Post on 27-Feb-2018
CapitaRetail China TrustAnnual Report 2014
Delivering Performance
Corporate ProfileFirst and only China shopping mall real estate investment trust in SingaporeCapitaRetail China Trust (CRCT) is the first and only People’s Republic of China shopping mall real estate investment trust (REIT) in Singapore, with a portfolio of 10 income-producing shopping malls. Listed on the Singapore Exchange Securities Trading Limited (SGX-ST) on 8 December 2006, it is established with the objective of investing on a long-term basis in a diversified portfolio of income-producing real estate used primarily for retail purposes and located primarily in China, Hong Kong and Macau.
The geographically diversified portfolio of quality shopping malls is located in six of China’s cities. The malls are CapitaMall Xizhimen, CapitaMall Wangjing, CapitaMall Grand Canyon, CapitaMall Anzhen and CapitaMall Shuangjing in Beijing; CapitaMall Qibao in Shanghai; CapitaMall Minzhongleyuan in Wuhan, Hubei Province; CapitaMall Erqi in Zhengzhou, Henan Province; CapitaMall Saihan in Huhhot, Inner Mongolia; and CapitaMall Wuhu in Wuhu, Anhui Province.
All the malls in the portfolio are positioned as one-stop family-oriented shopping, dining and entertainment destinations for the sizeable population catchment areas in which they are located, and are accessible via major transportation routes or access points. A significant portion of the properties’ tenancies consists of major international and domestic retailers such as Walmart, Carrefour and the Beijing Hualian Group (BHG) under master leases or long-term
VisionSustainable and resilient REIT with a professionally managed portfolio of quality retail real estate across China.
MissionDeliver sustainable income growth to our Unitholders and value add to the community and stakeholders by enhancing organic growth through proactive asset management; creating new value through innovative asset enhancement strategies; and capitalising on yield-accretive acquisitions.
02 Financial Highlights 04 Letter to Unitholders10 Trust Structure11 Organisation Structure13 Growth Strategies14 Portfolio at a Glance16 Board of Directors 24 Year in Brief25 Trust Management Team27 Corporate Governance44 Enterprise Risk Management47 Operations Review53 Financial Review
Contents
leases, which provide CRCT Unitholders with stable and sustainable returns. The anchor tenants are complemented by popular specialty brands such as UNIQLO, ZARA, Vero Moda, Sephora, Watsons, KFC, Pizza Hut and BreadTalk.
CRCT is managed by an external manager, CapitaRetail China Trust Management Limited (CRCTML or the Manager), which is an indirect wholly-owned subsidiary of CapitaLand Limited, one of Asia’s largest real estate companies headquartered and listed in Singapore.
56 Capital Management59 Investor & Media Relations61 Unit Price Performance63 Corporate Social Responsibility64 People & Talent Management66 Portfolio Summary68 Portfolio Details76 Financial Statements147 Interested Person Transactions148 Unitholders’ Statistics150 Mall DirectoryIBC Corporate Information
Delivering Performance
Delivering Performance | 01
With a clear focus and disciplined approach towards executing our strategies, CapitaRetail China Trust (CRCT) continued to deliver a strong performance in 2014. With our portfolio of 10 quality shopping malls in major Chinese cities, we have leveraged on our expertise in proactive mall management and asset enhancement to create resilient and growing returns for our Unitholders. CRCT will continue to strengthen our portfolio and seek suitable expansion opportunities as we tap on China’s rising consumption to enhance Unitholder value.
89.8million
Portfolio Occupancy Rate
Annual Shopper Traffic
95.9%
Net PropertyIncome
Total Deposited Properties
S$132.4million
Tenants’ Sales
RMB1,630per square metre
Total Returns for the Year
28.4%
AggregateLeverage
28.7%
Distribution Per Unit
Distributable Income
S$80.9 million
Highlights of 2014
S$2.3 billion
9.82cents
10properties
02 | CapitaRetail China Trust Annual Report 2014
Financial Highlights
Gross Revenue (S$ million)
2010 2011 2012 2013 2014
119.0131.9
152.5 160.1
203.31
Net Property Income (S$ million)
2010 2011 2012 2013 2014
77.285.8
99.7 103.0
132.41
Distributable Income (S$ million)
2010 2011 2012 2013 2014
52.257.2
66.8 70.1
80.9
Net Asset Value Per Unit (S$)
Distribution Per Unit (cents)
2010
2010
2011
2011
2012
2012
2013
2013
2014
2014
1.17
8.36
1.33
8.70
1.31
9.54
1.48
9.02
1.63
9.82
1 Includes new contribution from CapitaMall Grand Canyon which was acquired on 30 December 2013.
Delivering Performance | 03
1 The financial year from 1 January to 31 December.2 All the assets of CRCT (or proportional share if CRCT owns less than 100% of a Barbados Company as defined in the CRCT Prospectus
dated 29 November 2006 (CRCT Prospectus) and/or a Project Company (as defined in the CRCT Prospectus)) including the properties and all the authorised investment of CRCT for the time being held or deemed to be held upon the trust under the trust deed dated 23 October 2006 as amended by the First Supplemental Deed dated 8 November 2006, Second Supplemental Deed dated 15 April 2010, Third Supplemental Deed dated 5 April 2012 and Fourth Supplemental Deed dated 14 February 2014 (collectively, the Trust Deed), and excluding undistributed income at the year end.
3 Based on valuation as at 31 December 2014. Portfolio property valuation included the valuation of the 10 malls and the carrying amount of CapitaMall Minzhongleyuan’s three residential units. Refer to page 104 for the details of the valuers as at 31 December 2014.
4 The figure has been restated for the effect of preferential offering completed on 20 November 2013.5 The aggregate leverage is calculated based on total borrowings and deferred payments over the total assets. Total assets included the
hedging effects on the net assets denominated in Renminbi (RMB).6 Refers to the expenses of CRCT excluding property expenses and interest expenses but including performance component of CRCTML’s
management fees, expressed as a percentage of weighted average net assets.7 Financial derivatives include non-deliverable forwards and interest rate swaps which CRCT entered into as a form of hedging against
the underlying foreign currency and interest rate risks. The net fair value derivative represented a negative 0.5% over the net assets of CRCT as at 31 December 2014.
Balance SheetAs at 31 December 20101 20111 20121 20131 20141
Total Assets (S$’000) 1,274,478 1,536,268 1,648,791 2,184,291 2,358,062Total Deposited Properties2 (S$’000) 1,229,196 1,482,001 1,623,824 2,155,554 2,328,008Net Assets Attributable to Unitholders (S$’000) 734,507 913,839 978,742 1,186,951 1,349,738Total Borrowings (S$’000) 401,958 433,048 465,847 713,458 672,893Market Capitalisation (S$ million) 775 792 1,232 1,068 1,337Net Asset Value Per Unit (S$) 1.17 1.33 1.31 1.48 1.63Portfolio Property Valuation (S$’000) 1,215,089 1,440,620 1,476,988 2,058,094 2,250,7833
Financial RatiosAs at 31 December 20101 20111 20121 20131 20141
Earnings Per Unit (cents) 17.84 18.22 19.524 17.52 17.69Distribution Per Unit (cents) 8.36 8.70 9.54 9.02 9.82Net Tangible Assets Per Unit (S$) 1.17 1.33 1.31 1.48 1.63Aggregate Leverage5 (%) 31.1 28.0 28.0 32.6 28.7Interest Cover (times) 6.2 7.3 8.5 8.5 5.6Management Expense Ratio6 (%) 1.0 0.9 1.0 0.9 1.0
Financial DerivativesAs at 31 December 20141
Net Fair Value of Financial Derivatives7 (S$ million) (7.1)Proportion of Financial Derivatives to Net Assets Attributable to Unitholders (%) (0.5)
04 | CapitaRetail China Trust Annual Report 2014
Letter to Unitholders
(Left) Liew Cheng San Victor, Chairman (Right) Tony Tan Tee Hieong, Chief Executive Officer
With CapitaMall Grand Canyon’s maiden contribution, gross revenue surged 24.2% year-on-year to RMB987.6 million and net property income (NPI) increased 25.7% to RMB643.1 million for FY 2014. Besides the lift provided by CapitaMall Grand Canyon’s contribution, we also recorded robust organic growth in several of our other malls. On a same mall basis1, gross revenue and net property income grew 6.8% and 9.2% year-on-year respectively.
Delivering Performance | 05
Dear Unitholders,
On behalf of the Board of Directors of the Manager, we are pleased to present the Annual Report for the financial year ended 31 December 2014 (FY 2014).
Despite the headwinds in China’s economy in FY 2014, we continued to press on and achieved another year of solid performance.
Delivering strong performanceWith CapitaMall Grand Canyon’s maiden contribution, gross revenue surged 24.2% year-on-year to RMB987.6 million and net property income (NPI) increased 25.7% to RMB643.1 million for FY 2014. Besides the lift provided by CapitaMall Grand Canyon’s contribution, we also recorded robust organic growth in several of our other malls. On a same mall basis1, gross revenue and net property income grew 6.8% and 9.2% year-on-year respectively.
For FY 2014, distributable income increased 15.4% year-on-year to S$80.9 million. Unitholders received a distribution per unit (DPU) of 4.99 cents in September 2014 and will be receiving a DPU of 4.83 cents in March 2015. Total DPU for FY 2014 was 9.82 cents, an 8.9% increase compared to FY 2013. Based on CRCT’s closing price of S$1.615 on 31 December 2014, the distribution yield was 6.1%.
Our proactive approach towards mall management has enabled us to stay ahead of our competition and remain popular among tenants and shoppers. For FY 2014, tenants’ sales increased 16.2%1 - above the national average retail sales growth of 12.0%2 - and shopper traffic grew 3.9%1. We committed 650 leases with an average increase of 23.1% over preceding rental rates. The strong average increase in rent was mainly attributed to CapitaMall Grand Canyon’s robust rental reversion of 43.1%. CapitaMall Wangjing and CapitaMall Saihan also recorded high rental reversions of 29.8% and 20.7% respectively. As at 31 December 2014, committed occupancy for the portfolio remained high at 95.9%, and valuation of our malls was RMB10.6 billion – 5.7% higher than a year ago.
CRCT’s unit price appreciated 21.4% in FY 2014, outperforming the Straits Times Index, the FTSE Straits Times Real Estate Index and the FTSE Straits Times Real Estate Investment Trust Index. Including the distribution payout of 9.32 cents3, CRCT generated a high total return of 28.4% for Unitholders in FY 2014.
Positioning for growthIn end-2013, we completed the acquisition of CapitaMall Grand Canyon, a quality shopping mall located in Fengtai District, South Beijing. It is the third largest property (based on NPI contribution) in our portfolio and contributed 13.5% to FY 2014 NPI.
Upon completion of the acquisition, we reconfigured the mall’s retail units to optimise the usage of floor space, adjusted the tenant mix to meet the changing needs and aspirations of our shoppers, and organised many exciting marketing and promotional events to drive shopper traffic and tenants’ sales. We widened our food and beverage (F&B) selections by bringing in popular F&B tenants such as Nanjing Impressions (南京大牌档), Golden Tripod Attic (金鼎轩), Sunshine Kitchen (汤城小厨) and Childhood Villas (童年小筑). Committed occupancy increased to 99.7% as at 31 December 2014 and rental reversion was a strong 43.1% for FY 2014. We will continue to fine-tune our offerings and upgrade the infrastructure to cater to our shoppers’ needs, and strengthen our position in South Beijing. We are confident that CapitaMall Grand Canyon will continue to be one of our key growth engines in FY 2015.
On 1 May 2014, we reopened CapitaMall Minzhongleyuan in Wuhan after a 10-month closure to carry out extensive asset enhancement works. We performed a major overhaul to reinforce the building’s interior infrastructure and improve the layout to achieve better efficiency and higher rentals. We also rejuvenated the building’s façade while retaining its historical charm, and differentiated our offerings by introducing new-to-market concepts. The revamped mall was well-received by both tenants and shoppers.
In order to facilitate the construction of the new subway Line 6 linking Hankou and Hanyang, the Wuhan government announced on 1 August 2014 an extensive road closure at the section of Zhongshan Avenue where CapitaMall Minzhongleyuan is located. While we expect shopper traffic and tenants’ sales to be temporarily affected during this two-year road closure, CapitaMall Minzhongleyuan stands to benefit from greater accessibility once Line 6 becomes operational by end-2016. It will also enjoy proximity to the Jianghan Road subway interchange for Line 2 and Line 6, which is a critical transport hub linking Hankou, Hanyang and Wuchang – the three main areas of Wuhan.
06 | CapitaRetail China Trust Annual Report 2014
Letter to Unitholders
CapitaMall Wuhu, located in Wuhu – the second largest city in Anhui Province – has been undergoing major tenant adjustments to cater to the changing environment. One of the key improvements included reconfiguring Level 4 into an F&B and entertainment zone. A popular buffet restaurant Guonei Guowai (锅内锅外) will be opening in the rezoned area in the second quarter of 2015. The mall is committed to bring in more quality new retailers to enhance the shopping experience.
We continue to unlock and enhance the value of our two largest malls, CapitaMall Xizhimen and CapitaMall Wangjing, in Beijing. We broadened the F&B selections and refreshed the fashion and beauty offerings in both malls. Established retailers such as Green Tea (绿茶), Yun Hai Yao (云海肴), Etude House, Charles & Keith and L’OCCITANE opened to overwhelming response from shoppers. Both malls achieved robust growth in FY 2014. CapitaMall Xizhimen registered a 13.8% year-on-year increase in NPI, while CapitaMall Wangjing recorded an 11.2% increase. With solid footfall and rising tenants’ sales, both malls were able to retain strong performing tenants while attracting popular new retailers. We will continue to actively engage our tenants and shoppers as we keep abreast of the latest retail trends.
Strengthening our financial positionIn line with our prudent and proactive approach towards capital management, we continued to enhance our funding structure and strategy in FY 2014.
We applied the Distribution Reinvestment Plan that we established in March 2013 to the distributions paid out in March 2014 and September 2014. We received good support from our Unitholders, with participation rates of 41.9% and 29.6% respectively.
During the year, we successfully refinanced a S$100.0 million loan with extended maturity to 2020. Overall cost of borrowings was 3.32%. As at 31 December 2014, CRCT’s borrowings totalled S$672.9 million, of which 72.6% were fixed and 95.6% were unencumbered. Aggregate leverage was a healthy 28.7%. To date, we have refinanced the S$88.0 million term loan which matured in February 2015.
Caring for the communityAs our shopping malls form an integral part of the communities where they are located, we are proud to support various community programmes and adopt green initiatives that promote sustainable growth.
In 2014, we carried out “My Schoolbag”, one of CapitaLand’s key annual corporate social responsibility programmes, for the fifth consecutive year. Staff volunteers from CapitaMall Xizhimen, CapitaMall Wangjing and CapitaMall Saihan actively participated in this meaningful programme, where new schoolbags are given to underprivileged children. Last year, each schoolbag contained more than 100 items, including arts and crafts materials and a water bottle on top of basic stationery items. Funding for the programme was donated by CapitaLand Hope Foundation, the philanthropic arm of CapitaLand, and our shoppers. This is the first time that My Schoolbag has canvassed for donations from the public. CapitaMall Wangjing and CapitaMall Minzhongleyuan were among several CapitaMalls in China that rallied shoppers to support this meaningful cause.
Our malls continued to make a positive impact on their local communities in their own ways. For example, CapitaMall Wangjing organised a winter clothes donation drive for the poor in the rural regions of West China, and CapitaMall Grand Canyon held a charity concert to rally shoppers to donate
Delivering Performance | 07
necessities to orphans. CapitaMall Xizhimen and CapitaMall Grand Canyon also held events for shoppers to adopt stray cats and dogs.
We continued to step up efforts to conserve our environment for future generations, and actively engaged our stakeholders through a series of activities to raise awareness of climate change and to reduce energy consumption. A key highlight was our annual participation in Earth Hour 2014, when six of our malls – CapitaMall Xizhimen, CapitaMall Wangjing, CapitaMall Grand Canyon, CapitaMall Qibao, CapitaMall Saihan and CapitaMall Wuhu – turned off their façade and non-essential lights throughout the night.
As part of our green effort, CapitaMall Qibao set up a rooftop farm to encourage urban residents to get closer to nature and enjoy the process of growing their own food. Since opening in 2013, the farm has been gaining popularity among schools and families. In an effort to promote green transportation, CapitaMall Qibao also held a cycling event that received overwhelming response from the local communities.
Moving forwardChina’s economy grew 7.4%2 and retail sales increased 12.0%2 year-on-year to RMB26.2 trillion2 in 2014. Urban disposable income per capita and expenditure per capita grew 9.0%2 and 5.8%2 year-on-year respectively.
In 2014, the Chinese government continued to place a strong emphasis on quality long-term growth. Going forward, the Chinese leaders have affirmed that there will be greater focus on in-depth structural reforms, which will drive domestic consumption and support the governing of the country. We believe the Chinese government’s efforts to build a sustainable
economy and enhance social stability will benefit CRCT’s business in the long run. The Chinese Academy of Social Sciences, China’s official think-tank, has forecast 2015 GDP growth to be around 7.0%.
In FY 2015, we will continue to strengthen the competitiveness of our portfolio and ensure our malls stay ahead of the game. With the financial flexibility provided by our robust balance sheet, we are actively looking out for suitable acquisition opportunities to propel our next phase of growth. With our proven track record, we are confident that CRCT will continue to deliver sustainable and resilient growth to our Unitholders in the coming year.
AcknowledgementsWe wish to express our deepest appreciation to our Board of Directors, shoppers, tenants, business partners and staff for their contributions and unwavering support in FY 2014.
We welcome Professor Tan Kong Yam, who joined us on 31 October 2014. With his expertise and experience, we are confident that he will contribute significantly to our Board.
Last but not least, we thank you, our Unitholders, for your confidence and trust in us. We look forward to your continued support in 2015 and beyond.
Liew Cheng San VictorChairman
Tony Tan Tee HieongChief Executive Officer
26 February 2015
1 Excluding CapitaMall Minzhongleyuan, which reopened on 1 May 2014 and CapitaMall Grand Canyon, which was acquired on 30 December 2013.
2 Source: National Bureau of Statistics of China.3 Comprising DPU of 4.33 cents paid out in March 2014 and 4.99 cents paid out in September 2014.
08 | CapitaRetail China Trust Annual Report 2014
致信托单位持有人之信函
尊敬的信托单位持有人,
我们谨代表管理人董事会呈报截至2014年12月31日财政
年度(2014财年)的致信托单位持有人报告。
尽管中国经济在2014年增长放缓,凯德商用中国信托仍继
续前进并取得丰硕业绩。
业绩表现强劲
2014财年,首次贡献收入的凯德MALL•大峡谷推动总收
入同比去年剧增24.2%达9.876亿人民币,净物业收入增长
25.7%达6.431亿人民币。除了凯德MALL•大峡谷贡献收入
的有利因素外,其他购物中心也取得强劲的内部增长。按同
个购物中心基准1计算,总收入和净物业收入分别同比去年
增长6.8%和9.2%。
2014财年,可派发收入同比去年增加15.4%,达8,090万新
元。单位持有人在2014年9月获得每单位派息4.99新分,并
将在2015年3月获得每单位派息4.83新分。2014财年的每
单位派息总额为9.82新分,较2013财年增加8.9%。按凯德
商用中国信托于2014年12月31日的闭市价1.615新元计算,
派息率为6.1%。
积极的购物中心管理方式不仅让我们在竞争中保持领先
地位,还让我们继续受到租户以及消费者的欢迎。2014财
年,我们的租户销售额增长16.2%1(高于国内12.0%2的平
均零售销售额增长),客流则增长3.9%1。2014年度签定的
650份租约较之前租约平均租金增长23.1%;这主要归功
于凯德MALL•大峡谷,其租金大幅增加43.1%。此外,凯德
MALL•望京和凯德MALL•赛罕租金也分别大幅增加29.8%
和20.7%。截止至2014年12月31日,旗下购物中心的整体
出租率保持在95.9%的高位。整体购物中心估值也较去年
上升5.7%达106亿人民币。
2014财年,凯德商用中国信托的单位价格上升21.4%,表
现超越海峡时报指数、富时海峡时报不动产指数和富时
海峡时报不动产投资信托指数。包括9.32新分3的派息在
内,凯德商用中国信托于2014财年为单位持有人带来高达
28.4%的总回报。
蓄势待发
2013年底,我们完成了对凯德MALL•大峡谷的收购。这个
高品质的购物中心座落于北京南部的丰台区,是凯德商用
中国信托旗下的第三大物业,2014财年净物业收入占整体
的13.5%。
收购完成后,我们重新规划购物中心的零售单位布局,优化
楼面空间的使用,调整租户组合,以满足消费者不断变化的
需求和期望。我们还组织了多场精彩的市场推广和促销活
动,以吸引客流和提高租户销售额。我们提供更多的餐饮选
择,引进南京大牌档、金鼎轩、汤城小厨和童年小筑等多家
受欢迎的餐饮品牌租户。截至2014年12月31日,出租率增至
99.7%,且2014财年租金大幅增长43.1%。我们将继续完善
品牌组合,提升基础设施,以迎合消费者的需求,巩固在北
京南部的地位。我们相信,凯德MALL•大峡谷在2015财年
仍将是凯德商用中国信托一个主要的增长引擎。
2014年5月1日,位于武汉的凯德新民众乐园在关闭10个月进
行大规模资产改良工程后重新开业。我们进行了重大翻修,
强化了大厦的内部基础设施,改善了布局,以提升使用效率
和提高租金。我们在保持大厦历史韵味的同时也修复了其外
立面,并通过引进首次登陆市场的零售概念,让我们的服务
脱颖而出。翻新后的购物中心深受租户和消费者欢迎。
为兴建连接汉口与汉阳的新地铁6号线,武汉政府在2014年
8月1日宣布,凯德新民众乐园所在的中山大道地段封路,为
期两年。尽管我们预期客流和租户销售额在封路期间会暂
时受到影响,但一旦6号线在2016年底开通运营后,该地区
的交通便利性将大幅度提升,凯德新民众乐园也会从中受
益。届时,该购物中心将邻近2号线与6号线的江汉路地铁
转换站,这是连接武汉三个主要区域汉口、汉阳和武昌的关
键交通枢纽。
位于安徽省第二大城市芜湖的凯德广场•芜湖,正在进行
大规模的租户调整以适应不断变化的环境。其中一项主要
改造工程包括将四楼改造成餐饮和休闲娱乐区。重新布局
后,时下颇受欢迎的自助餐厅锅内锅外将于2015年第二季
度进驻。该购物中心将竭力招揽更多高品质的新零售商进
驻,以提升购物体验。
我们将继续发掘并提升位于北京的两家最大购物中心凯
德MALL•西直门和凯德MALL•望京的价值。我们在该两
家购物中心引入更多的餐饮选择,并更新了时装和美容
品牌。绿茶、云海肴、Etude House、Charles & Keith
和L’OCCITANE等著名零售商的进驻,受到消费者的热
烈欢迎。2014财年,两家购物中心均实现强劲增长。凯德
MALL•西直门的净物业收入同比去年增长13.8%,而凯德
MALL•望京则增长11.2%。凭藉稳定的客流和不断增长的
租户销售额,两家购物中心在保留业绩表现优异的租户的
同时,也吸引新的知名品牌进驻。我们将继续紧贴最新的
零售潮流,积极与租户和消费者保持互动。
Delivering Performance | 09
1 不包括于2014年5月1日重新开业的凯德新民众乐园和于2013年12月30日收购的凯德MALL•大峡谷。2 资料来源:中国国家统计局。3 包括于2014年3月支付的每单位派息4.33新分和于2014年9月支付的每单位派息4.99新分。
财务状况稳健
秉承审慎与积极的资本管理方法,我们在2014财年继续优
化资金架构和策略。
我们为2014年3月和2014年9月的派息,采用了于2013年
3月设立的配售再投资计划。此计划获得了单位持有人的
大力支持,参与度分别高达41.9%和29.6%。
在这一年内,我们成功为一笔1亿新元的借款进行再融资,
并将借款期延至2020年。整体借款成本为3.32%。截至
2014年12月31日,凯德商用中国信托的总借款为6.729亿
新元,其中72.6%为定息借款,95.6%为无产权负担借款。
负债比率则为28.7%,表现稳健。迄今为止,我们已成功地
为于2015年2月到期的8,800万新元债务进行再融资。
关爱社会
凯德商用中国信托旗下的购物中心已成为所在社区不可或
缺的一部分,我们非常荣幸能够支持各项社区活动并通过
绿色行动推动可持续发展。
2014年,我们连续第五年参与凯德集团名为“凯德•我的第
一个书包”的标志性年度企业社会责任项目。凯德MALL•
西直门、凯德MALL•望京及凯德MALL•赛罕的员工踊跃参
与了此项有意义的活动,充当志愿者向弱势学生捐赠新书
包。去年,每个书包都包含100多件文具,除了基本的文具
外,还包括工艺美术材料以及一个水壶。该活动的资金由
凯德集团旗下的慈善专属基金凯德希望基金及消费者捐
赠。凯德MALL•望京和凯德新民众乐园连同其他凯德旗
下的购物中心,号召消费者支持此项有意义的活动,这是
凯德•我的第一个书包活动首次面向公众筹募善款。
我们的购物中心也继续以各自的方式在其所在的社区发挥
正面影响。例如,凯德MALL•望京为中国西部农村地区贫
困人士组织了一次冬衣募捐,而凯德MALL•大峡谷则举办
了一场慈善音乐会,呼吁消费者为孤儿捐赠生活必需品。
凯德MALL•西直门和凯德MALL•大峡谷还举办收养流浪
猫和流浪狗的活动。
为了下一代,我们继续努力保护环境,并通过一系列推动
改善气候变化和减少能源消耗的活动与我们的利益相关者
互动。其中一个亮点,是我们为响应2014年地球一小时活
动,把六家购物中心(凯德MALL•西直门、凯德MALL•望
京、凯德MALL•大峡谷、凯德七宝购物广场、凯德MALL•
赛罕及凯德广场•芜湖)的外墙灯和非主要的照明灯彻夜
关闭。
作为绿色行动的一部分,凯德七宝购物广场开辟屋顶农
场,鼓励城镇居民走进大自然,体 验自己种植食物的过
程。自2013年开办以来,该农场已受到了学校及家庭的热
烈欢迎。为倡导绿色出行,凯德七宝购物广场还举办了一
场骑自行车活动,在当地社区引起了热烈反响。
锐意进取
2014年,中国经济增长7.4%2,零售销售额同比去年增长
12.0%2,达26.2万亿人民币2。城镇居民人均可支配收入和
人均支出同比去年分别增长9.0%2和5.8%2。
2014年,中国政府继续着眼于高质量的长期增长。展望未
来,中国领导人已表明将更注重深层次的结构改革,从而
拉动内需,助力国家治理。长远而言,我们相信中国政府努
力推动经济的可持续发展和促进社会稳定,将有利于凯德
商用中国信托的业务。中国的官方智库中国社会科学院预
测,2015年的国内生产总值将会增长7.0%左右。
2015财年,我们将继续提高组合的竞争力,确保在竞争中
处于领先地位。凭藉稳健的资产负债表所带来的灵活融资
能力,我们正积极物色合适的收购机会,以期推进下一阶
段的增长。鉴于优异的业绩记录,我们相信凯德商用中国
信托将在来年继续为我们的单位持有人带来可持续和具韧
性的增长。
致谢
我们借此机会对董事会、消费者、租户、业务伙伴及员工于
2014财年作出的贡献及持续的支持表示深切的感激。
我们谨此欢迎陈光炎教授于2014年10月31日加入董事会。
相信他的专长及经验将会对董事会作出重大贡献。
最后,衷心感谢各位单位持有人一直以来对我们的信心及
信任。我们也期待在2015年及以后继续获得您的支持。
廖青山
主席
陈智雄
首席执行官
2015年2月26日
Trust Structure
10 | CapitaRetail China Trust Annual Report 2014
Holding of Units Distributions
Unitholders
ManagementServices
ManagementFees
Trustee Fees
Acts on behalf of Unitholders
ProjectCompany
ProjectCompanies
SingaporeCompanies
BarbadosCompanies
CapitaMallWuhu
The Property Manager
The Property Managers
The TrusteeHSBC Institutional
Trust Services(Singapore) Limited
The ManagerCapitaRetail China Trust
Management Limited
Properties(Excluding
CapitaMall Wuhu)
Barbados
Dividends
Dividends, Interest Income and PrincipalRepayment of Shareholder’s Loans
Ownership and Shareholder’s Loans Ownership and Shareholder’s Loans
China
Singapore
Singapore
Dividends 100% Ownership andShareholder’s Loans
100% Ownership andShareholder’s Loans
51.0%Ownership andShareholder’sLoans
Proportionate Shareof Dividends, InterestIncome and PrincipalRepayment ofShareholder’s Loans
NetPropertyIncome
Ownership
Dividends, Interest Income and PrincipalRepayment of Shareholder’s Loans
OwnershipNetPropertyIncome
PropertyManagementServices
Property Manager’sFees
PropertyManager’sFees
PropertyManagementServices
Delivering Performance | 11
Organisation Structure
Investment and Asset Management TeamFinance Team Investor Relations Team
Audit Committee
Board of Directors
Chief Executive Officer
The ManagerCapitaRetail China Trust Management Limited
Growth Strategies
Delivering Performance | 13
Integrated Retail Real Estate Management PlatformCRCT enjoys access to CapitaLand’s integrated shopping mall business model, with in-house capabilities in retail real estate investment, development, mall operations, asset management and fund management.
As the Manager, we seek to drive continued growth of CRCT through the following three-pronged strategy:
1. Enhancing Organic Growth through Proactive Asset Management
Most of our leases provide for an annual step-up in the base rent and for rent to be payable on the basis of the higher of either base rent or a percentage of tenants’ gross sales turnover, thereby providing stability and potential upside in rental income.
Apart from organic growth through rental receipts, we work closely with the mall managers to identify improvements to the malls’ retail offerings and tenant mix, and carry out marketing and promotional initiatives to drive up shopper traffic and non-rental income.
2. Creating New Value through Innovative Asset Enhancement Strategies
We also actively explore innovative asset enhancement initiatives to improve the returns of our malls. These include the reconfiguration of the retail units or floor plates to achieve better efficiency and higher rental potential, and retro-fitting and refurbishing the malls to maintain their appeal to tenants and shoppers.
3. Capitalising on Yield-Accretive Acquisitions Growth Model
We are always identifying and evaluating yield-accretive acquisition opportunities from our secured and proprietary pipeline, and other third-party vendors.
CRCT is provided with long-term growth potential from its rights of first refusal to purchase assets held by CapitaMalls China Income Fund, CapitaMalls China Income Fund II (previously known as CapitaMalls China Incubator Fund), CapitaMalls China Income Fund III (previously known as CapitaMalls China Development Fund II), CapitaMalls China Development Fund III, as well as CapitaMalls Asia, which is the wholly-owned shopping mall business unit of CapitaLand Limited, one of Asia’s largest real estate companies headquartered and listed in Singapore.
In evaluating acquisition opportunities, we will focus on properties which can maintain or enhance CRCT’s distribution yield; the properties’ potential asset enhancement opportunities; and properties with potential to demonstrate strong growth in occupancy rates, sustainable rental yields, and quality tenant and lease profiles.
Retail Real Estate Management Retail Real Estate Capital Management
PropertyManagement
RetailManagement& OperationalLeasing
StrategicMarketing
Design &DevelopmentManagement
AssetManagement
StrategicPlanning &Investment
FundStructuring &Management
Unitholders
Net Property Income
Ownership
Distributions
Investment
Retail Real Estate
Portfolio at a Glance
14 | CapitaRetail China Trust Annual Report 2014
1. CapitaMall Xizhimen
2. CapitaMall Wangjing
3. CapitaMall Grand Canyon
6. CapitaMall Saihan
4. CapitaMall Anzhen
5. CapitaMall Shuangjing
Delivering Performance | 15
Beijing
Huhhot
1. CapitaMall Xizhimen2. CapitaMall Wangjing3. CapitaMall Grand Canyon4. CapitaMall Anzhen5. CapitaMall Shuangjing
6. CapitaMall Saihan
Wuhan
Wuhu
Zhengzhou
Shanghai
10. CapitaMall Minzhongleyuan
9. CapitaMall Wuhu
7. CapitaMall Erqi
8. CapitaMall Qibao
7. CapitaMall Erqi
8. CapitaMall Qibao
9. CapitaMall Wuhu
10. CapitaMall Minzhongleyuan
Board of Directors1 3
5
2
64
7
16 | CapitaRetail China Trust Annual Report 2014
1 Liew Cheng San Victor Chairman & Non-Executive Independent Director2 Lim Ming Yan Deputy Chairman & Non-Executive Non-Independent Director3 Fong Heng Boo Non-Executive Independent Director4 Christopher Gee Kok Aun Non-Executive Independent Director5 Ng Kok Siong Non-Executive Non-Independent Director6 Professor Tan Kong Yam Non-Executive Independent Director7 Tony Tan Tee Hieong Chief Executive Officer & Executive Non-Independent Director
Liew Cheng San Victor, 68
ChairmanNon-Executive Independent Director
Bachelor of Social Sciences (Honours), University of Singapore
Date of first appointment as a director: 31 October 2006
Date of appointment as Chairman: 1 January 2009
Length of service as a director (as at 31 December 2014): 8 years 2 months
Board committee served on
• Corporate Disclosure Committee (Chairman)
Present principal commitments
• Accuron Technologies Limited (Director)
• Allocated Bullion Solutions Pte. Ltd. (Chairman)
• Catalist Advisory Panel (Member)
• Singapore Aerospace Manufacturing Private Limited (Director)
• Singapore Institute of Management (Vice-Chairman, Governing Council, Chairman, Investment
Committee and Member, Audit Committee and Nominating Committee)
• Singapore Institute of Management Pte. Ltd. (Director)
Background and working experience
• Corporate Advisor of Temasek Holdings (Private) Limited (From 2004 to June 2011)
• Corporate Advisor of Singapore Technologies Pte Ltd (From February 2002 to 2004)
• Executive Vice President, Global Markets and Treasury of Overseas Union Bank Limited (From
1980 to 2002)
Award
• Public Service Star (2000)
Delivering Performance | 17
Lim Ming Yan, 52
Deputy ChairmanNon-Executive Non-Independent Director
Bachelor of Engineering (Mechanical) and Economics (First Class Honours), University of
Birmingham, UK
Date of first appointment as a director: 1 January 2013
Date of appointment as Deputy Chairman: 1 January 2013
Length of service as a director (as at 31 December 2014): 2 years
Board committees served on
• Corporate Disclosure Committee (Member)
• Executive Committee (Chairman)
Present directorships in other listed companies
• Ascott Residence Trust Management Limited (manager of Ascott Residence Trust) (Deputy
Chairman)
• CapitaCommercial Trust Management Limited (manager of CapitaCommercial Trust) (Deputy
Chairman)
• CapitaLand Limited
• CapitaMall Trust Management Limited (manager of CapitaMall Trust) (Deputy Chairman)
Present principal commitments (other than directorships in listed companies)
• Building and Construction Authority (Board Member)
• Business China (Director)
• CapitaLand China Holdings Pte Ltd (Chairman)
• CapitaLand Hope Foundation (Director)
• CapitaLand Limited (President & Group CEO)
• CapitaLand Regional Investments Limited (Chairman)
• CapitaLand Singapore Limited (Chairman)
• CapitaMalls Asia Limited1 (Chairman)
• CTM Property Trust, Steering Committee (Chairman)
• LFIE Holding Limited (Co-Chairman)
• Shanghai YiDian Holding (Group) Company (Director)
• Singapore-China Foundation Ltd. (Governor)
• Singapore Tourism Board (Board Member)
• The Ascott Limited (Chairman)
Directorship in other listed companies held over the preceding three years
• Central China Real Estate Limited
Background and working experience
• Chief Operating Officer of CapitaLand Limited (From May 2011 to December 2012)
• CEO of The Ascott Limited (From July 2009 to February 2012)
• CEO of CapitaLand China Holdings Pte Ltd (From July 2000 to June 2009)
Awards
• Outstanding Chief Executive (Overseas) at the Singapore Business Awards 2006
• Magnolia Award by the Shanghai Municipal Government in 2003 and 2005
1 Delisted on 22 July 2014.
Board of Directors
18 | CapitaRetail China Trust Annual Report 2014
Fong Heng Boo, 65
Non-Executive Independent Director
Bachelor of Accountancy (Honours), University of Singapore
Date of first appointment as a director: 1 January 2013
Length of service as a director (as at 31 December 2014): 2 years
Board committee served on
• Audit Committee (Chairman)
Present directorships in other listed companies
• Asian American Medical Group Limited
• Colex Holdings Limited
• Pteris Global Limited
• Sapphire Corporation Limited
Present principal commitments (other than directorships in listed companies)
• Botanical Services Pty Ltd (Director)
• CapitaLand Township Development Fund II Pte. Ltd. (Director)
• CapitaLand Township Holdings Pte. Ltd. (Director)
• Certis CISCO Security Pte. Ltd. (Director)
• Council for Estate Agencies (Member, Licensing & Practice Committee and Member, Audit
Committee)
• Eastern Health Alliance Pte. Ltd. (Director)
• Surbana International Consultants Holdings Pte. Ltd. (Director)
Background and working experience
• Director, Special Duties of Singapore Totalisator Board (From July 2004 to December 2014)
• Senior Vice President, Corporate Services of Singapore Turf Club (From May 2000 to June 2004)
• Deputy General Manager, Corporate Services of Singapore Turf Club (From May 1998 to May
2000)
• Chief Financial Officer of Easycall International Pte Ltd/Matrix Telecommunications Ltd (From
June 1996 to April 1998)
• General Manager, Corporate Services of Amcol Holdings Limited (From October 1993 to May
1996)
• Assistant Auditor-General of Auditor-General’s Office (From February 1987 to September 1993)
• Divisional Director of Auditor-General’s Office (From May 1980 to January 1987)
• Auditor of Auditor-General’s Office (From November 1975 to April 1979)
Award
• Institute of Certified Public Accountants of Singapore Silver Medal (1999)
Delivering Performance | 19
Christopher Gee Kok Aun, 46
Non-Executive Independent Director
Bachelor of Arts in Law (Honours), University of Nottingham, UK
Member, The Institute of Chartered Financial Analysts
Date of first appointment as a director: 24 January 2014
Length of service as director (as at 31 December 2014): 11 months
Board committee served on
• Audit Committee (Member)
Present principal commitments
• Institute of Policy Studies, Lee Kuan Yew School of Public Policy, National University of
Singapore (Research Fellow)
• Manas Asian Equities Value Fund (Director)
Background and working experience
• Head, Singapore Equities Research of J.P. Morgan Securities Singapore Private Limited (From
July 2002 to February 2012)
• Head, Asia Real Estate Equities Research of J.P. Morgan Securities Singapore Private Limited
(From September 2006 to February 2012)
• Head, Singapore and Malaysia Equities Research of ING Barings Securities (From June 2000 to
June 2002)
• Head, Malaysia Equities Research and Investment Analyst of ING Barings Securities Malaysia
Sdn. Bhd. (From June 1994 to June 2000)
• Audit and Corporate Recovery of Price Waterhouse, London (From September 1990 to March
1994)
Board of Directors
20 | CapitaRetail China Trust Annual Report 2014
Professor Tan Kong Yam, 59
Non-Executive Independent Director
Bachelor in Economics, Princeton University
PhD in Economics, Stanford University
Date of first appointment as a director: 31 October 2014
Length of service as a director (as at 31 December 2014): 2 months
Board committee served on
• Audit Committee (Member)
Present principal commitments
• APS Asset Management Pte Ltd (Director)
• Changi Airport Group (Singapore) Pte. Ltd. (Director)
• Nanyang Technological University of Singapore (Professor of Economics)
• Surbana International Consultants Holdings Pte. Ltd. (Director)
Background and working experience
• Senior Economist, Beijing Office of World Bank (From July 2002 to July 2005)
• Member, Expert Group on the 11th Five Year Plan of World Bank (2004)
• Chief Economist of The Ministry of Trade and Industry (From July 1999 to June 2002)
• Head, Department of Business Policy at NUS Business School of National University of
Singapore (From 1988 to 1999)
Delivering Performance | 21
Ng Kok Siong, 43
Non-Executive Non-Independent Director
Bachelor of Accountancy (Honours), Nanyang Technological University of Singapore
Date of first appointment as a director: 21 July 2009
Length of service as a director (as at 31 December 2014): 5 years 5 months
Board committees served on
• Audit Committee (Member)
• Corporate Disclosure Committee (Member)
• Executive Committee (Member)
Present directorship in other listed companies
• CapitaMalls Malaysia REIT Management Sdn. Bhd. (manager of CapitaMalls Malaysia Trust)
Present principal commitment (other than directorships in listed companies)
• CapitaLand Limited (Chief Corporate Development Officer)
Background and working experience
• Chief Financial Officer of CapitaMalls Asia Limited (From November 2009 to August 2014)
• Senior Vice President, Strategic Finance of CapitaLand Limited (From October 2008 to
September 2009)
• Senior Vice President, CapitaLand Eurasia of CapitaLand Limited (From January 2007 to
October 2008)
• Vice President, Office of the President of CapitaLand Limited (From September 2005 to January
2007)
• Strategy and Portfolio Manager of Shell Oil Products East (From August 2003 to September
2005)
• Planning and Appraisal Advisor of Shell Oil Products East (From July 2001 to August 2003)
• Regional Advisor of Exxon Mobil Asia Pacific Pte Ltd (From May 2000 to July 2001)
• Global Analyst of Esso Coordination Centre N.V. (From January 1999 to May 2000)
• Senior Planning Analyst of Esso Singapore Private Limited (From July 1998 to January 1999)
Board of Directors
22 | CapitaRetail China Trust Annual Report 2014
Tony Tan Tee Hieong, 48
Chief Executive OfficerExecutive Non-Independent Director
Bachelor of Accountancy, National University of Singapore
Master of Business Administration, University of Manchester
Date of first appointment as a director: 1 July 2010
Length of service as a director (as at 31 December 2014): 4 years 6 months
Board committee served on
• Executive Committee (Member)
Background and working experience
• Deputy CEO of CapitaRetail China Trust Management Limited (From April 2010 to June 2010)
• Head, Finance of CapitaRetail China Trust Management Limited (From September 2007 to June
2010)
• Asia Pacific Treasurer of IKEA (From August 1998 to September 2007)
• Treasury Accountant of Wearnes International (From May 1995 to August 1998)
• Money Market Dealer of Credito Italiano Bank (From April 1994 to May 1995)
• Money Market Broker of Harlow Ueda Sassoon (From November 1992 to April 1994)
• Auditor of Ernst & Young (From June 1991 to October 1992)
Delivering Performance | 23
Month Events
January Distributable income of S$70.1 million for the financial year ended 2013 was
4.9% higher than the previous year. Distribution per unit (DPU) for financial
year ended 2013 was 9.02 cents.
March Paid a DPU of 4.33 cents to Unitholders for the period 1 July to 31 December
2013.
April With strong contribution from the newly acquired CapitaMall Grand Canyon,
net property income (NPI) increased robustly by 25.0% and distributable
income grew 13.2% year-on-year for 1Q 2014.
Held its annual general meeting with all the resolutions duly passed.
May CapitaMall Minzhongleyuan reopened after going through a major asset
enhancement initiative.
July NPI increased 29.5% and distributable income grew 18.7% year-on-year for
2Q 2014.
Clinched the Bronze award for the Best Annual Report (REITs and Business
Trusts category) at the Singapore Corporate Awards 2014.
September Paid a DPU of 4.99 cents to Unitholders for the period 1 January to 30 June
2014, an increase of 6.4% compared to the same period in the previous year.
October NPI increased 29.2% and distributable income grew 14.1% year-on-year for
3Q 2014.
Participated in the “5th Singapore Corporate Governance Week – Statement of
Support” organised by Securities Investors Association (Singapore) in
demostration of CRCT’s commitment to good corporate governance.
Year in Brief 2014
24 | CapitaRetail China Trust Annual Report 2014
Tony Tan Tee Hieong
Chief Executive Officer & Executive Director
Refer to the description under the section on Board of Directors.
INVESTMENT AND ASSET MANAGEMENT TEAM
The Investment and Asset Management Team is responsible for identifying and evaluating potential
acquisitions and investments, as well as formulating business and enhancement plans for CRCT’s
assets. They work closely with the property managers as well as the shopping malls’ centre
management to ensure that the plans are diligently implemented.
Tan Tze Wooi
Vice President, Investment and Asset Management
Tze Wooi has over 17 years of financial experience in real estate, corporate banking, credit and
auditing in Singapore and China. He was an Investment and Asset Manager for CapitaMalls Asia
before joining CRCTML. He is a Chartered Financial Analyst and holds a Bachelor of Accountancy
(Honours) from Nanyang Technological University, Singapore.
Toh Yee-Shui
Vice President, Investment and Asset Management
Yee-Shui has over 13 years of experience in the real estate and banking industry in Singapore and
China. He was an Investment and Asset Manager in China for CapitaMalls Asia before joining
CRCTML. He is a Chartered Financial Analyst and holds a Master of Science in Financial Engineering
from the National University of Singapore.
FINANCE TEAM
The Finance Team is responsible for all finance-related functions, including the preparation of
statutory accounts, budgeting, sourcing and management of funds, management of treasury and tax
affairs, compliance, liaison with external audit, and all other finance-related matters.
Joanne Tan Siew Bee
Head, Finance
Joanne has over 14 years of finance and accounting experience. She holds a professional degree
with the Association of Chartered Certified Accountants (ACCA) and is a Chartered Accountant of
Singapore.
Trust Management Team (CRCTML)
Delivering Performance | 25
FUND ANALYST
The Fund Analyst is responsible for developing and maintaining financial and asset models to
analyse the performance of CRCT at the property level, as well as preparing asset reports on the
assets.
Samantha Huang Yin
Executive, Investment and Asset Management
Samantha graduated with a Bachelor of Science in Real Estate from the National University of
Singapore in 2013. Prior to joining CRCTML, she gained internship and traineeship exposure in
various real estate firms.
INVESTOR RELATIONS MANAGER
The Investor Relations Manager is responsible for maintaining transparent communications with
Unitholders, potential investors and analysts through communication channels such as the annual
reports, press releases, presentations, roadshows and CRCT’s website.
Leng Tong Yan
Manager, Investor Relations
Tong Yan has over eight years of experience in auditing and investor relations. She was an Internal
Audit Manager with CapitaMalls Asia before joining CRCTML in May 2013. She holds a Bachelor of
Accountancy from Nanyang Technological University, Singapore and is a Chartered Accountant of
Singapore.
Trust Management Team (CRCTML)
26 | CapitaRetail China Trust Annual Report 2014
OUR ROLE
Our primary role as the manager of CRCT (Manager) is to set the strategic direction of CRCT and
make recommendations to HSBC Institutional Trust Services (Singapore) Limited, in its capacity as
trustee of CRCT (Trustee), on acquisition, divestment and enhancement of the assets of CRCT in
accordance with its stated investment strategy. The research, evaluation and analysis required for
this purpose are coordinated and carried out by us as the Manager.
As the Manager, we have general powers of management over the assets of CRCT. Our primary
responsibility is to manage the assets and liabilities of CRCT for the benefit of the unitholders of
CRCT (Unitholders). We do this with a focus on generating rental income and enhancing asset value
over time so as to maximise the returns from the investments, and ultimately the distributions and total
returns to Unitholders.
Our other functions and responsibilities as the Manager include:
(a) using our best endeavours to conduct CRCT’s business in a proper and efficient manner and to
conduct all transactions with, or on behalf of CRCT, at arm’s length;
(b) preparing annual business plans for review by the directors of the Manager (Directors),
including forecasts on revenue, net income and capital expenditure, explanations on major
variances to previous years’ plans, written commentaries on key issues and underlying
assumptions on rental rates, operating expenses and any other relevant assumptions;
(c) ensuring compliance with relevant laws and regulations, including the Listing Manual of
Singapore Exchange Securities Trading Limited (SGX-ST) (Listing Manual), the Code on
Collective Investment Schemes (CIS Code) issued by the Monetary Authority of Singapore
(MAS) (including Appendix 6 of CIS Code (Property Funds Appendix)) and the tax rulings issued
by the Inland Revenue Authority of Singapore on the taxation of CRCT and Unitholders;
(d) attending to all regular communications with Unitholders; and
(e) supervising CapitaLand Retail (Shanghai) Management & Consulting Co., Ltd. (Property
Manager), the property manager which performs the day-to-day property management
functions (including leasing, marketing, promotion, coordination and property management) for
CRCT’s malls.
CRCT, constituted as a trust, is externally managed by the Manager and therefore has no personnel
of its own. The Manager appoints experienced and well qualified management to run its day-to-day
operations. All Directors and employees of the Manager are remunerated by the Manager and not
CRCT.
The Manager was appointed in accordance with the terms of the trust deed constituting CRCT and
dated 23 October 2006 (as amended, varied or supplemented from time to time) (Trust Deed). The
Trust Deed also outlines certain circumstances under which the Manager can be removed, including
by notice in writing given by the Trustee upon the occurrence of certain events, or by a resolution
passed by a simple majority of Unitholders present and voting at a meeting of Unitholders duly
convened and held in accordance with the provisions of the Trust Deed.
The Manager is a subsidiary of CapitaLand Limited (CL) which holds a significant unitholding interest
in CRCT. CL is a long-term real estate developer and investor and has strong inherent interests in the
performance of CRCT. CL’s retention of a significant unitholding interest in CRCT ensures its
commitment to CRCT and aligns its interests with other Unitholders. The Manager’s association with
CL provides the following benefits, amongst other things, to CRCT:
(a) stable pipeline of property assets through CL’s development activities;
Corporate Governance
Delivering Performance | 27
(b) wider and better access to banking and capital markets on favourable terms;
(c) fund raising and treasury support; and
(d) access to a bench of experienced management talent.
OUR CORPORATE GOVERNANCE CULTURE
The Manager aspires to the highest standards of corporate conduct as guided by the Principles of
the Code of Corporate Governance 2012 (Code). The Manager believes in developing and
maintaining sound and transparent policies and practices to meet the specific business needs of
CRCT and to provide a firm foundation for a trusted and respected business enterprise. The Manager
remains focused on complying with the substance and spirit of the Principles of the Code while
achieving operational excellence and delivering CRCT’s long-term strategic objectives.
The Manager has received accolades from the investment community for excellence in corporate
governance. More details can be found in the Investor & Media Relations section on pages 59 to 60
of the Annual Report.
This report sets out the corporate governance practices for financial year (FY) 2014 with reference
to the Code. Where there are deviations from the principles and guidelines of the Code, an
explanation has been provided within this report.
(A) BOARD MATTERS
The Board’s Conduct of Affairs
Principle 1:
Every company should be headed by an effective Board to lead and control the company. The
Board is collectively responsible for the long-term success of the company. The Board works
with Management to achieve this objective and Management remains accountable to the Board.
The Manager is led by a board of Directors (Board) comprising a majority of non-executive
independent Directors. Each Director brings to the Board skills, experience, insights and sound
judgement, which together with his strategic networking relationships, serve to further the interests
of CRCT. At all times, the Directors are collectively and individually obliged to act honestly and with
diligence, and consider the best interests of Unitholders.
The Board oversees the affairs of the Manager, in furtherance of the Manager’s primary responsibility
to manage the assets and liabilities of CRCT for the benefit of Unitholders. The Board appoints the
Chief Executive Officer (CEO), who, assisted by the management team of the Manager
(Management), is responsible for the day-to-day management and overall operations of CRCT’s
business.
The Board provides leadership to the Management, sets strategic directions and oversees the
management of CRCT. The Board establishes goals for Management and monitors the achievement
of these goals. It ensures that proper and effective controls are in place to assess and manage
business risks and compliance with requirements under the Listing Manual, the Property Funds
Appendix, as well as any other applicable guidelines prescribed by the SGX-ST, the MAS or other
relevant authorities, and applicable laws. It also sets the disclosure and transparency standards for
CRCT and ensures that obligations to Unitholders and other stakeholders are understood and met.
The Board has reserved authority to approve certain matters and these include:
(a) material acquisitions, investments, disposals and divestments;
(b) issue of new units;
(c) income distributions and other returns to Unitholders; and
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28 | CapitaRetail China Trust Annual Report 2014
(d) matters which involve a conflict of interest for a controlling unitholder or a Director.
Various Board Committees, namely the Audit Committee (AC), Corporate Disclosure Committee
(CDC) and Executive Committee (EC) have been constituted with clear written terms of reference to
assist the Board in the discharge of its functions. The composition of the various Board Committees
is set out on page 43 of the Annual Report.
Each of these Board Committees operates under delegated authority from the Board. The Board may
form other Board Committees as dictated by business imperatives. Membership of the various Board
Committees is managed to ensure an equitable distribution of responsibilities among Board
members, to maximise the effectiveness of the Board and to foster active participation and
contribution from Board members. Diversity of experience and appropriate skills are considered in
the composition of the respective Board Committees.
The Board has adopted a set of internal controls which establishes approval limits for, amongst other
things, capital expenditure, investments, divestments and debts. Apart from matters that specifically
require the Board’s approvals, the Board delegates authority for transactions below those limits to
Board Committees and Management. Approval sub-limits are also provided at management level to
optimise operational efficiency.
The Board meets at least once every quarter, and as required by business imperatives. Where
exigencies prevent a Director from attending a Board meeting in person, the Articles of Association
of the Manager permit the Director to participate via teleconferencing or video conferencing. The
Board and Board Committees may also make decisions by way of resolutions in writing.
A total of four Board meetings were held in FY 2014. A table showing the attendance record of
Directors at meetings of the Board and AC during FY 2014 is set out on page 43 of the Annual Report.
The Manager believes in the manifest contribution of its Directors beyond attendance at formal Board
and Board Committees meetings. To judge a director’s contributions based on his attendance at
formal meetings alone would not do justice to his overall contributions, which include being
accessible by Management for guidance or exchange of views outside the formal environment of
Board and Board Committees meetings.
The Manager provides suitable training for Directors. Upon appointment, each Director is provided
with a formal letter of appointment and is also given a copy of the Directors’ Manual (which includes
information on a broad range of matters relating to the role of a director). All Directors on appointment
are required to undertake an induction programme to familiarise themselves with matters relating to
the business activities of CRCT, its strategic directions and policies, the regulatory environment in
which CRCT operates and the Manager’s corporate governance practices. The Manager also
provides appropriate training for first-time directors including industry-specific knowledge.
Following their appointment, Directors are provided with opportunities for continuing education in
areas such as directors’ duties and responsibilities, changes to regulations and accounting
standards and industry-related matters, so as to be updated on matters that affect or may enhance
their performance as Directors or Board Committee members.
Delivering Performance | 29
Board Composition and Guidance
Principle 2:
There should be a strong and independent element on the Board, which is able to exercise
objective judgement on corporate affairs independently, in particular, from Management and
10% shareholders. No individual or small group of individuals should be allowed to dominate
the Board’s decision making.
The Board comprises individuals who are business leaders and professionals with financial, banking,
fund management, real estate, legal, investment and accounting backgrounds. The varied
backgrounds of the Directors enable Management to benefit from their external, diverse and
objective perspectives on issues brought before the Board. The size and composition of the Board
are reviewed regularly to ensure that the Board is of appropriate size and has an optimal mix of
expertise and experience, and comprises persons who, as a group, provide the necessary core
competencies, taking into consideration the nature and scope of CRCT’s operations.
The Board presently comprises seven Directors, of whom four are non-executive independent
Directors. The profiles of the Directors are set out on pages 17 to 23 of the Annual Report.
The independence of each Director is reviewed by the Board upon appointment, and thereafter
annually and as and when circumstances require. An independent director is one who has no
relationship with the Manager, its related corporations, its shareholders who hold 10% or more of the
voting shares in the Manager, or Unitholders who hold 10% or more of the units in issue of CRCT or
its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the
Directors’ independent business judgement in the best interests of CRCT. The Board has determined
that Mr Liew Cheng San Victor, Mr Fong Heng Boo, Mr Christopher Gee Kok Aun and Professor Tan
Kong Yam are independent Directors under the Code.
Chairman and Chief Executive Officer
Principle 3:
There should be a clear division of responsibilities between the leadership of the Board and the
executives responsible for managing the company’s business. No one individual should
represent a considerable concentration of power.
To maintain an appropriate balance of power, increased accountability and greater capacity of the
Board for independent decision making, the roles and responsibilities of the Chairman and the CEO
are held by separate individuals.
The non-executive independent Chairman is responsible for leading the Board and ensuring that the
Board is effective on all aspects of its role. The CEO has full executive responsibilities over the
business directions and operational decisions of CRCT and is responsible for implementing CRCT’s
strategies and policies and for conducting CRCT’s business. The Chairman and the CEO are not
immediate family members. The separation of the roles of the Chairman and the CEO and the
resulting clarity of roles provide a healthy professional relationship between the Board and
Management and facilitate robust deliberations on the business activities of CRCT and the exchange
of ideas and views to help shape the strategic process.
The Chairman is responsible for leadership of the Board and for creating the conditions for overall
Board, Board Committee and individual Director effectiveness. This includes setting the agenda of
the Board in consultation with the CEO and promoting constructive engagement among the Directors
as well as between the Board and the CEO on strategic issues.
The Chairman plays a significant leadership role by providing clear oversight, advice and guidance
to the CEO and Management on strategies and business operations.
Corporate Governance
30 | CapitaRetail China Trust Annual Report 2014
Board Membership
Principle 4:
There should be a formal and transparent process for the appointment and re-appointment of
directors to the Board.
The Manager does not have a nominating committee. In view that the Manager is a dedicated
manager to only CRCT, and taking into account the activities and scale of business of CRCT, the
limited number of independent director appointment and the fact that independent directors
constitute more than half of the Board of the Manager, the Board considers that the objectives of a
nominating committee may be achieved by the full Board (of which comprises a majority of
independent Directors) undertaking the responsibilities of a nominating committee. Therefore, the
Board performs the functions that such a committee would otherwise perform, namely, it administers
nominations to the Board, reviews the structure, size and composition of the Board, and reviews the
independence of Board members. Directors of the Manager are not subject to periodic retirement by
rotation.
Under the Code, the composition of the Board, including the selection of candidates for new
appointments to the Board as part of the Board’s renewal process, is determined using the following
principles:
(a) the Board should comprise Directors with a broad range of commercial experience, including
expertise in fund management, the property industry, banking and legal fields; and
(b) at least one-third of the Board should comprise independent Directors. Where, amongst other
things, the Chairman of the Board is not an independent Director, at least half of the Board
should comprise independent Directors.
Renewal or replacement of Board members do not necessarily reflect their contributions to date, but
may be driven by the need to position and shape the Board in line with the evolving needs of CRCT
and its business.
The selection of candidates is evaluated taking into account various factors including the current and
mid-term needs and goals of CRCT, as well as the relevant expertise of the candidates and their
potential contributions. Candidates may be put forward or sought through contacts and
recommendations.
Guideline 4.4 of the Code recommends that the Board determine the maximum number of listed
company board representations which any director may hold and disclose this in the annual report.
The Board is of the view that, the limit on the number of listed company directorships that an
individual may hold should be considered on a case-by-case basis, as a person’s available time and
attention may be affected by many different factors such as whether they are in full-time employment
and their other responsibilities. A Director with multiple directorships is expected to ensure that
sufficient attention is given to the affairs of the Manager in managing the assets and liabilities of
CRCT for the benefit of Unitholders. The Board believes that each individual Director is best placed
to determine and ensure that he is able to devote sufficient time and attention to discharge his duties
and responsibilities as a Director of the Manager, bearing in mind his other commitments. In
considering the nomination of Directors for appointment, the Board will take into account, amongst
other things, the competing time commitments faced by Directors with multiple Board memberships.
All Directors had confirmed that notwithstanding the number of their individual listed company board
representations and other principal commitments, which the Directors held, they were able to devote
sufficient time and attention to the affairs of the Manager in managing the assets and liabilities of
CRCT for the benefit of Unitholders. The Board is of the view that the current commitments of each
of its Directors are reasonable and each of the Directors is able to and has been adequately carrying
out his duties.
Delivering Performance | 31
Board Performance
Principle 5:
There should be a formal annual assessment of the effectiveness of the Board as a whole and
its board committees and the contribution by each director to the effectiveness of the Board.
The Manager believes that Board performance is ultimately reflected in the long-term performance
of CRCT.
The Board strives to ensure that there is an optimal blend in the Board of background, experience
and knowledge in business, finance and management skills critical to CRCT’s business and that each
Director could bring to the Board an independent and objective perspective to enable balanced and
well-considered decisions to be made in the interests of CRCT. Contributions by an individual Board
member can also take other forms, including providing objective perspectives on issues, facilitating
business opportunities and strategic relationships, and accessibility by Management outside of a
formal environment of Board and/or Board Committees meetings.
Reviews of Board performance are carried out on an informal basis. The Manager believes that
collective Board performance and that of individual Board members are better reflected in, and
evidenced by, its and their proper guidance, diligent oversight and able leadership, and the support
that it lends to Management in steering CRCT in the appropriate direction, and the long-term
performance of CRCT whether under favourable or challenging market conditions. The Board was
also able to assess the Board Committees through their regular reports to the Board on their
activities.
Access to Information
Principle 6:
In order to fulfil their responsibilities, directors should be provided with complete, adequate
and timely information prior to board meetings and on an on-going basis so as to enable them
to make informed decisions to discharge their duties and responsibilities.
The Manager recognises the importance of providing the Board with timely, adequate and relevant
information prior to Board meetings, and as and when the need arises.
As a general rule, Board papers are sent to Board members at least five working days prior to the
Board meeting to allow the members to prepare for the Board meetings and to enable the discussions
to focus on questions that the members may have. However, sensitive matters may be tabled at the
meeting itself or discussed without any papers being distributed.
In line with the Manager’s commitment to limit paper wastage and reduce its carbon footprint, the
Manager no longer provides printed copy of Board papers and Directors are instead provided with
tablet devices to enable them to access and read Board and Board Committee papers prior to and
at meetings. This initiative also enhances information security as the papers are downloaded to tablet
devices through an encrypted channel.
In addition to providing timely, adequate and relevant information to the Board on Board affairs and
issues requiring the Board’s decision, Management also provides on-going reports relating to the
operational and financial performance of the Manager, such as monthly management reports.
Where appropriate, informal meetings are also held for Management to brief Directors on prospective
deals and potential developments in the early stages before formal Board approval is sought.
The Board has separate and independent access to Management including the company secretary
of the Manager (Company Secretary) at all times. The Company Secretary attends to corporate
secretarial administration matters and is the corporate governance advisor on corporate matters to
the Board and Management. The Company Secretary attends Board meetings. The Board, whether
as individual Directors or as a group, is also entitled to have access to independent professional
advice where required, at the Manager’s expense.
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32 | CapitaRetail China Trust Annual Report 2014
The AC also meets the internal auditors and external auditors separately at least once a year, without
the presence of the CEO and Management and has unfettered access to any information that it may
require.
(B) REMUNERATION MATTERS
Procedures for Developing Remuneration Policies
Principle 7:
There should be a formal and transparent procedure for developing policy on executive
remuneration and for fixing the remuneration packages of individual directors. No director
should be involved in deciding his own remuneration.
Level and Mix of Remuneration
Principle 8:
The level and structure of remuneration should be aligned with the long-term interest and risk
policies of the company, and should be appropriate to attract, retain and motivate (a) the
directors to provide good stewardship of the company, and (b) key management personnel to
successfully manage the company. However, companies should avoid paying more than is
necessary for this purpose.
Disclosure on Remuneration
Principle 9:
Every company should provide clear disclosure of its remuneration policies, level and mix of
remuneration, and the procedure for setting remuneration, in the company’s Annual Report. It
should provide disclosure in relation to its remuneration policies to enable investors to
understand the link between remuneration paid to directors and key management personnel,
and performance.
The Manager believes that a framework of remuneration for the Board and key executives should not
be taken in isolation. It should be linked to the building of management bench strength and the
development of key executives. This is to ensure continual development of talent and renewal of
strong and sound leadership for a sustainable business and a lasting company in the best interests
of CRCT.
The remuneration of the Directors and employees of the Manager is paid by the Manager, and not by
CRCT. As the Manager is a subsidiary of CL, it adheres to the remuneration policies and practices
of CL. The Manager therefore does not have a remuneration committee.
The Manager’s tapping on the compensation framework of CL puts the Manager in a better position
to attract better qualified management talent, who may otherwise not be attracted to a standalone
REIT manager. The Manager being a subsidiary of CL also provides an intangible benefit of allowing
its employees to be associated with a wider corporate group identity which can offer them the depth
and breadth of experience and career horizon and this enables the Manager to attract and retain
qualified individuals.
The Board has carefully considered the remuneration policies and practices of CL and is satisfied
that such policies and practices will provide the Manager with a suitable remuneration policy.
The Directors’ fees for FY 2014 are shown in the table on page 34 of the Annual Report. The CEO
does not receive any fees in his capacity as a Director. Directors’ fees generally comprise a basic
retainer fee as a Director, an additional fee for serving on any of the Board Committees and an
attendance fee for participation in meetings of the Board and any of the Board Committees, project
meetings and verification meetings.
Delivering Performance | 33
Non-executive Directors (save for Directors who are employees of CL or CapitaMalls Asia Limited
(CMA)) receive Directors’ fees which are payable by way of cash and units in CRCT (Units). The
Manager believes that the payment of a portion of the Directors’ fees in Units will serve to align the
interests of such Directors with that of Unitholders and CRCT’s long-term growth and value.
Director’s Fees1,2
Board Members FY 2014 FY 2013
Liew Cheng San Victor S$129,000 S$129,000
Lim Ming Yan N.A.4 S$117,0003
Chew Gek Khim5 S$11,143 S$91,000
Fong Heng Boo S$89,5726 S$76,000
Christopher Gee Kok Aun7 S$68,291 N.A.
Professor Tan Kong Yam8 S$10,161 N.A.
Ng Kok Siong N.A.4 S$94,0003
Tony Tan Tee Hieong N.A. N.A.
N.A.: Not Applicable.
1 Inclusive of attendance fees of (a) S$2,000 per meeting attendance in person, (b) S$1,700 per meeting attendance viateleconferencing or video conferencing, and (c) S$1,000 per meeting attendance at project and verification meetings subjectto a maximum of S$10,000 per Director per annum. Directors’ fees are subject to the approval of the Manager’s soleshareholder.
2 Each non-executive Director (save for non-executive Directors who are employees of CL or CMA) shall receive up to 20% ofhis Directors’ fees in the form of Units (subject to rounding adjustments). The remainder of the Directors’ fees shall be paidin cash. No new Units will be issued for this purpose as these Units will be paid by the Manager from the Units it holds.
3 In respect of non-executive Directors who are employees of CL or CMA, their Directors’ fees in respect of FY 2013 were paidto CL and CMA respectively in cash.
4 With effect from FY 2014, non-executive Directors who are employees of CL or CMA do not receive Directors’ fees.
5 Chew Gek Khim resigned as a non-executive independent Director and ceased to be the Chairperson of the AC with effectfrom 5 February 2014. All Directors’ fees paid and payable to Chew Gek Khim were paid/will be paid in cash.
6 Fong Heng Boo was appointed as Chairman of the AC with effect from 5 February 2014.
7 Christopher Gee Kok Aun was appointed as a non-executive independent Director and a member of the AC with effect from24 January 2014.
8 Professor Tan Kong Yam was appointed as a non-executive independent Director and a member of the AC with effect from 31October 2014.
(C) ACCOUNTABILITY AND AUDIT
Accountability
Principle 10:
The Board should present a balanced and understandable assessment of the company’s
performance, position and prospects.
The Manager provides Unitholders with quarterly and annual financial statements. In presenting the
annual and quarterly financial statements to Unitholders, the Board aims to provide Unitholders with
a balanced, clear and understandable assessment of CRCT’s performance, position and prospects.
In order to achieve this, Management provides the Board with management accounts on a monthly
basis and such explanation and information as any Director may require, to enable the Directors to
keep abreast, and make a balanced and informed assessment, of CRCT’s financial performance,
position and prospects.
The Manager believes in conducting itself in ways that seek to deliver maximum sustainable value to
Unitholders. Best practices are promoted as a means to build an excellent business for Unitholders
and the Manager is accountable to Unitholders for CRCT’s performance. Prompt fulfilment of
statutory reporting requirements is but one way to maintaining Unitholders’ confidence and trust in
the capability and integrity of the Manager.
Corporate Governance
34 | CapitaRetail China Trust Annual Report 2014
Risk Management and Internal Controls
Principle 11:
The Board is responsible for the governance of risk. The Board should ensure that
Management maintains a sound system of risk management and internal controls to safeguard
shareholders’ interests and the company’s assets, and should determine the nature and extent
of the significant risks which the Board is willing to take in achieving its strategic objectives.
The Manager has in place an adequate and effective system of internal controls addressing material
financial, operational, compliance and information technology risks to safeguard Unitholders’
interests and CRCT’s assets.
The Board has overall responsibility for the governance of risk and exercises oversight of the risk
management strategy and framework. The AC assists the Board in strengthening the Manager’s risk
management capabilities for CRCT and its subsidiaries (CRCT Group).
In carrying out this responsibility, in particular, the AC:
(a) makes recommendations to the Board on risk appetite including associated risk parameters for
CRCT Group;
(b) oversees Management in the formulation, updating and maintenance of an adequate and
effective risk management framework, policies and strategies for managing risks that are
consistent with the approved risk appetite and parameters for CRCT Group and report to the
Board on its decisions on any material matters concerning the aforementioned;
(c) makes the necessary recommendations to the Board such that an opinion and comment
regarding the adequacy and effectiveness of the risk management and internal control systems
can be made by the Board in the annual report of CRCT in accordance with the Listing Manual
and the Code; and
(d) reports to the Board on any material breaches of risk limits and the adequacy of any proposed
action.
The Manager adopts an Enterprise Risk Management (ERM) Framework which sets out the required
environmental and organisational components for managing risk in an integrated, systematic and
consistent manner. The ERM Framework and related policies are reviewed annually.
The Manager consistently seeks to improve and strengthen its ERM Framework. As part of the ERM
Framework, Management, amongst other things, undertakes and performs a Risk and Control
Self-Assessment (RCSA) process. As a result of the RCSA process, the Manager produces and
maintains a risk register which identifies the material risks CRCT Group faces and the corresponding
internal controls it has in place to manage or mitigate those risks. The material risks are reviewed
annually by the AC and the Board. The AC also reviews the approach of identifying and assessing
risks and internal controls in the risk register. The system of risk management and internal controls
is reviewed and, where appropriate, refined, regularly by Management, the AC and the Board.
The Manager has established an approach towards how risk appetite is defined, monitored and
reviewed for CRCT Group. Approved by the Board, the Risk Appetite Statement (RAS), addresses the
management of material risks faced by CRCT Group. Alignment of CRCT Group’s risk profile to the
RAS is achieved through various communication and monitoring mechanisms (including key
performance indicators set for Management) put in place across the various functions within the
Manager.
More information on CRCT’s ERM Framework can be found in the Enterprise Risk Management
section on pages 44 to 46 of the Annual Report.
Internal auditors and external auditors conduct audits that involve testing the effectiveness of the
material internal controls for CRCT Group addressing financial, operational, compliance and
information technology risks. This includes testing, where practical, material internal controls in areas
Delivering Performance | 35
managed by external service providers. Any material non-compliance or lapses in internal controls
together with corrective measures recommended by the internal auditors and external auditors are
reported to and reviewed by the AC. The adequacy and effectiveness of the measures taken by the
Manager in response to the recommendations made by the internal auditors and external auditors are
also reviewed by the AC.
The Board has received assurance from the CEO and the Head, Finance of the Manager that:
(a) the financial records for CRCT Group have been properly maintained and the financial
statements for the year ended 31 December 2014 give a true and fair view of CRCT Group’s
operations and finances; and
(b) the system of risk management and internal controls in place for CRCT Group is adequate and
effective in addressing the material risks faced by CRCT Group in its current business
environment including material financial, operational, compliance and information technology
risks. The CEO and the Head, Finance of the Manager have obtained similar assurance from the
respective risk and control owners.
In addition, in FY 2014, the Board has received quarterly certification by Management on the integrity
of financial reporting and the Board has provided a negative assurance confirmation to Unitholders
as required by the Listing Manual.
Based on the ERM Framework established and the reviews conducted by Management and both the
internal auditors and external auditors, as well as the assurance from the CEO and the Head, Finance
of the Manager, the Board concurs with the recommendation of the AC and is of the opinion, that the
system of risk management and internal controls addressing material financial, operational,
compliance and information technology risks established by the Manager is adequate and effective
to meet the needs of CRCT Group in its current business environment as at 31 December 2014.
The Board notes that the system of risk management and internal controls established by the
Manager provides reasonable assurance that CRCT Group, as it strives to achieve its business
objectives, will not be significantly affected by any event that can be reasonably foreseen or
anticipated. However, the Board also notes that no system of risk management and internal controls
can provide absolute assurance in this regard, or absolute assurance against poor judgement in
decision making, human error, losses, fraud or other irregularities.
Audit Committee
Principle 12:
The Board should establish an Audit Committee with written terms of reference which clearly
set out its authority and duties.
The AC comprises four non-executive Directors, the majority of whom (including the Chairman of the
AC) are independent. The members bring with them invaluable recent and relevant managerial and
professional expertise in accounting and related financial management domains.
The AC has explicit authority to investigate any matter within its terms of reference. Management is
required to provide the fullest co-operation in providing information and resources, and in
implementing or carrying out all requests made by the AC. The AC has direct access to the internal
auditors and external auditors and full discretion to invite any Director or executive officer to attend
its meetings. Similarly, both the internal auditors and external auditors are given unrestricted access
to the AC.
The AC is guided by its terms of reference, in particular, the AC:
(a) monitors and evaluates the effectiveness of the Manager’s system of risk management and
internal controls (including financial, operational, compliance and information technology
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36 | CapitaRetail China Trust Annual Report 2014
controls and risk management policies and systems) through reviewing written reports from the
internal auditors and external auditors to ensure that where deficiencies in internal controls have
been identified, appropriate and prompt remedial action is taken by Management;
(b) reviews the significant financial reporting issues and judgements so as to ensure the integrity of
the financial statements of CRCT Group and any announcements relating to CRCT Group’s
financial performance;
(c) reviews the effectiveness of the internal audit function;
(d) reviews the scope and results of the external audit and also assesses the cost effectiveness, the
independence and objectivity of the external auditors;
(e) makes recommendations to the Board on the proposals to Unitholders on the appointment,
re-appointment and removal of the external auditors, and approving the remuneration of the
external auditors;
(f) reviews and approves processes to regulate transactions involving an Interested Person (as
defined in Chapter 9 of the Listing Manual) and/or Interested Party (as defined in the Property
Funds Appendix) (each, an Interested Person) and CRCT and/or its subsidiaries (Interested
Person Transactions), in particular, ensuring compliance with the provisions of the Listing
Manual and the Property Funds Appendix relating to Interested Person Transactions; and
(g) reviews the policy and arrangements by which employees of the Manager and any other persons
may, in confidence, report suspected fraud or irregularity or suspected infringement of any laws
or regulations or rules or, raise concerns about possible improprieties in matters of financial
reporting or other matters with a view to ensuring that arrangements are in place for such
concerns to be raised and independently investigated, and for appropriate follow-up action to
be taken.
The AC has reviewed the nature and extent of non-audit services provided by the external auditors
during FY 2014 and the fees paid for such services. The AC is satisfied that the independence of the
external auditors has not been impaired by the provision of those services. The external auditors
have also provided confirmation of their independence to the AC. The aggregate amount of fees paid
and payable to the external auditors for FY 2014 was S$437,002 of which audit fees amounted to
S$429,002 and non-audit fees amounted to S$8,000.
In FY 2014, the AC also met with the internal auditors and external auditors, without Management’s
presence, to discuss the reasonableness of the financial reporting process, the system of internal
controls, and the significant comments and recommendations by the auditors. Where relevant, the
AC makes reference to the best practices and guidance in the Guidebook for Audit Committees in
Singapore and the practice directions issued from time to time in relation to Financial Reporting
Surveillance Programme administered by the Accounting and Corporate Regulatory Authority of
Singapore.
The Manager confirms, on behalf of CRCT, that CRCT complies with Rule 712 and Rule 715 of the
Listing Manual.
Internal Audit
Principle 13:
The company should establish an effective internal audit function that is adequately resourced
and independent of the activities it audits.
The Manager has in place an internal audit function supported by CL’s Internal Audit Department (CL
IA) which reports directly to the AC and administratively to the CEO. CL IA plans its internal audit
schedules in consultation with, but independently of, Management and its plan is submitted to the AC
Delivering Performance | 37
for approval prior to the beginning of each year. The AC also meets with CL IA at least once a year
without the presence of Management. CL IA has unfettered access to the Manager’s documents,
records, properties and employees, including access to the AC.
CL IA is a corporate member of the Singapore branch of the Institute of Internal Auditors Inc. (IIA),
which has its headquarters in the USA. CL IA subscribes to, and is guided by, the International
Standards for the Professional Practice of Internal Auditing (Standards) developed by the IIA and has
incorporated these Standards into its audit practices.
To ensure that internal audits are performed by competent professionals, CL IA recruits and employs
suitably qualified professional staff with the requisite skill set and experience.
CL IA identifies and provides training and development opportunities for its staff to ensure their
technical knowledge and skill set remain current and relevant.
(D) SHAREHOLDER RIGHTS AND RESPONSIBILITIES
Shareholder Rights
Principle 14:
Companies should treat all shareholders fairly and equitably, and should recognise, protect
and facilitate the exercise of shareholders’ rights, and continually review and update such
governance arrangements.
The Manager is committed to treating all Unitholders fairly and equitably and keeping all Unitholders,
other stakeholders and analysts informed of the performance and changes in CRCT or its business
which would be likely to materially affect the price or value of Units, on a timely and consistent basis,
so as to assist Unitholders and investors in their investment decisions.
The Manager provides accurate and timely disclosure of material information on the SGXNet.
All Unitholders are entitled to attend general meetings and are accorded the opportunity to
participate effectively and vote at general meetings. All Unitholders are also informed of the rules,
including voting procedures, governing such meetings.
Communication with Shareholders
Principle 15:
Companies should actively engage their shareholders and put in place an investor relations
policy to promote regular, effective and fair communication with shareholders.
The Manager has in place the Investor Relations and Corporate Communications team which
facilitates effective communication with Unitholders, analysts, fund managers and the media.
The Manager actively engages with Unitholders and has put in place a Unitholders’ Communication
and Investor Relations Policy (Policy) to promote regular, effective and fair communication with
Unitholders. The Policy is uploaded on CRCT’s website at www.capitaretailchina.com.
The Board has established the CDC which assists the Board in the discharge of its function to meet
the legal and regulatory obligations arising under the laws and regulations of Singapore relating to
and to conform to best practices in the corporate disclosure and compliance process.
More information on the Manager’s investor and media relations with Unitholders can be found in the
Investor & Media Relations section on pages 59 to 60 of the Annual Report and the Policy which is
available on CRCT’s website.
CRCT’s distribution policy is to distribute at least 90.0% of its distributable income (other than gains
from the sale of properties by CRCT which are determined to be trading gains), with the actual level
of distribution to be determined at the Manager’s discretion.
Corporate Governance
38 | CapitaRetail China Trust Annual Report 2014
Conduct of Shareholder Meetings
Principle 16:
Companies should encourage greater shareholder participation at general meetings of
shareholders, and allow shareholders the opportunity to communicate their views on various
matters affecting the company.
The Manager supports the principle of encouraging Unitholders’ participation and voting at general
meetings. Unitholders receive a CD containing the CRCT Annual Report (printed copies are available
upon request) and notice of the annual general meeting. As and when an extraordinary general
meeting is to be held, Unitholders will receive a copy of the circular which contains details of the
matters to be proposed for Unitholders’ consideration and approval. Notices of the general meetings
are also advertised in the press and issued via SGXNet.
At general meetings, Unitholders are encouraged to communicate their views on and discuss with the
Board and the Manager matters affecting CRCT. Representatives of the Trustee, Directors (including
the respective Chairpersons of the Board and the AC), the Manager’s senior management and the
external auditors, would usually be present at general meetings.
To safeguard Unitholders’ interests and rights, a separate resolution is proposed for each
substantially separate issue at general meetings. To ensure transparency in the voting process and
better reflect Unitholders’ interest, the Manager conducts poll voting for Unitholders/proxies present
at the meeting for all the resolutions proposed at the general meetings. The total number of votes cast
for or against the resolutions and the respective percentages are announced after the general
meetings via SGXNet. Minutes of the general meetings are taken and are available to Unitholders for
their inspection upon request.
Unitholders also have the opportunity to communicate their views and discuss with the Board and
Manager matters affecting CRCT after the general meetings.
(E) ADDITIONAL INFORMATION
Executive Committee
Apart from the AC and CDC, the Board has also established an EC.
The EC oversees the day-to-day activities of the Manager and that of CRCT, on behalf of the Board.
The EC is guided by its terms of reference, in particular, the EC:
(a) reviews, endorses and recommends to the Board strategic directions and management policies
of the Manager in respect of CRCT;
(b) oversees operational, investment and divestment matters within its approved financial limits;
and
(c) reviews management reports and operating budgets.
The members of the EC meet informally during the course of the year.
Dealings with Interested Persons
Review Procedures for Interested Person Transactions
The Manager has established internal control procedures to ensure that all Interested Person
Transactions are undertaken on an arm’s length basis and on normal commercial terms, which are
generally no more favourable than those extended to unrelated third parties, and are not prejudicial
to the interests of CRCT and Unitholders. In respect of such transactions, the Manager would have
to demonstrate to the AC that such transactions are undertaken on normal commercial terms and are
not prejudicial to the interests of CRCT and Unitholders which may include obtaining (where
practicable) third party quotations or obtaining valuations from independent valuers (in accordance
Delivering Performance | 39
with applicable provisions of the Listing Manual and the Property Funds Appendix). The internal
control procedures also ensure compliance with Chapter 9 of the Listing Manual and the Property
Funds Appendix.
In particular, the following procedures are in place:
Interested Person Transactions1 Approving Authority,
Procedures and Disclosure
Below S$100,000 per transaction • Trustee
S$100,000 and above per transaction (which singly, or when
aggregated with other transactions2 with the same Interested
Person in the same financial year is less than 3.0% of CRCT’s
latest audited net tangible assets/net asset value)
• Trustee
• Audit Committee
Transaction2 which:
(a) is equal to or exceeds 3.0% of CRCT’s latest audited net
tangible assets/net asset value; or
(b) when aggregated with other transactions2 with the same
Interested Person in the same financial year is equal to or
exceeds 3.0% of CRCT’s latest audited net tangible
assets/net asset value
• Trustee
• Audit Committee
• Immediate announcement
Transaction2 which:
(a) is equal to or exceeds 5.0% of CRCT’s latest audited net
tangible assets/net asset value; or
(b) when aggregated with other transactions2 with the same
Interested Person in the same financial year is equal to or
exceeds 5.0% of CRCT’s latest audited net tangible
assets/net asset value
• Trustee
• Audit Committee
• Unitholders
• Immediate announcement
1 Excluding interested person transactions falling under the exceptions set out in Rules 915 and 916 of the Listing Manual.
2 Any transaction of less than S$100,000 in value is disregarded.
Role of the Audit Committee for Interested Person Transactions
The Manager’s internal control procedures are intended to ensure that Interested Person
Transactions are conducted at arm’s length and on normal commercial terms, and are not prejudicial
to CRCT and Unitholders’ interests.
The Manager maintains a register to record all Interested Person Transactions which are entered into
by CRCT (and the basis on which they are entered into, including the quotations obtained to support
such basis). All Interested Person Transactions are subject to regular periodic reviews by the AC,
which in turn obtains advice from CL IA, to ascertain that the guidelines and procedures established
to monitor Interested Person Transactions, including the relevant provisions of the Listing Manual and
the Property Funds Appendix, as well as any other guidelines which may from time to time be
prescribed by the SGX-ST, the MAS or other relevant authorities, have been complied with. The
review includes an examination of the nature of the transaction and its supporting documents or such
other information deemed necessary by the AC. If a member of the AC has an interest in a
transaction, he is to abstain from participating in the review and approval process in relation to that
transaction. In addition, the Trustee also reviews such audit reports to ascertain that the Listing
Manual and the Property Funds Appendix have been complied with.
Details of all Interested Person Transactions (equal to or exceeding S$100,000 each in value) entered
into by CRCT during FY 2014 are disclosed on page 147 of the Annual Report.
Corporate Governance
40 | CapitaRetail China Trust Annual Report 2014
Dealing with Conflicts of Interest
The following principles and procedures have been established to deal with potential conflicts of
interest which the Manager (including its Directors, executive officers and employees) may
encounter in managing CRCT:
(a) the Manager is a dedicated manager to CRCT and will not manage any other REIT or be involved
in any other real property business;
(b) all resolutions at meetings of the Board in relation to matters concerning CRCT must be decided
by a majority vote of the Directors, including at least one non-executive independent Director;
(c) in respect of matters in which CL and/or its subsidiaries have an interest, whether direct or
indirect, any nominees appointed by CL and/or its subsidiaries to the Board will abstain from
voting. In such matters, the quorum must comprise a majority of the non-executive independent
Directors and shall exclude such nominee Directors of CL and/or its subsidiaries;
(d) in respect of matters in which a Director or his associates have an interest, whether direct or
indirect, such interested Director will abstain from voting. In such matters, the quorum must
comprise a majority of the Directors and shall exclude such interested Director(s);
(e) if the Manager is required to decide whether or not to take any action against any person in
relation to any breach of any agreement entered into by the Trustee for and on behalf of CRCT
with an affiliate of the Manager, the Manager is obliged to consult with a reputable law firm
(acceptable to the Trustee) which shall provide legal advice on the matter. If the said law firm
is of the opinion that the Trustee, on behalf of CRCT, has a prima facie case against the party
allegedly in breach under such agreement, the Manager is obliged to pursue the appropriate
remedies under such agreement; and
(f) at least one-third of the Board shall comprise non-executive independent Directors.
Additionally, the Trustee has been granted rights of first refusal by CapitaMalls China Income Fund,
CapitaMalls China Income Fund II, CapitaMalls China Income Fund III, CapitaMalls China
Development Fund III and CMA over any proposed sale or certain proposed acquisitions (as the case
may be) of shares or equity interests in properties by CapitaMalls China Income Fund, CapitaMalls
China Income Fund II, CapitaMalls China Income Fund III, CapitaMalls China Development Fund III
and CMA in China.
In respect of voting rights where the Manager would face a conflict between its own interests and that
of Unitholders, the Manager shall cause such voting rights to be exercised according to the
discretion of the Trustee.
Dealings in Securities
The Manager has devised and adopted a securities dealing policy for the Manager’s officers and
employees which applies the best practices recommendations in the Listing Manual. To this end, the
Manager has issued guidelines to its Directors and employees as well as certain relevant executives
of the CL group, which sets out prohibitions against dealings in CRCT’s securities (i) while in
possession of material unpublished price sensitive information, (ii) during two weeks before the
release of CRCT’s results for the first three quarters, and (iii) during one month before the release of
CRCT’s full-year results. The Manager will also not deal in CRCT’s securities during the same period.
Under these guidelines, all Directors and employees of the Manager as well as certain relevant
executives of the CL group are directed to refrain from dealing in CRCT’s securities on short-term
considerations. They are also regularly reminded of laws against insider trading.
Delivering Performance | 41
(F) CODE OF BUSINESS CONDUCT
The Manager adheres to an ethics and code of business conduct policy which deals with issues such
as confidentiality, conduct and work discipline, corporate gifts and concessionary offers. Clear
policies and guidelines on how to handle workplace harassment and grievances are also in place.
The policies and guidelines are published on CL’s intranet which is accessible by all employees of
the Manager.
The policies that the Manager has implemented aim to help to detect and prevent occupational fraud
in mainly three ways.
First, the Manager offers fair compensation packages, based on practices of pay-for-performance
and promotion based on merit to its employees. The Manager also provides various healthcare
subsidies and financial assistance schemes to alleviate the common financial pressures its
employees face.
Second, clearly documented policies and work procedures incorporate internal controls which
ensure that adequate checks and balances are in place. Periodic audits are also conducted to
evaluate the efficacy of these internal controls.
Finally, the Manager seeks to build and maintain the right organisational culture through its core
values, educating its employees on good business conduct and ethical values.
Bribery and Corruption Prevention Policy
The Manager adopts a strong stance against bribery and corruption. In addition to clear guidelines
and procedures for the giving and receipt of corporate gifts and concessionary offers, all employees
of the Manager are required to make a declaration on an annual basis where they pledge to uphold
the Manager’s core values and not to engage in any corrupt or unethical practices. This serves as a
reminder to all employees to maintain the highest standards of integrity in their work and business
dealings.
The Manager’s zero tolerance policy towards bribery and corruption extends to its business dealings
with third parties. Pursuant to such policy, the Manager requires that certain agreements incorporate
anti-bribery and anti-corruption provisions.
Whistle-Blowing Policy
A whistle-blowing policy and other procedures are put in place to provide employees of the Manager
and parties who have dealings with the Manager with well defined, accessible and trusted channels
to report suspected fraud, corruption, dishonest practices or other improprieties in the workplace,
and for the independent investigation of any reported incidents and appropriate follow up action. The
objective of the whistle-blowing policy is to encourage the reporting of such matters – that employees
or external parties making any reports in good faith will be able to do so with the confidence that they
will be treated fairly, and to the extent possible, be protected from reprisal.
Anti-Money Laundering and Countering the Financing of Terrorism Measures
As a holder of a Capital Markets Services licence issued by the MAS, the Manager abides by the
MAS’ guidelines on the prevention of money laundering and countering the financing of terrorism.
Under these guidelines, the main obligations of the Manager are:
(a) customer due diligence;
(b) suspicious transaction reporting;
Corporate Governance
42 | CapitaRetail China Trust Annual Report 2014
(c) record keeping;
(d) employee screening; and
(e) staff training.
The Manager has developed and implemented a policy on the prevention of money laundering and
terrorist financing and is alert at all times to suspicious transactions. Where there is a suspicion of
money laundering or terrorist financing, the Manager performs due diligence checks on its
counterparties in order to ensure that it does not enter into business transactions with terrorist
suspects or other high risk persons or entities. Suspicious transactions are also reported to the
Suspicious Transaction Reporting Office of the Commercial Affairs Department.
Under this policy, the Manager must retain all relevant records or documents relating to business
relations with its customers or transactions entered into for a period of at least five years following the
termination of such business relations or the completion of such transactions.
All prospective employees of the Manager are also screened against various lists of terrorist
suspects issued by the MAS. Periodic training is provided by the Manager to its Directors and
employees to ensure that they are updated and aware of applicable anti-money laundering and
terrorist financing regulations, the prevailing techniques and trends in money laundering and terrorist
financing and the measures adopted by the Manager to combat money laundering and terrorist
financing.
Composition and Attendance Record of Meetings of the Board and Board Committees
CompositionAttendance Record ofMeetings in FY 2014
BoardAudit
Committee
Board MembersAudit
Committee
CorporateDisclosureCommittee
ExecutiveCommittee
Number ofMeetingsHeld: 4
Number ofMeetingsHeld: 4
Liew Cheng San Victor – Chairman – 4 out of 4 N.A
Lim Ming Yan – Member Chairman 3 out of 4 N.A.
Chew Gek Khim1 Chairperson – – 1 out of 1 1 out of 1
Fong Heng Boo2 Chairman – – 4 out of 4 4 out of 4
Christopher Gee
Kok Aun3
Member – – 3 out of 4 3 out of 4
Ng Kok Siong Member Member Member 4 out of 4 4 out of 4
Professor Tan
Kong Yam4
Member – – N.A. N.A.
Tony Tan Tee Hieong – – Member 4 out of 4 N.A.
N.A.: – Not Applicable.
1 Chew Gek Khim resigned as a non-executive independent Director and ceased to be Chairperson of the Audit Committee witheffect from 5 February 2014.
2 Fong Heng Boo was appointed as Chairman of the Audit Committee with effect from 5 February 2014.
3 Christopher Gee Kok Aun was appointed as a non-executive independent Director and a member of the Audit Committee witheffect from 24 January 2014.
4 Professor Tan Kong Yam was appointed as a non-executive independent Director and a member of the Audit Committee witheffect from 31 October 2014.
Delivering Performance | 43
Risk management is an integral part of CRCT Group’s business at both the strategic and operational
level. A proactive approach towards risk management supports the attainment of CRCT Group’s
business objective and corporate strategy, thereby creating and preserving value.
The Manager of CRCT Group (Manager) recognises that risk management is about opportunities as
much as it is about threats. To capitalise on opportunities, the Manager has to take risks. Therefore,
risk management is not about pursuing risk minimisation as a goal but rather optimising the
risk-reward relationship, within known and agreed risk appetite levels. The Manager therefore takes
risks in a prudent manner for justifiable business reasons.
The Board of Directors of the Manager (Board) is responsible for the governance of risk across CRCT
Group. The responsibilities include determining CRCT Group’s risk appetite, overseeing CRCT
Group’s Enterprise Risk Management (ERM) Framework, regularly reviewing CRCT Group’s risk
profile, material risks and mitigation strategies, and ensuring the effectiveness of risk management
policies and procedures. For these purposes, it is assisted by the Audit Committee (AC) which
provides dedicated oversight of risk management at the Board level.
The AC comprises four independent board members and meets on a quarterly basis. The meetings
are regularly attended by the CEO as well as key management staff.
The Board has approved CRCT Group’s risk appetite which determines the nature and extent of
material risks which CRCT Group is willing to take to achieve its strategic objectives. CRCT Group’s
Risk Appetite (RAS) is expressed via formal high level and overarching statements. Having
considered key stakeholders’ interests, the RAS sets out explicit, forward-looking views of the CRCT
Group’s desired risk profile and is aligned to CRCT Group’s strategy and business plans.
ENTERPRISE RISK MANAGEMENT FRAMEWORK
ERM Framework
Risk Strategy
Board Oversight & Senior Management Involvement
Inte
rnal C
on
tro
l S
yste
m
Ind
ep
en
den
t R
evie
w &
Au
dit
RiskIdentification
& Assessment
Risk Monitoring& Reporting
RiskResponse• Key Risk Indicators
Risk-Aware Culture
• Accept• Avoid• Mitigate• Transfer
• Risk Appetite• Risk & Control Self-Assessment• Investment Risk Evaluation• Scenario Analysis• Whistle-blowing/ Business Malpractice
CRCT Group’s ERM Framework sets out the required environmental and organisational components
which enable CRCT Group to manage risks in an integrated, systematic and consistent manner. The
ERM Framework and related risk management policies are reviewed annually and are periodically
validated by external ERM consultants.
Enterprise Risk Management
44 | CapitaRetail China Trust Annual Report 2014
A robust internal control system and an effective, independent review and audit process are the twin
pillars that underpin CRCT Group’s ERM Framework. While the line management is responsible for
the design and implementation of effective internal controls using a risk-based approach, the
outsourced Internal Audit team reviews such design and implementation to provide reasonable
assurance to the AC on the adequacy and effectiveness of the internal control system.
Annually, the Manager facilitates and coordinates CRCT’s Group-wide Risk and Control Self-
Assessment (RCSA) exercise that requires respective risk and control owners to proactively identify,
assess and document material risks as well as the corresponding key controls and mitigating
measures needed to address them. Material risks and their associated controls are consolidated and
reviewed by the Manager before they are presented to the AC and the Board.
Awareness of and preparedness for potential risks affecting CRCT Group’s business continuity helps
the Manager to minimise the impact of disruption to its business operations. CRCT Group has in
place a business continuity plan. In addition, the outsourced Information Techolology (IT) team has
also put in place a disaster recovery strategy, which is reviewed and tested on an annual basis.
The Manager believes that having the right risk culture and people with the right attitude, values and
knowledge are fundamental to CRCT Group’s success. Therefore, the Manager works closely with
CapitaLand’s Risk Assessment Group to proactively enhance risk management knowledge within
CRCT Group and promote a culture of risk awareness.
MANAGING MATERIAL RISKS
The Manager undertakes an iterative and comprehensive approach to identifying, managing,
monitoring and reporting of material risks across CRCT Group. Such material risks include:
ACTS OF GOD AND PANDEMIC
Natural disasters, catastrophes and pandemic events are beyond CRCT Group’s control. Such
events may significantly damage our properties or disrupt our operations and reduce shopper traffic.
This could lead to loss of income for our tenants and possibly defaults on lease payments, resulting
in adverse effect on our business and financial conditions. The Manager manages such risks through
established crisis management standard operating procedures at each property.
COMPETITION RISK
CRCT Group faces keen competition from established players and new market entrants in the
property industry. It adopts a relentless approach towards strengthening its competitiveness through
high-quality products and services, product differentiation, pricing, asset enhancement initiatives
and branding. CRCT Group also promotes shopper loyalty through shopper-centric initiatives and
shopper loyalty programmes.
ECONOMIC RISK
CRCT Group is exposed to economic, financial and property markets developments in major cities
in China. These developments may reduce revenue, increase costs and result in downward
revaluation of our assets. Market illiquidity during a financial crisis makes asset divestment
challenging and this can affect CRCT Group’s investment, financial and strategic objectives. The
Manager manages this by adopting a disciplined approach towards financial management and
having a balanced portfolio.
FOREIGN EXCHANGE RISK
CRCT Group is exposed to Chinese Renminbi (RMB) flutuation against Singapore Dollar which is the
distribution pay out currency. Where possible, CRCT Group adopts a natural hedging by borrowing
in RMB which matches the revenue stream generated from its investments. Non-RMB denominated
Delivering Performance | 45
term loans are hedged via non-deliverable forwards so as to match its underlying assets which are
denominated in RMB. In relation to CRCT Group’s overseas investments in foreign subsidiaries whose
net assets are exposed to currency translation risk and are held for long term investment purposes,
the differences arising from such translation are captured under foreign currency translation reserve
which are reviewed and monitored on a regular basis.
INFORMATION TECHNOLOGY RISK
The outsourced IT team has put in place policies and procedures to manage IT risks. These policies
and procedures govern IT security, vendor selection, access controls and data security. Disaster
recovery testing is conducted regularly to validate the system continuity plan that is put in place. In
addition, network penetration testing is also conducted regularly to check for potential security gaps.
INTEREST RATE RISK
Some of CRCT Group’s existing debt carry floating interest rates, and consequently, the interest cost
to CRCT Group for such loans will be subjected to fluctuations in interest rates. As part of CRCT
Group’s active capital management strategy, the Manager enters into hedging transactions to
partially mitigate the risk of such interest rate fluctuations through the use of interest rate swaps
and/or fixed rate borrowings. The exposure to interest rate risk is further managed through regular
reviews with senior management on the optimal mix of fixed and floating rate borrowings. In addition,
debt portfolio is reviewed on an on-going basis, taking into account the investment holding period
and nature of the assets.
LIQUIDITY RISK
The Manager actively monitors CRCT Group’s debt maturity profile, operating cash flow and the
availability of funding so as to ensure sufficient funds are available to meet its capital, refinancing
and operating needs. To manage liquidity risk, CRCT Group seeks to maintain adequate levels of
liquid resources to cover its working capital obligations. Moreover, CRCT Group has access to debt
capital market through its Medium Term Note (MTN) Programme to raise funds for acquisition,
development and/or refinance maturing debt. CRCT Group’s ability to raise funds from both banks
and debt capital markets has enabled it to diversify it sources of funding to avoid over-reliance on
any single source of funding.
POLITICAL AND POLICY RISK
CRCT Group’s properties and investments are mainly in China, where it could be exposed to political
and policy risks such as political leadership uncertainty, inconsistency in public policies, social
unrest, etc. Such risks could result in the deterioration of the economic or social conditions and affect
the financial viability of CRCT Group’s investments or even the control of assets. To mitigate these
risks, overseas operations are managed by experienced management teams supported by local
teams who are familiar with the local conditions and culture.
Enterprise Risk Management
46 | CapitaRetail China Trust Annual Report 2014
Committed Occupancy Rates
As at
31 December 20141
As at
31 December 20131
% %
CapitaMall Xizhimen 97.0 98.3
CapitaMall Wangjing 99.3 99.0
CapitaMall Grand Canyon 99.7 95.9
CapitaMall Minzhongleyuan 73.92 N.A.3
CapitaMall Qibao 96.1 97.1
CapitaMall Saihan 100.0 99.9
CapitaMall Wuhu 73.94 90.9
CapitaMall Anzhen 100.0 100.0
CapitaMall Shuangjing 100.0 100.0
CapitaMall Erqi 100.0 100.0
CRCT Portfolio 95.9 98.2N.A.: Not Applicable1 Based on committed leases.2 Impacted by road closure to facilitate the construction of a new subway line.3 CapitaMall Minzhongleyuan is excluded as the mall was closed temporarily from 1 July 2013 to 30 April 2014 to carry out asset
enhancement initiative.4 Tenancy adjustment to differentiate market positioning from competing malls.
Shopper Traffic1
2014 2013
Million Million
CapitaMall Xizhimen 36.9 34.9
CapitaMall Wangjing 10.4 10.6
CapitaMall Grand Canyon 9.5 N.A.2
CapitaMall Minzhongleyuan 4.13 N.A.2
CapitaMall Qibao 13.2 11.5
CapitaMall Saihan 8.9 8.4
CapitaMall Wuhu 6.8 7.9
CRCT Portfolio 89.8 73.3N.A.: Not Applicable1 CapitaMall Anzhen, CapitaMall Shuangjing and CapitaMall Erqi do not have traffic counters.2 CapitaMall Grand Canyon is excluded as its acquisition was completed on 30 December 2013. CapitaMall Minzhongleyuan
is excluded as the mall was closed temporarily from 1 July 2013 to 30 April 2014.3 Shopper traffic for CapitaMall Minzhongleyuan is from 1 May 2014 to 31 December 2014 as the mall reopened on 1 May 2014
after completion of asset enhancement initiative.
Portfolio Tenants’ Sales (RMB per square metre)1
1,327 1,356 1,403 1,522
1,403 1,516 1,541
1,629
1,846
1,630
raeY lluFQ4Q3Q2Q1
2013 2014
1 Based on tenants’ sales (excluding Department Stores and Supermarkets) from CapitaMall Xizhimen, CapitaMall Wangjing,CapitaMall Qibao, CapitaMall Saihan and CapitaMall Wuhu. Prior year’s numbers have been restated for comparativepurposes.
Operations Review
Delivering Performance | 47
Lease Expiry Profile
CapitaMall Anzhen, CapitaMall Erqi and the majority of the Gross Rentable Area (GRA) of CapitaMall
Shuangjing are let out under master-leases. The master-leases are long-term with a typical tenure of
20 years which help to ensure stable cash flows. For tenants which are not under master-leases, the
typical lease term is 15 to 20 years for anchor tenants, five to seven years for mini-anchor tenants and
up to three years for specialty tenants.
New Leases and Renewals
Number of New
Leases/Renewals
in FY 20141
Variance Over
Preceding
Rental2,3
%
CapitaMall Xizhimen 125 15.6
CapitaMall Wangjing 134 29.8
CapitaMall Grand Canyon 96 43.1
CapitaMall Qibao 88 10.9
CapitaMall Saihan 147 20.7
CapitaMall Wuhu 60 1.2
CRCT Portfolio4 650 23.1
1 Excludes new leases at newly created lettable area, short-term renewals (< 1 year), units vacant for >= 1 year andpre-terminated leases.
2 Excludes turnover rent component.
3 Majority of leases have rental escalation clauses.
4 Excludes CapitaMall Minzhongleyuan as the mall was closed temporarily from 1 July 2013 to 30 April 2014 for assetenhancement initiative.
Weighted Average Lease Expiry by Mall
(As at 31 December 2014)
Weighted Expiry
(by Total Rental Income)
Weighted Expiry
(By Net Lettable Area
(NLA))
Years Years
CapitaMall Xizhimen 5.4 2.8
CapitaMall Wangjing 7.5 3.5
CapitaMall Grand Canyon 8.5 4.6
CapitaMall Minzhongleyuan 1.5 1.4
CapitaMall Qibao 4.5 2.9
CapitaMall Saihan 6.6 3.3
CapitaMall Wuhu 4.2 2.8
CapitaMall Anzhen 10.6 10.6
CapitaMall Erqi 11.9 11.9
CapitaMall Shuangjing 9.0 8.5
CRCT Portfolio 9.0 6.7
Operations Review
48 | CapitaRetail China Trust Annual Report 2014
Lease Expiry Profile for 2015 By Mall
(As at 31 December 2014)
NLA
Total Rental
Income/month
No. of
leases1 sq m
% of
Total2 RMB’000
% of
Total3
CapitaMall Xizhimen 82 9,778 19.3% 6,180 28.9%
CapitaMall Wangjing 99 6,243 11.5% 4,018 23.7%
CapitaMall Grand Canyon 112 6,080 13.5% 3,411 30.0%
CapitaMall Minzhongleyuan 168 7,891 34.3% 2,794 60.2%
CapitaMall Qibao 53 7,459 14.6% 1,475 18.7%
CapitaMall Saihan 112 8,014 26.1% 2,043 46.2%
CapitaMall Wuhu 62 3,209 8.6% 744 38.2%
1 Based on all committed leases as at 31 December 2014.
2 As percentage of each mall’s total NLA as at 31 December 2014.
3 As percentage of each mall’s total rental income for the month of December 2014.
Portfolio Lease Expiry Profile
(As at 31 December 2014)
10.27.5
5 9 4 8
66.9
24.3
19.5
11.89.0
35.4
7.55. .
8102dnoyeB8102710261025102
% of Total NLA for the month of December 2014 % of Total Rental Income for the month of December 2014
Delivering Performance | 49
Turnover Rent
CRCT’s favourable lease structure helps to provide Unitholders with a stable and growing rental cashflow. Most of the leases for the anchors, mini-anchors and specialty tenants have an annual step-upin the base rent. In addition, most of the leases also contain provisions for rent to be payable at theapplicable base rent or at a percentage of sales turnover, whichever is higher. The combination ofdirect point-of-sales systems, system link-up with tenants’ point-of-sales and central cashier systemsat our malls allows us to keep track of tenants’ sales. The long-term master leases at CapitaMallAnzhen, CapitaMall Erqi and CapitaMall Shuangjing contain provisions for upside in rental throughstep-ups in the base rent. In addition, the master leases at CapitaMall Anzhen and CapitaMall Erqiprovide further potential upside through a percentage of tenants’ sales turnover if the turnoverexceeds an agreed threshold.
Committed Leases with Turnover Rent
Provisions by Total Rental Income (%)
(As at 31 December 2014)
Committed Leases with Turnover Rent Provisions 85.1%
Committed Leases without Turnover Rent Provisions 14.9%
Committed Leases with Turnover Rent
Provisions by NLA (%)
(As at 31 December 2014)
Committed Leases with Turnover Rent Provisions 72.0%
Committed Leases without Turnover Rent Provisions 28.0%
Trade Sector Analysis
by Total Rental Income (%)
(As at 31 December 2014)
Fashion & Accessories
Food & Beverage
Department Store
Supermarket
Beauty & Healthcare
Shoes & Bags
Houseware & Furnishings
Leisure & Entertainment
Education
Others
28.4
21.8
14.6
9.4
7.7
3.4
2.8
2.6
2.4
6.9
Trade Sector Analysis
by Committed NLA (%)
(As at 31 December 2014)
Fashion & Accessories
Food & Beverage
Department Store
Supermarket
Beauty & Healthcare
Shoes & Bags
Houseware & Furnishings
Leisure & Entertainment
Education
Others
11.9
12.3
29.5
28.0
3.6
1.1
4.3
1.8
4.4
3.1
Operations Review
50 | CapitaRetail China Trust Annual Report 2014
The portfolio’s biggest tenant is Beijing Hualian Group (BHG) which operates the master-leased
Beijing Hualian Department Stores at CapitaMall Anzhen and CapitaMall Erqi. It is also the anchor
tenant at CapitaMall Xizhimen, CapitaMall Wangjing and CapitaMall Saihan.
TOP 10 TENANTS
(Based on percentage of Total Rental Income in the month of December 20141)
Tenant Brand Names
Trade
Category
Lease
Expiry2
NLA
sq m
%
committed
NLA
% Total
Rental
Income1
BHG(北京)百貨有限公司
北京華聯呼和浩特金宇綜合超市有限公司
北京華聯綜合超市股份有限公司
華聯咖世家(北京)餐飲管理有限公司
Beijing
Hualian
Department
Store
Beijing
Hualian
Supermarket
Costa Coffee
Department
Store
Supermarket
Food &
Beverage
Sep/2015
Dec/2018
Sep/2020
Jul/2025
Nov/2026
Sep/2028
Jun/2029
185,182 40.4% 18.4%
上海聯家超市有限公司3
北京家樂福商業有限公司3
Carrefour Supermarket Jan/2024
Mar/2024
Dec/2030
60,077 13.1% 4.4%
綾致時裝(天津)有限公司3
金林德伯格(天津)有限公司3
Only
Jack & Jones
Vero Moda
Selected
J.Lindeberg
Fashion &
Accessories
May/2015
Sep/2015
Oct/2015
Nov/2015
Dec/2015
Jan/2016
Mar/2016
Apr/2016
Apr/2017
Jun/2017
5,410 1.2% 3.7%
迅銷(中國)商貿有限公司
優衣庫商貿有限公司
UNIQLO Fashion &
Accessories
Apr/2016
Nov/2018
Aug/2020
4,520 1.0% 2.0%
北京百安居裝飾建材有限公司
B&Q Houseware &
Furnishings
Apr/2024 17,429 3.8% 1.4%
北京為之味餐飲有限公司3
北京為之味餐飲有限公司第三分公司
3
富迪康(北京)餐飲管理有限公司3
夾揀成廚麻辣燙
姑姑宴川成元麻辣香鍋
金湯玉線港仔驛棧
Food &
Beverage
May/2016
Sep/2016
Nov/2016
Apr/2017
Mar/2018
Sep/2018
Nov/2018
1,894 0.4% 1.3%
Delivering Performance | 51
Tenant Brand Names
Trade
Category
Lease
Expiry2
NLA
sq m
%
committed
NLA
% Total
Rental
Income1
北京必勝客比薩餅有限公司3
北京肯德基有限公司
3
天津肯德基有限公司
3
上海肯德基有限公司
3
銅陵金壇餐飲有限公司3
KFC
Pizza Hut
Food &
Beverage
Jul/2016
Apr/2017
May/2017
Sep/2017
Sep/2018
Dec/2021
Apr/2022
2,795 0.6% 1.0%
北京拉夏樂微服飾有限公司拉夏貝爾服飾(太倉)
有限公司上海拉夏貝爾服飾股份有限公司上海樂歐服飾有限公司
La Chapelle
Candie’s
Fashion &
Accessories
Sep/2015
Mar/2016
Dec/2017
Feb/2018
3,001 0.7% 1.0%
北京聯郡餐飲管理有限公司北京聯郡餐飲管理有限公司第三分公司
南京大牌檔 Food &
Beverage
Feb/2023
Jun/2024
Oct/2024
3,043 0.7% 0.8%
蓋璞(北京)商業有限公司
GAP Fashion &
Accessories
Sep/2018
Apr/2021
2,153 0.5% 0.8%
1 Includes CapitaMall Minzhongleyuan and CapitaMall Grand Canyon.
2 Some of the tenants have signed more than one tenancy agreement and this has resulted in more than one lease expiry datefor such tenants.
3 Under the same group of companies respectively.
Operations Review
52 | CapitaRetail China Trust Annual Report 2014
In RMB terms, FY 2014 gross revenue for the portfolio was RMB987.6 million, an increase of 24.2%
over FY 2013. The was mainly due to the new contribution of RMB138.1 million from CapitaMall Grand
Canyon, which was acquired on 30 December 2013. The remaining increase of RMB54.4 million was
contributed by other malls due to higher rental growth and higher tenants’ sales, except for
CapitaMall Wuhu where tenancy adjustment is currently being carried out. Gross revenue in SGD
terms for FY 2014 increased by $43.2 million, 27.0% over FY 2013.
Gross Revenue By Property
FY 20141
S$’000
FY 20132
S$’000
%
Change
FY 20141
RMB’000
FY 20132
RMB’000
%
Change
Multi-Tenanted Malls
CapitaMall Xizhimen 53,978 48,596 11.1 262,259 241,352 8.7
CapitaMall Wangjing 41,100 36,871 11.5 199,691 183,118 9.1
CapitaMall Grand Canyon 28,430 – N.M. 138,129 – N.M.
CapitaMall Minzhongleyuan3 5,150 4,578 12.5 25,020 22,738 10.0
CapitaMall Qibao 19,821 17,813 11.3 96,301 88,468 8.9
CapitaMall Saihan 11,456 9,962 15.0 55,663 49,474 12.5
CapitaMall Wuhu 6,802 7,043 (3.4) 33,049 34,978 (5.5)
166,737 124,863 33.5 810,112 620,128 30.6
Master-Leased Malls
CapitaMall Anzhen 16,794 16,262 3.3 81,596 80,766 1.0
CapitaMall Erqi 10,385 10,084 3.0 50,459 50,082 0.8
CapitaMall Shuangjing 9,346 8,866 5.4 45,407 44,033 3.1
36,525 35,212 3.7 177,462 174,881 1.5
Total 203,262 160,075 27.0 987,574 795,009 24.2
Gross Revenue Contribution By Property
FY 20141
(%)
FY 20132
(%)
Multi-Tenanted Malls
CapitaMall Xizhimen 26.6 30.4
CapitaMall Wangjing 20.2 23.0
CapitaMall Grand Canyon 14.0 –
CapitaMall Minzhongleyuan3 2.5 2.9
CapitaMall Qibao 9.8 11.1
CapitaMall Saihan 5.6 6.2
CapitaMall Wuhu 3.3 4.4
Master-Leased Malls
CapitaMall Anzhen 8.3 10.2
CapitaMall Erqi 5.1 6.3
CapitaMall Shuangjing 4.6 5.5
1 The financial year from 1 January 2014 to 31 December 2014.
2 The financial year from 1 January 2013 to 31 December 2013.
3 CapitaMall Minzhongleyuan’s gross revenue was impacted by the road closure to facilitate the construction of a new subwayline.
N.M. – Not Meaningful
Financial Review
Delivering Performance | 53
In RMB terms, NPI for FY 2014 increased by RMB131.4 million, or 25.7% over FY 2013. This wasmainly due to the new contribution of RMB86.6 million from CapitaMall Grand Canyon which wasacquired on 30 December 2013. FY 2014 recorded higher NPI for all malls except CapitaMallMinzhongleyuan and CapitaMall Wuhu. Multi-tenanted malls that registered strong double digitgrowth in NPI included CapitaMall Saihan, CapitaMall Qibao, CapitaMall Xizhimen and CapitaMallWangjing. The master-leased malls – CapitaMall Anzhen, CapitaMall Erqi and CapitaMall Shuangjing– also showed stable year-on-year growth.
NPI By Property
FY 20141
S$’000
FY 20132
S$’000
%
Change
FY 20141
RMB’000
FY 20132
RMB’000
%
Change
Multi-Tenanted Malls
CapitaMall Xizhimen 37,988 32,649 16.4 184,571 162,153 13.8
CapitaMall Wangjing 29,557 26,007 13.7 143,607 129,164 11.2
CapitaMall Grand Canyon 17,815 – N.M. 86,555 – N.M.
CapitaMall Minzhongleyuan3 271 675 (59.9) 1,313 3,353 (60.8)
CapitaMall Qibao 8,543 7,270 17.5 41,506 36,102 15.0
CapitaMall Saihan 6,155 5,171 19.0 29,909 25,681 16.5
CapitaMall Wuhu 2,394 2,911 (17.8) 11,630 14,458 (19.6)
102,723 74,683 37.5 499,091 370,911 34.6
Master-Leased Malls
CapitaMall Anzhen 13,777 13,319 3.4 66,936 66,149 1.2
CapitaMall Erqi 8,336 7,963 4.7 40,504 39,549 2.4
CapitaMall Shuangjing 7,529 7,073 6.4 36,579 35,126 4.1
29,642 28,355 4.5 144,019 140,824 2.3
Total 132,365 103,038 28.5 643,110 511,735 25.7
NPI Contribution By Property
FY 20141
(%)
FY 20132
(%)
Multi-Tenanted Malls
CapitaMall Xizhimen 28.6 31.7
CapitaMall Wangjing 22.3 25.2
CapitaMall Grand Canyon 13.5 –
CapitaMall Minzhongleyuan3 0.2 0.7
CapitaMall Qibao 6.5 7.1
CapitaMall Saihan 4.7 5.0
CapitaMall Wuhu 1.8 2.8
Master-Leased Malls
CapitaMall Anzhen 10.4 12.9
CapitaMall Erqi 6.3 7.7
CapitaMall Shuangjing 5.7 6.91 The financial year from 1 January 2014 to 31 December 2014.
2 The financial year from 1 January 2013 to 31 December 2013.
3 CapitaMall Minzhongleyuan’s NPI was impacted by the road closure to facilitate the construction of a new subway line.
N.M. – Not Meaningful
Financial Review
54 | CapitaRetail China Trust Annual Report 2014
Portfolio Valuations And Property Yield
Valuation
2014
Valuation
2013
Valuation
2014
Property
Yield
20141
Valuation
2014
Valuation
2013
(in per sq
m of GRA)
RMB
million
RMB
million RMB %
S$
million
S$
million
CapitaMall Xizhimen 2,777 2,600 33,428 6.6 588.4 532.2
CapitaMall Wangjing 2,050 1,900 30,143 7.0 434.4 388.9
CapitaMall Grand Canyon 1,948 1,882 27,842 4.4 412.8 385.2
CapitaMall Anzhen 973 949 22,397 6.9 206.2 194.3
CapitaMall Erqi 606 590 6,562 6.7 128.4 120.8
CapitaMall Minzhongleyuan 564 504 15,051 N.M 119.5 103.2
CapitaMall Shuangjing 558 543 11,281 6.6 118.2 111.2
CapitaMall Qibao 485 472 6,669 8.6 102.8 96.6
CapitaMall Saihan 400 362 9,538 7.5 84.8 74.1
CapitaMall Wuhu 260 251 5,698 4.5 55.1 51.4
Total 10,621 10,053 – 6.42 2,250.6 2,057.9
1 Property yield is calculated based on NPI for FY 2014 and the valuation as at 31 December 2014.
2 Excludes CapitaMall Minzhongleyuan’s 2014 yield as the mall was impacted by the road closure to facilitate the construction
of a new subway line.
N.M. – Not Meaningful
S$’000
Investment Properties as at 31 December 2014 2,250,7831
Surplus on revaluation for FY 2014 104,829
1 The carrying amount of the investment properties includes the valuation of the 10 retail malls and the carrying amount of
CapitaMall Minzhongleyuan’s three residential units.
Delivering Performance | 55
As at 31 December 2014, CRCT maintains the following debt facilities:
RMB denominated facility
• the RMB495.0 million five-year secured term loan facility
S$ denominated facilities
• the S$151.0 million money market line facilities
• the S$88.0 million three-year trust term loan facility
• the S$50.0 million three-year trust term loan facility
• the S$50.0 million four-year trust term loan facility
• the S$50.5 million four-year trust term loan facility
• the S$75.0 million four-year trust term loan facility
• the S$50.0 million five-year trust term loan facility
• the S$75.0 million five-year trust term loan facility
• the S$100.0 million five-year trust term loan facility
US$ denominated facility
• the US$50.0 million money market line facility
Multicurrency Medium Term Notes
• the S$500.0 million multicurrency Medium Term Notes (MTN) Programme
CRCT has sufficient untapped facilities, which include S$500.0 million from the MTN Programme, and
money market line facilities of S$121.5 million and US$50.0 million. Current aggregate leverage for
CRCT is at 28.7% (below the Monetary Authority of Singapore’s requirement of 35%) with a total
outstanding debt of S$672.9 million.
CRCT’s effective capital management includes hedging its currency and interest rate risk exposures.
Other than the natural hedge where loans are borrowed in RMB, CRCT also hedges its non-RMB
denominated loans. This provides a currency match against CRCT’s assets which are predominantly
denominated in RMB. However, CRCT does not hedge the equity largely denominated in RMB as
CRCT is of the view that such equity investments are long-term. CRCT will hedge the RMB cash flow
from operations if it is determined with certainty the exact timing in which they will be remitted back
to Singapore for distribution purposes. As at 31 December 2014, CRCT has hedged its non-RMB
loans through non-deliverable forwards (NDF) with a notional amount of S$258.0 million which
represented 53.9% (including RMB denominated loans) of total outstanding debts.
The fair value derivatives for FY 2014, which was included as financial derivatives in total assets and
total liabilities, were S$1.5 million and S$8.6 million respectively. This net amount represented a
negative 0.5% of the net assets of CRCT as at 31 December 2014.
CRCT successfully refinanced the term loans that matured in November 2014, and kept the overall
average cost of debt at 3.32%.
Capital Management
56 | CapitaRetail China Trust Annual Report 2014
Debt maturity each year as a percentage of total outstanding debt as at 31 December 2014 is as
follows:
Debt Maturity Profile (S$ million)
(As at 31 December 2014)
72.6%
27.4%
88.0 100.0 125.5
29.5 5.3
5.3 5.3
50.0 75.0
89.0
100.0
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
Total Debt 2015 2016 2017 2018
672.9 122.8 105.3 130.8 139.0
100.0% 18.3% 15.6% 19.4% 20.7%
2019 2020
75.0 100.0
11.1% 14.9%
S$’million
Total Debt1 (S$ million)
% of Outstanding Debt
Trust-Unsecured Money Market Line3
CapitaMall Grand Canyon - Secured Onshore Term Loan4
Trust - Unsecured Offshore Term Loan2 Fixed RateVariable Rate
1 Total debt excludes interest and upfront fees.
2 Comprises multiple term loans drawn in Singapore at the Trust level, these include fixed and/or floating term loan facilities.
3 Comprises multiple floating rate money market facilities.
4 Secured onshore term loan comprises a RMB term loan of S$104.9 million (RMB495.0 million). The loan is secured by a legal
mortgage over CapitaMall Grand Canyon and bears interest referenced against three to five years People’s Bank of China
(“PBOC”) base lending rate. This secured RMB term loan is payable on a semi-annual basis starting six months from the first
drawdown date. Outstanding loan will be repaid on final maturity.
As at 31 December 2014, 18.3% or S$122.8 million of CRCT’s debt will mature in 2015. To date, the
Manager has refinanced S$88.0 million which matured in February 2015.
Cash Flows and Liquidity
CRCT takes a proactive role in monitoring its cash and liquid reserves to ensure adequate funding
is available for distributions to Unitholders as well as to meet any short-term liabilities.
Operating Activities
Operating net cash flow for FY 2014 was S$111.4 million, an increase of S$42.8 million over the
operating cash flow of S$68.6 million in the preceding financial year. This was mainly due to the
contribution of operating income from CapitaMall Grand Canyon which was acquired on 30
December 2013.
Investing Activities
CRCT adheres to stringent criteria when evaluating potential acquisitions. This involves a thorough
review of risks and returns, and to overall add value to the existing portfolio and future growth
expectations. CRCT will constantly look for new acquisition opportunities.
Delivering Performance | 57
Financing Activities
CRCT continues to adopt a prudent and proactive approach to monitor the cash position and level
of borrowings to ensure a healthy cash position to finance its operations. During the year, CRCT has
fully repaid two of its onshore loans amounting to S$131.5 million resulting in net cash used in
financing activities. CRCT can also tap on the capital and debt markets to facilitate any new
acquisitions.
Cash and Cash Equivalents
As at 31 December 2014, the value of the cash and cash equivalents at CRCT stood at S$86.6 million
compared with S$105.5 million as at 31 December 2013. S$26.7 million of cash retained from our
distributions on 27 March 2014 and 25 September 2014 through Distribution Reinvestment Plan were
used for general corporate and working capital purposes. This is in accordance with the stated use
and allocation of the proceeds from the announcements.
Key Financial Indicators
As at
31 December 2014
Unencumbered Assets to Assets as % of Total Assets (%) 95.6
Aggregate Leverage (%)1 28.7
Net Debt/EBITDA (times)2 5.5
Interest Coverage (times)3 5.6
Average Term to Maturity (Years) 2.8
Average Cost of Debt (%)4 3.32
1 Aggregate leverage is calculated based on total borrowings and deferred payments over total assets. Total assets include the
hedging effects on the net assets denominated in RMB.
2 Net Debt comprises gross debt less transaction costs and EBITDA refers to earnings before interest, tax, depreciation and
amortisation excluding change in fair value of financial derivatives, investment properties and unrealised foreign exchange
gain or loss.
3 Ratio of net income before change in fair value of financial derivative, investment properties and unrealised foreign exchange
gain or loss at CRCT Group over interest expense from FY 2014.
4 Ratio of interest expense over weighted average borrowings.
Capital Management
58 | CapitaRetail China Trust Annual Report 2014
We are committed to provide the investment and media communities with timely, effective,
unbiased and transparent information. We maintain a high standard of access through our wide
variety of communication channels such as meetings, conference calls, roadshows, conferences and
mall visits. Our Unitholders’ Communication and Investor Relations Policy states the guiding
principles of our approach, and it is available on our corporate website at
http://www.capitaretailchina.com/ir_policy.html.
During the year, senior management participated, in roadshows in Hong Kong and Singapore. We
held our full-year and half-year financial analysts’ and media results briefings in January and July
respectively. CRCT’s results, strategies and outlook were communicated during the briefings. The
recordings of the results briefings were posted on our website to keep our stakeholders abreast of
the latest developments of the Trust. On 16 April 2014, we held our annual general meeting, which
gave us an opportunity to have close interaction with our Unitholders. Our communication efforts
have been recognised by the investing community. In July 2014, CRCT was conferred the Bronze
award for Best Annual Report under the REITs and Business Trusts category at the Singapore
Corporate Awards.
Individual and group mall visits are arranged for investors and analysts travelling to the cities in
which our malls are located. These visits offer them a first-hand experience of our malls’ operations
and a greater appreciation of the long-term growth potential of CRCT.
All our latest announcements and news are promptly released to SGX-ST and published on CRCT’s
website (www.capitaretailchina.com). Unitholders and potential stakeholders have 24-hour access to
CRCT’s website for information such as quarterly results, press releases, annual reports and CRCT’s
unit price. An email alert service is also provided so that registered participants can receive email
alerts on CRCT’s latest announcements and press releases. In addition, the public can pose
questions via a dedicated “Ask Us” email address (ask-us@capitaretailchina.com).
INVESTOR RELATIONS & MEDIA CALENDAR 2014
Date Event Organiser
29 Jan FY 2013 results briefing to media and analysts, Singapore CRCT
29 Jan FY 2013 post results briefing, Singapore BAML
18 – 19 Feb Non-deal roadshow, Hong Kong J.P. Morgan
5 – 6 Mar ASEAN Stars Conference 2014 BAML
16 Apr Annual General Meeting CRCT
24 Apr 1Q 2014 post results briefing, Singapore UBS
26 – 27 Jun Asia Pacific Property Conference Citibank
24 Jul 2Q 2014 results briefing to media and analysts, Singapore CRCT
24 Jul 2Q 2014 post results briefing, Singapore DBS
11 Aug CapitaLand Debt Investor Day CapitaLand
24 Oct 3Q 2014 post results briefing, Singapore J.P. Morgan
12 – 13 Nov Thirteenth Annual Asia Pacific Summit Morgan
Stanley
Investor & Media Relations
Delivering Performance | 59
FINANCIAL CALENDAR 2015 – 2016 (TENTATIVE)
April 2015
2015 First Quarter Results Announcement
Annual General Meeting
July 2015
2015 Second Quarter Results Announcement
September 2015
2015 First Half Distribution to Unitholders
October 2015
2015 Third Quarter Results Announcement
January 2016
2015 Full Year Results Announcement
March 2016
2015 Second Half Distribution to Unitholders
ANALYST COVERAGE (AS AT 26 FEBRUARY 2015)
China International Capital Corporation
Daiwa Capital Markets
DBS Bank
J.P. Morgan Securities
Macquarie Capital Securities
OCBC Investment Research
UBS Securities
UNITHOLDER & MEDIA ENQUIRIES
If you have any enquiries or would like to find out more about CRCT, please contact:
The Manager
Ms Leng Tong Yan
Investor Relations
Mr Lim Seng Jin
Corporate Communications
Tel: (65) 6713 2888
Fax: (65) 6713 2999
Email: ask-us@capitaretailchina.com
Website: www.capitaretailchina.com
The Unitholder Registrar
Boardroom Corporate & Advisory Services Pte. Ltd.
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
Tel: +65 6536 5355
Fax: +65 6536 1360
Website: www.boardroomlimited.com
For depository-related matters such as change of details pertaining to Unitholders’ investment
records, please contact:
The Central Depository (Pte) Limited
9 North Buona Vista Drive
#01-19/20 The Metropolis
Singapore 138588
Tel: +65 6535 7511
Fax: +65 6535 0775
Email: asksgx@sgx.com
Website: www.sgx.com/cdp
Investor & Media Relations
60 | CapitaRetail China Trust Annual Report 2014
CRCT Trading Data in FY 2014
Highest Unit Price (S$) 1.705
Lowest Unit Price (S$) 1.285
Average Closing Unit Price (S$) 1.500
Opening Unit Price on 2 January 2014 (S$) 1.330
Closing Unit Price on 31 December 2014 (S$) 1.615
Turnover (million units) 223.6
CRCT Monthly Trading Performance in FY 2014
1.321.38 1.40
1.48 1.52 1.48
1.711.62 1.57
1.63 1.60 1.62
19.5
17.6
11.3
23.6
17.8
14.5
21.6 21.5
23.6
15.4
22.6
14.8
Jan-14 Dec-14Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14
Trading Volume (million units) Closing Unit Price as at end of the month (S$)
Unit Price Performance
Delivering Performance | 61
Comparative Yields (%)
(As at 31 December 2014)
6.1
2.3
3.73.3
4.0
5.6
2.5
0.3
CRCT
Yield1
Singapore
10-year
Govt Bond
Yield2
China
10-year Govt
Bond Yield2
FSSTI
Yield3
FSTRE
Yield4
FSTREI
Yield5
CPF
Ordinary
Account6
12-month
Fixed
(S$) Deposit7
Source: Bloomberg, CRCTML, Central Provident Fund (CPF) Board, Monetary Authority of Singapore.
1 Based on distribution per unit of 9.82¢ for FY 2014 and the unit closing price of S$1.615 on 31 December 2014.
2 Singapore Government 10-year and China Government 10-year bond yields as at 31 December 2014.
3 Average 12-month gross dividend yield of Straits Times Index stocks as at 31 December 2014.
4 Average 12-month gross dividend yield of Straits Times Real Estate Index as at 31 December 2014.
5 Average 12-month gross dividend yield of Straits Times REIT Index as at 31 December 2014.
6 Prevailing CPF-Ordinary Account savings rate.
7 Average 12-month S$ fixed deposit savings rate as at December 2014.
Change in Unit Price/Index Value (%)
-10%
0%
10%
20%
30%
40%
50%
60%
Dec
2013
Jan
2014
Feb
2014
Mar
2014
Apr
2014
May
2014
Jun
2014
Jul
2014
Aug
2014
Sep
2014
Oct
2014
Nov
2014
Dec
2014
CRCT
Straits Times Index (FSSTI)
FTSE Straits Times Real Estate Index (FSTRE)FTSE Straits Times REIT Index (FSTREI)
Shanghai Exchange Composite Index (SHCOMP)
Unit Price Performance
62 | CapitaRetail China Trust Annual Report 2014
As a committed corporate citizen, we continue to promote charity causes in benefit of the
communities served by our shopping malls, and adopt green practices that contribute to sustainable
development.
SUPPORTING THE COMMUNITY
“My Schoolbag”, a key annual CapitaLand corporate social responsibility programme, took place in
China for the fifth consecutive year in September 2014, in conjunction with the start of the new
academic year. For the second year running, CapitaLand partnered with the China Foundation for
Poverty Alleviation (CFPA) to distribute new schoolbags to about 16,000 first grade pupils from over
250 schools, including 22 CapitaLand Hope Schools.
The programme also canvassed for public donations for the first time through the collaboration with
CFPA. Including pledges from CapitaLand Hope Foundation (CHF), the philanthropic arm of
CapitaLand, the amount raised to purchase these schoolbags and stationery totalled RMB1.59
million (S$330,500). The children were also in for a treat with additional bag contents last year – each
bag contained over 100 items, including arts and crafts materials and a water bottle, on top of basic
stationery.
The event involved about 500 volunteers comprising staff, retailers and shoppers. Staff volunteers
from CapitaMall Xizhimen, CapitaMall Wangjing and CapitaMall Saihan took part in the programme.
Besides My Schoolbag, our malls held community activities in support of various causes throughout
the year. CapitaMall Wangjing initiated a winter clothes donation drive for the poor rural regions of
West China, a move that drew a warm response from the mall’s surrounding communities. CapitaMall
Xizhimen and CapitaMall Grand Canyon organised adoption events for stray cats and dogs, while the
latter also held a charity concert to rally shoppers to donate daily necessities to orphans. CapitaMall
Wuhu invited 25 underprivileged families to spend Mid-Autumn Festival in the mall.
BEING GREEN
We remain strongly committed to protecting our environment for future generations, and continue to
minimise the environmental footprint of our malls’ operations.
A recurring highlight was our participation in the World Wide Fund for Nature’s (WWF) Earth Hour
2014, the global movement to raise awareness of climate change. Our malls showed strong support
by turning off façade and non-essential lights throughout the night, beginning at 8.30pm on Saturday,
29 March 2014. Six of our malls – CapitaMall Xizhimen, CapitaMall Wangjing, CapitaMall Grand
Canyon, CapitaMall Qibao, CapitaMall Saihan and CapitaMall Wuhu – took part in the event.
Beyond Earth Hour, our malls also engaged different stakeholders in activities throughout the year to
raise awareness of climate change and the role each of us can play in conserving the environment.
CapitaMall Saihan joined hands with the local authorities to increase awareness of environmental
protection by involving shoppers in maintaining the cleanliness of the streets and bus stops, while
CapitaMall Qibao held a cycling event to promote green transportation. CapitaMall Qibao also
houses a rooftop farm that provides children and families with a hands-on approach to learning green
values, thus reinforcing the importance of environmentally friendly practices to the future generation.
Corporate Social Responsibility
Delivering Performance | 63
We recognise that our people are our greatest asset and are integral to the success of the
organisation. We adopt an integrated human capital strategy to continually develop and grow our
people to reach their fullest potential.
TALENT MANAGEMENT
We actively seek outstanding talents to support our business growth in China. To strengthen the
management bench and talent pipeline for leadership succession planning, we recruit talents at different
points in their careers, from fresh graduates to young, mid-career professionals and industry veterans.
Through our network with various distinguished China and overseas universities, we attract young talents
to join our Management Associate Programme and Graduate Development Programme.
Our scale allows us to provide a platform for cross-fertilisation of skills and capabilities, where our
employees have the opportunity to rotate to different malls, functions, cities or countries within
CapitaLand’s portfolio as part of their career development and growth.
COMPETITIVE REMUNERATION PACKAGE
We provide a comprehensive and competitive remuneration package which includes short-term cash
bonuses and long-term equity-based reward plans such as Restricted Share Plan and Performance
Share Plan. Such reward plans aim to tie incentive with performance, as well as to retain talent. We
conduct regular benchmarking exercises against different markets and are innovative in our
compensation strategies to ensure that we remain competitive and continue to attract and retain
talent.
DEVELOPING OUR PEOPLE
We strongly believe that continual learning is a fundamental building block of growth, and ample
training opportunities are provided to expand our people’s capabilities and realise their potential. We
collaborate with CapitaLand to offer our employees a suite of training and development programmes
that will help them gain the relevant knowledge and skills required to achieve business excellence.
Apart from classroom training, our employees are encouraged to proactively learn at their own time
and pace through our online learning platform iCampus, which contains a library of more than 400
courses in English and Chinese.
For new employees, we have in place structured programmes such as the new hire orientation
modules on iCampus, where staff can learn company information and policies and processes. This
helps to seamlessly integrate and ease new employees into our culture and system. During their first
three months of service, they are invited to attend a four-day immersion programme where they can
gain deeper insights into our management philosophy, core values, business strategy and
operations. The immersion programme also provides an opportunity for new employees to network
and interact with colleagues from other malls and functions.
To sharpen the leadership, management and business skills of the senior management team, we
partner with CapitaLand Institute of Management and Business (CLIMB) to organise and run
leadership and management programmes.
ENGAGING OUR PEOPLE
We believe it is important to engage our employees through regular communication. Staff
communication sessions with senior management are held on a regular basis to keep our employees
abreast of CRCT’s financial results and strategic business thrusts. In addition, regular recreational,
team-building and networking events are organised to foster engagement and cohesiveness.
CARING FOR OUR PEOPLE
We value and care for our people. We believe our success is shaped by our people and we will
continue to develop our human capital to achieve optimal performance.
People & Talent Management
64 | CapitaRetail China Trust Annual Report 2014
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Name
CapitaMallXizhimen凱德MALL•西直門
CapitaMallWangjing凱德MALL•望京
CapitaMallGrand Canyon凱德MALL•大峽谷
CapitaMallMinzhongleyuan凱德新民眾樂園
CapitaMall Qibao凱德七寶購物廣場
CapitaMall Saihan凱德MALL•賽罕
CapitaMall Wuhu凱德廣場•蕪湖
CapitaMall Anzhen凱德MALL•安貞
CapitaMall Erqi凱德廣場•二七
CapitaMallShuangjing凱德MALL•雙井
Address No. 1 XizhimenwaiAvenue,Xicheng District,Beijing
No. 33 GuangshunNorth Street,Chaoyang District,Beijing
No. 16 South ThirdRing West Road,Fengtai District,Beijing
No. 704Zhongshan Avenue,Jianghan District,Hankou Wuhan,Hubei Province
No. 3655,Qixin Road,Minhang District,Shanghai
No. 26Ordos Street,Saihan District,Huhhot,Inner MongoliaAutonomousRegion
No. 37 ZhongshanNorth Road,Jinghu District,Wuhu,Anhui Province
Building 4, Zone 5,Anzhenxili,Chaoyang District,Beijing
No. 3 Minzhu Road,Erqi District,Zhengzhou,Henan Province
No. 31Guangqu Road,Chaoyang District,Beijing
GFA (sq m)(As at 31 December 2014)
83,075 83,768 92,918 41,717 83,986 41,938 59,624 43,443 92,356 49,463
GRA (sq m)(As at 31 December 2014)
83,075 68,010 69,967 37,472 72,729 41,938 45,634 43,443 92,356 49,463
NLA (sq m)(As at 31 December 2014)
50,592 54,109 44,915 23,003 50,979 30,714 37,354 43,443 92,356 51,2446
Number of Leases(As at 31 December 2014)
237 226 204 213 166 186 101 2 2 10
Land UseRight Expiry
23 August 204423 August 2054
15 May 204315 May 2053
29 August 204429 August 2054
30 June 204415 Sep 2045
10 March 20434 11 March 204120 March 2041
29 May 2044 7 October 20345 March 20423 June 2042
31 May 2042 10 July 2042
Market Valuation1 (RMB million)(As at 31 December 2014)
2,777.0 2,050.0 1,948.0 564.0 485.0 400.0 260.0 973.0 606.0 558.0
Purchase Price (RMB million) 1,863.5 1,102.0 1,760.0 395.0 264.0 315.0 130.0 772.0 454.0 414.0
Acquisition Date2 Phase 1:5 February 2008Phase 2:29 September 2008
1 December 2006 30 December 2013 30 June 2011 8 November 2006 1 December 2006 8 November 2006 8 November 2006 1 December 2006 1 December 2006
Committed Occupancy Rate(As at 31 December 2014)
97.0% 99.3% 99.7% 73.9% 96.1% 100.0% 73.9% 100.0% 100.0% 100.0%
Shopper Traffic for 20143 (Million) 36.9 10.4 9.5 4.15 13.2 8.9 6.8 – – –
Major Tenants Beijing HualianSupermarket/CostaCoffeeVero Moda/Only/Selected/Jack & JonesUNIQLO為之味(夾揀成廚麻辣燙/金湯玉線/川成元麻辣香鍋/姑姑宴/港仔驛棧)KFCLa ChapelleGAP南京大牌檔綠茶
Beijing HualianGroup (DepartmentStore &Supermarket)UNIQLOVero Moda/Only/Selected/Jack & Jones/J.Lindeberg為之味(夾揀成廚麻辣燙/金湯玉線/川成元麻辣香鍋/姑姑宴)I.TZARA南京大牌檔
CarrefourPoly CinemaH&MGAP富貴時代美食廣場La Chapelle/Candie’sVero Moda/Only/Selected/Jack & Jones南京大牌檔
UA CinemasinnisfreeStarbucksadidasOriginalsSwatch
七寶大光明影城(Cinema)CarrefourUNIQLOBao Da XiangShopping For KidsH3 Club (Gym)Haoledi (KTV)
Beijing HualianSupermarketJinyi CinemaNikeVero Moda/Only/Selected/Jack & JonesKFC/Pizza HutBreadTalkLa Chapelle:Chocoolate
Walmart阿香婆麻辣涮火鍋McDonald’sKFC
Beijing HualianDepartment StoreBeijing HualianSupermarket
Beijing HualianDepartment StoreBeijing HualianSupermarket
CarrefourB&QAppleSASASubway
Gross Revenue for 2014(RMB million)
262.3 199.7 138.1 25.0 96.3 55.7 33.0 81.6 50.5 45.4
NPI for 2014 (RMB million) 184.6 143.6 86.6 1.3 41.5 29.9 11.6 66.9 40.5 36.6
1. Independent valuation of CapitaMall Grand Canyon was conducted by CBRE Pte. Ltd.Independent valuations of CapitaMall Anzhen, CapitaMall Shuangjing and CapitaMall Saihan were conducted by DTZDebenham Tie Leung International Property Advisers (Shanghai) CO., Ltd.Independent valuations of CapitaMall Qibao, CapitaMall Wuhu, CapitaMall Wangjing and CapitaMall Erqi were conducted byKnight Frank Petty Limited.Independent valuations of CapitaMall Xizhimen and CapitaMall Minzhongleyuan were conducted by Colliers International(Hong Kong) Limited.
2. Refers to the completion of the acquisition of the special purpose vehicles which own the properties.
3. CapitaMall Shuangjing, CapitaMall Anzhen, and CapitaMall Erqi do not have traffic counters.
4. CapitaMall Qibao is indirectly held by CRCT under a master lease with Shanghai Jin Qiu (Group) Co., Ltd, the legal owner.The master-lease expires in January 2024, with the right to renew for a further term of 19 years and two months. Accordingly,the land-use right is owned by the legal owner.
5. Shopper traffic for CapitaMall Minzhongleyuan is from 1 May 2014 to 31 December 2014 as the mall reopened on 1 May 2014after completion of asset enhancement initiative.
6. Includes the area zoned for civil defense but certified for commercial use.
Portfolio Summary
Delivering Performance | 6766 | CapitaRetail China Trust Annual Report 2014
Name
CapitaMallXizhimen凱德MALL•西直門
CapitaMallWangjing凱德MALL•望京
CapitaMallGrand Canyon凱德MALL•大峽谷
CapitaMallMinzhongleyuan凱德新民眾樂園
CapitaMall Qibao凱德七寶購物廣場
CapitaMall Saihan凱德MALL•賽罕
CapitaMall Wuhu凱德廣場•蕪湖
CapitaMall Anzhen凱德MALL•安貞
CapitaMall Erqi凱德廣場•二七
CapitaMallShuangjing凱德MALL•雙井
Address No. 1 XizhimenwaiAvenue,Xicheng District,Beijing
No. 33 GuangshunNorth Street,Chaoyang District,Beijing
No. 16 South ThirdRing West Road,Fengtai District,Beijing
No. 704Zhongshan Avenue,Jianghan District,Hankou Wuhan,Hubei Province
No. 3655,Qixin Road,Minhang District,Shanghai
No. 26Ordos Street,Saihan District,Huhhot,Inner MongoliaAutonomousRegion
No. 37 ZhongshanNorth Road,Jinghu District,Wuhu,Anhui Province
Building 4, Zone 5,Anzhenxili,Chaoyang District,Beijing
No. 3 Minzhu Road,Erqi District,Zhengzhou,Henan Province
No. 31Guangqu Road,Chaoyang District,Beijing
GFA (sq m)(As at 31 December 2014)
83,075 83,768 92,918 41,717 83,986 41,938 59,624 43,443 92,356 49,463
GRA (sq m)(As at 31 December 2014)
83,075 68,010 69,967 37,472 72,729 41,938 45,634 43,443 92,356 49,463
NLA (sq m)(As at 31 December 2014)
50,592 54,109 44,915 23,003 50,979 30,714 37,354 43,443 92,356 51,2446
Number of Leases(As at 31 December 2014)
237 226 204 213 166 186 101 2 2 10
Land UseRight Expiry
23 August 204423 August 2054
15 May 204315 May 2053
29 August 204429 August 2054
30 June 204415 Sep 2045
10 March 20434 11 March 204120 March 2041
29 May 2044 7 October 20345 March 20423 June 2042
31 May 2042 10 July 2042
Market Valuation1 (RMB million)(As at 31 December 2014)
2,777.0 2,050.0 1,948.0 564.0 485.0 400.0 260.0 973.0 606.0 558.0
Purchase Price (RMB million) 1,863.5 1,102.0 1,760.0 395.0 264.0 315.0 130.0 772.0 454.0 414.0
Acquisition Date2 Phase 1:5 February 2008Phase 2:29 September 2008
1 December 2006 30 December 2013 30 June 2011 8 November 2006 1 December 2006 8 November 2006 8 November 2006 1 December 2006 1 December 2006
Committed Occupancy Rate(As at 31 December 2014)
97.0% 99.3% 99.7% 73.9% 96.1% 100.0% 73.9% 100.0% 100.0% 100.0%
Shopper Traffic for 20143 (Million) 36.9 10.4 9.5 4.15 13.2 8.9 6.8 – – –
Major Tenants Beijing HualianSupermarket/CostaCoffeeVero Moda/Only/Selected/Jack & JonesUNIQLO為之味(夾揀成廚麻辣燙/金湯玉線/川成元麻辣香鍋/姑姑宴/港仔驛棧)KFCLa ChapelleGAP南京大牌檔綠茶
Beijing HualianGroup (DepartmentStore &Supermarket)UNIQLOVero Moda/Only/Selected/Jack & Jones/J.Lindeberg為之味(夾揀成廚麻辣燙/金湯玉線/川成元麻辣香鍋/姑姑宴)I.TZARA南京大牌檔
CarrefourPoly CinemaH&MGAP富貴時代美食廣場La Chapelle/Candie’sVero Moda/Only/Selected/Jack & Jones南京大牌檔
UA CinemasinnisfreeStarbucksadidasOriginalsSwatch
七寶大光明影城(Cinema)CarrefourUNIQLOBao Da XiangShopping For KidsH3 Club (Gym)Haoledi (KTV)
Beijing HualianSupermarketJinyi CinemaNikeVero Moda/Only/Selected/Jack & JonesKFC/Pizza HutBreadTalkLa Chapelle:Chocoolate
Walmart阿香婆麻辣涮火鍋McDonald’sKFC
Beijing HualianDepartment StoreBeijing HualianSupermarket
Beijing HualianDepartment StoreBeijing HualianSupermarket
CarrefourB&QAppleSASASubway
Gross Revenue for 2014(RMB million)
262.3 199.7 138.1 25.0 96.3 55.7 33.0 81.6 50.5 45.4
NPI for 2014 (RMB million) 184.6 143.6 86.6 1.3 41.5 29.9 11.6 66.9 40.5 36.6
1. Independent valuation of CapitaMall Grand Canyon was conducted by CBRE Pte. Ltd.Independent valuations of CapitaMall Anzhen, CapitaMall Shuangjing and CapitaMall Saihan were conducted by DTZDebenham Tie Leung International Property Advisers (Shanghai) CO., Ltd.Independent valuations of CapitaMall Qibao, CapitaMall Wuhu, CapitaMall Wangjing and CapitaMall Erqi were conducted byKnight Frank Petty Limited.Independent valuations of CapitaMall Xizhimen and CapitaMall Minzhongleyuan were conducted by Colliers International(Hong Kong) Limited.
2. Refers to the completion of the acquisition of the special purpose vehicles which own the properties.
3. CapitaMall Shuangjing, CapitaMall Anzhen, and CapitaMall Erqi do not have traffic counters.
4. CapitaMall Qibao is indirectly held by CRCT under a master lease with Shanghai Jin Qiu (Group) Co., Ltd, the legal owner.The master-lease expires in January 2024, with the right to renew for a further term of 19 years and two months. Accordingly,the land-use right is owned by the legal owner.
5. Shopper traffic for CapitaMall Minzhongleyuan is from 1 May 2014 to 31 December 2014 as the mall reopened on 1 May 2014after completion of asset enhancement initiative.
6. Includes the area zoned for civil defense but certified for commercial use.
Portfolio Summary
Delivering Performance | 6766 | CapitaRetail China Trust Annual Report 2014
CAPITAMALL XIZHIMEN
• Strategically located at Xizhimen transport hub, well-served by Beijing’s subway Line 2, Line 4and Line 13, as well as the national rail and bus interchange.
• Retail podium of an integrated development.• Well-supported by large shopper catchment from daily commuters passing through the busy
transportation hub and middle-income residents from the vicinity.• Attracts working professionals and students from the nearby Beijing’s Financial Street,
universities and technological zones of Zhongguancun District.
Lease Expiry Profile
(As at 31 December 2014)
19.3
15.313.7
10.4
37.0
28.9
24.5
19.1
12.714.8
2015 2016 2017 2018 Beyond 2018
% of Total Net Lettable Area % of Total Rental Income
Trade Sector Analysis (%)
(As at 31 December 2014)
Trade Categories
By Committed
NLA
(%)
By Total Rental
Income
(%)
Food & Beverage 29.4 29.2
Fashion & Accessories 28.5 39.3
Supermarket 21.0 3.7
Beauty & Healthcare 8.0 12.0
Education 5.6 3.6
Shoes & Bags 2.5 5.3
Sundry & Services 1.5 2.4
Houseware & Furnishings 1.5 1.7
Sporting Goods & Apparel 0.5 0.6
Information & Technology 0.3 0.7
Office 0.3 0.0
Gifts & Souvenirs 0.3 0.6
Jewellery/Watches/Pens 0.3 0.6
Toys & Hobbies 0.2 0.3
Warehouse 0.1 0.0
Portfolio Details
68 | CapitaRetail China Trust Annual Report 2014
CAPITAMALL WANGJING
• Leading comprehensive shopping mall in the densely populated residential suburb of Wangjing.• Convenient access by key highways, well-served by numerous bus routes and in close proximity
to the Wangjingxi subway station.• A popular one-stop shopping, dining and entertainment destination in Wangjing.• International tenants include ZARA, UNIQLO and Calvin Klein.
Lease Expiry Profile
(As at 31 December 2014)
11.514.1
3.95.7
63.8
23.7
31.5
10.87.7
26.3
2015 2016 2017 2018 Beyond 2018
% of Total Net Lettable Area % of Total Rental Income
Trade Sector Analysis (%)
(As at 31 December 2014)
Trade Categories
By Committed
NLA
(%)
By Total Rental
Income
(%)
Department Store 35.4 11.4
Food & Beverage 19.8 27.4
Supermarket 16.5 3.0
Fashion & Accessories 13.4 32.8
Beauty & Healthcare 6.9 10.5
Education 2.0 3.6
Warehouse 1.1 0.0
Toys & Hobbies 1.0 1.5
Sundry & Services 0.9 2.4
Houseware & Furnishings 0.8 1.6
Leisure & Entertainment 0.8 0.9
Shoes & Bags 0.5 1.7
Information & Technology 0.3 1.2
Jewellery/Watches/Pens 0.3 1.3
Sporting Goods & Apparel 0.2 0.4
Gifts & Souvenirs 0.1 0.3
Delivering Performance | 69
CAPITAMALL GRAND CANYON
• Strategically located in the up-and-coming Fengtai District of South Beijing with strongeconomic fundamentals.
• One of the pioneer shopping malls in South Beijing.• Facing the busy South Third Ring West road, the shopping mall is easily accessible from the
Majiapu subway station, Beijing South Railway Station and numerous bus stops.• Well-established among the local community with its comprehensive offerings. Popular tenants
include Carrefour, H&M, Sephora, Nanjing Impressions and Poly Cinema.
Lease Expiry Profile
(As at 31 December 2014)
% of Total Net Lettable Area % of Total Rental Income
13.5 12.1
6.910.5
56.5
30.0
16.3
12.012.6
29.1
2015 2016 2017 2018 Beyond 2018
Trade Sector Analysis (%)
(As at 31 December 2014)
Trade Categories
By Committed
NLA
(%)
By Total Rental
Income
(%)
Supermarket 31.5 9.0
Fashion & Accessories 19.6 30.0
Food & Beverage 18.6 22.8
Leisure & Entertainment 12.6 8.1
Education 4.9 4.7
Beauty & Healthcare 3.4 6.5
Sundry & Services 2.4 3.3
Sporting Goods & Apparel 2.1 3.9
Shoes & Bags 1.5 3.6
Houseware & furnishings 0.7 1.5
Warehouse 0.7 0.0
Jewellery/Watches/Pens 0.6 3.0
Music & Videos 0.4 0.8
Toys & Hobbies 0.4 1.3
Information & Technology 0.3 0.9
Electricals & Electronics 0.2 0.2
Gifts & Souvenirs 0.1 0.3
Books & Stationery 0.0 0.1
Portfolio Details
70 | CapitaRetail China Trust Annual Report 2014
CAPITAMALL MINZHONGLEYUAN
• Strategically located along Zhongshan Avenue, an established shopping and entertainment beltthat enjoys strong retail activities and pedestrian flow.
• Easily accessible via public bus routes and subway Line 1 and Line 2.• Strong and diverse tenant base that comprises quality and well-known tenants such as innisfree,
Starbucks, adidas Originals and Studio City (Wuhan) – the operator of IMAX Screen, as well aslocal fashion tenants offering young and trendy brands not commonly available in departmentstores.
• A natural focal point among youths and young adults.• Zhongshan Avenue along where CapitaMall Minzhongleyuan is located has been closed since
20 August 2014. The road closure is to facilitate the construction of the new subway Line 6 whichwill last for two years.
Lease Expiry Profile
(As at 31 December 2014)
34.3
8.3
26.7
0.73.9
60.2
15.8 17.0
3.7 3.3
2015 2016 2017 2018 Beyond 2018
% of Total Net Lettable Area % of Total Rental Income
Trade Sector Analysis (%)
(As at 31 December 2014)
Trade Categories
By Committed
NLA
(%)
By Total Rental
Income
(%)
Leisure & Entertainment 35.2 6.7
Fashion & Accessories 34.6 55.1
Food & Beverage 13.4 13.7
Beauty & Healthcare 5.7 9.0
Sundry & Services 3.3 2.2
Shoes & Bags 3.0 5.5
Jewellery/Watches/Pens 1.6 3.3
Houseware & Furnishings 0.6 0.5
Information & Technology 0.6 1.4
Sporting Goods & Apparel 0.6 1.5
Toys & Hobbies 0.5 0.2
Music & Videos 0.4 0.2
Warehouse 0.2 0.1
Gifts & Souvenirs 0.2 0.4
Art Gallery 0.1 0.2
Delivering Performance | 71
CAPITAMALL QIBAO
• One of the largest shopping malls in Shanghai Minhang District, near Hongqiao transport hub.• Located in a growing mid-to high-end residential locality to the west of Shanghai’s Central
Business District.• One-stop family shopping destination providing shopping, dining and entertainment for
residents.• Brought in the first modern cinema to Qibao vicinity.• Houses popular fashion retailer UNIQLO’s first duplex store in Minhang District.
Lease Expiry Profile
(As at 31 December 2014)
% of Total Net Lettable Area % of Total Rental Income
14.6 15.813.5
11.2
41.0
18.7
25.3
16.6
20.518.9
2015 2016 2017 2018 Beyond 2018
Trade Sector Analysis (%)
(As at 31 December 2014)
Trade Categories
By Committed
NLA
(%)
By Total Rental
Income
(%)
Supermarket 29.8 6.2
Food & Beverage 24.0 37.1
Fashion & Accessories 17.9 30.0
Leisure & Entertainment 10.3 6.4
Beauty & Healthcare 9.8 7.9
Education 4.8 3.4
Sundry & Services 1.1 3.2
Houseware & Furnishings 0.7 1.7
Shoes & Bags 0.6 2.1
Warehouse 0.3 0.0
Information & Technology 0.3 0.8
Toys & Hobbies 0.2 0.3
Jewellery/Watches/Pens 0.1 0.4
Gifts & Souvenirs 0.1 0.4
Art Gallery 0.0 0.1
Portfolio Details
72 | CapitaRetail China Trust Annual Report 2014
CAPITAMALL SAIHAN
• One of the most popular one-stop shopping destinations in Huhhot.• Near the heart of Huhhot’s main retail cluster.• Well-served by public transportation.• The range of retail offerings has widened with the opening of Jinyi Cinema, and new food and
beverage outlets after the completion of asset enhancement initiative.
Lease Expiry Profile
(As at 31 December 2014)
% of Total Net Lettable Area % of Total Rental Income
26.1
9.45.4 5.6
50.746.2
16.8
8.2 8.2
20.6
2015 2016 2017 2018 Beyond 2018
Trade Sector Analysis (%)
(As at 31 December 2014)
Trade Categories
By Committed
NLA
(%)
By Total Rental
Income
(%)
Supermarket 36.1 12.5
Fashion & Accessories 19.4 33.6
Food & Beverage 14.5 17.5
Leisure & Entertainment 10.3 3.7
Sporting Goods & Apparel 6.4 10.1
Shoes & Bags 5.4 12.0
Beauty & Healthcare 2.4 4.8
Warehouse 2.1 0.0
Sundry & Services 1.0 1.1
Houseware & Furnishings 0.9 1.7
Toys & Hobbies 0.6 0.8
Information & Technology 0.5 0.9
Jewellery/Watches/Pens 0.3 1.0
Books & Stationery 0.1 0.2
Gifts & Souvenirs 0.0 0.1
Delivering Performance | 73
CAPITAMALL WUHU
• Located approximately 1 km north of Wuhu’s Central Business District.• Near the popular Fenghuang Food Street and close to several commercial projects.• One of the first one-stop shopping, dining and entertainment destinations in the locality.• Positioned as a destination for young working adults and middle-income families which fits well
with the targeted population catchment’s demographic profile.
Lease Expiry Profile
(As at 31 December 2014)
% of Total Net Lettable Area % of Total Rental Income
8.6
4.1 3.31.4
53.2
38.2
14.011.7
3.5
32.6
2015 2016 2017 2018 Beyond 2018
Trade Sector Analysis (%)
(As at 31 December 2014)
Trade Categories
By Committed
NLA
(%)
By Total Rental
Income
(%)
Supermarket 69.7 24.5
Food & Beverage 15.6 29.9
Fashion & Accessories 6.7 21.0
Beauty & Healthcare 1.8 4.2
Shoes & Bags 1.8 7.0
Sundry & Services 1.6 4.7
Gifts & Souvenirs 1.3 3.7
Jewellery/Watches/Pens 0.5 2.4
Toys & Hobbies 0.4 1.1
Houseware & Furnishings 0.3 1.3
Sporting Goods & Apparel 0.3 0.2
Portfolio Details
74 | CapitaRetail China Trust Annual Report 2014
CAPITAMALL SHUANGJING
• Located in the Chaoyang District, in close proximity to Beijing’s Central Business District.• Well-served by bus routes and close to Dawanglu and Guomao subway stations.• Strong supermarket anchor, drawing significant shopper traffic from the nearby Central
Business District and neighbouring residential areas.
Lease Expiry Profile
(As at 31 December 2014)
% of Total Net Lettable Area % of Total Rental Income
0.0 1.4 0.0
95.4
0.09.2
2.3 0.0
88.5
2015 2016 2017 2018 Beyond 2018
3.2
Trade Sector Analysis (%)
(As at 31 December 2014)
Trade Categories
By Committed
NLA (%)
By Total Rental
Income (%)
Supermarket 61.0 56.3
Houseware & Furnishings 34.0 31.2
Fashion & Accessories 3.2 2.3
Sundry & Services 1.0 4.9
Food & Beverage 0.5 1.8
Information & Technology 0.2 1.8
Beauty & Healthcare 0.1 1.7
CAPITAMALL ANZHEN
• Located in a densely populated area to the south of Beijing’s Olympic Village.• Adjacent to the North Third Ring Road and a major bus terminal.• One of the most popular and well-established shopping destinations in the area.• Master-leased to BHG.
CAPITAMALL ERQI
• Located in Zhengzhou’s Central Business District, at the heart of Erqi District, Zhengzhou’spremier shopping district.
• Attracts repeat shoppers who are mainly residents and office workers in the vicinity, as well asvisitors to the province.
• Master-leased to BHG.
Delivering Performance | 75
Financial
Statements
Report of the Trustee 77
Statement by the Manager 78
Independent Auditors’ Report 79
Statements of Financial Position 80
Statements of Total Return 81
Distribution Statements 82
Statements of Movements in Unitholders’ Funds 84
Portfolio Statement 85
Consolidated Statement of Cash Flows 87
Notes to the Financial Statements 89
76 | CapitaRetail China Trust Annual Report 2014
HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”) is under a duty to take into
custody and hold the assets of CapitaRetail China Trust (the “Trust”) in trust for the Unitholders. In
accordance with the Securities and Futures Act (Cap. 289), its subsidiary legislation and the Code
on Collective Investment Schemes, the Trustee shall monitor the activities of CapitaRetail China Trust
Management Limited (the “Manager”) for compliance with the limitations imposed on the investment
and borrowing powers as set out in the Trust Deed dated 23 October 2006 (as amended by a first
supplemental deed dated 8 November 2006, a second supplemental deed dated 15 April 2010, a
third supplemental deed dated 5 April 2012 and a fourth supplemental deed dated 14 February
2014) (collectively the “Trust Deed”) between the Manager and the Trustee in each annual
accounting period and report thereon to Unitholders in an annual report.
To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Trust
during the year covered by these financial statements, set out on pages 80 to 146, in accordance
with the limitations imposed on the investment and borrowing powers set out in the Trust Deed.
For and on behalf of the Trustee,
HSBC Institutional Trust Services (Singapore) Limited
Antony Wade Lewis
Director
Singapore
26 February 2015
Report of the TrusteeYear ended 31 December 2014
Delivering Performance | 77
Year ended 31 December 2014
In the opinion of the directors of CapitaRetail China Trust Management Limited (the “Manager”), the
accompanying financial statements set out on pages 80 to 146 comprising the statements of financial
position, statements of total return, distribution statements and statements of movements in
Unitholders’ funds of the CapitaRetail China Trust (the “Trust”) and its subsidiaries (the “Group”) and
of the Trust, the portfolio statement and statement of cash flows of the Group and a summary of
significant accounting policies and other explanatory information, are drawn up so as to present
fairly, in all material respects, the financial position of the Group and of the Trust and the portfolio of
the Group as at 31 December 2014, the total return, distributable income and movements in
Unitholders’ funds of the Group and of the Trust and cash flows of the Group for the year ended on
that date in accordance with the recommendations of Statement of Recommended Accounting
Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered
Accountants and the provisions of the Trust Deed. At the date of this statement, there are reasonable
grounds to believe that the Group will be able to meet its financial obligations as and when they
materialise.
For and on behalf of the Manager,
CapitaRetail China Trust Management Limited
Tan Tee Hieong
Director
Singapore
26 February 2015
Statement by the Manager
78 | CapitaRetail China Trust Annual Report 2014
Unitholders of CapitaRetail China Trust
(Constituted in the Republic of Singapore pursuant to a trust deed dated 23 October 2006
(as amended))
We have audited the accompanying financial statements of CapitaRetail China Trust (the “Trust”) and
its subsidiaries (the “Group”), which comprise the statements of financial position of the Trust and the
Group and the portfolio statement of the Group as at 31 December 2014, the statements of total
return, distribution statements and statements of movements in Unitholders’ funds of the Trust and of
the Group and the statement of cash flows of the Group for the year then ended, and a summary of
significant accounting policies and other explanatory information, as set out on pages 80 to 146.
MANAGER’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Manager of the Trust is responsible for the preparation and fair presentation of these financial
statements in accordance with the recommendations of Statement of Recommended Accounting
Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered
Accountants, and for such internal control as the Manager of the Trust determines is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
AUDITORS’ RESPONSIBILITY
Our responsibility is to express an opinion on these 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 about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditor’s judgement, including
the assessment of the risks of material misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the Manager of the Trust, as well as evaluating the overall presentation of the 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 statement of financial
position, statement of total return, distribution statement and statement of movements in Unitholders’
funds of the Trust present fairly, in all material respects, the financial position of the Group and the
Trust as at 31 December 2014 and the total return, distributable income, and movements in
Unitholders’ funds of the Group and of the Trust and the cash flows of the Group for the year then
ended in accordance with the recommendations of Statement of Recommended Accounting Practice
7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants.
KPMG LLP
Public Accountants and
Chartered Accountants
Singapore
26 February 2015
Independent Auditors’ Report
Delivering Performance | 79
Group Trust
2014 2013 2014 2013
Note $’000 $’000 $’000 $’000
Assets
Investment properties 4 2,250,783 2,058,094 – –
Plant and equipment 5 7,759 7,325 – –
Interests in subsidiaries 6 – – 1,093,523 1,028,567
Trade and other receivables 7 11,347 11,371 201 224
Financial derivatives 11 1,547 2,044 1,547 2,044
Cash and cash equivalents 8 86,626 105,457 238 249
2,358,062 2,184,291 1,095,509 1,031,084
Less:
Liabilities
Trade and other payables 9 51,140 57,719 5,386 9,060
Security deposits 41,158 34,980 – –
Interest-bearing borrowings 10 671,713 712,338 566,823 474,383
Financial derivatives 11 8,605 5,208 8,605 5,208
Deferred tax liabilities 12 204,923 159,620 – –
Provision for taxation 2,707 561 15 20
980,246 970,426 580,829 488,671
Net assets 1,377,816 1,213,865 514,680 542,413
Represented by:
Unitholders’ funds 13 1,349,738 1,186,951 514,680 542,413
Non-controlling interest 14 28,078 26,914 – –
1,377,816 1,213,865 514,680 542,413
Units in issue (’000) 15 828,118 803,027 828,118 803,027
Net asset value per unit
attributable to Unitholders
($) 1.63 1.48 0.62 0.68
The accompanying notes form an integral part of these financial statements.
Statements of Financial PositionAs at 31 December 2014
80 | CapitaRetail China Trust Annual Report 2014
Group Trust
2014 2013 2014 2013
Note $’000 $’000 $’000 $’000
Gross rental income 189,088 149,083 – –
Other income 14,174 10,992 – –
Gross revenue 203,262 160,075 – –
Land rental (5,620) (5,238) – –
Property related tax (10,943) (8,938) – –
Business tax (11,272) (9,009) – –
Property management fees &reimbursables (10,078) (8,028) – –
Other property operating expenses 17 (32,984) (25,824) – –
Total property operating expenses (70,897) (57,037) – –
Net property income 132,365 103,038 – –
Manager’s management fees
– Base fee 18 (5,527) (4,283) (5,527) (4,283)
– Performance fee 18 (5,295) (4,122) (5,295) (4,122)
Manager’s acquisition fee – – – (3,562)
Trustee’s fees (368) (302) (368) (302)
Audit fees (479) (407) (164) (155)
Valuation fees (188) (278) – –
Other trust operating (expenses)/income 19 (2,151) (426) (537) 265
Dividend income – – – 17,396
Foreign exchange gain – realised 1,371 746 675 620
Finance income 874 1,133 24,405 24,210
Finance costs (21,926) (11,329) (12,470) (9,784)
Net finance (costs)/income 20 (21,052) (10,196) 11,935 14,426
Total return before change in fair valueof financial derivatives, investmentproperties and unrealised foreignexchange (loss)/gain 98,676 83,770 719 20,283
Change in fair value of financialderivatives – 1,423 (6,977) (20,148)
Change in fair value of investmentproperties 4 104,829 99,159 – –
Foreign exchange (loss)/gain – unrealised (41) 101 16,406 13,922
Total return for the year before taxation 203,464 184,453 10,148 14,057
Taxation 21 (57,109) (48,505) (8) (20)
Total return for the year after taxation 146,355 135,948 10,140 14,037
Non-controlling interest 14 (1,757) (3,030) – –
Total return for the year attributable toUnitholders 144,598 132,918 10,140 14,037
Earnings per unit (cents) 22
– Basic 17.69 17.52
– Diluted 17.69 17.52
The accompanying notes form an integral part of these financial statements.
Statements of Total ReturnYear ended 31 December 2014
Delivering Performance | 81
Group Trust
2014 2013 2014 2013
Note $’000 $’000 $’000 $’000
Amount available for distribution
to Unitholders at beginning of
the year 34,902 11,256 34,902 11,256
Total return for the year attributable
to Unitholders 144,598 132,918 10,140 14,037
Distribution adjustments A (63,716) (62,858) 70,742 56,023
Income for the year available for
distribution to Unitholders B 80,882 70,060 80,882 70,060
Amount available for distribution
to Unitholders 115,784 81,316 115,784 81,316
Distribution to Unitholders during
the year:
– Distribution of 4.33 cents per unit
for the period from 1 July 2013
to 31 December 2013 (34,771) – (34,771) –
– Distribution of 4.99 cents per unit
for the period from 1 January
2014 to 30 June 2014 (40,863) – (40,863) –
– Distribution of 1.50 cents per unit
for the period from 2 November
2012 to 31 December 2012 – (11,234) – (11,234)
– Distribution of 4.69 cents per unit
for the period from 1 January
2013 to 30 June 2013 – (35,180) – (35,180)
(75,634) (46,414) (75,634) (46,414)
Amount available for distribution
to Unitholders at end of the
year 40,150 34,902 40,150 34,902
Number of Units entitled to
distribution (’000) 828,118 803,027
Distribution per Unit (cents) * 9.82 9.02
* The Distribution per Unit relates to the distribution in respect of the relevant financial year. The
distribution relating to 1 July 2014 to 31 December 2014 will be paid within 90 days of the end
of the distribution period, in accordance with the provisions of the Trust Deed.
The accompanying notes form an integral part of these financial statements.
Distribution StatementsYear ended 31 December 2014
82 | CapitaRetail China Trust Annual Report 2014
Note A – Distribution adjustments
Group Trust
2014 2013 2014 2013
Note $’000 $’000 $’000 $’000
Distribution adjustment items:
– Manager’s management fees
(performance component
paid/payable in Units) 5,295 4,122 5,295 4,122
– Change in fair value of financial
derivatives – (1,423) 6,977 20,148
– Change in fair value of
investment properties1 (103,960) (96,944) – –
– Deferred taxation1 36,364 32,306 – –
– Transfer to general reserve (4,244) (3,164) – –
– Unrealised foreign exchange
gain1 (6) (19) (16,406) (13,922)
– Other adjustments 2,835 2,264 – –
– Net overseas income not
distributed to the Trust – – 74,876 45,675
Net effect of distribution
adjustments (63,716) (62,858) 70,742 56,023
Note B – Income for the year available for distribution to Unitholders
Comprises:
– from operations 6,006 24,385 6,006 24,385
– from Unitholders’ contribution 74,876 45,675 74,876 45,675
Total Unitholders’ distribution 16 80,882 70,060 80,882 70,060
1 Excludes non-controlling interest’s share.
The accompanying notes form an integral part of these financial statements.
Delivering Performance | 83
Group Trust
2014 2013 2014 2013
$’000 $’000 $’000 $’000
Operations
Unitholders’ funds as at beginning of the year 1,186,951 978,742 542,413 504,541
Change in Unitholders’ funds resulting from
operations 144,598 132,918 10,140 14,037
Transfer to general reserve (4,244) (3,164) – –
Net increase in net assets resulting from
operations 140,354 129,754 10,140 14,037
Movements in hedging reserve
Effective portion of changes in fair value of
cash flow hedges 2,251 157 2,251 157
Movements in foreign currency translation
reserve
Translation differences from financial
statements of foreign operations 46,749 52,209 – –
Exchange differences on monetary items
forming part of net investment in
foreign operations 16,290 20,819 – –
Exchange differences on hedges of net
investment in foreign operations (6,977) (21,572) – –
Net gain recognised directly in
Unitholders’ funds 58,313 51,613 2,251 157
Movement in general reserve 4,244 3,164 – –
Unitholders’ transactions
New Units issued – 59,038 – 59,038
Creation of Units paid/payable to Manager
– Units issued and to be issued as
satisfaction of the portion of Manager’s
management fees payable in Units 5,295 4,122 5,295 4,122
– Units issued in respect of acquisition fee for
CapitaMall Grand Canyon 3,562 – 3,562 –
Units issued in respect of the distribution
reinvestment plan 26,653 8,732 26,653 8,732
Distributions to Unitholders (75,634) (46,414) (75,634) (46,414)
Equity issue expenses – (1,800) – (1,800)
Net (decrease)/increase in net assets
resulting from Unitholders’ transactions (40,124) 23,678 (40,124) 23,678
Unitholders’ funds as at end of year 1,349,738 1,186,951 514,680 542,413
The accompanying notes form an integral part of these financial statements.
Statements of Movements in Unitholders’ FundsYear ended 31 December 2014
84 | CapitaRetail China Trust Annual Report 2014
Group
Description of
leasehold
property Location
Term of
lease
(years)
Lease
expiry Valuation Valuation
Percentage
of
Unitholders’
funds
2014 2013 2014 2013 2014 2013
RMB’000 RMB’000 $’000 $’000 % %
CapitaMall
Xizhimen
No. 1
Xizhimenwai
Avenue,
Xicheng District,
Beijing
40 – 50 August
2044/2054
2,777,000 2,600,000 588,446 532,246 43.6 44.8
CapitaMall
Wangjing
No. 33 Guangshun
North Street,
Blk 213 & 215,
Chaoyang District,
Beijing
38 – 48 May
2043/2053
2,050,000 1,900,000 434,395 388,949 32.2 32.8
CapitaMall
Grand Canyon
No. 16 Nansanhuan
Xi Road,
Fengtai District,
Beijing
40 – 50 August
2044/2054
1,948,000 1,881,793 412,781 385,222 30.5 32.5
CapitaMall
Anzhen
Section 5
No. 4 of Anzhen
Xi Li,
Chaoyang District,
Beijing
29 – 37 October
2034/
March and
June 2042
973,000 949,000 206,179 194,270 15.3 16.4
CapitaMall Erqi No. 3 Minzhu Road,
Erqi District,
Zhengzhou,
Henan Province
38 May 2042 606,000 590,000 128,411 120,779 9.5 10.2
CapitaMall
Minzhongleyuan1
No. 704
Zhongshan
Avenue,
Jianghan District,
Hankou, Wuhan,
Hubei Province
40 June 2044/
September
2045
564,911 504,911 119,705 103,360 8.9 8.7
CapitaMall
Shuangjing
No. 31
Guangqu Road,
Chaoyang District,
Beijing
40 July 2042 558,000 543,000 118,240 111,158 8.8 9.4
CapitaMall
Qibao2
No. 3655
Qi Xin Road,
Minhang District,
Shanghai
39 March
2043
485,000 472,000 102,772 96,623 7.6 8.1
CapitaMall
Saihan
No. 26
Ordos Street,
Saihan District,
Huhhot,
Inner Mongolia
Autonomous
Region
35 March
2041
400,000 362,000 84,760 74,105 6.3 6.2
Balance carried
forward
10,361,911 9,802,074 2,195,689 2,006,712 162.7 169.1
The accompanying notes form an integral part of these financial statements.
Portfolio StatementAs at 31 December 2014
Delivering Performance | 85
Description of
leasehold
property Location
Term of
lease
(years)
Lease
expiry Valuation Valuation
Percentage
of
Unitholders’
funds
2014 2013 2014 2013 2014 2013
RMB’000 RMB’000 $’000 $’000 % %
Balance brought
forward
10,361,911 9,802,074 2,195.689 2,006,712 162.7 169.1
CapitaMall
Wuhu
No. 37 Zhongshan
North Road,
Jinghu District,
Wuhu,
Anhui Province
40 May 2044 260,000 251,000 55,094 51,382 4.1 4.3
Investment properties, at valuation 10,621,911 10,053,074 2,250,783 2,058,094 166.8 173.4
Other assets and liabilities (net) (872,967) (844,229) (64.7) (71.1)
1,377,816 1,213,865 102.1 102.3
Net assets attributable to non-
controlling interests
(28,078) (26,914) (2.1) (2.3)
Net assets attributable to Unitholders 1,349,738 1,186,951 100.0 100.0
Notes:
1 The carrying amount of CapitaMall Minzhongleyuan includes the valuation of the retail mall and carrying amount of the threeresidential units.
2 CapitaMall Qibao is held under a master lease by CapitaRetail Dragon Mall (Shanghai) Co., Ltd, a subsidiary of CapitaRetailChina Investments (B) Alpha Pte. Ltd. The master lease was entered with Shanghai Jin Qiu (Group) Co., Ltd (“Jin Qiu”), thelegal owner of CapitaMall Qibao and expires in January 2024, with the right to renew for a further term of 19 years and twomonths from January 2024 at the option of the Group. Accordingly, the land use rights is held by Jin Qiu.
The accompanying notes form an integral part of these financial statements.
Portfolio StatementAs at 31 December 2014
86 | CapitaRetail China Trust Annual Report 2014
Group
2014 2013
Note $’000 $’000
Operating activities
Total return for the year after taxation 146,355 135,948
Adjustments for:
Finance income (874) (1,133)
Finance costs 21,926 11,329
Depreciation and amortisation 2,754 2,088
Impairment losses/(write-back) on trade receivables, net 28 (58)
Taxation 57,109 48,505
Manager’s management fees paid/payable in Units A(i) 5,295 4,122
Plant and equipment written off 81 176
Change in fair value of investment properties (104,829) (99,159)
Change in fair value of financial derivative – (1,423)
Operating income before working capital changes 127,845 100,395
Changes in working capital:
Trade and other receivables (60) (766)
Trade and other payables 2,083 (10,582)
Cash generated from operating activities 129,868 89,047
Income tax paid (18,452) (20,422)
Net cash from operating activities 111,416 68,625
Investing activities
Interest received 874 1,133
Net cash outflow on purchase of investment property B – (134,610)
Capital expenditure on investment properties A(ii)(iii) (14,597) (7,906)
Proceeds from disposal of plant and equipment 13 5
Purchase of plant and equipment (2,960) (1,937)
Net cash used in investing activities (16,670) (143,315)
Financing activities
Proceeds from issuance of new Units – 59,038
Distribution to Unitholders (48,981) (37,682)
Payment of equity issue expenses (460) (915)
Payment of financing expenses (774) (977)
Proceeds from draw down of interest-bearing borrowings 250,900 309,148
Repayment of interest-bearing borrowings (294,797) (279,752)
Settlement of derivative contracts (832) (2,824)
Interest paid (22,317) (11,309)
Net cash (used in)/from financing activities (117,261) 34,727
Decrease in cash and cash equivalents (22,515) (39,963)
Cash and cash equivalents at 1 January 105,457 140,476
Effect of foreign exchange rate changes on cash balances 3,684 4,944
Cash and cash equivalents at 31 December 8 86,626 105,457
The accompanying notes form an integral part of these financial statements.
Consolidated Statement of Cash FlowsYear ended 31 December 2014
Delivering Performance | 87
Notes:
(A) Significant non-cash and other transactions
(i) $4.0 million (2013: $3.1 million) of the $5.3 million (2013: $4.1 million) of the performance
component of the Manager’s management fee was paid during the year through the issue
of 2,682,096 Units (2013: 2,074,331 Units). The remaining $1.3 million (2013: $1.0 million)
will be paid through the issue of 844,273 new Units (2013: 786,472 new Units) subsequent
to the year end.
(ii) The Group incurred $36.1 million to purchase investment property in 2008, of which $nil
and $43,000 were paid in 2014 and 2013 respectively.
(iii) The Group enhanced its investment properties during the year, of which $3.4 million (2013:
$6.6 million) was paid. During the year, the Group paid $11.2 million (2013: $1.3 million) of
the prior years unpaid balance.
(B) Significant non-cash and other transactions
Net cash outflows on acquisition of subsidiaries are provided below:
Group
2014 2013
$’000 $’000
Investment property – 380,459
Cash – 8,293
Other assets – 2,861
Other liabilities – (248,710)
Net identifiable assets and liabilities acquired – 142,903
Cash consideration paid – (142,903)
Cash acquired – 8,293
Net cash outflow – (134,610)
The accompanying notes form an integral part of these financial statements.
Consolidated Statement of Cash FlowsYear ended 31 December 2014
88 | CapitaRetail China Trust Annual Report 2014
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Manager and the Trustee on 26 February
2015.
1. GENERAL
CapitaRetail China Trust (the “Trust”) is a Singapore-domiciled unit trust constituted pursuant to
the trust deed dated 23 October 2006 (as amended by the first supplemental deed dated 8
November 2006, a second supplemental deed dated 15 April 2010, a third supplemental deed
dated 5 April 2012 and a fourth supplemental deed dated 14 February 2014) (collectively the
“Trust Deed”) between CapitaRetail China Trust Management Limited (the “Manager”) and
HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”). The Trust Deed is
governed by the laws of the Republic of Singapore. The Trustee is under a duty to take into
custody and hold the assets of the Trust held by it or through its subsidiaries (the “Group”) in
trust for the holders (“Unitholders”) of Units in the Trust (the “Units”).
The Trust was formally admitted to the Official List of the Singapore Exchange Securities Trading
Limited (the “SGX-ST”) on 8 December 2006 (the “Listing Date”) and was included under the
Central Provident Fund (“CPF”) Investment Scheme on 8 December 2006.
The principal activities of the Trust are those relating to investment in a diversified portfolio of
income-producing properties located primarily in the People’s Republic of China (“China”),
Hong Kong and Macau and used primarily for retail purposes.
The principal activities of the subsidiaries are those of investment holding of properties located
in China and used for retail purposes.
The Group has entered into several service agreements in relation to the management of the
Trust and its property operations. The fee structures for these services are as follows:
(a) Trustee’s fees
Pursuant to the Trust Deed, the Trustee’s fee shall not exceed 0.03% per annum of the value
of all the assets of the Group (“Deposited Property”), subject to a minimum of $15,000 per
month, excluding out of pocket expenses and Goods and Service Tax.
(b) Manager’s management fees
The Manager is entitled under the Trust Deed to the following management fees:
• a base fee of 0.25% per annum of the value of the Deposited Property;
• a performance fee of 4.0% per annum of the net property income in the relevant
financial year (calculated before accounting for the performance fee in that financial
year); and
• an authorised investment management fee of 0.5% per annum of the value of
authorised investments which are not real estate. Where such authorised investment is
an interest in a property fund (either a real estate investment trust or private property
fund) wholly managed by a wholly-owned subsidiary of CapitaLand Limited, no
authorised investment management fee shall be payable in relation to such authorised
investment.
Notes to the Financial Statements
Delivering Performance | 89
1. GENERAL (continued)
(b) Manager’s management fees (continued)
The Manager may elect to receive the management fees in cash or Units or a combination
of cash and/or Units (as it may in its sole discretion determine).
(c) Property management fees
Under the property management agreements in respect of each property, the property
managers will provide lease management services, property tax services and marketing
co-ordination services in relation to that property. The property managers are entitled to the
following fees:
• 2.0% per annum of the gross revenue;
• 2.0% per annum of the net property income; and
• 0.5% per annum of the net property income in lieu of leasing commissions otherwise
payable to the property managers and/or third party agents.
(d) Acquisition fee
For any authorised investment acquired from time to time by the Trustee on behalf of the
Trust, the acquisition fee payable to the Manager shall be:
• up to 1.5% of the purchase price in the case of any authorised investment (as defined
in the Trust Deed) acquired by the Trust for less than $200 million; and
• 1.0% of the purchase price in the case of any authorised investment acquired by the
Trust for $200 million or more.
The acquisition fee payable in respect of any authorised investment acquired from time to
time by the Trustee on behalf of the Trust from CapitaMalls China Income Fund, CapitaMalls
China Income Fund II, CapitaMalls China Income Fund III, CapitaMalls China Development
Fund III, or CapitaMalls Asia Limited shall be 1.0% of the purchase price paid by the Trust.
No acquisition fee was payable for the acquisition of the initial property portfolio of the
Trust.
The acquisition fee is payable to the Manager in the form of cash and/or Units (as the
Manager may elect) at the prevailing market price provided that in respect of any
acquisition of real estate assets from interested parties, such a fee should, if required by
the applicable laws, rules and/or regulations, be in the form of Units issued by the Trust at
prevailing market price(s) and subject to such transfer restrictions as may be imposed.
Any payment to third party agents or brokers in connection with the acquisition of any
authorised investments for the Trust shall be paid by the Manager to such persons out of
the Deposited Property of the Trust or the assets of the relevant special purpose vehicle,
and not out of the acquisition fee received or to be received by the Manager.
Notes to the Financial Statements
90 | CapitaRetail China Trust Annual Report 2014
1. GENERAL (continued)
(e) Divestment fee
The Manager is entitled to receive a divestment fee of 0.5% of the sale price of any
authorised investment disposed directly or indirectly by the Trust, prorated if applicable to
the proportion of the Trust’s interest.
The divestment fee is payable to the Manager in the form of cash and/or Units (as the
Manager may elect) at the prevailing market price provided that in respect of any
divestment of real estate assets to interested parties, such a fee should, if required by the
applicable laws, rules and/or regulations, be in the form of Units issued by the Trust at
prevailing market price(s) and subject to such transfer restrictions as may be imposed.
Any payment to third party agents or brokers in connection with the divestment of any
authorised investments for the Trust shall be paid by the Manager to such persons out of
the Deposited Property of the Trust or the assets of the relevant special purpose vehicle,
and not out of the divestment fee received or to be received by the Manager.
2. BASIS OF PREPARATION
(a) Statement of compliance
The financial statements have been prepared in accordance with the recommendations of
Statement of Recommended Accounting Practice (“RAP”) 7 “Reporting Framework for Unit
Trusts” issued by the Institute of Singapore Chartered Accountants, the applicable
requirements of the Code on Collective Investment Schemes (the “CIS Code”) issued by the
Monetary Authority of Singapore (“MAS”) and the provisions of the Trust Deed. RAP 7
requires that accounting policies adopted should generally comply with the principles
relating to recognition and measurement of the Singapore Financial Reporting Standards
(“FRS”).
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis except for the
following material items on the statement of financial position:
• derivative financial instruments are measured at fair value
• investment properties are measured at fair value.
(c) Functional and presentation 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 that entity (the “functional currency”). The consolidated financial
statements of the Group are presented in Singapore dollars, which is the functional
currency of the Trust. All financial information presented in Singapore dollars has been
rounded to the nearest thousand, unless otherwise stated.
Delivering Performance | 91
2. BASIS OF PREPARATION (continued)
(d) Use of estimates and judgements
The preparation of financial statements in conformity with RAP 7 requires the Manager to
make judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, the results of
which form the basis of making the judgements about carrying amounts of assets and
liabilities that are not readily apparent from other sources.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimates are revised and
any future periods affected.
Information about assumptions and estimation uncertainties that have a significant risk of
resulting in a material adjustment within the next financial year are included in the following
notes:
• Note 4 – Valuation of investment properties
• Note 27 – Valuation of financial instruments.
(e) Changes in accounting policies
(i) Subsidiaries
FRS 110 Consolidated Financial Statements introduces a new control model that
focuses on whether the Group has power over an investee, exposure or rights to
variable returns from its involvement with the investee and ability to use its power to
affect those returns.
In accordance with the transitional provisions of FRS 110, the Group reassessed its
involvement with investees under the new control model. The adoption of the new
standard did not result in a change in the control conclusion in respect of its
investment in its investees.
(ii) Disclosure of interests in other entities
From 1 January 2014, as a result of FRS 112 Disclosure of Interests in Other Entities,
the Group has expanded its disclosures about its interests in subsidiaries (see Note 6
and Note 14).
(iii) Offsetting of financial assets and financial liabilities
Under the Amendments to FRS 32 Financial Instruments: Presentation – Offsetting
Financial Assets and Financial Liabilities, to qualify for offsetting, the right to set off a
financial asset and a financial liability must not be contingent on a future event and
must be enforceable both in the normal course of business and in the event of default,
insolvency or bankruptcy of the entity and all counterparties. The adoption of
amendments to FRS 32 does not have any significant impact on the financial position
or performance of the Group and the Trust.
Notes to the Financial Statements
92 | CapitaRetail China Trust Annual Report 2014
2. BASIS OF PREPARATION (continued)
(e) Changes in accounting policies (continued)
(iv) Disclosures of recoverable amount for non-financial assets
From 1 January 2014, the Group has adopted Amendments to FRS 36: Impairment of
Assets Recoverable Amount Disclosures for Non-Financial Assets. The adoption of
Amendments to FRS 36 has no impact on the financial position or performance of the
Group and the Trust.
(v) Levies
The Group has adopted INT FRS 121 Levies with a date of initial application of 1
January 2014. The adoption of INT FRS 121 does not have any significant impact on
the financial position or performance of the Group and the Trust.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented
in these financial statements, and have been applied consistently by Group entities, except as
explained in Note 2(e), which addresses changes in accounting policies.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when
it is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect these returns through its power over the entity. The
financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
The Group’s acquisition of subsidiaries are primarily accounted for as acquisitions of
assets as the subsidiaries are special purpose vehicles established for the sole
purpose of holding assets.
(ii) Loss of control
Upon the loss of control, the Trust derecognises the assets and liabilities of the
subsidiary, any non-controlling interests and the other components of equity related to
the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the
statement of total return.
If the Group retains any interest in the previous subsidiary, then such interest is
measured at fair value at the date that control is lost. Subsequently, it is accounted for
as an equity-accounted investee or as an available-for-sale financial asset depending
on the level of influence retained.
(iii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income or expenses
arising from intra-group transactions, are eliminated in preparing the consolidated
financial statements. Unrealised gains arising from transactions with equity accounted
investees are eliminated against the investment to the extent of the Group’s interest in
the investee. Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.
Delivering Performance | 93
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) Basis of consolidation (continued)
(iv) Accounting for subsidiaries by the Trust
Investments in subsidiaries are stated in the Trust’s statement of financial position at
cost less accumulated impairment losses.
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rates ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated at the foreign exchange rates ruling
at that date. Non-monetary assets and liabilities measured at cost in a foreign currency
are translated using foreign exchange rates at the date of the transaction. Non-
monetary assets and liabilities denominated in foreign currencies that are measured at
fair value are retranslated at the foreign exchange rates ruling at the date on which the
fair value was determined.
Foreign currency differences arising on retranslation are recognised in the statement
of total return, except for differences arising on the retranslation of monetary items that
in substance form part of the Group’s net investment in a foreign operation (see below)
and financial derivatives designated as hedges of the net investment in a foreign
operation (see Note 3(c)(iii)).
(ii) Foreign operations
The assets and liabilities of foreign operations are translated to Singapore dollars at
exchange rates at the reporting date. The income and expenses of foreign operations
are translated to Singapore dollars at exchange rates at the dates of the transactions.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation
are treated as assets and liabilities of the foreign operation and translated at the
exchange rate at the reporting date.
Foreign currency differences are recognised in the foreign currency translation
reserve. When a foreign operation is disposed of, in part or in full, the relevant amount
is transferred to the statement of total return.
(iii) Net investment in a foreign operation
Exchange differences arising from monetary items that in substance form part of the
Trust’s net investment in a foreign operation are recognised in the Trust’s statement of
total return. Such exchange differences are reclassified to foreign currency translation
reserve in the consolidated financial statements. When the hedged net investment is
disposed of, the cumulative amount in the foreign currency translation reserve is
transferred to the statement of total return as an adjustment to the gain or loss arising
on disposal.
Notes to the Financial Statements
94 | CapitaRetail China Trust Annual Report 2014
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Financial instruments
(i) Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that
they are originated. All other financial assets are recognised initially on the trade date
at which the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows
from the asset expire, or it transfers the rights to receive the contractual cash flows on
the financial asset in a transaction in which substantially all the risks and rewards of
ownership of the financial asset are transferred. Any interest in transferred financial
assets that is created or retained by the Group is recognised as a separate asset or
liability.
Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Group has a legal right to
offset the amounts and intends either to settle on a net basis or to realise the asset and
settle the liability simultaneously.
The Group has loans and receivables as its non-derivative financial assets.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that
are not quoted in an active market. Such assets are recognised initially at fair value
plus any directly attributable transaction costs. Subsequent to initial recognition, loans
and receivables are measured at amortised cost using the effective interest method,
less any impairment losses.
Loans and receivables comprise non-trade amounts due from subsidiaries, trade and
other receivables excluding prepayments and cash and cash equivalents.
Cash and cash equivalents comprise cash balances and bank deposits.
(ii) Non-derivative financial liabilities
Financial liabilities are recognised initially on the trade date at which the Group
becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are
discharged or cancelled or expired.
Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Group has a legal right to
offset the amounts and intends either to settle on a net basis or to realise the asset and
settle the liability simultaneously.
Delivering Performance | 95
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Financial instruments (continued)
(ii) Non-derivative financial liabilities (continued)
The Group has the following non-derivative financial liabilities: trade and other
payables, security deposits and interest-bearing borrowings.
Such financial liabilities are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, these financial
liabilities are measured at amortised cost using the effective interest method.
(iii) Derivative financial instruments, including hedge accounting
The Group holds derivative financial instruments to hedge its foreign currency and
interest rate risk exposures. Embedded derivatives are separated from the host
contract and accounted for separately if the economic characteristics and risks of the
host contract and the embedded derivative are not closely related, a separate
instrument with the same terms as the embedded derivative would meet the definition
of a derivative, and the combined instrument is not measured at fair value through the
statement of total return.
On initial designation of the hedge, the Group formally documents the relationship
between the hedging instrument(s) and hedged item(s), including the risk
management objectives and strategy in undertaking the hedge transaction and the
hedged risk, together with the methods that will be used to assess the effectiveness
of the hedging relationship. The Group makes an assessment, both at the inception of
the hedge relationship as well as on an ongoing basis, of whether the hedging
instruments are expected to be “highly effective” in offsetting the changes in the fair
value or cash flows of the respective hedged items attributable to the hedged risk, and
whether the actual results of each hedge are within a range of 80%-125%. For a cash
flow hedge of a forecast transaction, the transaction should be highly probable to
occur and should present an exposure to variations in cash flows that could ultimately
affect the statement of total return.
Derivatives are recognised initially at fair value; attributable transaction costs are
recognised in the statement of total return when incurred. Subsequent to initial
recognition, derivatives are measured at fair value, and changes therein are
accounted for as described below.
Cash flow hedges
When a derivative is designated as the hedging instrument in a hedge of the variability
in cash flows attributable to a particular risk associated with a recognised asset or
liability or a highly probable forecast transaction that could affect total return, the
effective portion of changes in the fair value of the derivative is recognised and
presented in the hedging reserve in Unitholders’ fund. The amount recognised in the
hedging reserve is removed and included in the statement of total return in the same
period as the hedged cash flows affect the statement of total return under the same
line item in the statement of total return as the hedged item. Any ineffective portion of
changes in the fair value of the derivative is recognised immediately in the statement
of total return.
Notes to the Financial Statements
96 | CapitaRetail China Trust Annual Report 2014
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Financial instruments (continued)
(iii) Derivative financial instruments, including hedge accounting (continued)
Cash flow hedges (continued)
If the hedging instrument no longer meets the criteria for hedge accounting, expires
or is sold, terminated or exercised, or the designation is revoked, then hedge
accounting is discontinued prospectively. The cumulative gain or loss previously
recognised and presented in the hedging reserve in Unitholders’ fund remains there
until the forecast transaction occurs. When the hedged item is a non-financial asset,
the amount recognised in the hedging reserve is transferred to the carrying amount of
the asset when it is recognised. If the forecast transaction is no longer expected to
occur, then the balance in the hedging reserve is recognised immediately in the
statement of total return. In other cases, the amount recognised in the hedging reserve
is transferred to the statement of total return in the same period that the hedged item
affects the statement of total return.
Hedge of net investment in foreign operation
Foreign currency differences arising on the retranslation of a financial liability
designated as a hedge of a net investment in a foreign operation are recognised in the
Trust’s statement of total return. On consolidation, such differences are recognised
directly, as part of foreign currency translation reserve, to the extent that the hedge is
effective. To the extent that the hedge is ineffective, such differences are recognised
in the statement of total return. When the hedged net investment is disposed of, the
cumulative amount in the foreign currency translation reserve attributable to that
investment is transferred to the statement of total return as an adjustment to the gain
or loss on disposal.
(d) Investment properties
Investment properties are properties held either to earn rental income or capital
appreciation or both. Investment properties are accounted for as non-current assets and
are stated at initial cost on acquisition and at fair value thereafter. The cost of a purchased
property comprises its purchase price and any directly attributable expenditure.
Transaction costs are included in the initial measurement. Fair value is determined in
accordance with the Trust Deed, which requires the investment properties to be valued by
independent registered valuers at least once a year in accordance with the CIS Code
issued by the MAS.
Any increase or decrease on revaluation is credited or charged to the statement of total
return as a net change in fair value of the investment properties.
Subsequent expenditure relating to investment properties that have already been
recognised is added to the carrying amount when it is probable that future economic
benefits, in excess of the originally assessed standard of performance of the existing asset
will flow to the Group.
All other subsequent expenditure is recognised as an expense in the period in which it is
incurred.
Delivering Performance | 97
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Investment properties (continued)
When an investment property is disposed of, the resulting gain or loss recognised in the
statement of total return is the difference between the net disposal proceeds and the
carrying amount of the property.
Investment properties are not depreciated. The properties are subject to continued
maintenance and regularly revalued on the basis set out above.
(e) Plant and equipment
(i) Recognition and measurement
Plant and equipment are stated at cost less accumulated depreciation and
accumulated impairment losses. Cost includes expenditure that is directly attributable
to the acquisition of the asset.
When parts of an item of plant and equipment have different useful lives, they are
accounted for as separate items (major components) of plant and equipment.
Gains or losses arising from the retirement or disposal of plant and equipment are
determined as the difference between the estimated net disposal proceeds and the
carrying amount of the asset and are recognised in the statement of total return on the
date of retirement or disposal.
(ii) Subsequent costs
The cost of replacing part of an item of plant and equipment is recognised in the
carrying amount of the item if it is probable that the future economic benefits
embodied within the part will flow to the Group and its cost can be measured reliably.
The cost of the day-to-day servicing of plant and equipment are recognised in the
statement of total return as incurred.
(iii) Depreciation
Depreciation is provided on a straight-line basis so as to write off items of plant and
equipment, and major components that are accounted for separately, over their
estimated useful lives as follows:
Improvement to premises – 5 years
Plant and machinery – 3 to 5 years
Motor vehicles – 5 years
Furniture, fittings and equipment – 2 to 5 years
Depreciation methods, useful lives and residual values are reviewed, and adjusted as
appropriate, at each reporting date.
Notes to the Financial Statements
98 | CapitaRetail China Trust Annual Report 2014
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(f) Impairment
(i) Financial assets (including receivables)
A financial asset not carried at fair value through the statement of total return is
assessed at each reporting date to determine whether there is objective evidence that
it is impaired. A financial asset is impaired if objective evidence indicates that a loss
event has occurred after the initial recognition of the asset, and that the loss event had
a negative effect on the estimated future cash flows of that asset that can be estimated
reliably.
Objective evidence that financial assets are impaired can include default or
delinquency by a debtor, restructuring of an amount due to the Group on terms that the
Group would not consider otherwise, indications that a debtor will enter bankruptcy.
The Group considers evidence of impairment for receivables at both a specific asset
and collective level. All individually significant receivables are assessed for specific
impairment. All individually significant receivables found not to be specifically
impaired are then collectively assessed for any impairment that has been incurred but
not yet identified. Receivables that are not individually significant are collectively
assessed for impairment by grouping together receivables with similar risk
characteristics.
In assessing collective impairment, the Group uses historical trends of the probability
of default, timing of recoveries and the amount of loss incurred, adjusted for
management’s judgement as to whether current economic and credit conditions are
such that the actual losses are likely to be greater or less than suggested by historical
trends.
An impairment loss in respect of a financial asset measured at amortised cost is
calculated as the difference between its carrying amount and the present value of the
estimated future cash flows discounted at the asset’s original effective interest rate.
Losses are recognised in the statement of total return and reflected in an allowance
account against receivables. Interest on the impaired asset continues to be
recognised through the unwinding of the discount. When the Group considers that
there are no realistic prospects of recovery of the asset, the relevant amounts are
written off. If the amount of impairment loss subsequently decreases and the decrease
can be related objectively to an event occurring after the impairment was recognised,
then the previously recognised impairment loss is reversed through the statement of
total return.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than investment
properties, are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable
amount is estimated.
Delivering Performance | 99
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(f) Impairment (continued)
(ii) Non-financial assets (continued)
The recoverable amount of an asset or cash-generating unit is the greater of its value
in use and its fair value less costs to sell. In assessing value in use, the estimated
future cash flows 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. For the purpose of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash
inflows of other assets or groups of assets (the “cash-generating unit”, or “CGU”).
An impairment loss is recognised if the carrying amount of an asset or its CGU
exceeds its estimated recoverable amount. Impairment losses are recognised in the
statement of total return. Impairment losses recognised in respect of the CGU are
allocated first to reduce the carrying amount of any goodwill allocated to the units, and
then to reduce the carrying amounts of the other assets in the unit (group of units) on
a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets,
impairment losses recognised in prior periods are assessed at each reporting date for
any indications that the loss has decreased or no longer exists. An impairment loss is
reversed if there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
(g) Unitholders’ funds
Unitholders’ funds represent the residual interests in the Group’s net assets upon
termination and are classified as equity.
Expenses incurred in connection with the issuance of Units in the Trust are deducted
directly against the Unitholders’ funds.
(h) Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as
an expense in the statement of total return as incurred.
(ii) Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and
are expensed as the related service is provided.
A provision is recognised for the amount expected to be paid under short-term cash
bonus if the Group has a present legal or constructive obligation to pay this amount as
a result of past service provided by the employee and the obligation can be estimated
reliably.
Notes to the Financial Statements
100 | CapitaRetail China Trust Annual Report 2014
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(i) Distribution policy
The Trust’s distribution policy is to distribute at least 90.0% of its distributable income in
each financial year to Unitholders, other than from the sale of properties that are
determined by Inland Revenue Authority of Singapore to be trading gains.
(j) Revenue recognition
(i) Rental income
Rental income receivable under operating leases is recognised on a straight-line basis
over the term of the lease, except where an alternative basis is more representative of
the pattern of benefits to be derived from the leased assets. Lease incentives granted
are recognised as an integral part of the total rental to be received. Contingent rentals,
which include gross turnover rental, are recognised as income in the accounting
period on an earned basis. No contingent rental is recognised if there are uncertainties
due to the possible return of the amounts received.
(ii) Dividend income
Dividend income is recognised when the right to receive payment is established.
(k) Lease payments
Payment made under operating leases are recognised in profit or loss on a straight-line
basis over the term of the lease. Lease incentives received are recognised as an integral
part of the total lease expense, over the term of the lease.
Contingent lease payments are accounted for by revising the minimum lease payments
over the remaining term of the lease when the lease adjustment is confirmed.
(l) Expenses
(i) Property expenses
Property expenses are recognised on an accrual basis.
(ii) Manager’s management fees, property management fees and Trustee’s fees
These are recognised on an accrual basis based on the applicable formula stipulated
in Note 1.
(m) Finance income and finance costs
Finance income comprises interest income recognised in the statement of total return as it
accrues, using the effective interest method.
Finance costs which comprise interest expense on borrowings and expense incurred in
connection with borrowings are recognised in the statement of total return, using the
effective interest method over the period of the borrowings.
Delivering Performance | 101
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Taxation
Taxation on the returns for the year comprises current and deferred tax. Taxation is
recognised in the statement of total return except to the extent that it relates to items
recognised directly in Unitholders’ fund.
Current tax is the expected tax payable on the taxable income for the year, using tax rates
enacted or substantively enacted at the reporting date and any adjustment to tax payable
in respect of previous years.
Deferred tax is in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for:
• temporary differences on the initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither accounting nor taxable
profit; and
• temporary differences relating to investments in subsidiaries to the extent that it is
probable that they will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been enacted or substantively
enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and assets and they relate to income
taxes levied by the same tax authority on the same taxable entity, or on different tax entities,
but they intend to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realised simultaneously.
A deferred tax asset is recognised only to the extent that it is probable that future taxable
profits will be available against which the unused tax losses and credits can be utilised.
Deferred tax assets are reduced to the extent that it is no longer probable that the related
tax benefits will be realised.
Except for the tax exemption as described below, income earned by the Trust will be
subject to Singapore income tax at the trustee level at the prevailing corporate tax rate.
The Trust is exempted from Singapore income tax under Section 13(12) of the Singapore
Income Tax Act on the following income:
(i) dividends; and
(ii) interest on shareholders’ loans,
payable by its subsidiaries in Barbados and Singapore out of underlying rental income
derived from the investment properties in China.
Notes to the Financial Statements
102 | CapitaRetail China Trust Annual Report 2014
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Taxation (continued)
This exemption is granted subject to certain conditions, including the condition that the
Trustee is a tax resident of Singapore.
The tax exemption also applies to dividends payable by these subsidiaries out of gains, if
any, derived from the disposal of their shares in the subsidiaries in China.
(o) Earnings per unit
The Group presents basic and diluted earnings per unit (“EPU”) data for its Units. Basic
EPU is calculated by dividing the total return attributable to Unitholders of the Group by the
weighted average number of ordinary Units outstanding during the period. Diluted EPU is
determined by adjusting the total return attributable to Unitholders and the weighted
average number of Units outstanding for the effects of all dilutive potential Units.
(p) Segment reporting
An operating segment is a component of the Group that engages in business activities from
which it may earn revenues and incur expenses, including revenues and expenses that
relate to transactions with any of the Group’s other components. Operating segments are
reported in a manner consistent with the internal reporting provided to the Chief Operating
Decision-Makers (“CODMs”). The CODMs has been identified as the Chief Executive
Officer (“CEO”) and Head of Finance.
Segment results that are reported to the Group CEO include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis. Unallocated items
comprise mainly financial derivative assets and liabilities, other receivables, cash and cash
equivalents, trade and other payables, and interest-bearing borrowings.
Segment capital expenditure is the total cost incurred during the year to acquire plant and
equipment and capital expenditure on investment properties.
(q) New standards, interpretations and revised recommended accounting practice not yet
adopted
The Group has not applied the following accounting standards (including their
consequential amendments) and interpretations that have been issued as of the reporting
date but are not yet effective:
• FRS 16 Property, plant and equipment
• FRS 19 Defined benefit plans: Employee Contributions
• FRS 24 Related party disclosures
• FRS 40 Investment property
• FRS 108 Operating segments
• FRS 113 Fair value measurement
The initial application of these new standards and amendments to standards is not
expected to have a significant effect on the financial statements of the Group.
Delivering Performance | 103
4. INVESTMENT PROPERTIES
Group
2014 2013
$’000 $’000
At beginning of year 2,058,094 1,476,988
Acquisition of investment property – 380,459
Expenditure capitalised 12,478 17,973
2,070,572 1,875,420
Changes in fair value 104,829 99,159
Translation differences 75,382 83,515
At the end of year 2,250,783 2,058,094
Investment properties are stated at fair value based on valuation performed by independent
professional valuers having appropriate recognised professional qualifications and recent
experience in the location and category of property being valued. In determining the fair value,
the valuers have used valuation methods which involve certain estimates. The Manager reviews
the key valuation parameters and underlying data including market-corroborated capitalisation
rates, term and reversion rates and discount rates adopted by the valuers and is of the view that
the valuation methods and estimates are reflective of the current market conditions.
The fair values are based on open market values, being the estimated amount for which a
property could be exchanged on the date of the valuation between a willing buyer and a willing
seller in an arm’s length transaction wherein the parties had each acted knowledgeably and
without compulsion.
The valuers have considered valuation techniques including the capitalisation, discounted cash
flows and/or term and reversion approaches in arriving at the open market value as at the
reporting date.
The capitalisation approach capitalises an income stream into a present value using revenue
multipliers or single-year capitalisation rates. The discounted cash flow method involves the
estimation and projection of an income stream over a period and discounting the income stream
with an internal rate of return to arrive at the market value. The term and reversion approach
capitalises net rental income on a fully leased basis with regards to the current passing rental
income from existing tenancies and potential future reversionary income at the market level.
Fair value of the investment properties were based on independent professional full valuations
carried out by the following valuers on the dates stated below:
Valuers Valuation Date Valuation Date
DTZ Debenham Tie Leung International
Property Advisers (Shanghai) Co., Ltd.
31 December 2014 –
Knight Frank Petty Limited 31 December 2014 –
CBRE Pte. Ltd. 31 December 2014 31 December 2013
Colliers International (Hong Kong)
Limited
31 December 2014 31 December 2013
Notes to the Financial Statements
104 | CapitaRetail China Trust Annual Report 2014
4. INVESTMENT PROPERTIES (continued)
Investment properties comprise retail properties that are held mainly for use by tenants under
operating leases. Most leases contain an initial non-cancellable period of within 1 to 3 years
(2013: within 1 to 3 years).
Contingent rents, representing income based on certain sales achieved by tenants, recognised
in the statement of total return during the year amounted to $11.9 million (2013: $7.6 million).
5. PLANT AND EQUIPMENT
Improvement
to premises
Plant and
machinery
Motor
vehicles
Furniture,
fittings and
equipment Total
$’000 $’000 $’000 $’000 $’000
Group
Cost
At 1 January 2013 6,982 371 157 5,063 12,573
Assets acquired 44 – 155 1,989 2,188
Additions 1,344 – – 694 2,038
Disposal/written off (652) (56) (118) (1,504) (2,330)
Translation difference on
consolidation 376 20 7 254 657
At 31 December 2013 8,094 335 201 6,496 15,126
Additions 2,387 – – 663 3,050
Disposal/written off (46) (36) (68) (910) (1,060)
Translation difference on
consolidation 283 10 4 203 500
At 31 December 2014 10,718 309 137 6,452 17,616
Less: Accumulated
depreciation
At 1 January 2013 2,921 211 145 3,469 6,746
Assets acquired 12 – 111 677 800
Charge for the year 1,405 48 1 578 2,032
Disposal/written off (639) (51) (106) (1,353) (2,149)
Translation difference on
consolidation 175 12 6 179 372
At 31 December 2013 3,874 220 157 3,550 7,801
Charge for the year 1,586 45 16 1,050 2,697
Disposal/written off (35) (33) (55) (843) (966)
Translation difference on
consolidation 181 8 4 132 325
At 31 December 2014 5,606 240 122 3,889 9,857
Carrying amounts
At 1 January 2013 4,061 160 12 1,594 5,827
At 31 December 2013 4,220 115 44 2,946 7,325
At 1 January 2014 4,220 115 44 2,946 7,325
At 31 December 2014 5,112 69 15 2,563 7,759
Delivering Performance | 105
6. INTERESTS IN SUBSIDIARIES
Trust
2014 2013
$’000 $’000
(a) Unquoted equity, at cost 385,035 385,035
(b) Loans to subsidiaries 326,428 315,480
Non-trade amounts due from subsidiaries 382,060 328,052
708,488 643,532
1,093,523 1,028,567
(a) Details of the subsidiaries are as follows:
Name of subsidiaries Principal activities
Place of
incorporation/
business
Effective equity held
by the Group
2014 2013
% %
(i) Direct subsidiaries
* CapitaRetail China
Investments (B)
Pte. Ltd.
Investment holding Barbados 100 100
* CapitaRetail China
Investments (B)
Alpha Pte. Ltd.
Investment holding Barbados 100 100
* CapitaRetail China
Investments (B)
Beta Pte. Ltd.
Investment holding Barbados 100 100
* CapitaRetail China
Investments (B)
Gamma Pte. Ltd.
Investment holding Barbados 100 100
** CapitaRetail China
Investments (BVI)
Alpha Limited
Investment holding British Virgin
Islands
100 100
*** Somerset (Wuhan)
Investments Pte Ltd
Investment holding Singapore 100 100
*** CapitaLand Retail
Investments (SY)
Pte Ltd
Investment holding Singapore 100 100
Notes to the Financial Statements
106 | CapitaRetail China Trust Annual Report 2014
6. INTERESTS IN SUBSIDIARIES (continued)
Name of subsidiaries Principal activities
Place of
incorporation/
business
Effective equity held
by the Group
2014 2013
% %
(ii) Indirect subsidiaries
Subsidiary of
CapitaRetail China
Investments (B) Pte.
Ltd.
* CapitaRetail Beijing
Wangjing Real Estate
Co., Ltd.
Property investment China 100 100
Subsidiaries of
CapitaRetail China
Investments (B)
Alpha Pte. Ltd.
* CapitaRetail Beijing
Anzhen Real Estate
Co., Ltd.
Property investment China 100 100
* CapitaRetail Dragon Mall
(Shanghai) Co., Ltd.
Property investment China 100 100
* CapitaRetail Beijing
Shuangjing Real
Estate Co., Ltd.
Property investment China 100 100
* CapitaRetail Henan
Zhongzhou Real
Estate Co., Ltd.
Property investment China 100 100
* Huaxin Saihan Huhhot
Real Estate Co., Ltd.
Property investment China 100 100
Subsidiary of
CapitaRetail China
Investments (B) Beta
Pte. Ltd.
* CapitaRetail Beijing
Xizhimen Real Estate
Co., Ltd.
Property investment China 100 100
Delivering Performance | 107
6. INTERESTS IN SUBSIDIARIES (continued)
Name of subsidiaries Principal activities
Place of
incorporation/
business
Effective equity held
by the Group
2014 2013
% %
(ii) Indirect subsidiaries
(continued)
Subsidiary of
CapitaRetail China
Investments (B)
Gamma Pte. Ltd.
* CapitaMalls Wuhu
Commercial Property
Co., Ltd.
Property investment China 51 51
Subsidiary of Somerset
(Wuhan) Investments
Pte Ltd
* Wuhan New Minzhong
Leyuan Co., Ltd.
Property investment China 100 100
Subsidiary of
CapitaLand Retail
Investments (SY) Pte
Ltd
* Beijing Huakun Real
Estate Management
Co., Ltd.
Property investment China 100 100
* Audited by other member firms of KPMG International.
** This subsidiary is not required to be audited by the laws of the country of incorporation.
*** Audited by KPMG LLP Singapore.
(b) The loans to subsidiaries, amounting to $326.4 million (2013: $315.5 million) and the
non-trade amounts due from subsidiaries amounting to $363.4 million (2013: $310.1 million)
are unsecured and settlement is neither planned nor likely to occur in the foreseeable
future. As these amounts are, in substance, a part of the Trust’s net investments in the
subsidiaries, they are stated at cost, less accumulated impairment. The remaining $18.7
million (2013: $18.0 million) of the non-trade amounts due from subsidiaries are unsecured,
interest-free and repayable on demand. The loans to subsidiaries bear interest fixed at
7.5% (2013: 7.5%).
Notes to the Financial Statements
108 | CapitaRetail China Trust Annual Report 2014
7. TRADE AND OTHER RECEIVABLES
Group Trust
2014 2013 2014 2013
$’000 $’000 $’000 $’000
Trade receivables 2,302 2,653 – –
Impairment losses (141) (351) – –
2,161 2,302 – –
Other receivables 2,549 2,840 201 219
Deposits 1,150 1,104 – –
Loans and receivables 5,860 6,246 201 219
Prepayments 5,487 5,125 – 5
11,347 11,371 201 224
Concentration of credit risk relating to loans and receivables is limited due to the Group’s many
varied tenants located in several cities in China and the credit policy of obtaining security
deposits from tenants for leasing the Group’s investment properties. These tenants comprise
retailers engaged in a wide variety of consumer trades.
The maximum exposure to credit risk for loans and receivables at the reporting date (by
geographical area in China) is:
Group
2014 2013
$’000 $’000
Inner Mongolia 31 32
Beijing 3,626 4,483
Shanghai 1,277 1,212
Others 725 300
5,659 6,027
Delivering Performance | 109
7. TRADE AND OTHER RECEIVABLES (continued)
Impairment losses
The ageing of loans and receivables at the reporting date is:
Gross Impairment
2014 2013 2014 2013
$’000 $’000 $’000 $’000
Group
Not past due 4,460 4,278 – –
Past due 1 – 30 days 369 1,074 – –
Past due 31 – 60 days 297 410 – 3
Past due 61 – 90 days 225 132 – –
More than 90 days past due 650 703 141 348
6,001 6,597 141 351
Gross Impairment
2014 2013 2014 2013
$’000 $’000 $’000 $’000
Trust
Not past due 201 219 – –
The movement in the allowance for impairment in respect of trade receivables during the year
is as follows:
Group
2014 2013
Note $’000 $’000
At 1 January 351 163
Impairment losses/(write-back) on
trade receivables, net 17 28 (58)
Provision acquired – 332
Allowance utilised (244) (94)
Translation difference 6 8
At 31 December 141 351
The majority of the trade receivables are mainly from tenants that have good credit records with
the Group. The allowance account in respect of trade receivables is used to record impairment
losses unless the Group is satisfied that no recovery of the amount owing is possible; at that
point the amounts are considered irrecoverable and are written off against the financial asset
directly. During the year ended 31 December 2014, the Group collected $0.1 million (2013: $0.1
million) of its impaired trade receivables.
Notes to the Financial Statements
110 | CapitaRetail China Trust Annual Report 2014
7. TRADE AND OTHER RECEIVABLES (continued)
Impairment losses (continued)
The Group’s historical experience in the collection of loans and receivables falls within the
recorded allowances. The Manager believes that no additional credit risk beyond the amounts
provided for collection losses is inherent in the Group’s loans and receivables, based on
historical payment behaviours and the security deposits held (if applicable).
8. CASH AND CASH EQUIVALENTS
Group Trust
2014 2013 2014 2013
$’000 $’000 $’000 $’000
Cash at banks and in hand 58,992 71,311 238 249
Fixed deposits with financial
institutions 27,634 34,146 – –
86,626 105,457 238 249
9. TRADE AND OTHER PAYABLES
Group Trust
2014 2013 2014 2013
$’000 $’000 $’000 $’000
Trade payable 650 802 – 63
Accrued operating expenses 11,187 12,463 2,582 3,047
Accrued development expenditure 7,528 9,893 – –
Amounts due to related parties
(trade) 2,344 5,214 1,467 4,677
Amount due to subsidiary (trade) – – – 17
Other deposits and advances 24,069 23,502 – –
Interest payable 1,564 1,745 1,337 1,256
Other payables 3,798 4,100 – –
51,140 57,719 5,386 9,060
Included in amounts due to related parties (trade) are amounts due to the Manager, Property
and Project Managers of $1.5 million (2013: $4.7 million), $0.7 million (2013: $0.5 million) and
$nil (2013: $14,000) respectively.
Delivering Performance | 111
10. INTEREST-BEARING BORROWINGS
Group Trust
2014 2013 2014 2013
Note $’000 $’000 $’000 $’000
Unsecured term loans (a) 538,503 456,465 538,503 435,503
Secured loans (b) 104,890 216,993 – –
Money market facilities 29,500 40,000 29,500 40,000
Less: Unamortised
transactions costs (1,180) (1,120) (1,180) (1,120)
671,713 712,338 566,823 474,383
(a) As at 31 December 2014, unsecured term loans comprise $100.0 million, $88.0 million,
$50.5 million, three $50.0 million, two $75.0 million fixed/floating rate trust term loans
(collectively known as “Trust Term Loan Facilities”). These facilities have negative pledge
covenants which require the Trust, amongst others:
(i) not to, without the prior written consent of the lender, create or have outstanding any
security on or over the Group’s interest in any of the investment properties;
(ii) in the event of a sale of any of the investment properties, to repay an amount equal to
the proportion of the market value of the investment properties sold to the total market
value of the investment properties as determined by the lender based on the latest
annual valuation reports of the investment properties; and
(iii) not to provide any guarantee for any other entities except for secured borrowings for
new investment properties acquired with existing mortgages.
The Trust Term Loan Facilities are repayable in full at maturity, although the Trust has the
option to make early prepayments.
In respect of the unsecured RMB term loan, 20% of the original RMB term loan principal of
RMB128.0 million was repayable on a semi-annual basis in equal instalments starting in
2012 and the remaining was fully repaid on full maturity of the term loan on 30 June 2014.
(b) At the reporting date, secured loans comprise of a RMB term loan of $104.9 million
(RMB495.0 million) (2013: $106.5 million (RMB520.0 million)) and a RMB bridge loan of $nil
(2013: $110.5 million (RMB540.0 million)). Interest rates for the term loan bear interest
referenced against the 3 to 5 years People’s Bank of China (“PBOC”) base lending rate and
1 year PBOC base lending rate for the bridge loan.
As security for the loans, the Trust has granted in favour of the lender the following:
(i) a mortgage over CapitaMall Grand Canyon;
(ii) an assignment of the rental revenue of CapitaMall Grand Canyon; and
(iii) an assignment of the insurance policies relating to CapitaMall Grand Canyon.
Notes to the Financial Statements
112 | CapitaRetail China Trust Annual Report 2014
10. INTEREST-BEARING BORROWINGS (continued)
In respect of the secured RMB term loan, RMB12.5 million is payable on a semi-annual
basis from June 2014. The outstanding loan balance of RMB407.5 million is payable in full
upon maturity on 19 December 2018. The RMB bridge loan of RMB540.0 million was fully
repaid in 2014.
Terms and debt repayment schedule
Terms and conditions of the outstanding interest-bearing borrowings are as follows:
Nominal
interest
rate per
annum
Year of
maturity
Face
value
Carrying
amount
% $’000 $’000
2014
Group
S$ unsecured floating rate money
market facility 1.54 2015 29,500 29,500
S$ unsecured floating rate loan 1.85 – 1.91 2015 88,000 87,996
S$ unsecured fixed rate loan 2.35 – 2.45 2016 50,000 49,946
S$ unsecured floating rate loan 1.37 – 1.84 2016 50,000 49,929
S$ unsecured floating rate loan 1.52 – 2.00 2017 50,503 50,381
S$ unsecured floating rate loan 1.31 – 1.59 2017 75,000 74,775
S$ unsecured fixed rate loan 2.75 2018 50,000 49,829
RMB secured floating rate term loan 6.00 – 6.40 2018 104,890 104,890
S$ unsecured floating rate loan 1.46 – 1.71 2019 75,000 74,713
S$ unsecured floating rate loan 1.65 2020 100,000 99,754
672,893 671,713
Delivering Performance | 113
10. INTEREST-BEARING BORROWINGS (continued)
Terms and debt repayment schedule (continued)
Nominal
interest
rate per
annum
Year of
maturity
Face
value
Carrying
amount
% $’000 $’000
Trust
S$ unsecured floating rate money
market facility 1.54 2015 29,500 29,500
S$ unsecured floating rate loan 1.85 – 1.91 2015 88,000 87,996
S$ unsecured fixed rate loan 2.35 – 2.45 2016 50,000 49,946
S$ unsecured floating rate loan 1.37 – 1.84 2016 50,000 49,929
S$ unsecured floating rate loan 1.52 – 2.00 2017 50,503 50,381
S$ unsecured floating rate loan 1.31 – 1.59 2017 75,000 74,775
S$ unsecured fixed rate loan 2.75 2018 50,000 49,829
S$ unsecured floating rate loan 1.46 – 1.71 2019 75,000 74,713
S$ unsecured floating rate loan 1.65 2020 100,000 99,754
568,003 566,823
2013
Group
S$ unsecured floating rate money
market facility 1.04 – 1.25 2014 40,000 40,000
S$ unsecured floating/fixed rate loan 1.41 – 2.66 2014 100,000 99,908
RMB unsecured floating rate term loan 6.77 2014 20,962 20,962
RMB secured floating rate bridge loan 6.00 2014 110,544 110,544
S$ unsecured floating rate loan 1.85 – 1.98 2015 88,000 87,952
S$ unsecured fixed rate loan 2.35 – 2.45 2016 50,000 49,896
S$ unsecured floating rate loan 1.36 – 1.40 2016 50,000 49,879
S$ unsecured floating rate loan 1.51 – 1.55 2017 50,503 50,331
S$ unsecured fixed rate loan 2.75 2018 50,000 49,779
S$ unsecured floating rate loan 1.51 2018 47,000 46,638
RMB secured floating rate term loan 6.40 2018 106,449 106,449
713,458 712,338
Notes to the Financial Statements
114 | CapitaRetail China Trust Annual Report 2014
10. INTEREST-BEARING BORROWINGS (continued)
Terms and debt repayment schedule (continued)
Nominal
interest
rate per
annum
Year of
maturity
Face
value
Carrying
amount
% $’000 $’000
Trust
S$ unsecured floating rate money
market facility 1.04 – 1.25 2014 40,000 40,000
S$ unsecured floating/fixed rate loan 1.41 – 2.66 2014 100,000 99,908
S$ unsecured floating rate loan 1.85 – 1.98 2015 88,000 87,952
S$ unsecured fixed rate loan 2.35 – 2.45 2016 50,000 49,896
S$ unsecured floating rate loan 1.36 – 1.40 2016 50,000 49,879
S$ unsecured floating rate loan 1.51 – 1.55 2017 50,503 50,331
S$ unsecured fixed rate loan 2.75 2018 50,000 49,779
S$ unsecured floating rate loan 1.51 2018 47,000 46,638
475,503 474,383
The following are the contractual maturities of non-derivative financial liabilities, including
estimated interest payments and excluding the impact of netting agreements:
Carrying
amount
Contractual
cash flow
Within
1 year
Within 2 to
5 years
After
5 years
$’000 $’000 $’000 $’000 $’000
2014
Group
S$ unsecured floating rate
money market facility 29,500 (29,541) (29,541) – –
S$ unsecured floating rate loan 87,996 (88,410) (88,410) – –
S$ unsecured fixed rate loan 49,946 (51,721) (1,182) (50,539) –
S$ unsecured floating rate loan 49,929 (51,474) (945) (50,529) –
S$ unsecured floating rate loan 50,381 (53,622) (1,030) (52,592) –
S$ unsecured floating rate loan 74,775 (80,500) (1,378) (79,122) –
S$ unsecured fixed rate loan 49,829 (54,640) (1,375) (53,265) –
RMB secured floating rate term
loan 104,890 (128,173) (11,597) (116,576) –
S$ unsecured floating rate loan 74,713 (84,147) (1,484) (82,663) –
S$ unsecured floating rate loan 99,754 (116,347) (1,924) (13,978) (100,445)
Trade and other payables
(Note 9) 51,140 (51,140) (51,140) – –
Security deposits 41,158 (41,158) (15,309) (21,643) (4,206)
764,011 (830,873) (205,315) (520,907) (104,651)
Delivering Performance | 115
10. INTEREST-BEARING BORROWINGS (continued)
Terms and debt repayment schedule (continued)
Carrying
amount
Contractual
cash flow
Within
1 year
Within 2 to
5 years
After
5 years
$’000 $’000 $’000 $’000 $’000
Trust
S$ unsecured floating rate
money market facility 29,500 (29,541) (29,541) – –
S$ unsecured floating rate loan 87,996 (88,410) (88,410) – –
S$ unsecured fixed rate loan 49,946 (51,721) (1,182) (50,539) –
S$ unsecured floating rate loan 49,929 (51,474) (945) (50,529) –
S$ unsecured floating rate loan 50,381 (53,622) (1,030) (52,592) –
S$ unsecured floating rate loan 74,775 (80,500) (1,378) (79,122) –
S$ unsecured fixed rate loan 49,829 (54,640) (1,375) (53,265) –
S$ unsecured floating rate loan 74,713 (84,147) (1,484) (82,663) –
S$ unsecured floating rate loan 99,754 (116,347) (1,924) (13,978) (100,445)
Trade and other payables
(Note 9) 5,386 (5,386) (5,386) – –
572,209 (615,788) (132,655) (382,688) (100,445)
2013
Group
S$ unsecured floating rate
money market facility 40,000 (40,073) (40,073) – –
S$ unsecured floating/fixed
rate loan 99,908 (101,564) (101,564) – –
RMB unsecured floating rate
term loan 20,962 (21,663) (21,663) – –
RMB secured floating rate
bridge loan 110,544 (117,158) (117,158) – –
S$ unsecured floating rate
loans 234,800 (251,106) (3,913) (247,193) –
S$ unsecured fixed rate loans 99,675 (106,067) (2,550) (103,517) –
RMB secured floating rate term
loan 106,449 (136,760) (11,830) (124,930) –
Trade and other payables
(Note 9) 57,719 (57,719) (57,719) – –
Security deposits 34,980 (34,980) (13,034) (20,121) (1,825)
805,037 (867,090) (369,504) (495,761) (1,825)
Notes to the Financial Statements
116 | CapitaRetail China Trust Annual Report 2014
10. INTEREST-BEARING BORROWINGS (continued)
Terms and debt repayment schedule (continued)
Carrying
amount
Contractual
cash flow
Within
1 year
Within 2 to
5 years
After
5 years
$’000 $’000 $’000 $’000 $’000
Trust
S$ unsecured floating rate
money market facility 40,000 (40,073) (40,073) – –
S$ unsecured floating/fixed
rate loan 99,908 (101,564) (101,564) – –
S$ unsecured floating rate
loans 234,800 (251,106) (3,913) (247,193) –
S$ unsecured fixed rate loans 99,675 (106,067) (2,550) (103,517) –
Trade and other payables
(Note 9) 9,060 (9,060) (9,060) – –
483,443 (507,870) (157,160) (350,710) –
It is not expected that the cash flows included in the maturity analysis could occur significantly
earlier, or at significantly different amounts.
11. FINANCIAL DERIVATIVES
Group and Trust
2014 2013
$’000 $’000
Financial derivative assets 1,547 2,044
Financial derivative liabilities (8,605) (5,208)
The following are the contractual maturities of financial derivative assets and liabilities, including
estimated interest payments:
Carrying
amount
Contractual
cash flow
Within
1 year
Within 2 to
5 years
$’000 $’000 $’000 $’000
Group and Trust
Financial derivative assets
2014
Interest rate swaps 1,481 1,793 (1,111) 2,904
Non-deliverable forward 66 66 – 66
1,547 1,859 (1,111) 2,970
Delivering Performance | 117
11. FINANCIAL DERIVATIVES (continued)
Carrying
amount
Contractual
cash flow
Within
1 year
Within 2 to
5 years
$’000 $’000 $’000 $’000
2013
Interest rate swaps 302 322 (570) 892
Non-deliverable forward 1,742 1,742 1,742 –
2,044 2,064 1,172 892
Financial derivative liabilities
2014
Interest rate swaps (19) (48) (48) –
Non-deliverable forward (8,586) (8,586) (5,669) (2,917)
(8,605) (8,634) (5,717) (2,917)
2013
Interest rate swaps (1,090) (1,261) (1,388) 127
Non-deliverable forward (4,118) (4,118) (1,286) (2,832)
(5,208) (5,379) (2,674) (2,705)
It is not expected that the cash flows included in the maturity analysis could occur significantly
earlier, or at significantly different amounts.
The table also indicates the periods in which the cash flows associated with derivatives that are
expected to occur and impact the statement of total return and Unitholders’ funds.
Notes to the Financial Statements
118 | CapitaRetail China Trust Annual Report 2014
12. DEFERRED TAX LIABILITIES
Movements in deferred tax liabilities during the financial year are as follows:
At
1 January
Statement
of total
return
(Note 21)
Acquired on
acquisition of
investment
property
Translation
difference
At
31 December
$’000 $’000 $’000 $’000 $’000
Group
2014
Investment properties 154,876 34,364 – 8,722 197,962
Tax on unrepatriated profits 4,744 2,217 – – 6,961
159,620 36,581 – 8,722 204,923
2013
Investment properties 114,258 28,116 4,123 8,379 154,876
Tax on unrepatriated profits – 4,744 – – 4,744
114,258 32,860 4,123 8,379 159,620
Deferred tax assets have not been recognised in respect of the following item because it is not
probable that future taxable profit will be available against which the Group can utilise the
benefits therefrom:
Group
2014 2013
$’000 $’000
Tax losses 48,500 51,106
The tax losses are subject to agreement by the tax authorities and compliance with tax
regulations in the country in which the subsidiaries operate. These tax losses can be carried
forward up to five consecutive years and will expire on the fifth year from which the tax losses
arise.
Delivering Performance | 119
13. UNITHOLDERS’ FUNDS
Group Trust
2014 2013 2014 2013
Note $’000 $’000 $’000 $’000
Net assets resulting from
operations 768,262 627,908 14,662 4,522
Hedging reserve (a) 1,459 (792) 1,459 (792)
Foreign currency translation
reserve (b) 66,043 9,981 – –
Unitholders’ transactions 498,559 538,683 498,559 538,683
General reserve (c) 15,415 11,171 – –
1,349,738 1,186,951 514,680 542,413
(a) The hedging reserve comprises the effective portion of the cumulative net change in the fair
value of cash flow hedging instruments relating to forecast hedged transactions.
(b) The foreign currency translation reserve comprises:
(i) foreign exchange differences arising from the translation of the financial statements of
foreign operations whose functional currencies are different from the functional
currency of the Trust;
(ii) the gains or losses on financial instruments used to hedge the Group’s net investment
in foreign operations that are determined to be effective hedges; and
(iii) the foreign exchange differences on monetary items which form part of the Group’s net
investment in foreign operations, provided certain conditions are met.
(c) General reserve
The subsidiaries incorporated in China are required to transfer 10% of their profits after
taxation, as determined under the accounting principles and relevant financial regulations
of China to the general reserve until the reserve balance reaches 50% of registered capital.
The transfer to this reserve must be made before distribution of dividends to its
shareholders.
General reserve can be used to make good previous years’ losses, if any, and may be
converted to registered capital in proportion to the existing interests of the shareholders,
provided that the balance after such conversion is not less than 25% of the registered
capital.
Notes to the Financial Statements
120 | CapitaRetail China Trust Annual Report 2014
14. NON-CONTROLLING INTEREST
The following summarises the financial information of the Group’s significant subsidiary with
material non-controlling interest. At the reporting date, the Group only had one subsidiary with
significant non-controlling interest of 49% (2013: 49%), CapitaMalls Wuhu Commercial Property
Co., Ltd..
Group
2014 2013
$’000 $’000
2014
Non-current assets 58,980 55,225
Current assets 5,790 6,727
Non-current liabilities (20,576) (25,311)
Current liabilities (23,882) (19,128)
Net assets 20,312 17,513
Net assets based on percentage shareholdings 9,952 8,581
Add non-controlling interest loans in respect of the Group’s
investment in a subsidiary in China: 18,126 18,333
Net assets attributable to non-controlling interest 28,078 26,914
Revenue 6,802 7,043
Total return after taxation 2,007 4,553
Attributable to non-controlling interest:
Total return after taxation 983 2,231
Add interest relating to non-controlling interest loans in
respect of the Group’s investment in a subsidiary in
China: 774 799
Total return allocated to non-controlling interest 1,757 3,030
Cash flows from operating activities 1,211 2,479
Cash flows used in investing activities (136) (199)
Cash flows used in financing activities (2,376) (2,163)
Net (decrease)/increase in cash and cash equivalents (1,301) 117
There are no dividends paid to non-controlling interest in 2014 and 2013.
Delivering Performance | 121
15. UNITS IN ISSUE
2014 2013
Number of
Units
Number of
Units
Balance as at beginning of year 803,026,588 748,909,649
New Units issued:
– as payment of Manager’s management fees 3,468,568 2,669,258
– as payment of acquisition fee of CapitaMall Grand
Canyon 2,735,125 –
– in connection with preferential offering exercise
completed on 20 November 2013 – 45,413,704
– as payment of distribution under distribution
reinvestment plan 18,887,423 6,033,977
Total issued Units as at end of year 828,117,704 803,026,588
New Units to be issued:
– as payment of Manager’s management fees 844,273 786,472
Total issued and issuable Units as at end of year 828,961,977 803,813,060
Units issued during the year ended 31 December 2014 are as follows:
(a) On 10 February 2014, the Trust issued 2,735,125 new Units at an issue price of $1.3023 per
Unit as payment of the related acquisition fees of CapitaMall Grand Canyon;
(b) On 27 March 2014, the Trust issued 11,408,589 new Units at an issue price of $1.276 per
Unit as payment of distribution under distribution reinvestment plan for the period from
1 July 2013 to 31 December 2013;
(c) On 31 March 2014, the Trust issued 786,472 new Units at an issue price of $1.311 per Unit
as payment of the performance component of the management fee for the period from
1 October 2013 to 31 December 2013;
(d) On 5 June 2014, the Trust issued 933,248 new Units at an issue price of $1.3861 per Unit
as payment of the performance component of the management fee for the period from
1 January 2014 to 31 March 2014;
(e) On 25 September 2014, the Trust issued 7,478,834 new Units at an issue price of $1.617
per Unit as payment of distribution under distribution reinvestment plan for the period from
1 January 2014 to 30 June 2014;
(f) On 29 September 2014, the Trust issued 930,416 new Units at an issue price of $1.4709 per
Unit as payment of the performance component of the management fee for the period from
1 April 2014 to 30 June 2014;
(g) On 25 November 2014, the Trust issued 818,432 new Units at an issue price of $1.5769 per
Unit as payment of the performance component of the management fee for the period from
1 July 2014 to 30 September 2014.
Notes to the Financial Statements
122 | CapitaRetail China Trust Annual Report 2014
15. UNITS IN ISSUE (continued)
Units issued during the year ended 31 December 2013 are as follows:
(a) On 28 March 2013, the Trust issued 594,927 new Units at an issue price of $1.6251 per Unit
as payment of the performance component of the management fee for the period from
1 October 2012 to 31 December 2012;
(b) On 6 June 2013, the Trust issued 601,471 new Units at an issue price of $1.7203 per Unit
as payment of the performance component of the management fee for the period from
1 January 2013 to 31 March 2013;
(c) On 25 September 2013, the Trust issued 6,033,977 new Units at an issue price of $1.447
per Unit as payment of distribution under distribution reinvestment plan for the period from
1 January 2013 to 30 June 2013;
(d) On 30 September 2013, the Trust issued 755,049 new Units at an issue price of $1.3993 per
Unit as payment of the performance component of the management fee for the period from
1 April 2013 to 30 June 2013;
(e) On 20 November 2013, the Trust issued 45,413,704 new Units at an issue price of $1.30 per
Unit in connection with the preferential offering exercise to finance the acquisition of
CapitaMall Grand Canyon; and
(f) On 29 November 2013, the Trust issued 717,811 new Units at an issue price of $1.392 per
Unit as payment of the performance component of the management fee for the period from
1 July 2013 to 30 September 2013.
The issue prices were determined based on the volume weighted average traded price for all
trades done on the SGX-ST in the ordinary course of trading for the last 10 business days of the
relevant periods in which the management fees accrue.
Each Unit in the Trust represents an undivided interest in the Trust. The rights and interests of
Unitholders are contained in the Trust Deed and include the right to:
• one vote per Unit;
• receive income and other distributions attributable to the Units held;
• participate in the termination of the Trust by receiving a share of all net cash proceeds
derived from the realisation of the assets of the Trust less any liabilities, in accordance with
their proportionate interests in the Trust. However, a Unitholder has no equitable or
proprietary interest in the underlying assets of the Trust and is not entitled to the transfer
to it of any assets (or part thereof) or any estate or interest in any asset (or part thereof) of
the Trust; and
• attend all Unitholders’ meetings. The Trustee or the Manager may (and the Manager shall
at the request in writing of not less than 50 Unitholders or one-tenth in number of
Unitholders, whichever is lesser) at any time convene a meeting of Unitholders in
accordance with the provisions of the Trust Deed.
Delivering Performance | 123
15. UNITS IN ISSUE (continued)
The restrictions of a Unitholder include the following:
• a Unitholder’s right is limited to the right to require due administration of the Trust in
accordance with the provisions of the Trust Deed; and
• a Unitholder has no right to request the Manager to redeem his Units while the Units are
listed on the SGX-ST.
A Unitholder’s liability is limited to the amount paid or payable for any unit in the Trust. The
provisions of the Trust Deed provide that no Unitholder will be personally liable to indemnify the
Trustee or any creditor of the Trustee in the event that the liabilities of the Trust exceed its assets.
16. TOTAL UNITHOLDERS’ DISTRIBUTION
Unitholders’ distribution for the year is accounted for as distribution from operations and
distribution from Unitholders’ contributions:
(a) Distribution from operations
This refers to distribution made by the Trust that is represented by income received or
receivable during the financial year, as the case may be, net of expenses. Such income
comprises mainly the following:
• dividend from subsidiaries in Barbados and Singapore paid out of dividend declared
by the subsidiaries in China;
• dividend from subsidiaries in Barbados and Singapore paid out of net interest income
earned by subsidiaries in Barbados and Singapore on shareholders’ loans extended
to subsidiaries in China; and
• interest income earned by the Trust on shareholders’ loans extended to subsidiaries in
Barbados and Singapore.
The above income originates from profits and income derived by the subsidiaries in China
in respect of the current financial year.
(b) Distribution from Unitholders’ contributions
This refers to the amount of distribution made by the Trust for the financial year where the
underlying cash is not, or may not be, received or receivable as income by the Trust during
that period. Such distribution comprises mainly the following:
• profits from operations arising from the investment properties which are declared as
dividend income after the financial year, as the case may be, and accordingly also
received as dividends by the Trust after that year;
• profits from operations arising from the investment properties which cannot be
declared as dividends;
• adjustment for depreciation expenses of the investment properties; and
Notes to the Financial Statements
124 | CapitaRetail China Trust Annual Report 2014
16. TOTAL UNITHOLDERS’ DISTRIBUTION (continued)
(b) Distribution from Unitholders’ contributions (continued)
• adjustments for trust expenses that are paid in Units, foreign currency differences
attributable to net investment hedges undertaken by the Trust and certain unrealised
expenses.
Income available for distribution to Unitholders at end of the year
Distributions are made on a semi-annual basis, with the amount calculated as at 30 June and
31 December each year for the six-month period ending on each of the said dates. In
accordance with the provisions of the Trust Deed, the Manager is required to pay distributions
within 90 days of the end of each distribution period. Distributions, when paid, will be in
Singapore dollars.
Distributions for the period from 1 January 2014 to 30 June 2014 had been paid on 25
September 2014. Distributions for the period from 1 July 2014 to 31 December 2014 will be paid
within 90 days of the end of the distribution period, in accordance with the provisions of the Trust
Deed.
17. OTHER PROPERTY OPERATING EXPENSES
Group
2014 2013
Note $’000 $’000
Utilities 7,223 5,304
Advertising and promotion 3,989 3,447
Maintenance 7,925 6,088
Staff costs 9,060 7,311
Depreciation of plant and equipment 5 2,697 2,032
Impairment losses/(write-back) on trade
receivables, net 7 28 (58)
Amortisation of deferred expenditure included in
other receivables 57 56
Plant and equipment written off 81 176
Others 1,924 1,468
32,984 25,824
Included in staff costs is contribution to defined contribution plans of $1.7 million (2013: $1.4
million).
Delivering Performance | 125
18. MANAGER’S MANAGEMENT FEES
Manager’s management fees comprise base fee of $5.5 million (2013: $4.3 million) and
performance fee of $5.3 million (2013: $4.1 million). The Manager has elected to receive all the
performance fee in the form of Units. $4.0 million (2013: $3.1 million) of the $5.3 million (2013:
$4.1 million) of performance component of the Manager’s management fee was paid during the
year through the issue of 2,682,096 Units (2013: 2,074,331 Units). The remaining $1.3 million
(2013: $1.0 million) will be paid through the issue of 844,273 new Units (2013: 786,472 new
Units) subsequent to the year end.
19. OTHER TRUST OPERATING EXPENSES/(INCOME)
Group Trust
2014 2013 2014 2013
$’000 $’000 $’000 $’000
Professional fees 191 321 28 136
Acquisition related expenses 888 – – –
Non-deal roadshow expenses 10 – 10 –
Others 1,062 105 499 (401)
2,151 426 537 (265)
20. FINANCE INCOME AND FINANCE COSTS
Group Trust
2014 2013 2014 2013
$’000 $’000 $’000 $’000
Interest income:
– financial institutions 874 1,133 29 119
– subsidiaries – – 24,376 24,091
Finance income 874 1,133 24,405 24,210
Interest expenses (21,212) (10,987) (11,980) (9,442)
Other finance costs (714) (342) (490) (342)
Finance costs (21,926) (11,329) (12,470) (9,784)
Net finance (costs)/income
recognised in statement of total
return (21,052) (10,196) 11,935 14,426
Notes to the Financial Statements
126 | CapitaRetail China Trust Annual Report 2014
21. TAXATION
Group Trust
2014 2013 2014 2013
Note $’000 $’000 $’000 $’000
Current taxation
Current year 19,487 16,607 – 15
Under/(over) provision in
prior years 1,041 (962) 8 5
20,528 15,645 8 20
Deferred taxation
Origination of temporary
differences 12 36,581 32,860 – –
Income tax expense 57,109 48,505 8 20
Reconciliation of effective tax rate
Group Trust
2014 2013 2014 2013
$’000 $’000 $’000 $’000
Total return for the year before
taxation 203,464 184,453 10,148 14,057
Tax calculated using Singapore tax
rate of 17% 34,589 31,357 1,725 2,390
Adjustments:
Effect of different tax rates in foreign
jurisdictions 10,157 8,310 – –
Income not subject to tax (27) (401) (6,959) (9,917)
Expenses not deductible for tax
purposes – – 1,186 4,273
Deferred tax assets not recognised 562 – – –
Utilisation of previously unrecognised
tax losses – (3,196) – –
Tax losses not allowed to be carried
forward 4,049 3,270 4,048 3,269
Foreign tax suffered 6,738 10,127 – –
Under/(over) provision in prior years 1,041 (962) 8 5
57,109 48,505 8 20
Delivering Performance | 127
22. EARNINGS PER UNIT
The calculation of basic earnings per unit is based on weighted average number of Units during
the year and total return for the year after taxation and non-controlling interest before
distribution.
Group
2014 2013
$’000 $’000
Total return for the year after taxation and non-controlling interest
before distribution 144,598 132,918
Trust
Number
of Units
Number
of Units
2014 2013
’000 ’000
Issued Units at beginning of year 803,027 748,910
Effect of creation of new Units:
– Manager’s management fees paid/payable in Units 13,876 6,362
– As payment of acquisition fee of CapitaMall Grand Canyon 337 –
– Units issued in connection with preferential offering exercise
completed on 20 November 2013 – 3,332
– As payment of distribution under distribution reinvestment plan 372 79
Weighted average number of issued and issuable Units
at end of year 817,612 758,683
Diluted earnings per unit is the same as the basic earnings per unit as there are no dilutive
instruments in issue during the year.
Group
2014 2013
$’000 $’000
Amount available for distribution to Unitholders at end of the year 80,882 70,060
23. RELATED PARTY TRANSACTIONS
For the purposes of these financial statements, parties are considered to be related to the Group
if the Group has the ability, directly or indirectly, to control the party or exercise significant
influence over the party in making financial and operating decisions, or vice versa, or where the
Group and the party are subject to common significant influence. Related parties may be
individuals or other entities. The Manager, being CapitaRetail China Trust Management Limited
is an indirect wholly-owned subsidiary of a substantial Unitholder of the Trust. The Property and
Project Managers, being CapitaLand Retail (Shanghai) Management & Consulting Co., Ltd. and
CapitaLand Retail (Beijing) Facilities & Projects Consulting Co., Ltd. are indirect wholly-owned
subsidiaries of a substantial Unitholder of the Trust.
Notes to the Financial Statements
128 | CapitaRetail China Trust Annual Report 2014
23. RELATED PARTY TRANSACTIONS (continued)
In the normal course of the operations of the Trust, the Manager’s management fees and the
Trustee’s fees have been paid or are payable to the Manager and Trustee respectively. The
property management fees, reimbursables and project management fees have been paid or are
payable to the Property and Project Managers respectively.
24. FINANCIAL RATIOS
Group
2014 2013
% %
Ratio of expenses to average net asset value1
– including performance component of Manager’s management
fees 1.03 0.89
– excluding performance component of Manager’s management
fees 0.61 0.52
Portfolio turnover rate2 – –
Notes:
1 The annualised ratio is computed in accordance with the guidelines of the Investment Management Association of
Singapore. The expenses used in the computation relate to expenses at the Group level, excluding property related
expenses and borrowing costs.
2 The annualised ratio is computed based on the lesser of purchases or sales of underlying investment properties of the
Group expressed as a percentage of weighted average net asset value.
25. OPERATING SEGMENTS
The Group has ten reportable segments, as described below, which are the Group’s investment
properties. The investment properties are managed separately because they require different
operating and marketing strategies. For each of the investment properties, the CODMs review
internal management reports on a monthly basis.
All of the Group’s reportable segments are investment properties located in China used primarily
for retail purposes. The reporting segments are as follows:
• CapitaMall Xizhimen
• CapitaMall Wangjing
• CapitaMall Grand Canyon
• CapitaMall Anzhen
• CapitaMall Erqi
• CapitaMall Minzhongleyuan
• CapitaMall Shuangjing
• CapitaMall Qibao
• CapitaMall Saihan
• CapitaMall Wuhu
Segment revenue comprises mainly income generated from its tenants. Segment net property
income represents the income earned by each segment after allocating property operating
expenses. This is the measure reported to the CODMs for the purpose of assessment of
segment performance. In addition, the CODMs monitor the non-financial assets as well as
financial assets attributable to each segment when assessing segment performance.
Delivering Performance | 129
25. OPERATING SEGMENTS (continued)
Segment results, assets and liabilities include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise mainly the
Trust’s financial assets and liabilities and its expenses. Segment capital expenditure is the total
cost incurred during the year to acquire segment assets that are expected to be used for more
than one year.
Information regarding the Group’s reportable segments is presented in the tables in the
following pages.
For the purpose of monitoring segment performance, the Group’s CODMs monitor the
non-financial assets as well as financial assets attributable to each segment.
Notes to the Financial Statements
130 | CapitaRetail China Trust Annual Report 2014
25
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Delivering Performance | 131
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132 | CapitaRetail China Trust Annual Report 2014
25. OPERATING SEGMENTS (continued)
Reconciliations of reportable segment revenues, total return, assets and liabilities and
other material items
2014 2013
$’000 $’000
Revenue
Total revenue for reporting segments 203,262 160,075
Total return
Total return for reportable segments before taxation 227,257 201,361
Unallocated amounts:
– Other corporate expenses (23,793) (16,908)
Total return before taxation 203,464 184,453
Assets
Total assets for reportable segments 2,355,843 2,181,125
Other unallocated amounts 2,219 3,166
Consolidated assets 2,358,062 2,184,291
Liabilities
Total liabilities for reportable segments 399,339 481,308
Other unallocated amounts 580,907 489,118
Consolidated liabilities 980,246 970,426
Reportable
segment
totals
Unallocated
amounts
Consolidated
totals
$’000 $’000 $’000
Other material items 2014
Finance income 845 29 874
Finance costs (10,426) (11,500) (21,926)
Other material items 2013
Finance income 1,010 123 1,133
Finance costs (1,545) (9,784) (11,329)
Geographical segments
All of the Group’s investment properties are used for retail purposes and are primarily located
in China.
Major tenant
Revenue from one tenant of the Group represents approximately $36.6 million (2013: $35.5
million) of the Group’s total revenue.
Delivering Performance | 133
26. COMMITMENTS
(a) Capital commitments
Group
2014 2013
$’000 $’000
Payable:
– contracted but not provided for 3,636 4,023
(b) The Group leases out its investment properties. Operating lease rentals are receivable as
follows:
Group
2014 2013
$’000 $’000
Receivable:
– within 1 year 175,125 158,326
– after 1 year but within 5 years 414,530 364,307
– after 5 years 372,730 412,612
962,385 935,245
(c) The Group has non-cancellable leases with rentals payable as follows:
Group
2014 2013
$’000 $’000
Payable:
– within 1 year 4,782 5,819
– after 1 year but within 5 years 25,386 23,992
– after 5 years 27,795 32,854
57,963 62,665
Notes to the Financial Statements
134 | CapitaRetail China Trust Annual Report 2014
27. CAPITAL AND FINANCIAL RISK MANAGEMENT
Capital management
The Group’s objectives when managing capital are to optimise Unitholders’ value through the
mix of available capital sources which include debt and equity instruments whilst complying with
statutory and constitutional capital and distribution requirements, maintaining aggregate
leverage and interest service coverage ratios within approved limits. As a key part of the Group’s
overall strategy, the Board of the Manager reviews the Group and the Trust’s debt and capital
management cum financing policy regularly so as to optimise the Group and the Trust’s funding
structure. The Board also monitors the Group and the Trust’s exposure to various risk elements
by closely adhering to clearly established management policies and procedures.
The Group is subject to the aggregate leverage limit as defined in Appendix 6 of the CIS Code
(“Property Fund Appendix”). The Property Fund Appendix stipulates that the total borrowings
and deferred payments (together, the “Aggregate Leverage”) of a property fund should not
exceed 35.0% of its Deposited Property except that the Aggregate Leverage of a property fund
may exceed 35.0% of its Deposited Property (up to a maximum of 60.0%) if a credit rating of the
property fund from Fitch Inc., Moody’s or Standard and Poor’s is obtained and disclosed to the
public. The Group’s aggregate leverage limit did not exceed 35.0% during the year, and was
28.7% (2013: 32.6%) as at 31 December 2014. In computing the aggregate leverage, the Trust
has considered the effect of hedging the net assets denominated in RMB.
There were no changes in the Group’s approach to capital management during the financial
year.
Financial risk management
Overview
The Group’s returns are primarily from net operating income and capital appreciation of its
assets. However, these returns are exposed to financial risks including credit, liquidity, interest
rate and foreign currency risks.
Financial risk management is integral to the whole business of the Group. The Group adopts an
integrated approach to manage the financial risks arising in the normal course of the Group’s
business. The Group has written risk management policies and guidelines, and established
processes to monitor and manage significant exposures. Risk management policies and
processes are reviewed regularly to reflect changes in market conditions and the Group’s
activities.
The Group adheres to standardised accounting and financial policies and exercises effective
controls over the financial affairs of its subsidiaries. This is achieved by ensuring group-wide
adherence to a comprehensive set of guidelines covering contracts, policies and procedures
and other requirements. Adequate measures are in place to ensure that the reliability and
integrity of financial information compiled from subsidiaries are kept intact.
Credit risk
While it is necessary to assume a certain level of tenant credit risks to remain competitive in
China, the Group has established credit limits for tenants and monitors their balances on an
ongoing basis. Risks associated with credit limits are reflected in the level of security deposits
and bank guarantees placed as collateral in respect of the leases. Appropriate risk mitigating
actions are in place to manage trade receivables.
Delivering Performance | 135
27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Financial risk management (continued)
Credit risk (continued)
The Group establishes an allowance for impairment that represents its estimate of incurred
losses in respect of trade and other receivables. The main components of this allowance are a
specific loss component that relates to individually significant exposures, and a collective loss
component established for groups of similar assets in respect of losses that have been incurred
but not yet identified. The collective loss allowance is determined based on historical data of
payment statistics for similar financial assets.
The allowance account in respect of trade and other receivables is used to record impairment
losses unless the Group is satisfied that no recovery of the amount owing is possible. At that
point, the financial asset is considered irrecoverable and the amount charged to the allowance
account is written off against the carrying amount of the impaired financial asset.
Cash and fixed deposits are placed with banks and financial institutions which are regulated.
Liquidity risk
The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed
adequate by management to finance the Group’s operations and to mitigate the effects of
fluctuations in cash flows. Typically the Group ensures that it has sufficient cash on demand to
meet expected operational expenses for a reasonable period, including the servicing of
financial obligations.
In addition, the Group maintains the following debt facilities and programme as at 31 December
2014.
RMB denominated facility:
• the RMB495.0 million five-year secured term loan facility
S$ denominated facilities:
• the S$151.0 million money market line facilities
• the S$88.0 million three-year trust term loan facility
• the S$50.0 million three-year trust term loan facility
• the S$50.0 million four-year trust term loan facility
• the S$50.5 million four-year trust term loan facility
• the S$75.0 million four-year trust term loan facility
• the S$50.0 million five-year trust term loan facility
• the S$75.0 million five-year trust term loan facility
• the S$100.0 million five-year trust term loan facility
Notes to the Financial Statements
136 | CapitaRetail China Trust Annual Report 2014
27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Financial risk management (continued)
Liquidity risk (continued)
US$ denominated facility:
• the US$50.0 million money market line facility
Multicurrency Medium Term Notes:
• the $500.0 million multicurrency Medium Term Note (“MTN”) Programme
As at 31 December 2014, the Group has drawn down $538.5 million of its trust term loan facilities
and $29.5 million of the money market facility. The Group has also drawn down RMB495.0 million
of the five-year secured term loan facility.
The Group also monitors and observes the Property Fund Appendix issued by MAS concerning
limits on total borrowings.
Interest rate risk
The Manager adopts a proactive interest rate management policy to manage the risk associated
with changes in interest rates on the Group’s loan facilities while also seeking to ensure that the
ongoing cost of debt remains competitive.
As at 31 December 2014, the Group has interest rate swaps (“IRS”) with notional contract
amount of $388.5 million (2013: $315.5 million). The Group pays a fixed rate interest and
receives a variable rate equal to the Swap Offer Rate (“SOR”) on the notional contract amount.
The Group classifies the IRS as cash flow hedges to hedge the exposure to changes in the
variability of interest rate fluctuations on certain of its term loans.
The term loans and the underlying IRS have the same terms and conditions.
The Manager proactively seeks to minimise the level of interest rate risk by locking the majority
of the Group’s borrowings at fixed rates. As at 31 December 2014, the Group has locked in
approximately 72.6% (2013: 61.0%) of its borrowings at fixed rates.
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial liabilities at fair value through profit or
loss and the Group does not designate interest rate derivatives as hedging instruments under
a fair value hedge accounting model. Therefore a change in interest rates at the reporting date
would not affect the statement of total return.
Cash flow sensitivity analysis for variable rate instruments
The net change in fair value of the interest component of IRS as at 31 December 2014 of $2.3
million (2013: $0.2 million), representing the effective portion of the cash flow hedge, has been
recognised directly in hedging reserves.
Delivering Performance | 137
27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Financial risk management (continued)
Interest rate risk (continued)
Cash flow sensitivity analysis for variable rate instruments (continued)
Effects of a 100 basis point (“bp”)* movement in interest rate at the reporting date would
increase/(decrease) statement of total return and Unitholders’ funds by the amounts shown
below. This analysis assumes that all other variables, in particular foreign currency rates, remain
constant. The analysis is performed on the same basis for 2013.
* 100 basis point is equivalent to 1 percentage point
Statement of
total return Unitholders’ funds
100 bp
increase
100 bp
decrease
100 bp
increase
100 bp
decrease
$’million $’million $’million $’million
Group and Trust
2014
Interest rate swaps – – (3.1) 3.1
Variable rate instruments (1.8) 1.8 – –
Cash flow sensitivity (net) (1.8) 1.8 (3.1) 3.1
2013
Interest rate swaps – – (1.9) 1.9
Variable rate instruments (0.5) 0.5 – –
Cash flow sensitivity (net) (0.5) 0.5 (1.9) 1.9
Foreign currency risk
The Group is exposed to foreign currency risk on cash holdings and operating expenses that are
denominated in a currency other than the respective functional currencies of the Group entities.
The currencies giving rise to this risk are primarily the United States dollar (“US dollar”) and
Chinese Renminbi (“RMB”).
As the Trust intends to be a long term investor in China, the Manager has taken a view not to
hedge the RMB equity exposure arising from its investments in China unless certain risks are
specifically identified. The Manager’s strategy is to achieve a natural hedge through local RMB
financing and any non-RMB denominated loan will be hedged into RMB where possible, to
protect the going concern of the Trust in the event of large currency fluctuation. However, the
Manager will hedge the RMB cash flow from operations if it is determined with certainty that they
are to be remitted back to Singapore for distribution purposes.
Notes to the Financial Statements
138 | CapitaRetail China Trust Annual Report 2014
27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Financial risk management (continued)
Foreign currency risk (continued)
The Group’s and Trust’s exposures to foreign currency are as follows:
US Dollars RMB Total
S$’000 S$’000 S$’000
Group
2014
Cash and cash equivalents 193 94 287
2013
Cash and cash equivalents 167 86 253
US Dollars RMB Total
S$’000 S$’000 S$’000
Trust
2014
Loans to subsidiaries 326,428 – 326,428
Non-trade amounts due from subsidiaries 165,060 – 165,060
Cash and cash equivalents 31 79 110
491,519 79 491,598
2013
Loans to subsidiaries 315,480 – 315,480
Non-trade amounts due from subsidiaries 159,677 – 159,677
Cash and cash equivalents 11 71 82
475,168 71 475,239
Sensitivity analysis
A 10% strengthening of Singapore dollar against the US dollar and RMB at the reporting date
would increase/(decrease) total return after tax by the amounts shown below. This analysis
assumes that all other variables, in particular interest rates, remain constant. The analysis is
performed on the same basis for 2013.
Statements of total return
Group Trust
$’000 $’000
2014
US dollars (19) (49,152)
RMB (9) (8)
Delivering Performance | 139
27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Financial risk management (continued)
Foreign currency risk (continued)
Sensitivity analysis (continued)
Statements of total return
Group Trust
$’000 $’000
2013
US dollars (17) (47,517)
RMB (9) (7)
A 10% weakening of Singapore dollar against the US dollar and RMB would have had the equal
but opposite effect on the US dollar and RMB to the amounts shown above, on the basis that all
other variables remain constant.
Hedge of net investment in foreign operation
The non-deliverable forwards (“NDF”) of $258.0 million (2013: $288.0 million) are designated as
hedges of the Group’s net investment in certain subsidiaries in China.
The net change in fair value of the net investment hedge comprised the effective portion of $7.0
million (2013: $21.6 million) which was recognised in the foreign currency translation reserve.
Sensitivity analysis
For NDF (accounted for as net investment hedges), a change of 10% in foreign exchange rate
at the reporting date would increase/(decrease) Unitholders’ funds as at 31 December 2014 by
the amounts shown below. This analysis assumes that all other variables, in particular interest
rates, remain constant. The analysis is performed on the same basis for 2013.
Unitholders’ funds
10% increase 10% decrease
$’million $’million
Group
2014
Non-deliverable forwards 20.1 (24.6)
2013
Non-deliverable forwards 21.9 (26.8)
Notes to the Financial Statements
140 | CapitaRetail China Trust Annual Report 2014
27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Accounting classifications and fair values
Fair values versus carrying amounts
Note
Loans and
receivables
Fair value –
hedging
instruments
Other financial
liabilities
within scope
of FRS 39
Total
carrying
amount Fair value
$’000 $’000 $’000 $’000 $’000
Group
2014
Trade and other receivables 7 5,860 – – 5,860 5,860
Cash and cash equivalents 8 86,626 – – 86,626 86,626
Financial derivative assets 11 – 1,547 – 1,547 1,547
92,486 1,547 – 94,033 94,033
Trade and other payables 9 – – 51,140 51,140 51,140
Security deposits – – 41,158 41,158 39,782
Interest-bearing borrowings 10 – – 671,713 671,713 672,943
Financial derivative liabilities 11 – 8,605 – 8,605 8,605
– 8,605 764,011 772,616 772,470
2013
Trade and other receivables 7 6,246 – – 6,246 6,246
Cash and cash equivalents 8 105,457 – – 105,457 105,457
Financial derivative assets 11 – 2,044 – 2,044 2,044
111,703 2,044 – 113,747 113,747
Trade and other payables 9 – – 57,719 57,719 57,719
Security deposits – – 34,980 34,980 33,803
Interest-bearing borrowings 10 – – 712,338 712,338 715,504
Financial derivative liabilities 11 – 5,208 – 5,208 5,208
– 5,208 805,037 810,245 812,234
Delivering Performance | 141
27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Accounting classifications and fair values (continued)
Fair values versus carrying amounts (continued)
Note
Loans and
receivables
Fair value –
hedging
instruments
Other financial
liabilities
within scope
of FRS 39
Total
carrying
amount Fair value
$’000 $’000 $’000 $’000 $’000
Trust
2014
Non-trade amounts due from
subsidiaries 6 18,693 – – 18,693 18,693
Trade and other receivables 7 201 – – 201 201
Cash and cash equivalents 8 238 – – 238 238
Financial derivative assets 11 – 1,547 – 1,547 1,547
19,132 1,547 – 20,679 20,679
Trade and other payables 9 – – 5,386 5,386 5,386
Interest-bearing borrowings 10 – – 566,823 566,823 568,053
Financial derivative liabilities 11 – 8,605 – 8,605 8,605
– 8,605 572,209 580,814 582,044
2013
Non-trade amounts due from
subsidiaries 6 17,954 – – 17,954 17,954
Trade and other receivables 7 219 – – 219 219
Cash and cash equivalents 8 249 – – 249 249
Financial derivative assets 11 – 2,044 – 2,044 2,044
18,422 2,044 – 20,466 20,466
Trade and other payables 9 – – 9,060 9,060 9,060
Interest-bearing borrowings 10 – – 474,383 474,383 477,549
Financial derivative liabilities 11 – 5,208 – 5,208 5,208
– 5,208 483,443 488,651 491,817
Notes to the Financial Statements
142 | CapitaRetail China Trust Annual Report 2014
27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Accounting classifications and fair values (continued)
Estimation of fair value
The following summarises the significant methods and assumptions used in estimating the fair
values of financial instruments of the Group and Trust.
Investment Properties
Refer to Note 4 on the valuation methods used to arrive at the fair value of investment properties.
Financial derivatives
The fair value of non-deliverable forwards is based on banks’ quotes. These quotes are tested
for reasonableness by discounting the difference between the contractual forward price and the
current forward price for the residual maturity of the contract using a risk-free interest rate
(based on government bonds).
The fair value of interest rate swaps is based on banks’ quotes. These quotes are tested for
reasonableness by discounting estimated future cash flows based on the terms and maturity of
each contract and using market interest rates for a similar instrument at the measurement date.
Interest-bearing borrowings
Fair value, which is determined for disclosure purposes, is calculated based on the present
value of future principal and interest cash flows, discounted at the market rate of interest at the
reporting date.
Other financial assets and liabilities
The carrying amounts of financial assets and liabilities with a maturity of less than one year
(including trade and other receivables, cash and cash equivalents, trade and other payables
and current security deposits) are assumed to approximate their fair values because of the short
period to maturity. All other financial assets and liabilities (non-current security deposits) are
discounted to determine their fair values.
Interest rates used in determining fair values
The interest rates used to discount estimated cash flows, where applicable, are based on the
forward yield curve as at 31 December 2014 plus an adequate constant credit spread, and are
as follows:
2014 2013
% p.a. % p.a.
Interest-bearing borrowings 1.31-6.40 1.04-6.77
Security deposits 1.84 1.85
Delivering Performance | 143
27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Fair value hierarchy
The table below analyses financial and non-financial instruments carried at fair value, by
valuation method. The different levels have been defined as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
• Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
Level 1 Level 2 Level 3 Total
$’000 $’000 $’000 $’000
Group and Trust
2014
Financial instruments
Non-deliverable forwards – (8,520) – (8,520)
Interest rate swaps – 1,462 – 1,462
– (7,058) – (7,058)
Non-financial instruments
Investment properties – – 2,250,783 2,250,783
– (7,058) 2,250,783 2,243,725
2013
Financial instruments
Non-deliverable forwards – (2,376) – (2,376)
Interest rate swaps – (788) – (788)
– (3,164) – (3,164)
Non-financial instruments
Investment properties – – 2,058,094 2,058,094
– (3,164) 2,058,094 2,054,930
Financial assets and financial liabilities not carried at fair value but for which fair values
are disclosed
Non-current security deposits and fixed rates interest-bearing borrowings which are level 2
financial instruments has fair value of $24.5 million and $100.0 million (2013: $20.8 million and
$102.0 million) respectively.
Notes to the Financial Statements
144 | CapitaRetail China Trust Annual Report 2014
27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Fair value hierarchy (continued)
Level 3 fair values
The reconciliation from the beginning balances to the ending balances for Level 3 fair valuemeasurements of investment properties is disclosed in Note 4.
The following table shows the key unobservable inputs used in the valuation models:
Valuation methods Key unobservable inputs
Inter-relationship between
key unobservable inputs and
fair value measurement
Capitalisation approach • Capitalisation rate (5.75%)
(2013: from 5.00% to
6.75%)
The fair value increases as
capitalisation rates decreases.
Discounted cash flows
approach
• Discount rates
(from 7.00% to 11.00%)
(2013: from 8.75% to
11.00%)
The fair value increases as
discount rates and terminal
rates decreases.
• Terminal rates
(from 4.00% to 6.50%)
(2013: from 5.50% to
6.75%)
Term and reversion
approach
• Term and reversion rates
(from 4.25% to 10.50%)
(2013: from 5.50% to
7.00%)
The fair value increases as
term and reversion rates
decreases.
Key unobservable inputs
Key unobservable inputs correspond to:
• Investment property yields derived from specialised publications from the related marketsand comparable transactions.
• Discount rate, based on the risk-free rate for 10-year bonds issued by the government inthe relevant market.
Offsetting financial assets and financial liabilities
The disclosures set out in the tables below include financial assets and financial liabilities that:
• are offset in the Trust’s statements of financial position; or
• are subject to an enforceable master netting arrangement, irrespective of whether they areoffset in the statement of financial position
Financial instruments such as loans and receivables and financial liabilities are not disclosed inthe tables below unless they are offset in the statements of financial position.
The Trust’s derivative transactions that are not transacted on an exchange are entered into under
International Swaps and Derivatives Association (“ISDA”) Master Agreements. In certain
circumstances, for example when a termination event such as a default occurs, all outstanding
transactions under the agreement are terminated, the termination value is assessed and only a
single net amount is due or payable in settlement of all transactions.
Delivering Performance | 145
27. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Fair value hierarchy (continued)
Offsetting financial assets and financial liabilities (continued)
Under the agreements signed, the Trust and its counterparties neither have a legal obligation
nor intend to settle on a net basis or to realise the assets and settle the liabilities simultaneously.
In addition, the right of set-off of recognised amounts is enforceable only following the
occurrence of a termination event as set out in the agreements. Accordingly, the ISDA
agreements do not meet the criteria for offsetting and the derivatives financial instruments
presented below are not offset in the Statement of Financial Position.
Financial assets and liabilities subject to offsetting and enforceable master netting
arrangement under termination events
Gross
amounts of
recognised
financial
instruments
Gross amount
of recognised
financial
instruments
offset in the
statement of
financial
position
Net amounts
of financial
instruments
presented in
the statement
of financial
position
Related
amounts not
offset in the
statement of
financial
position Net amounts
$’000 $’000 $’000 $’000 $’000
31 December 2014
Financial assets
Interest rate swaps 1,481 – 1,481 (13) 1,468
Non-deliverable forward 66 – 66 (66) –
1,547 – 1,547 (79) 1,468
Financial liabilities
Interest rate swaps 19 – 19 (13) 6
Non-deliverable forward 8,586 – 8,586 (66) 8,520
8,605 – 8,605 (79) 8,526
31 December 2013
Financial assets
Interest rate swaps 302 – 302 (139) 163
Non-deliverable forward 1,742 – 1,742 (1,240) 502
2,044 – 2,044 (1,379) 665
Financial liabilities
Interest rate swaps 1,090 – 1,090 (139) 951
Non-deliverable forward 4,118 – 4,118 (1,240) 2,878
5,208 – 5,208 (1,379) 3,829
28. SUBSEQUENT EVENTS
On 29 January 2015, the Manager declared a distribution of 4.83 cents per Unit to Unitholders
in respect of the period from 1 July 2014 to 31 December 2014.
Notes to the Financial Statements
146 | CapitaRetail China Trust Annual Report 2014
The transactions entered into with interested persons during the financial year, which fall under the
Listing Manual and the Property Funds Appendix of the CIS Code (excluding transactions of less than
$100,000 each), are as follows:
Name of Interested Persons
Aggregate value of all
interested person
transactions during the
financial year under review
(excluding transactions of
less than S$100,000 and
transactions conducted
under shareholder’s
mandate pursuant to
Rule 920)
S$’000
Aggregate value of all
interested person
transactions during the
financial year under review
under shareholder’s
mandate pursuant to
Rule 920 (excluding
transactions less than
S$100,000)
S$’000
CapitaLand Limited and its subsidiaries or associates
– Management fees1 10,822 –
– Property management fees
(including reimbursables) 10,302 –
HSBC Institutional Trust Services (Singapore) Limited
Trustee’s fees 362 –
1 For the purposes of Rule 907 of the Listing Manual of the SGX-ST, in arriving at this figure, the market price of the units (being
the closing price of the units traded on the SGX-ST on the relevant date of issue of the units) issued to the Manager for its
management fees, was used to determine the amount of the aggregate asset management fees paid to the Manager for the
period from 1 January 2014 to 31 December 2014.
Saved as disclosed above, there were no additional Interested Person Transactions (excluding
transactions of less than S$100,000 each) entered into during the financial period under review.
The fees and charges payable by CRCT to the Manager under the Trust Deed, and to the Property
Managers under the Property Management Agreements (collectively, the “Exempted Agreements”),
each of which constitutes a Interested Person Transaction, are deemed to have been specifically
approved by the Unitholder upon purchase of the Units and are therefore not subject to Rules 905
and 906 of the Listing Manual to the extent that there is no subsequent change to the rates and/or
bases of the fees charged thereunder which will affect CRCT. However, the renewal of such
agreements will be subject to Rules 905 and 906 of the Listing Manual.
Please also see Related Party Transactions on note 23 in the financial statements.
SUBSCRIPTION OF CRCT UNITS
An aggregate of 3,468,568 Units were issued in relation to the performance component of the
Manager’s management fee paid during the year. As at 31 December 2014, 828,961,977 Units were
in issue and outstanding. In the first quarter of 2015, 844,273 Units will be issued to the Manager as
part payment of the performance component of its management fee for the fourth quarter of 2014.
Interested Person Transactions
Delivering Performance | 147
ISSUED AND FULLY PAID UNITS
828,117,704 Units (voting rights: 1 vote per Unit)
Market Capitalisation: S$1,378,815,977.16 (based on closing Unit price of S$1.665 on 23 February
2015)
DISTRIBUTION OF UNITHOLDINGS
Size of Holdings
No. of
Unitholders % No. of Units %
1 – 99 32 0.41 1,458 0.00
100 – 1,000 1,717 22.09 1,673,084 0.20
1,001 – 10,000 4,249 54.66 18,220,651 2.20
10,001 – 1,000,000 1,755 22.57 72,882,069 8.80
1,000,001 and above 21 0.27 735,340,442 88.80
7,774 100.00 828,117,704 100.00
LOCATION OF UNITHOLDERS
Country
No. of
Unitholders % No. of Units %
Singapore 7,581 97.52 823,378,259 99.43
Malaysia 110 1.41 2,577,879 0.31
Others 83 1.07 2,161,566 0.26
7,774 100.00 828,117,704 100.00
TWENTY LARGEST UNITHOLDERS
S/No. Name No. of Units %
1 HSBC (Singapore) Nominees Pte Ltd 175,990,578 21.25
2 Retail Crown Pte. Ltd. 157,033,221 18.96
3 DBS Nominees (Private) Limited 138,939,292 16.78
4 Citibank Nominees Singapore Pte Ltd 111,723,549 13.49
5 DBSN Services Pte. Ltd. 41,004,283 4.95
6 CapitaRetail China Trust Management Limited 31,843,543 3.85
7 DB Nominees (Singapore) Pte Ltd 18,089,178 2.18
8 Raffles Nominees (Pte) Limited 15,844,747 1.91
9 United Overseas Bank Nominees (Private) Limited 14,455,106 1.75
10 BNP Paribas Securities Services Singapore Branch 5,936,373 0.72
11 DBS Vickers Securities (Singapore) Pte Ltd 4,134,458 0.50
12 Koo Boon Hooi (Qiu Wenhui) 4,100,083 0.50
13 Bank Of Singapore Nominees Pte. Ltd. 3,084,629 0.37
14 Morgan Stanley Asia (Singapore) Securities Pte Ltd 2,862,499 0.35
15 Phillip Securities Pte Ltd 1,879,412 0.23
16 OCBC Securities Private Limited 1,647,290 0.20
17 ABN AMRO Nominees Singapore Pte Ltd 1,614,469 0.19
18 OCBC Nominees Singapore Private Limited 1,504,035 0.18
19 Siong Lim Private Limited 1,249,740 0.15
20 Societe Generale, Singapore Branch 1,240,957 0.15
734,177,442 88.66
Unitholders’ StatisticsAs at 23 February 2015
148 | CapitaRetail China Trust Annual Report 2014
DIRECTORS’ INTERESTS IN UNITS AND CONVERTIBLE SECURITIES AS AT 21 JANUARY 2015
Based on the Register of Directors’ Unitholdings, save for those disclosed below, none of the
Directors holds any interest in Units and convertible securities issued by CRCT.
No. of Units
Name of Director Direct Interest Deemed Interest
Liew Cheng San Victor 121,319 –
Lim Ming Yan 181,154 –
Fong Heng Boo 10,340 –
Ng Kok Siong 251,000 –
Tony Tan Tee Hieong 34,989 –
SUBSTANTIAL UNITHOLDERS’ UNITHOLDINGS AS AT 23 FEBRUARY 2015
Based on the information available to the Manager as at 23 February 2015, the unitholdings of
Substantial Unitholders of CRCT are as follows:
Name of Substantial Unitholder
Direct Interest Deemed Interest
No. of Units % No. of Units %
Temasek Holdings (Private) Limited (THPL) – – 314,985,9161 38.04
CapitaLand Limited (CL) – – 311,581,7642 37.63
CapitaMalls Asia Limited (CMA) – – 311,581,7643 37.63
CapitaLand Retail China Pte. Ltd. (CLRC) – – 157,033,2214 18.96
Retail Crown Pte. Ltd. 157,033,221 18.96 – –
HSBC Institutional Trust Services (Singapore)
Limited, as trustee of CapitaMall Trust 122,705,000 14.82 – –
Matthews International Capital Management,
LLC (MICM) – – 60,253,0005 7.28
Matthews International Funds (MIF) – – 48,680,0006 5.88
AIA Group Limited (AIAGL) – – 44,302,0007 5.35
AIA Company Limited (AIACL) 50,000 0.01 44,252,0008 5.34
AIA Singapore Private Limited 44,252,000 5.34 – –
1 THPL is deemed to have an interest in the unitholdings in which its associated companies have or are deemed to have aninterest pursuant to Section 4 of the Securities and Futures Act, Chapter 289 of Singapore. THPL is wholly-owned by theMinister for Finance.
2 CL is deemed to have an interest in the unitholdings of HSBC Institutional Trust Services (Singapore) Limited, as trustee ofCapitaMall Trust and its indirect wholly-owned subsidiaries namely, Retail Crown Pte. Ltd. and the Manager.
3 CMA is deemed to have an interest in the unitholdings of HSBC Institutional Trust Services (Singapore) Limited, as trustee ofCapitaMall Trust and its indirect wholly-owned subsidiaries namely, Retail Crown Pte. Ltd. and the Manager.
4 CLRC is deemed to have an interest in the unitholdings of its direct wholly-owned subsidiary namely, Retail Crown Pte. Ltd..
5 MICM is a U.S. registered investment advisor who has a discretionary authority over its clients’ investment.
6 MIF is deemed to have an interest in the unitholdings of Brown Brothers Harriman & Co, the custodian for Units owned by MIF.
7 AIAGL is deemed to have an interest in the unitholdings of its direct wholly-owned subsidiary namely, AIACL and its indirectwholly-owned subsidiary namely, AIA Singapore Private Limited.
8 AIACL is deemed to have an interest in the unitholdings of its direct wholly-owned subsidiary namely, AIA Singapore PrivateLimited.
FREEFLOAT
Based on the information made available to the Manager, approximately 49.27% of the Units in CRCT
were held in the hands of the public as at 23 February 2015. Accordingly, Rule 723 of the Listing
Manual of the SGX-ST has been complied with.
Delivering Performance | 149
Name of Mall Address Tel (General) Fax (General)
CapitaMall
Xizhimen
凱德MALL•西直門
No. 1 Xizhimenwai Street,
Xicheng District, Beijing
北京市西城區西直門外大街1號
(86) 10 5830 1111 (86) 10 5830 1599
CapitaMall
Wangjing
凱德MALL•望京
No. 33 Guangshun North Street,
Chaoyang District, Beijing
北京市朝陽區廣順北大街33號
(86) 10 8472 9898 (86) 10 8472 9800
CapitaMall Grand
Canyon
凱德MALL•大峽谷
No.16 South Third Ring West
Road, Fengtai District, Beijing
北京市豐台區南三環西路16號
(86) 10 8756 2780 (86) 10 8526 7556
CapitaMall
Minzhongleyuan
凱德新民眾樂園
No. 704 Zhongshan Avenue,
Jianghan District, Hankou,
Wuhan, Hubei Province
湖北省武漢市漢口江漢區中山大道704號
(86) 27 8553 0108 (86) 27 8537 9137
CapitaMall Qibao
凱德七寶購物廣場No. 3655 Qixin Road, Minhang
District, Shanghai
上海市閔行區七莘路3655號
(86) 21 6479 3030 (86) 21 6479 0808
CapitaMall Saihan
凱德MALL•賽罕No. 26 Ordos Street,
Saihan District, Huhhot,
Inner Mongolia Autonomous Region
內蒙古自治區呼和浩特市賽罕區鄂爾多斯大街26號
(86) 47 1596 1222 (86) 47 1597 1671
CapitaMall Wuhu
凱德廣場•蕪湖No. 37 Zhongshan North Road,
Jinghu District, Wuhu,
Anhui Province
安徽省蕪湖市鏡湖區中山北路37號
(86) 55 3599 1888 (86) 55 3599 1886
CapitaMall Anzhen
凱德MALL•安貞Building 4, Zone 5, Anzhenxili,
Chaoyang District, Beijing
北京市朝陽區安貞西里5區4號樓
(86) 10 5879 9001 (86) 10 5879 9009
CapitaMall Erqi
凱德廣場•二七No. 3 Minzhu Road,
Erqi District, Zhengzhou,
Henan Province
河南省鄭州市二七區民主路3號
(86) 27 8359 1800 (86) 27 8359 1818
CapitaMall
Shuangjing
凱德MALL•雙井
No. 31 Guangqu Road,
Chaoyang District, Beijing
北京市朝陽區廣渠路31號
(86) 10 5879 9001 (86) 10 5879 9009
.
Malls Directory
150 | CapitaRetail China Trust Annual Report 2014
Corporate Information
REGISTERED ADDRESS HSBC Institutional Trust Services (Singapore) Limited 21 Collyer Quay #10-02 HSBC Building Singapore 049320 www.capitaretailchina.com Email: ask-us@capitaretailchina.com
Stock Code: AU8UCounter Name: CapitaR China TR
TRUSTEEHSBC Institutional Trust Services (Singapore) Limited 21 Collyer Quay #03-01 HSBC Building Singapore 049320 Tel: +65 6658 6906 Fax: +65 6534 5526
AUDITOR KPMG LLP Public Accountants and Chartered Accountants 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581 Tel: +65 6213 3388 Fax: +65 6225 0984 Partner-In-Charge: Ronald TayAppointed: With effect from financial year ended 31 December 2012
UNIT REGISTRAR Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 Tel: +65 6536 5355 Fax: +65 6536 1360
CAPITARETAIL CHINA TRUST THE MANAGER
This Annual Report to Unitholders may contain forward-looking statements. Forward-looking statement is subject to inherent uncertainties and is based on numerous assumptions. Actual performance, outcomes and results may differ materially from those expressed in forward-looking statements. Representative examples of factors which may cause the actual performance, outcomes and results to differ materially from those in the forward-looking statements include (without limitation) changes in general industry and economic conditions, interest rate trends, cost of capital and capital availability, availability of real estate investment opportunities, competition from other companies, shifts in customers’ demands, changes in operating conditions, including employee wages, benefits and training, governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. You are cautioned not to place undue reliance on these forward-looking statements, which are based on the current views of management on future events. All rights are reserved.
REGISTERED ADDRESS CapitaRetail China Trust Management Limited 168 Robinson Road #30-01 Capital Tower Singapore 068912 Tel: +65 6713 2888 Fax: +65 6713 2999
BOARD OF DIRECTORS Liew Cheng San VictorChairman & Non-Executive Independent Director
Lim Ming YanDeputy Chairman & Non-Executive Non-Independent Director
Fong Heng BooNon-Executive Independent Director
Christopher Gee Kok AunNon-Executive Independent Director
Ng Kok SiongNon-Executive Non-Independent Director
Professor Tan Kong YamNon-Executive Independent Director
Tony Tan Tee HieongChief Executive Officer & Executive Non-Independent Director
AUDIT COMMITTEE Fong Heng Boo ChairmanChristopher Gee Kok AunNg Kok SiongProfessor Tan Kong Yam
CORPORATE DISCLOSURE COMMITTEE Liew Cheng San Victor Chairman Lim Ming YanNg Kok Siong
EXECUTIVE COMMITTEE Lim Ming Yan ChairmanNg Kok Siong Tony Tan Tee Hieong
COMPANY SECRETARY Goh Mei Lan
CapitaRetail China Trust Management LimitedAs Manager of CapitaRetail China TrustCompany Registration No. 200611176D
168 Robinson Road#30-01 Capital TowerSingapore 068912Tel: +65 6713 2888Fax: +65 6713 2999Email: ask-us@capitaretailchina.com
www.capitaretailchina.com
This annual report is printed on environmentally-friendly paper.