Keppel Land Limited Report to Shareholders 2000 KEPPEL LAND LIMITED REPORT TO SHAREHOLDERS 2000

Transcription

1 Keppel Land Limited Report to Shareholders 2000 KEPPEL LAND LIMITED REPORT TO SHAREHOLDERS 2000

2 Contents eppel Land (Incorporated in the Republic of Singapore) 2 Corporate Profile 4 Milestones Chairman s Message 16 Board of Directors THE GROUP AT A GLANCE 18 Financial Highlights 19 Simplified Balance Sheet 20 Half-Yearly Results 21 Five-Year Financial Profile PEOPLE COUNT 22 At the Helm 24 Key Personnel 25 Organisational Structure 26 Human Resources and Community Relations 31 Investor Relations 33 In Harmony with the Environment FOCUS : MARKET AND PROSPECTS 37 Asian Economic and Property Round-Up 42 Change and Impact 43 In Retrospect... and Prospects value quality innovation Contents

3 THE YEAR IN REVIEW 47 Market and Operations 72 Sedona Hotels International 74 Feature - Keppel Bay - Exclusive Homes by the Sea 81 Finance ANALYSES 84 Segmental Reporting 88 Value Added and Productivity 89 Value Added by Segment 90 Value Added Statement 92 Property Portfolio Analysis 107 Gearing Structure STATUTORY REPORT AND ACCOUNTS 110 Directors Report 118 Statement by the Directors 119 Auditors Report 120 Profit and Loss Accounts 121 Balance Sheets 122 Group Statement of Changes in Equity 123 Company Statement of Changes in Equity 124 Consolidated Cash Flow Statement 126 Summary of Significant Accounting Policies 130 Notes to the Accounts 149 Subsidiary and Associated Companies CORPORATE GOVERNANCE 157 Corporate Governance CORPORATE INFORMATION 159 Corporate Information 160 Corporate Structure 162 Calendar of Financial Events SHAREHOLDER INFORMATION 163 Statistics of Shareholdings 164 Notice of Annual General Meeting 166 Share Transaction Statistics Contents

4 Corporate Profile Keppel Land Limited is the property arm of the Keppel Group, one of Singapore s largest conglomerates with core businesses in banking and financial services, property investment, development and management, telecommunications and logistics, as well as offshore, energy and engineering, and marine services. Keppel Land is one of the largest property groups listed on the Singapore Exchange Securities Trading Limited. The Company s vision is to be a premier property multi-national corporation with listed and sizeable local companies in Asia. Keppel Land intends to grow its overseas assets from about 20% to 30% of the Company s total assets, with emphasis on shorter-term trading projects and strategic acquisitions of property companies. Immediate regional efforts will be in North Asian countries with growth potential like China, Hong Kong, South Korea, and Japan. Corporate Profile 2

5 The Company s portfolio of properties include office buildings, residential properties, serviced apartments, hotels, resorts, retail complexes, industrial buildings and townships. This diversified portfolio is presently in eight Asian countries, including Singapore, and Australia. In addition to property investment and development, Keppel Land is engaged in property and project management, hotel/serviced apartment/resort operations under its own Sedona Hotels International brand, and retail management. The Company is also in the fee-based property fund management business. The Company has also recently moved into the business of building and operating data centres in the region. It will commence operating its first data centre in Singapore soon. Keppel Land s guiding philosophy is that properties should be developed to harmonise with and improve the environment as well as enhance the quality of life of the people who use them. Corporate Profile 3

6 Milestones 2000 January Keppel Land signed an agreement to purchase a 45-percent stake through private placement and rights issue in Five Stars Property Public Company for $13 million. March Viewpoint Condominium, a freehold site in the East Coast, was added to Keppel Land s landbank. PARCO Bugis Junction hosted the Singapore Food Festival Opening Celebrations for the third consecutive year. April Hotel Inter-Continental Singapore was awarded the Excellence Award in the Best Public Relations Work for the Environment category at the Prism Awards. May Keppel Land, through KeplandeHub, and Keppel T&T teamed up to form a joint venture to invest in and develop TeleHubs in Asia. KeplandeHub and US-based Cisco Systems signed a Memorandum of Understanding to leverage on their respective expertise to create cost-effective quality Internet-powered properties that will use leading-edge communications technology to enhance the e-lifestyle in Asia. Capital Square was awarded both the Certificate of Merit for Construction Excellence 2000 and Best Buildable Design 2000 at the Building and Construction Authority s Awards Presentation Ceremony. Keppel Land and Keppel Corporation signed the Sales and Purchase and Joint Venture Agreements for Keppel Harbour in which Keppel Land is the project manager. In the joint venture, Keppel Corporation will hold a 70 percent stake and Keppel Land the remaining interest. June Keppel Land acquired four property companies and certain assets from TLB Land for $111 million. KeplandeHub and Keppel Corporation each took a 10 percent stake in CXhub, Pan-Asia s first industry-led online construction exchange. Milestones 4

7 July Keppel Land and Yi Liang County signed a Memorandum of Understanding for an adjacent 133-ha site to further enhance the award-winning Spring City Golf and Lake Resort in Kunming, China. Spring City s third resort home development, The Azalea was launched. Keppel Land secured a conditional option to purchase Uraco Industrial Building for $29 million, as part of its plans to invest in and develop TeleHubs in Asia. August Keppel Land announced that it would redevelop its 307,449 sf freehold site in Cluny Hill which would be launched for sale next year. September Caribbean at Keppel Bay, Singapore s first homes by the sea, was launched with astounding success. Keppel Land acquired Wisma BCA, a prime office development located in the prestigious banking and financial precinct in Jakarta for $57.5 million. Saigon Centre was the first property development in Vietnam to be awarded an Excellent Grade in the International Asia Pacific Quality Award Competition. November KeplandeHub signed a Memorandum of Understanding with pfission, City Developments and Interpex Services to invest up to $5 million in a joint-venture company which will develop and operate an office e-hub that will link up office tenants, property managers and property owners. December Keppel Land acquired three sites for local residential development covering a total area of 95,906 sqm in the prime area of Jingan District, Shanghai. The three sites are valued at a total of $229.5 million, and payment will be made progressively over the next four years. Milestones 5

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9 chairman s message

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11 Chairman s Message On behalf of the Board, I present the Keppel Land Group report for the year ended 31 December Financial Performance Keppel Land s sales for the year were $500.5 million compared with $996 million in Despite lower sales, the Group achieved a pre-tax profit of $158.9 million, a 12.5% increase over the previous year s. This improvement was due to the increase in occupancies and rentals achieved by the Group s office buildings, maiden profit contributions from Caribbean at Keppel Bay and Freesia Woods, cost adjustments in respect of recently completed projects, and the release of certain provisions no longer required. Chairman Lim Chee Onn At the attributable level before extraordinary items, the Group s profit of $120.6 million showed a 53.3% increase over the previous year s due to higher pre-tax profit, and lower tax charge and minority interests. At 31 December 2000, the Group s debt-equity ratio was 0.98, down from 1 a year ago. During the year, shareholders funds grew from $2.15 billion to $2.24 billion. As a result, the Company s net tangible asset per share rose 4% to $3.16. Left: Keppel Land will unlock value from its portfolio of prime office developments. Chairman s Message 9

12 Chairman s Message (continued) Proposed Dividend Unlocking Value of Assets The Board is recommending a final gross dividend of 6% or 3 cents per share less tax, amounting to $16 million for approval by shareholders at the Annual General Meeting on 22 May If approved, the dividend will be paid on 12 June Future Directions for the Company Against the spectre of an economic slowdown in the US, political uncertainties in several Asian countries and a soft residential property market in Singapore, Keppel Land s path ahead is a challenging one. Nonetheless, Keppel Land remains focused on achieving its vision of being a premier property multinational corporation with listed and sizeable local companies in Asia. Towards this goal, Keppel Land will grow its overseas investments from about 20% to 30% of the Group s total assets, with greater emphasis on shorter-term trading projects and strategic acquisitions of property companies. The Group will, in the immediate term, pursue opportunities in North Asia, particularly China, Hongkong, S.Korea and Japan. It will identify and seize opportunities in selective niches such as local middle class housing in selected parts of the region, and prime office buildings in key North Asian cities. Looking ahead, Keppel Land will unlock value of some of its existing assets within one to two years. First, it will market land parcels in the Cluny Hill good class bungalow enclave in the vicinity of Botanic Gardens. The current ten bungalows residing in the Cluny Hill estate site, which the Group has owned for many years, produced a low yield. This situation will be reversed with Keppel Land s unique marketing concept of offering bungalow lots with design-and-build options for sale. The freehold site area totals 303,697 sf. In addition, Keppel Land will extract value from its prime office portfolio of about 2 million sf of net floor area. The approaches being considered include listing, real estate investment trusts, partial sell-down and securitisation. We will also continue to look for other new ways to unlock the value of the Group s assets. The real estate business is facing changes in the New Economy, and just as Keppel Land has re-defined properties by introducing innovative features and setting new standards in quality, it must also redefine its business to create value more through leveraging on the Group s expertise and human capital rather than on financial assets. We believe that the way forward is through an assetlight approach. Chairman s Message 10

13 Recent Major Developments Singapore The millennium year marked a new milestone: the former Keppel Shipyard site has begun its exciting transformation into a unique waterfront precinct. Over the next eight to ten years, some 2,700 waterfront residences will emerge from the sprawling 32-ha former harbour. Keppel Land, which holds 30% equity of the project, is the project manager for this premier waterfront development. The first development in the precinct Caribbean at Keppel Bay outperformed other market launches, achieving the highest number of sales in the 3rd quarter of To date, 310 of the 430 units launched have been sold. During the year, more than 1,000 units of residential units from Palm Gardens, The Mayfair and Villa Verde were successfully handed over to owners, strengthening Keppel Land s reputation as a major developer of quality homes. In March 2001, Keppel Land was awarded the first site in the new Marina South downtown, which it jointly tendered with two Hong Kong developers, Cheung Kong and Hongkong Land. The 1.14 ha site is the gateway to the new financial hub. The proposed project will incorporate the latest in design and construction technology, and Keppel Land has been appointed the project manager. This development will further establish Keppel Land as a prime quality office developer. Overseas The marketing launch of Caribbean at Keppel Bay also served as a platform for the cross-selling of the Keppel Group s products and services. Buyers could purchase homes bundled with a competitive Keppel TatLee Bank mortgage loan, a fire insurance policy from Keppel Insurance and a Keppel Life credit card along with other benefits. Despite the soft residential market, Freesia Woods, a 129-unit freehold condominium development in Sunset Way, has sold almost half of the 50 units launched since its soft launch in November. In the region, Keppel Land seized several opportunities presented by the low capital values of post-crisis Asia, with particular emphasis on trading projects. Keppel Land s listed vehicle Keppel Philippines Property in Philippines entered into a long-term option agreement with Araneta Properties to jointly develop a 600-ha site in Metro Manila. The site, north of the Ortigas CBD, will be developed into a comprehensive township with commercial and recreational facilities for the middle-income locals. Chairman s Message 11

14 Chairman s Message (continued) In Indonesia, Keppel Land acquired Wisma BCA, a prime twin-tower office development from the Indonesian Bank Restructuring Agency. Located in Jakarta s financial and business district, the site has further development potential from the unused portion of the plot ratio. The office towers are fully let with a net rental yield of 11% per annum. In China, Keppel Land acquired three adjoining sites totalling more than 1 million sf for local middle-income residential housing in Shanghai. Located in the prime Jingan district in Central Puxi, it is close to five-star hotels such as the Portman Ritz-Carlton and Shanghai JC Mandarin, and is also situated near the Mass Rapid Transit station. Looking Ahead The Group hopes to launch two freehold condominium developments : The Linc in the Newton area and Butterworth 8 in the East Coast area. The timing of launches of other residential developments will depend on market conditions. At Marina South, two office towers will offer more than 1.3 million sf of net floor area. The development will also provide space for a district cooling plant, a hub car park, and an enhanced network of pedestrian links to buildings in the vicinity and an underground subterranean mall linking to the Raffles Place MRT station. With the strong experience of our partners, Hongkong Land and Cheung Kong, behind the project, this office development is expected to add variety and vibrancy to the new cityscape. Singapore The exclusive Cluny Hill bungalow plots will be launched for sale in an innovative manner offering home-owners with a variety of options. Buyers can purchase the land, design-and-build their dream homes with the option to use Keppel Land s panel of architects and consultants. Alternatively, Keppel Land can undertake the entire process from concept to completion in accordance with the buyers specifications. Even the size of the bungalow land parcels can be varied if buyers wish to combine several plots together. The HarbourFront Office Park, which the Group is jointly developing with PSA Corporation, will have some 866,730 sf of waterfront office space. It will be ready in Keppel Corporation s headquarters will be located in Tower One, and the Keppel Group will eventually hold 70% stake of Tower One. In both these office developments, Keppel Land has tied up with strong strategic partners who can add value significantly to the respective projects. Where appropriate, we will continue to seek such strategic alliances to grow the Group s business. Chairman s Message 12

15 Capitalising on Keppel Land s experience in real estate development and facility management, Keppel Digihub, a wholly-owned subsidiary, will fit out and operate data centres for co-location to house the Group s regional technology infrastructure. Keppel Digihub s first data centre located in Serangoon North in Singapore is scheduled to operate from the middle of the year. Overseas To diversify out of the Singapore market and broaden its earnings base, the Company has set a target of growing its overseas assets from 20% to 30% of total assets. Keppel Land believes that there are niche opportunities in North Asia. In selected Asian cities, Keppel Land will enter into the local housing market and position itself as a provider of good quality residences for the locals. This participation in the local residential market is in line with the Group s emphasis on trading projects which will provide quicker returns compared with longer-term investment projects. In Shanghai, about 3,000 quality local residential apartments will be developed. The first phase of the project, comprising about 1,000 units, is expected to be launched for sale in The entry of China into the World Trade Organisation is expected to serve as an engine for growth for the Chinese economy. In the search for investment opportunities, Keppel Land has adopted a two-pronged approach. Its own China team will focus on major gateway cities while it builds its presence in other growing cities through a strategic stake in a China-focused company. In March 2001, Keppel Land signed a conditional agreement to take a 24.9% stake in Dragon Land, a Singapore-listed company. This will serve as an additional platform to capitalise on the growing demand for local housing especially in the promising provincial cities. The government s encouragement of home ownership, attractive mortgage rates, and the growing affluent local middle class will fuel the propensity to upgrade to better quality housing. Human Capital and Technology Recognising the significance of employees as stakeholders, Keppel Land commissioned human resource specialist William M. Mercer to perform an extensive survey to gather feedback from both executives and support staff. Following the exercise, the Company has started four task forces to look into the areas of remuneration and performance management, training and career development, empowerment, and communication. Where appropriate, changes will be implemented to attract and retain good people. The Company will also introduce a flexible benefits system for staff to choose benefits which meet their needs and forego others which are less useful. In the long-term, the Company hopes to work towards being an employer of choice, Chairman s Message 13

16 Chairman s Message (continued) an organisation that people will want to join and where employees feel proud to be affiliated with. The Company will also continue to redefine properties and set new standards in innovation and quality. Keppel Land s office developments have won more awards recently, and its quality residential developments provide a lifestyle, going beyond the provision of just a physical abode. Nowhere is this better seen than at Caribbean at Keppel Bay, which is setting new standards of quality residential properties. In addition, some of the smart home features introduced at Caribbean at Keppel Bay have since become industry-standard. Despite the failure of many dotcom companies, Keppel Land recognises the potential in the use of technology as a catalyst and enabler of change and improvement. Operating companies will, therefore, continue to look at new technologies to exploit them to improve processes in their operations. Corporate Transparency and Investor Relations During the year, Keppel Land won two awards which acknowledge the Company s efforts and commitment to timely and accurate disclosure to shareholders. At the keenly-contested Annual Report Award competition, Keppel Land won the top Grand award, which is awarded to a company whose annual report takes the best award for the third consecutive year. Judging criteria include timely and excellent standards of voluntary report disclosure and presentation. In its 27th year, the competition was jointly organised by the Institute of Certified Public Accountants of Singapore, the Singapore Institute of Management and Singapore Exchange Securities Trading Limited. Recognition for Keppel Land s investor relations efforts also came from the Securities Investors Association of Singapore, a new entity formed to safeguard the interests of shareholders in Singapore. The Company was awarded a prize in the properties category for the Most Transparent Company Award. Enhancing Value for Shareholders The enhancement of shareholder value will be a key focus of Keppel Land. The Company will work at improving its return on equity and Economic Value Added (EVA) for shareholders. The emphasis on EVA will institutionalise the constant drive for staff to use total quality process tools and a team approach to maximise the Company s value to shareholders. This new accountability Chairman s Message 14

17 approach is expected to incorporate a performance measure and incentive system that will fully align staff s interests with those of the Company. To ingrain into all staff the need to focus on key drivers to improve performance, more than 350 executive and support staff have attended training in the concept and on how they can take practical steps to improve EVA performance. Acknowledgements At the Company s Annual General Meeting on 22 May 2001, Mr Alan F. C. Choe and Dr Kwa Soon Bee will be retiring from the Board. I would like to express our thanks to them for their invaluable contribution and advice during their terms of service. I would also like to take this opportunity to thank shareholders, business partners and customers for their continued support. Together with them, Keppel Land will stride confidently into the knowledge-based economy. The New Economy will pose fresh challenges, but with passion, creativity and flexibility, I am confident that Keppel Land staff will be able to redefine properties to beyond the physical space where people live, work or play. This will be the challenge ahead for real estate companies. Homeowners and office tenants demand more as the New Economy blurs the lines of work and recreation. Homeowners may work from home, while office workers may wish to manage their households through web-surveillance of their homes and electronic transactions. Many staff from different departments have worked hard to get the Caribbean at Keppel Bay project off the ground, making it one of the most successful projects of the year. I would like to thank them for their efforts which have contributed to making the project a truly unique one. Lim Chee Onn Chairman Singapore, 23 March 2001 Chairman s Message 15

18 Board of Directors Chairman since January Executive Chairman of Keppel Corporation Limited. Chairman of Keppel Capital Holdings Limited, Keppel TatLee Bank Limited and MobileOne (Asia) Pte Ltd. Director of Temasek Holdings (Pte) Ltd, NatSteel Limited and Singapore Airlines Limited. Chairman and Chairman ExCo of Singapore-Suzhou Township Development Co Ltd. Co-Chairman of Philippines-Singapore Business Council. Chairman of National Heritage Board. Member of INSEAD International Council. A graduate of the University of Glasgow and Harvard University. Lim Chee Onn Managing Director since January Director of Keppel TatLee Finance Limited, Asia Real Estate Fund Management Ltd and SAFE Enterprises Pte Ltd. Chairman of Keppel Philippines Properties Inc., Philippines and Five Stars Property Public Company Limited, Thailand. A Bachelor of Science graduate in civil engineering from Imperial College, University of London and a Master of Science graduate majoring in real estate from the Massachusetts Institute of Technology. Kevin Wong Kingcheung Director since December Chairman of Pasir Ris Resort Pte Ltd, Sentosa Cove Pte Ltd and Sentosa Golf Club. Director of Centrepoint Properties Limited, United Overseas Land Limited, Hotel Plaza Limited, Singapore Cable Car (Pte) Ltd, Singapore Airport Bus Services Ltd and OUB Centre Ltd. A trustee of NTUC Income. Chairman, Board of Governors of Spring City Golf and Lake Resort. A qualified architect and town planner from the University of Melbourne, and a member of the respective professional institutes of architects and town planning in Singapore, UK and Australia. Alan F C Choe Director since August Director of Keppel Corporation Limited. Director of Singapore Power International Pte Ltd, United Power Corporation (Singapore) Pte Ltd, SPI (Seosan) Cogen Pte Ltd, SPI Korea Capital Pte Ltd and SPI (Shanghai) Cogen Pte Ltd. Member of Preservation of Monuments Board. A chartered engineer and a member of various professional institutes in Singapore and overseas. Loh Wing Siew Director since January Executive Director of Keppel Corporation Limited. Chairman of Keppel FELS Energy & Infrastructure Limited, Keppel Hitachi Zosen Limited, Singapore Petroleum Company Limited, and Singapore Refining Company Pte Ltd. Director of Keppel Capital Holdings Limited, Keppel TatLee Bank Limited, k1 Ventures Limited, Pacven Walden Management Singapore Pte Ltd and Pacven Investments Ltd. Alternate Director of MobileOne (Asia) Pte Ltd. Chairman of Ngee Ann Polytechnic Council. A graduate in naval architecture from the University of Newcastle-upon-Tyne and PMD, Harvard Business School. A chartered engineer and a member of several institutes of naval architects and marine engineers. Choo Chiau Beng Board of Directors 16

19 Director since May Executive Director and Group Finance Director of Keppel Corporation Limited. Chairman of Keppel Telecommunications & Transportation Limited, Keppel TatLee Finance Limited and Keppel Philippines Holdings Inc. Director of Keppel Capital Holdings Limited, Keppel TatLee Bank Limited, Keppel FELS Energy & Infrastructure Limited, Keppel Hitatchi Zosen Limited, K1 Ventures Limited, Singapore Petroleum Company Limited, MobileOne (Asia) Pte Ltd and Keppel Philippines Marine Inc. Chairman of DataOne Corporation Pte Ltd, Keppel Insurance Pte Ltd. Keppel Monte Bank Inc, Keppel IVI Investments Inc. and Keppel Securities (Philippines) Inc. A graduate of the University of Singapore. Teo Soon Hoe Director since November Chairman and Managing Director of Jurong Bird Park (Pte) Ltd. Chairman of Singapore Zoological Gardens. Director of Parkway Holdings Limited, Pontiac Land Pte Ltd and Camden Medical Centre Pte Ltd. A medical doctor and a member of various professional institutes in Singapore and overseas. Kwa Soon Bee Director since February Principal Consultant to Singapore Bus Services Limited. A graduate of the University of Adelaide and University of London, a chartered engineer and a member of several professional institutes in Singapore and UK. Lim Leong Geok Director since June Chairman of Inchcape Motors Limited. Deputy Chairman of Dynasty Corporation (S) Pte Ltd. Director of Keppel Hitachi Zosen Limited, Natsteel Limited, United Engineers Limited, Lindeteves-Jacoberg Ltd, Tuan Sing Holdings Limited and Prudential Assurance Company Singapore (Pte) Ltd. A member of Board of Inland Revenue Authority of Singapore. Chairman of Board of Governors of Nanyang Polytechnic. A Certified Public Accountant. Thai Chee Ken Director since April President & Chief Executive Officer of PWD Corporation Pte Ltd. A civil engineering graduate with a master degree from the National University of Singapore. Khor Poh Hwa Board of Directors 17

20 Financial Highlights % Increase/ $ 000 $ 000 (Decrease) FOR THE YEAR Sales - excluding associated companies 500, ,981 (49.7) - including associated companies 826,160 1,326,140 (37.7) Profit / (loss) Operating 168, , Before tax 158, , After tax and minority interests; Before extraordinary items 120,618 78, After extraordinary items 120, ,263 (20.8) Funds generated from operations 216, ,134 (17.1) Development expenditure incurred 512, ,626 (35.8) Capital expenditure 102,453 2,670 3,737.2 Dividends paid and proposed 16,045 15, Value added from operations 206, ,200 (6.1) AT YEAR-END Share capital 354, , Shareholders funds 2,240,096 2,150, Minority interests 371, ,600 (6.5) Short and long-term borrowings 2,328,951 2,128, Total funds invested 4,940,691 4,676, Debt-equity ratio (%) Excluding minority interests (2.0) Including minority interests (1.2) PER SHARE Profit before tax (cents) Profit after tax and minority interests (cents) Before extraordinary items After extraordinary items (24.7) Dividends - Less tax (cents) Gross equivalent (cents) Cover (excluding extraordinary items) Net tangible assets $3.16 $ RETURN ON SHAREHOLDERS EQUITY (%) Before tax After tax but before extraordinary items After tax and extraordinary items (27.6) EMPLOYEES (including property associates) Number 4,485 3, Wages and salaries ($ 000) 88,556 82, Pre-tax profit per employee ($ 000) (4.7) The Group at a Glance 18

21 Simplified Balance Sheet TOTAL ASSETS OWNED TOTAL LIABILITIES OWED AND CAPITAL INVESTED What We Owned What Shareholders Invested Fixed Assets and Investment Properties Shareholders' Funds Properties Held for Development Minority Interests Investments What We Owed 2,240 (40%) 2,784 (52%) 2,972 (53%) Stocks Trade Creditors 372 (7%) 2,151 (41%) 28 (1%) 398 (7%) 60 (1%) Trade Debtors Other Liabilities 630 (11%) 631 (12%) 1,720 (32%) 1,547 (28%) Cash and Bank Balances Long-term External Borrowings 1,367 (24%) 572 (11%) 50 (1%) 23 (- %) 54 (1%) 165 (3%) 679 (12%) 37 (1%) 22 (- %) 62 (1%) 280 (5%) Other Assets Short-term External Borrowings 962 (17%) 1,473 (27%) 655 (12%) $5,368 m (100%) $5,599 m (100%) $5,599 m (100%) $5,368 m (100%) The Group at a Glance 19

22 Half-Yearly Results 1st Half 2nd Half Total $ 000 % $ 000 % $ 000 % Sales , , , , , , Operating profit , , , , , , Profit before taxation , , , , , , Profit attributable to shareholders , , , , , , Earnings per share, before tax but after minority interests (cents) The Group at a Glance 20

23 Five-Year Financial Profile Income Statement ($ 000) Sales 591, , , , ,492 Operating profit / (loss) 213, ,977 (349,681) 157, ,550 Profit / (loss) before taxation 233, ,663 (354,149) 141, ,930 Profit / (loss) after taxation 171, ,731 (378,604) 101, ,568 Profit / (loss) attributable to shareholders: Before extraordinary items 101, ,663 (350,564) 78, ,618 After extraordinary items 101, ,663 (350,564) 152, ,618 Balance Sheet ($ 000) Fixed assets 2,497,325 2,565,530 2,857,693 2,784,299 2,972,897 Investments 736, , , , ,282 Properties held for development 1,687,692 2,226, ,411 1,720,439 1,546,619 Net current assets / (liabilities) (Note 1) (173,146) (603,548) (286,428) (399,614) (258,107) Assets employed 4,748,064 4,988,775 4,240,517 4,676,687 4,940,691 Shareholders funds 2,843,318 2,829,935 1,833,809 2,150,552 2,240,096 Minority interests 486, , , , ,644 Short and long-term borrowings 1,418,239 1,602,446 2,041,708 2,128,535 2,328,951 Total funds invested 4,748,064 4,988,775 4,240,517 4,676,687 4,940,691 Per Share Earnings (cents) (Note 2) Before tax (50.4) After tax but before extraordinary items (53.5) After tax and extraordinary items (53.5) Dividends Less tax (cents) Gross equivalent (cents) Cover (24.1) Net tangible assets $4.66 $4.32 $2.80 $3.04 $3.16 Financial Ratios Return on shareholders equity (%) (Note 3) Before tax (14.2) After tax but before extraordinary items (15.0) After tax and extraordinary items (15.0) Interest cover (2.9) Debt-equity ratio (%) Employees (Including Property Associates) Number 3,161 3,166 3,260 3,591 4,485 Wages and salaries ($ 000) 78,661 94,006 78,539 82,095 88,556 Pre-tax profit per employee ($ 000) (Note 4) N.A Notes: 1. In arriving at net current assets, short-term borrowings have been excluded. 2. Earnings per share are calculated by reference to the weighted average of shares in issue during the year. 3. In calculating returns on shareholders equity, the simple average basis has been used. 4. In the calculation of pre-tax profit per employee, the profit before tax of associated companies includes partner s share of pre-tax profit. The Group at a Glance 21

24 At the Helm From left: Tan Swee Yiow, Ou Yong Meng, Lui Seng Fatt, Ang Wee Gee, Kevin Wong, Choo Chin Teck, Lim Seng Bin People Count 22

25 From left: Young Lok Kuan, Lim Tow Fok, Jack Hrad, Augustine Tan, Quah Kim Boon, Yeo Kah Tiang, Tong Kok Wing, Lim Boon Kwee People Count 23

26 Key Personnel Keppel Land Limited Lim Chee Onn Chairman Kevin Wong Kingcheung Managing Director Property Investment, Development and Management Keppel Land International Limited Choo Chin Teck Director, Corporate Services and Group Company Secretary Lui Seng Fatt Senior General Manager Corporate Development Tan Swee Yiow General Manager Singapore Goh Han Kee Assistant General Manager (Projects) Singapore Ang Wee Gee General Manager Head, Regional Investments Lim Seng Bin General Manager Regional Investments Arthur Yeo Hui Kong Deputy General Manager (Projects) Regional Investments Steven Shum Wing On Deputy General Manager Malaysian Operations Yeoh Hai Yeoh Assistant General Manager Regional Investments John Tan Chee Kiong Assistant General Manager Regional Investments Augustine Tan Wee Kiong General Manager Marketing Lim Tow Fok General Manager Property Management Tong Kok Wing General Manager Retail Management Young Lok Kuan General Manager Fund Management Jeffery Leong Hon Keong Assistant General Manager Development and Asset Performance Audit Ho Mun Piew Financial Controller Group Finance and Accounts Yeo Kah Tiang (Mrs) General Manager Finance and Administration Serena Toh Lai Siong (Ms) Assistant General Manager Research and Investor Relations Sharon Lua Siew Hah (Ms) Assistant General Manager Human Resources Wee Lay Lian (Ms) Manager Group Internal Audit Keppel Land Pty Ltd Yip Wan Toh General Manager Australia Hotel, Serviced Apartment and Resort Management Sedona Hotels International Pte Ltd Lim Boon Kwee Senior Vice President Technology and E-Business KeplandeHub Limited Ou Yong Meng General Manager Kwok Yan Hoe Assistant General Manager Keppel Digihub Pte Ltd Dave Ng Chun Sun Chief Executive Officer Keppel Services Staff Union Quah Kim Boon President Ou Yong Meng General Manager Asset Planning People Count 24

27 Organisational Structure Board of Directors Chairman Audit Committee Managing Director Group Company Secretary/Director, Corporate Services Finance and Tax Treasury and Administration Human Resources Corporate Secretariat Investor Relations Manager, Group Internal Audit Property Investment and Development Property Services Hospitality Technology and E-Business Singapore Investments Regional Investments Corporate Development Asset Planning Development Management Property Marketing Property Management Retail Management Hotel, Club, Resort, and Serviced Apartment Management Hotel Procurement Technology Infrastructure E-Commerce Solutions Strategic Investments Development and Asset Performance Audit Fund Management Research and Investor Relations Information Technology People Count 25

28 Human Resources and Community Relations Creating Value and Growing Talents Recognising employees as important stakeholders, Keppel Land commissioned human resources specialist William M Mercer in July 2000, to conduct an extensive staff survey. This was to gather feedback and suggestions from executive and support staff on human resources and corporate matters. Qualification of Management and Executive Staff 11.7% 23.4% 5% 2% 57.9% Qualification of Non-Executive Staff 22% 20.9% 1.2% 10.1% 45.8% Training Expenditure Distribution 1st Degree Postgraduate Degree Diploma/GCE "A" Level Secondary Others Primary Secondary Diploma/GCE "A" Level Industrial Certificate Others Following this exercise, four task forces were set up to look further into the areas of performance management, remuneration structure, training and career development, communication and empowerment. Where appropriate, changes will be implemented to attract and retain good people. So far, the Company has reviewed the compensation and benefits system, and plans to introduce a more flexible system in the coming year. This allows staff to select benefits that meet their needs and forego others which are less useful to them. The existing share option scheme has also been reviewed and has been extended to include staff at all executive levels. The Company continues to train and upgrade the skills of the employees to meet corporate objectives. 0.43% 3.03% 6.49% 9.96% 80.09% Seminars Skills Redevelopment Program (SRP) Information Technology Diploma/Degree Others To support the corporate mission of creating value for shareholders, more than 350 employees were trained on the Economic Value Added (EVA) approach during the year. This was to align Keppel Land s business activities with shareholder interests. All employees are challenged to find new ways to enhance value. People Count 26

29 Investment executives and accountants were also sent for training on mergers and acquisitions with the Institute of Banking and Finance. Another 10 employees were sent for skill upgrading towards a Basic Certificate in Property and Building Management resulting in the enlargement of their job scopes and responsibilities. In the long-term, the Company hopes to work towards being an employer of choice, an organization that people will want to join and where employees feel proud to be affiliated with. Regional Challenges As one of the measures to ensure consistency in service standards, Keppel Land s wholly owned subsidiary, Sedona Hotels International has embarked on the Training in Guest Employee Relations Programme, for all levels of staff across the Sedona group. The focus was on developing communication and teamwork skills towards meeting the needs of both internal and external customers. For strategic collaboration and communication of corporate objectives across the Group s regional offices, a regional conference is organised every year. Keppel Land s regional investments add another dimension to human resource management. When recruiting, developing and retaining employees in regional positions, the Company is mindful of key considerations such as adaptability and ability to thrive in a cross-cultural environment. Careful considerations of local cultures and the management of these expectations enable us to make appropriate placements of key personnel in specific locations. While efforts are made to maintain a consistent human resources policy across the Group, some practices are modified to suit the particular norms of local cultures. In March 2000, key marketing executives from around the region converged in Singapore for a lively forum with brisk exchanges of new ideas and initiatives, cross-learning opportunities and camaraderie. Regional operations have all participated in the Human Resources Development Programme, jointly organised by the Productivity and Standards Board, and the Association for Overseas Technical Scholarship, to ensure the adherence to the best practices model. Staff getting a first-hand account of the latest corporate objectives from management at the regional conference. People Count 27

30 Human Resources and Community Relations (continued) The annual regional conference is a much anticipated event where regional staff meet, share experiences and generate new ideas. It has been an invaluable source of creative solutions and a hothouse of new marketing initiatives. Preparing for the Future Manpower at end To develop Keppel Land into an employer of choice is the next challenge ahead. Pro-active measures will be taken to ensure that practices and systems are in place to anticipate the advent of an increasingly competitive market for talent. Manpower at end Executive Non-Executive Another thrust for future development is addressing the impact of expanding regional presence. Streamlining of local practices and active promotion of training and development programmes will be enforced. This is to better equip employees across the Group to manage and embrace best-in-class practices. Executive Non-Executive Human resource policies are kept in-line with the business objective of growing Keppel Land into a world-class establishment. Regional Manpower Distribution Community Relations Keppel Land has been an active participant in the Keppel Volunteers movement, a China Indonesia Vietnam Thailand The Philippines brainchild of Keppel Group Chairman, Lim Chee Onn. This project fosters the spirit of volunteerism within the Group. Australia Malaysia The Keppel Group has adopted three junior schools and an adult centre from the People Count 28

31 Association for People with Special Needs. About 800 children come from the three schools - Katong Special School, Chao Yang Special School and Jervois Special School. Corporate volunteering takes place at the business unit level in providing professional expertise, and at the individual level in volunteering personal time and effort. Individual employees are encouraged to volunteer their personal time for community services such as providing tuition and special skills courses like arts and craft, music and information technology, as well as organising outdoor trips and special events for students of the schools and adults of the centre. To date, about 200 employees across the Keppel Group have signed up as corporate volunteers, of which 14% are from Keppel Land. Through wholly-owned subsidiary, Sedona Hotel International, Keppel Land also participates actively in local community services in the region. In Mandalay, Sedona sponsored local high school graduates for a one-year hospitality course while in Makassar, Indonesia, Sedona raised funds for the Jannatul Ma wa Orphanage. In Vietnam, Sedona Suites Hanoi participated in donation drives for flood victims in Hue, the Red Cross Association, the School for the Deaf and Dumb, and the disabled children at Thanh Xuan Village. To encourage the spirit of volunteerism, all Keppel staff are given two days leave annually for volunteer work. People Count 29

32 Human Resources and Community Relations (continued) Keppel Land also actively participates in community activities organised by other organisations in Singapore. Some 17 employees represented Keppel Land in the Corporate Community Games held in November 2000, organised by East West Cultural Development Centre and the Singapore Sports Council. Supported by the Ministry of Community Development and Sports, the games encouraged companies to develop community spirit through sporting activities. They also allowed organisations to interact in a non-business setting and build a stronger community of corporate citizens. Healthy Living For nurturing both body and mind, Keppel Land s corporate membership with Clark Hatch Fitness Centre at Hotel Inter-Continental Singapore has been renewed for another year. Conveniently located within the Bugis Junction development where Keppel Land s offices are also situated, the fitness centre is very popular with staff with the usage of the membership passes being as high as 95% each month. The membership passes allow staff use of facilities such as the gym, swimming pool and indoor and outdoor jacuzzis. Cultivating Camaraderie The General Staff Welfare Committee in Keppel Land has been organising various activities throughout the year to foster greater interaction and esprit de corps among staff. These range from health talks from the National Skin Centre to staff karaoke sessions and parties to celebrate the Mid-Autumn Mooncake Festival and Christmas. Employees look forward to these activities as good opportunities to unwind from the work and catch up with fellow colleagues. Enabling Learning Opportunities Annual events like the Dinner and Dance provide staff with opportunities to interact and build esprit de corps. In line with the Company s promotion of computer literacy, the Group has devised a staff scheme with Dell Computers, which allows staff to make on-line purchases of computers at a preferential rate. In addition, old computers were also refurbished and sold at a nominal fee to staff. This exercise, which has been on-going for several years, was focused on security guards this year. This scheme allows recycling of old computers while benefiting families and children who now have access to computers at home. People Count 30

33 Investor Relations With the Company s greater emphasis on corporate transparency and timely information flow to shareholders, Keppel Land has stepped up its investor relations efforts in recent years. Recognition for its Efforts During the year, Keppel Land won two awards which acknowledge the Company s efforts and commitment to timely and accurate disclosure to shareholders. At the keenly-contested Annual Report Award Competition, Keppel Land won the Grand Award which is given to a company whose annual report takes the best award for the third consecutive year. Judging criteria include timely and excellent, standards of voluntary report disclosure and presentation. In its 27th year, the competition was jointly organised by the Institute of Certified Public Accountants of Singapore, the Singapore Institute of Management and the Singapore Exchange Securities Trading Limited. Involvement of Top Management and Open-door Policy Critical to the success to any communication with investors is the involvement of top management. Hence, apart from the annual and interim results briefing to press and analysts, Keppel Land s top management maintains an open-door policy with the investment community. One-on-one meetings and business luncheons with analysts and fund managers are held frequently. At these meetings, top management is able to Recognition for Keppel Land s investor relations efforts also came from the Securities Investors Association of Singapore, a new entity formed to safeguard the interests of shareholders in Singapore. The Company was awarded a prize in the properties category for the Most Transparent Company Award. Moving into the Internet age with online investor relations. People Count 31

34 Investor Relations (continued) exchange views, address any concerns and update investors on recent major corporate developments. This direct contact gives analysts and fund managers a better understanding of the Company s rationale for undertaking certain investments and acquisitions, as well as the business environment, especially overseas. where plans for the HarbourFront project were unveiled. Against the backdrop of the spectacular sea view, analysts were able to appreciate first-hand the innovative features, quality and design of the premier waterfront residences. Staying in Touch Keppel Land also participates in overseas presentations and roadshows to institutional investors regularly. These present the Company with a platform to expound its strategy and action plans, its new initiatives and its reading of the property market. Feedback from overseas shareholders has been positive as they appreciate these efforts to maintain contact. Sharing the Caribbean Experience with Analysts In August 2000, analysts were invited to one of the year s highlights for Keppel Land the launch of Caribbean at Keppel Bay. This was a follow-up to an analysts presentation on Keppel Harbour redevelopment in 1999 Capitalising on the tools of Internet age, the Company uses to stay in touch with overseas investors. Copies of the annual and interim results presentations are sent to fund managers and overseas investors via . They can also tap on to the resources of Keppel Land s corporate website which has a section devoted to providing shareholders with valuable information. The investing public can access the past three years award-winning annual reports, key financial ratios spanning ten years, a calendar of major events, and a press release archive. Also available is a ticker tape which provides live share prices and allows investors to chart the direction of the Company s share price. People Count 32

35 In Harmony with the Environment Breathing Life in Living and Working Spaces Evolution of demographics, expanding global reach and changing business landscapes all influence how our environment affects our daily lives. Habitats are constantly redefined by redevelopment. As a major property developer contributing to changing landscapes in Singapore and the region, Keppel Land makes conscious efforts to create vibrant living and working spaces for its home owners, tenants as well as the general public. Low impact, sustainable living and thoughtful consideration of environmental issues have always been guiding factors that shape Keppel Land s project development, be it in Singapore or on foreign land. We are constantly striving to strike the balance between economically and environmentally viable management practices. each development. Within the grounds of the Caribbean at Keppel Bay development, for instance, there are more than 2,200 shrubs and 800 trees in 15 different species. The use of water features has been showcased in most of our properties such as the interactive fountain at Bugis Junction, the waterfall wall curtain at Capital Square, and massive water channels at the Caribbean at Keppel Bay. They all bear testimony to water springing a new lease of life to enhance environmental well-being. Keppel Land has also ceaselessly championed the energy-saving, recycling It is these practices that Keppel Land brings to bear to mobilise solutions to align business and environmental objectives. Sanctuary in the City Keppel Land is one of the largest landlords in the Central Business District, with nine prime office buildings featured prominently in the city skyline. Green relief from stone and slate landscaping for all Keppel Land s properties are sculptured to embrace and complement The interactive fountain at Bugis Junction showcases the innovative use of water features. People Count 33

36 In Harmony with the Environment (continued) and water conservation programmes. In efforts to secure a better and greener tomorrow for planet earth, staff are continuously encouraged to recycle and reuse. Old newspapers and used papers, averaging ten cartons a month, are sold to a recycling agency, and the proceeds are in turn donated to charity. Old books and magazines are donated to a social organisation every year, while old computers were refurbished and sold to staff at a nominal sum. numerous environmental awards the hotel has bagged since its opening in Think Local, Act Global Mindful of our responsibilities beyond the home front, Keppel Land is committed to preserving and conserving natural landscapes in our overseas projects as well. We are careful to observe development constraints and seek opportunities to enhance the natural value of our properties. For its efforts in going green, Hotel Inter-Continental Singapore won the Excellence Award in the Best Public Relations Work for the Environment category at the Public Relations in the Service of Mankind Awards 2000, adding to the At our Indonesian resort Ria Bintan, the architecture of the Forest Course cleverly circumvents existing natural contours, showcasing and opening wildlife corridors. The integrated design ensures that the one-with-nature theme permeates the entire resort. Golf courses at Ria Bintan are sculptured along existing contours to preserve and enhance natural landscape. People Count 34

37 It is not uncommon for golfers at the resort to be delighted by the sight of a shy mousedeer or a scurrying giant squirrel, flitting across the fairways. Indigenous animal species and flora thrive, enveloping golfers with the magic of Mother Nature during the entire length of play. Hotel Sedona Makassar s contribution to the Group s eco-efforts comes in the form of weekly cleaning activity of its surrounding neighbourhoods. Sedona Suites Hanoi, also mindful of its responsibilities, uses only environmentally-friendly cleaning chemicals and treats all sewage water at the property before disposal. Over in Sydney, Australia, Botanic Cove is an example of a sanctuary of conserved habitat. Beyond building quality homes on prime land, Keppel Land is appreciative of the fact that Botanic Cove harbours important natural assets, and that the development surrounds environmentally sensitive acreage. In Kunming, China, Keppel Land s other premier resort Spring City Golf and Lake Resort has been developed into a world-class golf destination, with its courses consistently garnering international awards for excellence. Environmental efforts are key when developing existing natural terrains into greens and fairways. The resort is adjacent to Lake Yang Zhonghai, which is the main reservoir of potable water for neighbouring municipal areas. To protect the pristine natural lakes, governmental agencies have taken great efforts to monitor and control waste disposal into the waters. At Spring City, the management plays an active role in resource management by participating in environmental protection Dedicated planting programmes ensure the preservation of heritage-listed vegetation. This allows the flourishing of an astounding 130 species of flora an amazing showcase of biodiversity. In fact, Keppel Land is now working closely with the Hunters Hill Council and its specialist consultants in the development and construction of the park reserve next to Tarban Creek, adjacent to Botanic Cove. This reserve is now called the Riverglade Reserve. Botanic Cove provides habitat to over 130 species of flora. People Count 35

38 In Harmony with the Environment (continued) campaigns. Staff are constantly educated on minimising water and material wastage and guests are also encouraged to participate in the conservation of natural resources. Maintenance of this world-class turf has been designed around the use of low-impact chemicals. Chemicals used will have gone through stringent quality tests conducted both by international consultants as well as local authorities. Even the dosage of use is carefully controlled through time-release methods. This will in turn control the seepage into the lakes during rainfalls or natural drainage. Constant checks are made through water sampling to ensure consistency in management. Spring City is currently collaborating with the local government to build a second water treatment plant on the lakeside. This will cater to future needs where all rain water will be treated for residual chemicals before it is discharged into the lakes. In Partnership with the World Wildlife Fund Hotel Inter-Continental Singapore is taking conservation one step further, by encouraging each of its guests to help protect some of our planet s most endangered wildlife by making a small contribution to the World Wildlife Fund (WWF). This is part of an innovative initiative by the hotel, aptly called Sleep well, you just saved a life campaign, that involves fundraising and raising awareness of endangered wildlife. Hotel guests are given the option of donating the local currency equivalent of US$1 by adding this to their hotel bills. All proceeds of this exercise go to the funding of WWF s on-going wildlife conservation work in Asia Pacific. Chemicals used for Spring City s course maintenance go through stringent quality checks. People Count 36

39 Asian Economic and Property Round-Up Global and Asian Economies 2000 Global economic conditions were healthy in 2000, despite the volatile stock markets worldwide and higher oil prices. However, after a promising run in the initial part of the year, global growth momentum began to ease as the year drew to a close. The US economy peaked with growth moderating to a more sustainable pace at 5.6%. In Japan, economic recovery petered out to a growth rate of 1.2% after initial momentum in The European Union held up better with a broad-based expansion of 3.6% on the back of robust domestic demand and buoyant export performance. Although growth momentum tapered off towards the end of 2000, the external environment was favourable on the whole and most Asian economies reported improved growth for the year. However, the recovery process was chequered across the region with North Asia leading the economic performance. Hong Kong and China posted stellar growth of 12% and 10% respectively while South Korea continued to extend its strong economic recovery with a GDP growth of 8.9% as corporate and financial reforms remained on track. In Southeast Asia, Singapore maintained its lead in terms of economic performance with a stunning 9.9% growth. Supported by strong export growth and pick-up in domestic demand, Malaysia also grew by a healthy 7.5%. Despite the persisting local political uncertainties and slow progress in corporate debt restructuring, Thailand, Indonesia and Philippines benefited from strong export demand and extended the recovery process to record growth of 4.3%, 4.8% and 3.9% respectively and 2000 Economic Growth Rates Per Cent US Japan European Union South Korea Singapore HongKong SAR China Taiwan Malaysia Thailand Philippines Indonesia Source: Ministry of Trade & Industry and various other official sources Focus: Market and Prospects 37

40 Asian Economic and Property Round-Up (continued) Singapore Economy 2000 The Singapore economy was vibrant in 2000, bolstered by the continued expansion of the manufacturing, wholesale and retail, hotels and restaurants, transport and communications, and business services sectors. The manufacturing sector chalked up an impressive growth of 15.2%, propelled by the vigorous expansion in the electronics industry. Bolstered by strong entrepot trade, visitor arrivals and consumer demand, the wholesale and retail sector doubled its growth in 1999 to record a 15.2% expansion in A record 7,691,090 visitor arrivals and higher domestic purchasing power supported the hotels and restaurants sector which grew by 8.2%. In the transport and communications sector, buoyant growth of 9% was registered in tandem with the improvement in regional trade and travel activities, and the liberalisation of the telecommunications industry. The financial services sector turned around with a healthy growth of 4.1%. The rebound was mainly derived from the increase in loans, and debt and equity issuance. On the other hand, the construction sector remained on a decline, but appeared to be bottoming out. Decline in the sector moderated to 4.6% on the back of higher volumes of non-residential construction activities and civil engineering works. The Singapore Economy - Sectorial Growth Rates Per Cent Overall Manufacturing Construction Wholesale & Retail Trade Hotels & Restaurant Transport & Communications Financial Services Business Services Source: Ministry of Trade & Industry Focus: Market and Prospects 38

41 Asian Property Markets 2000 On the property front, the performance of property markets in Asia was mixed, along with the divergent political and economic developments across the region. The road to recovery for most Asian property markets was choppy as financial difficulties continued to linger and fresh political uncertainties emerged. Nevertheless, Asian property sectors have made gradual but slow improvements, with investment opportunities existing within certain segments. The office sector led the rebound in property markets across the region. The rapid expansion of financial institutions, IT and telecommunications companies, and new e-business start-ups led to strong office demand and falling vacancies. In Australia, major office markets continued to put in strong performances despite a slower economy and weaker business sentiments. With limited new supply of quality office buildings in the CBD, rents grew 15.6% and 28.4% in Sydney and Melbourne respectively. While the regional office sector continued to strengthen, the regional residential sector did not fare as well. Private residential markets in Singapore and Hong Kong slowed down in 2000 after the impressive rebound in Despite sound fundamentals, prices flattened out in Singapore and dropped 13% in Hong Kong over concerns that the US economy was slowing down. In line with the strong leasing demand, office rents in most of the major Asian cities registered strong growth. In particular, prime office rents in Hong Kong grew an impressive 56.5%. In Singapore, strong demand coupled with a shortage of prime CBD office space drove CBD rents up 28.3%. Office rentals also increased in Kuala Lumpur (4.6%), Jakarta (24.3%), Shanghai (1.2%) and Beijing (41%). On the other hand, the faltering economic recovery in Thailand resulted in relatively flat growth while the political crisis in Philippines led to a decline of 22.4% in Makati s office rents. Rapid expansion of the office sector led the rebound in property markets across the region. Focus: Market and Prospects 39

42 Asian Economic and Property Round-Up (continued) Against the backdrop of political uncertainty, capital values in Bangkok and Makati fell 1.1% and 8% respectively. On the other hand, capital values increased 7.9% in Kuala Lumpur and 9.8% in Jakarta. Supported by firm expatriate demand, the rental markets were more active. Average prime rents increased in Singapore (7.1%), Hong Kong (4.8%), Kuala Lumpur (11.4%) and Jakarta (3.2%). However, rental markets in Makati and Bangkok remained weak and rents fell 9.2% and 0.5% respectively. Asian Economic and Property Outlook 2001 Although Asia may have emerged from the economic crisis, recovery remains burdened by the sluggish restructuring progress and lingering political problems. With looming threats of a recession in the US and the gloomy Japanese economy, the economic and property outlook for Asia is expected to be a challenging one in Despite the more volatile global environment, the outlook for Singapore remains stable. The unexpected budget surplus has put Singapore in a position of strength to ride out the fluctuations. The government s pro-business policy stance will also continue to attract foreign investments. In a March 2001 survey by Fortune Asia and Time Asia, Singapore was voted the best country in Asia for business, trade and investment. With economic growth in 2001 forecast to be healthy at 3.5% to 5.5%, the outlook for the office sector remains positive even though demand is likely to moderate in comparison to its record performance in On the other hand, performance of the residential sector remains vulnerable to prevailing weak sentiments. Nonetheless, fundamentals remain intact with the low interest rates environment and restoration of the employers CPF contribution. For the rest of Asia Pacific, the economic and property outlook will continue to fall into the north-south divide in line with the economic fundamentals and political uncertainties that mark the countries in the two regions. The stronger GDP figures and greater inflow of foreign investments have increased expectations that China, Hong Kong and South Korea will be able to produce better performances. For China, the accelerated economic growth going forward and its impending entry into the World Trade Organisation (WTO) have led to confidence and optimism in the property market. With growing affluence, government incentives for home ownership, favourable mortgage rates, and the desire for locals to upgrade, local housing is a promising sector in many parts of China. Focus: Market and Prospects 40

43 Benefiting from China s strong economic momentum as well as recent favourable measures by the Special Administrative Region government, prospects are looking up for the Hong Kong market. As for South Korea, it is pushing ahead with corporate and financial reforms, and will remain one of the favourite destinations for investments as distress sales of prime property assets by major corporations attract interest to the property market. Overall, the economic and property outlook for Asia Pacific is divided with North Asia looking brighter while Singapore emerges as one of the brighter spots in Southeast Asia. Nevertheless, patchy performances across the various countries and market segments present opportunities for diversification while low asset values in selected segments offer strong potential for returns. For Thailand, Indonesia and Philippines, economic recovery from the 1997 Asian financial crisis is being watched closely by the international community. However, the recovery is fragile as political factors disrupt the smooth path of recovery. Due to the overhanging uncertainties, the outlook of their property markets will hinge on the economic and political environment. On a more positive note, prospects are slowly improving in Philippines as the political climate stabilises. The gradual return of investor confidence bodes well for the economy and the property sector. In Malaysia, the currency control and expansionary budget coupled with various government incentives will help to cushion the impact of the slowdown in the US economy and provide support for the property market. China s accelerating economic growth and its impending entry into the WTO has raised optimism in the property market. Focus: Market and Prospects 41

44 Change and Impact Investment Properties Trading Properties The Group s principal investment properties are Ocean Building, Ocean Towers, Keppel Towers, GE Tower, Capital Square and Prudential Tower in Singapore, and Saigon Centre and International Centre in Vietnam. The rental income from these properties is sensitive to changes in their occupancies and rental rates for lease renewals. Assuming that average rental rates are maintained, a full year s impact on rental income for every 1% change in the occupancies of the above mentioned properties is approximately $1.1 million. In respect of committed leases and lease renewals, a full year s impact on rental income for every 10% change in average rental rates resulting from the new rates negotiated is about $10.7 million. The Group s profits from property trading is sensitive to actual sales achieved and the percentage of physical completion recognised during the year. Based on the actual sales contracts signed as at 31 December 2000, the incremental impact on Group pre-tax profit for every 5% of physical completion is about $0.1 million. For every additional 1% of sales achieved for projects which have been launched, the additional contribution to Group pre-tax profit is an estimated $1.8 million. This is based on physical completion projected and sales projected for the year, and the completed properties available for sale which the Group had at end Change in Rental Income Resulting from: $ million 1% change in occupancies (a) % change in average rental rates (b) 10.7 (a) Assuming current average rentals are maintained. (b) Based on committed leases and leases for renewal in Incremental Impact on Group Pre-tax Profit Resulting from: $ million For every 5% of physical completion (c) 0.1 For every 1% of additional sales (d) 1.8 (c) Based on actual sales contracts at 31 December (d) Based on physical completion projected and sales projected for the year, and completed properties available for sale at end Focus: Market and Prospects 42

45 In Retrospect... and Prospects Looking Back at 2000 Results and Initiatives Looking Ahead at 2001 Objectives and Outlook Group profit increased by 53.3% to $120.6 million. Value unlocking of Cluny Hill prime residential site. Completed and handed over more than 1600 Keppel Land homes in Palm Gardens, The Mayfair and Villa Verde to purchasers. Launch and construction of several new residential projects in Singapore, depending on market conditions. Launched sale of condominium units at Caribbean at Keppel Bay and Freesia Woods. Unlocking of value in the Group s office portfolio with suitable approach, for example securitisation, REITs, etc. Acquired a 45% stake in Five Stars Property, a company listed on the Stock Exchange of Thailand. Completed purchase of four development sites and other assets from TLB Land Limited. Also acquired: - Uraco Industrial Building in Singapore for development as a data centre; - Wisma BCA, a prime office development in Jarkarta; Joint-venture office development of Marina Boulevard site. Joint-venture development of The HarbourFront Office Park. Search for shorter-term trading projects and strategic acquisitions of property companies in North Asia, particularly China, Hong Kong, South Korea and Japan. Completion of acquisition of a 24.9% stake in Dragon Land. - Three sites for residential development in Shanghai. Focus: Market and Prospects 43

46 quality

47 year in review

48

49 Review Market and Operations REVIEW OF OPERATIONS SINGAPORE RESIDENTIAL New launches Keppel Land launched the unique waterfront property, Caribbean at Keppel Bay at the site of the former Keppel Shipyard in Despite poor market conditions, the project achieved good sales as buyers were sold on the Group s signature quality, thoughtful layouts and choice finishings. Freesia Woods located in Sunset Way was soft-launched in the last quarter of Caribbean at Keppel Bay The first and only one of its kind, Caribbean at Keppel Bay redefines waterfront living in Singapore with its unparalleled sea views, grand marina and spectacular water channels which bring the sea right up to the homes. Comprising 969 units of two- to four-bedroom luxurious condominiums with floor areas ranging from 840 sf to 6,135 sf, the project received enthusiastic response. Some 200 units were snapped up even before the official launch on 16 September Visitors thronged the Caribbean show house, and good sales were achieved. All were impressed with the signature quality, thoughtful layouts and choice finishings. Visitors to Caribbean s showflat were impressed with quality finishes and features such as the floor to ceiling french glass windows, the private lift lobby and the thoughtful half-sunken long bath. Caribbean is also the first of Keppel Land s Internet-powered homes equipped with state-of-the-art technology. These include broadband MARKET REVIEW Residential market weighed down by weak sentiments Despite the stellar economic performance, sentiments in the residential market were affected by volatility in the stock market and concerns over the US economy. House-buying momentum was generally sluggish for the year with the exception of the third quarter when demand rose to about 2,129 units. As a result, total demand for the year fell to 5,406 units while residential prices slipped 1% overall, with the 4.6% increase in the first half of the year offset by the 5.5% decline in the second half. Singapore s economic growth for 2001 is expected to be moderate. Concerns over the US economy and the performance of the local stock market will affect the near-term outlook of the residential market. Nevertheless, demand will be sustainable with the low interest rate environment and partial restoration of the employer s CPF contributions. Left: Singapore s new landmark, Caribbean at Keppel Bay will redefine waterfront-living. The Year in Review 47

50 REVIEW OF OPERATIONS access which allows residents to surf the web at high speeds, a wired local area network, home automation to control lights, air-conditioning and home-entertainment systems and a condominium web portal where residents can shop online, book facilities, e-pay maintenance bills, and form e-communities sharing similar interests. To date, more than 70% of the 430 units launched have been sold. Caribbean is the first residential development to be launched in the master-planned waterfront precinct, Keppel Bay. Keppel Corporation and Keppel Land hold 70% and 30% in Keppel Bay respectively. Keppel Land is also the development manager for Keppel Bay. Freesia Woods Fine finishes, efficient layouts, private lift lobbies and floor-to-ceiling windows are just some of the attractive features found in the one- to four-bedroom units, with floor sizes range from 1,023 sf to 2,680 sf. Residents of the eight penthouses have the added exclusivity of their own private roof terrace. Units are also equipped with smart features. To date, close to half of the 50 units soft-launched in November have been sold. Upcoming Launches In the coming months, Keppel Land will market its Cluny Hill bungalow sites with customised design-and-build options, Butterworth 8 condominium along Tanjong Katong and The Linc apartments in the Newton area. Freesia Woods is every homeowner s dream. The 129-unit freehold condominium is set within the tranquil Sunset Way residential enclave, and yet is a mere stone s throw away from Holland Village and the city, amenities and schools, entertainment and business centres. Cluny Hill Redevelopment As part of its strategy to continually unlock value in the Company to enhance shareholders returns, Keppel Land will redevelop its Cluny Hill site in the prime district 10 area into an exclusive residential enclave comprising Freesia Woods is located in the Sunset Way residential enclave. The Year in Review 48

51 REVIEW OF OPERATIONS good-class bungalows. Ideally located in the Botanic Gardens good-class bungalows vicinity, the 303,697 sf freehold site, when redeveloped, will yield a net saleable land area of 248,328 sf. Keppel Land will market the Cluny Hill bungalow plots with customised design-and-build options in the first half of This concept, a first in the real estate industry in Singapore, allows buyers to purchase plots with land areas ranging from 15,000 sf to more than 30,000 sf each and build the bungalow according to their own specifications. Keppel Land will also provide project management services for the entire process from conceptualisation to completion for buyers who prefer to have pre-designed homes but wish to avoid the hassle of having to project-manage the construction. Butterworth 8 Butterworth 8 is the largest freehold condominium in the Katong vicinity, with a total of 216 units spread over three 18-storey blocks. It is within walking distance to the Paya Lebar MRT station and close to reputable schools such as Tao Nan, Tanjong Katong Girls, Kong Hwa and Chung Cheng High. Like Caribbean and Freesia Woods, every unit at Butterworth 8 is also equipped with smart features such as pre-wired data or telephone points in all bedrooms, living room and kitchen, a web portal and broadband Internet access to allow residents to enjoy convenient connectivity. The Linc pool, gymnasium, children s pool and play area, barbecue area and basement carpark within the exclusive and quiet Newton residential enclave. The Linc offers 51 exclusive freehold apartments, with sizes ranging from 646 sf to 1,851 sf, complete with smart features. Quality Landbank Keppel Land s residential landbank currently stands at around 3.1 million sf of attributable gross floor area. About 75% of its landbank are freehold or 999-year leasehold in tenure. Of this, 60% are located in the prime 9, 10, 11 and 15 districts. The acquisition of properties and assets from TLB Land following the divestment of the company by Keppel TatLee Bank to the Ayala Group, was completed in May These include two 999-year leasehold sites at Mar Thoma Road, and freehold sites at Cairnhill Circle and Devonshire Road. Existing Residential Properties Nassim Woods, Keppel Land s luxury condominium at Nassim Road, continues to enjoy full occupancy. Tenants include expatriates from Europe and the United States. Some 98% of the 510 units at Pebble Bay, an exclusive waterfront project at Tanjong Rhu, have been sold, while the remaining units have been leased. Located at Lincoln Road, The Linc offers city living in a prime district, with easy access to the Newton MRT station which is just one stop from the Orchard Road shopping belt and entertainment centre. Yet, it is fine living as well with lifestyle facilities including a swimming Keppel Land s reputation as a major developer of quality homes was further strengthened with the completion and successful hand-over of 1,000 units from Palm Gardens and The Mayfair condominiums and another 515 terrace houses at Villa Verde to the owners in The Year in Review 49

52 REVIEW OF OPERATIONS MIXED DEVELOPMENT Bugis Junction is an integrated development comprising an office tower, large-scale retail space and the five-star Hotel Inter-Continental Singapore. Conveniently located above the Bugis MRT station, both the office tower and retail space are fully occupied. Similarly, Hotel Inter-Continental Singapore enjoys high occupancy rates averaging 87%. In addition, it has continuously received many awards for its efforts in conservation and contribution to the community. In early 2000, it won the Excellence Award in the Best Public Relations Work for the Environment category at the Public Relations in the Service of Mankind (PRISM) Awards OFFICE Keppel Land is one of the largest office landlords in the Raffles Place area. The Company s quality portfolio of investment properties include Ocean Building, Ocean Towers, Prudential Tower, Capital Square and Award-winning Hotel Inter-Continental Singapore continues to be recognised for its contribution towards conserving the environment. The Exchange in Raffles Place, as well as Keppel Towers, GE Tower and Bugis Junction Towers in the CBD area. All office buildings enjoy full or close to full occupancies. MARKET REVIEW Office Bumper year for office market with record take-up of 4.22 million sf The strong economic performance in 2000 saw GDP recording a 9.9% growth. Demand for office space surged to a record high of 4.22 million sf, a substantial jump from 1.67 million sf in The strong demand came from companies in the financial, information technology, media and telecommunications sectors. Prime office rents also saw a significant improvement of 36% since it bottomed out in As at end-2000, prime rents stood at about $7.50 psf per month and capital values remained firm at about $1,500 psf. Demand expected to moderate but outlook remains positive in the medium term Looking ahead, the economy is expected to continue to be healthy. However, GDP growth in 2001 is likely to moderate to %. Coupled with the slowdown in the US economy and possible consolidation of businesses, demand for office space will be affected. Nonetheless, the medium-term outlook remains positive due to tight supply of office space, especially in Raffles Place, and Singapore becoming an important hub for financial and other service industries. The Year in Review 50

53 REVIEW OF OPERATIONS Adding to Keppel Land s quality portfolio of office space is the Marina Boulevard site, which was recently awarded by the Urban Redevelopment Authority in March New Downtown at Marina South Keppel Land together with two Hong Kong developers, Cheung Kong and Hongkong Land, successfully tendered for the 1.14 ha Marina Boulevard site in March Located within the central business district, next to the Raffles Place financial hub, Marina South is the gateway site to the rest of the sprawling reclaimed land earmarked as the New Downtown, Singapore s new business and financial district. Designated a white site on which residential, commercial, hotel, retail or mixed-development can be built, the site will be used to develop two office towers with more than 1.3 million sf of net floor area. This project will have several firsts in terms of infrastructural features. These include the district cooling plant which serves as a centralised air-conditioning system for the adjoining sites to be released for sale in the future. The developers will provide about 32,200 sf of non-gfa space for the cooling plant, thereby ensuring more efficient layout of office space. A subterranean retail mall will link the new financial hub to the Raffles Place MRT station. This will inject greater vibrancy into the CBD and provide shoppers with a new shopping experience. In addition, a Downtown carpark hub, with 574 carpark lots will also be built to minimize downtown traffic congestion. With the scarcity of carpark space in prime CBD area, this serves to benefit the office towers tenants as well. Given the consortium s local, regional and global expertise and experience in developing internationallyrenowned properties, a world-class landmark showcasing the latest in design and construction technologies will emerge from the Marina Boulevard site. Capital Square Capital Square, a 16-storey office tower with 320,000 sf of Grade A office space as well as 19 units of boutique office suites, with an additional 49,000 sf of office space, was completed in January Its column-free floor plates spanning 31,000 sf per floor, is the largest in Raffles Place and is popular with financial institutions such as Citibank N.A., Barclays Bank, Salomon Smith Barney and Morgan Stanley Asia. To date, Capital Square office tower is 98% committed, while the boutique office and restaurant space are fully leased. In May 2000, Capital Square bagged two awards - the Certificate of Merit for Construction Excellence 2000 and Best Buildable Design at the Building and Construction Authority s Awards Presentation for its high standard of management, technical expertise, workmanship and environmental friendliness. The HarbourFront Keppel Land has garnered the partnership of major-league developers Cheung Kong Holdings and Hongkong Land to develop the first site in Singapore s new Downtown area. Adding to Keppel Land s portfolio of premier office buildings are the twin office towers at The HarbourFront Office Park. Strategically situated along Telok Blangah Road and next to the upcoming World Trade Centre MRT station, they enjoy easy accessibility to all parts of the island, great waterfront views and a whole host of amenities. The Year in Review 51

54 REVIEW OF OPERATIONS The twin office towers at The HarbourFront Office Park are jointly developed by Keppel Point Pte Ltd, a joint-venture between Keppel Corporation (70%) and Keppel Land (30%), and The HarbourFront Pte Ltd, a joint-venture between Temasek Holdings (80%) and PSA (20%). The HarbourFront Pte Ltd, with a 61% stake, will be the majority shareholder and manager of the development, whilst Keppel Point will hold the remaining 39% stake. The 18-storey twin office towers are scheduled for completion in 2003, slightly after the completion of the MRT station fronting the development. The existing Cable Car Tower will also be retrofitted and upgraded to meet the needs of modern office users and complement the new developments in the vicinity. When completed, the twin office towers and the Cable Car Tower will yield a total of 866,730 sf of net lettable area for lease. Construction of the twin towers has commenced and piling work has been substantially completed. Keppel Corporation s headquarters will be located in Tower One, next to the Cable Car Tower. Keppel Corporation has purchased another 31% stake in Tower One, bringing the Keppel Group s interest in Tower One to 70%. CONSERVATION SHOPHOUSES Keppel Land has in its portfolio, two rows of conservation shophouses, Heritage Court at Peck Seah Street and four shophouses at Joo Chiat Road. Heritage Court, located within walking distance to the Tanjong Pagar MRT station, is for commercial use. To date, seven out of the eight units have been sold while the remaining HarbourFront Tower One will house Keppel Corporation s headquarters. unit has been leased. The four freehold shophouses at Joo Chiat Road are for commercial and retail use. One unit has been sold, while two-thirds of the remaining spaces have been leased. INDUSTRIAL Keppel Land has two industrial buildings in the MacPherson and Paya Lebar Industrial Estates. Quartz Industrial Building, located at Aljunied Link, is a high quality, eight-storey freehold property. To date, 70% of the space have been sold, while 14 out of the remaining 16 units have been leased. Orion Industrial Building located at the Paya Lebar Road thoroughfare, is 60% sold. The remaining 29 units have all been leased. MARKET REVIEW Industrial Uneven performance in industrial market expected In line with the healthy growth of 15.2% recorded by the manufacturing sector, the industrial market appeared to have firmed up in Going forward, the global electronics downturn and the weaker economic climate are likely to affect the industrial market in Performance in the industrial market will be uneven with a better outlook for the high-tech industrial space segment, supported by the growth of data-hosting and co-location businesses. The Year in Review 52

55 REVIEW OF OPERATIONS KEPLANDEHUB Data Centres Established in early 2000, KeplandeHub Limited is the e-business arm of Keppel Land. Capitalising on Keppel Land s experience in regional real estate development and facility management, Keppel Digihub, a wholly-owned subsidiary of KeplandeHub, will build and operate data centres in the region. In Singapore, Keppel Digihub acquired the Uraco Industrial Building at Serangoon North for $29 million. The building will be ready in mid-2001, with more than 20,000 sf of space. Internet-Powered Homes In May 2000, a Memorandum of Understanding (MOU) was signed with Cisco Systems of USA, to develop and market the Internet-powered home. To promote the concept, KeplandeHub and Cisco created a model of the Internet-powered home at the showflat of Caribbean at Keppel Bay. Equipped with broadband Internet access, home automation and monitoring systems, the showflat served as a working platform for the parties as well as numerous other technology and e-lifestyle service providers. Internet-Powered Offices A MOU was signed in November 2000 with three other large office landlords - City Developments, Singapore Land and CapitaLand - to invest up to $5 million in a joint venture company which will develop and operate an on-line portal linking up office tenants, property managers and property owners. The portal, which is expected to be operational in the second half of 2001, will benefit tenants, property managers and owners by lowering operating and procurement costs. FUND MANAGEMENT To provide a new source of income from fund management fees and fees for providing other property services, Keppel Land joint-ventured with AMP-Henderson Global Investors to form Asia Real Estate Fund Management (AREFM). AREFM has been granted the Approved Fund Manager status by the Monetary Authority of Singapore, and is in the process of setting up Asia No. 1 Property Fund. The fund, which is targeted at institutional investors in the US, Europe, Australia and Asia, is expected to raise US$300 million. It will selectively invest in low-to-medium-risk property assets in Singapore and Asia. A fund management unit was also recently formed to pursue opportunities in real estate fund management. MARKET REVIEW Data Centres Emerging trend for data centres and co-locating facilities Bolstered by strong demand from IT and telecommunications players, the year saw an emerging trend for data centres and co-locating facilities in Singapore. There was also a notable increase in the number of industrial buildings acquired by data centre providers. The Economic Development Board s efforts to grow the data hosting and co-location businesses to reach $1-2 billion a year by end-2001 will underpin the outlook for the high-tech industrial space segment. Fund Management Compared to the United States and Australia, the Singapore real estate market has remained largely a primary one where real estate is held as a direct investment. However, the situation looks set to change with the Monetary Authority of Singapore s release of guidelines on setting up of property funds in May Coupled with the efforts to make Singapore a leading financial centre as well as a ready pool of capital backed by a high savings rate and Central Provident Fund, the potential for secondary real estate instruments such as property funds and REITs is promising. The Year in Review 53

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57 REVIEW OF OPERATIONS AUSTRALIA Sydney Botanic Cove Botanic Cove consists of a total of 235 apartments and townhouses. Overlooking the famed Hunters Hill in Sydney, the development is located in a district renowned for its magnificent river and creek views and heritage listed trees and flora. The tranquil and natural retreat which has access to 11 hectares of recreational area by the waterfront, is also only 15 minutes drive from the Sydney CBD. Owners of the 75 units under Phase 1A of Botanic Cove have settled into their homes. Phase 1B, comprising 42 apartments and townhouses, is presently under construction and almost all sold out. More than half of the remaining 118 units under Phase Two of the project have also been sold. The Crescent on Bayswater enjoys healthy occupancy rates of 77%, with retail space fully leased. Sydney Bayswater Village Bayswater Village, a hotel cum retail development with a five-storey basement carpark, is located in the tourist district of Kings Cross, Sydney. The 68-suite hotel, known as The Crescent on Bayswater and managed by Sedona Hotels International enjoys healthy occupancy rates of 77%. The retail space is also fully leased. MARKET REVIEW Australia Post-Olympics and post-gst corrections expected to affect economic growth The Australian economy continued to achieve steady GDP growth of 4% in 2000 with the communications, property and business services sectors contributing to much of the economic growth. Slower GDP growth of 3% is expected in 2001 with a correction in industries such as construction and housing which enjoyed strong growth due to the Olympics and the Goods and Services Tax implementation. Nonetheless, the overall outlook for Australia is still excellent on the back of continued job growth, low interest rates and relatively low inflation rates. Tourism and convention sectors to continue to benefit from Olympic exposure The tourism and convention sectors are expected to continue to enjoy long-term benefits from the hosting of the Olympic Games. The weak Australian dollar and strong marketing of the country are expected to attract visitors. Sydney and Melbourne residential markets peaked in 2000 The Sydney and Melbourne residential property markets have been experiencing a strong upturn since mid Home prices peaked in June 2000, following the run-up in demand in anticipation of the GST implementation on 1 July Prices in both markets are expected to decline in 2001 as the effects of reduced demand, higher interest rates and slower economic growth begin to set in. Left: Bugis Junction Office Towers houses Keppel Land s headquarters. The Year in Review 55

58 REVIEW OF OPERATIONS CHINA Shanghai Acquisition of Residential Sites In December 2000, Keppel Land acquired three adjoining sites in Shanghai, China for residential development. Located in the prime Jingan District, close to the Jingan Shi MTR station, the 1.03 million sf site will yield a total of about 3,000 apartments, complete with recreational facilities. Keppel Land has a 99% stake in this project, while the remaining 1% equity is held by Shanghai Jingan District Land Development Holding Company, a company wholly owned by the Jingan District. Development of the sites, which have a total land value of $229.5 million, will be carried out in phases. The land cost will be paid progressively over the next four years. strategic investment in Dragon Land will enable it to identify and capture opportunities in other growing cities. Shanghai Ocean Towers The Group is also developing a 25-storey office tower in Shanghai. Named Ocean Towers, the building is strategically located at Yan An East Road in the prime commercial district of Huangpu. It is also adjacent to the tunnel linking the Huangpu Central Business District to Pudong. When completed in the second half of 2001, it will yield 517,275 sf of gross floor area or 388,128 sf of net floor area. With China s impending entry into the World Trade Organisation (WTO) and Shanghai being developed as a major financial and commercial centre, the residential project is well-timed to meet the strong demand driven by growing affluence. Targeted at the middle to upper middle income groups of the local market, the first phase of the project comprising 1,000 units is expected to be launched in Acquisition of Stake in Dragon Land As part of a greater plan to expand its operations in the China market, Keppel Land has signed a conditional agreement with China-focused Dragon Land to acquire a 24.9% stake in the latter. Under the US$15 million (S$26.6 million) deal, Keppel Land will subscribe for about million Dragon Land shares at US$0.125 apiece. Its strategic investment in Dragon Land, whose real estate developments in China cover an area of more than 2,000 ha in the provincial cities of Qingdao, Shenyang, Changzhou and Anxi, will strengthen Keppel Land s move into the housing market in China. In adopting a two-pronged strategy for China, Keppel Land s China team will focus on major gateway cities, while its Ocean Towers, a 25-storey office tower located in the heart of the commercial district of Huangpu, will be completed in second half of The Year in Review 56

59 MARKET REVIEW China Rapid economic growth expected to accelerate China is entering into an upturn stage of its economic expansion. A stunning 10% GDP growth was achieved in 2000 with accelerating growth expected over the next few years. Its impending accession into the World Trade Organization will bring in more foreign investments and establishment of foreign enterprises. Residential Residential sector to maintain leading role in the real estate market Housing is expected to continue to lead the real estate market. The Chinese government s support for home-ownership, as seen in the introduction of tax rebates and other preferential policies, has bolstered sales across the country. The influx of foreign expatriates following China s WTO entry will see rising demand in the sales and leasing market of better grade housing. Office Bright prospects for Shanghai office market with WTO entry In Shanghai, more than 10.3 million sf of Grade A office space were taken up in 2000, doubling the take-up in Rentals reversed its downward trend and rose 40% to about US$25 psf per annum. The sales market, however, was relatively quiet. In view of the WTO accession and limited Grade A office space, the demand for quality office space is expected to remain strong as more foreign companies invest in China. The sales market is also expected to see a rebound with prices stabilising around US$186 psf. REVIEW OF OPERATIONS Kunming Spring City Resort Spring City Golf and Lake Resort is a world-class integrated holiday resort in Kunming, Yunnan. The resort enjoys mountain and lake views in a spring-like climate all year round. It is also less than an hour s drive from the Kunming Airport, which has direct links to Singapore, Macau, Hong Kong, Bangkok, Chiangmai, Yangon, Osaka and major Chinese cities. Phase One comprises two 18-hole golf courses designed by Jack Nicklaus and Robert Trent Jones Junior, a luxurious clubhouse with 49 exclusive lodges and luxurious resort homes and villas, business and conference facilities as well as other recreational facilities, including a newly-opened watersports centre. Keppel Land is spearheading the development with an effective 40% stake and is also managing the resort. Spring City is fast gaining a reputation for having two of Asia s best golf courses. The Jack Nicklaus-designed Mountain Course was ranked the Number One Golf Course in China and Hong Kong by the US Golf Digest in June The 18th Hole Par Four of the Mountain Course was also voted amongst the Best 500 Holes in the World by the US Golf Magazine in conjunction with Asian Golf Monthly and 10 other international publications in January The other golf course, the Lake Course designed by Robert Trent Jones Junior, was voted as the best course in China and second in Asia by Asian Golf Monthly in December The resort homes have similarly fared well. Following the sell-out and completion of the first collection of 50 resort homes, The Primrose, in the Spring City Golf and Lake Resort, Keppel Land launched the second and third collections, The Magnolia and Azalea I, in The Year in Review 57

60 Spring City in Kunming has award-winning golf courses, luxurious homes and the best of weather. REVIEW OF OPERATIONS The Magnolia was also a sell-out, with buyers snapping up all 82 units of luxurious villas. It is scheduled to be completed in mid Azalea I, comprising 42 apartments and 12 villas, was launched in July 2000 and has been equally well-received. HONG KONG Kowloon The Waterfront Kowloon MTR Station along the new MTR Airport Line. Other members in the Wing Tai-led consortium include Temasek Holdings, Singapore Land and Hong Kong s Lai Sun Development and Worldwide Investment. The project received its Temporary Occupation Permit in Some 60% of the 1,200 units launched have been sold. The remaining 88 duplexes will be launched in the second half of Keppel Land is part of a consortium developing a large-scale 1,288-unit condominium project above the MARKET REVIEW Hong Kong Residential market remained subdued in 2000 Although the Hong Kong economy experienced a strong export-led recovery with an impressive 12% GDP growth in 2000, its residential market remained sluggish. The weak market conditions saw many developers launching backlog units at discounts. Mass residential prices fell some 13% over the year. Property market to benefit from low interest rates and favourable government measures In 2001, the outlook of the property market remains hinged on the US economy, but it looks set to benefit from a more benign interest rate environment and salary increments. Recent government measures are also expected to bring greater confidence to the real estate sector. The SAR government recently reaffirmed its commitment to stimulate market activity as reflected by the announcements to cut land sales by two-thirds and ease rules against property speculation. The Year in Review 58

61 REVIEW OF OPERATIONS INDONESIA Jakarta Wisma BCA Keppel Land acquired Wisma BCA, a prime office development in Jakarta, for $57.5 million in September The sale was part of the asset disposal programme by the Indonesian Bank Restructuring Agency (IBRA). Comprising two office towers with a total net lettable area of 397,622 sf, the development is located in the heart of the financial and business district along Jalan Jenderal Sudirman and is within easy access to the Jakarta Stock Exchange, five-star hotels, embassies and the airport. The office towers are fully let with an attractive net rental yield of 11% per annum. Major tenants include the PT Bank Central Asia and the PT Mahameru Citra / Mercantile Club. The 112,419 sf site has further development potential as the plot ratio has not been fully utilised, and allows future development of a third office tower when market conditions are suitable. Jakarta Pasadenia Garden Keppel Land has a 25% stake in Taman Pasadenia, a residential development in Pulomas, Jakarta. Phase One, comprising 147 condominium units, was completed in Half of the units have been sold, while 30% of the remaining units have been leased. The unsold units have also been retrofitted in The Wisma BCA is a prime office development in Jakarta s financial and business district. The second phase of the development is currently in the planning stage. In the meanwhile, the land has been leased as a 40-bay golf driving range to generate revenue. MARKET REVIEW Indonesia Steady progress despite persisting political problems Due to the continuing political and security problems within the country, the Indonesian economy only showed signs of slow economic recovery with GDP growth of 4.8% in Despite the continuing problems, the banking sector re-capitalisation and corporate restructuring programme have been progressing. Corporate restructuring in the property sector, however, has not progressed as far due to discrepancies in the asset value assessment. The Year in Review 59

62 REVIEW OF OPERATIONS Bintan Ria Bintan Ria Bintan is a premier integrated resort within the Bintan Beach International Resort. The 447-ha development, comprising Club Med Resort, hotels, resort homes and golf courses, will be developed over four phases. Club Med Ria Bintan, a beachfront resort with 302 rooms, continues to attract international visitors with average annual occupancy close to 60%. The first 500 waterfront resort homes have been planned on a 22-ha site adjacent to the Club Med Resort. Development of Phase One, comprising 64 resort homes, is subject to market conditions. Ria Bintan Golf Club is a 36-hole championship golf course designed by Gary Player. The 18-hole Ocean Course and the first nine holes of the 18-hole Forest Course opened for play in October 1998 and December 2000 respectively. In 2000, the Ocean Course was awarded first runner-up in the Best Golf Resort in Asia, the Best Golf Course in Indonesia and the Best Par Four in Asia categories by the Asian Golf Monthly. The remaining nine holes of the Forest Course will be completed in later phases of the development. Yogyakarta Melia Purosani Hotel Melia Purosani Hotel is located in the heart of Yogyakarta city, near the Sultan s Palace and the main commercial street in Central Java. It also enjoys access to Borobudur, which is one of the seven ancient wonders of the world. Keppel Land has a 20% stake in this 296-room hotel, in which Singapore Airlines is also a partner. Measures to reduce costs and improve operating margins are still in force. Ria Bintan has recently won accolades such as the Best Golf Resort in Asia, Best Golf Course in Indonesia and Best Par Four in Asia by Asian Golf Monthly. The Year in Review 60

63 MARKET REVIEW Jakarta Office Jakarta office demand and rent showing gradual improvement The overall supply of CBD office space in Jakarta is estimated at 31.5 million sf in New businesses started by some IT companies and increased office space requirements by financial institutions saw slow but improving demand with average occupancy rate of 75.7%. Average CBD gross rent increased by 13.1% to Rp 8,751 psf per month or US$0.91 psf per month while capital values increased slightly to Rp 0.70 million psf or US$72.28 psf. In 2001, demand is likely to increase slightly on assumption of expansion in information technology and telecommunications, trading, insurance and other financial services generating demand for CBD office space. Rentals are expected to continue to increase, albeit slowly. Residential Apartment rentals and condominium prices in Jakarta begin to pick up Total stock of residential units available for rent increased by 1.5% to 14,711 units as of December Likewise, average occupancy also increased slightly to around 57% with projects in prime residential areas attracting higher rentals of around US$1.28 psf. In the condominium market, total supply was 26,015 units as of December An overall sales rate of about 76% was achieved. The secondary market was more active and drove average prices of condominiums in the CBD and prime locations up 18.1% and 9.8% to about Rp 0.98 million psf and Rp 0.78 million psf respectively. Going forward, positive demand growth for rental apartments is likely to continue in 2001, providing a strong base for rental increments. In the condominium sales market, transactions will remain more active in the secondary market, but sales activity in the primary market may pick up as developers continue to offer more attractive prices. REVIEW OF OPERATIONS Surabaya Galleria Tunjungan Surabaya Wijaya Centre site Keppel Land is part of a joint venture which is developing a retail and office complex on a prime 251,705 sf site in the heart of the Central Business District of Surabaya. Named Galleria Tunjungan, the first phase of the project will comprise about 818,000 sf of retail space. Keppel Land has an 80% stake in another retail-cum-commercial complex which is being planned on a 279,864 sf site in Surabaya CBD. The Year in Review 61

64 Club Med Ria Bintan continues to draw in international visitors. REVIEW OF OPERATIONS Manado Hotel Sedona Manado Bali Tanah Lot Beach Resort Located at Tateli, 12 km from Manado, the capital of North Sulawesi, Hotel Sedona Manado offers access to some of the world s most magnificent diving sites with pristine coral reefs and crystal clear waters. The hotel will have 247 deluxe rooms and suites, with recreational facilities such as a private swimming lagoon and a Dive and Sea Sports Centre. The opening will be timed according to market conditions. Tanah Lot Resort is an integrated resort development located along the southwestern coastline of Bali, overlooking the Indian Ocean. International class hotels and resort homes have been included in the masterplan of this 108 ha site. Land acquisition activities to consolidate the site are in progress. MARKET REVIEW Surabaya Retail Positive demand for Surabaya retail space due to supply shortage Cumulative supply of retail space remained unchanged at 2.3 million sf as construction of retail projects continued to be put on hold. The result was an increase in occupancy levels by 5.5% to 92% with quality centres achieving almost full occupancy. As at December 2000, average monthly rents of around Rp 11,093 psf were achieved for prime ground floor space. Due to the lack of supply of new retail space, demand for retail space is expected to continue to be positive with increasing rental rates. The Year in Review 62

65 REVIEW OF OPERATIONS MALAYSIA Johor Taman Sutera In Johor, Keppel Land together with joint-venture partners, is developing a township project on about 500 ha of land. The project, named Taman Sutera, is strategically located close to the city centre and Senai International Airport. It is also well-connected by the North South Highway and the second causeway between Malaysia and Singapore. The township will have residential and commercial space as well as recreational facilities. A bridge will also be constructed across Skudai River in Johor Bahru. Upon completion, the bridge will provide greater convenience for residents, with direct access to the Skudai Expressway. Response to the 1,418 houses and shopoffices launched has been good, with 83% of the units sold. Another 240 affordable housing and 193 double-storey terrace houses are expected to be launched in Penang Taman Jernih Keppel Land is currently developing a 14.4 ha freehold site in Bukit Mertajam, Penang, for residential use. The development, known as Taman Jernih, is a joint-venture with the Malaysian Boustead Group. To be developed Taman Jernih is a 14.4 ha freehold residential site in Bukit Mertajam, Penang, jointly developed with the Malaysian Boustead Group. over four phases, the entire development will have a total of 517 landed residential units, comprising 367 terrace houses, 28 semi-detached houses and 120 linked houses and two bungalow plots when fully completed in end Phase One of Taman Jernih, comprising 85 terraces and 16 semi-detached houses, has been sold and handed over to the buyers. The second phase comprising 206 units, was launched in 2000 and achieved 78% sales. Another 174 residential units and two bungalow plots under Phase Three and Four are expected to be launched in MARKET REVIEW Malaysia Global economic climate dampened economic and property market sentiments Underpinned by a robust export-oriented manufacturing sector, the Malaysian economy continued to recover and recorded a 7.5% GDP growth rate in However, the deteriorating performance of the US economy, which accounts for 20% of Malaysia s exports, dampened the economic climate. Coupled with negative sentiments in the stock market, general confidence in the property sector was affected. To spur the property sector, additional incentives were introduced in the 2001 Budget to create buying interest, and the home ownership campaign was organized for the third consecutive year. However, the campaign drew conservative response despite developers offering incentives such as price discounts, free legal and stamp duties, flexible down payment schemes, free furniture packages and lucky draws. In its latest move to cushion the impact of the US economic slowdown, the Malaysian government recently announced that it is relaxing the Foreign Investment Committee s rules governing the ownership level and acquisition of properties to enable easier entry for foreigners. The Year in Review 63

66 MARKET REVIEW Stable residential prices in Johor and Penang despite weaker sentiments Reflecting the negative market sentiments, the take-up rate of new launches in Johor declined to about 32%. Prices, however, remained unchanged. Terrace and semi-detached house prices ranged around RM260,000 RM720,000 in prime areas and RM160,000 - RM340,000 in secondary areas. Supported by low interest rate loan packages and higher discounts, new launches in Penang achieved an overall sales take-up rate of 41%. In prime locations, prices of semi-detached and detached properties saw an increase of 7-12% to RM340,000 RM900,000 with a smaller increase of 5-6% to RM220,000 RM530,000 in secondary locations. REVIEW OF OPERATIONS MYANMAR Yangon Sedona Hotel Yangon Situated along Yangon s famous Kabe Aye Pagoda Road, Sedona Hotel Yangon is close to the airport, city centre, and cultural attractions such as the Shwedagon Pagoda and Inya Lake. Opened in 1996, it is known to be one of the best business hotels in Myanmar. However, trade sanctions imposed on Myanmar has affected the business environment. The leisure segment has also been affected by a decline in Japanese tourists due to the cancellation of direct flights from Japan to Myanmar. Average occupancy for the hotel stood at close to 50% for the 175 rooms in operation. Reputed to be one of the best business hotels in Myanmar, Sedona Hotel Yangon is situated just by the famous Kabe Aye Pagoda Road. The Year in Review 64

67 REVIEW OF OPERATIONS Mandalay Sedona Hotel Mandalay Sedona Hotel Mandalay is located opposite the Mandalay Palace, close to the city centre. The shift in marketing focus to the leisure segment, particularly from Europe, has helped achieve full occupancy for the 56 rooms in operation, a 14% improvement over the previous year. With marketing efforts geared towards promoting online reservations through Sedona Hotels International s website and developing strategic business alliances with airlines and travel agents to increase visits to Myanmar, occupancy rates are expected to improve further in Sedona Hotel Mandalay provides luxurious hospitality to tourists and business travellers. MARKET REVIEW Myanmar Economic progress hindered by political impasse The political impasse in Myanmar continued to take a toll on the economy. In addition, weak industrial growth and depressed construction and property sectors also hampered economic recovery, while the imposition of trade sanctions saw an increasing number of foreign firms relocating elsewhere. GDP growth for 2000 was 5%. On a brighter note, the tourism sector may pick up in 2001 as arrivals from neighbouring countries start to recover. In December, Myanmar and China signed a co-operation agreement on tourism, which may see a modest increase in package tours and other tourist arrivals from China. Aside from China, Myanmar is also actively seeking to boost arrivals from other Asian countries. The Year in Review 65

68 REVIEW OF OPERATIONS PHILIPPINES Manila Metro North Township Restructuring of Keppel Philippines Property In the Philippines, the restructuring of Keppel Philippines Property (KPP) to focus on real estate is in its final stages. During the year, KPP divested its stakes in non-core businesses such as its 20% stake in Keptrade Engineering Supplies. It also plans to sell off the 22% and 7.2% stakes in KMP Engineering and KP Engineering Services respectively. KPP also entered into a long-term option agreement to form a joint venture with Araneta Properties to buy and develop the latter s 600-ha land parcel in San Jose Del Monte, north of Quezon City, Manila. The land parcel will be developed into Metro North Township, a comprehensive residential township with commercial Metro Manila Palmdale Heights In view of the soft market in the office and high-end residential sectors in the Philippines, KPP has selectively focused on sectors with sound fundamentals such as middle-income housing, under the brandname of Buena Homes, and retail. KPP is jointly developing a commercial and residential project named Palmdale Heights with Phinma Properties Holdings. Located in Pasig City in Metro Manila, the development will comprise 29 apartment blocks, two commercial centres, three parking buildings and recreational facilities when fully completed. Ground breaking for the project took place in October Phase One, comprising three residential blocks with more than 400 units, will be launched in Palmdale Heights comprises homes targeted at the middle-income group in the Philippines. and recreational facilities for the middle-income market. The initiative is in line with Keppel Land s regionalisation plans to increase its investments in trading projects overseas. MARKET REVIEW Philippines New administration offers better prospects for economic reforms The new administration is expected to usher in positive reforms to the Philippines economy and strengthen investor confidence. The economy remained resilient despite the political crisis and expanded 3.9% in 2000 on the back of robust performance by the services sector. The services sector is expected to continue to propel economic growth in 2001 with a GDP growth of 3-4%. Retail Resilient retail sector continued to enjoy strong growth The retail sector continued to put in a robust performance in The resilience of the sector is encouraging expansion by major retail players, like Shoemart, as their existing chains of malls enjoy high occupancy rates of close to 100%. Rental rates remained buoyant with rentals of prime retail space ranging from PHP psf. The local retail scene is expected to be livelier with the liberalization of the retail trade and the potential entry of international players like Wal-Mart. The Year in Review 66

69 REVIEW OF OPERATIONS Metro Manila SM-KL Towers KPP is also developing SM-KL Towers in Ortigas in Metro Manila, Philippines. The development comprises two 55-storey office towers and a 70-storey residential tower interlinked by a five-storey retail podium. Construction of Phase One of the retail podium is currently underway and is expected to be completed in the fourth quarter of Meanwhile, Benguet Centre, an existing six-storey office building on the development site, continues to enjoy practically full occupancy, way above the average occupancy rate of 81% for similar Grade B office space in Ortigas CBD. The SM-KL Towers in Ortigas, set to redefine the Metro Manila skyline, will comprise two 55-storey office towers and a 70-storey residential tower, interlinked by a five-storey retail podium. MARKET REVIEW Philippines Residential Luxury residential market under pressure while middle-income housing remained buoyant The lacklustre economy and political uncertainty resulted in a slow market for the luxury residential sector. Monthly rents in Ortigas and Makati remained soft at PHP24 psf and PHP28 psf respectively. New high-end residential developments from emerging communities are expected to aggravate the existing oversupply situation. As a result, rents and capital values will remain vulnerable to downward pressures. In contrast, the middle-income housing sector is expected to remain buoyant on account of strong end-user demand and stable outlook for mortgage rates. Office Consolidating office markets in Makati and Ortigas expected to bottom out in 2001 The terse political situation resulted in a marked slowdown in the demand for office space. The office markets in Makati and Ortigas were subdued with activities limited to relocations by companies to better premises and consolidation of operations to single locations. As at end-december 2000, average monthly rents in Makati and Ortigas declined to PHP38 psf and PHP30 psf respectively. Although the eventual change in government led to an improved investment climate, the office market is expected to continue to consolidate with capital values and rental levels bottoming out in The Year in Review 67

70 REVIEW OF OPERATIONS THAILAND Five Stars Property Five Stars Property, the company which Keppel Land acquired a 45.5% stake in 1999, is debt-free. Properties under its portfolio include strata units in Sukhaphiban 3 Mansion, a residential apartment in Bangkok; Jewellery Centre, a 34-storey commercial tower in the Surawong area of the Central Business District; and Nana Tai Mansion, a 157-unit serviced apartment development at Sukhumvit 4, in Bangkok. Nana Thai Mansion has just been refurbished. Five Stars Property will focus on local detached housing for trading profit, taking advantage of the improved market conditions, competitive interest rates, limited supply of new homes and the government s measures to encourage home ownership. Five Stars Property has residential and commercial properties in its stable. MARKET REVIEW Thailand Gradual economic recovery with opportunities within certain property market segments Bolstered by low interest rates and broad stability in exchange rates of around 40.2 baht against the US dollar, the Thai economy grew 4.3% in The moribund Thai property market also began to make tentative improvements, with opportunities within certain market segments. Office Improving demand but office sector continued to lag behind other property sectors The Bangkok office sector put in a better performance on the back of demand from IT and dot.com companies as well as manufacturing companies with expansion plans. Overall vacancy in the CBD fell to about 35%. Despite the improved demand, the Bangkok office sector continued to lag the other property sectors as it remained weighed down by some 24.8 million sf of vacant space. Stiff competition drove office rents downwards to approximately 32 baht psf per month while capital values averaged at 3,066 baht psf. Residential Housing market on steady platform to recovery with positive outlook Helped by historically low mortgage rates, demand gradually returned with top residential developments achieving occupancy of around 86.9%. Capital values averaged around 2,852 4,366 baht psf. The housing market was more active in 2000 as developers ready-to-move-in housing concept enjoyed good response. The outlook for housing is positive, as the government has adopted various incentives in addition to extending existing measures to encourage demand. The Year in Review 68

71 REVIEW OF OPERATIONS VIETNAM Ho Chi Minh City Saigon Centre Keppel Land owns 68% of Saigon Centre, a landmark development fronting Le Loi Boulevard, Ho Chi Minh City s main thoroughfare. To be developed in phases, the development will comprise international-class office buildings, serviced apartments and a hotel interlinked by a retail podium when fully completed. Phase One, comprising three levels of basement carpark, a 25-storey office tower above a three-storey retail podium and 89 serviced apartments, was completed in Despite an oversupply of office space, Saigon Centre s occupancy stands at 96%. It is the preferred address of MNCs, consulate offices as well as legal and financial institutions and has attracted tenants such as Deutche Bank, Mitsubishi Corporation, AIA, Consulate-General of the Republic of Singapore and United States Information Service. Similarly, despite tough competition among serviced apartment operators, Sedona Suites in Saigon Centre has also achieved an annual occupancy of 98%. Sedona Town Club, the business and recreational club within Saigon Centre, has also been the venue of a number of corporate functions and has played host to several international business delegations. The retail podium is fully-leased and is popular with both locals and the expatriate community. The landmark Saigon Centre enjoys good occupancy despite challenging market conditions. In 2000, Saigon Centre received international recognition with the top award of Excellent Grade in the International Asia Pacific Quality Award Competition. It is the first property development in Vietnam to receive this prestigious award. Companies were assessed on their strategic planning and business plan, customer and market focus, human resources and process management, and leadership. MARKET REVIEW Vietnam Positive developments expected to spur economic growth Vietnam s GDP grew 6.75% in 2000 despite a continued decline in foreign direct investments. The situation is expected to improve, as the signing of the Bilateral Trade Agreement with the US in July 2000 will spur foreign investments into the country. The establishment of Vietnam s first Securities Trading Centre in July also marked a positive development in the Vietnamese government s efforts to reform and liberalize the economy. GDP growth for 2001 is forecast to be 7.5%. The Year in Review 69

72 MARKET REVIEW Vietnam Office Oversupply in office market but rents appeared to have bottomed out In Hanoi and Ho Chi Minh City, the oversupply condition continued to persist in the office market although rents appeared to have bottomed out. Monthly rents for international standard offices ranged around US$ psf per month with good occupancy levels of 80-90%. Residential Low residential rental rates spur flight to quality apartments Rental rates of apartments were relatively stable in Rents of good quality apartments with some recreational facilities averaged US$ psf per month. The low rental rates saw many expatriates upgrading to better-managed apartments, resulting in higher occupancy of 80-90% for good quality apartments. REVIEW OF OPERATIONS Ho Chi Minh City Tamarind Park Tamarind Park, a proposed 20-storey apartment tower located at Thai Van Lung Street in Ho Chi Minh City s prime District 1, is only a stone s throw away from major hotels, commercial establishments, embassies and government offices. Its prime location is expected to be popular with the expatriates. The development will feature a total of 173 furnished residential apartments complete with full recreational facilities. Hanoi International Centre International Centre, strategically located at Ngo Quyen Street, is the first international standard building to be built in the CBD of Hanoi. It offers more than 81,600 sf of prime Grade A office space in an eight-storey office block. International Centre has an occupancy of 85% from international tenants such as Citibank, Telstra, Singapore Airlines, Pricewaterhouse Coopers, ING Barings and Allianz AGF. International Centre enjoys good occupancy with an international tenant profile. The Year in Review 70

73 REVIEW OF OPERATIONS Hanoi Royal Park Vung Tau Petro Vietnam Towers Royal Park in Hanoi comprises 175 serviced apartments and villas with comprehensive clubhouse facilities managed by Sedona Hotels International. Located just 15 minutes drive away from the bustling city and on the edge of Ho Tay Lake, Sedona Suites Hanoi is popular with diplomatic corps, businessmen and expatriates. It is also the market leader in terms of occupancy and rental rates in Hanoi, with annual average occupancy of more than 90%. Petro Vietnam Towers, the first international standard building in Vung Tau City, was completed in mid With 134,173 sf of prime office space, Petro Vietnam Towers has attracted tenants from various industries such as the oil and gas, petrochemical and financial industries. Keppel Land has a 12.9% stake in Petro Vietnam Towers. Keppel Land s investments in Vietnam include quality residential, office and hospitality properties. Hanoi Vietcombank Towers Keppel Land has a 6% stake in Vietcombank Towers, a 22-storey prime office building with fully integrated building services. The development, which has a net lettable area of about 207,000 sf, is expected to be completed in The Year in Review 71

74 REVIEW OF OPERATIONS SEDONA HOTELS INTERNATIONAL Sedona Hotels International continues to deliver the best in hospitality and comfort, ensuring the highest standards of service quality in all its hotels and serviced apartments. Operating under the Sedona Suites brand name, the serviced apartments in Hanoi and Ho Chi Minh City have performed well. Despite keen competition in both cities, Sedona Suites Ho Chi Minh City and Sedona Suites Hanoi have achieved high occupancies of 96% and 92% respectively. In Myanmar, business travellers have declined as a result of the continuing trade sanctions. The leisure market has also been adversely affected, especially in the Japanese market as direct flights from Japan to Myanmar have been cancelled. The Crescent on Bayswater in Sydney performed well, enjoying an occupancy of 78%. Marketing Initiatives Sedona s marketing strategies have moved into cyberspace, and the eyeballs garnered have translated into substantial room nights for all properties. The corporate website now provides real-time online reservations for Sedona s Internet-savvy customers. Sedona also participated in major trade shows like the Asean Tourism Forum held in Bangkok, International Travel Bourse in Berlin and Travel Indonesia Mart and Exhibition in Jakarta. Strategic Alliances Sedona Hotel Yangon s occupancy for the year was about 45% for the 175 rooms in operation. Sedona Hotel Mandalay fared better than the Yangon property, achieving an occupancy of 95% for the 56 rooms in operation this year, up from 82% in Sedona has been actively seeking strategic partnerships with travel partners such as airlines and travel agents. To create synergy with these partners, Sedona has designed promotional packages to Myanmar, Australia and Indonesia. Sedona Hotels International will face challenging market conditions, but will pro-actively seek new markets to boost occupancy. The Year in Review 72

75 MARKET REVIEW Hotels and Resorts Fierce competition continued to push down rates and yields Strong visitor arrivals into Asia were recorded in Seoul, Bali and Tokyo were the star performers reporting major growth in revenue per available room. However, certain markets remained in the doldrums. The Indonesia, Philippines and Myanmar tourism markets continued to report poor performance. The depressed demand environments in these countries have resulted in lower occupancies, room rates and yields. In Indonesia, the tourism outlook remains bleak against the backdrop of prolonged political and social uncertainty. Similarly, Myanmar s tourism will continue to be affected by the ongoing trade sanctions and negative publicity on the country. On the other hand, the Vietnam tourism sector is more promising as the establishment of the United States Vietnam Bilateral Trade Agreement will lead to an influx of foreign direct investments and stronger demand for accommodation. REVIEW OF OPERATIONS Collaborative efforts with credit card companies have resulted in our inclusion in Keppel Card s Redemption Programme as well as the recently incorporated HSBC s Rewards Programme. Sedona has also struck an alliance with one of the world s largest reservations service networks that include the major global distribution systems to promote the properties to corporate and travel accounts. Community Relations Sedona has always been committed to cultivating a close relationship with the local communities. Sedona Hotel Yangon participated in Myanmar s annual Hospitality Charity Ball, which was a fund-raising event to benefit the welfare and education of children. One recent project was the reconstruction of a pre-primary school in Mine Thauk Village. Sedona Hotel Mandalay sponsored a one-year hospitality course for local high school graduates. Over in Vietnam, Sedona Suites Hanoi s donation drives have benefited the flood victims in Hue, the Red Cross Association, the School for the Deaf and Dumb and the disabled children at Thanh Xuan Village. Sedona continues to work with the local communities. The Year in Review 73

76 REDEFINING SINGAPORE S NEW WATERFRONT Keppel Bay - Exclusive Homes by the Sea Marketing Launch of Caribbean at Keppel Bay A decade of hard work and planning culminated in the successful launch of the Caribbean at Keppel Bay on 16 September 2000, marking the beginning of the transformation of Keppel Shipyard into a premier waterfront housing district. The first and only one of its kind, Caribbean at Keppel Bay redefines waterfront living in Singapore, with its unparalleled sea views, a marina and spectacular water channels. Caribbean is the first residential project to be developed on the 32-ha waterfront site, which is destined to be a major landmark in Singapore. The development with a total gross floor area of 1.43 million sf consists of 969 units housed in 22 blocks. The development is scheduled for completion in The other three residential projects to be developed over the next five to seven years will also bear the suffix Keppel Bay, reinforcing the unique identity of this waterfront district. Together, the four projects will provide 2,700 homeowners with a lifestyle, not experienced previously in Singapore. Keppel Land, which holds 30% equity of the entire waterfront project, is also the development manager. Keppel Corporation holds the remaining 70%. The Year in Review 74

77 To showcase this prestigious project, a two-storey mega showhouse with 20,000 sf of floor space was built right by the waters edge, complete with three showflats, comfortable discussion areas, massive display models, a children s playroom and a projection viewing area. Enticing potential buyers with their innovative features, design and quality, the three showflats - two-, three- and four-bedroom types - were done up with different interior decor to appeal to varied tastes. Full-height windows accentuated the views of the sparkling sea waters and Sentosa Island. Cruise liners sailing majestically through the sea channels as well as Sentosa Island lighted up magically by fireworks were a visual treat to all present. The crown jewel of Keppel Land s stable of properties, Caribbean at Keppel Bay has redefined the concept of waterfront living. The Year in Review 75

78 Keppel Bay - Exclusive Homes by the Sea (continued) The marketing launch of Caribbean at Keppel Bay also served as a platform for the cross-selling of the Keppel Group s products and services. Buyers could purchase homes bundled with a competitive Keppel TatLee Bank mortgage loan, a fire insurance policy from Keppel Insurance and a Keppel Life credit card along with other benefits. Almost 200 apartments, including penthouses, were snapped up during the soft launch in August outperforming all other market launches in the third quarter. So far, 310 out of the 430 apartments launched have been sold. To help visitors and potential buyers imagine what living at Caribbean would be like, a 3-D animated fly-through was commissioned from a leading Australian visualisation production house. The fly-through with its specially rendered 3-D images depicting the entire sprawling development with its facilities such as clubhouse, lagoon with water features, swimming pools and water-edged pavilions helped buyers visualise the unique waterfront lifestyle. Presentation to Analysts Analysts were invited for a presentation and special preview before the public launch. At the public launch, visiting families were given personalised tours of the show apartments with its distinctive lifestyle features such as the full-height glass windows, a half-sunken bathtub, and the smart home features. A comprehensive website provided a virtual walk-through of the showflats, floor plans, information on the location and amenities, as well as a history of the site. Living at Keppel Bay The unparalleled premium location has the sea and Sentosa Island as its frontage, Mount Faber as its backdrop, the Keppel Golf Course and Labrador Park along one boundary, and The HarbourFront Office Park and Maritime Square entertainment hub on the other. It enjoys easy access to major expressways and is ten minutes drive to Raffles Place, the heart of the financial district. The new HarbourFront MRT station, which is scheduled for completion in 2003, is also within walking distance and only three MRT stations from the Raffles Place Interchange. This rare confluence of location strengths are factors which help to raise Keppel Bay to crown jewel status. However, the key attraction of Keppel Bay is the waterfront lifestyle - the experience of living by the sea. This was borne out by buyers surveyed after they had purchased the homes: almost everyone identified the one compelling reason for purchase as the proximity to the seafront. The waterfront-living experience has been carefully woven into the modern architecture and design complete with quality finishings, and the conversion of the existing historic docks into private waterways within the development. To maximise the views of the sea and waterways, Caribbean at Keppel Bay s 22 apartment blocks are stepped gradually from four to ten storeys. Apartments have been designed from the inside out to have optimal water views through full-height glass windows. Residents can look out to the sea and the marina, views of the private waterways, lagoons, swimming pools and water features. Pavilions and courtyards encourage residents to interact within the development. Providing a subtle link to its heritage, paving materials will be selected to echo the character of the docks. With its 1,200 m long shoreline, Keppel Bay is about gracious waterfront-living in a premium location. Apartment types in the project range from twobedrooms to penthouses with floor areas ranging from The Year in Review 76

79 840 sf to 6,135 sf. There are a total of 71 different layouts. The development is slated for completion in Residents will enjoy the convenience of broadband high-speed access, a condominium portal and intelligent linking of the entire residential community. Residents will have their own unique Prospective buyers desires have been closely studied at pre-launch focus group discussions, followed by surveys of actual buyers and visitors to the show houses. The results reiterate a strong aspiration for seafront living. The HarbourFront Precinct Adjacent to Keppel Bay, the existing World Trade Centre area is also planned for redevelopment into another waterfront precinct with an office park and a sprawling entertainment and recreational hub. Together with the Keppel Bay, this precinct will form a continuous 52-ha stretch of waterfront city in southern Singapore giving residents at Keppel Bay easy access to sophisticated shopping, dining and other entertainment and recreational facilities. The HarbourFront Office Park, which comprises twin 18-storey office towers and the retrofitting and upgrading of the existing Cable Car Tower, is jointly-developed by Keppel Point Pte Ltd and The HarbourFront Pte Ltd. Keppel Point is a joint-venture between Keppel Corporation (70%) and Keppel Land (30%), while The HarbourFront is a joint venture between Temasek Holdings (80%) and PSA Corporation (20%). The HarbourFront, with a 61% stake will be majority shareholder and manager whilst Keppel Point will hold the remaining 39% stake. The office park is scheduled for completion in When completed, Keppel Corporation s headquarters will be located in Tower One. Keppel Corporation has acquired another 31% stake in Tower One to bring the Group s interest in Tower One to 70% upon completion. Office space in both office towers will be available for lease. The office development will add to Keppel s quality portfolio of premier office buildings. Apart from its convenient location of being just three train stops from Raffles Place, and intelligent features, the office development will enjoy the special ambience of the sea. Together with the surrounding lush greenery and the exceptional waterfront residential development next door, The HarbourFront Office Park will be the ideal business address in the New Economy. Tower One of the HarbourFront Office Park will house the Keppel Group s headquarters. The Year in Review 77

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81 financial report

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83 FINANCE Overall Financial Performance For 2000, Group attributable profit amounted to $120.6 million. The results included the profit from Villa Verde and Pebble Bay, the maiden profit contributions from Caribbean at Keppel Bay and Freesia Woods, adjustments of costs in respect of completed projects and release of certain provisions no longer required, as well as higher earnings from the Group s investment properties. Proposed dividend per share was 3.0 cents, same as the previous year s. 1,600 1,400 1,200 1, Total Sales ($ million) 1, , , , Earnings per share was 17.1 cents, compared with 11.8 cents in At end-2000, shareholders funds increased by 4.2% to $2,240 million. Group Associates Return on shareholders funds was 5.5%, compared with 4% in Sales 300 Group Profit ($ million) Total sales (including associated companies) was $826.2 million compared with $1,326.1 million for Consolidated sales (i.e. sales excluding associated companies) were $500.5 million versus $996 million for the previous year Revenue from Property Investment rose by 10.7% while Property Trading declined by 50.1%. Hospitality and Services showed a marginal increase Earnings Profit before Tax Attributable Profit Operating Profit Operating profit for 2000 was $168.6 million, compared with $157.1 million for Earnings and Dividend Per Share (cents) The Group s share of associated companies profit was $10.4 million compared with $20.7 million in Group profit before tax was $158.9 million, compared with $141.3 million in Left: Innovative features in Keppel Land s projects add splashes of colour to life. Earnings before Tax Earnings after Tax but before Extraordinary Items Gross Dividend The Year in Review 81

84 FINANCE Taxation for the year was $29.4 million, equivalent to 18.5% of Group pre-tax profit. Group attributable profit for the year was $120.6 million, compared with $152.3 million in the previous year, which included extraordinary items of $73.6 million Return on Shareholders' Equity (%) Cash Flows During 2000, the Group incurred $512.8 million in development expenditure. Purchases of fixed assets, additional investment in associated companies and other investments amounted to $305.6 million. A further $35.5 million was for tax payments and dividends to shareholders Return before Tax (%) 2000 Cash generated from operations amounted to $216.5 million. Proceeds from progress billings and sale of fixed assets were $669.1 million, and the net loan drawdown was $124.2 million. Return before Extraordinary Items (%) Dividend Payout Total Dividend Paid Dividend Per Share ($ million) (Cents) The overall net cash inflow was $200.7 million, represented mainly by increase of short-term deposits and reduction in borrowings with related companies. In 1999, there was a net cash inflow of $10.3 million Dividend A final dividend of 6% (3.0 cents per share) less tax at 24.5% amounting to $16 million on the existing issued share capital, has been proposed for the financial year ended 31 December For 1999, a dividend of 6% (3.0 per cents per share) less tax of $15.8 million was declared and paid Total Dividend Paid Dividend Per Share (Gross) Financial Condition at End-2000 Sources of Finance ($ million) At 31 December 2000, share capital and reserves totalled $2.2 billion, 6,000 which was 4.2% higher than that at end Net borrowings at $2.2 billion represented 98% of total shareholders funds. 5,000 4,000 4, , , , ,940.7 The Company s paid-up share capital increased by $0.9 million from the issue of new shares arising from the exercise of share options, and total reserves rose by $88.6 million. 3,000 2,000 1,000 2, , , , ,240.1 Net tangible assets backing per share was $3.16, an increase of 3.9% from the previous year s figure of $ Shareholders' Equity Minority Interests Long-term Borrowings Short-term Borrowings The Year in Review 82

85 Five-Year Profit Record The profit uptrend continued in Group s profit before tax increased to $233.8 million, and attributable profit to $101.6 million. Improvements came from the Pebble Bay condominium project and the initial profit recognition from the two industrial building projects. 6,000 5,000 4,000 Assets Employed ($ million) 4, , , , ,979.2 For 1997, whilst Group s profit before tax showed a decline, attributable profit improved by 3% to $104.7 million. These results include the partial sale of Prudential Tower, the disposal of 30% 3,000 2,000 shareholding in a property subsidiary and shop units at Heritage Court 1,000 and Bukit Timah Plaza. 0 In 1998, the Group incurred an attributable loss of $350.6 million. Profit contributions from continuing businesses, partial sale of Prudential Tower and the sale of an office building in Australia were insufficient to cover the provisions made for two leasehold residential developments and the Group s freehold landbank. -2, Development Properties Investments Fixed Assets and Investment Properties Net Current Assets / (Liabilities) The Group made a turnaround in 1999 and recorded a profit before extraordinary items of $78.7 million. This result included the initial profit from the Villa Verde project and a further profit contribution from Pebble Bay. Attributable profit was $152.3 million after including extraordinary gains of $73.6 million from the unwinding of the Group s investments in three related companies Net Tangible Asset Per Share ($) Further progress was made in Group s pre-tax profit reached 1.00 $158.9 million, and attributable profit was $120.6 million. These results included the profit from Villa Verde and Pebble Bay, the maiden profit contributions from Caribbean at Keppel Bay and Freesia Woods Net Tangible Asset Per Share condominium projects. The Year in Review 83

86 Segmental Reporting Property Investment For 2000, sales from Property Investment were $283 million or 34.3% of Group sales (including associated companies). This was 10.7% higher than the previous year s figure of $255.6 million (or 19.3 % of Group sales for that year). 1,400 1,200 1,000 Sales Mix ($ million) (7.7%) (8.5%) In Singapore, the Group s office buildings - Ocean Building, Ocean Towers, Capital Square, Prudential Tower, The Exchange, Keppel Towers and GE Tower enjoyed good occupancies in Bugis Junction, (0.4%) (13.7%) (51.7%) (64.5%) an integrated development comprising offices, large-scale retail space and Hotel Inter-Continental Singapore, is almost fully let. 0 2, (34.2%) Property Investment Property Trading Profit and Equity Employed by Segment ($ million) 2, (19.3%) Hospitality and Services Non-Property In Vietnam, Saigon Centre s office tower has an occupancy of more than 90% and its serviced apartments average occupancy rate is 98%. International Centre, located in Hanoi, was about 85% let. At Royal Park Sedona Suites in Hanoi, the occupancy was about 90%. 2,000 1,500 1,000 1,374.9 At the pre-tax profit level, Property Investment s contribution was $63.8 million compared with $34.9 million in (500) (1.2) The improvement in this segment in 2000 was due to higher occupancies and rental rates, and lower interest expense. (1,000) (1,500) (1,401.4) Property Investment Property Trading Hospitality and Services Non- Property Pre-tax Profit Equity Employed Analyses 84

87 Property Trading Sales from Property Trading were $426.9 million or 51.7% of Group revenue. This was $428.1 million lower than 1999 sales. During 2000, the main contributors to profits were sales of Villa Verde, Caribbean at Keppel Bay and Freesia Woods. Hospitality and Services Sales by Segment $ 000 This is the hotel operations and the fee-based segment of the Group s business. It includes 450, , ,870 marketing, project management, property 350,000 and hotel / serviced apartment management 300, ,045 services and related technical consultancy 250,000 services. 200,000 Hospitality and Services made a pre-tax profit of $17.9 million in 2000 (after deduction of hotel depreciation of $10 million) from sales of $113.1 million (or 13.7% of total sales for the Group). In 1999, sales were $113.1 million 150, ,000 50,000 0 Property Investment Property Trading 113,143 Hospitality and Services 3,102 Non- Property and pre-tax loss was $20.3 million. Hotel depreciation included in this loss was $2 million. 90,000 Pre-tax Profit $ ,000 78,429 70,000 60,000 63,830 50,000 40,000 30,000 20,000 17,895 10, ,000 Property Investment Property Trading Hospitality and Services (1,224) Non- Property Analyses 85

88 Segmental Reporting (continued) Non-Property In 2000, Non-Property segment contributed insignificant amounts in both sales and results following divestments made in the previous year. 70,000 60,000 50,000 Attributable Profit $ ,882 44,470 For 1999, Non-Property comprising the Group s associated companies (engaged in telecommunications and transportation, engineering and financial service activities) provided a pre-tax profit of $10.5 million. Equity Employed 40,000 30,000 At 31 December 2000, the Group s equity employed amounted to $2.6 billion, 2.5% 20,000 10,000 12,555 higher than the corresponding position a year ago. This came from funds provided by the 0-10,000 Property Investment Property Trading Hospitality and Services (1,289) Non- Property Company s shareholders and the minority shareholders in certain subsidiary companies. The greater part of these funds was utilised by Property Investment and Property Trading. Analyses 86

89 Sales and Profits by Segment Sales Pre-tax Profit Attributable Profit $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Property Investment 283, ,658 63,830 34,925 44,470 26,952 Trading 426, ,942 78, ,118 64,882 69,551 Hospitality and Services 113, ,070 17,895 (20,251) 12,555 (27,108) 823,058 1,223, , , ,907 69,395 Non-property 3, ,470 (1,224) 10,471 (1,289) 9,299 Extraordinary items , ,160 1,326, , , , ,263 Group 500, , , , , ,662 Associates 325, ,159 10,436 20,672 5,847 17, ,160 1,326, , , , ,263 Analyses 87

90 Value Added and Productivity In 2000, the value added by the Group was $236.9 million, compared with $306.7 million for the previous year. In terms of segmental contribution, the value added can be analysed as follows: $ million % Property Investment Trading Hospitality and Services Non-property (1.3) (0.5) Income from the Group s investments was $30.9 million representing 13% of total value added. Excluding this investment income, the Group s value added from operations was 13.6% absorbed by employees in salaries and staff benefits of $28 million, 14.2% absorbed by governments in taxation of $29.3 million, and 58.2% absorbed by providers of capital in interest and dividends totalling $119.8 million. The balance of $28.9 million or 14% of Group value added from operations was reinvested in the Group s businesses to achieve future growth and for asset replacements Value Added ($ million) (382.8) Wages, Salaries & Benefits Taxation Interest Expense & Dividends Depreciation & Retained Profit Analyses 88

91 Value-Added by Segment Property Property Hospitality Non- Investment Trading and Services Property Group $ million $ million $ million $ million $ million Total value added (1.3) Distributed as follows: Employees in salaries and staff benefits Government in taxes Providers of capital in dividends and interest Retained for reinvestment and asset replacements (1.3) (26.1) Total distribution (1.3) Total Value Added by Segment ($ million) Group Investment Property Trading Property Hospitality and Services Non-Property Distribution of Total Value Added Employees Governments Providers of Capital Retained/Reinvested in Group's Business Analyses 89

92 Value Added Statement $ million $ million $ million $ million $ million Our sales of goods and services to non-group customers totalled Whereas our purchase of raw materials, supplies and services from non-group sources amounted to (347.2) (424.6) (695.0) (797.5) (304.9) so that the value added from operations was (377.1) In addition: our share of profits earned by associated companies was (5.7) income from our investments was extraordinary items were (366.4) Excluding investment income and extraordinary items, total value added for the Group was distributed as follows: to employees in wages, salaries, and benefits to governments in taxation to providers of capital in: interest paid on borrowings dividends to minority shareholders in subsidiary companies dividends to shareholders of the Company The balance was reinvested in or ploughed back from business in: depreciation minorities share of subsidiary previous years profits ploughed back by subsidiaries (62.4) (1.6) (43.9) profit for the year retained or previous years profits ploughed back by the Company (454.5) (507.7) (382.8) And non-operating costs and income were: investment income extraordinary items (366.4) Analyses 90

93 Productivity Data (Excluding Associated Companies) Sales per employee: - excluding associated companies ($ 000) Value added per employee: - gross value added basis ($ 000) (298.3) net value added basis ($ 000) (305.8) Value added per dollar employment cost: - gross value added basis ($) (15.58) net value added basis ($) (15.96) Value added per dollar investment in fixed assets and investment properties (before depreciation): - gross value added basis ($) (0.15) net value added basis ($) (0.15) (100) (200) Value Added Per Employee Value Added Per Dollar Employment Cost ($'000) ($) (300) (298.3) (305.8) (15.96) (15.58) (400) Gross Value Added Basis Net Value Added Basis Value Added Per Dollar Employment Cost Gross Value Added Basis Net Value Added Basis Analyses 91

94 Property Portfolio Analysis Analysis by Tenure 1,619 (38.4%) 1,732 (41%) 869 (20.6%) The Group s property portfolio is diversified. The portfolio includes office buildings, residential properties, hotels and resorts, shophouses and retail outlets, and industrial projects. For a full list of these investment and trading properties, owned through the Company s subsidiary and associated companies, please refer to the next few pages. $ million % Freehold 1, year lease year lease and others 1, , Analysis by Development Stage In the following analysis of the Group s property portfolio, only the Company s effective ownership interests have been included. On this basis, the total value attributable to the Company was $5 billion at end ,079 (25.6%) 623 (14.8%) 2,518 (59.6%) Singapore Properties (a) Analysis by Tenure $ million % Completed 2, Under development Awaiting development 1, , Analysis by Sector 150 (3.6%) 67 (1.6%) 50 (1.2%) (b) Freehold properties accounted for 41% of the Group s properties. The proportion of properties with 999-year leases was 20.6%. The balance of 38.4% represented properties with leases of about 99 years. Analysis by Development Stage 1,812 (42.9%) 2,141 (50.7%) Sq m ('000) % Office 2, Residential 1, Hotel Retail Industrial , At end-2000, about 59.6% of the Group s property portfolio comprised completed properties. Another 14.8% of the Group s properties was under development and included Freesia Woods and Caribbean at Keppel Bay. The Group s landbank awaiting development formed 25.6% of the Group s property portfolio. Analyses 92

95 (c) Analysis by Sector At 31 December 2000, office buildings formed 50.7% of the Group s property portfolio. These include Ocean Building, Ocean Towers, The Exchange, Capital Square, Prudential Tower, Keppel Towers, GE Tower and the office tower in Bugis Junction. The proportion of residential properties was 42.9%. In respect of the remaining portfolio, properties in the retail, hotel and industrial sectors made up 3.6%, 1.2% and 1.6% respectively of the Group s properties. Analysis by Estimated Building Area 15 (2.3%) 29 (4.5%) 12 (1.9%) 361 (56.1%) 226 (35.1%) $ million % Office Residential Hotel Retail Industrial (d) Analysis by Building Floor Area The total building floor area of the Group s properties at end-2000 was 643,000 sq.m. Office buildings and residential properties formed 35.1% and 56.1% respectively of this area. The residual 8.8% was the combined building floor area for the Group s retail, hotel and industrial properties. Analysis by Location - Completed Projects 367 (12.7%) 2,518 (87.3%) $ million % Local 2, Overseas , Overseas Properties The Group s completed property assets were 87.3% local and 12.7% overseas. Including projects currently under development, overseas properties form 16.4% of the Group s portfolio. In dollar terms, this amounts to $0.8 billion out of a total of $5 billion for all of the Group s property assets. Analysis by Location - All Projects 826 (16.4%) 4,220 (83.6%) $ million % Local 4, Overseas , Analyses 93

96 Property Portfolio (continued) SINGAPORE Office 1. Ocean Building 2. Ocean Towers 3. Keppel Towers 4. GE Tower 5. Prudential Tower 6. Capital Square 7. Heritage Court 8. Marina Boulevard 9. The HarbourFront Office Park Residential 10. Pebble Bay 11. Nassim Woods 12. Cluny Hill Redevelopment Residential Landbank 13. Avenue Park Development 14. Wee Nam 15. Freesia Woods 16. The Linc 17. The Edgewater 18. Viewpoint Condominium 19. Arang Court 20. Norfolk Garden 21. Duchess Park & 24 Duchess Road 22. Butterworth Chen Yuan/Dragon Pearl/River Valley View 24. Naga Court 25. Keppel Bay A & 451A Geylang Road G Pasir Panjang Road Mar Thoma Road Mar Thoma Road & 40 St Michael s Road 30. The Cairnhill 31. Parc Devon Retail 32. Bugis Junction* 33. Bukit Timah Plaza 34. Joo Chiat Shophouses Industrial 35. Quartz Industrial Building 36. Orion Industrial Building Data Centre 37. Keppel Digihub Mass Rapid Transit Lines Office Residential Residential Landbank Retail Industrial Data Centre OVERSEAS Australia 38. Bayswater Village** 39. Botanic Cove Indonesia 40. Galleria Tunjungan 41. Pasadenia Garden 42. Wijaya Centre Site 43. Wisma BCA Vietnam 44. International Centre 45. Saigon Centre 46. Tamarind Park Malaysia 47. Township in Skudai 48. Taman Jernih China/Hong Kong 49. Ocean Towers, Shanghai 50. The Waterfront at the Kowloon Station 51. Residential Site in Shanghai Philippines 52. SM-KL Towers 53. Palmdale Heights 54. Landbank in Cebu 55. Keppel Place 56. Sampaguita Ville 57. Metro North Township^ Thailand 58. Nana Tai Mansion 59. Jewellery Centre 60. Residential landbank at Highway 332 in Sattahip 61. Sukhaphiban 3 Mansion United States of America 62. TCB Building HOTELS Indonesia 63. Hotel Sedona Bintan Lagoon 64. Hotel Sedona Manado 65. Melia Purosani Hotel Myanmar 66. Sedona Hotel Yangon 67. Sedonal Hotel Mandalay Vietnam 68. Royal Park Complex RESORTS China 69. Spring City Golf & Lake Resort Indonesia 70. Ria Bintan 71. Bintan Lagoon Resort 72. Nongsa Point Marina 73. Tanah Lot Resort * includes Hotel Inter-Continental Singapore and Bugis Junction Towers ** includes The Crescent-on-Bayswater ^ under acquisition Analyses 94

97 CHINA Shanghai USA Texas 62 MYANMAR 67 Mandalay Kunming 69 Hong Kong Yangon THAILAND 58 Hanoi Bangkok 61 VIETNAM PHILIPPINES Ho Chi Minh City MALAYSIA 47 SINGAPORE 72 Manado 64 SUMATRA Batam Bintan Jakarta Surabaya Yogyakarta Bali INDONESIA AUSTRALIA Sydney Property Hotels / Serviced Apartments Resorts Analyses 95