To facilitate effective management, certain functions have been delegated to various Board Committees, each of which has its own written terms of reference and whose actions are reported to and monitored by the Board.

The Company’s Articles of Association (“Articles”) allow Board meetings to be conducted by way of teleconferencing to facilitate Board participation.

The Company also has in place a budget for Directors’ training programmes. This is utilised for Directors’ participation in industry conferences and seminars and application to courses of instruction/training programmes in connection with their duties as Directors. The budget may be utilised by each Director subject to the approval of the Chairman.


Principle 2: Board Composition and Balance

As at year end, the Board had comprised 3 Independent Directors and 4 Executive Directors. The Board complies with the recommendation in the Code for at least one-third of the Board to comprise Independent Directors.
The independence of each Director is reviewed annually by the Company’s Nominating Committee (“NC”). The NC adopts the Code’s definition of what constitutes an Independent Director in its review, and further ensures that no individual or group of individuals dominate the Board’s decision-making process.

The Non-executive Directors contribute to the Board process by monitoring and reviewing Management’s performance against goals and objectives. Their views and opinions provide alternative perspectives to the Group’s business and they bring independent judgement to bear on business activities and transactions involving conflicts of interest and other complexities.

Key information regarding the Directors is set out on page 7 of the Annual Report. The NC is of the view that the current Board members provide core competencies necessary to meet the Company’s needs.

Principle 3: ROLE OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER (“CEO”)

Mr Koh Kian Kiong is the Executive Chairman and CEO of the Company. As one of the founders of the Group, Mr Koh has been for leading the Board and has assumed full executive responsibilities over the directions and operational decisions of the Group since 1974.

The Board is of the view that having Mr Koh assume the roles of both Chairman and CEO has not compromised accountability and independent decision-making as there is a sufficient number of Independent Directors on the Board to exercise objective judgement on decisions. Notwithstanding that the Company has benefited from having an Executive Chairman who is knowledgeable about the businesses of the Company, the Board is looking into the issue of CEO succession and the segregation of the two positions. In compliance with the Code, Mr Heng Lee Seng was recently appointed as Lead Independent Director to address shareholders’ concerns, if any.

The Chairman ensures that Board meetings are held when necessary. The Chairman reviews most Board papers before they are presented to the Board and ensures that Board members are provided with complete, adequate and timely information. Members of Management who can provide additional insight into the matters to be discussed are invited to attend the relevant Board meeting.

Principle 6: Access to Information

The Company recognises that the flow of accurate and timely information is important for the Board to be effective in the discharge of its duties. Accordingly, it endeavours to meet the information needs of the Directors, such as requests for further explanations, briefings or informal discussions on any aspect of the Company’s operations or business issues. The Directors are provided with the contact details of the Company’s senior Management and Company Secretary to facilitate access to information..

The Board seeks independent professional advice as and when necessary to enable it to discharge its responsibilities effectively. Subject to the approval of the Chairman, Directors, whether as a group or individually, may seek and obtain independent professional advice to assist them in their duties, at the expense of the Company.

The Company Secretary or her representative attends all Board meetings and is responsible for ensuring that Board procedures are followed and that all relevant statutes, rules and regulations, including requirements of the SGX-ST, are complied with. She is also the primary channel of communication between the Company and the SGX-ST.

The appointment and the removal of the Company Secretary is a Board matter.

Executive Committee

The Executive Committee (“EC”) comprises the following Directors:

Mr Koh Kian Kiong
Ms Koh Maggie
Ms Chng Geok
Mr Lim Joo Suan

The EC meets regularly and performs the following functions:

• Approves investment/divestment proposals within 5% of NTA;
  
• Reviews and submits the Group’s business plans to the Board;
  
• Establishes guidelines and approval limits for the management and operation of the Group’s businesses;
  
• Reviews budget against performance of each business unit;
  
• Ensures that interested person transactions are undertaken at arm’s length and on commercial terms;
  
• Oversees and implements appropriate systems to manage risks.

The AC is empowered to investigate any matter relating to the Group’s accounting, auditing, internal controls and financial practices brought to its attention, with full access to records, resources and personnel, to enable it to discharge its functions properly. It has full access to and the co-operation of Management, including the internal auditors, and has full discretion to invite any Director and executive officer to attend its meetings.

The Group has an Internal Audit department which reports primarily to the Chairman of the AC. The AC ensures that the team is adequately resourced and has the appropriate standing within the Group. It also reviews and approves the annual internal audit plan proposed by the Internal Audit department.

The Group also out sourced certain internal audit projects to BDO Raffles Consultants Pte Ltd (“BDO”) to strengthen the internal audit function to meet the growing global emphasis on corporate governance, compliance and risk assessment. The Internal Audit department and BDO, like the external auditors, report independently their findings and recommendations to the AC.

In performing its functions, the AC reviews the overall scope of both internal and external audits, and the assistance given by Management to the auditors. The AC also met with the internal and external auditors without the presence of Management to discuss the results of their respective audit findings and their evaluation of the Group’s system of accounting and internal controls.

The AC has reviewed the Group’s risk management policies and, based on the audit reports and management controls in place except for certain areas which improvement is needed, is satisfied that there are adequate internal controls in the Group.

The AC has adopted a whistle-blowing programme to encourage and to provide a channel for Group employees to report and to raise, in good faith and in confidence, their concerns about possible improprieties in matters of financial reporting or other matters.

The AC is also satisfied with the independence and objectivity of the external auditors and has recommended to the Board the re-appointment of Ernst & Young LLP as the Company’s external auditors at the forthcoming AGM.

Remuneration Committee
Principle 7: Procedures for Development of Remuneration Policies
Principle 8: Level and Mix of Remuneration
Principle 9: Disclosure of Remuneration

The members of the Company’s Remuneration Committee (“RC”) are:

Mr Heng Lee Seng (Chairman)
Mr Hoon Tai Meng
Mr Chan Lay Ho

The RC comprises entirely Independent Directors.

The RC has access to external professional advice on remuneration matters, if required.

The RC, through a competitive and appropriately structured framework of remuneration, aims to motivate and retain executives and ensure that the Company is able to attract talents in the market in order to maximise shareholder value. In consultation with the Chairman of the Board, the RC will:

The Company adopts a remuneration policy for Executive Directors and key Management staff comprising a fixed component and a variable component. The fixed component is in the form of a base salary and fixed bonus. The variable component is in the form of profit-sharing or a variable bonus that is linked to the performance of the Company and the individual. The Executive Directors’ service contracts are renewed on an annual basis.

As part of its review, the RC covers all aspects of remuneration, including but not limited, to Directors’ fees, salaries, allowance, bonuses and benefits-in-kind.

The RC ensures that the remuneration packages of employees related to Executive Directors and controlling shareholders of the Group are in line with the Group’s staff remuneration guidelines and commensurate with their respective job scopes and levels of responsibilities.

Non-executive Directors’ fees are set in accordance with a remuneration framework comprising a basic fee and increment fixed fee for the level of responsibilities such as chairing Board Committees. The Non-executive Directors’ fees proposed are subject to shareholders’ approval at the AGM.

The Company does not have a long-term incentive or share option scheme in place.

The following information relates to the remuneration of Directors for the year ended 31 December 2008:
(1) Number of Directors in Remuneration Bands:

Number of Directors

(2) Summary compensation table for the year ended 31 December 2008:

In view of the confidentiality of remuneration matters, the Board is of the opinion that it is in the best interests of the Company not to disclose the names and exact remuneration of key executives in the Annual Report.

There is 1 key executive of the Group who is an immediate family member of the CEO and whose remuneration exceeded S$150,000 in 2008.

Communication with Shareholders
Principle 14: Communication with Shareholders
Principle 15: Greater Shareholder Participation

The Board is mindful of its obligation to provide timely disclosure of material information. The Board is accountable to the shareholders while Management is accountable to the Board.

The Company does not practise selective disclosure. Announcements, including quarterly, half-year and full-year results, are released through SGXNET and news releases. The Company has engaged the services of a public relations company to facilitate the dissemination of information to investors and the public since becoming publicly listed in 2000. All shareholders of the Company receive a copy of the Annual Report of the Company and the Group.

At general meetings, shareholders are given the opportunity to express their views and ask questions regarding the Group and its businesses.

Resolutions on each distinct issue are tabled separately at general meetings.

The Chairmen of the AC, NC and RC are normally available to address questions at the Company’s AGMs. The Company’s external auditors are also present to assist the Directors in addressing any relevant queries from shareholders.

Dealings in Securities
The Company has adopted a policy for securities transactions which provide guidance to its Directors and officers of the Group. Under this policy, Directors and officers are not permitted to deal in the Company’s securities while in possession of price-sensitive information and for the periods commencing 2 weeks before the release of quarterly results and 1 month before the release of full-year results.

Interested Person Transactions
The Company has adopted an internal policy in respect of any transaction with interested persons and has set out the procedures for review and approval of the Company’s interested person transactions. All interested person transactions are subject to review by the AC.

The Company confirms that the aggregate value of all interested person transactions during the financial year under review is less than S$100,000.

Material Contracts
No material contracts were entered between the Company and any of its subsidiaries with any Director or controlling shareholder during the financial year ended 31 December 2008.

Risk Management
As the Company does not have a risk management committee, the AC and Management assume the responsibility of the risk management function. Management reviews regularly the Company’s business and operational activities to identify areas of significant risks, as well as appropriate measures to control and mitigate these risks. Management reviews all significant policies and procedures and highlights all significant matters to the Board and the AC.