Page 7 - SAR141018_Forterra AR 2013

FORTERRA
ANNUAL REPORT 2013 5
“To preserve steady growth and Unitholders’ interests, we would focus all
our endeavors and resources to build quality, value and market reputation
to guide our operations and undertakings.”
Eric CHUNG Chun Kwong
Chairman of the Board
consideration of S$333.47 million
resulting in a net cash proceeds
of circa S$159.20 million which
further strengthened the Trust’s
cashflow liquidity and financial
positions and enable the Trust to
focus its development of its core
asset – The Place (formerly known
as The HQ). The successful sale
of Central Plaza also resulted in
a gain of S$17.96 million which
reinforced the Trust’s capability
to reposition under-performing
assets and provide proactive
management solutions to deliver
higher value and return.
NAN FUNG’s STRENGTH
On 28 August 2013, Nan Fung
International Holdings Limited
(“Nan Fung”) , through i ts
subsidiar ies, completed the
acquisition of 100% of the equity
interest of the Trustee-Manager
and the Property Manager by
acquiring Oriental Management
Services Limited, the sponsor of
the Trustee-Manager, and 26.90%
of the units in issue of the Trust as
well as 3.08% of the units in issue
secured by certain put and call
options which were subsequently
exercised on 21 January 2014.
As a result of the acquisition of
the units, Nan Fung became the
largest unitholder of the Trust.
Nan Fung is one of the
largest privately-owned property
developers in Hong Kong, with
over 47 years of solid experience
in real estate development in Hong
Kong and 20 years in China. Major
business activities of the group
are real estate development and
investment, construction, property
management and f inancial
investment. In China, Nan Fung
currently has projects in Shanghai,
Guangzhou, Wuxi, Dalian, Tianjin,
Sanya, etc and is also the second
largest shareholder of Hong Kong
listed Sino Ocean Land. Other than
Hong Kong and China, Nan Fung
also has investments in Singapore,
Malaysia, South Korea, Japan, and
New Zealand.
Market has responded positively
to Nan Fung’s acquisition. The
Trust’s unit price rose from S$1.63
to S$2.20 after the announcement
of the acquisition.
FOCUSING ON LAUNCHING
FLAGSHIP PROJECT – THE PLACE
The Board is delighted to announce
that The HQ is now rebranded
as The Place to leverage on the
reputation and recognition of Nan
Fung as “The Place” is the brand
that Nan Fung uses for its retail
mall in China. The new branding
of The Place reflects the strong
confidence of Nan Fung in the
Trust and its operations in Greater
China.
The Place’s development has
achieved a number of milestones
during the year. For The Place
Phase 1 (formerly known as
The HQ 1) refurbishment, it is
substantial ly completed and
discussions with tenants for their
fit-out works have commenced
since February 2014. Construction
work at The Place Phase 3
(formerly known as The HQ 3)
is well underway with structure
topping out successfully completed
on 16 January 2014.
The Place Phase 1 retail pre-
commitment remained in excess
of 50.0%, of which written
confirmation of interest, including
leases under detailed negotiation,
was approximately 42.1% as at
31 December 2013 and the balance
represented work in progress.
Fol lowing the change in the
management in October 2013, the
Property Manager has performed
an extensive review of the
operational and development
timeline of The Place which is now
expected for The Place Phase 1 to
be launched in Q3 2014, and The
Place Phase 2 (formerly known as
The HQ 2) and The Place Phase 3
in Q4 2014. The revision to the
completion and opening schedule
is the result of unforeseen events,
a recalibrated development and
operational review undertaken
by management to optimise the
overall positioning, tenant mix and
launch of The Place, with particular
consideration given to changing
opportunities in market conditions.
Management remains committed
to focus on the successful
completion of The Place project in
a timely manner, and consequently
there are no plans for additional
balance sheet growth via asset
acquisitions until the development
of The Place is completed.
The Board has determined that
it is prudent, with regard to the
Trust’s revenue budget, operations
and strategy, and in particular, the
completion of The Place and the
planned commencement of the
refurbishment of Huai Hai Mall
in 2014, that there would not be
a distribution declared for the
year ended 31 December 2013.
Nonetheless, the Board maintains
its commitment to commence
distributions no later than FY 2015.
HEALTHY FINANCIAL POSITION
The Trust maintained a healthy
financial position throughout the
year. As at 31 December 2013,
the Trust gearing ratio stood at
32.6% (total borrowing to total
assets), which was still far from