LIPPO-MAPLETREE - Lippo Malls Indonesia Retail Trust - Investor ...

Profit forecast and profit projection(III)DepreciationDepreciation expenses at the Indonesian SPCs consist of depreciation of property, plant, equipment,including capitalised acquisition related expenses. Properties are depreciated on a straight-line basis overuseful life.(IV)Interest incomeFinancial income comprises mainly interest income earned from interest bearing bank balances. TheManager has calculated the interest earned based on the estimated monthly net cash inflow and hasassumed such cash to earn interest at an interest rate of 2.0% per annum calculated on a monthly basis.The Manager has assumed that the interest income earned will be subjected to Indonesian withholding taxof 20.0% and that the cash will be kept in Rupiah and Singapore dollars.(V)Financial ExpensesLMIR Trust will not incur any borrowings at Listing Date. Financial expenses comprise the notional interestexpense in relation to the FRS adjustment on rental deposit.(VI)Administrative Expenses(a)Manager’s management feesUnder the Trust Deed, the Manager’s Base Fee is 0.25% per annum of the value of the Deposited Propertyand a Performance Fee of 4.0% per annum of the NPI of LMIR Trust for each financial year. Bothcomponents are payable quarterly in arrears pursuant to the Trust Deed. (See “The Manager andCorporate Governance—Management Fees”.)The Manager may elect to receive the management fees in cash or units or a combination of cash andunits (as it may in its sole discretion decide). For Forecast Period 2007, Projection Year 2008 andProjection Year 2009, the Manager has assumed that 100.0% of the Performance Fee will be paid in theform of Units and will be issued at the Offering Price.(b)Trustee’s feeUnder the Trust Deed, the Trustee’s fee is up to 0.03% per annum of the value of the Deposited Property,subject to a minimum amount of S$15,000 per month, and is accrued daily and paid monthly. It iscalculated based on the forecast and projected Deposited Property at the end of each month inaccordance with the Trust Deed. In addition, a one-time inception fee of S$25,000 is payable.(c)Other expensesOther expenses include recurring operating expenses such as annual listing fees, valuation fees, legalfees, registry and depository charges, accounting, audit and tax adviser’s fees, postage, printing andstationery costs, costs associated with the preparation of annual reports, investor communications costsand other miscellaneous expenses. The Manager has assumed no growth in the annual operatingexpenses for Forecast Period 2007, Projection Year 2008 and Projection Year 2009.(VII)Repayment of Shareholder’s LoanBased on Indonesian accounting standards, depreciation of real estate is a mandatory expense of theIndonesian SPCs when determining the net profits from operations of an Indonesian SPC that would beavailable for payment as dividends. This effectively traps cash in the Indonesian SPCs as depreciation isnot a cash expense.However, the Properties are treated as real properties carried at valuation under FRS and hence are notdepreciated. Accordingly, such depreciation of real properties is not treated as an expense item whencomputing Distributable Income of LMIR Trust. To distribute this portion, there is a need to extract the cashthat is trapped in the Indonesian SPCs mainly in the form of depreciation expense. Hence a principal105