Frasers Property Limited
Annual Report 2013

Plain-text annual report

Creating Value Through Space Annual Report 2013 Our Vision The solution to all real estate needs globally. Our Mission A fully-integrated global real estate company built on trust & integrity. Frasers Centrepoint Limited (FCL) will remain focused on providing fully-integrated real estate solutions for a complete spectrum of property classes, be it in residential, office, shopping mall, serviced apartments, or real estate investment trusts. Contents FCL Strategy Group at a Glance Global Presence Milestones Corporate Information Group Structure Financial Highlights Chairman’s Statement Board of Directors Group Management Group CEO Business Review - Development Property - Commercial Property - Hospitality Corporate Social Responsibility Awards & Accolades FY2013 Enterprise-Wide Risk Management (ERM) Corporate Governance Report Index to Financial Report 01 10 12 14 16 17 18 20 24 30 32 34 46 56 64 74 76 77 92 FCL Strategy Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 4 1 2 3 4 KEY STRATEGIES Achieve sustainable earnings growth through significant development project pipeline, investment properties and fee income Grow asset portfolio in a balanced manner across geographies and property segments to preserve stability of earnings Optimise capital productivity through REIT platforms and active asset management initiatives Develop synergies with TCC Group 01 Integrated development Central Park, Sydney, Australia 02 03 04 Integrated development Changi City, Singapore 05 Commercial China Square Central, Singapore 06 Residential Esparina Residences EC, Singapore 07 Hospitality Fraser Suites Glasgow, UK 08 Hospitality Capri by Fraser, Changi City, Singapore 09 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group at a Glance Frasers Centrepoint Limited (FCL) Total Assets ($m) FCL is headquartered in Singapore and our principal activities are property development, investment and management of commercial property, serviced residences and property trusts. Our Group’s property portfolio comprises properties located in Singapore and overseas, ranging from residential and commercial developments to shopping malls, serviced residences and office and business space properties. They are represented by the following four main brands/divisions - Frasers Centrepoint Homes (for Singapore residential development properties), Frasers Property (for overseas development properties), Frasers Centrepoint Commercial (for shopping malls, office and business space properties) and Frasers Hospitality (for serviced residences). 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 6,140 5,081 4,979 4,024 10,445 10,357 9,808 9,567 10,112 9,860 9,127 Group Total Revenue ($m) Group Profit Before Interest and Taxation ($m) $2,053m $571m Revenue (%) Profit Before Interest and Taxation (%) 9 2 7 FY2013 82 1 11 12 FY2013 10 66 Business Segment Investment Properties REIT Development Properties Hospitality Corporate & Others Investment Properties ($’000) REIT ($’000) Development Properties ($’000) Hospitality ($’000) Corporate & Others ($’000) Group ($’000) 136,224 – 1,682,379 183,833 50,313 2,052,749 Revenue FY2013 Profit Before Interest and Taxation FY2013 63,032 54,452 379,377 69,658 4,619 571,138 10 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Residential Commercial Hospitality Frasers Hospitality has interests in and/or manages serviced residences under the branded lifestyle offerings of Fraser Suites, Fraser Place, Fraser Residence, Modena by Fraser and Capri by Fraser, offering about 8,000 apartments in over 30 cities. Based on management contracts secured, more than 7,000 apartments will be added to Frasers Hospitality’s portfolio of serviced residences over the next four years. Frasers Centrepoint Homes focuses on residential property development in Singapore. We have built over 12,000 homes in Singapore, with about 7,000 homes under development (including properties under our joint venture projects). Frasers Property is the international arm of our Group which develops residential and mixed-use property projects outside of Singapore, including in China, Australia, New Zealand, Thailand, and the United Kingdom. China and Australia are the two key overseas property markets for development properties for our Group. Frasers Centrepoint Commercial manages our shopping malls in Singapore under the Frasers Centrepoint Malls brand. We manage five shopping malls in Singapore held by Frasers Centrepoint Trust (FCT), an entity which is listed on the SGX-ST. In addition, we also have interests in and/or manage seven other shopping malls in Singapore, one shopping mall each in China and Australia. Frasers Centrepoint Commercial also manages office and business space properties. We manage five commercial and office properties in Singapore and Australia held by Frasers Commercial Trust (FCOT), an entity which is also listed on the SGX-ST. In addition, our Group also has interests in six office and business space properties located in Singapore, China and Vietnam. Group Profit Before Interest and Taxation ($m) 11 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Global Presence Profit Before Interest and Taxation (%) 5 1 3 3 1 FY2013 87 Geographical Segment (%) Revenue (%) 8 11 4 9 FY2013 77 Singapore Australia UK China Thailand Others* Singapore Australia China Revenue ($’000) Revenue ($’000) Revenue ($’000) 1,583,514 187,105 157,409 Profit Before Interest and Taxation ($’000) Profit Before Interest and Taxation ($’000) Profit Before Interest and Taxation ($’000) 499,352 4,230 29,552 UK Thailand Others* Revenue ($’000) Revenue ($’000) Revenue ($’000) 81,321 20,328 23,072 Profit Before Interest and Taxation ($’000) Profit Before Interest and Taxation ($’000) Profit Before Interest and Taxation ($’000) 18,465 7,896 11,643 * Include New Zealand, Malaysia, Indonesia, Philippines & Vietnam. 12 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Residential Commercial Hospitality Australia China Malaysia New Zealand Singapore Thailand United Kingdom Australia China Malaysia Singapore Vietnam Australia Bahrain China France Hungary India Indonesia Japan Malaysia Philippines Qatar Singapore South Korea Thailand Turkey United Arab Emirates United Kingdom Vietnam 13 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 1988 Our Company, then named as Centrepoint Properties Limited, was listed on the SGX-ST. 1993 We launched our first residential project, The Anchorage, which was re-developed from the land occupied by F&N Singapore’s old brewery and soft drinks plants. 1996 We embarked on our first overseas office project through the development of the commercial-cum-retail centre, Me Linh Point, in Ho Chi Minh City, Vietnam. 1990 Our Company became a subsidiary of F&N. 1992 We launched Singapore’s pioneer suburban retail mall, Northpoint, located in Yishun, and also launched Bridgepoint, a retail mall in Sydney, Australia, and our first office project, Alexandra Point, Singapore. 14 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 1997 We developed and launched our first business space project, Alexandra Technopark. 1998 2002 We developed and launched our first hospitality projects, Fraser Suites and Fraser Place serviced residences in Singapore. 2000 We embarked on our first foray into residential projects overseas through the development of Pavilions on the Bay in Australia and Annandale House in the United Kingdom. • We launched serviced residences in United Kingdom, Seoul, Korea and Manila, Philippines. • Our Company delisted from the SGX-ST and became a wholly-owned subsidiary of F&N. 2006 2008 Our Company was rebranded as Frasers Centrepoint Limited, and launched our first REIT, FCT, which is listed on the Main Board of the SGX-ST. We acquired a stake in Allco Commercial REIT and the entire stake of Allco Commercial REIT’s manager, and rebranded the REIT as FCOT, which is listed on the SGX-ST. 2001 We ventured into residential development in China through the development of Jingan Four Seasons in Shanghai, China. 2013 FCL became a member of TCC Group. 2014 FCL is listed by way of introduction on the Main Board of the Singapore Exchange Securities Trading Limited. 15 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Information Board of Directors Mr Charoen Sirivadhanabhakdi Non-Executive and Non-Independent Chairman Khunying Wanna Sirivadhanabhakdi Non-Executive and Non-Independent Vice Chairman Mr Charles Mak Ming Ying Non-Executive and Independent Director Mr Chan Heng Wing Non-Executive and Independent Director Audit Committee Mr Charles Mak Ming Ying Chairman Mr Sithichai Chaikriangkrai Mr Philip Eng Heng Nee Mrs Siripen Sitasuwan Nominating Committee Mr Weerawong Chittmittrapap Chairman Mr Philip Eng Heng Nee Mr Chan Heng Wing Non-Executive and Independent Director Mr Weerawong Chittmittrapap Non-Executive and Independent Director Mrs Siripen Sitasuwan Mr Chotiphat Bijananda Remuneration Committee Mr Philip Eng Heng Nee Non-Executive and Independent Director Chairman Mr Chotiphat Bijananda Mrs Siripen Sitasuwan Mr Charles Mak Ming Ying Mr Panote Sirivadhanabhakdi Group Management Mr Lim Ee Seng Group Chief Executive Officer Mr Cheang Kok Kheong Chief Executive Officer, Development & Property, Singapore Mr Chia Khong Shoong Chief Executive Officer, Australia, New Zealand & United Kingdom Chief Financial Officer Mr Choe Peng Sum Chief Executive Officer, Frasers Hospitality Mr Tang Kok Kai Christopher Chief Executive Officer, Frasers Centrepoint Commercial Chief Executive Officer, Greater China Mr Uten Lohachitpitaks Chief Investment Officer Non-Executive and Non-Independent Director Mr Panote Sirivadhanabhakdi Non-Executive and Non-Independent Director Mr Sithichai Chaikriangkrai Non-Executive and Non-Independent Director Board Executive Committee Mr Charoen Sirivadhanabhakdi Chairman Mr Charles Mak Ming Ying Vice Chairman Mr Chotiphat Bijananda Vice Chairman Mr Panote Sirivadhanabhakdi Mr Sithichai Chaikriangkrai Risk Management Committee Mr Chotiphat Bijananda Chairman Mr Chan Heng Wing Mr Weerawong Chittmittrapap Mr Panote Sirivadhanabhakdi Mr Sithichai Chaikriangkrai Mr Charles Mak Ming Ying 16 Registered Office 438 Alexandra Road #21-00 Alexandra Point Singapore 119958 Tel: (65) 6276 4882 Fax: (65) 6276 6328 Share Registrar Tricor Barbinder Share Registration Services 80 Robinson Road #02-00 Singapore 068898 Tel: (65) 6236 3333 Fax: (65) 6236 4399 Auditor Ernst & Young LLP Partner-in-charge: Mr Nagaraj Sivaram Principal Bankers Bank of Tokyo-Mitsubishi UFJ, Ltd DBS Bank Ltd Overseas-Chinese Banking Corporation Standard Chartered Bank Sumitomo Mitsui Banking Corporation United Overseas Bank Limited Frasers Centrepoint Limited’s admission to and listing on the Singapore Exchange Securities Trading Limited was sponsored by DBS Bank Ltd. DBS Bank Ltd. assumes no responsibility for the contents of this document. Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Group Structure Frasers Centrepoint Homes Singapore Project Entities Frasers Property UK Project Entities China Project Entities Australia Project Entities Frasers Centrepoint Asset Management Ltd. Frasers Centrepoint Asset Management (Commercial) Ltd. Hektar Asset Management Sdn Bhd FCT* FCOT* Hektar REIT* Frasers Centrepoint Commercial Investment Holding Singapore / Overseas Holding Entities REIT Management Retail and Commercial Property Management Frasers Hospitality Investment Holding Serviced Apartments Management Frasers Centrepoint Property Management Services Pte. Ltd. Singapore / Overseas Holding Entities Frasers Hospitality Pte. Ltd. / Frasers Hospitality (UK) Limited * These are REIT managers of FCT, FCOT and Hektar REIT, respectively. 17 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Financial Highlights 5 YEARS’ STATISTICS FROM 2009 TO 2013 2009 2010 2011 2012 2013 (restated) (restated) (restated) Revenue ($’m) 1,845 1,708 2,234 1,412 2,053 Profit before interest, fair value change, taxation and exceptional items ($’m) 443 503 578 390 571 Profit before tax ($’m) Before fair value change and exceptional items After fair value change and exceptional items Attributable profit ($’m) Before fair value change and exceptional items After fair value change and exceptional items Earnings per share1 (cents) Attributable profit before fair value change and exceptional items (“APBFE”) Attributable profit after fair value change and exceptional items (“AP”) Dividend per share1 Ordinary shares (cents) Preference shares ($) 402 320 335 262 441 621 333 484 525 784 395 603 330 721 252 643 510 832 401 722 40.0 42.9 51.7 33.5 53.2 30.3 63.0 79.4 85.4 95.9 26.3 166.0 30.5 60.0 26.6 30.1 19.9 Nil 26.6 Nil Net asset value (share capital & reserves) ($’m) 3,742 3,960 4,384 4,932 5,451 Net asset value per share1 ($) 4.53 4.82 5.38 6.11 6.80 Return on average shareholders’ equity (%) Profit before fair value change and exceptional items Attributable profit before fair value change and exceptional items 11.9 9.0 13.1 8.6 13.9 9.5 8.4 5.4 11.0 7.7 1 Based on number of shares in issue as at the end of each respective financial year. If calculated based on the number of shares issued as at the date, FCL’s listing on SGX-ST of 2,889,812,572, the earnings per share on APBFE and AP, dividend per share and net asset value per share for the financial year ended 30 September 2013 would be 13.9 cents, 25.0 cents, 6.9 cents and $1.77 respectively. 18 Commercial Central Park, Perth, Australia 19 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Chairman’s Statement It has been a milestone year for Frasers Centrepoint Limited (“FCL”), with the successful distribution in-specie (“DIS”) and listing of FCL in early 2014 on the Main Board of the Singapore Exchange (“SGX-ST”). The listing creates investment flexibility for all shareholders. More importantly, it enables FCL to have direct access to capital markets, enhances our corporate visibility and represents a step forward for FCL to independently realise its potential to the fullest extent possible. I extend my special appreciation to Dr. Richard Hu Tsu Tau, who has accepted the appointment of Senior Advisor to the Board, as well as our distinguished Independent Board members. They will bring with them extensive experience and insights in relation to the macroeconomic and geopolitical trends in the region, as well as expertise in the real estate arena. I look forward to their contributions in the years ahead. Charoen Sirivadhanabhakdi Chairman 20 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES I am also pleased with the efforts of our Group Chief Executive Officer, Mr. Lim Ee Seng, and his senior management team in establishing a strong foundation for FCL, as a full-fledged international real estate player, with multi-segment capabilities and a strong brand franchise for quality and value. With total assets of $10.4 billion and profits before tax and interest of $571 million, we are well positioned to ride through market challenges and to win the confidence of our customers. Looking Forward In 2013, Europe narrowly averted widespread financial distress. The United States saw signs of economic recovery and the Fed commenced tapering. China set off its economic structural reform initiatives to achieve a steadier and more sustainable growth. We, nevertheless, see structural risks lurking beneath the surface of these major economies. Property cooling measures were introduced to combat inflationary pressure on real asset prices, which resulted in softer markets in some of the countries our Group are engaged in. residential units in Singapore, Australia and China. The progressive revenue recognition from these pre-sold projects is expected to contribute positively to our cash flow as well as financial performance in 2014. Furthermore, about 56% of our property assets are in retail, office and hospitality assets, which provide strong recurring earnings. We will continue to seek sustainable earnings from these assets over the long term to maintain our financial resilience. About 89% of our property assets are invested in our core markets of Singapore, China and Australia, with the remaining property assets invested across markets such as the United Kingdom, Thailand, Malaysia and Vietnam. Our presence and established track record in diversified markets are a source of competitive advantage. We have built up strong capabilities spanning the full real estate value chain, from land acquisition, development, asset management, property management to operations. We will continue to optimise our resources, leveraging on our multi-segment capabilities and strong market positions to pursue wide ranging opportunities. On a brighter note, FCL stands on firm ground with approximately $3.2 billion of unrecognised revenue from pre-sold We will continue to recycle capital from our investment properties through our existing REITs. We are also exploring the setting up of a hospitality REIT to extend our existing REIT platform. Capital unlocked through our existing and new REITs will be deployed to support new investments and acquisitions. This capital recycling model will allow FCL to maintain a robust balance sheet and prudent capital management. To position for the future, FCL has also completed a capital restructuring with $1 billion of capital from Fraser and Neave Limited (“F&N”) prior to the DIS exercise and our listing. This gives us a healthy balance sheet with a net debt-to-equity ratio of 0.4x (proforma as at 30 Sep 2013). We also have cash and undrawn credit lines of about $2.3 billion. As always, we will use these resources to selectively acquire assets in good locations to seed and grow, while remaining committed to delivering our existing development pipeline in Singapore, Australia and China. On this note, I look forward to FCL growing its asset portfolio for future generations and building for the long term. I am confident that the company’s strong financial position will enable it to weather market volatilities and to make selective acquisitions when attractive opportunities materialise. Charoen Sirivadhanabhakdi Chairman 21 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Chairman’s Statement “An exciting 2014 beckons the Group. Being a newly listed organization, we look forward to building our future on a rock-solid foundation that every one of our stakeholders has helped to put in place.” 01 Central Park, Sydney, Australia 03 Fraser Place Anthill Istanbul, Turkey 02 Northpoint, Singapore 04 Fraser Suites Perth, Australia Dividends In view of FCL’s strong financial achievement in 2013, FCL has paid a $150 million cash dividend to F&N prior to the distribution in-specie of FCL. The Board of Directors has proposed a further final one-tier tax exempt cash dividend of $50 million (or $0.0173 per share) to be paid after the listing of FCL on the SGX-ST. The aggregate dividend payout in 2013 represents approximately 50% of FCL’s attributable net profit before fair value changes and exceptional items. 22 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Acknowledgements I am honored to have been appointed to this Board and look forward to working with some of the most distinguished names in the real estate industry to steer FCL into its next phase of growth. An exciting 2014 beckons the Group. Being a newly listed organisation, we look forward to building our future on a rock-solid foundation that every one of our stakeholders has helped to put in place. I want to thank my colleagues on the Board for their counsel, and our business partners, financial advisors, bankers, customers and shareholders for their unwavering support. I wish to convey my deepest appreciation to the shareholders of F&N, who unanimously approved the distribution in-specie of FCL and made the listing of FCL possible. We will cherish our role as an active and responsible real estate player and as an asset owner - investing today, but always with tomorrow in mind. We will strive to enhance shareholder value. We will continue to maintain a high standard of corporate governance as well as discharge our corporate social responsibilities. On behalf of the Board, I would also like to record our appreciation to the Boards of Frasers Centrepoint Asset Management Limited (the Manager of FCT) and Frasers Centrepoint Asset Management (Commercial) Ltd (the Manager of FCOT) for their stewardship of our listed REITs. Last but not least, I would also like to thank our staff for their dedication and hard work. Charoen Sirivadhanabhakdi Chairman 01 03 04 02 23 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Board of Directors Charoen Sirivadhanabhakdi, 69 Khunying Wanna Sirivadhanabhakdi, 70 Non-Executive and Non-Independent Chairman Non-Executive and Non-Independent Vice Chairman Date of first appointment as a director Date of last re-election as a director Length of service as a director (as at 30 Sep 2013) : N.A. : 25 Oct 2013 : - Date of first appointment as a director Date of last re-election as a director Length of service as a director (as at 30 Sep 2013) : N.A. : 07 Jan 2014 : - Board committee(s) served on: • Board Executive Committee (Chairman) Board committee(s) served on: Nil Academic & Professional Qualification(s): • Honorary Doctoral Degree in Agricultural Business Administration, Maejo Institute of Agricultural Technology, Thailand • Honorary Doctoral Degree in Industrial Technology, Chandrakasem Rajabhat University, Thailand Academic & Professional Qualification(s): • Honorary Doctoral Degree in Bio-Technology, Ramkhamhaeng University, Thailand • Honorary Doctoral Degree in Business Administration, Maejo Institute of Agricultural Technology, Thailand • Honorary Doctoral Degree in Business Administration, • Honorary Doctoral Degree in Management, Huachiew Chiang Mai University, Thailand Chalermprakiet University, Thailand • Honorary Doctor of Philosophy Degree in Social Sciences, • Honorary Doctoral Degree in Business Administration, Mae Fah Luang University, Thailand • Honorary Doctoral Degree of Faculty of Business Administration and Information Technology, Rajamangala University of Technology Tawan-ok Present Directorships (as at 30 Sep 2013) Listed companies • Berli Jucker Public Company Limited (Vice Chairman) • Thai Beverage Public Company Limited (Vice Chairman) • Fraser and Neave, Limited (Vice Chairman) Others • Beer Thip Brewery (1991) Co., Ltd. (Chairman) • Sangsom Group of Companies (Chairman) • TCC Capital Land Limited (Vice Chairman) • TCC Holding Co., Ltd. (Vice Chairman of Executive Board) Major Appointments (other than Directorships) Nil Past Directorships in listed companies held over the preceding three years (from 01 Oct 2010 to 30 Sep 2013) Nil Eastern Asia University, Thailand • Honorary Doctor of Philosophy Degree in Business Administration, Mae Fah Luang University, Thailand • Honorary Doctoral Degree in Management, Rajamangala University of Technology Suvarnabhumi, Thailand • Honorary Doctoral Degree in International Business Administration, University of the Thai Chamber of Commerce, Thailand • Honorary Doctoral Degree in Sciences and Food Technology, Rajamangala University of Technology Lanna, Thailand Present Directorships (as at 30 Sep 2013) Listed companies • Berli Jucker Public Company Limited (Chairman) • Thai Beverage Public Company Limited (Chairman) • Fraser and Neave, Limited (Chairman) Others • Beer Thai (1991) Public Company Limited (Chairman) • Red Bull Distillery Group of Companies (Chairman) • Southeast Group Co., Ltd. (Chairman) • TCC Holding Co., Ltd. (Chairman) • TCC Land Co., Ltd. (Chairman) Major Appointments (other than Directorships) Nil Past Directorships in listed companies held over the preceding three years (from 01 Oct 2010 to 30 Sep 2013) Nil Others Nil 24 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Charles Mak Ming Ying, 61 Chan Heng Wing, 67 Non-Executive and Independent Director Non-Executive and Independent Director Date of first appointment as a director Date of last re-election as a director Length of service as a director (as at 30 Sep 2013) : N.A. : 25 Oct 2013 : - Date of first appointment as a director Date of last re-election as a director Length of service as a director (as at 30 Sep 2013) : N.A. : 25 Oct 2013 : 07 Jan 2014 Board committee(s) served on: • Audit Committee (Chairman) • Remuneration Committee • Risk Management Committee • Board Executive Committee (Vice Chairman) Academic & Professional Qualification(s): • Master of Business Administration, PACE University, USA • Bachelor of Business Administration, PACE University, USA Present Directorships (as at 30 Sep 2013) Listed companies Nil Major Appointments (other than Directorships) • Morgan Stanley Asia Pacific (Vice Chairman) • Morgan Stanley International Wealth Management (President) Past Directorships in listed companies held over the preceding three years (from 01 Oct 2010 to 30 Sep 2013) • Fraser and Neave, Limited Others • Previously Managing Director and Head of Morgan Stanley Asia Pacific Private Wealth Management • Previously Executive Director and Senior Investment Adviser of Morgan Stanley’s Private Wealth Management Group Board committee(s) served on: • Nominating Committee • Risk Management Committee Academic & Professional Qualification(s): • Master of Science, Columbia Graduate School of Journalism, USA • Master of Arts, University of Singapore, Singapore • Bachelor of Arts (Honours), University of Singapore, Singapore Present Directorships (as at 30 Sep 2013) Listed companies • Banyan Tree Holdings Ltd. • Shanda Games Ltd. Others • Precious Quay Pte. Ltd. • Precious Treasures Pte. Ltd. Major Appointments (other than Directorships) • Ministry of Foreign Affairs, Singapore (Senior Advisor) • Milken Institute Asia Center (Chairman) Past Directorships in listed companies held over the preceding three years (from 01 Oct 2010 to 30 Sep 2013) • Fraser and Neave, Limited Others • Previously Managing Director of Temasek Holdings • Previously Singapore’s Consul General to Shanghai • Previously Ambassador of Singapore to Thailand 25 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Board of Directors Philip Eng Heng Nee, 67 Weerawong Chittmittrapap, 55 Non-Executive and Independent Director Non-Executive and Independent Director Date of first appointment as a director Date of last re-election as a director Length of service as a director (as at 30 Sep 2013) : N.A. : 25 Oct 2013 : - Date of first appointment as a director Date of last re-election as a director Length of service as a director (as at 30 Sep 2013) : N.A. : 25 Oct 2013 : - Board committee(s) served on: • Audit Committee • Remuneration Committee (Chairman) Board committee(s) served on: • Nominating Committee (Chairman) • Risk Management Committee Academic & Professional Qualification(s): • Bachelor of Commerce in Accountancy, University of Academic & Professional Qualification(s): • Thai Barrister-at-Law and the first Thai lawyer admitted to New South Wales, Australia the New York State Bar • Associate Member, Institute of Chartered Accountants in Australia Present Directorships (as at 30 Sep 2013) Listed companies • Ezra Holdings Limited • Frasers Centrepoint Asset Management Ltd. (Chairman) • mDR Limited (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 Pte. Ltd. • KK Women’s and Children’s Hospital Pte. Ltd. • NTUC Income • OpenNet Pte. Ltd. • Singapore Health Services Pte. Ltd. Major Appointments (other than Directorships) Nil • Master of Law, University of Pennsylvania, USA • Bachelor of Law, Chulalongkorn University, Thailand Present Directorships (as at 30 Sep 2013) Listed companies • Berli Jucker Public Company Limited • Golden Land Property Development Public Company Limited • GMM Grammy Public Company Limited • SCB Life Assurance Public Company Limited • Thai Airways International Public Company Limited Others • National Power Supply Public Company Limited • Weerawong, Chinnavat & Peangpanor Ltd. (Chairman) Major Appointments (other than Directorships) • Thai Institute of Directors (Special Lecturer) Past Directorships in listed companies held over the preceding three years (from 01 Oct 2010 to 30 Sep 2013) • Minor International Public Company Limited • Fraser and Neave, Limited Past Directorships in listed companies held over the preceding three years (from 01 Oct 2010 to 30 Sep 2013) • Asia Pacific Breweries Limited • MCL Land Limited (Deputy Chairman) • Fraser and Neave, Limited Others Nil Others Nil 26 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Siripen Sitasuwan, 65 Chotiphat Bijananda, 50 Non-Executive and Independent Director Non-Executive and Non-Independent Director Date of first appointment as a director Date of last re-election as a director Length of service as a director (as at 30 Sep 2013) : N.A. : 25 Oct 2013 : 07 Jan 2014 Date of first appointment as a director Date of last re-election as a director Length of service as a director (as at 30 Sep 2013) : 06 months : 08 Mar 2013 : 07 Jan 2014 Board committee(s) served on: • Audit Committee • Remuneration Committee Academic & Professional Qualification(s): • Master of Business Administration, Wichita State University, Kansas, USA Board committee(s) served on: • Risk Management Committee (Chairman) • Board Executive Committee (Vice Chairman) • Nominating Committee Academic & Professional Qualification(s): • Master of Business Administration, Finance, University of • Bachelor of Arts (Commerce), Chulalongkorn University, Missouri, USA Thailand Present Directorships (as at 30 Sep 2013) Listed companies • Thanachart Capital Public Company Limited • Serm Suk Public Company Limited • Fraser and Neave, Limited Others • Solaris Asset Management Co., Ltd. • Thai Solar Energy Co., Ltd. Major Appointments (other than Directorships) Nil Past Directorships in listed companies held over the preceding three years (from 01 Oct 2010 to 30 Sep 2013) Nil Others Nil • Bachelor of Laws, Thammasat University, Thailand Present Directorships (as at 30 Sep 2013) Listed companies • Serm Suk Public Company Limited • Golden Land Property Development Public Company Limited • Fraser and Neave, Limited Others • Southeast Group Co., Ltd. (President) • Southeast Insurance Public Co., Ltd. (Chairman of Executive Board) • Southeast Life Insurance Public Co., Ltd. (Chairman of Executive Board) • Southeast Capital Co., Ltd. (Chairman of Executive Board) • TCC Assets Limited • TCC Technology Co., Ltd. Major Appointments (other than Directorships) Nil Past Directorships in listed companies held over the preceding three years (from 01 Oct 2010 to 30 Sep 2013) Nil Others Nil 27 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Board of Directors Panote Sirivadhanabhakdi, 36 Sithichai Chaikriangkrai, 59 Non-Executive and Non-Independent Director Non-Executive and Non-Independent Director Date of first appointment as a director Date of last re-election as a director Length of service as a director (as at 30 Sep 2013) : 06 months : 08 Mar 2013 : 07 Jan 2014 Date of first appointment as a director Date of last re-election as a director Length of service as a director (as at 30 Sep 2013) : 01 month : 07 Aug 2013 : 07 Jan 2014 Board committee(s) served on: • Board Executive Committee • Remuneration Committee • Risk Management Committee Board committee(s) served on: • Board Executive Committee • Audit Committee • Risk Management Committee Academic & Professional Qualification(s): • Master of Science in Analysis, Design and Management of Information System, London School of Economics and Political Science, UK Academic & Professional Qualification(s): • Bachelor of Accountancy (First Class Honors), Thammasart University, Thailand • Diploma in Computer Management, Chulalongkorn • Bachelor of Science in Manufacturing Engineering, Boston University, Thailand University, USA • Certificate of the Mini MBA Leadership Management, • Certificate in Industrial Engineering and Economics, Kasetsart University, Thailand Massachusetts University, USA Present Directorships (as at 30 Sep 2013) Listed companies • Berli Jucker Public Company Limited • Golden Land Property Development Public Company Limited (Vice Chairman) • Siam Food Products Public Company Limited • Thai Beverage Public Company Limited • Univentures Public Company Limited • Fraser and Neave, Limited Others • Beer Thip Brewery (1991) Co., Ltd. • Blairmhor Distillers Limited • Blairmhor Limited • InterBev (Singapore) Limited • International Beverage Holdings (China) Limited • International Beverage Holdings Limited • International Beverage Holdings (UK) Limited • Sura Bangyikhan Group of Companies Present Directorships (as at 30 Sep 2013) Listed companies • Thai Beverage Public Company Limited • Berli Jucker Public Company Limited • Golden Land Property Development Public Company Limited • Oishi Group Public Company Limited • Siam Food Products Public Company Limited • Serm Suk Public Company Limited • Univentures Public Company Limited • Fraser and Neave, Limited Others • InterBev Investment Limited • International Beverage Holdings Limited • Certain Subsidiaries of Thai Beverage Public Company Limited • Certain Subsidiaries of Berli Jucker Public Company Limited • Certain Subsidiaries of Oishi Group Public Company Limited • Certain Subsidiaries of Siam Food Products Public Company Limited • Certain Subsidiaries of Serm Suk Public Company Limited Major Appointments (other than Directorships) • Univentures Public Company Limited Major Appointments (other than Directorships) • Thai Beverage Public Company Limited (Chief Executive Officer) (Chief Financial Officer) Past Directorships in listed companies held over the preceding three years (from 01 Oct 2010 to 30 Sep 2013) Nil Past Directorships in listed companies held over the preceding three years (from 01 Oct 2010 to 30 Sep 2013) Nil Others Nil 28 Others Nil Residential Soleil @ Sinaran, Singapore 29 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group Management Cheang Kok Kheong Non-Executive and Independent Director Chief Executive Officer, Development and Property, Singapore Lim Ee Seng Tang Kok Kai Christopher Group Chief Executive Officer Chief Executive Officer, Frasers Centrepoint Commercial and Chief Executive Officer, Greater China 30 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Chief Executive Officer, Frasers Centrepoint Commercial and Chief Executive Officer, Greater China Chief Executive Officer, Frasers Hospitality Pte. Ltd. Chief Executive Officer, Australia, New Zealand and United Kingdom and Chief Financial Officer Chief Investment Officer Choe Peng Sum Chia Khong Shoong Uten Lohachitpitaks 31 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review Lim Ee Seng Group Chief Executive Officer 32 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES “In this, our inaugural annual report, we look back on a year in which we have achieved healthy numbers all round. Based on our long-term growth strategies, we have continued to build on the strong expansion of the preceding decade.” THE BEGINNING OF A NEW ERA Eleven years after delisting from the Singapore Exchange (SGX) in 2002 when we were still known as Centrepoint Properties Limited, we have returned to the SGX, with a new name and, more importantly, a vastly enlarged international foot print with a diversified portfolio of properties. Frasers Centrepoint Limited has been spun off from Fraser and Neave, Limited (F&N) in a demerger exercise to further unlock shareholder value. After the demerger, we are now an independent group with direct access to the capital markets so that we can take each of our businesses to new heights. In this, our inaugural annual report, we look back on a year in which we have achieved healthy numbers all round. Based on our long-term growth strategies, we have continued to build on the strong expansion of the preceding decade. Sharp revenue and PBIT hikes translate to 59% higher earnings per share Group revenue rose 45% to $2,053 million, closely mirrored by a 46% growth in profit before interest, fair value change, taxation and exceptional items (PBIT) to $571 million. Overall, a 59% increase in Group attributable profit to $401 million generated a corresponding percentage climb in earnings per share* to 53.2 cents. The strong growth was due to profit recognition from completed projects in Singapore, Australia, China and the United Kingdom. Other factors included improved performance of our two commercial REITs, and contributions from newly opened serviced residences and Fraser Suites Singapore after its asset enhancement programme. * Before fair value change on investment properties & exceptional items. 33 Group CEO Business Review DEVELOPMENT PROPERTY The Pano, Bangkok, Thailand 34 Group CEO Business Review DEVELOPMENT PROPERTY Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES “Revenue from Development Property (DP) grew 57% to $1,682 million, whilst PBIT surged 95% to $379 million.” DEVELOPMENT PROPERTY Revenue from Development Property (DP) grew 57% to $1,682 million, whilst PBIT surged 95% to $379 million. In addition to higher sales from the completed Pano condominium project in Thailand, the increase in overall receipts came mainly from revenue recognition on the completion of Esparina Residences Executive Condominium (EC) in Singapore, Suzhou Baitang Phase 2A in China, One Central Park West in Sydney and Wandsworth Riverside Quarter Blk 5A in the United Kingdom. 01 01 Esparina Residences EC, Singapore 35 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review DEVELOPMENT PROPERTY “DP’s operations performed strongly. Measured against the year before, revenue went up 65% and PBIT increased 64%.” Singapore DP’s operations performed strongly. Measured against the year before, revenue went up 65% and PBIT increased 64% - mostly due to completion of Esparina Residences, an executive condominium project which recognised revenue upon completion in September 2013. Altogether, we sold about 1,900 residential units (including joint venture projects) across more than half a dozen properties in Singapore. Projects such as eCO, Palm Isles, Seastrand, Watertown, Boathouse Residences and Eight Courtyards enjoyed take-up rates of between 88% and 100%. 01 Eight Courtyards, Singapore 02 Boathouse Residences, Singapore 03 Soleil @ Sinaran, Singapore 03 36 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 01 02 37 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review DEVELOPMENT PROPERTY A pair of completely new developments that came off the drawing board this year yielded a total of 1,050 units. Q Bay Residences made its debut after the government’s seventh cooling measure in January and signed up 400 buyers within a month. Of the 632 units available, 541 have already been sold as of end September 2013. This is a result of the right pricing strategy combined with excellent product innovation. We introduced a first-ever ‘bay villa’ at the development, offering residents a function space to not only entertain but accommodate guests. Q Bay Residences is a joint development with Far East Organisation and Sekisui House Ltd. 01 In May, we also introduced Twin Fountains, a 418-unit EC located at Woodlands Avenue 6. Twin Fountains was jointly developed with Lum Chang. Day One of its launch resulted in the sale of 272 units or 65% of the available units, underscoring the unabated demand for ECs. As of end September 2013, 77% of Twin Fountains had already found buyers. 02 01 Palm Isles, Singapore 02 Esparina Residences EC, Singapore 03 Twin Fountains EC, Singapore 03 38 38 Q Bay Residences, Singapore 39 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review DEVELOPMENT PROPERTY SINGAPORE: Projects currently under development Projects Waterfront Key Esparina Residences EC Flamingo Valley Waterfront Gold Eight Courtyards Waterfront Isle Boathouse Residences Seastrand Twin Waterfalls EC Watertown Palm Isles eCO Q Bay Residences Twin Fountains EC % sold @ 30 Sep 13 % Completion @ 30 Sep 13 Ave. selling price ($ psf) Land cost ($ psf ppr) Est. completion date No. of units 437 573 393 361 656 563 494 475 728 992 430 750 632 418 100% 97% 95% 100% 100% 99% 100% 99% 100% 99% 96% 88% 86% 77% 100% 100% 94% 81% 80% 48% 48% 58% 42% 19% 27% 10% 13% 10% $848 $743 $1,222 $973 $807 $1,041 $910 $915 $710 $1,191 $865 $1,322 $1,022 $744 $240 $315 $415 $240 $321 $240 $320 $334 $270 $482 $325 $534 $418 $302 Completed Completed Dec 13 Jan 14 Jun 14 Nov 14 Jan 15 Jul 14 Mar 15 Aug 16 Jun 15 Jan 16 May 16 Nov 15 Watertown, Singapore 40 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES SINGAPORE: Land bank Projects Fernvale Close Location Sengkang Yishun Central1 Yishun Cecil Street2 Raffles Place 51 Cuppage Road Orchard Road TOTAL Effective interest Est. no. of units Est. saleable area (mil sqf) Land cost ($ psf ppr) Tenure Est. launch ready date 40% 100% 100% 100% 496 900 - 141 1,537 0.47 0.72 - 0.24 1.43 $533 Leasehold 2Q FY2014 $1,077 Leasehold (Includes retail) $1,111 $1,194 Leasehold Leasehold TBD - TBD 1 2 Legal completion expected in November 2014. Legal completion in November 2013. 01 02 01 eCO, Singapore 02 Twin Waterfalls EC, Singapore 41 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review DEVELOPMENT PROPERTY “Revenue contributions from our overseas developments rose 34% to $344 million.” Overseas Demand for our properties remained strong in our overseas markets. Revenue contributions from our overseas developments rose 34% to $344 million. Australia Pre-sales of projects under construction came to 495 units spread over a trio of properties. These comprised 119 units from Putney Hill, 305 units from Central Park in Sydney and 72 units from Queens Riverside in Perth. Completed projects at Lumiere, City Quarter, Lorne and The Habitat, along with 12 land plots at Frasers Landing, together accounted for 25 units sold during the year. Central Park 2013 was a year of achievements for Central Park in Sydney. One Central Park West tower was completed and this marked the transition from vision to reality of the A$2 billion urban village. As at 30 September 2013, 250 units have been handed over and residents are now occupying the new 5.8 hectare urban village. In February 2013 the uppermost levels of One Central Park East, known as ‘Sky at One Central Park’, were released to the public. Sky’s 38 penthouse and sub-penthouse apartments were priced from A$1 million to A$3 million. 10 properties were sold ahead of the February 2014 completion. 01 The Mark, Sydney, Australia 02 Putney Hill, Sydney, Australia 01 02 42 AUSTRALASIA: Projects currently under development Projects One Central Park - West Park Lane 5A One Central Park - East Park Lane 5B The Mark Queens Riverside (QII) Queens Riverside (QIII) Putney Hill (Phase 1A, 2A, 3A, 4A) Sydney Putney Hill (Phase 1H, 2H) Sydney AUSTRALASIA: Land bank Location Effective interest No. of units % Sold @ 30 Sep 13 Ave. selling price (A$ psf) Land cost (A$ psf ppr) Est. completion date Sydney Sydney Sydney Sydney Sydney Perth Perth 38% 38% 38% 38% 38% 88% 88% 75% 75% 240 155 383 238 412 107 267 363 84 98% 86% 87% 83% 71% 27% 84% 45% 100% A$1,117 A$1,218 A$1,117 A$1,239 A$1,245 A$689 A$767 A$710 A$491 A$252 A$257 A$252 A$257 A$256 A$29 A$29 A$100 A$100 Completed Completed 2014 2014 2014 2015 2014 2016 2015 Projects Central Park - JV Central Park - Non-JV Frasers Landing Putney Hill Queen Riverside (QI) Broadview Coast Papamoa Beach TOTAL Location Sydney Sydney Western Australia Sydney Perth New Zealand New Zealand Effective interest 38% 75% 56% 75% 88% 75% 68% Est. no. of units 1,0961 561 280 342 126 43 303 2,751 Est. saleable area (mil sqf) Land cost (A$ psf ppr) 0.982 0.28 1.55 0.34 0.11 0.07 1.89 5.22 A$163 A$163 A$6 A$100 A$30 NZ$77 NZ$6 1 2 Includes about 641 student accommodation units. Includes about 0.55m sqf of commercial space and 0.26m sqf of student accommodation space. Central Park, Sydney, Australia 4343 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review DEVELOPMENT PROPERTY China Suzhou Baitang The Suzhou Baitang Phase 2A project obtained its occupancy permit in September 2013 and had 333 of its units snapped up over the course of the year. Phase 2B, launched in June, saw a booking of 69 units (or 40%) of the 172 units on offer. A total of 52 out of the 69 units were sold by the end of the financial year. Chengdu Logistics Hub Over in Chengdu, construction of two office blocks and an ancillary retail block for Phase 2 which comprises 149 office units and 14 retail units, is on track for completion in 1Q2014. As at end of September 2013, 46 out of 163 units were sold. Gemdale MegaCity In Shanghai, the Group is in a 45% joint venture with Gemdale Corporation. Gemdale MegaCity (formerly known as Shanshui Four Seasons) Phase 2A was launched in August 2013. The launch was a success and 459 units (or 50%) of the 924 units were sold. 01 Chengdu Logistics Hub, Chengdu, China 02 Baitang One, Suzhou, China 01 44 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES CHINA: Projects currently under development Projects Baitang One (Phase 2A) Baitang One (Phase 2B) Location Suzhou Suzhou Chengdu Logistic Hub (Phase 2) Chengdu Gemdale MegaCity (Phase 2A)1 Shanghai Effective interest No. of units % Sold @ 30 Sep 13 100% 100% 80% 45% 538 360 163 1,065 80% 14% 28% 43% Ave. selling price (RMB psf) Land cost (RMB psf ppr) Est. completion date RMB1,103 RMB233 Completed RMB1,241 RMB233 RMB883 RMB30 RMB1,563 RMB174 2014 2014 2014 CHINA: Land bank Projects Baitang One (Phase 3) Gemdale MegaCity (Phase 2B - 5)1 Residential Location Suzhou Shanghai Effective interest 100% 45% Chengdu Logistics Hub (Phase 2A & 4) Chengdu 80% Commercial TOTAL Est. no. of units Est. saleable area (mil sqf) Land cost (RMB psf ppr) 2,062 4,978 7,040 - - 2.79 5.53 8.32 2.76 2.76 7,040 11.08 RMB237 RMB179 - 1 Gemdale MegaCity was formerly known as Shanshui Four Seasons and was accounted as an associate. 02 45 Group CEO Business Review COMMERCIAL PROPERTY 46 Changi City Point, Singapore Group CEO Business Review COMMERCIAL PROPERTY Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES “The Group has interest in and/or manages a global commercial portfolio of 25 retail, office and business space properties totalling a net lettable area of over 7 million square feet.” COMMERCIAL PROPERTY The Group has interest in and/or manages a global commercial portfolio of 25 retail, office and business space properties totalling a net lettable area of over 7 million square feet. In Singapore, there are 12 shopping malls marketed under the ‘Frasers Centrepoint Malls’ brand, one shopping mall each in China and Australia, and 11 office and business space properties in Singapore, Australia, China and Vietnam. Commercial Property comprises the retail and office REITS, and non-REIT retail, office and business space properties. In September 2012, the Group, as part of its strategic rationalisation to grow its China business through its non-listed arm, divested its HKSE-listed Frasers Property China Limited. Commercial Property’s PBIT for FY2013 stood at $117 million. Excluding the effects of the Frasers Property China Ltd divestment, Commercial Property showed a growth of 13% and 10% in its revenue and PBIT respectively. Meanwhile, occupancy rates among the Group’s retail malls in Singapore held steady at 98% on average. Our office and business space properties enjoyed an occupancy rate above 90%. Our REITs - Frasers Centrepoint Trust (FCT) and Frasers Commercial Trust (FCOT) – also improved on their operating results in FY2012/13. 01 Changi City Point, Singapore 01 Waterway Point, Singapore 02 The Centrepoint, Singapore 03 Anchorpoint, Singapore 02 03 47 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review COMMERCIAL PROPERTY “DPU for FCT for the year reached a record-high of 10.93 cents. Distributions to unitholders was $90 million in 2013, 10% higher than in the previous year.” Retail Delivering steady performance Frasers Centrepoint Trust (FCT) turned in yet another strong performance, achieving new highs in its income, NAV and DPU. Its gross revenue grew 7% to $158 million on higher rental returns for new and renewed leases at Causeway Point and Northpoint. Net property income grew 7% to $112 million. DPU for FCT for the year reached a record-high of 10.93 cents. Distributions to unitholders was $90 million in 2013, 10% higher than in the previous year. The 5 malls in FCT’s portfolio averaged 98% occupancy as at 30 September 2013. 170 leases, which accounted for 146,864 sq ft of net lettable area, were renewed during the year with an average rental reversion of 8%. Non-REIT malls enjoyed high occupancy Our non-REIT malls likewise logged high occupancy levels during the year. Both Valley Point and Compass Point were fully leased. Robertson Walk came in at 99%, whilst both The Centrepoint and Changi City Point enjoyed an occupancy of 98% and 98% respectively. Over in Beijing, in a competitive retail market, Crosspoint with its net lettable area of 161,909 sq ft, posted a healthy occupancy of 92% as of 30 September 2013. 01 02 03 01 Changi City Point, Singapore 02 Changi City Point, Singapore 03 Northpoint, Singapore 48 49 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review COMMERCIAL PROPERTY 01 02 03 04 Launch of Frasers Rewards Card On the marketing and promotions front, Frasers Centrepoint Malls launched the all-in-one Frasers Rewards Card to usher in the Great Singapore Sale 2013 in May. The programme, which offers complimentary lifetime memberships, allows its cardholders to accumulate loyalty points at 11 malls and redeem them to offset future purchases, enjoy free parking, year-round retailer offers and seasonal instant gift redemptions as well as participate in a quarterly $20,000 draw. Within six months of its launch, the programme’s 130,000 members had spent about $100 million at our malls and earned themselves $1 million worth of rewards. 01 Bedok Point, Singapore 02 Changi City Point, Singapore 02 Causeway Point, Singapore 03 Bedok Point, Singapore 50 Commercial Portfolio Properties SINGAPORE: REIT (Frasers Centrepoint Trust) Anchorpoint Bedok Point Causeway Point Northpoint YewTee Point SINGAPORE: Non-REIT retail assets Compass Point Changi City Point (classified as held for sale) Eastpoint Mall* Robertson Walk The Centrepoint Valley Point (Retail) Waterway Point (Punggol mixed-use site) OVERSEAS: Non-REIT retail assets China, Beijing - Crosspoint (classified as held for sale) Australia, Sydney - Central (classified as held for sale) TOTAL RETAIL PROPERTIES SINGAPORE: REIT (Frasers Commercial Trust) 55 Market Street Alexandra Technopark China Square Central SINGAPORE: Non-REIT office/business park assets Alexandra Point Valley Point (Office) ONE@Changi City (Office) 51 Cuppage Road (classified as held for sale) OVERSEAS: REIT (Frasers Commercial Trust) Australia, Canberra - Caroline Chisholm Centre Australia, Perth - Central Park OVERSEAS: Non-REIT office/business park assets China, Chengdu - Chengdu Logistics Park (classified as held for sale) Vietnam, Ho Chi Minh City - Me Linh Point TOTAL OFFICE/BUSINESS PARK PROPERTIES TOTAL COMMERCIAL PROPERTIES * Undergoing asset enhancement. Effective interest Book value of property Net lettable area of property (sqf) Occupancy (%) FY2013 FY2012 41% 41% 41% 41% 41% 19% 50% 0% 100% 100% 100% 33% 100% 38% 28% 28% 28% 100% 100% 50% 100% 28% 14% 80% 75% $86m $129m $1,006m $638m $161m $530m $199m NA $99m $640m $36m $732m $59m $141m 71,610 81,393 416,137 235,653 73,602 266,586 207,237 189,986 97,044 333,329 39,817 360,591 97% 97% 100% 99% 97% 99% 99% 88% 100% 96% 100% 100% 98% NA 99% 98% 100% NA 97% 93% 93% 100% 100% NA 161,909 149,652 92% NA 91% NA $4,456m 2,684,546 $133m $465m $573m $271m $233m $281m $392m 71,796 1,045,227 372,453 199,380 183,109 665,914 276,439 100% 100% 94% 100% 91% 91% 74% 90% 100% 74% 95% 78% NA 64% $232m $816m 433,182 714,372 100% 94% 100% 96% $89m $51m $3,536m $7,992m 703,981 188,896 4,854,749 7,539,295 78% 100% 73% 100% Causeway Point, Singapore 51 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review COMMERCIAL PROPERTY “Frasers Commercial Trust (FCOT) unitholders received a record- high of $51 million in distributable income, up 19% from the previous financial year.“ Office & Business Space Frasers Commercial Trust (FCOT) unitholders received a record-high of $51 million in distributable income, up 19% from the previous financial year (FY). This is despite the divestments of KeyPoint and the Japanese properties. The divestments and the weaker Australian dollar resulted in a lower gross revenue of $118 million, Caroline Chisholm Centre, Canberra, Australia 52 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 01 down 11% compared to the previous financial year. DPU was 17% higher year-on-year at 7.83 cents for FY2013. This strong performance was driven by a payoff from the past years’ initiatives in reshaping and unlocking property value, and a boost in revenue recognised after the expiry of the master lease at China Square Central. Other contributing factors were the higher rental rates as well as increased income from an additional 50% interest in Caroline Chisholm Centre. Savings in Series A CPPU distributions arising from the redemption and conversion of these CPPUs, coupled with lower finance costs from effective capital management, further boosted FCOT’s distributable income to Unitholders. 01 Central Park, Perth, Australia 53 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review COMMERCIAL PROPERTY We expect that the recent completion of our asset enhancement initiatives to the office tower of China Square Central, and the rejuvenation of the China Square Precinct will unlock even more value and growth potential in the property. The opening in December 2013 of the Telok Ayer MRT Station on the Downtown Line should further fortify China Square Central’s appeal to office space users. Stable demand for our non-REIT office and business space Outside of the Group’s commercial REIT, our Alexandra Point and Valley Point office towers achieved 100% and 91% occupancy, respectively. The Chengdu Logistics Hub had 78% of its 703,981 sq ft of net lettable space leased out, while Me Linh Point in Ho Chi Minh City achieved 100% occupancy for yet another year. ONE@Changi City which is a 50% joint venture project with Ascendas Land (Singapore) Pte Ltd was completed in November 2012 and enjoyed occupancy rates above 90%. 01 China Square Central, Singapore 02 Alexandra Technopark, Singapore 01 02 54 China Square Central, Singapore 55 Group CEO Business Review HOSPITALITY 56 Capri by Fraser, Changi City, Singapore Group CEO Business Review HOSPITALITY Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES “Boosted by room revenue from new property acquisitions and launches, our serviced apartment arm recorded a 40% increase in revenue to $184 million and a 74% rise in PBIT to $70 million in the last financial year.” HOSPITALITY A strong global leader in serviced residence The globalisation of industry and business in today’s world ensures that our hospitality segment will always have room to grow. Boosted by room revenue from new property acquisitions and launches, our serviced apartment arm recorded a 40% increase in revenue to $184 million and a 74% rise in PBIT to $70 million in the last financial year. Major contributors to our bottom line include Fraser Suites Kensington in the United Kingdom, which became 100% owned by Frasers Hospitality in September 2012*, and two developments that began operations, Fraser Suites Perth in Australia and Capri by Fraser, Changi City in Singapore. Fraser Suites Singapore had also completed its asset enhancement initiatives and improved its contributions to the Group. * FCL owned 30% of Frasers Suites Kensington before Sep 2012. 01 Fraser Suites Top Glory, Shanghai, China 01 Capri by Fraser, Changi City, Singapore 57 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review HOSPITALITY In addition, improved operating efficiency coupled with higher daily rental rates and occupancy at existing, refurbished or expanded properties also helped to beef up our earnings. The division’s investment portfolio was further boosted by the acquisition of an office building in Brisbane worth A$37 million that is being reconfigured into 240 serviced apartments. Along with the developments that we own and operate, Frasers Hospitality also manages residences for a fee. This financial year, it nearly doubled the number of apartments under its stewardship with 7,146 units signed up to add to the 7,914 already in operation. We expect to grow this segment of our business exponentially in the years ahead. 01 Fraser Suites Queens Gate, UK 02 Capri by Fraser, Ho Chi Minh City, Vietnam 03 Fraser Suites Guangzhou, China 02 01 03 58 Serviced Residences: Properties in Operation Country Property OWNED PROPERTIES Australia Fraser Suites Perth Fraser Suites Sydney Fraser Place Melbourne China Fraser Suites Beijing 88% 81% 100% 100% Indonesia Fraser Residence Sudirman Jakarta 100% London, UK Fraser Place Canary Wharf Fraser Suites Kensington Fraser Suites Queens Gate1 Philippines Fraser Place Manila Scotland Fraser Suites Glasgow Fraser Suites Edinburgh Singapore Fraser Place Singapore Fraser Suites Singapore Capri By Fraser, Changi City 100% 100% 100% 100% 100% 100% 100% 100% 50% Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Equity (%) No. of units Occupancy (%) Ave. daily rate in local currency FY2013 FY2012 FY2013 FY2012 Book value @ 30 Sep 13 236 201 112 357 108 97 69 106 89 99 75 163 255 313 65% 89% 75% 82% 93% 80% 84% 11% 86% 78% 84% 76% 82% 77% NA 89% 63% 88% 89% 80% 85% 81% 91% 73% 81% 78% 55% 38% A$270.55 A$252.95 A$142.41 NA A$238.37 A$127.74 A$125m A$99m A$28m RMB841.82 RMB758.93 RMB1,150m USD134.37 USD128.83 GBP148.84 GBP252.53 GBP159.13 GBP239.24 GBP150.49 GBP134.25 USD33m GBP35m GBP99m GBP53m PHP7,117.44 PHP6,725.43 PHP953m GBP68.87 GBP63.62 GBP110.79 GBP105.64 S$366.41 S$330.67 S$248.36 S$334.82 S$310.50 S$222.20 GBP10m GBP13m S$232m S$357m S$101m TOTAL NO. OF ROOMS (OWNED) 2,280 1 Closed for refurbishment between November 2012 and August 2013. Country UNDER MANAGEMENT Property No. of units Bahrain China France Hungary India Japan UK Malaysia Qatar Singapore Fraser Suites Bahrain Fraser Place Shekou Fraser Residence Shanghai Fraser Suites Shanghai Fraser Residence CBD East Beijing Fraser Suites Nanjing Modena Shanghai Putuo Modena Heping Tianjin Fraser Suites Chengdu Fraser Suites Suzhou Modena Jinjihu Suzhou Fraser Suites Guangzhou Fraser Suites Harmonie, Paris La Defense Fraser Suites Le Claridge, Paris Fraser Residence Budapest Fraser Suites New Delhi Fraser Residence Nankai Osaka Fraser Residence Prince of Wales Fraser Residence Bishopgate Fraser Residence Blackfriars Fraser Residence Monument Fraser Residence City Fraser Place Kuala Lumpur Fraser Suites Doha Fraser Place Fusionopolis Fraser Residence Orchard South Korea Fraser Suites Insadong, Seoul Thailand Turkey UAE Vietnam Fraser Place Central, Seoul Fraser Place Namdaemun Fraser Suites Sukhumvit, Bangkok Fraser Place Anthill Istanbul Fraser Suites Dubai Fraser Suites Hanoi Capri by Fraser, District 7, HCMC TOTAL NO. OF ROOMS (UNDER MANAGEMENT) 91 232 324 186 228 210 348 104 360 276 237 332 134 110 51 92 114 18 26 12 14 22 315 138 50 72 213 254 252 163 116 180 185 175 5,634 59 Fraser Suites Perth, Australia 60 Group CEO Business Review Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 01 02 “While our key businesses are undeniably brick-and-mortar constructions, we operate very much on the principle that our people are our most precious resource and invest in them accordingly.“ 01 Riverside Quarter, UK 02 The Pano, Bangkok, Thailand Replenishing the land bank In September 2013, the Group won a tender for a mixed-use land parcel at Yishun Central for $1,429 million. This prime site is located in the heart of Yishun Town Central. We intend to develop it into a 12-storey integrated complex comprising 900 residential units, a retail mall, bus interchange and a community club. We also managed to secure Fernvale Close with a $257 million or $533 psf ppr bid that was tendered in concert with Far East Organization and Sekisui House Limited. Our joint venture partners hold a 30% stake each in the acquisition with FCL holding the remaining 40%. We plan to capitalise on the site’s idyllic environment to build seven 18-storey apartment blocks comprising some 490 residences. Another successful bid was put in for the Cecil Street/Telok Ayer Street commercial land parcel within the Central Business District. The $924 million purchase is being envisaged as the site of a premium Grade A office tower. Taking our corporate citizenship to heart No report of FCL’s year-round activities is complete without a reference to our wide-ranging Corporate Social Responsibility programme. Over the course of FY2012/13, we embraced causes that ranged from funding activities for senior citizens to sponsoring competitions to help bring out the entrepreneur in our youth, and also lending financial support to, and offering exhibition space for the arts. The multiple Green Mark Awards bestowed on our developments attest to the unmitigated care we demonstrate for the environment in the conduct of our business. At the same time, while our key businesses are undeniably brick-and- mortar constructions, we operate very much on the principle that our people are our most precious resource and invest in them accordingly. 61 61 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Group CEO Business Review On the horizon Whether it is in the residential, commercial or hospitality sector, we have quality projects for which there is strong demand. Our long- term strategic planning is proactive and backed by land bank selectively stocked and continually replenished to sustain our growth. In Singapore, in the wake of the government’s property market cooling measures, 12,400 private residences were sold from January to September 2013 compared to 18,000 units during the corresponding period of the previous year. Their prices also grew at a markedly lower 0.4% in the September quarter as opposed to 1% earlier. Nevertheless, we expect demand to stabilise over the longer term and be supported by steady economic growth, first-time buyers, HDB upgraders and population growth, albeit at a slower pace. Similarly in the commercial sector, we see positive trends emerging in the suburban retail market which includes a growing median household income, low unemployment rate and expanding suburban populations. As a result, we foresee continuing demand for retail space that will propel us to pursue growth through both organic and acquisitive means. With our dominance in northern Singapore, Causeway Point and Northpoint will continue to anchor FCT’s performance for a good while. 01 Soleil @ Sinaran, Singapore 04 China Square Central, Singapore 02 Central Park, Sydney, Australia 05 Baitang One, Suzhou, China 03 Causeway Point, Singapore 06 Fraser Suites Perth, Australia 01 62 02 03 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES We further anticipate growth for our office business to be supported by a relatively strong Singapore economy, and driven by positive rental reversions and close-to-full occupancy rates. The enhanced China Square Central will be a significant contributor to our profits in the near future. Our focus overseas will be on delivering our existing development pipeline. In Australia, a number of projects are due for completion in FY2014, including One Central Park East and Park Lane in Sydney, QIII in Perth as well as various phases of Putney Hill at Ryde. In China, FY2014 is shaping up to be a robust year for the property market following a sudden increase in the sale of state-owned land from January to July 2013. The Group will look to expand its holdings where circumstances permit, in the current dynamic market. Meanwhile, we expect to complete Suzhou Baitang Phase 2B and Chengdu Phase 2 in the coming financial year. Our hospitality arm will continue to look for opportunities to enlarge its portfolio and grow the international footprint of its management business. Overall, the countries and segments we have a significant presence in are doing fairly well. We have good reasons to be optimistic about our prospects in 2014. 05 04 06 63 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Social Responsibility COMMUNITY “We are happy to report the numerous avenues where we have contributed to our commitment to being a responsible corporate citizen both locally and globally in FY2013.” Making more room in our hearts for communal causes Frasers Centrepoint’s properties around the world are designed to improve the lives of the people who live, work or shop in them. We consider it a privilege to serve and support the wider communities that host our developments. FCL is well-placed to lend a helping hand to a range of diverse causes. Along with our growth as a business, we are happy to report the numerous avenues where we have contributed to our commitment to being a responsible corporate citizen both locally and globally in FY2013. Financial support for senior citizens Causeway Point contributed $30,000 to the North West Silver Care Fund, which is aimed at helping seniors in the North West District stay active after retirement. Outings for underprivileged children • As part of its ‘Love Tree’ Christmas programme, Fraser Suites Insadong Seoul hosted 30 little guests from Sangroktown Orphanage for a pool party and dinner that was joined by children of the residents. Each child went away with a gift that he or she had wished for. • Causeway Point reached out to MINDS during the Lunar New Year festivities with a luncheon at The Manhattan Fish Market for 30 children and their families, along with its volunteers. The sumptuous treat was topped off with a presentation of shopping vouchers to the children. • Our Office and Industrial Division staff pitched in with an afternoon of fun and tea-time goodies for 23 children from Melrose Home at Robertson Walk’s indoor playground, The Polliwogs. Nurturing tomorrow’s entrepreneurs • Frasers Centrepoint Malls joined hands with Ngee Ann Polytechnic Business Studies’ final-year Entrepreneurship students to put up the National Youth Business Challenge. Part of a long-term collaboration begun in 2009 to get students to think up earth-friendly ideas, the competition garnered proposals by 40 shortlisted teams from 23 secondary schools on the essentials of setting up planet- preserving businesses. The finals, held at Changi City Point, saw Outram Secondary School walk away with the FCM Challenge trophy for the third consecutive year. • The National Pushcart Challenge presented yet another showcase underwritten by FCL for the spirit of enterprise among the youth of Singapore. In the 2012 contest held at Causeway Point, Bukit Merah Secondary School proved its creative mettle with eco-friendly materials to beat 30 other secondary schools for the championship. At the end of the two-day event, the 210 participants had raised a total of $8,000 for 15 social enterprises. 64 01 02 03 01 Melrose Home outing at Polliwogs 02 Melrose Home outing at Polliwogs 03 ‘Love Tree’ Christmas programme 04 Causeway Point contributed towards the North West Silver Care Fund 04 65 01 03 08 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Social Responsibility COMMUNITY Sponsorship of the arts • FCL’s reaffirmed patronage of the artistic community during the year included Frasers Hospitality providing $146,000 worth of accommodation for the performing groups of various productions such as Kidsfest Singapore, Shakespeare in the Park – Othello, The Importance of Being Earnest and In The Spotlight – Alfian Sa’at. These contributions earned our serviced apartment arm the Friend of the Arts Award from the National Arts Council of Singapore. • Over in Sydney, Frasers Property Australia together with Sekisui House Australia provided A$30,000 to help underwrite the Chippendale BEAMS Art Festival for a second year. Organised by the local creative community with the backing of the City of Sydney Council, the festival drew over 350 artists and performers as well as some 8,000 visitors. • Beyond monetary contributions, we have also allocated free or subsidised work spaces for creative businesses and artists within the Central Park development site. Frasers Property Australia embarked on a four-year- long community collaboration with FraserStudios in 2009. Part of the Central Park site in Perth was used as visual and performing arts studios. Currently, some of the retail space at Central Park is given over to Work- Shop and the NG Art Gallery. • Central Park, the tallest building in Perth, lent its lobby to Jana Vodesil- Baruffi’s art exhibition, Permanent Impressions. The fortnight-long show spotlighted the largest portrait collection featuring inductees from the Western Australian Women’s Hall of Fame and other contemporary female pillars of the community. • Central Park also showcased Catholic Schools art in an exhibition that took up its entire lobby. Venue sponsorship of charitable events The retail podium of China Square Central hosted an inaugural blood donation drive to register blood donors. Jointly organised with Cerebos Pacific Limited, the six-hour campaign not only signed up more than twice its targeted number of registrants but also had to turn away interested donors as a result of the overwhelming response. Central Park in Perth was also the pro bono site of multiple fundraising activities for several causes, including ‘Pink Ribbon Day’ and ‘Daffodil Day’ organised by Cancer Council of Western Australia, ‘Australia’s Biggest Morning Tea’ by the Western Australia Cancer Society, ‘Bear By Night Ball’ in support of The Princess Margaret Hospital for Children Foundation, and ‘Special Air Service Widows Abseil’ organised by former SAS members for the benefit of the families left behind by fallen colleagues. For the seventh year, Central Park in Perth played host to the annual ‘Enerflex Step Up for Multiple Sclerosis’. The 2013 competition attracted a record 1,000 participants and raised a total of A$276,901. On top of this amount raised, the Central Park management continued with its support of A$10,000 towards the cause. 66 02 01 Blood donation drive at China Square Central 02 Enerflex Step Up for Multiple Sclerosis 03 The Chippendale BEAMS Art Festival 04 The Chippendale BEAMS Art Festival 05 The Chippendale BEAMS Art Festival 06 The Chippendale BEAMS Art Festival 07 Daffodil Day 2012 08 Bear By Night Ball 09 The Chippendale BEAMS Art Festival 06 07 04 05 09 67 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Social Responsibility ECO-FRIENDLY BUILDINGS “Frasers Centrepoint continued with our pro-environment practices and achievements over the course of FY2013.” Accommodating an environment- friendly culture Frasers Centrepoint continued with our pro-environment practices and achievements over the course of FY2013. Recognition Once again, FCL’s projects earned a stream of accolades for the incorporation of environmentally- sensitive provisions into their architectural DNA. We received a total of four new Green Mark Awards from the Building and Construction Authority (BCA) – one for the residential development Eight Courtyards, with the rest going to a trio of commercial properties – 55 Market Street, Valley Point and China Square Central. In addition, our high-end condominium, Martin Place Residences, obtained a Merit in the BCA Construction Excellence Awards. Besides Green Mark Awards, six of our commercial buildings bagged the ‘Eco Office Award’, while China Square Central participated in the Friends of Water programme organised by the Public Utilities Board (PUB) to raise water conservation awareness island-wide. Focus on energy and water efficiency At China Square Central, water-efficient fittings together with green features such as variable speed drive devices (VSD) were installed at the chiller plants to enhance efficiency. Three of our malls – Anchorpoint, Bedok Point and Changi City Point – are each fitted with a new state-of-the-art chiller system which, according to international benchmarks, operates 32.5% more efficiently than conventional ones. Meanwhile, energy-saving lighting systems have replaced existing car park, corridor or staircase illumination at a number of our developments including Valley Point, 55 Market Street, Anchorpoint and 51 Cuppage Road. The move is paying off by substantially reducing electricity costs at the four properties every month. Alexandra Technopark, which holds the Green Mark Gold from September 2011 to August 2014, continued to enjoy savings in energy consumption as a result of its eco-friendly features and a broader use of NEWater (treated used water). These initiatives saved Alexandra Technopark about $6.5 million from 2011 to 2013. NEWater has also been adopted at Bedok Point, Changi City Point, Causeway Point, Northpoint and The Centrepoint, which allowed these developments to economise on their water bills by a good 9.2%. FCL’s overall scheme to promote a green environment embraces as well the installation of bicycle parking facilities at China Square Central, Robertson Walk, and Capri by Fraser, Changi City, Singapore. 68 02 01 Bicycle parking facility at Capri by Fraser, Changi City, Singapore 02 Martin Place Residences, Singapore 03 Valley Point, Singapore 04 Changi City Point, Singapore 01 03 04 69 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Social Responsibility ECO-FRIENDLY BUILDINGS 01 Tried and tested Six of our commercial properties in Singapore – China Square Central, Robertson Walk, Valley Point, 51 Cuppage Road, Alexandra Point and Alexandra Technopark – participated in the Eco-Office Audit. Launched in 2002 as part of ‘World Environment Day’, this on-going programme aims to help companies cultivate environmentally friendly habits and practices in the workplace. The targeted areas for improvement include energy and water conservation efforts, waste management and recycling. Our commitment and efforts were recognised when all the six properties were awarded the Eco-Office certification. Thumbs up Down Under In Australia, three of our projects have emerged as consistent models of sustainability. In a first for a commercial office building in Perth, Central Park emerged the winner in the Business Category of the Western Australia Water Awards 2012 organised by the Australian Water Association, Western Australia. This award recognised our commitment to improving water management and implementing effective water-wise practices, as well as our initiatives to educate the staff and community thereon. The installation of tap-flow restrictors, low-flow showerheads, low-flush water closets and a park reticulation weather station plus several improvements to the cooling towers undertaken resulted in a 20.6% reduction in water consumption over the last four years. 70 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 02 04 01 Central Park, Sydney, Australia 02 Eight Courtyards, Singapore 03 China Square Central, Singapore 04 Central Park, Perth, Australia 03 Likewise, Caroline Chisholm Centre in Canberra picked up the NABERS Energy base building rating of 5 stars, an upgrade from its previous achievement of 4.5 stars. Another noteworthy sustainable project is the A$2 billion mixed-use Central Park Sydney development, now under construction on the old Carlton United Brewery site on Broadway in Sydney’s southern CBD. Through Frasers Property Australia, our overseas arm, we signed a historic A$26.5 million Environmental Upgrade Agreement (EUA) with the City of Sydney and Eureka Funds Management as trustee of The Australian Environmental Upgrade Fund No. 2 in March 2013. This fund provides low-cost financing for the construction of a central thermal and tri-generation electrical plant at Central Park Sydney. The planned plant will use low-emission natural gas engines to produce thermal and electrical energy, efficiently harnessing the bi-products of energy generation (hot and cold water) to provide centrally reticulated heating and cooling for air and water, for utilisation throughout the precinct. Electricity will be delivered not only to the site’s historic buildings, but possibly to neighbouring buildings as well. Much has been achieved in terms of implementing earth-friendly practices throughout our properties. Clearly, we recognise that much more can be done and we are committed to working on these going forward. 71 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Social Responsibility HUMAN CAPITAL “At FCL, we will always be heavily invested in our people simply because they make up the very foundation on which our businesses are built.” Giving our people space to grow As at end September 2013, FCL as a group has had 1,618 of its staff put in the equivalent of 15,311 training hours for the year. This represented 89% of our FY2012/13 target count of personnel upgrading places. Government funding accounted for 18% of our training investment. FCL’s talent management framework is based on two key pillars, namely, Functional Excellence and Future Leadership. To strengthen the leadership of our people at supervisory and management levels, we placed considerable emphasis on building their core technical and service excellence skills. As an example, our Project Managers in Development and Property continue to upgrade their technical expertise by attending relevant courses and conferences on building and construction, the environment, safety, law and business writing. Furthermore, site staff were continually instructed on safety, the sharing of good practices and learning points across projects. We take particular pride in the CARE training that was not only provided for our Property Services staff but also extended to all parties involved in our residential projects, including architects, contractors and sub-contractors, to ensure home owners of an impeccable handing- over experience. FCL staff who 72 deliver excellent service and received compliments from home owners are recognised with the CARE STAR award. At FCL, we will always be heavily invested in our people simply because they make up the very foundation on which our businesses are built. Frasers Centrepoint Commercial partnered with the Institute of Technical Education (ITE) to customise a programme on Facility Management for staff without a background in building or engineering. This allowed personnel from Leasing, Advertising and Promotions to better appreciate tangential issues that could nevertheless impact their core duties. At Frasers Hospitality, we rolled out the concept of Hub Training, conducting Improving Guest Experience at Front Office and Housekeeping training for the China Hub and South East Asia Hub. To beef up our training curriculum, the Learning and Development team worked with ITE to produce our own proprietary housekeeping training video. Plans are afoot to adapt the video for overseas properties. The group-wide Customer Centric Initiative (CCI), manifested in a number of training programmes, is paying dividends in terms of raising our staff’s service standards and awareness. As a result, a record 85 service staff were honoured for their excellent service standards at the annual EXSA Awards. Among the pickings were 26 Star Awards, three Superstar Awards and one Outstanding Award. Homing in on health The FCL Corporate Wellness Programme took off in 2008 with the aim of promoting health awareness among our employees. Under the chairmanship of Mr Cheang Kok Kheong, CEO, Development & Property, FCL scored the Silver Award in the bi-annual Singapore HEALTH (Helping Employees Achieve Life-Time Health) Awards in November 2012. This honour was presented in tandem with the Workplace Health Promotion (WHP) Grant and in recognition of FCL’s performance in three key wellness areas: General Health, Targeted Interventions and Mental Health. Over the course of 2013, the programme committee organised a wide range of activities. They included cooking and dance classes, various sports tournaments and a three-month exercise programme to advance General Health, as well as a body management programme for Targeted Interventions. A counselling service hotline was set up as part of the programme’s approach to Mental Health management. In more ways than one, we strive to be a healthy organisation. 01 02 04 05 03 06 01 FCL Long Service Awards 02 FCL Long Service Awards 03 F&N’s 130th Anniversary Dinner 04 Team Frasers at the REDAS Dragon Boat Race 05 EXSA presentation ceremony 06 Let’s synergise group photo 73 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Awards & Accolades FY2013 Corporate Residential Commercial • Singapore Health Award 2012 & 2013 (Silver) by Health Promotion Board - Frasers Centrepoint Limited • FIABCI Singapore Property Awards 2012 - Residential High Rise category - Soleil @ Sinaran • Excellent Service Awards 2012 by SPRING Singapore - Changi City Point, Northpoint, & YewTee Point • 8th China Hotel Starlight Award 2012 - Best Serviced Apartment Brand of China - Frasers Hospitality Pte. Ltd. • FIABCI Prix d’Excellence Awards 2013 (Silver) - Residential High Rise category - Soleil @ Sinaran • BCA Green Mark Gold - Eight Courtyards • BCA Construction Excellence Awards 2013 (Merit) - Martin Place Residences • Environmental Excellence Award 2013 by the Urban Development Institute - Frasers Landing, Western Australia • World Travel Awards 2012 - World’s Leading Serviced Apartment Brand - Frasers Hospitality Pte. Ltd. • World Travel Awards 2013 - Middle East’s Leading Serviced Apartment Brand - Frasers Hospitality Pte. Ltd. • World Travel Awards 2013 - Bahrain’s Leading Serviced Apartments - Fraser Suites Bahrain • World Travel Awards 2013 - Qatar’s Leading Serviced Apartments - Fraser Suites Doha • World Travel Awards 2013 - Dubai’s Leading Serviced Apartments - Fraser Suites Dubai • Expatriate Management and Mobility Awards (EMMA) 2012 & 2013 - Corporate Housing Provider of the Year - Frasers Hospitality Pte. Ltd. • Asia’s Most Promising Brand 2012 & 2013 by World Consulting & Research Corporation - Frasers Hospitality Pte. Ltd. • Asia’s Most Promising Leader 2012 & 2013 by World Consulting & Research Corporation - Mr Choe Peng Sum • Best Serviced Apartment Provider, Singapore 2013 by Business Destinations - Frasers Hospitality Pte. Ltd. • Friend of the Arts Award 2013 by National Arts Council - Frasers Hospitality Pte. Ltd. 74 • IR Magazine Awards South East Asia 2012 - Grand Prix for best overall investor relations (mid/small cap) - Frasers Centrepoint Trust • Australian Water Association WA Water Award 2012 - Central Park Perth • Singapore Service Class Award (2012 - 2015) by SPRING Singapore - Anchorpoint - Compass Point - Northpoint - The Centrepoint - YewTee Point • BCA Green Mark Gold - China Square Central - Valley Point (Office & Retail) - 55 Market Street • ‘We Welcome Families’ Excellence Awards by Businesses For Families Council - Changi City Point & Northpoint • ‘We Welcome Families’ Achiever Award by Businesses For Families Council - The Centrepoint, Bedok Point & Compass Point • Eco Office Award by Singapore Environment Council - China Square Central - 51 Cuppage Road - Valley Point - Robertson Walk - Alexandra Point - Alexandra Technopark • Singapore Corporate Awards 2013 by the Business Times - Bronze for IR REIT/Business Trust category - Frasers Centrepoint Trust • Singapore Property Awards 2013 - Industry category - Changi City Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Hospitality • 8th China Hotel Starlight Award 2012 - Best Serviced Apartment of China - Fraser Suites Suzhou • Winner of Investors in People 2012 • Golden Horse Award - Best by Investors in People - Fraser Suites Glasgow International Service Apartment in China - Fraser Suites Chengdu • Excellent Service Award 2012 by SPRING Singapore - Fraser Suites River Valley, Singapore - Fraser Place Robertson Walk, Singapore - Fraser Place Fusionopolis, Singapore - Fraser Residence Orchard, Singapore - Capri by Fraser, Changi City, Singapore • Indonesia Travel Tourism Awards 2012/2013 - Indonesia’s Leading Serviced Apartment and Suite - Fraser Residence Sudirman, Jakarta • Asia Hotel Golden Olive Awards - Best Serviced Apartment of the Year 2013 - Fraser Residence CBD East, Beijing • The Best Service Apartment by • Golden Pillow Awards 2013 - Best Serviced Apartment in China - Fraser Suites Top Glory, Shanghai Japanese Community in Pearl River Area by Crossroad 2012 & 2013 - Fraser Place Shekou, Shenzhen • Best Serviced Apartment by Time Out - Fraser Suites Top Glory, Shanghai • Best Service Award 2012 by City Weekend - Fraser Suites Top Glory, Shanghai • Best Serviced Apartment by Shanghai Business Review - Fraser Suites Top Glory, Shanghai • Certificate of Quality Selection 2012 by Holidaycheck.com - Fraser Suites Harmonie, Paris La Défense • The Best Serviced Apartment of China by China Hotel - Fraser Suites Top Glory, Shanghai • Business Traveller Awards 2012 - Best Serviced Apartment - Fraser Suites Dubai • Best Interior Decoration Award 2012 by City Weekend - Modena Putuo Shanghai • Top Ranked Seoul Hotel 2012 by Booking.com - Fraser Suites Insadong, Seoul • Excellent Performance in Hospitality by Guide Awards 2012, The Guide Magazine - Fraser Suites Hanoi • The Best Serviced Residence Excellence Award 2012 by Expatriate Lifestyle Magazine - Fraser Place Kuala Lumpur • HM Awards for Hotel & Accommodation Excellence 2012 & 2013 - Serviced Apartment Property of the Year - Fraser Suites Sydney • Travellers’ Choice Award 2013 by Trip Advisor - Fraser Residence Budapest - Fraser Suites Top Glory, Shanghai - Fraser Place Kuala Lumpur - Fraser Residence Nankai, Osaka • Certificate of Excellence 2013 by Trip Advisor - Fraser Suites Sydney - Fraser Suites River Valley, Singapore - Fraser Suites Glasgow - Fraser Suites Seef Bahrain - Fraser Suites Doha - Fraser Suites Dubai - Fraser Suites Harmonie Paris La Defense - Fraser Suites Le Claridge - Fraser Place Kuala Lumpur - Fraser Place Anthill Istanbul - Fraser Place Canary Wharf - Fraser Place Melbourne - Fraser Residence Budapest - Fraser Residence Shanghai - Modena Putuo Shanghai - Modena Jinjihu Suzhou • Arts Supporter Award 2013 by National Arts Council, Singapore - Capri by Fraser, Changi City, Singapore • Singapore Green Hotel Award 2013 by Singapore Hotel Association - Capri by Fraser, Changi City, Singapore • AsiaRooms Hotel Awards 2013 - Best Airport Hotel - Capri by Fraser, Changi City, Singapore - Most Loved Hotel (Finalist) - Capri by Fraser, Changi City, Singapore 75 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Enterprise-Wide Risk Management (ERM) Enterprise-wide Risk Management is an integral part of the organisational process. FCL maintains a risk management system to proactively manage risks to support the achievement of its business objectives. Through active risk management, Management creates and preserves value for the organisation. Risk Management Process FCL maintains a high level of corporate discipline and governance by adopting a risk management framework that is dynamic and relevant. The framework links our risk management process with the organisation’s strategic objectives. Risks are identified, assessed, and mitigating measures developed to address and manage those risks. The risk management process is integrated and coordinated. It is embedded in the organisation across all business units. The ownership of these risks lies with the heads of the respective business units who review risks and mitigating measures quarterly. Risks that have a potential material impact on the business units are identified and assessed. The risk exposures and mitigating measures are tracked in a risk register maintained in a Corporate Risk Scorecard system. Where applicable, Key Risk Indicators (“KRIs”) are established to monitor risks. For the financial year ended 30 September 2013, key material risks and their associated mitigating measures were consolidated at the Company level and reported to the Risk Management Committee of FCL’s parent company, Fraser and Neave, Limited (“F&N”). Risk tolerance statements of the Company setting out the nature and extent of the significant risks that the Company is willing to take in achieving its strategic objectives have been formalised and adopted. The risk tolerance statements will be reviewed periodically. An annual ERM validation is held, with all heads of business units providing assurance to the Group Chief Executive Officer, that key risks at the business unit level have been identified and the associated mitigating measures are effective and adequate. An ERM validation report for the financial year ended 30 September 2013 was submitted for review by the Risk Management Committee of F&N, where Management provided assurance that the risk management system was adequate and effective as at 30 September 2013 to address risks that are considered relevant and material to FCL’s operations. At FCL, our risk management culture is enhanced by risk awareness briefings conducted for new recruits. During the financial year, 13 risk awareness sessions have been held. Refresher sessions are also organised for existing staff when required. FCL’s enterprise-wide risk management system is benchmarked against market practice and regulatory guidelines. One initiative undertaken by Management is the implementation of control self-assessment for several key processes, which promotes accountability and risk ownership. Another initiative is the implementation of a Comfort Matrix framework, which provides an overview of the mitigating measures and assurance processes of key financial, compliance and operational (including information technology) risks. 76 Key Risks Throughout the financial year, Management has been monitoring key material risks that affect the Company. The following are some of the key potential risks that the Company is exposed to: Country Risks (Economic, Political and Regulatory Risks) FCL operates and invests in many countries. The risk of adverse changes in the global economy can reduce profits, result in revaluation losses and affect the Company’s ability to sell its residential development stock. Inconsistent and frequent changes in regulatory policies may also result in higher operating and investment costs, loss in productivity and disruptions to business operations. To mitigate these risks, FCL adopts a prudent approach in selecting locations for its investment. Measures are in place to monitor the markets closely, such as through maintaining good working relationships with local authorities, business associations and local contacts, and reviewing expert opinions and market indicators, to keep abreast of economic, political and regulatory changes. Where the need arises, FCL will reassess its business and marketing plans accordingly. Foreign Currency and Interest Rate Risks With worldwide operations, FCL is exposed to changes in currency exchange rates and interest rates. The Company uses derivatives and other financial instruments to hedge against these risks. Policies and processes are in place to facilitate the monitoring and management of risks in a timely manner. Corporate Governance Report FOR THE YEAR ENDED 30 SEPTEMBER 2013 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Good corporate governance is essential to the success of FCL. FCL is firmly committed to setting and maintaining high standards of corporate governance and corporate transparency, and adheres to sound corporate policies, business practices and a system of internal controls. Operating within such a framework allows FCL to safeguard the assets of the Group and Shareholders’ interests whilst pursuing sustainable growth and enhancement of value for shareholders. The Company believes in compliance with applicable laws, rules and regulations. The Company is listed on 9 January 2014 and will comply with the principles and guidelines of the Code of Corporate Governance 2012 (the “Code 2012”) to such extent and as best as it can. A. BOARD MATTERS Principle 1: The Board’s Conduct of Affairs The Board is entrusted with oversight of the business performance and affairs of the FCL Group, and is responsible for the Group’s overall entrepreneurial leadership, strategic direction, performance objectives and long-term success. Our current Board of Directors1 are highly qualified and non-executive. There are 10 Directors on the Board, including two female directors in recognition of the importance and value of gender diversity, and they comprise: Mr Charoen Sirivadhanabhakdi (Chairman)2 Khunying Wanna Sirivadhanabhakdi (Vice-Chairman)3 Mr Charles Mak Ming Ying4 Mr Chan Heng Wing4 Mr Philip Eng Heng Nee4 Mr Weerawong Chittmittrapap4 Mrs Siripen Sitasuwan4 Mr Chotiphat Bijananda5 Mr Panote Sirivadhanabhakdi5 Mr Sithichai Chaikriangkrai6 Notes: 1 The prior Board of FCL comprised Mr Chotiphat Bijananda, Mr Panote Sirivadhanabhakdi, Mr Sithichai Chaikriangkrai, Mr Lim Ee Seng, Mr Anthony Cheong and Mr Chia Khong Shoong. Mr Lim, Mr Cheong and Mr Chia resigned from the Board on 25 October 2013. Mr Lee Hsien Yang who was on the Board at the beginning of the financial year resigned from the Board on 26 February 2013. 2 Mr Charoen Sirivadhanabhakdi was appointed as a non-executive and non-independent Director on 25 October 2013. 3 Khunying Wanna Sirivadhanabhakdi joined the Board as a non-executive and non-independent Director on 7 January 2014. 4 Mr Charles Mak, Mr Chan Heng Wing, Mr Philip Eng, Mr Weerawong Chittmittrapap and Mrs Siripen Sitasuwan were appointed as non-executive and independent Directors on 25 October 2013. 5 Mr Chotiphat Bijananda and Mr Panote Sirivadhanabhakdi were appointed as non-executive and non-independent Directors on 8 March 2013. 6 Mr Sithichai Chaikriangkrai was appointed as a non-executive and non-independent Director on 7 August 2013. The Board will also review annual budgets, financial plans, major acquisitions and divestments, funding and investment proposals, monitor the financial performance of the Group and Management’s performance, and ensure compliance by the Group with relevant laws and regulations. The Board intends to meet regularly, and during Board meetings, our Directors will actively participate in, discuss, deliberate and appraise matters requiring its attention and decision. If required, time will be set aside after scheduled Board meetings for discussions amongst our Directors without the presence of Management, in line with the guidelines of Code 2012, so as to facilitate a more effective check on Management. 77 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Governance Report FOR THE YEAR ENDED 30 SEPTEMBER 2013 Board Matters (cont’d) Delegation of Authority on certain Board Matters In order for the Board to efficiently provide strategic oversight of FCL, it delegates specific areas of responsibilities to five Board Committees namely, the Board Executive Committee (“EXCO”)1, the Audit Committee (“AC”), the Nominating Committee (“NC”), the Remuneration Committee (“RC”) and the Risk Management Committee (“RMC”). Each Board Committee is governed by clear Terms of Reference which have been approved by the Board2. Minutes of all Board Committee meetings will be circulated to the Board so that Directors are aware of and kept updated as to the proceedings and matters discussed during such meetings. Notes: 1 2 The Terms of Reference of the EXCO were updated and approved by the Board and adopted on 25 October 2013. The AC, NC, RC and RMC were constituted, and Terms of Reference for each of these Committees were approved by the Board and adopted, on 25 October 2013. The Company adopts a framework of delegated authorisations in its Manual of Authority (“MOA”). The MOA defines the procedures and levels of authorisation required for specified transactions. It also sets out approval limits for operating and capital expenditure as well as acquisitions and disposals of investments. The MOA also contains a schedule of matters specifically reserved to the Board for approval. These include approval of annual budgets, financial plans, financial statements, business strategies and material transactions, such as major acquisitions, divestments, funding and investment proposals. The MOA authorises the EXCO to approve certain transactions up to specified limits, beyond which the approval of the Board needs to be obtained. Below the Board and EXCO levels, there are appropriate delegations of authority and approval sub-limits at Management level, to facilitate operational efficiency. To address and manage possible conflicts of interest that may arise between Directors’ interests and those of the Group, Directors are required to abstain from voting on any matter in which they are so interested or conflicted. Board Executive Committee (or EXCO) The current EXCO2 is made up of the following members: Mr Charoen Sirivadhanabhakdi Mr Charles Mak Mr Chotiphat Bijananda Mr Panote Sirivadhanabhakdi Mr Sithichai Chaikriangkrai Chairman Vice-Chairman Vice-Chairman Member Member Notes: 1 The prior EXCO of FCL comprised Mr Chotiphat Bijananda, Mr Panote Sirivadhanabhakdi, Mr Sithichai Chaikriangkrai, Mr Lim Ee Seng, Mr Anthony Cheong and Mr Chia Khong Shoong. Mr Lim, Mr Cheong and Mr Chia resigned from the Board and from the FCL EXCO on 25 October 2013. Mr Lee Hsien Yang who was on the Board and the Chairman of the FCL EXCO at the beginning of the financial year, resigned from the Board and the FCL EXCO on 26 February 2013. The current EXCO was appointed on 25 October 2013. 2 The EXCO assumes oversight of the business affairs of FCL. The EXCO will formulate the FCL Group’s strategic development initiatives, provide direction for new investments and material financial and non-financial matters to ensure that the Group achieves its desired performance objectives and enhances long-term shareholder value, and will oversee the Company’s and the Group’s conduct of business and corporate governance structure. The activities and responsibilities of other Board Committees are described in the following sections of this report. Meetings of the Board and Board Committees The Board and its various Board Committees will meet regularly, and also as required by business needs or if their members deem it necessary or appropriate to do so. 78 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Board Matters (cont’d) The Directors will be given direct access to the Management team of the Group’s business divisions through presentations at Board and Board Committee meetings. Where required or requested by Board members, site visits and meetings with personnel from the Group’s business divisions may also be arranged in order for Directors to have an intimate understanding of the key business operations of each division. The Company’s Articles of Association provide for Board members who are unable to attend physical meetings to participate through telephone conference, video conference or any other forms of electronic or instantaneous communication facilities. A letter of appointment setting out, among other things, a Director’s duties and obligations including, where appropriate, how to deal with conflicts of interest, will be issued to all new Directors. A comprehensive orientation programme will also be conducted to familiarise new appointees with the business activities, strategic directions, policies and corporate governance practices of the FCL Group. This programme will allow new Directors to get acquainted with senior Management, and will also foster better rapport and facilitate communications with Management. Our Directors will be kept continually and regularly updated on the Group’s businesses and the regulatory and industry-specific environments in which the entities of the Group operate. Updates on relevant legal, regulatory and technical developments may be in writing or disseminated by way of briefings, presentations and/or handouts. Our Directors are also encouraged to be members of the Singapore Institute of Directors (“SID”) and for them to receive journal updates and training from SID to stay abreast of relevant developments in financial, legal and regulatory requirements, and the business environment and outlook. Principle 2: Board Composition and Guidance Our current Board comprises 10 non-executive Directors, of whom five are independent. Based on representations made by each of these independent Directors, none of them has any relationship with the Company, its related corporations1, our 10% shareholders2 or FCL’s officers that could interfere, or be reasonably be perceived to interfere, with the exercise of each of their independent business judgment with a view to the best interests of the Company. These five independent Directors will help to uphold good corporate governance at the Board level and their presence will facilitate the exercise of independent and objective judgment on corporate affairs. Their participation and input will also ensure that key issues and strategies are critically reviewed, constructively challenged, fully discussed and thoroughly examined, and takes into account the long-term interests of FCL and its Shareholders. Notes: 1 Code 2012 defines “related corporations” as having the same meaning under the Companies Act, Chapter 50 i.e. a corporation that is the company’s holding company, subsidiary or fellow subsidiary. 2 Code 2012 defines a ten percent (10%) shareholder as a person who has an interest or interests in one or more voting shares in the company and the total votes attached to that share, or those shares, is not less than ten percent (10%) of the total votes attached to all the voting shares in the company. A review of the size and composition of the Board will be undertaken by the Company to see if these aspects can fulfill the needs of the Group. The Nominating Committee (“NC”) will also determine if the current size and composition of the Board is appropriate for the scope and nature of the Group’s operations, and facilitate effective decision-making. In line with Code 2012, the Committee will take into account the requirements of the Group’s businesses and the need to avoid undue disruptions from changes to the composition of the Board and Board Committees. No individual or group dominates the Board’s decision-making process. The Board proactively seeks to maintain an appropriate balance of expertise, skills and attributes among the Directors. This is also reflected in the diversity of backgrounds and competencies of our Directors, whose competencies range from banking, finance, accounting and legal to relevant industry knowledge, entrepreneurial and management experience, and familiarity with regulatory requirements and risk management. This is beneficial to the Company and its Management as decisions by, and discussions with, the Board would be enriched by the broad range of views and perspectives and the breadth of experience of our Directors. 79 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Governance Report FOR THE YEAR ENDED 30 SEPTEMBER 2013 Board Matters (cont’d) The Directors will be provided with accurate, complete and timely information and have direct and unrestricted access to Management. This is to give the Board and Board Committees sufficient time to critically evaluate and consider issues relevant to the Company and its businesses and operations. This will also allow our Directors to carry out their duties and discharge their oversight functions more effectively. Principle 3: Chairman and Chief Executive Officer The Chairman and the Group Chief Executive Officer (“Group CEO”) of the Company, Mr Lim Ee Seng are separate persons to ensure an appropriate balance and separation of power and authority, and clear division of responsibilities and accountability. The Chairman, who is non-executive, is not related to the Group CEO and neither is there is any business relationship between them. Likewise, none of the chief executive officers of the Group’s business divisions and the Group CEO are related to each other, and neither is there any other business relationships between or among them. The Chairman leads the Board and ensures its effectiveness by, among other things, steering effective, productive and comprehensive discussions amongst Board members and the Management team on strategic, business and other key issues pertinent to the business and operations of the Group. In addition, the Chairman also makes sure, with the support of the Company Secretary, that Directors are provided with clear, complete and timely information in order to make sound, informed decisions. The Chairman encourages active and effective engagement, participation by and contribution from all Directors, and facilitates constructive relations among and between them and Management. With the full support of the Board, Company Secretary and Management, the Chairman will spur the Company to promote, attain and maintain the highest standards of corporate governance and transparency. Principle 4: Board Membership Nominating Committee (or NC) The NC1 is made up of the following Directors: Mr Weerawong Chittmittrapap Mr Chan Heng Wing Mr Chotiphat Bijananda Chairman Member Member A majority of the members of this Committee, including the Chairman, are independent non-executive Directors. Note: 1 The NC was constituted on 25 October 2013. The NC is guided by written Terms of Reference approved by the Board and which set out the duties and responsibilities of this Committee. It is responsible for reviewing the structure, size and composition of the Board, identifying the balance of skills, knowledge and experience required for the Board to discharge its responsibilities effectively, and for nominating candidates to meet the needs and requirements of the Group. Annually, the NC will assess the independence of each Director, the performance of the Board as a whole, and the contribution of each Director to the effectiveness of the Board. The NC is also required to determine whether Directors who hold multiple board representations are able to and have been devoting sufficient time to discharge their responsibilities adequately. Code 2012 requires listed companies to fix the maximum number of board representations on other listed companies that their directors may hold and to disclose this in their annual report. Details of such directorships and other principal commitments of our Directors may be found on pages 24 to 28. In determining whether each Director is able to devote sufficient time to discharge his or her duties, the NC will 80 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Board Matters (cont’d) take cognizance of the Code 2012 requirement, but is of the view that its assessment should not be restricted to the number of board representations of each Director – and their respective principal commitments – per se. Holistically, the contributions by the Directors to and during meetings of the Board and relevant Board Committees as well as their attendance at such meetings should also be taken into account. The NC will also review all nominations for appointments and re-appointments to the Board and to Board Committees, and will submit its recommendations for approval by the Board taking into account an appropriate mix of core competencies for the Board to fulfill its roles and responsibilities. The Committee will take the lead in identifying, evaluating and selecting suitable candidates for new directorships. In its search and selection process, the NC will consider factors such as the ability of the prospective candidate to contribute to discussions, deliberations and activities of the Board and Board Committees. It will also review the composition of the Board – including the mix of expertise, skills and attributes of Directors – so as to identify needed and/or desired competencies to supplement the Board’s existing attributes. Where it deems necessary or appropriate, the Committee may tap on its networking contacts and/or engage external professional headhunters to assist with identifying and shortlisting candidates. The Company’s Articles of Association provides that at least one-third of its Directors shall retire from office and are subject to re-election at every Annual General Meeting of the Company (“AGM”). All Directors are required to retire from office at least once every three years. The NC will assess and evaluate whether Directors retiring at each AGM are properly qualified for reappointment by virtue of their skills, experience and contributions. Newly-appointed Directors during the year must also submit themselves for retirement and re-election at the next AGM immediately following their appointment. The Shareholders approve the appointment or re-appointment of Board members at the AGM. Going forward, the NC will determine the independence of each Director annually based on the definitions and guidelines of independence set out in Code 2012. For the current Board, the status of each Director is as follows: Mr Charoen Sirivadhanabhakdi1 Khunying Wanna Sirivadhanabhakdi1 Mr Charles Mak Ming Ying Mr Chan Heng Wing Mr Philip Eng Heng Nee Mr Weerawong Chittmittrapap Mrs Siripen Sitasuwan Mr Chotiphat Bijananda2 Mr Panote Sirivadhanabhakdi3 Mr Sithichai Chaikriangkrai2 Non-Independent Non-Independent Independent Independent Independent Independent Independent Non-Independent Non-Independent Non-Independent Notes: 1 Each of Mr Charoen Sirivadhanabhakdi and Khunying Wanna Sirivadhanabhakdi are directly or indirectly interested in not less than ten percent (10%) of the total voting shares in the Company. 2 Under Code 2012, these Directors are deemed non-independent by virtue of their being directly associated with a ten percent (10%) Shareholder of the Company. 3 Mr Panote Sirivadhanabhakdi is an immediate family member of a ten percent (10%) shareholder of the Company. 81 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Governance Report FOR THE YEAR ENDED 30 SEPTEMBER 2013 Board Matters (cont’d) Key Information regarding Directors Key information on the Directors is set out on pages 24 to 28. Principle 5: Board Performance The effectiveness of the Board as a whole and the contribution by each Director to the effectiveness of the Board will be assessed annually. All Directors will be required to assess the performance of the Board and the Board Committees. The assessment will be likely to cover areas such as Board processes, managing the Company’s performance, effectiveness of the Board Committees, and Director development, and management self-evaluation. Directors will also be asked to provide input on issues which do not fall under these categories, for instance, addressing specific areas where improvements can be made. Feedback and comments received from the Directors would then be reviewed by the NC, in consultation with the Chairman of the Board. External consultants may also be engaged to facilitate the formulation and implementation of the Board evaluation process. Principle 6: Access to Information Management will be required to provide the Board with detailed Board papers specifying relevant information and commercial rationale for each proposal for which Board approval is sought. Such information will include relevant financial forecasts, risk analyses, mitigation strategies, feasibility studies and key commercial issues for the Board’s attention and consideration. Reports on major operational matters, business development activities, financial performance, potential investment opportunities and budgets will also be circulated to the Board. A calendar of activities will be scheduled for the Board a year in advance, with Board papers and agenda items dispatched to the Directors about a week before scheduled meetings as far as possible. This is to give Directors sufficient time to review and consider the matters being tabled and/or discussed so that discussions can be more meaningful and productive. Senior Management from the Company’s business divisions will be requested to attend meetings of the Board and the Board Committees in order to provide input and insight into matters being discussed, and to respond to any queries that the Directors may have. The Board will also have separate and independent access to the Company’s senior Management and the Company Secretary. The Company Secretary will attend all Board meetings, ensure that Board procedures are complied with, and provide advice and guidance on corporate governance, and on legal and regulatory compliance. The Company Secretary will also facilitate and act as a channel of communication for the smooth flow of information to and within the Board and its various Committees, as well as between and with senior Management. Additionally, the Company Secretary will solicit and consolidate Directors’ feedback and evaluation from time to time, arrange for and facilitate orientation programmes for new Directors and will assist with their professional development as required. The Company Secretary will be the Company’s primary channel of communication with SGX-ST. Where it is necessary for the efficacious discharge of their duties, the Directors may seek and obtain independent professional advice at the Company’s expense. 82 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES B. REMUNERATION MATTERS Principle 7: Procedures for Developing Remuneration Policies Remuneration Committee (or RC) The RC1 is made up of non-executive Directors, the majority of whom, including the Chairman, are independent Directors. It comprises the following members: Mr Philip Eng Heng Nee Mr Charles Mak Ming Ying Mrs Siripen Sitasuwan Mr Panote Sirivadhanabhakdi Chairman Member Member Member Note: 1 The RC was constituted on 25 October 2013. The RC’s main responsibility is to assist the Board in establishing a formal and transparent process for developing policies on executive remuneration and development. Such policies will be submitted to the Board for approval. The RC will also review remuneration packages and service terms of individual Directors and the Group CEO. Additionally, the RC’s duties will include reviewing and making recommendations on the remuneration framework for the Board and key management personnel (such as the chief executive officers of the business divisions of the Company). The RC will also oversee the framework for remuneration and other terms of service for other key Management of the Company. Annually, the RC will review the level and mix of remuneration and benefits policies and practices of the Company, including long-term incentives. When conducting such reviews, the RC will take into account the performance of the Company and that of individual employees. It will also review and approve the framework for salary reviews, performance bonus and incentives for key Management of the Group. The RC will also conduct an annual review of the development and succession plans for key Management and the leadership pipeline for the Company. In doing so, the RC will align the Group CEO’s leadership – through appropriate remuneration and benefits policies and long-term incentives – with the Company’s strategic objectives and key challenges. Performance targets will also be set for the Group CEO and his performance evaluated yearly. The RC may from time to time, and where necessary or required, engage external consultants in framing the remuneration policy and determining the level and mix of remuneration for Directors and Management. Among other things, this helps the Company to stay competitive in its remuneration packages. Principle 8: Level and Mix of Remuneration In recommending the level and mix of remuneration, the RC will seek to build, motivate and retain Directors and key Management. It will ensure that competitive remuneration policies and practices are in place to draw and motivate high-performing executives so as to drive the Group’s businesses to greater growth, efficiency and profitability. In its deliberation, the RC will take into consideration industry practices and will benchmark against relevant industry players to ensure that its remuneration and employment conditions are competitive. The Company’s compensation framework comprises fixed pay and short-term and long-term incentives. The Company subscribes to linking executive remuneration to corporate and individual performance, based on an annual appraisal of employees and using indicators such as core values, competencies, key result areas, performance rating, and potential of the employees. Long-term incentive schemes are put in place to motivate and reward employees and align their interests to maximise long–term Shareholder value. 83 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Governance Report FOR THE YEAR ENDED 30 SEPTEMBER 2013 Remuneration Matters (cont’d) Long Term Incentive Plans The RC will be responsible for administering the Company’s share-based remuneration incentive plans, namely, the FCL Restricted Share Plan (“RSP”) and FCL Performance Share Plan (“PSP”)1. Note: 1 The FCL RSP and FCL PSP were approved by the Board and adopted on 25 October 2013. Through the RSP and PSP, the Company seeks to foster a greater ownership culture within the FCL Group by aligning more directly the interests of key senior Management and senior executives with the interest of Shareholders, and for such employees to participate and share in the Group’s growth and success. The RSP is available to a broader base of senior executives compared to the PSP. Its objectives are to increase the Company’s flexibility and effectiveness in its continuing efforts to attract, motivate and retain talented senior executives and to reward these executives for the performance of the Company and that of the individual. The PSP applies to senior Management in key positions who shoulder the responsibility of the Company’s performance and who are able to drive the growth of the Company through superior performance. It serves as further motivation to key senior Management in striving for excellence and delivering long-term Shareholder value. Under the RSP and PSP, the Company grants share-based awards (“Base Awards”) conditional upon pre-determined performance targets being met. These targets are set by the RC in its absolute discretion for the performance conditions to be met over the performance period. The performance period for the RSP and PSP are two years and three years respectively. For the RSP, the targets set are the achievement of Attributable Profit Before Fair Value Adjustment and Exceptional Items and Return On Capital Employed. For the PSP, the pre-set targets are based on Return On Invested Capital, Total Shareholders’ Return Relative to the Straits Times Index and Absolute Shareholders’ Return as a multiple of Cost of Equity. The awards represent the right to receive fully paid shares, their equivalent cash value or a combination thereof, free of charge, provided certain prescribed performance conditions are met. The final number of shares to be released will depend on the achievement of the pre-determined targets at the end of the performance period. If such targets are met and/or exceeded, more shares than the Base Awards can be delivered, subject to a maximum percentage of the Base Awards. The maximum number of Company shares which can be released, when aggregated with the number of new shares issued pursuant to the vesting of awards under the RSP and PSP will not exceed ten percent (10%) of the issued share capital of the Company. Senior management participants are required to hold a minimum number of the shares released to them under the RSP and PSP to maintain a beneficial ownership stake in the Company for the duration of their employment or tenure with the Company. To date, no awards have been granted under the FCL RSP and PSP. 84 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Remuneration Matters (cont’d) Principle 9: Disclosure on Remuneration Remuneration of Directors and Top Five Key Management Personnel Information on the remuneration of Directors of the Company and key management personnel of the Group for the financial year ended 30 September 2013 are set out below. Directors of the Company1 Mr Charoen Sirivadhanabhakdi2 Khunying Wanna Sirivadhanabhakdi2 Mr Charles Mak Ming Ying3 Mr Chan Heng Wing3 Mr Philip Eng Heng Nee3 Mr Weerawong Chittmittrapap3 Mrs Siripen Sitasuwan3 Mr Chotiphat Bijananda1 Mr Panote Sirivadhanabhakdi1 Mr Sithichai Chaikriangkrai1 Remuneration $ Director Fee % N.A. N.A. N.A. N.A. 75,0004 N.A. N.A. 37,5005 37,5005 6,2505 N.A. N.A. N.A. N.A. 100 N.A. N.A. 100 100 100 Total % N.A. N.A. N.A. N.A. 100 N.A. N.A. 100 100 100 Notes: 1 At the beginning of the financial year, the Board of FCL comprised Mr Lee Hsien Yang, Mr Lim Ee Seng, Mr Anthony Cheong and Mr Chia Khong Shoong. Mr Lee resigned from the Board of FCL on 26 February 2013 and was paid the sum of $61,607 being Director’s fees for the period 1 October 2012 to 26 February 2013. Mr Sithichai Chaikriangkrai was appointed as a non-executive and non-independent Director on 7 August 2013, and Mr Chotiphat Bijananda and Mr Panote Sirivadhanabhakdi were appointed as non-executive and non-independent Directors on 8 March 2013. Mr Lim, Mr Cheong and Mr Chia resigned from the Board on 25 October 2013. As nominees of F&N who were employees of F&N (in the case of Mr Cheong) and FCL (for Mr Lim and Mr Chia) respectively, none of them received Director’s fees. As key management personnel of the Company, Mr Lim and Mr Chia’s remuneration are set out in the following table. 2 Each of Mr Charoen Sirivadhanabhakdi and Khunying Wanna Sirivadhanabhakdi were appointed as non-executive and non-independent Directors on 25 October 2013 and 7 January 2014 respectively. 3 Mr Charles Mak, Mr Chan Heng Wing, Mr Philip Eng, Mr Weerawong Chittmittrapap and Mrs Siripen Sitasuwan were appointed as non-executive and independent Directors on 25 October 2013. 4 Being payment of director’s fees of $75,000 from FCL’s subsidiary, Frasers Centrepoint Asset Management Ltd. 5 These fees have not been paid. Remuneration of Key Management Personnel for Year Ended 30 September 2013 Between $3,500,000 and $3,750,000 Mr Lim Ee Seng Between $900,000 and $1,150,000 Mr Tang Kok Kai Christopher Mr Chia Khong Shoong Mr Choe Peng Sum Mr Cheang Kok Kheong Salary % Bonus % Allowances / Benefits % Long Term Inc / Benefits % Total % 35 44 42 42 39 29 26 25 24 24 4 5 5 6 5 32 25 28 28 32 100 100 100 100 100 There are no existing or proposed service agreements entered into or to be entered into by the Company or any of its subsidiaries with Directors, the Group CEO or other key management personnel which provide for compensation in the form of stock options, or pension, retirement or other similar benefits, or other benefits, upon termination of employment. There are no employees within the FCL Group who are immediate family members of a Director, and whose remuneration exceeds $50,000 during the year. 85 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Governance Report FOR THE YEAR ENDED 30 SEPTEMBER 2013 Remuneration Matters (cont’d) Directors’ Fees The remuneration of non-executive Directors takes into account their level and quality of contribution and their respective responsibilities, including attendance and time spent at Board meetings and Board Committee meetings. Directors will be paid a basic fee and attendance fees for attending Board meetings. Non-Executive Directors who perform services through Board Committees will be paid additional basic and attendance fees for such services. No Director decides his own fees. Directors’ fees will be reviewed periodically to benchmark such fees against the amounts paid by other major listed companies. C. ACCOUNTABILITY AND AUDIT Principle 10: Accountability FCL prepares its financial statements in accordance with the Singapore Financial Reporting Standards (“SFRS”) prescribed by the Accounting Standards Council. The Board will provide Shareholders with quarterly and annual financial reports, and will release its quarterly and full year financial results through announcements to the SGX-ST and, where appropriate, press releases and media and analysts’ briefings. In communicating and disseminating its results, FCL will aim to present a balanced and clear assessment of the Group’s performance, position and prospects. Principle 11: Risk Management and Internal Controls The Company maintains a sound system of internal controls with a view to safeguard its assets and Shareholders’ investments. The Audit Committee (or AC)1, with the assistance of internal and external auditors, will review and report to the Board on the adequacy of the Company’s system of controls, including financial, operational and compliance controls, established by Management. In assessing the effectiveness of internal controls, the AC will ensure primarily that key objectives are met, material assets are properly safeguarded, fraud or errors in the accounting records are prevented or detected, accounting records are accurate and complete, and reliable financial information is prepared in compliance with applicable internal policies, laws and regulations. Note: 1 The AC was constituted on 25 October 2013. The importance and emphasis placed by the FCL Group on internal controls is underpinned by the fact that the key performance indicators for Management’s performance takes into account the findings of both internal and external auditors and the number of unresolved or outstanding issues raised in the process. Risk Management Committee The Board, through the Risk Management Committee (or RMC)1, reviews the adequacy of the Group’s risk management framework to ensure that robust risk management and internal controls are in place. The Company has adopted an enterprise- wide risk management (“ERM”) framework to enhance its risk management capabilities. Key risks, mitigating measures and management actions are continually identified, reviewed and monitored as part of the ERM process. Financial and operational key risk indicators are in place to track key risk exposures. Apart from the ERM process, key business risks are thoroughly assessed by Management and each significant transaction is comprehensively analysed so that Management understands the risks involved before it is embarked upon. Note: 1 The RMC was constituted on 25 October 2013. 86 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Accountability and Audit (cont’d) The RMC will oversee the risk management framework and policies of the Group. It is responsible for, among other things, reviewing the Group’s strategy, policies, enterprise-wide risk management framework, processes and procedures for identifying, measuring, reporting and mitigating key risks in the Group’s businesses and operations. The RMC will report material matters, findings and recommendations to the Board. Together with the AC, the RMC will help to ensure that Management maintains a sound system of risk management and internal controls to safeguard the interests of Shareholders and the assets of the Group. The RMC will also provide guidance to Management, and will assist the Board in determining the nature and extent of significant risks which the Board is willing to take in achieving the Group’s strategic objectives. The meetings of the RMC will be attended by the senior Management of the Group, and will serve as a forum to review and discuss material risks and exposures of these businesses and their strategies to mitigate risks. The RMC comprises the following members: Mr Chotiphat Bijananda Mr Charles Mak Ming Ying Mr Chan Heng Wing Mr Weerawong Chittmittrapap Mr Panote Sirivadhanabhakdi Mr Sithichai Chaikriangkrai Chairman Member Member Member Member Member Periodic updates will be provided to the RMC on the Group’s risk profile. These updates will include an assessment of the Group’s key risks by major business units, risk categories, and the status and changes in plans undertaken by Management to manage key risks. Using a comfort matrix of key risks, the material financial, compliance and operational (including information technology) risks of the Company have been documented and presented against strategies, policies, people, processes, systems, mechanisms and reporting processes that have been put in place. The Management of the Company also carries out control self-assessment in key areas of their respective businesses and operations to evaluate the adequacy and effectiveness of their risk management measures and internal controls. Based on the internal controls and risk management framework established and maintained by the Group, work performed by internal and external auditors and reviews performed by Management and various Board Committees, the Board, with the concurrence of the AC, is of the opinion that the Group’s internal controls were adequate as at 28 October 2013 (being the date on which the Introductory Document was issued by the Company) to address financial, operational and compliance risks, which the Group 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 Group 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 Group’s ERM framework and progress report is set out on page 76. 87 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Governance Report FOR THE YEAR ENDED 30 SEPTEMBER 2013 Accountability and Audit (cont’d) Whistle-Blowing Policy For the financial year ended 30 September 2013, the Company, as part of the Fraser and Neave, Limited (“F&N”) Group, has in place a Whistle-Blowing Policy. This Policy provides an independent feedback channel through which matters of concern about possible improprieties in matters of financial reporting or other matters may be raised by employees in confidence and in good faith, without fear of reprisal. Details of this policy have been disseminated and made available to all employees of the Company. All matters which are raised are then independently investigated and appropriate actions taken. The AC will ensure that independent investigations and any appropriate follow-up actions are carried out. Principle 12: Audit Committee The Audit Committee (or AC), on behalf of the Board, will undertake the monitoring and review of the system of internal controls. Its main responsibilities are to assist the Board in the discharge of its oversight responsibilities in the areas of internal controls, financial and accounting practices, operational and compliance controls. Significant findings are reported to the Board. The AC is guided by written Terms of Reference endorsed by the Board and which set out its duties and responsibilities. It is duly authorised to investigate any matter within such Terms of Reference, and has full access to and the co-operation of Management, as well as the full discretion to invite any Director or executive officer to attend its meetings. The AC comprises the following members: Mr Charles Mak Ming Ying Mr Philip Eng Heng Nee Mrs Siripen Sitasuwan Mr Sithichai Chaikriangkrai Chairman Member Member Member The AC is made up of non-executive Directors, the majority of whom, including the Chairman, are independent Directors. The members of the AC are appropriately qualified. Their collective wealth of experience and expertise on accounting and financial management enables them to discharge their responsibilities competently. The Company will commit reasonable resources to enable the Committee to discharge its functions effectively. The Committee will also meet with internal and external auditors without the presence of Management at least once a year to obtain feedback on the competency and adequacy of the finance function and to ascertain if there are any material weaknesses or control deficiencies in the Group’s financial reporting and operational systems. In addition, periodic updates on changes in accounting standards and treatment will be prepared by external auditors and circulated to members of the AC. The Committee will make recommendations to the Board for approval by shareholders, the appointment, re-appointment and removal of the Company’s external auditors. It will also review and approve the remuneration and terms of engagement of the external auditors, the scope and results of audit by the incumbent auditors and its cost effectiveness, as well as the independence and objectivity of the auditors. All non-audit services provided by the incumbent auditors, and the aggregate amount of audit fees paid to them will also be reviewed. For details of fees payable to the auditors in respect of audit and non-audit services for the year ended 30 September 2013, please refer to Note 5 of the Notes to the Financial Statements on page 132. The Committee will need to assess and be satisfied that neither their independence nor their objectivity is put at risk, and that they are still able to meet the audit requirements and statutory obligations of the Company. It would also need to be satisfied with the aggregate amount of audit fees paid to the auditors and consider and review a variety of factors including the adequacy of resources, experience of supervisory and professional staff to be assigned to the audit, and size and complexity of the Group, its businesses and operations. 88 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Accountability and Audit (cont’d) Principle 13: Internal Audit Currently, the Internal Audit (“IA”) function for the Company is performed by the Internal Audit department of F&N, FCL’s parent company prior to its listing, as part of shared corporate services. On 25 October 2013, the Company entered into a Shared Services Agreement (“SSA”) with Fraser & Neave (Singapore) Pte Limited (“F&NS”), a wholly-owned subsidiary of F&N, pursuant to which certain shared services (including IA services) will be provided by F&NS to the Company as part of transitional arrangements in conjunction with FCL’s listing. On and after the expiry or termination of the SSA, it is envisaged that an independent IA department will perform the IA function for the Group (“FCL IA Department”). The FCL IA Department will be responsible for conducting objective and independent assessments on the adequacy and quality of the Group’s system of internal controls, and the Head of IA for FCL will report directly to the Chairman of the AC and administratively, to the Company Secretary. For the financial year ended 30 September 2013, in performing IA services for the Company, the IA department of F&N adopted and complied with the Standards for the Professional Practice of Internal Auditing set out by the Institute of Internal Auditors. To ensure that the internal audits are effectively performed, it recruits and employs suitably qualified staff with the requisite skills and experience. Such staff are given relevant training and development opportunities to update their technical knowledge and auditing skills. Key staff members of the F&N’s IA department also received relevant technical training and seminars organised by the Institute of Internal Auditors, Singapore and other professional bodies. The F&N IA department operates within the framework stated in a set of Terms of Reference. During the year, it adopted a risk-based audit methodology to develop its audit plans, and its activities were aligned to key risks of the FCL Group. Based on risk assessments performed, greater focus and appropriate review intervals were then set for higher risk activities, and material internal controls, including compliance with the Company’s policies, procedures and regulatory responsibilities. During the year ended 30 September 2013, the IA department of F&N conducted its audit reviews based on the approved internal audit plans. All audit reports detailing audit findings and recommendations are provided to Management who would respond on the actions to be taken. Going forward, the FCL IA Department will submit quarterly reports to the AC on the status of the audit plan and on audit findings and actions taken by Management on such findings. Key findings will then be highlighted at AC meetings for discussion and follow-up action. The Committee will in turn monitor the timely and proper implementation of required corrective, preventive or improvement measures undertaken by Management. D. SHAREHOLDER RIGHTS AND RESPONSIBILITIES Principle 14: Shareholder Rights FCL believes in treating all shareholders fairly and equitably. It will aspire to keep all shareholders and other stakeholders and analysts in Singapore and beyond informed of its corporate activities, including changes (if any) in the Company or its businesses which are likely to materially affect the price or value of its shares, in a timely and consistent manner. Shareholders of FCL will be given the opportunity to participate effectively and vote at general meetings of the Company, where relevant rules and procedures governing such meetings (for instance, how to vote) will be clearly communicated. 89 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Annual Report 2013 Corporate Governance Report FOR THE YEAR ENDED 30 SEPTEMBER 2013 Shareholder Rights and Responsibilities (cont’d) Principle 15: Communication with Shareholders FCL aims to provide fair, relevant, comprehensive and timely information regarding the Group’s performance and progress to shareholders and the investment community to enable them to make informed investment decisions. The Group’s dedicated Investor Relations (“IR”) team will be tasked with and will focus on facilitating communications between the Company and its Shareholders, as well as with the investment community, through timely disclosures of material and other pertinent information, via forums such as regular dialogues and announcements to SGX-ST. The team also plans to conduct roadshows (together with key senior Management), and participate in investor seminars and conferences to keep the market and investors apprised of the FCL Group’s corporate developments and financial performance. In conjunction with FCL’s listing, senior Management were engaged with Singaporean and foreign investors at non-deal roadshows. Going forward, such engagements will provide shareholders and investors prompt disclosure of relevant information, to enable them to have a better understanding of the Company’s businesses and performance. The Company will also make available all its briefing materials to analysts and the media, its financial information, its annual reports and all announcements to the SGX-ST and on its website at www.fraserscentrepoint.com, with contact details for investors to channel their comments and queries. As previously disclosed in the Introductory Document, the Company intends to recommend dividends of up to 75% of its net profit after tax after considering factors such as its level of cash and reserves, results of operations, business prospects, capital requirements and surplus, general financial condition, contractual restrictions, the absence of any circumstances which might reduce the amount of reserves available to pay dividends and other factors relevant to the Board (including the expected financial performance of FCL). Principle 16: Conduct of Shareholder Meetings The Board will support and encourage active shareholder participation at AGMs as it believes that general meetings serve as an opportune forum for shareholders to meet the Board and senior Management, and to interact with them. The Company’s Articles of Association allows shareholders the right to appoint up to two proxies to attend and vote on their behalf in shareholders’ meetings. For greater transparency, FCL will consider implementing electronic poll voting at AGMs. This entails shareholders being invited to vote on each of the resolutions by poll, using an electronic voting system (instead of voting by hands), thereby allowing all shareholders present or represented at the meeting to vote on a one share, one vote basis. The voting results of all votes cast for, or against, each resolution will be screened at the meeting and announced to the SGX-ST after the meeting. 90 Particulars of Key Management Personnel Name of Key Executive Academic & Professional Qualifications Age Working Experience Area(s) of Responsibility Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES As at 30 September 2013 Mr Lim Ee Seng PBM 62 Bachelor of Engineering (Civil), University of Singapore 1982 – 1989 Project Manager, Singapore Land Ltd Master of Science (Project Management), National University of Singapore 1989 – 1996 General Manager (Property Division), First Capital Corporation Ltd Member, The Institution of Engineers, Singapore 1996 – 2004 Managing Director, MCL Land Limited Mr Cheang Kok Kheong 58 Bachelor of Architecture, National University of Singapore Fellow, Singapore Institute of Directors Master of Science in Tourism, Planning and Development, University of Surrey Mr Chia Khong Shoong 42 Bachelor of Commerce (Accounting and Finance), University of Western Australia Master of Philosophy (Management Studies), Cambridge University Mr Choe Peng Sum 53 Bachelor of Science with Distinction, Cornell University, New York President’s Honor Roll, Washington State University Executive Development Programme, International College of Hospitality Administration, BRIG, Switzerland Mr Tang Kok Kai Christopher 52 Bachelor of Science, National University of Singapore Master of Business Administration, National University of Singapore 1994 – 1998 Senior Manager, DBS Land Limited 1998 – 2002 Senior Manager, Ascendas Land (Singapore) Pte Ltd 2002 – 2005 General Manager, MCL Land Limited 2007 – 2010 Chief Operating Officer, Development and Property, Frasers Centrepoint Limited 1996 – 2004 Investment Banker, Citigroup / Salomon Smith Barney 2004 – 2008 Investment Banker, The Hongkong & Shanghai Banking Corporation Ltd 1984 – 1994 Executive Assistant Manager, Shangri-La Hotel, Singapore 1994 – 1996 Resident Manager, Portman Shangri-La Hotel, Shanghai 1996 – 1998 General Manager of Hospitality, Frasers Centrepoint Limited 1987 – 1994 Manager, British Petroleum Singapore Pte Ltd 1994 – 1997 Manager, Lubrizol South East Asia 1997 – 2000 Senior Manager, DBS Land Limited 2000 – 2001 Vice President, DBS Bank Ltd 2001 – 2002 General Manager, Frasers Centrepoint Limited 2002 – 2006 General Manager, Fraser and Neave, Limited 2006 – 2010 Chief Executive Officer, Frasers Centrepoint Asset Management Ltd Group Chief Executive Officer, Frasers Centrepoint Limited (Date appointed: 15 October 2004) Chief Executive Officer, Development and Property Frasers Centrepoint Limited (Date appointed: 1 October 2010) Chief Executive Officer, Australia, New Zealand and United Kingdom Frasers Centrepoint Limited (Date appointed: 1 October 2010 Chief Financial Officer, Frasers Centrepoint Limited (Date appointed: 2 March 2009) Chief Executive Officer, Frasers Hospitality Pte. Ltd. (Date appointed: 19 June 2007) Chief Executive Officer, Greater China Frasers Centrepoint Limited (Date appointed: 1 October 2010) Chief Executive Officer, Frasers Centrepoint Commercial Frasers Centrepoint Limited (Date of Appointment: 1 October 2006) Appointed on 1 October 2013 Mr Uten Lohachitpitaks 40 Bachelor of Business Administration, Assumption University, Thailand Master of Business Administration, Assumption University, Thailand 1996 – 2005 Vice President, Corporate & Investment Banking Group, DBS Bank Ltd Chief Investment Officer, Frasers Centrepoint Limited (Date appointed: 1 October 2013) 2005 – 2006 Director, Investment Banking Division, United Overseas Bank (Thai) Public Company Limited 2006 – 2013 Managing Director, Strategic Advisory, DBS Bank Ltd 91 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Index to Financial Report Contents Directors’ Report Statement by Directors Independent Auditor’s Report Consolidated Profit Statement Consolidated Statement of Comprehensive Income Balance Sheets Statements of Changes in Equity Consolidated Cash Flow Statement Notes to the Financial Statements Particulars of Group Properties Shareholding Statistics Interested Person Transactions 93 98 99 100 101 102 103 106 108 197 206 207 92 Annual Report 2013Directors’ Report FRASERS CENTREPOINT LIMITED & SUBSIDIARIES The directors have pleasure in submitting their report and the audited consolidated financial statements of Frasers Centrepoint Limited (the “Company”) and subsidiaries (the “Group”) and the balance sheet and statements of changes in equity of the Company for the year ended 30 September 2013. 1. DIRECTORATE The directors of the Company in the office at the date of this report are: Mr Charoen Sirivadhanabhakdi (Chairman) Mr Charles Mak Ming Ying Mr Chan Heng Wing Mr Philip Eng Heng Nee Mr Weerawong Chittmittrapap Mrs Siripen Sitasuwan Mr Chotiphat Bijananda Mr Panote Sirivadhanabhakdi Mr Sithichai Chaikriangkrai (Appointed on 25 October 2013) (Appointed on 25 October 2013) (Appointed on 25 October 2013) (Appointed on 25 October 2013) (Appointed on 25 October 2013) (Appointed on 25 October 2013) (Appointed on 8 March 2013) (Appointed on 8 March 2013) (Appointed on 7 August 2013) Messr Lee Hsien Yang resigned from the Board on 26 February 2013. Messrs Lim Ee Seng, Anthony Cheong Fook Seng and Chia Khong Shoong resigned from the Board on 25 October 2013. The Board places on record its appreciation to Messrs Lee, Lim, Cheong and Chia for their past services. At the forthcoming Annual General Meeting, the following directors will retire, being eligible, offer themselves for re-election: - Pursuant to Article 97 of the Company’s Articles of Association, having been appointed since the last Annual General Meeting: • Mr Charoen Sirivadhanabhakdi • Mr Charles Mak Ming Ying • Mr Chan Heng Wing • Mr Philip Eng Heng Nee • Mr Weerawong Chittmittrapap • Mrs Siripen Sitasuwan • Mr Chotiphat Bijananda • Mr Panote Sirivadhanabhakdi • Mr Sithichai Chaikriangkrai 2. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES Neither at the end of, nor at any time during, the financial year did there subsist any arrangements to which the Company is a party whereby directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, save as disclosed in this report. 93 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Directors’ Report 3. DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES The directors who held office at the end of the financial year and their beneficial or deemed interests in the capital of the Company and its related corporations as recorded in the register required to be kept under Section 164 of the Companies Act, Cap.50 were as follows: Chotiphat Bijananda Panote Sirivadhanabhakdi Sithichai Chaikriangkrai Lim Ee Seng 3 - Fraser and Neave, Limited • Ordinary Shares • Options to subscribe for shares • Conditional award of restricted shares • Conditional award of performance shares • Conditional award of restricted shares • Conditional award of performance shares • Conditional award of restricted shares • Conditional award of performance shares • Conditional award of restricted shares • Conditional award of performance shares - Frasers Centrepoint Asset Management Ltd • Ordinary Units in Frasers Centrepoint Trust Chia Khong Shoong 3 - Fraser and Neave, Limited • Ordinary shares • Conditional award of restricted shares • Conditional award of performance shares • Conditional award of restricted shares • Conditional award of performance shares • Conditional award of restricted shares • Conditional award of performance shares • Conditional award of restricted shares • Conditional award of performance shares (Year 1) (Year 1) (Year 2) (Year 2) (Year 3) (Year 3) (Year 4) (Year 4) (Year 1) (Year 1) (Year 2) (Year 2) (Year 3) (Year 3) (Year 4) (Year 4) OTHER SECURITIES IN GROUP COMPANIES As at 1 Oct 2012 or Date of Appointment As at 30 Sep 2013 Nil 1 Nil 1 Nil 2 Nil Nil Nil 97,200 2,409,000 97,200 4 135,048 6 177,066 8 127,120 10 186,170 12 116,054 14 Nil Nil Nil Nil 77,615 5 Nil 7 103,282 9 202,122 11 299,547 13 187,892 15 212,558 16 171,764 17 200,000 200,000 28,150 28,150 18 10,666 20 55,500 21 20,000 23 58,500 25 20,000 27 Nil Nil Nil 22,478 19 Nil 7 32,341 22 31,800 24 94,127 26 32,380 28 53,625 29 27,232 30 94 Annual Report 2013 Directors’ Report FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 3. DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES (cont’d) Anthony Cheong Fook Seng 3 - Fraser and Neave, Limited • Ordinary shares • Options to subscribe for shares • Conditional award of restricted shares • Conditional award of performance shares • Conditional award of restricted shares • Conditional award of performance shares • Conditional award of restricted shares • Conditional award of performance shares • Conditional award of restricted shares • Conditional award of performance shares - Frasers Centrepoint Asset Management Ltd • Ordinary Units in Frasers Centrepoint Trust (Year 1) (Year 1) (Year 2) (Year 2) (Year 3) (Year 3) (Year 4) (Year 4) - Frasers Centrepoint Asset Management (Commercial) Ltd • Ordinary Units in Frasers Commercial Trust OTHER SECURITIES IN GROUP COMPANIES As at 1 Oct 2012 or Date of Appointment As at 30 Sep 2013 736,400 2,572,400 33,600 31 32,000 33 55,500 34 20,000 36 58,500 38 20,000 40 Nil Nil Nil Nil 26,830 32 Nil 7 32,341 35 31,800 37 94,127 39 32,380 41 77,294 42 36,434 43 50,000 50,000 24,000 24,000 1 As at date of appointment, i.e. 8 March 2013 2 As at date of appointment, i.e. 7 August 2013 3 Resigned on 25 October 2013 4 Reflects a deemed interest in 97,200 shares in F&N to be released in accordance with the rules of the F&N Restricted Share Plan (“RSP”). 5 Reflects a deemed interest in 77,615 shares in F&N after vesting and adjustment due to capital reduction to be released in accordance with the rules of the RSP. 6 Reflects a deemed interest in up to 135,048 shares in F&N arising from the grant of a conditional award of performance shares under the F&N Performance Share Plan (“PSP”). The actual number of F&N shares to be delivered will range from 0% to 200% of the base award of 67,524 shares, depending on the level of achievement of performance targets set over a three-year performance period. Shares have been released in accordance with the rules of the PSP. 7 8 Reflects a deemed interest in up to 177,066 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP. The actual number of F&N shares to be delivered will range from 0% to 150% of the base award of 118,044 shares, depending on the level of achievement of performance targets set over a two-year performance period. 9 Reflects a deemed interest in 103,282 shares in F&N after vesting and adjustment due to capital reduction to be released in accordance with the rules of the RSP. 10 Reflects a deemed interest in up to 127,120 shares in F&N arising from the grant of a conditional award of performance shares under the PSP. The actual number of F&N shares to be delivered will range from 0% to 200% of the base award of 63,560 shares, depending on the level of achievement of performance targets set over a three-year performance period. 11 Reflects a deemed interest in up to 202,122 shares in F&N arising from the grant of a conditional award of performance shares under the PSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 200% of the adjusted base award of 101,061 shares, depending on the level of achievement of performance targets set over a three-year performance period. 12 Reflects a deemed interest in up to 186,170 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP. The actual number of F&N shares to be delivered will range from 0% to 150% of the base award of 124,113 shares, depending on the level of achievement of performance targets set over a two-year performance period. 13 Reflects a deemed interest in up to 299,547 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 150% of the adjusted base award of 199,698 shares, depending on the level of achievement of performance targets set over a two-year performance period. 14 Reflects a deemed interest in up to 116,054 shares in F&N arising from the grant of a conditional award of performance shares under the PSP. The actual number of F&N shares to be delivered will range from 0% to 200% of the base award of 58,027 shares, depending on the level of achievement of performance targets set over a three-year performance period. 15 Reflects a deemed interest in up to 187,892 shares in F&N arising from the grant of a conditional award of performance shares under the PSP and after adjustment of capital reduction. The actual number of F&N shares to be delivered will range from 0% to 200% of the adjusted base award of 93,946 shares, depending on the level of achievement of performance targets set over a three-year performance period. 16 Reflects a deemed interest in up to 212,558 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 150% of the adjusted base award of 141,705 shares, depending on the level of achievement of performance targets set over a two-year performance period. 17 Reflects a deemed interest in up to 171,764 shares in F&N arising from the grant of a conditional award of performance shares under the PSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 200% of the adjusted base award of 85,882 shares, depending on the level of achievement of performance targets set over a three-year performance period. 95 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Directors’ Report 3. DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES (cont’d) 18 Reflects a deemed interest in 28,150 shares in F&N to be released in accordance with the rules of the RSP. 19 Reflects a deemed interest in 22,478 shares in F&N after vesting and adjustment due to capital reduction to be released in accordance with the rules of the RSP. 20 Reflects a deemed interest in up to 10,666 shares in F&N arising from the grant of a conditional award of performance shares under the PSP. The actual number of F&N shares to be delivered will range from 0% to 200% of the base award of 5,333 shares, depending on the level of achievement of performance targets set over a three-year performance period. 21 Reflects a deemed interest in up to 55,500 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP. The actual number of F&N shares to be delivered will range from 0% to 150% of the base award of 37,000 shares, depending on the level of achievement of performance targets set over a two-year performance period. 22 Reflects a deemed interest in 32,341 shares in F&N after vesting and adjustment due to capital reduction to be released in accordance with the rules of the RSP. 23 Reflects a deemed interest in up to 20,000 shares in F&N arising from the grant of a conditional award of performance shares under the PSP. The actual number of F&N shares to be delivered will range from 0% to 200% of the base award of 10,000 shares, depending on the level of achievement of performance targets set over a three-year performance period. 24 Reflects a deemed interest in up to 31,800 shares in F&N arising from the grant of a conditional award of performance shares under the PSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 200% of the adjusted base award of 15,900 shares, depending on the level of achievement of performance targets set over a three-year performance period. 25 Reflects a deemed interest in up to 58,500 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP. The actual number of F&N shares to be delivered will range from 0% to 150% of the base award of 39,000 shares, depending on the level of achievement of performance targets set over a two-year performance period. 26 Reflects a deemed interest in up to 94,127 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 150% of the adjusted base award of 62,751 shares, depending on the level of achievement of performance targets set over a two-year performance period. 27 Reflects a deemed interest in up to 20,000 shares in F&N arising from the grant of a conditional award of performance shares under the PSP. The actual number of F&N shares to be delivered will range from 0% to 200% of the base award of 10,000 shares, depending on the level of achievement of performance targets set over a three-year performance period. 28 Reflects a deemed interest in up to 32,380 shares in F&N arising from the grant of a conditional award of performance shares under the PSP after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 200% of the adjusted base award of 16,190 shares, depending on the level of achievement of performance targets set over a three-year performance period. 29 Reflects a deemed interest in up to 53,625 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 150% of the adjusted base award of 35,750 shares, depending on the level of achievement of performance targets set over a two-year performance period. 30 Reflects a deemed interest in up to 27,232 shares in F&N arising from the grant of a conditional award of performance shares under the PSP after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 200% of the adjusted base award of 13,616 shares, depending on the level of achievement of performance targets set over a three-year performance period. 31 Reflects a deemed interest in 33,600 shares in F&N to be released in accordance with the rules of the RSP. 32 Reflects a deemed interest in 26,830 shares in F&N after vesting and adjustment due to capital reduction to be released in accordance with the rules of the RSP. 33 Reflects a deemed interest in up to 32,000 shares in F&N arising from the grant of a conditional award of performance shares under the PSP. The actual number of F&N shares to be delivered will range from 0% to 200% of the base award of 16,000 shares, depending on the level of achievement of performance targets set over a three-year performance period. 34 Reflects a deemed interest in up to 55,500 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP. The actual number of F&N shares to be delivered will range from 0% to 150% of the base award of 37,000 shares, depending on the level of achievement of performance targets set over a two-year performance period. 35 Reflects a deemed interest in 32,341 shares in F&N after vesting and adjustment due to capital reduction to be released in accordance with the rules of the RSP. 36 Reflects a deemed interest in up to 20,000 shares in F&N arising from the grant of a conditional award of performance shares under the PSP. The actual number of F&N shares to be delivered will range from 0% to 200% of the base award of 10,000 shares, depending on the level of achievement of performance targets set over a three-year performance period. 37 Reflects a deemed interest in up to 31,800 shares in F&N arising from the grant of a conditional award of performance shares under the PSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 200% of the adjusted base award of 15,900 shares, depending on the level of achievement of performance targets set over a three-year performance period. 38 Reflects a deemed interest in up to 58,500 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP. The actual number of F&N shares to be delivered will range from 0% to 150% of the base award of 39,000 shares, depending on the level of achievement of performance targets set over a two-year performance period. 39 Reflects a deemed interest in up to 94,127 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 150% of the adjusted base award of 62,751 shares, depending on the level of achievement of performance targets set over a two-year performance period. 40 Reflects a deemed interest in up to 20,000 shares in F&N arising from the grant of a conditional award of performance shares under the PSP. The actual number of F&N shares to be delivered will range from 0% to 200% of the base award of 10,000 shares, depending on the level of achievement of performance targets set over a three-year performance period. 41 Reflects a deemed interest in up to 32,380 shares in F&N arising from the grant of a conditional award of performance shares under the PSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 200% of the adjusted base award of 16,190 shares, depending on the level of achievement of performance targets set over a three-year performance period. 42 Reflects a deemed interest in up to 77,294 shares in F&N arising from the grant of a conditional award of restricted shares under the RSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 150% of the adjusted base award of 51,529 shares, depending on the level of achievement of performance targets set over a two-year performance period. 43 Reflects a deemed interest in up to 36,434 shares in F&N arising from the grant of a conditional award of performance shares under the PSP and after adjustment due to capital reduction. The actual number of F&N shares to be delivered will range from 0% to 200% of the adjusted base award of 18,217 shares, depending on the level of achievement of performance targets set over a three-year performance period. Except as disclosed in this report, no director who held office at the end of the financial year had interest in shares, share options, warrants or debentures of the Company, or of related corporations, either at beginning of the financial year or at the date he became a director or at the end of the financial year. 96 Annual Report 2013 Directors’ Report FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 4. DIRECTORS’ CONTRACTUAL BENEFITS Since the end of the previous financial year, no director has received or has become entitled to receive a benefit required to be disclosed by Section 201(8) of the Companies Act, Cap.50 by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which he had a substantial financial interest except as disclosed in the financial statements and in this report, and except that certain directors have employment relations with, or are directors/officers of related corporations and have received remuneration/fees/benefits in those capacities. 5. SHARE OPTIONS The Company does not have any share option scheme in place. Certain directors of the Company are participants of the Fraser and Neave, Limited (“F&N”) Executives’ Share Option Scheme and the F&N Restricted Share Plan and F&N Performance Share Plan. Directors’ interests in shares and share options in F&N are set out in paragraph 3 above. 6. AUDITOR Ernst & Young LLP, Certified Public Accountants, Singapore have expressed their willingness to accept re-appointment as auditors and a resolution proposing their appointment will be submitted at the Annual General Meeting. On behalf of the Board Charles Mak Ming Ying Director Sithichai Chaikriangkrai Director Singapore 12 November 2013 97 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Statement by Directors We, Charles Mak Ming Ying and Sithichai Chaikriangkrai, being two of the Directors of FRASERS CENTREPOINT LIMITED, do hereby state that in the opinion of the Directors: (i) the balance sheets, consolidated profit statement, consolidated statement of comprehensive income, statements of changes in equity, and consolidated cash flow statement together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 30 September 2013 and of the results of the business, changes in equity and cash flow of the Group and the changes in equity of the Company for the year ended 30 September 2013; and (ii) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. On behalf of the Board Charles Mak Ming Ying Director Sithichai Chaikriangkrai Director Singapore 12 November 2013 98 Annual Report 2013 Independent Auditor’s Report TO THE MEMBER OF FRASERS CENTREPOINT LIMITED FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Frasers Centrepoint Limited (the “Company”) and its subsidiaries (the “Group”), which comprise the balance sheets of the Group and the Company as at 30 September 2013, the statements of changes in equity of the Group and the Company and the consolidated profit statement, consolidated statement of comprehensive income and consolidated cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act Cap. 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risk of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated financial statements that give a true and fair view 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 management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and the Company as at 30 September 2013 and the results, changes in equity and cash flow of the Group and the changes in equity of the Company for the year ended on that date. Report on Other Legal and Regulatory Requirements In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act. ERNST & YOUNG LLP Public Accountants and Chartered Accountants Singapore 12 November 2013 99 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Consolidated Profit Statement FOR THE YEAR ENDED 30 SEPTEMBER 2013 REVENUE Cost of sales GROSS PROFIT Other (losses)/income Other items of expenses Operation costs Marketing costs Administrative costs TOTAL COSTS AND EXPENSES TRADING PROFIT Share of results of associates Investment income PROFIT BEFORE INTEREST, FAIR VALUE CHANGE, TAXATION AND EXCEPTIONAL ITEMS Interest income Interest expense Net interest costs PROFIT BEFORE FAIR VALUE CHANGE, TAXATION AND EXCEPTIONAL ITEMS Fair value change on investment properties Share of associates’ fair value change on investment properties PROFIT BEFORE TAXATION AND EXCEPTIONAL ITEMS Exceptional items PROFIT BEFORE TAXATION Taxation PROFIT FOR THE YEAR ATTRIBUTABLE TO: Shareholder of the Company - before fair value change and exceptional items fair value change - - exceptional items Non-controlling interests PROFIT FOR THE YEAR EARNINGS PER SHARE Basic and diluted Group 2013 $’000 2012 $’000 (Restated) 2,052,749 (1,241,094) 1,411,770 (785,398) 811,655 (2,561) 626,372 14,351 (144,771) (60,599) (92,122) (132,188) (84,344) (93,005) (297,492) (309,537) 511,602 59,536 - 331,186 58,475 493 571,138 390,154 18,459 (79,428) (60,969) 510,169 165,883 109,860 785,912 46,409 832,321 (96,583) 735,738 401,080 275,682 45,541 722,303 13,435 735,738 20,242 (80,504) (60,262) 329,892 265,228 71,695 666,815 54,087 720,902 (91,924) 628,978 252,420 337,650 53,193 643,263 (14,285) 628,978 Note 3a 3b 4 5 6 7 8 13 9 10 11 - before fair value change on investment properties and exceptional items - after fair value change on investment properties and exceptional items 53.2¢ 95.9¢ 33.5¢ 85.4¢ The accompanying Notes form an integral part of the Financial Statements. 100 Annual Report 2013 Consolidated Statement of Comprehensive Income FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME, NET OF TAX Items that will be reclassified to profit or loss: Fair value change of cash flow hedges Fair value change of available-for-sale financial assets Foreign currency translation reserve: - exchange difference on consolidation Share of other comprehensive income of associates Realisation of reserves upon change in control: - step-up acquisition of subsidiary - disposal of subsidiaries Other comprehensive income for the year, net of tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO: Shareholder of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME FOR THE YEAR Group 2013 $’000 2012 $’000 (Restated) 735,738 628,978 5,517 (34,900) (17,126) (15,049) - - (61,558) 5,256 34,900 (27,752) 158 12,833 19,711 45,106 674,180 674,084 668,859 5,321 674,180 690,733 (16,649) 674,084 The accompanying Notes form an integral part of the Financial Statements. 101 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Balance Sheets AS AT 30 SEPTEMBER 2013 joint ventures NON-CURRENT ASSETS Investment properties Fixed assets Investments in: - subsidiaries - - associates Financial assets Intangible assets Other assets Other receivables Deferred tax assets CURRENT ASSETS Inventory, at cost Properties held for sale Trade and other receivables Prepaid land costs Other prepayments Financial assets Derivative financial instruments Cash and cash equivalents TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Provision for taxation Derivative financial instruments Loans and borrowings NET CURRENT ASSETS NON-CURRENT LIABILITIES Loans and borrowings Other payables Derivative financial instruments Deferred tax liabilities NET ASSETS SHARE CAPITAL AND RESERVES Share capital Retained earnings Other reserves NON-CONTROLLING INTERESTS TOTAL EQUITY Note Group Company 2013 $’000 2012 $’000 (Restated) 2013 $’000 2012 $’000 13 14 15 16 17 18 19 20 21 22 23 21 18 24 25 26 24 27 27 26 24 22 28 29 3,115,234 31,599 2,821,434 33,337 1,650 1 1,550 2 - - 1,055,983 2,164 64,478 43,200 168,104 2,937 - - 1,223,506 2,166 64,834 42,400 89,708 2,937 1,556,627 500 - 2,148 - - 1,710,382 - 1,561,981 500 - 2,148 - - 1,770,348 - 4,483,699 4,280,322 3,271,308 3,336,529 3,578 4,737,053 302,763 398,033 11,901 - 1,478 506,784 4,175 4,471,239 327,697 - 7,127 60,350 - 1,206,314 5,961,590 6,076,902 - - 562,097 - 49 - 1,478 28,426 592,050 - - 14,967 - 117 60,350 - 564,627 640,061 10,445,289 10,357,224 3,863,358 3,976,590 1,725,158 112,674 3,232 629,135 1,659,544 127,161 10,858 167,798 2,470,199 1,965,361 3,491,391 4,111,541 538,776 11,767 2,163 - 552,706 39,344 533,008 10,093 9,195 2,116 554,412 85,649 7,975,090 8,391,863 3,310,652 3,422,178 1,175,373 1,200,444 3,059 117,928 1,424,727 1,914,751 4,732 91,984 2,496,804 3,436,194 - 725,478 698 - 726,176 - 866,093 2,997 - 869,090 5,478,286 4,955,669 2,584,476 2,553,088 1,083,977 4,363,384 3,725 5,451,086 27,200 5,478,286 1,083,977 3,791,081 57,169 4,932,227 23,442 4,955,669 1,083,977 1,499,588 911 2,584,476 - 2,584,476 1,083,977 430,818 1,038,293 2,553,088 - 2,553,088 NET ASSET VALUE PER ORDINARY SHARE $6.80 $6.11 - - The accompanying Notes form an integral part of the Financial Statements. 102 Annual Report 2013 Statements of Changes in Equity FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 2013 Group Opening balance at 1 October 2012, as previously reported Effects of adopting FRS 12 (Note 2.1(b)) Opening balance at 1 October 2012, as restated Profit for the year Other comprehensive income Net fair value change of cash flow hedges Foreign currency translation Realisation upon disposal of available-for-sale financial assets Share of other comprehensive Attributable to Owners of the Company Equity Attributable to Owners of the Company, Total Total Equity Share Capital Retained Earnings (Note 28) Other Reserves, Total (Note 29) Hedging Reserve Fair Value Adjustment Reserve Foreign Currency Translation Reserve Statutory Reserve Other Reserve Non- controlling Interests $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 4,946,214 4,922,772 1,083,977 3,781,626 57,169 (6,042) 35,136 29,920 303 (2,148) 23,442 9,455 9,455 - 9,455 - - - - - - - 4,955,669 4,932,227 1,083,977 3,791,081 722,303 722,303 735,738 - 57,169 - (6,042) - 35,136 - 29,920 - 303 - (2,148) - 23,442 13,435 5,517 (17,126) 5,278 (8,773) (34,900) (34,900) - - - - - - - - 5,278 (8,773) 5,278 - - - - (8,773) - (34,900) - (34,900) - - - - - - (15,049) 382 (33) (15,507) 109 (53,444) 5,660 (34,933) (24,280) 109 722,303 (53,444) 5,660 (34,933) (24,280) 109 income of associates (15,049) (15,049) Other comprehensive income for the year Total comprehensive income for the year Contributions by and distributions to owners (61,558) (53,444) 674,180 668,859 Dividends (Note 30) (151,268) (150,000) - (150,000) (151,268) (150,000) - (150,000) Total contributions by and distributions to owners Changes in ownership interests in subsidiaries and associates Shares issued to non-controlling interests Redemption of non-controlling interest’s Total changes in ownership interests in subsidiaries and associates Total transactions with owners in their capacity as owners Closing balance at 30 September 2013 preference shares (595) 300 (295) - - - - - - - - - (151,563) (150,000) - (150,000) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 239 (8,353) - - (8,114) 5,321 (1,268) (1,268) 300 (595) (295) (1,563) 5,478,286 5,451,086 1,083,977 4,363,384 3,725 (382) 203 5,640 412 (2,148) 27,200 The accompanying Notes form an integral part of the Financial Statements. 103 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Statements of Changes in Equity FOR THE YEAR ENDED 30 SEPTEMBER 2013 Attributable to Owners of the Company Equity Attributable to Owners of the Company, Total Total Equity $’000 $’000 Share Capital (Note 28) $’000 Retained Earnings $’000 Other Reserves, Total (Note 29) $’000 Hedging Reserve Fair Value Adjustment Reserve Share-based Compensation Reserve Foreign Currency Translation Reserve Statutory Reserve Other Reserve Non- controlling Interests $’000 $’000 $’000 $’000 $’000 $’000 $’000 4,606,593 4,384,277 1,083,977 3,290,746 9,554 (11,473) (214) 1,012 21,128 1,268 (2,167) 222,316 8,111 8,111 - 8,111 - - - - - - - - 4,614,704 4,392,388 1,083,977 3,298,857 643,263 628,978 643,263 - 9,554 - (11,473) - (214) - 1,012 - 21,128 - 1,268 - (2,167) - 222,316 (14,285) 2012 (Restated) Group Opening balance at 1 October 2011, as previously reported Effects of adopting FRS 12 (Note 2.1(b)) Opening balance at 1 October 2011, as restated Profit for the year Other comprehensive income Net fair value change of cash flow hedges Foreign currency translation Fair value change of available-for-sale financial assets Share of other comprehensive income of associates Realisation of reserves due to change in control - Step-up acquisition - Disposal of subsidiaries Other comprehensive income for the year Total comprehensive income for the year Contributions by and distributions to owners Net change in share-based compensation reserve Fair value of restricted share plan Dividends (Note 30) Total contributions by and distributions Changes in ownership interests in subsidiaries and associates Disposal of subsidiaries Shares issued to non-controlling interests Total changes in ownership interests in subsidiaries and associates Total transactions with owners in their capacity as owners Closing balance at 30 September 2012 - - - - - - - 5,745 5,745 (25,877) 34,900 158 12,833 - - - - 19,711 (314) - - 34,900 450 - - - - - (25,877) - - - - - - - 223 (534) 19 - - - 12,833 - (1,157) 21,613 (431) - - (489) (1,875) - - - - 47,470 5,431 35,350 (1,157) 8,792 (965) 19 (2,364) 643,263 47,470 5,431 35,350 (1,157) 8,792 (965) 19 (16,649) 5,256 5,745 (27,752) (25,877) 34,900 34,900 158 158 12,833 12,833 19,711 19,711 45,106 47,470 674,084 690,733 257 145 (1,039) (152,434) (1,039) (150,000) - - - - - - - - - - - - 145 (1,039) (150,000) - - to owners (153,216) (150,894) - (151,039) 145 (191,455) 11,552 (179,903) - - - - - - - - - - - - (333,119) (150,894) - (151,039) 145 - - - - - - - - - - - - - - - - 145 - - 145 - - - 145 - - - - - - - - - - - - - - - - - - - - 112 - (2,434) (2,322) - (191,455) - 11,552 - (179,903) - (182,225) 4,955,669 4,932,227 1,083,977 3,791,081 57,169 (6,042) 35,136 - 29,920 303 (2,148) 23,442 The accompanying Notes form an integral part of the Financial Statements. 104 Annual Report 2013 Statements of Changes in Equity FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Total Equity $’000 Share Capital (Note 28) $’000 Retained Earnings Other Reserves, Total (Note 29) Hedging Reserve Fair Value Adjustment Reserve Asset Revaluation Reserve $’000 $’000 $’000 $’000 $’000 2,553,088 211,656 1,083,977 - 430,818 211,656 1,038,293 - (3,721) - 34,900 - 1,007,114 - 4,632 (34,900) (30,268) 181,388 (150,000) - (150,000) - - - - - - - - - - 4,632 4,632 - (34,900) - (34,900) (30,268) 4,632 (34,900) 211,656 (30,268) 4,632 (34,900) - - - - (150,000) 1,007,114 - (1,007,114) 857,114 (1,007,114) - - - - - - (1,007,114) - (1,007,114) 2,584,476 1,083,977 1,499,588 911 911 2,256,088 404,485 1,083,977 - 176,333 404,485 995,778 - (11,336) - 7,615 34,900 42,515 447,000 (150,000) (150,000) - - - - - - - - - 7,615 7,615 34,900 - 34,900 42,515 7,615 34,900 404,485 42,515 7,615 34,900 (150,000) (150,000) - - - - - - - - - - - 1,007,114 - - - - - - - 2013 Company Opening balance at 1 October 2012 Profit for the year Other comprehensive income Net fair value change of cash flow hedges Realisation upon disposal of available-for-sale financial assets Other comprehensive income for the year Total comprehensive income for the year Contributions by and distributions to owners Dividends (Note 30) Transfer of reserves* Total transactions with owners in their capacity as owners Closing balance at 30 September 2013 2012 Company Opening balance at 1 October 2011 Profit for the year Other comprehensive income Net fair value change of cash flow hedges Fair value change of available-for-sale financial assets Other comprehensive income for the year Total comprehensive income for the year Contributions by and distributions to owners Dividends (Note 30) Total transactions with owners in their capacity as owners Closing balance at 30 September 2012 2,553,088 1,083,977 430,818 1,038,293 (3,721) 34,900 1,007,114 * The transfer from Asset Revaluation Reserve to Retained Earnings relates to the revaluation reserve on investments which crystalised on 1 October 2005 on the adoption of FRS 39 Financial Instruments: Recognition and Measurement. The accompanying Notes form an integral part of the Financial Statements. 105 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Consolidated Cash Flow Statement FOR THE YEAR ENDED 30 SEPTEMBER 2013 CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation and exceptional items Adjustments for: Development profit Allowance for foreseeable losses and impairment for properties held for sale Fair value change on investment properties Share of associates’ fair value change on investment properties Depreciation of fixed assets Net loss on disposal of fixed assets Amortisation of intangible assets Loss on disposal of financial assets Share of results of associates Dividend income from available-for-sale financial assets Mark-to-market gains on derivatives Interest expense Interest income Provision for share-based compensation Exchange difference Operating cash flow before working capital changes Progress payments received from sale of residential units Development expenditure - properties held for sale Payment of land premium Change in prepaid project costs Change in rental deposits Change in inventory Change in trade and other receivables Change in trade and other payables Change in joint venture and associates’ balances Change in related company balances Cash used in operations Interest expense paid Interest income received Income taxes paid Group 2013 $’000 2012 $’000 785,912 666,815 (408,711) 8,452 (165,883) (109,860) 7,655 625 498 - (59,536) - 3,922 79,428 (18,459) - 24,925 148,968 1,282,779 (996,030) (256,054) (398,033) 632 597 (31,687) 65,864 6,585 11,905 (164,474) (78,485) 27,098 (87,017) (281,936) 34,752 (265,228) (71,695) 7,310 564 498 22 (58,475) (493) 4,507 80,504 (20,242) 257 3,199 100,359 1,467,107 (1,008,254) (366,686) 61,519 4,803 (849) 24,511 74,579 (288) (723,927) (367,126) (73,269) 23,321 (140,892) Net cash used in operating activities (302,878) (557,966) The accompanying Notes form an integral part of the Financial Statements. 106 Annual Report 2013 Consolidated Cash Flow Statement FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES CASH FLOW FROM INVESTING ACTIVITIES Purchase of available-for-sale financial assets Proceeds from disposal of available-for-sale financial assets Proceeds from disposal of fixed assets Development expenditure - investment properties under construction Purchase of fixed assets Additions of investment properties Purchase of intangible assets Investment in associates Redemption of Series A CPPUs (Note 17) (Loans to)/repayment by associates Acquisition of subsidiaries, net of cash acquired Disposal of subsidiaries, net of cash disposed of Acquisition of joint venture, net of cash acquired Dividend income from available-for-sale financial assets Dividend income from associates Net cash generated from/(used in) investing activities CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of new shares by subsidiary to non-controlling interests Redemption of non-controlling interest’s preference shares Proceeds from bank loans drawn down Repayment of bank loans Long-term loans (to)/from a related company Payment of dividends to shareholders Group 2013 $’000 2012 $’000 - 60,709 - (13,329) (5,364) (83,784) (143) (34,114) 306,158 (71,688) - - - - 61,068 219,513 300 (595) 591,924 (356,426) (697,045) (151,268) (2) 703 280 (53,232) (10,969) (31,356) - (15,565) - 9,607 (129,040) 55,946 (28,558) 493 59,742 (141,951) 11,552 - 683,586 (234,925) 628,935 (152,434) Net cash (used in)/generated from financing activities (613,110) 936,714 Net change in cash and cash equivalents Cash and cash equivalents at beginning of year (Note 25) Effects of exchange rate on opening cash Cash and cash equivalents at end of year (Note 25) (696,475) 1,202,222 - 236,797 968,249 (2,824) 505,747 1,202,222 The accompanying Notes form an integral part of the Financial Statements. 107 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 These notes form an integral part of the financial statements: 1. CORPORATE INFORMATION Frasers Centrepoint Limited (the “Company”) is a limited liability company. It is a wholly-owned subsidiary of Fraser and Neave, Limited which was also the ultimate holding company up to February 2013. The two companies are domiciled and incorporated in Singapore. In February 2013, TCC Assets Limited, incorporated in the British Virgin Islands, became the ultimate holding company. The registered office and principal place of business of the Company is located at 438 Alexandra Road, #21-00 Alexandra Point, Singapore 119958. The principal activities of the Company are investment holding and provision of management and administrative services to its subsidiaries, joint ventures and associates. The principal activities of the significant subsidiaries are set out in Note 32. Related companies in the financial statements refer to Fraser and Neave, Limited group of companies and the entities related to the shareholders of Fraser and Neave, Limited. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of Preparation The complete set of consolidated financial statements of the Company and its subsidiaries (collectively, the “Group”), are prepared in accordance with Singapore Financial Reporting Standards. The consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are prepared on the historical cost basis except as disclosed in the accounting policies below. The financial statements are presented in Singapore Dollars (“$” or “S$”). All financial information presented in Singapore Dollars has been rounded to the nearest thousand, unless otherwise stated. The Group and the Company have applied the same accounting policies and methods of computation in the preparation of the financial statements for the current financial year and are consistent with those used in the previous financial year, except as disclosed below. (a) Adoption of New and Revised Standards In the current year, the Group has adopted the following standards that are relevant and effective for financial years beginning on or after 1 October 2012: Amendments to FRS 1 Amendments to FRS 12 Presentation of Items of Other Comprehensive Income Deferred Tax: Recovery of Underlying Assets The adoption of the above standards did not result in any substantial change to the Group’s accounting policies nor any significant impact on the financial statements, except for Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets, the effects of which are disclosed in Note 2.1(b). 108 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.1 Basis of Preparation (cont’d) (a) Adoption of New and Revised Standards (cont’d) The principal effects of these changes are as follows: (i) Amendments to FRS 1 Presentation of Items of Other Comprehensive Income The Amendments to FRS 1 is effective for financial periods beginning on or after 1 July 2012. The Amendments to FRS 1 changes the grouping of items presented in OCI. Items that could be reclassified to profit statement at a future point in time would be presented separately from items which will never be reclassified. As the Amendments only affect the presentations of items that are already recognised in OCI, except for changes in presentation, there are no impact on the Group’s financial position or performance. (ii) Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets The Amendments to FRS 12 apply to the measurement of deferred tax liabilities and assets arising from investment properties measured using the fair value model under FRS 40 Investment Property, including investment property acquired in a business combination and subsequently measured using the fair value model. For the purposes of measuring deferred tax, the Amendments introduce a rebuttable presumption that the carrying amount of an investment property measured at fair value will be recovered entirely through sale. The presumption can be rebutted if the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits over time, rather than through sale. The Group provided for deferred tax liabilities for its investment properties on the basis that the carrying amount of the investment properties will be recovered through use. Upon adoption of the Amendments to FRS 12, there is a presumption that the carrying amount of an investment property measured at fair value will be recovered entirely through sale. Accordingly, there will be no deferred tax liability on investment properties in Singapore as there is no capital gains tax in Singapore. (b) Effects of Adopting Amendments to FRS 12 The change in accounting policy has been applied retrospectively. The effects of adoption on the financial statements are as follows: (Decrease)/increase in: Deferred tax liabilities Retained earnings 2.2 Significant Accounting Judgements and Estimates 30.9.2012 $’000 1.10.2011 $’000 (9,455) 9,455 (8,111) 8,111 The preparation of the Group’s consolidated financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities at the balance sheet date. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities and which are not readily apparent from other sources. Estimates and underlying assumptions are revised on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods. 109 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.2 Significant Accounting Judgements and Estimates (cont’d) (a) Key Sources of Estimation Uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: (i) Revenue Recognition and Estimation of Total Development Costs For Singapore property development projects under progressive payment scheme, the Group recognises revenue and cost of sales from partly completed development properties held for sale based on the percentage of completion method. The stage of completion is measured in accordance with the accounting policy stated in Note 2.10. Estimates are required in determining the total estimated development costs which will affect the stage of completion. In making these assumptions, the Group relies on references to information such as current offers and/or recent contracts with contractors and suppliers, estimation on construction and material costs based on historical experience, and the work of professional surveyors and architects. Revenue from partly completed development properties held for sale is as disclosed in Note 3. (ii) Income Taxes The Group has exposure to income taxes in numerous jurisdictions. Significant assumptions are required in determining the group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises the liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amounts of provision for taxation, deferred tax assets and liabilities are as disclosed in the Group’s balance sheet. (iii) Valuation of Completed Investment Properties The Group’s completed investment properties are stated at their estimated market values, which are determined annually based on independent professional valuations. The fair value of completed investment properties is determined using a combination of the Direct Comparison Method, Income Approach and Discounted Cash Flow Analysis. These estimated market values may differ from the prices at which the Group’s completed investment properties could be sold at a particular time, since actual selling prices are negotiated between willing buyers and sellers. Also, certain estimates require an assessment of factors not within the directors’ control, such as overall market conditions. As a result, actual results of operations and realisation of these completed investment properties could differ from the estimates set forth in these financial statements, and the difference could be significant. The carrying amount of completed investment properties is as disclosed in the Group’s balance sheet. (iv) Revaluation of Investment Property under Construction (“IPUC”) IPUC is measured at fair value if it can be reliably determined. If fair value cannot be reliably determined, then IPUC is recorded at cost. The fair value of IPUC is determined using a combination of market comparison and discounted cash flow analysis and investment comparable sales and residual land value methods which considers the significant risks which are relevant to the development process, including but not limited to construction and letting risks. 110 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.2 Significant Accounting Judgements and Estimates (cont’d) (a) Key Sources of Estimation Uncertainty (cont’d) (v) Impairment of Non-financial Assets The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. In particular, allowance for foreseeable losses is made for properties held for sale when the net realisable value has fallen below cost. In arriving at estimates of net realisable values, management considers factors such as current market conditions, recent selling prices of the development properties and comparable development properties less the estimated costs of completion and the estimated costs necessary to make the sale. The allowance for foreseeable losses charged to the profit statement for the year is as disclosed in Note 5. The carrying amounts of properties held for sale is as disclosed in the Group’s balance sheet. (vi) Impairment of Loans and Receivables The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flow are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables is as disclosed in Note 21. The Group’s allowance for doubtful debts as at 30 September 2013 is also disclosed in Note 21. (vii) Impairment of Available-for-sale Financial Assets The Group assesses at each balance sheet date whether there is any objective evidence that any available-for-sale financial assets is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the market condition and whether there is a significant prolonged decline in the values of these financial assets. Where there is objective evidence of impairment for quoted available-for-sale financial assets, the difference between the cost and current fair value is recognised as impairment loss. Where there is objective evidence of impairment for unquoted available-for-sale financial assets, the recoverable value is estimated based on the amount and timing of future cash flow. The carrying amount of the Group’s available-for-sale financial assets is as disclosed in Note 18. (viii) Impairment of Intangible Assets Management contracts with indefinite useful life are tested for impairment at least on an annual basis. Other management contracts are assessed for indicators of impairment at each reporting date and if any such indication exists, the Group makes an estimate of the recoverable values. This requires an estimation of the value in use of the cash-generating unit to which the management contracts are allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of management contracts is as disclosed in Note 19. 111 Annual Report 2013FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.2 Significant Accounting Judgements and Estimates (cont’d) (a) Key Sources of Estimation Uncertainty (cont’d) (ix) Impairment of Investment in Associates The Group assesses at each reporting date whether there is any objective evidence that investments in associates are impaired. Where there is objective evidence of impairment, the recoverable amount is estimated based on the higher of the value-in-use and the fair value less costs to sell. Estimating the value in use requires the Group to make an estimate of the expected future cash flow to be generated by the associates and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of investments in associates is as disclosed in Note 17. There was no impairment of investment in associates for the year (2012: Nil). (x) Provision for Bank Profit Share The Group has recognised a provision for bank profit share as described in Note 26. In determining the amount of the provision, assumptions and estimates are made in relation to discount rates, the expected achievable sales value for each development and the expected timing of sales. The carrying amount of the provision as at 30 September 2013 is $14,036,000 (2012: $18,224,000). (b) Critical Judgements made in Applying Accounting Policies In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have significant effects on the amounts recognised in the consolidated financial statements. (i) Land Appreciation Tax Under the Provisional Regulations on land appreciation tax (“LAT”) implemented upon the issuance of the Provisional Regulations of the People’s Republic of China (the “PRC”) on 27 January 1995, all gains arising from the transfer of real estate property in China effective from 1 January 1994 are subject to LAT at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds of sales of properties less deductible expenditure including amortisation of land use rights, borrowing costs and all property development expenditure. The subsidiaries of the Group engaging in property development business in China are subject to land appreciation tax. However, the implementation of this tax varies amongst China cities and the Group has not finalised its land appreciation tax returns with various tax authorities. Accordingly, significant judgement is required in determining the amount of land appreciation and related taxes. The ultimate tax determination is uncertain during the ordinary course of business. The Group recognises these liabilities based on management’s best estimates. When the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the provisions for land appreciation tax in the period in which such determination is made. (ii) Operating Lease Commitments – Group as Lessor The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties which are leased out on operating leases. (iii) Unquoted Equity Investments The Group’s unquoted equity investments have been stated at cost less impairment because there are no active markets for these investments such that management is of the opinion that their fair values cannot be measured reliably. 112 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.2 Significant Accounting Judgements and Estimates (cont’d) (b) Critical Judgements made in Applying Accounting Policies (cont’d) (iv) Classification of Property The Group determines whether a property is classified as investment property or development property: (a) (b) Investment property comprises land and buildings (principally offices, serviced apartments, commercial and retail properties) which are not occupied substantially for use by, or in the operations of, the Group, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. Development property comprises property that is held for sale in the ordinary course of business. Principally, these are residential and commercial/retail properties that the Group develops and intends to sell before or on completion of construction. In further determining whether a property used as service apartments is classified as investment property or fixed assets, the Group analyses whether the quantum of other income derived from ancillary services rendered in the service apartments is significant as compared to room revenue and total revenue. Based on the analysis for the years presented, the Group has determined that revenue from ancillary services is not significant. 2.3 Functional Currency Items included in the financial statements of each entity in the Group are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to the entity (the “functional currency”). The consolidated financial statements and financial statements of the Company are presented in Singapore dollars, the functional currency of the Company. 2.4 Basis of Consolidation and Business Combinations (a) Basis of Consolidation The financial year of the Company and all its subsidiaries ends on 30 September unless otherwise stated. The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries made up to 30 September. The financial statements of subsidiaries are prepared using consistent accounting policies. Adjustments are made to any dissimilar material accounting policies to conform to the Group’s significant accounting policies. A list of the Company’s significant subsidiaries is shown in Note 32. The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance. 113 Annual Report 2013FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.4 Basis of Consolidation and Business Combinations (cont’d) (a) Basis of Consolidation (cont’d) Basis of Consolidation from 1 January 2010 A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group losses control over a subsidiary, it: - - - - - - - De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost; De-recognises the carrying amount of any non-controlling interest; De-recognises the cumulative translation differences recorded in equity; Recognises the fair value of the consideration received; Recognises the fair value of any investment retained; Recognises any surplus or deficit in profit statement; Re-classifies the Group’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate. Basis of Consolidation prior to 1 January 2010 Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation: - - - Acquisition of non-controlling interests, prior to 1 January 2010, were accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired were recognised in goodwill; Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further losses were attributed to the Group, unless the non-controlling interest had a binding obligation to cover these. Losses prior to 1 January 2010 were not reallocated between non-controlling interest and the owners of the Company; Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying value of such investments as at 1 January 2010 has not been restated. (b) Business Combinations Business Combinations from 1 January 2010 Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired, and liabilities and contingent 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 financial 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. 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, which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in the profit statement or as change to other comprehensive income. If the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity. 114 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.4 Basis of Consolidation and Business Combinations (cont’d) (b) Business Combinations (cont’d) Business Combinations from 1 January 2010 (cont’d) 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 profit statement. The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any), that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation, is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree identifiable net assets. Other components of non-controlling interests are measured on their acquisition date at fair value, unless another measurement basis is required by another FRS. 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 identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out below. In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in the profit statement on the acquisition date. Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company and are presented separately in the consolidated profit statement and consolidated statement of comprehensive income, and within equity in the consolidated balance sheet, separately from the equity attributable to owners of the Company. Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributable to owners of the Company. Business Combinations prior to 1 January 2010 In comparison to the above mentioned requirements, the following differences applied: Business combinations are accounted for using the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest was measured at the proportionate share of the acquiree’s identifiable net assets. Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any additional acquired share of interest did not affect previously recognised goodwill. Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill. 2.5 Investment in Subsidiaries Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. The Group generally has such power when it directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors. In the Company’s balance sheet, investment in subsidiaries is accounted for at cost less any impairment losses. 115 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.6 Joint Ventures A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, where the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control. The Group recognises its interest in the joint venture using the proportionate consolidation method. The Group combines its proportionate share of each of the assets, liabilities, income and expenses of the joint venture with the similar items, line by line, in its consolidated financial statements. The joint venture is proportionately consolidated from the date the Group obtains joint control until the date the Group ceases to have joint control over the joint venture. Adjustments are made in the Group’s consolidated financial statements to eliminate the Group’s share of intragroup balances, income and expenses and unrealised gains and losses on such transactions between the Group and its jointly controlled entity. Losses on transactions are recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment loss. The financial statements of the joint venture are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. Upon loss of joint control, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the former jointly controlled entity upon loss of joint control and the aggregate of the fair value of the retained investment and proceeds from disposal is recognised in profit statement. In the Company’s separate financial statements, interests in joint ventures are carried at cost less impairment losses. A list of the joint ventures is shown in Note 32. 2.7 Associates Associates are entities (not being subsidiaries or joint ventures) in which the Group has significant influence. Associates are equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associates. The Group’s investments in associates are accounted for in the consolidated financial statements using the equity method. Under the equity method, the investment in associates is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates 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 identifiable assets, liabilities and contingent liabilities over the cost of the investment is included as income in the determination of the Group’s share of results of the associate in the period in which the investment is acquired. The profit statement reflects the share of the results of operations of the associates. Where there has been a change recognised in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associates are eliminated to the extent of the interest in the associates. The Group’s share of the profit or loss of its associates is the profit attributable to equity holders of the associate and, therefore is the profit or loss after tax and non-controlling interests in the subsidiaries of associates. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. 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 profit statement. 116 Annual Report 2013Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.7 Associates (cont’d) The most recently available audited financial statements of the associates are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not co-terminous with those of the Group, the share of results is arrived at from the last audited financial statements available and unaudited management financial statements to the end of the accounting period. Consistent accounting policies are applied for like transactions and events in similar circumstances. Upon loss of significant influence 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 significant influence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in profit statement. In the Company’s separate financial statements, interests in associates are carried at cost less impairment losses. A list of the associates is shown in Note 32. 2.8 Other Investments Other investments represent non-derivative financial assets that are designated as available-for-sale. After initial recognition, available-for-sale financial assets are subsequently measured at fair value with gains or losses being recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in the profit statement. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to the profit statement as a reclassification adjustment when the financial asset is derecognised. The fair value of investments that are actively traded in organised financial markets is determined by reference to the relevant stock exchanges’ quoted market bid prices at the close of business on the balance sheet date. For investments where there is no active market, the fair value is determined using valuation techniques, such techniques include using recent arm’s length transactions, reference to the underlying net asset value of the investee companies and discounted cash flow analysis. Investments in equity instruments whose fair value cannot be reliably measured are stated at cost less impairment loss. 2.9 Investment Properties (a) Completed Investment Properties Completed investment properties are held either to earn rental income or for capital appreciation or both and are treated as non-current assets. Completed investment properties are initially recorded at cost, including transaction costs. Subsequent to recognition, completed investment properties are measured at fair value and gains or losses arising from changes in the fair value of completed investment properties are included in the profit statement in the year in which they arise. The fair values are determined annually based on independent professional valuations on the balance sheet date. Completed investment properties are derecognised when either they have been disposed of or when the completed investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of a completed investment property are recognised in the profit statement in the year of retirement or disposal. Transfers are made to or from completed investment properties only when there is a change in use. For a transfer from completed investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to completed investment property, the property is accounted for in accordance with the accounting policy for fixed assets up to the date of change in use. Rental and related income from completed investment properties are recognised on a straight line basis over the lease term commencing on the date from which the lessee is entitled to exercise its right to use the leased asset. 117 Annual Report 2013FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.9 Investment Properties (cont’d) (b) Investment Properties under Construction (“IPUC”) IPUC are initially stated at cost which includes cost of land and construction, related overhead expenditure and financing charges incurred during the period of construction and up to the completion of construction. IPUC are subsequently measured at fair value annually and on completion, with changes in fair values being recognised in the profit statement when fair value can be measured reliably. IPUC are considered completed and are transferred to investment properties when they are ready for their intended use and a Temporary Occupation Permit from the authorities have been obtained. When assessing whether the fair value of IPUC can be determined reliably, the Group considers, among other things: 1. 2. 3. 4. whether the asset is being constructed in a developed liquid market; whether a construction contract with the contractor has been signed; whether the required building and letting permits are obtained; and what percentage of rentable area has been pre-leased to tenants. IPUC for which fair value cannot be determined reliably is measured at cost less impairment. The fair values of IPUC are determined annually based on the opinion of a qualified independent valuer and valuations are performed using methods as deemed appropriate by the valuer. Each IPUC is individually assessed. The estimated value of future assets is based on the expected future income from the project, using risk adjusted yields that are higher than the current yields of similar completed property. The remaining expected costs of completion plus margin are deducted from the estimated future assets value. 2.10 Properties Held for Sale (a) Development Properties Held for Sale Development properties held for sale are properties acquired or being constructed for sale in the ordinary course of business, rather than to be held for the Company’s own use, rental or capital appreciation. Development properties held for sale are held as inventories and are measured at the lower of cost and net realisable value. The costs of development properties held for sale include: - - - Freehold and leasehold rights for land; Amounts paid to contractors for construction; and Borrowing costs, planning and design costs, costs of site preparation, professional fees for legal services, property transfer taxes, construction overheads and other related costs. Non-refundable commissions paid to sales or marketing agents on the sale of real estate units are expensed when incurred. Net realisable value of development properties held for sale is the estimated selling price in the ordinary course of the business, based on market prices at the end of the reporting period and discounted for the time value of money if material, less the estimated costs of completion and the estimated costs necessary to make the sale. 118 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.10 Properties Held for Sale (cont’d) (a) Development Properties Held for Sale (cont’d) Development properties held for sale are stated at cost plus attributable profits less progress billings if their revenue is recognised based on percentage of completion method (see accounting policy for revenue recognition below). Progress billings not yet paid by customers are included within “trade and other receivables”. Development properties held for sale are stated at cost if their revenue is recognised upon completion. Payments received from purchasers prior to completion are included in “trade and other payables” as “progress billings received in advance”. The costs of development properties recognised in profit statement on disposal are determined with reference to the specific costs incurred on the property sold and an allocation of any non-specific costs based on the relative size of the property sold. Development properties held for sale are considered complete upon the issue of Temporary Occupation Permit. When completed, development properties held for sale are transferred to completed properties held for sale. (b) Completed Properties Held for Sale Completed properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land and construction, related overhead expenditure, and financing charges and other net costs incurred during the period of development. Allowance for impairment is made when it is anticipated that the net realisable value has fallen below cost. 2.11 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. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repair are charged to the profit statement. When assets are sold or retired, their cost and accumulated depreciation are removed from the financial statements and any gain or loss resulting from their disposal is included in the profit statement. Fixed assets are depreciated on the straight line method so as to write off the cost of the assets over their estimated useful lives. The principal annual rates of depreciation are as follows: Leasehold land Buildings Equipment, furniture and fittings Motor vehicles Rate per annum Over remaining lease term 2% to 5% 10% to 20% 14.3% The useful lives and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of fixed assets. 119 Annual Report 2013FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.12 Financial Assets Financial assets within the scope of FRS 39 are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate. Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit and loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at each financial year end. Non-derivative financial assets with fixed or determinable payment that are not quoted in an active market are classified as loans and receivables. Such assets are initially recognised at fair value, plus directly attributable costs, and subsequently carried at amortised cost using the effective interest method. Gains and losses are recognised in the profit statement when the loans and receivables are derecognised or impaired, and through the amortisation process. Where the Group has the positive intent and ability to hold debt securities to maturity, they are classified as held-to-maturity investments and stated at amortised cost using the effective interest method less impairment. Gains and losses are recognised in the profit statement when the held-to-maturity investments are derecognised or impaired, and through the amortisation process. Available-for-sale financial assets are those that are not classified in any of the other categories. After initial recognition, available-for-sale financial assets are measured at fair value, with any resultant gain or loss recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit statement. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. 2.13 Receivables Trade and other receivables, including amounts due from subsidiaries, associates, joint ventures, related companies and loans to related companies, are classified and accounted for as loans and receivables under FRS 39. The accounting policy is stated in Note 2.12. An allowance is made for uncollectible amounts when there is objective evidence that the Group will not be able to collect the debt. Bad debts are written off when identified. Further details of accounting policy for impairment of financial assets are stated in Note 2.17. 2.14 Cash and Cash Equivalents Cash on hand and in banks and fixed deposits which are held to maturity are classified and accounted for as loans and receivables under FRS 39. The accounting policy is stated in Note 2.12. For the purpose of Cash Flow Statement, cash and cash equivalents consist of cash on hand and deposits in banks, net of outstanding bank overdrafts. 120 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.15 Financial Liabilities Financial liabilities within the scope of FRS 39 are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. Financial liabilities are recognised initially at fair value plus directly attributable transaction costs. Subsequent to initial recognition, financial liabilities are measured at amortised cost using the effective interest method. Gains and losses are recognised in the profit statement when the liabilities are derecognised, and through the amortisation process. 2.16 Provisions Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. Where the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. 2.17 Impairment (a) Impairment of Non-financial Assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflow that are largely independent of those from other assets or groups of assets. In assessing value in use, the estimated future cash flow are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the profit statement as ‘impairment losses’. The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group’s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses of continuing operations are recognised in profit statement in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. 121 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.17 Impairment (cont’d) (a) Impairment of Non-financial Assets (cont’d) For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised 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. That increased amount cannot 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 profit statement unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal, the depreciation charge 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. The Group does not reverse in a subsequent period, any impairment loss recognised for goodwill. (b) Impairment of Financial Assets The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired. (i) Assets Carried at Amortised Cost For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial 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 loans and receivables or held-to-maturity investments carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flow discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance. The amount of the loss is recognised in the profit statement. When the asset becomes uncollectible, the carrying amount of impaired financial asset 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 financial asset. To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant 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 was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the profit statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. 122 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.17 Impairment (cont’d) (b) Impairment of Financial Assets (cont’d) (ii) Assets Carried at Cost If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flow discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods. (iii) Available-for-sale Financial Assets In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its costs. ‘Significant’ is to be evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost. If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the profit statement, is transferred from equity to the profit statement. Reversals in respect of equity instruments classified as available-for-sale are not recognised in the profit statement. Reversals of impairment losses on debt instruments are reversed through the profit statement, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in the profit statement. 2.18 Income Taxes (a) Current Tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Current taxes are recognised in the profit statement except to the extent that the tax relates to items recognised outside the profit statement, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. (b) 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 financial reporting purposes. Deferred tax liabilities are recognised for all taxable 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 profit nor taxable profit or loss; and In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, 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. 123 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.18 Income Taxes (cont’d) (b) 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 profit 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 profit nor taxable profit or loss; and In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, 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 profit 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 sufficient taxable profit 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 profit 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 to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred tax relating to items recognised outside the profit statement is recognised outside the profit statement. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. (c) 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 in the balance sheet. 2.19 Deferred Income Deferred income relates to sales commission from the sale of residential condominium units which is credited to the profit statement on a straight line basis over a period from signing of the sale and purchase agreement to issuance of the Temporary Occupation Permit and leasing commission from leasing of commercial units which is credited to the profit statement on a straight line basis over a period of 36 months. 124 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.20 Inventories Inventories comprise linens, utensils and hollowares and are stated at the lower of cost and net realisable value. In arriving at the net realisable value, due allowance is made for obsolete items. 2.21 Borrowing Costs Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditure and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 2.22 Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The following specific recognition criteria must also be met before revenue is recognised: (a) Properties Held for Sale Sale of Completed Property Revenue from completed properties is recognised when the risks and rewards of ownership have been transferred to the purchaser either through the transfer of legal title or equitable interest in the properties, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognised only when all the significant conditions are satisfied. Sale of Property under Development The Group recognises revenue on property under development when the significant risks and rewards of ownership have been transferred to the purchasers. For residential development projects under progressive payment scheme in Singapore, whereby the legal terms in the sales contracts result in continuous transfer of work-in-progress to the purchasers, revenue is recognised based on the percentage of completion method. Under the percentage of completion method, profit is brought into profit statement only in respect of finalised sales contracts and to the extent that such profit relates to the progress of construction work. The progress of construction work is measured by the proportion of the construction and related costs incurred to date to the estimated total construction and related costs for each project. For executive condominium projects in Singapore, residential development projects under deferred payment scheme in Singapore and overseas development projects, revenue will be recognised upon the transfer of significant risks and rewards of ownership, which generally coincides with the time the development units are delivered to the purchasers. (b) Rental Income Refer to the policy on Investment Properties. (c) Dividends Dividend income is recognised when the Group’s right to receive the payment is established. (d) Interest Income Interest income is recognised using the effective interest method. (e) Management Fees Revenue is recognised on an accrual basis. 125 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.23 Goodwill Goodwill acquired in a business combination is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is reviewed for impairment, at least annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. 2.24 Intangible Assets Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in profit statement in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite useful lives is recognised in profit statement in the expense category consistent with the function of the intangible asset. Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. (a) Management Contracts Management contracts with finite useful lives are amortised on a straight line basis over an estimated useful life of 8 years. Management contracts with indefinite useful lives are not amortised. (b) Software Software is initially recognised at cost and subsequently carried at cost less accumulated amortisation. 126 Annual Report 2013FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.25 Foreign Currencies (a) Foreign Currency Transactions Transactions in foreign currencies are measured in the respective functional currencies of the group companies at rates of exchange approximating those ruling at transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rates ruling at the balance sheet date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rates ruling at the initial transaction dates. 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 measured. Exchange differences are dealt with in the profit statement. Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance sheet date are recognised in the profit statement except for exchange differences arising on monetary items that form part of the Company’s net investment in foreign subsidiaries, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity and recognised in the consolidated profit statement on disposal of the subsidiary. In the Company’s separate financial statements, such exchange differences are recognised in the profit statement. (b) Foreign Currency Translation The results and financial position of foreign operations are translated into Singapore dollars using the following procedures: - - Assets and liabilities for each balance sheet presented are translated at the closing rate ruling at that balance sheet date; and Income and expenses for each profit statement are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions. All resulting exchange differences are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount of exchange differences recognised in other comprehensive income relating to that foreign operation is recognised in the profit statement as a component of the gain or loss on disposal. 2.26 Employee Benefits (a) Defined Contribution Plan As required by law, the Group makes contributions to state pension schemes in accordance with local regulatory requirements. The pension contributions are recognised as compensation expense in the same period as the employment that gives rise to the contribution. (b) Employee Leave Entitlement Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for leave as a result of services rendered by employees up to the balance sheet date. (c) Share Options Cash-Settled Transactions The Company’s holding company has in place an Executives’ Share Option Scheme for the granting of share options to eligible executives of the Group. The fair values over the vesting period are measured by the holding company and settled in cash by the Group. The fair values are expensed over the period till vesting with recognition of a corresponding liability. 127 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.27 Derivative Financial Instruments The Group uses derivative financial instruments to hedge against risks associated with foreign currency and interest rate fluctuations. Foreign exchange forward contracts are used to hedge its risks associated primarily with foreign currency fluctuations. Interest rate swap contracts are used to hedge its risks associated with interest rate fluctuations. It is the Group’s policy not to trade in derivative financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The changes in fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the profit statement. The Group applies hedge accounting for certain hedging relationships, which qualifies for hedge accounting. For the purpose of hedge accounting, these hedges are classified as cash flow hedges. At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. Such hedges are expected to be highly effective in achieving offsetting changes in cash flow and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated. Hedges which meet the strict criteria for hedge accounting are accounted for as follows: The effective portion of the gain or loss on the hedging instrument is recognised directly as other comprehensive income in hedging reserve, while any ineffective portion is recognised immediately in the profit statement. Amounts recognised as other comprehensive income are transferred to the profit statement when the hedged transaction affects the profit statement, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs. Where the hedged item is the cost of a non-financial asset or non-financial liability, the amounts recognised as other comprehensive income are transferred to the initial carrying amount of the non-financial asset or liability. If the forecast transaction or firm commitment is no longer expected to occur, amounts previously recognised in equity are transferred to the profit statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in other comprehensive income remain in other comprehensive income until the forecast transaction or firm commitment occurs. The fair value of forward foreign currency contracts is calculated by reference to current forward foreign exchange rates for contracts with similar maturity profiles. The fair value of interest rate swap contracts is determined by reference to market values for similar instruments. 2.28 Derecognition of Financial Assets and Liabilities (a) Financial Assets A financial asset is derecognised when the contractual rights to receive cash flow from the asset have expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that has been recognised in other comprehensive income is recognised in the profit statement. (b) Financial Liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or has expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit statement. 128 Annual Report 2013Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.29 Financial Guarantee A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantees are recognised initially at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, financial guarantees are recognised as income in the profit statement over the period of the guarantee. If it is probable that the liability will be higher than the amount initially recognised less amortisation, the liability is recorded at the higher amount with the difference charged to the profit statement. 2.30 Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104. (a) As Lessee Finance leases which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit statement. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as an expense in profit statement on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. (b) As Lessor Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified 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 stated in Note 2.22. Contingent rents are recognised as revenue in the period in which they are earned. (c) Other Long Term Asset Other long term asset relates to the unguaranteed residual value which is the portion of the residual value of the leased asset, the realisation of which by the lessor is not assured or is guaranteed solely by a party related to the lessor. Lessors shall initially recognise such assets in their balance sheets and present them as a receivable at an amount equal to the net investment in the lease. For subsequent measurement, the recognition of finance income shall be based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the lease. The finance income will be allocated over the lease term on a systematic and rational basis. Lease payments relating to the period, excluding cost for services, are applied against the gross investment in the lease to reduce both the principal and the unearned finance income. Estimated unguaranteed residual values used in computing the lessor’s gross investment in a lease are reviewed regularly. If there has been a reduction in the estimated unguaranteed residual value, the income allocation over the lease term is revised and any reduction in respect of amounts accrued is recognised immediately. 129 Annual Report 2013FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 2.31 Exceptional Items Exceptional items are items of income and expense of such size, nature or incidence that their disclosure is relevant to explain the performance of the Company and Group for the year. 2.32 Share Capital and Share Issuance Expenses Proceeds from issuance of ordinary shares and redeemable preference shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of such shares are deducted against share capital. 2.33 Related Parties A related party is defined as follows: (a) A person or a close member of that person’s family is related to the Group and the Company if that person: (i) Has control or joint control over the Company; (ii) Has significant influence over the Company; or (iii) Is a member of the key management personnel of the Group or Company or of a parent of the Company. (b) An entity is related to the Group and the Company if any of the following conditions applies: (i) (ii) The entity and the Company 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) One entity is a joint venture of a third entity and the other entity is an associate of the third entity; (v) The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company; (vi) The entity is controlled or jointly controlled by a person identified in (a); (vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). 130 Annual Report 2013Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 3a. REVENUE Properties held for sale - - recognised on completed contract method recognised on percentage of completion method Rent and related income Management fee income Others 3b. COST OF SALES Properties held for sale 4. OTHER (LOSSES)/INCOME Fair value loss on foreign currency forward contracts Exchange gain Loss on disposal of fixed assets Compensation income from settlement of litigation Others Group 2013 $’000 2012 $’000 769,310 872,043 457,064 575,519 1,641,353 1,032,583 334,983 64,926 11,487 284,429 80,970 13,788 2,052,749 1,411,770 Group 2013 $’000 2012 $’000 (1,241,094) (785,398) Group 2013 $’000 (3,922) 1,899 (625) - 87 (2,561) 2012 $’000 (224) 8,132 (564) 6,749 258 14,351 131 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 5. TRADING PROFIT Trading profit is stated after crediting: Write-back of allowance for doubtful trade receivables (Note 21) Write-back of allowance for impairment for completed properties held for sale and charging: Allowance for foreseeable losses for properties held for sale Allowance for impairment for completed properties held for sale Allowance for doubtful trade receivables (Note 21) Depreciation of fixed assets (Note 14) Amortisation of intangible assets (Note 19) Audit fees paid to: - auditors of the Company - other auditors Non-audit fees paid to: - auditors of the Company - other auditors Property tax Staff costs Defined contribution plans Employee share-based expense 6. INVESTMENT INCOME Dividend income - available-for-sale financial assets 7. INTEREST INCOME Interest income from loans and receivables immediate holding company - - related companies - non-controlling interest - fixed deposits and bank balances Interest income from available-for-sale assets - quoted non-equity investments Interest income accretion from other long term asset (Note 20) Interest rate swaps - realised 132 Group 2013 $’000 2012 $’000 2,041 137 8,589 - 2,556 7,655 498 535 924 827 1,052 20,114 66,571 5,053 5,384 1,481 - 24,799 9,953 2,486 7,310 498 578 1,425 156 1,017 19,047 59,498 4,059 5,115 Group 2013 $’000 2012 $’000 - 493 Group 2013 $’000 2012 $’000 466 3,414 6,382 6,666 16,928 290 800 441 - - 4,830 11,995 16,825 2,017 1,400 - 18,459 20,242 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 8. INTEREST EXPENSE Interest expense - - loans and borrowings related companies Interest rate swaps - unrealised 9. EXCEPTIONAL ITEMS Gain on disposal of financial assets Negative goodwill on acquisition of: - a subsidiary - an associate Gain on disposal of subsidiaries Loss on step acquisition of subsidiary Loss on redemption of quoted non-equity investments Write-back of over-provision of bank profit share Share of associates’ exceptional items 10. TAXATION Based on profit for the year: Current taxation Withholding tax Deferred taxation Over-provision in prior years: Current taxation Deferred taxation Utilisation of previously unrecognised tax losses Current taxation Group 2013 $’000 2012 $’000 (21,291) (57,439) (78,730) (23,664) (56,840) (80,504) (698) - (79,428) (80,504) Group 2013 $’000 2012 $’000 35,260 - - 1,162 - - (622) 4,337 6,272 46,409 1,086 5,020 35,632 (12,833) - 4,469 20,713 54,087 Group 2013 $’000 2012 $’000 (Restated) 57,996 3,941 38,582 67,401 5,130 35,049 100,519 107,580 (3,163) (773) (3,936) - 96,583 (10,340) (1,985) (12,325) (3,331) 91,924 133 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 10. TAXATION (cont’d) A reconciliation of the statutory tax rate to the Group’s effective tax rate applicable to profit before taxation and non-controlling interests for the years ended 30 September is as follows: Singapore statutory rate Income not subject to tax Expenses not deductible for tax purposes Utilisation of previously unrecognised tax losses Over-provision in prior years Deferred tax benefits on losses not recognised Effect of tax losses not recognised Effect of different tax rates of other countries Tax effect of FRS 40 fair value adjustments Withholding tax Transfer of losses under group relief Others Effective tax rate Group 2013 % 2012 % (Restated) 17.0 (1.5 ) 1.4 (1.1 ) (0.5 ) 0.8 0.1 0.4 (5.6 ) 0.5 (0.2 ) 0.3 11.6 17.0 (2.6 ) 2.6 (0.4 ) (1.7 ) 4.6 0.2 (0.2 ) (8.0 ) 0.7 (0.2 ) 0.8 12.8 During the current year, in relation to Year of Assessment (“YA”) 2013, certain subsidiaries in Singapore have transferred losses of $61,721,000 (YA 2012: $7,654,000) to set off against the taxable income of other companies in the Group. During the current year, tax benefits of $1,933,000 were recognised on the tax losses utilised under the Singapore group relief system as compared to net tax benefits of $1,423,000 recognised in the last financial year in relation to prior assessment years. Tax benefits of $12,827,000 (2012: $4,267,000) arising from the utilisation of group relief have not been recognised as they are subject to compliance with the relevant tax legislation governing group relief and agreement of the Inland Revenue Authority of Singapore. In the United Kingdom, the 2012 Budget on 21 March 2012 announced that the UK corporation tax rate will reduce to 22% by 2014. A reduction in the rate from 26% to 25% (effective from 1 April 2012) was substantively enacted on 5 July 2011, and further reductions to 24% (effective from 1 April 2012) and 23% (effective from 1 April 2013) were substantively enacted on 26 March 2012 and 3 July 2012, respectively. As at 30 September 2013, certain subsidiaries have unutilised tax losses of approximately $190,599,000 (2012: $194,748,000) available for set off against future taxable profits and taxable capital gains respectively. The use of these tax losses is subject to certain statutory requirements being met. 134 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 11. EARNINGS PER SHARE Basic and diluted earnings per share is computed by dividing the Group’s attributable profit (net of preference dividends paid) by the weighted average number of ordinary shares in issue during the year: Group profit attributable to shareholder of the Company - before fair value change and exceptional items Attributable profit after fair value change and exceptional items Group 2013 $’000 2012 $’000 (Restated) 401,080 252,420 722,303 643,263 No. of Shares ‘000 ‘000 Weighted average number of ordinary shares in issue 753,292 753,292 Basic and diluted earnings per share - before fair value change and exceptional items - after fair value change and exceptional items 53.2¢ 95.9¢ 33.5¢ 85.4¢ There are no potential dilutive ordinary shares in existence for the years presented. 12. SEGMENT INFORMATION The Group’s operating businesses are organised and managed separately according to the nature of activities. The Group’s operating business segments are namely investment properties, REIT, development properties, serviced residences and corporate and others. Serviced residences comprise service apartments and related management consultancy services. The Group operates in seven main geographical areas, namely, Singapore, Australia, United Kingdom, China, Thailand and others. Geographical segment revenue is based on geographical location of the Group’s customers. Geographical segment assets is based on geographical location of the Group’s assets. Segment accounting policies are the same as the policies described in Note 2. Inter-segment sales are based on terms agreed between the related companies. 135 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 12. SEGMENT INFORMATION (cont’d) Year ended 30 September 2013 The following table presents financial information regarding business segments: Business segment Investment Properties $’000 Development Properties $’000 REIT $’000 Hospitality $’000 Corporate & Others $’000 Eliminations $’000 Group $’000 Revenue - external Revenue - inter-segment Revenue - intra-segment 136,224 2,346 - - - - 1,682,379 - - 183,833 484 9,661 50,313 38,660 15,824 - 2,052,749 - - (41,490) (25,485) Total revenue 138,570 - 1,682,379 193,978 104,797 (66,975) 2,052,749 Subsidiaries and joint ventures Associates PBIT * Interest income Interest costs Profit before fair value change, taxation and exceptional items Fair value change on 63,032 - - 54,452 375,454 3,923 69,658 - 63,032 54,452 379,377 69,658 3,458 1,161 4,619 - - - 511,602 59,536 571,138 18,459 (79,428) 510,169 investment properties 129,960 - - 35,923 - - 165,883 Share of associates’ fair value change on investment properties Profit before taxation and exceptional items Exceptional items Profit before taxation Taxation Profit for the year Assets Tax assets Bank deposits and cash balances Total assets Liabilities Loans and borrowings Tax liabilities Total liabilities Other segment information Capital expenditure Depreciation Allowance for foreseeable losses Write-back of allowance for impairment Negative goodwill 136 - 107,771 - - 2,089 - 109,860 2,049,059 910,897 4,943,374 1,777,091 255,147 250,240 - 1,620,576 276,872 784,205 24,062 139 - - - - - - - 1,162 101 308 77,157 6,480 13,385 770 8,589 (137) - - - - - - - 785,912 46,409 832,321 (96,583) 735,738 - 9,935,568 2,937 506,784 10,445,289 - 2,931,893 1,804,508 230,602 4,967,003 - - 114,705 7,697 - 8,589 - - (137) 1,162 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 12. SEGMENT INFORMATION (cont’d) Year ended 30 September 2013 (cont’d) Business segment (cont’d) Investment Properties $’000 Development Properties $’000 REIT $’000 Hospitality $’000 Corporate & Others $’000 Eliminations $’000 Group $’000 Attributable profit before exceptional items Exceptional items 176,147 - 156,927 5,512 281,908 3,470 68,754 - (6,974) 36,559 - - 676,762 45,541 Attributable profit 176,147 162,439 285,378 68,754 29,585 - 722,303 The following table presents financial information regarding geographical segments: Geographical segment Singapore $’000 Australia $’000 UK $’000 China $’000 Thailand $’000 Others(1) $’000 Group $’000 Total revenue PBIT * 1,583,514 499,352 187,105 4,230 81,321 18,465 157,409 29,552 20,328 7,896 23,072 11,643 2,052,749 571,138 Assets Tax assets Bank deposits and cash balances Total assets Liabilities Loans and borrowings Tax liabilities Total liabilities Other segment information Capital expenditure Depreciation Allowance for foreseeable losses Write-back of allowance for impairment Negative goodwill 6,301,148 1,614,908 765,271 937,120 87,027 230,094 9,935,568 2,937 506,784 10,445,289 2,133,113 378,160 211,224 163,444 8,298 37,654 2,931,893 1,804,508 230,602 4,967,003 26,642 2,298 61,375 1,639 26,255 2,011 184 1,148 - 8,589 - - 1,162 - - (137) - - - - 1 4 - - - 248 597 114,705 7,697 - - - 8,589 (137) 1,162 * PBIT - Profit before interest, fair value change, taxation and exceptional items. (1) Others - New Zealand, Vietnam, Philippines, Indonesia and Malaysia. 137 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 12. SEGMENT INFORMATION (cont’d) Year ended 30 September 2012 (Restated) The following table presents financial information regarding business segments: Business segment Investment Properties $’000 Development Properties $’000 REIT $’000 Hospitality $’000 Corporate & Others $’000 Eliminations $’000 Group $’000 Revenue - external Revenue - inter-segment Revenue - intra-segment 149,673 2,423 - - - - 1,068,983 - - 130,857 371 6,520 62,257 35,603 14,609 - 1,411,770 - - (38,397) (21,129) Total revenue 152,096 - 1,068,983 137,748 112,469 (59,526) 1,411,770 73,604 - - 55,772 192,777 1,655 39,138 1,007 26,160 41 73,604 55,772 194,432 40,145 26,201 Subsidiaries and joint ventures Associates PBIT * Interest income Interest costs Profit before fair value change, taxation and exceptional items Fair value change on investment properties 179,773 - - 85,455 - 58,008 - 13,687 - - Share of associates’ fair value change on investment properties Profit before taxation and exceptional items Exceptional items Profit before taxation Taxation Profit for the year Assets Tax assets Bank deposits and cash balances Total assets Liabilities Loans and borrowings Tax liabilities Total liabilities 1,597,332 1,113,018 4,737,389 1,464,286 235,948 263,732 301,664 2,049,774 206,827 767,888 Other segment information Capital expenditure Depreciation Allowance for foreseeable losses (net) Allowance for impairment Negative goodwill 29,145 80 - - - 138 - - - - 345 1,299 39,761 5,190 1,623 741 24,799 9,953 - - 5,020 - 1,086 - - - - - - 331,679 58,475 390,154 20,242 (80,504) 329,892 - 265,228 - 71,695 666,815 54,087 720,902 (91,924) 628,978 - 9,147,973 2,937 1,206,314 10,357,224 - 3,589,885 1,592,525 219,145 5,401,555 - - - - - 70,874 7,310 24,799 9,953 6,106 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 12. SEGMENT INFORMATION (cont’d) Year ended 30 September 2012 (Restated) (cont’d) Business segment (cont’d) Investment Properties $’000 Development Properties $’000 REIT $’000 Hospitality $’000 Corporate & Others $’000 Eliminations $’000 Group $’000 Attributable profit before exceptional items Exceptional items 227,307 - 109,024 24,987 144,096 39,207 112,697 (11,001) (3,054) - Attributable profit 227,307 134,011 183,303 101,696 (3,054) - - 590,070 53,193 - 643,263 The following table presents financial information regarding geographical segments: Geographical segment Singapore $’000 Australia $’000 UK $’000 China $’000 Thailand $’000 Others(1) $’000 Group $’000 Total revenue PBIT * 1,017,720 350,953 89,556 (50,009) 37,848 9,654 236,105 70,399 6,832 2,299 23,709 6,858 1,411,770 390,154 Assets Tax assets Bank deposits and cash balances Total assets Liabilities Loans and borrowings Tax liabilities Total liabilities 5,877,585 1,409,585 717,956 813,844 95,348 233,655 9,147,973 2,937 2,690,637 567,013 120,394 160,207 9,032 42,602 3,589,885 1,592,525 219,145 5,401,555 1,206,314 10,357,224 Other segment information Capital expenditure Depreciation Allowance for foreseeable losses (net) Allowance for impairment Negative goodwill 58,100 2,027 5,266 2,052 (13,752) - 5,020 36,898 9,703 - 6,699 1,393 - 250 1,086 468 1,254 - - - 9 3 - - - 332 581 70,874 7,310 1,653 - - 24,799 9,953 6,106 * PBIT - Profit before interest, fair value change, taxation and exceptional items. (1) Others - New Zealand, Vietnam, Philippines, Indonesia and Malaysia. 139 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 13. INVESTMENT PROPERTIES Group Balance Sheet At Cost At 1 October 2011 Currency re-alignment Acquisition of subsidiaries Disposal of subsidiaries Additions Fair value change At 30 September 2012 and 1 October 2012 Currency re-alignment Transfer upon completion Additions Fair value change At 30 September 2013 Profit Statement Rental income from completed investment properties: - Minimum lease payments - Contingent rent based on tenants’ turnover Completed Investment Properties $’000 Investment Properties under Construction $’000 Total Investment Properties $’000 2,201,802 (21,335) 266,688 (235,402) 31,356 257,472 2,500,581 15,470 105,566 83,784 165,883 259,865 - - - 53,232 7,756 320,853 - (105,566) 28,663 - 2,461,667 (21,335) 266,688 (235,402) 84,588 265,228 2,821,434 15,470 - 112,447 165,883 2,871,284 243,950 3,115,234 2013 $’000 2012 $’000 229,995 2,894 232,889 203,809 2,491 206,300 Direct operating expenses (including repairs and maintenance) arising from: - Rental generating properties 85,933 79,824 Company Balance Sheet At Cost At 1 October 2011, 30 September 2012 and 1 October 2012 Fair value change At 30 September 2013 Completed Investment Properties $’000 1,550 100 1,650 140 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 13. INVESTMENT PROPERTIES (cont’d) (a) Completed Investment Properties Completed investment properties comprise service residences and commercial properties that are leased mainly to third parties under operating leases (Note 38). Completed investment properties are stated at fair value which has been determined based on valuations performed at balance sheet date. Valuations are performed by accredited independent valuers with recognised and relevant professional qualification and with recent experience in the location and category of the properties being valued. The valuations are based on open market values on the as-is basis and were prepared primarily using the Direct Comparison Method, Income/Investment Approach and Discounted Cash Flow Analysis. In relying on the valuation reports, management has exercised its judgement and is satisfied that the valuation methods and estimates are reflective of current market conditions. Independent professional valuations were carried out by the following valuers: Country Singapore United Kingdom Australia Philippines Vietnam Indonesia China 2013 Valuers 2012 Valuers Knight Frank Pte Ltd Savills Commercial Limited CBRE Valuations Pty Limited Asian Appraisal Company, Inc. Colliers International KJPP Rengganis, Hamid & Rekan Savills Real Estate Valuation (Beijing) Company Knight Frank Pte Ltd Savills Commercial Limited CBRE Valuations Pty Limited Asian Appraisal Company, Inc. DTZ Debenham Tie Leung (Vietnam) Co. Ltd KJPP Rengganis, Hamid & Rekan Savills Commercial Limited Completed investment properties amounting to Nil (2012: $268,988,000) are secured for credit facilities with banks. (b) Investment Properties under Construction Investment properties under construction (“IPUC”) are stated at fair value which has been determined based on valuations performed at balance sheet date. Valuations are performed by accredited independent valuers with recognised and relevant professional qualification and with recent experience in the location and category of the properties being valued. The valuation is prepared on an ungeared basis. The fair value of IPUC is determined using a combination of Capitalisation Approach, Discounted Cash Flow Analysis and Residual Land Value Method, where appropriate. In arriving at their estimates of market value, the valuers have used their market knowledge and professional judgement and not only relied on historical transactional comparables. Country Singapore Singapore 2013 Valuers Knight Frank Pte Ltd - 2012 Valuers Knight Frank Pte Ltd CKS Property Consultants Pte Ltd IPUC amounting to approximately $243,950,000 (2012: $320,853,000) has been mortgaged to the bank as securities for bank facilities. 141 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 14. FIXED ASSETS Group At Cost At 1 October 2011 Currency re-alignment Acquisition of subsidiaries Disposal of subsidiaries Additions Disposals/write-offs Other movement At 30 September 2012 and 1 October 2012 Currency re-alignment Additions Disposals/write-offs At 30 September 2013 Accumulated Depreciation At 1 October 2011 Currency re-alignment Acquisition of subsidiaries Disposal of subsidiaries Charge for the year 2012 Disposals/write-offs Other movement At 30 September 2012 and 1 October 2012 Currency re-alignment Charge for the year 2013 Disposals/write-offs At 30 September 2013 Net Book Value At 30 September 2013 At 30 September 2012 Equipment, Furniture and Fittings $’000 Buildings $’000 Motor Vehicles $’000 298 (11) - (287) - - - - - - - - 298 (11) - (287) - - - - - - - - - - 60,054 (272) 8,260 (1,690) 10,962 (8,257) (1,913) 67,144 682 5,251 (2,299) 70,778 30,410 (115) 5,734 (1,609) 7,251 (7,302) (287) 34,082 (532) 7,601 (1,674) 39,477 31,301 33,062 1,785 (43) - (410) 7 (277) - 1,062 24 113 - 1,199 1,315 (32) - (213) 106 (389) - 787 18 96 - 901 298 275 Total $’000 62,137 (326) 8,260 (2,387) 10,969 (8,534) (1,913) 68,206 706 5,364 (2,299) 71,977 32,023 (158) 5,734 (2,109) 7,357 (7,691) (287) 34,869 (514) 7,697 (1,674) 40,378 31,599 33,337 142 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 14. FIXED ASSETS (cont’d) Company At Cost At 1 October 2011, 30 September 2012, 1 October 2012 and 30 September 2013 Accumulated Depreciation At 1 October 2011 Charge for the year 2012 At 30 September 2012 and 1 October 2012 Charge for the year 2013 At 30 September 2013 Net Book Value At 30 September 2013 At 30 September 2012 Equipment, Furniture and Fittings $’000 53 50 1 51 1 52 1 2 The depreciation charge for the year is included in the financial statements as follows: Charged to profit statement (Note 5) Capitalised in properties held for sale 15. INVESTMENTS IN AND BALANCES WITH SUBSIDIARIES Group Company 2013 $’000 7,655 42 7,697 2012 $’000 7,310 47 7,357 2013 $’000 2012 $’000 1 - 1 1 - 1 Investments in subsidiaries Unquoted shares, at cost Allowance for impairment Company 2013 $’000 2012 $’000 1,637,117 (80,490) 1,642,471 (80,490) 1,556,627 1,561,981 143 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 15. INVESTMENTS IN AND BALANCES WITH SUBSIDIARIES (cont’d) Balances with subsidiaries Amounts due from subsidiaries - - interest free interest bearing Amounts due to subsidiaries interest free - Net balances with subsidiaries Note 21 26 Company 2013 $’000 2012 $’000 722,534 1,549,942 643,943 1,099,843 2,272,476 1,743,786 (938,299) (1,084,490) 1,334,177 659,296 Amounts due from subsidiaries are non-trade related, unsecured and payable in cash. In respect of interest-bearing amounts, interest of between 1.3% to 2.8% (2012: between 0.5% to 2.8%) per annum was charged. Amounts due to subsidiaries are non-trade related, unsecured and payable in cash. Balances which are payable on demand have been classified as current while balances with no fixed terms of repayment are not expected to be repaid within the next 12 months and have been classified as non-current. Refer to disclosures in Notes 21 and 26 respectively. Details of significant subsidiaries are included in Note 32. (a) Incorporation/Constitution of Subsidiaries The following subsidiaries of the Group and Company are incorporated/constituted during the financial year: Subsidiaries of the Group Incorporated in Date of Incorporation Paid-up Capital Group’s Effective Interest FCL Admiralty Pte. Ltd. Frasers Kensington Holdings Pty Ltd Frasers Kensington Land Pty Ltd Frasers Kensington Development Pty Ltd Frasers Brisbane Management Pty Ltd Frasers Brisbane Apartments Pty Ltd Frasers Brisbane Trust FC North Gem Trustee Pte. Ltd. North Gem Trust Singapore Australia Australia Australia Australia Australia Australia Singapore Singapore 9 November 2012 3 April 2013 3 April 2013 3 April 2013 12 June 2013 12 June 2013 13 June 2013 2 September 2013 4 September 2013 S$1,000,000 A$2 A$2 A$2 A$1 A$1 A$42,161,295 S$2 S$2 70% 75% 75% 75% 100% 100% 100% 100% 100% 144 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 15. INVESTMENTS IN AND BALANCES WITH SUBSIDIARIES (cont’d) (b) Acquisition of Subsidiaries On 11 September 2012, Fairbriar Residential Investment Partnership (“FRIP”), a 32% held associate, completed the buy- out of three out of four partners in its partnership. As FRIP’s sole business is the operation of the serviced apartments, Fraser Suites Kensington, the buy-out was based on the fair valuation of this property of £92.0 million as at August 2012 and resulted in cash of £56.3 million being paid out to the three partners. Consequent to the buy-out, FCL (Fraser) Pte Ltd, being the sole remaining partner, controls 100% of the shareholding interest in FRIP. As FCL (Fraser)’s share of the fair value of FRIP’s net assets remains the same before and after the acquisition, no gain or loss is recognised in the profit statement in relation to the re-measurement to fair value of any retained interest. Upon the gain in control in FRIP, the cumulative exchange differences in respect of the net assets of FRIP of $12.8 million has been reclassified from equity to the profit statement, and disclosed under exceptional items as loss on acquisition of subsidiaries (Note 9). The fair value of the identifiable assets and liabilities of Queensgate Gardens, 39 QGG and FRIP as at the respective acquisition dates were: Investment properties Fixed assets Trade and other receivables Cash and cash equivalents Trade and other payables Bank borrowings Provision for taxation Total identifiable net assets at fair value Cumulative differences in respect of the net assets of the subsidiary reclassified from equity on gain of control of subsidiary Loss on step-acquisition of subsidiary Negative goodwill arising from acquisition Investment in associate previously accounted for Total consideration Cash of subsidiaries acquired Cash out flow on acquisition of subsidiaries Transaction Costs Fair Value Recognised on Acquisition $’000 266,688 2,526 3,919 11,629 284,762 (16,501) (82,627) (1) (99,129) 185,633 12,833 (12,833) (1,086) 184,547 (43,878) 140,669 (11,629) 129,040 Transaction costs related to the acquisitions of $514,000 have been recognised in the “Administrative costs” in the Group’s profit statement for the year ended 30 September 2012. 145 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 15. INVESTMENTS IN AND BALANCES WITH SUBSIDIARIES (cont’d) (b) Acquisition of Subsidiaries (cont’d) Impact of the Acquisition on Profit Statement From the acquisition date, Queensgate Gardens and 39 QGG have contributed $6,491,000 of revenue and $2,120,000 to the Group’s profit for the year 2012. If the business combination had taken place at the beginning of the year, the revenue from continuing operations would have been $6,906,000 and the Group’s profit from continuing operations, net of tax would have been $2,122,000. The Group has equity accounted for its share of FRIP’s results, share of fair value change on investment properties and exceptional item, from the beginning of the year to the date of acquisition, of $1,007,000, $13,687,000 and $746,000, respectively. If the business combination had taken place at the beginning of the year, the revenue from FRIP’s operations would have been $9,140,000 and the Group’s profit from FRIP’s operations net of tax would have been $48,010,000. (c) Disposal of Subsidiaries On 14 September 2012, the Company entered into a sale agreement to dispose of its entire 56% interest in shares in Frasers Property (China) Limited (“FPCL”) comprising 3,847,509,895 ordinary shares, for a total consideration of HK $1.654 billion (S$261 million). The consideration was received on behalf by its immediate holding company. The disposal was completed on 28 September 2012, on which date, control of FPCL was passed to the acquirer. Subsequent to the disposal, the Company’s retained interests in certain former subsidiaries were reclassified to associates due to loss in control. The value of assets and liabilities of the subsidiaries recorded in the consolidated financial statements on the respective dates of disposal, and the cash flow effects are disclosed below: Fixed assets Investment properties Investment in available-for-sale financial assets Current assets Current liabilities Non-current liabilities Non-controlling interests Carrying value of assets disposed Provision for cost of disposal Cumulative exchange differences in respect of the net assets of the subsidiaries reclassified from equity on loss of control of subsidiaries Gain on disposal/dilution of interest in subsidiaries Fair value of retained interest reclassified to investment in associates Total consideration Consideration satisfied by other receivables Cash of subsidiaries disposed of/diluted Cash inflow on disposal/dilution of subsidiaries Group 2012 $’000 278 235,402 1,421 541,125 (77,215) (235,963) 465,048 (191,455) 273,593 100 21,613 35,631 330,937 (69,316) 261,621 - (205,675) 55,946 146 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 16. INVESTMENTS IN AND BALANCES WITH JOINT VENTURES Investments in joint ventures Unquoted investments, at cost Balances with joint ventures Loans (from)/to joint ventures Non-current Current FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Note 21 26 Company 2013 $’000 2012 $’000 500 500 - (50,568) (50,568) 39,765 - 39,765 Non-current loans to joint ventures were repayable between 3 and 5 years. Loans to joint ventures bore interest which ranged between 1.0% to 4.6% (2012: 1.3% to 4.6%) per annum. These loans to joint ventures were unsecured and payable in cash. Loans from joint ventures are interest free, unsecured and repayable in cash on demand. Loans to joint ventures shall be repaid as follows: (a) only after full repayment of any bank or third party loans; (b) only after full payment of all regulatory requirements in respect of the Project; (c) (d) (e) no loan shall be repaid to any joint venture parties in full unless the other loans then outstanding and owed to the other joint venture parties shall be repaid in full at the same time; no loan shall be repaid to any joint venture parties in part unless all loans then outstanding shall be proportionately reduced by the proposed repayment; the Project Development Committee of the joint venture company shall review the cash flow of the joint venture company from time to time to decide on the timing and quantum of the repayment. Details of joint ventures are included in Note 32. 147 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 16. INVESTMENTS IN AND BALANCES WITH JOINT VENTURES (cont’d) On 18 January 2012, the Group acquired Vacaron Company Sdn Bhd (“Vacaron”) from a related company at a consideration of $206,000. The fair value of the identifiable assets and liabilities of Vacaron for the purpose of the cash flow for the period ended 30 September 2012 were: Properties held for sale Cash and cash equivalents Trade and other payables Total identifiable net assets at fair value Negative goodwill arising from acquisition Cash of subsidiaries acquired Net cash out flow on acquisition of joint venture Fair Value Recognised on Acquisition $’000 28,619 226 28,845 (65) 28,780 4 28,784 (226) 28,558 The aggregate amounts of current assets, non-current assets, current liabilities, non-current liabilities, income and expenses related to the Group’s interests in the joint ventures are as follows: Assets and Liabilities Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Results Revenue Fair value change on investment properties Cost of sales/expenses Interest expense Taxation Profit for the year 148 Group 2013 $’000 2012 $’000 (Restated) 1,177,915 384,872 1,094,946 321,031 1,562,787 1,415,977 659,144 542,609 605,823 613,467 1,201,753 1,219,290 Group 2013 $’000 2012 $’000 (Restated) 602,524 34,934 (441,707) (4,218) (27,154) 328,948 7,756 (241,921) (3,500) (14,175) 164,379 77,108 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 17. INVESTMENTS IN AND BALANCES WITH ASSOCIATES Note 2013 $’000 2012 $’000 2013 $’000 2012 $’000 Group Company Investments in associates Shares, at cost Quoted non-equity investments, at cost Negative goodwill on acquisition Share of post-acquisition reserves Allowance for impairment Balances with associates Loans to associates - non-current current - Investments in associates are represented by: Quoted instruments Market value: $854,938,000 (2012: $1,129,824,000) Unquoted instruments 784,061 - 97,712 174,387 (177) 749,944 306,158 97,173 70,408 (177) 1,055,983 1,223,506 21 21 77,675 8,071 85,746 13,833 - 13,833 910,897 1,113,018 145,086 110,488 1,055,983 1,223,506 - - - - - - - - - - - - - - - - - - - - - - - - The quoted non-equity instruments related to Series A convertible perpetual preference units (“Series A CPPUs”) in Frasers Commercial Trust (“FCOT”). The Series A CPPUs are convertible at the option of the holders and redeemable at the option of FCOT at fixed determined dates after 3 years from the issuance date of the Series A CPPUs. The Series A CPPUs are entitled to receive a preferred distribution of 5.5% per annum which shall be declared at the sole discretion of FCOT. The CPPUs have been fully redeemed at cost as at 30 September 2013. Except for $63,617,000 which bear interest at 6.2% (2012: Not applicable) per annum and are repayable in November 2022, non-current loans to associates are unsecured, interest free, payable in cash and have no fixed repayment terms. Current loan to an associate bears interest at 6.0% (2012: Not applicable) per annum, is unsecured and is repayable in cash on demand. 149 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 17. INVESTMENTS IN AND BALANCES WITH ASSOCIATES (cont’d) (a) Payment of Management Fees and Acquisition Fees by way of Units in Frasers Centrepoint Trust (“FCT”) Management Fees The Group, through its subsidiary, Frasers Centrepoint Asset Management Ltd. (“FCAM”) as the manager of FCT, received the following Units in FCT in payment of 20% of its management fees for the year from 1 October 2012 to 30 September 2013 (the “Relevant Period”): Relevant Period Date Received No. of Units Received Issued Price $ Value of Units Received $ Aggregate of FCT Units held by FCAM Aggregate of FCT Units held by the Group 1 July 2012 to 30 September 2012 25 October 2012 322,655 1.7885 577,068 23,892,544 337,392,544 1 October 2012 to 31 December 2012 1 January 2013 to 31 March 2013 1 April 2013 to 30 June 2013 24 January 2013 286,575 1.9573 560,913 24,179,119 337,679,119 22 April 2013 269,180 2.1261 572,304 24,448,299 337,948,299 26 July 2013 304,496 1.8854 574,097 24,752,795 338,252,795 2,284,382 The payment of such fees in the form of Units is provided for in the Trust Deed constituting FCT dated 5 June 2006. The Issue Price is the volume weighted average price of the Units traded on the Singapore Exchange Securities Trading Limited for the last ten business days of the Relevant Period. With the above payments of management fees and acquisition fees by way of Units in FCT, the Group and FCAM hold an aggregate of 338,252,795 and 24,752,795 Units in FCT, representing 41.0% and 3.0% of the total issued FCT Units, respectively. 150 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 17. INVESTMENTS IN AND BALANCES WITH ASSOCIATES (cont’d) (b) Payment of Management Fees by way of Units in Frasers Commercial Trust (“FCOT”) The Group, through its subsidiary, Frasers Centrepoint Asset Management (Commercial) Ltd. (“FCAMC”) as the manager of FCOT, received the following units in FCOT in payment of approximately 45% to 80% of its management fees for the year from 1 October 2012 to 30 September 2013 (the “Relevant Period”): Relevant Period Date Received No. of Units Received Issued Price $ Value of Units Received $ Aggregate of FCOT Units held by FCAMC Aggregate of FCOT Units held by the Group 1 July 2012 to 30 September 2012 30 October 2012 2,187,604 1.1626 2,543,308 77,352,711 178,737,690 1 October 2012 to 31 December 2012 1 January 2013 to 31 March 2013 1 April 2013 to 30 June 2013 29 January 2013 1,853,587 1.2714 2,356,651 79,206,298 180,591,277 30 April 2013 1,681,660 1.3802 2,321,027 80,887,958 182,272,937 29 July 2013 950,856 1.3600 1,293,164 81,838,814 183,223,793 8,514,150 The payment of such management fees in the form of Units is provided for in the Trust Deed constituting FCOT dated 12 September 2005. The Issue Price is the volume weighted average price of the Units traded on the Singapore Exchange Securities Trading Limited for the last ten business days of the Relevant Period. With the above payments of management fees by way of Units in FCOT, the Group and FCAMC hold an aggregate of 183,223,793 and 81,838,814 Units in FCOT, representing 27.9% and 12.5% of the total issued FCOT Units, respectively. (c) The summarised financial information of the associates, not adjusted for the proportion of ownership interest held by the Group, is as follows: Assets and Liabilities Total assets Total liabilities Results Revenue Profit for the year Group 2013 $’000 2012 $’000 5,439,278 2,390,513 5,079,756 2,094,589 428,291 482,942 351,470 219,564 151 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 18. FINANCIAL ASSETS Available-for-sale financial assets: Unquoted Equity investments, at cost Allowance for impairment Quoted Equity investments Allowance for impairment Non-equity investments Total available-for-sale financial assets Represented by: Current Non-current Group Company 2013 $’000 2012 $’000 2013 $’000 2012 $’000 3,303 (1,155) 2,148 24 (8) 16 - 16 2,164 - 2,164 2,164 3,305 (1,155) 2,150 24 (8) 16 60,350 60,366 62,516 60,350 2,166 62,516 3,303 (1,155) 2,148 3,303 (1,155) 2,148 - - - - - 2,148 - 2,148 2,148 - - - 60,350 60,350 62,498 60,350 2,148 62,498 The unquoted equity investments are measured at cost less impairment losses as there are no active markets for these investments and other methods of determining fair value do not result in a reliable estimate. 19. INTANGIBLE ASSETS At Cost At 1 October 2011, 30 September 2012 and 1 October 2012 Additions At 30 September 2013 Accumulated Amortisation At 1 October 2011 Amortisation At 30 September 2012 and 1 October 2012 Amortisation At 30 September 2013 Net Book Value At 30 September 2013 At 30 September 2012 Management Contracts (Indefinite Useful Life) $’000 Management Contracts (Finite Useful Life) $’000 Software $’000 Total $’000 62,601 - 62,601 - - - - - 62,601 62,601 4,648 - 4,648 1,960 490 2,450 490 2,940 1,708 2,198 43 142 185 - 8 8 8 16 169 35 67,292 142 67,434 1,960 498 2,458 498 2,956 64,478 64,834 Management contracts relate to fair values of management contracts held by certain acquired subsidiaries prior to the acquisition of the subsidiaries by the Group. 152 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 19. INTANGIBLE ASSETS (cont’d) Management contracts with a cost of $62,601,000 (2012: $62,601,000) are assessed to have an indefinite useful life and not amortised. This is the value ascribed to management contracts entered into between a subsidiary and an associate. Management is of the view that these intangible assets have an indefinite useful life as the contracts are contracts which go into perpetuity, and will only be terminated upon the removal of the subsidiary as the manager. The remaining useful life of management contracts with finite useful life is 2 (2012: 3) years. The recoverable amount of the management contracts has been determined based on value in use calculations using a projection of the management fee income covering a 5-year period. The pre-tax discount applied to the projections is 10% (2012: 10%) and the forecast growth rate used beyond the 5-year period is 2% (2012: 2%). Based on the recoverable amount, no impairment is necessary. Amortisation charge of $498,000 (2012: $498,000) is included in administrative costs in the profit statement. 20. OTHER ASSETS Other assets relates to the unguaranteed residual value in relation to the Group’s freehold interest retained in Alexandra Technopark after the expiry of the 99-year lease to an associate. Finance income is recognised based on average long-term inflationary rate in Singapore and the interest accretion recognised in the profit statement for the year amounted to $800,000 (2012: $1,400,000). 21. TRADE AND OTHER RECEIVABLES Other receivables (non-current) Amounts due from subsidiaries Loans to joint ventures Loans to associates Loan to a non-controlling interest Note 15 16 17 Trade receivables (current) Trade receivables Sales proceeds and progress billing receivables Other receivables (current) Tax recoverable Accrued interest income Staff loans and advances Sundry debtors Other deposits Amount due from holding company Amounts due from subsidiaries Loan to an associate Amounts due from related companies 15 17 Group Company 2013 $’000 2012 $’000 2013 $’000 2012 $’000 - - 77,675 90,429 - - 13,833 75,875 1,710,382 - - - 1,730,583 39,765 - - 168,104 89,708 1,710,382 1,770,348 34,077 187,812 221,889 24,807 217,644 242,451 2 - 2 2,665 3,393 896 36,499 5,438 16,551 - 8,071 7,361 80,874 9,109 5,804 1,026 29,429 10,469 15,473 - - 13,936 85,246 - - - 1 - - 562,094 - - 562,095 562,097 1,762 - 1,762 - - - 2 - - 13,203 - - 13,205 14,967 Total trade and other receivables (current) 302,763 327,697 Total trade and other receivables (current and non-current) 470,867 417,405 2,272,479 1,785,315 153 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 21. TRADE AND OTHER RECEIVABLES (cont’d) Trade Receivables Trade receivables are non-interest bearing and are recognised at their original invoiced amounts which represent their fair values on initial recognition. Sales Proceeds and Progress Billing Receivables Sales proceeds receivable relate to the balance of sales proceeds from completed properties held for sale which will be received upon issue of notice of vacant possession, certificate of statutory completion, expiry of defect liability period and/ or title subdivision. Progress billing receivables relate to the outstanding balance of progress billings which are due within 14 days after the purchasers receive the notices to make payments. Related Companies Balances Amounts due from holding and related companies (current) are non-trade related, unsecured, interest free and repayable on demand in cash. Loan to a Non-controlling Interest Loan to a non-controlling interest (“NCI”) relates to the NCI’s share of shareholders’ loan contributions to a subsidiary, Frasers (Australia) Pte. Ltd. (“Frasers Australia”) paid on behalf by FCL Clover Pte. Ltd. (“FCL Clover”), another subsidiary of the Company. The amount is repayable in cash and bears interest at a fixed rate of 8% (2012: 8%) per annum. The loan to a NCI shall be repaid out of: (i) all repayment of shareholders loans and interest accrued thereon made by Frasers Australia to the extent of the NCI’s share thereof; (ii) all distributions made by Frasers Australia to the extent of the NCI’s share thereof; (iii) all dividends declared or made by Frasers Australia to the extent of the NCI’s share thereof derived from Frasers Broadway Pty Limited (“Frasers Broadway”) and Frasers Queens Pty Limited (“Frasers Queens”) (subsidiaries of Frasers Australia); and (iv) half of all dividends declared or made by Frasers Australia to the extent of the NCI’s share thereof derived from subsidiaries of Frasers Australia other than Frasers Broadway and Frasers Queens. The amount has no fixed date of repayment. The amount is secured: (i) (ii) by way of first fixed charge to FCL Clover all the NCI’s right, title and interest in and to the shares that it may from time to time hold in the capital of Frasers Australia and all its rights attaching or relating thereto; and assignment by the NCI all its rights, title and interest in and to all moneys payable to the NCI by Frasers Australia in respect of loans made by the NCI to Frasers Australia. 154 Annual Report 2013Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 21. TRADE AND OTHER RECEIVABLES (cont’d) (a) Credit risk by business segments The maximum exposure to credit risk for trade receivables and sales proceeds receivable at the balance sheet date by business segment is as follows: Investment properties Development properties Hospitality Corporate & others Group Company 2013 $’000 1,870 190,508 15,249 14,262 221,889 2012 $’000 1,465 218,695 10,414 11,877 242,451 2013 $’000 - - - 2 2 2012 $’000 - - - 1,762 1,762 (b) Trade receivables that are past due but not impaired The Group had trade receivables amounting to $15,758,000 (2012: $9,012,000) that are past due at balance sheet date but not impaired. These receivables are unsecured and the aging analysis at the balance sheet date is as follows: Trade receivables past due: 1 to 30 days 31 to 60 days 61 to 90 days More than 90 days Group 2013 $’000 2012 $’000 12,385 1,203 1,273 897 15,758 6,330 1,100 467 1,115 9,012 (c) Trade receivables that are impaired The Group’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: Individually impaired Trade receivables - nominal amounts Allowance for impairment Movements in allowance account: At 1 October Charge for the year Write-back of allowance Written off Exchange difference At 30 September Group 2013 $’000 2012 $’000 2,816 (2,816) - 2,405 (2,405) - Group 2013 $’000 2012 $’000 2,405 2,556 (2,041) (54) (50) 2,816 2,209 2,486 (1,481) (808) (1) 2,405 155 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 21. TRADE AND OTHER RECEIVABLES (cont’d) (c) Trade receivables that are impaired (cont’d) Trade and other receivables that are individually determined to be impaired at the balance sheet date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements. Based on the Group’s historical experience in the collection of receivables, management believes that no additional credit risk beyond that provided for is inherent in the Group’s trade and other receivables. 22. DEFERRED TAX ASSETS AND LIABILITIES (a) Deferred Tax Assets Unabsorbed losses and capital allowances Others (b) Deferred Tax Liabilities Deferred tax liabilities at the end of the financial year related to the following: Deferred tax liabilities Differences in depreciation Tax effect on revaluation surplus Provisions, expenses and income taken in a different period Others Gross deferred tax liabilities Less: Deferred tax assets Employee benefits Unabsorbed losses and capital allowances Provisions, expenses and income taken in a different period Gross deferred tax assets Group Balance Sheet Profit Statement 2013 $’000 232 2,705 2,937 2012 $’000 161 2,776 2,937 2013 $’000 (115) (46) (161) 2012 $’000 (41) (2,429) (2,470) Group Balance Sheet Profit Statement 2013 $’000 2012 $’000 2013 $’000 2012 $’000 (Restated) 13,803 35,493 71,757 (1,084) 119,969 13,019 30,751 45,029 5,139 93,938 770 (561) 39,342 (1,587) 37,964 (121) (1,950) (124) (1,811) 30 (19) (2,041) (1,954) 3 - 3 6 1,281 (42) 33,741 1,188 36,168 (11) (609) (14) (634) Net deferred tax liabilities 117,928 91,984 37,970 35,534 No deferred tax liabilities (2012: $360,000) have been established for withholding and other taxes that would be payable on the unremitted earnings as there were no unremitted earnings as at 30 September 2013 (2012: $2,117,000). 156 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 23. PROPERTIES HELD FOR SALE Development properties held for sale Properties in the course of development, at cost Allowance for foreseeable losses Development profit Progress payments received Completed properties held for sale Completed units, at cost Allowance for impairment losses Total properties held for sale Group 2013 $’000 2012 $’000 4,515,741 (51,021) 4,378,792 (46,124) 4,464,720 469,864 4,332,668 286,364 4,934,584 (1,035,875) 4,619,032 (752,393) 3,898,709 3,866,639 861,079 (22,735) 632,550 (27,950) 838,344 604,600 4,737,053 4,471,239 (a) During the year, net interest expense of $69,908,000 (2012: $71,392,000) arising from borrowings obtained specifically for the projects were capitalised as cost of development properties held for sale. The borrowing cost of loans used to finance the projects have been capitalised at interest rates of between 1.0% and 7.3% (2012: 0.6% and 7.9%) per annum. (b) The following table provides information about agreements that are in progress at the reporting date whose revenue are recognised on a percentage of completion basis. Aggregate costs incurred and recognised to date Less: Progress billings Group 2013 $’000 2012 $’000 2,632,851 (1,035,875) 1,951,173 (752,393) 1,596,976 1,198,780 (c) Included in development properties held for sale are projects of approximately $926,395,000 (2012: $1,017,688,000) which are expected to be completed within the next twelve months. 157 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 23. PROPERTIES HELD FOR SALE (cont’d) (d) Included in development properties held for sale are the following significant transactions between the Group and related parties which took place during the year at terms agreed between the parties: Interest expense Paid to related companies Paid to related parties Development costs Paid to related parties Project management fees Paid to related parties Group 2013 $’000 2012 $’000 17,205 4,422 45,487 4,787 91,496 104,145 1,581 2,400 (e) Certain subsidiaries and joint ventures have granted fixed and floating charges over their properties held for sale totalling $1,897,151,000 (2012: $1,587,617,000) to banks as securities for credit facilities. 24. DERIVATIVE FINANCIAL INSTRUMENTS Assets Foreign currency forward contracts Liabilities Interest rate swaps Foreign currency forward contracts Comprise: Current Non-current Interest Rate Swaps Group Company 2013 $’000 1,478 1,478 5,323 968 6,291 3,232 3,059 6,291 2012 $’000 - - 10,891 4,699 15,590 10,858 4,732 15,590 2013 $’000 1,478 1,478 2,861 - 2,861 2,163 698 2,861 2012 $’000 - - 7,493 4,699 12,192 9,195 2,997 12,192 The Group has applied cash flow hedge accounting to interest rate swap arrangements for which the associated floating rate loans have the same critical terms, and which have been assessed to be effective hedges. 158 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 24. DERIVATIVE FINANCIAL INSTRUMENTS (cont’d) The Company and the Group have interest rate swap arrangements in place for the following loan amounts: Notional amounts Within one year Between one to three years After three years Group Company 2013 $’000 2012 $’000 2013 $’000 2012 $’000 190,797 286,587 - 477,384 292,321 252,300 - 544,621 82,537 44,443 - 126,980 143,693 81,218 43,733 268,644 At 30 September 2013, the fixed interest rates of the outstanding interest rate swap contracts range between 1.6% to 4.0% (2012: between 1.6% to 4.3%) per annum. Foreign Currency Forward Contracts As at 30 September 2013, the Company held forward currency contracts designed as hedge in respect of cash and cash equivalents received on disposal of subsidiaries. The contracts have matured during the financial year. The carrying amounts of the remaining foreign currency forward contracts are accounted for at fair value through profit or loss. The Company and the Group have foreign currency forward contracts arrangements in place for the following amounts: Notional amounts Within one year 25. CASH AND CASH EQUIVALENTS Fixed deposits Cash at bank and in hand Amounts held under “Project Account Rules - 1997 Ed” Fixed deposits Cash at banks Group Company 2013 $’000 2012 $’000 2013 $’000 2012 $’000 196,027 311,980 146,027 311,980 Group Company 2013 $’000 2012 $’000 100,322 206,105 142,053 699,723 2013 $’000 12,585 15,841 2012 $’000 31,852 532,775 181,444 18,913 200,357 355,878 8,660 364,538 - - - - - - Cash and cash equivalents 506,784 1,206,314 28,426 564,627 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made in varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. The withdrawals from amounts held under “Project Account Rules - 1997 Ed” are restricted to payments for development expenditure incurred on properties developed for sale. 159 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 25. CASH AND CASH EQUIVALENTS (cont’d) For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise the following at the balance sheet date: Fixed deposits and cash at banks and in hand Bank overdrafts Effect of exchange rate change on opening cash Cash and cash equivalents in the consolidated cash flow statement 26. TRADE AND OTHER PAYABLES Note 27 Group 2013 $’000 2012 $’000 506,784 (1,037) - 1,206,314 (1,268) (2,824) 505,747 1,202,222 Group Company Trade payables 344,519 345,370 Note 2013 $’000 2012 $’000 2013 $’000 61 - 206 2,663 333 - - - 212,821 - 50,568 272,124 - 538,715 538,776 - - 725,478 - 725,478 2012 $’000 80 - 1,024 292 - - - - 218,397 - - 313,215 - 532,928 533,008 - - 866,093 - 866,093 159,082 5,015 115,758 34,032 14,036 41,314 25,681 - 7,427 - 675,665 302,629 133,167 7,235 102,429 24,223 - 40,682 - - 8,373 - 663,012 335,053 1,380,639 1,314,174 1,725,158 1,659,544 - 3,169 - 1,197,275 18,224 3,491 - 1,893,036 1,200,444 1,914,751 2,925,602 3,574,295 1,264,254 1,399,101 Other payables (current) Loans from non-controlling interests Interest payable Accruals Sundry creditors Provision for bank profit share Rental deposits Deposits Amounts due to subsidiaries Amounts due to holding company Loans from joint ventures Amounts due to related companies Progress billings received Total trade and other payables (current) Other payables (non-current) Provision for bank profit share Sundry creditors Amounts due to subsidiaries Amounts due to related companies Total trade and other payables (current and non-current) 15 16 15 160 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 26. TRADE AND OTHER PAYABLES (cont’d) Trade Payables Trade payables are non-interest bearing and are generally settled on 60 day terms. Loans from Non-controlling Interests Loans from non-controlling interests are non-trade in nature, unsecured, repayable in cash on demand and interest free except for loans of $17,372,000 (2012: $11,663,000) which bear interest at 2.0% (2012: 2.4%) per annum. Related Companies Balances Amounts due to holding and related companies are non-trade related, unsecured and repayable in cash. The current amounts are repayable upon demand. Maturity of non-current amounts due to related companies is as follows: Between 1 and 2 years Between 3 and 5 years Group Company 2013 $’000 2012 $’000 2013 $’000 2012 $’000 641,845 555,430 538,619 1,354,417 1,197,275 1,893,036 - - - - - - The amounts are non-interest bearing except for the following: Group Company 2013 $’000 2012 $’000 2013 $’000 2012 $’000 Interest bearing 1,847,259 2,530,123 - 313,207 Interest is charged at a range of between 0.6% to 6.0% (2012: between 1.7% to 6.0%) per annum. Subsequent to year end, certain portions of the amounts due to related companies will be repaid with equity injected by Fraser and Neave Limited, the immediate holding company of the Company (Note 41(b)). Sundry Creditors (Non-current) Included in non-current sundry creditors is a Redeemable Special Preference Share (“RSPS”) of $2 (£1) (2012: $2 (£1)) issued by a subsidiary, Frasers Property (UK) Limited (“FPUK”), to a bank in consideration for the waiver of a portion of its debt as disclosed in Note 27. The key rights and obligations of the RSPS as set out in the Articles of Association of FPUK are as follows: - - - the holder of the RSPS is entitled to a Bank’s Equity Allocation Dividend (“BEAD”) equivalent to 1% of any future profits arising on certain development properties held for sale in the United Kingdom; FPUK or the bank is entitled to redeem the RSPS for £1 after the “BEAD” and certain bank facilities have been fully repaid; and the RSPS has no attendance and voting rights at general meetings. 161 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 26. TRADE AND OTHER PAYABLES (cont’d) Provision for Bank Profit Share This provision is made in connection with the bank debt restructuring of FPUK during the year and comprises: - - a 1% dividend known as “BEAD” as described above; and a Deferred Restructuring Fees (“DRF”) pursuant to a refinanced facility, the Senior Facilities (“SF”) with the bank (see Note 27), which is equal to 19% of any future profits arising on certain development properties held for sale in the United Kingdom. The “BEAD” and “DRF” payouts, collectively known as the “Bank Profit Share”, are payable on the earlier of these 3 events: - - - upon repayment of the SF; or upon the maturity of the SF (see Note 27); or upon the sale of the secured development properties in UK (see Note 23). This bank profit share was subsequently settled in October 2013 as disclosed in Note 41 (c). 27. LOANS AND BORROWINGS Repayable within one year: Unsecured Bank loans Bank overdrafts Secured Bank loans Repayable after one year: Unsecured Bank loans Medium Term Notes Secured Bank loans Total loans and borrowings Weighted Average Effective Interest Rate Group Company 2013 % 2012 % 2013 $’000 2012 $’000 2013 $’000 2012 $’000 2.5 1.4 107,260 1,037 2,116 1,268 4.0 4.0 520,838 164,414 629,135 167,798 5.4 3.7 3.4 3.7 34,751 125,000 135,785 125,000 2.4 2.7 1,015,622 1,163,942 1,175,373 1,424,727 1,804,508 1,592,525 - - - - - - - - - 2,116 - - 2,116 - - - - 2,116 162 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 27. LOANS AND BORROWINGS (cont’d) (a) The secured bank loans, overdrafts and term loans are secured by certain subsidiaries and joint ventures by way of fixed and floating charges over certain assets and mortgages on freehold and leasehold land under development as disclosed in Notes 13 and 23. (b) Maturity of non-current loans and borrowings is as follows: Between 1 and 2 years Between 3 and 5 years After 5 years At 30 September Group Company 2013 $’000 490,012 549,090 136,271 2012 $’000 319,357 980,370 125,000 1,175,373 1,424,727 2013 $’000 2012 $’000 - - - - - - - - (c) (d) (e) (f) Included in current secured bank loans are Senior Facilities (“SF”) of £35 million, which will be subject to Deferred Restructuring Fees (“DRF”) based on 19% of any future profit arising on certain development properties held for sale in the United Kingdom. The SF are also secured by these certain development properties in the United Kingdom. The DRF is payable when the secured properties are sold, or within 2 years of practical completion of one of the secured properties, or on the respective maturity dates of the various tranches of the SF in December 2013 and December 2014, whichever is earlier. These loans are fully paid subsequent to the year end as disclosed in Note 41 (b). The provision for such DRF is included under “Provision for bank profit share” as disclosed in Note 26. As at 30 September 2013, the Company and Group had interest rate swaps in place, which have the economic effect of converting borrowings from fixed rates to variable rates or vice versa. The terms of these interest rate swaps is discussed in Note 24, and the fair values are disclosed in Note 35. FCL Treasury Pte. Ltd., a wholly-owned subsidiary of the Company, has established a S$1,000,000,000 Multicurrency Medium Term Note Programme, to be unconditionally and irrevocably guaranteed by the Company. As at 30 September 2012, a subsidiary of the Group in the United Kingdom did not meet certain clauses on a £28.6 million facility and as a result, the £28.6 million loan has been classified as repayable in less than one year. Subsequent to 30 September 2012, in an Amendment Agreement entered into with the bank, the bank has agreed to an extension of time for this subsidiary to achieve the Loan to Value ratio (“LTV” ratio) and to comply with its obligation under the original Facility Agreement. With the extension of time, this subsidiary is obliged to achieve and maintain the LTV ratio for the deferred period commencing from 31 December 2012 and ending on such day the loan is repaid in full, or on maturity in December 2013. This loan is fully repaid subsequent to the year end as disclosed in Note 41 (c). 163 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 28. SHARE CAPITAL Group and Company 2013 2012 (No. of Shares) $’000 (No. of Shares) $’000 At beginning and end of year: Issued and fully paid: Ordinary Shares Redeemable Preference Shares (“RPS”) 330,000 Class B RPS Total Share Capital 753,291,782 753,977 753,291,782 753,977 330,000 330,000 330,000 330,000 1,083,977 1,083,977 (a) Ordinary Shares The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All shares carry one vote per share without restriction. The ordinary shares have no par value. (b) Redeemable Preference Shares The Class B RPS have no fixed maturity, are redeemable at the option of the Company on a Dividend Date and shall rank in priority to the ordinary shares of the Company in the entitlement to receive declared dividends and repayment of specified redemption amount upon any liquidation, dissolution or winding-up of the Company. Holders of Class B RPS shall be paid dividend at the same rate declared, and on the same date as that for the ordinary shares. Save in certain instances set out in the Company’s Articles and the Companies Act, the Class B RPS shall not confer on its holders the right to receive notice of or attend or vote at any general meeting of the Company. Subject to the Companies Act, the Class B RPS shall be redeemed by the Company on such date as the Company and the holders of the Class B RPS may agree, or on liquidation, or winding-up of the Company, whichever is earlier. 29. OTHER RESERVES (a) Fair Value Adjustment Reserve Fair value adjustment reserve represents the cumulative fair value changes, net of tax, of available-for-sale financial assets until they are disposed of or impaired. At 1 October Net change in the reserve At 30 September Net change in the reserve arises from: Realisation upon disposal of available-for-sale financial assets Fair value change of available-for-sale financial assets Share of associate’s fair value change Group Company 2013 $’000 35,136 (34,933) 203 2012 $’000 (214) 35,350 35,136 2013 $’000 34,900 (34,900) - (34,900) - (33) (34,933) - 34,900 450 35,350 (34,900) - - (34,900) 2012 $’000 - 34,900 34,900 - 34,900 - 34,900 164 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 29. OTHER RESERVES (cont’d) (b) Asset Revaluation Reserve The asset revaluation reserve represents increases in fair value of investments. At 1 October Net change in reserve At 30 September Net change in the reserve arises from: Transfer of reserves Group Company 2013 $’000 2012 $’000 2013 $’000 2012 $’000 - - - - - - - - - - 1,007,114 (1,007,114) 1,007,114 - - 1,007,114 (1,007,114) (1,007,114) - - During the year, the Company transferred $1,007,114,000 from Asset Revaluation Reserve to Retained Earnings relating to the revaluation reserve on investments in subsidiaries which crystalised on 1 October 2005 on the adoption of FRS 39 Financial Instruments: Recognition and Measurement. (c) Foreign Currency Translation Reserve The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the effect of hedging net investment in foreign operations and translating foreign currency loans which form part of the Group’s net investment in foreign operations. At 1 October Net change in the reserve At 30 September Net change in the reserve arises from: Translation of financial statements of foreign operations Hedging of net investment in foreign operations Realisation on settlement of monetary items which form part of the Group’s net investment in foreign subsidiaries Change in group structure Share of associates’ reserve Group 2013 $’000 29,920 (24,280) 5,640 19,590 (27,542) (821) - (15,507) (24,280) 2012 $’000 21,128 8,792 29,920 (26,042) 2,667 (2,502) 34,446 223 8,792 165 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 29. OTHER RESERVES (cont’d) (d) Hedging Reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments related to hedged transactions that have not yet occurred. At 1 October Net change in the reserve At 30 September Net change in the reserve arises from: Effective portion of change in fair value of cash flow hedges Change in group structure Share of associate’s reserve Group Company 2013 $’000 (6,042) 5,660 (382) 5,278 - 382 5,660 2012 $’000 (11,473) 5,431 (6,042) 5,745 (314) - 5,431 2013 $’000 (3,721) 4,632 911 4,632 - - 4,632 2012 $’000 (11,336) 7,615 (3,721) 7,615 - - 7,615 (e) Share-based Compensation Reserve Share-based compensation reserve represents the equity-settled share options granted by a subsidiary. The reserve is made up of the Group’s share of the cumulative value of services received from employees of the subsidiary recorded over the vesting period commencing from the grant date of equity-settled share options, and is reduced by the expiry or exercise of the share options. At 1 October Net change in the reserve At 30 September Net change in the reserve arises from: Cost of share-based payments Change in group structure (f) Other Reserves Included in other reserves are: Group 2013 $’000 - - - - - - 2012 $’000 1,012 (1,012) - 145 (1,157) (1,012) (i) the statutory reserve which relates to appropriation of funds from the net profit of subsidiaries and associate in China and Thailand, respectively, in accordance with the local laws; and (ii) the group’s share of its associates’ costs directly attributable to the issuance of the units of the associates. 166 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 30. DIVIDENDS Company 2013 $’000 2012 $’000 Dividends on Ordinary Shares Interim paid 19.91 cents (2012: 19.91 cents) per share, tax exempt 150,000 150,000 Dividends on Redeemable Preference Shares No preference dividends were paid during the years. 31. FINANCIAL REPORTING STANDARDS (“FRS”) AND INTERPRETATIONS OF FRS (“INT FRS”) FRS and INT FRS not yet effective The Group has not adopted the following standards that have been issued but not yet effective: Description Revised FRS 19 FRS 113 Employee Benefits Fair Value Measurement Amendments to FRS 107 Disclosures - Offsetting Financial Assets and Financial Liabilities Improvements to FRSs 2012 - Amendment to FRS 1 - Amendment to FRS 16 - Amendment to FRS 32 Revised FRS 27 Revised FRS 28 FRS 110 FRS 111 FRS 112 Presentation of Financial Statements Property, Plant and Equipment Financial Instruments: Presentation Separate Financial Statements Investments in Associates and Joint Ventures Consolidated Financial Statements Joint Arrangements Disclosure of Interests in Other Entities Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities Amendments to FRS 110, FRS 111 and FRS 112 Amendments to FRS 110, FRS 112 and FRS 27 Effective for Annual Period Beginning on or after 1 January 2013 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 1 January 2014 1 January 2014 Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance Investment Entities 1 January 2014 167 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 31. FINANCIAL REPORTING STANDARDS (“FRS”) AND INTERPRETATIONS OF FRS (“INT FRS”) (cont’d) The standards that are relevant to the Group are as follows: FRS 113 Fair Value Measurements FRS 113 Fair Value Measurements provides a single source of guidance for all fair value measurements. FRS 113 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under FRS when fair value is required or permitted by FRS. The Group is currently determining the impact of this new standard on the Group’s financial statements. FRS 111 Joint Arrangements and Revised FRS 28 Investments in Associates and Joint Ventures FRS 111 Joint Arrangements and Revised FRS 28 Investments in Associates and Joint Ventures are effective for financial periods beginning on or after 1 January 2014. FRS 111 classifies joint arrangements either as joint operations or joint ventures. Joint operation is a joint arrangement whereby the parties that have rights to the assets and obligations for the liabilities whereas joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. FRS 111 requires the determination of joint arrangement’s classification to be based on the parties’ rights and obligations under the arrangement, with the existence of a separate legal vehicle no longer being the key factor. FRS 111 disallows proportionate consolidation and requires joint ventures to be accounted for using the equity method. The revised FRS 28 was amended to describe the application of equity method to investments in joint ventures in addition to associates. The Group currently applies proportionate consolidation for its joint ventures. Upon adoption of FRS 111, the Group expects the change to equity accounting for these joint ventures will affect the Group’s financial statement presentation. FRS 112 Disclosure of Interests in Other Entities FRS 112 Disclosure of Interests in Other Entities is effective for financial periods beginning on or after 1 January 2014. FRS 112 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. FRS 112 requires an entity to disclose information that helps users of its financial statements to evaluate the nature and risks associated with its interests in other entities and the effects of those interests on its financial statements. As this is a disclosure standard, it will have no impact to the financial position and financial performance of the Group when implemented in 2014. 168 Annual Report 2013Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 31. FINANCIAL REPORTING STANDARDS (“FRS”) AND INTERPRETATIONS OF FRS (“INT FRS”) (cont’d) Amendments to FRS 107: Disclosures – Offsetting Financial Assets and Financial Liabilities The Amendments to FRS 107 provides disclosure requirements that are intended to help investors and other financial statement users better assess the effect or potential effect of offsetting arrangements on a company’s financial position. The new disclosures require information about the gross amount of financial assets and liabilities before offsetting and the amounts set off in accordance with offsetting model in FRS 32. As the Amendments only affect disclosures, it will not have any impact to the financial position or financial performance of the Group upon adoption. Amendments to FRS 32: Offsetting Financial Assets and Financial Liabilities The Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities clarifies the meaning of ‘currently has a legally enforceable right to set-off’; and that some gross settlement systems may be considered equivalent to net settlement. The Group expects to offset certain assets and liabilities and hence affecting the financial position upon adoption of the Amendments. Improvements to FRSs 2012 The Accounting Standards Council issued Improvements to FRSs 2012 on 16 August 2012 that is effective for annual periods beginning on or after 1 January 2013. Some of the key amendments are listed below: (i) Amendment to FRS 1 Presentation of Financial Statements The amendment clarifies that an entity must include comparative in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. However, unlike the voluntary comparative information, the related notes are not required to accompany the third balance sheet. (ii) Amendment to FRS 16 Property, Plant and Equipment The amendment provides clarification that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory. (iii) Amendment to FRS 32 Financial Instruments: Presentation The amendment clarifies that income tax arising from distributions to equity holders are accounted for in accordance with FRS 12 Income Taxes. Previously, FRS 32 requires that distributions to holders of an equity instrument to be recognised directly in equity net of any related income tax while FRS 12 requires that tax consequences of dividends generally to be recognised in the profit statement unless certain conditions are met. FRS 32 was amended to address the inconsistencies by referring to FRS 12 for the accounting for income tax relating to distributions to holders of an equity instrument and transaction costs of an equity transaction. The adoption of the amendments in the improvements to FRSs issued in 2012 will not have any impact to the accounting policies of the Group in the period of initial application. FRS 110 Consolidated Financial Statements and Revised FRS 27 Separate Financial Statements FRS 110 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by FRS 110 will require management to exercise significant judgment to determine which entities are controlled, and therefore are required to be consolidated by the Group, compared with the requirements that were in FRS 27. Therefore, FRS 110 may change which entities are consolidated within a group. The revised FRS 27 was amended to address accounting for subsidiaries, jointly controlled entities and associates in separate financial statements. The Group is currently determining the impact of the changes to control and expect that the adoption of FRS 110 in 2014 will likely lead to more entities being consolidated to the Group. 169 Annual Report 2013FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 32. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES Principal Activities Effective Shareholding 2013 2012 Subsidiaries of the Company Country of Incorporation and Place of Business: Singapore (a) FCL Property Investments Pte. Ltd. (a) FCL Enterprises Pte. Ltd. (a) Riverside Property Pte. Ltd. (a) FCL Centrepoint Pte. Ltd. (a) Orrick Investments Pte Limited (a) Yishun Development Pte Ltd (a) FCL Alexandra Point Pte. Ltd. (a) Woodlands Complex Pte Ltd (a) Riverside Walk Pte Ltd (a) FCL Ventures Pte. Ltd. (a) FCL Management Services Pte. Ltd. (a) Riverside Investments Pte Ltd (a) Yishun Land Pte Ltd (a) Yishun Property Pte Ltd (a) FCL Tampines Pte. Ltd. (a) FCL Homes Pte. Ltd. (a) FCL Land Pte. Ltd. (a) FCL Assets Pte. Ltd. (a) FCL Estates Pte. Ltd. (a) Frasers Hospitality Pte. Ltd. (a) Frasers (UK) Pte. Ltd. (a) Frasers (Australia) Pte. Ltd. (a) FCL (China) Pte. Ltd. (a) FCL Boon Lay Pte. Ltd. (a) FCL (Fraser) Pte. Ltd. (a) FCL Sophia Pte. Ltd. (a) Frasers Centrepoint Property Management Services Pte. Ltd. (a) FCL Choa Chu Kang Pte. Ltd. (a) FCL Joo Chiat Place Pte. Ltd. (a) Frasers (NZ) Pte. Ltd. (a) FCL China Development Pte. Ltd. (a) FCL Court Pte. Ltd. 170 Property investment Property investment Property investment Investment holding Property investment Property development Property investment Property development Property development Property development Management services Property development Property development Property development Property development Property development Property development Investment holding Property development Investment holding and management services Investment holding Investment holding Investment holding Property development Investment holding Property development Management services Property development Property development Investment holding Investment holding Property development 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 80% 100% 100% 100% 100% 100% 75% 75% 100% 100% 100% 100% 100% 100% 100% 75% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 80% 100% 100% 100% 100% 100% 75% 75% 100% 100% 100% 100% 100% 100% 100% 75% 100% 100% Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 32. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (cont’d) Principal Activities Effective Shareholding 2013 2012 Subsidiaries of the Company (cont’d) Country of Incorporation and Place of Business: Singapore (cont’d) (a) FCL Lodge Pte. Ltd. (a) FCL Place Pte. Ltd. (a) FCL Rise Pte. Ltd. (a) Frasers (Thailand) Pte. Ltd. (a) River Valley Properties Pte Ltd (a) Lion (Singapore) Pte. Limited (a) FCL View Pte. Ltd. (a) FCL Tower Pte. Ltd. (a) FCL Loft Pte. Ltd. Property development Property development Property development Investment holding Investment holding and property development Property development Property development Property development Property development (a) Frasers Centrepoint Asset Management Ltd. Management services (a) FCL Investments Pte. Ltd. (a) FCL Trust Holdings Pte. Ltd. (a) Frasers Hospitality Investment Holding (Philippines) Pte. Ltd. (a) Frasers Centrepoint Asset Management (Malaysia) Pte. Ltd. Investment holding Investment holding Investment holding 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Investment holding 100% 100% (a) FCL Trust Holdings (Commercial) Pte. Ltd. Investment holding (a) Frasers Centrepoint Asset Management (Commercial) Ltd Asset management, fund and property management and related advisory services (a) MLP Co Pte. Ltd. (a) SAJV Co Pte. Ltd. (a) FCL Clover Pte. Ltd. (a) FCL Tampines Court Pte. Ltd. (a) FCL Emerald (1) Pte. Ltd. (a) FCL Emerald (2) Pte. Ltd. (a) Opal Star Pte. Ltd. (a) Fraser Suites Jakarta Pte. Ltd. Investment holding Investment holding Financial services Investment holding Investment holding Investment holding Investment holding Investment holding (a) Fraser Residence Orchard Pte. Ltd. Operation of serviced apartments (a) Frasers Centrepoint Property Management (Commercial) Pte. Ltd. Asset management, fund and property management and related advisory services 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% (a) FCL Management Services (Commercial) Pte. Ltd. (a) FCL Crystal Pte. Ltd. (a) FCL Topaz Pte. Ltd. (a) Frasers Hospitality Investments Melbourne Pte. Ltd. Management services 100% 100% Property development Investment holding Investment holding 100% 100% 100% 100% 100% 100% 171 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 32. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (cont’d) Principal Activities Effective Shareholding 2013 2012 Subsidiaries of the Company (cont’d) Country of Incorporation and Place of Business: Singapore (cont’d) (a) FCL Treasury Pte. Ltd. (a) Frasers Land Pte. Ltd. (a) FCL Aquamarine Pte. Ltd. Financial services Property development Investment holding (a) FC Commercial Trustee Pte. Ltd. Trustee-management services (a) FCL Amber Pte. Ltd. (formerly FCL Vietnam Pte. Ltd.) Investment holding 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% (a) FC North Gem Trustee Pte. Ltd. Trustee-management services 100% - Country of Incorporation: Singapore and Place of Business: Australia (a) FCL Bridgepoint Pte. Ltd. Property investment 100% 100% Country of Incorporation and Place of Business: Hong Kong (a) Excellent Esteem Limited Investment holding 100% 100% Subsidiaries of the Group Country of Incorporation and Place of Business: Singapore (a) Frasers Hospitality Management Pte Ltd Management consultancy services (a) Frasers Hospitality Property Services Pte. Ltd. Management consultancy services (a) Frasers Hospitality Changi City Pte. Ltd. Management consultancy services (a) FC Hotel Trustee Pte. Ltd. (a) Ruby Star Trust (a) Sinomax International Pte. Ltd. Management services Investment holding Investment holding (a) Singapore Logistics Investments Pte Ltd Investment holding (a) Emerald Hill Developments Pte. Ltd. (a) River Valley Shopping Centre Pte Ltd (a) River Valley Tower Pte Ltd (a) River Valley Apartments Pte Ltd (a) FCL Compassvale Pte. Ltd. (a) FCL Admiralty Pte. Ltd. (a) Punggol Residences Pte. Ltd. (a) Aquamarine Star Trust Property investment Property investment Property investment Property investment Property development Property development Property development Property investment and development 100% 100% 100% 100% 100% 100% 80% 100% 100% 100% 100% 80% 70% 80% 100% 100% 100% 100% 100% 100% 100% 80% 100% 100% 100% 100% 80% - 80% 100% (a) North Gem Development Pte. Ltd. Property development 100% 100% (formerly Aquamarine Development Pte. Ltd.) (a) North Gem Trust Property investment and development 100% - 172 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 32. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (cont’d) Principal Activities Effective Shareholding 2013 2012 Subsidiaries of the Group (cont’d) Country of Incorporation and Place of Business: Singapore (cont’d) (a) Frasers Property (Europe) Holdings Pte. Ltd. Investment holding 80% 80% Country of Incorporation and Place of Business: United Kingdom (c) Frasers Projects Ltd Property development (c) The School House (Tunbridge Wells) Limited Property development (c) Frasers General Partner Limited (c) Frasers FB (UK) Group Limited (c) Frasers FB (House) Limited (c) Frasers Homes (UK) Ltd (c) Frasers (Buckswood Grange) Limited (c) Frasers Islington Limited (c) Frasers Islington Properties Limited (c) Frasers (Brown Street) Limited (c) Frasers (Vincent Square) Ltd (c) Frasers Lumiere Leeds Ltd (c) Frasers Management (UK) Ltd (c) Frasers (Riverside Quarter) Ltd (c) Frasers (Maidenhead) Ltd (c) Frasers Imperial Place Ltd (c) Frasers Property (UK) Limited (c) Frasers Property Developments Ltd (c) Frasers Investments (UK) Limited (c) Frasers Ventures Limited (c) Frasers FB (UK) Limited (c) Fairdace Limited (c) Frasers Hospitality (UK) Limited Property investment Investment holding Investment holding Property development Property development Property development Property development Property development Property development Investment holding Management services Property development Property development Property development Investment holding Investment holding Property investment Property development Property investment Serviced apartments Management consultancy services and serviced apartments (c) Frasers St Giles Street Management Ltd Property management (c) 39 QGG Management Limited Management services (c) Frasers Hospitality Frankfurt Investment Ltd Investment holding (c) Fairbriar Residential Investment Partnership Investment in residential property fund 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 79.2% 79.2% 79.2% 79.2% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 100% 100% 100% 100% 100% 100% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 100% 100% 100% 100% 100% 100% 173 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 32. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (cont’d) Principal Activities Effective Shareholding 2013 2012 Subsidiaries of the Group (cont’d) Country of Incorporation and Place of Business: Australia (a) Frasers Property Australia Pty Ltd (a) Frasers Property Management Australia Pty Limited (a) Frasers Chandos Pty Limited (a) Frasers Lorne Pty Limited (a) Frasers Mandurah Pty Limited (a) Frasers Killara Pty Ltd (a) Frasers Morton Pty Ltd (a) Frasers Broadway Pty Ltd Investment holding Management services Property development Property development Property development Property development Property development Property development 75% 75% 75% 75% 75% 75% 75% 75% 56.3% 56.3% 75% 75% 75% 75% 75% 75% (a) Frasers Homes WA Pty Limited Builder 56.3% 56.3% (a) Frasers Putney Pty Limited Property development (a) Frasers Central Park Holdings No. 1 Pty Ltd Investment holding (a) Frasers Central Park Holdings No. 2 Pty Ltd Investment holding (a) Frasers Central Park Land No. 1 Pty Ltd Property development (a) Frasers Central Park Land No. 2 Pty Ltd Property development (a) Frasers Central Park Equity No. 1 Pty Ltd Property development (a) Frasers Central Park Equity No. 2 Pty Ltd Property development (a) Frasers Kensington Holdings Pty Ltd Investment holding (a) Frasers Kensington Land Pty Ltd Property development (a) Frasers Kensington Development Pty Ltd Property development 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% - - - (a) Frasers Town Hall Pty Ltd Investment holding and property development 80.5% 80.5% (a) Frasers Town Hall Residences Pty Ltd Property investment (a) Frasers Town Hall Issuer Pty Ltd (a) Frasers Town Hall Residences Operations Pty Ltd (a) Frasers City Quarter Pty Limited (a) Frasers Queens Pty Ltd (a) Frasers Perth Pty Ltd (a) Frasers Perth Management Pty Ltd (a) Frasers Melbourne Trust Financial services Management services Property development Investment holding and property development Property investment Management services Property investment 80.5% 80.5% 80.5% 87.5% 87.5% 87.5% 87.5% 100% (a) Frasers Melbourne Apartments Pty Limited Management and consultancy services 100% (a) Frasers Melbourne Management Pty Limited Management services (a) Frasers Brisbane Trust Property investment (a) Frasers Brisbane Management Pty Ltd Trustee-management services 100% 100% 100% (a) Frasers Brisbane Apartments Pty Ltd Management and consultancy services 100% 80.5% 80.5% 80.5% 87.5% 87.5% 87.5% 87.5% 100% 100% 100% - - - 174 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 32. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (cont’d) Principal Activities Effective Shareholding 2013 2012 Subsidiaries of the Group (cont’d) Country of Incorporation and Place of Business: New Zealand (a) Frasers Broadview Limited (a) Frasers Papamoa Limited (a) Coast Homes Limited Property development Property development Builder 75% 67.5% 67.5% 75% 67.5% 67.5% Country of Incorporation and Place of Business: Philippines (a) Frasers Hospitality Philippines, Inc Management consultancy services (a) Frasers Hospitality Investments Inc. Property investment 100% 100% 100% 100% Country of Incorporation and Place of Business: Thailand (1)(a) Frasers Hospitality (Thailand) Limited Management consultancy services 100% 100% Country of Incorporation and Place of Business: Japan (b) Frasers Hospitality Japan Kabushiki Kaisha Management consultancy services 100% 100% Country of Incorporation and Place of Business: India (a) Frasers Hospitality India Pty Ltd Management consultancy services 100% 100% Country of Incorporation: Jersey, Channel Islands and Place of Business: United Kingdom (c) Frasers (St Giles Street, Edinburgh) Limited Property investment (c) Queensgate Gardens (C.I.) Limited Property investment 100% 100% 100% 100% Country of Incorporation and Place of Business: France (c) Societe de Gestion de Residence La Defense Management services 100% 100% Country of Incorporation and Place of Business: Indonesia (1)(a) PT Frasers Hospitality Investments Indonesia Property investment 100% 100% Country of Incorporation and Place of Business: Vietnam (a) Me Linh Point Limited Property investment 75% 75% 175 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 32. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (cont’d) Principal Activities Effective Shareholding 2013 2012 Subsidiaries of the Group (cont’d) Country of Incorporation and Place of Business: China (1)(d) Shanghai Frasers Management Consultancy Co., Ltd (1)(d) Beijing Sin Hua Yan Real Estate Development Co., Ltd Management services 100% 100% Property development 100% 100% (1)(d) Singlong Property Development Property development 100% 100% (Suzhou) Co., Ltd (1)(d) Frasers Property Management (Shanghai) Co., Ltd Management services 100% 100% (1)(d) Chengdu Sino Singapore Southwest Property development 80% 80% Logistics Co., Ltd (1)(d) Frasers Hospitality Management Management consultancy services 100% 100% Co., Ltd, Shanghai (1)(d) Fraser Place (Beijing) Property Management Co., Ltd Management consultancy services 100% 100% (1)(d) Modena Hospitality Management Management consultancy services 51% 51% Co., Ltd. (Shanghai) (1)(d) Beijing Fraser Suites Real Estate Management Co., Ltd Property investment 100% 100% Country of Incorporation and Place of Business: Hong Kong (d) Ace Goal Limited (d) Extra Strength Limited (d) Forth Carries Limited (d) Forward Plan Limited (d) Summit Park Limited (d) Superway Logistics Investments (Hong Kong) Limited Investment holding Investment holding Investment holding Investment holding Investment holding Investment holding 100% 100% 100% 100% 100% 80% 100% 100% 100% 100% 100% 80% (d) Frasers Hospitality (Hong Kong) Limited Management consultancy services 100% 100% 176 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 32. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (cont’d) Principal Activities Effective Shareholding 2013 2012 Joint Ventures of the Group Country of Incorporation and Place of Business: Thailand (1)(a) Riverside Homes Development Co., Ltd Property development 69.6% (5) 69.6% (5) Country of Incorporation and Place of Business: Singapore (a) FCL Peak Pte. Ltd. (2)(a) Ascendas Frasers Pte. Ltd. (a) Yishun Gold Pte. Ltd. (a) Precious Sand Pte. Ltd. (a) Easthouse Properties Pte. Ltd. (a) Emerald Star Pte. Ltd. (a) Sapphire Star Trust (a) FC Retail Trustee Pte. Ltd. (a) eCO Properties Pte. Ltd. (a) Quarry Bay Pte. Ltd. (a) WaterVine Homes Pte. Ltd. Property development Property development Property development Property development Property development Property development Property investment and development Trustee-management services Property development Property development Property development 50% 50% 50% 50% 50% 33.3% 33.3% 33.3% 33.3% 33.3% 40% 50% 50% 50% 50% 50% 33.3% 33.3% 33.3% 33.3% 33.3% - Country of Incorporation and Place of Business: Malaysia (a) Vacaron Company Sdn Bhd Property development 50% 50% Country of Incorporation and Place of Business: United Kingdom (c) GSF Homes Limited Property development (c) Sovereign House Fairbriar Homes Ltd Property development (c) Fairmuir Limited Property development 40% 40% 40% 40% 40% 40% Country of Incorporation and Place of Business: Australia (4)(a) Frasers Central Park Equity No. 1 Pty Ltd and SH Central Park Development East Pty Ltd (4)(a) Frasers Central Park Equity No. 2 Pty Ltd and SH Central Park Development West Pty Ltd Property development 37.5% 37.5% Property development 37.5% 37.5% 177 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 32. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES (cont’d) Principal Activities Effective Shareholding 2013 2012 Associates of the Group Country of Incorporation and Place of Business: Singapore (a) Frasers Commercial Trust (a) Frasers Centrepoint Trust Real estate investment trust 27.9% 27.4% Real estate investment trust 41% 19% 41% 19% (3)(a) Gemshine Investments (S) Pte Ltd Investment holding Country of Incorporation and Place of Business: Thailand (1)(a) Krungthep Land Public Company Limited Investment holding and property development 40.5% 40.5% Country of Incorporation and Place of Business: Malaysia (1)(d) Hektar Asset Management Sdn Bhd Management services 40% 40% Country of Incorporation and Place of Business: British Virgin Islands (b) Supreme Asia Investments Limited Investment holding 43.3% 43.3% Country of Incorporation and Place of Business: China (1)(a) Shanghai Zhong Jun Property Real Estate Development Co, Ltd Property development 45.2% 45.2% (a) (b) (c) (d) Note (1) Note (2) Note (3) Note (4) Note (5) Audited by Ernst & Young in the respective countries Not required to be audited under laws of the country of incorporation Audited by KPMG, Nottingham Audited by other firms Accounting year end is 31 December Accounting year end is 31 March Accounting year end is 30 June Unincorporated joint ventures Riverside Homes Development Co., Ltd is accounted for as a joint venture as the Group exercises only joint control over the company. 178 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 33. SIGNIFICANT RELATED PARTY TRANSACTIONS (a) Sale and Purchase of Goods and Services In addition to those related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place during the period at terms agreed between the parties: Rental Received from related companies Paid to an associate Service charge Received from related companies Management fees Paid to a related company Paid to a related party Received from associates Acquisition fees Received from an associate Divestment fees Received from an associate Leasing commission Received from an associate Marketing costs Paid to related parties Purchases Paid to related companies Corporate guarantee fee Paid to holding company Interest (income)/expense Received from related parties Paid to a related company (b) Compensation of Key Management Personnel Short term employment benefits Defined contribution plans Employee share-based expense Group 2013 $’000 2012 $’000 (2,211) 22,000 (3,276) 22,318 (541) (846) 12,500 360 (31,000) - - 11,500 360 (33,041) (1,075) (1,800) (161) (206) 11,960 5,034 208 808 96 937 (10,262) 57,439 (4,830) 56,840 Group 2013 $’000 8,281 120 2,931 2012 $’000 8,055 123 2,569 Total compensation paid to key management personnel 11,332 10,747 Comprises amounts paid to: Directors of the Company Resigned Directors of the Company Other key management personnel 4,672 62 6,598 4,390 - 6,357 11,332 10,747 179 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 33. SIGNIFICANT RELATED PARTY TRANSACTIONS (cont’d) (b) Compensation of Key Management Personnel (cont’d) The remuneration of key management personnel are determined by Fraser & Neave, Limited (“F&N”) Remuneration Committee having regard to the performance of individuals and market trends. Certain eligible employees and directors of the Group and Company have been granted share options to acquire shares in F&N. The details of the share options can be found in F&N’s Annual Report. The fair value of these options as at the date of grant is computed by F&N using the Binomial valuation model taking into account the terms and conditions upon which the options were granted. The share-based compensation recorded by the Group and Company is based on the amounts allocated by F&N. 34. FINANCIAL RISK MANAGEMENT The Group and the Company are exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk. The Group has risk management policies and guidelines governing all investments, which set out its overall business strategies, its tolerance for risk and its general risk management philosophy and has established processes to monitor and control hedging transactions in a timely and accurate manner. All investment opportunities are reviewed regularly by the Executive Committee of the Board to ensure that the Group’s policy guidelines are adhered to. (a) Credit Risk At the balance sheet date, the Group’s and the Company’s maximum exposure to credit risk in the event that the counterparties fail to perform their obligations is represented by the carrying amount of each class of financial assets recognised in the balance sheets, including derivatives with positive fair values. At 30 September 2013, 100% (2012: 100%) of the Company’s receivables are due from subsidiaries and joint ventures. The directors believe that there is no significant credit risk as these companies are of good credit standing. The Group has guidelines governing the monitoring of credit risk. Contractual deposits are collected and scheduled progress payments are received from the buyers of development properties held for sale when due. Titles to development properties held for sale are only transferred upon full settlement. Rental deposits are collected from tenants and debts are monitored regularly to minimise risk of non-payment. Cash and fixed deposits are placed with reputable financial institutions. Information regarding financial assets that are either past due or impaired and the aging analysis of trade receivables is disclosed in Note 21. With respect to derivative financial instruments, credit risk arises from the potential failure of counterparties to meet their obligations under the contract or arrangement. The Group’s maximum credit risk exposure for foreign currency swap contracts and interest rate swap contracts are limited to the fair value adjustments of these contracts. It is the Group’s and the Company’s policy to enter into financial instruments with a diversity of credit worthy counterparties. The Group and the Company do not expect to incur material credit losses on their financial assets or other financial instruments. 180 Annual Report 2013Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 34. FINANCIAL RISK MANAGEMENT (cont’d) (b) Liquidity Risk Liquidity risk is the risk that the Group and Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group adopts a prudent approach to managing its liquidity risk. The Group always maintains sufficient cash and has available funding through a diverse source of uncommitted credit facilities from various banks and a related company. Surplus cash from subsidiaries are transferred to the Company in accordance with its group policy for management of liquidity of the companies in the Group. The table below analyses the maturity profile of the Group’s and Company’s financial assets and liabilities (including derivative financial instruments) based on contractual undiscounted cash flow. 1 year or less $’000 2013 1 to 5 years $’000 Over 5 years $’000 Total $’000 1 year or less $’000 2012 1 to 5 years $’000 Over 5 years $’000 Total $’000 Group Financial Assets Trade and other receivables Derivative financial instruments Cash and cash equivalents Total undiscounted financial assets Financial Liabilities Trade and other payables Derivative financial instruments Loans and borrowings Total undiscounted financial liabilities Total net undiscounted financial liabilities 313,954 106,257 94,067 514,278 333,767 75,875 13,833 423,475 1,478 506,784 - - - - 1,478 - 506,784 1,206,314 - - - - - 1,206,314 822,216 106,257 94,067 1,022,540 1,540,081 75,875 13,833 1,629,789 1,461,043 1,245,096 3,169 2,709,308 1,404,412 2,040,361 3,491 3,448,264 3,232 669,079 2,924 17,206 10,858 1,095,454 144,809 1,909,342 198,262 1,373,543 138,213 1,710,018 6,156 6,348 - - 2,133,354 2,343,474 147,978 4,624,806 1,613,532 3,420,252 141,704 5,175,488 (1,311,138) (2,237,217) (53,911) (3,602,266) (73,451) (3,344,377) (127,871) (3,545,699) 181 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 34. FINANCIAL RISK MANAGEMENT (cont’d) (b) Liquidity Risk (cont’d) 1 year or less $’000 2013 1 to 5 years $’000 Over 5 years $’000 Total $’000 1 year or less $’000 2012 1 to 5 years $’000 Over 5 years $’000 Total $’000 3 - - 3 1,764 - - 1,764 562,094 315,828 1,394,554 2,272,476 13,203 88,796 1,641,787 1,743,786 - 28,426 - - - - - 904 42,174 28,426 564,627 - - - 43,078 564,627 590,523 315,828 1,394,554 2,300,905 580,498 130,970 1,641,787 2,353,255 539,316 725,478 - 1,264,794 533,668 866,093 - 1,399,761 2,163 - 698 - - - 2,861 - 9,195 2,116 3,973 - - - 13,168 2,116 541,479 726,176 - 1,267,655 544,979 870,066 - 1,415,045 49,044 (410,348) 1,394,554 1,033,250 35,519 (739,096) 1,641,787 938,210 Company Financial Assets Trade and other receivables Amounts due from subsidiaries Loans to joint ventures Cash and cash equivalents Total undiscounted financial assets Financial Liabilities Trade and other payables Derivative financial instruments Loans and borrowings Total undiscounted financial liabilities Total net undiscounted financial assets/ (liabilities) The earliest period in which the financial guarantee contracts amounting to $52,383,000 (2012: $75,105,000) could be called is within one year. 182 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 34. FINANCIAL RISK MANAGEMENT (cont’d) (c) Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flow of the Group’s financial instruments will fluctuate because of changes in market interest rates. The Group’s exposure to changes in interest rates is in respect of debt obligations and deposits with related companies and financial institutions. The Group’s policy is to manage interest cost using a mix of fixed and floating rate debts with varying tenors. To manage this mix in a cost-efficient manner, the Group enters into interest rate swaps to hedge its interest rate exposure for specific underlying debt obligations. Effective interest rates and repricing analysis In respect of the interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates at balance sheet date and the periods in which they reprice. Financial instruments classified as fixed rates are instruments for which interest rates are fixed until the maturity of the instruments or for which interest rate swaps have been entered into. Note Effective Interest Rate % Floating Interest Rate $’000 Within 1 year $’000 Between 1 to 5 years $’000 After 5 years $’000 Total $’000 Fixed Interest Rate Group 2013 Financial Assets Cash and bank deposits Other financial assets 25 21 0.0 to 4.0 6.0 to 8.0 73,090 - 281,766 8,071 - 90,429 - 63,617 354,856 162,117 73,090 289,837 90,429 63,617 516,973 Financial Liabilities Loans and borrowings Other financial liabilities Derivative financial instruments 27 26 24 1.0 to 7.3 0.6 to 6.0 1.6 to 4.0 1,329,104 302,350 5,323 61,300 289,104 347,634 1,197,275 - - 125,000 1,804,508 - 1,847,259 5,323 - 1,636,777 408,934 1,486,379 125,000 3,657,090 2012 Financial Assets Cash and bank deposits Other financial assets 25 21 0.0 to 3.6 8.0 51,477 - 497,931 60,350 - 75,875 51,477 558,281 75,875 - - - 549,408 136,225 685,633 Financial Liabilities Loans and borrowings Other financial liabilities Derivative financial instruments 27 26 24 1.1 to 7.0 1.7 to 6.0 1.6 to 4.3 1,183,190 301,708 10,891 - 284,335 335,379 1,893,036 - - 125,000 1,592,525 - 2,530,123 10,891 - 1,495,789 335,379 2,177,371 125,000 4,133,539 183 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 34. FINANCIAL RISK MANAGEMENT (cont’d) (c) Interest Rate Risk (cont’d) Note Effective Interest Rate % Floating Interest Rate $’000 Within 1 year $’000 Between 1 to 5 years $’000 After 5 years $’000 Total $’000 Fixed Interest Rate Company 2013 Financial Assets Cash and bank deposits Amounts due from subsidiaries 25 15 0.0 to 7.7 1.3 to 2.8 - 1,549,942 12,585 - 1,549,942 12,585 Financial Liabilities Other financial liabilities Derivative financial instruments 26 24 0.9 to 7.8 1.6 to 4.0 145,140 2,861 126,980 - 148,001 126,980 2012 Financial Assets Cash and bank deposits Amounts due from subsidiaries Other financial assets Financial Liabilities Loans and borrowings Other financial liabilities Derivative financial instruments 25 15 18 27 26 24 0.0 to 1.0 0.5 to 2.8 8.0 - 1,099,843 - 31,852 - 60,350 1,099,843 92,202 1.4 1.0 to 7.8 1.6 to 4.3 2,116 44,563 7,493 - 268,644 - 54,172 268,644 - - - - - - - - - - - - - - 12,585 - - 1,549,942 - 1,562,527 - - - 272,120 2,861 274,981 - 31,852 - 1,099,843 60,350 - - 1,192,045 - - - - 2,116 313,207 7,493 322,816 Sensitivity Analysis for Interest Rate Risk For the variable rate financial assets and liabilities, a hundred basis points increase/decrease in interest rate, with all other variables held constant, would decrease/increase the Group’s profit after tax and net loss in hedging reserve by approximately $12,979,000 (2012: $11,988,000) and $5,300,000 (2012: $5,000,000) respectively, arising mainly as a result of higher/lower interest expense on net floating borrowing position and increase/decrease in the fair value of derivatives held for hedging respectively. (d) Foreign Currency Risk The purpose of the Company’s and the Group’s foreign currency hedging activities is to protect against the volatility associated with investments in and loans granted to foreign subsidiaries. The Company and the Group primarily utilise foreign currency forward contracts with maturities of less than twelve months to hedge foreign currency-denominated investments and loans to foreign subsidiaries. Under this programme, increases or decreases in the Company’s foreign currency-denominated investments and loans are partially offset by gains and losses on the hedging instruments. The Company does not use foreign currency forward contracts for trading purposes. In addition to transactional exposures, the Group is also exposed to foreign exchange movements on its net investment in foreign subsidiaries. The Group uses foreign currency borrowings as a natural hedge against the activities of the foreign subsidiaries. The net fair value gain/loss of the foreign currency forward contracts as at 30 September 2013 was $510,000 (2012: $4,699,000). 184 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 34. FINANCIAL RISK MANAGEMENT (cont’d) (d) Foreign Currency Risk (cont’d) The financial assets and liabilities are denominated in the following currencies: Singapore Dollar Australia Dollar $’000 $’000 Chinese Renminbi $’000 Hong Kong Dollar $’000 Sterling Pound $’000 United States Dollar $’000 Others $’000 Total $’000 Group 2013 Financial Assets Financial assets Trade and other receivables Cash and cash equivalents Derivative financial instruments 2,148 403,597 259,277 - 26,208 74,604 - 12,254 123,278 - 572 939 16 11,465 32,944 - 14,658 5,690 - 2,113 10,052 2,164 470,867 506,784 - - - - - 1,478 - 1,478 Total Financial Assets 665,022 100,812 135,532 1,511 44,425 21,826 12,165 981,293 Financial Liabilities Trade and other payables Derivative financial instruments Loans and borrowings 1,775,806 211,033 102,149 81 318,449 201,299 14,156 2,622,973 1,720 820,586 1,710 723,584 - 46,689 - - - 97,787 2,861 107,260 - 6,291 8,602 1,804,508 Total Financial Liabilities 2,598,112 936,327 148,838 81 416,236 311,420 22,758 4,433,772 2012 Financial Assets Financial assets Trade and other receivables Cash and cash equivalents 62,500 358,372 708,121 - 24,705 68,735 - 6,045 - 66 129,933 259,000 16 6,073 25,480 - 17,133 8,019 62,516 - 417,405 5,011 7,026 1,206,314 Total Financial Assets 1,128,993 93,440 135,978 259,066 31,569 25,152 12,037 1,686,235 Financial Liabilities Trade and other payables Derivative financial instruments Loans and borrowings 2,222,461 420,492 75,733 17 156,733 349,510 14,296 3,239,242 18 876,489 3,030 343,972 - 48,646 4,475 - 574 193,724 7,493 107,660 - 15,590 22,034 1,592,525 Total Financial Liabilities 3,098,968 767,494 124,379 4,492 351,031 464,663 36,330 4,847,357 185 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 34. FINANCIAL RISK MANAGEMENT (cont’d) (d) Foreign Currency Risk (cont’d) The financial assets and liabilities are denominated in the following currencies: Singapore Dollar Australia Dollar $’000 $’000 Chinese Renminbi $’000 Hong Kong Dollar $’000 Sterling Pound $’000 United States Dollar $’000 Others $’000 Total $’000 - - 5,487 - 250,448 39 - 2,148 56,845 2,272,479 28,426 - - 1,478 - 1,478 5,487 251,965 56,845 2,304,531 - - - - - - - - - - - 172,073 - 1,264,254 2,861 174,934 - 2,861 - 1,267,115 - 245,770 358 - 62,498 56,299 1,785,315 564,627 - 246,128 56,299 2,412,440 313,207 - 1,399,101 7,493 2,116 322,816 - - 12,192 2,116 - 1,413,409 Company 2013 Financial Assets 2,148 Financial assets Trade and other receivables 1,910,020 Cash and cash equivalents 22,846 Derivative financial instruments - - 55,166 - - Total Financial Assets 1,935,014 55,166 Financial Liabilities Trade and other payables Derivative financial instruments 1,092,181 - Total Financial Liabilities 1,092,181 - - - 2012 Financial Assets Financial assets 62,498 Trade and other receivables 1,421,056 298,160 Cash and cash equivalents - 62,190 7,852 Total Financial Assets 1,781,714 70,042 Financial Liabilities Trade and other payables Derivative financial instruments Loans and borrowings 1,085,894 - - Total Financial Liabilities 1,085,894 - - - - - - - - - - - - - - 54 - 54 - - - - - - - - 258,257 - 258,257 - - - - - 4,699 - 4,699 186 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 34. FINANCIAL RISK MANAGEMENT (cont’d) (d) Foreign Currency Risk (cont’d) The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the US$ and A$ exchange rates (against the respective functional currencies of the Group entities), with all other variables held constant. Group US$/S$ strengthened 10% (2012: 10%) - - weakened 10% (2012: 10%) US$/RMB strengthened 10% (2012: 10%) - - weakened 10% (2012: 10%) A$/S$ strengthened 10% (2012: 10%) - - weakened 10% (2012: 10%) Company US$/S$ strengthened 10% (2012: 10%) - - weakened 10% (2012: 10%) A$/S$ strengthened 10% (2012: 10%) - - weakened 10% (2012: 10%) NZ$/S$ strengthened 10% (2012: 10%) - - weakened 10% (2012: 10%) 2013 $’000 2012 $’000 (11,862) 11,862 (23,587) 23,587 (1,809) 1,809 1,551 (1,551) (1,781) 1,781 1,157 (1,157) 2013 $’000 2012 $’000 6,508 (6,508) 4,579 (4,579) 4,718 (4,718) (5,568) 5,568 5,813 (5,813) 4,673 (4,673) 187 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 35. FAIR VALUE OF FINANCIAL INSTRUMENTS (a) Fair Value of Financial Instruments that are Carried at Fair Value (i) The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy: Quoted Prices in Active Markets for Identical Instruments Level 1 $’000 Significant Other Observable Inputs Level 2 $’000 Significant Unobservable Inputs Level 3 $’000 16 - 16 - - - 16 - 16 - - - - 1,478 1,478 5,323 968 6,291 - - - - - - - - - - 60,350 60,350 10,891 4,699 15,590 - - - Total $’000 16 1,478 1,494 5,323 968 6,291 16 60,350 60,366 10,891 4,699 15,590 Group 2013 Financial Assets Available-for-sale financial assets Quoted investments Derivative financial assets Foreign currency forward contracts At 30 September 2013 Financial Liabilities Derivative financial liabilities Interest rate swaps Foreign currency forward contracts At 30 September 2013 2012 Financial Assets Available-for-sale financial assets Quoted investments Quoted non-equity investments At 30 September 2012 Financial Liabilities Derivative financial liabilities Interest rate swaps Foreign currency forward contracts At 30 September 2012 188 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 35. FAIR VALUE OF FINANCIAL INSTRUMENTS (cont’d) (a) Fair Value of Financial Instruments that are Carried at Fair Value (cont’d) (ii) The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: 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). Quoted investments: Fair value is determined directly by reference to their published market bid price at the balance sheet date. Derivatives: The fair value of interest rate swap contracts and foreign currency forward contracts is determined by reference to market values for similar instruments. There have been no transfers between Level 1 and Level 2 during the financial year ended 30 September 2013. (b) Fair Value of Financial Instruments by Classes that are Not Carried at Fair Value and whose Carrying Amounts are Reasonable Approximation of Fair Value Current Trade and Other Receivables and Payables, Cash and Cash Equivalents, Current Loans and Borrowings and Non-current Bank Loans The carrying amounts of these financial assets and liabilities are reasonable approximation of fair value, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the balance sheet date. 189 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 35. FAIR VALUE OF FINANCIAL INSTRUMENTS (cont’d) (c) Fair Value of Financial Instruments by Classes that are Not Carried at Fair Value and whose Carrying Amounts are Not Reasonable Approximation of Fair Value (i) The fair value of financial assets and liabilities by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows: Group Company 2013 2012 2013 2012 Carrying Amount $’000 Fair Value $’000 Carrying Amount $’000 Fair Value $’000 Carrying Amount $’000 Fair Value $’000 Carrying Amount $’000 Fair Value $’000 Financial Assets Unquoted equity investments, at cost Amounts due from subsidiaries Loans to associates Loans to non-controlling interest Financial Liabilities Sundry creditors Amounts due to subsidiaries Amounts due to related companies Medium Term Notes 2,148 @ 2,150 @ 2,148 @ 2,148 - 77,675 - * - 13,833 - * 1,710,390 - * - 1,730,583 - 90,429 * 75,875 3,169 - * - 3,491 * * - - - - - - - - 725,478 * 866,093 1,197,275 1,293,536 124,647 125,000 1,893,036 2,136,646 124,594 125,000 - - - - - - @ * - - - * - - @ Unquoted Equity Investments Carried at Cost Fair value information has not been disclosed for these investments carried at cost less impairment because fair value cannot be measured reliably. These equity instruments represent ordinary shares that are not quoted on any market and do not have any comparable industry peer that is listed. The quoted non-equity instruments represent bonds that are not actively traded and whose quoted price has not moved in years. The Group does not intend to dispose of these investments in the foreseeable future. * Other Receivables and Other Payables (Non-current) No disclosure of fair value is made for amounts due from/to related companies as it is not practicable to determine their fair values with sufficient reliability since these balances have no fixed terms of repayment. (ii) Determination of fair value Amounts due to related companies and Medium Term Notes (Non-current) The fair values as disclosed in the table above are estimated by discounting expected future cash flow at market incremental lending rate for similar types of lending and borrowing arrangements at the balance sheet date. 190 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 36. CLASSIFICATION OF FINANCIAL INSTRUMENTS Set out below is a comparison by category of carrying amounts of all the Group’s and the Company’s financial instruments that are carried in the financial statements. Loans and Receivables Derivatives used for Hedging Fair Value through Profit or Loss Available- for- sale Liabilities at Amortised Cost Non- financial Assets/ Liabilities $’000 $’000 $’000 $’000 $’000 $’000 Total $’000 Group Year ended 30 September 2013 Assets Investment properties Fixed assets Associates Financial assets Intangible assets Other assets Deferred tax assets Inventory, at cost Properties held for sale Trade and other receivables Prepaid land costs Other prepayments Derivative financial instruments Cash and cash equivalents Liabilities Trade and other payables Provision for taxation Derivative financial instruments Loans and borrowings Deferred tax liabilities Year ended 30 September 2012 Assets Investment properties Fixed assets Associates Financial assets Intangible assets Other assets Deferred tax assets Inventory, at cost Properties held for sale Trade and other receivables Other prepayments Financial assets Cash and cash equivalents Liabilities Trade and other payables Provision for taxation Derivative financial instruments Loans and borrowings Deferred tax liabilities - - - - - - - - - 470,867 - - - 506,784 977,651 - - - - - - - - - - - - - - - - - - - - - - - 4,663 - - 4,663 - - - - - - - - - 417,405 - - 1,206,314 1,623,719 - - - - - - - - - - - - - - - - - - - - - - 15,590 - - 15,590 - - - - - - - - - - - - 1,478 - 1,478 - - 1,628 - - 1,628 - - - - - - - - - - - - - - - - - - - - - - - 2,164 - - - - - - - - - - 2,164 31,599 - 3,115,234 3,115,234 - 31,599 - 1,055,983 1,055,983 2,164 - - 64,478 64,478 - 43,200 43,200 - 2,937 2,937 - - 3,578 3,578 - 4,737,053 4,737,053 470,867 - - 398,033 398,033 - 11,901 11,901 - 1,478 - - - 506,784 - - 9,463,996 10,445,289 - 2,622,973 - - - - - 1,804,508 - - - 4,427,481 302,629 2,925,602 112,674 112,674 - 6,291 - 1,804,508 117,928 117,928 533,231 4,967,003 - - - 2,166 - - - - - - - 60,350 - 62,516 33,337 - 2,821,434 2,821,434 - 33,337 - 1,223,506 1,223,506 2,166 - - 64,834 64,834 - 42,400 42,400 - 2,937 2,937 - - 4,175 4,175 - 4,471,239 4,471,239 417,405 - - 7,127 7,127 - - - 60,350 - - 1,206,314 - 8,670,989 10,357,224 - 3,239,242 - - - - - 1,592,525 - - - 4,831,767 335,053 3,574,295 127,161 127,161 15,590 - - 1,592,525 91,984 554,198 5,401,555 91,984 191 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 36. CLASSIFICATION OF FINANCIAL INSTRUMENTS (cont’d) Loans and Receivables Derivatives used for Hedging Fair Value through Profit or Loss Available- for- sale Liabilities at Amortised Cost Non- financial Assets/ Liabilities $’000 $’000 $’000 $’000 $’000 $’000 Total $’000 - - - - - 2,272,479 - 28,426 - 2,300,905 - - - - - - - - - 1,785,315 - - 564,627 2,349,942 - - 2,861 2,861 - - - - - - - - - - - - - - - - - 12,192 - 12,192 - - - - - - - - - - - - - - - - - - 1,478 1,478 - - - - 2,148 - - - - 2,148 - - 1,650 1 1,650 1 - 1,556,627 1,556,627 500 - 500 - - 2,148 - 2,272,479 - 49 - 28,426 - 1,478 - 49 - - - 1,558,827 3,863,358 - - - - - - - - - - - - - - - - - - - - 1,264,254 - - - - - 1,264,254 11,767 2,861 11,767 - - 1,264,254 11,767 1,278,882 - - - - 1,550 2 1,550 2 - - 2,148 - - 60,350 - 62,498 - 1,561,981 1,561,981 500 - 500 - - 2,148 - 1,785,315 - 117 - 60,350 - 564,627 - 117 - - - 1,564,150 3,976,590 - 1,399,101 - - - - 2,116 - - 1,399,101 10,093 12,192 2,116 10,093 - - - 1,401,217 10,093 1,423,502 Company Year ended 30 September 2013 Assets Investment properties Fixed assets Investments in: - subsidiaries - joint ventures Financial assets Trade and other receivables Other prepayments Cash and cash equivalents Derivative financial instruments Liabilities Trade and other payables Provision for taxation Derivative financial instruments Year ended 30 September 2012 Assets Investment properties Fixed assets Investments in: - subsidiaries - joint ventures Financial assets Trade and other receivables Other prepayments Financial assets Cash and cash equivalents Liabilities Trade and other payables Provision for taxation Derivative financial instruments Loans and borrowings 192 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 37. CAPITAL MANAGEMENT The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholder, return capital to shareholder or issue new shares. No changes were made in the objectives, policies or processes during the years ended 30 September 2013 and 30 September 2012. The Group monitors capital using a gearing ratio, which is net debt divided by total equity, as follows: Fixed deposits, cash and bank balances Loans and borrowings Interest bearing loans due to related companies Net borrowings Total equity Net borrowings over total equity ratio Group 2013 $’000 2012 $’000 (Restated) 506,784 (1,804,508) (1,847,259) 1,206,314 (1,592,525) (2,530,123) (3,144,983) (2,916,334) 5,478,286 4,955,669 0.57 0.59 Certain entities in the Group are required to comply with certain externally imposed capital requirements in respect of some of their external borrowings. 38. COMMITMENTS (a) Capital Commitments Capital and development expenditures contracted for as at the end of the reporting period but not recognised in the financial statements are as follows: Commitments in respect of contracts placed for: - Estimated development costs for properties held for sale - Capital expenditure costs for investment properties - Share of joint ventures’ capital and development expenditure Group 2013 $’000 2012 $’000 2,144,291 788,414 339,445 871,154 46,939 376,724 3,272,150 1,294,817 193 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 38. COMMITMENTS (cont’d) (b) Operating Lease Commitments – as Lessee Future minimum rental payable under non-cancellable operating leases at the end of the reporting period is as follows: Within 1 year From 1 year to 5 years Group Company 2013 $’000 23,012 7,333 30,345 2012 $’000 25,200 30,345 55,545 2013 $’000 2012 $’000 - - - - - - The operating leases do not contain any escalation clauses and do not provide for contingent rents. The lease terms do not contain restrictions on the Group activities concerning dividends, additional debts or entering into other leasing agreements. Rental expense recognised in the profit statement is as follows: Minimum lease payments (c) Operating Lease Commitments – as Lessor Group 2013 $’000 2012 $’000 25,200 25,200 The Group has entered into commercial property leases on its investment properties and properties held for sale. These non-cancellable leases have remaining non-cancellable lease terms of between 2 to 8 years. Future minimum rental receivable under non-cancellable operating leases at the end of the reporting period is as follows: Within 1 year From 1 year to 5 years After 5 years Group Company 2013 $’000 125,114 166,797 63 291,974 2012 $’000 131,239 157,363 700 289,302 2013 $’000 2012 $’000 - - - - - - - - Rental income from investment properties is disclosed in Note 13. Rental income recognised in the profit statement from properties held for sale is as follows: Group 2013 $’000 2012 $’000 102,093 78,129 Minimum lease payments 194 Annual Report 2013 Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 39. CONTINGENCIES (a) Financial Guarantee Contracts (i) (ii) (iii) As at 30 September 2013, the Company has provided bankers’ guarantees of $61,153,000 (2012: $78,726,000) to unrelated parties in respect of performance contracts on behalf of certain subsidiaries. No liability is expected to arise. The Company has provided a corporate guarantee for Baht 200,000,000 (2012: Baht 200,000,000) as security for bank facility granted to a joint venture in respect of the acquisition of land. The Company has provided an unconditional and irrevocable corporate guarantee for up to $57 million to finance the payment of development charge and construction cost of the New Wing of The Centrepoint by The Management Corporation Strata Title Plan No. 1298 (“MCST 1298”). The corporate guarantee will only be discharged upon full repayment of the loan by the MCST 1298. As at 30 September 2013, the outstanding loan by MCST 1298 is $15,431,000 (2012: $18,199,000). (iv) A wholly-owned subsidiary of the Group has provided RMB 176.3 million (2012: RMB 91.0 million) financial guarantees to banks in China in connection with loans provided by the banks to the subsidiary’s property buyers, covering the period from loan contract date to the property delivery date. 40. COMPARATIVES Certain adjustments have been made to the prior period financial statements to conform with the current period presentation in connection with the adoption of Amendments in FRS 12 as disclosed in Note 2.1. 41. SUBSEQUENT EVENTS (a) On 27 August 2013, the directors of Fraser and Neave, Limited (“F&NL”), the immediate holding company of the Company, announced that F&NL proposes to demerge its property business (the “Announcement”) by effecting a distribution in specie (the “Proposed FCL Distribution”) of all the ordinary shares in the issued share capital of the Company, to shareholders of F&NL, on the basis of two ordinary shares in the Company (“FCL Shares”) for each ordinary share of F&NL and the listing of the FCL Shares on the Main Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”) by way of an introduction (the “Proposed Listing”). On 27 October 2013, F&NL announced that SGX-ST has granted a conditional eligibility to list for the listing of the FCL Shares on the Main Board of the SGX-ST by way of an introduction. On 28 October 2013, F&NL despatched the following documents to shareholders of F&NL: (a) a circular dated 28 October 2013 containing, inter alia, a notice to convene an extraordinary general meeting on 13 November 2013 for the purpose of seeking the approval of shareholders of F&NL for the Proposed FCL Distribution, and (b) an introductory document dated 28 October 2013 in relation to the Proposed Listing. 195 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Notes to the Financial Statements FOR THE YEAR ENDED 30 SEPTEMBER 2013 41. SUBSEQUENT EVENTS (cont’d) (b) On 25 October 2013, in conjunction with the Proposed FCL Distribution, F&NL subscribed for 330,000,000 new FCL Shares (the “Initial Capitalisation”) for a total subscription amount of $330 million. Thereafter, on the same day, the Company redeemed all its 330,000 Class B redeemable preference shares held by F&NL in the Company, at $1,000 per Class B redeemable preference share, for an aggregate amount of $330 million (the “Preference Shares Redemption”). F&NL will, immediately prior to the Proposed Listing, subscribe for new FCL shares (the “Additional Capitalisation”) for a total subscription amount of $670 million. F&N Treasury Pte. Ltd. (“F&NT”), a wholly-owned subsidiary of F&NL, has, from time to time, extended loans to FCL and its subsidiaries (“FCL Group”) (“Loans”) for various purposes. Immediately prior to the Proposed Listing, $670 million of the Loans will be repaid with equity injected by F&NL pursuant to the Additional Capitalisation while the remaining loans will be transferred (for consideration) by F&NT (as lender) to FCL Treasury Pte. Ltd., which consideration will be funded by drawing down on bank loans, (together with the Initial Capitalisation and the Preference Shares Redemption, the “Corporate Restructuring”). The effects of the Corporate Restructuring on the equity attributable to owners of the Company will be an increase in share capital by $670 million. The equity attributable to owners of the Company as at 30 September 2013 was $5,451 million. (c) On 31 October 2013, in connection with a refinancing of $97.8 million (£48.8 million) bank borrowings in the UK, the Deferred Restructuring Fees (“DRF”) and Bank’s Equity Allocation Dividend (“BEAD”) totalling $11 million (£5.5 million) (Note 26) were settled with the bank concurrently based on the valuation of certain sites at the time of refinancing. 42. AUTHORISATION OF FINANCIAL STATEMENTS The financial statements for the financial year ended 30 September 2013 were authorised for issue in accordance with a resolution of the directors on 12 November 2013. 196 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Particulars of Group Properties AS AT 30 SEPTEMBER 2013 COMPLETED INVESTMENT PROPERTIES Land $’000 Building $’000 Singapore Alexandra Point Robertson Walk & Fraser Place Robertson Walk The Centrepoint Valley Point & Fraser Suites River Valley ONE@Changi City Business Park A 24-storey office building at 438 Alexandra Road Freehold, lettable area - 18,523 sqm 212,630 58,370 A 10-storey commercial-cum-serviced apartment complex with a 2-storey basement carpark, a 2-storey retail podium and 164 serviced apartment units at Robertson Walk Shopping Centre and Fraser Place Robertson Walk, 11 Unity Street Leasehold (Lease expires year 2840) Lettable area: Retail 9,016 sqm Serviced apartments 17,694 sqm 26,710 sqm Total A 7-storey shopping-cum-residential complex with 2 basement floors at The Centrepoint, 176 Orchard Road Freehold and leasehold (Lease expires year 2078), lettable area - 30,967 sqm A 20-storey commercial-cum-serviced apartment complex with a 5-storey covered carpark, a 5-storey podium block, a 2-storey retail podium and 255 serviced apartment units at Valley Point Shopping Centre/Office Tower and Fraser Suites River Valley, River Valley Road Leasehold (Lease expires year 2876) Lettable area: Retail 3,699 sqm Serviced apartments 22,214 sqm 16,948 sqm 42,861 sqm Office Total A 9-storey commercial business park building at 1 Changi Business Park Central 1 Leasehold (Lease expires year 2069), lettable area - 61,299 sqm 249,750 81,250 520,160 119,840 448,370 177,630 30,500 110,205 Centrepoint Apartment An apartment unit 1,540 110 Australia Fraser Place Melbourne Capri by Fraser, Brisbane Vietnam Me Linh Point 112 serviced apartment units in 2 blocks of high rise building at Melbourne, VIC 3000 Freehold, lettable area - 3,801 sqm 239 units of hotel residences at 80 Albert St, Brisbane, Australia Freehold, lettable area - 9,468 sqm A 22-storey retail/office building plus 2 basements at Me Linh Point Tower, 2 Ngo Duc Ke Street, District 1, Ho Chi Minh City Leasehold (Lease expires year 2045), lettable area - 17,549 sqm 32,872 47,885 - - 27,999 22,526 197 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Particulars of Group Properties AS AT 30 SEPTEMBER 2013 COMPLETED INVESTMENT PROPERTIES (cont’d) China Fraser Suites CBD Philippines Fraser Place Forbes Tower United Kingdom Fraser Place Canary Wharf Fraser Suites Glasgow Fraser Suites Edinburgh Fraser Suites Queens Gate Fraser Suites Kensington Indonesia Fraser Residence Sudirman A building comprising residential apartments (3rd to 23rd level) and clubhouse (2nd level) at Fraser Suites CBD Beijing (EEL), 12 Jin Tong Xi Road, Chaoyang District, Beijing Leasehold: Residential (Lease expires year 2073) Clubhouse (Lease expires year 2043) Lettable area - 28,448 sqm 89 serviced apartment units with 116 car park lots in the East Tower of Fraser Place Forbes Tower, Valero Street, Salcedo Village, Makati City, Manila Freehold, lettable area - 17,046 sqm 2 buildings of 96 residential apartments at Fraser Place Canary Wharf, C2 and C3 The Boardwalk, Trafalgar Way, London Leasehold, lettable area - 4,460 sqm A 4-storey building of 99 serviced apartments at Fraser Suites Glasgow, 1-19 Albion Street, Glasgow G1 1LH, Scotland Freehold, lettable area - 4,964 sqm A 8-storey building of 75 residential apartments at Fraser Suites Edinburgh, 12-26 St Giles Street Edinburgh EH1 1PT, Scotland Freehold, lettable area - 2,333 sqm 105 residential apartments at Fraser Suites Queens Gate, 39B Queens Gate Gardens, London SW7 5RR Freehold, lettable area - 4,188 sqm 69 residential apartments at Fraser Suites Kensington, 75 Stanhope Gardens, London SW7 5RN Freehold, lettable area - 6,845 sqm 108 serviced apartment units in Fraser Tower of Fraser Residence Sudirman Jakarta, The Peak Sudirman Jakarta, Jl. Setiabudi Raya No. 9, Jakarta Freehold, lettable area - 11,388 sqm Land $’000 Building $’000 - 239,048 - 27,603 - 71,185 - 20,052 12,759 13,309 - - 106,276 197,512 41,903 - TOTAL COMPLETED INVESTMENT PROPERTIES 1,626,368 1,244,916 198 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Particulars of Group Properties AS AT 30 SEPTEMBER 2013 INVESTMENT PROPERTIES UNDER CONSTRUCTION Singapore Waterway Point A mixed commercial and residential development at Punggol Central/Punggol Walk. 331/3% proportionate share of commercial component Leasehold (Lease expires year 2110), gross floor area of 50,398 sqm Land $’000 Building $’000 215,956 27,994 TOTAL INVESTMENT PROPERTIES UNDER CONSTRUCTION 215,956 27,994 TOTAL PROPERTIES (CLASSIFIED AS INVESTMENT PROPERTIES) 1,842,324 1,272,910 COMPLETED PROPERTIES HELD FOR SALE Singapore Soleil @ Sinaran Esparina Residences Leasehold land of approximately 12,468 sqm situated at Sinaran Drive. The development has a gross floor area of 44,878 sqm and consists of 417 condominium units. Leasehold land of approximately 19,000 sqm at Compassvale Bow for the development of 573 executive condominium units of approximately 56,643 sqm of gross floor area for sale. Changi City Point and Capri by Fraser Leasehold land of approximately 47,006 sqm situated at Changi Business Park. The development has a gross floor area of 47,438 sqm and consists of 313 hotel rooms and a retail mall. Australia The Habitat Lumiere Central Park Fraser Suites Perth Freehold land of approximately 862 sqm situated at 11-17 Chandos Street, Sydney NSW. The development has a gross floor area of 6,223 sqm and consists of 60 residential units, 2 retail units and 9 offices. Freehold land of approximately 3,966 sqm situated at former Regent Theatre, Frontages on George Street, Bathurst & Kent Street, Sydney NSW. The development has a gross floor area of 61,146 sqm and consists of 1 retail podium, 456 residential units, 201 serviced apartments, 3 retail units and 19 commercial suites. Freehold land of approximately 48,000 sqm situated at Broadway, Sydney NSW. The development has a gross floor area of 30,350 sqm and consists of 395 residential apartment units. Freehold land of approximately 11,895 sqm situated at East Perth. The development has a gross floor area of 22,118 sqm and consists of 165 serviced apartments, 5 retail units and 6 commercial office units. Effective Group Interest % 100.0 80.0 50.0 75.0 80.5 37.5 87.5 199 Annual Report 2013 Effective Group Interest % 100.0 80.0 100.0 49.0 80.0 79.2 40.0 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Particulars of Group Properties AS AT 30 SEPTEMBER 2013 COMPLETED PROPERTIES HELD FOR SALE (cont’d) China Crosspoint Leasehold land of approximately 7,111 sqm situated at Xi Cheng District, Xin Jie Kou, Beijing. The development has a gross floor area of 28,572 sqm and consists of retail units and offices. Chengdu Logistics Hub Leasehold land of approximately 195,846 sqm situated at Chengdu. Phase 1 of the development has a gross floor area of 161,288 sqm and consists of 136 offices, 29 warehouses and 766 car park lots. Leasehold land of approximately 314,501 sqm situated at Gongye Yuan District, Nan Shi Jie Dong, Suzhou. Phase 1a and 1b of the development has a gross floor area of 132,520 sqm and consists of 968 apartment units. Phase 2a has a gross floor area of 78,859 sqm and consists of 538 apartment units. Freehold land of approximately 40,608 sqm situated at Rama III Road, Bangkok. Phase 1 of the development has a gross floor area of 62,348 sqm and consists of 399 condominium units. Freehold land of approximately 40,015 sqm situated at River Thames, London. The development has a gross floor area of 27,000 sqm and consists of 204 residential units and 8 commercial units. Freehold land of approximately 4,273 sqm situated at Islington, London. The development has a gross floor area of 7,659 sqm and consists of 70 apartment units, 2 townhouse units and commercial space. Freehold land of approximately 2,226 sqm situated at Water Street, Edinburgh. The development has a gross floor of 4,512 sqm and consists of 50 residential units. Baitang One Thailand The Pano United Kingdom Wandsworth Collins Theatre Water Street 200 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Particulars of Group Properties AS AT 30 SEPTEMBER 2013 DEVELOPMENT PROPERTIES HELD FOR SALE Singapore Waterfront Gold Waterfront Isle Flamingo Valley Eight Courtyards Holland Park Boathouse Residences 51 Cuppage Road Palm Isles Seastrand Stage of Completion % Estimated Date of Completion Effective Group Interest % Leasehold land (Lease expires year 2108) of approximately 14,496 sqm at Bedok Reservoir Road for the development of 361 residential units of approximately 36,085 sqm of gross floor area for sale. Leasehold land (Lease expires year 2108) of approximately 20,800 sqm at Bedok Reservoir Road for the development of 561 residential units and 2 retail units of approximately 52,491 sqm of gross floor area for sale. Freehold land of approximately 31,164 sqm at Siglap Road for the development of 393 condominium units of approximately 43,629 sqm of gross floor area for sale. Leasehold land (Lease expires year 2109) of approximately 26,540 sqm at Yishun Ave 2/Ave 7/ Canberra Drive for the development of 654 residential units and 2 retail units of approximately 64,092 sqm of gross floor area for sale. Freehold land of approximately 2,801 sqm at Holland Park for the development of 2 good class bungalows for sale. Leasehold land (Lease expires year 2110) of approximately 13,000 sqm at Upper Serangoon View for the development of 493 residential units of approximately 45,501 sqm of gross floor area for sale. Leasehold land (Lease expires year 2095) of approximately 6,310 sqm together with the commercial building erected thereon at Cuppage Road, for the proposed development of 141 residential units of approximately 23,496 sqm of gross floor area for sale and commercial space of approximately 4,328 sqm of gross floor area for sale. Leasehold land (Lease expires year 2110) of approximately 26,818 sqm at Flora Drive for the development of 429 residential units and 1 retail unit of approximately 40,323 sqm of gross floor area for sale. Leasehold land (Lease expires year 2110) of approximately 20,000 sqm at Pasir Ris Link for the development of 473 residential units and 2 retail units of approximately 40,314 sqm of gross floor area for sale. 81 2nd Quarter 2014 50.0 48 1st Quarter 2015 50.0 94 1st Quarter 2014 100.0 80 3rd Quarter 2014 50.0 - 1st Quarter 2014 100.0 48 2nd Quarter 2015 50.0 - - 100.0 27 3rd Quarter 2015 100.0 58 4th Quarter 2014 50.0 201 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Particulars of Group Properties AS AT 30 SEPTEMBER 2013 DEVELOPMENT PROPERTIES HELD FOR SALE (cont’d) Stage of Completion % Estimated Date of Completion Effective Group Interest % Singapore (cont’d) Watertown eCO Twin Waterfalls Q Bay Residences Twin Fountains Fernvale Close Australia Queens Riverside Paramatta River 202 Leasehold land (Lease expires year 2110) of approximately 29,999 sqm at Punggol Central/ Punggol Walk for a mixed commercial and residential development. The residential component of the development comprises 992 residential units of approximately 73,376 sqm of gross floor area for sale. Leasehold land (Lease expires year 2111) of approximately 62,096 sqm at Bedok South Ave 3 for the development of 714 condominium units, 34 units of strata landed houses and 2 retail units of approximately 60,154 sqm of gross floor area for sale. Leasehold land (Lease expires year 2110) of approximately 25,164 sqm at Punggol Walk for the development of 728 executive condominium units of approximately 76,713 sqm of gross floor area for sale. Leasehold land (Lease expires year 2111) of approximately 20,071 sqm at Tampines Ave 10 for the development of 630 residential units and 2 retail units of approximately 56,516 sqm of gross floor area for sale. Leasehold land (Lease expires year 2111) of approximately 16,504 sqm at Woodlands Ave 6 (Woodlands Planning Area) for the development of 418 executive condominium units of approximately 45,769 sqm of gross floor area for sale. Leasehold land (Lease expires year 2112) of approximately 14,931 sqm at Lot 4789X Mukim 20 at Fernvale Close for the development of 495 residential units and 1 retail unit of approximately 44,792 sqm of gross floor area for sale. Freehold land of approximately 11,895 sqm situated at East Perth for a proposed mixed development comprises approximately 500 private apartment units, 165 serviced apartments and commercial space of a total of approximately 64,854 sqm of gross floor area for sale. - Q II - Q III Freehold land of approximately 49,240 sqm situated at Parramatta, Sydney NSW for a proposed development of approximately 766 apartment units of approximately 54,329 sqm of gross floor area for sale. 19 4th Quarter 2016 33.3 10 2nd Quarter 2016 33.3 42 2nd Quarter 2015 80.0 13 3rd Quarter 2016 33.3 10 2nd Quarter 2017 70.0 - 3rd Quarter 2017 40.0 21 78 3rd Quarter 2015 3rd Quarter 2014 - 3rd Quarter 2014 87.5 87.5 75.0 Annual Report 2013 Particulars of Group Properties AS AT 30 SEPTEMBER 2013 DEVELOPMENT PROPERTIES HELD FOR SALE (cont’d) FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Stage of Completion % Estimated Date of Completion Effective Group Interest % Australia (cont’d) Killara Pavillions Frasers Landing Central Park Central Park (CUB Site) Putney Hill China Chengdu Logistics Hub Freehold land of approximately 6,215 sqm situated at Killara NSW for a proposed development comprises 99 apartment units of approximately 9,190 sqm of gross floor area for sale. Freehold land of approximately 550,000 sqm situated at Mandurah, Western Australia for a proposed residential development. Freehold land of approximately 48,000 sqm situated at Broadway, Sydney NSW for a proposed mixed development of approximately 2,129 residential apartment units of approximately 136,776 sqm of gross floor area for sale and commercial space of approximately 50,971 sqm of gross floor area for sale. Freehold land of approximately 10,000 sqm situated at Broadway, Sydney NSW for a proposed mixed development of approximately 561 residential apartment units of approximately 32,203 sqm of gross floor area for sale and commercial space of approximately 5,200 sqm of gross floor area for sale. Freehold land of approximately 113,500 sqm situated at Putney, Sydney NSW for a proposed development comprises 705 apartments and 86 houses of approximately 75,818 sqm of gross floor area for sale. - Phase 1 H - Houses - Phase 1 A - Apartments Leasehold land (Lease expires year 2057) of approximately 195,846 sqm situated at Chengdu for a proposed industrial/commercial development of a total of approximately 542,638 sqm of gross floor area for sale, which is separated into Phase 1 of 161,288 sqm and Phase 2 to 4 of 381,350 sqm. Phase 1 of the development was completed. Phase 3 was sold in September 2012. - Phase 2 - Office - Phase 3 - Warehouse - 3rd Quarter 2014 75.0 - 3rd Quarter 2017 56.3 13 4th Quarter 2018 37.5 3 2nd Quarter 2018 75.0 33 64 1st Quarter 2017 1st Quarter 2017 75.0 75.0 87 1st Quarter 2014 - 1st Quarter 2016 - 80.0 80.0 203 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Particulars of Group Properties AS AT 30 SEPTEMBER 2013 DEVELOPMENT PROPERTIES HELD FOR SALE (cont’d) Stage of Completion % Estimated Date of Completion Effective Group Interest % China (cont’d) Baitang One New Zealand Broadview Coast @ Papamoa United Kingdom Leasehold land (Lease expires year 2074) of approximately 314,501 sqm situated at Gongye Yuan district, Nan Shi Jie Dong, Suzhou for a residential development of a total of approximately 543,700 sqm of gross floor area for sale, which is separated into Phase 1a and 1b of 132,520 sqm and Phase 2a to 3d of 410,785 sqm. Phase 1a, 1b and 2a of the development were completed. - Baitang One (Phase 2b) - Baitang One (Phase 3a) - Baitang One (Phase 3b) - Baitang One (Phase 3c) - Baitang One (Phase 3d) Freehold land of approximately 13,275 sqm situated at South Island, Queenstown for a proposed development of 43 luxury residential apartments of approximately 8,410 sqm of gross floor area for sale. Freehold land of approximately 271,168 sqm situated at Tauranga, North Island for a proposed development of approximately 303 land lots of approximately 139,906 sqm of lot area for sale. Freehold land of approximately 20,531 sqm situated at south bank of River Thames, London for a proposed residential and commercial development of 512 residential units and ancillary office and retail space of a total of approximately 32,236 sqm of gross floor area for sale for Phase 3 of the Wandsworth Riverside Development. Freehold land of approximately 1,700 sqm situated at Vauxhall, London. The 36 storey tower development has a gross floor area of approximately 21,000 sqm and consists of 180 private apartments, 41 affordable, with offices and ground floor commercial. 67 - - - - 3rd Quarter 2014 4th Quarter 2015 3rd Quarter 2016 2nd Quarter 2017 2nd Quarter 2014 100.0 100.0 100.0 100.0 100.0 - - 75.0 - 3rd Quarter 2014 67.5 - 3rd Quarter 2016 80.0 - 3rd Quarter 2016 80.0 Freehold land of approximately 2,310 sqm situated at 1 - 6 Camberwell Green and 307 - 311 Camberwell New Road SE5, London. Freehold land of approximately 3,157 sqm situated at Brown Street, Glasgow. Freehold land of approximately 5,870 sqm situated at Baildon. - - - - - - 80.0 80.0 80.0 204 Annual Report 2013 Particulars of Group Properties AS AT 30 SEPTEMBER 2013 DEVELOPMENT PROPERTIES HELD FOR SALE (cont’d) Thailand The Pano Peninsular Malaysia Freehold land of approximately 40,608 sqm situated at Rama III Road, Bangkok, which is separated into Phase 1 of 14,062 sqm and Phase 2 and 3 of 26,546 sqm. Phase 1 of the development was completed. FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Stage of Completion % Estimated Date of Completion Effective Group Interest % - - 49.0 Leasehold land (Lease expires year 2069) of approximately 51,491 sqm situated at Petaling Jaya, Selangor for a proposed mixed development with a total of approximately 179,916 sqm of gross floor area for sale. - Phase 1a - Services Apartment & Street Retail - Phase 1b - SOHO - Phase 2 - Boutique Office & Shopping Mall - Phase 3 - Corporate Tower - Phase 4 - Business Hotel - 2nd Quarter 2018 - 4th Quarter 2018 - 2nd Quarter 2019 - 1st Quarter 2019 - 1st Quarter 2020 50.0 50.0 50.0 50.0 50.0 205 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Shareholding Statistics AS AT 23 DECEMBER 2013 Class of Shares Voting rights Number of Shares in Issue Name of Shareholder Number of Shares Held Shareholding % - Ordinary share - One vote per share - 2,889,812,572 - Fraser and Neave, Limited - - 100% 2,889,812,572 As at 23 December 2013, the sole shareholder of Frasers Centrepoint Limited (the “Company” or “FCL”) is Fraser and Neave, Limited (“F&N”). As announced by F&N on 13 November 2013, shareholders of F&N voted unanimously in favour of the proposed distribution of the entire issued share capital of the Company by way of a dividend in specie to shareholders of F&N (the “Distribution”). Pursuant to the Distribution, F&N shareholders will receive, without any cash outlay, two shares in the Company (“FCL shares”) for every one F&N share held as at the books closure date of the Distribution. Upon the completion of the proposed Distribution, the Company’s shareholding structure will be the same as F&N’s shareholding structure as at the date of the books closure date for the distribution in specie. 206 Annual Report 2013 Interested Person Transactions FRASERS CENTREPOINT LIMITED & SUBSIDIARIES Particulars of interested person transactions (“IPTs”) for the period 1 October 2012 to 30 September 2013. Name of Interested Person F&N Treasury Pte Ltd (“F&NT”)(1) - Loans to the Company, its subsidiaries and associated companies (collectively, the “FCL Group”) Fraser and Neave, Limited (“F&N”) and F&NT(1) - Cash deposits placed by the FCL Group with F&N and F&NT F&N and Fraser & Neave (Singapore) Pte Limited (“F&NS”)(1) - Provision of various services by F&N and F&NS to the FCL Group F&NS(1) - Lease agreements for office premises entered into between F&NS and Orrick Investments Pte Ltd and FCL Alexandra Point Pte Ltd respectively, which are subsidiaries of the Company F&N(1) - Provision of corporate guarantee to Frasers Property Australia Pty Limited, a subsidiary of the Company Aggregate Value of All IPTs during the Financial Year under Review (Excluding Transactions less than S$100,000) (S$) 2.68 billion 454.30 million 18.50 million 2.75 million 0.44 million Note: (1) Upon the completion of the proposed distribution in specie of all the issued shares in the Company to shareholders of Fraser and Neave, Limited (“F&N”) and the proposed listing of the Company on the Singapore Exchange Securities Trading Limited (“SGX-ST”) by way of introduction, F&N and its associates will be considered “interested persons” of the FCL Group for the purposes of Chapter 9 of the Listing Manual of SGX-ST. This is by virtue of F&N being an associate of FCL Chairman Charoen Sirivadhanabhakdi and his wife Khunying Wanna Sirivadhanabhakdi, who would become controlling shareholders of the Company. 207 Annual Report 2013 FRASERS CENTREPOINT LIMITED & SUBSIDIARIES 208 This page is intentionally left blank. Annual Report 2013FRASERS CENTREPOINT LIMITED Company Registration Number: 196300440G 438 Alexandra Road #21-00 Alexandra Point Singapore 119958 Tel: (65) 6276 4882 Fax: (65) 6276 6328 

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