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CONTENTSCorporate Information 02
Financial Highlights 03
Portfolio Summary 05
Message from the Chairman and the Managing Director 06
Message from the Chief Executive Officer 09
IGB REIT Structure 13
Salient Features of IGB REIT 14
Management Reporting Structure 16
Profile of Directors 17
Profile of Management 21
Manager’s Report 23
Corporate Governance Statement 25
Audit Committee Report 32
Financial Review 35
Financial Statements 36
Statistics of Unitholders 84
�IGB Real Estate Investment TrustAnnual Report 2012
MANAGERIGBREITManagementSdnBhd(908168-A)
Level3�,TheGardensSouthTower,MidValleyCity,LingkaranSyedPutra,
59�00KualaLumpur,Malaysia
Telephone:603��898989
Telefax:603��89880�
COMPANY SECRETARYTinaChanLaiYin
REGISTRARIGBCorporationBerhad(ShareRegistrationDepartment)
Level3�,TheGardensSouthTower,MidValleyCity,LingkaranSyedPutra,
59�00KualaLumpur,Malaysia.
Telephone:603��898989
Telefax:603��89880�
TRUSTEEAmTrusteeBerhad(16303�-V)
Level��,BangunanAmBankGroup,55JalanRajaChulan,
50�00KualaLumpur,Malaysia
Telephone:603�036�633
Telefax:603�03�1914
PROPERTY MANAGERChartwellITACInternationalSdnBhd(5�31�-H)
SuiteA-6-3,Level6,BlockA,PutraMajestik,JalanKasipillay,
Batu�½,OffJalanIpoh,51�00KualaLumpur,Malaysia
Telephone:60340433998
Telefax:60340439388
AUDITORSPricewaterhouseCoopers(AF1146)
Level10,1Sentral,JalanTravers,KualaLumpurSentral,
50706KualaLumpur,Malaysia
Telephone:603�1731188
Telefax:603�1731�88
PRINCIPAL BANKERSHongLeongBankBerhad(97141-X)
Level5,WismaHongLeong,18JalanPerak,
50450KualaLumpur,Malaysia
Telephone:603�164�8�8
Telefax:603�164�503
PublicBankBerhad(6463-H)
HeadOffice,MenaraPublicBank,146JalanAmpang,
50450KualaLumpur,Malaysia
Telephone:603�1766000
Telefax:603�1639917
STOCK EXCHANGE LISTINGMainMarketofBursaMalaysiaSecuritiesBerhad
StockCode:5��7
StockName:IGBREIT
WEBSITE ADDRESSwww.igbreit.com
INVESTOR RELATIONSEmail:enquiry@igbreit.com
CorporateInformation
BOARD OF DIRECTORS
Independent Non-Executive ChairmanTanSriDato’Dr.LinSeeYan
Managing DirectorRobertTanChungMeng
Executive DirectorsTanBoonLee
DanielYongChen-I
ElizabethTanHuiNing
Independent Non-Executive DirectorsHalimbinHajiDin
LeChingTai@LeeChenChong
Non-Independent Non-Executive DirectorsTanLeiCheng
TanYeeSeng
3IGB Real Estate Investment Trust
Annual Report 2012
FinancialHighlights
Financial Period * Forecast Period * Variance 31 December 2012 31 December 2012Statement of Comprehensive Income RM’000 RM’000 RM’000
TotalRevenue 115,�85 110,718 4,567
NetPropertyIncome 76,174 74,084 �,090
DistributableIncome 6�,333 60,866 1,467
Distributionperunit(“DPU”)(sen) 1.83 1.79 0.04
AnnualisedDPU(sen) 6.50 6.36 0.14
*From�0September�01�to31December�01�.
Statement of Financial Position As at 31 December 2012
TotalAssetValue(RM’000) 4,89�,134
NetAssetValue(“NAV”)(afterdistributableincome)(RM’000) 3,484,044
NAVperunit(beforedistributableincome)(RM) 1.0431
NAVperunit(afterdistributableincome)(RM) 1.0�47
NAV PER UNIT PERFORMANCE (BEFORE DISTRIBUTABLE INCOME)
4IGB Real Estate Investment TrustAnnual Report 2012
FinancialHighlights(cont’d)
1.28
1.30
1.32
1.34
1.39
1.37
1.4 1.4
1.37
1.34 1.34 1.34 1.34
1.33
1.35
1.32
1.33 1.33
1.36
1.38
1.40
1.42
21DEC
28DEC
31DEC
14DEC
7DEC
30NOV
23NOV
16NOV
9NOV
2NOV
26OCT
19OCT
12OCT
5OCT
28SEP
21SEP
Trading performance
Closingpriceasat31December�01�(RM) 1.33
Highesttradedpriceduringthefinancialperiod(RM) 1.44
Lowesttradedpriceduringthefinancialperiod(RM) 1.31
Capitalappreciation 6.4%
Annualtotalreturn/Averagetotalreturnsincelisting 11.3%
Unitsincirculation(‘000) 3,400,000
Marketcapitalisationasat31December�01�(RM’000) 4,5��,000
5IGB Real Estate Investment Trust
Annual Report 2012
PortfolioSummary
PORTFOLIO COMPOSITION
Properties
Mid Valley Megamall The Gardens Mall
Landareaofmastertitle(sqft)
Tenure
Mastertitleinformation
Encumbrances/materiallimitationsinmastertitle(1)
Restrictionsininterestinmastertitle
Expressconditionsinmastertitle
Type
AppraisedValueasat31December�01�(RM’000)
Purchaseconsideration(RM’000)
NLAasat31December�01�(sqft)
GFAasat31December�01�(sqft)
Numberoftenanciesasat31December�01�
Occupancyrateasat31December�01�(%)
Numberofcarparkbaysasat31December�01�
Notes:(1) MidValleyCitySdnBhdhadon15August2012obtainedtheStateAuthority’sconsentforthetransferofMidValleyMegamallinfavourofAmTrusteeBerhad.(2) MidValleyCityDevelopmentsSdnBhdhadon16March2012obtainedtheStateAuthority’sconsentforthetransferofTheGardensMallinfavourofMidValley
CityGardensSdnBhd(“MVCG”),andMVCGhadinturnon15August2012,obtainedtheStateAuthority’sconsentforthetransferofTheGardensMallinfavourofAmTrusteeBerhad.
1,047,53�
Leasehold interest of 99 years expiring on 6June�103
PN 37075, Lot 80 Seksyen 95A, Bandar KualaLumpur, Daerah Kuala Lumpur, WilayahPersekutuanKualaLumpur
Trust caveat lodged by Amtrustee Berhadon behalf of IGB REIT vide presentationNo.15448/�01�on14September�01�
This land shall not be transferred, leased,securedorchargedexceptwiththeconsentoftheFederalTerritoryLandExecutiveCommitteeSecretariat (Tanahinitidakbolehdipindahmilik,dipajak,dicagarataudigadaimelainkandengankebenaran Jawatankuasa Kerja Tanah WilayahPersekutuanKualaLumpur)(1)
Thislandshallbeusedforcommercialbuildingonly(Tanahinihendaklah(Tanahinihendaklahhanyauntukbangunanperdagangansahaja)
Retail
3,500,000
3,440,000
1,751,864
6,107,103
475
99.8
6,10�
4�1,773
Leasehold interest of 99 years expiring on 6June�103
PN 37073, Lot 70 Seksyen 95A, Bandar KualaLumpur, Daerah Kuala Lumpur, WilayahPersekutuanKualaLumpur
• Privatecaveat lodgedbyAmTrusteeBerhadon behalf of IGB REIT vide presentationNo.1�690/�01�on�6July�01�
• Trust caveat lodged by AmTrustee Berhadon behalf of IGB REIT vide presentationNo.1447�/�01�on30August�01�
• Trust caveat lodged by Amtrustee Berhadon behalf of IGB REIT vide presentationNo.16049/�01�on�6September�01�
This land shall not be transferred, leased,securedorchargedexceptwiththeconsentoftheFederalTerritoryLandExecutiveCommitteeSecretariat(Tanah initidakbolehdipindahmilik,dipajak,dicagarataudigadaimelainkandengankebenaran Jawatankuasa Kerja Tanah WilayahPersekutuanKualaLumpur)(2)
Thislandshallbeusedforcommercialbuildingonly(Tanahinihendaklahhanyauntukbangunanperdagangansahaja)
Retail
1,�00,000
1,160,000
816,910
3,379,510
�06
99.5
4,1�8
6IGB Real Estate Investment TrustAnnual Report 2012
MessagefromtheChairmanandtheManagingDirector
DEAR UNITHOLDERS,
ON BEHALF OF THE BOARD OF DIRECTORS, WE ARE DELIGHTED TO EXTEND OUR DEEPEST AND SINCERE APPRECIATION TO ALL UNITHOLDERS, TENANTS, BUSINESS PARTNERS AND THE AUTHORITIES, NAMELY SECURITIES COMMISSION MALAYSIA AND BURSA MALAYSIA SECURITIES BERHAD FOR THEIR COMMITTED SUPPORT DURING THE PUBLIC LISTING OF IGB REIT.
“ONTHEDAYOFLISTING,THEUNITPRICEOFIGBREITACHIEVEDAHIGHOFRM1.41AGAINSTIPOPRICE
OFRM1.25ANDCLOSEDAT RM1.39.“
7IGB Real Estate Investment Trust
Annual Report 2012
POISED FOR GREATNESS
Malaysia’s retail industry recorded sales growth of 6.9%in the first quarter of �01�, boosted by various incentivesintroducedbytheGovernmentsincelatelastyear.
Industry observers are cautiously optimistic about theperformanceofthelocalretailindustryforthefourthquarterdespitehopesofbonusesandyear-endpromotions.Thisisprimarily due to the uncertainty created by the timing ofimpending general election and less-than-stellar globaleconomic conditions. The local retail industry is cyclical,dependingonwhetherit’safestiveornon-festiveseason.
InMalaysia,domesticdemandisstillstrongandgoingshoppingis considered one of the most affordable family outings.Malaysian consumers will still remain cautious in their retailspending.Inlinewiththehostofcelebrationsthatthiscountryenjoys through our very own Four Seasons of Chinese NewYear,HariRaya,DeepavaliandChristmasyearendcelebrations,consumer spending and revenue generation will continuetoflourishandsustain itself inthe longrun.Howeverweareconfidentandremainbullishaboutourchancesandforeseeaprofitableoutcomefortheyeartocome.
Withproactivestepstakentoopenupnewsaleschannelsandnewmarketingstrategies,weexpectamarkedimprovementinfinancialperformancefortheyearahead.ThefocusthisyearwillbetoputIGBREIT’spropertyportfolioinastrongerpositioninthecompetitiveretailmarketthroughenhancedmanagementstrategiesandbrandrenewals.
ThiswillincreaseoursalesvolumeandprovidetheimpetusforIGBREITtoachieveasteadygrowthrateintheyearstocome.Newandinnovativemarketingstrategiesandincentivesarealsobeingintroducedthroughouttheyeartomotivatethefrontlinestafftodoubletheireffortsandpushforhigheryieldsandreturns.
FINANCIAL RESULTS
Forthefinancialperiodended31December�01�,IGBREITpostedapre-taxprofitofRM153.3millionwithtotalrevenueamountingtoRM115.3million.
IGBREIT’scurrentyearperiod-to-date,revenueandnetpropertyincome,mainlyfromtherentalincomeofMidValleyMegamallandTheGardensMallwereRM115.3millionandRM76.�millionrespectively.
WebelievethattherelativelyyoungTheGardensMallshouldactasthegrowthdriverforIGBREIT.Thismallisonlyfouryearsoldandhasgonethrough only one cycle of rental reversion. A very sizeable 54.�% of its occupied net lettable area will be expiring in financial year ending 31December�013.Thissecondroundofrentalreversionwillgivethemalltheopportunitytoenjoysignificantupwardrentalreversion.Webelievethereispotentialforroomforgrowthinrentsasthemall’sluxuryandpremiumbrandtenantshavetheabilitytopayhighrents,aswitnessedinthecitycentre.
IGBREITisalsoexpectedtocontinuouslyflourishinthefirsthalfof�013,triggeredbytheChineseNewYearcelebrations,year-endbonuspayoutsandgovernmentincentivessuchastheBantuanRakyat1Malaysia(BR1M).
REVIEW OF OPERATIONS
WithatotalretailassetvalueofRM4.7billion,IGBREIThasthelargestexposuretotheresilientretailindustryinMalaysiathroughaninitialportfoliomadeupoftwoassets,MidValleyMegamallandTheGardensMall.Futuregrowthinassetvaluewillbehelpedbyitslowassetleverageof�5%andtherightoffirstrefusal(ROFR)fortheretailpropertiesownedbyitssponsor,IGBCorporationBerhad.
In�01�,IGBREITcontinuedtofocusonenhancingtheperformanceandvalueofthemallsmainlyfromorganicgrowthwithassetenhancementinitiatives.
MessagefromtheChairmanandtheManagingDirector(cont’d)
8IGB Real Estate Investment TrustAnnual Report 2012
Mid-Valley MegamallTherepositioningofMPHBookstorefromtheGroundFloortotheLowerGroundFloorofthemallhasyieldedenhancedrentalsduetostrategiclocationandincreaseoftrafficthere.
TheThirdFloortoNorthCourtwheretheFoodJunctionwaspreviouslylocatedhasalsobeenrefurbishedandaddedwithnewtenantssuchasMUJI,Daiso,OldTownWhiteCoffeeSignature,UrbanAdventureamongafew.FoodJunctionhasbeenrelocatedcloseby,andnowoffersnewandexcitingfoodfare,givingnewopportunitiesandchoicestovisitorsofthemall.
On-goingenhancementsarealwaysonourprioritylisttouplifttheretailexperienceforourcustomersalike.ThisdevelopmentcombinedwiththeconstantforesightbyIGBREIThasledto177tenancyrenewalsinthepastyear.MidValleyMegamallremainsamajorplayerintheretailsectorandisnodoubt,aleadingshoppingdestinationintheregionwithover36millionvisitorsthusfar.
The Gardens MallTheGardensMallcontinuedtoshowapositiveperformancein�01�,withoccupancyremainingat99.5%.49tenancieswererenewedand14newtenantsLancel,Tempur,LauraMercier,Blomus,Sticky,RoyceChocolates,DelectableTreats,MailBoxesEtc.,MyBagSpa,DKNYJeans,Maybank,TMLevin,VersaceCollection,andBlueCubewerewelcomed,includingFresca,ThaiUp!,FongLyeFusion,andDrMartenswhoopenedtheirfirststoresinthemall.
The mall underwent several asset enhancement initiatives for the year which include upgrading works for The Gardens Club, Surau,washrooms,backofhousecorridorsandloadingdocks,andLowerGroundnewcovedceilinginstallation.Newflower-petaldesignedpushcartswerealsoinstalledinthemallontheupperfloors.
OurGardensClubLoyaltyprogramhasnowbeenlaunchedfor3yearsandreachedover35,000signupssinceApril�009.Membershipcontinuestogrow.TherearestillacoupleofInternationalbrandnamestobeaddedinthenearfuturewithHermesandGucciamongthemix.
CREATING LASTING IMPRESSIONS IN THE REGION
IGBREITwashonouredwithBestREITDealOf TheYear�01�inSoutheastAsiaandMostInnovativeDealOfTheYear�01�inSoutheastAsiaatthe6thAlphaSoutheastAsiaAnnualDealandSolutionAwards�01�.
WithatotalassetvalueofRM4.7billion, IGBREITisoneofthelargestREITs inMalaysiabyassetsizebutitwouldhavethelargestretailexposurebyassetvalue.ItstotalretailportfolioofRM4.7billionislargerthanitsclosestcompetitors.IGBREIT’ssheersizeshouldenhanceitsvisibilityamonginvestorsandcontinuetogatheraccoladeswithintheregion,andifnot,theworldover.
PROSPECTS
TheMalaysianrealestateinvestmenttrusts(M-REITS)industrymayseeexcitingtimesaheadasvisibilityandinvestmentabilityimprovesamong international funds.The challenges include the sluggish global economy, the ability to attract talent back to Malaysia, a long-awaitedsluggishgeneralelectionandmanaging itsfiscaldeficit.Theeconomywill reviveoncetheuncertaintyofthegeneralelectionceasestobeardownonsentiment.
Inviewoftheforegoing,barringunforeseencircumstances,wethereforeexpectanothersatisfactoryyearforIGBREIT.
OnbehalfoftheBoard,wewishtoexpressoursincereappreciationtoallmanagementandemployeesfortheirendlesssupport,hardworkanddedication.Wewouldalsoliketoextendahugewordofthankstoallourunitholders,customers,financiers,businessassociatesandtherelevantauthoritiesfortheircontinuedconfidence,cooperationandsupport.
Weremainconfidentofcontinuingtodoourbestandinreturn,getrewardedforbeingthebestthereis.
TAN SRI DATO’ DR. LIN SEE YAN ROBERT TAN CHUNG MENGChairman ManagingDirector
MessagefromtheChairmanandtheManagingDirector(cont’d)
9IGB Real Estate Investment Trust
Annual Report 2012
MessagefromtheChiefExecutiveOfficer
BUILDING EMPIRES IS AKIN TO BUILDING RELATIONSHIPS, WHEREBY TRUST AND
INTEGRITY ARE KEY PLAYERS. BY PUTTING THIS INTO OUR DNA HERE AT IGB REIT, WE
STRONGLY BELIEVE WE ARE FIRMLY PLACED TO BE A LIFELONG STRATEGIC PARTNER
THAT HELPS ENHANCE OUR CLIENTS BRAND AND CORPORATE IMAGE. OUR AIM
AND GOAL REMAINS FOCUSED TO CONTINUOUSLY PROVIDE THEM WITH PROMPT,
RELIABLE AND QUALITY SERVICE THAT WILL BE UNRIVALLED BY MANY.
IGB REIT, THE SAME OLD QUALITY THAT JUST GOT BETTER IN TIME.
ALTHOUGHHAVINGONLYBEENESTABLISHEDFOR110DAYSBYTHEENDOF�01�,THEWEALTH
OFEXPERIENCECONTAINEDWITHINIGBREITSTRETCHESFARBEYOND.WEHAVEMAINTAINED
THETALENTTOFURTHERHARNESSTHEVALUEOFHIGHERREITINVESTMENTSFORIGBREIT.WE
AREPLEASEDTHATOURFIRSTREPORTHASCOMEWITHIGBREITSITTINGWITHANESTIMATED
VALUATIONOFRM4.7BILLION.
10IGB Real Estate Investment TrustAnnual Report 2012
MessagefromtheChiefExecutiveOfficer(cont’d)
KEY PERFORMANCES OF 2012
Theyear thatpassedusbywasa reasonablygoodyear for IGBREIT. Inspiteof thesofteningmarketsentimentcoupledwiththeeconomic
slowdown,wemanagedtochalkupsatisfyingfinancialresultsforthefinancialyearunderreview.
Therecoveryintheworldeconomytowardstheendof�011gatheredmomentumin�01�.TheMalaysiaeconomyreboundedstrongly,with
significantincreasesingrossdomesticproduct(GDP)andretailsalesgrowth.
AccordingtotheMalaysianInstituteofEconomicResearch,consumerconfidencegallopedaheadto114.3inthefirstquarterof�01�,upfrom
106.3inthefourthquarterof�011.Headline inflationregisteredontheconsumerprice index(CPI)stoodatabenign�.3percent inJanuary
�01�,downfrom3.�percentin�011,accordingtotheMalaysianDepartmentofStatistics.Withaproventrackrecordinthemanagementand
operationofmalls,Malaysiahasoutlineditsambitionstostepintothelimelightasanexporterofexpertlydesignedretailcomplexes.
Despitethischallengingglobalscenario,onthedemandside,growthwillbesupportedbysustainedconsumerspendingreinforcedbystrong
investmentactivities.Consumerspendingisexpectedtopostastronggrowthbackedbyincreasinghouseholdincomeandstableemployment
conditions.
REVIEW OF OPERATIONS
IGBREIT’sshorttermoutlookremainsfavourable,drivenbyorganicgrowthatitsexistingretailassets–MidValleyMegamallandTheGardens
Mall.Therecentlyannouncedfourth-quarterfinancial results for theperiodendedDecember31,�01�werewithinanalystexpectations. IGB
REITpostedapretaxprofitofRM153.3millionandrevenueofRM115.3million.ThiscamefromthetotalrevenueofMidValleyMegamallandThe
GardensMall,whichstoodatRM79.8millionandRM35.5million,respectively.
Agoodexampleofhowmuchrentalratescanincreasebyconvertingoneanchortenant’sspaceintoafew,smallerlotsforspecialtytenantscan
beseenintherecentMPHBookstorecase.MPHBookstorewaspreviouslyamini-anchortenantofMidValleyMegamall,occupying33,000sqft
ontheprimeGroundFloorneartheCentreCourt.However,ithasbeenrelocatedtoalessstrategicplaceattheLowerGroundFloorwithitssize
cutto14,000sqft.Initsplace,interestingretailconceptsyieldingmuchhigherrentalrateshavebeenintroduced(Uniqlo,Forever�1,Quicksilver/
Roxy,MNGextension).Thistenantremixinghasconsiderablyincreasedrentalrates.
WhileMidValleyMegamallwillremainasthemainearningscontributor,TheGardensMall’searningsgrowthcouldoutpacethatofMidValley
Megamall,asitmaturesandcementsitspositioninthehigh-endretailmallsegment,thusnarrowingthecontributiongapbetweenthetwo
mallsoverthemediumterm.
11IGB Real Estate Investment Trust
Annual Report 2012
MessagefromtheChiefExecutiveOfficer(cont’d)
HUMAN CAPITAL
Ouremployeesareembodiedintheheartsofouroperations.Withthatfirmlyrooted,webelievethattheyshouldbevalued,harnessedand
prepared to further develop and consolidate themselves. Hence our human capital initiatives focused on providing ongoing training and
developmentsolutions,upskillingofservicestoenhancetheirhumanresourcesqualityandproductivity.
CORPORATE SOCIAL RESPONSIBILITY
AsCorporateSocialResponsibilityencompassessocietyandourdutytoserve,manyfacetsarecoveredinthisannualreport.SomeofIGBREIT’s
effortsinphilanthropyandvolunteerism,aswellasenvironment,healthandsafetyeventsarehighlighted.
Incelebrationofthemainfestivitieshere,MidValleyMegamall,togetherwithitspartnersbroughtsomemuchneededcheertosomedeserving
folksaround.
Atotalof17seniorcitizensfromDeLuxeRetirementHomewerefetedandtreatedduringtheChineseNewYearcelebrationsaswellasthe
HariRayaCharityeventwith40underprivilegedkidsfromRumahAmalBelianKasih(RABEKA)beingtreatedandfetedtomarktheauspicious
occasion.TheGardensMalldiditspartintheseasonalfestivitiestoobyholdingnumerouseventsthatwerein-houseaswellascollaborations
withotherpartnersandmediapartners.BesidesseasonalcampaignssuchasChineseNewYear,HariRayaandChristmas,themallhosteditsfirst
‘Beauty&Home’campaignwhichsawamixofcosmeticandskincareplayersaswellashometenants.Therewerealsosuccessfulfashionevents
includingtheSpringSummerFashionWeekandFallWintermediaeventthatalsoshowcasedthemall’sin-housemagazinecalled‘Gardens’.
IGBREIThasdevelopedanimportantrelationshipwithsocietyaswefeeltheyareourstrengthandwewillcontinuetoofferthemoursupportin
thisveryimportantendeavor.Withthatinmindafewinitiativeswerecarriedouttohelpthedisabled.AmongthemwereaMickeyMousethrough
theYearProjectfortheDownSyndromeAssociationofMalaysia.Theobjectivewastochannelallfundsraisedthroughapurchasewitha“purchase
program”atthemall.DuringChristmas,weheldaMeetSantafundraisingcampaignandthefundwerechannelledintopurchasingitemsand
servicesrequestedbyoneofthecharityhomes(SpasticChildren’sAssociationofSelangorandFederalTerritory)listedunder*GivingIsGold.org.
Wealsoplayedhoststoaveryspecialgroupofchildrenfromthe‘HouseofJoy’,whowereinvitedtothemallandtreatedtoanicemealwithDin
TaiFungrestaurantasco-hosts.DuringRaya,wevisited‘PersatuanKanak-kanakIstimewaHuluLangat’wheretheMarketingdepartmenthadthe
chancetointeractwiththechildren.Childrenfrom‘PersatuanKebajikanSriEden’wereinvitedtoTheGardensMallfortheafternoonandhadfun
buildinggingerbreadhousesandwereentertainedbyamagicianaswell.
1�IGB Real Estate Investment TrustAnnual Report 2012
THE YEAR AHEAD
Malaysia’seconomicoutlookisexpectedtoremainstablenextyear,supportedbycontinuedstrongdomesticconsumptionandinvestments.
Notwithstandingthesluggishglobaleconomicenvironment,webelievedomesticconsumerspendingwillremainhealthy.
Privateconsumptionisexpectedtogrowby6.5%,underpinningourGDPgrowthforecastof5%in�013. Importantly,webelievehousehold
disposableincomewillbesupportedbytheimplementationoftheminimumwagepolicyaswellasthevariouscashhandoutsannouncedby
theGovernmentduringBudget�013.
WeatIGBREITarealwaysstrivingtoenhancethevaluewithinbyconstantlysourcingforacquisitionopportunitieswithinthecountry.Through
thesteadyandundyingeffortsofourpeopleandmanagement,wearebullishandremainconfidentthatwearewellpositionedtocapitaliseon
thegrowthopportunitiesinMalaysiafortheyearahead.
APPRECIATION
Withallthegratitudeandappreciationinmyheart,Iwouldliketothankallunitholders,businesspartners,fellowcolleagues,tenantsandshoppers
fortheirsupport.
IwouldalsoliketoputonrecordourappreciationfortheguidanceandwisecounselofboththeTrusteeandourfellowmembersoftheBoard
oftheManager.Ilookforwardtotheyearaheadandtothenewandexcitingtimesaheadforusall.
ANTONY PATRICK BARRAGRYChiefExecutiveOfficer(CEO)
MessagefromtheChiefExecutiveOfficer(cont’d)
13IGB Real Estate Investment Trust
Annual Report 2012
IGBREITStructure
OtherUnitholders
SponsorIGBCorporation
Berhad
49.1% 50.9%
100%
ManagementFee
ManagementServices
RepresentsinterestsofUnitholders
Trustee’sFee
Property Manager
ChartwellITACInternationalSdn
Bhd
OwnershipofAssets(InvestedinTrustee) Income
PropertyManagementFee
PropertyManagementServices
IGB REITPortfolio
•MidValleyMegamall•TheGardensMall
TrusteeAmTrustee
Berhad
ManagerIGBREIT
ManagementSdnBhd
14IGB Real Estate Investment TrustAnnual Report 2012
SalientFeaturesofIGBREIT
Fund Name IGBREIT
Fund Category Realestateinvestmenttrust
Fund Type Incomestabilityandgrowth
Fund Duration IGBREITshallterminateontheearlierof:
• theoccurrenceofanyoftheeventslistedinClause�6.�ofthedeedoftrustdated18July�01�(“Deed”);
• thedate999yearsafter�5July�01�i.e.thedateofestablishmentofIGBREIT;or
• thedateonwhichIGBREITisterminatedbytheManagerunderClause�6.1(b)oftheDeed
Approved Fund Size 3,550,000,000Units
Authorised Investments Real estate, unlisted single-purpose companies, real estate-related assets, non-real estate-related assets, cash,
deposits,moneymarketinstrumentsandanyotherinvestmentsnotspecifiedabovebutspecifiedasapermissible
investmentintheSecuritiesCommission’s(“SC”)GuidelinesonRealEstateInvestmentTrusts(“REITGuidelines”)or
asotherwisepermittedbytheSC
Authorised Investments TheinvestmentsofIGBREITaresubjecttothefollowinginvestmentslimitsimposedbytheREITGuidelines:
Limits • atleast50%ofIGBREIT’stotalassetvalue(“TAV”)mustbeinvestedinrealestateassetsatalltimes;and
• notmorethan�5%ofIGBREIT’sTAVmaybeinvestedinnon-realestate-relatedassetsand/orcash,deposits
andmoneymarketinstruments,
provided that investments in both real estate-related assets and non-real estate-related assets are limited as
follows:
• thevalueofIGBREIT’sinvestmentsinsecuritiesissuedbyanysingleissuermustnotexceed5%ofIGBREIT’s
TAV;
• thevalueofIGBREIT’sinvestmentsinsecuritiesissuedbyanygroupofcompaniesmustnotexceed10%of
IGBREIT’sTAV;and
• IGBREIT’sinvestmentinanyclassofsecuritiesmustnotexceed10%ofthesecuritiesissuedbyanysingleissuer,or
suchotherlimitsandinvestmentsasmaybepermittedbytheSCortheREITGuidelines
Distribution Policy 100%ofIGBREIT’sdistributableincomefrom�5July�01�to31December�014,andthereafteratleast90%of
IGBREIT’sdistributableincomeonahalf-yearlybasis(orsuchotherintervalsastheManagermaydetermineatits
absolutediscretion)
Borrowing Limitations Upto50%ofIGBREIT’sTAVatthetimetheborrowingisincurredorsuchhigheramountwiththepriorapprovalofthe
unitholdersorsuchotherlimitpermittedbytheREITGuidelinesfromtimetotime
Revaluation Policy AtleastonceeverythreeyearsbasedonanindependentprofessionalvaluationpursuanttotheREITGuidelines
orsuchothershorterintervalastheManagerdeemsnecessary
and Gearing Policy
15IGB Real Estate Investment Trust
Annual Report 2012
SalientFeaturesofIGBREIT(cont’d)
Management Fees TheManagermayelecttoreceivethemanagementfeeincashorunitsoracombinationofcashandunits(as
itmayinitssolediscretiondetermine).TheManagerisentitledundertheDeedtothefollowingmanagement
fees(exclusiveofservicetax,ifany):
• BaseFee:upto1.0%perannumofIGBREIT’sTAV(excludingcashandbankbalanceswhichareheldin
non-interestbearingaccount).TheManagerintendstochargeaBaseFeeof0.3%forFY�01�andFY�013
(FY�01�actual:RM4,045,746.46or�,979,47�units)
• PerformanceFee:5.0%perannumofIGBREIT’snetpropertyincome(“NPI”)intherelevantfinancialyear
(FY�01�actual:RM3,805,385.81or�,80�,954units)
• AcquisitionFee:1.0%ofthetotalpurchaseconsiderationofanyrealestateandrealestate-relatedassets
directlyorindirectlyacquiredfromtimetotimebytheTrusteeoroneormoreSPVsonbehalfonbehalfof
IGBREITpro-rated,ifapplicable,totheproportionofIGBREIT’sinterest.
• DivestmentFee:0.5%ofthetotalsaleconsiderationofanyrealestateandrealestate-relatedassetsdirectly
orindirectlysoldordivestedfromtimetotimebytheTrusteeoroneormoreSPVsonbehalfofIGBREIT
pro-rated,ifapplicable,totheproportionofIGBREIT’sinterest.
Financial Period (FY2012) �5July�01�to31December�01�
Quotation MainMarketofBursaSecurities
IPO Price RM1.�5
Minimum Investment 100unitsperboardlot
Stock Name/ Code IGBREIT/5��7
16IGB Real Estate Investment TrustAnnual Report 2012
ManagementReportingStructure
Head of Operations/
Leasing (Mid Valley Megamall)
RennieLeeChaiTin
BOARD OF DIRECTORS
Chief Executive OfficerAntonyPatrickBarragry
Audit Committee
Internal Audit
Joint Chief Operating Officer (The Gardens Mall)
ElizabethTanHuiNing
Joint Chief Operating Officer (Mid Valley Megamall)
DanielYongChen-I
Chief Financial Officer
ChaiLaiSim
Head ofCompliance
TinaChan
Head of Marketing (Mid Valley Megamall)
KoChaiHuat
Head of Operations/
Leasing (The Gardens
Mall)
ElizabethTanHuiNing
Head of Marketing
(The Gardens Mall)
GabrielleTanHuiChween
Head of Investment
ChowYengKeet
Managing DirectorRobertTanChungMeng
17IGB Real Estate Investment Trust
Annual Report 2012
TAN SRI DATO’ DR. LIN SEE YANChairman,IndependentNon-ExecutiveDirector
TanSriDato’Dr.LinSeeYan,aged73,isanIndependentNon-ExecutiveDirector(“INED”)andChairmanoftheManager.HewasappointedtotheBoard
on�7April�01�.
Dr.Linisanindependentstrategicandfinancialconsultant.Priorto1998,hewasChairman/PresidentandChiefExecutiveOfficerofPacificBankGroup
andfor14yearspreviously,DeputyGovernorofBankNegaraMalaysia(theCentralBank),havingbeenacentralbankerfor34years.Dr.Lincontinues
toservethepublicinterest,includingMember,PrimeMinister’sEconomicCouncilWorkingGroup,aswellasamemberofanumberofkeyNational
Committees on Higher Education; Economic Advisor, Associated Chinese Chambers of Commerce & Industry of Malaysia; Board Director, Monash
UniversitySunwayCampusMalaysiaSdnBhd;andGovernor,AsianInstituteofManagement,Manila. Inaddition,Dr.Linsitsontheboardsofseveral
publiclistedcompaniesinMalaysia,includingKrisAssetsHoldingsBerhad(“KrisAssets”),AncomBerhad,GentingBerhad,JobStreetCorporationBerhad,
WahSeongCorporationBerhad(“WSCB”)andTopGloveCorporationBerhad,andanumberofbusinessenterprisesinMalaysia,SingaporeandIndonesia
engagedininsurance,mining,petroleumrelatedproducts,propertydevelopment,softwareandprivateequity.Dr.LinisChairmanEmeritusofHarvard
University’s Graduate School Alumni Association Council in Cambridge (USA) as well as President, Harvard Club of Malaysia. He is also Professor of
Economics(Adjunct),UniversitiUtaraMalaysiaandProfessorofBusiness&InternationalFinance(Adjunct),UniversityMalaysiaSabahandaTrusteeofthe
TunIsmailAliFoundation(PNB),HarvardClubofMalaysiaFoundation,MalaysianEconomicAssociationFoundationandJeffreyCheahFoundation.
ProfessionallyqualifiedintheUnitedKingdomasaCharteredStatistician,Dr.Linisalsobanker,economistandventureentrepreneur,havingreceived
threepost-graduatedegreesfromHarvardUniversity(includingaPhDinEconomics)wherehewasaMasonFellowandFordScholar.HeisaBritish
CharteredScientist.TanSri isanEisenhowerFellowandaFellowof the IMF Institute (WashingtonDC),RoyalStatisticalSociety (London),Malaysian
InstituteofBankers,MalaysianInsuranceInstitute,MalaysianInstituteofManagementandMalaysianEconomicAssociation.HeisalsoaDistinguished
FellowoftheInstituteofStrategicandInternationalStudiesinMalaysia.
ROBERT TAN CHUNG MENGManagingDirector,Non-IndependentExecutiveDirector
RobertTanChungMeng,aged60,istheManagingDirector(“MD”)oftheManagerandaNon-IndependentExecutiveDirector(“NIED”).Hewasappointed
totheBoardon�1March�01�.
He has extensive experience in property development, hotel construction, retail design and development as well as corporate management with
morethan30yearsexperienceinthepropertyindustry.AfterstudyingBusinessAdministrationintheUnitedKingdom,hewasattachedtoaChartered
Surveyor’sfirmforayear.HealsodevelopedahousingprojectinCentralLondonbeforereturningtoMalaysia.Hisstintinthepropertyindustrybegan
withIGBCorporationBerhad(“IGB”)in1995whenhewasmadeIGB’sJointMDandsubsequentlybecomingitsGroupMDin�001,apositionhecurrently
holdstoday.
He has been involved in various development projects carried out by IGB group, in particular MidValley City. From inception to the realisation of
MidValleyMegamallandTheGardensMall,hewasactivelyinvolvedineverystageoftheirdevelopments. Thefullfruitionofhisgrandvisionisthe
constructionanddevelopmentofMidValleyMegamallandTheGardensMallwhichspannedoveradecadeintoalandmarkretailcomplexinMalaysia.
HeisinstrumentaltothedevelopmentandsuccessofMidValleyMegamallandTheGardensMallandmoreimportantly,inretainingtheirpositionsas
primeretailplayersamidstincreasinglycompetitiveretaillandscape.Throughhismanagementandleadership,MidValleyMegamallandTheGardens
MallarenowtwoofthemostpopularshoppingmallsintheKlangValley,enjoyinganalmostfulloccupancyrateforthepastfewyears.
HeisalsotheGroupMDofKrisAssets,theNon-ExecutiveChairmanofWSCBandaDirectorofTan&TanDevelopmentsBerhad(“Tan&Tan”),aproperty
divisionofIGB.
ProfileofDirectors
18IGB Real Estate Investment TrustAnnual Report 2012
ProfileofDirectors(cont’d)
HALIM BIN HAJI DINIndependentNon-ExecutiveDirector
HalimbinHajiDin,aged66,isanINED.HejoinedtheBoardon�7April�01�,andwasappointedthechairmanoftheAuditCommittee.
HeisaCharteredAccountantwhospentmorethan30yearsworkingformultinationalcorporationsandinternationalconsultingfirms.Heaccumulated18yearsofexperienceworkingintheOilandGasIndustry,ofwhich6yearswasspentasaboardmemberofCaltex/Chevron,responsibleforfinancialmanagement, before engaging in the consulting business. Prior to his appointment as a board member of Caltex Malaysia, he served as RegionalFinancialAdvisorforCaltexPetroleumCorporationDallas,Texasoverseeinginvestmentviabilityofthecorporation’sAsiansubsidiaries.
He also had an extensive experience in corporate recovery when he worked for Ernst &Whinney, London, United Kingdom in mid-1980’s. He wasappointedasManagingPartneroftheconsultingdivisionofErnst&YoungMalaysiain1995.HelaterbecametheCountryAdvisorofCapGeminiErnst&YoungConsultingMalaysiawhenCapGeminiofFrancemergedwithErnst&YoungConsulting.In�003,hewithtwopartnerstookovertheconsultingbusinessofCapGeminiErnst&YoungMalaysiathroughamanagementbuy-outandrebrandeditasInnovationAssociates,currentlyknownasTheIAGroup,whereheiscurrentlytheChairmanofthegroup.
HeisalsoanINEDofKrisAssets,WSCBandBNPParibasMalaysiaBerhad.
LE CHING TAI @ LEE CHEN CHONGIndependentNon-ExecutiveDirector
MrLeeChenChong,aged71,wasappointedtotheBoardon�7April�01�,andisanINED.
HeisaFellowoftheCharteredInstituteofBankers(FCIB),London,UnitedKingdomandspentatotalof34yearsincommercialandinternationalbankingwithlocalaswellasbanksoverseas.From197�to1984,hewastheChiefExecutiveOfficerofanoverseasbankintheCityofLondon.In1985,hereturnedtoMalaysiaandjoinedaMalaysia-Frenchjoint-venturebankinKualaLumpurasanExecutiveDirector.HewassubsequentlyappointedtheManagingDirectoruntilherelinquishedthepostinend1993.Thenext4yearssawhimspendtimeoverseasasChiefExecutiveOfficerandDirectorofinternationalbanksintheCzechRepublic,HungaryandMalta.
HeisanINEDofKrisAssetsandwasassociatedwithMulti-Purposegroupofcompaniesfrom1989untilhisretirementasExecutiveDirectorinend�000.HewasanExecutiveDirectorofIpmudaBerhadfromDecember�001untilretiringinJanuary�008.
TAN BOON LEENon-IndependentExecutiveDirector
TanBoonLee,aged49,isanExecutiveDirectoroftheManagerandaNIED.HewasappointedtotheBoardon�7April�01�.
HeholdsaBachelorofEconomicsfromMonashUniversity,AustraliaandaMastersinBusinessAdministrationfromCranfieldSchoolofManagement,UnitedKingdom.Hehas�5years’experienceinthepropertyandhotelindustry,providingmanagementandtechnicalassistancetohotelandhospitalityprojectsinMalaysiaandAsia.HewasPresidentoftheMalaysianAssociationofHotelOwners(MAHO)from�00�to�004.
He spearheaded IGB group’s growth into emerging economies of Myanmar and Cambodia in 1990’s via the group’s hotel division. He is currentlyinstrumentalinthegroup’sgrowthofthe“CititelExpress”brandinganewfour-starhotelinSydney.
HeispresentlyanExecutiveDirectorofIGB,aDirectorofKrisAssets,GoldisBerhad(“Goldis”),MacroKioskBerhadandSWHomeownersBerhad,andaDirectorandChiefExecutiveOfficerofTan&Tan.
19IGB Real Estate Investment Trust
Annual Report 2012
ProfileofDirectors(cont’d)
TAN LEI CHENG Non-IndependentNon-ExecutiveDirector
TanLeiCheng,aged55,wasappointedtotheBoardon�7April�01�,andisaNon-IndependentNon-ExecutiveDirector(“NINED”).
SheholdsaBachelorofCommercefromtheUniversityofMelbourne,AustraliaandaBachelorofLawfromKing’sCollege,London(LLBHons.),England.
SheisalsoamemberofLincoln’sInnandwasadmittedtotheEnglishBarin1983.
Shehasmorethan30yearsofexperienceinthepropertyindustryandthecorporatesector.ShewastheChiefExecutiveOfficerofTan&TanfromMarch
1995,apropertydevelopmentcompanythatwaslistedonBursaSecuritiesuntilGoldistookoveritslistingon8May�00�,followingthecompletionof
themergerbetweenIGB,Tan&TanandGoldis.SheispresentlytheExecutiveChairmanandChiefExecutiveOfficerofGoldis.Shealsositsontheboards
ofIGB,KrisAssets,MacroKioskBerhadandTan&Tan.SheisamemberoftheWorldPresidents’Organisation,MalaysiaChapterandaboardmemberof
KualaLumpurBusinessClubAdvisoryCouncil.
DANIEL YONG CHEN-I JointChiefOperatingOfficer(MidValleyMegamall)Non-IndependentExecutiveDirector
DanielYongChen-I,aged41,wasappointedtotheBoardon�7April�01�.HeisaNIEDandtheJointChiefOperatingOfficer(“COO”)(MidValleyMegamall)oftheManager.
HeisalawgraduatefromtheUniversityofBristol,England.HejoinedMidValleyCitySdnBhd(“MVC”)in1999asamemberofthepre-openingretaildevelopment team.HewasappointedanExecutiveDirectorofMVC in�003and is responsible foroverseeing themanagementandoperationofMidValleyMegamallsince.Hewasalsoinvolvedinthedesignandpre-openingofTheGardensMallfrom�004to�007.Hispriorworkexperience includes thedevelopmentofbespokesystemswithBYGSystemsLtd inEnglandandOperationalManagementwithWahSeongEngineeringSdnBhd,thedistributorandmanufacturerforToshibaElevatorandEscalatorsinMalaysia.
HeisaDirectorofKrisAssetsandthealternateDirectortoPaulineTanSuatMingontheboardofIGB.
ELIZABETH TAN HUI NING JointChiefOperatingOfficer(TheGardensMall)Non-IndependentExecutiveDirector
ElizabethTanHuiNing,aged�9,wasappointedtotheBoardon�7April�01�.SheisaNIED,theJointCOO(TheGardensMall)andHeadofOperations/Leasing(TheGardensMall)oftheManager.
ShegraduatedwithFirstClassHonoursfromCardiffUniversity,Wales,UnitedKingdomwithadegreeinBusinessAdministration(BSc)inJune�004.ShejoinedMidValleyCityGardenSdn.Bhd(“MVCG”)inAugust�004andsubsequentlyassumedherpresentroleastheDirectorofLeasingofMVCG.SheisresponsiblefortheconceptualisationandstrategyofthetenantmixofTheGardensMallaswellasoverseeingtheleasing,retaildevelopmentandcustomerservicedepartments.
SheisthealternateDirectortoRobertTanChungMengontheboardofKrisAssets.
�0IGB Real Estate Investment TrustAnnual Report 2012
ProfileofDirectors(cont’d)
TAN YEE SENGNon-IndependentNon-ExecutiveDirector
TanYeeSeng,aged3�,wasappointedtotheBoardon�7April�01�andisaNINED.
HeholdsaprofessionalDiplomaofArchitecture(RoyalInstituteofBritishArchitects,Part�)fromtheUniversityofEastLondon,UnitedKingdom.He
joinedIGBin�010asSeniorGeneralManager(PropertyDevelopment)division.Hispriorworkexperienceincludesbeingpartofthepre-openingteam
memberofGTowerwhichisownedbyGoldis,whereheoversawthecoordinationofbasebuilding,fitoutandoperations.Hewasalsoextensively
involvedintheaestheticrealisationofTheGardensMallwhileworkingatEnsigniaConstructionSdnBhd,theconstructionarmofIGB,whereheworked
asadesignarchitect.ThereheusedhistrainingtocreateandfinetunethefacadesandkeyelementsofTheGardensMallandMidValleyMegamall.He
hasalsobeenadesignarchitectatEricKuhneAssociatesinLondonwhereheworkedonseverallargemixed-useproposals.
HeisthealternateDirectortoTanBoonSengontheboardofIGB.
Notes:
1. AlldirectorsareMalaysian.
2. SaveforRobertTanChungMeng,TanBoonLee,TanLeiCheng,DanielYongChen-I,ElizabethTanHuiNingandTanYeeSeng,theDirectorshavenofamilyrelationshipwithanyDirectoroftheManagerand/ormajorunitholderofIGBREIT.
3. Save for the Directors’ interests in IGB REIT (as disclosed under Unitholdings of Directors and CEO) and the transactions with companiesrelatedtotheManager(asdisclosedinNotestotheFinancialStatements),noconflictofinteresthasarisenduringthefinancialyearunderreview.
4. AllDirectorshavenotbeenconvictedofanyoffence.
�1IGB Real Estate Investment Trust
Annual Report 2012
ProfileofManagement
ANTONY PATRICK BARRAGRY ChiefExecutiveOfficer
AntonyPatrickBarragry,aged61,aBritishbutapermanentresidentofMalaysia,wasappointedtheCEOoftheManageron1September�01�.
Heisaqualifiedarchitectwith36yearsofinternationalexperienceinthedesign,developmentandoperationsofmajormixed-usedevelopments.HispriorworkexperienceincludesPutraWorldTradeCentreinKualaLumpur,IGB’sRenaissanceKualaLumpurHotel,CiraganPalaceHotelinIstanbul,andJebelAliHoteldevelopmentinDubai.HewaspreviouslyProjectDirectorintheconstructionofMidValleyCityPhase1,includingMidValleyMegamall.AppointedasExecutiveDirectorofMVC in�00�,hespearheadedthedevelopmentofmorethan6millionsq ftofcommercial space inMidValleyCity’sPhases�,3and4.HewasalsoProjectDirectorforthedesignandconstructionofStGilesHotel,Heathrow,LondonandtheupgradingofIGB’sPangkorIslandBeachResort,a100-acrebeach-frontpropertyonPangkorIsland.HewastheChiefExecutiveOfficerofMVCGfromJanuary�008untilherelinquishedthepostinAugust�01�.
HeholdsaDiplomainArchitecturefromtheUniversityofSheffieldandisamemberoftheInternationalCouncilofShoppingCentresandTheInternationalReal-EstateFederation(“FIABCI”).
HehasnotbeenconvictedofanyoffencesandhasnoconflictofinterestwithIGBREIT,savefortheinterestinIGBREITasdisclosedinUnitholdingsofDirectorsandCEO.HedoesnothaveanyfamilyrelationshipwithanyDirectoroftheManagerand/ormajorunitholderofIGBREIT.
DANIEL YONG CHEN-IJointChiefOperatingOfficer(MidValleyMegamall)
DanielYongChen-IistheJointCOO(MidValleyMegamall)andaNIEDoftheManager.HisprofileispresentedintheProfileofDirectors.
ELIZABETH TAN HUI NINGJointChiefOperatingOfficer(TheGardensMall)
ElizabethTanHuiNingistheJointCOO(TheGardensMall),HeadofOperations/Leasing(TheGardensMall)andaNIEDoftheManager.HerprofileispresentedintheProfileofDirectors.
CHAI LAI SIMChiefFinancialOfficer
ChaiLaiSimistheChiefFinancialOfficer(“CFO”)oftheManager.
Shehasover30yearsofexperienceinaudit,corporatefinance,capitalmanagementstrategyincludingtreasury,financialaccountingandtaxationinpropertydevelopment,commercialandretailpropertyinvestmentandhospitalityindustries.ShebeganhercareerasanarticledstudentwithCoopers&Lybrand(nowknownasPriceWaterhouseCoopers)beforejoiningTan&TanastheGroupFinancialControllerin1993.FollowingthecompletionofthemergerbetweenTan&TanandIGBin�00�,shewasappointedtheSeniorGroupGeneralManagerofGroupFinanceandsubsequentlyassumedthepresentroleofGroupCFOofIGB.
SheisamemberofboththeMalaysianInstituteofAccountants(MIA)andtheMalaysianInstituteofCertifiedPublicAccountants(MICPA).
CHOW YENG KEETHeadofInvestment
ChowYengKeetistheHeadofInvestmentoftheManager.
HeispresentlytheGeneralManager,CorporateFinanceofIGBandDirectorofFinanceofMVC.Hehasworkingexperienceincorporatefinanceandadvisorycoveringmergersandacquisitions,equityanddebtfundraising,capitalmanagementandrestructuring,valuationsaswellastake-overoffers.HestartedhiscareerasCorporateFinanceExecutivewiththethenSimeMerchantBankersBerhadin1997.Thereafter,hewaswithCommerceInternationalMerchantBankersBerhad(nowknownasCIMBInvestmentBankBerhad)priortojoiningIGBin�004.Currently,heisinvolvedincorporatefinanceaswellasfinanceandaccountsofKrisAssetsgroup.
HeholdsaBachelorofEconomics(FirstClassHonours)fromUniversityofMalayaandisaFellowoftheAssociationofCharteredCertifiedAccountants.
��IGB Real Estate Investment TrustAnnual Report 2012
ProfileofManagement(cont’d)
RENNIE LEE CHAI TINHeadofOperations/Leasing(MidValleyMegamall)
RennieLeeChaiTinistheHeadofOperations/Leasing(MidValleyMegamall)oftheManager.SheisalsotheGeneralManagerofMVC.
ShejoinedMVCin1995.Shehasapproximately�0yearsofworkexperienceinleasingandoperationswithintheretailindustry.SheiscreditedwithbeingpartofthefoundingteaminthemarketingofMidValleyCity.HerpreviousworkexperienceincludestheleasingandmarketingofMahkotaParadeinMalacca,SubangParadeandIOIShoppingcentresinKualaLumpur.ShewasakeymemberofMidValleyMegamallpre-openingteam.
KO CHAI HUATHeadofMarketing(MidValleyMegamall)
KoChaiHuatistheHeadofMarketing(MidValleyMegamall)oftheManager.HeisalsotheDirectorofDesignofMVC.
HejoinedMVCin1999.Hehasapproximately�5yearsofworkexperienceinvisualmerchandisingaswellasadvertisingandpromotion.HewasformerlyVisualMerchandisingManageratAtriaShoppingCentreinKualaLumpur.Hedirects,conceptualiseandleadsalldesignsetupsforpromotionalactivitiesandeventsinMidValleyMegamall.HewasakeymemberofMidValleyMegamallpre-openingteam.HeholdsaDiplomainFineArts.
GABRIELLE TAN HUI CHWEENHeadofMarketing(TheGardensMall)
GabrielleTanHuiChweenistheHeadofMarketing(TheGardensMall)oftheManager.SheisalsotheDirectorofMarketingofMVCG.
SheholdsaBachelorofArtsinBusinessEconomicsfromtheUniversityofExeter,UnitedKingdomandaBachelorofFineArtsdegreeinfashiondesignand marketing from the American Intercontinental University, London, United Kingdom. She joined MVCG as the Head of Marketing in �007 andsubsequentlyassumedtheroleofDirectorofMarketing.SheoverseestheadvertisingandpromotionsactivitiesaswellasthepublicrelationsinitiativesatTheGardensMall.SheisalsoaDirectorofMVCG.
TINA CHAN LAI YINHeadofComplianceCompanySecretary
TinaChanistheHeadofComplianceandtheCompanySecretaryoftheManager.
Shehasabroadknowledgeandskill-baseincorporatesecretarialwork,havingdealtwithawiderangeofcorporateexercisesinthecourseofher�0yearsworkingexperience.SheispresentlytheCompanySecretaryof IGBgroup,apositionwhichshehasheldsince1997.SheheadsthecorporatesecretarialdivisionandisresponsiblefortheefficientadministrationofIGBgroup,particularlywithregardtoensuringcompliancewithstatutoryandregulatoryrequirementsincludingkeyareasrelatingtogovernanceandcompliancestructureswhichareimplementedthroughoutthegroup.Shealsooverseesthein-houseshareregistrardepartmentofIGB.SheisalsotheCompanySecretaryofKrisAssetsgroup.PriortojoiningIGB,shehadworkedinalegalfirm,RahmanHashim,V.T.RavindranandPartnerswhereshewastheCompanySecretarycumAdministratorandwaslaterattachedtoTan&Tan,herlastpositiontherebeingtheJointCompanySecretarywhereshehadbeensignificantlyinvolvedinthefloatationofTan&Tanin1993(thelistingstatusofwhichwasassumedbyGoldisfollowingthecompletionofthemergerbetweenTan&TanandIGBin�00�).
SheisanAssociateofTheInstituteofCharteredSecretariesandAdministrators.
�3IGB Real Estate Investment Trust
Annual Report 2012
Manager’sReport
TheManagerofIGBRealEstateInvestmentTrust(“IGBREIT”),IGBREITManagementSdnBhd(“theManager”),ispleasedtosubmittheirreportand
auditedfinancialstatementstounitholdersofIGBREITforthefinancialperiodended31December�01�.
PRINCIPAL ACTIVITY AND INVESTMENT OBJECTIVES
IGBREITwasconstitutedpursuanttothetrustdeeddated18July�01�(“theDeed”)between IGBREITManagementSdnBhdandAmTrustee
BerhadandlistedonMainMarketofBursaMalaysiaSecuritiesBerhadon�1September�01�.Theprincipal investmentpolicyof IGBREIT isto
invest,directlyandindirectly,inadiversifiedportfolioofincomeproducingrealestateusedprimarilyforretailpurposesinMalaysiaandoverseasas
wellasrealestate-relatedassets.Realestateusedprimarilyforretailpurposeswouldincluderetailpropertiesandmixeduseddevelopmentswith
aretailcomponent.
Theprimaryobjectiveof IGBREIT istoprovideunitholderswithregularandstabledistributions,sustainable longtermunitprice,distributable
incomeandcapitalgrowth,whilemaintaininganappropriatecapitalstructure.
Investmentstrategies
TheManagerintendstoincreasetheincomeandconsequentlythevalueoftheassets,throughthefollowingstrategies:
• Activeassetmanagementstrategy
- ensuredcontinuedhighshoppertrafficatmalls;
- continualimprovementofrentalrateswhilemaintaininghighoccupancyrates;
- deliverqualityservicestotenantsandmaintainstrongtenantrelationship;
- aimed at improving operational efficiency and reducing operating cost without compromising on quality of services to tenants and
shoppers;and
- increasingnetlettableareaviaassetenhancementinitiatives.
• Acquisitiongrowthstrategy
- exploreacquisitionopportunitiesifsuchopportunitiesfitwithintheinvestmentcriteriaandinvestmentobjectivesofIGBREIT;and
- focusonacquisitionsthatareimmediatelyyieldaccretive,butwillalsoconsiderthosethatarenotimmediatelyyieldaccretivethatwillstill
addvaluetounitholdersoverthelongterm.
• Capitalandriskmanagementstrategy
- adoptandmaintainanappropriategearinglevelandactiveinterestratemanagementstrategy;
- diversifysourcesofdebtfundingtotheextentappropriate;
- maintainareasonablelevelofdebtservicecapability;
- securefavourabletermsoffunding;
- managingitsfinancialobligations;and
- managingtheexposurearisingfromadversemarketinterestrates,suchasthroughfixedrateborrowingstooptimisethecostofcapital.
REVIEW FOR FINANCIAL PERIOD ENDED 31 DECEMBER 2012
TheManagerconfirmedthatIGBREIThasachieveditsinvestmentobjectiveforthefinancialperiodfromdateofestablishment,�5July�01�to31
December�01�andthereisnochangeinthestrategiesadoptedasdisclosedinIGBREITinitialpublicofferingprospectus.
Therearenosignificantchangesinthestateofaffairsofthefundduringthefinancialperiodended31December�01�anduptothedateofthis
reportotherthanthosedisclosedinthefinancialstatements.
�4IGB Real Estate Investment TrustAnnual Report 2012
Manager’sReport(cont’d)
MALAYSIA RETAIL INDUSTRY REVIEW AND OUTLOOK
The world economic environment remained challenging in the third quarter of �01�. Amid the challenging economic conditions, the Malaysian
economyrecordedagrowthof5.�%(�Q,�01�:5.6%)duringthethirdquarterof�01�.Goingforward,themorechallenginginternationalenvironment
wouldpresentriskstoMalaysia’sgrowthprospects.Nevertheless,domesticdemandisexpectedtocontinuetobetheanchorofgrowth,supportedby
theexpansioninprivateconsumptionandinvestment.Publicspendingandinvestmentactivityarealsoexpectedtolendsupporttogrowth(Source:
EconomicandFinancialDevelopmentsinMalaysia,BankNegaraMalaysia).TheConsumerPriceIndex(CPI)forofNovember�01�showedanincreaseof
1.3%to105.5from104.1forthesamemonthin�011.CPIfortheperiodJanuary-November�01�increasedby1.7%to104.9comparedwith103.1in
thesameperiodin�011.ThisincreasewasbroughtaboutbyincreasesintheindicesofallthemaingroupsexceptthoseofCommunication(-0.7%)and
Clothing&Footwear(-0.6%).(Source:TheMalaysianEconomyinBrief,DepartmentofStatistics,Malaysia)
Afterconsideringcontinuedglobaleconomicfears,resilientdomesticdemandandmoderatedomesticinflation,BankNegaraMalaysiahasdecidedto
maintainitskeyovernightpolicyrate(OPR)at3%onitsmeetingon6September�01�.Consumerconfidenceisholdingupstrong,andthisisexpected
tocontinue,withtheConsumerSentimentsIndex(CSI)havingended3Q�01�at118.3points(3.4pointshigherquarteronquarter).
TheretailsectorinGreaterKualaLumpurcontinuestooutperformotherpropertysectors,evidencedbycontinuedinstitutionalinvestmentinterestin
qualityassetsandthereceptiontotheIGBREITbyinvestors.ParadigmandSetiaCityMall,thetwomajorretailcompletionssincethebeginningof�01�,
bothopenedto90%+levelsofoccupancy.SixnewcompletionsincludingNuSentralareexpectedin�013,increasingtotalretailsupplyby6%.Average
occupancyrateforasampleof5�significantretailcentersimprovedbynearly100basispointsto89.5%,partlydrivenbyalackofnewsupplyandstrong
demandforexistingretailspace.
Recentpatternsofdevelopmenthavefocusedaroundemergingtownshipsorareaspreviouslyunderservedbyqualityretailspace,andthistrendis
expectedtocontinue.Competitionamongso-called‘regional’retailcentresofabove1millionsqftnetlettableareaisconsiderable,withatleast3to
4suchadditionalcentersscheduledforcompletionby�016/�017.Primerentshaveincreasedbynearly150%overthepastdecade.Thelastroundof
notableincreaseswasin�010andsoexpectationsareforanotherroundofrentalgrowthin�013,atleastintheleadingcentres.
�01�sawtheopeningoftwosuburbanmallsi.e.SetiaCityMallandParadigm,bothlocatedinhighlypopulatedsuburbs,atstrongoccupancyratesof
over90%.Thisindicatedretailers’demandforqualitymallswithgoodmanagementandlargecatchmentareas.Malaysiaisincreasinglybecomingan
importantexpansionbaseforretailersfromtheWest,whoonthebackoftheEurozonesovereigndebtcrisiswhichhasaffectedretailsalesinthatregion,
arelookingeastforgrowthandsurvival.Goingforward,itisanticipatedthatMalaysiawouldseemoreinternationalretailersventuringintothemarket
directlyandmaynotviathetraditionalgatewaysofHongKongandSingapore.
Thenumberofprime-grademallsintheKlangValleyisscarceandtheyieldsofthesemallshavebeencompressed.Whilstthesemallsrarelybecome
availableforsaleinthemarket,itisanticipatedthatprime-grademallsintheKlangValleyarebeingsoughtafterbybothinvestorsandretailers.
(Source:CBRE,Malaysia)
MATERIAL LITIGATION
TheManagerisnotawareofanymateriallitigationsincethebalancesheetdateasat31December�01�uptothedateofthisreport.
CIRCUMSTANCES THAT MATERIALLY AFFECT THE INTERESTS OF UNITHOLDERS
Therearenocircumstanceswhichmateriallyaffecttheinterestsoftheunitholders.
�5IGB Real Estate Investment Trust
Annual Report 2012
CorporateGovernanceStatement
IGBRealEstateInvestmentTrust(“IGBREIT”)isaREITestablishedinMalaysiaandconstitutedbythedeedoftrustdated18July�01�enteredintobetween
IGBREITManagementSdnBhd(the“Manager”)andAmTrusteeBerhad(the“Trustee”)andregisteredwiththeSecuritiesCommissionMalaysia(“SC”)on
�5July�01�(“Deed”).IGBREITwasestablishedwiththeprincipalinvestmentpolicyofinvesting,directlyandindirectly,inadiversifiedportfolioofincome
producingrealestateusedprimarilyforretailpurposes(includingretailpropertiesandmixed-usedevelopmentswitharetailcomponent)inMalaysia
andoverseas,aswellasrealestate-relatedassets,withthekeyobjectiveofprovidingunitholderswithregularandstabledistributions,sustainablelong
termunitpriceanddistributableincomeandcapitalgrowth,whilemaintaininganappropriatecapitalstructure.
IGBREITwaslistedontheMainMarketofBursaMalaysiaSecuritiesBerhad(“BursaSecurities”)on�1September�01�followingthecompletionofthe
acquisitionofMidValleyMegamallandTheGardensMall(collectively,“Properties”)on�0September�01�.AsIGBREITisanewlyestablishedREIT,and
exceptfortheProperties,IGBREIThasnothadanyportfolioofrealestatesinceestablishment.
TheBoardofDirectorsoftheManager(“Board”) iscommittedtoensurethatgoodcorporategovernanceispractisedwiththeultimateobjectiveof
protectingandenhancingunitholders’valueandthe longtermvalueof IGBREIT.Thepoliciesandpracticesof theManager, supportedbyexisting
internalcontrolprocesses,areregularlyauditedandreviewed,toensuretransparencyandaccountability.
ThefollowingsectionsdescribetheManager’scorporategovernancepoliciesandpractices,encompassingmeasuressetoutinSC’sGuidelinesonReal
EstateInvestmentTrusts(“REITGuidelines”),BursaSecurities’MainMarketListingRequirements(“MMLR”)andMalaysianCodeonCorporateGovernance
�01�(“MCCG�01�”).Exceptforthedeparturesexplainedinthisstatement,theDirectorsbelievethattheManagerhascompliedinallsubstantialrespects
withthebestpracticesofMCGG�01�andtheprovisionsinMMLR.
I. THE MANAGER
IGBREITisexternallymanagedandadministeredbytheManagerandaccordingly,ithasnopersonnelofitsown.TheManagerappointsexperienced
andqualifiedpersonneltohandletheday-to-dayoperationsofIGBREIT.AllDirectorsandemployeesoftheManagerareremuneratedbythe
Manager and not IGB REIT.The Manager also manages and supervises the service providers including the property manager, who provides
propertymanagement,marketingandmanagementservicesforthePropertiespursuanttothepropertymanagementagreement.
TheManagerisrequiredtoensurethatthebusinessandoperationsofIGBREITarecarriedoutandconductedinaproper,diligentandefficient
manner,andinaccordancewithacceptableandefficaciousbusinesspracticesintherealestateinvestmentindustryinMalaysia.Subjecttothe
provisionsoftheDeed,theManagerhasfullandcompletepowerofmanagementovertheassetsandliabilitiesofIGBREIT.
TheprimaryroleoftheManageristosetthestrategicbusinessdirectionandriskmanagementofIGBREITandmakingrecommendationsto
theTrusteeonacquisitions,divestmentsandenhancementofassetsofIGBREITinaccordancewithitsstatedbusinessstrategyandinvestment
criteria.
TheManager’smainresponsibilityistoseektoincreasetheincomeand,consequently,thevalueofthePropertiesthroughthefollowing:
(a) optimisingrentalrates,occupancyratesandnetlettableareasofthePropertiesinordertoimprovethereturnsfromIGBREIT’sproperty
portfolio;
(b) sourcing for and acquiring properties that fit within IGB REIT’s investment strategy to enhance returns to unitholders and improve
opportunitiesforfutureincomeandnetassetvaluegrowth;and
(c) endeavouringtoemployanappropriatemixofdebtandequityinfinancingacquisitions,andmanagingrefinancingriskandinterestrate
riskbyutilisinginterestratehedgingstrategiesincompliancewithREITGuidelines.
�6IGB Real Estate Investment TrustAnnual Report 2012
CorporateGovernanceStatement(cont’d)
II. BOARD OF DIRECTORS (“BOARD” or “DIRECTORS”)
(a) The Board
TheManagerisledandmanagedbyanexperiencedBoardwithawideandvariedrangeofexpertise.
TheBoardhastheoverallresponsibilityformanagingandgoverningtheManagerandIGBREITinthebestinterestsofunitholdersand
stakeholders.TheBoardprovidesleadershiptotheManager,setsthestrategicdirectionsandoverseesthemanagementofIGBREIT.
TheBoardassumes,amongothers,thefollowingkeyroles:
(i) Setobjectives,goalsandstrategicplansfortheManagerandIGBREITwithaviewofmaximisingunitholders’value.
(ii) FormulatepoliciesandoverseetheproperconductoftheManager(includingbudgetingapprovalandallotherfinancialmatters).
(iii) OverseetheconductofIGBREIT’sPropertiestoevaluatewhethertheyareproperlymanaged.
(iv) Consider management’s recommendations on key issues including acquisitions, divestments, funding and significant capital
expenditure.
(v) Overseetheriskmanagementprocesses, internalcompliancecontrolsand integrityofmanagement informationsystemsof the
ManagerandIGBREIT.
(vi) Monitorcompliancewithallrelevantlaws,legislativeandregulatoryrequirements(includingcontinuousdisclosure).
(vii) Determineandapprovethedistributionamountstounitholders.
TheBoardhasadoptedasetofinternalguidelines,whichsetoutauthoritylimitsfor,amongothers,capitalexpenditure,newinvestments
anddivestments,andoperationofbankaccounts.TheBoardapprovestransactionsexceedingcertainlimits,whiledelegatingauthorityfor
transactionsbelowthoselimitstotheManagingDirector(“MD”)andtheChiefExecutiveOfficer(“CEO”).Fortransactionsbelowacertain
level,theauthorityisdelegatedtothemanagementtofacilitateoperationalefficiency.
(b) Board Composition and Balance
TheDirectorswithproperty investmentandcommercialexperiencewithdiverseacademicbackgroundsprovideacollective rangeof
skillsandexpertisewhichisvitaltoeffectivelyleadtheManagerandIGBREIT.AbriefprofileofeachDirectorispresentedintheProfileof
Directors.
TheBoardasatthedateofthisstatementconsistsof9members;5Non-ExecutiveDirectors(“NEDs”)and4ExecutiveDirectors(“EDs”),with
3ofthe5NEDsbeingindependentDirectors(“INEDs”).ThisisincompliancewithMMLR’srequirementtohaveatleastonethirdofthe
BoardcomprisedofINEDs.TheEDsandNEDsareequalmembersoftheBoard,bothhavingfiduciarydutiestounitholdersandhaveoverall
collectiveresponsibilityforthedirectionandperformanceoftheManagerandIGBREIT.
ThereisaclearidentifiablerolesandresponsibilitiesforChairmanoftheBoard,MDandCEO.Thisistoensureanappropriatebalanceof
powerandauthoritytofacilitateeffectiveoversightandclearsegregationofduties.TheChairmanoftheBoardisanINED.Heassumes
responsibilityforthemanagementoftheBoardandensuresthatmembersoftheBoardandthemanagementworktogetherwithintegrity
and competency, and that the Board engages the management in constructive debate on strategies, business operations, enterprise
risksandotherplans.TheMDasarepresentativeoftheBoard,togetherwiththeCEO,isaccountabletotheBoardandresponsibleover
thebusinessdirectionandthestrategyimplementationofIGBREIT.TheCEOhastheoverallresponsibilityfortheday-to-dayoperational
managementofIGBREIT,includingexecutionoftheagreedbusinesspoliciesanddirectionssetbytheBoardandofalloperationaldecisions
inmanagingtheManagerandIGBREIT.
TheINEDs,allofwhomarepersonsofhighcalibreandintegrity,playimportantrolesbyexercisingindependentjudgementandobjective
participation in theproceedingsanddecision-makingprocessesof theBoard.Thepresenceof INEDs fulfilsapivotal role incorporate
accountabilitytoensurethattheinterestsofminorityunitholdersareproperlysafeguarded.Theothernon-INEDs(“NINEDs”)alsobringwith
themawiderangeofessentialbusinessandfinancialexperiencerelevanttotheManagerandIGBREIT.
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CorporateGovernanceStatement(cont’d)
TheBoardisoftheviewthattakingintoaccountthenatureandscopeoftheoperationsoftheManager,thecurrentnumberof9Directors
remainsoptimumandconduciveforeffectivedeliberationsatBoardmeetingsandforefficientconductofBoardmeetings.
(c) Board Meetings and Access to Information
Directors are expected to prepare for, attend, and contribute meaningfully in all Board and applicable Board Committee meetings in
ordertodischargetheirobligations.Consistentwiththeirfiduciaryduties,Directorsareexpectedtomaintaintheconfidentialityofthe
deliberationsoftheBoardanditsCommittees.
Board meetings are scheduled at least once every quarter, to discuss and review IGB REIT’s business and affairs, with a focus on its
performanceandresultsaswellasmattersofmaterialconsequenceforIGBREITanditsunitholders.Additionalmeetingsmaybeconvened
aswarrantedbyspecificcircumstances.TofacilitateparticipationattheBoardmeetings,Directorsmayattendinperson,viatelephoneor
video-conference.BoardmeetingsarealsosupplementedbyresolutionscirculatedtotheDirectorsfordecisionbetweenthescheduled
meetings.TheBoardmetonceduringthefinancialperiodended31December�01�whichwasattendedbyallDirectors.
DirectorsreceiveagendatogetherwithafullsetofBoardpaperscontaininginformationrelevanttothebusinessofthemeetingsahead
ofthescheduledmeetingstoenableDirectorstoperuse,obtainadditionalinformationand/orseekfurtherexplanationsorclarificationon
thematterstobedeliberated.ThekeymanagementofficersoftheManagerareinvitedtoattendBoardmeetingstopresentreportson
mattersrelatingtotheirareasofresponsibility,andtobriefandprovidedetailstotheDirectorsonrecommendationsorreportssubmitted
totheBoard.Intheeventofpotentialconflictofinterest,theDirectorinsuchpositionwillmakeadeclarationinthemeetingandabstain
fromdeliberationanddecisionoftheBoardonthesubjectproposal.MatterstobeconsideredbytheBoardwillbeadoptedonthebasisof
amajorityofvotes.Inthecaseofanequalityofvote,theChairmanoftheBoardwillhaveacastingvote.ArecordoftheBoard’sdeliberation
oftheissuesdiscussedandconclusionsreachedindischargingitsdutiesandresponsibilitiesiscapturedintheminutesofeachmeeting.
MinutesofeachBoardmeetingarecirculatedtoeachBoardmemberpriortoconfirmationoftheminutesinthenextBoardmeeting.
DirectorsarealsonotifiedofanyannouncementreleasedtoBursaSecuritiesandtheimpendingrestrictionindealingwiththesecurities
ofIGBREITpriortotheannouncementofthefinancialresults.Directorsarealsoexpectedtoobserveinsidertradinglawsatalltimeseven
whendealingwithsecuritieswithinthepermittedtradingperiod.
DirectorshavefullandunrestrictedaccesstoallinformationandrecordsoftheManagerandIGBREITaswellastheadviceandservices
ofthemanagementandcompanysecretaryinfurtheranceoftheirduties.Directorsmayseekexternallegalorindependentprofessional
adviceonanymatterconcernedwiththedischargeoftheirresponsibilitiesastheymaydeemnecessaryandappropriate.
(d) Board Committees
The Board has entrusted specific responsibilities to several Board Committees, which operate within defined terms of reference.The
functionsandtermsofBoardCommitteesaswellasauthoritydelegatedbytheBoardtotheCommitteesarereviewedfromtimetotime
toensurethattheyarerelevantandup-to-date.TheCommitteesmeetascircumstancesdictate.ThechairmanoftherespectiveBoard
Committees reports to theBoardonanysalientmattersnotedby theCommitteesandwhich require theBoard’snotice,directionor
approval.TheminutesofCommittees’meetingsareincludedintheBoardpapers.
ThecompositionofBoardCommittees,theirattendanceattheCommittees’meetingsandtermsofreferencewereasfollows:
(i) AuditCommittee(“AC”)
ACcomprises3INEDsandaNINED,namelyHalimbinHajiDin(Chairman),TanSriDato’Dr.LinSeeYan,LeChingTai@LeeChen
ChongandTanLeiCheng,allofwhomhavetheappropriateaccountingexperienceorrelatedfinancialmanagementexpertise.
Withanindependentcomponentof75%andcomprisedofNEDs,thecompositionofACisfullycompliantwithMMLR.
TheroleofACistoassisttheBoardinfulfillingitsoversightresponsibilitiesforthefinancialreportingprocess,thesystemofinternal
controlandtheauditprocessoftheManagerandIGBREITaswellastheManager’sprocessformonitoringcompliancewithlaws
andregulations.AChasthepowertoconductorauthoriseinvestigationsintoanymatterswithinitstermsofreference.
�8IGB Real Estate Investment TrustAnnual Report 2012
ACmeetsat leastquarterly.ACmetonce in�01�andJanuary�013toassist theBoard indischarging its responsibility for the
integrityoftheCompany’squarterlyandyear-endfinancialresults,theassessmentoftheeffectivenessandefficiencyoftheinternal
controlsandgovernanceprocessesofIGBREITandmonitoringtheeffectivenessoftheinternalandexternalauditors.InJanuary
�013,ACalsometindependentlywiththeexternalauditorswithoutthepresenceofExecutiveBoardandmanagement.
(ii) NominationCommittee(“NC”)
NCcomprises3INEDsandaNINED,namelyTanSriDato’Dr.LinSeeYan(Chairman),HalimbinHajiDin,LeChingTai@LeeChen
ChongandTanLeiCheng.
NCrecommendssuitablecandidatesforappointmentstotheBoard,includingCommitteesoftheBoard.NCalsoconductannual
review of the structure, size and composition of the Board (including skills, knowledge, experience and gender diversity), the
performanceoftheBoard,itsCommitteesandindividualDirectorsandthoseDirectorswhoaredueforre-election/re-appointment
attheManager’sannualgeneralmeeting(“AGM”)aswellasreviewBoard’ssuccessionplans.
NCmeetsasandwhenrequired,andatleastonceayear.NCdidnotmeetin�01�asNCwasformedinJanuary�013.
(iii) RemunerationCommittee(“RC”)
RCcomprises3INEDsandtheMD,namelyTanSriDato’Dr.LinSeeYan(Chairman),HalimBinHajiDin,LeChingTai@LeeChen
ChongandRobertTanChungMeng.
RCrecommendstotheBoardthepolicyframeworkontermsofemploymentandonallelementsoftheremunerationofExecutive
Board. RC is authorised to review and approve the annual salary increments and bonuses of Executive Board, CEO and key
managementofficers.RCalsoreviewsNEDs’feesandmeetingallowancesandthereuponrecommendstotheBoardforapproval.
NoDirectorswillbeinvolvedindecidinghisorherownremuneration.
RCmeetsasandwhenrequired,andatleastonceayear.RCdidnotmeetin�01�asRCwasformedinJanuary�013.
(iv) InvestmentWorkingGroup(“IWG”)
TheIWG,comprisingtheExecutiveBoardandCEO,istaskedwiththeresponsibilitiestoreview,assessandconsiderinvestmentand
divestmentstrategiesofIGBREIT,withanaimtogrowIGBREITandimprovedistributionyields.
(e) Board Appointment and Evaluation
TheManager’sArticlesofAssociation(“AA”)providesthattheBoardhasthepowertoappointanypersontobeaDirector,eithertofilla
vacancyorasadditiontotheexistingDirectors.ShareholdersoftheManagermaybyordinaryresolutionremoveanyDirectorandappoint
anotherpersoninhisorherstead.OnethirdoftheBoardissubjecttoretirementbyrotationateachAGMwiththeexceptionofthefirst
AGMwherebyallDirectorsshallretirefromoffice.AretiringDirectorshallbeeligibleforre-election.TheDirectorstoretireineachyearare
thosewhohaveremainedinofficethelongestsincetheirlastelectionorappointment.Directorsover70yearsofagearealsorequiredto
submitthemselvesforre-appointmentannuallyincompliancewithSection1�9(6)oftheCompaniesAct1965.
Directorsarenotappointedforafixedterm.TheBoarddoesnotimposeatermoflimitation.Termlimitsholdthedisadvantageoflosing
theDirectorswhohavebeenabletodevelop,overaperiodoftime,increasinginsightintotheoperationsoftheManagerandIGBREIT,
andthereforeprovideanincreasingcontributiontotheBoardasawhole.
TheBoard issatisfiedthattheBoardaspresentlyconstituted isofsufficientsizeanddiversitywiththeappropriatemixofexperience,
competenciesandskillstocarryoutitsresponsibilities.TheBoardisalsooftheviewthattheBoardasawholehasperformedwellwith
theindividual’screditabilitytoaddvaluetotheBoard’sdeliberationsandexerciseobjectivejudgementindecision-makingprocesses,and
eachoftheDirectorhascommittedsufficienttimetothebusinessoftheManagerandcontributedtothegovernanceandoperationsof
theManagerandIGBREIT.AllINEDsasattheendof�01�areconsideredbytheBoardtobewhollyindependentofanypersonalbusiness
connectionwiththeManager.
InaccordancewithMMLR,eachmemberoftheBoardholdsnotmorethan5directorshipsinpubliclistedcompaniessaveforTanSriDato’
Dr.LinSeeYanwhowillcomplyinthecourseof�013.
CorporateGovernanceStatement(cont’d)
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(f) Directors’ remuneration
TheremunerationoftheDirectorsispaidbytheManagerandnotIGBREIT.ThedeterminationoftheremunerationoftheDirectorsisa
matterfortheBoard.NoDirectormakesadecisionrelatingtohisorherownremuneration.Theremunerationstructuresaredesignedas
suchtoattractandretainDirectorsofthecalibreneededtosuccessfullycarryouttheManager’soperations.
The Executive Board and CEO have entered into service agreements with the Manager.The service agreement covers the terms of
employment, specifically salary and other benefits. NED’s remuneration reflects the experience, expertise and level of responsibilities
undertakenbytheindividualNEDconcerned.
Ingeneral,theremunerationoftheExecutiveBoardandCEOisstructuredonthebasisof linkingrewardstocorporateandindividual
performance.TheremunerationofNEDstakestheformprimarilyoffees,whichareagreedbytheBoardandapprovedbytheshareholders
of theManager.NEDsalso receivemeetingallowances forparticipation inmeetingsof theBoardandanyCommitteesmeetings.The
Directors’feespaidtoNEDsforFY�01�totalledRM1�7,500.
(g) Directors’ Continuing Education
TheBoardfirmlybelievesinthecontinuingeducationofindividualDirectorsformaintainingacurrentandeffectiveBoard.Accordingly,the
BoardencouragesDirectorstoparticipateinongoingeducationaswellasparticipationinaccrediteddirectoreducationprogrammes.
During FY�01�, all Directors had attended various training programmes, conferences and workshops which they have individually or
collectivelyconsideredas relevantanduseful incontributing to theeffectivedischargeof theirdutiesasDirectors.TheDirectorshad
attended/participatedinoneormoreofthefollowingtrainingprogrammes/conferences/workshopsin�01�:
• InternationalFinancialReportingStandards(“IFRS”)Convergence
• SingaporeInstituteofDirectors(“SID”)ConferenceonCorporateGovernanceintheNewNormal,Singapore
• SIDConferenceonListedCompanyDirectorProgrammeModule4onNominatingCommitteeEssentials
• SIDConferenceonListedCompanyDirectorProgrammeModule5onRemunerationCommitteeEssentials
• IntroductiontotheCompetitionAct�010
• FinancialInstitutionsDirectors’EducationProgramme–InternalCapitalAdequacyAssessmentProcess(“ICAAP”)
• UpdateonrecentfloodinThailandandnaturalcatastrophepoolandanoverviewofICAAP
• CreditDerivativesProducts
• GrowthThroughInnovation
• BursaSecurities’Half-dayGovernanceProgramme
• TalkonCustomerAnalyticsEvent
TheDirectorsarealsokeptinformedofthevariousrequirementsandupdatesissuedbyregulatoryauthorities.
III. INVESTOR RELATIONS AND UNITHOLDERS COMMUNICATION
TheBoardacknowledgestheneedforunitholdersandinvestorstobeinformedofallmaterialbusinessmattersaffectingIGBREIT.Inadditiontothe
variousdisclosuresandannouncementsmadetoBursaSecurities,thetimelyreleaseofquarterlyandannualfinancialresultsprovidesunitholders
andinvestingpublicwithanoverviewofIGBREIT’sperformance.TheManagerhasawebsiteatwww.igbreit.comfromwhichinvestors,analysts
andunitholderscanaccessdetailedinformationonIGBREIT’sbusinessesandlatestdevelopments.Allinformationreportedtothemarketvia
theregulatoryinformationserviceappearsassoonaspracticableonthecorporatewebsitetopromoteaccessibilityofinformationtoallmarket
participants.
Management of the Manager conducts regular dialogues, briefings and meetings with fund managers, financial analysts and the media to
provideupdatesandnewdevelopmentsaboutIGBREIT,basedonpermissibledisclosures.However,informationthatisprice-sensitiveorthat
mayberegardedasundisclosedmaterialinformationaboutIGBREITisnotdisclosedinthesesessionsuntilaftertheprescribedannouncement
toBursaSecuritieshasbeenmade.
WhilsttheManageraimstoprovidesufficientinformationtounitholdersandinvestorsaboutIGBREIT,italsorecognisesthatunitholdersand
investorsmayhavespecificqueriesandrequireadditionalinformation.Anyenquiriesoninvestorrelatedmattersmaybedirectedtothisemail
address:enquiry@igbreit.com.
CorporateGovernanceStatement(cont’d)
30IGB Real Estate Investment TrustAnnual Report 2012
IV. ACCOUNTABILITY AND AUDIT
(a) Financial Reporting
TheBoardiscommittedtoprovidingabalanced,clearandcomprehensiveassessmentofthefinancialperformanceandprospectsofIGB
REITinalldisclosuresmadetostakeholdersandregulatoryauthorities.
TheBoard,assistedbyAC,overseesthefinancialreportingprocessandthequalityofthefinancialreportingoftheManagerandIGBREIT.
ACreviewsandmonitorstheintegrityofIGBREIT’sannualandinterimfinancialstatements.ItalsoreviewstheappropriatenessofIGBREIT’s
accountingpoliciesandthechangestothesepoliciesaswellasensuresthesefinancialstatementscomplywithaccountingstandardsand
regulatoryrequirements.
TheStatementbyTheManagerinrespectofthepreparationoftheannualauditedfinancialstatementsofIGBREITfortheperiodended
31December�01�issetoutintheFinancialStatement.
(b) Internal Control
TheBoard is responsibletomaintainasoundsystemof internalcontrols thatprovidesreasonableassuranceofeffectiveandefficient
operations,andcompliancewithlawsandregulations,aswellaswithinternalprocedurestosafeguardunitholders’investmentandIGB
REIT’sassets.Whileacknowledgingtheirresponsibilityforthesystemofinternalcontrol,theDirectorsareawarethattheManager’ssystem
isdesignedtomanageratherthaneliminaterisksandthereforecannotprovideabsoluteassuranceagainstmaterialmisstatement,fraud
andloss.
TheManager’s internalaudit function isundertakenbythe internalauditdivisionof itsparentcompany, IGBCorporationBerhad.The
internalauditreportsdirectlytoAConmatterspertainingtotheManagerandIGBREIT.
(c) Relationship with the Auditors
Theappointmentoftheauditors,whomaybenominatedbytheManager,mustbeapprovedbytheTrustee.Theauditorsappointedmust
beindependentoftheManagerandtheTrustee.TheremunerationoftheauditorsmustbeapprovedbytheTrustee.
TheBoardmaintains,viatheAC,anactive,transparentandprofessionalrelationshipwiththeauditorsofIGBREIT.IGBREIT’sauditorsreport
theirfindingstomembersoftheACaspartoftheauditprocessonthestatutoryfinancialstatements.TheroleoftheACinrelationtothe
auditorsisdisclosedintheAuditCommitteeReport.
(d) Compliance Officer
TheManagerhasadesignatedcomplianceofficerworkingtowardsensuringthecompliancewithall legislations,rulesandguidelines
issuedbySCandBursaSecuritiesaswellastheDeed.
V. CONFLICTS OF INTEREST AND RELATED PARTY TRANSACTIONS
TheDeedprovidesthattheManager,theTrusteeandanydelegateofeitherofthemshallavoidconflictsofinterestarisingor,ifconflictsarise,shall
ensurethatIGBREITisnotdisadvantagedbythetransactionconcerned.TheManagermustnotmakeimproperuseofitspositioninmanaging
IGBREITtogain,directlyorindirectly,anadvantageforitselforforanyotherpersonortocausedetrimenttotheinterestofunitholders.
Indealingwithanyconflict-of-interestsituationsthatmayarise,theManager’spolicyisthatalltransactionscarriedoutfororonbehalfofIGB
REITaretobeexecutedontermsthatarebestavailabletoIGBREITandwhicharenolessfavourablethanarm’s-lengthtransactionsbetween
independentparties.
CorporateGovernanceStatement(cont’d)
31IGB Real Estate Investment Trust
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Forrelatedpartytransactions(“RPTs”),theManagerhasestablishedprocedurestoensurethattransactionsinvolving,amongothers,theTrustee,
theManager,theDirectors,themajorunitholdersandpersonsconnectedwiththem,areconductedatarm’slengthandonnormalcommercial
terms,whicharegenerallynomorefavourablethanthoseextendedtounrelatedthirdparties,andinaccordancewithallapplicablerequirements
oftheREITGuidelinesand/orMMLRrelatingtothetransactioninquestion.AllRPTsarereviewedbyAConaquarterlybasis.Ifamemberofthe
Boardand/orAChasan interest inatransaction,theDirectorconcerned istoabstainfromparticipating inthereviewandrecommendation
processinrelationtothattransaction.TheManagershalladherestrictlytotheDeedwhichprohibitstheManageranditsrelatedpartiesfrom
votingwiththeirunitsat,orbeingpartofaquorumfor,anymeetingofunitholdersconvenedtoapproveanymatterinwhichtheManagerand
itsrelatedpartieshaveinterestintheoutcomeofthetransactionunlessanexemptionisobtainedfromtheSC.
DetailsoftherelatedpartytransactionsenteredintobyIGBREITduringthefinancialperiodended31December�01�aredisclosedintheNotes
totheFinancialStatements.
VI. CORPORATE SOCIAL RESPONSIBILITY (“CSR”)
InformationonIGBREIT’sCSRactivitiesisdisclosedintheMessagefromtheChiefExecutiveOfficer.
CorporateGovernanceStatement(cont’d)
3�IGB Real Estate Investment TrustAnnual Report 2012
AuditCommitteeReport
FORMATION
TheAuditCommittee(“AC”)wasestablishedbytheBoardoftheManageron7May�01�.
TheroleofACistoassisttheBoardinfulfillingitsoversightresponsibilitiesforthefinancialreportingprocess,thesystemofinternalcontrolandtheaudit
processoftheManagerandIGBREITaswellastheManager’sprocessformonitoringcompliancewithlawsandregulations.
COMPOSITION
ThemembersofACsinceitsestablishmentareasfollows:
EncikHalimbinHajiDin,ACChairman(INED)
TanSriDato’Dr.LinSeeYan(INED)
LeChingTai@LeeChenChong(INED)
TanLeiCheng(NINED)
TERMS OF REFERENCE
ACisgovernedbythefollowingtermsofreference:
(a) Membership
ACmembersshallbeappointedbytheBoardandshallconsistofnotlessthan3members,allofwhommustbeNEDs,withamajorityofthem,
includingthechairman,mustbeindependent.NoalternateDirectorshallbeappointedtoAC.
(b) Authority
ACshall,withinthelimitsofthepolicydeterminedandpowersdelegatedbytheBoard,hastheauthorityto-
(i) investigateanymatterwithinitstermsofreference;
(ii) obtaintheresourcesrequiredtoperformitsduties;
(iii) fullandunrestrictedaccesstoinformation,recordsanddocumentsrelevanttoitsactivities;
(iv) communicatedirectlywiththeexternalandinternalauditors,aswellasemployeesoftheManager;
(v) engage,consultandobtainexternallegalorindependentprofessionaladviceasnecessary;and
(vi) convene meetings with external and internal auditors, property manager or its service providers or all of them whenever deemed
necessary.
(c) Responsibilities
TheresponsibilitiesofACinclude-
(i) reviewandrecommendquarterlyresultsofIGBREITandannualfinancialstatementsofIGBREITandtheManagerfortheBoard’sapproval,
focusingprimarilyon:
• goingconcernassumptions;
• changesandimplementationofnewaccountingpoliciesandpractices;
• majorjudgementalareas,significantandunusualevents;and
• compliancewithaccountingstandardsandregulatoryrequirements.
(ii) reviewwithexternalauditorsofthefollowing:
• auditplansandauditreportsandtheextentofassistancerenderedbyemployeesoftheManager,propertymanageror itsservice
providers;
• evaluationofthesystemofinternalcontrols;
• issuesandreservationsarisingfromaudit;and
• auditfeeandanyquestionsofresignation,dismissalorreappointmentofexternalauditors.
33IGB Real Estate Investment Trust
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AuditCommitteeReport(cont’d)
(iii) reviewwithinternalauditorsofthefollowing:
• internalaudit’scharterwhichdefinestheindependentpurpose,authority,scopeandresponsibilityoftheinternalauditfunction;
• adequacyandrelevanceofthescope,functions,competencyandresourcesoftheinternalauditfunctionandthenecessaryauthority
tocarryoutitswork;
• auditplanofworkprogrammeandresultsoftheinternalauditprocessesincludingrecommendationsandactionstaken;
• effectivenessofthesystemofinternalcontrols,riskmanagementandgovernanceprocessesincludingcompliancewiththeoperational
manual,REITGuidelinesandMMLR;and
• assessmentoftheperformanceoftheinternalauditfunctionincludingthatofseniorstaffandanymatterconcerningtheirappointment
andtermination.
(iv) reviewRPTsandconflictofinterestsituationsthatmayarise,includinganytransaction,procedureorcourseofconductthatraisesquestions
ofmanagementintegrity.
(v) considerandrecommendthedistributionamountstounitholdersfortheBoard’sapproval.
(vi) reviewallprospectivefinancialinformationprovidedtotheregulatorsand/orthepublic.
(vii) preparereports,ifthecircumstancesariseoratleastonceayear,summarisingtheworkperformedbyACforinclusioninIGBREIT’sAnnual
Report.
(viii) reportpromptlytoBursaSecuritiesonanymatterreportedbyittotheBoardwhichhasnotbeensatisfactorilyresolvedresultinginbreach
ofMMLR.
(ix) actonanymattersasmaybedirectedbytheBoardfromtimetotime.
(d) Meetings
ACshallmeetatleast4timesayearanditsquorummustatalltimescomprisedatleast�INEDs.ACmeetingsmaybeheldbytelephoneor
video-conferenceorbycircularresolution.OtherBoardmembersandmanagementmayattendmeetingsuponinvitationofAC,toassistinits
deliberationsandresolutionsofmattersraised.
Atleasttwiceayear,ACshallmeetwithexternalauditorswithoutthepresenceofExecutiveBoardandemployeesoftheManager.Additional
meetingsmaybehelduponrequestbyanyACmember,internalorexternalauditors.
MinutesshallbekeptoftheproceedingsandtheresolutionsofAC.Minutesshallbesignedbythechairmanandmadeavailablepriortothenext
meetingandapprovedtherein.ACchairmanshallreporttotheBoardonanysalientmattersnotedbyACandwhichrequirestheBoard’snotice,
directionandapproval.ACminutesshallbeincludedintheBoardpapers.
MEETINGS AND ATTENDANCE
ACmetonceinFY�01�andJanuary�013,whichwereattendedbyallmembers.
TheMD,CFO,companysecretary, internalandexternalauditorswere invitedtoACmeetingstopresenttheirrespectivereportstoAC.Theexternal
auditorsattendedtwomeetings,onein�01�andtheother,inJanuary�013,topresenttheAuditors’AuditPlanFY�01�andAuditors’Reportonthe
annualfinancialstatementsof IGBREITforthefinancialperiodended31December�01�.ACalsometalonewithPwCinJanuary�013withoutthe
presenceofMD,CEOandmanagementoftheManagertomakeenquiriesinrelationtomanagement’sco-operationinfinancialreporting,andthestate
ofaffairsofinternalauditfunction.
SUMMARY OF ACTIVITIES
TheactivitiesofACforFY�01�andJanuary�013:
(a) Financial Reporting
(i) ReviewedandrecommendedfortheBoard’sapprovalthequarterlyresultsandannualfinancialstatementsofIGBREIT.
34IGB Real Estate Investment TrustAnnual Report 2012
AuditCommitteeReport(cont’d)
(ii) ReviewedandrecommendedfortheBoard’sapprovaltheannualfinancialstatementsoftheManager.
(iii) Reviewedanddiscussedmanagementaccountswithmanagement.
(b) External Audit
(i) Reviewedandapprovedexternalauditors’auditplanandthescopefortheannualaudit.
(ii) RecommendedtotheBoardandendorsedbyTrusteeontheappointmentandremunerationofexternalauditors.
(iii) Reviewedanddirectedfollow-upaction,whenneeded,thefindingsofexternalauditorsontheresultsoftheexternalaudits.
(iv) Reviewedtheextentofassistancerenderedbymanagementandissuesandreservationsarisingfromstatutoryauditwithexternalauditors,
withoutthepresenceoftheMD,CEOandmanagementstaff.
(c) Internal Audit
(i) ConsideredtheIGBInternalauditfunctiontoperformtheinternalauditfunctionfortheManagerandoutlinedthescopeofitswork.
(ii) RecommendedtotheBoardontheappointmentandremunerationoftheinternalauditors.
(iii) Reviewedandapprovedinternalaudit’scharteraswellasannualauditplanwhichcoveredentitiesacrossallleveloperationswithinthe
Manager.
(iv) Reviewedreportsonspecialauditsperformedduringtheperiod.
(d) RPT
(i) ReviewedallRPTenteredintobyIGBREIT.
(ii) Reviewedanyconflictofinterestsituationthatmayariseincludinganytransaction,procedureorcourseofconductthatraisesquestionsof
managementintegrity.
AC’S CONTINUING EDUCATION
ThedetailsoftrainingprogrammeandseminarsattendedbyeachACmemberduringFY�01�aresetoutintheCorporateGovernanceStatementunder
“Directors’ContinuingEducation”.
INTERNAL AUDIT FUNCTION
TheinternalauditfunctionisoutsourcedandundertakenbytheManager’sparentcompany’sinternalauditdivision.Theinternalauditorscarriedout
thefollowingactivitiesduringFY�01�:
(a) PreparedtheannualauditplanforAC’sapproval.
(b) Performedspecialauditasrequestedbymanagementandissuedauditreportsontheresults.
(c) AttendedAC’smeetingtotableanddiscusstheauditreportsandfolloweduponmattersraised.
(d) PerformedcorporategovernancereviewandcompliancewithMMLR,MCCG�01�andREITGuidelines.
ThecostsincurredfortheinternalauditfunctionforFY�01�wereRM35,000.
35IGB Real Estate Investment Trust
Annual Report 2012
FinancialReview
SUMMARY OF FINANCIAL RESULTS
Financial Period * Forecast period * Variance 31 December 2012 31 December 2012 RM’000 RM’000 RM’000
TotalRevenue 115,�85 110,718 4,567
NetPropertyIncome 76,174 74,084 �,090
DistributableIncome 6�,333 60,866 1,467
Distributionperunit(DPU)(sen) 1.83 1.79 0.04
AnnualisedDPU(sen) 6.50 6.36 0.14
TOTAL REVENUE
Financial Period * Forecast period * Variance 31 December 2012 31 December 2012 RM’000 RM’000 RM’000
MidValleyMegamall 79,834 78,43� 1,40�
TheGardensMall 35,451 3�,�86 3,165
Total 115,�85 110,718 4,567
NET PROPERTY INCOME
Financial Period * Forecast period * Variance 31 December 2012 31 December 2012 RM’000 RM’000 RM’000
MidValleyMegamall 57,449 56,089 1,360
TheGardensMall 18,7�5 17,995 730
Total 76,174 74,084 �,090
*From20September2012to31December2012.
UTILISATION OF PROCEEDS
Atotalof3.4billionnewunitswereissuedbyIGBREITtosatisfypartofpurchaseconsiderationfortheinvestmentpropertiesi.e.MidValleyMegamalland
TheGardensMalltogetherwiththerelatedassetsasfollows:
Purchase Consideration Cash Consideration Units Consideration RM’000 ‘000 RM’000
MidValleyMegamall 3,440,000 �,730,000 710,000
MidValleyMegamallRelatedAssets 1,58� - 1,58�
TheGardensMall 1,160,000 670,000 490,000
TheGardensMallRelatedAssets 10,977 - 10,977
Total 4,61�,559 3,400,000 1,�1�,559
FINANCIALSTATEMENTS31DECEMBER�01�
Manager’s Report 37
Statement by The Manager 40
Trustee’s Report 41
Independent Auditors’ Report 42
Statement of Financial Position 44
Statement of Comprehensive Income 45
Statement of Changes in Net Asset Value 47
Statement of Cash Flows 48
Notes to the Financial Statements 49
37IGB Real Estate Investment Trust
Annual Report 2012
Manager’sReport
TheManagerof IGBRealEstate InvestmentTrust (“IGBREIT”), IGBREITManagementSdnBhd(“theManager”), ispleasedtosubmit their reportand
auditedfinancialstatementstounitholdersofIGBREITforthefinancialperiodended31December�01�.
PRINCIPAL ACTIVITY
IGBREITwasestablishedon�5July�01�pursuanttothedeedoftrustdated18July�01�(“theDeed”)betweentheManagerandAmTrusteeBerhad
(“theTrustee”)andlistedonMainMarketofBursaMalaysiaSecuritiesBerhad(“BursaSecurities”)on�1September�01�.Theprincipalinvestmentpolicy
ofIGBREITistoinvest,directlyandindirectly,inadiversifiedportfolioofincomeproducingrealestateusedprimarilyforretailpurposesinMalaysiaand
overseasaswellasrealestaterelatedassets.Realestateusedprimarilyforretailpurposeswouldincluderetailpropertiesandmixeduseddevelopment
witharetailcomponent.
DISTRIBUTION OF INCOME
IGBREIThaddeclaredadistributionperunitforthefinancialperiodended31December�01�of1.83senperunit.
RESERVES AND PROVISIONS
Allmaterialtransferstoorfromreservesandprovisionsduringthefinancialperiodareshowninthefinancialstatements.
DIRECTORS
TheDirectorswhohaveservedontheBoardoftheManager,sincethedateofestablishmentofIGBREITareasfollows:
TanSriDato’DrLinSeeYan
RobertTanChungMeng
TanBoonLee
HalimbinHajiDin
LeChingTai@LeeChenChong
TanLeiCheng
DanielYongChen-I
ElizabethTanHuiNing
TanYeeSeng
DIRECTORS’ BENEFITS
Duringandattheendofthefinancialperiod,noarrangementsubsistedtowhichtheManagerisaparty,withtheobjectorobjectsofenablingthe
DirectorsoftheManagertoacquirebenefitsbymeansoftheacquisitionofunitsinordebenturesofIGBREIToranyotherbodycorporate,otherthan
asdisclosedinDirectors’interest.
Forthefinancialperiodended31December�01�,noDirectorhasreceivedorbecomeentitledtoreceiveabenefit(otherthancertaindirectorsreceive
remunerationasaresultoftheiremploymentwithrelatedcorporations).
38IGB Real Estate Investment TrustAnnual Report 2012
Manager’sReport(cont’d)
DIRECTORS’ INTEREST
ThefollowingDirectorsoftheManagerwhoheldofficeattheendofthefinancialperiodhad,accordingtotheregisterofunitholdingsinIGBREIT,
interestsintheunitsofIGBREITasfollows:-
Number of units of RM1.00 each Balance at 25.07.2012 (date of Disposal Balance at establishment) Addition /Transferred 31.12.2012
RobertTanChungMeng
Direct 0 7,�89,081 0 7,�89,081
Indirect 0 1,790,708,8�3 (�,4�3,800) 1,788,�85,0�3
TanLeiCheng
Direct 0 �,�03,74� (350,000) 1,853,74�
Indirect 0 345,7�� 0 345,7��
TanBoonLee
Direct 0 1,989,7�5 0 1,989,7�5
DanielYongChen-I
Direct 0 80�,13� 0 80�,13�
TanYeeSeng
Direct 0 907,�00 (�00,000) 707,�00
ElizabethTanHuiNing
Direct 0 750,000 0 750,000
Otherthanasdisclosedabove,theotherDirectorswhoheldofficeattheendofthefinancialperioddidnothaveinterestsintheunitsofIGBREIT.
OTHER INFORMATION ON THE FINANCIAL STATEMENTS
BeforethefinancialstatementsofIGBREITweremadeout,theManagertookreasonablesteps:
(a) toascertainthatproperactionhadbeentakeninrelationtothewritingoffofbaddebtsandthemakingofallowancefordoubtfuldebtsand
satisfiedthemselvesthatallknownbaddebtshadbeenwrittenoffandthatadequateallowancehadbeenmadefordoubtfuldebts;and
(b) toensurethatanycurrentassets,otherthandebts,whichwereunlikelytorealiseintheordinarycourseofbusinesstheirvaluesasshowninthe
accountingrecordsofIGBREIThadbeenwrittendowntoanamountwhichtheymightbeexpectedsotorealise.
Atthedateofthisreport,theManagerisnotawareofanycircumstances:
(a) whichwouldrendertheamountswrittenoffforbaddebtsortheamountoftheallowancefordoubtfuldebtsinthefinancialstatementsofIGB
REITinadequatetoanysubstantialextent;or
(b) whichwouldrenderthevaluesattributedtocurrentassetsinthefinancialstatementsofIGBREITmisleading;or
(c) whichhavearisenwhichrenderadherencetotheexistingmethodofvaluationofassetsorliabilitiesofIGBREITmisleadingorinappropriate.
Nocontingentorotherliabilityhasbecomeenforceableor is likelytobecomeenforceablewithintheperiodoftwelvemonthsaftertheendofthe
financialperiodoryearwhich,intheopinionoftheManager,willormayaffecttheabilityofIGBREITtomeetitsobligationswhentheyfalldue.
39IGB Real Estate Investment Trust
Annual Report 2012
Manager’sReport(cont’d)
OTHER INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED)
Atthedateofthisreport,theredoesnotexist:
(a) anychargeontheassetsofIGBREITwhichhasarisensincetheendofthefinancialperiodwhichsecurestheliabilityofanyotherperson;or
(b) anycontingentliabilityofIGBREITwhichhasarisensincetheendofthefinancialperiod.
Atthedateofthisreport,theManagerisnotawareofanycircumstancesnototherwisedealtwithinthisreportorthefinancialstatementswhichwould
renderanyamountstatedinthefinancialstatementsmisleading.
IntheopinionoftheManager:
(a) theresultsofIGBREIT’soperationsduringthefinancialperiodwerenotsubstantiallyaffectedbyanyitem,transactionoreventofamaterialand
unusualnature;and
(b) therehasnotarisenintheintervalbetweentheendofthefinancialperiodandthedateofthisreportanyitem,transactionoreventofamaterial
andunusualnaturelikelytoaffectsubstantiallytheresultsoftheoperationsofIGBREITforthefinancialperiodinwhichthisreportismade.
ULTIMATE HOLDING COMPANY
TheDirectorsoftheManagerregardIGBCorporationBerhad,acompanyincorporatedinMalaysiaandlistedontheMainMarketofBursaSecurities,as
theultimateholdingcompany.
AUDITORS
Theauditors,PricewaterhouseCoopers,haveexpressedtheirwillingnesstocontinueinoffice.
SignedonbehalfofIGBREITManagementSdnBhdinaccordancewitharesolutiondated�5February�013.
ROBERT TAN CHUNG MENG HALIM BIN HAJI DIN
MANAGINGDIRECTOR DIRECTOR
40IGB Real Estate Investment TrustAnnual Report 2012
StatementbyTheManager
IntheopinionoftheDirectorsoftheManager,thefinancialstatementssetoutonpages44to83aredrawnupinaccordancewiththeprovisionsof
theDeed,theSecuritiesCommission’sGuidelinesonRealEstateInvestmentTrusts(“REITGuidelines”),applicablesecuritieslawsandMalaysianFinancial
ReportingStandardsand InternationalFinancialReportingStandardssoas togivea trueand fairviewof thefinancialpositionof IGBREITasat31
December�01�andofitsfinancialperformanceandcashflowsfortheperiodfromthedateofestablishmenton�5July�01�to31December�01�.
ForandonbehalfoftheManager,
IGB REIT MANAGEMENT SDN BHDSignedinaccordancewitharesolutionoftheDirectorsoftheManagerdated�5February�013:
ROBERT TAN CHUNG MENGMANAGINGDIRECTOR
HALIM BIN HAJI DINDIRECTOR
KualaLumpur
STATUTORY DECLARATION
I,ChaiLaiSim,theChiefFinancialOfficeroftheManagerprimarilyresponsibleforthefinancialmanagementof IGBREIT,dosolemnlyandsincerely
declarethatthefinancialstatementssetoutinpages44to83,are,tothebestofmyknowledgeandbelief,correctandImakethissolemndeclaration
conscientiouslybelievingthesametobetrue,andbyvirtueoftheprovisionsoftheStatutoryDeclarationsAct,1960.
CHAI LAI SIM
SubscribedandsolemnlydeclaredbytheabovenamedatKualaLumpuron�5February�013.
Beforeme:
41IGB Real Estate Investment Trust
Annual Report 2012
Trustee’sReporttoTheUnitholdersofIGBREIT(EstablishedinMalaysia)
WehaveactedasTrusteeofIGBREITforthefinancialperiodended31December�01�.Inouropinionandtothebestofourknowledge,theManager
hasmanagedIGBREITinaccordancewiththelimitationsimposedontheinvestmentpowersoftheManagerandtheTrusteeundertheDeed,theREIT
Guidelines,applicablesecuritieslawsandotherapplicablelawsduringthefinancialperiodthenended.
WehaveensuredtheproceduresandprocessesemployedbytheManagertovalueandpricetheunitsofIGBREITareadequateandthatsuchvaluation/
pricingiscarriedoutinaccordancewiththeDeedandotherregulatoryrequirements.
We also confirm the income distributions declared during the financial period ended 31 December �01� are in line with and are reflective of the
objectivesofIGBREIT.Incomedistributionshavebeendeclaredforthefinancialperiodended31December�01�asfollows:
1) Incomedistributionof1.83senperunitpayableon�8February�013.
ForandonbehalfoftheTrustee,
AMTRUSTEE BERHAD
TAN KOK CHEENGCHIEFEXECUTIVEOFFICER
KualaLumpur,
Date:�5February�013
4�IGB Real Estate Investment TrustAnnual Report 2012
IndependentAuditors’ReporttoTheUnitholdersofIGBREIT(EstablishedinMalaysia)
REPORT ON THE FINANCIAL STATEMENTS
WehaveauditedthefinancialstatementsofIGBREIT,onpages44to8�,whichcomprisesthestatementofthefinancialpositionasat31December�01�,
andthestatementsofcomprehensiveincome,changesinnetassetvalueandcashflowsfortheperiodfromthedateofestablishmenton�5July�01�
to31December�01�,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation,assetoutinnotes1to�7.
DirectorsoftheManager’sresponsibilityforthefinancialstatements
TheDirectorsoftheManagerareresponsibleforthepreparationoffinancialstatementssoastogiveatrueandfairviewinaccordancewithMalaysian
FinancialReportingStandardsandInternationalFinancialReportingStandards.TheDirectorsarealsoresponsibleforsuchinternalcontrolastheDirectors
determineisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Auditors’responsibility
Ourresponsibility istoexpressanopiniononthesefinancialstatementsbasedonouraudit.Weconductedouraudit inaccordancewithapproved
standardsonauditinginMalaysia.Thosestandardsrequirewecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonable
assuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures
selecteddependonourjudgment,includingtheassessmentofrisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.
Inmakingthoseriskassessments,weconsiderinternalcontrolrelevanttotheManager’spreparationandfairpresentationofthefinancialstatement
thatgiveatrueandfairviewinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressingan
opinionontheeffectivenessoftheManager’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthe
reasonablenessofaccountingestimatesmadebytheManager,aswellasevaluatingtheoverallpresentationofthefinancialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.
43IGB Real Estate Investment Trust
Annual Report 2012
IndependentAuditors’ReporttoTheUnitholdersofIGBREIT(continued)(EstablishedinMalaysia)
REPORT ON THE FINANCIAL STATEMENTS (CONTINUED)
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of IGB REIT as of 31 December �01� and of its financial
performanceandcashflowsfortheperiodfromthedateofestablishmenton�5July�01�to31December�01�inaccordancewithMalaysianFinancial
ReportingStandardsandInternationalFinancialReportingStandards.
OTHER REPORTING RESPONSIBILITIES
ThesupplementaryinformationsetoutinNote�8onpage83isdisclosedtomeettherequirementofBursaMalaysiaSecuritiesBerhadandisnotpart
of thefinancial statements.TheDirectorsof theManagerare responsible for thepreparationof thesupplementary information inaccordancewith
GuidanceonSpecialMatterNo.1,DeterminationofRealisedandUnrealisedProfitsorLossesintheContextofDisclosurePursuanttoBursaMalaysia
SecuritiesBerhaddated�0December�011(“BursaDirective”). Inouropinion,thesupplementary informationisprepared, inallmaterialrespects, in
accordancewiththeMIAGuidanceandthedirectiveofBursaMalaysiaSecuritiesBerhad.
OTHER MATTERS
ThisreportismadesolelytotheunitholdersofIGBREITandfornootherpurpose.Wedonotassumeresponsibilitytoanyotherpersonforthecontent
ofthisreport.
PRICEWATERHOUSECOOPERS SOO HOO KHOON YEAN(No.AF:1146) (No.�68�/10/13(J))
CharteredAccountants CharteredAccountant
KualaLumpur
Date:�5February�013
44IGB Real Estate Investment TrustAnnual Report 2012
StatementofFinancialPositionasat31December�01�
2012 Note RM’000
Non-current assets Plantandequipment 5 1�,�66
Investmentproperties 6 4,700,000
Total non-current assets 4,71�,�66
Current assets
Tradeandotherreceivables 7 4�,116
Cashandbankbalances 8 137,75�
Total current assets 179,868
Total assets 4,89�,134
Financed by Unitholders’ fund
Unitholders’capital 9 4,�43,085
Accumulatedlosses (759,041)
Total unitholders’ fund 3,484,044
Non-current liabilities
Borrowings 10 1,193,38�
Payablesandaccruals 11 45,987
Total non-current liabilities 1,�39,369
Current liabilities
Borrowings 10 �7,606
Payablesandaccruals 11 141,115
Total current liabilities 168,7�1
Total liabilities 1,408,090
Total unitholders’ fund and liabilities 4,89�,134
Net asset value (“NAV”)
-beforeincomedistribution 3,546,377
-afterincomedistribution 3,484,044
Number of units in circulation (‘000 units) 3,400,000
NAV per unit (RM)
-beforeincomedistribution 1.0431
-afterincomedistribution 1.0�47
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
45IGB Real Estate Investment Trust
Annual Report 2012
StatementofComprehensiveIncomeforTheFinancialPeriodFromDateofEstablishmenton�5July�01�to31December�01�
25.07.2012 (date of establishment) to 31.12.2012 Note RM’000
Grossrentalincome 88,119
Otherincome 1� �7,166
Total revenue 115,�85
Utilitiesexpenses (13,459)
Maintenanceexpenses (4,987)
Quitrentandassessment (�,960)
Otheroperatingexpenses 13 (17,705)
Property operating expenses (39,111)
Net property income 76,174
Changesinfairvalueofinvestmentproperties 100,000
Interestincome 315
Net investment income 176,489
Manager’smanagementfees 14 (7,851)
Trustees’fees (88)
Othertrustexpenses (41)
Borrowingcosts 15 (15,�17)
Profit before taxation 153,�9�
Taxation 16 -
Profit after taxation 153,�9�
Othercomprehensiveincome,netoftax -
Total comprehensive income attributable to unitholders 153,�9�
Profit after taxation is made up as follows:
Realised 53,�9�
Unrealised 100,000
153,�9�
Basic earnings per unit (sen) 17 4.51
Diluted earnings per unit (sen) 17 4.50
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
46IGB Real Estate Investment TrustAnnual Report 2012
StatementofComprehensiveIncomeforTheFinancialPeriodFromDateofEstablishmenton�5July�01�to31December�01�(continued)
25.07.2012 (date of establishment) to 31.12.2012 Note RM’000
Totalcomprehensiveincome 153,�9�
Distributionperunit(sen)–final 18 1.83
Incomedistribution
Totalcomprehensiveincomeforthefinancialperiod 153,�9�
Less:Distributionadjustments A (90,959)
Totalavailableforincomedistribution 6�,333
Proposedforincomedistributionof1.83senperunitfor
periodfrom�5July�01�(dateofestablishment)to31December�01� (6�,333)
Balanceundistributed -
NoteA
Distributionadjustmentscomprise:
Changesoffairvalueoninvestmentproperties (100,000)
Manager’smanagementfeepayableinunits 7,851
Amortisationoffit-outincentives 614
Amortisationofcapitalisedborrowingcosts 170
Depreciationofplantandequipment 406
(90,959)
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
47IGB Real Estate Investment Trust
Annual Report 2012
StatementofChangesinNetAssetValueforTheFinancialPeriodFromDateofEstablishmenton�5July�01�to31December�01�
Retained earnings/ Unitholders’ (Accumulated Total capital losses) funds Note RM’000 RM’000 RM’000
As at 25 July 2012 - - -
Totalcomprehensiveincomefortheperiod
attributabletounitholders - 153,�9� 153,�9�
Incomedistribution 18 - (6�,333) (6�,333)
Nettotalcomprehensiveincomefortheperiod
attributabletounitholders - 90,959 90,959
Unitholders’ transactions
Issueofnewunitsatpar 3,400,000 - 3,400,000
Valuationofunitsissuedatfairvalue 850,000 - 850,000
Totalvalueofunitsissued 4,�50,000 - 4,�50,000
Effectoffairvalueadjustment
(duetounitsissued)foracquisition
ofinvestmentproperties* - (850,000) (850,000)
Listingexpenses (6,915) - (6,915)
Increaseinnetassetsresultingfrom
unitholders’transactions 4,�43,085 (850,000) 3,393,085
As at 31 December 2012 9 4,�43,085 (759,041) 3,484,044
* IGBREITadoptspredecessoraccountingasitsaccountingpolicytoaccountforbusinesscombinationsundercommoncontrol.Inaccordancewith
itspolicy,thedifferencebetweenthefairvalueoftheunitsissuedasconsiderationandtheaggregatecarryingamountsoftheassetsandliabilities
acquiredasofthedateofthebusinesscombinationisincludedinequity-accumulatedlosses.
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
48IGB Real Estate Investment TrustAnnual Report 2012
StatementofCashFlowsforTheFinancialPeriodFromDateofEstablishmenton�5July�01�to31December�01�
25.07.2012 (date of establishment) to 31.12.2012 Note RM’000
Cash flows from operating activities Profitbeforetaxation 153,�9�
Adjustmentsfor:
Changesoffairvalueoninvestmentproperties (100,000)
Manager’smanagementfeepayableinunits 7,851
Amortisationoffit-outincentives 614
Borrowingcosts 15,�17
Interestincome (315)
Depreciationofplantandequipment 406
Operatingincomebeforechangesinworkingcapital 77,065
Netchangeintradeandotherreceivables (4�,730)
Netchangeinpayablesandaccruals 116,918
Net cash generated from operating activities 151,�53
Cash flows from investing activities
Acquisitionofinvestmentproperties* (1,�00,000)
Purchaseofplantandequipment (1�,67�)
Interestreceived 315
Net cash used in investing activities (1,�1�,357)
Cash flows from financing activities
Proceedsfromborrowings 1,�1�,559
Paymentoffinancingexpenses (6,788)
Paymentoflistingexpenses (6,915)
Cashheldundertrustee (�6,441)
Net cash generated from financing activities 1,17�,415
Net increase in cash and cash equivalents 111,311
Cashandcashequivalentsatdateofestablishment -
Cash and cash equivalents at end of period 8 111,311
Note *:Acquisitionofinvestmentproperties
Cashconsideration 1,�00,000
Issuanceofnewunits 3,400,000
6 4,600,000
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
49IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements
1 GENERAL
IGBREITisaMalaysia-domiciledrealestateinvestmenttrust(“REIT”)establishedon�5July�01�pursuanttotheDeedbetweentheManagerand
theTrustee.TheDeedisregulatedbytheSecuritiesCommissionAct1993,theSecuritiesCommission’sGuidelinesonRealEstateInvestmentTrusts,
theListingRequirementsofBursaSecurities,theRulesoftheDepositoryandtaxationlawsandrulings.IGBREITwillcontinueitsoperationsuntil
suchtimeasdeterminedbytheTrusteeandtheManagerasprovidedundertheprovisionsofClause�6oftheDeed.TheaddressesoftheManager’s
registeredofficeandprincipalplaceofbusinessareasfollows:
Registered office Principal place of business Level3�,TheGardensSouthTower MidValleyMegamallandTheGardensMall
MidValleyCity MidValleyCity
LingkaranSyedPutra LingkaranSyedPutra
59�00KualaLumpur 59�00KualaLumpur
IGBREITisaREITestablishedwiththeprincipalinvestmentpolicyofinvesting,directlyandindirectly,inadiversifiedportfolioofincomeproducing
realestateusedprimarilyforretailpurposesinMalaysiaandoverseasaswellasrealestate-relatedassets.
Realestateusedprimarilyforretailpurposeswillincluderetailpropertiesandmixed-usedevelopmentswitharetailcomponent.
TheManager’s keyobjective is toprovideunitholderswith regularandstabledistributions, sustainable long termunitpriceanddistributable
incomeandcapitalgrowth,whilemaintainingappropriatecapitalstructure.
IGBREITwaslistedontheMainMarketofBursaSecuritieson�1September�01�.
TheultimateholdingcompanyisIGBCorporationBerhad,acompanyincorporatedinMalaysiaandlistedontheMainMarketofBursaSecurities.
The financial statements for the financial period ended 31 December �01� were authorised for issue in accordance with a resolution by the
DirectorsoftheManageron�5February�013.
IGBREIThasentered intoserviceagreements in relationtothemanagementof IGBREITand itspropertyoperations.The feestructuresareas
follows:
(a) Property management fees
Thepropertymanager,ChartwellITACInternationalSdnBhd,isentitledtopropertymanagementfeeofRM�0,000permonth(excluding
servicetax).Inaddition,thepropertymanagerisalsoentitledtofulldisbursementofcostsandexpensesproperlyincurredintheoperation,
maintenance,managementandmarketingofthepropertiesheldbyIGBREIT(“PermittedExpenses”)aswellasfeesandreimbursementsfor
PermittedExpensespayabletoitsserviceproviders.
50IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
1 GENERAL (CONTINUED)
(b) Manager’s management fees
PursuanttotheDeed,theManagerisentitledtoreceivethefollowingfeesfromIGBREIT:
i) abasefee(“BaseFee”)ofupto1.0%perannumofthetotalassetvalueofIGBREIT(excludingcashandbankbalanceswhichareheld
innon-interestbearingaccounts).
ii) aperformancefee(“PerformanceFee”)ofupto5.0%perannumofnetpropertyincomeintherelevantfinancialperiod/year.
iii) 1.0%ofthetransactionvalue(beingtotalpurchaseconsideration)ofanyrealestateandrealestate-relatedassetsdirectlyandindirectly
acquiredfromtimetotimebytheTrusteeoroneormorespecialpurposevehicle(“SPV”)onbehalfofIGBREITpro-rated,ifapplicable,
totheproportionofIGBREIT’sinterest.
In the case of acquisition of SPVs or holding entities which holds real estate, 1.0% of the underlying value (as determined by an
independentvaluerappointedbytheTrustee)ofanyRealEstate(whicharedirectlyorindirectlyheldthroughoneormoreSPVsofIGB
REIT)pro-rated,ifapplicable,totheproportionofIGBREIT’sinterest.
Anypaymenttothirdpartyagentsorbrokersinconnectionwiththeacquisitionofanyrealestateandrealestate-relatedassetsforIGB
REITshallnotbepaidbytheManageroutoftheacquisitionfeereceivedortobereceivedbytheManager(butshallbebornebyIGB
REIT).
Fortheavoidanceofdoubt,noacquisitionfeeispayablewithrespecttoacquisitionofthesubjectpropertiesinconnectionwiththe
listingofIGBREITbutacquisitionfeeispayablewithrespecttoallothertransactions(whichincludesrelatedpartyandnon-related
partytransactions),includingacquisitionsfromthesponsor.
iv) 0.5%ofthetransactionvalue(beingtotalsaleconsideration)ofanyrealestateandrealestate-relatedassetsdirectlyorindirectlysold
ordivestedfromtimetotimebytheTrusteeoroneormoreSPVsonbehalfofIGBREITpro-rated,ifapplicable,totheproportionofIGB
REIT’sinterest.
In the case of divestment of SPVs or holding entities which holds real estate, 0.5% of the underlying value (as determined by an
independentvaluerappointedbytheTrustee)ofanyrealestate(whicharedirectlyorindirectlyheldthroughoneormoreSPVsofIGB
REIT)pro-rated,ifapplicable,totheproportionofIGBREIT’sinterest.
Anypaymenttothirdpartyagentsorbrokersinconnectionwiththesaleordivestmentofanyrealestateandrealestate-relatedassets
forIGBREITshallnotbepaidbytheManageroutofthedivestmentfeereceivedortobereceivedbytheManager(butshallbeborne
byIGBREIT).
Fortheavoidanceofdoubt,theDivestmentFeeispayablewithrespecttoalltransaction(whichincludesrelatedpartyandnon-related
partytransaction),includingdivestmentstotheSponsor,aswellasforcompulsoryacquisitions.
51IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
1 GENERAL (CONTINUED)
(b) Manager’s management fees (continued)
ThepaymentoftheManager’smanagementfeeintheformofnewunitswillbeinaccordancewiththefollowingformula:
NewUnitstobeissuedaspaymentof =Manager’smanagementfee
theManager’smanagementfee payableinunits
MarketPrice
Forthispurpose,“MarketPrice”meansthevolumeweightedaveragemarketpriceoftheUnits forthe last5marketdaysprecedingthe
followingevents:
(i) inrespectoftheBaseFeeandPerformanceFee,theannouncementoftherelevantquarterlyfinancialreports;or
(ii) inrespectoftheacquisitionfeeanddivestmentfee,thecompletionoftherelevantacquisition/divestment,
(eacha“TriggerEvent”).
Withreferencetoanybookclosingdate,wheretheTriggerEventisbeforebuttheissuanceofthenewUnitsrelatingtosuchTriggerEventis
afterthesaidbookclosingdate,theMarketPricewillbefurtheradjustedfortheentitlementrelatingtosuchbookclosingdate.
TheManagerwillmakeanimmediateannouncementtoBursaSecuritiesdisclosingthenumberofnewunitstobeissuedandtheissue
priceofthenewunitswhennewunitsareissuedaspaymentformanagementfee.Paymentofthemanagementfeesinunitsshallalsobe
subjectedtoIGBREITcomplyingwiththepublicspreadrequirementsstatedintheListingRequirementsofBursaSecuritiesandtherebeing
noadverseimplicationsunderMalaysianCodeonTake-OversandMergers�010.
(c) Trustee’s fees
InaccordancetotheDeed,anannualtrusteeshipfeeofupto0.03%perannumofNAVistobepaidtoTrustee.
5�IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
2 BASIS OF PREPARATION
(a) Statement of compliance
Thefinancial statementsof IGBREIThavebeenprepared inaccordancewith theprovisionsof theDeed,MalaysianFinancialReporting
Standard(“MFRS”)andInternationalFinancingReportingStandards.
ThepreparationoffinancialstatementsinconformitywithMFRSrequirestheuseofcertaincriticalaccountingestimatesandassumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements,andthereportedamountsofrevenuesandexpensesduringthereportedperiod.ItalsorequiresDirectorsoftheManagerto
exercisetheirjudgmentintheprocessofapplyingIGBREIT’saccountingpolicies.Althoughtheseestimatesandjudgmentarebasedonthe
DirectorsoftheManager’sbestknowledgeofcurrenteventsandactions,actualresultscoulddiffer.Theareasinvolvingahigherdegreeof
judgmentorcomplexity,orareaswhereassumptionsandestimatesaresignificanttothefinancialstatementsaredisclosedinNote4.
(b) Standards, amendments to published standards and interpretations to existing standards that are applicable to IGB REIT but not yet effective
IGBREITwillapplythenewstandards,amendmentstostandardsandinterpretationstoexistingstandardsinthefollowingperiod:
(i) Financialyearbeginningon/after1January�013
• AmendmenttoMFRS101“Presentationofitemsofothercomprehensiveincome”(effectivefrom1July�01�)requiresentitiesto
separateitemspresentedin‘othercomprehensiveincome’(“OCI”)inthestatementofcomprehensiveincomeintotwogroups,
basedonwhetherornottheymayberecycledtoprofitorlossinthefuture.
• MFRS13“Fairvaluemeasurement”(effectivefrom1January�013)aimstoimproveconsistencyandreducecomplexitybyproviding
aprecisedefinitionoffairvalueandasinglesourceoffairvaluemeasurementanddisclosurerequirementsforuseacrossMFRSs.
Therequirementsdonotextendtheuseoffairvalueaccountingbutprovideguidanceonhowitshouldbeappliedwhereitsuse
isalreadyrequiredorpermittedbyotherstandards.TheenhanceddisclosurerequirementsaresimilartothoseinMFRS7“Financial
instruments:Disclosures”,butapplytoallassetsandliabilitiesmeasuredatfairvalue,notjustfinancialones.
• AmendmenttoMFRS7“Financialinstruments:Disclosures”(effectivefrom1January�013)requiresmoreextensivedisclosures
focusingonquantitativeinformationaboutrecognisedfinancialinstrumentsthatareoffsetinthestatementoffinancialposition
andthosethataresubjecttomasternettingorsimilararrangementsirrespectiveofwhethertheyareoffset.
53IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
2 BASIS OF PREPARATION (CONTINUED)
(b) Standards, amendments to published standards and interpretations to existing standards that are applicable to IGB REIT but not yet effective (continued)
IGB REIT would apply the new standards, amendments to standards and interpretations to existing standards in the following period:
(continued)
(ii) Financialyearbeginningon/after1January�014
• Amendment to MFRS 13�“Financial instruments: Presentation” (effective from 1 January �014) does not change the current
offsettingmodelinMFRS13�.Itclarifiesthemeaningof‘currentlyhasalegallyenforceablerightofset-off’thattherightofset-off
mustbeavailabletoday(notcontingentonafutureevent)andlegallyenforceableforallcounterpartiesinthenormalcourseof
business.Itclarifiesthatsomegrosssettlementmechanismswithfeaturesthatareeffectivelyequivalenttonetsettlementwill
satisfytheMFRS13�offsettingcriteria.
(iii) Financialyearbeginningon/after1January�015
• MFRS 9 “Financial instruments - classification and measurement of financial assets and financial liabilities” (effective from 1
January�015)replacesthemultipleclassificationandmeasurementmodelsinMFRS139withasinglemodelthathasonlytwo
classification categories: amortised cost and fair value.The basis of classification depends on the entity’s business model for
managingthefinancialassetsandthecontractualcashflowcharacteristicsofthefinancialasset.
Theaccountingandpresentationforfinancialliabilitiesandforde-recognisingfinancialinstrumentshavebeenrelocatedfrom
MFRS139,withoutchange,exceptforfinancialliabilitiesthataredesignatedatfairvaluethroughprofitorloss(“FVTPL”).Entities
withfinancialliabilitiesdesignatedatFVTPLrecognisechangesinthefairvalueduetochangesintheliability’screditriskdirectly
inOCI.ThereisnosubsequentrecyclingoftheamountsinOCItoprofitorloss,butaccumulatedgainsorlossesmaybetransferred
withinequity.
TheguidanceinMFRS139onimpairmentoffinancialassetsandhedgeaccountingcontinuestoapply.
MFRS7requiresdisclosuresontransitionfromMFRS139toMFRS9.
Theadoptionoftheabovenewstandards,amendmentstostandardsandinterpretationtoexistingstandardsarenotexpectedtohavea
materialimpactonthefinancialresultsofIGBREIT.
54IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
TheaccountingpoliciessetoutbelowhavebeenappliedconsistentlytotheperiodpresentedinthesefinancialstatementsbyIGBREIT.
(a) Business combination under common control
IGBREITappliespredecessoraccountingtoaccountforbusinesscombinationsundercommoncontroli.e.combinationinvolvingentities
orbusinessesundercommoncontrol.Underthepredecessoraccounting,assetsandliabilitiesacquiredarenotrestatedtotheirrespective
fairvaluesbutatthecarryingamountsfromtheconsolidatedfinancialstatementsoftheholdingcompany.Thedifferencebetweenany
considerationgivenandtheaggregatecarryingamountsoftheassetsandliabilities(atthedateofthetransaction)oftheacquiredbusiness
isrecordedasanadjustmenttoretainedearnings.Noadditionalgoodwillisrecognised.Acquisition-relatedcostsareexpensedasincurred.
The acquired business’ results and the related balance sheet items are recognised prospectively from the date on which the business
combinationbetweenentitiesundercommoncontroloccurred.
(b) Investment properties
Investmentpropertiesareheldforlongtermrentalyieldsorforcapitalappreciationorboth,andarenotsubstantiallyoccupiedbyIGBREIT.
Investmentpropertiesaremeasuredinitiallyatcost,includingrelatedtransactioncosts.Afterinitialrecognition,investmentpropertiesare
carriedatfairvalue.
Fairvalueisbasedoninvestmentmethod,wherecashflowsprojectionsarecapitalisedusingacapitalisationrate,whichtakesintoaccount
theunexpiredperiod,yieldandsinkingfund,whereapplicable.Changeinfairvaluesisrecognisedinprofitandlossfortheperiodinwhich
itarises.
Thefairvalueoftheinvestmentpropertyreflectsthemarketconditionsatthereportingdate.Itreflects,amongothers,rentalincomefrom
currentleasesandreasonableandsupportableassumptionsthatrepresentwhatknowledgeable,willingpartieswouldassumeaboutrental
incomefromfutureleasesinthelightofcurrentconditions.Italsoreflects,onasimilarbasis,anycashoutflowsthatcouldbeexpectedin
respectoftheproperty.Someofthoseoutflowsarereflectedinliabilitywhereasothersrelatetooutflowsthatarenotrecognisedinthe
financialstatementsuntilalaterdate.
Valuationsareperformedasofthefinancialpositiondatebyprofessionalvaluerswhoholdrecognisedandrelevantprofessionalqualifications
andhaverecentexperienceinthelocationandcategoryoftheinvestmentpropertybeingvalued.
Subsequentexpenditureiscapitalisedtotheasset’scarryingamountonlywhenitisprobablethatfutureeconomicbenefitsassociatedwith
theexpenditurewillflowtoIGBREITandthecostoftheitemcanbemeasuredreliably.Allotherrepairsandmaintenancecostsareexpensed
whenincurred.Whenpartofaninvestmentpropertyisreplaced,thecarryingamountofthereplacedpartisderecognised.
Investmentpropertiesarederecognisedwhentheyhavebeendisposed.Where IGBREITdisposesofapropertyat fairvalue inanarm’s
lengthtransaction, thecarryingvalue immediatelyprior tothesale isadjustedtothetransactionprice,andtheadjustment is recorded
withinnetgainfromfairvalueadjustmentoninvestmentproperty.
55IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Plant and equipment
Plantandequipmentarestatedatcostlessaccumulateddepreciationandaccumulatedimpairmentlosses.Costincludesexpenditurethat
isdirectlyattributabletotheacquisitionoftheitems.
Subsequentcostsareincludedintheasset’scarryingamountorrecognisedasaseparateasset,asappropriate,onlywhenit isprobable
thatfutureeconomicbenefitsassociatedwiththeitemwillflowtoIGBREITandthecostoftheitemcanbemeasuredreliably.Thecarrying
amountofthereplacedpartisderecognised.Allotherrepairsandmaintenancearechargedtothestatementofcomprehensiveincome
duringtheperiodinwhichtheyareincurred.
Plantandequipmentaredepreciatedonastraightlinebasistowrite-offthecostoftheassetstotheirresidualvaluesovertheirestimated
usefullives,summarisedasfollows:
Motorvehicles �0%
Furnitureandfittings 1�.5%
Equipment 1�.5%
Informationtechnologyequipment 331/3%
Plantandmachinery 10%
Residualvaluesandusefullivesofassetsarereviewed,andadjustedifappropriate,ateachreportingdate.Theassessmentofresidualvalues
andestimatedusefullivesofassetsiscarriedoutonanannualbasis.
Ateachreportingdate,IGBREITassesseswhetherthereisanyindicationofimpairment.Ifsuchindicationsexist,ananalysisisperformedto
assesswhetherthecarryingamountoftheassetisfullyrecoverable.Awrite-downismadeifthecarryingamountexceedstherecoverable
amount.Pleaserefertoaccountingpolicyonimpairmentofnon-financialassets.
Gainsandlossesondisposalsaredeterminedbycomparingnetdisposalproceedswithcarryingamountandareincludedinprofit/(loss)
fromoperationsinthestatementofcomprehensiveincome.
(d) Financial assets
Afinancialassetisanyassetthatiscash,acontractualrighttoreceivecashoranotherfinancialassetfromanotherenterprise,acontractual
righttoexchangefinancialinstrumentswithanotherenterpriseunderconditionsthatarepotentiallyfavourable,oranequityinstrumentof
anotherenterprise.
Financialassetsarerecognisedinthestatementoffinancialpositionwhen,andonlywhen,IGBREITbecomesapartytothecontractual
provisionsofthefinancialinstrument.
Whenfinancialassetsarerecognisedinitially,theyaremeasuredatfairvalue,plus,inthecaseoffinancialassetsnotatfairvaluethrough
profitorloss,directlyattributabletransactioncosts.
IGBREITclassifiesitsfinancialassetsasloansandreceivables.Theclassificationdependsonthepurposeforwhichthefinancialassetswere
acquired.IGBREITdeterminestheclassificationofitsfinancialassetsatinitialrecognition.
56IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Financial assets (continued)
Loansandreceivables
Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.They
areincludedincurrentassets,exceptforamountsnotexpectedtoberealisedwithintwelve(1�)monthsaftertheendofthereporting
periodwhichshallbeclassifiedasnon-currentassets.IGBREIT’sloansandreceivablescomprise‘tradeandotherreceivables’and‘cashand
bankbalances’inthestatementoffinancialposition(Notes7and8).
Subsequenttoinitialrecognition,loansandreceivablesaremeasuredatamortisedcostusingtheeffectiveinterestmethod.
LoansandreceivablesarederecognisedifIGBREIT’scontractualrightstothecashflowsfromthefinancialassetsexpireorifIGBREITtransfers
thefinancialassettoanotherpartywithoutretainingcontrolortransfersubstantiallyalltherisksandrewardsoftheasset.
Gainsand lossesuponderecognition, impairment losses, and theamortisationof loansand receivablesare recognised in statementof
comprehensiveincome.
(e) Impairment of financial assets
IGBREITassessesattheendofeachreportingperiodwhetherthereisobjectiveevidencethatafinancialassetorgroupoffinancialassetsis
impaired.
Assetscarriedatamortisedcost
Afinancialassetoragroupoffinancialassetsisimpairedandimpairmentlossesareincurredonlyifthereisobjectiveevidenceofimpairment
asaresultofoneormoreeventsthatoccurredaftertheinitialrecognitionoftheasset(“lossevent”)andthatlosseventhasanimpactonthe
estimatedfuturecashflowsofthefinancialassetorgroupoffinancialassetsthatcanbereliablyestimated.
ThecriteriathatIGBREITusestodeterminethatthereisobjectiveevidenceofanimpairmentlossinclude,amongstothers,thefollowing:
• Significantfinancialdifficultyoftheobligor;
• Abreachofcontract,suchasadefaultordelinquencyinpayments;
• IGBREIT,foreconomicorlegalreasonsrelatingtotheobligor’sfinancialdifficulty,grantingtotheobligoraconcessionthatIGBREIT
wouldnototherwiseconsider;
• Itbecomesprobablethattheobligorwillenterbankruptcyorotherfinancialdestress;
• Disappearanceofanactivemarketforthatfinancialassetbecauseoffinancialdifficulties;or
• Observabledataindicatingthatthereisameasurabledecreaseintheestimatedfuturecashflowsfromaportfoliooffinancialassets
sincetheinitialrecognitionofthoseassets,althoughthedecreasecannotyetbeidentifiedwiththeindividualfinancialassetsinthe
portfolio,including:
(i) adversechangesinthepaymentstatusofobligorsintheportfolio;and
(ii) nationalorlocaleconomicconditionsthatcorrelatewithdefaultsontheassetsintheportfolio.
57IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) Impairment of financial assets (continued)
Ifanysuchevidenceexists,theamountofimpairmentlossismeasuredasthedifferencebetweentheasset’scarryingamountandthepresent
valueofestimatedfuturecashflowsdiscountedatthefinancialasset’soriginaleffectiveinterestrate.Theimpairmentlossisrecognisedin
statementofcomprehensiveincomeduringtheperiodinwhichitisincurred.
Thecarryingamountofthefinancialassets isreducedbytheimpairmentlossdirectlyforallfinancialassetswiththeexceptionoftrade
receivables,wherethecarryingamountisreducedthroughtheuseofanallowanceaccount.Whenatradereceivablebecomesuncollectible,
itiswrittenoffagainsttheallowanceaccount.
Inasubsequentperiod,iftheamountoftheimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoaneventoccurring
aftertheimpairmentwasrecognised,thepreviouslyrecognisedimpairmentlossisreversedtotheextentthatthecarryingamountofthe
assetdoesnotexceeditsamortisedcostatthereversaldate.Theamountofreversalisrecognisedinstatementofcomprehensiveincome
duringtheperiodinwhichsuchreversalisevidenced.
(f) Impairment of non-financial assets
Plantandequipmentarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynot
berecoverable.Animpairmentlossisrecognisedfortheamountbywhichthecarryingamountoftheassetexceedsitsrecoverableamount.
Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalueinuse.Forthepurposesofassessingimpairment,
assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashflows(cash-generatingunits).
Theimpairmentlossischargedtothestatementofcomprehensiveincomeduringtheperiodinwhichtheyareincurredandanysubsequent
increaseinrecoverableamountisrecognisedinthestatementofcomprehensiveincomeduringtheperiodinwhichtheyareincurred.
(g) Cash and cash equivalents
For thepurposeof thestatementsofcashflows,cashandcashequivalentsconsistofcash inhand,depositsheldatcallwith licensed
financialinstitutions,othershortterm,highlyliquidinvestmentswithoriginalmaturitiesofthreemonthsorless,andbankoverdrafts.
(h) Trade and other payables
Tradeandotherpayablesareobligations topay forgoodsorservices thathavebeenacquired in theordinarycourseofbusiness from
suppliersorvendors.Tradepayablesareclassifiedascurrentliabilitiesifpaymentisduewithinone(1)yearorless(orinthenormaloperating
cycleofthebusinessiflonger).Ifnot,theyarepresentedasnon-currentliabilities.Tradepayables,depositsreceivedfromtenantsandother
payablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.
58IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(i) Unitholders’ capital
Unitholders’contributionsareclassifiedasequitywhenthereisnoobligationtotransfercashorotherassets,northeyareredeemableatthe
unitholders’option.Anyconsiderationreceivedordistributionspaidisaddedordeducteddirectlyfromequity.Incrementalexternalcosts
directlyattributabletotheissueofnewunitsareshowninequityasadeduction,netoftax,fromtheproceeds.
(j) Borrowing and borrowing costs
Borrowingsarerecognisedinitiallyatfairvalue,netoftransactioncostsincurred.Insubsequentperiods,borrowingsarestatedatamortised
costusingtheeffectiveyieldmethod;anydifferencebetweenproceeds(netoftransactioncosts)andtheredemptionvalueisrecognisedin
thestatementofcomprehensiveincomeovertheperiodofborrowings.BorrowingsareclassifiedascurrentliabilitiesunlessIGBREIThasan
unconditionalrighttodefersettlementoftheliabilityforatleasttwelve(1�)monthsafterthereportingdate.
Borrowingscostsincurredfortheconstructionofanyqualifyingassetarecapitalisedduringtheperiodoftimethatisrequiredtocomplete
andpreparetheassetforitsintendeduseorsale.
Feespaidontheestablishmentofloanfacilitiesarerecognisedastransactioncostsoftheloantotheextentthatitisprobablethatsomeor
allofthefacilitywillbedrawn-down.Inthiscase,thefeeisdeferreduntilthedraw-downoccurs.Totheextentthereisnoevidencethatitis
probablethatsomeorallofthefacilitywillbedrawn-down,thefeeiscapitalisedasaprepaymentforliquidityandamortisedovertheperiod
ofthefacilitytowhichitrelates.
(k) Revenue recognition
Revenuecomprisesthe fairvalueof theconsiderationreceivedor receivable for thesaleofservices intheordinarycourseof IGBREIT’s
activities.Revenueisshownnetofrebatesanddiscounts.
Revenueincludesrentalincome,servicechargesandpromotionalchargesfromtenants.
Rental incomefromoperating leases is recognisedonastraight-linebasisover the leaseterm.When IGBREITprovides incentivesto its
tenants,thecostofincentivesisrecognisedovertheleaseterm,onastraight-linebasis,asareductionofrentalincome.Otherrentrelated
andcarparkincomearerecognisedintheaccountingperiodinwhichtheservicesbeingrendered.
Interestincomeisrecognisedonaneffectiveyieldbasis.
(l) Income tax
Taxisrecognisedinstatementofcomprehensiveincome,excepttotheextentthatitrelatestoitemsrecognisedinothercomprehensive
incomeordirectlyinequity.Inthiscase,thetaxisalsorecognisedinothercomprehensiveincomeordirectlyinequity,respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period.
Managementperiodicallyevaluatespositionstakenintaxreturnswithrespecttosituationsinwhichapplicabletaxregulationissubjectto
interpretation.Provisionsareestablishedwhereappropriateonthebasisofamountsexpectedtobepaidtothetaxauthorities.Thisliability
ismeasuredusingthesinglebestestimateofthemostlikelyoutcome.
59IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) Operating lease
Leasesofassetswhereasignificantportionoftherisksandrewardsofownershipareretainedbythelessorareclassifiedasoperatingleases.
Paymentsmadeunderoperatingleases(netofanyincentivesreceivedfromthelessor)arechargedtothestatementofcomprehensive
incomeonthestraightlinebasisduringtheleaseperiodinwhichtheyareincurred.
Propertiesleasedoutunderoperatingleasesareincludedasinvestmentproperties.
(n) Functional and presentation currency
Itemsincludedinthefinancialstatementsof IGBREITaremeasuredusingthecurrencyoftheprimaryeconomicenvironment inwhich
IGBREIToperates(“functionalandpresentationcurrency”).ThefinancialstatementsarepresentedinRinggitMalaysia,whichisIGBREIT’s
functionalandpresentationcurrency.
(o) Earnings per unit
IGBREIT’searningsperunit(“EPU”)arepresentedonbasicanddilutedformat.
BasicEPUiscalculatedbydividingthecomprehensiveincomeattributabletounitholdersofIGBREITbytheweightedaveragenumberof
unitsoutstandingduringtheperiod.
DilutedEPUisdeterminedbyadjustingthecomprehensiveincomeattributabletounitholdersagainsttheweightedaveragenumberof
unitsoutstandingadjustedfortheeffectsofalldilutivepotentialunits,whichmainlycomprisemanagementfeestotheManager.
(p) Segment reporting
Operatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtothechiefoperatingdecisionmaker.
Thechiefoperatingdecision-maker,whoisresponsibleforallocatingresourcesandassessingperformanceoftheoperatingsegments,has
beenidentifiedastheChiefExecutiveOfficer,togetherwiththeJointChiefOperationOfficers,thatmakesstrategicdecisions.
60IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
EstimatesandjudgementsarecontinuallyevaluatedbytheDirectorsoftheManagerandarebasedonhistoricalexperienceandotherfactors,
includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.
IGBREITmakesestimatesandassumptionsconcerningthefuture.Theresultingaccountingestimateswill,bydefinition,rarelyequaltherelated
actualresults.Toenhancetheinformationcontentoftheestimates,certainkeyvariablesthatareanticipatedtohavematerialimpacttotheIGB
REIT’sresultsandfinancialpositionaretestedforsensitivitytochangesintheunderlyingparameters.Theestimatesandassumptionsthatmay
haveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyearareoutlined
below.
Principalassumptionsforestimationoffairvalueofinvestmentproperties
The principal assumptions underlying estimation of fair value of investment properties are those related to the receipt of contractual rentals,
expectedfuturemarketrentals,voidperiods,sinkingfundsandmaintenancerequirements,andtherespectivecapitalisationrates.
Investmentpropertiesarestatedatfairvaluebasedonvaluationsperformedbyindependentprofessionalvaluerwhoholdarecognisedrelevant
professionalqualificationandhaverecentexperienceinthelocationsandcategoriesoftheinvestmentpropertiesvalued,HenryButcherMalaysia
SdnBhd.
Thevaluationsare regularlycompared toactualmarketyielddataandactual transactionsand those reportedby themarket,whenavailable.
Assumptionsusedaremainlybasedonmarketconditionsexistingateachreportingdate.
Changestocapitalisationrateandreversionusedintheinvestmentmethodonexistingunexpiredcontractualtermsby100basispoints,thefair
valueofinvestmentpropertieswouldbeanestimateofRM681millionlowerorRM458millionhigher,respectively.
61IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
5 PLANT AND EQUIPMENT
Furniture Information Motor and technology Plant and vehicles fittings Equipment equipment machinery Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost
Asatdateof
establishment,
�5July�01� - - - - - -
Additions 354 �,615 9,594 101 8 1�,67�
Asat31December�01� 354 �,615 9,594 101 8 1�,67�
Accumulated depreciation
Asatdateof
establishment,
�5July�01� - - - - - -
Depreciationchargefor
thefinancialperiod 18 81 �99 8 - 406
Asat31December�01� 18 81 �99 8 - 406
Carrying amounts
Asat31December�01� 336 �,534 9,�95 93 8 1�,�66
6 INVESTMENT PROPERTIES
2012 RM’000
Asatdateofestablishment,�5July�01� -
Acquisitionofinvestmentproperties 4,600,000
Netfairvaluegainrecognisedinstatementofcomprehensiveincome 100,000
Asat31December�01� 4,700,000
On�0September�01�,IGBREITacquiredtheinvestmentpropertiesofwhichtheconsiderationwassettledincashforRM1,�00,000andissuance
of3,400,000unitsinIGBREIT.
OneoftheinvestmentpropertiesischargedasasecurityforbankborrowingsasdisclosedinNote10.
Investmentpropertiesarestatedatfairvaluebasedonvaluationsperformedbyindependentprofessionalvaluerwhoholdsarecognisedrelevant
professionalqualificationandhasrecentexperienceinthelocationsandcategoriesoftheinvestmentpropertiesvalued,HenryButcherMalaysia
SdnBhd.Fairvalueisdeterminedprimarilybasedoninvestmentmethod.Inarrivingatthefairvalueusingtheinvestmentmethod,thecapitalisation
rateadoptedis5-6%andreversionis5.�5-6.�5%.Otherkeyparametersusedintheinvestmentmethodofvaluationareallowanceforvoidof3%,
carparkincomeof8%andotherincomeof8%.Basedonthevaluationbyindependentprofessionalvaluerdated9January�013,thefairvalueof
theMidValleyMegamallandTheGardensMallasat31December�01�wasRM3.5billionandRM1.�billionrespectively.Theinvestmentproperties
areleaseholdpropertieswithleaseexpiryyearin�103.
6�IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
6 IN
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63IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
7 TRADE AND OTHER RECEIVABLES
2012 RM’000
Trade Tradereceivables �,494
Less:Allowanceforimpairmentoftradereceivables (170)
Tradereceivables–net �,3�4
Accruedbillings 6,555
8,879
Non-Trade Otherreceivables 15
Deposits 5
Amountowingbyultimateholdingcompany 36
Amountsowingbyrelatedcompanies �4,�76
�4,33�
Prepayments 8,905
33,�37
Totaltradeandotherreceivables 4�,116
Thecarryingamountsoftradeandotherreceivablesasat31December�01�approximatedtheirfairvalues.
Thecredittermsoftradereceivableswereseven(7)days.
Theamountowingbyultimateholdingcompanyisunsecured,repayableondemandandinterestfree.
Theamountsowingbyrelatedcompaniesareunsecured,repayableondemandandinterestfree.
64IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
7 TRADE AND OTHER RECEIVABLES (CONTINUED)
Asat31December�01�,tradereceivablesofRM�,3�4,000werepastduebutnotimpaired.SuchtradereceivablesareduefromtenantsinMid
ValleyMegamallandTheGardensMallwhohavepaidsecuritydepositsforthetenancyandwithnoknownrecenthistoryofdefault.Inaddition,
thehistoricalexperienceincollectionoftradereceivablesfallswithintherecordedallowance.
Theageinganalysisofthesetradereceivablesisasfollows:
2012 RM’000
8to30days 1,5�0
31to60days 804
�,3�4
Individuallyimpaired 170
Less:Allowanceforimpairmentoftradereceivables (170)
�,3�4
Movementofallowanceforimpairmentoftradereceivablesisasfollows:
2012 RM’000
Asatdateofestablishment,�5July�01� -
Allowanceforimpairmentoftradereceivables 170
Asat31December�01� 170
Theotherclasseswithintradeandotherreceivablesdonotcontainimpairedassets.
Themaximumexposuretocreditriskatthereportingdateisthecarryingvalueofeachclassofreceivablesmentionedabove.
65IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
8 CASH AND CASH EQUIVALENTS 2012 RM’000
Cashinhand �90
Bankbalances 31,950
Depositsplacedwithlicensedbanks 105,51�
Cashandbankbalances 137,75�
Less:Restrictedcash (�6,441)
Cashandcashequivalents 111,311
Bankbalancesaredepositsheldatcallwithbanksandearnsnointerest.
Theweightedaverageeffectiveinterestrateofdepositswithlicensedbanksthatwaseffectiveatthereportingdatewas3.05%perannum.
Depositswithlicensedbankshaveanaveragematurityof�6days.
IncludedinthedepositsplacedwithlicensedbanksisanamountofRM�6.4millionwhichismaintainedinaDebtServiceReserveAccount
withthefacilityagenttocoveraminimumofsixmonthsinterestforasyndicatedfinancingfacilitygrantedtoIGBREIT(Note10).
66IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
9 UNITHOLDERS’ CAPITAL
2012 Number of units ’000
Approved fund size: Asatdateofestablishment,�5July�01�/endoffinancial
period 3,550,000
Number of units Value ’000 RM’000
Issued and fully paid up:
Atdateofestablishment,�5July�01� - -
Creationofunits
Issueofnewunitsatpar 3,400,000 3,400,000
Valuationofunitsissuedatfairvalue - 850,000
Totalvalueofunitsissued 3,400,000 4,�50,000
Listingexpenses - (6,915)
Asat31December�01� 3,400,000 4,�43,085
67IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
10 BORROWINGS
2012 RM’000
Current (secured) : Syndicatedfinancingfacilities �7,606
Non-current (secured) : Syndicatedfinancingfacilities 1,�00,000
Less:Unamortisedtransactioncosts (6,618)
1,193,38�
TheTrustee,onbehalfofIGBREIT,asborrower,hasobtainedthesyndicatedfinancingfacilitiescomprisingthefollowing:
(a) Afixedratetermloanfacility(“FRTL”)ofuptoRM1,�00million;and
(b) Astandbyrevolvingcreditfacility(“SBRC”)ofuptoRM�0million.
Thematurityprofileofthesyndicatedfinancingfacilitiesasat31December�01�isasfollows:
<1 year 1 to 2 years 2 to 3 years >3 years Total RM’000 RM’000 RM’000 RM’000 RM’000
FRTL 14,900 0 0 1,193,38� 1,�08,�8�
SBRC 1�,706 0 0 0 1�,706
�7,606 0 0 1,193,38� 1,��0,988
Theweightedaverageeffectiveinterestratesasatthereportingdatewereasfollows:
2012 % per annum
Weightedaverageeffectiveinterestratesatreportingdate
FRTL 4.40%
SBRC 4.15%
68IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
10 BORROWINGS (CONTINUED)
ProceedsdrawnfromtheFRTLwereutilisedbyIGBREITtopartfinancetheacquisitionsofMidValleyMegamallandTheGardensMalltogether
withrelatedassets(“Acquisitions”)andtheproceedsdrawnfromtheSBRCwereutilisedbyIGBREITtopartfinancetheAcquisitionsandtofinance
itscapitalexpenditurerequirements.
TheFRTLhastenureoffive(5)yearsfromthedateoffirstdrawdownwithanoptiontoextendthesameforafurthertwo(�)yearsexercisableby
theTrustee.Forthefirstfive(5)years,theFRTLbearsafixedinterestrareof4.4%perannum.IntheeventtheFRTLisextended,theinterestratesfor
thesixthandtheseventhyearshallbesteppedupto5.0%perannum.
TheSBRChas tenureof seven (7) years fromthedateof fulfillmentofall conditionsprecedent.TheSBRCbearsafloating interest rateof the
aggregateeffectivecostsoffundsandamarginof0.7%perannum.
TheSyndicatedFinancingFacilitiesaresecuredagainst,amongothers,thefollowing:
(i) afirstpartyassignmentbytheTrusteeof itsrights, title, interestsandbenefits inMidValleyMegamallandunderthesaleandpurchase
agreement in relation toMidValleyMegamallpursuant to theAcquisitionandallotherdocumentsevidencing theTrustee’s interest in
MidValleyMegamall.IntheeventthesubdivisionofmastertitleiscompletedandaseparatestratatitleisissuedforMidValleyMegamall
(“MegamallStrataTitle”),afirstpartyfirst legalchargeshallbecreatedbytheTrusteeontheMegamallStrataTitleforthebenefitofthe
syndicatedlenders;
(ii) anundertakingfromtheTrusteeandtheManager;
(a) todepositallcashflowsgeneratedfromMidValleyMegamallintotherevenueaccount;and
(b) thatitshallnotdeclareormakeanydividendsordistributionsoutofthecashflowderivedfromMidValleyMegamalltotheUnitholdersif
aneventofdefaulthasoccurredunderthetermsoftheSyndicatedFinancingFacilities,andiscontinuingandhasnotbeenwaived;
(iii) a first party legal assignment and charge by theTrustee over all rights, interests, title and benefits relating to the following designated
accounts:
(a) therevenueaccountintowhichtheTrusteeshallcredit,amongothers,allincomeandinsuranceproceedsderivedfromorinrelation
toMidValleyMegamall;
(b) theoperatingaccountwhichistocapturefundstransferredfromtherevenueaccountforthepurposeofmanagingtheoperating
expenditureofMidValleyMegamall;and
(c) thedebtservicereserveaccountwhichistocapturefundstransferredfromtherevenueaccountforpurposesofmeetingthedebt
servicerequirement;
(iv) afirstpartylegalassignmentbytheTrusteeofalltheproceedsunderthetenancy/leaseagreementsinrelationtoMidValleyMegamall;
and
(v) afirstpartylegalassignmentoveralloftheTrustee’srights,interests,titlesandbenefitsandalltheinsurancepoliciesinrelationtoMidValley
Megamallandthesecurityagent(actingforandonbehalfofthesyndicatedlenders)beingnamedasthelosspayeeandbeneficiaryofthe
insurancepolicies.
69IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
11 PAYABLES AND ACCRUALS
2012 Note RM’000
Non-current
Trade
Tenants’deposits a 45,987
45,987
Current
Trade
Tradepayables b 10,071
Tenants’deposits a �7,415
37,486
Non-Trade
Otherpayablesandaccruedexpenses 19,763
Amountduetoultimateholdingcompany c 69
Amountsduetorelatedcompanies d �1,464
Distributionpayabletounitholders 6�,333
103,6�9
Totalcurrentpayablesandaccruals 141,115
Totalpayablesandaccruals 187,10�
(a) Tenants’depositsareinrespectofrefundabledepositsreceivedfromtenantsfortenancyrelatedagreements.Tenancytenuresaregenerally
foraperiodofone(1)tothree(3)years.
(b) Credittermsfortradepayablesrangefrom30daysto90days.
(c) Amountduetoultimateholdingcompanyisinterest-freeandrepayableondemand.
(d) Amountsduetorelatedcompaniesareinterest-freeandrepayableondemand.
70IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
12 OTHER INCOME
25.07.2012 (date of establishment) to 31.12.2012 RM’000
Carparkincome 1�,�57
Advertisingandpromotionalincome 1,669
Utilitiesrecoverable 6,759
Kioskrentandotherleasingincome 4,846
Others 1,635
�7,166
13 OTHER OPERATING EXPENSES
Includedinotheroperatingexpensesarethefollowingexpenses:
25.07.2012 (date of establishment) to 31.12.2012 RM’000
Reimbursable* 14,�91
Others 3,414
17,705
*Reimbursablereferstocostsandexpensesincurredintheoperation,maintenance,managementandmarketingoftheinvestmentproperties.
14 MANAGER’S MANAGEMENT FEES
25.07.2012 (date of establishment) to 31.12.2012 RM’000 Basefee 4,046
Performancefee 3,805
7,851
100%ofthetotalManager’smanagementfeeswouldbepayableinunits.
15 BORROWING COSTS
25.07.2012 (date of establishment) to 31.12.2012 RM’000
Interestexpense 15,047
Amortisationoftransactioncosts 170
15,�17
71IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
16 TAXATION
25.07.2012 (date of establishment) to 31.12.2012 RM’000
Reconciliation of tax expense Incomebeforetaxation 153,�9�
IncometaxusingMalaysiantaxrateof�5% 38,3�3
Non-deductibleexpenses 1,�09
Effectofincomeexemptedfromtax (39,53�)
0
PursuanttoSection61AoftheMalaysianIncomeTaxAct,1967(“Act”),incomeofIGBREITwillbeexemptedfromtaxprovidedthatatleast90%
ofitstotaltaxableincome(asdefinedintheAct)isdistributedtotheinvestorsinthebasisperiodofIGBREITforthatyearofassessmentwithin
twomonthsafterthecloseofthefinancialyear.Ifthe90%distributionconditionisnotcompliedwithorthe90%distributionisnotmadewithin
two(�)monthsafterthecloseofIGBREITfinancialyearwhichformsthebasisperiodforayearofassessment,IGBREITwillbesubjecttoincome
taxattheprevailingrateonitstotalincome.IncomewhichhasbeentaxedattheIGBREITlevelwillhavetaxcreditsattachedwhensubsequently
distributedtounitholders.
As IGBREITdeclared100%of itsdistributable incometounitholders forfinancialperiodended31December�01�,noprovision for income
taxationhasbeenmadeforthecurrentperiod.
7�IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
17 EARNINGS PER UNIT (“EPU”) – BASIC AND DILUTED
The calculation of EPU is based on total comprehensive income attributable to unitholders for the period of RM153,�9�,000 divided by the
weightedaveragenumberofunitsincirculationduringthesameperiodof3,400,000,000.
25.07.2012 (date of establishment) to 31.12.2012 RM’000 Total comprehensive income -Realised 53,�9�
-Unrealised 100,000
-Total 153,�9�
Weighted average number of units in issue (‘000) 3,400,000
Basic EPU (sen)-Realised 1.57
-Unrealised �.94
-Total 4.51
Weighted average number of units (‘000)Weightedaveragenumberofunitsinissue 3,400,000
AdjustmentforManager’smanagementfeespayableinunits* 5,78�
WeightedaveragenumberofunitsfordilutedEPU 3,405,78�
Diluted EPU (sen)-Realised 1.56
-Unrealised �.94
-Total 4.50
Note *:
Note Number of units Value ‘000 RM’000
Manager’smanagementfeespayableinunits
-fromdateofestablishment,�5July�01�to30September
�01�atRM1.34perunit 648 869
-from1October�01�to31December�01�atRM1.36perunit 5,134 6,98�
14 5,78� 7,851
73IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
18 DISTRIBUTION TO UNITHOLDERS
Distributiontounitholdersisfromthefollowingsources:
25.07.2012 (date of establishment) to 31.12.2012 RM’000
Totalcomprehensiveincomeattributetounitholdersforthefinancialperiodended
31December�01� 153,�9�
Less:Distributionadjustments (90,959)
Distributableincometounitholders 6�,333
Netdistributionperunit(sen) 1.83
* Withholdingtaxwillbedeductedfordistributionsmadetothefollowingcategoriesofunitholders:
Withholding tax rate 2012
Residentcorporate N/A^
Residentnon-corporate 10%
Non-residentindividual 10%
Non-residentcorporate �5%
Non-residentinstitutional 10%
^ totaxatprevailingrate
74IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
19 PORTFOLIO TURNOVER RATIO
2012
PortfolioTurnoverRatio(“PTR”)(times) -
ThecalculationofPTRisbasedontheaverageoftotalacquisitionsanddisposalsofinvestmentsinIGBREITforthefinancialperiodtotheaverage
netassetvalueduringtheperiod.
PTRisnilforIGBREITastherewerenonewacquisitionsanddisposalsofinvestmentsinIGBREITsincethedateofestablishmentof�5July�01�
to31December�01�exceptfortheinitialacquisitionoftheinvestmentpropertiesi.e.theAcquisitionduringtheinitialpublicofferingthatwas
completedon�0September�01�.
SincethebasisofcalculatingPTRcanvaryamongREITs,thereisnoconsistentorcoherentbasisforprovidinganaccuratecomparisonofIGBREIT’s
PTRagainstotherREITs.
20 MANAGEMENT EXPENSE RATIO
2012
Managementexpenseratio(“MER”)(%) 0.�3
ThecalculationoftheMERisbasedonthetotalfeesofIGBREITincurred,includingtheManager’smanagementfees,trustee’sfees,valuationfee,
auditfees,taxagent’sfeesandadministrativeexpenses,tothenetassetvalue(afterincomedistribution)duringthefinancialperiod.
SincethebasisofcalculatingMERcanvaryamongREITS,thereisnoconsistentorcoherentbasisforprovidinganaccuratecomparisonofIGB
REIT’sMERagainstotherREITs.
21 SEGMENT REPORTING
ThesegmentalfinancialinformationbybusinessorgeographicalsegmentsisnotpresentedasIGBREITonlycomprisesofonebusinessactivity,
whichistheownerandoperatorofMidValleyMegamallandTheGardensMallanditsentirebusinessisconductedinKualaLumpur.
TheManagerassessestheperformanceoftheoperatingsegmentsbasedonvariousfactors,includingbutnotlimitedto,ameasureofadjusted
earningsbeforeinterest,tax,depreciationandamortisation(“EBITDA”).TheEBITDAenablesperformancebenchmarkingassuchbasiseliminates
theeffectoffinancingandaccountingdecisionswhichmaynotbemadeatoperatinglevel.
75IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
22 FINANCIAL INSTRUMENTS BY CATEGORY
Note 2012 RM ‘000 Loansandreceivablesatamortisedcost
Assetsasperstatementoffinancialposition:
-Tradeandotherreceivablesexcludingprepayments 7 33,�11
-Cashandbankbalancesexcludingcashinhand 8 137,46�
Totalfinancialassets 170,673
Otherfinancialliabilitiesatamortisedcost
Liabilitiesasperstatementoffinancialposition:
-Borrowings 10 1,��0,988
-Payablesandaccruals 11 187,10�
Totalfinancialliabilities 1,408,090
76IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
23 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES23.1 Financial risk factors
IGBREIT’sactivitiesexposeittoavarietyoffinancialrisks:marketrisk(includingfairvalueinterestraterisk),creditrisk,liquidityandcashflowrisk.
IGBREIT’soverallfinancialriskmanagementobjectiveistoensurethatitcreatesvalueforitsunitholders.IGBREITfocusesontheunpredictability
offinancialmarketsandseeks tominimisepotentialadverseeffectsonthefinancialperformanceof IGBREIT.Financial riskmanagement is
carriedoutthroughriskreviews,internalcontrolsystems,insuranceprogrammesandadherencetotheIGBREIT’sfinancialriskmanagement
policies.TheManagerregularlyreviewstheserisksandapprovesthetreasurypolicies,whichcoversthemanagementoftheserisks.
(a) Marketrisk
Fairvalueandcashflowinterestraterisk
IGBREIT interestrateriskarisesfromfixedratetermloanandrevolvingcredit.ThefixedratetermloantakenbyIGBREIT locks inthe
interest rate against any fluctuation. Hence, IGB REIT’s fixed rate term loan exposes it to fair value interest rate risk and the standby
revolvingcreditfacilityobtainedatvariablerateexposesIGBREITtoriskofchangeincashflowsinterestratesrisk.
IGBREIT’sincomeandoperatingcashflowsaresubstantiallyindependentofchangesinmarketinterestrates.Thisisduetoasignificant
portionoftheborrowingismadeupoffixedratetermloantakenbyIGBREITwhichlocksintheinterestrateagainstanyfluctuation.
Hence,IGBREIThasnosignificantexposuretocashflowinterestraterisk.TheManagerregularlyreviewstheinterestraterisksanddoes
notexpecttheimpacttobematerialtoIGBREIT.
SensitivityanalysisforinterestratechangesisunrepresentativeasIGBREITdoesnotusevariableratesinmanagingitsinterestraterisk.
(b) Creditrisk
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to
outstandingreceivablesfromthetenants.
CreditrisksarisingfromoutstandingreceivablesfromthetenantsareminimisedandmonitoredbystrictlylimitingIGBREIT’sassociation
to business partners with high creditworthiness.Trade receivables are monitored on an on-going basis via the Manager’s reporting
procedures.Otherthantheanchortenants,namelyAeonBIG(formerlyknownasCarrefour),Aeon,Metrojaya,Isetan,RobinsonsandGSC
Signature,whichcontribute1�.8%oftherentalincome,IGBREITdoesnothaveanysignificantexposuretoanyindividualcustomeror
counterpartynordoesIGBREIThaveanymajorconcentrationofcreditriskrelatedtoanyfinancialinstruments.Creditriskwithrespectto
tradereceivablesislimitedduetoIGBREIT’snatureofbusinesswhichispredominatelyrentalrelatedandcash-based.IGBREIT’shistorical
experienceincollectionoftradereceivablesfallswithintherecordedallowances.Furthermore,thetenantshaveplacedsecuritydeposits
with IGB REIT which act as collateral. Due to these factors, no additional credit risk beyond amounts allowed for collection losses is
inherentinIGBREIT’stradereceivables.
Thedepositsareplacedwithcreditworthylicensedfinancialinstitutionswithhighcreditratingsassignedbycreditratingagencies.Based
ontheabove,IGBREITconsiderstheriskofmateriallossintheeventofnon-performancebyafinancialcounterpartytobeunlikely.
77IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
23 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
23.1 Financial risk factors (continued)
(c) Liquidityandcashflowrisk
IGBREITmonitorsrollingforecastsofitsliquidityrequirementstoensureithassufficientcashtomeetoperationalneedswhilemaintaining
sufficientheadroomonitscommittedborrowingfacilities(Note10).
IGBREITmonitorsandmaintainsalevelofcashandcashequivalentsandbankfacilitiesdeemedadequatetofinanceitsoperations,to
distributeincometounitholders,andtomitigatetheeffectsoffluctuationsincashflows.Inaddition,theManageralsomonitorsand
observestheSecuritiesCommission’sGuidelinesonRealEstateInvestmentTrustconcerninglimitsontotalborrowingsfinancing.
Atthereportingdate,IGBREITheldcashandbankbalancesofRM137.75millionthatareexpectedtoreadilygeneratecashinflowsfor
managingliquidityrisk.
ThetablebelowanalysestheIGBREIT’snon-derivativefinancialliabilitiesintorelevantmaturitygroupingsbasedontheremainingperiod
atthereportingdatetothecontractualmaturitydate.Theamountsdisclosedinthetablearethecontractualundiscountedcashflows.
<1 year 1 to 2 years 2 to 3 years >3 years Total RM’000 RM’000 RM’000 RM’000 RM’000
At31December�01�
Borrowings 80,9�7 53,3�1 53,3�1 1,�86,694 1,474,�63
Payablesandaccruals 141,115 �3,938 ��,049 - 187,10�
23.2 Capital risk management
TheoverallcapitalmanagementobjectivesaretosafeguardIGBREIT’sabilitytocontinueasagoingconcerninordertoprovidereturnsfor
unitholdersandbenefitsforotherstakeholdersandtomaintainamoreefficientcapital.
TheManager’son-goingcapitalmanagementstrategyinvolvesadoptingandmaintaininganappropriategearinglevelandadoptinganactive
interest rate management strategy to manage the risks associated with refinancing and changes in interest rates.The Manager intends to
implementthisstrategyby(i)diversifyingsourcesofdebtfundingtotheextentappropriate,(ii)maintainingareasonablelevelofdebtservice
capability,(iii)securingfavourabletermsoffunding,(iv)managingitsfinancialobligationsand(v)whereappropriate,managingtheexposures
arisingfromadversemarketinterestrates,suchasthroughfixedrateborrowings,tooptimisethecostofcapital.
78IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
23 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
23.2 Capital risk management (continued)
Theborrowingstototalassetsratioasat31December�01�wasasfollows:
2012 RM’000
Totalborrowings 1,��0,988
Totalassets 4,89�,134
Borrowingstototalassetsratio(%) �4.96
TheDeedprovidesthattheManagershall,withtheapprovaloftheTrustee,foreachdistributionperiod,distributeall(orsuchotherpercentage
asdeterminedbytheManageratitsabsolutediscretion)ofIGBREIT’sdistributableincome.ItistheintentionoftheManagertodistributeatleast
90.0%ofIGBREIT’sdistributableincomeonahalf-yearlybasis(orsuchotherintervalasdeterminedbytheManageratitsabsolutediscretion).
Fortheperiodfromtheestablishmentdate,�5July�01�to31December�01�,IGBREITwilldistribute100%ofitsdistributableincome.Basedon
theprospectusinrespectoftheinitialpublicofferofIGBREITdated�7August�01�,theManagerintendstodistributeupto100%ofIGBREIT’s
distributableincomefortheperiodfromdateofestablishmentto31December�014.
Theactualproportionofdistributableincomedistributedtounitholdersbeyond31December�014,whichshallbeattheabsolutediscretion
oftheManager,maybegreaterthan90.0%ofIGBREIT’sdistributableincometotheextentthattheManagerbelievesitisappropriate,having
regardtoIGBREIT’sfundingrequirements,othercapitalmanagementconsiderationsandtheavailabilityoffunds.Distributionwhenmadewill
beinRinggitMalaysia.
23.3 Fair value of financial instruments
ThecarryingamountsoffinancialassetsandliabilitiesofIGBREITasatreportingdateapproximatedtheirfairvalues.
Thefairvaluesarebasedonthefollowingmethodologiesandassumptions:
a) Tradereceivables,otherreceivablesandpayableandaccruals
Tradereceivables,otherreceivablesandpayableandaccrualsareassumedtoapproximatetheirfairvaluesastheseitemsarenotmaterially
sensitivetotheshiftinmarketinterestrates.
b) Cashandbankbalances
Cashandbankbalanceswithmaturitieslessthanoneyear,thecarryingamountisareasonableestimateoffairvalue.
c) Borrowings
Thefairvalueoftheborrowingsisestimatedbasedondiscountedcashflowsusingprevailingmarketratesforborrowingswithsimilarrisk
profile.
79IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
24 OPERATING LEASES
Leasesaslessor
IGBREITleasesoutitsinvestmentproperties(Note6)underoperatingleases.Thefutureminimumleasereceivablesundernon-cancellablelease
areasfollows:
2012 RM’000
Lessthanoneyear �86,307
Betweenoneandfiveyears 57�,615
858,9��
25 CAPITAL COMMITMENTS
Capitalexpenditureinrespectofthefollowinghasnotbeenprovidedforinthefinancialstatement:
2012 RM’000
Plantandequipment
AuthorisedbyDirectorsbutnotcontracted �,709
26 COMPARATIVE FIGURES
No comparative figures are presented as this is the first set of financial statements of IGB REIT prepared by the Manager since IGB REIT was
establishedon�5July�01�.
27 SIGNIFICANT TRANSACTIONS WITH PARTIES RELATED TO THE MANAGER
Thesignificantrelatedpartytransactionssetoutbelowarecarriedout inthenormalcourseofbusinessontermsandconditionsnegotiated
betweentheparties.
TheultimateholdingcompanyisIGBCorporationBerhad,acompanyincorporatedinMalaysiaandlistedontheMainMarketofBursaSecurities.
80IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
27 SIGNIFICANT TRANSACTIONS WITH PARTIES RELATED TO THE MANAGER (CONTINUED)
Related party Relationship
IGBCorporationBerhad HoldingcompanyandSponsorofIGBREIT
IGBPropertiesSdnBhd Afellowsubsidiary
IGBREITManagementSdnBhd Afellowsubsidiary
KrisAssetsHoldingsBerhad Afellowsubsidiary
MidValleyCitySdnBhd Afellowsubsidiary
MidValleyCityEnergySdnBhd Afellowsubsidiary
MidValleyCityEnterpriseSdnBhd Afellowsubsidiary
MidValleyCityGardensSdnBhd Afellowsubsidiary
MidValleyCityHotelsSdnBhd Afellowsubsidiary
MidValleyCityNorthTowerSdnBhd Afellowsubsidiary
MidValleyCitySouthTowerSdnBhd Afellowsubsidiary
MVCCentrepointNorthSdnBhd Afellowsubsidiary
MVCCentrepointSouthSdnBhd Afellowsubsidiary
MVECExhibitionandEventServicesSdnBhd Afellowsubsidiary
TanahPermataSdnBhd Afellowsubsidiary
TechnolticEngineeringSdnBhd Afellowassociate
StrassMediaSdnBhd AsubsidiaryofWahSeong(Malaya)Trading
Co.SdnBhd,whichisasubstantial
shareholderofIGBCorporationBerhad
81IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
27 SIGNIFICANT TRANSACTIONS WITH PARTIES RELATED TO THE MANAGER (CONTINUED)
2012Significant related party transactions: RM ’000
Sales of services
1) Rentalofcarpark
-IGBCorporationBerhad 36
-MVCCentrepointNorthSdnBhd �44
-MidValleyCityHotelsSdnBhd �0
-TanahPermataSdnBhd 40
340
�) Utilitiescharges
-IGBPropertiesSdnBhd 135
-MidValleyCityEnterpriseSdnBhd 347
-MVCCentrepointSouthSdnBhd 168
-MVCCentrepointNorthSdnBhd 148
-MidValleyCityHotelsSdnBhd 669
-TanahPermataSdnBhd 315
-MidValleyCitySouthTowerSdnBhd 45�
-MidValleyCityNorthTowerSdnBhd 47�
�,706
3) Rentalofpremises
-MVECExhibitionandEventServicesSdnBhd 697
4) Rentaloflightbox
-StrassMediaSdnBhd 488
8�IGB Real Estate Investment TrustAnnual Report 2012
NotestoTheFinancialStatements(continued)
27 SIGNIFICANT TRANSACTIONS WITH PARTIES RELATED TO THE MANAGER (CONTINUED)
2012Significant related party transactions: RM ’000
Purchases of services1) Repairandmaintenance
-TechnolticEngineeringSdnBhd 167
�) Electricitycharges
-MidValleyCityEnergySdnBhd 3,6�4
3) Manager’smanagementfee
-IGBREITManagementSdnBhd 7,851
Significant related party balances as at reporting date:
Amount owing by
MidValleyCitySdnBhd 11,586
MidValleyCityGardensSdnBhd 11,0�6
Amount owing to
IGBREITManagementSdnBhd 7,851
KrisAssetsHoldingsBerhad 1�,097
83IGB Real Estate Investment Trust
Annual Report 2012
NotestoTheFinancialStatements(continued)
28 REALISED AND UNREALISED PROFITS OR LOSSES
TheanalysisoftheaccumulatedlossesofIGBREITasat31December�01�,intorealisedandunrealisedportions,pursuanttoParagraphs�.06and
�.�3ofMainMarketListingRequirementsofBursaSecurities,areasfollows:
2012 RM’000
Totalaccumulatedlosses
-realised (859,041)
-unrealised 100,000
(759,041)
ThedisclosureofrealisedandunrealiseddeficitsisbasedontheGuidanceofSpecialMatterNo.1,DeterminationofRealisedandUnrealisedProfitsor
LossesintheContextofDisclosuresPursuanttoListingRequirementsofBursaSecurities,issuedbytheMalaysianInstituteofAccountants.
84IGB Real Estate Investment TrustAnnual Report 2012
APPROVED FUND SIZE3,550,000,000Units
ISSUED AND FULLY PAID UNITS3,400,000,000Units(votingright:1voteperUnit)
PUBLIC SPREADAsat31December�01�,publicshareholdingspreadofIGBREITwas46.55%** ExcludingunitholdingsheldbyDirectors,substantialunitholdersandassociatesoftheDirectorsorsubstantialunitholders,pursuanttothedefinitionof“public”undertheMMLR.
DISTRIBUTION OF UNITHOLDINGS
No. of % of No. of % ofRange of Unitholdings Unitholders Unitholders Issued Units Issued Units
Lessthan100 1,��3 5.36 40,405 0.00
100–1,000 7,933 34.75 3,8�3,946 0.11
1,000–10,000 9,575 41.95 41,175,481 1.�1
10,001–100,000 3,353 14.69 110,415,0�5 3.�5
100,001tolessthan5%ofIssuedUnits 743 3.�5 1,510,9�7,389 44.44
5%andaboveofIssuedUnits 1 0.00 1,733,617,754 50.99
Total 22,828 100.00 3,400,000,000 100.00
SUBSTANTIAL UNITHOLDERS (5% AND ABOVE)
Direct % of Deemed** % of Name of Unitholder No. of Units Issued Units No. of Units Issued Units
IGBCorporationBerhad 1,733,617,754 50.99 86,113 0.00
GoldisBerhad 41,�34,4�4 1.�1 1,735,338,497 51.04
RobertTanChungMeng 7,�89,081 0.�1 1,788,�85,0�3 5�.60
PaulineTanSuatMing 1,080,898 0.03 1,788,�85,0�3 5�.60
TonyTan@ChoonKeat 1,000,000 0.03 1,788,�85,0�3 5�.60
TanChinNamSdnBhd 4,�8�,888 0.13 1,785,506,556 5�.51
TanKimYeowSdnBhd �,879,665 0.08 1,785,405,358 5�.51
WahSeong(M)TradingCo.Sdn.Bhd. 6,079,99� 0.18 1,779,000,0�1 5�.3�
** DeemedtohaveinterestsinUnitsheldbyothercorporationsbyvirtueofSection6AoftheCompaniesAct1965
UNITHOLDINGS OF DIRECTORS AND CEO
Direct % of Deemed** % ofName of Director/ CEO No. of Units Issued Units No. of Units Issued Units
RobertTanChungMeng 7,�89,081 0.�1 1,788,�85,0�3 5�.60
TanBoonLee 1,989,7�5 0.06 - -
TanLeiCheng 1,853,74� 0.05 3�5,345 0.01
DanielYongChen-I 80�,13� 0.0� - -
ElizabethTanHuiNing 750,000 0.0� - -
TanYeeSeng 707,�00 0.0� - -
AntonyPatrickBarragry 581,300 0.0� - -
StatisticsofUnitholdersasat31December�01�
85IGB Real Estate Investment Trust
Annual Report 2012
TOP 30 UNITHOLDERS
% ofNo. Name of Unitholder No. of Units Issue Units
1 IGBCorporationBerhad 1,733,617,754 50.99� HSBCNominees(Asing)SdnBhd ExemptANforTheBankofNewYorkMellon(BNYMasE&A) 117,�00,000 3.453 MaybankNominees(Tempatan)SdnBhd MaybankTrusteesBerhadforPublicRegularSavingsFund(N14011940100) 69,441,5�8 �.044 CartabanNominees(Tempatan)SdnBhd ExemptANforEastspringInvestmentsBerhad 68,673,048 �.0�5 CitigroupNominees(Tempatan)SdnBhd ExemptANforAmericanInternationalAssuranceBerhad 66,749,491 1.966 MalaysiaNominees(Tempatan)SendirianBerhad GreatEasternLifeAssurance(Malaysia)Berhad(PAR1) 59,593,700 1.757 CitigroupNominees(Tempatan)SdnBhd EmployeesProvidentFundBoard 55,373,613 1.638 KumpulanWangPersaraan(Diperbadankan) 54,6�4,300 1.619 GoldisBerhad 41,�34,4�4 1.�110 HSBCNominees(Asing)SdnBhd ExemptANforHSBCPrivateBank(Suisse)S.A.(HongKongACCL) 34,463,3�8 1.0�11 AmanahrayaTrusteesBerhad PublicSmallcapFund 33,134,616 0.971� CitigroupNominees(Tempatan)SdnBhd EmployeesProvidentFundBoard(Nomura) 31,696,�36 0.9313 AmanahrayaTrusteesBerhad PublicDividendSelectFund �8,995,33� 0.8514 AmanahrayaTrusteesBerhad PublicSavingsFund �8,938,�76 0.8515 HSBCNominees(Asing)SdnBhd ExemptAnForCreditSuisse(SGBR-TST-Asing) �1,531,170 0.6316 CartabanNominees(Asing)SdnBhd GovernmentofSingaporeInvestmentCorporationPteLtdforGovernmentofSingapore(C) �1,016,949 0.6�17 HSBCNominees(Asing)SdnBhd ExemptANforJPMorganChaseBank,NationalAssociation(SaudiArabia) �0,000,000 0.5918 AmanahrayaTrusteesBerhad PBGrowthFund 18,314,19� 0.5419 PertubuhanKeselamatanSocial 18,054,�50 0.53�0 CIMBCommerceTrusteeBerhad PublicFocusSelectFund 15,�00,085 0.45�1 AmanahrayaTrusteesBerhad PublicEquityFund 13,776,468 0.41�� MalaysiaNominees(Tempatan)SendirianBerhad GreatEasternLifeAssurance(Malaysia)Berhad(LSF) 1�,517,000 0.37�3 HongLeongInvestmentBankBerhad(IVT-A) 1�,158,016 0.36�4 HSBCNominees(Asing)SdnBhd ExemptANforHSBCPrivateBank(Suisse)S.A.(SporeTSTACCL) 11,598,441 0.34�5 CimSecNominees(Asing)SdnBhd BankofSingaporeLimitedforMightyFinanceLimited 11,000,000 0.3��6 M&ANominee(Asing)SdnBhd MontegoAssetsLimited 10,336,916 0.30�7 CimsecNominees(Asing)SdnBhd BankofSingaporeLimitedforAmaraCompanyLimitedJ1840 10,000,000 0.�9�8 HwangDBSInvestmentBankBerhad–IVT(JBD) 10,000,000 0.�9�9 AmanahrayaTrusteesBerhad PublicIndexFund 9,3�7,�00 0.�730 AmanahrayaTrusteesBerhad PublicFar-EastProperty&ResortsFund 9,���,400 0.�7
StatisticsofUnitholdersasat31December�01�(cont’d)
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