Page 3 of 3 China-Singapore Partnership Forum A highlight of the year was the China-Singapore Partnership Forum in Shanghai, which we organised jointly with Temasek Holdings and International Enterprise Singapore (IE Singapore). Held in August 2003, the forum brought together more than 500 business leaders from China, Singapore and other parts of the world, and was the largest forum to be held in Shanghai following the outbreak of SARS in China. Among its numerous benefits, the Forum provided valuable networking opportunities for the leaders of top companies in China and Singapore to come together and explore the myriad investment opportunities in both countries. Community Relations As a tribute to all healthcare frontliners who bravely fought SARS during the unforeseen outbreak, CapitaLand Group's management and staff in Singapore contributed more than S$45,000 towards setting up the Healthcare Frontliners Award at the Nanyang Polytechnic School of Health Sciences. The Group also donated airport thermal scanners to the governments of China and Vietnam to help them combat the disease. We also contributed towards the Singapore Music Conservatory, now renamed the Yong Siew Toh Conservatory of Music, and the newly-established Lee Kuan Yew School of Public Policy at the National University of Singapore. The School strives to become a nexus for academic study, research and practice in public policy. Going Forward We are confident that we will continue to build shareholder value through the three principles of 'Focus, Balance and Scale' that underpin our strategy: focused on real estate and hospitality businesses, with a balanced portfolio of trading, investment and fee-based businesses in Singapore and overseas, and having significantly large scale to be an international player of repute. Maintaining a strong presence in Singapore and growing our operations internationally will continue to be key thrusts for the Group. The Group will work towards raising capital productivity. We will allocate capital to higher yielding assets, and leverage upon our asset base and real estate knowledge to grow our fee-based services. Looking ahead, the Group will create a commercial REIT, CapitaCommercial Trust (CCT), and distribute in-specie CCT units free to its CapitaLand shareholders. It will mark another milestone in Singapore's capital and real estate markets. The proposed listing of CCT is targeted for May 2004. The Group achieved S$20.9 million in synergistic cost savings through group bulk purchasing in 2003. We will continue with procurement initiatives across our strategic business units to obtain economies of scale and to increase operational efficiencies. To capitalise on the Group's unique spread of services and geographical markets, we will step up corporate marketing activities to exploit cross-marketing and selling opportunities across the Group's extensive network of client and business contacts. A Strategic Corporate Marketing unit has been formed, to spearhead initiatives to better market the Group as a whole. In the span of three short years, CapitaLand has emerged as a highly regarded international property and hospitality Group. Our success is attributable to our shareholders, customers, tenants, service providers and partners. We would like to thank them all for their support, confidence and trust. In particular, we wish to express our deep appreciation to our Board members for their invaluable contributions. In 2003, we welcomed Mr Richard Hale, who joined our Board on 10 February 2003, and Mr Andrew Buxton, who was appointed a Director with effect from 1 June 2003. In October, CapitaLand's International Advisory Panel (IAP), comprising industry leaders, chief executives and experts from the corporate world, met in Singapore to discuss the Group's international strategy. Our management has benefited greatly from the advice of both the Board and the IAP. Of equal significance is the contribution from our staff. We wish to commend them for their hard work. Together, we will achieve a successful 2004. Philip Yeo Liew Mun Leong Chairman President and CEO   Riding the Strategic Inflection Point   During the economic boom in the early ’90s,easy financing led to the build up of an excessive supply of real estate in many Asian countries.The Asian financial crisis and the bursting of the property bubble highlighted the weakness of the real estate industry, which was speculative and too focused on expectations of capital appreciation.Following the crisis,banks became more cautious in their real estate lending.This meant that the financing mechanism for Asian real estate had to change,bringing about a “Strategic Inflection Point ”,where the ownership and funding of real estate will see a fundamental shift to public and private real estate capital markets. Unlike traditional Asian real estate firms,capital market investors are strongly focused on yields.Real estate investment products with recurrent income that appeal to these investors will grow,as seen in the rapidly growing interest in REITs in Asia. As capital markets play an important role in promoting international investment in real estate, this will also increase the pace of internationalisation of the Asian real estate industry. CapitaLand saw the change in the real estate landscape and began to build its capabilities in financial skills to ride this strategic inflection point.The Group has added skills in origination,structuring,distribution and risk management to its core real estate domain knowledge,asset base and industry networks.It already has an impressive track record for pioneering REITs in Singapore, creating offshore property funds and various other financial initiatives.