ANALYSIS OF RESULTS

Group earnings before interest and tax ("EBIT") for 2000 was S$754.0 million, an increase of 23.0% over 1999. The two key contributors were the Commercial and Residential SBUs whose EBIT were 43.6% and 32.7% of Group EBIT respectively. All SBUs were profitable at the operating level except pFission, our E-business arm, which is still in gestation stage. In addition, the three overseas hotels, namely Hotel Equatorial in Yangon, Meritus Westlake in Hanoi and Sheraton Suzhou Hotel, showed negative EBIT (albeit lower than 1999) largely due to difficult market conditions and high depreciation expense.

In terms of geographical analysis, the Group EBIT came mainly from Singapore (77.1%), Australia/New Zealand (20.6%) and United Kingdom (14.4%). EBIT from Singapore operations increased by 10.8% from S$524.8 million in 1999 to S$581.4 million in 2000. This was largely due to improved rental income from commercial and retail properties and higher average room and occupancy rates from hotels and serviced residences. EBIT from Australia/New Zealand operations jumped 44.0% from S$107.9 million to S$155.4 million as a result of higher earnings from Australand and the acquisition of Walker Corporation. EBIT of S$108.3 million from United Kingdom, contributed mainly from the sale of land rights in Canary Riverside, was also substantially higher than the S$2.6 million the year before. However, businesses in China and Hong Kong, posted higher losses of S$79.6 million compared with losses of S$18.0 million in 1999. This was mainly due to provisions made for China residential projects.

DIVIDENDS

In view of the poorer performance, and after taking into consideration the target to lower the gearing ratio and the need to conserve funds for future business expansion, the Directors have decided to propose a first and final dividend of 2% (1999: 2.7% based on the combined share capital of DBS Land Limited and Pidemco Land Limited). The net cash outflow after deducting tax of 24.5% is about S$38.0 million.

ASSETS

Total Group assets grew by 11.2% from S$17.6 billion in 1999 to S$19.6 billion in 2000. The increase was mainly due to higher market valuation in investment properties, the acquisition of land in Singapore to replenish the Group's landbank and new investments such as Hitachi Tower and Caltex House in Singapore, Furama site in Hong Kong, Moorgate project in London, Raffles Lermitage Beverly Hills in Los Angeles and a residential project in Japan.

In 2000, Australand acquired another major property player in Australia, Walker Corporation Limited. The Ascott Limited also became a subsidiary of the Group following its merger with Somerset. In addition, the Group increased its stake in Canary Riverside from 50% to 62.5%. As a result, the assets of Walker Group, Ascott Group and Canary Riverside Group were consolidated. Hence, this also contributed to the jump in total assets.

SHAREHOLERS' EQUITY

During the year, there was an equity injection of S$63.6 million by holding company, Singapore Technologies Pte Ltd. DBS Land also issued about 14.2 million shares at a premium of S$1.67 per share in consideration for the purchase of a plot of land in Yio Chu Kang Road for S$38.0 million.

The Group revaluation reserve increased by S$572.3 million. This was mainly contributed by a net increase of S$337.4 million due to improvement in market valuations of investment properties and a write-back of S$188.7 million. The write-back pertains to write-down in Parkway shares previously charged to revaluation reserve which has now been flowed to the profit and loss account.

Retained earnings decreased substantially from S$275.3 million in 1999 to negative S$61.6 million in 2000, mainly due to the full year loss of S$287.0 million and after setting aside S$38.0 million for net dividends to be paid.

Arising from the above and movements in other reserves, the shareholders' funds as at 2000 year-end was S$7.0 billion, an increase of S$242.4 million or 3.6%, from S$6.8 billion in 1999. Net tangible assets backing per share at 2000 year-end was S$2.78, an increase of 7 cents from S$2.71 the year before.