106 Material Risk Assessment and Management Both the ARCC and the Management periodically review the material risks faced by ESR-REIT and the Manager to ensure relevance to the business and economic environment. Periodic risk workshops have been conducted with the involvement of the Management via a top-down approach as well as bottomup engagement with the employees of the Manager. At the workshops, key risks were identified, mapped and updated into the existing Key Risk and Control Matrix to ensure the ongoing relevance of the enterprise-wide risks for both the REIT as well as the Manager. In addition, the identified risks would be addressed with mitigating controls and are reviewed by the respective heads of departments quarterly (or more frequently if the business environment warrants) and monitored by the ARCC and reported to the Board, to ensure that the Key Risk and Control Matrix remains relevant and effective. If there are any breaches of regulations or any risks that fall outside the risk appetite that ESR-REIT and the Manager are willing to undertake, the Board will be alerted and measures and steps would be put in place to reduce the risk level to within the acceptable range. In line with the strategic objectives of providing Unitholders with a stable income stream and achieving longterm growth in net asset value per unit, the Manager critically analyses each transaction before proceeding. To arrive at an investment decision, the Manager identifies the risk exposures and determines how to mitigate, transfer, manage and/or reduce those risks, where possible, to a level which is appropriate for the corresponding expected return on that investment. Extensive procedures, including due diligence, are carried out at various stages of the investment process. The Board reviews management reports and feasibility studies on proposed acquisitions prepared by the Manager, and approves the proposal if the Board believes it is in the best interests of ESRREIT and the Unitholders to enter into the transaction. Board’s Comment on Risk Management and Internal Controls The Board has received confirmation from the CEO and CFO of the Manager that, as at 31 December 2025, they were not aware of any events that have arisen which would have a material effect on the financial results of ESR-REIT, except as disclosed in the financial statements, and nothing has come to their attention which may render the financial results false or misleading. In addition, they have provided assurances to the Board that the financial records have been properly maintained and the financial statements for FY2025 give a true and fair view of ESR-REIT’s operations and finances. The Board and the ARCC have also received confirmation from the CEO, the CFO, and the KMP who are responsible for the adequacy and effectiveness of the Manager’s risk management and internal control systems, that to the best of their knowledge and belief, the internal controls and risk management systems were adequate and effective to address the risks that were relevant and material to ESR-REIT’s operations. The bases of confirmation are as follows: • both internal and external auditors have confirmed that based on their audits conducted, there were no issues to warrant any significant concerns in the risk management and internal control systems of the Manager; • The Compliance and Risk Management Department of the Manager has confirmed the following: — based on internal quarterly compliance monitoring reviews conducted, there were no issues to warrant any significant concerns in the areas covered in the compliance monitoring program; — there were no issues to warrant significant concerns on the continuous fit and proper requirement of Directors and appointed representatives based on the annual due diligence conducted on them; — Key Risk and Control Matrix for each of ESR-REIT, the Manager and ESR Property Services Pte. Ltd. was reviewed and updated on a quarterly basis by the Heads of Departments to ensure relevance and controls are continuously in place for each risk factor; — quarterly and annual attestations on the risk monitoring tools, quarterly attestations from employees, appointed representatives, the Management and the Directors in terms of compliance with relevant regulatory requirements have been made; — sufficient training hours were completed by all employees; — policies and procedures are in place to reduce operational risks and serve as guidance in day-today work processes; — quarterly letters of representation in connection with the unaudited financial statements announcement were provided by the CEO and the CFO confirming that nothing has come to their attention which may render the result announcements to be false or misleading in any material respect; — there have been no communications from the relevant regulatory bodies concerning material non-compliance with or deficiencies in the internal controls of ESR-REIT and the Manager; and — there has been no fraud or suspected fraud affecting the Group involving the Management and employees who have significant roles in internal controls. Based on the above, pursuant to Rule 1207(10) of the Listing Manual, the Board, with the concurrence of the ARCC, is of the opinion that the Manager’s risk management systems and internal controls (including financial, operational, compliance, environmental and IT controls) were adequate and effective as at 31 December 2025 to address strategic, financial and economic, operational and asset management, compliance, environmental, social and governance, people and IT risks, which the Manager considers relevant and material to ESR-REIT’s operations. For FY2025, Corporate Governance ESR-REIT ANNUAL REPORT 2025
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