Keppel : Responses to Shareholders on Substantial & Relevant Questions

Responses to shareholders on substantial and relevant questions raised for

Keppel Corporation's 55th Annual General Meeting

Singapore, 15 April 2023 - Keppel Corporation Limited ("Keppel" and the "Company") would like to thank shareholders for submitting questions ahead of the Company's 55th Annual General Meeting to be held on Friday, 21 April 2023 at 3.00 p.m. (Singapore time).

Due to overlaps in several of the questions received, the Company will not be providing individual responses to every question. Instead, responses to substantial and relevant questions have been set out via the following topics:

1. Vision 2030 Transformation
2. Business and Operations
3. Shareholder Returns, Dividends and Share Buyback Programme

Please refer to the Company's responses set out in Appendix 1. Unless otherwise defined, all capitalised terms shall bear the same meanings ascribed to them in the circular issued by the Company dated 23 November 2022 (the "Circular").

By Order of the Board

Caroline Chang/Samantha Teong

Company Secretaries

15 April 2023

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		Appendix 1
VISION 2030 TRANSFORMATION
S/N	Question	Response
1	Can Keppel provide an update	In 2022, we accelerated the execution of our Vision 2030
	of the Company's progress in its	plans, simplifying and focusing our business as we advanced
	Vision 2030 plans?	on our asset-light strategy. We successfully divested Keppel
		Logistics1 and Keppel Offshore & Marine (KOM), and
		reached a resolution of our legacy rigs and associated
		receivables. We have also progressively monetised our
		landbank and non-core assets.
		The Group has made significant progress in asset
		monetisation, with over S$4.6 billion in asset monetisation
		announced by end-December 2022, since the start of the
		programme in October 2020. Several more divestments have
		been announced in 1Q 2023 and we are on track to exceed
		the S$5 billion target in 2023.
		Harnessing synergies as one integrated business and in line
		with our asset-light model, we announced about S$2.8 billion
		worth of energy & environment and sustainable urban
		renewal-related investments in 2022, jointly undertaken by
		Keppel together with the private funds and/or business trust
		managed by Keppel Capital.
		We continue to pivot away from lumpy profits in the
		orderbook and property development business to focus on
		expanding recurring income. In FY 2022, the Company more
		than doubled its recurring income on a year-on-year basis to
		S$560 million, compared to S$262 million in FY 2021.
		We have announced that in the next phase of Keppel's Vision
		2030 transformation, we will evolve into a global asset
		manager with strong operating capabilities, focused on
		creating sustainability-related solutions.
2	Keppel's discontinued offshore	Although Keppel recognised S$88 million in net profit from its
	& marine (O&M) business	discontinued O&M operations in FY 2022, this was mainly
	turned in a net profit of	due to gains from the divestment of certain assets, a partial
	S$88 million in FY 2022	write-back of impairments on certain legacy rigs, and after
	compared to a net loss of S$225	ceasing depreciation of relevant assets that have been
	million in FY 2021. Why did	classified under disposal group held for sale.
	Keppel decide to exit the O&M
	business given the improving	The restructured KOM, which has since been combined with
	market conditions?	Sembcorp Marine (SCM), registered a net loss in FY 2022,
		due mainly to provisions for cost overruns on certain projects
		in the United States.
		Earnings from Keppel's O&M business had been very volatile
		in recent years2. Over the past five years, it ranged from a net
		profit of S$157 million in 2019, to a net loss of S$768 million
		in 2020. On average, the O&M business sustained an annual
		net loss of S$178 million from FY 2018 to FY 2022.

1. Includes Keppel Logistics' businesses in Singapore, Malaysia, Vietnam and Australia, as well as
   UrbanFox.
2. Does not include effects of out-of-scope assets as well as intercompany loan interest expense and fee charges.

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			Through the combination of KOM and SCM, Keppel
			recognised a disposal gain of approximately S$3.3 billion3.
			Together with the vendor notes issued to Keppel from the
			sale of the legacy rigs to Asset Co, for which we will be
			repaid over time, as well as the out-of-scope assets, Keppel
			is unlocking close to S$9.4 billion of value from the O&M
			transactions.
			Keppel delivered a total shareholder return (TSR) of 49.3%
			for the whole of 2022, compared to Straits Times Index's
			(STI) 8.4%. Significantly, Keppel's TSR reached 77.7%,
			compared to STI's 9.2%, over a 15-month period from
			January 2022 to end-March 2023, following the completion of
			the O&M transactions and the distribution in specie of SCM
			shares to Keppel shareholders.
			In addition, we are able to replace the volatile earnings of the
			O&M business with stable interest income from the vendor
			notes issued by Asset Co for KOM's legacy rigs and
			associated receivables.
			The vendor notes come with a coupon rate of 4% that
			translates into approximately S$170 million of interest income
			per annum. We will also benefit from a redemption premium
			equal to 5% of the outstanding principal amount if and when
			the vendor notes are redeemed.
			More importantly, notwithstanding improving market
			conditions, we do not think the O&M business has a good fit
			with Keppel's Vision 2030 plans, which sees us moving away
			from lumpy orderbook and property development businesses
			and focusing on growing recurring income and building
			scalable businesses that leverage our asset-light model.
3	With the KOM divestment	In our next phase of growth, we are driving Keppel's
	completed, what will Keppel's	transformation to be a global asset manager and operator,
	key business be in future?	which harnesses our strong capabilities in the areas of
			energy & environment, urban development and connectivity.
	Can you share more details of
	Keppel's transformation plans?	Building on the Group's strong domain knowledge and
			operational expertise, we will continue expanding in areas
			such as renewables, clean energy, decarbonisation solutions,
			sustainable urban renewal as well as connectivity, by
			leveraging our asset-light model.
			With the growing global focus on sustainable development
			and climate change, we believe that Keppel is in the right
			space at the right time. We will continue to make
			sustainability our business by investing in and creating
			sustainability solutions that can help our customers and other
			stakeholders on their progress towards Net Zero.

3 Arising from the combination of KOM and SCM, based on the value of assets and liabilities of KOM (as Disposal Group) as of 28 February 2023, the gain on disposal recognised in the profit or loss on the date of completion is approximately S$3,300 million. The gain on disposal is subject to adjustment for any reimbursement by the Company to KOM for certain expenditures incurred by KOM before the completion of the combination, relating to assets sold by KOM to Asset Co to the extent that such expenditures are in excess of an agreed sum.

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4	How will Keppel differentiate	Keppel has a strong track record for managing funds and
	itself and compete with other	playing a fiduciary role in looking after investors' interests.
	global asset managers?	This, coupled with our strong operating capabilities in energy
		and environment, urban development and connectivity
		solutions, present a strong value proposition to investors of
		our private funds and listed REITs and business trust.
		As one integrated business, we are adopting a horizontal
		'cradle-to-maturity' approach in evaluating opportunities, from
		the initial investment in both greenfield and brownfield
		projects, to the design and development followed by the
		operation and maintenance phases, to their possible injection
		upon maturity into a REIT or business trust managed by
		Keppel. Our business model allows us to enjoy multiple bites
		of the cherry from different earning streams, and also
		enables us to scale up without relying just on our balance
		sheet.
BUSINESS AND OPERATIONS
S/N	Question	Response
5	How will Keppel navigate the	Despite the volatile macro environment, there continues to be
	current volatile geopolitical and	strong demand for the assets that Keppel invests in, or which
	economic environment?	we develop and operate, such as renewables, clean energy,
		decarbonisation solutions, sustainable urban renewal and
		connectivity solutions. With the growing global focus on
		sustainable development, climate change and digitalisation,
		we believe Keppel is in the right space and at the right time to
		provide solutions which are good for the planet, people and
		the Company.
		Nevertheless, we are monitoring the geopolitical and
		macroeconomic situation closely, as they can adversely
		affect the global economy and international operating
		environment.
		In the meantime, we continue to strengthen our business
		resilience amidst rising interest rates. As at end-March 2023,
		about 69% of the Group's borrowings were on fixed rates,
		with an average interest cost of 3.39% and weighted tenor of
		about 3 years.
		We believe that Keppel is in a strong position to weather the
		challenging international environment as we press ahead
		with our Vision 2030 transformation plans.
6	Given the high interest rate and	Higher interest rates are a challenge that all companies face.
	cost of capital, how will Keppel	We remain cautious and disciplined in evaluating deals, and
	acquire assets for its funds at	will ensure that all acquisitions meet our hurdle rates.
	good value?
		Importantly, unlike pure financial investors, Keppel brings to
		the table our strong operating capabilities and technical
		know-how, harnessing the strengths of the Keppel ecosystem
		to add value to the assets and platforms that we create or
		acquire. To meet the needs of different investors, we are also
		able to create funds with various risk profiles, ranging from
		Core funds with mature cash flow generating assets that
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		have lower risks and cost of capital to Value-Added funds
		that provide the additional returns at moderate levels of risk.
		Our strong track record as an asset manager and operator
		makes Keppel a compelling partner for providers of capital.
7	With the lifting of COVID-19	With the relaxation of China's zero-COVID policy as well as
	restrictions in China, is Keppel	the announcement of policies supportive of the real estate
	seeing its performance in China	sector, we are optimistic about the long-term potential of the
	improving?	Chinese market, especially in the key cities where we
		operate.
	How is the management
	navigating the challenging	In the first few months of 2023, Keppel Land has already
	property segment in China,	seen more positive signs, including an improvement in
	especially as Keppel still has a	enquiries and home sales. As market conditions improve, we
	lot of property developments	expect both home sales and asset monetisation of our
	and investments in China?	landbank to gain further traction.
	What are the expectations for	Importantly, Keppel Land is pivoting away from the traditional
	the earnings in China this year	developer model. Building on Keppel's strong track record in
	and moving forward?	the real estate business, we see opportunities to offer Real
		Estate-as-a-Service to enhance our relevance in a world
		characterised by flexible work arrangements, climate action
		and where digitalisation is redefining the built environment.
		We are expanding into sustainable urban renewal and senior
		living, which are relatively resilient, compared to the
		residential real estate sector. While we do not provide
		forecasts of earnings, we remain confident about the long-
		term potential in the Chinese market, especially in the key
		cities where Keppel operates.
8	Keppel embarked on its first	Increasing life expectancy and rising affluence continue to
	senior living community in	drive the expansion of ageing populations and deepen focus
	China. Will this be a profitable	on well-being and healthy ageing, boosting demand for
	venture? What do the potential	senior living facilities with community-based services.
	earnings look like?
		Keppel has built in-house capabilities across the senior living
		segment, including development and operational expertise,
		coupled with the experience from our investment in
		Watermark Retirement Communities in the United States.
		We are on track to commence operations in our senior living
		facility in Nanjing by end-2023, having finalised our facility
		design and are making good progress on the set-up of our
		operating team and systems.
		We believe that the senior living sector presents growth
		opportunities and is aligned with Keppel's Vision 2030
		strategy to be asset-light and focus on growing recurring
		income.
9	Is the performance of Keppel's	The Group's recurring income from infrastructure services
	infrastructure business	tripled from S$99 million in FY 2021 to S$309 million in FY
	sustainable with energy prices	2022.
	trending lower?
		In addition to electricity and gas sales, Keppel Infrastructure
		also derives recurring income from the operation and
		maintenance of essential infrastructure as well as through
		offering Energy-as-a-Service (EaaS) on long-term service
		contracts with building owners and customers.
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