Annual Report 2007 - The Link REIT

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32 The Link Real Estate Investment Trust Annual Report 2007 Management Discussion and Analysis Gearing Ratio As at 31 March 2007, the loan to asset ratio for the Group was 26.9% (2006: 29.9%), based on total borrowings of HK$12,177 million (2006: HK$12,169 million) and total gross asset value of HK$45,235 million (2006: HK$40,691 million), after the revaluation conducted by CBRE for the properties portfolio, the result of which has been reflected in the valuation report and auditedfinancial statements. The Group continued to maintain most of its borrowings on an unsecured basis, with unsecured debt accounting for approximately 68.3% of total available facilities as at 31 March 2007. The Group will continue to obtainfinancing on an unsecured basis whenever possible. Credit Ratings In June 2006, The Link REIT was assigned a corporate credit rating of “A grade with a stable outlook” by Standard and Poor’s and a corporate family rating of “A3 grade with a stable outlook” by Moody’s Investor Service. The strong ratings given by the two agencies are a reflection of The Link REIT’s unique and strong market position of managing a geographically diverse portfolio of retail and carpark facilities and such credit ratings have also shown the strong credit standing andfinancial position of The Link REIT. This is the first time the agencies assigned a rating to The Link REIT. In addition to the strong credit ratings, The Link REIT was honoured to be awarded Asia’s Best Newly Listed Company in the “Asia’s Best Managed Companies 2006” survey conducted in October 2006 by Euromoney. Gross Liabilities and Net Assets As at 31 March 2007, gross liabilities (excluding net assets attributable to unitholders) accounted for HK$18,446 million (2006: HK$16,976 million), or 40.8% (2006: 41.7%) of total gross asset value. As at 31 March 2007, net assets attributable to unitholders amounted to HK$26,789 million or HK$12.53 per unit (2006: HK$23,715 million or HK$11.09 per unit). Units in Issue Upon listing on 25 November 2005, a total of 2,137,454,000 units were issued. During the year under review, the units have been actively traded. The closing price of the units as at 31 March 2007 was HK$18.80 (2006: HK$16.80) with total market capitalisation amounting to HK$40,184 million (2006: HK$35,909 million). The closing price reflected a premium of 50% (2006: 51%) over the net asset value of HK$12.53 (2006: HK$11.09) per unit. The Link REIT (0823) Price Performance HK$ 20 19 18 17 16 15 14 13 12 11 10 30/4/06 31/5/06 30/6/06 31/7/06 31/8/06 30/9/06 31/10/06 30/11/06 31/12/06 31/1/07 28/2/07 31/3/07
Annual Report 2007 The Link Real Estate Investment Trust 33 Management Discussion and Analysis Remuneration Policy Independent Non-Executive Directors The objective of remunerating Independent Non- Executive Directors is to ensure that they are remunerated sufficiently but not excessively for their efforts and time dedicated to the Manager. Their remuneration is reviewed annually in line with market practices and with assistance provided by an independent consultant. They receive fees comprising a director’s fee and additional fees for additional responsibilities such as chairmanship or membership of Board/Committees. Non-Executive Directors Messrs Liew Mun Leong and Pua Seck Guan are appointed Non-Executive Directors pursuant to the Co-operation Agreement and its supplemental agreement signed between the Manager and CapitaLand Limited. Under the said agreement, they do not receive any remuneration. Mr John Ho Chi On has elected not to receive any remuneration in relation to his appointment as a Non-Executive Director. Executive Directors and Staff in General The Manager’s remuneration policy is built upon the principles of providing an equitable, motivating and competitive remuneration package with a view to attracting, motivating and retaining high performing staff. As an on-going practice of adhering to these principles, the Manager reviews the remuneration policies and practices in line with market practices and with assistance provided by an independent consultant. Staff benefits, amongst others, include the Mandatory Provident Fund (“MPF“), annual leave, sick leave, maternity leave, medical insurance, life and personal accident insurance, employee compensation, club membership, etc. Human Resources Development Human resources are a vital part to the success of The Link REIT and the Manager has strived to attract potential talent and to retain existing competent staff. Most of the additions in headcounts during the year are in the property management and project management departments. The Manager has planned and provided a comprehensive and integrated series of programmes for its staff covering both professional and personal developments. For example, induction and refreshment courses are held to ensure that staff are equipped with all the necessary knowledge or updated information about the operational systems they use in their day-to-day work. Other soft skills programmes are also offered such as time management, listening and understanding, communication skill and complaints handling, etc. Off-site team building courses are also arranged to build up bonding and trust between colleagues. Professional and educational subsidies are also available to staff who want to upgrade themselves. Regular training on service standards including appearance and personal hygiene, courtesy, greeting and offering service etc are arranged for frontline staff of the property management agents and carpark operators. All full-time and permanent staff are eligible for a discretionary bonus, the payment of which is based on both the individual staff’s performance and the performance of The Link REIT.
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