This statement is based on the contents of the following:

1. The Institute of Directors in New Zealand (Inc) publication “The Four Pillars of Governance Best Practice for New Zealand Directors.
2. Handbook published by the FMA headed “Corporate Governance in New Zealand Principles and Guidelines, A Handbook for Directors, Executives and Advisors.”
3. Though not a member of the NZX Exchange we have referred to the “NZX Corporate Governance Code”
4. The Governance Manual of the Company.

PRINCIPLE 1

Code of Ethical Behaviour

“Directors should set high standards of ethical behaviour and also hold its Contracted Management Team to these same high standards of ethical behaviour.”

• Deal with conflicts of interest, especially when voting on matters for which they have a personal interest.
• Safeguards against insider trading in the Company’s securities. Full and premature disclosure with Board approval required.
• Fair dealing with all persons including tenants, customers to the Mall, all advisors and contractors, shareholders and stakeholders.
• To treat all such individuals above with due respect.
• Policy of giving and receiving of gifts, avoidance of bribes and sharp practices.
• Ensuring fair and reasonable transparency.
• Maintenance of confidentiality with no comments being made on social media unless sanctioned by the Board.
• Complying with laws and policies.
• The maintenance of a whistle blower and protected disclosure policy

PRINCIPLE 2

Board Composition and Performance

“To ensure an effective Board there should be a balance of independence, skills, knowledge, experience and perspectives.”

The Board of Directors

• The practices adopted by the Board are prescribed in the Charter that sets out the protocols of how the Board operates.
• There should be at least one independent Director.
• There is a set policy of rotation of Directors as determined within the Constitution.
• Each and every Director to be also independent of thought.
• The Chairman to be formally responsible for establishing a constructive governance culture and applying appropriate governance principles among Directors and the Contract Management.
• Due to the structure of the Company, the Chairman acts in a quasi Executive Role but these responsibilities only relate to strategic asset matters and the interface between Contract Management (Colliers International) and the Company.
• All Directors should remain up to date on how best to perform their duties as Directors

The Board’s Responsibilities

• Identify the clear establishment of the Company’s goals and ensure there are strategies in place to achieve these.
• For overall governance and the provision of strategic leadership.
• Monitor the financial performance of the Company with an emphasis on maintaining solvency, the ability to meet its debts and obligations when they fall due and meeting the Bank’s financial covenants.
• Overseeing the appropriate construction of accounting and reporting systems (including the external audit).
• Appointment of the Managing Agents and the regular review of that contract.
• The Board will monitor the performance of its advisors and ensure there is an appropriate reporting system in place in order to monitor those duties duly delegated.
• Appointment of a contracted Project Manager and a regular review of that contract. Appointment of a reputable firm of Chartered Accountants to complete all accounting functions, the monitoring thereof.
• Appointment of appropriate Legal Advisors.
• Appointment of a Chairman on an annual basis.
• Ensure that there is a proactive program seeking to build the business.
• Ensure the Company has appropriate risk management and regulatory compliance policies in place.
• Ensure the Company adheres to high standards of ethics and corporate behaviour.
• Ensure that all eligible people get an equal opportunity to demonstrate that they have the right skills and experience for a role and this is the basis of our Diversity Policy.
• As at March 2022, 3 of the Directors are male, 1 is female.
• The dedicated Hornby Colliers Management team, 2 are female, 1 male.

PRINCIPLE 3

Board Committees

“The Board should use Committees where this will enhance its effectiveness in key areas, while still retaining Board responsibility.”

The Board has three standing committees and these are:

1. The Audit Committee
2. Financial Risk
3. Health and Safety

Audit Committee

The objective of the Audit Committee is to assist the Board in discharging its responsibilities for financial
reporting compliance and to confirm the appropriateness of the invoices submitted by the various sub
contractors, principally from our Management Provider, Colliers International and our Accounting Provider,
Nexia New Zealand.

The responsibilities include:

1. Reviewing the appointment of the external auditor.
2. Participating in the annual pre audit review.
3. Review of the Audit Management letter when received, addressing any recommendations from audit.
4. Ensure the appropriate financial systems and internal controls are in place.
5. Reviewing the annual Insurance proposals with a final recommendation to the Board.
6. Ensuring that all the assets of the Company are adequately insured.

The Committee to ensure that the external auditors are independent and that they provide an appropriate rotation of the lead Partner.

The Committee comprises two Directors, one of which must be an independent Director.

Financial Risk Committee

• This comprises the total members of the Board and a Risk Management review and discussion is completed at every Board meeting.
• A substantial majority of the Term Loan is on a floating basis and it is the responsibility of the Accountants (Nexia) and the Chairman to advise the Board of the regular monthly interest rates.
• Reports, including the monthly swop rate advice, are submitted as the ASB notifications are received.
• Regular contact is maintained with the Bankers to the Company.

Health and Safety Report

• This Committee assists the Board in discharging it’s responsibilities in overseeing and reviewing health and safety matters arising out the Mall’s activities.
• The administration of Health and Safety is the responsibility of our Management Contractors, Colliers International.
• A detailed report is submitted monthly by the Mall Manager and is a regular Agenda item. This is a written report but also tabled at the regular Board meeting by the Mall Manager who is in attendance.
• The Chairman also receives, as they occur, “Incident Reports” of note.
• The Health and Safety program is administrated and constructed by our Management Consultants. The Board, via its Chairman, has identified its protocols with regular reviews.
• The Committees responsibilities include a) Considering and approving health and safety strategies, b) Setting indicators c) Conducting regular assessments and audits of the risk profile and control processes.

PRINCIPLE 4

Reporting and Disclosure

“The Board should demand integrity in financial and non financial reporting, and in the timeliness and balance of corporate disclosures.”

The focus of the Board is on the provision of accurate, adequate and timely information both for itself and to its shareholders. This enables all investors to make informed decisions about the Company.

Board Reports
The monthly reports include:

1. The monthly financial statements
2. The monthly cash flow statement.
3. Report from the Project Manager as required.
4. A reconciliation check list as prepared by the Accountants.
5. An aged debtors listing.
6. Tenancy Report including the length of leases, review and renewal dates.
7. Leasing Report.
8. Health and Safety Report
9. Maintenance Report
10. Detailed reconciliations to such important items as the GOC (Gross Occupancy Costs) Caps, the percentage rental estimates.

Interim Reports

1. Annual Cash Flow Projections and Projected Balance Sheet
2. Capital Expenditure projections, analysis, and reporting of variances.
3. OPEX projections for the year, recommendations as to striking of the OPEX rate.

PRINCIPLE 5

Remuneration

“The remuneration of Directors should be transparent, fair and reasonable”

• The setting of the total Directors remuneration is subject to the terms of the Constitution and is the responsibility of the Board.
• Details of the Director’s remuneration for the year are in the Director’s Disclosure section of the Annual Report.
• The remuneration levels are determined by industry benchmarking and recourse to similar private company levels, by the obtaining of indicators from the Institute of Directors.
• A premium is paid to the Chairman to identify his unique quasi Executive responsibilities, no Chief Executive Officer is employed.

PRINCIPLE 6

Risk Management

“Directors should have a sound understanding of the material risks faced by the Issuer and how to manage them. The Board should regularly identify that the Issuer has appropriate processes that identify and manage potential and material risks.”

The Board is responsible for developing processes to identify and manage these risks.

• Due to the gearing of SCIL the interest rate risk must be managed.
• This risk is subject to regular monthly review, and close consultation with the Company’s bankers and the Bank’s economic advisors.
• Detailed spreadsheet analysis and interest rate projections have been constructed and regularly tracked and updated.

This risk process is described to the shareholders and stakeholders where and when appropriate.

Specific Health and Safety registers are maintained by our Management contractors and reported to the Board every month. Areas of risk are closely monitored.

PRINCIPLE 7

Auditors

“The Board should ensure the quality and independence of the external audit process”

• The quality of external auditing is critical to the integrity of financial reporting and provides an important protection for investors. Our external auditor maintains its independent status.
• The construction of our financial statements is completed by a reputable chartered accounting firm and a peer Partner audit review is carried out at that stage before submission to the external auditors.
• The Board, specifically through the Chairman and the Audit Committee, has regular and full dialogue with the external Auditors and the rotation of lead partners is monitored and adhered to. Apart from this there is no relationship between the auditor and the Issuer or its Directors or its Management Contractors.
• The Company ensures that the external auditor attends the regular Annual General Meetings and are available to answer questions from shareholders relevant to the audit.

PRINCIPLE 8

Shareholder Rights and Relations

“The Board should respect the rights of shareholders and foster constructive relationships with shareholders that encourage them to engage with the Issuer.”

The overview commentary is that the Shareholders beneficially own the Company and this Board is accountable to them. The Company and its Board have an open dialogue with all its shareholders.

All the Board members are Christchurch based.

Regular Chairman’s Reports are submitted to the Shareholders. Further to the annual statutory reports six-monthly unaudited financial statements are now constructed.

This website has detailed and extensive information which the shareholder and the investor can access. There are contact details and a link for our share registry (Computershare) and this provides shareholder information such as shares held, dates and payments of dividends etc.

There are further links to:

1. The Companies Office
2. The Hub Hornby’s Website
3. The Hub Hornby’s Facebook page