Capitaland Is One of the Largest Listed Property Companies in Asia
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AR01(Review pg 1-43) FA 22/3/02 4:51 PM Page 1 BUILDING FOR LASTING VALUE PROFILE/INTRODUCTION CapitaLand is one of the largest listed 1 property companies in Asia. Headquartered in Singapore, the multinational company PAGE has property, hospitality and property-related products and services spanning more than 50 cities around the world. Its diversified business interests cover commercial and industrial buildings, residential properties, serviced residences, hotels, property funds, real estate financials and property services. The Company leverages on its significant asset base and market knowledge to develop fee-based businesses. Given its scale, scope of services and geographic spread, the company’s core assets are its people – a strong international management team and a dedicated, professional staff. The Company believes in developing the best people to deliver the best products and services; in other words, building people who build for people. AR01(Review pg 1-43) FA 22/3/02 4:51 PM Page 2 CAPITALAND ANNUAL REPORT 2001 CORPORATE DIRECTORY 2 CORPORATE DIRECTORY PAGE PAGE Board of Directors Nominations Committee Principal Bankers Philip Yeo Liat Kok Peter Seah Lim Huat • ABN-AMRO Bank N.V. Chairman Hsuan Owyang • Australia and New Zealand Banking Liew Mun Leong Group Limited Hsuan Owyang Sir Alan Cockshaw • Bank of America N.A. Deputy Chairman Lim Chin Beng • Bayerische Hypo-und Vereinsbank AG Jackson Peter Tai • Bayerische Landesbank Girozentrale Liew Mun Leong • BNP Paribas President & CEO Budget and Finance • Commerzbank AG in alphabetical order: Committee • Credit Agricole Indosuez Hsuan Owyang • Credit Lyonnais Sir Alan Cockshaw Liew Mun Leong • Credit Suisse First Boston Hsieh Fu Hua Jackson Peter Tai • Dresdner Bank AG Lim Chin Beng Lui Chong Chee • Hang Seng Bank Vernon R Loucks Jr. • Malayan Banking Berhad Peter Seah Lim Huat Corporate Disclosure Committee • National Australia Bank Limited Sum Soon Lim Sum Soon Lim • Oversea-Chinese Banking Jackson Peter Tai Liew Mun Leong Corporation Limited Lucien Wong Yuen Kuai Lucien Wong Yuen Kuai • Shanghai Commercial Bank Ltd. • Standard Chartered Bank Company Secretary Registered Address • Sumitomo Mitsui Banking Lim Mei Yi 168 Robinson Road Corporation #30-01 Capital Tower • The Bank of Tokyo-Mitsubishi Limited Assistant Company Secretary Singapore 068912 • The Development Bank of Singapore Jessica Lum Telephone: 6823 3200 Limited Facsimile: 6820 2202 • The Hongkong & Shanghai Banking Audit Committee Corporation Limited Sum Soon Lim Registrar • UFJ Bank Limited Hsieh Fu Hua Lim Associates (Pte) Ltd • United Overseas Bank Limited Lucien Wong Yuen Kuai 10 Collyer Quay • Wing Hang Bank, Ltd. #19-08 Ocean Building • Wing Lung Bank Ltd. Investment Committee Singapore 049315 Philip Yeo Liat Kok Telephone: 6536 5355 Hsuan Owyang Facsimile: 6536 1360 Liew Mun Leong Jackson Peter Tai Auditors Lui Chong Chee KPMG 16 Raffles Quay #22-00 Executive Resource and Hong Leong Building Compensation Committee Singapore 048581 Peter Seah Lim Huat Telephone: 6213 3388 Hsuan Owyang Facsimile: 6225 6157 Sir Alan Cockshaw (Partner-in-charge: Martha Tan) Lim Chin Beng Jackson Peter Tai AR01(Review pg 1-43) FA 22/3/02 4:51 PM Page 3 BUILDING FOR LASTING VALUE CHAIRMAN’S MESSAGE CHAIRMAN’S MESSAGE 3 Dear Shareholders PAGE 2001 was an unprecedented year in The Group increased the management Singapore's recent history. GDP fee component of its earnings. growth turned negative in the second Contributions to management fees quarter. Singapore was in technical came from all the business units of the recession by the third-quarter; the Group, fulfilling the goal of growing its global economy was not promising. fee-based businesses. CapitaLand That economic decline was further Commercial, the office, retail and PHILIP YEO exacerbated by the terrorist attacks industrial property arm of the company, on New York's World Trade Center entered into strategic alliances with The Group has been able to execute in September. Singapore recorded foreign and local companies to pave its strategies with nimbleness and negative GDP growth of 2.2% for the the way for more fee-based contracts. achieve creditable performance despite full year, the country's worst economic Raffles Holdings, the hotel business the difficult operating environment outcome in its 36-year history. unit, made acquisitions to increase its due to the quality of its management management contracts in the Asia- and staff. The Group is increasing We demonstrated our resilience in Pacific, Europe and the United States. its talent pool at a global level, in line these challenging market conditions The Ascott Group, the serviced with its positioning as a multinational and difficult operating environment. residences arm, secured more new corporation headquartered in The Group remains committed to the management contracts through a series Singapore. In fact, one quarter of the strategies that we had mapped out to of acquisitions and alliances in key staff, of Vice President-level and above, our shareholders. We focused on our gateway cities in China, the United is made up of foreign nationals. The core competencies, balancing trading Kingdom and Australia. PREMAS Group will continue to place premium returns with steady investment income, International, the property services value on our committed and challenged and growing fee-based business. We arm, was awarded new management staff as they are better able to seek and stayed the course to leverage on our contracts in Singapore and Shanghai. seize opportunities and build lasting significant asset base and domain value for CapitaLand's shareholders. knowledge of the real estate and The year also saw the Group seizing hospitality businesses and to access opportunities to expand its global On behalf of the Board, I wish to third party capital to lighten balance presence in the gateway cities and thank all our shareholders, customers, sheet. The Group sought to seize increasing the contributions from tenants and business partners for their diversification opportunities, capitalise overseas operations. These strategic continued support and last but not on our geographic spread and moves proved to be positive, as least, our staff of CapitaLand for international reach and optimise its contributions from overseas investments their valued contributions. Looking capital structure by divesting non-core helped to offset to some extent, the forward, I am confident that having businesses. These actions successfully weak Singapore market. Our eight-year demonstrated resilience in the first year positioned our Group to overcome the presence in China bore fruit as the of operations during a severe economic adverse environment in Singapore and operations experienced a turnaround in climate, the Group will continue to the selected gateway cities (namely 2001 and began to contribute positively succeed in executing our strategic Hong Kong, Tokyo, London and to the Group's earnings. In the United direction and transform CapitaLand Sydney). In 2001, CapitaLand divested Kingdom, with the Group's domain into a world-class property company. more than S$1.7 billion worth of assets. knowledge of the property market, we This is satisfactory because apart from took advantage of the property cycle in PHILIP YEO these transactions, the investment the United Kingdom to sell an office Chairman property market in general was muted. building in London. 25 February 2002 “I am confident that having demonstrated resilience in the first year of operations during a severe economic climate, the Group will continue to transform CapitaLand into a world-class property company.” AR01(Review pg 1-43) FA 22/3/02 4:51 PM Page 4 CAPITALAND ANNUAL REPORT 2001 PRESIDENT’S OVERVIEW 4 PRESIDENT’S OVERVIEW PAGE PAGE For the year 2001, CapitaLand our strategies, which was to access increased its revenue by 15.3% to third-party capital and increase fee S$3.4 billion. However, in the light of income while leveraging on our the economic slowdown, which caused significant asset base. We established property values in Singapore and the first Singapore dollar-denominated abroad to decline, the Group took wholesale property fund jointly with one measures to write down the value of its of Europe’s leading insurers, ERGO LIEW MUN LEONG assets by S$1.2 billion, of which Insurance Group. S$424.9 million was charged to reserves and S$747.2 million (Group’s Our group fee income was also share is S$691.6 million) was charged supplemented by new management to the profit and loss account. As a contracts secured by our hospitality result, our bottom-line was affected businesses, Raffles Holdings and and we reported a S$275 million loss The Ascott Group. Raffles Holdings for the year. Excluding these non-cash completed the purchase of Swissotel provisions, CapitaLand would have Holding AG, increasing the number of reported S$417 million profit. We also Raffles Holdings’ management generated healthy cash flow. In total for contracts from five to 21. For the the year, we generated net cash flow of residential business, we devised S$2.1 billion, before financing cost, tax Singapore’s first credit-rated and dividends. securitisation of receivables from residential projects to lower our 2001 was an exceptionally tough year, financing costs and to widen our prompting commentators to describe sources of capital. the confluence of several negative events as a “perfect storm”. For Raffles Holdings and The Ascott Singapore, it was one of the worst Group seized opportunities to acquire recessions in its history. This challenging and grow their portfolio of branded environment severely put to test our products and services and enlarge strategic intents in the first year of our the scale of their operations globally. operations since the merger. They are now recognised as significant international companies by their peers. Strategies – Delivering on The cornerstone of our strategy was our promises to have balance, focus and scale. Our Restructuring the company into increased global footprint, focused on strategic business units was part of gateway cities, has provided us with our strategy to focus on execution and scale and balance in all our operations, performance.