Keppel Land Limited
Repor
KEPPEL LAND LIMITED REPORT TO SHAREHOLDERS 2000
t to Shareholders 2000 Contents
eppel Land (Incorporated in the Republic of Singapore)
2 Corporate Profile 4 Milestones 2000 9 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 valuequality innovation
Contents 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 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 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 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 50-50 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 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 value s message
’
chairman
Chairman’s Message
On behalf of the Board, I present the Keppel Land Group report for the year ended 31 December 2000.
Financial Performance
Keppel Land’s sales for the year were $500.5 million compared with $996 million in 1999. 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 Chairman’s Message (continued)
Proposed Dividend Unlocking Value of Assets
The Board is recommending a final gross Looking ahead, Keppel Land will unlock dividend of 6% or 3 cents per share less tax, value of some of its existing assets within amounting to $16 million for approval by one to two years. First, it will market land shareholders at the Annual General Meeting parcels in the Cluny Hill good class bungalow on 22 May 2001. If approved, the dividend enclave in the vicinity of Botanic Gardens. will be paid on 12 June 2001. The current ten bungalows residing in the Cluny Hill estate site, which the Group has Future Directions for the Company owned for many years, produced a low yield. This situation will be reversed with Keppel Against the spectre of an economic Land’s unique marketing concept of offering slowdown in the US, political uncertainties in bungalow lots with design-and-build options several Asian countries and a soft residential for sale. The freehold site area totals property market in Singapore, Keppel Land’s 303,697 sf. path ahead is a challenging one. In addition, Keppel Land will extract value Nonetheless, Keppel Land remains focused from its prime office portfolio of about on achieving its vision of being a premier 2 million sf of net floor area. The approaches property multinational corporation with listed being considered include listing, real estate and sizeable local companies in Asia. investment trusts, partial sell-down and Towards this goal, Keppel Land will grow its securitisation. We will also continue to look overseas investments from about 20% to for other new ways to unlock the value of the 30% of the Group’s total assets, with greater Group’s assets. emphasis on shorter-term trading projects and strategic acquisitions of property The real estate business is facing changes companies. in the New Economy, and just as Keppel Land has re-defined properties by introducing The Group will, in the immediate term, pursue innovative features and setting new standards opportunities in North Asia, particularly China, in quality, it must also redefine its business Hongkong, S.Korea and Japan. It will identify to create value more through leveraging on and seize opportunities in selective niches the Group’s expertise and human capital such as local middle class housing in rather than on financial assets. We believe selected parts of the region, and prime that the way forward is through an “asset- office buildings in key North Asian cities. light” approach.
Chairman’s Message 10 Recent Major Developments During the year, more than 1,000 units of residential units from Palm Gardens, The Singapore Mayfair and Villa Verde were successfully handed over to owners, strengthening The millennium year marked a new milestone: Keppel Land’s reputation as a major the former Keppel Shipyard site has begun developer of quality homes. its exciting transformation into a unique waterfront precinct. Over the next eight to In March 2001, Keppel Land was awarded ten years, some 2,700 waterfront the first site in the new Marina South residences will emerge from the sprawling downtown, which it jointly tendered with two 32-ha former harbour. Keppel Land, which Hong Kong developers, Cheung Kong and holds 30% equity of the project, is the Hongkong Land. The 1.14 ha site is the project manager for this premier waterfront gateway to the new financial hub. The development. proposed project will incorporate the latest in design and construction technology, and The first development in the precinct Keppel Land has been appointed the project Caribbean at Keppel Bay outperformed manager. This development will further other market launches, achieving the highest establish Keppel Land as a prime quality number of sales in the 3rd quarter of 2000. office developer. To date, 310 of the 430 units launched have been sold. Overseas
The marketing launch of Caribbean at In the region, Keppel Land seized several Keppel Bay also served as a platform for the opportunities presented by the low capital cross-selling of the Keppel Group’s products values of post-crisis Asia, with particular and services. Buyers could purchase homes emphasis on trading projects. bundled with a competitive Keppel TatLee Bank mortgage loan, a fire insurance policy Keppel Land’s listed vehicle Keppel from Keppel Insurance and a Keppel Life Philippines Property in Philippines entered credit card along with other benefits. into a long-term option agreement with Araneta Properties to jointly develop a Despite the soft residential market, Freesia 600-ha site in Metro Manila. The site, north Woods, a 129-unit freehold condominium of the Ortigas CBD, will be developed into development in Sunset Way, has sold almost a comprehensive township with commercial half of the 50 units launched since its soft and recreational facilities for the launch in November. middle-income locals.
Chairman’s Message 11 Chairman’s Message (continued)
In Indonesia, Keppel Land acquired Wisma The Group hopes to launch two freehold BCA, a prime twin-tower office development condominium developments : The Linc in from the Indonesian Bank Restructuring the Newton area and Butterworth 8 in the Agency. Located in Jakarta’s financial East Coast area. The timing of launches of and business district, the site has further other residential developments will depend development potential from the unused on market conditions. portion of the plot ratio. The office towers are fully let with a net rental yield of At Marina South, two office towers will offer 11% per annum. more than 1.3 million sf of net floor area. The development will also provide space for In China, Keppel Land acquired three a district cooling plant, a hub car park, and adjoining sites totalling more than 1 million sf an enhanced network of pedestrian links to for local middle-income residential housing buildings in the vicinity and an underground in Shanghai. Located in the prime Jingan subterranean mall linking to the Raffles Place district in Central Puxi, it is close to five-star MRT station. hotels such as the Portman Ritz-Carlton and Shanghai JC Mandarin, and is also With the strong experience of our partners, situated near the Mass Rapid Transit Hongkong Land and Cheung Kong, behind station. the project, this office development is expected to add variety and vibrancy to the Looking Ahead new cityscape.
Singapore The HarbourFront Office Park, which the Group is jointly developing with PSA The exclusive Cluny Hill bungalow plots will Corporation, will have some 866,730 sf of be launched for sale in an innovative manner waterfront office space. It will be ready offering home-owners with a variety of in 2003. Keppel Corporation’s headquarters options. Buyers can purchase the land, will be located in Tower One, and the design-and-build their dream homes with Keppel Group will eventually hold 70% stake the option to use Keppel Land’s panel of of Tower One. architects and consultants. Alternatively, Keppel Land can undertake the entire In both these office developments, process from concept to completion in Keppel Land has tied up with strong strategic accordance with the buyers’ specifications. partners who can add value significantly to Even the size of the bungalow land parcels the respective projects. Where appropriate, can be varied if buyers wish to combine we will continue to seek such strategic several plots together. alliances to grow the Group’s business.
Chairman’s Message 12 Capitalising on Keppel Land’s experience in In the search for investment opportunities, real estate development and facility Keppel Land has adopted a two-pronged management, Keppel Digihub, a wholly-owned approach. Its own China team will focus on subsidiary, will fit out and operate data major gateway cities while it builds its centres for co-location to house the Group’s presence in other growing cities through a regional technology infrastructure. strategic stake in a China-focused company. Keppel Digihub’s first data centre located in In March 2001, Keppel Land signed a Serangoon North in Singapore is scheduled conditional agreement to take a 24.9% stake to operate from the middle of the year. in Dragon Land, a Singapore-listed company. This will serve as an additional platform to Overseas capitalise on the growing demand for local housing especially in the promising provincial To diversify out of the Singapore market and cities. The government’s encouragement of broaden its earnings base, the Company has home ownership, attractive mortgage rates, set a target of growing its overseas assets and the growing affluent local middle class will from 20% to 30% of total assets. Keppel fuel the propensity to upgrade to Land believes that there are niche better quality housing. opportunities in North Asia. Human Capital and Technology In selected Asian cities, Keppel Land will enter into the local housing market and Recognising the significance of employees position itself as a provider of good quality as stakeholders, Keppel Land commissioned residences for the locals. This participation human resource specialist William M. Mercer in the local residential market is in line with to perform an extensive survey to gather the Group’s emphasis on trading projects feedback from both executives and support which will provide quicker returns compared staff. Following the exercise, the Company with longer-term investment projects. has started four task forces to look into the areas of remuneration and performance In Shanghai, about 3,000 quality local management, training and career development, residential apartments will be developed. empowerment, and communication. Where The first phase of the project, comprising appropriate, changes will be implemented to about 1,000 units, is expected to be attract and retain good people. The Company launched for sale in 2002. will also introduce a flexible benefits system for staff to choose benefits which meet their The entry of China into the World Trade needs and forego others which are less useful. Organisation is expected to serve as an In the long-term, the Company hopes to engine for growth for the Chinese economy. work towards being an employer of choice,
Chairman’s Message 13 Chairman’s Message (continued)
an organisation that people will want to join At the keenly-contested Annual Report Award and where employees feel proud to be affiliated competition, Keppel Land won the top with. Grand award, which is awarded to a company whose annual report takes the best award The Company will also continue to redefine for the third consecutive year. Judging properties and set new standards in criteria include timely and excellent innovation and quality. Keppel Land’s office standards of voluntary report disclosure developments have won more awards and presentation. In its 27th year, the recently, and its quality residential competition was jointly organised by the developments provide a lifestyle, going Institute of Certified Public Accountants of beyond the provision of just a physical Singapore, the Singapore Institute of abode. Nowhere is this better seen than at Management and Singapore Exchange Caribbean at Keppel Bay, which is setting Securities Trading Limited. new standards of quality residential properties. In addition, some of the Recognition for Keppel Land’s investor relations “smart home” features introduced at efforts also came from the Securities Investors Caribbean at Keppel Bay have since Association of Singapore, a new entity formed become industry-standard. to safeguard the interests of shareholders in Singapore. The Company was awarded a Despite the failure of many dotcom prize in the properties category for the companies, Keppel Land recognises the Most Transparent Company Award. potential in the use of technology as a catalyst and enabler of change and Enhancing Value for Shareholders improvement. Operating companies will, therefore, continue to look at new The enhancement of shareholder value will technologies to exploit them to improve be a key focus of Keppel Land. The Company processes in their operations. will work at improving its return on equity and Economic Value Added (EVA) for Corporate Transparency and Investor shareholders. Relations The emphasis on EVA will institutionalise During the year, Keppel Land won two the constant drive for staff to use total awards which acknowledge the Company’s quality process tools and a team approach efforts and commitment to timely and to maximise the Company’s value to accurate disclosure to shareholders. shareholders. This new accountability
Chairman’s Message 14 approach is expected to incorporate a At the Company’s Annual General Meeting performance measure and incentive system on 22 May 2001, Mr Alan F. C. Choe and that will fully align staff’s interests with those Dr Kwa Soon Bee will be retiring from the of the Company. Board. I would like to express our thanks to them for their invaluable contribution and To ingrain into all staff the need to focus advice during their terms of service. on key drivers to improve performance, more than 350 executive and support staff I would also like to take this opportunity to have attended training in the concept and on thank shareholders, business partners and how they can take practical steps to improve customers for their continued support. EVA performance. Together with them, Keppel Land will stride confidently into the knowledge-based Acknowledgements 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 Lim Chee Onn the year. I would like to thank them for their Chairman efforts which have contributed to making the project a truly unique one. Singapore, 23 March 2001
Chairman’s Message 15 Board of Directors
Chairman since January 1997. 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 2000. 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 1978. 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 1983. 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 1985. 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 Director since May 1991. 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 1995. 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 1997. 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 1997. 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 1998. 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 Financial Highlights
2000 1999 % Increase/ $’000 $’000 (Decrease)
FOR THE YEAR
Sales - excluding associated companies 500,492 995,981 (49.7) - including associated companies 826,160 1,326,140 (37.7) Profit / (loss) Operating 168,550 157,114 7.3 Before tax 158,930 141,263 12.5 After tax and minority interests; Before extraordinary items 120,618 78,694 53.3 After extraordinary items 120,618 152,263 (20.8) Funds generated from operations 216,545 261,134 (17.1) Development expenditure incurred 512,768 798,626 (35.8) Capital expenditure 102,453 2,670 3,737.2 Dividends paid and proposed 16,045 15,791 1.6 Value added from operations 206,000 219,200 (6.1)
AT YEAR-END
Share capital 354,190 353,267 0.3 Shareholders’ funds 2,240,096 2,150,552 4.2 Minority interests 371,644 397,600 (6.5) Short and long-term borrowings 2,328,951 2,128,535 9.4 Total funds invested 4,940,691 4,676,687 5.6 Debt-equity ratio (%) Excluding minority interests 98 100 (2.0) Including minority interests 84 85 (1.2)
PER SHARE
Profit before tax (cents) 20.9 16.8 24.4 Profit after tax and minority interests (cents) Before extraordinary items 17.1 11.8 44.9 After extraordinary items 17.1 22.7 (24.7) Dividends - Less tax (cents) 2.3 2.2 4.5 - Gross equivalent (cents) 3.0 3.0 - - Cover (excluding extraordinary items) 7.5 5.0 50.0 Net tangible assets $3.16 $3.04 3.9
RETURN ON SHAREHOLDERS’ EQUITY (%)
Before tax 6.7 5.6 19.6 After tax but before extraordinary items 5.5 4.0 37.5 After tax and extraordinary items 5.5 7.6 (27.6)
EMPLOYEES (including property associates)
Number 4,485 3,591 24.9 Wages and salaries ($’000) 88,556 82,095 7.9 Pre-tax profit per employee ($’000) 40.9 42.9 (4.7)
The Group at a Glance 18 Simplified Balance Sheet
TOTAL ASSETS OWNED TOTAL LIABILITIES OWED AND CAPITAL INVESTED
What What We Owned Shareholders Invested
Fixed Assets Shareholders' and Investment Funds Properties
Properties Minority Held for Interests Development
What We 2,240 (40%) Investments Owed
2,972 (53%) 2,151 (41%) Stocks Trade Creditors 2,784 (52%) 372 (7%) 28 (1%) 398 (7%) 60 (1%)
Trade Debtors Other Liabilities 630 (11%)
631 (12%)
1,547 (28%) 1,720 (32%) Cash and Long-term Bank Balances External Borrowings
1,367 (24%)
1,473 (27%) 679 (12%) 572 (11%) Other Assets Short-term 37 (1%) External 50 (1%) 22 (- %) Borrowings 23 (- %) 62 (1%) 54 (1%) 962 (17%) 655 (12%) 165 (3%) 280 (5%)
$5,368 m $5,599 m $5,599 m $5,368 m (100%) (100%) (100%) (100%) 1999 2000 2000 1999
The Group at a Glance 19 Half-Yearly Results
1st Half 2nd Half Total $’000 % $’000 % $’000 %
Sales
2000 350,964 70 149,528 30 500,492 100
1999 489,008 49 506,973 51 995,981 100
Operating profit
2000 83,108 49 85,442 51 168,550 100
1999 56,468 36 100,646 64 157,114 100
Profit before taxation
2000 72,835 46 86,095 54 158,930 100
1999 47,078 33 94,185 67 141,263 100
Profit attributable to shareholders
2000 55,015 46 65,603 54 120,618 100
1999 80,883 53 71,380 47 152,263 100
Earnings per share, before tax but after minority interests (cents)
2000 10.1 48 10.8 52 20.9 100
1999 6.3 38 10.5 62 16.8 100
The Group at a Glance 20 Five-Year Financial Profile
1996 1997 1998 1999 2000 Income Statement ($’000) Sales 591,742 621,160 317,914 995,981 500,492 Operating profit / (loss) 213,265 170,977 (349,681) 157,114 168,550 Profit / (loss) before taxation 233,830 209,663 (354,149) 141,263 158,930 Profit / (loss) after taxation 171,494 144,731 (378,604) 101,865 129,568 Profit / (loss) attributable to shareholders: Before extraordinary items 101,599 104,663 (350,564) 78,694 120,618 After extraordinary items 101,599 104,663 (350,564) 152,263 120,618
Balance Sheet ($’000) Fixed assets 2,497,325 2,565,530 2,857,693 2,784,299 2,972,897 Investments 736,193 799,838 761,841 571,563 679,282 Properties held for development 1,687,692 2,226,955 907,411 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 486,507 556,394 365,000 397,600 371,644 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 23.0 24.8 (50.4) 16.8 20.9 After tax but before extraordinary items 16.8 16.7 (53.5) 11.8 17.1 After tax and extraordinary items 16.8 16.7 (53.5) 22.7 17.1 Dividends Less tax (cents) 3.0 3.0 2.2 2.2 2.3 Gross equivalent (cents) 4.0 4.0 3.0 3.0 3.0 Cover 5.5 5.0 (24.1) 5.0 7.5 Net tangible assets $4.66 $4.32 $2.80 $3.04 $3.16
Financial Ratios Return on shareholders’ equity (%) (Note 3) Before tax 5.0 5.5 (14.2) 5.6 6.7 After tax but before extraordinary items 3.6 3.7 (15.0) 4.0 5.5 After tax and extraordinary items 3.6 3.7 (15.0) 7.6 5.5 Interest cover 6.7 3.2 (2.9) 2.0 1.9 Debt-equity ratio (%) 51 76 114 100 98
Employees (Including Property Associates) Number 3,161 3,166 3,260 3,591 4,485 Wages and salaries ($’000) 78,661 94,006 78,539 82,095 88,556 Pre-tax profit per employee ($’000) (Note 4) 70 63 N.A. 43 41
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 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 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 Key Personnel
Keppel Land Limited Young Lok Kuan General Manager Lim Chee Onn Fund Management Chairman Jeffery Leong Hon Keong Kevin Wong Kingcheung Assistant General Manager Managing Director Development and Asset Performance Audit
Property Investment, Ho Mun Piew Development and Management Financial Controller Group Finance and Accounts Keppel Land International Limited Yeo Kah Tiang (Mrs) Choo Chin Teck General Manager Director, Corporate Services and Finance and Administration Group Company Secretary Serena Toh Lai Siong (Ms) Lui Seng Fatt Assistant General Manager Senior General Manager Research and Investor Relations Corporate Development Sharon Lua Siew Hah (Ms) Tan Swee Yiow Assistant General Manager General Manager Human Resources Singapore Wee Lay Lian (Ms) Goh Han Kee Manager Assistant General Manager (Projects) Group Internal Audit Singapore Keppel Land Pty Ltd Ang Wee Gee General Manager Yip Wan Toh Head, Regional Investments General Manager Australia Lim Seng Bin General Manager Hotel, Serviced Apartment and Regional Investments Resort Management
Arthur Yeo Hui Kong Sedona Hotels International Pte Ltd Deputy General Manager (Projects) Regional Investments Lim Boon Kwee Senior Vice President Steven Shum Wing On Deputy General Manager Technology and E-Business Malaysian Operations KeplandeHub Limited Yeoh Hai Yeoh Assistant General Manager Ou Yong Meng Regional Investments General Manager
John Tan Chee Kiong Kwok Yan Hoe Assistant General Manager Assistant General Manager Regional Investments Keppel Digihub Pte Ltd Augustine Tan Wee Kiong General Manager Dave Ng Chun Sun Marketing Chief Executive Officer
Lim Tow Fok Keppel Services Staff Union General Manager Property Management Quah Kim Boon President Tong Kok Wing General Manager Retail Management
Ou Yong Meng General Manager Asset Planning
People Count 24 Organisational Structure
Board of Directors
Chairman
Audit Committee
Managing Director
Group Company Secretary/Director, Corporate Services
Manager, Finance and Tax Group Internal Audit Treasury and Administration Human Resources Corporate Secretariat Investor Relations
Property Investment Technology and and Development Property Services Hospitality E-Business
Singapore Investments Development Management Hotel, Club, Resort, and Technology Infrastructure Serviced Apartment Regional Investments Property Marketing E-Commerce Solutions Management Corporate Development Property Management Strategic Investments Hotel Procurement Asset Planning Retail Management Development and Asset Fund Management Performance Audit Research and Investor Relations Information Technology
People Count 25 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. Following this exercise, four task forces were Qualification of Management and Executive Staff set up to look further into the areas of
5% 2% performance management, remuneration 11.7% structure, training and career development, communication and empowerment. Where appropriate, changes will be implemented to 57.9% 23.4% 1st Degree attract and retain good people. Postgraduate Degree Diploma/GCE "A" Level Secondary Others So far, the Company has reviewed the compensation and benefits system, and plans
Qualification of Non-Executive Staff to introduce a more flexible system in the coming year. This allows staff to select 1.2% 20.9% benefits that meet their needs and forego 10.1% others which are less useful to them. The existing share option scheme has also been reviewed and has been extended to include 45.8% Primary Secondary staff at all executive levels. Diploma/GCE "A" Level 22% Industrial Certificate Others The Company continues to train and upgrade the skills of the employees to meet corporate Training Expenditure Distribution objectives.
0.43% 3.03% 6.49% To support the corporate mission of
9.96% creating value for shareholders, more than 350 employees were trained on the
80.09% Seminars Economic Value Added (EVA) approach during Skills Redevelopment Program (SRP) Information Technology the year. This was to align Keppel Land’s Diploma/Degree Others business activities with shareholder interests. All employees are challenged to find new ways to enhance value.
People Count 26 Investment executives and accountants As one of the measures to ensure were also sent for training on mergers and consistency in service standards, Keppel acquisitions with the Institute of Banking and Land’s wholly owned subsidiary, Sedona Finance. Another 10 employees were sent for Hotels International has embarked on the skill upgrading towards a Basic Certificate in Training in Guest Employee Relations Property and Building Management resulting Programme, for all levels of staff across the in the enlargement of their job scopes and Sedona group. The focus was on developing responsibilities. communication and teamwork skills towards meeting the needs of both internal and In the long-term, the Company hopes to work external customers. towards being an employer of choice, an organization that people will want to join and For strategic collaboration and where employees feel proud to be affiliated with. communication of corporate objectives across the Group’s regional offices, a Regional Challenges regional conference is organised every year.
Keppel Land’s regional investments add In March 2000, key marketing executives another dimension to human resource from around the region converged in management. When recruiting, developing Singapore for a lively forum with brisk and retaining employees in regional positions, exchanges of new ideas and initiatives, the Company is mindful of key considerations cross-learning opportunities and camaraderie. 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.
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 Staff getting a first-hand account of the latest corporate the “best practices” model. objectives from management at the regional conference.
People Count 27 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-1999 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 169 167 competitive market for talent.
Executive Another thrust for future development is Non-Executive addressing the impact of expanding regional presence. Streamlining of local practices and Manpower at end-2000 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’
167 practices. 194
Human resource policies are kept in-line Executive with the business objective of growing Non-Executive Keppel Land into a world-class establishment.
Regional Manpower Distribution Community Relations
5 4 26 58 Keppel Land has been an active participant 100 in the Keppel Volunteers movement, a China brainchild of Keppel Group Chairman, Indonesia 600 876 Vietnam Lim Chee Onn. This project fosters the spirit Thailand of volunteerism within the Group. The Philippines Australia Malaysia The Keppel Group has adopted three junior schools and an adult centre from the
People Count 28 Association for People with Special Needs. To date, about 200 employees across the About 800 children come from the three Keppel Group have signed up as corporate schools - Katong Special School, volunteers, of which 14% are from Keppel Land. Chao Yang Special School and Jervois Special School. Through wholly-owned subsidiary, Sedona Hotel International, Keppel Land also Corporate volunteering takes place at the participates actively in local community business unit level in providing professional services in the region. In Mandalay, Sedona expertise, and at the individual level in sponsored local high school graduates for a volunteering personal time and effort. one-year hospitality course while in Makassar, Individual employees are encouraged to Indonesia, Sedona raised funds for the volunteer their personal time for community Jannatul Ma’wa Orphanage. In Vietnam, services such as providing tuition and special Sedona Suites Hanoi participated in donation skills courses like arts and craft, music and drives for flood victims in Hue, the Red Cross information technology, as well as organising Association, the School for the Deaf and outdoor trips and special events for students Dumb, and the disabled children at Thanh of the schools and adults of the centre. Xuan Village.
To encourage the spirit of volunteerism, all Keppel staff are given two days leave annually for volunteer work.
People Count 29 Human Resources and Community Relations (continued)
Keppel Land also actively participates in year. Conveniently located within the Bugis community activities organised by other Junction development where Keppel Land’s organisations in Singapore. Some 17 offices are also situated, the fitness centre is employees represented Keppel Land in the very popular with staff with the usage of the Corporate Community Games held in membership passes being as high as 95% November 2000, organised by East West each month. The membership passes allow Cultural Development Centre and the staff use of facilities such as the gym, Singapore Sports Council. Supported by the swimming pool and indoor and outdoor Ministry of Community Development and jacuzzis. Sports, the games encouraged companies to develop community spirit through sporting Cultivating Camaraderie activities. They also allowed organisations to interact in a non-business setting and build a The General Staff Welfare Committee in stronger community of corporate citizens. Keppel Land has been organising various activities throughout the year to foster Healthy Living greater interaction and esprit de corps among staff. These range from health talks For nurturing both body and mind, Keppel from the National Skin Centre to staff Land’s corporate membership with Clark karaoke sessions and parties to celebrate Hatch Fitness Centre at Hotel Inter-Continental the Mid-Autumn Mooncake Festival and Singapore has been renewed for another Christmas. Employees look forward to these activities as good opportunities to unwind from the work and catch up with fellow colleagues.
Enabling Learning Opportunities
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 Annual events like the Dinner and Dance provide staff with opportunities to interact and build esprit de corps. now have access to computers at home.
People Count 30 Investor Relations
With the Company’s greater emphasis on Involvement of Top Management and corporate transparency and timely Open-door Policy information flow to shareholders, Keppel Land has stepped up its investor relations efforts in Critical to the success to any communication recent years. with investors is the involvement of top management. Hence, apart from the annual Recognition for its Efforts and interim results briefing to press and analysts, Keppel Land’s top management During the year, Keppel Land won two awards maintains an open-door policy with the which acknowledge the Company’s efforts investment community. One-on-one meetings and commitment to timely and accurate and business luncheons with analysts and disclosure to shareholders. At the fund managers are held frequently. At these keenly-contested Annual Report Award meetings, top management is able to 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.
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 Investor Relations (continued)
exchange views, address any concerns and where plans for the HarbourFront project update investors on recent major corporate were unveiled. Against the backdrop of the developments. This direct contact gives spectacular sea view, analysts were able to analysts and fund managers a better appreciate first-hand the innovative features, understanding of the Company’s rationale quality and design of the premier waterfront for undertaking certain investments and residences. acquisitions, as well as the business environment, especially overseas. Staying in Touch
Keppel Land also participates in overseas Capitalising on the tools of Internet age, the presentations and roadshows to institutional Company uses e-mail to stay in touch with investors regularly. These present the Company overseas investors. Copies of the annual and with a platform to expound its strategy and interim results presentations are sent to fund action plans, its new initiatives and its reading managers and overseas investors via e-mail. of the property market. Feedback from overseas They can also tap on to the resources of shareholders has been positive as they Keppel Land’s corporate website which has appreciate these efforts to maintain contact. a section devoted to providing shareholders with valuable information. The investing Sharing the Caribbean Experience with public can access the past three years’ Analysts award-winning annual reports, key financial ratios spanning ten years, a calendar of In August 2000, analysts were invited to one major events, and a press release archive. of the year’s highlights for Keppel Land – the Also available is a “ticker tape” which launch of Caribbean at Keppel Bay. This was provides “live” share prices and allows a follow-up to an analysts’ presentation on investors to chart the direction of the Keppel Harbour redevelopment in 1999 Company’s share price.
People Count 32 In Harmony with the Environment
Breathing Life in Living and Working each development. Within the grounds of the Spaces Caribbean at Keppel Bay development, for instance, there are more than 2,200 shrubs Evolution of demographics, expanding global and 800 trees in 15 different species. reach and changing business landscapes all influence how our environment affects our The use of water features has been daily lives. Habitats are constantly redefined showcased in most of our properties such by redevelopment. as the interactive fountain at Bugis Junction, the waterfall wall curtain at Capital Square, As a major property developer contributing and massive water channels at the Caribbean to changing landscapes in Singapore and the at Keppel Bay. They all bear testimony to region, Keppel Land makes conscious efforts water springing a new lease of life to enhance to create vibrant living and working spaces environmental well-being. for its home owners, tenants as well as the general public. Keppel Land has also ceaselessly championed the energy-saving, recycling 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.
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 The interactive fountain at Bugis Junction showcases are sculptured to embrace and complement the innovative use of water features.
People Count 33 In Harmony with the Environment (continued)
and water conservation programmes. In numerous environmental awards the hotel efforts to secure a better and greener has bagged since its opening in 1995. tomorrow for planet earth, staff are continuously encouraged to recycle and Think Local, Act Global reuse. Old newspapers and used papers, averaging ten cartons a month, are sold to Mindful of our responsibilities beyond the a recycling agency, and the proceeds are home front, Keppel Land is committed to in turn donated to charity. Old books and preserving and conserving natural landscapes magazines are donated to a social in our overseas projects as well. organisation every year, while old computers We are careful to observe development were refurbished and sold to staff at a constraints and seek opportunities to nominal sum. enhance the natural value of our properties.
For its efforts in going green, Hotel At our Indonesian resort Ria Bintan, the Inter-Continental Singapore won the architecture of the Forest Course cleverly “Excellence Award” in the “Best Public circumvents existing natural contours, showcasing Relations Work for the Environment” category and opening wildlife corridors. The integrated at the Public Relations in the Service of design ensures that the “one-with-nature” Mankind Awards 2000, adding to the theme permeates the entire resort.
Golf courses at Ria Bintan are sculptured along existing contours to preserve and enhance natural landscape.
People Count 34 It is not uncommon for golfers at the In Kunming, China, Keppel Land’s other resort to be delighted by the sight of a premier resort Spring City Golf and Lake shy mousedeer or a scurrying giant squirrel, Resort has been developed into a world-class flitting across the fairways. Indigenous golf destination, with its courses consistently animal species and flora thrive, enveloping garnering international awards for excellence. golfers with the magic of Mother Nature Environmental efforts are key when during the entire length of play. developing existing natural terrains into greens and fairways. Hotel Sedona Makassar’s contribution to the Group’s eco-efforts comes in the form The resort is adjacent to Lake Yang Zhonghai, of weekly cleaning activity of its surrounding which is the main reservoir of potable water neighbourhoods. Sedona Suites Hanoi, also for neighbouring municipal areas. To protect mindful of its responsibilities, uses only the pristine natural lakes, governmental environmentally-friendly cleaning chemicals agencies have taken great efforts to monitor and treats all sewage water at the property and control waste disposal into the waters. before disposal. At Spring City, the management plays an Over in Sydney, Australia, Botanic Cove is active role in resource management by an example of a sanctuary of conserved participating in environmental protection 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.
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 In Harmony with the Environment (continued)
campaigns. Staff are constantly educated on be treated for residual chemicals before it is minimising water and material wastage and discharged into the lakes. guests are also encouraged to participate in the conservation of natural resources. In Partnership with the World Wildlife Fund Maintenance of this world-class turf has been designed around the use of low-impact Hotel Inter-Continental Singapore is taking chemicals. Chemicals used will have gone conservation one step further, by through stringent quality tests conducted encouraging each of its guests to help both by international consultants as well as protect some of our planet’s most local authorities. endangered wildlife by making a small contribution to the World Wildlife Fund (WWF). Even the dosage of use is carefully controlled through time-release methods. This will in This is part of an innovative initiative by the turn control the seepage into the lakes during hotel, aptly called “Sleep well, you just saved rainfalls or natural drainage. Constant checks a life” campaign, that involves fundraising and are made through water sampling to ensure raising awareness of endangered wildlife. consistency in management. Hotel guests are given the option of donating Spring City is currently collaborating with the local currency equivalent of US$1 by adding the local government to build a second water this to their hotel bills. All proceeds of this treatment plant on the lakeside. This will exercise go to the funding of WWF’s on-going cater to future needs where all rain water will wildlife conservation work in Asia Pacific.
Chemicals used for Spring City’s course maintenance go through stringent quality checks.
People Count 36 Asian Economic and Property Round-Up
Global and Asian Economies 2000 growth for the year. However, the recovery process was chequered across the region Global economic conditions were healthy in with North Asia leading the economic 2000, despite the volatile stock markets performance. Hong Kong and China posted worldwide and higher oil prices. However, stellar growth of 12% and 10% respectively after a promising run in the initial part of the while South Korea continued to extend its year, global growth momentum began to strong economic recovery with a GDP growth ease as the year drew to a close. The US of 8.9% as corporate and financial reforms economy peaked with growth moderating to remained on track. a more sustainable pace at 5.6%. In Japan, economic recovery petered out to a growth In Southeast Asia, Singapore maintained rate of 1.2% after initial momentum in 1999. its lead in terms of economic performance The European Union held up better with a with a stunning 9.9% growth. Supported by broad-based expansion of 3.6% on the back strong export growth and pick-up in domestic of robust domestic demand and buoyant demand, Malaysia also grew by a healthy export performance. 7.5%. Despite the persisting local political uncertainties and slow progress in corporate Although growth momentum tapered off debt restructuring, Thailand, Indonesia and towards the end of 2000, the external Philippines benefited from strong export environment was favourable on the whole and demand and extended the recovery process most Asian economies reported improved to record growth of 4.3%, 4.8% and 3.9% respectively.
1999 and 2000 Economic Growth Rates
14.0
12.0
10.0
8.0
6.0
Per Cent
4.0
2.0
0.0
China
Taiwan
Malaysia Thailand Japan
Philippines
Indonesia
South Korea US Singapore
European Union
HongKong SAR
1999 2000 Source: Ministry of Trade & Industry and various other official sources
Focus: Market and Prospects 37 Asian Economic and Property Round-Up (continued)
Singapore Economy 2000 grew by 8.2%. In the transport and communications sector, buoyant growth The Singapore economy was vibrant in 2000, of 9% was registered in tandem with the bolstered by the continued expansion of the improvement in regional trade and travel manufacturing, wholesale and retail, hotels activities, and the liberalisation of the and restaurants, transport and telecommunications industry. communications, and business services sectors. The manufacturing sector chalked The financial services sector turned around up an impressive growth of 15.2%, propelled with a healthy growth of 4.1%. The rebound by the vigorous expansion in the electronics was mainly derived from the increase in industry. Bolstered by strong entrepot trade, loans, and debt and equity issuance. On the visitor arrivals and consumer demand, the other hand, the construction sector remained wholesale and retail sector doubled its growth on a decline, but appeared to be bottoming in 1999 to record a 15.2% expansion in out. Decline in the sector moderated to 2000. A record 7,691,090 visitor arrivals and 4.6% on the back of higher volumes of higher domestic purchasing power supported non-residential construction activities and the hotels and restaurants sector which civil engineering works.
The Singapore Economy - Sectorial Growth Rates
20
15
10
5
Per Cent 0
-5
-10
Manufacturing Wholesale & Retail Trade Hotels & Restaurant
Transport & Financial Communications Services
Overall Construction Business Services
1999 2000 Source: Ministry of Trade & Industry
Focus: Market and Prospects 38 Asian Property Markets 2000 In Australia, major office markets continued to put in strong performances despite a On the property front, the performance of slower economy and weaker business property markets in Asia was mixed, along sentiments. With limited new supply of with the divergent political and economic quality office buildings in the CBD, rents grew developments across the region. The road 15.6% and 28.4% in Sydney and Melbourne to recovery for most Asian property markets respectively. was choppy as financial difficulties continued to linger and fresh political uncertainties While the regional office sector continued to emerged. Nevertheless, Asian property strengthen, the regional residential sector did sectors have made gradual but slow not fare as well. Private residential markets in improvements, with investment opportunities Singapore and Hong Kong slowed down in existing within certain segments. 2000 after the impressive rebound in 1999. Despite sound fundamentals, prices flattened The office sector led the rebound in out in Singapore and dropped 13% in Hong property markets across the region. The Kong over concerns that the US economy rapid expansion of financial institutions, IT was slowing down. and telecommunications companies, and new e-business start-ups led to strong office demand and falling vacancies.
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 Asian Economic and Property Round-Up (continued)
Against the backdrop of political uncertainty, With economic growth in 2001 forecast to capital values in Bangkok and Makati fell be healthy at 3.5% to 5.5%, the outlook for 1.1% and 8% respectively. On the other the office sector remains positive even hand, capital values increased 7.9% in though demand is likely to moderate in Kuala Lumpur and 9.8% in Jakarta. comparison to its record performance in 2000. On the other hand, performance of Supported by firm expatriate demand, the the residential sector remains vulnerable to rental markets were more active. Average prevailing weak sentiments. Nonetheless, prime rents increased in Singapore (7.1%), fundamentals remain intact with the low Hong Kong (4.8%), Kuala Lumpur (11.4%) and interest rates environment and restoration Jakarta (3.2%). However, rental markets in of the employers’ CPF contribution. Makati and Bangkok remained weak and rents fell 9.2% and 0.5% respectively. For the rest of Asia Pacific, the economic and property outlook will continue to fall Asian Economic and Property into the north-south divide in line with the Outlook 2001 economic fundamentals and political uncertainties that mark the countries in the Although Asia may have emerged from the two regions. The stronger GDP figures and economic crisis, recovery remains burdened greater inflow of foreign investments have by the sluggish restructuring progress and increased expectations that China, Hong lingering political problems. With looming Kong and South Korea will be able to threats of a recession in the US and the produce better performances. For China, the gloomy Japanese economy, the economic accelerated economic growth going forward and property outlook for Asia is expected to and its impending entry into the World Trade be a challenging one in 2001. Organisation (WTO) have led to confidence and optimism in the property market. With Despite the more volatile global environment, growing affluence, government incentives the outlook for Singapore remains stable. for home ownership, favourable mortgage The unexpected budget surplus has put rates, and the desire for locals to upgrade, Singapore in a position of strength to ride local housing is a promising sector in many out the fluctuations. The government’s parts of China. 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.
Focus: Market and Prospects 40 Benefiting from China’s strong economic Overall, the economic and property outlook momentum as well as recent favourable for Asia Pacific is divided with North Asia measures by the Special Administrative looking brighter while Singapore emerges as Region government, prospects are looking one of the brighter spots in Southeast Asia. up for the Hong Kong market. As for Nevertheless, patchy performances across South Korea, it is pushing ahead with the various countries and market segments corporate and financial reforms, and will present opportunities for diversification while remain one of the favourite destinations for low asset values in selected segments offer investments as distress sales of prime strong potential for returns. property assets by major corporations attract interest to the property market.
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 Change and Impact
Investment Properties Trading Properties
The Group’s principal investment properties The Group’s profits from property trading are Ocean Building, Ocean Towers, is sensitive to actual sales achieved and the Keppel Towers, GE Tower, Capital Square percentage of physical completion and Prudential Tower in Singapore, and recognised during the year. Saigon Centre and International Centre in Vietnam. The rental income from these Based on the actual sales contracts properties is sensitive to changes in their signed as at 31 December 2000, the occupancies and rental rates for lease incremental impact on Group pre-tax profit renewals. for every 5% of physical completion is about $0.1 million. Assuming that average rental rates are maintained, a full year’s impact on rental For every additional 1% of sales achieved income for every 1% change in the for projects which have been launched, occupancies of the above mentioned the additional contribution to Group pre-tax properties is approximately $1.1 million. profit is an estimated $1.8 million. This is based on physical completion projected In respect of committed leases and lease and sales projected for the year, and the renewals, a full year’s impact on rental completed properties available for sale income for every 10% change in average which the Group had at end-2000. rental rates resulting from the new rates negotiated is about $10.7 million.
Change in Rental Income
Resulting from: $ million
1% change in occupancies (a) 1.1 10% 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 2001.
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 2000. (d) Based on physical completion projected and sales projected for the year, and completed properties available for sale at end-2000.
Focus: Market and Prospects 42 In Retrospect ... and Prospects
Looking Back at 2000 Results Looking Ahead at 2001 Objectives and Initiatives and Outlook
• Group profit increased by 53.3% to • Value unlocking of Cluny Hill prime $120.6 million. residential site.
• Completed and handed over more than • Launch and construction of several new 1600 Keppel Land homes in Palm Gardens, residential projects in Singapore, The Mayfair and Villa Verde to purchasers. depending on market conditions.
• Launched sale of condominium units at • Unlocking of value in the Group’s office Caribbean at Keppel Bay and Freesia portfolio with suitable approach, for Woods. example securitisation, REITs, etc.
• Acquired a 45% stake in Five Stars • Joint-venture office development of Property, a company listed on the Marina Boulevard site. Stock Exchange of Thailand. • Joint-venture development of • Completed purchase of four development The HarbourFront Office Park. sites and other assets from TLB Land Limited. • Search for shorter-term trading projects and strategic acquisitions of property • Also acquired: companies in North Asia, particularly China, Hong Kong, South Korea and - Uraco Industrial Building in Singapore for Japan. development as a data centre;
- Wisma BCA, a prime office development • Completion of acquisition of a 24.9% in Jarkarta; stake in Dragon Land.
- Three sites for residential development in Shanghai.
Focus: Market and Prospects 43 quality year in review
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 2000. 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 2000.
Caribbean at Keppel Bay
Visitors thronged the Caribbean show house, and good sales were The first and only one of its kind, Caribbean at Keppel achieved. All were impressed with the signature quality, thoughtful Bay redefines waterfront living in Singapore with its layouts and choice finishings. unparalleled sea views, grand marina and spectacular water channels which bring the sea right up to the Visitors to Caribbean’s showflat were impressed with homes. Comprising 969 units of two- to four-bedroom quality finishes and features such as the floor to ceiling luxurious condominiums with floor areas ranging from french glass windows, the private lift lobby and the 840 sf to 6,135 sf, the project received enthusiastic thoughtful half-sunken long bath. Caribbean is also the response. Some 200 units were snapped up even first of Keppel Land’s Internet-powered homes equipped before the official launch on 16 September 2000. 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 REVIEW OF OPERATIONS
access which allows residents to surf the web at high Fine finishes, efficient layouts, private lift lobbies and speeds, a wired local area network, home automation to floor-to-ceiling windows are just some of the attractive control lights, air-conditioning and home-entertainment features found in the one- to four-bedroom units, with systems and a condominium web portal where residents floor sizes range from 1,023 sf to 2,680 sf. Residents can shop online, book facilities, e-pay maintenance bills, of the eight penthouses have the added exclusivity of and form e-communities sharing similar interests. their own private roof terrace. Units are also equipped with smart features. To date, more than 70% of the 430 units launched have been sold. To date, close to half of the 50 units soft-launched in November have been sold. Caribbean is the first residential development to be launched in the master-planned waterfront precinct, Upcoming Launches Keppel Bay. Keppel Corporation and Keppel Land hold 70% and 30% in Keppel Bay respectively. Keppel Land In the coming months, Keppel Land will market its Cluny is also the development manager for Keppel Bay. Hill bungalow sites with customised design-and-build options, Butterworth 8 condominium along Tanjong Freesia Woods Katong and The Linc apartments in the Newton area.
Freesia Woods is every homeowner’s dream. The Cluny Hill Redevelopment 129-unit freehold condominium is set within the tranquil Sunset Way residential enclave, and yet is a mere As part of its strategy to continually unlock value in the stone’s throw away from Holland Village and the city, Company to enhance shareholders’ returns, Keppel Land amenities and schools, entertainment and business will redevelop its Cluny Hill site in the prime district 10 centres. area into an exclusive residential enclave comprising
Freesia Woods is located in the Sunset Way residential enclave.
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good-class bungalows. Ideally located in the Botanic pool, gymnasium, children’s pool and play area, barbecue Gardens good-class bungalows vicinity, the 303,697 sf area and basement carpark within the exclusive and quiet freehold site, when redeveloped, will yield a net saleable Newton residential enclave. land area of 248,328 sf. The Linc offers 51 exclusive freehold apartments, with Keppel Land will market the Cluny Hill bungalow plots sizes ranging from 646 sf to 1,851 sf, complete with with customised design-and-build options in the first half smart features. of 2001. This concept, a first in the real estate industry in Singapore, allows buyers to purchase plots with land Quality Landbank areas ranging from 15,000 sf to more than 30,000 sf each and build the bungalow according to their own Keppel Land’s residential landbank currently stands at specifications. Keppel Land will also provide project around 3.1 million sf of attributable gross floor area. management services for the entire process from About 75% of its landbank are freehold or 999-year conceptualisation to completion for buyers who prefer to leasehold in tenure. Of this, 60% are located in the have pre-designed homes but wish to avoid the hassle prime 9, 10, 11 and 15 districts. of having to project-manage the construction. The acquisition of properties and assets from TLB Land Butterworth 8 following the divestment of the company by Keppel TatLee Bank to the Ayala Group, was completed in Butterworth 8 is the largest freehold condominium in the May 2000. These include two 999-year leasehold sites Katong vicinity, with a total of 216 units spread over at Mar Thoma Road, and freehold sites at Cairnhill Circle three 18-storey blocks. It is within walking distance to the and Devonshire Road. Paya Lebar MRT station and close to reputable schools such as Tao Nan, Tanjong Katong Girls’, Kong Hwa and Existing Residential Properties Chung Cheng High. Like Caribbean and Freesia Woods, every unit at Butterworth 8 is also equipped with smart Nassim Woods, Keppel Land’s luxury condominium at features such as pre-wired data or telephone points in Nassim Road, continues to enjoy full occupancy. Tenants all bedrooms, living room and kitchen, a web portal and include expatriates from Europe and the United States. broadband Internet access to allow residents to enjoy convenient connectivity. Some 98% of the 510 units at Pebble Bay, an exclusive waterfront project at Tanjong Rhu, have been sold, while The Linc the remaining units have been leased.
Located at Lincoln Road, The Linc offers city living in Keppel Land’s reputation as a major developer of quality a prime district, with easy access to the Newton MRT homes was further strengthened with the completion and station which is just one stop from the Orchard Road successful hand-over of 1,000 units from Palm Gardens shopping belt and entertainment centre. Yet, it is fine and The Mayfair condominiums and another 515 terrace living as well with lifestyle facilities including a swimming houses at Villa Verde to the owners in 2000.
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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 2000.
OFFICE Award-winning Hotel Inter-Continental Singapore continues to be recognised for its contribution towards conserving the environment. Keppel Land is one of the largest office landlords in the Raffles Place area. The Company’s quality portfolio The Exchange in Raffles Place, as well as Keppel Towers, of investment properties include Ocean Building, GE Tower and Bugis Junction Towers in the CBD area. Ocean Towers, Prudential Tower, Capital Square and 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 1999. 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 1999. 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 3.5 - 5.5%. 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.
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Adding to Keppel Land’s quality portfolio of office space of non-GFA space for the cooling plant, thereby ensuring is the Marina Boulevard site, which was recently awarded more efficient layout of office space. A subterranean by the Urban Redevelopment Authority in March 2001. retail mall will link the new financial hub to the Raffles Place MRT station. This will inject greater vibrancy into New Downtown at Marina South the CBD and provide shoppers with a new shopping experience. In addition, a Downtown carpark hub, with Keppel Land together with two Hong Kong developers, 574 carpark lots will also be built to minimize downtown Cheung Kong and Hongkong Land, successfully tendered traffic congestion. With the scarcity of carpark space in for the 1.14 ha Marina Boulevard site in March 2001. prime CBD area, this serves to benefit the office towers’ Located within the central business district, next to the tenants as well. Raffles Place financial hub, Marina South is the gateway site to the rest of the sprawling reclaimed land earmarked Given the consortium’s local, regional and global as the New Downtown, Singapore’s new business and expertise and experience in developing internationally- financial district. renowned properties, a world-class landmark showcasing the latest in design and construction technologies will Designated a “white site” on which residential, emerge from the Marina Boulevard site. commercial, hotel, retail or mixed-development can be built, the site will be used to develop two office towers Capital Square with more than 1.3 million sf of net floor area. Capital Square, a 16-storey office tower with 320,000 sf This project will have several “firsts” in terms of of Grade A office space as well as 19 units of boutique infrastructural features. These include the district cooling office suites, with an additional 49,000 sf of office plant which serves as a centralised air-conditioning space, was completed in January 2000. Its column-free system for the adjoining sites to be released for sale in floor plates spanning 31,000 sf per floor, is the largest the future. The developers will provide about 32,200 sf 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 2000 - at the Building and Construction Authority’s Awards Presentation for its high standard of management, technical expertise, workmanship and environmental friendliness.
The HarbourFront
Adding to Keppel Land’s portfolio of premier office buildings are the twin office towers at The HarbourFront Keppel Land has garnered the partnership of major-league developers Office Park. Strategically situated along Telok Blangah Cheung Kong Holdings and Hongkong Land to develop the first site in Singapore’s new Downtown area. 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.
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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 HarbourFront Tower One will house Keppel Corporation’s Car Tower will yield a total of 866,730 sf of net lettable headquarters. area for lease. unit has been leased. The four freehold shophouses at Construction of the twin towers has commenced and Joo Chiat Road are for commercial and retail use. One piling work has been substantially completed. Keppel unit has been sold, while two-thirds of the remaining Corporation’s headquarters will be located in Tower One, spaces have been leased. next to the Cable Car Tower. Keppel Corporation has purchased another 31% stake in Tower One, bringing the INDUSTRIAL Keppel Group’s interest in Tower One to 70%. Keppel Land has two industrial buildings in the CONSERVATION SHOPHOUSES MacPherson and Paya Lebar Industrial Estates.
Keppel Land has in its portfolio, two rows of conservation Quartz Industrial Building, located at Aljunied Link, is a shophouses, Heritage Court at Peck Seah Street and high quality, eight-storey freehold property. To date, four shophouses at Joo Chiat Road. Heritage Court, 70% of the space have been sold, while 14 out of the located within walking distance to the Tanjong Pagar remaining 16 units have been leased. Orion Industrial MRT station, is for commercial use. To date, seven out Building located at the Paya Lebar Road thoroughfare, is of the eight units have been sold while the remaining 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 2000.
Going forward, the global electronics downturn and the weaker economic climate are likely to affect the industrial market in 2001. 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.
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KEPLANDEHUB Internet-Powered Offices
Data Centres A MOU was signed in November 2000 with three other large office landlords - City Developments, Singapore Established in early 2000, KeplandeHub Limited is the Land and CapitaLand - to invest up to $5 million in a e-business arm of Keppel Land. Capitalising on Keppel joint venture company which will develop and operate Land’s experience in regional real estate development an on-line portal linking up office tenants, property and facility management, Keppel Digihub, a wholly-owned managers and property owners. subsidiary of KeplandeHub, will build and operate data centres in the region. The portal, which is expected to be operational in the second half of 2001, will benefit tenants, property In Singapore, Keppel Digihub acquired the Uraco managers and owners by lowering operating and Industrial Building at Serangoon North for $29 million. procurement costs. The building will be ready in mid-2001, with more than 20,000 sf of space. FUND MANAGEMENT
Internet-Powered Homes To provide a new source of income from fund management fees and fees for providing other property In May 2000, a Memorandum of Understanding (MOU) services, Keppel Land joint-ventured with AMP-Henderson was signed with Cisco Systems of USA, to develop Global Investors to form Asia Real Estate Fund and market the Internet-powered home. Management (AREFM). AREFM has been granted the “Approved Fund Manager” status by the Monetary To promote the concept, KeplandeHub and Cisco Authority of Singapore, and is in the process of setting created a model of the Internet-powered home at the up Asia No. 1 Property Fund. The fund, which is targeted showflat of Caribbean at Keppel Bay. Equipped with at institutional investors in the US, Europe, Australia broadband Internet access, home automation and and Asia, is expected to raise US$300 million. It will monitoring systems, the showflat served as a working selectively invest in low-to-medium-risk property assets platform for the parties as well as numerous other in Singapore and Asia. A fund management unit was technology and e-lifestyle service providers. 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 1999. 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.
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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. The Crescent on Bayswater enjoys healthy occupancy rates of 77%, with retail space fully leased.
Owners of the 75 units under Phase 1A of Botanic Cove Sydney – Bayswater Village have settled into their homes. Phase 1B, comprising 42 apartments and townhouses, is presently under Bayswater Village, a hotel cum retail development with construction and almost all sold out. More than half of a five-storey basement carpark, is located in the tourist the remaining 118 units under Phase Two of the project district of Kings Cross, Sydney. The 68-suite hotel, have also been sold. 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-1996. Home prices peaked in June 2000, following the run-up in demand in anticipation of the GST implementation on 1 July 2000.
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.
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CHINA strategic investment in Dragon Land will enable it to identify and capture opportunities in other growing cities. Shanghai – Acquisition of Residential Sites Shanghai – Ocean Towers In December 2000, Keppel Land acquired three adjoining sites in Shanghai, China for residential development. The Group is also developing a 25-storey office tower Located in the prime Jingan District, close to the Jingan in Shanghai. Named Ocean Towers, the building is Shi MTR station, the 1.03 million sf site will yield a total strategically located at Yan An East Road in the prime of about 3,000 apartments, complete with recreational commercial district of Huangpu. It is also adjacent to the facilities. tunnel linking the Huangpu Central Business District to Pudong. When completed in the second half of 2001, Keppel Land has a 99% stake in this project, while the it will yield 517,275 sf of gross floor area or 388,128 sf remaining 1% equity is held by Shanghai Jingan District of net floor area. 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.
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 2002.
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 117.6 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 Ocean Towers, a 25-storey office tower located in the heart of the team will focus on major gateway cities, while its commercial district of Huangpu, will be completed in second half of 2001.
The Year in Review 56 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 1999. 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 is fast gaining a reputation for having two of Asia’s best golf courses. The Jack Nicklaus-designed Spring City Golf and Lake Resort is a world-class Mountain Course was ranked the “Number One Golf Course integrated holiday resort in Kunming, Yunnan. The resort in China and Hong Kong” by the US Golf Digest in June 1999. enjoys mountain and lake views in a spring-like climate The 18th Hole Par Four of the Mountain Course was also all year round. It is also less than an hour’s drive from voted amongst the “Best 500 Holes in the World” by the the Kunming Airport, which has direct links to Singapore, US Golf Magazine in conjunction with Asian Golf Monthly Macau, Hong Kong, Bangkok, Chiangmai, Yangon, and 10 other international publications in January 2000. Osaka and major Chinese cities. The other golf course, the Lake Course designed by Phase One comprises two 18-hole golf courses Robert Trent Jones Junior, was voted as the best course designed by Jack Nicklaus and Robert Trent Jones in China and second in Asia by Asian Golf Monthly in Junior, a luxurious clubhouse with 49 exclusive lodges December 2000. and luxurious resort homes and villas, business and conference facilities as well as other recreational The resort homes have similarly fared well. Following facilities, including a newly-opened watersports centre. the sell-out and completion of the first collection of Keppel Land is spearheading the development with 50 resort homes, The Primrose, in the Spring City Golf an effective 40% stake and is also managing the and Lake Resort, Keppel Land launched the second and resort. third collections, The Magnolia and Azalea I, in 2000.
The Year in Review 57 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 Kowloon MTR Station along the new MTR Airport Line. up all 82 units of luxurious villas. It is scheduled to be Other members in the Wing Tai-led consortium include completed in mid-2001. Azalea I, comprising Temasek Holdings, Singapore Land and Hong Kong’s 42 apartments and 12 villas, was launched in July 2000 Lai Sun Development and Worldwide Investment. and has been equally well-received. The project received its Temporary Occupation Permit HONG KONG in 2000. Some 60% of the 1,200 units launched have been sold. The remaining 88 duplexes will be launched Kowloon – The Waterfront in the second half of 2001. 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.
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INDONESIA
Jakarta – Wisma BCA
Keppel Land acquired Wisma BCA, a prime office development in Jakarta, for $57.5 million in September 2000. 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
The Wisma BCA is a prime office development in Jakarta’s financial Keppel Land has a 25% stake in Taman Pasadenia, a and business district. residential development in Pulomas, Jakarta. Phase One, comprising 147 condominium units, was completed in 1996. Half of the units have been sold, while 30% of The second phase of the development is currently in the the remaining units have been leased. The unsold units planning stage. In the meanwhile, the land has been leased have also been retrofitted in 2000. 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 2000. 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.
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Bintan – Ria Bintan Course opened for play in October 1998 and December 2000 respectively. In 2000, the Ocean Ria Bintan is a premier integrated resort within the Course was awarded first runner-up in the “Best Golf Bintan Beach International Resort. The 447-ha Resort in Asia”, the “Best Golf Course in Indonesia” and development, comprising Club Med Resort, hotels, resort the “Best Par Four in Asia” categories by the Asian Golf homes and golf courses, will be developed over four phases. Monthly. The remaining nine holes of the Forest Course will be completed in later phases of the development. Club Med Ria Bintan, a beachfront resort with 302 rooms, continues to attract international visitors Yogyakarta – Melia Purosani Hotel with average annual occupancy close to 60%. The first 500 waterfront resort homes have been planned on a Melia Purosani Hotel is located in the heart of 22-ha site adjacent to the Club Med Resort. Development Yogyakarta city, near the Sultan’s Palace and the of Phase One, comprising 64 resort homes, is subject to main commercial street in Central Java. It also enjoys market conditions. access to Borobudur, which is one of the seven ancient wonders of the world. Keppel Land has a 20% stake in Ria Bintan Golf Club is a 36-hole championship golf this 296-room hotel, in which Singapore Airlines is also course designed by Gary Player. The 18-hole Ocean a partner. Measures to reduce costs and improve Course and the first nine holes of the 18-hole Forest 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.
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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 2000. 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 2000. 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 2000. 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 Keppel Land has an 80% stake in another a retail and office complex on a prime 251,705 sf site in retail-cum-commercial complex which is being planned the heart of the Central Business District of Surabaya. on a 279,864 sf site in Surabaya CBD. Named Galleria Tunjungan, the first phase of the project will comprise about 818,000 sf of retail space.
The Year in Review 61 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 Tanah Lot Resort is an integrated resort development North Sulawesi, Hotel Sedona Manado offers access to located along the southwestern coastline of Bali, some of the world’s most magnificent diving sites with overlooking the Indian Ocean. International class hotels pristine coral reefs and crystal clear waters. The hotel and resort homes have been included in the masterplan will have 247 deluxe rooms and suites, with recreational of this 108 ha site. Land acquisition activities to facilities such as a private swimming lagoon and a consolidate the site are in progress. Dive and Sea Sports Centre. The opening will be timed according to market conditions.
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.
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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 Taman Jernih is a 14.4 ha freehold residential site in Bukit Mertajam, Penang, jointly developed with the Malaysian Boustead Group. across Skudai River in Johor Bahru. Upon completion, the bridge will provide greater convenience for residents, with direct access to the Skudai Expressway. over four phases, the entire development will have a total of 517 landed residential units, comprising Response to the 1,418 houses and shopoffices 367 terrace houses, 28 semi-detached houses and launched has been good, with 83% of the units sold. 120 linked houses and two bungalow plots when fully Another 240 affordable housing and 193 double-storey completed in end-2002. terrace houses are expected to be launched in 2001. Phase One of Taman Jernih, comprising 85 terraces Penang – Taman Jernih and 16 semi-detached houses, has been sold and handed over to the buyers. The second phase Keppel Land is currently developing a 14.4 ha freehold comprising 206 units, was launched in 2000 and site in Bukit Mertajam, Penang, for residential use. The achieved 78% sales. Another 174 residential units and development, known as Taman Jernih, is a joint-venture two bungalow plots under Phase Three and Four are with the Malaysian Boustead Group. To be developed expected to be launched in 2001.
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 2000. 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 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 the best business hotels in Myanmar. However, trade sanctions imposed on Myanmar has affected Yangon – Sedona Hotel Yangon the business environment. The leisure segment has also been affected by a decline in Japanese tourists Situated along Yangon’s famous Kabe Aye Pagoda Road, due to the cancellation of direct flights from Japan to Sedona Hotel Yangon is close to the airport, city centre, Myanmar. Average occupancy for the hotel stood at and cultural attractions such as the Shwedagon Pagoda close to 50% for the 175 rooms in operation. and Inya Lake. Opened in 1996, it is known to be one of
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 REVIEW OF OPERATIONS
Mandalay – Sedona Hotel Mandalay With marketing efforts geared towards promoting online reservations through Sedona Hotels International’s Sedona Hotel Mandalay is located opposite the Mandalay website and developing strategic business alliances with Palace, close to the city centre. The shift in marketing airlines and travel agents to increase visits to Myanmar, focus to the leisure segment, particularly from Europe, occupancy rates are expected to improve further in has helped achieve full occupancy for the 56 rooms in 2001. operation, a 14% improvement over the previous year.
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 REVIEW OF OPERATIONS
PHILIPPINES Manila – Metro North Township
Restructuring of Keppel Philippines Property KPP also entered into a long-term option agreement to form a joint venture with Araneta Properties to buy In the Philippines, the restructuring of Keppel Philippines and develop the latter’s 600-ha land parcel in San Jose Property (KPP) to focus on real estate is in its final Del Monte, north of Quezon City, Manila. The land parcel stages. During the year, KPP divested its stakes in will be developed into Metro North Township, a non-core businesses such as its 20% stake in Keptrade comprehensive residential township with commercial Engineering Supplies. It also plans to sell off the 22% and 7.2% stakes in KMP Engineering and KP Engineering Services respectively.
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 Palmdale Heights comprises homes targeted at the middle-income group in the Philippines. development will comprise 29 apartment blocks, two commercial centres, three parking buildings and recreational facilities when fully completed. Ground and recreational facilities for the middle-income market. breaking for the project took place in October 2000. The initiative is in line with Keppel Land’s regionalisation Phase One, comprising three residential blocks with plans to increase its investments in trading projects more than 400 units, will be launched in 2001. 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 2000. 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 74 – 93 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 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 2001.
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 2001.
The Year in Review 67 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 Five Stars Property has residential and commercial to encourage home ownership. 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 2000. 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 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 1996. 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 The landmark Saigon Centre enjoys good occupancy despite apartment operators, Sedona Suites in Saigon Centre challenging market conditions. has also achieved an annual occupancy of 98%. Sedona Town Club, the business and recreational club within In 2000, Saigon Centre received international Saigon Centre, has also been the venue of a number recognition with the top award of “Excellent Grade” of corporate functions and has played host to several in the International Asia Pacific Quality Award international business delegations. Competition. It is the first property development in Vietnam to receive this prestigious award. Companies The retail podium is fully-leased and is popular with both were assessed on their strategic planning and business locals and the expatriate community. 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 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$1.11 - 2.04 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 2000. Rents of good quality apartments with some recreational facilities averaged US$2.04 - 2.60 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% International Centre enjoys good occupancy with an international from international tenants such as Citibank, Telstra, tenant profile. Singapore Airlines, Pricewaterhouse Coopers, ING Barings and Allianz AGF.
The Year in Review 70 REVIEW OF OPERATIONS
Hanoi – Royal Park Vung Tau – Petro Vietnam Towers
Royal Park in Hanoi comprises 175 serviced apartments Petro Vietnam Towers, the first international standard and villas with comprehensive clubhouse facilities building in Vung Tau City, was completed in mid-1997. managed by Sedona Hotels International. Located just With 134,173 sf of prime office space, Petro Vietnam 15 minutes’ drive away from the bustling city and on the Towers has attracted tenants from various industries edge of Ho Tay Lake, Sedona Suites Hanoi is popular such as the oil and gas, petrochemical and financial with diplomatic corps, businessmen and expatriates. industries. Keppel Land has a 12.9% stake in It is also the market leader in terms of occupancy and Petro Vietnam Towers. rental rates in Hanoi, with annual average occupancy of more than 90%.
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 2001.
The Year in Review 71 REVIEW OF OPERATIONS
SEDONA HOTELS INTERNATIONAL The Crescent on Bayswater in Sydney performed well, enjoying an occupancy of 78%. Sedona Hotels International continues to deliver the best in hospitality and comfort, ensuring the highest Marketing Initiatives standards of service quality in all its hotels and serviced apartments. Sedona’s marketing strategies have moved into cyberspace, and the “eyeballs” garnered have Operating under the Sedona Suites brand name, the translated into substantial room nights for all serviced apartments in Hanoi and Ho Chi Minh City have properties. performed well. Despite keen competition in both cities, Sedona Suites Ho Chi Minh City and Sedona Suites Hanoi The corporate website now provides real-time online have achieved high occupancies of 96% and 92% reservations for Sedona’s Internet-savvy customers. respectively. Sedona also participated in major trade shows like the In Myanmar, business travellers have declined as a result Asean Tourism Forum held in Bangkok, International of the continuing trade sanctions. The leisure market has Travel Bourse in Berlin and Travel Indonesia Mart and also been adversely affected, especially in the Japanese Exhibition in Jakarta. market as direct flights from Japan to Myanmar have been cancelled. Strategic Alliances
Sedona Hotel Yangon’s occupancy for the year was Sedona has been actively seeking strategic partnerships about 45% for the 175 rooms in operation. with travel partners such as airlines and travel agents. To create synergy with these partners, Sedona has Sedona Hotel Mandalay fared better than the Yangon designed promotional packages to Myanmar, Australia property, achieving an occupancy of 95% for the and Indonesia. 56 rooms in operation this year, up from 82% in 1999.
Sedona Hotels International will face challenging market conditions, but will pro-actively seek new markets to boost occupancy.
The Year in Review 72 MARKET REVIEW
Hotels and Resorts
Fierce competition continued to push down rates and yields
Strong visitor arrivals into Asia were recorded in 2000. 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 Sedona Hotel Yangon participated in Myanmar’s resulted in our inclusion in Keppel Card’s Redemption annual “Hospitality Charity Ball”, which was a fund-raising Programme as well as the recently incorporated HSBC’s event to benefit the welfare and education of children. Rewards Programme. One recent project was the reconstruction of a pre-primary school in Mine Thauk Village. Sedona has also struck an alliance with one of the world’s largest reservations service networks that Sedona Hotel Mandalay sponsored a one-year include the major global distribution systems to promote hospitality course for local high school graduates. the properties to corporate and travel accounts. Over in Vietnam, Sedona Suites Hanoi’s donation drives Community Relations have benefited the flood victims in Hue, the Red Cross Association, the School for the Deaf and Dumb and the Sedona has always been committed to cultivating a close disabled children at Thanh Xuan Village. relationship with the local communities.
Sedona continues to work with the local communities.
The Year in Review 73 REDEFINING SINGAPORE’S NEW WATERFRONT
Keppel Bay - Exclusive Homes by the Sea
Marketing Launch of Caribbean at Keppel Bay major landmark in Singapore. The development with a total gross floor area of 1.43 million sf consists of 969 A decade of hard work and planning culminated in the units housed in 22 blocks. The development is scheduled successful launch of the Caribbean at Keppel Bay on for completion in 2004. 16 September 2000, marking the beginning of the transformation of Keppel Shipyard into a premier The other three residential projects to be developed waterfront housing district. over the next five to seven years will also bear the suffix Keppel Bay, reinforcing the unique identity of this The first and only one of its kind, Caribbean at Keppel waterfront district. Together, the four projects will Bay redefines waterfront living in Singapore, with its provide 2,700 homeowners with a lifestyle, not unparalleled sea views, a marina and spectacular water experienced previously in Singapore. channels. Keppel Land, which holds 30% equity of the entire Caribbean is the first residential project to be developed waterfront project, is also the development manager. on the 32-ha waterfront site, which is destined to be a Keppel Corporation holds the remaining 70%.
The Year in Review 74 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 The crown jewel of Keppel Land’s stable of properties, Caribbean at a visual treat to all present. Keppel Bay has redefined the concept of waterfront living.
The Year in Review 75 Keppel Bay -
Exclusive Homes by the Sea (continued)
The marketing launch of Caribbean at Keppel Bay The unparalleled premium location has the sea and also served as a platform for the cross-selling of the Sentosa Island as its frontage, Mount Faber as its Keppel Group’s products and services. Buyers could backdrop, the Keppel Golf Course and Labrador Park purchase homes bundled with a competitive Keppel along one boundary, and The HarbourFront Office Park TatLee Bank mortgage loan, a fire insurance policy from and Maritime Square entertainment hub on the other. Keppel Insurance and a Keppel Life credit card along with other benefits. It enjoys easy access to major expressways and is ten minutes’ drive to Raffles Place, the heart of the financial Almost 200 apartments, including penthouses, district. The new HarbourFront MRT station, which is were snapped up during the soft launch in August scheduled for completion in 2003, is also within walking outperforming all other market launches in the third distance and only three MRT stations from the Raffles quarter. So far, 310 out of the 430 apartments Place Interchange. launched have been sold. This rare confluence of location strengths are factors To help visitors and potential buyers imagine what living which help to raise Keppel Bay to crown jewel status. at Caribbean would be like, a 3-D animated fly-through was commissioned from a leading Australian visualisation However, the key attraction of Keppel Bay is the production house. The fly-through with its specially waterfront lifestyle - the experience of living by the sea. rendered 3-D images depicting the entire sprawling This was borne out by buyers surveyed after they had development with its facilities such as clubhouse, lagoon purchased the homes: almost everyone identified the with water features, swimming pools and water-edged one compelling reason for purchase as the proximity to pavilions helped buyers visualise the unique waterfront the seafront. The waterfront-living experience has been lifestyle. carefully woven into the modern architecture and design complete with quality finishings, and the conversion of Presentation to Analysts the existing historic docks into private waterways within the development. Analysts were invited for a presentation and special preview before the public launch. At the public launch, To maximise the views of the sea and waterways, visiting families were given personalised tours Caribbean at Keppel Bay’s 22 apartment blocks are of the show apartments with its distinctive lifestyle stepped gradually from four to ten storeys. Apartments features such as the full-height glass windows, a have been designed from the inside out to have optimal half-sunken bathtub, and the smart home features. water views through full-height glass windows. Residents A comprehensive website www.caribbean.com.sg can look out to the sea and the marina, views of the provided a virtual walk-through of the showflats, floor private waterways, lagoons, swimming pools and water plans, information on the location and amenities, as features. Pavilions and courtyards encourage residents well as a history of the site. to interact within the development. Providing a subtle link to its heritage, paving materials will be selected to echo Living at Keppel Bay the character of the docks.
With its 1,200 m long shoreline, Keppel Bay is about Apartment types in the project range from two- gracious waterfront-living in a premium location. bedrooms to penthouses with floor areas ranging from
The Year in Review 76 840 sf to 6,135 sf. There are a total of 71 different The HarbourFront Office Park, which comprises twin layouts. The development is slated for completion in 18-storey office towers and the retrofitting and upgrading 2004. of the existing Cable Car Tower, is jointly-developed by Keppel Point Pte Ltd and The HarbourFront Pte Ltd. Residents will enjoy the convenience of broadband Keppel Point is a joint-venture between Keppel Corporation high-speed access, a condominium portal and intelligent (70%) and Keppel Land (30%), while The HarbourFront is linking of the entire residential community. Residents a joint venture between Temasek Holdings (80%) and will have their own unique e-mail address PSA Corporation (20%). The HarbourFront, with a 61% @caribbean.com.sg. stake will be majority shareholder and manager whilst Keppel Point will hold the remaining 39% stake. The Prospective buyers’ desires have been closely studied at office park is scheduled for completion in 2003. pre-launch focus group discussions, followed by surveys of actual buyers and visitors to the show houses. The When completed, Keppel Corporation’s headquarters results reiterate a strong aspiration for seafront living. will be located in Tower One. Keppel Corporation has acquired another 31% stake in Tower One to bring the The HarbourFront Precinct Group’s interest in Tower One to 70% upon completion. Office space in both office towers will be available for Adjacent to Keppel Bay, the existing World Trade Centre lease. area is also planned for redevelopment into another waterfront precinct with an office park and a sprawling The office development will add to Keppel’s quality entertainment and recreational hub. Together with the portfolio of premier office buildings. Apart from its Keppel Bay, this precinct will form a continuous 52-ha convenient location of being just three train stops from stretch of waterfront city in southern Singapore giving Raffles Place, and intelligent features, the office residents at Keppel Bay easy access to sophisticated development will enjoy the special ambience of the sea. shopping, dining and other entertainment and Together with the surrounding lush greenery and the recreational facilities. 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 innovation financial report
FINANCE
Overall Financial Performance
For 2000, Group attributable profit amounted to $120.6 million. The Total Sales results included the profit from Villa Verde and Pebble Bay, the maiden ($ million) 1,600 profit contributions from Caribbean at Keppel Bay and Freesia Woods, 1,501.5 1,412.1 1,326.1 adjustments of costs in respect of completed projects and release of 1,400 1,200 1,163.2 certain provisions no longer required, as well as higher earnings from 996 1,000 the Group’s investment properties. 826.2 800 591.1 621.2 600 Proposed dividend per share was 3.0 cents, same as the previous 500.5 400 317.9 year’s. 200
0 Earnings per share was 17.1 cents, compared with 11.8 cents in 1999. 1996 1997 1998 1999 2000
Group At end-2000, shareholders’ funds increased by 4.2% to $2,240 million. Associates
Return on shareholders’ funds was 5.5%, compared with 4% in 1999. Group Profit ($ million) Sales 300
233.8 209.7 200 Total sales (including associated companies) was $826.2 million 168.6 213.3 171.0 157.1 141.3 158.9 compared with $1,326.1 million for 1999. Consolidated sales 101.6 104.7 152.3 120.6 100 (i.e. sales excluding associated companies) were $500.5 million versus $996 million for the previous year. 0
-100
Revenue from Property Investment rose by 10.7% while Property -349.7 Trading declined by 50.1%. Hospitality and Services showed a marginal -400 -354.1 -350.6 increase. 1996 1997 1998 1999 2000
Profit before Tax Operating Profit Earnings Attributable Profit
Operating profit for 2000 was $168.6 million, compared with Earnings and Dividend Per Share $157.1 million for 1999. (cents)
30 The Group’s share of associated companies’ profit was $10.4 million 24.8 23.0 20.9 20 compared with $20.7 million in 1999. 16.8 17.1 16.8 10 16.7 11.8 4.0 4.0 Group profit before tax was $158.9 million, compared with 3.0 3.0 3.0 $141.3 million in 1999. 0
-10
-50.4 -53.5 -60
1996 1997 1998 1999 2000
Earnings before Tax Left: Innovative features in Earnings after Tax but before Extraordinary Items Keppel Land’s projects add Gross Dividend splashes of colour to life.
The Year in Review 81 FINANCE
Taxation for the year was $29.4 million, equivalent to 18.5% of Group pre-tax profit.
Return on Shareholders' Equity Group attributable profit for the year was $120.6 million, compared with (%) $152.3 million in the previous year, which included extraordinary items 10
6.7 of $73.6 million. 5.6 5.0 5.5 5 5.5
3.6 4.0 Cash Flows 3.7 0
During 2000, the Group incurred $512.8 million in development -10 expenditure. Purchases of fixed assets, additional investment in -14.2 -15.0 associated companies and other investments amounted to -20
$305.6 million. A further $35.5 million was for tax payments and 1996 1997 1998 1999 2000 dividends to shareholders. Return before Tax (%)
Return before Extraordinary Items (%) Cash generated from operations amounted to $216.5 million. Proceeds from progress billings and sale of fixed assets were $669.1 million, and Dividend Payout Total Dividend Paid Dividend Per Share the net loan drawdown was $124.2 million. ($ million) (Cents)
25 25 The overall net cash inflow was $200.7 million, represented mainly by 20.7 20 20 increase of short-term deposits and reduction in borrowings with related 18.5 15.8 16.0 companies. In 1999, there was a net cash inflow of $10.3 million. 15 14.6 15
10 10 Dividend
5 4.0 4.0 5 3.0 3.0 3.0 A final dividend of 6% (3.0 cents per share) less tax at 24.5% amounting 0 0 to $16 million on the existing issued share capital, has been proposed for 1996 1997 1998 1999 2000 the financial year ended 31 December 2000. 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
4,940.7 which was 4.2% higher than that at end-1999. Net borrowings at 5,000 4,748.0 4,988.7 4,676.7 $2.2 billion represented 98% of total shareholders’ funds. 4,240.5 4,000
The Company’s paid-up share capital increased by $0.9 million from the 3,000 2,843.3 2,829.9 issue of new shares arising from the exercise of share options, and total 2,000 2,150.6 1,833.8 2,240.1 reserves rose by $88.6 million. 1,000
0 Net tangible assets backing per share was $3.16, an increase of 3.9% 1996 1997 1998 1999 2000 from the previous year’s figure of $3.04. Shareholders' Equity
Minority Interests
Long-term Borrowings Short-term Borrowings
The Year in Review 82 Five-Year Profit Record
The profit uptrend continued in 1996. Group’s profit before tax Assets Employed ($ million) increased to $233.8 million, and attributable profit to $101.6 million. 6,000 Improvements came from the Pebble Bay condominium project and 4,981.8 4,021.5 3,979.2 5,000 the initial profit recognition from the two industrial building projects. 4,748.1 4,190.9 4,000
For 1997, whilst Group’s profit before tax showed a decline, 3,000 attributable profit improved by 3% to $104.7 million. These results 2,000 include the partial sale of Prudential Tower, the disposal of 30% shareholding in a property subsidiary and shop units at Heritage Court 1,000 and Bukit Timah Plaza. 0
-2,000
In 1998, the Group incurred an attributable loss of $350.6 million. 1996 1997 1998 1999 2000 Profit contributions from continuing businesses, partial sale of Development Properties Prudential Tower and the sale of an office building in Australia were Investments insufficient to cover the provisions made for two leasehold residential Fixed Assets and Investment Properties Net Current Assets / (Liabilities) developments and the Group’s freehold landbank.
Net Tangible Asset Per Share The Group made a turnaround in 1999 and recorded a profit before ($) extraordinary items of $78.7 million. This result included the initial 5.00 4.66 profit from the Villa Verde project and a further profit contribution 4.32 4.00 from Pebble Bay. Attributable profit was $152.3 million after including 3.16 3.04 extraordinary gains of $73.6 million from the unwinding of the Group’s 3.00 2.80 investments in three related companies. 2.00
1.00 Further progress was made in 2000. Group’s pre-tax profit reached $158.9 million, and attributable profit was $120.6 million. These 0 1996 1997 1998 1999 2000 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 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 $255.6 million (or 19.3 % of Group sales for that year).
In Singapore, the Group’s office buildings - Sales Mix ($ million) Ocean Building, Ocean Towers, Capital 1,400 Square, Prudential Tower, The Exchange, 102.5 (7.7%) 1,200 Keppel Towers and GE Tower – enjoyed 113.1 (8.5%) 1,000 good occupancies in 2000. Bugis Junction, 3.1 (0.4%) 800 an integrated development comprising 113.2 (13.7%)
600 offices, large-scale retail space and Hotel Inter-Continental Singapore, is almost fully 400 426.9 (51.7%) 854.9 (64.5%) let. 200
283 (34.2%) 255.6 (19.3%) 0 In Vietnam, Saigon Centre’s office tower 2000 1999 has an occupancy of more than 90% and its Property Investment Hospitality and Services serviced apartments’ average occupancy Property Trading Non-Property rate is 98%. International Centre, located in
Profit and Equity Employed by Segment Hanoi, was about 85% let. At Royal Park ($ million) Sedona Suites in Hanoi, the occupancy was 2,619.4 2,500 about 90%.
2,000 At the pre-tax profit level, Property 1,500 1,374.9 Investment’s contribution was $63.8 million 1,000 compared with $34.9 million in 1999. 500 The improvement in this segment in 2000 63.8 78.4 17.9 19.1 0 was due to higher occupancies and rental (1.2) (500) rates, and lower interest expense.
(1,000)
(1,401.4) (1,500)
Property Property Hospitality and Non- Investment Trading Services Property
Pre-tax Profit Equity Employed
Analyses 84 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 450,000 426,870 segment of the Group’s business. It includes 400,000 marketing, project management, property 350,000 and hotel / serviced apartment management 300,000 283,045 services and related technical consultancy 250,000 services. 200,000
150,000 Hospitality and Services made a pre-tax profit 113,143 100,000 of $17.9 million in 2000 (after deduction of 50,000 hotel depreciation of $10 million) from sales 3,102 0 of $113.1 million (or 13.7% of total sales for Property Property Hospitality and Non- the Group). In 1999, sales were $113.1 million Investment Trading Services Property and pre-tax loss was $20.3 million. Hotel depreciation included in this loss was Pre-tax Profit $ ‘000 $2 million. 90,000
80,000 78,429
70,000 63,830 60,000
50,000
40,000
30,000
20,000 17,895
10,000
0 (1,224) -10,000 Property Property Hospitality and Non- Investment Trading Services Property
Analyses 85 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.
For 1999, Non-Property comprising the Group’s associated companies (engaged in telecommunications and transportation, Attributable Profit engineering and financial service activities) $ ‘000 70,000 provided a pre-tax profit of $10.5 million. 64,882 60,000
50,000 Equity Employed 44,470
40,000 At 31 December 2000, the Group’s equity 30,000 employed amounted to $2.6 billion, 2.5% 20,000 higher than the corresponding position a year 12,555 10,000 ago. This came from funds provided by the Company’s shareholders and the minority 0 (1,289) shareholders in certain subsidiary companies. -10,000 The greater part of these funds was utilised Property Property Hospitality and Non- Investment Trading Services Property by Property Investment and Property Trading.
Analyses 86 Sales and Profits by Segment
Sales Pre-tax Profit Attributable Profit
2000 1999 2000 1999 2000 1999 $’000 $’000 $’000 $’000 $’000 $’000
Property
Investment 283,045 255,658 63,830 34,925 44,470 26,952
Trading 426,870 854,942 78,429 116,118 64,882 69,551
Hospitality and Services 113,143 113,070 17,895 (20,251) 12,555 (27,108) 823,058 1,223,670 160,154 130,792 121,907 69,395
Non-property 3,102 102,470 (1,224) 10,471 (1,289) 9,299
Extraordinary items - - - - - 73,569 826,160 1,326,140 158,930 141,263 120,618 152,263
Group 500,492 995,981 148,494 120,591 114,771 134,662
Associates 325,668 330,159 10,436 20,672 5,847 17,601 826,160 1,326,140 158,930 141,263 120,618 152,263
Analyses 87 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 110.2 46.5 Trading 66.2 27.9 Hospitality and Services 61.8 26.1 238.2 100.5 Non-property (1.3) (0.5) 236.9 100.0
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) 300 261.4 219.2 208.0 206.0 200 (382.8) 100
0
-100
-200
-600
1996 1997 1998 1999 2000
Wages, Salaries & Benefits Interest Expense & Dividends Taxation Depreciation & Retained Profit
Analyses 88 Value-Added by Segment
Property Property Hospitality Non- Investment Trading and Services Property Group
$ million $ million $ million $ million $ million
Total value added 2000 110.2 66.2 61.8 (1.3) 236.9 1999 89.0 100.1 33.6 84.0 306.7
Distributed as follows:
Employees in salaries and staff benefits 2000 5.5 - 22.5 - 28.0 1999 4.2 - 20.3 - 24.5
Government in taxes 2000 6.2 11.9 11.2 - 29.3 1999 3.5 28.5 6.3 1.1 39.4
Providers of capital in dividends and interest 2000 42.0 49.7 28.1 - 119.8 1999 37.3 24.2 33.1 - 94.6
Retained for reinvestment and asset replacements 2000 56.5 4.6 - (1.3) 59.8 1999 44.0 47.4 (26.1) 82.9 148.2
Total distribution 2000 110.2 66.2 61.8 (1.3) 236.9 1999 89.0 100.1 33.6 84.0 306.7
Total Value Added by Segment ($ million)
350
300
250
200
150
100
50
0
-50 2000 1999 2000 1999 2000 1999 2000 1999 2000 1999 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 Value Added Statement
1996 1997 1998 1999 2000 $ million $ million $ million $ million $ million
Our sales of goods and services to non-Group customers totalled 591.7 621.2 317.9 996.0 500.5 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 244.5 196.6 (377.1) 198.5 195.6
In addition: our share of profits earned by associated companies was 16.9 11.4 (5.7) 20.7 10.4 income from our investments was 15.0 14.7 16.4 14.0 30.9 extraordinary items were - - - 73.5 - 276.4 222.7 (366.4) 306.7 236.9
Excluding investment income and extraordinary items, total value added for the Group was distributed as follows: to employees in wages, salaries, and benefits 26.8 34.7 24.2 24.5 28.0 to governments in taxation 62.3 64.9 24.5 39.4 29.3 to providers of capital in:
interest paid on borrowings 11.4 35.5 41.7 50.5 51.0 dividends to minority shareholders in subsidiary companies 2.8 16.6 19.9 28.3 52.8 dividends to shareholders of the Company 18.5 19.4 14.6 15.8 16.0
32.7 71.5 76.2 94.6 119.8
The balance was reinvested in or ploughed back from business in: depreciation 6.1 9.4 9.2 6.7 16.7 minorities’ share of subsidiary previous years’ profits ploughed back by subsidiaries 67.3 8.5 (62.4) (1.6) (43.9) profit for the year retained or previous years’ profits ploughed back by the Company 66.2 19.0 (454.5) 55.6 56.1
139.6 36.9 (507.7) 60.7 28.9
261.4 208.0 (382.8) 219.2 206.0
And non-operating costs and income were: investment income 15.0 14.7 16.4 14.0 30.9 extraordinary items - - - 73.5 - 15.0 14.7 16.4 87.5 30.9
276.4 222.7 (366.4) 306.7 236.9
Analyses 90 Productivity Data
(Excluding Associated Companies)
1996 1997 1998 1999 2000
Sales per employee: - excluding associated companies ($’000) 458.3 478.2 251.5 800.0 249.3
Value added per employee: - gross value added basis ($’000) 189.4 151.3 (298.3) 159.4 97.4 - net value added basis ($’000) 184.7 144.1 (305.8) 154.1 89.1
Value added per dollar employment cost: - gross value added basis ($) 9.12 5.67 (15.58) 8.10 6.99 - net value added basis ($) 8.90 5.39 (15.96) 7.83 6.39
Value added per dollar investment in fixed assets and investment properties (before depreciation): - gross value added basis ($) 0.10 0.08 (0.15) 0.07 0.07 - net value added basis ($) 0.10 0.07 (0.15) 0.07 0.07
Value Added Per Employee Value Added Per Dollar Employment Cost ($'000) ($) 300 10.0 9.12 8.10 6.99 8.90 5.67 6.39 189.4 5.0 7.83 200 5.39 184.7 159.4 151.3 144.1 154.1 0.5 100 97.4 89.1 0 0 -0.5
(100) -5.0
(200) -10.0
(300) -15.0 (298.3) (15.58) (305.8) (15.96) (400) -20.0
1996 1997 1998 1999 2000 1996 1997 1998 1999 2000
Value Added Per Dollar Employment Cost Gross Value Added Basis Net Value Added Basis Gross Value Added Basis
Net Value Added Basis
Analyses 91 Property Portfolio Analysis
The Group’s property portfolio is diversified. The portfolio includes office buildings, residential properties, hotels and resorts,
Analysis by Tenure shophouses and retail outlets, and industrial projects. For a full list of these investment and trading properties, owned through the
1,619 (38.4%) 1,732 (41%) Company’s subsidiary and associated companies, please refer to the next few
869 (20.6%) pages.
$ million % Freehold 1,732 41.0 In the following analysis of the Group’s 999-year lease 869 20.6 property portfolio, only the Company’s 99-year lease and others 1,619 38.4 4,220 100.0 effective ownership interests have been included. On this basis, the total value attributable to the Company was $5 billion Analysis by Development Stage at end-2000.
1,079 (25.6%) Singapore Properties
2,518 (59.6%) 623 (14.8%) (a) Analysis by Tenure
$ million % Completed 2,518 59.6 Freehold properties accounted for Under development 623 14.8 41% of the Group’s properties. The Awaiting development 1,079 25.6 4,220 100.0 proportion of properties with 999-year leases was 20.6%. The balance of 38.4% represented properties with Analysis by Sector leases of about 99 years.
150 (3.6%) 67 (1.6%) 50 (1.2%) (b) Analysis by Development Stage
2,141 (50.7%) 1,812 (42.9%) At end-2000, about 59.6% of the Group’s property portfolio comprised completed properties. Another 14.8%
Sq m ('000) % of the Group’s properties was under Office 2,141 50.7
Residential 1,812 42.9 development and included Freesia
Hotel 50 1.2 Woods and Caribbean at Keppel Bay. Retail 150 3.6 The Group’s landbank awaiting Industrial 67 1.6 4,220 100.0 development formed 25.6% of the Group’s property portfolio.
Analyses 92 (c) Analysis by Sector
At 31 December 2000, office buildings formed 50.7% of the Group’s property Analysis by Estimated Building Area
portfolio. These include Ocean Building, 15 (2.3%) 29 (4.5%) 12 (1.9%) Ocean Towers, The Exchange, Capital Square, Prudential Tower, 226 (35.1%) Keppel Towers, GE Tower and the office 361 (56.1%) tower in Bugis Junction. The proportion of residential properties was 42.9%. $ million % In respect of the remaining portfolio, Office 226 35.1
properties in the retail, hotel and Residential 361 56.1 industrial sectors made up 3.6%, 1.2% Hotel 12 1.9 and 1.6% respectively of the Group’s Retail 15 2.3 Industrial 29 4.5 properties. 643 99.9
(d) Analysis by Building Floor Area Analysis by Location - Completed Projects
The total building floor area of the 367 (12.7%) Group’s properties at end-2000 was 643,000 sq.m. Office buildings and residential properties formed 35.1% 2,518 (87.3%) and 56.1% respectively of this area. The residual 8.8% was the combined $ million % building floor area for the Group’s retail, Local 2,518 87.3 hotel and industrial properties. Overseas 367 12.7 2,885 100.0
Overseas Properties Analysis by Location - All Projects
The Group’s completed property assets were 87.3% local and 12.7% overseas. 826 (16.4%) Including projects currently under development, overseas properties form 4,220 (83.6%) 16.4% of the Group’s portfolio. In dollar terms, this amounts to $0.8 billion out of a $ million % total of $5 billion for all of the Group’s Local 4,220 83.6 property assets. Overseas 826 16.4 5,046 100.0
Analyses 93 Property Portfolio (continued)
SINGAPORE
Office Residential Landbank 28. 6 Mar Thoma Road 1. Ocean Building 13. Avenue Park Development 29. 22-26 Mar Thoma Road & 40 St Michael’s Road 2. Ocean Towers 14. Pinnacles @ Wee Nam 30. The Crest @ Cairnhill 3. Keppel Towers 15. Freesia Woods 31. Parc Devon 4. GE Tower 16. The Linc 5. Prudential Tower 17. The Edgewater Retail 6. Capital Square 18. Viewpoint Condominium 32. Bugis Junction* 7. Heritage Court 19. Arang Court 33. Bukit Timah Plaza 8. Marina Boulevard 20. Norfolk Garden 34. Joo Chiat Shophouses 9. The HarbourFront Office Park 21. Duchess Park & 24 Duchess Road 22. Butterworth 8 Industrial Residential 23. Chen Yuan/Dragon Pearl/River Valley View 35. Quartz Industrial Building 10. Pebble Bay 24. Naga Court 36. Orion Industrial Building 11. Nassim Woods 25. Keppel Bay 12. Cluny Hill Redevelopment 26. 449A & 451A Geylang Road Data Centre 27. 283–283G Pasir Panjang Road 37. Keppel Digihub
17 37
19 29 33 28 13 24 14 21 15 16 20 32 30 31 36 12 26 35 23 11 2 1 5 34 6 8 22 7 3 4 27 18 10 9 Mass Rapid Transit Lines 25 Office Retail Residential Industrial
Residential Landbank Data Centre
OVERSEAS Australia Philippines Myanmar 38. Bayswater Village** 52. SM-KL Towers 66. Sedona Hotel Yangon 39. Botanic Cove 53. Palmdale Heights 67. Sedonal Hotel Mandalay 54. Landbank in Cebu Indonesia 55. Keppel Place Vietnam 40. Galleria Tunjungan 56. Sampaguita Ville 68. Royal Park Complex 41. Pasadenia Garden 57. Metro North Township^ 42. Wijaya Centre Site RESORTS 43. Wisma BCA Thailand 58. Nana Tai Mansion China Vietnam 59. Jewellery Centre 69. Spring City Golf & 44. International Centre 60. Residential landbank at Highway 332 in Sattahip Lake Resort 45. Saigon Centre 61. Sukhaphiban 3 Mansion 46. Tamarind Park Indonesia United States of America 70. Ria Bintan Malaysia 62. TCB Building 71. Bintan Lagoon Resort 47. Township in Skudai 72. Nongsa Point Marina 48. Taman Jernih HOTELS 73. Tanah Lot Resort China/Hong Kong Indonesia 49. Ocean Towers, Shanghai 63. Hotel Sedona Bintan Lagoon * includes Hotel Inter-Continental 50. The Waterfront at the Kowloon Station 64. Hotel Sedona Manado Singapore and Bugis Junction Towers 51. Residential Site in Shanghai 65. Melia Purosani Hotel ** includes The Crescent-on-Bayswater ^ under acquisition
Analyses 94 CHINA USA Shanghai 49 Texas 51 62
Hong Kong 50 Kunming MYANMAR 69 67 Mandalay
66 Yangon Hanoi 53 57 VIETNAM 52 THAILAND 68 44 58 60 59 61 Bangkok PHILIPPINES
45 46
Ho Chi Minh City 54 55 56
48 MALAYSIA 47 SINGAPORE Manado 72 64
Batam Bintan 70 71 63 SUMATRA
43 Jakarta 41 42 Surabaya INDONESIA 65 40 73 Yogyakarta Bali
AUSTRALIA
38 39 Sydney
Property Hotels / Serviced Apartments Resorts Analyses 95 Property Portfolio
GROUP PROPERTIES (SINGAPORE) Description Held by % Owned Site Area Estimated Estimated Year of Tenure (sqm) Building Total Rentable Completion Floor Floor Area (sqm) Area (sqm)
Completed Properties
Ocean Building a 29-storey office building located at the Ocean 76% 6,109 57,676 39,738 1974 999-year Collyer Quay corner of Raffles Place Properties leasehold
Ocean Towers a 27-storey office tower located in Ocean 76% 2,781** 32,863 21,645 1992 999-year Raffles Place Properties leasehold
Capital Square a 16-storey office building and 19 units Capital 70% 11,100 40,937 Office 34,753 1998 99-year of shophouses at Church Street Square Retail 893 leasehold
Prudential Tower a 30-storey office building located at the Keppel Land 100% 1,998 27,700 10,184 1998 99-year junction of Church Street and Cecil Street (Tower D) (retained leasehold interest)
Keppel Towers a 27-storey office development Mansfield 100% 7,760 43,483 34,909 1991 Freehold located at Hoe Chiang Road Realty
GE Tower a 13-storey office development Mansfield 100% 1,367 9,317 7,378 1993 Freehold located at Hoe Chiang Road Realty
The Exchange a 28-storey office building DL 35% 2,366 31,538 23,974 1992 99-year located in Raffles Place Properties leasehold
Bugis Junction an integrated development comprising Bugis City 31% 25,986 119,221 Office 23,201 1995 99-year a 5-star hotel, office tower and large-scale Holdings Retail 39,617 leasehold retail space featuring a departmental store, supermarket and specialty shops
The Arcade three adjoining strata units on Earnwell 100% - - 101 1981 99-year the first storey of the retail cum leasehold commercial building
Heritage Court eight units of conservation shophouses Glenville 100% 1,150 4,144 534 1996 99-year located at Peck Seah Street near Estate leasehold the Tanjong Pagar MRT station. Investment Seven units have been sold and one unit leased.
Joo Chiat Shophouses four units of conservation shophouses Keppel Land 100% 784 1,436 1,232 1996 Freehold located in the Joo Chiat area. Realty One unit has been sold and two-thirds of remaining space leased.
Analyses 96 GROUP PROPERTIES (SINGAPORE) Description Held by % Owned Site Area Estimated Estimated Year of Tenure (sqm) Building Total Rentable Completion Floor Floor Area (sqm) Area (sqm)
Completed Properties
Nassim Woods 35 units of luxurious condominium Parksville 50% 5,775 9,255 8,301 1998 99-year apartments in an exclusive Development leasehold residential district
Pebble Bay 510 units of luxurious condominium Waterfront 50% 32,300 110,881 3,453 1997 99-year apartments at Tanjong Rhu. Properties leasehold 499 units have been sold.
449A & 451A Geylang Road Acresvale 100% 201 - 306 - Freehold two adjoining units of 2-storey Investment intermediate terrace buildings
283 - 283G Pasir Panjang Road Tat Chuan 100% 1,749 2,096 - - Freehold eight units of 3-storey semi-detached Development houses. Three units have been sold.
Quartz Industrial Building a modern 8-storey industrial Harvestland 100% 5,657 14,143 3,569 1997 Freehold building at 5 Upper Aljunied Link. Development 37 out of 53 units have been sold.
Orion Industrial Building a modern 8-storey industrial Acresvale 100% 5,790 14,475 4,723 1997 Freehold building at Paya Lebar. Investment 43 out of 72 units have been sold.
Keppel Digihub Keppel 100% 7,333 18,345 - 1997 60-year a modern 6-storey industrial building Digihub leasehold at Serangoon North Ave 5.
** Part of Ocean Building site area
Analyses 97 Property Portfolio (continued)
GROUP PROPERTIES (SINGAPORE) Description Held by % Owned Site Area Estimated Estimated Year of Tenure (sqm) Building Total Rentable Completion Floor Floor Area (sqm) Area (sqm)
Properties Under Development
The HarbourFront Office Park 18-storey twin office tower development Harbourfront One 11.7% 32,340 101,328 80,522 *2003 99-year and Cable Car Tower located next to and leasehold World Trade Centre Harbourfront Two
Marina Boulevard Two office towers located at the One Marina 33.33% 11,367 152,003 123,740 *2005 99-year New Downtown at Marina South Boulevard Pte Ltd leasehold
Cluny Hill Redevelopment Redevelopment of Cluny Hill site into Keppel Land / 100% 28,214 23,070^ 23,070^ 2003^ Freehold good-class bungalows with customised Straits Properties design-and-build options
Caribbean at Keppel Bay 969 waterfront condominium Keppel Bay 30% 97,534 132,780 - *2004 99-year units at Keppel Bay leasehold
Freesia Woods 129 units of condominium apartments Keppel Land 100% 12,536 17,550 - *2003 Freehold at Sunset Way Realty
The Linc 51 apartments at Lincoln Road Keppel Land 100% 2,369 6,633 - *2003 Freehold Realty
Butterworth 8 216 condominium units at Tanjong Katong Keppel Land 100% 10,082 28,230 - *2003 Freehold Realty
Cockpit Hotel Redevelopment a commercial / residential Dovedale 10% 14,018 42,838 - *2001 Freehold mixed development Development
Landbank
Sixth Avenue (Avenue Park) Mansfield 52% 16,056 22,478 - - Freehold a condominium development Development
Pinnacles @ Wee Nam Keppel Land 100% 13,220 37,016 - - Freehold a condominium development at Realty Wee Nam / Keng Lee Road
The Edgewater Keppel Land 100% 4,332 6,065 - - Freehold a condominium development at Realty Jalan Loyang Besar
Viewpoint Condo Sherwood 100% 7,496 20,988 - - Freehold a condominium development Development
Arang Court Sherwood 100% 11,182 23,482 - - Freehold a condominium development Development
Analyses 98 GROUP PROPERTIES (SINGAPORE) Description Held by % Owned Site Area Estimated Estimated Year of Tenure (sqm) Building Total Rentable Completion Floor Floor Area (sqm) Area (sqm)
Landbank
Norfolk Garden Sherwood 100% 2,909 8,145 - - Freehold an apartment development Development
Duchess Park & 24 Duchess Road Keppel Land 100% 7,478 10,465 - - 999-year a condominium development Realty leasehold
Chen Yuan/Dragon Pearl/River Valley View Sherwood 100% 5,638 15,787 - - Freehold a condominium development Development
Naga Court Keppel Land 100% 4,568 9,593 - - Freehold a condominium development Realty
Keppel Bay^^ Keppel Bay and 30% 217,708 302,220 - - 99-year a residential / commercial / recreational Keppel Plaza leasehold mixed development
6 Mar Thoma Road Bukit Timah Hill 100% 1,589 4,448 - - 999-year an apartment development Development leasehold
22-26 Mar Thoma Road & Evansville 100% 3,608 10,102 - - 999-year 40 St Michael’s Road Investment leasehold an apartment development
The Crest @ Cairnhill Tat Chuan 60% 1,039 2,909 - - Freehold an apartment development at Development Cairnhill Circle
Parc Devon Evansville 70% 1,280 3,584 - - Freehold an apartment development at Investment Devonshire Road
* Expected year of completion, subject to market conditions ^ Subject to buyers’ design / schedule ^^ Excludes Caribbean at Keppel Bay
Analyses 99 Property Portfolio (continued)
GROUP PROPERTIES (OVERSEAS) Description Location Held by % Owned Site Area Estimated Estimated Year of Tenure (sqm) Building Total Rentable Completion Floor Floor Area (sqm) Area (sqm)
Completed Investment Properties
Australia Bayswater Village a hotel cum retail complex Sydney, Straits 100% 2,007 - 70 suites and 1990 Freehold in the tourist district of Australia Properties 2,007 sqm retail Kings Cross, Sydney (Bayswater) with 228 carpark lots Botanic Cove (Phase 1) a residential development Sydney, Keppel Land 100% 34,000 - Mixed 2000/2001 Freehold in Tarban, Hunters Hill municipality Australia Devt townhouses/ about 7 km north-west of Sydney CBD apartments with full facilities 117 units (Phase 1)
China Spring City Golf & Lake Resort an integrated resort comprising Kunming, Kunming 40% 2,670,000 - two 18-hole 1999 50 years golf courses, resort homes and China Yinxin golf courses, resort facilities Tourist club house Devt Co and 50 resort 70 years homes
Hong Kong The Waterfront at the Kowloon Station along Kowloon, Union 7% 16,969 147,639 1,288 residential 2000 51 years the new airport MTRC line Hong Kong Charm units lease Development
Indonesia Club Med Ria Bintan a beachfront hotel at Ria Bintan, PT Straits - 39% 202,000 - 302-room hotel 1997 30 years Bintan Resort Indonesia CM Village lease with option for another 50 years
Ria Bintan (Phase 1) Bintan, PT Ria Bintan 45.9% 1,465,000 - a 27-hole 1998 30 years a 27-hole golf course Indonesia golf course lease with with club house option for another 50 years
Bintan Lagoon Resort an integrated resort with Bintan, SAFE 21% 2,400,000 - 416-room hotel 1996 30 years a hotel, bungalows/villas Indonesia Bintan with 100 lease with and golf courses Resort bungalows/villas option for another 50 years
Melia Purosani Hotel a 5-star hotel with retail Yogyakarta, PT Purosani 20% 18,189 26,398 296-room hotel 1994 20 years outlets in Yogyakarta Indonesia Sri Persada lease with option for another 20 years
Analyses 100 GROUP PROPERTIES (OVERSEAS) Description Location Held by % Owned Site Area Estimated Estimated Year of Tenure (sqm) Building Total Rentable Completion Floor Floor Area (sqm) Area (sqm)
Completed Investment Properties
Nongsa Point Marina a waterfront resort with a Batam, PT Nongsa 17% 100,000 - 192 rooms/ 1995 30 years marina and hotel-style Indonesia Point Marina chalets lease with and 178 berths option for another 50 years
Pasadenia Garden (Phase 1) a residential development Jakarta, PT Pulomas 25% 32,586 32,490 147 units of 1996 30 years in Pulomas, a fast growing Indonesia Gemala strata-titled lease with residential district in Jakarta. Misori condominiums, option for 73 units of strata-titled condominiums 50 units of rental another have been sold. apartments and 20 years a 2-storey clubhouse
Wisma BCA Jakarta, PT Kepland 100% 10,444 46,267 36,940 1985 20 years a prime office development located Indonesia Investama lease with in Jakarta CBD option for another 20 years
Malaysia Taman Sutera, Skudai (Stages 1-4) a residential / commercial / retail Johor, Tanah 18% 373,216 - 843 residential 1998 Freehold development Malaysia Sutera (Stages 1-3) units and Development 80 shop offices (Stages 1-3) 67,532 - 192 residential 2000 Freehold (Stage 4) units (Stage 4)
Taman Jernih, Bukit Mertajam (Phases 1 & 1A) a residential development Penang, Jernih 49% 44,588 17,511 135 residential 1999/2000 Freehold Malaysia Rezeki units
Myanmar Sedona Hotel Yangon a 5-star hotel fronting Yangon, Straits 100% 31,889 53,489 334 rooms, 1997 30 years Yangon’s famous Inya Lake Myanmar Greenfield 32 serviced BOT with apartments and option for 30 office suites another three 5-year extensions
Sedona Hotel Mandalay an international class hotel Mandalay, Wiseland 100% 16,467 19,835 220 rooms 1998 30 years opposite the famous Myanmar Investment and 27 BOT ancient Mandalay Palace (Myanmar) serviced apartments
Vietnam International Centre an 8-storey office development Hanoi, Centre for 41% 1,450 9,064 7,585 1995 45 years at 17 Ngo Quyen Street Vietnam International lease Transactions
Analyses 101 Property Portfolio (continued)
GROUP PROPERTIES (OVERSEAS) Description Location Held by % Owned Site Area Estimated Estimated Year of Tenure (sqm) Building Total Rentable Completion Floor Floor Area (sqm) Area (sqm)
Completed Investment Properties
Royal Park Complex a serviced apartment development Hanoi, Quang Ba 59% 28,400 23,130 150 units of 1998 50 years at Quang Ba Vietnam Royal Park serviced lease JV Co apartments and 20 villas
Saigon Centre (Phase 1 Tower) a 25-storey office, retail cum Ho Chi Keppel Land 68% 2,730 32,499 10,263 sqm 1996 50 years serviced apartment development Minh City, Watco Co office, lease at Le Loi Boulevard Vietnam 6,265 sqm retail and 89 units of serviced apartments
Petro Vietnam Towers a 10-storey office development Vung Tau, Petro Tower 12.9% 6,191 17,026 12,465 1997 40 years Vietnam lease
Philippines Sampaguita Ville Cebu, Opon Realty 19.8% 5,498 960 - 1996 Freehold 12 units of linked houses Philippines and Development Corp.
Keppel Place Land Cebu, Opon Realty 19.8% 1,245 - - - Freehold Philippines and Development Corp.
a 2-storey commercial building Cebu, KPP 49.5% - 1,670 1,344 - Freehold Philippines
Thailand^ Nana Tai Mansion a serviced apartment development Bangkok, Five Stars 45.45% 3,277 19,000 157 units of 1986 Freehold at Sukhumvit Soi 4 Thailand Property of serviced apartments
Jewellery Centre a 34-storey strata titled Bangkok, Five Stars 45.45% 5,866 42,834 12,975 1993 Freehold commercial building at Nares Road. Thailand Property (retained interest) Retained interest in 19 strata units.
Sukhaphiban 3 Mansion a 19-storey strata residential Bangkok, Gold Star 45.45% 4,440 70,000 12,548 1994 Freehold apartment at Sukhaphiban 3 Road. Thailand Propery (retained interest) Retained interest in 284 strata units
USA TCB Building a 12-storey office building Houston, Keppel 30% 13,015 27,323 26,858 1982 Freehold located in the prestigious Texas, Houston Galleria area of Houston USA Group Partnership
^ Assets owned by Five Stars Property Public Company which became a Keppel Land Group Company in March 2000.
Analyses 102 GROUP PROPERTIES (OVERSEAS) Description Location Held by % Owned Site Area Estimated Estimated Year of Tenure (sqm) Building Total Rentable Completion Floor Floor Area (sqm) Area (sqm)
Properties Under Development
Australia Botanic Cove (Phase 2) a residential development Sydney, Keppel Land 100% 35,460 - Mixed *2002/2003 Freehold in Tarban, Hunters Hill municipality Australia Devt townhouses/ about 7 km north-west of Sydney CBD apartments with full facilities 118 units (Phase 2) Indonesia Hotel Sedona Manado a 4-star international class Manado, PT Pantai 50% 243,083 - 247-room hotel *2002 30 years hotel Indonesia Indah Tateli (Phase 1) lease with option for another 20 years
Ria Bintan Resort (Phase 2 onwards) an integrated resort project Bintan, PT Ria-Bintan 45.9% 2,803,000 - 64 resort *2003 30 years with golf courses and a Indonesia homes (Phase 2a) lease with Club Med Village and (Phase 2a) (a) option for resort homes 9-hole another golf course 50 years
Pasadenia Garden (Phase 2) a residential development Jakarta, PT Pulomas 25% 48,332 - Residential *2004 30 years in Pulomas Indonesia Gemala apartment (Phase 2) lease with Misori blocks (a) option for another 20 years
Galleria Tunjungan a retail/commercial complex Surabaya, PT Sentral 80% 23,384 - 76,000 sqm *2004 30 years in Surabaya Indonesia Tunjungan retail (Phase 1) lease with Perkasa (Phase 1) option for another 20 years
Wijaya Centre Site a proposed retail/commercial Surabaya PT Sentral 80% 26,000 - Retail *2003 30 years in Surabaya Indonesia Supel (Phase 1) lease with Perkasa option for another 20 years
Tanah Lot Resort an integrated resort project Bali, PT Purimas 26% 910,020 - 250-room hotel *2004 30 years incorporating hotels, condominium Indonesia Straits Resort (Phase 1) (Phase 1) lease with housing and a golf course (a) (a) option for another 20 years
* Expected year of completion, subject to market conditions (a) Plans are in the process of being finalised
Analyses 103 Property Portfolio (continued)
GROUP PROPERTIES (OVERSEAS) Description Location Held by % Owned Site Area Estimated Estimated Year of Tenure (sqm) Building Total Rentable Completion Floor Floor Area (sqm) Area (sqm)
Properties Under Development
Vietnam Vietcombank Towers a 22-storey office development Hanoi, Vietcombank 6% 1,986 30,900 19,263 *2001 40 years Vietnam Tower lease
Saigon Centre (Phase 2 onwards) a 25-storey office, retail cum Ho Chi Keppel Land 68% 2,886 - 212 units *2004 50 years serviced apartments Minh City, Watco Co (Phase 2) of serviced (Phase 2) lease at Le Loi Boulevard Vietnam 14,090 apartments with (subsequent retail podium phases) (Phase 2)
Tamarind Park a 20-storey apartment tower Ho Chi Keppel Land 60% 2,808 - 173 units of *2004 45 years with swimming pool and Minh City, Agtex furnished lease recreational facilities located Vietnam apartments in prime District 1
Malaysia Taman Sutera, Skudai a residential / commercial Johor, Tanah 18% 4,443,860 - 303 *2001 Freehold development Malaysia Sutera residential units Development (Stages 5 - 7)
Taman Jernih, Bukit Mertajam a residential development Penang, Jernih 49% 99,548 51,047 206 units *2001 Freehold Malaysia Rezeki (Phase 2) 108 units *2002 (Phase 3) 66 units *2002 (Phase 4)
* Expected year of completion, subject to market conditions
Analyses 104 GROUP PROPERTIES (OVERSEAS) Description Location Held by % Owned Site Area Estimated Estimated Year of Tenure (sqm) Building Total Rentable Completion Floor Floor Area (sqm) Area (sqm)
Properties Under Development
China Ocean Towers a 25-storey office tower on Shanghai, Shanghai 29% 4,798 48,056 36,058 *2001 50 years Yan An Road East China Sing Straits lease Land Co
Spring City Golf & Lake Resort an integrated resort comprising Kunming, Kunming 40% 5,000,000 - 82 units of *2001 70 years resort homes and resort facilities China Kunxin resort homes, lease Real Estate 54 units of *2002 Devt Co resort homes and 83 *2004 residential homes
Residential Site a development of residential Shanghai, Shanghai 99% 95,906 383,624 3,000 *2004 70 years apartments complete with China Merryfield residential (Plot A) lease recreational facilities Land Co apartments (Plot A) Shanghai Pasir Panjang Land Co (Plot B) Shanghai Floraville Land Co (Plot C)
Philippines SM-KL Towers, Ortigas two 55-storey office towers and Manila, SM Keppel 20.7% 20,000 10,300 9,793 1985 Freehold a 70-storey residential tower, Philippines Land (Existing) (Existing) (Existing) interlinked by a 5-storey retail 27,974 19,201 *2001 podium. To be developed in (Phase 1 (Phase 1 (Phase 1 phases. retail retail retail podium) podium) podium)
Vacant land at Caragay Road Cebu, Opon Realty 19.8% 7,803 - - - Freehold Philippines and Development Corp.
* Expected year of completion, subject to market conditions
Analyses 105 GROUP PROPERTIES (OVERSEAS) Description Location Held by % Owned Site Area Estimated Estimated Year of Tenure (sqm) Building Total Rentable Completion Floor Floor Area (sqm) Area (sqm)
Properties Under Development
Palmdale Heights Pasig City, KPP 22.4% 76,156 229,416 176,392 *2003 Freehold a 29-block residential development Philippines (residential) (residential) (Phase 1 with 4,000 apartment units, 19,137 820 parking comprising 3 parking buildings and 2 (parking) lots 6 residential commercial buildings 5,749 blocks and (commercial) 1 carpark building)
Thailand ^ Vacant Land for residential development Chonburi, Five Stars 45.45% 355,996 - - - Freehold at Highway 332 in Sattahip Thailand Property
Properties in the Process of Acquisition
Philippines Metro North Township 600-ha parcel of land for a San Jose KPP 22.6% 6,000,000 (a) (a) (a) Freehold mixed-use township del Monte, development. To be Bulacan (north developed in phases of Ortigas CBD), Philippines
* Expected year of completion, subject to market conditions (a) Plans are in the process of being finalised
^ Assets owned by Five Stars Property Public Company Ltd which became a Keppel Land Group Company in March 2000.
Analyses 106 Gearing Structure as at 31 December 2000
At end-2000, the credit facilities available to Credit Facilities the Group for drawdown totalled $2.7 billion. ($ billion) 2.0 As 89% was utilised, the unutilised balance 1.9 1.8 was 11% or $282 million. This did not include 1.6 1.6 1.5 cash in hand and on deposit of $236 million. 1.4 1.3 1.3 Of the credit facilities that were drawn down, 1.2 1.0 1.0 35% was in fixed rate borrowings and 65% in 0.8 0.8 0.8 floating rate borrowings. 0.6
0.4 During the year, funds were raised by way 0.2 0.0 of (a) further issues of Floating Rate Notes, Available Utilised Available Utilised 1999 1999 2000 2000 and (b) increased borrowings from related Floating Rate Borrowings companies. Fixed Rate Borrowings
Interest Cover For 2000, the Group’s interest cover was ($ million) (Number of Times) 200 2.5 178 182 1.9 times compared with 2 times for the 180 2.0 1.9 previous year. The effective cost of 160 2.0 borrowing was 4.5% compared with 4.2% 140 120 1.5 in 1999. Net interest cost expensed and 100 96.5 89.7 capitalised totalled $96.5 million, while 80 1.0 average net borrowings amounted to 60 $2,164.7 million. 40 0.5 20
0 0.0 Secured borrowings as a percentage of total 1999 2000 borrowings at 31 December 2000 amounted Net Interest Cover Profit to 11.4%, a decrease from 19.3% in 1999.
Debt-equity Ratio ($ million) (Debt-equity Ratio) % With total borrowings of $2.4 billion at 2260 1.010
2,240.1 31 December 2000, the Group’s debt-equity 2240 1.005 ratio was 107%. Taking cash in hand and on 2220 1 1 deposit into account, the ratio was 98%. 2200 0.995
At the previous year-end, the Group’s 2180 0.99 2,163.8 2,165.6 debt-equity ratios were higher at 108% and 2160 0.985
100% respectively. The lower gearing at 2140 2,150.6 0.98 0.98 end-2000 was due mainly to the Group’s 2120 0.975 increase in shareholders’ funds. 2100 0.97 1999 2000
Debt Debt-equity Ratio (%) Equity
Analyses 107 Gearing Structure (continued)
Fixed Rate Floating Rate Borrowings Borrowings Total $’000 % $’000 % $’000 % Facilities available for drawdown 839,705 100 1,844,638 100 2,684,343 100 Amount utilised 839,705 100 1,562,168 85 2,401,873 89 Balance unutilised - - 282,470 15 282,470 11
Cash in hand and on deposit 236,243 518,713
2000 1999 Interest cover Profit before interest and tax 181,845 178,012 Net interest cost expensed and capitalised ($’000) 96,515 89,695 Interest cover 1.9 2.0
Effective cost of borrowings Net interest cost expensed and capitalised ($’000) 96,515 89,695 Average net borrowings ($’000) 2,164,725 2,126,502 Effective cost of borrowings (%) 4.5 4.2
Secured borrowings ratio Total secured borrowings ($’000) 272,741 449,396 Percentage of total borrowings (%) 11.4 19.3
Debt-equity ratio Total borrowings: Gross ($’000) 2,401,873 2,327,037 Net of cash ($’000) 2,165,630 2,163,820
Total equity (excluding minority interests) ($’000) 2,240,096 2,150,552
Debt-equity ratio (excluding minority interests): Gross (%) 107 108 Net of cash (%) 98 100
Total equity (including minority interests ) ($’000) 2,611,740 2,548,152
Net debt-equity ratio (including minority interests) (%) 84 85
Analyses 108 statutory report and accounts Directors’ Report
The Directors submit their report together with the audited accounts of the Company and of the Group for the year ended 31 December 2000.
1 Principal Activities The principal activities of the Group consist of property investment, development and management, and property-related services.
The principal activity of the Company is that of a holding, management and investment company.
2 Results Group Company
$’000 $’000
Profit after taxation and minority interests 120,618 65,730 Extraordinary items - (2,852) Profit attributable to shareholders transferred to revenue reserves 120,618 62,878
The following amounts have been credited/(debited) to:
Capital reserves: Net surplus on revaluation of subsidiary and associated companies - 51,100 Net surplus on revaluation of investment properties and fixed assets 8,650 - Adjustment arising from change in Group structure 204 - Transfer from revenue reserves 71,086 - Transfer from / (to) profit and loss account (4,029) 2,826
Foreign currency translation account: Exchange differences arising on consolidation (4,312) - Exchange differences on foreign currency borrowings (13,162) (13,162) Transfer from revenue reserves 16 - Adjustment arising from change in Group structure (90) -
Revenue reserves: Adjustment arising from change in Group structure (4,237) - Transfer to capital reserves (71,086) - Transfer to foreign currency translation account (16) -
There were no material transfers to or from provisions during the year except for amounts set aside for such items as depreciation, provisions for doubtful debts and income tax as disclosed in the accounts.
3 Dividends During the year, a final dividend of 6% (or 3.0 cents per share) less tax amounting to $15,796,000, in respect of the previous year as proposed in the Directors’ report for that year, was paid to shareholders.
The Directors propose that a final dividend of 6% (or 3.0 cents per share) less tax, amounting to $16,045,000 on the existing issued share capital, be paid for the current financial year.
Statutory Report and Accounts 110 4 Share Issues During the year, the Company issued the following shares of $0.50 each, fully paid:
(a) 1,780,000 shares under the Keppel Land Share Option Scheme, comprising 745,000 shares at $1.58 per share and 1,035,000 shares at $0.56 per share. (b) 64,919 shares on exercise of Keppel Land Warrants 2000.
Shares issued by subsidiary companies during the year were as follows:
Name of Company Number of Shares Issued Purpose of Share Issue
Bukit Timah Hill Development Pte Ltd 2,500 preference shares of $1 each at $10,000 each To provide working capital
Keppel Digihub (Singapore) Pte Ltd 999,998 ordinary shares of $1 each at par To provide working capital
PT Kepland Investama 700,000,000 ordinary shares of Rupiah 500 each at par To provide working capital
PT Kepindo Properti 200,000 ordinary shares of Rupiah 1,000 each at par To provide working capital
PT Keppel Land 200,000,000 ordinary shares of Rupiah 500 each at par To provide working capital
Utayan Thani Ltd 10,000 shares of 100 Bahts each, 25 Bahts paid up To provide working capital
5 Acquisition and Disposal of Shares in Subsidiaries Shares in the following subsidiary were acquired / (disposed) during the year:
Name of Company % Ownership Attributable Net before Tangible Assets Acquisition / % Acquired / Consideration/ on Date of Disposal (Disposal) (Sale Proceeds) Acquisition / Disposal
Five Stars Property Public Co. Ltd - 45 16,647 16,647
Bukit Timah Hill Development Pte Ltd - 100 42,108 42,108
Evansville Investment Pte Ltd - 100 41,938 41,938
Tat Chuan Development Pte Ltd - 100 26,117 26,117
Keppel Bay Pte Ltd 100 (70) (627) 627 (Formerly Holland Realty Pte Ltd)
Keppel Land (China) Pte Ltd 100 (100) - -
Keppel Land (Myanmar) Pte Ltd 100 (100) - -
Keppel Land (Vietnam) Pte Ltd 100 (100) - -
Statutory Report and Accounts 111 Directors’ Report (continued)
6 Directors The Directors in office at the date of this report are:
Lim Chee Onn, Chairman Kevin Wong Kingcheung, Managing Director Alan F. C. Choe Loh Wing Siew Choo Chiau Beng Teo Soon Hoe Kwa Soon Bee Lim Leong Geok Thai Chee Ken Khor Poh Hwa
The Directors holding office at the end of the financial year and their interests in the share capital of the Company and related companies as recorded in the register of Directors’ shareholdings were as follows:
At 1.1.00 or Date of Appointment At 31.12.00 At 21.1.01
Interest in the Company (Shares of 50 cents each): Kevin Wong Kingcheung 157,400 157,400 157,400
Interest in share options in the Company: Kevin Wong Kingcheung 528,980 633,000 633,000
Interest in Warrants 2000 to subscribe for shares in the Company: Kevin Wong Kingcheung 39,925 - - Lim Leong Geok 1,500 - -
Interest in Keppel Corporation Limited (“KCL”) (Shares of $1 each): Lim Chee Onn 462,083 462,083 462,083 Loh Wing Siew 316,458 316,458 316,458 Loh Wing Siew (Deemed interest) 100,000 100,000 100,000 Choo Chiau Beng 239,583 239,583 239,583 Teo Soon Hoe 629,166 629,166 629,166 Kwa Soon Bee 20,000 20,000 20,000 Kwa Soon Bee (Deemed interest) 3,500 3,500 3,500 Lim Leong Geok 25,000 30,000 30,000
Interest in share options in KCL: Lim Chee Onn 583,750 751,250 751,250 Loh Wing Siew 583,750 541,250 541,250 Choo Chiau Beng 583,750 681,250 681,250 Teo Soon Hoe 583,750 681,250 681,250
Interest in Keppel FELS Energy & Infrastructure Limited (Shares of 50 cents each): Lim Chee Onn 10,500 10,500 10,500 Loh Wing Siew 32,500 32,500 32,500 Choo Chiau Beng 77,875 127,875 127,875 Teo Soon Hoe 10,500 10,500 10,500
Statutory Report and Accounts 112 At 1.1.00 or Date of Appointment At 31.12.00 At 21.1.01
Interest in Singapore Petroleum Company Limited (Shares of 50 cents each): Choo Chiau Beng - 50,000 50,000
Interest in Keppel Marine Industries Limited (Shares of 50 cents each): Loh Wing Siew 16,500 - - Loh Wing Siew (Deemed interest) 8,000 - - Choo Chiau Beng 812 - - Teo Soon Hoe 14,500 - -
Interest in Keppel Telecommunications & Transportation Ltd (“Keppel T & T”) (Shares of 20 cents each): Lim Chee Onn 23,000 23,000 23,000 Alan F.C. Choe 7,500 7,500 7,500 Choo Chiau Beng 26,000 26,000 26,000 Teo Soon Hoe 28,000 28,000 28,000
Interest in Warrants 2002 to subscribe for shares in Keppel T & T: Lim Chee Onn 4,500 4,500 4,500 Alan F.C. Choe 1,250 1,250 1,250 Choo Chiau Beng 4,000 4,000 4,000 Teo Soon Hoe 5,000 5,000 5,000
Interest in Keppel Capital Holdings Limited (Shares of $1 each): Lim Chee Onn - 37,500 37,500 Loh Wing Siew - 50,000 50,000 Choo Chiau Beng - 50,000 50,000 Choo Chiau Beng (Deemed interest) - 7,656 7,656 Teo Soon Hoe - 56,250 56,250 Kwa Soon Bee - 25,625 25,625 Kwa Soon Bee (Deemed interest) - 6,250 6,250 Lim Leong Geok - 4,000 4,000
Interest in Keppel TatLee Bank Limited (“KTLB”) (Shares of $1 each): Lim Chee Onn 30,000 - - Loh Wing Siew 40,000 - - Choo Chiau Beng 40,000 - - Choo Chiau Beng (Deemed interest) 6,125 - - Teo Soon Hoe 45,000 - - Kwa Soon Bee 20,500 - - Kwa Soon Bee (Deemed interest) 5,000 - - Lim Leong Geok 4,000 - -
Interest in Warrants 000831 to subscribe for shares in KTLB: Lim Chee Onn 7,500 - - Loh Wing Siew 10,000 - - Choo Chiau Beng 10,000 - - Teo Soon Hoe 11,500 - - Lim Leong Geok 1,500 - - Statutory Report and Accounts 113 Directors’ Report (continued)
At 1.1.00 or Date of Appointment At 31.12.00 At 21.1.01 Interest in Keppel TatLee Finance Limited (“KTLF”) (Shares of 50 cents each at 1.1.2000 and 25 cents with effect from 9.12.2000) Loh Wing Siew 31,808 31,808 31,808
Interest in Warrants 2001 to subscribe for shares in KTLF: Loh Wing Siew 8,000 8,000 8,000
Interest in Keppel Philippines Holdings Inc (“B” shares of 1 Peso each) Lim Chee Onn 2,000 2,000 2,000 Loh Wing Siew 4,592 4,592 4,592 Choo Chiau Beng 2,000 2,000 2,000 Teo Soon Hoe 2,000 2,000 2,000
Interest in Keppel Philippines Marine Inc (Shares of 1 Peso each) Lim Chee Onn 232,507 246,457 246,457 Loh Wing Siew 467,143 495,170 495,170 Choo Chiau Beng 267,558 283,611 283,611 Teo Soon Hoe 285,689 302,830 302,830
Interest in Keppel Philippines Properties Inc (Shares of 1 Peso each): Loh Wing Siew 20,001 20,000 20,000 Teo Soon Hoe 2,916 2,916 2,916
Since the end of the previous financial year, no Director has received or become entitled to receive benefits under contracts required to be disclosed by Section 201(8) of the Companies Act, Cap 50.
Neither at the end of the financial year, nor at any time during the year, did there subsist any arrangements, to which the Company or any of its subsidiary companies is a party, whereby the Directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate other than the Keppel Land Share Option Scheme approved by shareholders at an Extraordinary General Meeting.
In accordance with the Company’s Articles of Association, Mr Khor Poh Hwa retires, and being eligible, offers himself for re-election.
Mr Alan F.C. Choe and Dr Kwa Soon Bee also retire and will not be seeking re-election.
Statutory Report and Accounts 114 7 Audit Committee In relation to the accounts of the Company and the Group for the year ended 31 December 2000, the Audit Committee reviewed the audit plans and scope of the audit examination of the external auditors of the Company. The external and internal auditors’ findings on the internal controls of the companies within the Group, and management’s response to these findings were also discussed with the auditors and management. The Audit Committee’s activities included a review of the accounts of the Company and the Group for the year ended 31 December 2000, and the report of the external auditors thereon.
The Audit Committee has recommended to the Board of Directors the re-appointment of Ernst & Young, Certified Public Accountants as external auditors of the Company at the forthcoming Annual General Meeting.
The members of the Committee are: Thai Chee Ken, Chairman Lim Leong Geok Kevin Wong Kingcheung
8 Options and Warrants The particulars of share options and warrants of the Company are as follows:
(a) The Keppel Land Share Option Scheme which has been approved by the shareholders of the Company is administered by the Share Option Committee whose members are:
Lim Chee Onn Teo Soon Hoe Thai Chee Ken
Under the Keppel Land Share Option Scheme, an option may, except in certain special circumstances, be exercised at any time after two years but no later than the expiry date. The shares under option may be exercised in full or in respect of 100 shares or a multiple thereof, on the payment of the subscription price.
The subscription price is based on the average last business done price for the shares of the Company on the Singapore Exchange Securities Trading Limited for the three market days preceding the date of offer. The Share Option Committee may at its discretion fix the subscription price at a discount not exceeding 20 per cent to the above price. None of the options offered in the financial year was granted at a discount.
The employees to whom the options have been granted do not have the right to participate by virtue of the options in a share issue of any other company.
Options to take up 3,142,000 shares were granted during the financial year. 1,780,000 shares were issued by virtue of the exercise of options, and options to take up 1,340,030 shares were cancelled during the financial year. At the end of the financial year, there were 8,208,000 shares under option as follows:
Statutory Report and Accounts 115 Directors’ Report (continued)
Number of Share Options
At 1.1.00 Date of or Date Subscription Expiry Grant of Grant Exercised Cancelled 31.12.00 Price ($) Date
23.3.95 309,270 - (309,270) - 4.40 22.3.00 21.8.95 344,760 - (344,760) - 3.99 20.8.00 21.3.96 410,000 - (35,000) 375,000 4.53 20.3.01 19.8.96 435,000 - (35,000) 400,000 4.67 18.8.01 21.4.97 880,000 - (99,000) 781,000 4.16 20.4.02 5.9.97 904,000 - (109,000) 795,000 3.86 4.9.02 12.3.98 1,230,000 (745,000) (124,000) 361,000 1.58 11.3.03 7.9.98 1,697,000 (1,035,000) (115,000) 547,000 0.56 6.9.03 5.3.99 588,000 - (47,000) 541,000 1.71 4.3.09 20.8.99 1,388,000 - (98,000) 1,290,000 2.48 19.8.09 8,186,030 (1,780,000) (1,316,030) 5,090,000 6.4.00 1,365,000 - (24,000) 1,341,000 1.87 5.4.10 29.11.00 1,777,000 - - 1,777,000 2.47 28.11.10 11,328,030 (1,780,000) (1,340,030) 8,208,000
Information on Directors of the Company participating in the Scheme is as follows:
Aggregate Options Aggregate Options Granted since Exercised since Aggregate Options Options Granted Commencement of Commencement of Outstanding as at the Name of Director during the Financial the Scheme to the the Scheme to the End of the Financial Year End of the Financial End of the Financial Year Year Year
Kevin Wong Kingcheung 175,000 1,002,360 227,400 633,000
No employee has received 5 per cent or more of the total number of options available under the Keppel Land Share Option Scheme.
(b) The Company issued 149,675,796 Warrants 2000 in February 1996. 104,143,772 Warrants 2000 were not exercised as of 12 December 2000 and ceased to be valid.
9 Asset Values Before the accounts of the Company and of the Group were prepared, the Directors took reasonable steps:
(a) to ascertain that proper action had been taken in relation to writing off and providing for bad and doubtful debts, and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and
(b) to ensure that any current assets which are unlikely to realise their book values in the ordinary course of business were written down to their estimated realisable values.
Statutory Report and Accounts 116 At the date of this report, the Directors are not aware of any circumstances which would render:
(a) the amount written off for bad debts or the amount of the provision for doubtful debts in the accounts of the Company and of the Group inadequate to any substantial extent; or
(b) the values attributed to current assets in the accounts of the Company and of the Group misleading.
10 Contingent Liabilities As at the date of this report:
(a) there are no charges on the assets of the Company and of the Group which have arisen since the end of the financial year to secure the liabilities of any other person; and
(b) there are no contingent liabilities which have arisen since the end of the financial year.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Company and of the Group to meet their obligations as and when they fall due.
11 Accounts At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in the accounts of the Company and of the Group which would render any amount stated in the accounts misleading.
In the opinion of the Directors, the results of the operations of the Company and of the Group during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature, other than the extraordinary items disclosed in the Company’s and the Group’s profit and loss accounts and the items shown as direct movements in capital and revenue reserves.
In the opinion of the Directors, the results of the Company and of the Group for the financial year in which this report is made are not likely to be substantially affected by any item, transaction or event of a material and unusual nature which has arisen in the interval between the end of the financial year and the date of this report.
12 Auditors The auditors, Ernst & Young, Certified Public Accountants, have expressed their willingness to accept reappointment as auditors.
On behalf of the Board
LIM CHEE ONN KEVIN WONG KINGCHEUNG CHAIRMAN MANAGING DIRECTOR
Singapore, 23 March 2001
Statutory Report and Accounts 117 Statement by the Directors
We, LIM CHEE ONN and KEVIN WONG KINGCHEUNG, being two of the Directors of Keppel Land Limited, do hereby state that, in the opinion of the Directors:
(a) the balance sheets, profit and loss accounts, statements of changes in equity and consolidated cash flow statement, together with the notes thereon, set out on pages 120 to 156 are drawn up so as to exhibit a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2000 and of the results of the Company and the Group, and of the changes in equity and cash flows of the Group for the year then ended; and
(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
On behalf of the Board
LIM CHEE ONN KEVIN WONG KINGCHEUNG CHAIRMAN MANAGING DIRECTOR
Singapore, 23 March 2001
Statutory Report and Accounts 118 Auditors’ Report
We have audited the financial statements of Keppel Land Limited and the consolidated financial statements of the Group as set out on pages 120 to 156, comprising the balance sheets of the Company and of the Group as at 31 December 2000, and the profit and loss accounts and the statements of changes in equity of the Company and of the Group and cash flow of the Group for the year ended 31 December 2000, and notes thereto. These financial statements are the responsibility of the Company's Directors. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion,
(a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act and Statements of Accounting Standard and so as to give a true and fair view of :
(i) the state of affairs of the Company and of the Group as at 31 December 2000, the results and changes in equity of the Company and of the Group and the cash flows of the Group for the year then ended; and
(ii) the other matters required by Section 201 of the Act to be dealt with in the financial statements and consolidated financial statements;
(b) the accounting and other records, and the registers required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
We have considered the financial statements and auditors' reports of all subsidiaries of which we have not acted as auditors, being financial statements included in the consolidated financial statements. The names of those subsidiaries audited by our associated firms and those audited by other firms are stated in the notes to the accounts.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations as required by us for those purposes.
The auditors' reports on the financial statements of the subsidiaries were not subject to any qualification and in respect of subsidiaries incorporated in Singapore did not include any comment made under section 207(3) of the Act.
ERNST & YOUNG Certified Public Accountants Singapore, 23 March 2001
Statutory Report and Accounts 119 Profit and Loss Accounts for the Year ended 31 December 2000
Group Company 2000 1999 2000 1999 Note $’000 $’000 $’000 $’000
SALES 2 500,492 995,981 - - COST OF SALES (319,948) (788,526) - -
GROSS PROFIT 180,544 207,455 - -
Marketing expenses (3,781) (4,294) - - Administrative expenses (24,917) (22,941) - - Other operating income / (expenses) 16,704 (23,106) (1,233) (522)
OPERATING PROFIT / (LOSS) 3 168,550 157,114 (1,233) (522) Interest and investment income 2 & 4 30,944 14,024 164,844 114,262 Interest expense 5 (51,000) (50,547) (73,811) (60,850) Share of results of associated companies 21 10,436 20,672 - -
PROFIT BEFORE TAXATION 158,930 141,263 89,800 52,890 Taxation 6 (29,362) (39,398) (24,070) (13,474)
PROFIT AFTER TAXATION 129,568 101,865 65,730 39,416 Minority interests (8,950) (23,171) - -
PROFIT BEFORE EXTRAORDINARY ITEMS 120,618 78,694 65,730 39,416 Extraordinary items 7 - 73,569 (2,852) 94,666
PROFIT ATTRIBUTABLE TO SHAREHOLDERS 120,618 152,263 62,878 134,082
Basic earnings per share (cents) 9 Before extraordinary items 17.1 11.8 After extraordinary items 17.1 22.7
Diluted earnings per share (cents) 9 Before extraordinary items 17.0 11.7 After extraordinary items 17.0 22.7
The notes shown on pages 126 to 156 form part of these accounts.
Statutory Report and Accounts 120 Balance Sheets as at 31 December 2000
Group Company 2000 1999 2000 1999 Note $’000 $’000 $’000 $’000
SHARE CAPITAL 10 354,190 353,267 354,190 353,267 SHARE PREMIUM 11 811,932 810,903 811,932 810,903 CAPITAL RESERVES 12 906,704 830,793 791,808 737,882 FOREIGN CURRENCY TRANSLATION ACCOUNT 13 (134,118) (116,570) (55,128) (41,966) REVENUE RESERVES 14 301,388 272,159 337,294 290,466
SHARE CAPITAL AND RESERVES 2,240,096 2,150,552 2,240,096 2,150,552 MINORITY INTERESTS 371,644 397,600 - - LONG-TERM BORROWINGS 16 1,367,469 1,473,397 1,093,623 1,118,372 3,979,209 4,021,549 3,333,719 3,268,924
Represented by: FIXED ASSETS 17 277,437 193,533 93 99 INVESTMENT PROPERTIES 18 2,695,460 2,590,766 39,700 39,700 PROPERTIES HELD FOR DEVELOPMENT 19 1,546,619 1,720,439 - - INVESTMENTS Subsidiary companies 20 - - 3,583,387 3,478,929 Associated companies 21 518,702 464,470 366,439 309,084 Other investments 22 160,580 107,093 4,120 4,120
679,282 571,563 3,953,946 3,792,133
CURRENT ASSETS Completed properties held for sale 32,808 48,204 - - Stocks 23 3,641 2,391 - - Trade debtors 24 22,032 22,746 - - Other debtors 25 128,855 165,206 3,402 18,941 Amounts owing by / (to) holding and related companies 26 150,787 (50,075) 57,914 32,538 Fixed deposits, bank balances and cash 27 61,943 54,012 2,262 2,652
400,066 242,484 63,578 54,131 Less: CURRENT LIABILITIES Trade creditors 28,375 60,543 - - Other creditors 28 544,578 499,854 64,363 12,005 Net tax provision 29 69,175 65,910 10,735 5,343 Short-term borrowings 30 961,482 655,138 632,455 584,000 Proposed dividend (net) 16,045 15,791 16,045 15,791
1,619,655 1,297,236 723,598 617,139
NET CURRENT ASSETS / (LIABILITIES) (1,219,589) (1,054,752) (660,020) (563,008) 3,979,209 4,021,549 3,333,719 3,268,924
The notes shown on pages 126 to 156 form part of these accounts.
Statutory Report and Accounts 121 GROUP STATEMENT OF CHANGES IN EQUITY For the Year ended 31 December 2000
Property Foreign Revaluation and Currency Share Share Other Capital Translation Retained Capital Premium Reserves Account Profit Total $’000 $’000 $’000 $’000 $’000 $’000
Balance at 1 January 2000 353,267 810,903 830,793 (116,570) 272,159 2,150,552
Revaluation surplus - - 8,650 - - 8,650 Exchange differences arising on consolidation - - - (4,312) - (4,312) Exchange differences on foreign currency borrowings - - - (13,162) - (13,162)
Net gains not recognised in income statement - - 8,650 (17,474) - (8,824) Net profit for the year - - - - 120,618 120,618
Total recognised gains and losses for the year - - 8,650 (17,474) 120,618 111,794
Transfer of goodwill to retained profits - - 71,086 - (71,086) - Transfer to profit and loss account - - (4,029) - - (4,029) Transfers - - - 16 (16) - Dividend - - - - (16,050) (16,050) Issue of share capital 923 1,029 - - - 1,952 Changes in Group structure - - 204 (90) (4,237) (4,123)
Balance at 31 December 2000 354,190 811,932 906,704 (134,118) 301,388 2,240,096
Balance at 1 January 1999 327,767 678,945 815,538 (123,175) 134,734 1,833,809
Revaluation surplus - - 16,978 - - 16,978 Exchange differences arising on consolidation - - - 10,095 - 10,095 Exchange differences on foreign currency borrowings - - - (2,881) - (2,881) Goodwill arising on consolidation - - (843) - - (843)
Net gains not recognised in income statement - - 16,135 7,214 - 23,349 Net profit for the year - - - - 152,263 152,263
Total recognised gains and losses for the year - - 16,135 7,214 152,263 175,612
Transfers - - (2,352) 601 1,751 - Dividend - - - - (15,791) (15,791) Issue of share capital 25,500 131,958 - - - 157,458 Changes in Group structure - - 1,472 (1,210) (798) (536)
Balance at 31 December 1999 353,267 810,903 830,793 (116,570) 272,159 2,150,552
Statutory Report and Accounts 122 COMPANY STATEMENT OF CHANGES IN EQUITY For the Year ended 31 December 2000
Property Foreign Revaluation and Currency Share Share Other Capital Translation Retained Capital Premium Reserves Account Profit Total $’000 $’000 $’000 $’000 $’000 $’000
Balance at 1 January 2000 353,267 810,903 737,882 (41,966) 290,466 2,150,552
Revaluation surplus - - 51,100 - - 51,100 Exchange differences arising on consolidation ------Exchange differences on foreign currency borrowings - - - (13,162) - (13,162)
Net gains not recognised in income statement - - 51,100 (13,162) - 37,938 Net profit for the year - - - - 62,878 62,878
Total recognised gains and losses for the year - - 51,100 (13,162) 62,878 100,816
Transfers from profit and loss account - - 2,826 - - 2,826 Dividend - - - - (16,050) (16,050) Issue of share capital 923 1,029 - - - 1,952
Balance at 31 December 2000 354,190 811,932 791,808 (55,128) 337,294 2,240,096
Balance at 1 January 1999 327,767 678,945 694,007 (39,085) 172,175 1,833,809
Revaluation surplus - - 43,875 - - 43,875 Exchange differences arising on consolidation ------Exchange differences on foreign currency borrowings - - - (2,881) - (2,881)
Net gains not recognised in income statement - - 43,875 (2,881) - 40,994 Net profit for the year - - - - 134,082 134,082
Total recognised gains and losses for the year - - 43,875 (2,881) 134,082 175,076
Dividend - - - - (15,791) (15,791) Issue of share capital 25,500 131,958 - - - 157,458
Balance at 31 December 1999 353,267 810,903 737,882 (41,966) 290,466 2,150,552
Statutory Report and Accounts 123 Consoildated Cash Flow Statement for the Year ended 31 December 2000
2000 1999 $'000 $’000 CASH FLOW FROM OPERATING ACTIVITIES Operating profit before interest and taxation 168,550 157,114 Adjustments for: Depreciation of fixed assets 16,735 6,704 Amortisation of deferred expenditure 9,237 9,548 Provisions for write down in investment - 11,937 Exchange difference on US$ bonds 2,826 2,832 Other items 53 31 Operating income before reinvestment in working capital 197,401 188,166
Decrease / (Increase) in debtors (27,764) 63,360 Decrease / (Increase) in stocks and completed properties held for sale 20,314 (19,812) Increase in creditors 26,594 29,420 Cash generated from operations 216,545 261,134
Income from investment received 2,859 226 Interest received 21,588 57,854 Income from interests in associated companies 6,497 3,581 Interest paid (51,000) (98,184) Income taxes paid (19,679) (24,059) Net cash provided by operating activities 176,810 200,552
CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets and additions to investment properties (102,453) (2,670) Purchase of marketable securities and other investments (31,320) (13,586) Additional investment in subsidiary and associated companies (171,786) (15,835) Development expenditure (512,768) (798,626) Proceeds from progress billings 668,866 45,255 Proceeds from sale of fixed assets 211 215 Sale of shares in subsidiary and associated companies 295 243,355 Net cash used in investing activities (148,955) (541,892)
CASH FLOW FROM FINANCING ACTIVITIES Net proceeds from issue of shares by the Company 1,952 157,458 Net loan drawdown / (repayment) 124,228 (22,583) Proceeds from Floating Rate Notes 55,750 105,000 Advances from minority shareholders of certain companies 47,713 48,524 Loans from related and associated companies, less dividends 9,237 60,932 Dividends paid to shareholders (15,796) (14,553) Contribution by, less dividends to, minority shareholders of subsidiary companies (50,189) 16,824 Net cash provided by financing activities 172,895 351,602
Statutory Report and Accounts 124 2000 1999 $'000 $’000
Net increase in cash and cash equivalents 200,750 10,262 Cash and cash equivalents at beginning of year (35,285) (47,477) Exchange gain / (loss) (2,144) 1,930 Cash and cash equivalents at end of year 163,321 (35,285)
REPRESENTED BY: CASH AND CASH EQUIVALENTS Fixed deposits, bank balances and cash 61,943 54,012 Deposits with related companies 174,300 109,205 Short-term borrowings from related companies (72,922) (198,502) 163,321 (35,285)
The acquisition and disposal of shares in subsidiary companies have been shown as separate items, and their effect on the individual assets and liabilities of the Group is not reflected in the above statement. The net assets of subsidiary company sold, acquired or reclassified as associated companies may be analysed as follows:
2000 1999 2000 1999
Investment properties 16,359 - Purchase Properties held for development 88,080 - consideration 126,810 - Other investments 22,219 Sale proceeds (627) - Stocks, debtors and creditors 2,695 - Net bank balances, cash and deposits with, and deposits from related company 10,927 - Minority interests (14,365) - Net assets reclassified as investment in associates 268 - 126,183 - 126,183 -
Statutory Report and Accounts 125 Summary of Significant Accounting Policies
The following summary explains the Group's significant accounting policies which have been consistently applied, except where otherwise indicated:
(a) Basis of Accounting The accounts are prepared in accordance with the historical cost convention modified by revaluation of certain fixed assets, investment properties and investments in subsidiary and associated companies.
(b) Basis of Consolidation The Group accounts consolidate the accounts of the Company and its subsidiary companies, all of which prepare audited accounts at 31 December. Subsidiary companies are those in which more than 50% of the issued share capital is held or in which the Group has Board control.
The accounts of subsidiary companies acquired or disposed of during the year are included in or excluded from Group figures from the effective dates of acquisition or disposal. Any excess or deficit of the cost of investments over net assets acquired is shown as a direct movement in capital reserves. On realisation, this excess or deficit is transferred direct to revenue reserves.
Minority interests are recorded on the basis of their share of the post-acquisition values of the net assets of the non-wholly owned subsidiaries.
(c) Subsidiary Companies Investments in subsidiary companies are stated in the accounts of the Company at the attributable share of their combined net asset value. Any revaluation surplus or deficit arising each year is transferred direct to capital reserves.
(d) Associated Companies Associated companies are those in which the Group has a long-term substantial equity interest and in whose commercial and financial policy decisions the Group actively participates. The Group's share of profits less losses of associated companies, as shown in their audited accounts for the year ended 31 December (except for certain associated companies), is included in the Group's results.
The results of certain associated companies which do not prepare audited accounts at 31 December are based on their latest audited accounts and unaudited management accounts for the ensuing months up to 31 December.
Investments in associated companies are stated in the Company's and Group's accounts at the attributable share of their combined net asset value as shown in their accounts. Any revaluation surplus or deficit arising each year is taken direct to capital reserves.
(e) Other Investments Investments held on a long-term basis are stated at average cost. Provision is made for any diminution in value which is considered to be permanent.
Dividend income is recognised in the accounts when it is declared to be payable by the investee companies.
(f) Fixed Assets Fixed assets are stated at cost except for those which have been revalued. Surpluses arising on revaluation are credited direct to capital reserves. Revaluation deficits are taken to the profit and loss
Statutory Report and Accounts 126 account as extraordinary items in the absence of or to the extent that they exceed any surpluses held in reserves relating to previous revaluations.
All fixed assets, except for freehold and long leasehold (i.e. with unexpired tenures of over 20 years) land, are depreciated evenly over their expected useful lives and residual values have also been taken into account where appropriate. The estimated useful lives of the Group's fixed assets have been taken as follows:
Buildings 30 to 50 years Short leasehold land and buildings Over period of lease (ranging from 2 to 20 years) Machinery and equipment 3 to 7 years Motor vehicles 4 to 5 years
Profits or losses on disposal of all fixed assets are included in the profit and loss account. Any surpluses held in capital reserves in respect of previous revaluations of fixed assets disposed of during the year are regarded as having become realised and are transferred to the revenue reserves.
(g) Investment Properties Revaluation surpluses arising on annual valuations of the Group's investment properties are credited direct to capital reserves. Revaluation deficits are taken to the profit and loss account as extraordinary items in the absence of or to the extent that they exceed any surpluses held in reserves relating to previous revaluations.
Profits or losses on disposal of all investment properties are included in the profit and loss account. Any surpluses held in capital reserves in respect of previous revaluations of investment properties disposed of during the year are regarded as having become realised and are transferred to the profit and loss account.
Rental and related income from investment properties is recognised on an accrual basis.
(h) Properties Held for Development Development properties held for sale are stated at the lower of cost and net realisable value. Upon receipt of temporary occupation permits, they are transferred to current assets as completed properties held for sale.
Profit recognised on partly completed projects which are held for sale is based on the percentage of completion method. Commencing from the year ended 31 December 2000, the profit recognition upon the signing of sales contracts for Singapore trading properties under development is 20% of the total estimated profit attributable to the actual contracts signed. The percentage due from purchasers on the signing of sales contracts in Singapore is 20%, which is higher than the percentages under the governmental regulations of other countries. This change from the previous practice of recognising profit entirely on the stage of physical completion has been adopted for a more appropriate reflection of the work done on property development projects. Subsequent recognition of profit is based on the stage of development completion. As a result of this change of treatment, the Group's profit before and after tax have been increased by $6.7 million and $5.1 million respectively. There is no effect on the Group's profits for the previous year or the Company's accounts as there were no new property launches.
Statutory Report and Accounts 127 Summary of Significant Accounting Policies (continued)
The amount brought into the accounts is after making provision for contingencies. When losses are expected, full provision is made in the accounts after adequate allowance has been made for estimated costs to completion. Any expenditure incurred on abortive projects is written off in the profit and loss account for the year.
Profit on partly completed projects which are held for sale less any provision to reduce cost to estimated realisable value as well as the profit or loss on sale of completed properties are included in the operating results for the year.
Investment properties held for development are stated at cost, which includes cost of land and construction, related overhead expenditure and financing charges and other net costs incurred during the period of development. They are considered completed and are transferred to investment properties when they are ready for their intended use as defined in Statement of Accounting Standard 19.
Each investment property under development is accounted for as a separate project. Where a project comprises more than one component, each component is treated as a separate project, and interest and other net costs are apportioned accordingly.
(i) Completed Properties Held for Sale Completed properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land and construction, and interest incurred during the period of construction.
(j) Stocks Stocks are valued at the lower of weighted average cost and net realisable value after adequate provision is made for damaged, obsolete or slow-moving stocks on an item by item basis. For finished goods and work-in-progress, cost comprises materials, direct labour and an appropriate proportion of fixed and variable overheads.
Profits are not recognised on short-term contracts until the contracts are completed. In the case of partly completed long-term contracts, profits are recognised using the percentage of completion method based on the stage of physical completion. When losses are expected, full provision is established in the accounts after adequate allowance has been made for estimated costs to completion.
Progress claims made against work-in-progress are offset against the cost of work-in-progress and the profits recognised on partly completed long-term contracts less any provision required to reduce cost to estimated realisable value.
(k) Debtors Known bad debts are written off and specific provisions are made for any debts which are considered doubtful.
(l) Deferred Taxation Deferred taxation is provided for under the liability method at current rates of taxation on the excess of book values of fixed assets over their tax written down values, and timing differences on certain provisions or charges in the accounts for which tax relief is not immediately available.
Statutory Report and Accounts 128 Future tax benefits arising from unutilised tax losses and capital allowances are recognised in the accounts only if there is reasonable assurance that they will be utilised against future taxable profits. These future tax benefits are offset against the deferred tax liability in the Group's accounts.
(m) Foreign Currencies Foreign currency monetary assets and liabilities are converted into Singapore dollars, the currency in which these accounts are stated, at the exchange rates ruling at the end of the year. Exchange differences arising from the conversion are dealt with through the profit and loss account, or in reserves when foreign equity investments are hedged by foreign currency borrowings.
Transactions arising in foreign currencies during the year are converted at rates closely approximating those ruling on the transaction dates. Profits or losses arising from completed transactions are taken to the profit and loss account.
For inclusion in Group accounts, all assets and liabilities of foreign subsidiaries and associated companies are translated into Singapore dollars at the exchange rates ruling at the end of the year. Exchange differences due to such currency translations as well as the exchange differences in respect of offsetting foreign currency loans or other hedging instruments are dealt with in reserves. The trading results of foreign subsidiaries and associated companies are translated into Singapore dollars at the average exchange rates for the year.
Statutory Report and Accounts 129 Notes to the Accounts
NOTES TO THE ACCOUNTS
1. Principal Activities The principal activity of the Company is that of a holding, management and investment company.
The principal activities of the Company and its subsidiary companies (“the Group”) consist of property investment, development and management, and property-related services.
2. Revenue Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Sale of trading properties 338,189 849,886 - - Rental income from investment properties 124,762 112,205 - - Revenue from hotels, serviced apartments, property services 37,541 33,890 - - Sales / Operating revenue 500,492 995,981 - -
Dividend income 2,859 226 67,362 40,015 Interest income 28,085 13,798 97,482 74,247 30,944 14,024 164,844 114,262
Total revenue 531,436 1,010,005 164,844 114,262
Sales represent the invoiced value of goods and services supplied. In respect of the Group, inter-company transactions and the sales of associated companies have been excluded.
Statutory Report and Accounts 130 3. Operating Profit/(Loss) Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000 The following amounts have been charged/ (credited) in arriving at the operating profit/ (loss): Depreciation of fixed assets: Freehold buildings 651 5 6 5 Leasehold buildings 4,077 - - - Machinery, equipment and vehicles 12,007 6,699 - - 16,735 6,704 6 5
Amortisation of deferred expenditure 9,237 9,548 - -
Auditors’ remuneration: Auditors of the Company 341 299 90 90 Other auditors 51 39 - -
Directors’ remuneration: Directors of the Company Fees 160 160 160 160 Other emoluments 955 1,653 - -
Staff costs 28,009 24,503 - -
Loss on sale of fixed assets 51 31 - -
Provision / (Write back) for doubtful debts (75) 1,479 - -
Provision for stock obsolescence 822 - - -
Provision for diminution in value of other investments (see also Note 7) - 11,937 - -
4. Investment and Interest Income Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000 Gross dividends from: Unquoted subsidiary companies - - 66,424 36,945 Quoted associated companies - - - 203 Unquoted associated companies - - 938 2,867 Quoted investments 2,859 226 - - Interest from deposits and short-term loans with: Banks 12,757 9,619 11,066 8,231 Holding and related companies (See note below) 75,528 47,733 81,628 63,864 Associated companies 6,497 3,581 4,788 1,732 Other companies 5 502 - 420 97,646 61,661 164,844 114,262 Interest capitalised (66,702) (47,637) 30,944 14,024
Statutory Report and Accounts 131 Notes to the Accounts (continued)
Included in interest income of the Group is $66,702,000 (1999: $47,637 ,000) of interest earned from loans to certain subsidiary companies which capitalised the interest as property development cost. Interest on deposits with related companies is earned at rates ranging between 0.63% to 6.44% (1999: 0.13% to 5.94%) per annum.
5. Interest Expense Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000 On Bonds 2000, Bonds 2001 and Bonds 2005 23,428 16,841 16,549 16,841 On fixed term loans from banks 14,801 23,244 7,450 16,472 On other term loans and overdrafts from: Related companies 39,355 40,121 24,301 17,786 Banks 22,181 3,703 10,733 - Other companies 3,291 4,524 132 - On Floating Rate Notes 11,820 6,919 11,820 6,919 Provision for unrealised exchange loss on foreign currency borrowings 2,826 2,832 2,826 2,832 117,702 98,184 73,811 60,850 Interest capitalised (see also Note 4) (66,702) (47,637) 51,000 50,547
Interest is charged by related companies at rates ranging from 2.5% to 7.98% (1999: 1.88% to 8.25%) per annum.
6. Taxation Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000 Provision for current taxation based on profit for the year: Singapore 26,177 40,456 24,070 13,474 Other - - - - Provision on share of profits of associated companies 5,334 3,071 - - Overprovision in respect of a prior year (2,149) (4,129) - - 29,362 39,398 24,070 13,474
The Company’s tax rate is higher than the statutory rate due to certain disallowable expenses and withholding taxes paid.
The taxation charge for the Group is lower than the statutory rate due to some adjustments of costs in respect of completed projects and release of certain provisions which are not subject to Singapore income tax.
Tax losses and capital allowances relating to previous years of certain subsidiary and associated companies which were utilised against taxable profit during the current year had the effect of reducing the Group’s overall taxation charge by approximately $3,876,000 (1999: $3,620,000).
Statutory Report and Accounts 132 7. Extraordinary Items Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000 Profit from sale of investments in Keppel Telecommunications & Transportation Limited, Keppel Integrated Engineering Limited and Kepital Holdings Ltd - 73,569 - 109,273 Profit from partial sales of shares in a subsidiary company - - 2,852 - Provision for diminution in value of other investments (see also Note 3) - - - (14,607) - 73,569 2,852 94,666
8. Dividend Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000 Proposed dividend: 6 % (or 3 cents per share) less tax [1999: 6% (or 3 cents per share) less tax] 16,045 15,791 16,045 15,791 Under-provision in respect of shares issued under the Keppel Land Share Option Scheme and on the exercise of Keppel Land Warrants 2000 5 - 5 - 16,050 15,791 16,050 15,791
9. Earnings per Share Group 2000 1999 $’000 $’000 (a) The calculation of basic earnings per share is based on the following:
Profit after tax and minority interests but before extraordinary items 120,618 78,694 Profit after tax, minority interests and extraordinary items 120,618 152,263 Weighted average number of shares (‘000) 706,896 669,265
(b) The calculation of diluted earnings per share is based on the following:
The average fair value of one ordinary share ($) 2.28 2.48 Weighted average number of shares (used in the calculation of basic earnings per share) (‘000) 706,896 669,265 Number of unissued shares under option (‘000) 2,790 3,515 Number of shares that would have been issued at fair value (‘000) (1,890) (1,572)
Weighted average number of shares 707,796 671,208
Statutory Report and Accounts 133 Notes to the Accounts (continued)
10. Share Capital Group and Company Group and Company 2000 1999 2000 1999 Shares Shares ’000 ’000 $’000 $’000 Authorised: 1,000,000,000 shares of 50 cents each with equal voting rights 1,000,000 1,000,000 500,000 500,000 Issued and fully paid: 708,379,081 (1999: 706,534,162) shares of $0.50 each 708,379 706,534 354,190 353,267
Issued and fully paid: At 1 January 706,534 655,534 353,267 327,767 Shares issued through a private placement - 51,000 - 25,500 Shares issued under the Keppel Land Share Option Scheme 1,780 - 890 - Shares issued upon exercise of Keppel Land Warrants 2000 65 - 33 - At 31 December 708,379 706,534 354,190 353,267
During the year, the Company issued the following shares:
(a) 745,000 shares and 1,035,000 shares at $1.58 per share and $0.56 per share respectively to certain full time employees on exercise of options under the Keppel Land Share Option Scheme.
(b) 64,919 shares at $3.00 per share to holders of Keppel Land Warrants 2000 on exercise under the terms of the issue.
At 31 December 2000, there were options granted to certain employees to take up 8,208,000 unissued shares in the Company. Except under certain circumstances, an option may be exercised after two years from the date of grant but not later than the expiry date. The shares under option may be exercised in full or in respect of 100 shares or a multiple thereof on the payment of the subscription price. The full-time employees to whom the options have been granted do not have the right to participate by virtue of the options in a share issue of any other company.
The subscription prices are $4.53 per share for 375,000 shares, $4.67 per share for 400,000 shares, $4.16 per share for 781,000 shares, $3.86 per share for 795,000 shares, $1.58 per share for 361,000 shares, $0.56 per share for 547,000 shares, $1.71 per share for 541,000 shares, $2.48 per share for 1,290,000 shares, $1.87 per share for 1,341,000 shares and $2.47 for 1,777,000 shares.
11. Share Premium Group and Company 2000 1999 $’000 $’000
At 1 January 810,903 678,945 Premium on shares issued: Under private placement less expenses - 131,958 Under Keppel Land Share Option Scheme 867 - On exercise of warrants by holders of Keppel Land Warrants 2000 162 - At 31 December 811,932 810,903
Statutory Report and Accounts 134 12. Capital Reserves Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
At 1 January 830,793 815,538 737,882 694,007 Net surplus on revaluation of investment properties and fixed assets 8,650 16,978 - 4,540 Goodwill arising on consolidation - (843) - - Net surplus on revaluation of subsidiary and associated companies - - 51,100 71,697 Realised asset revaluation surplus transferred to profit and loss account (4,029) - 2,826 (32,362) Adjustment arising from change in Group structure 204 1,472 - - Transfer from / (to) revenue reserves 71,086 (2,352) - - At 31 December 906,704 830,793 791,808 737,882
Representing: Statutory reserves 3,993 3,993 - - Bond premium 4,057 4,057 4,057 4,057 Goodwill arising on consolidation - (71,086) - - Asset revaluation and other reserves 898,654 893,829 787,751 733,825 906,704 830,793 791,808 737,882
None of the above capital reserves is free for distribution as dividends.
13. Foreign Currency Translation Account Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
At 1 January (116,570) (123,175) (41,966) (39,085) Exchange differences arising on consolidation (4,312) 10,095 - - Exchange differences on foreign currency borrowings (13,162) (2,881) (13,162) (2,881) Transfer from revenue reserves 16 601 - - Adjustment arising from change in Group structure (90) (1,210) - - At 31 December (134,118) (116,570) (55,128) (41,966)
Statutory Report and Accounts 135 Notes to the Accounts (continued)
14. Revenue Reserves Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
At 1 January 272,159 134,734 290,466 172,175 Profit for the year 120,618 152,263 62,878 134,082 Adjustment arising from change in Group structure (4,237) (798) - - Transfer from / (to) capital reserves (71,086) 2,352 - - Transfer to exchange translation reserves (16) (601) - - Dividend (16,050) (15,791) (16,050) (15,791) At 31 December 301,388 272,159 337,294 290,466
Retained in: Company 337,294 290,466 337,294 290,466 Subsidiary companies (41,719) (32,296) - - Associated companies 5,813 13,989 - - 301,388 272,159 337,294 290,466
Revenue reserves are retentions of distributable profits. However, based on estimated tax-exempt shipping profits and tax credits available in Singapore and Malaysia, and the prevailing tax rates applicable to dividends, reserves of the Company amounting to $152,267,000 (1999: $80,716,000) are available for distribution as dividends without incurring additional tax liability.
15. Tax Losses and Capital Allowances Carried Forward
Subject to Sections 23 and 37 of the Income Tax Act, Cap 134, the Group has certain unutilised tax losses of $62,231,000 (1999: $54,473,000) and capital allowances of $37,637,000 (1999: $56,492,000) at 31 December 2000 for which related tax benefits totalling $26,925,000 (1999: $31,166,000) have not been included in the accounts.
16. Long-term Borrowings Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Bonds due 2005, secured 180,000 - - - Bonds 4 15/16 % due 2001, unsecured (see also Note 30) - 200,000 - 200,000 180,000 200,000 - 200,000
Floating Rate Notes, unsecured: Due 2001 (see also Note 30) - 236,000 - 236,000 Due 2002 112,000 100,500 112,000 100,500 112,000 336,500 112,000 336,500
Bank borrowings: Secured (see also Note 30) - 250,000 - - Unsecured 204,095 363,782 150,000 296,960 204,095 613,782 150,000 296,960
Loans from related companies, unsecured 871,374 323,115 831,623 284,912 1,367,469 1,473,397 1,093,623 1,118,372 Statutory Report and Accounts 136 In 1996, the Company entered into two series of agreements relating to $300,000,000 Floating Rate Notes due 2001 and $200,000,000 Floating Rate Notes Due 2002 (“Notes”). The Notes are unsecured and issued in tranches, and will mature five years from the respective dates of issue. Interest payable is based on money market rates ranging from 2.44% to 4.75% (1999: 2% to 6.75%).
The Group’s secured bonds due 2005 bear interest at a fixed rate of 5%. The security is a mortgage of property held by a subsidiary company.
The Group’s secured bank borrowings bear interest at rates ranging from 4.69% to 4.81% (1999: 4.69%) per annum. The security is a mortgage of property held by a subsidiary company.
Interest on the Group’s unsecured bank borrowings is payable at rates ranging from 4.5% to 10% (1999: 4.5% to 10%) per annum.
The above long-term borrowings are repayable between two to five years. Borrowings repayable within one year are shown under current liabilities.
Loans from related companies have no fixed terms of repayment and are not expected to be repaid over the next 12 months. Interest is payable at rates ranging from 2.5% to 7.98% (1999: 1.88% to 6%) per annum.
Bonds 2000 - Alternative accounting treatment :
In Singapore, the generally accepted accounting treatment for an issue of bonds with warrants is to record the bonds at their principal value. However, under International Accounting Standard (“IAS”) 32, the proceeds of a bonds with warrants issue are allocated separately between the value of the bonds and the value of the warrants. The discount on the value of the bonds is amortised to maturity, and charged to the profit and loss account.
If the Company had adopted the alternative accounting treatment under IAS 32, the effects in relation to the Bonds 2000 for the year ended 31 December 2000 would have been as follows:
Group and Company 2000 1999 Profit and loss account: $’000 $’000
Reduction in profit before taxation representing bond discount amortised 24,613 23,194
Balance sheet: Increase in capital reserves representing value of warrants, net of issue expenses 109,684 109,684 Reduction in retained earnings representing cumulative bond discount amortised (109,684) (85,656) Increase in reserves - 24,028
Bonds 2000 Present value on initial recognition 423,316 423,316 Cumulative bond discount amortised 109,684 85,656 533,000 508,972 Redemption on maturity (533,000) - Present value at year-end - 508,972
Statutory Report and Accounts 137 Notes to the Accounts (continued)
17. Fixed Assets
Land and Buildings Machinery, Long Equipment Freehold Lease & Vehicles Total $’000 $’000 $’000 $’000 GROUP Cost or Valuation At 1 January 2000 Valuation 1999 10,085 - - 10,085 Cost 156 143,491 79,458 223,105 10,241 143,491 79,458 233,190 Additions - 9,190 653 9,843 Transfer from development properties - 59,851 31,716 91,567 Disposals - - (975) (975) Assets of subsidiaries acquired 1,686 - 96 1,782 Revaluation surplus 227 - - 227 Reclassification - (16,729) 16,729 - Exchange differences arising on consolidation (2,033) 3,891 1,128 2,986 At 31 December 2000 10,121 199,694 128,805 338,620
Representing: Valuation 2000 8,279 - - 8,279 Cost 1,842 199,694 128,805 330,341 10,121 199,694 128,805 338,620
Land and Buildings Machinery, Long Equipment Freehold Lease & Vehicles Total $’000 $’000 $’000 $’000 Depreciation At 1 January 2000 57 - 39,600 39,657 Depreciation for the year 651 4,077 12,007 16,735 Disposals - - (711) (711) Exchange differences arising on consolidation (31) 12 417 398 Adjustments - - 5,104 5,104 At 31 December 2000 677 4,089 56,417 61,183
Depreciation for 1999 5 - 6,699 6,704
Net Book Value At 31 December 2000 9,444 195,605 72,388 277,437 At 1 January 2000 10,184 143,491 39,858 193,533
As at 31 December 2000, the net book value of assets which had been revalued, if based on cost, would be $33,523,000 (1999: $37,551,000).
The freehold property stated at Directors’ valuation is based on the valuation (open market value basis) by Herron Todd White, an independent firm of professional valuers as at 31 December 2000. The valuation surplus has been taken direct to capital reserves.
Statutory Report and Accounts 138 Freehold Land and Buildings $’000 COMPANY Cost At 1 January 2000 and at 31 December 2000 156
Depreciation At 1 January 2000 57 Depreciation for the year 6 At 31 December 2000 63
Depreciation for 1999 5
Net Book Value At 31 December 2000 93 At 1 January 2000 99
18. Investment Properties Group Company Land and Buildings Freehold Long Land and Freehold Lease Total Building $’000 $’000 $’000 $’000 At valuation At 1 January 2000 682,730 1,908,036 2,590,766 39,700 Additions 902 91,708 92,610 - Assets of subsidiary acquired 13,816 - 13,816 - Revaluation surplus / (deficit) 858 (389) 469 - Exchange differences arising on consolidation (654) (1,547) (2,201) - At 31 December 2000 697,652 1,997,808 2,695,460 39,700
The Group’s investment properties (including integral plant and machinery) are stated at Directors’ valuation based on the following valuations (open market value basis) by independent firms of professional valuers as at 31 December 2000:
(a) Knight Frank Pte Ltd for properties in Singapore;
(b) First Pacific Davies (Singapore) Pte Ltd and Jones Lang LaSalle Ltd for properties in Vietnam.
Based on these valuations, the Group’s share of net surplus over their book value amounted to $40,900,000 and has not been taken up in the accounts.
The Company’s properties are stated at Directors’ valuation based on the valuation by Knight Frank Pte Ltd as at 31 December 1999. In January 2001, the Company entered into a sale and purchase agreement for the sale of its freehold land and building to a subsidiary company for $51.5 million.
Properties amounting to $1,140,000,000 (1999: $1,203,460,000) in value and included in the above balances are jointly mortgaged to banks as securities for borrowings referred to in Notes 16, 26 and 30.
Statutory Report and Accounts 139 Notes to the Accounts (continued)
19. Properties Held for Development Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000 Properties held for development comprise: Land cost 1,487,557 1,617,948 - - Development cost incurred todate 246,269 504,157 - - Related overhead expenditure 157,310 223,338 - - Development profit 8,717 67,643 - - Progress billings received (26,878) (254,414) - - Provisions (326,356) (438,233) - - 1,546,619 1,720,439 - -
Interest capitalised during the year was $66,643,000 (1999: $69,250,000) at rates ranging from 4.25% to 8.44% (1999: 3.95% to 7.78%).
Properties amounting to $43,720,000 (1999: $126,749,000) in value and included in the above balances are jointly mortgaged to banks as securities for borrowings referred to in Note 30.
Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000 Analysis of provisions: At 1 January (438,233) (438,233) - - Provisions utilised 142,974 - - - New subsidiary companies (31,097) - - -
At 31 December (326,356) (438,233) - -
20. Subsidiary Companies Company 2000 1999 $’000 $’000
Unquoted shares, at Directors’ valuation 1,862,265 1,770,614 Advances to subsidiary companies (Non-trade) 1,913,805 1,990,179 3,776,070 3,760,793 Less: Advances from subsidiary companies (Non-trade) (192,683)) (281,864) 3,583,387 3,478,929
The advances to and from subsidiary companies are unsecured and have no fixed terms of repayment. Interest-bearing advances to and from subsidiary companies are charged at rates ranging from 4.5% to 8.75% (1999: 5.45% to 6%) per annum.
The Company’s investment in its subsidiary companies is stated at the attributable share of their combined net asset value. The revaluation surplus for the year amounting to $38,628,000 (1999: $29,964,000) is taken direct to capital reserves.
Statutory Report and Accounts 140 21. Associated Companies Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
At Directors’ valuation - - 307,959 242,330 At cost 292,826 231,485 - - Share of post-acquisition retained revenue reserves (Distributable) 5,813 13,989 - - Capital and other reserves (Non-distributable) 60,411 54,095 - - Investment in associated companies (See note below) 359,050 299,569 307,959 242,330 Advances to associated companies (Non-trade) 163,216 167,614 60,233 68,507 Advances from associated companies (Non-trade) (3,564) (2,713) (1,753) (1,753) 518,702 464,470 366,439 309,084
Investment in associated companies is represented by: Quoted shares (Market value $5,565,000; 1999: $14,762,000) 33,443 34,234 33,443 34,234 Unquoted shares 325,607 265,335 274,516 208,096 359,050 299,569 307,959 242,330
The advances to and from associated companies are unsecured, have no fixed terms of repayment and are not expected to be repaid during the next 12 months. Interest is charged at rates ranging from 2.85% to 3.73 % (1999: 2.5% to 3.62%) per annum on interest-bearing advances to associated companies.
The Company’s and the Group’s investments in associated companies are stated at the attributable share of their combined net asset value. The revaluation surplus for the Company for the year of $12,472,000 (1999: $41,733,000) is taken direct to capital reserves.
Details of the Group’s share of the sales, profits less losses, and retained revenue reserves of associated companies are as follows: Group 2000 1999 $’000 $’000
Sales 97,610 100,445
Profit before taxation 10,436 20,672 Taxation (5,334) (3,071) Profit after taxation 5,102 17,601
Retained revenue reserves: At 1 January 13,989 32,649 Profit for the year 5,102 17,601 Dividends (1,085) (2,501) Adjustment arising from change in Group structure - (35,685) Transfer from / (to) capital reserves (12,193) 2,352 Transfer to exchange reserves - (427) At 31 December 5,813 13,989
Statutory Report and Accounts 141 Notes to the Accounts (continued)
By industry, the Group’s share of associated companies’ pre-tax profit / (loss) and net assets is as follows:
Group’s Share of Group’s Share Profit / (Loss) before Taxation of Net Assets 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Property 11,660 10,201 341,955 277,157 Non-property (1,224) 10,471 17,095 22,412 10,436 20,672 359,050 299,569
22. Other Investments Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Quoted shares in corporations, at cost 38,705 2,692 - - Unquoted shares in corporations, at cost less provision $5,168,000 (1999: $5,168,000) 119,875 102,401 2,120 2,120 Convertible loan stock 2,000 2,000 2,000 2,000 160,580 107,093 4,120 4,120
Market value of quoted investments 44,575 18,375 - -
23. Stocks Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Work-in-progress - 560 - - Spare parts and consumable stores 3,641 1,831 - - 3,641 2,391 - -
In 1999, work-in-progress is stated after deducting progress claims of $13,392,000. Provision for stock obsolescence as at 31 December 2000 was $822,000 (1999: Nil).
24. Trade Debtors Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Trade debtors are stated after providing for doubtful debts of 1,532 1,635 - -
Analysis of provision for doubtful debts: At 1 January 1,635 156 - - Provision during the year - 1,487 - - Provision written back (75) (8) - - Currency alignment (28) - - - At 31 December 1,532 1,635 - -
Statutory Report and Accounts 142 25. Other Debtors Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Prepaid project costs and prepayments 2,471 769 644 216 Deposits paid 1,322 1,775 - - Staff loans 1,035 723 - - Advances to corporations in which the Group has investment interests 39,969 40,024 6,769 6,769 Advances to minority shareholders of subsidiary companies 47,241 89,219 - - Other debtor 13,637 13,913 - 13,913 Deferred expenditure * 15,490 11,738 - 2,826 Other recoverable amounts 14,617 13,972 2,858 2,086 135,782 172,133 10,271 25,810 Less: Provision (6,927) (6,927) (6,869) (6,869) 128,855 165,206 3,402 18,941
Advances to corporations are unsecured and have no fixed terms of repayment. Interest is charged at rates ranging from 7.19% to 7.94% (1999: 6.06% to 7%) per annum on interest-bearing advances.
Advances to minority shareholders are unsecured, have no fixed terms of repayment and are interest-free.
*Deferred expenditure is analysed as follows: Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Pre-operating expenses 31,774 22,526 - - Less: accumulated amortisation (16,284) (13,614) - -
Exchange differences on unhedged long-term foreign currency borrowings 11,319 11,319 11,319 11,319 Less: accumulated amortisation (11,319) (8,493) (11,319) (8,493) 15,490 11,738 - 2,826
Statutory Report and Accounts 143 Notes to the Accounts (continued)
26. Amounts Owing by / (to) Holding and Related Companies Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Current account (non-trade): Amount owing to holding company (397) (62) - - Amount owing by / (to) related companies (1,959) (3,604) 2,993 (4,074) (2,356) (3,666) 2,993 (4,074) Deposits and short-term borrowings: Surplus cash deposited with related companies 174,300 109,205 48,055 34,816 Advances to holding company 5,000 5,000 - - Advances to related companies 46,765 37,888 6,866 1,796 Short-term borrowings from related companies, unsecured (72,922) (198,502) - - 153,143 (46,409) 54,921 36,612
Total 150,787 (50,075) 57,914 32,538
Included in cash deposited with related companies are amounts held under Project Account Rules 1985, withdrawals from which are restricted to payment for expenditures incurred on projects 25,217 1,105 - -
Borrowings from related companies are repayable within one year, and bear interest at rates ranging from 2.5% to 7.35% (1999: 1.88% to 6%) per annum.
The immediate and ultimate holding company is Keppel Corporation Limited, incorporated in Singapore.
Related companies are subsidiary companies of Keppel Corporation Limited.
27. Fixed Deposits, Bank Balances and Cash Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000 Amounts held under Project Account Rules 1985, withdrawals from which are restricted to payment for expenditure incurred on projects 2,368 12,957 - -
28. Other Creditors Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Deposits received 28,113 31,323 75 75 Loans from minority shareholders of certain subsidiary companies 233,606 230,166 - - Interest payable 48,915 55,602 6,707 6,426 Retention monies 16,433 31,997 - - Payable on acquisition of subsidiaries 54,176 - 54,176 - Accruals 163,335 150,766 3,405 5,504 544,578 499,854 64,363 12,005
Statutory Report and Accounts 144 The loans from the minority shareholders of certain subsidiary companies are unsecured and have no fixed terms of repayment. Interest is payable at rates ranging from 4.5% to 6% (1999: 5.25% to 6%) per annum.
29. Net Tax Provision Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Provision for taxation 77,531 74,148 10,735 5,343 Income tax refund receivable (8,356) (8,238) - - 69,175 65,910 10,735 5,343
30. Short-term Borrowings Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
S$ Bonds 2000, unsecured - 250,000 - 250,000 US$ Bonds 2000, unsecured - 334,000 - 334,000 - 584,000 - 584,000 Bonds 4 15/16 % due 2001, unsecured (see Note 16) 200,000 - 200,000 - Floating rate notes, due 2001 unsecured (see Note 16) 280,250 - 280,250 -
Bank borrowings: Secured 256,306 29,597 - - Unsecured 224,926 41,541 152,205 - 481,232 71,138 152,205 -
Total 961,482 655,138 632,455 584,000
These borrowings bear interest at rates ranging from 4.11% to 8.44% (1999: 1% to 8%), are repayable within one year and are secured by mortgages of properties held by two subsidiary companies.
In December 1995, the Company issued $250 million and US$200 million principal amounts of unsecured bonds (together referred to as “Bonds 2000”) in conjunction with 149,675,796 detachable warrants (“Warrants 2000”) to subscribe for 149,675,796 new shares of $0.50 each in the Company at an exercise price of $3.00 per share. Interest on the S$ Bonds is 1% per annum and interest on the US$ Bonds is 1.25% per annum. The Bonds 2000 were redeemed at their principal amounts on 22 December 2000.
On 26 November 1996, the Company issued $200,000,000 unsecured 4 15/16 % Bonds due 2001. The Bonds are redeemable at their principal amounts on 26 November 2001 unless previously purchased by the Company and cancelled.
As at 31 December 2000, related companies held the following bonds and floating rate notes:
Bonds 4 15/16 % due 2001 $73,750,000 (1999: $75,000,000) Floating Rate Notes $ 2,000,000 (1999: Nil)
Statutory Report and Accounts 145 Notes to the Accounts (continued)
31. Sales, Profits and Assets Employed by Segment
(a) By Industry - Segment The Group operates principally in the property sector.
(b) By Geographical Location - 2000 Far East and ASEAN other than Australia Consolidated Singapore Singapore and Others Total $’000 $’000 $’000 $’000
Sales to third parties 398,611 49,846 52,035 500,492 Operating profit 160,544 6,351 1,655 168,550 Segment assets 3,983,539 844,202 91,456 4,919,197 Capital expenditure 33,036 85,015 - 118,051 Depreciation charge 1,658 14,946 131 16,735 Amortisation - 9,237 - 9,237
(c) By Geographical Location - 1999 Far East and ASEAN other than Australia Consolidated Singapore Singapore and Others Total $’000 $’000 $’000 $’000
Sales to third parties 947,614 43,436 4,931 995,981 Operating profit 151,654 4,574 886 157,114 Segment assets 4,113,511 693,026 86,729 4,893,266 Capital expenditure 425 1,580 211 2,216 Depreciation charge 1,397 5,167 140 6,704 Amortisation - 9,548 - 9,548
32. Capital Commitments Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000 (a) Estimated development costs for investment properties : (i) Contracted for 4,702 14,203 - - (ii) Not contracted for 69,356 16,649 - -
(b) Estimated development costs for properties for sale: (i) Contracted for 204,610 374,952 - - (ii) Not contracted for 265,628 153,607 - - 544,296 559,411 - -
Less: Minority shareholders’ share (15,208) (13,469) - - 529,088 545,942 - -
(c) Estimated capital subscription in associated companies 69,004 335,710 69,004 335,710
(d) Capital subscription in other corporations 43,450 5,799 43,450 5,799
Statutory Report and Accounts 146 33. Contingent Liabilities, Unsecured Group Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000 Guarantees given to financial institutions in connection with: (a) Facilities given to subsidiary companies - - 50,919 51,157 (b) Facilities given to associated companies 328,546 27,590 321,534 20,791 (c) Facilities given to corporations in which the Group has long-term investments 121,817 117,839 121,817 117,839
No material losses under these unsecured guarantees are expected.
34. Significant Related Party Transactions (a) The following are the significant inter-company transactions entered into by the Company with:
2000 2000 1999 1999
Holding Holding Company Company and Fellow Subsidiary and Fellow Subsidiary Subsidiaries Companies Subsidiaries Companies $’000 $’000 $’000 $’000
Interest income 2,928 78,700 2,031 61,833 Interest expense (24,301) - (17,786) -
(b) Significant inter-company transactions entered into by the Group with the holding company, fellow subsidiaries and related parties are as follows:
2000 1999 $’000 $’000
Interest income 6,051 3,878 Interest expense (39,355) (40,121) Management fees paid (1,324) (1,431) Rent income 9,105 9,109 Project management fees received 1,406 540 Property management fees received 65 65 Marketing commission received 3,059 115
35. Regional Investments The Group’s investments in the region particularly Indonesia have been written down vide year-end translation of foreign currencies. These countries are still experiencing economic uncertainties. The year- end valuations of the Group’s assets are based on conditions prevailing and information available at the date of these financial statements.
36. Comparative Figures Certain comparative figures have been reclassified to conform with this year’s presentation.
Statutory Report and Accounts 147 Notes to the Accounts (continued)
37. Group Companies Information relating to the subsidiary companies consolidated in these accounts and to the associated companies whose results are included in the accounts is given on the following eight pages.
The accounts of the Company and the consolidated accounts of the Group are expressed in Singapore dollars.
38. Post Balance Sheet Date Events (a) On 13 March 2001, the Company announced that it had, together with two consortium partners, submitted a tender to the Urban Redevelopment Authority (“URA”) for the purchase of a land parcel located at Raffles Quay / Marina Boulevard, Singapore. The Company has a one-third share in the consortium, and the price tendered was $461.8 million. The tender was accepted by URA on 16 March 2001.
(b) On 17 March 2001, the Company announced that it had signed a conditional agreement with Dragon Land Limited (“DLL”) for the subscription of 117,598,000 shares of $0.10 each amounting to 24.9% of DLL’s enlarged share capital. The subscription price would be US$0.125 (approximately $0.22) per share and the total investment amounted to about US$15 million (approximately $26 million). This agreement is subject to, inter-alia, the approval by the shareholders of DLL, and has not been completed at the date of this report.
39. Information Required by Paragraph 7 of the Ninth Schedule of the Companies Act
Amounts Payable Amount Payable by the Company to the Company 2000 1999 2000 1999 $’000 $’000 $’000 $’000
Not later than two years 1,031,845 1,341,790 2,083,416 2,176,734
Later than two years but not more than five years 981,623 682,372 - -
Later than five years - - - - 2,013,468 2,024,162 2,083,416 2,176,734
40. Corporate Information The Company is incorporated in Singapore and is listed on the Singapore Exchange Securities Trading Limited. The address of its registered office is 230 Victoria Street #15-05, Bugis Junction Towers, Singapore 188024.
The financial statements of Keppel Land Limited for the year ended 31 December 2000 were authorised for issue in accordance with a resolution of the Directors on 23 March 2001.
The number of employees as at 31 December 2000 was 2,008.
Statutory Report and Accounts 148 Subsidiary and Associated Companies
Country of Effective Incorporation/ Equity Interest Cost of Investment Place of PROPERTY 2000 1999 2000 1999 Business Principal Activities % % $'000 $'000 Subsidiaries Acresvale Investment Pte Ltd 100 100 1 1 Singapore Property development and investment Aldrich Investment Pte Ltd 100 100 1 1 Singapore Investment holding Bintan Bay Resort Pte Ltd* 90 90 1,607 1,607 Singapore Investment holding
Bugis Junction Asset 57 100 11 - Singapore Investment holding Management Pte Ltd * Bukit Timah Hill Development Pte Ltd 100 - 67,108 - Singapore Property development (Acquired on 31.5.2000) Capital Square Pte Ltd * 70 70 101,500 101,500 Singapore Property investment Daysville Development Pte Ltd * 46 46 1 1 Singapore Investment holding Denton Investment Pte Ltd 100 100 - - Singapore Investment holding Dovesdale Development Pte Ltd 100 100 1 1 Singapore Investment holding Earnwell Pte Ltd 100 100 4 4 Singapore Property investment Evansville Investment Pte Ltd 100 - 41,938 - Singapore Property development (Acquired on 31.5.2000) Experre Pte Ltd 100 100 12,604 12,604 Singapore Investment holding Fernland Investment Pte Ltd 55 55 1,651 1,651 Singapore Investment holding Flanningan Investment Pte Ltd 100 100 8,510 8,510 Singapore Investment holding Glenville Estate Investment Pte Ltd 100 100 1 1 Singapore Investment holding Goodways Investment Pte Ltd 60 60 1,261 1,261 Singapore Investment holding Grandsdale Investment Pte Ltd 100 100 1 1 Singapore Investment holding Greenfield Development Pte Ltd 100 100 125,501 125,501 Singapore Investment holding Harvestland Development Pte Ltd 100 100 1 1 Singapore Property development and investment High Point Development Pte Ltd 100 100 121 121 Singapore Investment holding Hillsvale Resort Pte Ltd 100 100 1 1 Singapore/ Property investment China Hospitality Sales Pte Ltd 100 100 1 1 Singapore Hotel and resort management Hotel Procurement Pte Ltd 100 100 11 11 Singapore Hotel services KeplandeHub Limited 100 100 1 1 Singapore Investment holding (Previously known as Yang Zong Hai Resorts Pte Ltd) Keppel Digihub Pte Ltd * 100 100 1 1 Singapore Investment, (Previously known as management and Keppel Land (Malaysia) Pte Ltd) holding company Keppel Digihub (Singapore) Pte Ltd * 100 100 1,000 1 Singapore Property investment (Previously known as Keppel Land Development Pte Ltd)
Statutory Report and Accounts 149 Subsidiary and Associated Companies (continued)
Country of Effective Incorporation/ Equity Interest Cost of Investment Place of PROPERTY 2000 1999 2000 1999 Business Principal Activities % % $'000 $'000 Subsidiaries Keppel Land Construction 100 100 101 101 Singapore Recruitment of Management Pte Ltd site staff Keppel Land Estate Pte Ltd 100 100 1 1 Singapore Investment holding Keppel Land International Limited 100 100 30,028 30,028 Singapore Property services Keppel Land Investment Pte Ltd 100 100 1 1 Singapore Investment holding Keppel Land Properties Pte Ltd 100 100 205,509 205,509 Singapore Investment holding Keppel Land Realty Pte Ltd 100 100 1,006 1,006 Singapore Property development and investment Keppel Land (Mayfair) Pte Ltd* 100 100 1,000 1,000 Singapore Property development Keppel Land (Palm Gardens) Pte Ltd* 100 100 1,000 1,000 Singapore Property development Keppel Land (Villa Verde) Pte Ltd * 100 100 1,000 1,000 Singapore Property development Keppel Land (Tower D) Pte Ltd* 100 100 139,000 139,000 Singapore Property development and investment Keppel Land (China) Pte Ltd - 100 - 1 Singapore Investment, (Sold on 10.4.2000) management and holding company Keppel Land (Indonesia) Pte Ltd 100 100 1 1 Singapore Investment, management and holding company Keppel Land (Myanmar) Pte Ltd - 100 - 1 Singapore Investment, (Sold on 29.3.2000) management and holding company Keppel Land (Philippines) Pte Ltd 100 100 1 1 Singapore Investment, management and holding company Keppel Land (Vietnam) Pte Ltd - 100 - 1 Singapore Investment, (Sold on 1.6.2000) management and holding company Kingsley Investment Pte Ltd 100 100 - - Singapore Investment holding Mansfield Developments Pte Ltd 100 100 2,336 2,336 Singapore Property development Mansfield Realty Limited 100 100 1,198 1,198 Singapore Property investment Meadowsville Investment Pte Ltd 100 100 54,001 54,001 Singapore Investment holding Merryfield Investment Pte Ltd 100 100 1 1 Singapore Investment holding Montfort Development Pte Ltd 100 100 28,101 28,101 Singapore Investment holding Ocean & Capital Properties Pte Ltd 85 85 18,037 18,037 Singapore Property development Ocean Properties Pte Ltd* 76 76 406,780 406,780 Singapore Property investment Oceandale Investment Pte Ltd 100 100 1 1 Singapore Management and consultancy services Palmsville Investment Pte Ltd 84 84 85 85 Singapore Investment holding Pasir Panjang Realty Pte Ltd 100 100 9,170 9,170 Singapore Property investment Prestige Landmark Pte Ltd 51 51 510 510 Singapore Investment holding Rosedale Properties Pte Ltd 70 70 1,051 1,051 Singapore Investment holding
Statutory Report and Accounts 150 Country of Effective Incorporation/ Equity Interest Cost of Investment Place of PROPERTY 2000 1999 2000 1999 Business Principal Activities % % $'000 $'000 Subsidiaries Saigon Centre Holdings Pte Ltd 100 100 63,101 63,101 Singapore Investment holding Sedona Clubs and Resorts 100 100 1 1 Singapore Club management International Pte Ltd Sedona Hotels International Pte Ltd 100 100 101 101 Singapore Hotel and resort management Semtec Construction Pte Ltd 63 63 316 316 Singapore Building retrofitting and construction Sherwood Development Pte Ltd 100 100 1,505 1,505 Singapore Property development Silkland Investment Pte Ltd 100 100 10,900 10,900 Singapore Investment holding Spring City Resort Pte Ltd 100 100 39,101 39,101 Singapore Investment holding Starville Investment Pte Ltd* 70 70 1,000 1,000 Singapore/ Property investment Australia Steadfast Development Pte Ltd* 36 36 2,110 2,110 Singapore Property development Straits Mansfield Property 100 100 12 12 Singapore Provision of marketing Marketing Pte Ltd services Straits Properties Limited 100 100 74,492 74,492 Singapore Investment, holding and property management Straits Property Investments Pte Ltd 100 100 200,136 200,136 Singapore Investment holding Straits Property Management Pte Ltd 100 100 28 28 Singapore Property management and estate agency services Straits Steamship Retail 100 100 101 101 Singapore Management of retail Management Pte Ltd centres Straits-CM Village Hotel Pte Ltd* 39 39 2 2 Singapore Property investment Straits-KMP Resort Development 46 46 1,786 1,786 Singapore Investment holding Pte Ltd* Sunlake Development Pte Ltd 100 100 13,101 13,101 Singapore Investment holding Swansville Investment Pte Ltd 100 100 1 1 Singapore Investment holding Tat Chuan Development Pte Ltd 100 - 26,117 - Singapore Property development (Acquired on 31.5.2000) Toshmatic Pte Ltd 100 100 17,704 17,704 Singapore Investment holding Ultimore Development Pte Ltd* 100 84 1 1 Singapore Investment holding Valour Investment Pte Ltd 100 100 1 1 Singapore/ Property investment United Kingdom Virginia Developments Pte Ltd 51 51 2,602 2,602 Singapore Property investment Waterfront Properties Pte Ltd 50 50 5,852 5,852 Singapore Property development Waterville Investment Pte Ltd 100 100 1 1 Singapore Investment holding Willowville Pte Ltd* 100 100 6 6 Singapore Investment holding Wiseland Investment Pte Ltd 100 100 101 101 Singapore Investment holding Yang Zong Hai Development Pte Ltd 100 100 1 1 Singapore Investment holding Keppel Land Development Pty Ltd* 100 100 - - Australia Property development Straits Properties 100 100 - - Australia Property investment (Bayswater) Pty Ltd* Double Peak Holdings Ltd 100 100 226,330 226,330 British Virgin Investment holding Islands/ Singapore Erskine Holdings Ltd* 70 70 1 1 British Virgin Investment holding Islands/ Hong Kong Statutory Report and Accounts 151 Subsidiary and Associated Companies (continued)
Country of Effective Incorporation/ Equity Interest Cost of Investment Place of PROPERTY 2000 1999 2000 1999 Business Principal Activities % % $'000 $'000 Subsidiaries Pembury Properties Ltd* 100 100 1 1 British Virgin Investment holding Islands/ Singapore Saigon Centre Investment Ltd* 100 100 17,821 17,821 British Virgin Investment holding Islands/ Hong Kong Smooth Sail Investments Ltd* 100 - - - British Virgin Investment holding (Incorporated on 18.5.2000) Islands/ Indonesia Vanese International Ltd* 70 70 1 1 British Virgin Investment holding Islands/ Hong Kong Vobster Properties Ltd* 100 - - - British Virgin Investment holding (Incorporated on 18.1.2000) Islands/ Indonesia Keppel Land (Saigon Centre) Ltd* 100 100 6 6 Hong Kong Investment holding Straits-KMP (HK) Ltd* 51 51 - - Hong Kong Investment holding Ventek International Ltd* 100 100 1 1 Hong Kong Investment holding PT Kepland Investama* 100 - 71,080 - Indonesia Property investment / (Incorporated on 7.11.2000) development PT Kelindo Properti* 100 - 37 - Indonesia Property services (Incorporated on 7.11.2000) PT Keppel Land* 100 100 19,937 358 Indonesia Property services / development / investment PT Ria Bintan* 46 46 55,261 55,261 Indonesia Property development PT Sedona Hotels Indonesia* 100 100 1,126 1,126 Indonesia Hotel and resort management PT Sentral Supel Perkasa* 80 80 19,937 - Indonesia Property investment / development PT Sentral Tanjungan Perkasa* 80 80 48,843 48,843 Indonesia Property development PT Straits CM Village* 39 39 41,513 41,513 Indonesia Hotel ownership and operations Keppel Land Sdn. Bhd. 100 100 - - Malaysia Property services Straits Greenfield Ltd* 100 100 5,797 5,797 Myanmar Hotel ownership and operations Wiseland Investment Myanmar Ltd* 100 100 3,292 3,292 Myanmar Hotel ownership and operations Five Stars Property Public Co Limited 45 - 14,208 - Thailand Property development / (Acquired on 14.3.2000) investment Utayan Thani Co Ltd*(Incorporated 49 - 6 - Thailand Investment holding on 27.1.2000) Straits (USA) Inc 100 100 10,555 10,555 United States Investment holding of America Straits Realty (Texas) Inc* 100 100 8,890 8,890 United States Investment holding of America International Centre* 43 41 8,307 8,014 Vietnam Property investment (Previously known as Centre for International Transactions)
Statutory Report and Accounts 152 Country of Effective Incorporation/ Equity Interest Cost of Investment Place of PROPERTY 2000 1999 2000 1999 Business Principal Activities % % $'000 $'000 Subsidiaries Keppel Land Watco I Co Ltd* 68 68 38,977 38,977 Vietnam Property investment / (Previously known as development FPSL Watco Co Ltd) Keppel Land Agtex Ltd* 60 60 5,169 5,169 Vietnam Property investment Quang Ba Royal Park JV Co* 59 59 34,902 34,902 Vietnam Property investment
Associates Asia Real Estate Fund 50 50 500 - Singapore Fund management Management Limited* Atlantic Marina Services 20 20 1,680 1,680 Singapore Property investment (Asia Pacific) Pte Ltd Bugis City Holdings Pte Ltd 31 31 55,304 55,304 Singapore Property investment China-Singapore International Pte Ltd 20 20 4,001 4,001 Singapore Investment holding DL Properties Ltd 35 35 31,832 31,832 Singapore Property investment EM Services Pte Ltd 25 25 500 500 Singapore Property management FELS SES International Pte Ltd 17 17 1,470 1,470 Singapore Investment holding Keppel Bay Pte Ltd 30 100 1,476 4,921 Singapore Property development (Previously known as Holland Realty Pte Ltd) (Interest 100% up to 26.3.2000) Keppel Marina Holdings Pte Ltd 30 30 4,404 1,614 Singapore Development of marina Keppel Point Pte Ltd 30 - 52,622 - Singapore Property development / (Acquired on 27.3.2000) investment Kingsdale Development Pte Ltd* 50 50 7 7 Singapore Investment holding Parksville Development Pte Ltd* 50 50 10,500 10,500 Singapore Property investment Sedona Hotel Bintan 49 49 25 25 Singapore / Hotel management Management Pte Ltd* Indonesia Semtec-Syntech Pte Ltd* 32 32 50 50 Singapore Construction Sing-Mas Investment Pte Ltd* 30 30 10,804 10,804 Singapore Investment holding Singapore Suzhou Industrial 25 25 12,026 12,026 Singapore Investment holding Holdings Pte Ltd* Straits Parco Retail 33 33 330 330 Singapore Investment holding Management Pte Ltd* Suzhou Property Development Pte Ltd* 25 25 250 250 Singapore Investment holding Keppel Kunming Resort Ltd 15 15 - - Hong Kong Property investment PT Pantai Indah Tateli* 50 50 28,235 28,235 Indonesia Property development PT Pulomas Gemala Misori* 25 25 8,024 8,024 Indonesia Property development PT Purimas Straits Resort* 25 25 4,245 4,245 Indonesia Development of holiday resort PT Purosani Sri Persada* 20 20 6,013 6,013 Indonesia Property investment Jernih Rezeki Sdn Bhd* 49 49 1,396 1,396 Malaysia Property development Renown Property Holdings 40 40 4,219 4,219 Malaysia Property investment (M) Sdn Bhd Tropical Garden NV* 25 25 13 13 Netherlands Investment holding Antilles Keppel Philippines Properties Inc. 48 48 15,915 15,648 Philippines Investment holding Keppel Houston Group Partnership* 30 30 10,937 10,937 United States Property investment of America
Statutory Report and Accounts 153 Subsidiary and Associated Companies (continued)
Country of Effective Incorporation/ Equity Interest Cost of Investment Place of OTHER ACTIVITIES 2000 1999 2000 1999 Business Principal Activities % % $'000 $'000 Subsidiaries Health Services Investment 100 100 1,350 1,350 Singapore Investment holding of Singapore Pte Ltd* Health Services Management 100 100 45 45 Singapore Health services of Singapore Pte Ltd* management OIL (Asia) Pte Ltd 100 100 89,931 89,931 Singapore Financial services Astek Pty Ltd 100 100 12,477 12,477 Australia Financial services Keppel Land Pty Ltd 100 100 - - Australia Investment holding Kep Corporation Incorporated* 100 100 1,089 1,089 Cayman Financial services Islands Duit Investments Ltd* 100 100 644 644 Hong Kong Financial services Keppel Land (Hong Kong) Ltd 100 100 11,342 11,342 Hong Kong Investment holding Straits Investments Ltd* 100 100 1,365 1,365 Hong Kong Investment holding
Associates Keppel Power Systems Pte Ltd 15 15 1,782 1,782 Singapore Investment holding SAFE Enterprises Pte Ltd 25 25 21,971 21,971 Singapore Investment holding
Statutory Report and Accounts 154 Country of Effective Incorporation/ Equity Interest Cost of Investment Place of INACTIVE COMPANIES 2000 1999 2000 1999 Business % % $'000 $'000 Subsidiaries Fairfield Properties Pte Ltd* 82 82 5,346 5,346 Singapore Floraville Estate Pte Ltd 100 100 1 1 Singapore IPP Technology Pte Ltd * 100 100 571 571 Singapore (Previously known as Island Cruises Pte Ltd) Keppel Land Asia Pte Ltd 100 100 1 1 Singapore Keppel Land (UK) Pte Ltd 100 100 1 1 Singapore Mansfield & Company Pte Ltd 100 100 30,000 30,000 Singapore Mansfield Investments Pte Ltd* 100 100 100 100 Singapore Transport and Storage Pte Ltd 90 90 - - Singapore Pride Properties Sdn Bhd 100 100 - - Malaysia Wellmade Land Sdn Bhd 100 100 - - Malaysia QAF-OIL (Hong Kong) Ltd 51 51 1,807 1,807 Hong Kong
Associates Hotforge Energy Services Pte Ltd 50 50 - - Singapore Straits-TCG Systems 50 50 10 10 Singapore Automation Pte Ltd* Malaysian Mokes Sdn Bhd* 49 49 45 45 Malaysia Pernas OIL (Sabah) Sdn Bhd* - 35 - 177 Malaysia (Liquidated) QAF-OIL (Thailand) Ltd* 24 24 338 338 Thailand
Statutory Report and Accounts 155 Subsidiary and Associated Companies (continued)
Notes:
1. The holding in the equity shown for each subsidiary and associated company is the proportion attributable to Keppel Land Limited. Changes in interest, if any, and subsidiary and associated companies acquired or disposed of during the year are as indicated in brackets against the companies concerned. Subsidiaries (including their subsidiaries and associated companies) and associated companies directly owned by Keppel Land Limited are included in the above list.
2. Associated companies are those in which the Group has a long-term substantial equity interest and in whose commercial and financial policy decisions the Group actively participates.
3. The cost of investment in each subsidiary/associated company is the proportion of the historical cost of its shares attributable to Keppel Land Limited. Companies indicated with an asterisk (*) are indirectly held by Keppel Land Limited.
4. All the active companies operate in their respective countries of incorporation, unless otherwise specified.
5. Subsidiaries incorporated outside Singapore are audited by associated firms of Ernst & Young, Singapore, except for:
(a) Straits (USA) Inc, Straits Realty (Texas) Inc, and Straits-KMP (HK) Ltd which are audited by Ernst & Young, Singapore;
(b) Keppel Land (Hong Kong) Ltd, Straits Investments Ltd and QAF-OIL (Hong Kong) Ltd which are audited by H.L. Leung & Co.;
(c) International Centre which is audited by Deloitte Vaco; and
(d) Quang Ba Royal Park JV Company Ltd and Keppel Land Agtex Ltd which are audited by KPMG Peat Marwick.
Statutory Report and Accounts 156 Corporate Governance
The Company believes in having high standards of corporate governance, and is committed to making sure that effective self-regulatory controls exist to protect the interests of its shareholders. These self-regulatory controls are set out in the Company’s Corporate Governance Manual, and include, inter alia, a Board of Directors comprising high calibre members, Board Committees, an internal audit function, a development and asset performance function, and best corporate practices in areas such as securities transactions.
Board of Directors and its Committees The Board of Directors is responsible for the corporate governance of the Company. Currently, it consists of ten members, of whom eight are non-executives. Brief details of their wide-ranging responsibilities and qualifications are set out on pages 16 and 17.
The Board meets regularly on a quarterly basis to review and approve appropriate strategic, operational and financial matters, supervise executive management and ensure that the Company’s strategies lead to enhanced shareholder wealth. Each Board member has equal responsibility to oversee the business and affairs of the Company. The Managing Director is responsible for the day-to-day operation and administration of the Company.
Three Board Committees continue to undertake specific roles. These are the Audit Committee, the Share Option Scheme Committee and the Board Committee (Delegated Powers), the last mentioned of which is delegated the responsibility of approving routine matters such as the affixation of the Company’s seal and approval of loan documentation. All other key matters, eg appointment of additional Directors, significant capital expenditures, etc are dealt with by the Board of Directors.
The Audit Committee meets four or five times a year, and discharges the following delegated functions:
(i) Reviews with external auditors their audit plan and scope of audit examination; (ii) Reviews with external and internal auditors their evaluation of the Group’s internal controls, together with management’s response; (iii) Reviews the assistance given to the external and internal auditors by the Company’s officers; (iv) Reviews the Company’s interim and annual announcements before they are submitted to the Board for approval; (v) Reviews the accounts of the Company and the Group before submission to the Board for approval, together with the report of the external auditors thereon; (vi) Recommends the appointment of external auditors; (vii) Reviews interested person transactions.
Internal Audit Function The Company’s internal audit team performs two types of audits - the traditional financial audits and the audits of other management processes. In the first type of audit, tests are conducted to verify the Group’s assets and liabilities, and also to check for compliance with the Company’s system of internal financial control. This control system comprises all the procedures which combine to give the Board of Directors reasonable assurance of:
- the maintenance of proper accounting records, and the reliability of financial information used within or published by the Group; and
- the safeguarding of the Group’s assets against unauthorised use or loss.
For management audits, areas such as productivity, information security and business strategy are covered.
Staffed by suitably qualified executives, the internal audit team has a direct access line to the Audit Committee.
Corporate Governance 157 Corporate Governance (continued)
Development and Asset Performance Audit (“DAPA”) Function The DAPA function is a quality control process in respect of design development for all the Group’s projects from commencement to completion to ensure that completed projects are consistent with project objectives and market demands. The audit is another tool for understanding the operating and financial performance of the Group’s completed properties so as to identify opportunities for improvement. In other words, DAPA seeks to safeguard the value of the Group’s assets by checking compliance with standards set internally based on customer and competitor information, and by seeking ways to exceed the standards set.
Securities Transactions The Company has issued a policy on dealings in its securities to executives within the Group, setting out guidance on such dealings and the implications of insider trading. It has adopted in full the Best Practices Guide on Dealings in Securities issued by the Singapore Exchange Securities Trading Limited.
Directors’ Remuneration
Company Number of Directors in remuneration bands: 2000 1999
$500,000 and above 1 2
$250,000 to $499,999 - -
Below $250,000 9 8
Total 10 10
Interested Person Transactions INTERESTED PERSON TRANSACTIONS UNDER SHAREHOLDERS’ MANDATE
Aggregated Transactions $’000 Property-based transactions
Keppel Corporation Limited Group 13,635
Other services and products transactions
Keppel Corporation Limited Group 1,324
Total interested person transactions 14,959
Note: All the above interested person transactions were done on normal commercial terms.
Corporate Governance 158 Corporate Information
Board of Directors Audit Committee Registered Office
LIM CHEE ONN THAI CHEE KEN 230 Victoria Street #15-05 Chairman Chairman Bugis Junction Towers Singapore 188024 KEVIN WONG KINGCHEUNG LIM LEONG GEOK Telephone: 3388111 Managing Director Facsimile: 3377168 KEVIN WONG KINGCHEUNG Website: ALAN F. C. CHOE http://www.keppelland.com.sg
LOH WING SIEW Joint Company Secretaries Auditors
CHOO CHIAU BENG CHOO CHIN TECK ERNST & YOUNG Certified Public Accountants TEO SOON HOE HO MUN PIEW Singapore Audit Partner: KWA SOON BEE NAGARAJ SIVARAM
LIM LEONG GEOK Registrar
THAI CHEE KEN KON CHOON KOOI PTE LTD 47 Hill Street #06-02 KHOR POH HWA Chinese Chamber of Commerce & Industry Building Singapore 179365 Telephone: 3363355 Facsimile: 3372197
Share Listing
The Company’s shares are listed on the Singapore Exchange Securities Trading Limited.
General
For further information about Keppel Land Limited, please contact the Secretariat at the Registered Office.
Corporate Information 159 Corporate Structure
SINGAPORE PROJECTS
SINGAPORE PROJECTS
100% Keppel Land International Limited
100% Straits Properties Ltd
100% Straits Property 76% Ocean Properties Investments Pte Ltd Pte Ltd
100% Mansfield Realty Limited
85% Ocean & Capital Properties Pte Ltd
100% Keppel Land Realty Pte Ltd
100% Sherwood Development Pte Ltd
100% Glenville Estate Investment Pte Ltd
100% Harvestland Development Pte Ltd
100% Acresvale Investment Pte Ltd
100% Bukit Timah Hill Development Pte Ltd
100% Evansville Investment Pte Ltd
100% Tat Chuan Development Pte Ltd
100% Keppel Land (Tower D) Pte Ltd Keppel Land Limited 70% Capital Square Pte Ltd
100% Keppel Land Properties 100% Keppel Land (Palm Gardens) Pte Ltd Pte Ltd
100% Keppel Land (Mayfair) Pte Ltd
100% Keppel Land (Villa Verde) Pte Ltd
100% Boulevard Development 33% One Marina Pte Ltd Boulevard Pte Ltd
100% Mansfield & Co. 100% Mansfield Investment 52% Mansfield Development Pte Ltd Pte Ltd Pte Ltd
100% Denton Investment 50% Parksville Development Pte Ltd Pte Ltd
50% Waterfront Properties 25% Steadfast Development Pte Ltd Pte Ltd
60% Goodways Investment 40% Pte Ltd
35% D.L. Properties Ltd
31% Bugis City Holdings Pte Ltd
30% Keppel Bay Pte Ltd
30% Keppel Point Pte Ltd
100% 100% 100% Keppel Digihub Keplandehub Limited Keppel Digihub Pte Ltd (Singapore) Limited
Note: This is intended to show only the principal companies involved in the Group's Singapore and overseas property projects. For a complete list of Group companies, please refer to pages 149 to 156. The Group's property projects are shown on pages 96 to 106.
Corporate Information 160 OVERSEAS PROJECTS
100% Straits Properties 100% (Bayswater) Pty Ltd Keppel Land Pty Ltd 100% Keppel Land Development Pty Ltd
100% Silkland Investments 20% Pte Ltd P.T. Purosani Sri Persada
100% Flannigan Investment 25% P.T. Pulomas Pte Ltd Gemala Misori
100% Montfort Development 50% Pte Ltd P.T. Pantai Indah Tateli
100% Meadowsville 80% P.T. Sentral Tunjungan Investment Pte Ltd Perkasa 69% P.T. Sentral Supel P.T. Keppel Land Perkasa 100% Keppel Land International Limited 100% P.T. Kepland Investama
51% Prestige Landmark 35% P.T. Purimas Pte Ltd Straits Resorts
25.5% 30% Tropical Garden NV
44% 25% SAFE Enterprises Bintan Lagoon Resort Pte Ltd Pte Ltd
100% Keppel Land 10% (Hong Kong) Ltd
30% Keppel Marina 100% Waterfront Investment 56% P.T. Nongsa Point Holdings Pte Ltd Pte Ltd Marina 85% Straits-CM Village Hotel Pte Ltd 100% 90% 51% Pembury Properties Bintan Bay Resort Straits-KMP Resort Ltd Pte Ltd Development Pte Ltd
100% P. T. Ria Bintan 100% OIL (Asia) Pte Ltd
70% 10% Avondale Properties 100% Union Charm Erskine Holdings Ltd Ltd Development Ltd Keppel Land Limited 100% Saigon Centre Investment Ltd 50% 100% 50% 68% Saigon Centre Keppel Land Keppel Land Watco I Holdings Pte Ltd (Saigon Centre) Ltd Co Ltd
55% Fernland Investment 75% Pte Ltd International Centre 84% 70% Palmsville Investment Quang Ba Royal Park Pte Ltd JV Co
100% Grandsdale Investment 100% 60% Pte Ltd Willowville Pte Ltd Keppel Land AGTEX Ltd
40% Renown Properties 45% Tanah Sutera Holdings (M) Sdn Bhd Development Sdn Bhd
100% High Point 49% Development Pte Ltd Jernih Rezeki Sdn Bhd
49% Keppel Philippines 40% SM-Keppel Straits Properties Inc Land Inc
100% Greenfield 100% Development Pte Ltd Straits Greenfield Ltd
100% Wiseland Investment 100% Wiseland Investment Pte Ltd Myanmar Ltd
45% Five Stars Property PCL
100% Merryfield Investment 99% Jingan, Shanghai Project Pte Ltd Company
100% Spring City Resort 50% Kingsdale Pte Ltd Development Pte Ltd
100% Sunlake Development 30% SING-MAS Investments 97% Shanghai Sing Pte Ltd Pte Ltd Straits Land Co Ltd
100% Valour Investments Pte Ltd
100% 100% 30% Keppel Houston Straits (USA) Inc Straits Realty (Texas) Inc Group Partnership
Corporate Information 161 Calendar of Financial Events
Announcement of interim results 1 August 2000
End of financial year 31 December 2000
Preliminary announcement of total year results 8 February 2001
Despatch of Summary Financial Report 20 April 2001
Despatch of Report to Shareholders 8 May 2001
Annual General Meeting 22 May 2001
2000 proposed final dividend Books closure dates 30 to 31 May 2001 (Both dates inclusive) Payment date 12 June 2001
End of financial year 31 December 2001
Announcement of interim results August 2001
Preliminary announcement of full year results February 2002
Annual General Meeting May 2002
Proposed final dividend payout date June 2002
Shareholder Information 162 Statistics of Shareholdings as at 31 December 2001
Authorised share capital : $500,000,000 Issued and fully paid-up capital : $354,246,540 Class of shares : Shares of 50 cents each with equal voting rights
Size of Shareholdings Number of % Number % Shareholders of Shares 1 - 1,000 3,211 31.76 2,532,156 0.36 1,001 - 10,000 5,942 58.77 23,384,433 3.30 10,001 - 1,000,000 940 9.30 38,787,907 5.47 1,000,001 and above 17 0.17 643,788,585 90.87
Total 10,110 100.00 708,493,081 100.00
Location of Shareholders Number of % Number % Shareholders of Shares Singapore 9,400 92.97 704,000,874 99.37 Malaysia 579 5.73 3,345,863 0.47 Other countries 131 1.30 1,146,344 0.16
Total 10,110 100.00 708,493,081 100.00
Twenty Largest Shareholders Number of Shares % 1. Keppel Corporation Limited 369,698,733 52.18 2. DBS Nominees Pte Ltd 59,073,510 8.34 3. Raffles Nominees Pte Ltd 39,992,355 5.64 4. Citibank Nominees Singapore Pte Ltd 36,913,355 5.21 5. HSBC (Singapore) Nominees Pte Ltd 36,786,693 5.19 6. United Overseas Bank Nominees Pte Ltd 24,706,284 3.49 7. Overseas-Chinese Bank Nominees Pte Ltd 17,004,711 2.40 8. NTUC Income Insurance Co-operative Ltd 13,376,000 1.89 9. DB Nominees (S) Pte Ltd 10,198,600 1.44 10. Keppel Finance Nominees Pte Ltd 10,029,000 1.42 11. J M Sassoon & Co (Pte) Ltd 7,554,000 1.07 12. ABN Amro Nominees Singapore Pte Ltd 7,049,241 0.99 13. Overseas Union Bank Nominees Pte Ltd 4,945,239 0.70 14. Hong Leong Enterprises Pte Ltd 1,871,000 0.26 15. Tudor Court Gallery Pte Ltd 1,764,000 0.25 16. Selat Pte Ltd 1,691,972 0.24 17. G K Goh Stockbrokers Pte Ltd 1,133,892 0.16 18. Dexia Nominees (S) Pte Ltd 944,100 0.13 19. Merrill Lynch (Singapore) Pte Ltd 922,000 0.13 20. Island Investment Company Pte Ltd 904,718 0.13
Total 646,559,403 91.26
Substantial Shareholders Number of Shares % 1. Temasek Holdings (Pte) Ltd (Deemed interest) 380,773,733 53.74 2. Keppel Corporation Limited (including holdings by subsidiary companies) 379,897,733 53.62
Shareholder Information 163 NOTICE OF ANNUAL GENERAL MEETING
ALL MEMBERS ARE CORDIALLY INVITED to attend the Annual General Meeting of the Company which will be held at 230 Victoria Street #15-05, Bugis Junction Towers, Singapore 188024 on 22 May 2001 at 10:30 a.m. to transact the following business:
AS ORDINARY BUSINESS 1. To receive and, if thought fit, adopt the Directors’ Report and Accounts for the year ended 31 December 2000 (Resolution 1). 2. To declare dividends as recommended by the Directors (Resolution 2). 3. To re-elect Mr Khor Poh Hwa, Director retiring in accordance with the Articles of Association of the Company (Resolution 3). 4. To approve Directors’ fees (Resolution 4). 5. To appoint Auditors, and to authorise Directors to fix their remuneration (Resolution 5). 6. To transact any other ordinary business of the Company.
AS SPECIAL BUSINESS 7. To consider and, if thought fit, pass the following Ordinary Resolutions: RESOLVED that: (a) pursuant to Section 161 of the Companies Act, Cap 50, the Directors be and are hereby empowered to issue shares in the Company (whether by way of bonus issue, rights issue or otherwise, and including any capitalisation pursuant to Article 136 of any sum for the time being standing to the credit of any of the Company’s reserve accounts or any sum standing to the profit and loss account or otherwise available for distribution) at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that: (i) the aggregate number of shares to be issued pursuant to this Resolution does not exceed 50% of the issued capital of the Company for the time being, and (ii) the aggregate number of shares issued other than on a pro-rata basis to existing Members does not exceed 20% of the Company’s issued share capital for the time being, such authority to continue in force until the conclusion of the next Annual General Meeting or the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier, unless previously revoked or varied at a general meeting of the Company (Resolution 6);
(b) the grant of options to Mr Kevin Wong Kingcheung to subscribe for 175,000 shares in the Company pursuant to the Keppel Land Share Option Scheme be and is hereby approved and ratified (Resolution7);
(c) approval be and is hereby given for the purposes of Chapter 9A of the Listing Manual of the Singapore Exchange Securities Trading Limited, for the Company, its subsidiaries and target associated companies (the “Group”) or any of them to enter into any of the transactions falling within the types of Interested Person Transactions, particulars of which are set out in the Company’s Circular to Members dated 10 June 1997 (“the Circular”), as amended with Members’ approval on 7 June 1999, with any party who is of the class of Interested Persons described in the Circular provided that such transactions are made on an arm’s length basis and on normal commercial terms and that the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or in the interest of the Company to give effect to this Resolution (Resolution 8); and
(d) The Directors of the Company be and are hereby authorised to make purchases from time to time of up to 10% of the issued ordinary share capital of the Company as at the date of this Resolution at any price up to but not exceeding the Maximum Price, in accordance with the “Guidelines on Share Purchases” set out in Appendix 2A of the Circular to Members dated 14 September 1999, and this mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the date on which the next Annual General Meeting of the Company is or is required by law to be held, whichever is earlier (Resolution 9).
Shareholder Information 164 NOTICE IS HEREBY GIVEN that the Register of Members of the Company will be closed from 30 to 31 May 2001 (both dates inclusive) for the preparation of dividend warrants. Duly completed transfers received by the Company up to 5:00 p.m. on 29 May 2001 will be registered before entitlements to the proposed dividend for the year ended 31 December 2000 are determined.
Directors have recommended a first and final dividend of 6% (or 3.0 cents per share) less tax at 24.5% amounting to $16 million on the existing capital (1999: 6% less tax or 3.0 cents per share less tax amounting to $15.8 million) in respect of the financial year ended 31 December 2000 for approval by Members at the Annual General Meeting to be held on 22 May 2001. The final dividend, if approved will be payable on 12 June 2001.
By Order of the Board
CHOO CHIN TECK Company Secretary
Singapore, 20 April 2001
NOTES:
1. A Member is entitled to appoint one proxy or two proxies to attend and vote in his place. A proxy need not also be a Member of the Company. A Member which is a corporation is entitled to appoint its authorised representative or proxy to vote on its behalf. Members wishing to vote by proxy at the Meeting may use the Proxy Form enclosed. To be valid, the completed Proxy Form must be lodged at the Registered Office of the Company at 230 Victoria Street #15-05, Bugis Junction Towers, Singapore 188024 not less than 48 hours before the Meeting.
2. Ordinary Resolution No. 8 under the heading of Special Business relates to the renewal of a mandate given by Members to the Company on 25 June 1997 allowing the Company and its related corporations to enter into transactions with interested persons as defined in Chapter 9A of the Listing Manual of the Singapore Exchange Securities Trading Limited, details of which are set out in a letter to Members dated 10 June 1997, as amended with Members’ approval on 7 June 1999.
3. Ordinary Resolution No. 9 under the heading of Special Business relates to the renewal of a mandate approved by Members on 5 October 1997 authorising the Company to purchase its own shares subject to and in accordance with the guidelines set out in the circular dated 14 September 1999, the Companies Act (Chapter 50) of Singapore and the rules of the Singapore Exchange Securities Trading Limited.
Shareholder Information 165 Share Transaction Statistics
Share Prices and Turnover Turnover (million) Share Prices (Dollar) 400 8
350 7
300 6
250 5
200 4
150 3
100 2
50 1
0 0 1996 1997 1998 1999 2000 2001
Turnover High and Low Prices
Straits Times and Straits Times Properties Indices Indices Index 3000 3000
2500 2500
2000 2000
1500 1500
1000 1000
500 500
0 0 1996 1997 1998 1999 2000 2001
Straits Times Index Straits Times Properties Index
Investor Data
1996 1997 1998 1999 2000
Earnings per share (cents) (Note 1) 16.8 16.7 (53.5) 11.8 17.1 Dividend per share (cents) (Note 2) 4 4 3 3 3 Share price (cents) (Note 3) Highest 540 530 254 350 287 Lowest 404 207 46 142 151 Average 472 369 150 246 219 Last done 448 232 179 273 279 Turnover (million shares) 221.1 280.7 1,367.2 651.5 368.3 Dividend yield (%) (Note 4) 0.8 1.1 2.0 1.2 1.4 Net price-earnings ratio (Note 4) 28.1 22.1 N.A. 20.8 12.8 Net tangible assets per share ($) 4.66 4.32 2.80 3.04 3.16
Notes 1 Earnings are Group profits / (loss) after tax before extraordinary items. 2 These are gross dividends declared out of taxed profits. 3 Share prices reflect transactions recorded on the Singapore Exchange Securities Trading Limited. 4 In calculating dividend yields and net price-earnings ratios, the average share prices have been used.
Shareholder Information 166