Insight & Foresight CapitaLand Limited Annual Report 2013 Insight & Foresight CapitaLand is a leader in the real estate industry in Asia. It leverages growth opportunities driven by consumption and urbanisation. Its consolidated structure and core competencies allow the Group to focus on integrated, mixed-use opportunities and build scale across its six city clusters in the core markets of Singapore and China. Deep knowledge and experience give CapitaLand the insight and foresight to fine-tune operational excellence while its leading position provides the clearest possible perspective on future drivers of growth opportunities. ), CapitaLand ‘Building People’ Photography Competition Photography 2011. ), CapitaLand People’ ‘Building Clarity Clarity enables us to enhance organisational performance through operational excellence and eff iciencies. Ng Soon Thong (Singapore Cover photo courtesy of David Corporate Profile 2 Contents Financial Highlights FY 2013 3 Letter to Shareholders 4 Managing Sustainability 13 Year in Brief 14 Awards & Accolades 16 Corporate Governance & Transparency Board of Directors 20 Senior Management 28 Corporate Governance Report 33 Enterprise Risk Management 61 Stakeholder Communication 64 Corporate Directory 68 Financial Calendar 69 Sustainability Business Environment, Health and Safety 70 Review People 72 Global Presence 76 Community 74 Performance Overview 77 Group Businesses 90 CapitaLand Singapore 92 CapitaLand China 94 CapitaMalls Asia 96 Ascott 98 Regional Investments 100 Financial Products & Services 103 Portfolio Details Mixed-use Developments 106 Residential 107 Commercial 112 Shopping Malls 113 Serviced Residences 118 5-Year Financial Summary 123 Share Price Performance 124 Appendix Statutory Accounts 125 Economic Value Added Statements 248 Value Added Statements 249 Supplemental Information 250 Shareholding Statistics 251 Notice of Annual General Meeting 252 Proxy Form 257 1 Corporate Profile CapitaLand is one of Asia’s largest real estate companies. Headquartered and listed in Singapore, the company’s businesses in real estate and real estate fund management are focused on its core markets of Singapore and China. The company’s diversified real estate portfolio primarily includes homes, offices, shopping malls, serviced residences and mixed-use developments. The company also has one of the largest real estate fund management businesses with assets located in Asia. CapitaLand leverages its significant asset base, real estate domain knowledge, product design and development capabilities, active capital management strategies and extensive market network to develop real estate products and services in its markets. The listed entities of the CapitaLand Group include CapitaMalls Asia, Ascott Residence Trust, CapitaCommercial Trust, CapitaMall Trust, CapitaMalls Malaysia Trust, CapitaRetail China Trust and Australand. Mission & Vision Core Values To build a world-class company, with an • Our people are our strength. international presence and a strong global We build people to build for people. network, that is managed by people whose core values are respected by the business • We are committed to the highest and social community to: standards of integrity. • Create sustainable shareholder value • We have the courage to do what is right and the will to succeed. • Deliver quality products and services • We add value to what we do through • Attract and develop quality human capital innovation and continuous improvement. • We are fair and reasonable in all our actions and dealings with business partners, customers and colleagues. • We contribute to the well-being of the community. 2 Clarity CapitaLand Limited Annual Report 2013 Financial Highlights FY 2013 Profit Attributable Operating to Shareholders PATMI S$849.8m S$527.7m Return on Dividend Sharholders’ Funds per share 5.5% 8cents Group Managed Revenue Under Real Estate Assets Management S$64.64b S$10.03b Group Assets Group EBIT S$32.92b1 S$1.80b 83% of Group’s assets 88% of Group’s EBIT in Singapore from Singapore and China and China Singapore 38% Singapore 47% China* 45% China* 41% Others** 17% Others** 12% 1 Excludes treasury cash * China includes Hong Kong * China includes Hong Kong ** Others include Australia, Europe and ** Others include Australia, Europe and Other Asia Other Asia 3 Letter to Shareholders CapitaLand is cautiously optimistic for 2014 as the global economy continues its recovery. The Group completed its strategic review in 2013 and will now build on its various growth platforms already in place while exploring new opportunities. CapitaLand will continue to deepen its presence in the two core markets of Singapore and China, as well as entrench its leadership position in integrated or mixed-use developments in line with its core competencies and macro trends in Asia. (Left) Lim Ming Yan, President & Group CEO | (Right) Ng Kee Choe, Chairman 4 Clarity CapitaLand Limited Annual Report 2013 DEAR SHAREHOLDERS, loss on divestment of 20% stake in Australand and In 2013, following a strategic higher impairment costs. review, CapitaLand was reorganised and streamlined into FOCUS ON CORE MARKETS four business units – CapitaLand OF SINGAPORE AND CHINA Singapore, CapitaLand China, For the core markets of Singapore CapitaMalls Asia Limited (CMA) and China, CapitaLand further and The Ascott Limited (Ascott). sharpened its focus on the S$3.98b CapitaLand Singapore and six clusters, namely, Singapore, Group Revenue CapitaLand China concentrate Beijing-Tianjin, Shanghai- in the residential, office and Hangzhou-Suzhou-Ningbo, For the year ended integrated or mixed-use Guangzhou-Shenzhen, 31 December 2013, the development businesses, while Chengdu-Chongqing, and Wuhan. Group posted revenue of S$3.98 billion, EBIT of CMA and Ascott continue their The sharpened focus allows the S$1.80 billion, and a 43% focus in the shopping mall and Group to take advantage of Asia’s increase in operating serviced residence businesses growth, urbanisation and consumer PATMI to S$527.7 million respectively. As part of the demand trends. streamlining, a common Chinese name, , was adopted In 2013, CapitaLand invested in both Singapore and China for a total of S$3.70 billion in new greater clarity and consistency. projects, with about 90% of the investments in Singapore and The streamlined organisation China. Its businesses in the allows the Group to sharpen its two core markets of Singapore focus, and better leverage and and China accounted for 83% harness synergies across the of the Group’s total assets four core business units; achieve (excluding treasury cash). greater economies of scale and China, with one of the highest enhance its competitive advantage rates of economic growth globally, in integrated and mixed-use is the Group’s largest market development projects, and deepen with assets amounting to its leading positions in shopping S$14.91 billion or 45% of Group’s malls and serviced residences. total assets, as at 31 December 2013. Assets in the Singapore In the next three to five years, portfolio stood at S$12.52 billion CapitaLand aims to deliver a or 38% of the Group’s total assets. sustainable return on equity (ROE) S$3.70b in excess of 8%. WELL-DIVERSIFIED PROPERTY New Investments ASSET PORTFOLIOS KEY FINANCIAL HIGHLIGHTS The property asset portfolios In 2013, CapitaLand For the year ended 31 December in Singapore and China are invested a total of 2013, the Group posted revenue well-diversified. In Singapore, S$3.70 billion in new of S$3.98 billion, earnings before residential, commercial (which projects, with about interest and taxes (EBIT) of includes mixed-use developments), 90% of the investments S$1.80 billion, and a 43% increase shopping malls and serviced in Singapore and China in operating net profit after tax residences make up 32%, 18%, and minority interest (PATMI) to 42%, and 7% of the portfolio S$527.7 million from 2012. PATMI respectively. In China, the of S$849.8 million was however residential, commercial, lower compared to 2012, due shopping malls and serviced mainly to a one-time accounting residences comprise 34%, 27%, 5 Letter to Shareholders 32%, and 6% of the portfolio on integrated or mixed-use respectively. Singapore remains developments. In Singapore, as CapitaLand’s most profitable new mixed-use developments market in 2013, accounting for include Westgate which consists 47% of Group EBIT, while China of the Westgate office tower and contributed 41%. shopping mall, and Bedok Mall and Bedok Residences. In China, CapitaLand is positive about the eight Raffles City projects the long-term prospects of its are a testament to CapitaLand’s two core markets of Singapore leading position in integrated and China, both of which have developments, four of which are strong economic fundamentals operational, namely, Raffles City Singapore remains and healthy consumer demand. Shanghai, Raffles City Beijing, as CapitaLand’s most To further enhance value from Raffles City Chengdu and Raffles profitable market in 2013, accounting these two core markets, the City Ningbo. Four more Raffles City for 47% of Group Group has deepened its expertise projects in Hangzhou, Changning, EBIT, while China across the entire real estate Shenzhen and Chongqing are contributed 41% value chain spanning from land slated to open from 2015 to 2018. acquisition, development and operation to capital management. In June 2013, CapitaLand China acquired a 70% stake in a new EMPHASIS ON INTEGRATED mixed-use development site OR MIXED-USE DEVELOPMENTS with a total GFA of