ARA ASSET MANAGEMENT LIMITED 亚腾资产管理有限公司 RESULTS FOR THE QUARTER AND FINANCIAL YEAR ENDED 31 DECEMBER 2013
1. FY2013 Highlights ht 2
FY2013 BUSINESS HIGHLIGHTS Building on established platforms, reaching for new heights Assets under Management as at 31 December 2013 S$ 25.5 billion S$ 2.9 billion year-on-year 13% year-on-year Achieved on the back of : Acquisitions by REITs under management (namely Suntec REIT, Fortune REIT, Cache Logistics Trust) Improved asset performance driven by asset enhancement initiatives resulting in higher property valuations of the REIT portfolios under management Deployment of committed capital of ARA Asia Dragon Fund II and ARA China Investment Partners, LLC ( CIP ) Contribution from new separate account Morningside Investment Partners, LLC ( MIP ), and from the additional committed capital obtained for CIP Higher valuation of the property in the ARA Harmony Fund following its asset enhancement works 3
ASSETS UNDER MANAGEMENT S$25.5 billion as at 31 December 2013 S$b 26.0 25.55 REITs - Real Estate 24.0 Private RE Funds - Real Estate 22.6 22.0 Private RE Funds - Capital 20.3 20.0 Real Estate Management Services 18.0 16.9 16.0 14.0 13.0 12.0 11.7 10.0 9.5 80 8.0 6.2 6.0 5.4 4.0 3.5 2.0 0.6 0.0 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec-13 S$b 26.0 24.0 22.0 20.0 18.0 16.0 14.0 12.0 10.0 80 8.0 6.0 4.0 2.0 0.0 Assets Under Management (1) (S$ billion) Dec 2013 Dec 2012 Change REITs Real Estate (2) 18.4 16.2 13.1% Private Real Estate Funds Real Estate 5.4 4.7 15.8% Private Real Estate Funds Capital (3) 1.3 1.3 (1.6%) Real Estate Management Services (4) 0.4 0.4 5.8% Notes: 1. Based on exchange rates as at 31 December 2013 2. Comprises gross property value of REITs managed by subsidiaries & associated companies 3. Excludes capital committed for projects pending completion 4. Revenue base for real estate management services fee computation Total 25.5 22.6 12.7% 4
FY2013 BUSINESS HIGHLIGHTS Forging partnerships - Positioned for accelerated growth Strategic t alliance with The Straits Trading Company Limited Start of a expanded long-term partnership with well-reputed premier business groups in Asia - The Straits Trading Company Limited and Cheung Kong (Holdings) Limited Strengthened Sponsorship Expanded business network in the Asia-Pacific region to bolster deal sourcing and origination capabilities AUM Growth Co-investment vehicle to support the future capital needs of the Group s private funds division S$100 million seed capital for new Asia-focused development fund 5
2. Financials i and Track Record 6
FY2013 FINANCIAL HIGHLIGHTS Strong set of results with double-digit growth in recurrent net profit Financial Highlights FY2013 FY2012 Recurrent Management Fees (S$ 000) 114,003 102,615 11% Net Profit (S$ 000) (Exc. Unrealized M-T-M gains/losses) (1) 81,386 63,580 28% Recurrent Net Profit (2) (S$ 000) 56,100 48,151 17% Strong quality of earnings achieved on the back of: Higher management fees received from the REITs division driven by improved asset performance post asset enhancement initiatives which resulted in higher property valuations Higher acquisition, divestment and performance fees Contributions from ARA Asia Dragon Fund II and CIP; MIP newly launched in November 2013 Higher real estate management fees comprising higher leasing commission recognised by APM from the re-making of Suntec City, and contributions from the Asia Property Management (China) Limited group of companies ( APMC Group ) subsequent to its acquisition in August 2012 (1) M-T-M refers to Marked-to-Market, adjusted for the effects of tax (2) Recurrent Net Profit refers to Net Profit excluding acquisition, divestment and performance fees, finance income and finance costs, adjusted for the effects of tax 7
FINANCIAL PERFORMANCE Solid business model delivers growing financial performance Financial Highlights FY2013 FY2012 Change Revenue Management fees (1) (S$ 000) 114,003 102,615 11% Acquisition, divestment and performance fees (2) (S$ 000) 14,671 8,223 78% Finance income (3) (S$ 000) 11,583 21,997 (47%) Other income (S$ 000) 139 695 (80%) Total Revenue (S$ 000) 140,396 133,530 5% Results from operating activities (S$ 000) 84,493 81,641 3% Share of Profit of Associates (S$ 000) 3,913 4,461 (12%) Net Profit (S$ 000) 74,250 72,704 2% Net Profit (Excluding unrealised M-T-M gains/losses) (4) (S$ 000) 81,386 63,580 28% Recurrent Net Profit (5) (S$ 000) 56,100 48,151 17% AUM (S$ billion) 25.5 22.6 13% Notes: (1) Recurrent management fees from REITs, private real estate funds and real estate management services (2) Primarily REIT acquisition/divestment fees and project management and consultancy fees (3) Comprises mainly distribution income from financial assets and net gains on fair valuation/disposal of REIT units (4) M-T-M refers to Marked-to-Market, adjusted for the effects of tax (5) Recurrent Net Profit refers to Net Profit excluding acquisition, divestment and performance fees, finance income and finance costs, adjusted for the effects of tax 8
BALANCE SHEET Asset-light business model with robust balance sheet Group Balance Sheet as at 31 December 2013 S$ 000 S$ 000 Plant and equipment 1,390 Loan and borrowings 141 Subsidiaries - Deferred tax liabilities 68 Associates 4,657 Financial assets 212,527 Other receivables 6,289 Non-current assets 224,863 Non-current liabilities 209 Financial assets 49,837 Trade and other payables 26,318 Trade and other receivables 33,576 Loan and borrowings 30,329 Cash and cash equivalents 39,060 Derivative liabilities - Current tax payable 10,083 Current assets 122,473 Current liabilities 66,730 Total liabilities 66,939 Shareholders equity 280,397 Total assets 347,336 Total liabilities & shareholders equity 347,336 9
REVENUE AND NET PROFIT TRACK RECORD Strong track record of revenue and net profit growth S$m 160 Recurrent management fees 140 Acquisition & performance fees Other income 120 112.5 122.8 133.5 140.4 100 86.3 80 62.1 70.0 60 40 27.6 31.3 20 0 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 S$m 80 70 PATMI 63.8 68.2 72.7 74.3 60 50 48.3 40 34.0 36.7 30 20 13.4 13.5 10 0 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 10
DIVIDENDS Rewarding shareholders S cents 3.0 2.5 2.17 2.24 2.30 2.50 2.30 2.50 2.30 2.70 2.30 2.70 2.30 2.70 2.0 1.5 1.0 0.5 00 0.0 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 Sustainable dividend policy 5.0 Singapore Cents per share annually, barring any unforeseen circumstances Interim dividend 2.3 Singapore Cents per share Proposed Final dividend 2.7 Singapore Cents per share 11
DIVIDENDS Growing total dividends over time S$m 45 40 38.4 40.5 42.3 35 33.5 30 25 20 15 10 5 25.7 27.9 - FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 1-for-5 1-for-10 1-for-10 bonus issue bonus issue bonus issue Dividend growth over time Issued bonus shares while maintaining the constant dividend of 5.0 Singapore Cents per share Estimated total dividends to be paid for FY2013 of S$42.3 million 12
3. Business model 13
FUNDS & SERVICES Diversified funds management platforms and complementary services REITs Listing Venue SGX-ST & SEHK SGX-ST SEHK Bursa SGX-ST SEHK Listing Year 2003 2004 2005 2006 2009 2011 Focus Suburban retail Prime office & retail Office & industrial/ office Commercial Logistics properties in Commercial properties in properties in properties in Hong Kong properties in the Asia Pacific region properties in Hong Kong Singapore and Malaysia China Australia Property Value (1) HK$29,338m S$8,364m HK$8,434m RM1,277m S$1,035m RMB 36,718m Private Real Estate Funds Description ADF ADF II CIP MIP ARA Harmony Fund ARA Asia Dragon Fund Flagship strategic and opportunistic private real estate fund investing in Singapore, Hong Kong, China, Malaysia and other emerging economies in Asia ARA Asia Dragon Fund II 2nd strategic and opportunistic private real estate fund investing in Singapore, Hong Kong, China, Malaysia and other emerging economies in Asia Single-asset private real estate fund which owns the Suntec Singapore Int l Convention & Exhibition Centre ARA China Investment Partners Core-plus private real estate fund investing in high quality office and commercial properties in key cities in China, including Hong Kong ARA Morningside Investment Partners Value-add private real estate fund investing in high quality office and commercial properties in Singapore, Hong Kong and Malaysia Fund Size US$1.1b US$441m S$630m US$830m (2) US$240m (Committed Capital) (Committed Capital) (Gross Asset Value) (Committed Capital) (Committed Capital) Real Estate Mgmt Svcs Description Property management services provider Operations, sales and marketing services provider & consultant for convention, exhibition, meeting and event facilities (1) Property values as of last publicly-announced valuation (2) Including additional capital commitments of US$330 million in July 2013 14
BUSINESS SEGMENTS Delivering value to shareholders ARA ASSET MANAGEMENT LIMITED Business Segments REITs Private Real Estate Funds Real Estate Management Services Corporate Finance Advisory Services Revenue - Recurrent (Primary Basis) Base Fees (Gross Property Value) Portfolio Management Fees (Committed Capital / Gross Property Value) Property Management Fees (Property Gross Revenue) Performance / Variable Fees (Net Property Income) Convention & Exhibition Service Fees (Gross Revenue) Revenue - One-off (Primary Basis) Acquisition / Divestment Fees (Gross Property Value) Performance Fees (IRR above Hurdle) Consultancy Fees (Project Value) Advisory Fees (Purchase Value) Return on Seed Capital 15
3. Strategyt 16
ARA GROUP INVESTMENT OFFICE Driving the Group s expansion Capital Raising ARA Group Investment Office Deal Sourcing & Origination Product Development 17
2014 GROUP STRATEGY AND KEY INITIATIVES Maintain focus and build on successes Investor Driven Build Relationships Develop Products Build Teams and Expertise Joint Ventures / Alliances Operating Partners Mergers & Acquisitions Pan-Asia Capabilities New Markets New Capital Sources Same Focus (Fund Management) 18
Established regional network Expanding regional footprint across Asia Beijing Shenyang Dalian Guangzhou Nanjing Kuala Lumpur Ipoh Klang Malacca Singapore Hong Kong Established Shanghai regional network spanning 13 cities in the Asia Pacific, including 6 cities in the China Mainland Network extends across Singapore, Hong Kong, China, Malaysia and Australia Staff strength of approximately 1,021 (1) as at 31 December 2013 Sydney Notes: (1) Inclusive of real estate management services business division and employees in joint-venture entities of the Group and various funds under management 19
MANAGEMENT TEAM Experienced team with a proven track record Group John Lim REITS John Lim Private Market Ng Beng Tiong Property Management Services CIO Moses Song Corporate Divisions Suntec REIT Yeo See Kiat ADF I Ng Beng Tiong APM Singapore Anthony Yip Deputy Chairman ARA Financial Low Poh Choo Senior Director Finance & Compliance Cheryl Seow Senior Director, Group Finance Fortune REIT Anthony Ang ADF II Paul Yi APM China Mun Hon Pheng, China Group Business Dev Private & Public Mkt Mark Chu Director Corporate Office Ng Beng Tiong Senior Director Prosperity REIT Mavis Wong ARA Harmony Fund Siew Siew Hoon Fund Director APM Malaysia Chan Lai Hing General Manager China Desk Mun Hon Pheng Head Group Risk Mgmt & IA Tang Boon Kang Senior Manager Cache Logistics Trust Daniel Cerf CIP Derek Lai Head Portfolio Management Suntec Singapore Arun Madhok Korea Desk Anthony Kang Head Group HR & Corp Dev Pauline Lim Director AmFIRSTREITREIT Zuhairy bin Md. Isa Acting MIP David Kim Suntec International Arun Madhok Australia Desk Low Poh Choo Head Group Office Admin Serene Yeo Senior Manager Hui Xian REIT Tom Cheung SIP Thomas Kong Fund Director Malaysia Desk June Lim Head ARA NPS REIT Anthony Kang Summit Development Fund Thomas Kong Japan / India / GCC Desk Low Poh Choo / Mark Chu Head 20
DISCLAIMER These slides may contain forward looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward looking statements as a result of a number of uncertainties, risks and assumptions. Representative examples of these factors include but are not limited to general market and economic conditions, interest rate trends, competition from other real estate investors, changes in operating expenses including employee wages and benefits, changes in government policies, and the continued availability of financing in the amounts and terms necessary to support future business. You are cautioned not to place undue reliance on the forward looking statements in these slides, which are based on the current view of management on future events. Information from external sources in these slides has not been independently verified by us nor have the external sources quoted consented to the inclusion of the information. Contact Cheryl Seow Senior Director, Group Finance cherylseow@ara.com.hk Marilyn Tan Senior Manager, Corporate Finance marilyntan@ara.com.hk Global Headquarters: 6 Temasek Boulevard Suntec Tower Four, #16 02 Singapore 038986 Tel: (65) 6835 9232 Fax: (65) 6835 9672 Website: www.ara asia.com 21