The Link Real Estate Investment Trust
Stock Code : 823
Interim Report 2007/08
Six Months Ended 30 September 2007
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link3 Eng.ai 11/20/07 12:55:52 PM
2007/08年中期報告
截至2007年9月30日止年度
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1. 8 Happiness Chinese Restaurant, Wong Tai Sin Shopping Centre
Featuring an array of cuisines, the newly opened restaurants offer customers an
exquisite dining experience at an equally reasonable price.
2. JP Books, Tsz Wan Shan Shopping Centre
Bookstores introduced to our portfolio receive a favourable response from
shoppers.
3. Lok Fu Shopping Centre
Our shopping centres are fi lled with promotions and decorations during festive
times.
4. Lung Cheung Mall
To capitalise on the synergy between our retail and carpark facilities, a series of
incentive parking promotions are launched to attract more patronage.
5. Hau Tak (Allmart) Fresh Market, Hau Tak Shopping Centre
Ancillary to shopping centres, our fresh markets provide a wide variety of
grocery and the freshest choice for a home-made meal.
6. Kai Tin Shopping Centre
We are committed to bringing inviting shopping experiences to customers,
prosperous business opportunities to tenants and rewarding fi nancial returns
to investors.
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2 Corporate Information
3 Information for Unitholders
4 Financial Highlights
6 Management Discussion and Analysis
18 Corporate Governance
21 Long Term Incentive Plan
25 Disclosure of Interests and Holdings of
Connected Persons
27 Connected Party Transactions
31 Progress Report on the Title Transfer of the
Properties
34 Auditor’s Review Report
36 Condensed Consolidated Interim Income Statement
37 Statement of Distributions
38 Condensed Consolidated Interim Balance Sheet
40 Condensed Consolidated Interim Statement of
Changes in Equity and Net Assets Attributable
to Unitholders
41 Condensed Consolidated Interim Statement
of Cash Flows
42 Notes to the Condensed Consolidated
Interim Financial Information
64 Performan
| Contents |
| Interim Report 2007/08 The Link Real Estate Investment Trust 1 |
Board of Directors of the Manager
Chairman (also an Independent
Non-Executive Director)
Nicholas Robert SALLNOW-SMITH
Executive Directors
Victor SO Hing Woh (Chief Executive Officer)
CHEW Fook Aun (Chief Financial Officer)
Non-Executive Directors
Ian Keith GRIFFITHS
John HO Chi On
KEE Teck Koon
PUA Seck Guan
Independent Non-Executive Directors
Michael Ian ARNOLD
Leslie CHAO Tse Hou
Anthony CHOW Wing Kin
Patrick FUNG Yuk Bun
Stanley KO Kam Chuen
Richard WONG Yue Chim
Allan ZEMAN
Audit Committee
Patrick FUNG Yuk Bun (Chairman)
Stanley KO Kam Chuen
Richard WONG Yue Chim
Allan ZEMAN
Disclosures Committee
Nicholas Robert SALLNOW-SMITH (Chairman)
CHEW Fook Aun
Anthony CHOW Wing Kin
PUA Seck Guan
Victor SO Hing Woh
Finance and Investment Committee
Nicholas Robert SALLNOW-SMITH (Chairman)
Michael Ian ARNOLD
Leslie CHAO Tse Hou
CHEW Fook Aun
Ian Keith GRIFFITHS
John HO Chi On
KEE Teck Koon
Victor SO Hing Woh
Human Resources
and Compensation Committee
Michael Ian ARNOLD (Chairman)
John HO Chi On
Stanley KO Kam Chuen
KEE Teck Koon
Victor SO Hing Woh
Richard WONG Yue Chim
Nomination Committee
Nicholas Robert SALLNOW-SMITH (Chairman)
Michael Ian ARNOLD
Anthony CHOW Wing Kin
Victor SO Hing Woh
Responsible Officers of the Manager
Victor SO Hing Woh
CHEW Fook Aun
Simon HO Kam Por
Authorised Representatives
ofTheLinkREIT
CHEW Fook Aun
Phoebe LAM Wan Ting
Qualified Accountant of the Manager
CHEW Fook Aun
Company Secretary of the Manager
Phoebe LAM Wan Ting
Trustee
HSBC Institutional Trust Services (Asia) Limited
Auditors of The Link REIT
PricewaterhouseCoopers
Principal Valuer
CB Richard Ellis Limited
Hong Kong Legal Advisors
Baker & McKenzie
Kao, Lee & Yip
Linklaters
WooKwanLee&Lo
Principal Bankers
Bank of China (Hong Kong) Limited
The Bank of Tokyo-Mitsubishi UFJ, Ltd,
Hong Kong Branch
BNP Paribas Hong Kong Branch
DBSBankLtd,HongKongBranch
The Hongkong and Shanghai Banking
Corporation Limited
Standard Chartered Bank (Hong Kong) Limited
Registered Office of the Manager
18th Floor, 8 Queen’s Road Central,
Hong Kong
Unit Registrar and Transfer Office
Computershare Hong Kong Investor
Services Limited
Shops 1712–1716, 17th Floor,
Hopewell Centre,
183 Queen’sRoadEast,
Wanchai, Hong Kong
Corporate Information
2 The Link Real Estate Investment Trust Interim Report 2007/08
Unit Listing
The Link Real Estate Investment Trust’s(‘‘The Link REIT’’) units are listed on
Scope of Review
We conducted our review in accordance with Hong Kong Standard on Review Engagements
2410, ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the
Entity’’ issued by the Hong Kong Institute of Certified Public Accountants. A review of interim
financial information consists of making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Hong Kong Standards on
Auditing and consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Auditor’s Review Report
34 The Link Real Estate Investment Trust Interim Report 2007/08
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim
financial information is not prepared, in all material respects, in accordance with Hong Kong
Accounting Standard 34 ‘‘Interim Financial Reporting’’.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 15 November 2007
Auditor’s Review Report
Interim Report 2007/08 The Link Real Estate Investment Trust 35
Six months
ended
30 September
2007
Six months
ended
30 September
2006
(Unaudited) (Unaudited)
Note HK$’M HK$’M
Revenues 3 2,056 1,956
Property operating expenses 5 (813) (792)
Net property income 1,243 1,164
General and administrative expenses (47) (41)
Change in fair values of investment properties 2,655 707
Operating profit 6 3,851 1,830
Interest income 39 28
Finance costs on interest bearing liabilities 7 (310) (292)
Profit before taxation and transactions with
unitholders 3,580 1,566
Taxation 9 (602) (274)
Profit for the period, before transactions with
unitholders 10 2,978 1,292
Distribution paid to unitholders (Note (iii)) (739) (467)
2,239 825
Represented by :
Change in net assets attributable to unitholders 2,283 825
Amount arising from cash flow hedging reserve
movement 19 (44) —
2,239 825
The above condensed consolidated interim income statement should be read with the accompanying notes to these condensed
consolidated interim financial information.
Notes:
(i) Total Distributable Income for the six months ended 30 September 2007 is determined in the Statement of Distributions.
The distribution declared in respect of this financial period as set out in the Statement of Distributions will be paid out to
unitholders on or about 15 January 2008.
(ii) Earnings per unit, based upon profit after taxation and before transactions with unitholders and the weighted average
number of units in issue, is set out in note 10 to the condensed consolidated interim financial information.
(iii) This represents the final distribution of HK$739 million for the year ended 31 March 2007 (31 March 2006: HK$467
million) paid during the period.
Condensed Consolidated Interim
Income Statement
For the six months ended 30 September 2007
36 The Link Real Estate Investment Trust Interim Report 2007/08
Six months
ended
30 September
2007
Six months
ended
30 September
2006
(Unaudited) (Unaudited)
Note HK$’M HK$’M
Profit for the period, before transactions with
unitholders 2,978 1,292
Adjustments:
Change in fair values of investment properties (2,655) (707)
Deferred taxation on change in fair values of
investment properties 465 124
Other non-cash income (12) (7)
Total Distributable Income 776 702
Interim distribution, to be paid to the unitholders 776 702
As a percentage of Total Distributable Income 100% 100%
Units in issue 18 2,148,434,317 2,137,454,000
Distribution per unit for the period HK36.11 cents HK32.81 cents
The above statement of distributions should be read with the accompanying notes to these condensed consolidated interim
financial information.
Notes:
(i) Pursuant to the Trust Deed, The Link Real Estate Investment Trust is required to ensure that the total amount distributed
to unitholders as distributions for each financial period shall be no less than 90% of ‘‘Total Distributable Income’’,plusat
its discretion, any other additional amount that the Manager determines is distributable. The Manager intends to distribute
100% of Total Distributable Income as the distribution for the interim reporting period ended 30 September 2007. The
distribution will be paid to unitholders on or about 15 January 2008.
(ii) Under the terms of the Trust Deed, the Total Distributable Income is the consolidated profit after tax attributable to
unitholders adjusted to eliminate the effects of certain non-cash adjustments which have been recorded in the income
statement for the relevant period.
Statement of Distributions
For the six months ended 30 September 2007
Interim Report 2007/08 The Link Real Estate Investment Trust 37
30 September
2007
31 March
2007
(Unaudited) (Audited)
Note HK$’M HK$’M
Non-current assets
Goodwill 3,988 3,988
Investment properties 11 42,352 39,557
Property, plant and equipment 12 50 52
46,390 43,597
------------------------------------------
Current assets
Trade and other receivables 13 141 92
Deposits and prepayments 23 18
Short term bank deposits 14 1,672 1,475
Cash and cash equivalents 14 49 53
1,885 1,638
------------------------------------------
Total assets 48,275 45,235
------------------------------------------
Current liabilities
Trade payable, receipts in advance and accruals 15 715 738
Security deposits 345 318
Provision for taxation 77 —
Interest bearing liabilities 16 2,198 —
3,335 1,056
------------------------------------------
Net current (liabilities)/assets (1,450) 582
------------------------------------------
Total assets less current liabilities 44,940 44,179
Non-current liabilities, excluding net assets
attributable to unitholders
Interest bearing liabilities 16 9,983 12,177
Deferred tax liabilities 5,627 5,102
Other non-current liabilities 17 71 111
15,681 17,390
------------------------------------------
Condensed Consolidated Interim Balance Sheet
As at 30 September 2007
38 The Link Real Estate Investment Trust Interim Report 2007/08
30 September
2007
31 March
2007
(Unaudited) (Audited)
Note HK$’M HK$’M
Total liabilities, excluding net assets attributable
to unitholders 19,016 18,446
------------------------------------------
Net assets attributable to unitholders 29,259 26,789
Units in issue 18 2,148,434,317 2,137,454,000
Net asset value per unit HK$13.62 HK$12.53
The above condensed consolidated interim balance sheet should be read with the accompanying notes to these condensed
consolidated interim financial information.
On behalf of the Board of Directors of
The Link Management Limited, as the Manager
Nicholas Robert SALLNOW-SMITH CHEW Fook Aun
Chairman Acting Chief Executive Officer
15 November 2007 15 November 2007
Condensed Consolidated Interim Balance Sheet
As at 30 September 2007
Interim Report 2007/08 The Link Real Estate Investment Trust 39
Total equity
Net assets
attributable to
unitholders Total
Note HK$’MHK$’MHK$’M
Equity/net asset value attributable to
unitholders at 1 April 2006 — 23,715 23,715
Profit for the period ended 30 September
2006, before transactions with
unitholders — 1,292 1,292
Distribution paid to unitholders — (467) (467)
Change in net assets attributable to
unitholders for the period ended
30 September 2006 — 825 825
Equity/net asset value attributable to
unitholders at 30 September 2006 — 24,540 24,540
Equity/net asset value attributable to
unitholders at 1 April 2007 — 26,789 26,789
Issuance of units under distribution
reinvestment scheme — 187 187
Profit for the period ended 30 September
2007, before transactions with
unitholders — 2,978 2,978
Distribution paid to unitholders — (739) (739)
Change in fair values of cash flow hedges 19 44 — 44
Amount arising from cash flow hedging
reserve movement 19 (44) 44 —
Change in net assets attributable to
unitholders for the period ended
30 September 2007 — 2,283 2,283
Equity/net asset value attributable to
unitholders at 30 September 2007 — 29,259 29,259
The above condensed consolidated interim statement of changes in equity and net assets attributable to unitholders should be
read with the accompanying notes to these condensed consolidated interim financial information.
Condensed Consolidated Interim Statement of Changes
in Equity and Net Assets Attributable to Unitholders
For the six months ended 30 Septermber 2007
40 The Link Real Estate Investment Trust Interim Report 2007/08
Six months
ended
30 September
2007
Six months
ended
30 September
2006
(Unaudited) (Unaudited)
HK$’M HK$’M
Operating activities
Net cash generated from operating activities 1,160 1,491
------------------------------------------
Investing activities
Additions to investment properties (140) (36)
Additions to property, plant and equipment (6) (8)
Interest income received 35 19
Increase in short term bank deposits with original
maturity of more than three months (197) (777)
Net cash used in investing activities (308) (802)
------------------------------------------
Financing activities
Proceeds from interest bearing liabilities,
net of transaction costs — 3,588
Repayment of interest bearing liabilities — (3,600)
Interest expenses paid on interest bearing liabilities (304) (273)
Distributionpaidtounitholders (552) (467)
Net cash used in financing activities (856) (752)
------------------------------------------
Net decrease in cash and cash equivalents (4) (63)
Cash and cash equivalents at the beginning of the period 53 314
Cash and cash equivalents at the end of the period 49 251
The above condensed consolidated interim statement of cash flows should be read with the accompanying notes to these
condensed consolidated interim financial information.
Condensed Consolidated Interim Statement of
Cash Flows
For the six months ended 30 September 2007
Interim Report 2007/08 The Link Real Estate Investment Trust 41
1 Corporate information
The Link Real Estate Investment Trust (the ‘‘Trust’’ or ‘‘The Link REIT’’) is an authorised unit
trust under section 104 of the Securities and Futures Ordinance. The Link REIT is governed
by a trust deed (‘‘Trust Deed’’) entered into on 6 September 2005 (as amended and
supplemented by the First Supplemental Deed dated 4 November 2005, the Second
Supplemental Deed dated 8 November 2005, the Third Supplemental Deed dated 16 January
2006, the Fourth Supplemental Deed dated 21 November 2006, the Fifth Supplemental Deed
dated 13 July 2007 and the Sixth Supplemental Deed dated 23 July 2007).
The principal activity of The Link REIT and its subsidiaries (the ‘‘Group’’) is investment in
retail and carpark operations (‘‘RC Operations’’) in Hong Kong. The address of the registered
office of the Manager and the Trustee, HSBC Institutional Trust Services (Asia) Limited, is
18th Floor, 8 Queen’s Road Central, Hong Kong, and 1 Queen’s Road Central, Hong Kong,
respectively.
2 Basis of preparation and accounting policies
The condensed consolidated interim financial information have been prepared in accordance
with Hong Kong Accounting Standard 34 ‘‘Interim Financial Reporting’’ issued by the Hong
Kong Institute of Certified Public Accountants (‘‘HKICPA’’). The condensed consolidated
interim financial information should be read in conjunction with the audited financial
statements for the year ended 31 March 2007.
The accounting policies adopted are consistent with those set out in the audited financial
statements for the year ended 31 March 2007.
In the current interim period, the Group has applied the following new standards,
amendments to standards and interpretations issued by the HKICPA, which are effective for
the Group’s accounting periods beginning on or after 1 April 2007.
HKAS 1 (Amendment) Capital Disclosures
HKFRS 7 Financial Instruments: Disclosures
HK(IFRIC)-Int 8 Scope of HKFRS 2
HK(IFRIC)-Int 9 Reassessment of Embedded Derivatives
HK(IFRIC)-Int 10 Interim Financial Reporting and Impairment
HK(IFRIC)-Int 11 HKFRS 2 — Group and Treasury Share Transactions
The adoption of the above has no significant impact on these condensed consolidated
interim financial information.
Notes to the Condensed Consolidated
Interim Financial Information
42 The Link Real Estate Investment Trust Interim Report 2007/08
2 Basis of preparation and accounting policies (Continued)
The following new standards, amendments to standards and interpretations which have been
published but are not yet effective, have not been early adopted in these condensed
consolidated interim financial information. These are effective for the Group’s accounting
periods beginning on or after 1 April 2008.
HKAS 23 (Revised) Borrowing Costs, effective for accounting periods beginning on
or after 1 January 2009;
HKFRS 8 Operating Segments, effective for accounting periods beginning
on or after 1 January 2009;
HK(IFRIC)-Int 12 Service Concession Arrangements, effective for accounting
periods beginning on or after 1 January 2008;
HK(IFRIC)-Int 13 Customer Loyalty Programmes; effective for accounting periods
beginning on or after 1 July 2008; and
HK(IFRIC)-Int 14 HKAS 19 — The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction; effective for
accounting periods beginning on or after 1 January 2008.
The Group will adopt the above when they become effective. The Manager does not expect
the adoption of the above will have significant impact on the condensed consolidated interim
financial information of the Group.
Notes to the Condensed Consolidated
Interim Financial Information
Interim Report 2007/08 The Link Real Estate Investment Trust 43
3 Revenues
Revenues recognised during the period comprise:
Six months
ended
30 September
2007
Six months
ended
30 September
2006
(Unaudited) (Unaudited)
HK$’M HK$’M
Rental income from retail properties 1,477 1,401
Gross rental receipts from carparks 456 435
1,933 1,836
--------------------- ---------------------
Other revenues
Air conditioning service fees 121 118
Other property related income 2 2
123 120
--------------------- ---------------------
Total revenues 2,056 1,956
Lease arrangements with tenants provide for base monthly rental charges and recovery of
certain outgoings. Additional rents based on business turnover amounting to HK$23 million
(2006: HK$12 million) have been included in the rental income.
Notes to the Condensed Consolidated
Interim Financial Information
44 The Link Real Estate Investment Trust Interim Report 2007/08
4 Segment information
Retail
properties Carparks
Head
office Total
HK$’MHK$’MHK$’MHK$’M
For the six months ended
30 September 2007 (Unaudited)
Revenues 1,600 456 — 2,056
Segment results 987 256 (47) 1,196
Change in fair values of
investment properties 2,351 304 — 2,655
Interest income 39
Finance costs on interest bearing liabilities (310)
Profit before taxation and transactions
with unitholders 3,580
Taxation (602)
Profit for the period, before transactions
with unitholders 2,978
Capital expenditure 133 7 6 146
Depreciation ——(6) (6)
As at 30 September 2007 (Unaudited)
Segment assets 34,810 7,654 102 42,566
Goodwill 3,988
Short term bank deposits 1,672
Cash and cash equivalents 49
Total assets 48,275
Segment liabilities 852 94 191 1,137
Interest bearing liabilities 12,181
Deferred tax liabilities 5,627
Other non-current liabilities 71
Total liabilities, excluding net assets
attributable to unitholders 19,016
Net assets attributable to unitholders 29,259
Notes to the Condensed Consolidated
Interim Financial Information
Interim Report 2007/08 The Link Real Estate Investment Trust 45
4 Segment information (Continued)
Retail
properties Carparks
Head
office Total
HK$’MHK$’MHK$’MHK$’M
For the six months ended
30 September 2006 (Unaudited)
Revenues 1,521 435 — 1,956
Segment results 932 232 (41) 1,123
Change in fair values of
investment properties 706 1 — 707
Interest income 28
Finance costs on interest bearing liabilities (292)
Profit before taxation and transactions
with unitholders 1,566
Taxation (274)
Profit for the period, before transactions
with unitholders 1,292
Capital expenditure 31 5 8 44
Depreciation ——(4) (4)
As at 31 March 2007 (Audited)
Segment assets 32,294 7,340 85 39,719
Goodwill 3,988
Short term bank deposits 1,475
Cash and cash equivalents 53
Total assets 45,235
Segment liabilities 830 112 114 1,056
Interest bearing liabilities 12,177
Deferred tax liabilities 5,102
Other non-current liabilities 111
Total liabilities, excluding net assets
attributable to unitholders 18,446
Net assets attributable to unitholders 26,789
Notes to the Condensed Consolidated
Interim Financial Information
46 The Link Real Estate Investment Trust Interim Report 2007/08
5 Property operating expenses
Six months
ended
30 September
2007
(Unaudited)
Six months
ended
30 September
2006
(Unaudited)
HK$’M HK$’M
Property managers’ fees, security and cleaning 278 302
Staff costs (Note 8) 61 48
Government rent and rates 50 54
Repairs and maintenance 106 101
Utilities 211 211
Promotion and marketing expenses 27 22
Estate common area costs 41 26
Other property operating expenses 39 28
813 792
6 Operating profit before finance costs, taxation and
transactions with unitholders
Six months
ended
30 September
2007
(Unaudited)
Six months
ended
30 September
2006
(Unaudited)
HK$’M HK$’M
Operating profit before finance costs, taxation and
transactions with unitholders is stated after charging:
Staff costs (Note 8) 84 64
Depreciation of property, plant and equipment 6 4
Loss on disposal of fixed assets 2 —
Strategic partner fee 1 1
Trustee’s remuneration 2 1
Valuation fee 1 —
Auditor’s remuneration 1 1
Operating lease charges 2 2
Other legal and professional fees 3 8
Notes to the Condensed Consolidated
Interim Financial Information
Interim Report 2007/08 The Link Real Estate Investment Trust 47
7 Finance costs on interest bearing liabilities
Six months
ended
30 September
2007
(Unaudited)
Six months
ended
30 September
2006
(Unaudited)
HK$’M HK$’M
Interest expenses on interest bearing liabilities wholly
repayable within five years (Note 16) 310 292
8Stafcosts
Six months
ended
30 September
2007
(Unaudited)
Six months
ended
30 September
2006
(Unaudited)
HK$’M HK$’M
Wages and salaries 78 63
Contributions to mandatory provident fund scheme 2 1
Long-term incentive plan (Note a) 4 —
84 64
Notes to the Condensed Consolidated
Interim Financial Information
48 The Link Real Estate Investment Trust Interim Report 2007/08
8Stafcosts(Continued)
Staff costs can be further analysed as below:
Six months
ended
30 September
2007
(Unaudited)
Six months
ended
30 September
2006
(Unaudited)
HK$’M HK$’M
Included under property operating expenses (Note 5) 61 48
Included under general and administrative expenses 23 16
84 64
Note:
(a) Long-term incentive plan
During the period, the Group adopted the Long-term Incentive Plan (the ‘‘Plan’’), which was approved by an ordinary
resolution on 23 July 2007 at the annual general meeting of the unitholders. The Plan shall be valid and effective
for 10 years commencing on the adoption date.
Under the Plan, the Manager may grant three types of awards, the Restricted Unit Awards, Unit Option and
Conditional Cash Awards (the ‘‘Awards’’) to eligible employees of the Group.
During the period, certain employees were granted the Restricted Unit Awards at nil consideration. The Restricted
Unit Awards granted under the related plan, in general, are fully vested in three years from the date of grant and the
eventual units to be issued under the Restricted Unit Awards are linked to the performance of The Link REIT.
The Group recognises the employee services received in exchange for the grant of the Awards as an expense, with
a corresponding increase in the liability incurred, at fair value as the employees render services. This expense is to
be charged to the income statement over the vesting period. Until the liability is settled, the fair value of the liability
is re-measured at each balance sheet date and at the date of settlement, with any changes in fair value recognised
in the income statement for the period. The expense arising from the above Awards for the interim period ended 30
September 2007, which was charged to the income statement for the current period, amounts to HK$4 million.
Notes to the Condensed Consolidated
Interim Financial Information
Interim Report 2007/08 The Link Real Estate Investment Trust 49
9 Taxation
Hong Kong profits tax has been provided for at the rate of 17.5% on the estimated
assessable profit for the period. For the period ended 30 September 2006, no current
taxation has been provided for as the Group has no estimated assessable profit.
The amount of taxation charged to the condensed consolidated interim income statement
represents:
Six months
ended
30 September
2007
(Unaudited)
Six months
ended
30 September
2006
(Unaudited)
HK$’M HK$’M
Current taxation 77 —
Deferred taxation 525 274
602 274
10 Earnings per unit based upon profit after taxation and
before transactions with unitholders
Six months
ended
30 September
2007
(Unaudited)
Six months
ended
30 September
2006
(Unaudited)
Profit for the period, before transactions with
unitholders
HK$2,978 million HK$1,292 million
Weighted average number of units
for the period 2,139,854,069 2,137,454,000
Earnings per unit based on profit after
taxation, before transactions with
unitholders, basic and diluted HK$1.39 HK$0.60
Notes to the Condensed Consolidated
Interim Financial Information
50 The Link Real Estate Investment Trust Interim Report 2007/08
11 Investment properties
(a) Details of the movements of investment properties are as follows:
Retail
properties Carparks Total
HK$’MHK$’MHK$M
At 1 April 2006 29,098 6,674 35,772
Additions 239 32 271
Change in fair values 2,914 600 3,514
At 31 March 2007 32,251 7,306 39,557
At 1 April 2007 32,251 7,306 39,557
Additions 133 7 140
Change in fair values 2,351 304 2,655
At 30 September 2007 34,735 7,617 42,352
(b) Government leases
The properties included as investment properties on the balance sheet comprise
properties where the Group has legal title under government leases for a fixed number
of years (with renewal rights in one case), and other properties where the granting of
the government leases and legal title is in progress. The remaining lease periods of the
government lease profile of these properties with government leases granted range from
36 to 50 years.
By virtue of the Property Agreement with the Hong Kong Housing Authority in respect of
the acquisition of the RC Operations, the Group as the beneficial owner, is legally
entitled to operate all these properties as if it was the legal owner.
(c) Fair values
The investment properties were revalued on an open market value basis as at 30
September 2007 by CB Richard Ellis Limited (‘‘CBRE’’), an independent firm of
professional qualified valuers. In arriving at the market values, CBRE has assumed,
inter alia, that legal titles to the properties are in place as of the property valuation date,
notwithstanding that legal titles to certain of the properties have not been granted as of
the balance sheet date (see note (b) above).
(d) REIT Code restrictions
In accordance with the Code on Real Estate Investment Trusts issued by the Securities
and Futures Commission of Hong Kong (‘‘REIT Code’’), the Group is prohibited from
disposing of its properties for at least two years from the time such properties are
acquired, unless unitholders have passed a special resolution consenting to the
proposed disposal.
Notes to the Condensed Consolidated
Interim Financial Information
Interim Report 2007/08 The Link Real Estate Investment Trust 51
11 Investment properties (Continued)
(e) Security for the Group’s loan facilities
As at 30 September 2007, certain of the Group’s investment properties, amounting to
approximately HK$4.8 billion (31 March 2007: HK$4.4 billion), were mortgaged to
secure the Group’s loan facilities.
12 Property, plant and equipment
Leasehold
improvements
Motor
vehicles Equipment Total
HK$’MHK$’MHK$’MHK$’M
At 1 April 2006 4 2 26 32
Additions 16 2 11 29
Depreciation charge for the year (1) (1) (7) (9)
At 31 March 2007 19 3 30 52
At 31 March 2007
Cost 21 4 39 64
Accumulated depreciation (2) (1) (9) (12)
Net book value 19 3 30 52
At 1 April 2007 19 3 30 52
Additions 2 — 46
Disposals —— (3) (3)
Depreciation charge for the period (2) — (4) (6)
Accumulated depreciation
written back upon disposal —— 11
At 30 September 2007 19 3 28 50
At 30 September 2007
Cost 23 4 40 67
Accumulated depreciation (4) (1) (12) (17)
Net book value 19 3 28 50
Notes to the Condensed Consolidated
Interim Financial Information
52 The Link Real Estate Investment Trust Interim Report 2007/08
13 Trade and other receivables
30 September
2007
(Unaudited)
31 March
2007
(Audited)
HK$’M HK$’M
Trade receivable (Note) 64 51
Other receivables 77 41
141 92
Note: Receivables are denominated in Hong Kong dollars and the carrying amounts of these receivables approximate
their fair values.
A majority of the Group’s rental income is received in cash and there are no specific credit
terms given to the tenants. The trade receivable are generally fully covered by the rental
deposits from corresponding tenants. The ageing analysis of trade receivable is as follows:
30 September
2007
(Unaudited)
31 March
2007
(Audited)
HK$’M HK$’M
0–30 days 54 47
31–90 days 7 2
Over 90 days 3 2
64 51
Monthly base rental in respect of retail properties are payable in advance by tenants in
accordance with the leasing agreements while daily gross receipts from carparks are
received from the carpark operators in arrears.
Notes to the Condensed Consolidated
Interim Financial Information
Interim Report 2007/08 The Link Real Estate Investment Trust 53
14 Cash and cash equivalents and short term bank deposits
30 September
2007
(Unaudited)
31 March
2007
(Audited)
HK$’M HK$’M
Cash in hand 2 2
Cash at bank 13 22
Short term bank deposits with original
maturity of less than three months 34 29
Cash and cash equivalents 49 53
Short term bank deposits with original
maturity of more than three months 1,672 1,475
1,721 1,528
Short term bank deposits at the balance sheet date mature approximately 74 days (31 March
2007: 96 days) from the balance sheet date. The effective interest rate at the balance sheet
date was 4.54% (31 March 2007: 4.09%) per annum.
15 Trade payable, receipts in advance and accruals
30 September
2007
(Unaudited)
31 March
2007
(Audited)
HK$’M HK$’M
Trade payable 103 64
Receipts in advance 58 59
Accruals 554 615
715 738
Notes to the Condensed Consolidated
Interim Financial Information
54 The Link Real Estate Investment Trust Interim Report 2007/08
15 Trade payable, receipts in advance and accruals
(Continued)
The ageing analysis of trade payable is as follows:
30 September
2007
(Unaudited)
31 March
2007
(Audited)
HK$’M HK$’M
0–30 days 86 60
31–90 days 14 3
Over 90 days 3 1
103 64
16 Interest bearing liabilities
30 September
2007
(Unaudited)
31 March
2007
(Audited)
HK$’M HK$’M
Guaranteed notes 3,594 3,591
Syndicated loan 4,587 4,586
Other loan (secured) 4,000 4,000
12,181 12,177
Less: Current portion of interest bearing liabilities (2,198) —
Non-current portion of interest bearing liabilities 9,983 12,177
Notes to the Condensed Consolidated
Interim Financial Information
Interim Report 2007/08 The Link Real Estate Investment Trust 55
16 Interest bearing liabilities (Continued)
Interest bearing liabilities are repayable as follows:
30 September
2007
(Unaudited)
31 March
2007
(Audited)
HK$’M HK$’M
Dueinthefirstyear
Guaranteed notes 2,198 —
--------------------- ---------------------
Due in the second year
Guaranteed notes 1,396 2,196
--------------------- ---------------------
Dueinthethirdyear
Guaranteed notes — 1,395
Other loan (secured) 4,000 4,000
4,000 5,395
--------------------- ---------------------
Dueinthefifthyear
Syndicated loan 4,587 4,586
--------------------- ---------------------
12,181 12,177
The effective interest rate of the interest bearing liabilities at the balance sheet date was
5.16% (31 March 2007: 4.66%). The carrying amounts of the interest bearing liabilities
approximate their fair values.
Notes to the Condensed Consolidated
Interim Financial Information
56 The Link Real Estate Investment Trust Interim Report 2007/08
17 Other non-current liabilities
30 September
2007
(Unaudited)
31 March
2007
(Audited)
HK$’M HK$’M
Long-term incentive plan payable (Note 8) 4 —
Interest rate swaps — cash flow hedges (Note) 67 111
71 111
Note:
The Group uses interest rate swaps to minimise its exposure to movements in interest rates in relation to its floating rates
interest bearing liabilities by swapping from floating rates to fixed rates. The full fair value of these cash flow hedges are
classified as non-current items as the remaining maturities of the hedged items extend for more than 12 months. Any
change in fair value of the effective portion of the cash flow hedges is recognised in hedging reserve. An amount of
HK$44 million has been credited to the hedging reserve during the period (Year ended 31 March 2007: HK$111 million
had been debited to the hedging reserve).
Derivative financial instruments qualifying as cash flow hedges as at 30 September 2007 have an average maturity of 4.1
years (31 March 2007: 4.6 years) from the balance sheet date. The notional principal amount and the average fixed
interest rate of the outstanding interest rate swap contracts at 30 September 2007 were HK$4 billion (31 March 2007:
HK$4 billion) and 5.05% (31 March 2007: 5.05%) respectively.
18 Units in issue
Number of
Units
At 1 April 2006 and 1 April 2007 2,137,454,000
Units issued under distribution reinvestment scheme 10,980,317
At 30 September 2007 2,148,434,317
Traded market value of the units as at 30 September 2007 was HK$17.10 (31 March 2007:
HK$18.80) per unit. Based on 2,148,434,317 units in issue as at 30 September 2007 (31
March 2007: 2,137,454,000 units), market capitalisation was HK$36,738 million (31 March
2007: HK$40,184 million).
Notes to the Condensed Consolidated
Interim Financial Information
Interim Report 2007/08 The Link Real Estate Investment Trust 57
19 Reserves
Hedging
reserve
Earnings
retained for
cash flow
hedge
adjustments
Total
reserves
HK$’MHK$’MHK$’M
At 1 April 2006 ———
Change in fair values of cash flow hedges (111) — (111)
Amount arising from cash flow
hedging reserve movement — 111 111
At 31 March 2007 (111) 111 —
At 1 April 2007 (111) 111 —
Change in fair values of cash flow hedges 44 — 44
Amount arising from cash flow
hedging reserve movement — (44) (44)
At 30 September 2007 (67) 67 —
20 Capital commitments
30 September
2007
(Unaudited)
31 March
2007
(Audited)
HK$’M HK$’M
Improvement projects to existing investment properties
Authorised but not contracted for 894 752
Contracted but not provided for 339 422
1,233 1,174
Notes to the Condensed Consolidated
Interim Financial Information
58 The Link Real Estate Investment Trust Interim Report 2007/08
21 Connected party transactions and significant related
party transactions and balances
Information required to be disclosed concerning related party transactions is set out in this
note unless disclosed elsewhere in these condensed consolidated interim financial
information.
(a) Nature of relationship with connected/related parties
The table set forth below summarises the names of the connected/related parties, as
defined in the REIT Code/HKAS 24 ‘‘Related Party Disclosures’’, and nature of their
relationship with The Link REIT as at 30 September 2007:
Connected/related party Relationship with the Group
HSBC Institutional Trust Services (Asia)
Limited (the ‘‘Trustee’’)
The Trustee of The Link REIT
The Hongkong and Shanghai Banking
Corporation Limited and its associates
(the ‘‘HSBC Group’’)
Related parties of the Trustee
CapitaLand Limited
(the ‘‘Strategic Partner’’)
The Strategic Partner of The Link REIT
andcommondirector
CB Richard Ellis Limited
(the ‘‘Principal Valuer’’)
The Principal Valuer of The Link REIT
The Children’s Investment Master Fund A significant unitholder of The Link REIT
The Wing Hang Bank Limited Common director
Industrial and Commercial Bank of
China (Asia) Limited (‘‘ICBC’’)
Common director
Aedas Limited Common director
These connected parties are also considered as related parties of the Group.
Notes to the Condensed Consolidated
Interim Financial Information
Interim Report 2007/08 The Link Real Estate Investment Trust 59
21 Connected party transactions and significant related
party transactions and balances (Continued)
(b) Transactions with connected/related parties
The following transactions were carried out with connected/related parties:
Six months
ended
30 September
2007
Six months
ended
30 September
2006
(Unaudited) (Unaudited)
HK$’M HK$’M
Trustee fee paid and payable to the Trustee (ii) (2) (1)
Fee paid and payable to the Strategic Partner (iii) (1) (1)
Valuation fee paid and payable to the
Principal Valuer (1) —
Transactions with the HSBC Group (iv)
Interest expense to the HSBC Group on
interest bearing liabilities (14) (263)
Staff expense to the HSBC Group on
medical/group life insurance (1) —
Rental income from the HSBC Group
on leasing of retail units 6 7
Interest income from the HSBC Group
on short term bank deposits 4 28
Transactions with ICBC (iv)
Interest expense to ICBC on
interest bearing liabilities (4) —
Rental income from ICBC on
leasing of retail units 2 —
Architectural/renovation consultancy services
fees paid and payable to Aedas Limited (1) —
Notes:
(i) All connected party transactions were carried out in accordance with the terms of the relevant agreement
governing the transactions and in the ordinary course of business.
(ii) The Trustee is entitled to receive an annual trustee fee (calculated and paid monthly) at a rate of 0.008% per
annum of the latest property value as determined in the latest annual valuation report of an independent
property valuer recommended by the Manager and appointed by the Trustee for and on behalf of The Link
REIT from time to time, subject to a minimum of HK$150,000 per month.
(iii) The Strategic Partner is entitled to receive a base fee equal to the costs and expenses reasonably incurred
by the Strategic Partner in the performance of its duties and obligations and also a performance fee under
the Co-operation Agreement from the listing date until the termination of its appointment under the Co-
operation Agreement.
(iv) The transactions with the HSBC Group and ICBC were in accordance with market rates.
Notes to the Condensed Consolidated
Interim Financial Information
60 The Link Real Estate Investment Trust Interim Report 2007/08
21 Connected party transactions and significant related
party transactions and balances (Continued)
(c) Balances with related parties
Balances with related parties are set out below:
30 September
2007
31 March
2007
(Unaudited) (Audited)
HK$’M HK$’M
Interest bearing liabilities with the HSBC Group (598) (598)
Short term bank deposits and savings placed with
the HSBC Group 185 497
Net interest receivable from the HSBC Group 1 6
Interest bearing liabilities with ICBC (184) —
Strategic Partner fee payable to
CapitaLand Limited (Note) (1) (1)
Architectural/renovation consultancy services
fees payable to Aedas Limited (1) —
Note:
The balance is unsecured, interest-free and repayable on demand.
(d) Key management compensation
The aggregate amounts of emoluments of the directors of the Group are as follows:
Six months
ended
30 September
2007
Six months
ended
30 September
2006
(Unaudited) (Unaudited)
HK$’M HK$’M
Fees 3 2
Basic salaries, allowances and other benefits 7 3
Long-term incentive plan (Note 8(a)) 1 —
11 5
Notes to the Condensed Consolidated
Interim Financial Information
Interim Report 2007/08 The Link Real Estate Investment Trust 61
22 Contingent liabilities
The Link Holdings Limited, a subsidiary, and the Trustee have jointly and severally executed
guarantees in favour of a bank in respect of a facility granted to a subsidiary for issuance of
bank guarantees to utilities companies. The facility amounts to HK$70 million (31 March
2007: HK$70 million), of which HK$52 million has been utilised as at 30 September 2007
(31 March 2007: HK$52 million).
23 Subsidiaries
The Link REIT held the following wholly owned subsidiaries as at 30 September 2007:
Name
Place of
establishment
and kind of legal
entity/place of
operations Principal activities
Particulars of
issued share
capital
Interest
held
Directly held:
The Link Holdings
Limited
Cayman Islands,
limited liability
company/Hong
Kong
Investment holding US$1 100%
The Link Management
Limited
Hong Kong,
limited liability
company/Hong
Kong
Asset management HK$5,000,001 100%
Indirectly held:
The Link Properties
Limited
Cayman Islands,
limited liability
company/Hong
Kong
Property holding US$1 100%
The Link Finance
Limited
Hong Kong,
limited liability
company/Hong
Kong
Financing HK$1 100%
The Link Finance
(Cayman) 2006
Limited
Cayman Islands,
limited liability
company/Hong
Kong
Financing US$1 100%
Notes to the Condensed Consolidated
Interim Financial Information
62 The Link Real Estate Investment Trust Interim Report 2007/08
24 Approval of the condensed consolidated
interim financial information
The condensed consolidated interim financial information were authorised for issue by the
Manager on 15 November 2007.
Notes to the Condensed Consolidated
Interim Financial Information
Interim Report 2007/08 The Link Real Estate Investment Trust 63
Six months ended
30 September
2007
Six months ended
30 September
2006
(Unaudited) (Unaudited)
Net assets attributable to unitholders HK$29,259 million HK$24,540 million
Net asset value per unit HK$13.62 HK$11.48
The highest premium of the traded price
to net asset value (Note a) HK$5.58 HK$5.97
Distribution per unit HK36.11 cents HK32.81 cents
Market price as at period end HK$17.10 HK$16.22
Net yield per unit (Note b) 2.11% 2.02%
Number of units in issue 2,148,434,317 2,137,454,000
Note:
(a) The highest premium is calculated based on the highest traded price of HK$19.20 (2006: HK$17.45) on The Stock
Exchange of Hong Kong Limited during the period. The lowest traded price during the period was HK$14.20 (2006:
HK$14.50) which is higher than the net asset value as at the period end date. Accordingly, no discount of the traded price
to net asset value is presented.
(b) Net yield per unit is calculated based on distribution per unit for the period ended 30 September 2007 of HK36.11 cents
(2006: HK32.81 cents) over the last traded price as at 30 September 2007 of HK$17.10 (2006: HK$16.22).
Performance Table
As at 30 September 2007
64 The Link Real Estate Investment Trust Interim Report 2007/08
2007/08年中期報告
截至2007年9月30日止年度
1.
2.
3.
4. 5.
6.
Paper: Made in Germany, paper comprises 100% virgin fi bre.
Pulps used are elemental chlorine-free.
The FSC logo identifi es products which contain wood and virgin
fi bre from well-managed forests certifi ed in accordance with
the rules of the Forest Stewardship Council.
Designed and published by:
iOne (Regional) Financial Press Limited
SGS-COC-003677
1. 8 Happiness Chinese Restaurant, Wong Tai Sin Shopping Centre
Featuring an array of cuisines, the newly opened restaurants offer customers an
exquisite dining experience at an equally reasonable price.
2. JP Books, Tsz Wan Shan Shopping Centre
Bookstores introduced to our portfolio receive a favourable response from
shoppers.
3. Lok Fu Shopping Centre
Our shopping centres are fi lled with promotions and decorations during festive
times.
4. Lung Cheung Mall
To capitalise on the synergy between our retail and carpark facilities, a series of
incentive parking promotions are launched to attract more patronage.
5. Hau Tak (Allmart) Fresh Market, Hau Tak Shopping Centre
Ancillary to shopping centres, our fresh markets provide a wide variety of
grocery and the freshest choice for a home-made meal.
6. Kai Tin Shopping Centre
We are committed to bringing inviting shopping experiences to customers,
prosperous business opportunities to tenants and rewarding fi nancial returns
to investors.
OTYOJKLXUTZIURUXVXUULOTJJ '3 '3
The Link Real Estate Investment Trust
The Link Real Estate Investment Trust
Stock Code : 823
Interim Report 2007/08
Six Months Ended 30 September 2007
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link3 Eng.ai 11/20/07 12:55:52 PM
