Page 1 of 3 Dear Shareholders,   The Group revenue in 2003 was S$3.83 billion, a 17.4% increase compared to S$3.26billion in 2002. At the operating level, the Group's underlying profits excluding the value of property revaluation, performed better than 2002. Excluding provisions and portfolio gains, the Group's 2003 PATMI (profit after tax and minority interests) was S$210.6 million, compared to the 2002 PATMI of S$172.3 million, a 22.2% increase. All of this was achieved despite the adverse effects of the Severe Acute Respiratory Syndrome (SARS) in Asia and war in Iraq.   At the end of the year, the Group did a comprehensive revaluation of the capital values of its investment properties in accordance with its standard practice and the decline in values reduced the Group's profit to S$105.3 million after tax and minority interests. Finance costs were S$240.8 million, which were S$43.2 million or 15.2% lower than S$284.0 million in 2002.   In the course of the year, we strengthened our balance sheet and generated healthy net cash flow from our operations, in excess of S$1.3 billion in 2003, comparable to 2002. Overall, the Group was in a strong position to weather these difficult market conditions and deliver on its 'Focus, Balance, Scale' strategy, raise asset productivity, and grow higher value added services.   Benefiting from a Multi-Local Operations Strategy   By having a geographically spread portfolio, the Group was able to take advantage of the different property cycles and risk-return profiles in the different markets and reduce its reliance on any one market. During the SARS outbreak, for example, our global presence beyond Asia helped mitigate the negative impact of SARS in the Asian countries. More importantly, the overseas expansion has provided the Group with a strong platform for robust, profitable growth. Over the next five years, the Group plans to have at least 75% of its total earnings from overseas.   China The year also saw the Group taking further steps to add depth and breadth to our multi-local strategy. This strategy calls for a deep appreciation of the respective domestic real estate markets. In China, we expanded our residential development business. In Beijing, we acquired a 1.09 million square feet site in the Chaoyang District, near the Olympic Park, where approximately 2,000 quality condominium units can be developed over the next three to five years. To date, CapitaLand has built over 4,000 condominium units in Shanghai, with another 6,000 units under planning and development in Shanghai and Beijing. Our two new projects in Shanghai - La Cité and Oasis Riviera - received enthusiastic response.   Our three commercial properties in China are strategically located within thriving central business districts. In 2003, we completed the development of Raffles City Shanghai. Since its opening in November, the retail podium of Raffles City Shanghai has achieved 100% occupancy with an increasing flow of shoppers, because of its location in the heart of the Shanghai business district. Another commercial complex, located in Luwan's Huaihai Road central business district, will be completed by 2005. These commercial properties are in addition to Pidemco Tower in the Huangpu central business district.   Our hospitality and property services businesses also have a strong presence in China. The Ascott Group is the largest international player in the serviced residence sector, with 1,600 units; Raffles Holdings has 750 hotel rooms in Beijing and Dalian; while PREMAS manages 19.2 million square feet of real estate in five Chinese cities.   Australia In Australia, Australand continued to make healthy contributions with projects such as Freshwater Place in Melbourne and The Quadrant in Sydney. It also embarked on an exercise to "staple" its shares to a trust, Australand Property Trust, which holds two Wholesale Property Trusts (WPTs). The new stapled entity, listed as the Australand Property Group (APG), will have a higher proportion of recurrent income and enjoy stronger revenue stream. This will provide Australand with an enhanced business platform for future growth. The stapling scheme was successfully implemented in November 2003 and trading of the APG has since commenced on the Australian and Singapore stock exchanges. APG is the first stapled property group to be listed in Singapore. Australand plans to staple more WPTs to the group for future growth.   Thailand Taking advantage of the rapid economic growth in Thailand, we increased our presence in the country through a S$87 million (Baht 2 billion) joint venture with TCC Land of the TCC Group of companies, one of the largest conglomerates in Thailand. With TCC Land's strong domain knowledge and contacts in Thailand, and CapitaLand's breadth of international experience and real estate expertise, the joint venture, named TCC Capital Land, will grow our presence in the buoyant residential, office and retail sectors in Thailand.   Singapore While we have been expanding rapidly and aggressively overseas, we have not overlooked the opportunities within Singapore. In Singapore, we successfully launched two residential projects - The Imperial and The Botanic on Lloyd. The Group acquired a 99-year residential site at Jellicoe Road in Singapore in 2003 for development in the coming year.   For commercial properties, the Group will continue to enhance or redevelop them to improve yields. Plaza Singapura was repositioned as an Orchard Road 'necessity mall', while Clarke Quay is being upgraded into a premier food, fashion and leisure precinct. The redevelopment of the One George Street site, located within the Raffles Place business district, will be completed on schedule end-2004.