1. THE BOARD’S CONDUCT OF ITS AFFAIRS
Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the long-term success of the company. The Board works with Management to achieve this objective and Management remains accountable to the Board.

The Board comprises the following members, all of whom have the appropriate core competencies and diversity of experience needed to enable them to effectively contribute to the Group.

Charles Antonny Melati Executive Chairman
Tung Kum Hon Chief Executive Officer and Executive Director
Dhamma Surya Executive Director
Huang She Thong Executive Director
Soh Chun Bin Lead Independent Director
Ong Beng Chye Independent Director
Lu King Seng Independent Director
Karyono Independent Director
James Beeland Rogers Jr (“Jim Rogers”) Independent Director

The principal functions of the Board, in addition to carrying out its statutory responsibilities, are as follows:

• overseeing the formulation of and approving the Group’s overall long-term strategic objectives and directions, taking into consideration sustainability issues (eg. environmental and social factors);
• overseeing and reviewing the management of the Group’s business affairs, financial controls, performance and resource allocation;
• establishing a framework of prudent and effective controls to assess and manage risks and safeguard shareholders’ interests and the Group’s assets;
• identifying the key stakeholder groups and recognizing that their perceptions affect the Company’s reputation; and
• setting the Company's values and standards (including ethical standards) and ensuring that obligations to shareholders and other stakeholders are understood and met.

The Board has adopted internal guidelines setting forth the matters reserved for the Board’s decision and clear directions to Management on matters that must be approved by the Board. The approval of the Board is required for matters such as corporate restructuring, mergers and acquisitions, appointment of directors, major investments and divestments, material acquisitions and disposals of assets, major corporate policies on key areas of operations, approval of periodical financial results announcement and annual audited financial statements, declaration of interim dividends, proposal of final dividends and other return to shareholders and interested person transactions of a material nature.

All directors exercise due diligence and independent judgment and are obliged to act in good faith and consider at all times the interests of the Company.

Directors have the opportunity to meet with the Group’s management (the “Management”) to gain a better understanding of the Group’s business operations. The Board as a whole is updated on changing commercial risks, and key changes in the relevant legal and regulatory requirements, as well as accounting standards. The directors are also encouraged to keep themselves abreast of the latest developments relevant to the Group and attendance of appropriate courses and seminars is arranged and funded by the Company.

The details of seminars and training programmes attended and updates received by the directors in 2017 and 2018-to-date include, amongst others:

• training provided by the external auditors, Deloitte & Touche LLP, to the Audit Committee and the Board on tax updates in Indonesia as well as key changes in transfer pricing regulations;
• updates by the Chief Executive Officer to the Board at each meeting on business and strategic developments pertaining to the Group’s business, if any;
• training/seminar organized by ISCA on “Annual Update for Financial Reporting Standards 2017", “Preparation and Presentation of Consolidated Financial Statements in the Singapore context”, “Directors’ Duties and the Relationship with Ethics” and “Corporate Tax Planning”;
• audit committee seminar organized by the Singapore Institute of Directors; and
• workshop on “Rebooting Corporate Governance” which highlighted the latest developments in the Code, new accounting standards and convergence to the International Financial Reporting Standards and ways to raise the transparency of corporate disclosure.

There was no new director appointed in 2017. Newly appointed directors will receive a formal letter explaining their duties and responsibilities and will undergo orientation and be briefed on the business and governance practices of the Group as well as industry-specific knowledge. The Company funded the training of its directors.

To assist in the execution of its responsibilities, the Board has established three Board Committees, comprising an Audit Committee (the “AC”), a Nominating Committee (the “NC”) and a Remuneration Committee (the “RC”). These committees function within clearly defined written terms of reference and operating procedures.

The Board meets on a regular basis and ad-hoc Board meetings are convened when they are deemed necessary. The number of Board and Board Committee meetings held in 2017 is set out below:

		Board Committees
	Board	AC	NC	RC
Number of meetings held	6	4	1	1
	Number of meetings attended
Charles Antonny Melati	5	N/A	1	N/A
Tung Kum Hon	6	N/A	N/A	N/A
Dhamma Surya	4	N/A	1	N/A
Huang She Thong	5	N/A	N/A	N/A
Soh Chun Bin	6	4	1	1
Ong Beng Chye	6	4	1	1
Lu King Seng	6	4	1	1
Karyono	6	4	1	N/A
Jim Rogers	5	N/A	N/A	N/A

N/A - Not Applicable

The Articles of Association of the Company provide for meetings of the Board to be held by way of telephonic or video conference or by similar means of communication equipment.

2. BOARD COMPOSITION AND GUIDANCE
Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate affairs independently, in particular, from Management and 10% shareholders. No individual or small group of individuals should be allowed to dominate the Board’s decision-making.

The Board comprises nine directors, of whom five (constituting more than half of the Board) are independent, namely, Mr. Soh Chun Bin, Mr. Ong Beng Chye, Mr. Lu King Seng, Mr. Karyono and Mr. Jim Rogers. The criterion of independence is based on the definition set out in the Code. The Board considers an “independent” director to be one who has no relationship with the Company, its related corporations, its 10% shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgment with a view to the best interests of the Company. With five independent directors, the Board is able to exercise independent judgment on corporate affairs and provide the Management with a diverse and objective perspective on issues.

The independence of each director is reviewed annually by the NC. Each independent director is required to complete a checklist annually to confirm his independence based on the guidelines as set out in the Code. The independence of any director who has served on the Board beyond nine years from the date of his first appointment will be subject to more rigorous review, taking into account the need for progressive refreshing of the Board. As of the date of this report, there is no independent director who has been appointed for more than nine years from the date of his first appointment.

The Board has examined its size and is of the view that it is an appropriate size for effective decision-making, taking into account the scope and nature of the operations of the Company, the requirements of the business and the need to avoid undue disruptions from changes to the composition of the Board and Board committees. There is no individual or small group of individuals who dominate the Board’s decision-making. In addition, the Board’s policy is to take into account diversity when identifying persons for appointment to the Board. The Board noted that gender diversity on the boards of directors is also one of the recommendations under the Code to provide an appropriate balance and diversity. Although there is currently no female director appointed to the Board, the Board does not rule out the possibility of appointing a female director if a suitable candidate is nominated for the Board’s consideration.

The composition of the Board is reviewed on an annual basis by the NC to ensure that the Board has the appropriate mix of expertise, experience, balance, diversity, and knowledge of the Company and collectively possesses the necessary core competencies for effective functioning and informed decision-making. The Board as a group comprises members with core competencies in accounting and finance, business and management experience, industry knowledge, strategic planning and customer-based experience and knowledge. Of the five non-executive directors on the Board, two have experience in accounting and finance, two have knowledge of the resources/mining industry and one with legal, business, and management experience.

Where necessary or appropriate including before or after each quarterly meeting of the Board, the non-executive directors on the Board will meet without the presence of the Management. The non-executive directors constructively challenge and assist in the development of business strategies, and assist the Board in reviewing the performance of the Management in meeting goals and objectives and monitoring the reporting of performance.

The profiles of the directors are set out in the “Board of Directors” section of this Annual Report.

3. CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Principle 3: There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the company’s business. No one individual should represent a considerable concentration of power.

The positions of Executive Chairman and Chief Executive Officer are held by separate individuals, who are not immediate family members, to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for objective decision-making.

Mr. Charles Antonny Melati is the Executive Chairman of the Company and oversees the overall strategic directions and expansion plans for the growth and development of the Group. With the assistance of the company secretary, he also ensures that Board meetings are held as and when required, sets the agenda for the Board meetings and ensures the quality, quantity, and timeliness of the flow of information between the Management, the Board and the shareholders.

Mr. Tung Kum Hon is the chief executive officer of the Company, who executing the Company’s long-term strategy and implementing the Company’s long and short-term plans with a view of creating shareholder value. He oversees the overall business and general management of the Group including spearheading its operations, optimising capital assets and human resources, identifying business opportunities, developing new markets, driving growth, managing business risks, establishing robust business disciplines and processes and managing relationships with customers, suppliers, bankers, business associates, advisors, government agencies, shareholders and the public at large. He also ensures that the Company maintains high standards of corporate governance and social responsibility wherever it does business and integrity of all public disclosures by the Company.

The Board is of the view that with the current executive management team and the establishment of the three Board committees, there are adequate safeguards in place to ensure unfettered decision-making, as well as to prevent an uneven concentration of power and authority in a single individual.

In view that the Executive Chairman is not an independent director and is part of the executive management team, Mr. Soh Chun Bin had been appointed as the lead independent director and he is available to shareholders where they have concerns and for which contact through the normal channels of the Executive Chairman, Chief Executive Officer or Chief Financial Officer has failed to resolve or is inappropriate. The lead independent director provides feedback to the Executive Chairman after meetings of independent directors.

4. BOARD MEMBERSHIP
Principle 4: There should be a formal and transparent process for the appointment and re-appointment of directors to the Board.

The NC comprises Mr. Soh Chun Bin, Mr. Ong Beng Chye, Mr. Lu King Seng, Mr. Karyono, Mr. Charles Antonny Melati and Mr. Dhamma Surya. The chairman of the NC is Mr. Soh Chun Bin, the lead independent director of the Company. The majority of the NC, including the chairman, is independent. The chairman of the NC is not a substantial shareholder of the Company and is not directly associated with, any substantial shareholder of the Company.

The written terms of reference of the NC have been approved and adopted, and they include the following:

• make recommendations to the Board on relevant matters relating to:
  (a) the review of board succession plans for directors, in particular, the Executive Chairman and for the Chief Executive Officer;
  (b) the development of a process for evaluation of the performance of the Board, its Board committees and directors;
  (c) the review of training and professional development programs for the Board; and
  (d) the appointment and re-appointment of directors (including alternate directors, if applicable);
• important issues to be considered as part of the process for the selection, appointment and re-appointment of directors include composition and progressive renewal of the Board and each director’s competencies, commitment, contribution and performance (e.g. attendance, preparedness, participation and candor) including, if applicable, as an independent director. All directors should be required to submit themselves for re-nomination and re-appointment at regular intervals and at least once every three years;
• determine annually, and as and when circumstances require, whether a director (including an alternate director) is independent, bearing in mind the circumstances set forth under SGX requirements and any other salient factors;
• when a director has multiple board representations, he must ensure that sufficient time and attention is given to the affairs of the Company. The NC should decide if a director is able to and has been adequately carrying out his duties as a director of the Company, taking into consideration the director’s number of listed company board representations and other principal commitments. Guidelines should be adopted that address the competing time commitments that are faced when directors serve on multiple boards. The Board should determine the maximum number of listed company board representations which any director may hold;
• assess and determine the independence status of the independent directors;
• vigorously review the independence status of any independent director serving the Board beyond nine years from the date of his first appointment;
• assess the effectiveness of the Board as a whole and its board committees to the effectiveness of the Board; and
• decide how the Board’s performance may be evaluated and propose objective performance criteria. Such performance criteria, which allow for comparison with industry peers, should be approved by the Board and address how the Board has enhanced long-term shareholder value. These performance criteria should not be changed from year to year, and where circumstances deem it necessary for any of the criteria to be changed, the onus should be on the Board to justify this decision.

Having carried out its review, the NC is of the view that Mr. Soh Chun Bin, Mr. Ong Beng Chye, Mr. Lu King Seng, Mr. Karyono and Mr. Jim Rogers have satisfied the criteria for independence.

With respect to the selection and appointment of new directors to the Board, the Company procures search services, contacts, and recommendations for the purposes of identifying suitably qualified and experienced candidates. The NC reviews the resume of the candidates, interviews the short-listed candidates and recommends the most suitable candidate(s) to the Board for approval.

Board appointments are made by way of a board resolution after the NC has, upon reviewing the resume of the proposed director and conducting appropriate interviews, recommended the appointment to the Board. Pursuant to the Articles of Association of the Company, each director is required to retire at least once every three years by rotation, and all newly appointed directors who are appointed by the Board are required to retire at the next annual general meeting following their appointment. The retiring directors are eligible to offer themselves for re-election.

The dates of initial appointment and last re-election of the directors, together with their directorships in other listed companies, are set out below:

Director	Position	Date of Initial Appointment	Date of Last Re-election	Current directorships in listed companies	Past directorships in listed companies (in last three years)
Charles Antonny Melati	Executive Chairman	24 May 2010	29 April 2015	-	-
Tung Kum Hon	Chief Executive Officer	1 November 2015	28 April 2016	Tien Wah Press Holdings Berhad	Bellzone Mining Plc
Dhamma Surya	Executive Director	24 May 2010	28 April 2016	-	-
Huang She Thong	Executive Director	15 June 2010	28 April 2017	-	-
Soh Chun Bin	Lead Independent Director	25 September 2012	29 April 2017	Triyards Holdings Limited ISOTeam Ltd.	Chosen Holdings Limited
Ong Beng Chye	Independent Director	25 September 2012	28 April 2016	Hafary Holdings Limited Heatec Jietong Holdings Ltd. Kitchen Culture Holdings Ltd. IPS Securex Holdings Ltd. CWX Global Limited (fka Loyz Energy Limited )	-
Lu King Seng	Independent Director	25 September 2012	29 April 2015	TLV Holdings Limited	Green Build Technology Limited
Karyono	Independent Director	25 September 2012	29 April 2015	-	-
Jim Rogers	Independent Director	3 December 2012	28 April 2016	Spanish Mountain Gold Ltd Virtus Total Return Fund Inc. (fka The Zweig Fund, Inc.) Virtus Global Dividend & Income Fund Inc. (fka The Zweig Total Return Fund, Inc.) Sinofortune Financial Holdings Limited (fka First China Financial Network Holdings Limited) Crusader Resources Limited (Australia) Duff & Phelps Select Energy MLP Fund Inc.	-

The NC, in determining whether to recommend a director for re-appointment, will have regard to the director’s performance and contribution to the Group and whether the director has adequately carried out his or her duties as a director.

When a director has multiple board representations, the NC also considers whether or not the director is able to and has adequately carried out his duties as a director of the Company, taking into consideration the director’s number of listed company board representations and other principal commitments. In support of their candidature for directorship or re-election, directors are to provide the NC with details of their other commitments and an indication of the time involved. In addition, directors should consult the NC before accepting any new appointments as directors. The NC is satisfied that sufficient time and attention are being given by the directors to the affairs of the Company, notwithstanding that some of the directors have multiple board representations. The Board is therefore of the view that there is no necessity at this point in time to determine the maximum number of listed company board representations which a director may hold.

The NC has nominated Mr. Charles Antonny Melati, Mr. Dhamma Surya and Mr. Lu King Seng who will retire by rotation, at the forthcoming annual general meeting and be subject to re-election by the Company’s shareholders.

Key information regarding the directors, including their shareholdings in the Company, is set out in the “Board of Directors” section and “Report of the Directors” section of this Annual Report.

The Company has no alternate directors on its Board.

5. BOARD PERFORMANCE
Principle 5: There should be a formal annual assessment of the effectiveness of the Board as a whole and its board committees and the contribution by each director to the effectiveness of the Board.

A formal assessment process is in place to assess the effectiveness of the Board and Board Committees annually.

The NC is responsible for assessing the effectiveness of the Board as a whole and the Board Committees. To-date, the NC does not require the assistance of an external facilitator in relation to the assessment process. The NC has established a review process and proposed objective performance criteria set out in assessment checklists which are approved by the Board. The NC assesses the Board’s effectiveness as a whole by completing a Board Assessment Checklist, which takes into consideration factors such as the Board’s structure, conduct of meetings, corporate strategy and planning, risk management and internal control, recruitment and evaluation, compensation, financial reporting and communication with shareholders. The Board adopts performance objectives and criteria which align with shareholder interest and allow for comparison with industry peers such as return on assets, return on equity, return on investment and total shareholder return as well as the Company’s share price performance over a period of time. The performance criteria are not subject to changes from year to year. Nonetheless, where circumstances deem it necessary for any of the criteria to be changed, the Board will justify such changes.

In carrying out its assessment of the Board’s effectiveness, the NC simultaneously considers the effectiveness of the Board Committees by completing Board Committees’ evaluation forms respectively.

The NC has decided that as each member of the Board, depending on his background, and expertise, contributes in different areas to the success of the Company, it would be more appropriate to assess the Board as a whole than on an individual basis.

The Board and the NC have endeavored to ensure that directors appointed to the Board possess the background, experience, business knowledge, financial expertise and management skills relevant to the Group’s business.

They have also ensured that each director, with his special contributions, brings to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made. The Chairman may, in consultation with the NC and the Board, act on the results of the performance evaluation and, where appropriate, propose new members for appointment to the Board and/or seek the resignation of relevant directors.

6. ACCESS TO INFORMATION
Principle 6: In order to fulfil their responsibilities, directors should be provided with complete, adequate and timely information prior to Board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities.

Directors are from time to time furnished with detailed information concerning the Group to support their decision-making process.

Prior to each Board meeting, members of the Board are each provided with the relevant documents and information necessary for them to comprehensively understand the issues to be deliberated upon and make informed decisions thereon. Such information includes budgets, forecasts, monthly management financial statement, related materials, facts, risk analysis, financial impact, expected outcomes, conclusions and recommendations.

As a general rule, notices are sent to the directors at least one week in advance of Board meetings, followed by the Board papers, in order for the directors to be adequately prepared for the meetings.

The Board (whether individually or as a whole) has separate and independent access to the Management and the company secretary at all times and may seek independent professional advice, if necessary, at the expense of the Company. The appointment and the removal of company secretaries are subject to the approval of the Board. The company secretary attends all Board meetings and ensures that all Board procedures are followed. Where the company secretary is unable to attend any Board meeting, he ensures that a suitable replacement is in attendance and that proper minutes of the same are taken and kept.

7. PROCEDURES FOR DEVELOPING REMUNERATION POLICIES
Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

The RC comprises Mr. Lu King Seng, Mr. Soh Chun Bin, and Mr. Ong Beng Chye, all of whom are independent directors. The chairman of the RC is Mr. Lu King Seng.

The terms of reference of the RC have been approved and adopted. The functions of the
RC include the following:

• review and recommend to the Board a general framework of remuneration for the Board and key management personnel;
• review and recommend to the Board the specific remuneration packages for each director as well as for the key management personnel. The RC’s recommendations should be submitted for endorsement by the entire Board. The RC should cover all aspects of remuneration, including but not limited to directors’ fees, salaries, allowances, bonuses, options, share-based incentives and awards, and benefits-in-kind;
• review and recommend to the Board the terms of renewal of the service contracts of directors;
• review whether executive directors and key management personnel should be eligible for benefits under long-term incentive schemes, and evaluate the costs and benefits of long-term incentive schemes;
• review the Company’s obligations arising in the event of termination of the executive directors’ and key management personnel’s contracts of service, to ensure that such contracts of service contain fair and reasonable termination clauses which are not overly generous. The RC should aim to be fair and avoid rewarding poor performance, and
• review the compensation packages of the non-executive directors.

The members of the RC are familiar with executive compensation matters as they manage their own businesses and/or are holding other directorships, and therefore do not currently need the assistance of an external expert. Nonetheless, the RC has access to appropriate external expert advice in the field of executive compensation if required.

The RC’s recommendations will be submitted for endorsement by the Board. No director is involved in deciding his own remuneration.

8. LEVEL AND MIX OF REMUNERATION
Principle 8: The level and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate (a) the directors to provide good stewardship of the company, and (b) key management personnel to successfully manage the company. However, companies should avoid paying more than is necessary for this purpose.

In setting remuneration packages, the Company takes into account pay and employment conditions within the same industry and in comparable companies, as well as the Group’s relative performance and the performance of individual directors and key management personnel.

Non-executive directors receive directors’ fees for their effort and time spent, responsibilities and contribution to the Board, subject to shareholders’ approval at annual general meetings. Given the size and operations of the Group, the RC considers that the current fees adequately compensate the non-executive directors, without over-compensating them as to compromise their independence.

Remuneration for the executive directors includes a basic salary component, allowances together with other benefits in kind and a variable component that is the performance bonus and long-term incentive schemes of the Company/the Group, if any, based on the performance of the Group as a whole. The Company has entered into service agreements with its Executive Chairman, Mr. Charles Antonny Melati, its chief executive officer and Executive Director, Mr. Tung Kum Hon and its Executive Director, Mr. Dhamma Surya. Either party may terminate the service agreements at any time by giving the other party not less than six months’ notice in writing, or payment in lieu of notice.

The Company is proposing share-based incentive schemes for approval by its shareholders at the Company’s extraordinary general meeting to be convened. The proposed schemes are intended to further incentivize performance of executive directors and key management personnel (other than major shareholders) and align the interests of non-executive directors with the interests of the shareholders of the Company. The RC is of the view that it is currently not necessary to use contractual provisions to allow the Company to reclaim incentive components of remuneration from the executive directors and key management personnel in exceptional circumstances of misstatement of financial statements or of misconduct resulting in financial loss to the Company, as the realisation of potential legal action by the Company would deter them from committing such wrongdoing. During the year, the Group paid variable bonus/incentive to the Executive Directors, Chief Executive Officer, and key management personnel, as well as the mandatory THR allowance to its staff in Indonesia, which is a labor allowance that must be paid by an employer before a religious holiday.

9. DISCLOSURE ON REMUNERATION
Principle 9: Every company should provide clear disclosure of its remuneration policies, level and mix of remuneration, and the procedure for setting remuneration, in the company’s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key management personnel, and performance.

The Company has established a performance-based remuneration system for executive directors and key management personnel that is flexible and responsive to the market, comprising a base salary, other fixed allowances, together with benefits in kind, as well as a performance bonus which is based on the Group’s performance and the individual’s performance. Mr. Charles Antonny Melati, the Executive Chairman, and Mr. Tung Kum Hon, the Chief Executive Officer and the Executive Director, are entitled to receive a performance bonus based on the audited consolidated profit before tax of the Group in each financial year. The foregoing performance condition was chosen having regard to the nature of the business, structure, and requirement of the Group. There was annual performance bonus paid for 2017 as the performance condition was met during the financial year.

The level and mix of remuneration paid or payable to the directors and key management personnel for 2017 are set out below:

Remuneration bands	Salary & CPF	Bonus & CPF	Director's Fee	Other Benefits	Total
	%	%	%	%	%
Directors S$ 1,750,000 to S$ 2,000,000
Tung Kum Hon	31	32	-	37	100
S$ 1,250,000 to S$ 1,500,000
Charles Antonny Melati(1)	42	54	-	4	100
S$ 500,001 to S$ 750,000
Dhamma Surya Huang She Thong(1)	67 67	28 29	- -	5 4	100 100
S$ 0 to S$ 250,000
Soh Chun Bin Ong Beng Chye Lu King Seng Karyono Jim Rogers	- - - - -	- - - - -	100 100 100 100 100	- - - - -	100 100 100 100 100
Key management personnel S$ 0 to S$ 250,000
Ng See Yong(1) Junanto Chan Cheng Fei Tan Sheng Hua, Adam	70 64 85 67	30 35 15 33	- - - -	- 1 - -	100 100 100 100

Notes:
(1) Mr Charles Antonny Melati, Mr Huang She Thong and Mr Ng See Yong are brothers.

S$ – Singapore dollars

The aggregate remuneration (including CPF contributions thereon and bonus) paid to the top four key management personnel of the Group (who are not directors of the Company or the Chief Executive Officer) in 2017 amounted to approximately S$ 904,016.

The Board is of the view that full disclosure of the specific remuneration of each individual director and key management personnel is not in the best interests of the Company, taking into account the sensitive nature of the subject, the competitive business environment the Group operates in and the potential negative impact such disclosure will have on the Group.

Save for the above key management personnel and the following employees, there was no employee of the Group who was an immediate family member of a director or the Chief Executive Officer, and whose remuneration exceeded S$ 50,000 during 2017:

Remuneration bands
S$ 150,001 to S$ 200,000	Yanti Ng, Lim Kok Wah, Eric(1)
S$ 100,000 to S$ 150,000	Ruddy(2)

Note:
(1) Ms. Yanti Ng is the sister and Mr. Lim Kok Wah, Eric is the brother-in-law of Mr. Charles Antonny Melati and Mr. Huang She Thong, the directors of the Company.
(2) Mr. Ruddy is the nephew of Mr. Dhamma Surya, the director of the Company.

The Company did not grant or pay any termination, retirement or post-employment benefits to its directors, Chief Executive Officer or other key management personnel in 2017.

10. ACCOUNTABILITY
Principle 10: The Board should present a balanced and understandable assessment of the company’s performance, position, and prospects.

The Board understands its accountability to the shareholders on the Group’s performance, financial position, and prospects. In presenting the quarterly and full-year financial statements to shareholders, the Board aims to provide shareholders with a detailed and balanced analysis and explanation of the Group’s financial performance, position, and prospects. In line with the rules of the SGX-ST Listing Manual, the Board provides a negative assurance statement to the shareholders in respect of the interim financial statements.

The Management provides the Board with relevant information on the performance of the Group on a quarterly basis and as the Board may require from time to time to enable the Board to make a balanced and informed assessment of the Group’s performance, position, and prospects.

11. RISK MANAGEMENT AND INTERNAL CONTROLS
Principle 11: The Board is responsible for the governance of risk. The Board should ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the company’s assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives.

The Board recognizes the importance of sound internal controls and risk management practices in safeguarding shareholders’ interests and the Group’s assets. The Group’s internal controls and systems are designed to provide reasonable assurance as to the integrity and reliability of the financial information and to safeguard and maintain accountability of assets. Procedures are in place to identify major business risks and evaluate potential financial implications, as well as for the authorization of capital expenditure and investments.

The Management has formed an Enterprise Risk Management (“ERM”) Working Group to devise and implement an ERM framework, in consultation with the Company’s internal auditors, PricewaterhouseCoopers Risk Services Pte Ltd. The ERM Working Group, together with the business and corporate executive heads, identifies the operational, financial and compliance risks faced by the Group and sets out the appropriate mitigating actions and monitoring mechanisms to respond to these risks and changes within the Group and the external business environment. The ERM framework is designed to manage the Group’s risks and is approved by the Board, taking into consideration the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives. On an on-going basis, the ERM Working Group reviews all significant control policies and procedures and highlights all significant matters to the Board and the AC. In December 2017, the ERM Working Group conducted an annual risk workshop to assist the Management in identifying and prioritizing the top risks affecting the Group as well as to provide counter-measures for the risks identified.

The internal auditors evaluated the related internal control as part of the internal audit plan approved by the AC. Any material non-compliance or weakness, including recommendations for improvements, is reported to the AC. The AC also reviews the effectiveness of actions taken by the Management on the recommendations made by the internal auditors in this respect.

In addition to the work performed by the internal auditors, the external auditors, Deloitte & Touche LLP, also perform tests of certain controls relevant to the preparation of the Group’s financial statements. The external auditors report any significant deficiencies of such internal controls to the AC.

During the year, the Board has, together with the internal auditors and the ERM Working Group, reviewed the adequacy, effectiveness, and integrity of the Group’s risk management and internal control systems, including financial, operational, compliance and information technology controls. The Chief Executive Officer and Chief Financial Officer have also provided assurance to the Board a) that the financial records have been properly maintained and the financial statements give a true and fair view of the Group’s operations and finances, and b) regarding the effectiveness of the Group’s risk management and internal controls.

Based on the ERM framework and internal controls established and maintained by the Group, the work performed by the internal and external auditors, and reviews performed by the Management and the AC, the Board, with the concurrence of the AC, is of the opinion that the risk management and internal control systems in place as at 31 December 2017 are adequate and effective to address in all material respects the financial, operational, compliance and information technology risks within the current scope of the Group’s business operations.

The Board notes that no system of internal controls can provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, fraud or other irregularities. The Board will continue its risk assessment process, which is an on-going process, with a view to improving the Group’s internal controls system.

12. AUDIT COMMITTEE
Principle 12: The Board should establish an Audit Committee (“AC”) with written terms of reference which clearly set out its authority and duties.

The AC comprises Mr. Ong Beng Chye, as the chairman, and Mr. Soh Chun Bin, Mr. Lu King Seng, and Mr. Karyono, as members, all of whom are independent directors. The members of the AC have sufficient accounting or financial management expertise, as interpreted by the Board in its business judgment, to discharge the AC’s functions.

The written terms of reference of the AC have been approved and adopted. The main functions of the AC include:

• reviewing the annual consolidated financial statements and the external auditors’ report on those financial statements, and discussing any significant adjustments, major risk areas, changes in accounting policies, compliance with Financial Reporting Standards in Singapore, concerns and issues arising from their audits, including any matters which the auditors may wish to discuss in the absence of the Management, where necessary, before submission to the Board for approval;
• reviewing the periodic consolidated financial statements comprising the statements of comprehensive income and statements of financial position and such other information required by the SGX-ST Listing Manual, before submission to the Board for approval;
• reviewing the significant financial reporting issues and judgments so as to ensure the integrity of the financial statements of the Company and any announcements relating to the Company’s financial performance;
• reviewing and reporting to the Board at least annually the adequacy and effectiveness of the Company’s risk management and internal control systems, including financial, operational, compliance and information technology controls (such review can be carried out internally or with the assistance of any competent third parties);
• reviewing the adequacy and effectiveness of the Company’s internal audit function at least annually;
• reviewing the scope and results of the external audit, its cost effectiveness and the independence and objectivity of the external auditors;
• making recommendations to the Board on the proposals to the shareholders on the appointment, re-appointment, and removal of the external auditors, and approving the remuneration and terms of engagement of the external auditors;
• meeting with the external auditors, and with the internal auditors, in each case without the presence of the Company’s Management, at least annually;
• reviewing the policy and arrangements by which employees of the Group and any other persons may, in confidence, raise concern to the Chairman of the AC about possible improprieties in matters of financial reporting or other matters. AC should ensure that there are arrangements in place for such concerns to be raised and independently investigated, and for appropriate follow-up action to be taken. To disclose the existence of a whistle-blowing policy in the Annual Report and disseminate the procedures and channel for raising such concerns;
• ensuring robust internal controls to mitigate the Group internal controls weaknesses and to oversee the annual internal audit procedures and follow up of the audit findings;
• reviewing the audit plans of the external auditors and internal auditors, and the results of the external and internal auditors’ review and evaluation of the Group’s system of internal controls;
• approving the hiring, removal, evaluation and compensation of the head of the internal audit function, or the accounting/auditing firm or corporation to which the internal audit function is outsourced;
• reviewing any interested person transactions falling within the scope of Chapter 9 of the SGX-ST Listing Manual;
• reviewing any potential conflicts of interest;
• approving internal control procedures and arrangements for all interested person transactions;
• reviewing and recommending hedging policies and instruments, if any, to be implemented by the Company to the Board;
• enquiring the status of the existing Qualifying Assets (as defined in the Company’s prospectus dated 10 October 2012 (the “Prospectus”)) and determining if any of the Qualifying Assets should be removed from the QA List (as defined in the Prospectus);
• reviewing and approving the Promoter Interest Register (as defined in the Prospectus);
• undertaking such other reviews and projects as may be requested by the Board, and reporting to the Board its findings from time to time on matters arising and requiring the attention of the AC; and
• undertaking generally such other functions and duties as may be required by law or the SGX-ST Listing Manual, and by such amendments made thereto from time to time.

The AC shall commission and review the findings of internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal controls or infringement of any Singapore law, rule or regulation which has or is likely to have a material impact on the Group’s operating results and/or financial position.

The AC has full authority to investigate any matter within its terms of reference, full access to and cooperation from the Management, and full discretion to invite any director, key management personnel or other employee of the Group to attend its meetings, and is given reasonable resources to enable it to discharge its functions properly and effectively.

During the year, the AC reviewed the financial statements of the Group before the announcement of the Group’s quarterly and full-year results. In the process, the AC reviewed the key areas of management’s estimates and judgment applied for key financial issues including revenue recognition, impairment testing, provisioning policies, critical accounting policies and any other significant matters that might affect the integrity of the financial statements. The AC also considered the report from the external auditors, including their findings on the significant risks and audit focus area. Significant matters that were discussed with management and the external auditors have been included as Key Audit Matters ("KAMs)" in the audit report for the financial year ended 31 December 2017. Refer to pages 91 to 93 of the Annual Report.

In assessing each KAM, the AC took into consideration the approach and methodology applied in the valuation of assets, as well as the reasonableness of the estimates and key assumptions used. In addition to the views from the external auditors, subject matter experts, such as independent valuers, were consulted where necessary. The AC concluded that management’s accounting treatment and estimates in each of the KAMs were appropriate.

During the year, the AC considered and approved the 2017 Audit Plan and the 2017 Internal Audit ("IA") Plan. In addition, the AC reviewed the adequacy of internal control procedures, Interested Person transactions and the issues raised in IA reports. It also considered the reappointment of the external auditors as well as their remuneration.

On an annual basis, the AC meets with the auditors without the presence of the Management. The external auditors update
the AC on any changes in accounting standards impacting the financial statements of the Group before an audit commences.

The fees paid by the Company to the external auditors in 2017 for audit and non-audit services amounted to S$ 981,250 and S$ 13,800, respectively. The AC, having undertaken a review of all non-audit services provided by the external auditors, is of the opinion that such services would not affect the independence of the external auditors.

The Company has complied with Rules 712 and 715 of the SGX-ST Listing Manual in relation to its external auditors.

The Group has implemented a whistle-blowing policy. The policy aims to provide an avenue for employees and other persons to raise concerns about improprieties in matters of financial reporting or other matters and at the same time assure them that they will be protected from reprisals or victimization for whistle-blowing in good faith. Anonymous disclosures will be accepted and anonymity honoured. Cases that are significant are reviewed by the AC for adequacy of investigative action and resolution. The outcome of each investigation is reported to the AC. Contact details of the AC chairman have been made available to all employees. No whistleblowing reports were received in 2017.

No former partner or director of the Company’s existing auditing firm is or can be a member of the AC.

13. INTERNAL AUDIT
Principle 13: The Company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits.

The Company outsources the internal audit function to an external professional firm, PricewaterhouseCoopers Risk Services Pte Ltd, who is a member of the Institute of Internal Auditors Singapore and staffed with persons with the relevant qualifications and experience, to perform the review and testing of controls of the Group’s processes consistent with the International Standards for the Professional Practice of Internal Auditing established by the Institute of Internal Auditors. The internal auditors have unfettered access to all the Group’s documents, records, properties and personnel, including access to the AC. AC meets internal auditors without the presence of Management, at least annually.

The internal auditors report directly to the chairman of the AC. The AC reviews and approves the annual internal audit plans, and reviews the scope and results of the internal audit performed by the internal auditors. The AC will ensure the adequacy and effectiveness of the internal audit function annually. The AC is satisfied that the internal auditors are independent and have the appropriate standing to perform their functions effectively. Based on its latest review, the AC is satisfied that the internal audit function then in place is adequate and effective bearing in mind that improvement to such function is an on-going process taking into account the prevailing scope of the Group’s operations and business environment.

14. SHAREHOLDER RIGHTS
Principle 14: Companies should treat all shareholders fairly and equitably, and should recognize, protect and facilitate the exercise of shareholders’ rights, and continually review and update such governance arrangements.

The Company strives for timeliness and consistency in its disclosures to shareholders.
It is the Company’s policy to keep all shareholders informed of developments or changes that will have a material impact on the Company’s share price, through announcements via SGXNET. Such announcements are communicated on an immediate basis, or as soon as possible where immediate disclosure is not practicable.

Shareholders are informed of general meetings through notices published in the newspapers, through reports or circulars sent to all shareholders and via SGXNET. The Company encourages shareholders’ participation during the general meetings. Resolutions are passed through a process of voting and shareholders are entitled to vote in accordance with established voting rules and procedures.

15. COMMUNICATION WITH SHAREHOLDERS
Principle 15: Companies should actively engage their shareholders and put in place an investor relations policy to promote regular, effective and fair communication with shareholders.

The Company recognizes that effective communication leads to transparency and enhances accountability. As part of its investor-relation policy, the Company regularly conveys pertinent information, gathers views or input, and addresses shareholders’ concerns. In this regard, the Company provides timely information, including disclosure on corporate developments, to its shareholders via SGXNET announcements, news releases, and its website and ensures that price-sensitive information is publicly released and is announced within the mandatory period. The Company does not practice selective disclosure. The views of shareholders are gathered at shareholder meetings where shareholders are permitted to ask questions and seek a better understanding of the Group.

In addition, the Company seeks to maintain a regular dialogue with its shareholders through briefings and by allowing them to share with directors or senior management from time to time their views and concerns. The Company works with a professional firm in respect of its investor-relation activities.

The Company does not have a formal dividend policy. As any declaration and payment for dividends depend on, inter alia, the Group’s earnings, financial position, results of operations, capital needs, plans for expansion, and other factors as the Board may deem appropriate. The Company has paid, a tax-exempt (one-tier) final cash dividend of S$ 0.01 per share on 30 May 2017 and a tax-exempt (one-tier) interim cash dividend of S$ 0.01 per share on 5 December 2017.

16. CONDUCT OF SHAREHOLDER MEETINGS
Principle 16: Companies should encourage greater shareholder participation at general meetings of shareholders, and allow shareholders the opportunity to communicate their views on various matters affecting the company.

All shareholders of the Company receive the Annual Report and the notices of general meetings. The notice will also be advertised in a local newspaper and made available on SGXNET. The Company encourages shareholders’ participation at general meetings, and all shareholders are given the opportunity to voice their views and to direct queries regarding the Group to directors, including the chairperson of each of the Board Committees. All directors including the Chairman of the Board are required to attend the general meetings of the Company. The Company’s external auditors are also present to assist the Board in addressing any relevant queries from shareholders. The Company also ensures that there are separate resolutions at general meetings on each distinct issue. Minutes of general meetings, including relevant substantial comments or queries from shareholders relating to the agenda of the meeting and responses from the Board or the Management, are available to shareholders upon their request.

The Board supports the Code’s principle of encouraging shareholder participation. The Articles of Association of the Company currently allow a member of the Company to appoint up to two proxies to attend and vote at general meetings. A shareholder who is a relevant intermediary (as defined in the Companies Act) may appoint more than two proxies, but each proxy must be appointed to exercise the rights attached to a different share or shares held by such shareholder. The Company does not currently employ electronic polling as it is not presently cost effective to do so. The Company shall put all resolutions to vote by poll and make an announcement of the detailed results showing the number of votes cast for and against each resolution and the respective percentages after the conclusion of the AGM.

The Company is proposing a new constitution for approval by its shareholders at the Company’s extraordinary general meeting to be convened on 23 April 2018. The proposed new constitution would contain, inter alia, provisions on absentia voting at general meetings of shareholders.

17. DEALINGS IN SECURITIES
In compliance with the best practices set out in the SGX-ST Listing Manual on dealings in securities, directors, and officers of the Company are advised not to deal in the Company’s shares on short-term considerations or when they are in possession of unpublished price-sensitive information. The Company prohibits dealings in its shares by its directors and officers during the period commencing two weeks before the announcement of the Company’s quarterly financial statements and one month before the announcement of the Company’s full-year financial statements and ending on the date of the announcement of the results.

18. INTERESTED PERSON TRANSACTIONS
The Company has established procedures to ensure that all transactions with interested persons are reviewed and/or approved by the AC and that the transactions are carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority shareholders.

In 2017, there was no interested person transaction which value exceeded S$ 100,000.

19. MATERIAL CONTRACTS
Save as disclosed in section 18 above, there were no material contracts of the Group involving the interests of its Chief Executive Officer, each director or controlling shareholder, either still subsisting at the end of 2017 or if not then subsisting, entered into since the end of the previous financial year.