Frasers Group
Annual Report 2012

Plain-text annual report

annual report 2012 DELIV ERING GROWTH EN H A NCING L V A UE FCT has delivered another solid set of results in FY2012 with multiple new-highs achieved in revenue, earnings, DPU and net asset value. Contents EdiTorial 02 Corporate Profile 03 Structure of FCT opEraTional & FinanCial rEviEw CorporaTE GovErnanCE 57 Corporate Governance Report 31 Operational & Financial Review 04 Performance At A Glance 35 Portfolio Review FinanCials 06 Portfolio Overview 38 Capital Resources 67 Financial Statements 10 Letter to Unitholders 40 Market Overview 109 Statistics of Unitholders 14 Year in Brief 15 Investor Relations 18 Board of Directors 42 Risk Management 111 Additional Information 112 Notice of Annual General Meeting Mall proFilEs Proxy Form 22 Trust Management Team 44 Causeway Point 24 Property Management Team 46 Northpoint 28 Community Engagement 48 Bedok Point 29 Corporate Information 50 YewTee Point 52 Anchorpoint 54 Hektar REIT FY2012 Financial Highlights Annual Report 2012 Annual Report 2012 01 Distribution Per Unit 10.01 cents Gross Revenue $147 million Net Property Income $104 million Net Asset Value* $1.53 per unit Total Assets $1.92 billion *as at 30 September 2012 02 Frasers Centrepoint Trust Corporate Profile Frasers Centrepoint Trust (“FCT”) is a leading developer-sponsored retail real estate investment trust with five quality suburban malls in Singapore. FCT’s current portfolio comprises Causeway Point, Northpoint, Bedok Point, YewTee Point and Anchorpoint. With a combined appraised value of $1.8 billion as at 30 September 2012, FCT’s malls enjoy wide captive markets, good connectivity and high occupancy. FCT also receives steady overseas returns via its 31% strategic stake in Hektar REIT. FCT is focused on increasing shareholder value by pursuing organic, enhancement and acquisition growth strategies. With proactive lease management initiatives, FCT is well-placed to achieve sustainable rental growth. To unlock the full potential of its assets, FCT continues to enhance existing assets to maximise their performance. The potential acquisitions of new assets will help FCT gain greater scale and drive further income growth for unitholders. FCT was listed on the Main Board of the Singapore Exchange Securities Trading Limited on 5 July 2006. The trust is managed by Frasers Centrepoint Asset Management Ltd., a division of property company Frasers Centrepoint Limited, which is a wholly-owned subsidiary of Fraser and Neave, Limited. Vision Our vision is to be “Your Malls of Choice” to our stakeholders: Tenants, Shoppers and Investors. We aim to be a fair and value-adding landlord to our Tenants. We aspire to create and offer a vibrant and exciting shopping experience to meet the expectations of our Shoppers. We endeavour to be the REIT of choice affording stable, sustainable and growing distributions to our Investors. Mission Frasers Centrepoint Trust’s mission is to provide its unitholders with a regular and stable distribution by investing primarily in quality income-producing retail properties in Singapore and overseas, and to achieve long-term growth in net asset value. Annual Report 2012 03 Structure of FCT UniTHoldErs Holdings of Units in Frasers Centrepoint Trust Distributions TrUsT ManaGEr Frasers Centrepoint Asset Management Ltd. Management Services Management Fees Acts on behalf of Unitholders Trustee Fees TrUsTEE HSBC Institutional Trust Services (Singapore) Limited Ownership of Assets Net Property Income propErTY ManaGEr Frasers Centrepoint Property Management Services Pte. Ltd. Property Management Services Property Management Fees FCT porTFolio • Causeway Point • Northpoint • Bedok Point • YewTee Point • Anchorpoint 04 Frasers Centrepoint Trust Performance At A Glance Strong financial performance with multiple-highs for FY2012 Gross revenue ($ million) Revenue growth driven by Causeway Point and full-year contribution from Bedok Point. All other malls enjoyed positive growth. +24.9% 147.2 net property income ($ million) All malls achieved positive NPI growth, key growth drivers were Causeway Point and full-year contribution from Bedok Point. +26.4% 104.4 114.7 117.9 80.1 82.6 84.7 86.6 56.6 59.9 FY2008 FY2009 FY2010 FY2011 FY2012 FY2008 FY2009 FY2010 FY2011 FY2012 net asset value per unit ($) Increase in NAV per unit was supported by net revaluation gains in FCT’s portfolio assets, reflecting the value creation from its asset enhancement initiatives and active lease management. +9.3% 1.23 1.22 1.29 1.53 1.40 distribution per unit (¢) Record-high DPU, sixth consecutive year of DPU growth since FCT’s listing in July 2006. +20.3% 10.01 7.29 7.51 8.20 8.32 FY2008 FY2009 FY2010 FY2011 FY2012 FY2008 FY2009 FY2010 FY2011 FY2012 Annual Report 2012 05 5-Year Financial Highlights selected income statement and distribution data Gross Rent ($’000) Other Revenue ($’000) Gross revenue ($’000) net property income ($’000) distributable income ($’000) selected Balance sheet data Total Assets ($ million) Total Borrowings ($ million) Net Assets ($ million) FY2008 FY2009 FY2010 FY2011 FY2012 73,256 74,608 100,349 103,644 131,280 11,408 12,016 14,389 14,240 15,923 84,664 86,624 114,738 117,884 147,203 56,566 59,861 80,050 82,618 104,430 45,244 46,940 59,177 64,375 82,348 1,127.0 1,165.5 1,516.2 1,786.8 1,917.1 317.5 767.2 349.0 763.8 460.0 559.0 577.0 989.3 1,151.9 1,263.0 Value of portfolio properties ($ million) 1,063.0 1,100.0 1,439.0 1,697.0 1,816.0 Key Financial indicators Distribution per Unit (cents) Net Asset Value per Unit ($) Ratio of Total Borrowing to Total Assets (Gearing) Interest Coverage (times) FCT unit price performance since ipo 7.29 1.24 28% 4.57 7.51 1.22 30% 6.12 8.20 1.29 30% 4.43 8.32 1.40 31% 4.62 10.01 1.53 30% 5.56 Unit price statistics For FY2012 (1 october 2011 – 30 september 2012) : $1.440 on 3 October 2011 Period Open Period High : $1.835 on 26 July 2011 Period Low : $1.420 on 19 October 2011 Period Close Simple Unit Price Appreciation : $1.81 on 28 September 2012 : 25.7% 06 Frasers Centrepoint Trust Portfolio Overview CaUsEwaY poinT norTHpoinT Causeway Point is an award-winning retail mall located in the heart of Woodlands, one of the most populous residential estates in Singapore. The mall is conveniently located next to the Woodlands MRT station and the Woodlands regional bus interchange. It is the largest mall within FCT’s portfolio with total lettable area of 415,896 square feet. Northpoint, opened in 1992, is Singapore’s pioneer suburban retail mall. The mall is located in the central of the populous Yishun estate. The mall offers 6 levels of shopping, including 2 basements. It is connected to the Yishun bus interchange and is also linked to the Yishun MRT Station via a direct underground pedestrian underpass. The mall offers more than 200 stores and outlets spread over seven floors and a basement level, making it a convenient shopping destination for shoppers. Top tenants of the mall include Metro (departmental store), Courts (IT, electrical and furniture retailer), Cold Storage (supermarket) and Cathay Cineplexes. Causeway Point enjoys good shopper catchment comprising residents and commuters from the surrounding housing estates, schools, offices and factories. Shopper footfall was 20.7 million1 in FY2012 or an average of 1.7 million per month. The mall was recently refurbished with distinctive mall features, new outlets, more vibrant shopping ambience and more family-friendly facilities. The mall has also won the prestigious Platinum Award in the BCA’s GreenMark program for its host of “Green” features that reduces its energy consumption and carbon footprint. Northpoint is the second largest mall in FCT’s portfolio with an aggregate net lettable area of 234,781 square feet. The mall consistently attracts high shopper flow from the surrounding residential estate, schools and commuter traffic. Shopper footfall in FY2012 was 40.8 million or an average of 3.4 million per month, one of the highest among suburban malls in Singapore. tenants at Northpoint Key include Cold Storage, Harvey Norman, Kopitiam and Popular Bookstore. The mall also features a community library and a 5,400 square feet rooftop wet and dry children’s playground. 1The refurbishment works at Causeway Point are still on-going for FY2012 ended September 2012. Full completion is expected in December 2012. summary information (as at 30 September 2012, unless otherwise specified) Net Lettable Area1 Location Connectivity Area Population2 FY2012 Shopper Traffic Occupancy FY2012 Gross Revenue FY2012 Net Property Income Valuation Capitalisation Rate 415,896 sq ft Woodlands MRT station & bus interchange 245,109 20.7 million 87.7% $66.5 million $48.6 million $890.0 million 5.50% 234,781 sq ft Yishun MRT station & bus interchange 185,214 40.8 million 99.7% $46.7 million $33.4 million $570.0 million 5.50% 1 Source: Valuation Reports of respective malls as at 30 September 2012 2 Singapore Department of Statistics, Census of Population 2010, page 23. 2011. Singapore: Ministry of Trade & Industry. Available from: http://www.singstat.gov.sg/pubn/popn/c2010sr3/cop2010sr3.pdf [Accessed 4 December 2012] Annual Report 2012 07 BEdoK poinT YEwTEE poinT anCHorpoinT Bedok Point is a 6-storey mall inclusive of 2 basement levels located in town centre of Bedok, which is one of the largest residential estates in Singapore by population. The mall is well-served by the nearby Bedok MRT station and the Bedok bus interchange. The mall offers an exciting array of restaurants, retail and food outlets, entertainment, service offerings that makes it an attractive destination for families, students and PMEBs (Professionals, Managers, Executives and Businessmen) around the precinct. The shops and outlets at Bedok Point include Paradise Inn, K Box, Challenger, Sushi-Tei, Beijing 101, Mind Stretcher, among others. Total shopper footfall to the mall in FY2012 was 8.0 million. YewTee Point is a 2-storey retail mall comprising one basement and one storey above ground. The mall is located in the town centre of Yew Tee housing estate and is adjacent to Yew Tee MRT station. YewTee Point’s key tenants include NTUC Fairprice, Koufu (food court), KFC, Burger King, among others. It draws shoppers from the surrounding Yew Tee housing estate, school, military camps and the nearby industrial estate. Total shopper footfall to the mall in FY2012 was 11.5 million. Anchorpoint is a two-storey mall that offers an exciting range of eateries and restaurants, retail shopping and boutique outlets. It is located along Alexandra Road, opposite to the popular large home furnishing store IKEA. Anchorpoint is well-served by public bus services as well as regular shuttle bus services between the mall and the nearby office buildings in Alexandra. The stores and restaurants at Anchorpoint include Cold Storage, Koufu (food court), Japanese BBQ restaurant Gyu-Kaku as well as reputable retailers such as Charles & Keith and Cotton On, among others. Total shopper footfall to the mall in FY2012 was 3.9 million. 81,393 sq ft Bedok MRT station & bus interchange 294,519 8.0 million 98.7% $12.5 million $8.0 million $128.0 million 5.75% 73,602 sq ft Yew Tee (Choa Chu Kang) MRT station & bus service 173,291 11.5 million 96.3% $13.1 million $9.6 million $147.0 million 5.75% 71,610 sq ft Queenstown Public buses & shuttle bus service 98,502 3.9 million 99.3% $8.4 million $4.8 million $81.0 million 5.60% We achieved six consecutive years of growth through a combination of accretive acquisitions, asset enhancement initiatives and organic growth. We will continue to build upon our strong foundations of our assets, sound capital management and the expertise of our people, to attain new heights in performance and to enhance value for our unitholders. NEW HEIGHTs sTRONG FOUNDATIONs 10 Frasers Centrepoint Trust Letter to Unitholders “FCT achieved a strong finish in FY2012 with multiple new-highs in revenue, DPU and net asset value.” Mr Philip Eng Chairman Dr Chew Tuan Chiong Chief Executive Officer Annual Report 2012 11 Dear Unitholders, We are pleased to present Frasers Centrepoint Trust (“FCT” or the “Trust”)’s Annual Report 2012 for the financial year ended 30 September 2012 (“FY2012”). strong performance in FY2012 FCT achieved a strong finish with multiple new-highs in revenue, earnings, distribution per unit (“DPU”) and net asset value (“NAV”). Gross revenue for the year under review was $147.2 million, up 24.9% and net property income was $104.4 million, up 26.4%. DPU for the year was 10.01 cents, up 20.3%. This is the sixth consecutive year of DPU growth since FCT’s listing. The results were also better than the forecast which we made in August 2011 in connection with the acquisition of Bedok Point. The good results were attributed to the strong performance of Causeway Point, full-year contribution from Bedok Point and positive growth in every mall in the portfolio. Gross revenue from Causeway Point rose 28.8% to $66.5 million, following the substantial completion of the mall’s asset enhancement initiative (“AEI”). It also accounted for more than half of FCT’s revenue growth in the year under review. The financial position of the Trust remained solid with gearing level at 30.1% and with no major refinancing needed over the next three years. FCT’s total assets rose to a new high of $1.92 billion, from $1.79 billion a year ago and NAV per unit rose to $1.53, from $1.40 a year ago. The increases were mainly attributed to a net revaluation surplus of $100.7 million, of which Causeway Point contributed the largest share of $54.1 million. The healthy gains in valuation of the portfolio reflect the value creation through judicious execution of our AEI strategy and efforts to improve the income-producing capability of the assets. Portfolio occupancy remained steady at 93.6% as at 30 September 2012. The portfolio occupancy is expected to improve as the AEI at Causeway Point progresses towards full completion by end-December 2012. FCT achieved healthy average rental reversions of 12.1% during the year, as demand from prospective and existing tenants remained strong. retail sector expected to remain stable The Government has warned of sluggish growth for Singapore next year, but there is a silver lining as the domestic economy is expected to stay resilient and unemployment is likely to remain low. Wages are expected to rise by more than 3% next year. Despite the slower growth outlook, the retail sector is expected to remain relatively stable and resilient. The real estate market statistics from the Urban Redevelopment Authority (URA) and leading property consultants showed that overall rentals in the retail sector have been stable since the Global Financial Crisis and occupancy of retail properties has stayed at healthy levels. The growing domestic population, sustained low unemployment rate and growing household income in the recent years have also helped to grow and underpin the stability of the retail sector. Rising wages, in general, would also enhance consumer spending power and this bodes well for the retail sector. These factors are especially important for FCT as a player in the suburban retail space, as our shoppers are mainly repeat- customers from local catchment and a large portion of their spending at our malls are non-discretionary in nature. A healthy domestic economy and sustained low unemployment are among the key factors that contribute to the stability of our business. addressing cost challenges ahead Given the tight labour supply and rising wages in Singapore, we expect our cost of labour-intensive services, such as cleaning and security services, to increase when the existing service contracts are renewed. We are working closely with our service providers to improve work flow and productivity, so as to better manage our cost without compromising on service quality. We are also exploring the use of technology, such as installation of CCTVs at strategic locations in our malls, to optimise the security manpower required in the night. These are sustainable cost mitigation measures that will deliver benefits over time. The other source of cost increase is utilities expense. In this respect, we are stepping up efforts to render our properties “Green”. In the case of Causeway Point, we introduced a host of “Green” features during the AEI, such as installing high- efficiency chillers, and the harvesting and recycling of water. These investments have not only won Causeway Point the Platinum award in BCA’s GreenMark program, but also resulted in considerable savings of $660,000 a year in utilities bill and reduced its carbon footprint. Such efforts will be extended progressively to other properties within our portfolio. FCT is well-positioned to continue to grow We are entering FY2013 on a solid footing with positive growth momentum. We expect our organic growth to be underpinned by high occupancy across our malls, active tenant mix strategy as well as healthy rental reversions, particularly from Causeway Point and Northpoint. We will also continue to pursue growth through acquisitions of sponsor’s pipeline assets and third-party assets. While our strategy remains Singapore-centric, we will also continue to explore growth opportunities in the region, especially in Malaysia, where good local knowledge and presence will enable us to succeed. FCT is well-positioned to continue to grow and deliver higher returns to our Unitholders. acknowledgements We wish to express our appreciation to our Board of Directors for their guidance and wise counsel. We also like to thank our Unitholders, business partners, colleagues, tenants and shoppers for their unwavering commitment and steadfast support for FCT and in bringing FCT through yet another rewarding year for all. Thank you. Mr philip Eng Chairman dr Chew Tuan Chiong Chief Executive Officer We have achieved a consistent compounded annual growth rate of 8.8% for our distribution per unit (DPU) since IPO. The DPU of 10.01 cents for FY2012 is a record-high. CONsIsTENT RETURNs sAFE INVEsTmENT 14 Frasers Centrepoint Trust Year in Brief January 2012 • FCT achieved strong 1Q12 results with 30% revenue year-on-year growth. DPU for 1Q12 grew 12.8% to 2.20 cents. • FCT convened its Third Annual General Meeting (AGM) on 18 January 2012 and all resolutions as set out in the Notice of AGM were duly passed. April 2012 • FCT announced new record DPU of 2.50 cents for 2Q12, up 21% year-on-year. June 2012 • FCT was voted Best Mid-Cap Company in Singapore by FinanceAsia. • FCT issued two new Medium Term Notes (“Notes”) comprising $70 million 2.30% Notes due 2015 and $30 million 2.85% Notes due 2017 under its $500 million multicurrency Medium Term Notes Programme. The proceeds were used to refinance the $75 million 4.8% Notes which matured in June 2012, to finance the investments of FCT, asset enhancement works initiated by FCT and general working capital purposes of FCT. • Frasers Centrepoint Asset Management, the Manager for FCT, was a nominee in the Category of Best Asian REIT Manager in the REIW ASIA 2012 Awards for Excellence. July 2012 • FCT announced DPU of 2.60 cents for 3Q12, up 33% year- on-year to new high. • FCT launched its revamped website www.fct.sg. The new website features user-friendly interface and rich content. September 2012 • FCT achieved a strong finish in FY2012 with multiple-highs in revenue, net property income and distribution per unit (DPU). Full year DPU was at record-high of 10.01 cents, an increase of 20%. This is also the sixth consecutive year of DPU growth since FCT’s listing. • FCT was ranked in the top quartile among Singapore companies in CLSA’s Corporate Governance survey. Annual Report 2012 15 Investor Relations open and transparent communications wide coverage by equity research houses Frasers Centrepoint Asset Management Ltd (“FCAM”), as Manager of Frasers Centrepoint Trust (“FCT”), is committed to maintaining open and transparent communications with its unitholders and the investment community. FCAM provides factual and timely disclosure on all material information concerning FCT. General information on FCT including annual reports, portfolio information and investor presentations are updated regularly on FCT’s website. All news releases and company announcements are also available on the SGX-ST website. active engagement with investors Senior management of FCAM meets regularly with FCT’s investors and analysts at conferences (both overseas and local), one-on-one meetings, post-results luncheons and road shows to apprise them of FCT’s corporate developments and financial performance. FCT has participated in several conferences hosted by major financial institutions this year and they include Bank of America Merrill Lynch ASEAN Conference, Credit Suisse Asian Investment Conference, Citi Asia Pacific Property Conference, DBS Pulse of Asia Conference, Credit Suisse Asean & India Conference and the UBS ASEAN Conference 2012. FCAM met or spoke with 282 investors (from 159 firms) in FY2012, compared to 269 investors (from 151 firms) in FY2011. The feedback from brokers and investors indicate that FCT is a favoured stock among institutional investors, particularly income-oriented, long-funds and insurance funds, because of its strong track record in distribution growth, stability, good growth prospects, attractive total return, good corporate governance and transparent management. As at 30 September 2012, 51.5% of the total FCT issued units are held by institutional investors, 41.0% are held by the Sponsor group (comprising Frasers Centrepoint Limited and FCAM) and 7.5% are held by individual retail investors. accolades • • FCT was voted “Best Mid-cap Company in Singapore” in June 2012 by FinanceAsia. This is an annual poll conducted by FinanceAsia which tallies votes for Asia’s top companies from investors and analysts across Asia. FCT was ranked in the top quartile among Singapore companies in CLSA’s CG Watch 2012. This biennial survey is conducted by CLSA in collaboration with Asian Corporate Governance Association to recognise companies with good corporate governance practices. • FCAM was a finalist for Best Asian REIT Manager in the REIW ASIA 2012 Awards for Excellence. As at 30 October 2012, there were 17 research houses which provide equity research coverage on FCT, compared to 14 in the prior year. The research houses are (in alphabetical order): 1. Bank of America-Merrill Lynch 2. CLSA Asia-Pacific Markets 3. Credit Suisse AG 4. CIMB Research 5. Citi Investment Research 6. Daiwa Capital Markets 7. DBS Vickers Securities 8. DMG & Partners Research 9. HSBC* 10. J.P. Morgan 11. Maybank Kim Eng Research* 12. OCBC Investment Research 13. Religãre Institutional Research* 14. RHB Research Institute Sdn Bhd* 15. Standard Chartered Bank 16. UBS 17. UOB Kay Hian Research * Initiated research coverage on Frasers Centrepoint Trust in FY2012. The Royal Bank of Scotland Asia Securities announced that it discontinued equity research on Singapore equities market from March 2012. Enquiries For general enquiries on FCT, please contact: Mr Chen Fung Leng Head, Investor Relations & Research Frasers Centrepoint Asset Management Ltd Tel: (65) 6277-2657 Email: ir@fraserscentrepointtrust.com Unit registrar Boardroom Corporate & Advisory Services Pte Ltd Phone: (65) 6536-5355 Fax: (65) 6536-1360 Website: www.boardroomlimited.com FY2013 Financial Calendar* – Annual General Meeting 22 January 2013 22 January 2013 – 1Q FY2013 Results Announcement End February 2013 – 1Q FY2013 Distribution Payment 22 April 2013 – 2Q FY2013 Results Announcement End May 2013 – 2Q FY2013 Distribution Payment 25 July 2013 – 3Q FY2013 Results Announcement End August 2013 – 3Q FY2013 Distribution Payment 24 October 2013 – 4Q FY2013 Results Announcement End November 2013 – 4Q FY2013 Distribution Payment * Note: Dates are indicative and are subject to change. We undertake asset enhancement initiatives to keep our malls competitive and attractive. In doing so, we improve the income-producing capability of our malls and enhance their values. Not resting on our laurels, we constantly seek to expand our portfolio through acquisitions that grow our portfolio and enhance the returns to our unitholders. GROWING PORTFOLIO CREATING VALUE 18 Frasers Centrepoint Trust Board of Directors Mr pHilip EnG HEnG nEE, 66 Chairman, Non-executive and independent Director dr CHEw TUan CHionG, 54 Executive and non-independent Director Date of appointment as Director : 03 April 2006 Date of appointment as Director : 14 July 2010 Length of service as Director (as at 30 September 2012) : 6 years 06 months Length of service as Director (as at 30 September 2012) : 2 years 02 months Board committee served on: Nil Board committee served on: Nil academic & professional Qualifications: • Bachelor of Commerce in Accountancy, University of New academic & professional Qualifications: • Bachelor of Engineering (First Class Honours), Monash South Wales • Associate Member, Institute of Chartered Accountants in Australia present directorships as at (30 september 2012) Listed companies • Asia Pacific Breweries Limited • Ezra Holdings Limited • Hup Soon Global Corporation Limited • mDR Limited (Non-Executive Chairman) • PT Adira Dinamika Multi Finance, Tbk (Commissioner) • The Hour Glass Limited Others • Chinese Development Assistance Council • Hektar Asset Management Sdn Bhd • Heliconia Capital Management Private Limited • KK Women’s and Children’s Hospital Pte Ltd • NTUC Income Insurance Cooperative Limited • OpenNet Private Limited • Singapore Health Services Pte Ltd Major appointments (other than directorships) • Singapore’s Non-Resident Ambassador to Greece • Singapore’s High Commissioner to Cyprus past directorships in listed companies held over the preceding 3 years (from 01 october 2009 to 30 september 2012) • MCL Land Limited others • Mr Philip Eng spent 23 years with the Jardine Cycle & Carriage Group before retiring in February 2005 as Group Managing Director. University • Master of Engineering, National University of Singapore • Doctor of Philosophy, University of Cambridge • Chartered Engineer, The Engineering Council UK • Fellow, The Institution of Engineers Singapore • Fellow, Academy of Engineering Singapore present directorships (as at 30 september 2012) Listed companies Nil Others • CityNet Infrastructure Management Pte Ltd • Frasers Property Australia Pty Ltd • Hektar Asset Management Sdn Bhd • Vacaron Company Sdn Bhd Major appointments (other than directorships) • Chief Executive Officer, Frasers Centrepoint Asset Management Ltd past directorships in listed companies held over the preceding 3 years (from 01 october 2009 to 30 september 2012) Nil others • Previously Chief Executive Officer of the Science Centre Singapore (1995 – 2010) • Awarded Public Administration Medal (Silver) (Singapore) • Awarded Sugden Award by the Combustion Institute (UK) • Awarded the IPS Cadi Scientific Medal by the Institute of Physics Singapore Annual Report 2012 19 Mr CHia KHonG sHoonG, 41 Non-executive and non-independent Director Mr CHrisTopHEr TanG KoK Kai, 51 Non-executive and non-independent Director Date of appointment as Director : 01 September 2009 Date of appointment as Director : 27 January 2006 Length of service as Director (as at 30 September 2012) : 3 years 01 month Length of service as Director (as at 30 September 2012) : 6 years 08 months Board committee served on: Nil Board committee served on: Nil academic & professional Qualifications: • Bachelor of Commerce (Accounting and Finance) (First Class Honours), University of Western Australia academic & professional Qualifications: • Bachelor of Science, National University of Singapore • Master of Business Administration, National University of • Master of Philosophy (Management Studies), Cambridge Singapore University present directorships as at (30 september 2012) Listed companies Nil Others • Frasers Centrepoint Asset Management (Commercial) Limited Major appointments (other than directorships) • Chief Financial Officer, Frasers Centrepoint Limited • Chief Executive Officer – Australia, New Zealand and United Kingdom, Frasers Centrepoint Limited past directorships in listed companies held over the preceding 3 years (from 01 october 2009 to 30 september 2012) • Frasers Property (China) Limited others • Mr Chia was previously a banker and has worked with Schroders, Salomon Smith Barney / Citigroup Global Markets and HSBC in London, New York, Kuala Lumpur and Singapore. present directorships as at (30 september 2012) Listed companies • Frasers Property (China) Limited Others • Frasers Centrepoint Asset Management (Commercial) Limited • Hektar Asset Management Sdn Bhd • Republic Polytechnic (Member of the Board of Governors) Major appointments (other than directorships) • Chief Executive Officer, Frasers Centrepoint Commercial, Frasers Centrepoint Limited • Chief Executive Officer, Greater China, Frasers Centrepoint Limited past directorships in listed companies held over the preceding 3 years (from 01 october 2009 to 30 september 2012) • China Dairy Group Limited others • Mr Tang has previously worked with DBS Bank, DBS Land and British Petroleum. 20 Frasers Centrepoint Trust Board of Directors Mr liM EE sEnG, 61 Non-executive and non-independent Director Mr anTHonY CHEonG FooK sEnG, 58 Non-executive and non-independent Director Date of appointment as Director : 27 January 2006 Date of appointment as Director : 27 January 2006 Length of service as Director (as at 30 September 2012) : 6 years 08 months Length of service as Director (as at 30 September 2012) : 6 years 08 months Board committees served on: • Former Chairman of the Board from 1 July 2008 to Board committee served on: • Audit Committee (Member) 23 April 2009 academic & professional Qualifications: • Bachelor of Engineering (Civil Engineering), University of Singapore academic & professional Qualifications: • Member, Institute of Chartered Accountants in England & Wales • Member, The Institute of Certified Public Accountants in • Master of Science (Project Management), National Singapore University of Singapore • Fellow, Singapore Institute of Directors • Member, The Institution of Engineers Singapore present directorships as at (30 september 2012) Listed companies • Frasers Property (China) Limited Others • Frasers Centrepoint Asset Management (Commercial) Limited Major appointments (other than directorships) • Group Chief Executive Officer, Frasers Centrepoint Limited past directorships in listed companies held over the preceding 3 years (from 01 october 2009 to 30 september 2012) Nil others • 1st Vice-President, Real Estate Development Association of Singapore • Awarded Public Service Medal, Singapore • Former Board member of the Building and Construction Authority of Singapore (2005 to 2009) • Former Council member of the Singapore Chinese Chamber of Commerce and Industry (2000 to 2004) • Previously Managing Director of MCL Land Limited (1996 to 2004) present directorships as at (30 september 2012) Listed companies • Fraser & Neave Holdings Bhd • Frasers Property (China) Limited Others • Asia Pacific Investment Private Limited • Fraser and Neave Group and Frasers Centrepoint Group companies Major appointments (other than directorships) • Group Company Secretary of the Fraser and Neave Group past directorships in listed companies held over the preceding 3 years (from 01 october 2009 to 30 september 2012) Nil others Nil Annual Report 2012 21 Mr BoBBY CHin YoKE CHoonG, 61 Non-executive and independent Director Mr soH KiM soon, 66 Non-executive and independent Director Date of appointment as Director : 03 April 2006 Date of appointment as Director : 23 March 2006 Length of service as Director (as at 30 September 2012) : 6 years 06 months Length of service as Director (as at 30 September 2012) : 6 years 06 months Board committee served on: • Audit Committee (Chairman) Board committee served on: • Audit Committee (Member) academic & professional Qualifications: • Bachelor of Arts (Honours), University of Singapore • Associate, Chartered Institute of Bankers present directorships as at (30 september 2012) Listed companies • EnGro Corporation Limited Others • ORIX Investment and Management Private Limited • ORIX Leasing Singapore Limited Major appointments (other than directorships) • Chairman of ORIX Investment and Management Private Limited past directorships in listed companies held over the preceding 3 years (from 01 october 2009 to 30 september 2012) Nil others • Previously Senior Managing Director of DBS Bank academic & professional Qualifications: • Bachelor of Accountancy, University of Singapore • Fellow, Institute of Certified Public Accountants of Singapore • Associate member, Institute of Chartered Accountants in England and Wales present directorships as at (30 september 2012) Listed companies • AV Jennings Limited • Ho Bee Investment Limited • Oversea-Chinese Banking Corporation Limited • Sembcorp Industries Limited • Singapore Telecommunications Limited • Yeo Hiap Seng Limited Others • NTUC Enterprise Co-Operative Limited (Deputy Chairman) • Singapore Totalisator Board (Chairman) • Singapore Power Limited • Singapore Labour Foundation • The Competition Commission of Singapore Major appointments (other than directorships) • Member of the Council of Presidential Advisers (CPA) past directorships in listed companies held over the preceding 3 years (from 01 october 2009 to 30 september 2012) • Neptune Orient Lines Limited others • Former Managing Partner of KPMG Singapore • Former Board member of Urban Redevelopment Authority (URA) from 1997 to 2006, and its Chairman from 2001 to 2006 22 Frasers Centrepoint Trust Trust Management Team Frasers Centrepoint Asset Management Ltd. First Row: Dr Chew Tuan Chiong and Mr Alex Chia Second Row: Ms Lim Poh Tin, Ms Tay Hwee Pio and Mr Chen Fung Leng dr CHEw TUan CHionG Chief Executive Officer & Executive Director Please refer to Dr Chew’s biography in the section on ‘Board of Directors’ Mr alEx CHia Head, Investment Alex leads the investment team that is responsible for the expansion of FCT’s asset portfolio with the objective of ensuring optimum investment returns. Alex has over 8 years of business development experience in the serviced residence industry covering the Pan Asia market. He also has more than 5 years of retail experience in areas of operations and project planning. Alex holds a Bachelor Degree in Business Administration from National University of Singapore and an MBA from University of Hull, United Kingdom. Annual Report 2012 23 Ms liM poH Tin General Manager and Head, Asset Management Poh Tin’s responsibilities includes formulating business and asset enhancement plans in relation to FCT’s properties with short, medium and long term objectives.This involves working together with the Property Manager to ensure that the property business plans are executed diligently. Poh Tin has 25 years of real estate asset and property management experience. She holds Diplomas in Building Maintenance and Management from Ngee Ann Technical College and Management Studies from Singapore Institute of Management. She obtained her Bachelor of Science (Honours) degree in Real Estate Management from Oxford Brookes University. Ms TaY HwEE pio Financial Controller Hwee Pio is responsible for the financial, taxation, treasury and compliance functions of Frasers Centrepoint Trust. She has over 20 years of financial experience in the real estate industry. Prior to joining FCT, Hwee Pio was based in Shanghai for 10 years, of which she was the Financial Controller for Frasers Centrepoint Limited’s property development operations in China since year 2006. Before joining Frasers Centrepoint Limited, Hwee Pio held financial positions at Keppel Land, Guocoland and KPMG. Hwee Pio is a Singapore CPA with the Institute of Certified Public Accountants of Singapore and a Fellow with the Association of Chartered Certified Accountants. Mr CHEn FUnG lEnG Head, Investor Relations and Research Fung Leng is responsible for FCT’s investor relations function. He covers investor targeting, media and unitholder communication, as well as to provide market intelligence and research support to the management. Fung Leng holds a Master of Science degree in Industrial and Systems Engineering and a Bachelor’s degree in Mechanical Engineering (Honours), both degrees from the National University of Singapore. 24 Frasers Centrepoint Trust Property Management Team Frasers Centrepoint Property Management Services Pte. Ltd. First Row: Second Row: Ms Jill Ng, Mr Andre Lobo and Ms Angela Ng Mr Chia Shee Liang, Mr Edward Kway and Ms See San San Mr CHia sHEE lianG General Manager Shee Liang, who has more than 20 years of experience in the real estate sector, leads the Property Management team in managing the portfolio of retail properties in the company. Shee Liang spent 17 years working overseas in China, Hong Kong, Taipei and Indonesia, specialising in retail management and consultancies. Prior to joining FCL, Shee Liang was head of Property Management with Savills, Singapore. He has extensive hands on experience in leading and coordinating shopping centres and mixed development that comprises retail, residential, hotel and office, from conceptual planning stage to pre and post operational stages of the development process. The sizes of projects ranged from 50,000 to 200,000 sqm. Shee Liang obtained his B.Sc (Estate Management) from National University of Singapore. Annual Report 2012 25 Mr Edward KwaY Senior Manager, Special Projects Edward has over 25 years of experience in the building industry, of which 14 years was in the hospitality industry where he spent 9 years at Royal Plaza on Scotts as Director of Engineering. An Electrical Engineer by training, he has many years of experience in building services. Edward also holds a Bachelor of Business Management and Economics degree from Charles Sturt University, Australia. With this mix in academic training, Mr Kway is both an effective engineer and an excellent manager, able to help properties maximise operational efficiencies e.g. energy efficiency, business operation effectiveness and efficiency as well as cost saving measures. Ms sEE san san Head, Leasing San San heads the leasing function across ten malls in the FCL Group and has more than 20 years of work experience. Prior to this, San San was Assistant General Manager of Marina Centre Holdings (MCH) where she was responsible for marketing/leasing the shopping mall, leisure-plex and office block at Marina Square, Singapore’s third largest shopping mall. Prior to joining MCH, San San gained extensive marketing and management experience in the retail, industrial and residential sector working for Jones Lang Wooton, Colliers Jardine, and Colliers Goh & Tan. San San holds a Bachelor Degree in Estate Management from the National University of Singapore and a graduate diploma in marketing from the Marketing Institute of Singapore. Ms Jill nG Senior Manager, Advertising & Promotions Jill has over 12 years of experience in sales and marketing in the field of information technology, event management and mall management. Prior to joining Frasers Centrepoint, she was part of the development marketing team for a greenfield retail mall. She also led Marketing Communications at Singapore’s largest suburban mall where she spearheaded branding, loyalty, service excellence and promotions. Jill has a Degree in Business Administration from Macquarie University and a Diploma in Hospitality Management from Temasek Polytechnic. Mr andrE loBo Senior Manager, Advertising & Promotions Andre has over 20 years of experience in the industry. He oversees the advertising & promotional planning and public relations for Frasers Centrepoint Malls. Andre has contributed to the image building and marketing efforts of a number of notable organisations such as Bata Shoes, Max Factor Cosmetics, Sentosa Development Corporation, Singapore Zoological Gardens and Suntec City. Andre holds a Bachelor’s Degree in Business Administration from the National University of Singapore. Ms anGEla nG Senior Manager, Retail Design Management Angela oversees the review and approval of designs for shop fit-outs. She also develops retail design guidelines and participates in the conceptualisation of asset enhancement initiatives and feasibility studies. Angela has more than nine years of real estate experience, with experience in retail design. She holds a Diploma in Interior Design from the National Design Academy, London. 26 Frasers Centrepoint Trust Property Management Team Frasers Centrepoint Property Management Services Pte. Ltd. First Row: Ms Molly Lim and Ms Cynthia Ng Second Row: Ms Angela Wu, Ms Deon Koh and Mr Raymond Chan Kin Ms MollY liM Senior Centre Manager, Causeway Point Molly has more than 21 years of experience in leasing commercial properties, which includes 18 years of shopping centre management. She has been actively involved in enhancing tenant mix, resolving legal tenancy issues and managing operational matters including safety and security, technical facilities, car park facilities and customer service. Molly was involved in formulating the standard operating procedures for lease documentation and office administration, overseeing customer service as well as facilitating the implementation of the division’s balance scorecard initiatives. Molly graduated from the National University of Singapore with a Bachelor of Social Sciences (Honours) degree majoring in Economics. She also holds a Graduate Diploma in Business Administration from the Singapore Institute of Management. Annual Report 2012 27 Ms CYnTHia nG Centre Manager, Northpoint Cynthia has more than 8 years of experience in building and property management. She holds a Diploma in Building and Property Management from Singapore Polytechnic and obtained her Bachelor of Science (Honours) degree in Real Estate from National University of Singapore. Ms anGEla wU Centre Manager, Bedok Point Angela has more than 15 years of experience in various aspect of real estate and property management of residential, industrial and retail properties. She has vast experience in retail mall management including leasing management, advertising and promotion, operational management and mall enhancement and upgrading project management. Angela graduated with a Bachelor of Science and also holds a Graduate Diploma in Business Administration from National University of Singapore. Ms dEon KoH Assistant Centre Manager, YewTee Point Deon has 5 years of experience in real estate management. Prior to joining Frasers Centrepoint, Deon was responsible for leasing activities at the commercial team of SMRT Investments Pte Ltd. Deon holds a Bachelor’s Degree in Real Estate Management from Oxford Brookes and a Diploma in Building and Real Estate Management from Ngee Ann Polytechnic. Mr raYMond CHan Kin Centre Manager, Anchorpoint Raymond oversees the management and performance of Anchorpoint. Prior to his current appointment, Raymond was responsible for marketing communication matters of FCT malls, overseeing media planning & production, casual leasing, sales promotions, sponsorship and customer services. He was also responsible for the advertising & promotional budgets and implementation of standards and work processes across all FCT malls. Raymond has more than 16 years of experience in the shopping centre industry. Prior to this, he spent over 8 years as a foreign services officer with the Singapore Ministry of Foreign Affairs. Raymond holds a joint Business Studies Diploma from Ngee Ann Technical College & Polytechnic of Central London. 28 Frasers Centrepoint Trust Community Engagement to establish our malls as We strive family-friendly destinations that support a wide variety of communal events and services that cater to families and the community. We frequently organise or support the hosting of events at our malls that promote healthy communal interaction and family bonding. Our malls are also equipped with dedicated children’s play area, nursing rooms, family parking spaces and elder-friendly amenities to serve the community. Our malls contribute in various ways towards the communal events in the form of provision of venue, sponsorship and promotion. These events include the festive celebrations and special feature events such as “Brighten Up This Mid-Autumn at Causeway Point”. Our mall management also works closely with local community organisations and government agencies to facilitate the organisation of social events such as children’s art and craft activities, charity drives, community exhibitions as well as initiatives to promote family-friendly practices. For example, we hosted a visit to Northpoint by Madam Halimah Yacob, Minister of State, Ministry of Community Development, Youth and Sports on 19 September 2012, with the objective to promote the awareness of the family-friendly amenities, services and facilities at business establishments. Mdm Halimah Yacob (far right), Minister of State, Ministry of Community Development, Youth and Sports during a visit to Northpoint on 19 September 2012, with the objective to promote the awareness of the family-friendly amenities, services and facilities at business establishments. Children enjoying themselves at the play area at Northpoint. Annual Report 2012 29 Corporate Information FRASERS CENTREPOINT TRUST THE MANAGER REGISTERED ADDRESS HSBC Institutional Trust Services (Singapore) Limited 21 Collyer Quay #10-02 HSBC Building Singapore 049320 WEBSITE ADDRESS www.fct.sg TRUSTEE HSBC Institutional Trust Services (Singapore) Limited 21 Collyer Quay #03-01 HSBC Building Singapore 049320 Phone: (65) 6658-6906 Fax: (65) 6534-5526 AUDITOR Ernst & Young LLP Partner-in-charge: Mr Nagaraj Sivaram (since financial year 2012) One Raffles Quay Level 18 North Tower Singapore 048583 Phone: (65) 6535-7777 Fax: (65) 6532-7662 BANKERS DBS Bank Ltd Oversea-Chinese Banking Corporation Ltd Standard Chartered Bank UNIT REGISTRAR Boardroom Corporate & Advisory Services Pte Ltd 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 Phone: (65) 6536-5355 Fax: (65) 6536-1360 REGISTERED ADDRESS Frasers Centrepoint Asset Management Ltd 438 Alexandra Road #21-00 Alexandra Point Singapore 119958 Phone: (65) 6276-4882 Fax: (65) 6272-8776 DIRECTORS OF THE MANAGER Mr Philip Eng Heng Nee Independent Non-Executive Chairman Dr Chew Tuan Chiong CEO and Executive Director Mr Chia Khong Shoong Non-Executive Director Mr Christopher Tang Kok Kai Non-Executive Director Mr Lim Ee Seng Non-Executive Director Mr Anthony Cheong Fook Seng Non-Executive Director Mr Bobby Chin Yoke Choong Independent Non-Executive Director Mr Soh Kim Soon Independent Non-Executive Director AUDIT COMMITTEE Mr Bobby Chin Yoke Choong (Chairman) Mr Anthony Cheong Fook Seng Mr Soh Kim Soon COMPANY SECRETARY Mr Anthony Cheong Fook Seng Frasers Centrepoint Trust OPERATIONAL & FINANCIAL REVIEW 31 Operational & Financial Review 35 Portfolio Review 38 Capital Resources 40 Market Overview 42 Risk Management Operational & Financial Review Annual Report 2012 31 Comparison of the Year Ended 30 September 2012 to the Year Ended 30 September 2011 Financial Highlights ($’000) Financial year ended 30 September Rental revenue Other revenue Gross revenue Property expenses net property income FY2012 131,280 15,923 147,203 (42,773) 104,430 FY2011 increase / (decrease) 103,644 14,240 117,884 (35,266) 82,618 26.7% 11.8% 24.9% 21.3% 26.4% Gross revenue for the year was $147.2 million, an increase of 24.9% and net property income (“NPI”) was $104.4 million, an increase of 26.4%. The increase was mainly attributed to the full-year contribution from Bedok Point and the increased contribution from Causeway Point upon the completion of the significant portion of its addition and alteration works. The other properties in the portfolio also achieved higher revenue against the same period last year. Property expenses for the year ended 30 September 2012 totaled $42.8 million, an increase of $7.5 million or 21.3% from the corresponding period last year. The increase was mainly due to: i. higher property manager’s fee arising from the improvement in revenue and net property income; ii. higher property tax and other expenses as there was write-back of provisions in the corresponding period last year; and iii. the addition of Bedok Point to the portfolio on 23 September 2011. The net property income achieved was $104.4 million, which was $21.8 million or 26.4% higher than the corresponding period last year. distribution statements ($’000) Financial year ended 30 September net income Net adjustments Distribution from Associate Income available for distribution distribution to unitholders FY2012 74,040 4,435 3,873 82,348 82,348 FY2011 increase / (decrease) 53,051 7,520 3,804 64,375 64,375 39.6% (41.0%) 1.8% 27.9% 27.9% distribution per Unit (cents) Financial year ended 30 September FY2012 FY2011 increase / (decrease) First quarter Second quarter Third quarter Fourth quarter Full Year 2.20 2.50 2.60 2.71 10.01 1.95 2.07 1.95 2.35 8.32 12.8% 20.8% 33.3% 15.3% 20.3% 32 Frasers Centrepoint Trust Operational & Financial Review Income available for distribution to Unitholders for FY2012 increased 27.9% year-on-year to $82.3 million, mainly due to the higher NPI achieved during the financial year and also higher contribution of the distribution received from Hektar REIT, which Frasers Centrepoint Trust holds a 31.17% stake. The distribution per Unit for FY2012 was 10.01 cents, an increase of 20.3% over the same period last year. net asset value per unit as at NAV per unit 1. computed based on 823,522,544 Units 2. computed based on 822,003,088 Units 30 sep 2012 30 sep 2011 increase / (decrease) $1.531 $1.402 9.3% Net asset value per Unit of FCT stood at $1.53 as at 30 September 2012, an increase of 9.3% from $1.40 a year ago, due net revaluation gains on FCT properties. Operational & Financial Highlights by Property Gross revenue by property ($’000) property Causeway Point Northpoint Bedok Point YewTee Point Anchorpoint Total FCT property Expenses by property ($’000) property Causeway Point Northpoint Bedok Point YewTee Point Anchorpoint Total FCT net property income by property ($’000) property Causeway Point Northpoint Bedok Point YewTee Point Anchorpoint Total FCT FY2012 FY2011 increase / (decrease) 66,507 46,669 12,464 13,124 8,439 51,563 45,036 269 12,988 8,028 147,203 117,884 29.0% 3.6% n.m. 1.0% 5.1% 24.9% FY2012 FY2011 increase / (decrease) 17,923 13,307 4,419 3,496 3,628 16,086 11,858 112 3,595 3,615 42,773 35,266 11.4% 12.2% n.m. (2.8%) 0.4% 21.3% FY2012 FY2011 increase / (decrease) 48,584 33,362 8,045 9,628 4,811 35,477 33,178 157 9,393 4,413 104,430 82,618 36.9% 0.6% n.m. 2.5% 9.0% 26.4% Annual Report 2012 33 leasing data (1 october 2011 to 30 september 2012) property number of renewals / new leases aggregate nla of renewals (sq ft) renewed aggregate nla as percentage of total mall nla average increase over preceding rents Causeway Point Causeway Point Northpoint Northpoint YewTee Point YewTee Point Anchorpoint Anchorpoint Bedok Point Bedok Point Total FCT portfolio Total FCT portfolio 18,894 15 27 76 53 33 23 17 26 Nil Nil 141 129 79,535 128,407 100.0% 37,577 NA 12,299 NA Nil 95.8% 257,818 87.2% 19.0% 11.6% 54.4% 0.1% 51.1% 0% 17.2% 0% N.A. 28.0% 29.3% 8.6% 9.1% 5.2% 14.1% 5.8% 9.6% NA 9.0% NA N.A. 12.1% 12.1% 7.2% FCT’s property portfolio continued to achieve positive rental reversions during the year. Rentals from renewal and replacement leases from the properties commencing during the period, showed an increase in average of 12.1% over the expiring leases. occupancy data as at 30 september property Causeway Point Northpoint YewTee Point Anchorpoint Bedok Point Total FCT portfolio FY2012 FY2011 87.7% 99.7% 96.3% 99.3% 98.7% 93.6% 92.0% 98.3% 95.6% 98.6% 98.3% 95.1% Change -4.3% point +1.4% point +0.7% point +0.7% point +0.4% point -1.5% point Occupancy of FCT portfolio stood at 93.6% as at 30 September 2012, a decline of 1.5%-point from the previous year. This was mainly attributed to the lower occupancy at Causeway Point due to the on-going refurbishment works at the mall. Causeway Point is expected to achieve full occupancy upon the full completion of the refurbishment works, which is due for full completion by end of December 2012. shopper Traffic (millions) property Causeway Point Northpoint YewTee Point Anchorpoint Bedok Point FY2012 FY2011 20.7 40.8 11.5 3.9 8.0 * 38.2 11.4 4.2 8.3# * The visitor traffic information in FY2011 for Causeway Point was not available as its electronic traffic counters were removed due to refurbishment works at the mall. # As recorded by electronic traffic counters for the nine and a half months period between mid-December 2010 and September 2011. The total shopper footfall in FY2012 was 84.9 million or an average of about 7.1 million per month. There was no comparable data for Causeway Point in the prior year FY2011 as the shopper traffic information then was not available due to the ongoing refurbishment works at the mall. Northpoint continued to register strong shopper traffic growth in FY2012 to reach 40.8 million footfall in FY2012. However, the shopper traffic trend at the 3 smaller malls was mixed, YewTee registered a small increase while Bedok and Anchorpoint both saw decline in the shopper traffic. 34 Frasers Centrepoint Trust Operational & Financial Review percentage of occupied leases with Gross turnover rent (GTo) and step-up Clauses: FY2012 FY2011 Change With GTO clause With step-up clause 94.0% 98.7% 93.8% 98.3% +0.2% point +0.4% point The proportion of leases with GTO and Step-up clauses continue to remain stable at 94.0% and 98.7%, respectively. In general, the GTO component represents between 0.5% and 1.0% of the tenants’ sales revenue. The aggregate GTO make up approximately 5% of FCT’s total gross revenue. appraised value of properties ($ million) property sep 2012 valuation ($ million) sep 2012 book value ($ million) Change sep 2012 Capitalisation rate1 sep 2011 Capitalisation rate1 Change in Capitalisation rate Causeway Point Northpoint Bedok Point YewTee Point Anchorpoint Total 890.0 570.0 128.0 147.0 81.0 835.9 534.1 ▲ 6.5% ▲ 6.7% 128.0 No change 138.0 78.0 ▲ 6.5% ▲ 3.8% ▲ 6.0% 1,816.0 1,714.0 5.50% 5.50% 5.75% 5.75% 5.60% 5.50% 5.65% 5.75% 6.00% 6.00% No change -15 bps No change -25 bps -40 bps 1. As indicated by property valuers. The properties were valued at $1.816 billion by Jones Lang LaSalle Property Consultants Pte. Ltd., Knight Frank Pte. Ltd. and Colliers International Consultancy & Valuation (Singapore) Pte. Ltd. (the “Valuers”) on 30 September 2012. The revaluation surplus was $102.0 million and after adjustment for amortisation of rent incentives of $1.3 million, the net revaluation surplus was $100.7 million. The Valuers have used the direct comparison, investment and discounted cash flows methods in determining the fair values of the Properties. Valuation is required to be conducted annually in compliance with the Code on Collective Investment Schemes. asset locations YewTee Point Annual Report 2012 35 Portfolio Review Causeway Point Northpoint Bedok Point Anchorpoint MRT lines summary (as at 30 september 2012) Year of completion address Connectivity Tenure Causeway point northpoint Bedok point YewTee point anchorpoint 1998 1992 2010 2008 1997 1 Woodlands Square, Singapore 738099 930 Yishun Avenue 2, Singapore 769098 799 New Upper, Changi Road Singapore 467351 21 Choa Chu Kang 368 and 370 North 6, Singapore 689578 Alexandra Road, Singapore 159952/3 Woodlands MRT station & bus interchange Yishun MRT station & bus interchange Bedok MRT station & bus interchange YewTee MRT station & bus stop Near Queenstown MRT station & bus stop 99 years leasehold, expires in 2094 99 years leasehold, expires in 2089 99 years leasehold, expires in 2077 99 years leasehold, expires in 2105 Freehold net lettable area (square feet) 415,896 234,781 81,393 73,602 71,610 area population1 245,109 185,214 294,519 173,291 98,502 appraised value $890.0 million $570.0 million $128.0 million $147.0 million $81.0 million as % of portfolio value 49.0% occupancy 87.7% number of leases 201 31.4% 99.7% 180 7.0% 98.7% 77 8.1% 96.3% 76 4.5% 99.3% 68 1 Singapore Department of Statistics, Census of Population 2010, page 23. 2011. Singapore: Ministry of Trade & Industry. Available from: http://www.singstat.gov.sg/pubn/popn/c2010sr3/cop2010sr3.pdf [Accessed 4 December 2012] 36 Frasers Centrepoint Trust Portfolio Review Healthy Trade and Tenancy Mix As at 30 September 2012, the five malls in FCT portfolio have a total of 602 running leases, excluding vacancy. The top five tenants ranked by gross rental income (“GRI”) were Cold Storage Supermarket, Metro, Courts, Kopitiam and Food Republic. These five tenants contributed collectively, 22.6% (FY2011: 22.9%) of the mall’s total gross rental income. The details of the top 10 tenants by GRI are presented in chart below. The top 5 trades by NLA were food & restaurants, fashion, education and services, household and departmental store. The detail breakdown of the trade mix by trade and by gross rental income is presented in charts below. Top 10 Tenants by Gross rental income as at 30 september 2012 Cold Storage Singapore (1983) Pte Ltd1 Metro (Private) Limited2 Courts (Singapore) Limited Kopitiam Pte Ltd Food Republic Pte Ltd Watson’s Personal Care Stores Pte Ltd NTUC Fairprice Co-operative Ltd Aspial-Lee Hwa Jewellery Pte Ltd3 Soo Kee Jewellery Pte Ltd G2000 Apparel (S) Pte Ltd 4.9% 3.3% 3.0% 2.1% 2.0% 1.6% 1.5% 1.4% 1.4% 1.3% (1) includes the leases for Cold Storage supermarket, Guardian Pharmacy and 7-Eleven (2) includes the leases for Metro Departmental Store and Clinique Service Centre (3) includes the leases for Lee Hwa Jewellery, CITIGEMS and Goldheart Jewellery Trade Mix by net lettable area (as at 30 September 2012) 11 12 10 9 8 7 6 5 4 3 1 2 Trade Classifications 25.6% 1 Food & Restaurants 15.6% 2 Fashion 8.8% 3 Services/Education 8.4% 4 Household 8.1% 5 Supermarket/Hypermarket 6.8% 6 Department Store 6.2% 7 Vacant 8 Leisure/Entertainment 6.1% 9 Beauty, Hair, Cosmetics, Personal Care 5.9% 4.3% 10 Books, Music, Art & Craft, Hobbies 2.5% 11 Healthcare 1.7% 12 Sports Apparels & Equipment Total 100.0% Trade Mix by Gross rental income (as at 30 September 2012) 10 11 9 8 7 1 5 6 4 3 2 Trade Classifications 31.0% 1 Food & Restaurants 24.6% 2 Fashion 3 Services/Education 8.6% 4 Beauty, Hair, Cosmetics, Personal Care 8.2% 7.6% 5 Household 4.4% 6 Supermarket/Hypermarket 4.1% 7 Healthcare 3.6% 8 Books, Music, Art & Craft, Hobbies 3.3% 9 Department Store 2.5% 10 Leisure/Entertainment 2.1% 11 Sports Apparels & Equipment Total 100.0% Annual Report 2012 37 FCT portfolio lease Expiry profile (as at 30 September 2012) FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Number of Leases expiring 195 203 180 20 3 1 Expiries as % of total gross rental income Net Lettable Area of expiring leases (square feet) Expiries as % of total Net Lettable Area (NLA) 22.9% 32.4% 36.2% 6.4% 0.9% 1.1% 162,948 259,904 304,180 56,886 8,743 32,102 19.8% 31.5% 36.9% 6.9% 1.1% 3.9% lease Expiry profile as % of total gross rental income of FCT portfolio (as at 30 September 2012) 36.2% 32.4% 22.9% FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 6.4% 0.9% 1.1% lease Expiry profile as % of total net lettable area of FCT portfolio (as at 30 September 2012) 36.9% 31.5% 19.8% 6.9% 1.1% 3.9% FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 lease expiry profile for FY2013 by property Causeway point northpoint Bedok point YewTee point anchorpoint Number of Leases expiring 47 60 23 38 27 Expiries as % of Property’s total gross rental income Net Lettable Area of expiring leases (square feet) Expiries as % of total gross rental income 11.4% 32.1% 18.3% 45.9% 32.1% 42,379 59,011 8,234 31,149 22,175 11.5% 25.1% 10.3% 43.9% 31.2% 38 Frasers Centrepoint Trust Capital Resources overview Credit ratings Frasers Centrepoint Asset Management (“FCaM”), as Manager of Frasers Centrepoint Trust (“FCT”), continues to maintain a prudent financial structure and adequate financial flexibility to ensure that it has access to capital resources at attractive cost. FCAM monitors FCT’s cash flows, financial position, debt maturity profile, cost of funds, interest rates exposure and overall liquidity position on a continuous basis. FCAM monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance its operations. It also maintains an amount of available banking facilities deemed sufficient by management with several reputable banks to ensure FCT has access to diversified sources of bank borrowings. sources of Funding FCT relies on the debt capital and syndicated loans markets, equity market and bilateral bank facilities for its funding needs. FCAM maintains active relationship with several reputable banks which are located in Singapore. The principal bankers of FCT are DBS Bank Ltd, Oversea- Chinese Banking Corporation and Standard Chartered Bank. As at 30 September 2012, FCT has a total capacity of $789 million from its sources of funding, of which $577 million or 73.1% has been utilised. The following table summarises the capacity and the amount utilised for each of the sources of funding: FCT has corporate credit ratings from Moody’s Investors Service (“Moody’s”) and Standard & Poor’s Rating Services (“s&p”). Moody’s has given FCT a corporate credit rating of “Baa1” with a stable outlook and S&P has given FCT a corporate rating of “BBB+” with a stable outlook as well. In addition, S&P has also given a “BBB+” credit rating with a stable outlook for FCT’s multicurrency Medium Term Notes Programme (“MTn programme”). debt profile The Manager announced in June 2012 the issue of two new Medium Term Notes (“notes”) comprising $70 million 2.3% Notes due 2015 (series 005 Notes) and $30 million 2.85% Notes due 2017 (series 006 Notes), both under the existing $500 million multicurrency MTN Programme. Part of the proceeds from these issues was utilised to retire the $75 million 4.8% Notes which matured in June 2012, while the remaining of the proceeds was utilised to finance the investments of FCT, asset enhancement works initiated by FCT and general working capital purposes of FCT. FCT’s total gross borrowings stood at $577 million at end- September in the financial year under review, of which $58 million of borrowing (10% of total borrowing) will mature in the next 12 months. The total borrowings comprised $334 million in secured bank borrowings, $240 million in unsecured Notes and $3 million in revolving credit facility. FCT’s gearing remains healthy at 30.1% as at 30 September 2012. The interest cover for the financial year ended September 2012 was also healthy at 5.56 times. FCT’s weighted average debt maturity is 3.08 years as at 30 September 2012. sources of Funding Sources of Funding Type Capacity Utilised %Untilised Revolving credit facility Unsecured $30 million $3 million Medium Term Note Programme1 Unsecured $425 million $240 million Bank borrowings Total Secured $334 million $334 million $789 million $577 million 10.0% 56.5% 100.0% 73.1% 1 FCT established the $500 million MTN Programme on 7 May 2009. The $75 million 4.8% Notes due June 2012 which was issued under this Programme, was retired upon its maturity. The available capacity under the Programme is reduced correspondingly by $75 million to $425 million. Annual Report 2012 39 Highlights Financial Year ended 30 September Total Borrowings Gearing1 Interest Cover Average Cost of Borrowing 2012 $577 million 30.1% 5.56 times 2.71% 2011 $559 million 31.3% 4.62 times 3.01% 1 Calculated as the ratio of total borrowings over the total assets as at the stated balance sheet date. debt Maturity profile (as at 30 september 2012) Timeframe < 1year 1-2 years 2-4 years > 4 years Total Borrowings $577 million Amount As % of total debt $58 million $60 milllion $359 million $100 million $577 million 10.1% 10.4% 62.2% 17.3% 100% $359 million (62.2% of total debt) $58 million (10.1% of total debt) $60 million (10.4% of total debt) $100 million (17.3% of total debt) Total Debt < 1year 1-2 years 2-4 years > 4 years 40 Frasers Centrepoint Trust Market Overview slow global economy growth in 2013, but singapore domestic economy is expected to stay resilient positive retail sales growth in the recent retail sales index The global economy is expected to continue to be sluggish in 2013. The macroeconomic issues such as the on-going sovereign debt problems in the Eurozone, the sluggish US economy and the slower GDP outlook of developed nations in general are likely to remain overhanging issues. Asia economy outlook is likely to remain resilient although the overall growth is likely to be moderate. The Government has forecast Singapore’s GDP to grow around 1.5% in 2012 and 1.0% to 3.0% in 20131. Despite the slower growth outlook, the domestic economy is expected to stay resilient and unemployment is likely to remain low. Wages are expected to rise by more than 3% next year2. retail sector to remain stable The retail sector is expected to remain relatively stable and resilient. The real estate market statistics from the Urban Redevelopment Authority (URA) and leading property consultants showed that overall rentals in the retail sector have been stable since the Global Financial Crisis and occupancy of retail properties has stayed at healthy levels. The growing domestic population, sustained low unemployment rate and growing household income in the recent years have also helped to grow and underpin the stability of the retail sector. Rising wages, in general, would also enhance consumer spending power and this bodes well for the retail sector. In a recent Third Quarter 2012 Business Expectation Survey3 conducted by the Department of Statistics, Singapore (DOS), the survey results showed that within the retail trade industry, a net weighted balance of 15% of firms are optimistic about business prospects for the second half of 2012 compared with the first half of the year. These include department stores as well as retailers of wearing apparel & footwear and jewellery & watches, citing the year-end holiday season as the reason for their optimism. The recent Retail Sales Index in the month of September 20124 indicated that retail sales, excluding motor vehicles, rose 3.9% year on year, a continued improvement from the decline of 0.7% in July 2012 and the 2.7% growth in August 2012. In particular, retailers of telecommunications apparatus & computers and supermarkets recorded double-digit year-on-year growth in sales of 15.8% and 13.8% respectively in September 2012. According to the URA’s real estate shop rental index (all area) in Exhibit 1, the retail rental has moderated over the last 12 months since September 2011, but it has remained below the peak achieved in the second quarter of 2008. Industry analysts have expected the rental index to remain relatively stable over the near term. URA projects an aggregate of 426,000 square meters (or 4,585,425 square feet) of gross shop space supply under construction from 2013 to 2016. The profile of the supply pipeline is shown in Exhibit 2. 1 Ministry of Trade and Industry, Press Release: MTI Forecasts Growth of Around 1.5 Per Cent in 2012 and 1.0 to 3.0 Per Cent in 2013, 16 November 2012. Available from: http://www.mti.gov.sg/ResearchRoom/SiteAssets/Pages/Economic-Survey-of-Singapore-Third-Quarter-2012/PR_3Q12.pdf [Accessed 16 November 2012]. 2 The Straits Times, MAS warns of sluggish growth ahead for Singapore, 31 October 2012. Available from: http://www.straitstimes.com/breaking-news/ singapore/story/mas-warns-sluggish-growth-ahead-singapore-20121031 [Accessed 31 October 2012]. 3 Department of Statistics, Business Expectations Survey (Services Sector) Third Quarter 2012, 31 July 2012. Available from: http://www.singstat.gov.sg/ news/news/bes3q2012.pdf [Accessed 12 November 2012]. 4 Department of Statistics, Press release: Retail Sales Index September 2012, 15 November 2012. Available from: http://www.singstat.gov.sg/news/news/ mrssep2012.pdf [Accessed 16 November 2012]. Annual Report 2012 41 Exhibit 1: Ura real Estate shop rental index 124 122 120 118 116 114 112 110 108 106 Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep 2007 2008 2009 2010 2011 2012 Source: Bloomberg [Accessed 23 November 2012] Index is based at 100 as at Dec-1998 Exhibit 2: shop space supply pipeline Gross Supply (’000 square meters) 250 200 150 100 50 0 Planned Under Construction Planned Under Construction 2013 2 139 2014 16 167 2017 73 120 2016 > 2016 42 0 9 23 Source: Urban Redevelopment Authority. Available from http://www.ura.gov.sg/pr/graphics/2012/pr12-120e2.pdf [Accessed 29 October 2012] 42 Frasers Centrepoint Trust Risk Management Effective risk management is a fundamental part of FCT’s business strategy. Key risks, control measures and management actions are continually identified, reviewed and monitored by management as part of FCAM’s enterprise wide risk management (“ErM”) framework. Recognising and managing risks are central to the business and to protecting unitholders’ interests and value. risK ManaGEMEnT FraMEworK Risks are reported and monitored at the operational level using a Risk Scorecard which captures risks, mitigating measures, timeline for action items and risk ratings. Where applicable, Key Risk Indicators (“Kris”) are established to monitor risks. For risks that are material, the mitigating measures and KRIs are presented in the form of a Key Risk Dashboard and reviewed by the Management on a regular basis. ERM reporting is facilitated through a web-based Corporate Risk Scorecard system which enables the reporting of risks and risk status using a common platform in a consistent and cohesive manner. risK UpdaTE Formal risk reviews take place half yearly and the scorecard is updated concurrently. On a half yearly basis, ERM validation sessions are held where the Management of FCAM provides assurance to the Audit Committee that key risks have been identified and the control measures are adequate. FCAM also seeks to benchmark its ERM programme against industry best practices and standards. In assessing areas for improvement and how the ERM processes and practices can be strengthened, reference was made to the best practices in risk management set out in the Risk Governance Guidance for Listed Boards issued by the Corporate Governance Council in May 2012. During the year, FCAM initiated a review of the risk scorecards and will adopt recommendations to improve the identification and recording of risks, where appropriate. As every staff has a role to play in risk management, ERM and business continuity plan (“BCp”) awareness briefings are conducted for new staff. Refresher sessions are also held to update staff on relevant developments in the area of ERM and BCP. KEY risKs in FinanCial YEar 2011/2012 operational risks FCAM has established and strictly adhered to a set of standard operating procedures designed to identify monitor, report and manage the operational risks associated with the day-to-day management and maintenance of FCT malls. The procedures and guidelines are regularly reviewed and benchmarked against industry best practices to ensure relevance and effectiveness. BCPs and insurances are also in place to mitigate losses resulting from natural disasters and pandemic outbreak. BCPs are regularly tested for their effectiveness. Human Capital risk FCAM has in place a career planning and development system and conducts regular salary and benefits benchmarking sessions to attract and retain appropriate talent for the business. liquidity risks In managing FCT, FCAM adheres closely to the covenants in the loan agreements and property fund guidelines in the Code of Collective Investment Schemes issued by the Monetary Authority of Singapore. In addition, there is close monitoring by FCAM of FCT’s cash flow position and requirements so as to ensure sufficient liquidity reserves to finance its operations and meet any short term obligations. investment risks As FCT grows its investment portfolio via acquisition of new properties and other forms of permitted investments, all investment opportunities are subject to a disciplined and rigorous appraisal process. All investment proposals are evaluated based on a comprehensive set of investment criteria including alignment with FCT’s investment mandate, asset quality, expected returns, sustainability of asset performance and future growth potential, and having due regard to market conditions and outlook. interest rate risk Interest rate risk is managed by FCAM on an on-going basis with the primary objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates. FCAM adopts a policy of fixing the interest rates for a major portion of its outstanding borrowings via financial derivatives or other suitable financial products. Credit risk FCAM has established credit limits for customers and monitors their debt levels on an ongoing basis. Credit evaluations are performed before lease agreements are entered into with customers. Credit risk is also mitigated by the rental deposits held for each of the customers. Cash and fixed deposits are placed with a regulated financial institution. Compliance risk FCT is subject to relevant laws and regulations including the Listing Manual of the Singapore Exchange Securities Trading Limited, the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore and the tax rulings issued by the Inland Revenue Authority of Singapore with regard to the taxation of FCT and its Unitholders. Any changes to these regulations may affect FCT’s operations and results. FCAM has in place policies and procedures to facilitate compliance with applicable laws and regulations. Mall Profiles 44 Causeway Point 46 Northpoint 48 Bedok Point 50 YewTee Point 52 Anchorpoint 54 Hektar Real Estate Investment Trust 44 Frasers Centrepoint Trust Causeway Point Year of Completion 1998 address 1 Woodlands Square, Singapore 738099 Connectivity Woodlands MRT Station and bus interchange Tenure 99 years leasehold (expires year 2094) net lettable area 415,896 sq ft leases 201 area population 245,109 appraised value $890.0 million Carpark lots 560 (During refurbishment) 843 (Upon completion of refurbishment in December 2012) profile snapshot as at 30 September 2012 Causeway Point is an award-winning retail mall located in the heart of Woodlands, one of the most populous residential estates in Singapore. The mall is conveniently located next to the Woodlands MRT station and the Woodlands regional bus interchange. It is the largest mall within FCT’s portfolio with total lettable area of 415,896 square feet. The mall offers more than 200 stores and outlets spread over seven floors and a basement level, making it a convenient shopping destination for shoppers. Top tenants of the mall include Metro (departmental store), Courts (IT, electrical and furniture retailer), Cold Storage (supermarket) and Cathay Cineplexes. Causeway Point enjoys good shopper catchment comprising residents and commuters from the surrounding housing estates, schools, offices and factories. Shopper footfall was 20.7 million1 in FY2012 or an average of 1.7 million per month. The mall was recently refurbished with distinctive mall features, new outlets, more vibrant shopping ambience and more family-friendly facilities. The mall has also won the prestigious Platinum Award in the BCA’s GreenMark program for its host of “Green” features that reduces its energy consumption and carbon footprint. 1The refurbishment works at Causeway Point are still on-going for FY2012 ended September 2012. Full completion is expected in December 2012. Causeway point Highlights Financial Year ended 30 september Gross Revenue ($’000) Net Property Income ($’000) Occupancy Visitor Traffic (million) FY2012 66,507 48,584 87.7% 20.7 FY2011 51,563 35,477 92.0% * Change +29.0% +36.9% -4.3% point n.a. * The visitor traffic information in FY2011 for Causeway Point was not available as its electronic traffic counters were deactivated due to refurbishment works at the mall. Annual Report 2012 45 strong revenue and npi growth improving shopper traffic Causeway Point delivered strong performance in FY2012. Gross revenue for the year was $66.5 million, up 29% and net property income (“NPI”) was $48.6 million, up 36.9%. The strong revenue performance was attributed to the sharp recovery in the occupancy of the mall, healthy rental reversions and higher receipts from turnover rents and car park income, following the substantial completion of the mall’s asset enhancement initiative (“AEI”). Property expense increased at a slower rate of 11.4% to $17.9 million, due to operational cost control measures as well as write back of provisions that were no longer required. achieved healthy rental revision of 9.1% for the year The average rental reversion at Causeway Point has remained healthy at 9.1% in FY2012 (FY2011: 8.8%). A total of 15 leases with an aggregate net lettable area (“NLA”) of 79,535 square feet were renewed. The NLA renewed accounted for approximately 19% of the mall’s total NLA. aEi to complete on schedule in end-december 2012 The AEI works at Causeway Point has entered the final stage prior to handing over to the tenants. As at 30 September 2012, occupancy of the mall stood at 87.7%, which was 4.3% point lower than the prior year, due to the ongoing AEI. The mall is expected to achieve full occupancy upon full completion of the AEI in end-December 2012. The total shopper footfall in FY2012 was 20.7 million or an average of about 1.7 million per month. There was no comparable data for the prior year FY2011 as the traffic counters at the mall were deactivated due to the AEI works. The footfall to the mall has improved steadily in the last few months in FY2012 (June to September 2012), which could be attributed to several promotional events and festive celebrations at the mall during the period. Healthy trade and tenancy mix As at 30 September 2012, Causeway Point has a total of 201 running leases, excluding vacancy. The top five tenants ranked by gross rental income (“GRI”) were Metro, Courts, Cold Storage Supermarket, Food Republic and Cathay Cineplexes. These five tenants contributed collectively, 26.5% (FY2011: 28%) of the mall’s total gross rental income. The details of the top 10 tenants by GRI are presented in chart below. The top 5 trades by NLA were fashion, food & restaurants, departmental store, household and leisure & entertainment. The NLA weightage of the food & restaurants trade is expected to increase when the tenants at the 5th level of mall, which are mainly restaurants and food outlets, commence trading progressively at the end of December 2012. The detail breakdown of the trade mix by trade and by gross rental income is presented in charts below. Top 10 Tenants by Gross rental income (as at 30 September 2012) Metro 1 Courts Cold Storage 2 Food Republic Cathay Cineplexes Uniqlo McDonald’s Aspial-Lee Hwa Jewellery 3 Soo Kee Jewellery Esprit 5.3% 4.4% 7.5% 6.8% 1 Includes the leases for Metro Departmental Store and Clinique Service Centre Includes the leases for Cold Storage, Guardian Pharmacy and 7-Eleven 2 3 Includes the leases for Lee Hwa Jewellery, CITIGEMS and Goldheart Jewellery 2.6% 2.3% 1.9% 1.7% 1.6% 1.6% Trade Mix by net lettable area (as at 30 September 2012) Trade Mix by Gross rental income (as at 30 September 2012) 10 1112 9 8 1 7 6 5 2 4 3 10 11 9 8 7 1 3 2 Trade Classifications 1 Fashion 2 Food & Restaurants 3 Department Store 4 Vacant 5 Household 6 Leisure/Entertainment 7 Supermarket/Hypermarket 8 Services/Education 9 Beauty, Hair, Cosmetics, Personal Care 17.9% 16.3% 14.4% 11.8% 11.2% 7.7% 5.7% 4.0% 3.8% 10 Books, Music, Art & Craft, 3.6% Hobbies 11 Healthcare 1.9% 12 Sports Apparels & Equipment 1.4% Total 100.0% 6 5 4 Trade Classifications 1 Fashion 2 Food & Restaurants 3 Household 4 Department Store 5 Beauty, Hair, Cosmetics, Personal Care 6 Services/Education 7 Healthcare 8 Supermarket/Hypermarket 9 Books, Music, Art & Craft, 28.2% 25.4% 11.0% 7.3% 6.8% 6.3% 3.6% 3.3% Hobbies 3.2% 2.6% 10 Leisure/Entertainment 11 Sports Apparels & Equipment 2.4% Total 100.0% well-staggered lease expiry profile Causeway Point has a well-staggered lease maturity profile which is shown in the table below: Causeway point lease Expiry profile (As at 30 September 2012) FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Number of Leases Expiries as % Gross Rental Income Net Lettable Area (square feet) Expiries as % Net Lettable Area 47 11.4% 42,379 11.5% 80 43.5% 153,535 41.8% 64 32.9% 99,455 27.1% 8 9.5% 39,246 10.7% 1 0.1% 377 0.1% 1 2.6% 32,102 8.7% 46 Frasers Centrepoint Trust Northpoint Year of Completion 1992 address 930 Yishun Avenue 2, Singapore 769098 Connectivity Yishun MRT Station and bus interchange Tenure 99 years leasehold (expires in 2089) net lettable area 234,781 sq ft leases 180 area population 185,214 Carpark lots 236 appraised value $570.0 million profile snapshot as at 30 September 2012 Northpoint, opened in 1992, is Singapore’s pioneer suburban retail mall. The mall is located in the central of the populous Yishun estate. The mall offers 6 levels of shopping, including 2 basements. It is connected to the Yishun bus interchange and is also linked to the Yishun MRT Station via a direct underground pedestrian underpass. Northpoint is the second largest mall in FCT’s portfolio with an aggregate net lettable area of 234,781 square feet. The mall consistently attracts high shopper flow from the surrounding residential estate, schools and commuter traffic. Shopper footfall in FY2012 was 40.8 million or an average of 3.4 million per month, one of the highest among suburban malls in Singapore. Key tenants at Northpoint include Cold Storage, Harvey Norman, Kopitiam and Popular Bookstore. The mall also features a community library and a 5,400 square feet rooftop wet and dry children’s playground. northpoint Highlights Financial Year ended 30 september Gross Revenue ($’000) Net Property Income ($’000) Occupancy Visitor Traffic (million) FY2012 46,669 33,362 99.7% 40.8 FY2011 45,036 33,178 98.3% 38.2 Change +3.6% +0.6% +1.4% point +6.8% Annual Report 2012 47 the Yishun Bus Interchange adjacent to Northpoint were evacuated and demolished. This was likely to have contributed to the increased footfall to Northpoint, in addition to the promotional and festive events held in the mall during the year. Healthy Trade and Tenancy Mix As at 30 September 2012, Northpoint has a total of 180 running leases, excluding vacancy. The top five tenants ranked by gross rental income (“GRI”) were Kopitiam, Cold Storage Supermarket, Pertama Merchandising, OCBC Bank and United Overseas Bank. These five tenants contributed collectively, 19.5% (FY2011: 17.8%) of the mall’s total gross rental income. The details of the top 10 tenants by GRI are presented in chart below. The top 5 trades by NLA were Food & Restaurants, Service/ Education, Fashion, Supermarket and Books, Music, Art & Craft, Hobbies. The detail breakdown of the trade mix by trade and by gross rental income is presented in charts below. stable performance Northpoint delivered stable performance in FY2012. Gross revenue for the year was $46.7 million, up 3.6% and net property income (“NPI”) was $33.4 million, up 0.6%. The mall enjoyed higher rental revenue and higher receipt from car park income. Occupancy of the mall also improved 1.4% point to 99.7% as at 30 September 2012. Property expenses rose 12.2% on year to $13.3 million, on higher property tax and maintenance expenses. Healthy rental reversion of 14.1% for the year The average rental reversion for the year under review was 14.1% (FY2011: 7.3%), which was the highest among all the 5 malls in FCT’s portfolio. A total of 76 leases with an aggregate net lettable area (“NLA”) of 128,407 square feet, accounting for 54.4% of the mall’s total NLA, were renewed during the year. improved shopper traffic The total shopper footfall in FY2012 was 40.8 million or an average of about 3.4 million per month. This is 6.8% higher than the 38.2 million footfall registered in the prior year. Three blocks of 2-storey HDB shops and dwelling units and two public car parks surrounding Top 10 Tenants by Gross rental income (as at 30 September 2012) Kopitiam Pte Ltd Cold Storage 1 Pertama Merchandising Oversea-Chinese Banking United Overseas Bank Soo Kee Jewellery 2 Aspial-Lee Hwa Jewellery 3 Popular Book Company Malayan Banking Berhad Suki Sushi Pte Ltd 2.4% 2.4% 2.2% 2.1% 2.1% 2.0% 1.9% 1.9% 6.5% 6.0% 1 Includes the leases for Cold Storage supermarket and Guardian Pharmacy and 7-Eleven 2 Includes the leases for 3 Soo Kee Jewellery and SK Jewellery Includes the leases for Lee Hwa Jewellery, CITIGEMS and Goldheart Jewellery Trade Mix by net lettable area (as at 30 September 2012) Trade Mix by Gross rental income (as at 30 September 2012) 10 1112 9 8 7 6 5 4 3 1 2 8 9 10 11 7 6 1 2 Trade Classifications 1 Food & Restaurants 2 Services/Education 3 Fashion 4 Supermarket/Hypermarket 5 Books, Music, Art & Craft, Hobbies 6 Household 7 Beauty, Hair, Cosmetics, 28.0% 17.2% 16.5% 8.7% 6.7% 6.2% Personal Care 5.7% 4.5% 8 Leisure/Entertainment 3.5% 9 Healthcare 10 Sports Apparels & Equipment 2.8% 0.3% 11 Vacant 0.0% 12 Department Store Total 100.0% 5 4 3 Trade Classifications 1 Food & Restaurants 2 Fashion 3 Services/Education 4 Beauty, Hair, Cosmetics, Personal Care 5 Healthcare 6 Household 7 Books, Music, Art & Craft, 31.2% 28.6% 12.1% 7.0% 4.9% 4.7% Hobbies 4.0% 8 Supermarket/Hypermarket 3.0% 9 Sports Apparels & Equipment 2.6% 1.9% 10 Leisure/Entertainment 0.0% 11 Department Store Total 100.0% northpoint lease expiry profile The lease maturity profile of Northpoint is shown in the table below: northpoint lease Expiry profile (As at 30 September 2012) FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Number of Leases Expiries as % Gross Rental Income Net Lettable Area (square feet) Expiries as % Net Lettable Area 60 32.1% 59,011 25.1% 43 17.4% 37,661 16.0% 74 45.1% 130,040 55.3% 5 3.5% 4,954 2.1% 1 1.9% 3,662 1.6% - 0.0% - 0.0% 48 Frasers Centrepoint Trust Bedok Point Year of Completion 2010 address 799 New Upper Changi Road, Singapore 467351 Connectivity Bedok MRT Station and bus interchange net lettable area 81,393 sq ft leases 77 Tenure 99 years leasehold (expires year 2077) area population 294,519 Carpark lots 76 appraised value $128.0 million profile snapshot as at 30 September 2012 Bedok Point is a 4-storey mall with 2 basement levels located in town centre of Bedok, which is one of the largest residential estates in Singapore by population. The mall is well-served by the nearby Bedok MRT station and the Bedok bus interchange. The mall offers an exciting array of restaurants, food outlets, entertainment, retail and service offerings that makes it an attractive destination for families, students and PMEBs (Professionals, Managers, Executives and Businessmen) around the precinct. The shops and outlets at Bedok Point include Paradise Inn, K Box, Challenger, Sushi-Tei, Beijing 101, Mind Stretcher, among others. Total shopper footfall to the mall in FY2012 was 8.0 million. Bedok point Highlights Financial Year ended 30 september Gross Revenue ($’000) Net Property Income ($’000) Occupancy Visitor Traffic (million) FY2012 12,464 8,045 98.7% 8.0 FY2011 Change 269 157 98.3% 8.3# n.m. n.m. +0.4% point -6.4% n.m.: not meaningful as Bedok Point was acquired on 23 September 2011. # For the nine and a half months period between mid-December 2010 and September 2011. Annual Report 2012 49 revenue and npi better than forecast Healthy trade and tenancy mix Bedok Point achieved revenue of $12.5 million and net property income (“NPI”) of $8.0 million in FY2012. This performance is better than the forecast provided in the Circular to Unitholders dated 24 August 2011 in connection with the acquisition of Bedok Point. The actual revenue of $12.5 million was 6% better than the $11.8 million in the forecast while the NPI of $8.0 million was 15% (based on figures before rounding) better than the forecast of $7 million. As at 30 September 2012, Bedok Point has a total of 77 running leases, excluding vacancy. The top five tenants ranked by gross rental income (“GRI”) were Paradise Group, K Box (Bedok Central) Pte Ltd, Sushi-Tei Pte Ltd, Beijing 101 Hair Consultants Pte Ltd and Mind Stretcher. These top five tenants contributed collectively, 21.7% of the mall’s gross rental income. The details of the top 10 tenants by GRI are presented in chart below. The key reasons for the better revenue performance were better- than-expected mall occupancy and higher income from car park and short-term leasing. The better NPI was attributed to lower maintenance charges and other property expenses. The top 5 trades by NLA were food & restaurants; leisure/ entertainment; services/education; beauty/hair/cosmetics & personal care; and household. The detail breakdown of the trade mix by trade and by gross rental income is presented in charts below. Bedok Pointhas no lease renewals in FY2012 as the current leases are still in their first lease cycle. shopper traffic The total shopper footfall in FY2012 was 8.0 million, lower than the 8.3 million registered in the nine and a half months period between mid-December 2010 and September 2011. Top 10 Tenants by Gross rental income (as at 30 September 2012) Paradise Group Holdings Pte Ltd K Box (Bedok Central) Pte Ltd Sushi-Tei Pte Ltd Beijing 101 Hair Consultants Pte Ltd Mind Stretcher Learning Centre Pte Ltd Louisiana QSR Pte Ltd L.A.I Singapore Pte Ltd Pastamatrix International Pte Ltd Sports Link Holdings Pte Ltd Pro Trim (II) Hair Studio 6.3% 5.6% 4.0% 3.2% 2.6% 2.6% 2.6% 2.5% 2.3% 2.3% Trade Mix by net lettable area (as at 30 September 2012) Trade Mix by Gross rental income (as at 30 September 2012) 9 10 11 12 7 8 6 1 5 4 3 2 7 8 91011 6 5 4 3 2 Trade Classifications 1 Food & Restaurants 2 Leisure/Entertainment 3 Services/Education 4 Beauty, Hair, Cosmetics, Personal Care 5 Household 6 Fashion 7 Books, Music, Art & Craft, 42.1% 12.9% 10.8% 10.4% 7.1% 6.9% Hobbies 5.1% 8 Sports Apparels & Equipment 2.7% 1.3% 9 Vacant 0.6% 10 Healthcare 0.0% 11 Supermarket/Hypermarket 0.0% 12 Department Store Total 100.0% 1 Trade Classifications 1 Food & Restaurants 2 Beauty, Hair, Cosmetics, Personal Care 3 Fashion 4 Services/Education 5 Leisure/Entertainment 6 Books, Music, Art & Craft, Hobbies 7 Household 8 Sports Apparels & Equipment 9 Healthcare 10 Department Store 11 Supermarket/Hypermarket 45.0% 14.3% 10.1% 9.8% 8.2% 5.3% 3.9% 2.3% 1.1% 0.0% 0.0% Total 100.0% well-staggered lease expiry profile Bedok Point has a well-staggered lease maturity profile which is shown in the table below: Bedok point lease Expiry profile (as at 30 September 2012) FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Number of Leases Expiries as % Gross Rental Income Net Lettable Area (square feet) Expiries as % Net Lettable Area 23 18.3% 8,234 10.3% 39 51.8% 41,186 51.3% 10 21.2% 20,924 26.1% 5 8.7% 9,962 12.4% - 0.0% - 0.0% - 0.0% - 0.0% 50 Frasers Centrepoint Trust YewTee Point Year of Completion 2008 address 21 Choa Chu Kang North 6, Singapore 689578 Connectivity Yew Tee MRT Station and bus stop Tenure 99 years leasehold (expires in 2105) net lettable area 73,602 sq ft appraised value $147.0 million area population 173,291 leases 76 Carpark lots 83# profile snapshot as at 30 September 2012 YewTee Point is a 2-storey retail mall comprising one basement and one storey above ground. The mall is located in the town centre of Yew Tee housing estate and is adjacent to Yew Tee MRT station. YewTee Point’s key tenants include NTUC Fairprice, Koufu (food court), KFC, Burger King, among others. It draws shoppers from the surrounding Yew Tee housing estate, school, military camps and the nearby industrial estate. Total shopper footfall to the mall in FY2012 was 11.5 million. YewTee point Highlights Financial Year ended 30 september Gross Revenue ($’000) Net Property Income ($’000) Occupancy Visitor Traffic (million) FY2012 13,124 9,628 96.3% 11.5 FY2012 12,988 9,393 95.6% 11.4 Change +1.0% +2.5% +0.7% point +0.9% # Part of limited common property for the exclusive benefit of YewTee Point Annual Report 2012 51 revenue and npi remained stable Trade and tenancy mix YewTee Point revenue remained relatively stable at $13.1 million compared to $13.0 million in the prior year. Net property income (“NPI”) improved 2.5% year-on-year to $9.6 million on lower property expense from write back of provisions and lower utilities charges, but partly offset by higher repair and maintenance expenses compared to the prior year. rental reversion of 9.6% achieved for the year YewTee Point achieved an average rental reversion of 9.6% in FY2012, which is higher than the 7.0% achieved in the prior year. A total of 33 leases with an aggregate net lettable area (“NLA”) of 37,577 square feet were renewed. The NLA renewed accounted for approximately 51.1% of the mall’s total NLA. shopper traffic The total shopper footfall in FY2012 was 11.5 million, slightly higher than the 11.4 million registered in FY2011. As at 30 September 2012, YewTee Point has a total of 77 running leases, excluding vacancy. The top five tenants ranked by gross rental income (“GRI”) were NTUC Fairprice supermarket, food court operator Koufu, Watson’s Personal Care Stores Pte Ltd, KFC Singapore and Burger King. These top five tenants contributed collectively, 37.4% of the mall’s gross rental income. The details of the top 10 tenants by GRI are presented in chart below. The top 5 trades by NLA were food & restaurants; supermarket; beauty/hair/cosmetics & personal care; services/education; and healthcare. The detail breakdown of the trade mix by trade and by gross rental income is presented in charts below. Top 10 Tenants by Gross rental income (as at 30 September 2012) NTUC Fairprice Co-operative Ltd Koufu Pte Ltd Watson’s Personal Care Stores Pte Ltd KFC Singapore Bon-Food Pte Ltd Asia Pacific Food Pte Ltd West Co’z Café Pte Ltd Pastamatrix International Pte Ltd XWS Pte Ltd BreadTalk Pte Ltd 3.5% 3.5% 2.9% 2.8% 2.2% 2.1% 2.0% 2.0% 9.9% 17.6% Trade Mix by net lettable area (as at 30 September 2012) Trade Mix by Gross rental income (as at 30 September 2012) 8 9 1011 Trade Classifications 101112 9 8 1 7 6 5 4 3 2 Trade Classifications 1 Food & Restaurants 2 Supermarket/Hypermarket 3 Beauty, Hair, Cosmetics, Personal Care 4 Service/Education 5 Healthcare 6 Fashion 7 Household 8 Vacant 9 Books, Music, Art & Craft, 37.3% 21.3% 10.6% 7.7% 6.1% 5.9% 4.8% 3.7% Hobbies 2.7% 10 Sports Apparels & Equipment 0.0% 0.0% 11 Department Store 0.0% 12 Leisure/Entertainment Total 100.0% 7 6 5 4 3 2 1 1 Food & Restaurants 2 Supermarket/Hypermarket 3 Beauty, Hair, Cosmetics, Personal Care 4 Service/Education 5 Healthcare 6 Fashion 7 Household 8 Books, Music, Art & Craft, 39.2% 16.1% 13.0% 7.7% 7.7% 7.5% 5.4% Hobbies 3.4% 9 Sports Apparels & Equipment 0.0% 0.0% 10 Department Store 0.0% 11 Leisure/Entertainment Total 100.0% well-staggered lease expiry profile YewTee Point has a well-staggered lease maturity profile which is shown in the table below: YewTee point lease Expiry profile (as at 30 September 2012) FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Number of Leases Expiries as % Gross Rental Income Net Lettable Area (square feet) Expiries as % Net Lettable Area 38 45.9% 31,149 43.9% 16 11.6% 7,330 10.3% 22 42.5% 32,420 45.7% - 0.0% - 0.0% - 0.0% - 0.0% - 0.0% - 0.0% 52 Frasers Centrepoint Trust Anchorpoint Year of Completion 1997 address 368 and 370 Alexandra Road, Singapore 159952/3 Connectivity Near Queenstown MRT Station, bus stop and shuttle bus service Tenure Freehold net lettable area 71,610 sq ft appraised value $81.0 million area population 98,500 leases 68 Carpark lots 128* profile snapshot as at 30 September 2012 Anchorpoint is a two-level mall that offers an exciting range of eateries and restaurants, retail shopping and boutique outlets. It is located along Alexandra Road, opposite to the popular large home furnishing store IKEA. Anchorpoint is well-served by public bus services as well as regular shuttle bus services between the mall and the nearby office buildings in Alexandra. The stores and restaurants at Anchorpoint include Cold Storage, Koufu (food court), Japanese BBQ restaurant Gyu-Kaku as well as reputable retailers such as Charles & Keith and Cotton On, among others. Total shopper footfall to the mall in FY2012 was 3.9 million. anchorpoint Highlights Financial Year ended 30 september FY2012 FY2011 Change Gross Revenue ($’000) Net Property Income ($’000) Occupancy Visitor Traffic (million) 8,439 4,811 99.3% 3.9 8,028 4,413 98.6% 4.2 +5.1% +9.0% +0.7% point -6.4% * Located at Anchorpoint but are part of a common property of strata sub-divided mix-use development, which comprises Anchorpoint and The Anchorage (a condominium), managed by the Management Corporation Strata Title Plan No. 2304. Annual Report 2012 53 Good revenue and npi growth Healthy trade and tenancy mix Anchorpoint revenue grew 5.1% to $8.4 million and its net property income (“NPI”) grew 9.0% to $4.8 million, compared to FY2011. The growth was attributed to better rental income as the mall enjoyed full occupancy for 3 quarters of the financial year. The mall was also able to maintain its overall property expense despite higher revenue from write back of provisions and lower utilities charges compared to the prior year. rental reversion of 9.0% achieved for the year Anchorpoint achieved an average rental reversion of 9.0% in FY2012, which is lower than the 11.6% achieved in the prior year. A total of 17 leases with an aggregate net lettable area (“NLA”) of 12,299 square feet were renewed. The NLA renewed accounted for approximately 17% of the mall’s total NLA. shopper traffic The total shopper footfall in FY2012 was 3.9 million, lower than the 4.2 million registered in FY2011. As at 30 September 2012, Anchorpoint has a total of 68 running leases, excluding vacancy. The top five tenants ranked by gross rental income (“GRI”) were Cold Storage Supermarket, Koufu Pte Ltd (food court), Royal Culinary Pte Ltd (Japanese BBQ restaurant), XWS Pte Ltd (Xin Wang Hong Kong Café) and Sarika Connoisseur Cafe Pte Ltd (TCC the Coffee Connoisseur). These top five tenants contributed collectively, 28.5% of the mall’s gross rental income. The details of the top 10 tenants by GRI are presented in chart below. The top 5 trades by NLA were food & restaurants; fashion; supermarket; beauty/hair/cosmetics & personal care; and services/ education. The detail breakdown of the trade mix by trade and by gross rental income is presented in charts below. Top 10 Tenants by Gross rental income (as at 30 September 2012) Cold Storage Singapore (1983) Pte Ltd 1 Koufu Pte Ltd Royal Culinary Pte Ltd XWS Pte Ltd Sarika Connoisseur Cafe Pte Ltd Cotton On Singapore Pte Ltd G2000 Apparel (S) Pte Ltd. Jack’s Place Restaurant (Singapore) Watson’s Personal Care Stores Pte Ltd Sakuraya Foods Pte Ltd 4.4% 4.1% 3.8% 3.7% 3.7% 3.3% 3.1% 2.3% 9.9% 6.3% 1 Includes the leases for Cold Storage supermarket, Guardian Pharmacy and 7-Eleven Trade Mix by net lettable area (as at 30 September 2012) Trade Mix by Gross rental income (as at 30 September 2012) 101112 9 7 8 6 1 5 4 3 2 5 4 3 Trade Classifications 1 Food & Restaurants 2 Fashion 3 Supermarket/Hypermarket 4 Beauty, Hair, Cosmetics, Personal Care 5 Service/Education 6 Household 7 Healthcare 8 Books, Music, Art & Craft, Hobbies 9 Vacant 10 Sports Apparels & Equipment 11 Department Store 12 Leisure/Entertainment 40.2% 19.1% 15.1% 8.5% 8.3% 4.4% 2.2% 1.5% 0.7% 0.0% 0.0% 0.0% Total 100.0% 7 8 9 10 11 6 1 2 Trade Classifications 1 Food & Restaurants 2 Fashion 3 Beauty, Hair, Cosmetics, Personal Care 4 Supermarket/Hypermarket 5 Service/Education 6 Houseold 7 Healthcare 8 Books, Music, Art & Craft, 42.2% 21.0% 9.6% 9.0% 7.4% 5.5% 2.9% Hobbies 2.4% 9 Sports Apparels & Equipment 0.0% 0.0% 10 Department Store 0.0% 11 Leisure/Entertainment Total 100.0% well-staggered lease expiry profile Anchorpoint has a well-staggered lease maturity profile which is shown in the table below: anchorpoint lease Expiry profile (as at 30 September 2012) FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Number of Leases Expiries as % Gross Rental Income Net Lettable Area (square feet) Expiries as % Net Lettable Area 27 32.1% 22,175 31.2% 25 34.2% 20,792 28.4% 13 24.4% 21,341 30.0% 2 5.0% 2,724 3.8% 1 4.4% 4,704 6.6% - 0.0% - 0.0% 54 Frasers Centrepoint Trust Hektar Real Estate Investment Trust From left to right: Subang Parade, Mahkota Parade, and Wetex Parade & Classic Hotel As at 30 September 2012, FCT holds 31.17% of the units in Hektar Real Estate Investment Trust (“H-REIT”). H-REIT, an associate of FCT, is a retail-focused REIT in Malaysia listed on the Main Market of Bursa Malaysia Securities Berhad. Its property portfolio comprises Subang Parade in Selangor, Mahkota Parade in Melaka and Wetex Parade & Classic Hotel in Muar, Johor. On 2 October 2012, H-REIT completed the acquisition of 2 Kedah malls in Kulim and Sungai Petani. Hektar property profile (as at 30 September 2012) subang parade Mahkota parade wetex parade & Classic Hotel State Title NLA (Retail) Tenancies Occupancy Visitor Traffic FY2011 Purchase Price (RM) Valuation (RM) FY2011 Gross Revenue (RM) FY2011 Net Property Income (RM) Source: Hektar REIT Annual Report 2011 Selangor Freehold 494,541 sq ft 124 99.9% 8.0 million 280.0 million 385.5 million 44.4 million 28.2 million Melaka Leasehold (expiring in 2101 ) 461,067 sq ft 103 94.5% 8.2 million 232.0 million 307.0 million 37.1 million 21.5 million Johor Freehold 155,921 sq ft 98 98.6% 5.9 million 117.5 million 130.0 million 12.2 million 7.4 million Annual Report 2012 55 Hektar rEiT’s Top 10 Tenants The top ten tenants in the Hektar’s portfolio contributed approximately 26.4% of total monthly rental income. Tenant Trade sector nla (sq ft) % of total 1 Parkson 2 The Store 3 McDonald’s 4 The Reject Shop 5 Ampang Superbowl 6 World Of Sports 7 Kenny Rogers Roasters 8 K.F.C 9 Celebrity Fitness 10 Bata Department Store Department Store Food & Beverage Fashion & Footwear Leisure & Entertainment Fashion & Footwear Food & Beverage Food & Beverage Food & Beverage Fashion & Footwear Top 10 Tenants (By Monthly Rental Income Other Tenants Total 1 Based on monthly rental income for December 2011 254,009 85,413 12,946 17,695 36,717 11,517 7,096 10,282 34,317 4,200 474,192 637,337 1,111,529 nla 22.9% 7.7% 1.2% 1.6% 3.3% 1.0% 0.6% 0.9% 3.1% 0.4% 42.7% 57.3% 100.0% % monthly rental income1 11.1% 3.1% 1.9% 1.7% 1.5% 1.5% 1.5% 1.4% 1.4% 1.3% 26.4% 73.6% 100.0% Tenancy Mix (as at 30 september 2012) The largest trade segment in Hektar’s portfolio tenancy mix is the department stores and supermarkets, which constitutes approximately 33.5% of total portfolio NLA. In terms of rental income, the largest segment remains fashion and footwear, which contributes approximately 30.3% of monthly rental income. Trade Mix by net lettable area Trade Mix by Gross rental income 9 8 1 7 6 5 4 2 3 Trade Classifications 1 Fashion & Footwear 2 Food & Beverages/Food Court 3 Department Store/Super- market 4 Gifts/Books /Toys/Specialty 5 Education/Services 6 Leisure & Entertainment, Sports & Fitness 7 Electronics & IT 8 Housewares & Furnishing 9 Others 16.2% 15.6% 33.5% 6.7% 4.5% 12.4% 5.4% 3.9% 1.8% Total 100.0% 11 10 9 8 7 6 5 4 1 3 2 Trade Classifications 1 Fashion & Footwear 2 Food & Beverages/Food Court 3 Department Store/Super- market 4 Gifts/Books/Toys/Specialty 5 Education/Services 6 Leisure & Entertainment, Sports & Fitness 7 Electronics & IT 8 Housewares & Furnishing 9 Others 10 Fashion & Footwear 11 Food & Beverages/ Food Court Total 30.3% 21.8% 14.9% 9.3% 8.1% 5.1% 4.2% 2.8% 3.5% 30.3% 21.8% 100.0% lease Expiry profile (as at 30 September 2012) Number of leases expiring NLA of expiring leases (sq ft) Expires as % NLA Expires as % Monthly Rental Income* * Based on monthly rental income for December 2011 FY2012 FY2013 FY2014 FY2015 108 93 81 276,787 171,700 472,267 25% 24% 15% 26% 42% 36% 42 4,817 <1% 1% CORPORATE GOVERNANCE Corporate Governance Report Annual Report 2012 57 Introduction Introduction Frasers Centrepoint Trust (“FCTFCT”) is a real estate investment trust (“REITREIT”) listed on the Main Board of the Singapore SGX-ST”). FCT is managed by Frasers Centrepoint Asset Management Ltd. Exchange Securities Trading Limited (“SGX-ST (“Manager Manager”), which is a wholly-owned subsidiary of Frasers Centrepoint Limited (“FCLFCL”) and part of the group of companies of Fraser and Neave, Limited (“F&NF&N”). The Manager is committed to upholding high standards of corporate governance to preserve and enhance FCT’s asset value so as to maximise the returns from investments, and ultimately the distributions and total return to unitholders (“Unitholders Unitholders”) of FCT. SGX-ST”), FCT adheres closely to Listed on the Mainboard of the Singapore Exchange Securities Trading Limited (“SGX-ST the principles and guidelines of the Code of Corporate Governance 2005 (“Code 2005 Code 2005”) and other applicable laws, rules and regulations, including the SGX-ST Listing Manual. The revised Code of Corporate Governance was issued by Code 2012”). Although Code 2012 will only take effect for the the Monetary Authority of Singapore on 2 May 2012 (“Code 2012 Company in respect of annual reports for the fi nancial year commencing 1 October 2013, FCT already complies with many of its revised principles, and continues to keep pace with developments in corporate governance by enhancing its practices and framework. The Manager has general powers of management over the assets of FCT. The Manager’s main responsibility is to manage FCT’s assets and liabilities for the benefi t of Unitholders. It ensures that the business of FCT is carried on and conducted in a proper and effi cient manner. The Manager also ensures that applicable laws and regulations such as the listing rules of the SGX-ST, the Code of Collective Investment Schemes (“CISCIS”) (containing the Property Funds Guidelines) and the Securities and Futures Act (“SFASFA”), are complied with. It also supervises the property manager in its day-to-day management of the malls of FCT, namely, Anchorpoint, Causeway Point, Northpoint, YewTee Point and Bedok Point, pursuant to property management agreements entered into for each mall. The primary role of the Manager is to set the strategic direction for FCT. This includes making recommendations to the Trustee on acquisitions, divestments and enhancement of assets. As required under the licensing regime for REIT managers, the Manager holds a Capital Markets Services licence (“CMS CMS Licence”) issued by the Monetary Authority of Singapore (“MASMAS”) to carry out REIT management activities. Licence This Report gives an account of the Manager’s corporate governance framework and practices in compliance with the Code 2005. As FCT is a listed REIT, not all principles of the Code may be applicable to FCT and the Manager. Any deviations from the Code are explained. Board Matters Board Matters Principle 1: Board’s Conduct of its Affairs Principle 1: Board’s Conduct of its Affairs Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board. The composition of the Board of Directors of the Manager (“Board Board”) as at 30 September 2012 is as follows: Mr Philip Eng Heng Nee Dr Chew Tuan Chiong Mr Anthony Cheong Fook Seng Mr Chia Khong Shoong Mr Bobby Chin Yoke Choong Mr Lim Ee Seng Mr Soh Kim Soon Mr Christopher Tang Kok Kai Chairman, Non-Executive (Independent) Chief Executive Offi cer (Non-independent) Non-Executive (Non-independent) Non-Executive (Non-independent) Non-Executive (Independent) Non-Executive (Non-independent) Non-Executive (Independent) Non-Executive (Non-independent) The Board oversees the business affairs of FCT and the Manager, providing oversight, strategic direction and entrepreneurial leadership, and sets strategic aims and directions of the Manager. It works closely with Management, and has oversight of and reviews Management’s performance. The Board sets the values and standards of corporate governance for the Manager and FCT, with the ultimate aim of safeguarding and enhancing Unitholder value and achieving sustainable growth for FCT. None of the Directors has entered into any service contract directly with FCT. 58 Frasers Centrepoint Trust Corporate Governance Report Management provides the Board with complete, timely and adequate information to keep the Directors updated on the operational and fi nancial performance of FCT. As part of the Manager’s internal controls, the Board has established a Manual of Authority. This sets out the requisite levels of authorisation required for particular types of transactions to be carried out, and specifi es whether Board approval needs to be sought. The matters reserved to the Board for approval include approval of annual budgets, fi nancial plans, fi nancial statements, business strategy and material transactions of FCT, namely, major acquisitions, divestments, funding and investment proposals, and appointment of key executives. To assist the Board to effectively discharge its oversight and functions, appropriate delegations of authority to Management have been effected to enhance operational effi ciency. To assist the Board in its corporate governance and risk management responsibilities, the Audit Committee was established. Upon joining the Board, new Directors undergo an induction and/or orientation programme to provide them with information on FCT’s business, strategic directions, governance practices, policies and business activities, including major new projects. New Independent Directors who join the Board are issued a formal letter of appointment setting out relevant Directors’ duties and obligations, so as to acquaint them with their responsibilities as Directors of the Manager. The Manager sees to it that the Board is regularly updated on new developments in laws and regulations or changes in regulatory requirements and fi nancial reporting standards which are relevant to or may affect the Manager or FCT. In April 2012, July 2012, and September 2012, briefi ngs, presentations were conducted on the proposed changes to the Code being promulgated by MAS, directors’ duties in respect of company’s fi nancial statements, enhanced provisions under the SGX-ST Listing Manual to strengthen corporate governance, and the Personal Data Protection Act which Parliament passed in October 2012. In addition, the Manager encourages Directors to be members of the Singapore Institute of Directors (“SIDSID”), and for them to attend training courses from SID and receive journal updates, so as to stay abreast of changes to the fi nancial, legal and regulatory requirements, and the business environment. The Board meets regularly, at least once every quarter, to review the key activities, performance, business strategies and signifi cant operational and/or management matters pertaining to the Manager and/or FCT. In the event Directors are unable to attend Board meetings physically, the Manager’s Articles of Association allows for such meetings to be conducted via telephone, video conference or any other form of electronic or instantaneous communication. The number of Board and Audit Committee meetings held during the year ended 30 September 2012 and the attendance of Directors at these meetings, are disclosed below: Board Meetings Board Meetings Audit Committee Meetings Audit Committee Meetings Meetings held for fi nancial year ended Meetings held for fi nancial year ended 30 September 2012 30 September 2012 Mr Philip Eng Heng Nee Dr Chew Tuan Chiong Mr Anthony Cheong Fook Seng Mr Chia Khong Shoong Mr Bobby Chin Yoke Choong Mr Lim Ee Seng Mr Soh Kim Soon Mr Christopher Tang Kok Kai Principle 2: Board Composition and Guidance Principle 2: Board Composition and Guidance 4 4/4 4/4 4/4 4/4 4/4 4/4 4/4 4/4 4 NA NA 4/4 NA 4/4 NA 4/4 NA There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board’s decision making. The Board comprises eight members, of which three are independent non-executive Directors. The Board has considered the independence of Mr Bobby Chin Yoke Choong, who is also an independent director of Oversea-Chinese Banking Corporation (“OCBCOCBC”). Until 14 August 2012, OCBC was a substantial shareholder1 of F&N, with which the F&N group of companies had a business relationship, under normal commercial terms. The Board was satisfi ed that Mr Chin could be considered independent. The Board is satisfi ed that there is a strong and independent element on the Board. Note: Note: (1) A substantial shareholder of F&N is one which has 5 per cent or more interest in the voting shares of F&N. OCBC ceased to be a substantial shareholder of F&N on 14 August 2012. Corporate Governance Report Annual Report 2012 59 The size of the Board is appropriate and adequate, having regard to the scope and nature of the Manager’s and FCT’s business and operations. The Board members have core competencies and expertise and experience in various fi elds ranging from accounting and fi nance, to business management. Coupled with relevant industry knowledge and strategic planning experience of the Board members, the Board is well-placed to drive FCT’s continuous growth and success and deliver sustainable Unitholder value. Management is able to benefi t from the diverse and objective perspectives of the Board members on issues that are brought before the Board, with a healthy exchange of ideas and views between the Board and Management, to help shape the strategic process. Directors of the Manager are not subject to periodic retirement by rotation. The Board reviews its composition to ensure the appropriate size and diversity of skills, expertise and experience. Principle 3: Chairman and Chief Executive Offi cer Principle 3: Chairman and Chief Executive Offi cer There should be a clear division of responsibilities at the top of the company – the working of the Board and the executive responsibility of the company’s business – which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power. The positions of Chairman and Chief Executive Offi cer are held by separate persons. This is so that an appropriate balance of power and authority, with clear divisions of responsibilities and accountability, can be attained. Such separation of roles between the Chairman and the Chief Executive Offi cer promotes robust deliberations by the Board and Management on the business activities of FCT. The Chairman and Chief Executive Offi cer are not related to each other, nor is there any other business relationship between them. The Chairman, who is non-executive and independent, leads and ensures the effectiveness of the Board. Through the Chairman’s continuing leadership of the Board, constructive discussions among the Board members as well as between the Board and Management, and effective contribution by the Directors, are promoted. High standards of corporate governance are upheld as a result. The Chief Executive Offi cer has full executive responsibilities over the business direction and operations of the Manager. Principle 4: Board Membership Principle 4: Board Membership There should be a formal and transparent process for the appointment of new directors to the Board. The Board does not consider it necessary to establish a nominating committee. In respect of the search and nomination process for new directors, the Board identifi es the relevant and/or desirable skills and experience, and engages search companies as well as networking contacts to identify and shortlist candidates, to spread its reach for the best person for the role. Principle 5: Board Performance Principle 5: Board Performance There should be formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board. The Board uses objective performance criteria to assess the effectiveness of the Board as a whole and the contribution of each Director to the effectiveness of the Board. The Board has engaged an independent external consultant to facilitate and administer the evaluation process to enhance the quality and objectivity of the evaluation. Save for the above engagement, the external consultant does not have any other connection with the Manager. All Directors are required to assess the performance of the Board and the Board Committee. The assessment covers areas such as Board composition, Board processes, managing the Manager’s performance, Board Committee effectiveness and any specifi c areas where improvements may be made. The assessment entails the external consultant conducting interviews with the Directors. Feedback and comments received are then collated and analysed. The fi ndings of the performance evaluation (including the feedback and comments from the Directors) are then reviewed by the Board, with a view to continuing improvements. 60 Frasers Centrepoint Trust Corporate Governance Report Principle 6: Access to Information Principle 6: Access to Information In order to fulfi ll their responsibilities, Board members should be provided with complete, adequate and timely information prior to Board meetings and on an on-going basis. On an on-going basis, and prior to Board meetings, adequate and timely information is given by Management to Board members, who have separate and independent access to Management and the Company Secretary. The Company Secretary is a non-executive Director and a member of the Audit Committee. Under the direction of the Chairman, the Company Secretary ensures that Board procedures, and applicable rules and regulations are complied with. He attends all Board meetings and acts as a channel of communication for information fl ow and dissemination to and within the Board, as well as between senior Management and non-executive Directors. The annual calendar of Board activities is scheduled in advance. Board papers are dispatched to Directors about a week before scheduled meetings so that Directors have suffi cient time to review and consider matters being tabled and discussed at the meetings. Senior Executives are requested to attend the Board meetings to provide additional insights into matters being discussed and to respond to any queries from Directors. The Directors, either individually or as a group, may seek and obtain independent professional advice, where necessary, in the furtherance of their duties and at the Manager’s expense. Remuneration Matters Remuneration Matters Principle 7: Remuneration Matters Principle 7: Remuneration Matters There should be a formal and transparent procedure for developing policy on executive remuneration and for fi xing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration. Principle 8: Level and Mix of Remuneration Principle 8: Level and Mix of Remuneration The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A signifi cant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance. Principle 9: Disclosure on Remuneration Principle 9: Disclosure on Remuneration Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration in the company’s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance. FCT, as a REIT, is managed by the Manager which has experienced and well-qualifi ed management personnel to manage the operational matters of the Manager and FCT. The remuneration of the staff of the Manager and Directors’ fees are paid by the Manager from the fees it receives from FCT, and not by FCT. The Manager adopts the remuneration policies and practices of F&N, which has a Remuneration & Staff Establishment Committee (“RSECRSEC”) that oversees the remuneration and development of key executives. The RSEC ensures that a formal and transparent procedure is in place for developing policies on executive remuneration and for determining remuneration packages and service terms of individual Directors and senior Management. The RSEC also reviews on an annual basis, the level and mix of remuneration and benefi ts policies and practices including the long-term incentive schemes. It also reviews and approves the frame work for salary reviews, performance bonuses and incentives for senior Management taking into consideration the achievements of FCT and the Manager, and the performance of individual employees. Remuneration of the Directors and offi cers of the Manager are not paid out of the trust property of FCT, but are directly paid by the Manager from the fees it receives. The Directors’ fees for the fi nancial year ended 30 September 2012 is shown in the table on page 61. The Chief Executive Offi cer does not receive Director’s fees. In determining the quantum of such fees, factors such as frequency of meetings, time spent and responsibilities of Directors are taken into account. Corporate Governance Report Annual Report 2012 61 Board Members Board Members Directors’ Fees Directors’ Fees Mr Philip Eng Heng Nee (Chairman) Dr Chew Tuan Chiong Mr Anthony Cheong Fook Seng1 (Member, Audit Committee) Mr Chia Khong Shoong2 Mr Bobby Chin Yoke Choong (Member, Audit Committee) Mr Lim Ee Seng2 Mr Soh Kim Soon (Member, Audit Committee) Mr Christopher Tang Kok Kai2 (1) Director’s fees are paid to Fraser & Neave (S) Pte Ltd (2) Director’s fees are paid to FCL Management Services Pte Ltd Accountability and Audit Accountability and Audit Principle 10: Accountability and Audit Principle 10: Accountability and Audit $74,000 – $45,000 $35,000 $54,000 $35,000 $49,000 $35,000 The Board should present a balanced and understandable assessment of the company’s performance, position and prospects. The Board, with the support of Management, is responsible for providing a balanced and understandable assessment of FCT’s performance, position and prospects, on a quarterly basis. Quarterly and annual fi nancial statements and other material information are disseminated to Unitholders through announcements to the SGX-ST, and, where applicable, press releases. Financial statements of FCT are prepared in accordance with the Singapore Financial Reporting Standards prescribed by the Accounting Standards Council. Principle 11: Audit Committee Principle 11: Audit Committee The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties. The Audit Committee comprises three Non-executive Directors, two of whom including the Chairman, are independent: Mr Bobby Chin Yoke Choong Mr Anthony Cheong Fook Seng Mr Soh Kim Soon Chairman Member Member Members of the Audit Committee are appropriately qualifi ed to discharge their responsibilities, possessing the requisite accounting and fi nancial management expertise and experience. The Audit Committee is governed by written terms of reference, with explicit authority to investigate any matter within its terms of reference. It has full access to, and the co-operation of Management, and full discretion to invite any Director or executive offi cer to attend its meetings. It has reasonable resources to enable it to discharge its functions effectively. The Audit Committee’s responsibilities include:      reviewing the effectiveness of the Manager’s internal control processes including fi nancial, compliance and risk management controls/framework, reviewing the results of audit fi ndings, and directing prompt remedial action by Management; reviewing the fi nancial statements and the audit report for recommendation to the Board for approval; monitoring Management’s compliance with applicable rules and legislation, such as the listing rules of the SGX- ST, the CIS and the SFA; reviewing with the external auditors, the audit plans, audit reports and their evaluation of the system of internal controls; reviewing the appointment and re-appointment of the external auditors and their fees and recommending the same to the Board for approval, as well as reviewing the adequacy of external audits in respect of cost, scope and performance; 62 Frasers Centrepoint Trust Corporate Governance Report    reviewing the independence and objectivity of the external auditors, taking into consideration the non-audit services provided by the external auditors. For FY2012, an aggregate amount in fees, comprising audit fees of $85,000 and non-audit fees of $58,420 was paid/payable to FCT’s external auditors; reviewing the adequacy and effectiveness of the internal audit function, including its resources, audit plans and the scope and effectiveness of the internal audit procedures; and reviewing Interested Person/Party Transactions to ascertain compliance with internal procedures and provisions of applicable laws and regulations; In discharging its duties, the Audit Committee met with the internal and external auditors and reviewed both their audit plans and reports, and the assistance given by the Manager to the auditors. The Audit Committee is satisfi ed with the independence and objectivity of the external auditors and has recommended to the Board the nomination of the external auditors for re-appointment. The Audit Committee, has reviewed the nature and extent of non-audit services provided by the external auditors, and is satisfi ed that they do not affect the independence and objectivity of the external auditors. The Manager, on behalf of FCT, confi rms that FCT has complied with Rule 712 and Rule 715 of the Listing Manual in relation to its auditing fi rm. Whistle-Blowing Policy Whistle-Blowing Policy A Whistle-Blowing Policy is in place to provide an avenue through which employees may report or communicate, in good faith and in confi dence, any concerns relating to fi nancial and other matters, so that independent investigation of such matters can be conducted and appropriate follow-up action taken. Principle 12: Internal Controls Principle 12: Internal Controls The Board should ensure that the Management maintains a sound system of internal controls to safeguard the Unitholders’ investments and the company’s assets. The Manager has established a system of internal controls comprising procedures and processes to safeguard FCT’s assets, Unitholders’ interests as well as to manage risks. The Audit Committee reviews and reports to the Board on the adequacy of the system of controls, including fi nancial, operational and compliance controls, and risk management policies and systems established by Management. The Audit Committee reviews the risk profi les of FCT and the Manager, and guides Management to ensure that robust risk management and internal controls are in place. Effective risk management is fundamental to FCT’s business strategy. Key risks, control measures and management actions are continually identifi ed, reviewed and monitored by Management as part of the Manager’s enterprise-wide risk management framework. Financial and operational key risk indicators are in place to track key risk exposures. In addition, each transaction is comprehensively analysed to understand the risks involved before it is undertaken. In assessing business risks, the Board considers the economic environment and risks pertaining to the relevant industry. It reviews management reports and feasibility studies on major transactions prior to their approval. Using a comfort matrix of key risks, the material operational, fi nancial and compliance risks of the FCT Group have been documented and presented against strategies, policies, people, processes, systems, mechanism and reporting processes that have been put in place. Based on internal controls and risk management framework established and maintained by the Manager, work performed by internal and external auditors and reviews performed by Management and the Audit Committee, the Board, with the concurrence of the Audit Committee, is of the opinion that the Manager’s internal controls were adequate as at 30 September 2012 to address fi nancial, operational and compliance risks, which the Manager considers relevant and material to its operations. The Board notes that the system of internal controls and risk management provides reasonable, but not absolute, assurance that the Manager will not be adversely affected by any event that could be reasonably foreseen as it works to achieve its business objectives. In this regard, the Board also notes that no system of internal controls and risk management can provide absolute assurance against the occurrence of material errors, poor judgment in decision making, human error, losses, fraud or other irregularities. An outline of the Manager’s enterprise-wide risk management framework and progress report is set out on page 42. Corporate Governance Report Annual Report 2012 63 Principle 13: Internal Audit Principle 13: Internal Audit The company should establish an internal audit function that is independent of the activities it audits. The internal audit function of the Manager is supported by F&N’s Internal Audit Department. It conducts objective and independent assessments of the adequacy and quality of the Manager’s system of internal controls. It is independent of the activities it audits. The internal auditor’s primary line of reporting is to the Chairman of the Audit Committee. The Head of Internal Audit is a certifi ed public accountant. The F&N Internal Audit has adopted and complied with the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors. The Audit Committee is satisfi ed that the Internal Audit function is adequately resourced, and has appropriate standing within FCT and the Manager. Communication with Shareholders Communication with Shareholders Principle 14: Communication with Shareholders Principle 14: Communication with Shareholders Companies should engage in regular, effective and fair communication with Unitholders. The Manager strives to uphold high standards of disclosure and corporate transparency. It aims to provide timely, effective and fair information relating to the FCT’s performance and its developments to its Unitholders and the investment community through announcements to the SGX-ST and on FCT’s website, to enable them to make informed investment decisions. The Manager has a dedicated investor relations manager (“IR manager IR manager”) to facilitate communication between FCT, its Unitholders and the investment community. The Manager meets and communicates regularly with Unitholders and the investment community to keep them apprised of FCT’s corporate developments and fi nancial performance. During the year, the senior Management and the IR manager, met or spoke with 282 investors at investment conferences, non-deal road shows as well as one-on-one and group meetings. The Manager also conducts post-result briefi ngs for analysts and the media, following the release of its half year and full year results. For its fi rst quarter and third quarter results, this is done by conference calls. The Manager makes available all its briefi ng materials, its fi nancial information, its annual reports and all announcements to the SGX-ST on its website at www.fct.sg, with contact details for investors to channel their comments and queries. Principle 15: Companies should engage greater unitholder participation at AGMs, and allow Unitholders the Principle 15: opportunity to communicate their views on various matters affecting the company. All Unitholders are sent a copy of the Annual Report. In compliance with the Property Funds Guidelines, an Annual General Meeting (“AGMAGM”) was held during the year. The Board supports and encourages active unitholder participation at AGMs. It believes that AGMs serve as an opportune forum for Unitholders to meet the Board and senior Management, and to interact with them. A Unitholder is allowed to appoint one or two proxies to attend and vote at the general meetings on his/her behalf. Board members and appropriate senior Management are present at each Unitholders’ meeting to respond to any questions from Unitholders. The external auditors are also present to address queries about the conduct of audit and the preparation and content of the auditors’ report. For greater transparency, the Manager has implemented electronic poll voting at its AGMs, whereby Unitholders are invited to vote on relevant resolutions by way of poll (instead of by show of hands), using hand held electronic devices. This allows all Unitholders present or represented at the meeting to vote on a one vote per Unit basis. The voting results of all votes cast for, or against, of each resolution are displayed at the meeting and announced to the SGX-ST after the meeting. The Manager will continue to use the electronic poll voting system at the forthcoming AGM. Dealings in Units Dealings in Units The Manager has adopted a dealing policy (“Dealing Policy Dealing Policy”) on securities trading which provides guidance with regard to dealings in FCT units by its Directors, offi cers and employees. Directors, offi cers and employees are prohibited from dealing in FCT units:  in line with the Listing Rule 1207(19)(c) on Dealings in Securities, two weeks before the date of announcement of quarterly fi nancial statements and one month before the date of announcement of full-year results (“Prohibition Prohibition Period”); and Period  at any time while in possession of unpublished material or price sensitive information. 64 Frasers Centrepoint Trust Corporate Governance Report Directors, offi cers and employees are also directed to refrain from dealing in FCT units on short-term considerations. Prior to the commencement of the Prohibition Period, Directors, offi cers and employees will be reminded not to trade during this period or whenever they are in possession of unpublished price sensitive information. Outside of the Prohibition Period, any trades must be reported to the Board within 48 hours. Every quarter, each Director, offi cer or employee is required to complete and submit a declaration form to the Compliance Offi cer to report any trades he/ she made in FCT units in the previous quarter and confi rm that no trades were made during the Prohibition Period. A quarterly report will be provided to the Audit Committee. Any non-compliance with the Dealing Policy will be reported to Audit Committee for its review and instructions. In compliance with the Dealing Policy in relation to the Manager, prior approval from the Board is required before the Manager deals or trades in FCT units. The Manager has undertaken that it will not deal in FCT units: a) during the period commencing one month before the public announcement of FCT’s full-year results and (where applicable) property valuations and two weeks before the public announcement of FCT’s quarterly results; or b) whenever it is in possession of unpublished material price sensitive information. The Manager has also given an undertaking to the MAS that it will announce to the SGX-ST the particulars of its holdings in FCT units and any changes thereto within two business days after the date on which it acquires or disposes of any FCT units, as the case may be. Confl icts of Interest Confl icts of Interest The Manager has put in place procedures to address potential confl icts of interest (including in relation to Directors, offi cers and employees) which may arise in managing FCT. These include the following:       The Manager is to be dedicated to managing FCT and will not directly or indirectly manage other REITs. All executive offi cers of the Manager will be employed by the Manager. All resolutions in writing of the Directors in relation to matters concerning FCT must be approved by a majority of the Directors, including at least one Independent Director. At least one-third of the Board shall comprise Independent Directors. On matters where FCL and/or its subsidiaries have an interest (directly or indirectly), Directors nominated by them shall abstain from voting. In such matters, the quorum must comprise a majority of independent Directors and must exclude nominee Directors of FCL and/or its subsidiaries. An interested Director is required to disclose his interest in any proposed transaction with FCT and is required to abstain from voting on resolutions approving the transaction. Additionally, the Trustee was granted a right of fi rst refusal by FCL over completed income-producing properties located in Singapore predominantly used for retail purposes, which satisfy certain criteria. This period for which the right of fi rst refusal was granted ended on 5 July 2012. Related Party Transactions Related Party Transactions The Manager has established internal control procedures to ensure that all related party transactions (“Related Party Related Party Transactions”) are undertaken on normal commercial terms, and will not be prejudicial to the interests of FCT and the Transactions Unitholders. This may entail obtaining (where practicable) quotations from parties unrelated to the Manager, or obtaining one or more valuations from independent professional valuers (in accordance with the Property Funds Guidelines). All Related Party Transactions are entered in a register maintained by the Manager, including any quotations from unrelated parties and independent valuations supporting the bases on which such transactions are entered into. The Manager incorporates into its internal audit plan a review of the Related Party Transactions recorded in the register to ascertain that internal procedures and requirements of the Listing Manual and Property Funds Guidelines have been complied with. The Audit Committee reviews the internal audit reports at least twice a year to ascertain that the guidelines and procedures established to monitor Related Party Transactions have been complied with. In addition, the Trustee also has the right to review any such relevant internal audit reports to ascertain that the Property Fund Guidelines have been complied with. Corporate Governance Report Annual Report 2012 65 In respect of transactions entered into or to be entered into by the Trustee for and on behalf of FCT with a related party of the Manager (which would include relevant Associates (as defi ned in the Listing Manual) thereof) or FCT, the Trustee is required to satisfy itself that such transactions are conducted on normal commercial terms, are not prejudicial to the interests of FCT and the Unitholders, and in accordance with all applicable requirements of the Property Funds Guidelines and/or the Listing Manual. The Trustee has the ultimate discretion under the Trust Deed entered into between the Trustee and the Manager constituting FCT to decide whether or not to enter into such a transaction involving a related party of the Manager or FCT. Role of the Audit Committee for Related Party Transactions Role of the Audit Committee for Related Party Transactions The Audit Committee reviews Related Party Transactions periodically to ensure compliance with the internal control procedures and the relevant provisions of the Listing Manual and Property Funds Guidelines. Any member who has an interest in a transaction shall abstain from participating in the review and approval processes in relation to that transaction. FINANCIALS Annual Report 2012 67 Report of The Trustee Trustee”) is under a duty to take into custody and hold the HSBC Institutional Trust Services (Singapore) Limited (the “Trustee Trust”) and its subsidiary (collectively, the “GroupGroup”) in trust for the holders assets of Frasers Centrepoint Trust (the “Trust (“Unitholders Unitholders”) of units in the Trust (the “UnitsUnits”). In accordance with the Securities and Futures Act, Chapter 289, of Singapore, its subsidiary legislation, the Code on Collective Investment Schemes, the Trustee shall monitor the Manager”) for compliance with the limitations imposed activities of Frasers Centrepoint Asset Management Ltd. (the “Manager on the investment and borrowing powers as set out in the trust deed dated 5 June 2006 (as amended and restated) (the “Trust Deed Trust Deed”) between the Manager and the Trustee in each annual accounting period and report thereon to Unitholders in an annual report. To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Trust during the period covered by these fi nancial statements set out on pages 70 to 108 in accordance with the limitations imposed on the investment and borrowing powers set out in the Trust Deed. For and on behalf of the Trustee, HSBC Institutional Trust Services (Singapore) Limited HSBC Institutional Trust Services (Singapore) Limited Antony Wade Lewis Antony Wade Lewis Director Singapore Singapore 15 November 2012 68 Frasers Centrepoint Trust Statement By The Manager In the opinion of the directors of Frasers Centrepoint Asset Management Ltd., the accompanying fi nancial statements set out on pages 70 to 108, comprising the Balance Sheets and Portfolio Statements as at 30 September 2012, the Statements of Total Return, Distribution Statements, Statements of Movements in Unitholders’ Funds and Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory notes are drawn up so as to present fairly, in all material respects, the fi nancial positions of the Group and the Trust as at 30 September 2012, the total return, distributable income, movements in Unitholders’ funds of the Group and of the Trust and cash fl ow of the Group for the year ended on that date in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certifi ed Public Accountants of Singapore and the provisions of the Trust Deed. At the date of this statement, there are reasonable grounds to believe that the Group and the Trust will be able to meet their fi nancial obligations as and when they materialise. For and on behalf of the Manager, Frasers Centrepoint Asset Management Ltd. Frasers Centrepoint Asset Management Ltd. Mr Philip Eng Heng Nee Mr Philip Eng Heng Nee Director Singapore Singapore 15 November 2012 Dr Chew Tuan Chiong Dr Chew Tuan Chiong Director and Chief Executive Offi cer Independent Auditor’s Report To The Unitholders of Frasers Centrepoint Trust Annual Report 2012 69 Constituted in The Republic of Singapore Pursuant to a Trust Deed Dated 5 June 2006 (as Amended and Restated) We have audited the accompanying fi nancial statements of Frasers Centrepoint Trust (the “Trust Trust”) and its subsidiary (collectively, the “GroupGroup”), which comprise the Balance Sheets and Portfolio Statements of the Group and the Trust as at 30 September 2012, the Statements of Total Return, Distribution Statements, Statements of Movements in Unitholders’ Funds of the Group and the Trust and Cash Flow Statement of the Group for the year then ended, and a summary of signifi cant accounting policies and other explanatory notes, as set out on pages 70 to 108. Manager’s Responsibility for the Financial Statements Manager’s Responsibility for the Financial Statements The Manager of the Trust is responsible for the preparation and fair presentation of these fi nancial statements in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certifi ed Public Accountants of Singapore. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of fi nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Auditor’s Responsibility Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risk of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager of the Trust, as well as evaluating the overall presentation of the fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion. Opinion Opinion In our opinion, the fi nancial statements present fairly, in all material respects, the fi nancial positions of the Group and of the Trust as at 30 September 2012, the total return, distributable income, movements in Unitholders’ funds of the Group and of the Trust and cash fl ow of the Group for the year ended on that date in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certifi ed Public Accountants of Singapore. ERNST & YOUNG LLP ERNST & YOUNG LLP Public Accountants and Certifi ed Public Accountants Singapore 15 November 2012 70 Frasers Centrepoint Trust Balance Sheets As at 30 September 2012 Non-current assets Non-current assets Investment properties Fixed assets Investment in subsidiary Investment in associate Current assets Current assets Trade and other receivables Cash and cash equivalents Total assets Total assets Current liabilities Current liabilities Trade and other payables Current portion of security deposits Deferred income Interest-bearing borrowings Non-current liabilities Non-current liabilities Interest-bearing borrowings Non-current portion of security deposits Deferred income Total liabilities Total liabilities Net assets Net assets Represented by:- Unitholders’ funds Translation reserve Unitholders’ funds and reserve Unitholders’ funds and reserve Units in issue (’000) Units in issue (’000) Net asset value per Unit Net asset value per Unit * Denotes amount less than $500 GroupGroup Trust Trust NoteNote 2012 2012 $’000 $’000 2011 2011 $’000 $’000 2012 2012 $’000 $’000 2011 2011 $’000 $’000 3 4 5 6 7 8 9 10 11 11 10 12 13 14 1,816,000 129 – 71,819 1,887,948 1,697,000 134 – 53,757 1,750,891 1,816,000 129 * 63,843 1,879,972 1,697,000 134 * 51,310 1,748,444 6,302 22,869 29,171 1,917,119 5,447 30,490 35,937 1,786,828 6,302 22,869 29,171 1,909,143 5,447 30,490 35,937 1,784,381 39,868 13,817 734 58,000 112,419 41,024 14,647 730 155,000 211,401 519,000 22,036 634 541,670 654,089 1,263,030 404,000 18,833 736 423,569 634,970 1,151,858 1,268,401 (5,371) 1,263,030 823,200 $ 1.53 1,156,215 (4,357) 1,151,858 819,817 $ 1.40 39,875 13,817 734 58,000 112,426 519,000 22,036 634 541,670 654,096 1,255,047 1,255,047 – 1,255,047 823,200 $ 1.52 41,028 14,647 730 155,000 211,405 404,000 18,833 736 423,569 634,974 1,149,407 1,149,407 – 1,149,407 819,817 $ 1.40 The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements. Statements of Total Return For the Financial Year Ended 30 September 2012 Annual Report 2012 71 Gross revenue Property expenses Net property income Interest income Borrowing costs Asset management fees Professional fees Trustee’s fees Audit fees Other charges Net income Distribution from associate Share of results of associate - operations - revaluation surplus Surplus on revaluation of investment properties Unrealised gain/(loss) from fair valuation of derivatives Total return before tax Taxation Total return for the year Total return for the year Earnings per Unit (cents) Earnings per Unit (cents) Basic Diluted NoteNote 15 16 17 18 3 19 20 GroupGroup Trust Trust 2012 2012 $’000 $’000 147,203 (42,773) 104,430 7 (18,245) (10,713) (550) (309) (106) (474) 74,040 – 4,352 6,064 100,759 352 185,567 – 185,567 2011 2011 $’000 $’000 117,884 (35,266) 82,618 13 (19,134) (8,897) (745) (276) (100) (428) 53,051 – 4,448 131 97,214 (2,581) 152,263 – 152,263 2012 2012 $’000 $’000 147,203 (42,773) 104,430 7 (18,245) (10,713) (550) (309) (106) (477) 74,037 3,873 – – 100,759 352 179,021 – 179,021 2011 2011 $’000 $’000 117,884 (35,266) 82,618 13 (19,134) (8,897) (745) (276) (100) (430) 53,049 3,804 – – 97,214 (2,581) 151,486 – 151,486 22.56 22.56 19.68 19.68 21.76 21.76 19.58 19.58 The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements. 72 Frasers Centrepoint Trust Distribution Statements For the Financial Year Ended 30 September 2012 Income available for distribution to Unitholders at beginning of year Net income Net adjustments (Note A) Distribution from associate Income available for distribution to Unitholders Distributions to Unitholders: Distribution of 2.16 cents per Unit for period from 1/7/2010 to 30/9/2010 Distribution of 1.95 cents per Unit for period from 1/10/2010 to 31/12/2010 Distribution of 2.07 cents per Unit for period from 1/1/2011 to 31/3/2011 Distribution of 1.95 cents per Unit for period from 1/4/2011 to 30/6/2011 Distribution of 2.07 cents per Unit for period from 1/7/2011 to 22/9/2011 Distribution of 0.28 cents per Unit for period from 23/9/2011 to 30/9/2011 Distribution of 2.20 cents per Unit for period from 1/10/2011 to 31/12/2011 Distribution of 2.50 cents per Unit for period from 1/1/2012 to 31/3/2012 Distribution of 2.60 cents per Unit for period from 1/4/2012 to 30/6/2012 GroupGroup Trust Trust 2011 2011 $’000 $’000 16,555 53,051 7,520 3,804 64,375 80,930 16,580 14,995 15,948 15,050 – – – – – 62,573 2012 2012 $’000 $’000 18,354 74,037 4,438 3,873 82,348 100,702 – – – – 15,977 2,303 18,096 20,572 21,403 78,351 2011 2011 $’000 $’000 16,552 53,049 7,522 3,804 64,375 80,927 16,580 14,995 15,948 15,050 – – – – – 62,573 2012 2012 $’000 $’000 18,357 74,040 4,435 3,873 82,348 100,705 – – – – 15,977 2,303 18,096 20,572 21,403 78,351 Income available for distribution to Unitholders at end of year 22,354 18,357 22,351 18,354 Note A – Net adjustments relate to the following items: - Asset management fees paid/payable in Units - Trustee’s fees - Amortisation of loan arrangement fee - Amortisation of lease incentives - Deferred income and amortisation of rental deposits - Other items Net adjustments 2,402 309 671 (1,288) 12 2,329 4,435 8,113 276 478 (2,182) (1) 836 7,520 2,402 309 671 (1,288) 12 2,332 4,438 8,113 276 478 (2,182) (1) 838 7,522 The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements. Statements of Movements in Unitholders’ Funds and Translation Reserve For the Financial Year Ended 30 September 2012 Annual Report 2012 73 GroupGroup Trust Trust 2012 2012 $’000 $’000 2011 2011 $’000 $’000 2012 2012 $’000 $’000 2011 2011 $’000 $’000 Net assets at beginning of year 1,151,858 991,870 1,149,407 988,852 Operations Operations Total return for the year Unitholders’ transactions Unitholders’ transactions Creation of Units - proceeds from placement - issued as satisfaction of acquisition fee - issued as satisfaction of asset management fees Issue expense adjustment / (Issue expenses) Distributions to Unitholders Net (decrease)/increase in net assets resulting from Unitholders’ transactions 185,567 152,263 179,021 151,486 – 1,270 3,655 45 (78,351) 66,720 – 6,734 (1,812) (62,573) – 1,270 3,655 45 (78,351) 66,720 – 6,734 (1,812) (62,573) (73,381) 9,069 (73,381) 9,069 Movement in translation reserve (Note 12) (1,014) (1,344) – – Net assets at end of year 1,263,030 1,151,858 1,255,047 1,149,407 The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements. 74 Frasers Centrepoint Trust Portfolio Statements As at 30 September 2012 GROUP GROUP Description Description of Property of Property Term of Lease Term of Lease Location Location Existing Existing UseUse Occupancy Occupancy Rate as Rate as at 30 at 30 September September 2012 2012 % At Valuation At Valuation 2012 2012 $’000 $’000 2011 2011 $’000 $’000 Percentage of Percentage of Total Assets Total Assets 2012 2012 % 20112011 % Investment properties in Singapore Causeway Point 99-year leasehold from 30 October 1995 1 Woodlands Square Northpoint 99-year leasehold from 1 April 1990 930 Yishun Avenue 2 Anchorpoint Freehold 368 & 370 Alexandra Road YewTee Point Bedok Point1 99-year leasehold from 3 January 2006 21 Choa Chu Kang North 6 99-year leasehold from 15 March 1978 799 New Upper Changi Road Investment properties, at valuation Investment in associate (Note 6) Other assets Total assets attributable to Unitholders 1. Bedok Point was acquired on 23 September 2011. Commercial 87.7 890,000 820,000 46.4 45.9 Commercial 99.7 570,000 533,000 29.7 29.8 Commercial 99.3 81,000 78,000 Commercial 96.3 147,000 138,000 4.2 7.7 4.4 7.7 Commercial 98.7 128,000 128,000 6.7 7.2 1,816,000 71,819 1,887,819 29,300 1,917,119 1,697,000 53,757 1,750,757 36,071 1,786,828 94.7 3.8 98.5 1.5 100.0 95.0 3.0 98.0 2.0 100.0 The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements. Annual Report 2012 75 Portfolio Statements As at 30 September 2012 TRUST TRUST Description Description of Property of Property Term of Lease Term of Lease Location Location Existing Existing UseUse Occupancy Occupancy Rate as Rate as at 30 at 30 September September 2012 2012 % At Valuation At Valuation 2012 2012 $’000 $’000 2011 2011 $’000 $’000 Percentage of Percentage of Total Assets Total Assets 2012 2012 % 2011 2011 % Investment properties in Singapore Causeway Point 99-year leasehold from 30 October 1995 1 Woodlands Square Northpoint 99-year leasehold from 1 April 1990 930 Yishun Avenue 2 Anchorpoint Freehold 368 & 370 Alexandra Road YewTee Point Bedok Point1 99-year leasehold from 3 January 2006 21 Choa Chu Kang North 6 99-year leasehold from 15 March 1978 799 New Upper Changi Road Investment properties, at valuation Investment in associate (Note 6) Other assets Total assets attributable to Unitholders 1. Bedok Point was acquired on 23 September 2011. Commercial 87.7 890,000 820,000 46.6 46.0 Commercial 99.7 570,000 533,000 29.9 29.9 Commercial 99.3 81,000 78,000 Commercial 96.3 147,000 138,000 4.3 7.7 4.3 7.7 Commercial 98.7 128,000 128,000 6.7 7.2 1,816,000 63,843 1,879,843 29,300 1,909,143 1,697,000 51,310 1,748,310 36,071 1,784,381 95.2 3.3 98.5 1.5 100.0 95.1 2.9 98.0 2.0 100.0 The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements. 76 Frasers Centrepoint Trust Portfolio Statements As at 30 September 2012 On 30 September 2012, independent valuations of the investment properties were undertaken by Knight Frank Pte Ltd (“Knight Frank Knight Frank”), Jones Lang LaSalle Property Consultants Pte Ltd (“JLLJLL”), and Colliers International Consultancy & Valuation (Singapore) Pte Ltd (“Colliers Colliers”). The Manager believes that these independent valuers possess appropriate professional qualifi cations and recent experience in the location and category of the investment properties being valued. The valuations were performed based on the following methods: Valuer Valuer Valuation Method Valuation Method Description of Description of Property Property Causeway Point JLL (2011: JLL) Northpoint Colliers (2011: Knight Frank) Anchorpoint YewTee Point Knight Frank (2011: Colliers) Knight Frank (2011: Colliers) Bedok Point 1 Knight Frank (2011: Knight Frank) Capitalisation approach and discounted cash (2011: capitalisation approach and flows discounted cash fl ows) Direct comparison method, investment method and discounted cash flows (2011: investment method and discounted cash fl ows) Investment method and discounted cash fl ows (2011: direct comparison method, investment method and discounted cash fl ows) Investment method and discounted cash fl ows (2011: direct comparison method, investment method and discounted cash fl ows) Investment method and discounted cash fl ows (2011: investment method and discounted cash fl ows) Valuation Valuation 2012 2012 $’000 $’000 890,000 2011 2011 $’000 $’000 820,000 570,000 533,000 81,000 78,000 147,000 138,000 128,000 128,000 1. Bedok Point was acquired on 23 September 2011. The net changes in fair values of these investment properties have been recognised in the Statements of Total Return in accordance with the Group’s accounting policies. The investment properties are leased to third party tenants. Generally, these leases contain an initial non-cancellable period of three years. Subsequent renewals are negotiated with individual lessee. Contingent rent, which comprises gross turnover rent, recognised in the Statements of Total Return amounted to $7,404,000 (2011: $6,285,000). The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements. Annual Report 2012 77 Cash Flow Statement For the Financial Year Ended 30 September 2012 GroupGroup 2012 2012 $’000 $’000 2011 2011 $’000 $’000 185,567 152,263 130 (290) – 257 (15) 2 18,245 19,134 (7) 2,402 44 (10,416) (100,759) (352) (1,288) (964) (13) 8,113 38 (4,579) (97,214) 2,581 (2,182) (1,017) Operating activities Operating activities Total return before tax Adjustments for: Allowance for doubtful receivables Receivables written back Receivables written off Borrowings costs Interest income Asset management fees paid/payable in Units Depreciation of fi xed assets Share of associate’s results (including revaluation surplus) Surplus on revaluation of investment properties Unrealised (gain)/loss from fair valuation of derivatives Amortisation of lease incentives Deferred income recognised Operating income before working capital changes 92,312 77,368 Changes in working capital: Trade and other receivables Trade and other payables Cash fl ows from operating activities Cash fl ows from operating activities Investing activities Investing activities Distributions received from associate Interest received Capital expenditure on investment properties Acquisition of fi xed assets Investment in associate Net cash outfl ow on purchase of investment properties (including acquisition charges) (Note B) Cash fl ows used in investing activities Cash fl ows used in investing activities Financing activities Financing activities Proceeds from borrowings Proceeds from issue of new Units Repayment of borrowings Borrowing costs paid Distributions to Unitholders Payment of issue and fi nance costs Cash fl ows (used in)/generated from fi nancing activities Cash fl ows (used in)/generated from fi nancing activities Net (decrease)/increase in cash and cash equivalents Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (Note 8) Cash and cash equivalents at end of year (Note 8) (611) 6,025 97,726 97,726 3,873 7 (1,071) (5,747) 70,550 70,550 3,804 13 (19,000) (25,690) (39) (12,533) – (33) – (123,942) (27,692) (27,692) (145,848) (145,848) 183,000 146,000 – (165,000) (16,549) (78,351) (755) (77,655) (77,655) (7,621) 30,490 22,869 22,869 66,720 (47,000) (13,160) (62,573) (3,990) 85,997 85,997 10,699 19,791 30,490 30,490 The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements. 78 Frasers Centrepoint Trust Cash Flow Statement For the Financial Year Ended 30 September 2012 Note B Net cash outfl ow on purchase of investment properties (including acquisition charges) Note B Net cash outfl ow on purchase of investment properties (including acquisition charges) Investment properties Receivables Trade and other payables Security deposits Net identifi able assets and liabilities acquired Acquisition charges Less: Units issuable/issued for acquisition fee paid to the Manager Acquisition charges accrued Net cash outfl ow GroupGroup 2011 2011 $’000 $’000 127,000 – – (3,192) 123,808 1,594 (1,270) (190) 123,942 2012 2012 $’000 $’000 – – – – – – – – – Signifi cant Non-Cash Transactions Signifi cant Non-Cash Transactions During the fi nancial year, there were the following signifi cant non-cash transactions: (i) (ii) 1,519,456 (2011: 5,516,414) Units were issued and issuable in satisfaction of asset management fees payable in Units, amounting to a value of $2,401,705 (2011: $8,113,000) in respect of the fi nancial year ended 30 September 2012; and 913,669 Units were issued in October 2011 in satisfaction of acquisition fees of $1,270,000 in connection with the acquisition of Bedok Point completed on 23 September 2011. The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements. Notes to The Financial Statements 30 September 2012 Annual Report 2012 79 The following notes form an integral part of the fi nancial statements. 1. 1. GENERAL GENERAL Trust”) is a Singapore-domiciled unit trust constituted pursuant to a trust deed Frasers Centrepoint Trust (the “Trust dated 5 June 2006 and any amendment or modifi cation thereof (the “Trust Deed Trust Deed”) between Frasers Centrepoint Manager”) and HSBC Institutional Trust Services (Singapore) Limited (the Asset Management Ltd. (the “Manager “Trustee Trustee”). The Trust Deed is governed by the laws of the Republic of Singapore. The Trustee is under a duty to take into custody and hold the assets of the Trust and its subsidiary (collectively, the “GroupGroup”) in trust for the holders (“Unitholders Unitholders”) of units in the Trust (the “UnitsUnits”). The address of the Trustee’s registered offi ce is 21 Collyer Quay #10-02 HSBC Building Singapore 049320. The Trust was formally admitted to the Offi cial List of the Singapore Exchange Securities Trading Limited (“SGX- SGX- STST”) on 5 July 2006 and was included in the Central Provident Fund Investment Scheme (“CPFIS CPFIS”) on 5 July 2006. The principal activity of the Trust is to invest in income-producing properties used primarily for retail purposes, in Singapore and overseas, with the primary objective of delivering regular and stable distributions to Unitholders and to achieve long-term capital growth. The principal activity of the subsidiary is set out in Note 5. The fi nancial statements were authorised for issue by the Manager and the Trustee on 15 November 2012. The Trust has entered into several service agreements in relation to management of the Trust and its property operations. The fee structures of these services are as follows: (a) Property management fees Under the property management agreements, fees are charged as follows: (i) (ii) (iii) 2.0% per annum of the gross revenue of the properties; 2.0% per annum of the net property income of the properties (calculated before accounting for the property management fees); and 0.5% per annum of the net property income of the properties (calculated before accounting for the property management fees), in lieu of leasing commissions. The property management fees are payable monthly in arrears. (b) Asset management fees Pursuant to the Trust Deed, asset management fees comprise the following: (i) (ii) A base fee not exceeding 0.3% per annum of the value of Deposited Property (being all assets, as stipulated in the Trust Deed) of the Trust; and An annual performance fee equal to a rate of 5.0% per annum of the Net Property Income (as defi ned in the Trust Deed) of the Trust and any Special Purpose Vehicles (as defi ned in the Trust Deed) for each fi nancial year. Any increase in the rate or any change in the structure of the asset management fees must be approved by an Extraordinary Resolution of Unitholders passed at a Unitholders’ meeting duly convened and held in accordance with the provisions of the Trust Deed. The Manager may elect to receive the fees in cash or Units or a combination of cash and Units (as it may in its sole discretion determine). For the year ended 30 September 2012, the Manager has opted to receive an average of 22% (2011: 91%) of the asset management fees in the form of Units with the balance in cash. The portion of the asset management fees in the form of Units is payable on a quarterly basis in arrears, and the portion in cash is payable on a monthly basis in arrears. The Manager is also entitled to receive acquisition fee at the rate of 1% of the acquisition price and a divestment fee of 0.5% of the sale price on all future acquisitions or disposals of properties or investments. 80 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 1. 1. GENERAL (cont’d) GENERAL (cont’d) (c) Trustee’s fees Pursuant to the Trust Deed, the Trustee’s fees shall not exceed 0.1% per annum of the value of Deposited Property of the Trust, subject to a minimum of $9,000 per month, excluding out-of-pocket expenses and GST. Any increase in the maximum permitted or any change in the structure of the Trustee’s fee must be approved by an Extraordinary Resolution of Unitholders passed at a Unitholders’ meeting duly convened and held in accordance with the provisions of the Trust Deed. The Trustee’s fees are payable monthly in arrears. 2. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation The fi nancial statements have been prepared in accordance with the recommendations of Statement of Recommended Accounting Practice (“RAPRAP”) 7 “Reporting Framework for Unit Trusts” issued by the ICPAS”), the applicable requirements of the Code Institute of Certifi ed Public Accountants of Singapore (“ICPAS on Collective Investment Schemes (the “CIS Code CIS Code”) issued by the Monetary Authority of Singapore (“MASMAS”) and the provisions of the Trust Deed. RAP 7 requires the accounting policies to generally comply with the principles relating to recognition and measurement under the Singapore Financial Reporting Standards (“FRSFRS”). The fi nancial statements, which are presented in Singapore dollars and rounded to the nearest thousand, unless otherwise stated, have been prepared on the historical cost basis except as disclosed in the accounting policies below. The preparation of the fi nancial statements in conformity with RAP 7 requires the Manager to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Financial impact arising from revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about signifi cant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most signifi cant effect on the amount recognised in the fi nancial statements is described in the following notes: (i) (ii) Note 3 – Valuation of investment properties Note 6 – Accounting for investment in associate (b) Changes in accounting policies The accounting policies adopted are consistent with those of the previous fi nancial year except in the current fi nancial year, the Group has adopted all the new and revised standards and Interpretations of INT FRS”) that are effective for annual periods beginning on 1 October 2011. The adoption of FRS (“INT FRS these standards and interpretations did not have any effect on the fi nancial performance or position of the Group and the Trust. Notes to The Financial Statements 30 September 2012 Annual Report 2012 81 2. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (c) Standards issued but not yet effective The Group has not adopted the following standards that have been issued and are relevant but not yet effective: Amendments to FRS 1 Presentation of Items of Other Comprehensive Income FRS 113 Fair Value Measurements Amendments to FRS 107 Disclosures – Offsetting Financial Assets and Financial Liabilities Improvements to FRSs 2012 – Amendment to FRS 1 Presentation of Financial Statements – Amendment to FRS 16 Property, Plant and Equipment – Amendment to FRS 32 Financial Instruments: Presentation Revised FRS 27 Separate Financial Statements Revised FRS 28 Investments in Associates and Joint Ventures FRS 110 Consolidated Financial Statements FRS 112 Disclosure of Interest in Other Entities Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities Effective date Effective date (Annual period (Annual period beginning on beginning on or after) or after) 1 July 2012 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 The Manager expects that the adoption of the above standards will have no material impact on the fi nancial statements in the period of initial application. In June 2012, the ICPAS issued a revised RAP 7 which will be effective for unit trusts with annual periods beginning on or after 30 June 2012. The changes that have been brought about under the revised RAP 7 include the requirements to present statement of movements in unitholders’ funds by unit trusts, as well as statement of cash fl ow and statement of distribution by property funds. The Group is in the process of assessing the impact on fi nancial statements arising from all the changes that have been introduced under the revised RAP 7. (d) Foreign currency Transactions in foreign currencies are measured and recorded on initial recognition in Singapore dollars, the functional currency of the Trust and subsidiary, at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance sheet date are recognised in the Statement of Total Return except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in equity as translation reserve in the Balance Sheet and recognised in the Statement of Total Return on disposal of the foreign operation. For consolidation purpose, the assets and liabilities of foreign operations are translated into Singapore dollars at the rate of exchange ruling at the balance sheet date and their profi t or loss are translated at the exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are taken directly to a separate component of equity as translation reserve. On disposal of a foreign operation, the cumulative amount recognised in translation reserve relating to that particular foreign operation is recognised in the Statement of Total Return. 82 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 2. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (d) Foreign currency (cont’d) In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non- controlling interest and are not recognised in the Statement of Total Return. For partial disposals of associates that are foreign operations, the proportionate share of the accumulated exchange differences is reclassifi ed to the Statement of Total Return. (e) Investment properties Investment properties are stated at initial cost on acquisition, including transaction costs, and at valuation thereafter. Valuation is determined in accordance with the Trust Deed, which requires the investment properties to be valued by independent registered valuers in the following events:   In such manner and frequency required under the CIS Code issued by the MAS; and At least once in each period of 12 months following the acquisition of each parcel of real estate property. Any increase or decrease on revaluation is credited or charged to the Statement of Total Return as a net revaluation surplus or defi cit in the value of the investment properties. Subsequent expenditure relating to investment properties that have already been recognised is added to the carrying amount of the asset when it is probable that future economic benefi ts, in excess of originally assessed standard of performance of the existing asset, will fl ow to the Group and the Trust. All other subsequent expenditure is recognised as an expense in the period in which it is incurred. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefi t is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the Statement of Total Return in the year of retirement or disposal. Investment properties are not depreciated. Investment properties are subject to continued maintenance and regularly revalued on the basis set out above. For taxation purposes, the Group and the Trust may claim capital allowances on assets that qualify as plant and machinery under the Income Tax Act. (f) Basis of consolidation and investment in subsidiary A subsidiary is an entity over which the Group has the power to govern the fi nancial and operating policies so as to obtain benefi ts from its activities. In the Trust’s balance sheet, investment in subsidiary is accounted for at cost less any impairment losses. The consolidated fi nancial statements incorporate the fi nancial statements of the Trust and its subsidiary as of the balance sheet date. The fi nancial statements of the subsidiary used in the preparation of the consolidated fi nancial statements are prepared for the same reporting date and using consistent accounting policies as the Trust. A subsidiary is consolidated from the date of acquisition, being the date on which the Group obtains control, and continues to be consolidated until the date that such control ceases. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Business combinations are accounted for by applying the acquisition method. Identifi able assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. When the Group acquires a business, it assesses the fi nancial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. Notes to The Financial Statements 30 September 2012 Annual Report 2012 83 2. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (f) Basis of consolidation and investment in subsidiary (cont’d) Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration, if deemed to be an asset or liability within the scope of FRS 39, will be recognised either in the Statement of Total Return or as change to a separate component of equity. If the contingent consideration is classifi ed as equity, it is not remeasured until it is fi nally settled within equity. In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in the Statement of Total Return. The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree’s identifi able net assets. Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifi able assets and liabilities is recorded as goodwill. In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in the Statement of Total Return on the acquisition date. (g) Investment in associate An associate is an entity, not being a subsidiary or a joint venture, in which the Group has signifi cant infl uence. The Group’s investment in associate is accounted for using the equity method. Under the equity method, the investment in associate is stated in the Balance Sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate. The Group’s share of results of the associate is recognised in the Statement of Total Return. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes in equity. After application of the equity method, the Group determines whether it is necessary to recognise any impairment loss with respect to the Group’s net investment in the associate. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the Statement of Total Return. The associate is equity accounted for from the date the Group obtains signifi cant infl uence until the date the Group ceases to have signifi cant infl uence over the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is neither amortised nor tested individually for impairment. Any excess of the Group’s share of the net fair value of the associate’s identifi able assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s results in the period in which the investment is acquired. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Where the dates of the fi nancial statements of the associate are not co-terminous with those of the Group, the share of results is arrived at from the last audited fi nancial statements available and un- audited management accounts to the end of the accounting period. Consistent accounting policies are applied for like transactions and events in similar circumstances. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. Upon loss of signifi cant infl uence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of signifi cant infl uence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in the Statement of Total Return. 84 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 2. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (h) Fixed assets Fixed assets are stated at cost less accumulated depreciation and any impairment. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. The cost of a fi xed asset is recognised as an asset if, and only if, it is probable that future economic benefi ts associated with the asset will fl ow to the Group and the cost of the asset can be measured reliably. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repair are charged to the Statement of Total Return. When assets are derecognised upon disposal or when no future economic benefi ts are expected from their use or disposal, their cost and accumulated depreciation are removed from the fi nancial statements and any gain or loss on derecognition of the assets is included in the Statement of Total Return. Fixed assets are depreciated on the straight line method so as to write off the cost of the fi xed assets over their estimated useful lives. The principal annual rates of depreciation for equipment, furniture and fi ttings range from 10% to 20%. The carrying values of fi xed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each fi nancial year-end, and adjusted prospectively, if appropriate. (i) Impairment of non-fi nancial assets The Group assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An impairment loss is recognised in the Statement of Total Return whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell and is determined for an individual asset, unless the asset does not generate cash infl ows that are largely independent of those from other assets or group of assets. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. Impairment losses recognised in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. If such indication exists, the recoverable amount is estimated. An impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Reversal of an impairment loss is recognised in the Statement of Total Return. After such a reversal, the depreciation charge, if any, is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (j) Financial assets The Group determines the classifi cation of its fi nancial assets at initial recognition. When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of fi nancial assets not at fair value through profi t or loss, directly attributable transaction costs. Non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market are classifi ed as loans and receivables. Subsequent to initial recognition, loans and receivables are carried at amortised cost using the effective interest method, less any impairment losses. Gains or losses are recognised in the Statement of Total Return when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Notes to The Financial Statements 30 September 2012 Annual Report 2012 85 2. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (j) Financial assets (cont’d) Financial assets at fair value through profi t or loss include fi nancial assets held for trading and fi nancial assets designated upon initial recognition at fair value through profi t or loss. Financial assets classifi ed as held for trading include derivative fi nancial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defi ned by FRS 39. Derivatives, including separated embedded derivatives, are also classifi ed as held for trading unless they are designated as effective hedging instruments. Subsequent to initial recognition, fi nancial assets at fair value through profi t or loss are measured at fair value. Any gains or losses arising from changes in fair value of the fi nancial assets are recognised in the Statement of Total Return. Financial assets are recognised on the Balance Sheet when, and only when, the Group becomes a party to the contractual provisions of the instruments. Financial assets are derecognised when the contractual rights to receive cash fl ows from the assets have expired. On derecognition, the difference between the carrying amount and the sum of the consideration received is recognised in the Statement of Total Return. All regular way purchases and sales of fi nancial assets are recognised or derecognised on the trade date i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of fi nancial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. (k) Cash and cash equivalents Cash and cash equivalents comprise cash balances and bank deposits. (l) Impairment of fi nancial assets The Group assesses at each reporting date whether there is any objective evidence that a fi nancial asset is impaired. For fi nancial assets carried at amortised cost, the Group fi rst assesses individually whether objective evidence of impairment exists individually for fi nancial assets that are individually signifi cant, or collectively for fi nancial assets that are not individually signifi cant. If the Group determines that no objective evidence of impairment exists for an individually assessed fi nancial asset, whether signifi cant or not, it includes the asset in a group of fi nancial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss on fi nancial assets carried at amortised cost has been incurred, the amount of impairment loss is calculated as the difference between its carrying amount, and the present value of estimated future cash fl ows discounted at the fi nancial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss and any subsequent write-back is recognised in the Statement of Total Return. When the asset becomes uncollectible, the carrying amount of impaired fi nancial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the fi nancial asset. To determine whether there is objective evidence that an impairment loss on fi nancial assets has incurred, the Group considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the Statement of Total Return to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. 86 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 2. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (m) Financial liabilities Financial liabilities are recognised on the Balance Sheet when, and only when, the Group becomes a party to the contractual provisions of the fi nancial instrument. The Group determines the classifi cation of its fi nancial liabilities at initial recognition. Financial liabilities are initially recognised at the fair value of consideration received, and in the case of fi nancial liabilities other than those designated at fair value through profi t or loss, less directly attributable transaction costs. Financial liabilities that are designated at fair value through profi t or loss include fi nancial liabilities held for trading and fi nancial liabilities designated upon initial recognition as at fair value. Financial liabilities are classifi ed as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative fi nancial instruments such as interest rate swaps entered into by the Group to hedge its risks associated with interest rate fl uctuations. Subsequent to initial recognition, fi nancial liabilities at fair value through profi t or loss are measured at fair value. In this respect, the fair value of interest rate swap contracts is determined by reference to the market value for similar instruments. Any gains or losses arising from changes in fair value of the fi nancial liabilities are recognised in the Statement of Total Return. After initial recognition, fi nancial liabilities other than those designated at fair value through profi t or loss are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the Statement of Total Return when the liabilities are derecognised, and through the amortisation process. Gains and losses are recognised in the Statement of Total Return when the liabilities are derecognised as well as through the amortisation process. A fi nancial liability is derecognised when the obligation under the liability is discharged or cancelled, or has expired. (n) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at the end of each reporting period and adjusted to refl ect the current best estimate. If it is no longer probable that an outfl ow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that refl ects, where appropriate, the risks specifi c to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a fi nance cost. (o) Security deposits and deferred income Security deposits relate to rental deposits received from tenants at the Group’s investment properties. The accounting policy for security deposits as a fi nancial liability is set out in Note 2(m). Deferred income relates to the difference between consideration received for security deposits and its fair value at initial recognition, and is credited to the Statement of Total Return as gross rental income on a straight line basis over individual lease term. (p) Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfi lment of the arrangement is dependent on the use of a specifi c asset or assets or the arrangement conveys a right to use the asset even if that right is not explicitly specifi ed in an arrangement. Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classifi ed as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2(q). Notes to The Financial Statements 30 September 2012 Annual Report 2012 87 2. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (q) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable, excluding discounts, rebates, and sales taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specifi c recognition criteria must also be met before revenue is recognised: (i) Rental income Rental income receivable under operating leases is recognised in the Statement of Total Return on a straight-line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefi ts to be derived from the leased assets. Lease incentives granted are recognised as an integral part of the total rental to be received. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straight-line basis. Contingent rent, which comprises gross turnover rental, is recognised as income in the accounting period on a receipt basis. No contingent rent is recognised if there are uncertainties that may result in the possible return of amounts received. (ii) Interest income Interest income is recognised in the Statement of Total Return using the effective interest method. (r) Expenses (i) Property expenses Property expenses are recognised on an accrual basis. Included in property expenses are property management fees which are based on the applicable formula stipulated in Note 1(a). (ii) Asset management fees Asset management fees are recognised on an accrual basis based on the applicable formula stipulated in Note 1(b). (iii) Trust expenses Trust expenses are recognised on an accrual basis. Included in trust expenses are Trustee’s fees which are based on the applicable formula stipulated in Note 1(c). (s) Taxation (i) Current income tax Current income tax is the expected tax payable on the taxable income for the period, using tax rates and tax laws enacted or substantively enacted at the balance sheet date. (ii) Deferred tax Deferred tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for fi nancial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except: – – Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profi t nor taxable profi t or loss; and In respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. 88 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 2. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (s) Taxation (cont’d) (ii) Deferred tax (cont’d) Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profi t will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: – – Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profi t nor taxable profi t or loss; and In respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profi t will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that suffi cient taxable profi t will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profi t will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the assets are realised or the liabilities are settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. IRAS”) has issued a tax ruling on the income tax The Inland Revenue Authority of Singapore (“IRAS treatment of the Trust. Subject to meeting the terms and conditions of the tax ruling which includes a distribution of at least 90% of the taxable income of the Trust, the Trustee will not be assessed to tax on the taxable income of the Trust. Instead, the distributions made by the Trust out of such taxable income are subject to tax in the hands of Unitholders, unless they are exempt tax transparency ruling”). Accordingly, the Trustee and from tax on the Trust’s distributions (the “tax transparency ruling the Manager will deduct income tax at the prevailing corporate tax rate from the distributions made to Unitholders that are made out of the taxable income of the Trust, except: a) b) where the benefi cial owners are individuals or Qualifying Unitholders, the Trustee and the Manager will make the distributions to such Unitholders without deducting any income tax; and where the benefi cial owners are foreign non-individual investors or where the Units are held by nominee Unitholders who can demonstrate that the Units are held for benefi cial owners who are foreign non-individual investors, the Trustee and the Manager will deduct/withhold tax at a reduced rate of 10% from the distributions. A Qualifying Unitholder is a Unitholder who is: (i) (ii) (iii) (iv) A tax resident Singapore-incorporated company; A non-corporate Singapore constituted or registered entity (e.g. town council, statutory board, charitable organisation, management corporation, club and trade and industry association constituted, incorporated, registered or organised in Singapore); A Singapore branch of a foreign company which has been presented a letter of approval from the Comptroller of Income Tax granting waiver from tax deducted at source in respect of distributions from the Trust; An agent bank or a Supplementary Retirement Scheme (“SRSSRS”) operator acting as nominee for individuals who have purchased Units in the Trust within the CPFIS or the SRS respectively; or Notes to The Financial Statements 30 September 2012 Annual Report 2012 89 2. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (s) Taxation (cont’d) (ii) Deferred tax (cont’d) A Qualifying Unitholder is a Unitholder who is: (cont’d) (v) A nominee who can demonstrate that the Units are held for benefi cial owners who are individuals or who fall within the classes of Unitholders listed in (i) to (iii) on page 88. The above tax transparency ruling does not apply to gains from the sale of real properties. Such gains which are considered as trading gains are assessable to tax on the Trustee. Where the gains are capital gains, the Trustee will not be assessed to tax and may distribute the capital gains without tax being deducted at source. (iii) Sales tax Revenue, expenses and assets are recognised net of the amount of sales tax except: – Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and – Receivables and payables that are stated with the amount of sales tax included. The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables on the Balance Sheet. (t) Borrowing costs Borrowing costs are expensed in the period they occur, and consist of interest and other costs that the Group incurs in connection with the borrowing of funds. (u) Segment reporting For management purposes, the Group is organised into operating segments based on individual investment properties within the Group’s portfolio. The Manager regularly reviews the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 23, including the factors used to identify the reportable segments and the measurement basis of segment information. (v) Units and unit issuance expenses Proceeds from issuance of Units are recognised as Unithholders’ funds. Incremental costs directly attributable to the issuance of Units are deducted against Unitholders’ funds. (w) Contingencies A contingent liability is: a) A possible obligation that arises from past events and whose existence will be confi rmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or b) A present obligation that arises from past events but is not recognised because: (i) It is not probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation; or (ii) The amount of the obligation cannot be measured with suffi cient reliability. 90 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 2. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (w) Contingencies (cont’d) A contingent asset is a possible asset that arises from past events and whose existence will be confi rmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Contingent liabilities and assets are not recognised on the Balance Sheet of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined. (x) Related parties A related party is defi ned as follows: a) A person or a close member of that person’s family is related to the Group if that person: (i) (ii) has control or joint control over the Group; has signifi cant infl uence over the Group; or (iii) is a member of the key management personnel of the Group or of a parent of the Group. b) An entity is related to the Group if any of the following conditions applies: (i) (ii) the entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). (iii) both entities are joint ventures of the same third party. (iv) (v) one entity is a joint venture of a third entity and the other entity is an associate of the third entity. the entity is a post-employment benefi t plan for the benefi t of employees of either the Group or an entity related to the Group. (vi) the entity is controlled or jointly controlled by a person identifi ed in (a); (vii) a person identifi ed in (a) (i) has signifi cant infl uence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). 3. 3. INVESTMENT PROPERTIES INVESTMENT PROPERTIES At beginning Purchase of investment properties Capital expenditure capitalised Surplus on revaluation At end Group and Trust Group and Trust 2012 2012 $’000 $’000 2011 2011 $’000 $’000 1,697,000 – 16,953 1,713,953 102,047 1,816,000 1,439,000 128,594 30,010 1,597,604 99,396 1,697,000 Northpoint has been mortgaged as security for a $264 million secured fi ve-year term loan from DBS Bank Ltd, Oversea-Chinese Banking Corporation Limited and Standard Chartered Bank (Note 11). Notes to The Financial Statements 30 September 2012 Annual Report 2012 91 3. 3. INVESTMENT PROPERTIES (cont’d) INVESTMENT PROPERTIES (cont’d) Bedok Point has been mortgaged as security for a $70 million secured fi ve-year term loan from DBS Bank Ltd (Note 11). Investment properties are stated at fair value based on valuations performed by independent professional valuers. In determining the fair value, the valuers have used valuation methods which involve certain estimates. The key assumptions used to determine the fair value of investment properties include market-corroborated capitalisation yields, terminal yields and discount rates. The Manager is of the view that the valuation methods and estimates are refl ective of the market conditions as at 30 September 2012. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties have each acted knowledgeably, prudently and without compulsion. The net change in fair value of the properties recognised in the Statements of Total Return is inclusive of amortisation of lease incentives as follows: Surplus on revaluation Amortisation of lease incentives Surplus on revaluation recognised in Statements of Total Return Group and Trust Group and Trust 2012 2012 $’000 $’000 102,047 (1,288) 100,759 2011 2011 $’000 $’000 99,396 (2,182) 97,214 The Group has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance or enhancements other than as disclosed in Note 24. 4. 4. FIXED ASSETS FIXED ASSETS CostCost At beginning Additions Disposals Write off At end Accumulated depreciation Accumulated depreciation At beginning Charge for the year Disposals Write off At end Carrying amount Carrying amount At beginning At end Equipment, furniture Equipment, furniture and fi ttings and fi ttings Group and Trust Group and Trust 2012 2012 $’000 $’000 2011 2011 $’000 $’000 246 39 (8) – 277 112 44 (8) – 148 134 129 244 33 – (31) 246 105 38 – (31) 112 139 134 92 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 5. 5. INVESTMENT IN SUBSIDIARY INVESTMENT IN SUBSIDIARY Unquoted equity investments, at cost * Denotes amount less than $500. Details of the subsidiary are as follows: Name of subsidiary Name of subsidiary Place of incorporation / business Place of incorporation / business FCT MTN Pte. Ltd. (1) Singapore (1) Audited by Ernst & Young LLP, Singapore Trust Trust 2012 2012 $’000 $’000 * 2011 2011 $’000 $’000 * Effective equity interest Effective equity interest held by the Trust held by the Trust 2012 2012 % 100 2011 2011 % 100 FCT MTN Pte. Ltd. (“FCT MTN FCT MTN”) is a wholly-owned subsidiary with share capital of $2 comprising 2 ordinary shares. The principal activity of the subsidiary is the provision of treasury services, including lending to the Trust the proceeds from issuance of notes under an unsecured multicurrency medium term note programme. 6. 6. INVESTMENT IN ASSOCIATE INVESTMENT IN ASSOCIATE Quoted units, at cost Share of post-acquisition reserves - operations - revaluation surplus Translation difference Allowance for impairment Fair value of associate based on published price quotation Details of the associate are as follows: GroupGroup Trust Trust 2012 2012 $’000 $’000 2011 2011 $’000 $’000 2012 2012 $’000 $’000 2011 2011 $’000 $’000 67,806 55,273 67,806 55,273 2,619 13,524 (5,371) 78,578 (6,759) 71,819 2,140 7,460 (4,357) 60,516 (6,759) 53,757 – – – 67,806 (3,963) 63,843 – – – 55,273 (3,963) 51,310 69,940 50,974 69,940 50,974 Name of associate Name of associate Place of incorporation Place of incorporation /business /business Hektar Real Estate Investment Trust (1) Malaysia (1) Audited by SJ Grant Thornton, Malaysia Effective equity interest Effective equity interest held by the Trust held by the Trust 2012 2012 % 31.17 2011 2011 % 31.06 Hektar Real Estate Investment Trust (“H-REIT H-REIT”) is a real estate investment trust constituted in Malaysia by a trust deed dated 5 October 2006. H-REIT units are listed on the Main Board of Bursa Malaysia Securities Berhad. The principal investment objective of H-REIT is to invest in income-producing real estate in Malaysia used primarily for retail purposes. Notes to The Financial Statements 30 September 2012 Annual Report 2012 93 6. 6. INVESTMENT IN ASSOCIATE (cont’d) INVESTMENT IN ASSOCIATE (cont’d) In September 2012, the Trust acquired 25.5 million units in H-REIT for RM31.4 million, and its unitholding increased to 31.17%. As the results of H-REIT are not expected to be announced in suffi cient time to be included in the Group’s results for the quarter ended 30 September 2012, the Group had estimated the results of H-REIT for the quarter ended 30 September 2012 based on its results for the preceding quarter, adjusted for signifi cant transactions and events occurring up to the reporting date of the Group, if any. The following summarised fi nancial information relating to the associate has not been adjusted for the percentage of ownership interest held by the Group: Assets and liabilities Assets and liabilities Non-current assets Current assets Total assets Current liabilities Non-current liabilities Total liabilities Results Results Revenue Expenses Revaluation surplus Total return for year (2) 2012 (2) 2012 $’000 $’000 (3) 2011 (3) 2011 $’000 $’000 330,283 16,904 347,187 71,300 85,392 156,692 38,936 (23,507) 19,095 34,524 311,376 11,119 322,495 85,620 64,369 149,989 37,657 (22,050) 412 16,019 (2) (3) The fi nancial information is based on the latest available unaudited management accounts as at 30 June 2012 and for the six months ended 30 June 2012 and the pro-rated six month results from the audited fi nancial statements for the period ended 31 December 2011. The fi nancial information is based on the unaudited management accounts as at 30 June 2011 and for the six months ended 30 June 2011 and the pro-rated six month results from the audited fi nancial statements for the period ended 31 December 2010. As at 30 September 2012, the associate’s property portfolio comprises Subang Parade in Selangor, Mahkota Parade in Melaka and Wetex Parade in Muar, Johor. On 2 October 2012, the associate completed the acquisition of Central Square and Landmark Central in Kedah. 7. 7. TRADE AND OTHER RECEIVABLES TRADE AND OTHER RECEIVABLES Trade receivables Allowance for doubtful receivables Net trade receivables Deposits Prepayments Other receivables Amount due from related company Loan arrangement fees Group and Trust Group and Trust 2012 2012 $’000 $’000 2,397 (90) 2,307 68 324 1,318 – 2,285 6,302 2011 2011 $’000 $’000 3,225 (257) 2,968 54 60 2 162 2,201 5,447 94 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 7. 7. TRADE AND OTHER RECEIVABLES (cont’d) TRADE AND OTHER RECEIVABLES (cont’d) Trade receivables are recognised at their original invoiced amounts which represent their fair values on initial recognition. (i) Trade receivables that are past due but not impaired The Group and the Trust have trade receivables amounting to $2,307,000 (2011: $2,968,000) that are past due at the balance sheet date but not impaired. The aging of receivables at the balance sheet date is as follows: Trade receivables past due but not impaired: Trade receivables past due but not impaired: Less than 30 days 30 to 60 days 61 to 90 days 91 to 120 days More than 120 days (ii) Trade receivables that are impaired Group and Trust Group and Trust 2012 2012 $’000 $’000 886 552 129 150 590 2,307 2011 2011 $’000 $’000 1,686 638 262 245 137 2,968 The Group’s and the Trust’s trade receivables that are impaired at the balance sheet date and the movements of the allowance account used to record the impairment are as follows: Trade receivables Allowance for impairment Movement in allowance account: At beginning Impairment loss recognised Written back Allowance utilised At end Group and Trust Group and Trust 2012 2012 $’000 $’000 2011 2011 $’000 $’000 90 (90) – 257 130 (290) (7) 90 257 (257) – 19 257 (15) (4) 257 Trade receivables that are individually determined to be impaired at the balance sheet date relate to debtors that are in signifi cant diffi culties and have defaulted on payments. The allowance for impairment recorded in relation to these receivables represents the amount in excess of the security deposits held as collateral. Based on the Group’s historical experience in the collection of trade receivables, the Manager believes that there is no additional credit risk beyond those which have been provided for. Notes to The Financial Statements 30 September 2012 Annual Report 2012 95 8. 8. CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS For the purpose of the consolidated cash fl ow statement, cash and cash equivalents comprise the following at the balance sheet date: Cash at bank and on hand Fixed deposits Group and Trust Group and Trust 2012 2012 $’000 $’000 17,869 5,000 22,869 2011 2011 $’000 $’000 14,490 16,000 30,490 The weighted average effective interest rate for fi xed deposits is 0.06% (2011: 0.19%) per annum. 9. 9. TRADE AND OTHER PAYABLES TRADE AND OTHER PAYABLES Trade payables and accrued operating expenses Amounts due to related parties (trade) Deposits and advances Interest payable Other payables Withholding tax Fair value of interest rate swaps GroupGroup Trust Trust 2012 2012 $’000 $’000 15,819 4,522 3,301 3,424 82 829 11,891 39,868 2011 2011 $’000 $’000 17,231 4,990 3,066 3,374 120 – 12,243 41,024 2012 2012 $’000 $’000 15,826 4,522 3,301 3,424 82 829 11,891 39,875 2011 2011 $’000 $’000 17,235 4,990 3,066 3,374 120 – 12,243 41,028 Included in trade payables and accrued operating expenses is an amount due to the Trustee of $52,597 (2011: $48,580). Included in amounts due to related parties are amounts due to the Manager of $3,087,324 (2011: $4,155,923) and the Property Manager of $1,434,103 (2011: $833,893) respectively. The amounts due to related parties are unsecured, interest free and repayable within the next 3 months. The Trust entered into contracts to exchange, at specifi ed intervals, the difference between fl oating rate and fi xed rate interest amounts calculated by reference to the agreed notional amounts of the secured term loan. As at balance sheet date, the Trust has interest rate swaps for: (i) notional contract amount of $100 million that mature in April 2015; (ii) notional contract amount of $159 million that mature in July 2016; and (iii) notional contract amount of $42 million that mature in June 2015. The Group does not apply hedge accounting. 96 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 10. 10. DEFERRED INCOME DEFERRED INCOME CostCost At beginning Additions Fully amortised At end Accumulated amortisation Accumulated amortisation At beginning Charge for the year Fully amortised At end Net deferred income Net deferred income This comprises: Current portion Non-current portion 11. 11. INTEREST-BEARING BORROWINGS INTEREST-BEARING BORROWINGS Non-current liabilities Non-current liabilities Term loans (secured) Loan from subsidiary (unsecured) Medium Term Notes (unsecured) Current liabilities Current liabilities Loan from subsidiary (unsecured) Medium Term Notes (unsecured) Bridge loan (unsecured) Group and Trust Group and Trust 2012 2012 $’000 $’000 3,266 866 (1,320) 2,812 1,800 964 (1,320) 1,444 2011 2011 $’000 $’000 3,152 1,236 (1,122) 3,266 1,905 1,017 (1,122) 1,800 1,368 1,466 734 634 1,368 730 736 1,466 GroupGroup Trust Trust 2012 2012 $’000 $’000 2011 2011 $’000 $’000 2012 2012 $’000 $’000 2011 2011 $’000 $’000 334,000 – 185,000 519,000 – 55,000 3,000 58,000 264,000 – 140,000 404,000 – 75,000 80,000 155,000 334,000 185,000 – 519,000 55,000 – 3,000 58,000 264,000 140,000 – 404,000 75,000 – 80,000 155,000 Notes to The Financial Statements 30 September 2012 Annual Report 2012 97 11. 11. INTEREST-BEARING BORROWINGS (cont’d) INTEREST-BEARING BORROWINGS (cont’d) a) Term loans (secured) The Trust obtained a $264 million 5-year secured term loan under a facility agreement dated 29 November 2010 between (i) the Trustee, as borrower and (ii) DBS Bank Ltd, Oversea-Chinese Banking $264 million Secured Term Loan”). Corporation Limited and Standard Chartered Bank, as lenders (the “$264 million Secured Term Loan The Secured Term Loan bears interest at the swap-offer rate plus a margin. The expected maturity date of the loan falls in July 2016. In December 2011, FCT entered into a facility agreement with DBS Bank Ltd for a secured fi ve-year term loan of $70 million (the “$70 million Secured Term Loan $70 million Secured Term Loan”) to refi nance the unsecured bank borrowings from DBS Bank. The $264 million Secured Term Loan is principally secured by the following:     a mortgage over Northpoint; an assignment of the rights, benefi ts, title and interest of the Trust in, under and arising out of the insurances effected in respect of Northpoint; an assignment and charge of the rights, benefi ts, title and interest of the Trust in, under and arising out of the tenancy agreements, the sale agreements, the performance guarantees (including sale proceeds and rental proceeds) and the bank accounts arising from, relating to or in connection with Northpoint; a fi rst fi xed and fl oating charge over all present and future assets of the Trust in connection with Northpoint. The $70 million Secured Term Loan is principally secured by the following:     a mortgage over Bedok Point; an assignment of the rights, benefi ts, title and interest of the Trust in, under and arising out of the insurances effected in respect of Bedok Point; an assignment and charge of the rights, benefi ts, title and interest of the Trust in, under and arising out of the tenancy agreements, the sale agreements, the performance guarantees (including sale proceeds and rental proceeds) and the bank accounts arising from, relating to or in connection with Bedok Point; and a fi rst fi xed and fl oating charge over all present and future assets of the Trust in connection with Bedok Point. b) Medium Term Notes (unsecured) On 7 May 2009, the Group through its subsidiary, FCT MTN, established a $500,000,000 Multicurrency Medium Term Note Programme (“FCT MTN Programme FCT MTN Programme”). Under the FCT MTN Programme, FCT MTN may, subject to compliance with all relevant laws, regulations and directives, from time to time issue notes (the “NotesNotes”) in Singapore dollars or any other currency. The Notes may be issued in various amounts and tenors, and may bear interest at fi xed, fl oating, hybrid or variable rates of interest. Hybrid notes or zero coupon notes may also be issued under the FCT MTN Programme. The Notes shall constitute direct, unconditional, unsubordinated and unsecured obligations of FCT MTN ranking pari passu, without any preference or priority among themselves, and pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law) of FCT MTN. All sums payable in respect of the Notes are unconditionally and irrevocably guaranteed by the Trustee. 98 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 11. 11. INTEREST-BEARING BORROWINGS (cont’d) INTEREST-BEARING BORROWINGS (cont’d) b) Medium Term Notes (unsecured) (cont’d) As at 30 September 2012, the aggregate balance of the Notes issued by the Group under the FCT MTN Programme amounted to $240 million (2011: $215 million), consisting of: (i) (ii) (iii) (iv) (v) $55 million (2011: $55 million) Fixed Rate Notes which mature on 12 February 2013 and bear a fi xed interest rate of 2.83% per annum payable semi-annually in arrear; $25 million (2011: $25 million) Fixed Rate Notes which mature on 12 February 2015 and bear a fi xed interest rate of 3.50% per annum payable semi-annually in arrear; $60 million (2011: $60 million) Fixed Rate Notes which mature on 24 January 2014 and bear a fi xed interest rate of 2.80% per annum payable semi-annually in arrear; $70 million (2011: $Nil) Fixed Rate Notes which mature on 12 June 2015 and bear a fi xed interest rate of 2.30% per annum payable semi-annually; and $30 million (2011: $Nil) Fixed Rate Notes which mature on 12 June 2017 and bear a fi xed interest rate of 2.85% per annum payable semi-annually. $75 million Fixed Rate Notes which bear a fi xed interest rate of 4.80% per annum were repaid in June 2012. c) Unsecured revolving credit and bridge loan facilities The Trust has obtained unsecured revolving credit and bridge loan facilities amounting to $30 million (2011: $190 million). As at 30 September 2012, total borrowings drawn down by the Trust on these facilities amounted to $3 million (2011: $80 million). 12. 12. TRANSLATION RESERVE TRANSLATION RESERVE The translation reserve represents exchange differences arising from the translation of the fi nancial statements of foreign operations whose functional currency is different from that of the Group’s presentation currency. At beginning Net effect of exchange differences arising from translation of fi nancial statements of foreign operations At end GroupGroup 2012 2012 $’000 $’000 4,357 1,014 5,371 2011 2011 $’000 $’000 3,013 1,344 4,357 Notes to The Financial Statements 30 September 2012 Annual Report 2012 99 13. 13. UNITS IN ISSUE UNITS IN ISSUE Units in issue Units in issue At beginning Issue of Units Issue of Units - private placement - issued as satisfaction of acquisition fee - issued as satisfaction of asset management fees At end Units to be issued Units to be issued - as asset management fees payable in Units - as acquisition fees payable in Units Total issued and issuable Units at end Group and Trust Group and Trust 2012 2012 2011 2011 No. of Units No. of Units No. of Units No. of Units ’000 ’000 ’000 ’000 819,817 767,276 – 914 2,469 823,200 323 – 823,523 48,000 – 4,541 819,817 1,272 914 822,003 Each Unit in the Trust represents an undivided interest in the Trust. The rights and interests of Unitholders are contained in the Trust Deed and include the rights to:    Receive income and other distributions attributable to the Units held; Participate in the termination of the Trust by receiving a share of all net cash proceeds derived from the realisation of the assets of the Trust less any liabilities, in accordance with their proportionate interests in the Trust. However, a Unitholder has no equitable or proprietary interest in the underlying assets of the Trust and is not entitled to the transfer to it of any assets (or part thereof) or of any estate or interest in any assets (or part thereof) of the Trust; Attend all Unitholders’ meetings. The Trustee or the Manager may (and the Manager shall at the request in writing of not less than 50 Unitholders or one-tenth in number of the Unitholders, whichever is lesser) at any time convene a meeting of Unitholders in accordance with the provisions of the Trust Deed; and  One vote per Unit. The restrictions of a Unitholder include the following:   A Unitholder’s right is limited to the right to require due administration of the Trust in accordance with the provisions of the Trust Deed; and A Unitholder has no right to request the Manager to redeem his Units while the Units are listed on SGX- ST. A Unitholder’s liability is limited to the amount paid or payable for any Units in the Trust. The provisions of the Trust Deed provide that no Unitholders will be personally liable to indemnify the Trustee or any creditor of the Trustee in the event that liabilities of the Trust exceed its assets. 14. 14. NET ASSET VALUE PER UNIT NET ASSET VALUE PER UNIT Net asset value per Unit is based on: Net assets GroupGroup Trust Trust 2012 2012 $’000 $’000 2011 2011 $’000 $’000 2012 2012 $’000 $’000 2011 2011 $’000 $’000 1,263,030 1,151,858 1,255,047 1,149,407 ’000 ’000 ’000 ’000 ’000 ’000 ’000 ’000 Total issued and issuable Units (Note 13) 823,523 822,003 823,523 822,003 100 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 15. GROSS REVENUE 15. GROSS REVENUE Gross rental income Turnover rental income Carpark income Others 16. 16. PROPERTY EXPENSES PROPERTY EXPENSES Property tax Utilities Maintenance Property management fees Marketing expenses Allowance for doubtful receivables Receivables written back Bad debts written off Depreciation Staff costs (1) Carpark expenses Others (1) Relates to reimbursement of staff costs paid/payable to the Property Manager. The Group does not have any employees. 17. 17. BORROWING COSTS BORROWING COSTS Interest expense Amortisation of loan arrangement fees 18. 18. ASSET MANAGEMENT FEES ASSET MANAGEMENT FEES Group and Trust Group and Trust 2012 2012 $’000 $’000 131,280 7,404 3,779 4,740 147,203 2011 2011 $’000 $’000 103,645 6,285 3,180 4,774 117,884 Group and Trust Group and Trust 2012 2012 $’000 $’000 11,631 6,885 9,507 5,697 4,243 130 (290) – 44 2,187 1,928 811 42,773 2011 2011 $’000 $’000 9,951 5,547 7,998 4,537 3,158 257 (15) 2 38 1,871 1,266 656 35,266 Group and Trust Group and Trust 2012 2012 $’000 $’000 17,574 671 18,245 2011 2011 $’000 $’000 18,656 478 19,134 An aggregate of 1,519,456 (2011: 5,516,414) Units were issued or are issuable to the Manager as satisfaction of the asset management fees payable. Notes to The Financial Statements 30 September 2012 Annual Report 2012 101 19. 19. TAXATION TAXATION Reconciliation of effective tax Reconciliation of effective tax Net income Income tax using Singapore tax rate of 17% (2011: 17%) Non-tax deductible items Income not subject to tax Income exempt from tax GroupGroup Trust Trust 2012 2012 $’000 $’000 2011 2011 $’000 $’000 2012 2012 $’000 $’000 2011 2011 $’000 $’000 74,040 53,051 74,037 53,049 12,587 754 658 (13,999) – 9,019 1,278 647 (10,944) – 12,586 754 658 (13,998) – 9,019 1,278 647 (10,944) – 20. 20. EARNINGS PER UNIT EARNINGS PER UNIT The calculation of basic earnings per Unit is based on the weighted average number of Units during the year and total return for the year. GroupGroup Trust Trust 2012 2012 $’000 $’000 2011 2011 $’000 $’000 2012 2012 $’000 $’000 2011 2011 $’000 $’000 Total return for year after tax 185,567 152,263 179,021 151,486 Weighted average number of Units in issue ’000 ’000 822,658 ’000 ’000 773,696 ’000 ’000 822,658 ’000 ’000 773,696 Diluted earnings per Unit is the same as basic earnings per Unit as there is no dilutive instrument in issue during the year. 21. 21. SIGNIFICANT RELATED PARTY TRANSACTIONS SIGNIFICANT RELATED PARTY TRANSACTIONS During the fi nancial year, other than the transactions disclosed in the fi nancial statements, the following related party transactions were carried out in the normal course of business on arm’s length commercial terms: Property management fees and reimbursement of expenses paid/payable to the Property Manager (1) Acquisition fees payable/paid to the Manager in connection with the acquisition of investment properties (1) Reimbursement of expenses paid/payable to the Manager Reimbursement of expenses paid/payable to a subsidiary of a Unitholder Acquisition of properties from a subsidiary of a Unitholder Group and Trust Group and Trust 2012 2012 $’000 $’000 13,119 2011 2011 $’000 $’000 9,993 – 1,270 36 248 – 24 85 127,000 (1) In accordance with service agreements in relation to management of the Trust and its property operations. 102 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 22. 22. FINANCIAL RISK MANAGEMENT FINANCIAL RISK MANAGEMENT (a) Capital management The primary objective of the Group’s and the Trust’s capital management is to ensure that it maintains a strong and healthy capital structure in order to support its business and maximise Unitholder value. The Group is subject to the aggregate leverage limit as defi ned in the Property Fund Guidelines of the CIS Code. The CIS Code stipulates that borrowings and deferred payments (together the “Aggregate Aggregate Leverage”) of a property fund should not exceed 35.0% of the fund’s depository property. The Leverage Aggregate Leverage of a property fund may exceed 35.0% of its depository property (up to a maximum of 60.0%) only if a credit rating from Fitch Inc., Moody’s or Standard and Poor’s is obtained and disclosed to the public. As at 30 September 2012, the Group’s and the Trust’s Aggregate Leverage stood at 30.1% (2011: 31.3%) of its depository property, which is within the limit set by the Property Fund Guidelines. The Trust has maintained its corporate ratings of “Baa1” from Moody’s and “BBB+” from Standard and Poor’s. (b) Financial risk management objectives and policies Exposure to credit, interest rate and liquidity risks arises in the normal course of the Group’s business. The Manager continually monitors the Group’s and the Trust’s exposure to the above risks. There has been no change to the Group’s exposure to these fi nancial risks or the manner in which it manages and measures risks. (i) Credit risk Credit risk is the potential fi nancial loss resulting from the failure of a customer or counterparty to settle its fi nancial and contractual obligations to the Group as and when they fall due. The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Manager has established credit limits for customers and monitors their balances on an ongoing basis. Credit evaluations are performed by the Manager before lease agreements are entered into with customers. Credit risk is also mitigated by the rental deposits held for each of the customers. In addition, receivables are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not signifi cant. The Manager has established an allowance account for impairment that represents its estimate of losses in respect of trade receivables due from specifi c customers. Subsequently when the Group is satisfi ed that no recovery of such losses is possible, the fi nancial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired fi nancial asset. The maximum exposure to credit risk is represented by the carrying value of each fi nancial asset on the Balance Sheet. At the balance sheet date, approximately 11.6% (2011: 23.6%) of the Group’s and the Trust’s trade receivables were due from 5 tenants who are reputable companies located in Singapore. Trade and other receivables that are neither past due nor impaired represent creditworthy debtors with good payment record with the Group. Cash and fi xed deposits are placed with a local bank regulated by the MAS. Information regarding fi nancial assets that are either past due or impaired is disclosed in Note 7. (ii) Interest rate risk The Group’s exposure to changes in interest rates relates primarily to its interest-earning fi nancial assets and interest-bearing fi nancial liabilities. Interest rate risk is managed by the Manager on an on-going basis with the primary objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates. The Manager adopts a policy of fi xing the interest rates for a portion of its outstanding borrowings using fi nancial derivatives or other suitable fi nancial products. Notes to The Financial Statements 30 September 2012 Annual Report 2012 103 22. 22. FINANCIAL RISK MANAGEMENT (cont’d) FINANCIAL RISK MANAGEMENT (cont’d) (b) Financial risk management objectives and policies (cont’d) (ii) Interest rate risk (cont’d) The Group’s exposure to interest rate risk is not signifi cant as it relates primarily to the remaining portion of the secured term loans that have not been hedged using interest rate swaps and the fl oating rate bridge loan as disclosed in Note 11. Sensitivity analysis for interest rate risk It is estimated that a hundred basis points increase or decrease in interest rate at the balance sheet date, with all other variables held constant, would decrease or increase the Group’s total return for the year and Unitholders’ funds by approximately $9,373,000 (2011: $3,634,000), arising mainly as a result of change in the fair value of interest rate swap instruments. (iii) Liquidity risk Liquidity risk is the risk that the Group will encounter diffi culty in meeting fi nancial obligations due to shortage of funds. The Group’s objective is to maintain suffi cient cash on demand to meet expected operational expenses for a reasonable period, including the servicing of fi nancial obligations. The Manager monitors and maintains a level of cash and cash equivalents deemed adequate to fi nance the Group’s operations and to mitigate the effects of fl uctuations in cash fl ows. In addition, the Manager monitors and observes the CIS Code issued by the MAS concerning limits on total borrowings. The table below summarises the maturity profi le of the Group’s and the Trust’s fi nancial liabilities at the balance sheet date based on contractual undiscounted payments. As at 30 September 2012 As at 30 September 2012 Group Group Trade and other payables Derivative fi nancial instruments Security deposits Interest-bearing borrowings Trust Trust Trade and other payables Derivative fi nancial instruments Security deposits Interest-bearing borrowings As at 30 September 2011 As at 30 September 2011 GroupGroup Trade and other payables Derivative fi nancial instruments Security deposits Interest-bearing borrowings Trust Trust Trade and other payables Derivative fi nancial instruments Security deposits Interest-bearing borrowings WithinWithin 1 year 1 year $’000 $’000 1 to 5 1 to 5 years years $’000 $’000 Total Total $’000 $’000 27,977 11,891 14,637 72,783 127,288 27,984 11,891 14,637 72,783 127,295 28,781 12,243 15,332 169,916 226,272 28,785 12,243 15,332 169,916 226,276 – – 22,627 547,490 570,117 – – 22,627 547,490 570,117 – – 19,668 434,694 454,362 – – 19,668 434,694 454,362 27,977 11,891 37,264 620,273 697,405 27,984 11,891 37,264 620,273 697,412 28,781 12,243 35,000 604,610 680,634 28,785 12,243 35,000 604,610 680,638 104 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 22. 22. FINANCIAL RISK MANAGEMENT (cont’d) FINANCIAL RISK MANAGEMENT (cont’d) (c) Fair values The following summarises the signifi cant methods and assumptions used in estimating the fair values of fi nancial instruments of the Group and the Trust. Derivative fi nancial instruments The fair value of interest rate swaps are derived by discounting estimated future cash fl ows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date. Non-derivative financial liabilities – non-current portion of security deposits and interest-bearing borrowings Fair values, which are determined for disclosure purposes, are estimated by discounting expected future cash fl ows at market incremental lending rates for similar types of lending or borrowing arrangements at the balance sheet date. Other non-derivative fi nancial assets and liabilities The carrying amounts of fi nancial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, current portion of security deposits and interest- bearing borrowings, and trade and other payables) are reasonable approximation of fair values, either due to their short-term nature or that they are fl oating rate instruments that are re-priced to market interest rates on or near the balance sheet date. The fair value of fi nancial liabilities by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows: As at 30.9.2012 As at 30.9.2012 $’000 $’000 As at 30.9.2011 As at 30.9.2011 $’000 $’000 Carrying Carrying amount amount Fair value Fair value Carrying Carrying amount amount Fair value Fair value 519,000 22,036 541,036 530,546 22,064 552,610 404,000 18,833 422,833 412,956 19,147 432,103 Group and Trust Group and Trust Financial liabilities: Financial liabilities: Interest-bearing borrowings (non-current) Security deposits (non-current) Fair value hierarchy The table below analyses fi nancial instruments carried at fair value, by valuation method. The different levels have been defi ned as follows:    Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Notes to The Financial Statements 30 September 2012 Annual Report 2012 105 22. 22. FINANCIAL RISK MANAGEMENT (cont’d) FINANCIAL RISK MANAGEMENT (cont’d) (c) Fair values (cont’d) At 30 September 2012 At 30 September 2012 Interest rate swaps At 30 September 2011 At 30 September 2011 Interest rate swaps Level 1 Level 1 $’000 $’000 Level 2 Level 2 $’000 $’000 Level 3 Level 3 $’000 $’000 Total Total $’000 $’000 – – – – 11,891 11,891 12,243 12,243 – – – – 11,891 11,891 12,243 12,243 During the fi nancial years ended 30 September 2012 and 2011, there have been no transfers between the respective levels. 23. 23. SEGMENT REPORTING SEGMENT REPORTING Business segments The Group is in the business of investing in the following shopping malls, which are considered to be the main business segments: Causeway Point, Northpoint, Anchorpoint, YewTee Point and Bedok Point. All these properties are located in Singapore. Management monitors the operating results of the business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment information is presented in respect of the Group’s business segments, based on its management and internal reporting structure. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly income-earning assets, interest-bearing borrowings and their related revenue and expenses. Segment capital expenditure is the total costs incurred during the year to acquire segment assets that are expected to be used for more than one year. Geographical segments The Group’s operations are primarily in Singapore except for its associate, for which operations are in Malaysia. 106 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 23. 23. SEGMENT REPORTING (cont’d) SEGMENT REPORTING (cont’d) (a) Business segments Causeway Causeway Point Northpoint Point $’000 $’000 $’000 $’000 Anchorpoint Northpoint Anchorpoint $’000 $’000 YewTee YewTee Point Point $’000 $’000 Bedok Bedok Point Point $’000 $’000 GroupGroup $’000 $’000 20122012 Revenue and expenses Gross rental income Others Gross revenue 59,029 7,478 66,507 41,557 5,112 46,669 7,668 771 8,439 11,587 1,537 13,124 11,439 1,025 12,464 131,280 15,923 147,203 Segment net property income 48,584 33,362 4,811 9,628 8,045 104,430 52,989 36,147 2,889 9,034 (300) 7 (30,397) 74,040 352 10,416 100,759 185,567 Causeway Causeway Point Northpoint Point $’000 $’000 $’000 $’000 Northpoint Anchorpoint Anchorpoint $’000 $’000 YewTee YewTee Point Point $’000 $’000 Bedok Bedok Point Point $’000 $’000 GroupGroup $’000 $’000 Interest income Unallocated expenses Net income Unrealised gain from fair valuation of derivatives Share of results of associate Surplus on revaluation of investment properties Total return for the year 20112011 Revenue and expenses Gross rental income Others Gross revenue 44,992 6,571 51,563 39,870 5,166 45,036 7,113 915 8,028 11,414 1,574 12,988 Segment net property income 35,477 33,178 4,413 9,393 Interest income Unallocated expenses Net income Unrealised loss from fair valuation of derivatives Share of results of associate Surplus on revaluation of investment properties Total return for the year 56,311 31,468 2,123 7,922 (610) 256 13 269 157 103,645 14,239 117,884 82,618 13 (29,580) 53,051 (2,581) 4,579 97,214 152,263 Notes to The Financial Statements 30 September 2012 Annual Report 2012 107 23. 23. SEGMENT REPORTING (cont’d) SEGMENT REPORTING (cont’d) (a) Business segments (cont’d) Causeway Causeway Point Northpoint Point $’000 $’000 $’000 $’000 Northpoint Anchorpoint Anchorpoint $’000 $’000 YewTee YewTee Point Point $’000 $’000 Bedok Bedok Point Point $’000 $’000 GroupGroup $’000 $’000 896,039 573,041 82,390 148,321 133,988 1,833,779 71,819 11,521 1,917,119 29,486 15,834 3,161 4,562 4,363 57,406 85 (168) 1,159 16 1 (1) (269) 5 15,852 6 1,123 3 24 (25) 111 6 – – – (81) (42) 11 8 2 20 (15) 329 6 (30) 28 Causeway Causeway Point Northpoint Point $’000 $’000 $’000 $’000 Northpoint Anchorpoint Anchorpoint $’000 $’000 YewTee YewTee Point Point $’000 $’000 Bedok Bedok Point Point $’000 $’000 825,156 536,247 78,706 139,421 128,162 19,683 577,000 654,089 130 (290) 1,288 44 16,953 39 GroupGroup $’000 $’000 1,707,692 53,757 25,379 1,786,828 28,138 16,221 2,991 4,665 3,219 55,234 20,736 559,000 634,970 168 – – 2,846 15 30,843 7 – – – (635) 5 (833) 8 2 2 – (123) 8 – 3 87 – (15) 79 10 – – – 15 – 257 2 (15) 2,182 38 – 15 128,594 – 158,604 33 As at 30 September 2012 As at 30 September 2012 Assets and liabilities Segment assets Investment in associate Unallocated assets Total assets Segment liabilities Unallocated liabilities - trade and other payables - interest-bearing borrowings Total liabilities Other segmental information Allowance for doubtful receivables Receivables written back Amortisation of lease incentives Depreciation Capital expenditure - Investment properties - Fixed assets As at 30 September 2011 As at 30 September 2011 Assets and liabilities Segment assets Investment in associate Unallocated assets Total assets Segment liabilities Unallocated liabilities - trade and other payables - interest-bearing borrowings Total liabilities Other segmental information Allowance for doubtful receivables Bad debts written off Receivables written back Amortisation of lease incentives Depreciation Capital expenditure - Investment properties - Fixed assets 108 Frasers Centrepoint Trust Notes to The Financial Statements 30 September 2012 24. 24. COMMITMENTS COMMITMENTS Capital expenditure contracted but not provided for: - contracted but not provided for - authorised but not contracted for Group and Trust Group and Trust 2012 2012 $’000 $’000 17,881 6,730 24,611 2011 2011 $’000 $’000 18,964 19,106 38,070 The Group and the Trust lease out their investment properties. Non-cancellable operating lease rentals receivable are as follows: Receivable: Within 1 year After 1 year but within 5 years After 5 years 25. 25. CONTINGENT LIABILITY CONTINGENT LIABILITY Group and Trust Group and Trust 2012 2012 $’000 $’000 2011 2011 $’000 $’000 125,598 146,142 457 272,197 106,473 139,809 31 246,313 Pursuant to the tax transparency ruling from the IRAS, the Trustee and the Manager have provided a tax indemnity for certain types of tax losses, including unrecovered late payment penalties, that may be suffered by IRAS should IRAS fail to recover from Unitholders tax due or payable on distributions made to them without deduction of tax, subject to the indemnity amount agreed with the IRAS. The amount of indemnity, as agreed with IRAS, is limited to the higher of $500,000 or 1.0% of the taxable income of the Trust each year. Each yearly indemnity has a validity period of the earlier of seven years from the relevant year of assessment and three years from the termination of the Trust. 26. 26. SUBSEQUENT EVENTS SUBSEQUENT EVENTS On 23 October 2012, the Manager declared a distribution of $22,317,000 to Unitholders in respect of the period from 1 July 2012 to 30 September 2012. On 25 October 2012, the Trust issued 322,655 new Units at a price of $1.7885 per Unit in payment of 20% of its management fees for the period from 1 July 2012 to 30 September 2012. 27. 27. FINANCIAL RATIOS FINANCIAL RATIOS Expenses to weighted average net assets (1): - including performance component of asset management fees - excluding performance component of asset management fees Portfolio turnover rate (2) GroupGroup 2012 2012 % 1.04 0.59 – 2011 2011 % 1.05 0.63 – (1) (2) The annualised ratios are computed in accordance with the guidelines of Investment Management Association of Singapore. The expenses used in the computation relate to expenses of the Trust, excluding property expenses, interest expense and income tax expense. The annualised ratios are computed based on the lesser of purchases or sales of underlying investment properties of the Group expressed as a percentage of daily average net asset value. Annual Report 2012 109 Statistics of Unitholders As at 30 November 2012 Issued and Fully Paid-Up Units Issued and Fully Paid-Up Units There were 823,522,544 Units (voting rights: one vote per Unit) outstanding as at 30 November 2012. There is only one class of Units. The market capitalisation was $1,634,692,000 based on closing unit price of $1.985 on 30 November 2012. Top Twenty Unitholders Top Twenty Unitholders As at 30 November 2012 Unitholders S/NoS/No Unitholders 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. FCL Trust Holdings Pte. Ltd. DBSN Services Pte. Ltd. HSBC (Singapore) Nominees Pte. Ltd. Citibank Nominees Singapore Pte. Ltd. DNS Nominees Pte. Ltd. Frasers Centrepoint Asset Management Ltd. Raffl es Nominees (Pte) Ltd. NTUC Fairprice Co-Operative Limited DB Nominees (S) Pte. Ltd. United Overseas Bank Nominees Pte. Ltd. Bank Of Singapore Nominees Pte. Ltd. BNP Paribas Securities Services (Singapore) BNP Paribas Nominees Singapore Pte. Ltd. OCBC Securities Private Ltd. Merrill Lynch (Singapore) Pte. Ltd. Ng Say Ban Maybank Kim Eng Securities Pte. Ltd. Nomura Securities Singapore Pte. Ltd. Morgan Stanley Asia (Singapore) Securities Pte. Ltd. UOB Kay Hian Pte. Ltd. % of Total Number of Units % of Total Number of Units 313,500,000 114,626,646 94,363,574 87,770,144 42,082,965 23,892,544 14,106,882 13,993,000 13,480,564 13,365,700 5,115,000 4,635,000 2,885,000 2,559,000 2,414,075 1,980,000 1,971,136 1,233,150 1,232,433 1,028,000 38.07% 13.92% 11.46% 10.66% 5.11% 2.90% 1.71% 1.70% 1.64% 1.62% 0.62% 0.56% 0.35% 0.31% 0.29% 0.24% 0.24% 0.15% 0.15% 0.12% Total Total 756,234,813 756,234,813 91.83%91.83% Manager’s Directors’ Unitholdings Manager’s Directors’ Unitholdings As at 15 November 2012 Name of Director Name of Director Mr Anthony Cheong Fook Seng Mr Bobby Chin Yoke Choong Mr Lim Ee Seng Mr Soh Kim Soon Mr Christopher Tang Kok Kai Number of FCT Units held Number of FCT Units held Direct Interest Direct Interest Deemed Interest Deemed Interest 50,000 – 200,000 100,000 50,000 – 100,000 – – 620,000 110 Frasers Centrepoint Trust Statistics of Unitholders As at 30 November 2012 Substantial Unitholders Substantial Unitholders As at 30 November 2012 Unitholders Unitholders Number of Units Number of Units % Number of Units Number of Units % Total Number of Total Number of Units Held Units Held % Direct Interest Direct Interest Deemed Interest Deemed Interest Fraser and Neave, Limited(1) Frasers Centrepoint Limited(1) Thai Beverage Public Company Limited(2) International Beverage Holdings Limited(2) Schroder Investment Management Group The Capital Group Companies, Inc. – – – – – – – – – – – – 337,392,544 40.969% 337,392,544 40.969% 337,392,544 40.969% 337,392,544 40.969% 337,392,544 40.969% 337,392,544 40.969% 337,392,544 40.969% 337,392,544 40.969% 66,168,000(3) 8.035% 66,168,000 8.035% 53,464,000(4) 6.492% 53,464,000 6.492% (1) (2) Fraser and Neave, Limited (“F&NL”) and Frasers Centrepoint Limited (“FCL”) are deemed to be interested in the 337,392,544 Units, comprising 313,500,000 Units held by FCL Trust Holdings Pte. Ltd. and 23,892,544 Units held by the Manager, Frasers Centrepoint Asset Management Ltd. Both FCL Trust Holdings Pte. Ltd. and Frasers Centrepoint Asset Management Ltd. are wholly-owned subsidiaries of FCL, which in turn is a wholly-owned subsidiary of F&NL. On 14 August 2012, Thai Beverage Public Company Limited announced the completion of the acquisition of 313,036,775 ordinary shares in the capital of F&NL via its wholly-owned subsidiary, International Beverage Holdings Limited. Following the completion, each of Thai Beverage Public Company Limited and International Beverage Holdings Limited is considered to have a deemed interest in the Units in which F&N has an interest. (3) Based on information provided by Schroder Investment (Singapore) Ltd. on 12 November 2012. (4) Based on information provided by The Capital Group Companies, Inc. on 21 November 2012. Distribution of Holdings Distribution of Holdings Size of Holdings Size of Holdings 1 to 999 1,000 to 10,000 10,001 to 1,000,000 1,000,001 and above Grand Total Grand Total Location of Unitholders Location of Unitholders Country Country Singapore Malaysia Others Grand Total Grand Total Free Float Free Float Number of Number of Unitholders Unitholders Percentage of Percentage of Unitholders Unitholders Number of Units Number of Units Percentage of Percentage of UnitsUnits 17 2,942 917 20 3,896 3,896 0.44% 75.51% 23.54% 0.51% 100.00% 100.00% 2,696 13,228,035 54,057,000 756,234,813 823,522,544 823,522,544 0.00% 1.61% 6.56% 91.83% 100.00% 100.00% Number of Number of Unitholders Unitholders Percentage of Percentage of Unitholders Unitholders Number of Units Number of Units Percentage of Percentage of UnitsUnits 3,761 80 55 3,896 3,896 96.53% 2.05% 1.42% 100.00% 100.00% 820,460,044 2,146,000 916,500 823,522,544 823,522,544 99.63% 0.26% 0.11% 100.00% 100.00% Based on information made available to the Manager, no less than 10 per cent of the Units were held in the hands of the public and this complies with Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited. Additional Information Annual Report 2012 111 Related Party Transactions Related Party Transactions The transactions entered into with related parties during the fi nancial period and which fall within the Listing Manual of the CIS Code, are as follows: Name of Related Party Name of Related Party Frasers Centrepoint Limited and its subsidiaries Frasers Centrepoint Limited and its subsidiaries - Asset management fees1 - Property management fees - Reimbursement of expenses - Project Management Fees HSBC Institutional Trust Services (Singapore) Limited HSBC Institutional Trust Services (Singapore) Limited - Trustee’s fees Aggregate value of all related Aggregate value of all related party transactions during the party transactions during the fi nancial period under review fi nancial period under review (excluding transactions of less (excluding transactions of less than $100,000 each) than $100,000 each) $’000 $’000 10,713 4,423 1,857 535 309 Saved as disclosed above, there were no additional related party transactions (excluding transactions of less than $100,000 each) entered into during the fi nancial period under review. Please also see Signifi cant Related Party Transactions in Note 21 in the fi nancial statements. Rules 905 and 906 of the Listing Manual are not applicable if such related party transactions are made on the basis of, and in accordance with, the terms and conditions set out in the Trust prospectus dated 27 June 2006 and therefore would not be subject to Audit Committee review / approval. Subscription of the Trust Units Subscription of the Trust Units As at 30 September 2012, an aggregate of 823,199,889 Units were in issue. On 25 October 2012, the Trust issued 322,655 Units to the Manager as asset management fees for the period from 1 July 2012 to 30 September 2012. Non-deal Roadshow Expenses Non-deal Roadshow Expenses Non-deal roadshow expenses of $29,669 (2011: $28,278) were incurred during the year ended 30 September 2012. 112 Frasers Centrepoint Trust Notice of Annual General Meeting (a real estate investment trust constituted on 5 June 2006 under the laws of the Republic of Singapore) Sponsored by Frasers Centrepoint Limited, a wholly-owned subsidiary of Fraser and Neave, Limited NOTICE OF ANNUAL GENERAL MEETING NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the 4th Annual General Meeting of FRASERS CENTREPOINT TRUST (“FCTFCT”) will be NOTICE IS HEREBY GIVEN held at Level 2, Alexandra Point, 438 Alexandra Road, Singapore 119958 on 22 January 2013 at 2.30 p.m. for the following purposes:- ROUTINE BUSINESS ROUTINE BUSINESS Resolution (1) Resolution (1) 1. To receive and adopt the Report of the Trustee issued by HSBC Institutional Trust Services (Singapore) Trustee”), the Statement by the Manager issued by Frasers Centrepoint Asset Limited, as trustee of FCT (the “Trustee Manager”) and the Audited Financial Statements of FCT for the year Management Ltd., as manager of FCT (the “Manager ended 30 September 2012. Resolution (2) Resolution (2) 2. To re-appoint Ernst & Young LLP as Auditors of FCT to hold offi ce until the conclusion of the next Annual General Meeting, and to authorise the Manager, to fi x their remuneration. SPECIAL BUSINESS SPECIAL BUSINESS To consider and, if thought fi t, to pass the following Ordinary Resolutions, with or without any modifi cations: Resolution (3) Resolution (3) 3. That authority be and is hereby given to the Manager, to (a) (i) (ii) issue units in FCT (“UnitsUnits”) whether by way of rights, bonus or otherwise; and/or make or grant offers, agreements or options (collectively, “Instruments Instruments”) that might or would require Units to be issued, including but not limited to the creation and issue of (as well as adjustments to) securities, warrants, debentures or other instruments convertible into Units, at any time and upon such terms and conditions and for such purposes and to such persons as the Manager may in its absolute discretion deem fi t; and (b) issue Units in pursuance of any Instrument made or granted by the Manager while this Resolution was in force (notwithstanding that the authority conferred by this Resolution may have ceased to be in force), provided that: (1) the aggregate number of Units to be issued pursuant to this Resolution (including Units to be issued in pursuance of Instruments made or granted pursuant to this Resolution) shall not exceed fi fty per cent. (50%) of the total number of issued Units (excluding treasury Units, if any) (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Units to be issued other than on a Unitholders”) does not exceed twenty per cent (20%) of the total pro rata basis to unitholders of FCT (“Unitholders number of issued Units (excluding treasury Units, if any) (as calculated in accordance with sub-paragraph (2) below); Notice of Annual General Meeting Annual Report 2012 113 (2) (3) (4) (5) (6) subject to such manner of calculation as may be prescribed by Singapore Exchange Securities Trading SGX-ST”) for the purpose of determining the aggregate number of Units that may be issued Limited (the “SGX-ST under sub-paragraph (1) above, the total number of issued Units (excluding treasury Units, if any) shall be based on the number of issued Units (excluding treasury Units, if any) at the time this Resolution is passed, after adjusting for: (a) any new Units arising from the conversion or exercise of any Instruments which are outstanding at the time this Resolution is passed; and (b) any subsequent bonus issue, consolidation or subdivision of Units; in exercising the authority conferred by this Resolution, the Manager shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived Trust Deed”) for by the SGX-ST) and the deed of trust constituting FCT (as amended and restated) (the “Trust Deed the time being in force (unless otherwise exempted or waived by the Monetary Authority of Singapore); unless revoked or varied by Unitholders in a general meeting, the authority conferred by this Resolution shall continue in force until (i) the conclusion of the next Annual General Meeting of FCT or (ii) the date by which the next Annual General Meeting of FCT is required by the applicable law or regulations to be held, whichever is earlier; where the terms of the issue of the Instruments provide for adjustment to the number of Instruments or Units into which the Instruments may be converted in the event of rights, bonus or other capitalisation issues or any other events, the Manager may issue additional Instruments or Units pursuant to such adjustment notwithstanding that the authority conferred by this Resolution may have ceased to be in force at the time the Instruments or Units are issued; and Director”) and the Trustee, be and are hereby severally the Manager, any director of the Manager (“Director authorised to complete and do all such acts and things (including executing all such documents as may be required) as the Manager, such Director, or, as the case may be, the Trustee may consider expedient or necessary or in the interest of FCT to give effect to the authority conferred by this Resolution. OTHER BUSINESS OTHER BUSINESS 4. To transact any other business which may properly be brought forward. Frasers Centrepoint Asset Management Ltd. (Company Registration No: 200601347G) As manager of Frasers Centrepoint Trust Anthony Cheong Fook Seng Company Secretary Singapore, 24 December 2012 A Unitholder entitled to attend the meeting and vote is entitled to appoint not more than two proxies to attend and vote instead of him; a proxy need not be a Unitholder. Where a Unitholder appoints more than one proxy, he shall specify the proportion of his unitholdings to be represented by each proxy. The instrument appointing a proxy or proxies (a form is enclosed) must be deposited with the company secretary of the Manager at the registered offi ce of the Manager not less than 48 hours before the time appointed for holding the meeting. 114 Frasers Centrepoint Trust Notice of Annual General Meeting Explanatory Notes: Explanatory Notes: Resolution 3 Resolution 3 above, if passed, will empower the Manager from the date of this Annual General Meeting until the date of the next Annual General Meeting, to issue Units and to make or grant instruments (such as securities, warrants or debentures) convertible into Units and issue Units pursuant to such instruments, up to a number not exceeding 50% of the total number of issued Units (excluding treasury Units, if any), of which up to 20% may be issued other than on a pro rata basis to Unitholders. For determining the aggregate number of Units that may be issued, the percentage of issued Units will be calculated based on the issued Units at the time Resolution 3 above is passed, after adjusting for new Units arising from the conversion or exercise of any Instruments which are outstanding at the time Resolution 3 above is passed and any subsequent bonus issue, consolidation or subdivision of Units. Fund raising by issuance of new Units may be required in instances of property acquisitions or debt repayments. In any event, if the approval of Unitholders is required under the Listing Manual of the SGX-ST and the Trust Deed or any applicable laws and regulations in such instances, the Manager will then obtain the approval of Unitholders accordingly. Important Notice Important Notice The value of Units and the income derived from them, if any, may fall or rise. Units are not obligations of, deposits in, or The value of Units and the income derived from them, if any, may fall or rise. Units are not obligations of, deposits in, or guaranteed by, the Manager or any of its affi liates. An investment in Units is subject to investment risks, including the possible guaranteed by, the Manager or any of its affi liates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. loss of the principal amount invested. Investors should note that they will have no right to request the Manager to redeem or purchase their Units for so long as the Investors should note that they will have no right to request the Manager to redeem or purchase their Units for so long as the Units are listed on the SGX-ST. It is intended that Unitholders may only deal in their Units through trading on the SGX-ST. The Units are listed on the SGX-ST. It is intended that Unitholders may only deal in their Units through trading on the SGX-ST. The listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. The past performance of FCT is not necessarily indicative of the future performance of FCT. The past performance of FCT is not necessarily indicative of the future performance of FCT. FRASERS CENTREPOINT TRUST FRASERS CENTREPOINT TRUST (Constituted in the Republic of Singapore pursuant to a trust deed dated 5 June 2006 (as amended and restated)) PROXY FORM PROXY FORM ANNUAL GENERAL MEETING ANNUAL GENERAL MEETING IMPORTANT 1. For investors who have used their CPF money to buy units in Frasers Centrepoint Trust, this Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purposes if used or is purported to be used by them. 3. CPF Investors who wish to attend the Annual General Meeting as OBSERVERS have to submit their requests through their respective Agent Banks so that their Agent Banks may register, in the required format, with the Company Secretary, Frasers Centrepoint Asset Management Ltd. (Agent Banks: please see note No. 8 on required format). 4. PLEASE READ THE NOTES TO THE PROXY FORM. I/We (Name) (NRIC/Passport Number) of being a unitholder/unitholders of Frasers Centrepoint Trust (“FCTFCT”), hereby appoint: (Address) NameName Address Address NRIC/Passport NRIC/Passport Number Number Proportion of Proportion of Unitholdings (Note 2) Unitholdings (Note 2) No. of Units No. of Units % and/or (delete as appropriate) NameName Address Address NRIC/Passport NRIC/Passport Number Number Proportion of Proportion of Unitholdings (Note 2) Unitholdings (Note 2) No. of Units No. of Units % or both of whom failing, the Chairman of the Annual General Meeting as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and if necessary, to demand a poll, at the Annual General Meeting of FCT to be held at 2.30 p.m. on 22 January 2013 at Level 2, Alexandra Point, 438 Alexandra Road, Singapore 119958 and any adjournment thereof. I/ We direct my/our proxy/proxies to vote for or against the resolutions to be proposed at the Annual General Meeting as indicated hereunder. If no specifi c direction as to voting is given, the proxy/proxies may vote or abstain from voting at his/ their discretion, as he/they may on any other matter arising at the Annual General Meeting. NOTE: The Chairman of the AGM will be exercising his right under paragraph 9 of Schedule 1 of the Deed of Trust NOTE: The Chairman of the AGM will be exercising his right under paragraph 9 of Schedule 1 of the Deed of Trust constituting FCT (as amended and restated) to demand a poll in respect of the resolutions to be put to the vote of constituting FCT (as amended and restated) to demand a poll in respect of the resolutions to be put to the vote of members at the AGM and at any adjournment thereof. Accordingly, such resolutions at the AGM will be voted on by members at the AGM and at any adjournment thereof. Accordingly, such resolutions at the AGM will be voted on by way of poll. way of poll. RESOLUTIONS RELATING TO: NO.NO. RESOLUTIONS RELATING TO: No. of Votes No. of Votes For*For* No. of Votes No. of Votes Against* Against* ROUTINE BUSINESS ROUTINE BUSINESS To receive and adopt the Trustee’s Report, the Statement by the Manager and the Audited Financial Statements of FCT for the year ended 30 September 2012 To re-appoint Ernst & Young as Auditors of FCT and authorise the Manager to fi x their remuneration SPECIAL BUSINESS SPECIAL BUSINESS To authorise the Manager to issue Units and to make or grant convertible instruments OTHER BUSINESS OTHER BUSINESS To transact any other business which may properly be brought forward 1. 2. 3. 4. * If you wish to exercise all your votes “For” or “Against” the relevant resolution, please tick () within the relevant box provided. Alternatively, if you wish to exercise your votes for both “For” and “Against” the relevant resolution, please indicate the number of Units in the boxes provided. Dated this day of 2013 Total number of Units held (Note 4)  Signature(s) of Unitholder(s)/Common Seal fold and seal here IMPORTANT: PLEASE READ THE NOTES TO PROXY FORM BELOW Notes To Proxy Form 1. 2. 3. 4. 5. 6. 7. 8. A unitholder of FCT (“Unitholder Unitholder”) entitled to attend and vote at the meeting is entitled to appoint one or two proxies to attend and vote in his stead. A proxy need not be a Unitholder. The instrument appointing a proxy or proxies must be deposited with the Company Secretary of the Manager at its registered offi ce at 438 Alexandra Road, #21-00 Alexandra Point, Singapore 119958, not less than 48 hours before the time appointed for holding the meeting. Where a Unitholder appoints more than one proxy, the appointments shall be invalid unless he specifi es the proportion of his holding (expressed as a percentage of the whole) to be represented by each proxy. Completion and return of this instrument appointing a proxy or proxies shall not preclude a member from attending and voting at the meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Manager reserves the right to refuse to admit any person or persons appointed under this instrument of proxy, to the meeting. A Unitholder should insert the total number of Units held. If the Unitholder has Units entered against his name in the Depository Register maintained by the Central Depository (Pte) Limited (“CDPCDP”), he should insert that number of Units. If the Unitholder has Units registered in his name in the Register of Unitholders of FCT, he should insert that number of Units. If the Unitholder has Units entered against his name in the said Depository Register and registered in his name in the Register of Unitholders, he should insert the aggregate number of Units. If no number is inserted, this form of proxy will be deemed to relate to all the Units held by the Unitholder. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised offi cer. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the power of attorney or a duly certifi ed copy thereof must (failing previous registration with the Manager) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid. The Manager shall be entitled to reject a Proxy Form which is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifi ed on and/or attached to the Proxy Form. In addition, in the case of Units entered in the Depository Register, the Manager may reject a Proxy Form if the Unitholder, being the appointor, is not shown to have Units entered against his name in the Depository Register as at 48 hours before the time appointed for holding the meeting, as certifi ed by CDP to the Manager. Agent Banks acting on the request of CPF investors who wish to attend the meeting as Observers are required to submit in writing, a list with details of the investors’ name, NRIC/Passport numbers, addresses and numbers of Units held. The list, signed by an authorised signatory of the Agent Bank, should reach the Company Secretary, at the registered offi ce of the Manager not later than 48 hours before the time appointed for holding the meeting. fold here Affi x Postage Stamp The Company Secretary Frasers Centrepoint Asset Management Ltd. (as manager of Frasers Centrepoint Trust) 438 Alexandra Road #21-00 Alexandra Point Singapore 119958 fold here w w w . f c t . s g Frasers Centrepoint Asset Management Ltd As Manager of Frasers Centrepoint Trust Company Registration Number: 200601347G Address: 438 Alexandra Road, #21-00 Alexandra Point, Singapore 119958 Phone: (65) 6276-4882 Fax: (65) 6272-8776 Email: ir@fraserscentrepointtrust.com 

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