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Dear Shareholders,On behalf of the Board, I present the Keppel Land Groupreport for the year ended 31 December 2006.Financial performance2006 marked significant milestones for Keppel Land.The Group achieved a profit after tax and minorityinterests (PATMI) of $200.3 million, a 28.6% increasefrom $155.7 million in 2005.PATMI from property trading rose 34.7% to $150.7 million,boosted by strong sales of residential homes in Singapore,China, India and Vietnam. The Group’s performance was alsosupported by the sale of its stakes in InterContinental Hotelin Singapore, Ocean Towers in Shanghai and SingaporeSuzhou Industrial Holdings as well as the sale of a subsidiary’sproperty interest in Tianjin. Moving ahead, Keppel Land willcontinue with this strategy of acquisition and developingproperties for sale.With higher contributions from China, India and Vietnam,PATMI from overseas increased by 7.6% to $98.1 million,continuing the uptrend contribution to Group PATMI. For2006, overseas earnings as a percentage of Group PATMI(before en bloc property sales and impairment loss) amountedto 64%, up from 59% in 2005, 43% in 2004 and 32% in 2003.In a move to unlock value from its office portfolio, Keppel Landestablished K-REIT Asia, a commercial real estate investmenttrust with an initial portfolio of four prime office buildings.K-REIT Asia was listed on the Singapore Exchange by way ofan introduction on 28 April 2006. About 60% (144.4 millionunits) of K-REIT Asia units were distributed to Keppel Landshareholders while the Group retained the remaining 40%.This distribution in specie also transferred the benefit of theCompany’s remaining Section 44A tax credits of about$53 million to its shareholders.To reflect fair market value, the Group made provisionsagainst the diminution in the value of its two hotels inMyanmar ($32.2 million) and the investment in an associatedcompany with hotel interest in Indonesia ($5 million).As a result of the successful execution of these initiatives,Keppel Land was able to achieve a return on equity of 12.8%for 2006, up from 9.5% in 2005.With greater profitability, Keppel Land’s net debt-equityratio fell from 1.14 to 1.04. Keppel Land’s net tangible assetsper share fell from $2.35 at end-2005 to $2.21 at end-2006due to the distribution in specie of K-REIT Asia units toKeppel Land shareholders.Proposed dividendThe Board is recommending to shareholders a final one-tierdividend of six cents per share. The Company hopes tocontinue to provide higher dividends to shareholders in yearsof good results.The dividend payout amounting to about $43.2 million issubject to shareholders’ approval at the Annual GeneralMeeting scheduled on 27 April 2007. If approved, thedividend will be paid on 22 May 2007.Major developmentsSingaporeThe nation achieved strong economic growth of 7.9% for2006, as compared with 6.6% in the preceding year.Keppel Land is in a happy position of being able to ride onthe recovery of both the residential and office sectors. Theresidential sector started to rally in 2006 and caught up withthe office sector’s recovery. Urban Redevelopment Authority’sfigures showed that some 11,150 new residential units weresold during the year compared with 8,955 units in 2005 and5,785 units in 2004. The Private Residential Property PriceIndex posted an increase of 10.2% at end-2006, comparedwith the modest gains of 4% in 2005 and 0.9% in 2004. Thestrong demand for luxury residential projects near the MarinaBay and Sentosa Island integrated resorts and in the OrchardRoad area has increased prices in the luxury segmentbeyond the last peak in 1996.Amid such market sentiments, Keppel Land sold more than1,200 units, registering the third highest number of salesamong listed developers. All 428 units at Marina BayResidences, the 55-storey residential tower in the MarinaBay Financial Centre (Phase I), were sold out within threedays at an average sales price of $1,950 psf. The SixthAvenue Residences, located in prime District 10, sold all its175 units within two weeks at an average price of $1,000psf. Caribbean at Keppel Bay sold all of its 801 launchedunits while retaining 168 units as corporate residences.Three other projects – The Belvedere, Amaranda Gardensand The Callista – achieved 100% take-up while Park InfiniaChairman’s messageKeppel Land LimitedReport to Shareholders 2006