Page 8 - Forterra

06 ANNUAL REPORT 2012
CHAIRMAN’S STATEMENT
Basic net asset value (“NAV”) per unit as at 31 December
2012 is S$4.44 (31/12/11 S$4.62)1, after excluding deferred
tax equivalent to S$1.74/unit. The reduction in NAV per unit
across 2012 was due predominantly to foreign exchange
rate volatility which witnessed a 6.2% appreciation of the
S$ against the US$2 and 5.1% appreciation of the S$ against
the Chinese Renminbi (“RMB”)3 across the 12 month period
ended 31 December 2012.
The Board was also revitalized during 2012 with the
introduction of Mr. Graham Sugden, Mr. Xu Sitao4 and
Mr. Yoon Wai Nam as independent non-executive Directors
ensuring that the Board remained majority independent
in accordance with the Business Trust Regulations and
bringing real estate, corporate finance and direct China
expertise onto the board. Mr. Graham Sugden assumed
the role as Board Chairman in October 2012 following the
decision of Mr. Richard Barrett to step down from the role.
The clarification of the issues external to Forterra’s Asia
operations, the solid operational performance of Forterra
throughout 2012 and the finalization of the Goldman Sachs
review has provided the Board with a strong foundation
to set a clear strategy for 2013 and into the medium term
to meet expectations for a defined timetable to deliver
optimum unitholder value.
In summary the Board’s strategy, outlined below, is
underpinned by the following deliverables:
1. Provide consistent recurrent income from lease rental
revenue to underwrite stable unitholder distributions
no later than 2015;
“With a tough year behind us Forterra can anticipate an exciting 2013 as the
completion of its flagship asset The HQ moves towards reality.”
2. Significantly reduce the “development asset discount”
inherent in Forterra’s unit price; and
3. Provide certainty in regard to the ongoing cashflow
liquidity of the Trust.
This will be achieved by:
1. Successfully completing, in a timely manner, The
HQ development, thus delivering long term stable
earnings in excess of RMB700 million per annum on an
annualized basis upon its relaunch in 2014;
2. Repositioning the Trust’s balance sheet to minimize
future development through the completion of The
HQ, which will result in 94% of the Trust assets5 being
stabilized in nature;
3. Completing the disposals of Central Plaza and Beijing
Logistics Park, which are expected to achieve in excess
of RMB1.0 billion in net cash for the Trust;
4. Giving no consideration to additional balance sheet
growth via asset acquisitions until at least The HQ is
complete, rental revenues are stabilized and liquidity
is normalized; and
5. Not undertaking development of either Huai Hai
Mall or Central Park Mall during 2013; whilst
pre-development work will continue in respect of
the assets to ensure that the appropriate regulatory
approvals are secured in a timely manner.
1 S$4.20/unit on a fully diluted basis (S$4.31/unit as at 31/12/11)
2 As at 31 December 2012 US$1 = S$1.2225;
31 December 2011 US$1 = S$1.2987
3 As at 31 December 2012 S$1 = RMB5.096;
31 December 2011 S$1 = RMB4.848
4 Mr. Xu Sitao was appointed as a Non-Executive Director on
18 May 2012. The Board determined him to be an
independent director in July 2012
5 By value as at 31 December 2012