TABLE OF CONTENTS - Malaysiastock.biz...TABLE OF CONTENTS CORPORATE INFORMATION 2 CORPORATE OVERVIEW...

T A B L E O F C O N T E N T S

CORPORATE INFORMATION 2

CORPORATE OVERVIEW

Structure 3

Salient Features 4

Property Portfolio 5

Organisation and Reporting Structure 6

Profile of Directors 7 - 10

Profile of Executive Team 11 - 12

BUSINESS REVIEW

Financial Highlights 13 - 14

Management Discussion and Analysis 15 - 20

CORPORATE GOVERNANCE AND ACCOUNTABILITY

Corporate Governance Overview Statement 21 - 35

Audit Committee Report 36 - 38

Sustainability Statement 39 - 43

FINANCIAL STATEMENTS 44 - 91

UNITHOLDING STATISTICS 92 - 93

NOTICE OF SIXTH ANNUAL GENERAL MEETING 94

PROXY FORM

2

PROPERTY MANAGER

Chartwell ITAC International Sdn Bhd (52312-H)

Suite A-6-3, Level 6, Block A

Putra Majestik, Jalan Kasipillay

Batu 2½, Off Jalan Ipoh

51200 Kuala Lumpur, Malaysia

Telephone : 603 - 4043 3998

Telefax : 603 - 4043 9388

AUDITOR

PricewaterhouseCoopers PLT (LLP0014401-LCA & AF 1146)

Level 10, 1 Sentral, Jalan Rakyat

Kuala Lumpur Sentral


Telephone : 603 - 2173 1188

Telefax : 603 - 2173 1288

UNIT REGISTRAR

Tricor Investor & Issuing House Services Sdn Bhd (11342-H)

Unit 32-01, Level 32, Tower A, Vertical Business Suite

Avenue 3, Bangsar South, No. 8, Jalan Kerinchi


Telephone : 603 - 2783 9299

Telefax : 603 - 2783 9222

PRINCIPAL BANKERS

Hong Leong Bank Berhad (97141-X)

Level 1, Wisma Hong Leong, 18 Jalan Perak


Telephone : 603 - 2164 2525

Telefax : 603 - 2164 7922

Public Bank Berhad (6463-H)

Head Office, Menara Public Bank

146 Jalan Ampang


Telephone : 603 - 2176 6000

Telefax : 603 - 2163 9917

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad

Date of Listing : 21 September 2012

Stock Name : IGBREIT

Stock Code : 5227

MANAGER

IGB REIT Management Sdn Bhd (908168-A)

Level 32, The Gardens South Tower

Mid Valley City, Lingkaran Syed Putra


Telephone : +603 - 2289 8989

Telefax : +603 - 2289 8802

Website : www.igbreit.com

BOARD OF DIRECTORS

Tan Sri Dato’ Dr. Lin See Yan

Chairman and Independent Non-Executive Director

Dato’ Seri Robert Tan Chung Meng

Managing Director and Non-Independent Executive Director

Halim bin Haji Din

Independent Non-Executive Director

Le Ching Tai @ Lee Chen Chong


Tan Boon Lee

Non-Independent Executive Director

Daniel Yong Chen-I


Elizabeth Tan Hui Ning


Tan Lei Cheng

Non-Independent Non-Executive Director

Tan Yee Seng


CHIEF EXECUTIVE OFFICER

Antony Patrick Barragry

COMPANY SECRETARY

Tina Chan Lai Yin

TRUSTEE

MTrustee Berhad (163032-V)

Tingkat 15, Menara AmFirst

No. 1, Jalan 19/3, 46300 Petaling Jaya

Selangor Darul Ehsan, Malaysia

Telephone : 603 - 2036 2633

Telefax : 603 - 2032 1914

Corporate Information

ANNUAL REPORT 20173

Structure

SPONSOR/

MAJOR UNITHOLDER

IGB Corporation Berhad

OTHER

UNITHOLDERS

TRUSTEE

MTrustee Berhad

MANAGER

IGB REIT

Management

Sdn Bhd

PROPERTY

MANAGER

Chartwell ITAC

International

Sdn Bhd

PROPERTY PORTFOLIO

PropertyManagement

Services

Represents interests

of Unitholders

Trustee Fee

Net Property Income

Property

Management Fee

Management Fee

Management

Services

100%52.6%47.4%

Ownership of

Properties

(vested in Trustee)

esents interests

itholders

stee Fee

Managemen

Manage

Ser

(MVM)

(TGM)

4

Fund Name IGB REIT

Fund Category Real Estate Investment Trust

Fund Type Income stability and growth

Fund Duration The earlier of:

the occurrence of any of events listed in Clause 26.2 of the deed of trust (Deed) dated 18 July

2012;

the date 999 years after 25 July 2012 (the date of establishment of IGB REIT); or

the date on which IGB REIT is terminated by the Manager under Clause 26.1(b) of the Deed

Approved Fund Size 3,550,000,000 Units

Authorised Investments Real estate, unlisted single-purpose companies, real estate-related assets, non-real estate-related

assets, cash, deposits, money market instruments and any other investments not specified above

but specified as a permissible investment in the Securities Commission Malaysia’s (SC) Guidelines on

Real Estate Investment Trusts (REIT Guidelines) or as otherwise permitted by the SC

Authorised Investment

Limits

The investments of IGB REIT are subject to the following investments limits imposed by REIT

Guidelines:

at least 50% of IGB REIT’s total asset value (TAV) must be invested in real estate assets at all

times; and

not more than 25% of IGB REIT’s TAV may be invested in non-real estate-related assets and/or

cash, deposits and money market instruments,

provided that investments in both real estate-related assets and non-real estate-related assets are

limited as follows:

the value of IGB REIT’s investments in securities issued by any single issuer must not exceed 5%

of IGB REIT’s TAV;

the value of IGB REIT’s investments in securities issued by any group of companies must not

exceed 10% of IGB REIT’s TAV; and

IGB REIT’s investment in any class of securities must not exceed 10% of the securities issued by

any single issuer, or

such other limits and investments as may be permitted by the SC or REIT Guidelines.

Distribution Policy At least 90% of IGB REIT’s distributable income

Semi-annual basis for each 6-month period ending 30 June and 31 December of each year (or

such other intervals as the Manager may determine at its absolute discretion)

Borrowing Limitations

and Gearing Policy

Up to 50% of IGB REIT’s TAV at the time the borrowing is incurred or such higher amount with the

prior approval of unitholders or such other limit permitted by REIT Guidelines from time to time

Revaluation Policy At least once every 3 years based on an independent professional valuation pursuant to REIT

Guidelines or such other shorter interval as the Manager deems necessary

Manager Fee The Manager may elect to receive its fees in cash or units or a combination of cash and units (as it

may in its sole discretion determine). The Manager is entitled under the Deed to the following fees

(exclusive of goods and services tax, if any):

Base Fee: up to 1% per annum of IGB REIT’s TAV (excluding cash and bank balances which are

held in non-interest bearing account). [FY2017: RM15,366,000]

Performance Fee: 5% per annum of IGB REIT’s net property income in the relevant financial year.

[FY2017: RM18,678,000]

Acquisition Fee: 1% of the total purchase consideration of any Authorised Investments directly

or indirectly acquired by Trustee on behalf of IGB REIT

Divestment Fee: 0.5% of the total sale consideration of any Authorised Investments directly or

indirectly sold or divested by Trustee on behalf of IGB REIT.

Trustee Fee Up to 0.03% per annum of the net asset value of IGB REIT

Financial Year End 31 December

Minimum Investment 100 units per board lot

Salient Features

ANNUAL REPORT 20175

Property Portfolio

Properties MVM TGM

Land area of master title (sq ft) 1,047,532 421,773

Tenure Leasehold for 99 years expiring on 6 June 2103

Master title particulars PN 37075, Lot 80 Seksyen 95A, Bandar

Kuala Lumpur, Daerah Kuala Lumpur,

Wilayah Persekutuan Kuala Lumpur

PN 37073, Lot 79 Seksyen 95A, Bandar

Kuala Lumpur, Daerah Kuala Lumpur,

Wilayah Persekutuan Kuala Lumpur#

Encumbrances/material limitations in

master title Trust caveat lodged by the Trustee on

behalf of IGB REIT vide Presentation

No. 15448/2012 dated 14 September

2012

Trust caveat lodged by the Trustee on

behalf of IGB REIT vide Presentation

No. 16050/2012 dated 26 September

2012

Private caveat lodged by the

Trustee on behalf of IGB REIT vide

presentation No. 12690/2012 on 26

July 2012


behalf of IGB REIT vide presentation

No. 14472/2012 on 30 August 2012


behalf of IGB REIT vide presentation

No. 16049/2012 on 26 September

2012

Restrictions in interest in master title This land shall not be transferred, leased, secured or charged except with the consent

of the Federal Territory Land Executive Committee Secretariat

(Tanah ini tidak boleh dipindahmilik, dipajak, dicagar atau digadai melainkan dengan

kebenaran Jawatankuasa Kerja Tanah Wilayah Persekutuan Kuala Lumpur)*

Express conditions in master title This land shall be used for commercial

building only

( Tanah ini hendaklah hanya untuk

bangunan perdagangan sahaja)

This land shall be used for commercial

building for purpose of commercial

spaces, offices, hotels and service

apartments only

(Tanah ini hendaklah digunakan untuk

bangunan perdagangan bagi tujuan ruang

perniagaan, pejabat, hotel dan pangsapuri

servis sahaja)

Type Retail

Appraised Value as at

31 December 2017 (RM’000)

3,645,000 1,285,000

Purchase consideration (RM’000) 3,440,000 1,160,000

Net Lettable Area as at

31 December 2017 (sq ft)

1,833,302 837,159

Gross Floor Area as at

31 December 2017 (sq ft)

6,107,103 3,540,796

Number of tenancies as at

31 December 2017

541 228

Occupancy rate as at

31 December 2017 (%)

99.9 98.0

Number of car park bays as at

31 December 2017

6,092 4,128

# TGM is separately held under 3 issue documents of strata title.

* The expiry date of the State Authority’s consent for the transfer of MVM in favour of the Trustee is 28 September 2018. The transfer of

strata titles of TGM in favour of the Trustee was presented on 22 December 2017 to the land registry for registration of transfer.

6

Organisation and Reporting Structure

MANAGING

DIRECTOR

Dato’ Seri RobertTan Chung Meng

BOARD

OF DIRECTORS

(BOARD)

Risk

Management

and Sustainability

Committee

(RMSC)

Remuneration

Committee

(RC)

Nomination

Committee

(NC)

Head of

Operations/

Leasing

(MVM)

Rennie Lee

Chai Tin

Head of

Marketing

(MVM)

Ko Chai Huat

Joint Chief

Operating Officer

(MVM)

Daniel Yong Chen-I

Joint COO and

Head of Operations/

Leasing

(TGM)Elizabeth Tan Hui Ning

Chief Financial

Officer

Chai Lai Sim

Investment

Working Group

(IWG)

Head of

Compliance/

Company Secretary

Tina Chan Lai Yin

Audit

Committee

(AC)

Internal

Audit

(IA)

CHIEF

EXECUTIVE

OFFICER

Antony Patrick

Barragry

Head of

Marketing

(TGM)

Gabrielle Tan

Hui Chween

Head of

Marketing

(TGM)

Gabrielle Tan

Hui Chween

Head of

Investment

Chow Yeng Keet

ANNUAL REPORT 20177

Profile of Directors

TAN SRI DATO’ DR. LIN SEE YAN

(Malaysian, male, age 78)

Chairman, Independent Non-Executive Director

Board Appointment

: 27 April 2012

Board Committee(s)

: Chairperson of NC and RC, and a member of AC

Education and Experience

: Professor Tan Sri Dr. Lin is an independent strategic and financial consultant. Prior to 1998, he was Chairman/President and Chief Executive Officer of Pacific Bank Group and for 14 years previously, Deputy Governor of Bank Negara Malaysia (the Central Bank), having been a central banker for 34 years. He continues to serve the public interest, including Member, Competition Appeal Tribunal; as well as Member of a number of key Steering Committees at Ministry of Higher Education (including the Putrajaya Higher Education Task Force); Economic Advisor, Associated Chinese Chambers of Commerce and Industry of Malaysia; Member, Asian Shadow Financial Regulatory Committee; Board Director, Monash University Malaysia Sdn Bhd and Sunway University Sdn Bhd; a member of the Board of Governors of IGB International School and Governor, Asian Institute of Management, Manila.

Tan Sri Dr. Lin is Chairman Emeritus of Harvard University’s Graduate School Alumni Association Council in Cambridge (USA) as well as President, Harvard Club of Malaysia. He is Pro-Chancellor & Research Professor, Sunway University; Pro-Chancellor, Universiti Teknologi Malaysia; Professor of Economics (Adjunct), Universiti Utara Malaysia; and Trustee of the Tun Ismail Ali Foundation PNB, Harvard Club of Malaysia Foundation, Prime Minister’s Exchange Fellowship Malaysia, Malaysian Economic Association Foundation and Jeffrey Cheah Foundation.

Professionally qualified in the United Kingdom as a Chartered Statistician, Tan Sri Dr. Lin is also banker, economist and venture entrepreneur, having received three post-graduate degrees from Harvard University (including a PhD in Economics) where he was a Mason Fellow and Ford Scholar. He is a British Chartered Scientist. He is an Eisenhower Fellow and a Fellow of the International Monetary Fund (IMF) Institute (Washington DC), Royal Statistical Society (London), Asian Institute of Chartered Bankers, Malaysian Insurance Institute (Hon.), Malaysian Institute of Management and Malaysian Economic Association. He is also a Distinguished Fellow of Institute of Strategic and International Studies in Malaysia.

Tan Sri Dr. Lin sits on the Board of several public companies, as well as several business enterprises in Malaysia, Singapore and Indonesia engaged in chemicals & logistics, hospitality, health, oil & gas, construction & property development, software and private equity.

Public Company Directorship(s)

: Ancom Berhad

Genting Berhad

Sunway Berhad

Wah Seong Corporation Berhad (WSCB)

DATO’ SERI ROBERT TAN CHUNG MENG


Managing Director, Non-Independent Executive Director

Board Appointment

: 21 March 2012

Board Committee(s)

: A member of RC


: Dato’ Seri Robert Tan has vast experience in property development, hotel construction, retail design and development as well as corporate management with more than 30 years’ experience in the property and hotel industries. After studying Business Administration in the United Kingdom, he was attached to a Chartered Surveyor’s firm for a year. He had developed a housing project in Central London before returning to Malaysia. His stint in the property industry began with IGB Corporation Berhad (IGB) in 1995 when he was Joint Managing Director and subsequently appointed the Group Managing Director in 2001, a position he currently holds today.

Dato’ Seri Robert Tan was involved in various development projects carried out by IGB, in particular Mid Valley City. From inception to the realisation of Mid Valley Megamall (MVM) and The Gardens Mall (TGM), he was actively involved in every stage of their developments. He is instrumental to the development and success of MVM and TGM, and more importantly, in retaining their positions as prime shopping hotspots in the Klang Valley.


: IGB

Goldis Berhad (Goldis)

Tan & Tan Developments Berhad (Tan & Tan)

WSCB

Yayasan Tan Kim Yeow

8

Profile of Directors(continued)

HALIM BIN HAJI DIN



Board Appointment

: 27 April 2012

Board Committee(s)

: Chairperson of AC, and a member of RC and NC


: Halim bin Haji Din is a Chartered Accountant who spent more than 30 years working for multinational corporations and international consulting firms.

He accumulated 18 years of experience working in the oil and gas industry - 6 years of which as a Board member of Caltex/Chevron, responsible for financial management before engaging in the consulting business. Prior to his appointment as a Board member of Caltex Malaysia, he served as Regional Financial Advisor for Caltex Petroleum Corporation Dallas, Texas, overseeing investment viability of the corporation’s Asian subsidiaries.

He also had an extensive experience in corporate recovery when he worked for Ernst & Whinney, London, United Kingdom in mid-1980’s. He was appointed as Managing Partner of the consulting division of Ernst & Young Malaysia from 1995. He later became the Country Advisor of Cap Gemini Ernst & Young Consulting Malaysia when Cap Gemini of France merged with Ernst & Young Consulting. In 2003, he with two partners took over the consulting business of Cap Gemini Ernst & Young Malaysia through a management buyout and rebranded it as Innovation Associates, currently known as IA Group, where he is currently the Chairman of the Group.

He was a Council Member of the Malaysian Institute of Certified Public Accountants from 1994 to 2003. He was a Board member of the Employees Provident Fund (EPF) from April 2009 to May 2013.


: BNP Paribas Malaysia Berhad

WSCB

LE CHING TAI @ LEE CHEN CHONG



Board Appointment

: 27 April 2012

Board Committee(s)

: A member of AC, RC and NC


: Lee Chen Chong is a Fellow of the Chartered Institute of Bankers (FCIB), London.

He spent a total of 34 years in commercial and international banking with local as well as banks overseas. He commenced his banking career with Malayan Banking Berhad in 1962 and was later the General Manager of the bank’s London branch from 1972 to 1985. From 1985 to 1993, he was Executive Director of Malaysian French Bank Berhad (now known as Alliance Bank Berhad) and subsequently appointed the Managing Director until he relinquished the post at the end of 1993. The next four years saw him spend time overseas as President and a Director of international banks in the Czech Republic, Hungary and Malta Island.

He was associated with Multi-Purpose Holdings Berhad (now known as Magnum Berhad) Group from 1989 until his retirement as Executive Director in end 2000. He was also Executive Director of Ipmuda Berhad from December 2001 until retiring in January 2008.

ANNUAL REPORT 20179


TAN BOON LEE



Board Appointment

: 27 April 2012


: Tan Boon Lee holds a Bachelor of Economics from Monash University, Australia and a Master in Business Administration from Cranfield School of Management, United Kingdom.

He is Chief Executive Officer of Tan & Tan, the property arm of IGB. He has 30 years’ experience in the property and hotel industries, providing management and technical assistance to hotel and hospitality projects in Malaysia and Asia. In the 1990’s, he spearheaded IGB Group’s growth into emerging economies of Myanmar and Cambodia via the group’s hotel division. He was President of Malaysian Association of Hotel Owners (MAHO) from 2002 to 2004.


: IGBGoldisTan & TanSW Homeowners BerhadDato’ Tan Chin Nam Foundation

DANIEL YONG CHEN-I



Board Appointment

: 27 April 2012

Board Committee(s)

: A member of RMSC


: Daniel Yong Chen-I is a law graduate from University of Bristol, England.

He is presently Joint Chief Operating Officer (MVM). He joined Mid Valley City Sdn Bhd (MVC) in 1999 as a member of the pre-opening retail development team. He was appointed Executive Director of MVC in 2003 and has been responsible for overseeing the management and operation of MVM since. He was also involved in the design and pre-opening of TGM from 2004 to 2007. His prior work experience includes the development of bespoke systems with BYG Systems Ltd in England and Operational Management with Wah Seong Engineering Sdn Bhd, the distributor and manufacturer for Toshiba Elevator and Escalators in Malaysia.


: IGB

Goldis

ELIZABETH TAN HUI NING

(Malaysian, female, age 34)


Board Appointment

: 27 April 2012

Board Committee(s)

: A member of RMSC


: Elizabeth Tan Hui Ning graduated with First Class Honours from Cardiff University, Wales, United Kingdom with a degree in Business Administration (BSc) in June 2004.

She is presently Joint Chief Operating Officer and Head of Operations/Leasing (TGM). She joined Mid Valley City Gardens Sdn Bhd in August 2004, and appointed Executive Director in January 2011, and has been responsible for the conceptualisation and strategy of the tenant mix of TGM as well as overseeing the leasing, retail development and customer service departments.

10


TAN LEI CHENG

(Malaysian, female, age 60)


Board Appointment

: 27 April 2012

Board Committee(s)

: A member of AC and NC


: Tan Lei Cheng holds a Bachelor of Commerce from University of Melbourne, Australia and a Bachelor of Law from King’s College, London (LLB Hons), England. She was admitted to the English Bar in 1983. She is a member of the Lincoln’s Inn and the World Presidents’ Organisation, Malaysia Chapter.

She has more than 30 years’ experience in the property industry and corporate sector. She was Chief Executive Officer of Tan & Tan from March 1995, a property development company that was listed on Bursa Malaysia until Goldis took over its listing on 8 May 2002. Following the completion of the merger between IGB, Tan & Tan and Goldis, she then assumed Executive Chairman and Chief Executive Officer until she retired from Goldis on 31 December 2016 but remains as Non-Executive Chairman of Goldis.


: IGBGoldisTan & TanDato Tan Chin Nam Foundation

TAN YEE SENG



Board Appointment

: 27 April 2012


: Tan Yee Seng holds a professional Diploma of Architecture (Royal Institute of British Architects) from University of East London, United Kingdom.

He is presently Senior General Manager of IGB, heading the property development division. His prior work experience includes being part of the pre-opening team member of G Tower, an integrated offices and hotel building owned by Goldis, where he oversaw the coordination of base building, fit out and operations. He was also involved in the aesthetic realisation of TGM while working at Ensignia Construction Sdn Bhd (the construction arm of IGB) where he was a design architect. There he used his training to create and fine tune the facades and key elements of TGM and MVM. He has also been a design architect at Eric Kuhne Associates in London where he worked on several large mixed-use proposals.


: IGB (Alternate Director to Tan Boon Seng)

Tan & Tan

Note:

None of the Directors have:

(i) any family relationships with any Director of the Manager, and/or major unitholders of IGB REIT save for Dato’ Seri Robert Tan Chung

Meng, Tan Boon Lee, Daniel Yong Chen-I, Elizabeth Tan Hui Ning, Tan Lei Cheng and Tan Yee Seng;

(ii) any conflicts of interest with the Manager or IGB REIT other than the significant related party transactions as disclosed in Notes to the Financial Statements of this Annual Report; and

(iii) any conviction of offences within the past 5 years nor any sanction and/or penalty imposed by the relevant regulatory bodies during

FY2017.

ANNUAL REPORT 201711

ANTONY PATRICK BARRAGRY

(British/Permanent Resident of Malaysia, male, age 66)

Chief Executive Officer

Appointment : 1 September 2012


: Antony Barragry holds a Diploma in Architecture from the University of Sheffield and a member of the International Council of Shopping Centres and The International Real-Estate Federation (FIABCI).

He is a qualified architect with more than 40 years of international experience in the design, development and operations of mixed-use developments. His prior work experience includes Jebel Ali Hotel development in Dubai, Putra World Trade Centre in Kuala Lumpur and Kempinski Ciragan Palace Hotel in Istanbul. His career with IGB Group commenced with Renaissance Kuala Lumpur Hotel in 1993; then, as Project Director for phase 1 of Mid Valley City, including MVM; and subsequent, appointed Executive Director of MVC in 2002, where he spearheaded the development of more than 6 million square feet of commercial space in Mid Valley City’s phase 2 (TGM and Gardens Hotel & Residences), phase 3 (Mid Valley City Southpoint, which is currently under construction) and phase 4 (Northpoint). He was also Project Director for the design and construction of St Giles Hotel-Heathrow, London, and Pangkor Island Beach Resort upgrade in 2004 (which is presently undergoing redevelopment work and will be converted into luxury villas). He was Chief Executive Officer of MVCG from January 2008 until he relinquished the post in September 2012.

DANIEL YONG CHEN-I

Joint Chief Operating Officer (MVM)

Please refer to description under the heading Profile of Directors in this Annual Report.

ELIZABETH TAN HUI NING

Joint Chief Operating Officer and Head of Operations/Leasing (TGM)

Please refer to description under the heading Profile of Directors in this Annual Report.

CHAI LAI SIM

Chief Financial Officer



: Chai Lai Sim is a member of the Malaysian Institute of Accountants (MIA) and Malaysian Institute of Certified Public Accountants (MICPA).

She has over 30 years of experience in audit, corporate finance, capital management strategy including treasury, financial accounting and taxation in property development, commercial and retail property investment and hospitality industries. She began her career as an articled student with Coopers & Lybrand (now known as PriceWaterhouseCoopers) before joining Tan & Tan as Group Financial Controller in 1993. Following the completion of the merger between Tan & Tan and IGB in 2002, she was appointed Senior Group General Manager of Group Finance and subsequently assumed the present role of Group Chief Financial Officer of IGB.

CHOW YENG KEET

Head of Investment



: Chow Yeng Keet holds a Bachelor of Economics (First Class Honours) from University of Malaya and a Fellow of the Association of Chartered Certified Accountants.

He is presently Senior General Manager, Corporate Finance of IGB and Director of Finance of MVC. He has 6 years of experience in corporate finance and advisory covering mergers and acquisitions, equity and debt fund raising, capital management and restructuring, valuations as well as take-over offers. He started his career as Corporate Finance Executive with the then Sime Merchant Bankers Berhad in 1997. Thereafter, he was with Commerce International Merchant Bankers Berhad (now known as CIMB Investment Bank Berhad) for 5 years where his last position was Corporate Finance Manager prior to joining IGB in 2004.

Profile of Executive Team

12

Profile of Executive Team(continued)

TINA CHAN LAI YIN

Head of Compliance/Company Secretary



: Tina Chan is a Fellow of the Institute of Chartered Secretaries and Administrators.

She has a broad knowledge and skill-base in corporate secretarial work, having dealt with a wide range of corporate exercises in the course of her 26 years working experience. She is also presently Senior General Manager (Company Secretariat) of IGB Group, a position which she has held since 1997. She heads the division and oversees the governance processes and company secretarial matters of the group, particularly with regard to ensuring compliance with procedures and applicable statutes and regulations including key areas relating to governance and compliance structures which are implemented throughout the group. Prior to joining IGB, she was company secretary of a legal firm, and was later attached to Tan & Tan, her last position there being joint company secretary where she had been significantly involved in the floatation of Tan & Tan in 1993 (the listing status of which was assumed by Goldis following the completion of the merger between Tan & Tan and IGB in 2002).

RENNIE LEE CHAI TIN

Head of Operations/Leasing (MVM)



: Rennie Lee joined MVC in 1995. She has more than 26 years of work experience in leasing and operations within the retail industry. She is credited with being part of the founding team in the marketing of Mid Valley City. Her previous work experience includes leasing and marketing of Mahkota Parade in Malacca, Subang Parade and IOI Shopping centres in Kuala Lumpur. She was a key member of MVM pre-opening team. She is also General Manager of MVC.

KO CHAI HUAT

Head of Marketing (MVM)


Education and

Experience

: Ko Chai Huat joined MVC in 1999. He has 29 years of work experience in visual merchandising as well as

advertising and promotions. He was formerly Visual Merchandising Manager at Atria Shopping Centre in

Petaling Jaya. He directs, conceptualise and leads all design set ups for promotional activities and events in

MVM. He was a key member of MVM pre-opening team. He holds a Diploma in Fine Arts. He is also Director of

Design of MVC.

GABRIELLE TAN HUI CHWEEN

Head of Marketing (TGM)



: Gabrielle Tan holds a Bachelor of Arts in Business Economics from the University of Exeter, United Kingdom and a Bachelor of Fine Arts in fashion design and marketing from American Intercontinental University, London, United Kingdom.

She joined MVCG as Head of Marketing in 2008 and subsequently assumed the role of Director of Marketing. She oversees the advertising and promotions activities as well as the public relations initiatives at TGM.

Note:

None of the Officers have:

(i) any family relationships with any Director of the Manager and/or major unitholder of IGB REIT save for Daniel Yong Chen-I, Elizabeth

Tan Hui Ning and Gabrielle Tan Hui Chween;

(ii) any conflicts of interest with the Manager or IGB REIT other than the significant related party transactions as disclosed in Notes to the Financial Statements of this Annual Report; and

(iii) any conviction of offences within the past 5 years nor any sanction and/or penalty imposed by the relevant regulatory bodies during

FY2017.


Financial Highlights

Group Fund

Statement of Comprehensive Income FYE 2017 FYE 2016 FYE 2015 FYE 2014 FYE 2013

Gross Revenue (RM’000) 524,918 507,344 489,190 461,768 430,726

Net Property Income (NPI) (RM’000) 373,563 361,109 342,788 312,641 285,727

Distributable Income (RM’000) 342,801 316,306 290,980 268,795 241,110

Earnings per Unit (EPU) (realised) (sen) 8.64 7.96 7.33 6.76 6.06

Core EPU (sen) 9.78 7.96 7.33 9.23 9.13

Distribution per Unit (DPU) (sen) 9.28 8.71 8.19 7.79 7.04

Annualised DPU (sen) 9.28 8.71 8.19 7.79 7.04

Annualised Distribution Yield (%) 5.16 5.41 6.11 5.95 5.92

Management expenses ratio (%) 0.94 0.93 0.91 0.87 0.83

Group Fund

Gross Revenue

FYE 2017

RM’000

FYE 2016

RM’000

FYE 2015

RM’000

FYE 2014

RM’000

FYE 2013

RM’000

MVM 366,447 354,677 340,045 318,993 300,013

TGM 158,471 152,667 149,145 142,775 130,713

Total 524,918 507,344 489,190 461,768 430,726

Group Fund

NPI

FYE 2017

RM’000

FYE 2016

RM’000

FYE 2015

RM’000

FYE 2014

RM’000

FYE 2013

RM’000

MVM 277,875 266,263 250,384 224,154 211,918

TGM 95,688 94,846 92,404 88,487 73,809

Total 373,563 361,109 342,788 312,641 285,727

Group Fund

Statement of Financial Position

As at

31.12.2017

As at

31.12.2016

As at

31.12.2015

As at

31.12.2014

As at

31.12.2013

Investment Properties (RM’000) 4,930,000 4,890,000 4,890,000 4,890,000 4,805,000

Total Asset Value (RM’000) 5,250,728 5,194,257 5,170,007 5,156,780 5,059,489

Total Liabilities (RM’000) 1,527,429 1,522,274 1,504,498 1,493,322 1,475,149

Net Asset Value (NAV) (RM’000) 3,723,299 3,671,983 3,665,509 3,663,458 3,584,340

NAV per Unit (RM) 1.0597 1.0511 1.0558 1.0627 1.0473

14

NAV PER UNIT PERFORMANCE FOR IGB REIT (RM)

UNIT PRICE PERFORMANCE FOR IGB REIT

Month End Closing Price for 2017 (RM)

Trading performance for IGB REIT FYE 2017 FYE 2016 FYE 2015 FYE 2014 FYE 2013

Closing price as at 31 December (RM) 1.80 1.61 1.34 1.31 1.19

Highest traded price (RM) 1.80 1.74 1.38 1.35 1.45

Lowest traded price (RM) 1.55 1.31 1.24 1.12 1.13

Issued units (‘000) 3,513,452 3,493,474 3,471,789 3,447,328 3,422,620

Market capitalisation as at 31 December (RM’000) 6,324,214 5,624,493 4,652,197 4,515,999 4,072,918

Notes:

1. FYE Financial year ended 31 December

2. The Group results presented in the current year include a subsidiary which was incorporated in FY2017

Financial Highlights(continued)

2013

1.0650

1.0600

1.0473

1.0627

1.0558

1.0511

1.0597

1.0550

1.0500

1.0450

1.0400

1.0350

2014 2015 2016 2017

1.45

1.50

1.55

1.60

1.65

1.70

1.75 1.75

1.66

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

1.70 1.69

1.76

1.72 1.72

1.75

1.65

1.59

1.80

1.69

1.80

1.85


Management Discussion and Analysis

Overview

IGB REIT is a Malaysia-domiciled real estate investment trust established on 25 July 2012 and listed on the Main Market of Bursa

Malaysia Securities Berhad on 21 September 2012. Two malls sit within its portfolio today – Mid Valley Megamall (MVM) and The

Gardens Mall (TGM).

When MVM first opened its doors to the public in 1999, it brought to Malaysia a new retail concept – the “Megamall”, which has since

proven to be a model that appeals to Malaysians and visitors to our country. A large part of the continued success of both MVM and

TGM has been the team’s commitment to bringing together the best in retail, lifestyle, and food & beverage (F&B) offerings. This

has been done through constantly seeking ways to stay ahead of retail trends and bringing to shoppers fresh and exciting lifestyle

offerings. Each mall has a distinct identity and through the years, has cultivated a unique position that both excites their shoppers,

and attracts contemporary brands that appeal to the community. We believe that these attributes have allowed IGB REIT to continue

to be successful and grow from strength to strength, in both good times and bad.

A testament to the success of the “Megamall” concept and approach taken by the malls is the fact that both MVM and TGM have firmly

established themselves as a key retail destination in the Klang Valley, and continue to attract visitors both near and far.

Investment Policy, Objectives, and Strategies

IGB REIT seeks to own and invest in a portfolio of quality, income producing real estate used primarily for retail purposes. Its primary

objective is to provide unitholders with regular and stable distributions, a sustainable long term unit price, and growth in distributable

income and capital, while maintaining an appropriate capital structure.

IGB REIT is externally managed and administered by IGB REIT Management Sdn Bhd, the Manager of IGB REIT, who works to

increase income and enhance asset value over time with the objective of maximising returns from investments, and consequently

the distributions to unitholders. The Manager does this through active asset management, acquisition growth, and capital and risk

management.

Capturing Opportunities for Intrinsic Growth

The start of 2017 was dominated by a largely cautious sentiment as the world came to terms with Donald Trump’s election win, a

seemingly increasing protectionist stance by the United States of America, a ringgit that ended the year as the region’s worst

performing currency, and a year ahead which saw several notable risks including elections in Europe, and a slowdown in China’s

growth. The Malaysian economy surprised observers however, enjoying a rebound in growth that exceeded market expectations,

driven by strong domestic demand and strengthening global trade.

The general performance of the traditional retail industry however was a little muted as growth enjoyed by the Malaysian economy

was slow to translate into higher pay and improved consumer sentiment. Malaysians continued to be impacted by rising living costs,

particularly in transportation, food, and fuel, and as such, remained cautious in their monthly spending. Additionally, 2017 saw a

marked increase in the popularity of online shopping, with e-commerce conglomerates such as Alibaba garnering support across the

digital sphere to push through sales periods such as Single’s Day, 11.11, 12.12 and Black Friday.

IGB REIT entered this year cautiously, wary of the challenges ahead, and determined to bring to market fresh and exciting

offerings, while improving the customer experience at both malls. We continued to stay true to our commitment to bringing to our

communities unparalleled retail and lifestyle experiences, refreshing our tenant mix and carrying out asset enhancement initiatives

(AEI) at both MVM and TGM. These efforts have helped to maximise the sales of tenants and generate growth through improved rental

income.

Our teams have also kept an ear to the ground to ensure that we continued to be quick to adapt to new and emerging trends. An

example of this was our response to the realisation that an increasing number of people were choosing to take Uber or Grab to our

malls. In response to this, in addition to the existing taxi stands available, we set up Uber and Grab stands for the convenience of our

customers. We estimate that on average, approximately 3,000 Uber and Grab drop offs and pickups were made each day this year.

As such, despite the challenges faced in the operating environment, we are proud to share that IGB REIT continued to perform well in

2017.

16

Continued Performance amidst a Challenging Environment

(a) Group Key Financial Highlights

Table 1: Summary of Group Key Financials

Group Key Financial Highlights

FY2017

RM’000

FY2016

RM’000

Change

(%)

Gross Revenue 524,918 507,344 3.46

MVM 366,447 354,677 3.32

TGM 158,471 152,667 3.80

Net Property Income (NPI) 373,563 361,109 3.45

MVM 277,875 266,263 4.36

TGM 95,688 94,846 0.89

Net Profit (NP) 343,366 277,836 23.59

Distribution per Unit (sen) 9.28 8.71 6.54

For FY2017, IGB REIT delivered steady growth driven mainly by higher rental income. We posted a gross revenue of RM524.9

million and a NPI of RM373.6 million for the year, both of which were 3.5% higher than that recorded in FY2016.

FY2017 NP was RM343.4 million, representing a 23.6% increase compared with that recorded in FY2016. This was mainly due to

higher rental income and the recognition of RM40.0 million fair value gain on investment properties in the year.

(b) Group Statement of Financial Position

Table 2: Group Statement of Financial Position

Group Statement of Financial Position

As at

31.12.2017

As at

31.12.2016

Change

(%)

Investment Properties (RM’000) 4,930,000 4,890,000 0.82

MVM (RM’000) 3,645,000 3,610,000 0.97

TGM (RM’000) 1,285,000 1,280,000 0.39

Total Asset Value (RM’000) 5,250,728 5,194,257 1.09

Cash and Bank Balances (RM’000) 285,208 274,395 3.94

Total Liabilities (RM’000) 1,527,429 1,522,274 0.34

Net Asset Value (NAV) (RM’000) 3,723,299 3,671,983 1.40

NAV per Unit (RM) 1.0597 1.0511 0.82

Fund Size (’000 units) 3,513,452 3,493,474 0.57

Investment properties are stated at fair value based on valuations performed by independent professional valuer - One Asia

Property Consultants (KL) Sdn Bhd. The company holds relevant professional qualifications and has relevant experience in valuing

the investment properties. Based on the valuation reports dated 8 January 2018, the market values of MVM and TGM as at 31

December 2017 were RM3.645 billion and RM1.285 billion respectively, indicating a fair value gain of RM35.0 million and RM5.0

million respectively.

As at 31 December 2017, NAV after income distribution was RM3.723 billion, compared with RM3.672 billion the year before,

reflecting a growth of 1.4%.

Notably this year, IGB REIT’s fund size increased from 3,493.474 million units as at 31 December 2016 to 3,513.452 million units as

at 31 December 2017, as a result of the issuance of new units as payment for Manager fees.

Management Discussion and Analysis(continued)


(c) Income Distribution

Distribution of income should only be made from realised gains or realised income in accordance with the Securities Commission Malaysia’s Guidelines on Real Estate Investment Trusts (REIT Guidelines).

Table 3: Income Distribution

FY2017 FY2016

Income Distribution (RM’million) 325.8 304.2

First Half (RM’million) 153.7 153.8

Second Half (RM’million) 172.1 150.4

Payout ratio (%) 95.0 96.2

For the first half ended 30 June 2017, the Manager paid an income distribution amounting to RM153.7 million or 4.38 sen per unit (4.30 sen taxable and 0.08 sen non-taxable). This was paid on 30 August 2017.

For the second half ended 31 December 2017, an income distribution of RM172.1 million or 4.90 sen per unit (4.79 sen taxable and 0.11 sen non-taxable). This is payable on 28 February 2018.

Distribution for FY2017 amounted to 9.28 sen per unit, up from 8.71 sen per unit in FY2016.

The Manager has proposed that at least 90% of IGB REIT’s distributable income will be paid semi-annually for FY2018 subject to IGB REIT’s financial position, earnings, funding and capital management requirements. This is in line with the Manager’s objective of providing investors with regular and stable income distribution.

Reimagining the Retail Experience

(a) MVM

MVM performed well this year despite the retail industry being impacted by an increase in the popularity of online shopping and e-commerce, and a generally weak consumer sentiment driven by rising living costs and weaker job prospects.

Against this backdrop, we focused on supporting our tenants by providing advertising and promotion (A&P) support to help drive footfall and overall consumer spend. We also worked to secure new tenants who, in addition to having a brick and mortar presence, have a strong online presence. This allowed us to bring in a new dimension to the overall retail experience. Shoppers for example, can browse tenant websites to view the latest products on offer as well as check availability and make online purchases. These items can then be picked up at a location of their choosing. With a system that integrates online and in-store purchases, tenants are better able to customise offers and discounts based on individual shopping patterns, thus encouraging additional spend. AEIs were also carried out in the year to rejuvenate the mall and elevate the overall shopping experience.

This year, new tenants welcomed to MVM included Smiggle, Pho Vietz, Thai Hou Sek, Greyhound Café, King of Trainers, Innisfree, The Hour Glass, Chuck Two Sons Bistro, Morganfield’s, Yubiso, Thunder Match Mega Store, London Weight Management, and The Rift, amongst others. The overall sales performance of these new tenants in the year have been encouraging and have contributed to an increase in overall footfall.

Our Marketing team also worked closely with our tenants to organise fun and creative workshops for both children and adults. The workshops were targeted at families in the mall, and sought to build closer relationships with our customers as well as to enrich their experience at MVM. Arts and crafts as well as festive workshops, are just some examples of the sessions held in the year. We also ran gift redemption programmes and collaborated with various non-governmental organisations such as WWF-Malaysia and the Malaysian Nature Society, on environmental protection and awareness programmes. Safety talks by Polis Diraja Malaysia were also held. These activities all sought to keep the customer experience at MVM fresh and exciting.

We also continued to enhance the mall through carrying out AEIs. This year, these included a refurbishment of our escalators as well as an upgrade of our toilets. Toilets on the East side of the mall on the ground, first and second floors were upgraded, while toilets located at the North and South side of the third floor were upgraded. Works to upgrade our car parks were also carried out.

(b) TGM

TGM also posted strong results. These were supported by our continued commitment to excite and remain relevant to our customers through offering an evolving tenant mix and ambience that seeks to enhance their experience with us.

An example of how we have kept our offerings fresh is Les Suites at TGM, a premium area in the mall housing a collection of tenants who together, offer a one-stop destination for customers looking to plan a wedding. Since opening its doors last year, Les Suites at TGM has garnered a strong following of loyal customers, and has helped drive footfall to the 6th floor. This year, we continued to welcome new tenants to the mall, including Kakigori, Tory Burch, Putien, Kare, Crumpler, and Dyson, whose store at TGM marked the first for the brand in Malaysia.


18

Underlying the team’s efforts to improve the mall was a push to enhance community engagement through working to build

stronger relationships with our tenants and customers. The team at TGM worked to actively engage them in various campaigns

carried out in the year. Shoppers, for example, could take part in our Corporate Social Responsibility (CSR) activities by donating

food and household items to families in homes and organisations supported by the mall.

We also worked to support our tenants, particularly those on the upper floors, by providing them with an opportunity to improve

their brand awareness through facilitating pop-up stores on the ground floor of the mall. Pop-up structures were provided by

TGM every quarter to 3 tenants who could set up a store for 2 weeks.

Through the year, we also continued to carry out AEIs. Our premier toilets on the ground floor for example, were newly

refurbished in the year, while works to reconfigure the façade of our west entrance were also undertaken to provide a more

contemporary and welcoming feel. Efforts to upgrade the car parks were also carried out.

Proactive Approach to Risk Management Key to Growth Strategy

A proactive approach to risk management sits at the heart of our long term growth strategy. We have in place a robust risk

management framework underpinned by a rigorous internal control system and an independent review and audit process. Our

framework allows the Manager to manage risks in an integrated, systematic, and consistent manner, and supports a culture where

employees adopt the values, knowledge, and attitude that support sustainable growth.

We remain committed to upholding the highest standards of corporate governance and risk management and expect our employees

to demand these standards both in our internal and external interactions.

(a) Interest Rate Risk

The Group’s income and cash flows are not affected by changes in market interest rates as our borrowings are made up of fixed

interest rate facilities which lock in the interest rate against fluctuations.

As such, we do not have any significant exposure to interest rate risks.

(b) Credit Risk

Credit risk arises from credit exposures to outstanding receivables from the tenants, as well as cash, cash equivalents, and

deposits with banks and financial institutions.

To mitigate our exposure to outstanding receivables from tenants, we adopt a strict tenant selection process so as to ensure

that we only engage with tenants/business associates who are of high creditworthiness. We also monitor trade receivables on

an ongoing basis to ensure compliance with standard operating and reporting procedures, and collect security deposits from

tenants which act as collateral. Other than our anchor tenants, namely AEON Big, AEON, Metrojaya, Isetan, Robinsons and GSC

Signature, which contribute 8.8% (2016: 8.9%) of our rental income, the Group does not have any significant exposure to any

individual or group of tenants or counterparties, and does not have any major concentration of credit risk in relation to any

financial instruments.

Additionally, credit risk with respect to trade receivables is also limited as a result of the nature of business, as it is primarily

rental related and cash-based. Historically, our experience in the collection of trade receivables has fallen within the recorded

allowances.

In view of the above, no additional credit risk beyond amounts allowed for collection losses is inherent in IGB REIT’s trade

receivables.

With regards to cash, cash equivalent and deposits held with banks and other financial institutions, the Group only engages

licensed financial institutions with high credit ratings assigned by credit rating agencies. As such, the risk of any material loss

resulting from non-performance by a financial counterpart is unlikely.

(c) Liquidity and Cash Flow Risk

The Manager closely monitors the rolling forecasts of liquidity requirements to ensure that there is sufficient cash to meet

its operational needs, including to distribute income to unitholders and mitigate the effects of fluctuations in cash flows.

Additionally, the Manager ensures that sufficient headroom is maintained on committed borrowing facilities, abiding by the REIT

Guidelines with regards to limits on total borrowings of the investment trust.

Cash and bank balances for the Group are expected to assist in liquidity and cash flow risk management.



(d) Capital Management

Capital is the unitholders’ capital and borrowings.

The overall capital management objectives are to safeguard our ability to continue as a going concern so that we are able to provide returns for unitholders and other stakeholders, as well as maintain an efficient capital structure.

The Manager’s on-going capital management strategy involves maintaining an appropriate gearing level and adopting an active interest rate management strategy to manage the risks associated with refinancing and changes in interest rates. The Manager intends to implement this strategy by (i) diversifying sources of debt funding to the extent appropriate, (ii) maintaining a reasonable level of debt service capability, (iii) securing favourable terms of funding, (iv) managing our financial obligations and (v) where appropriate, managing the exposures arising from adverse market interest rates, such as through fixed rate borrowings, to improve the efficiency of the cost of capital.

The gearing profile for the Group is as follows:

Table 4: The Group’s Gearing Profile

31.12.2017 31.12.2016

RM million RM million

Borrowings 1,214 1,237

Cash and Bank Balances (285) (274)

Net Gearing 929 963

Total unitholders’ fund 3,723 3,672

Net Gearing (%) 25% 26%

Loan-to-value (LTV) (%) 23% 24%

In FY2017, net gearing was 25%, down 1% compared with FY2016. LTV was 23% for the year, which is below the limit (50% of total asset value) allowed by the REIT Guidelines.

(e) Business/Market Risk

Malaysia’s economic performance surprised on the upside in 2017, with economic growth exceeding analyst forecasts. This performance did not immediately translate into higher consumer spending however, as salaries were slow to reflect the country’s performance, and Malaysians continued to be impacted by rising costs of living. Consumer spending therefore remained cautious.

Against this backdrop, we continued to focus on offering fresh and exciting retail experiences, and embarked on various AEIs. We also continued to work closely with our tenants and rolled out promotional campaigns to help drive footfall. Additionally, we worked to improve our relationships with our customers, engaging them in more activities, including CSR initiatives.

As a result of our efforts, both MVM and TGM have reported positive growth in revenue (3.32% and 3.80% growth respectively when compared to 2016).

(f) Regulatory and Compliance Risk

IGB REIT is subject to Malaysia’s local laws and regulations which include those relating to employment, data privacy, and anti-corruption, amongst others. We have in place a framework which not only allows us to proactively identify any new laws or regulatory obligations that apply to us, but ensures that all business units comply with them in their day-to-day operations. Our teams work hard to ensure that we remain compliant with all applicable laws and regulations and are prepared to manage any changes which may impact our business. For example, following the hike in electricity tariffs, we continued with the installation of LED lighting throughout our malls. This year, TGM converted the common area cove and downlights, as well as the back of house lights to LED.

(g) Tenant Concentration Risk

We recognise the benefits that come with housing good anchor tenants as well as the risk that in doing so, we become too dependent on a few large tenants in terms of both revenue and net lettable area (NLA).

Since opening our doors to the public, we have had the opportunity to welcome and work with several good anchor tenants, all of whom have contributed to the vitality of both MVM and TGM, and who continue to help drive footfall. To mitigate IGB REIT’s exposure to tenant concentration risks, we employ proactive leasing strategies, actively engaging tenants for forward renewals, and spreading out the portfolio lease expiry profile. We also closely monitor the performance of all anchor tenants and work to support them where appropriate. Moreover, we continually assess our tenant mix and bring in fresh new brands, further diversifying our tenant base.


20

(h) Human Capital Risk

As an externally managed REIT, IGB REIT does not have any employees. The service providers engaged by the Property Manager,

Chartwell ITAC International Sdn Bhd are responsible for attracting, retaining, and developing the people who are central to our

success.

The service providers work very hard to ensure that they not only attract the right talent, but retain them. They seek to mitigate

human capital risk by maintaining a robust human resource policy which ensures fair and reasonable remuneration in line with

industry standards, as well as access to personal development and training opportunities that support staff development and

progression. The service providers believe that it is only through investing in people that they can help us realise our potential as

a business and contributor to our communities.

While the service providers remain committed to attracting and retaining talent with the right skills to support our business, they

are also exploring the possibility of outsourcing select job functions and automating processes where it makes sense. This will

allow them to address the risks posed by staffing shortages and the challenges of attracting and retaining the right talent.

Longevity in business depends very much on having continuity of leadership so that new leaders are developed who are able

to take over the roles of existing leaders should the need arise. As such, succession planning is something that is taken very

seriously, with next generation leaders identified and offered the appropriate training, exposure, and mentorship, so that they are

prepared for advancements into ever more challenging roles.

(i) Terrorist Threats

With the global incidence of terrorist attacks on the rise, the risk of an attack in Malaysia is something that needs to be

considered and planned for, as the impact of any attack will be catastrophic.

To address this risk, both MVM and TGM continue to work closely with the local authorities to keep up to date with any suspected

threats, and have worked to heighten security measures to manage this risk. We continued to update our security procedures,

revising the contingency plans we have in place where required. Annual training for our Police Bantuan and in-house guards also

continued in the year.

Unlocking Value to Propel Sustained Growth

Analysts have forecast an improvement in consumer sentiment for 2018 on the back of better than expected growth in the Malaysian

economy this year. This momentum is expected to carry into 2018. Additionally, the impact of Budget 2018, specifically personal

income tax cuts, various cash handouts, and an overall increase in civil servant emoluments, is expected to go some way towards

providing the impetus needed for a recovery in consumer sentiment. Having said that, we expect global economic uncertainties, an

upcoming General Election, and ringgit volatility to also weigh in on overall economic performance and consumer sentiment. Given

these uncertainties, we remain cautious going into 2018 and expect another challenging year ahead.

An area that we continue to keep a watchful eye on is the way in which e-commerce is changing consumer spending habits. Although

online shopping has gained popularity around the world, we believe that in Malaysia, the proportion of total online retail spend still

represents a small portion of the total. Malaysians still enjoy visiting malls and see them as more than just a place to shop. People

across all ages continue to visit malls with friends and family, spending time not only shopping but enjoying the range of lifestyle

avenues offered such as F&B and entertainment.

Against this backdrop, we stand firm in our belief in the importance of pushing ahead with continued AEIs and building stronger

relationships with our customers. As such, we will continue to roll out active customer engagement programmes such as targeted

A&P initiatives, and will also continue to work closely and support all our tenants so that we are able to keep visitor experiences fresh

and contemporary.

In 2018, visitors to our malls will not only benefit from improved facilities and a friendlier retail ambience, they can also look forward

to expanded retail spaces. At TGM for example, 18,000 square feet of new NLA on the lower ground floor will be introduced, allowing

us to welcome new F&B and lifestyle tenants, including some who are new to market. In its eleventh year, TGM will also be looking

to upgrade some major building equipment and fixtures, however, the scheduling of such works will be done so as to minimise any

disruptions to our shoppers.

We believe that we have done well in 2017, particularly given the challenges faced this year. However, it is imperative that we

continue to evolve and adapt if we want to remain resilient in an ever-changing landscape. Going into 2018, we will continue to pro-

actively manage our assets, and are confident that we can carry on exciting our consumers through bringing in new to market brands,

ideas, and engagement initiatives. We will also continue to seek out new opportunities to support income growth and manage our

costs, with the view of creating long term value for our stakeholders.

This Statement has been approved by the Board of Directors and is current as at 23 February 2018.



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-ow

ne

d s

ub

sid

iary

of

IGB

Co

rpo

rati

on

Be

rha

d (

IGB

), t

he

sp

on

sor

an

d a

co

ntr

olli

ng

UH

of

IGB

RE

IT.

Th

e M

an

ag

er’

s m

ain

re

spo

nsi

bili

ty i

s to

ma

na

ge

act

ivit

ies

in r

ela

tio

n t

o I

GB

RE

IT. T

he

Ma

na

ge

r sh

all,

in

ma

na

gin

g I

GB

RE

IT, u

nd

ert

ake

pri

ma

ry m

an

ag

em

en

t a

ctiv

itie

s in

clu

din

g b

ut

no

t lim

ite

d t

o o

vera

ll

stra

teg

y, r

isk

ma

na

ge

me

nt

stra

teg

y, n

ew

acq

uis

itio

n a

nd

dis

po

sal

an

aly

sis,

ma

rke

tin

g a

nd

co

mm

un

ica

tio

ns,

in

div

idu

al

ass

et

pe

rfo

rma

nce

an

d b

usi

ne

ss p

lan

nin

g, m

ark

et

pe

rfo

rma

nce

an

aly

sis

an

d o

the

r

act

ivit

ies

as

pro

vid

ed

un

de

r th

e D

ee

d,

an

d i

n a

cco

rda

nce

wit

h a

cce

pta

ble

an

d e

ffica

cio

us

bu

sin

ess

pra

ctic

es

in t

he

RE

IT i

nd

ust

ry i

n M

ala

ysia

. Th

e M

an

ag

er

als

o m

an

ag

es

an

d s

up

erv

ise

s th

e p

rop

ert

y

ma

na

ge

r (i

ncl

ud

ing

its

serv

ice

pro

vid

ers

) w

ho

pro

vid

es

pro

pe

rty

ma

na

ge

me

nt

serv

ice

s in

clu

din

g le

asi

ng

an

d m

ark

eti

ng

fu

nct

ion

s in

re

spe

ct o

f M

VM

an

d T

GM

.

IGB

RE

IT i

s m

an

ag

ed

un

de

r th

e s

up

erv

isio

n a

nd

dir

ect

ion

of

the

Bo

ard

of

Dir

ect

ors

(B

oa

rd o

r D

ire

cto

rs)

of

the

Ma

na

ge

r. T

he

Bo

ard

is

he

ad

ed

by

Tan

Sri

Da

to’ D

r. L

in S

ee

Ya

n (

Bo

ard

Ch

air

ma

n),

wh

o i

s

an

In

de

pe

nd

en

t N

on

-Exe

cuti

ve D

ire

cto

r (I

NE

D).

He

is

join

ed

on

th

e B

oa

rd b

y H

alim

bin

Ha

ji D

in (

INE

D),

Le

e C

he

n C

ho

ng

(IN

ED

), D

ato

’ Se

ri R

ob

ert

Ta

n C

hu

ng

Me

ng

(M

an

ag

ing

Dir

ect

or/

MD

), T

an

Bo

on

Lee

(E

xecu

tive

Dir

ect

or/

ED

), D

an

iel Y

on

g C

he

n-I

(E

D),

Eliz

ab

eth

Ta

n H

ui

Nin

g (

ED

), T

an

Le

i C

he

ng

(N

on

-IN

ED

) a

nd

Ta

n Y

ee

Se

ng

(N

on

-IN

ED

). E

ach

Dir

ect

or

ha

s b

ee

n a

pp

oin

ted

on

th

e s

tre

ng

th o

f h

is/h

er

calib

re a

nd

exp

eri

en

ce.

As

a t

ea

m,

the

Bo

ard

bri

ng

s to

ge

the

r a

bro

ad

ra

ng

e o

f q

ua

lifica

tio

ns

wit

h c

on

sid

era

ble

exp

eri

en

ce a

nd

exp

ert

ise

in

pro

pe

rty

inve

stm

en

t, c

om

me

rcia

l, fi

na

nce

, a

cco

un

tin

g a

nd

risk

ma

na

ge

me

nt,

wh

ich

is

vit

al

to e

ffe

ctiv

ely

le

ad

th

e M

an

ag

er

an

d I

GB

RE

IT. T

he

Ma

na

ge

r h

as

als

o a

pp

oin

ted

a t

ea

m o

f e

xpe

rie

nce

d a

nd

we

ll-q

ua

lifie

d p

ers

on

ne

l (E

xecu

tive

Te

am

or

Offi

cers

) to

ha

nd

le

its

day

-to

-day

op

era

tio

ns.

Exe

cuti

ve T

ea

m c

om

pri

ses

Ch

ief

Exe

cuti

ve O

ffice

r (C

EO

), J

oin

t C

hie

f O

pe

rati

ng

Offi

cer

(Jo

int

CO

O)

(MV

M),

Jo

int

CO

O a

nd

He

ad

of

Op

era

tio

ns/

Lea

sin

g (

TGM

), C

hie

f Fi

na

nci

al

Offi

cer

(CF

O),

He

ad

of

Inve

stm

en

t, H

ea

d o

f O

pe

rati

on

s/Le

asi

ng

(M

VM

), H

ea

d o

f M

ark

eti

ng

(M

VM

), H

ea

d o

f M

ark

eti

ng

(TG

M)

an

d H

ea

d o

f C

om

plia

nce

/Co

mp

an

y S

ecr

eta

ry (

HO

C/C

S).

In

th

is S

tate

me

nt,

refe

ren

ces

to ‘E

xecu

tive

Ma

na

ge

me

nt’

refe

r to

MD

, ED

s a

nd

Exe

cuti

ve T

ea

m. B

iog

rap

hic

al

de

tails

of

Dir

ect

ors

an

d E

xecu

tive

Te

am

are

se

t o

ut

in t

his

An

nu

al

Re

po

rt u

nd

er

the

re

spe

ctiv

e h

ea

din

gs

Pro

file

of

Dir

ect

ors

an

d P

rofi

le o

f E

xe

cuti

ve

Te

am

.

Th

e M

an

ag

er,

as

resp

on

sib

le e

nti

ty o

f IG

B R

EIT

, re

cog

nis

es

tha

t w

ell

-de

fin

ed

co

rpo

rate

go

ve

rna

nce

(C

G)

pro

cess

es

are

ess

en

tia

l in

en

ha

nci

ng

co

rpo

rate

acc

ou

nta

bil

ity

an

d l

on

g-t

erm

bu

sin

ess

sust

ain

ab

ility

, a

nd

re

ma

ins

com

mit

ted

to

en

suri

ng

th

at

its

po

licie

s a

nd

pra

ctic

es

refl

ect

hig

h s

tan

da

rds

of

CG

wh

ich

me

et

the

ap

plic

ab

le l

aws

an

d r

eg

ula

tio

ns.

Th

e B

oa

rd c

on

sid

ers

th

at

the

Ma

na

ge

r’s

go

vern

an

ce f

ram

ew

ork

, as

sum

ma

rise

d i

n t

his

Sta

tem

en

t, a

nd

ad

he

ren

ce t

o t

ha

t fr

am

ew

ork

are

fu

nd

am

en

tal

in d

em

on

stra

tin

g t

ha

t th

e B

oa

rd i

s a

cco

un

tab

le t

o U

Hs

an

d i

s a

pp

rop

ria

tely

ove

rse

ein

g t

he

ma

na

ge

me

nt

of

risk

an

d t

he

fu

ture

dir

ect

ion

of

IGB

RE

IT. I

n d

eve

lop

ing

its

go

vern

an

ce f

ram

ew

ork

, th

e B

oa

rd is

gu

ide

d b

y th

e m

ea

sure

s se

t o

ut

in R

EIT

Gu

ide

line

s, B

urs

a S

ecu

riti

es’

Co

rpo

rate

Go

vern

an

ce

Gu

ide

(C

G G

uid

e)

an

d M

ala

ysia

n C

od

e o

n C

orp

ora

te G

ove

rna

nce

(M

CC

G).

Th

is S

tate

me

nt

pro

vid

es

an

in

sig

ht

on

th

e M

an

ag

er’

s g

ove

rna

nce

fra

me

wo

rk a

nd

pra

ctic

es

tha

t w

ere

in

pla

ce f

or

the

fin

an

cia

l ye

ar

en

de

d 3

1 D

ece

mb

er

20

17

(F

Y2

01

7)

an

d t

o t

he

da

te o

f th

is S

tate

me

nt.

Th

e D

ire

cto

rs r

eco

gn

ise

th

e v

alu

e o

f th

e M

CC

G a

nd

be

lieve

th

at

rep

ort

ing

ag

ain

st t

he

pri

nci

ple

s a

nd

pra

ctic

es

of

the

MC

CG

(M

CC

G P

ract

ice

s),

an

d b

y re

fere

nce

th

e C

G G

uid

e,

will

pro

vid

e U

Hs

of

IGB

RE

IT w

ith

be

tte

r in

form

ati

on

. H

ow

eve

r, s

om

e o

f th

e M

CC

G P

ract

ice

s a

re n

ot

rele

va

nt

to I

GB

RE

IT’s

po

siti

on

, b

ein

g a

n e

xte

rna

lly m

an

ag

ed

tru

st.

To t

he

ext

en

t th

e M

CC

G P

ract

ice

s a

re a

pp

lica

ble

, th

e

Bo

ard

ha

s m

ad

e a

pp

rop

ria

te s

tate

me

nts

re

po

rtin

g o

n t

he

ad

op

tio

n o

f th

e M

CC

G P

ract

ice

s. W

he

re, a

fte

r d

ue

co

nsi

de

rati

on

an

d g

ive

n t

he

ne

ed

s a

nd

cir

cum

sta

nce

s o

f IG

B R

EIT

, in

so

fa

r a

s C

G p

ract

ice

s o

f

the

Ma

na

ge

r d

ive

rge

fro

m t

he

MC

CG

Pra

ctic

es,

th

e B

oa

rd h

as

off

ere

d f

ull

dis

clo

sure

an

d r

ea

son

fo

r th

e a

do

pti

on

of

its

ow

n p

ract

ice

s. A

s th

e a

ctiv

itie

s o

f IG

B R

EIT

de

velo

p i

n s

ize

, n

atu

re a

nd

sco

pe

, th

e

imp

lem

en

tati

on

of

ad

dit

ion

al C

G s

tru

ctu

res

will

be

aff

ord

ed

fu

rth

er

con

sid

era

tio

n.

Th

e M

an

ag

er’

s ke

y g

ove

rna

nce

do

cum

en

ts, i

ncl

ud

ing

th

e C

on

stit

uti

on

, Bo

ard

Ch

art

er

(Ch

art

er)

, Dir

ect

ors

’ Co

de

of

Bu

sin

ess

Co

nd

uct

an

d E

thic

s (C

od

e),

th

e t

erm

s o

f re

fere

nce

(To

R)

of

ea

ch o

f th

e B

oa

rd

Co

mm

itte

e a

nd

Re

mu

ne

rati

on

Po

licie

s a

nd

Pra

ctic

es

(RP

P)

are

po

ste

d o

n IG

B R

EIT

’s w

eb

site

(w

ww

.igb

reit

,co

m).

Th

is S

tate

me

nt

ha

s b

ee

n a

pp

rove

d b

y th

e B

oa

rd a

nd

is c

urr

en

t a

s a

t 2

3 J

an

ua

ry 2

01

8.

22

PR

INC

IPL

E A

: B

OA

RD

LE

AD

ER

SH

IP A

ND

EF

FE

CT

IVE

NE

SS

MC

CG

Pra

ctic

es

Ex

pla

na

tio

n

Inte

nd

ed

Ou

tco

me

Pra

ctic

e

Eve

ry c

om

pa

ny

is

he

ad

ed

by

a b

oa

rd,

wh

ich

ass

um

es

resp

on

sib

ility

fo

r th

e

com

pa

ny

’s le

ad

ers

hip

a

nd

is c

olle

ctiv

ely

re

spo

nsi

ble

fo

r m

ee

tin

g t

he

o

bje

ctiv

es

an

d g

oa

ls

of

the

co

mp

an

y.

1.1

Th

e

bo

ard

sh

ou

ld

set

the

co

mp

an

y’s

str

ate

gic

aim

s, e

nsu

re

tha

t th

e

ne

cess

ary

re

sou

rce

s a

re i

n p

lace

fo

r th

e c

om

pa

ny

to

m

ee

t it

s o

bje

ctiv

es

an

d r

ev

iew

m

an

ag

em

en

t p

erf

orm

an

ce.

Th

e

bo

ard

sh

ou

ld

set

the

co

mp

an

y’s

va

lue

s a

nd

sta

nd

ard

s,

an

d e

nsu

re t

ha

t it

s o

bli

ga

tio

ns

to

its

sha

reh

old

ers

a

nd

o

the

r st

ake

ho

lde

rs a

re u

nd

ers

too

d a

nd

m

et.

Th

e B

oa

rd i

s co

mm

itte

d t

o e

ffe

ctiv

ely

re

pre

sen

tin

g a

nd

pro

mo

tin

g I

GB

RE

IT,

an

d t

he

reb

y a

dd

ing

lo

ng

-te

rm v

alu

e t

o a

ll U

Hs.

Th

e B

oa

rd i

s a

cco

un

tab

le t

o U

Hs

for

the

ma

na

ge

me

nt,

ad

min

istr

ati

on

an

d o

vera

ll g

ove

rna

nce

of

IGB

RE

IT, i

n e

ach

ca

se in

clu

din

g t

he

pro

tect

ion

of

UH

s’ in

tere

sts,

d

eve

lop

ing

str

ate

gic

dir

ect

ion

, est

ab

lish

ing

go

als

fo

r E

xecu

tive

Ma

na

ge

me

nt

an

d m

on

ito

rin

g t

he

ach

ieve

me

nt

of

the

se g

oa

ls.

To c

lari

fy t

he

ro

les

an

d r

esp

on

sib

ilit

ies

of

Dir

ect

ors

an

d E

xecu

tiv

e M

an

ag

em

en

t, a

nd

to

ass

ist

the

Bo

ard

in

dis

cha

rgin

g i

ts r

esp

on

sib

ilit

ies,

th

e

Ma

na

ge

r h

as

est

ab

lish

ed

a g

ove

rna

nce

fra

me

wo

rk w

hic

h s

ets

ou

t th

e f

un

ctio

ns

rese

rve

d t

o t

he

Bo

ard

an

d p

rov

ide

s fo

r th

e d

ele

ga

tio

n o

f fu

nct

ion

s to

th

e B

oa

rd C

om

mit

tee

s (B

Cs)

an

d E

xecu

tive

Ma

na

ge

me

nt.

Th

ose

fu

nct

ion

s a

nd

re

spo

nsi

bili

tie

s re

serv

ed

to

th

e B

oa

rd a

re s

et

ou

t in

its

Ch

art

er

(la

st r

ev

iew

ed

in J

an

ua

ry 2

01

8)

wh

ich

incl

ud

e:

co

ntr

ibu

tin

g t

o a

nd

ap

pro

vin

g E

xecu

tive

Ma

na

ge

me

nt’

s d

eve

lop

me

nt

of

stra

teg

y fo

r IG

B R

EIT

, in

clu

din

g s

ett

ing

pe

rfo

rma

nce

ob

ject

ive

s a

nd

a

pp

rov

ing

op

era

tin

g b

ud

ge

ts;

o

ve

rse

ein

g,

rev

iew

ing

an

d m

on

ito

rin

g s

yste

ms

of

risk

ma

na

ge

me

nt,

in

tern

al

con

tro

ls a

nd

eth

ica

l a

nd

le

ga

l co

mp

lia

nce

, w

hic

h i

ncl

ud

es

rev

iew

ing

pro

ced

ure

s to

id

en

tify

th

e m

ain

ris

ks a

sso

cia

ted

wit

h t

he

bu

sin

ess

es

of

the

Ma

na

ge

r a

nd

IG

B R

EIT

(in

clu

din

g t

he

ma

na

ge

me

nt

of

ma

teri

al

exp

osu

re t

o e

nv

iro

nm

en

tal,

eco

no

mic

an

d s

oci

al

(EE

S)

sust

ain

ab

ility

ris

ks)

an

d t

he

im

ple

me

nta

tio

n o

f a

pp

rop

ria

te s

yste

ms

to m

an

ag

e

tho

se r

isks

;

rev

iew

ing

pe

rio

dic

ally

th

e M

an

ag

er’

s ri

sk m

an

ag

em

en

t fr

am

ew

ork

to

sa

tisf

y it

self

th

at

it c

on

tin

ue

s to

be

so

un

d;

m

on

ito

rin

g p

erf

orm

an

ce a

nd

imp

lem

en

tati

on

of

stra

teg

y a

nd

po

licy

for

IGB

RE

IT;

a

pp

rov

ing

ma

jor

cap

ita

l exp

en

dit

ure

, acq

uis

itio

ns

an

d d

ive

stit

ure

s, a

nd

mo

nit

ori

ng

ca

pit

al m

an

ag

em

en

t;

mo

nit

ori

ng

an

d r

ev

iew

ing

ma

na

ge

me

nt

pro

cess

es

aim

ed

at

en

suri

ng

th

e i

nte

gri

ty o

f fi

na

nci

al

an

d o

the

r re

po

rtin

g a

nd

en

suri

ng

co

mp

lian

ce

wit

h fi

na

nci

al r

ep

ort

ing

re

qu

ire

me

nts

;

de

velo

pin

g a

nd

re

vie

win

g t

he

Ma

na

ge

r’s

CG

pri

nci

ple

s a

nd

po

licie

s; a

nd

e

nsu

rin

g U

Hs

are

ke

pt

info

rme

d o

f IG

B R

EIT

’s p

erf

orm

an

ce a

nd

ma

jor

de

velo

pm

en

ts a

ffe

ctin

g it

s st

ate

of

aff

air

s.

1.2

A C

ha

irm

an

of

the

bo

ard

wh

o i

s re

spo

nsi

ble

fo

r in

stil

lin

g

go

od

C

G

pra

cti

ces,

le

ad

ers

hip

a

nd

e

ffe

cti

ve

ne

ss

of

the

b

oa

rd

is

ap

po

inte

d.

Th

e B

oa

rd C

ha

irm

an

, Ta

n S

ri D

ato

’ Dr.

Lin

Se

e Y

an

, w

as

ind

ep

en

de

nt

of

IGB

RE

IT a

nd

th

e M

an

ag

er

at

the

tim

e o

f h

is a

pp

oin

tme

nt

and

re

ma

ins

so.

Bo

ard

Ch

air

ma

n a

lso

ch

air

s th

e N

om

ina

tio

n C

om

mit

tee

(N

C)

an

d R

em

un

era

tio

n C

om

mit

tee

(R

C).

Bo

ard

Ch

air

ma

n l

ea

ds

the

Bo

ard

an

d e

nsu

res

its

eff

ect

ive

ne

ss,

am

on

g o

the

r th

ing

s, s

tee

rin

g e

ffe

ctiv

e,

pro

du

ctiv

e a

nd

co

mp

reh

en

sive

dis

cuss

ion

s a

mo

ng

me

mb

ers

of

the

Bo

ard

an

d E

xecu

tive

M

an

ag

em

en

t o

n s

tra

teg

ic,

bu

sin

ess

an

d o

the

r ke

y i

ssu

es

pe

rtin

en

t to

th

e b

usi

ne

ss a

nd

op

era

tio

ns

of

IGB

RE

IT a

nd

th

e M

an

ag

er.

Wit

h t

he

fu

ll

sup

po

rt o

f th

e B

oa

rd a

nd

Exe

cuti

ve T

ea

m,

Bo

ard

Ch

air

ma

n s

pe

arh

ea

ds

the

Ma

na

ge

r’s

dri

ve t

o p

rom

ote

, a

tta

in a

nd

ma

inta

in h

igh

sta

nd

ard

s o

f C

G

an

d t

ran

spa

ren

cy.

1.3

Th

e

po

siti

on

s o

f C

ha

irm

an

a

nd

CE

O a

re h

eld

by

dif

fere

nt

ind

ivid

ua

ls.

Th

e B

oa

rd C

ha

irm

an

, M

D a

nd

CE

O a

re s

ep

ara

te p

ers

on

s a

nd

no

t re

late

d t

o e

ach

oth

er.

Th

eir

ro

les

are

ke

pt

sep

ara

te t

o e

nsu

re a

cle

ar

div

isio

n

of

resp

on

sib

ilit

ies

an

d a

n a

pp

rop

ria

te b

ala

nce

of

po

we

r a

nd

au

tho

rity

. T

his

se

pa

rati

on

of

role

s p

rom

ote

s g

rea

ter

acc

ou

nta

bil

ity

fro

m E

xecu

tive

M

an

ag

em

en

t a

nd

allo

ws

the

Bo

ard

to

exe

rcis

e it

s in

de

pe

nd

en

ce in

its

ove

rsig

ht

of

an

d d

elib

era

tio

ns

wit

h E

xecu

tive

Ma

na

ge

me

nt.

Th

e r

ole

of

Bo

ard

C

ha

irm

an

is

de

scri

be

d i

n B

ox

1.2

. M

D a

s a

re

pre

sen

tati

ve o

f th

e B

oa

rd,

tog

eth

er

wit

h C

EO

, is

acc

ou

nta

ble

to

th

e B

oa

rd a

nd

re

spo

nsi

ble

ove

r th

e

bu

sin

ess

dir

ect

ion

s a

nd

th

e s

tra

teg

y im

ple

me

nta

tio

n o

f IG

B R

EIT

an

d t

he

Ma

na

ge

r a

nd

fo

r a

ll o

pe

rati

on

al

de

cisi

on

s in

ma

na

gin

g I

GB

RE

IT a

nd

th

e

Ma

na

ge

r, a

s w

ell

as

pro

vid

es

clo

se o

vers

igh

t, g

uid

an

ce, a

dv

ice

an

d le

ad

ers

hip

to

Exe

cuti

ve T

ea

m.

1.4

Th

e

bo

ard

is

su

pp

ort

ed

b

y

a

suit

ab

ly q

ua

lifie

d a

nd

co

mp

ete

nt

Co

mp

an

y S

ecr

eta

ry t

o p

rov

ide

so

un

d

go

ve

rna

nc

e

ad

vic

e,

en

sure

a

dh

ere

nc

e

to

rule

s a

nd

pro

ced

ure

s, a

nd

ad

vo

cate

a

do

pti

on

of

CG

be

st p

ract

ice

s.

Th

e B

oa

rd i

s su

pp

ort

ed

by

HO

C/C

S,

Tin

a C

ha

n,

wh

o i

s a

Fe

llow

of

the

In

stit

ute

of

Ch

art

ere

d S

ecr

eta

rie

s a

nd

Ad

min

istr

ato

rs.

HO

C/C

S h

as

ove

rall

resp

on

sib

ilit

y f

or

the

se

cre

tari

at

fun

ctio

n a

nd

is

dir

ect

ly a

cco

un

tab

le t

o t

he

Bo

ard

, th

rou

gh

Bo

ard

Ch

air

ma

n,

on

all

ma

tte

rs t

o d

o w

ith

th

e

pro

pe

r fu

nct

ion

ing

of

the

Bo

ard

. T

his

in

clu

de

s su

pe

rvis

ing

, m

on

ito

rin

g a

nd

ad

vis

ing

on

go

vern

an

ce m

att

ers

an

d c

om

pli

an

ce b

y IG

B R

EIT

wit

h

all

le

gis

lati

on

, ru

les

an

d g

uid

eli

ne

s a

nd

dis

clo

sure

re

qu

ire

me

nts

of

va

rio

us

reg

ula

tory

bo

die

s, c

oo

rdin

ati

ng

Bo

ard

bu

sin

ess

an

d p

rov

idin

g a

p

oin

t o

f re

fere

nce

fo

r e

nsu

rin

g g

oo

d i

nfo

rma

tio

n fl

ow

wit

hin

th

e B

oa

rd a

nd

its

BC

s, a

nd

be

twe

en

No

n-E

xecu

tive

Dir

ect

ors

(N

ED

s) a

nd

Exe

cuti

ve

Ma

na

ge

me

nt,

an

d p

erf

orm

ing

su

ch o

the

r d

uti

es

of

HO

C/C

S, a

s re

qu

ire

d u

nd

er

law

s a

nd

re

gu

lati

on

s, o

r a

s re

qu

ire

d b

y B

oa

rd C

ha

irm

an

or

Dir

ect

ors

(o

r a

ny

of

the

m),

as

the

ca

se m

ay b

e. D

eci

sio

ns

to a

pp

oin

t o

r re

mo

ve H

OC

/CS

are

ma

de

or

ap

pro

ved

by

the

Bo

ard

.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)


PR

INC

IPL

E A

: B

OA

RD

LE

AD

ER

SH

IP A

ND

EF

FE

CT

IVE

NE

SS

MC

CG

Pra

ctic

es

Ex

pla

na

tio

n

Inte

nd

ed

Ou

tco

me

Pra

ctic

e

Eve

ry c

om

pa

ny

is

he

ad

ed

by

a b

oa

rd,

wh

ich

ass

um

es

resp

on

sib

ility

fo

r th

e

com

pa

ny

’s le

ad

ers

hip

a

nd

is c

olle

ctiv

ely

re

spo

nsi

ble

fo

r m

ee

tin

g t

he

o

bje

ctiv

es

an

d g

oa

ls

of

the

co

mp

an

y.

1.5

Dir

ec

tors

re

ce

ive

m

ee

tin

g

ma

teri

als

, w

hic

h

are

co

mp

lete

a

nd

acc

ura

te w

ith

in a

re

aso

na

ble

p

eri

od

p

rio

r to

th

e

me

eti

ng

. U

po

n c

on

clu

sio

n o

f th

e m

ee

tin

g,

the

min

ute

s a

re c

ircu

late

d i

n a

ti

me

ly m

an

ne

r.

Dir

ect

ors

are

exp

ect

ed

to

pre

pa

re f

or,

att

en

d,

an

d c

on

trib

ute

me

an

ing

full

y in

all

Bo

ard

an

d a

pp

lica

ble

BC

me

eti

ng

s in

ord

er

to d

isch

arg

e t

he

ir

ob

liga

tio

ns.

Th

e M

an

ag

er’

s C

on

stit

uti

on

allo

ws

for

such

me

eti

ng

s to

be

co

nd

uct

ed

via

te

lep

ho

ne

, vid

eo

co

nfe

ren

ce o

r a

ny

oth

er

form

of

ele

ctro

nic

o

r in

sta

nta

ne

ou

s co

mm

un

ica

tio

n. T

o f

aci

lita

te p

art

icip

ati

on

of

Dir

ect

ors

’ att

en

da

nce

at

the

Bo

ard

an

d B

C m

ee

tin

gs

as

we

ll a

s a

nn

ua

l U

H M

ee

tin

g

(UH

M),

sch

ed

ule

of

me

eti

ng

s fo

r e

ach

ca

len

da

r ye

ar

is s

che

du

led

we

ll in

ad

va

nce

be

fore

th

e e

nd

of

the

pre

ced

ing

fin

an

cia

l ye

ar.

Th

e B

oa

rd m

ee

ts 4

tim

es

a y

ea

r a

t a

pp

roxi

ma

tely

qu

art

erl

y in

terv

als

an

d a

s w

arr

an

ted

by

pa

rtic

ula

r ci

rcu

mst

an

ces.

Wh

ere

re

qu

ire

d,

tim

e i

s se

t a

sid

e a

fte

r sc

he

du

led

Bo

ard

me

eti

ng

s fo

r d

iscu

ssio

ns

am

on

g t

he

me

mb

ers

of

the

Bo

ard

wit

ho

ut

the

pre

sen

ce o

f E

xecu

tive

Te

am

as

this

fa

cilit

ate

s a

mo

re e

ffe

ctiv

e c

he

ck o

n t

he

Offi

cers

. M

ee

tin

g m

ate

ria

ls f

or

the

Bo

ard

an

d B

Cs

are

up

loa

de

d o

nto

pe

rso

na

l e

lect

ron

ic t

ab

lets

to

en

ab

le D

ire

cto

rs

to a

cce

ss t

he

do

cum

en

ts i

n a

tim

ely

ma

nn

er.

Me

eti

ng

ma

teri

als

ge

ne

rally

pro

vid

ed

to

me

mb

ers

of

the

Bo

ard

an

d B

Cs

at

lea

st 5

day

s p

rio

r to

ea

ch

Bo

ard

or

BC

me

eti

ng

, so

th

at

such

ma

tte

rs m

ay b

e c

on

sid

ere

d a

nd

dis

cuss

ed

th

oro

ug

hly

an

d f

ully

, p

rio

r to

th

e m

ak

ing

of

an

y d

eci

sio

n.

Exe

cuti

ve

Tea

m m

ay b

e r

eq

ue

ste

d t

o a

tte

nd

me

eti

ng

s o

f th

e B

oa

rd s

o a

s to

be

at

ha

nd

to

an

swe

r a

ny

qu

est

ion

or

con

trib

ute

to

an

y d

iscu

ssio

n. P

rese

nta

tio

ns

are

ma

de

by

Exe

cuti

ve T

ea

m a

t th

e m

ee

tin

gs

of

the

Bo

ard

to

fa

cilit

ate

de

libe

rati

on

s a

nd

dis

cuss

ion

s. C

on

sist

en

t w

ith

th

eir

fid

uci

ary

du

tie

s, D

ire

cto

rs

are

exp

ect

ed

to

ma

inta

in c

on

fid

en

tia

lity

of

the

de

libe

rati

on

s o

f th

e B

oa

rd a

nd

BC

s. M

inu

tes

of

ea

ch B

oa

rd o

r B

C m

ee

tin

g a

re c

ircu

late

d p

rom

ptl

y to

e

very

Bo

ard

or

BC

me

mb

er

for

the

ir c

om

me

nts

pri

or

to c

on

firm

ati

on

of

the

min

ute

s. T

he

att

en

da

nce

of

Dir

ect

ors

at

me

eti

ng

s o

f th

e B

oa

rd a

nd

BC

s,

an

d t

he

fre

qu

en

cy o

f su

ch m

ee

tin

gs,

is d

iscl

ose

d in

Ap

pe

nd

ix 1

.

For

ma

tte

rs w

hic

h r

eq

uir

e t

he

Bo

ard

’s d

eci

sio

n o

uts

ide

su

ch m

ee

tin

gs,

bo

ard

pa

pe

rs a

lon

g w

ith

re

solu

tio

ns

in w

riti

ng

will

be

cir

cula

ted

th

rou

gh

H

OC

/CS

fo

r th

e B

oa

rd’s

co

nsi

de

rati

on

, w

ith

dis

cuss

ion

s a

nd

cla

rifi

cati

on

s ta

kin

g p

lace

be

twe

en

me

mb

ers

of

the

Bo

ard

an

d E

xecu

tive

Te

am

, w

he

re

req

uir

ed

, b

efo

re a

pp

rova

l is

gra

nte

d.

Dir

ect

ors

, w

he

the

r a

s a

gro

up

or

ind

ivid

ua

lly,

may

at

the

ir d

iscr

eti

on

an

d w

he

re n

ece

ssa

ry,

see

k a

nd

ob

tain

in

de

pe

nd

en

t p

rofe

ssio

na

l ad

vic

e in

th

e f

urt

he

ran

ce o

f th

eir

du

tie

s.

Th

ere

is d

em

arc

ati

on

o

f re

spo

nsi

bili

tie

s b

etw

ee

n t

he

b

oa

rd, B

Cs

an

d

ma

na

ge

me

nt.

Th

ere

is c

lari

ty in

th

e a

uth

ori

ty o

f th

e b

oa

rd, B

Cs

an

d

ind

ivid

ua

l dir

ect

ors

.

2.1

Th

e b

oa

rd h

as

a b

oa

rd c

ha

rte

r w

hic

h

is

pe

rio

dic

all

y

rev

iew

ed

a

nd

pu

blis

he

d o

n t

he

co

mp

an

y’s

w

eb

site

. T

he

b

oa

rd

ch

art

er

cle

arl

y id

en

tifi

es

–

th

e

resp

ec

tiv

e

role

s a

nd

re

spo

nsi

bili

tie

s o

f th

e b

oa

rd,

BC

s, i

nd

ivid

ua

l d

ire

cto

rs a

nd

m

an

ag

em

en

t; a

nd

is

su

es

a

nd

d

ec

isio

ns

rese

rve

d f

or

the

bo

ard

.

Th

e C

ha

rte

r se

ts o

ut

the

re

spe

ctiv

e a

uth

ori

ty a

nd

re

spo

nsi

bili

tie

s o

f th

e B

oa

rd, B

Cs

an

d in

div

idu

al D

ire

cto

rs a

nd

th

ose

ma

tte

rs e

xpre

ssly

re

serv

ed

to

th

e B

oa

rd a

nd

th

ose

de

leg

ate

d t

o B

Cs

an

d E

xecu

tive

Ma

na

ge

me

nt.

Th

e B

oa

rd i

s re

spo

nsi

ble

fo

r o

ve

rse

ein

g t

he

ma

na

ge

me

nt

of

IGB

RE

IT o

n b

eh

alf

of

UH

s. T

he

Bo

ard

fu

lfils

its

ma

nd

ate

at

reg

ula

rly

sch

ed

ule

d

me

eti

ng

s o

r a

s re

qu

ire

d. F

req

ue

ncy

of

me

eti

ng

s m

ay b

e i

ncr

ea

sed

an

d t

he

na

ture

of

the

ag

en

da

ite

ms

may

be

ch

an

ge

d d

ep

en

din

g u

po

n t

he

sta

te

of

the

aff

air

s o

f IG

B R

EIT

an

d t

he

Ma

na

ge

r a

nd

in li

gh

t o

f o

pp

ort

un

itie

s o

r ri

sks

wh

ich

th

ey

face

. Dir

ect

ors

are

ke

pt

info

rme

d o

f th

e o

pe

rati

on

s o

f IG

B

RE

IT a

nd

th

e M

an

ag

er

at

the

se m

ee

tin

gs

as

we

ll a

s th

rou

gh

re

po

rts

an

d d

iscu

ssio

ns

wit

h E

xecu

tive

Te

am

on

ma

tte

rs w

ith

in t

he

ir p

art

icu

lar

are

as

of

resp

on

sib

ility

. In

ad

dit

ion

, fr

om

tim

e t

o t

ime

, th

e B

oa

rd p

art

icip

ate

s (e

ith

er

dir

ect

ly o

r th

rou

gh

re

pre

sen

tati

ves)

in

du

e d

ilig

en

ce c

om

mit

tee

s in

re

lati

on

to

str

ate

gic

de

cisi

on

s, c

ap

ita

l an

d f

un

din

g a

ctiv

itie

s.

Th

e C

on

stit

uti

on

an

d t

he

Ch

art

er

en

ab

le t

he

Bo

ard

to

de

leg

ate

to

BC

s a

nd

Exe

cuti

ve T

ea

m.

BC

me

mb

ers

are

ch

ose

n f

or

the

sk

ills

an

d e

xpe

rie

nce

th

ey

can

co

ntr

ibu

te t

o t

he

re

spe

ctiv

e B

Cs.

BC

s co

nst

itu

ted

by

the

Bo

ard

are

Au

dit

Co

mm

itte

e (

AC

), N

C,

RC

, R

isk

Ma

na

ge

me

nt

an

d S

ust

ain

ab

ility

C

om

mit

tee

(R

MS

C)

an

d I

nve

stm

en

t W

ork

ing

Gro

up

(IW

G).

All

BC

s m

ad

e u

p o

f D

ire

cto

rs,

save

fo

r R

MS

C a

nd

IW

G,

of

wh

ich

Offi

cers

are

me

mb

ers

a

nd

is

led

by

CE

O. T

he

ob

ject

ive

, re

mit

an

d p

ow

ers

of

ea

ch B

C a

re e

sta

blis

he

d i

n t

he

Ch

art

er.

To

pic

s o

f d

iscu

ssio

n a

nd

fre

qu

en

cy o

f m

ee

tin

gs

will

v

ary

de

pe

nd

ing

on

ea

ch B

C’s

To

R a

nd

th

e p

ort

folio

’s c

om

ple

xity

. B

C m

ee

tin

g m

inu

tes

are

in

clu

de

d a

s p

art

of

Dir

ect

ors

’ me

eti

ng

ma

teri

als

to

ke

ep

D

ire

cto

rs u

pd

ate

d o

n e

ach

BC

’s a

ctiv

itie

s. T

he

ro

le, f

un

ctio

n, p

erf

orm

an

ce a

nd

me

mb

ers

hip

of

ea

ch B

C is

re

vie

we

d o

n a

n a

nn

ua

l ba

sis

as

pa

rt o

f th

e

Bo

ard

’s p

erf

orm

an

ce-a

sse

ssm

en

t p

roce

ss. T

he

an

nu

al

Bo

ard

ev

alu

ati

on

pe

rfo

rme

d i

n F

Y2

01

7 s

ho

we

d t

ha

t a

ll B

Cs

ha

d e

ffe

ctiv

ely

dis

cha

rge

d t

he

ir

fun

ctio

ns

as

de

scri

be

d in

Bo

x 5

.1. B

C a

tte

nd

an

ce r

eco

rds

are

dis

clo

sed

in A

pp

en

dix

1.

Th

e B

oa

rd i

s re

spo

nsi

ble

fo

r g

uid

ing

th

e c

orp

ora

te s

tra

teg

y a

nd

dir

ect

ion

of

IGB

RE

IT a

nd

ha

s th

e o

vera

ll re

spo

nsi

bili

ty f

or

de

cisi

on

ma

kin

g.

Th

e

Bo

ard

de

leg

ate

s to

Exe

cuti

ve T

ea

m r

esp

on

sib

ility

fo

r im

ple

me

nti

ng

th

e B

oa

rd’s

str

ate

gy

an

d f

or

ma

na

gin

g t

he

op

era

tio

ns

of

IGB

RE

IT.

CE

O l

ea

ds

Exe

cuti

ve T

ea

m i

n m

ak

ing

an

d i

mp

lem

en

tin

g d

ay-t

o-d

ay d

eci

sio

ns

on

bu

sin

ess

op

era

tio

ns

an

d m

an

ag

em

en

t o

f IG

B R

EIT

an

d m

an

ag

ing

re

sou

rce

s a

nd

ris

ks i

n p

urs

uin

g t

he

in

vest

me

nt

ob

ject

ive

s o

f IG

B R

EIT

, in

acc

ord

an

ce w

ith

th

e B

oa

rd a

pp

rove

d p

olic

ies

an

d d

ele

ga

tio

ns

of

au

tho

rity

. To

en

sure

th

e b

usi

ne

ss a

nd

op

era

tio

na

l e

ffica

cy i

s m

ain

tain

ed

wit

ho

ut

com

pro

mis

ing

th

e s

tan

da

rd o

f C

G,

the

sco

pe

of,

an

d l

imit

ati

on

s to

ma

na

ge

me

nt

de

leg

ate

d a

uth

ori

ty is

cle

arl

y d

ocu

me

nte

d a

nd

co

ver

are

as

such

as

op

era

tin

g a

nd

ca

pit

al e

xpe

nd

itu

re.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)

24

PR

INC

IPL

E A

: B

OA

RD

LE

AD

ER

SH

IP A

ND

EF

FE

CT

IVE

NE

SS

MC

CG

Pra

ctic

es

Ex

pla

na

tio

n

Inte

nd

ed

Ou

tco

me

Pra

ctic

e

Th

e b

oa

rd is

co

mm

itte

d t

o

pro

mo

tin

g g

oo

d

bu

sin

ess

co

nd

uct

an

d

ma

inta

inin

g a

he

alt

hy

corp

ora

te c

ult

ure

th

at

en

ge

nd

ers

inte

gri

ty,

tra

nsp

are

ncy

an

d

fair

ne

ss.

Th

e b

oa

rd,

ma

na

ge

me

nt,

e

mp

loye

es

an

d o

the

r st

ake

ho

lde

rs a

re c

lea

r o

n w

ha

t is

co

nsi

de

red

a

cce

pta

ble

be

hav

iou

r a

nd

pra

ctic

e in

th

e

com

pa

ny.

3.1

Th

e

bo

ard

e

sta

bli

she

s a

C

od

e

of

Co

nd

uc

t a

nd

Eth

ics

for

the

co

mp

an

y,

an

d

tog

eth

er

wit

h

ma

na

ge

me

nt

imp

lem

en

ts

its

po

lici

es

an

d p

roce

du

res,

wh

ich

in

clu

de

m

an

ag

ing

co

nfl

icts

o

f in

tere

st

(CO

I),

pre

ve

nti

ng

th

e

ab

use

o

f p

ow

er,

c

orr

up

tio

n,

insi

de

r tr

ad

ing

a

nd

m

on

ey

lau

nd

eri

ng

.

Th

e C

od

e o

f C

on

du

ct a

nd

Eth

ics

is p

ub

lish

ed

on

th

e c

om

pa

ny

’s

we

bsi

te.

Th

e M

an

ag

er

ha

s in

pla

ce a

Co

de

. Th

e B

oa

rd i

s g

uid

ed

by

the

Co

de

in

dis

cha

rgin

g i

ts o

vers

igh

t ro

le e

ffe

ctiv

ely

. Th

e C

od

e r

eq

uir

es

all

Dir

ect

ors

to

o

bse

rve

hig

h e

thic

al

bu

sin

ess

sta

nd

ard

s, h

on

est

y a

nd

in

teg

rity

an

d t

o a

pp

ly t

he

se v

alu

es

to a

ll a

spe

cts

of

the

bu

sin

ess

an

d p

rofe

ssio

na

l p

ract

ice

of

the

Ma

na

ge

r a

nd

act

in g

oo

d f

ait

h in

th

e b

est

inte

rest

s o

f th

e M

an

ag

er

an

d U

Hs

of

IGB

RE

IT.

Un

de

r th

e D

ee

d,

the

Ma

na

ge

r, T

rust

ee

an

d a

ny

de

leg

ate

of

eit

he

r o

f th

em

sh

all

avo

id C

OI

ari

sin

g o

r, i

f co

nfl

icts

ari

se,

sha

ll e

nsu

re t

ha

t IG

B R

EIT

is

no

t d

isa

dv

an

tag

ed

by

the

tra

nsa

ctio

n c

on

cern

ed

. Th

e M

an

ag

er

mu

st n

ot

ma

ke i

mp

rop

er

use

of

its

po

siti

on

in

ma

na

gin

g I

GB

RE

IT t

o g

ain

, d

ire

ctly

o

r in

dir

ect

ly,

an

ad

va

nta

ge

fo

r it

self

or

for

an

y o

the

r p

ers

on

or

to c

au

se d

etr

ime

nt

to t

he

in

tere

st o

f U

Hs.

Th

e M

an

ag

er

an

d i

ts r

ela

ted

pa

rtie

s a

re

pro

hib

ite

d f

rom

vo

tin

g t

he

ir u

nit

s a

t, o

r b

ein

g p

art

of

the

qu

oru

m f

or,

an

y U

HM

co

nve

ne

d t

o a

pp

rove

an

y m

att

er

in w

hic

h t

he

Ma

na

ge

r a

nd

its

re

late

d p

art

ies

hav

e in

tere

st in

th

e o

utc

om

e o

f th

e t

ran

sact

ion

un

less

an

exe

mp

tio

n is

ob

tain

ed

fro

m S

C.

Wh

en

act

ing

as

Dir

ect

ors

of

the

re

spo

nsi

ble

en

tity

of

IGB

RE

IT,

the

Dir

ect

ors

mu

st a

ct i

n t

he

be

st i

nte

rest

of

UH

s, a

nd

if

the

re i

s a

co

nfl

ict

be

twe

en

th

e i

nte

rest

of

UH

s a

nd

th

e i

nte

rest

of

the

Ma

na

ge

r, t

he

Dir

ect

ors

mu

st g

ive

pri

ori

ty t

o t

he

in

tere

st o

f U

Hs.

Th

e C

ha

rte

r p

rov

ide

s D

ire

cto

rs w

ith

g

uid

eli

ne

s fo

r co

mp

lyin

g w

ith

th

eir

ob

lig

ati

on

s to

ta

ke a

ll r

ea

son

ab

le s

tep

s to

avo

id a

ctu

al,

po

ten

tia

l o

r a

pp

are

nt

CO

I. To

ma

inta

in i

nte

gri

ty i

n

de

cisi

on

ma

kin

g e

ach

Dir

ect

or

mu

st a

dv

ise

th

e B

oa

rd o

f a

ny

po

ten

tia

l C

OI.

If a

CO

I e

xist

s, t

he

Dir

ect

or

con

cern

ed

will

hav

e n

o i

nvo

lve

me

nt

in t

he

d

eci

sio

n m

ak

ing

pro

cess

re

lati

ng

to

th

e m

att

er.

Th

e M

an

ag

er

ha

s e

sta

bli

she

d p

roce

du

res

to e

nsu

re t

ha

t re

late

d p

art

y t

ran

sact

ion

s (R

PTs

) in

vo

lvin

g,

am

on

g o

the

rs,

the

Tru

ste

e,

the

Ma

na

ge

r,

Dir

ect

ors

, CE

O, m

ajo

r U

Hs

an

d p

ers

on

s co

nn

ect

ed

wit

h t

he

m, a

re c

on

du

cte

d a

t a

rm’s

le

ng

th a

nd

on

no

rma

l co

mm

erc

ial

term

s w

hic

h a

re g

en

era

lly

no

mo

re f

avo

ura

ble

th

an

th

ose

ex

ten

de

d t

o u

nre

late

d t

hir

d p

art

ies,

an

d i

n a

cco

rda

nce

wit

h a

ll a

pp

lica

ble

re

qu

ire

me

nts

of

RE

IT G

uid

elin

es

an

d

MM

LR.

Exe

cuti

ve T

ea

m h

as

be

en

ke

pt

info

rme

d o

f th

e d

iscl

osu

re p

roce

du

res

for

RP

Ts,

wh

o w

ou

ld e

nsu

re t

ha

t tr

an

sact

ion

s w

ith

re

late

d p

art

ies

wo

uld

be

en

tere

d i

nto

aft

er

tak

ing

in

to a

cco

un

t th

e p

rici

ng

an

d c

on

tra

ct r

ate

s, t

erm

s a

nd

co

nd

itio

ns,

le

vel

of

serv

ice

an

d e

xpe

rtis

e r

eq

uir

ed

, a

nd

th

e q

ua

lity

of

pro

du

cts

an

d s

erv

ice

s p

rov

ide

d,

wh

en

co

mp

are

d t

o p

rev

ail

ing

ma

rke

t p

rice

s a

nd

ra

tes,

in

du

stry

no

rms

an

d s

tan

da

rds,

as

we

ll a

s g

en

era

l p

ract

ice

s, a

do

pte

d b

y se

rvic

e p

rov

ide

rs o

f si

mila

r ca

pa

citi

es

an

d c

ap

ab

iliti

es

ge

ne

rally

ava

ilab

le i

n t

he

op

en

ma

rke

t. T

he

Bo

ard

, th

rou

gh

AC

, re

vie

ws

an

d m

on

ito

rs a

ll R

PTs

an

d C

OI

situ

ati

on

s, i

f a

ny,

on

a q

ua

rte

rly

ba

sis

to e

nsu

re c

om

plia

nce

wit

h i

nte

rna

l co

ntr

ol

pro

ced

ure

s a

nd

wit

h t

he

p

rov

isio

ns

of

RE

IT G

uid

elin

es

an

d M

MLR

. If

a m

em

be

r o

f th

e B

oa

rd a

nd

/or

AC

ha

s a

n i

nte

rest

in

a t

ran

sact

ion

, th

e D

ire

cto

r co

nce

rne

d i

s to

ab

sta

in

fro

m p

art

icip

ati

ng

in

th

e r

ev

iew

an

d r

eco

mm

en

da

tio

n p

roce

ss i

n r

ela

tio

n t

o t

ha

t tr

an

sact

ion

. Th

e M

an

ag

er

ma

inta

ins

a r

eg

iste

r to

re

cord

all

RP

Ts

wh

ich

are

en

tere

d in

to b

y IG

B R

EIT

. Th

e I

nte

rna

l Au

dit

’s (

IA)

pla

n in

clu

de

s a

n a

nn

ua

l re

vie

w o

f a

ll R

PTs

re

cord

ed

in t

he

re

gis

ter.

Du

rin

g F

Y2

01

7, a

ll R

PTs

tra

nsa

cte

d w

ere

in t

he

ord

ina

ry a

nd

usu

al c

ou

rse

of

bu

sin

ess

ne

ed

s o

f IG

B R

EIT

, an

d w

ere

co

nd

uct

ed

at

arm

’s le

ng

th a

nd

on

te

rms

no

le

ss f

avo

ura

ble

to

IG

B R

EIT

th

an

te

rms

ava

ilab

le t

o o

r fr

om

(a

s a

pp

rop

ria

te)

ind

ep

en

de

nt

thir

d p

art

ies.

Qu

art

erl

y a

nn

ou

nce

me

nts

on

RP

Ts

be

twe

en

IG

B R

EIT

an

d r

ela

ted

pa

rtie

s v

is-à

-vis

na

ture

of

tra

nsa

ctio

ns

an

d a

gg

reg

ate

va

lue

tra

nsa

cte

d f

or

the

re

po

rtin

g q

ua

rte

r, a

s w

ell

as

ag

gre

ga

te

va

lue

est

ima

ted

fo

r th

e n

ext

qu

art

er

we

re m

ad

e t

o B

urs

a S

ecu

riti

es.

No

Dir

ect

or

ha

s a

ma

teri

al

inte

rest

in

an

y co

ntr

act

of

sig

nifi

can

ce i

n r

ela

tio

n t

o

IGB

RE

IT’s

bu

sin

ess

du

rin

g F

Y2

01

7 o

r to

th

e d

ate

of

this

Sta

tem

en

t o

the

r th

an

re

curr

en

t R

PTs

as

dis

clo

sed

in

No

tes

to F

ina

nci

al

Sta

tem

en

ts u

nd

er

the

he

ad

ing

of

Sig

nifi

can

t R

ela

ted

Pa

rty

Tra

nsa

ctio

n o

f th

is A

nn

ua

l Re

po

rt.

Dir

ect

ors

an

d O

ffice

rs a

re n

oti

fie

d o

f a

ny

an

no

un

cem

en

t re

lea

sed

to

Bu

rsa

Se

curi

tie

s a

nd

th

e i

mp

en

din

g r

est

rict

ion

in

de

alin

g w

ith

IG

B R

EIT

un

its

pri

or

to t

he

an

no

un

cem

en

t o

f q

ua

rte

rly

fin

an

cia

l re

sult

s o

r co

rpo

rate

pro

po

sal.

Dir

ect

ors

an

d O

ffice

rs a

re a

lso

exp

ect

ed

to

ob

serv

e i

nsi

de

r tr

ad

ing

la

ws

at

all

tim

es

eve

n w

he

n d

ea

ling

wit

h I

GB

RE

IT u

nit

s w

ith

in t

he

pe

rmit

ted

tra

din

g p

eri

od

. E

ach

Dir

ect

or

or

Offi

cer

is r

eq

uir

ed

to

giv

e n

oti

ce t

o

the

Ma

na

ge

r o

f h

is/h

er

acq

uis

itio

n o

f u

nit

s o

r o

f ch

an

ge

s in

th

e n

um

be

r o

f u

nit

s w

hic

h h

e/s

he

ho

lds

or

in w

hic

h h

e/s

he

ha

s a

n i

nte

rest

, w

ith

in 3

m

ark

et

day

s a

fte

r su

ch a

cqu

isit

ion

or

cha

ng

es

in i

nte

rest

. All

de

alin

gs

in I

GB

RE

IT u

nit

s b

y D

ire

cto

rs a

nd

Offi

cers

are

an

no

un

ced

to

Bu

rsa

Se

curi

tie

s.

Dir

ect

ors

an

d O

ffice

rs w

ho

are

in

po

sse

ssio

n o

f, aw

are

of

or

pri

vy

to a

ny

ne

go

tia

tio

ns

or

ag

ree

me

nts

re

late

d t

o i

nte

nd

ed

acq

uis

itio

ns

or

dis

po

sals

w

hic

h a

re s

ign

ifica

nt

tra

nsa

ctio

ns

or

an

y u

np

ub

lish

ed

in

sid

e i

nfo

rma

tio

n m

ust

re

fra

in f

rom

de

ali

ng

in

IG

B R

EIT

un

its

as

soo

n a

s th

ey

po

sse

ss,

be

com

e a

wa

re o

f o

r p

riv

y to

su

ch in

form

ati

on

un

til p

rop

er

dis

clo

sure

of

the

info

rma

tio

n in

acc

ord

an

ce w

ith

MM

LR. T

he

inte

rest

s in

IGB

RE

IT u

nit

s o

f D

ire

cto

rs a

nd

CE

O a

re s

ho

wn

in U

nit

ho

ldin

g S

tati

stic

s in

th

is A

nn

ua

l Re

po

rt.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)


PR

INC

IPL

E A

: B

OA

RD

LE

AD

ER

SH

IP A

ND

EF

FE

CT

IVE

NE

SS

MC

CG

Pra

ctic

es

Ex

pla

na

tio

n

Inte

nd

ed

Ou

tco

me

Pra

ctic

e

Th

e b

oa

rd is

co

mm

itte

d t

o

pro

mo

tin

g g

oo

d

bu

sin

ess

co

nd

uct

an

d

ma

inta

inin

g a

he

alt

hy

corp

ora

te c

ult

ure

th

at

en

ge

nd

ers

inte

gri

ty,

tra

nsp

are

ncy

an

d

fair

ne

ss.

Th

e b

oa

rd,

ma

na

ge

me

nt,

e

mp

loye

es

an

d o

the

r st

ake

ho

lde

rs a

re c

lea

r o

n w

ha

t is

co

nsi

de

red

a

cce

pta

ble

be

hav

iou

r a

nd

pra

ctic

e in

th

e

com

pa

ny.

3.2

Th

e b

oa

rd e

sta

bli

she

s, r

ev

iew

s a

nd

to

ge

the

r w

ith

ma

na

ge

me

nt

imp

lem

en

ts

po

lic

ies

a

nd

p

roce

du

res

on

wh

istl

eb

low

ing

.

Th

e M

an

ag

er

is a

wh

oll

y-o

wn

ed

su

bsi

dia

ry o

f IG

B w

ho

ha

s a

Wh

istl

eb

low

ing

Po

licy

. T

he

po

licy

all

ow

s th

e s

taff

an

d e

xte

rna

l p

art

ies

such

as

sup

plie

rs, c

ust

om

ers

, co

ntr

act

ors

an

d o

the

r st

ake

ho

lde

rs, t

o r

ais

e c

on

cern

s o

r o

bse

rva

tio

ns

in c

on

fid

en

ce t

o t

he

gro

up

, ab

ou

t p

oss

ible

irr

eg

ula

riti

es

for

ind

ep

en

de

nt

inve

stig

ati

on

an

d a

pp

rop

ria

te f

ollo

w u

p a

ctio

n t

o b

e t

ake

n.

Su

ch c

on

cern

s in

clu

de

dis

ho

ne

sty,

fra

ud

ule

nt

act

s, c

orr

up

tio

n,

leg

al

bre

ach

es

an

d o

the

r se

rio

us

imp

rop

er

con

du

ct;

un

safe

wo

rk p

ract

ice

s; a

nd

an

y o

the

r co

nd

uct

th

at

ma

y c

au

se fi

na

nci

al

or

no

n-fi

na

nci

al

loss

to

th

e g

rou

p o

r d

am

ag

e t

o t

he

gro

up

’s r

ep

uta

tio

n.

Th

e p

oli

cy e

nco

ura

ge

s st

aff

an

d e

xte

rna

l p

art

ies

to i

de

nti

fy t

he

mse

lve

s w

he

ne

ver

po

ssib

le t

o

faci

lita

te i

nve

stig

ati

on

s, b

ut

wil

l a

lso

co

nsi

de

r a

no

nym

ou

s co

mp

lain

ts,

in c

ert

ain

cir

cum

sta

nce

s. A

ll w

his

tle

blo

we

r re

po

rts

are

ad

dre

sse

d t

o t

he

W

his

tle

blo

win

g W

ork

ing

Gro

up

, w

hic

h c

om

pri

ses

the

he

ad

s o

f G

rou

p I

nte

rna

l A

ud

it (

GIA

), G

rou

p H

um

an

Re

sou

rce

an

d G

rou

p C

orp

ora

te a

nd

Le

ga

l A

ffa

irs,

wh

o a

re r

esp

on

sib

le f

or

the

ad

min

istr

ati

on

, im

ple

me

nta

tio

n a

nd

ov

ers

ee

ing

co

mp

lia

nce

wit

h t

he

po

licy

, a

nd

to

in

ve

stig

ate

, o

r d

ete

rmin

e t

he

ap

pro

pri

ate

co

rre

ctiv

e o

r re

me

dia

l a

ctio

ns

tha

t m

ay b

e w

arr

an

ted

in

co

nsu

lta

tio

n w

ith

Gro

up

Ma

na

gin

g D

ire

cto

r. C

om

pla

ints

an

d

con

cern

s a

bo

ut

po

ssib

le i

mp

rop

rie

tie

s in

ma

tte

rs o

f fi

na

nci

al

rep

ort

ing

or

oth

er

ma

tte

rs a

re r

ep

ort

ed

dir

ect

ly t

o A

C o

f IG

B w

ho

sh

all

en

sure

th

at

arr

an

ge

me

nts

are

in

pla

ce f

or

ind

ep

en

de

nt

inve

stig

ati

on

of

such

ma

tte

rs a

nd

fo

r a

pp

rop

ria

te f

ollo

w-u

p a

ctio

n. F

or

FY

20

17

, th

ere

we

re n

o r

ep

ort

ed

in

cid

en

ts p

ert

ain

ing

to

wh

istl

e-b

low

ing

.

Bo

ard

de

cisi

on

s a

re

ma

de

ob

ject

ive

ly in

th

e b

est

inte

rest

s o

f th

e c

om

pa

ny

tak

ing

in

to a

cco

un

t d

ive

rse

p

ers

pe

ctiv

es

an

d

insi

gh

ts.

4.1

At

lea

st

ha

lf

of

the

b

oa

rd

com

pri

ses

ind

ep

en

de

nt

dir

ect

ors

(I

Ds)

.

For

La

rge

Co

mp

an

ies,

th

e b

oa

rd

com

pri

ses

a m

ajo

rity

IDs.

Th

e M

an

ag

er

is c

om

mit

ted

to

bu

ildin

g a

n o

pe

n,

incl

usi

ve a

nd

co

llab

ora

tive

cu

ltu

re,

an

d r

eco

gn

ise

s th

e b

en

efi

ts o

f h

avin

g a

Bo

ard

wit

h d

ive

rse

b

ack

gro

un

ds

an

d e

xpe

rie

nce

. S

uch

div

ers

ity

will

pro

vid

e a

wid

er

ran

ge

of

pe

rsp

ect

ive

s, s

kill

s a

nd

exp

eri

en

ce,

wh

ich

will

allo

w B

oa

rd m

em

be

rs t

o

be

tte

r id

en

tify

po

ssib

le r

isks

, ra

ise

ch

alle

ng

ing

qu

est

ion

s, a

nd

co

ntr

ibu

te t

o p

rob

lem

-so

lvin

g.

Th

ere

are

9 D

ire

cto

rs o

n t

he

Bo

ard

, 3

of

wh

om

are

IN

ED

s. T

he

Bo

ard

co

nsi

de

rs t

ha

t th

e B

oa

rd’s

pre

sen

t si

ze,

com

po

siti

on

an

d b

ala

nce

be

twe

en

E

Ds

an

d N

ED

s, p

rov

ide

fo

r a

n a

pp

rop

ria

te b

ala

nce

an

d d

ive

rsit

y o

f sk

ills,

exp

eri

en

ce a

nd

kn

ow

led

ge

of

IGB

RE

IT a

nd

th

e M

an

ag

er,

as

we

ll a

s co

re

com

pe

ten

cie

s su

ch a

s fi

na

nce

, a

cco

un

tin

g a

nd

oth

er

rele

va

nt

ind

ust

ry k

no

wle

dg

e,

en

tre

pre

ne

uri

al

an

d m

an

ag

em

en

t e

xpe

rie

nce

, re

qu

ire

d f

or

the

Bo

ard

an

d B

Cs

to b

e e

ffe

ctiv

e.

Th

e B

oa

rd c

oll

ect

ive

ly h

as

the

cri

tica

l sk

ills

an

d e

xpe

rtis

e n

ee

de

d i

n t

he

str

ate

gic

dir

ect

ion

an

d p

lan

nin

g o

f th

e b

usi

ne

sse

s o

f IG

B R

EIT

an

d t

he

Ma

na

ge

r. T

he

cu

rre

nt

com

po

siti

on

giv

es

the

Bo

ard

th

e a

bil

ity

to

co

nsi

de

r a

nd

ma

ke d

eci

sio

ns

ob

ject

ive

ly

an

d i

nd

ep

en

de

ntl

y o

n i

ssu

es

rela

tin

g t

o I

GB

RE

IT a

nd

th

e M

an

ag

er

wit

h a

ba

lan

ced

exc

ha

ng

e o

f v

iew

s, r

ob

ust

de

libe

rati

on

s a

nd

de

ba

tes

am

on

g

me

mb

ers

, an

d p

rov

ide

s fo

r e

ffe

ctiv

e o

vers

igh

t o

ver

Exe

cuti

ve T

ea

m.

Wh

ilst

MC

CG

Pra

ctic

e r

eco

mm

en

ds

the

ma

jori

ty o

f th

e B

oa

rd c

om

pri

ses

INE

Ds,

it

is t

ho

ug

ht

by

the

Bo

ard

th

at

to a

pp

oin

t fu

rth

er

NE

Ds

(wh

ose

p

erc

eiv

ed

in

de

pe

nd

en

ce i

s b

eyo

nd

do

ub

t) o

r to

pro

cure

th

e d

ep

art

ure

of

on

e o

f th

e e

xist

ing

Dir

ect

ors

is

un

ne

cess

ary

. M

ost

im

po

rta

ntl

y, a

ll

Dir

ect

ors

, w

he

the

r in

de

pe

nd

en

t o

r n

ot,

are

re

qu

ire

d t

o b

rin

g i

nd

ep

en

de

nt

jud

ge

me

nt

to b

ea

r o

n B

oa

rd d

eci

sio

ns.

Th

e B

oa

rd c

on

sid

ers

th

at,

fu

nd

am

en

tally

, th

e i

nd

ep

en

de

nce

of

Dir

ect

ors

is

ba

sed

on

th

eir

ca

pa

city

to

pu

t th

e b

est

in

tere

sts

of

the

Ma

na

ge

r a

nd

UH

s o

f IG

B R

EIT

ah

ea

d o

f a

ll o

the

r in

tere

sts,

so

th

at

Dir

ect

ors

are

ca

pa

ble

of

exe

rcis

ing

ob

ject

ive

in

de

pe

nd

en

t ju

dg

em

en

t. A

dd

itio

na

l p

olic

ies,

su

ch a

s D

ire

cto

rs n

ot

be

ing

p

rese

nt

du

rin

g d

iscu

ssio

ns

or

de

cisi

on

ma

kin

g o

n m

att

ers

in

wh

ich

th

ey

hav

e o

r co

uld

be

se

en

to

po

ten

tia

lly h

ave

a m

ate

ria

l C

OI,

in a

dd

itio

n t

o

Dir

ect

ors

be

ing

exc

lud

ed

fro

m t

ak

ing

pa

rt i

n t

he

ap

po

intm

en

t o

f th

ird

pa

rty

serv

ice

pro

vid

ers

wh

ere

th

e D

ire

cto

r h

as

an

in

tere

st,

pro

vid

e f

urt

he

r se

pa

rati

on

an

d s

afe

gu

ard

s to

in

de

pe

nd

en

ce.

Als

o,

the

re a

re p

roce

du

res

in p

lace

, a

gre

ed

by

the

Bo

ard

, to

en

ab

le t

he

Dir

ect

ors

in

fu

rth

era

nce

of

the

ir d

uti

es

to s

ee

k in

de

pe

nd

en

t p

rofe

ssio

na

l ad

vic

e a

t th

e M

an

ag

er’

s e

xpe

nse

.

In t

his

re

ga

rd,

the

Bo

ard

, a

fte

r co

nsi

de

rin

g t

he

re

qu

ire

me

nts

of

the

bu

sin

ess

es

of

IGB

RE

IT a

nd

th

e M

an

ag

er,

an

d t

he

ne

ed

to

av

oid

un

du

e

dis

rup

tio

ns

to t

he

co

mp

osi

tio

n o

f th

e B

oa

rd,

is o

f th

e v

iew

th

at

the

cu

rre

nt

size

an

d c

om

po

siti

on

of

the

Bo

ard

are

ap

pro

pri

ate

fo

r th

e s

cop

e a

nd

n

atu

re o

f th

e o

pe

rati

on

s o

f IG

B R

EIT

an

d t

he

Ma

na

ge

r a

nd

fa

cilit

ate

s e

ffe

ctiv

e d

eci

sio

n-m

ak

ing

. Th

e B

oa

rd b

elie

ves

tha

t th

e 3

IN

ED

s ca

n m

ake

, an

d

do

ma

ke, q

ua

lity

an

d in

form

ed

jud

ge

me

nts

in t

he

be

st in

tere

sts

of

UH

s o

f IG

B R

EIT

on

all

rele

va

nt

issu

es.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)

26

PR

INC

IPL

E A

: B

OA

RD

LE

AD

ER

SH

IP A

ND

EF

FE

CT

IVE

NE

SS

MC

CG

Pra

ctic

es

Ex

pla

na

tio

n

Inte

nd

ed

Ou

tco

me

Pra

ctic

e

Bo

ard

de

cisi

on

s a

re

ma

de

ob

ject

ive

ly in

th

e b

est

inte

rest

s o

f th

e c

om

pa

ny

tak

ing

in

to a

cco

un

t d

ive

rse

p

ers

pe

ctiv

es

an

d

insi

gh

ts.

4.2

Th

e

ten

ure

o

f a

n

ID

do

es

no

t e

xce

ed

a c

um

ula

tiv

e t

erm

lim

it

of

9 y

ea

rs.

Up

on

co

mp

leti

on

of

the

9 y

ea

rs,

an

ID

ma

y c

on

tin

ue

to

se

rve

on

th

e b

oa

rd a

s a

no

n-

ID.

If

the

b

oa

rd

inte

nd

s to

re

tain

a

n

ID

be

yo

nd

9

y

ea

rs,

it

sho

uld

ju

stif

y a

nd

se

ek

an

nu

al

sha

reh

old

ers

’ a

pp

rov

al.

If

th

e

bo

ard

co

nti

nu

es

to r

eta

in t

he

ID

a

fte

r th

e t

we

lfth

ye

ar,

th

e b

oa

rd

sho

uld

se

ek

an

nu

al

sha

reh

old

ers

’ a

pp

rov

al

thro

ug

h a

2-t

ier

voti

ng

p

roce

ss.

Th

e M

an

ag

er

me

asu

res

the

in

de

pe

nd

en

ce o

f it

s IN

ED

s b

ase

d o

n t

he

de

fin

itio

ns

an

d g

uid

elin

es

of

ind

ep

en

de

nce

se

t o

ut

in M

MLR

, R

EIT

Gu

ide

line

s a

nd

MC

CG

, in

wh

ich

an

IN

ED

sh

ou

ld b

e i

nd

ep

en

de

nt

of

ma

na

ge

me

nt

an

d f

ree

fro

m a

ny

bu

sin

ess

or

rela

tio

nsh

ip t

ha

t co

uld

ma

teri

ally

in

terf

ere

w

ith

, o

r re

aso

na

bly

pe

rce

ive

d t

o m

ate

ria

lly i

nte

rfe

re w

ith

, th

e e

xerc

ise

of

his

/he

r u

nfe

tte

red

an

d i

nd

ep

en

de

nt

jud

ge

me

nt.

IN

ED

s a

re r

eq

uir

ed

to

in

form

th

e B

oa

rd o

f a

ll re

lev

an

t in

form

ati

on

wh

ich

may

aff

ect

th

eir

ind

ep

en

de

nce

an

d a

t le

ast

an

nu

ally

, to

re

con

firm

th

eir

ind

ep

en

de

nce

.

NC

de

term

ine

s th

e i

nd

ep

en

de

nce

of

INE

Ds

an

nu

ally

. In

its

re

vie

w f

or

FY

20

17

, NC

de

term

ine

d t

ha

t th

e I

NE

Ds

rem

ain

ed

ob

ject

ive

an

d i

nd

ep

en

de

nt,

e

vid

en

ced

by

the

ir a

bili

ty t

o d

em

on

stra

te t

he

va

lue

s a

nd

pri

nci

ple

s a

sso

cia

ted

wit

h i

nd

ep

en

de

nce

du

rin

g B

oa

rd d

iscu

ssio

ns

such

as

imp

art

ialit

y,

ob

ject

ivit

y a

nd

co

nsi

de

rati

on

of

the

in

tere

sts

of

IGB

RE

IT a

nd

th

e M

an

ag

er,

an

d t

he

y h

ad

an

d w

ou

ld c

on

tin

ue

to

pro

vid

e t

he

ne

cess

ary

ch

eck

s a

nd

b

ala

nce

s to

th

e B

oa

rd i

n d

isch

arg

ing

th

eir

re

spo

nsi

bili

tie

s in

an

in

de

pe

nd

en

t m

an

ne

r w

ith

in

teg

rity

an

d c

om

pe

ten

cy. N

on

e o

f th

e M

an

ag

er’

s IN

ED

s h

ave

se

rve

d o

n t

he

Bo

ard

be

yon

d 9

ye

ars

fro

m t

he

ir r

esp

ect

ive

da

tes

of

ap

po

intm

en

t.

Th

e B

oa

rd (

wit

ho

ut

pa

rtic

ipa

tio

n b

y re

late

d I

NE

Ds)

, ta

kin

g i

nto

acc

ou

nt

NC

’s v

iew

s, a

ffirm

ed

th

at

Tan

Sri

Da

to’ D

r. L

in S

ee

Ya

n,

Ha

lim b

in H

aji

Din

a

nd

Le

e C

he

n C

ho

ng

de

mo

nst

rate

d c

om

ple

te i

nd

ep

en

de

nce

in

ch

ara

cte

r a

nd

ju

dg

em

en

t b

oth

as

Bo

ard

me

mb

ers

an

d t

he

ir d

esi

gn

ate

d r

ole

s in

th

e r

esp

ect

ive

BC

s, a

nd

th

eir

go

od

un

de

rsta

nd

ing

of

the

bu

sin

ess

es

of

IGB

RE

IT a

nd

th

e M

an

ag

er

wit

h t

he

ir w

ea

lth

of

kn

ow

led

ge

, sk

illse

ts a

nd

e

xpe

rie

nce

wo

uld

co

nti

nu

e t

o p

rov

ide

inv

alu

ab

le c

on

trib

uti

on

s to

th

e B

oa

rd, a

nd

de

em

ed

it a

pp

rop

ria

te t

ha

t th

ey

con

tin

ue

to

act

as

INE

Ds.

Ea

ch o

f th

e 3

INE

Ds

ha

s p

rov

ide

d a

n a

nn

ua

l co

nfi

rma

tio

n o

f h

is in

de

pe

nd

en

ce t

o t

he

Bo

ard

.

4.3

Ste

pU

p

Th

e b

oa

rd h

as

a p

oli

cy

wh

ich

li

mit

s th

e t

en

ure

of

its

IDs

to 9

ye

ars

.

Th

e B

oa

rd’s

po

licy

on

te

nu

re i

s th

at

con

tin

uit

y a

nd

exp

eri

en

ce a

re c

on

sid

ere

d t

o a

dd

sig

nifi

can

tly

to t

he

str

en

gth

of

the

Bo

ard

an

d,

as

such

, th

ere

is

no

lim

it o

n t

he

ove

rall

le

ng

th o

f se

rvic

e o

f a

ny

of

the

Dir

ect

ors

. T

he

Bo

ard

do

es

no

t b

eli

eve

th

at

len

gth

of

serv

ice

on

IN

ED

ha

s a

be

ari

ng

on

in

de

pe

nd

en

ce. A

n i

nd

ivid

ua

l D

ire

cto

r’s

exp

eri

en

ce a

nd

co

nti

nu

ity

of

Bo

ard

me

mb

ers

hip

ca

n s

ign

ifica

ntl

y e

nh

an

ce t

he

eff

ect

ive

ne

ss o

f th

e B

oa

rd a

s a

wh

ole

.

4.4

Ap

po

intm

en

t o

f b

oa

rd

an

d

sen

ior

ma

na

ge

me

nt

(SM

) a

re

ba

sed

on

ob

ject

ive

cri

teri

a, m

eri

t a

nd

wit

h d

ue

re

ga

rd f

or

div

ers

ity

in s

kill

s, e

xpe

rie

nce

, a

ge

, cu

ltu

ral

ba

ckg

rou

nd

an

d g

en

de

r.

Ap

po

intm

en

ts o

f n

ew

Dir

ect

ors

to

th

e B

oa

rd a

re t

he

re

spo

nsi

bil

ity

of

the

fu

ll B

oa

rd o

n N

C’s

re

com

me

nd

ati

on

. S

uch

re

com

me

nd

ati

on

s p

ay

pa

rtic

ula

r a

tte

nti

on

to

th

e m

ix o

f sk

ills,

exp

eri

en

ce, e

xpe

rtis

e, d

ive

rsit

y a

nd

oth

er

qu

alit

ies

of

exi

stin

g D

ire

cto

rs, a

nd

ho

w t

he

ca

nd

ida

te’s

att

rib

ute

s w

ill b

ala

nce

an

d c

om

ple

me

nt

tho

se q

ua

litie

s a

nd

ad

dre

ss a

ny

po

ten

tia

l sk

ills

ga

ps

in l

igh

t o

f th

e e

volv

ing

str

ate

gic

dir

ect

ion

s o

f IG

B R

EIT

an

d t

he

M

an

ag

er.

Th

ere

are

fo

rma

l, co

nsi

de

red

an

d t

ran

spa

ren

t p

roce

du

res

for

ap

po

intm

en

ts o

f p

ote

nti

al

can

did

ate

s fo

r th

e o

ffice

of

Dir

ect

or

wh

ich

are

ma

de

on

p

ers

on

al

me

rit

an

d m

ea

sure

d a

ga

inst

ob

ject

ive

cri

teri

a w

ith

du

e r

eg

ard

fo

r th

e b

en

efi

ts o

f d

ive

rsit

y in

th

e b

oa

rdro

om

. To

en

sure

th

e M

an

ag

er

ma

inta

ins

the

op

tim

um

mix

of

Dir

ect

ors

, N

C,

wh

en

co

nsi

de

rin

g p

ote

nti

al

dir

ect

or

can

did

ate

s, u

nd

ert

ake

s a

pp

rop

ria

te c

he

cks.

NC

may

do

so

wit

h

the

aid

of

an

ind

ep

en

de

nt

ad

vis

or.

Th

ere

we

re n

o n

ew

ap

po

intm

en

ts t

o t

he

Bo

ard

du

rin

g F

Y2

01

7.

Ap

po

intm

en

ts a

nd

pe

rfo

rma

nce

ap

pra

isa

ls o

f E

xecu

tiv

e M

an

ag

em

en

t a

re u

nd

er

the

pu

rvie

w o

f R

C.

RC

me

t o

nce

du

rin

g F

Y2

01

7 t

o c

on

sid

er

the

re

ne

wa

l o

f se

rvic

e c

on

tra

cts

of

the

ED

s a

nd

Offi

cers

. H

avin

g a

sse

sse

d t

he

in

div

idu

al

pe

rfo

rma

nce

, a

nd

up

on

MD

’s r

eco

mm

en

da

tio

n,

RC

wa

s sa

tisfi

ed

wit

h t

he

ir p

erf

orm

an

ce a

nd

re

com

me

nd

ed

to

th

e B

oa

rd t

ha

t it

wo

uld

be

in

th

e b

est

in

tere

st o

f th

e M

an

ag

er

to e

xte

nd

th

eir

em

plo

yme

nt

for

an

oth

er

3 y

ea

rs,

fro

m 1

Ja

nu

ary

20

18

to

31

De

cem

be

r 2

02

0,

the

reb

y re

tain

ing

its

te

am

of

com

pe

ten

t a

nd

co

mm

itte

d E

Ds

an

d O

ffice

rs a

nd

m

ain

tain

ing

ma

na

ge

me

nt’

s co

nti

nu

ity,

of

wh

ich

th

e B

oa

rd h

as

ap

pro

ve

d.

Exe

cuti

ve

Ma

na

ge

me

nt

ha

ve

se

rvic

e c

on

tra

cts

wh

ich

se

ts o

ut

the

co

nd

itio

ns

an

d e

xpe

cta

tio

ns

of

the

ro

le.

4.5

Th

e b

oa

rd d

iscl

ose

s in

its

an

nu

al

rep

ort

th

e c

om

pa

ny

’s p

olic

ies

on

g

en

de

r d

ive

rsit

y, i

ts t

arg

ets

an

d

me

asu

res

to m

ee

t th

ose

ta

rge

ts.

For

La

rge

Co

mp

an

ies,

th

e b

oa

rd

mu

st h

av

e a

t le

ast

30

% w

om

en

d

ire

cto

rs.

Th

e B

oa

rd p

roa

ctiv

ely

se

eks

to

en

sure

th

at

the

ba

lan

ce a

nd

div

ers

ity

of

the

Bo

ard

ma

inta

in a

n a

pp

rop

ria

te b

ala

nce

of

skill

exp

eri

en

ce, g

en

de

r a

nd

k

no

wle

dg

e r

eq

uir

ed

by

the

Bo

ard

, an

d t

his

is s

ub

sta

nti

ally

re

fle

cte

d in

th

e d

ive

rsit

y o

f b

ack

gro

un

ds

an

d c

ore

co

mp

ete

nci

es

of

the

cu

rre

nt

Dir

ect

ors

. A

s d

esc

rib

ed

in

Bo

x 4

.4,

the

Ma

na

ge

r m

ake

s it

s a

pp

oin

tme

nt

de

cisi

on

s b

ase

d o

n m

eri

ts,

by

ass

ess

ing

wh

eth

er

a p

ers

on

’s s

kill

s a

nd

exp

eri

en

ce a

re

ap

pro

pri

ate

fo

r p

art

icu

lar

role

s. I

t d

oe

s n

ot

dis

crim

ina

te b

ase

d o

n g

en

de

r, a

ge

, eth

nic

ity

or

cult

ura

l ba

ckg

rou

nd

.

Th

e M

an

ag

er

ha

s n

ot

yet

est

ab

lish

ed

a f

orm

al

po

licy

on

div

ers

ity

an

d h

as

no

t e

sta

blis

he

d m

ea

sura

ble

ob

ject

ive

s fo

r a

chie

vin

g g

en

de

r d

ive

rsit

y. T

he

B

oa

rd h

as

take

n c

og

nis

an

ce o

f M

CC

G P

ract

ice

an

d d

oe

s n

ot

fee

l th

at

it w

ou

ld b

e a

pp

rop

ria

te t

o s

et

ge

nd

er

div

ers

ity

targ

ets

as

all

ap

po

intm

en

ts

mu

st b

e m

ad

e o

n m

eri

t, in

th

e c

on

text

of

the

sk

ills,

kn

ow

led

ge

an

d e

xpe

rie

nce

th

at

are

ne

ed

ed

fo

r th

e B

oa

rd t

o b

e e

ffe

ctiv

e. A

t 3

1 D

ece

mb

er

20

17

, th

e p

rop

ort

ion

of

wo

me

n e

mp

loye

d b

y th

e M

an

ag

er

wa

s, B

oa

rd @

22

%, a

nd

Exe

cuti

ve T

ea

m @

57

%.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)


PR

INC

IPL

E A

: B

OA

RD

LE

AD

ER

SH

IP A

ND

EF

FE

CT

IVE

NE

SS

MC

CG

Pra

ctic

es

Ex

pla

na

tio

n

Inte

nd

ed

Ou

tco

me

Pra

ctic

e

Bo

ard

de

cisi

on

s a

re

ma

de

ob

ject

ive

ly in

th

e b

est

inte

rest

s o

f th

e c

om

pa

ny

tak

ing

in

to a

cco

un

t d

ive

rse

p

ers

pe

ctiv

es

an

d

insi

gh

ts.

4.6

In

ide

nti

fyin

g

ca

nd

ida

tes

for

ap

po

intm

en

t o

f d

ire

cto

rs,

the

b

oa

rd

do

es

no

t so

lely

re

ly

on

re

com

me

nd

ati

on

s fr

om

exi

stin

g

bo

ard

m

em

be

rs,

ma

na

ge

me

nt

or

ma

jor

sha

reh

old

ers

. Th

e b

oa

rd

uti

lise

s in

de

pe

nd

en

t so

urc

es

to

ide

nti

fy

suit

ab

le

qu

ali

fie

d

can

did

ate

s.

As

IGB

RE

IT is

an

ext

ern

ally

ma

na

ge

d t

rust

, UH

s a

re n

ot

leg

ally

ab

le t

o v

ote

fo

r D

ire

cto

rs o

f th

e M

an

ag

er.

Th

e B

oa

rd s

ee

k re

com

me

nd

ati

on

s a

nd

re

ferr

als

fro

m t

he

so

le s

ha

reh

old

er

of

the

Ma

na

ge

r, D

ire

cto

rs a

nd

ex

tern

al

sou

rce

s w

he

re p

ract

ica

ble

in

id

en

tify

ing

ap

pro

pri

ate

ca

nd

ida

tes

to b

e a

pp

oin

ted

as

ne

w D

ire

cto

rs.

4.7

NC

is

cha

ire

d b

y a

n I

D o

r se

nio

r ID

.N

C c

om

pri

ses

3 IN

ED

s a

nd

1 N

on

-IN

ED

. NC

is c

ha

ire

d b

y Ta

n S

ri D

ato

’ Dr.

Lin

Se

e Y

an

wh

o is

als

o B

oa

rd C

ha

irm

an

.

Th

e r

ole

of

NC

is

to m

ake

re

com

me

nd

ati

on

s to

th

e B

oa

rd o

n a

ll b

oa

rd a

pp

oin

tme

nts

an

d o

n r

ele

va

nt

ma

tte

rs r

ela

tin

g t

o t

he

re

vie

w o

f B

oa

rd

succ

ess

ion

pla

ns

for

Dir

ect

ors

; th

e d

eve

lop

me

nt

of

a p

roce

ss f

or

ev

alu

ati

on

of

the

pe

rfo

rma

nce

of

the

Bo

ard

, it

s B

Cs

an

d i

nd

ivid

ua

l D

ire

cto

rs;

an

d

the

re

vie

w o

f tr

ain

ing

an

d p

rofe

ssio

na

l de

velo

pm

en

t p

rog

ram

s fo

r th

e B

oa

rd.

Sta

keh

old

ers

are

a

ble

to

fo

rm a

n

op

inio

n o

n t

he

ove

rall

eff

ect

ive

ne

ss o

f th

e

bo

ard

an

d in

div

idu

al

dir

ect

ors

.

5.1

Th

e

bo

ard

sh

ou

ld

un

de

rta

ke

a

fo

rma

l a

nd

ob

jec

tiv

e a

nn

ua

l e

va

lua

tio

n

to

de

term

ine

th

e

eff

ec

tiv

en

ess

o

f th

e

bo

ard

, it

s B

Cs

an

d e

ach

in

div

idu

al

dir

ect

or.

T

he

bo

ard

sh

ou

ld d

iscl

ose

ho

w

the

ass

ess

me

nt

wa

s ca

rrie

d o

ut

an

d it

s o

utc

om

e.

For

La

rge

Co

mp

an

ies,

th

e b

oa

rd

en

ga

ge

s in

de

pe

nd

en

t e

xp

ert

s p

eri

od

ica

lly t

o f

aci

lita

te o

bje

ctiv

e

an

d c

an

did

bo

ard

ev

alu

ati

on

s.

Th

e D

ire

cto

rs a

re a

wa

re t

ha

t th

ey

ne

ed

to

co

nti

nu

ally

mo

nit

or

an

d im

pro

ve p

erf

orm

an

ce a

nd

re

cog

nis

e t

his

ca

n b

e a

chie

ved

th

rou

gh

re

gu

lar

Bo

ard

a

sse

ssm

en

t, w

hic

h p

rov

ide

s a

va

lua

ble

fe

ed

ba

ck m

ech

an

ism

fo

r im

pro

vin

g B

oa

rd e

ffe

ctiv

en

ess

, th

us

en

suri

ng

th

e M

an

ag

er

is u

nd

er

the

ove

rsig

ht

an

d g

uid

an

ce o

f a

n a

cco

un

tab

le a

nd

co

mp

ete

nt

Bo

ard

.

Th

e B

oa

rd h

as

incl

ud

ed

in

its

Ch

art

er

a r

eq

uir

em

en

t to

co

nd

uct

an

an

nu

al

ass

ess

me

nt

to e

va

lua

te t

he

eff

ect

ive

ne

ss o

f th

e B

oa

rd,

BC

s a

nd

e

ach

Dir

ect

or

an

d r

eg

ula

r a

sse

ssm

en

ts o

n t

he

re

qu

ire

d m

ix o

f sk

ills

, e

xpe

rie

nce

an

d c

ore

co

mp

ete

nci

es

wit

hin

th

e B

oa

rd t

o e

nsu

re D

ire

cto

rs

con

tin

uo

usl

y co

ntr

ibu

te t

ow

ard

s th

e a

chie

vem

en

ts o

f co

rpo

rate

ob

ject

ive

s a

nd

fu

lfil

the

ir fi

du

cia

ry r

esp

on

sib

ilit

ies.

Th

e i

nte

rna

l re

vie

w p

roce

ss

inv

olv

es

ha

vin

g D

ire

cto

rs c

om

ple

te a

n e

va

lua

tio

n q

ue

stio

nn

air

e w

hic

h i

ncl

ud

es

are

as

such

as

the

re

spo

nsi

bil

itie

s o

f th

e B

oa

rd i

n r

ela

tio

n t

o

stra

teg

ies

an

d d

ire

ctio

n,

acc

ou

nta

bili

ty a

nd

ove

rsig

ht,

ris

k m

an

ag

em

en

t, p

erf

orm

an

ce m

an

ag

em

en

t, c

om

plia

nce

an

d C

G;

Bo

ard

co

mp

osi

tio

n a

nd

p

roce

sse

s; a

nd

Bo

ard

de

cisi

on

-ma

kin

g a

nd

me

eti

ng

pro

cess

es.

In

ad

dit

ion

, me

mb

ers

of

the

Bo

ard

will

be

re

qu

ire

d t

o a

sse

ss t

he

ind

ivid

ua

l Dir

ect

or’

s p

erf

orm

an

ce s

uch

as

the

Dir

ect

or’

s a

tte

nd

an

ce,

pre

pa

red

ne

ss,

can

do

ur,

pa

rtic

ipa

tio

n a

nd

co

ntr

ibu

tio

n a

t B

oa

rd m

ee

tin

gs.

Th

e c

ha

irm

en

an

d

me

mb

ers

of

ea

ch B

C a

re a

lso

re

qu

ire

d t

o c

om

ple

te a

qu

est

ion

na

ire

on

th

e e

ffe

ctiv

en

ess

of

BC

s o

n w

hic

h t

he

y se

rve

, in

te

rms

of

com

po

siti

on

an

d

go

vern

an

ce;

me

eti

ng

ad

min

istr

ati

on

an

d c

on

du

ct;

an

d s

kill

s a

nd

co

mp

ete

nci

es.

Th

e i

nd

ep

en

de

nce

of

ea

ch I

NE

D i

s a

lso

co

nsi

de

red

as

pa

rt o

f th

is

pro

cess

. HO

C/C

S c

om

pile

s D

ire

cto

rs’ r

esp

on

ses

to t

he

qu

est

ion

na

ire

s in

to a

co

nso

lida

ted

re

po

rt. T

he

re

po

rt i

s d

iscu

sse

d a

t N

C m

ee

tin

g a

nd

sh

are

d

wit

h t

he

Bo

ard

on

th

e o

vera

ll re

sult

s o

f th

e e

va

lua

tio

n c

on

du

cte

d a

nd

imp

rove

me

nts

re

com

me

nd

ed

wh

ere

ap

pro

pri

ate

.

Th

e B

oa

rd’s

pe

rfo

rma

nce

-ass

ess

me

nt

pro

cess

ha

s b

ee

n a

pp

lied

in

re

spe

ct o

f F

Y2

01

7.

In i

ts a

sse

ssm

en

t, N

C t

oo

k in

to c

on

sid

era

tio

n t

he

in

div

idu

al

Dir

ect

or’

s co

ntr

ibu

tio

n a

nd

pe

rfo

rma

nce

, w

ith

re

fere

nce

to

th

e r

esu

lts

of

the

an

nu

al

ass

ess

me

nt

of

the

eff

ect

ive

ne

ss o

f th

e i

nd

ivid

ua

l D

ire

cto

r,

an

d t

he

in

trin

sic

ind

ep

en

de

nt

va

lue

s d

em

on

stra

ted

by

INE

Ds,

an

d c

on

clu

de

d t

ha

t th

e B

oa

rd a

s a

wh

ole

an

d i

ts B

Cs

ha

ve p

erf

orm

ed

we

ll w

ith

th

e i

nd

ivid

ua

l’s c

red

ita

bili

ty t

o a

dd

va

lue

to

th

e B

oa

rd a

nd

BC

de

libe

rati

on

s a

nd

exe

rcis

e o

bje

ctiv

e j

ud

ge

me

nt

in d

eci

sio

n-m

ak

ing

pro

cess

es,

an

d

ea

ch D

ire

cto

r h

as

giv

en

su

ffici

en

t ti

me

an

d a

tte

nti

on

to

th

e a

ffa

irs

of

the

Ma

na

ge

r. N

o m

ate

ria

l is

sue

s o

r a

rea

s o

f co

nce

rn w

ere

id

en

tifi

ed

in

th

ese

re

vie

ws.

Th

e B

oa

rd h

ad

co

nsi

de

red

NC

’s v

iew

s, a

nd

co

ncu

rre

d t

ha

t e

ach

Dir

ect

or

ha

d c

on

tin

ue

d t

o p

erf

orm

eff

ect

ive

ly a

nd

de

mo

nst

rate

d c

om

mit

me

nts

to

his

/he

r ro

le,

incl

ud

ing

co

mm

itm

en

t o

f ti

me

to

th

e B

oa

rd,

an

d w

he

re r

ele

va

nt

BC

re

spo

nsi

bili

tie

s. T

he

Bo

ard

wa

s a

lso

sa

tisfi

ed

th

at

it a

nd

its

BC

s h

ave

an

ap

pro

pri

ate

ba

lan

ce o

f b

ack

gro

un

ds,

sk

ills

, e

xpe

rie

nce

, in

de

pe

nd

en

ce a

nd

kn

ow

led

ge

of

IGB

RE

IT a

nd

th

e M

an

ag

er

to d

isch

arg

e t

he

ir

du

tie

s e

ffe

ctiv

ely

.

Th

e B

oa

rd b

elie

ves

tha

t th

is in

tern

ally

fa

cilit

ate

d p

roce

ss w

ork

s w

ell

for

its

size

an

d c

om

po

siti

on

, an

d a

s su

ch, t

he

use

of

an

ind

ep

en

de

nt

con

sult

an

t is

no

t n

ece

ssa

ry a

t th

is s

tag

e.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)

28

PR

INC

IPL

E A

: B

OA

RD

LE

AD

ER

SH

IP A

ND

EF

FE

CT

IVE

NE

SS

MC

CG

Pra

ctic

es

Ex

pla

na

tio

n

Inte

nd

ed

Ou

tco

me

Pra

ctic

e

Th

e le

vel a

nd

co

mp

osi

tio

n o

f re

mu

ne

rati

on

of

dir

ect

ors

an

d S

M

take

into

acc

ou

nt

the

co

mp

an

y’s

de

sire

to

a

ttra

ct a

nd

re

tain

th

e

rig

ht

tale

nt

in t

he

b

oa

rd a

nd

SM

to

dri

ve

the

co

mp

an

y’s

lon

g-

term

ob

ject

ive

s.

Re

mu

ne

rati

on

p

olic

ies

an

d d

eci

sio

ns

are

ma

de

th

rou

gh

a

tra

nsp

are

nt

&

ind

ep

en

de

nt

pro

cess

.

6.1

Th

e b

oa

rd h

as

in p

lace

po

lici

es

an

d p

roce

du

res

to d

ete

rmin

e t

he

re

mu

ne

rati

on

o

f d

ire

cto

rs

an

d

SM

, w

hic

h

tak

es

into

a

cco

un

t th

e d

em

an

ds,

co

mp

lexi

tie

s a

nd

p

erf

orm

an

ce

of

the

co

mp

an

y a

s w

ell

as

skil

ls a

nd

exp

eri

en

ce

req

uir

ed

. T

he

p

oli

cie

s a

nd

p

roc

ed

ure

s a

re

pe

rio

dic

all

y re

vie

we

d a

nd

ma

de

ava

ilab

le o

n

the

co

mp

an

y’s

we

bsi

te.

Th

e M

an

ag

er

reco

gn

ise

s th

at

its

pe

op

le a

re i

ts h

um

an

re

sou

rce

an

d o

ne

of

its

key

ass

ets

. Th

e p

rofe

ssio

na

l g

row

th a

nd

de

velo

pm

en

t o

f it

s p

eo

ple

a

re c

en

tra

l to

ach

iev

ing

th

e M

an

ag

er’

s m

issi

on

an

d s

tra

teg

y. W

ith

th

is i

n m

ind

, th

e M

an

ag

er

sup

po

rts

leve

ls o

f re

mu

ne

rati

on

an

d c

om

pe

nsa

tio

n

ne

cess

ary

to

att

ract

, e

ng

ag

e,

reta

in a

nd

mo

tiv

ate

hig

h q

ua

lity

pe

op

le r

eq

uir

ed

to

eff

ect

ive

ly l

ea

d a

nd

ma

na

ge

th

e o

pe

rati

on

s a

nd

gro

wth

of

the

M

an

ag

er,

at

a c

om

pe

titi

ve c

ost

.

Th

e M

an

ag

er

stri

ves

to e

nsu

re t

ha

t re

mu

ne

rati

on

pa

cka

ge

s re

fle

ct t

he

re

lev

an

t d

uti

es

an

d r

esp

on

sib

iliti

es,

are

fa

ir a

nd

eq

uit

ab

le,

an

d i

nco

rpo

rate

re

wa

rds

cle

arl

y a

nd

me

asu

rab

ly li

nke

d t

o p

erf

orm

an

ce b

oth

on

an

ind

ivid

ua

l an

d o

n a

co

rpo

rate

ba

sis.

Mo

re s

pe

cifi

call

y, t

he

RP

P w

hic

h w

as

est

ab

lish

ed

an

d a

do

pte

d b

y t

he

Bo

ard

on

8 N

ov

em

be

r 2

01

7,

ha

s b

ee

n d

esi

gn

ed

to

me

et

the

fo

llo

win

g

pri

nci

ple

s a

nd

ob

ject

ive

s:

to

re

cru

it, m

oti

va

te, r

ew

ard

an

d r

eta

in t

ale

nt

an

d p

rofi

le d

esi

red

by

the

Ma

na

ge

r;

to

se

t re

mu

ne

rati

on

pa

cka

ge

at

a c

om

pe

titi

ve l

eve

l b

y b

en

chm

ark

ing

to

th

e m

ark

et

an

d p

rov

idin

g i

nce

nti

ves

ge

are

d t

o a

gre

ed

pe

rfo

rma

nce

o

utc

om

es,

wh

ere

ap

pro

pri

ate

; an

d

to a

lign

to

th

e b

usi

ne

ss s

tra

teg

y a

nd

ach

ieve

me

nt

of

bu

sin

ess

go

als

.

6.2

Th

e

bo

ard

h

as

a

RC

to

im

ple

me

nt

its

po

lic

ies

an

d

pro

ce

du

res

on

re

mu

ne

rati

on

in

clu

din

g

rev

iew

ing

a

nd

re

com

me

nd

ing

ma

tte

rs r

ela

tin

g

to t

he

re

mu

ne

rati

on

of

the

bo

ard

a

nd

SM

.

RC

ha

s w

ritt

en

To

R w

hic

h d

ea

ls

wit

h i

ts a

uth

ori

ty a

nd

du

tie

s a

nd

th

ese

te

rms

are

dis

clo

sed

on

th

e

com

pa

ny

’s w

eb

site

.

RC

co

mp

rise

s 3

INE

Ds

an

d M

D. R

C is

ch

air

ed

by

Tan

Sri

Da

to’ D

r. L

in S

ee

Ya

n w

ho

is a

lso

Bo

ard

Ch

air

ma

n.

RC

ha

s o

vers

igh

t o

f th

e M

an

ag

er’

s R

PP

in

th

e c

on

text

th

at

the

se p

olic

ies

an

d p

ract

ice

s fa

irly

an

d r

esp

on

sib

ly r

ew

ard

in

div

idu

als

hav

ing

re

ga

rd t

o

pe

rfo

rma

nce

. Th

e f

un

ctio

ns

of

RC

, wh

ich

in

clu

de

am

on

g o

the

rs, r

ev

iew

th

e r

em

un

era

tio

n f

ram

ew

ork

fo

r th

e B

oa

rd a

nd

Exe

cuti

ve M

an

ag

em

en

t fo

r B

oa

rd’s

en

do

rse

me

nt;

an

d r

ev

iew

an

d a

pp

rove

th

e f

ram

ew

ork

fo

r sa

lary

re

vie

ws,

pe

rfo

rma

nce

bo

nu

ses

an

d i

nce

nti

ves

for

Exe

cuti

ve M

an

ag

em

en

t.

No

RC

me

mb

er

or

an

y D

ire

cto

r is

invo

lve

d in

de

libe

rati

on

s in

an

y re

mu

ne

rati

on

to

be

gra

nte

d t

o h

imse

lf/h

ers

elf

.

Th

e r

em

un

era

tio

n o

f D

ire

cto

rs a

nd

Offi

cers

is

pa

id b

y th

e M

an

ag

er

fro

m t

he

fe

es

it r

ece

ive

s fr

om

IG

B R

EIT

. T

he

re

mu

ne

rati

on

of

NE

Ds

take

s in

to

acc

ou

nt

the

ir r

esp

ect

ive

re

spo

nsi

bili

tie

s, i

ncl

ud

ing

att

en

da

nce

an

d t

ime

sp

en

t a

t B

oa

rd a

nd

BC

me

eti

ng

s. N

ED

s a

re p

aid

Dir

ect

ors

’ fe

es

wh

ich

are

su

bje

ct t

o t

he

ap

pro

va

l o

f th

e M

an

ag

er’

s so

le s

ha

reh

old

er,

IG

B,

an

d s

itti

ng

fe

es

for

att

en

din

g m

ee

tin

gs

of

Bo

ard

an

d B

Cs.

Dir

ect

ors

are

en

titl

ed

to

be

re

imb

urs

ed

by

the

Ma

na

ge

r fo

r re

aso

na

ble

tra

velli

ng

, a

cco

mm

od

ati

on

an

d o

the

r e

xpe

nse

s th

at

the

y m

ay i

ncu

r w

hils

t tr

ave

llin

g t

o o

r fr

om

m

ee

tin

gs

of

the

Bo

ard

or

BC

s. D

eta

ils

on

re

mu

ne

rati

on

of

Dir

ect

ors

are

sh

ow

n i

n B

ox

7.1

. Fo

r E

xecu

tiv

e M

an

ag

em

en

t, t

he

Ma

na

ge

r a

do

pts

a

rem

un

era

tio

n s

yste

m t

ha

t is

re

spo

nsi

ve t

o t

he

ma

rke

t e

lem

en

ts a

nd

pe

rfo

rma

nce

of

bo

th t

he

Ma

na

ge

r a

nd

th

e i

nd

ivid

ua

l. E

xecu

tive

Ma

na

ge

me

nt

typ

ica

lly r

ece

ive

s re

mu

ne

rati

on

co

mp

risi

ng

ba

se s

ala

ry a

nd

oth

er

fixe

d b

en

efi

ts b

ase

d o

n t

he

ir r

esp

ect

ive

se

rvic

e c

on

tra

cts

wit

h t

he

Ma

na

ge

r. B

ase

sa

lari

es

are

re

vie

we

d a

nn

ua

lly t

ak

ing

in

to a

cco

un

t a

va

rie

ty o

f fa

cto

rs,

such

as

ge

ne

ral

eco

no

mic

an

d m

ark

et

con

dit

ion

s; p

art

icu

lar

circ

um

sta

nce

s su

ch a

s ch

an

ge

s in

th

e s

cop

e a

nd

re

spo

nsi

bili

ty o

f th

e r

ole

; sa

lary

le

vels

fo

r co

mp

ara

ble

ro

les

at

rele

va

nt

com

pa

rato

rs; a

nd

in

div

idu

al

pe

rfo

rma

nce

. T

he

pe

rfo

rma

nce

-ba

sed

bo

nu

s is

lin

ked

to

an

d d

ete

rmin

ed

ba

sed

on

ach

iev

em

en

t o

f th

e M

an

ag

er’

s ke

y q

ua

lita

tiv

e fi

na

nci

al,

op

era

tio

na

l a

nd

st

rate

gic

me

asu

res

in t

he

ye

ar.

Th

e r

em

un

era

tio

n l

eve

ls f

or

Dir

ect

ors

an

d E

xecu

tive

Te

am

are

re

vie

we

d e

ach

ye

ar

thro

ug

h a

str

uct

ure

d a

nd

tra

nsp

are

nt

ass

ess

me

nt

pro

cess

. To

e

nsu

re t

he

co

mp

eti

tive

ne

ss o

f th

e M

an

ag

er’

s re

mu

ne

rati

on

le

vels

, th

e l

eve

ls a

re b

en

chm

ark

ed

ag

ain

st i

ts p

ee

r g

rou

p a

nd

RE

IT i

nd

ust

ry g

en

era

lly.

Th

e l

ast

pe

rfo

rma

nce

ev

alu

ati

on

fo

r D

ire

cto

rs a

nd

Exe

cuti

ve T

ea

m w

as

un

de

rta

ken

in

No

vem

be

r 2

01

7.

RC

ha

d c

on

sid

ere

d t

he

qu

an

tum

of

NE

Ds’

fe

es

(in

re

spe

ct o

f 2

01

7 fi

na

nci

al

yea

r) a

nd

me

eti

ng

allo

wa

nce

s (i

n r

esp

ect

of

yea

r 2

01

8),

an

d h

avin

g n

ote

d t

ha

t th

e a

nn

ua

l re

tain

er

fee

s o

f th

e

Ma

na

ge

r h

ad

be

en

se

t a

n i

na

de

qu

ate

le

vel

for

com

pa

rab

le r

ole

s to

th

ose

of

com

pa

rab

le c

om

pa

nie

s, h

ad

ag

ree

d t

o r

eco

mm

en

d t

o t

he

Bo

ard

th

at

the

an

nu

al

fee

s fo

r B

oa

rd C

ha

irm

an

, A

C C

ha

irm

an

an

d N

ED

be

re

vis

ed

re

spe

ctiv

ely

to

RM

90

,00

0,

RM

80

,00

0 a

nd

RM

70

,00

0 t

ota

llin

g R

M3

80

,00

0 f

or

FY

20

17

, w

hile

th

e m

ee

tin

g a

llow

an

ces,

pre

sen

tly

set

at

RM

3,0

00

fo

r th

e c

ha

ir o

f m

ee

tin

g,

an

d R

M2

,50

0 f

or

the

me

mb

ers

, to

ma

inta

in s

tatu

s q

uo

, w

he

reu

po

n t

he

Bo

ard

ha

d e

nd

ors

ed

RC

’s r

eco

mm

en

da

tio

n.

RC

ha

d a

lso

re

vie

we

d t

he

ye

ar-

en

d p

erf

orm

an

ce b

on

use

s a

nd

me

rit

pa

y in

cre

ase

s (i

n r

esp

ect

of

yea

r 2

01

8),

fo

r E

xecu

tive

Ma

na

ge

me

nt,

an

d h

avin

g c

on

sid

ere

d t

he

go

od

pe

rfo

rma

nce

of

IGB

RE

IT d

esp

ite

th

e p

rev

ail

ing

ca

uti

ou

s se

nti

me

nt

an

d i

ncr

ea

sin

g c

om

pe

titi

on

bro

ug

ht

on

by

ne

w s

ho

pp

ing

ma

lls a

nd

ack

no

wle

dg

ed

th

e a

chie

vem

en

ts w

ere

th

e r

esu

lt o

f th

e c

on

tin

ue

d

com

mit

me

nt

an

d d

ed

ica

tio

n o

f th

e t

ea

m b

eh

ind

IG

B R

EIT

, ha

d a

pp

lied

its

ju

dg

em

en

t in

de

term

inin

g a

ba

lan

ced

fa

ir o

utc

om

e o

f m

eri

t in

cre

ase

s in

2

01

8 a

nd

ye

ar-

en

d p

erf

orm

an

ce b

on

use

s fo

r E

xecu

tive

Ma

na

ge

me

nt.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)


PR

INC

IPL

E A

: B

OA

RD

LE

AD

ER

SH

IP A

ND

EF

FE

CT

IVE

NE

SS

MC

CG

Pra

ctic

es

Ex

pla

na

tio

n

Inte

nd

ed

Ou

tco

me

Pra

ctic

e

Sta

keh

old

ers

are

ab

le

to a

sse

ss w

he

the

r

the

re

mu

ne

rati

on

of

dir

ect

ors

an

d S

M

is c

om

me

nsu

rate

wit

h t

he

ir in

div

idu

al

pe

rfo

rma

nce

, ta

kin

g

into

co

nsi

de

rati

on

the

co

mp

an

y’s

pe

rfo

rma

nce

.

7.1

Th

ere

is

d

eta

ile

d

dis

clo

sure

on

n

am

ed

b

asi

s fo

r th

e

rem

un

era

tio

n

of

ind

ivid

ua

l

dir

ec

tors

. T

he

re

mu

ne

rati

on

bre

ak

do

wn

o

f in

div

idu

al

dir

ec

tors

in

clu

de

s fe

es,

sa

lary

,

bo

nu

s, b

en

efi

ts-i

n-k

ind

(B

IK)

an

d

oth

er

em

olu

me

nts

.

De

tails

of

Dir

ect

ors

’ re

mu

ne

rati

on

fo

r F

Y2

01

7 a

re a

s fo

llow

s:

Dir

ect

ors

Sa

lari

es

an

d

EP

F c

on

trib

uti

on

s

RM

An

nu

al

Fe

es

RM

Me

eti

ng

All

ow

an

ces

RM

Tota

l

Re

mu

ne

rati

on

RM

Tan

Sri

Da

to’ D

r. L

in S

ee

Ya

n, I

NE

D-

90

,00

02

8,0

00

11

8,0

00

Da

to’ S

eri

Ro

be

rt T

an

Ch

un

g M

en

g, M

D5

,30

0,0

00

--

5,3

00

,00

0

Ha

lim b

in H

aji

Din

, IN

ED

-8

0,0

00

21

,50

01

01

,50

0

Lee

Ch

en

Ch

on

g, I

NE

D-

70

,00

02

5,5

00

95

,50

0

Tan

Bo

on

Le

e, E

D5

00

,00

0-

-5

00

,00

0

Da

nie

l Yo

ng

Ch

en

-I, E

D5

00

,00

0-

-5

00

,00

0

Eliz

ab

eth

Ta

n H

ui N

ing

, ED

50

0,0

00

--

50

0,0

00

Tan

Le

i Ch

en

g, N

on

-IN

ED

-7

0,0

00

15

,00

08

5,0

00

Tan

Ye

e S

en

g, N

on

-IN

ED

-7

0,0

00

10

,00

08

0,0

00

Tota

l6

,80

0,0

00

38

0,0

00

10

0,0

00

7,2

80

,00

0

No

ne

of

the

Dir

ect

ors

re

ceiv

e B

IK a

nd

oth

er

em

olu

me

nts

.

Sta

keh

old

ers

are

ab

le

to a

sse

ss w

he

the

r

the

re

mu

ne

rati

on

of

dir

ect

ors

an

d S

M

is c

om

me

nsu

rate

wit

h t

he

ir in

div

idu

al

pe

rfo

rma

nce

, ta

kin

g

into

co

nsi

de

rati

on

the

co

mp

an

y’s

pe

rfo

rma

nce

.

7.2

Th

e

bo

ard

d

isc

lose

s o

n

a

na

me

d

ba

sis

the

to

p

5

SM

’s

rem

un

era

tio

n

co

mp

on

en

t

incl

ud

ing

sa

lary

, b

on

us,

BIK

an

d

oth

er

em

olu

me

nts

in

ba

nd

s o

f

RM

50

,00

0.

Th

e B

oa

rd i

s o

f th

e v

iew

th

at,

giv

en

th

e c

on

fid

en

tia

l a

nd

co

mm

erc

ial

sen

siti

vit

ies

ass

oci

ate

d w

ith

sta

ff r

em

un

era

tio

n m

att

ers

an

d t

he

hig

hly

com

pe

titi

ve h

um

an

re

sou

rce

en

vir

on

me

nt

in w

hic

h t

he

Ma

na

ge

r o

pe

rate

s a

nd

th

e i

mp

ort

an

ce o

f e

nsu

rin

g s

tab

ilit

y a

nd

co

nti

nu

ity

of

bu

sin

ess

op

era

tio

ns

wit

h a

co

mp

ete

nt

an

d e

xpe

rie

nce

d E

xecu

tive

Te

am

in p

lace

, it

is in

th

e b

est

inte

rest

s o

f th

e M

an

ag

er

no

t to

dis

clo

se t

he

re

mu

ne

rati

on

of

its

top

5 O

ffic

ers

on

a n

am

ed

ba

sis.

Th

e r

em

un

era

tio

n p

aid

to

th

e t

op

5 O

ffic

ers

in b

an

ds

of

RM

50

,00

0 f

or

FY

20

17

is a

s fo

llow

s:

Re

mu

ne

rati

on

Ba

nd

s

No

. o

f

Ex

ecu

tiv

es

Ba

se S

ala

ryB

on

us

BIK

Tota

l

Be

twe

en

RM

30

0,0

00

– R

M3

50

,00

01

70

.24

%2

9.7

6%

-1

00

%

Be

twe

en

RM

50

0,0

00

– R

M5

50

,00

03

55

.36

%4

4.6

4%

-1

00

%

Be

twe

en

RM

70

0,0

00

– R

M7

50

,00

01

72

.08

%2

2.2

0%

5.7

2%

10

0%

Th

e a

nn

ua

l ag

gre

ga

te r

em

un

era

tio

n p

aid

to

th

e t

op

5 O

ffic

ers

of

the

Ma

na

ge

r fo

r F

Y2

01

7 w

as

RM

2,6

00

,00

0.

7.3

Ste

p

Up

Co

mp

an

ies

are

e

nc

ou

rag

ed

to

full

y

dis

clo

se

the

d

eta

ile

d

rem

un

era

tio

n o

f e

ach

me

mb

er

of

SM

on

a n

am

ed

ba

sis.

As

exp

lain

ed

in B

ox

7.2

, th

e B

oa

rd h

as

ass

ess

ed

an

d d

eci

de

d a

ga

inst

th

e d

iscl

osu

re o

f th

e r

em

un

era

tio

n o

f th

e t

op

5 O

ffice

rs o

n a

na

me

d b

asi

s, a

nd

be

lieve

d t

ha

t th

e in

tere

sts

of

UH

s o

f IG

B R

EIT

wo

uld

no

t b

e p

reju

dic

ed

as

a r

esu

lts

of

such

no

n-d

iscl

osu

re. M

ost

imp

ort

an

tly,

th

e c

om

po

siti

on

of

the

curr

en

t E

xecu

tive

Te

am

ha

s b

ee

n q

uit

e s

tab

le a

nd

to

en

sure

th

e c

on

tin

uit

y o

f b

usi

ne

ss a

nd

op

era

tio

ns

of

IGB

RE

IT, i

t is

im

po

rtan

t th

at

the

Ma

na

ge

r

con

tin

ue

s to

re

tain

its

tea

m o

f co

mp

ete

nt

an

d c

om

mit

ted

Offi

cers

so

to

dri

ve IG

B R

EIT

’s b

usi

ne

sse

s to

gre

ate

r g

row

th, e

ffici

en

cy a

nd

pro

fita

bili

ty.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)

30

PR

INC

IPL

E B

: E

FF

EC

TIV

E A

UD

IT A

ND

RIS

K M

AN

AG

EM

EN

T

MC

CG

Pra

ctic

es

Ex

pla

na

tio

nIn

ten

de

d O

utc

om

eP

ract

ice

Th

ere

is a

n e

ffe

ctiv

e

an

d in

de

pe

nd

en

t A

C.

Th

e b

oa

rd is

ab

le t

o

ob

ject

ive

ly r

ev

iew

A

C’s

fin

din

gs

an

d

reco

mm

en

da

tio

ns.

Th

e c

om

pa

ny

’s

fin

an

cia

l sta

tem

en

t is

a r

elia

ble

so

urc

e o

f in

form

ati

on

.

8.1

Th

e c

ha

irm

an

of

AC

is

no

t th

e

cha

irm

an

of

the

bo

ard

.A

C c

om

pri

ses

3 I

NE

Ds

an

d 1

No

n-I

NE

D.

AC

is

cha

ire

d b

y H

alim

bin

Ha

ji D

in,

an

IN

ED

. B

oa

rd C

ha

irm

an

is

a m

em

be

r o

f A

C b

ut

do

es

no

t a

ct a

s A

C

Ch

air

ma

n. W

ith

an

ind

ep

en

de

nt

com

po

ne

nt

of

75

% a

nd

co

mp

ose

d o

f N

ED

s, t

he

co

mp

osi

tio

n o

f A

C is

fu

lly c

om

plia

nt

wit

h M

MLR

.

8.2

AC

h

as

a

po

lic

y

tha

t re

qu

ire

s a

fo

rme

r k

ey

a

ud

it

pa

rtn

er

to

ob

serv

e

a

coo

lin

g-o

ff

pe

rio

d

of

at

lea

st 2

ye

ars

be

fore

be

ing

a

pp

oin

ted

as

a m

em

be

r o

f A

C.

Th

e a

pp

oin

tme

nt

of

Ext

ern

al A

ud

ito

r (E

A),

wh

o m

ay b

e n

om

ina

ted

by

the

Ma

na

ge

r, is

ap

pro

ved

by

the

Tru

ste

e. E

A a

pp

oin

ted

mu

st b

e in

de

pe

nd

en

t o

f th

e M

an

ag

er

an

d t

he

Tru

ste

e. T

he

re

mu

ne

rati

on

of

EA

mu

st b

e a

pp

rove

d b

y th

e T

rust

ee

. EA

’s p

erf

orm

an

ce is

re

vie

we

d a

nn

ua

lly.

Th

e B

oa

rd h

as

incl

ud

ed

in

its

Ch

art

er

a r

eq

uir

em

en

t fo

r th

e B

oa

rd t

o o

bse

rve

a c

oo

ling

-off

pe

rio

d o

f a

t le

ast

2 y

ea

rs p

rio

r to

th

e a

pp

oin

tme

nt

of

a

form

er

key

au

dit

pa

rtn

er

as

a m

em

be

r o

f A

C.

No

ne

of

AC

me

mb

ers

is

a f

orm

er

pa

rtn

er

of

Pri

cew

ate

rho

use

Co

op

ers

(P

wC

) w

ho

ha

s b

ee

n E

A o

f IG

B

RE

IT s

ince

list

ing

. Pw

C h

as

a p

olic

y o

f ro

tati

ng

au

dit

pa

rtn

er

at

lea

st e

very

5 y

ea

rs a

nd

pro

vid

ing

an

an

nu

al d

ecl

ara

tio

n o

f in

de

pe

nd

en

ce.

8.3

AC

ha

s p

oli

cie

s a

nd

pro

ced

ure

s to

a

sse

ss

the

su

ita

bil

ity

, o

bje

ctiv

ity

an

d i

nd

ep

en

de

nce

of

EA

.

AC

mo

nit

ors

an

d r

ev

iew

s th

e e

ffe

ctiv

en

ess

of

the

ext

ern

al

au

dit

pro

cess

fo

r th

e fi

na

nci

al

sta

tem

en

ts o

f IG

B R

EIT

, u

nd

ert

ake

s a

de

taile

d r

ev

iew

of

the

au

dit

pla

n a

nd

th

e a

ud

it r

esu

lts

rep

ort

. A

ny

con

cern

wit

h t

he

eff

ect

ive

ne

ss o

f th

e e

xte

rna

l a

ud

it p

roce

ss w

ou

ld b

e r

ep

ort

ed

to

th

e B

oa

rd.

No

co

nce

rns

we

re r

ais

ed

in r

esp

ect

of

IGB

RE

IT F

ina

nci

al S

tate

me

nts

FY

20

17

.

AC

is

task

ed

wit

h t

he

an

nu

al

ass

ess

me

nt

pro

cess

on

th

e p

erf

orm

an

ce a

nd

qu

alit

y o

f E

A a

nd

th

eir

in

de

pe

nd

en

ce,

ob

ject

ive

an

d p

rofe

ssio

na

lism

. Fo

llow

ing

th

is y

ea

r’s

ev

alu

ati

on

usi

ng

a q

ue

stio

nn

air

e-b

ase

d i

nte

rna

l re

vie

w,

as

we

ll a

s in

pu

t fr

om

Offi

cers

wh

o h

ave

co

nst

an

t co

nta

ct w

ith

Pw

C

tea

m t

hro

ug

ho

ut

the

ye

ar,

AC

wa

s sa

tisfi

ed

wit

h P

wC

’s t

ech

nic

al

com

pe

ten

cy i

n t

erm

s o

f th

eir

sk

ills,

exe

cuti

on

of

au

dit

pla

n,

rep

ort

ing

an

d o

vera

ll p

erf

orm

an

ce.

Pw

C h

as

pro

vid

ed

a c

on

firm

ati

on

of,

the

ir i

nd

ep

en

de

nce

to

AC

th

at

the

y w

ere

an

d h

ad

be

en

in

de

pe

nd

en

t th

rou

gh

ou

t th

e c

on

du

ct

of

the

au

dit

en

ga

ge

me

nt

in a

cco

rda

nce

wit

h t

he

pro

vis

ion

s o

f th

e B

y-La

ws

on

Pro

fess

ion

al

Ind

ep

en

de

nce

of

the

Ma

lays

ian

In

stit

ute

of

Acc

ou

nta

nts

(M

IA)

an

d t

he

ir fi

rm’s

re

qu

ire

me

nts

fo

r th

e a

ud

it o

f IG

B R

EIT

Fin

an

cia

l Sta

tem

en

ts F

Y2

01

7.

AC

ha

s a

lso

co

nd

uct

ed

a r

ev

iew

of

all

no

n-a

ud

it s

erv

ice

s p

rov

ide

d b

y P

wC

du

rin

g F

Y2

01

7 a

nd

en

sure

d t

ha

t th

e f

ee

s fo

r su

ch n

on

-au

dit

fe

es

did

no

t im

pa

ir t

he

ir a

ud

it in

de

pe

nd

en

ce. B

ase

d o

n it

s re

vie

w, A

C w

as

sati

sfie

d t

ha

t g

ive

n t

he

na

ture

an

d e

xte

nt

of

no

n-a

ud

it s

erv

ice

s p

rov

ide

d a

nd

th

e f

ee

s fo

r su

ch s

erv

ice

s, n

eit

he

r th

e i

nd

ep

en

de

nce

no

r th

e o

bje

ctiv

ity

of

Pw

C w

as

pu

t a

t ri

sk. T

he

fe

es

pay

ab

le t

o P

wC

in

FY

20

17

am

ou

nte

d t

o R

M1

10

,00

0

for

au

dit

an

d a

ud

it r

ela

ted

se

rvic

es,

an

d R

M8

,77

5 f

or

no

n-a

ud

it s

erv

ice

s re

late

d t

o t

ax

com

plia

nce

an

d c

on

sult

an

cy.

8.4

Ste

pU

p

AC

sh

ou

ld c

om

pri

se s

ole

ly o

f ID

s.A

C c

om

pri

ses

ma

jori

ty o

f IN

ED

s, a

nd

as

such

th

ere

is

a s

tro

ng

an

d i

nd

ep

en

de

nt

ele

me

nt

to p

rov

ide

eff

ect

ive

ove

rsig

ht

for

it t

o f

un

ctio

n e

ffe

ctiv

ely

a

nd

exe

rcis

e o

bje

ctiv

e ju

dg

em

en

ts in

de

pe

nd

en

tly.

8.5

Co

llect

ive

ly,

AC

sh

ou

ld p

oss

ess

a

wid

e r

an

ge

of

ne

cess

ary

sk

ills

to

dis

cha

rge

its

du

tie

s. A

ll m

em

be

rs

sho

uld

b

e

fin

an

cia

lly

li

tera

te

an

d

are

a

ble

to

u

nd

ers

tan

d

ma

tte

rs u

nd

er

the

pu

rvie

w o

f A

C

incl

ud

ing

th

e fi

na

nci

al

rep

ort

ing

p

roce

ss.

All

m

em

be

rs

of

AC

sh

ou

ld

un

de

rt

ak

e

co

nt

inu

ou

s p

rofe

ss

ion

al

de

ve

lop

me

nt

to

ke

ep

th

em

selv

es

ab

rea

st

of

rele

va

nt

de

ve

lop

me

nts

in

a

cc

ou

nti

ng

a

nd

a

ud

itin

g

sta

nd

ard

s, p

ract

ice

s a

nd

ru

les.

Th

e B

oa

rd r

eg

ard

s th

e m

em

be

rs o

f A

C c

olle

ctiv

ely

po

sse

ss t

he

acc

ou

nti

ng

an

d r

ela

ted

fin

an

cia

l m

an

ag

em

en

t e

xpe

rtis

e a

nd

exp

eri

en

ce r

eq

uir

ed

fo

r A

C t

o d

isch

arg

e i

ts r

esp

on

sib

iliti

es

an

d a

ssis

t th

e B

oa

rd i

n i

ts o

vers

igh

t o

ver

ma

na

ge

me

nt

in t

he

de

sig

n, i

mp

lem

en

tati

on

an

d m

on

ito

rin

g o

f ri

sk

ma

na

ge

me

nt

an

d in

tern

al c

on

tro

l sys

tem

s.

AC

’s r

esp

on

sib

ilit

ies

incl

ud

e r

ev

iew

ing

th

e s

ign

ifica

nt

fin

an

cia

l re

po

rtin

g i

ssu

es

an

d j

ud

ge

me

nts

so

as

to e

nsu

re t

he

in

teg

rity

of

the

fin

an

cia

l st

ate

me

nts

of

IGB

RE

IT a

nd

an

y a

nn

ou

nce

me

nt

rela

tin

g t

o I

GB

RE

IT’s

fin

an

cia

l p

erf

orm

an

ce;

rev

iew

ing

an

d m

on

ito

rin

g t

he

eff

ect

ive

ne

ss o

f th

e

Ma

na

ge

r’s

inte

rna

l co

ntr

ols

, in

clu

din

g fi

na

nci

al,

com

pli

an

ce a

nd

ris

k m

an

ag

em

en

t co

ntr

ols

an

d p

roce

du

res

an

d r

ep

ort

ing

fin

din

gs

the

reo

n t

o

the

Bo

ard

at

lea

st a

nn

ua

lly

; re

vie

win

g t

he

ad

eq

ua

cy a

nd

eff

ect

ive

ne

ss o

f IA

fu

nct

ion

, in

clu

din

g i

ts r

eso

urc

es,

au

dit

pla

ns

an

d t

he

sco

pe

an

d

eff

ect

ive

ne

ss o

f IA

pro

ced

ure

s; a

nd

re

vie

win

g,

on

an

an

nu

al

ba

sis,

th

e i

nd

ep

en

de

nce

an

d o

bje

ctiv

ity

of

EA

. Ta

sks

pe

rfo

rme

d b

y A

C d

uri

ng

FY

20

17

a

re d

esc

rib

ed

in g

rea

ter

de

tails

un

de

r th

e h

ea

din

g A

ud

it C

om

mit

tee

Re

po

rt in

th

is A

nn

ua

l Re

po

rt.

AC

ta

kes

me

asu

res

to k

ee

p a

bre

ast

of

the

ch

an

ge

s to

acc

ou

nti

ng

sta

nd

ard

s a

nd

iss

ue

s w

hic

h h

ave

a d

ire

ct i

mp

act

on

fin

an

cia

l st

ate

me

nts

, w

ith

tr

ain

ing

co

nd

uct

ed

by

pro

fess

ion

als

or

ext

ern

al

con

sult

an

ts.

Up

dat

es

on

de

velo

pm

en

ts i

n a

cco

un

tin

g a

nd

go

vern

an

ce s

tan

da

rds

are

pre

sen

ted

by

EA

at

AC

me

eti

ng

s. D

eta

ils o

f th

e t

rain

ing

pro

gra

mm

es,

se

min

ars

an

d c

on

fere

nce

s th

at

AC

me

mb

ers

att

en

de

d a

re s

et

ou

t in

Ap

pe

nd

ix I

I.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)


PR

INC

IPL

E B

: E

FF

EC

TIV

E A

UD

IT A

ND

RIS

K M

AN

AG

EM

EN

T

MC

CG

Pra

ctic

es

Ex

pla

na

tio

nIn

ten

de

d O

utc

om

eP

ract

ice

Co

mp

an

ies

ma

ke

info

rme

d d

eci

sio

ns

ab

ou

t th

e le

vel o

f ri

sk

the

y w

an

t to

ta

ke a

nd

im

ple

me

nt

ne

cess

ary

co

ntr

ols

to

pu

rsu

e

the

ir o

bje

ctiv

es.

Th

e b

oa

rd is

pro

vid

ed

w

ith

re

aso

na

ble

a

ssu

ran

ce t

ha

t a

dve

rse

imp

act

a

risi

ng

fro

m a

fo

rese

ea

ble

fu

ture

e

ven

t o

r si

tua

tio

n

on

th

e c

om

pa

ny

’s

ob

ject

ive

s is

m

itig

ate

d a

nd

m

an

ag

ed

.

9.1

Th

e b

oa

rd s

ho

uld

est

ab

lish

an

e

ffe

ctiv

e r

isk

ma

na

ge

me

nt

an

d

inte

rna

l co

ntr

ol f

ram

ew

ork

.

Th

e M

an

ag

er

ha

s e

sta

blis

he

d a

so

un

d s

yste

m o

f ri

sk m

an

ag

em

en

t a

nd

in

tern

al

con

tro

ls c

om

pri

sin

g p

roce

du

res

an

d p

roce

sse

s to

sa

feg

ua

rd I

GB

R

EIT

’s a

sse

ts a

nd

UH

s’ i

nte

rest

s. T

he

Bo

ard

ha

s o

vera

ll re

spo

nsi

bili

ty f

or

IGB

RE

IT’s

sys

tem

of

inte

rna

l co

ntr

ols

an

d f

or

rev

iew

ing

its

eff

ect

ive

ne

ss,

en

suri

ng

th

at

risk

ma

na

ge

me

nt

an

d in

tern

al c

on

tro

l pro

cess

es

are

em

be

dd

ed

in t

he

day

-to

-day

op

era

tio

ns.

AC

, th

rou

gh

th

e a

ssis

tan

ce o

f IA

, re

vie

ws

an

d r

ep

ort

s to

th

e B

oa

rd o

n t

he

ad

eq

ua

cy a

nd

eff

ect

ive

ne

ss o

f th

e M

an

ag

er’

s sy

ste

m o

f in

tern

al

con

tro

ls,

incl

ud

ing

fin

an

cia

ls,

com

plia

nce

, o

pe

rati

on

al

an

d i

nfo

rma

tio

n t

ech

no

log

y (I

T).

EA

als

o a

sse

sse

s th

e s

yste

m o

f in

tern

al

con

tro

ls r

ele

va

nt

to t

he

ir a

ud

it p

roce

du

res

an

d r

ep

ort

s to

AC

on

an

exc

ep

tio

n b

asi

s. I

n a

sse

ssin

g t

he

eff

ect

ive

ne

ss o

f in

tern

al

con

tro

ls,

AC

en

sure

s p

rim

ari

ly t

ha

t ke

y o

bje

ctiv

es

are

me

t, m

ate

ria

l a

sse

ts a

re p

rop

erl

y sa

feg

ua

rde

d,

fra

ud

or

err

ors

in

th

e a

cco

un

tin

g r

eco

rds

are

pre

ven

ted

or

de

tect

ed

, a

cco

un

tin

g

reco

rds

are

acc

ura

te a

nd

co

mp

lete

, a

nd

re

lia

ble

fin

an

cia

l in

form

ati

on

is

pre

pa

red

in

co

mp

lia

nce

wit

h a

pp

lica

ble

in

tern

al

po

lici

es,

la

ws

an

d

reg

ula

tio

ns.

AC

, th

rou

gh

th

e a

ssis

tan

ce o

f R

MS

C a

nd

IA

, re

vie

ws

the

ad

eq

ua

cy a

nd

eff

ect

ive

ne

ss o

f th

e M

an

ag

er’

s ri

sk m

an

ag

em

en

t fr

am

ew

ork

to

en

sure

th

at

rob

ust

ris

k m

an

ag

em

en

t a

nd

mit

iga

tin

g c

on

tro

ls a

re i

n p

lace

. Th

e M

an

ag

er

ha

s a

do

pte

d a

n e

nte

rpri

se-w

ide

ris

k m

an

ag

em

en

t (E

RM

) fr

am

ew

ork

to

e

nh

an

ce i

ts r

isk

ma

na

ge

me

nt

cap

ab

iliti

es.

Ke

y ri

sks,

co

ntr

ol

me

asu

res

an

d m

an

ag

em

en

t a

ctio

ns

are

co

nti

nu

ally

id

en

tifi

ed

, re

vie

we

d a

nd

mo

nit

ore

d

as

pa

rt o

f E

RM

pro

cess

. Fi

na

nci

al

an

d o

pe

rati

on

al

key

risk

in

dic

ato

rs a

re i

n p

lace

to

tra

ck k

ey

risk

exp

osu

res.

Ap

art

fro

m E

RM

pro

cess

, ke

y b

usi

ne

ss

risk

s a

re t

ho

rou

gh

ly a

sse

sse

d b

y R

MS

C a

nd

ea

ch s

ign

ifica

nt

tra

nsa

ctio

n i

s co

mp

reh

en

sive

ly a

na

lyse

d s

o t

ha

t m

an

ag

em

en

t u

nd

ers

tan

ds

the

ris

ks

invo

lve

d b

efo

re i

t is

em

ba

rke

d u

po

n.

In a

dd

itio

n t

o E

RM

fra

me

wo

rk,

a m

atr

ix o

f ke

y ri

sks,

by

wh

ich

re

lev

an

t m

ate

ria

l fi

na

nci

al,

com

plia

nce

an

d

op

era

tio

na

l (i

ncl

ud

ing

IT

) ri

sks

of

IGB

RE

IT h

ave

be

en

do

cum

en

ted

to

ass

ist

the

Bo

ard

to

ass

ess

th

e a

de

qu

acy

an

d e

ffe

ctiv

en

ess

of

the

exi

stin

g

inte

rna

l co

ntr

ols

. Th

e r

isk

ma

trix

is

pre

pa

red

wit

h r

efe

ren

ce t

o s

tra

teg

ies,

po

licie

s, p

roce

sse

s, s

yste

ms

an

d r

ep

ort

ing

pro

cess

es

con

ne

cte

d w

ith

th

e

ma

na

ge

me

nt

of

such

ke

y ri

sks

an

d p

rese

nte

d t

o t

he

Bo

ard

an

d A

C.

Ea

ch y

ea

r, i

n c

on

sult

ati

on

wit

h R

MS

C,

AC

an

d I

A,

the

Bo

ard

ass

ess

es

the

ad

eq

ua

cy a

nd

eff

ect

ive

ne

ss o

f ri

sk m

an

ag

em

en

t a

nd

in

tern

al

con

tro

ls o

f IG

B R

EIT

. Th

e r

ev

iew

co

vere

d a

ll m

ate

ria

l co

ntr

ols

, in

clu

din

g fi

na

nci

al,

op

era

tio

na

l, co

mp

lian

ce a

nd

IT

as

we

ll a

s ri

sk m

an

ag

em

en

t fu

nct

ion

s. B

ase

d

on

th

e i

nte

rna

l co

ntr

ols

an

d E

RM

fra

me

wo

rk e

sta

blis

he

d a

nd

ma

inta

ine

d b

y th

e M

an

ag

er,

re

vie

ws

pe

rfo

rme

d b

y R

MS

C,

AC

an

d I

A,

an

d a

ssu

ran

ce

fro

m M

D,

CE

O a

nd

CF

O,

the

Bo

ard

wa

s o

f th

e o

pin

ion

th

at

the

ris

k m

an

ag

em

en

t a

nd

in

tern

al

con

tro

ls i

n p

lace

fo

r IG

B R

EIT

we

re a

de

qu

ate

an

d

eff

ect

ive

as

at

31

De

cem

be

r 2

01

7 t

o a

dd

ress

th

e fi

na

nci

al,

op

era

tio

na

l, co

mp

lian

ce a

nd

ris

ks,

wh

ich

th

e M

an

ag

er

con

sid

ers

re

lev

an

t a

nd

ma

teri

al

to I

GB

RE

IT’s

op

era

tio

ns.

No

ne

of

the

we

ak

ne

sse

s o

r is

sue

s id

en

tifi

ed

du

rin

g F

Y2

01

7 h

as

resu

lte

d i

n n

on

-co

mp

lian

ce w

ith

an

y re

lev

an

t p

olic

ies

or

pro

ced

ure

s, M

MLR

or

reco

mm

en

de

d in

du

stry

pra

ctic

es

tha

t w

ou

ld r

eq

uir

e d

iscl

osu

re in

th

is A

nn

ua

l Re

po

rt.

9.2

Th

e b

oa

rd s

ho

uld

dis

clo

se t

he

fe

atu

res

of

its

risk

ma

na

ge

me

nt

an

d i

nte

rna

l co

ntr

ol

fra

me

wo

rk,

an

d

the

a

de

qu

ac

y

an

d

eff

ect

ive

ne

ss o

f th

is f

ram

ew

ork

.

9.3

Ste

pU

p

Th

e

bo

ard

e

sta

bli

she

s a

R

isk

Ma

na

ge

me

nt

Co

mm

itte

e,

wh

ich

co

mp

rise

s a

m

ajo

rity

o

f ID

s,

to

ov

ers

ee

th

e

com

pa

ny

’s

risk

m

an

ag

em

en

t fr

am

ew

ork

a

nd

p

olic

ies.

As

de

taile

d i

n B

ox

9.1

an

d B

ox

9.2

, th

e B

oa

rd’s

ove

rsig

ht,

re

vie

w a

nd

mo

nit

ori

ng

of

the

eff

ect

ive

ne

ss o

f IG

B R

EIT

’s r

isk

ma

na

ge

me

nt

an

d i

nte

rna

l co

ntr

ols

are

su

pp

ort

ed

by

RM

SC

, A

C a

nd

IA

. R

MS

C o

ve

rse

es

the

im

ple

me

nta

tio

n a

nd

op

era

tio

n o

f E

RM

fra

me

wo

rk a

nd

ris

k cu

ltu

re w

ith

in t

he

M

an

ag

er.

RM

SC

gu

ide

s th

e i

mp

lem

en

tati

on

of

risk

ma

na

ge

me

nt

pra

ctic

es,

pro

cess

es

an

d s

yste

ms,

an

d o

vers

ee

s a

ll m

ate

ria

l ri

sk e

xpo

sure

s a

nd

ris

k d

eci

sio

ns

faci

ng

IG

B R

EIT

. A

C a

ssis

ts b

y p

rov

idin

g a

n o

bje

ctiv

e n

on

-exe

cuti

ve r

ev

iew

of

the

eff

ect

ive

ne

ss o

f E

RM

fra

me

wo

rk.

IA p

rov

ide

s th

e B

oa

rd

an

d m

an

ag

em

en

t w

ith

an

in

de

pe

nd

en

t a

nd

ob

ject

ive

ev

alu

ati

on

of

the

ad

eq

ua

cy a

nd

eff

ect

ive

ne

ss o

f th

e c

on

tro

l o

ver

the

ris

ks f

or

IGB

RE

IT. T

he

B

oa

rd h

as

be

en

pro

vid

ed

wit

h a

ssu

ran

ce t

ha

t a

ll o

f IG

B R

EIT

’s m

ate

ria

l bu

sin

ess

ris

ks h

ave

be

en

eff

ect

ive

ly m

an

ag

ed

fo

r F

Y2

01

7.

RM

SC

co

mp

rise

s E

xecu

tive

Te

am

an

d is

ch

air

ed

by

CE

O. R

MS

C is

ta

ske

d w

ith

th

e r

esp

on

sib

ility

to

ove

rse

e t

he

ris

k m

an

ag

em

en

t a

ctiv

itie

s o

f IG

B R

EIT

b

y re

vie

win

g I

GB

RE

IT’s

ris

k p

rofi

le a

nd

en

suri

ng

th

e i

mp

lem

en

tati

on

of

ap

pro

pri

ate

sys

tem

s to

ma

na

ge

an

d m

itig

ate

th

e i

de

nti

fie

d r

isks

as

we

ll a

s IG

B R

EIT

’s p

olic

ies

an

d s

tra

teg

ies

as

the

y p

ert

ain

to

su

sta

ina

bili

ty b

y id

en

tify

ing

, e

va

lua

tin

g,

mo

nit

ori

ng

an

d m

an

ag

ing

EE

S r

isks

an

d o

pp

ort

un

itie

s a

s th

ey

ari

se.

RM

SC

me

ets

qu

art

erl

y o

r m

ore

oft

en

if

ne

cess

ary

, to

ap

pra

ise

th

e a

de

qu

acy

an

d e

ffe

ctiv

en

ess

of

IGB

RE

IT’s

ris

k m

an

ag

em

en

t p

lan

s,

syst

em

s, p

roce

sse

s a

nd

pro

ced

ure

s, a

s w

ell

as

its

risk

po

rtfo

lio

s, r

isk

leve

ls a

nd

ris

k m

itig

ati

on

an

d s

tra

teg

ies.

A r

isk

ma

trix

ha

s b

ee

n p

rod

uce

d

ag

ain

st w

hic

h t

he

ris

ks i

de

nti

fie

d a

nd

th

e c

on

tro

ls i

n p

lace

to

mit

iga

te t

ho

se r

isks

ca

n b

e m

on

ito

red

. T

he

ris

ks a

re a

sse

sse

d o

n t

he

ba

sis

of

the

lik

elih

oo

d o

f th

em

ha

pp

en

ing

, th

e im

pa

ct o

n t

he

bu

sin

ess

if t

he

y w

ere

to

occ

ur

an

d t

he

eff

ect

ive

ne

ss o

f th

e c

on

tro

ls in

pla

ce t

o m

itig

ate

th

em

. Th

is

risk

re

gis

ter

is r

ev

iew

ed

at

ea

ch m

ee

tin

g o

f R

MS

C a

nd

at

oth

er

tim

es

as

ne

cess

ary

.

Th

e M

an

ag

er

va

lue

s E

ES

su

sta

ina

bili

ty w

ith

in t

he

are

as

wh

ich

IG

B R

EIT

op

era

tes.

In

ord

er

to m

itig

ate

an

y m

ate

ria

l e

xpo

sure

to

EE

S s

ust

ain

ab

ility

ri

sks,

th

e M

an

ag

er

un

de

rta

kes

reg

ula

r m

on

ito

rin

g a

nd

ass

ess

me

nt

of

bo

th o

pe

rati

ng

an

d n

on

-op

era

tin

g a

sse

ts o

f IG

B R

EIT

to

en

sure

th

at

all

a

ctiv

itie

s a

re c

on

du

cte

d i

n a

ma

nn

er

tha

t is

co

nsi

ste

nt

wit

h I

GB

RE

IT’s

co

mm

itm

en

t to

sa

fe a

nd

su

sta

ina

ble

op

era

tio

ns.

Cu

rre

nt

mo

nit

ori

ng

an

d

ass

ess

me

nt

ha

s n

ot

ind

ica

ted

an

y m

ate

ria

l e

xpo

sure

s in

th

e a

rea

s o

f e

nv

iro

nm

en

tal

an

d s

oci

al

sust

ain

ab

ilit

y. I

GB

RE

IT’s

co

rpo

rate

su

sta

ina

bili

ty

dir

ect

ion

s a

nd

act

ivit

ies

are

dis

clo

sed

in t

his

An

nu

al R

ep

ort

un

de

r th

e h

ea

din

g S

ust

ain

ab

ilit

y S

tate

me

nt.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)

32

PR

INC

IPL

E B

: E

FF

EC

TIV

E A

UD

IT A

ND

RIS

K M

AN

AG

EM

EN

T

MC

CG

Pra

ctic

es

Ex

pla

na

tio

nIn

ten

de

d O

utc

om

eP

ract

ice

Co

mp

an

ies

hav

e a

n

eff

ect

ive

go

vern

an

ce,

risk

ma

na

ge

me

nt

an

d in

tern

al c

on

tro

l fr

am

ew

ork

an

d

sta

keh

old

ers

are

a

ble

to

ass

ess

th

e

eff

ect

ive

ne

ss o

f su

ch

a f

ram

ew

ork

.

10

.1A

C

sho

uld

e

nsu

re

tha

t IA

fu

nct

ion

is

eff

ect

ive

an

d a

ble

to

fu

nct

ion

ind

ep

en

de

ntl

y.

IGB

RE

IT d

oe

s n

ot

hav

e it

s o

wn

in-h

ou

se IA

fu

nct

ion

. IA

fu

nct

ion

is o

uts

ou

rce

d t

o G

IA d

ivis

ion

of

its

pa

ren

t co

mp

an

y, IG

B, t

o a

ssis

t A

C in

dis

cha

rgin

g

its

du

tie

s a

nd

re

spo

nsi

bil

itie

s. G

IA i

s in

de

pe

nd

en

t o

f th

e a

ctiv

itie

s th

at

it a

ud

its.

GIA

in

de

pe

nd

en

tly

exa

min

e a

nd

ev

alu

ate

th

e a

ctiv

itie

s o

f th

e

Ma

na

ge

r, f

ocu

sin

g o

n t

he

ad

eq

ua

cy a

nd

eff

ect

ive

ne

ss o

f in

tern

al

con

tro

ls,

risk

ma

na

ge

me

nt

an

d C

G p

roce

sse

s. G

IA h

as

rea

son

ab

le a

cce

ss t

o t

he

M

an

ag

er’

s p

ers

on

ne

l, p

rem

ise

s, d

ocu

me

nts

, re

cord

, in

form

ati

on

an

d a

sse

ts, a

nd

au

tho

rise

d t

o o

bta

in s

uch

in

form

ati

on

an

d e

xpla

nat

ion

s w

hic

h G

IA

con

sid

er

ne

cess

ary

to

fu

lfil i

ts r

esp

on

sib

ility

.

Th

e H

ea

d o

f G

IA,

Ch

rist

ine

On

g M

ay

Ee

, w

ho

ha

s a

Ba

che

lor

of

Acc

ou

nta

ncy

(B

. A

cc (

Ho

ns.

) (S

ing

ap

ore

), C

ert

ifie

d I

nte

rna

l A

ud

ito

r (C

IA)

(US

A),

C

ert

ifie

d R

isk

Ma

na

ge

me

nt

Ass

ura

nce

(C

RM

A)

(US

A),

Fe

llow

Ch

art

ere

d A

cco

un

tan

t (F

CA

) (A

ust

ralia

), F

ello

w M

em

be

r o

f In

stit

ute

of

Inte

rna

l A

ud

ito

rs

(FM

IIA

) (M

ala

ysia

) a

nd

Ch

art

ere

d A

cco

un

tan

t (C

A)

(Ma

lays

ia),

re

po

rts

dir

ect

ly t

o A

C C

ha

irm

an

. G

IA’s

act

ivit

ies

are

gu

ide

d b

y t

he

In

tern

ati

on

al

Sta

nd

ard

s fo

r th

e P

rofe

ssio

na

l P

ract

ice

of

Inte

rna

l A

ud

itin

g (

Sta

nd

ard

s) s

et

by

th

e I

nst

itu

te o

f In

tern

al

Au

dit

ors

(II

A),

an

d i

nco

rpo

rate

d t

he

se

Sta

nd

ard

s in

to i

ts a

ud

it p

ract

ice

s. T

o e

nsu

re t

ha

t th

e i

nte

rna

l a

ud

its

are

eff

ect

ive

ly p

erf

orm

ed

, G

IA d

ivis

ion

re

cru

its

an

d e

mp

loys

su

ita

bly

qu

alifi

ed

st

aff

wit

h t

he

re

qu

isit

e s

kill

s a

nd

exp

eri

en

ce.

Su

ch s

taff

are

als

o g

ive

n r

ele

va

nt

tra

inin

g a

nd

de

velo

pm

en

t o

pp

ort

un

itie

s to

up

dat

e t

he

ir t

ech

nic

al

kn

ow

led

ge

an

d a

ud

itin

g s

kill

s.

GIA

op

era

tes

wit

hin

th

e f

ram

ew

ork

as

con

tain

ed

in

th

e I

A C

ha

rte

r a

pp

rove

d b

y A

C.

It a

do

pts

a r

isk-

ba

sed

au

dit

me

tho

do

log

y to

de

velo

p i

ts a

ud

it

pla

ns,

an

d i

ts a

ctiv

itie

s a

re a

lign

ed

to

ke

y ri

sks

of

IGB

RE

IT.

Ba

sed

on

ris

k a

sse

ssm

en

t p

erf

orm

ed

, g

rea

ter

focu

s a

nd

ap

pro

pri

ate

re

vie

w i

nte

rva

ls

are

se

t fo

r h

igh

er

risk

act

ivit

ies,

an

d m

ate

ria

l in

tern

al

con

tro

ls,

incl

ud

ing

co

mp

lia

nce

wit

h I

GB

RE

IT a

nd

th

e M

an

ag

er’

s p

oli

cie

s, p

roce

du

res

an

d

reg

ula

tory

re

spo

nsi

bil

itie

s. A

ll a

ud

it r

ep

ort

s d

eta

ilin

g a

ud

it fi

nd

ing

s a

nd

re

com

me

nd

ati

on

s a

re p

rov

ide

d t

o m

an

ag

em

en

t w

ho

wo

uld

re

spo

nd

o

n t

he

act

ion

s to

be

ta

ken

. E

ach

qu

art

er,

GIA

su

bm

its

to A

C a

re

po

rt o

n a

ud

it fi

nd

ing

s a

nd

act

ion

s ta

ken

by

ma

na

ge

me

nt

on

su

ch fi

nd

ing

s. K

ey

fin

din

gs

are

hig

hli

gh

ted

at

AC

me

eti

ng

s fo

r d

iscu

ssio

n a

nd

fo

llo

w-u

p a

ctio

n.

AC

mo

nit

ors

th

e t

ime

ly a

nd

pro

pe

r im

ple

me

nta

tio

n o

f re

qu

ire

d

corr

ect

ive

, pre

ven

tive

or

imp

rove

me

nt

me

asu

res

un

de

rta

ken

by

ma

na

ge

me

nt.

Du

rin

g F

Y2

01

7,

GIA

co

nd

uct

ed

its

au

dit

re

vie

ws

ba

sed

on

th

e a

pp

rov

ed

IA

Pla

n a

nd

iss

ue

d m

ult

iple

re

po

rts

cov

eri

ng

all

le

ve

ls o

f o

pe

rati

on

s w

ith

in t

he

Ma

na

ge

r a

nd

IG

B R

EIT

, a

nd

mo

nit

ore

d t

he

sta

tus

of

ma

na

ge

me

nt

act

ion

pla

ns

resu

ltin

g f

rom

au

dit

fin

din

gs

to e

nsu

re c

om

ple

tio

n

an

d r

ep

ort

s p

rog

ress

ea

ch q

ua

rte

r to

AC

. Th

e a

rea

s re

vie

we

d i

n F

Y2

01

7 i

ncl

ud

e C

G,

RP

T r

ep

ort

ing

, a

dve

rtis

ing

an

d p

rom

oti

on

s, b

uild

ing

se

rvic

es,

fi

na

nce

, le

asi

ng

, m

ark

eti

ng

, IT

an

d r

isk

ma

na

ge

me

nt.

As

reg

ard

s ri

sk m

an

ag

em

en

t a

nd

fra

ud

, G

IA i

s re

spo

nsi

ble

on

ly f

or

the

fa

cilit

ati

on

an

d a

ssis

ts

ma

na

ge

me

nt

by

ass

ess

ing

th

e a

de

qu

acy

an

d e

ffe

ctiv

en

ess

of

the

de

velo

pe

d o

r re

vis

ed

sys

tem

s a

nd

pro

ced

ure

s. A

C i

s sa

tisfi

ed

th

at

for

FY

20

17

, th

e

IA f

un

ctio

n i

s a

de

qu

ate

ly r

eso

urc

ed

to

pe

rfo

rm i

ts f

un

ctio

ns,

is

ind

ep

en

de

nt

an

d f

ree

fro

m C

OI

an

d h

as

ap

pro

pri

ate

sta

nd

ing

wit

hin

IG

B R

EIT

an

d

the

Ma

na

ge

r to

pe

rfo

rm it

s fu

nct

ion

s e

ffe

ctiv

ely

.

10

.2T

he

bo

ard

sh

ou

ld d

iscl

ose

:

w

he

the

r IA

p

ers

on

ne

l a

re

fre

e f

rom

an

y r

ela

tio

nsh

ips

or

CO

I, w

hic

h c

ou

ld i

mp

air

th

eir

o

bje

cti

vit

y

an

d

ind

ep

en

de

nce

;

the

nu

mb

er

of

reso

urc

es

in

IA d

ep

art

me

nt;

n

am

e

an

d

qu

ali

fica

tio

n

of

the

pe

rso

n r

esp

on

sib

le f

or

IA; a

nd

w

he

the

r IA

fu

nc

tio

n

is

carr

ied

o

ut

in

acc

ord

an

ce

wit

h

a

rec

og

nis

ed

fr

am

ew

ork

.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)


PR

INC

IPL

E C

: IN

TE

GR

ITY

IN

CO

RP

OR

AT

E R

EP

OR

TIN

G A

ND

ME

AN

ING

FU

L R

EL

AT

ION

SH

IP W

ITH

ST

AK

EH

OL

DE

RS

MC

CG

Pra

ctic

es

Ex

pla

na

tio

nIn

ten

de

d O

utc

om

eP

ract

ice

Th

ere

is c

on

tin

uo

us

com

mu

nic

ati

on

b

etw

ee

n t

he

co

mp

an

y a

nd

st

ake

ho

lde

rs t

o

faci

lita

te m

utu

al

un

de

rsta

nd

ing

o

f e

ach

oth

er’

s o

bje

ctiv

es

an

d

exp

ect

ati

on

s.

Sta

keh

old

ers

are

ab

le

to m

ake

info

rme

d

de

cisi

on

s w

ith

re

spe

ct

to t

he

bu

sin

ess

of

the

co

mp

an

y, it

s p

olic

ies

on

go

vern

an

ce, t

he

e

nv

iro

nm

en

t a

nd

so

cia

l re

spo

nsi

bili

ty.

11

.1T

he

b

oa

rd

en

sure

s th

ere

is

e

ffe

cti

ve

, tr

an

spa

ren

t a

nd

re

gu

lar

com

mu

nic

ati

on

wit

h i

ts

sta

keh

old

ers

.

Th

e M

an

ag

er

(th

rou

gh

th

e B

oa

rd)

is r

esp

on

sib

le f

or

CG

of

IGB

RE

IT a

nd

th

ere

fore

ha

s si

gn

ifica

nt

con

tin

uo

us

dis

clo

sure

ob

lig

ati

on

s u

nd

er

RE

IT

Gu

ide

lin

es

an

d M

ML

R.

Th

e M

an

ag

er

is c

om

mit

ted

to

ma

kin

g t

ime

ly a

nd

ba

lan

ced

dis

clo

sure

of

all

ma

teri

al

ma

tte

rs c

on

cern

ing

IG

B R

EIT

an

d

eff

ect

ive

co

mm

un

ica

tio

n w

ith

its

sta

keh

old

ers

so

as

to g

ive

th

em

re

ad

y a

cce

ss t

o c

lea

r a

nd

re

lev

an

t in

form

ati

on

to

ass

ist

the

m i

n m

ak

ing

in

form

ed

d

eci

sio

ns.

Th

e M

an

ag

er

en

sure

s th

at

all

ma

teri

al

an

d p

rice

se

nsi

tive

in

form

ati

on

is

rele

ase

d t

o t

he

ma

rke

t a

nd

UH

s o

f IG

B R

EIT

in

acc

ord

an

ce w

ith

re

gu

lato

ry r

eq

uir

em

en

ts, i

n a

tim

ely

ma

nn

er

an

d w

ith

sim

ult

an

eo

us

acc

ess

.

Th

e M

an

ag

er

pla

ces

a h

igh

pri

ori

ty o

n c

om

mu

nic

ati

on

wit

h U

Hs

of

IGB

RE

IT,

ma

rke

t p

art

icip

an

ts a

nd

oth

er

sta

keh

old

ers

an

d a

ims

to e

nsu

re t

he

y a

re k

ep

t in

form

ed

of

all

ma

jor

de

velo

pm

en

ts a

ffe

ctin

g t

he

sta

te o

f a

ffa

irs

of

IGB

RE

IT.

On

e o

f th

e k

ey

com

mu

nic

ati

on

to

ol

is I

GB

RE

IT’s

we

bsi

te.

Th

e w

eb

site

co

nta

ins

the

ke

y g

ove

rna

nce

do

cum

en

ts,

ma

rke

t a

nn

ou

nce

me

nts

, a

nn

ua

l re

po

rts,

qu

art

erl

y a

nd

an

nu

ally

fin

an

cia

l re

sult

s a

nd

oth

er

com

mu

nic

ati

on

s to

sta

keh

old

ers

. T

he

Ma

na

ge

r h

as

als

o p

rov

ide

d U

Hs

wit

h c

on

tact

de

tail

s fo

r in

vest

or

rela

tio

ns

(in

vest

orr

ela

tio

ns@

igb

reit

.co

m)

thro

ug

h w

hic

h t

he

y ca

n d

ire

ct e

nq

uir

ies

on

in

vest

or

rela

ted

ma

tte

rs. T

he

we

bsi

te a

lso

co

nta

ins

a f

aci

lity

(fe

ed

ba

ck@

igb

reit

.co

m)

for

UH

s to

dir

ect

in

qu

irie

s to

th

e M

an

ag

er.

Th

e B

oa

rd b

elie

ves

tha

t th

e m

ain

ten

an

ce o

f g

oo

d r

ela

tio

ns

wit

h b

oth

in

stit

uti

on

al

an

d r

eta

il U

Hs

is i

mp

ort

an

t fo

r th

e l

on

g-t

erm

pro

spe

cts

of

IGB

R

EIT

. Exe

cuti

ve T

ea

m c

on

du

cts

reg

ula

r d

ialo

gu

es,

bri

efi

ng

s a

nd

me

eti

ng

s w

ith

fin

an

cia

l a

na

lyst

s a

nd

me

dia

as

we

ll a

s p

rese

nta

tio

ns

to i

nst

itu

tio

na

l in

ve

sto

rs t

o p

rov

ide

up

da

tes,

str

ate

gie

s a

nd

de

ve

lop

me

nts

ab

ou

t IG

B R

EIT

’s s

tate

of

aff

air

s b

ase

d o

n p

erm

issi

ble

dis

clo

sure

s. T

he

se m

ee

tin

gs

focu

s e

ith

er

on

re

cen

tly

an

no

un

ced

fin

an

cia

l re

sult

s, r

ece

nt

corp

ora

te a

ctiv

ity

or

the

lo

ng

er

term

str

ate

gy

of

IGB

RE

IT.

Info

rma

tio

n t

ha

t is

pri

ce-

sen

siti

ve o

r th

at

may

be

re

ga

rde

d a

s u

nd

iscl

ose

d m

ate

ria

l in

form

ati

on

ab

ou

t IG

B R

EIT

is

no

t d

iscl

ose

d i

n t

he

se s

ess

ion

s u

nti

l a

fte

r th

e p

resc

rib

ed

a

nn

ou

nce

me

nt

to B

urs

a S

ecu

riti

es

ha

s b

ee

n m

ad

e.

11

.2L

arg

e

Co

mp

an

ies

a

re

en

cou

rag

ed

to

ad

op

t in

teg

rate

d

rep

ort

ing

b

ase

d

on

a

g

lob

all

y re

cog

nis

ed

fra

me

wo

rk.

Th

is r

eco

mm

en

da

tio

n w

ill b

e s

ati

sfie

d a

t th

e a

pp

rop

ria

te t

ime

in IG

B R

EIT

’s f

utu

re.

Sh

are

ho

lde

rs a

re a

ble

to

pa

rtic

ipa

te, e

ng

ag

e

the

bo

ard

an

d S

M

eff

ect

ive

ly a

nd

ma

ke

info

rme

d v

oti

ng

d

eci

sio

ns

at

Ge

ne

ral

Me

eti

ng

s (G

Ms)

.

12

.1N

oti

ce

for

an

a

nn

ua

l g

en

era

l m

ee

tin

g

sho

uld

b

e

giv

en

to

sh

are

ho

lde

rs

at

lea

st

28

d

ay

s p

rio

r to

th

e m

ee

tin

g.

UH

M n

oti

ce is

issu

ed

at

lea

st a

mo

nth

be

fore

th

e s

che

du

led

da

te o

f su

ch m

ee

tin

g.

12

.2A

ll

dir

ec

tors

a

tte

nd

G

Ms.

T

he

ch

air

of

AC

, N

C,

RM

C a

nd

oth

er

com

mit

tee

s p

rov

ide

me

an

ing

ful

resp

on

se t

o q

ue

stio

ns

ad

dre

sse

d

to t

he

m.

Th

e M

an

ag

er

is in

fu

ll su

pp

ort

of

UH

pa

rtic

ipa

tio

n a

t IG

B R

EIT

’s U

HM

s. U

HM

pro

ced

ure

s a

llow

UH

s to

ra

ise

qu

est

ion

s a

nd

cla

rify

an

y is

sue

s th

ey

may

h

ave

re

lati

ng

to

ea

ch r

eso

luti

on

ta

ble

d f

or

ap

pro

val,

an

d t

o p

art

icip

ate

, e

ng

ag

e a

nd

op

en

ly c

om

mu

nic

ate

th

eir

vie

ws

on

ma

tte

rs r

ela

tin

g t

o I

GB

R

EIT

. Pre

sen

tati

on

s to

UH

s co

veri

ng

th

e in

vest

me

nt

pe

rfo

rma

nce

an

d s

tra

teg

y o

f IG

B R

EIT

are

ma

de

by

CE

O.

All

Dir

ect

ors

, in

clu

din

g t

he

ch

air

me

n o

f A

C,

NC

, R

C a

nd

RM

SC

, a

nd

Exe

cuti

ve T

ea

m,

att

en

de

d t

he

5th

UH

M i

n 2

01

7.

Bo

ard

Ch

air

ma

n,

MD

, C

EO

, C

FO

a

nd

EA

, su

bje

ct t

o t

he

lin

e o

f q

ue

stio

ns

an

d r

ele

va

nce

, ha

d a

tte

nd

ed

qu

est

ion

s ra

ise

d a

nd

pro

vid

ed

cla

rifi

cati

on

as

req

uir

ed

by

UH

s. M

inu

tes

of

the

5

th U

HM

we

re p

ost

ed

on

IGB

RE

IT’s

we

bsi

te.

12

.3L

iste

d c

om

pa

nie

s w

ith

a l

arg

e

nu

mb

er

of

sha

reh

old

ers

o

r w

hic

h h

av

e m

ee

tin

gs

in r

em

ote

lo

ca

tio

ns

sho

uld

le

ve

rag

e

tech

no

log

y to

fa

cilit

ate

–

v

oti

ng

in

clu

din

g

vo

tin

g

in

ab

sen

tia

; an

d

rem

ote

s

ha

reh

old

ers

’ p

art

icip

ati

on

at

GM

s.

IGB

RE

IT d

oe

s n

ot

allo

w a

UH

to

vo

te i

n a

bse

nti

a a

t U

HM

s, e

xce

pt

thro

ug

h t

he

ap

po

intm

en

t o

f a

pro

xy,

att

orn

ey

or

in t

he

ca

se o

f a

co

rpo

rati

on

, a

co

rpo

rate

re

pre

sen

tati

ve, t

o c

ast

th

eir

vo

te in

th

eir

ste

ad

.

At

UH

Ms,

ea

ch d

isti

nct

iss

ue

is

pro

po

sed

as

a s

ep

ara

te r

eso

luti

on

. A

ll r

eso

luti

on

s a

re p

ut

to t

he

vo

te b

y e

lect

ron

ic p

oll

vo

tin

g (

e-V

oti

ng

).

Ind

ep

en

de

nt

scru

tin

ee

rs a

re a

pp

oin

ted

to

co

nd

uct

e-V

oti

ng

pro

cess

an

d v

eri

fy t

he

vo

tes.

Th

e r

esu

lts

of

e-V

oti

ng

are

an

no

un

ced

in

sta

nta

ne

ou

sly

at

the

me

eti

ng

. Th

e o

utc

om

e o

f th

e U

HM

is p

rom

ptl

y a

nn

ou

nce

d t

o B

urs

a S

ecu

riti

es

aft

er

the

UH

M.

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)

34

Ap

pe

nd

ix 1

Dir

ect

ors

’ an

d E

xe

cuti

ve

Te

am

’s A

tte

nd

an

ce a

t th

e M

an

ag

er’

s B

oa

rd a

nd

BC

me

eti

ng

s h

eld

du

rin

g F

Y2

01

7

Dir

ect

ors

Bo

ard

AC

NC

RC

RM

SC

Tan

Sri

Da

to’ D

r Li

n S

ee

Ya

n, I

NE

D4

ou

t o

f 4

4 o

ut

of

41

ou

t o

f 1

1 o

ut

of

1

Ha

lim b

in H

aji

Din

, IN

ED

3 o

ut

of

43

ou

t o

f 4

1 o

ut

of

11

ou

t o

f 1

Lee

Ch

en

Ch

on

g, I

NE

D4

ou

t o

f 4

4 o

ut

of

41

ou

t o

f 1

1 o

ut

of

1

Da

to’ S

eri

Ro

be

rt T

an

Ch

un

g M

en

g, M

D4

ou

t o

f 4

1 o

ut

of

1

Tan

Bo

on

Le

e, E

D4

ou

t o

f 4

Da

nie

l Yo

ng

Ch

en

-I, E

D4

ou

t o

f 4

4 o

ut

of

4

Eliz

ab

eth

Ta

n H

ui N

ing

, ED

4 o

ut

of

44

ou

t o

f 4

Tan

Le

i Ch

en

g, N

on

-IN

ED

3 o

ut

of

43

ou

t o

f 4

0 o

ut

of

1

Tan

Ye

e S

en

g, N

on

-IN

ED

4 o

ut

of

4

Offi

cers

An

ton

y P

atri

ck B

arr

ag

ry, C

EO

4 o

ut

of

44

ou

t o

f 4

Ch

ai L

ai S

im, C

FO

4 o

ut

of

44

ou

t o

f 4

Ch

ow

Ye

ng

Ke

et,

He

ad

of

Inve

stm

en

t4

ou

t o

f 4

4 o

ut

of

44

ou

t o

f 4

Re

nn

ie L

ee

Ch

ai T

in, H

ea

d o

f Le

asi

ng

(M

VM

)4

ou

t o

f 4

Tin

a C

ha

n, H

OC

/CS

4 o

ut

of

44

ou

t o

f 4

1 o

ut

of

11

ou

t o

f 1

Co

rpo

rate

Go

ve

rna

nce

Ov

erv

iew

Sta

tem

en

t(c

on

tin

ue

d)


Ap

pe

nd

ix 2

De

tail

s o

f tr

ain

ing

pro

gra

mm

es,

se

min

ars

an

d c

on

fere

nce

s th

at

Bo

ard

me

mb

ers

att

en

de

d d

uri

ng

FY

20

17

Th

e B

oa

rd i

s co

mm

itte

d t

o t

he

co

nti

nu

al

en

ha

nce

me

nt

of

the

ca

pa

bil

itie

s o

f e

ach

Dir

ect

or

an

d t

he

pe

rfo

rma

nce

of

the

Bo

ard

ge

ne

rall

y. I

n a

dd

itio

n t

o t

alk

s co

nd

uct

ed

by

re

lev

an

t p

rofe

ssio

na

ls,

me

mb

ers

of

the

Bo

ard

are

en

cou

rag

ed

to

att

en

d r

ele

va

nt

cou

rse

s a

nd

se

min

ars

so

as

to k

ee

p t

he

mse

lve

s u

pd

ate

d o

n d

eve

lop

me

nts

an

d c

ha

ng

es

in I

GB

RE

IT’s

op

era

tin

g e

nv

iro

nm

en

t, a

s w

ell

as

to s

tay

ab

rea

st o

f re

lev

an

t d

eve

lop

me

nts

in

fin

an

cia

l, le

ga

l a

nd

re

gu

lato

ry r

eq

uir

em

en

ts,

an

d t

he

bu

sin

ess

en

vir

on

me

nt

an

d o

utl

oo

k. T

he

Bo

ard

is

reg

ula

rly

up

da

ted

on

ne

w l

aws

aff

ect

ing

IG

B R

EIT

’s b

usi

ne

ss,

as

we

ll a

s ch

an

ge

s in

ap

plic

ab

le r

eg

ula

tio

ns.

HO

C/C

S k

ee

ps

Dir

ect

ors

in

form

ed

of

the

se

rie

s/ta

lks

org

an

ise

d b

y re

gu

lato

ry b

od

ies

as

we

ll a

s fa

cilit

ate

s th

e o

rga

nis

ati

on

of

in-h

ou

se t

rain

ing

/de

velo

pm

en

t p

rog

ram

me

s.

In F

Y2

01

7, a

ll D

ire

cto

rs a

nd

CE

O h

ad

att

en

de

d o

r p

art

icip

ate

d i

n o

ne

or

mo

re o

f th

e f

ollo

win

g c

on

fere

nce

s, s

em

ina

rs a

nd

tra

inin

g p

rog

ram

me

s w

hic

h t

he

y h

ave

in

div

idu

ally

or

colle

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36

Audit Committee Report

Audit Committee (AC), formed on 7 May 2012, is to assist the Board of Directors (Board) of the Manager in fulfilling its oversight

responsibilities for the financial reporting process, the management of risk and system of internal controls, the governance processes,

and the audit process of IGB REIT and the Manager as well as the Manager’s process for monitoring compliance with laws and

regulatory requirements.

AC has authority to investigate any matter within its terms of reference (ToR) which can be viewed on IGB REIT’s website, full access

to and co-operation from management and full discretion to invite any Director or Officer to attend its meetings, and reasonable

resources to enable it to discharge its functions properly.

AC is pleased to present its report on the activities carried out during the year to 31 December 2017 (FY2017) and to the date of this

report in conducting its affairs and discharging its responsibilities. This report has been made in accordance with resolution and the

authority of the Board dated 23 January 2018.

COMPOSITION

AC comprises 4 members, all of whom are Non-Executive Directors (NEDs), 3 (including AC Chairman) being Independent NEDs

(INEDs). AC Chairman is Halim bin Haji Din and the members are Tan Sri Dato’ Dr. Lin See Yan, Lee Chen Chong and Tan Lei Cheng. All

AC members have accounting or related financial management expertise or experience.

The annual review of the composition and performance of AC, including members’ tenure, performance and effectiveness as well

as their accountability and responsibilities, was duly assessed via the annual Board assessment. Based on the evaluation for FY2017,

the Board was satisfied that AC has continued to show strong performance over the years, and AC members, as indicated in their

profiles, have sound judgement, objectivity, independent attitude, management experience, integrity, knowledge of the industry, and

financially literate. With balanced diversity of skills and experience, they have discharged their functions, duties and responsibilities,

supporting the Board in ensuring that IGB REIT and the Manager uphold appropriate corporate governance (CG) standards. The Board

has agreed to maintain the composition of AC.

MEETINGS AND ATTENDANCE

AC meetings for 2017 were pre-arranged in April 2016 and communicated to the members early to ensure their time commitments.

The schedule of business considered by AC covered the key areas within its remit and is supported by information provided by

management of the Manager, external and internal auditors.

4 meetings were held during FY2017 which were attended by all members except Halim bin Haji Din and Tan Lei Cheng who attended

3 out of 4 meetings. The Managing Director (MD) attended all meetings as requested by AC to facilitate direct communication and to

seek clarification on audit issues as well as to solicit information in relation to the operations of IGB REIT and the Manager. In addition,

Chief Financial Officer (CFO), Head of Compliance/Company Secretary, Head of Investment, the senior internal audit executive and

external auditor (EA) (twice a year to discuss their audit plan and audit findings on IGB REIT’s annual financial statements) were

permanent invitees to AC meetings to present their respective reports. AC also had 2 private sessions with EA to enquire about

management’s co-operation with EA and their sharing of information as well as discuss the results of the audit and any other

observations they may have during the audit process and regarding risk management issues, without the presence of Executive

Management. AC Chairman also permitted internal and external auditors to contact him at any time that they became aware of

incidents or matters in the course of their audits or reviews that needed his attention or that of AC or the Board. Matters of significant

concern raised by internal and external auditors noted by AC requiring the Board’s notice, direction and approval were highlighted

and reported by AC Chairman at Board meetings. Minutes of AC meetings were included in Directors’ materials for meetings.

DISCHARGING OF FUNCTIONS AND DUTIES

During FY2017 and to the date of this report, AC has met its responsibilities in discharging its functions and duties in accordance with

its ToR as follows:

1. Financial Reporting

(a) Evaluated on an ongoing basis the appropriateness, adequacy and efficiency of accounting policies and procedures,

compliance with generally accepted accounting practice and overall accounting standards, as well as any related changes

discussed and resolved any significant or unusual accounting issues. Introduced measures that, in AC’s opinion, would

enhance the credibility and objectivity of financial statements and reports prepared about the affairs of IGB REIT.

(b) Reviewed IGB REIT’s unaudited results for the financial quarters of Q4FY2016, Q1FY2017, Q2FY2017 and Q3FY2017, which

were announced via the regulatory information service immediately after the Board’s approvals, respectively on 25 January

2017, 25 April 2017, 2 August 2017 and 8 November 2017, and IGB REIT Financial Statements for year ended 31 December

2016 (IGB REIT Financial Statements FY2016) which was submitted via the regulatory information service on 28 February

2017. AC concluded that the quarterly financial results and IGB REIT Financial Statements FY2016 complied with appropriate

Malaysian Financial Reporting Standards (MFRS) and regulatory requirements.


(c) Reviewed the Manager’s Audited Financial Statements FY2016 (AFS2016), and concluded that the AFS2016 complied with

appropriate FRS. A copy of the Manager’s AFS2016 was submitted to the Securities Commission Malaysia (SC) on 27 March

2017.

(d) Considered IGB REIT’s distributable income for the second half of 2016 of 4.30 sen per unit @ 4.18 sen taxable and 0.12 sen

non-taxable, and the first half of 2017 of 4.38 sen per unit @ 4.30 sen taxable and 0.08 sen non-taxable, which were paid to

unitholders (UHs) respectively on 28 February 2017 and 30 August 2017 after the Board’s approvals.

(e) Noted significant changes and amendments to the regulations, MFRS and other regulatory requirements that could affect

the financial reporting of IGB REIT.

Subsequent to FY2017, AC had at its meeting on 23 January 2018, considered and reviewed the financial reporting checklist

FY2017 completed by CFO, and assessed by MD, and obtained their assurance, in making its recommendation to the Board,

that adequate processes and controls were in place for an effective and efficient process in preparation of IGB REIT Financial

Statements for the year ended 31 December 2017 (IGB REIT Financial Statements FY2017) and, in all material respects, IGB REIT

Financial Statements FY2017 complied with the applicable MFRS as well as disclosure provisions of the Main Market Listing

Requirements (MMLR), and fairly present the results of the operations, cash flow and financial position of IGB REIT. AC had also

considered IGB REIT’s distributable income for the second half of 2017 of 4.90 sen per unit @ 4.79 sen taxable and 0.11 sen non-

taxable, which is payable to UHs on 28 February 2018.

2. External Audit

(a) Reviewed EA’s report on the conduct of IGB REIT Financial Statements FY2016 audit, the findings on significant accounting

and reporting issues together with the findings on the internal control system as well as overview of issues found during the

interim audit.

(b) Reviewed EA’s audit plan 2017, encompassing the proposed work blueprint, nature and scope for the year’s audit and other

examination including the evaluation of internal control systems, to the extent performed as part of the external audit.

(c) Considered whether the extent of reliance on internal audit by EA was appropriate and whether there were any significant

gaps between internal and external audits.

(d) Obtained assurance from EA that their independence has not been impaired.

(e) Reviewed, in consultation with management, the terms of engagement of PwC for the statutory audit of IGB REIT Financial

Statements FY2017 in respect of cost, scope and performance, upon confirmation of their independence and objectivity

including non-audit services related to tax consultancy.

(f ) Conducted bi-annual private sessions with EA without the presence of management on 25 January 2017 and 8 November

2017 to discuss any issue or reservation arising from their audit. No major concerns were highlighted by EA and they had

received full cooperation from management.

Subsequent to FY2017, AC carried out the following duties at its meeting on 23 January 2018:

(i) Reviewed the results of EA’s report on the conduct of IGB REIT Financial Statements FY2017, the audit findings together with

EA recommendations, including the key audit matter raised and management’s response as set out in the management

representation letter issued to EA.

(ii) Reviewed and deliberated on matters relating to internal control highlighted by EA in the course of their statutory audit of

IGB REIT Financial Statements FY2017.

(iii) Evaluated EA’s performance and effectiveness, quality of communication and interaction and its independence and

objectivity, on the basis of AC meetings and a questionnaire-based internal review. Based on the assessment for FY2017,

AC was satisfied with EA’s technical competency in terms of their skills, execution of audit plan, reporting and overall

performance, and the reasonableness of their audit fees. Requisite assurance was sought and provided by EA that internal

governance processes within PwC demonstrate and support the firm’s independence.

3. Internal Audit (IA)

The IA function is outsourced and undertaken by the Manager’s parent company’s Group Internal Audit (GIA) department.

The Head of GIA is Christine Ong May Ee, CIA (US), CRMA (USA), FCA (Australia), FMIIA (Malaysia), CA (Malaysia), B.Acc (Hons)

(Singapore) and she is assisted by a team of IA. The main role of IA function is to provide AC with independent and objective

reports on the adequacy and effectiveness of the internal controls, risk management and governance of IGB REIT. The Head of

GIA reports to AC on its activities based on the approved annual audit plan. The following is a summary of internal audit’s work

reviewed and/or approved by AC during FY2017 and to the date of this report:

Audit Committee Report(continued)

38

(a) Reviewed IA’s reports on the effectiveness and adequacy of internal controls, risk management, operational, compliance and

governance processes of IGB REIT and the Manager including management’s responses thereto and the implementation

of management’s action plans on outstanding issues and recommendations were being properly addressed and corrected

on a timely basis. A total of 17 audit reports (including follow-up audits and special reviews) were issued by IA for the

assignments conducted on IGB REIT and the Manager based on the 2017 IA plan, adhering to the International Standards

for the Professional Practice of Internal Auditing Standards (Standards) issued by the Institute of Internal Auditors (IIA). The

areas covered included CG, related party transaction (RPT) reporting, advertising and promotions, building services, finance,

leasing, marketing, information technology and risk management. Most findings were rated satisfactory while some required

improvements relating to controls weaknesses, compliance shortcoming, and documentation anomalies whereby all gaps

had since been addressed.

(b) Reviewed and approved IA’s plan for the ensuing financial year end 31 December 2018 to ensure adequate scope and

coverage of the key risk areas and processes of the operational, compliance and internal controls of IGB REIT. In planning

for the audit of IGB REIT, a risk based auditing approach taking into account the Standards and global best practices, was

adopted. The approach emphasised on effective planning and scoping of audits to suit the size and activities of functional

areas, and to concentrate audit resources on areas that expose IGB REIT to the greater degree of risk. All high risk activities in

each auditable area are audited annually.

A quality assurance review on GIA function at IGB-level was performed by IIA Malaysia in 2015 and the assessment affirmed that

GIA activity conformed to the Standards. The next review would be due in year 2020.

IGB REIT and the Manager have paid RM80,000 for IA services in FY2017.

4. Risks and Control Environment

The Board has assigned oversight of IGB REIT’s risk management function to Risk Management and Sustainability Committee

(RMSC). AC also assists the Board in examining the adequacy and effectiveness of IGB REIT’s risk management framework and

the appropriateness of management’s responses to key risk areas and recommendations for improvements to be implemented.

Based on the periodic reports/minutes of RMSC and the annual risk identification survey as well as half-yearly key risk indicator

reports presented by IA which shed insights on the areas of risks, likelihood, impact and management action on IGB REIT’s

operating business, AC was thus able to keep under review the adequacy and effectiveness of IGB REIT’s risk management system

along with its risk portfolio, risk levels and risk mitigation strategies. No significant irregularity or deficiency in internal controls

came to the attention of AC during FY2017.

5. RPT

Reviewed the quarterly RPT reports, and ensured proper disclosures were made in accordance with the Securities Commission

Malaysia’s Guidelines on Real Estate Investment Trusts and MMLR. AC was satisfied that all transactions were in the best interest

of IGB REIT, whereby the terms concluded were fair, reasonable and based on commercial viability, and were therefore not

deemed to be detrimental to the interests of minority UHs, and the monitoring procedures to regulate such transactions were

appropriate and sufficient.

6. Annual Reporting

Reviewed the extent of IGB REIT’s compliance with the requirements of MMLR for the purpose of preparing Audit Committee

Report for inclusion in Annual Report 2017, and whereupon recommendation was submitted and approved by the Board.

AC’S TRAINING

During the year, AC members attended various conferences, seminars and training programmes to enhance their knowledge to

efficiently discharge their duties as Directors of the Manager as well as to keep themselves abreast with the changes and updates on

technical competencies in their respective fields of expertise. Details of the seminars, training programmes and conferences that they

attended during FY2017 are set out in Appendix 2 of the Corporate Governance Overview Statement of this Annual Report.

This Audit Committee Report has been approved by the Board and is current as at 23 January 2018.

Audit Committee Report(continued)


Sustainability Statement

1. Introduction

We are pleased to present IGB REIT’s second Sustainability Statement which has been prepared in accordance with the

sustainability reporting guide and toolkit shared by Bursa Malaysia Securities Berhad.

This report includes information that is significant to our stakeholders, including our employees, investors, customers, suppliers,

and local community. It covers the two retail malls within IGB REIT, namely – Mid Valley Megamall (MVM) and The Gardens Mall

(TGM), both of which are located in the Klang Valley.

2. Our Commitment to Sustainability

Sustainability has long formed the backbone of our approach to business, driving our long term strategy, day-to-day operations,

and guiding how we engage not only with our communities but with our stakeholders. We are committed to improving the

economic, environmental, and social well-being of all our stakeholders, and uphold the highest standards of corporate

governance and transparency so as to safeguard their interests.

We entered the year cautiously on the back of a weak ringgit, soft consumer sentiment, and a global landscape that had been

rocked by the surprise outcome of the elections held in the United States of America and Brexit. As with previous years however,

we remained guided by our long term strategy and focused on building a sustainable business, pushing forward in particular,

with initiatives to build stronger relationships with our communities. We also took the time to continue strengthening our

sustainability framework, enhancing existing sustainability policies and practices and working to formally embed sustainability

into our governance and reporting structures. We believe that our focus on sustainability has allowed us to deliver the positive

results that we have achieved this year.

As we enter 2018, the Board of Directors (Board) of IGB REIT Management Sdn Bhd, the Manager of IGB REIT, remains firmly

committed to driving sustainability within our business, and will continue to work towards striking a balance between our

financial performance, social engagements, and environmental stewardship. We believe that it is only by doing so that we can

build a stronger, more robust business for the long term.

3. Our Sustainability Governance Structure

The responsibility for IGB REIT’s sustainability strategy and performance sits with the Board. In their capacity, they have appointed

the Chief Executive Officer (CEO) to chair the Risk Management & Sustainability Committee (RMSC), reporting back to them on

matters discussed.

RMSC comprise the executive team of the Manager. Their responsibilities include overseeing the risk management activities

of IGB REIT, as well as identifying, evaluating, monitoring, and managing the economic, environmental, and social risks and

opportunities for IGB REIT as they relate to sustainability. The communication and implementation of sustainability initiatives as

part of day-to-day operations comes under the responsibility of the management team within MVM and TGM.

IGB REIT’s Sustainability Governance Structure is as follows:

Board

Management

RMSC CEO

4. Materiality Process

Since IGB REIT was established in 2012, the Manager has sought to deliver value to our stakeholders through business strategies

adopted, the management of operational activities, and in the allocation of capital to further enhance IGB REIT’s assets. Part

of this process includes engaging IGB REIT’s stakeholders in order to gain important insights that contribute to guiding and

reaffirming the Manager’s strategies, as well as support meaningful reporting.

This year, an internal review of our sustainability framework, policies, and practices, was carried out to gain feedback from our

department heads and members of RMSC on how sustainability within the organisation can be better managed. The review

also allowed us to obtain an update on sustainability initiatives carried out in the year. Feedback received from our stakeholders

through the team’s day-to-day operations were also shared during the process.

40

Sustainability Statement(continued)

As part of this exercise an internal review of our materiality assessment was carried out to allow us to reprioritise existing

materiality factors identified, and update the list with any new factors, where required. Following the review, we found that the

materiality factors from last year continued to remain relevant. The results of this assessment were included in a report tabled to

RMSC as well as Audit Committee.

The list of sustainability matters material to our business are as follows: Health & Safety, Water Management, Waste Management,

Energy Consumption, Environmentally Friendly Materials, Diversity of Manpower, Security, Procurement, and Human Rights.

These are discussed below:

(a) Economic

Enriching Communities

We believe that a large part of our success has been the result of our commitment to enrich our communities through

engaging them and investing in them for a sustained future. This belief has underpinned our growth strategies and is why

we continue to invest in upgrading our infrastructure. We continue to improve access to our malls through facilitating the

flow of traffic during peak periods, and upgrade public walkways from the malls to public transportation. This year for

example, we setup separate Grab and Uber stands for the convenience of the public when we noticed that an increasing

number of visitors were choosing to visit our malls via those methods of transport.

We have also continued to refresh our tenant mix, bringing in contemporary brands that shape the retail industry. With

The Studio in particular, we have sought to support local and ASEAN designers. Since its opening in early 2017, we have

welcomed home grown brands such as MAARIMAIA, THESELINA, Bremen Wong Millinery, and Asian Potions.

Operationally, we also work to engage local suppliers where it makes sense. Additionally, our retail outlets provide

employment to approximately 8,000 members of our local community.

(b) Environmental

Water Management

This year, efforts to reduce water consumption and increase the efficiency with which it is used, continued. Several initiatives

were carried out in the year, in particular, works to upgrade the flushing systems at both MVM and TGM which started in

2015, were completed. Further to the upgrades made, we now also use recycled water for the purposes of flushing toilets.

We also carried out an assessment of our pipes, allowing us to replace any that were found to be leaking. Water from our

chillers continued to be used to water plants and wash common areas, and rain water collected by the two water tanks on

our roof also continued to be used for landscaping purposes.

As a result of these efforts, the volume of water consumed by MVM and TGM decreased from 1.2 million cubic metres in

2016 to 1.1 million cubic metres in 2017.

Moving forward, we will continue to explore new ways to improve our utilisation of water. We will also continue to monitor

overall water consumption at our malls and work to investigate and address any unaccounted for usage.

Waste Management

We believe that education is key in effecting real change in waste management. As such, we have made it a point this year

to raise public awareness around the national and local recycling campaigns that have been running. Recycling bins for

example, have been placed in our offices, while in our malls, they have replaced common rubbish bins. Additionally, we have

worked to encourage our tenants to recycle packaging materials, and increase the use of biodegradable and compostable

packaging materials where possible. Food & beverages tenants have also been asked to segregate their waste, separating

food waste from other waste generated.

We also continued to adopt an environmentally responsible approach to decorating our malls, re-using decorations where

possible, and minimising the use of plastic and polystyrene based materials.

Thus far, our efforts have resulted in some improvement in the year, with the volume of waste sent to landfills dropping from

5,094 tonnes in 2016 to 4,500 tonnes in 2017.

Though much more can certainly be done to embed a responsible waste management mentality amongst our communities,

we believe that with Government efforts to drive a greener mind set amongst Malaysians, and efforts made by individual

businesses to educate staff, business partners, and customers, we are much better placed today than a decade ago to

significantly contribute to environmental sustainability.



Moving forward, we will continue to embark on campaigns to raise awareness around the importance of recycling and

responsible waste management, and work with our tenants to increase the volume of waste composted, while reducing

the amount that ends up in landfills. We will also explore the possibility of engaging a higher proportion of suppliers who

practice environmentally and socially responsible practices.

Energy Consumption

Energy continues to be one of the largest cost components for our malls. However, with a growing consciousness of the

need to be responsible corporate citizens, we have made headway in reducing overall energy consumption through the

years.

This year, we continued to monitor our electricity consumption closely and carried on with efforts to replace existing lighting

in our malls with more efficient LED lights. We also reduced the number of chillers in operation, which contributed to the

reduction in energy consumed this year.

Efforts to educate our tenants are also ongoing, with our teams working to encourage the use of energy efficient equipment

and fittings where possible.

In 2018, we will be engaging a contractor to assess our current chillers with the view of optimising their performance,

thereby enhancing their efficiency and lowering energy consumption. We will also continue to explore additional avenues to

either reduce energy consumption or increase its efficiency.

(c) Social

Health & Safety (H&S)

The H&S of our employees, tenants, and customers, are a priority for us. We take our responsibility to manage and mitigate

the occurrence of H&S incidences very seriously. All incidents that occur are recorded by security as well as H&S personnel,

and are investigated thoroughly to ensure a complete understanding of what led to the incident. This allows us to then take

steps to mitigate the risk of similar incidents occurring. We comply with the requirements set out by the Department of

Safety & Health (DOSH), and receive period checks by DOSH representatives who ensure ongoing compliance.

As part of our efforts to prevent the occurrence of H&S incidents, our management team monitors the news for global

incidents that have occurred on properties similar to ours. These incidents are then used in risk management workshops

conducted where these scenarios are run by the operations team, allowing them to test their responses as well as update

their standard operating procedures where required.

This year unfortunately, 2 fires broke out at MVM. In both incidents, MVM’s fire detection and protection systems kicked in to

limit and contain the fires, with the mall’s operations team responding quickly and working with the Kuala Lumpur Fire and

Rescue Department. The fires were therefore quickly contained, with limited damage to the shops and surrounding areas.

Following these incidents, our H&S team conducted a full internal investigation into the fires, and mapped out steps which

will help reduce the risk of similar fires breaking out. Specifically, the team will be imposing more stringent guidelines during

the fit out process for tenants to ensure that the set up and installation of equipment meet all H&S guidelines. Additionally,

our Building Services team will conduct more frequent checks to ensure continued adherence to H&S guidelines, and in

particular, look for faulty wiring and ensure all refrigerators within the mall are properly ventilated.

IGB REIT takes H&S very seriously and regret that the abovementioned incidents occurred at our malls. We will continue to

work closely with our tenants and authorities and ensure that all relevant staff are up to date with all required trainings.

Human Capital Management

IGB REIT does not have any employees. The service providers engaged by the Property Manager, Chartwell ITAC International

Sdn Bhd are responsible for attracting, retaining, and developing the people who run our business day-to-day.

The service providers are committed to cultivating a positive work environment that is professional, respectful, and

inclusive. They strive to be a workplace of choice for their employees and have in place a robust human capital strategy

that seeks to attract, develop, and retain talent with the right skill sets to support our continued growth. They adhere to

a non-discriminatory employment practice and all job applicants and staff are treated fairly regardless of ethnicity, age or

gender. They also adopt a merit-based recruitment policy, and assess potential candidate based on their skills, experience,

and ability. All employment policies and practices strictly abide by the Employment Act and other legal statutory provisions

of the country, as well as international labour provisions, where applicable.

42

The service providers also support talent development and provides employees with equal opportunities for training and

development based on their strengths and needs. It is strongly believed that continual learning is a fundamental building

block for growth and is necessary in order to achieve business excellence. Through talent development programmes, future

leaders are also identified and groomed, allowing for sustained succession planning.

The service providers also ensure that employees received comprehensive and competitive remuneration packages. Salary

data is matched and benchmarked against competitor salary and benefit surveys as well as the general market each year.

Employees are strictly rewarded based on their performance, contribution, and experience.

The service providers do not tolerate any form of bribery and corruption. This not only applies internally to staff, but to all

dealings that their staff have with third parties as well. Copies of the professional code of conduct, policies, practices, and

terms of employment, are readily available to all employees.

Security

The threat of terror has become a constant in our lives as news outlets around the world report on an ever increasing

number of attacks in public spaces. Malaysia has so far been fortunate, with local law enforcement taking a tough stand on

terror, pulling out all stops in the war on terrorism.

IGB REIT takes the potential risk of such attacks seriously and have in place standard operating procedures that apply in

the event of a terrorist attack. Our Security team have been trained to manage such situations before the arrival of first

responders and conduct annual evacuation drills to familiarise tenants and staff with emergency response plans. We have

also started to conduct regular training programmes for our Auxiliary Police with Polis Diraja Malaysia, so our security staff

are kept abreast of the latest threats and risks.

Contributing to the Well-Being of Our Communities

Being sustainable encompasses an appreciation of the symbiotic relationship between ourselves and our communities. As

such, playing an active role in engaging and giving back to our communities forms an integral part of the work that we do.

5. Corporate Social Responsibility

(a) Bringing Communities Together through Celebration

Malaysia celebrates a variety of festivities through the year, reflecting our country’s rich heritage and diversity. As our

communities celebrate these occasions with family and friends, MVM and TGM work to enrich these festive periods both for

their visitors as well as the less fortunate.

Chinese New Year

TGM partnered with the Kechara Soup Kitchen Society again this year during the Chinese New Year period. With

contributions from its generous shoppers, the mall donated a myriad of household necessities to fifteen families under the

society.

Hari Raya

The spirit of Hari Raya was brought to life at MVM, who, in partnership with RHB Bank, invited shoppers to learn more

about the cultural celebration and appreciate the beauty of local traditions. During this period, MVM also supported the

Malaysian Nature Society (MNS), encouraging shoppers to drop by the MNS booth to learn and contribute towards nature

conservation.

TGM also did their part to spread some festive cheer during the Hari Raya period. TGM donated to the Food Aid Foundation

(Foundation), and worked with its shoppers to sponsor groceries for 20 underprivileged families identified by the

Foundation. Costing RM115, each bag of groceries contained enough to support one family for a few weeks. Additionally,

to help encourage Malaysian families prepare traditional Hari Raya dishes together, TGM shared a series of video tutorials by

celebrity Chef Zamzani, a member of the Foundation’s Board of Trustees, on their Facebook page.

Christmas

Celebrated at the end of the year, Christmas typically coincides with a period where people are winding down for the year

and spending time with family and friends. This year, in partnership with HSBC Bank Malaysia Berhad, MVM evoked the

nostalgia of a traditional homecoming with the theme “Home for Christmas”. Money raised from the annual Santa Meet &

Greet was channelled to support Agathians Shelter, a children’s home in the Klang Valley. A WWF-Malaysia booth was also

set up during the Christmas period to collect donations.



This year, TGM was invited by The Star Metro to take part in their “Do Good – Grant a Wish Project” to help spread some

Christmas cheer to the less fortunate. As part of this initiative, TGM donated to Pusat Jagaan Pertubuhan Kebajikan Yesuvin

Mahligai in Kajang. Staff from TGM also spent a day with residents from the home, bringing with them items such as meals

and bedspreads which were sponsored by tenants of TGM. An information board was also set up at TGM’s concierge desk to

help raise awareness about the project.

(b) Mid Valley City Charity Run 2017

Since it was launched 4 years ago, Mid Valley City Charity Run has grown from strength to strength. Organised in

collaboration with WWF-Malaysia to raise awareness around wildlife conservation, the run attracted 2,000 participants

and raised funds which were donated to the environmental conservation organisation. Additionally, from 17th to 30th April,

shoppers who visited TGM could learn more about endangered animals and the WWF-Malaysia’s conservation efforts.

Shoppers could also buy WWF-Malaysia merchandise at an exhibition set up on the ground floor of the mall. An art

installation by The One Academy was also set up at the South Atrium in conjunction with the event.

(c) Spaces to Raise Awareness

We believe that every little bit helps, and make an effort to support our communities where we can. One of the ways that we

have continued to do so through the years is through providing various organisations with space for them to run awareness

campaigns. The organisations that we have supported this year are National Kidney Foundation, WWF-Malaysia, Persatuan

Kebajikan Ronald McDonald Malaysia, MNS, Tzu-Chi Merits Society Malaysia and The Salvation Army.

(d) Developing the Game of Chess

MVM hosted the 14th Malaysia Chess Festival 2017 which saw the participation of close to 2,000 chess players this year,

including 27 players who were in Malaysia for the ASEAN Para Games. The festival saw the participation of players across a

range of ages representing 27 nationalities.

6. Looking Ahead

It is more important today than at any time in the past that businesses build a strategy centred on sustainability. With technology

in particular, the landscape across industries has become increasingly competitive, with consumer and investor preferences and

sentiments rapidly evolving, and new ideas shaking up traditional expectations and pushing the boundaries of what is possible.

In the retail industry for example, technology has brought the retail experience into the hands of consumers, who now have one-

click access to a plethora of local and international retail products. Against this backdrop, being sustainable has become critical

for our longevity.

This is IGB REIT’s second Sustainability Statement, and although we have made some progress towards formalising sustainability

within our business, we recognise that we still have room for improvement both in terms of initiatives undertaken and

our reporting structure. As we continue on our sustainability journey, our ultimate goal is to build a sustainable business for

generations to come. To achieve this, we will continually keep abreast of developments in our industry, actively and regularly

engage our stakeholders, build upon our existing sustainability framework, and seek to further embed sustainable practices

within our business so as to improve our overall sustainability performance.

Moving forward, we will be adding metrics and targets to measure issues that are material to our business, and move towards

benchmarking our progress against international standards of reporting.

As we look to the future, it is our hope that we will continue to introduce new and exciting retail experiences for our customers,

enrich our local communities, create value for our stakeholders, and be a business that people will be proud to work with, work

for, and support.

This Statement has been approved by the Board and is current as at 23 February 2018.


F I N A N C I A L S T A T E M E N T S

Manager’s Report 45 - 47

Statement by the Manager 48

Statutory Declaration 48

Trustee’s Report 49

Independent Auditors’ Report 50 - 53

Statements of Financial Position 54

Statements of Comprehensive Income 55

Statements of Changes in Net Asset Value 56

Statements of Cash Flows 57

Notes to the Financial Statements 58 - 91

31 December 2017


The Manager of IGB Real Estate Investment Trust (“IGB REIT” or “Fund”), IGB REIT Management Sdn Bhd (“Manager”), is pleased to present the report and audited financial statements of IGB REIT and its wholly-owned subsidiary, IGB REIT Capital Sdn Bhd (“Group”) for the financial year ended 31 December 2017.

PRINCIPAL ACTIVITY OF THE MANAGER

The principal activity of the Manager is the management of real estate investment trust. There has been no significant change in the nature of this activity during the financial year.

THE FUND AND ITS INVESTMENT OBJECTIVE

IGB REIT is a Malaysia-domiciled real estate investment trust (“REIT”) established on 25 July 2012 pursuant to the deed of trust dated 18 July 2012 (“Deed”) between the Manager and MTrustee Berhad (“Trustee”), listed on Main Market of Bursa Malaysia Securities Berhad (“Bursa Securities”) on 21 September 2012 and regulated by the Securities Commission Act 1993, the Securities Commission’s Guidelines on Real Estate Investment Trusts (“REIT Guidelines”), the Listing Requirements of Bursa Securities, the Rules of Bursa Malaysia Depository (“Depository”) and taxation laws and rulings. IGB REIT will continue its operations until such time as determined by the Manager and the Trustee as provided under the provisions of Clause 26 of the Deed. The principal investment policy of IGB REIT is to invest, directly and indirectly, in a diversified portfolio of income producing real estate used primarily for retail purposes in Malaysia and overseas as well as real estate related assets. Real estate used primarily for retail purposes would include retail properties and mixed used development with a retail component.

DISTRIBUTION OF INCOME

IGB REIT had declared distributions in the financial year as follows:-

- 4.38 sen per unit (@ 4.30 sen taxable and 0.08 sen non-taxable) for the period from 1 January 2017 to 30 June 2017, which was paid on 30 August 2017; and

- 4.90 sen per unit (@ 4.79 sen taxable and 0.11 sen non-taxable) for the period from 1 July 2017 to 31 December 2017, which is payable on 28 February 2018.

RESERVES AND PROVISIONS

All material transfers to or from reserves and provisions during the financial year are shown in the financial statements.

DIRECTORS

The Directors who have served on the Board of the Manager, since the date of the last report are as follows:- Tan Sri Dato’ Dr Lin See YanDato’ Seri Robert Tan Chung MengTan Boon LeeHalim bin Haji DinLe Ching Tai @ Lee Chen ChongTan Lei ChengDaniel Yong Chen-IElizabeth Tan Hui NingTan Yee Seng

DIRECTORS’ BENEFITS

Since the end of the financial year, no arrangement subsisted to which the Manager is a party, with the object or objects of enabling the Directors of the Manager to acquire benefits by means of the acquisition of units in or debentures of IGB REIT or any other body corporate, other than as disclosed in Directors’ interest.

For the financial year ended 31 December 2017, no Director has received or become entitled to receive a benefit (other than certain Directors received remuneration as a result of their employment with the Manager or related corporations).

Manager’s Report


DIRECTORS’ INTEREST

The following Directors of the Manager who held office at the end of the financial year had, according to the register of unitholdings in IGB REIT, interests in the units of IGB REIT as follows:-

Number of units

Balance at01.01.2017 Addition

Disposal/Transferred

Balance at31.12.2017

Dato’ Seri Robert Tan Chung Meng

Direct 9,289,081 4,450,000 - 13,739,081

Indirect 1,858,803,880 19,977,933 - 1,878,781,813

Tan Lei Cheng

Direct 1,853,742 - - 1,853,742

Indirect 345,722 - - 345,722

Tan Boon Lee

Direct 1,605,025 100,000 - 1,705,025

Daniel Yong Chen-I

Direct 622,132 - - 622,132

Indirect 1,080,898 - - 1,080,898

Elizabeth Tan Hui Ning

Direct 894,000 2,105,000 - 2,999,000

Other than as disclosed above, the other Directors who held office at the end of the financial year did not have interests in the units of IGB REIT.

OTHER INFORMATION ON THE FINANCIAL STATEMENTS

Before the financial statements of the Group and of the Fund were made out, the Manager took reasonable steps:-

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and of the Fund had been written down to an amount which they might be expected so to realise.

At the date of this report, the Manager is not aware of any circumstances:-

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Fund inadequate to any substantial extent;

(b) which would render the values attributed to current assets in the financial statements of the Group and of the Fund misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Fund misleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve (12) months after the end of the financial year which, in the opinion of the Manager, will or may affect the ability of the Group or of the Fund to meet its obligations when they fall due.

At the date of this report, there does not exist:-

(a) any charge on the assets of the Group or of the Fund which has arisen since the end of the financial year which secures the liability of any other person; or

(b) any contingent liability of the Group or of the Fund which has arisen since the end of the financial year.

At the date of this report, the Manager is not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.

Manager’s Report (continued)


OTHER INFORMATION ON THE FINANCIAL STATEMENTS (continued)

In the opinion of the Manager:-

(a) other than as disclosed in the financial statements, the results of the operations of the Group and of the Fund during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Fund for the financial year in which this report is made.

MATERIAL LITIGATION

The Manager is not aware of any pending material litigation as at the date of statement of financial position and up to the date of this report.

CIRCUMSTANCES THAT MATERIALLY AFFECT THE INTERESTS OF UNITHOLDERS

There are no circumstances which materially affect the interests of the unitholders.

SOFT COMMISSION

There was no soft commission received by the Manager and/or its delegates during the financial year.

IMMEDIATE AND ULTIMATE HOLDING COMPANIES

The Manager regards IGB Corporation Berhad and Goldis Berhad as the immediate and ultimate holding company respectively. Both IGB Corporation Berhad and Goldis Berhad are listed on the Main Market of Bursa Securities. All companies are incorporated in Malaysia.

AUDITORS

The auditors, PricewaterhouseCoopers PLT (LLP0014401-LCA & AF 1146), have expressed their willingness to accept re-appointment as auditors.

PricewaterhouseCoopers PLT (LLP0014401-LCA & AF 1146) was registered on 2 January 2018 and with effect from that date, PricewaterhouseCoopers (AF 1146), a conventional partnership was converted to a limited liability partnership.

Signed on behalf of the Board of the Manager in accordance with a resolution of the Directors of the Manager dated 23 February 2018.

DATO’ SERI ROBERT TAN CHUNG MENG HALIM BIN HAJI DINMANAGING DIRECTOR DIRECTOR

Manager’s Report (continued)


In the opinion of the Directors of the Manager, the financial statements are drawn up in accordance with the provisions of the Deed, the REIT Guidelines, applicable securities laws, Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of the Group and of the Fund as at 31 December 2017 and of its financial performance and cash flows for the year ended 31 December 2017.

Signed on behalf of the Board of the Manager in accordance with a resolution of the Directors of the Manager dated 23 February 2018.

DATO’ SERI ROBERT TAN CHUNG MENG HALIM BIN HAJI DINMANAGING DIRECTOR DIRECTOR

I, Chai Lai Sim, the Chief Financial Officer of the Manager primarily responsible for the financial management of IGB REIT, do solemnly and sincerely declare that the financial statements are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

CHAI LAI SIM

Subscribed and solemnly declared by the abovenamed at Kuala Lumpur on 23 February 2018.

Before me:

COMMISSIONER FOR OATHS

Statement by the Manager

Statutory Declaration


We have acted as Trustee of IGB REIT for the financial year ended 31 December 2017. In our opinion and to the best of our knowledge, the Manager has managed IGB REIT in accordance with the limitations imposed on the investment powers of the Manager and the Trustee under the Deed, the REIT Guidelines, applicable securities laws and other applicable laws during the financial year then ended.

We have ensured the procedures and processes employed by the Manager to value and price the units of IGB REIT are adequate and that such valuation/pricing is carried out in accordance with the Deed and other regulatory requirements.

We also confirm the income distributions declared during the financial year ended 31 December 2017 are in line with and are reflective of the objectives of IGB REIT. Income distributions have been declared for the financial year ended 31 December 2017 as follows:

- 4.38 sen per unit (@ 4.30 sen taxable and 0.08 sen non-taxable) for the period from 1 January 2017 to 30 June 2017, which was paid on 30 August 2017; and

- 4.90 sen per unit (@ 4.79 sen taxable and 0.11 sen non-taxable) for the period from 1 July 2017 to 31 December 2017, which is payable on 28 February 2018.

For and on behalf of the Trustee,MTRUSTEE BERHAD

NURIZAN BINTI JALILCHIEF EXECUTIVE OFFICER

Selangor,Date: 23 February 2018

Trustee’s Reportto the Unitholders of IGB REIT (Established In Malaysia)


REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Our opinion

In our opinion, the financial statements of IGB Real Estate Investment Trust (“the Fund”) and its subsidiary (“the Group”) give a true and fair view of the financial position of the Group and of the Fund as at 31 December 2017, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

What we have audited

We have audited the financial statements of the Group and of the Fund, which comprise the statements of financial position as at 31 December 2017, of the Group and of the Fund, and the statements of comprehensive income, statements of changes in net asset value and statements of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out in pages 54 to 91.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the “Auditors’ responsibilities for the audit of the financial statements” section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and other ethical responsibilities

We are independent of the Group and of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Our audit approach

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements of the Group and of the Fund. In particular, we considered where the Directors of the Manager made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group and of the Fund, the accounting processes and controls, and the industry in which the Group and the Fund operates.

Independent Auditors’ Reportto the Unitholders of IGB REAL ESTATE INVESTMENT TRUST (Established In Malaysia)


REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (continued)

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Fund for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Fund as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters How our audit addressed the key audit matters

Fair value of investment properties

As at 31 December 2017, the Group’s and the Fund’s investment properties, carried at fair value, amounted to RM4.93 billion.

The fair value of the Group’s and the Fund’s investment properties were carried out by an external valuer.

We focused on this area due to the magnitude of the balance and the complexities in determining the fair value of the investment properties, which involves significant judgement and estimations.

The existence of significant judgement and estimation uncertainty could result in material misstatement, which is why we have given special audit focus and attention to this area.

Refer to Note 3(b) (Summary of Significant Accounting Policies – Investment Properties), Note 4 (Critical Accounting Estimates and Judgements) and Note 6 (Investment Properties).

We evaluated the competence of the external valuer which included consideration of their qualifications, expertise and objectivity.

We met with external valuer to discuss the methodology and assumptions used in the valuation.

We performed testing on the rental rates and rental periods used in the valuation, on a sample basis, to satisfy ourselves of the accuracy and completeness of the property information supplied to the external valuer by management. This included agreeing a sample of these data back to the underlying lease agreements.

We tested the inputs underpinning the valuation, such as reversionary rental, car park income, other income, outgoings and allowance for void, by agreeing them to the underlying lease data or comparing to historical trends. We also assessed the reasonableness of the capitalisation rates used by the valuer, with references to comparable real estate investment trusts.

We reviewed the disclosures of the sensitivity analysis on the capitalisation rates on term and reversionary periods and the outgoings, underpinning the valuation.

Based on the above procedures performed, we did not identify any material exceptions.

Information other than the financial statements and auditors’ report thereon

The Directors of the Manager are responsible for the other information. The other information comprises the Corporate Information, Corporate Overview, Business Review, Corporate Governance, Manager’s Report and Trustee’s Report, but does not include the financial statements of the Group and the Fund and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Fund does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Fund, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Fund or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors of the Manager for the financial statements

The Directors of the Manager are responsible for the preparation of the financial statements of the Group and of the Fund that give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Directors of the Manager are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Fund that are free from material misstatement, whether due to fraud or error.

Independent Auditors’ Reportto the Unitholders of IGB REAL ESTATE INVESTMENT TRUST (Established In Malaysia)(continued)


REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (continued)

Responsibilities of the Directors of the Manager for the financial statements (continued)

In preparing the financial statements of the Group and of the Fund, the Directors of the Manager are responsible for assessing the Group’s and the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors of the Manager either intend to liquidate the Group and the Fund or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Fund as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of the financial statements of the Group and of the Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

(b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Fund’s internal controls.

(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors of the Manager.

(d) Conclude on the appropriateness of the Directors of the Manager’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Fund’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group and the Fund to cease to continue as a going concern.

(e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Fund, including the disclosures, and whether the financial statements of the Group and of the Fund represent the underlying transactions and events in a manner that achieves fair presentation.

(f ) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors of the Manager, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors of the Manager with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors of the Manager, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Fund for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.



OTHER MATTERS

This report is made solely to the unitholders of the Fund and for no other purpose. We do not assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS PLT GAN WEE FONGLLP0014401-LCA & AF 1146 03253/01/2019 J Chartered Accountants Chartered Accountant

Kuala Lumpur23 February 2018



Group Fund

2017 2017 2016

Note RM’000 RM’000 RM’000

Non-current assets

Plant and equipment 5 10,220 10,220 10,456

Investment properties 6 4,930,000 4,930,000 4,890,000

Investment in subsidiary 7 - - * -

Total non-current assets 4,940,220 4,940,220 4,900,456

Current assets

Trade and other receivables 8 25,300 51,514 19,406

Cash and bank balances 9 285,208 258,994 274,395

Total current assets 310,508 310,508 293,801

Total assets 5,250,728 5,250,728 5,194,257

Financed by

Unitholders’ fund

Unitholders’ capital 10 4,401,760 4,401,760 4,367,920

Accumulated losses (678,461) (678,461) (695,937)

Total unitholders’ fund 3,723,299 3,723,299 3,671,983

Non-current liabilities

Borrowings 11 1,198,765 - 1,209,176

Trade and other payables 12 69,131 1,267,896 64,455

Total non-current liabilities 1,267,896 1,267,896 1,273,631

Current liabilities

Borrowings 11 14,900 - 28,053

Trade and other payables 12 244,633 259,533 220,590

Total current liabilities 259,533 259,533 248,643

Total liabilities 1,527,429 1,527,429 1,522,274

Total unitholders’ fund and liabilities 5,250,728 5,250,728 5,194,257

Net asset value (“NAV”)

- before income distribution 4,049,189 4,049,189 3,976,193

- after income distribution 3,723,299 3,723,299 3,671,983

Number of units in circulation (‘000 units) 10 3,513,452 3,513,452 3,493,474

NAV per unit (RM)

- before income distribution 1.1525 1.1525 1.1382

- after income distribution 1.0597 1.0597 1.0511

* Denotes RM2 share capital in IGB REIT Capital Sdn Bhd

Statements of Financial PositionAs at 31 December 2017

The accompanying notes form an integral part of the financial statements.

The Group results presented in the current year include a subsidiary which was incorporated in FY2017.


Group and Fund Fund

2017 2016

Note RM’000 RM’000

Gross rental income 413,152 395,038

Other income 13 111,766 112,306

Gross revenue 524,918 507,344

Utilities expenses (48,802) (49,870)

Maintenance expenses (22,558) (21,654)

Quit rent and assessment (15,040) (14,424)

Reimbursement costs 14 (52,649) (52,522)

Other operating expenses/upgrades (12,306) (7,765)

Property operating expenses (151,355) (146,235)

Net property income 373,563 361,109

Changes in fair value on investment properties 40,000 -

Interest income 8,335 8,545

Net investment income 421,898 369,654

Manager’s management fees 15 (34,044) (33,413)

Trustees’ fees (320) (320)

Other trust expenses (491) (560)

Finance costs 16 (43,677) (57,525)

Profit before taxation 343,366 277,836

Taxation 17 - -

Profit after taxation 343,366 277,836

Other comprehensive income, net of tax - -

Total comprehensive income attributable to unitholders 343,366 277,836

Profit after taxation is made up as follows:

Realised 303,366 277,836

Unrealised 40,000 -

343,366 277,836

Basic earnings per unit (sen) 18 9.78 7.96

Diluted earnings per unit (sen) 18 9.78 7.96

Total comprehensive income 343,366 277,836

Distribution adjustments 19 (565) 38,470

Distributable income 342,801 316,306

Distribution per unit (sen) 19 9.28 8.71

Statements of Comprehensive IncomeFor the Financial Year Ended 31 December 2017




Unitholders’ capital

Accumulated losses*

Total unitholders’

funds


Group and Fund

As at 1 January 2017 4,367,920 (695,937) 3,671,983

Total comprehensive income for the year attributable to unitholders - 343,366 343,366

Distribution to unitholders 19 - (325,890) (325,890)

Net total comprehensive income for the year attributable to unitholders - 17,476 17,476

Unitholders’ transactions

Issue of new Units

- Manager’s management fees paid in Units 10 33,840 - 33,840

Increase in net assets resulting from unitholders’ transactions 33,840 - 33,840

As at 31 December 2017 4,401,760 (678,461) 3,723,299

Fund

As at 1 January 2016 4,335,072 (669,563) 3,665,509

Total comprehensive income for the year attributable to unitholders - 277,836 277,836

Distribution to unitholders 19 - (304,210) (304,210)

Net total comprehensive income for the year attributable to unitholders - (26,374) (26,374)

Unitholders’ transactions

Issue of new Units

- Manager’s management fees paid in Units 10 32,848 - 32,848

Increase in net assets resulting from unitholders’ transactions 32,848 - 32,848

As at 31 December 2016 4,367,920 (695,937) 3,671,983

* IGB REIT adopted predecessor accounting as its accounting policy to account for business combinations under common control on 21 September 2012. In accordance with this policy, the difference between the fair value of the Units issued as consideration and the aggregate carrying amounts of the assets and liabilities acquired as of the date of the business combination is included in equity as accumulated losses.

Statements of Changes in Net Asset ValueFor the Financial Year Ended 31 December 2017




Group Fund

2017 2017 2016


Cash flows from operating activities

Profit before taxation 343,366 343,366 277,836

Adjustments for:

Changes in fair value on investment properties (40,000) (40,000) -

Manager’s management fee payable in Units 34,044 34,044 33,413

Amortisation of fit-out incentives 42 42 1,475

Finance costs 43,677 43,677 57,525

Interest income (8,335) (8,335) (8,545)

Movement of allowance for impairment of trade receivables 1,151 1,151 366

Depreciation of plant and equipment 2,617 2,617 2,613

Plant and equipment written-off 51 51 73

(Gain)/Loss on disposal of plant and equipment (2) (2) 15

Operating income before changes in working capital 376,611 376,611 364,771

Net change in trade and other receivables (6,454) (32,668) 424

Net change in trade and other payables 6,714 6,714 (7,912)

Net cash generated from operating activities 376,871 350,657 357,283

Cash flows from investing activities

Purchase of plant and equipment (2,432) (2,432) (1,426)

Proceeds from disposal of plant and equipment 2 2 9

Interest received 7,702 7,702 8,494

Movement in fixed deposits with maturity of more than 3 months (147,329) (147,300) -

Net cash (used in)/generated from investing activities (142,057) (142,028) 7,077

Cash flows from financing activities

Interest paid (53,382) (53,382) (53,411)

Income distribution paid to unitholders (304,089) (304,089) (283,202)

Proceeds from borrowings 1,200,000 - -

Advances received from subsidiary - 1,200,000 -

Settlement of borrowings (1,212,559) (1,212,559) -

Payment of financing expenses (1,300) (1,300) -

Movement in restricted cash 4,198 30,382 (1,190)

Net cash used in financing activities (367,132) (340,948) (337,803)

Net (decrease)/increase in cash and cash equivalents (132,318) (132,319) 26,557

Cash and cash equivalents at beginning of the year 244,013 244,013 217,456

Cash and cash equivalents at end of the year 9 111,695 111,694 244,013

Statements of Cash FlowsFor the Financial Year Ended 31 December 2017




1 GENERAL

(A) Background

IGB Real Estate Investment Trust (“IGB REIT”) is a Malaysia-domiciled real estate investment trust established on 25 July 2012 pursuant to the Deed between IGB REIT Management Sdn Bhd (“Manager”) and MTrustee Berhad (“Trustee”), listed on Main Market of Bursa Securities on 21 September 2012 and regulated by the Securities Commission (“SC”) Act 1993, the Securities Commission’s Guidelines on Real Estate Investment Trusts (“REIT Guidelines”), the Listing Requirements of Bursa Securities, the Rules of Bursa Malaysia Depository (“Depository”) and taxation laws and rulings. IGB REIT will continue its operations until such time as determined by the Manager and the Trustee as provided under the provisions of Clause 26 of the Deed. The addresses of the Manager’s registered office and principal place of business are as follows:-

Registered office

Level 32, The Gardens South TowerMid Valley CityLingkaran Syed Putra59200 Kuala Lumpur

Principal place of business

Mid Valley Megamall and The Gardens MallMid Valley CityLingkaran Syed Putra59200 Kuala Lumpur

The principal investment policy of IGB REIT is to invest, directly and indirectly, in a diversified portfolio of income producing real estate used primarily for retail purposes in Malaysia and overseas as well as real estate related assets. Real estate used primarily for retail purposes would include retail properties and mixed used development with a retail component. The principal activity of the subsidiary, incorporated in Malaysia, is disclosed in Note 7 to the financial statements.

The consolidated financial statements comprise the Fund and its subsidiary (“Group”). The Group results presented in the current year include a subsidiary which was incorporated in 2017.

The Manager’s key objective is to provide unitholders with regular and stable distributions, sustainable long term IGB REIT’s units (“Unit”) price and distributable income and capital growth, while maintaining an appropriate capital structure.

The immediate and ultimate holding companies of the Manager are IGB Corporation Berhad and Goldis Berhad respectively, both incorporated in Malaysia and listed on the Main Market of Bursa Securities.

The financial statements for the financial year ended 31 December 2017 were authorised for issue in accordance with a resolution by the Directors of the Manager on 23 February 2018.

(B) Fee Structure

IGB REIT has entered into service agreements in relation to the management of IGB REIT and its property operations. The fee structures are as follows:-

(a) Property management fees

The property manager, Chartwell ITAC International Sdn Bhd, is entitled to property management fee of RM20,000 per month (excluding goods and services tax). In addition, the property manager is also entitled to full disbursement of costs and expenses properly incurred in the operation, maintenance, management and marketing of the properties held by IGB REIT (“Permitted Expenses”) as well as fees and reimbursements for Permitted Expenses payable to its service providers.

(b) Manager’s management fees

Pursuant to the Deed, the Manager is entitled to receive the following fees from IGB REIT, in the forms of cash, new Units or a combination thereof at the election of the Management Company in its sole discretion:-

i) a base fee (“Base Fee”) of up to 1.0% per annum of the total asset value of IGB REIT (excluding cash and bank balances which are held in non-interest bearing accounts).

ii) a performance fee (“Performance Fee”) of up to 5.0% per annum of net property income in the relevant financial year.

Notes to the Financial Statements


Notes to the Financial Statements(continued)

1 GENERAL (continued)

(B) Fee Structure (continued)

(b) Manager’s management fees (continued)

iii) an acquisition fee of 1.0% of the transaction value (being total purchase consideration) of any real estate and real estate-related assets directly or indirectly acquired from time to time by the Trustee or one or more special purpose vehicle (“SPV”) on behalf of IGB REIT pro-rated, if applicable, to the proportion of IGB REIT’s interest.

In the case of acquisition of SPVs or holding entities which holds real estate, 1.0% of the underlying value (as determined by an independent valuer appointed by the Trustee) of any Real Estate (which are directly or indirectly held through one or more SPVs of IGB REIT) pro-rated, if applicable, to the proportion of IGB REIT’s interest.

Any payment to third party agents or brokers in connection with the acquisition of any real estate and real estate-related assets for IGB REIT shall not be paid by the Manager out of the acquisition fee received or to be received by the Manager (but shall be borne by IGB REIT).

For the avoidance of doubt, no acquisition fee is payable with respect to acquisition of the subject properties in connection with the listing of IGB REIT but acquisition fee is payable with respect to all other transactions (which includes related party and non-related party transactions), including acquisitions from the sponsor.

iv) a divestment fee of 0.5% of the transaction value (being total sale consideration) of any real estate and real estate-related assets directly or indirectly sold or divested from time to time by the Trustee or one or more SPVs on behalf of IGB REIT pro-rated, if applicable, to the proportion of IGB REIT’s interest.

In the case of divestment of SPVs or holding entities which holds real estate, 0.5% of the underlying value (as determined by an independent valuer appointed by the Trustee) of any real estate (which are directly or indirectly held through one or more SPVs of IGB REIT) pro-rated, if applicable, to the proportion of IGB REIT’s interest.

Any payment to third party agents or brokers in connection with the sale or divestment of any real estate and real estate-related assets for IGB REIT shall not be paid by the Manager out of the divestment fee received or to be received by the Manager (but shall be borne by IGB REIT).

For the avoidance of doubt, the divestment fee is payable with respect to all transactions (which includes related party and non-related party transactions), including divestments to the sponsor, as well as for compulsory acquisitions.

The payment of the Manager’s management fee in the form of new Units will be in accordance with the following formula:-

New Units to be issued as payment of the Manager’s management fee = Manager’s management fee

payable in Units

Market Price

For this purpose, “Market Price” means the volume weighted average market price of the Units for the last 5 market days preceding the following events:-

(i) in respect of the Base Fee and Performance Fee, the announcement of the relevant quarterly financial reports; or

(ii) in respect of the acquisition fee and divestment fee, the completion of the relevant acquisition/divestment,

(each a “Trigger Event”).

With reference to any book closing date, where the Trigger Event is before but the issuance of the new Units relating to such Trigger Event is after the said book closing date, the Market Price will be further adjusted for the entitlement relating to such book closing date.

The Manager will make an immediate announcement to Bursa Securities disclosing the number of new Units to be issued and the issue price of the new Units when new Units are issued as payment for management fee. Payment of the management fees in Units shall also be subject to IGB REIT complying with the public spread requirements stated in the Listing Requirements of Bursa Securities and there being no adverse implications under Malaysian Code on Take-Overs and Mergers 2010.



1 GENERAL (continued)

(B) Fee Structure (continued)

(c) Trustee’s fees

In accordance to the Deed, an annual trustee fee of up to 0.03% per annum of NAV of IGB REIT is to be paid to Trustee.

2 BASIS OF PREPARATION

(a) Statement of compliance

The financial statements of the Group and the Fund have been prepared in accordance with the provisions of the Deed, Malaysian Financial Reporting Standards (“MFRS”) and International Financial Reporting Standards.

The financial statements have been prepared under the historical cost convention except as disclosed in the summary of significant accounting policies.

The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors of the Manager to exercise their judgement in the process of applying accounting policies. Although these estimates and judgement are based on the Directors of the Manager’s best knowledge of current events and actions, actual results could differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.

(b) Standards and amendments to published standards and interpretations that are effective

The Group and the Fund had applied the following amendments for the first time for the financial year beginning on 1 January 2017:-

l Amendments to MFRS 107 ‘Statement of Cash Flows – Disclosure Initiative’ l Amendments to MFRS 112 ‘Income Taxes – Recognition of Deferred Tax Assets for Unrealised Losses’ l Annual Improvements to MFRSs 2014 – 2016 Cycle: Amendments to MFRS 12 ‘Disclosures of Interests in Other Entities’

The adoption of the Amendments to MFRS 107 has required additional disclosure of changes in liabilities arising from financing activities. Other than that, the adoption of these amendments did not have any impact on the current period or any prior period and is not likely to affect future periods.

(c) Standards and amendments that have been issued but not yet effective

A number of new standards and amendments to standards and interpretations are effective for financial year beginning after 1 January 2017 and is applicable to the Group and the Fund as follows:-

l MFRS 9 ‘Financial Instruments’ (effective from 1 January 2018) will replace MFRS 139 ‘Financial Instruments: Recognition and Measurement’.

MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss (“FVTPL”) and fair value through other comprehensive income (“OCI”). The basis of classification depends on the entity’s business model and the cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest.

For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main changes are:

l For financial liabilities classified as FVTPL, the fair value changes due to own credit risk should be recognised directly to OCI. There is no subsequent recycling to profit or loss.

l When a financial liability measured at amortised cost is modified without this resulting in derecognition, a gain or loss, being the difference between the original contractual cash flows and the modified cash flows discounted at the original effective interest rate, should be recognised immediately in profit or loss.



2 BASIS OF PREPARATION (continued)

(c) Standards and amendments that have been issued but not yet effective (continued)

A number of new standards and amendments to standards and interpretations are effective for financial year beginning after 1 January 2017 and is applicable to the Group and the Fund as follows:- (continued)

MFRS 9 introduces an expected credit loss model on impairment that replaces the incurred loss on impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised.

l MFRS 15 ‘Revenue from contracts with customers’ (effective from 1 January 2018) replaces MFRS 118 ‘Revenue’ and MFRS 111 ‘Construction contracts’ and related interpretations. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Revenue is recognised when a customer obtains control of goods or services, i.e. when the customer has the ability to direct the use of and obtain the benefits from the goods or services.

A new five-step process is applied before revenue can be recognised:-

l Identify contracts with customers; l Identify the separate performance obligations; l Determine the transaction price of the contract; l Allocate the transaction price to each of the separate performance obligations; and l Recognise the revenue as each performance obligation is satisfied.

Key provisions of the new standard are as follows:-

l Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the contract price must generally be allocated to the separate elements.

l If the consideration varies (such as for incentives, rebates, performance fees, royalties, success of an outcome etc), minimum amount of revenue must be recognised if they are not at significant risk of reversal.

l The point at which revenue is able to be recognised may shift: some revenue which is currently recognised at a point in time at the end of a contract may have to be recognised over the contract term and vice versa.

l There are new specific rules on licenses, warranties, non-refundable upfront fees, and consignment arrangements, to name a few.

l As with any new standard, there are also increased disclosures.

l MFRS 16 ‘Leases’ (effective from 1 January 2019) supersedes MFRS 117 ‘Leases’ and the related interpretations.

Under MFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

MFRS 16 eliminates the classification of leases by the lessee as either finance lease (on balance sheet) or operating leases (off balance sheet). MFRS 16 requires a lessee to recognise a “right-of-use” of the underlying asset and a lease liability reflecting future lease payments for most leases.

The right-of-use of the asset is depreciated in accordance with the principle in MFRS 116 ‘Property, Plant and Equipment’ and the lease liability is accreted over time with interest expense recognised in profit or loss.

For lessors, MFRS 16 retains most of the requirements in MFRS 117. Lessors continue to classify all leases as either operating leases or finance leases and account for them differently.

l Amendments to MFRS 9 “Prepayment features with negative compensation” (effective 1 January 2019) allow companies to measure some prepayable financial assets with negative compensation at amortised cost. Negative compensation arises where the contractual terms permit the borrower to prepay the instrument before its contractual maturity, but the prepayment amount could be less than the unpaid amounts of principal and interest. To qualify for amortised cost measurement, the negative compensation must be reasonable compensation for early termination of the contract, and the asset must be held within a “held to collect” business model.

The amendment will be applied retrospectively.

The adoption of these new standards and amendments will not have any material impact on the financial statements of the Group and of the Fund in the year of initial application and are not likely to affect future periods.



3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to the period presented in these financial statements.

(a) Consolidation

(i) Business combination under common control

IGB REIT applied predecessor accounting to account for business combinations under common control on 21 September 2012, i.e. combination involving entities or businesses under common control. Under the predecessor accounting, assets and liabilities acquired are not restated to their respective fair values but at the carrying amounts from the consolidated financial statements of the holding company. The difference between any consideration given and the aggregate carrying amounts of the assets and liabilities (at the date of the transaction) of the acquired business is recorded as an adjustment to retained earnings. No additional goodwill is recognised. Acquisition-related costs are expensed as incurred. The acquired business’ results and the related balance sheet items are recognised prospectively from the date on which the business combination between entities under common control occurred.

(ii) Subsidiary

Subsidiary is an entity over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity. Subsidiary is fully consolidated from the date on which control is transferred to the Group. It is deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.

The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recognised as goodwill.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date and any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 139 in profit or loss. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(iii) Investment in subsidiary

In the Fund’s separate financial statements, investment in subsidiary is carried at cost less accumulated impairment losses. On disposal of investment in subsidiary, the difference between disposal proceeds and the carrying amounts of the investments are recognised in the statement of comprehensive income.

The amounts due from subsidiary of which the Fund does not expect repayment in the foreseeable future are considered as part of the Fund’s investment in the subsidiary.



3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(b) Investment properties

Investment properties are held for long term rental yields or for capital appreciation or both, and are not occupied by the Group.

Investment properties are measured initially at cost, including related transaction costs and borrowing costs if the investment property meets the definition of qualifying asset.

After initial recognition, investment properties are carried at fair value. Fair value is based on valuation using an income approach, where cash flows projections are capitalised using a capitalisation rate and takes into account the unexpired period, yield and outgoings, where applicable. Valuations are performed as of the financial position date by professional valuers who hold recognised and relevant professional qualifications and have relevant experience in valuing the investment properties.

The fair value of investment property reflects, among other things, rental income from current leases and other assumptions that market participants would make when pricing the property under current market conditions.

Subsequent expenditure is recognised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. All other repair, maintenance and upgrade costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.

Changes in fair value are recognised in the statement of comprehensive income. Investment properties are derecognised either when they have been disposed or when the investment properties are permanently withdrawn from use and no future economic benefit is expected from its disposal.

Where the Group disposes of a property at fair value in an arm’s length transaction, the carrying value immediately prior to the sale is adjusted to the transaction price, and the adjustment is recorded in the statement of comprehensive income as a net gain/loss from fair value adjustment on investment property.

(c) Plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost also includes borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset.

Cost of plant and equipment includes purchase price and any direct attributable costs. Cost includes the cost of replacing part of an existing plant and equipment at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of the plant and equipment.

Property, plant and equipment are initially stated at cost, net of the amount of goods and services tax (“GST”), if applicable, except where the amount of GST incurred is not recoverable. When the amount of GST incurred is not recoverable, the GST is recognised as part of the cost of acquisition of the property, plant and equipment.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Depreciation on capital work-in-progress commences when the assets are ready for their intended use. Plant and equipment are depreciated on a straight line basis to allocate the cost of the assets to their residual values over their estimated useful lives, summarised as follows:-

Motor vehicles 20%Furniture and fittings 12.5%Equipment 12.5%Information technology equipment 33 1/3%Plant and machinery 10%

Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at the end of each reporting period. The assessment of expected residual values and estimated useful lives of assets is carried out on an annual basis.

At the end of the reporting period, the Group assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write-down is made if the carrying amount exceeds the recoverable amount. Please refer to accounting policy on impairment of non-financial assets (Note 3(e)).

Gains and losses on disposals are determined by comparing net disposal proceeds with carrying amount and are included in net property income in the statement of comprehensive income.




(d) Financial assets

(i) Classification

The Group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. If collection of the amounts is expected in one year or less they are classified as current assets. If not, they are presented as non-current assets.

(ii) Recognition and initial measurement

Financial assets are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset for all financial assets not carried at fair value through profit or loss. Financial assets at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the statement of comprehensive income.

(iii) Subsequent measurement – gains and losses

Loans and receivables are subsequently carried at amortised cost using the effective interest method.

(iv) Subsequent measurement – impairment

Assets carried at amortised cost

The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred or expected to occur after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If ‘loans and receivables’ or a ‘held to maturity’ investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the statement of comprehensive income.

When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined.

(v) De-recognition

Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of the ownership.

(e) Impairment of non-financial assets

Plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).




(e) Impairment of non-financial assets (continued)

The impairment loss is charged to the statement of comprehensive income during the period in which they are incurred and any subsequent increase in recoverable amount is recognised in the statement of comprehensive income during the period in which they are incurred.

(f) Cash and cash equivalents

For the purpose of the statements of cash flows, cash and cash equivalents consist of cash in hand, deposits held at call with licensed financial institutions, other short term and highly liquid investments with original maturities of three (3) months or less, that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. Bank overdrafts, if any, are included within borrowings in current liabilities in the statements of financial position.

(g) Trade and other payables

Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers or vendors. Trade payables are classified as current liabilities if payment is due within one (1) year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables, deposits received from tenants and other payables are recognised initially at fair value, with the amount of GST included, if applicable, and subsequently measured at amortised cost using the effective interest method.

(h) Unitholders’ capital

Unitholders’ contributions are classified as equity when there is no obligation to transfer cash or other assets, nor they are redeemable at the unitholders’ option. Any consideration received or distributions paid is added or deducted directly from equity. Incremental external costs directly attributable to the issue of new Units are shown in equity as a deduction, net of tax, from the proceeds.

(i) Borrowings and borrowing costs

Borrowings are recognised initially at fair value, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of borrowings. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve (12) months after the reporting date.

Borrowings costs directly attributable to the acquisition, construction or production of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in statement of comprehensive income in the period in which they are incurred.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn-down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn-down, the fee is capitalised as a prepayment for liquidity and amortised over the period of the facility to which it relates.

(j) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for the performance of services in the ordinary course of the Group’s activities. Revenue is shown net of GST, returns, rebates and discounts and amount collected on behalf of third parties.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue includes base rent, percentage rent, service and promotional charges from tenants.

Base rent from operating leases is recognised on a straight-line basis over the lease term. Percentage rent is recognised based on sales reported by tenants. When the Group provides incentives to its tenants, the cost of incentives is recognised over the lease term, on a straight-line basis, as a reduction of rental income. Car park income, utilities recoverable and other rent related income are recognised in the accounting period in which the services are being rendered.

Interest income is recognised using the effective interest method.




(k) Manager’s management fees

Manager’s management fees are recognised in statement of comprehensive income in the period in which they are incurred. If, the payment of the Manager’s management fees is in the form of new Units, such payment is determined by reference to the market price of the Units as set out in Note 1(B)(b).

(l) Income tax

Tax is recognised in statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Provisions are established where appropriate on the basis of amounts expected to be paid to the tax authorities. This liability is measured using the single best estimate of the most likely outcome.

Where investment properties are carried at their fair value in accordance with the accounting policy set out in Note 3(b), the amount of deferred tax recognised is measured using the tax rates that would apply on the sale of those assets at their carrying value at the reporting date unless the property is depreciable and is held with the objective to consume substantially all of the economic benefits embodied in the property over time, rather than through sale. In all other cases, the amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.

(m) Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right to use an asset for an agreed period of time.

Accounting by lessee - operating lease

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on the straight line basis during the lease period in which they are incurred.

(n) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the Group operates (“functional currency”). The financial statements are presented in Ringgit Malaysia, which is the Group’s functional and presentation currency.

(o) Earnings per unit

The earnings per Unit (“EPU”) are presented on basic and diluted format.

Basic EPU is calculated by dividing the profit or loss attributable to unitholders by the weighted average number of Units outstanding during the period.

Diluted EPU is determined by adjusting the profit or loss attributable to unitholders against the weighted average number of Units outstanding adjusted for the effects of all dilutive potential units.

(p) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The chief operating decision makers, who are responsible for allocating resources, assessing performance of the operating segments and making strategic decisions for the Group, have been identified as the Directors of the Manager.

(q) Net asset value (“NAV”)

NAV is the value of the total assets less the value of the total liabilities.




(r) Distribution of income

Distribution of income should only be made from realised gains or realised income in accordance with the REIT Guidelines.

Distribution of income should be made after the Manager has taken into consideration the total returns for the period, income for the period, cash flow for distribution, stability and sustainability of income and the investment objective and distribution policy of IGB REIT. Liability is recognised for the amount of any distribution of income not distributed at the end of the reporting period.

Distribution adjustments are disclosed in Note 19.

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the Directors of the Manager and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Group’s results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

Principal assumptions for estimation of fair value of investment properties

The principal assumptions underlying estimation of fair value of investment properties are those related to term rental, reversionary rental, car park income, other income, outgoings (including asset enhancement initiatives), capitalisation rate and allowance for void.

Investment properties are stated at fair value based on valuations performed by One Asia Property Consultants (KL) Sdn Bhd (“One Asia”), an independent professional valuer who holds a recognised relevant professional qualification and has relevant experience in valuing the investment properties.

The valuations are compared with actual market yield data, actual transactions and those reported by the market, when available. Assumptions used are mainly based on market conditions existing at each reporting date.

Sensitivity analysis on fair value of investment properties as valued by One Asia is disclosed in Note 6.



5 PLANT AND EQUIPMENT

Group and FundMotor

vehiclesFurniture

and fittings Equipment

Information technologyequipment

Plant and machinery

Capital work-in-progress Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost

As at 1 January 2017 657 2,537 14,289 1,732 28 321 19,564

Additions 38 186 242 360 - 1,606 2,432

Disposals - - (1) - - - (1)

Write-offs (4) (31) (77) (4) - - (116)

Reclassification - - 1,470 - - (1,470) -

As at 31 December 2017 691 2,692 15,923 2,088 28 457 21,879

Accumulated depreciation

As at 1 January 2017 445 1,294 5,862 1,495 12 - 9,108

Depreciation charge for the financial year 120 322 1,982 191 2 - 2,617

Disposals - - (1) - - - (1)

Write-offs (3) (19) (39) (4) - - (65)

As at 31 December 2017 562 1,597 7,804 1,682 14 - 11,659

Carrying amounts

As at 31 December 2017 129 1,095 8,119 406 14 457 10,220

FundMotor

vehiclesFurniture

and fittings Equipment

Information technologyequipment

Plant and machinery

Capital work-in-progress Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost

As at 1 January 2016 642 2,576 12,157 1,600 28 1,285 18,288

Additions 15 36 326 136 - 913 1,426

Disposals - - (29) - - - (29)

Write-offs - (75) (42) (4) - - (121)

Reclassification - - 1,877 - - (1,877) -

As at 31 December 2016 657 2,537 14,289 1,732 28 321 19,564

Accumulated depreciation

As at 1 January 2016 317 1,008 4,106 1,108 9 - 6,548

Depreciation charge for the financial year 128 320 1,771 391 3 - 2,613

Disposals - - (5) - - - (5)

Write-offs - (34) (10) (4) - - (48)

As at 31 December 2016 445 1,294 5,862 1,495 12 - 9,108

Carrying amounts

As at 31 December 2016 212 1,243 8,427 237 16 321 10,456



6 INVESTMENT PROPERTIES

Group and Fund Fund

2017 2016RM’000 RM’000

As at 1 January 4,890,000 4,890,000

Fair value gain 40,000 -

As at 31 December 4,930,000 4,890,000

On 20 September 2012, IGB REIT acquired the investment properties of which the consideration was settled in cash for RM1,200 million and issuance of 3,400 million units in IGB REIT. The purchase considerations were as follows:-

Purchase Consideration satisfied in

Investment PropertiesUnits

RM’millionCash

RM’millionTotal

RM’million

Mid Valley Megamall 3,413 710 4,123

The Gardens Mall 837 490 1,327

Total 4,250 1,200 5,450

The title deeds to the investment properties’ land are currently being held in trust by related companies. The expiry date of the State Authority’s consent for the transfer of Mid Valley Megamall in favour of the Trustee is 28 September 2018. Strata titles for The Gardens Mall had been issued on 13 January 2017. The transfer of the strata titles for The Gardens Mall in favour of the Trustee was presented on 22 December 2017 to the State Authority for registration of transfer.

Mid Valley Megamall is charged as a security for bank borrowings as disclosed in Note 11.

Investment properties as at 31 December 2017 and 31 December 2016 are stated at fair value based on valuations performed by independent professional valuer, One Asia and Henry Butcher Malaysia Sdn Bhd (“Henry Butcher”) respectively, who hold a recognised relevant professional qualification and have relevant experience in valuing the investment properties. Valuations are performed quarterly by independent professional valuer. The quarterly valuations will be reviewed by the Manager and approved by the Board of Directors of the Manager.

Based on the valuation reports dated 8 January 2018 issued by One Asia, the fair values of Mid Valley Megamall and The Gardens Mall as at 31 December 2017 were RM3.645 billion (2016: RM3.610 billion) and RM1.285 billion (2016: RM1.280 billion) respectively.

Fair value is determined based on income approach method using Level 3 inputs (defined as unobservable inputs for asset or liability) in the fair value hierarchy of MFRS 13 ‘Fair Value Measurement’. Under the income approach, the fair value of the investment properties is derived from an estimate of the market rental which the investment properties can reasonably be let for. Rental evidence may be obtained from actual passing rents commanded by the investment properties if they are tenanted. Outgoings, such as quit rent and assessment, utilities costs, reimbursable manpower costs, repair and maintenance, insurance premium, asset enhancement initiatives as well as management expenses, are then deducted from the rental income. Thereafter, the net annual rental income is capitalised at an appropriate current market yield to arrive at its fair value. Changes in fair value are recognised in the statement of comprehensive income during the period in which they are reviewed.

The Level 3 inputs or unobservable inputs include:-

Term rental - the expected rental that the investment properties are expected to achieve and is derived from the current passing rental, (including revision upon renewal of tenancies during the year which is part of passing rental);

Reversionary rental - the expected rental that the investment properties are expected to achieve upon expiry of term rental;Car park income - the rental on car park bays;Other income - mainly percentage rent and advertising income;Outgoings - mainly quit rent and assessment, utilities costs, reimbursable manpower costs, repair and maintenance,

insurance premium, asset enhancement initiatives/upgrade expense and management expenses;Capitalisation rate - based on actual location, size and condition of the investment properties and taking into account market

data at the valuation date based on the valuers’ knowledge of the factors specific to the investment properties; and

Allowance for void - allowance provided for vacancy periods.

There has been no change to the valuation techniques used during the financial year.



6 IN

VES

TMEN

T PR

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31

Dec

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Para

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Sens

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anal

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on

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Valu

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6 IN

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Th

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7 INVESTMENT IN SUBSIDIARY

Fund

2017 2016

RM’000 RM’000

At cost

Unquoted shares -* -

* Denotes RM2

Name of company Principal activitiesPlace of

Incorporation

Group’s effective interest (%)

2017 2016

IGB REIT Capital Sdn Bhd A special purpose vehicle to raise financing via the issuance of medium term notes pursuant to a medium term notes programme

Malaysia 100 -

On 19 July 2017, IGB REIT Capital Sdn Bhd, a special purpose vehicle wholly-owned by IGB REIT via MTrustee Berhad (acting in its capacity as trustee for IGB REIT), was incorporated in Malaysia.

8 TRADE AND OTHER RECEIVABLES

Group Fund

2017 2017 2016

RM’000 RM’000 RM’000

Trade receivables 3,903 3,903 3,525

Less: Allowance for impairment of trade receivables (3,096) (3,096) (1,945)

Trade receivables – net 807 807 1,580

Accrued billings 13,023 13,023 8,283

13,830 13,830 9,863

Other receivables 1,879 1,598 985

Deposits 7,580 7,580 6,968

Amount owing by immediate holding company 25 25 19

Amount owing by subsidiary - 26,495 -

Amounts owing by related companies 1,323 1,323 1,349

10,807 37,021 9,321

Prepayments 663 663 222

11,470 37,684 9,543

Total trade and other receivables 25,300 51,514 19,406 The carrying amounts of trade and other receivables as at 31 December 2017 and 31 December 2016 approximated their fair

values.

The credit terms of trade receivables were seven (7) days (2016: seven (7) days).

The amounts owing by immediate holding and related companies are trade in nature, unsecured and with credit terms of seven (7) days (2016: seven (7) days).

The amount owing by subsidiary represents advances, mainly to comply with the minimum required balance in Debt Service Reserve Account pursuant to Tranche 1, MTN (Note 11), which are unsecured and carries interest rate at 3.80% (2016: nil) per annum.



8 TRADE AND OTHER RECEIVABLES (continued)

As at 31 December 2017, trade receivables of RM797,000 (2016: RM1,551,000) were past due but not impaired. Such trade receivables are due from tenants in Mid Valley Megamall and The Gardens Mall who have paid security deposits for the tenancy and with no known recent history or expected occurrence of default. In addition, the historical experience in collection of trade receivables falls within the recorded allowance.

The ageing analysis of these trade receivables is as follows:-

Group and Fund Fund

2017 2016

RM’000 RM’000

Not past due:

- 1 to 7 days 10 29

Past due but not impaired:

- 8 to 30 days 247 1,056

- 31 to 60 days 458 437

- 61 to 90 days 92 58

797 1,551

Past due and impaired 3,096 1,945

3,903 3,525 The movement of allowance for impairment of trade receivables is as follows:-

Group and Fund Fund

2017 2016

RM’000 RM’000

As at 1 January 1,945 1,579

Allowance for impairment 2,479 1,420

Reversal during the year (1,328) (1,054)

As at 31 December 3,096 1,945 The other classes within trade and other receivables are neither past due nor impaired.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables.



9 CASH AND CASH EQUIVALENTS

Group Fund

2017 2017 2016

RM’000 RM’000 RM’000

Cash in hand 525 525 350

Bank balances 43,574 43,569 29,304

Deposits placed with licensed banks 241,109 214,900 244,741

Cash and bank balances 285,208 258,994 274,395

Less:-

Fixed deposits with maturity of more than 3 months (147,329) (147,300) -

Restricted cash (26,184) - (30,382)

Cash and cash equivalents 111,695 111,694 244,013

Bank balances are deposits held at call with banks and earns no interest.

The weighted average effective interest rate of deposits with licensed banks of the Group and the Fund that were effective at the reporting date were 3.68 % per annum (2016: nil) and 3.67% per annum (2016: 3.31% per annum) respectively.

Deposits with licensed banks of the Group and the Fund have a weighted average maturity of 93 days (2016: nil) and 93 days (2016: 79 days) respectively.

Included in the deposits placed with licensed banks of the Group and the Fund are restricted amounts of RM26.2 million (2016: nil) and nil (2016: 30.4 million) respectively, which is maintained in a Debt Service Reserve Account to cover a minimum of six (6) months interest for borrowings (Note 11).

The reconciliation of liabilities arising from financing activities is as follows:-

GroupNon-current borrowings

Current borrowings

Distribution payable to

unitholders Total

RM’000 RM’000 RM’000 RM’000

As at 1 January 2017 1,209,176 28,053 150,273 1,387,502

Cash flows:-

Interest paid - (53,382) - (53,382)

Income distribution paid to unitholders - - (304,089) (304,089)

Proceeds from borrowings 1,200,000 - - 1,200,000

Settlement of borrowings (1,200,000) (12,559) - (1,212,559)

Payment of financing expenses (1,300) - - (1,300)

(1,300) (65,941) (304,089) (371,330)

Non-cash changes:-

Written-back of step-up interest (11,843) - - (11,843)

Amortisation of transaction costs 2,732 - - 2,732

Accrual for interest - 52,788 - 52,788

Accrual for income distribution - - 325,890 325,890

(9,111) 52,788 325,890 369,567

As at 31 December 2017 1,198,765 14,900 172,074 1,385,739



9 CASH AND CASH EQUIVALENTS (continued)

The reconciliation of liabilities arising from financing activities is as follows:- (continued)

FundNon-current borrowings

Current borrowings

Distribution payable to

unitholders

Non-current – amount due

to subsidiary

Current – amount due

to subsidiary Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

As at 1 January 2017 1,209,176 28,053 150,273 - - 1,387,502

Cash flows:-

Interest paid - (53,382) - - - (53,382)

Income distribution paid to unitholders - - (304,089) - - (304,089)

Advances received from subsidiary - - - 1,200,000 - 1,200,000

Settlement of borrowings (1,200,000) (12,559) - - - (1,212,559)

Payment of financing expenses - - - (1,300) - (1,300)

(1,200,000) (65,941) (304,089) 1,198,700 - (371,330)

Non-cash changes:-

Written-back of step-up interest (11,843) - - - - (11,843)

Amortisation of transaction costs 2,667 - - 65 - 2,732

Accrual for interest - 37,888 - - 14,900 52,788

Accrual for income distribution - - 325,890 - - 325,890

(9,176) 37,888 325,890 65 14,900 369,567

As at 31 December 2017 - - 172,074 1,198,765 14,900 1,385,739

10 UNITHOLDERS’ CAPITAL

Group and Fund Fund

2017 2016

Numberof units

Numberof units

‘000 ‘000

Approved fund size:

As at 1 January/31 December 3,550,000 3,550,000

Numberof units Value

Numberof units Value

‘000 RM’000 ‘000 RM’000

Issued and fully paid up:

At 1 January 3,493,474 4,367,920 3,471,789 4,335,072

Creation of units

Issue of new Units 19,978 33,840 21,685 32,848

As at 31 December 3,513,452 4,401,760 3,493,474 4,367,920



11 BORROWINGS

Group Fund

2017 2016

RM’000 RM’000

Current (secured):

Medium term notes 14,900 -

Fixed rate term loan - 15,323

Standby revolving credit - 12,730

14,900 28,053

Non-current (secured):

Medium term notes 1,198,765 -

Fixed rate term loan - 1,209,176

1,198,765 1,209,176

Total 1,213,665 1,237,229

Syndicated Financing Facilities (“SFF”)

The SFF comprised of a Fixed Rate Term Loan facility (“FRTL”) of up to RM1.2 billion and a Standby Revolving Credit facility (“SBRC”) of up to RM20.0 million. Both the FRTL and SBRC were fully settled in September 2017 through refinancing and internally generated fund respectively.

Medium Term Notes (“MTN”) Programme of up to RM5.0 billion in nominal value (“MTN Programme”)

On 18 August 2017, the Manager announced on the Main Market of Bursa Securities that IGB REIT Capital Sdn Bhd (“IGBRC”), a special purpose vehicle wholly-owned by IGB REIT via MTrustee Berhad (acting in its capacity as trustee for IGB REIT), had lodged a MTN Programme with the SC pursuant to the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework issued by the SC. The MTN Programme has a tenure of twenty (20) years from the date of first issuance of MTN under the MTN Programme.

On 20 September 2017, IGBRC issued the first tranche AAA-rated MTN (“Tranche 1, MTN”) amounting to RM1.2 billion which was advanced to the Fund to fully settle the FRTL. The Tranche 1, MTN has a tenure of 7 years (“Legal Maturity”) effective from 20 September 2017. For the first 5 years (“Expected Maturity”), the Tranche 1, MTN bears a fixed coupon rate of 4.4% per annum. The RM1.2 billion has to be fully repaid on Expected Maturity, otherwise it will cause a trigger event that will result in the coupon rate to be stepped up to 5.4% per annum for the sixth and seventh years.

The Tranche 1, MTN is secured against, among others, the following:-

(i) a third party legal assignment of the Trustee’s present and future rights, titles, interests and benefits in Mid Valley Megamall (“MVM”) and under the sale and purchase agreement in relation to MVM. In the event the subdivision of master title is completed and a separate strata title is issued for MVM (“MVM Strata Title”), a third party first legal charge shall be created on MVM Strata Title;

(ii) a third party legal assignment over all the Trustee’s rights, titles, interests and benefits under the proceeds derived from the tenancy/lease agreements in relation to MVM;

(iii) a third party legal assignment of the Trustee’s present and future rights, titles, interests and benefits under all insurance policies in relation to MVM and the Security Trustee (acting for and on behalf of the MTN holders) being named as the co-insured and loss payee of the insurance policies;

(iv) a third party first ranking legal assignment and charge over the revenue and operating accounts of the Tranche 1, MTN;

(v) a first party first ranking legal assignment and charge over the debt service reserve account of the Tranche 1, MTN;

(vi) an irrevocable power of attorney granted by the Trustee in favour of the Security Trustee (acting for and on behalf of the MTN holders) to manage and dispose MVM upon expiry of the remedy period under the terms of the Tranche 1, MTN;



11 BORROWINGS (continued)

The Tranche 1, MTN is secured against, among others, the following:- (continued)

(vii) a letter of undertaking from the Trustee and the Manager:-

(a) to deposit all cash flows generated from MVM into the revenue account; and

(b) it shall not declare or make any distributions out of the cash flows from the revenue account to the unitholders if an event of default and/or a trigger event has occurred and is continuing or the financial covenants are not met; and

(viii) a first party legal assignment over the Tranche 1, MTN’s Trustee financing agreement.

The maturity profiles of the borrowings are as follows:-

<1 year 1 to 2 years 2 to 3 years >3 years

TotalCarrying Amount

RM’000 RM’000 RM’000 RM’000 RM’000

Group

As at31 December 2017

Tranche 1, MTN 14,900 - - 1,198,765 1,213,665

14,900 - - 1,198,765 1,213,665

Fund

As at31 December 2016

FRTL 15,323 - 1,209,176 - 1,224,499

SBRC 12,730 - - - 12,730

28,053 - 1,209,176 - 1,237,229

The weighted average effective interest rates as at the reporting date are as follows:-

Group Fund

2017 2016

% per annum % per annum

Tranche 1, MTN 4.38% -

FRTL - 4.49%

SBRC - 4.84%



12 TRADE AND OTHER PAYABLES

Group Fund

2017 2017 2016


Non-current

Tenants’ deposits a 69,131 69,131 64,455

Amount due to subsidiary b - 1,198,765 -

69,131 1,267,896 64,455

Current

Trade payables c 11,869 11,869 9,555

Tenants’ deposits a 23,010 23,010 22,389

34,879 34,879 31,944

Other payables and accrued expenses 15,144 15,144 18,430

Net output tax 1,789 1,789 1,567

Prepaid rental 8,489 8,489 8,042

Amount due to subsidiary b - 14,900 -

Amounts due to related companies d 12,258 12,258 10,334

Distribution payable to unitholders 172,074 172,074 150,273

209,754 224,654 188,646

Total current trade and other payables 244,633 259,533 220,590

Total trade and other payables 313,764 1,527,429 285,045

(a) Tenants’ deposits are in respect of refundable deposits received from tenants for tenancy related agreements. Tenancy tenures are generally for a period of one (1) to three (3) years.

(b) The amount due to subsidiary represents advances from the issuance of Tranche 1, MTN, which are secured and carries interest rate at 4.40% (2016: nil) per annum, in which the repayment terms mirror the terms stated in Note 11.

(c) Credit terms for trade payables range from 30 days to 90 days (2016: 30 days to 90 days).

(d) Amounts due to related companies are unsecured, interest-free (2016: interest free) and repayable on demand.

13 OTHER INCOME

Group and Fund Fund

2017 2016

RM’000 RM’000

Car park income 45,095 45,029

Utilities recoverable 26,025 26,142

Kiosk rent and other leasing income 26,732 25,997

Advertising and promotional income 8,538 9,629

Others 5,376 5,509

111,766 112,306



14 REIMBURSEMENT COSTS

Group and Fund Fund2017 2016

RM’000 RM’000

Manpower costs 31,198 30,714

Marketing expenses 6,213 8,152

Administration expenses 9,058 7,695

Management expenses 4,049 3,867

Insurance premium 2,131 2,094

52,649 52,522

15 MANAGER’S MANAGEMENT FEES


RM’000 RM’000

Base fee 15,366 15,358

Performance fee 18,678 18,055

34,044 33,413

For the financial year ended 31 December 2017, 100% of the total Manager’s management fees has been paid/payable in Units (2016: 100%).

16 FINANCE COSTS

Group Fund2017 2017 2016

RM’000 RM’000 RM’000

Borrowing costs 40,945 26,045 56,556

Interest on advances from subsidiary - 14,900 -

Amortisation of transaction costs 2,732 2,732 969

43,677 43,677 57,525

17 TAXATION


RM’000 RM’000

Reconciliation of tax expense

Profit before taxation 343,366 277,836

Income tax using Malaysian tax rate of 24% (2016: 24%) 82,408 66,681

Non-deductible expenses 4,441 3,305

Income exempted from tax (86,849) (69,986)

- -



17 TAXATION (continued)

Pursuant to Section 61A of the Malaysian Income Tax Act, 1967 (“Act”), income of IGB REIT will be exempted from tax provided that at least 90% of its total taxable income (as defined in the Act) is distributed to the investors in the basis period of IGB REIT for that year of assessment within two (2) months after the close of the financial year. If the 90% distribution condition is not complied with or the 90% distribution is not made within two (2) months after the close of IGB REIT financial year which forms the basis period for a year of assessment, IGB REIT will be subject to income tax at the prevailing rate on its total taxable income. Income which has been taxed at the IGB REIT level will have tax credits attached when subsequently distributed to unitholders.

As the distribution to unitholders for the financial year ended 31 December 2017 is approximately 95.0% (2016: 96.2%) of the total distributable income, no provision for income taxation has been made for the current and prior financial year.

18 EARNINGS PER UNIT (“EPU”) – BASIC AND DILUTED

The calculation of EPU is based on total comprehensive income attributable to unitholders divided by the weighted average number of Units.

Group and Fund Fund

2017 2016


Total comprehensive income

- Realised 303,366 277,836

- Unrealised 40,000 -

Total 343,366 277,836

Weighted average number of units (‘000)

Weighted average number of Units in issue 3,503,884 3,483,741

Adjustment for Manager’s management fees payable in Units a 5,370 4,880

Weighted average number of Units for diluted EPU 3,509,254 3,488,621

Basic/Diluted EPU (sen)

- Realised 8.64 7.96

- Unrealised 1.14 -

Total 9.78 7.96

Dilutive EPU equals to Basic EPU as there are no potential dilutive units in issue.

Note (a):-

Group and Fund Fund

2017 2016

Number of units Value

Number of units Value

‘000 RM’000 ‘000 RM’000

Manager’s management fees payable in Units

- from 1 October 2017 to 31 December 2017 at RM1.61 per Unit listed on 30 January 2018 5,370 8,646 - -

- from 1 October 2016 to 31 December 2016 at RM1.73 per Unit listed on 2 February 2017 - - 4,880 8,442

5,370 8,646 4,880 8,442



19 DISTRIBUTION TO UNITHOLDERS



Total comprehensive income 343,366 277,836

Distribution adjustments a (565) 38,470


Distribution per unit (sen)

- for the period from 1 January 2017 to 30 June 2017 4.38 -

- for the period from 1 July 2017 to 31 December 2017 4.90 -

- for the period from 1 January 2016 to 30 June 2016 - 4.41

- for the period from 1 July 2016 to 31 December 2016 - 4.30

9.28 8.71

Income distribution


Income distribution of 4.38 sen per unit (@ 4.30 sen taxable and 0.08 sen non-taxable) for the period from 1 January 2017 to 30 June 2017 (153,660) -

Income distribution of 4.90 sen per unit (@ 4.79 sen taxable and 0.11 sen non-taxable) for the period from 1 July 2017 to 31 December 2017 (172,074) -

Income distribution of 4.41 sen per unit (@ 4.32 sen taxable and 0.09 sen non-taxable) for the period from 1 January 2016 to 30 June 2016 - (153,833)

Income distribution of 4.30 sen per unit (@ 4.18 sen taxable and 0.12 sen non-taxable) for the period from 1 July 2016 to 31 December 2016 - (150,273)

Adjustment for under accrual of income distribution for the period from 1 July to 31 December (156) (104)

Income distributed (325,890) (304,210)

Income retained 16,911 12,096

Note (a):-

Distribution adjustments comprise:-

Changes in fair value on investment properties (40,000) -

Manager’s management fees payable in Units 15 34,044 33,413

Amortisation of fit-out incentives 42 1,475

Amortisation of transaction costs 2,732 969

Depreciation of plant and equipment 5 2,617 2,613

(565) 38,470

Withholding tax will be deducted for distributions as follows:-

Withholding Tax rate2017 2016

Resident corporate N/A^ N/A^

Resident non-corporate 10% 10%

Non-resident individual 10% 10%

Non-resident corporate 24% 24%

Non-resident institutional 10% 10%

^ to tax at prevailing rate



20 PORTFOLIO TURNOVER RATIO

Group and Fund Fund

2017 2016

Portfolio Turnover Ratio (“PTR”) (times) - -

The calculation of PTR is based on the average value of total acquisitions and disposals of investments in the Group for the financial year to the average NAV during the financial year.

Save for placement and upliftment of fixed deposits, there were no acquisitions and disposals of investments in the Group for the financial year.

Since the basis of calculating PTR can vary among REITs, there is no consistent or coherent basis for providing an accurate comparison of the Group’s PTR against other REITs.

21 MANAGEMENT EXPENSE RATIO

Group and Fund Fund

2017 2016

Management expense ratio (“MER”) (%) 0.94 0.93

The calculation of the MER is based on the total fund operating fees of the Group incurred for the financial year, including the Manager’s management fees, trustees’ fees and other trust expenses, to the NAV (after income distribution).

Since the basis of calculating MER can vary among REITs, there is no consistent or coherent basis for providing an accurate comparison of the Group’s MER against other REITs.

22 SEGMENT REPORTING

The segmental financial information by business or geographical segments is not presented as there is only one (1) business activity within the investment properties portfolio of the Group, which comprised of Mid Valley Megamall and The Gardens Mall and its entire business is conducted in Kuala Lumpur.

The Manager assesses the financial performance of the operating segments based on, including but not limited to, net property income (“NPI”). The NPI enables financial performance benchmarking as such basis eliminates the effect of financing and investment decisions which may not be made at operating level.



23 FINANCIAL INSTRUMENTS BY CATEGORY

Group Fund

2017 2017 2016

Note RM’000 RM’000 RM ’000

Loans and receivables at amortised cost

Assets as per statement of financial position:

- Trade and other receivables excluding prepayments and accrued billings 8 11,614 37,828 10,901

- Cash and bank balances 9 285,208 258,994 274,395

Total financial assets 296,822 296,822 285,296

Other financial liabilities at amortised cost

Liabilities as per statement of financial position:

- Borrowings 11 1,213,665 - 1,237,229

- Trade and other payables excluding net output tax and prepaid rental 12 303,486 1,517,151 275,436

Total financial liabilities 1,517,151 1,517,151 1,512,665

24 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

24.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: interest rate risk (including fair value interest rate risk), credit risk and liquidity and cash flow risk. The Group’s overall financial risk management objective is to ensure that it creates value for its unitholders. The Group focuses on the unpredictability of financial markets and seeks to mitigate potential adverse effects on the financial performance of the Group. Financial risk management is carried out through risk reviews, internal control systems and insurance programmes. The Manager regularly reviews the risk profile and ensure adherence to the Group’s financial risk management policies.

(a) Interest rate risk The Group’s income and cash flows are substantially independent of changes in market interest rates as the interest

rate of Tranche 1, MTN is fixed at 4.4% per annum which locks in the interest rate against any fluctuation resulting in exposure to fair value and cash flow interest rate risk.

Sensitivity analysis for interest rate fluctuation is irrelevant or not applicable as the Group does not use variable rates in managing its cash flow interest rate risk.

(b) Credit risk

Credit risk arises from credit exposures to outstanding receivables from the tenants, as well as cash, cash equivalents and deposits with banks and financial institutions.

Credit risks arising from outstanding receivables from the tenants are mitigated and monitored by strict selection of tenants and/or business associates with high creditworthiness. Trade receivables are monitored on an on-going basis via compliance with standard operating and reporting procedures. Other than anchor tenants, namely Aeon BIG, Aeon, Metrojaya, Isetan, Robinsons and GSC Signature, which contribute 8.8% (2016: 8.9%) of the rental income, investment properties of the Group do not have any significant exposure to any individual or group of tenants or counterparties nor any major concentration of credit risk in relation to any financial instruments.

Credit risk with respect to trade receivables is limited due to the nature of business which is mainly rental related and cash-based. The historical experience in collection of trade receivables falls within the recorded and expected allowances. Furthermore, the tenants have placed security deposits in the form of cash or bank guarantees which act as collateral. In view of the above, no additional credit risk beyond amounts allowed for collection losses is inherent in the Group’s trade receivables.

Bank deposits are placed with licensed financial institutions with high credit ratings assigned by credit rating agencies. Hence, the risk of material loss in the event of non-performance by a financial counterparty could be considered to be unlikely.



24 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

24.1 Financial risk factors (continued)

(c) Liquidity and cash flow risk

The rolling forecasts of liquidity requirements are monitored to ensure there is sufficient cash to meet operational needs while maintaining sufficient headroom on the committed borrowing facilities (Note 11).

Adequate cash, cash equivalents and bank facilities are maintained and monitored to finance the operations, to distribute income to unitholders, and to mitigate the effects of fluctuations in cash flows. In addition, the Manager also monitors and observes the REIT Guidelines concerning limits on total borrowings of the investment trust.

Cash and bank balances as at 31 December 2017 of the Group and of the Fund of RM285 million (2016: nil) and RM259 million (2016: RM274 million) respectively are expected to assist in the liquidity and cash flow risk management.

The analysis of the non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date are as follows:-

Group <1 year1 to 2years

2 to 3years >3 years Total

RM’000 RM’000 RM’000 RM’000 RM’000 At 31 December 2017

Borrowings 67,700 52,800 52,800 1,291,165 1,464,465

Payables and accruals excluding net output tax and prepaid rental 234,355 28,208 22,644 18,279 303,486

Fund <1 year1 to 2years

2 to 3years >3 years Total

RM’000 RM’000 RM’000 RM’000 RM’000 At 31 December 2017

Payables and accruals excluding net output tax and prepaid rental 302,055 81,008 75,444 1,309,444 1,767,951

At 31 December 2016

Borrowings 83,261 60,000 1,254,176 - 1,397,437

Payables and accruals excluding net output tax and prepaid rental 210,981 29,879 26,230 8,346 275,436

Note:-

The amounts are contractual and undiscounted cash flows.

24.2 Capital risk management

The Group’s capital is the unitholders’ capital and borrowings. The Fund’s capital is the unitholders’ capital and intercompany borrowings.

The overall capital management objectives are to safeguard the ability to continue as a going concern in order to provide returns for unitholders and other stakeholders as well as to maintain a more efficient capital structure.

The Manager’s on-going capital management strategy involves maintaining an appropriate gearing level and adopting an active interest rate management strategy to manage the risks associated with refinancing and changes in interest rates. The Manager intends to implement this strategy by (i) diversifying sources of debt funding to the extent appropriate, (ii) maintaining a reasonable level of debt service capability, (iii) securing favourable terms of funding, (iv) managing its financial obligations and (v) where appropriate, managing the exposures arising from adverse market interest rates, such as through fixed rate borrowings, to improve the efficiency for the cost of capital.




24.2 Capital risk management (continued)

The total borrowings to total assets ratio is as follows:-

Group Fund

2017 2017 2016

RM’000 RM’000 RM’000

Total borrowings 1,213,665 - 1,237,229

Total intercompany borrowings - 1,213,665 -

Total assets 5,250,728 5,250,728 5,194,257

Borrowings to total assets ratio (%) 23.1 23.1 23.8

The total borrowings should not exceed 50% of the total assets at the time the borrowings are incurred in accordance with the REIT Guidelines. The Group and the Fund complied with the borrowing limit requirement for the financial year.

The financial covenants of the MTN Programme are as follows:-

(i) to ensure that the total amount raised by the Group from issuance of debt securities and/or any other financing facilities shall not exceed 50% of the total asset value of the Group; and

(ii) to maintain the interest service cover ratio (“ISCR”) of not less than 1.5 times for the Group, calculated on a yearly basis at the end of the financial year of the Group.

The financial covenants of the Tranche 1, MTN are as follows:-

(i) to maintain a security cover ratio for MVM of not more than 60%;

(ii) to maintain the ISCR of not less than 2.0 times for MVM, calculated on a yearly basis at the end of the financial year of IGB REIT; and

(iii) to ensure that the total amount raised by the Group from issuance of debt securities and/or any other financing facilities shall not exceed 50% of the total asset value of the Group.

The Deed provides that the Manager shall, with the approval of the Trustee, for each distribution period, distribute all (or such other percentage as determined by the Manager at its absolute discretion) of the Fund’s distributable income. It is the intention of the Manager to distribute at least 90% of the Fund’s distributable income on a half-yearly basis (or such other interval as determined by the Manager at its absolute discretion).

For the financial year ended 31 December 2017, the Group and the Fund distributed approximately 95.0% (2016: 96.2%) of its distributable income.

Based on the prospectus in respect of the initial public offer of IGB REIT dated 26 August 2012, the Manager will distribute 100% of the Fund’s distributable income for the period from date of establishment to 31 December 2014. The actual proportion of distributable income distributed to unitholders beyond 31 December 2014 shall be at the absolute discretion of the Manager, may be at least 90% of the Fund’s distributable income to the extent that the Manager believes it is appropriate, having regard to the Fund’s funding requirements, total return, cash flow as well as sustainability and stability of the income. Distribution, when made, will be in Ringgit Malaysia.




24.3 Fair value

The assets and liabilities measured at fair value and classified by level of the fair value measurement hierarchy are as follows:-

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (Level 2); and

(c) inputs for the asset or liability that are not based on observable market data i.e. unobservable inputs (Level 3).

Group and Fund Fund

2017 2016

RM’000 RM’000

Level 3

Recurring fair value measurements:

Investment properties 4,930,000 4,890,000

Level 3 fair values of the investment properties have been derived from the income approach method based on valuations performed by independent professional valuer, One Asia (2016: Henry Butcher), who holds a recognised relevant professional qualification and has relevant experience in valuing the investment properties. The valuation techniques, significant parameters and movement in fair values are as disclosed in Note 6.

Assets and liabilities not carried at fair value

Save as disclosed below, the carrying amounts of financial assets and liabilities as at reporting date approximated their fair values. The fair value of cash deposits received from tenants at the reporting date is not materially different from their carrying value as the impact of discounting is not significant.

The Group’s borrowings are not measured at fair value as at reporting date. The fair value of such borrowings is disclosed within the fair value hierarchy as follows:-

Group

2017 2016

Carrying amount

Fair value

Carrying amount

Fairvalue

RM’000 RM’000 RM’000 RM’000

Level 2

Borrowings 1,213,665 1,217,408 - -

Fund

2017 2016

Carrying amount

Fair value

Carrying amount

Fairvalue

RM’000 RM’000 RM’000 RM’000

Level 2

Borrowings - - 1,237,229 1,217,941

Intercompany borrowings 1,213,665 1,217,408 - -



25 OPERATING LEASES

Leases as lessor

The Group and the Fund lease out the investment properties (Note 6) under operating leases. Subject to full receipts and/or recoveries of all trade receivables, the future minimum lease receivables under non-cancellable lease are as follows:-

Group and Fund Fund

2017 2016

RM’000 RM’000

Less than one (1) year 321,363 339,736

Between one (1) and five (5) years 347,981 377,782

More than five (5) years 229,243 243,236

898,587 960,754

26 CAPITAL COMMITMENTS

The capital expenditure which has not been provided for in the financial statements is as follows:-

Group and Fund Fund

2017 2016

RM’000 RM’000

Plant and equipment

Authorised by Directors of the Manager but not contracted 2,539 2,948



27 SIGNIFICANT RELATED PARTY TRANSACTIONS

The significant related party transactions are carried out in the normal course of business on terms and conditions negotiated between the contracting parties.

Related party Relationship

IGB Corporation Berhad (“IGB”) Major unitholder, the sponsor of IGB REIT and immediate holding company of the Fund

IGB REIT Management Sdn Bhd The Manager of the Fund, a subsidiary of IGB

IGB REIT Capital Sdn Bhd A subsidiary of the Fund via MTrustee Berhad (acting in its capacity as trustee for IGB REIT)

Ensignia Construction Sdn Bhd A subsidiary of IGB

IGB Properties Sdn Bhd A subsidiary of IGB

Mid Valley City Developments Sdn Bhd A subsidiary of IGB

Mid Valley City Energy Sdn Bhd A subsidiary of IGB

Mid Valley City Enterprise Sdn Bhd A subsidiary of IGB

Mid Valley City Hotels Sdn Bhd A subsidiary of IGB

Mid Valley City North Tower Sdn Bhd A subsidiary of IGB

Mid Valley City South Tower Sdn Bhd A subsidiary of IGB

MVC Centrepoint North Sdn Bhd A subsidiary of IGB

MVC Centrepoint South Sdn Bhd A subsidiary of IGB

MVC CyberManager Sdn Bhd A subsidiary of IGB

MVEC Exhibition and Event Services Sdn Bhd A subsidiary of IGB

Tanah Permata Sdn Bhd A subsidiary of IGB

Technoltic Engineering Sdn Bhd An associate of IGB

Wah Seong (Malaya) Trading Co. Sdn Bhd Major unitholder of the Fund

Strass Media Sdn Bhd A subsidiary of Wah Seong (Malaya) Trading Co. Sdn Bhd

Syn Tai Hung Trading Sdn Bhd A subsidiary of Wah Seong Corporation Berhad

JVP Venture Sdn Bhd A person connected to a director of the Manager

Fast Casual Hospitality Sdn Bhd A person connected to a director of the Manager



27 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)

Group and Fund Fund

2017 2016

RM’000 RM’000

Significant related party transactions for the financial year:

Sales of services

1) Utilities charges

- IGB Properties Sdn Bhd 693 796

- Mid Valley City Enterprise Sdn Bhd 1,535 1,702

- MVC Centrepoint South Sdn Bhd 924 1,006

- MVC Centrepoint North Sdn Bhd 1,109 125

- Mid Valley City Hotels Sdn Bhd 3,602 3,539

- Tanah Permata Sdn Bhd 1,365 1,476

- Mid Valley City South Tower Sdn Bhd 1,910 2,085

- Mid Valley City North Tower Sdn Bhd 2,029 2,077

- Mid Valley City Energy Sdn Bhd 701 696

- Mid Valley City Developments Sdn Bhd 81 90

- Ensignia Construction Sdn Bhd 625 634

- Strass Media Sdn Bhd 124 153

14,698 14,379

2) Rental of premises

- MVEC Exhibition and Event Services Sdn Bhd 5,202 5,206

- MVC CyberManager Sdn Bhd 60 60

- JVP Venture Sdn Bhd 203 198

- Fast Casual Hospitality Sdn Bhd 271 269

5,736 5,733

3) Rental of light box

- Strass Media Sdn Bhd 1,086 1,242

4) Rental of car park

- IGB Corporation Berhad 180 165

- Tanah Permata Sdn Bhd 179 181

359 346




Group and Fund Fund

2017 2016

RM’000 RM’000

Significant related party transactions for the financial year (continued):

Purchases of services

1) Utilities charges

- Mid Valley City Energy Sdn Bhd 40,057 41,702


40,125 41,767

2) Manager’s management fee

- IGB REIT Management Sdn Bhd 34,044 33,413

3) Repair and maintenance

- Technoltic Engineering Sdn Bhd 2,451 3,629

- Ensignia Construction Sdn Bhd 829 3,412

- Wah Seong (Malaya) Trading Co. Sdn Bhd 985 394

- Syn Tai Hung Trading Sdn Bhd 136 58

4,401 7,493

4) Hotel facilities and services


- Mid Valley City Hotels Sdn Bhd 69 64

199 250

Significant related party balances as at reporting date:

Deposits placed with – included in deposits receivable

Mid Valley City Energy Sdn Bhd 7,424 6,817

Amount owing to

IGB REIT Management Sdn Bhd (Manager’s management fee) 9,001 8,782

Technoltic Engineering Sdn Bhd - 1,508




Fund

2017 2016

RM’000 RM’000

Significant related party transactions for the financial year:

Interest charged to

IGB REIT Capital Sdn Bhd 281 -

Interest charged by

IGB REIT Capital Sdn Bhd 14,900 -

Advances from

IGB REIT Capital Sdn Bhd (Note 11) 1,200,000 -

Significant related party balances as at reporting date:

Amount owing by

IGB REIT Capital Sdn Bhd (Note 11) 26,495 -

Amount owing to

IGB REIT Capital Sdn Bhd (Note 11) 1,213,665 -


Unitholding StatisticsAs at 8 February 2018

APPROVED FUND SIZE3,550,000,000 Units

ISSUED UNITS3,518,821,841 Units (voting right : 1 vote per Unit)

PUBLIC SPREAD45.04%

DISTRIBUTION OF UNITHOLDINGS

Range of UnitholdingsNo. of

Unitholders% of

UnitholdersNo. of

Issued Units% of

Issued Units

Less than 100 1,676 7.81 48,514 0.00

100 – 1,000 7,589 35.35 3,763,281 0.11

1,000 – 10,000 8,752 40.76 37,757,830 1.07

10,001 – 100,000 2,803 13.06 88,847,086 2.53

100,001 to less than 5% of Issued Units 647 3.01 1,393,504,763 39.60

5% and above of Issued Units 2 0.01 1,994,900,367 56.69

Total 21,469 100.00 3,518,821,841 100.00

SUBSTANTIAL UNITHOLDERS (5% AND ABOVE)

Name

Direct Deemed**

No. of Issued Units

% of Issued Units

No. of Issued Units

% of Issued Units

IGB Corporation Berhad 1,733,617,754 49.27 118,821,841 3.38

Goldis Berhad Nil Nil 1,852,439,595 52.64

Dato’ Seri Robert Tan Chung Meng 13,739,081 0.39 1,884,151,697 53.54

Pauline Tan Suat Ming Nil Nil 1,884,151,697 53.54

Tony Tan Choon Keat 1,000,000 0.03 1,884,151,697 53.54

Tan Chin Nam Sendirian Berhad 14,482,888 0.41 1,881,373,230 53.47

Tan Kim Yeow Sendirian Berhad 2,879,665 0.08 1,881,272,032 53.46

Wah Seong (M) Trading Co. Sdn. Bhd. 26,079,992 0.74 1,854,866,695 52.71

Employees Provident Fund Board 327,891,513 9.32 Nil Nil

DIRECTORS AND CEO UNITHOLDINGS

Name

Direct Deemed**

No. of Issued Units

% of Issued Units

No. of Issued Units

% of Issued Units

Dato’ Seri Robert Tan Chung Meng 13,739,081 0.39 1,884,151,697 53.54

Tan Boon Lee 1,705,025 0.05 Nil Nil

Tan Lei Cheng 1,853,742 0.05 345,722 0.01

Daniel Yong Chen-I 622,132 0.02 1,080,898 0.03

Elizabeth Tan Hui Ning 2,999,000 0.09 Nil Nil

Antony Patrick Barragry 151,300 0.00 Nil Nil

** Deemed interests held by other corporations by virtue of Section 8 (4) of the Companies Act 2016


Unitholding StatisticsAs at 8 February 2018(continued)

TOP 30 UNITHOLDERS

No. Name of UnitholderNo. of

Issued Units% of

Issue Units

1 IGB Corporation Berhad 1,733,617,754 49.272 Citigroup Nominees (Tempatan) Sdn Bhd

Employees Provident Fund Board261,282,613 7.43

3 IGB REIT Management Sdn Bhd 118,821,841 3.384 Kumpulan Wang Persaraan (Diperbadankan) 113,355,800 3.225 Valuecap Sdn Bhd 93,311,300 2.656 Malaysia Nominees (Tempatan) Sendirian Berhad

Great Eastern Life Assurance (Malaysia) Berhad (PAR 1)60,607,000 1.72

7 Citigroup Nominees (Tempatan) Sdn BhdExempt AN for AIA Bhd

54,602,031 1.55

8 Maybank Nominees (Tempatan) Sdn BhdMaybank Trustees Berhad For Public Regular Savings Fund (N14011940100)

42,378,828 1.21

9 Pertubuhan Keselamatan Sosial 39,173,550 1.1110 Amanahraya Trustees Berhad

Public Smallcap Fund33,134,616 0.94

11 Citigroup Nominees (Tempatan) Sdn BhdEmployees Provident Fund Board (Affin-Hwg)

32,608,900 0.93

12 Cartaban Nominees (Tempatan) Sdn BhdPAMB for Prulink Equity Fund

31,736,492 0.90

13 Amanahraya Trustees BerhadPublic Savings Fund

23,738,876 0.68

14 Amanahraya Trustees BerhadPublic Dividend Select Fund

23,660,932 0.67

15 Wah Seong (Malaya) Trading Co. Sdn Bhd 21,805,823 0.6116 Citigroup Nominees (Tempatan) Sdn Bhd

Employees Provident Fund Board (Nomura)20,000,000 0.57

17 HSBC Nominees (Asing) Sdn BhdJPMCB NA for Vanguard Total International Stock Index Fund

19,557,904 0.56

18 HSBC Nominees (Asing) Sdn BhdBBH And Co Boston for Vanguard Emerging Markets Stock Index Fund

16,876,370 0.48

19 DB (Malaysia) Nominee (Asing) Sdn BhdBNYM SA/NV for Newton Asian Income Fund

16,670,100 0.47

20 Amanahraya Trustees BerhadPublic Equity Fund

15,800,368 0.45

21 Citigroup Nominees (Asing) Sdn BhdCBNY for DFA International Real Estate Securities Portfolio of DFA Investment Dimensions Group Inc

15,020,400 0.43

22 Citigroup Nominees (Tempatan) Sdn BhdEmployees Provident Fund Board (Amundi)

14,000,000 0.40

23 Malaysia Nominees (Tempatan) Sendirian BerhadGreat Eastern Life Assurance (Malaysia) Berhad (LSF)

13,017,000 0.37

24 DB (Malaysia) Nominee (Asing) Sdn BhdSSBT Fund NBIF For Nuveen Real Asset Income Fund

12,102,608 0.34

25 HSBC Nominees (Tempatan) Sdn BhdHSBC (M) Trustee Bhd For Pertubuhan Keselamatan Sosial (Aff Hwg6939-403)

11,667,200 0.33

26 Malaysia Nominees (Tempatan) Sendirian BerhadGreat Eastern Life Assurance (Malaysia) Berhad (Par 3)

11,151,900 0.32

27 Robert Tan Chung Meng 11,005,755 0.3128 Tan Chin Nam Sendirian Berhad 10,465,921 0.3029 UOBM Nominees (Asing) Sdn Bhd

Pledged Securities Account for Montego Assets Limited (PCB)10,000,000 0.28

30 Cartaban Nominees (Tempatan) Sdn BhdPAMB for Prulink Equity Income Fund

9,880,000 0.28

Total 2,891,051,882 82.16


Notice of Sixth Annual General Meeting

NOTICE IS HEREBY GIVEN of the Sixth Annual General Meeting (6th AGM) of IGB Real Estate Investment Trust (IGB REIT) to be held at Bintang Ballroom, Level 5, Cititel Mid Valley, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia on Monday, 23 April 2018 at 2.00 p.m. to transact the following business:

Ordinary Business

To lay Financial Statements of IGB REIT for the year ended 31 December 2017 together with reports issued by the Trustee, the Manager and the Auditors (Financial Statements and Reports FY2017).

By Order of Board of Directors (Board)IGB REIT MANAGEMENT SDN BHDthe Manager of IGB REIT

Tina Chan Company Secretary (MAICSA 7001659)

Kuala Lumpur 28 February 2018

Notes:

(1) Financial Statements and Reports FY2017

The Financial Statements and Reports FY2017 have been approved by the Board of IGB REIT Management Sdn Bhd and there is no requirement for unitholders to approve these reports. Unitholders will be given a reasonable opportunity to ask questions and make comments on the reports at the 6th AGM.

(2) Appointment of proxy

(a) A unitholder is entitled to appoint 1 or 2 proxies (none of whom need be a unitholder of IGB REIT). (b) A unitholder, who is an authorised nominee, may appoint not more than 2 proxies in respect of each securities account held;

whereas, an exempt authorised nominee may appoint multiple proxies in respect of each securities account held. (c) A unitholder who appoints a proxy must execute the Proxy Form accompanies this Notice of 6th AGM. The lodging of

Proxy Form does not preclude a unitholder from attending and voting in person at the 6th AGM, should the unitholder subsequently decide to do so.

(d) A corporate unitholder who appoints a proxy must execute Proxy Form under seal or the hand of its officer or attorney duly authorised.

(e) Only unitholders registered in Record of Depositors as at 16 April 2018 shall be eligible to attend and vote at the 6th AGM, or appoint proxy(ies) to attend and vote on their behalf.

(f ) The executed Proxy Form must be deposited at the Manager’s Registered Office, no later than 21 April 2018 at 2.00 p.m. (g) Annual Report 2017 is available on IGB REIT’s website www.igbreit.com, which unitholders can view or download at their

convenience.

(3) Registration of unitholders/proxies

(a) Registration will start at 12.00 noon on the day of the 6th AGM. (b) Unitholders/proxies are required to produce original identification cards/documents during registration for verification. (c) Parking tickets can be validated at registration counter for unitholders/proxies who park their vehicles in Mid Valley

Megamall (MVM) and The Gardens Mall (TGM) only. IGB REIT will NOT validate nor reimburse unitholders/proxies for parking charges using Touch’ N Go, or the valet parking services at MVM and TGM.

(d) Each unitholder/proxy will be given a wristband upon registration. No person will be allowed to enter the meeting room without wearing the wristband. There will be no replacement in the event unitholders/proxies lose or misplace the wristband. Unitholders/proxies are allowed to enter the meeting room at 1.30 p.m.

(e) The registration counters will only process verification of identities and registration. Other queries/clarification, please proceed to Help Desk counter.

Managed by IGB REIT MANAGEMENT SDN BHD (908168-A)

PROXY FORM

Number of Units Held

CDS Account Number

CDS Account Number of Authorised Nominee

*I/We (Full name as per Identification/Certificate of Incorporation)

Identification/Company No. of (address)

being a unitholder of IGB REIT hereby appoint Identification No.

of (address)

or failing him/her, Identification No.

of (address)

or, both of whom failing, *the Chairman of the 6th AGM as *my/our proxy to attend and vote on *my/our behalf, at the 6th AGM of IGB REIT to be held at Bintang Ballroom, Level 5, Cititel Mid Valley, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia on Monday, 23 April 2018 at 2.00 p.m. and at any adjournment thereof.

* Delete as appropriate

Dated this day of 2018 Signature/Common Seal of unitholder

Notes:

(a) A unitholder is entitled to appoint 1 or 2 proxies (none of whom need be a unitholder of IGB REIT).

(b) A unitholder, who is an authorised nominee, may appoint not more than 2 proxies in respect of each securities account held; whereas, an exempt authorised nominee may appoint multiple proxies in respect of each securities account held.

(c) A unitholder who appoints a proxy must execute the Proxy Form accompanies this Notice of 6th AGM. The lodging of Proxy Form does not preclude a unitholder from attending and voting in person at the 6th AGM, should the unitholder subsequently decide to do so.

(d) A corporate unitholder who appoints a proxy must execute Proxy Form under seal or the hand of its officer or attorney duly authorised.

(e) Only unitholders registered in Record of Depositors as at 16 April 2018 shall be eligible to attend and vote at the 6th AGM, or appoint proxy(ies) to attend and vote on their behalf.

(f ) The executed Proxy Form must be deposited at the Manager’s Registered Office, no later than 21 April 2018 at 2.00 p.m.

(g) Annual Report 2017 is available on IGB REIT’s website www.igbreit.com, which unitholders can view or download at their convenience.

The Company Secretary

IGB REIT Management Sdn Bhd (908168-A)the Manager of IGB REIT

Level 32, The Gardens South TowerMid Valley CityLingkaran Syed Putra59200 Kuala LumpurMalaysia

AFFIXRM0.80STAMP

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Fold this flap for sealing

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