CDL Hospitlity Trusts - Annual Report 2016

REPORTS

The HBT Trustee-Manager has the dual responsibility of safeguarding the interests

of the HBT Unitholders, and managing the business conducted by HBT. The HBT

Trustee-Manager has general powers of management over the assets of HBT and its

main responsibility is to manage HBT’s assets and liabilities for the benefit of the HBT

Unitholders. The HBT Trustee-Manager also sets the strategic direction of HBT and works

closely with the hotel managers where it is the master lessee or owner of the properties.

Both H-REIT and HBT are externally managed by the H-REIT Manager and the

HBT Trustee-Manager (collectively, the "

Managers

") respectively. Accordingly, both

H-REIT and HBT do not have personnel of their own. The H-REIT Manager and the HBT

Trustee-Manager employ experienced and well-qualified management staff to run the

day-to-day operations of H-REIT and HBT. The Directors and employees of the H-REIT

Manager and HBT Trustee-Manager are remunerated by the H-REIT Manager and HBT

Trustee-Manager and not by H-REIT, HBT or CDLHT.

This report sets out the corporate governance practices of both the Managers as they

have adopted a similar set of corporate governance practices, with specific reference to

the principles and guidelines of the Code of Corporate Governance 2012 ("

2012 Code

").

Where there are differences in practice from the principles and guidelines under the 2012

Code, the Managers’ position in respect of the same is also explained in this report.

The Managers are committed to maintaining good corporate governance and business

integrity in all of CDLHT’s business activities.

BOARD MATTERS

Principle 1: The Board’s Conduct of Affairs

Primary Functions of the H-REIT Manager Board and the HBT Trustee-Manager

Board

Both the H-REIT Manager Board and the HBT Trustee-Manager Board are responsible

for the overall corporate governance of the Managers respectively, including establishing

goals for management and monitoring the achievement of these goals. The Managers’

Boards are also responsible for setting strategic business objectives and direction as

well as the risk management of H-REIT and HBT, and to ensure that necessary financial,

operational and human resources are in place for the Managers to meet their objectives.

All Board members of the H-REIT Manager and the HBT Trustee-Manager participate in

matters relating to corporate governance including setting corporate values and ethical

standards, business operations and risk management, financial performance, engaging

key stakeholder groups and the nomination and review of performance of Directors and

key personnel.

The H-REIT Manager Board and the HBT Trustee-Manager Board have established

a framework for the management of the Managers, H-REIT and HBT, including a

system of internal controls and business risk management processes. The Managers’

Boards meet quarterly or more often if necessary to (i) review respectively the financial

performance of H-REIT and HBT against previously approved budgets, (ii) review the

business risks of H-REIT and HBT respectively, (iii) examine liability management, (iv)

oversee the sustainability policies and proposals of H-REIT and HBT, and (v) act upon

any recommendations and/or comments from both the internal and external auditors

of H-REIT and HBT respectively. In assessing business risks, the Managers’ Boards also

consider the economic environment and risks relevant to the property and hospitality

industries. They also review management reports and feasibility studies on individual

projects prior to approving major transactions.

CORPORATE GOVERNANCE

Annual Report 2016