further stronger Mapletree Investments Pte Ltd Annual Report 2013/2014

Transcription

1 further stronger Mapletree Investments Pte Ltd Annual Report 2013/2014

2 Key Performance Targets FY2009/ FY2013/2014 Mapletree challenged itself to achieve six growth targets by FY13/14, and successfully turned in commendable results as it played to its strengths as an Asia-focused real estate developer, investor and capital manager. In five years, the Group expanded assets under management (AUM) to S$24.6 billion, hitting the upper range of the S$20-25 billion growth target set. An assetlight strategy further helped Mapletree to meet the goal of managing as opposed to directly owning more than half of the AUM. Fee income grew to S$203.2 million meeting the S$200 million target it set for itself, while EBIT + SOA 1 grew from S$337.3 million five years ago to S$472.0 million. Average return on invested equity (ROIE) for the fiveyear period came in high at 14.1% above the 10% minimum rate the Group wanted to achieve. Mapletree also realised a NAV CAGR 2 of 11.4% in five years. Going forward, Mapletree is confident that it will continue to strengthen its earnings base and build recurring income to deliver consistent and high returns AVERAGE ROIE (From FY09/10) 14.1% ROIE (%) NAV CAGR (%) EBIT + SOA (S$M) FEE INCOME (S$M) OWNED ASSETS (S$M) , % 11.4% (From FY09/10) , ,450 11, ,020 16,744 S$472.0M S$203.2M S$6,381M S$18,224M MANAGED ASSETS (S$M) 6,076 7,903 FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 S$12,939M S$15,422M S$19,851M S$21,764M S$24,605M 1 Earnings before interest and taxes including share of profits of associated companies and joint ventures, and share of associates gain on disposal 2 Net asset value compounded annual growth rate. NAV adjusted for dividends distributed to shareholder and calculated excluding non-controlling interests and perpetual securities and with NAV as of 31 March 2009 as starting base

3 further stronger Five years ago, we established a set of performance targets focused on growing key areas of our business. At the end of FY13/14, we have made good progress, having achieved significant scale, strong earnings and high returns. The successful implementation of our asset-light strategy has also seen us build a comprehensive range of real estate investment products. As we enter a new five-year cycle, whether it be in our roles as developer, capital manager or investor, we remain committed to furthering our growth and becoming a stronger business. Contents 1 further, stronger 2 better, faster 4 deeper, broader 6 brighter, greener 8 Corporate Overview 10 Five-Year Business Plan 11 Development Highlight 12 Message from the Chairman 16 Interview with the Group CEO 20 Board of Directors 24 Group Senior Management 28 Highlights of the Year 32 Financial Review 45 Corporate Liquidity and Financial Resources 48 Operations Review 60 Investment Activities and Fund Management 64 Sustainability Corporate Social Responsibility, Corporate Governance, Risk Management, and Human Resource 76 Property Portfolio 79 Awards and Accolades 81 Financial Statements 156 Our Offices Clothing sponsored by ZARA at VivoCity Singapore on the cover and pages 2-3 and 4-5

4 better faster We have achieved better growth at a faster pace, backed by a stronger balance sheet and solid fundamentals. With a keen eye for good opportunities, our experienced team and their astute decisions have allowed Mapletree to close deals and create funds more quickly, and build investor confidence. Key Performance Targets (as at 31 March 2014) Average ROIE FY09/10 - FY13/ % EBIT + SOA NAV CAGR FY09/10 - FY13/ % Fee Income S$472.0million S$203.2million aum S$24.6billion AUM Ratio Managed vs Owned Assets 2.9:1

5 deeper broader We have expanded our geographical footprint, venturing into new markets while deepening our presence in the places we are already in. As a result, we have a broad range of real estate assets that we develop and manage across the region which includes office, retail, logistics, industrial and residential developments, as well as serviced apartments. ASSETS UNDER MANAGEMENT (S$ million) SOUTH KOREA S$327M JAPAN S$1,694M CHINA S$3,303M INDIA S$63M HONG KONG SAR S$5,285M VIETNAM S$520M MALAYSIA S$414M SINGAPORE S$12,999M

6 brighter greener The focus on growth extends to our corporate social responsibility (CSR) initiatives. We have intensified our commitment to the communities within markets we operate in by providing education and healthcare assistance to the underprivileged. A lot of care is also taken to enrich the communities by building environmentally sustainable developments and supporting local arts. Mapletree Business City, A Healthy Workplace Ecosystem 1st in Singapore Mapletree s eco-friendly buildings annual energy savings is equivalent to providing electricity to 6,000 households Through education and healthcare, Mapletree has impacted, from 2011 to 2013, 8,000 lives

7 8 Mapletree Investments Pte Ltd Annual Report 2013/2014 Corporate Overview 9 Corporate Overview Going Further Assets Under Management (AUM) by Geography Headquartered in Singapore, Mapletree Investments Pte Ltd (Mapletree) is a leading real estate company established in investing in Asian real estate markets with good growth potential. Combining its key strengths as a real estate developer, investor and capital manager, Mapletree has built a track record of award-winning projects as well as for consistently delivering high returns to its investors through a diversified portfolio. Since transforming its business model and setting a five-year business plan to scale up significantly from FY09/10, Mapletree has been striving to go further and grow stronger as the Group pursues value across a spectrum of assets in the real estate business. Today, Mapletree has an operating presence in seven countries across Asia with assets under management (AUM) of S$24.6 billion as at 31 March The owned and managed assets extend across different real estate asset classes such as office, logistics, industrial, residential and serviced apartments, retail/lifestyle and mixed-use. At the same time, Mapletree has been broadening its range of capital management products, which now consists of four Singapore-listed real estate investment trusts (REITs) and five private real estate funds, with a total managed AUM of S$18.2 billion. SOUTH KOREA CHINA INDIA S$327 million S$3,303 million S$63 million JAPAN HONG KONG SAR S$1,694 million S$5,285 million Our Growth Platforms VIETNAM S$520 million Singapore Commercial Singapore Industrial Logistics MALAYSIA S$414 million SINGAPORE S$12,999 million Growing Stronger Developer/owner/manager of primarily commercial properties (and certain industrial and business park properties) in Singapore Capital management platform Singapore-listed REIT: Mapletree Commercial Trust (MCT) Developer/owner/manager of industrial properties in Singapore Capital management platform Singapore-listed REIT: Mapletree Industrial Trust (MIT) Developer/owner/manager of logistics properties in Asia Capital management platform Singapore-listed REIT: Mapletree Logistics Trust (MLT) Five-Year AUM Growth 25,000 20,000 19,851 21,764 24,605 FY13/14 S$24,605 million China and India North Asia South East Asia 15,422 15,000 12,939 10,000 Singapore Vietnam Developer/owner/manager of properties in China and India Capital management platform Private real estate funds: Mapletree India China Fund (MIC Fund) Mapletree China Opportunity Fund II (MCOF II) Developer/owner/manager of properties in Hong Kong SAR, South Korea, Japan and other markets Capital management platform Singapore-listed REIT: Mapletree Greater China Commercial Trust (MGCCT) Developer/owner/manager of properties in South East Asia Capital management platform Private real estate funds: CIMB-Mapletree Real Estate Fund 1 (CMREF1) CIMB-Mapletree Real Estate Fund 2 Shariah (CMREF2 Shariah) Mapletree Industrial Fund (MIF) 5,000 0 (S$ million) FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 Hong Kong SAR China Japan Malaysia South Korea India Indonesia

8 10 Five -Year Business Plan The close of FY13/14 caps the five-year strategic plan that Mapletree put in place at the end of FY08/09. By adopting a business model that integrates three complementary roles: a real estate developer, an investor and a capital manager, Mapletree s business strategy is to be asset-light and maximise efficiencies through capital management and redeployment of funds. To this end, Mapletree adopted a well-balanced set of indicators comprising six decisive targets to further propel and strengthen its business. Mapletree continually focuses on leveraging its core competencies in real estate development, and applies astute investment and capital management strategies to drive value for investors. By realising returns in the form of recurring income from its private funds and real estate investment trusts (REITS) and injecting into them its substantial portfolio of acquisitions and developments, Mapletree is able to redeploy proceeds back into its business and fund new investments. This Key Performance Indicators (starting FY09/10) creates a sustainable and capital efficient business model. As a result, the Group has scaled up significantly and at the same time delivered superior returns through its suite of capital management platforms. Mapletree currently manages four Singapore-listed REITs and five private real estate funds as at the end of FY13/14. In five years, Mapletree s assets under management (AUM) doubled to S$24.6 billion, with 74% being third-party AUM. The Group s earnings base also expanded to include a sizable S$472.0 million in EBIT + SOA 1, and fee income of S$203.2 million. Importantly, Mapletree delivered a strong five-year average return on invested equity (ROIE) of 14.1% and 11.4% NAV CAGR 2. Going forward, the Group will further diversify its risks and broaden its markets and real estate sectors while managing its concentration in Singapore and select Asian markets. This expansion in geographical and sector focus will enable Mapletree to seed and syndicate more high-growth private funds and income-yielding REITs, in turn generating higher EBIT + SOA and fee income contributions, and increasing Mapletree s recurring profit after tax and minority intrests (PATMI). While the last five years saw Mapletree build its regional operations and network, the next five will see this scale up accompanied by higher recurring income that will mitigate earnings volatility. While featuring the same set of performance targets, Mapletree s next stage of growth will involve greater emphasis on average ROIE and NAV CAGR to ensure high and consistent returns. The business objective of the Mapletree Group remains unchanged: to achieve strong, sustainable returns (average ROIE and NAV CAGR), a high quality and stable earnings base (EBIT + SOA and fee income), and a substantial scale of operations (AUM). ROIE (%) NAV CAGR (%) EBIT + SOA (S$M) FEE INCOME (S$M) OWNED ASSETS (S$M) MANAGED ASSETS (S$M) ,863 6, ,519 7, ,450 11, ,020 16,744 AVERAGE ROIE (From FY09/10) 14.1% % 11.4% (From FY09/10) S$472.0M S$203.2M S$6,381M S$18,224M New Targets (FY14/15-FY18/19) 10% - 15% (five-year) 10% - 15% (five-year) S$800M - S$1.2B 3 S$350M - S$500M (cumulative >$1.5B) > 3:1 AUM Ratio (Managed vs Owned assets) FY09/10 S$12,939M FY10/11 S$15,422M FY11/12 S$19,851M FY12/13 S$21,764M FY13/14 S$24,605M S$40B - S$50B 1 Earnings before interest and taxes including share of profits of associated companies and joint ventures, and share of associates gain on disposal 2 Net asset value compounded annual growth rate. NAV adjusted for dividends distributed to shareholder and calculated excluding non-controlling interests and perpetual securities and with NAV as of 31 March 2009 as starting base 3 Excludes non-recurring items

9 11 Development Highlight Artist impression of MBC II MBC II Alexandra Precinct, Singapore Mapletree unveiled redevelopment plans for The Comtech, which will form the next phase of Mapletree Business City (MBC) one of the Group s flagship developments. The new phase, MBC II, is strategically located in the up and coming growth corridor of Singapore s Southern Waterfront. With excellent connectivity via major expressways and the Circle MRT Line, the development is about a 15-minute drive from the Central Business District (CBD). The success of the current MBC in attracting premium tenants, both multinational corporations and financial institutions, has anchored Alexandra Precinct as a thriving business hub. The locality is also recognised as a commercial micro-market in the Southern Waterfront area. The demand for quality business space outside the CBD remains relatively strong as established businesses appreciate well-designed developments with building specifications and amenities that are operationally cost-efficient. MBC II aims to serve this demand with Grade-A office specifications and large, column-free floor plates. With floor plates potentially reaching above 9,300 square metres (sqm) (approx. 100,000 square feet), the development allows for efficient space planning. MBC II s high floor-to-ceiling height of 3.2 metres will also allow for more natural light in the interior space. The completed MBC II will offer about 106,000 sqm (approx million square feet) of net lettable area in a high-rise tower, which will terrace down to lower five-, six- and eight-storey blocks. With an unprecedented 30 storeys, MBC II will be the tallest business park in Singapore. The landmark tower will offer commanding views of the sea to the South and the surrounding greenery of the Southern Ridges, including Labrador Park and HortPark. To blend in with the surrounding greenery, an extensive and luscious landscape will be incorporated into MBC II, further providing a refreshing respite from the hustle and bustle of work. Complementing the existing state-of-the-art business facilities and lifestyle amenities already at the current MBC, MBC II will house sports and recreational facilities such as basketball courts, futsal courts and jogging tracks, to provide more amenities that offer a healthy workplace environment. Attesting to Mapletree s commitment to building sustainability, the planned MBC II has been awarded the Singapore Building and Construction Authority s Green Mark Platinum Award. It has also obtained the precertification for Leadership in Energy and Environmental Design (LEED) for Core and Shell Development (Gold Level) from the U.S. Green Building Council. The environmentally friendly building infrastructure and features will translate into user benefits and cost savings for tenants. MBC II is expected to be completed in 2016 and it will enhance the vibrancy of Alexandra Precinct, reinforcing the appeal of MBC as a successful business hub created by Mapletree Group s vision and innovation.

10 12 Message from the Chairman Mr Edmund Cheng

11 Mapletree Investments Pte Ltd Annual Report 2013/2014 Message from the Chairman 13 In addition to the Group s strong financial performance in the last five years, we have proven our capability in real estate development. The financial year ended 31 March 2014 (FY13/14) was of special significance, capping a strategic milestone for Mapletree Investments Pte Ltd (Mapletree or the Group). At the end of FY08/09, we had set ourselves an ambitious set of five-year key performance targets which, when attained, would see the Group scale up significantly, grow our earnings and deliver superior returns. I am happy to report that these targets have substantially been met. our five-year average return on invested equity (ROIE) stood at 14.1% in FY13/14. In addition to the Group s strong financial performance in the last five years, we have proven our capability in real estate development. The success of Mapletree Business City (MBC), our innovative business hub in Singapore s Alexandra Precinct, attests to this. This validation carries through to Mapletree s capital management business as well. To date, four Mapletree sponsored real estate investment trusts (REITs) have been listed on the Singapore Exchange and their market capitalisation as at 31 March 2014 is as follows: Mapletree Logistics Trust (MLT) at S$2.6 billion, Mapletree Commercial Trust (MCT) at S$2.5 billion, Mapletree Industrial Trust (MIT) at S$2.3 billion and Mapletree Greater China Commercial Trust (MGCCT) at S$2.2 billion. This achievement is in addition to our growing portfolio of private equity funds, which expanded to five funds as at the end of FY13/14. Having sustained our strong performance over the last five years, the Group s management team is looking forward to leveraging our successes to deliver the next phase of growth. Mapletree s management team firmly believes that our business model which combines real estate development, capital management, and investment expertise can continue to deliver growth and consistently superior returns. However, given the relatively large size that Mapletree s business has grown to, our management team is cognisant that future growth should not be pursued at the expense of real returns. While our management team intends to use the same combination of scale (AUM), capital efficiency and returns targets to benchmark performance, our five-year NAV CAGR and average ROIE indicators will take on special importance and interest in the next stage of growth. The Year in Review In FY13/14, the Group delivered a steady financial performance. Revenue came in at S$548.6 million, lower than the previous year due to an absence of contributions from Festival Walk and Mapletree Anson which had been divested to MGCCT and MCT respectively. Profit after tax and minority interests (PATMI) was S$859.4 million and Operational PATMI was S$373.9 million. PATMI from recurring activities was S$363.5 million, growing 12% compared to the year before and boosted by new contributions derived from the listing of MGCCT and launch of our new private real estate fund, Mapletree China Opportunity Mapletree s assets under management (AUM) more than doubled from FY08/09 at S$11.8 billion to S$24.6 billion in FY13/14. That represents a compounded annual growth rate (CAGR) of 16% during the period. In line with our asset-light strategy, this scaling up was accompanied by a shift in Mapletree s AUM ratio of managed versus owned assets from 0.9:1 to 2.9:1. Over the same period, the Group has further seen a CAGR of 23% for its fee income from S$72.6 million (FY08/09) to S$203.2 million in FY13/14. Mapletree s earnings before interest and tax including share of associates income (EBIT + SOA) reached S$472.0 million as at FY13/14, which is an increase of 63% from FY08/09. The Group s net asset value (NAV) CAGR over five years from FY09/10 was 11.4% while MBC II, Singapore

12 14 Fund II (MCOF II). Fee income continued to grow in FY13/14 to S$203.2 million, again driven by MGCCT and MCOF II. As at 31 March 2014, Mapletree s net gearing stands comfortably at 8% with cash and undrawn banking facilities totalling S$2.8 billion. Underlining the Group s strong performance are several developments. The first is international recognition for Mapletree s capability in generating consistent and high returns from investments in China. In March 2014, MCOF II was named Asia s Capital Raise of the Year by Global PERE, the industry s respected media voice. This achievement affirms Mapletree s brand name and its successful investment track record in a key overseas market, China. MCOF II closed at its hard cap of US$1.4 billion just 10 months after its marketing launch in October Seeded by two mixed-use development projects, South Station Enterprise City and the combined MBC Shanghai and VivoCity Shanghai developments, MCOF II will continue Mapletree s strategy of investing in the development of integrated mixed-use or single-use projects, as well as projects with value enhancement potential located in China s Tier I and Tier II cities. The Group also succeeded in tendering for a prime site in Tsing Yi, Hong Kong SAR, in May 2013, bidding HK$1.69 billion to develop its first greenfield development in the city. With a site area of 21,000 sqm and a permissible gross floor area (GFA) of 85,000 sqm, the modern, multi-storey rampup logistics facility will be located close to the Kwai Chung Container Terminal, and is well-connected to the city, the Hong Kong International Airport and the mainland China border via expressways. The successful land bids coupled with the credible endorsement of Mapletree s ability to structure and raise funds for its various platforms help position the Group for growth in key overseas markets such as Hong Kong SAR and China. China remains in focus and it is where the Group intends to increase its AUM going forward. Together with Hong Kong SAR, Japan and Singapore, where the real estate markets are more developed and transparent, China will continue to see the greater proportion of our investments and focus. At the same time, the Group will remain engaged and regularly evaluate its presence and investments in emerging and relatively constrained markets such as Vietnam, Malaysia, South Korea and India. Meanwhile in Singapore, we have commenced development of the second phase of MBC (MBC II). MBC II will comprise a 30-storey tower (making it Singapore s tallest business park) and three podium blocks ranging from five to eight storeys over a total site area of 108,000 sqm. With a GFA of 124,800 sqm, MBC II will feature state-of-the-art infrastructure, an eco-friendly design and sustainable building features. The first phase of MBC maintained good occupancy with a committed occupancy of over 99% as at 31 March 2014, and provided substantial rental income to the Group in FY13/14. In addition to this, the business hub Global PERE Awards ASIA CAPITAL RAISE OF THE YEAR also served as a catalyst for the transformation of Alexandra Precinct and created value for Mapletree s Singapore portfolio. Another feature of the precinct is MCT s PSA Building (PSAB) together with its redeveloped retail centre, Alexandra Retail Centre (ARC). Although PSAB is now owned by MCT, the redevelopment of ARC was initiated prior to MCT s listing and is in line with the Group s precinct rejuvenation efforts. The value add that came with MBC is set to be enhanced with MBC II, which is expected to add to the vibrancy and appeal of Alexandra Precinct as a high quality, fringe Central Business District location catering to a wide range of office and business uses. Soon after in January 2014, Mapletree won the tender for another prime commercial site spanning a site area of about 5,112 sqm, this time in Kwun Tong, Kowloon, for HK$3.769 billion. Strategically located in Kowloon East, the site will house a Grade-A office building with a total GFA of 61,344 sqm, to cater to the growing demand for large and columnfree quality office space. Expected to be completed by 2017, this will be Mapletree s first greenfield commercial development in Hong Kong SAR. MBC Shanghai, China

13 Mapletree Investments Pte Ltd Annual Report 2013/2014 Message from the Chairman 15 Sustainability and Social Responsibility While the Group continues to work towards attaining its business goals, it is mindful to grow value for all stakeholders and improve sustainability. In China, our largest overseas development featuring our two iconic brands, MBC Shanghai and VivoCity Shanghai in Minhang, were awarded the Leadership in Energy and Environmental Design (LEED) precertification, with MBC Shanghai achieving the Gold and VivoCity Shanghai attaining the Silver level. Both are designed to minimise environmental impact by incorporating sustainable green technology features while ensuring the comfort of end-users. Also achieving the LEED Gold precertification were Global Technology Park, Mapletree s technology park in Bangalore, India, and MBC II in Singapore. Together, these achievements reflect Mapletree s commitment to environmentally sound operations and its drive to meet the highest available standards within the markets where we operate. In the area of corporate giving, Mapletree in FY13/14 channelled funds towards two more undergraduate bursary programmes, the Singapore Management University and the Singapore University of Technology and Design. The Group also contributed to education-related programmes supporting disadvantaged youths from Boys Town Home and Assumption Pathway School, both located in Singapore. Meanwhile, the Group continued to support programmes in its targeted China markets, with the objective of supporting education and healthcare for the poor and marginalised. Apart from financial donations, Mapletree provides resources such as complimentary use of space within its malls as well as access to its business network and partnerships. The intangible support by Mapletree for charities and various causes helps build awareness and boost patronage. It was a happy moment when we were informed that a student from Assumption Pathway School had obtained permanent employment at Jamie s Italian restaurant in VivoCity Singapore. Mapletree had helped connect both organisations for training and industrial attachment opportunities. South Station Enterprise City, China Acknowledgements Mapletree has consistently maintained that its success is in no small measure due to our people. Our employees have performed well not only in FY13/14 but also throughout Mapletree s early days. The Board and Management are appreciative of these efforts and on their behalf, I offer congratulations to our staff for another fruitful and successful year. As we embark on the Group s new five-year strategic road map, the expertise and experience of our Board continues to play an important role, and we have taken steps to further strengthen its composition. We are pleased that two highly respected individuals joined the Board on 18 March They are Mr Samuel N. Tsien, Group CEO of OCBC, and Mr David Christopher Ryan, former President of Goldman Sachs Asia. Mapletree warmly welcomes them. At the same time, we bid farewell to Mr Frank Wong Kwong Shing, who stepped down from the Board on 31 March We would like to thank him for his invaluable service. The Group is now in a good position to scale up and leverage its complementary roles as a real estate developer, capital manager and investor. With the support of our various business partners and stakeholders, I am confident that Mapletree will go further and grow stronger in the next five years. While the Group continues to work towards attaining its business goals, it is mindful to grow value for all stakeholders and improve sustainability. Yours sincerely, Edmund Cheng Chairman

14 16 Interview with the Group CEO Mr Hiew Yoon Khong Q: FY2013/2014 marked the completion of a five-year plan for Mapletree. Much of that five-year plan was informed by strategic decisions which date back to Can you give an overview of the milestones and key events in Mapletree s growth during this past decade? We track our business in terms of its scale, earnings and returns. During these past 10 years, Mapletree has grown significantly on all three counts. From holding just S$2.5 billion in property assets, all of which were located in Singapore, the Group now has assets under management (AUM) of S$24.6 billion. These span retail, office, industrial, logistics and mixed-use developments, and are located across seven countries in Asia namely Singapore, Greater China, Japan, South Korea, Vietnam, Malaysia and India. The bulk of these assets are managed under our real estate investment trusts (REITs) and private fund platforms. A decade ago, we had no REITs and private funds business. Today, there are four Mapletree REITs, plus seven private funds (past and existing), which together account for close to three-quarters of our total AUM. We take pride that our REITs have been well-received by investors. In the latest example of this, Mapletree Greater China Commercial Trust (MGCCT) was 29.5 times subscribed during its initial public offering (IPO) in Similarly, our newest

15 Mapletree Investments Pte Ltd Annual Report 2013/2014 Interview with the Group CEO 17 private fund, Mapletree China Opportunity Fund II (MCOF II), raised US$1.4 billion to become one of the largest China-focused private equity real estate funds raised to-date. Over the past ten years, our Group s net asset value (NAV) 1 grew from S$2.2 billion to S$8.3 billion. Much of this growth has taken place over the last five years, which saw us forge our business model and implement our strategic plan. As we embarked on that journey, we were mindful that we should not enlarge our AUM simply for the sake of achieving greater scale. Therefore, in 2009, we adopted a set of quantitative indicators to help us dynamically monitor the balance between AUM expansion and the need to consistently deliver high earnings and returns, namely: Returns NAV CAGR (five-year) Average ROIE (five-year) Mapletree Business City (MBC), Singapore - one of Mapletree s flagship developments Earnings EBIT + SOA 2 Fee Income Scale AUM AUM ratio (managed vs owned assets) Our growth in scale has come hand in hand with strong performances in earnings and returns. We grew our NAV by a compounded annual growth rate (CAGR) of 14.6% 3 over this 10-year period. We also improved our fiveyear average return on invested equity (ROIE) of 3.8% for the FY04/05 to FY08/09 period to 14.1% for the FY09/10 to FY13/14 period. In 10 years, our EBIT + SOA increased six-fold from S$76.5 million to S$472.0 million - this is a good indicator to measure the cash flow strength of the Group. Our fee income stands at S$203.2 million. Specific targets were set for each of these indicators for the five-year period through FY13/14. With those targets as guideposts over those last five years, we brought three REITs to market, namely Mapletree Industrial Trust, Mapletree Commercial Trust and MGCCT; kept a watchful eye on quality developments both locally and overseas and made numerous acquisitions; developed a good number of projects that created significant value; and continued to introduce new private funds. Development and acquisition highlights include the completion of our flagship integrated business hub development in Singapore, Mapletree Business City (MBC), and our first overseas VivoCity in Xi an, China. Significant acquisitions include Festival Walk in Hong Kong SAR and Gateway Plaza in Beijing, both of which have since been divested to MGCCT. We also began developing large-scale integrated projects overseas, such as the combined MBC-VivoCity project in Minhang, Shanghai, which will have a gross floor area of 297,000 square metres (sqm); the 500,000 sqm South Station Enterprise City in Foshan, Guangdong, and the 262,000 sqm Saigon South Place in Ho Chi Minh City, Vietnam. These integrated projects, which Mapletree is developing in phases, will be fully completed over the next few years. The MGCCT IPO is Singapore s largest REIT listing The Group s consistent financial results over the past five years show that our business model has worked for us. We capped FY13/14 with a profit after tax and minority interests (PATMI) of S$859.4 million and a strong return on equity (ROE) of 10.6%. 1 Excluding non-controlling interests and perpetual securities. 2 Earnings before interest and taxes including share of profits of associated companies and joint ventures, and share of associates gain on disposal. 3 NAV adjusted for dividends distributed to shareholder and calculated excluding non-controlling interests and perpetual securities and with NAV as of 31 March 2004 as starting base.

16 18 HarbourFront Precinct, Singapore (after) Q: You talked about how Mapletree s growth came from the successful execution of its business model. What is Mapletree s business model and how was it developed? The real estate business can be a volatile and cyclical one. To counter this, we decided to focus on building a steady stream of recurring earnings. That led us to adopt a business model that integrates three complementary roles: a real estate developer, an investor and a capital manager. The capital management business, in particular, enables us to not only reduce risk by being asset-light, but also maximise efficiencies in our capital structures and deployment of funds. How has this business model worked in practice? In 2003, all we held were S$2.5 billion in property assets in Singapore s HarbourFront and Alexandra areas. These assets were low-yielding and needed to be redeveloped or refurbished. Our plan was to rejuvenate these properties. We decided to play to the advantage of their close proximity to each other and transform them as integrated precincts, rather than individually, into exciting lifestyle and business hubs. We knew that such a task would require significant capital outlay. At the same time, we HarbourFront Precinct, Singapore (before) also knew that if these rejuvenation initiatives were executed well, these assets would provide strong recurring income streams. They would be prime candidates for injection into capital management platforms. We were therefore watching developments in the nascent Singapore REIT market very closely. The early 2000s witnessed the introduction of Singapore s first REIT, and there was much talk about more REITs to come. Much attention was focused on how REITs as a financial instrument allowed investors to gain exposure to prime income-yielding real estate on terms which they would not otherwise be able to. On our part, we saw that developing a REIT platform would address two of our needs: to recycle capital and to deliver consistent returns. By 2004, we had made the decision to list a REIT. To build a REIT, however, we needed quality assets with a common theme that could be injected into a trust. In 2004, there were only four REITs on the Singapore bourse which held assets such as retail, office and industrial developments. We saw an untapped niche in a logistics REIT and decided to seize that

17 Mapletree Investments Pte Ltd Annual Report 2013/2014 Interview with the Group CEO 19 opportunity. That year, we began building our ownership of logistics properties. In 2005, we listed our first REIT, Mapletree Logistics Trust (MLT), with an initial portfolio of 15 properties through a S$349 million offering. That marked the first major capital recycling operation for our integrated developer-investor-capital manager business model. MLT has since grown its portfolio to 111 assets worth approximately S$4.2 billion at the end of FY13/14. As we acquired our logistics assets and worked towards the listing of MLT, we also recognised the potential that lay in the private real estate funds sphere. Private funds allow us to work with investors to undertake development and investment projects which would generate higher returns. In 2005, we launched two private funds: the S$90 million Mapletree Real Estate Mezzanine Fund 1, which invested in property-linked mortgage and mezzanine loans in Asia, and CIMB- Mapletree Real Estate Fund 1, which we launched with CIMB with a committed capital of RM327 million at its first closing. The latter invested in development and investment assets, real estate investment products and listed real estate securities. These were the developments which formed our business model in the mid-2000s. In the following years, we continued investing in assets from different sectors that could potentially be a part of future capital management platforms such as REITs and private funds. By 2008, we had established what we felt was a sustainable, high returns business, with capital management and recurring earnings at its core. As at 31 March 2014, our four REITs have a total portfolio size of over S$16.2 billion and a combined market capitalisation of approximately S$9.6 billion, and they contribute a recurring EBIT + SOA of about S$290.5 million annually. Q: With Mapletree s growth over the past decade, how does it plan to further expand going forward? We believe our business model is a robust and resilient one. We have built stability through recurring income streams, and have deployed capital relatively efficiently to grow through both investment and development projects. Going forward, our focus is to maintain a high level of profitability and returns for our shareholder and all stakeholders. Scale may be important, but not at the expense of real returns. The key indicators we used to measure our performance in the past five years remain relevant to us. We will focus on broadening our earnings opportunities and generating strong returns consistently as we scale our AUM. The targets, however, will be much higher. Having achieved significant scale, the task going forward will challenge us. Our business thus far has focused on very select markets in Asia. Those fast-developing and developed economies have served us well. However, we also recognise that the outlook for Asia is not expected to be robust, at least in the near to middle term. There are also sector-specific challenges. In China, for instance, the real estate market is getting saturated. In Singapore, land sales are increasingly limited in this relatively small market. Therefore going forward, our strategy within Asia is to selectively focus on specific asset classes and micro-markets where we see opportunities to acquire good quality, high returns assets. For example, during the past year, we made significant inroads into logistics development projects in China, with three completed land bids and several other investment agreements. As China sees rising demand for modern logistics warehouses, of which it has a limited supply, we see opportunities for us to cater to this need and develop such facilities. Besides identifying opportunities to develop and acquire high-yielding assets in niche micro-markets, we will also seek to achieve our next five-year targets by diversifying beyond our current geographical and asset reach. This will in turn allow us to grow our capital management platforms and enlarge our recurring income. In particular, we will look to new markets such as Europe and the US. In April 2014, we announced our acquisition of a stake in the Asia business of Oakwood Worldwide, a well-known corporate housing and serviced apartment brand based in the US. Mapletree will also acquire and develop corporate and serviced apartment assets in Asia, Europe and North America. This is one Mapletree s largest logistics development, in Tsing Yi, Hong Kong SAR, will support MLT s future growth example of the type of investments which we can look into. In this regard, our low net gearing level of 8% at the close of FY13/14 positions the Group well to capitalise on future growth opportunities. I would like to highlight the importance of having the right team in place to propel us further. We have devoted a lot of resources to hiring and training the right professionals for our business. As a relatively young company (age-wise) that is growing aggressively, we work very hard at retaining the individuals who have contributed to Mapletree s achievements over the past years. They understand the company and its business model well; they also possess the competencies and experience to execute our business strategy. These experienced professionals are the bedrock of our business. At the same time, we need to strengthen our team as Mapletree expands, and invest in programmes to attract and develop our human capital. At locations outside Singapore, we are also recruiting more local staff, in recognition that a sustainable business can only be built with the help of those who are a part of the local communities. This focus to nurture employees will continue going forward, and we will strive to develop new initiatives to attract talents and retain high performers.

18 20 Board of Directors Edmund Cheng, 61 Chairman Mr Edmund Cheng is the Chairman of the Board of Directors of Mapletree Investments Pte Ltd (MIPL). He is also the Chairman of its Executive Resource and Compensation Committee and Investment Committee. Mr Cheng is concurrently the Deputy Chairman of Wing Tai Holdings Limited, Chairman of SATS Ltd (both listed on the Singapore Exchange) and Executive Director of Wing Tai Malaysia Berhad (a company listed on Bursa Malaysia). Apart from his wealth of experience as a property developer, Mr Cheng is actively involved in the public and private sectors. From 2005 to 2013, he was Chairman of the National Arts Council where he was involved in national efforts to promote and develop an arts landscape that will enhance vibrancy in the economy and society. Mr Cheng previously served as Chairman of the Singapore Tourism Board ( ), The Old Parliament House Limited ( ), The Esplanade Co. Ltd ( ), and as Founding Chairman of Design Singapore Council ( ) and a member on the Board of Trustees of Nanyang Technological University ( ). He also served on the Boards of the Urban Redevelopment Authority ( ), the Construction Industry Development Board ( ) and Singapore Airlines Limited ( ). A past President of the Real Estate Developers Association of Singapore (REDAS), Mr Cheng remains a member of its Presidential Council. Mr Cheng was awarded The Public Service Star (BAR) in 2010 and The Public Service Star (BBM) in 1999 by the Singapore Government for his significant contributions. He also received the Outstanding Contribution to Tourism Award from the President of Singapore in In 2009, he was conferred Officier de l Ordre des Arts et des Lettres by the Government of the Republic of France.

19 Mapletree Investments Pte Ltd Annual Report 2013/2014 Board of Directors 21 Lee Chong Kwee, 57 Director Mr Lee Chong Kwee is a member of the MIPL Board and the Chairman of its Audit and Risk Committee as well as its Transaction Review Committee. He is also currently the Chairman of Jurong Port Pte Ltd, a Director of Tiger Airways Holdings Ltd, as well as the Corporate Advisor to Temasek Holdings (Pte) Limited. Mr Lee had previously served on the boards of Singapore Post Ltd, Sinotrans Ltd, JTC Corporation and PSB Certifications Pte Ltd. He was also on the Advisory Boards of the National University of Singapore Business School and The Logistics Institute Asia Pacific. Mr Lee was formerly the Chief Executive Officer of Pontiac Land Pte Ltd, and before that, the Chief Executive Officer, Asia Pacific, of Exel (Singapore) Pte Ltd from 1999 to Prior to joining Exel, Mr Lee was with Singapore Airlines Ltd in various senior positions. Paul Ma Kah Woh, 66 Director Mr Paul Ma Kah Woh is a member of the MIPL Board and a member of its Audit and Risk Committee, Executive Resource and Compensation Committee, Investment Committee and Transaction Review Committee. He is also the Chairman of Mapletree Logistics Trust Management Ltd. Concurrently, Mr Ma is a Director of Nucleus Connect Pte Ltd, Keppel Infrastructure Fund Management Pte Ltd (Trustee-Manager of Keppel Infrastructure Trust), PACC Offshore Services Holdings Ltd as well as two private equity firms, namely CapitaLand China Development Fund Pte Ltd and CapitaLand China Development Fund II Limited. In addition, Mr Ma is a member of the Board of Trustees of the National University of Singapore and the National Heritage Board where he also chairs their Audit Committee. Mr Ma is a Fellow of the Institute of Chartered Accountants in England and Wales as well as a Member of the Institute of Certified Public Accountants in Singapore. Tsang Yam Pui, 67 Director Mr Tsang Yam Pui is a member of the MIPL Board and a member of the Audit and Risk Committee. He is also the Chairman of Mapletree Commercial Trust Management Ltd. Mr Tsang is concurrently the Executive Director and a member of the Executive Committee of NWS Holdings Ltd, a leading infrastructure and services company listed on the Hong Kong Stock Exchange since He is also the Vice Chairman and Director of New World First Bus Services Limited and Citybus Limited and a Director of New World First Bus Services (China) Limited and New World First Ferry Services Limited. In addition, Mr Tsang is the Vice Chairman of China United International Rail Containers Co., Limited, in the People s Republic of China. Prior to Mr Tsang s appointment with NWS Holdings Ltd, he served in the Hong Kong Police Force for 38 years where he held many key appointments before retiring as its Commissioner in For his distinguished public service, Mr Tsang was awarded the Gold Bauhinia Star (Hong Kong SAR), the Order of the British Empire, the Queen s Police Medal, the Colonial Police Medal for Meritorious Service, the Commissioner s Commendation, and the Hong Kong SAR Police Long Service Medal.

20 22 Frank Wong Kwong Shing, 66 Director Mr Frank Wong Kwong Shing is a member of the MIPL Board and its Investment Committee, until 31 March He is the Chairman of Mapletree Greater China Commercial Trust Management Ltd. Mr Wong is an Independent Non-Executive Director of Industrial and Commercial Bank of China Limited, China Mobile Limited, and PSA International Pte Ltd, Singapore. He is also a member of the Hong Kong SAR Government s Financial Services Development Council. From 1999 until his retirement in 2008, Mr Wong was Vice Chairman of DBS Bank Ltd, Director and Chief Operating Officer of DBS Bank Ltd. and DBS Group Holdings Ltd, Executive Director of DBS Group Holdings Ltd, and Chairman of DBS Bank (China) Limited and DBS Bank (Hong Kong) Limited. He had previously also assumed positions as Chairman of The Hong Kong Futures Exchange Limited and Chairman of the Leveraged Foreign Exchange Trading Ordinance Arbitration Panel. He was a member of the Foreign Exchange and Money Market Practices Committee of Hong Kong Association of Banks, and an Independent Non-Executive Director of Singapore s National Healthcare Group Pte Ltd. Wong Meng Meng, 65 Director Mr Wong Meng Meng, Senior Counsel, is a member of the MIPL Board, a member of its Audit and Risk Committee and a member of its Transaction Review Committee. Mr Wong is also the Chairman of Mapletree Industrial Trust Management Ltd. Mr Wong is concurrently a Director of United Overseas Bank Ltd, and the Chairman of Energy Market Company Pte. Ltd. Mr Wong is the Founder-Consultant of WongPartnership LLP, a leading law firm in Singapore. He is an accredited Adjudicator under the Building and Construction Industry Security of Payment Act, Chapter 30B of Singapore and a Member of the Competition Appeal Board, Singapore. He is a Member of the Advisory Board of the Faculty of Law, National University of Singapore and was also the President of Law Society of Singapore from 2010 to David Christopher Ryan, 44 Director Mr David Christopher Ryan is a member of the MIPL Board and a member of its Investment Committee. Mr Ryan was the immediate past President of Goldman Sachs Asia (ex Japan) from 2010 to Mr Ryan had joined Goldman Sachs in 1992, and had spent nine years in Asia before returning to the US in end He was made partner of Goldman Sachs in 2004 at age 34. In addition to his role on the MIPL Board, Mr Ryan remains a Senior Director of Goldman Sachs & Co.

21 Mapletree Investments Pte Ltd Annual Report 2013/2014 Board of Directors 23 Samuel N. Tsien, 59 Director Mr Samuel N. Tsien is a member of the MIPL Board. Mr Tsien is the Group Chief Executive Officer and Executive Director of Oversea-Chinese Banking Corporation Limited (OCBC). He is also Chairman of OCBC (China) and a board member of other companies in the OCBC group. Prior to these appointments, he was the Senior Executive Vice President and Global Head, Global Corporate Bank with worldwide responsibilities for OCBC s corporate and commercial customer relationships. He is also Chairman of the Association of Banks in Singapore since June Prior to joining OCBC, Mr Tsien was President and Chief Executive Officer of Bank of America (Asia) Ltd. and later, President and Chief Executive Officer of China Construction Bank (Asia) Corporation Ltd. He had concurrently served as Executive Vice President and as Asia Commercial and Consumer Banking Group Executive of Bank of America Corporation. Mr Tsien has held other senior management positions in corporate banking, retail banking and risk management at Bank of America in Hong Kong and San Francisco. Hiew Yoon Khong, 52 Director and Group Chief Executive Officer Mr Hiew Yoon Khong is a member of the Board and Group Chief Executive Officer. He is also a Non-Executive Director of Mapletree Logistics Trust Management Ltd, Mapletree Industrial Trust Management Ltd, Mapletree Commercial Trust Management Ltd, and Mapletree Greater China Commercial Trust Management Ltd. Mr Hiew joined Mapletree in 2003 as Group Chief Executive Officer. Mr Hiew has since led the Mapletree Group from a Singaporecentric asset-owning real estate company worth S$2.3 billion to a fast-growing regional company with total owned and managed assets in excess of S$20 billion. In the process, Mapletree also built a substantial and growing capital management business. From 2003 to 2011, Mr Hiew was concurrently Senior Managing Director (Special Projects) in Temasek Holdings. Prior to joining Mapletree, Mr Hiew held various senior positions in the CapitaLand group of companies. His past directorships include serving as a member on the Boards of Changi Airport International and Sentosa Development Corporation, as well as the Board of Trustees of the National University of Singapore. Mr Hiew currently serves as a member of the Pro-Tem Singapore Accountancy Council.

22 24 Group Senior Management Hiew Yoon Khong, 52 Group Chief Executive Officer Mr Hiew is a member of the Board and Group Chief Executive Officer. He is also a Non-Executive Director of Mapletree Logistics Trust Management Ltd, Mapletree Industrial Trust Management Ltd, Mapletree Commercial Trust Management Ltd, and Mapletree Greater China Commercial Trust Management Ltd. Mr Hiew joined Mapletree in 2003 as Group Chief Executive Officer. Mr Hiew has since led the Mapletree Group from a Singapore-centric asset-owning real estate company worth S$2.3 billion to a fast-growing regional company with total owned and managed assets in excess of S$20 billion. In the process, Mapletree also built a substantial and growing capital management business. From 2003 to 2011, Mr Hiew was concurrently Senior Managing Director (Special Projects) in Temasek Holdings. Prior to joining Mapletree, Mr Hiew held various senior positions in the CapitaLand group of companies. His past directorships include serving as a member on the Boards of Changi Airport International and Sentosa Development Corporation, as well as the Board of Trustees of the National University of Singapore. Mr Hiew currently serves as a member of the Pro-Tem Singapore Accountancy Council. Wong Mun Hoong, 48 Group Chief Financial Officer Mr Wong oversees the Finance, Tax, Treasury, Private Funds & Investor Relations, Risk Management, and Information Systems & Technology functions of the Mapletree Group. Prior to joining Mapletree in 2006, Mr Wong had over 14 years of investment banking experience in Asia, the last 10 years of which were with Merrill Lynch & Co. He is also a Non-Executive Director of Mapletree Logistics Trust Management Ltd, Mapletree Industrial Trust Management Ltd, Mapletree Commercial Trust Management Ltd and CapitaLand Township Development Fund. Chua Tiow Chye, 55 Group Chief Investment Officer and Regional Chief Executive Officer, North Asia Mr Chua exercises strategic oversight of the Mapletree Group s business expansion and directly spearheads the development of new markets in North Asia, i.e. South Korea, Hong Kong SAR, Australia and Japan, as well as other opportunistic markets. As business head of the North Asia region, he has direct responsibility over Mapletree s non-reit assets and growth in these markets. Mr Chua concurrently serves as a Non- Executive Director of Mapletree Logistics Trust Management Ltd and Mapletree Greater China Commercial Trust Management Ltd. He was also previously the Chief Executive Officer of Mapletree Logistics Trust Management Ltd. Prior to joining Mapletree in 2002, Mr Chua held senior positions with various companies including Vision Century Corporation Ltd, Ascendas Pte Ltd, Singapore Food Industries Pte Ltd and United Overseas Bank Ltd.

23 Mapletree Investments Pte Ltd Annual Report 2013/2014 Group Senior Management 25 Phua Kok Kim, 51 Regional Chief Executive Officer, South East Asia Mr Phua heads up the Group s business in South East Asia. He has direct responsibility over the Group s non-reit assets in these markets. He also supervises the management of the non-reit industrial assets under the Mapletree Industrial Fund, and is concurrently involved in various Mapletree real estate capital management initiatives such as sitting on the Investment Committee of Mapletree s joint venture fund with CIMB of Malaysia. Mr Phua is also a Non-Executive Director of Mapletree Industrial Trust Management Ltd. Mr Phua was previously Chief Executive Officer of Mapletree Industrial. Prior to joining Mapletree, Mr Phua was Managing Director at Temasek Holdings Private Limited, covering investments in various sectors such as telecommunications, finance and transport. Quek Kwang Meng, 48 Regional Chief Executive Officer, China and India Mr Quek joined Mapletree in March 2012 as Regional Chief Executive Officer for China and India. He is leading the Group in its business expansion in these two key markets, with direct responsibility over the Group s non-reit assets in these countries. Prior to joining Mapletree, Mr Quek was the Global Co-head/Managing Director for Real Estate Investments in Citi Private Bank. He was also previously Managing Director with CapitaLand Financial Ltd. Ho Seng Chee, 46 Group Chief, Corporate Services Mr Ho oversees all administration, communications, human resources and legal matters of the Mapletree Group. He was also formerly the Joint Company Secretary of Mapletree Logistics Trust Management Ltd, Mapletree Industrial Trust Management Ltd, and Mapletree Commercial Trust Management Ltd. Mr Ho began his career as a litigation counsel with Drew & Napier and Rajah & Tann. Prior to joining Mapletree in 2008, he was a staff member of the International Monetary Fund in the USA for 11 years.

24 26 Tan Wee Seng, 48 Head, Regional Development Management Mr Tan heads up Regional Development Management where he oversees the execution of all development projects including asset enhancement initiatives undertaken within the Mapletree Group across all business units and countries*. 22 years of design, project/construction management experience in the industrial, logistics, pharmaceutical, telecommunications, institutional, retail and commercial sectors across different geographies. Prior to joining Mapletree in 2012, he spent the last 18 years with the Lend Lease Group in various senior positions. Mr Tan has over * Excluding China and Japan Ng Kiat, 44 Chief Executive Officer, Mapletree Logistics Trust Management Ltd Ms Ng is the Chief Executive Officer and an Executive Director of Mapletree Logistics Trust Management Ltd. Prior to this appointment in July 2012, Ms Ng was Chief Investment Officer, South East Asia, of Mapletree where she was responsible for managing the acquisitions, development and operations of Mapletree s investment portfolio in the region. She was also previously the Chief Executive Officer, Vietnam, of Mapletree. Prior to joining Mapletree in 2007, Ms Ng was with Temasek Holdings Private Limited for five years managing private equity fund investments. Preceding that, Ms Ng was Vice President at the CapitaLand group of companies where she was responsible for real estate investments and cross-border mergers and acquisitions activities in South East Asia and Europe. Amy Ng Lee Hoon, 47 Chief Executive Officer, Mapletree Commercial Trust Management Ltd Ms Ng joined Mapletree in 2010 as the Chief Executive Officer of Singapore Investments, where she was responsible for the Group s Singapore Commercial portfolio. She also oversaw Mapletree s Marketing, Property Management and Development Management departments in Singapore. Upon the listing of Mapletree Commercial Trust in April 2011, Ms Ng became the Chief Executive Officer and an Executive Director of Mapletree Commercial Trust Management Ltd. Prior to joining Mapletree, Ms Ng held various appointments in the CapitaLand group of companies.

25 Mapletree Investments Pte Ltd Annual Report 2013/2014 Group Senior Management 27 Tham Kuo Wei, 45 Chief Executive Officer, Mapletree Industrial Trust Management Ltd Mr Tham is the Chief Executive Officer and an Executive Director of Mapletree Industrial Trust Management Ltd. He was previously the Deputy Chief Executive Officer and Chief Investment Officer of Mapletree s Industrial business unit. In that capacity, he was responsible for structuring, establishing and managing real estate investment platforms in Singapore and the region. Mr Tham joined Mapletree in 2002 and has since held various positions with the Group. Prior to joining Mapletree, he was in various engineering and logistics management roles with PSA Corporation. Cindy Chow Pei Pei, 44 Chief Executive Officer, Mapletree Greater China Commercial Trust Management Ltd Ms Chow is the Chief Executive Officer and an Executive Director of Mapletree Greater China Commercial Trust Management Ltd. She was previously the Chief Executive Officer, India, of Mapletree, where she was instrumental in establishing Mapletree s investments in the country. Ms Chow joined Mapletree in 2002 as a Business Development Manager. She later became the Senior Vice President and Head of Investment for Mapletree Logistics Trust Management Ltd. In that capacity, she was responsible for sourcing, identifying and evaluating potential acquisitions in the region, as well as recommending and analysing potential asset enhancement initiatives, with a view to enhance MLT s portfolio. Wendy Koh Mui Ai, 42 Head, Strategy & Research Ms Koh was appointed Head, Strategy and Research in May 2014, overseeing strategy and planning as well as research for the Group. In her capacity, she also provides investment analysis and evaluation of opportunities in new markets. Before the appointment, she was engaged by Mapletree as an advisor to review the Group s strategy implementation from FY09/10 to FY13/14. She was also involved in the formulation of Mapletree s next five-year strategic plan. Prior to joining Mapletree, Ms Koh was Co-head, Asia Pacific Property Research at Citi Investment Research. With almost 20 years of experience as a real estate equities analyst, she was involved in many IPOs and capital raising deals including for Mapletree Logistics Trust, Mapletree Industrial Trust and Mapletree Commercial Trust.

26 28 Highlights of the Year April 2013 Mapletree Commercial Trust (MCT) issued S$70 million of 3.20% Fixed Rate Notes due in 2021, under its S$1 billion Multicurrency Medium Term Note Programme established in August A Moody s rating of Baa2 1 was assigned to the Notes, similar to MCT s long-term Issuer Rating. Mapletree Industrial Trust (MIT) celebrated the groundbreaking of a build-to-suit (BTS) development for Equinix s third International Business Exchange TM data centre in Singapore. Designed to be energy efficient, the S$108 million project will meet the Building and Construction Authority (BCA) Green Mark and Leadership in Energy and Environmental Design (LEED) standards. With a total gross floor area (GFA) of 35,767 square metres (sqm), the development provides the infrastructure and scale for Equinix to expand its presence in Singapore and Asia-Pacific. VivoCity Singapore was named Best Shopping Centre by the AsiaOne People s Choice Awards. A total of 180,000 online voters rated their favourite brands and products. This award attests to VivoCity s commitment to provide its shoppers with an iconic retail, entertainment and lifestyle destination that constantly surprises and excites. Mapletree acquired CentrePoint, a premier office building in Ho Chi Minh City, Vietnam. With a GFA of 33,567 sqm, the 15-storey prime office building is strategically sited along the main trunk road between Ho Chi Minh City s Central Business District (CBD) and Tan Son Nhat International Airport. The acquisition supports Mapletree s Vietnam strategy of focusing on acquiring well-located investment properties with good quality specifications that generate attractive returns. May 2013 Mapletree Business City, Singapore Mapletree Business City (MBC) garnered the BCA Universal Design Mark Gold PLUS Award, which is a voluntary certification scheme introduced as an initiative to raise the bar on Universal Design adoption in developments. The award succeeds the initial Universal Design Awards which MBC was awarded in This accolade illustrates Mapletree s commitment to provide best-in-class, user-friendly spaces by incorporating best practices to enhance the conduciveness and accessibility of its developments. Mapletree Greater China Commercial Trust (MGCCT) established a US$1.5 billion Euro Medium Term Securities Programme together with issuers including Mapletree Greater China Commercial Trust Treasury Company Pte. Ltd. and Mapletree Greater China Commercial Treasury Company (HKSAR) Limited. June 2013 CIMB-Mapletree Real Estate Fund 2 Shariah, a Shariah-compliant private real estate fund established through Mapletree s joint venture with CIMB in Malaysia, announced that it will commit to a total project value of MYR450 million after its first closing. With an investment strategy targeting the sale and leaseback of Shariah-compliant projects in Malaysia, the fund aims to maximise total returns on capital primarily by seeking stable recurring income, realistic capital appreciation, and development profits. The Initial Public Offering (IPO) of MGCCT beat four rivals to win the title of Best Capital Raising Strategy of the Year at the 2013 Real Estate Investment World Asia Awards for Excellence. The winner was selected by voters from across the Asian real estate industry. VivoCity, Singapore Mapletree clinched a prime site in Tsing Yi, Hong Kong SAR, for HK$1.69 billion, to develop a modern multi-storey ramp-up logistics facility. The project is Mapletree s first greenfield development in the city. The site has a land area of 21,000 sqm and a permissible GFA of 85,000 sqm. Festival Walk, Hong Kong SAR a MGCCT property 1 A rating is not a recommendation to buy, sell or hold securities, does not address the likelihood or timing of prepayment, if any, or the receipt of default interest, and may be subjected to revision or withdrawal at any time by the assigning rating organisation

27 Mapletree Investments Pte Ltd Annual Report 2013/2014 Highlights of the Year 29 July 2013 Mapletree Logistics Trust (MLT) acquired The Box Centre in Gyeonggi-do, South Korea, for KRW28.75 billion. This acquisition is in line with MLT s efforts to rebalance its portfolio towards the higher growth markets in Asia. The Box Centre comprises a modern, three-storey dry warehouse and an ancillary office block, with a total GFA of approximately 27,000 sqm. Mapletree completed the construction of Odawara Centre 2 in Japan, an extension of Odawara Centre 1 which was completed earlier in January. Strategically located in Kanagawa Prefecture, a popular logistics hub in Western Japan, this BTS e-commerce distribution centre enjoys easy access to the neighbouring Tokyo, Yokohama and Nagoya areas. With a total GFA of over 200,000 sqm, Odawara Centre is amongst the largest of logistics centres in the vicinity. Odawara Centre 2, Japan August 2013 Mapletree completed the construction of its sixth logistics development in China Mapletree Zhengzhou International Logistics Park. Comprising four blocks of single-storey dry warehouses with a GFA of 79,319 sqm, the Grade-A logistics facility has achieved a lease commitment of close to 100% to-date. Mapletree China Opportunity Fund II (MCOF II) closed at its hard cap of US$1.4 billion. Seeded by two mixeduse development projects, South Station Enterprise City as well as the combined MBC Shanghai and VivoCity Shanghai, MCOF II closed 10 months after its marketing launch. MCOF II will continue Mapletree s strategy of investing in the development of integrated mixed-use or single-use projects, and projects with value enhancement potential located in China s Tier I and Tier II cities. Artist impression of South Station Enterprise City, China Festival Walk received the Yahoo! Emotive Brand Awards (Shopping Centre Category) This award further affirmed Festival Walk s popularity as a premier retail and lifestyle destination among the 2.5 million survey participants. September 2013 Mapletree Anson emerged as first runnerup at the ASEAN Energy Awards 2013, in the Energy Efficient Building New and Existing category. Designed with an array of environmentally friendly features, Mapletree Anson is a premier Grade-A office building in the CBD with a small carbon footprint. With the impressive energy saving effort of an estimated 2,700,000 kwh per year, Mapletree Anson successfully reduces carbon dioxide emissions by approximately 1,400 tonnes a year. October 2013 K&S Corporate Headquarters, Singapore MIT successfully completed the development of K&S Corporate Headquarters, a BTS project for Kulicke & Soffa (K&S). Developed with environmentally sustainable features, K&S Corporate Headquarters was accorded the BCA Green Mark Gold Award. The five-storey Hi-Tech Building spans a GFA of approximately 30,864 sqm. The property serves as a production, research and development facility as well as a corporate office for K&S. Mapletree Logistics Trust Management Ltd (MLTM) was named Frost & Sullivan s 2013 Asia Pacific Logistics Infrastructure Developer of the Year. This is the second time 2 that the Frost & Sullivan Asia Pacific Best Practices Awards has recognised MLTM for its excellent track record in growing its market presence and managing logistics infrastructure development in the region. MBC was officially named Singapore s first Healthy Workplace Ecosystem at the launch of the National Healthy Lifestyle Campaign Partnering the Health Promotion Board to initiate programmes that encourage the 10,000-strong working community at MBC to pursue a healthier lifestyle, Mapletree provides a favourable work environment that brings healthy living to the doorsteps of its tenants, enabling occupants to make better choices. 2 Mapletree Logistics was named Frost & Sullivan s Asia Pacific Logistics Park Developer of the Year in 2011

28 30 MBC II was awarded the LEED precertification Gold level for its sustainable building design. Awarded by the U.S. Green Building Council, the LEED certification is the international standard for high-performance green buildings. November 2013 MBC Shanghai and VivoCity Shanghai gained international recognition in building sustainability as the combined development was awarded the LEED precertification, at Gold and Silver levels respectively, marking the Group s first LEED pre-certified overseas development. Featuring two of Mapletree s iconic brands, the development was specifically designed to minimise environmental impact by incorporating sustainable green technology features without compromising on the comfort of end-users. Mapletree Benoi Logistics Hub, MLT s first redevelopment project in Singapore, was completed with a 100% lease commitment. The 92,500 sqm modern five-storey rampup logistics facility also received the BCA Green Mark Platinum Award, the highest certification for sustainable buildings in Singapore. December 2013 MGCCT was named Best REIT by The Asset Magazine MGCCT s IPO was named Best REIT at The Asset Magazine s Triple A Regional House and Deals Awards This recognition acknowledged MGCCT s S$1.68 billion IPO, which demonstrated the confidence in and support for the offering from both institutional and retail investors. Mapletree clinched a prime industrial site in Singapore for S$120 million to develop a modern high-specification industrial facility with office space and a retail centre within a permissible GFA of 41,230 sqm on 11,780 sqm of land. The project will be directly connected at the basement level to the Tai Seng MRT station, and is an ideal location for businesses in highvalue light industrial sectors and research and development services. The project is expected to be completed in the first half of 2016 at a development cost of about S$250 million. January 2014 Mapletree awarded the construction of the second phase of MBC (MBC II) to Shimizu Corporation, also the main contractor for the first phase of MBC, which was completed in Slated to be completed in 2016, the new business park will comprise a 30-storey tower, and three podium buildings of five to eight storeys over a total site area of 108,000 sqm. With a GFA of 124,800 sqm, the new development will feature state-of-the-art infrastructure incorporating an eco-friendly design and green features. Artist impression of MBC II, Singapore Mapletree was awarded a prime commercial site spanning a site area of about 5,112 sqm in Kwun Tong, Kowloon (Hong Kong SAR) for HK$3.769 billion. Strategically located in Kowloon East, the site will house a Grade-A office building with a total GFA of 61,344 sqm, to cater to the growing demand for large and column-free office space. Expected to be completed by 2017, this will be Mapletree s first greenfield commercial development in Hong Kong SAR. Festival Walk, in recognition of its commitment to provide shoppers with an enhanced shopping experience, was named Top 10 Favourite Shopping Malls in Hong Kong at the Shopping Mall Awards 2013 organised by leading local media Hong Kong Economic Times and Sky Post. Mapletree Benoi Logistics Hub, Singapore

29 Mapletree Investments Pte Ltd Annual Report 2013/2014 Highlights of the Year 31 February 2014 Mapletree received a certificate of outstanding merit for its pioneering efforts as one of the first business entities to set up in Binh Duong New City, Vietnam. The award recognised Mapletree s contributions towards the development of the emerging township through its 75-hectare integrated business and industrial park, Mapletree Business Binh Duong. The mixeduse development enjoys 100% occupancy for its completed Ready-Built Business Space (Phase 1A and Phase 1B). Mapletree obtained the Certificate of Compliance and Completion for Jaya Shopping Centre in Malaysia following a MYR400 million transformation. With a net lettable area of 23,600 sqm, the new Jaya Shopping Centre has almost doubled its previous retail space. Spanning seven storeys and divided into various zones, the mall is located in a popular neighbourhood shopping spot in Petaling Jaya, which will cater to a variety of consumers. Jaya Shopping Centre was 80% pre-leased prior to its re-opening. Jaya Shopping Centre, Malaysia March 2014 Mapletree received international recognition for its expertise in capital management when the 2013 Global PERE Awards named it Asia Capital Raise of the Year. A testament to the successful launch of MCOF II, the award affirmed Mapletree s competence in generating consistent and high returns from successful investments in the China market. MIT announced the acquisition of a four-storey light industrial building for approximately S$14.1 million 3 in the Changi North Industrial Estate. With a GFA of 6,290 sqm, the property is used for manufacturing, warehousing and as an ancillary office. Easily accessible via major expressways, the property is near the Pasir Ris and Tampines regional centres as well as Changi Airport. Following the completion of this acquisition in 2Q , MIT s portfolio will increase to 84 properties. The Group celebrated the groundbreaking of Mapletree Wuxi New District Logistics Park in Jiangsu Province, China. The planned Grade-A logistics facility will house four blocks of two-storey rampup warehouses spanning a total GFA of 124,000 sqm. Strategically located along China s Yangtze River Delta and wellconnected to key transportation networks, the facility is ideally located for regional distribution purposes serving Wuxi s economically vibrant market. MIT inked an agreement with Hewlett- Packard Singapore to develop a new BTS facility at its existing Telok Blangah Cluster. This will be MIT s largest BTS project to date. With a total GFA of 76,500 sqm, the proposed redevelopment will reposition the cluster into a high-tech industrial cluster when completed in the first half of Mapletree obtained the LEED precertification Gold level by the Indian Green Building Council for Global Technology Park (GTP) in Bangalore, India. As Mapletree s first development project in India, GTP s design is benchmarked against local and international standards, incorporating green technology features to create a sustainable business park environment. Artist impression of Global Technology Park, India Mapletree commenced the construction of Mapletree Logistics Hub Tsing Yi, a 12-storey ramp-up Grade-A logistics facility located in Hong Kong SAR. With a total GFA of 85,000 sqm, the development is well-connected to the city centre, the Hong Kong International Airport and the mainland China border via major expressways. It will also enjoy improved accessibility to Macau and Tuen Mun when the Hong Kong-Zhuhai-Macau bridge and Tuen Mun-Chek Lap Kok Link are completed in 2016 and 2018 respectively. 3 Includes purchase consideration of S$12.0 million, land premium and other acquisition-related expenses 4 Subject to approval from the relevant authorities and satisfaction of certain conditions (including the land premium payable for the remaining land lease for the first 30-year term)

30 32 Financial Review Income Statement For the Financial Year Ended 31 March (S$ million) FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 Revenue Earnings before interest and tax (EBIT) Share of profits of associated companies and joint ventures (SOA) (operating) EBIT + SOA (operating) Net finance cost (62.9) (74.7) (82.4) (100.3) (42.1) Revaluation gains Corporate restructuring surplus and disposal gains Other gains and losses Profit before tax , Income tax expense (47.0) (63.9) (62.7) (76.8) (58.6) Minority interests (6.8) (6.5) (7.4) (9.3) (8.4) Profit after tax and minority interests Operational profit after tax and minority interests , Notes: 1 Net of tax and minority interests and including share of associated companies and joint ventures revaluation gains. 2 Other gains and losses refer to mark-to-market fair value adjustments, negative goodwill, dilution gains or losses and the like. 3 Operational profit after tax and minority interests (Operational PATMI) denotes net income derived from the underlying operating activities of the Group including, inter-alia, real estate rental and sales activities, capital management fee income businesses, investments in real estate related assets and/or securities, and corporate restructuring surplus or deficit. Any gains or losses on disposal and corporate restructuring surplus or deficit are measured based on the relevant original invested costs. Gains or losses on foreign exchange, fair value adjustments for financial derivatives and financial assets available-for-sale (per FRS 39 Financial Instruments: Recognition and Measurement), unrealised gains or losses, inter-alia, revaluation gains or losses, negative goodwill and dilution gains or losses are not included.

31 Mapletree Investments Pte Ltd Annual Report 2013/2014 Financial Review 33 Balance Sheet As at 31 March (S$ million) FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 Assets Investment properties: Completed properties 5, , , , ,393.3 Under redevelopment 1, Residential investment property held for sale Properties under development ,367.3 Property, plant and equipment Investments in associated companies and joint ventures 1, , , , ,022.3 Cash and cash equivalents , , Others Total Assets 8, , , , ,765.4 Liabilities Borrowings/Medium term notes 2, , , , ,054.8 Deferred income tax liabilities Others Total Liabilities 3, , , , ,648.5 Net Assets 5, , , , ,116.9 Shareholder s funds 5, , , , ,273.0 Perpetual securities Non-controlling interests Total Equity 5, , , , ,116.9

32 34 Key Highlights FY13/14 The Group achieved profit after tax and minority interests (PATMI) of S$859.4 million and Operational PATMI 1 of S$373.9 million for FY13/14. PATMI from recurring activities was S$363.5 million in FY13/14, representing a growth of 12% as compared to S$323.7 million in FY12/13. The Group recorded net revaluation gains of S$478.0 million, an increase of 61% from FY12/13 of S$297.5 million. Corporate restructuring surplus for FY13/14 was S$14.6 million, significantly reduced from that recorded in FY12/13. In FY12/13, the Group recorded corporate restructuring surplus of S$259.1 million from the initial public offering (IPO) of Mapletree Greater China Commercial Trust (MGCCT), and the acquisition of Mapletree Anson by Mapletree Commercial Trust (MCT). Return on equity (ROE) was 10.6% for FY13/14 and return on invested equity 2 (ROIE) was 6.4%. During the year, Mapletree raised a US$1.4 billion equity commitment for Mapletree China Opportunity Fund II (MCOF II), well above the initial target of US$1.0 billion. MCOF II is the second China fund sponsored by Mapletree, a sequel to the fully-deployed US$1.2 billion Mapletree India China Fund (MIC Fund). MCOF II is one of the largest Chinafocused private real estate funds to date and was awarded the 2013 Global PERE Award Asia Capital Raise of the Year. MCOF II s initial portfolio consists of stakes in two mixed-use development projects. They are the combined Mapletree Business City (MBC) Shanghai and VivoCity Shanghai in Minhang, and South Station Enterprise City in Foshan. MBC Shanghai comprises seven blocks of Grade-A office buildings and VivoCity Shanghai is a one-stop shopping and lifestyle mall. South Station Enterprise City comprises 23 premium office buildings, ranging from nine to 21 storeys. Mapletree acquired CentrePoint, a 15-storey office building in Ho Chi Minh City, Vietnam, in April CentrePoint is located in the Phu Nhuan District and is strategically sited between Ho Chi Minh City s Central Business District and the Tan Son Nhat International Airport. Mapletree also succeeded in bidding for three prime sites, namely the Kowloon East commercial site and the Tsing Yi logistics site in Hong Kong SAR, and the Tai Seng industrial site in Singapore. The Group also made significant inroads into logistics development projects in China, securing three land parcels for development and several other investment agreements. As of 31 March 2014, the Group s net gearing stood at 8.2% and the Group has cash and undrawn banking facilities totalling S$2.8 billion, providing strong financial flexibility for the Group to fund future investments. Mapletree continued its corporate social responsibility efforts by allocating another S$2.0 million to the Mapletree Corporate and Staff Social Responsibility Programme (CSSR), bringing the total pledge since the programme first started in FY10/11 to S$9.0 million. (For more information, please refer to the Corporate Social Responsibility section from page 64 to 67). Performance Over Five Years Shareholder s funds grew by S$3.3 billion over a five-year period to S$8.3 billion as at 31 March The net asset value compounded annual growth rate (NAV CAGR) 3 since 31 March 2009 was 11.4%. PATMI grew from S$408.9 million in FY09/10 to S$859.4 million in FY13/14, achieving a compounded annual growth rate (CAGR) of 20%. Operational PATMI grew from S$236.5 million in FY09/10 to S$373.9 million in FY13/14, representing a CAGR of 12%. Fee income increased from S$80.5 million in FY09/10 to S$203.2 million in FY13/14 at a CAGR of 26%, as the Group successfully listed three real estate investment trusts (REITs) and launched three new private real estate funds over the last five years. Total owned and managed real estate assets grew by 2.1 times from S$11.8 billion as at April 2009 to S$24.6 billion as at March Notes: 1 Operational PATMI denotes net income derived from the underlying operating activities of the Group including, inter-alia, real estate rental and sales activities, capital management fee income businesses, investments in real estate related assets and/or securities, and corporate restructuring surplus or deficit. Any gains or losses on disposal and corporate restructuring surplus or deficit are measured based on the relevant original invested costs. Gains or losses on foreign exchange, fair value adjustments for financial derivatives and financial assets available-for-sale (per FRS 39 Financial Instruments: Recognition and Measurement), unrealised gains or losses, inter-alia, revaluation gains or losses, negative goodwill and dilution gains or losses are not included. 2 ROIE is computed based on Operational PATMI over the Group s equity from shareholder adjusted for unrealised revaluation gains or losses and such other non-cash flow and non-operating items including mark-to-market fair value adjustments and negative goodwill. 3 NAV is adjusted for dividends distributed to shareholder and calculated excluding non-controlling interests and perpetual securities and with NAV as of 31 March 2009 as starting base.

33 Mapletree Investments Pte Ltd Annual Report 2013/2014 Financial Review 35 Revenue Sources of Revenue (%) % % 3% 1% 21% 1% 24% 27% 1% 37% % % 75% 75% 72% 62% (S$ million) FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 S$453.5M S$590.2M S$574.4M S$686.3M S$548.6M Rental Revenue Fee Income Sale of Residential Units Others In FY13/14, Mapletree achieved a total revenue of S$548.6 million, compared to FY12/13 of S$686.3 million. Rental revenue accounted for 62% of total revenue vis-à-vis 72% in FY12/13, and fee income was 37% of total revenue, compared to 27% in FY12/13. The change in mix of revenue contributors is in line with Mapletree s asset-light business model and the Group s focus on its capital management business. Lower total revenue was mainly due to the de-consolidation of Festival Walk and Mapletree Anson, which together contributed total rental revenue of S$183.8 million in FY12/13. Festival Walk was divested in March 2013 to MGCCT as one of the IPO portfolio assets, and Mapletree Anson was divested to MCT in February Rental revenue from the Group s Singapore Commercial properties contributed a significant 47% to total revenue in FY13/14. MBC achieved 98% weighted average occupancy in FY13/14 (FY12/13: 92%) and contributed rental revenue of S$105.1 million, representing an increase of S$8.5 million over FY12/13. Fee income continued its growth momentum and stood at S$203.2 million in FY13/14, an increase of S$15.1 million or 8% from the fee income of S$188.1 million recorded in FY12/13.

34 36 Rental Revenue Y-O-Y Analysis The Group s rental revenue was lower by S$152.8 million or 31% year-on-year (y-o-y), primarily due to the de-consolidation of Festival Walk and Mapletree Anson (S$ million) FY12/ % FY13/ Festival Walk/ Mapletree Anson Existing Properties Excluding the revenue contribution from Festival Walk and Mapletree Anson in FY12/13, the Group achieved 10% growth from its existing portfolio. The growth in rental revenue was primarily driven by higher occupancy at MBC and a stronger operating performance from properties in the HarbourFront Precinct, as well as new income streams from two newly completed logistics assets in Japan, one newly completed logistics asset in China and CentrePoint in Vietnam, which was acquired in April Fee Income Y-O-Y Analysis 250 Fee Income by Type Fee Income by Business Unit (S$ million) FY12/13 FY13/14 FY12/13 FY13/14 Base and Performance Fees from REITs Base Fee from Private Real Estate Funds Property and Development Management Fees Acquisition and Incentive Fees Singapore Commercial Logistics Singapore Industrial China and India North Asia South East Asia Others Fee income was S$203.2 million in FY13/14, representing an 8% y-o-y increase. Growth in fee income was largely driven by the launch of MCOF II and from MGCCT which was listed in March Both platforms combined contributed S$57.0 million in total fee income. The increase in contribution from these new capital management income sources was partially offset by lower acquisition and incentive fees recorded in FY13/14. In FY12/13, the Group recorded an incentive fee of S$36.3 million from the MIC Fund arising from its divestment of Gateway Plaza to MGCCT as one of its IPO portfolio assets. Base and performance fees from REITs saw an increase of S$24.8 million or 36% over FY12/13, mainly due to a full year contribution from MGCCT and the continued growth in the REITs businesses.

35 Mapletree Investments Pte Ltd Annual Report 2013/2014 Financial Review 37 Earnings Profiles PATMI and Operational PATMI 1 1,200 1, , (S$ million) FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 Recurring Core PATMI Investment & Other Gains Revaluation Gains Operational PATMI The Group achieved a PATMI of S$859.4 million in FY13/14 compared to FY12/13 PATMI of S$931.7 million in FY12/13. Recurring core PATMI grew by 12% from FY12/13. Earnings diluted by the MGCCT IPO and the divestment of Mapletree Anson to MCT in FY12/13 were replaced by new income streams from newly completed logistics properties, the newly acquired CentrePoint, a better operating performance of the HarbourFront Precinct properties as well as improved occupancy at MBC. In addition, net interest expense was reduced from S$100.3 million in FY12/13 to S$42.1 million in FY13/14. Revaluation gains increased from S$297.5 million in FY12/13 to S$478.0 million in FY13/14 largely due to the strong performance of Mapletree s owned and managed real estate assets. The Group recorded investment & other gains of S$17.9 million, mainly from the corporate restructuring surplus of S$13.7 million from the divestment of a 31.5% stake in the Minhang development project, and a 80% stake in South Station Enterprise City to MCOF II. The investment & other gains of S$310.5 million in FY12/13 included the corporate restructuring surplus of S$134.2 million from Mapletree s divestment of Festival Walk to MGCCT and Mapletree Anson to MCT, and share of MIC Fund s realised gain of S$124.9 million on the disposal of Gateway Plaza to MGCCT. The Group achieved Operational PATMI of S$373.9 million in FY13/14, compared to S$761.8 million in FY12/13. Operational PATMI in FY12/13 included a corporate restructuring surplus and share of associated companies gain on disposal measured from original invested cost of S$427.0 million, mainly from the listing of MGCCT and the divestment of Mapletree Anson to MCT. Notes: 1 Operational PATMI denotes net income derived from the underlying operating activities of the Group including, inter-alia, real estate rental and sales activities, capital management fee income businesses, investments in real estate related assets and/or securities, and corporate restructuring surplus or deficit. Any gains or losses on disposal and corporate restructuring surplus or deficit are measured based on the relevant original invested costs. Gains or losses on foreign exchange, fair value adjustments for financial derivatives and financial assets available-for-sale (per FRS 39 Financial Instruments: Recognition and Measurement), unrealised gains or losses, inter-alia, revaluation gains or losses, negative goodwill and dilution gains or losses are not included.

36 38 Ebit + Soa 1 (Including Share of Associates Gain on Disposal) Y-O-Y Growth Analysis by Business Unit (S$ million) (84.1) (0.6) (82.1) FY12/13 S$664.4M FY13/14 S$472.0M Singapore Commercial Logistics Singapore Industrial North Asia Others China and India South East Asia EBIT + SOA (including share of associates gain on disposal) was S$472.0 million in FY13/14, compared to S$664.4 million in FY12/13. This was largely due to the dilution of earnings from Festival Walk and Mapletree Anson following their divestments in late FY12/13 to MGCCT and MCT respectively and the absence of share of MIC Fund s gain on the disposal of Gateway Plaza recorded in FY12/13. Singapore Commercial business unit (BU) recorded a lower EBIT + SOA of S$10.6 million over FY12/13 mainly due to the absence of Mapletree Anson s contribution as well as the decantment of The Comtech for redevelopment into MBC II. The BU maintained a steady earnings growth of 8% on MBC and the HarbourFront Precinct assets. Logistics BU reported an increase of S$26.5 million mainly from newly completed logistics properties in Japan and China, and share of higher profits from Mapletree Logistics Trust (MLT). Singapore Industrial BU posted an increase of S$9.7 million mainly from its share of higher profit from Mapletree Industrial Trust (MIT), and higher fee revenue from the enlarged portfolio of MIT. China and India BU recorded a lower EBIT + SOA of S$150.1 million mainly due to the absence in share of the MIC Fund s gain of S$124.9 million on disposal of Gateway Plaza, and incentive fee of S$36.3 million recognised from the MIC Fund in FY12/13. MCOF II contributed new fee revenue of S$20.5 million to the BU and share of loss as its portfolio of assets are still under development. North Asia BU recorded a lower EBIT + SOA of S$73.4 million mainly due the absence of Festival Walk s contribution of S$128.4 million recorded in FY12/13. MGCCT contributed new fee revenue of S$34.5 million and share of results of S$35.6 million in FY13/14. Notes: 1 EBIT + SOA denotes earnings before interest and tax plus share of profits of associated companies and joint ventures.

37 Mapletree Investments Pte Ltd Annual Report 2013/2014 Financial Review 39 Earnings Ratio Average Shareholder s Funds, Roe 1 (%) and Roie 2 (%) 30% 29.4% 25% 20% 15% 13.6% 12.8% Five-year average ROE 10.9% 12.0% 14.6% Five-year average ROIE 14.1% 10% 9.7% 10.6% 7.9% 8.0% 6.4% 5% 0% FY09/10 S$5,170.2M FY10/11 S$5,774.5M FY11/12 S$6,425.2M FY12/13 S$7,100.1M FY13/14 S$7,890.9M FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 Average Shareholder s Funds ROE ROIE The Group delivered strong returns to its shareholder with a ROE of 10.6% for FY13/14. For the last five financial years, the average ROE was 10.9%. ROE for a property capital manager is naturally volatile given that gains or losses from the revaluation of investment properties, in accordance with Singapore Financial Reporting Standards 40, can be significant and largely influenced by the realisation of properties in certain years. From an operational point of view, the Group believes that ROIE is more meaningful. This ratio captures the operating returns of the Group for the amount invested by its shareholder in the underlying businesses and adjusts for the effect of non-operating and non-cash flow items, such as unrealised investment properties revaluation gains and losses, negative goodwill, dilution gains or losses and fair value adjustments for financial derivatives and available-for-sale financial assets. The Group recorded a high ROIE in FY12/13 mainly due to the MGCCT IPO and the divestment of Mapletree Anson to MCT. Whilst recurring PATMI grew in FY13/14 by 12%, the absence of a corporate restructuring surplus (measured from original invested costs) contributed to the lower ROIE of 6.4% in FY13/14. For the last five financial years, the average ROIE was strong at 14.1%. Notes: 1 ROE denotes return on equity 2 ROIE denotes return on invested equity and is computed based on Operational PATMI over the Group s equity from shareholder adjusted for unrealised revaluation gains or losses and such other non-cash flow and non-operating items including mark-to-market fair value adjustments and negative goodwill.

38 40 Total Asset Base and Shareholder s Funds Total Asset Base 1 12,000 10,000 8,000 6,000 4, , ,059 5, , , , , , , ,022 1, ,393 2,000 0 (S$ million) FY09/10 S$8,595.9M FY10/11 FY11/12 FY12/13 FY13/14 S$9,418.9M S$11,214.8M S$9,018.5M S$10,462.1M Investment Properties - Completed Properties Under Development Others Residential Investment Property Held for Sale Property, Plant and Equipment Investment Properties - Under Redeveloment Investment in Associated Companies and Joint Ventures Total assets excluding cash and cash equivalents of the Group as at 31 March 2014 grew 16%, or S$1.4 billion, to S$10.5 billion compared to 31 March During the financial year, the Group s acquisition of CentrePoint and the land acquisitions in Kowloon East, Tsing Yi and Tai Seng resulted in an increase in investment properties and properties under development. Notes: 1 Excluding cash and cash equivalents

39 Mapletree Investments Pte Ltd Annual Report 2013/2014 Financial Review 41 Shareholder s Funds MLHF, MBC and Mapletree Anson development value-add MIT IPO and capital uplift of Singapore portfolio MCT IPO and capital uplift of portfolio 6.2 MGCCT IPO and capital uplift of portfolio 6.7 Capital uplift of portfolio (S$ billion) FY08/09 FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 The Group s precinct rejuvenation and real estate capital management strategies since FY06/07 have added considerable value to its shareholder. This is evident from the increasing recurring core PATMI, significant development value-add and revaluation gains of the portfolio over the past few years. The increase in shareholder s funds from S$7.5 billion in FY12/13 to S$8.3 billion in FY13/14 is the result of the Group s PATMI of S$859.4 million. Shareholder s funds grew from S$5.0 billion as at 31 March 2009 to S$8.3 billion as at 31 March NAV CAGR 1 since 31 March 2009 was a healthy 11.4%. The Group has created significant value in the development of Bank of America Merrill Lynch HarbourFront (MLHF), Mapletree Anson and MBC. These assets, as well as the strong operating performance from the rest of the Group s owned and managed assets, resulted in significant revaluation gains. Notes: 1 NAV is adjusted for dividends distributed to shareholder and calculated excluding non-controlling interests and perpetual securities and with NAV as of 31 March 2009 as starting base.

40 42 Third-Party Aum by Segment (%) 1% 1% 1% 9% 8% 1% 1% 24% 23% Mapletree Logistics Trust 26% FY12/13 S$16,744M 26% FY13/14 S$18,224M Mapletree Industrial Trust Mapletree Commercial Trust Mapletree Greater China Commercial Trust 17% 17% Mapletree India China Fund Mapletree Industrial Fund Mapletree China Opportunity Fund II 23% 22% CIMB-Mapletree Real Estate Fund 1 During the financial year, third-party AUM grew by S$1.5 billion from S$16.7 billion in FY12/13 to S$18.2 billion in FY13/14. The increase is mainly attributable to the revaluation gains of assets within the REIT portfolios as well as the development activities in the MIC Fund and MCOF II. Total Real Estate Assets Base (Owned and Managed) and Net Gearing 25,000 52% 20,000 47% 40% 15,000 10,000 47% 51% 57% 77% 74% Owned Assets Third-Party AUM 5,000 53% 49% 43% 23% 8% 26% Net Debt/Equity 0% 0 (S$ million) FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 S$12,939M S$15,422M S$19,851M S$21,764M S$24,605M Mapletree has achieved significant growth in its real estate asset base in the last five years and the five-year compounded annual growth rate is 16%. With an asset-light business model and success in executing its capital management strategy, Mapletree has achieved significant increase in scale over the last five years while at the same time lowering its net gearing, without additional capital from its shareholder. Total owned and managed real estate assets increased from S$21.8 billion in FY12/13 to S$24.6 billion in FY13/14 mainly driven by the acquisition of CentrePoint, the Group s successful land acquisitions, development activities, and the capital uplift of the REIT portfolios and the Group s owned assets.

41 Mapletree Investments Pte Ltd Annual Report 2013/2014 Financial Review 43 Total Owned and Managed Real Estate Assets by Business Units (%) 25,000 1% 3% 20,000 1% 2% 18% 1% 2% 22% 23% 7% 15,000 10,000 3% 1% 4% 3% 13% 26% 3% 1% 3% 9% 14% 25% 7% 14% 23% 6% 13% 22% 13% 21% 5,000 50% 45% 35% 34% 32% 0 (S$ million) FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 S$12,939M S$15,422M S$19,851M S$21,764M S$24,605M Singapore Commercial Singapore Industrial North Asia Others Logistics China and India South East Asia In April 2012, the Group was reorganised to better align its focus and business structure. Mapletree was previously organised by property type, with BUs in logistics, industrial, commercial/retail and regional investments. The Group has since been reorganised with a greater focus on geography, except where property type focus is important, such as Logistics and Singapore Industrial. Singapore Commercial BU continues to be the largest BU measured by total owned and managed real estate assets, accounting for 32% of total AUM. With the acquisition of the Kowloon East commercial site and portfolio gains recorded by MGCCT, North Asia BU is now the second largest BU.

42 44 Total Owned and Managed Real Estate Assets by Country (%) 25,000 20,000 15,000 10,000 3% 1% 2% 7% 6% 6% 3% 1% 2% 9% 12% 4% 1% 2% 2% 9% 9% 20% 1% 2% 2% 8% 13% 19% 1% 1% 2% 2% 7% 13% 21% 5,000 75% 69% 57% 55% 53% 0 (S$ million) FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 S$12,939M S$15,422M S$19,851M S$21,764M S$24,605M Singapore China Malaysia South Korea India Hong Kong SAR Japan Vietnam Indonesia Mapletree continued to make significant expansion of its regional footprint outside Singapore. Notwithstanding that, majority of its total owned and managed real estate assets continue to be in Singapore at 53%. During the year, Mapletree has grown in presence in the developed economy of Hong Kong SAR with successful land bids for the Tsing Yi logistics site and the Kowloon East commercial site.

43 45 Corporate Liquidity and Financial Resources 1 Prudent capital management and financial flexibility to fuel the Group s growth Financial Market Review The global economy continued to be in a state of uncertainty over the impact of the US Quantitative Easing (QE) tapering plan and geopolitical tensions. The Fed began the tapering of its QE programme in December 2013 with a reduction of US$10 billion of the monthly purchase of US Treasuries and mortgage-backed securities. It is expected to complete tapering by the end of The Fed also indicated that it would look at a broader array of economic indicators and financial conditions on its interest rate policy. The US economy has shown signs of improvement in economic activity and labour market conditions. The Eurozone is showing tentative signs of slowly pulling itself out from recession, while China achieved a modest 7.7% GDP growth in 2013 amid a new leadership and ensuing reforms. In Singapore, the Monetary Authority of Singapore (MAS) has kept its policy of a modest and gradual appreciation of the SGD unchanged, keeping SGD interest rates subdued. During the year, the Group continued to build a strong base of funding resources to support its operations and investment needs, and also to capitalise on opportunities that may arise. On an ongoing basis, the Group also monitors its cash flow position, debt maturity profile, cost of funds, foreign exchange and interest rate exposures, and overall liquidity position. To ensure financial flexibility, scenario analyses including stress tests are performed regularly to assess the potential impact of market conditions on its financial position. Financial Resources and Liquidity Financial Capacity (S$ million) Cash 303 Undrawn Banking Facilities 2,491 Total 2,794 Issue Capacity under MTN 4,812 Programmes As at 31 March 2014, the Group had cash reserves and undrawn banking facilities of S$2.8 billion. In addition, the Group has a S$2 billion domestic Medium Term Note (MTN) Programme and a US$3 billion Euro MTN Programme, which enable the Group to tap on an ongoing basis the debt capital markets for issues in various currencies and longer dated funding, hence achieving further diversification of funding sources. Bank Facilities Availability and Utilisation (S$ million) 3,763 FY12/13 27% 73% 3,133 FY13/14 20% 80% 0 1,000 2,000 3,000 4,000 Amount utilised Available and unutilised 1 Loans from related parties have been excluded from the analysis

44 46 Debt and Gearing As at 31 March 2014, the Group recorded a net debt of S$729 million as compared to S$16 million a year ago. Net gearing edged up to 0.08 times as at 31 March 2014 from almost zero a year ago. Debt Gearing 10,000 8,000 8,344 9,117 During the year, the Group actively utilised the SGD cash proceeds from the divestment of properties in the prior year to repay loans and fund land acquisitions and investments in various currencies. To maintain the assetliability matching in the respective currencies, the Group has entered into various derivatives including foreign exchange swaps and cross currency interest rate swaps. This has helped achieve interest savings for the Group while maintaining the asset-liability matching. 6,000 4,000 2,000 0 (S$ million) 16 FY12/ FY13/14 Net Debt Equity Net Debt/Equity Ratio (times) As at 31 March 2013 (S$ million) As at 31 March 2014 (S$ million) Gross Debt 1,759 1,032 Cash 1, Net Debt Maturity Profile as at 31 March 2014 (S$ million) Cash S$303m 39% As at 31 March 2014, all of the Group s borrowings were from committed banking facilities and medium- to long-term bond issuance % 16% 20% The Group makes a conscious effort to spread out its debt maturity profile to align with its cash flow plans and to reduce refinancing risks. The average life of its existing gross debt portfolio was 3.1 years as at 31 March 2014, longer than 2.4 years a year ago. As at the date of this report, the Group has more than sufficient resources to support its refinancing needs Fixed vs Float 5% FY14/15 FY15/16 FY16/17 FY17/18 FY18/19 & beyond As at 31 March 2014, S$605 million of the Group s borrowings were secured by investment properties, mainly in Japan. This constituted only 6% of the Group s total assets. The Group continues to maintain and build an active relationship with a network of more than 35 banks of various nationalities. The Group adopts the philosophy of engaging the banks as its business partners. The diversification of financial institutions has enabled the Group to tap on the different competencies and strengths of its relationship banks to enhance its business strategy and growth in Singapore and abroad. Float 27% Fixed 73% FY12/13 Float 47% Fixed 53% FY13/14

45 Mapletree Investments Pte Ltd Annual Report 2013/2014 Corporate Liquidity and Financial Resources 47 The Group managed its interest cost by maintaining a balanced mix of fixed and floating rate borrowings as part of its liability management strategy. Fixed rate borrowings comprised 53% of the Group s gross debt (74% on a net debt basis) with the balance on floating rates. Factors taken into consideration in determining the interest rate profile include the interest rate outlook, the investment holding period, as well as the expected cash flows generated from its business operations. Where feasible, the Group adopts a natural hedge policy to mitigate exposure to foreign exchange risks. As at 31 March 2014, the Group has drawn foreign currency loans to fund investments which were denominated in the same currencies. The Group has also entered into foreign exchange contracts (in USD, HKD, JPY, CNH and MYR) to hedge the currency exposure of certain overseas investments. Debt Profile (Currency Breakdown) 4% 5% 16% FY12/13 52% FY13/14 54% 41% 28% Overview of Asset Base and Capital Structure as at 31 March 2014 Assets SGD JPY USD Others In FY13/14, the Group s interest cover ratio and cash flow cover ratio were very healthy at 10.5 times (FY12/13: 6.4 times) and 11.5 times (FY12/13: 5.8 times) respectively, due mainly to lower interest expense. Liabilities* & Equity 75.1% 7.4% 8.6% 6.0% 2.9% 73.5% 8.4% 5.0% 5.6% 5.5% 2.0% Equity Liabilities SGD HKD USD JPY Others Interest Cover Ratio Cash Flow Cover Ratio (S$ million) FY12/13 FY13/14 (S$ million) FY12/13 FY13/14 EBIT and Share of Associates Income Interest Cover Ratio (times) Operating Cash Flow Cash Flow Cover Ratio (times) Net Interest Expense Net Interest Paid * Adjusted for foreign exchange swaps and cross currency interest rate swaps

46 48 Mapletree Investments Pte Ltd Annual Report 2013/2014 Operations Review Singapore Commercial Singapore Commercial 49 VivoCity Mapletree s Singapore Commercial business unit (Singapore Commercial) manages a portfolio of real estate assets held under Mapletree and Mapletree Commercial Trust (MCT), a Singapore-listed real estate investment trust (REIT). Assets held directly under Mapletree include: Mapletree Business City (MBC), a Grade-A integrated office and business park development The redevelopment of The Comtech into the new phase of MBC (MBC II) HarbourFront Centre (HFC) HarbourFront Towers One and Two (HF 1 & 2) St James Power Station PSA Vista The properties in the MCT portfolio are VivoCity, Singapore s largest mall; PSA Building (PSAB), an established office and retail development; and two premium office buildings, Bank of America Merrill Lynch HarbourFront (MLHF) located in the HarbourFront Precinct and Mapletree Anson, located in Singapore s Central Business District (CBD). As at 31 March 2014, Singapore Commercial owned and managed about S$7.8 billion in assets. It also contributed S$280.6 million and S$37.3 million to Mapletree s EBIT + SOA 1 and fee income respectively. Singapore Commercial (held directly by Mapletree) The Singapore Commercial portfolio of properties performed well in FY13/14, maintaining high occupancies and generating steady returns for the Group. The assets are largely located in two precincts, namely the Alexandra and HarbourFront precincts, within the Greater Southern Waterfront. In Alexandra Precinct, MBC - one of the Group s flagship developments - continued to attract premium tenants. Key tenants such Mapletree Anson as Samsung, BW Maritime, BW Offshore and Credit Agricole have expanded within MBC, and occupancy ramped up to above 99% as at 31 March In October 2013 MBC, in partnership with the Health Promotion Board, became Singapore s first Healthy Workplace Ecosystem. It is the first business hub to promote healthy living at the workplace. During the year, Mapletree commenced the redevelopment of The Comtech, which will form the next phase of MBC (MBC II). The success of the current MBC in attracting premium tenants has anchored Alexandra Precinct as a thriving business hub, and MBC II aims to continue to serve the demand for quality business space in this precinct. Like the current MBC, MBC II will be a product that will have a leading edge in sustainability design. To date, MBC II has been awarded the precertification for Leadership Energy and Environmental Design (LEED) for Core and Shell Development programme Gold level by the U.S. Green Building Council in October 2013, as well as the Singapore Building and Construction Authority (BCA) Green Mark Platinum Award in January The HarbourFront Precinct continues to grow from strength to strength as a commercial hub. This has enabled HFC, HF1 & 2 and St James Power Station to maintain good operating performances and provide steady income for the Group. Under the Urban Redevelopment Authority s Draft Master Plan, the Greater Southern Waterfront is envisioned to be a seamless extension of the city and will open up new live-work-play opportunities. Over time, this will further add to the appeal of the Alexandra and HarbourFront precincts. During the year, Mapletree continued to focus on pursuing environment sustainability and green initiatives. Singapore Commercial renewed the Green Mark Platinum award for MBC and HarbourFront Centre, and secured the Green Mark Award for PSA Vista. For its user-friendliness within a built environment, MBC also received the Universal Design Mark Gold PLUS Award. Mapletree Commercial Trust Continued Growth With the robust performance of its assets, MCT reported a distribution per unit (DPU) of cents for FY13/14, representing a 15.9% increase over the forecast DPU in the Mapletree Anson Acquisition Circular published in December 2012, as well as a 13.6% increase from FY12/13. Gross revenue increased to S$267.2 million and net property income grew by 25.2% to S$195.3 million. As at 31 March 2014, MCT s overall portfolio size was S$4.0 billion. VivoCity continued to see strong support from shoppers and tenants. Several zones in the mall have been refreshed with new brands and concepts complementing the existing ones. The shoppers have endorsed these changes with footfall rising 1.4% and tenant sales rising 5.6% for the year to above S$900 million a new record. Meanwhile, the offices at PSAB achieved 100% occupancy during FY13/14, with a retention rate of 93.9% for leases expiring in the year. Alexandra Retail Centre, the retail component of PSAB, achieved committed occupancy of 97.9%, up from 81.9% a year ago. Mapletree Anson, an asset that MCT acquired from its sponsor in February 2013, has contributed positively to MCT s distributable income for FY13/14. Mapletree Anson was one of the first buildings in Singapore to be certified Green Mark Platinum, and was also the first runner-up in the Energy Efficient Building - New and Existing Category at the ASEAN Energy Awards MLHF continued to contribute stable income to the portfolio, and renewed its Green Mark Gold award during the year. Market Review and Outlook Singapore s economy grew by 4.1% year-onyear (y-o-y) in Growth is expected to be between 2.0% and 4.0% in Office demand was healthy in the quarter ended March 2014 with healthy absorption seen for quality space in new projects in the CBD and decentralised locations. Leasing activities were strong in the Grade-A market with better occupancy rates recorded for new developments while high occupancy levels maintained in majority of the existing buildings. Office rents for both Grade-A and Grade-B buildings continued their uptrend in the quarter ended March 2014 with 4.1% - 5.1% growth from the previous quarter. In view of the limited supply in the near term, rental recovery is expected to be led by the Grade-A market. Following a weak performance in retail sales in the quarter ended December 2013, the Retail Sales Index (excluding motor vehicles) registered a 9.2% increase in January 2014, due largely to the festive season. Demand for retail space remained steady in the quarter ended March 2014 as retailers continued to seek new space for expansion and replacement. The retail market outlook for the next six to 12 months is expected to remain relatively stable on the back of a low unemployment rate and healthy tourist arrivals. However, rising business costs, especially from the manpower crunch and new retail supply of close to 3 million square feet coming on stream in 2014, could lead to vacancy rates inching up. References 1. Ministry of Trade and Industry, Singapore 2. CBRE Singapore Market View Q Singapore Commercial EBIT + SOA: S$280.6 million Fee Income: S$37.3 million AUM: S$7.8 billion MCT Portfolio: 4 properties Property value: S$4.0 billion GFA: > 279,000 sqm Gross revenue: S$267.2 million NPI: S$195.3 million DPU: cents Price per unit: S$1.22 (closing price as at 31 March 2014) 1 Earnings before interest and tax plus share of profits of associates and joint ventures

47 50 Mapletree Investments Pte Ltd Annual Report 2013/2014 Singapore Industrial 51 Operations Review Singapore Industrial K&S Corporate Headquarters Mapletree s Singapore Industrial business unit manages a diversified portfolio of industrial properties held by the Singapore-listed real estate investment trust (REIT), Mapletree Industrial Trust (MIT), as well as a development project under the Mapletree Group. As at 31 March 2014, the business unit has S$3.3 billion in assets under management (AUM). Its contribution to the Group s EBIT + SOA 1 and fee income for FY13/14 was S$77.9 million and S$40.5 million respectively. Mapletree Industrial Trust Delivering Growth In FY13/14, MIT s distributable income of S$166.1 million was 10.0% higher than the S$151.0 million for the same period last year. Distribution per unit (DPU) grew 7.4% yearon-year to 9.92 cents. Gross revenue and net property income for FY13/14 were S$299.3 million and S$214.7 million, which were 8.3% and 9.9% higher than the preceding year. The better performance was attributed to higher rental rates secured for leases across all property segments and higher occupancies in Flatted Factories. MIT s portfolio of 84 properties continued to demonstrate resilience in FY13/14. Average portfolio occupancy was 92.8%, with average portfolio rental rate increasing by 6.8% from S$1.61 per square foot per month (psf/mth) in FY12/13 to S$1.72 psf/mth in FY13/14. Through proactive lease management and marketing efforts, MIT achieved a healthy tenant retention rate of 73.9% for its large base of over 2,000 tenants who operate across a variety of trade sectors. As at 31 March 2014, overall portfolio size grew to S$3.2 billion from S$2.9 billion the year before. Enhancing Assets, Customising Solutions During the year, MIT completed two asset enhancement initiatives (AEI). The AEI at Woodlands Central Cluster was completed in Toa Payoh North 1 Cluster July 2013, adding 6,500 square metres (sqm) of gross floor area (GFA) to MIT s portfolio. A number of tenants in the biomedical sectors took up space in the newly created extension wing. Tenants in this sector collectively accounted for about 76% of the leased area in the cluster. The AEI at Toa Payoh North 1 Cluster saw the development of an eightstorey Hi-Tech Building and a five-storey amenity block, as well as the upgrading of existing buildings. About 13,900 sqm of GFA was added to MIT s portfolio. Following its completion in January 2014, the cluster has been repositioned as a high-tech industrial space for companies engaged in clean and light manufacturing. Leasing interest has been strong with commitment secured for about 78% of the space created. On 18 April 2013, MIT celebrated the groundbreaking of the new build-to-suit (BTS) data centre development for Equinix. With a total GFA of 35,700 sqm, the S$108 million development is located at one-north, a 200-hectare precinct in Singapore that houses world-class research facilities and business park buildings. It is designed to meet the Building and Construction Authority (BCA) Green Mark and Leadership in Energy and Environmental Design (LEED) standards. Equinix is committed to lease the building for at least 20 years. The long-term lease from a high-quality tenant will offer MIT income stability and lengthen the portfolio s weighted lease to expiry. In October 2013, MIT completed the BTS facility for Kulicke & Soffa (K&S), which was developed with environmentally sustainable features, and accorded the BCA Green Mark Gold Award. The grand opening of K&S Corporate Headquarters was held on 20 February K&S occupies 69% of the 26,500 sqm net lettable area under a 10-year lease with the option to renew for two more 10-year terms. The five-storey high-specification industrial building houses facilities for manufacturing, research and development, and a corporate office. Extracting Value from New Projects FY13/14 also saw MIT extend its track record in BTS developments through the development of a S$250 million BTS facility at its existing Telok Blangah Cluster for Hewlett-Packard Singapore, which was announced in March The proposed redevelopment will reposition the cluster as a high-tech industrial cluster, comprising two new buildings with high specifications. The purpose-built development will include facilities for manufacturing, product and software development as well as an office, occupying a total GFA of approximately 76,500 sqm. The redevelopment will be in two phases and is expected to complete in the first half of Hewlett-Packard Singapore has committed to fully lease the BTS facility for an initial period of 10.5 years. In March 2014, MIT announced the proposed acquisition of a four-storey light industrial building for approximately S$14.1 million 2 in the Changi North Industrial Estate. With a GFA of 6,290 sqm, the property is used mainly for manufacturing and warehousing. Accessible via major expressways, the property is near the Pasir Ris and Tampines regional centres as well as Changi Airport. Upon completion of the acquisition in 2Q 2014, this asset will provide a steady income stream and is expected to be accretive to MIT s DPU. Besides the MIT portfolio, the business unit is also responsible for a development project for the Mapletree Group. In December 2013, Mapletree successfully bid for a prime industrial site of about 11,780 sqm for S$120 million through the government land sale programme. Located within the Paya Lebar ipark, a 15-hectare modern industrial park in the central-east of Singapore, the plot is strategically located next to Tai Seng MRT station and has a permissible GFA of 41,230 sqm. Mapletree plans to develop a modern high-specification industrial facility with office and retail space that caters to businesses in high-value light industrial and research and development services. The development project is expected to complete in the first half of 2016 at a development cost of approximately S$250 million. Market Review and Outlook The Singapore economy grew 4.1% in 2013, higher than 2012 s 1.9% growth, on the back of strong growth in the manufacturing sector. The manufacturing sector grew by 0.3% in 2012 and 1.7% in 2013, due to the robust performance of the transport engineering and electronics clusters. The median rent for multi-user factory space island-wide in 1Q 2014 was flat at S$2.00 psf/mth from the same period last year. The median rent for business park space island-wide continued the upward trend to S$4.23 psf/mth in 1Q 2014, 4.4% higher than the same period last year. Although the pipeline of industrial space supply in the market is anticipated to increase, MIT s portfolio rent is expected to remain stable in the next 12 months. Woodlands Central Cluster References 1. Ministry of Trade and Industry, Singapore 2. JTC Corporation Singapore Industrial EBIT + SOA: S$77.9 million Fee Income: S$40.5 million AUM: S$3.3 billion MIT Portfolio: 84 properties Property value: S$3.2 billion GFA: 1.8 million sqm Gross revenue: S$299.3 million NPI: S$214.7 million DPU: 9.92 cents Price per unit: S$1.365 (closing price as at 31 March 2014) 1 Earnings before interest and tax plus share of profits of associates and joint ventures 2 Includes purchase consideration of S$12.0 million, land premium and other acquisition-related expenses

48 52 Mapletree Investments Pte Ltd Annual Report 2013/2014 Logistics 53 Operations Review Logistics Mapletree Benoi Logistics Hub, MLT s first redevelopment project The Mapletree Logistics business unit comprises logistics properties held by the Singapore-listed real estate investment trust (REIT) Mapletree Logistics Trust (MLT), as well as several development projects under the Mapletree Group. As at 31 March 2014, Mapletree s logistics properties have a combined value of S$5.3 billion. Mapletree Logistics EBIT + SOA 1 for FY13/14 was S$121.7 million, while fee income was S$43.3 million. MLT, which invests in logistics properties across Asia, continued to make strides in its efforts to rebalance and rejuvenate its portfolio during the year. The REIT manager, Mapletree Logistics Trust Management Ltd. was named Frost & Sullivan s 2013 Asia Pacific Logistics Infrastructure Developer of the Year, and one of Singapore s Top 50 Brands by Brand Finance for the second year running. MLT s first redevelopment project, Mapletree Benoi Logistics Hub (MBLH), received the Building and Construction Authority s Green Mark Platinum Award Singapore s highest certification for environmentally sustainable buildings. MBLH is the first naturally ventilated warehouse in Singapore to earn this accolade. Mapletree Logistics Trust Stable Returns, Resilient Portfolio In FY13/14, MLT continued to deliver stable and growing returns to unitholders. Distribution per unit (DPU) increased 7.1% year-on-year (y-o-y) to 7.35 cents, on the back of strong positive rental reversions, contributions from acquisitions and lower financing costs. Over the year, the Japanese Yen depreciated 20%. However, as income streams from Japan had been substantially hedged, the impact on distributable income to unitholders was largely mitigated. Gross revenue and net property income (NPI) achieved were S$310.7 million and S$267.6 million respectively, representing y-o-y growth of 5% and 4% excluding forex impact. MLT s overall portfolio remained strong with occupancy of 98.3% as at end-march 2014, while positive rental reversion of 17% was achieved for leases renewed during the year. The portfolio also enjoyed stability from its long lease structure with a weighted average lease term to expiry (by net lettable area) of 4.8 years. MLT s balance sheet remained healthy with a well-staggered debt maturity profile and an aggregate leverage of 33.3%. The weighted average borrowing cost was 1.9% while the average debt duration was around 3.6 years. To mitigate the impact of currency and interest rate fluctuations on distributable income, about 75% of MLT s total debt has been hedged into fixed rates, while approximately 88% of MLT s FY14/15 income stream has been hedged into or is derived in Singapore dollars. During the year, MLT continued to execute its strategy of rejuvenating existing assets to optimise returns, and rebalancing the portfolio towards higher growth markets in Asia. In November 2013, the redevelopment of MBLH was completed with a 100% lease commitment and provided a NPI yield of 9%. The modern, five-storey ramp-up warehouse spans a gross floor area (GFA) of 92,500 square metres (sqm), representing a four-fold increase from the original 22,500 sqm. MLT has identified 5B Toh Guan Road East in Singapore as its next redevelopment opportunity. This initiative will transform the asset from a three-storey warehouse with cargo lift to a six-storey ramp-up logistics facility, increasing GFA by 2.7 times to 63,500 sqm. Other asset enhancements include the installation of solar panels at four properties in Japan. The second phase, expected to commence in FY14/15, will see installations at five more properties in Japan. In line with portfolio rebalancing efforts, MLT enlarged its presence in South Korea with the acquisition of The Box Centre for KRW28.75 billion in July As part of its capital recycling strategy, MLT is seeking opportunities to divest lower yielding assets and reinvesting the proceeds into asset enhancements or acquisitions that provide higher yields. During the year, MLT completed the divestment of 30 Woodlands Loop in Singapore for a total consideration of S$15.5 million, recording a net gain of S$4.96 million which is being distributed to unitholders over eight quarters from 1Q FY13/14. Capital released from the divestment has been redeployed into acquiring higher yielding assets. Logistics Development Deepening Presence in Growth Markets The Mapletree Group continued to develop logistics parks and facilities in Asia to meet demand at locations where quality logistics space is lacking. To tap the increasing demand for modern logistics facilities in Hong Kong SAR, Mapletree secured a prime site of about 21,000 sqm in Tsing Yi for HK$1.69 billion. The planned modern, multi-storey ramp-up logistics facility will be Mapletree s first greenfield development in the territory. Located close to the Kwai Chung Container Terminal and well-connected to the city centre, the Hong Kong International Airport and the mainland China border, the site is a choice location for freight forwarding and local distribution. Scheduled for completion by 2017, active marketing is underway to secure pre-commitments for this project. In August 2013, Mapletree completed its sixth logistics development project in China, Mapletree Zhengzhou International Logistics Park. Strategically located with easy accessibility via key transportation networks, the 79,319 sqm GFA Grade-A facility has achieved near 100% occupancy. Mapletree also won land tender bids in Xi an and Wuxi, China, for the development of three logistics facilities with a combined floor area of approximately 240,000 sqm. Construction of the Wuxi project for a 124,000 sqm Grade-A logistics facility has commenced in March In addition, investment agreements have been signed for another eight up-and-coming logistics hubs across China spanning a total floor area of 557,000 sqm. These projects will further strengthen Mapletree s presence in China s growing logistics real estate space. Mapletree continues to focus on expanding its customer network, adding over 10 quality customers from diverse industries in FY13/14. Market Review and Outlook As uncertainty continued to persist in the global economy, Asian economies registered overall growth of 5.2% in 2013 compared with the previous year s 5.3%. Nevertheless, demand for logistics facilities in Asia remained robust. Coupled with the limited supply of quality logistics facilities, rentals and occupancies for logistics assets held steady, while competition for the acquisition of assets intensified. Asia is projected to grow at around 5.5% in 2014, supported by resilient domestic demand and a gradual pickup in exports. Mapletree will remain focused on driving organic growth from the existing portfolio through proactive leasing efforts and asset enhancements. At the same time, it will selectively pursue opportunities for strategic acquisitions while maintaining a disciplined capital management approach. As part of its capital recycling strategy, Mapletree will continue to seek opportunities for divesting lower yielding assets and reinvesting the proceeds into higher yielding assets. With a healthy balance sheet, Mapletree is well positioned to capitalise on opportunities when they arise. Reference 1. International Monetary Fund, World Economic Outlook, April 2014 Groundbreaking ceremony of a logistics facility in Wuxi, China Logistics EBIT + SOA: S$121.7 million Fee Income: S$43.3 million AUM: S$5.3 billion MLT Portfolio: 111 properties Property value: S$4.2 billion GFA: 2.9 million sqm Gross revenue: S$310.7 million NPI: S$267.6 million DPU: 7.35 cents Price per unit: S$1.045 (closing price as at 31 March 2014) 1 Earnings before interest and tax plus share of profits of associates and joint ventures

49 54 Mapletree Investments Pte Ltd Annual Report 2013/2014 China and India 55 Operations Review China and India VivoCity Shanghai, China Mapletree s China and India business unit seeks to capitalise on real estate opportunities arising from these large emerging economies. The business unit develops and manages a range of real estate assets in China and India, as well as two private real estate funds, Mapletree India China Fund (MIC Fund) and follow-on vehicle Mapletree China Opportunity Fund II (MCOF II). As at 31 March 2014, the business unit accounted for S$1.8 billion of the Group s total assets under management. The EBIT + SOA 1 and fee income contributions were S$1.4 million 2 and S$44.5 million respectively in FY13/14. China Mapletree is focused on investing in projects relating to the development of integrated mixed-use or single-use projects, as well as projects with value enhancement potential located in China s Tier I and Tier II cities. FY13/14 saw the closing of MCOF II at its hard cap, or maximum target, of US$1.4 billion in September Seeded by two mixed-use development projects in the Nanhai district of Foshan (Guangdong) and the Minhang district of Shanghai, MCOF II is one of the largest China-focused private real estate funds raised to date. In recognition of MCOF II s fundraising success, Mapletree was accorded Asia Capital Raise of the Year at the 2013 Global Private Equity Real Estate (PERE) Awards in March In Minhang, the mixed-use project (previously known as the Mapletree Minhang Development Project) is the Group s first development housing two of its signature brands Mapletree Business City (MBC) and VivoCity in a single location. To be constructed in MBC Shanghai, China phases from 2015 onwards, MBC Shanghai will comprise seven blocks of Grade-A office buildings while VivoCity Shanghai is planned as a one-stop shopping destination. The development is close to Hongqiao Transportation Hub, offering easy access to key destinations in Shanghai as well as the surrounding regions. With a total gross floor area (GFA) of 200,000 square metres (sqm), MBC Shanghai aims to meet the growing demand for decentralised, costeffective quality office space, while the adjoining VivoCity Shanghai caters to the needs of the working population at MBC Shanghai and over 300,000 residents within a three-kilometre radius. Designed to minimise environmental impact while maintaining a high level of comfort for the end-user, MBC Shanghai and VivoCity Shanghai were awarded the Leadership in Energy and Environmental Design (LEED) Gold and Silver level precertification respectively. This is the first international accolade for Mapletree s China developments, demonstrating the Group s commitment to extend environmentally sustainable building processes beyond Singapore. South Station Enterprise City (SSEC) is Mapletree s second integrated development in Foshan following Nanhai Business City (NBC). The development will offer over 500,000 sqm of GFA for office and business space. Comprising 23 premium office buildings ranging from nine to 21 storeys, the development will be completed in phases, with the first completion of six buildings in 4Q Strategically situated within the upcoming Sanshan New City project, SSEC will benefit from the increasing consolidation of high-tech services and financial industries in the area. The development s close proximity to the Guangzhou South Railway Station also allows for seamless connectivity to neighbouring cities, Guangzhou and Hong Kong SAR. Also in Foshan, Mapletree opened its second VivoCity in China with the completion of the four-storey, 100,000 sqm VivoCity Nanhai retail mall in May The mall is located within the larger mixed-use NBC development. Separately, following the closing of MCOF II, Mapletree has been actively sourcing suitable opportunities to invest the remaining fund equity. In October 2013, MCOF II successfully secured a new project in Foshan, known as King s Place, within NBC. The project comprises residential apartments, educational facilities, retail outlets and other amenities spread over a GFA of 445,000 sqm. India Through the MIC Fund platform, Mapletree made its first investment in India with the acquisition of Global Technology Park in The information technology (IT) park in Bangalore features a fully leased building with about 26,000 sqm of net lettable area (NLA). To capitalise on the growing demand for quality business space in Bangalore s IT sector, Mapletree will develop more than 160,000 sqm in NLA of ready-built and build-to-suit IT space. Constructed in phases, completion of the first phase is scheduled for February In recognition of its eco-friendly design, Global Technology Park was awarded the LEED India Gold level precertification in Market Review and Outlook China China recorded GDP growth of 7.7% in Growth is expected to decline, with the government targeting 7.5% growth for The retail sector performed well in 2013, and landlords with established track records in retail operations are expected to outperform others in Amid property cooling measures, the residential market stayed resilient, with transaction volumes and residential prices in major Chinese cities experiencing stable growth in 4Q The residential market is expected to remain positive on the back of sustained demand in Office rentals are expected to face continued downward pressure in 2014 with upcoming supply. South Station Enterprise City, China India India is expected to grow at 4.9% in FY13/14, and GDP growth is expected to increase further to 5.6%, with inflation easing slightly to 6% in The office market in Bangalore was relatively stable in Rentals and capital values are expected to hold steady in 2014, driven by sustained demand from the manufacturing and IT sectors. Bangalore, being one of the most popular locations for the IT sector, is expected to perform strongly. References 1. CBRE, China MarketView Q Jones Lang Lasalle Research, Asia Pacific Property Digest Fourth Quarter 2013 China and India EBIT + SOA: S$1.4 million Fee Income: S$44.5 million AUM: S$1.8 billion Global Technology Park, India 1 Earnings before interest and tax plus share of profits of associates and joint ventures 2 Including share of associates revaluation gains

50 56 Mapletree Investments Pte Ltd Annual Report 2013/2014 North Asia 57 Operations Review North Asia Festival Walk, Hong Kong SAR Mapletree s North Asia business unit focuses on growing the Group s commercial real estate business in the mature markets of North Asia including Hong Kong SAR, Japan and South Korea. It is also exploring investments in new markets outside Asia such as Australia, Europe and the USA, as well as new asset sectors. Singapore-listed real estate investment trust (REIT) Mapletree Greater China Commercial Trust (MGCCT) also comes under this business unit. As at 31 March 2014, the business unit s portfolio had a combined value of S$5.6 billion. These properties contributed S$69.5 million to the Group s EBIT + SOA 1 and S$36.5 million to fee income. Mapletree Greater China Commercial Trust Exceeding Forecasts Following its listing on 7 March 2013, MGCCT delivered a distribution per unit (DPU) of cents 2, exceeding its forecast 3 at its initial public offering (IPO) by 13.1%. Gross revenue of S$267.6 million 2 and net property income of S$216.2 million 2 also surpassed forecasts by 7.4% and 9.7% respectively. Raising total gross IPO proceeds of S$1.68 billion, MGCCT remains the largest REIT IPO in Singapore to date. In recognition of its fundraising success, MGCCT was accorded the Best Capital Raising Strategy of the Year at the Real Estate Investment World Asia Awards for Excellence and Best REIT at The Asset Magazine s Triple A Regional House and Deal Awards. It was nominated for Best Investor Relations in the IPO category at the IR Magazine Awards and Conference-South East Asia MGCCT s portfolio comprises Festival Walk, a territorial retail mall with an office component in Hong Kong SAR, and Gateway Plaza, a Grade-A office building with a retail podium in Beijing. Located in the upscale residential area of Kowloon Tong, Festival Walk continued to enjoy full occupancy, with expiring retail leases renewed or re-let at a positive rental uplift of 20% in FY13/14. During the year, 1 Earnings before interest and tax plus share of profits of associates and joint ventures 2 For the period from Listing Date of 7 March 2013 to 31 March The forecast is based on MGCCT s IPO Prospectus dated 27 February 2013 Gateway Plaza, China Festival Walk welcomed new tenants such as Ted Baker, Just Cavalli, Qeelin, Love Moschino and Glasstique, and organised promotional activities within the mall such as the display of a life-size Breitling airplane, car shows and events, as well as the Spring Fashion Maze. A popular shopping destination among locals and tourists from Mainland China, Festival Walk was ranked Top 10 Favourite Shopping Malls by Hong Kong Economic Times, and was voted the favourite Hong Kong brand in the shopping mall category by Southern Metropolis Daily, a Guangzhou newspaper. Festival Walk also received the Yahoo! Emotive Brand Awards in the shopping centre category, for its strong emotional appeal and popularity among the 2.5 million voters who participated in the survey. Situated within Beijing s prime Lufthansa area, Gateway Plaza is a premier Grade-A office building. As at 31 March 2014, it had a committed occupancy of 97.5% and enjoyed positive rental reversions of 79% for leases expiring during the year. MGCCT will carry out planned asset enhancement initiatives for Gateway Plaza in FY14/15 to further strengthen its appeal. Hong Kong SAR In January 2014, Mapletree won a government land tender for a prime commercial site in Kwun Tong, Kowloon East, for HK$3.769 billion. With an existing office cluster, the Kowloon East area has been earmarked as Hong Kong SAR s new Central Business District (CBD) and has seen a wave of relocation activities as companies begin to consolidate their operations there. Located within walking distance from Ngau Tau Kok MTR station and spanning 5,112 square metres (sqm), the site will be developed into a Grade-A office building with a gross floor area of 61,344 sqm. At a total development cost of approximately HK$6 billion, Mapletree s development will cater to the growing demand for quality office space for corporate headquarters and middle office operations. Completion is expected at the end of Japan In FY13/14, Mapletree continued to strengthen its presence in Japan, building on local partnerships and on-the-ground support to facilitate further growth. With four office buildings in Tokyo as seed assets, Mapletree is set to close its first Japan-dedicated office fund, which is focused on investing in predominantly income generating office space located primarily in or around the fringe of Tokyo CBD, within the Greater Tokyo area, and other major cities. In addition, Mapletree is close to syndicating a Japan Logistics Development Fund to capture the growing demand for modern logistics space driven by the domestic third-party logistics (3PL) trend and expansion of the e-commerce industry. New Markets and New Sectors To further expand its business and grow its earnings, Mapletree is exploring investment opportunities in markets such as Australia, Europe and the US where the Group can scale up while balancing its existing Asia exposure. These markets are currently at different stages of economic recovery. As the real estate sectors in these markets are highly liquid and transparent with sizable investmentgrade stock, they present a stable income proposition given that their yield spreads over risk-free rates are attractive. Additionally, Mapletree is exploring investments in new asset sectors to complement its existing product offerings. This will deepen and broaden its business reach in Asia and in the new markets. Market Review and Outlook Hong Kong SAR s economy grew 2.9% in 2013 with growth projected at 3% to 4% in Retail sales performed well and grew 11% in Backed by strong tourist arrivals from Mainland China, rising retail sales are expected to drive rentals up by 5% in In the office market, rentals declined 1.3% quarter-on-quarter (q-o-q) in 4Q Leasing demand is expected to pick up slightly as the global economy improves. Coupled with low vacancy and limited supply, office rents are expected to hold steady in China s economy grew 7.7%, better than the official target of 7.5%. Utilised foreign direct investment, according to China s Ministry of Commerce, increased 5.3% year-on-year to US$117.6 billion in China s economy is forecasted to grow between 7.0% and 7.5% in 2014 as the leadership focuses on enacting structural reforms to put China on a more sustainable growth path. Though overall Grade-A office rental growth in Beijing is expected to slow, demand will continue to remain stable amidst tight supply, as is projected for the next two years. The Japanese economy grew 1.5% in 2013 due to improvements in exports and private consumption. GDP growth for 2014 is expected to remain relatively unchanged at 1.4%. Office rentals in Tokyo increased 0.2% q-o-q in 4Q 2013, backed by strong demand in consumer-related industries such as IT and e-commerce. Given limited supply and low vacancy, office rentals are expected to increase in 2014, with well-located and high-specifications properties experiencing the largest increase. In the logistics market, Greater Tokyo rentals remained flat in 4Q Against declining vacancy, rentals are projected to increase in 2014, driven by demand from the e-commerce, apparel and pharmaceuticals sectors. References 1 CBRE, Asia Pacific Office MarketView Q CBRE, Japan Office MarketView Q CBRE, Japan Industrial & Logistics MarketView Q Jones Lang Lasalle Research, Asia Pacific Property Digest Fourth Quarter Hong Kong Trade Development Council 6 Census & Statistics Department 7 International Monetary Fund North Asia EBIT + SOA: S$69.5 million Fee Income: S$36.5 million AUM: S$5.6 billion MGCCT Portfolio: 2 properties Property value: S$4.7 billion Gross revenue: S$267.6 million NPI: S$216.2 million GFA: 220,000 sqm DPU: cents Price per unit: S$0.815 (closing price as at 31 March 2014)

51 58 Mapletree Investments Pte Ltd Annual Report 2013/2014 Operations Review South East Asia South East Asia 59 and CMM is targeting to close a CMREF2 conventional tranche, which will focus on development projects and complement the Shariah tranche. income and also entitle Mapletree to receive a share of the projects development profits. Market Review and Outlook Following investors approval, the fund life for CMREF1 was extended for another two years to December The fund has successfully divested most of its investments, with remaining fund equity invested in four projects: Vietnam Vietnam s economy held steady in 2013 with GDP growth at 5.4%, compared to 5% in With the government focusing on sustainable and balanced growth, growth is projected at 6% for CentrePoint, Vietnam Mapletree s South East Asia (SEA) business unit focuses on acquiring income-yielding investment properties in South East Asia (excluding Singapore) to build a scalable capital management platform that generates sustainable returns. SEA manages three private real estate funds, CIMB-Mapletree Real Estate Fund 1 (CMREF1), CIMB-Mapletree Real Estate Fund 2 Shariah (CMREF2 Shariah) and Mapletree Industrial Fund (MIF). SEA also seeks to generate income from activities that are not suitable for a capital management platform but add diversity to the Group s income sources, such as mezzanine interest income, development profits and gains on divestment. As at 31 March 2014, SEA owned and managed S$677.9 million assets and contributed S$5.0 million to Mapletree s EBIT + SOA 1. SEA s footprint spans the retail, office, serviced apartments, industrial and mixed-use sectors in Vietnam and Malaysia. It is also exploring opportunities in Indonesia and the Philippines. Mapletree Business Binh Duong, Vietnam Vietnam In Ho Chi Minh City (HCMC), development of the Saigon South Place mixed-use project located in the upscale District 7 is underway. Its 65,000 square metres (sqm) retail component, SC VivoCity, is set to open in early Construction of the offices and serviced apartments is expected to be completed in stages from 2016 onwards. In FY13/14, Mapletree acquired CentrePoint, an office property on the fringe of HCMC s Central Business District (CBD). The 15-storey building is easily accessible to the airport and city centre, and enjoys a strong tenant base of multinational corporations such as HSBC, Bayer, Li & Fung and Cap Gemini. In Binh Duong New City, a 45-minute drive from HCMC, Mapletree enjoys 100% occupancy at Phase 1A and Phase 1B of the Ready-Built Business Space (RBBS) units at its Mapletree Business Binh Duong, a 75-hectare integrated business and industrial park. Phase 1C comprising 23,000 sqm of RBBS units was completed in May 2014 and received substantial leasing pre-commitment, as investor interest in Binh Duong is picking up. Mapletree also manages Pacific Place, a premier office, serviced apartment and retail property in Hanoi s CBD. Malaysia Through CIMB-Mapletree Management Sdn Bhd (CMM), a joint venture with CIMB Group, Mapletree manages CMREF1 and CMREF2 Shariah. Both closed-end private funds focus on real estate in Malaysia. CMREF1 is in its divestment phase while CMREF2 Shariah achieved a first close in June 2013 with MYR140 million in committed equity. The latter focuses on Shariah-compliant projects Menara CIMB is a 41-storey Grade-A office building development in Kuala Lumpur (KL).Completed in January 2013 and currently enjoying strong occupancy at 87%, it is 60% owned by CMREF1 with the remaining 40% stake held by Mapletree. Also in KL, Patimas Technology Centre is a data centre within Technology Park Malaysia, and is leased to FTMS Consultants as a higher education campus and to Patimas Computers Berhad for data centre operations. Jaya Shopping Centre is located in Petaling Jaya and was completed in early The seven-storey mall had preleased 80% of the leasable area when it opened for business in 2Q Giant Seberang Prai in Penang is leased to hypermarket operator GCH Retail. CMREF2 Shariah is a follow-on fund to CMREF1. With MYR140 million of committed capital, it will seek investment opportunities to deploy the capital raised, while engaging other potential investors for a second close. The conventional tranche is targeting to achieve a first close in the second half of To further diversify earnings, the SEA business unit committed to invest in two residential projects in KL via mezzanine loans during the year. These loans will generate regular Fundamental drivers of Vietnam real estate such as the shortage of quality real estate assets, a growing middle class and rapid urbanisation remain intact. Despite the challenging economic climate, HCMC office market rentals rose 4% quarter-on-quarter in 4Q Serviced apartment rentals remained flat in both HCMC and Hanoi, while retail rentals declined in Hanoi in the same period. The 2014 outlook for development and investment opportunities in HCMC and Hanoi CBDs remains positive. Malaysia Malaysia recorded 4.7% GDP growth in 2013, lower than 5.6% in The property market is expected to be muted in 2014 with new fiscal tightening measures. Demand for KL office space remained steady in 2013, as witnessed by the stable occupancy rate. As a result, rentals and capital values changed marginally during the year. In 2014, 4.5 million square feet (418,000 sqm) of office space will be completed. Competition for tenants in the office sector is expected to be challenging in In the residential and retail markets, average rents and capital values remained stable in 4Q Weakening consumer sentiment following government subsidy cuts and the imposition of Goods and Services Tax Jaya Shopping Centre, Malaysia are expected to lower retail sales and limit retail rental growth in Property cooling measures and tighter funding guidelines are likely to depress average residential rentals. Nonetheless, new properties in sought-after locations with high quality specifications are expected to command higher rentals and prices. References 1. CBRE, Asia Pacific Office MarketView Q Jones Lang Lasalle Research, Asia Pacific Property Digest Fourth Quarter DTZ Property Times, Kuala Lumpur Q South East Asia EBIT + SOA: S$5.0 million Fee Income: S$1.0 million AUM: S$677.9 million 1 Earnings before interest and tax plus share of profits of associates and joint ventures

52 60 Investment Activities & Fund Management Mapletree s real estate capital management business focuses on the management of public-listed real estate investment trusts (REITs) and private equity real estate funds. With a range of real estate investment products, Mapletree offers both institutional and retail investors different options to meet their varying investment needs and risk profiles. Since establishing its first managed platform in 2005, Mapletree has managed or continued to manage 11 capital management vehicles, offering investors exposure to the retail, office, residential, industrial and logistics real estate asset classes across Asia. The Group currently manages four Singapore-listed REITs and five private funds with a combined funds under management of over S$13 billion. As at 31 March 2014, the Group had assets under management (AUM) of S$24.6 billion, of which 74% are third-party managed assets. In line with this growth, the Group s fee income increased to S$203.2 in FY13/14. Third-Party AUM Growth (S$ million) h3 FROM S$6.1 billion TO S$18.2 billion 11,401 An Operator-Manager Mapletree distinguishes itself as an operatormanager and emphasises a disciplined investment approach that focuses on the delivery of consistent and high returns. With its real estate development, investment and operational asset management capabilities, Mapletree is strategically positioned to seize attractive investment opportunities in the major asset classes across the real estate value chain. Mapletree s integrated functions, together with its proactive approach to asset management, enable the Group to create and extract significant intrinsic values across real estate projects. With 11 offices across Asia, Mapletreemanaged platforms benefit from the Group s decade-long operational and financial experience, broad real estate industry knowledge, robust network of local relationships, and a strong balance sheet, to identify and capitalise on investment opportunities, delivering a proven investment performance. 16,744 18,224 To ensure strong alignment of interests, Mapletree typically maintains or commits to about one-third of the total equity in each platform. Surpassing Expectations In August 2013, Mapletree held a final closing for Mapletree China Opportunity Fund II (MCOF II). Exceeding its initial target of US$1.1 billion and closing at its hard cap of US$1.4 billion, MCOF II is one of the largest China-focused private equity real estate funds raised to date. Seeded by two mixed-use development projects, the fund continues the Group s successful strategy of investing in the development of integrated mixed-use or single-use projects as well as in projects with value enhancement potential in China s Tier I and Tier II cities. MCOF II is Mapletree s second China-focused private fund and a follow-on investment vehicle from the Mapletree India China Fund (MIC Fund). MCOF II received strong investor support, where the fund was able to hold a final close within 10 months from its marketing launch and two months from its first closing in June MCOF II attracted investors from North America, Europe, the Middle East and Asia. The majority of investors were new relationships for the Group, in addition to repeat investors from the earlier investment vehicle. A strong testament to Mapletree s capital management capabilities and international recognition of MCOF II s fundraising success was the accolade of Asia Capital Raise of the Year at the 2013 Global Private Equity Real Estate (PERE) Awards. 7,903 6,076 FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14

53 Mapletree Investments Pte Ltd Annual Report 2013/2014 Investment Activities & Fund Management 61 Asia Capital Raise of the Year ASIA CAPITAL RAISE OF THE YEAR In March 2014, Mapletree was accorded Asia Capital Raise of the Year at the 2013 Global Private Equity Real Estate (PERE) Awards. This was for the successful launch of Mapletree China Opportunity Fund II (MCOF II). With an initial target of US$1.1 billion, the fund held its final close at its maximum target of US$1.4 billion, giving rise to one of the largest China-focused private real estate funds to-date. Seeded by two mixed-use development projects, MCOF II received strong investor support from North America, Europe, the Middle East and Asia, and closed within 10 months from its marketing launch. The fund continues Mapletree s successful strategy of investing in the development of integrated mixed-use or single-use projects as well as in projects with value enhancement potential in China s Tier I and Tier II cities. During the year, Mapletree achieved another milestone with the first closing of CIMB- Mapletree Real Estate Fund 2 Shariah (CMREF2 Shariah) at MYR140 million in June CMREF2 Shariah is Mapletree s second Malaysia-focused private fund and a follow-on investment vehicle to CIMB-Mapletree Real Estate Fund 1 (CMREF1). CMREF2 Shariah aims to maximise total returns on capital, primarily through rental income and capital gain through Shariah-compliant property investments and development projects in Malaysia. In addition to MCOF II and CMREF2 Shariah, Mapletree manages three other private funds, MIC Fund, CMREF1 and Mapletree Industrial Fund (MIF), with an aggregate capital commitment totalling approximately US$3 billion. While Mapletree continues to formulate new vehicles to meet investor appetite, it is mindful to continue delivering for its existing private funds, with those that commenced prior to 2013 achieving a positive gross internal rate of return 1. On the REIT front, the Group s four listed entities, Mapletree Greater China Commercial Trust (MGCCT), Mapletree Commercial Trust (MCT), Mapletree Industrial Trust (MIT) and Mapletree Logistics Trust (MLT), turned in a good performance in FY13/14. MGCCT reported a distribution per unit (DPU) 2 of cents, outperforming the forecast at its initial public offering (IPO) by 13.1%. MCT, MIT and MLT also registered year-on-year DPU growth of 13.6%, 7.4% and 7.1%, delivering DPU of 7.37 cents, 9.92 cents and 7.35 cents respectively. A Growing Reach Mapletree has successfully scaled up its capital management business and is committed to supporting this business growth. The Group s success in raising capital from both public and private markets speaks of its ability to create and extract value from its real estate investments. The Group will continue to explore investment opportunities and strategies including those in Australia, Japan and Vietnam. With a stronger capital management platform and proven investment approach backed by a good track record, Mapletree is well positioned to further expand its AUM and add complementary businesses to its stable. 1 As at 31 March For the period from listing date of 7 March 2013 to 31 March 2014

54 62 Mapletree s Private Funds and REITs Name of Fund/REIT Brief Description Launch/ Listing Date Investment Universe Investment Focus Strategy Fund Life (Years) Fund Size/ NAV 1 Private Funds Existing Mapletree China Opportunity Fund II (MCOF II) A private fund established with the objective of maximising total returns by investing in a portfolio of development projects and projects with value enhancement potential located in Tier I and Tier II cities in China China Commercial, Industrial, Residential & Mixed-use Opportunistic/ Value add 9 US$1,400m Mapletree India China Fund (MIC Fund) A private fund established with the objective of maximising total returns by acquiring, developing and realising real estate projects in India and China India & China Commercial & Mixed-use Opportunistic/ Value add 10 US$1,158m Mapletree Industrial Fund (MIF) A private fund established with the objective of investing in industrial properties in Asia for yield and appreciation Pan Asia Industrial Core+/ Value add 7 US$299m CIMB Mapletree Real Estate Fund 2 Shariah (CMREF2 Shariah) A Shariah-compliant private fund with the objective of maximising total returns on capital, primarily through rental income and capital gains from property investments and development projects in Malaysia Malaysia Commercial & Education Facilities Core+/ Value add 7 MYR140m 2 CIMB Mapletree Real Estate Fund 1 (CMREF1) A Malaysia-focused private fund with a mandate to make direct investments in development and/ or investment assets, real estate investment products and listed real estate securities Malaysia Commercial & Residential Core+/ Value add 8 MYR402m private fully realised Mapletree Industrial Trust - Private (MITP) A private fund that held the S$1.71 billion of industrial assets acquired from JTC in Singapore Industrial Core+/ Value add Realised S$708m Fully realised and achieved a 1.5x multiple and net IRR 3 of 19.1% against a targeted 15.0%.

55 Mapletree Investments Pte Ltd Annual Report 2013/2014 Investment Activities & Fund Management 63 Name of Fund/REIT Brief Description Launch/ Listing Date Investment Universe Investment Focus Strategy Fund Life (Years) Fund Size/ NAV 1 Mapletree Real Estate Mezzanine Fund (MREM) A private fund that focused on originating and executing real estate mezzanine loans in Asia. Fully realised and achieved a 1.2x multiple and net IRR 3 of 25.3% against a targeted 10% Pan Asia All Mezzanine Realised S$90m Public Listed REITs Mapletree Greater China Commercial Trust (MGCCT) REIT investing in a diversified portfolio of income-producing commercial real estate in the Greater China 4 region Greater China Commercial Public REIT S$2,840m Mapletree Commercial Trust (MCT) Mapletree Industrial Trust (MIT) Mapletree Logistics Trust (MLT) REIT investing on a longterm basis in a diversified portfolio of office and retail properties in Singapore. REIT investing in a diversified portfolio of income-producing properties used for industrial purposes in Singapore. The first Asia-focused logistics REIT in Singapore with the principal strategy of investing in a diversified portfolio of incomeproducing logistics real estate and real estate related assets in Asia Singapore Commercial Public REIT S$2,426m 2010 Singapore Industrial Public REIT S$2,029m 2005 Pan Asia Logistics Public REIT S$2,382m 1. Total fund size for private funds; NAV for listed REITs as at 31 March Fund size at first closing 3. After expenses, taxes and base fee but before carried interest 4. MGCCT s investment mandate includes Hong Kong SAR, Tier I cities in China (Beijing, Guangzhou and Shenzhen) and key Tier II cities in China (Chengdu, Chongqing, Foshan, Hangzhou, Nanjing, Suzhou, Tianjin, Wuhan and Xi an)

56 64 Sustainability Corporate Social Responsibility Mapletree strives to incorporate sustainable practices in its operations and invest in communities, as it broadens its business reach across Asia. To this end, it seeks to generate shared positive outcomes through corporate social responsibility (CSR) initiatives underpinned by a Group-wide framework, which articulates guidelines for areas of support. The framework is focused on two broad objectives. To empower individuals by creating social impact through the support of educational and healthcare causes to alleviate poverty. CSR Board Committee Membership Name Mr Edmund Cheng Wai Wing Mr Hiew Yoon Khong Mr Cheah Kim Teck Mr Wee Joo Yeow To enrich communities by deriving positive outcomes for the Group s business and the environment through sustainable operational practices. Efforts include environmental conservation and support for the arts. CSR Board Committee (for FY13/14) Chairman, Mapletree Investments Pte Ltd (MIPL) Group Chief Executive Officer, MIPL Mapletree Logistics Trust Management Ltd board member Mapletree Industrial Trust Management Ltd board member Steering Mapletree s CSR efforts is a Board Committee comprising senior management and members of Mapletree s board as well as the boards of its real estate investment trusts (REITs). Meeting at least twice a year, the committee provides strategic direction and makes decisions on CSR programmes. To ensure good governance as well as foster diversity and an exchange of views, board representatives from the Mapletree REITs are rotated on a two-year basis. Mapletree aims to align its CSR efforts with business growth and performance. A portion of its profits is channelled to the Mapletree Shaping & Sharing corporate giving programme. Each year, S$1 million is set aside for the programme to fund Mapletree s CSR initiatives. This increases to S$2 million when the Group s profit after tax and minority interests (PATMI) for the year exceeds S$300 million. In FY13/14, Mapletree continued to incorporate sustainable practices and invest in the communities it operates in, both locally and overseas. Mr Ho Seng Chee Group Chief, Corporate Services, MIPL Education & Healthcare Singapore In FY13/14, Mapletree contributed S$500,000 to each of the bursary endowment funds of Singapore Management University (SMU) and Singapore University of Technology and Design (SUTD). The bursaries are open to students from all courses of study and based purely on financial needs. Mapletree had established similar bursaries with Nanyang Technological University and National University of Singapore in FY12/13. To date, Mapletree has contributed S$2 million to Singapore tertiary institutions through their SMU-hosted event in appreciation of Mapletree s contribution (photograph courtesy of SMU)

57 Mapletree Investments Pte Ltd Annual Report 2013/2014 Corporate Social Responsibility 65 MBC is Singapore s first Healthy Workplace Ecosystem respective endowment funds, which benefit 25 financially needy students annually and in perpetuity. During the year, Mapletree continued to support Boys Town Home (BTH) by contributing S$115,000 to fund three of BTH s programmes for one year. Apart from continuing support for BTH s residential youth programme that provides basic necessities such as food and clothing to over 60 socially and financially disadvantaged boys, Mapletree expanded its support to include sports and art therapy programmes to engage the boys in a more holistic manner. Tapping its large customer network, Mapletree facilitated the visit of culinary students from its corporate giving beneficiary, Assumption Pathway School (APS), to the renowned Jamie s Italian restaurant at VivoCity. The visit provided the students with valuable insights and firsthand industry experience. Mapletree had previously made a cash contribution to APS in-house residential programme in FY11/12. In addition, for the third year running, Mapletree organised a blood donation drive at MBC together with The Coca Cola Company and The Singapore Red Cross Society. The two-day event received overwhelming support from staff and the MBC working community. A total of 151 donations was collected, a 40% increase from Mapletree provided complimentary use of MBC premises, while staff from its internal recreation club provided on-site logistics support. China In FY12/13, Mapletree pledged RMB5 million each to low-income residents in the districts of Minhang (Shanghai) and Nanhai (Foshan, Guangdong). The contributions will help to meet their healthcare and educational needs over five years. In Nanhai, funds were disbursed in 2013 to provide the handicapped and sick with financial aid for rehabilitation, hearing aids, wheelchairs and other healthcare needs. In addition, needy students from low-income households received education assistance. For its community efforts, Mapletree received the Silver award at the Rose Charity Cup conferred by Foshan City Poverty Alleviation Initiative Development Group. In Minhang, a total of 167 individuals and households benefitted from Mapletree s contribution in 2013, with over RMB800,000 going towards helping low-income households cope with illnesses. Beyond financial giving, Mapletree also encouraged its China-based staff to participate in community activities. In January 2014, a team of staff volunteers visited 10 beneficiary households in Minhang to present them with gift hampers in celebration of the Lunar New Year. Mapletree s China offices and partner organisations also held charity auctions in FY13/14 to raise funds for the underprivileged in the local communities. In recognition of Mapletree s contributions to the district, Mapletree was named Charity Star by the Minhang Division of Shanghai Charity Foundation in March Earlier in FY11/12, Mapletree pledged RMB1 million to Xidian University, a tertiary institution located near VivoCity Xi an, Mapletree s first VivoCity overseas. The contribution provides financial assistance to students from low-income households over five years. Ranging from RMB2,000 to RMB4,000 per student, the contribution has benefitted 210 needy students since Mapletree receiving the Minhang Charity Star award Mapletree further leverages its role as a leading business landlord and reaches out to working populations, both staff and tenants, to help promote healthy living. During the year, Mapletree, in partnership with the Health Promotion Board, made its flagship Mapletree Business City (MBC) the first Healthy Workplace Ecosystem in Singapore. By working with F&B tenants, MBC introduced healthier food options and organised fitness programmes such as regular group runs and complimentary lunchtime health talks for the 10,000-strong working community at MBC. The aim is to encourage working adults to adopt healthier lifestyles Contributions in Nanhai Beneficiaries Hearing aids 100 recipients Wheelchairs and other equipment 100 recipients Treatment and rehabilitation equipment 3 rehabilitation hospitals Rehabilitation treatment for severely disabled patients 31 patients Assistance to households facing serious illnesses 10 households Schooling related vouchers for needy students 1,000 recipients Educational assistance 51 students Insurance for single-parent families 161 families

58 66 Environment As a real estate developer, Mapletree is committed to using environmentally sustainable designs for its projects. Energy efficiency also translates into cost savings for both Mapletree and its tenants. For its Singapore-based developments, Mapletree strives to achieve the Green Mark accreditation issued by the Singapore Building and Construction Authority (BCA). To date, Mapletree has achieved 14 BCA awards for its Singapore assets and two accreditations for its overseas developments. In addition, Mapletree also achieved the Leadership in Energy and Environmental Design (LEED) accreditation, the international standard for green buildings, for five of its developments. Country Name of Property LEED Level Singapore Tata Communications Exchange LEED Gold Award U.S. Green Building Council Singapore Mapletree Business City II Precertification for LEED for Core and Shell Development Gold Level U.S. Green Building Council China Mapletree Business City Shanghai (MBC Shanghai) Precertification for LEED for Core and Shell Development Gold Level U.S. Green Building Council China VivoCity Shanghai Precertification for LEED for Core and Shell Development Silver Level U.S. Green Building Council India Global Technology Park Precertification for LEED India for Core and Shell Development Gold Level Indian Green Building Council As Mapletree s flagship development, MBC has garnered international and local recognition for its eco-friendly design and building sustainability. MBC performed well at the Federation Internationale des Adminstrateurs de Bien-Conseils Immobiliers (FIABCI) Singapore Property Awards, emerging winner in 2011 and runner-up in 2012 in FIABCI Prix d Excellence Awards Sustainable Development category. Apart from its eco-friendly design, MBC also offers facilities that serve people from differing age groups and abilities. In recognition of its userfriendly features, MBC won the BCA Universal Design Mark Gold PLUS award in Mapletree seeks to achieve similar standards for its overseas developments. At its latest project in Minhang (China), both MBC Shanghai and VivoCity Shanghai were awarded the LEED Gold and Silver level precertification respectively, for their water and energy saving features. In Japan, Mapletree commenced a solar panel power generation project for properties under the Mapletree Logistics Trust (MLT) platform. Solar energy generated from the properties will be sold to the national power grid, adding a new income stream to MLT while enabling these properties to enjoy significant energy cost savings. The solar panel installations at Mizuhomachi Centre, Zama Centre, Atsugi Centre and Kashiwa Centre were completed in FY13/14. Installations will commence at five more properties in FY14/15. In addition to green design, Mapletree has introduced ground-level measures such as programming office computers and laptops to sleep mode when idle, switching off non-essential office lights during lunchtime, and using sustainable paper sources for publications. To encourage tenants to go green, Mapletree incorporated environmentally-friendly practices into their fitting-out and operations guidelines. During the annual Earth Hour and Earth Day, Mapletree rolled out initiatives such as raising air-conditioning temperatures and reducing non-essential energy-consuming activities at its commercial properties in Singapore.

59 Mapletree Investments Pte Ltd Annual Report 2013/2014 Corporate Social Responsibility 67 Arts in the City a series of complimentary arts performances at MBC Arts Mapletree recognises the value of design and the arts in communities. This is evident in the installation of artworks in the public areas of its Singapore properties, all of which help to enrich the developments while offering a showcase platform for artists and designers. Mapletree commissioned a series of art books featuring its collection of installed artworks and other artefacts. The final book, Artefacts from Sea to Land was produced in FY13/14 and showcased articles from Singapore s maritime past installed around Mapletree s HarbourFront Precinct. The earlier books, Art in the City and Art on the Waterfront, featured the sculpture collection at MBC, and VivoCity s art installations from the Singapore Biennale 2006, respectively. Mapletree also regularly organises complimentary arts performances at MBC. Launched in 2013, Arts in the City is a series of lunchtime arts performances and workshops. This is a collaboration between Mapletree and the Singapore National Arts Council (NAC) under the latter s Arts@Work programme, which seeks to bring arts to the workplace and provide working adults with more opportunities for artistic engagement. Arts in the City entertaining the MBC lunchtime crowd Through Arts in the City, Mapletree is able to add to the vibrancy of MBC as a business locality and create opportunities for MBC occupants to share artistic and cultural experiences. In July 2013, the MBC community was entertained by a life-size puppetry performance, and its working population was able to take a breather and create key chains from recyclable materials. During the year, the Mapletree malls of VivoCity and Alexandra Retail Centre (ARC) in Singapore, and Festival Walk in Hong Kong SAR, provided venue sponsorship for arts-related causes. In recognition of the Group s contribution to the arts in Singapore, Mapletree has consistently received the NAC s annual Patron of the Arts Awards.

60 68 Sustainability Corporate Governance As Mapletree continues its regional expansion, the importance of maintaining good corporate governance practices to ensure investor confidence and business integrity becomes more entrenched in its activities. Although Mapletree is not listed on a stock exchange and therefore not subject to mandatory disclosures, it ascribes voluntarily to some of the core principles set out in the Code of Corporate Governance (Code) issued by the Monetary Authority of Singapore. A) Board Matters Board s Conduct of its Affairs Mapletree applies the principle that an effective Board of Directors is one constituted with the right core competencies and diversity of experiences for the growth and success of the Group. The collective wisdom of the Board provides strategic guidance and diverse insights to support Management, and Management is accountable to the Board. Board Committee Membership The Board comprises eight members, of whom seven are Non-Executive Directors and Independent Directors 1. Board committees are also constituted to assist the Board in discharging their duties. The following sets out the composition of the Board and the various Board committees. Mapletree s Directors comprise business leaders and distinguished professionals in their respective fields and are appointed based on their professional calibre, experience and stature, with the overall consideration that their collective experiences will bring breadth and depth to the Board s deliberations. Every Director is expected to act in good faith and consider the interests of the Group at all times. The Board meets at least once every quarter to assess Mapletree s business performance and key activities, review strategic policies and significant acquisitions and disposals. Name Board of Directors Audit and Risk Committee (AC) Executive Resource and Compensation Committee (ERCC) Investment Committee (IC) Transaction Review Committee (TRC) Mr Edmund Cheng Wai Wing Chairman Chairman Chairman Mr Lee Chong Kwee Member Chairman Chairman Mr Paul Ma Kah Woh Member Member Member Member Member Mr Tsang Yam Pui Member Member Mr Wong Meng Meng Member Member Member Mr David Christopher Ryan (2) Member Member Mr Samuel N. Tsien (3) Member Mr Frank Wong Kwong Shing (4) Member Member (4) Ms Chan Wai Ching Co-opted Member Mr Hiew Yoon Khong Member Group CEO & Ex-officio Member Mr Wong Mun Hoong Group CFO & Ex-officio Member Notes: (1) Two new Directors were appointed to the Board during the year, namely Mr David Christopher Ryan and Mr Samuel N. Tsien. (2) Mr David Christopher Ryan was appointed as a Director on 18 March (3) Mr Samuel N. Tsien was appointed as a Director on 18 March (4) Mr Frank Wong Kwong Shing resigned as a Director on 31 March 2014.

61 Mapletree Investments Pte Ltd Annual Report 2013/2014 Corporate Governance 69 The Board is updated on any material change to relevant laws, regulations and accounting standards by way of briefings by professionals or by updates issued by Management. All Directors provide, and are also provided with the other Directors disclosures of interests. Board Composition and Balance Mapletree applies the principle that at least one-third of its Directors are independent and the majority of them are non-executive. To this end, other than the Group Chief Executive Officer (Group CEO) who is an Executive Director, all Board members are Independent Directors. This generates broad and in-depth deliberations between the Board and Management, which provides Management with external, diverse and objective perspectives. The Board is supported by the Audit and Risk Committee (AC) to provide a better overview of financial, risk and audit matters. In addition, other Board committees, namely the Executive Resource and Compensation Committee (ERCC), the Investment Committee (IC) and the Transaction Review Committee (TRC), are constituted to address different aspects of the business. All these ensure optimal effectiveness of the Board, fostering active participation and contribution. Chairman and Chief Executive Officer Mapletree applies the principle that a clear separation between the roles and responsibilities of Chairman and Group CEO institutes an appropriate balance of power and authority. As a Non-Executive Director, the Chairman guides the Board in constructive debates on the strategic direction, management and governance matters. Being non-executive, the Chairman is free to act independently in the best interests of Mapletree. The Chairman and the Group CEO are not related to each other. The Group CEO, who is a Board member, is responsible for the management of the Group s business. The Group CEO carries out full executive responsibilities over the business directions and operational decisions of the Group. The Group CEO is also responsible for ensuring compliance with the applicable laws and regulations in the daily operations of the Group. Board Membership Mapletree applies the principle that Board renewal is an ongoing process to ensure good governance and maintain relevance to the changing needs of the Group. All appointments and resignations of Board members are approved by the Board. All Board members are required to submit themselves for re-nomination and re-election at regular intervals. As a Board member, the Group CEO is also subjected to retirement and re-election. Board Performance Mapletree applies the principle that the Board s performance is ultimately reflected in the performance of the Group. Each Board member is given sufficient time to bring to the Board his perspective to enable balanced and well-considered decisions to be made. Access to Information Mapletree applies the principle that the Board shall be provided with timely and complete information prior to Board meetings and when the need arises. New Board members are briefed on Mapletree s businesses. Management is required to provide adequate and timely information to the Board, which includes matters requiring the Board s decision as well as ongoing reports relating to the operational and financial performance of the Group. Management is also required to furnish any additional information, when so requested by the Board, in a timely manner in order for the Board to make informed decisions. The Board has separate and independent access to the Management and Company Secretary. The Company Secretary attends to the administration of corporate secretarial matters, attends all Board and committee meetings, and provides assistance to the Chairman in ensuring adherence to Board procedures. The Board takes independent professional advice as and when necessary to discharge its responsibilities effectively. The AC meets the external and internal auditors separately at least once a year, without the presence of Management. B) Remuneration Matters Mapletree applies the principle that remuneration matters are to be sufficiently structured and benchmarked to good market practices, in order to attract suitably qualified talent, so as to grow and manage its business. Mapletree applies the principle that remuneration for the Board and Senior Management should be viewed in totality. The Group implemented a performance-linked remuneration system to ensure continuous talent development and renewal of strong and sound leadership for the continued success of Mapletree. To this end, the ERCC is responsible for recruiting and retaining key talents. The members of the ERCC are: Mr Edmund Cheng Wai Wing (Chairman); Mr Paul Ma Kah Woh (Member); Ms Chan Wai Ching, Senior Managing Director, Temasek International (Private) Limited (Co-opted Member). All members of the ERCC are independent of Management. The ERCC oversees executive compensation and development of the management bench strength, so as to build and augment a capable and dedicated management team, and gives guidance on progressive policies which can attract, motivate and retain a pool of talented executives for the present and future growth of the Group. Specifically, the ERCC: establishes compensation policies for key executives; approves salary reviews, bonuses and incentives for key executives; approves key appointments and reviews succession plans for key positions; and oversees the development of key executives and younger talented executives. The ERCC conducts on an annual basis, a succession planning review of the Group CEO and selected key positions in the Group. In this regard, potential internal and external

62 70 candidates for succession are reviewed for immediate, medium term and longer term needs. The ERCC held a total of five meetings in FY13/14. The Group CEO, as an Executive Director, does not receive director s fees. He is a lead member of Management. His compensation consists of his salary, allowances, bonuses and share appreciation awards from the Group. The latter is conditional upon him meeting certain performance targets. The Group CEO is not present during discussions relating to his own compensation, terms and conditions of service, and performance review. C) Accountability and Audit Accountability Mapletree applies the principle that to build confidence among stakeholders, there is a need to deliver maximum sustainable value. The Group complies with statutory and regulatory requirements as well as adopts best practices in its business processes. On a regular basis, the Board is also apprised of the Group s performance in order to make a balanced and informed assessment of the Group s performance, position and prospects. Internal Controls Mapletree is committed to the principle of a sound system of internal controls and has established an internal control framework which addresses the operational, financial, compliance and information technology (IT) risks applicable to its business and operating environment as well as the Group s risk management system. These internal controls provide reasonable but not absolute assurance on the achievement of their intended control objectives. The key elements of Mapletree s system of controls are as follows: Operating Structure Mapletree has a defined operating structure with lines of responsibility and delegated authority, as well as a reporting mechanism to Senior Management and the Board. Policies, Procedures and Practices Controls are detailed in formal procedures and manuals. For example, the Board has approved a set of delegations of authority which sets out approval limits for operational and capital expenditures, investments and divestments, bank borrowings and cheque signatory arrangements. Approval sub-limits are also provided at various management levels to facilitate operational efficiency as well as provide a system of checks and balances. Mapletree s procedures and practices are regularly reviewed and revised where necessary to enhance controls and efficiency. Mapletree has a control self-assessment programme to promote accountability, control and risk ownership, in order to cultivate a stronger sense of risk awareness within Management. The Internal Audit department (IA) verifies compliance with these control procedures and manuals. Whistle-blowing Policy To reinforce a culture of good business ethics and governance, Mapletree has a Whistle-blowing Policy to encourage the reporting in good faith of any suspected improper conduct, including possible financial irregularities, while protecting the whistle-blowers from reprisals. Any reporting shall be notified to the AC Chairman and the AC for investigation. Risk Management Risk management is an integral part of Mapletree s business management. In order to safeguard and create value for stakeholders, Mapletree proactively manages risks and requires the risk management process to be part of the Group s planning and decision making process. In this regard, the Risk Management department oversees the risk management framework, reviews annually the adequacy and effectiveness of the risk management system, and monitors the key risks faced by the Group. It reports to the AC and the Board on material findings and recommendations in respect of significant risk matters. The risk management system is dynamic and evolves with the business. The Risk Management department works closely with Management to review and enhance the risk management system to be in line with market practices and regulatory requirements. One such initiative is the implementation of a control self-assessment programme in FY12/13, which promotes accountability, control and risk ownership throughout the Group, thereby cultivating a stronger sense of risk awareness within the Group. Mapletree s policies and procedures relating to risk management can be found on pages 72 to 73 of this Annual Report. Information Technology Controls As part of the operational risk process, IT general controls have been put in place and are periodically reviewed to ensure that IT risks are identified and mitigated. In addition, as part of Mapletree s business continuity plan, IT disaster recovery planning and tests are conducted to ensure that critical IT systems remain functional in a crisis situation. Financial Reporting The Board is regularly updated on the Group s financial performance via quarterly reports. These reports provide explanations for significant variances in financial performance as well as an updated full year forecast, in comparison with budgets and actual performance of corresponding periods in the preceding year. In addition, the Board is provided with quarterly updates on key operational activities. Financial Management Management reviews the performance of the Group s portfolio properties on a monthly basis to instill financial and operational discipline at all levels of the Group. The key financial risks to which Mapletree is exposed comprise interest rate risk, liquidity risk, currency risk and credit risk. Where necessary and appropriate, Mapletree hedges against interest and/or currency rate fluctuations. In addition, Management proactively manages liquidity risk by ensuring that sufficient working capital lines and loan facilities are maintained. The Group also has in place credit control procedures for managing tenant credit risk and monitoring of debt collection. Internal Audit On an annual basis, IA prepares a riskbased audit plan to review the adequacy and effectiveness of Mapletree s system of

63 Mapletree Investments Pte Ltd Annual Report 2013/2014 Corporate Governance 71 internal controls. The department is also involved during the year in conducting system or process reviews that may be requested by the AC or Management on specific areas of concerns. In doing so, the department obtains reasonable assurance that business objectives for the process under review are being achieved and key control mechanisms are in place. Upon completion of each review, a formal report detailing the audit findings and the appropriate recommendations is issued to the AC. IA monitors and reports on the timely implementation of the action plans to Management and the AC on a quarterly basis. The external auditors provide an independent perspective on certain aspects of the internal financial controls system arising from their work and annually report their findings to the AC. Transaction Review Committee With the listing of Mapletree Greater China Commercial Trust (MGCCT) in March 2013, where Mapletree is the sponsor, Mapletree has established a Transaction Review Committee to (a) resolve any potential conflict of interest that may arise between MGCCT and the Mapletree China Opportunity Fund II (whose investment mandate includes investment properties in China) as well as any Future Greater China Commercial Private Fund (whose investment mandate includes commercial properties in Greater China) concerning the process to be undertaken to acquire investment properties in Greater China, and (b) grant approval for the acquisition of any seed asset for a Future Greater China Commercial Private Fund. With regard to (a), the Transaction Review Committee process will not apply if the proposed acquisition is by way of a tender, auction or other form of competitive process. Audit and Risk Committee The AC supports the Board thereby allowing deeper overview of financial, risk and audit matters, so as to maximise the effectiveness of the Board and foster active participation and contribution. Mapletree applies the principle that the AC shall have at least three members, all of whom must be non-executive and the majority of whom must be independent. The AC has Terms of Reference dealing with its scope and authority, which include: review of annual internal and external audit plans; review of audit findings of internal and external auditors, as well as Management responses to them; review of quarterly, half-yearly and annual financial statements; review of the quality and reliability of information prepared for inclusion in financial reports; recommendation for the appointment and re-appointment of external auditors; and approval of the remuneration and terms of engagement of external auditors. In addition, the AC also: meets with the external and internal auditors, without the presence of Management, at least once a year to review and discuss the financial reporting process, system of internal controls (including financial, operational and compliance controls), significant comments and recommendations; and reviews and, if required, investigates the matters reported via the whistleblowing mechanism by which staff may, in confidence, raise concerns about suspected improprieties including financial irregularities. The objective is to ensure that arrangements are in place for independent investigations of any matter arising from such meetings and for review to ensure appropriate follow-up actions. The AC held a total of four AC meetings in FY13/14. Internal Audit Mapletree adopts the practice that IA reports directly to the Chairman of the AC and administratively to the Group Chief, Corporate Services, who reports to the Group CEO. The role of IA is to conduct its internal audit work in consultation with, but independently of Management. Its annual audit plan and findings are submitted to the AC. The AC also meets with IA at least once a year without the presence of Management. The Head of IA is a member of the Singapore branch of the Institute of Internal Auditors Inc. (IIA), which has its headquarters in the USA. IA is in conformance with the Standards for the Professional Practice of Internal Auditing (Standards), developed by the IIA and has incorporated these Standards into its audit practices. The Standards set by the IIA cover requirements on: independence and objectivity; proficiency and due professional care; managing the internal audit activity; engagement planning; performing engagement; and communicating results. The internal auditors involved in IT audits are Certified Information System Auditors and members of the Information System Audit and Control Association (ISACA) in the USA. The ISACA Information System Auditing Standards provide guidance on the standards and procedures to be applied in IT audits. To ensure that the internal audits are performed by competent professionals, IA employs qualified staff. In order for their technical knowledge to remain current and relevant, IA also provides training and development opportunities to the staff. D) Communication with Shareholders Mapletree subscribes to the principle of providing regular and timely communications with its shareholder as well as ensuring equal access to information.

64 72 Sustainability Risk Management Risk management is integral to Mapletree s business strategy of delivering consistent and high returns, and is driven by Management. Mapletree has formalised an Enterprise Risk Management (ERM) framework, which enables the Group to assess, mitigate and monitor risks. The framework aims to preserve capital, ensure business resilience in an economic downturn and provide support for Management s decision making. Entrenched Mindset and Culture At Mapletree, risk management is implemented top down and practised bottom up. This ensures a risk approach that is aligned with the Group s business objectives and strategies, and integrated with operational processes for effectiveness and accountability. Strong Oversight and Governance The Board of Directors (Board) is responsible for determining the overall risk strategy and risk governance, and ensuring that Management implements sound risk management and internal control practices. The Board also approves the risk appetite and tolerance statements, which set out the nature and extent of risks which Management is willing to take in achieving its business objectives. The Board is supported by the Audit and Risk Committee (AC), which comprises independent directors whose collective experience and knowledge serve to guide and challenge Management. The AC has direct access to the Risk Management (RM) team, which it engages quarterly as part of its review of Mapletree s portfolio risks. Mapletree s ERM framework is dynamic and evolves with the business. The RM team works closely with Management to review and enhance the risk management system in accordance with market practices and regulatory requirements. A Group-wide control self-assessment (CSA) framework further creates risk awareness by fostering accountability, control and risk ownership. Risk Appetite, Tolerance, Attitudes and Philosophy Risk Reporting Structures, Roles, Responsibilities and Communication Risk Strategy Risk Governance 1. Risk Identification Risk Management Process 5. Risk Reporting 4. Risk Monitoring Risk Management Process 2. Risk Assessment Risk Analysis Risk Evaluation 3. Risk Treatment Risk Tracked Strategic External Operational Financial Compliance Information Technology Risk Awareness Internal Audit Key Risk Indicators Delegation of Authority Standard Operating Procedures Control Self- Assessment Trainings Whistle-blowing

65 Mapletree Investments Pte Ltd Annual Report 2013/2014 Risk Management 73 Robust Measurement and Analysis Mapletree s risk measurement framework is based on Value-at-Risk (VaR), a methodology which measures the volatilities of market and property risk drivers such as rental rates, occupancy rates, capital values, interest rates and foreign exchange rates. It takes into consideration changes in market environment and asset cash flows as they occur. To further complement the VaR methodology, other risks such as refinancing, customer creditworthiness and developmental risks are also assessed, monitored and as far as possible, measured as part of the framework. With the VaR methodology, Mapletree quantifies risk on a consistent basis across business units, countries and asset types, identifying high risk assets, sectors and countries. This enables Mapletree to make informed and efficient capital allocation decisions by quantifying the benefits of risk diversification across its portfolio. Recognising the limitations of any statistically-based system that relies on historical data, Mapletree s portfolio is subject to further stress testing and scenario analyses to ensure that businesses remain resilient during unexpected market shocks. Management also identifies key risks, assesses their likelihood and impact on businesses, and establishes corresponding mitigating controls. The information is maintained in a risk register that is reviewed and updated regularly. The key risks identified include but are not limited to: Strategic Risks Mapletree s portfolio is subject to real estate market risks such as rental rates and occupancy volatilities in the countries it operates and specific factors including competition, supply, demand and regulations. Such risks are quantified, aggregated and monitored for existing assets and new acquisitions. Significant risk profile changes or emerging trends are reported for assessment and/or action. The Group has a disciplined investment approach which subjects all investment proposals to stringent reviews. Project returns are assessed against internal country and sector-specific hurdle rates, which are independently determined by the RM team and regularly reviewed by Management. To test the robustness of the assumptions used, sensitivity analysis is performed for key project variables, which are benchmarked against the relevant market comparables. For material acquisitions, independent risk assessments are conducted by the RM team and included in investment proposals submitted to the Investment Committee or the Board for approval. All investment proposals are subject to rigorous scrutiny by the Board (or its delegates, depending on agreed thresholds). External Risks To mitigate country risks such as economic uncertainties or political turbulence in countries where it operates, Mapletree conducts rigorous country and market research, and monitors economic and political developments closely. Operational Risks Comprehensive operating, reporting and monitoring guidelines enable Mapletree to manage day-to-day activities and mitigate operational risks. To ensure relevance, the Group regularly reviews its Standard Operating Procedures (SOPs) and benchmarks them against industry practices. Compliance with SOPs is ensured by the CSA framework and reinforced through training of employees and regular checks by the Internal Audit department, which reports independently to the AC. In the event of catastrophes such as terrorism and natural disasters, Mapletree has put in place and tested a comprehensive Business Continuity Plan to enable it to resume operations with minimal disruption and loss. Mapletree s properties are insured in accordance with industry norms in their respective jurisdictions and benchmarked against those in Singapore. Financial Risks Financial market risks and capital structure are closely monitored and actively managed by Management, and reported quarterly to the Board. At the portfolio level, the risk impact of interest rate and currency volatilities on value is quantified, monitored and reported quarterly using the VaR methodology. Refinancing risk is also quantified, taking into account the concentration of the loan maturity profile and credit spread volatility. Management prudently manages exposure to interest rate volatility from its floating rate borrowings by way of interest rate swaps. To mitigate foreign exchange risks, Management will borrow in the same currency as the underlying assets to provide some natural hedge or hedge through derivatives whenever appropriate. The Group also actively monitors its cash flow position and requirements to ensure significant liquid reserves to fund operations and meet short-term obligations. In addition, Management tracks and monitors bank concentration risks, ensuring a welldiversified funding base. Compliance Risks The Group is subject to applicable laws and regulations of various jurisdictions in which it operates. Non-compliance may result in litigation, penalties, fines or revoking of business licenses. Mapletree identifies applicable laws and regulatory obligations and embeds compliance in day-to-day business processes. Information Technology (IT) Risks Any system downtime or breach in security may have an adverse impact on the integrity, accuracy and completeness of data and information. Mapletree has comprehensive policies and procedures governing information availability, control and governance, as well as data security. In addition, the IT disaster recovery plan is in place and tested to ensure business recovery objectives are met. Rigorous Monitoring and Control Mapletree has developed internal key risk indicators that serve as a warning system to Management by highlighting risks that have escalated beyond established tolerance levels. Management has also established required actions to be taken when risk thresholds are breached. Every quarter, the RM team presents to the Board and AC a comprehensive report highlighting key risk exposures, portfolio risk profile, results of stress testing scenarios and status of key risk indicators. The Board and AC are also kept abreast of any material changes to the Group s risk profiles and activities.

66 74 Sustainability Human Resource Mapletree is a dynamic and growing company with an extensive network in Asia. With the Group s operations expanding across the region, staff strength rose to about 1,700 employees in FY13/14. Recognising that employees drive the Group s success, Mapletree continually works with them to unlock their potential and enrich its talent base through talent attraction, staff development, performance management and employee welfare. Strengthening the Pipeline Talent Attraction One focus of Mapletree s talent attraction strategy is to identify and develop fresh graduates with high potential. FY13/14 saw the launch of the Mapletree Graduate Trainee (GT) programme, an excellent entry point for graduates seeking their first job. By collaborating with top universities in Singapore, Mapletree successfully recruited eight promising and motivated graduates. Based on the graduates career interest and aptitude, Mapletree placed them in roles such as Investment, Asset Management, Human Resource, Retail Management and Development Management. Through participation in live projects, job shadowing, coaching, peer support and on-the-job training over a 12-month period, the GTs build technical knowledge in the respective functions. Such a holistic training process is expected to help the GTs transition quickly and contribute effectively to the work teams. international institutions to engage students early in their career planning. Besides hosting student visits to Mapletree s offices, participating in university career and networking events also help strengthen the Group s branding on-campus. Mapletree also offers internships to promising students from a range of disciplines, to expose them to the real estate industry and introduce the career options within Mapletree. Outstanding interns are considered for Mapletree s graduate programmes upon the completion of their studies. Concurrently, Mapletree has launched an internal job posting platform to facilitate career development and talent retention. This allows Mapletree employees to apply for different roles within the Group and provides cross-function exposure which in turn helps deepen employees expertise and cultivate personal growth. Sharpening the Focus Talent Development To equip its workforce with the requisite knowledge and skills, Mapletree continued to build leadership and technical skills during the year. The Mapletree Service with a Difference, a service excellence programme, was launched for frontline staff and aims to better equip service staff with skills to anticipate and exceed customers expectations. Mapletree s cornerstone leadership programmes designed for employees who possess managerial calibre were also enhanced. New segments include application tactics through role play, as well as harnessing self-awareness and understanding of personality dynamics as leadership tools. The Group also attracts talents through its management associate scheme, the Mapletree International Talent Management (MINT) programme, which targets candidates with a postgraduate degree and some years of working experience. The programme offers local and overseas job rotations for these graduates to hone their competencies as real estate professionals. In FY13/14, the programme was enhanced with a six-month extension to 24 months, to provide greater exposure to Mapletree s various operations. To raise Mapletree s profile as an employer of choice, the Group actively partners local and Mapletree s leadership programmes are designed for those possessing managerial calibre

67 Mapletree Investments Pte Ltd Annual Report 2013/2014 Human Resource 75 Mapletree Service with a Difference training session Additionally, the Group conducted a 360-degree feedback survey to increase senior leaders self-awareness and help identify their development needs. The results are intended to have a multiplier effect where teams under the leaders charge can be better shaped and have their skills sharpened. To further strengthen technical skills on investment evaluation, the Group launched an assessment tool for senior leaders to evaluate investment teams on their project proposals. This initiative aims to provide guidance and feedback to the investment teams through critical analysis of deals, further strengthening their business acumen. To encourage a vibrant learning environment, Mapletree offers schemes that subsidise employees course fees for higher learning, book purchases, and/or self-development efforts. Meanwhile, the ongoing Learning Fiesta enables employees to attend bitesized seminars on topics such as Essentials of Interpersonal Communication, Effective Negotiation and Harmony with Bosses and Peers. Shaping the Work Environment Employee Welfare To promote staff welfare, improve work-life balance and expand employees social contacts in the workplace, the Mapletree Recreation Club led various initiatives to foster employee engagement and interaction during the year. The inaugural Movie Night, for instance, welcomed over 700 staff and their family members. In support of the annual national Eat with Your Family Day in Singapore, all employees were encouraged to head home earlier. Mapletree also extended this initiative to its overseas offices. During the year, Mapletree Business City (MBC) at Alexandra Precinct became Singapore s first Healthy Workplace Ecosystem. Through a partnership with the Health Promotion Board to encourage a healthy lifestyle at the workplace, MBC ran a series of programmes ranging from offering healthier food options at MBC s food outlets, to organising health talks and screenings as well as weekly mass runs. The campaign raised awareness and made healthier options more accessible to working adults. To supplement these efforts, Mapletree continued to run its Workplace Health Promotion series, which is open to MBC tenants as well as Mapletree employees. The series included the annual MBC blood donation drive and lunchtime talks addressing wellness topics such as Making Sense of Your Money, Build Your Inner Strength and Preparing Healthy Meals. These programmes were warmly received. Apart from providing quality work-life balance, such efforts help create a holistic working environment at MBC. The annual MBC Blood Drive is supported by members of the Mapletree Recreation Club Performance Management During the year, Mapletree rolled out an improved staff assessment process that emphasises core competencies in addition to key performance indicators and targets. The competencies across all staff categories were streamlined for greater consistency and to reflect the up-skilling expected as employees make career progress within the Group. Mapletree Recreation Club organised interactive staff activities during festive occasions