STAYING THE COURSE Report to Shareholders 2004

Transcription

1 STAYING THE COURSE Report to Shareholders 2004

2 CONTENTS Staying the Course Corporate Profile 4 CORPORATE STEWARDSHIP Chairman's Statement 6 Board of Directors 12 Senior Management 20 Profile of Directors and Senior Management 24 Interested Person Transactions 27 Group Financial Highlights 28 Simplified Balance Sheet 29 Five-year Financial Profile 30 Group Quarterly Results 31 Architect of Value Corporate Governance 34 Investor Relations 48 People in Review 52 Community Relations 57 Environmental Responsibility 62 Leverage for Edge Special Feature - Asia s Dynamic Economies 68 Choices for Courses OPERATING AND FINANCIAL REVIEW Structure of Keppel Land Group 80 Strategic Directions and Outlook 81 Financial Review 83 Segmental Reporting 88 Sensitivity Analysis 91 Property Portfolio Analysis 92 Value Added Statement 94 Productivity Analysis 96 Economic Value Added 98 Corporate Liquidity and Capital Resources 99 Risk Management 101 Business Dynamics and Risk Factors 104 Critical Accounting Policies 105 Asian Economic and Property Round-up 106 Operations and Market Review 112 Target on Ace Significant Events 160 Awards and Accolades 162 Regional Network 166 STATUTORY REPORTS AND ACCOUNTS Directors Report 170 Statement by the Directors 174 Auditors Report 175 Consolidated Profit and Loss Account 176 Balance Sheets 177 Consolidated Statements of Changes in Equity 178 Consolidated Cash Flow Statement 180 Summary of Significant Accounting Policies 182 Notes to the Financial Statements 187 Significant Subsidiary 209 and Associated Companies CORPORATE INFORMATION Corporate Directory 215 Calendar of Financial Events 215 Key Personnel 216 Corporate Structure 218 Property Portfolio 220 SHAREHOLDER INFORMATION Statistics of Shareholdings 231 Notice of Annual General Meeting 233 and Closure of Books Share Transaction Statistics 237

3 Staying the Course

4 We are staying the course to deliver continued earnings growth through building our brand equity with a holistic approach to creating an optimal living environment which epitomises quality, innovation and integrity

5 CORPORATE PROFILE Keppel Land Limited began in 1890 as Straits Steamship Company Limited, a ship operator and owner. In the 1970s, the Group went into new businesses such as property, warehousing and distribution, and leisure. In 1983, Straits Steamship Company became a subsidiary of Keppel Corporation Limited. As property became its core business, the Company was renamed Straits Steamship Land Limited in In 1997, in a Keppel Group-wide exercise to adopt a common identity, Straits Steamship Land was renamed Keppel Land, the property arm of Keppel Group, one of Singapore s largest multi-national groups with key businesses in offshore and marine, infrastructure and property. Today, Keppel Land is a leading property development company in Asia recognised for its award-winning premier residential projects and investment-grade offices, and its high standards of corporate transparency and disclosure. It is geographically diversified in Asia including Singapore, China, Thailand, Vietnam, India, Indonesia, Hongkong, Japan, South Korea, Malaysia, Philippines, Australia and Myanmar. The Company is one of the largest listed property companies by total assets on the Singapore Exchange. Keppel Land s return on equity is among the highest in the property industry in Singapore. Overseas earnings have grown to 43.1% of the Group s net profit in 2004 from 3% in The Company is on track towards achieving at least 50% of net profit from overseas by Keppel Land is currently focused on two core businesses of property development for sale and property fund management to achieve higher returns. The Company will divest low-yielding investment properties and re-deploy resources into higher-yielding businesses and assets. Keppel Land aims to be a leading developer of quality housing in the region. Riding on strong economic growth and homeownership aspirations, favourable demographics and urbanisation trends, it is presently focused on Singapore, China, Thailand, Vietnam, India and Indonesia. The Group has also embarked on residential township development to tap on the demand for quality housing from the growing middle class in the region. Keppel Land will grow its property fund management business for a recurring stream of fee-based incomes. The Group targets to build its fund management arm, Alpha Investment Partners Limited, into a successful manager of property funds, leveraging Keppel Land s reputation as a developer, owner and manager of premier properties, its extensive network and market knowledge in Asia, and its good corporate disclosure and investor relations. 05

6 CHAIRMAN S STATEMENT

7 Keppel Land has achieved a growth of 32.5% in net profit. Return on equity has improved to 8.6%. Overseas earnings have grown to 43.1% of total earnings from 32% in 2003 and 3% in The Company is on track towards achieving at least 50% of net profit from overseas by On behalf of the Board, I present the Keppel Land Group report for the year ended 31 December Financial Performance 2004 saw a vast improvement when compared to the previous year which was affected by the Severe Acute Respiratory Syndrome (SARS) outbreak, the US-Iraq war and terrorist attacks. Group turnover was lower at $476.2 million compared with $678.8 million for the previous year due to the completion of several projects in Singapore and overseas in However, new projects in China and Thailand have begun to contribute. Profit at both the pre-tax and after-tax levels was higher because of strong performance in the Group s trading projects. This came from the sale of four Cluny Hill bungalow plots in Singapore, and residential projects overseas, especially in China. The Group s tax expense at only $2.9 million was 75% lower than the previous year s figure of $11.4 million. This significant reduction can be attributed to benefits from group tax relief of $16.1 million, and a write back of deferred tax provisions of $3 million as a result of the reduction of Singapore corporate tax rate from 22% to 20%. Overseas operations continued to post higher contributions, especially from trading projects. The Group s hotels and resorts in the region also saw an improvement as business travel and tourism recovered post-sars. At the attributable level, overseas earnings increased by 44.1% to $57.5 million from $39.9 million for the previous year. With new acquisitions in Singapore and overseas, and investment in properties by the fund management business, the Group s net debt/equity ratio increased albeit slightly, to 0.96 from 0.95 a year ago. 07

8 Proposed Dividend The Board is recommending to shareholders a final gross dividend of 10% or 5 cents per share less tax. The dividend payout, amounting to $28.5 million is subject to shareholders approval at the Annual General Meeting scheduled on 29 April If approved, the dividend will be paid on 24 May Keppel Land continued to acquire land in Singapore selectively. After buying an adjoining piece of land to an existing site at Wee Nam Road in late 2003, the Group jointly purchased another site adjacent to its Devonshire Road project. The larger integrated plots will allow for the provision of a wider range of recreational facilities and enhancement of project value. Strategic Review Regionally, Keppel Land continued to make headway into new countries, new districts and new segments. The Group has entered into Bangalore, the Silicon Valley of India, with local developer Puravankara to jointly develop a 2,002-unit condominium project. The recovery of the office sector has become more visible with higher occupancies and rentals. Take-up for the whole year was 1.07 million sf, after two years of negative net demand of 1.13 million sf and 0.93 million sf respectively in 2003 and Island-wide occupancy has gone up to 84% from 82.1% at the end of Average prime office rentals rose by 10% to $4.40 psf over the same period. In China, the Group has ventured into the villa segment in the Qingpu district, Shanghai. To tap on the demand for good quality housing from the growing middle class, Keppel Land embarked on residential township development a few years ago to build a sustainable stream of earnings for the longer term. The Group recently gained a foothold in Indonesia, acquiring one of the last large plots of land available for township development in Jakarta. Internationally, Singapore s office rental rates are attractive vis-a-vis other major cities in the world. A global ranking of office locations by CB Richard Ellis puts Singapore in the 56 th position after Asian cities like Hongkong, Seoul, Mumbai, Shanghai and Beijing. Another survey of office accommodation costs (on a per work station basis) by DTZ Research ranked Singapore 92nd out of 113 locations in 44 countries. The competitive position will help to keep Singapore in the spotlight for businesses considering setting up operations in Asia to ride on the region s recovery. 08 Major Developments Singapore The Singapore economy staged a strong rebound with a GDP growth of 8.4% for 2004, compared with 1.4% in Both the residential and office markets saw an uptrend from the second quarter with improved take-up and modest price increases. The residential market saw the increased sale of good class bungalows, a revival of buying interest including from foreigners in selected projects, and the resurgence of en bloc collective sales for redevelopment. The take-up of new units rose to 5,785 units, up 12% from the previous year. For the full year, the URA price index rose 0.9% compared to a decline of 2% in The Group shared a similar experience with the projects it launched. Four Cluny Hill bungalow sites were sold. Caribbean at Keppel Bay saw 100% of the 135 units of its second release taken up while Urbana saw 79% of 96 units released taken up. One Raffles Quay, the Group s landmark joint venture office development secured two prized tenants ABN AMRO and Deutsche Bank. With ABN AMRO and Deutsche Bank taking 160,000 sf and 140,000 sf respectively, about 25% of the total office development has been pre-committed. When completed in 2006, One Raffles Quay s North and South towers will provide 1.3 million sf of prime office space. Affirming the Group s quality hallmark for its developments, Prudential Tower took the top prize in the office/industrial category of the FIABCI Prix d Excellence Awards, considered the Oscars of the real estate industry in the world. Two other office developments, HarbourFront Tower One and Keppel Bay Tower, received the Construction Excellence Award from the Building and Construction Authority. In February 2005, Keppel Land and Harrah s Entertainment of the United States jointly submitted concepts to the Singapore Tourism Board on the development of world-class integrated resorts at

9 Sentosa and Marina Bayfront. The government s decision on whether to proceed with the integrated resorts is expected by mid-april Overseas China Despite government measures to cool the property market, the Group s projects in Shanghai, Beijing and Chengdu continued to chalk up good sales. Like its successful predecessor One Park Avenue, 8 Park Avenue saw a 100% take-up of the three blocks (with 230 units) launched in the Shanghai market. Meanwhile in Beijing and Chengdu, more than 90% of the 541 and 582 units launched respectively at The Seasons and The Waterfront have been sold. Keppel Land took the opportunity to acquire a prime site for villa development in Shanghai by buying over a company which owned a 153,726 sm site in the Qingpu district. Located in the established villa enclave of Xujing town, the site will provide 186 landed homes. Demand is expected to come from well-to-do locals and expatriates. Apart from the gateway city of Shanghai, Keppel Land is continuing its inroads into China s secondary cities. Keppel Land has also taken a 15% stake in a residential development, with ancillary commercial elements in Fuzhou, the capital city of Fujian province. Vietnam In August 2004,Keppel Land s Ho Chi Minh City projects Villa Riviera and Saigon Sports City, received investment licences from the Ministry of Planning and Investment to proceed with construction and sale. see the launch of the 782 high-rise apartments in the first phase of Saigon Sports City. India During the year, Keppel Land entered into a joint venture to acquire and develop a 9.7-ha site in Bangalore, which has one of the fastest growing urban populations in India. The joint venture partner is ISO 9001-certified developer Puravankara with over 20 years of experience in residential development. The freehold site, situated in a locality popular for IT campuses, will be developed into an 18-storey condominium with more than 2,000 units. Demand is expected to come from IT professionals, non-resident Indians and middle-income families. Keppel Land will continue to monitor other growth cities like New Delhi, Hyderabad, Mumbai and Chennai. Thailand In Bangkok, the Group s subsidiary Keppel Thai Properties Public Company (KTP) launched the first phase of its 367-unit landed development, Villa Arcadia at Srinakarin. Srinakarin is a suburban centre close to the future new international airport as well as hypermarkets Carrefour and Makro. Being close to recreational amenities, it attracts young families. To-date, 31 out of the 50 two-storey detached homes launched for sale have been sold. KTP s second development, Villa Arcadia at Watcharapol, targeted at the upper-middle income group, is expected to be launched in the second half of the year. Watcharapol is an established residential enclave, north of Bangkok. Some 270 double-storey homes are being developed for sale. Located in the well-established residential area of An Phu Ward in District 2, Villa Riviera comprises 113 villas with sizes ranging between 300 sm and 550 sm. It is located close to International Grammar School, British International School and the Metro Hypermarket. Of the 25 villas launched, 14 have been sold at an average price of US$410,000 per unit. Indonesia In December 2004, Keppel Land tied up with PT Modernland Realty, a listed property developer on the Jakarta Stock Exchange, to purchase and develop a 270-ha site in Cakung, Jakarta. The proposed township is located in the vicinity of a successful mature residential township, Kelapa Gading. Saigon Sports City is a residential township with a fully-integrated commercial and recreational/sporting hub. Spread over 74 ha, it will be the first of its kind in Vietnam and will introduce locals to a healthy lifestyle development concept. The second half of 2005 will Targeted at middle to upper-middle income families, the entire township will be developed in phases over 10 to 15 years. The township will yield about 7,000 landed housing units with substantial space allocated to retail and entertainment malls, 09

10 international schools and other public facilities. In Surabaya, a retail complex known as BG Junction has secured Carrefour hypermarket as its anchor tenant. The French hypermarket has pre-committed to 11,940 sm for 25 years. The strata-titled development with total net lettable area of 37,836 sm, in which Keppel Land has an 80% stake, is currently under construction. The development will be ready in Pre-sale of the individual strata-titled units has commenced. Fund Management Keppel Land s fund management vehicle Alpha Investment Partners (Alpha), has set up a second fund called Alpha Core Plus Real Estate Fund to invest in institutional grade, income-producing properties in mature Asian markets. At its first closing, the fund raised a total of $275 million. Two cornerstone investors from Europe and Australia have committed a total of more than $100 million each, while Keppel Land will invest $41 million in the fund. Meanwhile, the first fund called the Asia No. 1 Property Fund, which was set up in joint venture with Henderson Global Investors, has invested some 60% of the $170 million raised. When the two funds are fully invested, assets under management will be about $1 billion. To be better positioned to tap on the deal-flow, Alpha recently opened new offices in Seoul and Tokyo. newly-reconstituted Business Times Corporate Transparency Index. Commitment to Shareholder Value Keppel Land has achieved a growth of 32.5% in net profit. Return on equity has improved to 8.6% from 8.5% in 2003 and 6.4% in Overseas earnings have grown to 43.1% of total earnings from 32% in 2003 and 3% in The Group is on track towards achieving at least 50% of net profit from overseas by The Company has also increased its dividends to shareholders to 5 cents per share, up from 4 cents per share in 2003, 3.5 cents per share in 2002 and 3 cents per share in As the Group grows its operations overseas, risk management continues to be an important area. Keppel Land has initiated an exercise to quantify risks and their impact on the Group s future earnings. The analysis covered key property projects and identified indicators that act as warning signals for timely review and corrective actions. Going Forward With its first foray into Bangalore, Keppel Land is now in the two dynamo economies of Asia - China and India. In these two countries as well as others in the region, strong economic growth and the thriving middle class will drive the demand for good quality housing. 10 Corporate Governance and Transparency With its commitment to good corporate governance practices, the Group continued to win several awards. A study of corporate disclosure of Singapore-listed companies by Standard & Poor s and National University of Singapore placed Keppel Land among the top five companies. Another survey by US-based Institutional Shareholders Service and Business Week which covered 1,785 non-us companies from Canada to Japan ranked Keppel Land top among Singapore real estate companies and 6 th among Singapore companies. The Group was runner-up for the Most Transparent Company (Properties) and also received a Merit Award for Corporate Governance at the Securities Investors Association (Singapore) Investors Choice Awards For good disclosure of its 2003 results, the Group ranked among the top 6% of 570 companies in the Keppel Land s residential townships will cater to this group. Based on current projects, the Group will be able to provide some 20,000 homes across the region. The first residential townships in China and Vietnam will be launched in In Chengdu, some 970 units in the first phase of The Botanica township, a joint venture with HDB Corp, will be launched in the first half, while in Ho Chi Minh City, some 782 units of the first phase of Saigon Sports City will be launched in the second half. Excluding townships, the Group will be launching about 7,000 homes in China, Vietnam, Thailand and Indonesia over the next few years. In 2004, it sold more than 1,100 homes in China, Thailand and Vietnam. Home sales are expected to increase as the Group expands further afield.

11 Keppel Land is diversifying its earnings base, and building up on sustainable stream of incomes from overseas. In Singapore, the Group has positioned itself to tap on the economic recovery with the launch of three new choice projects, Park Infinia at Wee Nam, The Belvedere and a residential development at Devonshire Road. Totalling more than 800 units, the projects are freehold and located in sought-after districts close to amenities and transportation nodes. The Group remains committed to the divestment of its low-yielding investment assets. With the office market showing firm signs of recovery, the Group will continue to monitor the market for the appropriate divestment options to maximise shareholders value, be it by real estate investment trusts (REITs), direct sale or securitisation. Increasingly, real estate is becoming an assets class that has greater institutional ownership. quality and excellence. As we scale up our operations, they continued to transplant the hallmark of quality in the region. This is evident from the many awards we have won from residential projects in China to serviced apartments in Vietnam. I would like to take this opportunity to welcome a new member to the Board. Mr Heng Chiang Meng, who is joining the Board on 1 March 2005, comes with many years of experience in the finance and property sectors. I am sure he will be able to contribute tremendously. I would also like to take this opportunity to thank shareholders, business partners and customers for their continued support. With the Board s guidance and the efforts of management and staff, Keppel Land will strive to achieve sustainable growth. The Group continues to grow its fee-based income through its fund management business. We expect Alpha s earnings to flow through as it grows in scale with more monies raised for existing funds and expansion in assets under management. Acknowledgements On 26 December 2004, more than 10 countries in the region were hit by the tsunami. Fortunately, the Group s operations in Indonesia, India, Thailand, Myanmar and Malaysia were not located in the affected areas. Keppel Land staff members responded quickly, spontaneously raising funds to support the relief efforts. I wish to thank our staff for their commitment to product LIM CHEE ONN Chairman 28 February

12 BOARD OF DIRECTORS Khor Poh Hwa Member Nominating Committee Kevin Wong Kingcheung Managing Director Lim Chee Onn Chairman 12

13 Thai Chee Ken Chairman Audit Committee Member Nominating Committee Lim Ho Kee Chairman Nominating Committee Member Remuneration Committee Tsui Kai Chong Member Audit Committee Member Remuneration Committee 13

14 BOARD OF DIRECTORS Teo Soon Hoe Niam Chiang Meng Member Nominating Committee Lee Ai Meng Member Audit Committee 14

15 Tan Yam Pin Choo Chiau Beng Chairman Remuneration Committee 15

16 BOARD OF DIRECTORS Lim Chee Onn, 60 Bachelor of Science (First Class Honours) in Naval Architecture, Glasgow University; Masters in Public Administration, Kennedy School of Government, Harvard University; Member of Wharton Society of Fellows, University of Pennsylvania; Honorary Doctor of Engineering, Glasgow University. Executive Chairman of Keppel Corporation Limited. He is Chairman of Keppel Land Limited, MobileOne Ltd, and Singapore-Suzhou Township Development Pte Ltd and a Board Member of the Monetary Authority of Singapore and k1 Ventures Limited. Mr Lim is also the Honorary Chairman of the National Heritage Board. Mr Lim started his career in the Civil Service. He was Deputy Secretary, Ministry of Communications until elected as Member of Parliament for Bukit Merah in July He served as Political Secretary, Ministry of Science and Technology from August 1978 to September He was Secretary-General, National Trades Union Congress from May 1979 to June 1983 and concurrently Minister without Portfolio, Prime Minister's Office from September 1980 to July 1983, and remained as Member of Parliament, Bukit Merah Constituency until August He was then elected Member of Parliament for Marine Parade GRC from September 1991 to December In addition, Mr Lim is Co-Chairman of the Philippines-Singapore Business Council; consultant for the People's Government of Yunnan Province, PRC; Deputy Council President, China Foreign Trade Council, and Deputy Chairman of the Seoul International Business Advisory Council. He is a Member of the Suzhou Industrial Park (SIP) Development Advisory Committee, the Singapore-US Business Council and Singapore representative, ASEAN Business Advisory Council. Mr Lim is also Counsellor of The Conference Board's Global Advisory Council on Economic Issues and member of the INSEAD Singapore International Council. Kevin Wong Kingcheung, 49 Mr Wong has been Managing Director, Keppel Land Limited since January Prior to this appointment, he was Executive Director since November He is Chairman and Director of Keppel Philippines Properties, Inc., Chairman and Director of Keppel Thai Properties Public Co Limited, and Vice-Chairman and Director, Dragon Land Limited. He is also a Director of HDB Corporation Pte Ltd. Prior to joining Keppel Land Limited, Mr Wong had diverse experience in the industry working with companies in the UK, USA and Singapore. Mr Wong holds a Bachelor degree in Civil Engineering with First Class Honours from Imperial College, University of London, and a Master degree from the Massachausetts Institute of Technology, USA. Thai Chee Ken, 66 Mr Thai is currently Director, Keppel Land Limited. He is also Deputy Chairman of Dynasty Corporation (S) Pte Ltd, Director of United Engineers Limited, Prudential Assurance Company Singapore (Pte) Ltd and Schroder Investment Management (Singapore) Ltd. Mr Thai is a Certified Public Accountant. 16

17 Khor Poh Hwa, 55 Mr Khor is the President and Chief Executive Officer of CPG Corporation, Director of Keppel Land Limited since 1998 and China-Singapore Suzhou Industrial Park Pte Ltd. Mr Khor is a member of the Network China Steering Committee, Singapore-British Business Advisory Council. He is the President of the Singapore-Suzhou Club (since its formation in February 2002) and the immediate Past President of the Society of Project Managers. Mr Khor is a civil engineering graduate with Bachelor and Master degrees from the National University of Singapore. Lim Ho Kee, 60 Mr Lim is Director of Keppel Land Limited and a number of private and public companies including Cycle & Carriage Limited, MCL Land Limited, Singapore Post Limited and Vertex Venture Holdings Ltd. He was a Director of Singapore Telecommunications Limited from October 1986 till September 2000 as well as Chairman of its Finance and Investment Committee. He was also previously Chairman of UBS (East Asia) and member of the group executive board in Zurich. Mr Lim served on the Board of the Civil Service College as well as the Singapore Government's Public Sector Divestment Committee in He also sat on the Singapore Government's Economic Planning Committee from December 1989 to October He was a member of the Committee on Singapore's Competitiveness from May 1997 to October Mr Lim studied at the London School of Economics where he obtained his Bachelor of Science (Economics) Honours degree in Tsui Kai Chong, 49 Associate Professor Tsui is a Director of Keppel Land Limited since He was the founding Dean of the School of Business and the Vice Provost of Undergraduate and Graduate Education at the Singapore Management University. He was previously an Associate Professor in the Department of Finance and Accounting, Faculty of Business Administration, the National University of Singapore and Deputy Director of the Graduate School of Business. He is a member of the Board of Governors, IP Academy, Singapore. His current research interests include market microstructure and behavioural finance. He has studied and published papers on prediction of corporate financial distress, corporate capital structure, dividend policy, stock price behaviour and the Eurodollar futures market. He received his PhD in Finance from New York University in 1988 and his Certified Financial Analyst qualification in

18 Lee Ai Ming, 50 Mrs Lee was appointed to the Board in November She is currently the Deputy Managing Partner of the law firm of Rodyk & Davidson. She has practised law for more than 20 years in the areas of commercial litigation, real estate and intellectual property. Mrs Lee is also an independent Director and Chairperson of the Nomination Committee and member of the Audit Committee of HTL Holdings Limited. Mrs Lee has, over the years, served on various forums, including as Executive Committee Member of the Law Society; Vice-Chairperson, Asian Patent Attorney's Association - Singapore Group; member of the International Panel of Neutrals of the International Trade Marks Association; member, Advisory Panel of the Trade Development Board on Franchising, and member of the CEO's Round Table on Branding organised by the Trade Development Board. Mrs Lee holds a Bachelor of Laws (Honours) from the University of Singapore, and is an Advocate & Solicitor of the Supreme Court of Singapore. Niam Chiang Meng, 46 Mr Niam was appointed to the Board on 1 June He is the Permanent Secretary of the Ministry of Community Development, Youth and Sports. He is also a Director in several companies, namely SMRT Corporation Ltd, SMRT Trains Ltd, SMRT Road Holdings Ltd and Singapore Sports School Ltd. He is a member of the Singapore Totalisator Board and Council on Governance of Institutions of Public Character. Prior to his current appointment with the Ministry of Community Development, Youth and Sports, Mr Niam held various positions in other Government Ministries and Statutory Boards. He had served as Chief Executive Officer of the Housing & Development Board, Chairman of the Singapore Broadcasting Authority, Permanent Secretary with the Ministry of Information, Communications and the Arts, Permanent Secretary with the Ministry of Law, Deputy Secretary with the Ministry of Health and Vice-President (News) with the Television Corporation of Singapore. Mr Niam graduated from National University of Singapore with a Bachelor of Social Science degree in Economics. He obtained a Masters in Public Administration from Harvard University in Tan Yam Pin, 64 Mr Tan was appointed a Director on 1 June A Chartered Accountant by profession, he retired as Managing Director of the Fraser and Neave Group in October Mr Tan served as Chief Executive Officer of Asia Pacific Breweries Limited, a subsidiary of Fraser and Neave Group and in 1993 was appointed the Managing Director of the Fraser and Neave Group. Mr Tan has been a Member of the Public Service Commission of Singapore since Mr Tan currently holds non-executive directorships in BHP Steel Limited (Australia), The East Asiatic Company Limited A/S (Denmark), Great Eastern Holdings Limited, Singapore Post Limited and PowerSeraya Limited (as non-executive Chairman). He is also a Board member of International Enterprise Singapore. 18

19 Mr Tan holds a Bachelor of Arts in Economics, University of Singapore; Master of Business Administration, University of British Columbia and is a member of the Canadian Institute of Chartered Accountants. Choo Chiau Beng, 57 Mr Choo is a Director of Keppel Land Limited; Chairman and Chief Executive Officer of Keppel Offshore & Marine Ltd; Senior Executive Director of Keppel Corporation Limited, Chairman of Singapore Petroleum Company Limited; Singapore Refining Company Pte Ltd and SMRT Corporation Limited. He sits on the Board of Directors of k1 Ventures Limited, EDB Investments Pte Ltd and Singapore Maritime Foundations and is a board member of the Maritime and Port Authority of Singapore. He is member of the Nanyang MBA Advisory Committee. He is also Chairman of Det Norske Veritas South East Asia Committee, Council Member of the American Bureau of Shipping and member of its Asia Regional Committee and Special Committee on Mobile Offshore Drilling Units. Mr Choo is Singapore's Non-Resident Ambassador to Brazil. He was conferred the Public Service Star Award (BBM) in August Mr Choo obtained a Bachelor of Science (First Class Honours) from the University of Newcastle upon Tyne in 1970 (under a Colombo Plan Scholarship to study Naval Architecture) and a Master of Science degree in Naval Architecture from the same University in He attended the Programme for Management Development in Harvard Business School in 1982 and is a member of Wharton Society of Fellows. Teo Soon Hoe, 56 Mr Teo is a Director of Keppel Land Limited, Senior Executive Director and Group Finance Director of Keppel Corporation Limited, Chairman of Keppel Telecommunications and Transportation Limited and Keppel Philippines Holding, Inc. and Director of MobileOne Limited, k1 Ventures Limited and Singapore Petroleum Company Limited. In addition, Mr Teo is a Director of several companies within Keppel Group including Keppel Offshore and Marine Ltd. Mr Teo commenced his career with the Keppel Group when he joined Keppel Shipyard Pte Ltd in He rose through the ranks and was seconded several times to various subsidiaries of the Keppel Group before assuming the position of Group Finance Director in Mr Teo holds a Bachelor of Business Administration degree from the University of Singapore. He is a member of the Wharton Society of Fellows, University of Pennsylvania. 19

20 SENIOR MANAGEMENT 20 From left: Choo Chin Teck, Director, Corporate Services and Chief Financial Officer Loh Chin Hua, Managing Director, Alpha Investment Partners Limited Tan Swee Yiow, Director, Singapore Kevin Wong Kingcheung, Managing Director Yeo Kah Tiang, General Manager, Group Finance and Administration Ang Wee Gee, Director, Regional Investments

21 From left: Lim Seng Bin, General Manager, Indonesia Quah Kim Boon, President, Keppel Services Staff Union Tong Kok Wing, General Manager, Retail Management Augustine Tan, General Manager, Marketing Vincent Tan, Vice President, Sedona Hotels International Pte Ltd Lim Tow Fok, General Manager, Property Management 21

22 SENIOR MANAGEMENT Choo Chin Teck, 60 Mr Choo is concurrently Director, Corporate Services, Keppel Land International Limited and Chief Financial Officer and Company Secretary, Keppel Land Limited. He has held various senior positions in Keppel Land Group for about 32 years, and is presently also a Director of a number of subsidiaries and associated companies of Keppel Land Limited. Mr Choo is also a Fellow of the Institute Certified Public Accountants of Singapore and also of CPA Australia. He has many years of accounting, audit, taxation, corporate treasury, human resource management, investor relations and corporate secretaryship experience. He holds a Master of Business Administration from Brunel University, UK. As a Bachelor of Accountancy graduate from the University of Singapore, he received the gold medal for being the best all-round student. Mr Choo is also an associate member of the Chartered Institute of Management Accountants, UK. Tan Swee Yiow, 45 Mr Tan Swee Yiow joined Keppel Land Group in 1990 and is currently the Director overseeing the Group's investment and development operations in Singapore. He has held various positions within the Group, including Head of Project Development and Corporate Development before assuming his present appointment. Prior to joining Keppel Land Limited, Mr Tan was with a banking group, advising property valuation, taxation and investment. Mr Tan holds a Bachelor of Science Degree (First Class Honours) in Estate Management from the National University of Singapore and a Master of Business Administration in Accountancy from the Nanyang Technological University. He is currently a member of the Building Construction Authority's Construction Excellence Awards Committee and a member of the Management Committee of the Real Estate Developers' Association of Singapore. Ang Wee Gee, 43 Mr Ang is Director, Regional Investments, of Keppel Land International Limited in charge of Keppel Land Group's overseas investments. Prior to joining the Keppel Land Group in 1991, Mr Ang had many years of diversified experience in the property, hotel and management consultancy business in the USA, Hong Kong and Singapore. 22

23 Mr Ang is a Director of Dragon Land Limited, Keppel Philippines Properties, Inc and Keppel Thai Properties Public Co Limited, property companies listed on the Singapore Exchange, Philippines Stock Exchange and The Stock Exchange of Thailand respectively. He is also a Director of Sedona Hotels International Pte Ltd, the hotel management arm of Keppel Land Limited, and a number of other Keppel Land Group's subsidiaries and associated companies. Mr Ang holds a Master of Business Administration from Imperial College, University of London. He received his Bachelor of Science summa cum laude from the University of Denver, USA. Loh Chin Hua, 44 Mr Loh is the Managing Director of Alpha Investment Partners Limited (AIpha), the real estate fund management arm of the Keppel Land Group. He joined AIpha in September 2002 and has 20 years of experience in real estate investing and fund management. Prior to joining AIpha, Mr Loh was the Managing Director of GRA (Singapore) Pte Ltd (GRA), the Asian real estate fund management arm of the Prudential Insurance Company of America. During his eight years at GRA, Mr Loh was responsible for overseeing all investment and asset management activities for the funds that GRA managed. Mr Loh built up GRA into one of the more established fund managers in Asia. Mr Loh started his career in real estate investment with the Government of Singapore Investment Corporation (GIC). During his ten years with GIC, Mr Loh held appointments in the San Francisco office and was head of the European real estate group in London before returning to Singapore to head the Asian real estate group. Mr Loh, a Colombo Plan scholar, graduated from Auckland University with a Bachelor of Property Administration and Pepperdine University's Presidential/Key Executive MBA Programme. Mr Loh is a Chartered Financial Analyst and is also a registered valuer with the New Zealand Institute of Valuers. 23

24 PROFILE OF DIRECTORS AND SENIOR MANAGEMENT (a) Directors Details of the Directors' present responsibilities and qualifications are set out on pages 16 to 19. Principal directorships held by the Directors in the past five years are as follows: Lim Chee Onn China-Singapore Suzhou Industrial Park Development Co Ltd Glory Central Holdings Ltd K1 ebiz Holdings Pte Ltd K Investment Holdings Ltd Kepital Holdings Ltd Keppel Asia Ltd Keppel Capital Holdings Ltd Keppel Harbour Redevelopment Ltd Keppel Power Systems Pte Ltd Keppel TatLee Bank Ltd Keppel Telecoms Pte Ltd Myanmar Investment Fund (S) Pte Ltd Natsteel Ltd Parksville Development Pte Ltd PT Nongsa Point Marina Singapore Airlines Limited Temasek Holdings (Pte) Ltd Kevin Wong Kingcheung Keppel TatLee Finance Ltd TLB Land Ltd Various subsidiaries and associated companies of Keppel Land Limited Thai Chee Ken Inchcape Motors Limited Keppel Hitachi Zosen Limited Natsteel Broadway Ltd Natsteel Electronics Limited Natsteel Limited Schroder International Merchant Bankers Ltd Tuan Sing Holdings Limited Lindeteves-Jacoberg Ltd 24 Lim Ho Kee Singapore Telecommunication Limited Union Bank of Switzerland k1 Ventures Limited Keppel TatLee Bank Ltd Jardine Cycle & Carriage Ltd Singapore Post Limited Vertex Venture Holdings Ltd

25 Tsui Kai Chong Keppel Capital Holdings Ltd Keppel TatLee Bank Ltd Lee Ai Ming HTL Holdings Ltd Niam Chiang Meng Bioethics Advisory Committee Board of Trustees for the Community Assistance Fund Board of Trustees for the Sporting Singapore Fund Council on Governance of Institutions of Public Charter Housing and Development Board Inland Revenue Authority of Singapore National Arts Council National Heritage Board Singapore Broadcasting Authority SMRT Corporation Ltd SMRT Trains Ltd SMRT Road Holdings Ltd Singapore Pools (Pte) Ltd Singapore Sports School Ltd Singapore Totalisator Board Temasek Management Services Ltd The Esplanade Co Ltd Tan Yam Pin Centrepoint Properties Limited Fraser & Neave Limited Singapore Post Limited Choo Chiau Beng Hydro Asia Pacific Pte Ltd Pacven Walden Management Singapore Pte Ltd Pacven Investment Ltd TatLee Bank Ltd WIIG Global Venture Pte Ltd Various subsidiaries and associated companies in the Keppel Group 25

26 PROFILE OF DIRECTORS AND SENIOR MANAGEMENT Teo Soon Hoe DataOne Corporation Pte Ltd Echo Broadband (Singapore) Pte Ltd Indotel Ltd KAC Holdings Ltd Keppel Capital Holdings Ltd Keppel Factors Pte Ltd Keppel Insurance Pte Ltd Keppel Integrated Engineering Limited Keppel Philippines Marine, Inc Keppel Realty Pte Ltd Keppel-SPH Investment Pte Ltd Keppel TatLee Bank Limited Keppel TatLee Finance Limited KF Ltd Radiance Communications Pte Ltd Southern Bank Bhd Southern Finance Company Bhd Steamers Fortune Shipping Pte Ltd Steamers Kimanis Shipping Pte Ltd Steamers Perak Shipping Pte Ltd Various subsidiaries and associated companies in the Keppel Group (b) Senior Management Details of the Senior Management's present responsibilities and qualifications are set out on pages 22 and 23. Principal directorships held by the senior management in the past five years are as follows: Choo Chin Teck Various subsidiaries and associated companies of Keppel Land Limited Tan Swee Yiow Various subsidiaries and associated companies of Keppel Land Limited Ang Wee Gee Various subsidiaries and associated companies of Keppel Land Limited Loh Chin Hua GRA (Singapore) Pte Ltd InterRoller Engineering Limited Mapletree Investments Pte Ltd The HarbourFront Pte Ltd 26

27 INTERESTED PERSON TRANSACTIONS Aggregate Value of all Aggregate Interested Person Value of all Transactions during Interested Person the Financial Year Transactions under Review conducted under (excluding Transactions Shareholders' less than $100,000 Mandate Pursuant conducted under to Rule 920 Shareholders' Mandate of the SGX Name of Interested Person Pursuant to Rule 920) Listing Manual $'000 $'000 $'000 $'000 (a) Property transactions Keppel Corporation Limited Group : Rental ,331 Project management fees Property management fees Marketing commission - - 1, (b) Other services and products Keppel Corporation Limited Group : Treasury - interest income - - 2,137 2,291 Treasury - interest expense - - (19,979) (17,390) Management fees paid - - (464) (3,627) Other services - - (2,066) (1,391) Temasek Group - - (5,285) (4,502) (c) Transactions entered into by the Group with the Directors of the Company Consideration for the sale of one unit each to two Directors of the Company and one unit to an immediate family member of a Director in an overseas residential development 1,

28 GROUP FINANCIAL HIGHLIGHTS % Increase/ $'000 $'000 (Decrease) FOR THE YEAR Sales - excluding associated companies 476, ,781 (29.8) Profit Operating 111, ,971 (12.8) Before tax Before exceptional items 140, , After exceptional items 140, , After tax and minority interests 133, , Funds (used in)/ generated from operations (154,674) 316,107 nm Development expenditure 376, , Capital expenditure 1,409 2,230 (36.8) Dividends paid 22,742 19, Value added from operations 205, , AT YEAR-END Share capital 355, , Shareholders' funds 1,606,806 1,486, Minority interests 225, , Short and long-term borrowings 2,154,633 2,100, Total funds invested 3,987,066 3,794, Debt-equity ratio (%) Excluding minority interests Including minority interests PER SHARE Profit before tax but after exceptional items (cents) Profit after tax but before exceptional items (cents) Profit after tax and exceptional items (cents) Dividends Less tax (cents) Gross equivalent (cents) Cover (no. of times) Net tangible assets ($) RETURN ON SHAREHOLDERS' EQUITY (%) Before tax but after exceptional items After tax but before exceptional items After tax and exceptional items EMPLOYEES Number (average) 1,975 1, Wages and salaries ($'000) 43,580 38, Pre-tax profit per employee ($'000) (7.6) nm : not meaningful 28

29 SIMPLIFIED BALANCE SHEET Total Assets Owned Total Liabilities Owed and Capital Invested ,756 (38%) 1,735 (38%) 1,607 (35%) 1,487 (32%) (4%) 195 (4%) 226 (5%) 64 (1%) 206 (4%) 61 (1%) (20%) 897 (19%) 523 (11%) 809 (17%) What We Owned Fixed Assets Properties Held for Development Investments 2000 Properties Held for Sale Trade Debtors Cash and Bank Balances 1500 Others Assets 1,124 (25%) 1,172 (25%) 1,829 (41%) 1,853 (41%) What Shareholders Invested Shareholders' Funds 1000 Minority Interests (1%) 393 (9%) 17 (0%) 501 (11%) What We Owed Trade Creditors Other Liabilities Long-term External Borrowings (3%) 2004 $4,575 m (100%) 147 (3%) 2003 $4,664 m (100%) 326 (7%) 2004 $4,575 m (100%) 248 (5%) 2003 $4,664 m (100%) Short-term External Borrowings 29

30 FIVE-YEAR FINANCIAL PROFILE Income Statement ($'000) Sales 500, , , , ,165 Operating profit 171, , , , ,644 Profit/(loss) before taxation Before exceptional items 161, , , , ,508 After exceptional items 161,600 (371,514) 61, , ,508 Profit / (loss) after taxation and exceptional items 132,238 (385,675) 28,523 98, ,627 Profit/ (loss) attributable to shareholders 122,114 (368,357) 26, , ,280 Balance Sheet ($'000) Fixed assets and investment properties 2,972,897 2,622,603 1,876,296 1,734,728 1,755,983 Investments 683, , , , ,346 Properties held for development 156, , , , ,437 Net current assets (Note 1) 1,132, ,833 1,229,242 1,300,771 1,148,767 Proceeds from sale of residential receivables - - (302,000) (302,000) - Deferred liabilities - (35,059) (36,443) (31,527) (28,467) Assets employed 4,945,330 4,498,320 3,721,529 3,794,151 3,987,066 Shareholders' funds 2,252,660 1,582,349 1,480,288 1,486,904 1,606,806 Minority interests 363, , , , ,627 Short and long-term borrowings 2,328,951 2,638,067 2,051,637 2,100,945 2,154,633 Total funds invested 4,945,330 4,498,320 3,721,529 3,794,151 3,987,066 Per Share Earnings (cents) (Note 2) Before tax but after exceptional items 21.1 (54.3) After tax but before exceptional items After tax and exceptional items 17.3 (52.0) Dividends Less tax (cents) Gross equivalent (cents) Cover (no. of times) 7.6 (23.0) Net tangible assets $3.18 $2.23 $2.09 $2.09 $2.26 Financial Ratios Return on shareholders' equity (%) (Note 3) Before tax but after exceptional items 6.8 (20.1) After tax but before exceptional items After tax and exceptional items 5.5 (19.2) Interest cover (before exceptional items) Debt-equity ratio (%) (Note 4) Employees Number 2,008 1,840 1,831 1,835 1,975 Wages and salaries ($'000) 28,009 33,702 33,498 38,012 43,580 Pre-tax profit per employee ($'000) (Note 5) 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 number 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 the debt-equity ratio, debt includes borrowings net of cash and equity includes minority interests in subsidiary companies. 5. In the calculation of pre-tax profit per employee, the profit of associated companies and exceptional items are excluded.

31 GROUP QUARTERLY RESULTS Total Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year $'000 % $'000 % $'000 % $'000 % $'000 Sales , , , , , , , , , ,781 Operating profit , , , , , , , , , ,971 Profit before taxation and exceptional items , , , , , , , , , ,262 Profit/(loss) before taxation but after exceptional items , , , , , , , , , ,462 Profit / (loss) attributable to shareholders , , , , , , , , , ,551 Quarterly turnover was highest in the second quarter due to a higher progressive revenue recognition for One Park Avenue in Shanghai and two Singapore projects, namely Butterworth 8 and Amaranda Gardens, which received their Temporary Occupancy Permits (TOPs) in that quarter. Operating profit peaked at about $33 million for two consecutive quarters, contributed by higher profits from One Park Avenue. Contributions also came from the write-back of provisions for Butterworth 8 and Amaranda Gardens in the second quarter while the sale of one Cluny Hill land plot and new overseas projects launched contributed to the third quarter's earnings. However, profit before taxation and exceptional items was higher in the third quarter than the second quarter at $41.8 million due to the sale of one Cluny Hill land plot, lower losses sustained by the Group s hotels and resorts, and the benefit of group tax relief. At the attributable profit level, 2004 results were better in all quarters compared to 2003 with the fourth quarter reaching a peak of $40.6 million.the better performance for 2004 came on the back of the sale of four Cluny Hill land plots, write-back of provisions for Butterworth 8 and Amaranda Gardens which received their TOPs in June 2004, and profits from One Park Avenue. New profit streams also started to come in from overseas projects launched in China and Thailand, namely 8 Park Avenue, The Seasons, The Waterfront and Villa Arcadia at Srinakarin. A further boost to profits came from group tax relief of $16.1 million. 31

32 Architect of value

33 We drive for value by building on strong fundamentals and from vantage points to increase shareholder returns

34 CORPORATE GOVERNANCE Corporate Governance Structure Shareholders Audit Committee Board of Directors Nominating Committee Remunerating Committee Enterprise Risk Management Committee Group Internal Audit Management Property Development & Investment Property Services Hotels, Serviced Apartments & Resorts Property Fund Management The Company believes in having high standards of corporate governance and is fully committed to ensure that self-regulatory controls exist to protect shareholders' interests and maximise long-term shareholder value. Good corporate governance helps companies to be more open and transparent, less bureaucratic, forward-looking with fresh ideas, and more decisive in the execution of strategies and initiatives, and is an effective safeguard against frauds and dubious financial engineering. These standards include a Board of Directors comprising high calibre members, Board Committees, and enterprise risk management and internal audit functions. They aim to not only meet but also exceed the principles of Singapore's Code of Corporate Governance. The Company has received many awards for achieving high standards in its corporate governance. Information on these awards is set out under Communication with Shareholders on page 46. The principles, policies and practices of corporate governance which the Company has adopted are explained in the paragraphs which follow. 34