It is the Board’s commitment to provide a balanced and meaningful assessment of Hektar REIT’s financial performance and prospects at the end of the financial year, primarily through quarterly announcements of results and annual financial statements to Bursa Malaysia.
Directors’ responsibility statement in respect of the preparation of the audited financial statements
The Board is responsible for ensuring that the financial statements give a true and fair view of the statements of financial position of Hektar REIT as at the end of the accounting period and of their profit or loss and other comprehensive income, statement of changes in net asset value and statement of cash flows and needs to the financial statements for the period ended. The financial statements were prepared in accordance with Malaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards (IFRS) and the requirements of the Securities Commission Guidelines on Real Estate Investment Trusts.
In preparing the financial statements, the Directors endeavour to apply consistently suitable accounting policies and make reasonable and prudent judgments and estimates. The Directors also have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of Hektar REIT and to prevent and detect fraud and other irregularities.
Statement on internal control and risk management
The Board acknowledges its responsibilities for maintaining sound internal control systems to safeguard unitholders’ interest and Hektar REIT’s assets and for reviewing the adequacy and integrity of these systems.
Our approach to Risk Management
Hektar REITS’s Board of Directors uses the Enterprise-Wide Risk Management Framework (ERM) which encompasses the identification of risks, analysis of risk impact and probability, assessment of appropriate management actions and risk controls and review of business. Our Risk Management Framework is maintained by the Management Team and is monitored by the Audit Committee (on behalf of the Board of Directors) that oversees the effectiveness of the risk management activities and its internal control systems. It also advises the Board of Directors on the principal risks facing the REIT including those that would threaten its solvency or liquidity.
With the ERM in place, Hektar REIT aims to:
- Establish a systematic and periodic process to identify, assess, manage and monitor risk within the organization. The risk assessment is intended to provide the Board of Directors and the management with a view of events that could impact the achievement of its business objectives;
- Safeguard unitholders’ interests and the REIT’s assets;
- Maximize opportunities across the Hektar Group to achieve REIT’s mission and vision;
- Achieve an enterprise wide consistent and cohesive framework for risk management, by establishing a risk register for each department / business unit within the REIT and relevant departments of its appointed property manager, through the use of corporate risk scorecard (“CRS”).
Our effective day-to-day management of risk is embedded in our operational processes at all levels and that allows:
- The Board and Senior Management to encourage a culture of openness and transparency throughout the organization;
- The Directors to be closely involved in the business by helping to identify new risks or system weaknesses quickly;
- The Audit Committee has appointed KPMG to act as internal auditors and undertake further testing of the risk management framework and controls;
- The Management Team holds weekly meetings and bi-weekly departmental update meetings with the property manager to discuss progress in each area of the business; and
- Under the ERM, Hektar REIT’s key risks and controls are continually identified, reviewed and monitored as part of the ERM process. Quantitative and qualitative analysis are performed to identify and quantify the most important risks. The system’s outputs include a risk register, risk monitoring plan and risk metrics which the business is measured against.
Under the ERM, a Risk Management Unit is set up and the main responsibilities of the Risk Management Unit are:
- Compliance of the ERM process and Methodology;
- Flow through of ERM concept to the respective departments / business units and each process levels;
- Continual risk assessment by each department using the methodology, assessing and monitoring management actions taken;
- Timely identification, mitigation and management of key risks that may have a material impact on Hektar REIT’s profit and loss, balance sheet and corporate objectives;
- Communication and understanding of risk tolerance statements adopted by the relevant departments;
- Periodic discussions of risks and risk issues with Management;
- Ensuring that the ERM process is carried out by each department / business unit and is endorsed by the CEO;
- Assurance to the CEO and the senior management team regarding the effectiveness of the ERM.