Statement of Internal Control

Introduction

In relation to internal control, pursuant to the requirements under the Malaysian Code on Corporate Governance for companies listed on the Bursa Malaysia Securities Berhad, your Board of Directors recognises the importance of a sound system of internal control to safeguard shareholders’ investments and the Group’s assets.

Board Responsibilities

Your Board recognises the importance of a sound system of internal controls and risk management framework to good corporate governance practices. The Board affirms its overall responsibility for the Group’s system of internal controls and risk management, and for reviewing the adequacy and integrity of those systems.

However, it should be noted that such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives. In addition, any system could provide only reasonable and not absolute assurance against material misstatement or loss.

The Board has in place an ongoing process for identifying, evaluating, monitoring and managing the significant risks affecting the achievement of its business objectives throughout the period. This process is regularly reviewed by the Board which dedicates time for discussion on this subject. The Group’s system of internal controls comprises the following key elements:

Board Meetings

Your Board meets at least quarterly and has a formal agenda on matters for discussion. The Chairman leads the meeting and provides the forum for comprehensive deliberations of important issues before arriving at any decision.

Organisational structure

Clearly defined delegation of responsibilities to the committees of the Board and to the management including authorization level for all aspects of the business is in place. The Board committees which are in place are the Audit Committee, the Nomination Committee and Remuneration Committee. The Nomination Committee and Remuneration Committee were merged into one as the Nomination and Remuneration Committee on March 28, 2011.

Risk Framework

There are policy guidelines and authority limits imposed on Executive Directors and management within the Group in respect of the day-to-day operations including acquisitions and disposal of assets.

The Internal Auditor as well as Management identifies risks relevant to the business and operation environment in which the Group operates. Risk action plan is then formulated to mitigate or eliminate the consequences happening from such risks. The risk assessment and the related action plan are also tabled to the Board for deliberations and its inputs.

Internal Audit Function

The Internal Audit function is outsourced to a professional firm specializing in providing internal audit services. Internal audits are carried out based on the annual audit plan approved by the Audit Committee and this includes regular and systematic review of the internal controls and to provide the Audit Committee with sufficient assurance that the operational controls are effective in addressing the risks identified.
The Internal Auditor will report his findings and recommendations to the Audit Committee for deliberations in the quarterly meetings. Such deliberations are conducted in the presence of the Management. Once the recommendations are accepted, the Management will see to their implementation.

Some weaknesses in internal control were identified for the year under review but these are not deemed significant and hence have not been included in this Statement, as these weaknesses have not materially impacted the business or operations of the Group.

This Statement has been approved by a resolution of your Board of Directors dated June 13, 2011 and has been reviewed by the external auditors.