209 CORPORATE GOVERNANCE REPORT Integrated Annual Report 2025 Tenant and Operational Communication Proactive communication with tenants plays a key role in supporting stable operations and occupancy. The Manager engages with tenants to address operational issues, support licensing or compliance needs, manage facilityrelated matters, and negotiate renewals. Feedback from tenants is used to improve service delivery and strengthen asset performance. The FY2025 Service Manager Evaluation achieved an average score of 80.38 across 21 hospitals, reflecting strong and sustained confidence in the Manager’s oversight, responsiveness, and support for lessees’ operational needs. The evaluation also offers valuable insights into hospitals’ expectations and areas for continuous enhancement in asset management and service delivery. In line with these insights, the Manager collaborated closely with hospital teams throughout FY2025 to refine and standardise proposal-assessment processes, with enhanced SOPs to be implemented across all hospital groups this year. Going forward, the Manager remains committed to strengthening communication, improving transparency on technical justifications, and providing clearer governance information to further support operational clarity, reinforce strong working relationships, and uphold the long-term performance and sustainability of the asset portfolio. Monitoring, Review and Assurance of Internal Controls Monitoring activities are embedded across Al-`Aqar to ensure that internal controls and risk mitigation measures continue to operate effectively. Ongoing monitoring is carried out through supervisory reviews, performance tracking, exception reporting, and operational oversight of tenancy management, asset performance, procurement, financial controls and ESG compliance. These reviews enable Management to detect irregularities, verify control compliance and respond promptly to emerging issues. Independent evaluations are undertaken through the ERMC, which reviews key risks, mitigation effectiveness and control outcomes on a quarterly basis. Management reports significant developments, including changes in risk exposure, emerging risks, compliance matters and incident escalations, to the ERMC and subsequently to the BARC, ensuring clear governance visibility and timely decisionmaking. Separate assurance is provided by the internal audit function, which performs risk-based audits in accordance with the approved annual audit plan. Audit findings and recommendations are presented to the BARC, and Management is accountable for implementing corrective actions within agreed timelines. The status of audit issue closure is monitored and reported until full resolution is achieved. External auditors, Shariah reviewers and other independent assessors further supplement assurance through financial, compliance and sustainability related reviews. Collectively, these monitoring mechanisms provide continuous feedback on the adequacy and operating effectiveness of the REIT’s internal control system and risk management practices. Issues identified through monitoring processes are addressed promptly, and insights gained are used to enhance controls and strengthen governance maturity across the organisation. Strategic and Market Insights The half-yearly budget review includes updates on market conditions and strategic initiatives. Management considers economic trends, rental benchmarks, and competitor movements that may affect asset performance. Progress on development or enhancement projects is reported, along with potential opportunities or risks that may influence the REIT’s forward strategy. In 2025, the Strategic Plan was tabled and approved by the Board on 26 May 2025, followed by a comprehensive budget review, which was subsequently presented and endorsed by the respective Boards on the same dates. Compliance with SC REIT Guidelines, Bursa Listing Requirements, MCCG, Trust Deed provisions, and ESGrelated regulatory obligations Management conducts ongoing reviews to ensure full compliance with the SC REIT Guidelines, Bursa Listing Requirements, covering areas such as disclosures, governance practices, and fiduciary obligations. There were no compliance breaches during the year. Effectiveness of Monitoring Activities Monitoring activities were effective in providing timely visibility of control performance, risk exposures and compliance obligations. Ongoing supervisory reviews, exception reporting, asset inspections and tenancy controls operated as designed, while separate evaluations through ERMC, internal audit and compliance reviews provided independent assurance over key processes. Corrective actions were tracked to closure, and no significant delays or unresolved issues were reported to the BARC. Overall, the monitoring processes provided sufficient assurance that the REIT’s controls and risk treatments were functioning as intended. STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL
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