The Board of Directors (“the Board”) is pleased to present its Statement on Risk Management and Internal Control for the financial year ended 31 December 2018. This Statement is prepared pursuant to paragraph 15.26(b) of the Main Market Listing Requirements and guided by the “Statement on Risk Management and Internal Control – Guidelines for Directors of Listed Issuers” issued by the publication of Bursa on the issuance of internal control statement.

The Board of Directors affirms its responsibility in maintaining a sound system of internal control and risk management procedures within the Group and constantly reviewing its adequacy and integrity. The Board also recognises that reviewing of the Group’s systems of risk management and internal control is a concerted and continuing process and the objective of risk management and systems of internal control is to manage rather than eliminate risk of failure to achieve business objectives.It shall be noted that all risk management and internal control can only provide reasonable and not absolute assurance against material misstatement or loss. Nonetheless, in striving for continuous improvement, the Board will put in place appropriate action plans, when necessary, to further enhance the Group’s systems of risk management and internal control.

Functionally, the Group’s risk management processes involve identifying, evaluating and managing significant risks in the organisation. It is the responsibilities of all Executive Directors and the Management team to identify and manage in order to mitigate the business risks.

The internal control system is established to ensure there is a check and balance to facilitate the Audit Committee to discharge their duties and responsibilities. A good internal control system in place is to safeguard the interest of minority shareholders and stakeholders. The present key elements of the Group’s systems of internal control are:

• The Group Management review of the financial results and forecasts for business units and formulation of action plans for operational and financial performance improvement;
• Board’s reviews and discussions with the Management on significant financial and operating performances of the Group;
• Audit Committee reviews and consultation with the management on the integrity of the financial results, annual report and audited financial statements;
• Audit findings and reports on the review of the system of internal control from the Internal Auditors; and
• Management assurance that the Group’s risk management and internal control systems have been in place and operating adequately at all time.

The Group has engaged an independent professional services firm to carry out the internal audit function.  The objective of the internal audit function is to review the adequacy and integrity of the internal control systems of key business units.

The Audit Committee reviews and approves the annual internal audit plan before the Internal Auditors carry out their functions. All audit findings are reported to the Audit Committee and areas of improvement and audit recommendations identified are communicated to the Management for further action.

During the financial year, the Internal Auditors conducted internal control reviews on certain key operating functions and procedures and recommended actions plans for Management improvement. The audit reports containing audit findings and recommendations together with Management’s responses thereto were circulated to all members of the Audit Committee. Areas of improvement identified were communicated to the Management for further action. All audit reports were reviewed by the Audit Committee and discussed at Audit Committee Meetings. Follow-up reviews are performed to ascertain the extent of Management’s implementation of the recommended corrective action for improvements.

The cost incurred for the internal audit function in respect of the financial year ended 31 December 2018 was RM75,572.09.

In accordance to the Bursa’s Guidelines, Management is responsible to the Board for identifying risks relevant to the business of the Group’s objectives and strategies implementing, maintaining sound systems of risk management and internal control and monitoring and reporting to the Board of significant control deficiencies and changes in risks that could significantly affect the Group achievement of its objective and performance.

Before producing this Statement, the Board has received assurance from the Executive Directors that, to the best of their knowledge that the Group’s risk management and internal control systems are operating adequately and effectively, in all material aspects.

There is no significant breakdown or weaknesses in the system of internal control of the Group that have resulted material losses incurred by the Group for the financial year ended 31 December 2018.  The Board believes that the current review framework and the systems of risk management and internal control are reasonable for the present level of operations. Nonetheless, the Group will continue to take the necessary measures to ensure that the systems of risk management and internal control are functioning effectively in line with the evolving business development in the Group.

The Board of Directors has approved this statement for issuance.