ANNUALANNUAL RREPORTEPORT LinkLink Real Estate InvestmentInvestment TrustTrust 22019019//22020020 Stock code: 823823 Governance, Disclosures and overnance Financial Statements isclosure and inancial Statements About Link
Link Real Estate Investment Trust is Asia’s About this Report largest REIT and one of the world’s largest We produce this standalone Governance, Disclosures and Financial Statements report in order to improve reporting REITs (with focus on retail) in terms of market transparency by making information easily and readily accessible to interested parties. This report complements our capitalisation. With a diversified portfolio, we 2019/2020 Strategic Report which highlights our corporate aim to deliver sustainable growth and create performance and values created over the year under review. long-term value for our Unitholders and all Sustainability Website our stakeholders. Up until 2013/2014, Link prepared separate annual sustainability reports which are on our corporate sustainability website. Since 2014/2015, we have updated our corporate sustainability performance solely on our website: Linkreit.com/en/sustainability/
Complete 2019/2020 Reports and Presentations Our complete suite of reports and supporting compliance documentation can be accessed and downloaded from our corporate website at: Linkreit.com
STRATEGIC REPORT Our Strategic Report, compiled according to the International Integrated Reporting Council’s International
GOVERNANCE, DISCLOSURES AND FINANCIAL STATEMENTS This report provides our detailed governance, disclosures and financial statements. Governance and disclosures sections are prepared in accordance with the REIT Code, applicable provisions of the Listing Rules, and other relevant laws and regulations while the consolidated financial statements have been prepared in accordance with the Hong Kong Financial Reporting Standards, the requirements of the Trust Deed and the relevant disclosure requirements of the REIT Code and the Listing Rules, and audited by PricewaterhouseCoopers.
VALUATION REPORT This report summarises the valuation of Link’s individual properties as conducted by Colliers International (Hong Kong) Limited.
ESG COMPLIANCE DOCUMENTATION • Environmental, Social and Governance Reporting Guide (ESG Reporting Guide) of Hong Kong Stock Exchange • Global Reporting Initiative Sustainability Reporting Standards (GRI Standards) — Comprehensive Options • United Nations Global Compact
Access our corporate website for further information Contents
Introduction Inside front Governance A Well-Governed Business 2 Board Committee Reports Report of the Audit and Risk Management Committee 35 Report of the Finance and Investment Committee 38 Report of the Nomination Committee 40 Report of the Remuneration Committee 42 Regulation and Compliance 44 Disclosures Biographical Details of Directors and Management Team 56 Disclosure of Interests 65 Long-term Incentive Schemes 69 Connected Party Transactions 76 Link Together Initiatives 82 Trustee’s Report 86 Financial Statements Independent Auditor’s Report 87 Consolidated Financial Statements Consolidated Income Statement 92 Consolidated Statement of Comprehensive Income 93 Consolidated Statement of Distributions 94 Consolidated Statement of Financial Position 95 Consolidated Statement of Changes in Equity and Net Assets Attributable to Unitholders 96 Consolidated Statement of Cash Flows 97 Notes to the Consolidated Financial Statements 98 Valuation Report 144 ESG Compliance HKQAA Assurance Statement 189 GRI Content Index 190 SEHK ESG Reporting Guide Index 199 United Nations Global Compact Index 204 Five Year Performance Summary 205 Investor Information 208 Definitions and Glossary 210 Corporate Information Inside back A Well-Governed Business
Our Corporate Governance Framework Link believes responsible governance should transcend merely complying with regulatory requirements to become a value that is embedded within all that we do. Our corporate governance framework identifies the participants and key controls which interact to ensure that the Board and management run the business of Link in the long-term interests of our Unitholders whilst also meeting the expectations of our other stakeholders.
• Vigorous investor relations program to keep • High level of independence Unitholders abreast of developments • Diversity in skill, experience, gender • Periodic reporting and corporate and ethnicity communications in full compliance with • Strong Board process REIT Code and Listing Rules • Periodic performance evaluation • Comprehensive sustainability initiatives • Programme of succession and nomination • Link Together Initiatives for people living in our communities • Government and community relations
UNITHOLDERS AND BOARD AND OTHER STAKEHOLDERS BOARD COMMITTEES
Our Corporate Governance Framework
REGULATORY AND MANAGEMENT OTHER OVERSIGHT
• Vision, Mission and Values, embedded as • SFC oversight through REIT Code and Link culture SFO compliance and inspection • Clear delegation of authority between • Trustee oversight through Trust Deed and Board and management periodic inspections • Regular updates to Board • External audit and review • Risk management framework and internal • Stringent internal audit system control • Whistle-blowing policy
2 Link Real Estate Investment Trust Annual Report 2019/2020 A Well-Governed Business
The Board The Board is central to the operation of Link’s corporate governance framework which provides for effective oversight and control. Under the direction of the Board, Link has implemented comprehensive systems and procedures designed to promote Link’s long-term success and deliver sustainable value to Unitholders and other stakeholders. Led by the Chairman, the Board sets strategy and risk appetite, leads and provides insight to management, and monitors business progress against agreed business targets. This is achieved through: • strong independence of the Board and the Board Committees • clear division of duties between the Board and the Board Committees • Vigorous investor relations program to keep • High level of independence Unitholders abreast of developments • Diversity in skill, experience, gender • clear division of responsibility between the Board and management • Periodic reporting and corporate and ethnicity • diversified skills, experiences, expertise, gender and ethnicity among Board members communications in full compliance with • Strong Board process REIT Code and Listing Rules • Periodic performance evaluation • strong and transparent Board process • Comprehensive sustainability initiatives • Programme of succession and nomination • Link Together Initiatives for people living Board Size, Composition and Appointments in our communities According to the Articles of the Manager, the number of Directors shall not be fewer than nine and shall not be greater than • Government and community relations 14. Currently, there are 12 Board members comprising two EDs, being the CEO and the CFO, one NED and nine INEDs. The Board considers this composition is balanced and facilitates strong independent monitoring and challenge of management initiatives. Biographies of our Directors as at the date of this report appear on pages 56 to 61 of this report. UNITHOLDERS AND BOARD AND OTHER STAKEHOLDERS BOARD COMMITTEES Each of our current NED and INEDs is appointed for a term of three years, subject to curtailment upon retirement by rotation and re-election by Unitholders at annual general meeting. The term, duties and obligations of each NED and INED are set out in a formal letter of appointment entered into with the Manager; neither the NED nor the INEDs are employees of Link. Each NED and INED has committed that they will be able to give sufficient time and attention to the Manager on Board matters. Our Corporate The term of appointment may be renewed upon expiry and up to a maximum of nine years in the case of INED. The NED is not Governance subject to the maximum nine-year term but is subject to the same requirements of retirement by rotation and re-election by Framework Unitholders at annual general meetings as the INEDs. The EDs are both full-time employees of Link. Their employment contracts with the Manager do not stipulate a specific period of tenure and may be terminated by six months’ written notice by either the Manager or the EDs. The EDs are not subject to REGULATORY AND retirement by rotation at annual general meeting. Mr NG Kok Siong, the CFO and one of the responsible officers of the MANAGEMENT Manager for the purposes of the SFO, was appointed as an ED with effect from 1 February 2020, in accordance with the Board OTHER OVERSIGHT diversity and nomination policies. According to the Articles of the Manager, Mr Ng, being a newly-appointed Director, is subject to retirement for election by the Unitholders at the first annual general meeting following his appointment. • Vision, Mission and Values, embedded as • SFC oversight through REIT Code and Link culture SFO compliance and inspection The updates on Directors’ biographical information since Interim Report 2019/2020 are set out on page 47 of this report. • Clear delegation of authority between • Trustee oversight through Trust Deed and Board and management periodic inspections • Regular updates to Board • External audit and review • Risk management framework and internal • Stringent internal audit system control • Whistle-blowing policy
Governance, Disclosures and Financial Statements 3 A Well-Governed Business
Strong Independence Our INEDs and the NED bring constructive challenge and critical judgement on management proposals, scrutinise business performance against goals, and monitor risks and compliance.
ADDITIONAL INDEPENDENCE REQUIREMENTS IN LINK CORPORATE GOVERNANCE POLICY OVER THE REQUIREMENTS UNDER KEY INDEPENDENCE FEATURES THE LISTING RULES
I E s cann t serve n t e B ar ey n nine years T e C airman t e B ar is an I E