Annual Report 2002
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Front cover 4/14/03 6:37 PM Page 1 Annual Report 2002 Building a Lasting and Profitable Company IFC-P1-ok 4/14/03 6:39 PM Page 1 Our Mission Profile To build a world-class property company CapitaLand is one of the largest listed property companies in Asia. with international presence that: Headquartered in Singapore, the multinational company’s core businesses in • creates sustainable shareholder value residential, commercial and industrial property and property-related services, • delivers quality products and services such as property funds and real estate financial products, are focused in selected • attracts and develops quality human capital gateway cities in China, Australia and the UK. In these countries, CapitaLand is in partnership with reputable local players and has established a management team that understands the market, business practices and socio-economic factors. The Company’s hospitality businesses, in hotels and serviced residences, span more than 50 cities around the world. CapitaLand also leverages on its significant real estate asset base and market knowledge to develop fee-based products and services in Singapore and the region. Contents 01 Profile 20 Residential 45 Statutory Accounts 02 Corporate Directory 23 Serviced Residences 160 Financial Calendar 03 Letter to Shareholders 26 Hotels 161 Corporate Governance 06 Board of Directors 28 Property Services 169 Additional Information 07 Directors’ Profile 30 Portfolio Details 173 Shareholding Statistics 10 Year in Brief 34 Portfolio Analysis 175 Notice of Annual General Meeting 13 Corporate Office 35 Performance Review 186 Notes to Proxy Form 14 Group Structure 41 Economic Value Added Statements 187 Proxy Form 15 Council of CEOs 42 Value Added Statements 16 Commercial and Financial 43 5-Year Financial Summary 01 CAPITALAND AR02 CL AR pages (proof2)1-25.OK 4/14/03 7:47 PM Page 2 Corporate Directory Letter to Shareholders Board of Directors Executive Resource and Registrar Dear Shareholders Philip Yeo Liat Kok Compensation Committee Lim Associates (Pte) Ltd Two years after the merger, and managing in the midst of very Similarly, the CapitaLand-owned and managed Singapore retail Chairman Peter Seah Lim Huat 10 Collyer Quay difficult market conditions, we are pleased to announce that we malls enjoyed 96% occupancy, as compared to the market Hsuan Owyang #19-08 Ocean Building achieved a profit before tax of S$484 million, and profit after tax average of 90%. Hsuan Owyang Sir Alan Cockshaw Singapore 049315 and minority interests (PATMI) of S$290 million. The Group Deputy Chairman Lim Chin Beng Tel: (65) 6536 5355 generated healthy net cash flow from operations, in excess of For our residential property business, we operated with focused Jackson Peter Tai Fax: (65) 6536 1360 S$1 billion in 2002. During the course of the year, we monetised attention in Singapore, China and Australia. China and Australia Liew Mun Leong about S$1.1 billion of assets to strengthen our balance sheet continued to make healthy contributions, while the Singapore President & CEO Nominating Committee Auditors and build platforms for a lasting and profitable company. market showed signs of stability. In terms of earnings before Peter Seah Lim Huat KPMG interests and tax (EBIT), China and Australia operations, which in alphabetical order: Hsuan Owyang 16 Raffles Quay Turning Platforms into Profits are primarily residential activities, contributed 32% of the total Liew Mun Leong #22-00 Hong Leong Building In many respects, 2002 was the year when our strategic group EBIT, up from 29% in 2001. Sir Alan Cockshaw Sir Alan Cockshaw Singapore 048581 platforms, articulated during the merger of DBS Land and Richard Edward Hale Lim Chin Beng Tel: (65) 6213 3388 Pidemco Land, came to fruition. We strengthened our balance While our core property businesses are in selected gateway Lim Chin Beng Jackson Peter Tai Fax: (65) 6225 6157 sheet, grew our fee-based businesses, and created a new asset cities, our hospitality businesses have wider global footprint, Peter Seah Lim Huat (Engagement Partner since financial year class by launching Singapore’s first real estate investment trust, operating in 50 cities worldwide. Our serviced residences chain, Sum Soon Lim Budget and Finance Committee ended 31 December 2001: Martha Tan or REIT. In addition, we increased our return on equity and The Ascott Group, steadily strengthened its presence in the UK, Jackson Peter Tai Hsuan Owyang Hui Keng) achieved cost savings through synergies among our various China, Japan and Australia and announced plans to acquire a Lucien Wong Yuen Kuai Liew Mun Leong business units. 50% interest in Citadines, a pan-European serviced residence Jackson Peter Tai Principal Bankers chain. Meanwhile, Raffles Holdings integrated its Swissôtel Company Secretary Lui Chong Chee • Bank of America N.A. Throughout the year, we were well aware that our properties properties and secured new management contracts. Tan Wah Nam • Bayerische Landesbank Girozentrale must remain top drawer assets to attract top-quality tenants. Corporate Disclosure Committee • BNP Paribas As a result, we actively implemented asset enhancement Besides successes in our core business, the Group has also Assistant Company Secretary Sum Soon Lim • Citibank N.A. programmes, such as Six Battery Road’s hotel-like lobby successfully executed its strategy to lower its debt level. By end Jessica Lum Liew Mun Leong • Credit Agricole Indosuez complete with concierge services, to improve yields and to FY2002, the net debt level stood at S$5.7 billion, down Lucien Wong Yuen Kuai • Malayan Banking Berhad provide greater value to tenants. Consequently, our Singapore substantially from S$8.2 billion in November 2000. Gearing has Audit Committee • National Australia Bank Limited office portfolio outperformed the market in 2002, with a 91% also improved to 0.73, from 0.92 at the time of the merger. The Richard Edward Hale Risk Committee • Oversea-Chinese Banking Corporation occupancy rate, as compared to the market average of 84%. reduced borrowings have led to a substantial 30.6% reduction in Sum Soon Lim Sum Soon Lim Limited Lucien Wong Yuen Kuai Richard Edward Hale • Standard Chartered Bank Lucien Wong Yuen Kuai • Sumitomo Mitsui Banking Corporation Investment Committee • The Development Bank of Singapore Philip Yeo Liat Kok Registered Address Limited Hsuan Owyang 168 Robinson Road • The Hongkong & Shanghai Banking Liew Mun Leong #30-01 Capital Tower Corporation Limited Jackson Peter Tai Singapore 068912 • UFJ Bank Limited Lui Chong Chee Tel: (65) 6823 3200 • United Overseas Bank Limited Fax: (65) 6820 2202 • Wing Hang Bank, Ltd PHILIP YEO Chairman LIEW MUN LEONG President &CEO “2002 was the year when our strategic platforms, articulated during the merger of DBS Land and Pidemco Land, came to fruition.” 03 02 CAPITALAND AR02 CAPITALAND AR02 CL AR pages (proof2)1-25.OK 4/14/03 7:47 PM Page 4 the board committees including audit, budget and finance, will reap benefits from its overseas acquisitions, such as the interest expense. Moreover, we strengthened our balance sheet and at its debut results announcement had outperformed investment and risk assessment. recent agreement for the Citadines purchase which adds the by divesting several non-core assets in Singapore and abroad. expectations. CMT, together with the various management European market to its portfolio. Raffles Holdings expects Specifically, we divested our stakes in two Indonesian companies, contracts clinched by our listed and unlisted business units, Management has placed high priority on fair and full disclosure. to generate further benefits from its Swissôtel operations. a healthcare operation in Malaysia, and non-core stakes in China. provided us with increased fee-based income. Besides hosting dozens of meetings with investors in Singapore, Our property services division, PREMAS International, will grow In Singapore, The Ascott Group sold some of its retail and senior management has met with investors in other Asian cities, both organically, especially by securing additional contracts residential holdings. Another notable “first” in 2002 was the company’s S$380 million the US and Europe. We also brought the media to take a look for higher value-added services, and through strategic alliances convertible bond, the first major Singapore dollar-denominated at our operations in Australia and China, so that our business to strengthen regional expansion. A Multinational with Multi-local Operations convertible bond. In addition, the company completed another philosophy, strategy and activities will be better reflected in As a multinational company, CapitaLand has successfully Rated Securitised Bond, using residential progress payments their coverage. We expect to see higher yields and continued profit contribution implemented its multi-local strategy in its international operations. from The Waterina condominium project in Singapore. from China and Australia. Most of our China activity will be in The strategy calls for a synthesis of its international brand name Contributing to Causes Shanghai with several property launches in the pipeline for 2003. and world-class competencies with a deep appreciation of the Managing Cost for Profit Contribution CapitaLand’s philosophy on community relations has been to We have started the process of looking at other cities, beginning respective domestic real estate markets. Within the multi-local The Group achieved its target of over S$50 million in synergistic give back to society in a meaningful