Financial Statements

Transcription

1 Financial Statements 62 Report of the Trustee 63 Statement by the Manager 64 Auditors Report to the Unitholders of CapitaCommercial Trust 65 Balance Sheets 67 Statements of Total Return 68 Distribution Statements 69 Statements of Movements in Unitholders Funds 70 Portfolio Statements 78 Cash Flow Statements 81 Notes to the Financial Statements

2 Report of the Trustee Year ended 31 December 2009 HSBC Institutional Trust Services (Singapore) Limited (the Trustee ) is under a duty to take into custody and hold the assets of CapitaCommercial Trust (the Trust ) and its subsidiary (the Group ) in trust for the holders ( Unitholders ) of units in the Trust (the Units ). In accordance with, inter alia, the Securities and Futures Act, Chapter 289 of Singapore, its subsidiary legislation and the Code on Collective Investment Schemes and the Listing Manual (collectively referred to as the laws and regulations ), the Trustee shall monitor the activities of CapitaCommercial Trust Management Limited (the Manager ) for compliance with the limitations imposed on the investment and borrowing powers as set out in the trust deed dated 6 February 2004 (as amended) (the Trust Deed ) between the Manager and the Trustee in each annual accounting period and report thereon to Unitholders in an annual report which shall contain the matters prescribed by the laws and regulations as well as the recommendations of Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of the Certified Public Accountants of Singapore and the provisions of the Trust Deed. To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Trust during the period covered by these financial statements, set out on pages 65 to 135 comprising the Balance Sheets, Statements of Total Return, Distribution Statements, Statements of Movements in Unitholders Funds, Portfolio Statements, Cash Flow Statements and Notes to the Financial Statements in accordance with the limitations imposed on the investment and borrowing powers set out in the Trust Deed, laws and regulations and otherwise in accordance with the provisions of the Trust Deed. For and on behalf of the Trustee, HSBC Institutional Trust Services (Singapore) Limited Johannes Van Verre Director Singapore 26 February

3 Statement by the Manager Year ended 31 December 2009 In the opinion of the directors of CapitaCommercial Trust Management Limited, the accompanying financial statements set out on pages 65 to 135 comprising the Balance Sheets, Statements of Total Return, Distribution Statements, Statements of Movements in Unitholders Funds, Portfolio Statements, Cash Flow Statements and Notes to the Financial Statements are drawn up so as to present fairly, in all material respects, the financial position of CapitaCommercial Trust (the Trust ) and its subsidiary (the Group ) and of the Trust as at 31 December 2009, the total return, distributable income, movements in unitholders funds and cash flows of the Group and the Trust for the year then ended in accordance with the recommendations of Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Certified Public Accountants of Singapore and the provisions of the Trust Deed. At the date of this statement, there are reasonable grounds to believe that the Group and the Trust will be able to meet its financial obligations as and when they materialise. For and on behalf of the Manager, CapitaCommercial Trust Management Limited Lynette Leong Chin Yee Director Singapore 26 February 2010 CapitaCommercial Trust Annual Report

4 Auditors Report to the Unitholders of CapitaCommercial Trust (Established in the Republic of Singapore pursuant to a trust deed dated 6 February 2004 (as amended)) We have audited the accompanying financial statements of CapitaCommercial Trust (the Trust ) and its subsidiary (the Group ), which comprise the Balance Sheets and Portfolio Statements of the Group and the Trust as at 31 December 2009, and Statements of Total Return, Distribution Statements, Statements of Movements in Unitholders Funds and Cash Flow Statements of the Group and the Trust for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 65 to 135. Manager s responsibility for the financial statements The Manager is responsible for the preparation and fair presentation of these financial statements in accordance with Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Certified Public Accountants of Singapore. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Trust s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements of the Group and the financial statements of the Trust present fairly, in all material respects, the financial position of the Group and the Trust as at 31 December 2009 and the total return, distributable income, movements in unitholders funds and cash flows of the Group and the Trust for the year then ended in accordance with Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Certified Public Accountants of Singapore. KPMG LLP Public Accountants and Certified Public Accountants Singapore 26 February

5 Balance Sheets as at 31 December 2009 Group Trust Note $ 000 $ 000 $ 000 $ 000 Non-current assets Plant and equipment 3 1,391 1, Investment properties 4 5,519,500 6,710,600 3,989,500 5,093,600 Subsidiary 5 * * Joint venture 6 809, ,886 Associate 7 62,630 63,886 51,479 44,925 Available-for-sale unquoted investment 8 12,077 10,212 12,077 10,212 5,595,598 6,785,965 4,863,194 5,951,228 Current assets Asset held for sale 4 182, ,500 Inventories Trade and other receivables 10 9,124 18,474 21,401 27,749 Cash and cash equivalents ,458 66, ,429 62, ,374 85, ,330 89,982 Total assets 6,099,972 6,871,391 5,366,524 6,041,210 Current liabilities Trade and other payables 12 70,638 82,946 49,836 61,634 Current portion of security deposits 19,926 13,865 11,034 8,552 Interest-bearing liabilities , , , ,042 Current tax payable , , , ,930 Non-current liabilities Non-current portion of security deposits 29,187 31,275 21,553 21,049 Interest-bearing liabilities 13 1,405,647 1,514, , ,624 Fair value of financial derivatives 14 19,616 26,140 19,616 26,140 Convertible bonds debt component , , , ,700 1,817,661 1,922,945 1,256,031 1,378,513 Total liabilities 2,143,563 2,716,500 1,552,239 2,145,443 Net assets 3,956,409 4,154,891 3,814,285 3,895,767 * Less than $1,000 The accompanying notes form an integral part of these financial statements. CapitaCommercial Trust Annual Report

6 Balance Sheets as at 31 December 2009 Group Trust Note $ 000 $ 000 $ 000 $ 000 Represented by: Unitholders funds 3,956,409 4,154,891 3,814,285 3,895,767 Units in issue ( 000) 16 2,813,915 1,397,239 2,813,915 1,397,239 $ $ $ $ Net asset value per Unit Net asset value per Unit As previously reported. 2 Restated for the effects of the Rights Issue (Note 16) based on Unitholders funds of $4,959,068,000 for the Group and $4,699,944,000 for the Trust taking into account the net proceeds from the Rights Issue of $804.2 million with the adjusted Units in issue of 2,801,130,156 for the Group and Trust. The accompanying notes form an integral part of these financial statements. 66

7 Statements of Total Return Year ended 31 December 2009 Group Trust Note $ 000 $ 000 $ 000 $ 000 Gross revenue , , , ,909 Property operating expenses 18 (103,112) (101,814) (67,727) (65,346) Net property income 300, , , ,563 Interest income 275 1, ,038 Investment income ,267 62,127 Manager s management fees 20 (19,781) (16,305) (12,462) (8,965) Audit fees (276) (291) (226) (238) Finance costs 21 (93,183) (84,062) (70,356) (61,249) Professional fees 22 2,513 (7,700) 2,367 (7,670) Trustee s fees (782) (788) (585) (585) Gain on remeasurement of financial derivatives 6,523 4,688 6,523 4,688 Reversal of impairment loss/ (impairment loss) on investment in associate 6,554 (13,925) Other expenses 23 (3,773) (6,390) (3,690) (6,271) (108,484) (109,437) (6,338) (31,050) Net income before share of profit of associate 191, , , ,513 Share of profit of associate, net of tax 4,032 3,877 Net income 195, , , ,513 Net change in fair value of investment properties (1,034,912) 203,798 (932,782) 164,094 Total return for the year before tax (839,153) 331,709 (723,599) 285,607 Income tax expense 24 (21) (35) (20) (35) Total return for the year (839,174) 331,674 (723,619) 285,572 cents cents cents cents Earnings per Unit 25 Basic (36.07) (31.11) Diluted (36.07) (31.11) Restated for effect of the Rights Issue The accompanying notes form an integral part of these financial statements. CapitaCommercial Trust Annual Report

8 Distribution Statements Year ended 31 December 2009 Group Trust $ 000 $ 000 $ 000 $ 000 Amount available for distribution to Unitholders at beginning of the year 84,416 65,214 84,416 65,214 Total return for the year before tax (839,153) 331,709 (723,599) 285,607 Net tax and other adjustments (Note A) 1,037,605 (178,662) 922,051 (132,560) 198, , , ,047 Amount available for distribution to Unitholders 282, , , ,261 Distributions to Unitholders: Distribution of 4.47 cents per Unit for period from 1/7/2007 to 31/12/ ,896 61,896 Distribution of 5.19 cents per Unit for period from 1/1/2008 to 30/6/ ,949 71,949 Distribution of 5.81 cents per Unit for period from 1/7/2008 to 31/12/ ,180 81,180 Distribution of 3.33 cents per Unit for period from 1/1/2009 to 30/6/ ,499 93, , , , ,845 Amount available for distribution to Unitholders at end of the year 108,189 84, ,189 84,416 Note A Net tax and other adjustments comprise: Non-tax deductible/(chargeable) items: Trustee s fees Net change in fair value of investment properties 1,034,912 (203,798) 932,782 (164,094) Gain on remeasurement of financial derivatives (6,523) (4,688) (6,523) (4,688) Asset management fees paid and payable in Units 11,338 9,240 4,019 1,900 Amortisation of loan transaction costs 3,926 3,172 3,236 2,355 Interest expense 11,139 7,015 11,139 7,015 (Reversal of impairment loss)/impairment loss on investment in associate (6,554) 13,925 Depreciation Distribution income received from associate/subsidiary 2,832 Other items (18,832) 6,129 (17,136) 10,110 Net tax and other adjustments 1,037,605 (178,662) 922,051 (132,560) The accompanying notes form an integral part of these financial statements. 68

9 Statements of Movements in Unitholders Funds Year ended 31 December 2009 Group Trust $ 000 $ 000 $ 000 $ 000 Net assets at beginning of the year 4,154,891 3,937,622 3,895,767 3,722,918 Operations Net (decrease)/increase in net assets resulting from operations (839,174) 331,674 (723,619) 285,572 Unitholders transactions Creation of new Units: Units issued in respect of One George Street s acquisition fee 11,650 11,650 Units issued in respect of Wilkie Edge s acquisition fee 1,370 1,370 Units issued in respect of RCS Trust s asset management fees 7,318 7,194 7,318 7,194 Units issued in respect of rights issue 828, ,296 Asset management fees paid/payable in units 3, , Issue expenses (Note 26) (22,797) (22,797) Distributions to Unitholders (174,679) (133,845) (174,679) (133,845) Net increase/(decrease) in net assets resulting from Unitholders transactions 642,137 (112,723) 642,137 (112,723) Total increase in net assets before movement in translation reserve 3,957,854 4,156,573 3,814,285 3,895,767 Foreign currency translation reserve Net movement in translation reserve (1,445) (1,682) Net assets at end of the year 3,956,409 4,154,891 3,814,285 3,895,767 The accompanying notes form an integral part of these financial statements. CapitaCommercial Trust Annual Report

10 Portfolio Statements As at 31 December 2009 GROUP Description Tenure Term Remaining Acquired from Location of Property of Land of Lease Term of Lease Investment properties Office buildings Singapore Capital Tower Leasehold 99 years 85 years CapitaLand Limited 168 Robinson Road Six Battery Road Leasehold 999 years 816 years Clover Properties 6 Battery Road Pte Ltd HSBC Building Leasehold 999 years 840 years The Hongkong and 21 Collyer Quay Shanghai Banking Corporation Limited Starhub Centre Leasehold 99 years 86 years CapitaLand (Office) 51 Cuppage Road Investments Pte Ltd Robinson Point 1 Freehold NA NA Birchvest Investments 39 Robinson Road Pte Ltd One George Street Leasehold 99 years 92 years George Street Pte Ltd 1 George Street Investment properties Mixed use buildings Singapore Bugis Village Leasehold 99 years 79 years CapitaLand (Office) 62 to 67 Queen Street Investments Pte Ltd 151 to 166 Rochor Road 229 to 253 (odd numbers only) Victoria Street Wilkie Edge Leasehold 99 years 95 years CapitaLand Selegie 8 Wilkie Road Pte Ltd Raffles City 3 Leasehold 99 years 69 years Tincel Properties 250 & 252 North Bridge (Pte) Ltd Road, 2 Stamford Road and 80 Bras Basah Road 1 Reclassification from an investment property to an asset held for sale on 31 December Acquisition of property was completed on 2 December Representing 60% interest in Raffles City Singapore. The accompanying notes form an integral part of these financial statements. 70

11 Committed Existing use occupancy Rates At Valuation percentage of Net Assets % % $ 000 $ 000 % % Commercial ,052,500 1,246, Commercial ,114,000 1,370, Commercial , , Commercial , , Commercial , Commercial ,000 1,146, ,630,300 4,677, Commercial ,300 69, Commercial , , Commercial ,530,000 1,617, ,737,300 1,863, The accompanying notes form an integral part of these financial statements. CapitaCommercial Trust Annual Report

12 Portfolio Statements As at 31 December 2009 GROUP Description Tenure Term Remaining Acquired from Location of Property of Land of Lease Term of Lease Investment properties - Car park buildings Singapore Golden Shoe Leasehold 99 years 72 years CapitaLand (Office) 50 Market Street Car Park Investments Pte Ltd Market Street Leasehold 99 years 64 years CapitaLand (Office) 146 Market Street Car Park Investments Pte Ltd Asset held for sale - Office building Singapore Robinson Point 1 Freehold NA NA Birchvest Investments 39 Robinson Road Pte Ltd Investment properties, at valuation Asset held for sale, at valuation Other assets and liabilities (net) Net assets TRUST Investment properties - Office buildings Singapore Capital Tower Leasehold 99 years 85 years CapitaLand Limited 168 Robinson Road Six Battery Road Leasehold 999 years 816 years Clover Properties 6 Battery Road Pte Ltd HSBC Building Leasehold 999 years 840 years The Hongkong and 21 Collyer Quay Shanghai Banking Corporation Limited Starhub Centre Leasehold 99 years 86 years CapitaLand (Office) 51 Cuppage Road Investments Pte Ltd Robinson Point 1 Freehold NA NA Birchvest Investments 39 Robinson Road Pte Ltd One George Street Leasehold 99 years 92 years George Street Pte Ltd 1 George Street 1 Reclassification from an investment property to an asset held for sale on 31 December The accompanying notes form an integral part of these financial statements. 72

13 Committed Existing use occupancy Rates At Valuation percentage of Net Assets % % $ 000 $ 000 % % Transport facilities , , Transport facilities ,300 60, , , Commercial , ,519,500 6,710, , (1,745,591) (2,555,709) (44.1) (61.5) 3,956,409 4,154, Commercial ,052,500 1,246, Commercial ,114,000 1,370, Commercial , , Commercial , , Commercial , Commercial ,000 1,146, ,630,300 4,677, The accompanying notes form an integral part of these financial statements. CapitaCommercial Trust Annual Report

14 Portfolio Statements As at 31 December 2009 TRUST Description Tenure Term Remaining Acquired from Location of Property of Land of Lease Term of Lease Investment properties - Mixed use buildings Singapore Bugis Village Leasehold 99 years 79 years CapitaLand (Office) 62 to 67 Queen Street Investments Pte Ltd 151 to 166 Rochor Road 229 to 253 (odd numbers only) Victoria Street Wilkie Edge Leasehold 99 years 95 years CapitaLand Selegie 8 Wilkie Road Pte Ltd Investment properties - Car park buildings Singapore Golden Shoe Leasehold 99 years 72 years CapitaLand (Office) 50 Market Street Car Park Investments Pte Ltd Market Street Leasehold 99 years 64 years CapitaLand (Office) 146 Market Street Car Park Investments Pte Ltd Asset held for sale Office building Singapore Robinson Point 2 Freehold NA NA Birchvest Investments 39 Robinson Road Pte Ltd Investment properties, at valuation Asset held for sale, at valuation Other assets and liabilities (net) Net assets 1 Acquisition of property was completed on 2 December Reclassification from an investment property to an asset held for sale on 31 December The accompanying notes form an integral part of these financial statements. 74

15 Committed Existing use occupancy Rates At Valuation percentage of Net Assets % % $ 000 $ 000 % % Commercial ,300 69, Commercial , , , , Transport facilities , , Transport facilities ,300 60, , , Commercial , ,989,500 5,093, , (357,715) (1,197,833) (9.4) (30.7) 3,814,285 3,895, The accompanying notes form an integral part of these financial statements. CapitaCommercial Trust Annual Report

16 Portfolio Statements As at 31 December 2009 By Geography (Summary) percentage of Net Assets % % Singapore Investment properties, at valuation Asset held for sale, at valuation 4.6 Other assets and liabilities (net) (44.1) (61.5) Net assets On 31 December 2009 (2008: 1 December 2008), independent valuations of Capital Tower, Six Battery Road, HSBC Building, Starhub Centre, Robinson Point, One George Street, Bugis Village, Wilkie Edge, Golden Shoe Car Park and Market Street Car Park were undertaken by Jones Lang LaSalle Property Consultants Pte Ltd (2008: Jones Lang LaSalle Property Consultants Pte Ltd). The Manager believes that the independent valuers have appropriate professional qualifications and recent experience in the location and category of the properties being valued. The valuations were based on capitalisation of income approach and discounted cash flow analysis. The direct comparison approach is used as a check against the derived values. The valuations adopted for the properties were as follows: $ 000 $ 000 Investment Properties Capital Tower 1,052,500 1,246,500 Six Battery Road 1,114,000 1,370,500 HSBC Building 299, ,000 Starhub Centre 268, ,800 Robinson Point 1 226,600 One George Street 896,000 1,146,000 Bugis Village 64,300 69,400 Wilkie Edge 143, ,800 Golden Shoe Car Park 102, ,600 Market Street Car Park 49,300 60,400 3,989,500 5,093,600 Asset held for sale Robinson Point 1 182,500 Total properties in the portfolio 4,172,000 5,093,600 1 Robinson Point has been reclassified from an investment property to an asset held for sale on 31 December 2009 (Note 4). The accompanying notes form an integral part of these financial statements. 76

17 On 31 December 2009 (2008: 1 December 2008), an independent valuation of Raffles City was undertaken by Knight Frank Pte Ltd (2008: Knight Frank Pte Ltd). The Manager believes that the independent valuers have appropriate professional qualifications and recent experience in the location and category of the property being valued. The valuations were based on the capitalisation of income approach and discounted cash flow analysis. The direct comparison approach is used as a check against the derived values. The valuations adopted for Raffles City were as follows: The Group s The Group s proportionate proportionate interest of 60% interest of 60% Property $ 000 $ 000 $ 000 $ 000 Raffles City 2,550,000 1,530,000 2,695,000 1,617,000 The net change in fair value of the investment properties has been taken to the statement of total return. Properties of the Group comprise mainly commercial properties that are leased to external customers. Generally, the leases contain an initial non-cancellable period of three years. Subsequent renewals are negotiated with the lessee. Contingent rents recognised in the Statements of Total Return of the Group and of the Trust amounted to $11,495,000 (2008: $14,929,000) and $33,000 (2008: $75,000) respectively. The accompanying notes form an integral part of these financial statements. CapitaCommercial Trust Annual Report

18 Cash Flow Statements Year ended 31 December 2009 Group Trust $ 000 $ 000 $ 000 $ 000 Operating activities Total return for the year before tax (839,153) 331,709 (723,599) 285,607 Adjustments for: Allowance for doubtful receivables Amortisation of lease incentives 1, , Asset management fees paid and payable in Units 11,338 9,240 4,019 1,900 Borrowing costs 93,183 84,062 70,356 61,249 Depreciation of plant and equipment Foreign exchange differences Gain on remeasurement of financial derivatives (6,523) (4,688) (6,523) (4,688) Interest income (275) (1,092) (270) (1,038) Investment income (319) (65,267) (62,127) Net change in fair value of investment properties 1,034,912 (203,798) 932,782 (164,094) (Reversal of impairment loss)/impairment loss on investment in associate (6,554) 13,925 Share of profit of associate, net of tax (4,032) (3,877) Operating income before working capital charges 292, , , ,654 Changes in working capital: Trade and other receivables 7,375 (14,247) 5,464 (12,531) Trade and other payables (7,490) 32,193 (2,930) 31,577 Security deposits 3,973 14,884 2,986 12,852 Cash generated from operations 296, , , ,552 Income tax paid (384) (384) Cash flows from operating activities 296, , , ,552 The accompanying notes form an integral part of these financial statements. 78

19 Group Trust $ 000 $ 000 $ 000 $ 000 Investing activities Acquisition of available-for-sale unquoted investment (1,865) (2,448) (1,865) (2,448) Capital expenditure on investment properties (26,312) (32,749) (11,182) (7,053) Acquisitions of investment properties, net of cash acquired (see Note A below) (1,296,136) (1,296,136) Distribution received from associate 3,465 2,345 3,465 2,345 Distribution received from joint venture 60,458 53,322 Interest received 271 1, ,058 Investment income received Purchase of plant and equipment (987) (821) (832) (341) Cash flows from investing activities (25,428) (1,328,378) 50,310 (1,248,934) Financing activities Interest paid (76,588) (67,000) (58,498) (44,900) Payment of borrowing transaction costs (14,959) (10,340) (14,861) (10,340) Distributions to Unitholders (174,679) (133,845) (174,679) (133,845) Issue expenses (22,797) (22,797) Proceeds from interest-bearing loans 876,850 1,041, ,650 1,025,000 Repayment of interest-bearing loans (1,441,042) (86,100) (1,441,042) (86,100) Proceeds from rights issue 828, ,296 Proceeds from issuance of convertible bonds 370, ,000 Cash flows from financing activities (24,919) 1,113,915 (25,931) 1,119,815 Net increase in cash and cash equivalents 245,775 31, ,196 34,433 Cash and cash equivalents at beginning of the year 66,683 35,484 62,233 27,800 Cash and cash equivalents at end of the year (Note 11) 312,458 66, ,429 62,233 The accompanying notes form an integral part of these financial statements. CapitaCommercial Trust Annual Report

20 Cash Flow Statements Year ended 31 December 2009 Notes: (A) Acquisitions of investment properties Net cash outflows from purchases of One George Street and Wilkie Edge are set out below: Group Trust $ 000 $ 000 $ 000 $ 000 Investment properties (including acquisition costs) 1,309,156 1,309,156 Purchase consideration paid in Units (13,020) (13,020) Net cash outflow 1,296,136 1,296,136 (B) Significant non-cash transactions During the financial year, 12,785,064 (2008: 4,561,324) Units were issued as payment for asset management fees amounting to a value of $11,316,867 (2008: $8,102,586). The accompanying notes form an integral part of these financial statements. 80

21 Notes to the Financial Statements These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Manager and the Trustee on 26 February General CapitaCommercial Trust (the Trust ) is a Singapore-domiciled unit trust established pursuant to the trust deed dated 6 February 2004 (as amended) (the Trust Deed ) between CapitaCommercial Trust Management Limited (the Manager ) and HSBC Institutional Trust Services (Singapore) Limited (the Trustee ). The Trust Deed is governed by the laws of the Republic of Singapore. The Trustee is under a duty to take into custody and hold the assets of the Trust and its subsidiary (the Group ) in trust for the holders ( Unitholders ) of units in the Trust (the Units ). The Trust was formally admitted to the Official List of the Singapore Exchange Securities Trading Limited (the SGX-ST ) on 11 May 2004 and was included under the Central Provident Fund ( CPF ) Investment Scheme on 11 May The principal activity of the Trust is to invest in income producing real estate and real estate related assets, which are used or substantially used for commercial purposes, with the primary objective of achieving an attractive level of return from rental income and for long-term capital growth. The principal activity of the subsidiary is the provision of treasury services, including lending to the Trust the proceeds from issuance of notes under an unsecured multicurrency medium term note program. The consolidated financial statements relate to the Trust and its subsidiary (the Group ) and the Group s interest in its associate and joint venture. The Trust has entered into several service agreements in relation to management of the Trust and its property operations. The fee structures of these services are as follows: (i) Property management fees Under the property management agreements, property management fees are charged at 3.00% per annum of the net property income of the properties except for HSBC Building which is charged at 0.25% per annum of the net property income. The property management fees are payable monthly in arrears. CapitaCommercial Trust Annual Report

22 Notes to the Financial Statements 1 General (continued) (ii) Manager s management fees Pursuant to the Trust Deed, the Manager s management fees comprise a base component of 0.10% per annum of the value of Deposited Property and a performance component of 5.25% per annum of net income of the Trust for each financial year. Deposited Property refers to all the assets of the Trust, including all its authorised investments for the time being held or deemed to be held upon the trusts of the Trust Deed, except for the following investments: (a) the investment in RCS Trust, a joint venture; (b) the investment in Quill Capita Trust ( QCT ), an associate; and (c) the investment in Malaysia Commercial Development Fund Pte. Ltd. ( MCDF ), an available-forsale unquoted investment. Commencing from 1 January 2006 up to and including 10 August 2006 (the day prior to the execution of the Trust s third supplemental deed), the Manager was entitled to receive the Manager s management fee in the form of cash and, to the extent required or necessary for the purpose of ensuring that the distribution for each financial year within such period is the same as any forecast and projected distribution for the financial year ended 31 December 2005 as set out in the Introductory Document of the Trust dated 16 March 2004 ( Introductory Document ), in the form of Units issued to the Manager at the prevailing Market Price (as defined in the Trust Deed) quarterly in arrears. Commencing from 11 August 2006 (the date of execution of the Trust s third supplemental deed) up to and including 31 December 2008, the Manager is entitled to receive, at the option of the Manager, the Manager s management fees in the form of cash, wholly in the form of Units or a combination of both, provided that, to the extent required or necessary for the purpose of ensuring that the distribution of each financial year within such period is the same as any forecast and projected distribution for the financial year ended 31 December 2005, as set out in the Introductory Document, the Manager s management fee shall be paid in the form of Units at the prevailing Market Price quarterly in arrears. For the period after 31 December 2008, the Manager is entitled to receive, at the option of the Manager, the Manager s management fees wholly in the form of cash, wholly in the form of Units or a combination of both. When paid in the form of Units, the Manager shall be entitled to receive such number of Units as may be purchased with the relevant amount of the Manager s management fee attributable to such period at an issue price equal to the Market Price. (iii) Trustee s fees Pursuant to the Trust Deed, the Trustee s fees shall not exceed 0.10% per annum of the value of Deposited Property (except for the investment in RCS Trust, a joint venture) (subject to a minimum sum of $8,000 per month) payable out of the Deposited Property of the Trust. The Trustee is also entitled to reimbursement of expenses incurred in the performance of its duties under the Trust Deed. The Trustee s fees are payable quarterly in arrears. 82

23 2 Summary of significant accounting policies 2.1 Basis of preparation The financial statements have been prepared in accordance with the Statement of Recommended Accounting Practice 7 ( RAP 7 ) Reporting Framework for Unit Trusts issued by the Institute of Certified Public Accountants of Singapore, and the applicable requirements of the Code on Collective Investment Schemes ( CIS Code ) issued by the Monetary Authority of Singapore ( MAS ) and the provisions of the Trust Deed. The financial statements, have been prepared on the historical cost basis, except for investment properties, derivative financial instruments and certain financial assets and financial liabilities which are measured at fair value. The financial statements of the Group and the Trust are presented in Singapore dollars, which is the functional currency of the Trust. All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated. The preparation of financial statements in conformity with RAP 7 requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes: Note 4 Valuation of investment properties Note 26 Valuation of financial instruments The Group and the Trust have adopted the following standards which are mandatory for financial years beginning on or after 1 January The Group s and the Trust s adoptions of the standards have no significant impact on current and prior periods. FRS 23 Borrowing Costs Amendments to FRS 107 Financial Instruments: Disclosures Improving Disclosures about Financial Statements FRS 108 Operating Segments CapitaCommercial Trust Annual Report

24 Notes to the Financial Statements 2 Summary of significant accounting policies (continued) 2.1 Basis of preparation (continued) Accounting for borrowing costs In respect of borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after 1 January 2009, the Group capitalises borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. This change in accounting policy was due to the adoption of FRS 23 Borrowing Costs (2007) in accordance with the transitional provisions of such standard; comparative figures have not been restated. The change in accounting policy had no material impact on earnings per unit. During the year, there were no capitalised borrowing costs with respect to the acquisition, construction or production of investment property. Disclosures Improving disclosures about financial statements The amendments require disclosures relating to fair value measurements using a three-level hierarchy that reflects the significance of the inputs used in measuring fair values. Additional disclosures are required for fair value measurements in Level 3 of the fair value hierarchy. The amendments also require disclosure of any significant transfers between Level 1 and Level 2 of the fair value hierarchy and a narrative explanation of the reasons for such transfers. Besides enhancing disclosures over fair value measurements relating to financial instruments, the amendments also seek to improve the disclosures of liquidity risk and how liquidity risk is being managed. Determination and presentation of operating segments As of 1 January 2009, the Group and the Trust determine and present operating segments based on the information that internally is provided to the Group s Chief Operating Decision Makers ( CODMs ). This change in accounting policy is due to the adoption of FRS 108 Operating Segments. Previously operating segments were determined and presented in accordance with FRS 14 Segment Reporting. The new accounting policy in respect of operating segment disclosures is presented as follows. Comparative segment information has been re-presented in conformity with the transitional requirements of such standard. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per unit. An operating segment is a component of the Group and the Trust that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components. An operating segment s operating results are reviewed regularly by the Group s CODMs to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the Group s CODMs include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly other income-earning assets and revenue, interest-bearing liabilities and expenses, and related assets and expenses. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and tangible assets other than goodwill. 84

25 The accounting policies set out below have been applied consistently by the Group. The accounting policies used by the Group have been applied consistently to all periods presented in these financial statements. 2.2 Consolidation Subsidiary A subsidiary is an entity controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiary are included in the consolidated financial statements from the date that control commences until the date that control ceases. In the Trust s balance sheet, investments in subsidiary is stated at cost less impairment losses. Joint venture Joint venture is an entity over whose activities the Group has joint control established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. In the financial statements of the Group, the interest in joint venture is accounted for by including its proportionate share of the jointly controlled entity s net assets, liabilities, income and expenses with the similar item, line by line, in its financial statements. The consolidated financial statements include the assets that the Group controls and the liabilities that it incurs in the course of pursuing the joint operation, share of the income that it earns from the joint operation, from the date that joint control commences until the date that joint control ceases. In the Trust s balance sheet, investments in joint venture is stated at cost less impairment losses. In the Trust s statement of total return, the results from joint venture are included to the extent of distributable income received and receivable, provided the Trust s right to receive the distributable income is established before the reporting date. Associate Associate is an entity in which the Group has significant influence, but not control over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Associate is accounted for using the equity method. The consolidated financial statements include the Group s share of the income and expenses and movements in unitholders funds of associate, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group s share of losses exceeds its interest in an associate, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate. In the Trust s balance sheet, investments in associate is stated at cost less impairment losses. In the Trust s statement of total return, the results from these entities are included to the extent of distributable income received and receivable, provided the Trust s right to receive the distributable income is established before the reporting date. CapitaCommercial Trust Annual Report

26 Notes to the Financial Statements 2 Summary of significant accounting policies (continued) 2.2 Consolidation (continued) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associate and joint venture are eliminated against the investment to the extent of the Group s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. 2.3 Plant and equipment Plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. When parts of an item of plant and equipment have different useful lives, they are accounted for as separate items (major components) of plant and equipment. Depreciation is recognised in the statement of total return on a straight-line basis over their estimated useful lives as follows: Furniture, fittings and equipment 2 to 5 years Depreciation methods, useful lives and residual values are reviewed at each reporting date. The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of plant and equipment are recognised in the statement of total return. Gains or losses arising from the retirement or disposal of plant and equipment are determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset and are recognised in the statement of total return on the date of retirement or disposal. 2.4 Investment properties Investment properties are properties held either to earn rental income or capital appreciation or both. Investment properties are accounted for as non-current assets and are stated at initial cost on acquisition, and at fair value thereafter. The cost of a purchased property comprises its purchase price and any directly attributable expenditure. Transaction costs shall be included in the initial measurement. Fair value is determined in accordance with the Trust Deed, which requires the investment properties to be valued by independent registered valuers at least once a year in accordance with the CIS Code issued by MAS. Any increase or decrease on revaluation is credited or charged to the statement of total return as a net change in fair value of investment properties. When an investment property is disposed, the resulting gain or loss recognised in the statement of total return is the difference between net disposal proceeds and the carrying amount of the property. Investment properties are not depreciated. The properties are subject to continued maintenance and regularly revalued on the basis set out above. 86

27 2.5 Foreign operations and foreign currencies Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rates at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined. Foreign currency differences arising on retranslation are recognised in the statement of total return, except for differences arising on the retranslation of monetary items that in substance form part of the Group s net investment in a foreign operation and available-for-sale equity instruments. Foreign operations The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates prevailing at the date of the transactions. Foreign currency differences are recognised in foreign currency translation reserve. When a foreign operation is disposed, in part or in full, the relevant amount in the foreign exchange translation reserve is transferred to the statement of total return. 2.6 Financial instruments Derivative financial instruments Derivative financial instruments are used to manage exposures to interest rate risks arising from financing and investment activities. Derivative financial instruments are not used for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through the statement of total return. Derivative financial instruments are recognised initially at fair value; attributable transaction costs are recognised in the statement of total return. Subsequent to initial recognition, derivative financial instruments are remeasured at fair value. The gain or loss on remeasurement to fair value is recognised immediately in the statement of total return. Other non-trading derivatives When a derivative financial instrument is not held for trading, and is not designated in a qualifying hedge relationship, all changes in its fair value are recognised immediately in the statement of return. Non-derivative financial instruments Non-derivative financial instruments comprise investment in equity securities, trade and other receivables, cash and cash equivalents, trade and other payables, security deposits and interest bearing liabilities. CapitaCommercial Trust Annual Report

28 Notes to the Financial Statements 2 Summary of significant accounting policies (continued) 2.6 Financial instruments (continued) Non-derivative financial instruments (continued) Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below. A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group s obligations specified in the contract expire or are discharged or cancelled. Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrafts that are repayable on demand and that form an integral part of the Group s cash management are included as a component of cash and cash equivalents for the purpose of the Cash Flow Statement. Available-for-sale financial assets The Group s investments in certain equity securities are classified as available-for-sale financial assets if they are not classified in any of the other categories. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, and foreign exchange gains and losses on available-for-sale monetary items, are recognised directly in Unitholders funds. When an investment is derecognised, the cumulative gain or loss in Unitholders fund is transferred to the statement of total return. Available-for-sale financial assets which are unquoted and where the fair value cannot be measured reliably, are stated at cost. Others Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses. Convertible bonds The convertible bonds is hybrid instruments comprising a host debt component plus derivative liabilities. The derivative instrument is recognised initially at fair value. The carrying amount of the host debt component is the difference between the cost of the convertible bonds and the fair value of the embedded derivative liability. Any directly attributable transaction costs are allocated to the debt and derivative liabilities components in proportion to their initial carrying amounts. Transaction cost related to the debt component is included in the initial measurement of the host straight bond, whereas transaction cost related to derivative liabilities component is charged to the statement of total return. Subsequent to initial recognition, the debt component is measured at amortised cost using effective interest method. The derivative liabilities are measured at fair value through profit or loss. Interest expense relating to the debt component is recognised in the statement of total return. 88

29 Impairment of financial assets A financial asset not carried at fair value through profit and loss is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the statement of total return. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in the statement of total return. 2.7 Impairment non-financial assets The carrying amounts of the Group s non-financial assets, other than investment properties and inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amounts are estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the statement of total return unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 2.8 Unitholders funds Unitholders funds are classified as equity. Incremental costs directly attributable to the issue of Units are recognised as a deduction from equity. CapitaCommercial Trust Annual Report

30 Notes to the Financial Statements 2 Summary of significant accounting policies (continued) 2.9 Revenue recognition Rental income from operating leases Rental income receivable under operating leases is recognised in the statement of total return on a straight-line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased assets. Lease incentives granted are recognised as an integral part of the total rental income. Contingent rentals, which include gross turnover rental, are recognised as income in the accounting period on an accrual basis. No contingent rentals are recognised if there are uncertainties due to the possible return of amounts received. Car park income Car park income is recognised in the statement of total return on receipt basis. Interest income Interest income is recognised in the statement of total return as it accrues, using the effective interest method. Investment income Investment income is recognised in the statement of total return on the date that the Group s right to receive payment is established Expenses Property operating expenses Property operating expenses consist of property tax, utilities, maintenance, property management reimbursements, property management fees, marketing expenses and other property outgoings in relation to investment properties where such expenses are the responsibility of the Group. Property management fees are recognised on an accrual basis based on the applicable formula stipulated in Note 1(i). Manager s management fees Manager s management fees are recognised on an accrual basis using the applicable formula, stipulated in Note 1(ii). Trustee s fees The Trustee s fees are recognised on an accrual basis using the applicable formula stipulated in Note 1(iii) Income tax Income tax expense comprises current and deferred tax. Income tax expense is recognised in the statement of total return except to the extent that it relates to items directly related to Unitholders funds, in which case it is recognised in Unitholders funds. 90

31 Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and joint venture to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. The Inland Revenue Authority of Singapore ( IRAS ) has issued a tax ruling on the taxation of the Trust for income earned and expenditure incurred after its listing on the SGX-ST. Subject to meeting the terms and conditions of the tax ruling, which includes a distribution of at least 90% of the taxable income of the Trust, the Trust will not be taxed on the portion of taxable income of the Trust that is distributed to Unitholders. Any portion of the taxable income that is not distributed to Unitholders will be taxed on the Trust. In the event that there are subsequent adjustments to the taxable income when the actual taxable income of the Trust is finally agreed with IRAS, such adjustments are taken up as an adjustment to the taxable income for the next distribution following the agreement with IRAS. Individuals and Qualifying Unitholders are entitled to gross distributions from the Trust. For distributions made to foreign non-individual Unitholders, the Trust is required to withhold tax at the rate of 10%. For other types of Unitholders, the Trust is required to withhold tax at the prevailing corporate tax rate on the distributions made by the Trust. Such other types of Unitholders are subject to tax on the regrossed amounts of the distributions received but may claim a credit for the tax deducted at source at the prevailing corporate tax rate by the Trust. A Qualifying Unitholder is a Unitholder who is (a) a Singapore-incorporated company which is tax resident in Singapore; (b) a body of persons, other than a company or a partnership, registered or constituted in Singapore (for example, a town council, a statutory board, a registered charity, a registered co-operative society, a registered trade union, a management corporation, a club and a trade and industry association); CapitaCommercial Trust Annual Report

32 Notes to the Financial Statements 2 Summary of significant accounting policies (continued) 2.11 Income tax (continued) (c) a Singapore branch of a foreign company which has been presented a letter of approval from the Comptroller of Income Tax granting waiver from tax deduction at source in respect of distributions from the Trust; (d) an agent bank or a Supplementary Retirement Scheme ( SRS ) operator acting as nominee for individuals who have purchased Units within the Central Provident Fund Investment Scheme ( CPFIS ) or the SRS respectively; or (e) a nominee who can demonstrate that the Units are held for beneficial owners who are individuals or who fall within the classes of Unitholders listed in (a) to (c) above. The Trust has a distribution policy where it is required to distribute at least 90% of its taxable income, other than gains from the sale of real estate properties that are determined by IRAS to be trading gains. For the taxable income that is not distributed, referred to as retained taxable income, tax will be assessed on the Trust. Where such retained taxable income is subsequently distributed, the Trust need not deduct tax at source Finance costs Finance costs comprise interest expense on borrowings and convertible bonds, amortisation of borrowings and convertible bonds related transaction costs and accretion of convertible bonds interest which are recognised in the statement of total return using the effective interest method over the period of borrowings and the convertible bonds Segment reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses including revenues and expenses that relate to transactions with any of the Group s other components. All operating segments operating results are reviewed regularly by the CODMs to make decisions about resources to be allocated to the segments and assess its performance and for which discrete financial information is available. 92

33 3 Plant and equipment Furniture, fittings and equipment $ 000 Group Cost At 1 January ,000 Additions 821 Disposals (10) At 31 December ,811 Additions 987 Disposals (9) At 31 December ,789 Accumulated depreciation At 1 January Charge for the year 648 Disposals (10) At 31 December ,544 Charge for the year 863 Disposals (9) At 31 December ,398 Carrying amount At 1 January ,094 At 31 December ,267 At 31 December ,391 CapitaCommercial Trust Annual Report

34 Notes to the Financial Statements 3 Plant and equipment (continued) Furniture, fittings and equipment $ 000 trust Cost At 1 January ,223 Additions 341 Disposals (9) At 31 December ,555 Additions 832 Disposals (9) At 31 December ,378 Accumulated depreciation At 1 January Charge for the year 332 Disposals (9) At 31 December Charge for the year 503 Disposals (9) At 31 December ,444 Carrying amount At 1 January At 31 December At 31 December

35 4 Investment properties Group Trust $ 000 $ 000 $ 000 $ 000 At 1 January 6,710,600 5,109,950 5,093,600 3,558,350 Acquisition of investment properties and related costs 1,364,103 1,364,103 Capital expenditure capitalised 26,312 32,749 11,182 7,053 Change in fair value recognised in statement of total return (1,034,912) 203,798 (932,782) 164,094 Balance before reclassification to Asset held for sale 5,702,000 6,710,600 4,172,000 5,093,600 Reclassification to Asset held for sale (182,500) (182,500) At 31 December 5,519,500 6,710,600 3,989,500 5,093,600 As at 31 December 2009, Capital Tower and HSBC Building have been mortgaged as security for credit facilities (Note 13). All properties are stated at fair value based on valuations performed by independent professional valuers. In determining the fair value, the valuers have used valuation methods which involve certain estimates. The Manager has exercised its judgment and is satisfied that the valuation methods and estimates are reflective of the current market condition. The key assumptions used to determine the fair value of investment properties include market-corroborated capitalisation yields, terminal yields and discount rates. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. Robinson Point, an office building at fair value of $182.5 million on 31 December 2009, has been reclassified from Investment property to Asset held for sale under Current assets on 31 December The reclassification was a result of the Manager s commitment to a plan to sell the office building in December 2009, and CCT has entered into a sale and purchase agreement with AEW VIA SPV4 Pte. Ltd. on 19 January CapitaCommercial Trust Annual Report

36 Notes to the Financial Statements 5 Subsidiary Trust $ 000 $ 000 Unquoted equity investments, at cost * * * values are less than $1,000 Details of the subsidiary are as follows: Effective equity Country of interest held by Name of subsidiary incorporation the Group % % CCT MTN Pte. Ltd. ( CCT MTN ) 1 Singapore Audited by KPMG Singapore 6 Joint venture Trust $ 000 $ 000 Investment in joint venture 809, ,886 Details of the joint venture are as follows: Effective equity Country of interest held by Name of joint venture establishment the Group % % RCS Trust 1 Singapore Audited by KPMG Singapore RCS Trust is an unlisted special purpose trust established under a trust deed ( RCS Trust Trust Deed ) dated 18 July 2006 entered into between HSBC Institutional Trust Services (Singapore) Limited as trusteemanager of RCS Trust ( RCS Trust Trustee-Manager ), HSBC Institutional Trust Services (Singapore) Limited as trustee of CapitaMall Trust ( CMT ), the Trustee, CapitaMall Trust Management Limited (as Manager of CMT) and the Manager. RCS Trust is 60% owned by the Trust and 40% owned by CMT. 96

37 RCS Trust has entered into several service agreements in relation to management of the trust and its property operations. The fee structures of these services are as follows: (i) Property management fees Under the property management agreement, property management fees are charged as follows: (a) 2.00% per annum of the property income of the property; and (b) 2.50% per annum of the net property income of the property. The property management fees are payable monthly in arrears. (ii) Asset management fees Pursuant to the RCS Trust Trust Deed, the asset management fees comprise a base component of 0.25% per annum of the value of deposited property of RCS Trust and a performance component of 4.00% per annum of the net property income of RCS Trust, including all its authorised investments for the time being held or deemed to be held upon the trusts of the RCS Trust Trust Deed. The asset management fees shall be paid entirely in the form of units or, with the unanimous approval of the Manager and CapitaMall Trust Management Limited (as Manager of CMT), either partly in units and partly in cash or wholly in cash. The asset management fees are payable quarterly in arrears. (iii) Trustee-Manager s fees Pursuant to the RCS Trust Trust Deed, the Trustee-Manager s fees shall not exceed 0.10% per annum of the value of deposited property of RCS Trust, as defined in the RCS Trust Trust Deed (subject to a minimum sum of $15,000 per month), payable out of the deposited property of RCS Trust. The Trustee-Manager is also entitled to reimbursement of expenses incurred in the performance of its duties under the Trust Deed. The Trustee-Manager s fees are payable quarterly in arrears. CapitaCommercial Trust Annual Report

38 Notes to the Financial Statements 6 Joint venture (continued) The financial information of the Group s interest in the joint venture is as follows: Joint venture $ 000 $ 000 Assets and liabilities Non-current assets 1,530,457 1,617,662 Current assets 16,171 9,614 Total assets 1,546,628 1,627,276 Current liabilities 29,683 26,617 Non-current liabilities 561, ,431 Total liabilities 591, ,048 Results Gross revenue 120, ,376 Expenses (65,718) (67,158) Net change in fair value of investment property (102,131) 39,704 Total return for the year (47,774) 89,922 Group s share of joint venture s capital commitment 26,426 35,041 7 Associate Group Trust $ 000 $ 000 $ 000 $ 000 Investment in associate 62,630 63,886 58,850 58,850 Impairment loss on investment in associate (7,371) (13,925) 62,630 63,886 51,479 44,925 Details of the associate are as follows: Effective equity Country of interest held by Name of associate incorporation the Group % % Quill Capita Trust 1 Malaysia Audited by Ernst & Young Malaysia, and it is listed on the main board of Bursa Malaysia Securities Berhad ( Bursa Securities ). Rule 716 has been complied with. QCT is a real estate investment trust constituted in Malaysia by a trust deed dated 9 October 2006 and has its place of business in Malaysia. The principal activity of QCT is to own and invest in commercial properties, primarily in Malaysia. 98

39 As the results of QCT are not expected to be announced in sufficient time to be included in the Group s results for the same calendar year end, the Group has equity accounted for the results of QCT based on a 3-month lag time. Consequently as at 31 December 2009, equity accounting is based on results for the period ended 30 September 2009, adjusted for significant transactions and events occurring up to the reporting date of the Group. During the year, the Trust assessed the recoverable amount of its investment in QCT. Based on this assessment, the Trust has reversed an amount of $6,554,000 from the impairment provision as at 31 December 2008 of $13,925,000. This reversal of impairment loss was determined based on fair value using market price quotations. The summarised financial information of the associate, not adjusted for the percentage of ownership held by the Group, is as follows: Associate $ 000 $ 000 Assets and liabilities Non-current assets 320, ,955 Current assets 8,035 12,650 Total assets 328, ,605 Current liabilities 84,326 54,855 Non-current liabilities 52,088 31,947 Total liabilities 136,414 86,802 Results Gross revenue 16,126 12,679 Expenses (6,416) (3,891) Taxation (1) Net change in fair value of investment properties 55 1,157 Profit after taxation 9,764 9,945 8 Available-for-sale unquoted investment Available-for-sale unquoted investment represents the Group s and Trust s 7.4% stake in MCDF. MCDF is a private real estate fund which invests in real estate development properties. As at 31 December 2009, the Trust s investment in MCDF is stated at cost as this investment is unquoted and the properties held by MCDF are currently under construction. CapitaCommercial Trust Annual Report

40 Notes to the Financial Statements 9 Inventories Group Trust $ 000 $ 000 $ 000 $ 000 Maintenance supplies Trade and other receivables Group Trust $ 000 $ 000 $ 000 $ 000 Trade receivables 2,019 2,545 1,604 1,241 Allowance for impairment losses (431) (269) (337) (269) Net trade receivables 1,588 2,276 1, Amount due from joint venture entity (non-trade) 15,148 14,182 Deposits 2,257 2, Interest receivable Other receivables 5,187 13,558 4,850 12,204 Prepayments ,124 18,474 21,401 27,749 Outstanding balance with the joint venture entity is unsecured, interest-free and repayable on demand. There is no allowance for impairment arising from the outstanding balance. Included in other receivables of the Group and the Trust is Yield Protection income (Note 17) receivable of $4,522,000 (2008: $11,952,000) due from a related company of the Manager. Concentration of credit risk relating to trade receivables is limited due to the Group s many varied tenants. These tenants are engaged in diversified businesses and are of good quality and strong credit standing. The Group s historical experience in collection of trade receivables falls within the recorded allowances. Due to these factors, the Manager believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Group s trade receivables. 100

41 Impairment losses The aging of trade receivables at the reporting date is as follows: Group Impairment Impairment Gross losses Gross losses $ 000 $ 000 $ 000 $ 000 Not past due 1,270 1, Past due days Past due more than 90 days , , trust Not past due Past due days Past due more than 90 days , , The change in impairment loss in respect of trade receivables during the year is as follows: Group Trust $ 000 $ 000 $ 000 $ 000 At 1 January Impairment loss recognised Impairment loss utilised (18) (9) At 31 December The Manager believes that no additional impairment allowance is necessary in respect of the remaining trade receivables as these receivables relate mainly to tenants that have a good record with the Group and sufficient security deposits. CapitaCommercial Trust Annual Report

42 Notes to the Financial Statements 11 Cash and cash equivalents Group Trust $ 000 $ 000 $ 000 $ 000 Cash at bank and in hand 179,445 23, ,016 18,775 Fixed deposits with financial institutions 133,013 43, ,413 43, ,458 66, ,429 62,233 The weighted average effective interest rate relating to fixed deposits with financial institutions at the balance sheet date is 0.10% (2008: 0.32%) per annum for the Group and the Trust. 12 Trade and other payables Group Trust $ 000 $ 000 $ 000 $ 000 Trade payables and accrued operating expenses 49,684 56,055 34,445 39,832 Amounts due to related parties (trade) 6,242 4,685 3,973 2,386 Other deposits and advances 7,215 5,910 5,158 4,372 Interest payable 7,497 16,296 6,260 15,044 70,638 82,946 49,836 61,634 Included in trade payables and accrued operating expenses is an amount due to the Trustee of $189,000 (2008: $212,000) for the Group and $140,000 (2008: $161,000) for the Trust. Included in the amounts due to related parties is an amount due to the Manager of $4,490,000 (2008: $3,007,000) for the Group and $3,374,000 (2008: $1,891,000) for the Trust and an amount due to the property manager of $964,000 (2008: $863,000) for the Group and $567,000 (2008: $446,000) for the Trust. Outstanding balances with related parties are unsecured. The Group and the Trust s exposure to liquidity risk related to trade and other payables is disclosed in note 13. Included in interest payable of the Trust is an amount due to the subsidiary of $4,063,000 (2008: $3,957,000). 102

43 13 Interest-bearing liabilities This note provides information about the contractual terms of the Group s and the Trust s interest-bearing liabilities, excluding convertible bonds debt component. Group Trust $ 000 $ 000 $ 000 $ 000 Non-current liabilities Term loans Secured 1,255,647 1,179, , ,624 Unsecured 150, ,000 Medium Term Notes (unsecured) 150, ,000 1,405,647 1,514, , ,624 Current liabilities Term loans (secured) 656, ,042 Bridge loans (unsecured) 40,000 40,000 Medium Term Notes (unsecured) 235, , , , , ,042 1,640,647 2,210,872 1,086,651 1,676,666 Maturity of liabilities Amount repayable in one year or less 235, , , ,042 After 1 year but within 5 years 1,405,647 1,514, , ,624 1,640,647 2,210,872 1,086,651 1,676,666 CapitaCommercial Trust Annual Report

44 Notes to the Financial Statements 13 Interest-bearing liabilities (continued) Terms and debt repayment schedule Terms and conditions of outstanding loans and borrowings are as follows: Nominal Year of Face Carrying Face Carrying interest rate maturity value amount value amount $ 000 $ 000 $ 000 $ 000 Group SGD fixed rate term loan 3.32% to 3.77% , ,431 SGD floating rate term loans 2 SOR 1 + margin , ,611 SGD Medium Term Notes 3.05% to 3.85% , , , ,000 SGD floating rate term loan SOR 1 + margin , ,624 SGD Medium Term Notes 3.15% , , , ,000 SGD fixed rate term loan 4.17% to 4.21% , , , ,006 SGD floating rate term loan SOR 1 + margin ,400 35,400 16,200 16,200 SGD floating rate term loans 2 SOR 1 + margin , ,651 SGD Medium Term Notes 3.50% ,000 50,000 1,652,650 1,640,647 2,216,842 2,210,872 trust SGD fixed rate term loan 3.32% to 3.77% , ,431 SGD floating rate term loans 2 SOR 1 + margin , ,611 SGD Medium Term Notes 3.05% to 3.85% , , , ,000 SGD floating rate term loan SOR 1 + margin , ,624 SGD Medium Term Notes 3.15% , , , ,000 SGD floating rate term loans 2 SOR 1 + margin , ,651 SGD Medium Term Notes 3.50% ,000 50,000 1,097,650 1,086,651 1,681,042 1,676,666 1 Swap Offer Rate 2 Included in the floating rate term loans is an amount of $390.0 million which is economically hedged by interest rate swaps with notional contract amounts of $390.0 million whereby the Trust pays a weighted average fixed interest rate of 3.54% (2008: 3.54%). 104

45 The following are the expected contractual undiscounted cash outflows of financial liabilities, including estimated interest payments/components: Group Cash flows Carrying Contractual Within Within 2 More than amount cash flows 1 year to 5 years 5 years $ 000 $ 000 $ 000 $ 000 $ Non-derivative financial liabilities SGD Medium Term Notes 385, , , ,629 Fixed rate term loans 518, ,540 21, ,828 Floating rate term loans 737, ,411 17, ,590 Convertible bonds debt component 363, ,155 7, ,755 Trade and other payables 70,638 70,638 70,638 Derivative financial liabilities Interest rate swaps 19,616 36,870 11,743 25,127 2,094,112 2,255, ,247 1,882, Non-derivative financial liabilities SGD Medium Term Notes 335, ,413 10, ,415 Fixed rate term loans 694, , , ,511 Floating rate term loans 1,181,435 1,217, , ,678 Convertible bonds debt component 350, ,509 7, ,109 Trade and other payables 82,946 82,946 82,946 Derivative financial liabilities Interest rate swaps 26,140 38,858 9,222 29,636 2,670,658 2,889, ,258 2,038,349 CapitaCommercial Trust Annual Report

46 Notes to the Financial Statements 13 Interest-bearing liabilities (continued) trust Cash flows Carrying Contractual Within Within 2 More than amount cash flows 1 year to 5 years 5 years $ 000 $ 000 $ 000 $ 000 $ Non-derivative financial liabilities Fixed rate term loans 385, , , ,629 Floating rate term loans 701, ,262 17, ,882 Convertible bonds debt component 363, ,155 7, ,755 Trade and other payables 49,836 49,836 49,836 Derivative financial liabilities Interest rate swaps 19,616 36,870 11,743 25,127 1,519,314 1,641, ,292 1,312, Non-derivative financial liabilities Fixed rate term loans 511, , , ,415 Floating rate term loans 1,165,235 1,200, , ,953 Convertible bonds debt component 350, ,509 7, ,109 Trade and other payables 61,634 61,634 61,634 Derivative financial liabilities Interest rate swaps 26,140 38,858 9,222 29,636 2,115,140 2,273, ,926 1,465,113 The interest-bearing liabilities comprised of the following: (1) In January 2009, the Manager entered into a facility agreement with DBS Bank Ltd, Standard Chartered Bank, United Overseas Bank Limited and The Bank of Tokyo-Mitsubishi UFJ, Ltd, for a secured three year term loan of up to $580.0 million for the Trust. The facility was drawn down in March 2009 to refinance the $580.0 million term loan from a special purpose company, Silver Loft Investment Corporation Limited ( Silver Loft ), which matured on 16 March Under the facility agreement between Silver Loft and the Trustee, Silver Loft had granted the Trust a total five-year facility of $580.0 million commencing from initial drawdown date of 16 March 2004 to maturity date of 16 March This loan had been fully paid in

47 In 2008, total facilities drawn down by the Trust was $580.0 million consisting of: (i) a term loan facility of $153.3 million commencing 16 March 2004 of which the first three years are at a fixed rate of interest of 2.40% per annum and the subsequent two years are at a floating rate of interest of 0.70% over the relevant swap rate, repriced every three months; (ii) a callable loan facility of $250.3 million commencing 16 March 2004 of which the first two years are at a fixed rate of interest of 1.90% per annum and the subsequent three years are at a floating rate of interest of 0.55% over the relevant swap rate, repriced every three months; (iii) a fixed rate term loan facility of $80.0 million. The interest rate is fixed at the rate of 3.32% per annum; and (iv) a fixed rate term loan facility of $96.4 million. The interest rate is fixed at the rate of 3.77% per annum. The term loan facilities were used to finance the acquisition of Six Battery Road in the previous period. In 2008, as security for the facilities granted by Silver Loft to the Trustee, the Trustee had granted in favour of Silver Loft the following: (i) a mortgage over the initial investment properties of the Trust ( initial investment properties refer to Capital Tower, Six Battery Road, Starhub Centre, Robinson Point, Bugis Village, Golden Shoe Car Park and Market Street Car Park). (ii) an assignment of the insurance policies relating to the initial investment properties of the Trust; (iii) an assignment of all the rights, interest and title of the initial investment properties of the Trust in relation to each of the Share Sale and Purchase Agreements and Property Sale and Purchase Agreements; (iv) an assignment of the agreements relating to the management of the initial investment properties of the Trust; (v) an assignment and charge of the rental proceeds and tenancy agreements of units in the initial investment properties of the Trust; and (vi) a fixed and floating charge over certain assets of the Trust relating to the initial investment properties. CapitaCommercial Trust Annual Report

48 Notes to the Financial Statements 13 Interest-bearing liabilities (continued) To fund the term loans to the Trust of $580.0 million in 2008, Silver Loft had raised funds through issuance of the following Floating Rate Notes (collectively, the Notes ): (i) US$90.0 million Class A1 Floating Rate Notes at floating interest rate of 0.45% above the US dollar London Interbank Offered Rate ( LIBOR ) repriced every three months, for the period from 16 March 2004 to 16 March In the event that the Class A1 Floating Rate Notes were not redeemed by Silver Loft on 16 March 2009, interest would accrue at the rate of 1.45% above the US dollar LIBOR repriced every three months, for the period from 16 March 2009 to date of redemption on 16 September 2010; (ii) US$147.0 million Class A2 Floating Rate Notes at floating interest rate of 0.45% above the US dollar LIBOR repriced every three months, for the period from 16 March 2004 to 16 March In the event that the Class A2 Floating Rate Notes were not redeemed by Silver Loft on 16 March 2009, interest would accrue at the rate of 1.45% above the US dollar LIBOR repriced every three months, for the period from 16 March 2009 to date of redemption on 16 September The Class A2 Floating Rate Notes might be partially or wholly callable by Silver Loft in the event that all or any part of Class A2 Floating Rate Notes is prepaid by the Trust; (iii) US$47.0 million Class A3 Floating Rate Notes at floating interest rate of 0.75% above the US dollar LIBOR repriced every three months, for the period from 16 March 2004 to 16 March In the event that the Class A3 Floating Rate Notes were not redeemed by Silver Loft on 16 March 2009, interest would accrue at the rate of 2.00% above the US dollar LIBOR repriced every three months, for the period from 16 March 2009 to date of redemption on 16 September 2010; and (iv) US$56.6 million Class A4 Floating Rate Notes at floating interest rate of 1.30% above the US dollar LIBOR repriced every three months, for the period from 16 March 2004 to 16 March In the event that the Class A4 Floating Rate Notes were not redeemed by Silver Loft on 16 March 2009, interest would accrue at the rate of 2.80% above the US dollar LIBOR repriced every three months, for the period from 16 March 2009 to date of redemption on 16 September As security for the Notes, Silver Loft had created a fixed and floating charge over the initial investment properties of the Trust in favour of the Silver Loft Notes Trustee under the Notes Debenture. The proceeds from the issue of the Notes were approximately $580.0 million. The Group does not control Silver Loft. Consequently, Silver Loft had not been consolidated into these financial statements. (2) Following the drawdown of the $580.0 million term loan facility granted by DBS Bank Ltd, Standard Chartered Bank, United Overseas Bank Limited and The Bank of Tokyo-Mitsubishi UFJ, Ltd on 16 March 2009 to refinance the $580.0 million term loan from Silver Loft, the Trust had made a partial repayment of $10.0 million on 16 December Hence, the outstanding amount of term loan facility is $570.0 million as at 31 December As security for the facility, the Trust has granted in favour of the lenders the following: (i) a mortgage over Capital Tower; (ii) an assignment of the insurance policies relating to Capital Tower; 108

49 (iii) an assignment of all the rights, benefit, title and interest of the Trust in relation to Property Sale Agreements and Tenancy Agreements (including Net Sale Proceeds and Rental proceeds) and the Accounts relating to Capital Tower; and (iv) a fixed and floating charge over all assets in connection with Capital Tower. (3) The $76.0 million term loan facility granted to the Trust by The Hongkong and Shanghai Banking Corporation Limited ( HSBC ) had been fully drawn down as at 31 December 2008 to part finance the acquisition of HSBC Building in This loan had been fully repaid on 30 June As security for the facility granted by HSBC to the Trustee, the Trustee had granted in favour of HSBC an assignment of the rental proceeds and tenancy agreement of HSBC Building. The security had since been discharged with the repayment of the loan in (4) A $650.0 million term loan facility was granted by Standard Chartered Bank and Bank of Tokyo Mitsubishi UFJ, Ltd. The Trust had fully drawn down the loan on 11 July 2008 to part finance the acquisition of One George Street, and this loan had been fully paid in As security for the facilities granted by Standard Chartered Bank and Bank of Tokyo Mitsubishi UFJ, Ltd, the Trust had granted in favour of the lenders the following : (i) a mortgage over One George Street; (ii) an assignment of the insurance policies relating to One George Street; (iii) an assignment of all the rights, benefit, title and interest of the Trust in relation to Property Sale Agreements and Tenancy Agreements (including Net Sale Proceeds and Rental Proceeds and the Accounts relating to One George Street); (iv) an assignment of all the rights, benefit, title and interest of the Trust in relation to the Net Property Yield Guarantee relating to One George Street; (v) a fixed and floating charge over all assets in connection with One George Street. The security had been discharged with the repayment of the loan in (5) A $142.7 million term loan facility was granted by Standard Chartered Bank and The Hongkong and Shanghai Banking Corporation Limited. The Trust has fully drawn down the loan on 30 June 2009 to refinance its short term loan. As security for the facility, the Trust has granted in favour of the lenders the following: (i) a mortgage over HSBC Building; (ii) an assignment of the insurance policies relating to HSBC Building; (iii) an assignment of all the rights, benefit, title and interest of the Trust in relation to Property Sale Agreements and Tenancy Agreements (including Net Sale Proceeds and Rental Proceeds) and the Accounts relating to HSBC Building; and (iv) a fixed and floating charge over all assets in connection with HSBC Building. CapitaCommercial Trust Annual Report

50 Notes to the Financial Statements 13 Interest-bearing liabilities (continued) (6) The term loan facilities of $866.0 million (2008: $866.0 million) was granted to RCS Trust by a special purpose company, Silver Oak Ltd ( Silver Oak ). Under the facility agreement between Silver Oak and the RCS Trust Trustee-Manager, Silver Oak has granted RCS Trust a five-year facility comprising the term loan facility of $866.0 million and revolving credit facility of $164.0 million (2008: $164.0 million) commencing from initial drawdown date of 13 September The total term loan facility drawn down by RCS Trust as at 31 December 2009 is $866.0 million (2008: $866.0 million), consisting of: (i) $670.0 million (2008: $670.0 million) term loan at a fixed interest rate of 4.17% (2008: 4.17%) per annum, fully repayable on 13 September 2011; (ii) $60.0 million (2008: $60.0 million) term loan at a fixed interest rate of 4.205% (2008: 4.205%) per annum, fully repayable on 13 September 2011; and (iii) $136.0 million (2008: $136.0 million) term loan at a fixed interest rate of 4.21% (2008: 4.21%) per annum, fully repayable on 13 September The term loan facilities were used to finance the acquisition of Raffles City. As security for the facilities granted by Silver Oak to the RCS Trust Trustee-Manager, the RCS Trust Trustee-Manager has granted in favour of Silver Oak the following: (i) a mortgage over Raffles City; (ii) an assignment of the insurance policy relating to Raffles City; (iii) an assignment of the agreements relating to the management of Raffles City; (iv) an assignment and charge of the rental proceeds and tenancy agreements of units in Raffles City; and (v) a fixed and floating charge over certain assets of RCS Trust relating to Raffles City. To fund the term loans to RCS Trust amounting to $866.0 million (2008: $866.0 million), Silver Oak has raised funds through issuance of the following Floating Rate Notes (collectively, the Silver Oak Notes ): (i) US$427.0 million Class A1 Secured Floating Rate Notes at floating interest rate of 0.19% above the US dollar LIBOR repriced every three months, for the period from 13 September 2006 to 13 September In the event that the Class A1 Floating Rate Notes are not redeemed by Silver Oak on 13 September 2011, interest will accrue at the rate of 1.19% per annum above the US dollar LIBOR repriced every three months, for the period from 13 September 2011 to date of redemption on 13 September 2013; 110

51 (ii) Euro 30.0 million Class A2 Floating Rate Notes at floating interest rate of 0.23% above the Euro Interbank Offered Rate ( EURIBOR ) repriced every three months, for the period from 13 September 2006 to 13 September In the event that the Class A2 Floating Rate Notes are not redeemed by Silver Oak on 13 September 2011, interest will accrue at the rate of 1.23% per annum above the EURIBOR repriced every three months, for the period from 13 September 2011 to date of redemption on 13 September 2013; and (iii) US$86.5 million Class B Floating Rate Notes at floating interest rate of 0.28% above the US dollar LIBOR repriced every three months, for the period from 13 September 2006 to 13 September In the event that the Class B Floating Rate Notes are not redeemed by Silver Oak on 13 September 2011, interest will accrue at the rate of 1.28% per annum above the US dollar LIBOR repriced every three months, for the period from 13 September 2011 to date of redemption on 13 September As security for the Silver Oak Notes, Silver Oak has created a fixed and floating charge over the assets of RCS Trust in favour of the Silver Oak Notes Trustee under the Silver Oak Notes Debenture. The proceeds from the issue of the Silver Oak Notes are approximately $866.0 million. As at 31 December 2009, $59.0 million (2008: $27.0 million) had been drawn down from the revolving credit facility granted by Silver Oak to RCS Trust. RCS Trust does not control Silver Oak. Consequently, Silver Oak has not been consolidated into the financial statements of RCS Trust. (7) The Trust also has the following facilities in place granted by DBS Bank Ltd: (i) a DBS omnibus line facility of up to $5.0 million granted by DBS Bank Ltd (comprising, within the line, an overdraft facility of $5.0 million and a letter of guarantee facility of $2.0 million, provided that the aggregate utilisation for both the overdraft facility and the letter of guarantee facility does not exceed $5.0 million). The purpose of the overdraft facility is to finance the general working requirements of the Trust and the properties in its portfolio while the letter of guarantee facility is to enable the issue of performance-related letters of guarantee arising from the day-to-day operations of the Trust and the properties in its portfolio. A floating rate of interest is payable on the overdraft facility and an annual commission, comprising a fixed percentage of the amount for which a letter of guarantee is given (which will vary depending on the duration of the letter of guarantee issued), is payable on any letter of guarantee which may be issued. As at 31 December 2009, the Trust has utilised $2.6 million (2008: $2.1 million) from the letter of guarantee facility. (ii) In 2008, the Trust had utilised $40.0 million from the $125.0 million bridge loan facility. This loan facility was fully paid in (8) On 20 November 2007, the subsidiary, CCT MTN, established a $1.0 billion unsecured Multicurrency Medium Term Note Programme ( Programme ). During the year, $50.0 million (2008: $335.0 million) notes were issued, which are due in 2013 at interest rate of 3.50%. CapitaCommercial Trust Annual Report

52 Notes to the Financial Statements 14 Fair value of financial derivatives Group Trust $ 000 $ 000 $ 000 $ 000 Interest rate swaps 19,616 26,140 19,616 26,140 Derivative liability portion of convertible bonds 19,616 26,140 19,616 26,140 Interest Rate Swaps At 31 December 2009, the Group has interest rate swaps with notional contract amounts of $390.0 million (2008: $390.0 million) whereby it pays a weighted average fixed interest rate of 3.54% (2008: 3.54%) and receives a variable rate equal to the SIBOR on the nominal amounts. The swaps are being used to hedge the exposure to varying cash flows due to changes in interest rates. Derivative liability portion of convertible bonds The changes in fair value of the derivative liability portion of the convertible bonds are recognised in the statement of total return. 15 Convertible bonds debt component GROUP AND TRUST $ 000 $ 000 Carrying amount of debt component at 1 January 350,700 Proceeds from issuance of Convertible Bonds 370,000 Transaction costs (6,860) Net proceeds 350, ,140 Amount classified as derivative liabilities (20,350) Interest accretion, including transaction costs 12,511 7,910 Carrying amount of debt component at 31 December 363, ,700 On 6 May 2008, the Trust issued $370.0 million principal amount of convertible bonds (the Convertible Bonds ) due 2013 which carry a coupon interest at 2.0% per annum. The Convertible Bonds are convertible by bondholders into Units at the conversion price of $ (revised on 29 January 2010 from initial conversion price of $2.6762) at any time on or after 21 May 2008 up to 3.00 p.m. on 21 April 2013 (at the price where the certificate evidencing such Convertible Bonds is deposited for conversion). Based on the latest conversion price, the bonds are convertible into approximately 201,645,866 Units, representing 7.2% of the total number of units of the Trust in issue as at 31 December This is against 142,127,300 Units representing 10.2% of the number of units of the Trust as at 31 December The Trustee has the option to pay cash in lieu of issuing new Units on conversion of any Convertible Bonds. The Convertible Bonds may be redeemed, in whole or in part, at the option of the bondholder on 6 May 2011 at the early redemption amount of the Convertible Bonds, together with any accrued but unpaid interest up to the date of redemption. 112

53 The Convertible Bonds may also be redeemed, in whole but not in part, at the option of the Trustee on or at any time after 6 May 2011 but not less than 7 business days prior to 6 May 2013 (subject to the satisfaction of certain conditions). The early redemption amount represents on any day a gross yield of 3.95% per annum, on a semi-annual basis calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the number of days elapsed. Unless previously redeemed by the bondholders on 6 May 2011 or by the Trustee at any time on or after 6 May 2011 and not less than 7 business days prior to 6 May 2013, the final redemption date of the Convertible Bonds is 6 May The redemption price upon maturity is equal to % of the principal amount, together with any accrued but unpaid interest accrued to the date of redemption, on the final redemption date. As at 31 December 2009, the effective interest rate for the Convertible Bonds debt component is approximately 5.16% (2008: 5.16%) per annum. 16 Units in issue GROUP AND TRUST Units in issue: At 1 January 1,397,239 1,384,692 Units created: rights issue 1,403,891 settlement of the acquisition fee on One George Street 6,123 settlement of the acquisition fee on Wilkie Edge 1,862 settlement of the asset management fees in relation to RCS Trust 8,271 3,898 settlement of the asset management fees in relation to One George Street and Wilkie Edge 4, At 31 December 2,813,915 1,397,239 Each Unit in the Trust represents an undivided interest in the Trust. The rights and interests of Unitholders are contained in the Trust Deed and include the right to: receive income and other distributions attributable to the Units held; participate in the termination of the Trust by receiving a share of all net cash proceeds derived from the realisation of the assets of the Trust less any liabilities, in accordance with their proportionate interests in the Trust. However, a Unitholder has no equitable or proprietary interest in the underlying assets of the Trust and is not entitled to the transfer of any assets (or part thereof) or of any estate or interest in any asset (or part thereof) of the Trust; attend all Unitholders meetings. The Trustee or the Manager may (and the Manager shall at the request in writing of not less than 50 Unitholders or one-tenth in number of the Unitholders, whichever is lesser) at any time convene a meeting of Unitholders in accordance with the provisions of the Trust Deed; and one vote per Unit. CapitaCommercial Trust Annual Report

54 Notes to the Financial Statements 16 Units in issue (continued) The restrictions of a Unitholder include the following: a Unitholder s right is limited to the right to require due administration of the Trust in accordance with the provisions of the Trust Deed; and a Unitholder has no right to request the Manager to redeem his Units while the Units are listed on SGX-ST. A Unitholder s liability is limited to the amount paid or payable for any units in the Trust. The provisions of the Trust Deed provide that no Unitholders will be personally liable to indemnify the Trustee or any creditor of the Trustee in the event that liabilities of the Trust exceed its assets. During the financial year, gross proceeds of $828.3 million was raised from a fully underwritten renounceable 1-for-1 rights issue ( Rights Issue ) of 1,403,891,006 Units at an issue price of $0.59 per rights units. The Units were listed on the SGX-ST on 3 July Gross revenue Group Trust $ 000 $ 000 $ 000 $ 000 Gross rental income 364, , , ,965 Car park income 16,656 16,317 13,533 13,218 Other income 22,402 22,323 19,752 19, , , , ,909 Included in other income is Yield Protection income from CapitaLand Commercial Limited amounting to $9,286,000 (2008: $11,952,000) in relation to One George Street. Pursuant to the terms of the sale and purchase agreement of One George Street with the vendor, a Deed of Yield Protection has been entered into with CapitaLand Commercial Limited whereby the latter will provide an income support to the Trust in the event the net property income per annum from One George Street is less than 4.25% of the purchase consideration of $1,165,000,000 (or $49.5 million per annum) for a period of 5 years from the date of completion of purchase on 11 July 2008 ( Yield Protection ). The shortfall in the net property income is due to lower operating performance as a result of global economic slowdown. This shortfall for the financial year ended 31 December 2009 is however lower than that for the financial year ended 31 December 2008 ($11,952,000 for the period 11 July 2008 to 31 December 2008) due to an increase in rental income arising from positive rent reversions. 114

55 18 Property operating expenses Group Trust $ 000 $ 000 $ 000 $ 000 Property tax 37,583 42,353 25,293 29,006 Utilities 18,734 17,208 11,710 10,450 Maintenance 17,209 15,238 11,777 9,657 Property management reimbursements 10,281 9,523 6,556 5,977 Property management fees 11,045 9,102 6,411 4,593 Marketing expenses 7,853 7,414 6,009 5,082 Others (29) , ,814 67,727 65, Investment income Group Trust $ 000 $ 000 $ 000 $ 000 Distribution income from RCS Trust 61,423 58,894 Distribution income from QCT 3,844 2,914 Coupon payments on redemption of Aragorn bonds ,267 62, Manager s management fees The Manager s management fees are paid and payable in cash for the Trust in relation to assets other than One George Street and Wilkie Edge. Management fees for One George Street and Wilkie Edge are paid and payable in Units. The Manager s management fees for RCS Trust are also paid and payable in Units. 21 Finance costs Group Trust $ 000 $ 000 $ 000 $ 000 Interest expense 77,544 66,818 55,409 44,819 Transaction costs 15,639 17,244 14,947 16,430 93,183 84,062 70,356 61,249 Included in interest expenses of the Group and the Trust is interest accretion of the Convertible Bonds amounting to $11,139,000 (2008 : $7,015,000). CapitaCommercial Trust Annual Report

56 Notes to the Financial Statements 22 Professional fees Included in the professional fees was a reversal of $3,100,000 (2008: $nil) mainly due to provision for consultancy fees for a proposed project in 2008 which has been aborted in Other expenses Included in other expenses is non-audit fees paid to auditors of the Group of $3,000 (2008: $159,000) and of the Trust of $3,000 (2008: $129,000). 24 Income tax expense Group Trust $ 000 $ 000 $ 000 $ 000 Income tax expense Current tax Based on results for the year Reconciliation of effective tax rate Total (loss)/return for the year before tax (839,153) 331,709 (723,599) 285,607 Tax calculated using Singapore tax rate of 17% (2008: 18%) (142,656) 59,708 (123,011) 51,409 Non-tax deductible items 3,127 4, ,711 Income not subject to tax 175,928 (37,271) 158,566 (30,124) Tax transparency (36,378) (26,961) (36,123) (26,961) Earnings per Unit (a) Basic Earnings per Unit The calculation of basic Earnings per Unit is based on the weighted average number of Units during the year and total return for the year after tax. Group Trust $ 000 $ 000 $ 000 $ 000 Total return for the year after tax (839,174) 331,674 (723,619) 285,

57 Group and Trust As previously restated reported Number of units Issued Units at beginning of the year 1,397,239 1,384,692 1,384,692 Effect of creation of new Units: rights issue 922, ,656 issued as payment of RCS Trust s asset management fees 4,526 1,848 1,848 issued as payment of asset management fees of One George Street and Wilkie Edge 2, issued as payment of acquisition fees of One George Street and Wilkie Edge 2,344 2,344 Weighted average number of Units at the end of the year 2,326,313 1,784,659 1,389,003 Group As previously restated reported Cents Cents Cents Basic Earnings per Unit (36.07) Trust Basic Earnings per Unit (31.11) (b) Fully diluted Earnings per Unit In calculating diluted Earnings per Unit, the total return for the year and weighted average number of Units during the year are adjusted for the effects of all dilutive potential Units calculated as follows: Group Trust $ 000 $ 000 $ 000 $ 000 Total return for the year (839,174) 331,674 (723,619) 285,572 Impact of conversion of the dilutive potential Units 19,911 (7,653) 19,911 (7,653) Adjusted total return for the year (819,263) 324,021 (703,708) 277,919 CapitaCommercial Trust Annual Report

58 Notes to the Financial Statements 25 Earnings per Unit (continued) (b) Fully diluted Earnings per Unit (continued) Group and Trust As previously restated reported Number of units Weighted average number of Units used in calculation of basic Earnings per Unit 2,326,313 1,784,659 1,389,003 Weighted average number of unissued Units from Convertible Bonds 195,189 93,198 93,198 Weighted average number of Units in issue (diluted) 2,521,502 1,877,857 1,482,201 Group As previously restated reported Cents Cents Cents Diluted Earnings per Unit (36.07) Trust Diluted Earnings per Unit (31.11) For the year ended 31 December 2009, the impacts of conversion of the Convertible Bonds were antidilutive and were excluded from the calculation of diluted Earnings per unit. 26 Issue expenses Group Trust $ 000 $ 000 $ 000 $ 000 Underwriting and selling commissions 19,907 19,907 Professional fees 1,973 1,973 Miscellaneous expenses ,797 22,797 These expenses are deducted directly against the Unitholders funds. Included in professional fees was non-audit fee of $80,000 (2008: $nil) paid to auditors of the Trust. 118

59 27 Financial risk management Capital management The Board of the Manager reviews the Group s and the Trust s capital management policy regularly so as to optimise the Group s and the Trust s funding structure. The Board also monitors the Group s and the Trust s exposures to various risk elements and externally imposed requirements by closely adhering to clearly established management policies and procedures. The Trust and its subsidiary are subject to the aggregate leverage limit as defined in the Property Fund Guidelines of the CIS Code. The CIS Code stipulates that the total borrowings and deferred payments (together the Aggregate Leverage ) of a property fund should not exceed 35.0% of its deposited property except that the Aggregate Leverage of a property fund may exceed 35.0% of its deposited property (up to a maximum of 60.0%) if a credit rating of the property fund from Fitch Inc., Moody s or Standard and Poor s is obtained and disclosed to the public. The property fund should continue to maintain and disclose a credit rating so long as its Aggregate Leverage exceeds 35.0% of its deposited property. For this financial year, the Group s and the Trust s corporate rating is Baa2 and has complied with the Aggregate Leverage limit during the financial year. There were no changes in the Group s approach to capital management during the financial year. Overview of risk management Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the costs of risks occurring and the cost of managing the risks. The Manager continually monitors the Group s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group s activities. The Audit Committee oversees how management monitors compliance with the Group s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and adhoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. Credit risk Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Group as and when they fall due. Exposure to credit risk The carrying amount of financial assets represents the maximum credit risk exposure. The maximum exposure to credit risk at the reporting date was: CapitaCommercial Trust Annual Report

60 Notes to the Financial Statements 27 Financial risk management (continued) Credit risk (continued) Exposure to credit risk (continued) Group Trust Carrying amount Carrying amount Note $ 000 $ 000 $ 000 $ 000 Available-for-sale financial assets 8 12,077 10,212 12,077 10,212 Trade and other receivables 10 9,124 18,474 21,401 27,749 Cash and cash equivalents 312,458 66, ,429 62,233 Recognised financial assets 333,659 95, , ,194 The Manager has established credit limits for tenants and monitors their balances on an ongoing basis. Credit evaluations are performed by the Manager before lease agreements are entered into with tenants. The Group s most significant tenant accounts for $764,000 (2008: $372,000) of the trade receivables carrying amount at 31 December The Manager establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main component of this allowance is a specific loss component that relates to the individually significant exposure. The allowance account in respect of trade and other receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired financial asset. Concentration of credit risk relating to trade receivables is limited due to the Group s many varied tenants. These tenants are engaged in diversified businesses and are of good quality and strong credit standing. The Group s historical experience in collection of trade receivables falls within the recorded allowances. Due to these factors, the Manager believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Group s trade receivables. Cash and fixed deposits are placed with financial institutions which are regulated. The Group limits its credit risk exposure in respect of investments by investing only in liquid securities and only with counterparties that have sound credit ratings. Given these high credit ratings, management does not expect any counterparty to fail to meet its obligations. As at 31 December 2009 and 2008, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying value of each financial asset on the Balance Sheet. 120

61 Liquidity risk The Manager monitors its liquidity risk, maintains a level of cash and cash equivalents and refinances borrowings to finance the Group s operations and to mitigate the effects of fluctuations in cash flows. In addition, the Manager also monitors and observes the CIS Code issued by MAS concerning limits on total borrowings. As at 31 December 2009, the Group has outstanding borrowings of approximately $235.0 million due in The Group has cash balance of approximately $140.0 million from the rights issue proceeds, arising from the 1-for-1 rights issue announced by the Manager on 22 May 2009, which raised a gross proceeds of $828.3 million. The Group had also in December 2009 issued $50.0 million of fixed rate notes due in 2013, out of which $10.0 million was utilized for partial prepayment of the term loan secured against Capital Tower. Therefore, the cash balance of approximately $180.0 million ($140.0 million from the rights issue proceeds and $40.0 million from fixed rates notes) may be utilised to repay the borrowings due in For the remaining $55.0 million outstanding borrowings due in 2010, the Manager intends to refinance through bank borrowings or capital market issuance. Market risk Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and unit fund prices which will affect the Group s total return or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Price risk The Group is exposed to price risk on embedded derivative liabilities arising from its classification as fair value through profit and loss. Interest rate risk The Group s exposure to changes in interest rates relates primarily to interest-bearing financial liabilities. Interest rate risk is managed on an ongoing basis with the primary objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates. Interest rate swaps have been entered into to provide an economic hedge to a portion of the Group s exposure to interest rate risk arising from floating interest rates on interest-bearing liabilities. At 31 December 2009, the Group has interest rate swaps with notional contract amounts of $390.0 million (2008: $390.0 million) whereby it pays a weighted average fixed interest rate of 3.54% (2008: 3.54%) and receives a variable rate equal to the SIBOR on the nominal amounts. The swaps are being used to hedge the exposure to varying cash flows due to changes in interest rates. The net fair value of swaps at 31 December 2009 is $19.6 million liability (2008: $26.1 million liability) comprising assets of $nil value (2008: $nil) and liabilities of $19.6 million (2008: $26.1 million). CapitaCommercial Trust Annual Report

62 Notes to the Financial Statements 27 Financial risk management (continued) Interest rate risk (continued) Profile At the reporting date, the interest rate profile of the interest-bearing financial instruments was: Group Trust Carrying amount Carrying amount $ 000 $ 000 $ 000 $ 000 Fixed rate instruments Financial liabilities 1,266,807 1,380, , ,131 Variable rate instruments Financial liabilities 737,051 1,181, ,651 1,165,235 Sensitivity analysis In managing the interest rate risk, the Manager aims to reduce the impact of short-term fluctuations on the Group s total return before tax. A change of 1% in interest rates at the reporting date would increase/(decrease) Unitholders Funds and statement of total return by amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates remain constant. Group and Trust statement of total return unitholders Funds 1% 1% 1% 1% increase decrease increase decrease $ 000 $ 000 $ 000 $ December 2009 Variable rate instruments (7,371) 7,371 Interest rate swap 196 (196) (7,175) 7, December 2008 Variable rate instruments (11,814) 11,814 Interest rate swap 261 (261) (11,553) 11,

63 Foreign currency risk The Group is exposed to foreign currency risk on rental income and operating expenses that are denominated in a currency other than the respective functional currencies of the Group s entities. The currency giving rise to this risk is primarily Ringgit Malaysia. The Group s and Trust s exposures to foreign currency are as follows: Group ringgit Malaysia 31 December 31 December $ 000 $ 000 Cash and cash equivalents 3, Trust Cash and cash equivalents 3, Sensitivity analysis A 10% strengthening of Singapore dollar against the following currencies at the reporting date would increase/(decrease) Unitholders Funds and statement of total return by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. Group statement of Unitholders Total Return Funds $ 000 $ December 2009 Ringgit Malaysia (343) 31 December 2008 Ringgit Malaysia (2) trust 31 December 2009 Ringgit Malaysia (343) 31 December 2008 Ringgit Malaysia (2) A 10% weakening of Singapore dollar against the above currency would have had the equal but opposite effect on the above currency to the amounts shown above, on the basis that all other variables remain constant. CapitaCommercial Trust Annual Report

64 Notes to the Financial Statements 27 Financial risk management (continued) Estimation of fair values The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments of the Group and the Trust. Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of expected future principal and interest cash flows, where the discount rate is computed from the market interest rates at the reporting date. Derivatives The fair value of interest rate swaps is the estimated amount that would be received or paid to terminate the swaps at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties. For interest rate swaps, fair value is obtained based on quotes provided by the financial institution. Interest rate swaps of $390.0 million (2008: $390.0 million) has been effected to provide fixed rate funding with various maturities up to 16 March $390.0 million (2008: $390.0 million) of the interest rate swaps outstanding as at 31 December 2009 mature between 1 to 4 years. Fair value changes relating to the interest rate swaps are recognised in the statement of total return. The fair value of embedded derivative component of the convertible bonds is based on Standard Black- Scholes option pricing model. Other financial assets and liabilities Interest rates used in determining fair values The interest rates used to discount estimated cash flows, where applicable, is computed from the market rates as follows: GROUP AND TRUST % % Security deposits Interest-bearing borrowings Convertible bonds debt component

65 Fair values of financial instruments and the respective carrying amounts are presented below: Group Carrying Carrying amount Fair value amount Fair value $ 000 $ 000 $ 000 $ 000 Non-current liabilities carried at amortised cost Security deposits 29,187 27,596 31,275 29,536 Interest-bearing liabilities 1,405,647 1,415,743 1,514,830 1,548,621 Convertible bonds debt component 363, , , ,456 1,798,045 1,811,966 1,896,805 1,936,613 TRUST Non-current liabilities carried at amortised cost Security deposits 21,553 20,539 21,049 20,101 Interest-bearing liabilities 851, , , ,066 Convertible bonds debt component 363, , , ,456 1,236,415 1,239,370 1,352,373 1,357,623 The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, trade and other payables and security deposits) are assumed to approximate their fair values because of the short period to maturity. CapitaCommercial Trust Annual Report

66 Notes to the Financial Statements 27 Financial risk management (continued) Fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Group and Trust Level 1 Level 2 Level 3 Total $ 000 $ 000 $ 000 $ Interest rate swaps 19,616 19,616 Derivative liability portion of convertible bonds * * At nil value 19,616 19,616 The following table presents the changes in level 3 instruments for the financial year ended 31 December 2009: Group and Trust 2009 $ 000 Derivative liability portion of convertible bonds Opening and closing balance At nil value For fair value measurement in level 3, there was no change of the inputs for the year ended 31 December Related parties For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common significant influence. Related parties may be individuals or other entities. The Manager (CapitaCommercial Trust Management Limited), Property Manager (CapitaLand Commercial Management Pte. Ltd.) and Property Manager of RCS Trust (CapitaLand (RCS) Property Management Pte. Ltd.) are indirect wholly-owned subsidiaries of a substantial Unitholder of the Trust. 126

67 In the normal course of the operations of the Group, the Manager s management fees and the Trustee s fees have been paid or are payable to the Manager and Trustee respectively. During the financial year, other than those disclosed elsewhere in the financial statements, there were the following significant related party transactions, which were carried out in the normal course of business on arm s length commercial terms: Group Trust $ 000 $ 000 $ 000 $ 000 Acquisition cost paid to related company of the Manager 1,347,700 1,347,700 Administrative fees and reimbursables paid to subsidiary Interest paid or payable to subsidiary 11,103 7,834 Leasing commissions paid/payable to related companies of the Manager 2,079 4,126 2,079 4,126 Manager s management fees and acquisition fees paid/payable to the Manager 19,781 29,326 12,462 21,986 Professional fee paid to related company of the Manager Project management fees paid/payable to related company of the Manager 1, Property management fees and reimbursables paid/payable to a related company of the Manager 21,326 18,625 12,967 10,570 Rental income (net) and other related income from related companies of the Manager 11,351 7,826 11,738 7,826 Yield protection income from a related company of the Manager 9,286 11,952 9,286 11, Operating segment For the purpose of the assessment of segment performance, the Group s CODMs have focused on main business segments: Capital Tower, Six Battery Road, One George Street, Other Office buildings, Other Mixed used buildings, Carpark buildings and the Group s 60% interest in RCS Trust Raffles City. This forms the basis of identifying the operating segments of the Group under FRS 108 Operating Segments. This primary format is based on the Group s management and internal reporting structure for the purpose of allocating resources and assessing performance by the Group s CODMs. The accounting policies of the reportable segments are as described in note Segment property income represents income generated from its tenants. Segment property income represents the income earned by each segment after allocating property operating expenses. This is the measure reported to the CODMs for the purpose of assessment of segment performance. CapitaCommercial Trust Annual Report

68 Notes to the Financial Statements 29 Operating segment (continued) For the purpose of monitoring segment performance, the CODMs monitor the non-financial assets as well as financial assets attributable to each segment. Segment results, assets and liabilities include terms directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly income-earning assets and revenue, interest-bearing borrowings and expenses, related assets and expenses. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one year. Information regarding the Group s reportable segments is presented in the tables below (from 129 to 133). Amounts reported for the prior year have been represented to conform to the requirements of FRS 108. Reportable segments The Group s business is investing in the following: Office buildings 2009: Capital Tower, Six Battery Road, HSBC Building, Starhub Centre, Robinson Point and One George Street 2008: Capital Tower, Six Battery Road, HSBC Building, Starhub Centre, Robinson Point and One George Street Car park buildings 2009: Golden Shoe Car Park and Market Street Car Park 2008: Golden Shoe Car Park and Market Street Car Park Mixed use buildings 2009: Bugis Village, Wilkie Edge and Raffles City 2008: Bugis Village, Wilkie Edge and Raffles City 128

69 Reportable segments Group 2009 S six one Other Total Capital Battery George office office Tower road Street buildings buildings $ 000 $ 000 $ 000 $ 000 $ 000 Gross rental income 53,908 81,343 49,147 41, ,559 Car park income 1,731 1, ,229 4,818 Others 2,783 2,801 11,870 1,232 18,686 Gross revenue 58,422 85,171 61,848 43, ,063 Segment net property income 39,899 67,832 49,433 35, ,544 Interest income Finance costs Unallocated expenses Share of profit of associate (net of tax) Other material non-cash item: Net change in fair value of investment properties (196,121) (257,164) (250,133) (171,248) (874,666) Reportable segment assets 1,056,093 1,117, , ,366 3,830,449 Investment in associate Capital expenditure 2, ,148 10,066 Reportable segment liabilities 14,478 13,766 11,684 12,156 52,084 CapitaCommercial Trust Annual Report

70 Notes to the Financial Statements 29 Operating segment (continued) Reportable segments Group % interest Other Total in RCS Trust mixed use mixed use Carpark All R raffles City buildings buildings buildings Segments $ 000 $ 000 $ 000 $ 000 $ 000 Gross rental income 114,303 17, ,982 6, ,265 Car park income 3, ,425 8,413 16,656 Others 2, , ,402 Gross revenue 120,075 18, ,548 15, ,323 Segment net property income 84,690 12,664 97,354 10, ,211 Interest income 275 Finance costs (93,183) Unallocated expenses (15,576) Share of profit of associate (net of tax) 4,032 Other material non-cash item: Net change in fair value of investment properties (102,131) (39,366) (141,497) (18,749) (1,034,912) Reportable segment assets 1,546, ,587 1,756, ,099 5,739,763 Investment in associate 62,630 Capital expenditure 15, , ,312 Reportable segment liabilities 591,313 6, ,400 6, ,

71 Reportable segments Group 2008 S six one Other Total Capital Battery George office office Tower road Street buildings buildings $ 000 $ 000 $ 000 $ 000 $ 000 Gross rental income 44,484 72,203 17,073 34, ,472 Car park income 1,788 1, ,339 4,548 Others 2,852 2,382 13, ,827 Gross revenue 49,124 75,642 30,518 36, ,847 Segment net property income 28,420 57,196 23,539 26, ,749 Interest income Finance costs Unallocated expenses Share of profit of associate (net of tax) Other material non-cash item: Net change in fair value of investment properties 21, ,872 (31,757) 75, ,883 Reportable segment assets 1,251,453 1,373,007 1,160, ,615 4,703,075 Investment in associate Capital expenditure 859 1, ,272 3,812 Reportable segment liabilities 12,106 11,857 10,705 10,207 44,875 CapitaCommercial Trust Annual Report

72 Notes to the Financial Statements 29 Operating segment (continued) Reportable segments Group % interest Other Total in RCS Trust mixed use mixed use Carpark All R raffles City buildings buildings buildings Segments $ 000 $ 000 $ 000 $ 000 $ 000 Gross rental income 111,679 9, ,525 6, ,645 Car park income 3, ,111 8,658 16,317 Others 2, , ,323 Gross revenue 117,376 10, ,462 15, ,285 Segment net property income 80,908 6,145 87,053 10, ,471 Interest income 1,092 Finance costs (84,062) Unallocated expenses (26,467) Share of profit of associate (net of tax) 3,877 Other material non-cash item: Net change in fair value of investment properties 39,704 (12,701) 27,003 (8,088) 203,798 Reportable segment assets 1,627, ,383 1,874, ,497 6,749,231 Investment in associate 63,886 Capital expenditure 25, ,849 3,088 32,749 Reportable segment liabilities 571,048 5, ,444 6, ,

73 Reconciliations of reportable segment revenues, statement of return, assets and liabilities $ 000 $ 000 Revenues Total revenue for reportable segments 403, ,285 Consolidated revenue 403, ,285 Statement of return Total net property income for reportable segments 300, ,471 Interest income 275 1,092 Unallocated expenses (108,759) (110,529) Share of profit of associate (net of tax) 4,032 3,877 Net change in fair value of investment properties (1,034,912) 203,798 Consolidated profit before income tax (839,153) 331,709 Assets Total assets for reportable segments 5,739,763 6,749,231 Investments in associate 62,630 63,886 Other unallocated amounts 297,579 58,274 Consolidated total assets 6,099,972 6,871,391 Liabilities Total liabilities for reportable segments 656, ,733 Other unallocated amounts 1,487,167 2,088,767 Consolidated total liabilities 2,143,563 2,716,500 Geographical segments The Group s operations are all in Singapore except for its associate, where the operations are in Malaysia. In presenting information on the basis of geographical segments, segment revenue and assets of the Group is based on the geographical location of the properties. CapitaCommercial Trust Annual Report

74 Notes to the Financial Statements 29 Operating segment (continued) Geographical information Non-current revenues assets $ 000 $ December 2009 Singapore (Trust) 403,323 5,520,891 Singapore (Investment in joint venture) 1 120,075 1,530,457 Malaysia (Investment in associate) 2 16, , December 2008 Singapore (Trust) 335,285 6,711,867 Singapore (Investment in joint venture) 1 117,376 1,617,662 Malaysia (Investment in associate) 2 12, ,955 1 The Group s 60% interest in joint venture 2 Not adjusted for the percentage of ownership held by the Group Major customers Revenues from two major customers of the Group represents approximately $81,205,000 (2008: $79,686,000). These revenues are attributable to 60% interest in RCS Trust (Raffles City) and Six Battery Road respectively. 30 Commitments Group Trust $ 000 $ 000 $ 000 $ 000 Capital expenditure commitments: contracted but not provided for 25,883 37,511 2,148 8,584 authorised but not contracted for 4,816 9,408 2,125 3,

75 The Group and the Trust lease out their investment properties. Non-cancellable operating lease rentals are receivable as follows: Group Trust $ 000 $ 000 $ 000 $ 000 Within 1 year 335, , , ,178 After 1 year but within 5 years 436, , , ,133 After 5 years 89, ,241 89,595 98, , , , , Financial ratios Group Note % % Expenses to weighted average net assets A expenses ratio excluding performance related fees expenses ratio including performance related fees Portfolio turnover rate B Note A: The annualised ratios are computed in accordance with the guidelines of Investment Management Association of Singapore. The expenses used in the computation relate to expenses of the Group, excluding property operating expenses, borrowing cost and income tax expense. Note B: The annualised ratio is computed based on the lesser of purchases or sales of underlying investment properties of the Group expressed as a percentage of average net asset value. 32 Subsequent Events (a) On 20 January 2010, the Manager announced that CCT has on 19 January 2010 entered into a sale and purchase agreement with AEW VIA SPV4 Pte. Ltd., a special purpose vehicle wholly-owned by a private fund managed by AEW Asia (a subsidiary of AEW Capital Management L.P.) for the sale of Robinson Point for the sale consideration of $ million. (b) On 20 January 2010, the Manager announced distribution for the period from 1 July 2009 to 31 December 2009 of 3.73 cents per Unit. (c) On 18 February 2010, the Manager announced that CCT has repurchased an aggregate principal amount of S$15.0 million of its S$370.0 million 2.0 per cent Convertible Bonds. (d) On 18 February 2010, the Manager announced that CCT through its subsidiary, CCT MTN Pte Ltd, has issued S$70.0 million 3.64 per cent Fixed Rate Notes Due The Notes were issued under the S$1.0 billion Multicurrency Medium Term Note Programme. CapitaCommercial Trust Annual Report

76 Statistics of Unitholdings as at 1 March 2010 Issued and Fully Paid Units 2,816,403,677 Units (Voting rights: 1 vote per Unit) Market capitalisation of S$3,098,044,045 based on market closing Unit price of S$1.10 on 1 March 2010 Distribution of Unitholdings Size of Unitholdings No. of Unitholders % No. of Units % , ,630, ,000 10,000 20, ,045, ,001 1,000,000 5, ,476, ,000,001 and above ,492,250, Total 31, ,816,403, Location of Unitholders No. of Unitholders % No. of Units % Singapore 29, ,807,741, Malaysia ,670, Others ,992, Total 31, ,816,403, Twenty Largest Unitholders No Name No. of Units % 1 Citibank Nominees Singapore Pte Ltd 443,624, SBR Private Limited 373,511, E-Pavilion Pte Ltd 368,274, HSBC (Singapore) Nominees Pte Ltd 339,564, DBS Nominees Pte Ltd 281,293, DBSN Services Pte Ltd 185,991, Raffles Nominees (Pte) Ltd 132,372, United Overseas Bank Nominees Pte Ltd 124,534, CapitaCommercial Trust Management Limited 65,924, Morgan Stanley Asia (Singapore) Securities Pte Ltd 65,425, BNP Paribas Securities Services Singapore 24,538, UOB Kay Hian Pte Ltd 8,303, OCBC Nominees Singapore Pte Ltd 7,074, Phillip Securities Pte Ltd 6,907, Merrill Lynch (Singapore) Pte Ltd 6,036, Pei Hwa Foundation Limited 6,004, DBS Vickers Securities (S) Pte Ltd 5,425, DB Nominees (S) Pte Ltd 4,962, Lee Pineapple Company Pte Ltd 4,620, OCBC Securities Private Ltd 4,591, TOTAL 2,458,979,

77 Substantial Unitholdings as at 1 March 2010 Based on the Register of Substantial Unitholder s Unitholdings maintained by the Manager, the Substantial Unitholders of CCT and their interests in the Unit are as follows: Direct Interest Deemed Interest Name of Substantial Unitholder No. of Units % No. of Units % Temasek Holdings (Private) Limited 900,285, CapitaLand Limited 891,410, CapitaLand Commercial Limited 825,486, SBR Private Limited ( SBR ) 373,511, ,700, CapitaLand (Office) Investments Pte Ltd 457,212, E-Pavilion Pte. Ltd. ( E-Pavilion ) 368,274, CapitaLand Investments Pte Ltd 368,274, Deemed to have an interest in the Unitholdings in which its subsidiary and associated companies have or are deemed to have an interest pursuant to Section 7 of the Companies Act, Chapter 50 (the Act ). Temasek Holdings (Private) Limited is wholly-owned by the Minister for Finance (Incorporated). 2 Deemed to have an interest in the Unitholdings of its indirect wholly-owned subsidiaries namely, E-Pavilion, SBR and the Manager. 3 Deemed to have an interest in the Unitholdings of its indirect wholly-owned subsidiaries namely, E-Pavilion and SBR. 4 Pursuant to the Securities Lending Agreement dated 2 April 2008 entered into between Standard Chartered Bank ( SCB ) and SBR (as supplemented by the letters dated 26 May 2009 and 15 June 2009) (the Agreement ), SBR has lent 41,850,385 Units to SCB and SCB has accepted their provisional allotment under the fully underwritten renounceable 1-for-1 rights issue by CCT in 2009 and been allotted 41,850,385 Units. Pursuant to Section 7 of the Act, SBR is deemed to be interested in 83,700,770 Units (the Relevant Units ) by reason of its contractual right to re-acquire the Relevant Units under the terms of the Agreement. 5 Deemed to have an interest in the Unitholdings of its direct wholly-owned subsidiary namely, SBR. 6 Deemed to have an interest in the Unitholdings of its direct wholly-owned subsidiary namely, E-Pavilion. Free Float Based on information available to the Manager as at 1 March 2010, approximately 67% of the Units are held in the hands of public. Rule 723 of the Listing Manual of the SGX-ST has accordingly been complied with. Manager s Directors Interests in Units and Convertible Securities as at 21 January 2010 Based on the Register of Directors Unitholdings maintained by the Manager and the information available to the Manager, save for those disclosed below, none of the Directors holds a direct or deemed interest in Units or in convertible securities issued by CCT, acting through the Trustee. Holdings as at 21 January 2010 Name of Director Direct Interest Deemed Interest Lui Chong Chee 1,000,000 Units Ee Chee Hong 429,000 Units Olivier Lim Tse Ghow 300,000 Units Liew Mun Leong 150,000 Units Lynette Leong Chin Yee 102,000 Units Dato Mohammed Hussein 50,000 Units S$370 million Convertible Bonds due 2013 Wen Khai Meng S$1,000,000 Liew Mun Leong S$500,000 CapitaCommercial Trust Annual Report

78 Additional Information Interested Person (as defined in the Listing Manual) and Interested Party (as defined in the Property Funds Appendix) Transactions The transactions entered into during the financial year are as follows: Name of Interested Person/Interested Party CapitaLand Limited and its subsidiaries or associates Aggregate value (excluding transactions of less than S$100,000 each) S$ 000 Manager s management fees 19,781 Property management fees and reimbursables 17,579 Leasing commissions 2,079 Project management fees and reimbursables 5,465 Rental and service charge income 14,291 59,195 Temasek Holdings (Private) Limited and its associates Provision of upgrading of parking guidance system 253 Provision of security equipment 278 Rental and service charge income 2,808 3,339 HSBC Institutional Trust Services (Singapore) Limited Trustee s fee Save as disclosed above, there were no additional related party transactions (excluding transaction of less than S$100,000 each) entered into during the financial year under review. The SGX-ST has granted a waiver to CCT from Rules 905 and 906 of the SGX-ST s Listing Manual in relation to payments for the Manager s management fees, payments for acquisition and divestment fees, payments of property management fees, reimbursements and leasing commissions to the property manager in respect of payroll and related expenses as well as payments of the Trustee s fees. Such payments are not to be included in the aggregate value of total related party transactions as governed by Rules 905 and 906 of the SGX-ST Listing Manual. In addition, certain other related party transactions as outlined in the Introductory Document dated 16 March 2004 are deemed to have been specifically approved by the Unitholders and are therefore not subject to Rules 905 and 906 of the SGX-ST Listing Manual insofar, in respect of each such agreement, there are no subsequent change to the rates and/or basis of the fees charged thereunder which will adversely affect CCT. Please also see Significant Related Party Transaction on Note 28 in the financial statements. Subscription for CCT Units For the financial year ended 31 December 2009, an aggregate of 1,416,676,070 Units were issued and subscribed for. As at 31 December 2009, 2,813,915,220 Units were in issue and outstanding. 138

79 Manager s Management Fee Paid in Units A summary of Units issued for payment of the Manager s management fee (part payment) during or in respect of the financial year are as follows: Issue Units * Issue Total date issued price value For period S$ S$000 Manager s Management Fee 1 January 2009 to 31 March May ,480, ,784 1 April 2009 to 30 June August ,290, ,770 1 July 2009 to 30 September November ,842, ,911 1 October 2009 to 31 December February ,488, ,873 11,338 * Based on the volume weighted average traded price for a Unit for all trades on the SGX-ST in the ordinary course of trading on the SGX-ST for the last ten business days of the relevant period in which the management fee accrues. CapitaCommercial Trust Annual Report

80 Glossary In this Annual Report, the following definitions apply throughout unless otherwise stated: CapitaLand CapitaLand Group CDP CMBS Deposited Property Gross Rental Income Gross Revenue Interest Service Coverage Ratio Management Expense Ratio Manager MRT Property Funds Guidelines Property Managers Property Operating Expenses sq ft sq m Trust Unit Unitholder RM or Ringgit Malaysia CapitaLand Limited CapitaLand and its subsidiaries (including the Manager) The Central Depository (Pte) Limited Commercial mortgage-backed securities The gross assets of CCT or the RCS Trust (as the case may be), including all its authorised investments held or deemed to be held upon the trusts under the Trust Deed or the RCS Trust (as the case may be) In respect of CCT properties, Gross Rental Income comprises base rent (after rent rebates, where applicable, including turnover rent) and tenant service charge, which is a contribution paid by tenants towards the Property Operating Expenses In respect of CCT s 60.0% interest in RCS Trust, Gross Rental Income comprises gross rent (after rent rebates, where applicable, including turnover rent, advertising and promotion levy and service charge, where applicable) Comprises Gross Rental Income, car park income and other income Ratio of net investment income before interest and tax of CCT Trust and RCS Trust (60.0%) over interest expenses of CCT Trust and RCS Trust (60.0%) Refers to the expenses of the Group excluding property expenses, borrowing costs and income tax expense as a percentage of weighted average net assets CapitaCommercial Trust Management Limited, in its capacity as manager of CCT Mass Rapid Transit The Property Funds Guidelines in Appendix 2 of the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore CapitaLand Commercial Management Pte. Ltd. and CapitaLand (RCS) Property Management Pte. Ltd. Comprises property tax, property management fee and other property operating expenses (comprising utility expenses, reimbursement of salaries and related expenses, marketing expenses, repairs and maintenance expenses, general and administrative expenses as well as other miscellaneous expenses) Square feet Square metre CapitaCommercial Trust or CCT A unit representing an undivided interest in CCT The registered holder for the time being of a Unit, including person so registered as joint holders, except where the registered holder is CDP, the term Unitholder shall, in relation to Units registered in the name of CDP, meaning where the context requires, the Depositor whose Securities Account with CDP is credited with Units The official currency of Malaysia S$ and cents Singapore dollars and cents % Per centum or percentage 140

81 Corporate Information Board of Directors Mr Richard E. Hale Chairman & Independent Director Mr Liew Mun Leong Deputy Chairman & Non-Executive Director Ms Lynette Leong Chin Yee Chief Executive Officer & Executive Director Mr Ho Swee Huat Independent Director Mr Fong Kwok Jen Independent Director Dato Mohammed Hussein Independent Director Mr Wen Khai Meng Non-Executive Director Mr Olivier Lim Tse Ghow Non-Executive Director Mr Lui Chong Chee Non-Executive Director Mr Ee Chee Hong Non-Executive Director Corporate Disclosure Committee Mr Fong Kwok Jen Chairman Mr Wen Khai Meng Member Mr Olivier Lim Tse Ghow Member Executive Committee Mr Liew Mun Leong Chairman Ms Lynette Leong Chin Yee Member Mr Wen Khai Meng Member Mr Olivier Lim Tse Ghow Member Mr Ee Chee Hong Member Audit Committee Mr Ho Swee Huat Chairman Mr Fong Kwok Jen Member Dato Mohammed Hussein Member Company Secretary Ms Michelle Koh Chai Ping Assistant Company Secretary Ms Honey Vaswani CapitaCommercial Trust Annual Report

82 Corporate Information CapitaCommercial Trust Registered Address HSBC Institutional Trust Services (Singapore) Limited 21 Collyer Quay #10-01 HSBC Building Singapore Phone: Fax: Website: Trustee HSBC Institutional Trust Services (Singapore) Limited 21 Collyer Quay #10-01 HSBC Building Singapore Phone: Fax: The Manager Registered Address CapitaCommercial Trust Management Limited 39 Robinson Road #18-01 Robinson Point Singapore Phone: Fax: Website: The Property Managers CapitaLand Commercial Management Pte. Ltd. 39 Robinson Road #18-01 Robinson Point Singapore Phone: Fax: CapitaLand (RCS) Property Management Pte. Ltd. 252 North Bridge Road #B1-44D Raffles City Shopping Centre Singapore Phone: Fax: Unit Registrar Boardroom Corporate & Advisory Services Pte Ltd 50 Raffles Place #32-01 Singapore Land Tower Singapore Phone: Fax: For updates or change of mailing address, please contact: The Central Depository (Pte) Limited 4 Shenton Way #02-01 SGX Centre 2 Singapore Phone: Fax: cdp@sgx.com Website: Auditor KPMG LLP Public Accountants and Certified Public Accountants 16 Raffles Quay #22-00 Hong Leong Building Singapore Phone: Fax: Partner in charge: Alex Koh Wei Peng (With effect from financial year ended 31 December 2009) 142

83 CapitaCommercial Trust (Constituted in the Republic of Singapore pursuant to a trust deed dated 6 February 2004 (as amended)) NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Annual General Meeting ( AGM ) of the holders of units of CapitaCommercial Trust ( CCT, and holders of units of CCT, Unitholders ) will be held at STI Auditorium, 168 Robinson Road, Level 9, Capital Tower, Singapore on Wednesday, 28 April 2010 at a.m. to transact the following business: (A) AS ORDINARY BUSINESS 1. To receive and adopt the Report of HSBC Institutional Trust Services (Singapore) Limited, as trustee of CCT (the Trustee ), the Statement by CapitaCommercial Trust Management Limited, as manager of CCT (the Manager ) and the Audited Financial Statements of CCT for the financial year ended 31 December 2009 and the Auditors Report thereon. 2. To re-appoint Messrs KPMG LLP as Auditors of CCT to hold office until the conclusion of the next AGM of CCT, and to authorise the Manager to fix their remuneration. Ordinary Resolution 1 Ordinary Resolution 2 (B) AS SPECIAL BUSINESS To consider and, if thought fit, to pass with or without any modifications, the following resolutions as Ordinary Resolutions: 3. That authority be and is hereby given to the Manager, to: Ordinary Resolution 3 (a) (i) issue units in CCT ( Units ) whether by way of rights, bonus or otherwise; and/or (ii) make or grant offers, agreements or options (collectively, Instruments ) that might or would require Units to be issued, including but not limited to the creation and issue of (as well as adjustments to) securities, warrants, debentures or other instruments convertible into Units, at any time and upon such terms and conditions and for such purposes and to such persons as the Manager may in its absolute discretion deem fit; and (b) issue Units in pursuance of any Instrument made or granted by the Manager while this Resolution was in force (notwithstanding that the authority conferred by this Resolution may have ceased to be in force), provided that: (1) the aggregate number of Units to be issued pursuant to this Resolution (including Units to be issued in pursuance of Instruments made or granted pursuant to this Resolution) shall not exceed fifty per cent. (50%) of the total number of issued Units (excluding treasury Units, if any) (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Units to be issued other than on a pro rata basis to Unitholders does not exceed twenty per cent. (20%) of the total number of issued Units (excluding treasury Units, if any) (as calculated in accordance with sub-paragraph (2) below); (2) subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading Limited ( SGX-ST ) for the purpose of determining the aggregate number of Units that may be issued under sub-paragraph (1) above, the total number of issued Units (excluding treasury Units, if any) shall be based on the number of issued Units (excluding treasury Units, if any) at the time this Resolution is passed, after adjusting for: (a) any new Units arising from the conversion or exercise of any Instruments which are outstanding at the time this Resolution is passed; and (b) any subsequent bonus issue, consolidation or subdivision of Units; CapitaCommercial Trust Annual Report

84 (3) in exercising the authority conferred by this Resolution, the Manager shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the trust deed constituting CCT (as amended) (the Trust Deed ) for the time being in force (unless otherwise exempted or waived by the Monetary Authority of Singapore); (4) (unless revoked or varied by Unitholders in a general meeting) the authority conferred by this Resolution shall continue in force until (i) the conclusion of the next AGM of CCT or (ii) the date by which the next AGM of CCT is required by applicable regulations to be held, whichever is the earlier; (5) where the terms of the issue of the Instruments provide for adjustment to the number of Instruments or Units into which the Instruments may be converted, in the event of rights, bonus or other capitalisation issues or any other events, the Manager is authorised to issue additional Instruments or Units pursuant to such adjustment notwithstanding that the authority conferred by this Resolution may have ceased to be in force at the time the Instruments or Units are issued; and (6) the Manager and the Trustee, be and are hereby severally authorised to complete and do all such acts and things (including executing all such documents as may be required) as the Manager or, as the case may be, the Trustee may consider expedient or necessary or in the interest of CCT to give effect to the authority conferred by this Resolution. (Please see Explanatory Notes) 4. That, contingent on the passing of Resolution 3 above, authority be and is hereby given to the Manager to fix the issue price for Units that may be issued by way of placement pursuant to the twenty per cent. (20%) sub-limit for the issue of Units on a non pro rata basis referred to in Resolution 3 above, at a discount exceeding ten per cent. (10%) but not more than twenty per cent. (20%) of the price as determined in accordance with the Listing Manual of the SGX-ST, until 31 December 2010 or such later date as may be determined by the SGX-ST. Ordinary Resolution 4 (Please see Explanatory Notes) (C) AS OTHER BUSINESS 5. To transact such other business as may be transacted at an AGM. BY ORDER OF THE BOARD CapitaCommercial Trust Management Limited (Company Registration No W) As manager of CapitaCommercial Trust Michelle Koh Company Secretary Singapore 25 March 2010 Notes: 1. A Unitholder entitled to attend and vote at the AGM is entitled to appoint not more than two proxies to attend and vote in his/her stead. Where a Unitholder appoints more than one proxy, he/she shall specify the proportion of his/her unitholdings to be represented by each proxy. A proxy need not be a Unitholder. 2. The proxy form must be deposited at the Manager s registered office, 39 Robinson Road, #18-01 Robinson Point, Singapore not later than 26 April 2010 at a.m. being 48 hours before the time fixed for the AGM. 144

85 Explanatory notes: 1. Ordinary Resolution 3 Ordinary Resolution 3 above, if passed, will empower the Manager from the date of the AGM until (i) the conclusion of the next AGM of CCT or (ii) the date by which the next AGM of CCT is required by applicable regulations to be held, whichever is the earlier, to issue Units and to make or grant Instruments (such as securities, warrants or debentures) convertible into Units and issue Units pursuant to the Instruments, up to a number not exceeding 50% of the total number of issued Units of which up to 20% may be issued other than on a pro rata basis to Unitholders. For determining the aggregate number of Units that may be issued, the percentage of issued Units will be calculated based on the issued Units at the time Ordinary Resolution 3 above is passed, after adjusting for new Units arising from the conversion or exercise of any Instruments which are outstanding at the time Ordinary Resolution 3 is passed and any subsequent bonus issue, consolidation or subdivision of Units. Fund raising by issuance of new Units may be required in instances of property acquisitions or debt repayments. In any event, if the approval of Unitholders is required under the Listing Manual of the SGX-ST and the Trust Deed or any applicable laws and regulations, in such instances, the Manager will then obtain the approval of Unitholders accordingly. 2. Ordinary Resolution 4 Ordinary Resolution 4 above, if passed, will empower the Manager to fix the issue price for Units that are issued by way of placement pursuant to the twenty per cent. (20%) sub-limit for the issue of Units on a non pro rata basis at a discount exceeding 10% but not more than 20% of the price as determined in accordance with the Listing Manual of the SGX-ST (the Reference Price ), being the weighted average price of Units for trades done on the SGX-ST (calculated in the manner as may be prescribed by the SGX-ST). The authority for Ordinary Resolution 4 is proposed pursuant to the SGX-ST news release of 19 February 2009 which introduced certain measures to accelerate and facilitate listed issuers fund raising efforts and which permits this authority to be effective until 31 December The effectiveness of this measure will be reviewed by the SGX-ST at the end of the period. Without Ordinary Resolution 4, under the Listing Manual of the SGX-ST, the Manager may only fix the issue price for Units that are issued by way of placement on a non pro rata basis at a discount not exceeding 10% of the Reference Price. CapitaCommercial Trust Annual Report

86 Notes to Proxy Form 1. A unitholder of CCT ( Unitholder ) entitled to attend and vote at the AGM is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a Unitholder. 2. Where a Unitholder appoints more than one proxy, the appointments shall be invalid unless he/she specifies the proportion of his/her holding (expressed as a percentage of the whole) to be represented by each proxy. 3. Completion and return of this proxy form shall not preclude a Unitholder from attending and voting at the AGM. Any appointment of a proxy or proxies shall be deemed to be revoked if a Unitholder attends the AGM in person, and in such event, the Manager reserves the right to refuse to admit any person or persons appointed under the proxy form, to the AGM. 4. A Unitholder should insert the total number of Units held. If the Unitholder has Units entered against his/ her name in the Depository Register maintained by The Central Depository (Pte) Limited ( CDP ), he/she should insert that number of Units. If the Unitholder has Units registered in his/her name in the Register of Unitholders of CCT, he/she should insert that number of Units. If the Unitholder has Units entered against his/ her name in the said Depository Register and registered in his/her name in the Register of Unitholders, he/ she should insert the aggregate number of Units. If no number is inserted, this proxy form will be deemed to relate to all the Units held by the Unitholder. 5. The proxy form must be deposited at the Manager s registered office, 39 Robinson Road #18-01 Robinson Point, Singapore , not later than 26 April 2010 at a.m. being 48 hours before the time fixed for the AGM. 6. The proxy form must be signed under the hand of the appointor or of his/her attorney duly authorised in writing. Where the proxy form is executed by a corporation, it must be executed under its common seal or under the hand of its attorney or a duly authorised officer. 7. Where a proxy form is signed on behalf of the appointor by an attorney, the power of attorney or a duly certified copy thereof must (failing previous registration with the Manager) be lodged with the proxy form; failing which the proxy form may be treated as invalid. 8. The Manager shall be entitled to reject the proxy form which is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified on the proxy form. In addition, in the case of Units entered in the Depository Register, the Manager may reject a proxy form if the Unitholder, being the appointor, is not shown to have Units entered against his/ her name in the Depository Register as at 48 hours before the time fixed for holding the AGM, as certified by CDP to the Manager. 9. All Unitholders will be bound by the outcome of the AGM regardless of whether they have attended or voted at the AGM. 10. At any meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded by the Chairman or by five or more Unitholders present in person or by proxy, or holding or representing one-tenth in value of the Units represented at the meeting. Unless a poll is so demanded, a declaration by the Chairman that such a resolution has been carried or carried unanimously or by a particular majority or lost shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. 11. On a show of hands, every Unitholder who (being an individual) is present in person or by proxy or (being a corporation) is present by one of its officers as its proxy shall have one vote. On a poll, every Unitholder who is present in person or by proxy shall have one vote for every Unit of which he/she is the Unitholder. A person entitled to more than one vote need not use all his/her votes or cast them the same way. 146

87 CapitaCommercial Trust (Constituted in the Republic of Singapore pursuant to a trust deed dated 6 February 2004 (as amended)) PROXY FORM ANNUAL GENERAL MEETING I/We of IMPORTANT 1. For investors who have used their CPF moneys to buy units in CapitaCommercial Trust, this Annual Report is forwarded to them at the request of their CPF Approved Nominee and is sent solely FOR THEIR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purposes if used or purported to be used by them. 3. CPF Investors who wish to attend the Annual General Meeting as observers have to submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf. 4. PLEASE READ THE NOTES TO THE PROXY FORM on page 146. (Name) (Address) being a Unitholder/Unitholders of CapitaCommercial Trust ( CCT ), hereby appoint: Name Address NRIC / Passport Number Proportion of Unitholdings No. of Units % and/or (delete as appropriate) Name Address NRIC / Passport Number Proportion of Unitholdings No. of Units % or, both of whom failing, the Chairman of the Annual General Meeting ( AGM ) as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and if necessary, to demand a poll, at the AGM of CCT to be held at the STI Auditorium, 168 Robinson Road, Level 9, Capital Tower, Singapore on 28 April 2010 at a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the resolutions to be proposed at the AGM as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/her/their discretion, as he/she/they will on any other matter arising at the AGM. No. Ordinary Resolutions To be used on a show of hands For * Against * To be used in the event of a poll No. of votes For ** No. of votes Against ** Ordinary business 1. To receive and adopt the Trustee s Report, the Manager s Statement, the Audited Financial Statements of CCT for the financial year ended 31 December 2009 and the Auditors Report thereon 2. To re-appoint KPMG LLP as Auditors of CCT and authorise the Manager to fix the Auditors remuneration special business 3. To authorise the Manager to issue Units and to make or grant convertible instruments 4. To authorise the Manager to fix the issue price for Units that may be issued by way of a placement up to a discount of 20% other business 5. To transact such other business as may be transacted at an AGM * Please indicate your vote For or Against with a tick ( ) within the box provided. ** If you wish to exercise all your votes For or Against, please tick ( ) within the box provided. Alternatively, please indicate the number of votes as appropriate. Total number of Units held Dated this day of 2010 Signature(s) of Unitholder(s) / Common Seal of Corporate Unitholder

88 3 rd fold here, glue along the dotted line and fold flap Affix postage stamp The Company Secretary CapitaCommercial Trust Management Limited (as manager of CapitaCommercial Trust) 39 Robinson Road #18-01 Robinson Point Singapore nd fold here 1 st fold here

89 Printed on environmentally-friendly paper with soy-based ink Concept and design by Equus

90 CapitaCommercial Trust Management Limited As Manager of CapitaCommercial Trust 39 Robinson Road #18-01 Robinson Point Singapore Telephone: Fax: Company Registration Number: W