The governance framework is embedded in the Trust’s compliance plan (referred to under the heading “risk control and compliance”) to ensure ethical behaviour and transparency and to protect unitholders’ interests.

This statement outlines the main corporate governance practices of the responsible entity.

The ASX Principles have been drafted primarily for listed companies, and not all of the recommendations are readily applicable for a registered managed investment scheme and its responsible entity. However, the responsible entity seeks to comply with the majority of the ASX Principles. Where it does not, it is largely in respect of obligations to disclose material or matters where the nature of regulation of listed trusts or of the Trust’s business is such that the board of the responsible entity considers that there has been no detriment to the unitholders of the Trust from non-compliance. Areas of non-compliance and the reasons for non-compliance are noted in this statement.

Relationship between the responsible entity and Wesfarmers Limited

The responsible entity is a wholly owned subsidiary of Wesfarmers Limited ("Wesfarmers").  A majority of the property income of the Trust is received from wholly owned subsidiaries of Wesfarmers. The Trust has purchased property from Wesfarmers subsidiaries, and utilised a Wesfarmers subsidiary, Bunnings Group Limited, as project manager on property developments. Wesfarmers is a substantial unitholder in the Trust, and details of Wesfarmers' unitholding can be found in the Top 20 unitholders section of the Investor Relations page of this website.  Further information regarding the relationship and transactions with Wesfarmers is detailed in the related party disclosure notes to the financial statements of the most recent annual report.

Roles of the board and management

The respective roles and responsibilities of the board and management are set out in the compliance plan.

The role of the board of the responsible entity is to ensure that the Trust is managed in a manner which protects and enhances the interests of the its unitholders and takes into account the interests of officers of the responsible entity, customers, suppliers, lenders and the wider community.

The board has overall responsibility for corporate governance, including setting the strategic direction for the Trust, establishing goals for management and monitoring the achievement of these goals. The board's responsibilities and duties include:

• adopting annual operating budgets for the Trust and monitoring progress against budgets;
• monitoring and overseeing the Trust's financial position;
• determining that satisfactory arrangements are in place for auditing the Trust's financial affairs;
• ensuring that all transactions with Wesfarmers and other related parties are carried out at arm's length, including obtaining independent valuation support for property related transactions;
• reviewing the level of adequacy of services provided by external service providers including services provided by Wesfarmers;
• ensuring that appropriate policies and compliance systems are in place, and that the responsible entity and its officers act legally, ethically and responsibly on all matters; and
• complying with the statutory duties and obligations as imposed by the law.

The board has delegated responsibility for the day to day management of the Trust to the General Manager.

The separation of responsibilities between the board and management is clearly understood and respected.

Board meetings

As provided for in the Trust’s compliance plan, the board holds at least six scheduled meetings each year, although additional meetings may be called as and when required.  During 2008/09 the board held 14 meetings.

Board structure

The board is currently comprised of five non-executive directors including the Chairman. The board is satisfied that the composition of the board is appropriate and accords with the requirements in the Trust’s compliance plan to maintain an appropriate range of backgrounds, skills and experience.

Details of directors in office at the date of this report, including their status as executive, non-executive or “external” directors can be found in the Overview section under Directors and Senior Management on this website.

Director independence

Directors of the responsible entity are expected to bring an independent view to the board’s deliberations.

It is the responsible entity’s policy that the board composition will comprise a majority of non-executive directors who are considered to be “independent”. Under the regulations applicable to managed investment schemes, “independence” is determined according to the definition of “external directors” in section 601JA of the Corporations Act (“the Act”).

Under section 601JA of the Act, a director of the responsible entity is an external director if they:

• are not, and have not been in the previous two years, an employee of the responsible entity or a related body corporate;
• are not, and have not been in the previous two years, a senior manager of a related body corporate;
• are not, and have not been in the previous two years, substantially involved in business dealings, or in a professional capacity, with the responsible entity or a related body corporate;
• are not a member of a partnership that is, or has been in the previous two years, substantially involved in business dealings, or in a professional capacity, with the responsible entity or a related body corporate;
• do not have a material interest in the responsible entity or a related body corporate; and
• are not a relative of a person who has a material interest in the responsible entity or a related body corporate.

All directors of the responsible entity including the Chairman are external directors as defined by section 601JA of the Corporations Act.

This definition against which their independent status is assessed differs from that applied by the ASX Principles to directors of listed companies.

The board’s assessment of the independence of each of the directors is included as part of the directors’ details on this website. In particular, the board reviewed the independence of Mr Mansell, who has been a principal of a professional advisor of the Trust, details of which can be found in the notes to the financial statements of the most recent annual report. The board considers that Mr Mansell is an independent director in accordance with the criteria for “external directors” set out above and given his continued and demonstrated performance and ability to make objective judgments on matters before the board.

The board is satisfied that all directors bring an independent judgement to bear on board decisions in relation to the affairs of the Trust and its unitholders.

Selection and appointment of directors

The responsible entity has recognised the importance of having a balanced board comprised of directors with an appropriate range of backgrounds, skills and experience. In considering potential candidates for appointment to the board, the board considers the following factors:

• the qualifications, expertise and experience of the person which are relevant to the role of director of the responsible entity;
• the extent to which the qualifications, expertise and experience of the person complement the qualifications, expertise and experience of incumbent directors;
• the professional and personal reputation of the person; and
• any person nominated as an executive director must be of sufficient stature and security of employment to express independent views on any matter.

All non-executive directors are expected to voluntarily review their membership of the board from time to time taking into account length of service, age, qualifications and expertise relevant to the responsible entity’s then current policy and programme, together with the other criteria considered desirable for composition of a balanced board and the overall interests of the responsible entity and the Trust.

In addition, each quarter, all non-executive directors are required to review the number of directorships that they hold and confirm that they are able to devote sufficient time and attention to properly fulfil their duties and responsibilities to the board of the responsible entity.

The board considers that the establishment of a nomination committee is unnecessary given that:

• the board consists of only four directors and is not of a size sufficient to justify the formation of a board committee for this task;
• the board complies with the independence standards applicable to registered managed investment schemes as set out above; and
• when considering new candidates for nomination or appointment as directors, the board assesses the skills, experience and expertise of its existing members, and based on that evaluation is able to select from those candidates who bring a complementary range of skills and expertise to the responsible entity’s board.

Given that there is not a nomination committee, the responsible entity does not comply with Recommendation 2.4 of the ASX Principles.

Independent professional advice

Subject to prior approval of the Chairman, directors may obtain independent professional advice at the expense of the responsible entity on matters arising in the course of their board duties.

Trading in units

Trading in the Trust's securities by the directors, employees and contractors of the responsible entity is restricted under the responsible entity's Securities Dealing Policy and applicable statutory regulations.

Click here for a copy of the Securities Dealing Policy.

Financial reporting

General Manager declaration

In accordance with section 295A of the Corporations Act 2001, the Trust’s financial report preparation and approval process for each financial year, involved the General Manager of the responsible entity providing a written statement to the board that, to the best of his knowledge and belief:

• the Trust’s financial report presents a true and fair view of the Trust’s financial condition and operating results and is in accordance with applicable accounting standards; and
• the Trust’s financial records for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001.

Audit and risk committee

The compliance plan entrenches processes for reporting and audit purposes.

The board formally constituted an Audit and Risk Committee. Click here to view the Trust's Audit and Risk Committee Charter

The Committee consists of the entire board and is chaired by an external director, who is not the chairman of the board.  All committee memebers are non-executive external directors.  During the year the committee held three meetings attended by all directors.

Rotation of lead external audit partner

In December 2007 the Trust changed audit firms and consequently a new lead audit partner was appointed.

Risk control and compliance

As a registered managed investment scheme, the responsible entity has a compliance plan that has been lodged with the Australian Securities and Investments Commission (ASIC) and a copy of the compliance plan can be obtained from ASIC.

The compliance plan is reviewed comprehensively every year to ensure that the way in which the responsible entity operates protects the rights and interests of unitholders and that business risks are identified and properly managed.

In particular, the compliance plan establishes processes for:

• identifying and reporting breaches of or non-compliance with the Corporations Act, the compliance plan, the constitution of the Trust and the responsible entity’s Australian Financial Services Licence;
• complying with the ASX Listing Rules;
• protecting Trust property;
• ensuring proper acquisition and disposal practices are followed in regard to Trust property;
• ensuring the timely collection of Trust income;
• completing regular valuations of Trust property;
• the maintenance of financial and other records to facilitate preparation of audited/reviewed financial reports;
• ensuring proper and timely distributions to unitholders;
• complying with the Trust’s investment objectives;
• managing investment risk;
• managing potential conflicts of interest with the various related parties of the Trust;
• holding and maintaining adequate insurance cover;
• ensuring that borrowing occurs only within permitted limits and ensuring that borrowing terms are complied with; and
• handling complaints relating to the Trust.

KPMG, the external auditor of the compliance plan, has completed its annual audit for the year ended 30 June 2009. No material breaches of the plan were identified as a result of this audit. The audit and risk committee is also responsible for assisting the board in overseeing the Trust’s risk management systems. The committee is responsible for reviewing the effectiveness of those systems and recommending improvements to them.

In addition to the compliance plan, the responsible entity has in place a number of risk management controls which include the following:

• guidelines and limits for the approval of capital and operating expenditure;
• policies and procedures for the management of financial risk, including exposure to financial instruments and movement in interests rates; and
• an insurance and risk management programme.

As the majority of members of the board are “external directors” (as defined in section 601JA of the Corporations Act), the board does not consider it is currently necessary to form a separate compliance committee in addition to the board of the responsible entity.

Discretionary Unit Pricing Policy

The constitution for the Trust allows the responsible entity of the Trust to exercise discretion in relation to unit pricing and the valuation of the Trust's assets. The Trust can, in certain circumstances, exercise discretion in:

• the calculation of the market price for units;
• determining the issue price for units;
• the calculation of the current unit value of units; and
• the valuation of the Trust's assets.

ASIC Class Order 05/26 was issued in May 2005 and requires the responsible entity to have written policy in relation to the exercise of its discretion when pricing units and valuing assets. The board has adopted a discretionary unit pricing policy and unitholders can obtain a copy of the policy from the responsible entity at no charge.

ASIC Class Order 05/26 also requires the responsible entity to keep a record of any exercise of a discretion which:

• is not covered by the discretionary unit pricing policy; or
• involves a departure from the discretionary unit pricing policy.

Unitholders can also obtain a copy of these records from the responsible entity at no charge.

General Manager's statement

In accordance with ASX Principle 7, the General Manager provides the board with a written statement that, in respect of each reporting period:

• the statement given with respect to the integrity of the financial statements was founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board of the responsible entity; and
• the Trust's risk management and internal compliance and control system was operating efficiently and effectively in all material respects.

Review of board and committee performance

The performance of the board and audit and risk committee is evaluated periodically through feedback obtained from the completion of qualitative and quantitative surveys by the directors. The results of the survey are considered and discussed at the board's subsequent annual performance and planning sessions.

Remuneration policies

The right of the responsible entity to be remunerated and indemnified by the Trust is set out in the constitution of the Trust and disclosed in the notes to the financial statements in the Trust's Annual Report. The constitution is available from ASIC and is available to unitholders on request.

Remuneration of directors and executives

Remuneration expenses of the responsible entity are not borne by the Trust. Directors are remunerated by the responsible entity, and management services are provided to the responsible entity by Wesfarmers Limited.

Each director is entitled to an annual director's fee. Directors do not receive options or bonus payments, nor do they receive retirement benefits in connection with their directorships other than statutory superannuation. There are no equity incentive schemes in relation to the Trust.

Remuneration Committee

The board considers that the establishment of a remuneration committee is not necessary given that:

• the board consists of only four directors and is therefore not of a size sufficient to justify the formation of a separate remuneration committee;
• the Responsible Entity's fee is prescribed in the constitution of the Trust and any change to that fee would require the approval of unitholders; and
• as directors and officers of the responsible entity are not remunerated by the Trust, unitholders have no direct exposure to those remuneration expenses.

Given that there is not a remuneration committee, the responsible entity does not comply with Recommendation 8.1 of the ASX Principles.

Conflicts management policy

The Trust’s compliance plan sets out the conflicts management policy, including the procedure for managing conflicts of interest. The policy applies to all directors and officers of the responsible entity.

The policy identifies circumstances where conflicts of interest may arise and outlines the requirement to evaluate conflicts, control or avoid conflicts and disclose relevant conflicts of interest. The policy also sets out who is responsible for managing conflicts and addresses the requirement to monitor, review and have appropriate approval of the conflicts management policy.

Continuous disclosure and communications with unitholders

The responsible entity has systems in place to ensure timely disclosure of price sensitive information to the market. Officers of the Trust receive training on their continuous disclosure obligations and all announcements made to the market, including information provided to analysts, are posted to the Trust's website.

To enhance communication with unitholders, important information including details of the Trust's properties, financial performance, distribution history and the Trust's complaints handling procedure can be found on the website.

Ethics and conduct

The responsible entity has adopted a code of conduct which sets out minimum acceptable standards of behaviour to ensure that dealings are conducted with integrity and honesty, and the highest standards of corporate behaviour and accountability are maintained.

In addition, the board has adopted the Code of Conduct for directors recommended by the Australian Institute of Company Directors.