Page 52 - ar2013

Enterprise
Risk Management
Financing Risk
Given CMT Group’s reliance on
external sources of funding for
refinancing of existing borrowings,
AEI, acquisition of properties
as well as investment in
greenfield developments,
the health of the debt markets
directly affects CMT Group.
Different funding strategies are
used to minimise over-reliance
on a single source of funds
for any funding or refinancing
requirements. Other than
MTN Programme and EMTN
Programme, CMT is also one
of the first real estate investment
trusts to set up a retail bond
programme. CMT Group has
also tapped into the convertible
bonds and commercial mortgage
backed securities markets for
funds. In addition, CMT Group
has banking facilities as a source
of back-up funds.
The Manager will continue to
proactively manage capital
structure of CMT Group by
ensuring its debt maturity profile
is spread out without major
concentration of debts maturing
in a single year, and maintaining
an optimal gearing level.
Legal and Compliance Risk
Due to the nature of CMT’s
business, CMT is required to
comply with the relevant
legislation and regulations that
include the Listing Manual of the
SGX-ST (Listing Manual), the Code
on Collective Investment Schemes
(CIS Code) issued by the Monetary
Authority of Singapore and the
tax rulings issued by the Inland
Revenue Authority of Singapore
with regards to the taxation of
CMT and its Unitholders. Thus,
any changes in these legislation
and regulations may affect
CMT’s business, results or
operations. The Manager has
established relevant policies
and procedures to ensure CMT’s
compliance with applicable
legislation and regulations.
In addition, any legal, arbitration,
administrative or other proceedings
against CMT that may arise
from time to time in the course
of its business may result in
additional costs, delays in its
projects or financial losses.
The Manager manages such risk
through identification and active
monitoring of potential issues,
and the effective use of its external
legal advisers where appropriate.
Interested Person
Transactions Risk
The Manager has established
internal control procedures
to ensure that all transactions
involving HSBC Institutional Trust
Services (Singapore) Limited
(in its capacity as trustee of
CMT) and an interested person
of the Manager pursuant to the
Listing Manual (Interested Person
Transactions) are undertaken on
an arm’s length basis and on
normal commercial terms and
will not be prejudicial to the
interests of the Unitholders. For
Interested Person Transactions,
the Manager would have to
demonstrate to the AC that the
transactions were undertaken
on normal commercial terms
and were not prejudicial to the
interests of CMT and its Unitholders
which may include obtaining
third party quotations or obtaining
valuations from independent
valuers (in accordance with the
Property Funds Appendix of
the CIS Code). Proactive
measures are also adopted
to avoid situations of conflict
and potential conflict of interest.
Human Resource Risk
In order to deliver quality products
and services to our valued tenants
and shoppers, the Manager and
the property manager of CMT,
CapitaLand Retail Management
Pte Ltd (Property Manager),
invest in quality human capital by
recruiting and retaining employees
with the relevant expertise, skills
and professionalism. High turnover
rate of valued employees can be
detrimental as it causes disruptions
to CMT Group’s business
operations and undermines the
implementation of CMT’s strategic
business plans. The Manager and
the Property Manager have also
adopted an integrated human
capital strategy to recruit, develop
and motivate quality employees.
In addition to seeking outstanding
talents with the required expertise
and experience, emphasis has also
been placed on managing these
talents through staff development
and continuous training.
Comprehensive compensation
and benefits plans are also used
to motivate and retain the talents.
Such measures are also to ensure
that the CMT Group maintains its
competitive edge.
Development and
Construction Risk
Under the Property Funds
Appendix of the CIS Code, the
total contract value of all property
development activities undertaken
by CMT Group, together with
its investments in uncompleted
property developments, may not
exceed 10.0% of CMT Group’s
deposited property. CMT Group’s
deposited property as at 31
December 2013 is about
S$10.0 billion.
To date, the Manager has
committed to invest about
S$469.5 million on CMT’s
Clarity 50 CapitaMall Trust Annual Report 2013