Statement on Internal Control

The Board of Directors recognises the importance of maintaining a sound system of internal control and risk management practices to safeguard the shareholders' investments and the Group's assets.

The Board has undertaken the overall responsibilities for reviewing the adequacy and integrity of the Group's internal control and management information systems including financial, operational, compliance and risk management.

The systems are designed to meet the Group's overall business objectives and to manage significant risks identified by involving the key management of each division.

The Group has in place an on-going process as part of the business cultures, which provides effective framework for review and identifying, monitoring and managing the risks in a proactive manner.

However, it should be noted that there are limitations that are inherent in any system of internal control and that such systems are designed to manage and control risks appropriately rather than to eliminate it. Accordingly, it should be noted that these systems could provide only reasonable, and not absolute assurance against material misstatement or loss or the occurrence of unforeseeable circumstances. The concept of reasonable assurance also recognises that the cost of control procedures should not exceed the expected benefits.

Policies and Procedures and Guideline Manual
The Group has long established policies, procedures and guideline manuals, which address most of the specific business risks and the types of control checks that must be in place. The manuals enable tasks to be carried out within a set of flexible rules with minimal supervision.

It also clearly delineates authorisation levels and proper segregation of duties within the defined organisation structure.

Code of Business Conduct
The Company has in place a Code of Business Conduct, which is communicated to and acknowledged by all employees and compliance to this Code is mandatory.

Risk Management Framework
The Group has also established a network of support areas with senior management to provide an infrastructure that would enable top management to review the following areas:

(i) the progress of the above policies and procedures; and
(ii) the assessment of any significant risks associated with respective areas of operation through the framework of the Executive Committee which comprises the Managing Director, Executive Vice President -Finance and the Senior Management Officers for corrective action and decision making.

The Executive Committee conducts weekly meetings to review and monitor operations and other relevant matters associated with business and decision-making. The Executive Committee has encouraged and called for effective communications among all levels of staff and departments to address any problems arising for discussion and decision-making.

Its review covers matters such as responses to significant risks identified, output from monitoring processes and changes made to the internal control systems.

The audit and compliance team is given the responsibility of overseeing the implementation of the policies and procedures adopted by the Board and provides an effective framework for monitoring and assists in managing the risks in a proactive manner in a checklist form. The management undertakes the process with the assistance of Internal Audit and a written report is submitted to the Audit Committee on a periodic basis.

The Board regularly receives and reviews reports on internal control on a quarterly basis, reviews the adequacy and integrity of internal controls based on the information and assurances provided to the Board. The Executive Committee is accountable to the Board for monitoring the Company's internal control systems and for providing assurances to the Board.

Financial Reporting
Monitoring of results against budgets with major variances are conducted on a monthly basis and the appropriate management action is undertaken. The Managing Director and Executive Vice President -Finance reviews the management accounts covering financial performance, key business indicators and cash flow performance on a weekly and monthly basis.

Internal Audit
The Internal Audit Department ("IAD") has laid down regulations and procedures to identify, govern and verify business weaknesses and risks within the Group. The internal audit function is carried out systematically across the Group, with regular visits and reviews conducted on the areas of risks and furnishes reports on compliance with internal control and procedures.

IAD also ensures that all applicable recommendations to improve control are followed through by the management at all levels. The Audit Committee is fully committed to ensure that corrective action, where necessary, is taken in a timely manner.