News
Pidemco Land and DBS Land Announce Senior Management Designates and Set Strategic Targets for Proposed Merged Group
Singapore, 31 July, 2000
Singapore, July 31 - Pidemco Land and DBS Land today announced the key management designates for the Strategic Business Units of the proposed Merged Group and the key strategic targets to deliver shareholder value for what will be Southeast Asia's largest listed property group.
Key Management Designates of Merged Group
As announced on July 12th, 2000, the proposed Chairman of the Merged Group will be Mr Philip Yeo (currently Pidemco Land's chairman) while Mr Hsuan Owyang (DBS Land Chairman) will be the Deputy Chairman of the Merged Group. The President and Chief Executive Officer designate will be Mr Liew Mun Leong.
Mr Hiew Yoon Khong will be the Chief Financial Officer designate for the Merged Group and Mrs Lim Joke Mui is the proposed Group Company Secretary and concurrently the Chief Financial Officer for the Commercial and Fund Management SBUs.
Key management heading the proposed Merged Group's Strategic Business Units are:
· Mr Richard Helfer, CEO, Raffles Holdings Limited (Hotels)
· Mr Kee Teck Koon, CEO designate, Serviced Residences
· Mr Ed Ng, CEO designate, Commercial
· Mr Ed Ng, CEO designate, Fund Management
· Mr Anthony Seah, CEO designate, Property Management
· Mr Tham Kui Seng, CEO designate, Residential
The formation of the Office of the President, comprising Mr Hiew Yoon Khong, Mr Kee Teck Koon, Mr Ed Ng and Mr Tham Kui Seng, has been proposed to assist in formulating the Group's strategic directions and policies, and in the development of human capital.
Mr Liew Mun Leong, President and CEO designate, said, "We are delighted to put together this capable and highly experienced team, representing a broad spectrum of domain expertise and skill sets. Together, we are determined to drive future growth and deliver to shareholders the value enhancement that they should expect."
"With the critical mass brought about by the merger, we are committed to building each business unit into a leading player within its sector. We have as a team set ourselves demanding but realistic performance targets for the Merged Group. Our adjusted Return On Equity (ROE) target is 10% to 15 % within three to five years. Similarly, the target for growth in Revalued Net Asset Value (RNAV) per share, including dividends, is 10% to 15 % growth targets in three to five years' time. We also intend to decrease our gearing from 0.77 times at present to 0.60 times within two years," added Mr Liew.
Strategy Overview
The Merged Group intends to increase total returns to shareholders using various drivers of value including active asset management to increase yield and total returns of investment properties and improving trading margins and generating higher fee-based income. The Merged Group will also capitalise on the economies of scale, cost savings and lower cost of capital.
Mr Liew said, "Currently, trading and investment activities contribute equally to our Earnings Before Interest and Tax (EBIT) levels. We aim for trading activities to contribute 60% of EBIT and for investment activities to contribute 40% of EBIT."
Asset Composition
Currently, DBS Land's asset mix is as follows: $3.5 billion of Commercial assets, $3.3 billion of Residential assets, $1.4 billion of Hotels & Others assets and $0.4 billion of Serviced Residences assets. Pidemco Land's present asset mix is as follows: $4.6 billion of Commercial assets, $2.6 billion of Residential assets, $0.7 billion of Hotels & Others assets and $0.7 billion of Serviced Residences assets.
Following the proposed merger, the Merged Group's asset mix will be as follows: $8.1 billion of Commercial assets, $5.9 billion of Residential assets, $3.2 billion of Hotels & Others assets and $1.2 billion of Serviced Residences assets.
Residential
The Merged Group will focus on residential markets primarily in Singapore where it aims to be a leading developer. It will deliver quality and innovative products and services such as intelligent and e-lifestyle homes. The Group will continue acquiring quality landbank to support its growth and to capitalise on overseas opportunities. Australand and United Malayan Land will continue to contribute to Group earnings from Australia and Malaysia respectively.
Mr Tham Kui Seng, CEO designate of the Residential Business Unit, said, "We will continue to provide high quality homes with innovative features as both companies have done in the past. We aim to be a leading quality developer that exceeds home buyers' increasingly sophisticated expectations, as evidenced by our well-received e-homes initiatives. Our focus will be in Singapore, launching on average 1,500 to 2,000 units annually and aiming for 20% to 25% market share. Overseas, we will exploit opportunities in selected gateway cities."
"We aim to improve profitability through the increased efficiency and economies of scale afforded by the proposed merger, leading to a cost savings equal to 5% of procurement costs. Furthermore, we will improve design efficiency and increase the use of advanced building technologies, and will look at the securitisation of sales proceeds," added Mr Tham.
Commercial
The Merged Group will focus on prime properties, including investment grade office buildings in Singapore's Central Business District and other prime retail assets. It will seek and seize overseas opportunities in gateway cities when it is timely. However, overseas assets will account for less than 20% of the total portfolio. The commercial asset management strategy will include active portfolio management to maximise yields and total returns, divestment of fringe assets, and spinning off stable assets into funds to generate fee-based income.
Mr Ed Ng, CEO designate of the Commercial Business Unit, said, "We plan to increase returns through enhanced asset management to improve rental yields and total returns. At the same time, we plan to reduce our current Singapore portfolio from $7 billion to $4 billion, subject to market conditions."
Fund Management
In his position as CEO designate of the Fund Management Business Unit, Mr Ed Ng also noted, "The Fund Management unit will work closely with the Commercial Business Unit to look for attractive, stable assets for injection into sector specific and regional funds targeting local and international investors."
"This business unit has its roots in ING-Pidemco Property Fund Asia, which was established with ING Real Estate in 1998. Our preliminary target is to have, within three to five years, an aggregate fund size of $3 billion to $5 billion generating about $30 million to $50 million in fee income annually," he added.
Serviced Residences
The Merged Group aims to build a dominant, branded "pure play" Serviced Residences company, which means divesting non-core businesses and redeploying the proceeds to finance growth in the core businesses.
"We will focus on gateway cities, firstly in the Asia-Pacific region, and then globally. We plan to have two or three properties in each geographical market, building on established brand names. We are confident that we will maintain a number one position for serviced residences in the Asia Pacific and we aim to be among the top three in the world in size and in financial performance," said Mr Kee Teck Koon, CEO designate of the Serviced Residences Business Unit.
Property Management
This Business Unit aims to offer integrated solutions to maximise value for property owners and to compete on superior levels of customer service and technical competency. The Merged Group may also enter regional markets through joint ventures.
Mr Anthony Seah, CEO designate of the Property Management Business Unit, said, "We will grow our third party client base, comprising major developers and asset owners, by offering integrated solutions through an enhanced level of management-based performance and benefits. Fee-based revenue streams will be expanded and we intend to grow our third-party business by about 25% on average annually."
Hotels
The Merged Group intends to conclude its review of its investment in Raffles Holdings by the end of the year. It will support the growth of the hotel group and the expansion of business unit pending completion of the review.
Mr Richard Helfer, CEO of Raffles Holdings Limited said, "Raffles Holdings will expand its Raffles International master branding through its Raffles and Merchant Court brands. Our growth strategy to double the number of rooms under management to 12,000 by 2003 is online. As we move forward, we intend to increase shareholder value by maximising our existing assets through repositioning, e-commerce initiatives, a proactive value-oriented management programme, growth in management contracts and leveraging on our branding."
Others
Regarding the existing healthcare business, the Merged Group intends to divest its healthcare interests. With increased demand for technology in the market place, the Merged Group intends to harness the avalanche of new telecommunications and information technologies in its building design and in its business processes. It will also make strategic investments in real estate related e-business to leverage on its domain knowledge, experience and databases.
Outlook
Mr Liew said, "The management of both DBS Land and Pidemco Land are committed to the proposed merger and are determined to work together to deliver improved returns for our shareholders. We believe this is a unique and excellent opportunity to create a world-class property company, one which delivers sustainable shareholder value."
Issued by : Pidemco Land Limited and DBS Land Limited
Date : July 31, 2000
The above release contains forward-looking statements. The financial targets set out herein release are targets proposed by the management for the Merged Group, based on prevailing economic and market conditions and currently available information. Such targets are not, and should not be construed, as a representation as to the future performance of the Merged Group. In particular, such targets should not be regarded as a forecast or projection of the future performance of the Merged Group. It should be noted that the actual performance of the Merged Group may vary significantly from such targets, especially if there is any change to prevailing economic and market conditions.
BACKGROUNDER
Pidemco Land Limited
Pidemco Land is one of the largest property groups in Singapore with total assets of $8.2 billion as at 31 December, 1999. The Group has a significant presence overseas with investments in 24 cities in 12 countries including key gateway cities in the Asia-Pacific region and in the United Kingdom.
As a leading developer, investor and manager, Pidemco Land's portfolio includes premier residential and commercial properties. The Group also has in its portfolio serviced residences and retail developments owned and/or managed by its subsidiary, Somerset Holdings, which is listed on the mainboard of the Singapore Exchange. Regional property and asset management services are provided by Pidemco's wholly owned subsidiary PREMAS International which is one of Singapore's largest residential and commercial property managers. Listed associate Raffles Holdings owns and manages leading hotels in the region.
Pidemco Land has regional offices in Hong Kong, Shanghai and London. In its drive to excel as a world-class real estate company, Pidemco Land is committed to developing its people, its systems and in building quality buildings using the most advanced technologies and the latest innovations. In Singapore, it has achieved a reputation for its professional building and management expertise and has ISO 9002 certification for its quality management systems. Pidemco Land is a subsidiary of the Singapore Technologies Group.
DBS Land Limited
DBSL is a leading property company in Singapore with total assets of $7.5 billion as at 31 December, 1999. It is the second largest property company listed on the main board of the Singapore Stock Exchange with a market capitalization of $3.5 billion as at 11 July, 2000. Based in Singapore, it has significant operations spanning 11 countries in the Asia Pacific and Europe.
DBSL's core business is in property development in Singapore, Australia, China and Malaysia where it develops mainly residential properties for sale. In addition, DBSL maintains a portfolio of prime office, retail and industrial complexes for rental income. In property-related services, DBSL offers extensive expertise in project management, marketing, valuation, estate and property management.
DBSL owns investments in several listed companies. Raffles Holdings owns, develops and manages a portfolio of deluxe and landmark hotels and resorts under the Raffles, Merchant Court and Raffles Resort brands; The Ascott is a leading developer and manager of serviced residences; Australand Holdings is one of Australia's largest residential property developers; United Malayan Land is a leading residential property developer in Malaysia; and Parkway Holdings is a prominent healthcare provider. DBSL also has interests in Hind Hotels International, Sea View Hotel and SC Global Developments.