire, pandemics, terrorism and cyber-attacks, as well as the failure of critical equipment/systems and industrial accidents. We also continually monitor other potentially disruptive threats to our business operations and adapt our plans to ensure operational resilience. Our Incident Reporting and Crisis Management operating standard guides us in the management of and response to major incidents, while our Business Continuity Plans address post-event mitigation. These are coordinated by management and the Keppel BCM Steering Committee, which provide sponsorship, direction, and guidance to ensure a state of constant readiness-to-respond. We continually 114 KEPPEL LTD. refine our capabilities in responding to major incidents or crises with the aim of safeguarding our people, assets, and stakeholders’ interests, as well as Keppel’s reputation. We also recognise the significance of cyber threats as a potential cause of business disruption and maintain a Keppel Cyber Incident Response plan, which details our response and recovery protocols in the event of a cyber incident. The plan takes reference from local and international standards and Cyber Tabletop Exercises are conducted regularly to validate the effectiveness of these protocols. Cyber Security, Data Protection and Technology Technology, cyber security and data-related risks, including outsourced services, are a part of Keppel’s operational risks. We recognise the criticality of global cyber threats and have established technology and cyber governance structures and frameworks to address both general technology and cyber security controls, covering key areas such as business disruption, theft/loss of confidential data and data integrity. Keppel continues to have a dedicated Cyber Security function which reports to the Head of Cyber Security, who has a reporting line to the Board Risk Committee through the Head of Risk & Compliance, to reinforce independence and facilitate Board oversight. A Digital Transformation Steering Committee is in place to provide strategic guidance and endorse Keppel-wide technology vision, initiatives and policies to achieve alignment and optimisation in achieving business strategies. Keppel continually monitors its technology and cyber security- related risks. The work involves the identification, assessment and management of risks within critical technology and data assets, applying leading industry guidelines where relevant, for example such as those by the Cyber Security Agency of Singapore. Keppel also seeks to improve technology and cyber security standards and inculcate a culture of cyber awareness among employees. In 2023, Keppel made progress on various initiatives to strengthen our technology and cyber security governance and controls through the refinement, enhancement and alignment of our frameworks, processes and systems, as shown in the table below. Keppel did not experience any breaches of information security during the year. OUR FRAMEWORK, PROCESS AND SYSTEMS Framework • Establishment of an Artificial Intelligence (AI) Governance Framework to provide guidelines and governance oversight, to manage the arising risks for safeguarding the use of AI within Keppel • Establishment of a Data Governance Framework to promote standards on how data is used throughout the data life cycle to improve data quality, enhance decision-making, and manage data risks Process • Harmonised the IT and cyber structure across Keppel to optimise and globally centralise oversight and governance to effectively manage technology and cyber risks • Appointment of Business Information Security Officer (BISO) as the cyber security business partner for the respective platforms and divisions to work closely with the management to strengthen cyber risk management and build cyber resiliency • Enhanced the ability to detect and respond to cyber threat actors while safeguarding assets from emerging threats through refinement of layered cyber security controls Systems • Completed annual IT and cyber business continuity management workshop, disaster • recovery and tabletop exercises, to ensure timely recoverability of business-critical IT systems Implemented recommendations from assessments and exercises to further strengthen cyber resilience • Engaged security service providers to conduct vulnerability assessments to provide external view of cyber risks that help strengthen our IT systems Training and assessment exercises were conducted throughout the year to heighten employees’ overall awareness of technology and cyber threats. In addition, Keppel has a set of Keppel-wide technology policies that was established according to leading industry guidelines as well as local regulators’ requirements and guidelines. These are regularly reviewed to ensure that the control requirements remain relevant in the current cyber and technology risk landscape. Independent external audits as well as internal audits are performed regularly on Keppel’s IT policies, IT infrastructure and information security management systems to ensure the adequacy and effectiveness of the controls. Vulnerability assessment and penetration testing are conducted to identify security vulnerabilities in Keppel’s IT environment. Appropriate mitigations/ remediations are carried out to reduce or remove associated risks, enabling Keppel to better protect its systems and data from malicious attacks. Technical teams and other experts across Keppel enable us to keep abreast of evolving technology. Risk mitigation or responses are either calibrated at respective platforms or divisions or managed strategically with the assistance of the Transformation & Innovation function, which assists in driving Keppel-wide adoption of new technology and innovation. The Keppel Technology Advisory Panel, comprising thought leaders and business veterans from key industries relevant to Keppel, also regularly advises Keppel in areas of technological innovation. More information on Keppel’s technology and innovation management can be found on pages 22 to 23 and 35 of this report. COMPLIANCE RISKS Laws, Regulations & Compliance We closely monitor developments in relevant laws and regulations of countries where Keppel operates to ensure regulatory compliance. We recognise that non-compliance with any law or regulation may have ANNUAL REPORT 2023 115 GOVERNANCE Risk Management detrimental effects on Keppel in multiple areas such as financial and operational performance, or reputation. As such, we stay abreast of changes to the applicable laws and regulations to assess any exposures or risks to Keppel effectively and expediently. Significant regulatory risk areas, such as those relating to potential corruption, are proactively identified and surfaced to management, and where applicable, are further assessed by the Board. With respect to corruption, key risk areas include situations where external agents are appointed for business development. We continually enhance our regulatory compliance policies and procedures to ensure that Keppel maintains a high level of compliance and ethical standards in the way we conduct business. We have zero tolerance for fraud, bribery, corruption and any violation of laws and regulations. In 2023, we continued to refine and enhance our regulatory compliance programme, update processes, deepen employee understanding, and ensure that compliance awareness and principles are well embedded in all business 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 118 to 120 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. the accuracy of the financial statements and adequacy of the internal control framework supporting the statements. Where required, we leverage the expertise of the external auditors in the interpretation of financial reporting standards and changes to existing or new reporting requirements. We also conduct regular training and education programmes to enhance the capabilities of our finance managers across Keppel. Our system of internal controls is outlined in Keppel’s System of Management Controls detailed in pages 94 to 95 of this report. Financial Management Financial risk management relates to Keppel’s ability to meet financial obligations and mitigate credit, liquidity, currency and interest rate risks. Details can be found on pages 197 to 211 of this report. In these areas, policies, processes and financial authority limits are reviewed regularly to ensure their adequacy in mitigating risks and to incorporate changes to ensure they remain relevant to Keppel’s operating environment. We are focused on financial discipline and seek to deploy our capital to earn the best risk-adjusted returns for our shareholders, while maintaining a strong balance sheet to seize new opportunities. In 2023, as global economies grappled with macroeconomic challenges, high interest rates and heightened geopolitical competitions, Keppel maintained a proactive approach to liquidity management and performed stress tests where necessary to assess our exposure to volatility in currency and rising interest rates, with mitigating actions taken where required. Regular external and internal audits are conducted to provide assurance on Our financial management procedures include the evaluation of counterparties and other related risks against pre-established internal guidelines. We conduct impact assessments and stress tests to gauge Keppel’s potential financial exposure to changing market situations. This enables informed decision making and the implementation of prompt mitigating actions. We also regularly monitor our country risk exposure to ensure that our business as well as our portfolio of assets and investments are diversified against the systemic risks of operating in a specific geography. Proactive Management of Risks Effective risk management is dynamic and encompasses the evaluation of both risks and opportunities. We recognise the need to effectively manage risks as an inherent part of business operations to optimise returns. We take a business-centric approach to managing risks and aligning business activities with risk considerations, and discuss issues in an open and transparent manner, to enable us to pursue optimal risk-return initiatives. Our risk framework and processes continually evolve to ensure that they stay effective and relevant. Across Keppel, we identify and review emerging risks at all levels throughout the year. Where relevant, these are escalated and discussed at various forums to determine any further actions and/or responses. We recognise that our systems and processes provide reasonable but not absolute assurance, and hence continuously look to adapt and improve to ensure that our ability to manage and respond to risks remains relevant and effective. EMERGING RISKS Heightened Geopolitical Risks Geopolitical risks have risen with the outbreak of conflict in the Middle East, the ensuing Russia-Ukraine war, 116 KEPPEL LTD. and heightened tensions among major powers, especially the US and China. The recent military tensions and conflict could contribute to economic uncertainty and disrupt global supply chains and potentially destabilise the energy market and lead to higher cost of doing business. With Keppel’s growing presence in Europe and investment in energy infrastructure, the escalation of any of these risks could be detrimental to Keppel. In addition, with our exposure to China and the rest of Asia, the effects of the continued tension between US and China, together with sluggish economic recovery in China, also pose a significant risk to Keppel’s business. In view of the heightened geopolitical risks, we are monitoring global developments closely. We have also conducted a Keppel-wide scenario planning exercise to assess potential risks from several global macroeconomic, geopolitical and climate-related scenarios. The scenarios served to generate inputs for the Board and management when considering Keppel’s strategy, while also identifying potential risks and opportunities. Playbooks with action plans have been developed to prepare for the possibility of any of the risk scenarios becoming a reality. Generative AI Risks As Keppel continues its digitalisation journey as a key enabler to achieve our Vision 2030 goals, we are likely to make more use of AI and in particular Generative AI (GenAI) (e.g., chatbots) to drive productivity increase and growth, which would require Keppel to manage the potential associated risks. For example, misuse of GenAI can lead to reputational damage and loss of customer trust, financial losses, regulatory penalties and litigation. Other risks include data security, intellectual property, privacy as well as sensitive/confidential data exposure. To mitigate this emerging risk, Keppel has set up an internal AI forum to oversee the strategic direction and coordinate the progress on the adoption of GenAI across Keppel. In addition, a set of AI principles has been developed to provide guidance on the dos and don’ts to mitigate the risks. Keppel has established its set of AI Risk Management Guidelines by taking reference from Singapore’s Infocomm Media Development Authority (IMDA)’s Model AI Governance Framework. The elements of the AI Risk Management Guidelines include internal governance, risk assessments, AI life cycle governance and stakeholder engagement. Risk assessment involves identifying the potential vulnerabilities that could compromise data security and confidentiality as well as assessing the impact on business operations if AI systems do not perform as intended. Nature and Biodiversity There is growing recognition of the importance of understanding nature and biodiversity-related risks and their potential impacts on businesses and communities. At the United Nations Biodiversity Conference (COP 15) in December 2022, 196 countries agreed to the Kunming-Montreal Global Biodiversity Framework to halt and reverse nature loss by 2030. In September 2023, the Task Force on Nature-related Financial Disclosures (TNFD) published its final recommendations which provide a framework to help companies identify, assess, manage, and where appropriate, disclose their nature-related risks and opportunities. Keppel operates mainly in urban areas and most of our activities and assets have limited direct impact on nature. Nevertheless, continued deterioration of nature and biodiversity loss can have longer-term impacts on the communities that Keppel operates in, as well as Keppel’s supply chains. Nature-related disclosures may increasingly be included in regulatory requirements, while stakeholders, including investors and customers, may also pay growing attention on how Keppel is managing its nature-related risks and opportunities. Keppel’s Environmental Sustainability Policy, which is available online, includes our commitment to practise good stewardship of the environment by protecting biodiversity and avoiding deforestation. We avoid disruption to sites containing critical biodiversity by applying the necessary mitigating measures when operating in or near such areas, and avoid deforestation as far as possible and where unavoidable, replanting trees to achieve net-zero deforestation. Keppel has been monitoring and disclosing our carbon emissions, wastewater discharge, water withdrawal, and waste generation, which are included among TNFD’s core global metrics. We will further study the recommendations of TNFD, including assessing their applicability to Keppel’s business and how they can be implemented in an appropriate manner. We will continue to monitor emerging regulatory requirements and international best practices regarding nature and biodiversity, and will further refine Keppel’s policies accordingly. ANNUAL REPORT 2023 117 GOVERNANCE Regulatory Compliance The tone for regulatory compliance is driven from the top and resonates with our employees at every level across Keppel. We remain vigilant and determined to build a disciplined and sustainable company. 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 in whichever countries we operate in. We strive to deliver outstanding performance, whilst maintaining the highest ethical standards in line with applicable laws and regulations. We are clear with our tone for regulatory compliance, which is consistently emphasised from the top and throughout all levels across Keppel. We do not tolerate fraud, bribery, corruption or any violation of laws and regulations. STRATEGIC OBJECTIVES In 2023, we continued to make significant progress in embedding a robust compliance framework and process throughout Keppel. We continued to implement ISO 37001 Anti-Bribery Management System across our platforms and divisions to ensure consistency and operational effectiveness of the compliance programme. During the year, the applicable in-scope entities achieved ISO 37001 certification/re-certification, which follows the ISO 37001 certification achieved by our overseas entities in India, Belgium and Qatar in 2022. Our compliance framework is designed to reflect the size, role and activity of the respective platforms and divisions, with appropriate compliance control systems to effectively detect and remediate potential gaps. We are committed to forging a sustainable compliance framework that supports Keppel’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 Keppel’s implementation of compliance and governance systems. The Risk & 118 KEPPEL LTD. Compliance support function serves as a secretariat to the BRC, assessing and reporting on compliance risks, controls and mitigation. The Regulatory Compliance Management Committee (RCMC) is chaired by Keppel’s CEO and its members include the respective platforms and divisions’ heads. The RCMC articulates Keppel’s commitment to regulatory compliance, and directs and supports the development and implementation of overarching compliance policies and guidelines. The RCMC is supported by the Regulatory Compliance Working Team (RCWT), which is chaired by the Head of Risk & Compliance. The RCWT (with the support of Risk & Compliance) oversees the development and review of pertinent regulatory compliance matters, overarching compliance policies and guidelines for Keppel. It also reviews Keppel’s compliance training and communication programmes conducted by Risk & Compliance. The respective platforms and divisions have dedicated Compliance Leads. He/she is supported by the risk and compliance team and is responsible for driving and administering the compliance programme and agenda for the respective platforms and divisions. This includes providing support to the relevant 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 Keppel’s compliance teams with additional professional and experienced officers. Under the RCMC’s direction, the respective platforms and divisions are responsible for implementing Keppel’s Code of Conduct, as well as Keppel’s 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 implemented are practical, adequate and effective. Compliance Resources Culture Compliance, Risk Assessment, Review & Monitoring Regulatory Compliance Framework Policies & Procedures Key Compliance Processes Training & Communications REGULATORY COMPLIANCE FRAMEWORK Our Regulatory Compliance Framework (Framework) focuses on critical pillars covering the areas of culture; policies and procedures; training and communication; key compliance processes; as well as compliance risk assessment, reviews and monitoring, and compliance resources. A key aspect of the Framework is the structure of the compliance organisation. The Head of Risk & Compliance reports directly to the chairman of the BRC. Similarly, the Compliance Leads of the respective platforms and divisions have direct reporting lines to the respective Audit and Risk Committees (where applicable). In addition, the Compliance Leads report directly to the Head of Risk & Compliance. This reporting structure reinforces independence of the Compliance function and enables the Board and management to provide continuous, clear and explicit support. It also lends credence and credibility to Keppel’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, as well as a compliance culture that permeates all levels across Keppel. Anti-bribery, anti-corruption and reporting mechanisms are widely publicised in our offices globally. We issue Keppel-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 the respective platforms and divisions 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. KEPPEL’S POLICIES & PROCEDURES Keppel’s Code of Conduct We have a strict Keppel’s Code of Conduct that applies to all employees, who are required to acknowledge and comply with Keppel’s Code of Conduct. Keppel’s Code of Conduct sets out important principles to guide employees in executing their duties and responsibilities to the highest standards of business integrity. It encompasses topics ranging from conduct in the workplace to business conduct, including clear provisions on prohibitions against bribery and corruption, and conflicts of interests amongst others. Keppel’s Code of Conduct is publicly available on Keppel’s website. We continue to review and enhance Keppel’s Code of Conduct to ensure that it stays relevant and instructive. Appropriate disciplinary action, including suspension/ termination of employment, is taken if an employee is found to have violated Keppel’s Code of Conduct. 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 Keppel’s Code of Conduct. SUPPLIER CODE OF CONDUCT The acknowledgement to abide by our Supplier Code of Conduct is mandatory for all key suppliers across Keppel. The areas covered within the Supplier Code of Conduct include proper business conduct, human rights, fair labour practices, stringent safety and health standards, as well as 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 107 of this report, are widely communicated and made accessible. PERSONAL DATA PROTECTION POLICY Guidance is provided to employees on the Personal Data Protection Commission’s advisory guidelines to ensure compliance with the requirements of the Personal Data Protection Act (PDPA). When necessary and appropriate, Keppel’s personal data protection policy is updated in accordance with changes in applicable privacy laws and regulations. Keppel’s Personal Data Protection Policy (PDPP) applies to all staff of Keppel and its related companies. It informs and guides our employees on activities which involve the collection, use, disclosure, storage, transfer and retention of personal data. Entities that perform services for or on behalf of Keppel, including vendors, contractors, partners and agents, are also expected to comply with the PDPP. We have a designated Data Protection Officer within the respective platforms and divisions that staff can reach out to in case of any data protection or privacy issues and concerns. Failure to comply with the PDPP may result in penalties and fines imposed by the law and disciplinary actions by the respective business division. M1 is the first telecommunications provider in Singapore to receive the Data Protection Trustmark (DPTM) certification1 by the Infocomm MediaDevelopment Authority, while Keppel Electric2 conducts external audits on compliance with the PDPA. Keppel is generally required to seek and obtain an individual’s consent before collecting, using or disclosing any personal data pertaining to him/ her. This includes informing customers of the nature of information captured and the use of the information. Customers can decide the purposes for which their personal data is collected, used, retained and processed through an opt-out option, and are entitled 1 2 In line with the DPTM framework, M1 informs customers on the nature of information captured; the use of the collected information; possibility for customers to decide how private data is collected, used, retained and processed (opt-out option is available, opt-out consent is required, request access to data held by M1, request their data be corrected or deleted); how long the information is kept on corporate files; how the information is protected; and third-party disclosure policy (private and public entities). In compliance with the PDPA, Keppel Electric has fulfilled the external audit requirements as mandated by Singapore’s Energy Market Authority. ANNUAL REPORT 2023 119 GOVERNANCE Regulatory Compliance to withdraw their consent at any time where reasonable notice has been given. COMPLIANCE POLICIES We maintain a comprehensive list of policies covering compliance-related matters including anti-bribery, gifts and hospitality, dealing with third-party associates (TPA), 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 Keppel operates. Unless the jurisdictional regulatory requirements are more stringent, these policies represent the baseline standards for Keppel. We ensure all compliance policies, including translated versions, are made available and accessible to all employees globally. We maintain a Keppel Sanctions Compliance policy and continually monitor updates on sanctions requirements. TRAINING & COMMUNICATIONS Training is an essential component of Keppel’s regulatory compliance framework. Our programmes are tailored to specific audiences and we leverage Keppel-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 Keppel’s 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 Keppel’s Code of Conduct in multiple languages are carried out for industrial/general workers. Also, e-training outlining the principles underpinning Keppel’s policies and key areas to note when representing or acting on Keppel’s behalf is conducted for high-risk TPAs. 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 requirements. On the annual e-learning training programme, new e-training modules covering Personal Data Protection were introduced in 2023. 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. 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 of changes in approaches, best practices and tools. 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 Keppel, we issue regular awareness communications on compliance matters, with a focus on topical compliance matters including anti-bribery, sanctions anti-money laundering and personal data protection. KEY PROCESSES Due Diligence We continue to improve our risk-based due diligence process for all TPAs who represent Keppel 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 Keppel’s Code of Conduct. The due diligence process for the onboarding and monitoring of TPAs has been enhanced with the implementation of a system platform and solution to standardise and automate processes across Keppel. Other Processes As part of our ongoing review of our compliance 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 continually explore the use of data analytics to enhance value and ensure efficiency of our compliance processes. In addition to the mandatory annual declaration of conflict of interest by all employees of Keppel, a Conflict of Interest App has been put in place to facilitate the conflict of interest review and conflict resolution process. RISK ASSESSMENT, REVIEW & MONITORING We continually develop Keppel’s compliance resources and framework. This enables the Compliance team to conduct independent risk assessments to identify and mitigate key compliance risks. Regular discussions are held with all platforms and divisions, focusing on risk assessments including specific compliance risks identified for the respective platforms and divisions. Separately, independent reviews of compliance risks are executed within the scope of internal audits, including 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. 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. 120 KEPPEL LTD. Directors’ Statement and Financial Statements FINANCIAL REPORT Directors’ Statement Independent Auditor’s Report Balance Sheets Consolidated Profit or Loss Account Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity/ Statement 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 Value-Added Statements Share Performance Shareholding Statistics Notice of Annual General Meeting and Closure of Books Corporate Information Financial Calendar 122 128 136 137 138 139 142 145 218 227 228 234 239 244 245 246 247 253 254 ANNUAL REPORT 2023 121 FINANCIAL REPORT Directors’ Statement For the financial year ended 31 December 2023 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 2023. 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 136 to 226, 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 2023, 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: Danny Teoh (Chairman) Loh Chin Hua (Chief Executive Officer) Till Bernhard Vestring Veronica Eng Jean-François Manzoni Teo Siong Seng Tham Sai Choy Penny Goh Shirish Moreshwar Apte Olivier Pascal Marius Blum Jimmy Ng Hwee Kim Ang Wan Ching (appointed on 1 July 2023) 2. AUDIT COMMITTEE The Audit Committee of the Board of Directors comprises five independent non-executive Directors. Members of the Committee are: Tham Sai Choy (Chairman) Veronica Eng Penny Goh Ang Wan Ching (appointed on 1 July 2023) Jimmy Ng Hwee Kim (appointed on 1 January 2024) The Audit Committee carried out its function in accordance with the Companies Act 1967, AC Guide issued by Singapore Institute of Directors, Rule 1207(10) of the Listing Manual and Code of Corporate Governance, which include the following: • • • • • • • Reviewed financial statements and announcements relating to financial performance, and significant financial reporting issues and judgments contained in them; Reviewed and reported to the Board at least annually on the adequacy and effectiveness of financial, operational, compliance and information technology controls, as well as risk management systems 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 risk management systems, and state whether it concurs with the Board’s comments; and if there are material weaknesses identified in the Group’s internal controls systems, 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 the adequacy, effectiveness, independence, scope and results of the internal and external auditors at least annually and reported the Audit Committee’s assessment to the Board; Ensured that the Head of Internal Audit and external auditors have direct and unrestricted access to the Chairman of the Audit Committee, and that they are able to meet separately and privately to discuss matters and concerns; Monitored and assessed the role and effectiveness of the internal audit function, including the internal audit charter, plans, activities (including consulting services), staffing, budget, resources and organisational structure of the internal audit function; 122 KEPPEL LTD. • • • • • • • • • • • • • • • 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; Reviewed audit plans and reports of the external auditors and on a periodic basis the internal auditors, management’s responsiveness to any findings and recommendations to the extent set out/identified, and effectiveness of any follow up actions taken; Ensured that a Quality Assurance Review on internal audit function is independently conducted at least once every five years; Decided and approved 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; Made recommendations to the Board on the proposals to the shareholders on the appointment, re-appointment and removal of the external auditors, and approved the remuneration and terms of engagement of the external auditors; Reviewed the nature and extent of non-audit services performed by external auditors; Met with external auditors (without the presence of management and internal auditors) and internal auditors (without the presence of management and external auditors), at least annually; Oversee the establishment and operation of the whistleblowing process. 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 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; Investigated any matters within the Audit Committee’s purview, whenever it deemed necessary; Perform such other functions as the Board may determine; Reported to the Board on the Committee’s proceedings on significant issues and judgements that the Committee considered in relation to the financial statements, and how these issues were addressed, the Committee’s assessments on internal control and risk management systems, the internal audit function and external auditors, as well as any material matters, findings and recommendations; Ensured proper disclosure and reporting to shareholders on interested party transactions as required by the SGX Listing Manual; Produced a report on its activities to be included in the Company’s annual report. The report should also disclose the measures taken by the Committee members to keep abreast of changes to accounting standards and issues which have a direct impact on financial statements; and an explanation of how the prospects of the Group have been assessed, over what period it has done so, and why the Board should consider it to be appropriate to use that period; and Reviewed the Audit Committee’s terms of reference annually and recommended proposed changes to the Board for approval. 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. 3. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURES Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object was to enable the Directors of the Company to acquire benefits by means of the acquisition of shares or debentures in the Company or any other body corporate other than the Keppel Restricted Share Plan, Keppel Performance Share Plan, Keppel Restricted Share Plan 2020, Keppel Performance Share Plan 2020 and Remuneration Shares to Directors of the Company. ANNUAL REPORT 2023 123 FINANCIAL REPORT Directors’ Statement For the financial year ended 31 December 2023 4. DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES According to the Register of Directors’ shareholdings kept by the Company for the purpose of Section 164 of the Companies Act 1967, 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 Ltd. (No. of ordinary shares) Danny Teoh Loh Chin Hua Loh Chin Hua (deemed interest) Till Bernhard Vestring Veronica Eng Jean-François Manzoni Teo Siong Seng Teo Siong Seng (deemed interest) Tham Sai Choy Penny Goh Shirish Moreshwar Apte Olivier Pascal Marius Blum Jimmy Ng Hwee Kim (Unvested restricted shares to be delivered after 2020) Loh Chin Hua (Unvested restricted shares to be delivered after 2021) 4 Loh Chin Hua (Unvested restricted shares to be delivered after 2022) 4 Loh Chin Hua Holdings At 1.1.2023 31.12.2023 21.1.2024 129,825 2,949,667 163,825 3,967,246 163,825 3,967,246 38,500 103,000 56,000 123,000 14,000 21,483 170,570 44,000 3,000 – – 38,500 112,000 66,000 131,000 21,000 21,483 179,570 53,000 11,000 4,000 4,000 38,500 112,000 66,000 131,000 21,000 21,483 179,570 53,000 11,000 4,000 4,000 86,958 – – 264,650 189,225 189,225 – 426,747 426,747 (Contingent award of performance shares issued in 2019 to be delivered after 2022) 1, 2 Loh Chin Hua 365,000 – – (Contingent award of performance shares issued in 2020 to be delivered after 2023) 1, 3 Loh Chin Hua 365,000 365,000 365,000 (Contingent award of performance shares issued in 2021 to be delivered after 2023) 1 Loh Chin Hua 365,000 365,000 365,000 (Contingent award of performance shares issued in 2022 to be delivered after 2024) 1 Loh Chin Hua 400,000 400,000 400,000 (Contingent award of performance shares issued in 2023 to be delivered after 2023) 1, 4 Loh Chin Hua (Contingent award of performance shares issued in 2023 to be delivered after 2024) 1, 4 Loh Chin Hua (Contingent award of performance shares issued in 2023 to be delivered after 2025) 1 Loh Chin Hua – – – 313,900 313,900 172,000 172,000 450,000 450,000 (Contingent award of performance shares – Transformation Incentive Plan issued in 2021 to be delivered after 2025) 1 Loh Chin Hua 970,000 970,000 970,000 (Contingent award of performance shares – Transformation Incentive Plan issued in 2023 to be delivered after 2025) 1, 4 Loh Chin Hua 124 KEPPEL LTD. – 417,100 417,100 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. 2 The performance period of the Keppel PSP award issued in 2019 was extended for 1 more year as the targets of the award were set before the onset of the COVID-19 pandemic. The achievements in Year 2019, 2021 and 2022 will be used to determine the vesting level of the award at the end of the extended performance period. 3 The performance period of the Keppel PSP award issued in 2020 was extended for 1 more year as the targets of the award were set before the onset of the COVID-19 pandemic. The achievements in Year 2021, 2022 and 2023 will be used to determine the vesting level of the award at the end of the extended performance period. 4 The unvested restricted shares and contingent award of performance shares include adjustments made on 27 March 2023 to certain unvested shares under the Keppel Share Plans arising from the dividend in specie of the Seatrium Limited (formerly, Sembcorp Marine Ltd) shares (“Consideration Shares”) to the Company’s shareholders. 5. SHARE PLANS OF THE COMPANY The Keppel Performance Share Plan (“Keppel PSP”) and Keppel Restricted Share Plan (“Keppel RSP”) were approved by the Company’s shareholders at the Extraordinary General Meeting of the Company on 23 April 2010. At the Annual General Meeting held on 2 June 2020, the Company’s shareholders approved the adoption of the Keppel Performance Share Plan 2020 (“Keppel PSP 2020”) and Keppel Restricted Share Plan 2020 (“Keppel RSP 2020”), replacing the Keppel PSP and Keppel RSP respectively with effect from 2 June 2020. The Keppel PSP and Keppel RSP were terminated on the same day. The termination of the Keppel PSP and Keppel RSP will not, however, affect awards granted prior to such termination, whether such awards have been released (whether fully or partially) or not, which awards will continue to be valid and be subject to the terms and conditions of the Keppel PSP and Keppel RSP. Details of share plans awarded under the Keppel PSP, Keppel PSP-M1 Transformation Incentive Plan (“Keppel PSP-M1 TIP”), Keppel PSP 2020, Keppel PSP 2020-Transformation Incentive Plan (“Keppel PSP 2020-TIP”) and Keppel RSP 2020-Deferred Shares are disclosed in Note 3 to the financial statements and as follows: Contingent awards: Date of Grant Keppel PSP 30.4.2019 31.3.2020 Keppel PSP-M1 TIP 17.2.20205 17.2.2020 Keppel PSP 2020 30.4.2021 29.4.2022 28.4.2023 Keppel PSP 2020-TIP 30.7.2021 29.4.2022 Balance at 1.1.2023 Contingent awards granted Adjustment upon release Released Cancelled Number of shares 1,462,847 1,379,033 2,841,880 115,100 264,800 379,900 1,420,000 1,695,000 – 3,115,000 – – – – – – – – 1,845,000 1,845,000 503,512 592,984 (1,966,359) – 1,096,496 (1,966,359) (147,624) – (147,624) 32,524 113,864 146,388 569,020 660,725 – 1,229,745 10,430,000 790,000 11,220,000 – – – 3,806,318 339,700 4,146,018 Balance at 31.12.2023 – 1,972,017 1,972,017 – 378,664 378,664 – – – – – – – – – – – – – (96,698) (158,430) – (255,128) 1,892,322 2,197,295 1,845,000 5,934,617 (2,001,867) 12,234,451 (257,400) (2,259,267) 872,300 13,106,751 5 The performance period of the 3-year Keppel PSP-M1 TIP issued in 2020 was extended for 1 more year as the targets of the award were set before the onset of the COVID-19 pandemic. The achievements in Year 2019, 2021 and 2022 will be used to determine the vesting level of the award at the end of the extended performance period. ANNUAL REPORT 2023 125 FINANCIAL REPORT Directors’ Statement For the financial year ended 31 December 2023 5. SHARE PLANS OF THE COMPANY (continued) Awards released but not vested: Date of Grant Keppel PSP 30.4.2019 Keppel PSP-M1 TIP 17.2.2020 Keppel RSP 2020-Deferred Shares 15.2.2021 15.2.2022 08.2.2023 15.2.2023 01.3.2023 Balance at 1.1.2023 Released Vested Cancelled Other adjustments Balance at 31.12.2023 Number of shares – – – – 1,966,359 1,966,359 (1,966,359) (1,966,359) 147,624 147,624 (147,624) (147,624) – – – – – – – – 1,442,179 3,812,169 – – – 5,254,348 – – 140,059 5,345,420 651,640 6,137,119 (2,048,054) (2,951,470) (46,686) (2,956,851) (217,204) (8,220,265) (6,427) (113,664) – (204,390) (4,772) (329,253) 612,302 1,617,505 – 2,278,270 – 4,508,077 – – – – – 2,364,540 93,373 4,462,449 429,664 7,350,026 Following the dividend in specie of the Seatrium Limited (formerly, Sembcorp Marine Ltd) shares (“Consideration Shares”) to the Company’s shareholders, adjustments have been made on 27 March 2023 to certain unvested shares under the Keppel Share Plans. The increase in unvested shares due to the adjustments were: • • • • • 1,222,008 unvested shares under the Keppel PSP; 163,357 unvested shares under the Keppel PSP-M1 TIP; 1,229,745 unvested shares under the Keppel PSP 2020; 4,146,018 unvested shares under the Keppel PSP 2020-TIP; and 4,510,021 unvested shares under the Keppel RSP 2020-Deferred Shares. No Director of the Company received any contingent award of Shares granted under the Keppel PSP, Keppel RSP 2020 and Keppel PSP 2020 except for the following: Contingent awards: Keppel PSP Executive Director Loh Chin Hua Keppel PSP 2020 Executive Director Loh Chin Hua Keppel PSP 2020-TIP Executive Director Loh Chin Hua Contingent awards granted during the financial year Contingent awards released during the financial year Aggregate awards granted since commencement of plans to the end of financial year Aggregate other adjustments since commencement of plans to the end of financial year Aggregate awards released since commencement of plans to the end of financial year Aggregate awards not released as at the end of financial year – (490,633) 2,250,814 (655,731) (1,073,133) 521,950 450,000 – – – 1,215,000 328,950 970,000 417,100 – – 1,543,950 1,387,100 126 KEPPEL LTD. Awards: Keppel RSP 2020-Deferred Shares Executive Director Loh Chin Hua Awards released but not vested: Keppel RSP 2020-Deferred Shares Executive Director Loh Chin Hua Keppel PSP Executive Director Loh Chin Hua Awards granted during the financial year Awards released during the financial year Aggregate awards granted since commencement of plans to the end of financial year Aggregate other adjustments since commencement of plans to the end of financial year Aggregate awards released since commencement of plans to the end of financial year Aggregate awards not released as at the end of financial year 492,921 (492,921) 1,150,766 298,389 (1,449,155) – 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 1,449,155 (833,183) 615,972 1,073,133 (1,073,133) – 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: Contingent shares granted during the financial year (%) Aggregate contingent shares granted to date (%) Executive Director Loh Chin Hua – Keppel Performance Share Plan (“Keppel PSP”) – Keppel Restricted Share Plan 2020 (“Keppel RSP 2020”) and Keppel Performance Share Plan 2020 (“Keppel PSP 2020”) – 10.62 6.96 9.78 There are no contingent award of Shares granted to any of the Company’s controlling shareholders or their associates under the Keppel RSP 2020, Keppel PSP and Keppel PSP 2020. 6. INDEPENDENT AUDITOR The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment. On behalf of the Board Danny Teoh Chairman Singapore 1 March 2024 Loh Chin Hua Chief Executive Officer ANNUAL REPORT 2023 127 FINANCIAL REPORT Independent Auditor’s Report to the Members of Keppel Ltd. (formerly known as Keppel Corporation Limited) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our Opinion In our opinion, the accompanying consolidated financial statements of Keppel Ltd. (formerly known as 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 1967 (“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 2023 and of the consolidated financial performance, consolidated changes in equity and consolidated cash flows of the Group and of the 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 2023; the consolidated profit or 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 material accounting policy information. 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 the 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 judgements; 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 judgement, were of most significance in our audit of the financial statements for the financial year ended 31 December 2023. 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. 128 KEPPEL LTD. Key Audit Matter How our audit addressed the Key Audit Matter We evaluated the appropriateness of management’s accounting treatment of the vendor notes, including the conclusion reached on the deferred loss. We reviewed management’s estimation of the fair value of the vendor notes. We also assessed the appropriateness of key assumptions. Our procedures included: • • • • Obtained the business plan and financial projections of Rigco and validated the inputs applied by management in the DCF calculations. Involved our valuation expert to review the DCF methodology and the discount rate used by management. Evaluated the competency and experience of the independent professional firm and the industry expert who had assisted management in the valuation of the vendor notes. Held discussions with the independent industry expert to gain an understanding on the approach adopted in estimating the future rig sale values used in the financial projections including the market outlook and industry parameters. Based on our procedures, we found management’s key judgements and estimation of the fair value of the vendor notes to be reasonable. 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 judgements and sources of estimation uncertainty to be adequate. 1. Accounting and fair valuation of notes receivables arising from the completion of the Asset Co Transaction (Refer to Notes 2.27(b)(vii) and 16 to the financial statements) Arising from the completion of the Asset Co Transaction on 27 February 2023, the Group subscribed to notes amounting to approximately $4,251,144,000 issued by Rigco Holding Pte Ltd (“Rigco”), which bear interest of 4.0% per annum and the interest is payable annually in arrears for a tenure of 12 years, with an option held by Rigco to extend the maturity date by an additional 3 years (“vendor notes”). Details of the Asset Co Transaction are disclosed in Note 16 to the financial statements. These vendor notes issued by Rigco are classified as financial assets carried at fair value through profit or loss. Given the unique business and risk profile of Rigco, the transaction price of the vendor notes was assessed to not represent the fair value on initial recognition. The fair value of the vendor notes amounted to $3,003,599,000 at initial recognition. As the fair value of the vendor notes is neither evidenced by a quoted price in an active market (i.e. Level 1 input) nor based on a valuation technique that uses only data from observable markets, the difference of $1,247,545,000 between the fair value at initial recognition and the transaction price was deferred (“deferred loss”). This deferred loss is amortised using a straight-line method over the expected tenor of 7 years based on the projected repayment of the vendor notes in Rigco’s business plan, or recognised in the profit or loss when there are observable market inputs, or when there is a redemption of the vendor notes. Management engaged an independent professional advisor to assist in the determination of the fair value of the vendor notes, which is based on the Discounted Cash Flow (“DCF”) calculations using the estimated cash flows available for repayment of the vendor notes, derived based on a probability weighted range of scenarios per Rigco’s business plan and financial projections. In addition to the independent professional firm responsible for estimating the fair value based on the DCF calculations and calculating the discount rates, management also relied on an independent industry expert engaged separately by Rigco to provide the estimated future rig sale values used in the financial projections, taking into consideration the market outlook, assumptions and industry parameters. As at 31 December 2023, the carrying value of the vendor notes, measured at fair value, amounted to $4,286,354,000 which included an unamortised deferred loss amounting to $1,107,501,000. ANNUAL REPORT 2023 129 FINANCIAL REPORT Independent Auditor’s Report to the Members of Keppel Ltd. (formerly known as Keppel Corporation Limited) Key Audit Matter How our audit addressed the Key Audit Matter 1. Accounting and fair valuation of notes receivables arising from the completion of the Asset Co Transaction (continued) (Refer to Notes 2.27(b)(vii) and 16 to the financial statements) We focused on this area because of the complexity in the accounting of the vendor notes and the significant judgement required in: • • Assessing the extent and significance of unobservable inputs used in the valuation of the vendor notes which determined the accounting for the deferral of the loss on initial recognition. Estimating the fair value of the vendor notes as the inputs to the valuation are not market observable. Such inputs and assumptions used in the valuation include estimated future rig sale values, dayrates, cost assumptions, utilisation rates, discount rates, duration of charters and estimated timing of future rig sales. These inputs are subject to high estimation uncertainty. The valuation of the vendor notes based on the DCF calculations was most sensitive to discount rates and the estimated future rig sale values. 2. Revenue recognition based on measurement of progress towards performance obligation (Refer to Notes 2.27(b)(ii), 24 and 26 to the financial statements) During the financial year, the Group recognised $382 million of revenue from continuing operations from 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 the proportion of contract costs incurred to date to the estimated total contract costs. When it is probable that the costs of a contract will exceed the contract revenue, the expected loss is recognised as an expense immediately. As at 31 December 2023, management assessed that for some projects, total contract costs of each project would exceed the total contract sum. Costs yet to be incurred for these projects as at 31 December 2023 had been included in provision for onerous contracts amounting to $47 million as presented in Note 24. We focused on this area because of the significant management judgment required in: • • the estimation of the expected completion dates of the contracts, including expectations of any potential delays; and the estimation of total costs on the contracts, including contingencies that could arise from variations to original contract terms, and claims. 130 KEPPEL LTD. 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. In relation to total contracts costs, we: • • • validated costs incurred by tracing to supplier invoices or subcontractor progress billings; reviewed management’s estimates of cost-to-complete for projects that were in-progress at the year end, by agreeing the costs to quotations and contracts entered for subcontracting costs and reviewing the estimation of construction costs with reference to the remaining activities of the projects, including the consideration for the expectation of potential delays and cost escalations; and reviewed claims from suppliers and subcontractors and traced to the recording of the costs. Key Audit Matter How our audit addressed the Key Audit Matter 3. Valuation of properties held for sale (Refer to Notes 2.27(b)(v) and 18 to the financial statements) As at 31 December 2023, the Group has residential properties held for sale of $2,053 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. Continued unfavourable market conditions in certain 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. We assessed the need for provision for liquidated damages via discussions with management and project managers and examination of project documentation. 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 and the estimation of total contract costs 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 in the estimates. Management applied their knowledge of the business in their regular review of these estimates. We corroborated the Group’s forecast selling prices by comparing the forecast selling price to, where available, recently transacted prices and prices of comparable properties located in the same vicinity as the properties held for sale. We compared management’s budgeted total development costs against underlying contracts with vendors and supporting documents. We discussed with the project managers to assess the reasonableness of estimated cost to complete and corroborated the underlying assumptions made with our understanding of past completed projects. 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 valuers 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. 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. ANNUAL REPORT 2023 131 FINANCIAL REPORT Independent Auditor’s Report to the Members of Keppel Ltd. (formerly known as Keppel Corporation Limited) Key Audit Matter How our audit addressed the Key Audit Matter 4. Valuation of investment properties (Refer to Notes 2.27(b)(iv) and 8 to the financial statements) As at 31 December 2023, the Group owns a portfolio of investment properties of $4,665 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 determined by independent professional property valuers. 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. We evaluated the qualifications and competence of the independent professional property valuers. We found that the valuers engaged by management are members of recognised professional bodies for professional property valuers and they possessed the requisite competency and experience to assist management in the assessment of the valuations. We considered the valuation methodologies used against those applied by other valuers for similar property types in determining the valuation of investment properties. We also considered other alternative valuation methods. 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 tested the reliability of the projected cash inflows and outflows used in the valuation against supporting lease agreements, construction contracts and other documents. We corroborated other 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 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. We found the disclosures in the financial statements to be adequate. 132 KEPPEL LTD. Key Audit Matter How our audit addressed the Key Audit Matter 5. Impairment assessment of goodwill arising from acquisition of subsidiary – M1 Limited (“M1”) (Refer to Notes 2.27(b)(i) and 10 to the financial statements) In February 2019, the Group obtained controlling interest in M1 and recognised a goodwill of $988 million upon the acquisition. An annual impairment assessment has been performed on the goodwill 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 2023 was determined on a VIU basis using a DCF model. The assessment of the VIU of M1 CGU as at 31 December 2023 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 estimated to be 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. We checked whether the cash flow projections were based on the approved business plan. We involved our valuation expert in evaluating the valuation methodology, the long term growth rate 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, we were satisfied that management’s estimates and assumptions used in the impairment assessment of the goodwill on acquisition of M1 were reasonable. 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. 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 the other sections of the Keppel Ltd. (formerly known as Keppel Corporation Limited) Annual Report 2023 (“the Other Sections”), 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, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and take appropriate actions in accordance with SSAs. ANNUAL REPORT 2023 133 FINANCIAL REPORT Independent Auditor’s Report to the Members of Keppel Ltd. (formerly known as Keppel Corporation Limited) 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 judgement and maintain professional scepticism 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 consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. 134 KEPPEL LTD. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiary corporations incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act. The engagement partner on the audit resulting in this independent auditor’s report is Lam Hock Choon. PricewaterhouseCoopers LLP Public Accountants and Chartered Accountants Singapore 1 March 2024 ANNUAL REPORT 2023 135 FINANCIAL REPORT Balance Sheets As at 31 December 2023 Share capital Treasury shares Reserves Share capital & reserves Perpetual securities Non-controlling interests Total equity Represented by: Fixed assets Investment properties Right-of-use assets Intangibles Subsidiaries Associated companies and joint ventures Investments Deferred tax assets Derivative assets Contract assets Notes receivables Long term assets Current assets Stocks Contract assets Amounts due from: – subsidiaries – associated companies and joint ventures Debtors Derivative assets Short term investments Bank balances, deposits & cash Disposal group and assets classified as held for sale Current liabilities Creditors Derivative liabilities Contract liabilities Provisions Amounts due to: – subsidiaries – associated companies and joint ventures Term loans Lease liabilities Taxation Liabilities directly associated with disposal group and assets classified as held for sale Net current assets Non-current liabilities Term loans Lease liabilities Deferred tax liabilities Derivative liabilities Other non-current liabilities Note GROUP 2023 $’000 COMPANY 2022 $’000 1,305,668 (456,015) 10,328,606 11,178,259 401,521 333,560 11,913,340 976,797 4,283,093 241,052 1,564,714 – 6,791,862 1,482,719 87,624 203,200 86,411 – 498,536 16,216,008 2023 $’000 1,305,668 (387,316) 6,345,501 7,263,853 401,521 – 7,665,374 2,853 – 7,923 – 7,183,858 – 18,013 8,862 82,083 – – 58,744 7,362,336 1,305,668 (387,316) 9,389,089 10,307,441 401,521 307,598 11,016,560 902,149 4,665,064 213,730 1,534,302 – 6,601,853 1,618,886 78,520 100,524 18,674 4,286,354 452,098 20,472,154 2,109,941 405,715 2,300,950 255,900 – – – 256,933 1,693,963 18,771 253,109 1,265,660 6,004,092 361,656 6,365,748 2,586,430 91,280 165,494 50,797 – 101,264 2,421,680 37,408 377,474 5,831,827 307,001 6,138,828 – 262,068 1,239,298 69,851 48,782 1,142,344 5,319,193 9,529,776 14,848,969 2,768,820 156,355 209,770 58,445 – 69,863 3,577,658 36,426 258,990 7,136,327 4,224,003 11,360,330 8,500,662 64 72,524 5,134 167,524 272,601 9,018,509 – 9,018,509 168,581 78,607 – – 210,923 897 1,547,129 4,129 52,762 2,063,028 – 2,063,028 2022 $’000 1,305,668 (456,015) 9,578,146 10,427,799 401,521 – 10,829,320 5,641 – 11,659 – 7,188,393 – 19,430 8,853 163,978 – – 70,252 7,468,206 – – 7,546,620 202 58,911 9,664 – 1,232 7,616,629 3,166,596 10,783,225 89,085 49,048 – – 273,063 900 2,789,301 4,216 43,513 3,249,126 – 3,249,126 226,920 3,488,639 6,955,481 7,534,099 8,537,958 142,055 411,815 114,563 476,123 9,682,514 6,603,186 162,703 368,031 99,849 557,538 7,791,307 6,505,384 4,606 3,198 109,693 29,562 6,652,443 4,043,984 8,467 – 91,306 29,228 4,172,985 3 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 15 19 19 20 21 22 38 23 15 24 19 19 25 9 30 38 25 9 14 23 Net assets 11,016,560 11,913,340 7,665,374 10,829,320 The accompanying notes form an integral part of these financial statements. 136 KEPPEL LTD. FINANCIAL REPORT Consolidated Profit or Loss Account For the financial year ended 31 December 2023 Continuing operations Revenue Materials, subcontract and other costs Staff costs Depreciation and amortisation Expected credit loss on financial assets Loss from dividend in specie Other operating income – net Operating profit Investment income Interest income Interest expenses Share of results of associated companies and joint ventures Profit before tax Taxation Profit from continuing operations for the year Discontinued operations Profit from discontinued operations, net of tax Profit for the year Attributable to: Shareholders of the Company: – from continuing operations – from discontinued operations Perpetual securities holders Non-controlling interests Earnings per ordinary share – basic – diluted Earnings per ordinary share – Continuing operations: – basic – diluted Note 2023 $’000 2022# $’000 26 27 28 28 28 29 29 29 30 38 6 31 31 6,966,128 6,619,718 (4,998,415) (5,174,408) (704,133) (221,440) (24,119) (110,816) 168,707 1,075,912 78,391 64,886 (328,053) 322,418 1,213,554 (289,706) 923,848 (667,878) (206,558) (34,010) - 28,343 565,207 48,541 91,348 (146,187) 535,979 1,094,888 (245,149) 849,739 3,181,232 4,105,080 83,066 932,805 885,219 3,181,433 4,066,652 11,600 26,828 4,105,080 838,959 87,658 926,617 11,600 (5,412) 932,805 227.6 cts 225.6 cts 52.1 cts 51.6 cts 49.5 cts 49.1 cts 47.2 cts 46.7 cts # On 27 February 2023 and 28 February 2023, the Asset Co Transaction and the Proposed Combination were completed respectively (please refer to Note 38 for more details). Consequent to the completion, in accordance with SFRS(I) 5 Non-current Assets Held for Sale and Discontinued Operations, the performance of Keppel O&M, as a separate reportable operating segment, excluding certain out-of-scope assets, for the period from 1 January to 28 February 2023 and the gain arising from the Proposed Combination, and the comparative full year ended 31 December 2022, were reported as discontinued operations. Refer to Note 38 for further details. The accompanying notes form an integral part of these financial statements. ANNUAL REPORT 2023 137 FINANCIAL REPORT Consolidated Statement of Comprehensive Income For the financial year ended 31 December 2023 Profit for the year Items that may be reclassified subsequently to profit or loss account: Cash flow hedges – Fair value changes arising during the year, net of tax – Realised and transferred to profit or loss account Foreign exchange translation – Exchange differences arising during the year – Realised and transferred to profit or 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 or loss account: Financial assets, at FVOCI – Fair value changes arising during the year Foreign exchange translation – Exchange differences arising during the year Share of other comprehensive income of associated companies and joint ventures – Financial assets, at FVOCI Other comprehensive loss for the year, net of tax Total comprehensive income for the year Attributable to: Shareholders of the Company – from continuing operations – from discontinued operations Perpetual securities holders Non-controlling interests 2023 $’000 2022 $’000 4,105,080 932,805 (82,706) (59,040) 155,771 195,578 5,849 123,900 (410,257) (15,954) (39,983) (57,506) (109,486) 68,506 (280,320) (286,676) (146,931) (9,121) (15,607) (17,080) (1,431) (163,969) (273,455) (662) (26,863) (313,539) 3,831,625 619,266 565,212 3,244,417 3,809,629 11,600 10,396 3,831,625 523,603 107,852 631,455 11,600 (23,789) 619,266 The accompanying notes form an integral part of these financial statements. 138 KEPPEL LTD. FINANCIAL REPORT Consolidated Statement of Changes in Equity For the financial year ended 31 December 2023 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 Perpetual Securities $’000 Non- controlling Interests $’000 Total Equity $’000 GROUP 2023 As at 1 January 2023 1,305,668 (456,015) 544,909 10,632,860 (849,163) 11,178,259 401,521 333,560 11,913,340 – – – – – – – 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 32) Dividends in specie (Note 32) Share-based payment Dividend paid to non-controlling shareholders Treasury shares reissued pursuant to share plans Transfer of statutory, capital and other reserves from revenue reserves Distribution paid to perpetual securities holders Contributions to defined benefits plans 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 Total transactions with owners – – – – – – – – – – – – – – – – – 4,066,652 – 4,066,652 11,600 26,828 4,105,080 (329,266) – 72,243 (257,023) – (16,432) (273,455) (329,266) 4,066,652 72,243 3,809,629 11,600 10,396 3,831,625 – – (581,520) (4,139,456) 40,777 – – – – 68,699 (68,699) – – – 8,606 (7,235) (1,371) – (248) – – – – – – – – – (581,520) (4,139,456) 40,777 – – – – – – – – – – (11,600) – – – (581,520) (4,139,456) 40,777 (15,993) (15,993) – – – – – (11,600) (248) – (143) (391) 68,699 (19,564) (4,728,211) (1,371) (4,680,447) (11,600) (16,136) (4,708,183) – – – – – – – – – – – – – – – – – – (14,316) (14,316) (5,906) (5,906) (20,222) (20,222) 68,699 (19,564) (4,728,211) (1,371) (4,680,447) (11,600) (36,358) (4,728,405) As at 31 December 2023 1,305,668 (387,316) 196,079 9,971,301 (778,291) 10,307,441 401,521 307,598 11,016,560 * 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. ANNUAL REPORT 2023 139 FINANCIAL REPORT Consolidated Statement of Changes in Equity For the financial year ended 31 December 2023 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 Perpetual Securities $’000 Non- controlling Interests $’000 Total Equity $’000 GROUP 2022 As at 1 January 2022 1,305,668 (4,624) 129,619 10,365,733 (141,256) 11,655,140 401,521 384,700 12,441,361 – – – – – – (499,993) 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 32) 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 Contribution by non-controlling shareholders Distribution paid to perpetual securities holders Contributions to defined benefits plans Total contributions by and distributions to owners Changes in ownership interests in subsidiaries 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 – – – – – – – – – – – – – – – – – – – 926,617 – 926,617 11,600 (5,412) 932,805 411,369 – (706,531) (295,162) – (18,377) (313,539) 411,369 926,617 (706,531) 631,455 11,600 (23,789) 619,266 – (643,233) 45,096 – – – – – – 48,602 (48,602) – – – – – – – – – 17,659 (16,283) (1,376) – – 1,234 – – – – – – (643,233) 45,096 – (499,993) – – – – – – – – – – – (11,600) 1,234 – – – (643,233) 45,096 (33,033) – – – (33,033) (499,993) – – 2,916 2,916 – 22 (11,600) 1,256 (451,391) 15,387 (659,516) (1,376) (1,096,896) (11,600) (30,095) (1,138,591) – – – – (11,466) – – (11,466) – 26 – 26 – – – – (11,466) 26 – (11,440) – – – – (13,138) (24,604) (4,071) (4,045) 19,953 19,953 2,744 (8,696) (451,391) 3,921 (659,490) (1,376) (1,108,336) (11,600) (27,351) (1,147,287) As at 31 December 2022 1,305,668 (456,015) 544,909 10,632,860 (849,163) 11,178,259 401,521 333,560 11,913,340 * 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. 140 KEPPEL LTD. FINANCIAL REPORT Statement of Changes in Equity For the financial year ended 31 December 2023 Attributable to owners of the Company Share Capital $’000 Treasury Shares $’000 Capital Reserves $’000 Revenue Reserves $’000 Share Capital & Reserves $’000 Perpetual Securities $’000 Total $’000 COMPANY 2023 As at 1 January 2023 1,305,668 (456,015) 217,036 9,361,110 10,427,799 401,521 10,829,320 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 (Note 32) Dividends in specie (Note 32) Share-based payment Treasury shares reissued pursuant to share plans Distribution paid to perpetual securities holders Total transactions with owners – – – – – – – – – – – – – – – – 1,517,670 1,517,670 11,600 1,529,270 (1,417) – (1,417) – (1,417) (1,417) 1,517,670 1,516,253 11,600 1,527,853 – – (581,520) (581,520) (4,139,456) (4,139,456) 40,777 68,699 (68,699) – – – – – 40,777 – – 68,699 (27,922) (4,720,976) (4,680,199) – – – – (581,520) (4,139,456) 40,777 – (11,600) (11,600) (11,600) (4,691,799) As at 31 December 2023 1,305,668 (387,316) 187,697 6,157,804 7,263,853 401,521 7,665,374 2022 As at 1 January 2022 1,305,668 (4,624) 224,759 8,271,057 9,796,860 401,521 10,198,381 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 Distribution paid to perpetual securities holders Total transactions with owners – – – – – – – – – – – – – – (499,993) – 1,733,286 1,733,286 11,600 1,744,886 (4,218) – (4,218) – (4,218) (4,218) 1,733,286 1,729,068 11,600 1,740,668 – (643,233) 45,097 – (643,233) 45,097 (499,993) – – – – – – 48,602 (48,602) – – (451,391) (3,505) (643,233) (1,098,129) – – – – (643,233) 45,097 (499,993) – (11,600) (11,600) (11,600) (1,109,729) As at 31 December 2022 1,305,668 (456,015) 217,036 9,361,110 10,427,799 401,521 10,829,320 The accompanying notes form an integral part of these financial statements. ANNUAL REPORT 2023 141 FINANCIAL REPORT Consolidated Statement of Cash Flows For the financial year ended 31 December 2023 Operating activities Operating profit Adjustments: Depreciation and amortisation Share-based payment expenses Gain on sale of fixed assets and investment properties Gain on disposal of subsidiaries Gain on disposal of associated companies and joint ventures (Gain)/loss from sale of interests in associated companies and joint ventures Provision/(write-back) of impairment of right-of-use assets and fixed assets Loss on dividend in specie Impairment of a joint venture Fair value gain on investment properties (Gain)/loss from change in interest in associated companies Fair value gain on investments and associated companies and joint ventures Fair value gain on notes receivables Gain on acquisition of subsidiaries Unrealised foreign exchange differences Operational cash flow before changes in working capital Working capital changes: Stocks Contract assets Debtors Creditors Contract liabilities Trade amount due (to)/from associated companies and joint ventures Interest received Interest paid Net income taxes paid, net of refunds received Net cash from operating activities Note 2023 $’000 2022 $’000 4,272,704 726,891 221,440 37,337 (53,931) (3,320,201) (69,774) (36,636) 1,023 110,816 – (149,532) 1,427 (69,028) (965) – (78,420) 866,260 295,878 (274,574) (24,685) (185,342) (104,795) (104,168) 468,574 70,231 (364,290) (116,086) 58,429 504 (419,157) (921,090) (890,641) 411,437 505,052 (44,912) (14,324) 166,516 263,901 (942,714) (14,316) – 4,958,307 (3,582,576) (40,005) – (581,520) (15,993) 10,646 (11,600) 722,943 241,957 43,403 (6,980) (22,498) (74,860) 40,168 (291,867) – 1,000 (131,711) (10,933) (85,844) – (6,795) (100,380) 321,551 708,305 (620,466) 38,717 274,318 3,297 99,741 825,463 107,306 (285,609) (387,573) 259,587 (34,328) (885,728) (696,211) 403,194 83,413 341,797 – – (210,364) 330,942 (667,285) (28,600) 2,916 2,933,615 (3,270,039) (82,641) (499,993) (643,233) (33,033) 111,023 (11,600) (1,521,585) (161,342) (1,929,283) 1,444,773 3,543,642 (18,340) (169,586) Investing activities Acquisition of subsidiaries Acquisition and further investment in associated companies and joint ventures Acquisition of fixed assets, investment properties, intangible assets and investments Disposal of subsidiaries Proceeds from disposal of fixed assets, investment properties, and investments Proceeds from disposal of associated companies and joint ventures and return of capital Deposit paid for acquisition of a real estate asset manager Loan extended in relation to a potential acquisition Repayment from/(advances to) associated companies, joint ventures and joint venture partner Dividends received from investments, associated companies and joint ventures Net cash used in investing activities A B Financing activities Acquisition of additional interest in subsidiaries 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 advances from non-controlling shareholders of certain subsidiaries Distribution to perpetual securities holders Net cash from/(used in) financing activities Net 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 C 1,265,091 1,444,773 The accompanying notes form an integral part of these financial statements. 142 KEPPEL LTD. Reconciliation of liabilities arising from financing activities 2023 Net proceeds/ (payment) of principal $’000 1 January 2023 $’000 10,180,844 199,129 877,051 (35,139) Addition during the year $’000 – 23,401 Non-cash changes Remeasure- ment of lease liabilities $’000 Disposal of sub- sidiaries $’000 Acquisition of sub- sidiaries $’000 Foreign exchange movement $’000 – 940 – (8,640) Others $’000 – – (98,257) (228) – – – 273,710 10,646 – – – (3,698) 2,084 Non-cash changes 1 January 2022 $’000 11,455,220 561,719 Net proceeds/ (payment) of principal $’000 (336,424) (82,641) Addition during the year $’000 – 43,084 Remeasure- ment of lease liabilities $’000 – 20,864 Disposal of sub- sidiaries $’000 (55,286) (30,814) Acquisition of sub- sidiaries $’000 Foreign exchange movement $’000 43,909 – (168,864) 1,631 Others $’000 – – Presented as liabilities directly associated with assets classified as held for sale (Note 38) $’000 – – – 31 December 2023 $’000 10,959,638 179,463 282,742 Presented as liabilities directly associated with assets classified as held for sale (Note 38) $’000 31 December 2022 $’000 (757,711) (314,714) 10,180,844 199,129 163,815 111,023 – – – – (1,970) 842 – 273,710 Term loans Lease liabilities Advances from non-controlling shareholders 2022 Term loans Lease liabilities Advances from non-controlling shareholders Notes to Consolidated Statement of Cash Flows A. Acquisition of subsidiaries During the financial year, net assets of subsidiaries acquired at their fair values were as follows: Fixed assets and investment properties Right-of-use assets Intangible assets Stocks Debtors and other assets Bank balances and cash Creditors and other liabilities Borrowings and lease liabilities Current and deferred taxation Total identifiable net assets at fair value Non-controlling interests measured at fair value Amount previously accounted for as associated companies or joint ventures Goodwill on consolidation (Note 10) Gain on acquisition of subsidiaries Total purchase consideration Less: Bank balances and cash acquired Cash (inflow)/outflow on acquisition 2023 $’000 – – – – 29,380 7,261 (4,201) – – 32,440 – (40,888) 15,205 – 6,757 (7,261) (504) 2022 $’000 3,829 226 10,799 9,174 109,918 21,056 (19,578) (43,909) (8,820) 82,695 (20,694) 178 – (6,795) 55,384 (21,056) 34,328 During the year, acquisition relates to acquisition of remaining 50% interest in Keppel Credit Fund Management Pte. Ltd. (previously known as Pierfront Capital Fund Management Pte. Ltd.) and gain of control of the Group’s 64% owned joint ventures, VN Glory Pte. Ltd., VN Fortune Pte. Ltd. and VN Growth Pte. Ltd. via a capital reduction after the exit of a joint venture partner. Subsequent to the capital reduction, the Group holds 91% interest in these entities. The fair value of the net identifiable assets is determined on a provisional basis. In prior year, acquisition relates to acquisition of 51% of the total issued share capital of Glocomp Systems (M) Sdn Bhd over two tranches and acquisition of 100% equity interest in Juventas DC Pte. Ltd. The accompanying notes form an integral part of these financial statements. ANNUAL REPORT 2023 143 FINANCIAL REPORT Consolidated Statement of Cash Flows For the financial year ended 31 December 2023 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 Intangible assets Stocks Debtors and other assets Associated companies and joint ventures Amount due to associated companies and joint ventures Bank balances and cash Disposal group classified as held for sale* Creditors and other liabilities Borrowings and lease liabilities Liabilities directly associated with disposal group classified as held for sale* Current and deferred taxation Non-controlling interests deconsolidated Net assets disposed, less provision for transaction costs and other liabilities Net gain on disposal Amount accounted for as associated company Realisation of cashflow hedge reserve Realisation of foreign currency translation reserve Sale proceeds Less: Bank balances and cash disposed Less: Proceeds receivable Less: Deferred proceeds received Less: Consideration in relation to disposal of discontinued operations* Cash outflow/(inflow) on disposal 2023 $’000 (268,241) (10,336) – (92) (39,939) – 31,579 (4,493) (9,710,455) 202,005 8,640 4,438,191 (37) 5,513 (5,347,665) (3,320,201) 40,223 42,719 (105,072) 2022 $’000 (98,621) (33,480) (1,275) (233,405) (59,263) (127,215) – (15,769) – 35,301 86,100 – 33,911 4,009 (409,707) (22,498) – – 8,520 (8,689,996) (423,685) 972,519 3,669 (4,722) 8,609,171 890,641 15,769 4,722 – – (403,194) * Refer to Note 38 for the breakdown of disposal group classified as held for sale and liabilities directly associated with disposal group classified as held for sale disposed during the year. During the year, disposal of subsidiaries relates to the Asset Co Transaction and the Proposed Combination (Note 38), Willowville Pte Ltd, Greenfield Development Pte. Ltd. as well as dilution of shareholding interest in Asgard Investment Holdings Pte. Ltd. to 40% and dilution of shareholding interest in Keppel Sakra Cogen Pte Ltd to 30%. During the year, the Group also received deferred proceeds from FY2022 sale of Shanghai Fengwo Apartment Management Co Ltd. In the prior year, disposal of subsidiaries relates to Shanghai Fengwo Apartment Management Co Ltd, Shanghai Jinju Real Estate Development Co Ltd, Keppel Logistics Pte. Ltd. and Indo-Trans Keppel Logistics Vietnam Co 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 a segregated account in relation to the proceeds (Note 22) from sale of the Retained Consideration Shares (as defined in Note 38) Disposal group classified as held for sale – bank balances, deposits & cash (Note 38) Amounts held under escrow accounts for overseas acquisition of land, payment of construction cost, claims and other liabilities 2023 $’000 2022 $’000 998,555 1,142,344 267,105 1,265,660 – (569) 1,265,091 – 1,142,344 381,179 (78,750) 1,444,773 The accompanying notes form an integral part of these financial statements. 144 KEPPEL LTD. FINANCIAL REPORT Notes to the Financial Statements For the financial year ended 31 December 2023 These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1. GENERAL With effect from 1 January 2024, the name of the Company has been changed from “Keppel Corporation Limited” to “Keppel Ltd.”. 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: • • • • management of private funds and listed real estate investment and business trusts, focusing in areas of infrastructure, real estate and connectivity. provision of energy and environmental solutions and services that are essential for sustainable development, including commercial power generation, renewables, environmental engineering and construction and infrastructure operation and maintenance; property development and investment, as well as master development, and provision of sustainable and innovative urban space solutions, including sustainable urban renewal and senior living; and development and operation of data centres, provision of telecommunications services, sale of telecommunications and information technology equipment, and provision of system integration solutions and services. The financial statements of the Group for the financial year ended 31 December 2023 and the balance sheet and statement of changes in equity of the Company at 31 December 2023 were authorised for issue in accordance with a resolution of the Board of Directors on 1 March 2024. 2. MATERIAL ACCOUNTING POLICY INFORMATION 2.1 Basis of Preparation The financial statements have been prepared in accordance with the provisions of the Companies Act 1967, 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 2023. 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: • • • SFRS(I) 17 Insurance Contracts (effective for annual periods beginning on or after 1 January 2023) Amendments to SFRS(I) 1-12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective for annual periods beginning on or after 1 January 2023) Amendments to SFRS(I) 1-12 Income Taxes: International Tax Reform – Pillar Two Model Rules (effective for annual periods beginning on or after 1 January 2023) 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. For the financial year ended 31 December 2023, the Group had applied the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to SFRS (I)1-12 issued in May 2023. The Group accounts for Pillar Two income taxes as current tax when it is incurred. ANNUAL REPORT 2023 145 2. MATERIAL ACCOUNTING POLICY INFORMATION (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 or 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 or 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 or 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 or loss account. For loss of control transactions where the retained interest in the former subsidiary is an associate or joint venture accounted for using the equity method, any previously unrecognised profit/loss arising from intra-group transactions are recognised only to the extent of the equity interest divested. 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 or 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 or loss account. 146 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 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 Plant, machinery & equipment Networks and related application systems Furniture, fittings & office equipment 30 to 50 years Over period of lease (ranging from 10 to 50 years) 3 to 30 years 5 to 25 years 2 to 15 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. 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 or loss account. The cost of major renovations or improvements is capitalised and the carrying amounts of the replaced components are recognised in the profit or loss account. On disposal of an investment property, the difference between the disposal proceeds and the carrying amount is recognised in the profit or 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 or 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 or 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. ANNUAL REPORT 2023 147 2. MATERIAL ACCOUNTING POLICY INFORMATION (continued) 2.7 Associated Companies and Joint Ventures (continued) When the Group’s investment in an associated company or a joint venture is held by, or is held indirectly through, a subsidiary or ‘organisation’ 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. The ‘organisation’ does not have to be a separate legal entity or special purpose vehicle. However, the ‘organisation’ does have to be a division or a branch that is clearly separated and managed independently from the entity’s other business activities and undertake a venture capital business, or a mutual fund, unit trust and similar types of businesses that is managed with the objective of earning a return on its investments. 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 or 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 or loss account as a bargain purchase gain. 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 16 years. Brand The brand was acquired as part of a business combination. 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 17 years. Other Intangible Assets Other intangible assets include 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 15 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. 148 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 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 or loss account. Where the transaction price is not representative of the fair value of the financial asset, the Group assesses the fair value of the financial asset. For transactions when the fair value is based on quoted price in an active market (i.e. Level 1 input) or based on a valuation technique that uses only data from observable markets, the difference if any, between the fair value at initial recognition and the transaction price is recognised directly in profit or loss. Otherwise the difference, if any, between the fair value at initial recognition and the transaction price is deferred and recognised on a systematic basis over time in profit or loss. i. Debt instruments Debt instruments mainly comprise of cash and bank balances, trade, intercompany and other receivables (excluding prepayments), notes receivables and investments. Trade, intercompany and other receivables are stated initially at fair value and subsequently at amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts. 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 or loss account when the asset is derecognised or impaired. Interest income from these financial assets is recognised in the profit or 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 or loss account in the period in which it arises. For notes receivables carried at FVPL, such movement in fair values and interest income is recognised in the profit or loss account in the period which it arises and presented on net basis as fair value gain or loss. For foreign currency denominated debt instruments measured at FVPL, the Group presents the exchange gain or loss arising from such instruments separately from the movements in fair values, and as part of total exchange gains or losses. 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 or loss account. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to the profit or loss account. Interest income from these financial assets is recognised in the profit or loss account using the effective interest rate method. On disposal of a debt instrument, the difference between the carrying amount and the sale proceeds is recognised in the profit or loss account. Any amount previously recognised in other comprehensive income relating to that asset is reclassified to the profit or loss account. ANNUAL REPORT 2023 149 2. MATERIAL ACCOUNTING POLICY INFORMATION (continued) 2.10 Financial Assets (continued) ii. Equity investments The Group 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 or 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 or loss account. On disposal of an equity investment, the difference between the carrying amount and sales proceed is recognised in the profit or 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. 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. Investments include equity investments classified as FVPL and FVOCI and debt investments classified as FVPL. 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. 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 or 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 or loss account. Amounts taken to other comprehensive income are reclassified to the profit or loss account when the hedged transaction affects the profit or loss account. For fair value hedges, changes in the fair value of the designated hedging instruments are recognised in the profit or 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 or loss account. For net investment hedges, the Group designates certain foreign currency borrowings as net investment hedges of foreign operations. These hedging instruments are accounted for similarly to cash flow hedges. When foreign currency borrowings are designated as net investments hedges of foreign operations, the effective portion of currency translation differences is recognised in other comprehensive income and presented in the translation reserve within equity. Any ineffective portion of the currency translation differences is recognised immediately in profit or loss. The amount recognised in other comprehensive income is reclassified to profit or loss on disposal of the foreign operation. 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. 150 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 2.12 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. 2.13 Contract Assets and Contract Liabilities For contracts 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. 2.14 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 36 sets out 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 or 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. 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 or 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 or loss account. ANNUAL REPORT 2023 151 2. MATERIAL ACCOUNTING POLICY INFORMATION (continued) 2.15 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 2.21). 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. A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantees are initially recognised at their fair values plus transaction costs in the balance sheet. Financial guarantees are subsequently amortised to the profit or loss account over the period of the guarantee. If it is probable that the liability will be higher than the amount initially recognised less amortisation, the liability is recorded at the higher amount with the difference charged to the profit or loss account. 2.16 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 onerous contracts is recognised when a contract is onerous. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The provision for onerous contract represents the present value of the management’s best estimate of the future outflow of economic benefits that the Group is presently obliged to make under its obligations. 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. 2.17 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. 152 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 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. 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 9. 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. Finance leases Leases where the Group has transferred substantially all risks and rewards incidental to ownership of the leased assets to the lessees, are classified as finance leases. The leased asset is derecognised and the present value of the lease receivable is recognised on the balance sheet and included in debtors and long-term receivables. The difference between the gross receivable and the present value of the lease receivable is recognised as unearned finance income. Each lease payment received is applied against the gross investment in the finance lease receivable to reduce both the principal and the unearned finance income. The finance income is recognised in profit or loss on a basis that reflects a constant periodic rate of return on the net investment in the finance lease receivable. Initial direct costs incurred by the Group in negotiating and arranging finance leases are added to finance lease receivables and reduce the amount of income recognised over the lease term. 2.18 Assets (or disposal groups) classified as Held for Sale and Discontinued Operations 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. The assets are not depreciated or amortised while they are classified as held for sale. This condition is regarded as met only when the sale is highly probable and the asset (or disposal groups) 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. ANNUAL REPORT 2023 153 2. MATERIAL ACCOUNTING POLICY INFORMATION (continued) 2.18 Assets (or disposal groups) classified as Held for Sale and Discontinued Operations (continued) Non-current assets (or disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. A discontinued operation is a component of an entity that either has been disposed of, or that is classified as held for sale and: • • • represents a separate major line of business or geographical area of operations; or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with a view to resale. 2.19 Revenue Revenue from continuing operations consists of: • • • • Revenue recognised on property construction and long-term engineering contracts; Sale of goods; Rendering of services; and Rental income from investment properties. Revenue from discontinued operations consists of revenue recognised on rigbuilding, shipbuilding and repairs. Revenue recognition The Group enters into rigbuilding, shipbuilding and repairs (as classified within discontinued operations in Note 38(i)), property construction and long term construction 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. 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 sale of electricity, utilities and gas, logistic services, operations and maintenance under service concession arrangements, asset management, 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 or in accordance with terms of the service agreements. 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. 154 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 2.20 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. 2.21 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 or 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. 2.22 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 Plans Scheme The Group operates share-based compensation plans. The fair value of the employee services received in exchange for the grant of restricted shares and performance shares is recognised as an expense in the profit or loss account with a corresponding increase in the 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 restricted shares and performance shares granted on the respective dates of grant. At each balance sheet date, the Group revises its estimates of the number of 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 or loss account, with a corresponding adjustment to the share plan reserve over the remaining vesting period. No expense is recognised for share plan awards that do not ultimately vest, except for 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. 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. 2.23 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. ANNUAL REPORT 2023 155 2. MATERIAL ACCOUNTING POLICY INFORMATION (continued) 2.23 Income Taxes (continued) 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 or 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. 2.24 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 or 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. 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, or 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. 2.25 Share Capital and Perpetual Securities Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account. Dividends to the Company’s shareholders are recognised when the dividends are approved for payment. 156 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT Treasury shares 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. Perpetual securities Perpetual securities which do not result in the Group having a contractual obligation to deliver cash or another financial asset, or to exchange financial assets or financial liabilities with the holder under conditions that are potentially unfavourable to the Group, are classified as equity. Distributions arising from such instruments are recognised in equity as there is no contractual obligation to pay distributions on these instruments. Incremental external costs directly attributable to the issuance of such instruments are accounted for as a deduction from equity. Distribution of non-cash assets to owners of the Company The Group measures a liability to distribute non-cash assets as a dividend to owners of the Company at fair value of the assets to be distributed. The carrying amount of the dividend is remeasured at each reporting date and at the settlement date, with any changes recognised directly in equity as adjustments to the amount of distribution. On settlement of the transaction, the Group recognises the difference, if any, between the carrying amount of the assets distributed and the carrying amount of the liability in profit or loss. 2.26 Segment Reporting The Group has four main segments, namely Infrastructure, Real Estate, Connectivity and Corporate Activities. Management monitors the results of each of the main segments for the purpose of making decisions on resource allocation and performance assessment. 2.27 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. Control over Keppel REIT The Group has approximately 37% (2022: approximately 47%) gross ownership interest of units in Keppel REIT as at 31 December 2023. 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. 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. ii. 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 7), investments in subsidiaries (Note 11), investments in associated companies and joint ventures (Note 12), and intangibles (Note 10) as at 31 December 2023. 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 10. Revenue recognition and contract cost The Group recognises contract revenue over time for long term construction contracts by reference to the proportion of contract costs incurred to-date to the estimated total contract costs. The stage of completion is measured in accordance with the accounting policy stated in Note 2.19. When it is probable that the total contract costs will exceed the total contract revenue, the expected loss is recognised as an expense immediately. Revenue from construction contracts is disclosed in Note 26. ANNUAL REPORT 2023 157 2. MATERIAL ACCOUNTING POLICY INFORMATION (continued) 2.27 Critical Accounting Judgments and Estimates (continued) b. Key sources of estimation uncertainty (continued) ii. Revenue recognition and contract cost (continued) Significant assumptions are required in determining the stage of completion and significant judgment is required in the estimation of the 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, the work of engineers as well as quotations and references from other projects. These estimations are also made with due consideration of the circumstances and relevant events that were known to management at the date of these financial statements. The above assessment had been made with the following key assumptions: i. ii. iii. estimation of the expected completion dates of each project, including expectations of any potential delays; additional costs that will be required to complete the projects; and impact of potential cost escalations. As at 31 December 2023, management has assessed that for some projects, total contract costs for each project would exceed the total contract sum, resulting in the recognition of expected loss as an expense immediately. Costs yet to be incurred for these projects as at 31 December 2023 and 2022 have been included in provision for onerous contracts as detailed in Note 24. iii. 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. iv. Revaluation of investment properties The Group carries its investment properties at fair value with changes in fair value being recognised in the profit or 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 2023, valuations were obtained from the valuers for the Group’s investment properties, and the resultant fair value changes were recognised in the profit or 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, estimated construction costs to complete, net initial yield and discount rate. 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 8 and 36. v. Valuation of properties held for sale For properties held for sale, the allowance for foreseeable losses is estimated taking into account the net realisable values and estimated total construction costs. The net realisable values are based on recent selling prices for the development project or comparable projects or independent valuation and the prevailing market conditions less costs to be incurred in selling the property. The estimated total construction costs include contracted amounts plus estimated costs to be incurred taking into consideration relevant data and trend. The allowance is progressively reversed for those residential units sold above their carrying amounts. 158 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT vi. Fair value measurement of unquoted investments In determining the fair value of unquoted investment funds, the Group relies on the net asset values as reported in the latest available capital account statements provided by third-party fund managers. The fund managers measure the fair value of underlying investments of the funds based on: i. ii. Last quoted bid price for all quoted investments; and Valuation techniques for unquoted investments where there is no active market. Valuation techniques used by the third-party fund managers include using recent arm’s length transactions between knowledgeable, willing parties (if available), reference to the current fair value of other instruments that are substantially the same, comparable company approach, discounted cash flow analyses, option pricing models, and latest round of fund raising. For other unquoted investments, the Group uses various valuation techniques including the income and market approaches to determine the fair value. The availability of observable inputs can vary from investment to investment. For certain investments classified under Level 3 of the fair value hierarchy, the valuation could be based on models or inputs that are less observable or unobservable in the market and the determination of the fair values require significant judgement. Those estimated values do not necessarily represent the amounts that may be ultimately realised due to the occurrence of future events which could not be reasonably determined as at the balance sheet date. These unobservable inputs that require significant judgement have been disclosed in Note 36. vii. Fair value measurement of notes receivables Arising from the completion of the Asset Co Transaction on 27 February 2023, the Group subscribed to notes (“vendor notes”) amounting to approximately $4,251,144,000 issued by Rigco Holding Pte Ltd (“Rigco”). Details of the Asset Co Transaction are disclosed in Note 38. The transaction price of the Asset Co Transaction agreed with Rigco was based on the carrying values of the underlying assets as of 27 February 2023. Given the unique business and risk profile of Rigco, the transaction price was assessed to be not representing the fair value of the vendor notes. As the fair value of vendor notes is neither evidenced by a quoted price in an active market (i.e. Level 1 input) nor based on a valuation technique that uses only data from observable markets and as such, in accordance with SFRS(I) 9, paragraph B5.1.2A(b), the difference between the fair value at initial recognition and the transaction price was deferred. The deferred loss will be recognised as a loss on a systematic basis over time. Management engaged an independent professional advisor to assist in the determination of the fair value of the vendor notes issued by Rigco, which is based on the Discounted Cash Flow (“DCF”) calculations using the estimated cash flows available for repayment of the vendor notes, derived based on a probability weighted range of scenarios per Rigco’s business plan and financial projections. In addition to the independent professional firm responsible for estimating the fair value based on the DCF calculations and calculating the discount rates, management has also relied on inputs provided by an independent industry expert engaged separately by Rigco that were used in the financial projections, taking into consideration the market outlook, assumptions and industry parameters. As at 31 December 2023, the carrying value of the vendor notes, measured at fair value, amounted to $4,286,354,000 which included an unamortised deferred loss amounting to $1,107,501,000 (Note 16). The determination of the fair value of the vendor notes require significant judgement as the inputs to the DCF calculations are not market observable. Such inputs used in the valuation include estimated future asset sale values, dayrates, cost assumptions, utilisation rates, discount rates, duration of charters and estimated timing of future asset sales. These inputs are subject to risk and uncertainty. The valuation of the vendor notes based on the DCF calculations was most sensitive to discount rates and the estimated future asset sale values. With all other variables held constant, the following demonstrates the sensitivity to a reasonably possible change in discount rates and the estimated future asset sale values on the fair value of vendor notes: • • Discount rates of 5.62% to 10.04% as computed by the independent professional advisor were used in the valuation as at 31 December 2023. A 1% increase in discount rate would lead to approximately $129,217,000 decrease in fair value. Estimated future oil rig sale values of $174 million to $602 million as provided by an independent industry expert engaged by Rigco were used in the valuation as at 31 December 2023. A 10% decrease in estimated future asset sale values would lead to approximately $260,932,000 decrease in fair value. Further details on these unobservable key inputs that require significant judgement are disclosed in Note 36(e). ANNUAL REPORT 2023 159 3. SHARE CAPITAL GROUP AND COMPANY Number of Ordinary Shares (“Shares”) Issued Share Capital Treasury Shares 2023 2022 2023 2022 Balance at 1 January 1,820,557,767 1,820,557,767 (68,597,849) Treasury shares transferred pursuant to share plans Treasury shares purchased – – – – 10,334,248 – (75,864,000) (943,259) 8,209,410 Balance at 31 December 1,820,557,767 1,820,557,767 (58,263,601) (68,597,849) Balance at 1 January Treasury shares transferred pursuant to share plans Treasury shares purchased Amount ($’000) Issued Share Capital Treasury Shares 2023 2022 2023 2022 1,305,668 1,305,668 – – – – (456,015) 68,699 – (4,624) 48,602 (499,993) Balance at 31 December 1,305,668 1,305,668 (387,316) (456,015) Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends declared by the Company. During the financial year, the Company transferred 10,334,248 (2022: 8,209,410) treasury shares to employees upon vesting of Shares released under the Keppel Share Plans. There were no treasury shares purchased (2022: 75,864,000) during the year. The total amount paid for the purchase of shares was $499,993,000 in prior year. Except for the transfer, there was no other sale, disposal, cancellation and/or use of treasury shares during the year ended 31 December 2023. Keppel Share Plans The Keppel Performance Share Plan (“Keppel PSP”) and Keppel Restricted Share Plan (“Keppel RSP”) were approved by the Company’s shareholders at the Extraordinary General Meeting of the Company on 23 April 2010. The Keppel Performance Share Plan 2020 (“Keppel PSP 2020”) and Keppel Restricted Share Plan 2020 (“Keppel RSP 2020”) were approved by the Company’s shareholders at the Annual General Meeting held on 2 June 2020, replacing the Keppel PSP and Keppel RSP respectively with effect from 2 June 2020. The Keppel PSP and Keppel RSP were terminated on the same day. The share plans are administered by the Remuneration Committee whose members are: Till Bernhard Vestring (Chairman) Danny Teoh Jean-François Manzoni Penny Goh Shirish Moreshwar Apte (appointed on 1 January 2024) Executive Directors who are eligible for the Keppel 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. During the financial year, the following were vested: • • • • • Nil (2022: 1,566,518) Shares under the Keppel Restricted Share Plan – Deferred Shares (“Keppel RSP-Deferred Shares”); 8,220,265 (2022: 3,802,557) Shares under the Keppel Restricted Share Plan 2020 – Deferred Shares (“Keppel RSP 2020-Deferred Shares”); 1,966,359 (2022: 495,600) Shares under the Keppel Performance Share Plan (“Keppel PSP”); 147,624 (2022: nil) Shares under the Keppel PSP – M1 Transformation Incentive Plan (“Keppel PSP-M1 TIP”); and Nil (2022: 2,344,735) Shares under the Keppel PSP – Transformation Incentive Plan (“Keppel PSP-TIP”). 160 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT Details of the Keppel RSP 2020-Deferred Shares, Keppel PSP, Keppel PSP 2020, Keppel PSP – M1 Transformation Incentive Plan (“Keppel PSP-M1 TIP”) and the Keppel PSP 2020 – Transformation Incentive Plan (“Keppel PSP 2020-TIP”) are as follows: Keppel RSP 2020-Deferred Shares Keppel PSP & Keppel PSP 2020 Plan Description Award of fully-paid ordinary shares of the Company Award of fully-paid ordinary shares of the Company, conditional on achievement of pre-determined targets over a three-year performance period Performance Conditions – PSP awards from Year 2019 to 2021 a. Absolute Total Shareholder’s Return b. Return on Capital Employed c. Net Profit PSP awards from Year 2022 onwards a. Reduction in Carbon Emission b. Net Profit c. Return on Equity d. Absolute Total Shareholder’s Return Final Award 100% of the awards granted Vesting Condition and Schedule Awards will vest equally over three years subject to fulfilment of service requirements 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 Plan Description Performance Conditions Keppel PSP-M1 TIP Keppel PSP 2020-TIP 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 Award of fully-paid ordinary shares of the Company, conditional on achievement of pre-determined targets over a five-year performance period a. Net Profit a. Absolute Total Shareholder’s Return b. Corporate Scorecard Achievement comprising pre-determined stretched financial and non-financial targets for the Group c. Net Promoter Score d. Individual Performance Achievement b. c. d. Corporate Scorecard Achievement comprising pre-determined stretched financial and non-financial targets for the Group Individual Performance Achievement Asset Monetisation and Cross-BU Revenue targets Final Award Vesting Condition and Schedule 0% to 150% of the contingent award granted, depending on achievement of pre-determined targets 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 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 five-year performance period subject to fulfilment of service requirements. Performance conditions may be subject to re-testing at the end of the five-year performance period ANNUAL REPORT 2023 161 3. SHARE CAPITAL (continued) Movements in the number of shares under the Keppel RSP-Deferred Shares, Keppel RSP 2020-Deferred Shares, Keppel PSP, Keppel PSP-TIP, Keppel PSP-M1 TIP, Keppel PSP 2020 and the Keppel PSP 2020-TIP are as follows: Keppel RSP 2020-Deferred Shares Keppel PSP Keppel PSP-TIP Keppel PSP-M1 TIP Keppel PSP 2020 Keppel PSP 2020-TIP 2023 Contingent awards/Awards (Keppel RSP 2020-Deferred Shares) Balance at 1 January Granted Adjustments upon released Released Cancelled Balance at 31 December – 2,841,880 10,647,140 – (4,510,021) 1,096,496 (6,137,119) (1,966,359) – – – 1,972,017 379,900 – 146,388 (147,624) 3,115,000 1,845,000 1,229,745 – 11,220,000 – 4,146,018 – – (255,128) (2,259,267) 378,664 5,934,617 13,106,751 – – – – – – 2022 Keppel RSP 2020-Deferred Shares Keppel PSP Keppel PSP-TIP Keppel PSP-M1 TIP Keppel PSP 2020 Keppel PSP 2020-TIP Contingent awards/Awards (Keppel RSP-Deferred Shares & Keppel RSP 2020-Deferred Shares) Balance at 1 January Granted Adjustments upon released Released Cancelled Balance at 31 December – 4,171,880 6,166,706 423,500 – (684,400) (495,600) (150,000) – (3,796,628) (2,344,735) (25,343) 1,490,000 1,775,000 11,140,000 840,000 – – – – – – – (43,600) (150,000) (760,000) 2,841,880 – 379,900 3,115,000 11,220,000 6,317,893 (8,862) (6,309,031) – – At the end of the financial year, the number of contingent award of Shares granted but not released was: • • • • 1,972,017 (2022: 2,841,880) under the Keppel PSP; 378,664 (2022: 379,900) under the Keppel PSP-M1 TIP, out of which nil (2022: 115,100) is to be vested in three years and 378,664 (2022: 264,800) is to be vested in six years; 5,934,617 (2022: 3,115,000) under the Keppel PSP 2020; and 13,106,751 (2022: 11,220,000) under the Keppel PSP 2020-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 2,958,026 under the Keppel PSP, zero to a maximum of 567,996 under the Keppel PSP-M1 TIP, zero to a maximum of 8,901,926 under the Keppel PSP 2020, and zero to a maximum of 19,660,127 under the Keppel PSP 2020-TIP. Awards released but not vested: Balance at 1 January Released Vested Cancelled Other adjustments Balance at 31 December 2023 2022 Keppel RSP-Deferred Shares Keppel RSP 2020-Deferred Shares Keppel RSP-Deferred Shares Keppel RSP 2020-Deferred Shares – – – – – – 5,254,348 6,137,119 1,576,649 – 3,231,494 6,309,031 (8,220,265) (1,566,518) (3,802,557) (329,253) 4,508,077 7,350,026 (10,131) (483,620) – – – 5,254,348 As at 31 December 2023 and 2022, there were no awards released but not vested under the Keppel RSP-Deferred Shares and 7,350,026 (2022: 5,254,348) under the Keppel RSP 2020-Deferred Shares. 162 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT The fair values of the contingent award of Shares under the Keppel RSP-Deferred Shares, Keppel RSP 2020-Deferred Shares, Keppel PSP, Keppel PSP-TIP, Keppel PSP-M1 TIP, Keppel PSP 2020 and the Keppel PSP 2020-TIP 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 8 February 2023, 15 February 2023 and 1 March 2023, the Company granted total awards of 6,137,119 Shares under the Keppel RSP 2020-Deferred Shares and the estimated fair value of the Shares granted were $6.69, $6.73 and $5.13 respectively. On 28 April 2023, the Company granted contingent awards of 1,845,000 Shares under the Keppel PSP 2020 and the estimated fair value of the Shares granted was $5.10. In the prior year, on 15 February 2022, the Company granted awards of 6,317,893 Shares under the Keppel RSP 2020-Deferred Shares and the estimated fair value of the Shares granted were $5.84. On 29 April 2022, the Company granted contingent awards of 1,775,000 Shares under the Keppel PSP 2020 and the estimated fair value of the Shares granted was $6.07. On 29 April 2022, the Company granted contingent awards of 840,000 Shares under the Keppel PSP 2020-TIP and the estimated fair value of the Shares granted was $3.53. Following the dividend in specie of the Seatrium Limited (formerly, Sembcorp Marine Ltd) shares (“Consideration Shares”) to the Company’s shareholders, adjustments have been made on 27 March 2023 to certain unvested shares under the Keppel Share Plans. The increase in unvested shares due to the adjustments were: • • • • • 1,222,008 unvested shares under the Keppel PSP; 163,357 unvested shares under the Keppel PSP-M1 TIP; 1,229,745 unvested shares under the Keppel PSP 2020; 4,146,018 unvested shares under the Keppel PSP 2020-TIP; and 4,510,021 unvested shares under the Keppel RSP 2020-Deferred Shares. 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 * Expected dividend yield is based on management’s forecast. Keppel RSP 2020-Deferred Shares 08.02.2023 15.02.2023 $7.08 22.09% 0.17 – 2.08 years 0.00 – 2.00 years 3.0% - 3.7% 3.2% - 3.4% * 2023 Keppel RSP 2020-Deferred Shares Keppel PSP 2020 01.03.2023 28.04.2023 $5.48 21.41% $6.17 23.84% 0.08 – 2.00 years 2.83 years 3.7% - 4.0% * 2.93% * 2022 Keppel RSP 2020-Deferred Shares Keppel PSP 2020 Keppel PSP 2020-TIP 15.02.2022 29.04.2022 29.04.2022 $6.05 26.92% $6.87 26.05% $6.87 26.05% 0.00 – 2.00 years 2.83 years 3.83 years 0.90% – 1.26% * 2.17% * 2.27% * 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. ANNUAL REPORT 2023 163 4. RESERVES Capital reserves Share option and share plans reserve Fair value reserve Hedging reserve Bonus issue by subsidiaries Statutory reserves Others Revenue reserves Foreign exchange translation account GROUP 2023 $’000 203,980 (208,448) 57,728 40,000 155,593 (52,774) 196,079 2022 $’000 205,342 (60,911) 239,457 40,000 146,987 (25,966) 544,909 COMPANY 2023 $’000 2022 $’000 203,979 18,013 205,342 19,430 – – – (34,295) 187,697 – – – (7,736) 217,036 9,361,110 – 9,971,301 10,632,860 6,157,804 (778,291) (849,163) – 9,389,089 10,328,606 6,345,501 9,578,146 Exchange differences arises from the translation of financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency as well as from the translation of foreign currency loans that form part of the Group’s net investment in foreign operations. The translation gain for 2023 arose from the discontinued operations, largely from the strengthening of foreign currencies, such as United States dollar against Singapore dollar, offset by translation losses from weakening of foreign currencies, such as Renminbi against Singapore dollar. In 2022, the translation losses arose largely from weakening of Renminbi against Singapore Dollar. Movements in the Group’s and the Company’s reserves are set out in the respective Statements of Changes in Equity. Movements in hedging reserve by risk categories are as follows: Foreign exchange risk $’000 Interest rate risk $’000 Price risk $’000 Total $’000 GROUP 2023 As at 1 January Fair value changes arising during the year, net of tax Realised and transferred to profit or loss account – Materials, subcontract and other costs – Other operating loss – net – Interest expenses – Other gains and losses Share of associated companies and joint ventures’ fair value changes As at 31 December 2022 As at 1 January Fair value changes arising during the year, net of tax Realised and transferred to profit or loss account – Materials, subcontract and other costs – Other operating income – net – Interest expenses – Other gains and losses Share of associated companies and joint ventures’ fair value changes 66,518 (8,755) 4,474 (74,022) – – (646) 256,505 (69,736) – – (49,880) (558) (39,337) (83,566) (4,215) 60,946 – – – – 239,457 (82,706) 65,420 (74,022) (49,880) (558) (39,983) (12,431) 96,994 (26,835) 57,728 2,396 (16,329) (1,895) 80,464 – – 1,882 (33,943) 224,247 – – (3,253) 2,830 66,624 (148,851) (52,147) 117,432 – – – – (180,398) 155,771 115,537 80,464 (3,253) 2,830 68,506 As at 31 December 66,518 256,505 (83,566) 239.457 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. 164 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 5. PERPETUAL SECURITIES On 16 September 2021, the Company issued subordinated perpetual securities with an aggregate principal amount of $400,000,000 and an initial distribution rate of 2.9% per annum. The distribution will be payable semi-annually in arrear unless deferred at the discretion of the Company and will be cumulative in accordance with the terms and conditions of the perpetual securities. The perpetual securities have no fixed redemption date and are redeemable in whole at the Company’s option on 16 September 2024 or any subsequent semi-annual distribution payment dates thereafter, at their principal amount, together with any accrued, unpaid or deferred distributions. Subject to the relevant terms and conditions of the perpetual securities, the Company can elect to defer distributions on these perpetual securities and is not subject to any limits as to the number of times a distribution can be deferred, unless it has: i. ii. paid or declared discretionary dividends, distributions or other discretionary payment in respect of its ordinary shares; or redeemed, cancelled, bought back or otherwise acquired ordinary shares (except in connection with any share scheme shares/options), during the six months ending on the day before the relevant distribution payment date. If on any distribution payment date, payment of all distribution payments is not made in full, the Company shall not (i) pay or declare any dividends, distributions or other discretionary payment on its ordinary shares or (ii) redeem, reduce, cancel, buy-back or acquire ordinary shares (except in connection with any share scheme shares/options) until the Company has satisfied in full all outstanding arrears of distribution on these perpetual securities or is permitted to do so by an extraordinary resolution by the holders of the perpetual securities. As the perpetual securities have no fixed redemption date and the payment of distributions is at the discretion of the Company, the perpetual securities do not meet the definition for classification as a financial liability under SFRS(I) 1-32 Financial Instruments: Presentation. The whole instrument is presented within equity, and distributions are treated as dividends. As at 31 December 2023, the perpetual securities of $401,521,000 (2022: $401,521,000) recognised within equity include the accrued distributions for the perpetual securities and distributions paid to perpetual securities holders for the year. 6. NON-CONTROLLING INTERESTS The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows: Konnectivity Pte. Ltd. Other subsidiaries with immaterial NCI NCI percentage of ownership interest and voting interest 2023 20% 2022 20% Carrying amount of NCI Profit after tax allocated to NCI 2023 $’000 286,448 21,150 2022 $’000 280,725 52,835 2023 $’000 12,382 14,446 2022 $’000 10,041 (15,453) Total 307,598 333,560 26,828 (5,412) ANNUAL REPORT 2023 165 6. NON-CONTROLLING INTERESTS (continued) 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 generated from operations Net cash used in investing activities Net cash from/(used in) financing activities Total comprehensive income allocated to NCI Dividends paid to NCI Konnectivity Pte. Ltd. 2023 $’000 2022 $’000 1,954,623 1,935,283 487,973 231,436 429,712 1,781,448 (349,207) 1,432,241 459,086 143,409 489,427 1,761,533 (357,907) 1,403,626 1,254,714 1,182,413 70,761 65,182 135,271 (152,958) 9,732 65,313 56,091 155,663 (148,946) (178,765) 12,667 12,629 7,141 38,640 During the financial year, the Group acquired additional interest in certain subsidiaries of the Company from its non-controlling interests. The following summarises the effect of the change in the Group’s ownership interest on the equity attributable to owners of the Company: Amounts paid on changes in ownership interest in subsidiaries Amounts paid on acquisition of additional interest made in prior year Non-controlling interest acquired Total amount recognised in equity reserves 2023 $’000 (14,316) – 14,316 2022 $’000 (28,600) 3,996 13,138 – (11,466) 166 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 7. FIXED ASSETS GROUP 2023 Cost At 1 January Additions Disposals Write-off Subsidiaries disposed Reclassification – Investment properties – Other fixed assets categories Exchange differences Freehold Land & Buildings $’000 Buildings on Leasehold Land $’000 Networks & Related Application Systems $’000 Plant, Machinery, Equipment & Others1 $’000 Capital Work-in- Progress $’000 Total $’000 45,236 307 – – – – 347 (722) 539,472 35,527 (59) (278) (151,203) (2,861) – (8,126) 154,025 66,001 (300) – – – – – 1,031,694 127,169 (12,895) (19,094) 169,744 126,109 (7,574) (721) 1,940,171 355,113 (20,828) (20,093) (106,366) (211,426) (468,995) – 7,636 (5,243) – (7,983) (1,153) (2,861) – (15,244) At 31 December 45,168 412,472 219,726 1,022,901 66,996 1,767,263 Accumulated depreciation and impairment losses At 1 January Depreciation charge – from continuing operations Disposals Write-off Subsidiaries disposed Reclassification – Investment properties Exchange differences At 31 December Net Book Value 32,183 246,784 50,291 613,237 20,879 963,374 860 – – – (599) 27,496 (59) (278) (98,199) (527) (3,726) 18,161 (68) – – – – 89,135 (10,496) (13,060) (102,555) – (3,754) – – – – – (591) 135,652 (10,623) (13,338) (200,754) (527) (8,670) 32,444 171,491 68,384 572,507 20,288 865,114 12,724 240,981 151,342 450,394 46,708 902,149 Included in freehold land & buildings are freehold land amounting to $2,689,000 (2022: $2,655,000). Certain fixed assets with carrying amount of $4,476,000 (2022: $4,751,000) are mortgaged to banks to secure banking facilities (Note 25). There was no interest capitalised during the financial years 2023 and 2022. ANNUAL REPORT 2023 167 7. FIXED ASSETS (continued) GROUP 2022 Cost At 1 January Additions Disposals Write-off Subsidiaries acquired Subsidiaries disposed Reclassification – ROU asset – Contract assets – Other fixed assets categories – Disposal group and assets classified as held for sale (Note 38) Exchange differences Freehold Land & Buildings $’000 Buildings on Leasehold Land $’000 Vessels & Floating Docks $’000 Networks & Related Application Systems $’000 Plant, Machinery, Equipment & Others1 $’000 Capital Work-in- Progress $’000 Total $’000 83,916 1,883,539 455,186 321 (267) – 3,409 – – – 38 1,237 (159) – – (249,852) (303) – 5,450 6 (13) – – – – – (877) (40,124) (1,078,608) (448,773) (2,057) (21,832) (5,529) 80,825 73,200 – – – – – – – – – 2,231,360 104,601 (43,443) (890) 420 (43,053) – – 24,184 160,344 100,048 (5,396) (52) – (791) – 753,612 (28,795) 4,895,170 279,413 (49,278) (942) 3,829 (293,696) (303) 753,612 – (1,232,094) (810,811) (3,610,410) (9,391) 1,585 (37,224) At 31 December 45,236 539,472 – 154,025 1,031,694 169,744 1,940,171 Accumulated depreciation and impairment losses At 1 January Depreciation charge – from continuing operations – from discontinued operations Disposals Subsidiaries disposed Reclassification – ROU asset – Other fixed assets categories – Disposal group and assets classified as held for sale (Note 38) Exchange differences At 31 December Net Book Value 57,039 956,228 171,115 37,083 1,586,668 42,663 2,850,796 919 446 (256) – – – 17,516 7,496 (155) (157,231) (155) (96) – 4,992 (13) – – – (24,308) (568,868) (172,040) (1,657) (7,951) (4,054) 32,183 246,784 13,053 292,688 – – 13,208 – – – – – – – 84,560 12,560 (39,884) (37,844) – 96 – – – – – – 116,203 25,494 (40,308) (195,075) (155) – (985,456) (19,555) (1,770,227) (7,463) (2,229) (23,354) 50,291 613,237 20,879 963,374 103,734 418,457 148,865 976,797 1 Others comprise furniture, fittings and office equipment and cranes. 168 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT COMPANY 2023 Cost At 1 January Additions Disposals Write-off At 31 December Accumulated depreciation and impairment losses At 1 January Depreciation charge Disposals Write-off At 31 December Net Book Value 2022 Cost At 1 January Additions Disposals At 31 December Accumulated depreciation and impairment losses At 1 January Depreciation charge Disposals At 31 December Net Book Value 2 Others comprise furniture, fittings and office equipment. Freehold Land & Buildings $’000 Plant, Machinery, Equipment & Others2 $’000 1,233 – – – 23,144 316 (517) (1,058) Total $’000 24,377 316 (517) (1,058) 1,233 21,885 23,118 1,233 – – – 17,503 2,419 (515) (375) 18,736 2,419 (515) (375) 1,233 19,032 20,265 – 2,853 2,853 1,233 – – 23,661 146 (663) 24,894 146 (663) 1,233 23,144 24,377 1,233 – – 15,199 2,582 (278) 16,432 2,582 (278) 1,233 17,503 18,736 – 5,641 5,641 ANNUAL REPORT 2023 169 8. INVESTMENT PROPERTIES At 1 January Development expenditure Fair value gain (Note 28) Disposal Reclassification – Fixed assets (Note 7) – Stocks (Note 18) Exchange differences At 31 December GROUP 2023 $’000 2022 $’000 4,283,093 4,256,428 327,402 149,532 (17,000) 2,334 548 216,799 131,711 (41,204) – – (80,845) (280,641) 4,665,064 4,283,093 The Group revalues its investment property portfolio on an annual basis except for significant investment properties which are revalued on a half-yearly basis. The fair value of investment properties is determined by external, independent professional valuers which have appropriate recognised professional qualifications and experience in the location and category of property being valued. Management reviews the appropriateness of the valuation methodologies and assumptions adopted, and the reliability of the inputs used in the valuations. 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 professional valuers as at 31 December 2023: • • • • • • • Cushman & Wakefield VHS Pte Ltd and Knight Frank Pte Ltd for properties in Singapore; PA International Property Consultants (KL) Sdn Bhd. for a property in Malaysia; Cushman & Wakefield Limited and Colliers Appraisal & Advisory Services Co., Ltd for properties in China; KJPP Willson dan Rekan (an affiliate of Knight Frank) for properties in Indonesia; Cushman & Wakefield Vietnam Ltd. and VAS Valuation Co., Ltd (in association with CBRE (Vietnam) Co., Ltd) for properties in Vietnam; Cushman & Wakefield India Private Limited for a property in India; and Cushman & Wakefield V.O.F. for a property in the Netherlands. Based on valuations performed by the independent professional valuers, management has analysed the appropriateness of the fair value changes. Interest capitalised within development expenditure during the financial year amounted to $58,697,000 (2022: $41,249,000). The Group has mortgaged certain investment properties of carrying value amounting to $1,968,052,000 as at 31 December 2023 (2022: $1,913,364,000) to banks for loan facilities (Note 25). During the year, the Group reclassified $548,000 (2022: $nil) from properties held for sale to investment properties upon change of use of the asset from property trading to holding for rental yield. During the year, the Group reclassified $2,334,000 (2022: $nil) from fixed assets to investment properties for the change in use of the asset from owner occupied to holding for capital gain and/or rental yield. 9. RIGHT-OF-USE ASSETS (LEASES) Leases The Group as lessee Leasehold land & buildings The Group leases several lands, offices and retail stores for use in its operations. Plant, machinery, equipment & others The Group leases equipment and vehicles for office and operation use, mainly in the Infrastructure 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. 170 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT Right-of-use assets GROUP 2023 Net Book Value At 1 January Additions Depreciation – from continuing operations Subsidiaries disposed Write-off Remeasurement Exchange differences At 31 December 2022 Net Book Value At 1 January Additions Subsidiaries acquired Depreciation – from continuing operations – from discontinued operations Subsidiaries disposed Write-off Remeasurement Reclassification – Fixed assets (Note 7) – Disposal group and assets classified as held for sale (Note 38) – Other right-of-use assets categories Exchange differences Leasehold Land & Buildings $’000 Plant, Machinery, Equipment & Others1 $’000 Base Station Sites $’000 Total $’000 213,628 18,700 (30,823) (10,336) (323) 940 (2,542) 3,157 2,614 24,267 1,375 241,052 22,689 (1,585) (5,047) – – – – – – (39) (256) (37,455) (10,336) (323) 940 (2,837) 189,244 4,147 20,339 213,730 501,956 24,045 226 (35,806) (9,594) (32,753) (524) 17,375 148 (253,063) 408 1,210 5,230 952 – (2,057) (95) (727) – – – (57) 6 (95) 22,030 6,885 – (4,234) – – – – – – (414) – 529,216 31,882 226 (42,097) (9,689) (33,480) (524) 17,375 148 (253,120) – 1,115 At 31 December 213,628 3,157 24,267 241,052 1 Others comprise furniture, fittings, office equipment and motor vehicles. As at 31 December 2022, the right-of-use asset relating to the leasehold land presented under investment properties (Note 8) was stated at fair value and had a carrying amount of $58,000. In 2023, such lease agreements have expired and no right-of-use asset related to leasehold property is presented under investment properties. Total cash outflow for all the leases was $41,644,000 (2022: $106,546,000), comprising repayment of principal of $35,139,000 (2022: $82,641,000) and interest payment of $6,505,000 (2022: $23,905,000). ANNUAL REPORT 2023 171 9. RIGHT-OF-USE ASSETS (LEASES) (continued) COMPANY 2023 Net Book Value At 1 January Depreciation Additions At 31 December 2022 Net Book Value At 1 January Depreciation Additions At 31 December Leasehold Land & Buildings $’000 Plant, Machinery, Equipment & Others2 $’000 11,580 (3,672) – 7,908 15,102 (3,669) 147 11,580 79 (71) 7 15 129 (72) 22 79 Total $’000 11,659 (3,743) 7 7,923 15,231 (3,741) 169 11,659 2 Others comprise office equipment. Total cash outflow for all the leases was $4,206,000 (2022: $4,225,000), comprising repayment of principal of $3,949,000 (2022: $3,875,000) and $257,000 interest payment (2022: $350,000). 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 2023 $’000 12,070 308 415 2022 $’000 12,559 212 404 As at 31 December 2023, future cash outflows to which the Group is potentially exposed that are not reflected in the measurement of lease liabilities include variable lease payments, $25,452,000 (2022: $24,890,000) for extension options and $55,341,000 (2022: $55,243,000) for committed leases which have yet to commence. The following table details the liquidity analysis for lease liabilities of the Group and the Company based on contractual undiscounted cash flows. GROUP COMPANY 2023 $’000 38,060 46,304 68,743 124,192 2022 $’000 38,111 33,085 55,781 154,365 2023 $’000 4,032 3,957 989 – 2022 $’000 4,205 4,031 4,945 – 277,299 281,342 8,978 13,181 Within one year Within one to two years Within two to five years After five years Total 172 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT The Group as lessor The Group leases out properties, pipe service corridor racks and wayleaves facilities 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: Within one year In the second year In the third year In the fourth year In the fifth year After the fifth year Total GROUP 2023 $’000 67,932 49,167 36,236 16,855 13,243 34,717 2022 $’000 70,734 62,569 42,880 24,002 15,852 47,388 218,150 263,425 The Group entered into leasing arrangement with customers for certain equipment as a manufacturer lessor and built-to-suit data centre for a customer. The lease is classified as finance lease as the customers have an option to purchase the underlying asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception date, that the option will be exercised. The asset relating to the finance lease is derecognised and the net investment in the lease is recognised under lease receivables (Note 17). In 2022, the Group had 6 jack-up oil rigs within the disposal group held for sale which has entered into bareboat charter contracts for a period of three to five years with total undiscounted lease receivable of $268,460,000 (Note 38). The following table shows the maturity analysis of the undiscounted lease payments to be received: Within one year In the second year In the third year In the fourth year In the fifth year After the fifth year Total GROUP 2023 $’000 12,966 13,053 73,750 3,949 3,947 30,674 2022 $’000 11,418 11,602 11,697 76,797 1,937 15,106 138,339 128,557 ANNUAL REPORT 2023 173 10. INTANGIBLES GROUP 2023 At 1 January Additions Acquisition of subsidiaries Amortisation – from continuing operations Exchange differences Others Goodwill $’000 Development Expenditure $’000 Brand $’000 Spectrum Rights $’000 Customer Contracts and Relationships $’000 Others $’000 Total $’000 1,042,488 5,008 242,097 142,742 110,497 21,882 1,564,714 – 15,205 – – 2,978 316 – (203) (21) – – – – – – – – – 316 15,205 (9,252) (15,686) (22,792) (400) (48,333) – – – – (555) – (2) – (578) 2,978 At 31 December 1,060,671 5,100 232,845 127,056 87,150 21,480 1,534,302 Cost Accumulated amortisation 1,060,671 – 13,092 (7,992) 277,563 (44,718) 183,787 (56,731) 209,871 (122,721) 22,575 (1,095) 1,767,559 (233,257) 1,060,671 5,100 232,845 127,056 87,150 21,480 1,534,302 2022 At 1 January Additions Acquisition of subsidiaries Disposal of a subsidiary Disposals Amortisation – from continuing operations – from discontinued operations Reclassification – Disposal group and assets classified as held for sale Exchange differences 1,047,558 13,685 251,349 – – – – – – 424 – (1,275) (52) (777) (216) (5,070) – (6,685) (96) 132,176 26,252 – – – 122,253 – 10,767 – – 22,251 1,589,272 – 32 – – 26,676 10,799 (1,275) (52) – – – – (9,252) (15,686) (22,143) (400) (48,258) – – – – – – – – (380) – – (1) (216) (11,755) (477) At 31 December 1,042,488 5,008 242,097 142,742 110,497 21,882 1,564,714 Cost Accumulated amortisation 1,042,488 – 12,723 (7,715) 277,563 (35,466) 183,787 (41,045) 210,517 (100,020) 22,577 1,749,655 (695) (184,941) 1,042,488 5,008 242,097 142,742 110,497 21,882 1,564,714 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 $1,060,671,000, goodwill allocated from the acquisition of M1 Limited amounted to $988,288,000. 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 2.00% (2022: 1.48%), premised on the estimated long term growth rate for the country where the CGU operates. Cash flows were discounted using a discount rate of 7.2% (2022: 7.9%) per annum. The recoverable amount was estimated to be higher than the carrying value of the M1 Limited CGU. Accordingly, no impairment of goodwill was recognised in 2023 and 2022. 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 used in the calculation of the value-in-use amount would not cause any impairment to goodwill. If the terminal rate were to decrease from 2.0% to 1.5%, the recoverable amount would decrease and would not result in impairment for the financial year ended 31 December 2023. If the discount rate were to increase by 1.6% and holding all other variables constant, the recoverable amount would decrease and equate the carrying amount, and any further increase in discount rate would result in impairment for the financial year ended 31 December 2023. 174 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 11. SUBSIDIARIES Quoted shares, at cost Market value: $7,814,000 (2022: $6,111,000) Unquoted shares, at cost Provision for impairment Movements in the provision for impairment of subsidiaries are as follows: At 1 January Charge to profit or loss Disposal Write-back At 31 December COMPANY 2023 $’000 2022 $’000 493 7,630,493 7,630,986 (447,128) 493 7,633,512 7,634,005 (445,612) 7,183,858 7,188,393 COMPANY 2023 $’000 445,612 1,516 – – 2022 $’000 449,056 – (3,000) (444) 447,128 445,612 In 2018, Keppel FELS Limited and Keppel Shipyard Limited, both indirect wholly owned subsidiaries of the Company, issued fixed rate senior perpetual securities (the “perpetual securities”) with an aggregate principal amount of $2,000,000,000 to Kepinvest Holdings Pte Ltd, a direct wholly owned subsidiary of the Company. During the financial year ended 31 December 2022, a. b. the perpetual securities amounting to $2,364,876,000 have been novated from Kepinvest Holdings Pte Ltd to the Company and were classified as an investment in subsidiaries by the Company; and unquoted shares in Keppel Offshore & Marine Ltd (“KOM”) amounting to $801,720,000 and perpetual securities relating to the KOM group as described above, amounting to a total of $3,166,596,000, have been reclassified to “Disposal group and assets classified as held for sale” on the balance sheet of the Company. The above transactions were for the purposes of undertaking an internal restructuring of KOM (the “KOM Pre-Combination Restructuring”) to effect the Proposed Combination as mentioned in Note 38. Information relating to significant subsidiaries consolidated in the financial statements is given in Note 41. 12. ASSOCIATED COMPANIES AND JOINT VENTURES Quoted shares, at cost Market value: $2,087,338,000 (2022: $2,302,422,000) Unquoted shares, at cost Provision for impairment Share of reserves post acquisition Carrying amount Unquoted shares, at fair value through profit or loss Notes issued by and long-term receivable from an associated company (notional) Advances to associated companies and joint ventures GROUP 2023 $’000 2022 $’000 1,940,562 3,533,820 5,474,382 (94,159) 5,380,223 389,618 5,769,841 398,272 260,541 173,199 2,304,848 3,454,664 5,759,512 (112,004) 5,647,508 476,094 6,123,602 246,677 245,000 176,583 6,601,853 6,791,862 Notes issued by and long-term receivables from an associated company amounted to $260,541,000 (2022: 245,000,000). The notes issued are unsecured and will mature in 2040. Interest is charged at 17.5% (2022: 17.5%) per annum. The long-term receivables are non-interest bearing and not repayable on demand. Including share of net liabilities and other adjustments, the carrying amount of the associated company amounted to approximately $41,375,000 (2022: $67,637,000). ANNUAL REPORT 2023 175 12. ASSOCIATED COMPANIES AND JOINT VENTURES (continued) Advances to associated companies and joint ventures are unsecured and are not repayable within the next 12 months. Interest is charged at 3.0% to 11.0% (2022: 3.0% to 11.0%) 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 and liquidation Reclassification to – Disposal group and assets classified as held for sale At 31 December GROUP 2023 $’000 112,004 – (17,845) 2022 $’000 144,005 1,000 (26,900) – (6,101) 94,159 112,004 Impairment loss made mainly relates to the shortfall between the carrying amount of the costs of investment and the recoverable amount of an associated company. The carrying amount of the Group’s material associated companies and joint ventures, all of which are equity accounted for, are as follows: Keppel REIT Keppel DC REIT Sino-Singapore Tianjin Eco-City Investment and Development Co., Limited Other associated companies and joint ventures a b c 2023 $’000 1,633,309 480,349 660,983 3,827,212 2022 $’000 2,085,919 496,454 618,968 3,590,521 6,601,853 6,791,862 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: 176 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 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 (loss)/income Total comprehensive income Fair value of ownership interest (if listed)** Dividends received 2023 $’000 2022 $’000 169,101 8,090,227 8,259,328 337,930 2,170,333 2,508,263 5,751,065 795,861 8,085,514 8,881,375 714,266 2,301,805 3,016,071 5,865,304 (746,444) (746,388) 5,004,621 5,118,916 37% 1,861,219 (227,910) 47% 2,390,022 (304,103) 1,633,309 2,085,919 233,071 196,479 (101,792) 94,687 219,286 448,403 18,690 467,093 1,308,426 1,590,158 102,204 101,123 ** Based on the quoted market price at 31 December (Level 1 in the fair value hierarchy). As at 31 December 2023 and 31 December 2022, the fair value of Keppel REIT was below the carrying amount of the Group’s effective ownership interest. Management is of the view that no impairment is required as it is held for long term and its recoverable amount approximates the carrying amount. b. 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 (loss)/income Total comprehensive income Fair value of ownership interest (if listed)** Dividends received ** Based on the quoted market price as at 31 December (Level 1 in the fair value hierarchy). 2023 $’000 2022 $’000 209,432 3,797,119 4,006,551 148,614 1,503,976 1,652,590 2,353,961 262,606 3,845,057 4,107,663 244,640 1,406,105 1,650,745 2,456,918 (42,981) (42,800) 2,310,980 2,414,118 20% 467,742 12,607 20% 485,721 10,733 480,349 496,454 281,207 122,204 (51,445) 70,759 679,304 27,298 277,322 234,174 29,804 263,978 612,172 22,380 ANNUAL REPORT 2023 177 12. ASSOCIATED COMPANIES AND JOINT VENTURES (continued) c. 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 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 2023 $’000 2022 $’000 1,388,680 451,898 1,840,578 487,512 10,216 497,728 1,243,193 503,634 1,746,827 460,153 17,747 477,900 1,342,850 1,268,927 50% 671,425 (10,442) 50% 634,464 (15,496) 660,983 618,968 538,663 113,004 – 113,004 – 32,077 6,482 – 6,482 – d. Other associated companies and joint ventures Aggregate information about the Group’s investments in other associated companies and joint ventures are as follows: Share of results – continuing operations Share of results – discontinued operations Share of other comprehensive loss Share of total comprehensive income 2023 $’000 165,965 – (24,777) 2022 $’000 282,877 4,420 (150,579) 141,188 136,718 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 set out in Note 41. 178 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 13. INVESTMENTS Investments at fair value through other comprehensive income (“OCI”): – Quoted equity units in a public infrastructure trust managed by a related company – Quoted equity shares in other industries – Unquoted equity shares in real estate industry – Unquoted equity shares and funds in other industries – Unquoted real estate funds managed by a related company Total investments at fair value through OCI Investments at fair value through profit or loss: – Quoted equity shares – Unquoted equity shares and funds – Unquoted bonds and debentures Total investments at fair value through profit or loss GROUP 2023 $’000 2022 $’000 COMPANY 2023 $’000 2022 $’000 512,180 3,466 68,319 116,512 84,791 785,268 20,053 762,796 50,769 833,618 490,886 3,820 78,561 109,381 90,746 773,394 34,618 622,449 52,258 709,325 – – – – 18,013 19,430 – – – – 18,013 19,430 – – – – – – – – Total investments 1,618,886 1,482,719 18,013 19,430 Unquoted investments at fair value through profit or loss included compulsorily convertible debentures amounting to $44,592,000 (2022: $46,821,000). In the prior year, the Group has converted 5,035,464 of the compulsorily convertible debentures held into equity shares at a conversion rate of 1:1 amounting to approximately $23 million (equivalent to Rs 1,280 million Indian Rupee). The remaining compulsorily convertible debentures bear interest at 10.0% per annum which is maturing in 2040. 14. DEFERRED TAXATION Deferred tax liabilities Deferred tax assets Net deferred tax liabilities GROUP 2023 $’000 411,815 (78,520) 2022 $’000 368,031 (87,624) 333,295 280,407 Net deferred tax liabilities are determined by offsetting deferred tax assets against deferred tax liabilities of the same entities arising from same tax jurisdiction. 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 $10,200,000 (2022: $13,434,000) for taxes that would be payable on the undistributed earnings of certain subsidiaries as these earnings would not be distributed in the foreseeable future and the Group is in a position to control the timing of the reversal of the temporary differences. The Group has unrecognised deferred tax liabilities of $14,261,000 (2022: $11,938,000) for taxes that would be payable on the undistributed earnings of certain associated companies and joint ventures as these earnings would not be distributed in the foreseeable future. The Group has unutilised tax losses and capital allowances of $838,327,000 (2022: $766,605,000) 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 $478,963,000 (2022: $422,151,000) can be carried forward for a period of one to nine years (2022: one to nine years) subsequent to the year of the loss, while the remaining tax losses have no expiry date. ANNUAL REPORT 2023 179 14. DEFERRED TAXATION (continued) Movements in deferred tax liabilities and assets are as follows: At 1 January $’000 Charged/ (credited) to profit or loss $’000 Charged/ (credited) to other comprehensive income $’000 Net subsidiaries acquired/ disposed $’000 Reclassification to liabilities directly associated with assets classified as held for sale $’000 Exchange Differences $’000 At 31 December $’000 GROUP 2023 Deferred Tax Liabilities Accelerated tax depreciation Investment properties valuation Offshore income & others Total Deferred Tax Assets Other provisions Unutilised tax benefits Lease liabilities Total Net Deferred Tax Liabilities 2022 Deferred Tax Liabilities Accelerated tax depreciation Investment properties valuation Offshore income & others Total Deferred Tax Assets Other provisions Unutilised tax benefits Lease liabilities Total Net Deferred Tax Liabilities 144,183 4,291 183,977 38,472 366,632 (25,579) (62,726) 2,080 (86,225) 25,214 13,450 42,955 6,613 4,239 1,682 12,534 – – 3,200 3,200 – – – – 280,407 55,489 3,200 – – – – – – – – – – – – – – – – – – (5,977) 142,497 (4,974) 4,343 (6,608) 588 1,100 (881) 807 204,217 59,465 406,179 (18,378) (57,387) 2,881 (72,884) (5,801) 333,295 202,506 170,157 87,242 459,905 (117,525) (110,590) (17,578) (245,693) (1,065) 32,162 (6,782) 24,315 (9,462) 10,314 765 1,617 214,212 25,932 – – – – – – – – – 803 (56,962) (1,099) 144,183 – (32,801) (31,998) 546 – 3,557 4,103 – (6,156) (63,118) 100,412 32,941 16,574 149,927 (18,342) (3,031) (22,472) 450 4,609 (1,238) 3,821 183,977 38,472 366,632 (25,579) (62,726) 2,080 (86,225) (27,895) 86,809 (18,651) 280,407 15. CONTRACT ASSETS/LIABILITIES Non-current Current Contract assets Contract liabilities GROUP 31 December 1 January 2023 $’000 18,674 405,715 2022 $’000 86,411 255,900 2022 $’000 99,109 3,169,694 424,389 342,311 3,268,803 165,494 209,770 1,002,024 Contract assets relate to the construction of facilities and fabrication of equipment, and the right to consideration for handset and equipment delivered and accepted by customers but not yet billed at the reporting date. In the financial year ended 31 December 2022, contract assets relating to certain rig-building contracts where the scheduled dates of the rigs have been deferred and have higher counter-party risks amounted to $572,179,000 has been reclassified to disposal group and assets classified as held for sale. 180 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT Contract liabilities included proceeds received from sale of properties of $59,382,000 (2022: $153,487,000). Remaining contract liabilities of $106,112,000 (2022: $56,283,000) 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 2023 in relation to the contract liabilities balance at 1 January 2023 was $180,316,000 (2022: $882,597,000). The aggregate amount of the transaction price allocated to the remaining performance obligations is $1,395,625,000 (2022: $1,001,841,000) and the Group expects to recognise this revenue over the next 1 to 3 years (2022: 1 to 3 years). Movements in the allowance for expected credit loss for contract assets are as follows: At 1 January Reclassification – Disposal group and assets classified as held for sale At 31 December 16. NOTES RECEIVABLES GROUP 31 December 2023 $’000 – – – 2022 $’000 432,541 (432,541) – Arising from the completion of the Asset Co Transaction on 27 February 2023 (Note 38), the Group subscribed to notes (“vendor notes”) issued by Rigco Holding Pte Ltd (“Rigco”) which bear interest of 4.0% per annum and the interest is payable annually in arrears for a tenure of 12 years, with an option held by Rigco to extend the maturity date by an additional 3 years. The vendor notes amounting to $4,251,144,000 included USD denominated notes of US$1,878,388,000 with the remaining notes being SGD denominated. Rigco could elect to pay interest due entirely in cash, entirely in additional vendor notes or a combination of cash and additional vendor notes. The vendor notes may be redeemed at the outstanding principal amount together with unpaid accrued interest and a redemption premium equal to 5.0% of the outstanding principal amount of vendor notes being redeemed. Vendor notes issued by Rigco are debt instruments that do not meet the criteria for classification as amortised cost or fair value through other comprehensive income and are classified as financial assets carried at fair value through profit or loss. As described in Note 2.27(b)(vii), the transaction price was assessed to be not representing the fair value of the vendor notes. Initial recognition The vendor notes are required to be measured at fair value on initial recognition as described in Note 2.27(b)(vii), the transaction price was assessed to be not representing the fair value of the vendor notes. Management had engaged an independent professional advisor to assist in the determination of the fair value of the vendor notes issued by Rigco, which is based on the Discounted Cash Flow (“DCF”) calculations using the estimated cash flows available for repayment of the vendor notes derived based on a probability weighted range of scenarios per Rigco’s business plan and financial projections received in May 2023. In addition to the independent professional firm responsible for estimating the fair value based on the DCF calculations and calculating the discount rates, management has engaged an independent industry expert to provide the estimated future asset sale values used in the financial projections, taking into consideration the market outlook, assumptions and industry parameters. Based on the above, the fair value of the vendor notes amounted to $3,003,599,000 at initial recognition. As this fair value was derived using unobservable inputs that are subject to significant estimates and judgement, the difference of $1,247,545,000 between the fair value at initial recognition and the transaction price was accounted as a deferred loss as required under SFRS(I) 9, paragraph B5.1.2A(b). The deferred loss is amortised using a straight-line method over the expected tenor of 7 years based on the projected repayment of the vendor notes in Rigco’s business plan, or recognised in the profit or loss when there are observable market inputs, or when there is a redemption of vendor notes. If the valuation of the vendor notes continue to be based on data that is not observable in the market and there is no redemption of vendor notes until the end of 7 years, the amortisation of deferred loss would amount to approximately $178,220,000 per annum. Interest income would be recognised using an effective interest rate method on the latest fair value. ANNUAL REPORT 2023 181 16. NOTES RECEIVABLES (continued) Subsequent measurement As of 31 December 2023, the carrying amount of the vendor notes, measured at fair value, was $4,286,354,000 which included an unamortised deferred loss amounting to $1,107,501,000. Movements in the notes receivables for the full year ended 31 December 2023 are as follows: At 27 February 2023 Fair value changes, including Interest income1 Amortisation to profit or loss1 (from 27 February to 31 December 2023) Exchange differences2 Fair value $’000 3,003,599 150,659 Deferred loss $’000 1,247,545 – – (149,694) 24,595 9,650 Carrying value $’000 4,251,144 150,659 (149,694) 34,245 At 31 December 2023 3,178,853 1,107,501 4,286,354 1 The fair value changes, including interest income and amortisation of the deferred loss are recognised in the profit or loss and presented as “fair value (gain)/ loss – Notes receivables” in Note 28. 2 The foreign exchange gain arising from the USD denominated vendor notes and the USD denominated unamortised deferred loss are recognised in the profit or loss and presented as “foreign exchange (gain)/loss” in Note 28. 17. LONG TERM ASSETS Call option Finance lease receivables Other receivables GROUP COMPANY 2023 $’000 203,898 101,982 146,218 2022 $’000 192,522 93,339 212,675 2023 $’000 – – 2022 $’000 – – 58,744 70,252 452,098 498,536 58,744 70,252 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 2023, 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 838-year leasehold and 87-year leasehold (2022: based on the remaining 839-year leasehold and 88-year leasehold). Based on these valuations, the fair value gain of $11,376,000 (2022: $21,002,000) was taken to profit or loss account (Note 28). The details of the valuation techniques and inputs used for the call option are disclosed in Note 36. Included in other receivables is a secured loan receivable due from KrisEnergy Asia Limited (“KAL”), a company under receivership. The Company had provided a guarantee, which was in relation to a bilateral agreement between the Company and a bank, on a revolving credit facility (RCF) granted to KAL. KAL defaulted on the repayment of the RCF on 30 June 2021, upon which the Company had made payment to the bank and recorded a loan receivable (net of impairment provision) from KAL. As at 31 December 2023, the loan receivable under the RCF amounted to $107,132,000 (31 December 2022: $109,601,000). In addition, the Company had extended a short term interest free bridging facility to KAL (in receivership) for the purpose of its cash flow requirements and receivership expenses which amounted to $5,080,000 as at 31 December 2023 (31 December 2022: $5,197,000). The non-current portion of the loan receivable and advances amounted to $58,411,000 (31 December 2022: $69,657,000) while the current portion amounted to $53,801,000 (31 December 2022: $45,141,000) which is included under Debtors (Note 20). The Group had a comprehensive first ranking security package over the assets of the KrisEnergy Limited group (“KrisEnergy”) through the RCF. With KrisEnergy Limited in liquidation, the Group has implemented detailed recovery plans which were developed in consultation with its financial advisor, Kroll (formerly known as Borrelli Walsh “Kroll”), and legal advisor to preserve KrisEnergy’s assets and to maximise recoveries for the Group. The Group had appointed Kroll in 2021 as receiver over the assets of a number of members of the KrisEnergy group under the security package. 182 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT In assessing expected credit loss, management reviewed the cash flow projections prepared by Kroll, based on the estimated amount of cash available from producing assets to be held over the remaining lives of the concession period of 6.5 to 10 years (2022: 7.5 to 11 years) and expected proceeds from assets to be sold, taking into account the rights to these cash flows from the secured assets on a receivership basis. The cash flow estimates from producing assets were based on forecasted production volumes and oil prices, determined by taking reference from external information sources, ranging from US$75 to US$85 per barrel for 2024 to 2032 (December 2022: US$80 to US$97 per barrel for 2023 to 2032). The estimated recoverable amounts for assets to be sold are based on the binding bids received from external parties. The timing of the cash flows, estimated production volumes, oil prices and discount rates used in assessing recoverable amounts are subject to risk and uncertainty. Based on the assessment, no additional expected credit loss provision was required for the year ended 31 December 2023 and 2022. The assessment took into account the rights to the cash flows from the secured assets on a receivership basis. Management reviewed the cash flow projections prepared by Kroll and determined that the cash flow projections were most sensitive to the production profile of the largest producing asset for the financial year ended 31 December 2023. The headroom in the recoverable amount over the carrying amount would be eliminated, holding other variables constant, if the production profile of the largest producing asset were to decrease by 5% across the forecasted period of 2024 to 2032, and any further decline in the production profile would result in an additional expected credit loss provision for the financial year ended 31 December 2023. For the financial year ended 31 December 2022, Management reviewed the cash flow projections prepared by Kroll and determined that the cash flow projections were most sensitive to oil prices. The headroom in the recoverable amount over the carrying amount would be eliminated, holding other variables constant, if oil prices were to decrease by 9.1% across the forecasted period of 2023 to 2032, and any further decline in oil prices would result in an additional expected credit loss provision for the financial year ended 31 December 2022. Included in other receivables is claims receivable which represents claims from customer for long term contracts. During the year, the Group recognised $5,140,000 (2022: $9,089,000) of allowance for expected credit loss on claims receivable arising from the discounting effects due to changes in the expected timing of receipt. In the prior year, included in other receivables was an unsecured, interest-free advance to an investee of $19,804,000, which and has been reclassified to debtors (Note 20) during the year as it is due in 2024. The carrying amount of the long term assets approximates their fair value. 18. STOCKS Consumable materials and supplies (net of provision) Finished products for sale (net of provision) Properties held for sale GROUP 2023 $’000 21,854 35,515 2022 $’000 24,521 40,954 a 2,052,572 2,235,475 2,109,941 2,300,950 The provision for stocks to write down its carrying value to its net realisable value at the end of the financial year was $12,719,000 (2022: $12,080,000). ANNUAL REPORT 2023 183 18. STOCKS (continued) 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 or loss account Company disposed Exchange differences Amount written off At 31 December GROUP 2023 $’000 2022 $’000 558,887 181,565 195,181 935,633 1,136,148 2,071,781 (19,209) 1,035,952 370,187 201,881 1,608,020 646,795 2,254,815 (19,340) 2,052,572 2,235,475 GROUP 2023 $’000 19,340 6,137 (4,790) (328) (1,150) 2022 $’000 20,916 76 – (1,823) 171 19,209 19,340 See Note 2.27(b)(v) for further disclosures on estimating the net realisable values of the Group’s properties held for sale. As at 31 December 2023, properties amounting to $273,480,000 (2022: $248,990,000) in value and included in the above balances were mortgaged to the banks as securities for borrowings as referred to in Note 25. Interest capitalised during the financial year amounted to $11,410,000 (2022: $10,646,000) at rates of 4.26% to 4.71% (2022: 0.95% to 4.71%) per annum for Singapore properties and 4.00% to 7.00% (2022: 2.00% to 7.00%) per annum for overseas properties. 19. AMOUNTS DUE FROM/TO Subsidiaries Amounts due from – trade – advances Allowance for expected credit loss Amounts due to – trade – non-trade – advances 184 KEPPEL LTD. COMPANY 2023 $’000 2022 $’000 7,402 9,323,584 9,330,986 (830,324) 143,837 7,543,926 7,687,763 (141,143) 8,500,662 7,546,620 3,339 2,613 3,555 – 204,971 269,508 210,923 273,063 Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT Movements in the allowance for expected credit loss are as follows: At 1 January Charge to profit or loss account Write-off Exchange differences At 31 December COMPANY 2023 $’000 2022 $’000 141,143 695,978 (6,600) (197) 145,251 279 (4,387) – 830,324 141,143 As at 31 December 2023, the Company recognised allowances for expected credit loss based on the lifetime expected credit loss as certain amounts due from subsidiaries have been determined to be credit impaired due to a significant increase in credit risk in the subsidiaries. Advances to and from subsidiaries are unsecured and are repayable on demand. Interest is charged at rates up to 6.91% (2022: up to 5.84%) per annum on interest-bearing advances. Associated Companies and Joint Ventures Amounts due from – trade – non-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 or loss account Reclassified to disposal group and assets classified as held for sale At 31 December GROUP 2023 $’000 2022 $’000 COMPANY 2023 $’000 2022 $’000 143,703 64 139,049 282,816 (25,883) 38,835 202 239,254 278,291 (16,223) 256,933 262,068 34,254 67,010 33,692 36,171 101,264 69,863 16,223 9,660 – 31,800 1,506 (17,083) 25,883 16,223 – 64 – 64 – 64 872 25 897 – – – – – 202 – 202 – 202 900 – 900 – – – – Advances to and from associated companies and joint ventures are unsecured and are repayable on demand. Interest is charged at rates ranging from 7.00% to 12.00% (2022: 3.00% to 8.00%) per annum on interest-bearing advances. As at 1 January 2022, the Group’s amount due from associated companies and joint ventures relating to trade amounted to $169,612,000. ANNUAL REPORT 2023 185 20. DEBTORS Trade debtors Allowance for expected credit loss Sundry debtors Prepayments Tax recoverable Value Added Tax receivable Interest receivable Deposits paid Recoverable accounts Accrued receivables Advances to investee Advances to subcontractors Advances to non-controlling shareholders of subsidiaries Allowance for expected credit loss GROUP COMPANY 2023 $’000 819,848 (30,794) 789,054 254,618 67,941 2,762 90,839 1,187 100,199 84,978 344,211 42,819 44,678 6,033 1,040,265 (135,356) 904,909 2022 $’000 661,671 (29,163) 632,508 74,553 78,428 1,237 75,519 1,712 44,559 81,683 357,787 – 604 6,583 722,665 (115,875) 606,790 2023 $’000 15 – 15 14,597 70 – 549 1,098 387 55,808 – – – – 72,509 – 72,509 2022 $’000 20 – 20 654 12 – 179 – 385 49,990 7,671 – – – 58,891 – 58,891 Total 1,693,963 1,239,298 72,524 58,911 Movements in the allowance for expected credit loss are as follows: At 1 January Charge to profit or loss account Amount written off Subsidiaries acquired Subsidiaries disposed Exchange differences Reclassified from provision for long-term receivables 145,038 13,470 (11,775) – (3) (1,812) 21,232 364,396 26,986 (10,998) 1,265 (1,801) 810 – Reclassified to disposal group and assets classified as held for sale – (235,620) Total 166,150 145,038 As at 1 January 2022, the Group’s net trade debtors amounted to $985,397,000. Advance to an investee is unsecured, interest-free advance and maturing in 2024. – – – – – – – – – – – – – – – – – – On 29 November 2023, the Group entered into an agreement to acquire an initial 50% stake in a real estate asset manager in 2024 (Phase 1) with full acquisition in 2028 (Phase 2). The maximum consideration payable to the Seller for the Phase 1 and Phase 2 is approximately $517 million (equivalent to €357 million) and $834 million (equivalent to €575 million) respectively, which can be funded through a combination of cash and treasury shares. A deposit amount of $45 million was paid and is recorded as “Deposits paid” within “Debtors” in the consolidated balance sheet as of 31 December 2023. Accordingly, remaining amounts of approximately $1,306,086,000 expected to be paid on completion of Phase 1 and Phase 2 is disclosed in Note 33 as a capital commitment. 186 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 21. SHORT TERM INVESTMENTS GROUP 2023 $’000 2022 $’000 COMPANY 2023 $’000 2022 $’000 Investments at fair value through other comprehensive income: Quoted equity shares 83,261 48,097 – Investments at fair value through profit or loss: Quoted equity shares Unquoted equity shares 164,220 5,628 169,848 685 – 685 161,896 5,628 167,524 Total short term investments 253,109 48,782 167,524 – – – – – Investments at fair value through other comprehensive income are mainly in the oil and gas industry listed in Singapore. Arising from the completion of the Proposed Combination on 28 February 2023 (as described in Note 38), the Group received 3,411,858,604 Seatrium Limited (“Seatrium” and formerly, Sembcorp Marine Ltd) shares, amounting to approximately $392 million, as Retained Consideration Shares. The cash proceeds arising from the sale of these Retained Consideration Shares are placed in the segregated account, together with the remaining Retained Consideration Shares, for a duration not exceeding 48 months from 28 February 2023 for the purpose of satisfying identified contingent liabilities which Seatrium may have against the Company in connection with the Proposed Combination as described in Note 38. For the year ended 31 December 2023, an amount of approximately $264,298,000 was received from the sale of 2,039,859,000 Retained Consideration Shares (Note 38) by an institutional financial services provider appointed by the Company to manage the Retained Consideration Shares, pursuant to a programme that has predefined sale parameters. As at 31 December 2023, the related cash and remaining Retained Consideration Shares amounted to approximately $267,105,000 and $161,896,000 and are recorded within “Bank balances, deposits & cash” and “Short term investments” respectively. 22. BANK BALANCES, DEPOSITS & 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 other liabilities Amounts held under project accounts, withdrawals from which are restricted to payments for expenditures incurred on projects GROUP COMPANY 2023 $’000 431,070 814,991 2022 $’000 657,790 369,653 569 6,290 19,030 108,611 2023 $’000 5,499 267,102 – – 2022 $’000 1,232 – – – 1,265,660 1,142,344 272,601 1,232 Fixed deposits with banks by the Group mature on varying periods, substantially between 11 days to 2 years (2022: 1 day to 6 months). These comprise Singapore Dollars fixed deposits of $341,874,000 (2022: $81,303,000) at interest rates substantially ranging from 2.40% to 3.95% (2022: 2.61% to 3.93%) per annum, and foreign currency fixed deposits of $473,117,000 (2022: $288,350,000) at interest rates substantially ranging from 0.80% to 7.45% (2022: 0.32% to 9.20%) per annum. Fixed deposits with a bank by the Company comprise Singapore Dollars fixed deposits and mature on varying periods between 2 months to 12 months (2022: nil). These fixed deposits are at interest rate of 2.78% (2022: nil) per annum. Cash and cash equivalents of $252,848,000 (2022: $328,052,000) 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. Included within fixed deposits with banks and bank balances and cash are related cash held under a segregated account (Note 38) in relation to the proceeds from sale of the Retained Consideration Shares amounting to $267,102,000 and $3,000 respectively. ANNUAL REPORT 2023 187 23. CREDITORS AND OTHER NON-CURRENT LIABILITIES 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 and other payables Advances from non-controlling shareholders GROUP 2023 $’000 404,072 74,039 245,356 1,679,670 13,804 126,442 43,047 2022 $’000 372,380 104,535 322,887 1,787,731 17,735 122,092 41,460 COMPANY 2023 $’000 7,130 – 70,104 65,124 – – 2022 $’000 1,005 – 4,273 60,654 – – 26,223 23,153 2,586,430 2,768,820 168,581 89,085 207,185 268,938 301,563 255,975 29,562 – 29,228 – 476,123 557,538 29,562 29,228 Advances from non-controlling shareholders of certain subsidiaries are unsecured and are repayable on demand. Interest is charged at rates ranging from 4.29% to 7.14% (2022: 1.65% to 5.24%) per annum on interest-bearing advances. The carrying amount of the non-current liabilities approximates their fair value. 24. PROVISIONS Warranties $’000 2023 Onerous Contracts $’000 GROUP Total $’000 Warranties $’000 2022 Onerous Contracts $’000 4,178 54,267 58,445 28,932 37,831 At 1 January (Write-back)/Charge to profit or loss account Amount utilised Exchange differences Reclassified to disposal group and liabilities classified as held for sale (81) (12) 127 – (1,500) (6,535) 353 (1,581) (6,547) 480 (5,986) (6,871) (931) 63,457 (27,887) (303) – – (10,966) (18,831) (29,797) Total $’000 66,763 57,471 (34,758) (1,234) At 31 December 4,212 46,585 50,797 4,178 54,267 58,445 188 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 25. TERM LOANS GROUP Keppel Medium Term Notes Keppel Management Ltd. Medium Term Notes Keppel Commercial Papers Bank loans – secured – unsecured COMPANY Keppel Medium Term Notes Keppel Commercial Papers Unsecured bank loans 2023 2022 Due within one year $’000 Due after one year $’000 Due within one year $’000 Due after one year $’000 150,000 129,966 – 1,845,968 279,783 – 200,000 299,979 35,996 1,817,864 409,619 – 85,515 2,056,199 686,256 5,725,951 127,393 2,914,290 554,291 3,821,412 2,421,680 8,537,958 3,577,658 6,603,186 150,000 1,845,968 – – 1,397,129 4,659,416 200,000 35,996 2,553,305 1,817,864 – 2,226,120 1,547,129 6,505,384 2,789,301 4,043,984 a b c d e a c e a. b. c. 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 $1,995,968,000 (2022: $2,017,864,000). The notes denominated in Singapore Dollars, US Dollars and Japanese Yen, are unsecured and comprised both variable and fixed rate notes due from 2024 to 2042 (2022: from 2023 to 2042) with interest rates ranging from 0.88% to 4.52% (2022: 0.88% 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 Management Ltd. (formerly known as Keppel Land Limited) and its wholly-owned subsidiary, Keppel Land Financial Services Pte. Ltd. amounted to $279,783,000 (2022: $579,672,000). The notes denominated in Singapore Dollars, are unsecured and comprised fixed rate notes due in 2026 (2022: 2023 to 2026), with interest rates of 2.00% (2022: ranging of 2.00% to 2.84%) per annum. At the end of the financial year, notes issued under the US$800,000,000 Multi-Currency Medium Term Note Programme by Keppel Management Ltd. (formerly known as Keppel Land Limited) amounted to $129,966,000 (2022: $129,926,000). The notes denominated in Singapore Dollars, are unsecured and comprised fixed rate notes due in 2024 (2022: 2024) with interest rates of 3.90% (2022: 3.90%) per annum. For the financial year ended 31 December 2022, commercial papers issued under the US$1,000,000,000 Multi-Currency Euro Commercial Paper Programme by the Company amounted to $35,996,000. The commercial papers, which are denominated in Singapore Dollars, are unsecured and comprised fixed rate commercial papers due in 2023 with interest rate of 0.90% per annum. These commercial papers have been repaid during the financial year ending 31 December 2023. ANNUAL REPORT 2023 189 25. TERM LOANS (continued) d. The secured bank loans consist of: • • • • A term loan of $110,000,000 drawn down by a subsidiary. The term loan is repayable in 2026 and is secured on certain assets of the subsidiary and bear interest at rate of 3.54% to 4.71% per annum. A term loan of $84,791,000 drawn down by a subsidiary. The term loan is repayable in 2024 and is secured on certain assets of the subsidiary and bear interest at rate of 4.58% to 4.68% per annum. A term loan of $550,301,000 drawn down by a subsidiary. The term loan is repayable in 2034 and is secured on certain assets of the subsidiary and bear interest at rates of 3.86% to 3.96% per annum. Other secured bank loans totaling $26,679,000 (2022: $60,231,000) comprised $25,919,000 (2022: $38,572,000) of loans denominated in Singapore Dollars and $760,000 (2022: $21,659,000) of foreign currency loans. They are repayable within one to four (2022: one to six) years and are secured on investment properties and certain fixed and other assets of the subsidiaries. Interest on foreign currency loans ranges from 3.86% to 5.56% (2022: 3.80% to 16.00%) per annum. e. The unsecured bank loans of the Group totaling $7,782,150,000 (2022: $6,735,702,000) comprised $2,945,870,000 (2022: $2,973,178,000) of loans denominated in Singapore Dollars and $4,836,280,000 (2022: $3,762,524,000) of foreign currency loans. They are repayable within one to five (2022: one to six) years. Interest on loans denominated in Singapore Dollars ranges from 1.77% to 5.34% (2022: 0.71% to 5.05%) per annum. Interest on foreign currency loans ranges from 0.69% to 10.62% (2022: 0.50% to 7.85%) per annum. The unsecured bank loans of the Company totaling $6,056,545,000 (2022: $4,779,425,000) comprised $1,645,000,000 (2022: $1,360,000,000) of loans denominated in Singapore Dollars and $4,411,545,000 (2022: $3,419,425,000) of foreign currency loans. They are repayable within one to five years (2022: one to five years). Interest on loans denominated in Singapore Dollars ranges from 3.76% to 4.82% (2022: 0.71% to 5.03%) per annum. Interest on foreign currency loans ranges from 0.69% to 6.91% (2022: 0.50% to 5.84%) per annum. The Group has mortgaged certain properties and assets of up to an aggregate amount of $2,242,773,000 (2022: $2,165,003,000) to banks for loan facilities. The fair values of term loans for the Group and Company are $10,699,937,000 (2022: $9,805,129,000) and $7,820,223,000 (2022: $6,498,043,000) 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 GROUP 2023 $’000 2022 $’000 COMPANY 2023 $’000 2022 $’000 2,403,516 4,757,920 1,376,522 1,859,527 3,671,418 1,072,241 2,386,096 3,269,288 850,000 842,710 2,551,274 650,000 8,537,958 6,603,186 6,505,384 4,043,984 190 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 26. 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 27. STAFF COSTS Wages and salaries Employer’s contribution to Central Provident Fund Share plans granted to Director and employees Other staff benefits 28. OPERATING PROFIT Operating profit from continuing operations is arrived at after charging/(crediting) the following: Included in materials and subcontract costs: Cost of stocks & contract assets 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 expected credit loss on debtors & receivables, contract assets and financial guarantee: Expected credit loss on debtors and receivables (Note 17, 19 & 20) Bad debts written-off GROUP 2023 $’000 2022 $’000 381,575 523,025 475,898 4,177,977 770,286 536,577 6,865,338 410,181 809,744 456,207 3,637,267 738,233 494,579 6,546,211 100,790 73,507 6,966,128 6,619,718 GROUP 2023 $’000 553,315 59,855 36,827 54,136 2022 $’000 515,838 57,892 43,403 50,745 704,133 667,878 GROUP 2023 $’000 2022 $’000 745,928 948,116 60,770 32,669 14,667 86 12,775 23,838 281 15,182 89 11,826 32,999 1,011 ANNUAL REPORT 2023 191 28. OPERATING PROFIT (continued) Included in other operating income – net: Impairment of a joint venture (Note 12) Impairment/write-off of right-of-use assets and fixed assets Provision for stocks Fair value gain on investment properties (Note 8) Fair value gain on – investments, associated companies and joint ventures – notes receivables, comprising of: a. Fair value changes including interest income b. Amortisation of deferred loss – forward foreign exchange contracts – call option (Note 17) (Gain)/loss on differences in foreign exchange (Gain)/loss on sale of fixed assets and investment properties Gain on disposal of subsidiaries Gain on disposal of associated companies and joint ventures (Gain)/loss on sale of interests in associated companies and joint ventures (Gain)/loss from change in interest in associated companies Gain on acquisition of subsidiaries Loss from dividend in specie Fees and other remuneration to Directors of the Company Auditors’ remuneration – auditors of the Company – other auditors of subsidiaries Non-audit fees paid to – auditors of the Company – other auditors of subsidiaries 29. INVESTMENT INCOME, INTEREST INCOME AND INTEREST EXPENSES Investment income from: Shares – quoted Shares/funds – 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/(loss) on interest rate caps and swaps 192 KEPPEL LTD. GROUP 2023 $’000 – 1,023 6,777 2022 $’000 1,000 1,171 6,939 (149,532) (131,711) (69,028) (965) (150,659) 149,694 21 (11,376) 21,147 (15,756) (28,338) (69,774) (36,636) 1,427 – 110,816 2,659 3,634 2,233 153 160 (57,801) – – – – (21,002) (704) 639 (22,498) (358) 40,168 (10,933) (6,795) – 2,487 3,037 2,105 603 193 GROUP 2023 $’000 73,533 4,858 2022 $’000 38,320 10,221 78,391 48,541 28,992 21,794 14,100 22,221 54,646 14,481 64,886 91,348 (318,300) (9,663) (90) (137,098) (10,262) 1,173 (328,053) (146,187) Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 30. TAXATION a. Income tax expense Tax expense comprised: Current tax – continuing operations Adjustment for prior year’s tax Others Deferred tax (Note 14): Current deferred tax – continuing operations Land appreciation tax: Current year Taxation – continuing operations Taxation – discontinued operations (Note 38(i)(a)) GROUP 2023 $’000 237,385 (14,647) 11,653 234,391 2022 $’000 156,382 (13,105) 19,988 163,265 55,597 21,040 (282) 289,706 (12,799) 60,844 245,149 33,212 276,907 278,361 The income tax expense on the results of the Group differs from the amount of income tax expense determined by applying the Singapore standard rate of income tax to profit before tax due to the following: Profit before tax – continuing operations Profit before tax – discontinued operations Share of profit/(loss) of associated companies and joint ventures, net of tax – continuing operations Share of profit/(loss) of associated companies and joint ventures, net of tax – discontinued operations GROUP 2023 $’000 1,213,554 3,168,433 (322,418) – 2022 $’000 1,094,888 116,278 (535,979) (4,420) Profit before tax and share of profit of associated companies and joint ventures 4,059,569 670,767 Tax calculated at tax rate of 17% (2022: 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 Land appreciation tax Tax effect of land appreciation tax Income tax expense – continuing operations Income tax expense – discontinued operations (Note 38(i)(a)) 690,127 (509,294) 66,336 21,439 23,157 (14,647) (282) 71 114,030 (105,735) 180,037 82,901 (1,817) (36,687) 60,844 (15,212) 276,907 278,361 289,706 (12,799) 245,149 33,212 276,907 278,361 ANNUAL REPORT 2023 193 30. TAXATION (continued) a. Income tax expense (continued) Pillar Two income taxes The Base Erosion and Profit Shifting (BEPS) Pillar Two model rules is applicable to the Group as the Group’s consolidated revenues is of EUR 750 million or more. As at the balance sheet date, the Pillar Two legislation has been enacted or substantively enacted, but not yet in effect, in certain jurisdictions the Group operates. Some of these legislations will be effective for the Group’s financial year beginning on or after 1 January 2024. The Group is in the process of assessing the potential exposure arising from Pillar Two legislation. The assessment that is being carried out is based on the latest available tax filings and country-by-country reporting for 2022, and the latest financial information for 2023. In certain jurisdictions, information required for the assessment is still being gathered and, therefore, the assessment is not complete. Based on the assessment carried out so far, the Group has identified potential exposure to Pillar Two income taxes on profits earned in The Netherlands where the expected Pillar Two effective tax rate is likely to be lower than 15%. The potential exposure is expected to come from the constituent entities (mainly operating subsidiaries) in these jurisdictions. However, exposure may also exist in other jurisdictions where the assessment is in progress. Due to the uncertainties surrounding when and how each jurisdiction will enact the legislations, quantitative information to indicate potential exposure to Pillar Two income taxes is currently not known or reasonably estimable. The Group continues to progress on the assessment and expects to complete the assessment in due course. 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 – liabilities directly associated with assets classified as held for sale At 31 December GROUP COMPANY 2023 $’000 258,990 (3,546) 237,385 (14,647) (282) (113,372) – 37 2022 $’000 505,479 (28,708) 171,589 (15,412) 60,844 (444,462) 2,204 600 12,975 19,020 (66) (12,164) 2023 $’000 43,513 – 5,684 1,300 – 2,258 – – 7 – 2022 $’000 39,651 – 7,356 (6,512) – 2,974 – – 44 – 377,474 258,990 52,762 43,513 194 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 31. EARNINGS PER ORDINARY SHARE Profit for the year from continuing operations Profit for the year from discontinued operations GROUP 2023 $’000 2022 $’000 Basic Diluted Basic Diluted 885,219 3,181,433 885,219 3,181,433 838,959 87,658 838,959 87,658 Net profit attributable to shareholders of the company 4,066,652 4,066,652 926,617 926,617 Number of Shares ’000 Number of Shares ’000 Weighted average number of ordinary shares (excluding treasury shares) 1,786,608 1,786,608 1,777,509 Adjustment for dilutive potential ordinary shares – 16,324 – 1,777,509 17,785 Weighted average number of ordinary shares used to compute earnings per share (excluding treasury shares) 1,786,608 1,802,932 1,777,509 1,795,294 Earnings per ordinary share – continuing operations Earnings per ordinary share – discontinued operations 49.5 cts 178.1 cts 49.1 cts 176.5 cts 47.2 cts 4.9 cts 46.7 cts 4.9 cts Earnings per ordinary share 227.6 cts 225.6 cts 52.1 cts 51.6 cts 32. DIVIDENDS A final cash dividend of 19.0 cents per share tax exempt one-tier (2022: final cash dividend of 18.0 cents per share tax exempt one-tier) in respect of the financial year ended 31 December 2023 has been proposed for approval by shareholders at the next annual general meeting to be convened. Together with the interim cash dividend of 15.0 cents per share tax exempt one-tier (2022: interim cash dividend of 15.0 cents per share tax exempt one-tier), special dividend in specie of 19.1 Seatrium Limited (formerly, Sembcorp Marine Ltd) shares for every 1 share in the Company equivalent to 219.0 cents per share (Note 38) and special dividend in specie of 1 Keppel REIT units for every 5 share in the Company equivalent to 16.7 cents per share, total distributions paid and proposed in respect of the financial year ended 31 December 2023 will be 269.7 cents per share (2022: 33.0 cents per share). During the financial year, the following distributions were made: Cash dividends paid A final cash dividend of 18.0 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 15.0 cents per share tax exempt one-tier on the issued and fully paid ordinary shares in respect of the current financial year Dividends in specie paid A dividend in specie of 19.1 Seatrium Limited (formerly, Sembcorp Marine Ltd) shares for every 1 share in the Company, equivalent to 219.0 cents per share, in respect of the current financial year A special dividend in specie of 1 Keppel REIT units for every 5 share in the Company, equivalent to 16.7 cents per share, in respect of the current financial year In the prior year, total distributions of $643,233,000 were made. $’000 317,190 264,330 581,520 3,845,162 294,294 4,139,456 4,720,976 ANNUAL REPORT 2023 195 33. 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 fixed assets – for purchase/subscription of shares – for commitments to associated companies and joint ventures – for commitments to private funds – for acquisition of a real estate asset manager (Note 20) Amounts approved by Directors in addition to contracts placed: – for purchase and construction of investment properties – for purchase of fixed assets – for purchase/subscription of shares mainly in property development companies Less: Non-controlling shareholders’ share 2023 $’000 GROUP 2022 Continuing Operations $’000 Discontinued Operations $’000 204,465 65,376 206,601 1,016,256 20,709 1,306,086 509,770 272,423 97,302 3,698,988 (43,969) 379,342 936,048 275,861 1,055,105 65,598 – 674,065 242,905 140,609 3,769,533 (39,205) – 3,197 – – 2,259 – – 46,181 – 51,637 – 3,655,019 3,730,328 51,637 There was no significant future capital expenditure/commitment for the Company. b. Lessee’s lease commitments Under the SFRS(I) 16 Leases, 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 9. 34. CONTINGENT LIABILITIES AND GUARANTEES GROUP COMPANY 2022 2023 2022 2023 $’000 Continuing Operations $’000 Discontinued Operations $’000 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 Performance guarantees issued for contracts awarded to customers and third parties Guarantees in favour of a non-related company in respect of performance by a subsidiary, and related guarantees in respect of a bank loan granted to a related party and payment of contract sum to a third party (Note 34(i)) 320,795 365,642 156,787 382,630 90,882 101,072 – 61,364 – – – 784,712 517,342 424,640 – $’000 $’000 369,761 462,579 – – – – – – – – 1,294,661 1,065,129 846,076 369,761 462,579 196 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT i. ii. The Group has entered into a separate indemnification contract with a related party at the point the guarantees were entered. The Group will be fully indemnified for losses which may incur in relation to the guarantees amounted to $517,342,000 (2022: $424,640,000). Included in the above guarantees in 2022 is a bilateral agreement between the Group and financial institutions which guaranteed a revolving credit facility granted to Floatel International Limited, an associated company, amounting to $82,551,000. The guarantee is secured on the assets of Floatel International Limited. In 2023, the revolving credit facility has been repaid and the guarantee has been terminated. 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. 35. 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, services and/or fixed assets to – associated companies – joint ventures – other related parties Purchase of goods and/or services from – associated companies – joint ventures – other related parties Treasury transactions with – associated companies – joint ventures GROUP 2023 $’000 248,962 46,803 147,194 2022 $’000 196,399 8,108 135,797 442,959 340,304 236,861 93,471 195,119 255,653 57,705 209,060 525,451 522,418 15,151 7,171 3,207 7,822 22,322 11,029 36. FINANCIAL RISK MANAGEMENT The Group operates internationally and is exposed to various financial risks, comprising market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Keppel Central Finance Committee has oversight of financial risk management which is carried out by the Keppel Treasury department in accordance with established Keppel policies and guidelines that are updated from time to time to take into account changes in the operating environment. The Keppel Central Finance committee is chaired by the Chief Financial Officer of the Company and includes senior finance management personnel and support function specialists. ANNUAL REPORT 2023 197 36. FINANCIAL RISK MANAGEMENT (continued) a. Market Risk i. Derivative financial instruments GROUP Fair Value Contract notional amount $’000 Asset $’000 Liability $’000 Notional amount directly impacted by IBOR reform $’000 1,099,229 1,835,714 4,601,496 37,542 322,105 72,502 983 2,589,650 1,466,863 3,378,334 165,978 344,615 124,232 63,530 28,815 3,947 5,999 97,860 1,609 7,883 1,555 442 119,295 14,384 17,300 186,983 23,897 20,436 – 13,214 1,998 278,212 28,444 143,859 17,787 1,623 12,701 1,429 – 205,843 27,480 121,836 – 40,480 6,973 55,840 159 17,090 269,858 n.a. – – n.a. n.a. n.a. n.a. n.a. – 170,950 n.a. n.a. n.a. n.a. n.a. 2023 Cashflow hedges – Forward foreign currency contracts – Cross currency swaps – Interest rate swaps – HSFO forward contracts – Dated Brent forward contracts – ICE Brent Crude forward contracts – Electricity futures contracts Total 2022 Cashflow hedges – Forward foreign currency contracts1 – Cross currency swaps – Interest rate swaps – HSFO forward contracts – Dated Brent forward contracts – JKM forward contracts – ICE Brent Crude forward contracts – Electricity futures contracts Total1 1 Included discontinued operations’ forward foreign currency contracts asset $5,161,000 and liabilities $13,654,000. The fair value of forward foreign currency contracts is determined using forward exchange market rates at the balance sheet date and are expected to occur at various dates within 37 months (2022: 28 months). 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 counterparties and are expected to occur at various dates within 12 months (2022: 17 months) and within 36 months (2022: 27 months). The fair value of JKM forward contracts is determined using forward Japan/Korea Marker prices provided by the Group’s key counterparties and are expected to occur at various dates within 12 months as of 31 December 2022. The fair value of ICE Brent Crude forward contracts is determined using Intercontinental Exchange Brent Crude prices provided by the Group’s key counterparties and are expected to occur at various dates within 11 months (2022: 24 months). The fair value of electricity future contracts is based on the Uniform Singapore Energy Price quarterly base load electricity futures prices quoted on the Singapore Exchange and are expected to occur within 3 months (2022: 15 months). The fair value of financial derivatives instruments, including cross currency swap agreements and interest rate swap agreements is based on valuations provided by the Group’s respective bank counterparties which the financial derivatives instruments are entered against, have maturity dates from April 2024 to December 2028 (2022: October 2023 to March 2028) and March 2024 to January 2043 (2022: January 2023 to January 2043). 198 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT ii. Currency risk The Group has receivables and payables denominated in foreign currencies via US Dollars, Renminbi, Euro 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 and cross currency swap agreements to hedge the Group’s exposure to specific currency risks relating to investments, receivables, payables and other commitments. The Group monitors its current and projected foreign currency cash flows and aims to reduce the exposure of the net position in each foreign currency by borrowing in the respective foreign currency where practicable. As at the end of the financial year, the Group has outstanding forward foreign exchange contracts. See Note 36(a)(i) for further details pertaining to the notional amounts and fair value of the forward foreign exchange contracts. These fair value 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 $1,096,954,000 (2022: $1,639,730,000). The net negative fair value of forward foreign exchange contracts is $24,472,000 (2022: net negative fair value of $8,983,000) comprising assets of $3,946,000 (2022: $9,533,000) and liabilities of $28,418,000 (2022: $18,515,000). These fair value 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 weighted average forex rate of USD:SGD 1.370 and EUR:SGD 1.478, and other currencies. See Note 36(a)(i) for further details pertaining to the notional amounts and fair value of the cross currency swap agreements. These fair value amounts are recognised as derivative assets and derivative liabilities. Other than the above forward foreign exchange contracts and cross currency swap agreements, the unhedged currency exposure of financial assets and financial liabilities denominated in currencies other than the respective entities’ functional currencies are as follows: 2023 USD $’000 RMB $’000 EUR $’000 Others $’000 USD $’000 2022 RMB $’000 EUR $’000 Others $’000 GROUP Financial Assets Notes receivables Debtors Investments Bank balances, deposits & cash Financial Liabilities Creditors Term loans Lease liabilities COMPANY Financial Assets Amounts due from subsidiaries Debtors Bank balances, deposits & cash Financial Liabilities Amounts due to subsidiaries Creditors Term loans Lease liabilities 2,410,051 231,072 817,044 30,511 3,488,678 133,169 3,212,374 – – 5,449 – 16,100 21,549 26,034 4,692 134 – 45,341 107,041 45 152,427 – 8,899 68,437 13,255 90,591 – 224,114 801,896 – 48,866 – – – 97,197 158,726 1,184,736 32,227 81,093 – 2,620 68,522 8,744 79,886 8,736 34,290 – 43,026 531 97,728 816 9,171 – 9,987 147 7,772 189,401 107,477 104,024 43,956 2,742,038 – – – – 227 3,345,543 30,860 104,171 51,728 2,931,439 107,704 3,163,187 113,109 2,882 3,279,178 216 4,117 3,212,374 – 3,216,707 4,694 85 277 5,056 – 275 4,692 134 5,101 104,271 46,779 2,729,037 – – – – 114,798 15 104,271 46,779 2,843,850 – – – – 736 14,752 104,024 43,663 2,742,038 – – – 104,024 43,663 2,757,526 – 15 174 189 – 114 – 227 341 9,173 38,311 – – – 4 9,173 38,315 – – 9,171 – 9,171 – – 34,290 – 34,290 ANNUAL REPORT 2023 199 36. FINANCIAL RISK MANAGEMENT (continued) a. Market Risk (continued) ii. Currency risk (continued) Sensitivity analysis for currency risk If the relevant foreign currency changes against SGD by 5% (2022: 5%) with all other variables held constant, the effects will be as follows: GROUP USD against SGD – Strengthened – Weakened RMB against SGD – Strengthened – Weakened EUR against SGD – Strengthened – Weakened COMPANY USD against SGD – Strengthened – Weakened RMB against SGD – Strengthened – Weakened EUR against SGD – Strengthened – Weakened Profit before tax 2023 $’000 2022 $’000 Equity 2023 $’000 2022 $’000 1,066 (1,066) (467) 467 (2,956) 2,956 3,140 (3,140) (3) 3 10,474 (10,474) (94,781) 94,781 (1,331) 1,331 (473) 473 4,317 (4,317) (8) 8 917 (917) 6,130 (6,130) 7,419 (7,419) – – – – 5,383 (5,383) 4,859 (4,859) – – – – – – – – – – – – iii. Interest rate risk The Group is exposed to interest rate risk which arises primarily from its debt obligations. 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 has entered into interest rate swap agreements to hedge the interest rate risk arising from its Singapore dollar and US dollar variable rate term loans (Note 25). As at the end of the financial year, the Group has interest rate swap agreements. See Note 36(a)(i) for further details pertaining to the notional amounts and fair value of the interest rate swap agreements for the Group. These fair value amounts are recognised as derivative assets and derivative liabilities. The Group receives variable rates equal to Singapore Overnight Rate Average (“SORA”) and United States Dollar Secured Overnight Financing Rate (“USD SOFR”) (2022: Singapore Swap Offer Rate (“SOR”), SORA, USD SOFR and United States Dollar London Inter-bank Offer Rate (“USD LIBOR”)) and pays fixed rates of between 0.12% and 3.49% (2022: 0.06% and 3.62%) on the notional amounts. These interest rate swap agreements are held for hedging interest rate risk arising from variable rate borrowings, with interest rates ranging from SORA and USD SOFR. This amounts to 38% (2022: 32%) of the Group’s total amount of borrowings excluding notional amounts of $433,940,000 (2022: $nil) relating to highly probable future borrowings. Sensitivity analysis for interest rate risk If interest rates increase/decrease by 0.5% (2022: 0.5%) with all other variables held constant, the Group’s profit before tax would have been lower/higher by $19,622,000 (2022: $19,548,000) as a result of higher/lower interest expense on variable rate loans. 200 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT iv. 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, Dated Brent, JKM and ICE Brent Crude. As at the end of the financial year, the Group has outstanding HSFO, Dated Brent, JKM and ICE Brent Crude forward contracts. See Note 36(a)(i) for further details pertaining to the notional amounts and fair value of the HSFO, Dated Brent, JKM and ICE Brent Crude forward contracts for the Group. These fair value 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. See Note 36(a)(i) for further details pertaining to the notional amounts and fair value of the electricity futures contracts. These fair value 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. The performance of these investments is monitored regularly, together with an assessment of their relevance to the Group’s strategic plans. Sensitivity analysis for price risk If prices for Dated Brent, JKM, ICE Brent Crude and electricity futures contracts increase/decrease by 5% (2022: 5%) with all other variables held constant, the Group’s hedging reserve in equity would have been higher/lower by $15,724,000 (2022: $17,934,000), $nil (2022: $3,420,000), $3,625,000 (2022: $3,829,000) and $27,000 (2022: lower/higher by $2,164,000) respectively as a result of fair value changes on cash flow hedges. If prices for HSFO increase/decrease by 5% (2022: 5%) with all other variables held constant, the Group’s hedging reserve in equity would have been lower/higher by $1,878,000 (2022: higher/lower by $7,324,000) as a result of fair value changes on cash flow hedges. If prices for quoted investments increase/decrease by 5% (2022: 5%) with all other variables held constant, the Group’s profit before tax would have been higher/lower by $9,214,000 (2022: $1,765,000) 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 $29,861,000 (2022: $27,296,000) 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. v. Cash flow and fair value interest rate risk IBOR reform The Group had variable rate borrowings and derivatives that were linked to SOR and USD LIBOR. The Group has completed the process of amending the financial instruments with contractual terms indexed to SOR and USD LIBOR. All affected financial instruments that the Group and Company held as at 31 December 2023 have effectively transitioned to the new benchmark rates during the year and have no material impact on the financial statements. b. 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 that are consistent with market practice. 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 expected credit losses (“ECLs”) associated with its financial assets which are mainly debtors, amounts due from associated companies and joint ventures and bank balances, deposits and cash. ANNUAL REPORT 2023 201 36. FINANCIAL RISK MANAGEMENT (continued) b. Credit Risk (continued) 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 2023 and 2022 that have not been assessed on a contract-by-contract basis are set out in the provision matrix as follows: 2023 Infrastructure Expected loss rate Gross carrying amount Loss allowance Connectivity Expected loss rate Gross carrying amount Loss allowance 2022 Infrastructure Expected loss rate Gross carrying amount Loss allowance Connectivity Expected loss rate Gross carrying amount Loss allowance Contract assets – – – 1.7% 76,000 1,303 – – – 2.2% 109,055 2,402 Trade receivables Current $’000 1 to 3 months $’000 3 to 6 months $’000 > 6 months $’000 Total $’000 0.7% 361,065 2,684 0.4% 184,673 659 0.5% 342,861 1,883 0.5% 173,869 834 17.2% 8,978 1,548 2.2% 75,739 1,679 6.7% 27,102 1,828 2.4% 52,192 1,239 70.4% 795 560 15.4% 53,464 8,220 64.1% 669 429 9.1% 20,019 1,815 78.9% 1,338 1,056 10.5% 24,171 2,550 17.2% 8,845 1,521 19.9% 56,742 11,294 372,176 5,848 414,047 14,411 379,477 5,661 411,877 17,584 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. 202 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 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 Real Estate 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. As at 31 December 2023 and 31 December 2022, there was no significant concentration of credit risks. Fund Management & Investment As part of the Group’s horizontally integrated model with three platforms comprising the Fund Management Platform, Investment Platform and Operating Platform (forming one integrated business focusing in the areas of Infrastructure, Real Estate and Connectivity), the Fund Management & Investment Platforms focus on raising capital and forging strong relationships with investors by bringing to them the best of Keppel’s solutions, investments and operating teams, as well as in driving capital deployment decisions in the areas of infrastructure, real estate and connectivity. 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 2023 and 2022, there are no significant financial assets that are past due and/or impaired. c. Liquidity Risk The Group actively manages its debt term-out profile, operating cash flows and availability of funding resources to ensure that all its financial obligations and funding needs are met. Funding resources include short-term money market facilities, committed revolving credit facilities as well as commercial paper and debt capital market programmes. Due to the dynamic nature of its underlying businesses, the Group maintains adequate cash reserves and sufficient undrawn credit facilities to ensure it is able to support its current operations as well as investing activities. ANNUAL REPORT 2023 203 36. FINANCIAL RISK MANAGEMENT (continued) c. Liquidity Risk (continued) Information relating to the maturity profile of loans is given in Note 25. The following table details the liquidity analysis for derivative financial instruments and borrowings of the Group and the Company based on contractual undiscounted cash inflows/(outflows). GROUP 2023 Gross-settled forward foreign exchange contracts – Receipts – Payments Gross-settled cross currency swaps – Receipts – Payments Net-settled interest rate swaps – Receipts – Payments Net-settled HSFO forward contracts – Receipts – Payments Net-settled Dated Brent forward contracts – Receipts – Payments Net-settled ICE Brent Crude forward – Receipts – Payments Net-settled electricity futures contracts – Receipts – Payments Borrowings Financial guarantees 2022 Gross-settled forward foreign exchange contracts – Receipts – Payments Gross-settled cross currency swaps – Receipts – Payments Net-settled interest rate swaps – Receipts – Payments Net-settled HSFO forward contracts – Receipts – Payments Net-settled Dated Brent forward contracts – Receipts – Payments Net-settled JKM forward contracts – Receipts – Payments Net-settled ICE Brent Crude forward – Receipts – Payments Net-settled electricity futures contracts – Receipts – Payments Borrowings Financial guarantees 204 KEPPEL LTD. Within one year $’000 Within one to two years $’000 Within two to five years $’000 After five years $’000 955,386 (978,813) 67,606 (50,566) 74,765 (1,577) 1,609 (1,623) 7,081 (9,620) 1,555 (1,429) 96,765 (97,234) 43,824 (37,786) 33,841 (9,769) – – 800 (3,072) – – 23,538 (23,346) 70,966 (66,350) 13,521 (25,948) – – 2 (9) – – – – – – – (9,888) – – – – – – 442 – (2,850,078) (675,206) – – (2,599,012) – – – (5,403,732) – – – (1,695,152) – 2,239,200 (2,245,274) 340,320 (348,948) 40,823 (34,464) 96,204 (1,808) 23,578 (40,480) 19,414 (3,196) – (51,074) 10,707 (159) 42,137 (31,116) 65,152 (1,879) 319 – 1,022 (3,573) – (4,766) 2,507 – 1,989 (1,979) 54,162 (44,748) 55,964 (4,493) – – – (204) – – – – – – 1,511 (1,260) – (3,208) – – – – – – – – 1,855 (17,090) (4,227,532) (747,134) 143 – (2,084,210) – – – (4,014,400) – – – (1,496,071) – Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT COMPANY 2023 Gross-settled forward foreign exchange contracts – Receipts – Payments Gross-settled cross currency swaps – Receipts – Payments Net-settled interest rate swaps – Receipts – Payments Borrowings Financial guarantees 2022 Gross-settled forward foreign exchange contracts – Receipts – Payments Gross-settled cross currency swaps – Receipts – Payments Net-settled interest rate swaps – Receipts – Payments Borrowings Financial guarantees Within one year $’000 Within one to two years $’000 Within two to five years $’000 After five years $’000 953,073 (976,501) 67,606 (50,566) 60,734 (1,491) 96,765 (97,234) 43,824 (37,786) 28,805 (7,612) 23,538 (23,346) 70,966 (66,350) 9,910 (19,683) – – – – – (83) (1,883,419) (2,606,756) (3,701,702) (1,026,950) (369,761) – – – – – 1,511 (1,260) – – 1,284,472 (1,291,652) 340,320 (348,948) 42,137 (31,116) 52,798 (1,728) 40,823 (34,464) 75,884 (1,344) (2,973,264) (462,579) 1,989 (1,979) 54,162 (44,748) 43,665 (2,962) (987,162) (2,778,095) (843,721) – – – In addition to the above, creditors (Note 23) of the Group and the Company have a maturity profile of within one year from the balance sheet date. d. 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 2023. 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 25) and total lease liabilities (Note 9) less bank balances, deposits & cash (Note 22). Net debt Total equity Net gearing ratio GROUP 2023 $’000 9,873,441 11,016,560 0.90x 2022 $’000 9,237,629 11,913,340 0.78x ANNUAL REPORT 2023 205 36. FINANCIAL RISK MANAGEMENT (continued) e. Fair Value of Financial Instruments and Investment Properties The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurement. The fair value hierarchy has the following levels: • • • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs). Fair value is determined by reference to the net tangible assets of the investments. The following table presents the assets and liabilities measured at fair value. GROUP 2023 Financial assets Derivative financial instruments – from continuing operations Notes receivables Call option Investments Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 – – – 119,295 – – – 4,286,354 203,898 119,295 4,286,354 203,898 – Investments at fair value through other comprehensive income – from continuing operations 513,959 1,687 269,622 785,268 – Investments at fair value through profit or loss – from continuing operations Short term investments – Investments at fair value through other comprehensive income – from continuing operations – Investments at fair value through profit or loss – from continuing operations 20,053 83,261 164,220 – – – 813,565 833,618 – 83,261 5,628 169,848 781,493 120,982 5,579,067 6,481,542 Financial liabilities Derivative financial instruments – from continuing operations Non-financial assets Investment Properties – Commercial, completed – Commercial, under construction Associates and joint venture at fair value through profit or loss – – – – – 205,843 – 205,843 – – – – 1,343,719 3,321,345 398,251 1,343,719 3,321,345 398,251 5,063,315 5,063,315 206 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT GROUP 2022 Financial assets Derivative financial instruments – from continuing operations – from discontinued operations Call option Investments – Investments at fair value through other comprehensive income – from continuing operations – from discontinued operations – Investments at fair value through profit or loss – from continuing operations – from discontinued operations Short term investments – Investments at fair value through other comprehensive income – from continuing operations – from discontinued operations – Investments at fair value through profit or loss – from continuing operations Financial liabilities Derivative financial instruments – from continuing operations – from discontinued operations Non-financial assets Investment Properties – Commercial and hospitality, completed – Commercial, under construction Associates and joint venture at fair value through profit or loss Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 – – – 493,297 – 34,618 – 48,097 3,118 685 273,051 5,143 – 1,409 – – 16,745 – – – – – 192,522 278,688 26,603 674,707 55,350 – – – 273,051 5,143 192,522 773,394 26,603 709,325 72,095 48,097 3,118 685 579,815 296,348 1,227,870 2,104,033 – – – – – – – 256,204 13,639 269,843 – – – 256,204 13,639 269,843 – – – – 1,349,265 2,933,828 246,677 1,349,265 2,933,828 246,677 4,529,770 4,529,770 ANNUAL REPORT 2023 207 36. FINANCIAL RISK MANAGEMENT (continued) e. Fair Value of Financial Instruments and Investment Properties (continued) COMPANY 2023 Financial assets Derivative financial instruments Investments – Investments at fair value through other comprehensive income Short term investments – Investments at fair value through profit or loss Financial liabilities Derivative financial instruments 2022 Financial assets Derivative financial instruments Investments – Investments at fair value through other comprehensive income Financial liabilities Derivative financial instruments Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 – – 161,896 87,217 – 87,217 – – 18,013 18,013 5,628 167,524 161,896 87,217 23,641 272,754 – - - - - 188,300 173,642 - 173,642 – - 19,430 19,430 188,300 173,642 19,430 193,072 140,354 - 140,354 The following table presents the reconciliation of financial instruments measured at fair value based on significant unobservable inputs (Level 3). At 1 January Purchases Sales Notes receivables – Initial recognition – Deferred loss – Fair value gain recognised in profit or loss, including interest income – Amortisation to profit of loss – Exchange differences Fair value (loss)/gain recognised in other comprehensive income – from continuing operations – from discontinued operations Fair value gain recognised in profit or loss – from continuing operations1 – from discontinued operations Reclassification – Subsidiaries – Disposal group and assets classified as held for sale – Associates/Joint Ventures Exchange differences GROUP COMPANY 2023 $’000 1,145,917 292,167 (6,793) 3,003,599 1,247,545 150,659 (149,694) 34,245 (149,111) – 10,575 – 5,554 – – (5,596) 2022 $’000 1,024,769 131,668 (11,374) – – – – – (29,785) (488) 113,379 28,043 – (82,649) (22,671) (4,975) 2023 $’000 19,430 – – – – – – – (1,417) – 2,608 – 3,020 – – – 2022 $’000 24,100 – – – – – – – (4,670) – – – – – – – At 31 December 5,579,067 1,145,917 23,641 19,430 1 As at 31 December 2023, the fair value gain recognised in profit or loss from continuing operations of $10,575,000 (2022: $113,379,000) comprises $14,937,000 (2022: $76,363,000) fair value gain attributable to an unquoted investment fund which primarily invests in high-performance batteries for electric vehicles and energy storage systems business. 208 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 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 – Fixed assets (Note 7) – Stocks (Note 18) Exchange differences At 31 December GROUP 2023 $’000 2022 $’000 4,283,093 4,256,428 327,402 149,532 (17,000) 2,334 548 216,799 131,711 (41,204) – – (80,845) (280,641) 4,665,064 4,283,093 The fair value of financial instruments categorised under Level 1 of the fair value hierarchy is based on published market bid prices at the balance sheet date. The fair value of financial instruments categorised under Level 2 of the fair value hierarchy are fair valued under valuation techniques with market observable inputs. These include forward pricing and swap models utilising present value calculations using inputs such as observable foreign exchange rates (forward and spot rates), interest rate curves and forward rate curves and discount rates that reflects the credit risks of various counterparties. The 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 – from continuing operations Fair value as at 31 December 2023 $’000 Valuation Techniques Significant unobservable Inputs 1,088,815 Net asset value, Net asset value* discounted cash flow, binomial option pricing method and revenue multiple Discount rate Growth rate Discount for lack of control Range of unobservable Inputs Not applicable 15.25% to 28.00% 1.09% to 4.10% 15.00% – 23.30% Discount for lack of marketability 10.70% Discount rate Estimated future asset sale values of Rigco’s rigs ($’million) 5.62% to 10.04% $174 to $602 Transacted price of comparable properties (psf) $2,781 to $3,617 Notes receivables (Vendor notes) 4,286,354 Discounted cash flow method Call option Associates and joint venture at fair value through profit or loss Investment properties – Commercial, completed 203,898 Discounted cash flow method and investment method Capitalisation rate Discount rate 398,251 Net asset value Net asset value 1,343,719 Discounted cash flow method and/or direct comparison method; Income capitalisation method Discount rate Capitalisation rate Net initial yield 3.30% to 3.40% 6.75% Not applicable 7.25% to 14.50% 4.25% to 7.50% 5.80% 7.00% to 17.00% 4.00% to 8.50% Offering price of comparable land plots (psm) $4,862 to $6,188 Transacted price of comparable properties in different geographical/cities (psf) $159 to $3,274 – Commercial, under 3,321,345 Discounted cash Discount rate construction flow method, direct comparison method and/or residual value method Capitalisation rate Offering price of comparable land plots (psm) $10,829 to $11,492 Transacted price of comparable properties (psf) $2,781 to $3,617 Gross development value ($’million) $199 to $1,891 * 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 or assets measured using valuation techniques that take into account key inputs such as revenue multiples, long term growth rate and discount rate (see further details in Note 2.27(b)(vi)). ANNUAL REPORT 2023 209 Transacted price of comparable properties (psf) $1,586 - $3,617 36. FINANCIAL RISK MANAGEMENT (continued) e. Fair Value of Financial Instruments and Investment Properties (continued) Description Investments – from continuing operations Fair value as at 31 December 2022 $’000 Valuation Techniques Significant unobservable Inputs 953,395 Net asset value, Net asset value* discounted cash flow and binomial option pricing Discount rate Growth rate – from discontinued operations 81,953 Net asset value and discounted cash flow Call option 192,522 Discounted cash flow method and investment method Discount for lack of control Net asset value* Discount rate Capitalisation rate Discount rate 246,677 Net asset value Net asset value Associates and joint venture at fair value through profit or loss Investment properties – Commercial, completed Range of unobservable Inputs Not applicable 15.71% to 20.00% 1.10% to 4.32% 15.00% - 23.30% Not applicable 9.00% - 19.00% 3.40% 6.25% to 6.50% Not applicable 7.25% to 14.50% 4.25% to 10.00% 5.70% – Commercial, under 2,933,828 construction 1,349,265 Discount rate Capitalisation rate Net initial yield Investment method, discounted cash flow method and/or direct comparison method; Income capitalisation method Direct comparison method, discounted cash flow method, and/or residual value method Transacted price of comparable land plots (psm) $3,974 to $5,610 Transacted price of comparable properties in different geographical/cities (psf) $239 to $1,304 Discount rate Capitalisation rate 7.00% to 17.00% 4.00% to 10.00% Transacted price of comparable land plots (psm) $6,569 to $9,163 Transacted price of comparable properties (psf) $2,376 to $3,617 Gross development value ($'million) $216 to $1,949 * 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 or assets measured using valuation techniques that take into account key inputs such as revenue multiples, long term growth rate and discount rate (see further details in Note 2.27(b)(vi)). 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. As at 31 December 2023, the total fair value on investments of $1,088,815,000 (2022: $1,035,348,000) comprises $992,394,000 (2022: $753,350,000) valued based on net asset value, of which $423,707,000 (2022: $409,500,000) is attributable to an unquoted investment fund which primarily invests in high-performance batteries for electric vehicles and energy storage systems business. A reasonably possible alternative assumption is when the net asset value of investments increase/decrease by 5%, which would lead to a $49,620,000 (2022: $37,668,000) increase/ decrease in fair value. 210 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT The notes receivables under Level 3 of the fair value hierarchy are 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 notes receivables. A reasonably possible alternative assumption is when the discount rate increase/decrease by 1%, which would lead to $129,217,000 decrease/ $136,718,000 increase in fair value. Another reasonably possible alternative assumption is when the estimated future asset sale values of Rigco’s rigs increase/decrease by 10%, which would lead to $248,798,000 increase/ $260,932,000 decrease in fair value. As at 31 December 2023, management assessed that the $120,000,000 10.0% perpetual securities issued by Rigco (Note 38), which is measured at fair value through other comprehensive income, may be unrecoverable based on Rigco’s business plan and financial projections received in December 2023. Accordingly, the carrying amount of the perpetual securities was reduced to $nil with the fair value changes recognised within other comprehensive income. Valuation process of investment properties is described in Note 8. 37. SEGMENT ANALYSIS On 3 May 2023, the Group announced the next phase of Vision 2030 plans, embarking on a major reorganisation to accelerate the transformation into a global alternative real asset manager and operator. The Group reorganised its operations into a simplified horizontally integrated model with four reportable segments, namely Infrastructure, Real Estate, Connectivity and Corporate Activities. The objective of the reorganisation was for the Group to streamline and be a one integrated company. i. ii. iii. iv. Infrastructure The Infrastructure segment business provide energy and environmental solutions and services that are essential for sustainable development. Principal activities include commercial power generation, renewables, environmental engineering, construction, and infrastructure operation and maintenance. The operating segment has operations in China, Singapore, Switzerland, the United Kingdom, and other countries. Real Estate The Real Estate segment business provide sustainable and innovative urban space solutions, focusing on sustainable urban renewal and senior living. 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. Connectivity Principal activities include the development and operation of data centres, provision of telecommunications services, sale of telecommunications and information technology equipment and provision of system integration solutions and services. The segment has operations in China, Singapore and other countries. Corporate Activities The Corporate Activities segment consists mainly of treasury operations, research & development, investment holdings, provision of management and other support services. Management monitors the results of each of the above 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 2022 restated to reflect the change in the reportable segments. ANNUAL REPORT 2023 211 37. SEGMENT ANALYSIS (continued) 2023 Revenue External sales Inter-segment sales Total Segment Results Operating profit – Loss from dividend in specie of Keppel REIT units – Other operating profit Investment income Interest income Interest expenses Share of results of associated companies and joint ventures Profit before tax Taxation Profit from continuing operations for the year Attributable to: Shareholders of Company Perpetual securities holders Non-controlling interests Profit from discontinued operations, net of tax and NCI Profit for the year attributable to shareholders of the Company 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 Infrastructure $’000 Real Estate $’000 Connectivity $’000 Corporate Activities $’000 Elimination $’000 Total $’000 4,845,450 129,137 4,974,587 763,663 7,262 770,925 1,351,068 14,883 1,365,951 5,947 53,392 59,339 – (204,674) (204,674) 6,966,128 – 6,966,128 – 721,838 69,507 52,680 (52,714) 18,079 809,390 (122,904) 686,486 699,226 – (12,740) 686,486 (110,816) 441,029 5,770 31,276 (146,612) 254,494 475,141 (130,717) 344,424 314,623 – 29,801 344,424 – 103,253 334 14,120 (28,066) 70,200 159,841 (23,104) 136,737 127,231 – 9,506 136,737 – (76,546) 2,780 664,698 (801,395) (20,355) (230,818) (12,981) (243,799) (255,861) 11,600 462 (243,799) 23,173 4,822,277 4,845,450 – 4,845,450 336,473 329,972 666,445 97,218 763,663 469,328 878,207 1,347,535 3,533 1,351,068 – 5,908 5,908 39 5,947 – (2,846) – (697,888) 700,734 – – – – – – – – – – – – – (110,816) 1,186,728 78,391 64,886 (328,053) 322,418 1,213,554 (289,706) 923,848 885,219 11,600 27,029 923,848 3,181,433 4,066,652 828,974 6,036,364 6,865,338 100,790 6,966,128 4,951,077 3,100,431 1,850,646 13,480,053 7,125,042 6,355,011 4,165,341 2,890,377 1,274,964 12,546,696 11,010,757 1,535,939 (8,305,265) (8,305,265) – 26,837,902 15,821,342 11,016,560 Investment in associated companies and joint ventures Additions to non-current assets Depreciation and amortisation Impairment loss on non-financial assets Allowance for expected credit loss and 1,172,102 242,238 38,983 676 4,322,587 619,851 45,528 6,138 878,576 238,290 125,711 661 228,588 1,609 11,218 325 bad debt written-off 14,578 297 9,240 4 – – – – – 6,601,853 1,101,988 221,440 7,800 24,119 Geographical information External sales Non-current assets Singapore $’000 6,210,349 7,801,486 China/ Hong Kong $’000 503,756 3,618,276 Other Far East & ASEAN Countries $’000 194,895 1,708,774 Other Countries $’000 57,128 788,562 Elimination $’000 Total $’000 – – 6,966,128 13,917,098 Other than Singapore, no single country accounted for 10% or more of the Group’s revenue for the year ended 31 December 2023. Information about a major customer Revenue of $1,988,863,000 is derived from a single external customer and is attributable to the Infrastructure segment for the year ended 31 December 2023. 212 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 2022 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 from continuing operations for the year Attributable to: Shareholders of Company Perpetual securities holders Non-controlling interests Profit from discontinued operations, net of tax and NCI Profit for the year attributable to shareholders of the Company 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* * Inclusive of disposal group classified as held for sale Infrastructure $’000 Real Estate $’000 Connectivity $’000 Corporate Activities $’000 Elimination $’000 Total $’000 4,290,435 34,841 4,325,276 996,386 2,898 999,284 1,332,419 9,464 1,341,883 478 91,865 92,343 – (139,068) (139,068) 6,619,718 – 6,619,718 143,454 34,817 64,367 (24,835) 126,915 344,718 (49,265) 295,453 297,985 – (2,532) 295,453 320,023 9,937 36,447 (95,243) 345,590 616,754 (163,093) 453,661 463,994 – (10,333) 453,661 81,276 273 7,062 (20,515) 71,023 139,119 (28,459) 110,660 98,497 – 12,163 110,660 9,724 3,514 425,355 (436,747) (7,549) (5,703) (4,332) (10,035) (21,517) 11,600 (118) (10,035) 55,860 4,234,575 4,290,435 – 4,290,435 686,781 239,567 926,348 70,038 996,386 395,829 933,124 1,328,953 3,466 1,332,419 – 475 475 3 478 10,730 – (441,883) 431,153 – – – – – – – – – – – – – 565,207 48,541 91,348 (146,187) 535,979 1,094,888 (245,149) 849,739 838,959 11,600 (820) 849,739 87,658 926,617 1,138,470 5,407,741 6,546,211 73,507 6,619,718 4,168,133 2,962,473 1,205,660 13,648,104 6,942,564 6,705,540 4,068,395 2,833,479 1,234,916 16,145,874 13,378,650 2,767,224 (6,965,529) (6,965,529) – 31,064,977 19,151,637 11,913,340 Investment in associated companies and joint ventures Additions to non-current assets Depreciation and amortisation Impairment loss on non-financial assets Allowance/(write-back) for expected credit loss and 1,051,679 696,713 33,163 7,052 4,687,211 383,119 34,294 107 798,469 317,087 124,801 1,953 254,503 61,483 14,300 – bad debt written-off 22,549 (776) 10,917 1,320 – – – – – 6,791,862 1,458,402 206,558 9,112 34,010 Geographical information External sales Non-current assets Singapore $’000 5,465,913 8,192,941 China/ Hong Kong $’000 916,228 3,503,743 Other Far East & ASEAN Countries $’000 172,458 1,695,069 Other Countries $’000 65,119 465,765 Elimination $’000 Total $’000 – – 6,619,718 13,857,518 Other than Singapore and China, no single country accounted for 10% or more of the Group’s revenue for the year ended 31 December 2022. Information about a major customer Revenue of $2,045,861,000 is derived from a single external customer and is attributable to the Infrastructure segment for the financial year ended 31 December 2022. ANNUAL REPORT 2023 213 38. DISCONTINUED OPERATIONS AND DISPOSAL GROUP AND ASSETS CLASSIFIED AS HELD FOR SALE AND LIABILITIES DIRECTLY ASSOCIATED WITH DISPOSAL GROUP AND ASSETS CLASSIFIED AS HELD FOR SALE i. Discontinued operations and disposal group held for sale and liabilities directly associated with disposal group classified as held for sale Keppel Offshore & Marine Ltd (“Keppel O&M”) On 27 April 2022, the Company and Sembcorp Marine Ltd (“Sembcorp Marine” and now known as Seatrium Limited “Seatrium”) entered into definitive agreements for the proposed combination of Keppel Offshore & Marine Ltd (“Keppel O&M”) and Sembcorp Marine Ltd (the “Proposed Combination”). Concurrent with the Proposed Combination, the Company has entered into a definitive agreement with Baluran Limited (“Baluran”) and Kyanite Investment Holdings Pte Ltd (“Kyanite”), for the sale of Keppel O&M’s legacy rigs and associated receivables to a new and separate entity, Rigco Holding Pte Ltd (the “Asset Co Transaction”). On 27 October 2022, the structure and terms of the Proposed Combination and the Asset Co Transfer were amended such that, 1) the merger of Keppel O&M and Sembcorp Marine will be effected by way of the acquisition by Sembcorp Marine (and not through the establishment of a new holding company) of all the Keppel O&M Shares held by the Company (the “KOM Share Transfer”) in consideration for the issuance by Sembcorp Marine of such number of new ordinary shares in the capital of Sembcorp Marine (“SCM Shares”) representing 54% of the total number of SCM Shares (“Consideration Shares”) and 2) the completion of the Asset Co Transfer will proceed regardless of whether the Keppel O&M Share Transfer takes place. Of which, the Company will distribute 49% of the total number of SCM Shares to its shareholders and remaining 5% of SCM shares (the “Retained Consideration Shares”) transfer to a segregated account (“Proposed Distribution”). Post acquisition Sembcorp Marine will be the “Combined Entity” owning a combination of its current business and KOM. Based on the carrying values of Keppel O&M’s legacy rigs and associated receivables, the Asset Co Transaction was completed on 27 February 2023 for a consideration of approximately $4,372 million satisfied in the following manner: a. b. c. issuance of 499,000 new ordinary shares in the capital of Rigco Holding Pte Ltd at the issue price of $1.00 per share; issuance of $120 million 10.0% perpetual securities by Rigco Holding Pte Ltd; and issuance of vendor notes of 4% per annum for a maximum tenure of 12 years in the same aggregate principal amount by Rigco Holding Pte Ltd of approximately $4,251 million. No gain or loss was recognised in the profit or loss on the date of completion from the Asset Co Transaction as the agreed transaction price with Rigco was based on carrying values of the legacy rigs and associated receivables. The Proposed Combination was completed on 28 February 2023 and the Company has received: I. 36,848,072,918 Consideration Shares amounting to approximately $4,237 million. Of which, 33,436,214,314 Consideration Shares (representing 49% of the enlarged capital of Seatrium) amounting to approximately $3,845 million has been distributed as dividend in specie to the Company’s shareholders and the remaining 3,411,858,604 Consideration Shares (representing 5% of the enlarged capital of Seatrium) amounting to approximately $392 million, as Retained Consideration Shares placed into a segregated account for purposes of satisfying any of the identified contingent liabilities (as defined below); and II. a Cash Component of $500,000,000 from Keppel O&M in settlement of interests and redemption amount for a partial redemption of intercompany perpetual securities. 214 KEPPEL LTD. Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT Arising from the completion of the Asset Co Transaction and the Proposed Combination, the effects of the disposal on the Group were: Carrying amounts of assets and liabilities as at the date of disposal: Fixed assets Right-of-use assets Intangible assets Investments Stocks Contract assets Debtors and other assets Associated companies and joint ventures Bank balances and cash Amount due from associated companies and joint ventures Total assets Creditors and other liabilities Contract liabilities Borrowings Lease liabilities Taxation Deferred tax liabilities Total liabilities Less: Non-controlling interests Realisation of foreign currency translation reserve and cashflow hedge reserves upon disposal Net assets disposed, including transaction costs and adjustments Consideration Gain on disposal of discontinued operations – net Cash flows arising from disposal: Cash proceeds on disposal Less: Cash and cash equivalents in subsidiary disposed of Net cash outflow on disposal GROUP At 28.02.2023 $’000 2,564,293 258,302 11,562 100,068 1,844,759 2,653,674 1,045,393 204,159 968,026 60,219 9,710,455 2,449,371 703,671 938,399 291,266 9,060 46,424 4,438,191 (14,295) 59,339 5,317,308 8,609,171 3,291,863 – (968,026) (968,026) The gain on disposal is subject to necessary adjustments including any reimbursement by the Company to Keppel O&M for certain expenditures incurred by Keppel O&M before the completion of the combination, relating to assets sold by Keppel O&M to Rigco Holding Pte Ltd to the extent that such expenditures are in excess of an agreed sum. The Company has entered into an agreement pursuant to which Consideration Shares representing 5% of Seatrium Shares on a fully diluted basis immediately after Closing has been transferred to a segregated account for the purpose of satisfying identified contingent liabilities which Seatrium may have against the Company in connection with the Combination (capitalised terms unless otherwise defined herein shall bear the meanings given to them in the Company’s circular to shareholders dated 23 November 2022 in relation to, among other things, the Combination). The Company has not received any claim in this regard. There is no certainty that a claim will be made in this regard. Accordingly, the Company does not consider any settlement amount to be material to the financial statements as at the end of the reporting period. ANNUAL REPORT 2023 215 38. DISCONTINUED OPERATIONS AND DISPOSAL GROUP AND ASSETS CLASSIFIED AS HELD FOR SALE AND LIABILITIES DIRECTLY ASSOCIATED WITH DISPOSAL GROUP AND ASSETS CLASSIFIED AS HELD FOR SALE (continued) i. Discontinued operations and disposal group held for sale and liabilities directly associated with disposal group classified as held for sale (continued) The financial performance and cash flow information presented are for the period from 1 January to 28 February 2023 and the full year ended 31 December 2022. a. The results of the discontinued operations are as follows: Revenue Expenses* Profit/(Loss) before tax from discontinued operations Taxation (Note 30(a)) Non-controlling interests Profit/(Loss) from discontinued operations, net of tax and non-controlling interests Gain on disposal of discontinued operations – net Profit from discontinued operations Period 28.02.2023 $’000 630,460 (753,890) (123,430) 12,799 201 (110,430) 3,291,863 3,181,433 Full Year 2022 $’000 2,799,418 (2,683,140) 116,278 (33,212) 4,592 87,658 – 87,658 * In accordance with SFRS(I) 5 Non-current Assets Held for Sale and Discontinued Operations, following the classification as disposal group classified as held for sale, the Group has ceased depreciation since 27 April 2022 for the relevant assets classified under disposal group held for sale up to 28 February 2023. Ceased depreciation amounted to $17,618,000 for 2023 (2022: $71,185,000). The 2022 results also include a partial writeback of $292,838,000 (before reversal of deferred tax credit of $38,919,000 recognised in taxation) impairment made in 2020 for certain legacy rig assets and a gain from divestment of Keppel Smit Towage Pte Limited and Maju Maritime Pte Ltd of $74,495,000. b. The cash flows attributable to the discontinued operations are as follows: Operating cash flow Investing cash flow Financing cash flow Net cash inflows/(outflows) Period 28.02.2023 $’000 (72,050) (12,042) (47,446) (131,538) Full Year 2022 $’000 115,472 92,204 260,362 468,038 ii. Assets classified as held for sale and liabilities directly associated with assets classified as held for sale a. Marina East Water Pte. Ltd. (“MEW”) On 30 June 2022, Keppel Infrastructure Holdings Limited (“Keppel Infrastructure”), a wholly-owned subsidiary of the Company, and Keppel Infrastructure Fund Management Pte Ltd (“KIFM”), as Trustee-Manager of Keppel Infrastructure Trust (“KIT”), have signed a non-binding term sheet with the intention to enter into definitive agreements with respect to the sale and purchase of the Group’s interest in MEW (“Proposed Transaction”). The Proposed Transaction is subject to customary closing conditions including approvals by shareholders and PUB, as well as the receipt of applicable regulatory approvals. Post the proposed transaction, MEW will be jointly-controlled by Keppel Infrastructure and KIT, with KIT receiving 100% of the economic interest. In accordance to SFRS(I) 5 Non-current Assets Held for Sale and Discontinued Operations, the assets and liabilities of MEW have been presented separately as “assets classified as held for sale” and “liabilities directly associated with assets classified as held for sale” in the condensed consolidated balance sheet as at 31 December 2023. Assets classified as held for sale Long term assets Debtors Bank balances, deposits & cash Liabilities directly associated with assets classified as held for sale Creditors Derivative liabilities Current term loans Non-current term loans Taxation 216 KEPPEL LTD. GROUP 31.12.2023 $’000 324,642 16,419 20,595 361,656 2,374 12,433 9,675 282,453 66 307,001 Notes to the Financial StatementsFor the financial year ended 31 December 2023FINANCIAL REPORT 39. NEW ACCOUNTING STANDARDS At the date of authorisation of these financial statements, the following new SFRS(I) and amendments to SFRS(I)s that are relevant to the Group and the Company were issued but not effective: • Amendments to SFRS(I) 1-1 Presentation of Financial Statements – Classification of Liabilities as Current or Non-current (effective for annual periods beginning on or after 1 January 2024) 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 amendments 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. • Amendments to SFRS(I) 16 Leases: Lease liability in a Sale and Leaseback (effective for annual periods beginning on or after 1 January 2024) The narrow-scope amendments to SFRS(I) 16 explain how an entity accounts for a sale and leaseback after the date of the transaction. The amendments specify that, in measuring the lease liability subsequent to the sale and leaseback, the seller-lessee determines ‘lease payments’ and ‘revised lease payments’ in a way that does not result in the seller-lessee recognising any amount of the gain or loss that relates to the right of use that it retains. This could particularly impact sale and leaseback transactions where the lease payments include variable payments that do not depend on an index or a rate. The management is currently assessing the impact of the adoption of the above amendments in future periods and anticipates that the above amendments will not have a material impact on the financial statements of the Group and of the Company in the period of their initial adoption. 40. SUBSEQUENT EVENTS On 26 February 2024, Seatrium Limited (formerly known as SembCorp Marine Ltd) (“Seatrium”) announced (“Seatrium’s Announcement”) that Seatrium has agreed to a settlement payment of approximately $182 million (equivalent to a total of R$670,699,731.73) and the in-principle settlement agreements are subject to various approval or ratification processes by the Brazilian Authorities, including ratification by the Fifth Chamber for Coordination and Review of the MPF, which has no statutory period by which it must complete its process. Pursuant to the Proposed Combination as disclosed in Note 38 of the financial statements, it was agreed that for a period of up to 24 months from the completion of the Proposed Combination, Seatrium would indemnify the Company for claims against Seatrium in respect of certain identified contingent liabilities. As stated in Seatrium’s Announcement, such contingent liabilities relate to Seatrium’s discussions with the Brazilian Authorities on the Operation Car Wash investigations. The Company is monitoring the developments closely and its impact on the financial statements, and working with its external legal advisor to determine the appropriate actions to be taken. 41. 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. ANNUAL REPORT 2023 217 FINANCIAL REPORT Significant Subsidiaries, Associated Companies and Joint Ventures Gross Interest Effective Equity Interest Cost of Investment 31 December 31 December 2023 % 2023 % 2022 % 2023 $’000 2022 $’000 Country of Incorporation/ Operation Principal Activities INFRASTRUCTURE Subsidiaries Keppel Infrastructure Holdings 100 100 100 445,892 445,892 Singapore Investment holding Pte Ltd Keppel Energy Pte Ltd Keppel Electric Pte Ltd 100 100 100 100 100 100 Keppel Gas Pte Ltd 100 100 100 Keppel DHCS Pte Ltd 100 100 100 Keppel Seghers Pte Ltd 100 100 100 Keppel Seghers Holdings BV 3 Keppel Seghers Belgium NV 1 Keppel Seghers Hong Kong Ltd 1 Keppel Seghers UK Ltd 2 100 100 100 100 100 100 100 100 100 100 100 100 Marina East Water Pte Ltd 100 100 100 Keppel Seghers Engineering 100 100 100 Singapore Pte Ltd Keppel Integrated Engineering 100 100 100 Ltd Keppel New Energy Pte. Ltd. 100 100 100 (formerly known as Keppel Volt. Pte Ltd.) Keppel EnServices Investment 100 100 100 Pte. Ltd. Cloud Alpha Pte Ltd Keppel Renewable Investments Pte Ltd 60 100 60 100 60 100 Keppel Sakra Cogen Pte. Ltd.^ – – 100 Associated Companies and Joint Ventures Keppel Merlimau Cogen Pte Ltd 2 49 49 49 218 KEPPEL LTD. # # # # # # # # # # # # # # # * – # # # Singapore Investment holding Singapore Electricity, energy and power supply and general wholesale trade # Singapore Purchase and sale of gaseous fuels # Singapore Development of district heating and cooling system for the purpose of air cooling and other utility services # Singapore Provision of environmental, technologies, engineering works & construction activities # Netherlands Investment holding # Belgium Provider of services and solutions to the environmental industry related to solid waste treatment # Hong Kong Investment holding # United Kingdom Design and construction of waste-to-energy plants # Singapore Design and construction of desalination plant # Singapore Engineering works, construction and O&M of plants and facilities # Singapore Investment holding # Singapore Provision of hydrogen and decarbonisation solutions # Singapore Investment holding # * Singapore Investment holding Singapore Investment holding # Singapore Commercial power generator # Singapore Commercial power generation Gross Interest Effective Equity Interest Cost of Investment 31 December 31 December 2023 % 2023 % 2022 % 2023 $’000 2022 $’000 Country of Incorporation/ Operation Principal Activities 100 100 100 4,793,367 4,793,367 Singapore Holding, management and investment company MET Holding AG 1 Tianjin Eco-City Energy Investment & Construction Co Ltd 2 Harmony Holdco Pte Ltd 2 Cleantech Solar Asia Pte Ltd 2 10 20 32 50 10 20 32 45 20 20 32 45 Cleantech Renewable Assets 51 31 31 Pte Ltd 2 Keppel MET Renewables AG 1 Keppel Sakra Cogen Pte. Ltd.^ One Eco. Co. Ltd. 2 REAL ESTATE Subsidiaries Keppel Management Ltd. (formerly known as Keppel Land Ltd.) Keppel Land China Ltd Keppel Land Estate Pte Ltd Keppel Bay Pte Ltd Keppel Philippines Properties Inc 1 Bellenden Investments Ltd 3 Broad Elite Investments Ltd 3 Cesario Pte Ltd Changzhou Fushi Housing Development Pte Ltd 1 Corredance Pte Ltd Dattson Pte Ltd Davinelle Ltd 3 Domenico Pte Ltd Double Peak Holdings Ltd 3 Estella JV Co Ltd 1 50 30 18 50 44 32 50 – 32 100 100 100 87+ 67 100 100 100 100 100 67 100 100 98 100 100 100 87+ 67 100 100 100 100 100 67 100 100 98 100 100 100 87+ 67 100 100 100 100 100 67 100 100 98 Elaenia Pte Ltd 100 100 100 # # # # # # # # # # Switzerland Integrated energy company China Investment and implementation of energy and utilities related infrastructure # Singapore Integrated environmental solutions provider # Singapore # Singapore Procurement, installation, operating and maintenance of solar generation facilities Procurement, installation, operating and maintenance of solar generation facilities # – # Switzerland Renewable energy generation Singapore Commercial power generator South Korea Investment holding # # # # # # Singapore Investment holding Singapore Investment holding Singapore Property development 493 493 Philippines Property development # # # # # # # # # # # # # # # # # # # # # BVI BVI Investment holding Investment holding Singapore Investment holding China Property development Singapore Investment holding Singapore Investment holding BVI Investment holding Singapore Investment holding BVI Investment holding Vietnam Property development and investment # Singapore Investment holding ANNUAL REPORT 2023 219 FINANCIAL REPORT Significant Subsidiaries, Associated Companies and Joint Ventures Gross Interest Effective Equity Interest Cost of Investment 31 December 31 December Country of Incorporation/ Operation Principal Activities Evergro Properties Ltd 2023 % 100 2023 % 100 Floraville Estate Pte Ltd 100 100 Greenfield Development Pte Ltd – – Straits Properties Ltd 100 100 2022 % 100 100 100 100 2023 $’000 2022 $’000 # # # # # Singapore Property investment and development # # # Singapore Investment holding Singapore Investment holding Singapore Property development Keppel Point Pte Ltd 100+ 100+ 100+ 122,785 122,785 Singapore Investment holding Jencity Ltd 3 K-Commercial Pte Ltd Katong Retail Trust Keppel Heights (Wuxi) Property Development Co Ltd 1 Keppel Hong Da (Tianjin Eco-City) Property Development Co Ltd 1 Keppel Hong Yuan (Tianjin Eco-City) Property Development Co Ltd 1 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Keppel Hong Xiang Management Consultancy (Shanghai) Co Ltd 1 100 100 100 Keppel Lakefront (Wuxi) Property 100 100 100 Development Co Ltd 1 Keppel Land (Saigon Centre) Ltd 1 Keppel Land (Singapore) Pte Ltd Keppel Land Financial Services Pte Ltd 100 100 100 100 100 100 Keppel Puravankara Dev Pvt Ltd 2 51 51 Keppel Land International (Management) Pte Ltd 100 100 Keppel Land Watco IV Co Ltd 1 Keppel Land Watco V Co Ltd 1 84 84 84 84 100 100 100 51 100 84 84 Keppel Seasons Residences 100 100 100 Property Development (Wuxi) Co., Ltd 1 Keppel Tianjin Eco-City Investments Pte Ltd 100 100 100 Keppel Tianjin Eco-City Three 100 100 100 Pte Ltd Keppel Tianjin Eco-City Two 100 100 100 Pte Ltd # # # # # # # # # # # # # # # # # # # # # # # BVI Investment holding Singapore Property development/ investment Singapore Investment trust China Property development # China Property development # China Property development # China Property services # China Property development # HK Investment holding # # # # # # # Singapore Investment holding Singapore Financial services India Property development Singapore Property services Vietnam Property development Vietnam Property development China Property development # Singapore Investment holding # Singapore Investment holding # Singapore Investment holding 220 KEPPEL LTD. Gross Interest Effective Equity Interest Cost of Investment 31 December 31 December 2023 % 2023 % 2022 % 2023 $’000 2022 $’000 Country of Incorporation/ Operation Principal Activities Tosalco Pte Ltd Krystal Investments Pte Ltd Joysville Investment Pte Ltd Main Full Ltd 1 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 Pre-1 Investments Pte Ltd PT Harapan Global Niaga 1 PT Kepland Investama 1 PT Puri Land Development 1 PT Sukses Manis Indonesia 1 PT Sukses Manis Tangguh 1 Primus II Investment Holdings Pte Ltd Riviera Point LLC 1 Saigon Centre Investment Ltd 3 Saigon Sports City Ltd 1 Beijing Changsheng Consultant Co Ltd 1 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Beijing Changsheng Property 100 100 100 Management Co Ltd 1 Shanghai Floraville Land Co Ltd 1 Shanghai Hongda Property Development Co Ltd 1 Shanghai Ji Lu Land Co Ltd 1 99 100 100 99 99 99 99 99 99 # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Singapore Investment holding Singapore Investment holding Singapore Investment holding # HK Investment holding # # # # # # # # # # # # # # # # # # # # # Singapore Investment holding 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 Indonesia Property development Indonesia Property investment Indonesia Property development Indonesia Property development Indonesia Property development Singapore Investment holding Vietnam Property development BVI Investment holding Vietnam Property development China Property investment # China Property investment # # China China Property investment Property development # China Property investment ANNUAL REPORT 2023 221 FINANCIAL REPORT Significant Subsidiaries, Associated Companies and Joint Ventures Gross Interest Effective Equity Interest Cost of Investment 31 December 31 December Country of Incorporation/ Operation Principal Activities Shanghai Ji Xiang Land Co Ltd 1 Shanghai Merryfield Land Co Ltd 1 Shanghai Pasir Panjang Land Co Ltd 1 Spring City Golf & Lake Resort Co Ltd 1 2023 % 100 99 99 80 2023 % 100 99 99 72 Spring City Resort Pte Ltd 100 100 Straits Greenfield Limited 2 – – Straits Property Investments 100 100 Pte Ltd 2022 % 100 99 99 72 100 100 100 2023 $’000 2022 $’000 # # # # # # # # # # China China China # China Property development Property development Property development Golf club operations and development and property development # Singapore Investment holding # Myanmar Hotel ownership and operations # Singapore Investment holding Keppel Group Eco-City Investments Pte Ltd 100+ 100+ 100+ 126,744 126,744 Singapore Investment holding Singapore Tianjin Eco-City Investment Holdings Pte Ltd 90+ 90+ 90+ Substantial Enterprises Ltd 3 100+ 100+ 100+ Tianjin Fulong Property Development Co Ltd 1 100 100 100 Bangalore Tower Pvt Ltd 2 100 100 100 PT Straits-CM Village 1 PT Ria Bintan 1 39 46 39 46 39 46 Aintree Assets Ltd3 100 100 100 Associated Companies and Joint Ventures Chengdu Taixin Real Estate Development Co Ltd 2 City Square Office Co Ltd 2 Empire City LLC 2 EM Services Pte Ltd Kapstone Construction Private Limited 1 Keppel Land Watco I Co Ltd 1 Keppel Land Watco II Co Ltd 1 Keppel Land Watco III Co Ltd 1 Harbourfront Three Pte Ltd – 40 40 25 49 61 61 61 39 – 40 40 25 49 61 61 61 39 35 40 40 25 49 61 61 61 39 # # # # # # # # # # # # # # # # # Singapore Investment holding # # # # # BVI China Investment holding Property development India Property investment Indonesia Hotel ownership and operations Indonesia Golf course ownership and operations # BVI Investment holding # China Property development # Myanmar Property development # # # Vietnam Property development Singapore Property management India Real estate construction and development # Vietnam # Vietnam # Vietnam Property investment and development Property investment and development Property investment and development # Singapore Property investment and development 222 KEPPEL LTD. Gross Interest Effective Equity Interest Cost of Investment 31 December 31 December 2023 % 2023 % 2022 % 2023 $’000 2022 $’000 Country of Incorporation/ Operation Principal Activities 8 25 60 30 33 40 50 42 25 – 30 30 30 49 8 25 60 30 33 40 45 42 25 – 30 30 30 49 8 25 60 30 33 40 45 42 25 15 30 30 30 49 52+ 45 52+ 45 52+ – Nam Long Investment Corporation 2 Nanjing Zhijun Property Development Co Ltd 2 Nha Be Real Estate JSC 1 North Bund Pte Ltd 2 Raffles Quay Asset Management Pte Ltd 2 Renown Property Holdings (M) Sdn Bhd 1 Sino-Singapore Tianjin Eco-City Investment and Development Co., Ltd 1 South Rach Chiec LLC 1 Suzhou Property Development Pte Ltd 2 Taicang Zhuchong Business Consulting Co Ltd 2 Vietcombank Tower 198 Ltd 2 Vision (III) Pte Ltd 2 Win Up Investment Ltd 2 Tianjin Fushi Property Development Co Ltd 1 Gaenari (IV) Pte Ltd 2 New Binh Trung Real Estate Company Limited 1, n CONNECTIVITY Data Centres & Networks Division Subsidiaries # # # # # # # # # # # # # # # # # Vietnam Trading of development properties # China Property development # # # Vietnam Property development Singapore Investment holding Singapore Property management # Malaysia Property investment # China Property development # # Vietnam Property development Singapore Investment holding # China Investment holding # # # # # – Vietnam Property investment Singapore Investment holding China China Investment holding Property development Singapore Property management Vietnam Property development Keppel Telecommunications & 100 100 100 621,299 621,299 Singapore Investment, management and holding company Transportation Ltd Keppel Data Centres Pte Ltd Keppel Data Centres Holding Pte Ltd 100 100 100 100 100 100 Keppel Communications Pte Ltd 100 100 100 Keppel Telecoms Pte Ltd 100 100 Keppel Midgard Holdings – – Pte Ltd 3^ 100 100 # # # # # # # Singapore Investment holding Singapore Investment holding and management services # Singapore Trading and provision of communications systems and accessories # # Singapore Investment holding Singapore Telecommunications network operation ANNUAL REPORT 2023 223 FINANCIAL REPORT Significant Subsidiaries, Associated Companies and Joint Ventures Gross Interest Effective Equity Interest Cost of Investment 31 December 31 December Country of Incorporation/ Operation Principal Activities Keppel Almere Pte Ltd Adfact Pte Ltd Apsilon Ventures Pte Ltd Associated Companies and Joint Ventures Computer Generated Solutions Inc 2 SVOA Public Company Ltd 2 Keppel Midgard Holdings Pte Ltd 3^ Memphis 1 Pte Ltd 2 M1 DIVISION Subsidiaries Keppel Konnect Pte Ltd Konnectivity Pte Ltd M1 Limited M1 Net Ltd 2023 % 100 100 100 21 – 40 60 100 80 100+ 100+ AsiaPac Technology Pte. Ltd. 100+ 70+ 70+ 70+ 50+ 50+ Glocomp Systems (M) Sdn. Bhd. 1 GCIS Sdn. Bhd. 1 Global Computing Solutions Sdn. Bhd. 1 Associated Companies and Joint Ventures M1 Network Private Limited Antina Pte Ltd 2 FUND MANAGEMENT & INVESTMENT Subsidiaries 2023 % 100 100 100 21 – 40 60 2022 % 100 100 100 21 32 – 60 100 100 80 84+ 84+ 84+ 59+ 59+ 59+ 42+ 50+ 80 84+ 84+ 84+ 43+ 43+ 43+ 42+ 50+ 2023 $’000 2022 $’000 # # # # # # # 1 # # # # # # # # # # # # Singapore Investment holding Singapore Investment holding Singapore Investment holding # USA IT consulting and outsourcing provider # Thailand Distribution of IT products and telecommunications services # Singapore Telecommunications network operation # Singapore Data centre facilities and colocation services 1 # # # Singapore Investment holding Singapore Investment holding Singapore Telecommunications services Singapore Provision of fixed and other related telecommunication services # Singapore ICT Solutions Provider # Malaysia ICT Solutions Provider # Malaysia ICT Solutions Provider # Malaysia ICT Solutions Provider # # Singapore Telecommunications services Singapore Mobile cellular and other wireless telecommunication network operation Keppel Capital Holdings Pte Ltd Keppel Capital International Pte Ltd 100 100 100 100 100 100 Keppel Capital Investment 100 100 100 Holdings Pte Ltd 783,000 783,000 Singapore Investment holding # # # Singapore Provision of management services and investment holding # Singapore Investment holding 224 KEPPEL LTD. Gross Interest Effective Equity Interest Cost of Investment 31 December 31 December Country of Incorporation/ Operation Principal Activities Keppel Fund Management Limited (formerly known as Alpha Investment Partners Ltd) 2023 % 100 2023 % 100 2022 % 100 Keppel DC REIT Management 100 100 100 Pte Ltd Keppel Capital Three Pte Ltd Keppel Capital US Holding Inc 3 Keppel REIT Management Ltd Keppel REIT Investment Pte Ltd Keppel DC Investment Holdings Pte Ltd Keppel Funds Investment Pte Ltd Keppel Infrastructure Fund Management Pte Ltd 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Keppel Capital Alternative Asset 100 100 100 Pte. Ltd. Associated Companies and Joint Ventures Keppel DC REIT 20 20 20 Keppel REIT 37+ 37+ 47+ Keppel Pacific Oak US REIT 2 Keppel Pacific Oak US REIT Management Pte. Ltd. 2 KBS US Prime Property Management Pte. Ltd 2 Keppel-Pierfront Private Credit Fund LP 2 Keppel Asia Infrastructure Fund LP 2 Watermark Retirement Communities, LLC 2 WRC KSL Senior Holdings, LLC 2 Alpha DC Fund Private Limited 2 Keppel Data Centre Fund II LP 2 7 50 30 26 19 50 50 65 41 7 50 30 26 19 50 50 65 41 7 50 30 26 19 50 50 65 41 2023 $’000 2022 $’000 # # # # # # # # # # # # # # # # # # # # # # Singapore Fund management # Singapore Real estate investment trust management and investment holding # # # # # # # Singapore Investment holding USA Investment holding Singapore Investment advisory and property fund management Singapore Investment holding Singapore Investment holding Singapore Investment holding Singapore Trust Management # Singapore Fund Management # Singapore Real estate investment trust – Data centre facilities and colocation services # # # Singapore Real estate investment trust Singapore Real estate investment trust Singapore Property management # Singapore Property management # Singapore Investment holding # Singapore Investment holding # USA Management company # # USA Investment holding Singapore Investment holding and fund management # Singapore Investment holding and fund management ANNUAL REPORT 2023 225 FINANCIAL REPORT Significant Subsidiaries, Associated Companies and Joint Ventures Gross Interest Effective Equity Interest Cost of Investment 31 December 31 December 2023 % 2023 % 2022 % 2023 $’000 2022 $’000 Country of Incorporation/ Operation Principal Activities CORPORATE ACTIVITIES Subsidiaries Kephinance Investment Pte Ltd 100 100 100 90,000 90,000 Singapore # Singapore Investment holding and central finance administrator To arrange, syndicate and/or provide financing to customers of Keppel Group # 10 Keppel Capital One Pte Ltd 100 100 100 Kepinvest Holdings Pte Ltd Kepinvest Singapore Pte Ltd 100 100 Keppel Ventures (Property) Pte Ltd 100 Keppel Oil & Gas Pte Ltd Kepventure Pte Ltd Associated Companies and Joint Ventures 100 100 100 100 100 100 100 100 100 100 100 100 10 Singapore Investment holding 18,425 18,425 Singapore Investment holding # # # # Singapore Investment holding Singapore Investment holding 594,922 594,922 Singapore Investment holding Floatel International Ltd 1 50 50 50 # # Bermuda Operating accommodation and construction support vessels (floatels) for the offshore oil and gas industry Total Significant Subsidiaries~ 7,596,938 7,596,938 Notes: i. ii. iii. iv. v. vi. All the companies are audited by PricewaterhouseCoopers LLP, Singapore except for the following: 1 Audited by PricewaterhouseCoopers firms outside Singapore; 2 Audited by other firms of auditors; and 3 Not required to be audited by law in the country of incorporation or 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. + The shareholdings of these companies are held jointly with other subsidiaries. # The shareholdings of these companies are held by subsidiaries of Keppel Ltd. * The cost of investment of the subsidiary is less than $1,000 n These companies were incorporated/acquired during the financial year. ^ During the year ended 31 December 2023, the shareholding interest in subsidiary was diluted and the investment in subsidiary was reclassified as an associated company. The subsidiaries' place of business is the same as its country of incorporation, unless otherwise specified. vii. vii. Abbreviations: viii. British Virgin Islands (BVI) Hong Kong (HK) The Company has 184 significant subsidiaries, associated companies and joint ventures as at 31 December 2023. 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. United Arab Emirates (UAE) United States of America (USA) ~ All entities within the disposal group held for sale that were disposed during 2023 as part of the completion of the Asset Co Transaction and Proposed Combination (Note 38) are not presented within the list. 226 KEPPEL LTD. OTHER INFORMATION Interested Person Transactions The Group has obtained a general mandate from shareholders of the Company for interested person transactions in the Annual General Meeting held on 21 April 2023. 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) 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) 2023 $’000 4,687 1,573 175,813 9,518 1,167 7,747 3,033 7,144 48,498 2,937 5 6,258 – 90 – 117 71 4,838 42,875 6,770 54,549 2023 $’000 3,664 6,270 113,766 1,549,410 6,053 11 340 – – 7,373 2,911 – 1,243,015 8,414 31,693 54,465 – – – – – Name of Interested Person Nature of Relationship Transaction for the Sale of Goods and Services Temasek Holdings Group (other than the below) CapitaLand Group Keppel Infrastructure Trust Group PSA International Group Seatrium Group (f.k.a. SembCorp Marine Group) Singapore Power Group Singapore Technologies Engineering Group Singapore Telecommunications Group StarHub Group Transaction for the Purchase of Goods and Services Temasek Holdings Group (other than the below) CapitaLand Group Keppel Infrastructure Trust Group Lan Ting Holdings Group Singapore Technologies Engineering Group Singapore Telecommunications Group StarHub Group Treasury Transactions Temasek Holdings Group (other than the below) Keppel Infrastructure Trust Group Joint Venture Keppel Infrastructure Trust Group Clifford Capital Group Equity Transactions Keppel Infrastructure Trust 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 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 other named interested persons are its associates. Total Interested Person Transactions 377,690 3,027,385 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. ANNUAL REPORT 2023 227 OTHER INFORMATION Key Executives Christina Tan Hua Mui, 58 Bachelor of Accountancy (Honours), National University of Singapore; CFA® charterholder. Ms Christina Tan is Chief Executive Officer, Fund Management and Chief Investment Officer of Keppel Ltd. She is also Chairman of Keppel DC REIT Management Pte Ltd (the Manager of Keppel DC REIT) and Deputy Chairman of Keppel Fund Management Ltd (KFM). 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. 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) and Keppel Infrastructure Fund Management Pte Ltd (the Trustee-Manager of Keppel Infrastructure Trust) and two private fund managers under Keppel Capital, being KFM and Keppel Capital Alternative Asset Pte Ltd (KCAA). She also sits on the Investment Committees for the private funds managed by KFM and KCAA. Kevin Chng, 51 Bachelor Degree (Merit) in Accounting and Information Systems, University of New South Wales; Member of Chartered Accountants, Australia and New Zealand. Mr Chng is the Chief Financial Officer of Keppel Ltd. Mr Chng joined Keppel in 2016 and has held various leadership positions in the Company, first as the General Manager of Group Risk and Compliance at Keppel, before being appointed Chief Financial Officer of Keppel’s former offshore & marine business from January 2020 to February 2023. In March 2023, Mr Chng was appointed Deputy Chief Financial Officer of Keppel and oversaw Keppel’s Risk and Compliance, Tax and Treasury functions. Prior to joining Keppel, Mr Chng had held senior positions at Credit Suisse Group in Singapore and Hong Kong, PricewaterhouseCoopers and Ord Minnett Group. Louis Lim, 51 Master and Bachelor of Economics (Sigma Xi), Massachusetts Institute of Technology; MBA, INSEAD. Mr Lim is the Chief Executive Officer, Real Estate at Keppel Ltd. Mr Lim was previously Director of Group Strategy & Development 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, a change agent and innovation catalyst which aims to transform how Keppel harnesses technology and innovation to create value for stakeholders. Prior to joining Keppel in 2016, Mr Lim was a Partner with Bain & Company where he led the firm’s Consumer Products & Retail as well as Change Management and Organisation practices in Southeast Asia. He began his career with the firm in 1997, working across Bain’s Southeast Asia, as well as Melbourne, San Francisco and Tokyo offices, on projects that spanned from Papua New Guinea to Nigeria. Mr Lim’s leadership roles at Bain included heading Human Resources and Recruiting for Southeast Asia. Mr Lim is currently a member of the INSEAD Facilities Committee and he also sits on the board of Glyph Community Limited. 228 KEPPEL LTD. Cindy Lim, 46 Bachelor of Engineering (Mechanical & Production) (Second Upper Honours), Nanyang Technological University; Executive MBA, Singapore Management University. Ms Cindy Lim is Chief Executive Officer, Infrastructure of Keppel Ltd. and holds directorships across several operating units in Keppel’s Infrastructure Division. In her over 20 years with Keppel, Ms Lim has held various leadership positions. She was the Director of Group Corporate Development (GCD) at Keppel and concurrently the Managing Director of Keppel Urban Solutions (KUS), an end-to-end master developer of integrated smart and sustainable precincts and townships in the Asia-Pacific region. As the Director of GCD, Ms Lim focused on identifying and extracting synergies across Keppel’s operating segments, as well as harnessing both internal and external collaboration. As the founding Managing Director of KUS, she set up and led the unit to pursue and capture business opportunities arising from rapid urbanisation and the increasing global focus on liveability and sustainability. Prior to these, Ms Lim was the Executive Director of Infrastructure Services where she stewarded the business by driving operating assets’ efficiency and reliability, health, safety & environment performance as well as procurement strategies. She has diverse experience in operations and process excellence, as well as assets, people, and organisation management. Thomas Pang Thieng Hwi, 59 Bachelor of Arts (Engineering) and Master of Arts (Honorary Award), University of Cambridge. Mr Pang is Chief Executive Officer, Data Centres and Networks of Keppel Ltd. Prior to this, he was CEO of Keppel Telecommunications & Transportation Ltd until its delisting in 2019 and integration with Keppel. 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’s former offshore & marine business 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. 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, both of which are economic agencies under Singapore’s Ministry of Trade & Industry. Mr Pang currently holds directorships in Keppel DC REIT Management Pte Ltd (the Manager of Keppel DC REIT) and M1 Limited. Manjot Singh Mann, 58 Master of Management Studies (Marketing and Sales Management), University of Bombay; Bachelor of Engineering (Mechanical Engineering), University of Jabalpur. Mr Mann is Chief Executive Officer and Director of M1. He was appointed as Chief Executive Officer in December 2018. Mr Mann is also the Chief Digital Officer of Keppel Ltd., appointed with effect from March 2022. 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. Mr Mann currently holds directorships in several subsidiaries of M1 Limited, as well as Keppel’s enterprise services and digital arms. ANNUAL REPORT 2023 229 OTHER INFORMATION Key Executives Bridget Lee Siow Pei, 52 Master of Management, JL Kellogg Graduate School of Management, Northwestern University; Bachelor of Accountancy, Nanyang Technological University. Ms Lee is the Chief Investment Officer, Real Estate, Keppel Ltd. and Chief Executive Officer (CEO) and Executive Director of Keppel Capital Alternative Asset Pte Ltd (KCAA). Ms Lee oversees all investments and divestments in the real estate sector, including alternatives such as education, living and healthcare sectors. Ms Lee is also a Non-Executive Director of Keppel Pacific Oak US REIT Management Pte. Ltd. (the Manager of Keppel Pacific Oak US REIT), with effect from 20 October 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, 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. Ang Sock Cheng, 51 Bachelor of Accountancy, Nanyang Technological University of Singapore Ms Ang is the Chief Operating Officer, Fund Management of Keppel Ltd. Ms Ang has more than 25 years of experience in real estate and infrastructure fund management business, leading financial and corporate reporting, investor relations, compliance and risk management, fund raising in the capital and debt market as well as transaction advisory in tax structuring, financial and tax due diligence for investments globally. She jointed Keppel in June 2004. Prior to joining Keppel, Ms Ang was Finance Manager of GRA (Singapore) Private Limited. She was responsible for system operation integration for new office outfits , financial reporting, local operational management and controls, raising project financing and treasury management for real estate investments in China. Having held auditor positions in international accounting firms in Singapore and China, she had regional exposure to different accounting and finance environments for real estate clients and is well-versed in internal audit, financial and tax due diligence in relation to mergers and acquisitions. Koh Wee Lih, 51 Master of Business Administration, Master of Science in Industrial and Operations Engineering, Bachelor of Science (Summa Cum Laude) in Aerospace Engineering, University of Michigan. Mr Koh was appointed Chief Executive Officer of Keppel REIT Management Limited (the Manager of Keppel REIT) with effect from 1 December 2021. Mr Koh has over 27 years of experience in investment, corporate finance and asset management, of which more than 17 years are in direct real estate – covering investments, developments, asset management and real estate private equity in the Asia Pacific region. Prior to joining the Manager, Mr Koh was the Executive Director and CEO of AIMS APAC REIT Management Limited, the manager of AIMS APAC REIT (AA REIT) from 2014 to 2021, where he was responsible for the overall planning, management and operation of AA REIT. Before that, Mr Koh held various senior positions at AA REIT as well as other private funds and a developer, overseeing regional investment and asset management. 230 KEPPEL LTD. Jopy Chiang, 39 Master of Finance, University of Cambridge; Bachelor of Business Administration, National University of Singapore; CFA® Charterholder. Mr Jopy Chiang was appointed Chief Investment Officer, Infrastructure, Keppel Ltd. on 1 October 2023. Prior to that, he was CEO of Keppel Infrastructure Fund Management, the Trustee Manager of Keppel Infrastructure Trust from August 2021 to September 2023. Mr Chiang has over 15 years of experience across infrastructure private equity and investment banking, with more than US$10 billion of transaction and advisory experience in developed and emerging markets of Asia Pacific, Europe, Middle East and North America. Mr Chiang’s investment experience spans the infrastructure spectrum across renewables, regulated utilities, conventional energy, distribution & transmission, transportation, water, waste and digital infrastructure, with a track record of successful returns to investors. Prior to joining Keppel, Mr Chiang worked at Partners Group, Arcapita and Barclays Capital, and was based in Hong Kong, London and Singapore over the tenure of his career. While in Keppel, Mr Chiang played a key role in the successful launch of the Keppel Asia Infrastructure Fund. Loh Hwee Long, 47 Bachelor of Science (Real Estate), First Class Honours, National University of Singapore Mr Loh has more than 23 years of experience in real asset investment, asset, and fund management across major global markets in Asia Pacific, Europe, Middle East and North America. He was appointed Chief Executive Officer of Keppel DC REIT Management Pte. Ltd. (the Manager of Keppel DC REIT) on 28 July 2023. Prior to joining the Manager, Mr Loh was the Chief Investment Officer, Data Centres, at Keppel Capital, overseeing its data centre strategies across various investment platforms and mandates. Before joining Keppel, he held senior positions with the Government of Singapore Investment Corporation (GIC) Real Estate and Mapletree Investments, where he was responsible for investments across multiple real estate sectors as well as spearheading entry into new markets. Mr Loh received a scholarship from Keppel in 1997 and began his career with Keppel Land in 2001. Kevin Neo, 43 Bachelor of Business Administration, National University of Singapore; CFA® charterholder Mr Neo was appointed Chief Executive Officer of Keppel Infrastructure Fund Management Pte Ltd (the Trustee-Manager of Keppel Infrastructure Trust) on 1 October 2023. Mr Neo joined the Trustee-Manager in 2016 and was a senior member of the Trustee-Manager’s investment team, leading several major investments (such as the acquisitions of Ixom, Philippine Coastal and One Eco) and managing them thereafter, before he was appointed Deputy Chief Executive Officer of the Trustee-Manager in June 2023. He has over 17 years of principal infrastructure and private equity investment, and corporate finance experience. He has invested across a wide range of infrastructure asset classes with over $8 billion of transaction and advisory experience in developed and emerging markets across Asia Pacific, Europe and the Middle East. Before joining Keppel, he held M&A advisory and investment positions in Samena Capital, PwC Corporate Finance and Singapore Power respectively. Mr Neo’s principal directorships include City Energy Pte Ltd (Chairman), Keppel Merlimau Cogen Pte Ltd (Chairman), One Eco Co., Ltd. (Chairman), Philippine Coastal Storage & Pipeline Corporation (Chairman), Ixom Holdings Pty Ltd., Australia and Wind Fund I AS. ANNUAL REPORT 2023 231 OTHER INFORMATION Key Executives David Eric Snyder, 53 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 of Keppel Pacific Oak US REIT Management Pte. Ltd. (the Manager of Keppel Pacific Oak US REIT) since the REIT’s 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. Galen Lee, 51 Masters of Business Administration, Columbia Business School; Bachelor of Accountancy, Nanyang Technological University of Singapore Mr Lee is the Chief Executive Officer of Real Estate & Data Centres, Keppel Fund Management and he leads the fund management initiatives to further strengthen Keppel’s capability in the private funds space for these sectors. Mr Lee has over 22 years of real estate investment, origination and structuring experience across various asset classes, and has been involved in the establishment of real estate joint ventures, real estate investment trusts, debt advisory, investment banking and corporate mergers and acquisitions in Asia and Europe. Prior to joining Keppel, he was the Executive Vice President and Head of Capital Markets for City Developments Limited, responsible for developing its fund management and Profit Participation Securities platform by structuring more than $2 billion worth of real estate deals. Prior to this, Mr Lee was the head of South East Asia real estate investment banking at UBS and Bank of America Merrill Lynch, and has covered the real estate sector at Macquarie Capital Advisors, Wachovia Real Estate Asia, DBS and Goldman Sachs. Sharon Tay Lin Li, 47 Master of Science (Finance & Economics) and Bachelor of Science (Economics), London School of Economics and Political Science; CFA® charterholder. Ms Tay is the Chief Executive Officer of Keppel Asia Infrastructure Fund, which is managed by Keppel Capital Alternative Asset Pte Ltd. Ms Tay has more than 20 years of experience in the infrastructure, private equity, fund management and banking industries, primarily in Asia. She has extensive experience across all aspects of fund management, from capital raising and fund establishment to successful implementation of the fund strategy across investments, portfolio construction, active asset management and exits. Ms Tay joined Keppel in September 2022 and is focused on building its private infrastructure funds business. Prior to Keppel, Ms Tay was the Head of Renewable Energy (Vietnam) at Sembcorp Industries, where she was responsible for driving the growth initiatives and strategic direction for Sembcorp’s renewable energy business in Vietnam. Prior to Sembcorp Industries, she held leadership roles in Asia Climate Partners, Daestrum Capital, Deutsche Asset Management, Macquarie and Citibank, where she focused on fund management and investments. Ms Tay is a director of Keppel Asia Infra Fund (GP) Pte. Ltd., the general partner of Keppel Asia Infrastructure Fund. She also holds directorships in several subsidiaries, associates, portfolio companies and joint venture companies of Keppel Asia Infrastructure Fund. 232 KEPPEL LTD. Jee Kim, 51 Master of Finance and Bachelor of Science in Business Administration, Ewha Woman’s University, Seoul, Korea. Ms Kim joined Keppel Capital Alternative Asset Pte Ltd in April 2022 as Chief Executive Officer of the Core Infrastructure division. She brings with her over 24 years of experience in global infrastructure investment, other alternative investments (including real estate and private equity), and financial services. Ms Kim was previously Global Head of Infrastructure Investment at the National Pension Service of Korea (NPS), which is the third-largest public pension fund in the world with US$768 billion AUM as of December 2021. She oversaw NPS’ US$26 billion infrastructure portfolio in transport, utilities, power and energy, telecom/digital infrastructure. Ms Kim had held several senior positions at NPS, including Head of NPS Singapore, where she developed an alternatives assets portfolio in APAC including infrastructure, real estate and private equities and built the investment team since she established it in 2015. She was also a member of the NPS Investment Committee. Prior to that, she was involved in various aspects of investment and asset management in Prudential Asset Management Co. Ltd. and Prudential Investment & Securities Co. Ltd, a wholly-owned subsidiary of Prudential Financial, Inc., an American Fortune Global 500 company. Ms Kim’s principal directorships include Keppel Core Infra Fund GP Pte. Ltd., KCIF Investments Pte. Ltd., KPC Management III (GP) Pte. Ltd. and Pierfront Capital Fund Management Pte. Ltd. Carina Lim, 50 Bachelor of Science (Estate Management), Second Class Honours (Upper Division), National University of Singapore; Master of Management (Financial Management), Macquarie Graduate School of Management, Sydney. Ms Carina Lim is the Chief Executive Officer of Keppel Education Asset Fund and Executive Director of Keppel Capital Alternative Asset Pte Ltd (KCAA). She has more than 25 years of experience in the real estate industry holding positions in investment, asset management, leasing, sales and marketing prior to joining KCAA as a director in January 2019. Ms Lim joined Keppel Fund Management Limited (KFM) in 2008 as Senior Manager and later assumed the role of Head of Asset Management in 2013, where she oversaw asset management in Asia Pacific for a series of private closed-end funds across different risk spectrums (including core, core-plus and value-add) and across different asset types. In KFM, she led the implementation of various asset strategies including asset optimisation, development, refurbishment, ESG and other value-add initiatives for the funds and was instrumental in the successful divestment of the funds’ assets. To date, she has been involved in more than $8 billion worth of transactions across key cities in Asia Pacific. Prior to joining KFM, she worked in the government sector as well as with large private developers in the areas of policies, leasing, marketing, investment and asset management of office, business park and industrial sectors. ANNUAL REPORT 2023 233 OTHER INFORMATION Major Properties Held By Effective Group Interest Location Description and Approximate Land Area Tenure Usage COMPLETED PROPERTIES Keppel REIT 37% Ocean Financial Centre Collyer Quay, Singapore Land area: 6,221 sqm 43-storey office tower with ancillary retail space 999 years leasehold Commercial office building with rentable area of 81,093 sqm Commercial office building with rentable area of 123,102 sqm Commercial office buildings with rentable area of 159,860 sqm 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 99 years leasehold 99 years leasehold 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 Land area: 9,710 sqm 46-storey office tower with retail podium 99 years leasehold Commercial office building with rentable area of 123,763 sqm Keppel Bay Tower HarbourFront Avenue, Singapore Land area: 10,441 sqm 18-storey office tower with a six-storey podium 8 Exhibition Street Melbourne, Australia Land area: 4,329 sqm 35-storey office tower with ancillary retail space 99 years leasehold Freehold Commercial office building with rentable area of 35,881 sqm Commercial office building with rentable area of 45,032 sqm 8 Chifley Square Sydney, Australia David Malcolm Justice Centre Perth, Australia Victoria Police Centre Melbourne, Australia Pinnacle Office Park Sydney, Australia 2 Blue Street (formerly known as Blue & William) Sydney, Australia T Tower Seoul, South Korea KR Ginza II Tokyo, Japan Land area: 1,581 sqm 30-storey office tower 99 years leasehold Commercial office building with rentable area of 19,394 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: 22,040 sqm Three office towers of 8-storey, 7-storey and 4-storey Land area: 2,312 sqm 10-storey office tower Freehold Commercial office building with rentable area of 34,560 sqm Freehold Commercial office building with rentable area of 14,122 sqm Land area: 5,346 sqm 28-storey office tower Freehold Commercial office building with rentable area of 21,216 sqm Land area: 805 sqm 8-storey office tower Freehold Commercial office building with rentable area of 3,594 sqm Keppel DC Singapore 1 Serangoon, Singapore Keppel DC Singapore 2 Tampines, Singapore Keppel DC Singapore 3 Tampines, Singapore Keppel DC Singapore 4 Tampines, Singapore Keppel DC Singapore 5 Jurong, Singapore 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 Land area: 6,805 sqm 5-storey data centre Land area: 7,742 sqm 5-storey data centre 30 years lease with option for another 30 years 30 years lease and extended for another 30 years 30 years lease and extended for another 30 years 30 years lease and extended for another 30 years Expiring 31 August 2050, including further term of 9 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 Data centre with rentable area of 7,854 sqm Data centre with rentable area of 8,717 sqm Keppel DC REIT 20% 234 KEPPEL LTD. Held By Effective Group Interest Location Description and Approximate Land Area Tenure Usage Keppel Pacific Oak US REIT 7% DC1 Riverside Road, Singapore Gore Hill Data Centre Sydney, Australia 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 Intellicentre Campus Sydney, Australia Land area: 20,031 sqm 2-storey and 5-storey data centres Freehold Data centre with rentable area of 21,881 sqm Almere Data Centre Amsterdam, Netherlands Keppel DC Dublin 1 Dublin, Ireland Keppel DC Dublin 2 Dublin, Ireland maincubes Data Centre Offenbach am Main, Germany Guangdong Data Centre 1 Guangdong, China Guangdong Data Centre 2 Guangdong, China 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 6,143 sqm Land area: 13,900 sqm Single-storey data centre 999 years leasehold Data centre with rentable area of 2,646 sqm Land area: 5,596 sqm 4-storey data centre Freehold Data centre with rentable area of 9,016 sqm Land area: 78,021 sqm 7-storey data centre 50 years leasehold Data centre with rentable area of 20,596 sqm Land area: 78,021 sqm 7-storey data centre 50 years leasehold Data centre with rentable area of 20,310 sqm The Plaza Buildings 8th Street, Bellevue, Washington, USA Land area: 16,304 sqm 16 and 10 storey multi-tenanted office buildings Bellevue Technology Center 24th Street, Bellevue, Washington, USA The Westpark Portfolio 8200-8644 154th Avenue Ne Redmond, Washington, USA Land area: 188,570 sqm Office campus featuring 9 multi-tenanted office buildings Land area: 167,080 sqm Business campus comprising 19 office buildings and 2 flex buildings which are multi-tenanted Freehold Commercial office building with rentable area of 45,595 sqm Freehold Commercial office buildings with rentable area of 31,063 sqm Freehold Commercial office and flex buildings with rentable area of 72,803 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 Land area: 77,464 sqm Office campus featuring 2 multi-tenanted office buildings One Twenty Five 125 East John Carpenter Freeway, Texas, USA Land area: 25,576 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 37,802 sqm Freehold Commercial office buildings with rentable area of 43,333 sqm Freehold Commercial office building with rentable area of 42,468 sqm ANNUAL REPORT 2023 235 OTHER INFORMATION Major Properties Held By Keppel Bay Pte Ltd Effective Group Interest 100% Parksville Development Pte Ltd 100% Katong Retail Trust 100% Beijing Changsheng Property Management Co Ltd 100% Description and Approximate Land Area Land area: 83,538 sqm Land area: 38,830 sqm Land area: 5,785 sqm Land area: 7,261 sqm Land area: 3,546 sqm Location Reflections at Keppel Bay Singapore Corals at Keppel Bay Singapore 19 Nassim Nassim Hill, Singapore I12 Katong East Coast Road, Singapore Linglong Tiandi Beijing, China Tenure Usage 99 years leasehold 99 years leasehold 99 years leasehold 99 years leasehold 50 years lease (office) 40 years lease (retail) A 1,129-unit waterfront condominium development A 366-unit waterfront condominium development A 101-unit condominium development A 6-storey shopping mall with rentable area of 19,730 sqm A 11-storey office tower with ancillary retail space in Haidian District A 4-storey office building at the core area of Zhangjiang Hi-Tech Park China The9 Interactive (Shanghai) Ltd, The9 Computer Technology Consulting (Shanghai) Ltd and Shanghai Kai E Information Technology Co Ltd 100% The Kube Shanghai, China Land area: 3,686 sqm 50 years lease Win Up Investment Ltd 30% Spring City Golf & Lake Resort Co Ltd. 72% 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% Keppel Land Watco I Co Ltd 45% Keppel Land Watco II & III Co Ltd 45% Alpha DC Fund 65% Westmin Plaza Guangzhou, China Spring City Golf & Lake Resort Kunming, China International Bund Gateway 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 Saigon Centre (Phase 1) Ho Chi Minh City, Vietnam Saigon Centre (Phase 2) Ho Chi Minh City, Vietnam Keppel DC Sydney 1 New South Wales, Australia Land area: 9,278 sqm 50 years lease (office) 40 years lease (retail) A 17-storey office tower with ancillary retail space in Liwan District Land area: 2,507,653 sqm Two 18-hole golf courses, 73 guest rooms and 527 resort homes 70 years lease (residential) 50 years lease (golf course) Integrated resort comprising golf courses, resort homes and resort facilities Land area: 13,373 sqm Land area: 16,427 sqm 50 years lease (office) 40 years lease (retail) 50 years lease (office) 40 years lease (retail) A mixed-use development in Hongkou District A mixed-use development in Hongkou District Land area: 10,428 sqm 20 years lease with option for another 20 years A Grade A office development in Jakarta CBD with rentable area of 50,200 sqm Land area: 2,088,745 sqm Freehold Land area: 26,406 sqm 50 years Build- Operate-Transfer with option for another two 10-years Land area: 2,730 sqm 25-storey office, retail cum serviced apartments development Land area: 8,355 sqm 50 years leasehold 50 years leasehold A township comprising residential units, commercial space and recreational facilities in Skudai A mixed-use development in CBD Commercial building with rentable area of 11,683 sqm office and 10,099 sqm of serviced apartments Commercial building with rentable area of 38,000 sqm retail, 34,000 sqm office and 195 units of serviced apartments Land area: 3,840 sqm 5-storey data centre Freehold Data centre with rentable area of 3,975 sqm Huizhou Data Centre Guangdong, China Land area: 41,487 sqm 4-storey internet data centre block 50 years leasehold Data centre with rentable area of 12,648 sqm 236 KEPPEL LTD. Held By Keppel Heights (Wuxi) Property Development Co Ltd Effective Group Interest 100% Location Park Avenue Heights Wuxi, China Description and Approximate Land Area Land area: 66,010 sqm Nanjing Zhijun Property Development Co Ltd 25% 100% Keppel Hong Yuan (Tianjin Eco-City) Property Development Co Ltd, Keppel Hong Tai (Tianjin Eco-City) Property Development Co Ltd and Keppel Hong Teng (Tianjin Eco-City) Property Development Co Ltd Noblesse IX Nanjing, China Seasons City in Sino-Singapore Tianjin Eco-City Tianjin, China Land area: 38,285 sqm Land area: 40,451 sqm Keppel Seasons Residences Property Development (Wuxi) Co Ltd 100% Seasons Residences Wuxi, China Land area: 180,258 sqm Tenure Usage 70 years lease (residential) 40 years lease (commercial) 70 years lease (residential) 40 years lease (commercial) 40 years leasehold A mixed-use development with 1,281 residential units with commercial facilities in Liangxi District A mixed-use development with about 181 residential units and 417 commercial units in Xuanwu District A commercial sub-centre comprising of retail mall and an office tower Land area: 215,230 sqm Land area: 109,686 sqm 70 years lease 70 years lease (residential) 40 years lease (commercial) 70 years lease (residential) 40 years lease (commercial) A 2,904-unit residential development with integrated facilities in Xinwu District A 1,403-unit residential development with commercial and SOHO facilities in Binhu District A 572-unit residential development within Sino-Tianjin Eco-City Land area: 5,095 Freehold A 15-storey office building with rentable area of 17,956 sqm Land area: 33,248 sqm 50 years leasehold Data centre with rentable area of 63,305 sqm Land area: 9,126 sqm Freehold Commercial office buildings *2025 Keppel Lakefront (Wuxi) Property Development Co Ltd Keppel Hong Yuan (Tianjin Eco-City) Property Development Co Ltd. 100% 100% Gaenari IV Pte Ltd 52% Keppel DC Fund II 41% PROPERTIES UNDER DEVELOPMENT K-Commercial Pte Ltd 100% Keppel Bay Pte Ltd Keppel DC Fund II 100% 41% Shanghai Floraville Land Co Ltd 99% Waterfront Residences Wuxi, China Waterfront Residences II in Sino-Singapore Tianjin Eco City Tianjin, China Inno88 Building (formerly known as Samhwan Building) Seoul, South Korea Huailai Data Centre Hebei, China Keppel South Central (formerly known as Keppel Towers) Hoe Chiang Road, Singapore Keppel Bay Plot 6 Singapore Greater Shanghai Data Centre Shanghai, China Park Avenue Central Shanghai, China Land area: 43,701 sqm Land area: 22,226 sqm 5-storey internet data centre block Land area: 27,958 sqm Harbourfront Three Pte Ltd 39% The Reef at King’s Dock Singapore Land area: 28,579 sqm Keppel Hong Yuan (Tianjin Eco-City) Property Development Co Ltd, Keppel Hong Tai (Tianjin Eco-City) Property Development Co Ltd and Keppel Hong Teng (Tianjin Eco-City) Property Development Co Ltd 100% Seasons City in Sino-Singapore Tianjin Eco-City Tianjin, China Land area: 40,451 sqm 99 years leasehold 50 years leasehold A proposed 84-unit waterfront condominium development Data centre with rentable area of 29,801 sqm 40 years lease (retail) 50 years lease (office) 99 years leasehold 40 years leasehold An office and retail development *2024 A 429-unit waterfront condominium development *2024 A commercial sub-centre comprising of two office towers ANNUAL REPORT 2023 237 OTHER INFORMATION Major Properties Held By Tianjin Fushi Property Development Co Ltd Effective Group Interest 49% Tianjin Fulong Property Development Co Ltd 100% PT Kepland Investama 100% PT Harapan Global Niaga 100% Tanah Sutera Development Sdn Bhd 18% City Square Tower Co Ltd 40% Location North Island mixed-use development Tianjin, China North Island mixed-use development Tianjin, 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 Ltd 100% Empire City LLC 40% South Rach Chiec LLC 42% Doan Nguyen House Trading Investment Company Limited 25% New Binh Trung Real Estate Company Limited 25% Kapstone Construction Private Limited 49% Bangalore Tower Pvt Ltd 100% Saigon Sports City Ho Chi Minh City, Vietnam Empire City Ho Chi Minh City, Vietnam Palm City Ho Chi Minh City, Vietnam Thu Duc City Ho Chi Minh City, Vietnam Thu Duc City Ho Chi Minh City, Vietnam Urbania Township Mumbai, India Bangalore Tower (formerly known as KPDL Grade-A Office Tower) Bangalore, India Description and Approximate Land Area Land area: 226,972 sqm Land area: 664,492 sqm Tenure Usage 70 years lease (residential) 40 years lease (commercial) 70 years lease (residential) 40 years lease (commercial) A mixed-use development in North Island within Sino- Singapore Tianjin Eco-City *(2024-2028) A mixed-use development in North Island within Sino- Singapore Tianjin Eco-City *(2024-2028) 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: 2,780,420 sqm Freehold Land area: 26,406 sqm Land area: 638,737 sqm 50 years Build-Operate- Transfer with option for another two 10-years 50 years leasehold Land area: 146,000 sqm 50 years leasehold Land area: 289,365 sqm Land area: 60,732 sqm Land area: 57,700 sqm 50 years leasehold 50 years leasehold 50 years leasehold Land area: 60,349 sqm Freehold Land area: 30,898 sqm Freehold A township comprising residential units, commercial space and recreational facilities in Skudai *2024 A 23-storey Grade A office building within a mixed use development in CBD A township with about 4,261 apartments, commercial complexes and public sports facilities *(2028-2034) A residential development with about 2,350 units and commercial space in Thu Thiem New Urban Area, District 2 *2026 A residential township with more than 3,000 units and commercial space at South Rach Chiec, District 2 A residential development with close to 70 landed houses and more than 610 apartments *(2024-2025) A landed housing development with about 160 units *2025 A 6,925 residential units integrated township development located in Thane *(2025-2031) A Grade A office development located in the prime commercial hub of Yeshwanthpur *2026 Memphis 1 Pte Ltd 60% Keppel DC Singapore 7 Genting Lane, Singapore Land area: 24,892 sqm 60 years Data centre with rentable area of 15,544 sqm * Expected year of completion 238 KEPPEL LTD. OTHER INFORMATION Group Five-Year Performance Selected Profit & Loss Account Data ($ million) Revenue Operating profit Profit before tax Net profit from Continuing Operations Net profit from Discontinued Operations Net profit attributable to shareholders of the Company Selected Balance Sheet Data ($ million) Fixed assets, investment properties & right-of-use assets Associated companies, joint ventures and investments Notes receivables, stocks, debtors, cash, long term assets & other assets Disposal group and assets classified as held for sale Intangibles Total assets Less : 2019 2020 2021# 2022# 2023# 7,580 877 954 707 – 707 6,684 7,121 15,834 – 1,683 31,322 6,574 8 (255) (506) – (506) 6,972 7,355 15,161 1,009 1,609 32,106 6,611^ 1,129^ 1,611^ 1,248 (225) 1,023 6,830 7,525 15,851 528 1,589 32,323 6,620^ 565^ 1,095^ 839 88 927 5,501 8,324 6,146 9,530 1,564 31,065 6,967^ 1,076^ 1,214^ 885 3,182 4,067 5,781 8,474 10,687 362 1,534 26,838 Creditors and other current liabilities 7,325 7,470 7,049 3,522 3,372 Liabilities directly associated with disposal group and assets classified as held for sale Borrowings & lease liabilities Other non-current liabilities Net assets Share capital & reserves Perpetual Securities 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 gearing (times) Employees Average headcount (number) Wages & salaries ($ million) – 11,657 694 11,646 11,211 – 435 11,646 48.8 38.9 20.00 6.17 5.25 7.9 6.3 1.9 (0.85) 115 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) 38 12,017 778 12,441 11,655 401 385 12,441 73.7 56.2 33.0 6.41 5.53 12.0 9.1 1.7 (0.68) 4,224 10,380 1,026 11,913 11,178 401 334 11,913 67.4 52.1 33.0 6.38 5.49 10.5 8.1 1.6 (0.78) 307 11,139 1,003 11,017 10,307 402 308 11,017 242.4 227.6 269.7* 5.85 4.98 40.3 37.9 0.9 (0.90) 18,297 1,187 18,452 1,166 16,393 1,151 17,238~ 1,162~ 12,245~ 827~ Includes the dividend in specie of Seatrium shares and KREIT units. * # On 27 February 2023 and 28 February 2023, the Asset Co Transaction and the Proposed Combination were completed respectively. Consequent to the completion, in accordance with SFRS(I) 5 Non-current Assets Held for Sale and Discontinued Operations, the performance of Keppel O&M, as a separate reportable operating segment, excluding certain out-of-scope assets, for the period from 1 January to 28 February 2023 and the gain arising from the Proposed Combination, and the comparative full year ended 31 December 2022 and 31 December 2021, were reported as discontinued operations. ^ Numbers are for continuing operations. ~ Excluding discontinued operations, FY2023's average headcount and wages & salaries for continuing operations is 5,455 and $733m respectively; FY2022's average headcount and wages & salaries for continuing operations is 5,678 and $698m respectively. 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 2023 239 OTHER INFORMATION Group Five-Year Performance 2023* Group revenue from continuing operations of $6,967 million was $347 million or 5% higher than 2022. Revenue from the Infrastructure segment increased by $556 million or 13% to $4,846 million. The increase was led by higher electricity sales, partly offset by lower gas sales and lower progressive revenue recognition from environmental projects in 2023. Asset management fee revenue was higher year-on-year mainly due to higher management fees arising from better performance achieved by KIT managed by Keppel, and the effect of the change in its fee structure that took effect in 2H 2022. These were partly offset by lower acquisition fees in 2023. Revenue from the Real Estate segment decreased by $232 million to $764 million largely due to lower revenue from property trading projects in China as a result of fewer units completed and handed over during the period, partly offset by higher contributions from property trading projects in Singapore. Asset management fee revenue remained stable year-on-year. Revenue from the Connectivity segment increased by $18 million to $1,351 million mainly due to M1 reporting higher mobile and enterprise revenues, including contribution from the newly acquired Glocomp Systems (M) Sdn Bhd, partly offset by lower handset sales, and lower revenue from the logistics business following the divestment of the logistics portfolio in South-East Asia in July 2022. Asset management fee revenue remained stable year-on-year. Group net profit from continuing operations of $885 million was $46 million or 6% higher than 2022. Excluding the DIS loss, net profit rose by 19% year-on-year to $996 million. The Infrastructure segment registered a net profit of $699 million in 2023, which was $402 million or 135% higher than the $297 million net profit recorded in 2022. Underpinned by higher net generation and margins, the integrated power business delivered stronger results for the year. The segment also saw higher returns from sponsor stakes in the form of higher distributions and fair value gains in 2023, while there was provision for supply chain cost escalation in the environment business in 2022. These were partially offset by higher interest expense, and lower share of results following a dilution of interest in an associated company in 2H 2022. Asset management net profit was higher year-on-year mainly due to higher fee revenue which was partly offset by higher overheads. Net profit from the Real Estate segment decreased by $149 million to $315 million. Excluding the DIS loss, the segment’s net profit was $38 million or 8% lower year-on-year, mainly due to lower fair value gains from investment properties, lower contribution from property trading projects in China, as well as higher net interest expense. These were partly offset by higher contribution from the Sino-Singapore Tianjin Eco-City, higher gains from asset monetisation, and fair value gains from investments. The Real Estate Division completed the monetisation of 7 assets across Vietnam, India, Philippines, China, Myanmar and Singapore in the current year, as compared to the monetisation of 2 assets in China in 2022. Asset management net profit was lower year-on-year mainly due to higher overheads. The Connectivity segment’s net profit of $127 million was $29 million higher than that in 2022, mainly due to improved earnings contribution from M1, gain from divestment of interest in SVOA Public Company Limited, and lower losses from the logistics business following the divestment of Keppel Logistics SEA in July 2022. These were partly offset by lower fair value gains on data centres, and fair value losses on investments. Asset management net profit remained stable year-on-year. Net loss from Corporate Activities was $256 million as compared to $20 million in 2022. In the prior year, significant fair value gains were recognised from investments in new technology and start-ups, in particular, Envision AESC Global Investment L.P.. The fair value gains from investments were lower, while net interest expense and overheads were higher year-on-year. The Group’s taxation increased mainly due to higher taxable profit from the Infrastructure segment, which was partially offset by lower taxable profit from the Real Estate segment. Taking into account income tax expenses, non-controlling interests and profit attributable to holders of perpetual securities, the Group’s net profit from continuing operations attributable to shareholders for 2023 was $885 million, and $996 million if the DIS loss were excluded. Including discontinued operations, the Group’s net profit attributable to shareholders was $4,067 million, which was $3,140 million higher than in the prior year. The discontinued operations recorded a net profit of $3,182 million, comprising 2 months performance from Keppel Offshore & Marine (KOM), excluding certain out-of-scope assets, for the period 1 January to 28 February 2023, as well as a gain on disposal of approximately $3.3 billion following the completion of the disposal of KOM at the end of February 2023. In contrast, the net profit from discontinued operations of $88 million in 2022 had included gains from the divestment of Keppel Smit Towage Pte Limited and Maju Maritime Pte Ltd, as well as the cessation of the depreciation for the relevant assets classified under disposal group held for sale. * On 3 May 2023, the Group announced the next phase of Vision 2030 plans, embarking on a major reorganisation to accelerate the transformation into a global alternative real asset manager and operator. The Group reorganised its operations into a simplified horizontally integrated model with four reportable segments, namely Infrastructure, Real Estate, Connectivity and Corporate Activities. Comparative information for FY2022 are re-presented accordingly. Review of performance for FY2019 to FY2022 are not re-segmentised. Revenue ($ billion) Pre-Tax Profit ($ million) Net Profit ($ million) 10.0 8.0 6.0 4.0 2.0 0 2,000 1,500 1,000 500 0 -500 6,000 4,500 3,000 1,500 0 -1,500 2019 2020 2021# 2022# 2023# 7.6 6.6 6.6^ 6.6^ 7.0^ 2019 954 2020 2021# 2022# 2023# (255) 1,611^ 1,095^ 1,213^ 2019 707 2020 2021 2022 2023 (506) 1,023 927 4,067 # On 27 February 2023 and 28 February 2023, the Asset Co Transaction and the Proposed Combination were completed respectively. Consequent to the completion, in accordance with SFRS(I) 5 Non-current Assets Held for Sale and Discontinued Operations, the performance of Keppel O&M, as a separate reportable operating segment, excluding certain out-of-scope assets, for the period from 1 January to 28 February 2023 and the gain arising from the Proposed Combination, and the comparative full year ended 31 December 2022 and 31 December 2021, were reported as discontinued operations. Including discontinued operations, revenue for FY2021 was $8,625 million and pre-tax profit for FY2021 was $1,335 million. ^ Numbers are for continuing operations. 240 KEPPEL LTD. 2022 Group revenue from continuing operations of $6,620 million was at about the same level as 2021. Revenue from Energy & Environment increased by $670 million or 19% to $4,230 million led by higher electricity and gas sales, and higher revenue recognition from Keppel Seghers’ projects abroad. Revenue from Urban Development decreased by $725 million to $904 million mainly due to lower revenue from property trading projects in China as a result of fewer units completed and handed over during the year. Revenue from Connectivity increased by $31 million to $1,291 million mainly due to M1 reporting higher mobile and enterprise revenue, including contribution from the newly acquired Glocomp Systems (M) Sdn Bhd, partly offset by lower handset sales, and lower revenue from the logistics business following the divestment of the logistics portfolio in South-East Asia and Australia in July 2022. Revenue from Asset Management increased by $33 million to $195 million mainly due to higher acquisition fees and management fees resulting from increased acquisitions completed. Group net profit from continuing operations of $839 million was $409 million or 33% lower than that in 2021. Energy & Environment registered a net profit of $172 million in 2022, reversing the net loss of $189 million in 2021, which had included an impairment of $318 million relating to the Group’s exposures to KrisEnergy, partially offset by share of Floatel’s net restructuring gain of $215 million. For the current year, the segment recorded higher electricity and gas sales and contributions from Keppel Seghers’ projects abroad, higher share of results from an associated company in Europe , and lower share of losses from Floatel. These were partially offset by the provision for supply chain cost escalation in the environment business. Net profit from Urban Development decreased by $481 million to $282 million mainly due to lower contributions from property trading projects in China, lower fair value gains from investment properties, as well as lower gains from enbloc sales. The segment completed the disposals of Upview and Sheshan Riviera projects in Shanghai in the current year, as compared to the recognition of gains from the disposals of the Dong Nai project in Vietnam, Serenity Villas project in Chengdu, and China Chic project in Nanjing, and divestment of a partial interest in Tianjin Fushi Real Estate Development Co Ltd in 2021. Connectivity’s net profit of $37 million was $27 million lower than that in 2021. This was mainly due to the absence of gains from the divestment of interests in Keppel Logistics (Foshan) and Wuhu Sanshan Port Company Limited in 2021, and lower fair value gains on data centres, which was partly offset by higher net profit from M1. Net profit from Asset Management increased by $10 million to $311 million mainly due to higher fair value gains on investment properties recorded by Keppel REIT, and higher fee income arising from acquisitions completed. These were partly offset by mark-to-market losses from investments, as well as lower fair value gains on data centres recorded by Keppel DC REIT and private funds. Net profit from Corporate & Others decreased by $272 million to $37 million mainly due to lower fair value gains on investments and lower investment income. In the prior year, the segment recorded significant distribution income and fair value gains from its investments in new technology and start-ups, in particular, Envision AESC Global Investment L.P.. The Group’s taxation decreased year-on-year mainly due to lower taxable profit from Urban Development. Taking into account income tax expenses, non-controlling interests and profit attributable to holders of perpetual securities, the Group’s net profit from continuing operations attributable to shareholders for 2022 was $839 million. All segments were profitable including Energy & Environment which had registered a loss in 2021. Including discontinued operations, the Group’s net profit attributable to shareholders was $927 million, which was $96 million lower year-on-year. The discontinued operations recorded a net profit of $88 million, as compared to the net loss of $225 million in 2021. In addition to revenue recognition from new projects and higher progressive revenue recognition on existing projects, the offshore & marine business recorded higher investment income, gains from the divestment of Keppel Smit Towage Pte Limited and Maju Maritime Pte Ltd, and partial write-back of impairments made in 2020 on certain legacy rigs. These were partly offset by the provisions made for cost overruns on certain projects in Keppel’s O&M’s yard in the US, mainly arising from shortage of manpower, higher-than-expected labour costs, as well as COVID-related supply chain disruptions. Apart from the yard in the US, the projects in Keppel O&M’s other yards, including the FPSOs projects with Petrobras, are progressing well and are on-track and within budget. The Group has also ceased depreciation for the relevant assets classified under the disposal group held for sale. Major jobs delivered by the offshore & marine business in 2022 include a jackup, an FSRU conversion repair, an LNG containership, an LNG carrier repair, two Trailer Suction Hopper Dredgers (TSHD), jumboisation of a TSHD, two offshore substations, a wind turbine installation vessel upgrade and fabrication of leg component for an offshore wind turbine installation vessel. Shareholders' Funds ($ billion) Total Equity ($ billion) Market Capitalisation ($ billion) 15.0 12.0 9.0 6.0 3.0 0 15.0 12.0 9.0 6.0 3.0 0 15.0 12.0 9.0 6.0 3.0 0 2019 11.2 2020 10.7 2021 11.7 2022 11.2 2023 10.3 2019 11.6 2020 11.2 2021 12.4 2022 11.9 2023 11.0 2019 2020 2021 2022 7.8~ 6.2~ 5.9~ 8.1~ 2023 12.5 ~ Based on adjusted share prices. Source: Bloomberg ANNUAL REPORT 2023 241 OTHER INFORMATION Group Five-Year Performance 2021 Group revenue of $8,625 million was $2,051 million or 31% higher than the preceding year. Revenue from Energy & Environment increased by $1,631 million or 41% to $5,574 million, led by higher electricity and gas sales, higher progressive revenue recognition from the Tuas Nexus Integrated Waste Management Facility project in Singapore which was secured in April 2020, higher progressive revenue recognition from the Hong Kong Integrated Waste Management Facility project, as well as higher revenue from the offshore & marine business. These were partially offset by the completion of Keppel Marina East Desalination Plant project in June 2020, as well as the absence of revenue from the Doha North Sewage Treatment Works due to the cessation of the operation and maintenance contract in July 2020. The higher revenue in the offshore & marine business was mainly due to higher revenue recognition from certain ongoing projects and revenue from new projects in 2021, which were partly offset by cessation of revenue recognition on Awilco contracts and deferment of some projects. Major jobs delivered by the offshore & marine business in 2021 include two LNG bunker vessels, an LNG carrier, a FLNG turret, four Floating Production Storage and Offloading vessel (FPSO) modification and upgrading projects, and a Floating Storage Regasification Unit (FSRU) conversion project. Revenue from Urban Development increased by $354 million to $1,629 million mainly due to higher revenue from property trading projects in China and Singapore. Revenue for Connectivity of $1,260 million was marginally above that of 2020. Higher revenues from the logistics and data centre businesses, and higher handset and equipment sales in M1, were partly offset by the lower service revenue in M1. Revenue from Asset Management increased by $27 million to $162 million mainly due to higher fees resulting from increased acquisition and divestment activities, and from additional fund commitments secured during the year. Group pre-tax profit was $1,335 million, as compared to pre-tax loss of $255 million in 2020. All segments recorded improved pre-tax results. The Energy & Environment’s pre-tax loss was $469 million as compared to pre-tax loss of $1,251 million in 2020. This was largely due to lower impairments and share of Floatel’s restructuring gain. Excluding impairments of $477 million and share of Floatel’s restructuring gain of $269 million, pre-tax loss of the segment was $261 million, as compared to pre-tax loss of $269 million (excluding impairments) in 2020. Pre-tax results for the offshore & marine business were better than last year’s despite lower government relief measures related to the COVID-19 pandemic. This was mainly driven by savings from overheads reduction and lower share of losses from associated companies, partly offset by higher net interest expense. There was lower contribution from the power & renewables business, as well as loss on hedge ineffectiveness on interest rate swaps following the refinancing plan for an asset. Pre-tax profit from Urban Development increased by $352 million to $1,072 million, mainly due to higher contribution from property trading projects in China and Vietnam, as well as gains from the disposal of interests in the Dong Nai project in Vietnam, Serenity Villas project in Chengdu, and China Chic project in Nanjing, and divestment of a partial interest in Tianjin Fushi Real Estate Development Co Ltd. These were partly offset by lower fair value gains from investment properties, impairment provision for a hotel in Myanmar, as well as lower contribution from the Sino-Singapore Tianjin Eco-City. Connectivity’s pre-tax profit of $86 million was $57 million higher than 2020. This was mainly due to the gains from divestment of interests in Wuhu Sanshan Port Company Limited and in Keppel Logistics (Foshan) following agreement reached with local authorities on the compensation for the closure of Lanshi port, as well as lower net interest expense. These were partly offset by lower contribution from M1, and absence of gain from the disposal of interest in Business Online Public Company Limited in 2020. Pre-tax profit from Asset Management increased by $23 million to $327 million. In 2020, there was a 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. Excluding the reclassification gain, pre-tax profit was $154 million higher than 2020. For 2021, the segment recorded higher fee income arising from acquisitions and divestments completed, and from additional fund commitments secured during the year. In addition, there was recognition of mark-to-market gains from investments, higher dividend income from KIT, as well as fair value gains on investment properties and data centres from Keppel REIT, Keppel DC REIT, Alpha Data Centre Fund and Keppel Data Centre Fund II. In 2020, there was the recognition of gains from the sale of units in Keppel DC REIT, divestment of interest in Gimi MS Corporation, and mark-to- market losses from investments. Corporate & Others recorded pre-tax profit of $319 million in 2021 as compared to pre-tax loss of $57 million in the prior year. This was mainly due to fair value gain instead of loss on investments, and higher investment income. The fair value gains were largely from investments in new technology and start-ups, in particular, Envision AESC Global Investment L.P.. Taxation expenses increased by $71 million mainly due to higher taxable profit at Urban Development. Taking into account income tax expenses, non-controlling interests and profit attributable to holders of perpetual securities, net profit attributable to shareholders was $1,023 million as compared to net loss of $506 million in the preceding year. Profits from Urban Development, Asset Management and Connectivity businesses were partly offset by losses at Energy & Environment. 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 Keppel Marina East Desalination Plant project in 2Q 2020 in the infrastructure business. Major jobs delivered by the offshore & marine business in 2020 include 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. 242 KEPPEL LTD. 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 include 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. 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 $948 million in 2018. Urban Development was the largest contributor to the Group’s net profit with a 68% share, followed by Asset Management’s 30% and Connectivity’s 19%, while Energy & Environment and Corporate & Others contributed negative 14% and negative 3% to the Group’s net profit respectively. ANNUAL REPORT 2023 243 OTHER INFORMATION Value-Added Statements ($ million) Value added from: Revenue earned Less: purchases of materials and services Gross value added from operation Interest and investment income Share of associated companies' profits Other operating income/(expenses) Total value added 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 Distributions to our Perpetual Securities holders Dividends to our partners in subsidiaries Dividends to our shareholders 2019 2020 2021^ 2022^ 2023^ 7,580 (5,267) 2,313 242 147 103 2,805 1,163 192 313 – 12 418 743 6,574 (4,591) 1,983 191 (162) (441) 1,571 1,120 253 292 – 24 273 589 8,625 (6,603) 2,022 221 467 398 3,108 1,116 325 251 – 11 346 608 9,419 (7,527) 1,892 225 540 221 2,878 1,133 278 293 12 33 643 981 7,597 (5,491) 2,106 153 323 3,189 5,771 800 277 367 12 16 4,721 5,116 6,193 221 – 11 (654) (422) 5,771 Total Distribution 2,098 1,962 2,049 2,392 Balance retained in the business: Depreciation & amortisation Perpetual Securities holders Non-controlling interests share of profits in subsidiaries Retained profit for the year 375 – 43 289 707 2,805 414 – (26) (779) (391) 1,571 406 3 (27) 677 1,059 3,108 242 – (38) 282 486 2,878 Average headcount (number) 18,297 18,452 16,393 17,238# 12,245# Productivity data: Value added per employee ($’000) Value added per dollar employment cost ($) Value added per dollar sales ($) 153 2.41 0.37 85 1.40 0.24 190 2.78 0.36 167# 2.54 0.31 471# 7.21 0.76 ^ FY2023, FY2022 & FY2021 value-added includes the results of the Discontinued Operations. On 27 February 2023 and 28 February 2023, the Asset Co Transaction and the Proposed Combination were completed respectively. Consequent to the completion, in accordance with SFRS(I) 5 Non-current Assets Held for Sale and Discontinued Operations, the performance of Keppel O&M, as a separate reportable operating segment, excluding certain out-of-scope assets, for the period from 1 January to 28 February 2023 and the gain arising from the Proposed Combination, and the comparative full year ended 31 December 2022 and 31 December 2021, were reported as discontinued operations. # Excluding discontinued operations, FY2023's average headcount and value added per employee are 5,455 and $452K respectively; FY2022's average headcount and value added per employee are 5,678 and $373K respectively. ($ million) 6,400 4,800 3,200 1,600 0 -1,600 2,805 1,571 3,108 2,878 Depreciation & Retained Profit Interest Expenses & Dividends Taxation 2019 707 743 192 2020 2021 (391) 1,059 589 253 608 325 2022 486 981 278 Wages, Salaries & Benefits 1,163 1,120 1,116 1,133 244 KEPPEL LTD. 5,771 2023 (422) 5,116 277 800 OTHER INFORMATION Share Performance Volume (million) 200 180 160 140 120 100 80 60 40 20 0 Share Prices ($) 20 18 16 14 12 10 8 6 4 2 0 2019 2020 2021 2022 2023 Volume High and Low Prices Share Price ($)* Last transacted (Note 3) High Low Volume weighted average (Note 2) Per Share Earnings (cents) (Note 1) Earnings – Continuing operations (cents) (Note 1) Total distribution (cents) Distribution yield (%) (Note 2) Price earnings ratio (Note 2) Net tangible assets backing ($) At Year End Share price ($) Distribution yield (%) (Note 3) Price earnings ratio (Note 3) Price to book ratio (Note 3) 2019 2020 2021 2022 2023 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 5.12 5.76 4.81 5.30 56.2 – 33.0 6.2 9.4 5.53 5.12 6.4 9.1 0.9 7.26 7.72 5.06 6.64 52.1 47.2 33.0 5.0 14.1^ 5.49 7.26 4.5 15.4^ 1.3 7.07 7.27 4.45 6.02 227.6 49.5 269.7 44.8 12.2^ 4.98 7.07 38.1 14.3^ 1.4 Notes: 1. Earnings per share are calculated based on the Group net profit by reference to the weighted average number of shares in issue during the year. 2. Volume weighted average share price is used in calculating distribution yield and price earnings ratio. 3. Last transacted share price is used in calculating distribution yield, price earnings ratio and price to book ratio. * Historical share prices are not adjusted for special dividends, capital distribution and dividend in specie. ^ For FY2023 & FY2022, Price earnings ratio is computed using Price over Earnings per Share from Continuing operations. ANNUAL REPORT 2023 245 OTHER INFORMATION Shareholding Statistics As at 4 March 2024 Issued and Fully paid-up capital (including Treasury Shares) : $1,305,667,320.62 Issued and Fully paid-up capital (excluding Treasury Shares) : $1,000,543,334.52 Number of Issued Shares (including Treasury Shares) Number of Issued Shares (excluding Treasury Shares) Number/Percentage of Treasury Shares Number/Percentage of Subsidiary Holdings1 Class of Shares Voting Rights (excluding Treasury Shares) : 1,820,557,767 : 1,774,658,288 : 45,899,479 (2.59%) : 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 1967, 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 & Above TOTAL No. of Shareholders 331 15,263 41,518 10,086 31 67,229 % 0.49 22.70 61.76 15.00 0.05 No. of Shares 13,881 11,993,039 167,125,971 330,585,516 1,264,939,881 % 0.00 0.67 9.42 18.63 71.28 100.00 1,774,658,288 100.00 TWENTY LARGEST SHAREHOLDERS (as shown in the Register of Members and Depository Register) Temasek Holdings (Private) Ltd Citibank Nominees Singapore Pte Ltd DBS Nominees (Private) Limited Raffles Nominees (Pte.) Limited DBSN Services Pte. Ltd. HSBC (Singapore) Nominees Pte Ltd United Overseas Bank Nominees (Private) Limited OCBC Nominees Singapore Private Limited BPSS Nominees Singapore (Pte.) Ltd. OCBC Securities Private Limited Phillip Securities Pte Ltd Shanwood Development Pte Ltd UOB Kay Hian Private Limited Maybank Securities Pte. Ltd. IFAST Financial Pte. Ltd. Chen Chun Nan CGS-CIMB Securities (Singapore) Pte Ltd Lim Chee Onn BNP Paribas Nominees Singapore Pte. Ltd. DB Nominees (Singapore) Pte Ltd No. of Shares 371,408,292 323,601,352 121,895,651 101,733,224 99,906,295 98,630,848 46,880,776 15,078,088 12,953,451 10,818,109 10,047,957 7,040,000 5,402,762 4,691,001 4,446,639 4,200,000 2,654,067 2,479,282 2,475,150 2,317,660 % 20.92 18.23 6.87 5.73 5.63 5.56 2.64 0.85 0.73 0.61 0.57 0.40 0.30 0.26 0.25 0.24 0.15 0.14 0.14 0.13 1,248,660,604 70.35 SUBSTANTIAL SHAREHOLDERS (as shown in the Register of Substantial Shareholders) Temasek Holdings (Private) Limited2 BlackRock, Inc3 Direct Interest Deemed Interest Total Interest No. of Shares 371,408,292 – % 20.92 – No. of Shares 4,883,542 94,339,300 % 0.27 5.31 No. of Shares 376,291,834 94,339,300 % 21.20 5.31 “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 1967. Notes 1 2 Temasek Holdings (Private) Limited is deemed interested in 4,883,542 shares in which its subsidiaries and associated companies have direct or deemed interests. 3 BlackRock, Inc is deemed interested in 94,339,300 shares in which its subsidiaries and associated companies have direct or deemed interests. PUBLIC SHAREHOLDERS Based on the information available to the Company as at 4 March 2024, approximately 72% 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. 246 KEPPEL LTD. OTHER INFORMATION Notice of Annual General Meeting and Closure of Books Keppel Ltd. UEN 196800351N (Incorporated in the Republic of Singapore) NOTICE IS HEREBY GIVEN that the 56th Annual General Meeting of Keppel Ltd. (the “Company”) will be convened and held on Friday, 19th April 2024 at 3.00 p.m. at Suntec Singapore Convention and Exhibition Centre, Nicoll 1-2, Level 3, 1 Raffles Boulevard, Suntec City, Singapore 039593 to transact the following business: ORDINARY BUSINESS 1. 2. 3. 4. To receive and adopt the Directors’ Statement and Audited Financial Statements for the year ended 31 December 2023. Resolution 1 To declare a final tax-exempt (one-tier) dividend of 19.0 cents per share for the year ended 31 December 2023 (2022: final tax-exempt (one-tier) dividend of 18.0 cents per share). Resolution 2 To re-elect Penny Goh, who will be retiring by rotation pursuant to Regulation 83 of the Constitution of the Company (“Constitution”) and being eligible, offers herself for re-election pursuant to Regulation 84 of the Constitution (see Note 9). Resolution 3 To re-elect Ang Wan Ching, who being appointed by the board of directors of the Company (“Directors”) after the last annual general meeting of the Company (“AGM”), will retire in accordance with Regulation 82(a) of the Constitution and being eligible, offers herself for re-election (see Note 9). Resolution 4 5. To approve the sum of S$18,277 as additional directors’ fees for the year ended 31 December 2023 (see Note 10). Resolution 5 6. 7. To approve the sum of up to S$2,600,000 as directors’ fees for the year ending 31 December 2024 (2023: S$2,491,000) (see Note 11). Resolution 6 To re-appoint PricewaterhouseCoopers LLP as the auditors of the Company, and authorise the Directors to fix their remuneration. Resolution 7 SPECIAL BUSINESS To consider and, if thought fit, approve with or without any modifications, the following ordinary resolutions: 8. That pursuant to Section 161 of the Companies Act 1967 (the “Companies Act”), authority be and is hereby given to the Directors to: Resolution 8 (1) (a) issue shares in the capital of the Company (“Shares”), whether by way of rights, bonus or otherwise, and including any capitalisation of any sum for the time being standing to the credit of any of the Company’s reserve accounts or any sum standing to the credit of the profit and loss account or otherwise available for distribution; and/or (b) make or grant offers, agreements or options that might or would require Shares to be issued (including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into Shares) (collectively “Instruments”), at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit; and (2) (notwithstanding that the authority so conferred by this Resolution may have ceased to be in force) issue Shares in pursuance of any Instrument made or granted by the Directors while the authority was in force; ANNUAL REPORT 2023 247 OTHER INFORMATION Notice of Annual General Meeting and Closure of Books provided that: (i) the aggregate number of Shares to be issued pursuant to this Resolution (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution and any adjustment effected under any relevant Instrument) shall not exceed fifty (50) per cent. of the total number of issued Shares (excluding treasury Shares 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); (ii) (subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading Limited (“SGX-ST”)) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (i) above, the percentage of issued Shares shall be calculated based on the total number of issued Shares (excluding treasury Shares and subsidiary holdings) at the time this Resolution is passed, after adjusting for: (a) new Shares arising from the conversion or exercise of convertible securities or share options or vesting of share awards which are outstanding or subsisting as at the time this Resolution is passed; and (b) any subsequent bonus issue, consolidation or sub-division of Shares; 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 12). (iii) (iv) 9. That: (1) for the purposes of the Companies Act, the exercise by the Directors of all the powers of the Company to purchase or otherwise acquire Shares not exceeding in aggregate the Maximum Limit (as hereafter defined), at such price(s) as may be determined by the Directors from time to time up to the Maximum Price (as hereafter defined), whether by way of: (a) market purchase(s) (each a “Market Purchase”) on the SGX-ST; and/or (b) off-market purchase(s) (each an “Off-Market Purchase”) in accordance with any equal access scheme(s) as may be determined or formulated by the Directors as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act; and otherwise in accordance with all other laws and regulations, including but not limited to, the provisions of the Companies Act and listing rules of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Purchase Mandate”); (2) (unless varied or revoked by the members of the Company in a general meeting) the authority conferred on the Directors pursuant to the Share Purchase Mandate may be exercised by the Directors at any time and from time to time during the period (“Relevant Period”) commencing from the date of the passing of this Resolution and expiring on the earliest of: Resolution 9 248 KEPPEL LTD. (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 five (5) per cent. of the total number of issued Shares as at the date of the passing of this Resolution, unless the Company has at any time during the Relevant Period reduced its share capital by a special resolution under Section 78C of the Companies Act, or the court has, at any time during the Relevant Period, 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 five (5) per cent. limit; “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; “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 13). 10. That: (1) (2) (3) 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 Resolution 10 ANNUAL REPORT 2023 249 OTHER INFORMATION Notice of Annual General Meeting and Closure of Books (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 IPT Mandate and/or this Resolution (see Note 14). 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 26 April 2024 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 1 HarbourFront Avenue Keppel Bay Tower #14-07 Singapore 098632 up to 5.00 p.m. on 26 April 2024 will be registered to determine shareholders’ entitlement to the proposed final dividend. Shareholders whose securities accounts with The Central Depository (Pte) Limited are credited with Shares as at 5.00 p.m. on 26 April 2024 will be entitled to the proposed final dividend. The proposed final dividend if approved at this AGM will be paid on 8 May 2024. BY ORDER OF THE BOARD Karen Teo/Samantha Teong Company Secretaries Singapore 28 March 2024 250 KEPPEL LTD. Notes: 1. 2. The AGM will be held, in a wholly physical format, at Suntec Singapore Convention and Exhibition Centre, Nicoll 1-2, Level 3, 1 Raffles Boulevard, Suntec City, Singapore 039593 on Friday, 19 April 2024 at 3.00 p.m. There will be no option for Shareholders to participate virtually. Printed copies of this Notice of AGM and the accompanying Proxy Form will be sent by post to members. These documents will also be published on the Company’s website at https://www.keppel.com/en/investors/agm-egm and the SGXNet. 3. (a) A member entitled to attend, speak and vote at a meeting of the Company, and who is not a Relevant Intermediary, is entitled to appoint one or two proxies to attend, speak and vote instead of him/her/it. Where a member appoints two proxies, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the proxy form. If no percentage is specified, the first named proxy shall be deemed to represent 100 per cent of the shareholding and the second named proxy shall be deemed to be an alternate to the first named proxy. (b) A member who is a Relevant Intermediary is entitled to appoint more than two proxies to attend and vote at a meeting of the Company, but each proxy must be appointed to exercise the rights attached to a different Share or Shares held by such member. Where more than one proxy is appointed, the number and class of Shares in relation to which each proxy has been appointed shall be specified in the proxy form. In relation to a Relevant Intermediary who wishes to appoint more than two proxies, it should annex to the proxy form the list of proxies, setting out, in respect of each proxy, the name, address, email address, NRIC/Passport Number and proportion of shareholding (number of Shares, class of Shares and percentage) in relation to which the proxy has been appointed. (c) “Relevant Intermediary” has the meaning ascribed to it in Section 181 of the Companies Act. 4. Arrangements relating to: (a) attendance at the AGM by Shareholders, including investors who hold shares of the Company through the Central Provident Fund (“CPF”) or the Supplementary Retirement Scheme (“SRS” and such investors, “CPF/SRS Investors”); (b) submission of questions to the Chairman of the Meeting by Shareholders, including CPF/SRS Investors, in advance of, or at, the AGM, and addressing of substantial and relevant questions in advance of, or at, the AGM; and (c) voting at the AGM by Shareholders, including CPF/SRS Investors, or (where applicable) their duly appointed proxy(ies), are set out in the accompanying announcement dated 28 March 2024. This announcement may be accessed at the Company’s website at https://www.keppel.com/en/ investors/agm-egm and the SGXNet. A member can appoint the Chairman as his/her/its proxy, but this is not mandatory. 5. Submission of Proxy Forms: Shareholders who wish to appoint a proxy(ies) or the Chairman as proxy to attend, speak and vote at the AGM on their behalf must submit a Proxy Form for the appointment of such proxy(ies). A proxy need not be a member of the Company. The Proxy Form must be submitted to the Company in the following manner: (i) by post to the office of the Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd. at 1 Harbourfront Avenue, Keppel Bay Tower #14-07, Singapore 098632; or (ii) by email to keppel@boardroomlimited.com (e.g. enclosing a clear scanned completed and signed Proxy Form in PDF), in either case to be received no later than 3.00 p.m. on 16 April 2024 (being 72 hours before the time appointed for the holding of the AGM). A Shareholder who wishes to submit a Proxy Form must first 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. Proxy Forms can be downloaded from the Company’s website at https://www.keppel.com/en/ investors/agm-egm or the SGXNet. In the case of Shareholders whose shares in the Company are entered against their names in the Depository Register, the Company may reject any Proxy Form submitted if such Shareholders are not shown to have shares in the Company entered against their names in the Depository Register (as defined in Part 3AA of the Securities and Futures Act 2001) as at 72 hours before the time appointed for holding the AGM, as certified by the CDP to the Company. 6. Voting by Investors (including CPF/SRS Investors): The Proxy Form is not valid for use by investors holding shares of the Company through Relevant Intermediaries (“Investors”) (including CPF/SRS Investors) and shall be ineffective for all intents and purposes if used or purported to be used by them. CPF/SRS Investors may appoint the Chairman as proxy to vote on his/her behalf at the AGM, in which case he/she should approach his/her respective CPF Agent Banks or SRS Operators to specify his/her voting instructions. Alternatively, they may approach their respective CPF Agent Banks or SRS Operators to appoint the Chairman as proxy to attend, speak and vote on their behalf at the AGM. CPF/SRS Investors must approach their respective CPF Agent Banks or SRS Operators to submit their voting instructions by 5.00 p.m. on 9 April 2024. Investors (other than a CPF/SRS Investor) who wish to vote at the AGM should approach their respective relevant intermediaries as soon as possible to specify their voting instructions or make the necessary arrangement to be appointed as proxy. 7. Submission of Questions: All Shareholders (including CPF/SRS Investors) may submit questions relating to the business of the AGM in advance of or at the AGM. Submission of Questions in Advance: All Shareholders (including CPF/SRS Investors) can submit questions relating to the business of the AGM up till 3.00 p.m. on 9 April 2024 (“Q&A Submission Deadline”) in the following manner: (i) by email to investor.relations@keppel.com; or (ii) by post addressed to the Share Registrar, Boardroom Corporate & Advisory Services Pte Ltd, at 1 HarbourFront Avenue, Keppel Bay Tower #14-07, Singapore 098632. When sending in questions, the following details should be provided for verification purposes: the Shareholder’s full name, address, telephone number and email address, and the manner in which such Shareholder holds shares in the Company (e.g. if you hold shares of the Company directly, please provide your CDP account number; otherwise, please state if you hold shares of the Company through CPF or SRS). Addressing Questions: The Company will endeavour to address all substantial and relevant questions relating to the business of the AGM received from Shareholders: (i) prior to the Q&A Submission Deadline, through publication on the SGXNet and the Company’s corporate website at https://www.keppel.com/en/investors/agm-egm by 3.00 p.m. on 13 April 2024; and (ii) after the Q&A Submission Deadline or at the AGM, during the AGM. Where substantially similar questions are received, the Company will consolidate such questions and consequently, not all questions may be individually addressed. ANNUAL REPORT 2023 251 OTHER INFORMATION Notice of Annual General Meeting and Closure of Books 8. All documents (including the Annual Report 2023, Proxy Form, this Notice of AGM and appendices to this Notice of AGM) and 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.keppel.com/en/investors/agm-egm. Members and Investors are advised to check SGXNet and/or the Company’s website regularly for updates. 9. Resolutions 3 and 4 relate to the re-election of Mrs Penny Goh and Ms Ang Wan Ching as a Director. Detailed information on these directors can be found in the “Board of Directors” section of the Annual Report 2023. Mrs Penny Goh will, upon her re-election, continue to serve as a non-executive and independent Director, and a member of the Audit Committee, Board Risk Committee and Remuneration Committee. Mrs Goh was formerly the Co-Chairman and Senior Partner, and is currently a Senior Adviser, at 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 Asia Pacific, involving investment, joint development and profit participation structures. Mrs Goh is also an independent director of HSBC Bank (Singapore) Limited and is on the board of Singapore Totalisator Board. Ms Ang Wan Ching will, upon her re-election, continue to serve as a non-executive and independent Director, and a member of the Board Risk Committee and the Audit Committee. Ms Ang has over 25 years of global experience in alternative private fund investments. Ms Ang is on the supervisory boards of Bavaria Industries Group AG, a Germany-based listed investment holding company, and HQ Capital, a French-German private equity and alternatives fund manager with global operations. She is also a member of the investment committee of Montana Capital Partners AG. Ms Ang was formerly Chief Executive Officer of Allianz Group’s global private equity funds business, and was also an external member of the investment committee for intermediated funds and co-investments at British International Investment plc, the UK government’s development finance institution. Mr Till Vestring, Ms Veronica Eng and Professor Jean-François Manzoni 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 5 is to approve the payment of additional Directors’ fees for the non-executive Directors of the Company (“NEDs”) for the year ended 31 December 2023. Based on a computation of fees payable, taking into consideration among other things the appointment of an additional NED to the Board of the Company with effect from 1 July 2023 and her position on various Board Committees following her appointment in FY2023, the total amount of Directors’ fees payable to the NEDs for FY2023 is S$2,509,277. The S$18,277 proposed for approval by shareholders at Resolution 5 represents the difference between S$2,509,277 and S$2,491,000, the latter being the amount of NED fees for FY2023 which shareholders approved at the last AGM of the Company held on 21 April 2023 (the “2023 AGM”). As noted at Note 10 of the Notice of the 2023 AGM circulated to shareholders on 30 March 2023, in the event that the amount of NED fees for FY2023 proposed for shareholder approval at the 2023 AGM is insufficient, approval will be sought at the next AGM in the financial year ending 31 December 2024 before any payments are made to NEDs for the shortfall. If approved, 70% of the additional Directors’ fees for the NEDs will be paid in cash (the “Additional Cash Component”) while the remaining 30% will be paid in the form of Shares (“Additional Remuneration Shares”) (subject to adjustment as described below). The Additional Cash Component and Additional Remuneration Shares are intended to be paid after this AGM, to be held on 19 April 2024 (“2024 AGM”), has been held. The actual number of Additional Remuneration Shares to be purchased from the market on the first trading day immediately after the date of the 2024 AGM, provided that it does not fall within any applicable restricted period of trading (“2024 Trading Day”) for delivery to the respective NEDs, will be based on the market price of the Shares on the SGX-ST on the 2024 Trading Day. In the event that the first trading day after the date of the 2024 AGM falls within a restricted period of trading, the Additional Remuneration Shares will be purchased on the first trading day immediately after the end of the restricted period of trading. The actual number of Additional Remuneration Shares will be rounded down to the nearest thousand and any residual balance will be paid in cash. The Additional Remuneration Shares will rank pari passu with the then existing issued Shares. A NED who steps down before the payment of the share component will receive all of his/her Directors’ fees for FY2023 (calculated on a pro-rated basis, where applicable) in cash. The NEDs will abstain from voting, and will procure that their respective associates abstain from voting, in respect of Resolution 5. 11. Resolution 6 is to approve the payment of Directors’ fees for the NEDs during FY2024. The amount of 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 FY2024. In the event that the amount proposed is insufficient, approval will be sought at the next AGM in the financial year ending 31 December 2025 (“2025 AGM”) before any payments are made to NEDs for the shortfall. 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 (“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 2025 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 2025 AGM provided that it does not fall within any applicable restricted period of trading (“2025 Trading Day”) for delivery to the respective NEDs, will be based on the market price of the Shares on the SGX-ST on the 2025 Trading Day. In the event that the first trading day after the date of the 2025 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 NED who steps down before the payment of the share component will receive all of his/her Directors’ fees for FY2024 (calculated on a pro-rated basis, where applicable) in cash. Details of the Directors’ remuneration for FY2023 are set out on page 89 of the Annual Report 2023. The NEDs will abstain from voting, and will procure that their respective associates abstain from voting, in respect of Resolution 6. 12. Resolution 8 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 8 is passed, and any subsequent bonus issue, consolidation or sub-division of Shares. 13. Resolution 9 relates to the renewal of the Share Purchase Mandate which was originally approved by Shareholders on 18 February 2000 and was last renewed at the AGM of the Company on 21 April 2023. At this AGM, the Company is seeking a “Maximum Limit” of 5 per cent. of the total number of issued Shares, which is lower than the 10 per cent. limit allowed under the Listing Manual. Please refer to Appendix 1 to this Notice of AGM for details. 14. Resolution 10 relates to the renewal of a mandate given by Shareholders on 22 May 2003, as updated consequent to the divestment of the offshore and marine business of the group on 28 February 2023, 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. 15. Any reference to a time of day is made by reference to Singapore time. 16. Personal Data Privacy: By submitting an instrument appointing proxy(ies), and/or representative(s) to attend, speak and vote at the AGM and/or any adjournment thereof, a Shareholder (i) consents to the collection, use and disclosure of the Shareholder’s personal data by the Company (or its agents or service providers) for the purpose of the processing, administration and analysis by the Company (or its agents or service providers) of proxies and representatives appointed for the 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, takeover rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) represents and warrants that he/she/it has obtained the prior consent of the individuals appointed as proxy(ies) and/or representatives 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 Purposes, and (iii) agrees to provide the Company with written evidence of such prior consent upon reasonable request. 252 KEPPEL LTD. OTHER INFORMATION Corporate Information BOARD OF DIRECTORS NOMINATING COMMITTEE REGISTERED OFFICE 1 HarbourFront Avenue #18-01 Keppel Bay Tower Singapore 098632 Telephone: (65) 6270 6666 Facsimile No.: (65) 6413 6391 Email: contactus@keppel.com Website: www.keppel.com SHARE REGISTRAR Boardroom Corporate & Advisory Services Pte. Ltd. 1 HarbourFront Avenue #14-07 Keppel Bay Tower Singapore 098632 AUDITORS PricewaterhouseCoopers LLP Public Accountants and Chartered Accountants 7 Straits View Marina One East Tower Level 12 Singapore 018936 Audit Partner: Lam Hock Choon Year appointed: 2021 Danny Teoh Chairman Loh Chin Hua Chief Executive Officer Till Vestring Lead Independent Director Veronica Eng Jean-François Manzoni Teo Siong Seng Tham Sai Choy Penny Goh Shirish Apte Olivier Blum Jimmy Ng Ang Wan Ching AUDIT COMMITTEE Tham Sai Choy Chairman Veronica Eng Penny Goh Jimmy Ng Ang Wan Ching Jean-François Manzoni Chairman Danny Teoh Till Vestring Tham Sai Choy Shirish Apte BOARD RISK COMMITTEE Veronica Eng Chairman Tham Sai Choy Penny Goh Shirish Apte Jimmy Ng Ang Wan Ching BOARD SUSTAINABILITY AND SAFETY COMMITTEE Teo Siong Seng Chairman Danny Teoh Loh Chin Hua Olivier Blum REMUNERATION COMMITTEE COMPANY SECRETARIES Karen Teo Samantha Teong Till Vestring Chairman Danny Teoh Jean-François Manzoni Penny Goh Shirish Apte ANNUAL REPORT 2023 253 31 December 2023 20 April 2023 27 July 2023 19 October 2023 1 February 2024 28 March 2024 19 April 2024 5.00 p.m., 26 April 2024 8 May 2024 31 December 2024 25 April 2024 1 August 2024 24 October 2024 5 February 2025 y l m r i f s e d i s l l a e u l g d n a d l o F OTHER INFORMATION Financial Calendar FY 2023 Financial year-end Announcement of 2023 1Q Business Updates Announcement of 2023 half year results Announcement of 2023 3Q Business Updates Announcement of 2023 full year results Despatch of Annual Report to Shareholders Annual General Meeting 2023 Proposed final dividend Books closure date Payment date FY 2024 Financial year-end Announcement of 2024 1Q Business Updates Announcement of 2024 half year results Announcement of 2024 3Q Business Updates Announcement of 2024 full year results 254 KEPPEL LTD. Proxy Form Keppel Ltd. UEN 196800351N (Incorporated in the Republic of Singapore) IMPORTANT: 1. The AGM (as defined below) will be held in a wholly physical format at Suntec Singapore Convention and Exhibition Centre, Nicoll 1-2, Level 3, 1 Raffles Boulevard, Suntec City, Singapore 039593 on Friday, 19 April 2024 at 3.00 p.m. There will be no option for Shareholders to participate virtually. Printed copies of the Notice of AGM and this Proxy Form will be sent by post to shareholders of the Company (as defined below) (“Shareholders”) . These documents will also be published on the Company’s website at https://www.keppel.com/en/investors/agm-egm and the SGXNet. 2. Arrangements relating to attendance at the AGM by Shareholders, including investors who hold shares of the Company (“Shares”) through the Central Provident Fund (“CPF”) or the Supplementary Retirement Scheme (“SRS” and such investors, “CPF/SRS Investors”), submission of questions to the Chairman of the Meeting by Shareholders, including CPF/SRS Investors, in advance of, or at, the AGM, and addressing of substantial and relevant questions in advance of, or at, the AGM, and voting at the AGM by Shareholders, including CPF/SRS Investors, or (where applicable) their duly appointed proxy(ies), are set out in the accompanying announcement dated 28 March 2024. This announcement may be accessed at the Company’s website at https://www.keppel.com/en/ investors/agm-egm and the SGXNet. 3. This Proxy Form is not valid for use by investors holding Shares through relevant intermediaries (as defined in Section 181 of the Companies Act 1967) (including CPF/SRS investors) and shall be ineffective for all intents and purposes if used or purported to be used by them. An Investor (other than a CPF/SRS Investor) who wishes to vote should refer to the instructions set out in the Notice of AGM and the announcement by the Company dated 28 March 2024. 4. Personal Data Privacy: By submitting this proxy form, a Shareholder accepts and agrees to the personal data privacy terms set out in the Notice of AGM. 5. Please read the notes overleaf which contain instructions on, inter alia, the appointment of proxies to vote on his/her/its behalf at the AGM. ANNUAL GENERAL MEETING I/We (Name(s)) (NRIC/Passport/UEN) of (Address) being a member or members of KEPPEL LTD. (the “Company”) hereby appoint Name Address NRIC/ Passport Number Proportion of Shareholdings (Ordinary Shares) No. of Shares % and/or (delete as appropriate) Name Address NRIC/ Passport Number Proportion of Shareholdings (Ordinary Shares) No. of Shares % or failing him/her, or if no persons are named above, the Chairman of the Annual General Meeting (“Chairman”), as my/our proxy or proxies to attend, speak and vote on my/our behalf at the 56th Annual General Meeting of the Company (“AGM”) to be held on Friday, 19th April 2024 at 3.00 p.m. at Suntec Singapore Convention and Exhibition Centre, Nicoll 1-2, Level 3, 1 Raffles Boulevard, Suntec City, Singapore 039593 and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the resolutions to be proposed at the meeting as indicated hereunder. If no specific instructions as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the meeting and at any adjournment thereof. l F o d a n d g l u e a l l s i d e s f i r m l y y l m r i f s e d i s l l a e u l g d n a d o F l No. 1. 2. 3. 4. 5. 6. 7. 8. 9. Resolutions For* Against* Abstain* Ordinary Business Adoption of Directors’ Statement and Audited Financial Statements Declaration of Dividend Re-election of Penny Goh as Director Re-election of Ang Wan Ching as Director Approval of Additional Fees of Non-Executive Directors for FY2023 Approval of Fees of Non-Executive Directors for FY2024 Re-appointment of Auditors Special Business Issue of Additional Shares and Convertible Instruments Renewal of Share Purchase Mandate 10. Renewal of Shareholders’ Mandate for Interested Person Transactions * You may tick () within the relevant box to vote for or against, or abstain from voting, in respect of all your Shares for each resolution. Alternatively, 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. Dated this day of 2024 Signature(s) or Common Seal of Member(s) IMPORTANT: Please read the notes overleaf before completing this Proxy Form Fold and glue all sides firmly Total Number of Shares held Notes: 1. A member of the Company 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 3AA of the Securities and Futures Act 2001), 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. a. A member entitled to attend, speak and vote at a meeting of the Company, and who is not a Relevant Intermediary, is entitled to appoint one or two proxies to attend, speak and vote instead of him/her/it. Where a member appoints two proxies, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the proxy form. If no percentage is specified, the first named proxy shall be deemed to represent 100 per cent of the shareholding and the second named proxy shall be deemed to be an alternate to the first named proxy. b. A member who is a Relevant Intermediary is entitled to appoint more than two proxies to attend and vote at a meeting of the Company, but each proxy must be appointed to exercise the rights attached to a different Share or Shares held by such member. Where more than one proxy is appointed, the number and class of Shares in relation to which each proxy has been appointed shall be specified in the proxy form. In relation to a Relevant Intermediary who wishes to appoint more than two proxies, it should annex to the proxy form the list of proxies, setting out, in respect of each proxy, the name, address, email address, NRIC/Passport Number and proportion of shareholding (number of Shares, class of Shares and percentage) in relation to which the proxy has been appointed. For the avoidance of doubt, Agent Bank/SRS Operator who intends to appoint CPF/SRS investors as its proxies shall comply with this Note. c. “Relevant Intermediary” has the meaning ascribed to it in Section 181 of the Companies Act 1967 (“Companies Act”). 3. Completion and return of the proxy form shall not preclude a member from attending and voting in person at the meeting. Any appointment of a proxy or proxies will be revoked if a member attends the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the proxy form, to the meeting. Fold along this line (1) Affix Postage Stamp Keppel Ltd. c/o Boardroom Corporate & Advisory Services Pte. Ltd. 1 Harbourfront Avenue #14-07 Keppel Bay Tower Singapore 098632 Fold along this line (2) 4. 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 1 HarbourFront Avenue, Keppel Bay Tower #14-07, Singapore 098632; or b. if submitted electronically, be submitted via email to keppel@boardroomlimited.com, in either case to be received no later than 3.00 p.m. on 16 April 2024, being 72 hours before the time appointed for the holding of the AGM. A Shareholder who wishes to submit the proxy form must first 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. 5. 6. 7. The proxy form must be under the hand of the appointor or of his/her 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 in writing. Where a proxy form is signed on behalf of the appointor by an attorney, the power of attorney or other authority or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the proxy form, failing which the proxy form may be treated as invalid. A corporation which is a member of the Company may authorise, by resolution of its directors or other governing body, such person as it thinks fit to act as its representative at the AGM, in accordance with Section 179 of the Companies Act. 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 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. 8. Any reference to a time of day is made by reference to Singapore time. KEPPEL LTD. (Incorporated in the Republic of Singapore) 1 HarbourFront Avenue Level 2 Keppel Bay Tower Singapore 098632 Tel: (65) 6270 6666 Email: contactus@keppel.com keppel.com UEN 196800351N I N V E S T I N G I N A S U S T A I N A B L E F U T U R E K E P P E L L T D . 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