capitacommercial trust · 2015-03-26 · corporate profile capitacommercial trust (cct, or the...
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Scaling New HeightsCapitaCommercial TrustAnnual Report 2014
Corporate ProfileCapitaCommercial Trust (CCT, or the Trust) is the first and largest listed commercial REIT on SGX-ST with a market capitalisation of S$5.2 billion as at 31 December 2014. CCT aims to own and invest in commercial real estate and real estate-related assets which are income producing. The total deposited properties of CCT is S$7.6 billion as at 31 December 2014, comprising a portfolio of 10 prime commercial properties in Singapore, as well as an investment in Malaysia.
Listed on SGX-ST on 11 May 2004, CCT was created through a distribution in specie by CapitaLand Limited (CapitaLand) to its shareholders.
The Trust is managed by an external manager, CapitaCommercial Trust Management Limited (CCTML, or the Manager), which is an indirect wholly-owned subsidiary of CapitaLand, one of Asia’s largest real estate companies.
VisionTo be a leading commercial REIT in Singapore and Asia, backed by a portfolio of quality income-producing commercial buildings, and led by a team of dedicated and experienced management personnel.
Mission
01 Highlights 201402 Financial Highlights 05 Trust Structure and Organisation Structure06 Letter to Unitholders 12 Portfolio Value Creation Strategy14 Property Portfolio16 Board of Directors24 The Manager27 Year in Brief 201428 Corporate Governance47 Enterprise Risk Management
Contents50 Investor Relations52 Sustainability Report79 Independent Market Review86 Financial Review90 Operations Review101 Property Details111 Glossary113 Financial Statements and Notes178 Additional Information183 Statistics of Unitholdings Corporate Information
To deliver long-term sustainable distribution and total returns to Unitholders.
Any discrepancies in the tables and charts between the listed figures and totals thereof are due to rounding. Where applicable, figures and percentages are rounded to one decimal place.
Where Ringgit Malaysia is quoted, an exchange rate of S$1.00 to RM2.66 as at 31 December 2014 is used in the conversion.
Scaling New Heights
Highlights 2014
CapitaCommercial Trust’s focused investment and proactive management of a high quality portfolio of commercial properties in Singapore has enabled the delivery of higher distributions in the last decade. Embarking on the next decade of growth, we continue to underscore our aspirations to scale greater heights, backed by our proactive and disciplined approach towards acquisitions and developments as well as asset, portfolio and capital management. The successful completion of CapitaGreen marks the transformation of the former Market Street Car Park into an iconic Grade A office building, and exemplifies our focus on optimising the potential of our assets and driving value creation for our Unitholders.
Portfolio Occupancy Rate
29.3%
Credit Rating
10 properties
Market Capitalisation
S$5.2 billion
Gearing
Assuming 40.0% gearing
96.8% (including CapitaGreen)
99.5% (excluding CapitaGreen)
Upgraded to A- with stable outlook by Standard & Poor’s
(25 August 2014)
Upgraded to A3 with stable outlook by Moody’s
(12 February 2015)
S$249.2 million
Distribution Per Unit
8.46 cents
Distributable Income
Total Deposited Properties
S$7.6billion
S$1.3 billion
Information as at 31 December 2014 or for FY 2014.
2.3% p.a.
Average Cost of Debt
Debt Headroom
Scaling New Heights | 01
02 | CapitaCommercial Trust Annual Report 2014
Financial Highlights
Net Property Income (S$ million)
2010 2011 2012 2013 2014
Gross Revenue (S$ million)
299.0277.3
295.5 296.5
2010 20111 12012 2013 22014 2
391.9361.2 375.8 386.9 402.1 307.1
Distributable Income (S$ million)
2010 2012 2013
221.0 212.8228.5 234.2
249.2
Distribution Per Unit (cents)
2010 2012 2013 2014
7.83
7.52
8.04 8.14
8.46
1 Two properties were divested in 2010 and resulted in lower gross revenue, net property income, distributable income and distribution per Unit in 2011.
2 With the adoption of FRS 111 Joint Arrangements, CCT’s 60.0% interest in RCS Trust and 40.0% interest in MSO Trust are accounted for as interest in joint ventures in 2014. Gross revenue and net property income of CCT’s 60.0% interest in RCS Trust and 40.0% interest in MSO Trust are represented in blue colour bars. The 2010 to 2013 figures are restated for reference.
262.6
139.5 87.995.2
96.1
199.4182.1
211.1
135.5
251.4270.0
231.1 243.2
132.6130.1121.9
205.2197.1
99.4 101.9
Adjusted Net Asset Value Per Unit (S$)
2010 2011 2012 2013 2014
1.47
1.571.62
1.671.71
Total Deposited Properties (S$ million)
2010 2011 2012 2013 2014
6,196.26,753.9 7,003.0 7,218.2
7,633.6
As at 31 DecemberAs at 31 December
20111 201112014
Five Years Comparative Trading Performance from 2010-2014
Jan2010
Dec2010
Dec2011
Dec2012
Dec2013
Dec2014
Jun2010
Jun2011
Jun2012
Jun2013
Jun2014
Scaling New Heights | 03
+50.0%
+26.2%+16.1%
100
Selected Balance Sheet Data (S$ million)As at 31 December 2010 2011 2012 2013 2014Valuation (including Raffles City Singapore and CapitaGreen) 5,475.4 6,011.7 6,695.1 6,959.8 7,358.5Unitholders’ Funds 4,273.7 4,541.4 4,714.7 4,912.7 5,153.5Total Borrowings (including RCS Trust and MSO Trust) 1,747.3 2,017.5 2,072.1 2,060.9 2,182.7Market Capitalisation 4,235.0 2,988.6 4,790.4 4,174.2 5,168.2
Key Financial IndicatorsAs at 31 December 2010 2011 2012 2013 2014Distribution Per Unit (cents) 7.83 7.52 8.04 8.14 8.46Earnings Per Unit (cents) 17.67 16.77 13.60 13.08 15.41Gearing (%) 28.6 30.2 30.1 29.3 29.3Interest Cover (times)1 3.7 4.3 4.5 5.9 7.2Management Expense Ratio (%)1 0.34 0.30 0.35 0.32 0.33
For more details, please refer to CCT’s Financial Statements and Operations Review in this report.
1 With the adoption of FRS 111 Joint Arrangements, CCT’s 60.0% interest in RCS Trust and 40.0% interest in MSO Trust are accounted for as interest in joint ventures in 2014. The 2010 to 2013 figures are restated for reference.
CapitaCommercial Trust (CCT SP Equity) FTSE Straits Times Real Estate Investment Trust Index (FSTREI Index) Straits Times Index (FSSTI Equity)
04 | CapitaCommercial Trust Annual Report 2014
Financial Highlights
Trading Performance for 2014
The Trust Offers Attractive Yield Compared to Other Investments
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1.42 1.485
1.70 1.67 1.685 1.7551.5951.6651.701.69
187.1
1.465
218.8
Volume (Million Units) Unit Price (S$) as at last trading day of the month
Unit Price Performance2010 2011 2012 2013 2014
As at last trading day of the year (S$) 1.50 1.05 1.68 1.45 1.755Highest (S$) 1.53 1.56 1.69 1.73 1.755Lowest (S$) 1.03 0.96 1.05 1.33 1.385Weighted Average (S$) 1.28 1.34 1.34 1.53 1.60Trading Volume (million units) 2,115.5 1,673.6 1,952.6 1,956.3 1,868.3
139.1136.3
165.5 161.6 169.1
118.2
175.1
137.7 131.1 128.7
1 CCT’s distribution yield is based on FY 2014 DPU of 8.46 cents over closing price of S$1.755 on 31 December 2014.2 CCT’s net property yield is based on FY 2014 net property income including Raffles City Singapore over December 2014 valuation.
3.3% Straits Times Index dividend yield
2.5%-3.5% Office property transacted yields
2.5% CPF (ordinary) account interest rate
2.3% 10-year government bond yield
0.3% Banks fixed deposit rate (12 months)
0.1% Banks savings deposit rate
4.6% CCT’s net property yield2
4.8% CCT’s distribution yield1
5.6% FTSE ST REIT Index dividend yield
As at 31 December 2014
1.60
Trust Structure
Organisation Structure
Scaling New Heights | 05
Unitholders
Holdings of Units in CCT
Distributions
The ManagerCapitaCommercial Trust Management
Limited
Management Services
Acts on behalf of Unitholders
Management Fees
Trustee’s Fees
Ownership of Assets
Net PropertyIncome
TrusteeHSBC Institutional
Trust Services (Singapore) Limited as Trustee of CCT
1. Capital Tower2. Six Battery Road3. One George Street4. Raffles City Singapore (60.0% interest)5. CapitaGreen (40.0% interest) - Obtained TOP on 18 Dec 20146. Twenty Anson7. HSBC Building8. Wilkie Edge9. Bugis Village10. Golden Shoe Car Park
Property Management Services
Property Management Fees
Properties
The Property ManagersCapitaLand Commercial
Management Pte. Ltd.
CapitaLand (RCS) Property Management Pte. Ltd.
Board of Directors
The ManagerCapitaCommercial Trust Management Limited
Chief Executive OfficerLynette Leong Chin Yee
Vice President,Customer
Experience Management
Faith Soh
Head,Investor Relations &
CommunicationsHo Mei Peng
Head,Finance
Anne Chua
Head, Asset
ManagementYvonne Ong
Head, Investment
Chew Peet Mun
Letter to Unitholders
(Left) Soo Kok Leng, Chairman (Right) Lynette Leong Chin Yee, Chief Executive Officer
Dear Unitholders,
2014 marked a significant year for CapitaCommercial Trust (CCT, or the Trust). We celebrated 10 years of listing since May 2004, and attained a major milestone with the completion of our first development project, CapitaGreen, on 18 December 2014 - a joint development with CapitaLand and Mitsubishi Estate Asia. Embarking on the next decade of growth,
Our proactive and disciplined approach towards acquisitions and developments as well as asset, portfolio and capital management has enabled us to turn in a stellar performance. CCT delivered a consecutive year of growth in FY 2014 with DPU of 8.46 cents. The Trust attained a significant milestone with the completion of its first development project, CapitaGreen – the result of the redevelopment of the former Market Street Car Park. It exemplifies our focus on optimising the potential of CCT’s assets and creating value for the Trust. Certainly enabling the Trust to scale new heights.
we continue to underscore our aspirations to scale greater heights, backed by our proactive and disciplined approach towards acquisitions and developments as well as asset, portfolio and capital management. Unitholders who have invested in CCT since its listing on 11 May 2004 would have been rewarded handsomely: from CCT’s distributable income which grew at a compounded annual growth rate (CAGR) of 18.6%, and from its total return of 249.7%1.
1 Sum of distribution and capital appreciation from CCT’s opening price on 11 May 2004 to closing unit price on 31 December 2014, taking into account the effects of the underwritten renounceable rights issue in 2009.
06 | CapitaCommercial Trust Annual Report 2014
Robust Financial PerformanceWe are pleased to report another year of growth in distribution per Unit (DPU) for the financial year ended 31 December 2014 (FY 2014) and a total return of 26.9%1. FY 2014 DPU of 8.46 cents was 3.9% higher than FY 2013 DPU of 8.14 cents. The growth in DPU occurred despite the absence of yield protection income for One George Street in FY 2014 (FY 2013: S$7.6 million) and enlarged base of CCT units resulting from S$69.3 million of convertible bonds due 2015 that were converted by the bondholders into CCT units.
The Trust’s distributable income of S$249.2 million in FY 2014 was up 6.4% over FY 2013’s S$234.2 million. The stronger performance was largely due to increased revenue contribution by CCT’s properties and higher distribution from Raffles City Singapore, a joint venture project, although the increase was partially offset by higher property tax expense. The tax-exempt income from CCT’s investment in Malaysia, Quill Capita Trust, also contributed to the rise in distributable income.
As at 31 December 2014, CCT’s investment properties were valued at an aggregate of S$7.4 billion by independent valuers, an increase of 5.7% over the valuation of December 2013. The increase was due to higher rental income achieved from the properties and the completion of CapitaGreen, which is now valued as an operating asset as opposed to a property under construction before. Including other assets, CCT’s deposited properties were valued at an aggregate of S$7.6 billion as at end FY 2014. Excluding the distributable income payable to Unitholders, the net asset value per Unit was S$1.71. This was 2.4% higher than the S$1.67 per Unit as at 31 December 2013.
Delivering Resilient GrowthOn top of the strong financials, the Trust’s portfolio enjoyed a healthy take-up rate during the year thanks to our team’s proactive leasing and marketing efforts. Committed occupancy rate for CCT’s portfolio excluding CapitaGreen stood at 99.5%, up from last year’s 98.7% and well above the office market average of 95.7% as at end December 2014. Including the recently completed CapitaGreen, which registered a leasing commitment of 69.3% as at end December 2014, the portfolio occupancy rate was 96.8%, which was still above the market average.
CapitaGreen’s 69.3% leasing commitment translated to a total net lettable area of 486,800 square feet. Additionally, CCT’s other properties signed approximately 900,000 square feet of total net lettable area in FY 2014, of which about 15% were new leases, while the remaining leases were renewed ahead of their expiries in 2014. CCT locked in an increase of 5.9% in average monthly office rent to S$8.61 per square foot from S$8.13 per square foot a year ago, after taking into account the rents committed at CapitaGreen.
The successful completion of CapitaGreen marks the transformation of the former Market Street Car Park into an iconic Grade A office building, and exemplifies our focus on optimising the potential of our assets and driving value creation. CapitaGreen is a prominent, new landmark in the heart of the Central Business District (CBD) in Singapore that not only redefines the downtown skyline with a first-of-its-kind façade perimeter where green, living plants grow, but also offers energy-saving building specifications that are in line with our continuous efforts to be environmentally sustainable. Distributable income contribution from CCT’s 40.0% interest in CapitaGreen is expected in 2016 as the development stabilises its operations. Given CapitaGreen’s strong tenant appeal, we target to achieve 100% committed occupancy by end 2015 which would further underpin the growth of the Trust.
Augmenting QualityWith a view to ensuring that the quality of CCT’s portfolio meets the modern demands of our tenants, strengthens its competitiveness and continues to generate positive returns for the Trust for the long term, we have been consistently renewing the properties in line with our “portfolio reconstitution strategy” of which we have commenced execution since 2010.
Besides the flagship development of CapitaGreen, we completed a S$32.3-million asset enhancement initiative (AEI) on Raffles City Tower in 2014, which successfully achieved a return on investment (ROI) of 9.3% and well above our target ROI of 8.6%. Capital Tower is currently undergoing a S$40.0-million revitalisation programme which is targeted for completion by the fourth quarter of 2015 and expected to achieve a projected ROI of 7.8%.
1 Sum of FY 2014 DPU and capital appreciation from CCT’s closing unit price on 31 December 2013 to closing unit price on 31 December 2014.
Scaling New Heights | 07
Letter to Unitholders
Disciplined Capital ManagementWe adopt a prudent and proactive capital management to maintain a strong financial position and financial flexibility. As at end of 2014, 83% of our total borrowings were on a fixed rate basis, which provided certainty of interest expense and limited the exposure to interest rate fluctuations. CCT’s average cost of debt improved to 2.3% per annum as at end FY 2014 from 2.6% per annum in the previous year. Testament to the strong financial position of CCT, Standard & Poor’s upgraded CCT’s credit rating to “A-” with stable outlook, which is the highest credit rating for a Singapore office REIT. On 12 February 2015, Moody’s also upgraded CCT’s senior unsecured ratings to “A3” from “Baa1” with stable outlook, given its strong market position and track record.
During the year, we proactively repurchased and redeemed the Convertible Bonds (CB) due in 2015 even as other bondholders converted the CBs into CCT units. This resulted in all the CBs being cancelled ahead of their maturity.
We also diversified our sources of funding and took advantage of the low interest rate environment to extend CCT’s debt maturities. In August 2014, CCT issued S$50.0 million of notes due 2021 at a fixed interest rate of 2.98% per annum. In October 2014, CCT issued 6.3 billion Japanese Yen of floating rate notes due 2021 which was swapped into S$75.0 million at a fixed interest rate of 2.95% per annum.
We continue to maintain CCT’s robust balance sheet, and CCT is well positioned to meet future financial obligations and possesses the financial flexibility to execute growth opportunities. CCT’s total debt as at end 2014 was S$2.2 billion which translated to a low gearing ratio of 29.3%. Assuming 40.0% gearing ratio, CCT has a S$1.3 billion debt headroom. CCT has diverse options of funding sources, with an untapped balance of S$1.5 billion from its Medium-Term Note programme and sufficient undrawn bank facilities of S$265.0 million to cater for working capital.
Going ForwardThe Trust is expected to ride on the positive office market fundamentals that are likely to support rental growth given the tight office supply in the Core CBD
market in 2015. Office leases in CCT’s portfolio that are due for renewal in 2015 constitute 12% of CCT’s portfolio gross rental income and represent potential for positive rental reversions. We target to fully lease the remaining 215,200 square feet (30.7%) of office space in CapitaGreen by end of 2015 as office market rents continue to firm up. The additional revenue from CapitaGreen will position CCT strongly for 2016 when its contribution to the Trust’s distributable income is expected.
Beyond 2015, the supply pipeline to Singapore’s CBD office market will be approximately five million square feet over the next four to five years, with completions taking place progressively from the second half of 2016 to 2017. If office demand were to grow at a similar rate to the 10-year historical net rate of approximately one million square feet per annum, the supply should be progressively absorbed and the market would be in equilibrium in the medium-term. We are actively bracing the Trust by managing its office lease expiries to minimise them in the years of larger office supply, through engaging tenants ahead of their lease expiries and the stepping up of tenant retentions. Our tenant retention rate was 86% in 2014 compared with 67% in 2013.
CCT now has the option to acquire the remaining 60.0% interest of the development held by its joint venture partners from 2015 to 2017. This provides another avenue of promising pipeline growth for the Trust. CapitaGreen’s completion also resets the regulatory development capacity1 to approximately S$763.4 million for CCT to undertake new development projects should opportunities arise.
The move towards more robust regulation of the Singapore REIT market under the consultation paper by the Monetary Authority of Singapore also bodes well for S-REITs in the longer term. Our continuous efforts to maintain the quality of assets, diversified funding streams and effective portfolio management ensure that the Trust remains on a steady growth trajectory going forward.
Commitment to ExcellenceCCT is committed to delivering service excellence and we actively engage our valued tenants to forge strong lasting partnerships. The Trust successfully rolled out several tenant engagement activities over
1 Under the Property Funds Appendix, a Singapore REIT can undertake development up to 10% of its Deposited Properties. CCT’s Deposited Properties amounted to S$7,633.6 million as at 31 December 2014.
08 | CapitaCommercial Trust Annual Report 2014
CapitaGreen Topping-Out CeremonyOn stage: (from left to right) Ms Lynette Leong, Mr Toichi Takenaka, Mr Lim Ming Yan, Mr Ng Kee Choe, Minister Khaw Boon Wan, Mr Keiji Kimura, Mr Kee Teck Koon, Mr Toyo Ito, Mr Wen Khai Meng
“The Power of 10”: CCT’s 10th Year Anniversary CelebrationOn stage: CCTML’s Board of Directors (past and present)
the year such as the bi-annual healthy treats, Eco Race and Gifts of Joy. These activities continued to receive strong support from our tenants through increased participation rates. Notably, we organised the very first CEO Breakfast Talk to provide networking opportunities for the senior management of our tenants, and it was well attended.
In other highlights of the year, the Trust celebrated the topping-out ceremony of CapitaGreen on 2 July 2014 and we were honoured to have had the Minister for National Development, Mr Khaw Boon Wan, grace this momentous occasion. That date also marked CCT’s 10th Year Anniversary dinner which we celebrated with our valued tenants and business partners in an evening of spectacular gastronomy, entertainment and conferring of awards to honour them for their strong support to the Trust.
Accolades and AppreciationCCT was conferred two Gold awards at the Singapore Corporate Awards 2014 for the Best Annual Report and Best Investor Relations in the
REITs and Business Trusts category, as we continue to pride ourselves on timely and transparent communication with our Unitholders.
We would like to take this opportunity to thank our former Chairman, Mr Kee Teck Koon, for his exemplary leadership and invaluable contributions to the Board and CCT until he stepped down on 22 September 2014.
We also extend our sincerest thanks to our valued tenants, business partners and Unitholders for their unwavering confidence and support.
Soo Kok LengChairman
Lynette Leong Chin YeeChief Executive Officer
26 February 2015
Key Events of the Year
Scaling New Heights | 09
致信托单位持有人
尊敬的单位持有人:
对凯德商务产业信托(凯德商务信托或信托)而言,2014是至关重要的一年。自2004年5月上市至今,信托迎来10周年大庆;2014年12月18日,由凯德商务信托、凯德集团和三菱亚洲地产联合开发的首个项目CapitaGreen已顺利完工,这无疑是一个重要的里程碑。展望未来十年,我们将继续以积极和严谨的处理方式进行收购、项目发展,租赁、投资组合与资本管理,创造更辉煌的业绩,更上一层楼。自2004年5月11日上市以来,投资于凯德商务信托的单位持有人已取得丰厚的回报,因为信托可派发收入的复合年均增长率(CAGR)高达18.6%,同时总体回报率高达249.7%1。
强劲稳健的业绩表现截止2014年12月31日财政年度,凯德商务信托的每单位可派发收入(DPU)再次取得年增长。2014财政年每单位可派发收入为8.46分,比2013财政年的8.14分高出3.9%,而2014年的总体年回报达26.9%2。尽管乔治街一号在2014年已没有收益保障(2013财年其收益为760万新元),再加上2015年到期并可转换成凯德商务信托单位的债券高达6930万新元,使信托已发行单位增数,该年单位可派发收入仍能实现增长,实属不易。
该信托2014财政年的可派发收入为2亿4920万新元,和2013财政年的2亿3420万新元同比增长6.4%。这强劲的业务表现主要归功于凯德商务信托独资产业取得更高的收入以及合资项目,新加坡来福士城较高的可派发收入贡献(其更高的可派发收入已被高涨的物业税抵消了一部分)。而信托从其在马来西亚的投资项目-桂嘉信托所得来的免税投资收益,也促成了全年可派发收入的上升。
根据独立估值报告,截至2014年12月31日,凯德商务信托投资物业估值为74亿新元,与2013年12月相比,上扬5.7%。这不仅归功于产业取得更高的租金,也因为已竣工的CapitaGreen项目被重新归类为营业资产,而非先前的在建资产。截止2014年底,包括其他资产在内,信托产业总价值达76亿新元。扣除支付给单位持有人的可派发收入,每单位资产净值为1.71新元,比2013年12月31日的1.67新元上升了2.4%。
持续性增长除了强健的财务业绩之外,信托的投资组合租用率也取得了稳健的年增长。这是因为团队积极主动的租赁和有效的市场推广策略。截止2014年12月底,该信托的租用率(不包括CapitaGreen)达到99.5%,高于去年同期的98.7%,也远胜办公楼市场95.7%的业界平均租用率。即使把近期完工的CapitaGreen(其租约承诺率已达69.3%)包括在内,投资组合的租用率也达到96.8%,仍高于市场平均水平。
1 自2004年5月11日CCT开盘价至2014年12月31日闭市价期间的每单位可派发收入总值及资本增值的总和(已将2009年可弃权包销附加股的影响考虑在内)。2 自2013年12月31日CCT闭市价至2014年12月31日闭市价期间,2014财年每单位可派发收入(DPU)和资本增值的总和。
凯德商务产业信托能取得卓越的业绩,归功于我们一贯以积极和严谨的处理方式对待收购、业务发展、租赁、投资组合以及资金管理。在2014财政年度,凯德商务产业信托再次实现年增长,每单位可派发收入为8.46分。近期的一个重要里程碑是通过改建马吉街旧停车场,成功开发了首个发展项目–CapitaGreen。这充分体现了我们优化资产的潜力以及信托增值的实力。毫无疑问,这些有利于本信托在来年再创佳绩,登上新高峰。
鉴于CapitaGreen69.3%的租约承诺率,其可出租的净面积达486,800平方英尺。此外,凯德商务信托其他产业在2014财年可出租的总净面积约900,000平方英尺,其中大约15%属于新租约,而其他租约在2014年到期前均已提前续约。包括CapitaGreen所签的租金,凯德商务信托办公楼月均租金从2013年每平方尺8.13新元上扬5.9%至8.61新元。
CapitaGreen的顺利竣工象征着马吉街旧停车场已成功改建成标志性甲级办公楼,也体现了我们优化资产的潜力以及信托增值的实力。作为新加坡中央商务区(CBD)的新地标,CapitaGreen不仅将改变市中心的景观,更是首座独一无二的四面绿化建筑,拥有多项节能指标,是我们不断努力打造可持续发展环境的成果之一。
凯德商务信托拥有CapitaGreen40.0%股份,预计在2016年其项目操作稳定发展之后,有望从中获得可派发收入。鉴于CapitaGreen强烈的租户号召力,我们将努力在2015年底实现百分之百租用率,从而进一步推动信托的增长。
强化质量自2010年以来,我们一直致力于产业翻新,贯彻“组合资产重建战略”,是为了确保凯德商务信托投资组合的质量符合租户日新月异的需求并增强产业的竞争力,以及保证信托长期的可持续收益。
除了CapitaGreen这一旗舰开发项目之外,来福士城办公楼在2014年完成了耗资3230万新元的资产增值计划(AEI),成功实现了9.3%的投资回报,远超于8.6%的目标回报率。目前,我们正在资金大厦进行耗资4000万新元的翻新振兴工程,预计2015年第4季完工,投资回报目标为7.8%。
审慎的资本管理我们以谨慎而积极的态度与策略管理资本,确保稳健的财务状况和维持财务适应能力。截至2014年底,我们83%的总贷款为固定利率,从而确定了利息支出,降低了利率波动的风险。截止2014财年,凯德商务信托年均借贷成本由上一年的2.6%降至2.3%。标准普尔提升凯德商务信托的信用评级至“A-”,发展前景良好。这是新加坡办公楼投资信托中最高的信用等级,证明了该信托稳健的财务状况。2015年2月12日,鉴于CCT稳健的发展前景与其一贯强劲的业绩,国际评级机构穆迪也将凯德商务信托高级无担保评级从“Baa1”上调至“A3”。
在这一年里,尽管有债券持有人选择把可转换债券兑成凯德商务信托单位,我们一样积极回购并赎回2015年到期的可转换债券(CB)。因此所有在2015年到期的可转换债券已被提前注销。
10 | CapitaCommercial Trust Annual Report 2014
1 根据房地产基金附录规定,新加坡房地产投资信托最多只能用产业总价的百分之十来投资发展项目。截至2014年12月31日,凯德商务信拖的产业总价值76亿新元。
我们也致力于资金来源多元化,利用低利率的环境优势,延长凯德商务信托债务期限。2014年8月,凯德商务信托发行了2021年到期的票据,每年固定利息为2.98%,总价值5000万新元。同年10月,信托发行了2021年到期的浮动利率票据,总价值63亿日元,并通过7500万新元对冲交易,把利率固定为每年2.95%,规避汇率风险。
我们继续保持凯德商务信托强健的资产负债表,让信托更占优势地应对未来的借贷需求,保持财务适应能力,把握机会,实现增长目标。截至2014年底,该信托总债务为22亿新元,其资产负债杠杆比仅为29.3%。假设将资产负债比提高至40.0%,凯德商务信托则尚有13亿新元借贷空间。凯德商务信托拥有多样化的融资渠道,其中中期票据计划下未用的额度尚有15亿新元,未动用的银行信贷额度充足(达26500万新元),足以应付营运资金需求。
展望未来2015年,中央商业区(CBD)预计将面对办公楼供应限量的状况,其办公楼市场前景乐观,基本面向好,从而支持租金的增长,该信托有望从中受益。在凯德商务信托投资组合中,2015年到期的办公室租赁合约占其总收入的12%,预计大多数都将得以续约。随着办公楼市场租金市场的持续坚挺,我们的目标是在2015年底前,将CapitaGreen剩余215,200平方英尺(30.7%)的办公楼空间全部出租。预计CapitaGreen将在2016年开始为信托贡献可派发收入,也为凯德商务信托的发展打下坚实的基础。
2015年后的四到五年内,新加坡中央商业区办公楼市场将涌现约5百万平方英尺的新楼面,并于2016年下半年到2017年逐步投入使用。如果办公楼面需求以10年净增长率(即,每年约百万平方英尺)的相似速度增长,这些供应将逐步被吸收,市场将达到中期平衡。我们积极加强信托地位,通过管理办公楼面租期,最大限度地减少在市场出现大量楼面时出现合约到期的情况,所采取的措施包括提前与租户续约以及提高租户保留率。2014年租户保留率从2013年的67%提高到86%。2015年至2017年,凯德商务信托可选择收购该发展项目余下60.0%属于其合资伙伴的权益。这为信托提供了另一个前景不错的增长道。CapitaGreen的竣工也让凯德商务信托法定开发能力提升至约76340万新元,从而具备把握机遇、开发新项目的实力。
根据新加坡金融管理局的咨询文件,政府将对新加坡房地产投资信托市场推行更强有力的监管,此举也对新加坡投资信托长期利好。我们坚持确保资产质量,分散资金流和有效管理投资组合,确保凯德商务信托保持稳定增长的发展态势。追求卓越凯德商务信托致力于为客户提供卓越的服务,我们与租户积极合作,致力于建立牢固持久的伙伴关系。信托在过去一年里成功推出了租户参与的活动,这包括由信托提供的健康食品一年两次分派给租户的活动、环保竞赛及圣诞佳节捐献儿童玩具礼物。这些活动一直得到租户的大力支持,参与率一再创下新高。值得一提的是,我们为租户高级管理人员首次举办的首席执行员(CEO)早餐演讲暨交流会,获得了热烈的响应。
2014年其他亮点包括:7月2日,CapitaGreen庆祝封顶落成典礼,并荣幸邀请到国家展部长许文远先生见证这一重要时刻。凯德商务信托第10届周年纪念庆典也于同日举行邀请了租户和商业合作伙伴共同庆祝。庆宴有丰富的美食和精彩的娱乐节目,还有奖项,以答谢和表彰租户和商业合作伙伴对本信托的大力支持。
获奖与致谢在2014年新加坡企业奖评选中,凯德商务信托荣获房地产投资信托和商业信托组“最佳年报”及“最佳投资者关系”两项金奖殊荣。对于能与单位持有人之间保持及时坦诚的沟通,我们引以为荣。
借此机会,我们要感谢2014年9月22日卸任的前任主席纪德坤,感谢他的杰出领导以及对董事会和该信托的宝贵贡献。
我们也向尊贵的租户、商业伙伴和单位持有人致以诚挚的谢意,感谢大家对信托的坚定信心与大力支持。
司徒国玲主席
2015年2月26日
荣获2014新加坡企业奖“最佳年报”及“最佳投资者关系”金奖
梁静仪首席执行员
举办年度环保竞赛,提倡绿化意识 提供租户健康食品
Scaling New Heights | 11
Portfolio Value Creation Strategy
Portfolio Reconstitution Strategy Model
CapitaGreen• Our first
Grade A office development obtained Temporary Occupation Permit (TOP) on 18 December 2014
CCT adopts a portfolio reconstitution strategy to position our portfolio for growth and continuous development. Over the years, we have proactively managed our assets to enhance and/or unlock the value of our properties in line with our goal to optimise the potential of our portfolio.
• Six Battery Road (Completed in December 2013) • Raffles City Tower (Completed in June 2014) • Capital Tower (Ongoing from November 2013 to December 2015)
• Robinson Point and StarHub Centre (2010) • Market Street Car Park (2011)
Total proceeds: S$639 million
• Twenty Anson (2012) • One George Street (2008) • Wilkie Edge (2008) • Raffles City Singapore (2006) • HSBC Building (2005)
• Market Street Car Park redeveloped into CapitaGreen (Obtained TOP on 18 December 2014)
Unlock value at optimal stage of life cycle
Grow portfolio
Recycle capital Enhance / refurbish asset
Furthering Growth through Development
Redeveloped into CapitaGreenMarket Street Car Park before redevelopment
12 | CapitaCommercial Trust Annual Report 2014
Asset enhancementsEnhance / refurbish asset Unlock value
Divestments AcquisitionsRecycle capital and Grow portfolio
Redevelopment
Flexibility and speed to seize growth
opportunities
Value creation
Funding flexibility
Organic growth
Creating Value with Asset Enhancements
Raffles City Tower • Completed
S$32.3-million AEI at Raffles City Tower in end June 2014
• Achieved return on investment of 9.3%, above target of 8.6%
Capital Tower • Ongoing
S$40.0-million AEI at Capital Tower on schedule for completion in 4Q 2015
• Target return on investment of 7.8%Revitalised main lobby Main lobby before AEI
Drop-off point before AEI
Main lobby before AEI Refurbished main lobby
Canopy extension at main lobby with signature sculpture at new water feature
Scaling New Heights | 13
Property Portfolio
1. Capital Tower
4. Raffles City Singapore
7. HSBC Building 9. Bugis Village 10. Golden Shoe Car Park
8. Wilkie Edge
2. Six Battery Road
5. CapitaGreen 6. Twenty Anson
3. One George Street
14 | CapitaCommercial Trust Annual Report 2014
Portfolio Statistics (Including CapitaGreen)As at 31 December 2013 2014Number of Properties 10 10Net Lettable Area (sq m) 297,726 363,360Net Lettable Area (sq ft) 3,204,703 3,911,207Valuation (S$ million) 6,959.8 7,358.5Number of Tenants 599 626Committed Occupancy (%) 98.7 96.8
CBD Singapore Central Business District
6
10 2
3
89
7
4
Shen
ton
Way
Espl
anad
e Dr
ive
Raffles Avenue
North Brid
ge Road
Victoria Street
Sele
gie
Road
Wilkie RoadOrchard Road
Raffles Boulevard
Rochor Road
Anso
n Ro
ad
Tanjong Pagar
Marina Bay
City Hall
Clarke Quay
Bras Basah
Ascott Raffles Place
Raffles Place
Downtown
Esplanade
Bugis Junction
Bugis
Dhoby Ghaut
Plaza Singapore
Chinatown
Swissotel The Stamford Singapore
Fairmont Singapore
5Cross Street
Church Street
Havelock Road
New Bridge Road
1 Robi
nson
Roa
d
Legend
MRT
CapitaCommercial Trust Properties
Landmarks
CTE
Net lettable area and number of tenants are accounted for on 100.0% interest basis.
Telok Ayer
Scaling New Heights | 15
Central Boulevard
Marina Boulevard
Raffl
es Q
uay
Board of Directors
1 Soo Kok Leng Chairman & Non-Executive Independent Director2 Lim Ming Yan Deputy Chairman & Non-Executive Non-Independent Director3 Lynette Leong Chin Yee Chief Executive Officer & Executive Non-Independent Director4 Dato’ Mohammed Hussein Non-Executive Independent Director5 Lam Yi Young Non-Executive Independent Director6 Goh Kian Hwee Non-Executive Independent Director7 Wen Khai Meng Non-Executive Non-Independent Director8 Chong Lit Cheong Non-Executive Non-Independent Director
Audit CommitteeDato’ Mohammed Hussein Lam Yi YoungGoh Kian Hwee
Corporate Disclosure CommitteeWen Khai Meng Chong Lit CheongSoo Kok Leng
Executive CommitteeLim Ming Yan Lynette Leong Chin YeeWen Khai MengChong Lit Cheong
16 | CapitaCommercial Trust Annual Report 2014
1
5
2
6
4
87
3
Soo Kok Leng
Chairman
Non-Executive Independent Director
Bachelor of Electrical Engineering (Honours), University of Singapore
Master of Business Administration, University of Strathclyde, Scotland
Date of first appointment as a director: 1 January 2013
Date of appointment as chairman: 22 September 2014
Length of service as a director (as at 31 December 2014): 2 years
Board committee served on
• Corporate Disclosure Committee (Member)
Present principal commitments
• Freelance management consulting
• Singapore Cruise Centre Pte Ltd (Chairman and Chairman of remuneration committee)
• Singapore Storage & Warehouse Pte Ltd (Chairman)
• Singapore Technologies Electronics Ltd (Chairman)
Background and working experience
• Corporate Advisor of Temasek International Advisors Pte. Ltd. (Since 2012)
• Adjunct Professor of National University of Singapore, Engineering School (Since 2007)
• Non-Resident Ambassador to Austria, Ministry of Foreign Affairs (Since 2006)
• Corporate Advisor of Singapore Technologies Engineering Ltd (Since 2002)
• Freelance management consultancy (Since 2002)
• Corporate Advisor of Temasek Holdings (Private) Limited (From 2003 to 2012)
• CEO (Acting) of Singapore Cable Car Pte Ltd (From 2003 to 2004)
• Vice President/General Manager of 3Com Technologies (From 1997 to 2002)
• Group General Manager/Executive Director of Falmac Ltd (From 1996 to 1997)
• Engineer to Management of Hewlett Packard Pte Ltd (From 1977 to 1996)
Award
• Public Service Medal (PBM, Pingat Bakti Masyarakat)
Scaling New Heights | 17
Lim Ming Yan
Deputy Chairman
Non-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 committee served on
• Executive Committee (Chairman)
Present directorships in other listed companies
• Ascott Residence Trust Management Limited (manager of Ascott Residence Trust) (Deputy
Chairman)
• CapitaLand Limited
• CapitaMall Trust Management Limited (manager of CapitaMall Trust) (Deputy Chairman)
• CapitaRetail China Trust Management Limited (manager of CapitaRetail China Trust) (Deputy
Chairman)
Present principal commitments (other than directorships in other listed companies)
• Building and Construction Authority (Member of the Board)
• 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 (Member of the Board)
• The Ascott Limited (Chairman)
Directorship in other listed company 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 | CapitaCommercial Trust Annual Report 2014
Lynette Leong Chin Yee
Chief Executive Officer
Executive Non-Independent Director
Bachelor of Science in Estate Management, National University of Singapore
Master of Science in Real Estate, National University of Singapore
Date of first appointment as a director: 1 October 2007
Length of service as a director (as at 31 December 2014): 7 years 3 months
Board committee served on
• Executive Committee (Member)
Present principal commitment
• National Environment Agency (Board Member and Audit Committee Member)
Background and working experience
• CEO of Ascendas South Korea office (From September 2003 to September 2007)
• National Director of LaSalle Investment Management, Asia (From March 2000 to September
2003)
• Vice President of LaSalle Investment Management, Chicago, USA (From January 1999 to March
2000)
• Vice President of LaSalle Investment Management, New York, USA (From January 1997 to
December 1998)
• Associate Director of LaSalle Investment Management, London, UK (From January 1996 to
December 1996)
• Director of Jones Lang Wootton (From 1993 to 1995)
• Senior Officer of United Malayan Banking Corporation Berhad (From 1991 to 1993)
• Senior Officer of Standard Chartered Bank (From 1986 to 1991)
Award
• Best CEOs for Property Sector (Third place) by Institutional Investor magazine in All-Asia
Executive Team Ranking in 2011
Scaling New Heights | 19
Dato’ Mohammed Hussein
Non-Executive Independent Director
Bachelor of Commerce (Accounting), University of Newcastle, Australia
Date of first appointment as a director: 1 January 2009
Length of service as a director (as at 31 December 2014): 6 years
Board committee served on
• Audit Committee (Chairman)
Present directorships in other listed companies
• Gamuda Berhad (Chairman)
• Hap Seng Consolidated Berhad
• Quill Capita Management Sdn. Bhd. (manager of Quill Capita Trust) (Chairman)
Present principal commitments (other than directorships in other listed companies)
• Danajamin Nasional Berhad (Chairman)
• PNB Commercial Sdn. Bhd. (Director)
• Bank of America Malaysia Berhad (Director)
Directorship in other listed company held over the preceding three years
• MCB Bank Limited
Background and working experience
• Senior Advisor of RSM Strategic Business Advisors Sdn Bhd, Malaysia (From July 2008 to 2009)
• Advisor of Malayan Banking Berhad, Malaysia (From April 2008 to September 2008)
• Deputy President & Chief Financial Officer of Malayan Banking Berhad, Malaysia (From 2005 to
January 2008)
• Executive Director, Business of Malayan Banking Berhad, Malaysia (From 2000 to 2005)
• Managing Director of Aseambankers Malaysia Berhad, Malaysia (From 1996 to 2000)
Board of Directors
20 | CapitaCommercial Trust Annual Report 2014
Lam Yi Young
Non-Executive Independent Director
Master of Arts in Engineering, University of Cambridge, UK
Master in Public Administration, Harvard University, USA
Date of first appointment as a director: 15 June 2012
Length of service as a director (as at 31 December 2014): 2 years 6 months
Board committee served on
• Audit Committee (Member)
Present principal commitment
• Deputy Secretary (Policy) of Ministry of Education
Background and working experience
• Chief Executive of Maritime and Port Authority of Singapore (From May 2009 to December 2013)
• Director of Manpower, Ministry of Defence (From June 2005 to April 2009)
• Deputy Director of Personnel, Ministry of Education (From September 2001 to July 2004)
Goh Kian Hwee
Non-Executive Independent Director
Bachelor of Laws (Honours), University of Singapore
Advocate & Solicitor
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 (Member)
Present directorships in other listed companies
• Hong Leong Asia Ltd.
• Hwa Hong Corporation Limited
• QAF Limited
Present principal commitment (other than directorships in other listed companies)
• Rajah & Tann Singapore LLP (Senior Partner)
Background and working experience
He has been a practising lawyer since 1980, principally in corporate and capital markets laws.
Scaling New Heights | 21
Wen Khai Meng
Non-Executive Non-Independent Director
Bachelor of Engineering (First Class Honours), University of Auckland, New Zealand
Master of Business Administration and Master of Science in Construction Engineering, National
University of Singapore
Date of first appointment as a director1: 1 October 2007
Length of service as a director (as at 31 December 2014): 7 years 3 months
Board committees served on
• Corporate Disclosure Committee (Chairman)
• Executive Committee (Member)
Present directorship in other listed company
• Quill Capita Management Sdn. Bhd. (manager of Quill Capita Trust)
Present principal commitment (other than directorship in other listed company)
• CapitaLand Singapore Limited (CEO)
Directorship in other listed company held over the preceding three years
• Ascott Residence Trust Management Limited (manager of Ascott Residence Trust)
Background and working experience
• CEO of CapitaLand Financial Limited (From February 2012 to 2 January 2013)
• Chief Investment Officer of CapitaLand Limited (From July 2009 to February 2012)
• CEO of CapitaLand Commercial Limited (From April 2007 to June 2009)
• Co-CEO of CapitaLand Financial Limited (From April 2007 to June 2009)
• CEO of CapitaLand Financial Limited (From April 2006 to March 2007)
• CEO of CapitaLand Financial Services Limited (From October 2004 to March 2006)
1 Mr Wen Khai Meng was an alternate director to Mr Kee Teck Koon (a former director) from September 2006 to October 2007
Board of Directors
22 | CapitaCommercial Trust Annual Report 2014
Chong Lit Cheong
Non-Executive Non-Independent Director
Bachelor of Engineering (Electronics), University of Tokyo, Japan
Date of first appointment as a director: 25 March 2011
Length of service as a director (as at 31 December 2014): 3 years 9 months
Board committees served on
• Corporate Disclosure Committee (Member)
• Executive Committee (Member)
Present directorship in other listed company
• Quill Capita Management Sdn. Bhd. (manager of Quill Capita Trust)
Present principal commitment (other than directorship in other listed company)
• CapitaLand Limited (Senior Advisor, Strategic Relations)
Background and working experience
• CEO of Regional Investments, CapitaLand Limited (From 3 January 2013 to 31 December 2014)
• CEO of CapitaLand Commercial Limited (From 10 February 2011 to 2 January 2013)
• CEO of International Enterprise Singapore (From June 2006 to December 2010)
• CEO of Jurong Town Corporation (From January 2001 to May 2006)
Scaling New Heights | 23
Ms Lynette Leong Chin Yee
Chief Executive Officer and Executive Non-Independent Director (since October 2007)
Lynette is responsible for the strategic management and growth of CCT. Reporting to the Manager’s
Board of Directors, she is committed to delivering stable investment returns to Unitholders. Together
with the Board, she charts CCT’s future directions. Working closely with her management team, she
ensures that the Trust’s day-to-day finance, investment and asset management strategies are
executed according to its vision, mission and corporate social responsibility objectives. Her
experience is detailed in the Board of Directors’ section.
FINANCE
The Finance team supports CCT’s investment and asset management strategies through quarterly
financial reporting, budgeting, implementation of treasury and taxation policies, as well as sourcing
and management of funds for the Trust’s ongoing operations and acquisitions.
Ms Anne Chua
Head, Finance (since January 2010)
Anne is responsible for CCT’s financial management functions. She oversees all business matters
involving treasury, accounting and fund management, ensuring full alignment with CCT’s investment
strategy while focusing on optimising revenue and investment returns. Anne draws on her extensive
regional experience in finance and treasury with banks, locally listed and multinational companies.
She holds a Bachelor of Business Administration from the National University of Singapore, a Master
of Applied Finance from Macquarie University of Australia and a Master of Professional Accounting
from the Singapore Management University.
INVESTMENT
The Investment team expands and optimises CCT’s property portfolio mix through strategic
acquisitions. It identifies and analyses potential investment targets, and evaluates alternative
investment and asset holding structures to enhance the Trust’s total investment returns. It also
identifies potential divestment targets to enhance the value of the Trust.
Mr Chew Peet Mun
Head, Investment (since March 2008)
Peet Mun’s experience in finance and real estate spans over 15 years. Prior to CCT, Peet Mun was
Vice President of CapitaLand Financial Services Limited where he helped establish and manage
various CapitaLand-sponsored private funds and real estate investment trusts in Singapore and
Malaysia. He holds a Bachelor of Business Administration (First Class Honours) from the National
University of Singapore and was a recipient of the Lee Kuan Yew Gold Medal and MAS Book Prize.
The Manager
24 | CapitaCommercial Trust Annual Report 2014
ASSET MANAGEMENT
The Asset Management team undertakes asset enhancement and environmentally sustainable initiatives to
realise the value potential of CCT’s portfolio. It directs asset enhancement exercises to maximise rental
income, and fosters close ties with tenants to understand and meet their needs. The Asset Management
team works with the Property Managers to execute asset strategies, boost rental and non-rental incomes
and manage operating expenses. It also collaborates with the Investment Team to evaluate acquisition
targets and optimise returns from the assets.
Ms Yvonne Ong
Head, Asset Management (since February 2011)
Yvonne has more than 20 years of real estate experience that includes investment and asset
management, marketing, and property and project management. A CFA charterholder and licensed
appraiser (lands and buildings), Yvonne has a Master of Science in Applied Finance from the
Singapore Management University and a Bachelor of Science (Estate Management) (Honours) from
the National University of Singapore. She is a member of CFA Singapore and the Singapore Institute
of Surveyors and Valuers.
INVESTOR RELATIONS AND COMMUNICATIONS
The Investor Relations and Communications team ensures clear and timely communications with
Unitholders and stakeholders through various communication channels. The team engages
investors, media and analysts through regular meetings, conferences and events, and produces
communication collaterals such as press releases, annual reports and presentations. The team is
responsible for CCT’s website and the “live” webcast of financial results and works closely with the
Property Managers to plan programmes as part of tenant communication.
Ms Ho Mei Peng
Head, Investor Relations and Communications (since March 2006)
Mei Peng brings more than 10 years of experience in managing investor relations and
communications. She has been instrumental to the Trust’s communication and liaison activities, and
is responsible for the delivery of timely and up-to-date information to the investing community. Mei
Peng graduated with an Honours degree in Japanese Studies from the National University of
Singapore.
Scaling New Heights | 25
The property manager provides property management, lease management and marketing services
to the Trust.
Owns Assets
The REIT
CapitaCommercial Trust
The Manager
CapitaCommercial Trust Management Limited
Manages
CapitaLand (RCS) Property
Management Pte. Ltd.
Managed by
Managed by
1. Capital Tower
2. Six Battery Road
3. One George Street
4. CapitaGreen
(40.0% interest)5. Twenty Anson
6. HSBC Building
7. Wilkie Edge
8. Bugis Village
9. Golden Shoe Car Park
10. Raffles City Singapore
(60.0% interest)
Building Managers
Cheong Pei Sze (Capital Tower)
Lim Chiong Kerng (Six Battery Road/
Golden Shoe Car Park)
Alan Chng (One George Street)
Victor Leung (CapitaGreen/HSBC Building)
Agnes Chua (Twenty Anson)
Lau Kok Ching (Wilkie Edge)
Mohd Nasir Bin Allapitchay (Bugis Village)
CapitaLand Commercial Management
Pte. Ltd.
General Manager
Margaret Khoo (Raffles City Singapore)
Head, Marketing
& Leasing
Dawn Lai
Head, Property
Services
Alfred Lim
The Property Manager
26 | CapitaCommercial Trust Annual Report 2014
Date Event
23 January • Achieved distributable income of S$234.2 million and DPU of 8.14 cents for
FY 2013.
15 April • CapitaGreen secured lease commitment for about 12% of total NLA.
• Obtained Unitholders’ approval for renewal of Unit buy-back mandate at
Annual General Meeting.
17 April • Achieved distributable income of S$59.9 million for 1Q 2014.
30 June • During 1H 2014, S$61.50 million of CB due 2015 was converted into CCT
units and S$83.25 million of CB due 2015 was repurchased, reducing the
principal amount to S$45.5 million.
2 July • CapitaGreen marked topping-out milestone with 21% leasing commitment.
• Celebrated CCT’s 10th Anniversary.
15 July • Awarded Gold for both Best Annual Report and Best Investor Relations at the
Singapore Corporate Awards 2014.
18 July • Achieved distributable income of S$124.0 million and DPU of 4.22 cents for
1H 2014.
• Completed AEI for Raffles City Tower and achieved return on investment of
9.3%, which was higher than projected.
14 August • Issued S$50.0 million 2.98% notes due 2021 from the S$2.0 billion
multicurrency Medium Term Note (MTN) Programme.
25 August • Standard & Poor’s upgraded CCT’s long-term corporate credit rating to “A-”
from “BBB+”.
22 September • Mr Kee Teck Koon resigned as Chairman of the Board and Non-Executive
Independent Director
• Mr Soo Kok Leng, a Non-Executive Independent Director, appointed as
Chairman of the Board
26 September • Organised the third CCT Eco Race 2014, in partnership with Singapore’s
Building and Construction Authority and event partner, BMW Asia. Attracted
about 300 participants from 30 organisations.
24 October • Achieved distributable income of S$61.6 million for 3Q 2014.
31 October • Issued JPY6.3 billion floating rate notes due 2021 from the S$2.0 billion
multicurrency MTN Programme. The JPY proceeds were hedged to S$75.0
million at SGD fixed interest rate of 2.95% per annum.
24 November • During 2H 2014, S$7.75 million of CB due 2015 was converted into CCT units
and S$37.50 million of CB due 2015 was repurchased. On 24 November
2014, CCT redeemed the outstanding balance of S$0.25 million and all the
CB due 2015 was cancelled.
17–19 December • Distributed “Gifts of Joy” contributed by tenants and staff to 480
beneficiaries supported by Beyond Social Services.
18 December • Obtained TOP for CapitaGreen.
• CapitaGreen secured lease commitment for 50.4% of total NLA.
31 December • CapitaGreen secured lease commitment for 69.3% of total NLA.
Year in Brief 2014
Scaling New Heights | 27
OUR ROLE
Our primary role as the manager of CCT (Manager) is to set the strategic direction of CCT and make
recommendations to HSBC Institutional Trust Services (Singapore) Limited, in its capacity as trustee
of CCT (Trustee), on acquisition, divestment and enhancement of the assets of CCT 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 CCT. Our primary
responsibility is to manage the assets and liabilities of CCT for the benefit of the unitholders of CCT
(Unitholders). We do this with a focus on generating rental income and enhancing asset value over
time so as to maximise returns from investments, and ultimately distributions and total returns to
Unitholders.
Our other functions and responsibilities as the Manager include:
(a) using our best endeavours to conduct CCT’s business in a proper and efficient manner and to
conduct all transactions with, or on behalf of CCT, 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 CCT and Unitholders;
(d) attending to all regular communications with Unitholders; and
(e) supervising CapitaLand Commercial Management Pte. Ltd. (Property Manager), the property
manager which performs the day-to-day property management functions (including leasing,
marketing, promotion, coordination and property management) for CCT’s properties; with regard
to Raffles City Singapore (RCS), which is held by CCT and CapitaMall Trust (CMT) in the
proportions of 60.0% and 40.0% respectively, the Property Manager holds 60.0% interest in
CapitaLand (RCS) Property Management Pte. Ltd. which provides property management
services to RCS with CapitaLand Retail Management Pte Ltd, the property manager of the malls
owned by CMT, holding the other 40.0%. As a result of its interest in CapitaLand (RCS) Property
Management Pte. Ltd., the Property Manager is able to play a key role in directing the property
management function for RCS.
The Manager also considers sustainability issues (including environmental and social factors) as part
of its responsibilities. CCT’s environmental sustainability and community outreach programmes are
set out on pages 52 to 78 of the Annual Report.
CCT, 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
CCT.
Corporate Governance
28 | CapitaCommercial Trust Annual Report 2014
The Manager was appointed in accordance with the terms of the trust deed constituting CCT dated
6 February 2004 (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 CCT. CL is a long-term real estate developer and investor and has strong inherent interests in the
performance of CCT. CL’s retention of a significant unitholding interest in CCT ensures its
commitment to CCT and aligns its interests with other Unitholders. The Manager’s association with CL
provides the following benefits, amongst other things, to CCT:
(a) stable pipeline of property assets through CL’s development activities;
(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
CCT 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 CCT’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 Relations section on page 50 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.
Scaling New Heights | 29
(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), with non-executive independent Directors
comprising half of the Board. Each Director brings to the Board skills, experience, insights and sound
judgement, which together with his or her strategic networking relationships, serve to further the
interests of CCT. 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 CCT 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 operation of CCT’s
business.
The Board provides leadership to the Management, sets strategic directions and oversees the
management of CCT. 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 CCT 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
(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 46 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.
Corporate Governance
30 | CapitaCommercial Trust Annual Report 2014
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 approval, 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 Board Committees during FY 2014 is set out on page 46 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 or her attendance at formal meetings alone would not do justice to his or her 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 CCT, its strategic directions and policies, the regulatory environment in
which CCT 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.
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 CCT’s operations.
The Board presently comprises eight 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.
Scaling New Heights | 31
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 CCT 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 CCT. The Board has determined
that Mr Soo Kok Leng, Dato’ Mohammed Hussein, Mr Lam Yi Young and Mr Goh Kian Hwee 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 CCT and is responsible for implementing CCT’s
strategies and policies and for conducting CCT’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 the
Management and facilitate robust deliberations on the business activities of CCT and 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
effectiveness of the Board, Board Committee and individual Director. 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.
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 CCT, and taking into account the activities and scale of business of CCT, the size
of the Board and the fact that independent directors constitute 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 independent Directors comprise half of the Board) 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.
Corporate Governance
32 | CapitaCommercial Trust Annual Report 2014
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 CCT
and its business.
The selection of candidates is evaluated taking into account various factors including the current and
mid-term needs and goals of CCT, 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 CCT
for the benefit of Unitholders. The Board believes that each individual Director is best placed to
determine and ensure that he or she is able to devote sufficient time and attention to discharge his
or her duties and responsibilities as a Director of the Manager, bearing in mind his or her 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 CCT 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 or her duties.
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 CCT.
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 CCT’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 CCT. Contributions by an individual Board
Scaling New Heights | 33
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 CCT in the appropriate direction, and the long-term
performance of CCT 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, the 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 Director or as a group, is also entitled to have access to independent professional
advice where required, at the Manager’s expense.
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.
Corporate Governance
34 | CapitaCommercial Trust Annual Report 2014
(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 CCT.
The remuneration of the Directors and employees of the Manager is paid by the Manager, and not by
CCT. 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 36 of the Annual Report. The CEO
does not receive any fees in her 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.
Scaling New Heights | 35
Non-executive Directors (save for Directors who are employees of CL) receive Directors’ fees which
are payable by way of cash and units in CCT (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 CCT’s long-term growth and value.
Directors’ Fees1
Board Members FY 2014 FY 2013
Soo Kok Leng S$ 72,8992,5 S$ 59,0002,3
Kee Teck Koon S$ 69,6494 S$ 93,4002,3
Lim Ming Yan N.A.6 N.A.3,6
Lynette Leong Chin Yee N.A. N.A.
Dato’ Mohammed Hussein S$112,0002 S$111,3002
Lam Yi Young S$ 76,0007 S$ 75,4007
Goh Kian Hwee S$ 76,0002 S$ 76,0002,3
Wen Khai Meng N.A.6 N.A.6
Chong Lit Cheong N.A.6 N.A.6
N.A.: Not Applicable
1 Inclusive of attendance fees of (a) S$2,000 (local director) and S$5,000 (foreign director) per meeting attendance in person
(b) S$1,700 per meeting attendance via teleconferencing or video conferencing, and (c) S$1,000 per meeting attendance at
project and verification meetings subject to a maximum of S$10,000 per Director per annum. Directors’ fees are subject to the
approval of the Manager’s sole shareholder.
2 Each non-executive Director shall receive up to 20% of his Director’s fees in the form of Units (subject to truncation
adjustments). The remainder of the Director’s fees shall be paid in 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 Mr Kee Teck Koon, Mr Soo Kok Leng, Mr Lim Ming Yan and Mr Goh Kian Hwee were appointed as Directors with effect from
1 January 2013. Mr Kee Teck Koon was appointed as Chairman of the Board with effect from 23 January 2013.
4 Mr Kee Teck Koon resigned from the Board with effect from 22 September 2014. Mr Kee will receive all of his Director’s fees
for FY 2014 in cash.
5 Mr Soo Kok Leng was appointed as Chairman of the Board with effect from 22 September 2014.
6 Non-executive Directors who are management appointees of CL do not receive Directors’ fees.
7 All Director’s fees payable to Mr Lam Yi Young, a public officer, will be paid in cash to a government agency, The Directorship
& Consultancy Appointments Council.
(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 CCT’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 CCT’s financial performance,
position and prospects.
Corporate Governance
36 | CapitaCommercial Trust Annual Report 2014
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 CCT’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.
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 CCT’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 CCT and its subsidiaries (CCT Group).
In carrying out this responsibility, in particular, the AC:
(a) makes recommendations to the Board on the risk appetite including associated risk parameters
for CCT 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 CCT 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 CCT 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 Framework (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, the 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 CCT 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 the Management, the AC and the Board.
Scaling New Heights | 37
The Manager has established an approach towards how risk appetite is defined, monitored and
reviewed for CCT Group. Approved by the Board, the Risk Appetite Statement (RAS), addresses the
management of material risks faced by CCT Group. Alignment of CCT 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 CCT’s ERM Framework can be found in the Enterprise Risk Management section
on pages 47 to 49 of the Annual Report.
Internal auditors and external auditors conduct audits that involve testing the effectiveness of the
material internal controls for CCT Group addressing financial, operational, compliance and
information technology risks. This includes testing, where practical, material internal controls in areas
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 Head of Finance of the Manager that:
(a) the financial records for CCT Group have been properly maintained and the financial statements
for the year ended 31 December 2014 give a true and fair view of CCT Group’s operations and
finances; and
(b) the system of risk management and internal controls in place for CCT Group is adequate and
effective in addressing the material risks faced by CCT Group in its current business
environment including material financial, operational, compliance and information technology
risks. The CEO and Head of 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 the Management and both
the internal auditors and external auditors, as well as the assurance from the CEO and Head of
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 CCT 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 CCT 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.
Corporate Governance
38 | CapitaCommercial Trust Annual Report 2014
Audit Committee
Principle 12:
The Board should establish an Audit Committee with written terms of reference which clearly
set out its authority and duties.
All the members of the AC, including the Chairman of the AC, are non-executive independent
Directors. 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
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 CCT Group and any announcements relating to CCT 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 CCT 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.
Scaling New Heights | 39
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 the FY 2014 was approximately S$290,000, of which audit
fees amounted to approximately S$277,000 and non-audit fees amounted to approximately
S$13,000.
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 CCT, that CCT 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
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.
Corporate Governance
40 | CapitaCommercial Trust Annual Report 2014
(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 CCT 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 an Investor Relations & Communications department which facilitates
effective communication with Unitholders, analysts, fund managers and the media.
The Manager actively engages with Unitholders and has put in place an Investor Relations Policy
(Policy) to promote regular, effective and fair communications with Unitholders. The Policy is
uploaded on CCT’s website at www.cct.com.sg.
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
best practices in the corporate disclosure and compliance process.
More information on the Manager’s investor relations with Unitholders can be found in the Investor
Relations section on pages 50 to 51 of the Annual Report and the Policy which is available on CCT’s
website.
CCT is a constituent of a few major indices including the MSCI Global Standard Indices, FTSE4Good
Index Series, and the European Public Real Estate Association (EPRA)/National Association of Real
Estate Investment Trust (NAREIT) Global Real Estate Index, as well as other indices which are widely
tracked and referred to by international fund managers as performance benchmarks in the selection
and monitoring of investments.
CCT’s distribution policy is to distribute at least 90% of its taxable income (other than gains on the
sale of real properties that are determined to be trading gains), with the actual level of distribution
to be determined at the Manager’s discretion.
Scaling New Heights | 41
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 CCT 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 Management matters affecting CCT. Representatives of the Trustee, Directors (including
the respective Chairpersons of the Board and the AC), the Manager’s senior management and the
external auditors of CCT, 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 electronic poll voting for
Unitholders/proxies present at the meeting for all the resolutions proposed at the general meetings.
Votes cast, for or against and the respective percentages, on each resolution will be tallied and
displayed ‘live-on-screen’ to Unitholders immediately at the general meetings. The total number of
votes cast for or against the resolutions and the respective percentages are also 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
Management matters affecting CCT 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 CCT, 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 CCT;
(b) oversees operational, investment and divestment matters within approved financial limits; and
(c) reviews management reports and operating budgets.
The members of the EC also 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 CCT 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 CCT and Unitholders which may include obtaining (where
Corporate Governance
42 | CapitaCommercial Trust Annual Report 2014
practicable) third party quotations or obtaining valuations from independent valuers (in accordance
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 CCT’s
latest audited net tangible assets/net asset value)
• Trustee
• Audit Committee
Transaction2 which:
(a) is equal to or exceeds 3.0% of CCT’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 CCT’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 CCT’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 CCT’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 CCT and Unitholders’ interests.
The Manager maintains a register to record all Interested Person Transactions which are entered into
by CCT (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
Scaling New Heights | 43
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 CCT during FY 2014 are disclosed on page 178 of the Annual Report.
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 CCT:
(a) the Manager is a dedicated manager to CCT 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 CCT 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 CCT 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 CCT, 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 a right of first refusal by CapitaLand Singapore Limited
(CLS) to purchase over properties with certain specified characteristics which may in the future be
identified and targeted for acquisition by CLS or any of its subsidiaries.
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 CCT Group’s securities (i) while in
possession of material unpublished price sensitive information, (ii) during two weeks before the
release of CCT’s results for the first three quarters and (iii) during one month before the release of
CCT’s full-year results. The Manager will also not deal in CCT Group’s securities during the same
period.
Corporate Governance
44 | CapitaCommercial Trust Annual Report 2014
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 CCT Group’s securities on
short-term considerations. They are also regularly reminded of laws against insider trading.
(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:
Scaling New Heights | 45
(a) customer due diligence;
(b) suspicious transaction reporting;
(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
Board Members
Composition Attendance Record of Meetings in FY 2014
Audit
Committee
Corporate
Disclosure
Committee
Executive
Committee
Board
Audit
Committee
Executive
Committee
Number of
Meetings
Held: 4
Number of
Meetings
Held: 4
Number of
Meetings
Held: 1
Soo Kok Leng1,
Chairman
– Member – 4 out of 4 N.A. N.A.
Kee Teck Koon2 – – – 3 out of 3 N.A. N.A.
Lim Ming Yan,
Deputy Chairman
– – Chairman 3 out of 4 N.A. 1 out of 1
Lynette Leong Chin
Yee, CEO
– – Member 4 out of 4 N.A. 1 out of 1
Dato’ Mohammed
Hussein
Chairman – – 4 out of 4 4 out of 4 N.A.
Lam Yi Young Member – – 4 out of 4 4 out of 4 N.A.
Goh Kian Hwee Member – – 4 out of 4 4 out of 4 N.A.
Wen Khai Meng – Chairman Member 4 out of 4 N.A. 1 out of 1
Chong Lit Cheong – Member Member 4 out of 4 N.A. 0 out of 1
N.A.: Not Applicable
1 Mr Soo Kok Leng was appointed as Chairman of the Board with effect from 22 September 2014 in place of Mr Kee Teck Koon.
2 Mr Kee Teck Koon resigned as Chairman of the Board and Director with effect from 22 September 2014.
Corporate Governance
46 | CapitaCommercial Trust Annual Report 2014
Risk management is an integral part of CCT Group’s business at both the strategic and operational
levels. A proactive approach towards risk management supports the attainment of CCT Group’s
business objective and corporate strategy, thereby creating and preserving value.
The Manager of CCT Group 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 is overall responsible for the governance of risk across CCT
Group. The responsibilities include determining CCT Group’s risk appetite, overseeing CCT Group’s
Enterprise Risk Management (ERM) Framework, regularly reviewing CCT 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 currently comprises three independent board members and meets on a quarterly basis. The
meetings are regularly attended by the CEO as well as other key management staff.
The Board has approved CCT Group’s risk appetite which determines the nature and extent of
material risks which CCT Group is willing to take to achieve its strategic objectives. CCT Group’s Risk
Appetite Statement (RAS) is expressed via formal high-level and overarching statements. Having
considered key stakeholders’ interests, CCT Group’s RAS aims to set out explicit, forward-looking
views of CCT Group’s desired risk profile and is aligned to CCT Group’s strategy and business plans.
Enterprise Risk Management Framework
Board Oversight & Senior Management Involvement
Inte
rnal C
on
tro
l S
yste
m
Ind
ep
en
den
t R
evie
w a
nd
Au
ditRisk
Identification
& Assessment
Risk Monitoring
& Reporting
Risk
Response
• Key Risk
Indicators
• Portfolio
Monitoring of
Financial Risks
Risk-Aware Culture
• Accept
• Avoid
• Mitigate
• Transfer
• Risk Appetite
Statement
• Risk & Control
Self Assessment
• Investment Risk
Evaluation
• Scenario Analysis
• Whistle Blowing/
Business Malpractice
Risk Strategy
ERM Framework
CCT Group’s ERM Framework sets out the required environmental and organisational components
which enable CCT 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
Scaling New Heights | 47
A robust internal control system and an effective, independent review and audit process are the twin
pillars that underpin CCT 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 Internal
Audit function 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 CCT’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 CCT Group’s business continuity helps
the Manager minimise the impact of disruption to its business operations. The Manager has in place
a business continuity plan. In addition, the outsourced Information Technology team has 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 CCT Group’s success. Therefore, the Manager works closely with
CapitaLand’s Risk Assessment Group to proactively enhance risk management knowledge within
CCT Group to promote a culture of risk awareness.
Managing Material Risks
The Manager undertakes an iterative and comprehensive approach in identifying, managing,
monitoring and reporting of material risks across CCT Group. Such material risks include:
Competition Risk
CCT Group faces keen competition from other real estate companies, REITs or investors and
managers of commercial real estate. It adopts a relentless approach towards strengthening its
competitiveness through high-quality products and services, effective cost management, pricing,
asset enhancement initiatives and branding. CCT Group also retains tenants through tenant-centric
and branding initiatives. The Manager actively monitors relevant leasing transactions in the market
to assess the rental competitiveness of CCT Group’s properties. The formation of joint ventures with
suitable partner(s), including with its sponsor, CapitaLand Limited, is also an effective way to tap into
a wider pool of expertise and resources.
Economic Risk
CCT Group operates in Singapore, and is exposed to Singapore’s economic, financial and property
market developments. Market illiquidity during a financial crisis makes asset investment and/or
divestment challenging and this can affect CCT Group’s investment, financial or strategic objectives.
The Manager takes a disciplined approach towards financial management, by monitoring the
macro-economic environment trends and their implications on the Singapore commercial property
market.
Financial Risks
CCT Group is exposed to financial risks including liquidity risk, foreign currency risk, and interest rate
risk. The Manager continues to focus on instilling financial discipline, deploying capital to earn the
best risk-adjusted returns and maintaining a strong balance sheet to invest in suitable opportunities.
For more information on CCT Group’s Financial Risk Management, please refer to Financial Risk
Management section on pages 160 to 171 of this Annual Report.
Enterprise Risk Management
48 | CapitaCommercial Trust Annual Report 2014
Fraud and Corruption Risk
The Manager is committed to the highest standards of integrity (one of its core values), and has no
tolerance for any fraud, corruption or bribery in the conduct of its business activities. Consistent with
this commitment, the Manager has in place an employee code of conduct and an anti-corruption
policy. The anti-corruption policy is designed to reiterate the tone from the top and sets out
CapitaLand Global Principles on Ethical Business Conduct. Every year, employees sign the
CapitaLand Pledge to renew their commitment to uphold the Group’s core values. It also has a
whistle-blowing policy to encourage the reporting of suspected reportable conduct by establishing
a clearly defined process through which such reports may be made in confidence and without fear
of reprisal.
Human Capital Risk
Competition for talent within the real estate industry remains intense. The Manager has a competitive
compensation framework designed to attract, retain and motivate talent, as well as to foster a
performance-oriented culture. CCT Group seeks to build a continual leadership pipeline and strong
management bench-strength is ensured through the annual talent review, where succession plans for
key management positions are reviewed and high-potential employees are identified for leadership
development.
Investment and Divestment Risk
To achieve the growth objectives of CCT Group, the Manager acquires properties, undertakes asset
enhancement initiatives and invests in greenfield developments. The risks involved in such activities
are weighed against a rigorous set of investment criteria, which includes rental sustainability and
potential for value creation and DPU accretion.
All major investment and divestment decisions are reviewed and approved by the Board of Directors.
The Manager conducts due diligence reviews in relation to any investment or divestment proposal.
Where necessary, it enlists the Property Manager and third-party consultants with the requisite
expertise to assist in the due diligence review. Each major investment or divestment proposal must
also include a detailed risk assessment, as well as sensitivity analysis and mitigative measures or
control strategies where appropriate.
Property Management Risk
To manage property management risks that arise from the day-to-day activities across all functions,
the Manager has established processes and procedures that seek to ensure that buildings are
well-maintained. The Manager is committed to creating and cultivating an environmentally friendly,
safe and healthy workplace in its buildings. CCT Group is guided by CapitaLand’s Environmental
Management System and Occupational Health and Safety Management System which are externally
audited and certified to internationally recognised ISO 14001 and OHSAS 18001 standards.
Regulatory and Compliance Risk
CCT Group is required to comply with relevant legislations and regulations that include the Listing
Manual of the SGX-ST, Financial Reporting Standards, Securities and Futures Act, industry standards
governed by Building and Construction Authority, Code of Corporate Governance, the CIS Code
issued by MAS and tax rulings issued by the Inland Revenue Authority of Singapore. The Manager
has in place a framework that proactively identifies applicable laws and regulatory obligations, and
embeds compliance into the day-to-day operations.
Scaling New Heights | 49
Providing Meaningful Investor Engagement
With the aim of keeping our stakeholders updated on our strategies, business operations and market
environment, CCT places a high priority on timely, unbiased and transparent communications. We
comply with regulatory requirements and abide by CCT’s Investor Relations Policy (available online
at www.cct.com.sg), while actively engaging our stakeholders.
Our semi-annual financial results briefings are held in January and July each year. Our CEO
personally conducts the presentations and question-and-answer sessions which are webcast “live”
through www.cct.com.sg. These are archived online and made available on demand for a period of
12 months.
In addition, our senior management and investor relations team host quarterly post-results meetings
and annual general meetings, as well as networking sessions and one-on-one meetings in order to
maintain regular interactions with our stakeholders and investing community and share our insights
on strategies, performance and market outlook. CCT also participates in global conferences and
roadshows which allow us to engage investors worldwide. This year, we connected with more than
200 investors in Singapore and around the world.
CCT conducts familiarisation tours of our properties for media, analysts and investors to understand
our ground operations and experience our facilities first hand. In 2014, we continued to host visits to
the CapitaGreen showsuite for about 50 investors and analysts aimed at enhancing their
understanding of the development.
We also engaged the retail and debt investors at events such as SIAS Investment Week and
CapitaLand Debt Investor Day. At the latter, CEOs from the REITs under CapitaLand were present to
take questions from the investors.
We are pleased that CCT continues to be part of the FTSE4Good index and the MSCI Global Standard
Indices.
Testament to our investor relations efforts, CCT was awarded Gold for both Best Investor Relations
and Best Annual Report in the REITs and Business Trusts category at the Singapore Corporate
Awards 2014.
Calendar of Financial Events 2015/2016
Subject to changes by the Manager without prior notice
April 2015 • Release of First Quarter 2015 Results
• Annual General Meeting
July 2015 • Release of Half Year 2015 Results
• Books closure to determine entitlement to distribution
August 2015 • Payment of distribution to Unitholders (six months ending 30 June 2015)
October 2015 • Release of Third Quarter 2015 Results
January 2016 • Release of Financial Year 2015 Results
• Books closure to determine entitlement to distribution
February 2016 • Payment of distribution to Unitholders (six months ending 31 December 2015)
Investor Relations Contact:
Ho Mei Peng, Head, Investor Relations & Communications
Direct: +65 6713 3668
Email: [email protected]
Counter Name: CapitaCom Trust
Investor Relations
50 | CapitaCommercial Trust Annual Report 2014
Investor Relations Activities In 2014
24 January FY 2013 post results investor meeting in Singapore
20–21 February FY 2013 post results investor meetings in Hong Kong
3–5 March Citi Global Property CEO Conference 2014 in Florida, USA
2 April JPMorgan Asia Pacific Real Estate Conference in Singapore
15 April CCT’s Annual General Meeting held at STI Auditorium, Capital Tower
21 April 1Q 2014 post results investor meeting in Singapore
20 May Deutsche Bank Access Asia Conference 2014 in Singapore
24 May CEO presentation to retail investors during Securities Investors
Association (Singapore) or SIAS Investment Week
4 June Nomura Investment Forum Asia 2014 in Singapore
18 July 2Q 2014 post results investor meeting in Singapore
6 August Debt investor meetings in Hong Kong
7–8 August 2Q 2014 post results investor meetings in Hong Kong
11 August CapitaLand Debt Investor Day presentation
26 August Macquarie ASEAN Conference 2014 in Singapore
9 September Debt investor meetings in Tokyo, Japan
10–11 September Investor meetings in Tokyo, Japan
24 October 3Q 2014 post results investor meeting in Singapore
3–6 November Non-Deal Roadshow in Europe
12 November Morgan Stanley 13th Annual Asia Pacific Summit in Singapore
CCT’s 2014 Distributions
The Trust distributes on a semi-annual basis.
Distribution per Unit (cents)
Period Taxable1 Tax-exempt Payment Date
1 January 2014 to 30 June 2014 4.14 0.08 26 August 2014
1 July 2014 to 31 December 2014 4.19 0.05 25 February 2015
1 Taxable income distribution – qualifying investors and individuals (other than those who hold their Units through a partnership)
will generally receive pre-tax distributions. These distributions are exempt from tax in the hands of individuals unless such
distributions are derived through a Singapore partnership or from the carrying on of a trade, business or profession. Qualifying
foreign non-individual investors will receive their distributions after deduction of tax at the rate of 10% (until 31 March 2020 unless
otherwise stated). All other investors will receive their distributions after deduction of tax at the rate of 17%.
Scaling New Heights | 51
Dear Stakeholders,
At CCT, our pursuit for excellence is underpinned by our commitment to sustainable businessobjectives and practices. For the second consecutive year, we are pleased to present the highlightsof our continuous efforts in this sustainability report, in accordance with the principles set out by theGlobal Reporting Initiative G3.1 reporting framework.
Benchmarking our business and operations to international best practices in the industry, weintegrate sustainable practices into our areas of focus relating to corporate governance, riskmanagement, environment stewardship, workplace health and safety, people and the community,and products and services. As wholly-owned subsidiaries of CapitaLand, both we (the Manager) andthe property managers of CCT are also aligned with CapitaLand’s core values and commitment tosustainability.
In upholding corporate governance, we continue to maintain a high ratio of independent directors onthe Manager’s Board of Directors. Since 2013, about half of our Board members, including theChairman, have been independent.
In line with our green philosophy, all our eligible properties have achieved Green Mark certificationfrom the Building and Construction Authority (BCA), with numerous attaining the top accolades ofGreen Mark Platinum and Gold. The newest property in our portfolio that achieved temporaryoccupation permit on 18 December 2014, CapitaGreen, is our first development project. Designedfor a sustainable future, this Grade A, BCA Green Mark Platinum building incorporates energy-savingtechnologies and modern features that raise engineering efficiency. CapitaGreen was also conferredthe BCA Universal Design Mark GoldPLUS (Design) to recognise the building’s barrier-free anduser-friendly features that have been designed for people of all ages and abilities. Additionally, wecontinually introduce energy-efficient improvements when we embark on asset enhancementinitiatives at our existing properties.
Adopting a customer-centric approach, we are committed to service excellence. During the year, wegathered feedback for improvements via individual interviews with our tenants to develop a holisticcustomer experience. Staying ahead of potential emergencies such as severe haze or Ebolaoutbreak, we also implemented precautionary measures including test drills to safeguard our tenantsand enhance our preparedness.
We actively engage our tenants throughout the year via events such as our bi-annual “HealthyTreats”, annual “CCT Eco Race” and the Christmas charity drive, “Gifts of Joy”. This year, CCT EcoRace, which promotes eco-friendly practices among our tenants, was organised in partnership withBCA, and renowned premium car maker, BMW Asia, for its newly launched electric vehicles. We alsocollaborated with LASALLE College of the Arts to collect recycled bottles from our tenants for festivedecorations at one of CCT’s properties, Wilkie Edge.
Furthering our green message, we rolled out a mobile exhibition that was publicly displayed onrotation at all our properties. The exhibition showcased CCT’s green efforts and promoted bettergreen awareness and conduct among our tenants. We continue to actively support local and globalcauses with a green theme, from similar programmes organised by CapitaLand to the World WideFund for Nature’s (WWF) Earth Hour.
Overall, our efforts in driving sustainability have contributed to CCT’s growth. Since CCT’s listing inMay 2004, it has grown its total deposited properties and market capitalisation from S$2.0 billion andS$1.1 billion respectively, to S$7.6 billion and S$5.2 billion respectively as at 31 December 2014. Inparticular, we achieved a distributable income of S$249.2 million and a DPU of 8.46 cents in financialyear 2014, bettering the previous year’s performance by 6.4% and 3.9% respectively.
Indeed, our green efforts are instrumental in shaping our sustainable practices and set a strongfoundation for a green mindset. As we forge ahead into the second decade of growth, we are lookingforward to further strengthening our sustainability efforts and engagement with our stakeholders toinfluence greater participation in green actions.
Lynette Leong Chin Yee
Chief Executive Officer
Sustainability Report
52 | CapitaCommercial Trust Annual Report 2014
INTRODUCTION
Corporate Profile
Listed on SGX-ST, CapitaCommercial Trust is Singapore’s premier commercial REIT and it is the
largest by market capitalisation as at 31 December 2014. We aim to own and invest in quality
income-producing properties and real estate-related assets in the commercial space.
About This Report
This report contains a full year’s data from 1 January to 31 December 2014 and covers CCT’s
properties and joint venture projects in Singapore, unless otherwise indicated. It is developed in line
with the Global Reporting Initiatives (GRI) G3.1 Guidelines. The GRI Index defines the reporting
elements and indicators that provide a comprehensive and balanced review of the Trust’s
sustainability disclosures. The framework driven report, first developed as part of our 2013 Annual
Report, is produced annually as part of the Trust’s annual report which can be downloaded from
www.cct.com.sg.
In an effort to enhance our policies, systems and results, we encourage our stakeholders to send
comments and suggestions concerning our sustainability disclosures to [email protected].
Sustainability Commitment
CCT is managed by the Manager and Property Managers. As wholly-owned subsidiaries of
CapitaLand, the Manager and Property Managers adopted the ethics and code of business conduct
upheld by CapitaLand that stem from its credo of “Building People. Building Communities.” The
sustainability policies guide decision making with regard to business strategies and the daily
operations of its commercial properties, and are aimed at raising the economic, environmental and
social well-being of its stakeholders.
Top Management Support and Staff Involvement
The CapitaLand Group spearheads initiatives in the areas of environment, social and governance,
helmed by CapitaLand’s Sustainability Management framework that comprises its Executive
Management Committee (EMC) which is led by the President & Group CEO with CEOs from the
various Strategic Business Units (SBUs). The latter are appointed as SBU Environmental, Health and
Safety (EHS) Champions responsible for the EHS performance within the business units.
The EMC receives support from CapitaLand’s Sustainability Steering Committee which oversees the
Environment Sustainability and Social Sustainability work teams. The work teams are made up of
representatives from the business units and are responsible for driving initiatives with support from
various departments.
CapitaLand’s Core Values
Respect
We believe in mutual trust and respect at all levels. This is fundamental to a high-performance culture
that embraces diversity and teamwork as One CapitaLand.
Integrity
We embrace the highest standards of integrity. We have the courage to do what is right, and earn the
trust of all our stakeholders.
Creativity
We constantly innovate to enhance value and stay ahead.
Excellence
We pursue excellence and persevere in everything we do.
Scaling New Heights | 53
Stakeholder Engagement
Stakeholder Objectives
Stakeholder
Needs/Interest
Selected Examples of
our Response
Employees Employer of choice 1. Regular engagement
2. Learning and
development
3. Fair and competitive
human resource
policies
4. Equitable system of
recognition and
rewards
5. Safe and healthy
working environment
1. Quarterly
communication
session by senior
management
2. Biennial Employee
Engagement Survey
(EES)
3. Focus on
occupational health
and safety
Investors Choice investment Long-term sustainable
distribution and total
returns
1. Proactive portfolio
and assets
management
2. Prudent capital
management
3. Committed to
corporate
governance
4. Disciplined approach
to acquisition
5. Identification and
mitigation of
environmental, health
and safety risks
Customers Landlord of choice 1. Reliable landlord
2. Quality and well-
maintained office
space
3. Safe working
environment
4. Positive customer
experience
1. Efficient design for
office space
2. Green Mark certified
buildings
3. Seven CCT buildings
conferred Fire
Excellence/Safety
awards from the
National Fire and
Civil Emergency
Preparedness
Council
4. Biennial customer
satisfaction survey
5. Tenants’ engagement
activities
6. Regular meet up
sessions with major
tenants
7. Quarterly newsletter,
your CapitaLetter
Sustainability Report
54 | CapitaCommercial Trust Annual Report 2014
Stakeholder Objectives
Stakeholder
Needs/Interest
Selected Examples of
our Response
Supply chain –
suppliers,
vendors,
contractors
1. A fair and
reasonable
employer of
goods and
services
2. Acquire
knowledge of
best industry
practices
1. Fair and reasonable
treatment
2. Recognition for
exceeding standards
in CCT properties
and projects
1. Customer feedback
system
2. Set up Standard
Operating
Procedures (SOPs)
for compliance
3. Work hand-in-hand
to handle
challenging
situations
4. Term contractor/
vendor evaluation
system
Business
Partners
Build joint ventures
to benefit from best
practices and expert
knowledge
1. Fair and reasonable
actions and dealings
2. Win-win partnerships
1. Regular meetings
2. Invited to corporate
and milestone events
Community Contribute to the
community we
operate in
Environmentally and
socially responsible
organisation
1. Customers and
employees
participation in
engagement events
2. Promote awareness
of environmental
sustainability through
the annual Eco Race
3. Introduce a charity
focus through the
annual Eco Race
4. Collect “Gifts of Joy”
for underprivileged
children during
Christmas
Scaling New Heights | 55
Focus Areas of Sustainability and the Assessment and Feedback Process
Governance Environment Social
Product
Responsibility
Annual general
meeting for
Unitholders
Conducted Enterprise
Risk Management
annually
Conducted internal
audit
Participation in
Investor Relations
Professionals
Association (IRPAS)
CapitaLand’s Green
Buildings Guidelines:
– Environmental
Impact & Universal
Design Assessments
(EIA & UDA)
– Building Information
Modelling (BIM)
Environmental
Tracking System
Continual pursuit to
upgrade Green Mark
certification for
properties
Trained employees to
be Green Mark facility
managers
ISO 14001 certified
Environmental
Management System
(EMS)
People
Quarterly
communication with
staff
Externally conducted
biennial Employee
Engagement Survey
OHSAS 18001
Certified
Occupational Health
& Safety (OHS)
Management System
Community
Annual CCT Eco
Race to promote
“green” awareness
Facebook for Eco
Race participants
Second edition of
“Gifts of Joy”
collection for
underprivileged
children
Customer satisfaction
survey on buildings
and services
Singapore Service
Class
Financial Performance
The Trust achieved strong financial results in 2014, as detailed in CCT Annual Report 2014. Please
refer to Financial Highlights, pages 1 to 3; Financial Review, pages 86 to 88; and Financial
Statements, pages 114 to 177.
GOVERNANCE
CCT’s management executes its policies and processes governed by the highest standards of
corporate governance and transparency in accordance to the Principles of the Code of Corporate
Governance 2012. This adherence to high standards of corporate conduct remains in the interests
of our Unitholders and is pivotal to the Trust’s continued success. Further details on our corporate
governance performance in 2014 can be found on pages 28 to 46 of the Annual Report.
Enterprise Risk Management (ERM)
As part of good corporate governance and resource management, CCT operates a proactive and
comprehensive ERM framework that enables the identification, communication and management of
risks and exposures through integrated, systematic and consistent methods. Decision-making and
business processes undergo prudent risk assessment as instituted by the Manager, thereby
enhancing risk awareness.
Sustainability Report
56 | CapitaCommercial Trust Annual Report 2014
Sustainability risks identified by the Trust include fraud and corruption risks, human capital risks and
property management risks. For further details on ERM, please refer to pages 47 to 49 of the Annual
Report.
ENVIRONMENT
Committed to environmental sustainability, CCT implements energy efficient practices, resource
conservation, waste management and innovative technologies in its buildings, thereby creating value
for stakeholders while enhancing its green footprint.
At CCT, it is the responsibility of each employee to lower the environmental footprint and report
environmental issues such as complaints and non-compliances. Employees are enabled in their
sustainability efforts by the CapitaLand Sustainability Structure, while the ISO 14001 certified EMS
ensures accountability.
Environmental Issues
The Sustainability Steering Committee manages the key environmental issues that affect business
strategy and operations. The Property Managers and Manager of CCT proactively seek to raise
operational efficiency by conserving resources, lowering greenhouse gas emissions and reducing
waste. The Trust adheres to CapitaLand’s Green Buildings Guidelines which safeguards
environmental factors throughout the stages of a property’s life cycle, whether it is undergoing
development or asset enhancement.
In 2014, the environmental protection expenditure for operational properties due to ISO 14001 and
OHSAS 18001 certification was maintained at about S$8,000. This is similar to 2013 as the
certification is an annual exercise. For property under construction, CapitaGreen’s consultancy fee
of S$0.5 million for Green Mark certification has been incurred progressively since 2011 and is
expected to be fully expensed in 2015.
Key
Environmental
Issues Targets Performance for 2014
Operational
Efficiency
• Using 2008 as the base
year to reduce energy and
water usage psm by 15%
by 2015 and 20% by 2020.
• Achieved 17.7% and 18.8%
reduction in energy and water
usage psm respectively.
Resource
Consumption
Management
• All new development
projects to meet Green
Mark Platinum certification.
• Achieved Green Mark Platinum
for CapitaGreen.
• To achieve Green Mark
certification for all CCT
properties.
• Achieved Green Mark GoldPLUS
and above certification for 67%
of CCT properties. Achieved
Green Mark certification for all
CCT properties except for Bugis
Village (No appropriate criteria
under current Green Mark
categories).
Scaling New Heights | 57
Key
Environmental
Issues Targets Performance for 2014
Stakeholder
Engagement
• Organise outreach activities
to promote and engage
stakeholders in
sustainability efforts.
• Organised third Eco Race to
advocate carbon monitoring and
offsetting to participating
tenants.
• Participated in i Light Marina
Bay and WWF’s Earth Hour 2014.
Supply Chain
Management
• Appoint contractors and
service providers who
comply with local
government and other legal
requirements.
• Appoint ISO 14001 and
OHSAS 18001 certified main
contractors or OHS legal
compliance on site.
• Give preference to OHSAS
18001 certified vendors/
suppliers; non-OHSAS
18001 certified vendors/
suppliers encouraged to
achieve certification of
BizSAFE Level 3 and above.
• For CapitaGreen, the main
contractor is both ISO 14001
and OHSAS 18001 certified.
• Non-certified OHSAS 18001
certified vendors/suppliers
engaged by CCT are minimally
BizSAFE Level 3 and above.
Energy Consumption
CCT has set a target to reduce its energy usage per square metre for its portfolio by 15% by 2015
from baseline year 2008, and to achieve a 20% reduction by 2020. The Trust employs an
Environmental Tracking System to monitor the electricity consumption for operational properties,
which was 38,827,998 kilowatt hour (kWh) for 2014. We achieved savings of 17.7% psm across our
portfolio, exceeding the target of 15% by 2015.
For property under construction, CapitaGreen’s direct energy consumption through diesel usage for
2014 was 520,674 litres, while indirect energy consumption through electricity usage measured
878,640 kWh. The development’s increases in electricity consumption from 2013 correspond with
heightened construction activity at the site as the project nears completion. CapitaGreen obtained its
TOP on 18 December 2014.
Energy Efficiency
CCT tracks and reduces energy consumption across its properties through energy efficiency
measures and controls. To conserve energy and raise efficiency, existing chillers and cooling tower
fans were upgraded with variable speed drives or optimised while chilled water and condenser water
pumps were upgraded. Other efforts include the introduction of auto tube cleaning system for chillers
and energy efficient light fittings for car parks.
Sustainability Report
58 | CapitaCommercial Trust Annual Report 2014
During the year, CCT supported i Light Marina Bay 2014, Asia’s biennial sustainable light art festival
that encourages buildings in the vicinity to conserve energy during the festival. Twenty Anson, One
George Street and Wilkie Edge participated in the event which ran from 7 to 30 March. The Trust also
supported Earth Hour 2014 on 29 March with 10 properties joining the effort. Although it was under
construction at the time, CapitaGreen also observed Earth Hour by turning off all non-essential lights.
Annual Electricity Saving1
(psm)
TARGET (Using 2008 as the base year)
15% BY 2015
4.7%
8.9%
11.8%
14.8%17.7%
2010 2011 2012 2013 2014
Annual Electricity Consumption y-o-y
(’000 kWh)
40,837 40,178 38,828
51 580879
2012 2013 2014
Operational properties
2012 cumulative GFA: 3.9 million sqm
2013 cumulative GFA: 4.0 million sqm
2014 cumulative GFA: 4.0 million sqm
Property under construction
1 Raffles City Tower’s data is included from 2012 onwards.
Scaling New Heights | 59
CapitaGreen: New Milestones in Construction, Sustainability and Design
CapitaGreen marked its completion with the receipt of its TOP on 18 December 2014. The
development was accelerated by innovative construction solutions that reduced construction
time to 36 months instead of the usual 40 months. These included the use of larger piles in the
foundation and a top-down construction method that allowed the three-storey basement car
park and the 40-storey super structure to be built concurrently. In addition, the building is the
first in Singapore to use Supercrete, an ultra high-strength concrete, which saved both energy
and manpower.
The iconic 40-storey Grade A office development represents a new achievement in CCT’s focus
on sustainable buildings, with a range of modern eco-friendly features – from energy-efficient
glass on the facade to efficient chillers and rainwater harvesting systems.
At the same time, the building incorporates a universal design that ensures ease of access and
way–finding for customers. In addition to an advanced lift system, art installations as visual cues
for better navigation as well as family-friendly and handicapped-friendly features facilitate
mobility and efficiency. CapitaGreen also features an underground pedestrian network that
enhances accessibility to the surrounding areas for tenants and the public regardless of
weather conditions.
For its achievements in sustainability and design, CapitaGreen was awarded BCA’s Green Mark
Platinum certification in 2012 and Universal Design Mark GoldPLUS (Design) in 2013.
Water Consumption
The majority of water consumed at CCT properties is distributed by PUB, Singapore’s national water
agency. CCT also uses recycled water in cooling towers and sprinklers systems in our operational
properties to lower water consumption. Total water consumption for operational properties and
property under construction in 2014 was 440,634 m3. Recycled water consumed by some of the
operational properties accounted for 148,755 m3 or about 40% of total water used in 2014.
We attained water consumption savings of 18.8% psm from our operational properties, with 2008 as
the base year. The main reason for the lower water consumption savings achieved in 2014 compared
to 2013 was the record-breaking dry spell that lasted from mid-January to mid-March 2014. More
water had to be purchased from PUB to maintain the daily activities in CCT’s properties during the
period. Nonetheless, the savings of 18.8% psm for operational properties has exceeded the target
of 15% by 2015.
Water Efficiency
Apart from the use of recycled water in the cooling towers and sprinkler systems in our properties,
we also installed rain water storage tanks at Six Battery Road, Wilkie Edge, Golden Shoe Car Park
and CapitaGreen, where rain water collected is used in irrigation, condenser tubes cleansing and
hi-jetting of car park decks and ramps, among others. In the recent AEI at Capital Tower, a water
sub-meter was installed at the cooling tower and linked to the building management system for leak
detection. These initiatives help ensure water efficiency as they control and monitor water
consumption.
Sustainability Report
60 | CapitaCommercial Trust Annual Report 2014
Annual Water Saving1
(psm)
TARGET (Using 2008 as the base year)
15% BY 2015
7.8%
15.3%
24.7%
21.7%
18.8%
2010 2011 2012 2013 2014
Higher Total Water Consumption y-o-y
(’000 m3)
339 358 372
38
53
69
2012 2013 2014
Operational properties
2012 cumulative GFA: 3.9 million sqm
2013 cumulative GFA: 4.0 million sqm 2014 cumulative GFA: 4.0 million sqm
Property under construction
1 Raffles City Tower’s data is included from 2012 onwards.
Scaling New Heights | 61
Stable Recycled Water Consumption y-o-y
(’000 m3)
130
150 149
2
3 2
2012 2013 2014
Operational properties
− Capital Tower, Six Battery Road,
One George Street and Raffles City Tower
Property under construction
Greenhouse Gas Emission
During the year, we reduced total greenhouse gas emissions by 3% psm, from 20,0891 tonnes in 2013
to approximately 19,414 tonnes in 2014. This was achieved by improving energy efficiency at the
operational properties, optimising the use of equipment as well as upgrading and replacing existing
equipment. In addition, we have introduced electric vehicle charging stations for electric vehicles in
Capital Tower, Six Battery Road, One George Street and CapitaGreen to encourage car owners to go
green and reduce resource depletion and air pollution. In addition, indirect emissions from air
transport of employees for business activities saw a decline to about 31,793 kg, translating to 40%
reduction from 2013.
Waste Management
Of the nine operational properties in the CCT portfolio, waste data is only collected for seven
properties as not all waste collectors are able to furnish the recycled waste collected as requested.
CCT engages licensed contractors such as SembWaste to conduct waste collection and disposal for
the seven properties. Non-recyclable waste amounted to about 2,555 tonnes in 2014 compared to
2,361 tonnes in 2013. Recyclable waste was higher at 61.0 tonnes in 2014 compared to 2013’s 45
tonnes and comprised paper (55.6 tonnes), metal (0.5 tonnes) and others (4.9 tonnes). The increases
are due to the addition of Six Battery Road and Wilkie Edge whose waste consumptions were not
tracked in 2013. Non-recyclable waste comprising food and construction materials generated by
CapitaGreen was 9,881 tonnes and the total amount of paper recycled was about 1.2 tonnes. The
increases were in line with the rise in manpower and construction activity on site. Stakeholders are
encouraged to reduce, reuse and recycle waste. Recycling bins are installed across the Trust’s
operational properties for such efforts.
Resource Consumption Management
Green-rated buildings are more resource efficient to construct, operate and maintain, thus making
their targets ideal benchmarks to gauge effective resource consumption management. Given that all
CCT properties reside within Singapore, the Trust adopts the Green Mark Certification administered
by the BCA as a standard.
1 Figure has been restated
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62 | CapitaCommercial Trust Annual Report 2014
CapitaLand is committed to ensuring its existing portfolio attain at least a Green Mark certification by
2020, in accordance with Singapore’s Green Building Master Plan. CCT is aligned with this
commitment. All our eligible properties have been awarded the minimum of a Green Mark
certification, and we aim to improve on this to achieve Green Mark GoldPLUS across our portfolio. To
date, nine of CCT’s properties have received a total of 10 awards, with 67% of our properties attaining
GoldPLUS and above.
Sustainability Standards
Green Mark Award
CapitaGreen (obtained TOP on 18 December 2014) Platinum
Six Battery Road Platinum
Twenty Anson Platinum
Capital Tower Platinum
Six Battery Road Tenant Service Centre GoldPLUS (Office Interior)
One George Street GoldPLUS
Raffles City Singapore Gold
Wilkie Edge Gold
Golden Shoe Car Park GoldPLUS
HSBC Building Certified
Other Awards
CapitaGreen (obtained TOP on 18 December 2014) UD Mark GoldPLUS (Design)
Stakeholder Engagement
CCT leverages diverse communication channels and programmes to engage its stakeholders and
drive key environmental messages.
In furthering the environmental cause, CCT formed a “Green” team to share CapitaLand’s green
efforts, discuss methods to create environmentally friendly-offices and recommend tips to encourage
eco-friendly behaviour. Aimed at raising awareness among tenants on sustainability and responsible
green conduct, a four-panel mobile exhibition showcasing CCT’s green buildings and examples of
green actions was put on display at the lobbies of the Trust’s properties.
Scaling New Heights | 63
A Multi-faceted Engagement Approach on Environmental Issues
CCT adopts an all-encompassing approach to connect with its tenants through a wide range of
activities. One major event is the annual CCT Eco Race – CCT’s flagship initiative that is
designed to heighten awareness on environmental issues and sustainable practices.
Recognising that tenants contribute to almost half of a building’s total energy consumption, the
Trust aims to encourage them to lower consumption so as to improve each building’s total
energy performance. In the race’s Facebook, suggestions of simple green actions that one can
easily do in the office were offered to tenants.
Our third annual Eco Race took place in 2014 with BCA supporting us as an event partner for
the second year. The CCT Eco Race attracted 300 participants comprising tenants, BCA staff
and CapitaLand employees. The event was highlighted in the Global Real Estate Sustainability
Report 2014 as an innovative example of tenant engagement in Asia. This report is issued by
GRESB, an industry-driven organisation committed to assessing the sustainability performance
of real-estate portfolios and are relied upon by institutional investors to improve the
sustainability performance of their investments.
CCT also takes a serious view of EHS threats and maintains high vigilance at all times. The
Property Manager instituted precautionary measures and Standard Operating Procedures
(SOPs) to safeguard staff and tenants against severe haze conditions. These included the
distribution of N95 masks to all CCT tenants in June 2014; the closure of sky gardens, outdoor
terraces and automatic doors when PSI levels exceed 150; the installation of additional filters in
the air handling units and other ventilation systems; and the placement of haze kits at each
building’s concierge, tenant service centre and fire command centre. Tenants were informed of
the precautionary measures via a circular.
Addressing the threat of the Ebola epidemic, CCT purchased recommended personal
protection equipment and adjusted existing SOPs to better manage the threat. The latter
includes screenings for visitors at the main entrances of all its buildings should the need arise.
Aimed at better preparing staff, test drills were carried out with the service providers at a few
CCT properties.
PEOPLE
The cornerstone of CCT’s success is its people. Although the Trust does not have employees, the
staff of the Manager and Property Managers form our headcount.
Human Capital
CCT has aligned its processes according to the principles of fair employment and equal
remuneration outlined by CapitaLand. CapitaLand has undertaken the Employers Pledge with the
Tripartite Alliance for Fair Employment Practices on behalf of the Group and adheres to five key
principles of fair employment:
• Recruit and select employees on the basis of merit, such as skills, experience and ability,
regardless of age, race, gender, religion or family status.
• Treat employees fairly and with respect and implement progressive human resource
management systems.
• Provide employees with equal opportunities for training and development based on their
strengths and needs to help them achieve their full potential.
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• Reward employees fairly based on their ability, performance, contribution and experience.
• Abide by labour laws and adopt Tripartite Guidelines which promote fair employment practices.
In 2014, there was no reported incidence of discrimination or human rights violation.
Workplace Diversity
CCT complies with CapitaLand’s policies on non-discriminatory employment practices. All job
opportunities are advertised in the public space via online job portals and newspapers in order to
attract the best talents. Selections are made solely on the basis of skill and abilities without regard
to age, gender, ethnicity or religion.
In 2014, permanent employees formed the majority of our workforce with less than 1% of staff working
on a part-time basis. By tracking manpower movement, we assessed that staff turnover for the year
was 11.7% compared to 10% in 2013. Every employee has to give minimum one month’s notice prior
to resigning. During the year, we retained 100% of male and female employees who went on parental
leave.
Work-life Balance
Our human resource (HR) policies are aimed at achieving a better work-life balance by allowing
employees flexibility in their work arrangements. Employees can opt for flexible hours, job sharing or
part-time work when it suits the job profile.
We also have a flexible benefits scheme which gives employees access to annual health screenings
and free flu vaccinations.
Learning & Development
Learning and development is an integral part of our organisational environment. Our CEO and
corporate Heads of Department meet on a monthly basis to identify and manage learning and
development, career planning and HR concerns.
About 3% of the 2014 payroll is allocated to the learning and development of employees, which
involved certified skills training programmes and personal development courses, as well as industry
seminars and conferences. Over the calendar year, 100%1 of employees joined in a minimum of one
learning event, with an average of 63.2 hours spent on training per employee. This is an improvement
of 32.2% compared to the average learning hours of 47.81 in 2013, reflecting our commitment
towards learning and development of employees. There is also a provision for full-time employees to
receive a maximum of 10 days of paid examination leave in a calendar year to sit for examinations
for sponsored or relevant training courses supported by the company.
In 2014, a group of employees under the Property Manager was selected to undergo a customised
training programme to enhance their communication skills in order to discharge their duties more
effectively.
1 Figures have been restated
Scaling New Heights | 65
Trend of Average Learning Hours Per Employee – from 2010 to 2014
42.4
53.4 53.5
47.8
63.2
2010 2011 2012 20131
2014
Employee Mix by Gender
(%)
44% 44% 47%
56% 56% 53%
20121
20131
2014
Female Male
Employee Diversity by Age
(%)
About 59% of the employees are in the age groups of 30-49 years old
9% 7%
13%
24% 26%
22%
39% 37%37%
28% 30%
28%
2012 20131 2014
< 30 30 - 39 40 - 49 ≥ 50
1 Figures have been restated
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66 | CapitaCommercial Trust Annual Report 2014
Employee Length of Service(%)
More than 65% of the employees are working for more than 5 years with the company
9% 7% 12%
17% 16%
22%
47% 49%
39%
27% 28% 27%
2012 20131 2014
< 1 year 1 - <5 years 5 - <10 years ≥ 10 years
1
Rewarding PerformanceTo drive performance, CapitaLand’s total reward approach includes competitive compensation andbenefits, employee development and the creation of a positive work environment.
Our pay-for-performance policy supports a remuneration package that is benchmarked based ontotal compensation. Employees participate in setting their performance goals for both team andindividual levels – an approach that clearly defines expectations of both performance andcompensation. All staff have access to regular performance feedback.
Legal ComplianceCCT complies with the provisions of the Singapore Government Central Provident Fund andsubscribes to the Flexible Benefits scheme. Under the latter, we provide a number of facilitiesincluding personal accident insurance, group medical insurance, health screenings and free fluvaccinations. CCT adheres to legislations concerning the welfare and rights of our employees.
Anti-Corruption PolicyThe Manager and Property Managers exercise utmost integrity across the operations and in theirbusiness conduct through a policy of strict financial discipline and zero tolerance for corruption,while ensuring their functions and responsibilities are executed to the highest standards.
The Manager identifies and reviews common risks for the Trust and proposes improvements tobusiness operations to circumvent bribery and corruption. The Manager’s Audit Committee receivequarterly reports on compliance which includes report on suspicious activities and incidents of fraud.If there are any reports of suspicious activities, investigation is carried out and offenders dealt withstringently. Any gaps in business processes are then fixed accordingly.
1 Figures have been restated
Scaling New Heights | 67
Our stringent anti-corruption policy is disseminated to staff and partners throughout the supply chainvia a comprehensive system. All service contracts and agreements with our suppliers and partnerscontain mandatory anti-corruption clauses. All employees are given an email address to which theycan report any irregularities or business malpractice. Our policies and procedures on BusinessMalpractice Incidents (BMIs) Reporting allow line and functional managers to report suspiciousbehaviour directly to the CEO.
It is mandatory for every new hire to attend the CapitaLand Immersion Program (CIP) – a group-wideprogramme organised by CapitaLand aimed at inculcating the core values and principles that directthe Group’s operations. Anti-corruption policies and procedures is a compulsory module in theprogramme. In 2014, 100% of all new employees of the Manager and Property Managers attendedthe CIP. There were no cases of corruption reported during the year.
All employees have to attend the course, CapitaDNA: Strengthening Core Values, which is designedto give them insights into the application of the core values in their respective work areas.
Staff EngagementCCT values open communication. It exercises an open door policy that emphasises fair reviews andefficient responses to employment concerns including workplace harassment, grievance handlingand whistleblowing.
Employees are able to highlight issues and share suggestions directly with HR or management viaa range of communication channels. The quarterly communication session is one such forum throughwhich SBU and CCT’s CEO and management team update employees on business results andoperational issues while addressing their work concerns.
Employees are updated on the Group’s recent developments through the quarterly e-newsletter,“i-Connect”, while the CapitaLand intranet portal offers information on employment, benefits, ethicsand corporate governance. We ensure that employees receive adequate guidance, coaching andcounselling on career development and leadership. This is covered by the CapitaLand Counsellingand Advisory Panel (CAP) which consists of experienced leaders within the Group.
CapitaLand engages an independent consultancy firm to carry out a biennial Employee EngagementSurvey (EES) with the aim of assessing the commitment level and perception of the company amongstaff. The last survey was conducted in 2012 and the next survey will be in 2015. Some of theimprovements arising from the findings of the previous surveys included regular feedback sessionswith management through various platforms, improving working conditions with flexible workarrangements as well as career development opportunities through periodic reviews of job load andjob fit. Staff is selected to participate in focus groups to stretch their potential and develop othercompetency levels.
Business ContinuityWith the potential threats of natural disasters, epidemics, terrorism and information systems failure,CCT has instituted a Business Continuity Plan (BCP) to mitigate risks of interruption and ensure rapidrecovery in the event of a crisis. Benchmarked to global and industry best practices, the BCPfacilitates the continued function of core business operations, limits financial and reputationaldamage and shields our tenants from the negative effects of a disruption. The BCP adheres torelevant laws and regulations.
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Occupational Health & Safety (OHS)
CapitaLand’s OHS Management System forms the foundation for CCT’s approach to workplace
safety, and is certified against the international OHSAS 18001 OHS Management System, with the
following commitments:
• Reduce occupational injury rates with the aim to achieve zero harm
• Meet or exceed OHS legal requirements
• Provide a robust OHS Management System
• Promote a culture of individual ownership and responsibility for OHS management
• Seek proactive support and participation from CapitaLand’s stakeholders including top
management, employees, contractors, suppliers and tenants
• Drive continuous improvement in OHS performance
To ensure quick response to an epidemic outbreak, CCT has in place a series of procedures as well
as an emergency response team on-call 24 by 7. The HR department regularly updates employees
with medical advice and travel alerts.
2014 saw an absentee rate of seven days compared to 6.2 days in 2013. There were three reported
incidents of work-related injuries in 2014 compared to none in 2013. The staff affected have since
resumed work and new SOPs and safety measures have been put in place to prevent recurrences.
COMMUNITY
CapitaLand believes that every business requires the community’s support for its continued success.
In contributing to community development. CapitaLand Hope Foundation (CHF) is established as a
philanthropic arm of CapitaLand, to take care of the needs of underprivileged children. CCT partners
CHF in corporate philanthropy and support our staff in participating in community development
initiatives as volunteers and collect funds through various activities. We embrace sustainable
business practices in our properties and continue to raise our stakeholders’ awareness of
sustainability through activities and communication channels.
Corporate Philanthropy
Donations
On 27 September 2014, CCT organised the CCT Eco Race to promote awareness of environmental
sustainability and raise funds for the underprivileged children of TOUCH Community Services. Some
300 participants from 30 organisations took part in the event which saw them race to complete eight
game stations around the Central Business District. The registration fee of S$10 per participant was
matched dollar for dollar by CHF and donated to the TOUCH Community Services to support the
education of its beneficiaries. The total amount donated from this initiative was S$5,930.00.
Employee Volunteerism
More than monetary donations, CHF encourages CapitaLand employees to participate in initiatives
that benefit the community. All staff are encouraged to volunteer for community service projects
through special schemes such as Volunteer Service Leave for up to three days, Volunteer No Pay
Leave and Volunteer Part-Time Work Arrangement. The latter two schemes allow employees longer
periods away from the office to join in CapitaLand’s 2014 community development projects.
In 2014, 25% of CCT employees spent 421 working hours volunteering in community development
projects – a improvement of 4% over the previous year and a testament to the strong spirit of altruism
within the Trust. Each volunteer who uses all three days of Volunteer Service Leave can select a
registered Singapore-based children’s charity to which CHF will donate S$500.00.
Scaling New Heights | 69
CCT also partnered its tenants from five office buildings through the “Gifts of Joy” programme. The
charity drive saw the collection of 980 gifts which went to 480 children and youth beneficiaries of
Beyond Social Services. CapitaLand staff and CCT tenants formed a team of 120 volunteers who
spent two and a half days wrapping the items and distributing them to the homes of the beneficiaries.
This was the first year that tenants were invited to volunteer with us.
Tenant Engagement
We value our tenants as important business partners who contribute to our progress. With their
continued support, CCT is able to achieve its goals across the triple bottomline of people, planet and
profit.
Tenant Appreciation
In expressing our gratitude to our tenants for their support, we engaged the services of Jessie Lim,
a well-known local ceramic artist, to handcraft a unique range of fine porcelain bowls that each tenant
receives as a lease anniversary gift.
Treats are another avenue through which the Trust engages its tenants. The half-yearly engagement
saw tenants receive healthy treats such as bottles of Yakult in May and Nature Valley granola bars in
November. In celebration of CCT’s 10th anniversary, tenants across nine properties also received a
cable charger for mobile devices in May.
Going Green
CCT consistently involves tenants in its sustainability and environmental conservation efforts. The
third Eco Race organised in September 2014 drew participation from 30 tenant organisations. Then
during the Christmas season, the Trust rallied its tenants across six CCT properties to collect some
200 used plastic bottles. These were transformed into an aerial artwork named Anemone by students
from LASALLE College of the Arts and displayed at Wilkie Edge as the centerpiece of its festive
decorations.
The Trust is also a supporter of electric vehicles. In partnership with BMW Group Asia, it installed
electric vehicle public charging stations at five CCT properties, namely, Capital Tower, Six Battery
Road, One George Street, Raffles City Singapore and CapitaGreen. This move benefits CCT tenants
as well as the working community and visitors to the area.
PRODUCT RESPONSIBILITY
In the business of providing service and business space, CCT places keen emphasis on operational
excellence and product responsibility. To this end, we embark on AEIs to ensure premium work
environments. At the same time, we streamline processes and augment customer experience through
IT platforms. Our efforts provide easy access to our products and services, thereby driving
productivity and allowing our tenants to focus on their core businesses.
CCT adheres to CapitaLand’s OHS Management System to secure the health and safety impacts of
a building at the different stages of its life cycle.
Useful Enhancements
Works Promoting Efficiency and Security
AEIs are part of a business strategy through which CCT secures competitive edge and incorporates
innovative features such as security turnstiles, self-registration kiosks and Destination Control
System (DCS) for the lift system into its buildings. Both tenants and their guests benefit from the
enhanced arrival experience and improved building security. In addition, the DCS reduces waiting
and travelling time for lifts by efficiently distributing passengers to selected lifts based on the floors
they want to visit, resulting in fewer interval stops for every lift user. Such innovative features have
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70 | CapitaCommercial Trust Annual Report 2014
been successfully implemented in the recent AEIs at Capital Tower and Twenty Anson. Moving
forward, innovation will be key consideration for CCT in new development projects as well as
enhancing the quality of existing properties. CapitaGreen is a beneficiary of some of these features
which were introduced at the design and development stage. Please refer to pages 60, 93 and 94 of
the Annual Report.
Online Car Park System
Implemented in 2013, the online car park system allows customers to make parking-related
transactions efficiently and conveniently. With the customers’ needs in mind, existing processes were
streamlined and simplified before the system was designed and developed. Currently, the system is
well-utilised by customers and new features to give customers more flexibility are being introduced.
In 2014, Capital Tower also came under the purview of this service. Moving forward, CapitaGreen’s
tenants are set to benefit from the system which, when it is put into service, will allow tenants the
choice of parking at CapitaGreen or Golden Shoe Car Park. It will also introduce Corporate Account
which features more self-help functions to facilitate the convenient planning and execution of tasks
by the tenant company administrator. The features of this system include:
• Additional payment mode by Bank Transfer
• Creation of multiple roles to facilitate communications/coordination within the tenant company
• Ability to apply and cancel multiple season parking space
• Viewing of payment history and retrieval of invoices
• Receipt of tax invoice via email upon successful payment
• Viewing and tracking of “entitled lots”
Customer Satisfaction
CCT relies on innovation to enhance customer experience and provide high quality office space that
caters to modern business needs. The Trust constantly reviews and introduces new initiatives to raise
customer experience, and values customer satisfaction as a key indicator of the quality of its portfolio
and services.
Focusing on Customer Centricity
Further strengthening its commitment towards delighting customers, the Trust saw the creation of a
Customer Experience Management team in 2014 – to focus on the overarching customer experience
framework and shaping of key experiences based on an understanding of customers’ needs and
expectations. Multiple projects to innovate and improve existing offerings and experiences were then
piloted by a Service Excellence taskforce. The members of the taskforce, from diverse functions and
backgrounds, come together to generate ideas and combine expertise to fulfill the customer-centric
objectives.
Building up Service Capabilities
With a better understanding of our customers’ expectations, an EQ Communications training
programme was designed and conducted in 2014 for a selected group of employees under the
Property Manager. With enhanced communication skills, they are more effective and better equipped
to meet and exceed our customers’ expectations.
Gathering Customer Insights
To understand our customers better, insights are gathered through different listening posts, including
surveys, one-on-one interviews, and customer research. These insights are used for shaping of
customer experiences, decision making, validating or innovating products and services, so as to
improve our performance and strengthen our position not only as a landlord of choice but also as the
preferred business partner.
Scaling New Heights | 71
In 2014, we conducted one-on-one interviews with a select group of customers involving key
decision-makers. The interviews included questions on engagement, customer needs and service
level, among others. An annual survey was also conducted with customers at our properties to
monitor the quality of the amenities and facilities across our portfolio.
On a biennial basis, an in-depth customer survey is conducted to determine the various aspects of
our properties that generate customer loyalty and strategic improvement. The exercise also
measures the Trust’s performance in meeting customer expectations in service delivery while
assessing the competitive strengths and weaknesses of each factor so as to allocate resources
effectively. In 2013, we achieved an eQ Index of 75 out of a total score of 100 in accordance with
Nielsen’s Customer eQ model which is above the industry average of 73. The next survey will be
conducted in 2015.
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72 | CapitaCommercial Trust Annual Report 2014
GRI INDEX
Indicator Description Cross Reference/Direct Answer
Strategy and Analysis
1.1 Statement from senior decision-maker CEO’s Message (pg 52)
1.2 Description of key impacts, risks and opportunities Governance (pg 28-46)
Enterprise Risk Management (pg 47-49)
Organisational Profile
2.1 Name of the organisation Corporate Profile (Inside front cover)
2.2 Primary brands, products, and/or services. Corporate Profile (Inside front cover)
2.3 Operational structure of the organisation, including
main divisions, operating companies, subsidiaries
and joint ventures.
Trust Structure (pg 5, 26)
Organisation Structure (pg 5)
2.4 Location of organisation’s headquarters. Corporate Information (Inside back
cover)
2.5 Number of countries where the organisation operates,
and names of countries with either major operations
or that are specifically relevant to the sustainability
issues covered in the report.
Corporate Profile (Inside front cover)
2.6 Nature of ownership and legal form. Corporate Profile (Inside front cover)
2.7 Markets served (including geographic breakdown,
sectors served, and types of
customers/beneficiaries).
Corporate Profile (Inside front cover)
2.8 Scale of the reporting organisation Corporate Profile (Inside front cover)
2.9 Significant changes during the reporting period
regarding size, structure, or ownership
Year in Brief 2014 (pg 27)
2.10 Awards received in the reporting period. Letter to Unitholders (pg 9)
Report Parameters
3.1 Reporting period About this Report (pg 53)
3.2 Date of most recent previous report (if any) CEO’s Message (pg 52)
About this Report (pg 53)
3.3 Reporting cycle (annual, biennial, etc.) About this Report (pg 53)
3.4 Contact point for questions regarding the report or its
contents.
About this Report (pg 53)
3.5 Process for defining report content. About this Report (pg 53)
3.6 Boundary of the report (e.g. countries, divisions,
subsidiaries, leased facilities, joint ventures,
suppliers).
About this Report (pg 53)
3.7 State any specific limitations on the scope or
boundary of the report
About this Report (pg 53)
3.8 Basis for reporting on joint ventures, subsidiaries,
leased facilities, outsourced operations, and other
entities that can significantly affect comparability
from period to period and/or between organisations.
About this Report (pg 53)
Scaling New Heights | 73
Indicator Description Cross Reference/Direct Answer
3.9 Data measurement techniques and the bases of
calculations, including assumptions and techniques
underlying estimations applied to the compilation of
the Indicators and other information in the report.
Explain any decisions not to apply, or to substantially
diverge from, the GRI Indicator Protocols.
Environment (pg 57-62)
People (pg 64-69)
Product Responsibility (pg 70-72)
3.10 Explanation of the effect of any restatements of
information provided in earlier reports, and the
reasons for such re-statement
(e.g.mergers/acquisitions, change of base
years/periods, nature of business, measurement
methods).
Environment (pg 62)
People (pg 65-67)
3.11 Significant changes from previous reporting periods
in the scope, boundary, or measurement methods
applied in the report.
CEO’s Message (pg 52)
About this report (pg 53)
3.12 Table identifying the location of the Standard
Disclosures in the report.
GRI Index (pg 73-78)
3.13 Policy and current practice with regard to seeking
external assurance for the report.
None
Governance, Commitment and Engagement
4.1 Governance structure of the organisation, including
committees under the highest governance body
responsible for specific tasks, such as setting
strategy or organisational oversight.
Corporate Governance (pg 28-46)
Enterprise Risk Management (pg 47-49)
Investor Relations (pg 50-51)
4.2 Indicate whether the Chair of the highest governance
body is also an executive officer.
Board of Directors (pg 16,17-23)
Corporate Governance (pg 31-32)
4.3 For organisations that have a unitary board structure,
state the number and gender of members of the
highest governance body that are independent
and/or non-executive members.
Board of Directors (pg 16, 17-23)
Corporate Governance (pg 31-32)
4.4 Mechanisms for shareholders and employees to
provide recommendations or direction to the highest
governance body.
Sustainability Commitment (pg 53)
Stakeholders Engagement (pg 54-55)
Environment (pg 57-64)
People (pg 64-69)
Community (pg 69-70)
Product Responsibility (pg 70-72)
4.5 Linkage between compensation for members of the
highest governance body, senior managers, and
executives (including departure arrangements), and
the organisation’s performance (including social and
environmental performance).
Letter to Unitholders (pg 6-9)
Corporate Governance (pg 35-37)
Environment (57-64)
People (pg 64-69)
4.6 Processes in place for the highest governance body
to ensure conflicts of interest are avoided.
Corporate Governance (pg 28-46)
4.7 Process for determining the composition,
qualifications, and expertise of the members of the
highest governance body and its committees,
including any consideration of gender and other
indicators of diversity.
Board of Directors (pg 16, 17-23)
Corporate Governance (pg 31-34)
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74 | CapitaCommercial Trust Annual Report 2014
Indicator Description Cross Reference/Direct Answer
4.8 Internally developed statements of mission or values,
codes of conduct, and principles relevant to
economic, environmental, and social performance
and the status of their implementation.
Corporate Profile (Inside front cover)
Sustainability Commitment (pg 53)
Environment (pg 57-64)
People (pg 64-69)
Community (69-70)
Product Responsibility (70-72)
4.9 Procedures of the highest governance body for
overseeing the organisation’s identification and
management of economic, environmental, and social
performance, including relevant risks and
opportunities, and adherence or compliance with
internationally agreed standards, codes of conduct,
and principles
Introduction (pg 53)
Corporate Governance (pg 36-38)
Enterprise Risk Management (pg 47-49)
Environment (pg 57)
People (pg 64-69)
Community (pg 69)
4.10 Processes for evaluating the highest governance
body’s own performance, particularly with respect to
economic, environmental, and social performance.
Corporate Governance (pg 33-34)
4.11 Explanation of whether and how the precautionary
approach or principle is addressed by the
organisation.
Corporate Governance (pg 36-40)
Enterprise Risk Management (pg 47-49)
Environment (pg 57, 64)
People (pg 64-69)
4.12 Externally developed economic, environmental, and
social charters, principles, or other initiatives to
which the organisation subscribes or endorses.
Stakeholder Engagement (pg 54-55)
Environment (pg 57-58)
People (pg 64-69)
4.13 Memberships in associations (such as industry
associations) and/or national/international advocacy
organisations in which the organisation: * Has
positions in governance bodies; * Participates in
projects or committees; * Provides substantive
funding beyond routine membership dues; or * Views
membership as strategic.
Represented by CapitaLand Limited in
various government agencies and non-
government organizations.
4.14 List of stakeholder groups engaged by the
organisation.
Stakeholder Engagement (pg 54-55)
4.15 Basis for identification and selection of stakeholders
with whom to engage.
Stakeholder Engagement (pg 54-55)
4.16 Approaches to stakeholder engagement, including
frequency of engagement by type and by stakeholder
group.
Stakeholder Engagement (pg 54-55)
Focus Areas of Sustainability (pg 56)
4.17 Key topics and concerns that have been raised
through stakeholder engagement, and how the
organisation has responded to those key topics and
concerns, including through its reporting.
Stakeholder Engagement (pg 54-55)
Focus Areas of Sustainability (pg 56)
Environment (pg 57, 63-64)
Community (pg 69-71)
Economic Performance Indicators
EC1 Information on the direct economic value generated
and distributed has been provided.
Financial Performance (pg 1-3, 86-88,
114-177)
EC3 Coverage of the organisation’s defined benefit plan
obligations.
People (pg 67)
EC4 Significant financial assistance received from
government.
No significant financial assistance
received from the government.
Scaling New Heights | 75
Indicator Description Cross Reference/Direct Answer
EC8 Development and impact of infrastructure
investments and services provided primarily for
public benefit through commercial, in-kind, or pro
bono engagement.
Environment (pg 60)
Environmental Performance Indicators
EN3 Direct energy consumption by primary energy
source.
Environment (pg 58-59)
EN4 Indirect energy consumption by primary source. Environment (pg 58-59)
EN5 Energy saved due to conservation and efficiency
improvements.
Environment (pg 58-59)
EN6 Initiatives to provide energy-efficient or renewable
energy based products and services, and reductions
in energy requirements as a result of these initiatives.
Environment (pg 58)
EN7 Initiatives to reduce indirect energy consumption and
reductions achieved.
Environment (pg 58-60)
Operations Review (pg 93-94)
EN8 Total water withdrawal by source. Environment (pg 60-61)
EN10 Percentage and total volume of water recycled and
reused.
Environment (pg 60-61)
EN16 Total direct and indirect greenhouse gas emissions
by weight.
Environment (pg 62)
EN17 Other relevant indirect greenhouse gas emissions by
weight.
Environment (pg 62)
EN18 Initiatives to reduce greenhouse gas emissions and
reductions achieved.
Environment (pg 62)
EN21 Total water discharge by quality and destination. Waste water from operational properties
is discharged into the public sewerage
system. Waste water at the construction
site of CapitaGreen is recycled and re-
used for vehicular washing.
EN22 Total weight of waste by type and disposal method. Environment (pg 62)
EN23 Total number and volume of significant spills. There were no significant spills identified.
EN28 Monetary value of significant fines and total number
of non-monetary sanctions for non-compliance with
environmental laws and regulations.
There were no monetary value of
significant fines and non-monetary
sanctions for non-compliance with laws
and regulations.
EN30 Total environmental protection expenditures and
investments by type.
Environment (pg 57)
Social – Labour Practices
LA1 Total workforce by employment type, employment
contract, and region, broken down by gender.
People (pg 66-67)
LA2 Total number and rate of new employee hires and
employee turnover by age group, gender, and region.
People (pg 65)
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76 | CapitaCommercial Trust Annual Report 2014
Indicator Description Cross Reference/Direct Answer
LA5 Minimum notice period(s) regarding significant
operational changes, including whether it is specified
in collective agreements.
People (pg 65)
LA7 Rates of injury, occupational diseases, lost days, and
absenteeism, and number of work-related fatalities by
region and by gender.
People (pg 69)
LA10 Average hours of training per year per employee by
gender, and by employee category.
People (pg 66)
LA12 Percentage of employees receiving regular
performance and career development reviews, by
gender.
People (pg 67)
LA13 Composition of governance bodies and breakdown of
employees per employee category according to
gender, age group, minority group membership, and
other indicators of diversity.
Board of Directors (pg 16, 17-23)
People (pg 66-67)
LA14 Ratio of basic salary and remuneration of women to
men by employee category, by significant locations
of operation.
People (pg 64-65)
LA15 Return to work and retention rates after parental
leave, by gender.
People (pg 65)
Social – Human Rights
HR4 Total number of incidents of discrimination and
corrective actions taken.
People (pg 65)
HR6 Operations and significant suppliers identified as
having significant risk for incidents of child labour,
and measures taken to contribute to the effective
abolition of child labour.
Environment (pg 58)
People (pg 64-65)
HR7 Operations and significant suppliers identified as
having significant risk for incidents of forced or
compulsory labour, and measures to contribute to the
elimination of all forms of forced or compulsory
labour.
Environment (pg 58)
People (pg 64-65)
Social – Society
SO1 Percentage of operations with implemented local
community engagement, impact assessments, and
development programs.
Environment (pg 57, 60)
Community (pg 69-70)
SO2 Percentage and total number of business units
analysed for risks related to corruption.
People (pg 67-68)
SO3 Percentage of employees trained in organisation’s
anti-corruption policies and procedures.
People (pg 67-68)
SO4 Actions taken in response to incidents of corruption. People (pg 67-68)
SO8 Monetary value of significant fines and total number
of non-monetary sanctions for non-compliance with
laws and regulations.
There were no monetary value of
significant fines and non-monetary
sanctions for non-compliance with laws
and regulations.
Scaling New Heights | 77
Indicator Description Cross Reference/Direct Answer
Social – Product Responsibility
PR1 Life cycle stages in which health and safety impacts
of products and services are assessed for
improvement, and percentage of significant products
and services categories subject to such procedures.
Product Responsibility (pg 70)
PR3 Type of product and service information required by
procedures and percentage of significant products
and services subject to such information
requirements.
Product Responsibility (pg 70-71)
PR5 Practices related to customer satisfaction, including
results of surveys measuring customer satisfaction.
Product Responsibility (pg 71-72)
PR9 Monetary value of significant fines for non-
compliance with laws and regulations concerning the
provision and use of products and services.
There were no significant fines for non-
compliance with laws and regulations for
contractors/consultants.
Sustainability Report
78 | CapitaCommercial Trust Annual Report 2014
THE SINGAPORE MARKET
According to the Ministry of Trade and Information (MTI), Singapore’s economy grew moderately by
2.9% in 2014. The manufacturing sector grew by 2.6%, while services producing industries
expanded by 3.2%. The main growth contributors to the services producing industries were the
finance and insurance, and business services sectors. In line with this moderate growth, demand for
office space remained healthy and registered a net absorption of 1.1 million square feet for the entire
year.
THE OFFICE MARKET
Existing Supply
The total islandwide office stock in Singapore rose by 2.4% y-o-y to 55.5 million sq ft in 4Q 2014. JEM
(315,390 sq ft) came on stream in the early part of 2014, followed by Orchard Gateway (37,000 sq
ft), Paya Lebar Square (430,000 sq ft), Westgate Tower (306,400 sq ft) and CapitaGreen (700,000 sq
ft) in the later part of the year.
The CBD Core in Singapore includes the Marina Bay, Raffles Place, Shenton Way and Marina Centre
micro-markets, and is the pre-eminent choice for office occupiers to locate their front office services
and related business functions. Supply in the CBD Core registered a 2.4% y-o-y growth in 4Q 2014
to 27.8 million sq ft, accounting for 50.1% of islandwide office stock. Grade A office stock is found
principally in the CBD Core and accounted for 11.7 million sq ft (42.2%) of office space in the area.
Future Supply
Over the next three years, total island-wide office supply is expected to increase by 6.4 million sq ft.
Approximately 3.5 million sq ft or 54.7% of this new supply will be in the CBD Core.
Island-wide Future Office Supply
(Million sq ft)
0.4
0.7
0.4
2015
2.2
1.4
0.1
2016
0.3
0.6
2017
0.6
2018
CBD Core Fringe CBD Decentralised
Source: CBRE Research
Independent Market Review
Scaling New Heights | 79
South Beach Tower (527,450 sq ft) is the only major office development in the CBD completing in
2015. Thus, CBRE Research anticipates market availability in the CBD to remain tight for the year.
New supply in the CBD will increase sharply in 2016 as four developments, namely Marina One
(1,875,630 sq ft), Guoco Tower (850,000 sq ft), DUO (570,475 sq ft) and Five Shenton Way (277,540
sq ft) are projected to come on stream that year. Supply will then moderate again from 2017 onwards,
when buildings such as Oxley Tower (111,710 sq ft) and Frasers Tower (645,000 sq ft) in the CBD,
and Vision Exchange (500,000 sq ft) in Jurong East, are completed.
Demand and Vacancy
CBD Core Office Supply and Demand
(‘000 sq ft)
0%
2%
4%
6%
8%
10%
12%
14%
(400)
(200)
0
200
400
600
800
1,000
1,200
1,400
1,600
1Q
2011
2Q
2011
3Q
2011
4Q
2011
1Q
2012
2Q
2012
3Q
2012
4Q
2012
1Q
2013
2Q
2013
3Q
2013
4Q
2013
1Q
2014
2Q
2014
3Q
2014
4Q
2014
New completions
(sq ft) (LHS)Quarterly Net Absorption
(sq ft) (LHS)
Vacancy Rate
CBD Core (RHS)
Vacancy Rate
Grade A CBD Core
(RHS)
Vacancy Rate
Grade B CBD Core
(RHS)
Source: CBRE Research
The CBD Core office net absorption for 2014 remained healthy at 771,180 sq ft, although this was a
21.9% decrease compared to the year before.
Vacancy levels have been declining over the past three years, indicating tightening availability of
office space as new supply was absorbed by positive net demand for office space and older
buildings were concurrently taken off the market for redevelopment. The islandwide vacancy rate was
4.7% in 4Q 2014, and vacancy rate in the CBD Core was even lower at 4.3%. Heightened by limited
pipeline of new office supply over the next few quarters, CBRE Research expects vacancy rates to
remain tight.
Independent Market Review
80 | CapitaCommercial Trust Annual Report 2014
Rental Values
CBD Core Monthly Rental Values
(S$ psf)
$1
1.0
0
$9
.58
$9
.75
$1
1.2
0
$7
.86
$7
.50
$7
.70 $8
.55
15%
20%
25%
30%
35%
40%
45%
$0
$2
$4
$6
$8
$10
$12
1Q
20
11
2Q
20
11
3Q
20
11
4Q
20
11
1Q
20
12
2Q
20
12
3Q
20
12
4Q
20
12
1Q
20
13
2Q
20
13
3Q
20
13
4Q
20
13
1Q
20
14
2Q
20
14
3Q
20
14
4Q
20
14
Grade A (CBD Core) Grade B (CBD Core) Premium of Grade A overGrade B (RHS)
Source: CBRE Research
Grade A CBD Core rents and Grade B CBD Core rents were S$11.20 psf (14.9% y-o-y growth) and
S$8.55 psf (11.0% y-o-y growth) respectively in 4Q 2014. This marked the fifth consecutive quarter
of rental increment for the Singapore office market. The increase in rents due to the tightening of
available space was reflected in both the Grade A and Grade B CBD Core sub-markets, with the
former registering a higher rate of growth compared to the latter.
CBRE Prime Office Occupancy Costs
Out of the 126 office markets tracked in the CBRE Prime Office Occupancy Costs 2014 report, over
half (74 markets) reported an increase in their prime occupancy costs, while 33 markets (26%)
reported a decline with the remaining 19 markets (15%) reporting no changes. The cost to occupy
prime office space was steadily increasing, and this was in line with the global economic recovery.
For the 12 months ended 3Q 2014, global prime office occupancy costs rose at a 2.5% annual rate
mainly due to the strong gains in the Americas (4.1%) and Asia Pacific (2.8%).
Asia-Pacific had seven markets ranked among the top 10 most expensive globally – Hong Kong
Central, Beijing’s Finance Street, Beijing’s CBD, New Delhi’s Connaught Place CBD, Hong Kong-West
Kowloon, Tokyo (Marunouchi/Otemachi) and Shanghai Pudong. Comparatively, Singapore ranked
14th on the index with an occupancy cost of US$112.91 (S$151) psf per annum. Thus, from a cost of
business perspective, Singapore remained a competitive location for multi-national corporations.
Scaling New Heights | 81
Prime Office Occupancy Costs Index (Asia Pacific Top 10 Cities)
(US$ psf per annum)
250.61
197.75189.39
153.65158.47
136.46127.89
112.14103.52
112.91
Hong
Kong
Centr
al
Beiji
ng
(Fin
ance
Str
eet)
Beiji
ng
(C
BD
)
Hong
Kong
(We
st
Kow
loon)
New
Delh
i(C
BD
)
Shang
hai
(Pud
ong
)
Tokyo
(Maru
no
uchi
Ote
ma
chi)
Shang
hai
(Puxi)
Mum
bai
Sin
ga
pore
Source: CBRE Research (as at December 2014)
The Office Investment Market and Capital Values
The preliminary total investment volume across all real estate sectors in Singapore decreased by
approximately 32.1% y-o-y in 2014 to S$16.7 billion. S$4.8 billion (29.0%) of these investments for the
year was from the office sector. The drop in transaction value was due in part to a dearth of large
commercial assets available for sale. Out of the 184 private deals transacted in 2014 (24 transactions
were pure office deals) across all sectors, 19 were above $100 million and the rest were priced below
S$100 million.
The top five notable office developments transacted in 2014 included Straits Trading Building
(S$450.0 million), Prudential Tower (S$512.0 million), Equity Plaza (S$550.0 million), Westgate Tower
(S$579.4 million) and one third stake in Marina Bay Financial Centre Tower 3 (S$1.2 billion). Most
investment deals were transacted at low initial yields, with buyers’ expectation for higher yields
arising from positive rental reversions in the future. Prudential Tower and Equity Plaza were sold to
buyers who were reportedly sub-dividing the buildings into smaller strata-title floors or units for sale.
Independent Market Review
82 | CapitaCommercial Trust Annual Report 2014
Prime Office Capital Values and Net Yields
(S$ psf)
$2,600
$2,400
$2,600
$2,850
$2,100
$2,200
$2,300
$2,400
$2,500
$2,600
$2,700
$2,800
$2,900
3.2%
3.4%
3.6%
3.8%
4.0%
4.2%
4Q 2011
Net Prime Yield (RHS)Prime Capital Value (LHS)
4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014
Source: CBRE Research
Grade A office capital values registered a 9.6% y-o-y growth to S$2,850 psf in 4Q 2014, with yields
compressing to 3.75% from 3.79% vis-a-vis the previous quarter, but expanding by 0.24% y-o-y in
line with rising market rentals.
The investment market is likely to remain relatively subdued in 2015 due to a lack of properties up
for sale. However, CBRE Research expects continued interest in enbloc and strata buildings for the
office sector.
Office Market Outlook
Singapore’s economic outlook for 2015 remains positive with an anticipated growth forecast of 2.0%
to 4.0%.
Leasing demand is expected to remain positive with the bulk of leasing activity likely to be
concentrated within the CBD Core. Vacancy levels are likely to remain low due to tight supply from
2015 to 1H 2016. However, with new expected supply coming in from 2H 2016 to 2017, the pressure
on vacancy rates to tighten will ease.
Rental growth is expected to remain through the next couple of quarters, particularly for 1H 2015, as
a result of tightening of available space in the market. CBRE Research expects the Grade A
sub-market to maintain its lead in the rise in the rental market. Grade B rents are also expected to
grow, albeit at a slower pace. Grade A CBD Core rents are expected to increase by 11.6% in 2015,
whereas Grade B CBD Core rents are expected to increase by 4.1% over the same period.
Rental growth is likely to taper from mid 2016 due to the oncoming sizeable supply. Both Grade A and
Grade B rents may ease and subsequently dip from 2016 to 2017. Going forward, tenant retention will
become more critical as the occupiers are presented with more space options.
Scaling New Heights | 83
CBD Core Monthly Rental Values
(S$ psf)
8.10
9.90
11.00
9.58 9.75
11.20
12.50
11.25
5.77
7.227.86
7.50 7.70
8.558.90
8.50
Grade A CBD Core Grade B CBD Core
2009 2010 2011 2012 2013 2014 2015F 2016F
Grade A CBD Coreprojected rent
Grade B CBD Coreprojected rent
Source: CBRE Research
Singapore REITs and Business Trusts Market Overview
Singapore is now one of the largest REIT markets in Asia. As at 4Q 2014, there were 34 listed REITs
and Business Trusts in Singapore with an aggregate market capitalisation exceeding S$61 billion. In
2015, a possible new REIT listing to look out for is Centurion Corp (formerly known as SM Summit
Holdings). With purpose-built workers facilities in Malaysia and student accommodation in Australia
and the UK, Centurion Corp is currently exploring the possibility of a REIT for dormitories.
The REIT regime in Singapore was established with the objective of providing investors with a
platform to gain exposure to real estate assets that encompassed diversification of risks through
pooling. Over the years, REITs have increasingly become a viable investment option for investors. To
further improve the regulatory regime governing REITs and REIT managers, there have been
deliberations to leverage on the strength of the current existing regime to further improve investor
confidence and growth.
There are new considerations by the MAS to strengthen the corporate governance and transparency
of the REITs and Business Trusts market. These new considerations include imposing new statutory
duties on REIT managers and its individual directors, increasing the representation of independent
directors on the Board of REIT Managers, more disclosure on remuneration of directors and key
executives and use of income support structures for acquisitions, and more alignment of
performance fee payable to REIT Managers to unitholders’ interests.
In addition, there are also proposals by MAS to improve the operational flexibility of REITs. These
include the adoption of a single-tier gearing limit of 45.0%, and increasing the development limit of
REITs from 10.0% of total deposited properties to 25.0%. While these measures might improve a
REIT’s ability to earn higher returns, they may also imply potentially higher volatility for an otherwise
Independent Market Review
84 | CapitaCommercial Trust Annual Report 2014
stable sector. Hence, the ability of REIT managers to effectively manage and optimise their property
portfolios would become even more important, and enhanced disclosure requirements to enable
unitholders to better assess the performance of REIT Managers is essential.
All in all, the proposed enhancements serve to improve operational effectiveness, transparency, and
corporate governance in the S-REIT market, and will improve the sector’s attractiveness to issuers
and investors. This would lead to more liquidity and REIT listings, and even more importantly,
strengthen the entire S-REIT market to benefit not just the financial sector, but also the real estate
sector and overall economy in Singapore in years to come.
Qualifying Clause
This Report is subject to the following limiting conditions:
The content of this report is for information only and should not be relied upon as a substitute for professional advice, which should
be sought from CBRE prior to acting in reliance upon any such information.
The opinions, estimates and information given herein or otherwise in relation hereto are made by CBRE and affiliated companies in
their best judgment, in the utmost good faith and are as far as possible based on data or sources which they believe to be reliable
in the context hereto.
Where it is stated in the Report that information has been supplied to CBRE by another party, this information is believed to be reliable
by CBRE. Other information is derived from sources which we believe to be reliable to the best of our ability. We can accept no
responsibility if this should prove not to be so.
Notwithstanding this, CBRE disclaims any liability in respect of any claim that may arise from any errors or omissions, or from
providing such advice, opinion, judgment or information.
All rights are reserved. No part of this report may be reproduced, stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of CBRE Pte Ltd.
Scaling New Heights | 85
Achieving New Heights
CCT reached a major milestone with the completion of CapitaGreen in end 2014. The timely
achievement places the Trust in a strong position for growth as it captures the expected rise in office
market rents. FY 2014 also saw the completion of an AEI at Raffles City Tower which delivered a 9.3%
return on investment, while Capital Tower’s AEI remains on schedule for completion in 4Q 2015.
The Trust achieved strong portfolio occupancy and higher signing rents during the financial year
buoyed by active leasing efforts and a tight office market. We continued to leverage the debt market
and secure opportunities to issue debt at low interest rates with long-dated maturities. At the same
time, we maintained a low gearing of 29.3% which afforded a debt headroom of S$1.3 billion,
assuming 40.0% gearing, and the flexibility to fund future opportunities for growth.
Change in Accounting Policy for Joint Venture Projects
From 1 January 2014, as a result of FRS 111 Joint Arrangements, the Group has changed its
accounting policy for its interests in joint arrangements. Under FRS 111, the Group has classified its
interests in joint arrangements as either joint operations (if the Group has rights to the assets, and
obligations for the liabilities, relating to an arrangement) or joint ventures (if the Group has rights only
to the net assets of an arrangement). When making this assessment, the Group considered the
structure of the arrangements, the legal form of any separate vehicles, the contractual terms of the
arrangements and other facts and circumstances. Previously, the structure of the arrangement was
the sole basis of classification.
At 31 December 2013, the Group had investments under joint arrangements. RCS Trust and MSO
Trust were accounted for as jointly-controlled entities using the proportionate consolidation method.
The Group has re-evaluated the rights and obligations of the parties to these joint arrangements and
has determined that the parties in these joint arrangements have rights to the net assets of the joint
arrangements. Accordingly, these joint arrangements have been classified as joint ventures under
FRS 111 and are accounted for using the equity method. The amendments were applied
retrospectively.
Financial Review
86 | CapitaCommercial Trust Annual Report 2014
Financial Performance for 2014
Gross Revenue
Gross revenue for FY 2014 stood at S$262.6 million1, marking an increase of 4.4% or S$11.1 million
from the year before which resulted from higher revenue contributions from all properties except One
George Street. Lower contribution from One George Street stemmed from the lack of yield protection
income which ceased on 10 July 2013.
FY 2014 Gross Revenue by Property
(S$ million)
135.5 139.5
66.6 61.2
65.0
57.6 53.3
21.7 20.4 12.8 11.6 12.8
50.22
22.3 20.4 13.3 11.9 12.9
CapitalTower
Six BatteryRoad
One GeorgeStreet
TwentyAnson
HSBCBuilding
Golden ShoeCar Park
BugisVillage
WilkieEdge
60.0% interestin
Raffles CitySingapore
FY 2013 FY 2014
Accounted for using equity method
40.0% interestin
CapitaGreen
Net Property Income
During the year in review, net property income grew 4.1% to S$205.2 million1 on the back of improved
revenue but was partially offset by higher property tax.
FY 2014 Net Property Income By Property
(S$ million)
CapitalTower
Six BatteryRoad
One GeorgeStreet
TwentyAnson
HSBCBuilding
Golden ShoeCar Park
BugisVillage
WilkieEdge
60.0% interestin
Raffles City
40.0% interest
in
CapitaGreen
FY 2013 FY 2014
43.1 46.6
42.0
17.2 20.4
9.7 9.2 8.9
99.6
48.7 51.4
39.62
17.2 20.3
9.8 9.4 8.8
102.1
Singapore
Accounted for using
equity method
(0.2)(0.2)
1 As a result of FRS 111 Joint Arrangements, interest in RCS Trust and MSO Trust were accounted for using equity method.
2 Due to absence of yield protection income.
Scaling New Heights | 87
Distributable Income
Distributable income of S$249.2 million in FY 2014 outperformed that of FY 2013 by 6.4% due to
higher NPI and lower interest expenses from CCT’s wholly-owned properties and higher distributable
income from RCS Trust as well as release of QCT’s tax-exempt income. We achieved a DPU of 8.46
cents for the financial year, an increase of 3.9% y-o-y.
Financial Performance for 2010 to 2013
The financial analysis on the revenue and net property income from 2010 to 2013 were based on
proportionate consolidation method, which had included CCT’s 60.0% interest in RCS Trust and
CCT’s 40.0% interest in MSO Trust.
2013
Gross revenue for FY 2013 was S$386.9 million, which was S$11.1 million or 3.0% improvement over
that of FY 2012. The increase was mainly due to the full-year contribution from Twenty Anson, as well
as higher revenues from all properties except for Capital Tower and One George Street. The drop in
Capital Tower revenue was due to lower average occupancy. For One George Street, lower yield
protection income which ceased on 10 July 2013, contributed to reduced revenue.
Net property income of S$296.5 million in FY 2013 outperformed that of FY 2012 by S$1.0 million or
0.3% mainly due to higher revenue, albeit offset by higher property operating expenses.
2012
Gross revenue of S$375.8 million for FY 2012 was S$14.6 million or 4.0% higher than that for FY 2011.
The higher revenue was mainly due to the acquisition of Twenty Anson on 22 March 2012 and higher
rental from HSBC Building since end April 2012. All properties recorded higher revenue in FY 2012
compared to a year ago, except for Six Battery Road, due to asset enhancement works, and the
former Market Street Car Park, due to its redevelopment to CapitaGreen, a Grade A office tower.
Lower property tax, together with higher gross revenue, yielded a net property income in FY 2012 of
S$295.5 million, a 6.6% increment over S$277.3 million in FY 2011.
2011
Gross revenue for FY 2011 was S$361.2 million, which was S$30.7 million or 7.8% lower than S$391.9
million for FY 2010. The decrease was due to lower revenue from Six Battery Road arising from
negative rent reversions and lower occupancy. Lower occupancy at Six Battery Road was partly
attributed to the ongoing AEI. In addition, loss of rental income resulting from the divestments of
Robinson Point and StarHub Centre, as well as the redevelopment of Market Street Car Park also
contributed to the decline. However, the drop in total revenue was mitigated by higher revenue from
Wilkie Edge and Raffles City Singapore’s retail and hotel components.
Net property income for FY 2011 of S$277.3 million was S$21.7 million, 7.2% lower than the S$299.0
million for FY 2010, which was largely due to lower gross revenue.
2010
Gross revenue for FY 2010 was S$391.9 million, a decrease of S$11.4 million or 2.8% over S$403.3
million for FY 2009. The decrease was mainly due to loss of rental income resulting from the
divestments of Robinson Point and StarHub Centre completed on 19 April 2010 and 16 September
2010 respectively. However, higher revenue from Capital Tower, Wilkie Edge and Raffles City
Singapore partially offset the decline.
Financial Review
88 | CapitaCommercial Trust Annual Report 2014
Net property income for FY 2010 of S$299.0 million was S$1.2 million or 0.4% lower than the S$300.2
million achieved in FY 2009. The decrease was due to lower gross revenue although the decline was
partially offset by lower operating expenses.
Sensitivity Analysis
Estimated DPU impact per annum
0.1% increase in interest rate -0.1%
0.1% decrease in interest rate 0.1%
As at 31 December 2014, approximately 83% of the Trust’s total borrowings are on fixed interest
rates, therefore minimising the impact due to changes in interest rates. It is estimated that a 0.1%
increase or decrease in interest rate would have a 0.1% negative or positive impact on DPU per
annum.
Estimated gearing impact per annum
0.25% increase in valuation of investment properties -0.1%
0.25% decrease in valuation of investment properties 0.1%
The Trust maintains a prudent low gearing of 29.3% as at 31 December 2014. It is estimated that a
0.25% increase or decrease in valuation would decrease or increase the Trust’s gearing by 0.1% per
annum.
Estimated rental income impact per annum
1.0% increase in occupancy1 S$3.3m
1.0% decrease in occupancy1 -S$3.3m
10.0% increase in committed rental rates2 S$2.3m
10.0% decrease in committed rental rates2 -S$2.3m
CCT’s rental income could be impacted by changes in its properties’ occupancies and rental rates
achieved. Assuming that the current average rental rate is maintained, it is estimated that a 1.0%
increase or decrease in occupancy would result in S$3.3 million increase or decrease in rental
income for FY 2014.
Using leases committed in 2014 for lease renewals, rent reviews and vacant units as the baseline for
assumption, the impact on rental income for every 10.0% increase or decrease in committed rental
rates would lead to a corresponding change of approximately S$2.3 million for FY 2014.
Given that the assets of CCT Group are mainly based in Singapore, there is minimal foreign currency
exposure.
1 Assuming current average rental rate is maintained.
2 Based on leases due for renewal and rent review, and committed vacant units in 2014.
Scaling New Heights | 89
PRUDENT CAPITAL MANAGEMENT
CCT adheres to a prudent capital structure and regularly reviews its sources of debt, the debt
maturity profile and liquidity position in order to meet its funding requirements.
As at 31 December 2014, CCT Group’s total gross debt stood at S$2.2 billion and the gearing was
29.3%. With the low gearing, CCT is financially well-positioned for future growth.
Proactive Refinancing of Debt Ahead of Maturity
During FY 2014, S$69.25 million of the principal amount of S$190.25 million CB due 2015 was
converted into CCT units, while S$120.75 million of the amount was repurchased and S$0.25 million
was redeemed. As at 31 December 2014, the CB due 2015 was cancelled in their entirety after the
completion of these activities ahead of its maturity in April 2015.
During the year, notes were issued from CCT’s S$2.0 billion multicurrency Medium Term Note
Programme. These comprised a 6.5-year S$50.0 million 2.98% notes due 2021 issued in August 2014
and a 7-year 6.3 billion Japanese Yen (JPY) denominated floating rate notes due 2021 issued in
October 2014. The JPY proceeds were hedged to S$75.0 million with a Singapore dollar fixed interest
rate of 2.95% per annum.
CCT’s Debt Maturity Profile
S$ (% of total borrowings)
As at 31 December 2014
3.64% p.a. fixed rate $70m MTN
3.25% p.a. fixed rate $200m MTN
$328m(15%)
$480m(21%)
$120m (5%)
$18m (1%)
$200m (9%)
$70m (3%)
$148m(7%)
$200m(9%)
$100m(5%)
$175m(8%)
$75m (3%)
$50m (2%)
$275m
(12%)
RCS revolving facility loan
RCS term loan at 3.025% p.a.
RCS fixed rate notes at 3.09% p.a.
MSO Trust bank loan
Convertible bonds at 2.5% p.a.
2.89% p.a. fixed rate $148m MTN1
Unsecured bank loans
2.98% p.a. fixed rate $50m MTN
2.95% p.a. fixed rate $75m MTN1
2015 2016 2017 2018 2019 2020 2021
1 JPY Bond swapped to S$.
Operations Review
90 | CapitaCommercial Trust Annual Report 2014
Accessibility to Banking and Debt Capital Markets
The issuance of long-dated notes at attractive interest rates are a testament to the strength of CCT’s
banking relationship and its robust debt capital market standing. These in turn generate strong
financial flexibility and lower funding costs for the Trust.
Diverse Funding Sources
CCT ensures diversified sources of funding by leveraging different debt markets through various
financial instruments. As at 31 December 2014, our funding sources comprised 46.5% bank loans,
21.4% commercial mortgage backed securities, 10.0% JPY bonds, 14.3% medium term notes and
7.8% convertible bonds.
Achieved Diversification of Funding Sources through the Years
(S$)
As at 31 December
$520m $480m $480m $480m $480m
$627m
$866m
$758m$848m
$1,041m
$220m
$320m
$320m $270m
$320m$405m
$371m$400m $365m
$175m$148m $148m
$223m
2010 2011 2012 2013 2014
CMBS Bank loans Medium Term Notes Convertible Bonds JPY Bonds (swapped to S$)
Strong Financial Flexibility
All of CCT’s assets are unencumbered, except CapitaGreen and Raffles City Singapore. The Trust’s
unsecured assets are valued at S$4.9 billion as at 31 December 2014 – a significant sum that
enhances financial flexibility. CCT also has an untapped balance of S$1.5 billion from its MTN
programme as well as undrawn bank facilities amounting to S$265.0 million which can be leveraged
as working capital and used to fund future financial obligations.
Scaling New Heights | 91
Financial Flexibility
(S$)
As at 31 December 2014
$265.0m
Available bank credit facilities Utilised bank credit facilities
Total Committed Bank Credit Facilities $1,786.0m
$1,456.7m
Available MTN Utilised MTN
Total MTN Facilities $2,000.0m
$4,882.4m $2,476.1m
Unencumbered properties Encumbered properties
Total Investment Properties $7,358.5m
$543.3m
$1,521.0m
Prudent Capital Structure with Low Gearing
CCT ended the financial year with a low gearing of 29.3%, at the lower end of our target gearing
range between 30.0% to 40.0% through property market cycles. Assuming 40.0% of gearing, CCT
maintains a debt headroom of S$1.3 billion.
Target Gearing Below 40.0% through Market Cycles
As at 31 December
1,747.3
2,017.5 2,072.1 2,060.9
2,182.7
28.630.2 30.1 29.3 29.3
2010 2011 2012 2013 2014
Borrowings (S$ million) Gearing (%)
Operations Review
92 | CapitaCommercial Trust Annual Report 2014
Reduced Cost of Debt
CCT’s weighted average cost of debt for FY 2014 was 2.3%, an improvement from 2.6% for FY 2013.
The lower cost of debt was achieved due to the expiry of a S$370.0 million interest rate swap, fixed
at 3.59% per annum on 18 March 2013, which was funded by lower floating rate.
Hedge Interest Rate and Currency to Manage Risks
At the close of FY 2014, fixed rate loans made up approximately 83% of CCT’s borrowings, thus
mitigating risks brought on by volatile interest rate movements. Borrowings in JPY and US dollars
have been swapped to Singapore dollars fixed rate borrowings.
Unit Buy-back Mandate
During CCT’s Annual General Meeting held in 2014, Unitholders approved the Trust’s unit buy-back
mandate – a capital management tool that improves return on equity for Unitholders. When engaged
at strategic junctures, unit buy-back mitigates short-term market volatilities, off-sets the effects of
short-term speculation and bolsters market confidence in the Units. The Unit buy-back mandate was
not used in FY 2014.
Upgrade of Credit Rating by Standard & Poor’s and Moody’s
During the year, Standard & Poor’s raised CCT’s long-term corporate credit rating to “A-” from “BBB+”
with stable outlook, reflecting the Trust’s stable business performance supported by consistent cash
flows, high occupancies and a disciplined approach in using debt to fund new investments.
Subsequent to FY 2014, Moody’s also upgraded CCT’s senior unsecured ratings to “A3” from “Baa1”
with stable outlook. The upgrade demonstrated CCT’s strong market position, successful completion
and pro-active lease management for CapitaGreen, a good track record of high portfolio occupancy
and strong financial profile with headroom to make debt-funded acquisitions for future growth.
VALUE CREATION FOR CCT
Optimised Portfolio for Long-term Growth
The Trust’s portfolio comprises 10 well-located and distinguished properties in Singapore. These
include four Grade A office buildings (including CapitaGreen, which obtained its TOP in December
2014), two prime office buildings, three integrated developments and one multi-storey car park.
Guided by a rigorous portfolio reconstitution strategy to optimise Unitholder returns, the Trust
pursues accretive acquisitions and value creation opportunities. At the same time, we unlock the
value of properties that have reached the optimal stage of their life cycle, and strengthen our financial
flexibility to capture better market opportunities.
Proactive leasing efforts, current AEIs and the potential rental income from CapitaGreen form the
cornerstone of CCT’s long-term growth, as we persist in exploring value-enhancing opportunities
marked by a disciplined approach.
Engagement of AEIs to Drive Value
CCT engages in AEIs to augment its properties’ competitiveness while enhancing long-term rental
yields. In FY 2014, AEIs were rolled out progressively at two properties – Raffles City Tower and
Capital Tower – with the aim of generating value for the Trust and its portfolio.
In end June 2014, the AEI for Raffles City Tower, a 42-storey office tower at Raffles City Singapore,
was completed at the cost of S$32.3 million instead of the projected S$34.7 million, while delivering
a return on investment of 9.3%, which is higher than the targeted 8.6%.
Scaling New Heights | 93
Following the AEI, Raffles City Tower now features an upgraded concierge area and main lobby as
well as enhanced security with the introduction of new security turnstiles. The office tower has
refurbished lift interiors; new pantry areas on every floor; and restrooms with energy-saving lighting
and water-efficient fittings. Externally, the entrance of the building features a distinctive canopy and
the sculpture, “L’ Envol”, created by renowned French sculptor, Etienne. Average occupancy rate
during the enhancement period stood at 99.9%. As at 31 December 2014, Raffles City Tower
achieved an occupancy rate of 100.0%.
At Capital Tower, a S$40-million AEI designed to reinforce its prime position as a Grade A office tower
is underway. Progressing on schedule for completion in 4Q 2015, upgrading works have concluded
in phases since June 2014. These include new security turnstiles, self-registration kiosks, enhanced
lift lobbies on the first and second floors, and a refurbished main lobby. Meanwhile, works on the
building’s restrooms and lift interiors are ongoing. Upper lift lobbies upgrading have commenced in
December 2014.
Capital Tower’s AEI also incorporates innovative green features such as more efficient lighting and
the recycling of condensate water from the air-handling units for the cooling towers of the new chiller
plant. Energy savings from these greening efforts are expected to reach about S$600,000 per year.
Supported by the scheduled upgrades, Capital Tower was awarded a BCA Green Mark Platinum
Award in May 2013 for excellence in energy and water efficiency, environmental protection and
indoor environmental quality. Committed occupancy at Capital Tower remains at 100.0%.
On 11 July 2014, we commenced an improvement programme at Twenty Anson. The Green Mark
Platinum building completed in 2009 underwent a series of improvements including the installation
of turnstiles at the main lobby, the implementation of Destination Control System (DCS) for the lift
system, upgrades of lift motors of low-rise passenger lifts, a new concierge counter and a visitor
self-registration kiosk. At the same time, Twenty Anson’s Tenant Service Centre has been moved to
Level 4. The upgrading was completed in January 2015.
Completion of CapitaGreen Enhances Value
CapitaGreen obtained TOP on 18 December 2014. Located in the heart of the Central Business
District (CBD), the former Market Street Car Park was redeveloped into a 40-storey Grade A office
building at an estimated cost of S$1.4 billion.
CCT has a 40.0% interest in CapitaGreen, its first development project, and has a call option to
purchase the remaining 60.0% interests from joint venture partners, CapitaLand and Mitsubishi
Estate Asia. The call option is exercisable within three years between 2015 and 2017, following
receipt of the building’s TOP. The purchase price will be at market valuation subject to a minimum
price of development cost compounded at 6.3% per annum.
With limited new office supply in the CBD in 2015, CapitaGreen’s location and timely completion in
end 2014 places it in a strong position to leverage the rise in office market rents. As at end FY 2014,
the development attained aggregate leasing commitment for approximately 486,800 sq ft, or 69.3%
of NLA. CapitaGreen’s committed tenants span a variety of industries including banking, insurance
and financial services, energy and commodities, IT, media and telecommunications, and real estate
and property services.
Operations Review
94 | CapitaCommercial Trust Annual Report 2014
Portfolio Value Marks Stable Increase
Driven by an improvement in rents, CCT’s portfolio generated an increase in valuation. For the first
time, CapitaGreen was valued as an operating asset in the December 2014 valuation as opposed to
an investment property under construction. The valuation of CCT’s portfolio and its joint venture
properties rose to S$7,358.5 million, up 5.7% y-o-y. A capitalisation rate of 3.75% to 4.25% was
adopted by the independent valuers for the valuation of CCT’s office portfolio, similar to that used in
the valuation as at 31 December 2013.
Enhancing Portfolio Value: Valuation Increased by 5.7%
Investment Properties
Valuation
As at 31 December
Capital Value
As at 31 December Cap rate
per annum
(%)
Discount
rate per
annum
(%)
2013
(S$ m)
2014
(S$ m)
Variance
(%)
2014
(S$ psf)
Capital Tower 1,282.0 1,309.0 2.1 1,770 3.85 7.50
Six Battery Road 1,285.0 1,330.0 3.5 2,691 3.75 7.50
One George Street 959.0 975.0 1.7 2,179 3.85 7.50
Twenty Anson 431.0 431.0 0.0 2,102 3.85 7.50
HSBC Building 429.0 450.0 4.9 2,245 3.85 7.50
Golden Shoe Car Park 138.4 141.0 1.9 Nm4 6.50 9.00
Wilkie Edge 186.0 191.0 2.7 1,249 4.25 7.50
Bugis Village1 58.6 55.4 (5.5) 457 13.00 13.00
Raffles City Singapore
(60.0% interest)
1,810.8 1,865.7 3.0 Nm4 Office 4.25
Retail 5.25
Hotel 5.25
Office 7.50
Retail 7.50
Hotel 7.75
CapitaGreen
(40.0% interest)
380.02 610.43 Nm4 2,171 4.00 7.25
Total 6,959.8 7,358.5 5.7
PROACTIVE PORTFOLIO MANAGEMENT
Objectives for Continued Success
The Trust maintains differentiated investment objectives for each property type within its portfolio to
ensure the competitiveness and value of its assets.
• With its Grade A office buildings, the Trust aims to optimise financial performance and
consolidate the standing of these properties as the preferred Grade A offices within the CBD.
This is achieved by focusing on tenant experience and building management services, while
creating solutions that are environmentally sustainable, thus leading to savings in property
expenses.
1 Bugis Village valuation saw a diminution compared to 12 months ago as the valuation has taken into account the right of the
President of the Republic of Singapore, as Lessor under the State Lease, to terminate on 1 April 2019 upon payment of
S$6,610,208.53 plus accrued interest.
2 Book value of property under construction comprising land value, construction and related costs
3 Market value of CapitaGreen as an operating asset
4 Not meaningful
Scaling New Heights | 95
• For its prime office properties, the Trust aims to optimise financial performance and asset value,
and capitalise on their strategic locations to ensure the long-term stability of the portfolio.
• Likewise, the Trust aims to optimise the financial returns from its integrated developments while
enhancing their positioning as unique office and shopping destinations.
• The Trust’s objective for its car park is to optimise financial returns through the provision of
quality parking facilities in the CBD, supported by varied retail and food and beverage (F&B)
options for the office community.
Strong Portfolio Performance
On the back of prime assets in choice locations, coupled with a strong customer-centric culture,
CCT’s portfolio committed occupancy, including CapitaGreen’s 69.3% committed occupancy,
continued to surpass market levels, reaching 96.8% as at 31 December 2014 versus CBRE’s CBD
Core market occupancy rate of 95.7%.
CCT’s Committed Occupancy Rate since Inception
As at 31 December
95.2%
99.1% 99.6% 99.6%
96.2%94.8%
99.3%
95.8%97.2%
98.7%
96.8%
91.7%
96.4%98.2%
95.7%
91.9%
95.4%91.2%
92.2% 95.2% 95.7%
84.0%
87.2%
89.7%
92.7%91.2%
87.9%88.7%
90.6% 90.1% 89.8%
80%
85%
90%
95%
100%
CCT CBRE's Core CBD Occupancy Rate URA
Includes CapitaGreen's
occupancy of 69.3%
87.9%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Portfolio Augmented by Choice Tenants from Diverse Industries
FY 2014 saw a healthy take up in leases with approximately 900,000 sq ft of leases signed during the
year. Meanwhile, CCT continued to attract and retain choice tenants, achieving a tenant retention rate
of about 86% and securing lease renewals with major tenants such as JPMorgan Chase Bank, N.A.
and GIC Private Limited. This high retention rate underpinned the strong portfolio occupancy rate.
Operations Review
96 | CapitaCommercial Trust Annual Report 2014
New tenants made up approximately 15% of total leases signed. They spanned diverse trade sectors
with the three largest being Banking, Insurance and Financial Services, Energy, Commodities,
Maritime and Logistics, and Business Consultancy, IT, Media and Telecommunications.
Trade Mix of New Leases Signed in 2014 Compared to 2013 (By NLA)1
2013 2014
11%7%
20%
3% 4%
10%
5%
33%
5%2%
22%20% 19%
14%12%
6% 5%1% 1% 0%
Banking, Insurance
and Financial Services
Energy, Commodities,
Maritime and
Logistics
Business Consultancy,
IT, Media and
Telecommunications
Food and
Beverage
Retail Products and
Services
Manufacturing and
Distribution
Education and
Services
Real Estate and
Property Services
Legal Government
About 42% of the Trust’s monthly gross rental income was contributed by its top 10 blue-chip tenants
which continue to underpin revenue. In terms of monthly gross rental income, RC Hotels (Pte) Ltd,
The Hongkong and Shanghai Banking Corporation Limited and JPMorgan Chase Bank, N.A. were the
year’s top three tenants.
Top 10 Blue-Chip Tenants Contribute about 42% of Monthly Gross Rental Income2
(based on monthly gross rental income excluding retail turnover rent of top 10 tenants)
As at 31 December 2014
14%
6%5% 4% 4%
2% 2% 2% 2% 2%
RC Hotels (Pte) Ltd
TheHongkong
and Shanghai Banking
Corporation Limited
JPMorgan Chase Bank,
N.A.
GIC Private Limited
Standard Chartered
Bank
CapitaLand Group
Robinson & Company
(Singapore) Private Limited
Mizuho Bank, Ltd.
The Royal Bank of
Scotland PLC
Credit Agricole
Corporate and
Investment Bank
1 Based on NLA of new leases committed using 100% basis for Raffles City Singapore and excluding CapitaGreen
2 Total percentage may not add up due to rounding
Scaling New Heights | 97
CCT’s Key Buildings’ Expiring Profiles and Rents
2015 2016 2017
% of
expiring
leases1
Average
Monthly
Gross
Rental Rate
for Expiring
Leases
(S$ psf)
% of
expiring
leases1
Average
Monthly
Gross
Rental Rate
for Expiring
Leases
(S$ psf)
% of
expiring
leases1
Average
Monthly
Gross
Rental
Rate for
Expiring
Leases
(S$ psf)
Capital Tower 5% 9.06 1% 9.04 0% NA
Six Battery Road 4% 11.32 7% 10.86 5% 12.10
One George Street 3% 8.11 4% 8.79 4% 9.48
Raffles City Tower 3% 7.88 2% 9.13 3% 8.28
Total/Weighted Average 15% 8.99 14% 9.78 12% 10.05
Well Spread Lease Expiry Profile
CCT engages in active lease management which supports a well-spread lease expiry profile. Of the
office leases expiring in 2015, about 8% have been renewed as at 31 December 2014, leaving only
around 12% to be renewed. The portfolio, comprising office, retail and hotels and convention centre
leases has a weighted average lease term to expiry of 8.1 years as at end December 2014.
With limited new supply of office space in the CBD in 2015, market rents in the Singapore office
market are expected to continue to rise. The Trust is strategically placed to capture positive rent
reversions for the remaining 12% of office leases due for renewal in 2015.
Well Spread Portfolio Lease Expiry Profile
(based on monthly gross rental income excluding retail and hotel turnover rent)
As at 31 December 2014
Portfolio WALE2 by NLA: 8.1 years
12%
12%10%
6%
29%
5%
6%4%
1%4%
11%
2015
Office Retail Hotels and Convention Centre Committed
1%
8%
2016 2017 2018 2019 and beyond
1 Percentage of monthly gross rental income for leases expiring at respective properties as at 31 December 2014 over the monthly
gross rental income for office portfolio
2 WALE: Weighted average lease term to expiry
Operations Review
98 | CapitaCommercial Trust Annual Report 2014
Average Office Portfolio Rental Rate Rises 5.9%
Average monthly rental for CCT’s office portfolio continued to rise, reaching S$8.61 psf as at
December 2014 – an uplift of 5.9% from S$8.13 psf the year before. The increase was fuelled by
higher achieved rents than expired rents for office leases due during the financial year and included
the committed rents of CapitaGreen. Property research consultants anticipate higher market office
rents in 2015, due to the limited supply of new office space in the CBD.
CCT’s Monthly Average Rent for Office Portfolio1
(S$ psf)
7.947.84
7.79
7.66
7.457.39
7.537.64
7.83
7.968.03
8.138.22 8.23
8.42
8.61
Average gross rent per month for office portfolio including CapitaGreen (S$ psf)
Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14
Income Contribution
CCT’s gross rental income for FY 2014 comprised approximately 66% office leases, 20% retail leases
and 14% hotels and convention centre leases. Its top three trade sectors accounted for about 60%
of the Trust’s gross rental income, of which some 34% was contributed by the Banking, Insurance and
Financial Services sector, 14% by the Hospitality sector and another 12% by the Retail Products and
Services sector.
CCT’s Income Contribution by Sector
(based on monthly gross rental income excluding retail turnover rent from 1 January 2014 to
31 December 2014)
Office (66%)
Retail (20%)
Hotels and Convention Centre (14%)
1 Average rent per month for office portfolio (S$ psf) = Total committed gross rent for office per month
Committed area of office per month
Scaling New Heights | 99
Diverse Tenant Mix in CCT’s Portfolio
(based on monthly gross rental income excluding retail turnover rent for December 2014)
Banking, Insurance and Financial Services (34%)
Hospitality (14%)
Retail Products and Services (12%)
Business Consultancy, IT, Media and Telecommunications (7%)
Manufacturing and Distribution (7%)
Food and Beverage (7%)
Education and Services (4%)
Real Estate and Property Services (4%)
Energy, Commodities, Maritime and Logistics (4%)
Legal (4%)
Government (3%)
Malaysia Investment
CCT owns 30.0% of Quill Capita Trust (QCT), a commercial REIT listed on Bursa Malaysia Securities
Berhad. CCT Group’s investment in Malaysia totals S$63.9 million, or 0.8% of its total deposited
properties.
QCT’s portfolio covers 10 properties across Kuala Lumpur, Penang and Selangor. Its total deposited
properties amounted to RM837.7 million (S$314.9 million) as at 31 December 2014, and it recorded
market capitalisation of RM456.5 million (S$171.6 million) for the same period. Its tenant profile spans
both multinational and local companies in automotive, banking, information technology, electronics,
logistics, oil & gas and retail. Its DPU of 8.38 sen for FY 2014 translates into a distribution yield of
7.2% based on the closing price of RM1.17 per unit on 31 December 2014.
Operations Review
100 | CapitaCommercial Trust Annual Report 2014
Capital Tower
Capital Tower is a 52-storey Grade A office building set in a landscaped plaza. Integrated with
lifestyle amenities, meeting facilities and retail outlets, this multiple-award winning building was
conferred a Green Mark Platinum award in 2013, the highest accolade for sustainable buildings.
Property Information
Location 168 Robinson Road
Title Leasehold estate expiring 31 December 2094
Purchase Price in 2004 (S$ million) 793.9
Car Park Lots 415
As at 31 December 2013 2014
Valuation (S$ million) 1,282.0 1,309.0
Net Lettable Area (sq m) 68,527 68,720
Net Lettable Area (sq ft) 737,618 739,702
Number of Tenants 20 20
Committed Occupancy (%) 100.0 100.0
Gross Rental Income (S$ million) 53.7 58.0
Gross Revenue (S$ million) 61.2 66.6
Net Property Income (S$ million) 43.1 48.7
Top 3 tenants’ contribution to portfolio gross rental income
for December 2014 %
JPMorgan Chase Bank, N.A. 4.7
GIC Private Limited 4.4
CapitaLand Group 2.4
Building Lease Expiry Profile
(based on building’s monthly gross rental income)
As at 31 December 2014
20.5%
3.0% 0.0% 2.9%
73.6%
2015 2016 2017 2018 2019 and
beyond
Property Details
Scaling New Heights | 101
Six Battery Road
Six Battery Road, a 42-storey Grade A office building, is a Raffles Place landmark. Combining a prime
location with towering views, excellent amenities and newly revitalised interiors, it was the first
operating CBD office building to attain Green Mark Platinum standards.
Property Information
Location 6 Battery Road
Title Leasehold estate expiring 19 April 2825
Purchase Price in 2004 (S$ million) 675.2
Car Park Lots 190
As at 31 December 2013 2014
Valuation (S$ million) 1,285.0 1,330.0
Net Lettable Area (sq m) 45,950 45,911
Net Lettable Area (sq ft) 494,600 494,186
Number of Tenants 95 96
Committed Occupancy (%) 98.6 99.2
Gross Rental Income (S$ million) 53.9 61.5
Gross Revenue (S$ million) 57.6 65.0
Net Property Income (S$ million) 46.6 51.4
Top 3 tenants’ contribution to portfolio gross rental income
for December 2014 %
Standard Chartered Bank 3.9
Watson, Farley & Williams Asia Practice LLP 0.7
CBRE Pte. Ltd. 0.6
Building Lease Expiry Profile
(based on building’s monthly gross rental income)
As at 31 December 2014
27.3%
14.9%
20.5%
6.6%
30.7%
2015 2016 2017 2018 2019 and
beyond
Property Details
102 | CapitaCommercial Trust Annual Report 2014
One George Street
One George Street is a 23-storey Grade A office building in Raffles Place with eco-friendly features,
sky gardens, large floor plates, advanced building automation and iconic roof gardens. It houses
excellent amenities including F&B outlets, a fitness centre and a swimming pool.
Property Information
Location 1 George Street
Title Leasehold estate expiring 21 January 2102
Purchase Price in 2008 (S$ million) 1,165.0
Car Park Lots 178
As at 31 December 2013 2014
Valuation (S$ million) 959.0 975.0
Net Lettable Area (sq m) 41,598 41,564
Net Lettable Area (sq ft) 447,756 447,395
Number of Tenants 47 48
Committed Occupancy (%) 95.5 100.0
Gross Rental Income (S$ million) 42.1 46.7
Gross Revenue (S$ million) 53.3 50.2
Net Property Income (S$ million) 42.0 39.6
Top 3 tenants’ contribution to portfolio gross rental income
for December 2014 %
The Royal Bank of Scotland PLC 1.7
Borouge Pte. Ltd. 1.3
Diageo Singapore Pte. Ltd. 1.0
Building Lease Expiry Profile
(based on building’s monthly gross rental income)
As at 31 December 2014
17.3%
21.4%22.7% 22.8%
15.8%
2015 2016 2017 2018 2019 and
beyond
Scaling New Heights | 103
Raffles City Singapore
Raffles City Singapore is a prime landmark and one of Singapore’s largest integrated developments.
Served by three MRT lines, it comprises the 42-storey Raffles City Tower, Raffles City Shopping
Centre, Raffles City Convention Centre, the 73-storey Swissôtel The Stamford Singapore, the
28-storey twin-towers Fairmont Singapore and three levels of basement car parks.
Property Information
Location 250 & 252 North Bridge Road,2 Stamford Road and 80 Bras Basah Road
Title Leasehold estate expiring 15 July 2078
Purchase Price in 2006 (S$ million) 2,166.0
Car Park Lots 1,045
As at 31 December 2013 2014
Valuation (S$ million) 3,018.0 3,109.5
Net Lettable Area (sq m) 74,502 74,391
Net Lettable Area (sq ft) 801,943 800,750
Number of Tenants 272 275
Committed Occupancy (%) 100.0 100.0
Gross Rental Income (S$ million) 215.0 221.9
Gross Revenue (S$ million) 225.8 232.5
Net Property Income (S$ million) 166.0 170.2
Top 3 tenants’ contribution to portfolio gross rental income
for December 2014 %
RC Hotels (Pte) Ltd 13.8
Robinson & Company (Singapore) Private Limited 2.2
Economic Development Board 1.5
Major Usage Mix (based on building’s monthly gross rental income,excluding retail and hotel turnover rent for December 2014) %
Retail 48.7
Hotels and Convention Centre 32.1
Office 19.2
Building Lease Expiry Profile
(based on building’s monthly gross rental income excluding retail and hotel turnover rent)
As at 31 December 2014
6.8%4.8% 6.0%
0.3%1.3%
12.3%
17.2%
9.8%
1.4%
8.0%
32.1%
2015 2016 2017 2018 2019 and
beyond
Hotels and Convention Centre
Retail
Office
Property Details
104 | CapitaCommercial Trust Annual Report 2014
CapitaGreen
CapitaGreen is an ultra-modern 40-storey Grade A office tower that occupies the site of the former
Market Street Car Park. With a net lettable area of about 702,000 square feet, it is the only CBD office
building in Singapore’s Downtown Core that was completed in end 2014.
Property Information
Location 138 Market Street
Title Leasehold estate expiring 31 March 2073
Car Park Lots 180
Joint Venture Partners (%) CapitaLand 50
CCT 40
Mitsubishi Estate Asia 10
Project Development Estimate (S$ million) 1,400
Date of TOP 18 December 2014
As at 31 December 2014
Valuation (S$ million) 1,526.0
Estimated Net Lettable Area (sq m) 65,298
Estimated Net Lettable Area (sq ft) 702,000
Number of Tenants 22
Committed Occupancy (%) 69.3
Building Lease Expiry Profile
(based on building’s committed monthly gross rental income)
As at 31 December 2014
0.0% 0.0% 0.0%
90.6%
2015 2016 2017
9.4%
2018 2019 and
beyond
Scaling New Heights | 105
Twenty Anson
Twenty Anson is a 20-storey prime office building in downtown Tanjong Pagar. Served by Tanjong
Pagar MRT station and major expressways, this Green Mark Platinum development features a modern
facade, column-free floor plates, a roof garden and a café.
Property Information
Location 20 Anson Road
Title Leasehold estate expiring 22 November 2106
Purchase Price in 2012 (S$ million) 430.0
Car Park Lots 55
As at 31 December 2013 2014
Valuation (S$ million) 431.0 431.0
Net Lettable Area (sq m) 18,892 19,051
Net Lettable Area (sq ft) 203,353 205,067
Number of Tenants 18 20
Committed Occupancy (%) 98.1 97.8
Gross Rental Income (S$ million) 16.3 17.8
Gross Revenue (S$ million) 21.7 22.3
Net Property Income (S$ million) 17.2 17.2
Top 3 tenants’ contribution to portfolio gross rental income
for December 2014 %
Toyota Motor Asia Pacific Pte Ltd 1.2
BlackRock Advisors Singapore Pte. Ltd. 0.8
KCG Asia Pacific Pte. Ltd. 0.5
Building Lease Expiry Profile
(based on building’s monthly gross rental income)
As at 31 December 2014
9.9%
35.5%
25.6%29.0%
0.0%
2015 2016 2017 2018 2019 and
beyond
Property Details
106 | CapitaCommercial Trust Annual Report 2014
HSBC Building
HSBC Building is a 21-storey office tower with excellent frontage, convenient transport access and
views of Marina Bay. It houses The Hongkong and Shanghai Banking Corporation Limited (HSBC
Bank), the sole tenant who bears the building’s operating expenses including property tax while CCT
manages the insurance and structural maintenance matters. The lease to HSBC Bank will expire in
April 2019.
Property Information
Location 21 Collyer Quay
Title Leasehold estate expiring 18 December 2849
Purchase Price in 2005 (S$ million) 153.9
Car Park Lots 55
As at 31 December 2013 2014
Valuation (S$ million) 429.0 450.0
Net Lettable Area (sq m) 18,624 18,624
Net Lettable Area (sq ft) 200,467 200,467
Number of Tenants 1 1
Committed Occupancy (%) 100.0 100.0
Gross Rental Income (S$ million) 20.4 20.4
Gross Revenue (S$ million) 20.4 20.4
Net Property Income (S$ million) 20.4 20.3
Scaling New Heights | 107
Wilkie Edge
Wilkie Edge is a 12-storey integrated development comprising office space, retail units and a
serviced residence. Its distinctive facade features a huge LED screen that lights up the surrounding
cultural precinct. Located at the junction of Wilkie Road and Selegie Road, it is in close proximity to
Dhoby Ghaut MRT interchange station.
Property Information
Location 8 Wilkie Road
Title Leasehold expiring 20 February 2105
Purchase Price in 2007 (S$ million) 182.7
Car Park Lots 215
As at 31 December 2013 2014
Valuation (S$ million) 186.0 191.0
Net Lettable Area (sq m) 14,038 14,206
Net Lettable Area (sq ft) 151,105 152,912
Number of Tenants 24 23
Committed Occupancy (%) 99.6 100.0
Gross Rental Income (S$ million) 11.5 11.4
Gross Revenue (S$ million) 12.8 12.9
Net Property Income (S$ million) 8.9 8.8
Top 3 tenants’ contribution to portfolio gross rental income
for December 2014 %
SF Consulting Pte Ltd 1.3
Kaplan Learning Institute Pte. Ltd 0.9
AstraZeneca Singapore Pte Ltd 0.3
Building Lease Expiry Profile
(based on building’s monthly gross rental income)
As at 31 December 2014
2.6%
13.8%
2.8%
17.7%
63.1%
2015 2016 2017 2018 2019 andbeyond
Property Details
108 | CapitaCommercial Trust Annual Report 2014
Bugis Village
Bugis Village comprises 34 restored pre-war shophouses in a vibrant heritage enclave. Located next
to Bugis MRT station, the three-storey shophouses accommodate a mix of offices, music schools and
tuition centres, as well as hair salons, restaurants and retail outlets.
Property Information
Location 62 to 67 Queen Street,
151 to 166 Rochor Road,
229 to 253 Victoria Street (Odd numbers only)
Title Leasehold estate expiring 30 March 20881
Purchase Price in 2004 (S$ million) 56.5
Car Park Lots NA
As at 31 December 2013 2014
Valuation (S$ million) 58.6 55.4
Net Lettable Area (sq m) 11,254 11,254
Net Lettable Area (sq ft) 121,138 121,140
Number of Tenants 81 77
Committed Occupancy (%) 97.2 94.8
Gross Rental Income (S$ million) 11.2 11.5
Gross Revenue (S$ million) 11.6 11.9
Net Property Income (S$ million) 9.2 9.4
Top 3 tenants’ contribution to portfolio gross rental income
for December 2014 %
Golden Pass (S) Pte. Ltd. 0.1
Kentucky Fried Chicken Management Pte Ltd 0.1
Burger King Singapore Pte. Ltd. 0.1
Building Lease Expiry Profile
(based on building’s monthly gross rental income)
As at 31 December 2014
22.1%16.7%
2.9% 0.0%
58.3%
2015 2016 2017 2018 2019 and
beyond
1 The leasehold title and the valuation take into account the right of the President of the Republic of Singapore, as Lessor under
the State Lease, to terminate the State Lease on 1 April 2019 upon payment of S$6,610,208.53 plus accrued interest.
Scaling New Heights | 109
Golden Shoe Car Park
The 10-storey Golden Shoe Car Park on Market Street is the largest parking facility in the CBD.
Besides offices on the top floor, it houses an array of retail and F&B outlets on the ground floor that
cater to the office crowd.
Property Information
Location 50 Market Street
Title Leasehold estate expiring 31 January 2081
Purchase Price in 2004 (S$ million) 72.1
Car Park Lots 1,053
As at 31 December 2013 2014
Valuation (S$ million) 138.4 141.0
Net Lettable Area (sq m) 4,341 4,341
Net Lettable Area (sq ft) 46,723 46,724
Number of Tenants 41 44
Committed Occupancy (%) 94.6 100.0
Gross Rental Income (S$ million) 6.0 6.6
Car Park Income (S$ million) 6.4 6.5
Gross Revenue (S$ million) 12.8 13.3
Net Property Income (S$ million) 9.7 9.8
Top 3 tenants’ contribution to portfolio gross rental income
for December 2014 %
May Hua Food Court Pte. Ltd. 0.2
DCA Architects Pte Ltd 0.2
KKS International (S) Pte Ltd 0.1
Building Lease Expiry Profile
(based on building’s monthly gross rental income)
As at 31 December 2014
42.5%
27.4%
18.3%
11.8%
0.0%
2015 2016 2017 2018 2019 and
beyond
Property Details
110 | CapitaCommercial Trust Annual Report 2014
In this Annual Report, the following definitions apply throughout unless otherwise stated:
AEI Asset enhancement initiative
CapitaLand CapitaLand Limited
CapitaLand Group CapitaLand and its subsidiaries (including the Manager)
CapitaLand Singaporeor CLS
CapitaLand Singapore Limited, a wholly-owned subsidiary ofCapitaLand
CB Convertible Bonds
CBD Central Business District
CCT CapitaCommercial Trust
CCT Group CCT and its subsidiaries
CDP The Central Depository (Pte) Limited
CIS Code Code on Collective Investment Schemes
CMS Capital Markets Services
CMBS Commercial Mortgage Backed Securities
CommittedOccupancy
Occupancy rate based on committed leases
CPI Consumer Price Index
Deposited Property Value of CCT’s total assets based on the latest valuation, including itsproportionate interest in joint ventures
Direct CapitalisationMethod
A valuation method appraisers use to estimate the value of incomeproducing real estate where the net income of the property iscapitalised for the remaining unexpired term of the lease period. Anappropriate capitalisation rate derived from the relevant sales evidence,is then applied to the net income.
Discounted CashflowMethod
A valuation method appraisers use to estimate the value of incomeproducing real estate, where net operating income is discounted at anappropriate discount rate to derive the market value. The capital valueof the property considers the 10-year discounted income stream andthe present value of its adopted terminal value.
DPU Distribution per Unit
GDP Gross Domestic Product
GFA Gross Floor Area
Gross Rental Income In respect of CCT properties, Gross Rental Income comprises base rent(after rent rebates, where applicable, including turnover rent) andtenant service charge, which is a contribution paid by tenants towardsthe Property Operating Expenses.
In respect of CCT’s 60.0% interest in RCS Trust, Gross Rental Incomecomprises gross rent (after rent rebates, where applicable, includingturnover rent, advertising and promotion levy and service charge, whereapplicable).
Gross Revenue Comprises Gross Rental Income, car park income and other income
HQ Headquarter
Interest ServiceCoverage Ratio
Ratio of earnings before interest, tax, depreciation and amortisationover interest expenses of CCT Group
kg Kilogram
kWh Kilowatt-hour
Glossary
Scaling New Heights | 111
LHS Left-hand side
Listing Manual Listing Manual of Singapore Exchange Securities Trading Limited(SGX-ST)
Management ExpenseRatio
Refers to the expenses of the Group excluding property expenses,borrowing costs and income tax expense as a percentage of weightedaverage net assets.
Manager CapitaCommercial Trust Management Limited, in its capacity asmanager of CCT
MAS Monetary Authority of Singapore
MRT Mass Rapid Transit
MTN Medium Term Note
m3 Cubic metres
NLA Net Lettable Area
NPI Net Property Income. Comprises Gross Revenue less PropertyOperating Expenses for CCT or the RCS Trust.
% Per Centum or Percentage
psf Per Square Foot
psm Per Square Metre
Property FundsAppendix
The Property Funds Appendix in Appendix 6 of the Code on CollectiveInvestment Schemes issued by the Monetary Authority of Singapore
Property Managers CapitaLand Commercial Management Pte. Ltd. and CapitaLand (RCS)Property Management Pte. Ltd.
Property OperatingExpenses
Comprises property tax, property management fee and other propertyoperating expenses (comprising utility expenses, reimbursement ofsalaries and related expenses, marketing expenses, repairs andmaintenance expenses, general and administrative expenses as well asother miscellaneous expenses)
Property Yield Net Property Income as a percentage of the asset value
q-o-q Quarter-on-Quarter
REIT Real Estate Investment Trust
RHS Right-hand side
RM or Ringgit The official currency of Malaysia
S-REITs Singapore Real Estate Investment Trusts
SFA Securities and Futures Act, Chapter 289
sq ft Square feet/foot
sq m Square metre
S$ Singapore dollars
Trust CapitaCommercial Trust or CCT
Trustee HSBC Institutional Trust Services (Singapore) Limited, as trustee of CCT
Unit A unit representing an undivided interest in CCT
Unitholder The registered holder for the time being of a Unit, including person soregistered as joint holders, except where the registered holder is CDP,the term “Unitholder” shall, in relation to Units registered in the name ofCDP, meaning where the context requires, the Depositor whoseSecurities Account with CDP is credited with Units.
y-o-y Year-on-Year
Glossary
112 | CapitaCommercial Trust Annual Report 2014
Financial
Statements
Report of the Trustee 114
Statement by the Manager 115
Auditor’s Report 116
Statements of Financial Position 117
Statements of Total Return 118
Distribution Statements 119
Statement of Movements in Unitholder’s Funds 120
Portfolio Statements 121
Statements of Cash Flows 124
Notes to the Financial Statements 126
Additional Information 178
Statistics of Unitholdings 183
Scaling New Heights | 113
HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”) is under a duty to take into custody and
hold the assets of CapitaCommercial Trust (the “Trust”) and its subsidiaries (the “Group”) in trust for the
unitholders. In accordance with the Securities and Futures Act, Chapter 289 of Singapore, its subsidiary
legislation and the Code on Collective Investment Schemes, the Trustee shall monitor the activities of
CapitaCommercial Trust Management Limited (the “Manager”) for compliance with the limitations imposed on
the investment and borrowing powers as set out in the Trust Deed in each annual accounting period and report
thereon to unitholders in an annual report.
To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Trust during the
period covered by these financial statements, set out on pages 117 to 177 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
Anthony Wade Lewis
Director
Singapore
26 February 2015
Report of the Trustee
114 | CapitaCommercial Trust Annual Report 2014
In the opinion of the directors of CapitaCommercial Trust Management Limited, the accompanying financial
statements set out on pages 117 to 177 comprising the Statements of Financial Position, Statements of Total
Return, Distribution Statements, Statements of Movements in Unitholders’ Funds, Portfolio Statements,
Statements of Cash Flows and Notes to the Financial Statements are drawn up so as to present fairly, in all
material respects, the financial position of CapitaCommercial Trust (the “Trust”) and its subsidiaries (the
“Group”) and of the Trust as at 31 December 2014, the total return, distributable income, movements in
unitholders’ funds and cash flows of the Group and of the Trust 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 and the provisions of the Trust Deed. At the date
of this statement, there are reasonable grounds to believe that the Group and the Trust will be able to meet its
financial obligations as and when they materialise.
For and on behalf of the Manager,
CapitaCommercial Trust Management Limited
Lynette Leong Chin Yee
Director
Singapore
26 February 2015
Statement by the Manager
Scaling New Heights | 115
(Constituted in the Republic of Singapore pursuant to a Trust Deed dated 6 February 2004 (as amended))
We have audited the accompanying financial statements of CapitaCommercial Trust (the “Trust”) and its
subsidiaries (the “Group”), which comprise the Statements of Financial Position and Portfolio Statements of the
Group and the Trust as at 31 December 2014, the Statements of Total Return, Distribution Statements,
Statements of Movements in Unitholders’ Funds and Statements of Cash Flows of the Group and the Trust for
the year then ended, and a summary of significant accounting policies and other explanatory information, as
set out on pages 117 to 177.
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 judgment, 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 Trust’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 Trust’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 financial statements of the Trust
present fairly, in all material respects, the financial position of the Group and of the Trust as at 31 December
2014 and the total return, distributable income, movements in unitholders’ funds and cash flows of the Group
and of the Trust 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
Auditors’ Report to the Unitholders ofCapitaCommercial Trust
116 | CapitaCommercial Trust Annual Report 2014
Group Trust2014 2013 2012 2014 2013
Note $’000 $’000 $’000 $’000 $’000(Restated) (Restated)
Non-current assets
Plant and equipment 4 1,453 1,480 774 1,440 1,467
Investment properties 5 4,882,400 4,769,000 4,639,000 4,451,400 4,338,000
Intangible asset 6 4,822 8,334 12,913 4,822 8,334
Subsidiaries 7 – – – 435,576 435,576
Joint ventures 8 1,427,895 1,283,879 1,232,934 984,933 971,471
Associate 9 63,899 65,002 66,491 51,479 51,479
Financial derivatives 15 1,160 – – 1,160 –
6,381,629 6,127,695 5,952,112 5,930,810 5,806,327
Current assets
Available-for-sale unquoted
investment 10 – 6 6 – 6
Trade and other receivables 11 38,345 33,716 36,558 37,576 31,540
Cash and cash equivalents 12 101,085 84,064 118,325 76,719 60,105
139,430 117,786 154,889 114,295 91,651
Total assets 6,521,059 6,245,481 6,107,001 6,045,105 5,897,978
Current liabilities
Trade and other payables 13 47,355 50,899 55,737 39,415 38,713
Current portion of security
deposits 11,437 11,964 9,243 10,876 9,726
Interest-bearing liabilities 14 270,000 – 50,000 270,000 –
Financial derivatives 15 – – 2,519 – –
Current tax payable 3 4 102 – –
328,795 62,867 117,601 320,291 48,439
Non-current liabilities
Non-current portion of
security deposits 28,300 26,333 22,462 23,510 23,614
Interest-bearing liabilities 14 800,972 867,049 864,521 800,972 867,049
Financial derivatives 15 40,298 25,243 10,693 40,298 25,243
Convertible bonds 16 169,206 351,276 377,071 169,206 351,276
1,038,776 1,269,901 1,274,747 1,033,986 1,267,182
Total liabilities 1,367,571 1,332,768 1,392,348 1,354,277 1,315,621
Net assets 5,153,488 4,912,713 4,714,653 4,690,828 4,582,357
Represented by:
Unitholders’ funds 5,153,488 4,912,713 4,714,653 4,690,828 4,582,357
Units in issue (’000) 17 2,944,849 2,878,774 2,842,956 2,944,849 2,878,774
$ $ $ $ $
Net asset value per Unit 1.75 1.71 1.66 1.59 1.59
The accompanying notes form an integral part of these financial statements.
Statements of Financial PositionAs at 31 December 2014
Scaling New Heights | 117
Group Trust2014 2013 2014 2013
Note $’000 $’000 $’000 $’000(Restated)
Gross revenue 18 262,608 251,463 240,289 229,730
Property operating expenses 19 (57,359) (54,342) (52,240) (49,809)
Net property income 205,249 197,121 188,049 179,921
Investment income 20 – – 87,087 84,743
Interest income 3,732 3,713 16,002 15,991
Base asset management fees 21 (4,892) (4,774) (4,892) (4,774)
Performance asset management fees 21 (8,681) (7,882) (8,681) (7,882)
Finance costs 22 (36,434) (42,560) (36,422) (42,547)
Audit fees (277) (264) (258) (244)
Amortisation of intangible asset (3,512) (4,579) (3,512) (4,579)
Trustee’s fees (620) (605) (620) (605)
Valuation fees (303) (285) (266) (246)
Other expenses 23 (1,466) (1,402) (1,464) (1,393)
Net income before share of profit of associate and
joint ventures 152,796 138,483 235,023 218,385
Share of profit (net of tax) of:
– Associate 4,745 4,355 – –
– Joint ventures 212,612 123,087 – –
Net income 370,153 265,925 235,023 218,385
Premium on repurchase of convertible bonds (2,713) – (2,713) –
Gain on disposal of available-for-sale unquoted
investment 226 – 226 –
Gain on remeasurement of financial derivatives – 2,519 – 2,519
Net increase in fair value of investment properties 81,219 106,162 83,222 106,322
Total return for the year before tax 448,885 374,606 315,758 327,226
Tax expense 24 (3) (16) – –
Total return for the year 448,882 374,590 315,758 327,226
Earnings per Unit cents cents cents cents
Basic 25 15.41 13.08 10.84 11.42
Diluted 25 15.06 12.47 10.65 10.96
The accompanying notes form an integral part of these financial statements.
Statements of Total ReturnYear ended 31 December 2014
118 | CapitaCommercial Trust Annual Report 2014
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Amount available for distribution to
Unitholders at 1 January 122,325 119,362 122,325 119,362
Net income before share of profit of
associate and joint ventures 152,796 138,483 235,023 218,385
Net tax and other adjustments (Note A) 9,139 13,186 10,155 15,850
Tax-exempt income distribution 4,035 1,667 4,035 –
Distribution from joint ventures 83,243 80,899 – –
249,213 234,235 249,213 234,235
Amount available for distribution to
Unitholders 371,538 353,597 371,538 353,597
Distributions to Unitholders:
Distribution of 4.08 cents per Unit for the period
from 1/7/2012 to 31/12/2012 – (116,001) – (116,001)
Distribution of 4.01 cents per Unit for the period
from 1/1/2013 to 30/6/2013 – (115,271) – (115,271)
Distribution of 4.13 cents per Unit for the period
from 1/7/2013 to 31/12/2013 (118,893) – (118,893) –
Distribution of 4.22 cents per Unit for the period
from 1/1/2014 to 30/6/2014 (123,873) – (123,873) –
(242,766) (231,272) (242,766) (231,272)
Amount available for distribution
to Unitholders at 31 December 128,772 122,325 128,772 122,325
Note A – Net tax and other adjustments comprise:
Non-tax deductible/(chargeable) items:
– Amortisation of transaction costs on
borrowings and convertible bonds 7,024 9,727 7,012 9,714
– Amortisation of lease incentives (330) 1,160 (508) 1,027
– Amortisation of intangible asset 3,512 4,579 3,512 4,579
– Asset management fees paid and
payable in Units 3,701 3,812 3,701 3,812
– Depreciation of plant and equipment 330 219 325 213
– Net profits from subsidiaries (4,356) (2,738) – –
– Trustee’s fees 620 605 620 605
– Tax-exempt income retained – – (3,422) (1,801)
Other items (1,362) (4,178) (1,085) (2,299)
Net tax and other adjustments 9,139 13,186 10,155 15,850
The accompanying notes form an integral part of these financial statements.
Distribution StatementsYear ended 31 December 2014
Scaling New Heights | 119
Group Trust2014 2013 2014 2013
Note $’000 $’000 $’000 $’000
Net assets at 1 January 4,912,713 4,714,653 4,582,357 4,430,039
Operations
Total return for the year 448,882 374,590 315,758 327,226
Unitholders’ transactions
Creation of Units:
– Units issued in respect of RCS Trust’s asset
management fees 8,662 8,378 8,662 8,378
– Asset management fees paid in Units 3,650 3,995 3,650 3,995
– Conversion of convertible bonds 74,304 35,851 74,304 35,851
86,616 48,224 86,616 48,224
Distributions to Unitholders (242,766) (231,272) (242,766) (231,272)
Redemption and conversion of convertible bonds (37,111) – (37,120) –
Net decrease in net assets resulting from
Unitholders’ transactions (193,261) (183,048) (193,270) (183,048)
Foreign currency translation reserves
Foreign currency translation differences (2,013) (2,000) – –
Capital reserves
Repurchase, redemption and conversion of
convertible bonds 26 (17,869) (3,210) (17,869) (3,210)
Hedging reserves
Effective portion of change in fair value of
cash flow hedges 27 3,852 11,350 3,852 11,350
Share of hedging reserves of joint venture 1,184 378 – –
5,036 11,728 3,852 11,350
Net assets at 31 December 5,153,488 4,912,713 4,690,828 4,582,357
The accompanying notes form an integral part of these financial statements.
Statements of Movements in Unitholders’ FundsYear ended 31 December 2014
120 | CapitaCommercial Trust Annual Report 2014
Group
Descriptionof Property
Tenure ofLand
Term ofLease
RemainingTerm ofLease
Location ExistingUse
Carrying Value1 Percentageof NetAssets
2014 2013 2014 2013
$’000 $’000 % %
Investment properties – Office buildings
Singapore
Six Battery Road Leasehold 999 years 810 years 6 Battery Road Commercial 1,330,000 1,285,000 25.8 26.2
Capital Tower Leasehold 99 years 80 years 168 Robinson Road Commercial 1,309,000 1,282,000 25.4 26.1
One George Street Leasehold 99 years 87 years 1 George Street Commercial 975,000 959,000 18.9 19.5
HSBC Building Leasehold 999 years 835 years 21 Collyer Quay Commercial 450,000 429,000 8.7 8.7
Twenty Anson2 Leasehold 99 years 92 years 20 Anson Road Commercial 431,000 431,000 8.4 8.8
Investment property – Car park building
Singapore
Golden ShoeCar Park
Leasehold 99 years 66 years 50 Market Street Transportfacilities
141,000 138,400 2.7 2.8
Investment properties – Other buildings
Singapore
Wilkie Edge Leasehold 99 years 90 years 8 Wilkie Road Commercial 191,000 186,000 3.7 3.8
Bugis Village Leasehold 99 years 73 years 62 to 67 QueenStreet151 to 166 RochorRoad229 to 253 (oddnumbers only)Victoria Street
Commercial 55,400 58,600 1.1 1.2
Investment properties, at valuation (Note 5) 4,882,400 4,769,000 94.7 97.1
Investment in associate (Note 9) 63,899 65,002 1.2 1.3
Investment in joint ventures (Note 8) 1,427,895 1,283,879 27.7 26.1
Other assets and liabilities (net) (1,220,706) (1,205,168) (23.6) (24.5)
Net assets 5,153,488 4,912,713 100.0 100.0
1 The carrying value of investment properties are at valuation.
2 Twenty Anson is held through CCT’s 100% interest in FirstOffice Pte. Ltd..
The accompanying notes form an integral part of these financial statements.
Portfolio StatementsAs at 31 December 2014
Scaling New Heights | 121
Trust
Description ofProperty
Tenureof Land
Term ofLease
RemainingTerm ofLease
Location ExistingUse
Carrying Value1 Percentageof NetAssets
2014 2013 2014 2013
$’000 $’000 % %
Investment properties – Office buildings
Singapore
Six Battery Road Leasehold 999 years 810 years 6 Battery Road Commercial 1,330,000 1,285,000 28.3 28.0
Capital Tower Leasehold 99 years 80 years 168 Robinson Road Commercial 1,309,000 1,282,000 27.9 28.0
One George Street Leasehold 99 years 87 years 1 George Street Commercial 975,000 959,000 20.8 20.9
HSBC Building Leasehold 999 years 835 years 21 Collyer Quay Commercial 450,000 429,000 9.6 9.4
Investment property – Car park building
Singapore
Golden ShoeCar Park
Leasehold 99 years 66 years 50 Market Street Transportfacilities
141,000 138,400 3.0 3.0
Investment properties – Other buildings
Singapore
Wilkie Edge Leasehold 99 years 90 years 8 Wilkie Road Commercial 191,000 186,000 4.1 4.1
Bugis Village Leasehold 99 years 73 years 62 to 67 QueenStreet151 to 166 RochorRoad229 to 253 (oddnumbers only)Victoria Street
Commercial 55,400 58,600 1.2 1.3
Investment properties, at valuation (Note 5) 4,451,400 4,338,000 94.9 94.7
Other assets and liabilities (net) 239,428 244,357 5.1 5.3
Net assets 4,690,828 4,582,357 100.0 100.0
1 The carrying value of investment properties are at valuation.
The accompanying notes form an integral part of these financial statements.
Portfolio StatementsAs at 31 December 2014
122 | CapitaCommercial Trust Annual Report 2014
INVESTMENT PROPERTIES
On 31 December 2014, independent valuations of Capital Tower, Six Battery Road, HSBC Building, One George
Street, Twenty Anson, Bugis Village, Wilkie Edge and Golden Shoe Car Park were undertaken by CBRE Pte. Ltd.
(2013: Jones Lang LaSalle Property Consultants Pte. Ltd.).
The Manager believes that the independent valuers have appropriate professional qualifications and recent
experience in the location and category of the properties being valued. The valuations were based on direct
capitalisation method and discounted cash flow analysis. The valuations were performed on the same basis as
2013.
The net increase in fair value of the investment properties has been taken to the statement of total return.
Investment properties comprise mainly commercial properties that are leased to external customers. Generally,
the leases contain an initial non-cancellable period of three years. Subsequent renewals are negotiated with the
lessee. Contingent rents recognised in the Statements of Total Return of the Group and of the Trust amounted
to $512,000 (2013 (restated): $415,000) and $510,000 (2013: $413,000) respectively.
Scaling New Heights | 123
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Cash flows from operating activities
Total return for the year before tax 448,885 374,606 315,758 327,226
Adjustments for:
Amortisation of intangible asset 3,512 4,579 3,512 4,579
Amortisation of lease incentives (330) 1,160 (508) 1,027
Asset management fees paid and payable in Units 3,701 3,812 3,701 3,812
Depreciation of plant and equipment 330 219 325 213
Finance costs 36,434 42,560 36,422 42,547
Foreign exchange loss 375 375 375 375
Gain on disposal of plant and equipment * * * *
Gain on disposal of available-for-sale unquoted
investment (226) – (226) –
Gain on remeasurement of financial derivatives – (2,519) – (2,519)
Interest income (3,732) (3,713) (16,002) (15,991)
Investment income – – (87,087) (84,743)
Net increase in fair value of investment properties (81,219) (106,162) (83,222) (106,322)
Premium on redemption of convertible bonds 2,713 – 2,713 –
Share of profit of associate and joint ventures (217,357) (127,442) – –
Operating income before working capital changes 193,086 187,475 175,761 170,204
Changes in working capital:
Trade and other receivables (202) 6,911 (1,432) 6,275
Trade and other payables (5,815) (5,825) (807) (1,167)
Security deposits 1,440 6,592 1,046 5,610
Cash generated from operations 188,509 195,153 174,568 180,922
Tax paid (4) (114) – (101)
Net cash from operating activities 188,505 195,039 174,568 180,821
* Less than $1,000
The accompanying notes form an integral part of these financial statements.
Statements of Cash FlowsYear ended 31 December 2014
124 | CapitaCommercial Trust Annual Report 2014
Group Trust2014 2013 2014 2013
Note $’000 $’000 $’000 $’000(Restated)
Net cash from operating activities
brought forward 188,505 195,039 174,568 180,821
Cash flows from investing activities
Capital expenditure on investment properties (29,817) (21,370) (28,575) (21,318)
Capital redemption and return of cash by
available-for-sale unquoted investment 232 – 232 –
Distributions from associate 3,459 3,469 3,459 3,469
Distributions from joint venture 82,687 79,180 82,687 79,180
Interest income received 200 203 12,470 12,413
Loan to joint venture (4,800) – (4,800) –
Purchase of plant and equipment (259) (955) (254) (945)
Net cash from investing activities 51,702 60,527 65,219 72,799
Cash flows from financing activities
Distributions to Unitholders (242,766) (231,272) (242,766) (231,272)
Interest paid (30,673) (33,833) (30,660) (33,820)
Payment of transaction costs related to
borrowings and convertible bonds (12) (4,722) (12) (4,722)
Proceeds from interest-bearing liabilities 295,000 30,000 295,000 30,000
Repayment of interest-bearing liabilities (75,000) (50,000) (75,000) (50,000)
Repurchase and redemption of
convertible bonds (169,735) – (169,735) –
Net cash used in financing activities (223,186) (289,827) (223,173) (289,814)
Net increase/(decrease) in cash and cash
equivalents 17,021 (34,261) 16,614 (36,194)
Cash and cash equivalents at 1 January 84,064 118,325 60,105 96,299
Cash and cash equivalents at 31 December 12 101,085 84,064 76,719 60,105
Significant non-cash transactions
During the year, 8,008,559 (2013: 8,032,273) Units were issued at various unit prices in satisfaction of asset
management fees payable to the Manager, amounting to $3,650,000 (2013: $3,995,000) for the Group and
$8,662,000 (2013: $8,378,000) on behalf of RCS Trust. The Trust received units in RCS Trust (see note 8) in
settlement for the amount paid on its behalf.
The accompanying notes form an integral part of these financial statements.
Scaling New Heights | 125
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
CapitaCommercial Trust (the “Trust”) is a Singapore-domiciled unit trust established pursuant to the trust
deed dated 6 February 2004 (as amended) (the “Trust Deed”) between CapitaCommercial 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 and 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 11 May 2004 and was included under the Central Provident Fund (“CPF”) Investment
Scheme on 11 May 2004.
The consolidated financial statements of the Trust as at and for the year ended 31 December 2014
comprise the Trust and its subsidiaries (together referred to as the ‘Group’ and individually as ‘Group
entities’) and the Group’s interest in its associate and joint ventures.
The principal activity of the Group is to invest in income producing real estate and real estate related
assets, which are used or substantially used for commercial purposes, with the primary objective of
achieving an attractive level of return from rental income and for long-term capital growth.
The Trust has entered into several service agreements in relation to management of the Trust and its
property operations. The fee structures of these services are as follows:
(i) Property management fees
Under the property management agreements, property management fees are charged at 3.00% per
annum of the net property income of the properties except for HSBC Building which is charged at
0.25% per annum of the net property income.
The property management fees are payable monthly in arrears.
(ii) Asset management fees
Pursuant to the Trust Deed, the asset management fees comprise a base component of 0.10% per
annum of the value of Deposited Property and a performance component of 5.25% per annum of
net income of the Trust for each financial year. “Deposited Property” refers to all the assets of the
Trust, including all its authorised investments for the time being held or deemed to be held upon the
trusts of the Trust Deed, except for the following investments:
(a) the investment in RCS Trust, a joint venture;
(b) the investment in MSO Trust, a joint venture; and
(c) the investment in Quill Capita Trust (“QCT”), an associate.
The Manager is entitled to receive, at the option of the Manager, the asset management fees wholly
in the form of cash, wholly in the form of Units or a combination of both. When paid in the form of
Units, the Manager shall be entitled to receive such number of Units as may be purchased with the
relevant amount of the asset management fee attributable to such period at an issue price equal to
the Market Price.
The Manager is also entitled to receive acquisition fee at the rate of 1% (or such lower percentage
as may be determined by the Manager in its absolute discretion) of the acquisition price and a
divestment fee at the rate of 0.5% (or such lower percentage as may be determined by the Manager
in its absolute discretion) of the sale price.
Notes to the Financial Statements
126 | CapitaCommercial Trust Annual Report 2014
1 GENERAL (continued)
(iii) Trustee’s fees
Pursuant to the Trust Deed, the Trustee’s fees shall not exceed 0.10% per annum of the value of
Deposited Property (except for the investment in RCS Trust, a joint venture) (subject to a minimum
sum of $8,000 per month) payable out of the Deposited Property of the Trust. The Trustee is also
entitled to reimbursement of expenses incurred in the performance of its duties under the Trust
Deed.
The Trustee’s fees are payable quarterly in arrears.
2 BASIS OF PREPARATION
2.1 Statement of compliance
The financial statements have been prepared in accordance with the Statement of Recommended
Accounting Practice (“RAP”) 7 “Reporting Framework for Unit Trusts” issued by the Institute of
Singapore Chartered Accountants and the applicable requirements of the Code on Collective
Investment Schemes (“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”).
2.2 Basis of measurement
The financial statements have been prepared on the historical cost basis except as otherwise
described in the notes below.
2.3 Functional and presentation currency
These financial statements are presented in Singapore dollars, which is the Trust’s functional
currency. All financial information presented in Singapore dollars has been rounded to the nearest
thousand, unless otherwise stated.
2.4 Use of estimates and judgments
The preparation of the financial statements in conformity with RAP 7 requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
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 in any future periods
affected.
Information about critical judgment in applying accounting policies that have the most significant
effect on the amount recognised in the financial statements is described in the following note:
• Note 2.5 – Classification of joint ventures
Information about assumptions and estimation uncertainties that have a significant risk of resulting
in a material adjustment within the next financial year is included in following notes:
• Note 5 – Valuation of investment properties
• Note 28 – Valuation of financial instruments
Scaling New Heights | 127
2 BASIS OF PREPARATION (continued)
2.4 Use of estimates and judgments (continued)
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair
values, for both financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Group uses market observable data as
far as possible. Fair values are categorised into different levels in a fair value hierarchy based on
the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included in 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).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different
levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the
same level of the fair value hierarchy as the lowest level input that is significant to the entire
measurement (with Level 3 being the lowest).
The Group recognises transfers between levels of the fair value hierarchy as of the end of the
reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the
following notes:
• Note 5 – Valuation of investment properties
• Note 28 – Valuation of financial instruments
2.5 Changes in accounting policies
Joint Arrangements
From 1 January 2014, as a result of FRS 111 Joint Arrangements, the Group has changed its
accounting policy for its interests in joint arrangements. Under FRS 111, the Group has classified
its interests in joint arrangements as either joint operations (if the Group has rights to the assets,
and obligations for the liabilities, relating to an arrangement) or joint ventures (if the Group has
rights only to the net assets of an arrangement). When making this assessment, the Group
considered the structure of the arrangements, the legal form of any separate vehicles, the
contractual terms of the arrangements and other facts and circumstances. Previously, the structure
of the arrangement was the sole basis of classification.
At 31 December 2013, the Group had investments under joint arrangements. RCS Trust and MSO
Trust were accounted for as jointly-controlled entities using the proportionate consolidation method.
The Group has re-evaluated the rights and obligations of the parties to these joint arrangements and
has determined that the parties in these joint arrangements have rights to the net assets of the joint
arrangements. Accordingly, these joint arrangements have been classified as joint ventures under
FRS 111 and are accounted for using the equity method. The amendments were applied
retrospectively.
Notes to the Financial Statements
128 | CapitaCommercial Trust Annual Report 2014
2 BASIS OF PREPARATION (continued)
2.5 Changes in accounting policies (continued)
Summary of quantitative impact
The quantitative impact of the above changes as follows:
Impact on Statement of Financial Position – Group
As at 1 January 2013 As at 31 December 2013
As
previously
reported
Joint
arrangements
As
restated
As
previously
reported
Joint
arrangements
As
restated
$’000 $’000 $’000 $’000 $’000 $’000
Non-current assets
Plant and equipment 898 (124) 774 1,955 (475) 1,480
Investment properties 6,380,200 (1,741,200) 4,639,000 6,579,800 (1,810,800) 4,769,000
Investment property
under construction 314,880 (314,880) – 380,025 (380,025) –
Intangible asset 12,913 – 12,913 8,334 – 8,334
Joint ventures 64,800 1,168,134 1,232,934 64,800 1,219,079 1,283,879
Associate 66,491 – 66,491 65,002 – 65,002
6,840,182 (888,070) 5,952,112 7,099,916 (972,221) 6,127,695
Current assets
Available-for-sale
unquoted investment 6 – 6 6 – 6
Inventories 327 (327) – 367 (367) –
Trade and other
receivables 22,969 13,589 36,558 14,358 19,358 33,716
Cash and cash
equivalents 139,520 (21,195) 118,325 103,593 (19,529) 84,064
162,822 (7,933) 154,889 118,324 (538) 117,786
Total assets 7,003,004 (896,003) 6,107,001 7,218,240 (972,759) 6,245,481
Current liabilities
Trade and other payables 87,139 (31,402) 55,737 97,454 (46,555) 50,899
Current portion of
security deposits 17,699 (8,456) 9,243 18,088 (6,124) 11,964
Interest-bearing liabilities 50,000 – 50,000 – – –
Financial derivatives 2,519 – 2,519 – – –
Current tax payable 102 – 102 4 – 4
157,459 (39,858) 117,601 115,546 (52,679) 62,867
Non-current liabilities
Non-current portion of
security deposits 31,654 (9,192) 22,462 37,738 (11,405) 26,333
Interest-bearing liabilities 1,645,016 (780,495) 864,521 1,709,644 (842,595) 867,049
Financial derivatives 12,351 (1,658) 10,693 26,523 (1,280) 25,243
Convertible bonds 377,071 – 377,071 351,276 – 351,276
Amounts owing to joint
venture partners 64,800 (64,800) – 64,800 (64,800) –
2,130,892 (856,145) 1,274,747 2,189,981 (920,080) 1,269,901
Total liabilities 2,288,351 (896,003) 1,392,348 2,305,527 (972,759) 1,332,768
Net assets 4,714,653 – 4,714,653 4,912,713 – 4,912,713
Represented by:
Unitholders’ funds 4,714,653 – 4,714,653 4,912,713 – 4,912,713
The change in accounting policy had no impact on net asset value per unit for the current and
comparative years.
Scaling New Heights | 129
2 BASIS OF PREPARATION (continued)
2.5 Changes in accounting policies (continued)
Impact on Statement of Total Return – Group
Year ended 31 December 2013
As
previously
reported
Joint
arrangements As restated
$’000 $’000 $’000
Gross revenue 386,936 (135,473) 251,463
Property operating expenses (90,400) 36,058 (54,342)
Net property income 296,536 (99,415) 197,121
Interest income 2,340 1,373 3,713
Base asset management fees (9,596) 4,822 (4,774)
Performance asset management fees (11,867) 3,985 (7,882)
Finance costs (61,462) 18,902 (42,560)
Audit fees (318) 54 (264)
Amortisation of intangible asset (4,579) – (4,579)
Trustee’s fees (829) 224 (605)
Valuation fees (420) 135 (285)
Other expenses (1,442) 40 (1,402)
Net income before share of profit of
associate and joint venture 208,363 (69,880) 138,483
Share of profit (net of tax) of:
– Associate 4,355 – 4,355
– Joint ventures – 123,087 123,087
Net income 212,718 53,207 265,925
Gain on remeasurement of financial derivatives 2,519 – 2,519
Net increase in fair value of investment
properties 159,371 (53,209) 106,162
Total return for the year before tax 374,608 (2) 374,606
Tax expense (18) 2 (16)
Total return for the year 374,590 – 374,590
The change in accounting policy had no impact on earnings per unit for the current and
comparative years.
Notes to the Financial Statements
130 | CapitaCommercial Trust Annual Report 2014
2 BASIS OF PREPARATION (continued)
2.5 Changes in accounting policies (continued)
Impact on Distribution Statement – Group
Year ended 31 December 2013
As
previously
reported
Joint
arrangements As restated
$’000 $’000 $’000
Amount available for distribution to Unitholders
at beginning of the year 119,362 – 119,362
Net income before share of profit of associate
and joint ventures 208,363 (69,880) 138,483
Net tax and other adjustments (Note A) 24,205 (11,019) 13,186
Tax-exempt income distribution 1,667 – 1,667
Distribution from joint venture – 80,899 80,899
234,235 – 234,235
Amount available for distribution to Unitholders 353,597 – 353,597
Distributions to Unitholders:
Distribution of 4.08 cents per unit for period
from 01/07/2012 to 31/12/2012 (116,001) – (116,001)
Distribution of 4.01 cents per unit for period
from 01/01/2013 to 30/06/2013 (115,271) – (115,271)
(231,272) – (231,272)
Amount available for distribution to Unitholders
at end of the year 122,325 – 122,325
Note A – Net tax and other adjustments comprise:
As
previously
reported
Joint
arrangements As restated
$’000 $’000 $’000
Non-tax deductible/(chargeable) items:
– Amortisation of transaction costs on
borrowings and convertible bonds 11,564 (1,837) 9,727
– Amortisation of lease incentives 1,160 – 1,160
– Amortisation of intangible asset 4,579 – 4,579
– Asset management fees paid and payable in
Units 12,260 (8,448) 3,812
– Depreciation of plant and equipment 273 (54) 219
– Net profits from subsidiaries (2,738) – (2,738)
– Trustee’s fees 829 (224) 605
Other items (3,722) (456) (4,178)
Net tax and other adjustments 24,205 (11,019) 13,186
Scaling New Heights | 131
2 BASIS OF PREPARATION (continued)
2.5 Changes in accounting policies (continued)
Impact on Statement of Cash Flows – Group
Year ended 31 December 2013
As
previously
reported
Joint
arrangements As restated
$’000 $’000 $’000
Net cash from operating activities 297,976 (102,937) 195,039
Net cash (used in)/from investing activities (79,455) 139,982 60,527
Net cash used in financing activities (254,448) (35,379) (289,827)
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 7), joint ventures (see note 8)
and associate (see note 9).
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
2.5, which addresses changes in accounting policies.
3.1 Basis of consolidation
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
those 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 accounting policies of subsidiaries have been changed when necessary to align them with the
policies adopted by the Group.
Investments in associate and joint ventures
An associate is an entity in which the Group has a significant influence, but not control, over the
financial and operating policies. Significance influence is presumed to exist when the Group holds
20% or more of the voting power of another entity. A joint venture is an arrangement in which the
Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather
than rights to its assets and obligations for its liabilities.
Investments in an associate and joint ventures are accounted for using the equity method. They are
recognised initially at cost, which includes transactions costs. Subsequent to initial recognition, the
consolidated financial statements include the Group’s share of profit or loss and other
comprehensive income of equity-accounted investees, after adjustments to align the accounting
policies with those of the Group, from the date that significant influence or joint control commences
until the date that significant influence or joint control ceases.
When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying
amount of that investment, together with any long-term interests that form part thereof, is reduced
to zero, and the recognition of further losses is discontinued except to the extent that the Group has
an obligation to fund the investee’s operations or has made payments on behalf of the investee.
Notes to the Financial Statements
132 | CapitaCommercial Trust Annual Report 2014
3 SIGNIFICANT ACCOUNTING POLICIES (continued)
3.1 Basis of consolidation (continued)
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from
intra-group transactions, are eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with the associate and joint ventures 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.
Accounting for subsidiaries, associate and joint ventures by the Trust
Investments in subsidiaries, associate and joint ventures are stated in the Trust’s statement of
financial position at cost less accumulated impairment losses.
3.2 Plant and equipment
Recognition and measurement
Items of plant and equipment are measured 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.
The gain or loss on the disposal of an item of plant and equipment is determined as the difference
between the proceeds from disposal and the carrying amount of the item, and is recognised net
within other expenses in the statement of total return on the date of disposal.
Subsequent costs
The cost of replacing a component 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 component
will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced
component is derecognised. The costs of the day-to-day servicing of plant and equipment are
recognised in the statement of total return as incurred.
Depreciation
Items of plant and equipment are depreciated on a straight-line basis in the statement of total return
over the estimated useful lives of each component.
The estimated useful lives for the current and comparative years of significant items of plant and
equipment are as follows:
• Furniture, fittings and equipment 2 to 5 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and
adjusted if appropriate.
3.3 Investment properties
Investment properties are properties held either to earn rental income or for capital appreciation or
for both, but not for sale in the ordinary course of business, use in the production or supply of goods
or services or for administrative purposes. Investment properties are measured at cost on initial
recognition and subsequently at fair value with any change therein recognised in the statement of
total return.
Cost includes expenditure that is directly attributable to the acquisition of the investment, which
includes transaction costs.
Scaling New Heights | 133
3 SIGNIFICANT ACCOUNTING POLICIES (continued)
3.3 Investment properties (continued)
Fair value is determined in accordance with the Trust Deed, which requires investment properties
to be valued by independent registered valuers at least once a year in accordance with the CIS
Code issued by MAS.
Any gain or loss on disposal of an investment property is recognised in the statement of total return.
Investment properties are not depreciated. The properties are subject to continued maintenance
and regularly revalued on the basis set out above.
3.4 Intangible asset
Intangible asset acquired by the Group and the Trust is measured at cost less accumulated
amortisation and accumulated impairment losses.
Amortisation is calculated based on the cost of the asset and recognised in the Statements of Total
Return on a systematic basis over the estimated useful life for the current and comparative years
of 42 months. Intangible asset is tested for impairment as described in Note 3.7.
3.5 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group
entities at the exchange rates at the date of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are retranslated to the functional currency
at the exchange rate at that date. The foreign currency gain or loss on monetary items is the
difference between amortised cost in the functional currency at the beginning of the year, adjusted
for effective interest and payments during the year, and the amortised cost in foreign currency
translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair
value are retranslated to the functional currency at the exchange rate at the date that the fair value
was determined. Non-monetary items in a foreign currency that are measured in terms of historical
cost are translated using the exchange rate at the date of the transaction.
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 and available-for-sale equity instruments.
Foreign operations
The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates
at the end of the reporting period. The income and expenses of foreign operations are translated
to Singapore dollars at exchange rates at the dates of the transactions.
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 proportion of the cumulative amount
in the foreign exchange translation reserve is reclassified to the statement of total return as part of
the gain or loss on disposal.
Notes to the Financial Statements
134 | CapitaCommercial Trust Annual Report 2014
3 SIGNIFICANT ACCOUNTING POLICIES (continued)
3.6 Financial instruments
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 derivative as a hedging instrument, the Group formally documents the
relationship between the hedging instrument and hedged item, 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 ultimately could affect the reported statement of total
return.
Derivative financial instruments are recognised initially at fair value; attributable transaction costs
are recognised in the statement of total return as incurred. Subsequent to initial recognition,
derivative financial instruments are measured at fair value, and changes therein are accounted for
as described below.
Cash flow hedge
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 the statement of total return, the effective portion of changes
in the fair value of the derivative is recognised in other comprehensive income and presented in the
hedging reserve in Unitholders’ funds. Any ineffective portion of changes in the fair value of the
derivative is recognised immediately in the statement of total return.
When the hedged item is a non-financial asset, the amount accumulated in the hedging reserve is
reclassified to the statement of total return in the same period or periods during which the
non-financial item affects the statement of total return. In other cases as well, the amount
accumulated in the hedging reserve is reclassified to the statement of total return in the same
period that the hedged item affects the statement of total return. 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. If the forecast
transaction is no longer expected to occur, then the balance in the hedging reserve is reclassified
to the statement of total return.
Separable embedded derivatives
Changes in the fair value of separable embedded derivatives are recognised immediately in the
statement of total return.
Other non-trading derivatives
When a derivative financial instrument is not held for trading, and is not designated in a hedge
relationship that qualifies for hedge accounting, all changes in its fair value are recognised
immediately in the statement of total return.
Scaling New Heights | 135
3 SIGNIFICANT ACCOUNTING POLICIES (continued)
3.6 Financial instruments (continued)
Non-derivative financial instruments
The Group initially recognises loans and receivables, deposits and convertible bonds issued on the
date that they are originated. All other financial instruments are recognised initially on the trade
date, which is the date that 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.
The Group derecognises a financial liability when its contractual obligations are discharged,
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.
The Group classifies non-derivative financial instruments into the following categories: loans and
receivables, available-for-sale financial assets and other financial liabilities.
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 on the date that they are originated 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 trade and other receivables and cash and cash equivalents.
Cash and cash equivalents comprise cash balances and short-term bank deposits with maturities
of three months or less from the acquisition date that are subject to an insignificant risk of changes
in their fair value, and are used by the Group in the management of its short-term commitments.
Available-for-sale financial assets
The Group’s investments in certain equity securities are classified as available-for-sale financial
assets if they are not classified in any of the above categories of financial assets. Available-for-sale
financial assets are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, they are measured at fair value and changes therein, other than
impairment losses, and foreign currency differences on available-for-sale debt instruments, are
recognised directly in Unitholders’ funds. When an investment is derecognised, the gain or loss
accumulated in Unitholders’ funds is reclassified to the statement of total return. Available-for-sale
financial assets which are unquoted and where the fair value cannot be measured reliably, are
stated at cost.
Notes to the Financial Statements
136 | CapitaCommercial Trust Annual Report 2014
3 SIGNIFICANT ACCOUNTING POLICIES (continued)
3.6 Financial instruments (continued)
Other financial liabilities
Other financial liabilities comprise trade and other payables, security deposits and interest-bearing
liabilities.
Such financial liabilities are recognised initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, other non-derivative financial instruments are measured at
amortised cost using the effective interest method.
Convertible bonds accounted for as compound financial instruments
Convertible bonds that can be converted into units at the option of the holder where the number of
units to be issued does not vary with changes in the fair value of the bonds are accounted for as
compound financial instruments.
The liability component of the convertible bonds is recognised initially at the fair value of a similar
liability that does not have an equity conversion option. The equity component is recognised initially
at the difference between the fair value of the compound financial instrument as a whole and the fair
value of the liability component. Any directly attributable transaction costs are allocated to the
liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of convertible bonds is measured at
amortised cost using the effective interest method. The equity component of convertible bonds is
not remeasured subsequent to initial recognition. When the conversion option is exercised or
lapsed, its carrying amount will be transferred to unitholders’ funds. No gain or loss is recognised
on conversion.
When a convertible bond is being redeemed before its maturity date, the purchase consideration
(including directly attributable costs, net of tax effects) are allocated to the liability and equity
components of the instrument at the date of redemption. Any resulting gain or loss relating to the
liability component is recognised in the statement of total return. The remaining purchase
consideration is recognised in unitholders’ funds.
3.7 Impairment
Non-derivative financial assets
A financial asset not classified at fair value through the statement of total return, including interest
in an associate and jointly controlled entities, 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(s) has occurred after the initial recognition of the asset, and
that loss event(s) has an impact on the estimated future cash flows of that asset that can be
estimated reliably.
The Group considers evidence of impairment for loans and receivables at both a specific asset and
collective level. All individually significant loans and receivables are assessed for specific
impairment. The individually significant receivables found not to be specifically impaired are then
collectively assessed for any impairment that has been incurred but not yet identified. Loans and
receivables that are not individually significant are collectively assessed for impairment by
grouping together assets with similar risk characteristics.
Scaling New Heights | 137
3 SIGNIFICANT ACCOUNTING POLICIES (continued)
3.7 Impairment (continued)
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 loans and receivables. Interest on the
impaired asset continues to be recognised. 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 statement of total return.
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 assets’ recoverable amounts are estimated.
An impairment loss is recognised in the statement of total return if the carrying amount of an asset
or cash-generating unit (“CGU”) exceeds its estimated recoverable amount. A CGU is the smallest
identifiable asset group that generates cash flows from continuing use that are largely independent
from other assets or CGUs. Impairment losses are recognised in the statement of total return unless
it reverses a previous revaluation, credited to Unitholders’ funds, in which case it is charged to
Unitholders’ funds.
The recoverable amount of an asset or CGU 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 or CGU.
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.
3.8 Unitholders’ funds
Unitholders’ funds are classified as equity. Incremental costs directly attributable to the issue of
Units are recognised as a deduction from equity.
3.9 Revenue recognition
Rental income from operating leases
Rental income from operating leases is recognised as revenue in the statement of total return on a
straight-line basis over the term of the lease, except where an alternative basis is more
representative of the pattern of benefits to be derived from the leased assets. Lease incentives
granted are recognised as an integral part of the total rental income, over the term of the lease.
Contingent rentals, which include gross turnover rental, are recognised as income in the accounting
period on a receipt basis. No contingent rentals are recognised if there are uncertainties due to the
possible return of amounts received.
Car park income
Car park income is recognised in the statement of total return on a receipt basis.
Notes to the Financial Statements
138 | CapitaCommercial Trust Annual Report 2014
3 SIGNIFICANT ACCOUNTING POLICIES (continued)
3.9 Revenue recognition (continued)
Interest income
Interest income is recognised in the statement of total return as it accrues, using the effective
interest method.
Investment income
Investment income is recognised in the statement of total return on the date that the Group’s right
to receive payment is established.
3.10 Government grants
Grants that compensate the Group for expenses incurred are recognised in the statement of total
return as other income on a systematic basis in the periods in which the expenses are recognised.
3.11 Expenses
Property operating expenses
Property operating expenses consist of property tax, utilities, maintenance, property management
reimbursements, property management fees using the applicable formula stipulated in Note 1(i) for
the Trust, marketing expenses and other property outgoings in relation to investment properties
where such expenses are the responsibility of the Group.
Property operating expenses are recognised on an accrual basis.
Asset management fees
Asset management fees are recognised on an accrual basis using the applicable formula stipulated
in Note 1(ii).
Trustee’s fees
The Trustee’s fees are recognised on an accrual basis using the applicable formula stipulated in
Note 1(iii).
3.12 Tax
Tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in the
statement of total return except to the extent that it relates to a business combination, or items
recognised directly in Unitholders’ funds, in which case it is recognised in Unitholders’ funds.
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 recognised 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 or loss;
• temporary differences related to investments in subsidiaries and joint ventures to the extent
that it is probable that they will not reverse in the foreseeable future; and
• taxable temporary differences arising on the initial recognition of goodwill.
Scaling New Heights | 139
3 SIGNIFICANT ACCOUNTING POLICIES (continued)
3.12 Tax (continued)
The measurement of deferred taxes reflects the tax consequences that would follow the manner in
which the Group expects, at the end of the reporting period, to recover or settle the carrying amount
of its assets and liabilities. For investment property that is measured at fair value, the presumption
that the carrying amount of the investment property will be recovered through sale has not been
rebutted. Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, using tax rates enacted or substantively enacted at 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 to the extent that it is probable that future taxable profits will be
available against which the temporary difference can be utilised. Deferred tax assets are reviewed
at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
In the ordinary course of business, there are many transactions and calculations for which the
ultimate tax treatment is uncertain. Therefore, the Group recognises tax liabilities based on
estimates of whether additional taxes and interest will be due. These tax liabilities are recognised
when the Group believes that certain positions may not be fully sustained upon review by tax
authorities, despite the Group’s belief that its tax return positions are supportable. The Group
believes that its accruals for tax liabilities are adequate for all open tax years based on its
assessment of many factors including interpretations of tax law and prior experience. This
assessment relies on estimates and assumptions and may involve a series of multifaceted
judgments about future events. New information may become available that causes the Group to
change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities
will impact tax expense in the period that such a determination is made.
The Inland Revenue Authority of Singapore (“IRAS”) has issued a tax ruling on the taxation of the
Trust for income earned and expenditure incurred after its listing on the SGX-ST. Subject to meeting
the terms and conditions of the tax ruling, which includes a distribution of at least 90% of the taxable
income of the Trust, the Trust will not be taxed on the portion of taxable income of the Trust that is
distributed to Unitholders. Any portion of the taxable income that is not distributed to Unitholders
will be taxed on the Trust. In the event that there are subsequent adjustments to the taxable income
when the actual taxable income of the Trust is finally agreed with IRAS, such adjustments are taken
up as an adjustment to the taxable income for the next distribution following the agreement with
IRAS.
Individuals and Qualifying Unitholders are entitled to receive taxable income distributions at gross
from the Trust. For other types of Unitholders (other than foreign non-individual Unitholders), the
Trust is required to withhold tax at the prevailing corporate tax rate (currently 17%) on the taxable
income distributions made by the Trust. Such Unitholders are subject to tax on the regrossed
amounts of the distributions received but may claim a credit for the tax deducted at source at the
prevailing corporate tax rate (currently 17%) by the Trust. Qualifying foreign non-individual
Unitholders are entitled to receive taxable income distributions net of withholding tax at a reduced
rate of 10% for distributions made on or before 31 March 2020.
Notes to the Financial Statements
140 | CapitaCommercial Trust Annual Report 2014
3 SIGNIFICANT ACCOUNTING POLICIES (continued)
3.12 Tax (continued)
A Qualifying Unitholder is a Unitholder who is
(a) a Singapore-incorporated company which is tax resident in Singapore;
(b) a body of persons, other than a company or a partnership, registered or constituted in
Singapore (for example, a town council, a statutory board, a registered charity, a registered
co-operative society, a registered trade union, a management corporation, a club and a trade
and industry association);
(c) a Singapore branch of a foreign company which has been presented a letter of approval from
the Comptroller of Income Tax granting waiver from tax deduction at source in respect of
distributions from the Trust;
(d) an agent bank or a Supplementary Retirement Scheme (“SRS”) operator acting as nominee for
individuals who have purchased Units within the Central Provident Fund Investment Scheme
(“CPFIS”) or the SRS respectively; or
(e) a nominee who can demonstrate that the Units are held for beneficial owners who are
individuals or who fall within the classes of Unitholders listed in (a) to (c) above.
The Trust has a distribution policy where it is required to distribute at least 90% of its taxable
income, other than gains from the sale of real estate properties that are determined by IRAS to be
trading gains. For the taxable income that is not distributed, referred to as retained taxable income,
tax will be assessed on the Trust. Where such retained taxable income is subsequently distributed,
the Trust need not deduct tax at source.
3.13 Finance costs
Finance costs comprise interest expense on borrowings and convertible bonds, amortisation of
borrowings and convertible bonds related transaction costs and accretion of convertible bonds
interest that are recognised in the statement of total return using the effective interest method over
the period of borrowings and the convertible bonds.
3.14 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 Trust by the weighted
average number of 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.
3.15 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. All operating segments’ operating results
are reviewed regularly by the Chief Executive Officer and Board of Directors of the Manager (the
Group’s “Chief Operating Decision Makers” or “CODMs”) to make decisions about resources to be
allocated to the segment and to assess its performance, and for which discrete financial information
is available.
Scaling New Heights | 141
3 SIGNIFICANT ACCOUNTING POLICIES (continued)
3.15 Segment reporting (continued)
Segment results that are reported to the Group’s CODMs include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise
mainly income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the year to acquire items of plant and
equipment and investment properties.
3.16 New standards, interpretations and revised recommended accounting practice not yet
adopted
A number of new standards, amendments to standards and interpretations are effective for annual
periods beginning after 1 January 2014, and have not been applied in preparing these financial
statements. None of these are expected to have a significant effect on the financial statements of
the Group and the Trust. The Group does not plan to adopt these standards early.
4 PLANT AND EQUIPMENT
Furniture, fittingsand equipment
2014 2013$’000 $’000
Group (Restated)
Cost
At 1 January 2,327 2,059
Additions 287 925
Disposals/write-off (117) (657)
At 31 December 2,497 2,327
Accumulated depreciation
At 1 January 847 1,285
Charge for the year 330 219
Disposals/write-off (133) (657)
At 31 December 1,044 847
Carrying amounts
At 1 January 1,480 774
At 31 December 1,453 1,480
Notes to the Financial Statements
142 | CapitaCommercial Trust Annual Report 2014
4 PLANT AND EQUIPMENT (continued)
Furniture, fittingsand equipment
2014 2013Trust $’000 $’000
Cost
At 1 January 2,307 2,040
Additions 282 924
Disposals/write-off (117) (657)
At 31 December 2,472 2,307
Accumulated depreciation
At 1 January 840 1,284
Charge for the year 325 213
Disposals/write-off (133) (657)
At 31 December 1,032 840
Carrying amounts
At 1 January 1,467 756
At 31 December 1,440 1,467
5 INVESTMENT PROPERTIES
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
At 1 January 4,769,000 4,639,000 4,338,000 4,208,000
Capital expenditure 32,181 23,838 30,178 23,678
Net increase in fair value recognised
in statement of total return 81,219 106,162 83,222 106,322
At 31 December 4,882,400 4,769,000 4,451,400 4,338,000
As at 31 December 2014 and 31 December 2013, all investment properties held by the Group and Trust
are unencumbered.
Investment properties are stated at fair value based on valuations performed by independent professional
valuers. In determining the fair value, the valuations are prepared by considering the estimated rental
value of the property by applying the appropriate valuation methods i.e. the capitalisation method and
discounted cashflow method.
Scaling New Heights | 143
5 INVESTMENT PROPERTIES (continued)
The capitalisation approach is an investment approach whereby the estimated gross passing income (on
both a passing and market rent basis) is adjusted to reflect anticipated operating costs and ongoing
vacancy to produce a net income on a fully leased basis. The adopted fully leased net income is
capitalised over the remaining term of the land lease from the valuation date at an appropriate
capitalisation rate. The discounted cash flow method involves the estimation and projection of a net
income stream over a period and discounting the net income stream with an internal rate of return to arrive
at the market value.
In determining the fair values of investment properties, the valuers have used the above valuation methods
which involve certain estimates. The Manager reviews the key valuation parameters and underlying data
including market-corroborated capitalisation rates and discount rates adopted by the valuers and is of the
view that the estimates are reflective of the current market conditions as at the reporting date.
6 INTANGIBLE ASSET
Group and Trust2014 2013$’000 $’000
Cost
At 1 January and 31 December 17,100 17,100
Accumulated amortisation
At 1 January 8,766 4,187
Amortisation for the year 3,512 4,579
At 31 December 12,278 8,766
Carrying amounts
At 1 January 8,334 12,913
At 31 December 4,822 8,334
Intangible asset represents the unamortised yield stabilization sum received by the Group under the Deed
of Yield Stabilization dated 22 March 2012 in relation to Twenty Anson (see Note 18).
7 SUBSIDIARIES
Trust2014 2013$’000 $’000
Unquoted equity investments at cost 167,657 167,657
Loan to a subsidiary 267,919 267,919
435,576 435,576
The loan to a subsidiary is unsecured, bears an effective interest rate of 4.6% (2013: 4.6%) per annum and
not repayable within 12 months.
Notes to the Financial Statements
144 | CapitaCommercial Trust Annual Report 2014
7 SUBSIDIARIES (continued)
Details of the subsidiaries are as follows:
Name of subsidiariesPlace of
incorporation/business
Effective equity interestheld by the Trust
2014 2013% %
CCT MTN Pte. Ltd. (“CCT MTN”)1 Singapore 100 100
FirstOffice Pte. Ltd. (“FOPL”)1 Singapore 100 100
1 Audited by KPMG LLP Singapore
8 JOINT VENTURES
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Investments in joint ventures 1,315,095 1,175,879 872,133 863,471
Loan to joint venture 112,800 108,000 112,800 108,000
1,427,895 1,283,879 984,933 971,471
The loan to joint venture is unsecured, bears an effective interest rate of 3.12% (2013: 3.25%) per annum
and not repayable within 12 months.
Details of the joint ventures are as follows:
Name of joint ventures
Place ofconstitution/
business
Effective equity interestheld by the Trust2014 2013
% %
RCS Trust1 Singapore 60 60
MSO Trust1 Singapore 40 40
1 Audited by KPMG LLP Singapore
Scaling New Heights | 145
8 JOINT VENTURES (continued)
RCS Trust
RCS Trust is an unlisted special purpose trust constituted under a trust deed (“RCS Trust Trust Deed”)
dated 18 July 2006 entered into between HSBC Institutional Trust Services (Singapore) Limited as
trustee-manager of RCS Trust (“RCS Trust Trustee-Manager”), HSBC Institutional Trust Services
(Singapore) Limited as trustee of CapitaMall Trust (“CMT”), the Trustee, CapitaMall Trust Management
Limited as Manager of CMT, and the Manager. RCS Trust is 60% owned by the Trust and 40% owned by
CMT.
MSO Trust
MSO Trust is an unlisted special purpose trust constituted under a trust deed (“MSO Trust Trust Deed”)
dated 15 June 2011 entered between Market Street Office Trustee Pte. Ltd. as trustee-manager of MSO
Trust (“MSO Trust Trustee-Manager”), the Trustee and the Manager.
On 13 July 2011, the Trustee and the Manager entered into a joint venture agreement with CapitaLand
Singapore Limited (“CLS”) and Mitsubishi Estate Asia Pte. Ltd. (“MEA”). Under the agreement, the Trust,
CLS and MEA own 40%, 50% and 10% equity interest respectively in MSO Trust.
The following table summarises the financial information of joint ventures, based on the financial
statements prepared in accordance with FRS, modified for fair value adjustments on acquisition, not
adjusted for the percentage ownership held by the Group, were as follows:
2014 2013RCS Trust MSO Trust RCS Trust MSO Trust
$’000 $’000 $’000 $’000
Results
Gross revenue 232,493 – 225,788 –
Expensesa (112,003) (3,032) (108,321) (1,504)
Net increase in fair value of investment
property and investment property under
construction 73,928 242,935 87,950 1,097
Total return for the year 194,418 239,903 205,417 (407)
Assets and liabilities
Non-current assets 3,110,389 1,533,316 3,018,792 950,062
Current assetsb 16,590 23,617 14,472 40,114
Total assets 3,126,979 1,556,933 3,033,264 990,176
Current liabilitiesc 81,574 977,856 82,338 68,667
Non-current liabilitiesd 1,044,089 293,315 1,019,738 878,594
Total liabilities 1,125,663 1,271,171 1,102,076 947,261
Net assets 2,001,316 285,762 1,931,188 42,915
Notes to the Financial Statements
146 | CapitaCommercial Trust Annual Report 2014
8 JOINT VENTURES (continued)
2014 2013RCS Trust MSO Trust RCS Trust MSO Trust
$’000 $’000 $’000 $’000
Group’s interest in net assets of
investee at 1 January 1,158,713 17,166 1,107,984 16,950
Increase in investment in joint venture with
no change in effective intereste 8,662 – 8,378 –
Share of total return for the year 116,651 95,961 123,250 (163)
Share of hedging reserves for the year – 1,184 – 379
Distributions received and receivable
during the year (83,236) (6) (80,899) –
Carrying amount of interest in investee
at 31 December 1,200,790 114,305 1,158,713 17,166
Group’s share of joint ventures’ capital
commitment 15,660 – 29,280 249,717
a Includes:
– depreciation of $114,000 (2013: $91,000) for RCS Trust;
– interest expense of $31,097,000 (2013: $30,781,000) and $906,000 (2013: Nil) for RCS Trust
and MSO Trust respectively; and
– tax credit of $4,000 (2013: tax expense of $4,000) for MSO Trust.
b Includes cash and cash equivalents of $9,163,000 (2013: $6,447,000) and $21,089,000 (2013:
$39,152,000) for RCS Trust and MSO Trust respectively.
c Includes current financial liabilities (excluding trade and other payables and provisions) of
$816,996,000 (2013: Nil) for MSO Trust.
d Includes non-current financial liabilities (excluding trade and other payables and provisions) of
$1,026,209,000 (2013: $1,000,730,000) and $282,240,000 (2013: $878,594,000) for RCS Trust and
MSO Trust respectively.
e Increase in investment by way of issuance of units in RCS Trust.
The Trust is committed to incur capital commitment of $340.0 million (2013: $340.0 million) in MSO Trust,
of which an amount up to $317.6 million (2013: $317.6 million) will be provided by unitholder’s loan to be
drawn down in multiple tranches progressively over time based on the needs of MSO Trust. As at 31
December 2014, the Trust had provided a total of $135.2 million (2013: $130.4 million) to MSO Trust
comprising $22.4 million (2013: $22.4 million) as equity and $112.8 million (2013: $108.0 million) as
unitholder’s loan.
The Trust has also provided undertakings on cost overrun, interest shortfall, security margin and project
completion, in respect of the $890.0 million (CCT’s 40% interest is $356.0 million) bank facility granted to
MSO Trust. As at 31 December 2014, the amount outstanding under the bank facility was $820.0 million
(2013: $610.0 million) (CCT’s 40% interest is $328.0 million (2013: $244.0 million).
Scaling New Heights | 147
9 ASSOCIATE
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
Investment in associate 63,899 65,002 58,850 58,850
Accumulated impairment loss – – (7,371) (7,371)
63,899 65,002 51,479 51,479
Details of the associate are as follows:
Name of associate
Place ofconstitution/
business
Effective equity interestheld by the Trust2014 2013
% %
Quill Capita Trust (“QCT”)1 Malaysia 30 30
1 Audited by Ernst & Young Malaysia.
QCT is a real estate investment trust constituted in Malaysia by a trust deed dated 9 October 2006 and
has its place of business in Malaysia. The principal activity of QCT is to own and invest in commercial
properties, primarily in Malaysia.
As the results of QCT are not expected to be announced in sufficient time to be included in the Group’s
results for the same calendar year end, the Group has equity accounted for the results of QCT based on
a 3-month lag time. Consequently as at 31 December 2014 (2013: 31 December 2013), equity accounting
was based on the results for the year ended 30 September 2014 (2013: 30 September 2013), adjusted for
significant transactions and events occurring up to the reporting date of the Group.
The fair value of the Group’s equity interest in QCT, based on the quoted market price at 31 December
2014 is $51,410,000 (RM136,937,000) (2013: $53,652,000 (RM138,107,000)).
During the year, the Trust assessed the recoverable amount of its investment in QCT. The carrying amountapproximates the fair value and no adjustment was made to the carrying amount of the investment in QCTas at 31 December 2014.
The summary financial information of the associate, not adjusted for the percentage of ownership held bythe Group, is as follows:
Associate2014 2013$’000 $’000
Results
Gross revenue 26,912 27,308
Total return for the year 15,815 14,517
Assets and liabilities
Total assets 320,278 328,225
Total liabilities 120,325 124,535
Notes to the Financial Statements
148 | CapitaCommercial Trust Annual Report 2014
9 ASSOCIATE (continued)
Associate2014 2013$’000 $’000
Group’s interest in net assets of investee at 1 January 65,002 66,491
Share of total return for the year 4,745 4,355
Foreign currency translation reserves (2,013) (2,000)
Distributions received during the year (3,835) (3,844)
Carrying amount of interest in investee at 31 December 63,899 65,002
10 AVAILABLE-FOR-SALE UNQUOTED INVESTMENT
Available-for-sale unquoted investment represents the Group’s and Trust’s 7.4% interest in the MalaysiaCommercial Development Fund Pte. Ltd. (“MCDF”) as at 31 December 2013. MCDF had returned all itscapital and distributed its surplus assets in cash to CCT in 2014. MCDF had been liquidated on 15December 2014.
11 TRADE AND OTHER RECEIVABLES
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Trade receivables 361 610 332 550
Investment income receivable
from joint venture 21,896 21,329 21,896 21,329
Interest receivable from joint venture 10,672 7,155 10,672 7,155
Interest receivable from subsidiary – – 338 338
Amount due from related parties (trade) 4 – 4 –
Deposits 245 247 49 52
Other receivables 4,002 4,006 3,121 1,748
Loans and receivables 37,180 33,347 36,412 31,172
Prepayments 1,165 369 1,164 368
38,345 33,716 37,576 31,540
There is no allowance for impairment arising from the amounts receivable from joint ventures.
The Group’s most significant tenant accounts for $43,000 (2013 (restated): $102,000) of the tradereceivables carrying amount at the reporting date.
Concentration of credit risk relating to trade receivables is limited due to the Group’s many varied tenants.These tenants are engaged in diversified businesses and are of good quality and strong credit standing.The Group’s historical experience in collection of trade receivables falls within the recorded allowances.Due to these factors, the Manager believes that no additional credit risk, beyond amounts provided forcollection losses, is inherent in the Group’s trade receivables.
Scaling New Heights | 149
11 TRADE AND OTHER RECEIVABLES (continued)
Impairment losses
The aging of trade receivables at the reporting date is as follows:
2014 2013
GrossImpairment
losses GrossImpairment
losses$’000 $’000 $’000 $’000
(Restated) (Restated)
Group
Not past due 353 – 605 –
Past due 31 – 90 days 8 – 4 –
Past due more than 90 days – – 1 –
361 – 610 –
Trust
Not past due 324 – 546 –
Past due 31 – 90 days 8 – 3 –
Past due more than 90 days – – 1 –
332 – 550 –
The Manager believes that no impairment allowance is necessary in respect of the trade receivables asthese receivables relate mainly to tenants that have a good record with the Group or have sufficientsecurity deposits as collateral.
12 CASH AND CASH EQUIVALENTS
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Cash at bank and in hand 51,085 84,064 26,719 60,105
Fixed deposits with financial institutions 50,000 – 50,000 –
Cash and cash equivalents in the statements
of cash flows 101,085 84,064 76,719 60,105
The weighted average effective interest rates relating to cash and cash equivalents at the reporting datefor the Group and Trust were 0.58% (2013 (restated): 0.33%) and 0.65% (2013: 0.37%) per annumrespectively.
Notes to the Financial Statements
150 | CapitaCommercial Trust Annual Report 2014
13 TRADE AND OTHER PAYABLES
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Trade payables and accrued operating
expenses 28,136 26,292 26,448 25,221
Amounts due to related parties (trade) 3,853 3,930 3,807 3,853
Other deposits and advances 10,720 15,852 4,514 4,814
Interest payable 4,646 4,825 4,646 4,825
47,355 50,899 39,415 38,713
Included in trade payables and accrued operating expenses was an amount due to the Trustee of$159,000 (2013 (restated): $155,000) for the Group and $159,000 (2013: $155,000) for the Trust.
Included in the amounts due to related parties (trade) was an amount due to the Manager of $3,360,000(2013 (restated): $3,178,000) for the Group and for the Trust and an amount due to the property managerof $465,000 (2013 (restated): $456,000) for the Group and $420,000 (2013: $411,000) for the Trust.
Included in interest payable of the Trust was an amount due to the subsidiary of $1,946,000 (2013:$1,322,000).
14 INTEREST-BEARING LIABILITIES
This note provides information about the contractual terms of the Group’s and the Trust’s interest-bearingliabilities.
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Current liabilities
Medium term notes (unsecured) 270,000 – 270,000 –
Non-current liabilities
Term loans (unsecured) 446,020 444,349 446,020 444,349
Revolving credit facilities (unsecured) 125,000 30,000 125,000 30,000
Medium term notes (unsecured) 229,952 392,700 229,952 392,700
800,972 867,049 800,972 867,049
Total 1,070,972 867,049 1,070,972 867,049
Scaling New Heights | 151
14 INTEREST-BEARING LIABILITIES (continued)
Terms and debt repayment schedule
Terms and conditions of outstanding loans and borrowings are as follows:
2014 2013Nominal
interest rateYear of
maturityFacevalue
Carryingamount
Facevalue
Carryingamount
$’000 $’000 $’000 $’000Group and Trust (Restated) (Restated)
Unsecured
SGD floating rate term
loans2
and revolving credit
facilities SOR1 + margin 2018 to 2020 575,000 571,020 480,000 474,349
SGD Medium Term Notes 2.98% to 3.64% 2015 to 2021 320,000 320,000 270,000 270,000
JPY Medium Term Notes3 2.8875% to 2.95% 2019 to 2021 223,300 179,952 148,300 122,700
1,118,300 1,070,972 898,300 867,049
1 Swap Offer Rate.
2 Included in the floating rate term loans is an amount of $360.0 million (2013: $130.0 million) which is hedged by interest
rate swaps with notional contract amounts of $360.0 million (2013: $130.0 million).
3 The Trust has entered into cross currency swaps to hedge the total of JPY16.3 billion medium term notes into notional
principal amount of $223.3 million at fixed interest rates ranging from 2.8875% to 2.95% per annum.
The interest-bearing liabilities comprised the following:
Unsecured medium term notes
The Group has a $2.0 billion unsecured Multicurrency Medium Term Note Programme (“Programme”)
under CCT MTN. Under the CCT MTN Programme, CCT MTN may issue notes in any currency.
At 31 December 2014, notes issued by CCT MTN were as follows:
(i) $270.0 million (2013: $270.0 million) fixed rate notes maturing in 2015;
(ii) $50.0 million (2013: Nil) fixed rate notes maturity in 2021; and
(iii) JPY16.3 billion (2013: JPY10.0 billion) medium term notes, which comprises JPY10.0 billion and
JPY6.3 billion maturing in 2019 and 2021 respectively. The Trust had entered into cross currency
swaps to swap the JPY notes into Singapore dollars.
Unsecured bank facilities, overdraft and guarantee facilities of the Trust
As at 31 December 2014, CCT has an aggregate of $780.0 million (2013: $930.0 million) unsecured bank
facilities, comprising a combination of $450.0 million (2013: $450.0 million) term loans and $330.0 million
(2013: $480.0 million) revolving credit facilities with various maturities of up to 5.7 years from various
banks. CCT has drawn down $575.0 million (2013: $480.0 million) of the unsecured bank facilities.
The Trust also has an omnibus line facility of up to $5.0 million. As at 31 December 2014, the Trust has
utilised $3.0 million (2013: $3.0 million) from the omnibus line facility for letter of guarantees.
Notes to the Financial Statements
152 | CapitaCommercial Trust Annual Report 2014
15 FINANCIAL DERIVATIVES
Group and Trust2014 2013$’000 $’000
(Restated)
Non-current assets
Interest rate swaps 1,160 –
Non-current liabilities
Interest rate swaps – 72
Cross currency swaps 40,298 25,171
40,298 25,243
Interest rate swaps
At 31 December 2014, the Group held interest rate swaps with a total notional contract amount of $360.0
million (2013: $130.0 million) to provide fixed rate funding for terms up to 2 years. The swaps are to hedge
the exposure to varying cash flows due to changes in interest rates.
Cross currency swaps
At 31 December 2014, the Group held JPY/S$ cross currency swaps of notional contract amount totalling
JPY16.3 billion (2013: JPY10.0 billion) to hedge its foreign currency risk arising from its JPY borrowings.
The Group has designated the cross currency swaps as a hedging instrument in a cash flow hedge. The
swap matures on the same date as the JPY borrowings.
Master netting or similar agreements
The Group enters into derivative transactions under International Swaps and Derivatives Association
(ISDA) master netting agreements. In general, under such agreements the amounts owed by each
counterparty on a single day in respect of all transactions outstanding in the same currency are
aggregated into a single net amount that is payable by one party to the other. In certain circumstances –
e.g. when a credit 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 payable in settlement of all
transactions.
The above ISDA agreements do not meet the criteria for offsetting in the statement of financial position.
This is because they create a right of set-off of recognised amounts that is enforceable only following an
event of default, insolvency or bankruptcy of the Group or the counterparties. In addition, the Group and
its counterparties do not intend to settle on a net basis or to realise the assets and settle the liabilities
simultaneously.
Scaling New Heights | 153
15 FINANCIAL DERIVATIVES (continued)
The following table sets out the carrying amounts of recognised financial instruments that are subject to
the above agreements.
Grossamounts ofrecognised
financialinstruments
Grossamounts ofrecognised
financialinstrumentsoffset in thestatement of
financialposition
Net amountsof financialinstruments
includedin the
statement offinancialposition
Relatedfinancial
instrumentsthat are not
offsetNet
amountGroup and Trust $’000 $’000 $’000 $’000 $’000
31 December 2014
Financial assets
Interest rate swaps 1,160 – 1,160 (581) 579
Financial liabilities
Cross currency swaps 40,298 – 40,298 (581) 39,717
At 31 December 2013, there were no derivative assets and liabilities which are offset in the statement of
financial position or are subject to enforceable master netting or similar arrangements.
16 CONVERTIBLE BONDS
Group and Trust2014 2013$’000 $’000
At 1 January 351,276 377,071
Repurchase and redemption of convertible bonds (118,538) –
Conversion of convertible bonds (67,800) (32,641)
Interest accretion, including transaction costs 4,268 6,846
At 31 December 169,206 351,276
(i) Convertible bonds due 2015
In April 2010, the Trust issued $225.0 million principal amount of convertible bonds due 2015 (the
“CB 2015”) with interest rate at 2.7% per annum.
During the year, $69,250,000 (2013: $34,250,000) and $120,750,000 (2013: Nil) of the outstanding
CB 2015 were converted into 58,066,405 Units (2013: 27,785,789) and repurchased respectively.
Following the conversion and repurchase of the CB 2015, the outstanding balance of $250,000 was
redeemed at 100% of its principal amount, plus unpaid accrued interest (calculated up to but
excluding the redemption date). As a result, the CB 2015 has been cancelled in their entirety as at
31 December 2014.
Notes to the Financial Statements
154 | CapitaCommercial Trust Annual Report 2014
16 CONVERTIBLE BONDS (continued)
(ii) Convertible bonds due 2017
In September 2012, the Trust issued $175.0 million principal amount of convertible bonds due 2017
(the “CB 2017”) with interest rate at 2.5% per annum. The CB 2017 can be converted by
bondholders into Units at the conversion price of $1.5865 (2013: $1.6394) up to the close of
business on 2 September 2017, subject to adjustment to the conversion price in the event a
distribution is paid or made to CCT unitholders.
The CB 2017 may be redeemed, in whole or in part, at the option of the Trustee at any time after 12
September 2015 but not less than seven business days prior to 12 September 2017 (subject to
satisfaction of certain conditions).
Unless previously redeemed, converted or purchased and cancelled, the CB 2017 will be
redeemed on 12 September 2017 at 100% of its principal amount together with accrued interest.
As at 31 December 2014, the aggregate principal amount of the CB 2017 was $175.0 million (2013:
$175.0 million).
17 UNITS IN ISSUE
Group and Trust2014 2013’000 ’000
Units in issue:
At 1 January 2,878,774 2,842,956
Units created:
– asset management fees in relation to RCS Trust paid in Units 5,637 5,443
– asset management fees in relation to One George Street and
Wilkie Edge paid in Units 2,372 2,589
– conversion of convertible bonds 58,066 27,786
At 31 December 2,944,849 2,878,774
Units to be issued:
– asset management fees in relation to RCS Trust payable in Units 1,300 1,511
– asset management fees in relation to One George Street and
Wilkie Edge payable in Units 545 615
1,845 2,126
Total issued and issuable Units at 31 December 2,946,694 2,880,900
Units issued during the year are as follows:
(a) 5,636,310 (2013: 5,443,506) Units were issued at issue prices ranging from $1.423 to $1.667 (2013:
$1.463 to $1.655) per Unit, amounting to $8,662,000 (2013: $8,378,000) as payment for the asset
management fees in relation to RCS Trust for the period from 1 October 2013 to 30 September 2014
(2013: 1 October 2012 to 30 September 2013).
(b) 2,372,249 (2013: 2,588,767) Units were issued at issue prices ranging from $1.423 to $1.667 (2013:
$1.463 to $1.655) per Unit, amounting to $3,650,000 (2013: $3,995,000) as payment for the asset
management fees in relation to One George Street and Wilkie Edge for the period from 1 October
2013 to 30 September 2014 (2013: 1 October 2012 to 30 September 2013).
Scaling New Heights | 155
17 UNITS IN ISSUE (continued)
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:
• 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 of any assets (or part thereof) or of any estate
or interest in any asset (or part thereof) of the Trust;
• attend all Unitholders’ meetings. The Trustee or the Manager may (and the Manager shall at the
request in writing of not less than 50 Unitholders or one-tenth in number of the Unitholders, whichever
is lesser) at any time convene a meeting of Unitholders in accordance with the provisions of the Trust
Deed; and
• one vote per Unit.
The restrictions of a Unitholder include the following:
• a Unitholder’s right is limited to the right to require due administration of the Trust in accordance with
the provisions of the Trust Deed; and
• a Unitholder has no right to request the Manager to redeem his Units while the Units are listed on
SGX-ST.
Under the Trust Deed, a Unitholder’s liability is limited to the amount paid or payable for any units in the
Trust. The provisions of the Trust Deed provide that no Unitholders will be personally liable to indemnify
the Trustee or any creditor of the Trustee in the event that liabilities of the Trust exceed its assets.
18 GROSS REVENUE
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Gross rental income 234,042 215,238 216,208 198,937
Car park income 11,711 11,323 11,510 11,134
Other income 16,855 24,902 12,571 19,659
262,608 251,463 240,289 229,730
Notes to the Financial Statements
156 | CapitaCommercial Trust Annual Report 2014
18 GROSS REVENUE (continued)
Included in other income are the following:
(i) Yield stabilization income of $3,512,000 (2013: $4,579,000) accrued for Twenty Anson. Pursuant to
the Deed of Yield Stabilization dated 22 March 2012 in relation to the acquisition of 100% equity
interest in FOPL, a yield stabilization sum of $17.1 million was provided by the vendors to achieve a
stabilized yield of up to 5.5% per annum of the property purchase value of $430.0 million, for a period
of 3.5 years from 22 March 2012. For the period ended 31 December 2014, the yield stabilization sum
was computed based on a yield of 4.0% (2013: 4.0%) per annum of the property purchase value of
$430.0 million.
(ii) There was no yield protection income from CapitaLand Singapore Limited for the financial year
ended 31 December 2014 (2013: $7,621,000 for the period 1 January 2013 to 10 July 2013) in
relation to One George Street as the Deed of Yield Protection had expired on 10 July 2013.
19 PROPERTY OPERATING EXPENSES
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Property tax 19,615 15,410 17,952 13,993
Utilities 9,887 10,382 9,130 9,603
Property management reimbursements 7,606 7,122 7,000 6,558
Property management fees 5,770 5,519 5,238 4,987
Marketing expenses 2,578 4,515 1,978 4,283
Maintenance and others 11,903 11,394 10,942 10,385
57,359 54,342 52,240 49,809
20 INVESTMENT INCOME
Trust2014 2013$’000 $’000
Distribution income from joint ventures 83,252 80,899
Distribution income from associate 3,835 3,844
87,087 84,743
21 ASSET MANAGEMENT FEES
Asset management fees comprise a base component and performance component. Asset management
fees for One George Street and Wilkie Edge of $3,701,000 (2013: $3,813,000) are paid and payable in
Units. Asset management fees are paid and payable in cash for the rest of the assets.
Scaling New Heights | 157
22 FINANCE COSTS
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Interest expense 29,410 32,833 29,410 32,833
Transaction costs 7,024 9,727 7,012 9,714
36,434 42,560 36,422 42,547
23 OTHER EXPENSES
Included in other expenses was non-audit fees paid and payable to auditors of the Group and the Trust
of $13,000 (2013: $33,000).
24 TAX EXPENSE
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Current tax expense
Current year 3 16 – –
Reconciliation of effective tax rate
Total return for the year before tax 448,885 374,606 315,758 327,226
Tax calculated using Singapore tax rate of
17% (2013: 17%) 76,310 63,683 53,679 55,628
Non-tax deductible items 2,018 2,258 2,839 3,066
Non-taxable income (13,846) (18,476) (14,838) (19,157)
Effects of profit of associate and joint
ventures (net of tax) (22,799) (7,912) – –
Tax transparency (41,680) (39,537) (41,680) (39,537)
3 16 – –
Notes to the Financial Statements
158 | CapitaCommercial Trust Annual Report 2014
25 EARNINGS PER UNIT
(a) Basic Earnings per Unit
The calculation of basic earnings per Unit is based on the total return for the year and weighted
average number of Units during the year, calculated as follows:
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
Total return for the year 448,882 374,590 315,758 327,226
Group and Trust2014 2013
Weighted average number of units ’000 ’000
Issued Units at 1 January 2,878,774 2,842,956
Effect of creation of new Units:
– issued as payment of RCS Trust’s asset management fees 3,108 2,875
– issued as payment of asset management fees of One George
Street and Wilkie Edge 1,297 1,421
– issued as conversion of convertible bonds 30,397 17,045
Weighted average number of Units in issue at 31 December 2,913,576 2,864,297
Group Trust2014cents
2013cents
2014cents
2013cents
Basic earnings per Unit 15.41 13.08 10.84 11.42
(b) Diluted Earnings per Unit
In calculating diluted earnings per Unit, the total return for the year and weighted average number
of Units during the year are adjusted for the effects of all dilutive potential Units, calculated as
follows:
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
Total return for the year 448,882 374,590 315,758 327,226
Interest expense on convertible bonds 6,383 16,617 6,383 16,617
455,265 391,207 322,141 343,843
Scaling New Heights | 159
25 EARNINGS PER UNIT (continued)
(b) Diluted Earnings per Unit (continued)
Group and TrustNumber of units 2014 2013
’000 ’000
Weighted average number of Units used in calculation of basic
earnings per share 2,913,576 2,864,297
Effect of conversion of convertible bonds 110,306 271,861
Weighted average number of Units in issue (diluted) 3,023,882 3,136,158
Group Trust2014cents
2013cents
2014cents
2013cents
Diluted earnings per Unit 15.06 12.47 10.65 10.96
26 CAPITAL RESERVES
Capital reserves relate to the value of the options granted to bondholders to convert their convertible
bonds into Units, net of transaction cost incurred which has been accounted for as a deduction against
equity.
27 HEDGING RESERVES
Hedging reserves comprises the effective portion of the cumulative net change in the fair value of hedging
instruments related to hedged transactions that have not yet occurred.
28 FINANCIAL RISK MANAGEMENT
Capital management
The Board of Directors of the Manager (the “Board”) reviews the Group’s and the Trust’s capital
management policy regularly so as to optimise the Group’s and the Trust’s funding structure. Capital
consists of unitholders’ funds. The Board also monitors the Group’s and the Trust’s exposures to various
risk elements and externally imposed requirements by closely adhering to clearly established
management policies and procedures.
The Trust and its subsidiaries are subject to the aggregate leverage limit as defined in the Property Funds
Appendix of the CIS Code. The CIS Code stipulates that the total borrowings and deferred payments
(together the “Aggregate Leverage”) of a property fund should not exceed 35% of its deposited property
except that the Aggregate Leverage of a property fund may exceed 35% of its deposited property (up to
a maximum of 60%) 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 property fund should continue to maintain and disclose a
credit rating so long as its Aggregate Leverage exceeds 35% of its deposited property.
During the year, Standard and Poor’s upgraded CCT’s long-term corporate rating to “A-” from “BBB+” and
outlook is stable. The Group and the Trust have complied with the Aggregate Leverage limit during the
financial year. There were no changes in the Group’s approach to capital management during the financial
year.
Notes to the Financial Statements
160 | CapitaCommercial Trust Annual Report 2014
28 FINANCIAL RISK MANAGEMENT (continued)
Overview of risk management
Risk management is integral to the whole business of the Group. The Group has a system of controls in
place to create an acceptable balance between the costs of risks occurring and the cost of managing the
risks. The Manager continually monitors the Group’s risk management process to ensure that an
appropriate balance between risk and control is achieved. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group’s activities.
The Audit Committee oversees how the Manager monitors compliance with the Group’s risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to the
risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal
Audit undertakes both regular and adhoc reviews of risk management controls and procedures, the results
of which are reported to the Audit Committee.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty fails to meet its contractual
obligations to the Group.
Exposure to credit risk
The carrying amounts of financial assets in the statements of financial position represent the Group and
the Trust’s maximum exposure to credit risk, before taking into account security deposits held as collateral.
Prior to signing lease agreements, credit assessments of prospective tenants are carried out. Security
deposits are collected from tenants when the lease agreements are signed. On an ongoing basis, the
Manager monitors the outstanding balances of the tenants continuously to minimize exposure to credit risk
of the tenants.
The Manager establishes an allowance for impairment that represents its estimate of incurred losses in
respect of trade and other receivables. The main component of this allowance is a specific loss component
that relates to the individually significant exposure.
Cash and fixed deposits are placed with financial institutions which are regulated. The Group limits its
credit risk exposure in respect of investments by investing only in liquid securities and only with
counterparties that have sound credit ratings. Given these high credit ratings, management does not
expect any counterparty to fail to meet its obligations.
At 31 December 2014 and 31 December 2013, there were no significant concentrations of credit risk other
than the amounts due from joint ventures.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Manager monitors its liquidity risk, maintains a level of cash and cash equivalents and refinances
borrowings to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. In
addition, the Manager also monitors and observes the CIS Code issued by MAS concerning limits on total
borrowings.
As at 31 December 2014, the Group and the Trust have undrawn bank facilities available for operating
activities of $205.0 million (2013: $450.0 million) (see note 14). In addition, the Group may issue up to
$1,456.7 million (2013: $1,581.7 million) notes under its $2.0 billion unsecured multi-currency Medium
Term Note Programme (see note 14).
Scaling New Heights | 161
28 FINANCIAL RISK MANAGEMENT (continued)
Exposure to liquidity risk
The following are the expected contractual undiscounted cash outflows of financial liabilities, including
estimated interest payments/components and excluding the impact of netting agreements:
< Cash flows >Carryingamount
Contractualcash flows
Within1 year
Within 2 to5 years
More than5 years
Group $’000 $’000 $’000 $’000 $’000
31 December 2014
Non-derivative financial liabilities
Medium Term Notes 499,952 568,871 279,902 161,644 127,325
SGD floating rate term loans and
revolving credit facilities 571,020 618,164 8,792 331,016 278,356
Convertible bonds 169,206 186,807 4,375 182,432 –
Trade and other payables 47,355 47,355 47,355 – –
Security deposits 39,737 39,737 11,437 28,264 36
1,327,270 1,460,934 351,861 703,356 405,717
Derivative financial instruments
Interest rate swaps (net-settled) (1,160) (1,367) (329) (1,038) –
Cross currency swaps
(gross-settled) 40,298 – – – –
– Outflow – 259,667 6,495 174,116 79,056
– (Inflow) – (233,190) (1,855) (155,684) (75,651)
39,138 25,110 4,311 17,394 3,405
1,366,408 1,486,044 356,172 720,750 409,122
31 December 2013 (Restated)
Non-derivative financial liabilities
Medium Term Notes 392,700 443,867 10,715 283,226 149,926
SGD floating rate term loans and
revolving credit facilities 474,349 516,111 6,358 224,787 284,966
Convertible bonds 351,276 388,117 9,512 378,605 –
Trade and other payables 50,899 50,899 50,899 – –
Security deposits 38,297 38,297 11,964 24,825 1,508
1,307,521 1,437,291 89,448 911,443 436,400
Derivative financial instruments
Interest rate swaps (net-settled) 72 2,160 756 1,404 –
Cross currency swaps
(gross-settled) 25,171 – – – –
– Outflow – 173,816 4,282 17,128 152,406
– (Inflow) – (158,262) (1,667) (6,669) (149,926)
25,243 17,714 3,371 11,863 2,480
1,332,764 1,455,005 92,819 923,306 438,880
Notes to the Financial Statements
162 | CapitaCommercial Trust Annual Report 2014
28 FINANCIAL RISK MANAGEMENT (continued)
Exposure to liquidity risk (continued)
< Cash flows >Carryingamount
Contractualcash flows
Within1 year
Within 2 to5 years
More than5 years
Trust $’000 $’000 $’000 $’000 $’000
31 December 2014
Non-derivative financial liabilities
Medium Term Notes 499,952 568,871 279,902 161,644 127,325
SGD floating rate term loans and
revolving credit facilities 571,020 618,164 8,792 331,016 278,356
Convertible bonds 169,206 186,807 4,375 182,432 –
Trade and other payables 39,415 39,415 39,415 – –
Security deposits 34,386 34,386 10,876 23,474 36
1,313,979 1,447,643 343,360 698,566 405,717
Derivative financial instruments
Interest rate swaps (net-settled) (1,160) (1,367) (329) (1,038) –
Cross currency swaps
(gross-settled) 40,298 – – – –
– Outflow – 259,667 6,495 174,116 79,056
– (Inflow) – (233,190) (1,855) (155,684) (75,651)
39,138 25,110 4,311 17,394 3,405
1,353,117 1,472,753 347,671 715,960 409,122
31 December 2013
Non-derivative financial liabilities
Medium Term Notes 392,700 443,867 10,715 283,226 149,926
SGD floating rate term loans and
revolving credit facilities 474,349 516,111 6,358 224,787 284,966
Convertible bonds 351,276 388,117 9,512 378,605 –
Trade and other payables 38,713 38,713 38,713 – –
Security deposits 33,340 33,340 9,726 22,106 1,508
1,290,378 1,420,148 75,024 908,724 436,400
Derivative financial instruments
Interest rate swaps (net-settled) 72 2,160 756 1,404 –
Cross currency swaps
(gross-settled) 25,171 – – – –
– Outflow – 173,816 4,282 17,128 152,406
– (Inflow) – (158,262) (1,667) (6,669) (149,926)
25,243 17,714 3,371 11,863 2,480
1,315,621 1,437,862 78,395 920,587 438,880
Scaling New Heights | 163
28 FINANCIAL RISK MANAGEMENT (continued)
Market risk
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and
equity prices which will affect the Group’s total return or the value of its holdings of financial instruments.
The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return on risk.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.
Exposure to foreign currency risk
The Group is exposed to foreign currency risk on interest-bearing borrowings that were denominated in a
currency other than the functional currency of the Group. The currency giving rise to this risk is the
Japanese Yen (“JPY”). The Group hedges this risk by entering into cross currency swaps with notional
contract amounts totalling JPY16.3 billion. The cross currency swaps mature on the same date that the
interest-bearing borrowings are due for repayment and are designated as a cash flow hedge.
The Group’s and Trust’s exposures to foreign currency based on notional amounts are as follows:
Japanese Yen2014 2013
Group and Trust $’000 $’000
Non-derivative financial liabilities 179,952 122,700
Sensitivity analysis
A 10% strengthening of Singapore dollar against Japanese Yen at the reporting date would decrease the
Unitholders’ Funds 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’ fundsGroup and Trust $’000
31 December 2014
Japanese Yen (10% strengthening) (1,488)
31 December 2013
Japanese Yen (10% strengthening) (797)
A 10% weakening of Singapore dollar against Japanese Yen at 31 December would have had the equal
but opposite effect on Japanese Yen to the amounts shown above, on the basis that all other variables
remain constant.
Notes to the Financial Statements
164 | CapitaCommercial Trust Annual Report 2014
28 FINANCIAL RISK MANAGEMENT (continued)
Interest rate risk
The Group’s exposure to changes in interest rates relates primarily to interest-bearing financial liabilities.
Interest rate risk is managed on an ongoing basis with the primary objective of limiting the extent to which
net interest expense could be affected by adverse movements in interest rates.
Interest rate swaps with a total notional amount of $360.0 million (2013: $130.0 million) by the Trust have
been entered into at the reporting date. The swaps are being used to hedge the exposure to varying cash
flows due to changes in interest rates.
The fair value of interest rate swaps in total non-current asset as at 31 December 2014 for the Group and
Trust was $1.2 million (2013: $0.1 million in non-current liabilities). Interest rate swaps represented 0.023%
(2013 (restated): 0.001%) of the net assets of the Group and 0.025% (2013: 0.002%) for the Trust.
Sensitivity analysis
In managing the interest rate risk, the Manager aims to reduce the impact of short-term fluctuations on the
Group’s total return before income tax.
A change of 100 basis points (“bp”) in interest rate at the reporting date would increase/(decrease) the
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.
Statement of total return Unitholders’ funds100 bp 100 bp 100 bp 100 bp
increase decrease increase decreaseGroup and Trust $’000 $’000 $’000 $’000
31 December 2014
Variable rate instruments (5,750) 2,568 – –
Interest rate swaps 3,600 (1,399) 892 (346)
Cross currency swaps 696 (77) 174 (19)
(1,454) 1,092 1,066 (365)
31 December 2013 (Restated)
Variable rate instruments (4,800) 978 – –
Interest rate swaps 1,300 (265) 335 (68)
(3,500) 713 335 (68)
Scaling New Heights | 165
28 FINANCIAL RISK MANAGEMENT (continued)
Accounting classification and fair values
The classification of financial assets and liabilities are as follows.
Note
Fair value –
hedging
instruments
Loans and
receivables
Available-
for-sale
Other
financial
liabilities
Total
carrying
amount
Group $’000 $’000 $’000 $’000 $’000
31 December 2014
Trade and other receivables 11 – 37,180 – – 37,180
Cash and cash equivalents 12 – 101,085 – – 101,085
Financial derivatives 15 1,160 – – – 1,160
1,160 138,265 – – 139,425
Trade and other payables 13 – – – (47,355) (47,355)
Security deposits – – – (39,737) (39,737)
Interest-bearing liabilities 14 – – – (1,070,972) (1,070,972)
Financial derivatives 15 (40,298) – – – (40,298)
Convertible bonds 16 – – – (169,206) (169,206)
(40,298) – – (1,327,270) (1,367,568)
31 December 2013 (Restated)
Available-for-sale unquoted
investment 10 – – 6 – 6
Trade and other receivables 11 – 33,347 – – 33,347
Cash and cash equivalents 12 – 84,064 – – 84,064
– 117,411 6 – 117,417
Trade and other payables 13 – – – (50,899) (50,899)
Security deposits – – – (38,297) (38,297)
Interest-bearing liabilities 14 – – – (867,049) (867,049)
Financial derivatives 15 (25,243) – – – (25,243)
Convertible bonds 16 – – – (351,276) (351,276)
(25,243) – – (1,307,521) (1,332,764)
Notes to the Financial Statements
166 | CapitaCommercial Trust Annual Report 2014
28 FINANCIAL RISK MANAGEMENT (continued)
Note
Fair value –
hedging
instruments
Loans and
receivables
Available-
for-sale
Other
financial
liabilities
Total
carrying
amount
Trust $’000 $’000 $’000 $’000 $’000
31 December 2014
Trade and other receivables 11 – 36,412 – – 36,412
Cash and cash equivalents 12 – 76,719 – – 76,719
Financial derivatives 15 1,160 – – – 1,160
1,160 113,131 – – 114,291
Trade and other payables 13 – – – (39,415) (39,415)
Security deposits – – – (34,386) (34,386)
Interest-bearing liabilities 14 – – – (1,070,972) (1,070,972)
Financial derivatives 15 (40,298) – – – (40,298)
Convertible bonds 16 – – – (169,206) (169,206)
(40,298) – – (1,313,979) (1,354,277)
31 December 2013
Available-for-sale unquoted
investment 10 – – 6 – 6
Trade and other receivables 11 – 31,172 – – 31,172
Cash and cash equivalents 12 – 60,105 – – 60,105
– 91,277 6 – 91,283
Trade and other payables 13 – – – (38,713) (38,713)
Security deposits – – – (33,340) (33,340)
Interest-bearing liabilities 14 – – – (867,049) (867,049)
Financial derivatives 15 (25,243) – – – (25,243)
Convertible bonds 16 – – – (351,276) (351,276)
(25,243) – – (1,290,378) (1,315,621)
Scaling New Heights | 167
28 FINANCIAL RISK MANAGEMENT (continued)
Measurement of fair values
The following summarises the significant methods and assumptions used in estimating the fair values of
financial instruments of the Group and the Trust.
Financial instruments measured at fair value
Derivatives
The fair value of interest rate swaps is the estimated amount that would be received or paid to terminate
the swaps at the reporting date, taking into account current interest rates and the current creditworthiness
of the swap counterparties.
For interest rate swaps and cross currency swap, fair value is obtained based on quotes provided by the
financial institution at the reporting date.
Financial instruments not measured at fair value
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of
expected future principal and interest cash flows, where the discount rate is computed from the market
interest rates at the reporting date.
Interest rates used in determining fair values
The interest rates used to discount estimated cash flows, where applicable, is computed from the market
rates as follows:
Group and Trust2014 2013
% %(Restated)
Security deposits 0.25–1.53 0.25–1.32
Interest-bearing borrowings 1.73–4.70 1.35–5.30
Fair value hierarchy
The table below analyses assets and liabilities carried at fair value. 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).
Notes to the Financial Statements
168 | CapitaCommercial Trust Annual Report 2014
28 FINANCIAL RISK MANAGEMENT (continued)
Assets and liabilities carried at fair value
Level 1 Level 2 Level 3 Total$’000 $’000 $’000 $’000
Group
31 December 2014
Investment properties – – 4,882,400 4,882,400
Interest rate swaps – 1,160 – 1,160
Total assets – 1,160 4,882,400 4,883,560
Cross currency swaps – 40,298 – 40,298
31 December 2013 (Restated)
Investment properties – – 4,769,000 4,769,000
Interest rate swaps – 72 – 72
Cross currency swap – 25,171 – 25,171
Total liabilities – 25,243 – 25,243
Trust
31 December 2014
Investment properties – – 4,451,400 4,451,400
Interest rate swaps – 1,160 – 1,160
Total assets – 1,160 4,451,400 4,452,560
Cross currency swaps – 40,298 – 40,298
31 December 2013
Investment properties – – 4,338,000 4,338,000
Interest rate swaps – 72 – 72
Cross currency swap – 25,171 – 25,171
Total liabilities – 25,243 – 25,243
Scaling New Heights | 169
28 FINANCIAL RISK MANAGEMENT (continued)
Financial assets and financial liabilities not carried at fair value but for which fair values are
disclosed*
Level 1 Level 2 Level 3 Total$’000 $’000 $’000 $’000
Group
31 December 2014
Non-current portion of security deposits – – 27,401 27,401
Interest-bearing liabilities – 1,061,396 – 1,061,396
Convertible bonds 198,742 – – 198,742
198,742 1,061,396 27,401 1,287,539
31 December 2013 (Restated)
Non-current portion of security deposits – – 25,555 25,555
Interest-bearing liabilities – 887,157 – 887,157
Convertible bonds 359,183 – – 359,183
359,183 887,157 25,555 1,271,895
Trust
31 December 2014
Non-current portion of security deposits – – 22,635 22,635
Interest-bearing liabilities – 1,061,396 – 1,061,396
Convertible bonds 198,742 – – 198,742
198,742 1,061,396 22,635 1,282,773
31 December 2013
Non-current portion of security deposits – – 22,850 22,850
Interest-bearing liabilities – 887,157 – 887,157
Convertible bonds 359,183 – – 359,183
359,183 887,157 22,850 1,269,190
* Excludes financial assets and financial liabilities whose carrying amounts measured on the amortised cost basis
approximate their fair values due to their short-term nature and where the effect of discounting is immaterial.
The entity’s policy is to recognise transfers out of Level 3 as of the end of the reporting period during which
the transfer has occurred. There were no transfers between levels during the year.
Notes to the Financial Statements
170 | CapitaCommercial Trust Annual Report 2014
28 FINANCIAL RISK MANAGEMENT (continued)
Level 3 fair values
The reconciliation from the beginning balances to the ending balances for fair value measurements in
Level 3 of the fair value hierarchy for investment properties is set out in note 5.
The following table shows the significant unobservable inputs used in the measurement of fair value of
investment properties:
Valuation techniques
Significant
unobservable inputs Range
Inter-relationship between
key unobservable inputs and
fair value measurement
Discounted cash flow
analysis
Discount rate 7.50%1 The estimated fair value
increases with a lower discount
rate
Capitalisation of income
approach
Capitalisation rate 3.75%-4.25%1 The estimated fair value
increases with a lower
capitalisation rate
1 Excludes Bugis Village and Golden Shoe Car Park discount rate range of 9.00% to 13.00% and capitalisation rate range
of 6.50% to 13.00%.
Key unobservable inputs
Key unobservable inputs correspond to:
• Discount rate, based on the risk free rate for 10-year bonds issued by the Singapore Government,
adjusted for a risk premium to reflect the risk of investing in the asset class.
• Capitalisation rate, based on investment property yields derived from comparable sales
transactions, taking into consideration the qualities of the respective properties.
29 RELATED PARTIES
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
(CapitaCommercial Trust Management Limited) and Property Manager (CapitaLand Commercial
Management Pte. Ltd.) are indirect wholly-owned subsidiaries of a substantial Unitholder of the Trust.
In the normal course of the operations of the Group, the asset management fees and the Trustee’s fees
have been paid or are payable to the Manager and Trustee respectively.
Scaling New Heights | 171
29 RELATED PARTIES (continued)
During the financial year, other than those disclosed elsewhere in the financial statements, there were
significant related party transactions, which were carried out in the normal course of business as follows:
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Administrative fees and reimbursables paid
to subsidiary – – 40 41
Asset management fees paid or payable to
the Manager 13,573 12,656 13,573 12,656
Interest received or receivable from joint
venture 3,517 3,510 3,517 3,510
Interest received or receivable from
subsidiary – – 12,324 12,324
Interest paid or payable to subsidiary – – 11,319 11,580
Leasing commissions paid or payable to
related companies of the Manager 2,686 2,670 2,308 2,455
Project management fees paid or payable to
related company of the Manager 328 504 289 472
Property management fees and
reimbursables paid or payable to related
company of the Manager 13,376 12,641 12,238 11,544
Rental income and other related income from
related companies of the Manager 8,436 3,621 8,436 3,621
Rental income and other related income from
joint venture 513 532 513 532
Yield protection income from related
company of the Manager – 7,621 – 7,621
Notes to the Financial Statements
172 | CapitaCommercial Trust Annual Report 2014
30 OPERATING SEGMENTS
For the purpose of the assessment of segment performance, the Group’s CODMs have focused on main
business segments: Capital Tower, Six Battery Road, One George Street, Other office buildings and Car
park and other buildings. This forms the basis of identifying the operating segments of the Group under
FRS 108 Operating Segments.
This primary format is based on the Group’s management and internal reporting structure for the purpose
of allocating resources and assessing performance by the Group’s CODMs.
Segment property income represents income generated from its tenants. Segment property income
represents the income earned by each segment after allocating property operating expenses. This is the
measure reported to the Group’s CODMs for the purpose of assessment of segment performance.
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.
Segment results, assets and liabilities include terms directly attributable to a segment as well as those that
can be allocated on a reasonable basis. Unallocated items comprise mainly income-earning assets and
revenue, interest-bearing borrowings and expenses, related assets and 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 below. Amounts reported for the prior year have been represented to conform to the requirements
of FRS 108.
Reportable segments
The Group invest in the following:
Office buildings Capital Tower, Six Battery Road, HSBC Building,
One George Street, Twenty Anson
Car park and other buildings Golden Shoe Car Park, Bugis Village and Wilkie Edge
Scaling New Heights | 173
30 OPERATING SEGMENTS
Reportable segments
31 December 2014
GroupCapitalTower
SixBatteryRoad
OneGeorgeStreet
Otheroffice
buildings
Totaloffice
buildings
Car parkand otherbuildings
Allsegments
$’000 $’000 $’000 $’000 $’000 $’000 $’000
Gross rental income 57,984 61,548 46,663 38,281 204,476 29,566 234,042
Car park income 1,895 1,173 923 202 4,193 7,518 11,711
Others 6,736 2,238 2,644 4,284 15,902 953 16,855
Gross revenue 66,615 64,959 50,230 42,767 224,571 38,037 262,608
Segment net property
income 48,748 51,376 39,581 37,535 177,240 28,009 205,249
Interest income 3,732
Finance costs (36,434)
Unallocated expenses (22,238)
Share of profit of associate (net of tax) 4,745
Share of profit of joint ventures (net of tax) 212,612
Other material non-cash item:
– Net increase in fair value of investment properties 81,219
Consolidated return for the year before tax 448,885
Tax expense (3)
Consolidated return for the year after tax 448,882
Segment assets and liabilities
Reportable segment assets 1,317,261 1,334,432 981,438 908,399 4,541,530 389,839 4,931,369
Investment in associate 63,899
Investment in joint ventures 1,427,895
Unallocated assets 97,896
Total assets 6,521,059
Reportable segment
liabilities 14,753 23,538 15,659 281,901 335,851 10,429 346,280
Unallocated liabilities 1,021,291
Total liabilities 1,367,571
Other segmental information
Depreciation and
amortisation (1,174) 275 580 183 (136) 136 –
Capital expenditure 24,578 4,625 208 2,003 31,414 767 32,181
Notes to the Financial Statements
174 | CapitaCommercial Trust Annual Report 2014
30 OPERATING SEGMENTS (continued)
Reportable segments (continued)
31 December 2013 (Restated)
GroupCapitalTower
SixBatteryRoad
OneGeorgeStreet
Otheroffice
buildings
Totaloffice
buildings
Car parkand otherbuildings
Allsegments
$’000 $’000 $’000 $’000 $’000 $’000 $’000
Gross rental income 53,683 53,908 42,143 36,748 186,482 28,756 215,238
Car park income 1,827 1,107 849 189 3,972 7,351 11,323
Others 5,687 2,553 10,327 5,244 23,811 1,091 24,902
Gross revenue 61,197 57,568 53,319 42,181 214,265 37,198 251,463
Segment net property income 43,134 46,622 42,024 37,536 169,316 27,805 197,121
Interest income 3,713
Finance costs (42,560)
Unallocated expenses (17,272)
Share of profit of associate (net of
tax) 4,355
Share of profit of joint ventures (net of tax) 123,087
Other material non-cash item:
– Net increase in fair value of investment
properties 106,162
Consolidated return for the year before tax 374,606
Tax expense (16)
Consolidated return for the year after tax 374,590
Segment assets and liabilities
Reportable segment assets 1,287,482 1,289,475 963,949 888,921 4,429,827 386,529 4,816,356
Investment in associate 65,002
Investment in joint ventures 1,283,879
Unallocated assets 80,244
Total assets 6,245,481
Reportable segment liabilities 11,543 27,299 12,974 285,769 337,585 10,554 348,139
Unallocated liabilities 984,629
Total liabilities 1,332,768
Other segmental information
Depreciation and amortisation 588 (34) 442 139 1,135 244 1,379
Capital expenditure 3,559 18,440 552 160 22,711 1,127 23,838
Scaling New Heights | 175
30 OPERATING SEGMENTS (continued)
Geographical segments
The Group’s operations are all in Singapore except for its associate, where the operations are in Malaysia.
In presenting information on the basis of geographical segments, segment revenue and assets of the
Group is based on the geographical location of the properties.
RevenueNon-current
assets$’000 $’000
31 December 2014
Singapore 262,608 6,317,730
Malaysia (Investment in associate) – 63,899
31 December 2013 (Restated)
Singapore 251,463 6,062,693
Malaysia (Investment in associate) – 65,002
Major customers
Revenue from two major customers of the Group approximates $39,296,000 (2013 (restated):
$37,852,000) and was attributable to tenants in HSBC Building and Capital Tower (2013 (restated): HSBC
Building and Capital Tower).
31 COMMITMENTS
Group Trust
2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Capital expenditure commitments:
– contracted but not provided for 24,080 49,961 23,478 47,671
The Group and the Trust lease out their investment properties. Non-cancellable operating lease rentals are
receivable as follows:
Group Trust2014 2013 2014 2013$’000 $’000 $’000 $’000
(Restated)
Within 1 year 240,828 215,175 221,719 199,509
After 1 year but within 5 years 577,148 425,063 551,439 404,284
After 5 years 107,094 96,728 107,094 96,728
925,070 736,966 880,252 700,521
Notes to the Financial Statements
176 | CapitaCommercial Trust Annual Report 2014
32 FINANCIAL RATIOS
Group2014 2013
Note % %(Restated)
Expenses to weighted average net assets A
– expenses ratio excluding performance related fees 0.15 0.15
– expenses ratio including performance related fees 0.33 0.32
Portfolio turnover rate B – –
Note A: The annualised ratios are computed in accordance with the guidelines of Investment Management Association of
Singapore. The expenses used in the computation relate to expenses of the Group, excluding property operating
expenses, borrowing cost and income tax expense.
Note B: 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.
33 SUBSEQUENT EVENTS
(a) Distribution
On 21 January 2015, the Manager announced distribution for the period from 1 July to 31 December
2014 of 4.24 cents per Unit.
(b) Issue of Medium Term Notes
On 17 February 2015, the Group issued JPY8.6 billion notes under the CCT MTN Programme. The
Trust has entered into a cross currency swap to hedge the JPY8.6 billion medium term notes into
notional principal amount of $100.0 million at a fixed interest rate of 3.05% per annum.
Scaling New Heights | 177
Interested Person (as defined in the Listing Manual) and Interested Party (as defined in the Property
Funds Appendix) Transactions
The transactions entered into with interested persons during the financial year, which falls under the Listing
Manual and the Property Funds Appendix (excluding transactions of less than S$100,000 each), are as follows:
Aggregate value
(excluding transactions
of less than S$100,000
each and transactions
conducted under
unitholders’ mandate
pursuant to Rule 920)
Aggregate value of all
interested person
transactions during the
financial year under review
under unitholders’
mandate pursuant to
Rule 920 (excluding
transactions less than
S$100,000 each)
Name of Interested Person/Interested Party S$’000 S$’000
CapitaLand Limited and its subsidiaries or associates
• Manager’s management fees 22,841 –
• Property management fees and
reimbursables 14,585 –
• Leasing commissions 669 –
• Project management fees 66,530 –
• Rental and service charge income 1,309 –
105,934 –
Temasek Holdings (Private) Limited and its associates
• Provision of refuse removal services 116 –
• Rental and service charge income 335 –
451 –
HSBC Institutional Trust Services (Singapore) Limited
• Trustee’s fee 852 –
852 –
Save as disclosed above, there were no additional related party transactions (excluding transaction of less than
S$100,000 each) entered into during the financial year under review.
CCT is deemed to have obtained Unitholders’ approval on 12 April 2004 through the approval of the
shareholders of CapitaLand Limited (as outlined in the Introductory Document dated 16 March 2004) in relation
to payments for the asset management fees, payments for acquisition and divestment fees, payments of
property management fees, reimbursements and leasing commissions to the property manager in respect of
payroll and related expenses as well as payments of the Trustee’s fees, which are therefore not subject to Rules
905 and 906 of the SGX-ST’s Listing Manual. Such payments are not to be included in the aggregate value of
total related property transactions as governed by Rules 905 and 906 of the SGX-ST’s Listing Manual.
Please also see Significant Related Party Transaction on Note 29 in the financial statements.
Additional Information
178 | CapitaCommercial Trust Annual Report 2014
Subscription of CCT Units
For the financial year ended 31 December 2014, an aggregate of 66,074,964 Units were issued and subscribed
for. As at 31 December 2014, 2,944,849,310 Units were in issue and outstanding.
Asset Management Fee Paid in Units
A summary of Units issued for payment of the asset management fee (part payment) during or in respect of the
financial year are as follows:
For Period Issue Date
Units
issued
*Issue
Price Total Value
S$ S$’000
Asset Management Fee
1 January 2014 to 31 March 2014 5 May 2014 2,074,261 1.4760 3,062
1 April 2014 to 30 June 2014 4 August 2014 1,862,490 1.6673 3,105
1 July 2014 to 30 September 2014 29 October 2014 1,945,902 1.6035 3,120
1 October 2014 to 31 December 2014 3 February 2015 1,844,770 1.6989 3,134
12,421
* Based on the volume weighted average traded price for a Unit for all trades on the SGX-ST in the ordinary course of trading
on the SGX-ST for the last ten business days of the relevant period in which the management fee accrues.
Scaling New Heights | 179
Additional Information
180 | CapitaCommercial Trust Annual Report 2014
Scaling New Heights | 181
Additional Information
182 | CapitaCommercial Trust Annual Report 2014
As at 27 February 2015
Issued and Fully Paid Units
2,946,694,080 Units (Voting rights: 1 vote per Unit)
Market capitalisation of S$5,200,915,051 based on market closing Unit price of S$1.765 on 27 February 2015
Distribution of Unitholdings
Size of Unitholdings
No. of
Unitholders % No. of Units %
1– 99 340 1.3 7,317 0.0
100 –1,000 7,160 27.8 4,459,563 0.2
1,001 – 10,000 14,087 54.6 60,567,400 2.0
10,001 –1,000,000 4,174 16.2 167,585,103 5.7
1,000,001 and above 33 0.1 2,714,074,697 92.1
Total 25,794 100.0 2,946,694,080 100.0
Location of Unitholdings
No. of
Unitholders % No. of Units %
Singapore 24,735 95.9 2,937,804,585 99.7
Malaysia 549 2.1 4,357,935 0.1
Others 510 2.0 4,531,560 0.2
Total 25,794 100.0 2,946,694,080 100.0
Twenty Largest Unitholders
Name No. of Units %
SBR Private Limited 640,349,000 21.7
Citibank Nominees Singapore Pte Ltd 500,157,124 17.0
DBS Nominees (Private) Limited 479,918,691 16.3
HSBC (Singapore) Nominees Pte Ltd 282,655,486 9.6
DBSN Services Pte. Ltd. 198,112,166 6.7
E-Pavilion Pte Ltd 185,137,000 6.3
CapitaCommercial Trust Management Limited 109,778,913 3.7
Raffles Nominees (Pte) Limited 104,606,717 3.6
United Overseas Bank Nominees (Private) Limited 85,471,357 2.9
BNP Paribas Securities Services Singapore Branch 29,243,452 1.0
Koo Boon Hooi (Qiu Wenhui) 13,800,000 0.5
UOB Kay Hian Private Limited 9,880,850 0.3
Bank of Singapore Nominees Pte. Ltd. 9,445,528 0.3
DB Nominees (Singapore) Pte Ltd 9,136,898 0.3
OCBC Securities Private Limited 8,948,079 0.3
Morgan Stanley Asia (Singapore) Securities Pte Ltd 6,327,152 0.2
Pei Hwa Foundation Limited 6,004,000 0.2
OCBC Nominees Singapore Private Limited 5,481,719 0.2
Lee Pineapple Company Pte Ltd 4,620,000 0.2
Gralf Max Hans Sieghold 3,500,000 0.1
Total 2,692,574,132 91.4
Statistics of Unitholdings
Scaling New Heights | 183
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 CCT.
No. of Units
Name Of Director Direct Interest Deemed Interest
Soo Kok Leng 7,329 –
Lim Ming Yan 199,000 –
Lynette Leong Chin Yee 102,000 –
Dato’ Mohammed Hussein 93,703 –
Goh Kian Hwee 9,441 –
Wen Khai Meng 19,839 –
Chong Lit Cheong 16,073 –
SUBSTANTIAL UNITHOLDERS’ UNITHOLDINGS AS AT 27 FEBRUARY 2015
Based on the information available to the Manager as at 27 February 2015, the unitholdings of Substantial
Unitholders of CCT are as follows:
Name of Substantial Unitholder
Direct Interest Deemed Interest
No. of Units % No. of Units %
Temasek Holdings (Private) Limited (THPL) – – 937,484,5711 31.8
CapitaLand Limited (CL) – – 935,264,9132 31.7
CapitaLand Singapore Limited (CLS) – – 935,264,9133 31.7
SBR Private Limited (SBR) 640,349,000 21.7 – –
CapitaLand (Office) Investments Pte Ltd (COI) – – 640,349,0004 21.7
E-Pavilion Pte. Ltd. (E-Pavilion) 185,137,000 6.3 – –
CapitaLand Investments Pte Ltd (CIPL) – – 185,137,0005 6.3
CBRE Clarion Securities LLC 173,763,933 5.9 – –
CBRE Group Inc. – – 173,763,9336 5.9
1 THPL is deemed to have an interest in the unitholdings in which its associated companies have or are deemed to have an
interest pursuant to Section 4 of the Securities and Futures Act, Chapter 289 of Singapore. THPL is wholly-owned by the
Minister for Finance.
2 CL is deemed to have an interest in the unitholdings of its indirect wholly-owned subsidiaries namely, SBR, E-Pavilion and
CapitaCommercial Trust Management Limited (CCTML).
3 CLS is deemed to have an interest in the unitholdings of its direct wholly-owned subsidiary namely, CCTML, and its indirect
wholly-owned subsidiaries namely, SBR and E-Pavilion.
4 COI is deemed to have an interest in the unitholdings of its direct wholly-owned subsidiary namely, SBR.
5 CIPL is deemed to have an interest in the unitholdings of its direct wholly-owned subsidiary namely, E-Pavilion.
6 CBRE Group Inc. is deemed to have an interest in the unitholdings of its subsidiary namely, CBRE Clarion Securities LLC.
FREE FLOAT
Based on the information available to the Manager as at 27 February 2015, approximately 61% of the
Units were held in the hands of the public. Rule 723 of the Listing Manual of the SGX-ST has
accordingly been complied with.
Statistics of Unitholdings
184 | CapitaCommercial Trust Annual Report 2014
Corporate InformationCAPITACOMMERCIAL TRUST
REGISTERED ADDRESS HSBC Institutional Trust Services(Singapore) Limited21 Collyer Quay #10-02 HSBC BuildingSingapore 049320Email: [email protected]: www.cct.com.sg
TRUSTEEHSBC Institutional Trust Services(Singapore) Limited21 Collyer Quay #03-01 HSBC BuildingSingapore 049320Tel: +65 6658 6906Fax: +65 6534 5526
AUDITORKPMG LLPPublic Accountants and Chartered Accountants16 Raffles Quay#22-00 Hong Leong BuildingSingapore 048581Tel: +65 6213 3388Fax: +65 6225 0984Partner-in-charge: Mr Lau Kam Yuen(With effect from financial year ended 31 December 2014)
UNIT REGISTRARBoardroom Corporate &Advisory Services Pte. Ltd.50 Raffles Place#32-01 Singapore Land TowerSingapore 048623Tel: +65 6536 5355Fax: +65 6536 1360
For updates or change of mailingaddress, please contact:The Central Depository (Pte) Limited9 North Buona Vista Drive#01-19/20 The MetropolisSingapore 138588Tel: +65 6535 7511Fax: +65 6535 0775Email: [email protected]: https://www1.cdp.sgx.com
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.
THE MANAGER
REGISTERED ADDRESSCapitaCommercial Trust Management Limited168 Robinson Road#30-01 Capital TowerSingapore 068912Tel: +65 6713 2888Fax: +65 6713 2400Email: [email protected]: www.cct.com.sg
BOARD OF DIRECTORSSoo Kok LengChairman & Non-Executive Independent Director
Lim Ming YanDeputy Chairman & Non-Executive Non-Independent Director
Lynette Leong Chin YeeChief Executive Officer & Executive Non-Independent Director
Dato’ Mohammed HusseinNon-Executive Independent Director
Lam Yi YoungNon-Executive Independent Director
Goh Kian HweeNon-Executive Independent Director
Wen Khai MengNon-Executive Non-Independent Director
Chong Lit CheongNon-Executive Non-Independent Director
AUDIT COMMITTEEDato’ Mohammed Hussein Chairman
Lam Yi YoungGoh Kian Hwee
CORPORATE DISCLOSURE COMMITTEEWen Khai Meng Chairman
Chong Lit CheongSoo Kok Leng
EXECUTIVE COMMITTEELim Ming Yan Chairman
Lynette Leong Chin YeeWen Khai MengChong Lit Cheong
COMPANY SECRETARYDoris Lai
ASSISTANT COMPANY SECRETARYHoney Vaswani
THE PROPERTY MANAGERS
CapitaLand Commercial Management Pte. Ltd.168 Robinson Road#30-01 Capital TowerSingapore 068912Tel: +65 6713 2888Fax: +65 6713 2400
CapitaLand (RCS) Property Management Pte. Ltd.252 North Bridge Road#B1-44D Raffles CityShopping CentreSingapore 179103Tel: +65 6338 7766Fax: +65 6337 3618
Counter Name: CapitaCom TrustStock Code: C61U
CapitaCommercial Trust Management LimitedCompany Registration No. 200309059W
168 Robinson Road#30-01 Capital TowerSingapore 068912Tel: +65 6713 2888Fax: +65 6713 2400Email: [email protected]
www.cct.com.sg
This annual report is printed on environmentally-friendly paper.