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A R A A S SE T M A N AG EMEN T LIMIT ED
A n n u A l R e p o R t 2 0 1 1
www.ara-asia.com
Singapore
6 temasek Boulevard#16-02, Suntec tower Four Singapore 038986tel: 65 6835 9232Fax: 65 6835 9672
Hong Kong unit 5508 - 10, 55th Floor, the Center99 Queen’s Road CentralHong Kongtel: 852 2169 0928Fax: 852 2169 0968
MalaySia penthouse, Menara AmFirstno. 1, Jalan 19/3 46300 petaling Jaya Selangor Darul ehsan Malaysia tel: 603 7955 8780/5 Fax: 603 7955 8360
ARA ASSET MANAGEMENT LIMITED
SHangHai
unit 2601 - 260226th Floor, Azia Center1233 lujiazui Ring Road, pudongShanghai 200120Chinatel: 8621 6859 1088 Fax: 8621 6859 1290
International Capital plaza 1318 Sichuan north Road Shanghai 200080 China tel: 8621 6307 9000 Fax: 8621 6307 9050
Beijing
unit 1901, l19, tower e2the towers, oriental plazano 1, east Chang An AvenueDong Cheng DistrictBeijing 100738Chinatel: 8610 8520 0187Fax: 8610 8520 0177
guangzHou
161 linhexi Road Block B46/F tianhe DistrictGuangzhou 510620China tel: 8620 3831 0876Fax: 8620 3825 1658
Dalian
no. 139-1Xi’an RoadShahekou DistrictDalian 116021Chinatel: 86411 8389 8255
nanjing
50-A, nanjing International Finance Center1 Hanzhong RoadBaixia Districtnanjing 210029Chinatel: 8625 8477 5566Fax: 8625 8477 5567
Tianjin
unit 201, Block 8ChaoYang liHou pu ChunDa Huang pu XiangtianjinChina
10 YEARS oF ACHIEVEMENTS十年辛勤筑辉煌
CONTENTS
Corporate Profile
Our Core Values
Celebrating 10 Years of Achievements
Letter to Shareholders
Year in Review
Highlights of the Year
Financial Highlights
Performance Review
Our Business
Business Segments
Funds and Services
Real Estate Investment Trusts
Private Real Estate Funds
Real Estate Management Services
Corporate Finance Advisory Services
Our People
Board of Directors
Management Team Structure
Management Team
Investor Relations and Awards
Corporate Information
Report on Corporate Governance
Financial Statements
Supplementary Information
Shareholders’ Information
Notice of Annual General Meeting
Notice of Books Closure
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18
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ANNUAL REPORT 2011 1
CORPORATE PROFILEARA Asset Management Limited (“ARA” or the “Company” and together with its subsidiaries , the “Group”) is an Asian real estate fund management company focused on the management of public– listed real estate investment trusts (“REITs”) and private real estate funds. ARA was incorporated on 1 July 2002 and was admitted to the official lis t of the Main Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”) on 2 November 2007.
ARA currently manages REITs lis ted in Singapore, Hong Kong and Malaysia with a diversified portfolio spanning the office / retail ( commercial ) , industrial /of fice and logistics sectors ; private real estate funds investing in Asia ; and provides real estate management services , including property management and convention & exhibition services ; and corporate finance advisory services .
ARA is one of the largest real estate fund managers in the region and has total assets under management (“AUM”) of S$20.2 billion (approximately US$15.6 billion) as at 31 December 2011.
ARA ASSET MANAGEMENT L IMITED2
CELEBRATING 10 YEARS OF ACHIEVEMENTS
2002 2003
2004
• EstablishmentofARA • InitialPublicOffering(“IPO”)ofFortuneREITin Singapore – the first cross-border REIT in Asia
• Establishment of the Al-Islami Far Eastern Real Estate Fund (“AIFEREF”) – the first Shariah- compliant fund in Asia
• IPO of Suntec REIT – the first composite REIT in Singapore
ARA was founded ten years ago as a joint venture between our Group CEO, Mr John Lim and Cheung Kong Group. Over the past decade, ARA has grown to become a leading Asian real estate fund manager, with a capable management team at the helm and employs over 800 people across 11 cities in the Asia-Pacific region.
On the 10th anniversary of ARA, we have reached a significant milestone in achieving over S$20 billion of AUM as at 31 December 2011. We will continue to pursue our vision of becoming the premier integrated real estate fund manager in Asia.
ARA ASSET MANAGEMENT L IMITED4
2005
2006
2007
2010
2011
• IPOof ProsperityREIT– thefirstprivate sector REIT in Hong Kong
• IPO of AmFIRST REIT – one of the largest commercial REITs in Malaysia
• Establishment of ARA Corporate Finance Advisory Services
• IPO of ARA Asset Management Limited – the first real estate fund manager listed in Singapore
• First closing of the ARA Asia Dragon Fund – ARA’s flagship private real estate fund with committed capital of US$716 million
• AIFEREFdivestedwithaninternalrateofreturn (“IRR”)(unlevered)of23.7%
• Dual primary listing of Fortune REIT in Hong Kong
• IPO of Cache Logistics Trust (“Cache”) – the first REIT IPO in Singapore since the global financial crisis
• Acquired strategic stake in APN Property Group Limited, a listed Australian boutique real estate fund manager
• ARA’s revenue crosses the S$100 million mark
• ARA’s market capitalisation crosses the S$1 billion mark for the first time
• ARA was accorded Forbes Asia’s “200 Best UnderaBillion”
• IPO of Hui Xian REIT – the first offshore RMB-denominated public equity offering listed in Hong Kong and the first RMB-denominated REIT in the world
• The ARA Harmony Fund achieves an IRR of 64.8%forinvestors
• TheARAAsiaDragonFundIIwasestablishedand achieved its first closing of US$300 million
• ARA was accorded Forbes Asia’s “200 Best UnderaBillion”forthesecondyearrunning
2008
• FinalclosingoftheARAAsiaDragonFundwith totalcommittedcapitalofUS$1.1billion
2009
• Establishment of the ARA Harmony Fund – a single asset private real estate fund invested in the Suntec Singapore International Convention & Exhibition Centre
• EstablishmentofSuntecSingapore–aconvention & exhibition services provider
• AcquisitionofAPMPropertyManagementPte. Ltd.–thepropertymanagerofSuntecCity
celebrating 10 years of achievements
ANNUAL REPORT 2011 5
LETTER TO SHAREHOLDERS
For the financial year ended 31 December 2011 (“FY2011”), the Group posted a record net profit of S$68.2 million, a 7% jump from the S$63.8 million achieved in the previous year. Earnings per share(1) were 8.9 cents (FY2010 – 8.3 cents).
ARA ASSET MANAGEMENT L IMITED8
letter to shareholders
Becoming the premier Integrated Real Estate Fund Manager in Asia
ARA celebrates its 10th anniversary this year and we are very pleased to be on track to realise our objective of becoming the
premierintegratedrealestatefundmanagerinAsia.Overthedecade,wehaveexpandedourportfolioandnowmanage
sixREITsinthreejurisdictions,aswellasthreeprivaterealestatefundsthatinvestintheAsianregion.Asat31December
2011,ARAhasaccumulatedassetsundermanagement(“AUM”)ofS$20.2billion,animpressivecompoundedannualgrowth
rateof56%from2002.Today,ARAmanagesover35millionsquarefeetofrealestatespaceacrossAsiathroughREITsand
privaterealestatefundsplatforms,makingARAoneofthelargestrealestatefundmanagersintheregion.Withmultiple
platforms and an excellent track record, ARA is well positioned to ride on the Asian growth story to continue growing its
AUMandextendingitspresenceintheregion.
Dividend
TheDirectorsarepleased toproposeafinaldividendof2.7Singaporecentsper share forFY2011. Including the interim
dividendof2.3Singaporecentspersharepaidouton8September2011, thetotaldividendforFY2011amounts to5.0
Singaporecentspershare.Withtheone-for-tenbonusissueinJune2011,theproposeddividendpayoutinFY2011represents
aneffective15%increasefromFY2010.Theproposedfinaldividendissubjecttoshareholders’approvalattheCompany’s
AnnualGeneralMeetingtobeheldon26April2012.
Delivering results amid an uncertain environment
FY2011 started off with uncertainty as the slow recovery of the US was weighed down by unresolved and expanding
sovereign debt issues in Europe. There were also fears that Asian economies might overheat due to accommodative
monetarypolicies.
As the year continued, a slow but discernable pattern emerged – the US and the weaker European Union countries continued
tobestymiedbyeconomicslowdownandthepersistentsovereigndebtcrisis.ThedevastatingcatastropheinJapan,political
upheavals in the Middle East and floods in Thailand exacerbated the economic uncertainties and Asian economies experienced
slowergrowthandrisinginflation.
Amid this uncertain environment, ARA continues to deliver consistent earnings based on strong fundamentals and this has
positionedARAto rideout thevolatilityof themarketandmaintainsustainable results. InFY2011,our revenue jumped
9%toS$122.8millionandournetprofit increasedtoS$68.2million,an increaseof7%year-on-year.Theoutstanding
performancewasduemainlytoourtwingrowthdriversofREITmanagementandprivaterealestatefundsplatforms.
ARAwascommendedforitsachievementsinbranding,strongcorporategovernancepoliciesandinternalcontrolsinFY2011.
Affirmingourstrongperformance,ARAwasincludedinAsia’s“200BestUnderaBillion”listinSeptember2011’sedition
ofForbesAsiaMagazineforthesecondyearrunning.ARAwastheonlyoneofeightSingaporecompaniesinthe2010list
tobeawardedin2011.ARAhasalsobeenrecognisedasaBusinessSuperbrandsinSingapore,astrongtestamenttoARA’s
excellentbrandingandrecognition locallyandabroad.At the Investors’ChoiceAwards2011organisedby theSecurities
InvestorsAssociation(Singapore),ARAreceivedtheinaugural“InternalAuditExcellenceAward”(Merit,OverallCategory).
Wevaluetherecognitionaccordedbyindustrypeersforourstrengthindeliveringconsistentperformancethroughbusiness
cycles.Wecontinuetooutperformthemarketatlargeandourmajorrevenuelinesincludingmanagementfees,acquisition
andperformancefeespostedrecordresults.
(1) Based on enlarged share capital of 768,319,189 shares
ANNUAL REPORT 2011 9
LETTER TO SHAREHOLDERS
REIT Management
ARAhadanotherbusybanneryearintermsofREITmanagement,withthelistingofHuiXianREITinHongKong.OurREITs
werealsoactiveontheacquisitionfront,makingseveralacquisitionsduringtheyear.
In April 2011, ARA, together with our joint venture partners Cheung Kong Group and CITIC Securities Group, jointly listed
HuiXianREITontheStockExchangeofHongKong.AsthefirstRMB-denominatedREITlistedinHongKong,HuiXianREIT
waslistedwithBeijingOrientalPlaza,oneofthelargestandmosticoniccommercialcomplexesinChina.HuiXianREIThas
sinceannouncedtheacquisitionoftheSheratonShenyangLidoHotelinShenyang,oneofthelargestinternationalfive-star
hotelsinNorth-easternChinainNovember2011.
InAugust2011,SuntecREITacquiredmajoritycontrolofSuntecSingapore,apremierconventionandexhibitioncentrewhich
is integratedwiththe iconicSuntecCity.Asaresult,SuntecREIT’seffective interest inSuntecSingapore increasedfrom
20.0%to60.8%.InOctober2011,SuntecREITannouncedthedivestmentofChijmesata23%premiumovervaluation
and the S$410 million remaking of Suntec City into a more exciting shopping and Meetings, Incentives, Conventions and
Exhibitions(“MICE”)destination.Theassetenhancementinitiative(“AEI”),whichisscheduledtostartinmid-2012,comprises
S$230millionincapitalexpendituretoremakeSuntecCityMallandS$180milliontomoderniseSuntecSingapore.When
completedinmid-2015,SuntecCitywillofferalmost1millionsquarefeetofshoppingexperience.
InDecember2011,FortuneREITannouncedtheacquisitionofTheBelvedereGardenPropertyandTheProvidentCentre
PropertyforatotalpurchaseconsiderationofHK$1,900million.Uponcompletion,theacquisitionofthesetwoproperties
willadd457,100squarefeetor23%ofgrossrentablearea(“GRA”)toFortuneREIT’sportfolio,bringingitstotalportfolio
GRAto2.4millionsquarefeet.
CacheLogisticsTrustmadeitsmaidenacquisitioninSingaporebyacquiringtwologisticsproperties,andmarkeditsforay
intoChinawith the acquisitionof JinshanChemicalWarehouse in Shanghai.Capitalisingon the economicgrowth and
vibrancyofCyberjaya’scommercialofficesegment,AmFIRSTREITmadeitsfirstinvestmentinCyberjayawiththeacquisition
ofPrima9andPrima10propertiesforatotalconsiderationofRM133millioninNovember2011.
The outlook for the Singapore and Hong Kong markets may be uncertain given their relatively open economies, which
aremoreexposedtoexternalfactors.However,wenotethatthefundamentalsinAsia,andinparticularthesetwocities,
remainstrongastheregion’seconomiescontinuetogrow.Lookingahead,wewillcontinuetogrowourREITmanagement
platform,proactivelymanageourassets,undertakeAEIsaswellaslistnewREITsinnewjurisdictions.
private Real Estate Funds
Ourflagshipprivate realestate fund, theARAAsiaDragonFund (“ADF”),completed its investmentperiod in2011and
shifted its focus to assetmanagement anddivestment.Over thenext three years, theADFwill bedivesting its assets,
afterhavingsuccessfullydeployedall itscapital.ARAhasofficially launchedtheARAAsiaDragonFund IIandwasable
toraiseUS$300millionat itsfirstclosingwiththefinalclosingscheduledfor2012.Despitethechallengingfundraising
environment,weareheartenedbythegoodsupportreceivedfrominvestors.
WeareindeedpleasedwiththeperformanceoftheARAHarmonyFundwhichheldamajoritystakeinSuntecSingapore.
InAugust2011,theARAHarmonyFundachievedanoverallinternalrateofreturnof64.8%whentheprivateinvestorsin
thefunddivestedtheirinterests.
Real Estate Management Services
Our real estate management services division continues to deliver steady results as it manages Suntec City in Singapore and
propertiesinMalaysia.Ourrealestatemanagementservicesdivisionplaysacrucialroleinenhancingtheperformanceof
theassetsofourREITsandprivatefundsinthesetwocountries.Therealestatemanagementservicesdivisionwillbenefit
ARA ASSET MANAGEMENT L IMITED10
letter to shareholders
fromtheAEIinthelongertermastherejuvenatedSuntecCitywillbeamoreexcitingshoppingandMICEdestination.We
willcontinuetodevelopAPMPropertyManagementPte.Ltd.asapremiumbrandinpropertymanagementinAsia.
Ourexpertise inpropertymanagementwas recognisedwhenSuntecSingaporewon the“Asia’s LeadingMeetingsand
Conference Centre” title at the World Travel Awards for the sixth year, beating strong competition from seven other
establishments across leading Asian cities. We are also proud that Suntec Singapore’s efforts at internationalising its
operations is bearing fruit as Suntec International has been appointed the sales and marketing representative for both
Vancouver Convention Centre as well as Adelaide Convention Centre to spearhead efforts in drawing more meetings and
eventsfromAsiatotherespectivecontinentsofNorthAmericaandAustralia.
prospects
WithconcernsthatgrowthinAsiacouldbeadverselyaffectedbytheslowdownintheUSandEuropeaneconomies,itis
vitalforARAtoproactivelymanagetherisksthatariseandtofocusonmanagingourfundsprudently.
Although the uncertain economic environment poses challenges, it also offers opportunities for ARA to expand our existing
platformsandstrengthenourorganisation.Wehaveandwillalwayskeeptoourcorevaluesofintegrity,excellence,respect
andteamwork.Thesehavebeenourguidingprinciplesinallourdealingswithourstakeholdersandbusinesspartners,and
wewillcontinuetoinculcatethesecorevalueswithintheorganisation.
Acknowledgement
WewouldliketothankourBoardofDirectorsfortheirguidanceinthepastyear,aswellasouremployeesfortheirhard
workincontributingtothesuccessofARAduringourfoundingdecade.ThereisaChinesewisdomthata journeyofa
thousandmilesstartswithafirststep.Wewouldalsoliketothankourinvestorsandbusinesspartnersfortheirsupport,
manyofwhomhavebeenwithussincetenyearsago.Welookforwardtotheirsupportformanydecadestocome.
Chiu KwoK hung Justin Lim hwee Chiang JohnChairman Group Chief Executive Officer
ANNUAL REPORT 2011 11
HIGHLIGHTS OF THE YEAR
FEBRUARY
JUNE
MARCH
• Cache acquires 6 Changi North Way and 4 PenjuruLaneforS$39.8million
• AmFIRSTREITcompletes theacqusitionofSYF Unit No. S2.140B 2nd Floor The Summit SubangUSJ
• CacheestablishesaS$500millionmulticurrency medium term note programme
APRIL
MAY
• ARAFY2010AnnualGeneralMeeting
• ListingofHuiXianREITontheStockExchange ofHongKong(“SEHK”)
• 1-for-10bonusissueof69,847,192newordinary sharesofS$0.002each
• CacheacquiresJinshanChemicalWarehousein Shanghai,ChinaforRMB71.0million
• Payment of FY2010 final dividend of S$0.025 per share
ARA ASSET MANAGEMENT L IMITED14
HIGHLIGHTS OF THE YEAR
JULY
AUGUST
OCTOBER
NOVEMBER
DECEMBER
• The ADF II secures US$300 million of capital commitments
• Fortune REIT announces new “Fortune Malls” asset branding exercise for 14 malls
• Suntec REIT announces the establishment of a S$500 million multicurrency medium term note programme
• Suntec REIT acquires majority control of Suntec Singapore International Convention & Exhibition Centre
• The ARA Harmony Fund achieves an IRR of 64.8%forinvestors
• Cacheacquires22LoyangLaneforS$13.0million
• SuntecREITissuesS$150million3.1%fixedrate notes due in 2016
SEPTEMBER
• ProsperityREITcompletestheassetenhancement initiative for Trendy Centre
• PaymentofFY2011interimdividendofS$0.023 per share
• ARA named one of Asia’s “200 Best Under a Billion”byForbesAsiaMagazineforthesecond year running
• ARA conferred the inaugural “Internal Audit Excellence Award” by Securities Investors Association(Singapore)(“SIAS”)
• ARA recognised as a “Business Superbrands 2011/2012”bySuperbrands
• SuntecREITannouncesthedivestmentofChijmes for S$177 million
• SuntecREITannouncestheremakingofSuntecCity
• Suntec REIT conferred the “Most Transparent Company Award 2011” Runner-up Award by SIAS
• Hui Xian REIT announces the acquisition of the Sheraton Shenyang Lido Hotel in Shenyang, China for RMB 980 million
• AmFIRSTREITcompletestheaquisitionofPrima 9 & 10 for RM133 million
• FortuneREITannouncestheproposedacquisition of The Belvedere Garden Property and The Provident Centre Property for HK$1,900 million
ANNUAL REPORT 2011 15
FINANCIAL HIGHLIGHTS
• Totalrevenuerose9%toS$122.8million
• Netprofitincreased7%toS$68.2million
• ProposedfinaldividendofS$0.027pershare,totalpayoutofS$0.050pershareforFY2011
• TotalAUMup18%toS$20.2billion(approximatelyUS$15.6billion)
(1) Earnings per share – based on the enlarged share capital of 768,319,189 shares in issue as at 31 December 2011
(2) Based on exchange rates as at 31 December 2011(3) Gross property value of REITs managed by subsidiaries & associated companies(4) Gross value of real estate investments in private real estate funds(5) Unutilised commitments in private real estate funds, excluding capital committed for projects pending completion(6) Revenue base for real estate management services fee computation
KEY FINANCIAL RESULTS FY2011 FY2010 Change (%)
Revenue
Management fees S$’000 90,860 84,630 7%
Acquisition and performance fees S$’000 21,288 17,499 22%
Other income S$’000 10,613 10,382 2%
Total revenue S$’000 122,761 112,511 9%
Net profit S$’000 68,202 63,812 7%
EPS(1) S$ cents 8.9 8.3 7%
Dividend S$ cents 5.0 4.8 4%
TOTAL ASSETS UNDER MANAGEMENT(2) 31 Dec 2011 31 Dec 2010 Change
REITs - Real estate(3) (S$ billion) 14.9 11.4 3.4
Private real estate funds - Real estate(4) (S$ billion) 4.9 5.0 (0.1)
Private real estate funds - Capital(5) (S$ billion) 0.2 0.3 (0.1)
Real estate management services(6) (S$ billion) 0.3 0.3 -
Total AUM (s$ billion) 20.2 17.1 3.1
ARA ASSET MANAGEMENT L IMITED16
financial highlights
TOTAL REVENUE & NET PROFIT (S$ MILLION)
TOTAL ASSETS UNDER MANAGEMENT (S$ BILLION)
140
120
100
80
60
40
20
0FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011
LEGEND
LEGEND
OTHER INCOME
REAL ESTATE MANAGEMENTSERVICES
ACqUISITION & PERFORMANCE FEES
PRIVATE FUNDS- CAPITAL
25
20
15
10
5
0
FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011
0.8
13.4
31.3
13.5
34.0
62.1
70.0
36.7
48.3
86.3
112.5
63.868.2
122.8
27.6
5.7
MANAGEMENT FEES
PRIVATEFUNDS
NET PROFIT
REITs
0.6
3.5
5.56.3
9.6
11.8
13.1
17.1
20.2
ANNUAL REPORT 2011 17
PERFORMANCE REVIEW
performance Overview
TheGroupachievedanotherrecordyearofnetprofitofS$68.2millionforthefinancialyearended31December2011,
a7%jumpfromS$63.8millioninFY2010.Totalrevenuerose9%toS$122.8million,backedbyanincreaseinrecurrent
managementfeeincomeastheGroupbenefittedfromthefullyearmanagementfeescontributionfromtheacquisition
ofaone-thirdinterestintheMarinaBayFinancialCentre(“MBFCProperty”)(1) by Suntec REIT on 9 December 2010 and
thelistingofCacheontheSGX-STon12April2010.Duringtheyear,theGroupalsolistedHuiXianREIT,theworld’sfirst
offshore RMB-denominated REIT on the SEHK, and successfully divested investors’ interest in the ARA Harmony Fund with
anexcellentIRRof64.8%.ThesuccessfulexecutionofthesetransactionscontributedsignificantlytotheGroup’snetprofit
forFY2011,aswellascementedtheGroup’sreputationasaleadingAsianrealestatefundmanager.
Assets Under Management
In line with the Group’s sustained growth since its establishment in 2002, the total AUM as at 31 December 2011 increased
by18%toS$20.2billionfromS$17.1billionasat31December2010.REITrealestateassetsundermanagementclimbed
S$3.4billiontoS$14.9billion,primarilyfromthe listingofHuiXianREITontheSEHKandrevaluationgainsforexisting
properties.FortheGroup’sprivaterealestatefunds,therewasaslightfallinAUMastheARAAsiaDragonFund(“ADF”)
commenceditsdivestmentofsomeofitsassetsandreturnedcapitaltoinvestors.
Revenue
Despitethechallengingmacroeconomicenvironment,theGroup’srevenueclimbed9%toS$122.8millioninFY2011from
S$112.5millioninFY2010.Recurrentmanagementfeeincomegrew7%toS$90.9million,primarilyduetothefullyear
managementfeecontributionfromtheMBFCPropertyacquisitionbySuntecREITandthelistingofCache.
Acquisition and performance fees rose to S$21.3 million from S$17.5 million in the previous year. The acquisition and
performance fees received were primarily from the performance fees received in relation to the divestment of investors’
interest in theARAHarmony Fundand the acquisition fees received in relation to the acquisitionof a51% interest in
HarmonyPartnersInvestmentsLimitedbySuntecREIT.InFY2010,theGroupreceivedacquisitionandperformancefeesof
S$17.5millionprimarilyfromSuntecREIT’sacquisitionoftheMBFCProperty.
Expenses
TheGrouprecordedhighertotaloperatingexpensesofS$48.8millioninFY2011comparedtoS$38.6millioninFY2010,
primary due to a net loss on fair valuation (mark-to-market loss) of S$6.1 million on the Suntec REIT acquisition units
received by the Group for the acquisition of MBFC Property last year, as well as management fee income received in
theformofunits.TheacquisitionunitsweresubjecttoaoneyearmoratoriumasstipulatedintheCollectiveInvestment
SchemesissuedbytheMonetaryAuthorityofSingapore.Theincreasewasalsopartlyduetohigherstaff-relatedexpenses
inlinewiththeGroup’scontinuingbusinessexpansion.
FinancecostinFY2011wasreducedsignificantlytoS$0.4millionfromS$0.9millionasasecuredrevolvingcreditfacility
ofRM44.9million(approximatelyS$18.9million)fromAmInvestmentBankBerhad(“AIBB”)wasfullyrepaidinMay2011.
(1) Refers to Marina Bay Financial Centre Tower 1, Marina Bay Financial Centre Tower 2, the Marina Bay Link Mall and 695 car park lots
ARA ASSET MANAGEMENT L IMITED18
PERFORMANCE REVIEW
REVENUE BY SEGMENTS
REAL ESTATE ASSETS UNDER MANAGEMENT BY COUNTRY
9%
17%
10%
46%
18%
TOTAL: S$122.8m
LEGEND
REIT MANAGEMENT FEES
PRIVATE FUND MANAGEMENT FEES
REAL ESTATE MANAGEMENT SERVICES
ACqUISITION & PERFORMANCE FEES
OTHER INCOME
5%
26%
47%
22%
TOTAL: S$19.8b
LEGEND
SINGAPORE
HONG KONG
CHINA
MALAYSIA
ANNUAL REPORT 2011 19
PERFORMANCE REVIEW
Earnings
TheGroup’sshareofprofitsofassociatestotalledS$2.8millionforFY2011.TheincreaseofS$2.3millionwasprimarilydue
tothecontributionfromtheGroup’s30%effectiveinterestinHuiXianAssetManagementLimited,themanagerofHuiXian
REIT.Taxexpensedeclined27%toS$6.8millioninFY2011fromS$9.3millioninFY2010despitehigheroperatingprofitsas
partoftheincomewasreceivedoffshoreforFY2011.
NetprofitattributabletoequityholdersoftheCompanyinFY2011wasS$68.2million,a7%jumpfromS$63.8millionin
thepreviousyear.Excludingtheeffectsofthemark-to-marketlossoncertainREITunitsamountingtoS$6.1millionandthe
relatedtaxeffects,theGroup’snetprofitwouldhavebeenS$73.3million,15%higherthanthatachievedinFY2010.While
thesharebaseoftheCompanyincreasedfollowingthe1-for-10bonusissueinJune2011,FY2011earningspersharewas
8.9Singaporecents,higherthanthe8.3SingaporecentspershareachievedinFY2010.
Dividends
TheDirectorsarepleasedtoproposeafinaltax-exemptdividendof2.7Singaporecentspershare.Inclusiveoftheinterim
dividendof2.3SingaporecentspersharepaidoutinSeptember2011,thetotaldividendpershareforFY2011amounted
to5.0Singaporecentspershare,higherthanthe4.8SingaporecentsdeclaredforFY2010.Thetotaldividendpaid/payable
forFY2011amountstoS$38.4million,a15%increasefromthepreviousyear,primarilyduetotheenlargedsharebaseof
theCompanyfollowingthebonusissue.
Assets
The Group has an asset-light but human-capital focused business model of generating fee-based income from real estate
fundmanagementandrelatedservices.Asat31December2011,theGroup’stotalassetswasS$214.6million,comprising
S$57.3millionofcashandcashequivalentsaswellasS$121.7millionoffinancialassets.Financialassets,whichinclude
the Group’s strategic stakes in AmFIRST REIT, Suntec REIT, Cache and seed investments in private funds and associated
securities,decreasedby18%primarilyduetothegeneralsofteningoftheglobalequitymarketsandthepartialsaleof
AmFirstREITunitsheldbytheGroup.
Borrowings
TheGrouphasfullyrepaidthesecuredrevolvingcreditfacilityfromAIBBthatwasusedtopartfinancetheacquisitionofa
12.5%interestinAmFIRSTREIT.Asat31December2011,theGrouphadnooutstandingborrowings.
Shareholders’ Equity
InJune2011,theCompanyundertookabonusshareissueofonesharecreditedasfullypaidforeverytenexistingshares
heldinthecapitaloftheCompany.Thisamountedtotheissuanceof69,847,192newordinaryshares,bringingthetotal
numberofsharesoutstandingto768,319,189.TherewerenooutstandingoptionsorconvertiblesecuritiesoftheCompany
asat31December2011.
TheGroup’stotalreserveswasS$187.4millionasat31December2011whiletotalshareholders’equitystoodatS$189.6
million.NettangibleassetspershareontheCompany’senlargedsharebaseasat31December2011wasS$0.25,unchanged
from31December2010.
ARA ASSET MANAGEMENT L IMITED20
PERFORMANCE REVIEW
Cash Flows & Liquidity
The Group’s main sources of operating cashflows are fees from the management of REITs and private real estate funds as
wellastheprovisionofrealestatemanagementservices.Thefeesfortheprovisionoftheseservicesaregenerallyreceived
incash,exceptformanagementfeesinrespectofcertainREITs,whicharereceivedincashand/orREITunits.TheGroup’s
practice for REIT units received as part payment of REIT management fees is to realise them into cash as soon as practicable
andoutsideofthecorrespondingblack-outperiodsfortherespectiveREITs.
Additionally, the Group maintains the following facilities:
• anunutilisedsecuredrevolvingcreditfacilityofS$20.0millionwhichbearsinterestatafloatingrateof1.35%p.a.above
the Association of Banks in Singapore Swap Offer Rate;
• anunutilisedsecuredrevolvingcreditfacilityofRM16.0millionwhichbearsinterestatafloatingrateof1.4%p.a.above
the bank’s cost of funds; and
• unutilisedunsecuredoverdraftfacilitiesofS$6.0millionandHK$3.0millionwhichbearinterestattherespectiveSingapore
andHongKongprimelendingrates.
NetcashgeneratedfromoperatingactivitiesinFY2011decreasedtoS$49.4millionfromS$56.1millioninFY2010,primarily
duetoadecrease inproceedsfromthesaleofREITunits.TheproceedsreceivedfromthesaleofREITunits inFY2010
includedREITunitsreceivedasfeesinpriorfinancialperiods.
NetcashinflowsfrominvestingactivitiesamountedtoS$21.6millioninFY2011,comparedwithanetcashoutflowofS$28.3
million intheprecedingyear.Thenetcash inflowfrominvestingactivities inFY2011wasprimarilyduetonetproceeds
received from the partial sale of AmFIRST REIT units in April 2011 and repayment in relation to the Group’s participation in
amezzanineloantotheARAHarmonyFund.ThenetcashoutflowforinvestingactivitiesinFY2010comprisedmainlyof
theacquisitionofastrategicstakeinCacheduringitsIPOinApril2010,astrategicinvestmentinAPNPropertyGroupand
seedcapitalinvestmentintheADFpursuanttocapitalcallsfromthefundinFY2010.
TherewasanincreaseinnetcashoutflowfromfinancingactivitiesofS$56.1millioninFY2011comparedtoS$31.2million
in FY2010, mainly due to the repayment of the RM 44.9 million revolving credit facility from AIBB and an increase in
dividendpaid.Asaresultoftheabove,theGroup’scashpositionincreasedbyS$15.0millionfromS$42.3millionasat31
December2010toS$57.3millionasat31December2011.
ANNUAL REPORT 2011 21
BUSINESS SEGMENTS
Asarealestatefundmanager,ARAisfocusedonthemanagementofpublic-listedREITsandprivaterealestatefunds.These
investmentvehiclesallowARAtoinvestacrossabroadspectrumofrealestateinvestmentclasses.Supportingthemare
ARA’s real estate management services and corporate finance advisory services divisions which provide in-house expertise
inpropertymanagement,convention&exhibitionservicesandcapitalmarkets.Together,ARA’svariousbusinesssegments
constitute an Asia-focused real estate fund manager with extensive expertise and experience across a wide range of real
estateassetclassescomplementedbyasset-specificskill sets.The revenuescontributedby thesebusinesssegmentsare
summarised as follows:
BUSINESSSEGMENTS
REVENUE (PRIMARYBASIS)
Reits
Base Fees(GrossPropertyValue)
Performance/ Variable Fees (NetPropertyIncome)
acquisition/ Divestment Fees (GrossPropertyValue)
Portfolio management Fees (CommittedCapital/ Contributed Capital / Gross PropertyValue)
Performance Fees (IRRabovehurdle)
Return on seed Capital
Portfolio management Fees (PropertyGrossRevenue)
Convention & exhibition service Fees (GrossRevenue)
Consultancy Fees (ProjectValue)
advisory Fees (PurchaseValue)
CoRPoRate FinanCe
aDVisoRy seRViCes
ReaL estate management
seRViCes
PRiVate ReaL estate FunDs
ARA ASSET MANAGEMENT L IMITED24
FUNDS AND SERVICES
Reits
Listing Venue
Focus
Property Value (1)
SGX-ST&SEHK
Suburban retail
properties in
Hong Kong
HK$16,388m
SGX-ST
Prime office &
retail properties
in Singapore
S$7,698m
SEHK
Office &
industrial/ office
properties in
Hong Kong
HK$6,991m
Bursa
Commercial
properties in
Malaysia
RM1,157m
SGX-ST
Logistics
properties in the
Asia Pacific region
S$843m
SEHK
Commercial
properties in the
PRC
RMB 33,190m
DIVERSIFIED AND COMPLEMENTARY FUND PLATFORMS AND SERVICES
PRiVate ReaL
estate FunDs
Description
Fund Size
Flagship strategic and
opportunistic private
real estate fund
investing in Singapore,
Hong Kong, China,
Malaysia and other
emerging economies
in Asia
US$1.1b
(CommittedCapital)
2nd strategic and
opportunistic private
real estate fund
investing in Singapore,
Hong Kong, China,
Malaysia and other
emerging economies
in Asia
US$1.0b
(TargetFundSize)
Single-asset private real
estate fund which owns
the Suntec Singapore
International Convention
& Exhibition Centre
S$400m
(GrossAssetValue)
Strategic alliance with
Australian specialist real
estate investment manager,
APN Property Group (2) for
private funds investing
primarily in Australian
real estate
ReaL estate
management
seRViCes
Description Property management services provider Operations, sales and marketing services provider &
consultant for convention, exhibition, meeting and
event facilities
Notes:(1) Property values as per the latest publicly-announced valuation (2) ARA held a 13.9% interest in APN Property Group as at 31 December 2011
ANNUAL REPORT 2011 25
REAL ESTATE INVESTMENT TRUSTS
the Reits managed by aRa are regulated investment vehicles that are freely traded on stock exchanges
in the region. they typically have core strategies – focusing on properties within their respective sectors
or geographical locations that offer stable rental income. Distinguishing features of these Reits include a
requirement to pay out nearly all income to investors through regular distributions and limits on debt and
development or operating activities. aRa currently manages six Reits listed in singapore, hong Kong and
malaysia with a combined floor area of 17 million square feet and an aggregate gross property value of s$14.9
billion (approximately us$11.5 billion) as at 31 December 2011.
SUNTEC REIT
1
FIRST COMPOSITE REIT IN SINGAPORE
ARA ASSET MANAGEMENT L IMITED26
real estate investment trusts
Listedon9December2004ontheSGX-STandwithaprimaryfocusonprimecommercialpropertyinSingapore,Suntec
REITwasthefirstcompositeREITinSingaporeowningbothofficeandretailproperties.SuntecREITismanagedbyARA
TrustManagement(Suntec)Limited,awholly-ownedsubsidiaryoftheCompany,andcurrentlyownsaportfolioofoffice
andretailpropertieswithatotalnetlettableareaofapproximately3.5millionsquarefeet.
* Includes Suntec REIT’s 60.8% effective interest in the retail net lettable area in the Suntec Singapore International Convention & Exhibition Centre** Excludes the permissible gross lettable area of 65,454 square feet from the acquired land along Penang Road*** Disposed on 20 January 2012
2
4
3
5
PROPERTY LOCATION NET LETTABLE AREA (Square Feet)
1 Suntec City Marina Bay 2,129,804*
2 Park Mall Orchard 269,959**
3 CHIJMES *** City Hall 79,794
4 One Raffles Quay Marina Bay 445,120 (one-third interest)
5 The MBFC Property Marina Bay 581,653 (one-third interest)
Total 3,506,330
ANNUAL REPORT 2011 27
REAL ESTATE INVESTMENT TRUSTS
Listedon12August2003ontheSGX-STandwithadualprimarylistingontheSEHKon20April2010,FortuneREITwas
Asia’sfirstcross-borderREITandalsothefirstREITtoholdassetsinHongKong.FortuneREITismanagedbyARAAsset
Management(Fortune)Limited,awholly-ownedsubsidiaryoftheCompany,andcurrentlyownsaportfolioof14private
housingestateretailpropertiesinHongKongwithatotalgrossrentableareaofapproximately2.0millionsquarefeet.
1FORTUNE REITASIA’S FIRST CROSS BORDER AND THE ONLY DUAL-LISTED REIT
ARA ASSET MANAGEMENT L IMITED28
real estate investment trusts
3 4
2PROPERTY LOCATION GROSS RENTABLE AREA (Square Feet)
1 Fortune City One Shatin 414,469
2 Ma On Shan Plaza Shatin 310,084
3 Metro Town Tseung Kwan O 180,822
4 Fortune Metropolis Hung Hom 332,168
5 Waldorf Avenue Tuen Mun 80,842
6 Caribbean Square Tung Chung 63,018
7 Smartland Tsuen Wan 123,544
8 Jubilee Square Shatin 170,616
9 Tsing Yi Square Tsing Yi 78,836
10 NOB Hill Square Kwai Chung 91,779
11 Centre de Laguna Kwun Tong 43,000
12 Hampton Loft West Kowloon 74,734
13 Lido Avenue Tsuen Wan 9,836
14 Rhine Avenue Tsuen Wan 14,604
Total 1,988,352
ANNUAL REPORT 2011 29
REAL ESTATE INVESTMENT TRUSTS
2 3
Listedon16December2005ontheSEHK,ProsperityREITwasthefirstprivatesectorREITinHongKong.ProsperityREITis
managedbyARAAssetManagement(Prosperity)Limited,awholly-ownedsubsidiaryoftheCompany,andcurrentlyowns
adiverseportfolioofsevenhighqualityoffice,industrial/office,andindustrialpropertiesinHongKong,withatotalgross
rentableareaofabout1.2millionsquarefeet.
1PROSPERITY REITFIRST PRIVATE SECTOR REIT IN HONG KONG
ARA ASSET MANAGEMENT L IMITED30
real estate investment trusts
6 7
4 5PROPERTY LOCATION GROSS RENTABLE AREA (Square Feet)
1 The Metropolis Tower Hung Hom 271,418
2 Harbourfront Landmark (portion) Hung Hom 77,021
3 Prosperity Millennia Plaza North Point 217,955
4 Trendy Centre Cheung Sha Wan 173,764
5 Prosperity Place Kwun Tong 240,000
6 Prosperity Center (portion) Kwun Tong 149,253
7 New Treasure Centre (portion) San Po Kong 86,168
Total 1,215,579
ANNUAL REPORT 2011 31
REAL ESTATE INVESTMENT TRUSTS
Listed on 21 December 2006, AmFIRST REIT is one of the largest commercial REITs listed on Bursa Malaysia with eight
propertiesinitsportfoliowithapproximately2.6millionsquarefeetofnetlettablearea.AmFIRSTREITismanagedbyAm
ARAREITManagersSdn.Bhd.andiswholly-ownedbyAmARAREITHoldingsSdn.Bhd.,whichinturnis70%ownedby
AmInvestmentGroupBerhadand30%ownedbyARAAssetManagement(Malaysia)Limited,awholly-ownedsubsidiary
oftheCompany.
1AMFIRST REITCOMMERCIAL REIT IN MALAYSIA
ARA ASSET MANAGEMENT L IMITED32
real estate investment trusts
7 8
3 4PROPERTY LOCATION NET LETTABLE AREA (Square Feet)
1 Bangunan AmBank Group Kuala Lumpur Golden Triangle 360,166
2 Menara AmBank Kuala Lumpur Golden Triangle 458,387
3 AmBank Group Leadership Centre Kuala Lumpur Golden Triangle 57,801
4 Kelana Brem Towers Kelana Jaya 286,267
5 Menara AmFIRST Petaling Jaya 159,001
6 The Summit Subang USJ Subang Jaya 1,030,741
7 Prima 9 Cyberjaya 111,224
8 Prima 10 Cyberjaya 100,272
Total 2,563,859
ANNUAL REPORT 2011 33
REAL ESTATE INVESTMENT TRUSTS
Listedon12April2010ontheSGX-ST,CachehasamandatetoinvestinlogisticspropertiesacrosstheAsiaPacificregion.
Cache ismanagedbyARA-CWTTrustManagement (Cache) Limited, a joint-venturebetweenARA (60% interest) and
CWTLimited(40%interest),thelargestlistedlogisticscompanyinSoutheastAsia.Cachecurrentlyownstenhighquality
logisticswarehousepropertieslocatedintheAsiaPacificRegion,withatotalgrossfloorareaofapproximately4.3million
squarefeet.
1
2
CACHE LOGISTICS TRUSTASIA-PACIFIC FOCUSED LOGISTICS REIT IN SINGAPORE
ARA ASSET MANAGEMENT L IMITED34
real estate investment trusts
5 6
3 4PROPERTY LOCATION
GROSS FLOOR AREA (Square Feet)
1 CWT Commodity Hub Penjuru/Pandan, Singapore 2,295,927
2 CWT Cold Hub Penjuru/Pandan, Singapore 341,947
3 Schenker Megahub Airport Logistics Park of Singapore 439,789
4 Hi-Speed Logistics Centre Airport Logistics Park of Singapore 308,632
5 C&P Changi Districentre Changi International LogisPark (South), Singapore 364,361
6 C&P Changi Districentre 2 Changi International LogisPark (South), Singapore 111,359
7 APC Distrihub Changi North Logistics Park, Singapore 176,955
8 Kim Heng Tubulars Penjuru/Pandan, Singapore 54,449
9 Air Market Logistics Centre Loyang Industrial Park, Singapore 63,290
10 Jinshan Chemical Warehouse Shanghai Chemical Industry Park, China 145,815
Total 4,302,524
ANNUAL REPORT 2011 35
ARA ASSET MANAGEMENT L IMITED36
REAL ESTATE INVESTMENT TRUSTS
Listedon29April2011,HuiXianREITisthefirstoffshoreRMB-denominatedequityofferingtobelistedontheSEHK.Hui
XianREITismanagedbyHuiXianAssetManagementLimited,ajointventurebetweenCheungKongGroup(30%interest),
CITICSecuritiesGroupLimited (40%interest)andARA(30%interest).At thetimeof listing,HuiXianREIT’smainreal
estate asset was the Oriental Plaza, one of the largest and most iconic integrated developments in Beijing with a valuation of
RMB33.2billionandacombinedgrossfloorareaofapproximately800,000squaremeters.
HUIXIANREITFIRST RMB-DENOMINATED REIT IN THE WORLD
ARA ASSET MANAGEMENT L IMITED36
real estate investment trusts
PROPERTY LOCATION APPROXIMATE GROSS FLOOR AREA (Square Meter)
Oriental Plaza
(The Malls, The Tower Offices,
The Tower Apartments, Grand
Hyatt Beijing)
Beijing, China 800,000
Total 800,000
ANNUAL REPORT 2011 37
PRIVATE REAL ESTATE FUNDS
the private real estate funds managed by aRa are generally unlisted closed-end investment vehicles with a
specified lifespan. these funds seek to acquire strategic and opportunistic real estate within their investment
mandate which offer the potential for higher risk-adjusted total returns through development, major
refurbishment or asset repositioning.
aRa currently manages private real estate funds investing in asia with total aum of s$5.1 billion (approximately
us$3.9 billion) as at 31 December 2011.
EstablishedinSeptember2007,theARAAsiaDragonFund(“ADF”)istheGroup’sflagshipprivaterealestatefundwith
aggregatecapitalcommitmentsinexcessofUS$1.1billion.Aclosed-endfund,theADFhasaninitiallifespanofsevenyears,
includinganinvestmentperiodoffouryears.
WithamandatetoinvestacrossAsiawithaprimaryfocusonthemaincitiesofChina,Singapore,HongKongandMalaysia
as well as a secondary focus on other emerging economies in Asia, the ADF attracted a broad range of investors including
public pension funds, foundations and other global institutional investors seeking to invest in a diversified portfolio of real
estateinvestmentsinAsia.LeveragingonARA’sexperienceandintimateknowledgeoftherealestatemarketinAsia,the
ADF seeks to make strategic and opportunistic investments in real estate assets with the goal of optimising total returns
fromacombinationofincomeandcapitalappreciation.
To date, the ADF has made investments in completed and development projects in the residential, retail and office sectors
inSingapore,HongKong,MalaysiaandinvariousmajorcitiesofChina–Nanjing,Dalian,ShanghaiandTianjin.Thefundis
fullyinvestedandhascommencedtherealisationofitsinvestments.
ARA ASIA DRAGON FUNDFLAGSHIP PRIVATE REAL ESTATE FUND INVESTING IN ASIA
ARA ASIA DRAGON FUND IISUCCESSOR FUND TO THE ARA ASIA DRAGON FUND
ARA ASSET MANAGEMENT L IMITED38
PRIVATE REAL ESTATE FUNDS
Established in September 2009, the ARA Harmony Fund is a single-asset private real estate fund which owns Suntec
Singapore.InAugust2011,theARAHarmonyFundachievedanoverallIRRof64.8%andanequitymultipleof2.2times
forinvestorswhentheprivateinvestorsinthefunddivestedtheirinterests.SuntecREITcurrentlyholdsaneffective60.8%
interestintheARAHarmonyFund.
Founded in 1996, APN Property Group Limited (“APN”) is one of Australia’s leading boutique real estate investment
managerswithAUMofA$2.5billionasat30September2011.APNcurrentlymanagesrealestatesecuritiesfunds,private
equityrealestatefunds,alistedREITandunlistedpropertyfundsinvestingprimarilyinAustralianrealestate.Asastrategic
shareholder, ARA will collaborate with APN on real estate fund opportunities in Australia, which may include the provision
ofseedcapital,capitalraisingand/orjointmanagementofsuchfunds.
AstheADFapproachedtheendofitsinvestmentperiod,theGroupestablishedtheARAAsiaDragonFundII(“ADFII”)in
July2011whichadoptsthesamesuccessfulandproveninvestmentstrategyofADF.TheADFIIisalsoaclosed-endfund
withaninitiallifespanoftenyears,includinganinvestmentperiodoffiveyears.
ARA HARMONY FUND
APN PROPERTY GROUP
PRIVATE REAL ESTATE FUND INVESTED IN THE SUNTEC SINGAPORE INTERNATIONAL CONVENTION & EXHIBITION CENTRE
STRATEGIC ALLIANCE WITH LEADING BOUTIQUE AUSTRALIAN REAL ESTATE FUND MANAGER
ANNUAL REPORT 2011 39
REAL ESTATE MANAGEMENT SERVICES
aRa’s real estate management services business division complements and supports the growth of the group’s
core Reits and private real estate funds business divisions through the provision of property management and
other supporting management services.
APMPropertyManagementPte.Ltd. (“APM”) isawholly-ownedsubsidiaryofARAandtheGroup’s in-houseproperty
managementarm.
APM is staffed by a team of experienced professionals with expertise in property and facilities management, leasing and
marketing.APMiscurrentlythepropertymanagerforSuntecREIT’spropertiesinSuntecCityaswellasthemanagingagent
for TheManagementCorporationStrata Title PlanNo.2197, responsible for themanagementandmaintenanceof the
commonpropertyofSuntecCity.APMhasapresenceinMalaysiaviatheprovisionofconsultancyservicestoretailmalls
ownedbytheADF.
SUNTEC SINGAPORE AND SUNTEC INTERNATIONALCONVENTION & EXHIBITION SERVICES PROVIDER
APM PROPERTY MANAGEMENTARA’S PROPERTY MANAGEMENT ARM
ARA ASSET MANAGEMENT L IMITED40
REAL ESTATE MANAGEMENT SERVICES
Suntec Singapore
Awholly-ownedsubsidiaryofARA,SuntecSingaporeInternationalConvention&ExhibitionServicesPte.Ltd.(“SSICES”)
hasateamofhighlydrivenanddedicatedprofessionalswithextensive local, regionaland internationalexperience.The
management team of SSICES has diverse backgrounds ranging from the airline, hospitality, healthcare, logistics to the
servicesectorindustries.Collectively,theydirectandmanageateamofspecialisedandhighlyprofessionalindividualswho
are well versed in the art and science of providing world-class service to ensure that all events held in Suntec Singapore
aresuccessfullyexecuted.TheSSICESteamhasbeenmanagingSuntecSingaporesinceitsinceptionin1995andoverthe
years, has accumulated extensive experience in hosting a range of events ranging from corporate meetings to mega-events,
including the World Trade Organisation Ministerial Meeting in 1996, the World Economic Forum in 1998, the Annual
MeetingsoftheBoardofGovernorsofthe InternationalMonetaryFundandtheWorldBankGroupin2006,theAPEC
EconomicLeaders’Meetings2009andtheSingapore2010YouthOlympicGames.SuntecSingaporehasalsobeenhome
toITBAsiasince2008aswellasTaxFreeWorldAssociationAsiaPacificsince1999.
Suntec International
SuntecInternationalConvention&ExhibitionServicesPte.Ltd.(“SuntecInternational”),awholly-ownedsubsidiaryofARA,
isheadquarteredinSingapore.LaunchedinMay2010,SuntecInternationalispositionedtoofferawiderangingportfolioof
services that include sales and marketing representation, venue management, franchising and brand transfer opportunities
andconsultancyservicesspeciallydesignedfortheMeetings,Incentives,ConventionsandExhibitions(“MICE”)andvenue
industry.SuntecInternationalofferscustom-designedsolutionsforclientsanddrawsontheexperience,knowledgeand
skillof residentexpertsatSuntecSingapore.Suntec International represents theVancouverConventionCentreand the
AdelaideConventionCentreinsalesandmarketing,andispursuingvenuemanagementopportunitiesintheregion.Suntec
International has signed a venue management as well as a consulting contract with one of Malaysia’s top developers, NAZA
TTDISdnBhd.SuntecInternationalhasalsosuccessfullycompletedanindustrydatabaseprojectthatwascommissioned
by Singapore’s MICE industry-trade association, the Singapore Association for Convention and Exhibition Organisers and
Suppliers(SACEOS)andthatwaslaunchedatITBAsia2011.
aRa Financial Pte. Ltd. (“aRa Financial”) is the group’s in-house corporate finance advisory arm. aRa Financial
currently provides advisory services on asset acquisitions by the Reits managed by the group and advises the
group on the establishment of Reits, partnerships and joint ventures as well as mergers and acquisitions.
CORPORATE FINANCE ADVISORY SERVICES
ANNUAL REPORT 2011 41
BOARD OF DIRECTORS
MrChiuKwokHungJustinistheFounderChairmanandNon-
ExecutiveDirectoroftheCompany.Heisalsothechairman
and non-executive director of ARA Asset Management
(Fortune)Limited(themanagerofFortuneREIT),ARATrust
Management (Suntec) Limited (the manager of Suntec
REIT)andARAAssetManagement(Prosperity)Limited(the
managerof ProsperityREIT). FortuneREIT is listedon the
MainBoardoftheSEHKandtheSGX-STwhileSuntecREIT
is listedontheSGX-STandProsperityREITis listedonthe
MainBoardoftheSEHK.MrChiuisalsoadirectorofARA
FundManagement (AsiaDragon) Limited as themanager
of the ARA Asia Dragon Fund. Mr Chiu is a member of
the 11th Shanghai Committee of the Chinese People’s
Political Consultative Conference of the People’s Republic
of China, a fellow of the Hong Kong Institute of Real Estate
Administrators and a member of the Board of Governors of
HongKongBaptistUniversityFoundation.
Mr Chiu has more than 30 years of international experience
in real estate in Hong Kong and various countries and is one
of the most respected professionals in the property industry
inAsia.MrChiu is anexecutivedirectorofCheungKong
(Holdings)Limited (“CheungKong”),acompany listedon
the Main Board of the SEHK. He joined Cheung Kong in
1997 and has been an executive director since 2000, heading
the real estate sales, marketing and property management
teams. Prior to joining Cheung Kong, Mr Chiu was with
Sino Land Company Limited from 1994 to 1997 and Hang
LungDevelopmentCompany,Limited(nowknownasHang
LungGroupLimited)from1979to1994,responsibleforthe
leasingandpropertymanagementinbothcompanies.Both
Sino Land Company Limited and Hang Lung Group Limited
arelistedontheMainBoardoftheSEHK.
Mr Chiu holds Bachelor degrees in Sociology and Economics
fromTrentUniversityinOntario,Canada.
CHIU KWOK HUNG JUSTINCHAIRMAN AND NON-EXECUTIVE DIRECTOR1.
1
2
3
4
ARA ASSET MANAGEMENT L IMITED44
board of directors
Mr Lim Hwee Chiang John is the Group Chief Executive
Officer and Executive Director of the Company since its
establishment.Heisanon-executivedirectorofARAAsset
Management (Fortune) Limited, ARA Trust Management
(Suntec) Limited, ARA Asset Management (Prosperity)
Limited, Am ARA REIT Managers Sdn. Bhd. (the manager
of AmFIRST REIT), ARA-CWT Trust Management (Cache)
Limited (the manager of Cache Logistics Trust), APN
PropertyGroupLimitedlistedinAustraliaandHuiXianAsset
Management Limited (the manager of Hui Xian REIT). Mr
Lim is also the chairman of APM Property Management
Pte. Ltd., Suntec Singapore International Convention &
Exhibition Services Pte. Ltd. and the management council
ofTheManagementCorporationStrataTitlePlanNo.2197
(SuntecCity).Inaddition,MrLimisanindependentdirector,
chairman of the remuneration committee and share options
scheme committee and member of the audit and nominating
committees of Singapore-listed Teckwah Industrial
Corporation Limited. He is also the vice president of the
Hong Kong-Singapore Business Association, the senior vice
president of the Asia Pacific Real Estate Association, a council
member of the Singapore Chinese Chamber of Commerce &
Industry and a member of the Valuation Review Board of the
MinistryofFinanceofSingapore.
MrLimhasmorethan30yearsofexperienceinrealestate.
Prior to founding ARA, from 1997 to 2002, he was an
executive director of GRA (Singapore) Pte. Ltd., a wholly-
owned subsidiary of Prudential (US) Real Estate Investors.
From 1996 to 1997, he founded and was the managing
director of The Land Managers (S) Pte. Ltd., a Singapore-
based property and consulting firm specialising in feasibility
studies, marketing and leasing management in Singapore,
HongKongandChina.Hewasthegeneralmanagerofthe
Singapore Labour Foundation Management Services Pte.
Ltd. from 1991 to 1995, and was with DBS Land Limited
(nowpartofCapitaLandLimited)from1981to1990.
MrLimholdsaBachelorofEngineering(FirstClassHonours)
in Mechanical Engineering, a Master of Science in Industrial
Engineering, as well as a Diploma in Business Administration,
each from the National University of Singapore
LIM HWEE CHIANG JOHNGROUP CHIEF EXECUTIVE OFFICER AND EXECUTIVE DIRECTOR2.
5
6
7
ANNUAL REPORT 2011 45
BOARD OF DIRECTORS
Mr Ip Tak Chuen Edmond is a Non-Executive Director of the
Company and member of the Remuneration Committee.
He is also the non-executive director of ARA Asset
Management(Fortune)LimitedandARATrustManagement
(Suntec)Limited.
Mr Ip has been an executive director of Cheung Kong since
1993 and deputy managing director since 2005, responsible
for overseeing all financial and treasury functions of
Cheung Kong and its subsidiaries, particularly in the fields
ofcorporateandprojectfinance.Hehasbeenanexecutive
directorofCheungKongInfrastructureHoldingsLimited(“CK
Infrastructure”) since its incorporation in 1996 and deputy
chairman since 2003, and the senior vice president and chief
investmentofficer ofCK Life Sciences Int’l., (Holdings) Inc.
(“CKLifeSciences”)since2002.Heoverseesmattersrelating
tocorporatefinance,strategicacquisitionandinvestmentof
bothCKInfrastructureandCKLifeSciences.MrIpisalsoa
non-executivedirectorofTOMGroupLimited(“TOM”),AVIC
InternationalHolding(HK)Limited(“AVIC”),ExcelTechnology
International Holdings Limited (“Excel”), Real Nutriceutical
Group Limited (formerly known as Ruinian International
Limited) (“Real Nutriceutical”) and Shougang Concord
International Enterprises Company Limited (“Shougang”).
Cheung Kong, CK Infrastructure, CK Life Sciences, TOM,
AVIC, Real Nutriceutical and Shougang are listed on the Main
BoardoftheSEHK.Excelis listedontheGrowthEnterprise
Market(GEM)oftheSEHK.
Prior to joining Cheung Kong, Mr Ip held a number of
senior financial positions in major financial institutions and
has extensive experience in the Hong Kong financial market
covering diverse activities such as banking, capital markets,
corporate finance, securities brokerage and portfolio
investments.
Mr Ip holds a Bachelor of Arts in Economics and a Master of
ScienceinBusinessAdministration.
Mr Lim How Teck is an Independent Non-Executive
Director of the Company and chairman of the Nominating
Committee. He is also the chairman of ARA-CWT Trust
Management (Cache) Limited, Certis CISCO Security Pte.
Ltd., Heliconia Capital Management Pte. Ltd. and deputy
chairman of Tuas Power Generation Pte Ltd. Mr Lim is
also an independent non-executive director of Swissco
HoldingsLtd,MewahInternationalInc.andRickmersTrust
Management Pte Limited (trustee-manager of Rickmers
Maritime),allofthemlistedontheSGX-ST.MrLimisalsoa
governoroftheFoundationforDevelopmentCooperation.
Currently, Mr Lim is the chairman of Redwood International
Pte. Ltd., an investment and consultancy company. From
1979 to 2005, Mr Lim was with Neptune Orient Lines
Ltd (“NOL”) where he held various positions including
executive director, group chief financial officer, group
chief operating officer and group deputy chief executive
officer. He also held directorships in various subsidiaries,
associatedcompaniesandinvestmentinterestsofNOL.Prior
Ip TAK CHUEN EDMONDNON-EXECUTIVE DIRECTOR
LIM HOW TECKINDEPENDENT NON-EXECUTIVE DIRECTOR
3.Mr Lee Yock Suan is an Independent Non-Executive Director
oftheCompanyandchairmanoftheAuditCommittee.
Mr Lee was elected as a Member of Parliament of Singapore
in 1980 and remained a Member of Parliament until his
retirementfrompolitics in2006.HewasaMinister inthe
Singapore Cabinet from 1981 to 2004 and his portfolios
included Finance, National Development, Education, Foreign
Affairs, Information and the Arts, Trade and Industry,
Environment and Labour. Mr Lee was also the chairman
of the Singapore Labour Foundation from 1997 to 2002,
deputy chairman of the People’s Association from 1984 to
1991 and deputy managing director of the Petrochemical
Corporationof Singapore Pte Ltd from1980 to1981.Mr
Lee started his career in the Economic Development Board
ofSingaporein1969.
Mr Lee holds a Bachelor of Science (First Class Honours)
in Chemical Engineering from the Imperial College, London
University and a Diploma in Business Administration from
theUniversityofSingapore.HewasawardedthePresident’s
Scholarshipin1966.
LEE YOCK SUANINDEPENDENT NON-EXECUTIVE DIRECTOR4.
5.
ARA ASSET MANAGEMENT L IMITED46
board of directors
Dr Cheng Mo Chi Moses is an Independent Non-Executive
Director of the Company and chairman of the Remuneration
Committee. He is also an independent non-executive
director of a number of public-listed companies. These
include the Hong Kong Exchanges and Clearing Limited,
K.Wah International Holdings Limited, China Mobile
Limited, China Resources Enterprise Limited, Towngas
China Company Limited, Kader Holdings Company Limited,
Liu Chong Hing Investment Limited, City Telecom (H.K.)
Limited, Guangdong Investment Limited and Tian An
China Investments Company Limited, all being public-listed
companies in Hong Kong. Dr Cheng is also the founder
chairman of The Hong Kong Institute of Directors of which
he isnow thehonorarypresidentandchairmanemeritus.
Presently, Dr Cheng is the chairman of the Education
Commission, the chairman of the Advisory Committee on
Post-office Employment for former Chief Executives and
Politically Appointed Officials, the chairman of the Advisory
Committee on Post-service Employment of Civil Servants,
and a member of the Financial Reporting Council of Hong
Kong. Dr Cheng is also an active Rotarian and served as
district governor of Rotary International District 3450
from 1993 to 1994. In addition, Dr Cheng is an active
member of the Anglican Church and is the chancellor
of the Province of the Hong Kong Sheng Kung Hui.
Dr Cheng is currently the senior partner of Messrs.
P.C. Woo & Co., a law firm in Hong Kong. He served as
a member of the Legislative Council of Hong Kong
between 1991 and 1995, and was appointed a Justice
of the Peace by the Hong Kong Special Administrative
RegionGovernmentin1996.
Dr Cheng holds a Bachelor of Laws from the University
of Hong Kong, a Post-Graduate Certificate in Laws from
the University of Hong Kong, a Doctor of Law from the
Hong Kong Baptist University and a Doctor of Law from
Lingnan University. Dr Cheng was awarded the Order of
the British Empire by Her Majesty, the queen of the United
Kingdom, in 1997 and the Gold Bauhinia Star medal by the
Hong Kong Special Administrative Region Government
in2003.
to joining NOL, he was with Coopers & Lybrand, an
international accounting firm and Plessey Singapore, a
multinationaltradingandmanufacturingcompany.
Mr Lim holds a Bachelor of Accountancy from the
UniversityofSingapore.Healso completed theCorporate
Financial Management Course and Advanced Management
Programme at the Harvard Graduate School of Business.
In addition, he is a fellow of the Chartered Institute of
Management Accountants, Certified Public Accountants
Australia, the Institute of Certified Public Accountants
of Singapore and the Singapore Institute of Directors as
well as an associate of the Australian Institute of Business
Administration. Mr Lim was awarded the Public Service
Medal (PBM) by the Singapore Government in 1999.
CHENG MO CHI MOSESINDEPENDENT NON-EXECUTIVE DIRECTOR6. Mr Colin Stevens Russel is an Independent Non-Executive
Director of the Company and member of the Audit,
Nominating andRemunerationCommittees.He is also an
independent non-executive director of CK Infrastructure,
CKLifeSciencesandHuskyEnergyInc..
Mr Russel is the founder and managing director of Emerging
MarketsAdvisoryServicesLtd.,acompanywhichprovides
advisory services on business strategy and planning, market
development,competitivepositioningandriskmanagement.
He is also the managing director of EMAS (HK) Limited.
From 1972 to 2001, Mr Russel held various appointments in
the Canadian Diplomatic Service, including ambassador to
Venezuela, consul general in Hong Kong, director for China
of the Department of Foreign Affairs (Ottawa), director
forEastAsiaTrade(Ottawa),seniortradecommissionerin
HongKong,directorforJapanTradeoftheDepartmentof
ExternalAffairs (Ottawa).Healso served in theCanadian
Trade Commissioner Service in Spain, Hong Kong, Morocco,
thePhilippines,Londonand India.Priortothat,MrRussel
was a project manager for RCA Limited in Canada, Liberia,
Nigeria, Mexico and India and a development engineer
with RCA Limited in Canada and with Associated Electrical
IndustriesLimitedintheUnitedKingdom.
Mr Russel holds a degree in Electronics Engineering and a
Master in Business Administration from McGill University,
Canada. He is a registered professional engineer and
qualifiedcommercialmediator.
COLIN STEVENS RUSSELINDEPENDENT NON-EXECUTIVE DIRECTOR7.
ANNUAL REPORT 2011 47
MANAGEMENT TEAM STRUCTURE
Lim hwee Chiang JohnGroup Chief Executive Officer
Suntec REITyeo see Kiat
CEO
Fortune REITanthony ang
CEO
Prosperity REITmaVis wong
Acting CEO
Hui Xian REITstePhen Chu
CEO
Cache Logistics TrustDanieL CeRF
CEO
CEO Public Market
John Lim
CEO Private Market
ng Beng tiong
CEO Principal Investments
moses song
ManagementServices
Corporate Finance Advisory
Services
Corporate Divisions
AmFIRST REITLim yoon Peng
CEO
Finance & Compliance
CheRyL seowSenior Director, Group Finance
CorporateOffice
ng Beng tiongDirector
Group OfficeAdministrationseRene yeo
Senior Manager
Corporate Business
Developmentmoses song
Director
Group Risk Management & IA
tangBoon Kang
Senior Manager
Group HR & Corporate
DevelopmentPauLine Lim
Senior Manager
ARA FinancialLow Poh Choo
Senior Director
APManthony yiP / susan sim
Deputy Chairman / CEO
Suntec SingaporePieteR iDenBuRg
CEO
SuntecInternational
PieteR iDenBuRgCEO
ARA CIPDeReK Lai
Senior Portfolio Manager
Australia Deskmoses song
Head
India Desk
Japan Desk
GCC Desk
ADF Ing Beng tiong
CEO
ADF IIPauL yi
CEO
ARA Harmony Fundsiew siew hoon
Fund Director
China Deskmun hon Pheng
Head
ARA ASSET MANAGEMENT L IMITED48
MANAGEMENT TEAM
Mr Yeo See Kiat is the chief executive officer and executive
director of ARA Trust Management (Suntec) Limited.
He is also a director of One Raffles Quay Pte. Ltd., BFC
DevelopmentPte.Ltd.andSuntecHarmonyPteLtd.
Mr Yeo has more than 30 years of experience in the real
estate industry, managing and overseeing various projects
with Hwa Hong Corporation Limited, The Wharf Group,
Parkway Holdings Limited, and CapitaLand Limited. He
has held senior management positions over the last 20
years. Mr Yeo started his career in Turquand Young (now
Ernst&Young)andwaswith thefirmfrom1976to1980.
Mr Yeo holds a Bachelor of Accountancy from the
University of Singapore and a Graduate Diploma in
Management Studies from the Singapore Institute of
Management. He is also a fellow of the Institute of
CertifiedPublicAccountantsofSingapore.
Mr Anthony Ang is the chief executive officer of ARA Asset
Management (Fortune) Limited. He is a Board member
of ARA Asia Dragon Limited (ARA Asia Dragon Fund),
the flagship US$1.1 billion private real estate fund of the
Group.MrAngisalsoanalternatedirectortoMrLimHwee
ChiangJohnofAmARAREITManagersSdn.Bhd.,andan
independent non-executive director of Armstrong Industrial
Corporation Limited, a precision engineering group listed on
theSGX-ST.Priortohiscurrentappointment,MrAngwasthe
chiefexecutiveofficerofARAManagers(AsiaDragon)Pte.
Ltd.,themanageroftheARAAsiaDragonFund.
Before joining the ARA Group in 2006, Mr Ang held various
seniorpositionswithGICRealEstatePte.Ltd.,aglobalreal
estate fund management company; Vertex Management
Pte Ltd, a Singapore-based global venture capital company;
Majulah Connection Limited, a global business networking
and consulting organisation, and Armstrong Industrial
Corporation Limited. Mr Ang began his career with
theSingaporeEconomicDevelopmentBoard(“EDB”)where
he served for 14 years, including 6 years in the United States
astheregionaldirectoroftheirNorthAmericanoperations.
Ms Mavis Wong is the acting chief executive officer of
ARA Asset Management (Prosperity) Limited. Prior to this,
she held various senior management appointments in ARA
AssetManagement(Prosperity)Limited.
MsWonghasmorethan15yearsofexperienceintheindustry.
Prior to joining the Group, she was the deputy manager
(leasing) for New World Development Company Limited
responsible for the marketing of office and industrial buildings
and overseeing the landlord profit and loss account. She
was an assistant leasing manager of Cheung Kong
(Holdings) Limited from 1997 to 2004, assistant property
manager of Jardine Matheson & Co Limited in 1997 and
administrative officer of Goodwill Management Limited
from 1995 to 1997. Ms Wong began her career with
YaohanDepartmentStore(HK)Limitedin1994.
MsWongholdsaBachelorofArtsfromtheChineseUniversity
of Hong Kong, a Postgraduate Certification in HK Law from
the City University of Hong Kong and a Diploma in Property
DevelopmentfromtheUniversityofHongKong.
MrAngholdsaBachelorofScience(MechanicalEngineering)
with First Class Honours from the Imperial College,
London University, and obtained a Master of Business
Administration from the European Institution of Business
Administration (INSEAD) in 1982 on a scholarship from
the Singapore and French governments. Mr Ang is a
fellow of the Chartered Management Institute (United
Kingdom) and a Council Member of the Chartered
Management Institute Singapore. He is also currently the
SecretaryoftheEDBSociety.
YEO SEE KIATCHIEF EXECUTIVE OFFICER
ARA TRUST MANAGEMENT (SUNTEC) LIMITED,MANAGER OF SUNTEC REIT
ANG MENG HUAT ANTHONYCHIEF EXECUTIVE OFFICER
ARA ASSET MANAGEMENT (FORTUNE) LIMITED,MANAGER OF FORTUNE REIT
WONG LAI HUNG MAVISACTING CHIEF EXECUTIVE OFFICER
ARA ASSET MANAGEMENT (PROSPERITY) LIMITED, MANAGER OF PROSPERITY REIT
Mr Lim Yoon Peng is the chief executive officer of Am
ARAREITManagersSdn.Bhd..
Prior to joining the Group, Mr Lim was the chief financial
officer of Axis REIT Managers Bhd, where he was involved in
the establishment of Axis REIT, the first REIT listed in Malaysia
in 2005. From 2001 to 2005, Mr Lim was the financial
controller and company secretary of Victoria Investments
LIM YOON pENGCHIEF EXECUTIVE OFFICER
AM ARA REIT MANAGERS SDN. BHD.,MANAGER OF AMFIRST REIT
ANNUAL REPORT 2011 49
MANAGEMENT TEAM
& Properties Pty Ltd, a real estate company focusing on
realestate inMelbourne,Australia.Hestartedhiscareer in
1980 as a credit and finance manager with Finplan Credit
& Leasing Sdn. Bhd. and was with various international
companies including Balfour, Williamson & Co. Ltd of the
UnitedKingdomandthePacificDunlopGroupofAustralia.
Mr Lim is a fellow of The Chartered Association of Certified
Accountants, United Kingdom, a member of the Malaysian
Institute of Accountants and a fellow of Certified Public
Accountants Australia. He is currently the vice chairman
oftheMalaysianREITManagersAssociation.
Limited, Primeland Realty Inc, and Century 21 Chartered
RealtyInc.
Mr Chu holds a Bachelor of Arts (Honours) and a Master
ofBusinessAdministration.
Mr Daniel Cerf is the chief executive officer of ARA-CWT
TrustManagement(Cache)Limited.
Mr Cerf has more than 20 years of experience in real
estate in Asia, working on investment and development
ventures in Singapore, Hong Kong, China, Malaysia,
Thailand, Philippines, Vietnam and Indonesia. Prior to
joining the Manager, Mr Cerf was the deputy chief
executive officer of K-REIT Asia Management Limited,
(themanagerofK-REITAsia,aREIT listedon theSGX-ST).
Mr Cerf is a licensed architect in the United States and
holds a Bachelor of Architecture Degree (Dean’s List)
fromtheUniversityofOklahoma,USA.
Mr Ng Beng Tiong is the chief executive officer of ARA
PrivateFunds,comprisingalltheprivatefundsintheGroup.
He is also the chief executive officer of ARA Managers
(AsiaDragon)Pte.Ltd..Heholdstheconcurrentappointment
of director, corporate office overseeing corporate
development, administration and training & development
fortheGroup.
Prior to joining the Group, from 2003 to 2007, Mr Ng was
the finance director of Low Keng Huat (Singapore) Ltd, a
property,constructionandhotelgrouplistedontheSGX-ST.
He was a director of Stone Forest M&A Pte Ltd, a mergers
and acquisitions advisory company from 2002 to 2003,
and director of corporate planning and business
development at Labroy Marine Limited, a shipping,
shipbuilding and marine engineering company listed
on the SGX-ST from 1997 to 2002. Mr Ng began his
career with DBS Bank Ltd in 1989, initially as a corporate
banker,andsubsequentlyasaninvestmentbanker.
MrNgholdsaMasterofEngineering(SoftwareEngineering)
(First Class Honours) from the Imperial College, London.
HeisalsoaCFACharterholder.
DANIEL CERFCHIEF EXECUTIVE OFFICER
ARA-CWT TRUST MANAGEMENT (CACHE) LIMITED, MANAGER OF CACHE LOGISTICS TRUST
NG BENG TIONGCHIEF EXECUTIVE OFFICER
ARA PRIVATE FUNDS
CHIEF EXECUTIVE OFFICER
ARA MANAGERS (ASIA DRAGON) PTE. LTD.,MANAGER OF THE ARA ASIA DRAGON FUND
DIRECTOR
CORPORATE OFFICEARA ASSET MANAGEMENT LIMITED
Mr Stephen Chu is the chief executive officer of Hui Xian
Asset Management Limited, a 30% associated company
of ARA. Prior to this, he was the chief executive officer
ofARAAssetManagement(Prosperity)Limited.
Mr Chu has more than 20 years of international property
experience in the fields of leasing, sales, facility and property
management and marketing work covering the retail,
residential, hotel, and commercial sectors of the real estate
market.PriortojoiningtheGroup,MrChuwaswithHarbour
Plaza Hotels & Resorts from 1998 to 2007 where he held
various positions including general manager, and deputy
generalmanager(groupleasing).Beforethat,heheldsenior
posts with various companies including Sino Land Company
STEpHEN CHUCHIEF EXECUTIVE OFFICER
HUI XIAN ASSET MANAGEMENT LIMITED,MANAGER OF HUI XIAN REIT
MrPaulYiisthechiefexecutiveofficerofARAManagers(Asia
Dragon II) Pte. Ltd.. He holds the concurrent appointment
pAUL YICHIEF EXECUTIVE OFFICER
ARA MANAGERS (ASIA DRAGON II) PTE. LTD.,MANAGER OF THE ARA ASIA DRAGON FUND II
DIRECTOR
INVESTMENT & RESEARCH,ARA PRIVATE FUNDS
ARA ASSET MANAGEMENT L IMITED50
MAnAgeMent teAM
of director, investment and research of ARA Private Funds,
responsible for sourcing, evaluating and underwriting of
investmentopportunitiesfortheARAprivatefundsplatform.
Prior to joining the Group, Mr Yi was based in Tokyo from
2005 to 2008 as a managing director at Capmark Finance
Inc., responsible for the company’s business development
and funds management platform in Asia. From 2000 to
2005, Mr Yi was based in Seoul and Hong Kong with
Merrill Lynch (Asia) as a director in the global principal
investments group covering real estate investment activities
inAsiaex-Japan.MrYialsoworkedforBlackrockInc.from
1998 to 2000 as an associate. Mr Yi began his career in
theUnitedStates,asananalystatPNCBankN.A in1996.
Mr Yi holds a Master of Business Administration and Bachelor
degree, both from the Pennsylvania State University, USA.
SIEW SIEW HOONFUND DIRECTOR
ARA MANAGERS (HARMONY) PTE. LTD.,MANAGER OF THE ARA HARMONY FUND
DIRECTOR
ASSET MANAGEMENT, ARA MANAGERS (ASIA DRAGON) PTE. LTD.,MANAGER OF THE ARA ASIA DRAGON FUND
MrMunHonPhengisthecountryheadofARA’sChinaDesk.
Prior to joining the Group, Mr Mun operated a boutique
advisory business specialising in advising Singapore
companiesoncrossborderacquisitionopportunitiesinChina
particularly in the acquisitionof commercial properties.Mr
Mun began his career in banking with the SIMBL, a joint
venture merchant bank between a UK merchant bank and
OCBC in 1982. He subsequently joined the First National
Bank of Chicago where he served for eight years, including
four years in Beijing, China as the bank’s representative
and three years in Hong Kong heading the bank’s China
group.HewasalsoanexecutivedirectorofSingapore-listed
Aztech Systems Ltd, an Information Technology company.
Mr Mun holds a Bachelor of Commerce (Accounting
and Information Systems) from the University of New
South Wales, Australia and a Master of Business
Administration from the Australian Graduate School
of Management, Australia. He is also a member of the
Chartered Institute of Arbitrators (United Kingdom) and
fellowoftheSingaporeInstituteofArbitrators.
MUN HON pHENGCOUNTRY HEAD, CHINA
Ms Siew Siew Hoon is the fund director of ARA Managers
(Harmony) Pte. Ltd.. She is also the director, asset
management of ARA Managers (Asia Dragon) Pte. Ltd.,
where she is responsible for the management of the
residentialassetsinthefundportfolio.
Ms Siew has close to 20 years of experience in the marketing,
sales, leasing and management of real estate in both
SingaporeandAustralia.ShejoinedARAin2004,managing
the AIFEREF which was fully divested in 2007. Prior to
joining the Group, Ms Siew was the marketing manager of
The Land Managers (S) Pte. Ltd., where she was involved
in the development and sales of residential
properties in Singapore. Ms Siew started her career
with the Far East Organization, one of the largest
propertydevelopersinSingapore.
MsSiewholdsaBachelorofScience (EstateManagement)
fromtheNationalUniversityofSingapore.
Mr Moses Song is the chief executive officer of principal
investments of the Group. He holds the concurrent
appointment of director, corporate business development
responsible for the establishment of new investment
management platforms and the Group’s business
developmentinitiatives.Inaddition,heoverseestheAustralia
DeskoftheGroup.MrSongisalsoanalternatedirectorto
MrLimHweeChiangJohnofARA-CWTTrustManagement
(Cache)Limited.
Prior to joining the Group, Mr Song was a principal and chief
operatingofficeratLubert-AdlerAsiaAdvisorsPte.Ltd.,the
Asia investment platform of United States-based real estate
privateequityfirmLubert-AdlerPartnersL.P.,wherehewas
responsible for North Asia investment opportunities, and
withMarathonAssetManagement(Singapore)Pte.Ltd.,as
managing director responsible for real estate finance and
MOSES SONGCHIEF EXECUTIVE OFFICER
PRINCIPAL INVESTMENTS
DIRECTOR
CORPORATE BUSINESS DEVELOPMENT
COUNTRY HEAD, AUSTRALIA
ANNUAL REPORT 2011 51
MANAGEMENT TEAM
Prior to that, Mr Yip was the senior vice president, planning
andbusinessdevelopmentforRafflesHoldingsLimited.
Mr Yip holds a Master in Business Administration from the
National University of Singapore and Bachelor of Engineering
(Civil) from the University of Auckland, New Zealand. He
was the President of the Shopping Centre Association of
Singapore and currently serves on the Singapore National
FamilyCouncil.
Mr Pieter Idenburg is the executive director and chief executive
officer of Suntec Singapore International Convention &
ExhibitionServicesPte.Ltd.,aswellaschiefexecutiveofficer
of Suntec International Convention & Exhibition Services
Pte.Ltd..
Having been with Suntec Singapore since 2005, Mr
Idenburg brings more than 20 years of extensive senior
management expertise and international experience from
the airline and hospitality industries where he has worked
with American Airlines, The Walt Disney Company and
pIETER IDENBURGCHIEF EXECUTIVE OFFICER
SUNTEC SINGAPORE INTERNATIONAL CONVENTION & EXHIBITION SERVICES PTE. LTD.
SUNTEC INTERNATIONAL CONVENTION & EXHIBITION SERVICES PTE. LTD.
SUSAN SIMCHIEF EXECUTIVE OFFICER
APM PROPERTY MANAGEMENT PTE. LTD.
Ms Susan Sim is the chief executive officer of APM Property
ManagementPte.Ltd..
Ms Sim has more than 20 years of experience in property
development and management in Singapore, Malaysia,
China, Indonesia and Vietnam. Prior to joining the Group,
Ms Sim was the co-founder and chief executive officer of
SGLCapital InvestmentPte.Ltd.,managerofanAIM-listed
Vietnam property fund. She was the general manager of
GuocoLand Limited and prior to that, the senior vice president
ofMapletreeInvestmentsPte.Ltd.anddirector(retail)ofDBS
LandPte.Ltd.(nowknownasCapitaLandLtd).MsSimbegan
hercareerwiththeSingaporeTourismBoard.
Ms Sim holds a Bachelor of Science in Finance (Honours)
fromtheSouthernlllinoisUniversity,USA.
Mr Anthony Yip is the deputy chairman of APM Property
ManagementPte.Ltd..
Mr Yip has more than 30 years experience in the real estate
sector focusing on mixed-use developments, the hospitality
industryandrecentlyintheeducationindustry.Priortojoining
the Group, Mr Yip was the chief executive of Shatec Institutes
PteLtd,ahospitalityandculinaryinstitution.Hewasdirector
(retail management) at Far East Organization, director and
general manager of Tincel Properties, the previous owner of
theRafflesCityComplex.
ANTHONY YIpDEPUTY CHAIRMAN
APM PROPERTY MANAGEMENT PTE. LTD.
Mr Derek Lai is the senior portfolio manager of ARA CIP.
Prior to joining the Group, Mr Lai was a principal at the
Blackstone Group in Hong Kong, where he was responsible
for investment opportunities in the Greater China region, and
was with the Global Commercial Real Estate division of Merrill
Lynch(AsiaPacific)asvicepresidentresponsibleforrealestate
investmentsinAsia.Priortothat,hewasanassociateinthe
Asia Real Estate Fund of the Carlyle Group and an analyst in
theRealEstatePrivateEquityGroupofDeutscheBankAG.
Mr Lai holds a Bachelor of Commerce from the University
ofBritishColumbia.HeisalsoaCFACharterholder.
DEREK LAISENIOR PORTFOLIO MANAGER
ARA CIP
investmentsinAsia.HewasbasedinHongKongfrom2004
to2007withMerrillLynch(AsiaPacific)Ltd.asadirectorin
the global commercial real estate group and Morgan Stanley
AsiaLtd.asavicepresidentofMorganStanleyInternational
RealEstateFunds.MrSongbeganhiscareerasacorporate
and real estate finance attorney in the United States. He
moved to Asia in 2000 as a seconded attorney to Morgan
Stanley InternationalRealEstateFunds inTokyo,Japanand
was appointed general counsel of Morgan Stanley’s real
estateassetmanagementplatforminKoreain2001.
MrSongholdsaJurisDoctorfromtheVanderbiltUniversity
School of Law and a Bachelor of Science in Economics from
theCentreCollege.HeisamemberoftheStateBarofTexas
(inactivestatus).
ARA ASSET MANAGEMENT L IMITED52
MAnAgeMent teAM
British Airways in the United States and Europe.
Mr Idenburg has a track record as an innovator
in the service industry and has been influential
in implementing large scale change initiatives to
increaseshareholders’value.
At Suntec Singapore, Mr Idenburg has been instrumental
in helming landmark projects such as the extensive building
enhancement programme; he led the teams that were
responsible for the complex Suntec Singapore venue
operationsfortheIMF-WorldBankAnnualMeetings(2006),
APEC Singapore (2009) and the Singapore 2010 Youth
Olympic Games. Within the organisation, he has been
influentialindrivingchangeatalllevels.Hehasbeensuccessful
in growing the business exponentially while encouraging
employees to constantly raise the bar in providing service
excellence.
Mr Idenburg is presently chairman of the Board of the
DutchChamberofCommerce (Singapore) and also sits on
theBoardofSingapore’sEuropeanChamberofCommerce.
He also serves as a committee member of the Hospitality
and Retail Group of the Singapore International Chamber
ofCommerce.
MsLowPohChooistheseniordirectorofARAFinancialPte.
Ltd.,thecorporatefinanceadvisoryarmoftheGroup.
Prior to joining the Group, Ms Low was vice president of
global financialmarkets (assetbacked structuredproducts)
atDBSBankLtdfrom2003to2006.ShewaswiththeREIT
origination team, where she evaluated, advised, structured
andmarketedvariousprimaryandsecondaryREITofferings.
Ms Lowbeganher career as anequity analyst andhas17
years of experience in the field, including 11 years as a
specialistintherealestatesector.
Ms Low holds a Bachelor of Arts from the University of
California,Berkeley,USA.
LOW pOH CHOOSENIOR DIRECTOR
ARA FINANCIAL PTE. LTD.
Ms Seow Bee Lian Cheryl is the senior director, group finance
ofARA.
Prior to joining the Group, Ms Seow established and ran her
own boutique consultancy firm providing accounting and
consultancy services to small and medium enterprises from
2002 to 2003. From 1990 to 2002, she was with various
companieslistedontheSGX-ST.Shewasthedeputyfinancial
controller and company secretary of L.C. Development Ltd
from 1997 to 2002, and was with Royal Sporting House from
1994 to 1997 and Lum Chang Holdings Limited from 1990
to1993.MsSeowbeganhercareerwithDeloitte&Touche,
Singaporein1988.
Ms Seow holds a Bachelor of Accountancy from the National
University of Singapore and is a Certified Public Accountant
with the Institute of Certified Public Accountants of
Singapore.
SEOW BEE LIAN CHERYLSENIOR DIRECTOR
GROUP FINANCE
ANNUAL REPORT 2011 53
INVESTOR RELATIONS AND AWARDS
ARA maintains timely and consistent communications with stakeholders including shareholders, prospective investors, analysts
andthemedia.ARAmakesdisclosuresonanimmediatebasisasrequiredundertheListingManualoftheSGX-ST,orassoonas
possiblewhereimmediatedisclosureisnotpracticable.Inadditiontoface-to-facemeetingsandconferencecallswithanalystsand
investors, ARA also participates in investment conferences and non-deal roadshows and where appropriate, conducts interviews
withthemedia.
Through a proactive investor relations and communications programme, ARA has been able to raise the level of awareness and
understandingoftheGroup’sbusiness,strategyandfinancialperformance.
ARA is committed to maintaining effective engagement of stakeholders and will continue to strive towards enhancing investor
relationspractices,corporategovernanceandtransparency.Tothisend,theGroup’semphasisoneffectiveinvestorrelationshas
been recognized by the investment community with numerous awards including:
ARA Asset Management
• Asia’s“200BestUnderaBillion”,ForbesAsia2011
• BusinessSuperbrands2011/2012,Superbrands
• Merit Award – Internal Audit Excellence Award, SIAS
Investors’ Choice Award 2011
Suntec REIT
• RunnerUp(REITsCategory)–MostTransparentCompany
Award, SIAS Investors’ Choice Award 2011
ARA ASSET MANAGEMENT L IMITED54
investor relations and awards
Fortune REIT
• DirectorsoftheYearAwards2011–ListedCompanies Board (SEHK – Non Hang Seng Index Constituents), The Hong Kong Institute of Directors
• GoldAward–OverallAnnualReport:REIT,International AnnualReportCompetition(ARC)Awards2011
• BronzeAward–Cover:RealEstate,InternationalAnnual ReportCompetition(ARC)Awards2011
• Bronze Award – Interim Report 2011, International Mercury Awards
• HonourAward–CorporateWebsite,iNOVAAwards2011
• Best Use of Knowledge Management of the Year (Property Management) - Customer Relationship Excellence Awards 2011, The Asia Pacific Customer Service Consortium
• CustomerServiceCentreoftheYear(Merit)-Customer Relationship Excellence Awards 2011, The Asia Pacific Customer Service Consortium
prosperity REIT
• Silver Award - Annual Report – REIT Sector, GALAXY Awards 2011
• BronzeAward–REITSector, LACP2010VisionAwards Annual Report Competition
• Corporate Service Team of the Year - Customer
Relationship Excellence Award 2011, The Asia Pacific Customer Service Consortium
• FirstRunner-up–WaterConservationDesignCompetition for Prosperity Place, The Water Supply Department, Hong Kong
• Excellence in Facility Management Award (Office Building), The Hong Kong Institute of Facilities Management
Suntec Singapore
• Asia’s LeadingMeetingsandConferenceCentre,World Travel Awards 2011
• Best Business Event Venue Experience, Singapore Experience Awards 2011
• Meritorious Home Team Partner Award, Ministry Of Home Affairs
• Distinguished Patron of The Arts Award, National Arts Council
• AIPC Innovation Award Member’s Choice, AIPC Innovation Award 2011
• Best International Venue – Special Commendation, Exhibition News Awards 2011
• Best Convention/Exhibition Centre (Second Runner-up), CEI Industry Awards 2011
• BestMICESalesTeam(SecondRunner-up),CEI Industry Awards 2011
ANNUAL REPORT 2011 55
CORPORATE INFORMATION
BOARD OF DIRECTORSChiu Kwok Hung JustinChairman & Non-Executive Director
Lim Hwee Chiang JohnGroup Chief Executive Office and Executive Director
Ip Tak Chuen Edmond Non-Executive Director
Lee Yock Suan Independent Non-Executive Director
Lim How Teck Independent Non-Executive Director
Cheng Mo Chi MosesIndependent Non-Executive Director
Colin Stevens Russel Independent Non-Executive Director
AUDIT COMMITTEELee Yock Suan (Chairman)
Lim How TeckCheng Mo Chi MosesColin Stevens Russel
REMUNERATION COMMITTEECheng Mo Chi Moses (Chairman)
Lim How TeckColin Stevens RusselIp Tak Chuen Edmond
NOMINATING COMMITTEELim How Teck (Chairman)
Cheng Mo Chi MosesColin Stevens Russel
COMpANY SECRETARYYvonne Choo
ASSISTANT COMpANY SECRETARIESBusarakham KohsikapornIra Stuart Outerbridge III
REGISTERED OFFICEClarendon House
2 Church Street
Hamilton HM 11
Bermuda
pRINCIpAL pLACE OF BUSINESS6 Temasek Boulevard #16-02 Suntec Tower Four
Singapore 038986
Tel: 65-6835 9232
Fax: 65-6835 9672
SINGApORE SHARE TRANSFER AGENTBoardroom Corporate & Advisory Services Pte. Ltd.50 Raffles Place #32-01 Singapore Land Tower
Singapore 048623
AUDITORSKPMG LLP16 Raffles quay #22-00 Hong Leong Building
Singapore 048581
(Partner-in-charge:EngChinChin)
(Appointmentsincefinancialyearended
31December2007)
pRINCIpAL BANKERSDBS Bank Ltd6ShentonWay
DBS Building Tower One
Singapore 068809
Standard Chartered Bank8 Marina Boulevard
Tower 1 Level 25
Marina Bay Financial Centre
Singapore 018981
United Overseas Bank Limited80 Raffles Place
UOB Plaza
Singapore 048624
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FINANCIAL STATEMENTS
Report on Corporate Governance
Directors’ Report
Statement by Directors
Independent Auditors’ Report
Statements of Financial Position
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
ConsolidatedStatementofChangesinEquity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Supplementary Information
Shareholders’ Information
Notice of Annual General Meeting
Notice of Books Closure
58
74
77
78
80
81
82
83
85
87
131
133
135
140
ANNUAL REPORT 2011 57
REPORT ON CORPORATE GOVERNANCE
ARA is committed to ensuring that high standards of corporate governance are practiced throughout the Group in line with
theCodeofCorporateGovernance2005(the“Code”).Webelievethatsoundcorporategovernancepoliciesandpractices
arethefoundationforatrusted,successfulandrespectedbusinessorganisation.Asweworktowardsourlongtermstrategic
objectives, we seek to observe both the substance and spirit of the Code while bearing in mind the Group’s specific business
needsandinterestsofourstakeholders.
This report describes the Group’s application of the corporate governance principles and guidelines of the Code which is
underpinnedbyarobustsystemofinternalcontrolsandaccountabilitytoourstakeholders.Thisisafundamentalpartofour
objectivestoprotectandenhanceshareholdervalueanddeliverlongtermsustainablegrowthoftheGroup.
ARA is pleased to confirm that the Group has adhered to the principles and guidelines of the Code unless specified otherwise
andprovidedexplanationsincasesofnon-compliance.
BoaRD matteRs
the BoaRD’s ConDuCt oF aFFaiRs
Principle 1 every company should be headed by an effective Board to lead and control the company. the
Board is collectively responsible for the success of the company. the Board works with
management to achieve this and the management remains accountable to the Board.
TheBoardisentrustedwiththeresponsibilityofoverseeingtheGroup’soverallmanagementandguidingitsstrategicdirection.
The Board’s role includes:-
(i) providingentrepreneurial leadership, setting strategicobjectives andensuring that thenecessaryfinancial andhuman
resources are in place for the Group to meet its objectives;
(ii) establishingaframeworkofprudentandeffectivecontrolstoassessandmanagerisksandsafeguardingofshareholders’
interests and the Group’s assets;
(iii)establishinggoalsforManagementandreviewingManagement’sperformancebymonitoringtheachievementofthese
goals;
(iv)identifyingthekeystakeholdergroupsandrecognisethattheirperceptionsaffecttheGroup’sreputation;
(v) settingGroupvaluesandstandards(includingethicalstandards)andensuringthatobligationstoshareholdersandother
stakeholders are understood and met; and
(vi)consideringsustainabilityissuessuchasenvironmentalandsocialfactors,aspartofitsstrategicformulation.
Each of our Directors is a well respected individual from the corporate and/or international circles and he brings to the Board
hisdiversifiedexperience,objectivejudgmentandstrategicnetworkingrelationships,whichfurthertheinterestsoftheGroup.
Collectively and individually, the Directors act in good faith and exercise due care and diligence in the course of deliberations
andconsiderobjectivelyatalltimestheinterestsoftheGroupanditsshareholders.ProfilesoftheDirectorscanbefoundin
pages44to47ofthisReport.
ARA ASSET MANAGEMENT L IMITED58
REPORT ON CORPORATE GOVERNANCE
TheBoardhasadoptedinternalguidelinessettingforthmattersthatrequireBoardapproval.MattersrequiringBoardapproval
includematerialacquisitionanddisposalofassets,investmentsanddivestments,capitalexpenditureandoperatingbudgets,
commitments to term loans and lines of credit as well as any transaction involving a conflict of interest of a substantial
shareholderoraDirector.Management,ontheotherhand,isresponsiblefortheday-to-dayoperationandadministrationof
theCompanyinaccordancewiththepoliciesandstrategiesestablishedbytheBoard.
The Board regularly reviews Management’s key activities relating to the Group’s financial performance, business plans, internal
controlsandkey risks.DirectorsarealsobriefedbyManagementon the strategicdirectionsandbusinessactivitesof the
Group, and are provided with relevant information on the Group’s operating policies and procedures, including but not
limited to corporate governance practices, employee code of ethics, disclosure of interests and prohibitions on dealings in the
Company’ssecurities.
TheBoardconducts regular scheduledmeetingsat least four timesayear. Ad-hocmeetingsareconvenedasandwhen
warrantedbymattersrequiringtheBoard’sattention.TheCompany’sBye-Lawsprovidesformeetingstobeheldviatelephone
conference.TheparticipationofeachDirectorinthevariousBoardandBoardCommitteemeetingsheldduringtheyearunder
reviewissummarisedinpage72ofthisReport.
Allnewly-appointedDirectorsaregivenlettersexplainingthetermsoftheirappointmentaswellastheirdutiesandobligations.
A comprehensive orientation programme, which includes Management presentations of the Group’s annual business
andstrategicplans, isarrangedforallDirectorsonanannualbasis.Whererequired,theCompanySecretaryandexternal
professionals bring to the Directors’ attention relevant updates in the industry and changes in accounting standards and
regulations.
BoaRD ComPosition anD guiDanCe
Principle 2 there should be a strong and independent element on the Board, which is able to exercise
objective judgement on corporate affairs independently, in particular, from management. no
individual or small group of individuals should be allowed to dominate the Board’s
decision making.
The composition of the Board is determined in accordance with the following principles:
• atleastone-thirdoftheBoardshouldcompriseIndependentNon-ExecutiveDirectors;
• theChairmanoftheBoardshouldbeaNon-ExecutiveDirector;and
• theBoardshouldcompriseDirectorswithabroadrangeofcommercialexperienceincludingexperienceinfundmanagement,
finance,lawandrealestate.
OurBye-Lawsprovide that theBoard shall consistofno fewer than twoDirectors.Currently, theBoard comprises seven
members: one Executive Director, two Non-Executive Directors and four Independent Non-Executive Directors. The
IndependentNon-ExecutiveDirectors(withinthedefinitionoftheCode)areMrLeeYockSuan,MrLimHowTeck,DrCheng
MoChiMosesandMrColinStevensRussel.
ANNUAL REPORT 2011 59
REPORT ON CORPORATE GOVERNANCE
TheIndependentNon-ExecutiveDirectorsexerciseobjectivejudgmentontheGroup’saffairsindependentlyfromManagement.
The Independent Non-Executive Directors have no relationship with the Company, its related companies or their officers that
could interfere, or be reasonably perceived to interfere, with the exercise of their independent business judgment in the best
interestsoftheGroup.
The current composition of the Board includes a diverse breadth of industry expertise, knowledge and experience in areas
suchasaccounting,finance,legal,strategicplanningandbusinessmanagement.ThisenablesManagementtobenefitfrom
external and expert perspectives of the Directors who collectively possess the core competencies relevant to the direction and
growthoftheGroup.TheBoardalsoreviewsitssizeandcompositionregularlytoensureanappropriatemixofexpertiseand
experiencefortheGroup’soperations.
The Board is supported by various Board Committees, namely the Audit Committee, Nominating Committee and Remuneration
CommitteetoassisttheBoardindischargingitsresponsibilitiesandenhancetheGroup’scorporategovernanceframework.
The Board has delegated specific responsibilities to these Board Committees and their composition and terms of reference are
describedinthisReport.
The Board accepts that while these Board Committees have the authority to examine particular issues in their specific areas
respectively, the Board Committees shall report back to the Board with their decisions and/or recommendations as the ultimate
responsibilityonallmatterslieswiththeentireBoard.
ChaiRman anD gRouP ChieF eXeCutiVe oFFiCeR
Principle 3 there should be a clear division of responsibilities at the top of the company – the working of the
Board and the executive responsibility of the company’s business – which will ensure a balance
of power and authority, such that no one individual represents a considerable concentration
of power.
The positions of Chairman and Group CEO are held by separate individuals to ensure an appropriate balance of power,
increasedaccountabilityandgreatercapacityoftheBoardforobjectivedecision-making.
OurChairmanandNon-ExecutiveDirector,MrChiuKwokHungJustin,isresponsiblefortheoverallleadershipofourBoard.
MrChiualsoensuresthatDirectorsreceivecomplete,adequateandtimelyinformation,andthereiseffectivecommunication
with shareholders. He also encourages constructive exchange of views between our Board members and Management,
facilitates the effective contribution of Non-Executive Directors, promotes a culture of openess and high standards of corporate
governance.
OurGroupCEOandExecutiveDirector,MrLimHweeChiangJohn,workswiththeBoardtodeterminethebusinessstrategies
fortheGroupandisresponsiblefortheday-to-dayoperations.MrLimworkswiththeManagementoftheGrouptoensure
thattheGroupoperatesinaccordancewithitsstrategicandoperationalobjectivesestablishedbytheBoard.
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REPORT ON CORPORATE GOVERNANCE
BoaRD memBeRshiP
Principle 4 there should be a formal and transparent process for the appointment of new directors to
the Board.
Board renewal is a continual and essential process to ensure that the Board remains relevant to changing business environment
andmaintaininggoodcorporategovernance.TheBoardhasestablishedaNominatingCommitteewhichcomprises three
IndependentNon-ExecutiveDirectorsnamelyMrLimHowTeck,DrChengMoChiMosesandMrColinStevensRussel.The
Chairman of the Nominating Committee is Mr Lim How Teck who is neither a substantial shareholder of the Company nor
directlyassociatedwithasubstantialshareholderoftheCompany.
TheNominatingCommitteeisguidedbyitstermsofreferencewhichsetsoutitsresponsibilities.Theseinclude:
(i) reviewingandrecommendingtotheBoardthestructure,sizeandcompositionoftheBoardandBoardCommittees;
(ii) reviewingBoardsuccessionplansforDirectors,inparticular,theChairmanandtheGroupCEO;
(iii)establishingproceduresforandmakingrecommendationstotheBoardonallBoardappointmentsandre-appointments
(aswellasalternateDirectors,ifapplicable);
(iv)determiningonanannualbasisifaDirectorisindependent;
(v) evaluatingifaDirectorhasmultipleBoardrepresentationsandifheisabletoandhasbeenadequatelycarryingouthis
duties as a Director; and
(vi)evaluatingtheperformanceoftheBoard,itsBoardCommitteesandDirectorsandproposingobjectiveperformancecriteria
fortheBoard’sapproval.
TheNominatingCommitteereportstotheBoardandmeetsatleastonceayear.
The Nominating Committee has put in place a transparent and formal process for shortlisting, evaluating and nominating
candidates for appointment of new Directors and re-appointment of Directors. The Nominating Committee makes
recommendations to the Board on the suitability of candidates based on key attributes such as integrity, commitment, financial
literacy, competencies and state of independence pursuant to the guidelines set out under the Code and detemines whether
there are any relationships or circumstances which are likely to affect the independence, or could appear to affect, the
Director’sjudgement.
The Nominating Committee reviews the independence of Board members annually and has determined that Mr Lee Yock
Suan, Mr Lim How Teck, Dr Cheng Mo Chi Moses and Mr Colin Stevens Russel are independent and free from any of the
relationshipsasstatedintheguidelinesoftheCode.
Although the Non-Executive Directors hold multiple directorships in other companies, the Nominating Committee reviews that
sufficient time and attention are being given by the Directors to the affairs of the Group annually and is of the view that such
multipleBoardrepresentationsdonothinderthemfromcarryingouttheirdutiesasDirectorsoftheCompany.TheBoard
affirmsandsupportsthisview.
OurBye-Laws require that eachDirector shall retire at leastonceevery three yearsbutwouldbeeligible for re-election.
ANNUAL REPORT 2011 61
AnewlyappointedDirectorisalsorequiredtosubmithimselfforretirementandre-electionattheAnnualGeneralMeeting
(“AGM”)immediatelyfollowinghisappointment.AsummaryofeachDirector’sinitialappointmentandlastre-electionaswell
ashisdirectorshipsinlistedcompaniesissetoutinpage73ofthisReport.
In recommending a Director for re-election to the Board, the Nominating Committee will consider, amongst other things, his
performanceandcontributionstotheBoard(includingattendanceandparticipationatmeetings,timeandeffortaccordedto
theGroup’sbusinessandaffairs).
TheNominatingCommitteehasrecommendedthenominationofMrLimHweeChiangJohn,MrIpTakChuenEdmondand
MrLeeYockSuanforre-electionattheforthcomingAGM.TheBoardhasacceptedthisrecommendationandbeingeligible,
MrLimHweeChiangJohn,MrIpTakChuenEdmondandMrLeeYockSuanwillbeofferingthemselvesforre-electionatthe
AGM.
BoaRD PeRFoRmanCe
Principle 5 there should be a formal assessment of the effectiveness of the Board as a whole and the
contribution by each director to the effectiveness of the Board.
WebelievethattheperformanceoftheBoardisultimatelyreflectedinthelongtermperformanceoftheGroup.
The Nominating Committee acknowledges the importance of a formal assessment of the Board and Directors’ performance
andhasadoptedaformalsystemofevaluatingtheirperformanceasawhole.TheNominatingCommitteedeterminesthe
performance criteria which include an evaluation of the size and composition of the Board, the Board’s access to information,
its accountabilty and processes, communication with Management, standards of Directors’ conduct and the Board’s and
individualdirector’sperformanceinrelationtodischargingtheirprincipalresponsibilities.
This collective assessment is conducted by means of a confidential questionnaire completed by each Director, which is
collated,analysedanddiscussedwiththeNominatingCommitteeandtheBoardwithcomparativesfromthepreviousyear.
Recommendations to further enhance the effectiveness of the Board are implemented, as appropriate. The Nominating
Committee had conducted a performance evaluation of the Board and Audit Committee for FY2011 and determined that all
Directorscontributedeffectivelyanddemonstratedfullcommitmentstotheirroles.
aCCess to inFoRmation
Principle 6 in order to fulfill their responsibilities, Board members should be provided with complete,
adequate and timely information prior to board meetings and on an ongoing basis.
WebelievethattheBoardshouldbeprovidedwithcomplete,adequateandtimelyinformationpriortoBoardmeetingsand
onanongoingbasis.ManagementprovidestheBoardwithinformationonBoardmattersandissuesrequiringtheBoard’s
REPORT ON CORPORATE GOVERNANCE
ARA ASSET MANAGEMENT L IMITED62
REPORT ON CORPORATE GOVERNANCE
deliberations.AllDirectorsarealsoprovidedwithongoingreportsrelatingtooperationalandfinancialperformanceofthe
Group,aswellaskeydevelopments,toenablethemtoexerciseeffectiveoversightovertheGroup’sperformance.
Board meetings for each year are scheduled in advance to facilitate Directors’ individual administrative arrangements and
commitments.Boardpapersaregenerallycirculatedthreedaysinadvanceofeachmeetingandincludebackgroundexplanatory
informationfortheDirectorstoprepareforthemeetingandmakeinformeddecisions.Suchexplanatoryinformationincludes
minutesofthepreviousmeetingsaswellasoperationalandfinancialmattersrequiringtheBoard’sattentionorresolution.
The information provided may also be in the form of briefings to the Directors or formal presentations by Management staff
inattendanceatBoardmeetings,orbyexternalprofessionals.
The Board has separate and independent access to the Group’s Management, Company Secretaries, internal and external
auditors.AtleastoneoftheCompanySecretaries,and/ortheirauthoriseddesignate(s),attend(s)allmeetingsoftheBoard
andBoardCommitteesandprepare(s)minutesofBoardproceedings.TheCompanySecretariesalsoassisttheChairmanto
ensure that Board procedures are duly followed and regularly reviewed for compliance with relevant rules and regulations and
effectivefunctioningoftheBoard.
WheretheDirectorsrequireindependentprofessionaladviceinthecourseoftheirduties,suchadvicewouldbeprovidedat
theCompany’sexpense,subjecttoapprovalbytheBoard.
RemuneRation matteRs
PRoCeDuRes FoR DeVeLoPing RemuneRation PoLiCies
Principle 7 there should be a formal and transparent procedure for developing policy on
executive remuneration and for fixing the remuneration packages of individual directors.
no director should be involved in deciding his own remuneration.
Webelieve that executive remuneration shouldbe linked to thedevelopmentofmanagementdepth for continual talent
renewalandsustainabilityoftheGroup.TheRemunerationCommitteeoftheBoardcomprisesfourDirectors,allofwhomare
Non-ExecutiveDirectorsandamajorityofwhom,includingtheChairman,areindependent.ThemembersoftheRemuneration
CommitteeareDrChengMoChiMoses,MrLimHowTeck,MrColinStevensRusselandMr IpTakChuenEdmond.The
ChairmanoftheRemunerationCommitteeisDrChengMoChiMoses.
The Remuneration Committee, guided by its terms of reference which set out its responsibilities, assists the Board in ensuring
a formal and transparent procedure in:
(i) overseeingexecutivestaffcompensationanddevelopmentintheGroup;
(ii) determiningandreviewing,fromtimetotime,theremunerationpolicyoftheGroup;
ANNUAL REPORT 2011 63
(iii)reviewingandsettingthecompensationpoliciesandremunerationforExecutiveDirectorsandseniorexecutivesincluding
employees who are related to Directors or controlling shareholders of the Group;
(iv)reviewingtheremunerationofNon-ExecutiveDirectors;
(v) ensuring, as far aspossible, that the remunerationpackagesof theGroup takedue accountof the environment and
circumstances faced by the Group in the various markets and countries in which we operate; and
(vi)administeringtheGroup’sPerformanceBasedBonusScheme.
TheRemunerationCommitteereportstotheBoardandmeetsatleastonceayear.TheRemunerationCommitteealsohas
accesstoindependentexpertandprofessionaladviceonremunerationmatters,ifrequired.
LeVeL anD miX oF RemuneRation
Principle 8 the level of remuneration should be appropriate to attract, retain and motivate the directors
needed to run the company successfully but companies should avoid paying more than
is necessary for this purpose. a significant proportion of executive directors’ remuneration
should be structured so as to link rewards to corporate and individual performance.
In setting remuneration packages, the Group takes into consideration the remuneration and employment conditions within
the same industry and in comparable companies, as well as the Group’s relative performance and the performance of each
individual.
The Independent Non-Executive Directors receive Directors’ fees commensurate with their appointment, taking into account
factors such as their time spent and responsibilities. Directors’ fees are recommended by the Board for approval at the
Company’sAGM.
TheNon-ExecutiveDirectors(otherthantheIndependentNon-ExecutiveDirectors)donotreceiveDirectors’fees.TheGroup
CEOandExecutiveDirector,MrLimHweeChiangJohn,hasaserviceagreementwiththeCompanyforanindefinitetermand
is paid a base salary monthly in arrears and variable year-end bonus for the continuation of his employment, unless terminated
forcausebywrittennoticeof6monthsbetweentheparties.TheRemunerationCommitteereviewsthetermsandconditions
oftheserviceagreementaswellastheremunerationcomponentoftheGroupCEO.
In addition to base salary and a variable year-end bonus, designated executives of the Group participate in the Group’s
PerformanceBasedBonusSchemeattheabsolutediscretionoftheRemunerationCommittee(the“Participants”).Underthe
scheme, the Participants from each operating business unit of the Group may be entitled to a pool of incentive payments based
oncertainperformanceindicators.Thecalculationforthepoolofincentivepaymentsforeachofthebusinessunitsandthe
awardscheduleissetoutinthetablebelow.10%ofeachpoolofincentivepaymentsforeachbusinessunitoftheGroup
is deducted and contributed to the pool of incentive payments for the Participants from the corporate divisions of the Group
whichsupportthevariousbusinessunits.
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REPORT ON CORPORATE GOVERNANCE
(1) Before deduction for the contribution to the pool of incentive payments for the corporate divisions.
(2) Refers to vendors which are not members of CWT Limited and the Cheung Kong Group.
(3) 10% of each of these amounts will be deducted from the pool of incentive payments for each business unit and contributed to the pool of
incentive payments for the corporate divisions which support the various business units. The awards (if any) to employees from the
corporate division would be made half-yearly every financial year.
Any such pool of incentive payments or any part thereof may be allocated to Participants of the scheme engaged in the
relevantbusinessunitorcorporatedivisionattheabsolutediscretionoftheRemunerationCommittee.Suchallocationtakes
intoaccounteachParticipant’sseniority,lengthofserviceandhis/herperformanceandcontributions.Anyamountallocated
shallbepaidtotheParticipantintheformofcash.
Each Participant’s annual entitlement under the scheme for each business unit he/she is engaged in is subject to a maximum
capofhis/herannualbasesalary(whichexcludesanyannualwagesupplement,bonus,awardandotherfringebenefit)for
that financial year, save for entitlements under the private real estate fund management, which is subject to a maximum cap of
theequivalentoftheParticipant’sannualbasesalary(asdescribedabove)fromthecommencementofeachrelevantclosed-
endfundtotherealisationofsuchfund.
The scheme is targeted at key executives who are in the best position to drive the growth of our Group through superior
performance.Itisanincentiveplandesignedonthebasisthatitisimportanttoretainemployeeswhosecontributionsare
essential tothegrowthandprofitabilityofourGroup. TheschemeallowstheGrouptoattractpotentialemployeeswith
relevant skills and to motivate existing employees to optimise their performance, efficiency as well as maintain a high level of
contribution to the Group, and more importantly, to retain key executives of the Group whose contributions are essential to our
long-termgrowthandprofitability.Inaddition,theschemeisdesignedtoconveytheGroup’srecognitionandappreciationto
the executives who have contributed to the Group’s growth to further strengthen these individuals’ commitment, support and
loyaltytotheGroup’slong-termgrowthandprofitability.
The Remuneration Committee had also recommended to the Board an amount of S$490,000 as Directors’ fees for the
financialyearending31December2012,tobepaidquarterly inarrears. However,MrChiuKwokHungJustin,Mr IpTak
ChuenEdmondandMrLimHweeChiangJohnhaveinformedtheBoardoftheirintentiontowaivetheirentitlementtothe
Directors’feesofS$70,000each.TheDirectors’feesrecommendedforthefinancialyearending31December2012would
thereforebeS$280,000.ThisrecommendationhasbeenendorsedbytheBoardandwouldbetabledattheforthcoming
AGMforshareholders’approval.
NoDirectorisinvolvedindecidinghisownremuneration.
Reits Private Real estate FundsCorporate Finance advisory services
Pools of incentive payments for each business units(1)
10%ofacquisitionfeesforeach REIT manager paid on acquisitionofassetsfromthird party vendors(2),(3)
10%to20%ofperformance fees for each fund(3)
10%ofrevenuegeneratedby ARA Financial in excess of its annual approved budget(3)
Award Schedule Half-yearly Upon the realisation of the performance fee for each fund
Annually
ANNUAL REPORT 2011 65
DisCLosuRe on RemuneRation
Principle 9 each company should provide clear disclosure of its remuneration policy, level and mix of
remuneration, and the procedure for setting remuneration in the company’s annual report. it
should provide disclosure in relation to its remuneration policies to enable investors to understand
the link between remuneration paid to directors and key executives, and performance.
The remuneration of the Directors for the financial year ended 31 December 2011 in bands of S$250,000 is provided below:
A breakdown of the remuneration of the Directors for the financial year ended 31 December 2011 is set out below:
(1) Includes AWS and employer’s CPF. (2) Mr Chiu Kwok Hung Justin and Mr Ip Tak Chuen Edmond are full time employees of Cheung Kong Investment Company Limited, a substantial shareholder of the Company, and have offered to waive their directors’ fees for FY2011. (3) Key person and strategic advisory fees paid to Mr Chiu Kwok Hung Justin by ARA Fund Management (Asia Dragon) Limited for strategic advice and serving as a key person of the ARA Asia Dragon Fund.
WehavealsoprovidedaGroup-widecross-sectionofkeyexecutives’ remunerationbynumberofemployees inbandsof
S$250,000 in lieuofnaming the top5keyexecutiveswhoarealsonotDirectorsof theCompany. Webelieve that this
disclosure, which provides sufficient overview of the remuneration of the Group while maintaining confidentiality of staff
remunerationmatters,isinthebestinterestsoftheGroupgiventhecompetitiveconditionsinthefundmanagementindustry.
(1) Includes base salary, bonus and Peformance Based Bonus.
Remuneration Bands in Fy2011 number of Directors
S$500,000 and above 1
S$250,000 to below S$500,000 1
Below S$250,000 4
total 6
Remuneration Band/name of Director
salary(1)
(%)Bonus
(%)Directors’ Fees(2)
(%)others
(%)total (%)
(i) s$500,000 and above
MrLimHweeChiangJohn 71 28 - 1 100
(ii) s$250,000 to below s$500,000
MrChiuKwokHungJustin - - - 100(3) 100
(iii) Below s$250,000
Mr Lee Yock Suan - - 100 - 100
Mr Lim How Teck - - 100 - 100
Dr Cheng Mo Chi Moses - - 100 - 100
Mr Colin Stevens Russel - - 100 - 100
total Compensation Bands in Fy2011(1) number of employees
S$750,000 to below S$1,000,000 2
S$500,000 to below S$750,000 7
S$250,000 to below S$500,000 6
Below S$250,000 6
total 21
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Save forMrLimHweeChiang Johnwho isa substantial shareholderof theCompanyandMsChiuYu Justinawho isan
immediate family member of the Chairman and Non-Executive Director, Mr Chiu Kwok Hung Justin, there are no other
Directorsorexecutiveswhoarerelatedtooneanotherortoanyofoursubstantialshareholders.TheGroupcurrentlydoes
nothaveanyshareoptionschemeorshareplan.Therearenoexistingorproposedserviceagreementsenteredintoortobe
entered into by the Directors or executives with the Company that provide for benefits upon termination of appointment or
employment.Wehavealsonotsetasidenoraccruedanyamountstoprovideforpension,retirementorsimilarbenefitsfor
theDirectorsandexecutivesoftheGroup.
aCCountaBiLity anD auDit
aCCountaBiLity
Principle 10 the Board should present a balanced and understandable assessment of the company’s
performance, position and prospects.
WeseektokeepstakeholdersupdatedontheGroup’sfinancialperformance,positionandprospectsthroughquarterlyand
annualfinancialreportsaswellastimelyannouncementsondevelopmentsintheGroup’sbusinesses.Quarterlyresultsare
released to shareholders within 45 days of the reporting period while the full year results are released to shareholders within
60daysof thefinancial yearend. Inpresenting thefinancial reports,weaim toprovideabalancedandunderstandable
assessmentoftheGroup’sperformance.
Management provides the Board with a continual flow of relevant information on the Group on a timely basis in order that the
Boardmayeffectivelydischargeitsduties.
auDit Committee
Principle 11 the Board should establish an audit Committee with written terms of reference which
clearly set out its authority and duties.
TheAuditCommitteeoftheBoardcomprisesfourDirectors,allofwhomareIndependentNon-ExecutiveDirectors.TheAudit
CommitteemembersareMrLeeYockSuan,MrLimHowTeck,DrChengMoChiMosesandMrColinStevensRussel.The
ChairmanoftheAuditCommitteeisMrLeeYockSuan.
The members of the Audit Committee bring with them invaluable experience and professional expertise in the financial and
legaldomains.TheBoardisoftheviewthatthemembersoftheAuditCommitteeareappropriatelyqualifiedtodischarge
theirresponsibilities.TheAuditCommitteeisguidedbyitstermsofreferenceendorsedbytheBoard,whichincludesreviewing:
(i) theannualauditplan,includingthenatureandscopeoftheinternalandexternalauditsbeforethecommencementof
these audits;
(ii) theadequacyoftheinternalauditprocess,effectivenessoftheGroup’sinternalcontrolsandtheinternalauditfunction;
(iii)theresultsofauditfindingsandManagement’sresponse;
(iv)theadequacyoftheGroup’saccountingandothercontrols;and
(v) interestedpersontransactions.
ANNUAL REPORT 2011 67
TheAuditCommitteemeetsatleastfourtimesayearandatleastquarterlywiththeinternalandexternalauditorswithout
thepresenceofManagement todiscuss theirfindingsas setout in their respective reports to theAuditCommittee. The
internal and external auditors may also request the Audit Committee to meet if they consider a meeting necessary. The
Audit Committee is also entitled to full access to Management and has full discretion to invite any Director, or members of
Managementtoattenditsmeetings.TheAuditCommitteeisrequiredtopassresolutionsonlyuponunanimousvote.Any
conflictingviewsaresubmittedtothefullBoardforitsfinaldecision.Anymemberwhohasaninterestinanymatterbeing
reviewedorconsideredisabstainedfromvotingonthematter.
TheAuditCommitteealsoreviewsanysignificantfinancialreportingissuesaswellasthequalityandreliabilityofinformation
inthequarterlyandannualfinancialstatementsandannouncementsoftheGroup.
The Audit Committee makes recommendations to the Board on the appointment/re-appointment of the external auditors,
taking into consideration the terms of engagement, scope, results of the audit, cost effectiveness and the independence and
objectivityoftheexternalauditors.TheAuditCommitteealsoreviewsthenon-auditservicesprovidedbytheexternalauditors
toensurethatprovisionofsuchserviceswillnotaffecttheindependenceoftheexternalauditors.
TheBoardhasadoptedaWhistleBlowingPolicywhereemployeesmay,inconfidence,reportpossibleimproprietiesdirectlyto
theAuditCommitteeinaresponsibleandeffectivemanner.AcopyoftheWhistleBlowingPolicyisavailabletoallemployeesof
theGroupincludingthelatestupdatedcontactdetailsoftheAuditCommittee.Theobjectiveforsucharrangementsistoensure
independentinvestigationofmattersraisedandtoallowappropriateactionstobetaken.Allsuchinvestigationsareundertaken
bytheGroupRiskManagement&InternalAuditDepartmentwhichreportsdirectlytotheChairmanoftheAuditCommittee.
For FY2011, the Audit Committee has:
(i) metupwiththeGroup’s internalandexternalauditorsonaquarterlybasis,withoutthepresenceofManagement,to
discusstheirfindingsassetoutintheirrespectivereportstotheAuditCommittee.Boththeinternalandexternalauditors
had confirmed that they had received full co-operation of Management and no restrictions were placed on the scope of audits;
(ii) reviewedallnon-auditservicesprovidedbytheexternalauditorsandissatisfiedthattheprovisionofsuchservicesdidnot
affect the independenceoftheexternalauditors.Theexternalauditorshavealsoaffirmedtheir independence intheir
report to the Audit Committee; and
(iii)reviewedarrangementsbywhichemployeesoftheGroupmay,inconfidence,raiseconcernsaboutpossibleimproprieties
relatingtoaccountingandfinancialcontrolsaswellasanyothermatterspursuanttotheWhistleBlowingPolicy.There
werenoreportsofwhistleblowingreceivedduringtheyear.
The Audit Committee, with the concurrence of the Board, had recommended the re-appointment of KPMG LLP as the external
auditorsattheforthcomingAGM.TheCompanyhascompliedwithRules712and715oftheListingManualinrelationtothe
externalauditors.Rule716oftheListingManualisnotapplicableasthesameauditingfirmisappointedfortheCompany
anditssubsidiaries.
REPORT ON CORPORATE GOVERNANCE
ARA ASSET MANAGEMENT L IMITED68
REPORT ON CORPORATE GOVERNANCE
inteRnaL ContRoLs
Principle 12 the Board should ensure that the management maintains a sound system of internal controls
to safeguard the shareholders’ investments and the company’s assets.
TheBoardrecognisestheimportanceofsoundinternalcontrolsandriskmanagementpracticestogoodcorporategovernance.
The Board ensures that Management maintains a robust system of internal controls and risk management designed to manage
risks and provide reasonable assurance against misstatement of loss, safeguarding of assets, maintenance of reliable and
properaccountingrecordsandcompliancewithrelevantlegislation.
RiskmanagementisanintegralpartoftheGroup’songoingoperations.Managementhasidentifiedthestrategic,operational,
hazard and financial risks faced by the various business units and set out the appropriate mitigating actions and monitoring
mechanisms to respond to changes within the Group and the external business environment, as summarised in the Group’s
RiskProfile.TheAuditCommitteereviewstheGroup’sriskmanagementframework,policiesandproceduresestablishedby
Management,withtheassistanceoftheInternalAuditors.
The Internal Auditors perform detailed work to assist the Audit Committee in the evaluation of the Group’s financial,
operational, compliance and information technology controls based on the internal audit plan approved by the Audit
Committee.Anymaterialnon-complianceorweaknessininternalcontrols,includingrecommendationsforimprovements,is
reportedtotheAuditCommittee.TheAuditCommitteealsoreviewstheeffectivenessofactionstakenbyManagementon
therecommendationsmadebytheInternalAuditorsinthisrespect.
In addition to the work performed by the Internal Auditors, the external auditors also perform tests of certain controls relevant
tothepreparationoftheGroup’sfinancialstatements.Theexternalauditorsreportanysignificantdeficienciesofsuchinternal
controlstotheAuditCommittee.
Duringtheyear,theAuditCommitteehasreviewedtheadequacy,effectivenessandintegrityoftheGroup’sinternalcontrol
and riskmanagement systems.Management alsoprovides aquarterly andannual assuranceon the stateof theGroup’s
internalcontrols.Basedontheworkperformedbyinternalandexternalauditors,theBoard,withtheconcurrenceoftheAudit
Committee,isoftheopinionthattheinternalcontrolsinplaceareadequateinaddressingtheGroup’sfinancial,operational
andcompliancerisksinitscurrentbusinessenvironment.
inteRnaL auDit
Principle 13 the company should establish an internal audit function that is independent of the activities
it audits.
TheGrouphasengagedDeloitte&ToucheEnterpriseRiskServicesPte.Ltd.toassisttheGroupRiskManagement&Internal
AuditDepartment(togetherreferredtoasthe“InternalAuditors”)inconductingafullreviewoftheGroup’sinternalcontrol
andriskmanagementsystems.Thisarrangementcombinesinternalexpertisewithexternalbestpracticesandenhancesthe
InternalAuditors’independenceandeffectiveness.
The Internal Auditors are independent of Management and the Head of Group Risk Management & Internal Audit Department
has a direct and primary reporting line to the Chairman of the Audit Committee, with administrative reporting to the Group
CEO.TheGroup’sinternalauditactivitiesareguidedbytheInternationalStandardsfortheProfessionalPracticeofInternal
AuditingsetbyTheInstituteofInternalAuditors.
ANNUAL REPORT 2011 69
During the year, the Internal Auditors conducted audit reviews based on the internal audit plan approved by the Audit
Committee.Uponcompletionofeachauditassignment,theInternalAuditorsreportedtheirfindingsandrecommendationsto
Managementwhowouldrespondontheactionstobetaken.TheInternalAuditorssubmitquarterlyinternalauditreportsto
theAuditCommitteeontheauditfindingsandactionstakenbyManagementonthefindings.
The Internal Auditors also carry out consulting services to advise Management on corporate governance matters such as risk
management framework, control self assessment in compliance, business continuity planning and updating of operations
manuals. This is coordinated through facilitatedworkshops andprojectswith active participationofManagement. These
consulting services help the Internal Auditors to establish collaborative and positive relationships with Management and
promotegoodpracticesincorporategovernance.
TheAuditCommitteeissatisfiedthattheGroup’sinternalauditfunctionisadequatelyresourcedandhasappropriatestanding
withintheGroup.
CommuniCation with shaRehoLDeRs
Principle 14 Companies should engage in regular, effective and fair communication with shareholders.
WestrivefortimelinessandconsistencyinourdisclosurestostakeholdersanditistheGroup’spolicytokeepallstakeholders
informedofmaterialdevelopmentsthatwouldhaveanimpactontheGroupthroughannouncementsviaSGXNETandonthe
Group’swebsite.SuchannouncementsarecommunicatedonanimmediatebasisasrequiredundertheListingManualofthe
SGX-ST(the“ListingManual”),orassoonaspossiblewhereimmediatedisclosureisnotpracticable.
Regularbriefingsareconductedforanalystsandmedia,generallycoincidingwiththereleaseoftheGroup’squarterlyandfull
yearfinancialresults.ThematerialsusedinthesebriefingsarealsodisseminatedsimultaneouslyviaSGXNETintheinterestof
transparencyandismadepubliclyavailableonatimelyandnon-selectivebasis.
Management also actively engages institutional investors through face-to-face meetings, conference calls, non-deal road
showsandbyparticipatingininvestmentconferences.Wealsostrivetokeepretailinvestorsupdatedondevelopmentsinthe
Groupthroughtimelyannouncements,theGroup’swebsiteandthemedia.
Webelieveinregular,effectiveandfaircommunicationwithourshareholdersandarecommittedtohearingtheirviewsand
addressingtheirconcernswherepossible.Shareholderscanavailthemselvesofatelephoneoremailfeedbacklinethatgoes
directlytotheGroup’sManagementteam.
Principle 15 Companies should encourage greater shareholder participation at agms, and allow
shareholders the opportunity to communicate their views on various matters affecting
the company.
Shareholders are accorded the opportunity to raise relevant questions and to communicate their views at shareholders’
meetings.Votinginabsentiasuchasbymail,emailorfaxhasnotbeenimplementedduetoconcernsrelatingtoissuesof
informationcontrolandsecurity.
REPORT ON CORPORATE GOVERNANCE
ARA ASSET MANAGEMENT L IMITED70
REPORT ON CORPORATE GOVERNANCE
If any shareholder is unable to attend the shareholders’ meeting, he is allowed to appoint up to two proxies to vote on his
behalfatthemeetingthroughproxyformswhicharesenttogetherwiththeAnnualReportsorCirculars(asthecasemay
be).Thedulycompletedandsignedproxyformsisrequiredtobesubmitted48hoursbeforetheshareholders’meetingat
theCompany’sShareTransferAgent’soffice.Ateachshareholders’meeting,eachdistinctissueisproposedasaseparate
resolution.
The Chairpersons of the Audit, Nominating and Remuneration Committees attend the AGM of the Company to address any
queriesrelatingtotheworkofthecommittees.TheexternalauditorsalsoattendtheAGMtoaddressshareholders’queries
abouttheconductoftheauditandthepreparationandcontentoftheauditors’report.
WeviewtheAGMastheprincipalforumfordialoguewithshareholders,inparticularretailshareholders.TheCompanyhas
alsodesignatedcontactpersonswhoareavailabletoaddressqueriesfromstakeholdersfromtimetotime.
DeaLings in seCuRities
The Group has adopted an internal code which prohibits Directors of the Company and executives of the Group from dealing
in the Company’s shares as well as in the units of public-listed REITs managed by the Group, while in possession of unpublished
materialornon-publicpricesensitiveinformationinrelationtosuchsecuritiesandduringthe“black-outperiod”inrespective
jurisdictions. Inthecaseof listedentities inSingapore,the“black-out”periodisdefinedasonemonthbeforethedateof
announcementofquarterlyandfullyearresultsand(whereapplicable)anypropertyvaluations. InthecaseofaREITthat
islistedinHongKong,the“black-out”periodisdefinedas60daysimmediatelyprecedingthepublicationdateofthefull
yearresultsand30daysimmediatelyprecedingthepublicationdateofthehalf-yearresultsandquarterlyresults(ifany)(or
ifshorter,theperiodfromtheendoftherelevantfinancialyearorhalf-year/quarterperioduptothepublicationdateof
theresults).InthecaseofaREITthatisconcurrentlylistedinSingaporeandHongKong,bothpreceding“black-out”periods
shallbeapplied(andtakingtheviewofthemorerestrictiveorstringentregulationshouldtherebeanyconflictbetweenboth
periods).TheDirectorsoftheCompanyandexecutivesoftheGrouparealsodiscouragedfromdealing intheCompany’s
sharesandunitsofpublic-listedREITsmanagedbytheGrouponshort-termconsiderations.
TheCompanyhascompliedwithRule1207(19)oftheListingManualoftheSGX-ST.
inteResteD PeRson tRansaCtions
Disclosureofinterestedpersontransactions(“IPTs”)issetoutinpage131ofthisReport.AllIPTsaresubjecttoreviewbythe
AuditCommitteeatitsquarterlymeetingstoensurethatsuchtransactionsareconductedonanarm’slengthbasisandnot
prejudicialtotheinterestsoftheshareholders.ItwasnotedthattheIPTswerewithinthethresholdlimitssetoutunderChapter
9oftheListingManualofSGX-STandnoannouncementorshareholders’approvalwas,therefore,required.Thetransactions
had been conducted on an arm’s length basis and the procedures described in the Company’s Letter to Shareholders and
Depositorsdated12April2011hadbeencompliedwith.InadditiontotherequirementssetoutintheListingManual,the
BoardhasalsoadoptedapolicyofrequiringDirectorstodeclaretheirconflictsofinterest,ifanyandabstainfromvotingif
theyaresoconflicted.
ANNUAL REPORT 2011 71
Board meetings
audit Committee
nominating Committee
Remuneration Committee
name of Director
appointment attendance/ number of meetings
held
appointment attendance/ number of meetings
held
appointment attendance/ number of meetings
held
appointment attendance/ number of meetings
held
Mr Chiu Kwok Hung Justin
Chairman and Non-Executive Director
4/4 - N/A - N/A - N/A
Mr Lim HweeChiangJohn
Group CEO and Executive Director
4/4 - N/A - N/A - N/A
Mr Ip Tak Chuen Edmond
Non-Executive Director
4/4 - N/A - N/A Member 4/4
Mr Lee Yock Suan
Independent Non-Executive Director
4/4 Chairman 4/4 - N/A - N/A
Mr Lim How Teck
Independent Non-Executive Director
4/4 Member 4/4 Chairman 1/1 Member 4/4
Dr Cheng Mo Chi Moses
Independent Non-Executive Director
4/4 Member 3/4 Member 1/1 Chairman 4/4
Mr Colin Stevens Russel
Independent Non-Executive Director
4/4 Member 4/4 Member 1/1 Member 4/4
REPORT ON CORPORATE GOVERNANCE
ARA ASSET MANAGEMENT L IMITED72
REPORT ON CORPORATE GOVERNANCE
Dates oF initiaL aPPointment oF DiReCtoRs anD DiReCtoRshiPs in ListeD ComPanies
name of Director appointment Date of initialappointment/ Last Re-election
Directorships in Listed Companies
Mr Chiu Kwok HungJustin
Chairman andNon-Executive Director
23July2002/28 April 2011
ARA Asset Management Limited
CheungKong(Holdings)Limited
Mr Lim HweeChiangJohn
Group CEO and Executive Director
23July2002/29 April 2009
ARA Asset Management Limited
APN Property Group Limited
Teckwah Industrial Corporation Limited
Mr Ip Tak Chuen Edmond
Non-Executive Director 17 September 2007/26 April 2010
ARA Asset Management Limited
AVICInternationalHolding(HK)Limited(formerlyknownasCATICInternationalHoldingsLimited)
CheungKong(Holdings)Limited
Cheung Kong Infrastructure Holdings Limited
CKLifeSciencesInt’l.,(Holdings)Inc.
Excel Technology International Holdings Limited
Shougang Concord International Enterprises Company Limited
TOM Group Limited
Real Nutriceutical Group Limited (formerlyknownasRuinianInternationalLimited)
Mr Lee Yock Suan IndependentNon-Executive Director
17 September 2007/26 April 2010
ARA Asset Management Limited
Mr Lim How Teck IndependentNon-Executive Director
17 September 2007/28 April 2011
ARA Asset Management Limited
MewahInternationalInc.
Swissco Holdings Limited
Dr Cheng MoChi Moses
IndependentNon-Executive Director
17 September 2007/28 April 2011
ARA Asset Management Limited
China COSCO Holdings Company Limited
China Mobile Limited
China Resources Enterprise Limited
CityTelecom(H.K.)Limited
Guangdong Investment Limited
Hong Kong Exchanges and Clearing Limited
K.WahInternationalHoldingsLimited
Kader Holdings Company Limited
Liu Chong Hing Investment Limited
Tian An China Investments Company Limited
Towngas China Company Limited
Mr ColinStevens Russel
IndependentNon-Executive Director
17 September 2007/28 April 2011
ARA Asset Management Limited
Cheung Kong Infrastructure Holdings Limited
CKLifeSciencesInt’l.,(Holdings)Inc.
HuskyEnergyInc.
ANNUAL REPORT 2011 73
DIRECTORS’ REPORT
WearepleasedtosubmitthisannualreporttothemembersoftheCompanytogetherwiththeauditedfinancialstatements
forthefinancialyearended31December2011.
DiReCtoRs
The directors in office at the date of this report are as follows:
MrChiuKwokHungJustin(Chairman)
MrLimHweeChiangJohn(GroupCEO)
Mr Ip Tak Chuen Edmond
Mr Lee Yock Suan
Mr Lim How Teck
Dr Cheng Mo Chi Moses
Mr Colin Stevens Russel
DiReCtoRs’ inteRests
According to the Register of Directors’ Shareholdings kept by the Company, particulars of interests of directors who held office
attheendofthefinancialyear(includingthoseheldbytheirspousesandinfantchildren)inshares,debentures,warrantsand
shareoptionsintheCompanyandinrelatedcorporations(otherthanwholly-ownedsubsidiaries)areasfollows:
MrLimHweeChiangJohn,whobyvirtueofhisinterestintheCompany,isdeemedtohaveinterestsinthesubsidiariesofARA
AssetManagementLimited,atthebeginningandattheendofthefinancialyear.
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures,
warrantsorshareoptionsoftheCompany,orofrelatedcorporations,eitheratthebeginningorattheendofthefinancialyear.
Betweentheendofthefinancialyearand21January2012,exceptforMrLimHweeChiangJohn’sinterestintheCompany
which decreased from 5,971,660 shares to 4,651,660 shares, there were no changes in any of the above mentioned interests
intheCompany.
name of director and corporation in which interests are held
holdings registered in name of director or nominee
holdings in which director is deemed to have an interest
at 1.1.2011 at 31.12.2011 at 1.1.2011 at 31.12.2011
aRa asset management Limited (number of ordinary shares of $0.002 each)
MrLimHweeChiangJohn 1,653,600 5,971,660 255,570,400 281,127,440
Mr Lee Yock Suan 60,000 66,000 - -
Mr Lim How Teck 540,000 594,000 - -
Mr Colin Stevens Russel 18,000 19,800 - -
ARA ASSET MANAGEMENT L IMITED74
DIRECTORS’ REPORT
DiReCtoRs’ inteRests (cont’d)
Neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects
are,oroneofwhoseobjectsis,toenablethedirectorsoftheCompanytoacquirebenefitsbymeansoftheacquisitionof
sharesinordebenturesoftheCompanyoranyotherbodycorporate.
Except for salaries, bonuses and fees and those benefits that are disclosed in this report and in Note 26 to the financial
statements, since the end of the last financial year, no director has received or become entitled to receive, a benefit by reason
of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with
acompanyinwhichhehasasubstantialfinancialinterest.
shaRe oPtions
During the financial year, there were:
(i) nooptionsgrantedbytheCompanyoritssubsidiariestoanypersontotakeupunissuedsharesintheCompanyorits
subsidiaries; and
(ii) nosharesissuedbyvirtueofanyexerciseofoptiontotakeupunissuedsharesoftheCompanyoritssubsidiaries.
Asattheendofthefinancialyear,therewerenounissuedsharesoftheCompanyoritssubsidiariesunderoption.
auDit Committee
The members of the Audit Committee during the year and at the date of this report are:
• MrLeeYockSuan(Chairman),IndependentNon-ExecutiveDirector
• MrLimHowTeck,IndependentNon-ExecutiveDirector
• DrChengMoChiMoses,IndependentNon-ExecutiveDirector
• MrColinStevensRussel,IndependentNon-ExecutiveDirector
TheAuditCommitteeperformsthefunctionsspecifiedinSection201BoftheSingaporeCompanies’Act,Chapter50,theSGX
ListingManualandtheCodeofCorporateGovernance.
TheAuditCommitteehasheldfourmeetingsduringthefinancialyear.Inperformingitsfunctions,theAuditCommitteemet
with the Company’s external and internal auditors to review their audit plans, discuss the scope of their work, the results of
theirexaminationandevaluationoftheCompany’sinternalaccountingcontrolsystem.
ANNUAL REPORT 2011 75
DIRECTORS’ REPORT
auDit Committee (cont’d)
The Audit Committee also reviewed the following:
• assistanceprovidedbytheCompany’sofficerstotheinternalandexternalauditors;
• quarterlyfinancialinformationandannualfinancialstatementsoftheGroupandtheCompanypriortotheirsubmission
to the directors of the Company for adoption; and
• interestedpersontransactions(asdefinedinChapter9oftheSGXListingManual).
TheAuditCommitteehasfullaccesstomanagementandisgiventheresourcesrequiredforittodischargeitsfunctions.Ithas
fullauthorityandthediscretiontoinviteanydirectororexecutiveofficertoattenditsmeetings.TheAuditCommitteealso
recommendstheappointmentoftheexternalauditorsandreviewsthelevelofauditandnon-auditfees.
The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to
the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual
GeneralMeetingoftheCompany.
In appointing our auditors for the Company, subsidiaries and significant associated companies, we have complied with Rules
712and715oftheSGXListingManual.
Theauditors,KPMGLLP,haveindicatedtheirwillingnesstoacceptre-appointment.
On behalf of the Board of Directors
mR Chiu KwoK hung Justin
Director
mR Lim hwee Chiang John
Director
22 February 2012
ARA ASSET MANAGEMENT L IMITED76
STATEMENT BY DIRECTORS
In our opinion:
(a) thefinancialstatementssetoutonpages80to130aredrawnupsoastogiveatrueandfairviewofthestateof
affairsoftheGroupandoftheCompanyasat31December2011andoftheresults,changesinequityandcashflows
of the Group for the year ended on that date in accordance with the Singapore Financial Reporting Standards; and
(b) atthedateofthisstatement,therearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsas
andwhentheyfalldue.
TheBoardofDirectorshas,onthedateofthisstatement,authorisedthesefinancialstatementsforissue.
On behalf of the Board of Directors
mR Chiu KwoK hung Justin
Director
mR Lim hwee Chiang John
Director
22 February 2012
ANNUAL REPORT 2011 77
INDEPENDENT AUDITORS’ REPORT
RePoRt on the FinanCiaL statements
WehaveauditedtheaccompanyingfinancialstatementsofARAAssetManagementLimited(the“Company”)anditssubsidiaries
(the“Group”),whichcomprisethestatementsoffinancialpositionoftheGroupandtheCompanyasat31December2011,
theincomestatementandstatementofcomprehensiveincome,statementofchangesinequityandstatementofcashflows
of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information, as
setoutonpages80to130.
management’s ResPonsiBiLity FoR the FinanCiaL statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Singapore
Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation
offinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
auDitoRs’ ResPonsiBiLity
Our responsibility is toexpressanopinionon thesefinancial statementsbasedonouraudit. Weconductedouraudit in
accordancewithSingaporeStandardsonAuditing.Thosestandardsrequirethatwecomplywithethicalrequirementsand
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements.Theproceduresselecteddependontheauditor’sjudgement,includingtheassessmentoftherisksofmaterial
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesused
and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the
financialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
Members of the Company
ARA Asset Management Limited
ARA ASSET MANAGEMENT L IMITED78
INDEPENDENT AUDITORS’ REPORT
oPinion
In our opinion, the consolidated financial statements of the Group and the statement of financial position of the Company
present fairly, in all material respects, the financial position of the Group and of the Company as at 31 December 2011, and
itsfinancialperformance,changesinequityandcashflowsfortheyearthenendedinaccordancewithSingaporeFinancial
ReportingStandards.
KPmg LLP
Public Accountants and
Certified Public Accountants
singapore
22 February 2012
ANNUAL REPORT 2011 79
note
group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
assets
Intangible asset 21 - 798 - -
Plantandequipment 4 1,360 1,498 - -
Tenancy deposits 7 502 495 - -
Subsidiaries 27 - - 87,690 95,284
Associates 5 3,100 1,060 - -
Financial assets 6 96,920 133,658 - -
total non-current assets 101,882 137,509 87,690 95,284
Financial assets 6 24,764 15,418 - -
Trade and other receivables 7 30,616 26,372 5,304 3,369
Cashandcashequivalents 8 57,291 42,327 31,091 10,240
total current assets 112,671 84,117 36,395 13,609
total assets 214,553 221,626 124,085 108,893
equity
Share capital 1,537 1,397 1,537 1,397
Reserves 71,791 88,978 75,012 75,152
Accumulated profits 115,574 82,505 46,110 29,569
equity attributable to equity holders of the Company 188,902 172,880 122,659 106,118
non-controlling interests 659 638 - -
total equity 9 189,561 173,518 122,659 106,118
Liabilities
Loan and borrowings 10 268 387 - -
Deferred tax liabilities 12 117 142 - -
total non-current liabilities 385 529 - -
Trade and other payables 13 17,343 20,200 1,426 2,773
Derivative liabilities 14 717 - - -
Loans and borrowings 10 120 18,971 - -
Current tax payable 6,427 8,408 - 2
total current liabilities 24,607 47,579 1,426 2,775
total liabilities 24,992 48,108 1,426 2,775
total equity and liabilities 214,553 221,626 124,085 108,893
STATEMENTS OF FINANCIAL POSITIONAs at 31 December 2011
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
ARA ASSET MANAGEMENT L IMITED80
CONSOLIDATED INCOME STATEMENTYear ended 31 December 2011
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
group
2011 2010
note $’000 $’000
Revenue 15 112,148 102,129
Finance income 17 10,566 10,230
Other income 47 152
122,761 112,511
Administrative expenses (33,789) (30,819)
Operating lease expenses (2,239) (2,537)
Other expenses (6,147) (5,211)
Results from operating activities 80,586 73,944
Finance costs 17 (7,048) (871)
73,538 73,073
Share of profit of associates, net of tax 2,794 456
Profit before tax 76,332 73,529
Tax expense 18 (6,812) (9,319)
Profit for the year 16 69,520 64,210
Profit attributable to:
EquityholdersoftheCompany 68,202 63,812
Non-controlling interests 1,318 398
Profit for the year 69,520 64,210
earnings per share
Basicearningspershare(cents) 19 8.88 8.31
Dilutedearningspershare(cents) 19 8.88 8.31
ANNUAL REPORT 2011 81
CONSOLIDATED STATEMENT OFCOMPREHENSIVE INCOME Year ended 31 December 2011
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
group
2011 2010
$’000 $’000
Profit for the year 69,520 64,210
other comprehensive income
Translation differences relating to financial statements of foreign subsidiaries 163 (2,649)
Available-for-sale financial assets in fair value reserve (16,374) 14,363
Effective portion of changes in fair value of cash flow hedge (836) (28)
other comprehensive income for the year, net of tax (17,047) 11,686
total comprehensive income for the year 52,473 75,896
total comprehensive income attributable to:
EquityholdersoftheCompany 51,155 75,498
Non-controlling interests 1,318 398
total comprehensive income for the year 52,473 75,896
Therearenoincometaxattributabletotheitemsinothercomprehensiveincome.
ARA ASSET MANAGEMENT L IMITED82
CONSOLIDATED STATEMENT OFCOMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OFCHANGES IN EQUITY
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
Year ended 31 December 2011
attributable to equity holders of the Company
Reserves
sharecapital
sharepremium
Foreign currency
translationreserve
Fair value
reservehedgingreserve
accumulatedprofits total
non-controlling interests
totalequity
group note $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
At1January2010 1,164 75,413 (773) 2,766 147 49,310 128,027 (371) 127,656
total comprehensive income for the year
Profit for the year - - - - - 63,812 63,812 398 64,210
Total other comprehensive income 9 - - (2,649) 14,363 (28) - 11,686 - 11,686
total comprehensive income for the year - - (2,649) 14,363 (28) 63,812 75,498 398 75,896
transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Issue of bonus shares 9 233 (233) - - - - - - -
Expenses on issue of bonus shares 9 - (28) - - - - (28) - (28)
Dividendstoequityholders 9 - - - - - (30,617) (30,617) - (30,617)
Waiverofshareholders’ loan - - - - - - - 211 211
total contributions by and distributions to owners 233 (261) - - - (30,617) (30,645) 211 (30,434)
Changes in ownership interests in subsidiary without a change
in control
Contribution from non-controlling interest - - - - - - - 400 400
Total changes in ownership interest in subsidiaries - - - - - - - 400 400
Total transactions with owners 233 (261) - - - (30,617) (30,645) 611 (30,034)
At 31 December 2010 1,397 75,152 (3,422) 17,129 119 82,505 172,880 638 173,518
ANNUAL REPORT 2011 83
attributable to equity holders of the Company
Reserves
sharecapital
sharepremium
Foreign currency
translationreserve
Fair value
reservehedgingreserve
accumulatedprofits total
non-controlling interests
totalequity
group note $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
At1January2011 1,397 75,152 (3,422) 17,129 119 82,505 172,880 638 173,518
total comprehensive income for the year
Profit for the year - - - - - 68,202 68,202 1,318 69,520
Total other comprehensive income 9 - - 163 (16,374) (836) - (17,047) - (17,047)
total comprehensive income for the year - - 163 (16,374) (836) 68,202 51,155 1,318 52,473
transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Issue of bonus shares 9 140 (140) - - - - - - -
Waiverofshareholders’loan - - - - - - - 231 231
Dividendstoequityholders 9 - - - - - (35,133) (35,133) (1,528) (36,661)
Total transactions with owners 140 (140) - - - (35,133) (35,133) (1,297) (36,430)
At 31 December 2011 1,537 75,012 (3,259) 755 (717) 115,574 188,902 659 189,561
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
CONSOLIDATED STATEMENT OFCHANGES IN EQUITYYear ended 31 December 2011
ARA ASSET MANAGEMENT L IMITED84
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
CONSOLIDATED STATEMENT OFCHANGES IN EQUITY
CONSOLIDATED STATEMENT OFCASH FLOWSYear ended 31 December 2011
group
2011 2010
note $’000 $’000
Cash flows from operating activities
Profit for the year 69,520 64,210
Adjustments for:
Amortisation of intangible asset 21 798 652
Depreciation 578 466
Share of profit of associates (2,794) (456)
Interest income (831) (718)
Interest expense 428 871
Distribution income (9,644) (7,599)
Gain on disposal of subsidiary 22 - (203)
Impairment loss on available-for-sale financial asset 541 -
Loss/(gain)onfairvaluationofheld-for-tradingsecurities 6,079 (1,710)
Loss/(gain)ondisposalofplantandequipment 1 (105)
Management fees received/receivable in units of real estate investment trusts (44,811) (51,324)
Tax expense 6,812 9,319
26,677 13,403
Change in trade and other receivables (2,271) 26
Change in trade and other payables (2,857) 2,440
Cash generated from operating activities 21,549 15,869
Tax paid (8,818) (5,873)
Proceeds from sale of units in real estate investment trusts 27,033 38,472
Distribution income received 9,644 7,599
net cash from operating activities 49,408 56,067
Cash flows from investing activities
Dividends received from associates 828 -
Proceeds from interest bearing loan to a private fund 8,000 -
Proceeds from disposal of available-for-sale securities 12,390 -
Interest received 831 718
Investment in associate (4) -
Disposal of subsidiary, net of cash disposed 22 - 24
Purchaseofplantandequipment (444) (1,018)
Proceedsfromdisposalofplantandequipment 3 246
Redemption/(purchase)ofunquotedavailable-for-salesecurities 12 (12,343)
Purchaseofquotedavailable-for-salesecurities - (16,334)
Contribution from non-controlling interest - 400
net cash from/(used in) investing activities 21,616 (28,307)
ANNUAL REPORT 2011 85
Theaccompanyingnotesformanintegralpartofthesefinancialstatements.
CONSOLIDATED STATEMENT OFCASH FLOWSYear ended 31 December 2011
group
2011 2010
note $’000 $’000
Cash flows from financing activities
Repayment of borrowings (18,851) -
Dividends paid (36,661) (30,617)
Interest paid (428) (871)
Net(payment)/proceedsoffinanceleaseliabilities (119) 319
net cash used in financing activities (56,059) (31,169)
net increase/(decrease) in cash and cash equivalents 14,965 (3,409)
Cashandcashequivalentsat1January 42,327 46,148
Effect of exchange rate fluctuations on cash held (1) (412)
Cash and cash equivalents at 31 December 8 57,291 42,327
ARA ASSET MANAGEMENT L IMITED86
CONSOLIDATED STATEMENT OFCASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
Thesenotesformanintegralpartofthefinancialstatements.
ThefinancialstatementswereauthorisedforissuebytheBoardofDirectorson22February2012.
1. DomiCiLe anD aCtiVities
ARAAssetManagementLimited(the“Company”)is incorporatedasanexemptedcompanywithlimitedliability in
BermudaandhasitsregisteredofficeatClarendonHouse,2ChurchStreet,HamiltonHM11,Bermuda.Theprincipal
placeofbusinessisat6TemasekBoulevard,#16-02SuntecTower4,Singapore038986.TheCompanywasadmitted
to the official list of the main board of the Singapore Exchange Securities Trading Limited (the “SGX-ST”)
on2November2007.
TheprincipalactivityoftheCompanyisthatofinvestmentholding.
The principal activities of the subsidiaries are those relating to the provision of real estate fund management services,
including acting as the manager for public-listed real estate investment trusts and private real estate funds, as well as
theprovisionofrealestatemanagementservicesandcorporatefinanceadvisoryservices.
The financial statements of the Company as at and for the financial year ended 31 December 2011 comprise the
Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the
Group’sinterestinassociates.
2. Basis oF PRePaRation
(a) statement of compliance
ThefinancialstatementshavebeenpreparedinaccordancewiththeSingaporeFinancialReportingStandards(“FRS”).
(b) Basis of measurement
Thefinancialstatementshavebeenpreparedonthehistoricalcostbasisexceptasotherwisedescribedbelow.
(c) Functional and presentation currency
These financial statements are presented in Singapore dollars, which is the Company’s functional currency. All
financial information presented in Singapore dollars have been rounded to the nearest thousand, unless
otherwisestated.
ANNUAL REPORT 2011 87
NOTES TO THE FINANCIAL STATEMENTS
2. Basis oF PRePaRation (cont’d)
(d) use of estimates and judgements
The preparation of the financial statements in conformity with FRSs requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities,incomeandexpenses.Actualresultsmaydifferfromtheseestimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognisedintheperiodinwhichtheestimatesarerevisedandinanyfutureperiodsaffected.
Information about critical judgements in applying accounting policies that have the most significant effect on the
amounts recognised in the financial statements is included in Notes 6, 11, 14 and 23 – valuation and measurement
offinancialassetsandfinancialliabilities.
(e) Changes in accounting policies
Identification of related party relationships and related party disclosures
From1January2011,theGrouphasappliedtherevisedFRS24Related Party Disclosures (2010)to identifyparties
that are related to the Group and to determine the disclosures to be made on transactions and outstanding balances,
including commitments, between the Group and its related parties. FRS 24 (2010) improved the definition of a
related party in order to eliminate inconsistencies and ensure symmetrical identification of relationships between
twoparties.
The adoption of FRS 24 (2010) has not resulted in additional parties being identified as related to the Group.
Transactions and outstanding balances, including commitments, with these related parties for the current and
comparativeyearshavebeendisclosedaccordinglyinNotes7,13and26tothefinancialstatements.Theadoption
ofFRS24 (2010)affectsonly thedisclosuresmade in thefinancial statements. There isnofinancialeffectonthe
resultsandfinancialpositionoftheGroupforthecurrentandpreviousfinancialyears.Accordingly,theadoptionof
FRS24(2010)hasnoimpactonearningspershare.
3. signiFiCant aCCounting PoLiCies
The accounting policies set out below have been applied consistently to all periods presented in these financial
statements,andhavebeenappliedconsistentlybyGroupentities,exceptasexplainedinNote2(e),whichaddresses
changesinaccountingpolicies.
ARA ASSET MANAGEMENT L IMITED88
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(a) Basis of consolidation
(i) Business combinations
Businesscombinationsareaccountedforusingtheacquisitionmethodasattheacquisitiondate,whichisthedate
onwhichcontrolistransferredtotheGroup.Controlisthepowertogovernthefinancialandoperatingpoliciesof
anentitysoastoobtainbenefitsfromitsactivities.Inassessingcontrol,theGrouptakesintoconsiderationpotential
votingrightsthatarecurrentlyexercisable.
Theconsiderationtransferreddoesnotincludeamountsrelatedtothesettlementofpre-existingrelationships.Such
amountsaregenerallyrecognisedinprofitorloss.
Costsrelatedtotheacquisition,otherthanthoseassociatedwiththeissueofdebtorequitysecurities,thattheGroup
incursinconnectionwithabusinesscombinationareexpensedasincurred.
Anycontingentconsiderationpayableisrecognisedatfairvalueattheacquisitiondate.Ifthecontingentconsideration
is classifiedas equity, it is not remeasuredand settlement is accounted forwithin equity. Otherwise, subsequent
changestothefairvalueofthecontingentconsiderationarerecognisedinprofitorloss.
For non-controlling interests that are present ownership interests and entitle their holders to a proportionate share
oftheacquiree’snetassetsintheeventofliquidation,theGroupelectsonatransaction-by-transactionbasiswhether
to measure them at fair value, or at the non-controlling interests’ proportionate share of the recognised amounts of
the acquiree’s identifiable net assets, at the acquisition date. All other non-controlling interests are measured at
acquisition-datefairvalueor,whenapplicable,onthebasisspecifiedinanotherstandard.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the
consolidatedfinancialstatementsfromthedatethatcontrolcommencesuntilthedatethatcontrolceases.
The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted
bytheGroup.Lossesapplicabletothenon-controlling interests inasubsidiaryareallocatedtothenon-controlling
interestsevenifdoingsocausesthenon-controllingintereststohaveadeficitbalance.
(iii) Acquisitions from entities under common control
Business combinations arising from transfers of interests in entities that are under the control of the shareholder
thatcontrolstheGroupareaccountedforasiftheacquisitionhadoccurredatthebeginningoftheearliestcomparative
yearpresentedor,iflater,atthedatethatcommoncontrolwasestablished;forthispurposecomparativesarerestated.
The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group
controllingshareholder’sconsolidatedfinancial statements. Thecomponentsofequityof theacquiredentitiesare
addedtothesamecomponentswithinGroupequityandanygain/lossarisingisrecogniseddirectlyinequity.
ANNUAL REPORT 2011 89
NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(a) Basis of consolidation (cont’d)
(iv) Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling
interestsandtheothercomponentsofequityrelatedtothesubsidiary.Anysurplusordeficitarisingonthelossof
controlisrecognisedinprofitorloss.IftheGroupretainsanyinterestintheprevioussubsidiary,thensuchinterest
ismeasuredat fair valueat thedate thatcontrol is lost. Subsequently, it isaccounted forasanequity-accounted
investeeorasanavailable-for-salefinancialassetdependingonthelevelofinfluenceretained.
(v) Investments in associates (equity-accounted investees)
Associates are companies in which the Group has significant influence, but not control, over the financial and
operatingpoliciesof theseentities. Significant influence ispresumed toexistwhen theGroupholdsbetween20%
and50%ofthevotingpowerofanotherentity.Investmentsinassociatesareaccountedforusingtheequitymethod
(equity-accountedinvestees)andarerecognisedinitiallyatcost.Thecostoftheinvestmentsincludestransactioncosts.
The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income
of the equity-accounted investees, after adjustments to align the accounting policies of the equity-accounted
investees with those of the Group, from the date that significant influence commences until the date the significant
influenceceases.
WhentheGroup’sshareof lossesexceedsits interest inanequity-accountedinvestee,thecarryingamountofthat
interest, including any long-term investments, is reduced to zero, and the recognition of further losses is discontinued
excepttotheextentthattheGrouphasanobligationorhasmadepaymentsonbehalfoftheinvestee.
(vi) Acquisition of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners
and therefore the carrying amounts of assets and liabilities are not changed and goodwill is not recognised as a result
of such transactions. Theadjustments tonon-controlling interestsarebasedonaproportionateamountof thenet
assets of the subsidiary. Any difference between the adjustment to non-controlling interests and the fair value of
considerationpaidisrecogniseddirectlyinequityandpresentedaspartofequityattributabletoownersoftheCompany.
(vii) 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
associates are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised
lossesareeliminatedinthesamewayasunrealisedgains,butonlytotheextentthatthereisnoevidenceofimpairment.
ARA ASSET MANAGEMENT L IMITED90
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(a) Basis of consolidation (cont’d)
(viii) Accounting for subsidiaries and associates
Investments in subsidiaries and associates are stated in the Company’s statement of financial position at cost less
accumulatedimpairmentlosses.
(b) Foreign currencies
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the
exchange ratesat thedatesof the transactions. Monetaryassetsand liabilitiesdenominated in foreigncurrencies
attheendofthereportingdateareretranslatedtothefunctionalcurrencyattheexchangerateatthatdate.The
foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency
at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in
foreigncurrencytranslatedattheexchangerateattheendoftheyear.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated
tothefunctionalcurrencyattheexchangerateatthedatethatthefairvaluewasdetermined.Non-monetaryitems
in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the
dateofthetransaction.Foreigncurrencydifferencesarisingonretranslationarerecognisedinprofitorloss,except
for differences arising on the retranslation of available-for-sale equity instruments, or qualifying cash flow
hedges,whicharerecognisedinothercomprehensiveincome.
(ii) Foreign operations
The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates at the end of the
reporting period. The income and expenses of foreign operations are translated to Singapore dollars at exchange
ratesatthedatesofthetransactions.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency
translationreserve(“translationreserve”)inequity.However,iftheoperationisanonwholly-ownedsubsidiary,then
the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When
a foreign operation is disposed of such that control or significant influence is lost, the cumulative amount in the
translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on
disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation
whileretainingcontrol,therelevantproportionofthecumulativeamountisreattributedtonon-controllinginterests.
When the Group disposes of only part of its investment in an associate that includes a foreign operation while
retainingsignificantinfluence,therelevantproportionofthecumulativeamountisreclassifiedtoprofitorloss.
ANNUAL REPORT 2011 91
NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(b) Foreign currencies (cont’d)
(ii) Foreign operations (cont’d)
Whenthesettlementofamonetary itemreceivable fromorpayable toaforeignoperation isneitherplannednor
likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered
toformpartofanetinvestmentinaforeignoperation.Thesearerecognisedinothercomprehensiveincome,and
arepresentedinthetranslationreserveinequity.
(c) Plant and equipment
(i) Recognition and measurement
Itemsofplantandequipmentarestatedatcostlessaccumulateddepreciationandaccumulatedimpairmentlosses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that is
integraltothefunctionalityoftherelatedequipmentiscapitalisedaspartofthatequipment.
Whenpartsofanitemofplantandequipmenthavedifferentusefullives,theyareaccountedforasseparateitems
(majorcomponents)ofplantandequipment.
The gain or loss on disposal of an item of plant and equipment is determined by comparing the proceeds from
disposalwiththecarryingamountofplantandequipment,andisrecognisednetwithinotherincome/otherexpenses
inprofitorloss.
(ii) Subsequent costs
Thecostofreplacingacomponentofanitemofplantandequipmentisrecognisedinthecarryingamountofthe
item if it is probable that the future economic benefits embodied within the component will flow to the Group, and
itscostcanbemeasuredreliably.Thecarryingamountofthereplacedcomponentisderecognised.Thecostsofthe
day-to-dayservicingofplantandequipmentarerecognisedinprofitorlossasincurred.
(iii) Depreciation
Depreciationisbasedonthecostofanasset less itsresidualvalue.Significantcomponentsof individualassetsare
assessed and if a component has a useful life that is different from the remainder of that asset, that component is
calculatedseparately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component
ofanitemofplantandequipment.Leasedassetsaredepreciatedovertheshorteroftheleasetermandtheiruseful
livesunlessitisreasonablycertainthattheGroupwillobtainownershipbytheendoftheleaseterm.
ARA ASSET MANAGEMENT L IMITED92
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(c) Plant and equipment (cont’d)
(iii) Depreciation (cont’d)
The estimated useful lives for the current and comparative years are as follows:
Fittingsandofficeequipment – 3to5years
Motor vehicles – 5 years
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted
ifappropriate.
(d) intangible asset
Goodwill
Goodwill represents the excess of:
• thefairvalueoftheconsiderationtransferred;plus
• therecognisedamountofanynon-controllinginterestsintheacquiree;plus
• ifthebusinesscombinationisachievedinstages,thefairvalueoftheexistingequityinterestintheacquiree,
overthenetrecognisedamount(generallyfairvalue)oftheidentifiableassetsacquiredandliabilitiesassumed.
Whentheexcessisnegative,abargainpurchasegainisrecognisedimmediatelyinprofitorloss.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, the
carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such
aninvestmentisnotallocatedtoanyasset,includinggoodwill,thatformspartofthecarryingamountoftheequity-
accountedinvestee.
Acquiredcontractualright
Intangible asset of the Group represents an acquired contractual right and is measured at cost less accumulated
amortisationandimpairmentlosses.Intangibleassetsareamortisedinprofitorlossonastraight-linebasisovertheir
estimatedusefullivesfromthedateofacquisitionovertheperiodasstatedineachcontract.Theestimateduseful
lifeforthecurrentandcomparativeyearsis2years.
Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted
ifappropriate.
ANNUAL REPORT 2011 93
NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(e) Financial instruments
(i) Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other
financialassets(includingassetsdesignatedatfairvaluethroughprofitor loss)arerecognisedinitiallyonthetrade
date,whichisthedatetheGroupbecomesapartytothecontractualprovisionsoftheinstrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially
alltherisksandrewardsofownershipofthefinancialassetaretransferred.Anyinterestintransferredfinancialassets
thatiscreatedorretainedbytheGroupisrecognisedasaseparateassetorliability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to
realisetheassetandsettletheliabilitysimultaneously.
The Group classifies non-derivative financial assets into the following categories: financial assets at fair value through
profitorloss,loansandreceivablesandavailable-for-salefinancialassets.
Financial assets at fair value through profit or loss
A financial asset is classified at fair value through profit or loss if it is classified as held-for-trading or is designated as
suchuponinitialrecognition.FinancialassetsaredesignatedatfairvaluethroughprofitorlossiftheGroupmanages
such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s
documentedriskmanagementorinvestmentstrategy.Attributabletransactioncostsarerecognisedinprofitorloss
asincurred.Financialassetsatfairvaluethroughprofitorlossaremeasuredatfairvalue,andchangesthereinare
recognisedinprofitorloss.
Financialassetsdesignatedatfairvaluethroughprofitorlosscompriseequitysecuritiesthatotherwisewouldhave
beenclassifiedasavailable-for-sale.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active
market.Suchassetsarerecognisedinitiallyatfairvalueplusanydirectlyattributabletransactioncosts.Subsequent
to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less
anyimpairmentlosses.
Loans and receivables comprise interest-bearing loan to a private fund, trade and other receivables and cash and cash
equivalents.
Cashandcashequivalentscomprisecashbalancesandbankdepositswithoriginalmaturitiesofthreemonthsorless.
ARA ASSET MANAGEMENT L IMITED94
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(e) Financial instruments (cont’d)
(i) Non-derivative financial assets (cont’d)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are
notclassifiedinanyoftheabovecategoriesoffinancialassets.Available-for-salefinancialassetsareinitiallyrecognised
atfairvalueplusanydirectlyattributabletransactioncosts.Subsequenttoinitialrecognition,theyaremeasuredat
fairvalueandchanges therein,other than impairment losses (seeNote3(f)(i))andforeigncurrencydifferenceson
available-for-saledebt instruments(seeNote3(b)(i)),arerecognisedinothercomprehensive incomeandpresented
inthefairvaluereserveinequity.Whenaninvestmentisderecognised,thecumulativegainorlossaccumulatedin
equityisreclassifiedtoprofitorloss.
Available-for-salefinancialassetscomprisesequitysecurities.
(ii) Non-derivative financial liabilities
All financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to
thecontractualprovisionsoftheinstrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to
realisetheassetandsettletheliabilitysimultaneously.
The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial
liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition,thesefinancialliabilitiesaremeasuredatamortisedcostusingtheeffectiveinterestmethod.
Otherfinancialliabilitiescompriseloansandborrowings,andtradeandotherpayables.
(iii) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are
recognisedasadeductionfromequity,netofanytaxeffects.
ANNUAL REPORT 2011 95
NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(e) Financial instruments (cont’d)
(iv) Derivative financial instruments, including hedging accounting
TheGroupholdsderivativefinancialinstrumentstohedgeitsforeigncurrencyriskexposures.Embeddedderivatives
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
valuethroughprofitorloss.
On initial designation of the derivative as the hedging instrument, the Group formally documents the relationship
between the hedging instrument and hedged item, including the risk management objectives and strategy in
undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the
effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge
relationshipaswellasonanongoingbasis,ofwhetherthehedginginstrumentsareexpectedtobe“highlyeffective”
in offsetting the changes in the fair value or cash flows of the respective hedged items during the period for which
thehedgeisdesignated.
For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should
presentanexposuretovariationsincashflowsthatcouldultimatelyaffectreportedprofitorloss.
Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when
incurred.Subsequenttoinitialrecognition,derivativesaremeasuredatfairvalue,andchangesthereinareaccounted
forasdescribedbelow.
Cash flow hedges
Whenaderivativeisdesignatedasthehedginginstrumentinahedgeofthevariabilityincashflowsattributableto
a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could
affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other
comprehensiveincomeandpresentedinthehedgingreserveinequity.Anyineffectiveportionofchangesinthefair
valueofthederivativeisrecognisedimmediatelyinprofitorloss.
Whenthehedgeditemisanon-financialasset,theamountcalculatedinequityis includedinthecarryingamount
oftheassetwhentheassetisrecognised.Inothercases,theamountaccumulatedinequityisreclassifiedtoprofit
or loss inthesameperiodthatthehedged itemaffectsprofitor loss. If thehedging instrumentno longermeets
the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, then
hedgeaccountingisdiscontinuedprospectively.Iftheforecasttransactionisnolongerexpectedtooccur,thenthe
balanceinequityisreclassifiedinprofitorloss.
ARA ASSET MANAGEMENT L IMITED96
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(e) Financial instruments (cont’d)
(iv) Derivative financial instruments, including hedging accounting (cont’d)
Other non-trading derivatives
Whenaderivativefinancialinstrumentisnotdesignatedinahedgerelationshipthatqualifiesforhedgeaccounting,
allchangesinitsfairvaluearerecognisedimmediatelyinprofitorloss.
(f) impairment
(i) Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting period to
determinewhetherthereisobjectiveevidencethatitisimpaired.Afinancialassetisimpairedifobjectiveevidence
indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has a negative
effectontheestimatedfuturecashflowsofthatassetthatcanbeestimatedreliably.
Objectiveevidencethatfinancialassets(includingequitysecurities)areimpairedcanincludedefaultordelinquency
by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise,
indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or
issuers in the Group, and economic conditions that correlate with defaults or the disappearance of an active market
forasecurity.Inaddition,foraninvestmentinanequitysecurity,asignificantorprolongeddeclineinitsfairvalue
belowitscostisobjectiveevidenceofimpairment.
Loans and receivables
TheGroupconsidersevidenceofimpairmentforloansandreceivablesatbothaspecificassetandcollectivelevel.All
individually significant loans and receivables are assessed for specific impairment. All individually significant
receivables found not to be specifically impaired are then collectively assessed for any impairment that has been
incurredbutnotyetidentified.Loansandreceivablesthatarenotindividuallysignificantarecollectivelyassessedfor
impairmentbygroupingtogetherloansandreceivableswithsimilarriskcharacteristics.
In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of
recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic
andcreditconditionsaresuchthattheactuallossesarelikelytobegreaterorlessthansuggestedbyhistoricaltrends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between
its carrying amount and the present value of the estimated future cash flows, discounted at the asset’s original
effectiveinterestrate.Lossesarerecognisedinprofitorlossandreflectedinanallowanceaccountagainstloansand
receivables.Interestontheimpairedassetcontinuestoberecognised.Whenasubsequentevent(e.g.repaymentby
adebtor) causes theamountof impairment loss todecrease, thedecrease in impairment loss is reversed through
profitorloss.
ANNUAL REPORT 2011 97
NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(f) impairment (cont’d)
(i) Non-derivative financial assets (cont’d)
Available-for-sale financial assets
Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the
fairvaluereserveinequitytoprofitorloss.Thecumulativelossthatisreclassifiedfromequitytoprofitorlossisthe
differencebetweentheacquisitioncost,netofanyprincipal repaymentandamortisation,andthecurrent fairvalue,
less any impairment loss recognised previously in profit or loss. Changes in impairment provisions attributable to
applicationoftheeffectiveinterestmethodarereflectedasacomponentofinterestincome.
If, inasubsequentperiod,thefairvalueofanimpairedavailable-for-saledebtsecurityincreasesandtheincreasecan
be related objectively to an event occurring after the impairment loss was recognised in profit or loss, then the
impairment loss is reversed. The amount of the reversal is recognised in profit or loss. However, any subsequent
recoveryinthefairvalueofanimpairedavailable-for-saleequitysecurityisrecognisedinothercomprehensiveincome.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each
reportingdate todeterminewhether there isany indicationof impairment. Ifanysuch indicationexists, thenthe
assets’recoverableamount isestimated.Forgoodwill,therecoverableamount isestimatedeachyearatthesame
time.Animpairmentlossisrecognisedifthecarryingamountofanassetexceedsitsestimatedrecoverableamount.
Impairmentlossesarerecognisedinprofitorloss.Impairmentlossesrecognisedinpriorperiodsareassessedateach
reportingdateforanyindicationthatthelosshasdecreasedornolongerexists. Animpairmentloss isreversedif
therehasbeenachangeintheestimatesusedtodeterminetherecoverableamount.Animpairmentlossisreversed
only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined,netofdepreciationoramortisation,ifnoimpairmentlosshadbeenrecognised.
(g) Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as
finance leases. Upon initial recognition, the leasedasset ismeasuredat anamount equal to the lowerof its fair
valueandthepresentvalueoftheminimumleasepayments.Subsequenttoinitialrecognition,theassetisaccounted
forinaccordancewiththeaccountingpolicyapplicabletothatasset.
OtherleasesareoperatingleasesandarenotrecognisedintheGroup’sstatementoffinancialposition.
(h) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the
lease.Leaseincentivesreceivedarerecognisedinprofitorlossasanintegralpartofthetotalleaseexpense,overthe
termofthelease.
ARA ASSET MANAGEMENT L IMITED98
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(h) Lease payments (cont’d)
Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction
oftheoutstandingliability. Thefinancelease isallocatedtoeachperiodduringthe leasetermsoastoproducea
constantperiodicrateofinterestontheremainingbalanceoftheliability.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of
theleasewhentheleaseadjustmentisconfirmed.
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A
specificassetisthesubjectofaleaseiffulfilmentofthearrangementisdependentontheuseofthatspecificasset.
An arrangement conveys the right to use the asset if the arrangement conveys to the Group the right to control the
useoftheunderlyingasset.
At interception or upon reassessment of the arrangement, the Group separates payments and other consideration
requiredbysuchanarrangementintothosefortheleaseandthoseforotherelementsonthebasisoftheirrelative
fairvalues.IftheGroupconcludesforafinanceleasethatitisimpracticabletoseparatethepaymentsreliably,then
anassetanda liabilityarerecognisedatanamountequal tothefairvalueoftheunderlyingasset. Subsequently,
the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the
Group’sincrementalborrowingrate.
(i) employee benefits
(i) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions
into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations
for contributions to defined contribution pension plans are recognised as an employee benefit expense in
profitorlossintheperiodsduringwhichservicesarerenderedbyemployees.
(ii) Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided. A liability is recognised for the amount expected to be paid under short-term
cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past
serviceprovidedbytheemployee,andtheobligationcanbeestimatedreliably.
ANNUAL REPORT 2011 99
NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(j) Revenue recognition
(i) Real estate investment trust (“REIT”) management fees
REIT management fees, comprising base and performance fees, are derived from the management of REITs and are
determined based on the value of the real estate assets or total gross assets under management and net property
incomeoftheREITsmanaged,respectively.Thesefeesarerecognisedonanaccrualbasis.
(ii) Acquisition and performance fees
AcquisitionfeesrelatetofeesearnedinrelationtotheacquisitionofpropertiesbyREITsandalsoincludescorporate
financialadvisoryfeesearnedinrelationtotheacquisitionofpropertiesbyREITs.Theacquisitionfeesaredetermined
basedonthevalueofthepropertiesacquiredandarerecognisedwhentheserviceshavebeenrendered.Corporate
finance advisory fees are determined based on contracted terms and are recognised when the services have been
rendered.
Performance fees relate to fees earned in relation to private real estate funds where the returns of the private real
estatefundsexceedcertainspecifiedhurdles.
(iii) Portfolio management fees
Portfolio management fees are derived from the management of private real estate funds and are determined based on
committedcapital,contributedcapital,portfoliovalueorinvestedcapital.Thesefeesarerecognisedonanaccrualbasis.
(iv) Real estate management service fees
Real estate management service fees are derived from the provision of property management services and convention
andexhibitionservicesrendered.Thesefeesincludemarketingservicesfees,advertisingfeesandcommissionsand
promotioncommissions,andarerecognisedonanaccrualbasis.
(k) government grants – Jobs Credit scheme
CashgrantsreceivedfromthegovernmentinrelationtotheJobsCreditSchemearerecognisedasotherincomeupon
receipt.Theschemewasdiscontinuedwiththefinalpaymenton30June2010.
(l) Finance income and finance costs
Financeincomecomprisesinterestincomeonfundsinvested(includingavailable-for-salefinancialassets),distribution
income, gains on the disposal of available-for-sale financial assets, fair value gains on financial assets at fair value
through profit or loss and gains on hedging instruments that are recognised in profit or loss. Interest income is
recognisedas itaccrues inprofitor loss,using theeffective interestmethod. Distribution income is recognised in
profitorlosswhentheunitholder’srighttoreceivepaymentisestablished.
ARA ASSET MANAGEMENT L IMITED100
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(l) Finance income and finance costs (cont’d)
Finance costs comprise interest expense on financial liabilities, fees incurred in connection with the arrangement of
debt facility, losses on disposal of available-for-sale financial assets, fair value losses on financial assets at fair value
throughprofitorloss,impairmentlossesrecognisedonfinancialassets(otherthantradereceivables),andlosseson
hedginginstrumentsthatarerecognisedinprofitorloss.
Borrowingcoststhatarenotdirectlyattributabletotheacquisition,constructionorproductionofaqualifyingasset
arerecognisedinprofitorlossusingtheeffectiveinterestmethod.
Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on
whetherforeigncurrencymovementsareinanetgainornetlossposition.
(m) tax
Taxexpensecomprisescurrentanddeferredtax.Currenttaxanddeferredtaxisrecognisedinprofitorlossexcepttothe
extentthatitrelatestoabusinesscombination,oritemsrecogniseddirectlyinequityorinothercomprehensiveincome.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted
orsubstantivelyenactedatthereportingdate,andanyadjustmenttotaxpayableinrespectofpreviousyears.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities
forfinancialreportingpurposesandtheamountsusedfortaxationpurposes.Deferredtaxisnotrecognisedfor:
• temporarydifferencesontheinitialrecognitionofassetsorliabilitiesinatransactionthatisnotabusiness
combination and that affects neither accounting nor taxable profit or loss;
• temporarydifferencesrelatedtoinvestmentsinsubsidiariesandassociatestotheextentthatitisprobable
that they will not reverse in the foreseeable future; and
• taxabletemporarydifferencesarisingontheinitialrecognitionofgoodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse,
basedonthelawsthathavebeenenactedorsubstantivelyenactedbythereportingdate.
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 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
berealisedsimultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the
extent that it isprobable that future taxableprofitswillbeavailableagainstwhich theycanbeutilised. Deferred
tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the
relatedtaxbenefitwillberealised.
ANNUAL REPORT 2011 101
NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(m) tax (cont’d)
In the ordinary course of business, there are many transactions and calculations for which the ultimate tax
treatment is uncertain. Therefore, the Group recognises tax liabilities based on estimates of whether additional
taxes and interest will be due. These tax liabilities are recognised when the Group believes that certain positions
may not be fully sustained upon review by tax authorities, despite the Group’s belief that its tax return positions
are supportable. The Group believes that its accruals for tax liabilities are adequate for all open tax years
basedonitsassessmentofmanyfactorsincludinginterpretationsoftaxlawandpriorexperience.Thisassessment
reliesonestimatesandassumptionsandmayinvolveaseriesofmultifacetedjudgmentsaboutfutureevents.New
information may become available that causes the Group to change its judgment regarding the adequacy of
existing tax liabilities, such changes to tax liabilities will impact tax expense in the period that such a determination
ismade.
(n) Key management personnel
Key management personnel of the Group are those persons having the authority and responsibility for planning,
directing and controlling the activities of the entity. The directors of the Company are considered as key
managementpersonneloftheGroup.
(o) 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
othercomponents. Alloperating segments’operating resultsare reviewedmonthlyby theGroupChiefExecutive
Officer (“Group CEO”) to make decisions about resources to be allocated to the segment and assess its
performance,andforwhichdiscretefinancialinformationisavailable.
Segment results reported to the Group CEO include items directly attributable to a segment as well as those that
can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the
Company’sheadquarters),headofficeexpenses,financeleaseliabilities,andtaxassetsandliabilities.
Segmentcapitalexpenditureisthetotalcostincurredduringtheyeartoacquireplantandequipment.
(p) earnings per share
The Group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share
is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted
averagenumberofordinarysharesoutstandingduringtheyear,adjustedforownsharesheld.Dilutedearningsper
share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding, adjusted for own shares held, and for the effects of all dilutive potential
ordinaryshares.
ARA ASSET MANAGEMENT L IMITED102
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
3. signiFiCant aCCounting PoLiCies (cont’d)
(q) new standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning
after1January2011,andhavenotbeenappliedinpreparingthesefinancialstatements.Noneoftheseareexpected
tohaveasignificanteffectonthefinancialstatementsoftheGroupandtheCompany.
4. PLant anD equiPment
Leased motor vehicles
Duringtheyear,therewerenoadditionstomotorvehiclesfinancedbynewfinanceleases(2010:$573,000).Asat
31December2011,thecarryingamountofmotorvehiclesheldunderfinanceleaseswas$437,000(2010:$550,000).
TheamountoutstandingunderthefinanceleaseagreementsissetoutinNote10tothefinancialstatements.
Fittings and office equipment
motor vehicles total
group $’000 $’000 $’000
Cost
At1January2010 1,619 467 2,086
Additions 445 573 1,018
Disposals (107) (452) (559)
Effect of movement in exchange rates (28) (15) (43)
At 31 December 2010 1,929 573 2,502
Additions 444 - 444
Disposals (35) - (35)
Effect of movement in exchange rates 2 3 5
At 31 December 2011 2,340 576 2,916
accumulated depreciation
At1January2010 724 267 991
Depreciation for the year 367 99 466
Disposals (91) (327) (418)
Effect of movement in exchange rates (19) (16) (35)
At 31 December 2010 981 23 1,004
Depreciation for the year 464 114 578
Disposals (31) - (31)
Effect of movement in exchange rates 3 2 5
At 31 December 2011 1,417 139 1,556
Carrying amounts
At1January2010 895 200 1,095
At 31 December 2010 948 550 1,498
At 31 December 2011 923 437 1,360
ANNUAL REPORT 2011 103
NOTES TO THE FINANCIAL STATEMENTS
5. assoCiates
Details of associates are as follows:
(1) Audited by Ernst & Young, Malaysia.
(2) Audited by KPMG LLP, Singapore.
(3) Not required to be audited by law of country of incorporation.
(4) Audited by Deloitte Touche Tohmatsu, Hong Kong.
(5) Audited by Unity & Strength Certified Public Accountants, China.
Summary financial information for associates which is not adjusted for the percentage of ownership held by the
Group, are as follows:
group
2011 2010
$’000 $’000
Movements in carrying value:
At1January 1,060 551
Additions 4 40
Effect of movement in exchange rates 70 13
Share of profit for the year, net of tax 2,794 456
Dividends (828) -
At 31 December 3,100 1,060
Country ofincorporation
ownership interest
name of associates 2011 2010
% %
AmARAREITHoldingsSdn.Bhd.(1) Malaysia 30 30
AmARAREITManagersSdn.Bhd.(1) Malaysia 30 30
CachePropertyManagementPte.Ltd.(2) Singapore 40 40
WorldDeluxeEnterprisesLimited(3) British Virgin Islands 30 -
HuiXianAssetManagementLimited(4) Hong Kong 30 -
BeijingHuiXianEnterpriseServicesLimited(5) People’s Republic of China 30 -
2011 2010
$’000 $’000
assets and liabilities
Total assets 23,591 3,126
Total liabilities 13,919 592
Results
Revenue 23,197 3,029
Expenses(includingtaxation) (14,295) (1,746)
Profit after taxation 8,902 1,283
ARA ASSET MANAGEMENT L IMITED104
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
5. assoCiates (cont’d)
In2011,theGroup,togetherwithCheungKong(Holdings)LimitedandCITICSecuritiesGroupLimited,established
WorldDeluxeEnterprisesLimited,BeijingHuiXianEnterpriseServicesLimitedandHuiXianAssetManagementLimited
tomanageHuiXianRealEstateInvestmentTrust.TheGroup’scontributiontosetuptheinvestmentwas$4,000and
resultedintheGroupobtaininga30%equityinterestinthesecompanies.Thiscontributionrepresentedstart-upcosts
andasaresult,thereisnogoodwillincludedintheinvestment.
6. FinanCiaL assets
QuotedfinancialassetsrelatetounitsheldinlistedREITsandarealestatefundmanager.Certainquotedavailable-for-
salesecuritieswithanaggregateamountof$47,528,000(2010:$26,575,000)relatetounitsheldincertainlistedREITs
whicharepledgedassecuritytoobtaincreditfacilities.
Unquotedavailable-for-salefinancialassetswithacarryingvalueof$30,513,000(2010:$25,705,000)relatetoseed
capitalinvestmentsstatedatfairvalue.
Unquotedavailable-for-salefinancialassetsof$3,672,000(2010:$4,640,000)relatetounitsheldinanopen-ended
specialistequityfund.TheGrouphasprovidedanimpairmentlossof$541,000(2010:Nil)duringtheyearasaresultof
asubsequentdeclineinthefairvalueoftheinvestmentwhichhasbeenpreviouslyimpaired.
ThenotionalprincipalamountsoftheGroup’soutstandingderivativefinancialinstruments(forwardexchangecontracts)
attheendoftheyearwere$15,556,000(2010:$6,161,000).
Theinterest-bearingloantoaprivatefund,classifiedas“loansandreceivables”of$8,000,000in2010wassecuredby
thesharesoftheborrower,withanet interestrateof8.50%perannum.Thesecured loanwassettled infull in
August2011.
The Group’s exposure to credit, currency and interest rate risks related to financial assets is disclosed in Note 11.
sensitivity analysis - equity price risk
AlloftheGroup’squotedequityfinancialassetsarelistedontheSGX-ST,theStockExchangeofHongKong(“SEHK”),
ASXLimitedortheBursaMalaysiaSecuritiesBerhad.
group
2011 2010
$’000 $’000
non-current
quoted available-for-sale financial assets 62,735 95,313
Unquotedavailable-for-salefinancialassets 34,185 30,345
Interest bearing loan to a private fund - 8,000
96,920 133,658
Current
Derivative assets – forward exchange contracts - 119
quoted financial assets held-for-trading 24,764 15,299
24,764 15,418
ANNUAL REPORT 2011 105
NOTES TO THE FINANCIAL STATEMENTS
6. FinanCiaL assets (cont’d)
sensitivity analysis - equity price risk (cont’d)
Forsuchinvestmentsclassifiedasavailable-for-saleorheld-for-trading,a10%increase/(decrease)intheabovestock
pricesatthereportingdatewouldhaveincreased/(decreased)equityandprofitorlossbytheamountsshownbelow.
Theanalysisassumesthatallothervariablesremainconstant.Theanalysisisperformedonthesamebasisfor2010,
as indicated below:
7. tRaDe anD otheR ReCeiVaBLes
Thereisnoimpairmentallowancearisingfromtheoutstandingbalances.
Thenon-tradeamountsduefromarelatedpartyandsubsidiariesareunsecured,interest-freeandrepayableondemand.
Trade receivables for the Group include amounts due from a trustee of REITs of $1,786,000 (2010: $1,263,000).
Accrued revenue relates to accrual of REIT management fees, portfolio management fees and real estate management
servicesfees.
TheCompany’sexposuretocreditandcurrencyrisksrelatedtotradeandotherreceivables isdisclosedinNote11.
equity Profit or (loss)
2011 2010 2011 2010
$’000 $’000 $’000 $’000
SGX-ST 4,796 6,223 2,262 1,530SEHK - - 214 -ASXLimited 390 651 - -Bursa Malaysia Securities Berhad 1,088 2,658 - -
group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Trade receivables 2,886 1,888 - -
Accrued revenue 18,672 17,189 - -
Deposits 618 610 - -
Other receivables 6,911 5,733 43 148Amounts due from a related party, non-trade
247 - - -
Amounts due from subsidiaries, non-trade - - 5,242 3,196
Loans and receivables 29,334 25,420 5,285 3,344Prepayments 1,784 1,447 19 25
31,118 26,867 5,304 3,369
Non-current 502 495 - -
Current 30,616 26,372 5,304 3,369
31,118 26,867 5,304 3,369
ARA ASSET MANAGEMENT L IMITED106
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
8. Cash anD Cash equiVaLents
TheGroup’sexposuretointerestrateriskandsensitivityanalysisaredisclosedinNote11.
9. CaPitaL anD ReseRVes
share capital
On1June2011,69,847,192newordinarysharesof$0.002eachinthecapitaloftheCompanycreditedasfullypaid
were allotted and issued to shareholders of the Company on the basis of one bonus share for every ten existing shares
heldinthecapitaloftheCompany(the“BonusIssue”).FollowingtheBonusIssue,thetotalnumberofissuedshares
oftheCompanyincreasedfrom698,471,997to768,319,189.
On26April2010,thebonus issueofupto116,412,000newordinarysharesof$0.002each inthecapitalof the
Company, on the basis of one bonus share credited as fully paid for every five existing shares held in the capital of the
Company,wasapprovedbyshareholdersattheCompany’sAnnualGeneralMeeting.On10May2010,116,411,997
bonusshareswereissuedfromthesharepremiumaccount.
Allthenewlyissuedsharesrankparipassuinallrespectwiththeexistingordinaryshares.
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one
votepershareatmeetingsoftheCompany.AllordinarysharesrankequallywithregardtotheCompany’sresidualassets.
Allissuedsharesarefullypaid,withaparvalueof$0.002each.
share premium
Sharepremiumisnetofcostofissueofnewshares.
group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Cash at bank and in hand 55,209 37,337 31,091 10,240
Short-term fixed deposits 2,082 4,990 - -
Cashandcashequivalentsinthe statement of cash flows
57,291 42,327 31,091 10,240
2011 2010
number ofshares
number ofshares
’000 ’000
group and Company
At1January 698,472 582,060
Issue of bonus shares 69,847 116,412
At 31 December 768,319 698,472
ANNUAL REPORT 2011 107
NOTES TO THE FINANCIAL STATEMENTS
9. CaPitaL anD ReseRVes (cont’d)
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of
the financial statements of foreign operations whose functional currencies are different from the functional currency
oftheCompany.
Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the
investmentsarederecognisedorimpaired.
hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging
instrumentsrelatedtohedgedtransactionsthathaveyettoaffectprofitorloss.
Dividends
The following dividends were declared and paid by the Group and Company:
At the Annual General Meeting to be held on 26 April 2012 (2010: 28 April 2011), a final exempt dividend of
$0.0270 (2010: $0.0250) per share amounting to $20,745,000 (2010: $17,462,000) will be recommended for
shareholders’approval. Thesefinancialstatementsdonotreflectthisdividend,whichwillbeaccountedfor inthe
shareholders’equityasanappropriationofretainedprofitsinthefinancialyearending31December2012.
10. Loans anD BoRRowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings,
whicharemeasuredatamortisedcost. Formore informationabouttheGroup’sexposureto interest rate, foreign
currencyandliquidityrisk,seeNote11.
group and Company
2011 2010
For the year ended 31 December $’000 $’000
Paid by the Company to owners of the Company
Interimdividendof$0.0230perordinaryshare(2010:$0.0230) 17,671 16,065
Finaldividendof$0.0250perordinaryshare,paidinrespectof thepreviousfinancialyear(2010:$0.0250) 17,462 14,552
35,133 30,617
group
2011 2010
Paid by a subsidiary to non-controlling interest $’000 $’000
Dividendof$3.82perordinaryshare(2010:Nil) 1,528 -
ARA ASSET MANAGEMENT L IMITED108
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
10. Loans anD BoRRowings (cont’d)
terms and debt repayment schedule
Terms and conditions of outstanding loans and borrowings are as follows:
Thesecuredbankloanin2010wasrelatedtoaRM44.9millionsecuredvariableraterevolvingcreditfacilityprovided
toasubsidiary,JadelineCapitalSdn.Bhd.topartlyfinanceitsacquisitionoftheunitsinAmFIRSTREIT.Thefacility
wassecuredbytheunitsheldinAmFIRSTREITandwasrepaidinfullatmaturityinMay2011.
group
2011 2010
$’000 $’000
non-current liabilities
Finance lease liabilities 268 387
Current liabilities
Secured bank loan - 18,851
Finance lease liabilities 120 120
120 18,971
388 19,358
Currencynominal
interest rateyear of
maturityFair
valueCarryingamount
group $’000 $’000
2011
Finance lease liabilities HKD 2.50%perannum 2013 101 101
Finance lease liabilities SGD 2.68%perannum 2017 287 287
388 388
Currencynominal
interest rateyear of
maturityFair
valueCarryingamount
$’000 $’000
2010
Secured bank loan MYR 1.0%perannumabovethe bank’s cost of funds
2011 18,851 18,851
Finance lease liabilities HKD 2.50%perannum 2013 170 170
Finance lease liabilities SGD 2.68%perannum 2017 337 337
19,358 19,358
ANNUAL REPORT 2011 109
NOTES TO THE FINANCIAL STATEMENTS
10. Loans anD BoRRowings (cont’d)
Finance lease liabilities
At 31 December, the Group has obligations under finance leases that are payable as follows:
11. FinanCiaL instRuments
overview
The Group has exposure to the following risks from its use of financial instruments:
• creditrisk
• liquidityrisk
• marketrisk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies
andprocessesformeasuringandmanagingrisk,andtheGroup’smanagementofcapital.
Risk management framework
The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and
the cost of managing the risks. The management continually monitors the Group’s risk management process to
ensurethatanappropriatebalancebetweenriskandcontrolisachieved.Riskmanagementpoliciesandsystemsare
reviewedregularlytoreflectchangesinmarketconditionsandtheGroup’sactivities.
The Audit Committee oversees how management monitors compliance with the Group’s risk management policies
andprocedures,andreviewstheadequacyoftheriskmanagementframeworkinrelationtotherisksfacedbythe
Group. The Audit Committee is assisted in its oversight role by the Group Risk Management and Internal Audit
division.TheGroupRiskManagementandInternalAuditdivisionundertakesbothregularandadhocreviewsofrisk
managementcontrolsandprocedures,theresultsofwhicharereportedtotheAuditCommittee.
2011 2010
Principal interest
Future minimum Payments Principal interest
Future minimum Payments
group $’000 $’000 $’000 $’000 $’000 $’000
Within1year 120 15 135 120 15 135
Between 1 to 5 years 223 41 264 294 46 340
More than 5 years 45 8 53 93 17 110
388 64 452 507 78 585
ARA ASSET MANAGEMENT L IMITED110
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
11. FinanCiaL instRuments (cont’d)
Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its
contractualobligations,andarisesprincipallyfromtheGroup’sreceivablesfromcounterparties.
The carrying amount of financial assets in the statement of financial position represents the Group and the
Company’srespectivemaximumexposuretocredit risk,beforetaking intoaccountanycollateralheld. TheGroup
andtheCompanydoesnotholdanycollateralinrespectofitsfinancialassets.
trade and other receivables
The Group’s exposure to credit risk arises mainly through its trade and accrued fees receivables from REITs, real estate
managementandprivaterealestatefunds.Exposuretocreditriskismonitoredonanongoingbasis.
investments and other financial assets
Financial assets that are potentially subject to concentrations of credit risk and failures by counterparties to
discharge their obligations in full or in a timelymanner consistprincipallyof cashand cashequivalents andother
financialassets.Creditriskoncashandcashequivalentsandderivativefinancialinstrumentsislimitedbecausethese
are placed with regulated financial institutions. Credit risk on other financial assets is limited because the
counterparties are entities with high credit quality and/or acceptable credit ratings. These financial assets are
monitoredonanongoingbasisbymanagement.
ANNUAL REPORT 2011 111
NOTES TO THE FINANCIAL STATEMENTS
11. FinanCiaL instRuments (cont’d)
Credit risk (cont’d)
Thecarryingamountoffinancialassetsrepresentsthemaximumcreditexposure.Themaximumexposuretocreditrisk
at the reporting date was:
impairment losses
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade
andotherreceivables.Themaincomponentsofthisallowanceareaspecificlosscomponentthatrelatestoindividually
significant exposures, and a collective loss component established for groups of similar assets in respect of losses that
havebeen incurredbutnotyet identified. Thecollective lossallowance isdeterminedbasedonhistoricaldataof
paymentstatisticsforsimilarfinancialassets.
The aging of trade receivables that was not impaired at the reporting date was:
Based on historical default rates, the Group believes that no impairment allowance is necessary as these accounts mainlyrelatestocustomersthathaveagoodpaymentrecordwiththeGroup.Noneoftheotherreceivablesarepast due.
group Company
2011 2010 2011 2010
note $’000 $’000 $’000 $’000
Loans and receivables
- Interest bearing loan to a private fund 6 - 8,000 - -
- Loan and other receivables 7 29,334 25,420 5,285 3,344
-Cashandcashequivalents 8 57,291 42,327 31,091 10,240
available-for-sale financial assets
- quoted financial assets 6 62,735 95,313 - -
-Unquotedfinancialassets 6 34,185 30,345 - -
Fair value through profit or loss
- quoted financial assets held-for-trading 6 24,764 15,299 - -
- Derivative assets – forward exchange contracts 6 - 119 - -
208,309 216,823 36,376 13,584
group
2011 2010
$’000 $’000
Not past due 2,555 1,634
Past due 0-30 days 175 103
Past due 31-60 days 111 68
Past due 61-90 days 15 -
Past due 91-120 days 2 83
More than 120 days 28 -
2,886 1,888
ARA ASSET MANAGEMENT L IMITED112
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
11. FinanCiaL instRuments (cont’d)
Liquidity risk
LiquidityriskistheriskthattheGroupwillencounterdifficultyinmeetingtheobligationsassociatedwithitsfinancial
liabilitiesthataresettledbydeliveringcashoranotherfinancialasset.TheGroup’sapproachtomanagingliquidityis
toensure,asfaraspossible,that itwillalwayshavesufficient liquiditytomeet its liabilitieswhendue,underboth
normalandstressedconditions,withoutincurringunacceptablelossesorriskingdamagetotheGroup’sreputation.
Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period
of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances
thatcannotreasonablybepredicted,suchasnaturaldisasters.
In addition, the Group maintains the following lines of credit:
• Anunutilisedrevolvingcreditfacilityof$20.0millionsecuredontheGroup’sstrategicstakeinSuntecREIT
(2010:Nil).Thefacilitybearsinterestatafloatingrateof1.35%p.a.abovetheAssociationofBanksin
SingaporeSwapOfferRateandterminatesin2014.
• AnunutilisedrevolvingcreditfacilityofRM16.0millionsecuredontheGroup’sstrategicstakeinAmFIRST
REIT(2010:Nil).Thefacilitybearsinterestatafloatingrateof1.4%p.a.abovethebank’scostoffunds.The
facilityisavailableforaperiodof3yearswithanoptiontoextendforanother3years.
• $6.0 million and HK$3.0 million (2010: $6.0 million and HK$3.0 million) overdraft facilities that are
unsecured.InterestwouldbepayableattherespectiveSingaporeandHongKongprimelendingrates.
The following are the contractual maturities of financial liabilities which are measured at amortised cost including
estimated interest payments but excluding the impact of netting agreements:
Cash flows
Carrying amount
Contractualcash flows
within1 year
within1 to 5 years
more than5 years
group $’000 $’000 $’000 $’000 $’000
2011
non-derivative financial liabilities
Finance lease liabilities 388 (452) (135) (264) (53)
Trade and other payables 17,343 (17,343) (17,343) - -
17,731 (17,795) (17,478) (264) (53)
2010
non-derivative financial liabilities
Floating interest rate loans 18,851 (19,285) (19,285) - -
Finance lease liabilities 507 (585) (135) (340) (110)
Trade and other payables 20,200 (20,200) (20,200) - -
39,558 (40,070) (39,620) (340) (110)
ANNUAL REPORT 2011 113
NOTES TO THE FINANCIAL STATEMENTS
11. FinanCiaL instRuments (cont’d)
Liquidity risk (cont’d)
It is not expected that the cash flows included in the maturity analysis of the Group and the Company could occur
significantlyearlier,oratsignificantlydifferentamounts.
The following table indicates the periods in which the cash flow associated with derivatives that are cash flow hedges
are expected to occur:
market risk
Marketriskistheriskthatchangesinmarketprices,suchasinterestrates,foreignexchangeratesandequitypriceswill
affecttheGroup’sincomeorthevalueofitsholdingsoffinancialinstruments.Theobjectiveofmarketriskmanagement
istomanageandcontrolmarketriskexposureswithinacceptableparameters,whileoptimisingthereturn.
TheGroupmanagesitsmarketriskusingderivatives.Allsuchtransactionsarecarriedoutwithintheguidelinessetby
theBoardofDirectors.Generally,theGroupseekstoapplyhedgeaccountinginordertomanagevolatilityinprofitorloss.
Currency risk
exposure to currency risk
Exposure to foreign currency risk is monitored on an outgoing basis and the Group endeavours to keep the net
exposuretoanacceptablelevel.
Cash flows
Carrying amount
Contractualcash flows
within1 year
within1 to 5 years
more than5 years
Company $’000 $’000 $’000 $’000 $’000
2011
Trade and other payables 1,426 (1,426) (1,426) - -
2010
Trade and other payables 2,773 (2,773) (2,773) - -
Cash flows
Carrying amount
expectedcash flows
within1 year
within1 to 5 years
more than5 years
group $’000 $’000 $’000 $’000 $’000
2011
Forward exchange contracts - liabilities (717) (717) (717) - -
2010
Forward exchange contracts - assets 119 119 119 - -
ARA ASSET MANAGEMENT L IMITED114
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
11. FinanCiaL instRuments (cont’d)
market risk (cont’d)
Currency risk (cont’d)
The Group’s and Company’s exposures to foreign currency was as follows based on notional amounts:
sensitivity analysis
A 10% strengthening of the Singapore dollar against the following currencies at the reporting date would have
increased/(decreased)profitorlossbytheamountsshownbelow.Thisanalysisisbasedonforeigncurrencyexchange
ratevariancesthattheGroupconsideredtobereasonablypossibleattheendofthereportingperiod.Theanalysis
assumesthatallothervariables,inparticularinterestrates,remainconstant.Theanalysisisperformedonthesame
basis for 2010, as indicated below:
A10%weakeningof theSingaporedollaragainst theabovecurrenciesat the reportingdatewouldhavehad theequal
butoppositeeffectontheabovecurrenciestotheamountsshownabove,onthebasisthatallothervariablesremainconstant.
group Company
singapore dollar
united statesdollar
hong Kongdollar
australiandollar
ChineseRenminbi
united statesdollar
hong Kongdollar
$’000 $’000 $’000 $’000 $’000 $’000 $’000
2011
Trade and other receivables - 545 307 - 8 - -
Cashandcashequivalents 1,024 855 643 382 - 222 -
Trade and other payables (6) (473) (157) - (33) - (5)
1,018 927 793 382 (25) 222 (5)
2010
Trade and other receivables - - 2,225 - - - -
Cashandcashequivalents 34 270 63 - - 5 -
Trade and other payables (21) - (64) - - - -
13 270 2,224 - - 5 -
group Company
Profit or (loss) Profit or (loss)
2011 2010 2011 2010
$’000 $’000 $’000 $’000
United States dollar (93) (27) (22) (1)
Hong Kong dollar (79) (222) 1 -
Australian dollar (38) - - -
Chinese Renminbi 2 - - -
(208) (249) (21) (1)
ANNUAL REPORT 2011 115
NOTES TO THE FINANCIAL STATEMENTS
11. FinanCiaL instRuments (cont’d)
market risk (cont’d)
interest rate risk
At the reporting date, the interest rate profile of the interest-bearing financial instruments was:
Fair value sensitivity analysis for fixed rate instruments
TheGroupdoesnotaccountforanyfixedratefinancialassetsandliabilitiesatfairvaluethroughprofitorloss.Therefore
achangeininterestratesatthereportingdatewouldnotaffectprofitorloss.
Cash flow sensitivity analysis for variable rate instruments
Achangeof100basispoints(bp)ininterestrateatthereportingdatewouldhaveincreased/(decreased)profitor
lossbytheamountsshownbelow.Thisanalysisassumesthatallothervariables,inparticularforeigncurrencyrates,
remainconstant.Theanalysisisperformedonthesamebasisfor2010.
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustainfuturedevelopmentofthebusiness.TheBoardofDirectorsmonitorsthereturnoncapital,whichtheGroup
definesasresultfromoperatingactivitiesdividedbytotalshareholders’equity,excludingnon-controllinginterests.
group
Carrying amount
2011 2010
$’000 $’000
Fixed rate instruments
Financial assets 2,082 4,990
Financial liabilities (388) (507)
1,694 4,483
Variable rate instruments
Financial liabilities - 18,851
Profit or (loss)
100 bp increase 100 bp decrease
$’000 $’000
group
2011
Variable rate instruments - -
Cashflowsensitivity(net) - -
2010
Variable rate instruments (189) 189
Cashflowsensitivity(net) (189) 189
ARA ASSET MANAGEMENT L IMITED116
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
11. FinanCiaL instRuments (cont’d)
Capital management (cont’d)
TheBoardofDirectorsalsomonitorsthelevelofdividendstoordinaryshareholders.Therewerenochangesinthe
Group’sapproachtocapitalmanagementduringtheyear.
Inaddition,certainsubsidiariesoftheCompanyareCapitalMarketsServices(“CMS”)Licenseholdersregisteredbythe
Monetary Authority of Singapore to conduct the regulated activity of REIT management and are subject to the
requirementsunder theSecuritiesandFuturesActandSecuritiesandFutures (LicensingandConductofBusiness)
Regulations(collectivelyreferredtoas“CMSregulations”). Asdefinedintheapplicable legislationundertheCMS
regulations, these subsidiaries are required to maintain the “Base Capital” of $1,000,000 and ensure that their
“FinancialResources”shallnotfallbelow120%ofthe“TotalRiskRequirement”.
Apart from the above, certain subsidiaries of the Company are licensed corporations registered under the Hong Kong
SecuritiesandFuturesOrdinanceandaresubjecttothecapitalrequirementsoftheHongKongSecuritiesandFutures
(Financial Resources) Rules (“FRR”). The minimum paid-up share capital requirement of these subsidiaries is
HK$5,000,000andtheminimumliquidcapitalrequirementisthehigherofHK$3,000,000andthevariablerequired
liquidcapitalasdefinedintheFRR.
TheGroupmonitorsitscompliancewiththerequirementsofboththeCMSandFRRregulationsregularly.
Fair value
Fair values versus carrying amounts
The carrying amounts of the Group and the Company’s financial instruments carried at cost or amortised cost are not
materiallydifferentfromtheirfairvaluesasat31December2011and2010.
Fair value hierarchy
Thetablebelowanalysesfinancialinstrumentscarriedatfairvalue,byvaluationmethod.Thedifferentlevelshavebeen
defined as follows:
• Level1:quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.
• Level2:inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,
eitherdirectly(i.e.asprices)orindirectly(i.e.derivedfromprices).
• Level3:inputsfortheassetorliabilitythatarenotbasedonobservablemarketpricedata(unobservableinputs).
ANNUAL REPORT 2011 117
NOTES TO THE FINANCIAL STATEMENTS
11. FinanCiaL instRuments (cont’d)
Fair value (cont’d)
During the financial year ended 31 December 2011, there were no transfers between Level 1 and Level 2 of the fair
valuehierarchy(2010:notransfersineitherdirections).
The following table shows a reconciliation from the beginning balances to the ending balances for fair value
measurements in Level 3 of the fair value hierarchy:
ThefairvalueoftheLevel3financialinstrumentasatthereportingdatewasdeterminedusingavaluationtechnique
using the realisable net asset value approach, which takes into consideration the fair value of the underlying assets
andliabilitiesoftheentitytowhichthefinancialinstrumentrelates.Theassetsheldbytherelevantentitycomprise
mainlypropertieswhose fairvaluesweredeterminedbyan independent licensedappraiser. The fairvaluesof the
propertieswerebasedonmarketvaluesdeterminedusingthediscountedcashflowanddirectcomparisonmethods.
An analysis of the effect of changing one or more inputs to reasonably possible alternative assumptions has not been
presented as such an effect would not have resulted in a significant change to the fair value measurement of the
Group’stotalequity.
Level 1 Level 2 Level 3 total
$’000 $’000 $’000 $’000
group
2011
Available-for-sale financial assets 62,735 3,672 30,513 96,920
Financial assets held-for-trading 24,764 - - 24,764
Derivative liabilities – forward exchange contracts
- (717) - (717)
87,499 2,955 30,513 120,967
2010
Available-for-sale financial assets 95,313 4,640 25,705 125,658
Financial assets held-for-trading 15,299 - - 15,299
Derivative assets – forward exchange contracts
- 119 - 119
110,612 4,759 25,705 141,076
group
2011 2010
$’000 $’000
available-for-sale financial asset – Level 3:
At1January 25,705 10,980
Capital contribution 1,623 11,999
Capital returns (1,621) -
Total gains and losses recognised in other comprehensive income 4,806 2,726
At 31 December 30,513 25,705
ARA ASSET MANAGEMENT L IMITED118
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
12. DeFeRReD taX
Recognised deferred tax liabilities
Deferred tax liabilities are attributable to the following:
13. tRaDe anD otheR PayaBLes
TheGroupandtheCompany’sexposuretocurrencyandliquidityriskrelatedtotradeandotherpayablesisdisclosed
inNote11.
Outstandingbalanceswithsubsidiariesandanon-controllinginterestareunsecured.
14. DeRiVatiVe LiaBiLities
ThenotionalprincipalamountsoftheGroup’soutstandingderivativefinancialinstruments(forwardexchangecontracts)
attheendoftheyeararedisclosedinNote6.
group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Deferred tax liabilities
Plantandequipment 117 142 - -
group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Trade payables 2,059 2,704 49 26
Accrued expenses 15,207 16,158 1,370 1,825
Other payables 77 1,038 - 922
Amounts due to subsidiaries, non-trade - - 7 -
Amount due to a non-controlling interest, non-trade - 300 - -
17,343 20,200 1,426 2,773
group
2011 2010
$’000 $’000
Derivative liabilities – forward exchange contracts 717 -
ANNUAL REPORT 2011 119
NOTES TO THE FINANCIAL STATEMENTS
15. ReVenue
16. PRoFit FoR the yeaR
The following items have been included in arriving at the profit for the year:
*Includedinstaffcostsarestaff-relatedexpensesof$18,479,000(2010:$15,450,000)forasubsidiarywhichwasfully
reimbursedfromaprivatefundandnettedoff.
group
2011 2010
$’000 $’000
REIT management fees 56,229 46,018
Portfolio management fees 21,764 25,561
Acquisitionandperformancefees 21,288 17,499
Real estate management service fees 12,867 13,051
112,148 102,129
group
2011 2010
$’000 $’000
other income
Gainondisposalofplantandequipment - 105
operating expenses
Audit fee paid to:
- auditors of the Company 319 291
- other auditors 72 72
Non-audit fee paid to:
- auditors of the Company 76 92
Amortisation of intangible asset 798 652
Depreciationofplantandequipment 578 466
Lossondisposalofplantandequipment 1 -
Foreign exchange loss, net - 651
Staff costs * 29,272 24,508
Contribution to defined contribution plans, included in staff costs 1,160 964
ARA ASSET MANAGEMENT L IMITED120
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
17. FinanCe inCome anD FinanCe Costs
Recognised in profit or loss:
18. taX eXPense
group
2011 2010
Finance income $’000 $’000
Interest income:
- bank deposits 48 47
- loan to a private fund 783 671
Gain on disposal of subsidiary - 203
Gain on fair valuation of held-for-trading securities - 1,710
Foreign exchange gain, net 91 -
Distribution income 9,644 7,599
Total finance income 10,566 10,230
Finance costs
Interest expense:
- bank loans 386 784
- finance lease liabilities 14 46
- bank overdraft 3 -
- others 25 41
Loss on fair valuation of held-for-trading securities 6,079 -
Impairment loss on available-for-sale financial asset 541 -
Total finance costs 7,048 871
group
2011 2010
$’000 $’000
Current tax expense
Current year 7,270 9,324
Overprovision in prior years (433) (93)
6,837 9,231
Deferred tax expense
(Reversal)/originationoftemporarydifferences (25) 88
Total tax expense 6,812 9,319
Reconciliation of effective tax rate
Profit for the year 69,520 64,210
Total tax expense 6,812 9,319
Profit excluding tax 76,332 73,529
ANNUAL REPORT 2011 121
NOTES TO THE FINANCIAL STATEMENTS
18. taX eXPense (cont’d)
19. eaRnings PeR shaRe
The calculation of basic and diluted earnings per share at 31 December 2011 was based on the profit attributable to
ordinary shareholders of $68,202,000 (2010: $63,812,000) and a weighted average number of ordinary shares
outstanding of 768,319,189 calculated as follows:
The basic and diluted earnings per ordinary share for the years ended 31 December 2011 and 31 December 2010 are
calculatedbasedonthenumberofordinarysharesaftertheissuanceofthebonusshareson1June2011.
group
2011 2010
$’000 $’000
Reconciliation of effective tax rate (cont’d)
TaxusingtheSingaporetaxrateat17%(2010:17%) 12,976 12,500
Effects of tax rates in foreign jurisdiction (5,649) (3,050)
Non-deductible expenses 239 399
Tax exempt income (299) (470)
Overprovision in prior years (433) (93)
Deferred tax assets not recognised (22) -
Others - 33
6,812 9,319
group
2011 2010
$’000 $’000
Profit attributable to ordinary shareholders 68,202 63,812
number of shares
number of shares
’000 ’000
Issued ordinary shares at beginning of the year 698,472 698,472
Effectofbonussharesissuedon1June2011 69,847 69,847
Weightedaveragenumberofordinarysharesduringtheyear 768,319 768,319
Basicanddilutedearningspershare(cents) 8.88 8.31
ARA ASSET MANAGEMENT L IMITED122
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
20. oPeRating segments
TheGrouphasfourreportablesegments,asdescribedbelow,whicharetheGroup’sstrategicbusinessunits.Thestrategic
businessunitsofferdifferentproductsandservices,andaremanagedseparately.Foreachofthestrategicbusinessunits,
theGroupCEOreviewsinternalmanagementreportsonamonthlybasis.Thefollowingsummarydescribestheoperations
in each of the Group’s reportable segments:
REITs: Provision of fund management services to real estate investment trusts
Private real estate funds: Provision of fund management services to private real estate funds and
specialistequityfunds
Real estate management services: Provision of property management services and convention and exhibition services
Investment holdings: Investing in a portfolio of listed securities in REITs and a real estate fund manager
andunlistedequityinvestmentinprivaterealestatefunds
Otherscompriseprimarilycorporatefinanceadvisoryserviceswhichdonotmeetanyof thequantitative thresholds for
determiningreportablesegmentin2011or2010.
Information regarding the results of each reportable segment is included below. Performance is measured based on
segmentprofitbeforetax,asincludedintheinternalmanagementreportsthatarereviewedbytheGroupCEO.Segment
profit is used to measure performance as management believes that such information is the most relevant in evaluating the
resultsofcertainsegmentsrelativetootherentitiesthatoperatewithintheseindustries.Inter-segmentpricingisdetermined
onanarm’slengthbasis.
ANNUAL REPORT 2011 123
NOTES TO THE FINANCIAL STATEMENTS
20. oPeRating segments (cont’d)
information about reportable segments
ReitsPrivate real estate
funds
Real estate management
servicesinvestment
holdings others total
2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
External revenues
60,259 63,553 40,424 26,660 13,298 13,570 8,780 7,645 - 1,083 122,761 112,511
Inter-segment revenue
- - - - - - - - 8,878 6,887 8,878 6,887
60,259 63,553 40,424 26,660 13,298 13,570 8,780 7,645 8,878 7,970 131,639 119,398
Interest expense
(17) (46) - - - - (411) (825) - - (428) (871)
Depreciation (321) (302) (2) (8) (154) (60) - - (101) (96) (578) (466)
Reportable segment profit before tax
31,708 41,683 26,623 17,501 6,739 6,910 8,861 4,959 110 3,231 74,041 74,284
Share of profit of associates, net of tax
2,300 170 - - 494 286 - - - - 2,794 456
Reportable segment assets
47,094 45,300 12,924 9,345 15,637 14,488 134,344 148,254 1,454 3,179 211,453 220,566
Investment in associates
2,565 733 - - 535 327 - - - - 3,100 1,060
Capital expenditure
121 717 - 6 291 293 - - 32 2 444 1,018
Reportable segment liabilities
3,244 5,718 3,588 3,518 6,802 6,556 2,781 21,721 1,044 1,677 17,459 39,190
ARA ASSET MANAGEMENT L IMITED124
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
20. oPeRating segments (cont’d)
Reconciliations of reportable segment revenues, profit or loss, assets and liabilities and other material
items of the group
geographical segments
The Group’s business is managed in four principal geographical areas, namely, Singapore, Hong Kong, Malaysia
andOthers.
In presenting information on the basis of geographical segments, segment revenue is based on the geographical
locationofcounterparties.Segmentassetsarebasedonthegeographicallocationoftheassets.
2011 2010
$’000 $’000
Revenue
Total revenue for reporting segments 122,761 111,428
Other revenue 8,878 7,970
131,639 119,398
Elimination of inter-segment revenue (8,878) (6,887)
Revenue 122,761 112,511
Profit or (loss)
Total profit for reportable segments 73,931 71,053
Other profit or loss 110 3,231
74,041 74,284
Unallocated amounts:
- Other corporate expenses (503) (1,211)
Share of profit of associates, net of tax 2,794 456
Profit before tax 76,332 73,529
assets
Total assets for reportable segments 209,999 217,387
Other assets 1,454 3,179
211,453 220,566
Investments in associates 3,100 1,060
Total assets 214,553 221,626
Liabilities
Total liabilities for reportable segments 16,415 37,513
Other liabilities 1,044 1,677
17,459 39,190
Other unallocated liabilities 7,533 8,918
Total liabilities 24,992 48,108
ANNUAL REPORT 2011 125
NOTES TO THE FINANCIAL STATEMENTS
20. oPeRating segments (cont’d)
geographical information
21. intangiBLe asset
acquired contractual right
Revenue segment assetsCapital
expenditure
$’000 $’000 $’000
2011
Singapore 92,901 133,004 423
Hong Kong 5,303 4,679 21
Malaysia 1,441 10,907 -
Others 23,116 62,863 -
122,761 211,453 444
2010
Singapore 79,847 143,393 789
Hong Kong 5,256 2,251 226
Malaysia 2,205 28,689 3
Others 25,203 46,233 -
112,511 220,566 1,018
total
group $’000
Cost
At1January2010,31December2010and31December2011 1,450
accumulated amortisation and impairment
At1January2010 -
Amortisation for the year 652
At 31 December 2010 652
Amortisation for the year 798
At 31 December 2011 1,450
Carrying amounts
At1January2010 1,450
At 31 December 2010 798
At 31 December 2011 -
ARA ASSET MANAGEMENT L IMITED126
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
22. DisPosaL oF suBsiDiaRy
InAugust2010,theGroupdivestedallofitsinterestinasubsidiary,ARAStrategicCapitalIPte.Ltd.toAPNFunds
ManagementLimited,theGroup’sstrategicpartnerinAustralia.
The disposal had the following effect on the financial position of the Group:
Therewerenodisposalofanysubsidiaryduringthefinancialyearended31December2011.
23. DeteRmination oF FaiR VaLues
AnumberoftheGroup’saccountingpoliciesanddisclosuresrequirethedeterminationoffairvalue,forbothfinancial
andnon-financialassetsandliabilities.Fairvalueshavebeendeterminedformeasurementand/ordisclosurepurposes
basedonthefollowingmethods.Whenapplicable,furtherinformationabouttheassumptionsmadeindetermining
fairvaluesisdisclosedinthenotesspecifictothatassetorliability.
(i) investments in equity securities
Thefairvaluesofquotedandunquotedinvestmentsthatareclassifiedasavailable-for-saleaswellasquoted
investmentsheld-for-tradingisdeterminedbyreferencetotheirquotedclosingbidpricesatthereporting
date. The fair valueof certainunquoted securities classifiedas available-for-sale isdeterminedusinga
valuationtechnique(seeNote11).
(ii) Loans and receivables
The fair value of loans and receivables is estimated as the present value of future cash flows, discounted at
themarketrateofinterestatthereportingdate.Thisfairvalueisdeterminedfordisclosurepurposes.
(iii) Derivatives
Thefairvalueofforwardexchangecontractsisbasedontheirlistedmarketprice,ifavailable.Ifalisted
market price is not available, then fair value is estimated by discounting the difference between the
contractual forward price and the current forward price for the residual maturity of the contract using a
risk-freeinterestrate(basedongovernmentbonds).
2010
$’000
Officeequipment 6
Cashandcashequivalents 398
Trade and other receivables 42
Trade and other payables (24)
Net identifiable assets and liabilities 422
Gain on disposal of subsidiary 203
Total consideration, satisfied in cash 625
Consideration receivable in cash (203)
Cashandcashequivalentsdisposedof (398)
Net cash inflow 24
ANNUAL REPORT 2011 127
NOTES TO THE FINANCIAL STATEMENTS
23. DeteRmination oF FaiR VaLues (cont’d)
(iv) non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future
principalandinterestcashflows,discountedatthemarketrateofinterestatthereportingdate.Forfinance
leases,themarketrateofinterestisdeterminedbyreferencetosimilarleaseagreements.
24. oPeRating Leases
Non-cancellable operating leases rentals are payable as follows:
TheGroupleasesanumberofofficesunderoperatingleases.Theleasestypicallyrunforaninitialperiodof2to3
years,withanoptiontorenewtheleaseafterthatdate.
25. CaPitaL Commitments
TheGrouphasacommitmenttoinvestanamountofupto2.0%ofARAAsiaDragonFund’saggregatecommitted
capital as seed capital in the fund. The Group’s undrawn commitment in the fund amounted to US$4.3 million
(equivalentto$5.6million)(2010:US$5.6million(equivalentto$7.2million))at31December2011.
TheGrouphasacommitmenttoinvestUS$100million(equivalentto$129.6million)(2010:Nil)inARAAsiaDragon
FundII’saggregatecommittedcapitalasseedcapital.Thisamounthasnotbeendrawnasat31December2011.
26. ReLateD PaRties
transactions with key management personnel
Key management personnel compensation
Compensation payable to key management personnel comprised:
group Company
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Within1year 2,300 1,901 - -
Between 1 to 5 years 2,391 4,006 - -
4,691 5,907 - -
group
2011 2010
$’000 $’000
Short-term employee benefits 17,368 10,019
Post-employmentbenefits(includingCPF) 235 152
17,603 10,171
ARA ASSET MANAGEMENT L IMITED128
NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
26. ReLateD PaRties (cont’d)
other related party transactions
Other than disclosed elsewhere in the financial statements, significant transactions with related parties at terms agreed
between the parties are as follows:
27. suBsiDiaRies
Arising from a review of the recoverable amount, estimated based on the fair value of the net assets of its net investments
insubsidiaries,animpairmentlossof$756,000(2010:$1,483,000)wasrecognisedbytheCompanyduringtheyear.
Details of significant subsidiaries are as follows:
transaction value for the year ended 31 December
2011 2010
$’000 $’000
Entities subject to common significant influence:
- Advisory fee (2,568) (408)
- REIT management fees received/receivable 10,604 9,733
- Distribution received 112 369
- Operating lease expenses paid/payable (828) (990)
Company
2011 2010
$’000 $’000
Equityinvestmentsatcost 62,591 1,744
Shareholder loans to subsidiaries 27,338 95,023
Less: Impairment loss (2,239) (1,483)
87,690 95,284
name of subsidiaryCountry of
incorporation
ownership interest
2011 2010
% %
ARAAssetManagement(Fortune)Limited(1)(2) Republic of Singapore
100 100
ARATrustManagement(Suntec)Limited(1) Republic of Singapore
100 100
ARAAssetManagement(Prosperity)Limited(2) Hong Kong 100 100
ARA-CWTTrustManagement(Cache)Limited(1) Republic of Singapore
60 60
ARA Management Pte Ltd (1) Republic of Singapore
100 100
ARAFundManagement(AsiaDragon)Limited(1) Bermuda 100 100
ANNUAL REPORT 2011 129
NOTES TO THE FINANCIAL STATEMENTS
27. suBsiDiaRies (cont’d)
(1) Audited by KPMG LLP, Singapore.
(2) Audited by other member firms of KPMG International.
(3) Not required to be audited by law of country of incorporation.
KPMG LLP is the auditor of all significant Singapore-incorporated and Bermuda-incorporated subsidiaries. Other
member firms of KPMG International are auditors of significant foreign-incorporated subsidiaries except for subsidiaries
incorporatedintheBritishVirginIslands(“BVI”)whicharenotrequiredtobeauditedunderBVIlaws.Forthispurpose,
a subsidiary is considered significant as defined under the Singapore Exchange Limited Listing Manual if its net tangible
assetsrepresent20%ormoreoftheGroup’sconsolidatednettangibleassets,orifitspre-taxprofitsaccountfor20%
ormoreoftheGroup’sconsolidatedpre-taxprofits.
Theshareholders’loantosubsidiariesareunsecuredandinterest-freewithnospecifiedrepaymentdate.Thesettlement
oftheamountisneitherplannednorlikelytooccurintheforeseeablefuture.Astheamountis,insubstance,apartof
theCompany’snetinvestmentinthesubsidiaries,itisstatedatcost.
name of subsidiaryCountry of
incorporation
ownership interest
2011 2010
% %
ARAManagers(AsiaDragon)PteLtd(1) Republic of Singapore
100 100
JadelineCapitalSdnBhd(2) Malaysia 100 100
ARA Real Estate Investors I Limited (3) British Virgin Islands
100 100
ARA Investors II Limited (3) British Virgin Islands
100 100
ARA Real Estate Investors III Limited (3) British Virgin Islands
100 100
ARA Real Estate Investors IV Limited (3) British Virgin Islands
100 100
ARA Real Estate Investors V Limited (3) British Virgin Islands
100 100
ARAManagers(Harmony)PteLtd(1) Republic of Singapore
100 100
Suntec Singapore International Convention & Exhibition Services Pte Ltd (1)
Republic of Singapore
100 100
APM Property Management Pte Ltd (1) Republic of Singapore
100 100
ARA ASSET MANAGEMENT L IMITED130
NOTES TO THE FINANCIAL STATEMENTS
1 inteResteD PeRson tRansaCtions
The aggregate value of transactions entered into by the Group with interested persons and their affiliates, as defined
intheSGXListingManual,areasfollows:
(1) A wholly-owned subsidiary of Cheung Kong (Holdings) Limited
SUPPLEMENTARY INFORMATION(SGXListingManualdisclosurerequirements)
aggregate value of all transactions conducted under a shareholders’ mandate pursuant to Rule 920 of
the sgX Listing manualaggregate value of
all other transactions
2011 2010 2011 2010
$’000 $’000 $’000 $’000
name of interested person
Fortune REIT
- REIT management fees 10,604 9,733 - -
MrChiuKwokHungJustin
- Key person and strategic advisory services to the ARA Asia Dragon Fund
- - 376 408
TheCenter(55)Limited
- Provision of office space - 2,639 - -
Cosmo Best Limited (1)
- Advisory services to ARA Trust Management(Suntec)Limited
- 10,000 - -
Thesupplementaryinformationabovedoesnotformpartofthefinancialstatements.
ANNUAL REPORT 2011 131
2 use oF iPo PRoCeeDs
Asat31December,theGrouphasutilisedthenetIPOproceedsof$75.5millionasfollows:
3 mateRiaL ContRaCts
Save for interested person transactions disclosed in this Annual Report, there are no material contracts involving the
interestsofanyDirectorsorcontrollingshareholdersstillsubsistingduringthefinancialyearasrequiredtobereported
underRule1207(8)oftheListingManual.
SUPPLEMENTARY INFORMATION(SGXListingManualdisclosurerequirements)
Company
2011 2010
$’000 $’000
Seed capital investment in the ARA Asia Dragon Fund 24,723 23,100
Strategic stake in REIT 27,200 27,200
Investment in interest bearing loan to a private fund 8,000 8,000
59,923 58,300
Thesupplementaryinformationabovedoesnotformpartofthefinancialstatements.
ARA ASSET MANAGEMENT L IMITED132
SHAREHOLDERS’ INFORMATION As at 12 March 2012
Issued and fully paid-up capital : S$1,536,638
No.ofissuedshares(excludingtreasuryshares) : 768,319,189
Class of shares : Ordinary
Voting rights : One vote per share
DistRiBution oF shaRehoLDings
treasury shares
Number of treasury shares held : NIL
Percentage of treasury shares held against total numberofissuedshares(excludingtreasuryshares) : NIL
List of twenty Largest shareholders
size of shareholdings no. of shareholders % no. of shares %
1 - 999 230 6.52 99,875 0.01
1,000 - 10,000 2,246 63.70 9,287,666 1.21
10,001 - 1,000,000 1,028 29.16 55,101,130 7.17
1,000,001 and above 22 0.62 703,830,518 91.61
total 3,526 100.00 768,319,189 100.00
no. name no. of shares %
1. JLInvestmentGroupLimited 280,027,440 36.45
2. Cheung Kong Investment Company Limited 120,011,760 15.62
3. DBS Nominees Pte Ltd 86,501,564 11.26
4. Citibank Nominees Singapore Pte Ltd 78,492,501 10.22
5. HSBC(Singapore)NomineesPteLtd 60,031,840 7.81
6. United Overseas Bank Nominees Pte Ltd 20,222,302 2.63
7. DBSN Services Pte Ltd 13,384,277 1.74
8. DBSVickersSecurities(Singapore)PteLtd 9,944,960 1.29
9. RafflesNominees(Pte)Ltd 5,318,825 0.69
10. BNP PARIBAS SECURITIES SERVICES SINGAPORE 5,027,660 0.65
11. Bank of Singapore Nominees Pte Ltd 4,524,600 0.59
12. UOB Kay Hian Pte Ltd 4,334,460 0.56
13. Yim Chee Chong 3,100,000 0.40
14. DBNominees(Singapore)PteLtd 2,260,420 0.29
15. MorganStanleyAsia(Singapore)SecuritiesPteLtd 2,238,849 0.29
16. WongChengYong 1,406,560 0.18
17. OCBC Securities Private Ltd 1,332,640 0.17
18. Ng Beng Tiong 1,320,000 0.17
19. LowGeokLinJudith 1,230,000 0.16
20. TangWeeLoke 1,188,000 0.15
total 701,898,658 91.32
ANNUAL REPORT 2011 133
SHAREHOLDERS’ INFORMATION As at 12 March 2012
suBstantiaL shaRehoLDeRs as at 12 maRCh 2012
(AsrecordedintheRegisterofSubstantialShareholders)
Notes:
(1) Mr Lim Hwee Chiang John has an indirect interest in the 280,027,440 shares of the Company held by JL Investment Group Limited,
which is wholly-owned by him.
He is also deemed interested in the 1,100,000 shares held by Citibank Nominees Singapore Pte Ltd (as nominee of JL Philanthropy
Ltd). The beneficiary of JL Philanthropy Ltd is JL Charitable Settlement and Mr Lim is the settlor of JL Charitable Settlement.
(2) Cheung Kong (Holdings) Limited has an indirect interest in the shares of the Company held through its wholly-owned subsidiary,
Cheung Kong Investment Company Limited.
PuBLiC shaRehoLDeRs
Asat12March2012,approximately38.9%oftheCompany’sissuedordinaryshares(excludingTreasuryShares)areheldin
thehandsofthepublic.Rule723oftheListingManualoftheSingaporeExchangeSecuritiesTradingLimitedhasaccordingly
beencompliedwith.
name of substantial shareholders Direct interest % Deemed interest %
JLInvestmentGroupLimited 280,027,440 36.45 - -
LimHweeChiangJohn(1) 4,651,660 0.61 281,127,440 36.59
Cheung Kong Investment Company Limited 120,011,760 15.62 - -
CheungKong(Holdings)Limited(2) - - 120,011,760 15.62
Matthews International Funds 48,082,100 6.26 - -
Matthews International Capital Management, LLC - - 62,780,300 8.17
ARA ASSET MANAGEMENT L IMITED134
NOTICE OF ANNUAL GENERAL MEETING
NOTICEISHEREBYGIVENthattheAnnualGeneralMeetingofARAASSETMANAGEMENTLIMITED(the“Company”)willbe
held at Room 325 and 326, Level 3, Suntec Singapore International Convention and Exhibition Centre, 1 Raffles Boulevard,
SuntecCity,Singapore039593,onThursday,26April2012at10.00a.m.forthefollowingpurposes:
as oRDinaRy Business
1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the financial year ended 31
December2011togetherwiththeAuditors’Reportthereon. (Resolution 1)
2. Todeclareafinaltaxexempt(one-tier)dividendofS$0.027pershareforthefinancialyearended31December2011
(2010:S$0.025pershare). (Resolution 2)
3. Tore-electthefollowingDirectorsretiringpursuanttoBye-law86(1)oftheCompany’sBye-laws:
(i) LimHweeChiangJohn (Resolution 3)
(ii) IpTakChuenEdmond (Resolution 4)
(iii) LeeYockSuan (Resolution 5)
Mr Lee Yock Suan will, upon re-election as Director of the Company, remain as Chairman of the Audit Committee and
will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange
Securities Trading Limited.
4. To approve the payment of Directors’ fees of S$490,000 for the financial year ending 31 December 2012, to be paid
quarterlyinarrears(2011:S$280,000).
Note: Mr Chiu Kwok Hung Justin, Mr Ip Tak Chuen Edmond and Mr Lim Hwee Chiang John, have informed the
Company of their intention to waive their entitlement to the Directors’ fees of S$70,000 each.
The Directors’ fees payable for FY2012 would therefore be S$280,000 (2011: S$280,000). (Resolution 6)
5. Tore-appointKPMGLLPastheCompany’sAuditorsandtoauthorisetheDirectorstofixtheirremuneration.
(Resolution 7)
6. TotransactanyotherordinarybusinesswhichmayproperlybetransactedatanAnnualGeneralMeeting.
ANNUAL REPORT 2011 135
NOTICE OF ANNUAL GENERAL MEETING
as sPeCiaL Business
To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:
7. share issue mandate
ThatpursuanttoRule806oftheListingManualoftheSingaporeExchangeSecuritiesTradingLimited(“SGX-ST”),the
Directors of the Company be empowered to:
(a) (i) issue shares in the capitalof theCompany (“Shares”)whetherbywayof rights,bonusorotherwise;
and/or
(ii) makeorgrantoffers, agreementsoroptions (collectively,“Instruments”) thatmightorwould require
Shares tobe issued, includingbutnot limited to thecreationand issueof (aswellasadjustments to)
options, warrants, debentures or other instruments convertible into Shares,
at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the
Company may in their absolute discretion deem fit; and
(b) (notwithstanding theauthority conferredby thisResolutionmayhaveceased tobe in force) issueShares in
pursuance of any Instrument made or granted by the Directors of the Company while this Resolution was in
force,
provided that:
(1) theaggregatenumberofShares(includingSharestobeissuedinpursuanceoftheInstruments,madeorgranted
pursuant to this Resolution) and Instruments to be issued pursuant to this Resolution shall not exceed fifty
percent.(50%)oftheissuedsharecapital(excludingtreasuryshares)oftheCompany(ascalculatedinaccordance
withsub-paragraph(2)below),ofwhichtheaggregatenumberofSharestobeissuedotherthanonaprorata
basis toexistingShareholdersof theCompany shallnotexceed twentyper cent. (20%)of the issued share
capital(excludingtreasuryshares)oftheCompany(ascalculatedinaccordancewithsub-paragraph(2)below);
(2) (subjecttosuchcalculationasmaybeprescribedbytheSGX-ST)forthepurposeofdeterminingtheaggregate
numberofSharesthatmaybeissuedundersub-paragraph(1)above,thepercentageofissuedsharecapitalshall
bebasedontheissuedsharecapital(excludingtreasuryshares)oftheCompanyatthetimeofthepassingof
this Resolution, after adjusting for:
(a) newSharesarisingfromtheconversionorexerciseofconvertiblesecurities;
(b) new Shares arising from the exercise of any share options or vesting of any share awards which are
outstanding or subsisting at the time of the passing of this Resolution; and
(c) anysubsequentbonusissue,consolidationorsubdivisionofShares;
ARA ASSET MANAGEMENT L IMITED136
NOTICE OF ANNUAL GENERAL MEETING
(3) inexercisingtheauthorityconferredbythisResolution,theCompanyshallcomplywiththeprovisionsofthe
ListingManualoftheSGX-STforthetimebeinginforce(unlesssuchcompliancehasbeenwaivedbytheSGX-
ST)andtheBye-lawsoftheCompany;and
(4) unlessrevokedorvariedbytheCompanyinageneralmeeting,suchauthorityshallcontinueinforceuntilthe
conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General
MeetingoftheCompanyisrequiredtobeheld,whicheverisearlier.
[See Explanatory Note (i)] (Resolution 8)
8. Renewal of shareholders’ mandate for interested Person transactions
ThatforthepurposesofChapter9oftheListingManualoftheSGX-ST:
(a) approvalbegivenfortherenewalofthemandatefortheCompany,itssubsidiariesandassociatedcompanies
thatareentitiesatrisk(asthattermisusedinChapter9)oranyofthemtoenterintoanyofthetransactions
falling within the types of Mandated Transactions as described in Appendix A to the Company’s Letter to
ShareholdersandDepositorsdated10April2012(the“Letter”),withanypartywhoisoftheclassofMandated
Interested Persons described in Appendix A to the Letter, provided that such transactions are made on normal
commercial terms and will not be prejudicial to the interests of the Company and its minority shareholders and
in accordance with the guidelines and review procedures set out in Appendix A to the Letter;
(b) authoritybegiventotheDirectorsoftheCompanyand/oranyofthemtocompleteanddoallsuchactsand
things(includingexecutingallsuchdocumentsasmayberequired)astheyand/orhemayconsidernecessary,
desirable or expedient to give effect to this Resolution as they and/or he may think fit; and
(c) suchapprovalshall,unlessrevokedorvariedbytheCompanyinageneralmeeting,continueinforceuntilthe
conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General
MeetingoftheCompanyisrequiredtobeheld,whicheverisearlier.
[See Explanatory Note (ii)] (Resolution 9)
9. Renewal of share Purchase mandate
That for the purposes of the Companies Act of Bermuda and otherwise in accordance with the rules and regulations of
theSGX-ST,theDirectorsoftheCompanybeandareherebyauthorised:–
ANNUAL REPORT 2011 137
NOTICE OF ANNUAL GENERAL MEETING
(a) tomakepurchasesorotherwiseacquireissuedsharesinthecapitaloftheCompanyfromtimetotime(whether
bywayofmarketpurchasesoroff-marketpurchasesonanequalaccessscheme)ofuptotenpercent.(10%)of
thetotalnumberofissuedshares(excludingtreasuryshares)inthecapitaloftheCompany(asascertainedas
at the date of this Annual General Meeting of the Company) at the price of up to but not exceeding the
Maximum Price as defined in the Letter to Shareholders and Depositors dated 10 April 2012 and that this
mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion
of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of
theCompanyisrequiredbylawtobeheld,whicheverisearlier;and
(b) tocompleteanddoallsuchactsandthings(includingexecutingsuchdocumentsasmayberequired)asthey
mayconsiderexpedientornecessarytogiveeffecttothetransactionscontemplatedbythisResolution.
[See Explanatory Note (iii)] (Resolution 10)
By Order of the Board
Yvonne Choo
Company Secretary
Singapore, 10 April 2012
explanatory notes to Resolutions to be passed –
(i) TheOrdinaryResolution8proposedinitem7above,ifpassed,willempowertheDirectorsoftheCompanyfrom
the date of this Annual General Meeting until the date of the next Annual General Meeting of the Company,
orthedatebywhichthenextAnnualGeneralMeetingoftheCompanyisrequiredtobeheldorsuchauthority
is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant
instruments convertible into shares and to issue shares pursuant to such instruments, up to a number not
exceeding,intotal,50%ofthetotalnumberofissuedshares(excludingtreasuryshares)inthecapitalofthe
Company,ofwhichupto20%maybeissuedotherthanonapro-ratabasistoexistingshareholdersoftheCompany.
For the purposes of determining the aggregate number of shares that may be issued, the percentage of issued
sharecapitalwillbecalculatedbasedontheissuedsharecapital(excludingtreasuryshares)oftheCompany
at the time this Ordinary Resolution is passed, after adjusting for new shares arising from the conversion or
exercise of any convertible securities, the exercise of any share options or the vesting of any share awards
whichareoutstandingorsubsistingatthetimewhenthisOrdinaryResolutionispassed,andanysubsequent
bonusissueorconsolidationorsubdivisionofshares.
(ii) TheOrdinaryResolution9proposedinitem8above,ifpassed,willrenewthemandatetoallowtheCompany,
its subsidiaries and associated companies that are entities at risk or any of them to enter into the Mandated
Transactionsdescribed inAppendixAtotheLettertoShareholdersandDepositorsdated10April2012(the
ARA ASSET MANAGEMENT L IMITED138
NOTICE OF ANNUAL GENERAL MEETING
“Letter”)withanypartywhoisoftheclassofMandatedInterestedPersonsdescribedinAppendixAtothe
Letter,andwillempowertheDirectorsoftheCompanytodoallactsnecessarytogiveeffecttothemandate.
This authority will, unless revoked or varied by the Company in a general meeting, continue in force until the
conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General
MeetingoftheCompanyisrequiredtobeheld,whicheveristheearlier.PleaserefertotheLetterformoredetails.
(iii) TheOrdinaryResolution10proposedinitem9above,ifpassed,willempowertheDirectorsfromthedateofthis
Annual General Meeting until the next Annual General Meeting to repurchase ordinary shares of the Company
bywayofmarketpurchasesoroff-marketpurchasesofupto10%ofthetotalnumberofissuedshares(excluding
treasuryshares) inthecapitaloftheCompanyattheMaximumPrice. Informationrelatingtothisproposed
ResolutionaresetoutintheLetter.
notes:
1. AShareholderbeingaDepositorwhosenameappearsintheDepositoryRegister(asdefinedinSection130Aofthe
CompaniesAct,Cap.50ofSingapore)isentitledtoappointaproxytoattendandvoteinhis/herstead.Aproxyneed
notbeaMemberoftheCompany.
2. IfaDepositorwishestoappointaproxy/proxiestoattendtheMeeting,thenhe/shemustcompleteanddepositthe
Depositor Proxy Form at the office of the Singapore Share Transfer Agent, Boardroom Corporate & Advisory Services
Pte.Ltd.at50RafflesPlace#32-01,SingaporeLandTower,Singapore048623,atleastforty-eight(48)hoursbefore
thetimeoftheMeeting.
3. IftheDepositorisacorporation,theinstrumentappointingaproxymustbeexecutedundersealorthehandofitsduly
authorisedofficerorattorney.
ANNUAL REPORT 2011 139
NOTICEISHEREBYGIVENthattheShareTransferBooksandRegisterofMembersofARAASSETMANAGEMENTLIMITED(the
“Company”)willbeclosedat5.00p.m.on7May2012forthepreparationofdividendwarrants.
Duly completed registrable transfers received by the Company’s Share Transfer Agent, Boardroom Corporate & Advisory
ServicesPte.Ltd.at50RafflesPlace#32-01,SingaporeLandTower,Singapore048623upto5.00p.m.on7May2012will
beregisteredtodetermineshareholders’entitlementstothesaiddividend.MemberswhoseSecuritiesAccountswithThe
CentralDepository(Pte)Limitedarecreditedwithsharesat5.00p.m.on7May2012willbeentitledtotheproposeddividend.
Payment of the dividend, if approved by shareholders at the Annual General Meeting to be held on 26 April 2012 will be made
on22May2012.
NOTICE OF BOOKS CLOSURE
ARA ASSET MANAGEMENT L IMITED140
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A R A A S SE T M A N AG EMEN T LIMIT ED
A n n u A l R e p o R t 2 0 1 1
www.ara-asia.com
Singapore
6 temasek Boulevard#16-02, Suntec tower Four Singapore 038986tel: 65 6835 9232Fax: 65 6835 9672
Hong Kong unit 5508 - 10, 55th Floor, the Center99 Queen’s Road CentralHong Kongtel: 852 2169 0928Fax: 852 2169 0968
MalaySia penthouse, Menara AmFirstno. 1, Jalan 19/3 46300 petaling Jaya Selangor Darul ehsan Malaysia tel: 603 7955 8780/5 Fax: 603 7955 8360
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10 YEARS oF ACHIEVEMENTS十年辛勤筑辉煌
10years