Generally, companies with substantial capital employed in investment properties in Singapore will have negative EVA figures as the earnings from rental income are below the weighted average cost of capital (WACC).

Capital employed in the Group’s investment properties amounting to $2.36 billion generated EBITDA of $50.8 million in 2003, a return of about 2.5%. This is below the Company’s WACC of 8.8%. However, this low return is mitigated by contributions from trading properties, which generated EBITDA of $109.4 million on $998.8 million of capital employed.

As a result, the Group registered an EVA loss of $135.8 million, albeit an improvement over the loss of $299.4 million in 2002. The losses for both years were mainly due to the high level of investment properties, which amounted to $2.36 billion in 2003 and $2.4 billion in 2002.

With the Group’s decision to move out of low-yield investment property holdings and the strategy of focusing on higher valued added businesses like property development for sale and property fund management, Group EVA is expected to improve in future years.