Risk Assessment and Management of Business Risk
Effective risk management is a fundamental part of CMT’s business strategy. Recognising and managing risk is central to the business and to protecting Unitholders’ interests and value. CMT operates within overall guidelines and specific parameters set by the Board. Each transaction is comprehensively analysed to understand the risk involved. Responsibility for managing risk lies initially with the business unit concerned, working within the overall strategy outlined by the Board.

The Manager’s focus on risk management recognises that risk management is, prima facie, an issue for management. The risk management framework supports this focus but provides a structured context for those personnel to undertake a half-yearly review of the past performance of, and to profile the current and future risks facing, their areas of responsibility.

This risk information is consolidated and used as key input into the corporate strategy sessions attended by management and the Property Manager. Such sessions are held on a quarterly basis to review CMT’s strategic direction in detail and include specific focus on the identification of key business and financial risks which could prevent CMT from achieving its objectives. Management is then required to ensure that appropriate controls are in place to effectively manage those risks, and such risks and controls are monitored by the Board on a quarterly basis (or on a more frequent basis if necessary). The internal audit plan is developed in conjunction with the risk management programme and is focused on ensuring the operation of internal controls and assessing the effectiveness and efficiency of the control environment.
The Board generally meets quarterly, or more often if necessary, and reviews the financial performance of the Manager and CMT against a previously approved budget. The Board also reviews the risks to the assets of CMT and acts upon any comments of the auditors of CMT. In assessing business risk, the Board considers the economic environment and the property industry risk. The Board and its Executive Committee reviews and approves all investment decisions. Management meets regularly to review the operations of the Manager and CMT and discuss continuous disclosure issues.

The Manager has determined that significant risk for CMT will most likely arise when making property investment decisions. Accordingly, the Manager has set out procedures to be followed when making such decisions. In accordance with this policy, the Board requires comprehensive due diligence to be carried out in relation to the proposed investment and a suitable determination is made as to whether the anticipated return on investment is appropriate having regard to the level of risk. In addition, the Board requires that each major proposal submitted to the Board for decision is accompanied by a comprehensive risk assessment and, where required, management’s proposed mitigation strategies.

Communications with Unitholders
The listing rules of SGX-ST require that a listed entity discloses to the market matters that could, or might be expected to, have a material effect on the price of the entity’s securities. In line with CMT’s disclosure obligations, the Board’s policy is to inform Unitholders of all major developments that impact CMT. During the year, a continuous disclosure process was in place to ensure that compliance with such obligations was constantly adhered to.
CMT believes that it should engage in regular, effective, unbiased and transparent communication with Unitholders. Communications channels with Unitholders are made accessible via:

• Report to Unitholders;
• Notices of, and explanatory memoranda for, extraordinary general meetings;
• Press releases on major developments of the company;
• Disclosures to SGX-ST;
• Other announcements, as appropriate; and
• CMT’s website at www.capitamall.com.

CMT was included in the Singapore Straits Times Index, the primary Singapore equity market barometer in March 2005. It is also included in other key indices such as the Morgan Stanley Capital International, Inc (MSCI) Index, the FTSE European Public Real Estate Association (EPRA) / National Association of Real Estate Investment Trust (NAREIT) Global Real Estate Index, the Global Property Research (GPR) General Property Shares Index, the GPR 250 Global Property Shares Index and the GPR 250 Global REIT Index – all of which are widely tracked and referred to by international fund managers as performance benchmarks in the selection and monitoring of investments.

The Manager considers meetings with local and foreign fund managers an integral part of the investor relations’ component of its responsibilities. During the year under review, the Manager met with institutional investors in Singapore, Malaysia, Hong Kong, Japan, United Kingdom, United States, Middle East, various European countries and Australia. The purpose of these meetings was to update potential and current Unitholders on the developments that have taken place with regard to CMT. CMT also participates in various conferences locally and in the region as part of its efforts to build interest in the REIT market for the region. The Manager will continue to pursue opportunities to educate and keep retail investors informed of the latest developments in the REIT industry.

Unitholders and potential stakeholders have access to CMT’s website for information on CMT’s major developments, descriptions of CMT’s properties, announcements and other corporate information. Real-time information on CMT’s Unit price is also made available on the site. In addition, members of the public can pose questions on the ‘Ask Us’ section of the CMT website and have their queries addressed accordingly. Also available on the website is an archive of CMT’s announcements, press releases, annual reports and operational details. The latest information is posted on the website as soon as it is released to the SGX-ST and the media.

 

Dealings in Securities
The Manager has voluntarily issued guidelines to its Directors and employees which prohibit them from dealing in CMT units while in possession of price-sensitive information and during the two weeks before and up to (and including) the date of announcement of CMT’s results (quarterly, half-yearly and full-year). Under these guidelines, Directors and employees have been directed to refrain from dealing in CMT units on short-term considerations.
CapitaMall Trust Management Limited
Board Composition and Committees
The matrix of the Board members’ participation on the various Board committees is as follows.

CAPITAMALL TRUST MANAGEMENT LIMITED BOARD COMPOSTION AND COMMITTEES

The Manager believes that contributions from each Director can be reflected in ways other than attendances at Board and committee meetings. A Director of the Manager would have been appointed on the principles outlined earlier in this Statement and his ability to contribute to the proper guidance of the Manager in its management of CMT.

Meeting Attendance