(e) Investment properties of the Group are held mainly for use by tenants under operating leases. Minimum lease payments receivable under non-cancellable operating leases of investment properties and not recognised in the financial statements are as follows:
The Group
$’0002014 2013
$’000 Lease rentals receivable:
Not later than 1 year 589,242 538,246
Between 1 and 5 years 1,294,963 940,382
After 5 years 180,075 111,090
2,064,280 1,589,718
(f) Contingent rents, representing income based on sales turnover achieved by tenants, amounted to $15.8 million for the year (2013: $7.0 million).
6 SUBSIDIARIES
The Company
$’0002014 2013
$’000
(a) Unquoted shares, at cost 6,957,295 7,439,486
Less:
Allowance for impairment loss (239,064) (278,992)
6,718,231 7,160,494
Add:
Amounts due from subsidiaries:
Loan accounts
- interest bearing 3,101,250 3,101,250
- interest free 3,245,518 2,737,322
Less:
Allowance for doubtful receivables (258,698) (259,438)
6,088,070 5,579,134
12,806,301 12,739,628
(i) The loans to subsidiaries form part of the Company’s net investment in the subsidiaries. These loans are unsecured and settlement is neither planned nor likely to occur in the foreseeable future.
(ii) As at 31 December 2014, the effective interest rates for amounts due from subsidiaries ranged from 1.85% to 2.95% (2013: 1.85% to 2.95%) per annum.
Notes to the Financial Statements
Year ended 31 December 2014
Notes to the Financial Statements
Year ended 31 December 2014 6 SUBSIDIARIES (cont’d)
(a) Unquoted shares, at cost (cont’d)
(iii) Movements in allowance for impairment loss were as follows:
The Company
Note 2014
$’000 2013
$’000
At 1 January (278,992) (87,459)
Allowance during the year 27(c)(iii) (9,832) (191,961)
Reversal of allowance during the year 27(a) 49,760 –
Allowance utilised upon disposal of a subsidiary – 428
At 31 December (239,064) (278,992)
The allowance for impairment loss amounting to $9.8 million for 2014 (2013: $192.0 million) was recognised in respect of the Company’s investments in certain subsidiaries as a result of losses incurred by these subsidiaries in their underlying investments. These investments are mainly in the non-core markets and the Group has taken impairments on the value of these investments in view of the deteriorating economic condition of these markets. The recoverable amounts for each of the relevant subsidiaries were estimated based on the higher of the value in use calculations using cash flow projections based on forecasts covering a three-year period, or the fair value of the net assets as at balance sheet date.
In 2014, a reversal of impairment of $49.8 million was recognised in respect of a subsidiary as a result of an increase in the recoverable amount. The recoverable amount was determined based on fair value less costs of disposal. The fair value measurement was estimated using the net tangible assets and categorised as Level 3 on the fair value hierarchy. The higher recoverable amount is due to better operating performance of the subsidiary as a result of the improved market conditions in the country where the subsidiary operates.
(iv) The movements in allowances for doubtful receivables in respect of the amounts due from subsidiaries were as follows:
The Company
Note 2014
$’000 2013
$’000
At 1 January (259,438) (186,247)
Allowance during the year (22,197) (73,191)
Reversal of allowance during the year 27(a) 22,937 –
At 31 December (258,698) (259,438)
The allowance/(reversal of allowance) for doubtful receivables were made based on estimated future cash flow recoveries.
Notes to the Financial Statements
Year ended 31 December 2014 6 SUBSIDIARIES (cont’d)
(b) The significant subsidiaries directly and indirectly held by the Company, which are incorporated and conducting business in the Republic of Singapore, are as set out below:
Effective interest
Name of Company 2014
% 2013
%
CapitaLand China Holdings Pte Ltd1 100 100
CapitaLand Regional Investments Limited 100 100
CapitaLand Residential Limited 100 100
CapitaLand Singapore Limited 100 100
CapitaLand Treasury Limited 100 100
CapitaMalls Asia Limited 100 2 65.4
Sound Investment Holdings Pte Ltd 100 –
The Ascott Limited 100 100
All the above subsidiaries are audited by KPMG LLP Singapore.
1 Indirectly held through CapitaLand Residential Limited.
2 Includes 34.7% interest indirectly held through Sound Investment Holdings Pte Ltd.
(c) The following subsidiaries of the Group have material non-controlling interests (NCI):
Effective interest held by NCI
Name of Company Principal place of business 2014
% 2013
%
CapitaCommercial Trust1 Singapore 68.3 67.9
Ascott Residence Trust2 Asia Pacific and Europe 54.2 54.7
CapitaMalls Asia Limited Singapore and China – 3 34.6
All the above subsidiaries are audited by KPMG LLP Singapore.
1 Indirectly held through CapitaLand Singapore Limited.
2 Indirectly held through The Ascott Limited.
3 CapitaMalls Asia Limited has become a 100% owned subsidiary during the year.
Although the Group owns less than half of the ownership interest and voting power of ART and CCT, management has determined that the Group has control over these investees as the Group has ability to direct the activities of these investees that significantly affect the Group’s overall exposure to variable return in these investees (note 2.1(a)(i)).
Notes to the Financial Statements
Year ended 31 December 2014 6 SUBSIDIARIES (cont’d)
The following table summarises the financial information of each of the Group’s subsidiaries with material NCI, based on their respective consolidated financial statements prepared in accordance with FRS, modified for fair value adjustments on acquisition and differences in the Group’s accounting policies. The information is before inter-company eliminations with other companies in the Group.
Group CCT
$’000
GroupART
$’000
Other subsidiaries with individually immaterial
$’000NCI Total
$’000
2014
Revenue 262,608 357,205
Profit after tax 448,882 130,372
Other comprehensive income 3,023 (7,710)
Total comprehensive income 451,905 122,662
Attributable to NCI:
- Profit 305,157 74,331 219,357 598,845
- Total comprehensive income 306,412 69,729 238,795 614,936
Current assets 139,430 316,972
Non-current assets 6,381,629 3,804,920
Current liabilities (328,795) (375,728)
Non-current liabilities (1,038,776) (1,392,928)
Net assets 5,153,488 2,353,236
Net assets attributable to NCI 3,519,192 1,389,495 1,541,842 6,450,529 Cash flows from:
- Operating activities 188,505 152,551
- Investing activities 51,702 (460,624)
- Financing activities1 (223,186) 298,077
Net increase/(decrease) in cash
and cash equivalents 17,021 (9,996)
1 Includes dividends paid to NCI (165,316) (66,513)
Notes to the Financial Statements
Year ended 31 December 2014 6 SUBSIDIARIES (cont’d)
$’000CMA
Group CCT
$’000
GroupART
$’000
Other subsidiaries with individually immaterial
$’000NCI Total
$’000
2013
Revenue 640,688 251,463 316,609
Profit after tax 660,366 374,590 215,354
Other comprehensive income 176,895 9,728 29,798 Total comprehensive income 837,261 384,318 245,152 Attributable to NCI:
- Profit 283,292 254,736 120,789 106,464 765,281
- Total comprehensive income 324,519 257,392 135,925 66,027 783,863
Current assets 1,777,990 117,786 323,853
Non-current assets 10,669,831 6,127,695 3,258,144 Current liabilities (632,226) (62,867) (168,909) Non-current liabilities (4,015,095) (1,269,901) (1,225,958)
Net assets 7,800,500 4,912,713 2,187,130
Net assets attributable to NCI 3,123,650 3,334,131 1,238,546 649,587 8,345,914
Cash flows from:
- Operating activities 191,210 195,039 151,984 - Investing activities 351,202 60,527 (220,351) - Financing activities1 (201,113) (289,827) 148,535 Net increase/(decrease) in cash
and cash equivalents 341,299 (34,261) 80,168
1 Includes dividends paid to NCI (84,275) (156,896) (60,091)
CCT and ART are regulated by the Monetary Authority of Singapore and are supervised by the Singapore Exchange Securities Trading Limited for compliance with the Singapore Listing Rules. Under the regulatory framework, transactions with the REITs are either subject to review by the REITs’ trustees or significant transaction must be approved by a majority of votes by the remaining holders of units in the REITs at a meeting of unitholders.
Notes to the Financial Statements
Year ended 31 December 2014
7 ASSOCIATES
The Group
$’0002014 2013
$’000 Restated
(a) Investment in associates 8,059,963 8,424,435
Less:
Allowance for impairment loss (50,514) (58,563)
8,009,449 8,365,872
Add:
Amounts due from associates:
Loan accounts
- interest free 240,530 313,804
- interest bearing 539,720 331,289
780,250 645,093
8,789,699 9,010,965
Less:
Allowance for doubtful receivables – (54)
8,789,699 9,010,911
(i) Movements in allowance for impairment loss were as follows:
The Group
Note 2014
$’000 2013
$’000
At 1 January (58,563) (28,049)
Allowance made during the year 27(c)(iii) (60,103) (50,514)
Allowance utilised during the year 68,152 20,000
At 31 December (50,514) (58,563)
(ii) The loans to associates form part of the Group’s net investment in associates. These loans are unsecured and settlement is neither planned nor likely to occur in the foreseeable future.
(iii) As at 31 December 2014, the effective interest rate for the loans to associates ranged from 1.47% to 1.50% (2013: 2.09%) per annum.
(iv) Loan accounts include an amount of approximately $331.3 million (2013: $331.3 million), the repayment of which is subordinated to that of the external borrowings of an associate.
Notes to the Financial Statements
Year ended 31 December 2014
7 ASSOCIATES (cont’d)
The Group
Note 2014
$’000 2013
$’000 Restated (b) Amounts due from/(to) associates:
Current accounts (unsecured)
- interest free (trade) 31,086 35,657
- interest free (non-trade) 34,479 87,466
- interest bearing (non-trade) 276,715 338,511
342,280 461,634
Less:
Allowance for doubtful receivables – (2,544)
12 342,280 459,090
Current accounts (mainly non-trade and unsecured)
- interest free (214,004) (178,826)
- interest bearing (132,523) (389,284)
17 (346,527) (568,110)
Non-current loans (unsecured)
- interest free – (276)
- interest bearing (136,385) (145,855)
21 (136,385) (146,131)
(c) The Group has three (2013: three) associates that are material and a number of associates that are individually immaterial to the Group. All are equity-accounted. The following are the material associates:
Effective interest
Name of Company Nature of relationship
with the Group Principal place
of business 2014
% 2013
%
CapitaMall Trust1 (CMT) Singapore-based REIT Singapore 27.7 18.1
which invests in shopping
malls in Singapore
CapitaRetail China Trust1 (CRCT) Singapore-based REIT China 26.9 16.7
which invests in shopping
malls in China
Raffles City China Fund Ltd2,3 (RCCF) Private equity fund which China 55.0 49.8
invests in five Raffles City
integrated developments
in China
All the above associates are audited by KPMG LLP Singapore.
1 Indirectly held through CapitaMalls Asia Limited.
2 Indirectly held through CapitaMalls Asia Limited and CapitaLand China Holdings Pte Ltd.
3 Considered to be an associate as key decisions are made by an independent board which the Group does not have majority control.
Notes to the Financial Statements
Year ended 31 December 2014 7 ASSOCIATES (cont’d)
The following summarises the financial information of each of the Group’s material associates based on their respective consolidated financial statements prepared in accordance with FRS, modified for fair value adjustments on acquisition and differences in the Group’s accounting policies. The table also includes summarised financial information for the Group’s interest in immaterial associates, based on the amounts reported in the Group’s consolidated financial statements.
GroupCMT
$’000
CRCT Group
$’000
RCCF Group
$’000
Other individually immaterial associates
$’000 Total
$’000 2014
Revenue 658,851 203,262 298,878
Profit after tax 618,875 146,355 124,131
Other comprehensive income 18,695 58,313 (5,891) Total comprehensive income 637,570 204,668 118,240 Attributable to:
- NCI – 2,457 38,452
- Associate’s shareholders 637,570 202,211 79,788
Current assets 1,154,650 99,520 678,498
Non-current assets 8,703,657 2,258,542 4,575,355 Current liabilities (1,015,527) (396,439) (269,212) Non-current liabilities (2,560,341) (583,807) (1,973,541)
Net assets 6,282,439 1,377,816 3,011,100
Attributable to:
- NCI – 28,078 436,678
- Associate’s shareholders 6,282,439 1,349,738 2,574,422 Carrying amount of interest in
associate at beginning of
the year 1,638,539 303,278 1,313,734
Additions during the year 8,225 21,337 11,200 Group’s share of:
- Profit 165,776 39,384 46,681 374,987 626,828
- Other comprehensive income 6,637 15,692 (2,798) 35,503 55,034 - Total comprehensive income 172,413 55,076 43,883 410,490 681,862 Dividends received during the year (102,363) (16,475) –
Translation and other adjustments – – 47,115
Carrying amount of interest in
associate at end of the year 1,716,814 363,216 1,415,932 4,513,487 8,009,449 Fair value of ownership interest
(if listed)^ 1,955,385 305,036 N/A
^ Based on the quoted market price at 31 December (Level 1 in the fair value hierarchy).
Notes to the Financial Statements
Year ended 31 December 2014 7 ASSOCIATES (cont’d)
GroupCMT
$’000
CRCT Group
$’000
RCCF Group
$’000
Other individually immaterial associates
$’000 Total
$’000 2013
Revenue 637,590 160,075 263,176
Profit after tax 574,366 135,948 225,830
Other comprehensive income 14,440 51,613 69,208 Total comprehensive income 588,806 187,561 295,038 Attributable to:
- NCI – 3,081 60,766
- Associate’s shareholders 588,806 184,480 234,272
Current assets 851,407 118,872 579,726
Non-current assets 8,368,551 2,065,419 4,239,762 Current liabilities (686,693) (507,034) (602,584) Non-current liabilities (2,524,521) (463,392) (1,428,241)
Net assets 6,008,744 1,213,865 2,788,663
Attributable to:
- NCI – 26,914 400,056
- Associate’s shareholders 6,008,744 1,186,951 2,388,607
Carrying amount of interest in associate at beginning of
the year 1,559,081 241,056 1,046,028
Additions during the year 5,585 23,884 106,931 Group’s share of:
- Profit 151,556 34,736 96,196 303,444 585,932
- Other comprehensive income 2,074 13,188 40,809 104,226 160,297 - Total comprehensive income 153,630 47,924 137,005 407,670 746,229 Dividends received during the year (79,757) (9,586) –
Translation and other adjustments – – 23,770
Carrying amount of interest in
associate at end of the year 1,638,539 303,278 1,313,734 5,110,321 8,365,872 Fair value of ownership interest
(if listed)^ 1,810,761 226,955 N/A
^ Based on the quoted market price at 31 December (Level 1 in the fair value hierarchy).
(d) The Group’s share of the contingent liabilities of the associates is $687.2 million (2013: $400.4 million).