United Industrial Corporation Limited (UIC) Annual Report Pitch

Annual Report 2013

United Industrial Corporation Limited

chairman’s statement 2013 OVERVIEW

Following an exceptional strong recovery the year before, the Singapore economy grew at a modest 4.9% in 2011. During the year, the global economy had been weakened by the euro zone debt crises and the soft US economy.

Performance Review and Dividend

For the financial year 2011, the Group’s total revenue came in at $805.5 million, a decline of $388.8 million (33%) compared with the previous year, with lower revenue from sales of trading properties and lower commercial rental revenue, which was partially offset by higher contribution from hotel operations.

During the year, the Group recognised $287.4 million in revenue from sales of trading properties, a decrease of 59% from the $700.5 million achieved in 2010. This was attributed mainly to the completion of residential projects, One Amber and Grand Duchess in 2010 and Park Natura in May 2011.

Additional new sales and progressive recognition of contributions from The Trizon residential project helped to sustain revenue.

Gross rental revenue from commercial properties declined to $287.5 million, a moderate drop of 3% compared to $297.4 million in 2010, as new leasing rates of

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Annual REport 2013 United Industrial Corporation Limited

office properties were lower than those of expired leases.

The Group’s hotel operations, buoyed by higher room and occupancy rates, continued to be robust, contributing total revenue of $141.1 million, an increase of 14% over $124.3 million in 2010.

During the year, Pan Pacific Singapore Hotel achieved higher revenue of $121.3 million, on the back of better room and occupancy rates, up 11% compared to $109.8 million in 2010. The Westin Tianjin Hotel in China, which opened in February 2010, also contributed $19.8 million in revenue, an increase of 36%.

In tandem with lower total revenue and contributions from associated companies following the completion of The Regency@Tiong Bahru residential project in March 2010, the Group’s profit from operations during the year under review declined by 28% ($77.5 million) to $200.2 million.

After adding the net fair value gain on investment properties of $13.9 million (2010: $466.0 million), the overall net profit amounted to $214.2 million (2010: $743.8 million).

Previously, sales of trading properties in Singapore with a Deferred Payment Scheme were recognised by the Group on a percentage of completion basis.

Following the clarification

by Accounting Standards Council on Interpretation of Financial Reporting Standard 115 – Agreement for the Construction of Real Estate in 2011, the Group proceeded to recognise such sales only upon completion of construction. As a result, the Group’s gross revenue and net profit for 2010 were restated upwards by $222.3 million and $40.8 million respectively. Net asset value increased to $2.86 per share, compared to $2.71 per share in 2010.

The Board recommends a first and final tax-exempt (one-tier) dividend of 3.0 cents (2010: 3.0 cents) amounting to $41.3 million (2010: $41.3 million) for the financial year ended 31 December 2011.

Singapore Office and Retail Properties, Hotels During the year under review, the Group’s office buildings registered an improvement in average

occupancy by 3 percentage points to 92% in spite of strong competition from newly completed buildings within the Raffles Place/ Marina Bayfront vicinity.

Gross rental income in 2011 was $181.8 million, 7% lower than the preceding year because market rents for new leases and renewals were 40% lower than the peak rents of expired leases.

Planning permission has been obtained to redevelop UIC Building into a 53-storey residential tower and a 23-storey office block.

Redevelopment works are expected to commence in early 2012 and overall completion is scheduled for 2017. Marketing of the residential units are expected to begin in the middle of 2012.

During the year under review, the Marina Square shopping mall underwent several improvement works which included the refurbishment of the central atrium and the food court. The upgrading works increase the net lettable area of the central atrium as well as the addition of new tenants of international lifestyle brands.

With strong international tourist arrivals, the three Marina Square hotels comprising Pan Pacific Singapore, Marina Mandarin Singapore and Marina Oriental Singapore achieved healthy occupancy rates.

West Mall, a shopping mall located near the Bukit Batok MRT, continued to enjoy strong shoppers’ traffic, receiving about 13 million visitors during the year. The mall enjoyed full occupancy and total rental revenue increased by 5%.

Singapore Residential Projects

The Group received TOP in May 2011 for its freehold condominium project, Park Natura, located close to the Bukit Timah Nature Reserve.

The development comprising four 5-storey blocks with full condominium facilities was fully sold.

The Trizon, a freehold condominium with 289 units located in the exclusive Mount Sinai area was 83% sold as at 31 December 2011. TOP is expected to be obtained in 2012.

The Group, in a joint venture

with UOL Group Limited (“UOL”), is developing a 45,622.9 square metre site at Bedok Reservoir Road.

The development called Archipelago comprises 553 units of low-rise apartments and 24 units of strata-houses is conveniently located near the upcoming Bedok North MRT station. This low density development which offers waterfront living amidst lush greenery was launched in December 2011. As at end 2011, 94 units have been sold.

Overseas Investments

In Chengdu, the Group’s wholly-owned twin-tower condominium, The Excellency, located at the popular Chun Xi shopping belt in Dacisi Road, Chengdu, will be completed in the second quarter of 2012. The development has a saleable area of approximately 54,000 square metres comprising two 51-storey residential blocks and a 3,300 square metre shopping and commercial mall. As at 31 December 2011, 71% of the residential units had been sold.

Wee Cho Yaw Chairman Singapore, 7 August 2012

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Board of directors

Gwee Lian Kheng

Mr Lim Hock San, the President and Chief Executive Officer, was appointed a Director of UIC in 1992. Mr Lim is also the President and Chief Executive Officer of Singapore Land Limited and a Director of Keppel Corporation Limited and the Chairman of the National Council on Problem Gambling.

Mr Lim graduated with a Bachelor of Accountancy from the University of Singapore. He obtained a Master of Science in Management from the Massachusetts Institute of Technology, and attended the Advanced Management Program at Harvard Business School. He is a Fellow of the Chartered Institute of Management Accountants (UK) and a Fellow and past President of the Institute of Certified Public Accountants of Singapore.

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Mr Gwee Lian Kheng was appointed a Director of UIC in 1999. He is the Group Chief Executive of UOL and its listed subsidiary Pan Pacific Hotels Group Limited. Mr Gwee has been with the UOL Group since 1973. He also sits on the board of Singapore Land Limited. He is a former director of Lee Kim Tah Holdings Limited and former Chairman of Singapore Reinsurance Corporation Ltd. Mr Gwee is an Associate of the Chartered Insurance Institute, United Kingdom.

Mr Gwee graduated with a Bachelor degree in Accountancy (Honours) from the University of Singapore.

He is a Fellow Member of the Chartered Institute of Management Accountants, Association of Chartered Certified Accountants and the Institute of Certified Public Accountants of Singapore.

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James L. go

Mr James L. Go was appointed a Director of UIC in 1999. He is the Chairman and Chief Executive Officer of JG Summit Holdings, Inc., Universal Robina Corporation, Robinsons Land Corporation, JG Summit Petrochemical Corporation and Oriental Petroleum and Minerals Corporation.

He also sits as a director of Singapore Land Limited, Marina Centre Holdings Private Limited and Hotel Marina City Private Limited. He was the Vice-Chairman of the Board of Directors of Digital Telecommunication Phils. Inc. and also held the positions of President and Chief Executive Officer until October 26, 2011. He was elected as a director of the Philippine Long Distance Telephone Company (PLDT) on November 3, 2011 and was also appointed a member of PLDT’s Technology Strategy Committee.

Mr Go graduated with a Bachelor of Science and Master of Science, Chemical Engineering from Massachusetts Institute of Technology, USA.

Mr Alvin Yeo Khirn Hai was appointed a Director of UIC in 2002 and is currently the Chairmen of the Remuneration Committee and Audit Committee. He is a lawyer in private practice and the Senior Partner of WongPartnership LLP. Mr Yeo was appointed Senior Counsel of the Supreme Court of Singapore in January 2000.

He is the Chairman of the Audit Committee of the Law Society of Singapore, and a member of the Appeals Advisory Panel of the Monetary Authority of Singapore, the Singapore International Arbitration Centre’s Council of Advisors, and a Fellow of the Singapore Institute of Arbitrators. He is also a Director of Singapore Land Limited and Keppel Corporation Limited. Mr Yeo is a Member of Parliament.

Mr Wee Ee Lim was appointed a Director of UIC in January 2003 and is currently the Chairman of the Nominating Committee. He is a Chartered Insurer qualified in the United Kingdom, and has more than 50 years’ business experience.

Mr Wee is currently the Chairman Emeritus and director of Singapore Reinsurance Corporation Ltd and also sits on the boards of directors of United Overseas Insurance Ltd, Haw Par Corporation Ltd and Singapore Land Limited, among others. He is a former director of Lee Kim Tah Holdings Limited and former Chairman of Singapore Reinsurance Corporation Ltd.

Mr Hwang Soo Jin was appointed a Director of UIC in January 2003 and is currently the Chairman of the Nominating Committee. He is a Chartered Insurer qualified in the United Kingdom, and has more than 50 years’ business experience.

Mr Hwang is currently the Chairman Emeritus and director of Singapore Reinsurance Corporation Ltd and also sits on the boards of directors of United Overseas Insurance Ltd, Haw Par Corporation Ltd and Singapore Land Limited, among others. He is a former director of Lee Kim Tah Holdings Limited and former Chairman of Singapore Reinsurance Corporation Ltd. Mr Hwang is an Associate of the Chartered Insurance Institute, United Kingdom.

Mr Wee is an Associate of the Chartered Insurance Institute, United Kingdom.

Mr Yeo graduated with a Bachelor of Laws (Honours) from King’s College, University of London, and is a Barristerat-Law (Gray’s Inn).

alvin yeo khirn hai

hwang soo jin

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corporate data Board of Directors

Board Appointment

Date of Initial

Date of Last Re-Election

Wee Cho Yaw

Non-Executive Chairman

26.06.92

27.04.11

John Gokongwei, Jr.

Non-Executive Deputy Chairman

27.07.99

27.04.11

Lim Hock San

President & Chief Executive Officer

01.04.92

24.04.09

Antonio L. Go

Non-Executive and Independent Director

25.04.07

27.04.11

James L. Go

Non-Executive Director

28.05.99

27.04.11

Lance Y. Gokongwei

Non-Executive Director

28.05.99

24.04.09

Gwee Lian Kheng

Non-Executive Director

28.05.99

27.04.11

Hwang Soo Jin

Non-Executive and Independent Director

31.01.03

27.04.11

Tan Boon Teik*

Non-Executive and Independent Director

24.07.92

27.04.11

Wee Ee Lim

Non-Executive Director

28.05.99

27.04.11

Alvin Yeo Khirn Hai

Non-Executive and Independent Director

11.09.02

24.04.09

Frederick D. Go

Alternate to John Gokongwei, Jr.

18.01.05

n/a

Patrick O. Ng

Alternate to Lance Y. Gokongwei

10.08.99

n/a

Audit Committee Alvin Yeo Khirn Hai

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Chairman (appointed 19 March 2012)

Tan Boon Teik* Chairman James L. Go Member Hwang Soo Jin Member

Nominating Committee Hwang Soo Jin Chairman Wee Cho Yaw Member James L. Go Member Tan Boon Teik* Member Antonio L. Go

Member

Remuneration Committee Alvin Yeo Khirn Hai Chairman Wee Cho Yaw Member James L. Go Member Hwang Soo Jin Member Antonio L. Go Member

Company Secretary Susie Koh

Annual REport 2013 United Industrial Corporation Limited

Auditors PricewaterhouseCoopers LLP 8 Cross Street #17-00 PWC Building Singapore 048424 Audit Partner: Sim Hwee Cher (appointed with effect from financial year 2008)

Share Registrars KCK CorpServe Pte Ltd 333 North Bridge Road #08-00 KH KEA Building Singapore 188721 Telephone: 6837 2133 Facsimile: 6338 3493 Registered Office 24 Raffles Place #22-01/06 Clifford Centre Singapore 048621 Telephone: 6220 1352 Facsimile: 6224 0278 Website: www.uic.com.sg

Company Registration Number 196300181E

MANAgement review Shanghai Chang Feng Project

V on Shenton

Clifford Centre

The Gateway

Notwithstanding the weak global sentiments, office rental market showed some resilience and recorded smaller decline in rents, underpinned mainly by demand from the non-financial sectors. However, it was a record-making year for the residential property market, with demand, liquidity and low interest rates pushing up prices and volume.

Archipelago

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property portfolio Singapore Commercial Retail Properties Marina Square Hotels

The overall hotel market performance in 2011 had been buoyant with strong international visitor arrivals generated by the Integrated Resorts and improved business sentiments which fuelled corporate travellers and MICE activities in Singapore.

The three Marina Square Hotels, Pan Pacific Singapore, Marina Mandarin Singapore and Mandarin Oriental Singapore, experienced improved occupancy and an increase in average room rates, in line with the competitive benchmark of international hotel brands in Singapore.

Mandarin Oriential

Marina Square Shopping Mall has over 660,000 square feet of lettable retail space and a broad mix of tenants offering a diverse selection of shopping, dining and entertainment options.

Complementing major international brands like Zara, Berskha, Mango, Massimo Dutti, Promod and Warehouse, are specialty stores such as Geox, StarThreeSixty, The North Face, Muji, HMV and The Planet Traveller.

In 2011, the central atrium was upgraded and international lifestyle brands such as Raymond Weil, Tissot, Maurice Lacroix, Gc Boutique and Samsonite were brought in. The opening of these international labels reinforces the Mall’s position as a prime shopping destination within the Marina Bay area.

Dining experience in Marina Square was also enhanced with the refurbishment of the 37,000 square feet food court in the first half of the year. Diners in the new food court – “The Gallerie” can enjoy spectacular views of Marina Bay while dining on famous local fare such as Lam’s Abalone Noodles.

The Marina Bay Business Association held the 3rd Christmas Light-up this year along with a series of fringe performances. The Christmas Light-up culminated with the annual New Year Countdown at the Bay. As part of the Christmas Promotion, the mall also staged the world premiere of “The Chuggington Train Live Show”. These specially planned activities affirm Marina Square as a mall with exciting events, in addition to a shopping and dining destination for locals and tourists.

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Novena Square

The Group has a 20% interest in Novena Square, a commercial development located above Novena MRT Station. As at the end of 2011, occupancy for the retail mail was 100% whilst office occupancy for Towers A and B were 99% and 100% respectively.

The retail mall, Velocity@Novena Square (“Velocity”), continued to heighten its sports branding in Singapore. It established strong alliances with sporting community by organising more high profile and innovative sports events which attracted substantial media coverage. These included the first Singapore National Squash Championships held in a glass squash court, a popular urban obstacle challenge and the only street basketball tournament in a cage. Well-known French outdoor brand Saloman also chose Velocity to open its first and only signature store in Singapore.

Velocity is also the venue for well-publicised events like National Students Lianhe Zaobao Table Tennis Cup Challenge, closing of the Eighth Singapore HeritageFest by the National Heritage Board, New Balance Real Run, Mizuno Run, Saucony Passion Run, Kids Run and the Singapore Sprint Series registration road shows.

West Mall

The Mall, with a shopper traffic of around 13 million in 2011, remained popular with residents of Bukit Batok, Jurong East, Upper Bukit Timah, Hillview and Clementi. To usher in the Year of the Rabbit, shoppers at the Mall were entertained by dancers from Beijing, a magnificent Lion Dance by the Bukit Batok Community Club and a Chinese Arts and Crafts show.

Leases for 42,000 square feet (23%) expired during the year. All expiring leases were either renewed or leased to new tenants at rates which were 6% higher. Occupancy remained at 100% and total rental revenue increased by 5% to $30.5 million.

Many retailers renovated their shops to be in sync with new retail trends. New brand names such as Duyi Bookshop, H2 Hub, Ogawa, KIYO, Gong Cha, Allure Beauty, IP Case and Sogurt (a self-vending yogurt outlet) were added to the retail mix. Various activities for youths such as Beyblade and Pokemon challenges were held to attract young shoppers from nearby schools and households.

Energy saving initiatives were carried out to meet Building and Construction Authority’s Green Mark recommendations, and light fittings in the car parks were replaced with energy efficient T5 lights.

The Mall continued to support public outreach programmes by hosting fringe events for the Singapore Arts Festival, Green Building Exhibition by the Building and Construction Authority of Singapore and an exhibition by the Singapore Police Force on anti-shop theft.

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United Industrial Corporation Limited